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Comprehensive Annual Financial Report (CAFR) 2019 (PDF)TOWN OF NANTUCKET Comprehensive Annual Financial Report for the Year Ended June 30, 2019 On the cover: A picturesque scene of the sun rising behind the cottages. It is scenes such as this that capture the beauty of the Island at its finest. Photo credit: William Perrelli Above: The Nantucket Boat Basin at sunrise. Photo Credit: Elizabeth Kelly, Nantucket TOWN OF NANTUCKET, MASSACHUSETTS COMPREHENSIVE ANNUAL FINANCIAL REPORT For the Fiscal Year Ended June 30, 2019 C. Elizabeth Gibson, Town Manager Prepared by the Finance Department Brian E. Turbitt, Director of Municipal Finance This page intentionally left blank. INTRODUCTORY SECTION Above: “The Fisherman” – A common scene on the Island is that of a fisherman at work or play as captured by the photo above credited to Kate Olson of Nantucket. This page intentionally left blank. TOWN OF NANTUCKET, MASSACHUSETTS COMPREHENSIVE ANNUAL FINANCIAL REPORT YEAR ENDED JUNE 30, 2019 TABLE OF CONTENTS Page(s) INTRODUCTORY SECTION Letter of Transmittal ....................................................................................................................... 1-14 Certificate of Achievement for Excellence in Financial Reporting.................................................. 15 Organizational Chart ........................................................................................................................ 16 Principal Town Officials .................................................................................................................. 17 FINANCIAL SECTION Independent Auditor’s Report ....................................................................................................... 21-23 Management’s Discussion and Analysis ....................................................................................... 25-37 Basic Financial Statements: Statement of Net Position .......................................................................................................... 40 Statement of Activities ............................................................................................................... 41 Balance Sheet – Governmental Funds ....................................................................................... 42 Reconciliation of the Governmental Funds Balance Sheet Total Fund Balances to the Statement of Net Position .............................................................................................. 43 Statement of Revenues, Expenditures and Changes in Fund Balances – Governmental Funds ........................................................................................................... 44 Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances of Governmental Funds to the Statement of Activities ....................................... 45 Statement of Net Position – Proprietary Funds .......................................................................... 46 Statement of Revenues, Expenses, and Changes in Net Position – Proprietary Funds.............. 47 Statement of Cash Flows – Proprietary Funds ........................................................................... 48 Statement of Fiduciary Net Position .......................................................................................... 49 Statement of Changes in Fiduciary Net Position ....................................................................... 50 Notes to Basic Financial Statements ...................................................................................... 51-101 Required Supplementary Information: Schedule of Town’s Proportionate Share of Net Pension Liability .......................................... 104 Schedule of Town’s Contributions to Pension Plan .................................................................. 104 Schedule of County’s Proportionate Share of Net Pension Liability ........................................ 105 Schedule of County’s Contributions to Pension Plan ............................................................... 105 Schedule of Land Bank’s Proportionate Share of Net Pension Liability.................................. 106 Schedule of Land Bank’s Contributions to Pension Plan ......................................................... 106 Schedule of Commonwealth’s Collective Share of Net Pension Liability – Massachusetts Teacher’s Retirement System ..................................................................... 107 Schedule of Change in Net OPEB Liability and Related Ratios .............................................. 108 Schedule of Contributions to OPEB Plan ................................................................................. 109 Schedule of Investment Returns – OPEB Plan ......................................................................... 109 Schedule of Revenues, Expenditures and Changes in Fund Balance – Budget and Actual – General Fund ................................................................................ 110-115 Notes to Required Supplementary Information .................................................................... 116-117 TOWN OF NANTUCKET, MASSACHUSETTS COMPREHENSIVE ANNUAL FINANCIAL REPORT YEAR ENDED JUNE 30, 2019 TABLE OF CONTENTS Page(s) Combining Statements: Nonmajor Governmental Funds ........................................................................................... 120-121 Combining Balance Sheet – Nonmajor Governmental Funds ........................................ 122-124 Combining Statement of Revenues, Expenditures, and Changes in Fund Balances – Nonmajor Governmental Funds ............................................................ 126-128 Internal Service Funds .............................................................................................................. 130 Combining Statement of Net Position – Internal Service Funds ........................................ 131 Combining Statement of Revenues, Expenses and Changes in Net Position – Internal Service Funds ................................................................................................. 132 Combining Statement of Cash Flows – Internal Service Funds ......................................... 133 Fiduciary Funds ........................................................................................................................ 134 Statement of Changes in Assets and Liabilities – Agency Fund ........................................ 135 STATISTICAL SECTION Narrative .......................................................................................................................................... 139 Net Position by Component – Last Ten Fiscal Years ...................................................................... 140 Changes in Net Position – Last Ten Fiscal Years ....................................................................... 141-142 Fund Balances, Governmental Funds – Last Ten Fiscal Years ....................................................... 143 Changes in Fund Balances, Governmental Funds – Last Ten Fiscal Years .................................... 144 Assessed Value and Estimated Actual Value of Taxable Property by Classification and Tax Rates – Last Ten Fiscal Years ..................................................................................... 145 Principal Taxpayers – Current Year and Nine Years Ago .............................................................. 146 Property Tax Levies and Collections – Last Ten Fiscal Years ........................................................ 147 Ratios of Outstanding Debt and General Obligation Debt – Last Ten Fiscal Years ....................... 148 Computation of Legal Debt Margin – Last Ten Fiscal Years ......................................................... 149 Direct and Overlapping Governmental Activities Debt .................................................................. 150 Demographic and Economic Statistics – Last Ten Fiscal Years ..................................................... 151 Principal Employers (Excluding Town) – Current Year and Nine Years Ago ............................... 152 Full-time Equivalent Town Employees by Functions – Last Ten Fiscal Years .............................. 153 Operating Indicators by Function/Program – Last Ten Fiscal Years .............................................. 154 Capital Asset Statistics by Function/Program – Last Ten Fiscal Years .......................................... 155 Dawn E. Hill Holdgate, Chair Rita Higgins, Vice Chair Jason Bridges Matthew Fee Kristie L. Ferrantella 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 10, 2019 Honorable Select Board and Citizens of the Town of Nantucket, Massachusetts: We are pleased to present the Town of Nantucket’s sixth annual Comprehensive 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, 2019. 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 accepted 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 interested 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 agencies as well as its citizens and taxpayers. Since the report consists of management’s representations concerning the finances of the Town, management 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 conformity 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 rather than absolute assurance that the financial statements will be free from material misstatement. Town of Nantucket, Massachusetts Page 1 of 157 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 assurance 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 as well as 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, 2019 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 administration of federal awards. These reports are available in the Town’s separately issued Single Audit Reports Pursuant to the Uniform Guidance. GAAP requires that management provide a narrative introduction, overview, and analysis to accompany the basic financial statements in the form of Management’s Discussion and Analysis (MD&A). This letter of transmittal is designed to complement that analysis and should be read in conjunction with it. The MD&A can be found immediately following the report of the independent auditors. Profile of the Town The Town is located on Nantucket Island and the adjacent islets of Tuckernuck and Muskeget. It is 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 157 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 century 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. Nantucket is often credited 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 Newton. In addition, according to the US Department of Commerce, Bureau of Economic Analysis, out of 3,144 county and county equivalents it is the 8th wealthiest county in the United States and the wealthiest in the Commonwealth of Massachusetts as of calendar year 2018. Nantucket is a tourist destination and summer colony. The population of the island increases from just over 10,000 (per the 2010 Federal census) 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) and the Hy-line Cruises (Hy-line) from the port of Hyannis. In calendar year 2018, the Steamship Authority transported about 620,039 passengers, 65,116 passenger vehicles and 52,922 commercial vehicles to Nantucket Island. Hy-line had about 678,390 embarkations in calendar year 2018; up 1.6% from 2017 and is very popular with professional daily commuters and contractors due to the speed of the transport, large capacity and frequency of travel. Town of Nantucket, Massachusetts Page 3 of 157 Comprehensive Annual Financial Report The Hy-line launched a newer larger vessel during calendar 2017 which led to an increase of over 18% in embarkations since calendar 2016. There are also two seasonal ferry services to the island. The Freedom Cruise Line has been transporting passengers from Harwich, Massachusetts to Nantucket since 1994. The SeaStreak began operating two ferry routes in recent years, one originating from New Bedford, Massachusetts and the other, from New York City. Together, these seasonal services transported over 60,000 passengers during the summer of 2018. The Nantucket Regional Transit Authority ("NRTA") provides seasonal fixed route shuttle service and year round advance 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 schedule 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 2018 with approximately 128,000 enplanements it was the second busiest airport in the Commonwealth trailing only Logan International Airport in Boston. Town of Nantucket, Massachusetts Page 4 of 157 Comprehensive Annual Financial Report The Town provides a full range of other traditional municipal services including police and fire protection, education, maintenance of streets, a sanitary landfill with materials recovery and composting facilities, water and sewer services, parks and recreational 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. During fiscal year 2018 the Town administered four schools in Nantucket: 1.Nantucket High School (grades 9 – 12) 2.Cyrus Pierce Middle School (grades 6 – 8) 3.Nantucket Intermediate School (grades 3 – 5) 4.Nantucket Elementary School (grades PK – 2) Construction on the Intermediate School was completed in May 2017 and the school opened in September 2017. The Intermediate School is part of a planned $50 million improvement to the entire District which also includes the addition of classrooms to certain of the existing schools. It was constructed to enroll approximately 400 students and alleviate the space challenges of a growing student population. The Nantucket Public Schools are set up campus style and are all within walking distance of each other. The new facility is located adjacent to the existing elementary school which has been converted to pre-k through 2. The Intermediate School is in the shaded area on the right hand side of the sketch below along with the entrance to the new facility: 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 Committee, and the School Business Manager acts as the Chief Financial Officer. School enrollment for fiscal year 2018 was 1,627 (up 35% since 2007) and funding for schools is provided via taxation and governmental revenues based on a minimum net school spending formula established 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 Town of Nantucket, Massachusetts Page 5 of 157 Comprehensive Annual Financial Report individual 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 select board, town manager and open town meeting form of government. The five elected Select Board members make policy decisions and the Town Manager is responsible for carrying out and enforcing the policies of the Select Board 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 Services, Supplies, Other Charges & Expenses) allowing the department heads to allocate resources within the department. Transfers between categories need approval from Town Meeting unless specifically exempted by state statute. 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 increases have been limited in recent years, fixed costs, including health insurance and pension costs, have increased more proportionally. As a result, balancing the annual budget can be a challenge. Given its geographical location and the limitations of being an island, the Town does not have a large commercial and industrial property tax-base so it relies heavily on residential property taxes. Approximately 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. Table 1 summarizes the Town’s building activity and new growth over the prior 5 calendar years: The Town’s strong growth as summarized in Table 1 has allowed the Town’s taxpayers the benefit of reduced property taxes through an unused levy capacity. In fact, as a result of the strong unused levy capacity, the taxpayers benefitted from an average real estate tax savings of approximately 3.1% over the past 6 years. Calendar # of Residential Non-Residential Total Year Permits Value Value Value 2018 1,931 279,741,490$ 35,400,799$ 315,142,289$ 2017 1,997 231,373,761 106,242,699 337,616,460 2016 780 188,525,945 80,796,833 269,322,778 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 Total 7,982 1,254,724,591$ 283,394,161$ 1,538,118,752$ Table 1 Town of Nantucket, Massachusetts Page 6 of 157 Comprehensive Annual Financial Report This is summarized in Table 2 below: 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 Culture and Tourism department, which is supported through revenues from local option room occupancy excise collections. The table and graph illustrate revenues from this source in each of the last five fiscal years. In addition, active construction over the past several years has had a dramatic impact on these local revenues as workers 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, the major ones being summarized in the table to the right. This has in effect lengthened the tourist season and had a positive impact on the local economy. Fiscal Levy Unused Year Limit Levy Levy Capacity Tax savings 2019 82,666,738 80,158,835 2,507,903 3.03% 2018 79,723,200 78,168,480 1,554,720 1.95% 2017 75,399,121 74,553,652 845,469 1.12% 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% 447,383,282$ 433,494,333$ 13,888,949$ 3.10% Table 2 Fiscal Year Amount 2019 3,807,930$ 2018 3,622,242 2017 3,498,400 2016 3,428,604 2015 3,041,496 Room Occupancy 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 Nantucket Triathlon July Race Week August Boston Pops August Nantucket Half-Marathon October Cranberry Festival October Arts Festival October Holiday Stroll Weekend December Town of Nantucket, Massachusetts Page 7 of 157 Comprehensive Annual Financial Report Nantucket Triathlon Boston Pops Independence Day Fireworks Cranberry Festival Nantucket Half-Marathon Daffodil Festival Town of Nantucket, Massachusetts Page 8 of 157 Comprehensive Annual Financial Report Economic Development Harbor Place - The Town’s downtown center remains a vibrant hub for small retail establishments, hospitality/resorts and restaurants. The Nantucket Island Chamber of Commerce, founded in 1937 and incorporated in 1954, has a diverse membership comprised of more than 650 businesses. The Town, including the Nantucket Planning and Economic Development Commission and Visitor Services department, has an on-going relationship with the Chamber involving the Town's economic issues. In 2008 at the annual town meeting, the town approved a study of an area called Harbor Place; previously referred to as the Wilkes Square Redevelopment site, which includes National Grid, Winthrop Management LLP, and Nantucket Island Resorts properties. To that end, the Select Board established a Downtown Revitalization Committee and charged it with identifying goals for the Nantucket downtown area that balance economic strength with community preservation, and encourage greater venues for social activity while recognizing the 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. •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 Town of Nantucket, Massachusetts Page 9 of 157 Comprehensive Annual Financial Report is currently owned by multiple land owners. The site’s close proximity to downtown and its waterfront location, present an extraordinary opportunity for the Town to develop its waterfront into a mixed-use gateway that will be a common ground for year-round residents as well as 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 Fuel Corporation to relocate the fuel tank farm to an area outside 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 concept is the transportation center which includes a bus station, a parking facility 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 downtown area and thus boosting the future, local economy even further. As part of the preliminary plan, the Town would ultimately own the transportation facility property. Nantucket Cottage Hospital (NCH) – One of the largest recent construction projects was completed and open on February 20, 2019. NCH is the only medical facility on the island providing primary, urgent, emergency and surgical care, as well as outpatient services and appointments with medical and surgical specialists. In recent years, the community had outgrown the 104-year-old facility as studies have shown it was 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 was in danger of losing its accreditation with the Massachusetts Department of Public Health. In order to address this dire need, NCH underwent a capital fund-raising campaign and was able to raise the $120 million need for construction completely from private donations, debt-free and without the use of taxpayer dollars. This project was expanded to complete the hospital campus with new housing for medical staff. MGH committed to donating $20 million and 65 other benefactors each donated at least $250,000 each. The new building is roughly 106,000 square feet and has been designed to maximize privacy, safety, and efficiency 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 157 Comprehensive Annual Financial Report The next phase in completing the hospital campus includes plans to build flexible-design housing units that will be capable of serving a range of hospital employees. The building will be located across the street from the hospital on land NCH already owns, enabling employees to simply walk to work. The building will feature the latest in apartment amenities and a flexible design by using the model of extended stay hotels. Below is an artist rendition. Old South Road Properties Richmond Great Point Development LLC (RGPD) has recently begun construction of a planned mixed market rate/affordable rate three-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 development of a thoughtful mixed-use plan; and thus providing a solution to the critical lack of diverse housing stock on the island. One of the largest housing developments in Island history, the project moved a major step forward in March 2017 when both Phase two and Phase three were approved by the Planning Board. The vote was unanimous with no public comment. The three phases of the development are summarized as follows: Phase one (Meadows I) consists of rental apartments that include 28 market rate apartment units. These are studio, one and two bedroom options. See design and rendition below: Phase two (Meadows II) sits 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 three (Sandpiper Place) consists of 94 single family homes for 2, 3 and 4 bedroom homes which are both mixed and affordable rate housing. Town of Nantucket, Massachusetts Page 11 of 157 Comprehensive Annual Financial Report Unassigned Fund Balances One of the methods the Town uses to maintain reserves from year to year is to