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Nantucket CAFR 2016 - FINALTOWN OF NANTUCKET, MASSACHUSETTS COMPREHENSIVE ANNUAL FINANCIAL REPORT For the Fiscal Year July 1, 2015 – June 30, 2016 On the cover: The mural at Gardiner’s Corner, more commonly referred to as the Compass Rose was originally painted in the 1930s. H. Marshall Gardiner, who owned the camera store on which the mural was painted, commissioned an artist to create the mural which was designed to commemorate locations important to Nantucket; the island’s whaling history, and his family. The mural has been renovated several times since the 1930’s including a renovation to return it to one of its original forms about 10 years ago and more recently during 2016. Over the years the mural has become somewhat of a Nantucket icon and public art form as numerous tourists often stop and pose in front of it. Above: The Daffodil Festival held in mid-spring is an enormously popular event on the Island. It typically marks the beginning of the season when visitors begin to return to the Island after the winter. The 2016 event, held from April 29 to May 1, was the 42nd annual installment of the Festival. TOWN OF NANTUCKET, MASSACHUSETTS COMPREHENSIVE ANNUAL FINANCIAL REPORT For the Fiscal Year Ended June 30, 2016 C. Elizabeth Gibson, Town Manager Prepared by the Finance Department Brian E. Turbitt, Director of Municipal Finance TOWN OF NANTUCKET, MASSACHUSETTS COMPREHENSIVE ANNUAL FINANCIAL REPORT YEAR ENDED JUNE 30, 2016 TABLE OF CONTENTS Page(s) INTRODUCTORY SECTION Letter of Transmittal ......................................................................................................................... 1-10 Certificate of Achievement For Excellence in Financial Reporting…………………………….......14 Organizational Chart .......................................................................................................................... 15 Principal Town Officials .................................................................................................................... 16 FINANCIAL SECTION Independent Auditor’s Report ........................................................................................................ 17-19 Management’s Discussion and Analysis ........................................................................................ 21-33 Basic Financial Statements: Statement of Net Position ............................................................................................................ 36 Statement of Activities ................................................................................................................. 37 Balance Sheet – Governmental Funds ......................................................................................... 38 Reconciliation of the Governmental Funds Balance Sheet Total Fund Balances to the Statement of Net Position .............................................................................................. 39 Statement of Revenues, Expenditures and Changes in Fund Balances – Governmental Funds ........................................................................................................... 40 Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances of Governmental Funds to the Statement of Activities ....................................... 41 Statement of Net Position – Proprietary Funds ............................................................................ 42 Statement of Revenues, Expenses, and Changes in Net Position – Proprietary Funds................ 43 Statement of Cash Flows – Proprietary Funds ............................................................................. 44 Statement of Fiduciary Net Position ............................................................................................ 45 Statement of Changes in Fiduciary Net Position ......................................................................... 46 Notes to Basic Financial Statements ........................................................................................ 47-88 Required Supplementary Information: Schedule of Town’s Proportionate Share of Net Pension Liability….…………………………90Schedule of Town’s Contributions to Pension Plan……………….…………………………....90Schedule of County’s Proportionate Share of Net Pension Liability.…………………………..91 Liabbbbb…………………………………….88 Liability……………………………87Plan…………………………………………....87Pension…………………………………..89 Liability……………………………87PPlanPlan…………………………………………....87 Schedule of County’s Contributions to Pension Plan………………………………………….91Schedule of Landbank’s Proportionate Share of Net Pension Liability………………………..92Schedule of Landbank’s Contributions to Pension Plan……………………………………….92Schedule of Commonwealth’s Collective Share of Net Pension Liability – Massachusetts Teacher’s Retirement System……………………………………………..93 Schedules of Funding Progress – Other Postemployment Benefits……………………………94 Schedules of Contribution Funding – Other Postemployement Benefits………………………94 Schedule of Revenues, Expenditures and Changes in Fund Balance – Budget and Actual – General Fund.................................................................................................... 95-100 Notes to Required Supplementary Information………………………………………….....101-102 TOWN OF NANTUCKET, MASSACHUSETTS COMPREHENSIVE ANNUAL FINANCIAL REPORT YEAR ENDED JUNE 30, 2016 TABLE OF CONTENTS Page(s) Combining Statements: Nonmajor Governmental Funds……………………………………………………………….......103-105 Combining Balance Sheet – Nonmajor Governmental Funds……………………....106-108 Combining Statement of Revenues, Expenditures, and Changes in Fund Balances – Nonmajor Governmental Funds ......................................................... 110-112 Internal Service Funds ........................................................................................................... 113 Combining Statement of Net Position – Internal Service Funds ..................................... 114 Combining Statement of Revenues, Expenses and Changes in Net Position – Internal Service Funds ............................................................................................. 115 Combining Statement of Cash Flows – Internal Service Funds ....................................... 116 Fiduciary Funds ...................................................................................................................... 118 Statement of Changes in Assets and Liabilities – Agency Fund ..................................... 119 STATISTICAL SECTION Narrative ..................................................................................................................................... 121 Net Position by Component – Last Ten Fiscal Years ...................................................................... 122 Changes in Net Position – Last Ten Fiscal Years ....................................................................... 123-124 Fund Balances, Governmental Funds – Last Ten Fiscal Years ....................................................... 125 Changes in Fund Balances, Governmental Funds – Last Ten Fiscal Years .................................... 126 Assessed Value and Estimated Actual Value of Taxable Property By Classification and Tax Rates – Last Ten Fiscal Years ............................................................................ 127 Principal Taxpayers – Current Year and Nine Years Ago .............................................................. 128 Property Tax Levies and Collections – Last Ten Fiscal Years ........................................................ 129 Ratios of Outstanding Debt and General Obligation Debt – Last Ten Fiscal Years ....................... 130 Computation of Legal Debt Margin – Last Ten Fiscal Years ......................................................... 131 Direct and Overlapping Governmental Activities Debt .................................................................. 132 Demographic and Economic Statistics – Last Ten Fiscal Years ..................................................... 133 Principal Employers (Excluding Town) – Current Year and Nine Years Ago ............................... 134 Full-time Equivalent Town Employees by Functions – Last Ten Fiscal Years .............................. 135 Operating Indicators by Function/Program – Last Ten Fiscal Years .............................................. 136 Capital Asset Statistics by Function/Program – Last Ten Fiscal Years .......................................... 137 This page intentionally left blank. INTRODUCTORY SECTION Hy-Line cruises, one of the primary steamship providers to the island, recently launched a new high- speed catamaran. The new vessel which holds 493 passengers and cost $14 million to construct began service shortly after labor-day and intends to make future boat travel back and forth to the island more efficient. Town and County of Nantucket Board of Selectmen County Commissioners James Kelly, Chairman Dawn E. Hill Holdgate, Vice Chairman Rick Atherton Matthew Fee Robert DeCosta 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 October 4, 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 third 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, 2016. This transmission is the continuation of what is becoming 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 137 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, 2016 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 Title 2 US “Code of Federal Regulations” (CFR) Part 200, “Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards”. 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 is adjacent to the islets of Tuckernuck and Muskeget. It is situated in the Atlantic Ocean and lies approximately 25 miles south of Cape Cod. It is bound by Nantucket Sound on the north and west, and by the Atlantic Ocean on the south and east. The Town has a total area of 304 square miles of which 45 square miles is land and 259 square miles is water. The island comprises the County of Nantucket, the smallest county in Massachusetts by land area. Town of Nantucket, Massachusetts Page 2 of 137 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 year 2015, the Steamship Authority transported about 645,000 passengers, 66,000 passenger vehicles and 48,000 com- mercial vehicles to Nantucket Island. These all increased from 2014 by 3 – 6%. The island is also served by Hy-line Cruises (the Hy-line), which operates one high speed ferry year-round and until recently, a larger, traditional ferry during peak seasons. Hy- line had about 525,000 embarkations in calendar year 2015; up 7.5% from 2014, and is very popular with professional daily commuters and contractors due to the speed of the transport and frequency of travel. In September 2016, the Hy-Line launched a new high- speed 1 hour catamaran with capacity for almost 500 pas- sengers and discontinued the traditional two-hour ferry ser- vice. Town of Nantucket, Massachusetts Page 3 of 137 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 5 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 2015 with over 155,000 en- planements it was the second busiest airport in the Commonwealth trailing only Logan International Air- port in Boston. Town of Nantucket, Massachusetts Page 4 of 137 Comprehensive Annual Financial Report The Town provides 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 and a town-owned pier. In addition, Nantucket also owns and operates Our Island Home, a nursing facility that provides long-term skilled nursing, short-term rehabilitation, palliative care and respite care for elderly island residents. It is a 45-bed smoke-free facility dually licensed in Medicaid and Medicare. Nantucket prides itself on the quality of its school system. There are currently 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) In February 2016, the Town broke ground on a new facility (the Nantucket Intermediate School). The intention of this facility is to service children in the 3rd to 5th grades with a realignment of the above cate- gories effective with the fiscal 2018 school year. The Intermediate School is part of a planned $50 mil- lion improvement to the entire District which also includes the addition of classrooms to certain of the existing schools. It will enroll approximately 400 students and alleviate the space challenges of a growing student population. The following is an artist rendition of the new facility: Town of Nantucket, Massachusetts Page 5 of 137 Comprehensive Annual Financial Report The Nantucket Public Schools are set up campus style and are all within walking distance of each other. The new facility will be located adjacent to the existing elementary school which will be converted to pre- k through 2. The Intermediate School is in the shaded area on the right hand side of the sketch below. 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 2016 is 1,570 (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. 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. Town of Nantucket, Massachusetts Page 6 of 137 Comprehensive Annual Financial Report Factors Affecting Economic Condition Property Taxes The growth of the Town’s main source of revenues, property taxes, is capped by Proposition 2 ½ and can only be overridden through a vote of Town Meeting and a ballot vote by the voters. While revenue in- creases 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 ge- ographical 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 89% 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 building activity and new growth over the prior 5 calendar years: Table 1 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 as a result of the strong unused levy capaci- ty, the taxpayers benefitted from a 3% to 5% savings in each of the last 5 fiscal years. This is summarized in Table 2 below: Table 2 Calendar # of Residential Non-Residential Total Year Building Permits Value Value Value 2015 966 206,697,965$ 21,942,351$ 228,640,316$ 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 Total 6,098 816,215,185$ 83,121,946$ 899,337,131$ Fiscal Levy Unused Year Limit Levy Levy Capacity Tax savings 2016 72,429,696$ 69,636,374$ 2,793,322$ 3.86% 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% Town of Nantucket, Massachusetts Page 7 of 137 Comprehensive Annual Financial Report Industry Tourism represents a significant portion of the Town’s private employment on the Island, and thus is an important 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 re- ceived $3.4 million, $3.0 million, $2.6 million and $2.3 million in fiscal 2016, 2015, 2014 and 2013 respectively from this source. In addition, robust construction over the past 7 years which is expected to continue for at least the next 5 years has also had a dramatic impact on these local revenues as work- ers are often on the island for weeks at a time and stay at guest houses and other available lodging. Throughout the year, the Island hosts numerous events. This has in effect lengthened the tourist sea- son and had a positive impact on the local economy. A number of these are annual events summarized in the table to the right: Wine Festival 2016 Holiday Stroll 2016 Independence Day Fireworks Event Month Daffodil Festival April Wine Festival May Book Festival June Dance Festival June Film Festival June Independence Day Fireworks July Independence Day Downtown Celebration July Comedy Festival July Race Week August Boston Pops August Cranberry Arts Fesitval October Holiday Stroll Weekend December Town of Nantucket, Massachusetts Page 8 of 137 Comprehensive Annual Financial Report Economic Development Harbor Place - The Town’s downtown center remains a vibrant hub for small retail establishments, hos- pitality/resorts and restaurants. The Nantucket Island Chamber of Commerce, founded in 1937 and in- corporated in 1954, has a diverse membership comprised of more than 650 businesses. The Town, includ- ing the Nantucket Planning and Economic Development Commission and Visitor Services department, has an on-going relationship with the Chamber in- volving the Town's economic issues. In 2008 at the an- nual town meeting, the town approved a study of an area called Harbor Place; previously referred to as the Wilkes Square Re- development site, which includes National Grid, ReMain Nantucket, Winthrop ManagementLLP and Nantucket Island Resorts. To that end, the Board of Select- men established a Downtown Revi- talization Commit- tee 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 importance 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. Town of Nantucket, Massachusetts Page 9 of 137 Comprehensive Annual Financial Report Incorporate attractive space for civic gatherings. The study area is approximately a 5.65-acre area bounded by Main Street, Commercial Street, Washington Street, and New Whale Street. The site is currently owned by multiple land owners. The site’s close proximity to downtown and its wa- terfront 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 seasonal 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 development, retail, dining and social venues. Recently, the land owners, who consist of National Grid, Winthrop Management LLP, ReMain Nantucket and Nantucket Island Resorts collaborated to roll out a conceptual framework for the plan that includes 3 phases; (1) a transportation center, (2) relocation of the grocery store, and (3) a facelift of the area closest to the waterfront with a mixed use component in the center of the new layout. The current roadways would be realigned after the relocation/reconfiguration of the existing parking lot. Key to the plan is the removal of the fuel tank farm behind Stop and Shop. In 2016, the Town executed a purchase and sale agreement with Harbor Fund Corporation to relocate the fuel tank farm to an area out- side the downtown. It is estimated that completion of the relocation will take several years but the first major step is now underway with the purchase and sale agreement. Another major step is the transporta- tion center which is intended to include a bus station, a multi-story paid parking garage and pedestrian services. This is expected to accommodate the increase in activity of fast-boat traffic and make space available for parking with the ultimate goal to attract year-round activity to the down-town area and thus boosting the future, local economy even further. As part of the preliminary plan, the Town would ulti- mately own the transportation facility as part of a 99 year lease. Nantucket Cottage Hospital (NCH) – One of the largest construction projects currently underway on the island is the new Nantucket Cottage Hospital. NCH is the only medical facility on the island providing primary, urgent, emergency and surgical care, as well as outpatient services and appointments with medi- cal and surgical specialists. In recent years, the community has outgrown the 104 year old facility as studies have shown it is in need of costly major maintenance and repairs; and despite its affiliation with Massachusetts General Hospital MGH, arguably one of the finest facilities in the world, it is in danger of losing its accreditation with the Massachu- setts Department of Public Health. In order to address this dire need, NCH has undergone a fund-raising campaign; and as of September 1, 2016 had raised $85 million of a planned $89 million total cost. $20 million will be donated by MGH, with the remainder from private benefactors; a number of them residents and property owners on the island. No taxpayer dollars have been so- licited as part of this project. The new building will be roughly 106,000 square feet and will be designed to maximize privacy, safety, and effi- ciency in the way modern health care is delivered. The plan also calls for improvements to the entire grounds. Town of Nantucket, Massachusetts Page 10 of 137 Comprehensive Annual Financial Report Old South Road Properties Richmond Great Point Development LLC (RGPD) has recently begun con- struction of a planned mixed market rate/affordable rate 3 phase complex along Old South Road near Nantucket Memorial Airport. The goal of RGPD is to make the best and most appropriate use of the company’s land portfolio through the develop- ment of a thoughtful mixed-use plan; and thus providing a solution to the critical lack of di- verse housing stock on the island. Phase 1 is currently approved and under con- struction on a 1.6 acre lot and consists of rental apartments that include 28 market rate apart- ment units. These are studio, one and two bed- room options. Phase 2 is in the proposal stage; and if ap- proved, will sit on 14.5 acres that include 225 apartment units that include both market and affordable rate units. These are also studio, one and two-bedroom. Phase 3 is also in the proposal stage and if approved will consist of 100 single family homes for 2, 3 and 4 bedroom homes which are both mixed and affordable rate housing. 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 unused levy capacity as previously discussed, the challenge of conservatively forecasting revenue is diminished and as a result, the Town has been able to maintain and/or increase reserves from year to year. The Town’s unassigned fund balance trend since 2010 is illustrated below: 0.0 2.0 4.0 6.0 8.0 10.0 12.0 14.0 16.0 18.0 20.0 2010 2011 2012 2013 2014 2015 2016 Unassigned Fund Balances (Millions) Town of Nantucket, Massachusetts Page 11 of 137 Comprehensive Annual Financial Report Long-term Financial Planning The Town prepares rolling five-year operating budget projections. The Town believes this will (1) pro- vide 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 financ- ing for its capital needs can be provided or if a need for borrowing to finance projects is required. The following represents the Town’s five-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 several years the Town has invested approximately $250 million in improving facilities and adding much needed infrastructure. The following were key capital initiatives: Improvement to Nantucket Memorial Airport, much of which was funded from Federal grants, over $70 million. (approximately $11 million in 2016) A new Public Safety (Police) building approximately $15.5 million. Improvements to municipal water infrastructure: almost $25 million. Improvements to Siasconset water infrastructure: almost $9 million. Improvements to municipal sewer infrastructure: over $70 million, some of this funded through the State subsidized, low interest loan program. Improvements to Schools: almost $22 million. (Approximately $16 million in 2016 as part of a planned $50 million new school) Improvements to roads, sidewalks, curbs and catch basins: almost $10 million of which almost half was funded through the State Chapter 90 Road Funding Program. In addition, the Town has prepared a capital improvement plan that includes the purchase and/or con- struction of over $300 million over the next ten years. These include major improvements to schools ($50 million), wastewater ($200 million), public safety ($17 million), Our Island Home nursing facili- ty ($40 million) and new administrative offices ($30 million). 