conservatively forecast revenues. This allows the Town to use free cash (surplus) for reserves, capital projects or other non- operating one-time expenses. Since the Town has a significant level of 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: Town of Nantucket, Massachusetts Page 12 of 157 Comprehensive Annual Financial Report Long-term Financial Planning The Town prepares rolling five-year operating budget projections. The Town believes this will (1) provide better insight when preparing annual budgets; (2) alert the Town to any potential budget issues far ahead of when these situations become real; and (3) allow the Town to determine when available financing for its capital needs can be provided or if a need for borrowing to finance projects is required. The following represents the Town’s five-year revenue projections: The Town expects that annual budget sources as forecasted will be sufficient to fund annual appropriations. The above projections do not include those of the solid waste or Our Island Home activities. Those are included in the GAAP presentation in the financials as governmental activities but are treated as enterprise funds by the Town. Capital Improvements The Town continues to invest aggressively in capital improvements. In the past several years the Town has invested almost $300 million in improving facilities and adding much needed infrastructure, and renovations to the Island. The following were key capital initiatives: •Improvement to Nantucket Memorial Airport, much of which was funded from Federal grants, over $70 million. •A new Public Safety (Police) building approximately $15.5 million. •Renovation of the Town Pier (financed in part with storm assistance funds from FEMA) •Improvements to municipal water infrastructure: almost $25 million. •Improvements to Siasconset water infrastructure: almost $9 million. •Improvements to municipal sewer infrastructure: almost $100 million; (over $21 million during fiscal 2018), some of this funded through the State subsidized, low interest loan program. •Improvements to Schools: over $40 million. •Improvements to roads, sidewalks, bike paths: almost $15 million of which almost half was funded through the Mass DOT Chapter 90 Road Funding Program. •In process construction on a new Fire Station: $16 million as of fiscal 2019. Fiscal Real and Personal Motor Vehicle Rooms and Year Property Taxes Excise Meals Excise Permits State Aid Miscellaneous Total 2020 85,796,025 2,500,000 3,425,000 1,450,000 3,809,322 2,847,540 99,827,887 2021 88,913,598 2,568,000 3,500,000 1,440,400 3,809,322 2,502,263 102,733,583 2022 93,718,918 2,597,350 3,400,000 1,476,500 3,809,322 2,526,760 107,528,850 2023 98,505,772 2,610,205 3,375,000 1,506,100 3,809,322 2,551,502 112,357,901 2024 103,505,772 2,620,205 3,350,000 1,490,000 3,809,322 2,550,000 117,325,299 Town of Nantucket, Massachusetts Page 13 of 157 Comprehensive Annual Financial Report In addition, the Town has prepared a capital improvement plan that includes proposed significant additions over the next five to ten years. These are still in the discovery and approval process and there are no guarantees they will ultimately be approved. Awards and Acknowledgements The Government Finance Officers Association of the United States and Canada (GFOA) awards a Certificate of Achievement for Excellence in Financial Reporting. This is a very prestigious award and in order to be awarded a Certificate of Achievement, a government must publish an easily readable and efficiently organized comprehensive annual financial report. This report must satisfy both generally accepted accounting 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, 2018. This was the fifth consecutive year that the Town has received this prestigious award. A Certificate of Achievement is valid for a period of one year only. We believe that our current comprehensive 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 Nantucket to provide enhanced financial information and accountability to its citizens, elected and appointed officials, 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 14 of 157 Comprehensive Annual Financial Report For its Comprehensive Annual June 30, 2018 Executive Director/CEO Financial Report for the Fiscal Year Ended Text38:Massachusetts Government Finance Officers Association Certificate of Achievement for Excellence in Financial Reporting Presented to Town of Nantucket Town of Nantucket, Massachusetts Page 15 of 157 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 16 of 157 Comprehensive Annual Financial Report PRINCIPAL TOWN OFFICIALS As of June 30, 2019 Elected Officials Select Board Dawn E. Hill Holdgate, Chair Rita Higgins, Vice Chair Jason Bridges Matthew Fee Kristie L. Ferrantella Town Moderator Sarah Alger, Esquire Town Clerk Nancy L. Holmes School Committee Jennifer Iller, Chairman Dr. Timothy Lepore, Vice Chairman Zona Tanna- Butler, Secretary Steven Zortevik Pauline Proch Appointed Financial Committees Audit Committee Matt Fee Dawn E. Hill Holdgate David D. Worth Finance Committee David D. Worth, Chairman Stephen Maury, Vice Chairman Christopher Glowacki Peter A. McEachern Jill Vieth Joseph T. Grause, Jr. Peter N. Schaeffer Joanna Roche Denice Kronau Stephen Welch Principal Executive Officers Town Manager C. Elizabeth Gibson Superintendent of Schools W. Michael Cozort Director of Finance Brian E. Turbitt Town of Nantucket, Massachusetts Page 17 of 157 Comprehensive Annual Financial Report This page intentionally left blank. Town of Nantucket, Massachusetts Page 18 of 157 Comprehensive Annual Financial Report FINANCIAL SECTION After a day in the sun, the Loines Observatory provides families with a popular venue to gaze at the moon and stars in the night sky. Stargazing nights at the Loines Observatory are held year-round on various dates and at different times. They provide children with the ability to learn about the myths behind the creatures in the celestial zoo, while visiting the public and researching telescopes. Photo Credit: Maria Mitchell Association, Nantucket Town of Nantucket, Massachusetts Page 19 of 157 Comprehensive Annual Financial Report This page intentionally left blank. Town of Nantucket, Massachusetts Page 20 of 157 Comprehensive Annual Financial Report INDEPENDENT AUDITOR’S REPORT Honorable Select Board 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, 2019 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 21 of 157 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, 2019, 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 Town’s governmental activities, business-type activities and each Enterprise Fund. 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, and the schedules listed under the required supplementary information section in the accompanying 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 22 of 157 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 10, 2019 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 10, 2019 Town of Nantucket, Massachusetts Page 23 of 157 Comprehensive Annual Financial Report This page intentionally left blank. Town of Nantucket, Massachusetts Page 24 of 157 Comprehensive Annual Financial Report Management’s Discussion and Analysis Town of Nantucket, Massachusetts Page 25 of 157 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, 2019. Financial Highlights ▪The assets and deferred outflows of financial resources of the Town exceeded its liabilities and deferred inflows of financial resources at the close of the most recent fiscal year by over $268.5 million (total net position). ▪The government’s total net position increased by over $1.5 million (less than 1% of total net position) over the prior year. This consisted of a decrease in governmental activities’ net position by almost $1.1 million (less than 1% of total governmental activities’ net position) and an increase in business- type activities’ net position of over $2.6 million (about 2.0% 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 almost $22.8 million (22.1% of General Fund expenditures). Total fund balance in the General Fund was just under $42.9 million (41.7% of General Fund expenditures). The Town reported a fund balance of almost $10.7 million in its Town Capital Projects Fund and reported total fund balances of almost $17.4 million in the Combined Nonmajor Governmental Funds. Detail of these balances and changes is provided under the Governmental Funds section of the Management Discussion and Analysis. ▪The Town’s total debt increased by almost $33.6 million during the fiscal year. Detail of this net increase is provided under the capital and debt administration section of the Management Discussion and Analysis. ▪The Town’s bond rating increased from Aa1 positive to Aaa during fiscal 2019. The rating was provided by Moody’s Investor Services. 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: Town of Nantucket, Massachusetts Page 26 of 157 Comprehensive Annual Financial Report Government-wide Financial Statements – The government-wide financial statements are designed to provide readers with a broad overview of the Town’s finances, in a manner similar to a private-sector business. The statement of position presents information on all of the Town’s assets, deferred outflows of resources, liabilities and deferred inflows of resources, with the difference between these reported as net position. Over time, increases or decreases in net position may serve as a useful indicator of whether the financial position of the Town is improving or deteriorating. The statement of activities presents information showing how the government’s net position changed during the most recent fiscal year. All changes in net position are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of related cash flows. Thus, revenues and expenses are reported in this statement for some items that will only result in cash flows in future fiscal periods (e.g., uncollected taxes and earned but unused vacation leave.) The government-wide financial statements consist of three classifications; (1) those whose activities are principally supported by taxes and intergovernmental revenue (governmental activities); (2) those whose activities are intended to recover all or a significant portion of their costs through user fees and charges (business-type activities), and (3) component units. The Town’s governmental activities consist of: 1.General government; 2.Public safety; 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 Supplementary Information – 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 27 of 157 Comprehensive Annual Financial Report 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; and 4.Nantucket Memorial Airport. The Town’s component units consist of: 1.Nantucket County; and 2.Nantucket Islands Land Bank. Fund Financial Statements - A fund is a grouping of related accounts that is used to maintain control over resources that have been segregated for specific activities or objectives. The Town, like other state and local governments, uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. All of the funds of the Town can be divided into three categories: governmental funds, proprietary funds, and fiduciary funds. Accounting guidelines distinguish fund balance between amounts that are considered nonspendable, such as fund balance associated with inventories, and other amounts that are classified based on the relative strength of the constraints that control the purposes for which specific amounts can be spent. Beginning with the most binding constraints, fund balance amounts will be reported in the following classifications: • Restricted—amounts constrained by external parties, constitutional provision, or enabling legislation • Committed—amounts constrained by a government using its highest level of decision-making authority • Assigned—amounts a government intends to use for a particular purpose • Unassigned—amounts that are not constrained at all will be reported in the general fund or in other major funds if negative Governmental funds – Governmental funds are used to account for essentially the same functions reported as governmental activities in the government-wide financial statements. However, unlike the government-wide financial statements, governmental fund financial statements focus on near-term inflows and outflows of spendable resources, as well as on balances of spendable resources available at 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 Town of Nantucket, Massachusetts Page 28 of 157 Comprehensive Annual Financial Report 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 29 of 157 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 financial resources exceeded liabilities and deferred inflows of financial resources by over $268.5 million at the close of the most recent fiscal year. The condensed Statement of Net Position is as follows: By far, the largest portion (almost $355.8 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, almost $18.1 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 almost $105.3 million. This consisted of Governmental activities unrestricted net position which is in a deficit position of almost $112.0 million offset by unrestricted net position in the Business-type funds of almost $6.7 million. The recognition of a Net Other Postemployment Benefits Liability and Net Pension Liability has reduced the Town’s net position significantly in both its Governmental and Business-Type activities. This has led to the significant deficit in the Governmental activities unrestricted net position. Governmental Activities Business-Type Activities Total June 30, June 30, June 30, June 30, June 30, June 30, 2019 2018 2019 2018 2019 2018 Assets Currrent and other assets 99,369,573$ 89,728,469$ 31,979,762$ 46,274,282$ 131,349,335$ 136,002,751$ Capital assets, net 326,131,846 312,540,117 234,876,123 225,187,440 561,007,969 537,727,557 Total assets 425,501,419 402,268,586 266,855,885 271,461,722 692,357,304 673,730,308 Deferred outflows of resources 21,244,998 11,537,348 3,409,292 2,319,885 24,654,290 13,857,233 Liabilities Long-term liabilities 289,571,226 241,913,097 111,837,936 88,572,243 401,409,162 330,485,340 Other liabilities 18,068,381 21,104,666 24,390,682 50,140,658 42,459,063 71,245,324 Total liabilities 307,639,607 263,017,763 136,228,618 138,712,901 443,868,225 401,730,664 Deferred inflows of resources 3,303,319 13,522,436 1,296,560 1,554,582 4,599,879 15,077,018 Net Position Net investment in capital assets 229,696,540 222,919,137 126,071,273 121,715,832 355,767,813 344,634,969 Restricted 18,070,833 24,663,139 - - 18,070,833 24,663,139 Unrestricted (111,963,882) (110,316,541) 6,668,726 11,798,292 (105,295,156) (98,518,249) Total Net Position 135,803,491$ 137,265,735$ 132,739,999$ 133,514,124$ 268,543,490$ 270,779,859$ Town of Nantucket, Massachusetts Page 30 of 157 Comprehensive Annual Financial Report Condensed changes in net position data is presented as follows: Governmental Activities – The governmental activities experienced a net decrease in net position by almost $1.1 million as compared to a net increase of almost $16.8 million in the prior year. This was due mainly to a one-time transaction in the prior year in which land valued at $13.7 million was transferred to the Town by the United States Coast Guard. Governmental Activities Business-Type Activities Total June 30,June 30,June 30,June 30,June 30,June 30, 2019 2018 2019 2018 2019 2018 Revenues Program revenues: Charges for services 16,484,533$ 16,302,750$ 30,055,443$ 28,655,420$ 46,539,976$ 44,958,170$ Operating grants and contributions 12,857,189 11,348,091 133,619 123,647 12,990,808 11,471,738 Capital grants and contributions 2,571,891 14,502,773 2,111,745 3,186,264 4,683,636 17,689,037 General revenues: Property taxes 79,997,125 77,739,238 - - 79,997,125 77,739,238 Hotel and meals excise 5,005,958 4,743,787 - - 5,005,958 4,743,787 Intergovernmental 246,669 193,824 - - 246,669 193,824 Other 8,545,132 6,415,944 161,926 95,529 8,707,058 6,511,473 Total Revenues 125,708,497 131,246,407 32,462,733 32,060,860 158,171,230 163,307,267 Expenses General government 15,765,219 13,660,766 - - 15,765,219 13,660,766 Public safety 22,887,964 19,236,351 - - 22,887,964 19,236,351 Education 52,485,059 47,854,776 - - 52,485,059 47,854,776 Public works 20,574,322 19,697,228 - - 20,574,322 19,697,228 Health and human services 8,194,864 7,817,065 - - 8,194,864 7,817,065 Culture and recreation 3,867,395 4,034,143 - - 3,867,395 4,034,143 Debt service 3,004,920 2,486,810 - - 3,004,920 2,486,810 Siasconset water - - 692,972 617,825 692,972 617,825 Wannacomet water - - 4,856,369 4,428,396 4,856,369 4,428,396 Sewer - - 7,463,953 7,912,679 7,463,953 7,912,679 Nantucket Memorial Airport - - 16,842,531 15,379,560 16,842,531 15,379,560 Total Expenses 126,779,743 114,787,139 29,855,825 28,338,460 156,635,568 143,125,599 Change in net position before transfers (1,071,246) 16,459,268 2,606,908 3,722,400 1,535,662 20,181,668 Transfers - 285,264 - (285,264) - - Change in net position (1,071,246) 16,744,532 2,606,908 3,437,136 1,535,662 20,181,668 Net position, beginning of year 137,265,735 166,781,880 133,514,124 131,405,629 270,779,859 298,187,509 Restatement for net OPEB liability (3,739,844) (46,260,677) (32,187) (1,328,641) (3,772,031) (47,589,318) Restatement for interfund payable 3,348,846 - (3,348,846) - - - Net position, beginning of year, as restated 136,874,737 120,521,203 130,133,091 130,076,988 267,007,828 250,598,191 Net position, end of year 135,803,491$ 137,265,735$ 132,739,999$ 133,514,124$ 268,543,490$ 270,779,859$ Town of Nantucket, Massachusetts Page 31 of 157 Comprehensive Annual Financial Report Revenues Total revenue decreases were over $5.5 million. The decrease in capital grants and contributions previously discussed was offset by modest increases in other revenue categories. Specifically, property taxes, which made up 63.6% of total revenues increased by almost $2.3 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 a Massachusetts 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 unused levy capacity despite the increase. Operating grants increased $1.5 million. This was primarily due to increases in pension expense related to the Town’s special funding situation with the State and an update in the related actuarial valuation. The Town’s Other Revenue category consists of local receipts such as motor vehicle excise, departmental receipts and other revenues not specifically classified. Included in this amount was a gain on the sale of Town owned property of over $1.5 million. Expenses Total expenses increased by almost $12.0 million. The 3 biggest drivers regarding this increase were 1) OPEB and pension expenses were almost $6.0 million greater than the prior year; 2) the Landfill provision was increased by $2.0 million and 3) Education expenses increased as a result of the operation of a brand- new facility for an entire year and its special funding arrangement with the State related to teacher’s retirement. The Town’s largest expenses were Education, Public Safety, Public Works and General Government (see graph to the left). All expenditure categories increased primarily as a result of the reasons provided at the opening of this discussion. Town of Nantucket, Massachusetts Page 32 of 157 Comprehensive Annual Financial Report Fiscal Year 2019 Expenses and Program Revenues – governmental activities are graphically presented as follows: Net position of the business-type activities increased by almost $2.5 million from the prior year balances. Change in net position for each business-type fund is broken down individually as follows: In its Business-type activities, the Town’s user charges are not designed to cover depreciation which is a component of the “change in net position” but does budget for principal payback of debt which is not a component of the “change in net position”. The difference in these two items impacts the “change in net position” on a GAAP basis. With respect to Siasconset and Wannacomet principal payback of debt is larger than depreciation, therefore the positive results are expected; also, seasonal weather patterns contributed to increased usage and positive operations of these two operations to explain the additional difference. In the instance of Sewer, depreciation and principal payback approximate one another however, numerous small capital items incurred but not capitalized were classified as maintenance and therefore caused the net loss above. The Airport experienced its 6th straight year of positive operations as travel to the Island continues to grow at a very rapid pace. Siasconset Water District 386,099$ Wannacomet Water District 1,518,198 Sewer (389,093) Nantucket Memorial Airport 980,206 Total Change 2,495,410$ Town of Nantucket, Massachusetts Page 33 of 157 Comprehensive Annual Financial Report Fund-wide Financial Analysis of the Government’s Funds As noted earlier, the Town uses fund accounting to ensure and demonstrate compliance with finance- related legal requirements. Governmental funds – The focus of the Town’s governmental funds is to provide information on near- term inflows, outflows, and balances of spendable resources. Such information is useful in assessing the Town’s financing requirements. In particular, unassigned fund balance may serve as a useful measure of a government’s net resources available for spending at the end of the fiscal year. As of the close of the current fiscal year, the Town’s governmental funds balance sheet reported a combined ending fund balance of about $70.9 million, an increase of almost $8.3 million over the prior year. Unassigned fund balance in the general fund was almost $22.8 million or 22.1% of general fund expenditures. This is available for spending at the government’s discretion. Assigned fund balance of over $7.5 million; committed fund balance of over $9.2 million, restricted fund balance of approximately $0.2 million and nonspendable fund balances of $3.1 million bring total general fund balance to almost $42.9 million or 41.7% of general fund expenditures. Total general fund balance was consistent with the prior year. The timing of capital costs verses bond proceeds was primarily responsible for an increase in capital projects of almost $4.8 million. The entire fund balance was restricted. The Combined Nonmajor Funds ended the year with a balance of almost $17.4 million which was higher than the prior year due to excess transfers from the general fund, bond issuances allocated to special revenue funds and a proceed from sale of Town property of over $1.6 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 almost $5.5 million. This represents an increase of almost $1.2 million over the prior year. Reinsurance proceeds of approximately $1.7 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 over $6.4 million. The Private Purpose Trust Funds make up almost $3.3 million; These assets are used strictly for purposes outside of the public domain such as scholarships and public assistance. Contributions to these funds were outpaced by expenses that led to almost a $0.3 million decrease year over year. Town of Nantucket, Massachusetts Page 34 of 157 Comprehensive Annual Financial Report 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 Other Postemployment Benefits. This fund increased by over $0.7 million to over $3.1 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 actuarially determined contribution. General Fund Budgetary Highlights Differences between the original budget and the final amended budget were for the most part not significant (less than 1%). The total budget ended the year with a favorable variance of over $7.8 million. For the seventh consecutive year revenues exceeded forecast (over $3.4 million). This was due to (1) the Town continuing its philosophy of conservatively forecasting revenue, and (2) the results of the continuation in the expanding economy felt mostly in motor vehicle excise and room occupancy. Favorable expenditure variances contributed over $4.4 million 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. 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, 2019 amounts to approximately $561.0 million (net of accumulated depreciation) an increase from the previous year’s balance of approximately $23.3 million. This investment in capital assets includes land, buildings and improvements, infrastructure, machinery, equipment, and software. The total increase is due to capital investments exceeding depreciation for the year. The two largest capital assets added to this year’s roll’s, were construction on the new Fire Station recorded in Governmental Activities and Sewer construction. Additional information on the Town’s capital assets can be found in Note II subsection D. Additional information on the Town’s short-term and long-term debt can be found in Note II under subsections F and G. 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 almost $1.2 billion, which is significantly in excess of the Town’s outstanding general obligation debt classified as inside the debt limit. The Town is assigned an Aaa credit rating from Moodys’ Investor Services and an AA+ credit rating from Standard and Poors’. At the end of the current fiscal year, the Town had total debt outstanding of almost $189.7 million. About $97.8 million is related to the Town’s Governmental activities and over $91.9 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. Town of Nantucket, Massachusetts Page 35 of 157 Comprehensive Annual Financial Report In addition, the Town issues bond anticipation notes prior to permanent financing to fund the initial stages of capital projects. At June 30, 2019 the bond anticipation notes payable balances approximated $29.0 million. Included in these outstanding debt amounts is unamortized bond premiums of over $3.5 million and over $1.9 million in the governmental and business-type activities respectively. The Town’s total debt increased by almost $33.6 million during the fiscal year due to following: Regular scheduled maturities: Governmental Activities (4,694,769)$ Business-Type Activities (5,396,274) Issuance of debt: Governmental Activities 16,804,000 Business-Type Activities 26,265,740 Originating premiums Governmental Activities 1,018,631 Business-Type Activities 209,000 Amortization of premiums Governmental Activities (299,909) Business-Type Activities (355,603) 33,550,816$ Town of Nantucket, Massachusetts Page 36 of 157 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 out more over the next several years. ▪The Town’s real estate tax base is made up predominantly of residential taxes, which comprise nearly 88.2% 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 9.8% 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 3.36 per $1,000. The Town has typically approximated or exceeded $1 billion in property sales each year since 2014. ▪All of the above items were considered when the Town developed its budget for fiscal year 2020. The budget was adopted in April 2019 and the Town is expected to set its tax rate in December 2019. Requests for Information This financial report is designed to provide a general overview of the Town’s finances for all those with an interest in the government’s finances. Questions concerning any of the information provided in this report or request for additional financial information should be addressed to the Office of the Director of Finance, 37 Washington Street, Nantucket, Massachusetts 02554. Complete stand-alone financial statements for Nantucket County may be obtained from the Office of the Director of Finance 37 Washington Street, Nantucket, Massachusetts 02554. Complete stand-alone financial statements for Nantucket Islands Land Bank may be obtained by contacting Nantucket Islands Land Bank, 22 Broad Street, Nantucket, Massachusetts 02554. Complete stand-alone financial statements for Nantucket Memorial Airport may be obtained from the Office of the Director of Finance 37 Washington Street, Nantucket, Massachusetts 02554 Town of Nantucket, Massachusetts Page 37 of 157 Comprehensive Annual Financial Report This page intentionally left blank. Town of Nantucket, Massachusetts Page 38 of 157 Comprehensive Annual Financial Report Basic Financial Statements Town of Nantucket, Massachusetts Page 39 of 157 Comprehensive Annual Financial Report Nantucket Governmental Business-Type Nantucket Islands Activities Activities Total County Land Bank Assets Cash and cash equivalents 72,066,463$ 25,345,895$ 97,412,358$ 5,482,565$ 20,125,703$ Investments 12,719,328 690,443 13,409,771 - 4,920,966 Investments, designated - - - - 3,145,867 Receivables, net: Property taxes 1,867,416 - 1,867,416 - - User fees 975,021 1,941,908 2,916,929 - - Departmental and other 2,096,967 450,633 2,547,600 - 193,722 Tax liens 2,898,606 - 2,898,606 - - Intergovernmental 2,897,027 5,616,193 8,513,220 202,366 - Grants - - - - 922,117 Inventory - 574,325 574,325 - 303,620 Prepaid items 1,206,380 - 1,206,380 - 64,258 Other assets 2,730 - 2,730 - - Internal balances 2,639,635 (2,639,635) - - - Restricted cash and cash equivalents - - - - 2,332,294 Restricted investments - - - - 2,810,366 Cash surrender value of life insurance - - - - 1,055,182 Land conservation rights - - - - 30,000 Capital assets not being depreciated 253,697,989 64,376,097 318,074,086 3,283,842 371,152,479 Capital assets, net of depreciation 72,433,857 170,500,026 242,933,883 - 22,839,338 Total Assets 425,501,419 266,855,885 692,357,304 8,968,773 429,895,912 Deferred Outflows of Resources Related to losses on refunding 152,680 635,707 788,387 - 158,980 Related to net other postemployment benefits liability 9,446,222 473,931 9,920,153 21,580 - Related to net pension liability 11,646,096 2,299,654 13,945,750 182,839 583,034 Total Deferred Outflows of Resources 21,244,998 3,409,292 24,654,290 204,419 742,014 Liabilities Warrants and accounts payable 3,778,457 1,125,572 4,904,029 280 1,243,133 Accrued payroll and withholdings 3,490,750 286,053 3,776,803 63,822 - Accrued expenses - - - - 280,878 Retainage payable 745,565 - 745,565 - - Health claims incurred but not reported 1,129,769 - 1,129,769 - - Accrued interest 1,113,220 694,445 1,807,665 - - Other liabilities 685,620 393,512 1,079,132 - - Unearned revenue - - - - - Unearned grant revenue - - - - 1,383,175 Bond anticipation notes payable 7,125,000 21,891,100 29,016,100 - - Noncurrent liabilities: Due within one year 7,409,782 7,331,407 14,741,189 - 7,997,635 Due in more than one year 282,161,444 104,506,529 386,667,973 1,118,875 19,656,748 Total Liabilities 307,639,607 136,228,618 443,868,225 1,182,977 30,561,569 Deferred Inflows of Resources Related to net pension liability 1,345,624 265,708 1,611,332 43,170 137,660 Related to net other postemployment benefits liability 1,957,695 1,030,852 2,988,547 17,370 76,580 3,303,319 1,296,560 4,599,879 60,540 214,240 Net Position Net investment in capital assets 229,696,540 126,071,273 355,767,813 3,283,842 369,951,811 Restricted: Nonexpendable permanent funds 44,965 - 44,965 - - Federal and State grants 1,608,291 - 1,608,291 - - Community preservation 5,021,659 - 5,021,659 - - Capital outlay 2,038,261 - 2,038,261 - - Revolving funds 4,650,424 - 4,650,424 - - Gift funds 1,201,987 - 1,201,987 - - Other purposes 3,505,246 - 3,505,246 4,363,887 5,142,660 Unrestricted (111,963,882) 6,668,726 (105,295,156) 281,946 24,767,646 Total Net Position 135,803,491$ 132,739,999$ 268,543,490$ 7,929,675$ 399,862,117$ TOWN OF NANTUCKET, MASSACHUSETTS STATEMENT OF NET POSITION JUNE 30, 2019 See accompanying notes to basic financial statements. Primary Government Component Units Town of Nantucket, Massachusetts Page 40 of 157 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 15,765,219$ 1,542,176$ 910,871$ 1,047,344$ (12,264,828)$ (12,264,828)$ Public safety 22,887,964 4,206,210 763,100 - (17,918,654) (17,918,654) Education 52,485,059 1,728,718 10,747,076 - (40,009,265) (40,009,265) Public works 20,574,322 3,458,221 34,859 1,073,989 (16,007,253) (16,007,253) Health and human services 8,194,864 5,145,194 125,689 - (2,923,981) (2,923,981) Culture and recreation 3,867,395 404,014 25,594 450,558 (2,987,229) (2,987,229) Interest expense 3,004,920 - 250,000 - (2,754,920) (2,754,920) Total governmental activities 126,779,743 16,484,533 12,857,189 2,571,891 (94,866,130) (94,866,130) Business-type activities: Siasconset water 692,972 1,081,527 - - 388,555$ 388,555 Wannacomet water 4,856,369 6,348,009 - - 1,491,640 1,491,640 Sewer 7,463,953 6,572,952 - 525,358 (365,643) (365,643) Nantucket Memorial Airport 16,842,531 16,052,955 133,619 1,586,387 930,430 930,430 Total business-type activities 29,855,825 30,055,443 133,619 2,111,745 2,444,982 2,444,982 Total Primary Government 156,635,568$ 46,539,976$ 12,990,808$ 4,683,636$ (94,866,130) 2,444,982 (92,421,148) Component units: Nantucket County 714,048$ 1,049,037$ 228,534$ -$ 563,523 - Nantucket Islands Land Bank 9,034,119 26,316,705 109,056 41,634,879 - 59,026,521 Total Component units 9,748,167$ 27,365,742$ 337,590$ 41,634,879$ 563,523 59,026,521 General Revenues: Property taxes 79,997,125 - 79,997,125 - - Motor vehicle and boat excise 3,212,027 - 3,212,027 - - Hotel and meals excise 5,005,958 - 5,005,958 - - Community Preservation Fund surcharges 2,254,544 - 2,254,544 - - Grants and contributions not restricted to specific programs 246,669 - 246,669 - - Penalties and interest on taxes 605,321 - 605,321 - - Unrestricted investment income 937,170 161,926 1,099,096 20,851 435,837 Gain on sale of capital assets 1,536,070 - 1,536,070 - - Miscellaneous - - - - 570,549 Transfers (net)- - - - - Total general revenues and transfers 93,794,884 161,926 93,956,810 20,851 1,006,386 Change in Net Position (1,071,246) 2,606,908 1,535,662 584,374 60,032,907 Net Position: Beginning of year, as restated (see Note IV)136,874,737 130,133,091 267,007,828 7,345,301 339,829,210 End of year 135,803,491$ 132,739,999$ 268,543,490$ 7,929,675$ 399,862,117$ See accompanying notes to basic financial statements. TOWN OF NANTUCKET, MASSACHUSETTS STATEMENT OF ACTIVITIES YEAR ENDED JUNE 30, 2019 Component Units Town of Nantucket, Massachusetts Page 41 of 157 Comprehensive Annual Financial Report TOWN OF NANTUCKET, MASSACHUSETTS GOVERNMENTAL FUNDS BALANCE SHEET JUNE 30, 2019 Town Nonmajor Total General Capital Governmental Governmental Fund Projects Funds Funds Assets Cash and cash equivalents 30,693,469$ 17,698,891$ 18,783,792$ 67,176,152$ Investments 12,263,222 - 197,815 12,461,037 Receivables, net of allowance for uncollectibles: Property taxes 1,674,599 - 192,817 1,867,416 User charges 975,021 - -975,021 Departmental and other 1,130,810 - 523,365 1,654,175 Tax liens 2,898,606 - -2,898,606 Intergovernmental 232,857 - 2,664,170 2,897,027 Other assets 2,730 - -2,730 Due from other funds 3,764,379 - -3,764,379 Total Assets 53,635,693 17,698,891 22,361,959 93,696,543 Total Deferred Outflows of Resources - - - - Total Assets and Deferred Outflows of Resources 53,635,693$ 17,698,891$ 22,361,959$ 93,696,543$ Liabilities: Warrants and accounts payable 1,282,126$ 2,174,422$ 218,573$ 3,675,121$ Accrued payroll and withholdings 3,360,230 - 130,520 3,490,750 Retainage payable - 745,565 - 745,565 Other liabilities 394,741 - 290,879 685,620 Due to other funds - - 651,154 651,154 Bond anticipation notes payable - 4,125,000 3,000,000 7,125,000 Total Liabilities 5,037,097 7,044,987 4,291,126 16,373,210 Deferred Inflows of Resources Unavailable revenue - property taxes 4,180,075 - 192,817 4,372,892 Unavailable revenue - user charges 975,021 - -975,021 Unavailable revenue - other 549,564 - 523,365 1,072,929 Total Deferred Inflows of Resources 5,704,660 - 716,182 6,420,842 Fund Balances: Nonspendable 3,113,226 - 44,965 3,158,191 Restricted 231,468 13,223,679 18,190,956 31,646,103 Committed 9,245,767 - - 9,245,767 Assigned 7,539,217 - - 7,539,217 Unassigned 22,764,258 (2,569,775) (881,270) 19,313,213 Total Fund Balances 42,893,936 10,653,904 17,354,651 70,902,491 Total Liabilities , Deferred Inflows of Resources and Fund Balances 53,635,693$ 17,698,891$ 22,361,959$ 93,696,543$ See accompanying notes to basic financial statements. Town of Nantucket, Massachusetts Page 42 of 157 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, 2019 Total Governmental Fund Balances 70,902,491$ Capital assets used in governmental activities are not financial resources and therefore are not reported in the funds.326,131,846 Other long-term assets are not available to pay for current period expenditures and, therefore, are reported as unavailable revenue in the funds 6,420,842 Deferred outflows and inflows of resources to be recognized in the future are not available resources and, therefore, are not reported in the funds: Deferred outflows related to charges on refunding 152,680 Deferred outflows related to net pension liability 11,646,096 Deferred outflows related to net other postemployment benefits liability 9,446,222 Deferred inflows related to net pension liability (1,345,624) Deferred inflows related to net other postemployment benefits liability (1,957,695) 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.4,976,114 In the Statement of Activities, interest is accrued on outstanding long-term debt whereas in the governmental funds, interest is not reported until due.(1,113,220) 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 (94,252,657) Unamortized premiums on bonds (3,547,550) Landfill closure liability (14,000,000) Compensated absences (2,861,915) Net other postemployment benefits liability (108,942,353) Net pension liability (65,851,786) Net Position of Governmental Activities 135,803,491$ See accompanying notes to basic financial statements. Town of Nantucket, Massachusetts Page 43 of 157 Comprehensive Annual Financial Report TOWN OF NANTUCKET, MASSACHUSETTS GOVERNMENTAL FUNDS STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES YEAR ENDED JUNE 30, 2019 Town Nonmajor Total General Capital Governmental Governmental Fund Projects Funds Funds Revenues: Property taxes 79,748,325$ -$ -$ 79,748,325$ Intergovernmental 9,449,941 - 4,132,241 13,582,182 Motor vehicle and other excises 3,374,420 - 35,923 3,410,343 User charges 8,093,931 - -8,093,931 Hotel and meals taxes 5,005,958 - -5,005,958 Community preservation surcharges - - 2,240,059 2,240,059 Licenses and permits 1,688,035 - - 1,688,035 Penalties and interest on taxes 605,321 - - 605,321 Fines and forfeitures 408,220 - - 408,220 Investment income 879,764 - 43,695 923,459 Departmental and other revenue 2,077,238 - 5,001,776 7,079,014 Contributions and donations 1,100 400,000 645,123 1,046,223 Total Revenues 111,332,253 400,000 12,098,817 123,831,070 Expenditures: Current: General government 10,328,025 449,946 1,008,125 11,786,096 Public safety 11,098,635 13,200,111 2,126,874 26,425,620 Education 28,805,253 1,592,896 3,763,145 34,161,294 Public works 12,978,993 5,231,485 671,381 18,881,859 Health and human services 6,414,862 580,473 743,807 7,739,142 Culture and recreation 1,125,307 62,187 2,207,372 3,394,866 Pension and fringe benefits 24,274,664 - - 24,274,664 State and county assessments 734,866 - - 734,866 Debt service: Principal 4,259,867 - 434,902 4,694,769 Interest 2,917,430 - 18,929 2,936,359 Total Expenditures 102,937,902 21,117,098 10,974,535 135,029,535 Excess (Deficiency) of Revenues Over (Under) Expenditures 8,394,351 (20,717,098) 1,124,282 (11,198,465) Other Financing Sources (Uses): Issuance of bonds and notes - 16,339,500 464,500 16,804,000 Premiums from bonds and notes 95,742 900,650 22,239 1,018,631 Sale of capital assets - - 1,635,924 1,635,924 Transfers in - 8,246,552 700,000 8,946,552 Transfers out (8,924,136) - (22,416) (8,946,552) Total Other Financing Sources (Uses)(8,828,394) 25,486,702 2,800,247 19,458,555 Net Change in Fund Balances (434,043) 4,769,604 3,924,529 8,260,090 Fund Balances - Beginning, as restated (See Note IV)43,327,979 5,884,300 13,430,122 62,642,401 Fund Balances - Ending 42,893,936$ 10,653,904$ 17,354,651$ 70,902,491$ See acompanying notes to basic financial statements. Town of Nantucket, Massachusetts Page 44 of 157 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 YEAR ENDED JUNE 30, 2019 Net Change in Fund Balances - Total Governmental Fund Balances 8,260,090$ 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 19,565,622 Depreciation expense (5,973,893) Net effect of reporting capital assets 13,591,729 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.1,073,153 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 (16,804,000) Premiums from general obligation bonds and notes (1,018,631) Repayments of debt 4,694,769 Net effect of reporting long-term debt (13,127,862) 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.327,646 Some expenses reported in the Statement of Activities do not require the use of current financial resources and therefore are not reported as expenditures in the governmental funds: Accrued interest expense (351,506) Amortization of premiums on bonds and notes payable 299,909 Amortization of deferred charges on refunding'(16,964) Landfill closure (2,000,000) Compensated absences (620,793) Pension benefits (3,358,612) Other postemployment benefits (5,148,036) Net effect of reporting long-term liabilities (11,196,002) Change in Net Position of Governmental Activities (1,071,246)$ See accompanying notes to basic financial statements. Town of Nantucket, Massachusetts Page 45 of 157 Comprehensive Annual Financial Report TOWN OF NANTUCKET, MASSACHUSETTS PROPRIETARY FUNDS STATEMENT OF NET POSITION JUNE 30, 2019 Governmental Activities Nantucket Internal Siasconset Wannacomet Memorial Service Water Water Sewer Airport Total Fund Assets: Current assets: Cash and cash equivalents 1,855,046$ 6,215,333$ 7,300,896$ 9,974,620$ 25,345,895$ 4,890,311$ Investments - - - 690,443 690,443 258,291 Receivables (net): User charges 113,975 584,864 773,740 469,329 1,941,908 - Privilege fees - - 450,633 - 450,633 - Intergovernmental - - 4,307,257 522,061 4,829,318 - Inventory - 224,955 - 349,370 574,325 - Reinsured claims receivable - -- -- 442,792 Prepaid items - -- -- 1,206,380 Total current assets 1,969,021 7,025,152 12,832,526 12,005,823 33,832,522 6,797,774 Noncurrent assets: Receivables (net): Intergovernmental - - 786,875 - 786,875 - Nondepreciable capital assets 2,720,781 5,816,260 51,289,098 4,549,958 64,376,097 - Capital assets (net of depreciation)9,017,189 36,915,481 64,157,826 60,409,530 170,500,026 - Total noncurrent assets 11,737,970 42,731,741 116,233,799 64,959,488 235,662,998 - Total Assets 13,706,991 49,756,893 129,066,325 76,965,311 269,495,520 6,797,774 Deferred Outflows of Resources Related to losses on refunding 274,304 281,540 79,863 - 635,707 - Related to net other postemployment benefits liability 25,033 100,917 18,791 329,190 473,931 - Related to net pension liability 27,892 575,959 351,433 1,344,370 2,299,654 - Total Deferred Outflows of Resources 327,229 958,416 450,087 1,673,560 3,409,292 - Total Assets and Deferred Outflows of Resources 14,034,220$ 50,715,309$ 129,516,412$ 78,638,871$ 272,904,812$ 6,797,774$ Liabilities: Current liabilities: Warrants and accounts payable 24,811$ 84,291$ 355,540$ 660,930$ 1,125,572$ 103,336$ Accrued payroll and withholdings 1,635 56,342 65,109 162,967 286,053 - Health claims incurred but not reported - - - - - 1,129,769 Accrued interest 20,476 178,850 412,969 82,150 694,445 - Due to other funds - - - 235,621 235,621 - Other liabilities - - - 393,512 393,512 - Bond anticipation notes payable 250,000 500,000 18,877,731 2,263,369 21,891,100 - Compensated absences - 137,053 50,044 294,634 481,731 - Workers' compensation claims - -- - - 114,965 Bonds and notes payable 471,602 1,932,688 3,746,009 699,377 6,849,676 - Total current liabilities 768,524 2,889,224 23,507,402 4,792,560 31,957,710 1,348,070 Noncurrent liabilities: Due to other funds - - - 2,877,604 2,877,604 - Compensated absences - 137,054 50,044 294,634 481,732 - Net other postemployment benefit liability 594,273 1,309,662 157,868 3,869,632 5,931,435 - Net pension liability 157,710 3,256,710 1,987,145 7,601,619 13,003,184 - Bonds and notes payable 4,706,588 18,221,124 54,375,818 7,786,648 85,090,178 - Total noncurrent liabilities 5,458,571 22,924,550 56,570,875 22,430,137 107,384,133 - Total Liabilities 6,227,095 25,813,774 80,078,277 27,222,697 139,341,843 1,348,070 Deferred Inflows of Resources Related to net pension liability 3,222 66,548 40,605 155,333 265,708 - Related to net other postemployment benefits liability 15,075 155,089 158,359 702,329 1,030,852 - 18,297 221,637 198,964 857,662 1,296,560 - Total Liabilities and Deferred Inflows of Resources 6,245,392 26,035,411 80,277,241 28,080,359 140,638,403 1,348,070 Net Position: Net investment in capital assets 6,584,084 22,359,469 42,628,657 54,499,063 126,071,273 - Unrestricted 1,204,744 2,320,429 6,610,514 (3,940,551) 6,195,136 5,449,704 Total Net Position 7,788,828$ 24,679,898$ 49,239,171$ 50,558,512$ 132,266,409 5,449,704$ 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 473,590 Net position of business-type activities (page 40)132,739,999$ See accompanying notes to basic financial statements. Business-Type Activities Town of Nantucket, Massachusetts Page 46 of 157 Comprehensive Annual Financial Report TOWN OF NANTUCKET, MASSACHUSETTS PROPRIETARY FUNDS STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN NET POSITION YEAR ENDED JUNE 30, 2019 Governmental Activities Nantucket Internal Siasconset Wannacomet Memorial Service Water Water Sewer Airport Total Fund Operating Revenues: Charges for services 1,081,527$ 6,025,718$ 