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 Fiscal Real and Personal Motor Vehicle Rooms and Year Property Taxes Excise Meals Excise Permits State Aid Miscellaneous Total 2017 75,426,127 2,574,900 4,033,700 1,577,600 3,180,702 2,620,490 89,413,519 2018 77,261,968 2,317,400 3,803,600 1,556,600 3,180,702 2,582,765 90,703,035 2019 84,392,344 2,201,500 3,613,400 1,401,000 3,180,702 2,590,433 97,379,379 2020 90,356,213 2,113,400 3,441,100 1,242,500 3,180,702 2,593,961 102,927,876 2021 95,596,283 2,050,000 3,288,900 1,180,400 3,180,702 2,597,758 107,894,043 Town of Nantucket, Massachusetts Page 12 of 137 Comprehensive Annual Financial Report 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, 2015. This was the second 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 13 of 137 Comprehensive Annual Financial Report Certificate of Presented to Town of Nantucket For its Comprehensive Annual June 30, 2015 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 14 of 137 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 15 of 137 Comprehensive Annual Financial Report PRINCIPAL TOWN OFFICIALS As of June 30, 2016 Elected Officials Board of Selectmen James Kelly, Chairman Dawn E. Hill Holdgate, Vice Chairman Rick Atherton Robert DeCosta Matthew Fee Town Moderator Town Clerk Sarah Alger, Esquire Catherine Flanagan Stover School Committee Jennifer Iller, Chairman Dr. Timothy Lepore, Vice Chairman Melissa Murphy, Secretary Pauline Proch Zona Butler Appointed Financial Committees Audit Committee James Kelly, Chairman Rick Atherton David D. Worth Finance Committee David D. Worth, Chairman Stephen Maury, Vice Chairman Clifford J. Williams Peter A. McEachern Henry Sanford Joseph T. Grause, Jr. John E. 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 16 of 137 Comprehensive Annual Financial Report FINANCIAL SECTION The Nantucket Whaling Museum, a reminder of the great whaling era of Nantucket, received status as an accredited museum by the American Association of Museums in 2008. The facility, which was a candle factory converted to museum in 1929, houses a 46 foot skeleton (see below) of a sperm whale that washed ashore in Nantucket in 1998. 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, 2016 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 the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. Town of Nantucket, Massachusetts Page 17 of 137 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, 2016, 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. 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 discretely presented component unit, the Town’s governmental activities, business- type activities and the Wannacomet Water, 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. 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 Town of Nantucket, Massachusetts Page 18 of 137 Comprehensive Annual Financial Report Town of Nantucket Page Three 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 October 4, 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 October 4, 2016 Town of Nantucket, Massachusetts Page 19 of 137 Comprehensive Annual Financial Report Roselli, Clark and Associates This page intentionally left blank. Town of Nantucket, Massachusetts Page 20 of 137 Comprehensive Annual Financial Report Management’s Discussion and Analysis Town of Nantucket, Massachusetts Page 21 of 137 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, 2016. Financial Highlights During the year ended June 30, 2016 the Town was required to restate its capital assets in the governmental and business-type activities. These adjustments resulted in a reduction of approximately $2.4 million in the governmental activities and an increase of $3.1 million in the business-type activities. This was necessary to properly report capital assets for the prior year that resulted from conducting a comprehensive inventory of capital assets during fiscal 2016. All changes in net position discussions have removed the impact that these adjustments from the analysis. 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 $295.9 million (total net position). The government’s total net position increased by approximately $11.3 million (4.0% of total net position) over the prior year. This consisted of increases in both governmental activities’ net position by approximately $5.1 million (3.0% of total governmental activities’ net position) and in business - type activities’ net position of approximately $6.2 million (4.9% of business-type activities’ net position). Detail of these changes is provided in the Government-wide financial analysis section of the Management Discussion and Analysis. The Town’s unassigned fund balance reported in the General Fund was approximately $17.5 million (23.2% of General Fund expenditures). Total fund balance in the General Fund was approximately $23.2 million (30.7% of General Fund expenditures). The Town reported a deficit of $4.6 million in its Town Capital Projects Fund and reported total fund balances of approximately $32.7 million in the Combined Nonmajor Governmental Funds. Detail of these changes is provided under the Governmental Funds section of the Management Discussion and Analysis. The Town’s total debt decreased by almost $9.3 million during the fiscal year. Detail of this net decrease is provided under the capital and debt administration section of the Management Discussion and Analysis. The Town’s bond rating was increased to Aa1 from Aa2 during fiscal 2015 and was affirmed during fiscal 2016. The rating was provided by Moody’s Investor Services. Town of Nantucket, Massachusetts Page 22 of 137 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 are comprised of 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 23 of 137 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 24 of 137 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 enterprise funds 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 25 of 137 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 $295.9 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 $307.4 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 $27.1 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 $38.6 million. This consisted of Governmental activities unrestricted net position which is in a deficit position of approximately $44.9 million. This is due to the recognition of other postemployment benefits (net OPEB obligation) of approximately $35.9 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, has resulted in the recognition of approximately $41.6 million in net pension liability. In similar fashion, the Business- type activities included a net OPEB obligation of almost $8.0 million and a net pension liability of approximately $18.3 million. Governmental Activities Business-Type Activities Total June 30, June 30, June 30, June 30, June 30, June 30, 2016 2015 2016 2015 2016 2015 Assets Currrent and other assets 80,457,455$ 63,066,853$ 44,340,535$ 34,298,867$ 124,797,990$ 97,365,720$ Capital assets, net 251,855,905 235,134,667 210,049,039 204,988,922 461,904,944 440,123,589 Total assets 332,313,360 298,201,520 254,389,574 239,287,789 586,702,934 537,489,309 Deferred outflows of resources 3,375,671 63,804 1,487,713 28,121 4,863,384 91,925 Liabilities Long-term liabilities 125,678,452 121,193,351 114,690,043 115,532,242 240,368,495 236,725,593 Other liabilities 41,112,150 10,846,837 14,166,065 6,063,814 55,278,215 16,910,651 Total liabilities 166,790,602 132,040,188 128,856,108 121,596,056 295,646,710 253,636,244 Deferred inflows of resources - - - - - - Net Position Net investment in capital assets 186,717,700 181,710,594 120,659,914 119,242,898 307,377,614 300,953,492 Restricted 27,131,162 20,995,512 - - 27,131,162 20,995,512 Unrestricted (44,950,433) (36,480,970) 6,361,265 (1,523,044) (38,589,168) (38,004,014) Total Net Position 168,898,429$ 166,225,136$ 127,021,179$ 117,719,854$ 295,919,608$ 283,944,990$ Town of Nantucket, Massachusetts Page 26 of 137 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, 2016 2015 2016 2015 2016 2015 Revenues Program revenues: Charges for services 7,159,934$ 6,322,542$ 39,612,392$ 33,738,945$ 46,772,326$ 40,061,487$ Operating grants and contributions 9,241,317 6,761,994 133,570 90,820 9,374,887 6,852,814 Capital grants and contributions 1,881,938 1,886,943 3,175,470 6,078,185 5,057,408 7,965,128 General revenues: Property taxes 68,978,062 65,895,498 - - 68,978,062 65,895,498 Hotel and meals excise 4,486,662 4,026,389 - - 4,486,662 4,026,389 Intergovernmental 179,523 186,666 - - 179,523 186,666 Other 5,792,302 8,012,789 62,084 862,147 5,854,386 8,874,936 Total Revenues 97,719,738 93,092,821 42,983,516 40,770,097 140,703,254 133,862,918 Expenses General government 13,375,694 11,574,757 - - 13,375,694 11,574,757 Public safety 17,211,310 15,484,735 - - 17,211,310 15,484,735 Education 40,296,659 38,839,302 - - 40,296,659 38,839,302 Public works 5,404,039 5,131,842 - - 5,404,039 5,131,842 Health and human services 1,544,941 1,528,171 - - 1,544,941 1,528,171 Culture and recreation 4,646,084 5,397,098 - - 4,646,084 5,397,098 Debt service 1,478,749 1,616,600 - - 1,478,749 1,616,600 Siasconset water - - 811,237 738,719 811,237 738,719 Wannacomet water - - 4,088,800 3,544,191 4,088,800 3,544,191 Sewer - - 6,338,700 6,255,624 6,338,700 6,255,624 Nantucket Memorial Airport - - 14,287,119 15,096,177 14,287,119 15,096,177 Our Island Home - - 8,358,350 7,945,959 8,358,350 7,945,959 Solid Waste - - 11,587,152 10,324,817 11,587,152 10,324,817 Total Expenses 83,957,476 79,572,505 45,471,358 43,905,487 129,428,834 123,477,992 Change in net position before transfers 13,762,262 13,520,316 (2,487,842) (3,135,390) 11,274,420 10,384,926 Transfers (8,659,384) (7,881,295) 8,659,384 7,881,295 - - Change in net position 5,102,878 5,639,021 6,171,542 4,745,905 11,274,420 10,384,926 Net position, beginning of year 166,225,136 197,700,380 117,719,854 128,455,466 283,944,990 326,155,846 Restatement for net pension liability - (36,982,558) - (16,298,817) - (53,281,375) Restatement for capital assets (2,429,585) - 3,129,783 685,593 700,198 685,593 Restatement for 'look-back'- (131,707) - 131,707 - - Net position, beginning of year, as restated 163,795,551 160,586,115 120,849,637 112,973,949 284,645,188 273,560,064 Net position, end of year 168,898,429$ 166,225,136$ 127,021,179$ 117,719,854$ 295,919,608$ 283,944,990$ Town of Nantucket, Massachusetts Page 27 of 137 Comprehensive Annual Financial Report Governmental Activities – The governmental activities experienced a net increase in net position by approximately $ 5.1 million (3.0 % of governmental activities’ net position) as compared to an approximate $5.6 million increase in the prior year. This consistency was due to revenues increasing at the same pace as expenses. Revenues Total revenue increases were $4.6 million. Specifically, property taxes, which made up 70.6% of total revenues increased by approximately $3.1 million; this was in line with the amount budgeted by the Town during its rate setting process and was within the permissible amount allowable by statute that limits the increase in taxes to 2.5% of the prior year plus any new growth. The Town still manages to maintain a healthy levy capacity despite the increase. Operating grants increased by $2.5 million; this was primarily due to an increase in Chapter 70 aid ($0.8 million) from the Commonwealth of Massachusetts which is directly related to the increase in school enrollment. In addition the Town has a special funding situation with respect to teacher pensions and distributions from the Commonwealth; these increased $1.3 million due a new actuarial study conducted by the Commonwealth. This will have the same impact to expenses. The Town’s Other Revenue category consists of local receipts such as motor vehicle excise, departmental receipts and other revenues not specifically classified. This decreased by approximately $2.3 million due to the prior year including a gain on sale of land of $2.4 million which did not exist in the current year. The remaining increase is due to hotel and meals excise increasing by approximately $0.5 million due to the continued expanding economy and other net minor increases and decreases. Expenses Total expense increases were approximately $4.4 million. Specifically, general government which represented 15.9% of total expenses increased by $1.8 million; this was due primarily to general fund articles that included public building expenses, legal services, and numerous small non-capitalized capital items. These are non-recurring costs. In addition, health and pension assessments which are allocated across all functional items increased over $3 million and impacted general government and public safety the most as these are high payroll categories. Public Safety which made up 20.5% of total 70.59% 9.46% 1.93% 7.33% 5.93%4.59%0.18% Revenues Property taxes Operating grants and contributions Capital grants and contributions Charges for services Other Hotel and meals excise Intergovernmental (unrestricted) 16% 20% 48% 6% 2%6% 2% Expenses General government Public safety Education Public works Health and human services Culture and recreation Interest expense Town of Nantucket, Massachusetts Page 28 of 137 Comprehensive Annual Financial Report expenses increased by $1.5 million primarily due to collectively bargained wage increases in the Police Department and health and pension costs as previously discussed. Education which is the Town’s largest expense and represents 48.0% of total expenses increased by approximately $1.4 million; this was primarily due to the special funding situation discussed under revenues as this is the expense side impact, which was $1.3 million greater than last year. The remainder of the expense net increase and decreases were minor after factoring in all allocations. Fiscal Year 2016 Expenses and Program Revenues – governmental activities are graphically presented as follows: Net position of the business-type activities increased by approximately $6.0 million from the prior year balances. Change in net position for each business-type fund is broken down individually as follows: In its Business-type activities, the Town does not budget for depreciation and OPEB charges which are components of the “change in net position” but does budget for principal payback of debt which is a component of the “change in net position”. With respect to Siasconset, Wannacomet and Sewer principal payback of debt is larger than depreciation and OPEB, $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 $50,000,000 Functional expenses Program Revenues Siasconset Water District 274,437$ Wannacomet Water District 1,790,198 Sewer 991,287 Nantucket Memorial Airport 975,811 Our Island Home 4,276,698 Solid Waste (2,281,014) Total Change 6,027,417$ Town of Nantucket, Massachusetts Page 29 of 137 Comprehensive Annual Financial Report therefore positive results are expected; also seasonal weather patterns contributed to increased usage and positive operations. Airport depreciation and OPEB in aggregate are much greater (about $1.5 million) than principal payback of debt; however, the Airport was the recipient of an intergovernmental grant of $2.5 million which netted to the positive results disclosed in the table. The positive results for Our Island Home were a direct result of the collection of claims from the Commonwealth that were in arrears one year. The total received, $5.2 million was about double what was expected and contributed to positive operations. The increase in landfill liability of $1.3 million, and OPEB costs of $0.9 million were primarily responsible for the loss of $2.3 million in Landfill operations. This is consistent with prior years as the Landfill is budgeted to breakeven after factoring in the General Fund subsidy. 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 $32.7 million, a decrease of approximately $13.5 million over the prior year. General Fund transfers to the Capital Project’s Fund and direct expenditures to cover one time capital expenditures in aggregate were nearly $11 million. After factoring these amounts out, the General Fund activities resulted in positive operations of almost $8 million. Better than expected revenues across the board contributed to these positive results; as the Town is undergoing a period of robust construction, economic expansion and tourism. The timing of capital costs verses bond proceeds was primarily responsible for a decrease in capital projects of over $3.6 million. Transfers to the Capital Projects Fund of almost $8 million led to the decrease of $6.6 million in the Combined Nonmajor Funds. Unassigned fund balance in the general fund was approximately $17.3 million or 23.2% of general fund expenditures. This is available for spending at the government’s discretion. Assigned fund balance of $3.0 million; committed fund balance of approximately $2.3 million and restricted fund balance of $0.4 million bring total general fund balance to $23.0 million or 30.7% of general fund expenditures. Capital Projects include $13.2 million as restricted for Capital Projects and a $17.7 million deficit due to construction funded from short-term notes for a total fund deficit of over $4.5 million. Town of Nantucket, Massachusetts Page 30 of 137 Comprehensive Annual Financial Report 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 $13.9 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 $2.4 million. This represents an increase of over $1.5 million over the prior year. Reinsurance proceeds of approximately $0.4 million and positive claims experience were primarily responsible for these positive operating results. 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 $4.9 million. The Private Purpose Trust Funds make up almost $3.5 million; These assets are used strictly for purposes outside of the public domain such as scholarships and public assistance and increased by about $1.2 million due to the receipt of a gift from a benefactor. 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. The Town anticipates the use of an annual dedicated budget source to fund a portion of the ARC. General Fund Budgetary Highlights Differences between the original budget and the final amended budget were for the most part not significant (less than 1%) except increased transfers to other funds in the amount of $6.0 million for capital purposes. 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, 2016 amounts to approximately $461.9 million (net of accumulated depreciation) an increase from the previous year’s balance of approximately $21.8 million. 5 7 9 11 13 15 Revenues Expenses Health Claims Fund Town of Nantucket, Massachusetts Page 31 of 137 Comprehensive Annual Financial Report The total budget ended the year with a favorable variance of $6.6 million. Most was a result of revenues exceeding forecast by almost $4.1 million. This was due to (1) the Town continuing its philosophy of conservatively forecasting revenue, (2) the results of the continuation in the expanding economy felt mostly in motor vehicle excise and room occupancy, and (3) a one-time revenue for disaster aid. Expenditure variances contributed over $2.5 to this positive result and were mainly spread over many expenditure categories and due to effective cost controls put in place mid-way through the year. 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 $123.3 million. Over $45.9 million is related to the Town’s Governmental activities and over $77.3 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, 2016 the bond anticipation note payable balances approximated $41.4 million. The Town’s total debt decreased by approximately $9.3 million during the fiscal year due to following: Additional information on the Town’s short-term and long-term debt can be found in Note II under subsections F and G. Regular scheduled maturities: Governmental Activities (5,511,741)$ Business-Type Activities (5,620,956) Issuance of refunding bonds: Governmental Activities 3,935,000 Business-Type Activities - Payments to Escrow Agent: Governmental Activities (3,995,000) Business-Type Activities - Issuance of debt: Governmental Activities 1,188,709 Bond premium 123,130 Business-Type Activities 776,000 Amortization of bond premium: Governmental Activities (22,332) Business-Type Activities (120,018) (9,247,208)$ Town of Nantucket, Massachusetts Page 32 of 137 Comprehensive Annual Financial Report Economic Factors and Next Year’s Budgets and Rates Consistent with both State and National work force trends, the Town’s unemployment rates have trended near historically low levels in recent years. The Town’s employment is seasonal however and subject to fluctuations during any given year. Anticipated economic expansion on the Island will smooth this over the next several years. 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 and 2015 the Town exceeded $1 billion in property sales for only the third time in Island History. All of the above items were considered when the Town developed its budget for fiscal year 2017. The budget was adopted in April 2016 and the Town is expected to set its tax rate in December 2016. Requests for Information This financial report is designed to provide a general overview of the Town’s finances for all those with an interest in the government’s finances. Questions concerning any of the information provided in this report or request for additional financial information should be addressed to the Office of the Director of Finance, 37 Washington Street, Nantucket, Massachusetts 02554. Complete stand-alone financial statements for Nantucket County may be obtained from the Office of the Director of Finance 37 Washington Street, Nantucket, Massachusetts 02554. Complete stand-alone financial statements for Nantucket Islands Land Bank may be obtained by contacting Nantucket Islands Land Bank, 22 Broad Street, Nantucket, Massachusetts 02554. Complete stand-alone financial statements for Nantucket Memorial Airport may be obtained from the Office of the Director of Finance 37 Washington Street, Nantucket, Massachusetts 02554. Town of Nantucket, Massachusetts Page 33 of 137 Comprehensive Annual Financial Report This page intentionally left blank. Town of Nantucket, Massachusetts Page 34 of 137 Comprehensive Annual Financial Report Basic Financial Statements Town of Nantucket, Massachusetts Page 35 of 137 Comprehensive Annual Financial Report Nantucket Governmental Business-Type Nantucket Islands Activities Activities Total County Land Bank Assets Cash and cash equivalents 68,404,483$ 38,515,404$ 106,919,887$ 4,096,456$ 4,485,159$ Investments 4,200,701 - 4,200,701 - 4,752,966 Investments, designated - - - - 2,492,036 Receivables, net: Property taxes 2,272,542 - 2,272,542 - - User fees - 2,993,027 2,993,027 - - Departmental and other 4,149,217 425,653 4,574,870 - 175,340 Intergovernmental 647,545 1,542,881 2,190,426 55,927 - Inventory - 463,337 463,337 - 321,112 Prepaid items 1,183,200 - 1,183,200 - - Other assets - - - - 103,984 Internal balances (400,233) 400,233 - - - Restricted cash and cash equivalents - - - - 1,805,328 Restricted investments - - - - 2,901,631 Cash surrender value of life insurance - - - - 874,063 Land conservation rights - - - - 30,000 Capital assets not being depreciated 197,066,287 36,931,944 233,998,231 3,283,842 297,237,702 Capital assets, net of depreciation 54,789,618 173,117,095 227,906,713 10,598 17,444,343 Total Assets 332,313,360 254,389,574 586,702,934 7,446,823 332,623,664 Deferred Outflows of Resources 3,375,671 1,487,713 4,863,384 79,669 113,998 Liabilities Warrants and accounts payable 5,986,552 1,352,226 7,338,778 9,246 154,019 Accrued payroll and withholdings 2,468,347 302,904 2,771,251 9,198 - Retainage payable 746,563 - 746,563 - - Accrued expenses - - - - 805,031 Health claims incurred but not reported 898,614 - 898,614 - - Accrued interest 503,325 885,320 1,388,645 - - Other liabilities 294,548 418,627 713,175 - - Bond anticipation notes payable 30,214,201 11,206,988 41,421,189 - - Noncurrent liabilities: Due within one year 6,916,235 6,213,898 13,130,133 - 6,602,561 Due in more than one year 118,762,217 108,476,145 227,238,362 694,036 21,770,607 Total Liabilities 166,790,602 128,856,108 295,646,710 712,480 29,332,218 Deferred Inflows of Resources - - - 49,995 165,148 Net Position Net investment in capital assets 186,717,700 120,659,914 307,377,614 3,294,440 287,736,445 Restricted: Nonexpendable permanent funds 44,805 - 44,805 - - Federal and State grants 1,422,683 - 1,422,683 - - Community preservation 4,497,164 - 4,497,164 - - Capital outlay 14,788,806 - 14,788,806 - - Public safety revolving funds 