6,395,307$ 16,052,955$ 29,555,507$ -$ Employee contributions - - - - - 2,242,738 Employer contributions - - - - - 14,234,357 Other - 322,291 177,645 - 499,936 1,706,947 Total Operating Revenues 1,081,527 6,348,009 6,572,952 16,052,955 30,055,443 18,184,042 Operating Expenses: Operating costs 249,533 3,296,017 3,896,029 13,724,052 21,165,631 - Depreciation 304,412 1,036,983 2,374,841 2,798,544 6,514,780 - Employee benefits - - - - - 17,013,102 Total Operating Expenses 553,945 4,333,000 6,270,870 16,522,596 27,680,411 17,013,102 Total Operating Income (loss)527,582 2,015,009 302,082 (469,641) 2,375,032 1,170,940 Nonoperating Revenues (Expenses): Intergovernmental - - - 133,619 133,619 - Investment income 813 47,978 - 113,135 161,926 13,711 Interest expense (142,296) (544,789) (1,216,533) (383,294) (2,286,912) - Total Nonoperating Revenues (Expenses)(141,483) (496,811) (1,216,533) (136,540) (1,991,367) 13,711 Income (Loss) Before Capital Contributions and Transfers 386,099 1,518,198 (914,451) (606,181) 383,665 1,184,651 Capital Contributions Intergovernmental - - 165,954 1,586,387 1,752,341 - Other - - 359,404 - 359,404 - - - 525,358 1,586,387 2,111,745 - Change in Net Position 386,099 1,518,198 (389,093) 980,206 2,495,410 1,184,651 Net Position at Beginning of Year, as restated (See note IV)7,402,729 23,161,700 49,628,264 49,578,306 4,265,053 Net Position at End of Year 7,788,828$ 24,679,898$ 49,239,171$ 50,558,512$ 5,449,704$ Adjustment for the net effect of the current year activity between the internal service funds and the enterprise funds 111,498 Changes in net position of business-type activities (page 41)2,606,908$ See accompanying notes to basic financial statements. Business-Type Activities Town of Nantucket, Massachusetts Page 47 of 157 Comprehensive Annual Financial Report TOWN OF NANTUCKET, MASSACHUSETTS STATEMENT OF CASH FLOWS PROPRIETARY FUNDS YEAR ENDED JUNE 30, 2019 Governmental Activities Nantucket Internal Siasconset Wannacomet Memorial Service Water Water Sewer Airport Total Fund Cash Flows from Operating Activities: Receipts from users 1,076,653$ 6,033,791$ 6,370,002$ 16,006,517$ 29,486,963$ -$ Employee contributions - - - - - 2,242,738 Employer contributions - - - - - 14,234,357 Receipts from other operating revenues - 322,291 177,645 - 499,936 1,457,567 Payments to employees - (964,596) (1,102,937) (4,942,874) (7,010,407) - Payments to vendors (286,247) (2,222,357) (2,541,811) (8,033,162) (13,083,577) - Payments for interfund services used - - - - - (16,779,516) Net Cash Provided by (Used in) Operating Activities 790,406 3,169,129 2,902,899 3,030,481 9,892,915 1,155,146 Cash Flows from Noncapital Financing Activities: Operating grants - - - 133,619 133,619 - Net Cash Provided by (Used in) Noncapital Financing Activities - - - 133,619 133,619 - Cash Flows from Capital and Related Financing Activities: Proceeds from the issuance of bonds and notes - 3,146,000 11,269,051 - 14,415,051 - Sewer privilege fees - -586,531 - 586,531 - Proceeds from capital grants - -- 1,469,624 1,469,624 - Acquisition and construction of capital assets (35,794) (161,440) (14,595,534) (1,410,695) (16,203,463) - Premiums on general obligation bonds - 154,000 55,000 - 209,000 - Proceeds from bond anticipation notes 250,000 500,000 13,853,144 2,263,369 16,866,513 - Repayments of bond anticipation notes (250,000) (3,812,000) (11,771,169) (2,175,447) (18,008,616) - Principal payments on bonds and notes (395,000) (1,738,000) (2,273,536) (800,000) (5,206,536) - Interest payments on bonds and notes (193,617) (661,039) (1,088,252) (402,791) (2,345,699) - Net Cash Used in Capital and Related Financing Activities (624,411) (2,572,479) (3,964,765) (1,055,940) (8,217,595) - Cash Flows from Investing Activities: Investment income 813 47,978 - 113,135 161,926 13,711 Investment of operating cash - - - (16,834) (16,834) (13,721) Net Cash Provided by (Used in) Investing Activities 813 47,978 - 96,301 145,092 (10) Net Change in Cash and Cash Equivalents 166,808 644,628 (1,061,866) 2,204,461 1,954,031 1,155,136 Cash and Cash Equivalents: Beginning of the year 1,688,238 5,570,705 8,362,762 7,770,159 23,391,864 3,735,175 End of the year 1,855,046$ 6,215,333$ 7,300,896$ 9,974,620$ 25,345,895$ 4,890,311$ Reconciliation of Operating Income (Loss) to Net Cash Provided by (Used in) Operating Activities: Operating Income (Loss)527,582$ 2,015,009$ 302,082$ (469,641)$ 2,375,032$ 1,170,940$ Adjustments to reconcile operating income (loss) to net cash provided by (used in) operating activities: Depreciation 304,412 1,036,983 2,374,841 2,798,544 6,514,780 - Changes in assets, deferred outflows, liabilities and deferred inflows Receivables (4,874) 8,073 (25,305) (46,438) (68,544) (249,380) Prepaid items - - - - - 197,147 Inventory - (140,522) - 11,596 (128,926) - Accounts payable and accrued expenses (33,693) (42,572) 119,405 328,092 371,232 25,727 Accrued benefits payable (3,021) 292,158 131,876 674,614 1,095,627 10,712 Due to other funds - - - (235,621) (235,621) - Other liabilities - - - (30,665) (30,665) - Net Cash Provided by (Used in) Operating Activities 790,406$ 3,169,129$ 2,902,899$ 3,030,481$ 9,892,915$ 1,155,146$ Noncash investing capital and financing activities: Intergovernmental subsidies of debt service -$ -$ 352,695$ -$ 352,695$ -$ Amortization of bond premiums 75,171 207,621 51,584 21,227 355,603 - Amortization of deferred charge on refunding 27,431 31,282 8,874 - 67,587 - See accompanying notes to basic financial statements. Business-Type Activities Town of Nantucket, Massachusetts Page 48 of 157 Comprehensive Annual Financial Report TOWN OF NANUCKET, MASSACHUSETTS FIDUCIARY FUNDS STATEMENT OF FIDUCIARY NET POSITION JUNE 30, 2019 Other Postemployment Private Benefits Purpose Agency Trust Fund Trust Funds Funds Assets: Cash and cash equivalents 881,144$ 888,965$ 1,495,636$ Investments: Equities 1,379,770 - - Government securities 869,398 2,405,749 - Receivables, net of allowance for uncollectibles - - 101,191 Total Assets 3,130,312 3,294,714 1,596,827 Liabilities: Warrants payable - 10,349 87,553 Accrued payroll and withholdings - - 40,400 Agency liabilities - - 528,669 Planning board deposits - - 940,205 Total Liabilities - 10,349 1,596,827 Net Position: Restricted for other postemployment benefits 3,130,312 - - Restricted for private purposes - 3,284,365 - Total Net Position 3,130,312$ 3,284,365$ -$ See accompanying notes to basic financial statements. Town of Nantucket, Massachusetts Page 49 of 157 Comprehensive Annual Financial Report TOWN OF NANTUCKET, MASSACHUSETTS STATEMENT OF CHANGES IN FIDUCIARY NET POSITION YEAR ENDED JUNE 30, 2019 Other Postemployment Private Benefits Purpose Trust Fund Trust Funds Additions Contributions: Employer 3,738,016$-$ Other - 630,834 Total contributions 3,738,016 630,834 Investment income: Interest and dividends 239,754 129,319 Net investment earnings 239,754 129,319 Total Additions (net)3,977,770 760,153 Deductions Life and health insurance premiums paid for retirees 3,238,016 - Education - scholarships - 140,675 Health and human services - public assistance - 908,917 Total Deductions 3,238,016 1,049,592 CHANGE IN NET POSITION 739,754 (289,439) NET POSITION AT BEGINNING OF YEAR 2,390,558 3,573,804 NET POSITION AT END OF YEAR 3,130,312$3,284,365$ See accompanying notes to basic financial statements. Town of Nantucket, Massachusetts Page 50 of 157 Comprehensive Annual Financial Report TOWN OF NANTUCKET, MASSACHUSETTS NOTES TO BASIC FINANCIAL STATEMENTS YEAR ENDED JUNE 30, 2019 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 Select Board 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, 2019 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, 2019 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 51 of 157 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 52 of 157 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 53 of 157 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. 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. 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. Town of Nantucket, Massachusetts Page 54 of 157 Comprehensive Annual Financial Report 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, donated works of art and similar items, and capital assets received in a service concession arrangement are reported at acquisition value rather than fair value. 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. Town of Nantucket, Massachusetts Page 55 of 157 Comprehensive Annual Financial Report Capital assets (excluding land and construction-in-process) are depreciated on a straight-line- basis. The estimated useful lives of capital assets being depreciated are as follows: Buildings and improvements 33-50 years Machinery and equipment 5-7 years Vehicles 5-10 years Infrastructure 40-70 years Interfund Balances – Activity between funds that are representative of lending arrangements outstanding at the end of the fiscal year are referred to as either due to/from other funds or advances to/from other funds. All other outstanding balances between funds are reported as due to/from other funds. Any residual balances outstanding between the governmental activities and business-type activities are reported in the government-wide financial statements as internal balances. Interfund Transfers – During the course of its operations, resources are permanently reallocated between and within funds. These transactions are reported as transfers in and transfers out in the individual fund statements. Transfers between and within governmental and fiduciary funds are eliminated from the governmental activities in the statement of activities. Any residual balances outstanding between the governmental activities and the business –type activities are reported in the statement of activities as transfers, net. Investment Income – Excluding the permanent funds, investment income derived from major and nonmajor governmental funds is legally assigned to the general fund unless otherwise directed by state law. Investment income of the proprietary funds is assigned to the fund within which it applies. Compensated Absences – It is the Town’s policy to permit employees to accumulate earned but unused sick pay benefits. Vacation time may be carried for a period of 6 months subsequent to year-end and if not used during this period is lost. Compensated absence liabilities related to both governmental and business-type activities are normally paid from the funds reporting payroll and related expenditures. Amounts related to these benefits are accrued when incurred in the government-wide and proprietary fund financial statements. A liability for these amounts is reported in Governmental Funds only if they have matured. Long-term Obligations – Long-term debt is reported as a liability in the government-wide and proprietary fund statement of net position. Bond premiums and discounts are deferred and amortized over the life of the bonds using the effective interest method. Bond anticipation notes payable are reported net of the applicable bond premium or discount. In the governmental fund financial statements, the face amount of long-term debt issued is reported as other financing sources. Premiums received on a debt issuance are reported as other financing sources while discounts are reported as other financing uses. Issuance costs are exclusively reported as general government expenditures regardless of whether they are withheld from the actual proceeds. 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 Town of Nantucket, Massachusetts Page 56 of 157 Comprehensive Annual Financial Report (expense/expenditure) until then. The Town has three types of items that are reported on the government-wide statement of net position. These relate to deferred losses on refunding transactions, outflows from changes in the net pension liability and outflows from changes in net other postemployment benefits liability . The deferred losses on refunding will be recognized in interest expense over the life of the refunding bonds issued or the remaining life of the bonds refunded, whichever is shorter. The deferred pensions will be recognized in pension expense in future years as more fully described in Note III, subsection A. The deferred other postemployment benefits will be recognized in employee benefits expense in future years as more fully described in Note III, subsection C. 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 two types of items that are reported on the government-wide statement of net position which relate to outflows from changes in the net pension liability and the other postemployment benefit liability. The deferred pensions will be recognized in pension expense in future years as more fully described in Note III, subsection A. The deferred other postemployment benefits will be recognized in employee benefits expense in future years as more fully described in Note III, subsection C. The Town also one type of item that arises 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 three sources: property taxes, user charges 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 57 of 157 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. 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 $5,411,964 at June 30, 2019 and is reported as unassigned fund balance in the General Fund. Town of Nantucket, Massachusetts Page 58 of 157 Comprehensive Annual Financial Report 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, 2019 and is reported as unassigned fund balance in the General Fund. The following table reflects the Town’s fund equity categorizations: 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 $1,463,973 of encumbrances from normal purchasing activity in the general fund as assigned and $1,306,112 of encumbrances from Town Meeting Articles in the general fund as committed. There are no encumbrances reported in any other fund. Town Nonmajor Capital Governmental General Projects Funds Total $ 3,113,226 -$ $-$ 3,113,226 - - 44,965 44,965 Nonspendable:Interfund loans Nonexpendable trust funds Restricted: School grants - - 440,221 440,221 Town grants - - 1,168,070 1,168,070 School revolving - - 1,491,704 1,491,704 Ambulance - - 1,240,220 1,240,220 Beach improvements - - 1,538,462 1,538,462 Waterway improvements - - 636,798 636,798 Insurance proceeds - - 1,086,954 1,086,954 Other Town revolving - - 2,519,437 2,519,437 Capital outlay - 13,223,679 2,038,261 15,261,940 Community preservation -- 4,828,842 4,828,842 Gift funds -- 1,049,137 1,049,137 Expendable trust funds -- 152,850 152,850 Debt service 231,468 - - 231,468 Committed: Nursing home 4,976,156 - - 4,976,156 Solid waste landfill 2,963,499 - - 2,963,499 Capital outlay 1,264,316 - - 1,264,316 Other purposes 41,796 - - 41,796 Assigned: Town administration 211,132 - - 211,132 Public buildings 162,161 - - 162,161 Education 461,971 - - 461,971 Public safety 127,057 - - 127,057 Other purposes 501,652 - - 501,652 Subsequent years' budget 6,075,244 - - 6,075,244 Unassigned 22,764,258 (2,569,775) (881,270) 19,313,213 42,893,936$ 10,653,904$ 17,354,651$ 70,902,491$ Town of Nantucket, Massachusetts Page 59 of 157 Comprehensive Annual Financial Report E.Excess of Expenditures Over Appropriations and Deficits During the fiscal year ended, the Town overspent its appropriation for state and county assessments by $68,707 which was funded from available revenues. The Town incurred deficits of $2,569,775 for capital outlays which is reported in the Town Capital Projects major fund and $881,270 for a septic program which is reported in the Nonmajor Governmental Funds. 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 $100,678,103 and the bank balance was $101,509,227. Of the Town's bank balance, $37,084,781 was covered by federal depository insurance or the Depositors Insurance Fund, $48,461,590 was collateralized and the remainder was uninsured. Town of Nantucket, Massachusetts Page 60 of 157 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 in U.S. government obligations and equity securities are held by a broker-dealer where the Town’s assets are segregated from the broker-dealer firm assets and are protected up to $500,000 under coverage through the Securities Investor Protection Corporation (“SIPC”). Additionally, the broker-dealer carries excess insurance to cover claims over the SIPC limit through Lloyd’s with a firm cap of $1 billion with no individual client limit. The Town’s investments in certificates of deposit are fully insured by federal depository insurance or the Depositors Insurance Fund or collateralized. Equity securities classified in Level 1 are valued using prices quoted in active markets for those securities. Debt securities classified in Level 2 are valued using prices for similar securities in active markets. Certificates of deposit classified in Level 2 are valued using matrix pricing based on the securities’ relationship to benchmark quoted prices. The State Treasurer’s investment pool (MMDT) is valued at amortized cost. The MMDT’s investment advisor may value the pool using an alternative valuation method that more accurately reflects the fair value in accordance with the pools fair value pricing policies should amortized cost not approximate the fair value of the pool. 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, 2019, 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 17% of its investments in the MMDT and 54% 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, Time Until Maturity (Years) Less Investment Type 6/30/19 Than 1 1-5 6-10 U.S. government obligations 9,742,616$ 7,257,893$ 2,484,723$ -$ Certificates of deposit 2,835,660 2,835,660 - - State investment pool (MMDT)3,120,906 3,120,906 - - Total Town investments with maturities 15,699,182$ 13,214,459$ 2,484,723$ -$ Town of Nantucket, Massachusetts Page 61 of 157 Comprehensive Annual Financial Report 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. At June 30, 2019, the Town’s investments in U.S. government securities were rated AAA by Moody’s and the remainder of the Town’s investments were unrated. 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, 2019: 6/30/19 Level 1 Level 2 Level 3 Investments by fair value level Debt securities: U.S. Government obligations 9,742,616$ -$ 9,742,616$ -$ Total debt securities 9,742,616 - 9,742,616 - Equity securities: Common stock 2,365,506 2,365,506 - - Total equity securities 2,365,506 2,365,506 - - Certificates of deposit 2,835,660 2,835,660 Total investments by fair value level 14,943,782$ 2,365,506$ 12,578,276$ -$ Investments measured at amortized cost MMDT 3,120,906 Total investments 18,064,688$ Fair Value Measurements Using Town of Nantucket, Massachusetts Page 62 of 157 Comprehensive Annual Financial Report Discretely Presented Component Unit – Nantucket County Custodial Credit Risk: Deposits- The County has adopted a deposit policy which requires that the Treasurer review each bank doing business with the County on a quarterly basis. The policy does not restrict the value of uninsured or uncollateralized investments held at any time. At year-end, the carrying amount of the County's deposits was $5,482,565 and the bank balance was $5,492,997. Of the County's bank balance, $5,362,320 was covered by either federal depository insurance or by the Depositors’ Insurance Fund (DIF) and the remaining balance was uninsured. Custodial Credit Risk: Investments- The County has adopted an investment policy regarding custodial credit risk that requires all securities not held directly by the Treasurer must be held by a third party custodian approved by the Treasurer in the Town/County’s name and tax identification number At year-end, the County’s investments consisted of Certificates of Deposit totaling $42,993 which were covered by federal depository insurance and were not subject to custodial credit risk. These are recorded as cash equivalents at June 30, 2019. Interest Rate Risk - The County limits investment maturities as a means of managing its exposure to fair value losses arising from increasing interest rates. The policy limits investments of operating funds to one year or less and limits investment maturities of trust funds and other special funds to periods no longer that seven years, maintaining an average maturity no greater than three years for the investment portfolio Credit Risk - The County restricts the investment of operating funds to U.S. Treasury or Agency securities which carry “AAA” ratings. Trust and other special funds which are longer-term investments may invest in fixed-income securities which are held principally for capital preservation and income potential and corporate debt that carries a rating of “A” or better by either Standard and Poor’s or Moody’s rating services. If a security falls below the “A” rating, the security will be monitored by the Treasurer and advisor and will be noted as an exception to the policy if held in the investment portfolio. The Treasurer will sell the securities if a decline in value is expected. Concentration of Credit Risk – The County does not place a limit on the amount that may be invested in any one issuer. Discretely Presented Component Unit – Nantucket Islands Land Bank Custodial Credit Risk: Deposits -The Land Bank does not have a policy regarding custodial credit risk for deposits. At year-end, the carrying amount of the Land Bank’s deposits was approximately $22,500,000, of which approximately $1,613,000 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. Town of Nantucket, Massachusetts Page 63 of 157 Comprehensive Annual Financial Report Restricted Cash consist of the following as of June 30, 2019: Series A Debt Reserve $1,440,548 Park construction 461,058 Mitigation agreements 209,184 Life insurance premium 221,504 $2,332,294 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 $4,920,966 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 $2,810,366 which mature in May 2022 and have a Moody’s quality rating of AAA. At June 30, 2019, all investments are categorized in Level 1 of the fair value hierarchy based on quoted market prices. The Land Bank has entered into an agreement with the Town, which requires the Land Bank to establish a working capital reserve fund. This fund, along with the guarantee of the Town of its full faith and credit, secures the Series 2009A, 2012A and 2016A bonds outstanding at year-end. In addition, the Land Bank is prohibited from acquiring additional real estate at any time that an amount equal to one year’s debt service relating to the bonds in the reserve fund is not on deposit. Interest Rate Risk -The Land Bank does not have a formal policy regarding interest rate risk. B.Receivables Receivables as of year-end for the Town’s individual major and non-major governmental funds in the aggregate, including the applicable allowances for