3,447,210 - 3,447,210 - - Gift funds 658,092 - 658,092 - - Other purposes 2,272,402 - 2,272,402 3,063,665 4,706,959 Unrestricted (44,950,433) 6,361,265 (38,589,168) 405,912 10,796,892 Total Net Position 168,898,429$ 127,021,179$ 295,919,608$ 6,764,017$ 303,240,296$ TOWN OF NANTUCKET, MASSACHUSETTS STATEMENT OF NET POSITION JUNE 30, 2016 See accompanying notes to basic financial statements. Primary Government Component Units Town of Nantucket, Massachusetts Page 36 of 137 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 13,375,694$ 1,121,165$ 675,150$ 888,966$ (10,690,413)$ (10,690,413)$ Public safety 17,211,310 3,703,493 276,253 - (13,231,564) (13,231,564) Education 40,296,659 1,500,573 7,988,094 - (30,807,992) (30,807,992) Public works 5,404,039 278,408 8,000 412,461 (4,705,170) (4,705,170) Health and human services 1,544,941 227,273 22,528 - (1,295,140) (1,295,140) Culture and recreation 4,646,084 329,022 21,292 580,511 (3,715,259) (3,715,259) Interest expense 1,478,749 - 250,000 - (1,228,749) (1,228,749) Total governmental activities 83,957,476 7,159,934 9,241,317 1,881,938 (65,674,287) (65,674,287) Business-type activities: Siasconset water 811,237 1,087,411 - - 276,174$276,174 Wannacomet water 4,088,800 5,885,606 - - 1,796,806 1,796,806 Sewer 6,338,700 6,681,982 - 709,217 1,052,499 1,052,499 Nantucket Memorial Airport 14,287,119 12,667,077 133,570 2,466,254 979,782 979,782 Our Island Home 8,358,350 9,494,178 - - 1,135,828 1,135,828 Solid waste 11,587,152 3,796,137 - - (7,791,015) (7,791,015) Total business-type activities 45,471,358 39,612,391 133,570 3,175,471 (2,549,926) (2,549,926) Total Primary Government 129,428,834$ 46,772,325$ 9,374,887$ 5,057,409$ (65,674,287) (2,549,926) (68,224,213) Component units: Nantucket County 950,910$ 970,969$ 170,201$ -$ 190,260 - Nantucket Islands Land Bank 7,814,717 23,282,144 833,805 8,905 - 16,310,137 Total Component units 8,765,627$ 24,253,113$ 1,004,006$ 8,905$ 190,260 16,310,137 General Revenues: Property taxes 68,978,062 - 68,978,062 - - Motor vehicle and boat excise 2,801,463 - 2,801,463 - - Hotel and meals excise 4,486,662 - 4,486,662 - - Community Preservation Fund surcharges 1,944,202 - 1,944,202 - - Grants and contributions not restricted to specific programs 179,523 - 179,523 - - Penalties and interest on taxes 657,303 - 657,303 - - Unrestricted investment income 389,334 62,084 451,418 9,669 118,902 Gain on sale of capital assets - - - - 147,448 Transfers (net)(8,659,384) 8,659,384 - - - Total general revenues and transfers 70,777,165 8,721,468 79,498,633 9,669 266,350 Change in Net Position 5,102,878 6,171,542 11,274,420 199,929 16,576,487 Net Position: Beginning of year, as restated (see Note IV)163,795,551 120,849,637 284,645,188 6,564,088 286,663,809 End of year 168,898,429$ 127,021,179$ 295,919,608$ 6,764,017$ 303,240,296$ See accompanying notes to basic financial statements. TOWN OF NANTUCKET, MASSACHUSETTS STATEMENT OF ACTIVITIES YEAR ENDED JUNE 30, 2016 Component Units Town of Nantucket, Massachusetts Page 37 of 137 Comprehensive Annual Financial Report TOWN OF NANTUCKET, MASSACHUSETTS GOVERNMENTAL FUNDS BALANCE SHEET JUNE 30, 2016 Town Nonmajor Total General Capital Governmental Governmental Fund Projects Funds Funds Assets Cash and cash equivalents 18,738,728$ 29,880,150$ 15,035,822$ 63,654,700$ Investments 6,341,944 - 167,197 6,509,141 Receivables, net of allowance for uncollectibles: Property taxes 2,157,408 - 115,134 2,272,542 Departmental and other 3,748,910 - 203,069 3,951,979 Intergovernmental 53,834 - 593,711 647,545 Due from other funds 362,461 - - 362,461 Total Assets 31,403,285 29,880,150 16,114,933 77,398,368 Total Deferred Outflows of Resources - - - - Total Assets and Deferred Outflows of Resources 31,403,285$ 29,880,150$ 16,114,933$ 77,398,368$ Liabilities: Warrants and accounts payable 814,478$ 3,736,139$ 973,414$ 5,524,031$ Accrued payroll and withholdings 2,364,397 - 103,950 2,468,347 Retainage payable - 746,563 - 746,563 Other liabilities 148,105 - 146,443 294,548 Due to other funds - - 362,461 362,461 Bond anticipation notes payable - 29,948,650 265,551 30,214,201 Total Liabilities 3,326,980 34,431,352 1,851,819 39,610,151 Deferred Inflows of Resources Unavailable revenue - property taxes 1,601,151 - 115,134 1,716,285 Unavailable revenue - other 3,192,309 - 203,069 3,395,378 Total Deferred Inflows of Resources 4,793,460 - 318,203 5,111,663 Fund Balances: Nonspendable - - 44,805 44,805 Restricted 414,514 13,186,251 13,900,106 27,500,871 Committed 2,267,807 - - 2,267,807 Assigned 3,028,651 - - 3,028,651 Unassigned 17,571,873 (17,737,453) - (165,580) Total Fund Balances 23,282,845 (4,551,202) 13,944,911 32,676,554 Total Liabilities , Deferred Inflows of Resources and Fund Balances 31,403,285$ 29,880,150$ 16,114,933$ 77,398,368$ See accompanying notes to basic financial statements. Town of Nantucket, Massachusetts Page 38 of 137 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, 2016 Total Governmental Fund Balances 32,676,554$ Capital assets used in governmental activities are not financial resources and therefore are not reported in the funds.251,855,905 Other long-term assets are not available to pay for current period expenditures and, therefore, are reported as unavailable revenue in the funds 5,111,663 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 3,302,861 Changes in proportion and differences between Town contributions and the proportionate share of contributions 72,810 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.1,955,566 In the Statement of Activities, interest is accrued on outstanding long-term debt whereas in the governmental funds, interest is not reported until due.(503,325) 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 (45,945,549) Unamortized premiums on bonds (123,130) Compensated absences (1,988,910) Other postemployment benefits (35,895,090) Net pension liability (41,620,926) Net Position of Governmental Activities 168,898,429$ See accompanying notes to basic financial statements. Town of Nantucket, Massachusetts Page 39 of 137 Comprehensive Annual Financial Report TOWN OF NANTUCKET, MASSACHUSETTS GOVERNMENTAL FUNDS STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES FISCAL YEAR ENDED JUNE 30, 2016 Town Nonmajor Total General Capital Governmental Governmental Fund Projects Funds Funds Revenues: Property taxes 69,040,526$ -$ -$ 69,040,526$ Intergovernmental 7,649,227 45,161 3,200,053 10,894,441 Motor vehicle and other excises 2,711,039 - 36,237 2,747,276 Hotel and meals taxes 4,486,662 - - 4,486,662 Community preservation surcharges - - 1,930,955 1,930,955 Licenses and permits 1,712,506 - - 1,712,506 Penalties and interest on taxes 657,303 - - 657,303 Fines and forfeitures 269,441 - - 269,441 Investment income 333,824 - 41,396 375,220 Departmental and other revenue 2,126,335 - 3,092,599 5,218,934 Contributions and donations - - 408,337 408,337 Total Revenues 88,986,863 45,161 8,709,577 97,741,601 Expenditures: Current: General government 9,153,966 916,225 743,492 10,813,683 Public safety 9,583,854 1,067,745 1,284,863 11,936,462 Education 25,791,742 16,914,287 3,120,436 45,826,465 Public works 3,480,032 1,335,234 443,303 5,258,569 Health and human services 836,463 - 215,434 1,051,897 Culture and recreation 1,238,992 2,426 3,115,082 4,356,500 Pension and fringe benefits 18,393,297 - - 18,393,297 State and county assessments 591,536 - - 591,536 Debt service: Principal 5,199,948 - 311,793 5,511,741 Interest 1,547,110 - 3,419 1,550,529 Total Expenditures 75,816,940 20,235,917 9,237,822 105,290,679 Excess (Deficiency) of Revenues Over (Under) Expenditures 13,169,923 (20,190,756) (528,245) (7,549,078) Other Financing Sources (Uses): Issuance of bonds and notes - 1,188,709 - 1,188,709 Issuance of refunding bonds 3,935,000 - - 3,935,000 Premiums from refunding bonds 123,130 - - 123,130 Sale of capital assets - - 1,439,916 1,439,916 Payments to refunding escrow agent (3,995,000) - - (3,995,000) Transfers in 294,402 15,135,326 350,000 15,779,728 Transfers out (16,551,710) - (7,887,402) (24,439,112) Total Other Financing Sources (Uses)(16,194,178) 16,324,035 (6,097,486) (5,967,629) Net Change in Fund Balances (3,024,255) (3,866,721) (6,625,731) (13,516,707) Fund Balances - Beginning 26,307,100 (684,481) 20,570,642 46,193,261 Fund Balances - Ending 23,282,845$ (4,551,202)$ 13,944,911$ 32,676,554$ See acompanying notes to basic financial statements. Town of Nantucket, Massachusetts Page 40 of 137 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, 2016 Net Change in Fund Balances - Total Governmental Fund Balances (13,516,707)$ 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 26,098,115 Depreciation expense (4,287,625) Disposal of capital assets (2,659,667) Net effect of reporting capital assets 19,150,823 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.641,002 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 (1,188,709) Issuance of refunding bonds (3,935,000) Premiums from refunding bonds (123,130) Payments to refunding escrow agent 3,995,000 Repayments of debt 5,511,741 Net effect of reporting long-term debt 4,259,902 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.(35,977) 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 49,448 Amortization of premiums on bonds and notes payable 22,332 Compensated absences (98,667) Pension benefits (1,053,004) Other postemployment benefits (4,316,274) Net effect of reporting long-term liabilities (5,396,165) Change in Net Position of Governmental Activities 5,102,878$ See accompanying notes to basic financial statements. Town of Nantucket, Massachusetts Page 41 of 137 Comprehensive Annual Financial Report TOWN OF NANTUCKET, MASSACHUSETTS PROPRIETARY FUNDS STATEMENT OF NET POSITION JUNE 30, 2016 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 1,272,078$ 5,217,045$ 10,915,840$ 10,423,917$ 9,202,502$ 1,484,022$ 38,515,404$ 2,441,343$ Receivables (net): User charges 143,204 679,037 847,954 303,254 330,833 688,745 2,993,027 - Privilege fees - - 425,653 - - - 425,653 - Intergovernmental - - 176,386 - - - 176,386 - Inventory - 52,771 - 410,566 - - 463,337 - Reinsured claims receivable - - - - - - - 197,238 Prepaid items - - - - - - - 1,183,200 Total current assets 1,415,282 5,948,853 12,365,833 11,137,737 9,533,335 2,172,767 42,573,807 3,821,781 Noncurrent assets: Receivables (net): Intergovernmental - - 1,366,495 - - - 1,366,495 - Nondepreciable capital assets 2,615,578 6,889,315 14,996,474 9,205,635 573,536 2,651,406 36,931,944 - Capital assets (net of depreciation)9,553,164 32,321,034 68,189,167 56,885,825 989,308 5,178,597 173,117,095 - Total noncurrent assets 12,168,742 39,210,349 84,552,136 66,091,460 1,562,844 7,830,003 211,415,534 - Total Assets 13,584,024 45,159,202 96,917,969 77,229,197 11,096,179 10,002,770 253,989,341 3,821,781 Deferred Outflows of Resources Deferred pension 9,727 200,718 122,409 468,624 686,235 - 1,487,713 - Total Deferred Outflows of Resources 9,727 200,718 122,409 468,624 686,235 - 1,487,713 - Total Assets and Deferred Outflows of Resources 13,593,751$ 45,359,920$ 97,040,378$ 77,697,821$ 11,782,414$ 10,002,770$ 255,477,054$ 3,821,781$ Liabilities: Current liabilities: Warrants and accounts payable 23,606$ 177,385$ 163,467$ 396,052$ 127,823$ 463,893$ 1,352,226$ 462,521$ Accrued payroll and withholdings 1,044 35,835 34,530 121,387 109,510 598 302,904 - Health claims incurred but not reported - - - - - - - 898,614 Accrued interest 75,336 191,677 511,714 100,797 - 5,796 885,320 - Other liabilities - - - 418,627 - - 418,627 - Bond anticipation notes payable - 2,562,000 3,896,008 4,248,980 500,000 - 11,206,988 - Compensated absences - 137,907 52,695 295,900 155,767 - 642,269 - Workers' compensation claims incurred but not reported - - - - - - - 104,847 Bonds and notes payable 380,048 1,667,707 2,619,425 864,449 - 40,000 5,571,629 - Total current liabilities 480,034 4,772,511 7,277,839 6,446,192 893,100 510,287 20,379,963 1,465,982 Noncurrent liabilities: Compensated absences - 137,907 52,695 295,901 155,768 - 642,271 - Landfill closure - - - - - 8,903,000 8,903,000 - Other postemployment benefits 281,105 619,928 388,310 2,678,453 4,009,549 - 7,977,345 - Net pension liability 119,928 2,474,792 1,509,261 5,777,980 8,461,060 - 18,343,021 - Bonds and notes payable 5,735,576 16,797,106 39,757,253 9,945,573 - 375,000 72,610,508 - Total noncurrent liabilities 6,136,609 20,029,733 41,707,519 18,697,907 12,626,377 9,278,000 108,476,145 - Total Liabilities 6,616,643 24,802,244 48,985,358 25,144,099 13,519,477 9,788,287 128,856,108 1,465,982 Total Deferred Inflows of Resources - - - - - - - - Total Liabilities and Deferred Inflows of Resources 6,616,643 24,802,244 48,985,358 25,144,099 13,519,477 9,788,287 128,856,108 1,465,982 Net Position: Net investment in capital assets 6,053,118 18,183,536 36,912,955 51,032,458 1,062,844 7,415,003 120,659,914 - Unrestricted 923,990 2,374,140 11,142,065 1,521,264 (2,799,907) (7,200,520) 5,961,032 2,355,799 Total Net Position 6,977,108$ 20,557,676$ 48,055,020$ 52,553,722$ (1,737,063)$ 214,483$ 126,620,946 2,355,799$ 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 400,233 Net position of business-type activities (page 35)127,021,179$ See accompanying notes to basic financial statements. Business-Type Activities Town of Nantucket, Massachusetts Page 42 of 137 Comprehensive Annual Financial Report TOWN OF NANTUCKET, MASSACHUSETTS PROPRIETARY FUNDS STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN NET POSITION FISCAL YEAR ENDED JUNE 30, 2016 Governmental Activities Nantucket Our Internal Siasconset Wannacomet Memorial Island Solid Service Water Water Sewer Airport Home Waste Total Fund Operating Revenues: Charges for services 1,072,405$ 5,545,615$ 6,474,255$ 12,667,077$ 9,492,803$ 3,796,087$ 39,048,242$ -$ Employee contributions - - - - - - - 2,226,306 Employer contributions - - - - - - - 12,815,730 Other 15,006 339,991 207,727 - 1,375 50 564,149 349,942 Total Operating Revenues 1,087,411 5,885,606 6,681,982 12,667,077 9,494,178 3,796,137 39,612,391 15,391,978 Operating Expenses: Operating costs 260,032 2,588,773 2,947,329 11,164,653 8,334,321 11,320,547 36,615,655 - Depreciation 309,633 917,150 2,163,851 2,491,379 92,834 250,009 6,224,856 - Maintenance - - - 287,658 - - 287,658 - Employee benefits - - - - - - - 14,620,875 Total Operating Expenses 569,665 3,505,923 5,111,180 13,943,690 8,427,155 11,570,556 43,128,169 14,620,875 Total Operating Income (loss)517,746 2,379,683 1,570,802 (1,276,613) 1,067,023 (7,774,419) (3,515,778) 771,103 Nonoperating Revenues (Expenses): Intergovernmental - - - 133,570 - - 133,570 - Investment income 347 7,354 - 41,091 13,291 1 62,084 14,114 Interest expense (243,746) (596,839) (1,241,732) (388,491) - (16,596) (2,487,404) - Total Nonoperating Revenues (Expenses)(243,399) (589,485) (1,241,732) (213,830) 13,291 (16,595) (2,291,750) 14,114 Income (Loss) Before Capital Contributions and Transfers 274,347 1,790,198 329,070 (1,490,443) 1,080,314 (7,791,014) (5,807,528) 785,217 Capital Contributions Intergovernmental - - 228,349 2,466,254 - - 2,694,603 - Privilege fees - - 480,868 - - - 480,868 - - - 709,217 2,466,254 - - 3,175,471 - Transfers Transfers in - - - - 3,196,384 5,510,000 8,706,384 - Transfers out - - (47,000) - - - (47,000) - Transfers - - (47,000) - 3,196,384 5,510,000 8,659,384 - Change in Net Position 274,347 1,790,198 991,287 975,811 4,276,698 (2,281,014) 6,027,327 785,217 Net Position at Beginning of Year, as restated (See note IV)6,702,761 18,767,478 47,063,733 51,577,911 (6,013,761) 2,495,497 1,570,582 Net Position at End of Year 6,977,108$ 20,557,676$ 48,055,020$ 52,553,722$ (1,737,063)$ 214,483$ 2,355,799$ Adjustment for the net effect of the current year activity between the internal service funds and the enterprise funds 144,215 Changes in net position of business-type activities (page 36)6,171,542$ See accompanying notes to basic financial statements. Business-Type Activities Town of Nantucket, Massachusetts Page 43 of 137 Comprehensive Annual Financial Report TOWN OF NANTUCKET, MASSACHUSETTS STATEMENT OF CASH FLOWS PROPRIETARY FUNDS FISCAL YEAR ENDED JUNE 30, 2016 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 1,077,076$ 5,417,301$ 6,496,967$ 12,911,274$ 9,499,878$ 3,743,555$ 39,146,051$ -$ Employee contributions - - - - - - - 2,226,306 Employer contributions - - - - - - - 12,815,730 Receipts from other operating revenues 15,006 339,991 207,727 - 1,375 50 564,149 303,236 Payments to employees - (1,469,810) (1,193,167) (4,311,800) (3,613,921) (20,029) (10,608,727) - Payments to vendors (206,901) (758,245) (1,610,563) (7,090,230) (4,133,658) (10,410,950) (24,210,547) - Payments for interfund services used - - - - - - - (15,167,383) Net Cash Provided by (Used in) Operating Activities 885,181 3,529,237 3,900,964 1,509,244 1,753,674 (6,687,374) 4,890,926 177,889 Cash Flows from Noncapital Financing Activities: Operating grants - - - 133,570 - - 133,570 - Advances (to) from other funds - - - - - - - - Transfers in - - - - 3,196,384 5,510,000 8,706,384 - Transfers out - - (47,000) - - - (47,000) - Net Cash Provided by (Used in) Noncapital Financing Activities - - (47,000) 133,570 3,196,384 5,510,000 8,792,954 - Cash Flows from Capital and Related Financing Activities: Proceeds from the issuance of bonds and notes 490,000 1,561,000 - 144,000 - - 2,195,000 - Sewer privilege fees - - 503,583 - - - 503,583 - Proceeds from capital grants - - 410,719 2,869,581 - - 3,280,300 - Proceeds from sale of assets - 21,065 - - - - 21,065 - Acquisition and construction of capital assets - (1,562,149) (1,083,322) (5,105,272) (425,512) - (8,176,255) - Proceeds from bond anticipation notes - 2,562,000 3,896,008 4,248,980 500,000 - 11,206,988 - Repayments of bond anticipation notes (500,000) (800,000) (1,000,000) (1,717,912) - - (4,017,912) - Principal payments on bonds and notes (620,000) (1,598,000) (2,542,956) (820,000) - (40,000) (5,620,956) - Interest payments on bonds and notes (247,521) (649,187) (1,295,670) (406,899) - (17,031) (2,616,308) - Net Cash Provided by (Used in) Capital and Related Financing Activities (877,521) (465,271) (1,111,638) (787,522) 74,488 (57,031) (3,224,495) - Cash Flows from Investing Activities: Investment income 347 7,354 - 41,091 13,291 1 62,084 14,114 Investment of operating cash - - - - - - - 116,635 Net Cash Provided by Investing Activities 347 7,354 - 41,091 13,291 1 62,084 130,749 Net Change in Cash and Cash Equivalents 8,007 3,071,320 2,742,326 896,383 5,037,837 (1,234,404) 10,521,469 308,638 Cash and Cash Equivalents: Beginning 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 End of the year 1,272,078$ 5,217,045$ 10,915,840$ 10,423,917$ 9,202,502$ 1,484,022$ 38,515,404$ 2,441,343$ Reconciliation of Operating Income (Loss) to Net Cash Provided by (Used in) Operating Activities: Operating Income (Loss)517,746$ 2,379,683$ 1,570,802$ (1,276,613)$ 1,067,023$ (7,774,419)$ (3,515,778)$ 771,103$ Adjustments to reconcile operating income (loss) to net cash provided by (used in) operating activities: Depreciation 309,633 917,150 2,163,851 2,491,379 92,834 250,009 6,224,856 - Changes in assets, deferred outflows and liabilities: Receivables 4,671 (128,314) 22,712 212,856 7,075 (52,532) 66,468 (46,706) Prepaid items - - - - - - - (1,033,559) Inventory - 1,788 - (52,652) - - (50,864) - Deposits held by third party - - - - - - - 1,952,600 Accounts payable and accrued expenses 16,295 145,169 55,340 (383,033) (10,539) (350,432) (527,200) (1,465,549) Accrued benefits payable 36,836 214,842 88,259 485,966 597,281 - 1,423,184 - Landfill closure - - - - - 1,240,000 1,240,000 - Other liabilities - (1,081) - 31,341 - - 30,260 - Net Cash Provided by (Used in) Operating Activities 885,181$ 3,529,237$ 3,900,964$ 1,509,244$ 1,753,674$ (6,687,374)$ 4,890,926$ 177,889$ Noncash investing capital and financing activities: Intergovernmental subsidies of debt service -$ -$ 393,097$ -$ -$ -$ 393,097$ -$ Amortization of bond premiums 5,048 59,799 28,018 27,154 - - 120,019 - See accompanying notes to basic financial statements. Business-Type Activities Town of Nantucket, Massachusetts Page 44 of 137 Comprehensive Annual Financial Report TOWN OF NANUCKET, MASSACHUSETTS FIDUCIARY FUNDS STATEMENT OF FIDUCIARY NET POSITION JUNE 30, 2016 Other Postemployment Private Benefits Purpose Agency Trust Fund Trust Funds Funds Assets: Cash and cash equivalents 31,106$ 1,300,090$ 1,433,565$ Investments 1,310,107 2,230,494 - Receivables, net of allowance for uncollectibles - - 99,289 Total Assets 1,341,213 3,530,584 1,532,854 Liabilities: Warrants payable - 3,302 19,221 Accrued payroll and withholdings - - 11,797 Agency liabilities - - 504,979 Planning board deposits - - 996,857 Total Liabilities - 3,302 1,532,854 Net Position: Held in trust for other postemployment benefits 1,341,213 - - Held in trust for private purposes - 3,527,282 - Total Net Position 1,341,213$ 3,527,282$ -$ See accompanying notes to basic financial statements. Town of Nantucket, Massachusetts Page 45 of 137 Comprehensive Annual Financial Report TOWN OF NANTUCKET, MASSACHUSETTS STATEMENT OF CHANGES IN FIDUCIARY NET POSITION FISCAL YEAR ENDED JUNE 30, 2016 Other Postemployment Private Benefits Purpose Trust Fund Trust Funds Additions Contributions: Employee 415,776$-$ Employer 3,004,025 - Other -1,044,435 Total contributions 3,419,801 1,044,435 Investment income: Interest and dividends 27,132 52,656 Net earnings on investments 48,087 26,760 Net investment earnings 75,219 79,416 Other income -436,573 Total Additions (net)3,495,020 1,560,424 Deductions Life and health insurance premiums paid for retirees 2,919,801 - Education - scholarships -125,415 Health and human services - public assistance -280,410 Total Deductions 2,919,801 405,825 CHANGE IN NET POSITION 575,219 1,154,599 NET POSITION AT BEGINNING OF YEAR 765,994 2,372,683 NET POSITION AT END OF YEAR 1,341,213$3,527,282$ See accompanying notes to basic financial statements. Town of Nantucket, Massachusetts Page 46 of 137 Comprehensive Annual Financial Report TOWN OF NANTUCKET, MASSACHUSETTS NOTES TO BASIC FINANCIAL STATEMENTS YEAR ENDED JUNE 30, 2016 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, 2016 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 to (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 those economic resources, and (3) those economic resources are significant to the Town therefore exclusion would cause the financial statements to be misleading. Complete stand-alone financial statements as of June 30, 2016 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 47 of 137 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, except interfund services provided and used are not eliminated in the process of consolidation. 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 48 of 137 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 due and payable. 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 49 of 137 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 50 of 137 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 of the Town and its component units are recorded at fair value in accordance with GASB Statement No. 72, Fair Value Measurement and Application. Accordingly, the change in fair value of investments is recognized as an increase or decrease to investment assets and investment income. Receivables – Real estate and personal property taxes are assessed on January 1 every year. Bills are sent quarterly and are due on August 1, November 1, February 1, and May 1, or thirty days subsequent to the mailing date. Interest accrues on delinquent taxes at the rate of 14% per annum. Property taxes levied are recorded as receivables in the fiscal year of the levy. The Town is allowed to take delinquent taxes into tax title fourteen days subsequent to the mailing of a demand for payment of the delinquent taxes. User charges receivables represent amounts billed for water, sewer, monthly landfill tipping fees, annual commercial landfill user fees, airport travel and fuel sales and nursing home fees. Water and sewer charges are billed monthly and are subject to penalties and interest if not paid by the respective due date. The Town is authorized to take water and sewer fees into tax title fourteen days subsequent to the mailing of a demand for payment of the delinquent taxes. Real estate taxes, water user fees and sewer user fees that are secured through a lien process are considered 100% collectible. Accordingly, an allowance for uncollectible balances for these receivables is not reported. All personal property tax and excise tax receivables are shown net of an allowance for uncollectible balances comprised of those outstanding amounts greater than five years old. Departmental, landfill, airport and nursing home receivables are shown net of an allowance for uncollectible balances based on historical trends and specific account analysis. Sewer privilege fees represent betterments assessed to property owners related to upgrades to the Surfside Wastewater Treatment Plant. These are considered 100% collectible since they are secured through a lien on the owner’s property. Inventories and Prepaid Items – Inventories of the Wannacomet Water Enterprise Fund and Nantucket Memorial Airport Enterprise Fund are valued at the lower of cost or market, with cost determined on a first-in, first out basis. Certain supplies and small tools are expensed when purchased. All other inventories, which are not material to the basic financial statements, are considered to be expenditures at the time of purchase. Restricted Assets – Certain assets of the component units are classified as restricted because their use is restricted by contract covenants. Capital Assets – Capital assets, which include land, land improvements, buildings and improvements, machinery and equipment, vehicles and infrastructure (e.g. roads, water and sewer mains, and similar items), are reported in the applicable governmental or business-type activities columns in the government-wide financial statements. Capital assets are recorded at historical cost or estimated historical cost if purchased or constructed. Donated capital assets are recorded Town of Nantucket, Massachusetts Page 51 of 137 Comprehensive Annual Financial Report at the estimated fair market value at the date of donation. Interest incurred during the construction phase of capital assets of business-type activities is included as part of the capitalized value of the assets constructed. All purchases and construction costs in excess of $10,000 are capitalized at the date of acquisition or construction, respectively, with expected lives of greater than one year. The costs of normal maintenance and repairs that do not add to the value of the asset or materially extend assets lives are not capitalized. Capital assets (excluding land and construction-in-process) are depreciated on a straight-line- basis. The estimated useful lives of capital assets being depreciated are as follows: Buildings and improvements 33-50 years Machinery and equipment 5-7 years Vehicles 5-10 years Infrastructure 40-70 years Interfund Balances – Activity between funds that are representative of lending arrangements outstanding at the end of the fiscal year are referred to as either due to/from other funds or advances to/from other funds. All other outstanding balances between funds are reported as due to/from other funds. Any residual balances outstanding between the governmental activities and business-type activities are reported in the government-wide financial statements as internal balances. Interfund Transfers – During the course of its operations, resources are permanently reallocated between and within funds. These transactions are reported as transfers in and transfers out in the individual fund statements. Transfers between and within governmental and fiduciary funds are eliminated from the governmental activities in the statement of activities. Any residual balances outstanding between the governmental activities and the business –type activities are reported in the statement of activities as transfers, net. Investment Income – Excluding the permanent funds, investment income derived from major and nonmajor governmental funds is legally assigned to the general fund unless otherwise directed by state law. Investment income of the proprietary funds is assigned to the fund within which it applies. Compensated Absences – It is the Town’s policy to permit employees to accumulate earned but unused sick pay benefits. Vacation time may be carried for a period of 6 months subsequent to year-end and if not used during this period is lost. Compensated absence liabilities related to both governmental and business-type activities are normally paid from the funds reporting payroll and related expenditures. Amounts related to these benefits are accrued when incurred in the government-wide and proprietary fund financial statements. A liability for these amounts is reported in Governmental Funds only if they have matured. Long-term Obligations – Long-term debt is reported as a liability in the government-wide and proprietary fund statement of net position. Bond premiums and discounts are deferred and amortized over the life of the bonds using the effective interest method. Bond anticipation notes payable are reported net of the applicable bond premium or discount. Town of Nantucket, Massachusetts Page 52 of 137 Comprehensive Annual Financial Report In the governmental fund financial statements, the face amount of long-term debt issued is reported as other financing sources. Premiums received on a debt issuance are reported as other financing sources while discounts are reported as other financing uses. Issuance costs are exclusively reported as general government expenditures regardless of whether they are withheld from the actual proceeds. Deferred Outflows/Inflows of Resources – In addition to assets, the statement of financial position will sometimes report a separate section for deferred outflows of resources. This separate financial statement element, deferred outflows of resources, represents a consumption of net position that applies to a future period(s) and so will not be recognized as an outflow of resources (expense/expenditure) until then. The Town has one type of 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. Town of Nantucket, Massachusetts Page 53 of 137 Comprehensive Annual Financial Report Other purposes represent assets that are restricted for numerous various minor specific governmental programs and uses. Fund Equity – In the fund financial statements, fund balance for governmental funds is reported in classifications that comprise a hierarchy based primarily on the extent in which the Town is required to honor constraints on the specific purpose for which amounts in the funds can be spent. 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. Town of Nantucket, Massachusetts Page 54 of 137 Comprehensive Annual Financial Report 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 $5,044,555 at June 30, 2016 and is reported as unassigned fund balance in the General Fund. The Town maintains a capital stabilization fund which may be used for any municipal capital purpose upon a two-thirds vote of the Town Meeting. The balance of the fund totals $1,250,000 at June 30, 2016 and is reported as unassigned fund balance in the General Fund. Encumbrances – The Town’s encumbrance policy regarding the general fund is to (1) classify encumbrances that arise from the issuance of purchase orders resulting from normal purchasing activity approved by the Director of Finance as assigned, and (2) classify encumbrances that result from an action of the Town Meeting as committed. Encumbrances of funds already restricted, or committed are included within the classification of those fund balances and not reported separately. The Town reports $2,546,391 of encumbrances from normal purchasing activity in the general fund as assigned and $2,267,807 of encumbrances from Town Meeting Articles in the general fund as committed. There are no encumbrances reported in any other fund. The following table reflects the Town’s fund equity categorizations: Town Nonmajor Capital Governmental General Projects Funds Total Nonspendable: Nonexpendable trust funds -$ -$ 44,805$ 44,805$ Restricted: School grants - - 743,839 743,839 Town grants - - 678,844 678,844 School revolving - - 1,014,112 1,014,112 Town revolving - - 4,705,500 4,705,500 Capital outlay - 13,186,251 1,602,555 14,788,806 Community preservation - - 4,497,164 4,497,164 Gift funds - - 535,700 535,700 Expendable trust funds - - 122,392 122,392 Debt service 414,514 - - 414,514 Committed: Capital outlay 2,183,793 - - 2,183,793 Other purposes 84,014 - - 84,014 Assigned: Purchase orders 2,546,391 - - 2,546,391 Subsequent years' budget 482,260 - - 482,260 Unassigned 17,571,873 (17,737,453) - (165,580) 23,282,845$ (4,551,202)$ 13,944,911$ 32,676,554$ Town of Nantucket, Massachusetts Page 55 of 137 Comprehensive Annual Financial Report E. Excess of Expenditures Over Appropriations During the fiscal year ended, the Town overspent its appropriation for snow and ice removal costs by $272,825. This will be raised through subsequent tax assessments when the Town sets its tax rate for fiscal year 2017. The Town incurred deficits of $17,737,453 which is reported in the Town 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 $107,048,792 and the bank balance was $107,839,428. Of the Town's bank balance, $97,535,114 was covered by federal depository insurance or the Depositors Insurance Fund (“DIF”), and the remainder was fully collateralized. Town of Nantucket, Massachusetts Page 56 of 137 Comprehensive Annual Financial Report Custodial Credit Risk: Investments – In the case of investments, this is the risk that in the event of the invested party not being able to provide required payments to investors, ceasing to exist, or filing of bankruptcy, the Town may not be able to recover the full amount of its principal investment and/or investment earnings. The Town has adopted an investment policy regarding custodial credit risk that requires all securities not held directly by the Treasurer must be held by a third party custodian approved by the Treasurer in the Town’s name and tax identification number. The Town’s investments of $2,261,406 in U.S. government obligations, $4,560,883 in corporate debt securities and $584,688 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 $1 billion with no individual client limit. Fair Value of Investments – The Town reports its investments at fair value. When actively quoted observable prices are not available, the Town generally uses either implied pricing from similar investments or valuation models based on net present values of estimated future cash flows (adjusted as appropriate for liquidity, credit, market and/or other risk factors). The Town categorizes its fair value measurements within the fair value hierarchy established by GAAP. This hierarchy is based on valuation inputs used to measure the fair value of the asset or liability. The three levels of the hierarchy are as follows:  Level 1 – Inputs are quoted prices in active markets for identical investments at the measurement date.  Level 2 – Inputs (other than quoted prices included in Level 1) are either directly or indirectly observable for the investment through correlation with market data at the measurement date and for the duration of the instrument’s anticipated life.  Level 3 – Inputs reflect the Town’s best estimate of what market participants would use in pricing the investment at the measurement date. The following table presents the Town’s investments carried at fair value on a recurring basis in the statement of net position at June 30, 2016: 6/30/16 Level 1 Level 2 Level 3 Investments by fair value level Debt securities: U.S. Government obligations 2,261,406$ 2,261,406$ -$ -$ Corporate bonds 4,560,883 4,560,883 - - MMDT 2,970,182 - 2,970,182 - Negotiable certificates of deposit 2,642,765 - 2,642,765 - Total debt securities 12,435,236 6,822,289 5,612,947 - Equity securities: Common stock 584,688 584,688 - - Total equity securities 584,688 584,688 - - Total investments by fair value level 13,019,924$ 7,406,977$ 5,612,947$ -$ Fair Value Measurements Using Town of Nantucket, Massachusetts Page 57 of 137 Comprehensive Annual Financial Report Debt and equity securities classified in Level 1 are valued using prices quoted in active markets for those securities. Negotiable certificates of deposit are valued using pricing based on the securities’ relationship to benchmark quoted prices. The State Treasurer’s investment pool (MMDT) is classified in Level 2 based on the composition and fair value of the underlying investments contained within this pool, which can be determined using inputs other than quoted prices that are observable either directly or indirectly. 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. At June 30, 2016, the Town’s investments had the following maturities: 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 23% of its investments in the MMDT and 17% of its investments in United States government backed securities. No other issuer was greater than 5% of the Town’s investments. 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. Time Until Maturity (Years) Less More Investment Type 6/30/16 Than 1 1-5 6-10 Than 10 Corporate fixed income securities 4,560,883$ -$ 3,157,568$ 970,935$ 432,380$ U.S. government obligations 2,261,406 411,396 1,850,010 - - Certificates of deposit 2,642,765 381,971 1,699,275 561,519 - State investment pool (MMDT)2,970,182 2,970,182 - - - Total Town investments with maturities 12,435,236 3,763,549$ 6,706,853$ 1,532,454$ 432,380$ Other investments: Equities 584,688 Total Town investments 13,019,924$ Town of Nantucket, Massachusetts Page 58 of 137 Comprehensive Annual Financial Report At June 30, 2016, the credit quality ratings of investments were as follows: 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 $4,126,075 and the bank balance of $4,135,784 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 $49,958 which were covered by federal depository insurance and were not subject to custodial credit risk. These are recorded as cash equivalents at June 30, 2016. Interest Rate Risk - The County limits investment maturities as a means of managing its exposure to fair value losses arising from increasing interest rates. The policy limits investments of operating funds to one year or less and limits investment maturities of trust funds and other special funds to periods no longer that seven years, maintaining an average maturity no greater than three years for the investment portfolio Credit Risk - The County restricts the investment of operating funds to U.S. Treasury or Agency securities which carry “AAA” ratings. Trust and other special funds which are longer-term investments may invest in fixed-income securities which are held principally for capital preservation and income potential and corporate debt that carries a rating of “A” or better by either Standard and Poor’s or Moody’s rating services. If a security falls below the “A” rating, the security will be monitored by the Treasurer and advisor and will be noted as an exception to the policy if held in the investment portfolio. The Treasurer will sell the securities if a decline in value is expected. Corporate U.S. Government State Fixed Income Agencies & Certificates Investment Securities Treasuries Of Deposit Pool Total AA+265,100$ 2,261,406$ -$ -$ 2,526,506$ AA-212,200 - - - 212,200 A+ 219,692 - - - 219,692 A 2,272,224 - - - 2,272,224 A-123,648 - - - 123,648 BBB+789,685 - - - 789,685 BBB 678,334 - - - 678,334 Not Rated - - 2,642,765 2,970,182 5,612,947 Total - All 4,560,883$ 2,261,406$ 2,642,765$ 2,970,182$ 12,435,236$ Town of Nantucket, Massachusetts Page 59 of 137 Comprehensive Annual Financial Report Concentration of Credit Risk – The County does not place a limit on the amount that may be invested in any one issuer. Discretely Presented Component Unit – Nantucket Islands Land Bank Custodial Credit Risk: Deposits -The Land Bank does not have a policy regarding custodial credit risk for deposits. At year-end, the carrying amount of the Land Bank’s deposits was approximately $11,090,000, of which approximately $1,121,000 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, 2016: Series A Debt Reserve $1,333,368 Mitigation agreements 259,996 Life insurance premium 211,964 $1,805,328 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 $4,752,966 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 $2,901,631 which mature in May 2022 and have a Moody’s quality rating of AAA. At June 30, 2016, all investments are categorized in Level 1 of the fair value hierarchy based on quoted market prices. 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 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 $1,542,881 and interest in the amount of $910,087 until the maturity of these agreements. GAAP requires the recognition of gross debt relative to these agreements; therefore, a receivable totaling $1,542,881 has been reported in the Sewer Enterprise Fund. Town of Nantucket, Massachusetts Page 60 of 137 Comprehensive Annual Financial Report Receivables as of year-end for the Town’s individual major and non-major governmental funds in the aggregate, including the applicable allowances for uncollectible accounts, are as follows: Receivables as of year-end for the Town’s proprietary funds are as follows: Governmental funds report deferred inflows of resources in connection with receivables for revenues that are not considered to be available to liquate liabilities of the current period. The following identifies the components of deferred inflows of resources in the governmental funds: Gross Allowance for Net Amount Uncollectibles Amount Receivables: Real estate and personal property taxes 2,565,687$ (293,145)$ 2,272,542$ Tax liens 2,737,748 - 2,737,748 Motor vehicle and other excise taxes 1,571,587 (545,053) 1,026,534 Ambulance user charges 312,637 (155,000) 157,637 Departmental and other 30,060 - 30,060 Intergovernmental 647,545 - 647,545 Total 7,865,264$ (993,198)$ 6,872,066$ Gross Allowance for Net Amount Uncollectibles Amount Receivables: Water user charges 822,241$ -$ 822,241$ Sewer user charges 847,954 - 847,954 Sewer privilege fees 425,653 - 425,653 Airport user charges 308,254 (5,000) 303,254 Our Island Home user charges 330,833 - 330,833 Solid waste user charges 688,745 - 688,745 Stop loss receivable 197,238 - 197,238 Intergovernmental 1,542,881 - 1,542,881 Total 5,163,799$ (5,000)$ 5,158,799$ Other General Governmental Fund Funds Total Receivable type: Real estate and personal property taxes 1,601,151$ 115,134$ 1,716,285$ Tax liens 2,692,316 45,432 2,737,748 Motor vehicle and other excise taxes 469,933 - 469,933 Ambulance user charges - 157,637 157,637 Departmental and other 30,060 - 30,060 Total 4,793,460$ 318,203$ 5,111,663$ Town of Nantucket, Massachusetts Page 61 of 137 Comprehensive Annual Financial Report C. Capital Assets Capital asset activity for the year ended June 30, 2016, was as follows: Beginning Ending Balance Increases Decreases Balance Governmental Activities: Capital assets not being depreciated: Land * 165,654,249$ 950,895$ (2,659,667)$ 163,945,477$ Construction in process 14,325,019 22,320,632 (3,524,841) 33,120,810 Total capital assets not being depreciated 179,979,268 23,271,527 (6,184,508) 197,066,287 Capital assets being depreciated: Buildings and improvements 55,218,763 310,413 (22,641) 55,506,535 Infrastructure 34,876,150 1,498,511 - 36,374,661 Machinery and equipment * 7,100,882 3,862,770 (806,810) 10,156,842 Vehicles * 8,480,062 679,735 (1,215,552) 7,944,245 Total capital assets being depreciated 105,675,857 6,351,429 (2,045,003) 109,982,283 Less accumulated depreciation for: Buildings and improvements (21,867,393) (1,455,410) 22,641 (23,300,162) Infrastructure (21,188,128) (1,106,159) - (22,294,287) Machinery and equipment * (3,468,546) (1,194,925) 806,810 (3,856,661) Vehicles * (6,425,976) (531,131) 1,215,552 (5,741,555) Total accumulated depreciation (52,950,043) (4,287,625) 2,045,003 (55,192,665) Total capital assets being depreciated, net 52,725,814 2,063,804 - 54,789,618 Total governmental activities capital assets, net 232,705,082$ 25,335,331$ (6,184,508)$ 251,855,905$ Business-Type Activities: Capital assets not being depreciated: Land * 20,408,400$ -$ (21,065)$ 20,387,335$ Construction in process * 17,842,290 6,236,970 (7,534,651) 16,544,609 Total capital assets not being depreciated 38,250,690 6,236,970 (7,555,716) 36,931,944 Capital assets being depreciated: Buildings and improvements * 59,738,695 5,780,803 (218,002) 65,301,496 Infrastructure 164,533,023 899,415 (54,464) 165,377,974 Machinery and equipment * 22,984,384 1,698,113 (202,672) 24,479,825 Vehicles * 4,452,733 1,095,605 (80,076) 5,468,262 Total capital assets being depreciated 251,708,835 9,473,936 (555,214) 260,627,557 Less accumulated depreciation for: Buildings and improvements (14,210,301) (1,553,906) 218,002 (15,546,205) Infrastructure (47,618,413) (3,699,543) 54,464 (51,263,492) Machinery and equipment * (16,253,334) (780,753) 202,672 (16,831,415) Vehicles * (3,758,772) (190,654) 80,076 (3,869,350) Total accumulated depreciation (81,840,820) (6,224,856) 555,214 (87,510,462) Total capital assets being depreciated, net 169,868,015 3,249,080 - 173,117,095 Total business-type activities capital assets, net 208,118,705$ 9,486,050$ (7,555,716)$ 210,049,039$ * As restated. Town of Nantucket, Massachusetts Page 62 of 137 Comprehensive Annual Financial Report Beginning Ending Balance Increases Decreases Balance Business-type Activities: Siasconset Water Capital assets not being depreciated: Land 2,615,578$ -$ -$ 2,615,578$ Construction in process 1,147,003 - (1,147,003) - Total capital assets not being depreciated 3,762,581 - (1,147,003) 2,615,578 Capital assets being depreciated: Buildings and improvements 364,855$ 648,474$ (205,030)$ 808,299$ Infrastructure 9,890,167 - (32,043) 9,858,124 Machinery and equipment 76,796 498,529 (50,164) 525,161 Total capital assets being depreciated 10,331,818 1,147,003 (287,237) 11,191,584 Less accumulated depreciation for: Buildings and improvements (228,771) (83,663) 205,030 (107,404) Infrastructure (1,330,440) (193,524) 32,043 (1,491,921) Machinery and equipment (56,813) (32,446) 50,164 (39,095) Total accumulated depreciation (1,616,024) (309,633) 287,237 (1,638,420) Total capital assets being depreciated, net 8,715,794 837,370 - 9,553,164 Total Siasconset Water capital assets, net 12,478,375$ 837,370$ (1,147,003)$ 12,168,742$ Business-type Activities: Wannacomet Water Capital assets not being depreciated: Land * 5,643,310$ -$ (21,065)$ 5,622,245$ Construction in process * 369,372 897,698 - 1,267,070 Total capital assets not being depreciated 6,012,682 897,698 (21,065) 6,889,315 Capital assets being depreciated: Buildings and improvements * 2,284,158 - (12,972) 2,271,186 Infrastructure 35,701,370 493,371 (22,421) 36,172,320 Machinery and equipment 3,611,471 98,006 (128,611) 3,580,866 Vehicles 212,844 73,074 (30,644) 255,274 Total capital assets being depreciated 41,809,843 664,451 (194,648) 42,279,646 Less accumulated depreciation for: Buildings and improvements (469,832) (44,782) 12,972 (501,642) Infrastructure (6,877,653) (729,727) 22,421 (7,584,959) Machinery and equipment (1,675,781) (135,333) 128,611 (1,682,503) Vehicles (212,844) (7,308) 30,644 (189,508) Total accumulated depreciation (9,236,110) (917,150) 194,648 (9,958,612) Total capital assets being depreciated, net 32,573,733 (252,699) - 32,321,034 Total Wannacomet Water capital assets, net 38,586,415$ 644,999$ (21,065)$ 39,210,349$ * As restated. Town of Nantucket, Massachusetts Page 63 of 137 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 7,931,466 780,524 (91,099) 8,620,891 Total capital assets not being depreciated 14,307,049 780,524 (91,099) 14,996,474 Capital assets being depreciated: Buildings and improvements 271,701 106,489 - 378,190 Infrastructure 82,962,990 - - 82,962,990 Machinery and equipment 15,713,546 287,408 - 16,000,954 Vehicles 1,009,568 - - 1,009,568 Total capital assets being depreciated 99,957,805 393,897 - 100,351,702 Less accumulated depreciation for: Buildings and improvements (156,683) (10,533) - (167,216) Infrastructure (17,548,503) (1,676,874) - (19,225,377) Machinery and equipment (11,838,675) (396,529) - (12,235,204) Vehicles (454,823) (79,915) - (534,738) Total accumulated depreciation (29,998,684) (2,163,851) - (32,162,535) Total capital assets being depreciated, net 69,959,121 (1,769,954) - 68,189,167 Total Sewer capital assets, net 84,266,170$ (989,430)$ (91,099)$ 83,185,641$ Capital assets not being depreciated: Land 2,736,587$ -$ -$ 2,736,587$ Construction in process 8,174,583 4,371,148 (6,076,683) 6,469,048 Total capital assets not being depreciated 10,911,170 4,371,148 (6,076,683) 9,205,635 Capital assets being depreciated: Infrastructure 35,201,013 406,044 - 35,607,057 Buildings and improvements 45,796,546 4,712,336 - 50,508,882 Machinery and equipment * 2,065,350 717,011 (23,897) 2,758,464 Vehicles * 3,111,238 975,416 (49,432) 4,037,222 Total capital assets being depreciated 86,174,147 6,810,807 (73,329) 92,911,625 Less accumulated depreciation for: Infrastructure (21,084,334) (1,099,418) - (22,183,752) Buildings and improvements (8,220,414) (1,114,236) - (9,334,650) Machinery and equipment * (1,330,980) (179,005) 23,897 (1,486,088) Vehicles * (2,972,022) (98,720) 49,432 (3,021,310) Total accumulated depreciation (33,607,750) (2,491,379) 73,329 (36,025,800) Total capital assets being depreciated, net 52,566,397 4,319,428 - 56,885,825 Total Nantucket Memorial Airport capital assets, net 63,477,567$ 8,690,576$ (6,076,683)$ 66,091,460$ * As reclassified. Business-type Activities: Nantucket Memorial Airport Town of Nantucket, Massachusetts Page 64 of 137 Comprehensive Annual Financial Report Beginning Ending Business-type Activities: Our Island Home Balance Increases Decreases Balance Capital assets not being depreciated: Land * 385,936$ -$ -$ 385,936$ Construction in process 219,866 187,600 (219,866) 187,600 Total capital assets not being depreciated 605,802 187,600 (219,866) 573,536 Capital assets being depreciated: Buildings and improvements 1,584,199 313,504 - 1,897,703 Machinery and equipment 216,285 97,159 - 313,444 Vehicles 119,083 47,115 - 166,198 Total capital assets being depreciated 1,919,567 457,778 - 2,377,345 Less accumulated depreciation for: Buildings and improvements (1,051,792) (64,170) - (1,115,962) Machinery and equipment (124,328) (23,953) - (148,281) Vehicles (119,083) (4,711) - (123,794) Total accumulated depreciation (1,295,203) (92,834) - (1,388,037) Total capital assets being depreciated, net 624,364 364,944 - 989,308 Total Our Island Home capital assets, net 1,230,166$ 552,544$ (219,866)$ 1,562,844$ * As restated. 