uncollectible accounts, are as follows: Gross Allowance for Net Amount Uncollectibles Amount Receivables: Real estate and personal property taxes 2,029,025$ (354,426)$ 1,674,599$ Tax liens 2,898,606 - 2,898,606 Motor vehicle and other excise taxes 1,146,291 (39,421) 1,106,870 Community preservation surcharges 192,817 - 192,817 Nursing home user charges 513,338 - 513,338 Landfill user charges 604,986 (143,303) 461,683 Ambulance user charges 935,365 (412,000) 523,365 Departmental and other 23,940 - 23,940 Intergovernmental 2,897,027 - 2,897,027 Total 11,241,395$ (949,150)$ 10,292,245$ Town of Nantucket, Massachusetts Page 64 of 157 Comprehensive Annual Financial Report Receivables as of year-end for the Town’s proprietary funds are as follows: Governmental funds report deferred inflows of resources in connection with receivables for revenues that are not considered to be available to liquate liabilities of the current period. The following identifies the components of deferred inflows of resources in the governmental funds: Massachusetts Clean Water Trust – The Town has entered into numerous loan agreements with the Massachusetts Clean Water Trust (“MCWT”). It is expected that the Town will be subsidized by MCWT on a periodic basis for principal in the amount of $992,704 and interest in the amount of $5,130,856 until the maturity of these agreements. GAAP requires the recognition of gross debt relative to these agreements; therefore, a receivable totaling $992,704 has been reported in the Sewer Enterprise Fund. Gross Allowance for Net Amount Uncollectibles Amount Receivables: Water user charges 698,839$ -$ 698,839$ Sewer user charges 773,740 - 773,740 Sewer privilege fees 450,633 - 450,633 Airport user charges 469,329 - 469,329 Stop loss receivable 442,792 - 442,792 Intergovernmental 5,616,193 - 5,616,193 Total 8,451,526$ -$ 8,451,526$ Other General Governmental Fund Funds Total Receivable type: Real estate and personal property taxes 1,281,469$ -$ 1,281,469$ Tax liens 2,898,606 - 2,898,606 Motor vehicle and other excise taxes 525,624 - 525,624 Community preservation surcharges - 192,817 192,817 Nursing home user charges 513,338 - 513,338 Landfill user charges 461,683 - 461,683 Ambulance user charges - 523,365 523,365 Departmental and other 23,940 - 23,940 Total 5,704,660$ 716,182$ 6,420,842$ Town of Nantucket, Massachusetts Page 65 of 157 Comprehensive Annual Financial Report C. Capital Assets Capital asset activity for the year ended June 30, 2019, was as follows: . Beginning Ending Balance Increases Decreases Balance Governmental Activities: Capital assets not being depreciated: Land 178,869,211$ 101,353$ (99,854)$ 178,870,710$ Construction in process 64,413,452 16,480,760 (6,066,933) 74,827,279 Total capital assets not being depreciated 243,282,663 16,582,113 (6,166,787) 253,697,989 Capital assets being depreciated: Buildings and improvements 69,654,028 585,595 (507,007) 69,732,616 Infrastructure 37,261,767 6,284,631 (184,842) 43,361,556 Machinery and equipment * 10,401,574 1,020,367 (721,231) 10,700,710 Vehicles * 9,633,555 1,259,703 (406,327) 10,486,931 Total capital assets being depreciated 126,950,924 9,150,296 (1,819,407) 134,281,813 Less accumulated depreciation for: Buildings and improvements (32,352,869) (2,161,223) 507,007 (34,007,085) Infrastructure * (14,502,387) (1,825,912) 184,842 (16,143,457) Machinery and equipment * (4,538,335) (1,118,023) 721,231 (4,935,127) Vehicles * (6,299,879) (868,735) 406,327 (6,762,287) Total accumulated depreciation (57,693,470) (5,973,893) 1,819,407 (61,847,956) Total capital assets being depreciated, net 69,257,454 3,176,403 - 72,433,857 Total governmental activities capital assets, net 312,540,117$ 19,758,516$ (6,166,787)$ 326,131,846$ Business-Type Activities: Capital assets not being depreciated: Land 16,805,385$ -$ -$ 16,805,385$ Construction in process 44,254,108 15,876,140 (12,559,536) 47,570,712 Total capital assets not being depreciated 61,059,493 15,876,140 (12,559,536) 64,376,097 Capital assets being depreciated: Buildings and improvements 55,021,532 4,332,161 (4,300) 59,349,393 Infrastructure 169,293,560 6,866,720 (82,382) 176,077,898 Machinery and equipment 20,495,075 1,134,535 (70,998) 21,558,612 Vehicles 7,553,021 553,443 (415,583) 7,690,881 Total capital assets being depreciated 252,363,188 12,886,859 (573,263) 264,676,784 Less accumulated depreciation for: Buildings and improvements (10,290,926) (1,406,138) 4,300 (11,692,764) Infrastructure (58,790,827) (3,833,369) 82,382 (62,541,814) Machinery and equipment (14,545,940) (761,566) 70,998 (15,236,508) Vehicles (4,607,548) (513,707) 415,583 (4,705,672) Total accumulated depreciation (88,235,241) (6,514,780) 573,263 (94,176,758) Total capital assets being depreciated, net 164,127,947 6,372,079 - 170,500,026 Total business-type activities capital assets, net 225,187,440$ 22,248,219$ (12,559,536)$ 234,876,123$ * As reclassified Town of Nantucket, Massachusetts Page 66 of 157 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 334,485 36,433 (265,715) 105,203 Total capital assets not being depreciated 2,950,063 36,433 (265,715) 2,720,781 Capital assets being depreciated: Buildings and improvements 808,299 - (4,300) 803,999 Infrastructure 9,858,124 - (57,700) 9,800,424 Machinery and equipment 525,161 265,076 (9,540) 780,697 Total capital assets being depreciated 11,191,584 265,076 (71,540) 11,385,120 Less accumulated depreciation for: Buildings and improvements (167,274) (30,848) 4,300 (193,822) Infrastructure (1,878,838) (235,383) 57,700 (2,056,521) Machinery and equipment (88,947) (38,181) 9,540 (117,588) Total accumulated depreciation (2,135,059) (304,412) 71,540 (2,367,931) Total capital assets being depreciated, net 9,056,525 (39,336) - 9,017,189 Total Siasconset Water capital assets, net 12,006,588$ (2,903)$ (265,715)$ 11,737,970$ Business-type Activities: Wannacomet Water Capital assets not being depreciated: Land 5,434,455$ -$ -$ 5,434,455$ Construction in process 8,117,528 331,428 (8,067,151) 381,805 Total capital assets not being depreciated 13,551,983 331,428 (8,067,151) 5,816,260 Capital assets being depreciated: Buildings and improvements 1,532,974 4,051,493 - 5,584,467 Infrastructure 37,717,269 3,496,020 (24,682) 41,188,607 Machinery and equipment * 1,490,312 307,416 (32,795) 1,764,933 Vehicles * 310,233 42,234 (52,196) 300,271 Total capital assets being depreciated 41,050,788 7,897,163 (109,673) 48,838,278 Less accumulated depreciation for: Buildings and improvements (380,738) (102,597) - (483,335) Infrastructure * (9,903,388) (829,329) 24,682 (10,708,035) Machinery and equipment * (477,983) (77,342) 32,795 (522,530) Vehicles * (233,378) (27,715) 52,196 (208,897) Total accumulated depreciation (10,995,487) (1,036,983) 109,673 (11,922,797) Total capital assets being depreciated, net 30,055,301 6,860,180 - 36,915,481 Total Wannacomet Water capital assets, net 43,607,284$ 7,191,608$ (8,067,151)$ 42,731,741$ * As reclassified Town of Nantucket, Massachusetts Page 67 of 157 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 31,576,349 14,076,780 (739,614) 44,913,515 Total capital assets not being depreciated 37,951,932 14,076,780 (739,614) 51,289,098 Capital assets being depreciated: Buildings and improvements 368,790 - - 368,790 Infrastructure 83,318,108 739,614 - 84,057,722 Machinery and equipment * 16,391,016 50,395 (7,400) 16,434,011 Vehicles * 1,833,630 468,359 (176,231) 2,125,758 Total capital assets being depreciated 101,911,544 1,258,368 (183,631) 102,986,281 Less accumulated depreciation for: Buildings and improvements (193,266) (13,261) - (206,527) Infrastructure (22,601,448) (1,697,165) - (24,298,613) Machinery and equipment * (13,006,547) (462,838) 7,400 (13,461,985) Vehicles * (835,984) (201,577) 176,231 (861,330) Total accumulated depreciation (36,637,245) (2,374,841) 183,631 (38,828,455) Total capital assets being depreciated, net 65,274,299 (1,116,473) - 64,157,826 Total Sewer capital assets, net 103,226,231$ 12,960,307$ (739,614)$ 115,446,924$ Capital assets not being depreciated: Land 2,379,769$ -$ -$ 2,379,769$ Construction in process 4,225,746 1,431,498 (3,487,055) 2,170,189 Total capital assets not being depreciated 6,605,515 1,431,498 (3,487,055) 4,549,958 Capital assets being depreciated: Infrastructure 38,400,059 2,631,086 - 41,031,145 Buildings and improvements 52,311,469 280,668 - 52,592,137 Machinery and equipment * 2,088,587 511,648 (21,263) 2,578,972 Vehicles * 5,409,157 42,850 (187,156) 5,264,851 Total capital assets being depreciated 98,209,272 3,466,252 (208,419) 101,467,105 Less accumulated depreciation for: Infrastructure (24,407,153) (1,071,492) - (25,478,645) Buildings and improvements (9,549,648) (1,259,432) - (10,809,080) Machinery and equipment * (972,463) (183,205) 21,263 (1,134,405) Vehicles * (3,538,186) (284,415) 187,156 (3,635,445) Total accumulated depreciation (38,467,450) (2,798,544) 208,419 (41,057,575) Total capital assets being depreciated, net 59,741,822 667,708 - 60,409,530 Total Nantucket Memorial Airport capital assets, net 66,347,337$ 2,099,206$ (3,487,055)$ 64,959,488$ * As reclassified Business-type Activities: Nantucket Memorial Airport Town of Nantucket, Massachusetts Page 68 of 157 Comprehensive Annual Financial Report Depreciation expense was charged to functions/programs as follows: Governmental Activities:Business-Type Activities: General government 319,520$ Water 1,341,395$ Public safety 1,987,860 Sewer 2,374,841 Education 1,216,397 Airport 2,798,544 Public works 2,293,921 6,514,780$ Health and human services 156,195 5,973,893$ 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 21,071 - - 21,071 Less accumulated depreciation for: Machinery and equipment (20,421) (650) - (21,071) Total capital assets being depreciated, net 650 (650) - - Total Nantucket County capital assets, net 3,284,492$ (650)$ -$ 3,283,842$ Discretely Presented Component Unit - Nantucket Islands Land Bank Beginning Ending Balance Increases Decreases Balance Capital assets not being depreciated: Land 320,726,743$ 51,400,736$ (975,000)$ 371,152,479$ Capital assets being depreciated: Buildings, improvements and equipment 28,547,483 7,539,004 (687,609) 35,398,878 Less: accumulated depreciation (11,894,223) (1,038,982) 373,665 (12,559,540) Total capital assets being depreciated, net 16,653,260 6,500,022 (313,944) 22,839,338 Total Nantucket Islands Land Bank capital assets, net 337,380,003$ 57,900,758$ (1,288,944)$ 393,991,817$ Town of Nantucket, Massachusetts Page 69 of 157 Comprehensive Annual Financial Report D.Interfund Receivables, Payables and Transfers The composition of interfund balances at June 30, 2019 is as follows: The outstanding balances between governmental 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 Town and the Nantucket Memorial Airport entered into an agreement in fiscal year 2019 for the Enterprise Fund to repay the General Fund in regular installments for costs that were subsidized in prior years. In connection with the execution of this agreement, a prior period restatement in the amount of $3,348,846 was recorded as an obligation due to the Town. Refer to Note IV for additional details on restatements. The composition of interfund transfers for the fiscal year ended June 30, 2019, was as follows: E.Temporary Debt The Town is authorized to borrow on a temporary basis to fund the following: Current Operating Costs – Prior to collection of revenues, expenditures may be financed through the issuance of revenue or tax anticipation notes (RANS or TANS). Capital Projects and Other Approved Costs – Projects may be temporarily funded through the issuance of bond anticipation notes (BANS) or grant anticipation notes (GANS). In certain cases, prior to the issuance of these temporary notes, the governing body must take the necessary legal steps to authorize the issuance of the general obligation bonds. Temporary notes may not exceed the aggregate amount of bonds authorized or the grant award amount and carry maturity dates Amount General Fund Nonmajor Governmental Funds -651,154$ Road Improvements General Fund Enterprise Fund - Nantucket Memorial Airport 3,113,225 Total 3,764,379$ Receivable Fund Payable Fund Town Nonmajor Capital Governmental Projects Funds Total General Fund 8,224,136$ 700,000$ 8,924,136$ (1) Nonmajor Governmental Funds 22,416 - 22,416 (1) Total 8,246,552$ 700,000$ 8,946,552$ (1) Transfer to town capital projects for various capital outlays; transfers to nonmajor funds to fund community school and special education programs. Transfers In Transfers Out Town of Nantucket, Massachusetts Page 70 of 157 Comprehensive Annual Financial Report that are limited by state law. Interest expenditures and expenses for temporary borrowings are accounted for in the general fund and enterprise funds, respectively. Short-term (BANs) issued for nonmajor governmental funds were used for septic betterments ($3,000,000), roadways and sidewalks ($500,000), town pier ($400,000), nursing home construction ($725,000) and fire station construction ($2,500,000). Those issued for business- type funds were issued for water projects ($750,000), sewer projects ($18,877,731) and airport projects ($2,263,369). 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 and sewer improvements. Short-term MCWT loans totaling $3,000,000 and $7,461,562 are reported in the non-major governmental funds and business-type funds, respectively. Temporary notes outstanding at June 30, 2019, are payable as follows: Interest Maturity July 1,June 30, Type Rate Date 2018 Additions Retirements 2019 MCWT 0.00%12/31/19 1,000,000$ -$ -$ 1,000,000$ MCWT 0.00%12/31/20 - 2,000,000 - 2,000,000 BAN 2.50% Matured 7,417,000 - (7,417,000)- BAN 2.75% Matured 3,000,000 - (3,000,000)- BAN 3.00% Matured - 825,000 (825,000) - BAN 2.50%10/24/19 - 2,925,000 - 2,925,000 BAN 2.75%05/22/20 - 1,200,000 - 1,200,000 Total Governmental Notes 11,417,000 6,950,000 (11,242,000) 7,125,000 BAN 2.50% Matured 13,333,169 - (13,333,169) - BAN 2.75% Matured 2,500,000 - (2,500,000)- BAN 3.00% Matured 1,883,447 - (1,883,447)- BAN 2.20% Matured 292,000 - (292,000) - BAN 2.50% Matured - 5,461,235 (5,461,235)- BAN 3.00% Matured - 6,454,934 (6,454,934)- BAN 3.00% Matured - 5,461,235 (5,461,235)- BAN 2.50%10/24/19 - 10,731,856 - 10,731,856 BAN 3.25%10/24/19 - 146,000 - 146,000 BAN 2.75%05/22/20 - 3,339,760 - 3,339,760 BAN 2.70%05/22/20 - 211,922 - 211,922 MCWT 2.00% Matured 8,472,975 - (8,472,975)- MCWT 2.00% Matured 14,101,765 - (14,101,765) - MCWT 2.00%12/31/19 5,873,812 - - 5,873,812 MCWT 2.00%12/31/19 1,587,750 - - 1,587,750 Total Business-Type Notes 48,044,918 31,806,942 (57,960,760) 21,891,100 Total Notes Payable 59,461,918$ 38,756,942$ (69,202,760)$ 29,016,100$ Town of Nantucket, Massachusetts Page 71 of 157 Comprehensive Annual Financial Report 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. 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”. On November 15, 2018, the Town issued $20,495,000 in general obligation bonds that mature on July 15, 2038 and pay interest at 3% – 5% per annum. A portion of the proceeds, along with $392,066 of available funds were used to retire $13,504,000 of BANS maturing on November 16, 2018. The bonds were issued for water projects ($3,146,000), sewer construction ($545,000), affordable housing ($464,500), roads and sidewalks ($1,970,000), fire station construction ($13,202,500), nursing home design ($167,000) and school construction ($1,000,000). 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, 2019, $2,490,000 of defeased bonds remains outstanding. Town of Nantucket, Massachusetts Page 72 of 157 Comprehensive Annual Financial Report The following reflects the current year activity in the long-term liability accounts: The Town’s governmental activities liabilities will be liquidated by the general fund. The business-type liabilities will be liquidated by the respective business-type funds. Beginning Ending Due within Balance Additions Deletions Balance one year Governmental Activities: General obligation bonds (a)68,401,427$ 16,804,000$ (3,980,859)$ 81,224,568$ 4,747,881$ Unamortized bond premium 2,828,828 1,018,631 (299,909) 3,547,550 387,411 Notes from direct borrowings and placements (a) 13,741,999 - (713,910) 13,028,089 728,567 Workers' compensation 95,805 373,414 (354,254) 114,965 114,965 Landfill closure 12,000,000 2,000,000 - 14,000,000 - Compensated absences 2,241,122 1,741,354 (1,120,561) 2,861,915 1,430,958 Net other postemployment benefits liability (b) 88,095,045 26,450,187 (5,602,879) 108,942,353 - Net pension liability 55,087,786 20,241,938 (9,477,938) 65,851,786 - Total Governmental Activities 242,492,012$ 68,629,524$ (21,550,310)$ 289,571,226$ 7,409,782$ Business-Type Activities - Siasconset Water: General obligation bonds (a)5,209,900$ -$ (395,000)$ 4,814,900$ 400,000$ Unamortized bond premium 438,461 - (75,171) 363,290 71,602 Net other postemployment benefits liability (b)545,448 100,787 (51,962) 594,273 - Net pension liability 131,931 48,478 (22,699) 157,710 - Total Siasconset Water 6,325,740 149,265 (544,832) 5,930,173 471,602 Business-Type Activities - Wannacomet Water: General obligation bonds (a)17,597,400 3,146,000 (1,738,000) 19,005,400 1,731,000 Unamortized bond premium 1,202,033 154,000 (207,621) 1,148,412 201,688 Compensated absences 235,628 156,293 (117,814) 274,107 137,053 Net other postemployment benefits liability (b) 1,169,500 311,775 (171,613) 1,309,662 - Net pension liability 2,724,375 1,001,068 (468,733) 3,256,710 - Total Wannacomet Water 22,928,936 4,769,136 (2,703,781) 24,994,291 2,069,741 Business-Type Activities - Sewer: General obligation bonds (a)3,236,250 545,000 (342,000) 3,439,250 393,000 Unamortized bond premium 287,290 55,000 (51,584) 290,706 58,033 Notes from direct borrowings and placements (a) 33,938,405 22,574,740 (2,121,274) 54,391,871 3,294,976 Compensated absences 88,227 55,974 (44,113) 100,088 50,044 Net other postemployment benefits liability (b)255,433 61,511 (159,076) 157,868 - Net pension liability 1,662,331 610,820 (286,006) 1,987,145 - Total Sewer 39,467,936 23,903,045 (3,004,053) 60,366,928 3,796,053 Business-Type Activities - Nantucket Memorial Airport: Bond and note debt 9,170,000 - (800,000) 8,370,000 680,000 Unamortized bond premium 137,252 - (21,227) 116,025 19,377 Compensated absences 603,231 287,653 (301,616) 589,268 294,634 Net other postemployment benefits liability (b) 3,612,261 998,404 (741,033) 3,869,632 - Net pension liability 6,359,074 2,336,634 (1,094,089) 7,601,619 - Total Nantucket Memorial Airport 19,881,818 3,622,691 (2,957,965) 20,546,544 994,011 Total Business-Type Activities 88,604,430$ 32,444,137$ (9,210,631)$ 111,837,936$ 7,331,407$ (a) Reclassifications were made to beginning balances for the adoption of GASB Statement No. 88. (b) As restated (see Note IV) Town of Nantucket, Massachusetts Page 73 of 157 Comprehensive Annual Financial Report The following is a summary of outstanding long-term debt obligations as of June 30, 2019: The Town’s outstanding notes from direct borrowings and placements related to governmental and business-type activities are issued by the Massachusetts Clean Water Trust. All financing agreements with the MCWT contain a provision that in the event of default, outstanding amounts due and payable shall be paid from any undisbursed proceeds on account or be deducted from any state local aid distributions owed to the Town. This provision also allows the MCWT to declare the entire outstanding principal amount due immediately. Interest Beginning Ending Description of Issue Rate Balance Additions Maturities Balance Governmental Activities: General Obligation Bonds 2.00 - 5.00% 58,089,977$ 16,804,000$ (2,340,859)$ 72,553,118$ General Obligation Refunding Bonds 1.50 - 5.00% 10,311,450 - (1,640,000) 8,671,450 Total General Obligation Bonds 68,401,427 16,804,000 (3,980,859) 81,224,568 Add: Unamortized bond premium 2,828,828 1,018,631 (299,909) 3,547,550 Total General Obligation Bonds, net 71,230,255 17,822,631 (4,280,768) 84,772,118 Massachusetts Clean Water Trust 0.00 - 2.42% 13,741,999 - (713,910) 13,028,089 Total notes from direct borrowings and placements 13,741,999 - (713,910) 13,028,089 Total Governmental Activities debt 84,972,254$ 17,822,631$ (4,994,678)$ 97,800,207$ Business-Type Activities - Siasconset Water: General Obligation Bonds 2.00 - 5.00% 1,580,000$ -$ (395,000)$ 1,185,000$ General Obligation Refunding Bonds 2.00 - 4.00% 3,629,900 - - 3,629,900 Total General Obligation Bonds 5,209,900 - (395,000) 4,814,900 Add: Unamortized bond premium 438,461 - (75,171) 363,290 Total General Obligation Bonds, net 5,648,361$ -$ (470,171)$ 5,178,190$ Business-Type Activities - Wannacomet Water: General Obligation Bonds 2.00 - 5.00% 7,981,000$ 3,146,000$ (806,000)$ 10,321,000$ General Obligation Refunding Bonds 1.50 - 5.00% 9,616,400 - (932,000) 8,684,400 Total General Obligation Bonds 17,597,400 3,146,000 (1,738,000) 19,005,400 Add: Unamortized bond premium 1,202,033 154,000 (207,621) 1,148,412 Total General Obligation Bonds, net 18,799,433$ 3,300,000$ (1,945,621)$ 20,153,812$ Business-Type Activities - Sewer: General Obligation Bonds 2.00 - 5.00% 1,534,000$ -$ (114,000)$ 1,420,000$ General Obligation Refunding Bonds 2.00 - 5.00% 1,702,250 545,000 (228,000) 2,019,250 Total General Obligation Bonds 3,236,250 545,000 (342,000) 3,439,250 Add: Unamortized bond premium 287,290 55,000 (51,584) 290,706 Total General Obligation Bonds, net 3,523,540 600,000 (393,584) 3,729,956 Massachusetts Clean Water Trust 0.00 - 5.50% 33,938,405 22,574,740 (2,121,274) 54,391,871 Total notes from direct borrowings and placements 33,938,405 22,574,740 (2,121,274) 54,391,871 Total debt 37,461,945$ 23,174,740$ (2,514,858)$ 58,121,827$ Business-Type Activities - Nantucket Memorial Airport: General Obligation Bonds 2.00 - 5.00% 9,170,000$ -$ (800,000)$ 8,370,000$ Total General Obligation Bonds 9,170,000 - (800,000) 8,370,000 Add: Unamortized bond premium 137,252 - (21,227) 116,025 Total General Obligation Bonds, net 9,307,252$ -$ (821,227)$ 8,486,025$ Total Business-Type Activities debt 71,216,991$ 26,474,740$ (5,751,877)$ 91,939,854$ Town of Nantucket, Massachusetts Page 74 of 157 Comprehensive Annual Financial Report Payments on long-term debt due in future years consist of the following: Direct Borrowings Year Ending June 30 Principal Interest Principal Interest Governmental Activities 2020 4,747,881$ 2,994,340$ 728,567$ 281,692$ 2021 4,884,924 2,705,455 742,413 266,686 2022 4,843,988 2,511,300 757,753 251,365 2023 4,826,073 2,321,748 773,447 235,689 2024 4,707,180 2,122,038 741,660 219,653 2025-2029 18,793,750 8,029,637 3,813,118 848,881 2030-2034 15,809,509 4,852,383 2,925,891 472,735 2035-2039 16,591,263 2,270,119 2,545,240 122,134 2040-2042 6,020,000 284,879 - - Total 81,224,568$ 28,091,899$ 13,028,089$ 2,698,835$ Business-Type Activities: Siasconset Water 