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 (4,082,809) (236,522) - (4,319,331) Infrastructure (777,483) - - (777,483) Machinery and equipment (1,226,757) (13,487) - (1,240,244) Total accumulated depreciation (6,087,049) (250,009) - (6,337,058) Total capital assets being depreciated, net 5,428,606 (250,009) - 5,178,597 Total Solid Waste capital assets, net 8,080,012$ (250,009)$ -$ 7,830,003$ Town of Nantucket, Massachusetts Page 65 of 137 Comprehensive Annual Financial Report Restatement – The Town conducted an evaluation of its capital assets in fiscal year 2016. As a result of this evaluation, the Town determined that previously reported capital assets of the Governmental Activities were overstated by $2,429,585, capital assets of the Wannacomet Water Depreciation expense was charged to functions/programs as follows: Governmental Activities:Business-Type Activities: General government 289,478$ Water 1,226,783$ Public safety 1,305,993 Sewer 2,163,851 Education 1,351,105 Airport 2,491,379 Public works 1,075,784 Our Island Home 92,834 Health and human services 10,186 Solid waste 250,009 Culture and recreation 255,079 6,224,856$ 4,287,625$ 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 (161,336) (15,993) - (177,329) Total capital assets being depreciated, net 26,591 (15,993) - 10,598 Total Nantucket County capital assets, net 3,310,433$ (15,993)$ -$ 3,294,440$ Discretely Presented Component Unit - Nantucket Islands Land Bank Beginning Ending Balance Increases Decreases Balance Capital assets not being depreciated: Land 278,119,843$ 19,117,859$ -$ 297,237,702$ Capital assets being depreciated: Buildings, improvements and equipment 25,969,010 1,841,411 (144,400) * 27,666,021 Less: accumulated depreciation (9,292,779) (952,966) 24,067 (10,221,678) Total capital assets being depreciated, net 16,676,231 888,445 (120,333) 17,444,343 Total Nantucket Islands Land Bank capital assets, net 294,796,074$ 20,006,304$ (120,333)$ 314,682,045$ * Includes $120,333 that is included as an increase to land. Town of Nantucket, Massachusetts Page 66 of 137 Comprehensive Annual Financial Report Enterprise Fund were understated by $2,743,847 and capital assets of the Our Island Home Enterprise Fund were understated by $385,936. These amounts were reported as a restatement to the Town’s net position at June 30, 2016. Reclassifications were also made to Airport assets. D. Interfund Receivables, Payables and Transfers The composition of interfund balances at June 30, 2016, was as follows: The outstanding balances between funds result mainly from the timing difference between the dates that (1) reimbursable expenditures occur, (2) the intergovernmental reimbursements are received and (3) the payments to the general fund are made. The composition of interfund transfers for the fiscal year ended June 30, 2016, was as follows: E. Temporary Debt The Town is authorized to borrow on a temporary basis to fund the following: Current Operating Costs – Prior to collection of revenues, expenditures may be financed through the issuance of revenue or tax anticipation notes (RANS or TANS). Capital Projects and Other Approved Costs – Projects may be temporarily funded through the issuance of bond anticipation notes (BANS) or grant anticipation notes (GANS). In certain cases, prior to the issuance of these temporary notes, the governing body must take the necessary legal steps to authorize the issuance of the general obligation bonds. Temporary notes may not exceed the aggregate amount of bonds authorized or the grant award amount and carry maturity dates that are limited by state law. Interest expenditures and expenses for temporary borrowings are accounted for in the general fund and enterprise funds, respectively. Amount General Fund Nonmajor Governmental Funds -362,461$ Road Improvements Total 362,461$ Receivable Fund Payable Fund Town Nonmajor Our General Capital Governmental Island Solid Fund Projects Funds Home Waste Total General Fund -$ 7,495,326$ 350,000$ 3,196,384$ 5,510,000$ 16,551,710$ (1) Nonmajor Governmental Funds 294,402 7,593,000 - - - 7,887,402 (2) Sewer - 47,000 - - - 47,000 (2) Total 294,402$ 15,135,326$ 350,000$ 3,196,384$ 5,510,000$ 24,486,112$ (1) Transfer to town capital projects for various capital outlays; transfer to nonmajor funds to fund community school programs; and transfers to enterprise funds to subsidize operations. (2) Transfers to general fund to close out fund and supplement capital outlays and transfers to town capital projects for various capital outlays. Transfers In Transfers Out Town of Nantucket, Massachusetts Page 67 of 137 Comprehensive Annual Financial Report Temporary notes outstanding at June 30, 2016, are payable as follows: Short-term (BANs) issued for nonmajor governmental funds were used for septic betterments ($265,551), roadways and sidewalks ($500,000), school construction ($23,547,000) and fire station construction ($5,901,650). Those issued for business-type funds were issued for water projects ($2,562,000), sewer projects ($3,896,008), nursing home ($500,000) and airport projects ($4,248,980). 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 December 31, 2016. Short-term MCWT loans totaling $265,551 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. 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 was reflected as retirements 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 a $7,217,912 BAN that matured on November 13, 2015. Interest Maturity July 1,June 30, Type Rate Date 2015 Additions Retirements 2016 MCWT 0.00% 12/31/16 265,551$ -$ -$ 265,551$ BAN 0.75% Matured * 2,463,000 - (2,463,000) - BAN 1.75% 11/11/16 - 3,547,000 - 3,547,000 BAN 2.00% 11/10/16 - 7,500,000 - 7,500,000 BAN 1.50% 11/10/16 - 18,901,650 - 18,901,650 Total Governmental Notes 2,728,551 29,948,650 (2,463,000) 30,214,201 BAN 0.75% Matured * 2,598,912 - (2,598,912) - BAN 1.75% 11/11/16 - 2,106,912 - 2,106,912 BAN 1.50% 11/10/16 - 9,100,076 - 9,100,076 Total Business-Type Notes 2,598,912 11,206,988 (2,598,912) 11,206,988 Total Notes Payable 5,327,463$ 41,155,638$ (5,061,912)$ 41,421,189$ * The portion of these BAN's that were permanently financed on October 22, 2015 and November 13, 2015 were reflected as BAN retirements and long-term debt issuances in the prior year. Town of Nantucket, Massachusetts Page 68 of 137 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 50,328,581$ 5,123,709$ (9,506,741)$ 45,945,549$ 5,723,885$ Unamortized bond premium 22,332 123,130 (22,332) 123,130 93,048 Workers' compensation 117,324 261,925 (274,402) 104,847 104,847 Compensated absences 1,890,243 1,043,789 (945,122) 1,988,910 994,455 Other postemployment benefits 31,578,816 6,476,529 (2,160,255) 35,895,090 - Net pension liability 37,256,055 7,998,376 (3,633,505) 41,620,926 - Total Governmental Activities 121,193,351$ 21,027,458$ (16,542,357)$ 125,678,452$ 6,916,235$ Business-Type Activities - Siasconset Water: Bond and note debt 6,670,000$ -$ (620,000)$ 6,050,000$ 375,000$ Unamortized bond premium 70,672 - (5,048) 65,624 5,048 Other postemployment benefits 247,303 50,720 (16,918) 281,105 - Net pension liability 107,351 23,047 (10,470) 119,928 - Total Siasconset Water 7,095,326 73,767 (652,436) 6,516,657 380,048 Business-Type Activities - Wannacomet Water: Bond and note debt 18,846,800 776,000 (1,598,000) 18,024,800 1,611,800 Unamortized bond premium 499,812 - (59,799) 440,013 55,907 Compensated absences 198,129 176,749 (99,064) 275,814 137,907 Other postemployment benefits 545,384 111,853 (37,309) 619,928 - Net pension liability 2,215,255 475,586 (216,049) 2,474,792 - Total Wannacomet Water 22,305,380 1,540,188 (2,010,221) 21,835,347 1,805,614 Business-Type Activities - Sewer: Bond and note debt 44,745,635 - (2,542,956) 42,202,679 2,595,035 Unamortized bond premium 202,017 - (28,018) 173,999 24,390 Compensated absences 102,008 54,386 (51,004) 105,390 52,695 Other postemployment benefits 341,617 70,062 (23,369) 388,310 - Net pension liability 1,350,982 290,038 (131,759) 1,509,261 - Total Sewer 46,742,259 414,486 (2,777,106) 44,379,639 2,672,120 Business-Type Activities - Nantucket Memorial Airport: Bond and note debt 11,444,000 - (820,000) 10,624,000 839,000 Unamortized bond premium 213,176 - (27,154) 186,022 25,449 Compensated absences 574,093 304,754 (287,046) 591,801 295,900 Other postemployment benefits 2,356,377 483,272 (161,196) 2,678,453 - Net pension liability 5,172,032 1,110,366 (504,418) 5,777,980 - Total Nantucket Memorial Airport 19,759,678 1,898,392 (1,799,814) 19,858,256 1,160,349 Business-Type Activities - Our Island Home: Compensated absences 410,454 106,308 (205,227) 311,535 155,767 Other postemployment benefits 3,527,413 723,441 (241,305) 4,009,549 - Net pension liability 7,573,732 1,625,978 (738,650) 8,461,060 - Total Our Island Home 11,511,599 2,455,727 (1,185,182) 12,782,144 155,767 Business-Type Activities - Solid Waste: Bond and note debt 455,000 - (40,000) 415,000 40,000 Landfill closure 7,663,000 1,240,000 - 8,903,000 - Total Solid Waste 8,118,000 1,240,000 (40,000) 9,318,000 40,000 Total Business-Type Activities 115,532,242$ 7,622,560$ (8,464,759)$ 114,690,043$ 6,213,898$ Town of Nantucket, Massachusetts Page 69 of 137 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, 2016: 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% 17,110,400$ 1,188,709$ (1,661,800)$ 16,637,309$ Refunding Bonds 1.50 - 5.00% 16,537,800 3,935,000 (7,151,600) 13,321,200 USDA Notes 4.13%1,173,000 - (34,500) 1,138,500 Massachusetts Clean Water Trust 0.00 - 2.42% 15,507,381 - (658,841) 14,848,540 Total Governmental Activities 50,328,581 5,123,709 (9,506,741) 45,945,549 Add: Unamortized bond premium 22,332 123,130 (22,332) 123,130 Total Governmental Activities, net 50,350,913$ 5,246,839$ (9,529,073)$ 46,068,679$ Business-Type Activities - Siasconset Water: General Obligation Bonds 2.00 - 5.00% 6,670,000$ -$ (620,000)$ 6,050,000$ Total Siasconset Water 6,670,000 - (620,000) 6,050,000 Business-Type Activities - Wannacomet Water: General Obligation Bonds 2.00 - 5.00% 13,975,000 776,000 (1,340,000) 13,411,000 Refunding Bonds 1.50 - 5.00% 4,871,800 - (258,000) 4,613,800 Total Wannacomet Water 18,846,800 776,000 (1,598,000) 18,024,800 Business-Type Activities - Sewer: General Obligation Bonds 2.00 - 5.00% 4,016,600 - (473,200) 3,543,400 Refunding Bonds 2.00 - 5.00%725,400 - (100,400) 625,000 Massachusetts Clean Water Trust 0.00 - 5.50% 40,003,635 - (1,969,356) 38,034,279 Total Sewer 44,745,635 - (2,542,956) 42,202,679 Business-Type Activities - Nantucket Memorial Airport: General Obligation Bonds 2.00 - 5.00% 11,444,000 - (820,000) 10,624,000 Total Nantucket Memorial Airport 11,444,000 - (820,000) 10,624,000 Business-Type Activities - Solid Waste: General Obligation Bonds 2.50 - 5.00%405,000 - (35,000) 370,000 Refunding Bonds 1.50 - 4.00%50,000 - (5,000) 45,000 Total Solid Waste 455,000 - (40,000) 415,000 Total Business-Type Activities 82,161,435 776,000 (5,620,956) 77,316,479 Add: Unamortized bond premium 985,677 - (120,018) 865,659 Total Business-Type Activities, net 83,147,112$ 776,000$ (5,740,974)$ 78,182,138$ Town of Nantucket, Massachusetts Page 70 of 137 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 2017 5,723,885$ -$ 5,723,885$ 1,341,624$ (228)$ 1,341,396$ 7,065,281$ 2018 5,227,650 - 5,227,650 1,162,652 (162) 1,162,490 6,390,140 2019 3,328,960 - 3,328,960 1,033,467 (96) 1,033,371 4,362,331 2020 3,299,619 - 3,299,619 934,977 (32) 934,945 4,234,564 2021 3,278,489 - 3,278,489 839,017 - 839,017 4,117,506 2022-2026 13,232,312 - 13,232,312 2,702,715 - 2,702,715 15,935,027 2027-2031 6,630,104 - 6,630,104 1,119,311 - 1,119,311 7,749,415 2032-2036 3,499,905 - 3,499,905 467,464 - 467,464 3,967,369 2037-2041 1,448,625 - 1,448,625 109,263 - 109,263 1,557,888 2042-2046 172,500 - 172,500 42,693 - 42,693 215,193 2047-2049 103,500 - 103,500 8,538 - 8,538 112,038 Total 45,945,549$ -$ 45,945,549$ 9,761,721$ (518)$ 9,761,203$ 55,706,752$ Business-Type Activities: Siasconset Water 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 415,000 - 415,000 182,664 - 182,664 597,664 2022-2026 2,275,000 - 2,275,000 660,737 - 660,737 2,935,737 2027-2031 1,690,000 - 1,690,000 170,431 - 170,431 1,860,431 2032-2036 115,000 - 115,000 8,175 - 8,175 123,175 6,050,000$ -$ 6,050,000$ 1,914,479$ -$ 1,914,479$ 7,964,479$ Business-Type Activities: Wannacomet Water 2017 1,611,800$ -$ 1,611,800$ 661,290$ -$ 661,290$ 2,273,090$ 2018 1,585,000 - 1,585,000 586,398 - 586,398 2,171,398 2019 1,594,000 - 1,594,000 531,152 - 531,152 2,125,152 2020 1,509,000 - 1,509,000 475,161 - 475,161 1,984,161 2021 1,550,000 - 1,550,000 421,617 - 421,617 1,971,617 2022-2026 6,795,000 - 6,795,000 1,316,283 - 1,316,283 8,111,283 2027-2031 2,860,000 - 2,860,000 299,770 - 299,770 3,159,770 2032-2036 520,000 - 520,000 29,249 - 29,249 549,249 18,024,800$ -$ 18,024,800$ 4,320,920$ -$ 4,320,920$ 22,345,720$ Business-Type Activities: Sewer 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 2,569,657 (213,650) 2,356,007 815,633 (100,705) 714,928 3,070,935 2022-2026 11,618,915 (573,225) 11,045,690 2,919,247 (148,307) 2,770,940 13,816,630 2027-2031 8,511,879 - 8,511,879 1,630,596 - 1,630,596 10,142,475 2032-2036 6,972,847 - 6,972,847 710,526 - 710,526 7,683,373 2037-2038 2,477,182 - 2,477,182 60,160 - 60,160 2,537,342 42,202,679$ (1,542,881)$ 40,659,798$ 10,221,562$ (910,087)$ 9,311,475$ 49,971,273$ Town of Nantucket, Massachusetts Page 71 of 137 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 $1,542,881 and interest in the amount of $910,087 until the maturity of these agreements. The following represents authorized and unissued debt as of June 30, 2016: Year Ending Principal Interest June 30 Balance Subsidy Net of Subsidy Balance Subsidy Net of Subsidy Total Business-Type Activities: Nantucket Memorial Airport 2017 839,000$ -$ 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 600,000 - 600,000 293,312 - 293,312 893,312 2022-2026 2,740,000 - 2,740,000 1,135,413 - 1,135,413 3,875,413 2027-2031 2,445,000 - 2,445,000 674,632 - 674,632 3,119,632 2032-2036 1,880,000 - 1,880,000 225,794 - 225,794 2,105,794 10,624,000$ -$ 10,624,000$ 3,725,072$ -$ 3,725,072$ 14,349,072$ Business-Type Activities: Solid Waste 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 35,000 - 35,000 10,687 - 10,687 45,687 2022-2026 170,000 - 170,000 32,861 - 32,861 202,861 2027-2028 60,000 - 60,000 3,825 - 3,825 63,825 415,000$ -$ 415,000$ 102,997$ -$ 102,997$ 517,997$ Project Amount Governmental: Title V septic 1,000,000$ Fire station 10,098,350 School building 22,653,000 Roads and sidewalks 2,000,000 Business-type: Wannacomet water projects 5,133,000 Sewer projects 44,153,992 Wastewater treatment facilities 10,800,000 Nantucket Memorial Airport 5,926,145 Our Island Home 1,215,000 Solid waste - landfill 2,633,000 Total Authorized and Unissued 105,612,487$ Town of Nantucket, Massachusetts Page 72 of 137 Comprehensive Annual Financial Report Current Refunding – On October 22, 2015, the Town issued general obligation bonds of $3,935,000 paying interest at 3.0% per annum. The debt proceeds, along with $123,130 of premiums were used to retire $3,995,000 of general obligation refunding bonds. As a result of the current refunding, the Town reduced its total debt service requirements by $101,275, which resulted in an economic gain (difference between the present value of the debt service payments on the old and new debt) of $102,494. Prior Year Refunding – In prior years, the Town defeased general obligation bonds by placing the proceeds of the new bonds in an irrevocable trust account to provide for all future debt service payments on the old bonds. Accordingly, the trust account assets and the liability for the defeased bonds are not included in the government’s financial statements. At June 30, 2016, $3,445,000 of defeased bonds remains outstanding. Discretely Presented Component Unit – Nantucket Islands Land Bank The general obligation bonds are secured by a second priority security interest in the Land Bank’s present and future transfer fees and unrestricted revenue. The bonds are additionally secured by a guarantee of the Town. The following reflects the activity in the long-term liability accounts for the Land Bank for the year ended June 30, 2016: Beginning Ending Due within Balance Additions Deletions Balance one year Bond and note indebtedness 26,657,717$ 2,710,582$ (2,570,736)$ 26,797,563$ 6,518,879$ Capital leases 124,435 97,561 (73,959) 148,037 83,682 Net pension liability 1,471,373 142,565 (186,370) 1,427,568 - Total Land Bank 28,253,525$ 2,950,708$ (2,831,065)$ 28,373,168$ 6,602,561$ The following is a summary of outstanding long-term debt obligations as of June 30, 2016: Interest Beginning Ending Description of Issue Rate Balance Additions Maturities Balance Notes payable 3.00 - 6.06% 2,184,032$ 2,710,582$ (484,032)$ 4,410,582$ General obligation bonds 2.00 - 5.00% 24,473,685 - (2,086,704) 22,386,981 Total Land Bank 26,657,717$ 2,710,582$ (2,570,736)$ 26,797,563$ Town of Nantucket, Massachusetts Page 73 of 137 Comprehensive Annual Financial Report Payments on general long-term debt obligation bonds and notes due in future years consist of the following: 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, 2015 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 January 1, 2014, was as follows: Retirees and beneficiaries currently receiving benefits 3,035 Active plan members 4,718 Inactive plan members 613 Total 8,366 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. Year Ending June 30 Principal Interest Total 2017 6,518,879$ 711,504$ 7,230,383$ 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 1,541,704 424,458 1,966,162 2022-2026 7,168,520 1,353,953 8,522,473 2027-2031 4,192,718 291,398 4,484,116 2032 470,630 10,920 481,550 Total 26,797,563$ 4,488,948$ 31,286,511$ Town of Nantucket, Massachusetts Page 74 of 137 Comprehensive Annual Financial Report Normal retirement generally occurs at age 65. However, participants may retire after twenty years of service or at any time after attaining age 55, if hired prior to April 2, 2012 or at any time after attaining age 60 if hired on or after April 2, 2012. Participants with hire dates subsequent to January 1, 1978 must have a minimum of ten years’ creditable service in order to retire at age 55. Participants become vested after ten years of service. Benefits commencing before age 65 are provided at a reduced rate. Members working in certain occupations may retire with full benefits earlier than age 65. Ordinary disability retirement is where a participant is permanently incapacitated from a cause unrelated to employment. Accidental disability retirement is where the disability is the result of an injury or illness received or aggravated in the performance of duty. The amount of benefits to be received in such cases is dependent upon several factors, including the age at which the disability retirement occurs, the years of service, average compensation and veteran status. Survivor benefits are extended to eligible beneficiaries of participants whose death occurs prior to or following retirement. Cost-of-living adjustments granted to members of Massachusetts retirement systems granted between 1981 and 1997 and any increases in other benefits imposed by the Commonwealth during those years have been the financial responsibility of the Commonwealth. Beginning in 1998, the funding of cost-of-living amounts became the responsibility of the participating units like the Retirement System. 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 $5,142,928, $47,272, and $122,446, respectively, to the Retirement System in fiscal year 2016, 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 19.9%, 19.3% and 19.4%, respectively, in fiscal year 2016. Net Pension Liability – At June 30, 2016, the Town, County and Land Bank reported liabilities of $59,963,947, $551,581 and $1,427,568, 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, 2015. 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. Town of Nantucket, Massachusetts Page 75 of 137 Comprehensive Annual Financial Report 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 9.523%, 0.087% and 0.227%, respectively, at December 31, 2015, which was consistent with the proportions measured at January 1, 2014. Pension Expense – The Town, County and Land Bank recognized $6,660,007, $51,081 and $175,275, respectively, in pension expense in the statement of activities in fiscal year 2016. Deferred Outflows of Resources and Deferred Inflows of Resources – At June 30, 2016, 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 4,758,486 — Changes in proportion and differences between Town contributions and proportionate share of contributions 104,898 — Town contributions subsequent to the measurement date — — Total $ 4,863,384 $ — 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, 2017 $ 1,216,356 2018 1,216,356 2019 1,216,356 2020 1,193,336 2021 20,980 $ 4,863,384 Town of Nantucket, Massachusetts Page 76 of 137 Comprehensive Annual Financial Report At June 30, 2016, the County 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 43,738 — Change in proportionate share impact on prior year net pension liability and deferred outflow (inflow) — 49,995 Changes in proportion and differences between County contributions and proportionate share of contributions 35,931 — County contributions subsequent to the measurement date — — Total $ 79,669 $ 49,995 The deferred outflows of resources and deferred inflows of resources are expected to be recognized in the County’s pension expense as follows: Year ended June 30, 2017 $ 8,122 2018 8,122 2019 8,122 2020 8,122 2021 (2,812) $29,674 Town of Nantucket, Massachusetts Page 77 of 137 Comprehensive Annual Financial Report At June 30, 2016, the Land Bank 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 113,286 — Change in proportionate share impact on prior year net pension liability and deferred outflow (inflow) — 129,492 Changes in proportion and differences between Land Bank contributions and proportionate share of contributions 712 35,656 Land Bank contributions subsequent to the measurement date — — Total $ 113,998 $ 165,148 The deferred outflows of resources and deferred inflows of resources are expected to be recognized in the County’s pension expense as follows: Year ended June 30, 2017 $ (4,566) 2018 (4,566) 2019 (4,566) 2020 (4,566) 2021 (32,886) $(51,150) 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 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 Town of Nantucket, Massachusetts Page 78 of 137 Comprehensive Annual Financial Report 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% 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 Town of Nantucket, Massachusetts Page 79 of 137 Comprehensive Annual Financial Report 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 $ 76,043,208 $ 59,963,947 $ 46,317,670 County’s proportionate share of the net pension liability $ 698,849 $ 551,169 $ 425,667 Land Bank’s proportionate share of the net pension liability $ 1,810,483 $ 1,427,568 $ 1,102,759 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, 2016, the Commonwealth contributed $2,237,223 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 0.218921%, 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. 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 $ 44,856,203 $ (44,856,203) $ — Pension expense 3,638,237 (3,638,237) — The Town has recognized intergovernmental revenue and pension expense of $3,638,237 associated with this arrangement. Town of Nantucket, Massachusetts Page 80 of 137 Comprehensive Annual Financial Report 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: 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, 2016 $ 7,915,877* 33.4% $ 43,872,435 June 30, 2015 $ 7,430,993 30.7% $ 38,596,910 June 30, 2014 $ 7,587,850 37.8% $ 33,444,610 Annual required contribution (ARC)7,587,715$ Interest on net OPEB obligation 1,736,861 Adjustment to ARC (1,408,699) Annual OPEB cost 7,915,877 Contributions made (2,640,352)$ Increase in net OPEB obligation 5,275,525 Net OPEB obligation at beginning of year 38,596,910 Net OPEB obligation at end of year 43,872,435$ Town of Nantucket, Massachusetts Page 81 of 137 Comprehensive Annual Financial Report * Reflected in the Statement of Activities as follows: The AOPEBC at June 30, 2016 was charged to the following functional programs: General Government $656,106; Public Safety $1,399,297; Education $3,844,260; Public Works $365,762; Health and Human Services $127,289; Culture and Recreation $83,815; Siasconset water $50,720; Wannacomet water $111,853; Sewer $70,063; Airport $483,272; and Our Island Home $723,440. Funding Status and Funding Progress – The funded status of the Plan at June 30, 2016, 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) 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. Town of Nantucket, Massachusetts Page 82 of 137 Comprehensive Annual Financial Report 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, 2016, the amount of the liability for IBNR health insurance claims totaled $898,614. This liability is the best estimate based on available information. In the fund-wide financial statements, the Town reports these self-insured activities in the Internal Service Fund where revenues are recorded when earned and expenses are recorded when the liability is incurred. Annual required contribution (ARC)24,708$ Interest on net OPEB obligation 5,656 Adjustment to ARC (4,587) Annual OPEB cost 25,777 Contributions made (8,598)$ Increase in net OPEB obligation 17,179 Net OPEB obligation at beginning of year 125,688 Net OPEB obligation at end of year 142,867$ Town of Nantucket, Massachusetts Page 83 of 137 Comprehensive Annual Financial Report Changes in the reported liability since July 1, 2014, are as follows: Balance at Beginning of Year Claims and Changes in Estimates Claims Payments Balance at End of Year Current Portion Fiscal Year 2016 $775,395 $13,861,420 $(13,738,201) $898,614 $898,614 Fiscal Year 2015 775,395 13,286,061 (13,286,061) 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, 2016, the amount of the liability for workers’ compensation claims totaled $104,847. This liability is the best estimate based on available information. Changes in the reported liability since July 1, 2014, are as follows: Balance at Beginning of Year Claims and Changes in Estimates Claims Payments Balance at End of Year Current Portion Fiscal Year 2016 $117,324 $261,925 $(274,402) $104,847 $104,847 Fiscal Year 2015 50,571 204,098 (137,345) 117,324 117,324 E. Commitments The Town is in the planning and construction stages of several major capital projects including a fire station, school building, and sewer and waste water treatment plant improvements. The Town plans to enter into contracts to expend approximately $15,000,000, $31,000,000, $41,000,000 and $10,000,000, 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, 2016, 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, 2016. Other amounts received or receivable from grantor agencies are subject to audit and adjustment by grantor agencies, principally the federal and state governments. Any disallowed claims, including amounts already collected, may constitute a liability of the applicable funds. The amount, if any, of expenditures which may be disallowed by the grantor cannot be determined at this time although the Town expects such amounts, if any, to be immaterial. The Town is subject to certain Federal arbitrage laws in accordance with long-term borrowing agreements. Failure to comply with the rules could result in the payment of penalties. The Town does not believe it has failed to comply with any of these agreements. The Town is contingently liable for 35% of any deficit, including operating and debt service costs, which may be incurred by the Woods Hole, Martha’s Vineyard and Nantucket Steamship Authority (the “Authority”). As of December 31, 2015, the Authority’s reserve fund balance Town of Nantucket, Massachusetts Page 84 of 137 Comprehensive Annual Financial Report totaled $3,594,750 and bonds outstanding totaled $79,974,027, net of unamortized premiums of $8,079,027. For the fiscal year ended December 31, 2015, the Authority’s revenues exceeded its cost of services by $11,743,164. 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 $8,903,000 in the Solid Waste Enterprise fund. This liability is based on estimates of the cost of all closure and post-closure care for 30 years. Actual costs may change due to inflation, changes in technology, or changes in regulations. H. Implementation of GASB pronouncements Current Year Implementations – In February 2015, the GASB issued GASB Statement No. 72, Fair Value Measurement and Application. GASB 72 addressed 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 became effective for the Town in fiscal year 2016 and did not have a material effect on its 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 was 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 established requirements for defined benefit pensions that are not within the scope of Statement 68, as well as for the assets accumulated for purposes of providing those pensions. In addition, it established requirements for defined contribution pensions that are not within the scope of Statement 68. The provisions of this Statement were 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 provisions of this Statement became effective for the Town in fiscal year 2016 and did not have a material effect on its 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 was to Town of Nantucket, Massachusetts Page 85 of 137 Comprehensive Annual Financial Report identify, in the context of the current governmental financial reporting environment, the hierarchy of generally accepted principles, or GAAP. This Statement reduced 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 became effective in fiscal year 2016 and did not have a material effect on the Town’s financial statements. In December 2015, the GASB issued GASB Statement No. 79, Certain External Investment Pools and Pool Participants. GASB 79 established criteria for which an external investment pool may qualify to measure its investment value at amortized cost versus fair value. The provisions of this Statement became effective in fiscal year 2016 and did not have a material effect on the Town’s financial statements. Future Implementations – 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 establishes new accounting and financial reporting requirements for governments whose employees are provided with OPEB, as well as for certain nonemployer governments that have a legal obligation to provide financial 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 August 2015, the GASB issued GASB Statement No. 77, Tax Abatement Disclosures. GASB 77 requires the disclosure of the terms of certain tax abatement agreements entered into by a government with individuals or entities. The provisions of this Statement are effective for financial reporting periods beginning after June 15, 2016 (fiscal year 2017), although early adoption is encouraged. The Town is currently evaluating whether adoption will have a material impact on the financial statements. In December 2015, the GASB issued GASB Statement No. 78, Pensions Provided through Certain Multiple-Employer Defined Benefit Pension Plans. The provisions of GASB 78 are applicable to certain government pension plans that (i) are not administered as a trust by a state or local governmental pension plan, (ii) are shared between governmental and nongovernmental employees, and (iii) have not predominant state of local governmental employer. The provisions of this Statement are effective for financial reporting periods beginning after June 15, 2016 (fiscal year 2017), although early adoption is encouraged. This Statement is not expected to have a material effect on the Town’s financial statements. In January 2016, the GASB issued GASB Statement No. 80, Blending Requirements for Certain Component Units. The provisions of GASB 80 apply to component units that are organized as not-for-profit corporations in which the primary government is the sole corporate member. Such Town of Nantucket, Massachusetts Page 86 of 137 Comprehensive Annual Financial Report component units should be included in the reporting entity financial statements using the blending method. The provisions of this Statement are effective for financial reporting periods beginning after June 15, 2016 (fiscal year 2017), although early adoption is encouraged. The Town is currently evaluating whether adoption will have a material impact on the financial statements. In March 2016, the GASB issued GASB Statement No. 81, Irrevocable Split-Interest Agreements. The objective of the Statement is to improve accounting and financial reporting for irrevocable split-interest agreements by providing recognition and measurement guidance for situations in which a government is a beneficiary of the agreement. The provisions of this Statement are effective for financial reporting periods beginning after December 15, 2016 (fiscal year 2018) and should be applied retroactively. The Town is currently evaluating whether adoption will have a material impact on the financial statements. In March 2016, the GASB issued GASB Statement No. 82, Pension Issues – an amendment of GASB Statements No. 67, No. 68, and No. 73. The objective of GASB 73 was to address issued raised with respect to previously issued statements related to pensions. Specifically, the Statement addressed issues regarding (i) the presentation of payroll-related measures in required supplementary information, (ii) the selection of assumptions and the treatment of deviations from the guidance in an Actuarial Standard of Practice for financial reporting and (iii) the classification of payments made by employers to satisfy employee (plan member) contributions requirements. The requirements for this Statement are effective for reporting periods beginning after June 15, 2016 (fiscal year 2017), except for the requirements of this Statement for the selection of assumptions in a circumstance in which an employer’s pension liability is measured as of a date other than the employer’s most recent fiscal year end. In that circumstance, the requirements for the selection of assumptions are effective for that employer in the first reporting period in which the measurement date of the pension liability is on or after June 15, 2017; earlier application is encouraged. The Town is currently evaluating whether adoption will have a material impact on the financial statements. I. Subsequent Event On August 3, 2016, the Town issued $14,400,000 of general obligation refunding bonds paying interest rates between 2.0% and 4.0% and maturing on December 15, 2028. The bonds and net premiums from the issuance totaling $16,324,698 were deposited with the refunding escrow agent to advance refund $13,975,000 of general obligation bonds maturing on various dates from 2019 to 2029 and for a current refunding of $1,138,500 of general obligation bonds. As a result of the refunding bonds, the Town reduced its total debt service requirements by $2,026,392, which resulted in an economic gain (difference between the present value of the debt service payments on the old and new debt) of $2,026,392. Town of Nantucket, Massachusetts Page 87 of 137 Comprehensive Annual Financial Report IV. Prior Period Restatements A prior period adjustment was made for a decrease in the capital assets reported in the Governmental activities and an increase in the capital assets reported in the Wannacomet Water and Our Island Home Enterprise Funds. A summary of the restatements is as follows: Discretely Presented Component Unit’s A prior period adjustment was made to decrease the beginning net position of Nantucket County to reflect unrecorded inter-municipal transactions. A summary of the restatement is as follows: Our Governmental Business-type Wannacomet Island Activities Activities Water Home Prior year as presented 166,225,136$ 117,719,854$ 16,023,631$ (6,399,697)$ Restate capital asset balances (2,429,585) 3,129,783 2,743,847 385,936 As restated 163,795,551$ 120,849,637$ 18,767,478$ (6,013,761)$ Nantucket County Prior year as presented 6,601,164$ Record inter-municipal activity (37,076) As restated 6,564,088$ Town of Nantucket, Massachusetts Page 88 of 137 Comprehensive Annual Financial Report Required Supplementary Information Town of Nantucket, Massachusetts Page 89 of 137 Comprehensive Annual Financial Report TOWN OF NANTUCKET, MASSACHUSETTS REQUIRED SUPPLEMENTARY INFORMATION - PENSIONS YEAR ENDED JUNE 30, 2016 SCHEDULE OF THE TOWN'S PROPORTIONATE SHARE OF THE NET PENSION LIABILITY 2015 2014 Town's proportion of the net pension liability (asset)9.52%9.51% Town's proportionate share of the net pension liability (asset)59,964$ 53,675$ Town's covered-employee payroll 25,827$ 24,938$ Town's proportionate share of the net pension liability (asset) as a percentage of its covered-employee payroll 232.18%215.23% Plan fiduciary net position as a percentage of the total pension liability 58.10%60.43% SCHEDULE OF THE TOWN CONTRIBUTIONS TO PENSION PLAN 2015 2014 Actuarially determined contribution 5,143$ 4,959$ Contributions in relation to the actuarially determined contribution 5,143 4,959 Contribution deficiency (excess)-$ -$ Town's covered-employee payroll 25,827$ 24,938$ Contributions as a percentage of covered-employee payroll 19.9%19.9% 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) Year Ended December 31, Year Ended December 31, Town of Nantucket, Massachusetts Page 90 of 137 Comprehensive Annual Financial Report TOWN OF NANTUCKET, MASSACHUSETTS REQUIRED SUPPLEMENTARY INFORMATION - PENSIONS YEAR ENDED JUNE 30, 2016 SCHEDULE OF THE COUNTY'S PROPORTIONATE SHARE OF THE NET PENSION LIABILITY 2015 2014 County's proportion of the net pension liability (asset)0.09%0.09% County's proportionate share of the net pension liability (asset)551$ 519$ County's covered-employee payroll 243$ 241$ County's proportionate share of the net pension liability (asset) as a percentage of its covered-employee payroll 226.75%215.35% Plan fiduciary net position as a percentage of the total pension liability 58.10%60.43% SCHEDULE OF THE COUNTY CONTRIBUTIONS TO PENSION PLAN 2015 2014 Actuarially determined contribution 47$ 48$ Contributions in relation to the actuarially determined contribution 47 48 Contribution deficiency (excess)-$ -$ County's covered-employee payroll 243$ 241$ Contributions as a percentage of covered-employee payroll 19.3%19.9% 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) Year Ended December 31, (dollar amounts are in thousands) Year Ended December 31, Town of Nantucket, Massachusetts Page 91 of 137 Comprehensive Annual Financial Report TOWN OF NANTUCKET, MASSACHUSETTS REQUIRED SUPPLEMENTARY INFORMATION - PENSIONS YEAR ENDED JUNE 30, 2016 SCHEDULE OF THE LAND BANK'S PROPORTIONATE SHARE OF THE NET PENSION LIABILITY 2015 2014 Land Bank's proportion of the net pension liability (asset)0.23%0.26% Land Bank's proportionate share of the net pension liability (asset)1,428$ 1,471$ Land Bank's covered-employee payroll 629$ 683$ Land Bank's proportionate share of the net pension liability (asset) as a percentage of its covered-employee payroll 227.03%215.37% Plan fiduciary net position as a percentage of the total pension liability 58.10%60.43% SCHEDULE OF THE LAND BANK CONTRIBUTIONS TO PENSION PLAN 2015 2014 Actuarially determined contribution 122$ 136$ Contributions in relation to the actuarially determined contribution 122 136 Contribution deficiency (excess)-$ -$ Land Bank's covered-employee payroll 629$ 683$ Contributions as a percentage of covered-employee payroll 19.4%19.9% 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) Year Ended December 31, (dollar amounts are in thousands) Year Ended December 31, Town of Nantucket, Massachusetts Page 92 of 137 Comprehensive Annual Financial Report TOWN OF NANTUCKET, MASSACHUSETTS REQUIRED SUPPLEMENTARY INFORMATION - PENSIONS YEAR ENDED JUNE 30, 2016 2015 2014 Commonwealth's proportion of the collective net pension liability (asset)100.0%100.0% Town's proportion of the collective net pension liability (asset)0.0%0.0% Commonwealth's proportionate share of the net pension liability (asset)20,489,643$ 15,896,354$ Commonwealth's actuarially determined contribution 1,021,930$ 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 auditor's report. (dollar amounts are in thousands) Year Ended June 30, SCHEDULE OF THE COMMONWEALTH'S COLLECTIVE SHARE OF THE NET PENSION LIABILITY MASSACHUSETTS TEACHER'S RETIREMENT SYSTEM Town of Nantucket, Massachusetts Page 93 of 137 Comprehensive Annual Financial Report TOWN OF NANTUCKET, MASSACHUSETTS REQUIRED SUPPLEMENTARY INFORMATION - OPEB YEAR ENDED JUNE 30, 2016 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) 07/01/14 248,522$ 88,841,553$ 88,593,031$ 0.28%N/A N/A 07/01/12 - 88,559,116 88,559,116 0%N/A N/A 07/01/10 - 82,253,000 82,253,000 0%N/A N/A 07/01/09 - 127,923,000 127,923,000 0%N/A N/A 07/01/07 - 104,980,000 104,980,000 0%N/A N/A Annual (A) Year Ended OPEB Actual Percentage June 30,Cost Contributions Contributed 2016 7,915,877$ 2,640,352$ 33.4% 2015 7,430,993 2,278,693 30.7% 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% N/A - Information not available. See accompanying independent auditors' report. SCHEDULE OF FUNDING PROGRESS SCHEDULES OF CONTRIBUTION FUNDING Town of Nantucket, Massachusetts Page 94 of 137 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, 2016 Budgeted Amounts Actual Actual Variance Original Final Budgetary Budgetary Positive Budget Budget Amounts Encumbrances Adjusted (Negative) Revenues: Taxes: Real estate taxes 67,270,550$ 67,270,550$ 67,529,653$ -$ 67,529,653 259,103 Personal property taxes 1,379,872 1,379,872 1,374,947 - 1,374,947 (4,925) Tax title - - 293,016 - 293,016 293,016 Motor vehicle excise 1,900,000 1,900,000 2,674,907 - 2,674,907 774,907 Boat excise 34,000 34,000 36,132 - 36,132 2,132 Meals taxes 860,000 860,000 997,903 - 997,903 137,903 Room occupancy taxes 2,550,000 2,550,000 3,428,604 - 3,428,604 878,604 73,994,422 73,994,422 76,335,162 - 76,335,162 2,340,740 Intergovernmental: State aid - chapter 70 2,980,944 2,980,944 2,980,944 - 2,980,944 - State aid - unrestricted 73,041 73,041 73,041 - 73,041 - State aid - state owned land 116,162 116,162 106,482 - 106,482 (9,680) State aid - other 2,237 2,237 6,718 - 6,718 4,481 Federal disaster aid - - 843,805 - 843,805 843,805 3,172,384 3,172,384 4,010,990 - 4,010,990 838,606 Departmental fees, charges, and other: Payments in lieu of taxes 7,330 7,330 33,231 - 33,231 25,901 Selectmen rentals 183,950 183,950 310,324 - 310,324 126,374 Planning office filing and inspection fees 203,000 203,000 94,896 - 94,896 (108,104) Police department fees 147,600 147,600 134,121 - 134,121 (13,479) Public safety detail charges 60,000 60,000 31,379 - 31,379 (28,621) Fire department fees 58,200 58,200 54,545 - 54,545 (3,655) Inspection fees 216,060 216,060 420,398 - 420,398 204,338 Harbormaster fees 179,140 179,140 317,535 - 317,535 138,395 Public works rentals 190,000 190,000 116,016 - 116,016 (73,984) Historic district fees 176,550 176,550 182,913 - 182,913 6,363 Medicare reimbursements 49,245 49,245 11,388 - 11,388 (37,857) Other miscellaneous 211,160 211,160 419,589 - 419,589 208,429 1,682,235 1,682,235 2,126,335 - 2,126,335 444,100 Licenses and permits: Liquor licenses 254,000 254,000 214,900 - 214,900 (39,100) Building permits 869,470 869,470 1,219,361 - 1,219,361 349,891 Other licenses and permits 213,995 213,995 278,245 - 278,245 64,250 1,337,465 1,337,465 1,712,506 - 1,712,506 375,041 Fines and forfeitures: Parking and court fines 252,300 252,300 223,712 - 223,712 (28,588) Other fines 12,500 12,500 45,729 - 45,729 33,229 264,800 264,800 269,441 - 269,441 4,641 Penalties and interest on taxes 599,140 599,140 657,303 - 657,303 58,163 Interest and investment income 110,500 110,500 124,002 - 124,002 13,502 Total Revenues 81,160,946 81,160,946 85,235,739 - 85,235,739 4,074,793 Town of Nantucket, Massachusetts Page 95 of 137 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, 2016 Budgeted Amounts Actual Actual Variance Original Final Budgetary Budgetary Positive Budget Budget Amounts Encumbrances Adjusted (Negative) Expenditures: General Government: Moderator: Salary 180 180 178 - 178 2 Operating 1,500 1,500 - - - 1,500 1,680 1,680 178 - 178 1,502 Town Administration: Salary 657,200 657,200 600,777 - 600,777 56,423 Operating 330,746 340,746 205,338 92,864 298,202 42,544 Articles 2,347,800 2,286,801 659,068 1,627,733 2,286,801 - 3,335,746 3,284,747 1,465,183 1,720,597 3,185,780 98,967 Finance Committee: Operating 17,675 17,675 17,675 - 17,675 - Articles 500,000 199,616 - - - 199,616 517,675 