2020 400,000$ 162,186$ -$ -$ 2021 410,000 147,061 - - 2022 420,000 130,961 - - 2023 435,000 114,935 - - 2024 450,000 97,485 - - 2025-2029 2,464,900 225,316 - - 2030-2034 195,000 18,051 - - 2035-2039 40,000 1,200 - - 4,814,900$ 897,195$ -$ -$ Business-Type Activities: Wannacomet Water 2020 1,731,000$ 685,268$ -$ -$ 2021 1,795,000 599,900 - - 2022 1,643,000 533,664 - - 2023 1,632,000 471,040 - - 2024 1,649,000 406,746 - - 2025-2029 6,290,400 1,191,316 - - 2030-2034 2,550,000 495,424 - - 2035-2039 1,715,000 139,875 - - 19,005,400$ 4,523,233$ -$ -$ Business-Type Activities: Sewer 2020 393,000$ 137,853$ 3,294,976$ 781,515$ 2021 393,000 116,150 3,350,852 716,984 2022 347,000 98,975 3,304,099 655,414 2023 342,000 83,595 3,365,613 585,104 2024 335,000 68,480 3,287,090 509,492 2025-2029 1,309,250 161,071 13,946,269 1,908,010 2030-2034 320,000 16,249 12,993,774 1,044,506 2035-2039 - - 10,849,198 243,168 3,439,250$ 682,373$ 54,391,871$ 6,444,193$ Business-Type Activities: Nantucket Memorial Airport 2020 680,000$ 316,338$ -$ -$ 2021 605,000 294,362 - - 2022 610,000 270,938 - - 2023 625,000 247,187 - - 2024 505,000 225,988 - - 2025-2029 2,460,000 851,243 - - 2030-2034 2,325,000 401,633 - - 2035-2039 560,000 40,850 - - 8,370,000$ 2,648,539$ -$ -$ and PlacementsGeneral Obligation Bonds Town of Nantucket, Massachusetts Page 75 of 157 Comprehensive Annual Financial Report The following represents authorized and unissued debt as of June 30, 2019: Discretely Presented Component Unit – Nantucket Islands Land Bank Project Amount Governmental: Fire station 4,711,394$ School building 2,789,319 Public works 9,880,000 Marine building 3,450,000 Our Island Home 1,215,000 Solid waste - landfill 14,383,000 Town pier 4,900,000 Bicycle paths 2,839,487 Land acquisition 5,000,000 Affordable housing 20,000,000 Miscellaneous 2,499,000 Business-type: Water projects 12,913,842 Sewer projects 86,190,912 Nantucket Memorial Airport 33,747,312 Total Authorized and Unissued 204,519,266$ The following reflects the activity in the long-term liability accounts for the Land Bank for the year ended June 30, 2019: Beginning Ending Due within Balance Additions Deletions Balance one year Bond and note indebtedness 25,419,340$ 3,587,836$ (5,021,335)$ 23,985,841$ 7,916,236$ Capital leases 129,730 158,511 (75,096) 213,145 81,399 Net OPEB liability 1,143,407 131,276 - 1,274,683 - Net pension liability 1,674,418 506,296 - 2,180,714 - Total Land Bank 28,366,895$ 4,383,919$ (5,096,431)$ 27,654,383$ 7,997,635$ The following is a summary of outstanding long-term debt obligations as of June 30, 2019: Interest Beginning Ending Description of Issue Rate Balance Additions Maturities Balance Notes payable 3.00 - 6.06% 7,450,000$ 4,000,000$ (2,875,000)$ 8,575,000$ General obligation bonds 2.00 - 5.00% 17,535,000 - (2,285,000) 15,250,000 Total bonds and notes 24,985,000 4,000,000 (5,160,000) 23,825,000 Add: Unamortized bond premium 732,296 - (72,478) 659,818 Less: Discounts on notes payable (297,956) (412,164) 211,143 (498,977) Total Land Bank 25,419,340$ 3,587,836$ (5,021,335)$ 23,985,841$ Town of Nantucket, Massachusetts Page 76 of 157 Comprehensive Annual Financial Report The general obligation bonds are secured by a second priority security interest in the Land Bank’s present and future transfer fees and unrestricted revenue. The bonds are additionally secured by a guarantee of the Town. Payments on long-term debt 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 System (the System), 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, 2018 were issued and may be obtained by writing to the Barnstable County Retirement System, 750 Attucks Lane, Hyannis, Massachusetts 02601. Membership – Membership in the System as of December 31, 2018, was as follows: Retirees and beneficiaries currently receiving benefits 3,254 Active plan members 4,762 Inactive plan members 795 Total 8,811 Benefit Terms – Membership in the 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 System do not participate in the federal Social Security retirement system. Massachusetts contributory retirement system benefits are uniform from retirement system to system. The 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. Year Ending June 30 Principal Interest Total 2020 8,278,333$ 686,974$ 8,965,307$ 2021 2,853,333 478,577 3,331,910 2022 2,913,334 375,025 3,288,359 2023 1,455,000 258,608 1,713,608 2024 1,260,000 211,463 1,471,463 2025-2029 5,845,000 526,178 6,371,178 2030-2032 1,220,000 64,090 1,284,090 Total 23,825,000$ 2,600,915$ 26,425,915$ Town of Nantucket, Massachusetts Page 77 of 157 Comprehensive Annual Financial Report The most common benefits paid by the System include normal retirement, disability retirement and survivor benefits. Normal retirement generally occurs at age 65. However, participants may retire after twenty years of service or at any time after attaining age 55, if hired prior to April 2, 2012 or at any time after attaining age 60 if hired on or after April 2, 2012. Participants with hire dates subsequent to January 1, 1978 must have a minimum of ten years’ creditable service in order to retire at age 55. Participants become vested after ten years of service. Benefits commencing before age 65 are provided at a reduced rate. Members working in certain occupations may retire with full benefits earlier than age 65. Ordinary disability retirement is where a participant is permanently incapacitated from a cause unrelated to employment. Accidental disability retirement is where the disability is the result of an injury or illness received or aggravated in the performance of duty. The amount of benefits to be received in such cases is dependent upon several factors, including the age at which the disability retirement occurs, the years of service, average compensation and veteran status. Survivor benefits are extended to eligible beneficiaries of participants whose death occurs prior to or following retirement. Cost-of-living adjustments granted to members of Massachusetts retirement systems granted between 1981 and 1997 and any increases in other benefits imposed by the Commonwealth during those years have been the financial responsibility of the Commonwealth. Beginning in 1998, the funding of cost-of-living amounts became the responsibility of the participating units like the System. The 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. 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 $6,271,380, $55,397, and $176,649, respectively, to the System in fiscal year 2019, 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 21%, 21% and 21%, respectively, in fiscal year 2019. Net Pension Liability – At June 30, 2019, the Town, County and Land Bank reported liabilities of $78,854,971, $683,871 and $2,180,714, respectively, for the proportionate shares of the net pension liability. The net pension liability was measured as of January 1, 2018 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, 2018. There were no material changes to the System’s benefit terms since the actuarial valuation; Town of Nantucket, Massachusetts Page 78 of 157 Comprehensive Annual Financial Report however, since the last actuarial valuation the System decreased the investment return assumption from 7.625% to 7.375% and changed mortality tables (see below). 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 System relative to the projected contributions of all employers. The Town, County and Land Bank’s proportions were approximately 9.977%, 0.087% and 0.276%, respectively, at December 31, 2018. Pension Expense – The Town, County and Land Bank recognized $10,293,188, $66,313 and $340,144, respectively, in pension expense in the statement of activities in fiscal year 2019. Deferred Outflows of Resources and Deferred Inflows of Resources – At June 30, 2019, the Town reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources: The deferred outflows of resources and deferred inflows of resources are expected to be recognized in the Town’s pension expense as follows: Deferred Outflows Deferred Inflows of Resources of Resources Net differences between projected and actual earnings on pension plan investments 4,605,119$ -$ Differences between expected and actual experience - 742,115 Changes in assumptions 6,601,626 - Changes in proportion and differences between Town contributions and proportionate share of contributions 2,739,006 869,218 Total 13,945,751$ 1,611,333$ Year ended June 30, 2020 3,781,242$ 2021 2,553,053 2022 2,469,156 2023 3,219,878 2024 311,089 Total 12,334,418$ Town of Nantucket, Massachusetts Page 79 of 157 Comprehensive Annual Financial Report At June 30, 2019, the County reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources: The deferred outflows of resources and deferred inflows of resources are expected to be recognized in the County’s pension expense as follows: Deferred Outflows Deferred Inflows of Resources of Resources Net differences between projected and actual earnings on pension plan investments 39,938$ -$ Differences between expected and actual experience - 36,734 Changes in assumptions 57,253 - Changes in proportion and differences between County contributions and proportionate share of contributions 85,648 6,436 Total 182,839$ 43,170$ Year ended June 30, 2020 33,004$ 2021 22,352 2022 30,329 2023 46,551 2024 7,433 Total 139,669$ Town of Nantucket, Massachusetts Page 80 of 157 Comprehensive Annual Financial Report At June 30, 2019, the Land Bank reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources: The deferred outflows of resources and deferred inflows of resources are expected to be recognized in the Land Bank’s pension expense as follows: Actuarial Valuation – The measurement of the System’s total pension liability is developed by an independent actuary. The latest actuarial valuation was performed as of January 1, 2018. The significant actuarial assumptions used in the January 1, 2018 actuarial valuation included: Actuarial cost method: Entry age normal Amortization method: Appropriations increase at 5.28% per year through 2035 and 3.34% in 2036 Remaining amortization period: 20 years from July 1, 2016 for 2002 and 2003 Early Retirement Incentives, retired sheriffs’ liability and remaining unfunded liability; and 6 years from July 1, 2016 for 2010 Early Retirement Inventive Investment rate of return: 7.375%, net of pension plan investment expenses, including inflation Cost of living adjustments: 3% on the first $18,000 Asset valuation method: Sum of actuarial value at the beginning of the year, contributions and investment earnings based on the actuarial interest assumption less benefit payments and operating expenses plus 20% of the market value at the end of the year in excess of that sum, plus additional adjustment toward market value as Deferred Outflows Deferred Inflows of Resources of Resources Net differences between projected and actual earnings on pension plan investments 127,353$ -$ Changes in assumptions 182,566 - Changes in proportion and differences between Landbank contributions and proportionate share of contributions 273,114 137,660 Total 583,033$ 137,660$ Year ended June 30, 2020 105,242$ 2021 71,277 2022 96,713 2023 148,441 2024 23,700 Total 445,373$ Town of Nantucket, Massachusetts Page 81 of 157 Comprehensive Annual Financial Report necessary so that the final actuarial value is within 20% of market value. Projected salary increases: Varied by length of service with ultimate ranges of 4.00%, 4.25% and 4.50% for groups 1, 2 and 4, respectively Inflation Rates of retirement: 3.25% Varies based upon age for general, police and fire employees Rates of disability: For general employees, it was assumed that 45% of all disabilities are ordinary (55% are service connected); for police and fire employees, 10% of all disabilities are assumed to be ordinary (90% are service connected) Mortality rates: Pre-retirement rates reflect the RP-2014 Blue Collar Employee Mortality Table projected generationally with Scale MP-2017 Healthy retiree rates reflect the RP-2014 Blue Collar Healthy Annuitant Mortality Table projected generationally with Scale MP-2017 Disabled retiree rates reflect the RP-2014 Blue Collar Healthy Annuitant Table set forward one year and projected generationally with Scale MP-2017 The System’s investment policy in regard to the allocation of its invested assets is established by the Commonwealth’s Pension Reserves Investment Management Board. System assets are managed on a total return basis with a long-term objective of achieving a fully-funded status for the benefits provided through the pension plan. The long-term expected rate of return on pension plan investments was determined using a building-block method in which best-estimate ranges of expected future real rates of return (expected returns, net of pension plan investment expense and inflation) are developed for each major asset class. These ranges are combined to produce the long-term expected rate of return by weighting the expected future real rates of return by the target asset allocation percentage and by adding expected inflation. Best estimates of arithmetic real rates of return for each major asset class included in the pension plan's target asset allocation as of December 31, 2018 are summarized in the following table: Town of Nantucket, Massachusetts Page 82 of 157 Comprehensive Annual Financial Report Discount Rate – The discount rate used to measure the total pension was 7.375%, which represents a decrease from the 7.625% in the previous actuarial valuation. 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 System’s fiduciary net position was projected to be available to make all projected future benefit payments of current plan members. Therefore, the long-term expected rate of return on pension plan investments was applied to all periods of projected benefit payments to determine the total pension liability. Sensitivity Analysis – The following presents the proportionate shares of the net pension liability calculated using the discount rate of 7.375% as well as the proportionate shares of the net pension liability using a discount rate that is one percentage point lower (6.375%) or one percentage point higher (8.375%) than the current rate: 1% Decrease (6.375%) Current Discount (7.375%) 1% Increase (8.375%) Town’s proportionate share of the net pension liability $100,660,432 $ 78,854,971 $ 60,512,876 County’s proportionate share of the net pension liability $ 872,979 $ 683,871 $ 524,799 Land Bank’s proportionate share of the net pension liability $ 2,783,738 $ 2,180,714 $ 1,673,468 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 Long-Term Target Expected Real Asset Class Allocation Rate of Return Domestic equity 21.0%6.16% International developed markets equity 13.0%6.69% International emerging markets equity 5.0%9.47% Core fixed income 15.0%1.89% High-yield fixed income 8.0%4.00% Real estate 10.0%4.58% Commodities 4.0%4.77% Hedge fund, GTAA, risk parity 11.0%3.68% Private equity 13.0%10.00% Town of Nantucket, Massachusetts Page 83 of 157 Comprehensive Annual Financial Report 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, 2019, the Commonwealth contributed $3,077,725 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 0.234086%, 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 $ 55,504,851 $ (55,504,851) $ — Pension expense 5,624,613 (5,624,613) — The Town has recognized intergovernmental revenue and pension expense of $5,624,613 associated with this arrangement. C.Other Postemployment Benefits The Town administers a single employer defined benefit healthcare plan (the “OPEB Plan”). The OPEB Plan provides health and life insurance benefits (other postemployment benefits) to current and future retirees, their dependents and beneficiaries in accordance with Section 20 of 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 premium-based insurance program. The OPEB Plan does not issue a stand-alone audited financial report and is presented as a fiduciary fund in the Town’s financial statements. With respect to OPEB plan reporting, GASB issued GASB Statement No.’s 74, Financial Reporting for Postemployment Benefit Plans Other Than Pensions, and Statement No, 75, Accounting and Financial Reporting for Postemployment Benefits Other Than Pensions. Reporting requirements for governments who administer an OPEB plan as defined under the accounting standard are required to present disclosures under both GASB 74 and GASB 75. GASB 74 requires specific disclosures and required supplementary information that relate directly to the fiduciary fund in which the OPEB Plan is recorded. GASB 75 address disclosures related to the net OPEB liability required to be recorded by the government in its applicable financial statements. A number of these disclosures are identical, especially if the measurement date under GASB 75 is the same as the plan year-end date. When a different measurement date is used different assumptions and calculations will result. For the year ended June 30, 2019, the Town elected to use a measurement date that was the same as the plan year-end date thus the majority of the same disclosures are used and will not be repeated. Town of Nantucket, Massachusetts Page 84 of 157 Comprehensive Annual Financial Report GASB Statement No. 75 OPEB Plan disclosures that impact the Town’s net OPEB liability using a measurement date of June 30, 2019 are summarized as follows: Employees Covered by Benefit Terms – The following employees were covered by the benefit terms as of July 1, 2018: Contributions – The contribution requirements of OPEB Plan members and the Town are established and may be amended by the Town. Retirees contribute 20% of the set premium for master medical and 10% for other medical plans; 100% for dental, and 55% for life insurance. The remainder of the cost is funded by general revenues of the Town. 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 OPEB Plan are paid by the Town. For the year ended June 30, 2019, the Town’s average contribution rate was less than 10.3% of covered-employee payroll. Net OPEB Liability – The Town’s net OPEB liability was measured as of June 30, 2019 using an actuarial valuation as of July 1, 2018. The components of the net OPEB liability of the Town at June 30, 2019 were as follows: Active employees 603 Inactive employees 354 Total 957 Total OPEB Liability 118,004,099$ Plan fiduciary net position (3,130,312) Net OPEB liability 114,873,787$ Plan fiduciary net position as a percentage of the total OPEB liability 2.7% Town of Nantucket, Massachusetts Page 85 of 157 Comprehensive Annual Financial Report The total OPEB liability in the most recent actuarial valuation was determined using the following key actuarial assumptions applied to all periods included in the measurement, unless otherwise specified: Changes to key assumptions: •Discount rate changed from 4.25% to 4.00%. •Retirement assumptions have been updated •The mortality table has been updated from the RP-2000 Employees Mortality Table projected generationally with scale BB and a base year 2009 to the RP-2014 Mortality Table projected generationally with scale MP-2016 for males and females •The expected long-term medical trend has been updated to 4.50% •Based on recent research by the Society of Actuaries, we have updated the assumption for morbidity or age-related costs of medical care Investment rate of return 4.88%, net of OPEB plan investment expense, including inflation. Muncipal bond rate 2.79% as of June 30, 2019 Discount Rate 4.00%, net of OPEB plan investment expense including inflation. Using a blend of the Municipal Bond Index Rate for unfunded periods and the Investment Rate of Return. Inflation 2.75% annually as of July 1, 2018 and for future periods Health Care Trend Rate 4.50% Salary Increases 3.00% annually as of July 1, 2018 and for future periods Cost of Living Adjustment Not applicable. Pre-Retirement Mortality General: RP-2014 Mortality Table for Blue Collar Employees projected generationally with scale MP-2016 for males and females Teachers: RP-2014 Mortality Table for White Collar Employees projected generationally with scale MP-2016 for males and females Post-Retirement Mortality General: RP-2014 Mortality Table for Blue Collar Healthy Annuitants projected generationally with scale MP-2016 for males and females Teachers: RP-2014 Mortality Table for White Collar Healthy Annuitants projected generationally with scale MP-2016 for males and females Disabled Mortality General: RP-2014 Mortality Table for Blue Collar Healthy Annuitants projected generationally with scale MP-2016 for males and females, set forward 1 year Teachers: RP-2014 Mortality Table for White Collar Healthy Annuitants projected generationally with scale MP-2016 for males and females Actuarial Cost Method Individual Entry Age Normal Town of Nantucket, Massachusetts Page 86 of 157 Comprehensive Annual Financial Report Long Term Expected Rate of Return – The long-term expected rate of return on OPEB Plan investments was determined using a building-block method in which best-estimate ranges of expected future real rates of return (expected returns, net of OPEB Plan investment expense and inflation) are developed for each major asset class. These ranges are combined to produce the long-term expected rate of return by weighting the expected future real rates of return by the target asset allocation percentage and by adding expected inflation. The target allocation and best estimates of arithmetic real rates of return were as reflected in the following table: Sensitivity Analyses – The following presents the Town’s net OPEB liability as well as what the Town’s net OPEB liability would be if it were calculated using a discount rate that is 1% lower or 1% higher than the current discount rate as well as if the healthcare cost trend rates are 1% lower or higher than the current healthcare cost trend rates: Expected Target Investment Rate Asset Class Allocation of Return Domestic Equity - Large Cap 30.55%4.00% Interntional Equity - Developed Market 2.50% 4.50% Domestic Fixed Income 52.46% 2.00% Cash 14.49% 0.00% 100.00% Real rate of return 2.38% Inflation assumption 2.75% Total nominal rate of return 5.13% Investment expense -0.25% Net investment return 4.88% Discount Rate 1% Decrease (3.00%)Trend Rate (4.00%)1% Increase (5.00%) Net OPEB Liability 134,190,272$ 114,873,787$ 99,533,856$ 1% Decrease (3.50%) Current (4.50%) 1% Increase (5.50%) Net OPEB Liability 97,407,279$ 114,873,787$ 137,394,462$ Health Care Rate Town of Nantucket, Massachusetts Page 87 of 157 Comprehensive Annual Financial Report Changes in the Net OPEB Liability – The following table summarizes the changes in the net OPEB liability for the year ended June 30, 2019: OPEB Expense and Deferred Outflows/Inflows of Resources Related to OPEB – For the year