217,291 17,675 - 17,675 199,616 Finance and Operations: Salary 611,840 588,188 536,577 - 536,577 51,611 Operating 255,667 250,057 134,401 75,801 210,202 39,855 Articles 10,230 33,390 24,038 7,609 31,647 1,743 877,737 871,635 695,016 83,410 778,426 93,209 Assessor: Salary 414,251 414,251 400,293 - 400,293 13,958 Operating 199,461 199,461 123,699 166 123,865 75,596 613,712 613,712 523,992 166 524,158 89,554 Collector: Salary 300,570 300,570 291,011 - 291,011 9,559 Operating 90,208 90,208 62,771 2,384 65,155 25,053 390,778 390,778 353,782 2,384 356,166 34,612 Treasurer: Salary 310,410 334,062 334,062 - 334,062 - Operating 110,860 111,027 106,880 4,147 111,027 - 421,270 445,089 440,942 4,147 445,089 - Information Systems/GIS: Salary 500,760 500,760 457,171 29,744 486,915 13,845 Operating 361,044 390,650 332,179 480 332,659 57,991 861,804 891,410 789,350 30,224 819,574 71,836 Legal: Operating 369,834 469,835 383,200 67,602 450,802 19,033 369,834 469,835 383,200 67,602 450,802 19,033 Human Resources: Salary 152,700 170,700 170,853 - 170,853 (153) Operating 28,770 33,770 33,942 789 34,731 (961) 181,470 204,470 204,795 789 205,584 (1,114) Town Clerk: Salary 240,500 246,500 246,990 - 246,990 (490) Operating 80,490 80,490 59,214 18,830 78,044 2,446 320,990 326,990 306,204 18,830 325,034 1,956 (continued) Town of Nantucket, Massachusetts Page 96 of 137 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, 2016 Budgeted Amounts Actual Actual Variance Original Final Budgetary Budgetary Positive Budget Budget Amounts Encumbrances Adjusted (Negative) Nantucket Planning Office: Salary 750,150 680,053 673,582 - 673,582 6,471 Operating 279,908 278,087 255,738 11,762 267,500 10,587 1,030,058 958,140 929,320 11,762 941,082 17,058 Public Buildings: Operating 1,000,431 1,015,964 833,440 142,884 976,324 39,640 1,000,431 1,015,964 833,440 142,884 976,324 39,640 Natural Resources: Salary 465,824 465,824 457,557 - 457,557 8,267 Operating 91,061 91,026 74,585 10,356 84,941 6,085 556,885 556,850 532,142 10,356 542,498 14,352 Insurances: Auto casualty 120,000 120,000 124,286 - 124,286 (4,286) Blanket liability 1,429,000 1,429,000 1,022,205 - 1,022,205 406,795 Claims deductible 89,675 89,675 56,205 5,000 61,205 28,470 Insurance consulting 42,910 42,910 55,940 2,783 58,723 (15,813) 1,681,585 1,681,585 1,258,636 7,783 1,266,419 415,166 Total General Government 12,161,655 11,930,176 8,733,855 2,100,934 10,834,789 1,095,387 Public Safety: Police: Salary 3,953,640 4,198,640 4,175,514 - 4,175,514 23,126 Operating 1,056,490 811,490 610,513 177,677 788,190 23,300 5,010,130 5,010,130 4,786,027 177,677 4,963,704 46,426 Centralized Dispatch: Salary 701,520 701,520 698,405 - 698,405 3,115 701,520 701,520 698,405 - 698,405 3,115 Fire: Salary 2,355,088 2,462,088 2,454,486 - 2,454,486 7,602 Operating 279,887 289,887 273,428 17,165 290,593 (706) 2,634,975 2,751,975 2,727,914 17,165 2,745,079 6,896 Inspectors: Salary 597,060 598,254 598,254 - 598,254 - Operating 22,040 23,629 23,240 389 23,629 - 619,100 621,883 621,494 389 621,883 - Emergency Management: Operating 7,000 7,000 1,859 75 1,934 5,066 7,000 7,000 1,859 75 1,934 5,066 Marine: Salary 691,800 691,800 665,767 - 665,767 26,033 Operating 96,158 96,158 54,313 4,993 59,306 36,852 Articles 213,230 213,230 28,075 185,155 213,230 - 1,001,188 1,001,188 748,155 190,148 938,303 62,885 Total Public Safety 9,973,913 10,093,696 9,583,854 385,454 9,969,308 124,388 Town of Nantucket, Massachusetts Page 97 of 137 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, 2016 Budgeted Amounts Actual Actual Variance Original Final Budgetary Budgetary Positive Budget Budget Amounts Encumbrances Adjusted (Negative) Education: Salary and operating 25,880,506 25,880,506 24,839,584 822,902 25,662,486 218,020 Articles 1,878,064 1,878,064 952,158 925,905 1,878,063 1 Total Education 27,758,570 27,758,570 25,791,742 1,748,807 27,540,549 218,021 Public Works: Public Works: Salary 2,092,796 2,182,796 2,157,592 - 2,157,592 25,204 Operating 497,307 547,307 450,460 46,449 496,909 50,398 Articles 545,547 544,792 159,786 335,007 494,793 49,999 3,135,650 3,274,895 2,767,838 381,456 3,149,294 125,601 Street Lighting: Operating 181,808 180,000 150,909 - 150,909 29,091 181,808 180,000 150,909 - 150,909 29,091 Mosquito Control: Operating 111,843 111,843 89,662 - 89,662 22,181 111,843 111,843 89,662 - 89,662 22,181 Snow and Ice Removal: Operating 35,000 35,000 234,432 73,393 307,825 (272,825) 35,000 35,000 234,432 73,393 307,825 (272,825) Gas/Town Vehicles: Operating 380,000 380,000 237,191 71,033 308,224 71,776 380,000 380,000 237,191 71,033 308,224 71,776 Total Public Works 3,844,301 3,981,738 3,480,032 525,882 4,005,914 (24,176) Health and Human Services: Health: Salary 110,021 194,083 194,083 - 194,083 - Operating 31,815 39,700 29,608 8,726 38,334 1,366 141,836 233,783 223,691 8,726 232,417 1,366 Commision on Disability: Salary 10,100 10,100 7,531 - 7,531 2,569 Operating 1,590 1,590 1,442 - 1,442 148 11,690 11,690 8,973 - 8,973 2,717 Senior Services/Council on Aging: Salary 154,240 159,452 159,452 - 159,452 - Operating 26,717 26,100 15,053 295 15,348 10,752 180,957 185,552 174,505 295 174,800 10,752 Veterans Services: Salary 15,000 15,000 4,678 - 4,678 10,322 Operating 17,900 17,900 11,212 612 11,824 6,076 32,900 32,900 15,890 612 16,502 16,398 Human Services: Salary 184,160 178,948 69,829 - 69,829 109,119 Operating 16,518 15,200 4,887 - 4,887 10,313 Articles 350,000 350,000 338,688 11,312 350,000 - 550,678 544,148 413,404 11,312 424,716 119,432 Total Health and Human Services 918,061 1,008,073 836,463 20,945 857,408 150,665 (Continued) Town of Nantucket, Massachusetts Page 98 of 137 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, 2016 Budgeted Amounts Actual Actual Variance Original Final Budgetary Budgetary Positive Budget Budget Amounts Encumbrances Adjusted (Negative) Culture and Recreation: Atheneum (Library): Operating 693,439 693,439 693,439 - 693,439 - 693,439 693,439 693,439 - 693,439 - Visitor Services: Salary 277,045 314,545 308,969 - 308,969 5,576 Operating 153,985 146,465 126,367 30,348 156,715 (10,250) 431,030 461,010 435,336 30,348 465,684 (4,674) Historical District Commission: Salary 107,890 108,731 108,731 - 108,731 - 107,890 108,731 108,731 - 108,731 - Town Clock: Operating 4,998 4,700 1,486 77 1,563 3,137 4,998 4,700 1,486 77 1,563 3,137 Total Culture and Recreation 1,237,357 1,267,880 1,238,992 30,425 1,269,417 (1,537) State and County Assessments: State assessments and charges 67,044 67,044 74,803 - 74,803 (7,759) Transportation authorities assessments 346,532 346,532 346,532 - 346,532 - County assessments and charges 170,201 170,201 170,201 - 170,201 - Total State and County Assessments 583,777 583,777 591,536 - 591,536 (7,759) Pension and Fringe Benefits: Medical Insurance: Salary 11,258,000 10,980,000 10,698,582 1,751 10,700,333 279,667 11,258,000 10,980,000 10,698,582 1,751 10,700,333 279,667 Unemployment: Salary 170,000 170,000 112,275 - 112,275 57,725 170,000 170,000 112,275 - 112,275 57,725 Workers' Compensation: Salary 197,000 197,000 197,000 - 197,000 - 197,000 197,000 197,000 - 197,000 - Laborer's Union Pension: Salary 48,916 44,000 38,577 - 38,577 5,423 48,916 44,000 38,577 - 38,577 5,423 Pension Assessments: Barnstable Retirement 3,567,165 3,567,165 3,567,128 - 3,567,128 37 3,567,165 3,567,165 3,567,128 - 3,567,128 37 Other Employee Benefits: Salary 442,655 293,155 141,498 - 141,498 151,657 442,655 293,155 141,498 - 141,498 151,657 Total Pension and Fringe Benefits 15,683,736 15,251,320 14,755,060 1,751 14,756,811 494,509 Town of Nantucket, Massachusetts Page 99 of 137 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, 2016 Budgeted Amounts Actual Actual Variance Original Final Budgetary Budgetary Positive Budget Budget Amounts Encumbrances Adjusted (Negative) Debt Service 7,255,057 7,195,057 6,747,058 - 6,747,058 447,999 Total Expenditures 79,416,427 79,070,287 71,758,592 4,814,198 76,572,790 2,497,497 Other Financing Sources (Uses) Transfers in 893,019 893,019 937,421 937,421 44,402 Transfers out (12,766,000) (18,801,710) (18,801,710) (18,801,710) - Total Other Financing Sources (Uses)(11,872,981) (17,908,691) (17,864,289) (17,864,289)$ 44,402 Excess (Deficiency) of Revenues and Other Financing Sources Over Expenditures/Uses Of Prior Year Budgetary Fund Balance (10,128,462) (15,818,032) (4,387,142)$ 6,616,692$ Other Budgetary Items Use of unassigned fund balance (free cash)3,915,169$ 9,225,415$ Use of excess abatement reserve (overlay surplus)- 379,324 Prior year encumbrances 2,161,707 2,161,707 Prior year articles 4,013,474 4,013,474 Article reversions 195,331 195,331 Prior year deficits (157,219) (157,219) Total Other Budgetary Items 10,128,462 15,818,032 Net budget and actual -$ -$ (Concluded) The notes to the financial statements are an integral part of this statement. The notes to the required supplementary information are and integral part of this statement. Town of Nantucket, Massachusetts Page 100 of 137 Comprehensive Annual Financial Report TOWN OF NANTUCKET, MASSACHUSETTS NOTES TO REQUIRED SUPPLEMENTARY INFORMATION YEAR ENDED JUNE 30, 2016 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 2016, Town Meeting approved various supplemental budgetary appropriations which decreased departmental budgets approximately $350,000 and increased transfers to other funds by approximately $6.0 million. The Finance Director’s Office has the responsibility to ensure that budgetary control is maintained in the manner in which the appropriations were voted by Town Meeting. Budgetary control is exercised through the Town’s accounting system. Budgetary-to-GAAP Reconciliation – The Town’s general fund is prepared on a basis of accounting other than GAAP to conform to the Uniform Municipal Accounting System basis of accounting as prescribed by the Massachusetts Department of Revenue. A reconciliation of the budgetary-basis to GAAP-basis results for the General Fund for the fiscal year ended June 30, 2016, is as follows: Basis of Accounting Fund Perspective Differences Differences Total Revenues on a budgetary basis 85,235,739$ Stabilization revenue -$ 209,822$ 209,822 Change in accruing revenues to GAAP basis (96,935) - (96,935) On behalf payments 3,638,237 - 3,638,237 Revenues on a GAAP basis 3,541,302$ 209,822$ 88,986,863$ Expenditures on a budgetary basis 71,758,592$ Reclass indirect transfers against expenditures (643,019)$ -$ (643,019) Refunding transaction 63,130 - 63,130 On behalf payments 3,638,237 - 3,638,237 Reclass transfer to private purpose trust - 1,000,000 1,000,000 Expenditures on a GAAP basis 3,058,348$ 1,000,000$ 75,816,940$ Other financing (uses) on a budgetary basis (17,864,289)$ Reclass indirect transfers against expenditures (643,019)$ -$ (643,019) Stabilization transfers - 1,250,000 1,250,000 Refunding transaction 63,130 - 63,130 Reclass transfer to private purpose trust - 1,000,000 1,000,000 Other financing (uses) on a GAAP basis (579,889)$ 2,250,000$ (16,194,178)$ Town of Nantucket, Massachusetts Page 101 of 137 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 $272,825. This will be raised through subsequent tax assessments when the Town sets its tax rate for fiscal year 2017. Town of Nantucket, Massachusetts Page 102 of 137 Comprehensive Annual Financial Report Combining Statements Town of Nantucket, Massachusetts Page 103 of 137 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 104 of 137 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 105 of 137 Comprehensive Annual Financial Report School School Town Town School Federal State Federal State Lunch Grants Grants Grants Grants Assets: Cash and cash equivalents 212,133$ 142,540$ 603,708$ 31,005$ 786,393$ Investments - - - - - Receivables, net of allowance for uncollectibles: Property taxes - - - - - Departmental and other - - - - 3,883 Intergovernmental 42,375 - - 59,825 129,050 Total Assets 254,508 142,540 603,708 90,830 919,326 Total Deferred Outflows of Resources - - - - - Total Assets and Deferred Outflows of Resources 254,508$ 142,540$ 603,708$ 90,830$ 919,326$ Liabilities and Fund Balances: Liabilities: Warrants and accounts payable 61,881$ 78$ -$ 1,859$ 53,990$ Accrued payroll and withholdings - 2,331 - 4,159 1,870 Other liabilities - - - - - Due to other funds - - - - - Bond anticipation notes payable - - - - 265,551 Total Liabilities 61,881 2,409 - 6,018 321,411 Deferred Inflows of Resources Unavailable revenue - property taxes - - - - - Unavailable revenue - other - - - - 3,883 Total Deferred Inflows of Resources - - - - 3,883 Fund Balances: Nonspendable - - - - - Restricted 192,627 140,131 603,708 84,812 594,032 Total Fund Balances 192,627 140,131 603,708 84,812 594,032 Total Liabilities, Deferred Inflows of Resources and Fund Balances 254,508$ 142,540$ 603,708$ 90,830$ 919,326$ JUNE 30, 2016 COMBINING BALANCE SHEET NONMAJOR GOVERNMENTAL FUNDS Special Revenue Funds Town of Nantucket, Massachusetts Page 106 of 137 Comprehensive Annual Financial Report Sub-total Community Road School Town Property Sale Gift Special Preservation Improvements Revolving Revolving Proceeds Funds Revenue Funds 4,769,191$ -$ 1,000,935$ 5,309,124$ 1,602,555$ 578,238$ 15,035,822$ - - - - - - - 115,134 - - - - - 115,134 45,432 - - 153,754 - - 203,069 - 362,461 - - - - 593,711 4,929,757 362,461 1,000,935 5,462,878 1,602,555 578,238 15,947,736 - - - - - - - 4,929,757$ 362,461$ 1,000,935$ 5,462,878$ 1,602,555$ 578,238$ 15,947,736$ 269,723$ -$ -$ 543,345$ -$ 42,538$ 973,414$ 2,304 - 33,007 60,279 - - 103,950 - - 146,443 - - - 146,443 - 362,461 - - - - 362,461 - - - - - - 265,551 272,027 362,461 179,450 603,624 - 42,538 1,851,819 115,134 - - - - - 115,134 45,432 - - 153,754 - - 203,069 160,566 - - 153,754 - - 318,203 - - - - - - - 4,497,164 - 821,485 4,705,500 1,602,555 535,700 13,777,714 4,497,164 - 821,485 4,705,500 1,602,555 535,700 13,777,714 4,929,757$ 362,461$ 1,000,935$ 5,462,878$ 1,602,555$ 578,238$ 15,947,736$ (Continued) Town of Nantucket, Massachusetts Page 107 of 137 Comprehensive Annual Financial Report NONMAJOR GOVERNMENTAL FUNDS COMBINING BALANCE SHEET JUNE 30, 2016 Permanent Funds Total Cemetery Other Sub-total Nonmajor Trust Trust Permanent Governmental Funds Funds Funds Funds Assets: Cash and cash equivalents -$ -$ -$ 15,035,822$ Investments 149,053 18,144 167,197 167,197 Receivables, net of allowance for uncollectibles: Property taxes - - - 115,134 Departmental and other - - - 203,069 Intergovernmental - - - 593,711 Total Assets 149,053 18,144 167,197 16,114,933 Total Deferred Outflows of Resources - - - - Total Assets and Deferred Outflows of Resources 149,053$ 18,144$ 167,197$ 16,114,933$ Liabilities and Fund Balances: Liabilities: Warrants and accounts payable -$ -$ -$ 973,414$ Accrued payroll and withholdings - - - 103,950 Other liabilities - - - 146,443 Due to other funds - - - 362,461 Bond anticipation notes payable - - - 265,551 Total Liabilities - - - 1,851,819 Deferred Inflows of Resources Unavailable revenue - property taxes - - - 115,134 Unavailable revenue - other - - - 203,069 Total Deferred Inflows of Resources - - - 318,203 Fund Balances: Nonspendable 44,305 500 44,805 44,805 Restricted 104,748 17,644 122,392 13,900,106 Total Fund Balances 149,053 18,144 167,197 13,944,911 Total Liabilities, Deferred Inflows of Resources and Fund Balances 149,053$ 18,144$ 167,197$ 16,114,933$ (Concluded) Town of Nantucket, Massachusetts Page 108 of 137 Comprehensive Annual Financial Report This page intentionally left blank. Town of Nantucket, Massachusetts Page 109 of 137 Comprehensive Annual Financial Report School School Town Town School Federal State Federal State Lunch Grants Grants Grants Grants Revenues: Intergovernmental 176,110$ 483,967$ 549,938$ 254,256$ 564,012$ Motor vehicle and other excises - - - - - Community preservation surcharges - - - - - Investment income - - - 45 - Departmental and other revenue 392,508 - - - 53,624 Contributions and donations - - - - - Total Revenues 568,618 483,967 549,938 254,301 617,636 Expenditures: Current: General government - - - 234,195 120,499 Public safety - - - 21,645 110,683 Education 476,796 513,705 501,297 - - Public works - - - - - Health and human services - - - - 62,756 Culture and recreation - - - - 31,959 Debt service: Principal - - - - 311,793 Interest - - - - 292 Total Expenditures 476,796 513,705 501,297 255,840 637,982 Excess (Deficiency) Of Revenues Over (Under) Expenditures 91,822 (29,738) 48,641 (1,539) (20,346) Other Financing Sources (Uses): Sale of capital assets - - - - - Transfers in - - - - - Transfers out - - - - - Total Other Financing Sources (Uses)- - - - - Net Change in Fund Balances 91,822 (29,738) 48,641 (1,539) (20,346) Fund Balances - Beginning of Year 100,805 169,869 555,067 86,351 614,378 Fund Balances - End of Year 192,627$ 140,131$ 603,708$ 84,812$ 594,032$ Special Revenue Funds FISCAL YEAR ENDED JUNE 30, 2016 COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES NONMAJOR GOVERNMENTAL FUNDS Town of Nantucket, Massachusetts Page 110 of 137 Comprehensive Annual Financial Report Sub-total Community Road School Town Property Sale Gift Special Preservation Improvements Revolving Revolving Proceeds Funds Revenue Funds 580,511$ 412,461$ -$ 178,798$ -$ -$ 3,200,053$ - - - 36,237 - - 36,237 1,930,955 - - - - - 1,930,955 33,610 - - 2,131 - - 35,786 34,022 - 1,097,100 1,509,945 - - 3,087,199 - - - - - 408,337 408,337 2,579,098 412,461 1,097,100 1,727,111 - 408,337 8,698,567 - - - 265,297 2,137 121,364 743,492 - - - 1,006,612 - 145,923 1,284,863 - - 1,481,772 - - 146,866 3,120,436 - 412,461 - 1,218 - 29,624 443,303 - - - 146,369 - 6,309 215,434 2,986,784 - - 95,900 - 439 3,115,082 - - - - - - 311,793 3,127 - - - - - 3,419 2,989,911 412,461 1,481,772 1,515,396 2,137 450,525 9,237,822 (410,813) - (384,672) 211,715 (2,137) (42,188) (539,255) - - - - 1,439,916 - 1,439,916 - - 350,000 - - - 350,000 - - - (814,402) (6,953,000) (120,000) (7,887,402) - - 350,000 (814,402) (5,513,084) (120,000) (6,097,486) (410,813) - (34,672) (602,687) (5,515,221) (162,188) (6,636,741) 4,907,977 - 856,157 5,308,187 7,117,776 697,888 20,414,455 4,497,164$ -$ 821,485$ 4,705,500$ 1,602,555$ 535,700$ 13,777,714$ (Continued) Town of Nantucket, Massachusetts Page 111 of 137 Comprehensive Annual Financial Report NONMAJOR GOVERNMENTAL FUNDS COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES FISCAL YEAR ENDED JUNE 30, 2016 Permanent Funds Total Cemetery Other Sub-total Nonmajor Trust Trust Permanent Governmental Funds Funds Funds Funds Revenues: Intergovernmental -$ -$ -$ 3,200,053$ Motor vehicle and other excises - - - 36,237 Community preservation surcharges - - - 1,930,955 Investment income 4,969 641 5,610 41,396 Departmental and other revenue 5,400 - 5,400 3,092,599 Contributions and donations - - - 408,337 Total Revenues 10,369 641 11,010 8,709,577 Expenditures: Current: General government - - - 743,492 Public safety - - - 1,284,863 Education - - - 3,120,436 Public works - - - 443,303 Health and human services - - - 215,434 Culture and recreation - - - 3,115,082 Pension and fringe benefits - - - - Debt service: Principal - - - 311,793 Interest - - - 3,419 Total Expenditures - - - 9,237,822 Excess (Deficiency) Of Revenues Over (Under) Expenditures 10,369 641 11,010 (528,245) Other Financing Sources (Uses): Sale of capital assets - - - 1,439,916 Transfers in - - - 350,000 Transfers out - - - (7,887,402) Total Other Financing Sources (Uses)- - - (6,097,486) Net Change in Fund Balances 10,369 641 11,010 (6,625,731) Fund Balances - Beginning of Year 138,684 17,503 156,187 20,570,642 Fund Balances - End of Year 149,053$ 18,144$ 167,197$ 13,944,911$ (Concluded) Town of Nantucket, Massachusetts Page 112 of 137 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 113 of 137 Comprehensive Annual Financial Report INTERNAL SERVICE FUNDS COMBINING STATEMENT OF NET POSITION JUNE 30, 2016 Total Health Workers'Internal Claims Compensation Service Funds Assets: Current assets: Cash and cash equivalents 2,340,444$ 100,899$ 2,441,343$ Reinsured claims receivable 197,238 - 197,238 Prepaid items 1,183,200 - 1,183,200 Total Assets 3,720,882 100,899 3,821,781 Total Deferred Outflows of Resources - - - Total Assets and Deferred Outflows of Resources 3,720,882 100,899 3,821,781 Liabilities: Current liabilities: Warrants and accounts payable 458,108$ 4,413$ 462,521$ Health claims incurred but not reported 898,614 - 898,614 Workers' compensation claims - 104,847 104,847 Total Current Liabilities 1,356,722 109,260 1,465,982 Total Deferred Inflows of Resources - - - Total Liabilities and Deferred Inflows of Resources 1,356,722 109,260 1,465,982 Net Position: Unrestricted 2,364,160 (8,361) 2,355,799 TOTAL NET POSITION 2,364,160$ (8,361)$ 2,355,799$ Town of Nantucket, Massachusetts Page 114 of 137 Comprehensive Annual Financial Report INTERNAL SERVICE FUNDS COMBINING STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET POSITION FISCAL YEAR ENDED JUNE 30, 2016 Total Health Workers'Internal Service Claims Compensation Funds Operating Revenues: Employee contributions 2,226,306$ -$ 2,226,306$ Employer contributions 12,618,730 197,000 12,815,730 Reinsured claims proceeds 349,942 - 349,942 Total Operating Revenues 15,194,978 197,000 15,391,978 Operating Expenditures: Employee benefits 14,358,950 261,925 14,620,875 Operating Income (loss)836,028 (64,925) 771,103 Nonoperating Revenues: Investment Income 278 13,836 14,114 Income (loss) Before Transfers 836,306 (51,089) 785,217 Change in Net Position 836,306 (51,089) 785,217 Fund Balances - Beginning of Year 1,527,854 42,728 1,570,582 Fund Balances - End of Year 2,364,160$ (8,361)$ 2,355,799$ Town of Nantucket, Massachusetts Page 115 of 137 Comprehensive Annual Financial Report INTERNAL SERVICE FUNDS COMBINING STATEMENT OF CASH FLOWS FISCAL YEAR ENDED JUNE 30, 2016 Total Health Workers'Internal Service Claims Compensation Funds Cash Flows From Operating Activities: Receipts from employees 2,226,306$ -$ 2,226,306$ Receipts from employer 12,618,730 197,000 12,815,730 Receipts from reinsured claims 303,236 - 303,236 Payments for interfund services used (14,882,257) (285,126) (15,167,383) Net Cash Provided by (Used in) Operating Activities 266,015 (88,126) 177,889 Cash Flows From Investing Activities: Investment income 278 13,836 14,114 Investment of operating cash - 116,635 116,635 Net Cash Provided by (Used in) Investing Activities 278 130,471 130,749 Net Change in Cash and Cash Equivalents 266,293 42,345 308,638 Cash and Cash Equivalents: Beginning of the Year 2,074,151 58,554 2,132,705 End of the Year 2,340,444$ 100,899$ 2,441,343$ Reconciliation of Operating Income to Net Cash Provided by (Used in) Operating Activities: Operating income (loss)836,028$ (64,925)$ 771,103$ Adjustments to reconcile operating income (loss) to net cash provided by (used in) operating activities: Changes in assets and liablities: Receivables (46,706) - (46,706) Prepaid items (1,033,559) - (1,033,559) Deposits held by third party 1,952,600 - 1,952,600 Accounts payable and accrued expenses (1,442,348) (23,201) (1,465,549) Net Cash Provided by (Used in) Operating Activities 266,015$ (88,126)$ 177,889$ Town of Nantucket, Massachusetts Page 116 of 137 Comprehensive Annual Financial Report This page intentionally left blank. Town of Nantucket, Massachusetts Page 117 of 137 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 118 of 137 Comprehensive Annual Financial Report AGENCY FUND STATEMENT OF CHANGES IN ASSETS AND LIABILITIES FISCAL YEAR ENDED JUNE 30, 2016 Beginning End of Year Additions Deletions of Year Assets Current assets: Cash and cash equivalents 988,566$ 1,608,526$ (1,160,527)$ 1,436,565$ Receivables, net of allowance 115,510 479,117 (495,338) 99,289 Total Assets 1,104,076$ 2,087,643$ (1,655,865)$ 1,535,854$ Liabilities Current liabilities: Warrants and accounts payable 35,000$ 403,356$ (419,135)$ 19,221$ Accrued payroll and withholdings 10,795 474,216 (473,214) 11,797 Agency liabilities 410,851 784,611 (690,483) 504,979 Planning board deposits 647,430 425,460 (76,033) 996,857 Total Liabilities 1,104,076$ 2,087,643$ (1,658,865)$ 1,532,854$ Town of Nantucket, Massachusetts Page 119 of 137 Comprehensive Annual Financial Report This page intentionally left blank. Town of Nantucket, Massachusetts Page 120 of 137 Comprehensive Annual Financial Report STATISTICAL SECTION The Island is known for having some of the most scenic water views in the world; and Jetties’ Beach (above and below) is a prime example of the breathtaking beauty both during the peak beach hours and at sunset. It is a wonderful and peaceful place for families to enjoy their day. 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 121 of 137 Comprehensive Annual Financial Report LAST TEN FISCAL YEARS 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Governmental activities: Invested in capital assets……….…………………. 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$ 186,717,700$ Restricted………………………………………………………………………….. 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 27,131,162 Unrestricted……………………………………………………………… 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) (44,950,433) Total governmental activities net position……………………………………….. 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$ 168,898,429$ Business-type activities: Invested in capital assets……….…………………. 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$ 120,659,914$ Restricted……………………………...…………………..… - - - - - - - - - - Unrestricted………………………………………………………………. 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) 6,361,265 Total business-type activities net position……………………………. 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$ 127,021,179$ Primary government: Invested in capital assets……….…………………. 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$ 307,377,614$ Restricted………………………………………………………………………. 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 27,131,162 Unrestricted…………………………………………………………… 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) (38,589,168) Total primary government net position…………………………………………………. 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$ 295,919,608$ NET POSITION BY COMPONENT Town of Nantucket, Massachusetts Page 122 of 137 Comprehensive Annual Financial Report CHANGES IN NET POSITION LAST TEN FISCAL YEARS 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Expenses - Governmental activities: General government…...……………………………………………………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$ 13,375,694$ Public safety…..………………………………………………………………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 17,211,310 Education……..………………………………………………………………….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 40,296,659 Public works……...……………………………………………………………….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 5,404,039 Health and human services………………………………………………………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 1,544,941 Culture and recreation………...……………………………………………………..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 4,646,084 Interest expense……………………………………………………………………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 1,478,749 Total government activities expenses……………………………………..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 83,957,476 Business-type activities: Siasconset Water……………………………………………………………………413,420 434,272 577,851 602,507 719,668 682,682 712,820 724,927 738,719 811,237 Wannacomet Water……………………………………………………………………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 4,088,800 Sewer……………………………………………………………………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 6,338,700 Solid waste……………………………………………………………………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 11,587,152 Nantucket Memorial Airport……………………………………………………………………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 14,287,119 Our Island Home……………………………………………………………………- - - - 8,808,654 6,923,716 7,079,676 7,670,514 7,945,959 8,358,350 Total business-type activities expenses……………………………………..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 45,471,358 Total primary government expenses……………………………………….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$ 129,428,834$ Program Revenues - Governmental activities: Charges for services: General government…………………………………………………General government…...……………………………………………………448,176$ 1,018,223$ 211,203$ 1,358,150$ 426,552$ 741,512$ 622,049$ 917,730$ 771,006$ 1,121,165$ Public safety………………………………………………………………..Public safety…..………………………………………………………………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 3,703,493 Education……………………………………………………………….Education……..………………………………………………………………….569,468 688,028 515,790 498,985 501,915 780,977 1,488,121 1,490,713 1,433,969 1,500,573 Public works……………………………………………………………….Public works……...……………………………………………………………….124,570 69,200 66,298 55,092 59,430 276,502 300,317 340,272 376,600 278,408 Health and human services………………………………………………………2,687,242 3,284,823 3,120,051 3,661,973 35,445 82,788 132,655 188,221 190,627 227,273 Culture and recreation………...……………………………………………………..348,352 318,742 321,181 289,279 325,010 522,063 248,089 295,416 346,626 329,022 Operating grants and contributions……………………………………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 9,241,317 Capital grants and contributions…………………………………………..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 1,881,938 Total government activities program revenues...……………………………..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 18,283,189 Business-type activities: Charges for services……………….………………………………….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 39,612,392 Operating grants and contributions……………………………………3,494,514 1,773,605 1,113,866 776,060 1,287,762 746,499 85,992 91,000 90,820 133,570 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 3,175,470 Total business-type activities program revenues……………………………………..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 42,921,432 Total primary government program revenues……………………………………….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$ 61,204,621$ Net (Expense)/Program Revenue Governmental activities……………………....……………………………..(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)$ (65,674,287)$ Business-type activities……………………....……………………………..(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) (2,549,926) Total primary government net (expense)/program revenue……………………………………….(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)$ (68,224,213)$ (continued) Town of Nantucket, Massachusetts Page 123 of 137 Comprehensive Annual Financial Report CHANGES IN NET POSITION LAST TEN FISCAL YEARS 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 General Revenues and other Changes in Net Position - Governmental activities: Real estate and personal property taxes, net of tax refunds payable…………………………………………………. 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$ 68,978,062$ Motor vehicle and other excise taxes…………………………………………………… 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 2,801,463 Hotel and meals excise……………………………………………..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 4,486,662 Penalties and interest on taxes………………………………………………………………398,796 410,785 473,701 659,062 633,008 687,221 677,906 598,411 882,916 657,303 Community Preservation Fund surcharges………………………………………………………………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 1,944,202 Grants and contributions not restricted to specific programs………………………………………………………………413,538 469,868 376,265 587,474 935,761 307,901 737,402 278,049 186,666 179,523 Unrestricted investment income……………………………………………. 355,288 634,539 277,329 160,970 65,960 173,698 66,235 159,229 257,230 389,334 Gain on sale of capital assets……………………………………………. -- -1,143,075 73,530 813,011 736,256 1,379,639 2,430,079 - Other revenue………………………………………………………………593,982 583,420 850,819 789,238 748,060 438,678 604,871 --- Transfers………………………………………………………………(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) (8,659,384) Total governmental activities………………………………………………………………… 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 70,777,165 Business-type activities: Unrestricted investment income……………………………………………………………… - - ---11,993 55,748 44,030 32,935 62,084 Gain on sale of capital assets………………………………………. - - ------829,212 - Transfers………………………………………………………………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 8,659,384 Total business-type activities….………..…………………………………..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 8,721,468 Total primary government general revenues and other changes in net position………………………………………………….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$ 79,498,633$ Changes in Net Position Governmental activities……………………....……………………………..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$ 5,102,878$ Business-type activities……………………....……………………………..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 6,171,542 Total primary government changes in net position………………………………………. 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$ 11,274,420$ (concluded) Town of Nantucket, Massachusetts Page 124 of 137 Comprehensive Annual Financial Report 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 General Fund: Nonspendable………………………………. -$ -$ -$ -$ -$ -$ -$ -$ 11,406$ -$ Restricted………………………………. 374,421 931,390 - 250,000 - 1,485,147 1,577,323 650,518 488,344 414,514 Committed…………………………….. 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 2,267,807 Assigned…………………………….. 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 3,028,651 Unassigned…………………………… 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 17,571,873 Total general fund…………………………….. 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$ 23,282,845$ All Other Governmental Funds: Nonspendable……………………………….308,153$ 308,153$ 308,153$ 308,153$ 288,280$ 44,305$ 44,305$ 114,762$ 44,805$ 44,805$ Restricted………………………………. 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 27,086,357 Unassigned…………………………… - - - - (138,806) (104,106) - - (1,109,351) (17,737,453) Total all other governmental funds…………….. 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$ 9,393,709$ Note: The Town implemented GASB 54 in fiscal year 2011. All previous years (2007 - 2010) data presented were restated to conform to GASB 54 presentation. FUND BALANCES - GOVERNMENTAL FUNDS LAST TEN FISCAL YEARS Town of Nantucket, Massachusetts Page 125 of 137 Comprehensive Annual Financial Report 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Revenues: Real estate and personal property taxes, net of tax refunds……………………………………………………. 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$ 69,040,526$ Motor vehicle and boat excise………………………………………… 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 2,747,276 Hotel and meals excise………………………………………………. 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 4,486,662 Departmental and other……………………………………….. 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 5,218,934 Communities Preservation surcharges……………………………………… 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 1,930,955 Penalties and interest on taxes………………………………………………………..398,796 410,785 473,701 659,062 633,008 687,221 677,906 598,411 882,916 657,303 Licenses and permits………………………………………………………..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 1,712,506 Fines and forfeitures…………………………………………………………….411,439 266,693 240,648 248,231 254,285 223,054 208,503 296,917 283,179 269,441 Intergovernmental………………………………………………………..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 10,894,441 Contributions………………………………………………………..850 1,300 96,821 83,320 1,249,415 - 258,425 372,331 107,578 408,337 Investment income……………………………………………………….. 436,029 758,901 440,459 278,439 159,602 164,936 63,751 147,521 252,185 375,220 Total Revenue………………………………………………… 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 97,741,601 Expenditures: General government……………………………………………………………. 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 8,946,404 Public safety……………………………………………………………… 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 10,698,049 Education………………………………………………………………… 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 25,329,925 Public works…………………………………………………………….. 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 2,981,431 Health and human services………………………………………………… 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 1,051,897 Culture and recreation……………………………………………….. 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 4,128,951 Pension and fringe benefits………………………………………………………… 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 18,393,297 State and county charges………………………………………… 447,745 462,130 449,457 458,657 461,358 531,772 546,250 566,814 574,275 591,536 Capital outlay and other………………………………………………………………. 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 26,106,919 Debt service: Principal……………………………………………………………… 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 5,511,741 Interest……………………………………………………………………. 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 1,550,529 Total Expenditures……………………………………………………….. 72,815,658 76,932,648 79,620,521 89,741,959 76,741,727 72,319,131 75,872,635 79,508,402 85,326,226 105,290,679 Excess of revenues over (under) expenditures………………………………………………… 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 (7,549,078) Other Financing Sources (Uses): Issuances from bonds and notes………………...………………………………………… 6,680,000 19,551,578 5,990,490 13,070,000 - 3,200,000 478,449 - 993,000 1,188,709 Issuances from refunding bonds………………...…………………………………………- - - - 1,329,900 8,685,000 - 758,200 3,935,000 Premiums from debt issuances………………………….- - - 279,138 - 212,513 808,509 - 51,600 123,130 Payments to refunded bond escrow agent………………………….- - - - - (1,519,037) (9,505,125) - (790,820) (3,995,000) Sale of capital assets………………………………………………… - - - 1,143,075 73,530 - 865,210 3,888,758 2,474,833 1,439,916 Transfers in……………………………………………………………………………… 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 15,779,728 Transfers out…………………………………………………………………………… (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) (24,439,112) Total other financing sources (uses)………………………………………………………………….. 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) (5,967,629) Net change in fund balance…………………………………………………………………. 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$ (13,516,707)$ Debt service as a percentage of noncapital expenditures………………………………………………. 10.20% 10.19% 13.20%14.00%14.68%13.12%11.34%10.22%9.40%8.92% LAST TEN FISCAL YEARS CHANGES IN FUND BALANCES - GOVERNMENTAL FUNDS Town of Nantucket, Massachusetts Page 126 of 137 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 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 2016 19,250,070,530 11,465,100 998,753,099 51,031,421 232,693,446 1,282,477,966 20,544,013,596 17,816,255,100 *115.31%3.36 5.93 3.38 Source: Official Statements, State Division of Local Services * The Commonwealth has not updated equalized value for fiscal 2016 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 127 of 137 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 98,678,600$ 1 0.48%137,791,767$ 1 0.68% Penant Realty LLC Residential 49,674,500 2 0.24% Nantucket Yacht Club Recreation 44,359,700 3 0.22%50,027,954 4 0.25% Richmond Great Point Development LLC Private 43,727,400 4 0.21% Nantucket Island Resort LLC Resort 37,539,400 5 0.18%73,682,608 2 0.36% Great Harbor Yacht Club Inc.Private 36,662,800 6 0.18% Sankaty Head Golf Club, Inc.Recreation 26,597,800 7 0.13%18,535,278 8 0.09% White Elephant Hotel LLC Resort 22,066,300 8 0.11% Nantucket Electric Company Private Utility 20,890,800 9 0.10%47,352,320 5 0.23% US REIF Marine Nantucket FEE LLC Retail 20,387,200 10 0.10% Walter Glowacki Private 70,579,200 3 0.35% NIR Retail III LLC Resort 27,206,500 6 0.13% Nantucket Golf Course Recreation 21,232,582 7 0.10% Wauwinet Inn, LLC Resort 16,403,775 9 0.08% Westmoor Club Resort 11,589,400 10 0.06% Totals 400,584,500$ 1.95%474,401,384$ 2.33% Source: Official Statements 2016 2007 Town of Nantucket, Massachusetts Page 128 of 137 Comprehensive Annual Financial Report Percent of First Year Delinquent Total Total Tax Fiscal Total Current Percent of Tax Tax Collections to Year Tax Levy Tax Collections Collected Collections Collections Net Tax Levy 2007 51,919,271$ 49,648,871$ 95.63%1,946,257$ 51,595,128$ 99.38% 2008 56,220,005 54,162,568 96.34%1,896,329 56,058,897 99.71% 2009 58,510,142 54,375,139 92.93%2,642,562 57,017,701 97.45% 2010 61,333,595 57,209,185 93.28%2,495,326 59,704,511 97.34% 2011 63,040,150 59,526,709 94.43%2,437,628 61,964,337 98.29% 2012 62,274,744 59,645,473 95.78%1,791,512 61,436,985 98.65% 2013 63,618,273 60,028,036 94.36%2,623,244 62,651,280 98.48% 2014 64,647,039 60,979,366 94.33%2,992,031 63,971,397 98.95% 2015 66,329,953 63,876,955 96.30%1,492,310 65,369,265 98.55% 2016 69,636,373 65,916,305 94.66%- 65,916,305 94.66% Source: Accounting Records and Official Statements PROPERTY TAX LEVIES AND COLLECTIONS LAST TEN FISCAL YEARS Collections Town of Nantucket, Massachusetts Page 129 of 137 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 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% 2016 10,298 550,016,180 20,544,013,596 46,068,679 4,474 8.38%0.22% 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 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% 2016 78,182,138 7,592 14.21%0.38%124,250,817 12,066 22.6%0.60% Note: Debt totals include unamrtized premium 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 130 of 137 Comprehensive Annual Financial Report 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Equalized Valuation………………………………….. 20,623,608,960$ 20,819,085,012$ 20,063,008,015$ 17,208,429,905$ 16,844,170,191$ 17,101,129,679$ 16,939,727,455$ 18,181,425,169$ 20,544,013,596$ 17,816,255,100$ Debt Limit…………………………..…………………. 1,031,180,448 1,040,954,251 1,003,150,401 860,421,495 842,208,510 855,056,484 846,986,373 909,071,258 1,027,200,680 890,812,755 Outstanding general obligation bonds………………. 111,505,499 146,529,779 150,698,238 157,240,850 150,040,866 153,072,902 144,200,827 137,176,623 133,498,025 124,250,817 Authorized and unissued debt…………………………. 114,109,539 95,034,114 81,093,282 68,310,085 72,315,737 48,369,825 51,318,862 24,976,578 87,611,526 157,802,928 Debt not applicable to debt limit…………………………. (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) (48,673,610) Legal debt margin………………………………………….. 780,425,164$ 768,477,323$ 727,876,877$ 582,953,556$ 577,809,760$ 606,571,610$ 608,073,037$ 704,246,597$ 767,904,262$ 560,085,400$ Total debt applicable to the limit as a percentage of debt limit………………………………….. 19.44%20.24%18.77%20.18%21.41%18.06%17.96%13.14%17.81%26.20% Source: State Division of Local Services, Accounting Records COMPUTATION OF LEGAL DEBT MARGIN LAST TEN FISCAL YEARS Town of Nantucket, Massachusetts Page 131 of 137 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……………………………………………………………. 46,068,679 Total direct and overlapping debt…………………………………………… 46,068,679$ *Outstanding debt as of June 30, 2016. Source: Official Statements, Accounting Records The estimated percentage applicable is based 100% to the Town. AS OF JUNE 30, 2016 DIRECT AND OVERLAPPING GOVERNMENTAL ACTIVITIES DEBT Town of Nantucket, Massachusetts Page 132 of 137 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 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% 2016 10,298 550,016,180 53,410 39.4 1,595 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 133 of 137 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 10.21%710 1 10.83% Nantucket Cottage Hospital Medical 180 2 2.74%106 2 1.62% Nantucket Island Resorts Hospitality 125 3 1.90%105 3 1.60% Marine Home Center Retail 90 4 1.37%105 4 1.60% Stop & Shop Retail 90 5 1.37%65 6 0.99% Blue Hills Bank Finance 60 6 0.91%0.00% Myles Reis Trucking Haulage 30 7 0.46% Steamship Authority Transportation 28 8 0.43%32 7 0.49% Don Allen Auto Dealership 25 9 0.38% Bartlett Oceanview Farm Farm/Retail 25 10 0.38% Harbor Fuel Petroleum Products 30 8 0.46% Pacific National Bank/Fleet Finance 28 9 0.43% The Brotherhood Restaurant 27 10 0.41% Nantucket Bank Finance 70 5 1.07% Source: Official Statements 2016 2007 CURRENT YEAR AND NINE YEARS AGO PRINCIPAL EMPLOYERS (INCLUDING TOWN) Town of Nantucket, Massachusetts Page 134 of 137 Comprehensive Annual Financial Report Function 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 General government……………………………………………………………. 54 53 58 60 60 63 60 66 68 73 Public safety…………………………………………….. 79 79 78 77 77 81 81 81 81 83 Education…………………………………………………… 305 306 293 295 292 299 299 301 301 310 Public works…………………………………………………………….. 24 26 27 24 26 28 27 30 30 32 Health and human services………………………………………………………….. 5 4 4 4 4 4 5 5 5 5 Culture and recreation………………………………………………… 25 22 18 16 17 9 10 10 10 10 Sub-total governmental activities ……………………………………………………….. 492 490 478 476 476 484 482 493 495 513 Nantucket Memorial Airport………………………… 47 47 41 45 47 44 44 41 41 44 Siasconset Water………………………………………………………………… 1 1 1 1 1 - - - - - Wannacomet Water………………………….. 11 11 11 11 11 11 11 11 11 11 Sewer………………………………………………………………… 10 10 12 12 12 10 10 10 10 10 Our Island Home………………………………………………………………… 78 80 78 72 73 71 69 69 70 70 Sub-total business-type activities ……………………………………………………….. 147 149 143 141 144 136 134 131 132 135 Total Town employees…………….…………………...…….. 639 639 621 617 620 620 616 624 627 648 Source: Town personnel records FULL-TIME EQUIVALENT TOWN EMPLOYEES BY FUNCTION LAST TEN FISCAL YEARS Town of Nantucket, Massachusetts Page 135 of 137 Comprehensive Annual Financial Report Function 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 General Government: Town Clerk Registered voters…………………………………….. 7,998 8,164 8,164 7,907 7,907 8,394 8,394 8,546 8,618 8,618 Public Safety: Police Criminal offenses Arrests……………………………….. 902 551 1,309 1,169 1,062 1,160 1,531 992 584 568 Reported crimes…………………….. 590 587 621 716 499 479 490 501 356 345 Motor vehicle responses………………………… 3,076 4,857 3,103 2,910 2,600 2,994 3,469 3,411 3,432 3,493 Other responses………………………… 16,446 19,783 18,962 17,659 15,913 18,553 20,648 17,899 21,576 23,678 Total criminal offenses…………. 21,014 25,778 23,995 22,454 20,074 23,186 26,138 22,803 25,948 28,084 Fire Incidents Fires…………………………….. 86 63 56 40 66 41 52 67 82 86 Non-fire incidents……………………………………………………….. 3,974 3,896 4,072 3,783 3,637 3,640 3,721 4,915 3,893 3,942 Total fire calls………………… 4,060 3,959 4,128 3,823 3,703 3,681 3,773 4,982 3,975 4,028 Inspectional Services: Number of building permits…………………………………. 1,439 1,280 972 1,156 1,145 1,406 1,639 1,797 2,010 2,137 Education: Number of students…………………………………. 1,220 1,288 1,294 1,255 1,230 1,282 1,322 1,378 1,535 1,595 Public Works: Landfill Solid waste tonnage………………………….. 38,000 33,359 40,056 24,687 34,933 34,000 33,710 37,400 38,000 39,000 Health and Human Services: Board of Health Inspections Food establishments…………………. 231 230 228 210 205 212 230 247 262 265 Other………………………….. 348 328 355 329 302 341 358 367 380 388 Total inspections………………….. 579 558 583 539 507 553 588 614 642 653 Our Island Home - Nursing Home Number of beds………………… 45 45 45 45 45 45 45 45 45 45 Culture and Recreation: Beaches Beach Stickers 3,965 3,889 3,512 3,838 3,628 3,845 3,795 3,973 4,102 4,259 Transportation: Nantucket Memorial Airport Number of enplanements……… 278,133 257,755 203,786 201,638 179,410 175,420 178,303 174,129 164,290 138,752 Number of tower operations…… 150,200 144,073 127,482 127,575 120,806 125,960 126,898 119,976 109,225 106,186 Gallons of fuel sold……………. N/A N/A N/A N/A 1,127,270 1,217,635 1,164,958 1,194,978 1,207,361 1,277,228 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 136 of 137 Comprehensive Annual Financial Report Function 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 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 137 of 137 Comprehensive Annual Financial Report