ended June 30, 3019, the Town recognized OPEB expense of $9,282,197. Deferred outflows of resources and deferred inflows of resources related to OPEB at June 30, 2019 were reported as follows: Amounts reported as deferred outflows of resources and deferred inflows of resources related to OPEB will be recognized in OPEB expense (benefit) as follows: Total OPEB Plan Fiduciary Net OPEB Liability Net Position Liability (a)(b)(a) - (b) Balances at June 30, 2018 94,970,410$ 93,066,585$ 1,903,825$ Changes for the year: Service cost 4,071,076 - 4,071,076 Interest 4,434,216 - 4,434,216 Other 1,097,835 486,733 611,102 Change in assumptions 10,728,558 - 10,728,558 Difference between expected and actual experience 5,940,020 - 5,940,020 Net investment income - 239,754 (239,754) Employer contributions - 3,738,016 (3,738,016) Benefit payments withdrawn from trust (3,238,016) (3,238,016) - Net changes 23,033,689 1,226,487 21,807,202 Balances at June 30, 2019 118,004,099$ 3,130,312$ 114,873,787$ Deferred Outflows of Resources Deferred Inflows of Resources $ 8,998,145 $ - -1,992,636 Changes in assumptions Change in proportionate share and differencesDifferences between actual and expected experience Differences between expected and actual earnings -73,903 $ 9,920,153 $ 2,988,547 June 30 2020 905,529$ 2021 905,529 2022 905,529 2023 988,835 2024 2,688,479 thereafter 537,705 $ 6,931,606 922,008 922,008 Town of Nantucket, Massachusetts Page 88 of 157 Comprehensive Annual Financial Report GASB Statement No. 74 OPEB Plan disclosures that impact the Town’s net OPEB liability using a measurement date of June 30, 2019 are summarized in this section except disclosures under GASB 74 that are identical to GASB 75 are not repeated. Investment Custody – In accordance with Massachusetts General Laws, the Town Treasurer is the custodian of the OPEB Plan and since the Town has not designated a Board of Trustees, the Town Treasurer is also the Trustee and as such is responsible for the general supervision of the management, investment and reinvestment of the OPEB Plan assets. OPEB Plan assets may be invested and reinvested by the custodian consistent with the prudent investor rule established in Chapter 203C and may, with the approval of the State Retiree Benefits Trust Fund Board of Trustees, be invested in the State Retiree Benefits Trust Fund established in Section 24 of Chapter 32A. OPEB Plan assets must be segregated from other funds and not be subject to the claims of any general creditor of the Town. Investment Policy – The OPEB Plan has a formal investment policy to invest in Domestic Equity, Domestic Fixed Income, International Equity, and Cash Equivalents with target allocations highlighted previously under the caption long-term expected rate of return. Investment Rate of Return – For the year ended June 30, 2019 the annual money-weighted rate of return on investments, net of investment expense, was 10.03%. The money-weighted rate of return expresses investment performance, net of investment expense, adjusted for the changing amounts actually invested. Discretely Presented Component Unit – Nantucket County The County administers a single-employer defined benefit healthcare plan (the “OPEB Plan”). The OPEB Plan provides health care, dental and life insurance benefits (other postemployment benefits) to current and future retirees, and their dependents/beneficiaries in accordance with Massachusetts General Law Chapter 32B. The County, however, has not adopted Section 20 of this Massachusetts General Law, therefore any assets accumulated for purposes of paying benefit claims are revocable. Thus, this arrangement does not qualify as a plan under generally accepted accounting principles and therefore GASB 74 does not apply. The following disclosures include only those disclosures required under GASB 75. This is the initial year of implementation. An employee hired before April 2, 2012 shall become eligible to retire upon attainment of age 55 as an active member and completion of 10 years of creditable service or shall be eligible if able to retire with 20 years of creditable service regardless of age. Those hired on or after April 2, 2012 shall be eligible to retire upon attainment of age 60 with 10 years of creditable service. Specific benefit provisions and contribution rates are established by state law and the Commission. All benefits are provided through the County’s premium-based insurance programs, and these include comprehensive medical and dental insurance as well as group life insurance. Employees Covered by Benefit Terms – The following employees were covered by the benefit terms as of June 30, 2019: Town of Nantucket, Massachusetts Page 89 of 157 Comprehensive Annual Financial Report Contributions – The contribution requirements of OPEB Plan members and the County are established and may be amended by the County. Retirees contribute 20% of the set premium for master medical and 10% for other medical plans; 100% for dental, and 55% for life insurance. The remainder of the cost is funded by general revenues of 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 OPEB Plan are paid by the County. For the year ended June 30, 2018, the County’s average contribution rate was 2.87% of covered- employee payroll. Net OPEB Liability – The County’s net OPEB liability was measured as of June 30, 2019 using an actuarial valuation as of July 1, 2018. The total OPEB liability in the most recent actuarial valuation was determined using the following key actuarial assumptions applied to all periods included in the measurement, unless otherwise specified: Inactive employees/retirees 1 Active employees 2 Total 3 Investment rate of return 2.75% net of OPEB plan investment expense including inflation Muncipal bond rate 2.79% as of June 30, 2019 Single Equivalent Discount Rate 2.75% net of OPEB plan investment expense including inflation. Using a blend of the Municipal Bond Index Rate for unfunded periods and the Investment Rate of Return. Inflation 2.75% annually as of June 30, 2019 and for future periods. Health Care Trend Rate 4.50% Salary Increases 3.00% annually as of June 30, 2019 and for future periods. Cost of Living Adjustment Not applicable. Pre-Retirement Mortality General: RP-2014 Mortality Table for Blue Collar Employees projected generationally with scale MP-2016 for males and females Teachers: RP-2014 Mortality Table for White Collar Employees projected generationally with scale MP-2016 for males and females Post-Retirement Mortality General: RP-2014 Mortality Table for Blue Collar Healthy Annuitants projected generationally with scale MP-2016 for males and females Teachers: RP-2014 Mortality Table for White Collar Healthy Annuitants projected generationally with scale MP-2016 for males and females Disabled Mortality General: RP-2014 Mortality Table for Blue Collar Healthy Annuitants projected generationally with scale MP-2016 for males and females, set forward 1 year Teachers: RP-2014 Mortality Table for White Collar Healthy Annuitants projected generationally with scale MP-2016 for males and females Town of Nantucket, Massachusetts Page 90 of 157 Comprehensive Annual Financial Report Changes to key assumptions: •Due to the GASB 75 standards the discount rate has been changed from 3.25% to 2.75%. •Retirement assumptions have been updated •The mortality table has been updated from the RP-2000 Employees Mortality Table projected generationally with scale BB and a base year 2009 to the RP-2014 Mortality Table projected generationally with scale MP-2016 for males and females •The expected long-term medical trend has been updated to 4.50% •Based on recent research by the Society of Actuaries, we have updated the assumption for morbidity or age-related costs of medical care Discount Rate – The discount rate used to measure the total OPEB liability was a compounded 2.75% which represented a blend of the yield or index rate of 2.79% at June 30, 2019 for twenty- year, tax-exempt general obligation municipal bonds with an average rating of AA/Aa or higher used for unfunded periods and the long-term expected rate of return of 2.75%. The long-term expected rate of return on OPEB Plan investments was determined using a building-block method in which best-estimate ranges of expected future real rates of return (expected returns, net of OPEB Plan investment expense and inflation) are developed for each major asset class. These ranges are combined to produce the long-term expected rate of return by weighting the expected future real rates of return by the target asset allocation percentage and by adding expected inflation. The target allocation and best estimates of arithmetic real rates of return were as reflected in the following table: Sensitivity Analyses – The following presents the County’s net OPEB liability as well as what the County’s net OPEB liability would be if it were calculated using a discount rate that is 1.0% lower or 1.0% higher than the current discount rate as well as if the healthcare cost trend rates are 1% lower or higher than the current healthcare cost trend rates: Target Target Rate Asset Class Allocation of Return Cash 100.00% 0.00% 100.00% Real rate of return 0.00% Inflation assumption 2.75% Total nominal rate of return 2.75% Investment expense 0.00% Net investment return 2.75% Town of Nantucket, Massachusetts Page 91 of 157 Comprehensive Annual Financial Report Changes in the Net OPEB Liability – The following table summarizes the changes in the net OPEB liability for the year ended June 30, 2019: OPEB Expense and Deferred Outflows/Inflows of Resources Related to OPEB – For the year ended June 30, 2019, the County recognized OPEB expense of $29,429. Deferred outflows of resources and deferred inflows of resources related to OPEB at June 30, 2019 were reported and will be amortized as followed: 1% Decrease Current Rate (2.75%) 1% Increase Discount Rate 519,902$ 435,004$ 370,938$ 1% Decrease Current Rate (4.50%) 1% Increase Health Care Trend Rate 352,064$ 435,004$ 545,020$ Net OPEB Liability Total OPEB Plan Fiduciary Net OPEB Liability Net Position Liability (a)(b)(a) - (b) Balances at June 30, 2018 (as adjusted)377,088$ -$ 377,088$ Changes for the year: Service cost 15,134 - 15,134 Interest 13,593 - 13,593 Other 27,726 - 27,726 Difference between expected and actual experience (20,265) - (20,265) Change in assumptions 25,177 - 25,177 Benefit payments withdrawn from trust (3,449) - (3,449) Net investment income - - - Benefit payments - - - Net changes 57,916 - 57,916 Balances at June 30, 2019 435,004$ -$ 435,004$ Deferred Ouflows Deferred Inflows of Resources of Resources Differences between expected and actual experience -$ 17,370$ Changes of assumptions 21,580 - 21,580$ 17,370$ Town of Nantucket, Massachusetts Page 92 of 157 Comprehensive Annual Financial Report Amounts reported as deferred outflows of resources and deferred inflows of resources related to OPEB will be recognized in OPEB expense (benefit) as follows: Net OPEB Liability – The components of the net OPEB liability of the County at June 30, 2019 were as follows: Discretely Presented Component Unit – Nantucket Islands Land Bank The Land Bank administers a single-employer defined benefit healthcare plan (the “OPEB Plan”). The OPEB Plan provides health care, dental and life insurance benefits (other postemployment benefits) to current and future retirees, and their dependents/beneficiaries in accordance with Massachusetts General Law Chapter 32B. The Land Bank, however, has not adopted Section 20 of this Massachusetts General Law, therefore any assets accumulated for purposes of paying benefit claims are revocable. Thus, this arrangement does not qualify as a plan under generally accepted accounting principles and therefore GASB 74 does not apply. The following disclosures include only those disclosures required under GASB 75. This is the initial year of implementation. An employee hired before April 2, 2012 shall become eligible to retire upon attainment of age 55 as an active member and completion of 10 years of creditable service or shall be eligible if able to retire with 20 years of creditable service regardless of age. Those hired on or after April 2, 2012 shall be eligible to retire upon attainment of age 60 with 10 years of creditable service. June 30 2020 702$ 2021 702 2022 702 2023 702 2024 702 Thereafter 700 4,210$ Total OPEB Liability 435,004$ Plan fiduciary net position - Net OPEB liability 435,004$ Plan fiduciary net position as a percentage of the total OPEB liability 0.0% Town of Nantucket, Massachusetts Page 93 of 157 Comprehensive Annual Financial Report Specific benefit provisions and contribution rates are established by state law and the Commission. All benefits are provided through the Land Bank’s premium-based insurance programs, and these include comprehensive medical and dental insurance as well as group life insurance. Employees Covered by Benefit Terms – The following employees were covered by the benefit terms as of June 30, 2019: Contributions – The contribution requirements of OPEB Plan members and the Land Bank are established and may be amended by the Land Bank. Retirees contribute 20% of the set premium for master medical and 10% for other medical plans; 100% for dental, and 55% for life insurance. The remainder of the cost is funded by general revenues of the Land Bank. The Land Bank currently contributes enough money to the Plan to satisfy current obligations on a pay-as-you-go basis. The costs of administering the OPEB Plan are paid by the Land Bank. For the year ended June 30, 2019, the Land Bank’s average contribution rate was 0% of covered- employee payroll. Net OPEB Liability – The Land Bank’s net OPEB liability was measured as of June 30, 2019 using an actuarial valuation as of July 1, 2018. Inactive employees/retirees - Active employees 7 Total 7 Town of Nantucket, Massachusetts Page 94 of 157 Comprehensive Annual Financial Report The total OPEB liability in the most recent actuarial valuation was determined using the following key actuarial assumptions applied to all periods included in the measurement, unless otherwise specified: Changes to key assumptions: •Due to the GASB 75 standards the discount rate has been changed from 3.25% to 2.75%. •Retirement assumptions have been updated •The mortality table has been updated from the RP-2000 Employees Mortality Table projected generationally with scale BB and a base year 2009 to the RP-2014 Mortality Table projected generationally with scale MP-2016 for males and females •The expected long-term medical trend has been updated to 4.50% •Based on recent research by the Society of Actuaries, we have updated the assumption for morbidity or age-related costs of medical care Investment rate of return 2.75% net of OPEB plan investment expense including inflation Muncipal bond rate 2.79% as of June 30, 2019 Single Equivalent Discount Rate 2.75% net of OPEB plan investment expense including inflation. Using a blend of the Municipal Bond Index Rate for unfunded periods and the Investment Rate of Return. Inflation 2.75% annually as of June 30, 2019 and for future periods. Health Care Trend Rate 4.50% Salary Increases 3.00% annually as of June 30, 2019 and for future periods. Cost of Living Adjustment Not applicable. Pre-Retirement Mortality General: RP-2014 Mortality Table for Blue Collar Employees projected generationally with scale MP-2016 for males and females Teachers: RP-2014 Mortality Table for White Collar Employees projected generationally with scale MP-2016 for males and females Post-Retirement Mortality General: RP-2014 Mortality Table for Blue Collar Healthy Annuitants projected generationally with scale MP-2016 for males and females Teachers: RP-2014 Mortality Table for White Collar Healthy Annuitants projected generationally with scale MP-2016 for males and females Disabled Mortality General: RP-2014 Mortality Table for Blue Collar Healthy Annuitants projected generationally with scale MP-2016 for males and females, set forward 1 year Teachers: RP-2014 Mortality Table for White Collar Healthy Annuitants projected generationally with scale MP-2016 for males and females Town of Nantucket, Massachusetts Page 95 of 157 Comprehensive Annual Financial Report Discount Rate – The discount rate used to measure the total OPEB liability was a compounded 2.75% which represented a blend of the yield or index rate of 2.79% at June 30, 2019 for twenty- year, tax-exempt general obligation municipal bonds with an average rating of AA/Aa or higher used for unfunded periods and the long-term expected rate of return of 2.75%. The long-term expected rate of return on OPEB Plan investments was determined using a building-block method in which best-estimate ranges of expected future real rates of return (expected returns, net of OPEB Plan investment expense and inflation) are developed for each major asset class. These ranges are combined to produce the long-term expected rate of return by weighting the expected future real rates of return by the target asset allocation percentage and by adding expected inflation. The target allocation and best estimates of arithmetic real rates of return were as reflected in the following table: Sensitivity Analyses – The following presents the Land Bank’s net OPEB liability as well as what the Land Bank’s net OPEB liability would be if it were calculated using a discount rate that is 1.0% lower or 1.0% higher than the current discount rate as well as if the healthcare cost trend rates are 1% lower or higher than the current healthcare cost trend rates: Changes in the Net OPEB Liability – The following table summarizes the changes in the net OPEB liability for the year ended June 30, 2019: Target Target Rate Asset Class Allocation of Return Cash 100.00% 0.00% 100.00% Real rate of return 0.00% Inflation assumption 2.75% Total nominal rate of return 2.75% Investment expense 0.00% Net investment return 2.75% 1% Decrease Current Rate (2.75%) 1% Increase Discount Rate 1,527,876$ 1,274,683$ 1,084,458$ 1% Decrease Current Rate (4.50%) 1% Increase Health Care Trend Rate 1,021,023$ 1,274,683$ 1,610,811$ Net OPEB Liability Town of Nantucket, Massachusetts Page 96 of 157 Comprehensive Annual Financial Report OPEB Expense and Deferred Outflows/Inflows of Resources Related to OPEB – For the year ended June 30, 2019, the Land Bank recognized OPEB expense of $95,300. Deferred outflows of resources and deferred inflows of resources related to OPEB at June 30, 2019 were reported as follows: Amounts reported as deferred outflows of resources and deferred inflows of resources related to OPEB will be recognized in OPEB expense (benefit) as follows: Total OPEB Plan Fiduciary Net OPEB Liability Net Position Liability (a)(b)(a) - (b) Balances at June 30, 2018 (as adjusted)1,255,963$ -$ 1,255,963$ Changes for the year: Service cost 65,128 - 65,128 Interest 42,935 - 42,935 Difference between expected and actual experience (24,079) - (24,079) Change in assumptions (65,264) - (65,264) Net changes 18,720 - 18,720 Balances at June 30, 2019 1,274,683$ -$ 1,274,683$ Deferred Ouflows Deferred Inflows of Resources of Resources Differences between expected and actual experience -$ 55,941$ Changes of assumptions - 20,639 -$ 76,580$ June 30 2020 (12,763)$ 2021 (12,763) 2022 (12,763) 2023 (12,763) 2024 (12,763) Thereafter (12,765) (76,580)$ Town of Nantucket, Massachusetts Page 97 of 157 Comprehensive Annual Financial Report Net OPEB Liability – The components of the net OPEB liability of the Land Bank at June 30, 2019 were as follows: 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, 2019, the amount of the liability for IBNR health insurance claims totaled $1,129,769. This liability is the best estimate based on available information. In the fund-wide financial statements, the Town reports these self-insured activities in the Internal Service Fund where revenues are recorded when earned and expenses are recorded when the liability is incurred. Changes in the reported liability since July 1, 2017, are as follows: Balance at Beginning of Year Claims and Changes in Estimates Claims Payments Balance at End of Year Current Portion Fiscal Year 2019 $1,138,217 $15,527,876 $(15,536,324) $1,129,769 $1,129,769 Fiscal Year 2018 1,314,778 13,284,427 (13,460,988) 1,138,217 1,138,217 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, 2019, the amount of the liability for workers’ compensation claims totaled $114,965. This liability is the best estimate based on available information. Total OPEB Liability 1,274,683$ Plan fiduciary net position - Net OPEB liability 1,274,683$ Plan fiduciary net position as a percentage of the total OPEB liability 0.0% Town of Nantucket, Massachusetts Page 98 of 157 Comprehensive Annual Financial Report Changes in the reported liability since July 1, 2017, are as follows: Balance at Beginning of Year Claims and Changes in Estimates Claims Payments Balance at End of Year Current Portion Fiscal Year 2019 $ 95,805 $373,414 $(354,254) $ 114,965 $ 114,965 Fiscal Year 2018 44,231 345,947 (294,373) 95,805 95,805 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 has entered 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, 2019, 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, 2019. 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”). 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 landfill consists of six cells. Three cells are inactive areas without liners that are no longer accepting material for disposal. Two cells are inactive areas with liners that are also no longer accepting waste. A sixth cell was constructed under the ACO to meet the Town’s need for capacity for disposal of residuals until 2027. The final capping and closure of the unclosed cells are dependent on a modified design for the closure will be submitted to the DEP in 2020. The Town has recognized a closure liability of $14,000,000 in the Governmental Activities. This liability is based on estimates of the cost of all Town of Nantucket, Massachusetts Page 99 of 157 Comprehensive Annual Financial Report 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 November 2016, the GASB issued GASB Statement No. 83, Certain Asset Retirement Obligations. The objective of the Statement was to address accounting and financial reporting for certain asset retirement obligations that have legally enforceable liability associated with the retirement of a tangible capital asset. The provisions of this Statement became effective in fiscal year 2019 and did not have a material impact on the Town’s financial statements. In April 2018, the GASB issued GASB Statement No. 88, Certain Disclosures Related to Debt, Including Direct Borrowings and Direct Placements. The objective of this Statement was to improve the information that is disclosed in notes to government financial statements related to debt, including direct borrowings and direct placements. It also clarified which liabilities governments should include when disclosing information related to debt. The provisions of this Statement became effective in fiscal year 2019 and did not have a material impact on the Town’s financial statements. Future Implementations – In January 2017, the GASB issued GASB Statement No. 84, Fiduciary Activities. The objective of the Statement is to improve guidance regarding the identification of fiduciary activities for accounting and financial reporting purposes and how these activities should be reported. The provisions of this Statement are effective for financial reporting periods beginning after December 15, 2018 (fiscal year 2020). The Town is currently evaluating whether adoption will have a material impact on the financial statements. In June 2017, the GASB issued GASB Statement No. 87, Leases. This Statement redefines the manner in which long-term leases are accounted and reported. The provisions of this Statement are effective for financial reporting periods beginning after December 15, 2019 (fiscal year 2021). The Town is currently evaluating whether adoption will have a material impact on the financial statements. In June 2018, the GASB issued GASB Statement No. 89, Accounting for Interest Cost Incurred Before the End of a Construction Period. This statement establishes accounting requirements for interest costs incurred before the end of a construction period. The provisions of this Statement are effective for financial reporting periods beginning after December 15, 2019 (fiscal year 2021). The Town is currently evaluating whether adoption will have a material impact on the financial statements. In August 2018, the GASB issued GASB Statement No. 90, Majority Equity Interest – An Amendment of GASB Statements No. 14 and No. 61. The objective of this Statement is to improve the consistency and comparability of reporting a government’s majority equity interest in a legally separate organization and to improve the relevance of financial statement information for certain component units. The provisions of this Statement are effective for financial reporting periods beginning after December 15, 2018 (fiscal year 2020). The Town is currently evaluating whether adoption will have a material impact on the financial statements. Town of Nantucket, Massachusetts Page 100 of 157 Comprehensive Annual Financial Report In May 2019, the GASB issued GASB Statement No. 91, Conduit Debt Obligations. The objective of this Statement is to standardize the reporting of conduit debt obligations by issuers by clarifying the existing definition of conduit debt obligation, among other matters. The provisions of this Statement are effective for financial reporting periods beginning after December 15, 2020 (fiscal year 2022). The Town is currently evaluating whether adoption will have a material impact on the financial statements. IV. Prior Period Restatements As a result of a new actuarial valuation for its other postemployment benefits liability, it wasdetermined that a prior period restatement was required to properly present the net otherpostemployment benefits liability at June 30, 2018. The Town and the Nantucket Memorial Airport have had an agreement for the Airport to repay the General Fund for costs that were subsidized a number of years ago. This was not reflected in prior year financial statements and is required to properly present the obligation at June 30, 2018. The impact of these items is illustrated in the table below: Nantucket Governmental Business-type Siasconset Wannacomet Memorial Activities Activities Water Water Sewer Airport Prior year as presented 137,265,735$ 133,514,124$ 7,404,429$ 23,168,554$ 49,629,540$ 52,949,509$ Restate net OPEB liability (3,739,844) (32,187) (1,700) (6,854) (1,276) (22,357) Record interfund payable 3,348,846 (3,348,846) - - - (3,348,846) As restated 136,874,737$ 130,133,091$ 7,402,729$ 23,161,700$ 49,628,264$ 49,578,306$ General Fund Prior year as presented 39,979,133$ Record interfund payable 3,348,846 As restated 43,327,979$ Town of Nantucket, Massachusetts Page 101 of 157 Comprehensive Annual Financial Report This page intentionally left blank. Town of Nantucket, Massachusetts Page 102 of 157 Comprehensive Annual Financial Report Required Supplementary Information Town of Nantucket, Massachusetts Page 103 of 157 Comprehensive Annual Financial Report TOWN OF NANTUCKET, MASSACHUSETTS REQUIRED SUPPLEMENTARY INFORMATION - PENSIONS YEAR ENDED JUNE 30, 2019 SCHEDULE OF THE TOWN'S PROPORTIONATE SHARE OF THE NET PENSION LIABILITY 2019 2018 2017 2016 2015 Town's proportion of the net pension liability (asset)9.98%9.69%9.90%9.52%9.51% Town's proportionate share of the net pension liability (asset)78,855$ 65,965$ 69,566$ 59,964$ 53,675$ Town's covered payroll 29,022$ 27,015$ 27,426$ 25,827$ 24,938$ Town's proportionate share of the net pension liability (asset) as a percentage of its covered payroll 271.71%244.18%253.65%232.18%215.23% Plan fiduciary net position as a percentage of the total pension liability 57.63%61.86%57.28%58.10%60.43% SCHEDULE OF THE TOWN CONTRIBUTIONS TO PENSION PLAN 2019 2018 2017 2016 2015 Actuarially determined contribution 6,271$ 5,785$ 5,612$ 5,143$ 4,959$ Contributions in relation to the actuarially determined contribution 6,271 5,785 5,612 5,143 4,959 Contribution deficiency (excess)-$ -$ -$ -$ -$ Town's covered payroll 29,437$ 27,234$ 27,179$ 26,023$ 25,018$ Contributions as a percentage of covered payroll 21.3%21.2%20.6%19.8%19.8% 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. Year Ended June 30 (dollar amounts are in thousands) (dollar amounts are in thousands) Year Ended June 30 Town of Nantucket, Massachusetts Page 104 of 157 Comprehensive Annual Financial Report TOWN OF NANTUCKET, MASSACHUSETTS REQUIRED SUPPLEMENTARY INFORMATION - PENSIONS YEAR ENDED JUNE 30, 2019 SCHEDULE OF THE COUNTY'S PROPORTIONATE SHARE OF THE NET PENSION LIABILITY 2019 2018 2017 2016 2015 County's proportion of the net pension liability (asset)0.09%0.09%0.09%0.09%0.09% County's proportionate share of the net pension liability (asset)684$ 597$ 625$ 551$ 519$ County's covered payroll 257$ 250$ 252$ 243$ 241$ County's proportionate share of the net pension liability (asset) as a percentage of its covered payroll 266.15%238.80%248.02%226.75%215.35% Plan fiduciary net position as a percentage of the total pension liability 57.63%61.86%57.28%58.10%60.43% SCHEDULE OF THE COUNTY CONTRIBUTIONS TO PENSION PLAN 2019 2018 2017 2016 2015 Actuarially determined contribution 55$ 52$ 50$ 47$ 48$ Contributions in relation to the actuarially determined contribution 55 52 50 47 48 Contribution deficiency (excess)-$ -$ -$ -$ -$ County's covered payroll 259$ 253$ 251$ 246$ 243$ Contributions as a percentage of covered payroll 21.2%20.6%19.9%19.1%19.8% 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. Year Ended June 30 (dollar amounts are in thousands) (dollar amounts are in thousands) Year Ended June 30 Town of Nantucket, Massachusetts Page 105 of 157 Comprehensive Annual Financial Report TOWN OF NANTUCKET, MASSACHUSETTS REQUIRED SUPPLEMENTARY INFORMATION - PENSIONS YEAR ENDED JUNE 30, 2019 SCHEDULE OF THE LAND BANK'S PROPORTIONATE SHARE OF THE NET PENSION LIABILITY 2019 2018 2017 2016 2015 Land Bank's proportion of the net pension liability (asset)0.28%0.25%0.20%0.23%0.26% Land Bank's proportionate share of the net pension liability (asset)2,181$ 1,674$ 1,384$ 1,428$ 1,471$ Land Bank's covered payroll 819$ 700$ 557$ 629$ 683$ Land Bank's proportionate share of the net pension liability (asset) as a percentage of its covered payroll 266.30%239.14%248.47%227.03%215.37% Plan fiduciary net position as a percentage of the total pension liability 57.63%61.86%57.28%58.10%60.43% SCHEDULE OF THE LAND BANK CONTRIBUTIONS TO PENSION PLAN 2019 2018 2017 2016 2015 Actuarially determined contribution 177$ 147$ 112$ 122$ 136$ Contributions in relation to the actuarially determined contribution 177 147 112 122 136 Contribution deficiency (excess)-$ -$ -$ -$ -$ Land Bank's covered payroll 861$ 728$ 578$ 618$ 667$ Contributions as a percentage of covered payroll 20.6%20.2%19.4%19.7%20.4% 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. Year Ended June 30 (dollar amounts are in thousands) (dollar amounts are in thousands) Year Ended June 30 Town of Nantucket, Massachusetts Page 106 of 157 Comprehensive Annual Financial Report TOWN OF NANTUCKET, MASSACHUSETTS REQUIRED SUPPLEMENTARY INFORMATION - PENSIONS YEAR ENDED JUNE 30, 2019 2019 2017 2016 2015 2014 Commonwealth's proportion of the collective net pension liability (asset)100.0%100.0%100.0%100.0%100.0% Town's proportion of the collective net pension liability (asset)0.0%0.0%0.0%0.0%0.0% Commonwealth's proportionate share of the net pension liability (asset)23,711,289$ 22,885,391$ 22,357,928$ 20,489,643$ 15,896,354$ Commonwealth's actuarially determined contribution 1,314,783$ 1,235,515$ 1,124,583$ 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) SCHEDULE OF THE COMMONWEALTH'S COLLECTIVE SHARE OF THE NET PENSION LIABILITY MASSACHUSETTS TEACHER'S RETIREMENT SYSTEM Year Ended June 30, Town of Nantucket, Massachusetts Page 107 of 157 Comprehensive Annual Financial Report TOWN OF NANTUCKET, MASSACHUSETTS REQUIRED SUPPLEMENTARY INFORMATION - OPEB YEAR ENDED JUNE 30, 2019 SCHEDULE OF CHANGES IN NET OPEB LIABILITY AND RELATED RATIOS 2019 2018 2017 Total OPEB liability: Service cost 4,071,076$ 3,270,431$ 3,915,845$ Interest 4,434,216 3,879,622 4,305,825 Differences between expected and actual experience 5,940,020 (18,207,317) - Change in assumptions 10,728,558 - - Benefit payments (3,238,016) (3,195,050) (3,230,121) Net change in total OPEB liability 21,935,854 (14,252,314) 4,991,549 Total OPEB liability - beginning of year 96,068,245 110,320,559 105,329,010 Total OPEB liability - end of year (a)118,004,099$ 96,068,245$ 110,320,559$ Plan fiduciary net position: Contributions - employer 3,738,016$ 3,695,050$ 3,730,121$ Net investment income 239,754 (13,267) 62,612 Benefit payments (3,238,016) (3,195,050) (3,230,121) Net change in Plan fiduciary net position 739,754 486,733 562,612 Plan fiduciary net position - beginning of year 2,390,558 1,903,825 1,341,213 Plan fiduciary net position - end of year (b)3,130,312$ 2,390,558$ 1,903,825$ Net OPEB liability - end of year (a) - (b)114,873,787$ 93,677,687$ 108,416,734$ Plan fiduciary net position as a percentage of the total OPEB liability 2.65%2.49%1.73% Covered payroll 36,180,000$ 26,400,000$ 26,950,000$ Net OPEB liability as a percentage of covered- employee payroll 317.51%354.84%402.29% Note: This schedule is presented to illustrate the requirement to show information for 10 years. However, until a full 10-year trend is compiled, information is presented for those years in which information is available. Note: This schedule is presented using the optional format of combining the required schedules in paragraph 36a and 36b of GASB 74. See accompanying independent auditor's report. Year Ended June 30, Town of Nantucket, Massachusetts Page 108 of 157 Comprehensive Annual Financial Report TOWN OF NANTUCKET, MASSACHUSETTS REQUIRED SUPPLEMENTARY INFORMATION - OPEB YEAR ENDED JUNE 30, 2019 SCHEDULE OF CONTRIBUTIONS 2019 2018 2017 Actuarially-determined contribution 10,458,732$ 9,639,685$ 9,698,176$ Contributions in relation to the actuarially- determined contribution (3,738,016) (3,695,050) (3,730,121) Contribution deficiency (excess)6,720,716$ 5,944,635$ 5,968,055$ Covered payroll 36,180,000$ 26,400,000$ 26,950,000$ Contribution as a percentage of covered payroll 10.3%14.0%13.8% Valuation date July 1, 2018 July 1, 2016 July 1, 2016 Amortization period 30 years 30 years 30 years Investment rate of return 4.88%5.51%5.74% Municipal bond rate 2.79%3.45%3.16% Single equivalent bond rate 4.00%4.00%4.50% Inflation 2.75%2.75%2.75% Healthcare cost trend rates 4.50%5.00%5.00% Salary increases 3.00%3.00%3.00% Actuarial cost method Individual Entry Age Normal (for all years presented) Asset valuation method Market Value of Assets as of Reporting Date (for all years presented) SCHEDULE OF INVESTMENT RETURNS 2019 2018 2017 10.03%-0.47%4.53% Note: These schedules are presented to illustrate the requirement to show information for 10 years. However, until a full 10-year trend is compiled, information is presented for those years in which information is available. See accompanying independent auditor's report. Annual money-weighted rate of return, net of investment expense Year Ended June 30, Year Ended June 30, Town of Nantucket, Massachusetts Page 109 of 157 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, 2019 Budgeted Amounts Actual Actual Variance Original Final Budgetary Budgetary Positive Budget Budget Amounts Encumbrances Adjusted (Negative) Revenues: Taxes: Real estate taxes 77,980,701$ 77,980,701$ 78,133,721$ -$ 78,133,721 153,020 Personal property taxes 1,568,940 1,568,940 1,552,743 - 1,552,743 (16,197) Tax title - - 260,444 - 260,444 260,444 Motor vehicle excise 2,450,000 2,450,000 3,338,862 - 3,338,862 888,862 Boat excise 32,500 32,500 35,558 - 35,558 3,058 Meals taxes 950,000 950,000 1,168,640 - 1,168,640 218,640 Room occupancy taxes 2,850,000 2,850,000 3,807,930 - 3,807,930 957,930 85,832,141 85,832,141 88,297,898 - 88,297,898 2,465,757 Intergovernmental: State aid - chapter 70 3,550,359 3,550,359 3,550,359 - 3,550,359 - State aid - unrestricted 81,923 81,923 81,923 - 81,923 - State aid - state owned land 164,746 164,746 164,746 - 164,746 - State aid - other 3,272 3,272 28,300 - 28,300 25,028 3,800,300 3,800,300 3,825,328 - 3,825,328 25,028 Departmental fees, charges, and other: Payments in lieu of taxes 8,794 8,794 8,067 - 8,067 (727) Selectmen rentals 335,700 335,700 460,429 - 460,429 124,729 Marina rentals 160,000 160,000 218,482 - 218,482 58,482 Municipal lien certificate fees 28,000 28,000 24,400 - 24,400 (3,600) Planning office filing and inspection fees 95,000 95,000 101,886 - 101,886 6,886 Police department fees 131,000 131,000 135,458 - 135,458 4,458 Public safety detail charges 60,000 60,000 72,412 - 72,412 12,412 Fire department fees 48,200 48,200 63,994 - 63,994 15,794 Inspection fees 352,500 352,500 417,274 - 417,274 64,774 Conservation fees 22,500 22,500 30,181 - 30,181 7,681 Historic district fees 215,000 215,000 264,465 - 264,465 49,465 Town gas 43,000 43,000 67,272 - 67,272 24,272 Other miscellaneous 659,100 659,100 212,816 - 212,816 (446,284) 2,158,794 2,158,794 2,077,136 - 2,077,136 (81,658) Licenses and permits: Liquor licenses 182,500 182,500 227,350 - 227,350 44,850 Building permits 1,100,000 1,100,000 1,176,849 - 1,176,849 76,849 Other licenses and permits 67,500 67,500 283,836 - 283,836 216,336 1,350,000 1,350,000 1,688,035 - 1,688,035 338,035 Fines and forfeitures: Parking and court fines 215,000 215,000 338,897 - 338,897 123,897 Other fines 10,000 10,000 69,323 - 69,323 59,323 225,000 225,000 408,220 - 408,220 183,220 Penalties and interest on taxes 475,000 475,000 605,321 - 605,321 130,321 Interest and investment income 150,000 150,000 506,869 - 506,869 356,869 Total Revenues 93,991,235 93,991,235 97,408,807 - 97,408,807 3,417,572 Town of Nantucket, Massachusetts Page 110 of 157 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, 2019 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 785,726 874,447 874,447 - 874,447 - Operating 845,517 1,070,517 593,823 211,132 804,955 265,562 Articles 1,119,346 1,119,346 6,471 1,112,875 1,119,346 - 2,750,589 3,064,310 1,474,741 1,324,007 2,798,748 265,562 Finance Committee: Operating 18,680 18,680 19,517 - 19,517 (837) Articles 500,000 500,000 - - - 500,000 518,680 518,680 19,517 - 19,517 499,163 Finance and Operations: Salary 802,720 802,720 652,988 - 652,988 149,732 Operating 275,924 275,924 196,617 70,588 267,205 8,719 Articles 7,609 17,833 10,224 7,609 17,833 - 1,086,253 1,096,477 859,829 78,197 938,026 158,451 Assessor: Salary 421,443 421,443 433,540 - 433,540 (12,097) Operating 315,400 315,400 190,797 39,175 229,972 85,428 736,843 736,843 624,337 39,175 663,512 73,331 Collector: Salary 313,180 313,180 341,532 - 341,532 (28,352) Operating 113,587 113,587 81,345 11,292 92,637 20,950 426,767 426,767 422,877 11,292 434,169 (7,402) Treasurer: Salary 297,931 297,931 284,058 - 284,058 13,873 Operating 137,300 137,300 30,607 5,000 35,607 101,693 435,231 435,231 314,665 5,000 319,665 115,566 Information Systems/GIS: Salary 654,760 695,616 695,616 - 695,616 - Operating 420,530 569,141 480,212 60,083 540,295 28,846 1,075,290 1,264,757 1,175,828 60,083 1,235,911 28,846 Legal: Operating 401,000 686,000 494,070 158,133 652,203 33,797 401,000 686,000 494,070 158,133 652,203 33,797 Human Resources: Salary 291,780 291,780 242,220 - 242,220 49,560 Operating 107,804 127,377 109,082 18,587 127,669 (292) 399,584 419,157 351,302 18,587 369,889 49,268 Town Clerk: Salary 262,320 262,320 226,018 - 226,018 36,302 Operating 83,435 83,435 61,178 4,751 65,929 17,506 345,755 345,755 287,196 4,751 291,947 53,808 (continued) Town of Nantucket, Massachusetts Page 111 of 157 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, 2019 Budgeted Amounts Actual Actual Variance Original Final Budgetary Budgetary Positive Budget Budget Amounts Encumbrances Adjusted (Negative) Nantucket Planning Office: Salary 951,066 975,401 975,401 - 975,401 - Operating 256,991 288,987 249,005 10,148 259,153 29,834 1,208,057 1,264,388 1,224,406 10,148 1,234,554 29,834 Public Buildings: Operating 1,506,186 1,506,186 1,124,791 162,161 1,286,952 219,234 1,506,186 1,506,186 1,124,791 162,161 1,286,952 219,234 Natural Resources: Salary 565,270 636,577 636,577 - 636,577 - Operating 188,347 188,347 152,390 20,601 172,991 15,356 753,617 824,924 788,967 20,601 809,568 15,356 Insurances: Auto casualty 150,000 150,000 45,183 - 45,183 104,817 Blanket liability 1,500,497 1,295,836 1,053,463 - 1,053,463 242,373 Claims deductible 123,200 123,200 33,807 3,986 37,793 85,407 Insurance consulting 60,345 60,345 46,126 12,828 58,954 1,391 1,834,042 1,629,381 1,178,579 16,814 1,195,393 433,988 Total General Government 13,479,574 14,220,536 10,341,283 1,908,949 12,250,232 1,970,304 Public Safety: Police: Salary 4,809,340 4,809,340 4,755,498 - 4,755,498 53,842 Operating 840,315 840,316 650,943 119,655 770,598 69,718 5,649,655 5,649,656 5,406,441 119,655 5,526,096 123,560 Centralized Dispatch: Salary 808,040 980,420 980,420 - 980,420 - 808,040 980,420 980,420 - 980,420 - Fire: Salary 2,664,450 2,664,450 2,534,418 - 2,534,418 130,032 Operating 304,679 307,156 237,761 4,961 242,722 64,434 2,969,129 2,971,606 2,772,179 4,961 2,777,140 194,466 Inspectors: Salary 663,966 771,132 771,132 - 771,132 - Operating 23,426 23,426 22,326 - 22,326 1,100 687,392 794,558 793,458 - 793,458 1,100 Emergency Management: Operating 8,000 8,000 3,231 - 3,231 4,769 8,000 8,000 3,231 - 3,231 4,769 Marine: Salary 766,360 849,624 849,624 - 849,624 - Operating 115,517 115,517 64,965 2,441 67,406 48,111 Articles 244,590 244,590 228,317 16,211 244,528 62 1,126,467 1,209,731 1,142,906 18,652 1,161,558 48,173 Total Public Safety 11,248,683 11,613,971 11,098,635 143,268 11,241,903 372,068 Town of Nantucket, Massachusetts Page 112 of 157 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, 2019 Budgeted Amounts Actual Actual Variance Original Final Budgetary Budgetary Positive Budget Budget Amounts Encumbrances Adjusted (Negative) Education: Salary and operating 29,157,193 29,157,193 28,730,805 350,810 29,081,615 75,578 Articles 282,005 282,005 74,448 207,557 282,005 - Total Education 29,439,198 29,439,198 28,805,253 558,367 29,363,620 75,578 Public Works: Public Works: Salary 2,589,600 2,589,600 2,510,228 - 2,510,228 79,372 Operating 708,033 708,034 525,330 44,825 570,155 137,879 Articles 45,074 45,074 6,179 38,834 45,013 61 3,342,707 3,342,708 3,041,737 83,659 3,125,396 217,312 Street Lighting: Operating 165,000 165,000 86,857 7,370 94,227 70,773 165,000 165,000 86,857 7,370 94,227 70,773 Mosquito Control: Operating 160,381 160,381 125,756 - 125,756 34,625 160,381 160,381 125,756 - 125,756 34,625 Snow and Ice Removal: Operating 82,600 104,083 60,415 - 60,415 43,668 82,600 104,083 60,415 - 60,415 43,668 Gas/Town Vehicles: Operating 375,000 375,000 279,235 - 279,235 95,765 375,000 375,000 279,235 - 279,235 95,765 Total Public Works 4,125,688 4,147,172 3,594,000 91,029 3,685,029 462,143 Health and Human Services: Health: Salary 276,347 300,599 300,599 - 300,599 - Operating 107,019 107,019 46,851 26,285 73,136 33,883 383,366 407,618 347,450 26,285 373,735 33,883 Commision on Disability: Salary 10,317 10,317 5,991 - 5,991 4,326 Operating 1,700 1,700 844 - 844 856 12,017 12,017 6,835 - 6,835 5,182 Senior Services/Council on Aging: Salary 168,280 179,698 179,698 - 179,698 - Operating 29,557 29,557 13,636 32 13,668 15,889 197,837 209,255 193,334 32 193,366 15,889 Veterans Services: Salary 15,460 15,460 4,129 - 4,129 11,331 Operating 17,900 17,900 11,888 - 11,888 6,012 33,360 33,360 16,017 - 16,017 17,343 Human Services: Salary 77,320 82,139 82,139 - 82,139 - Operating 15,646 15,646 9,502 195 9,697 5,949 Articles 461,312 486,312 452,125 34,187 486,312 - 554,278 584,097 543,766 34,382 578,148 5,949 Total Health and Human Services 1,180,858 1,246,347 1,107,402 60,699 1,168,101 78,246 (Continued) Town of Nantucket, Massachusetts Page 113 of 157 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, 2019 Budgeted Amounts Actual Actual Variance Original Final Budgetary Budgetary Positive Budget Budget Amounts Encumbrances Adjusted (Negative) Culture and Recreation: Atheneum (Library): Operating 722,735 722,735 722,735 - 722,735 - 722,735 722,735 722,735 - 722,735 - Visitor Services: Salary 292,200 292,200 286,603 - 286,603 5,597 Operating 156,218 156,218 114,227 7,732 121,959 34,259 448,418 448,418 400,830 7,732 408,562 39,856 Town Clock: Operating 4,738 4,738 1,742 41 1,783 2,955 4,738 4,738 1,742 41 1,783 2,955 Total Culture and Recreation 1,175,891 1,175,891 1,125,307 7,773 1,133,080 42,811 State and County Assessments: State assessments and charges 69,404 69,404 91,922 - 91,922 (22,518) Transportation authorities assessments 408,302 408,302 408,302 - 408,302 - Tuition assessments 18,252 18,252 64,441 - 64,441 (46,189) County assessments and charges 170,201 170,201 170,201 - 170,201 - Total State and County Assessments 666,159 666,159 734,866 - 734,866 (68,707) Pension and Fringe Benefits: Medical Insurance: Salary 12,722,552 12,464,556 11,711,229 - 11,711,229 753,327 12,722,552 12,464,556 11,711,229 - 11,711,229 753,327 Unemployment: Salary 177,880 177,880 82,265 - 82,265 95,615 177,880 177,880 82,265 - 82,265 95,615 Workers' Compensation: Salary 246,250 246,250 246,250 - 246,250 - 246,250 246,250 246,250 - 246,250 - Laborer's Union Pension: Salary 44,880 44,880 60,698 - 60,698 (15,818) 44,880 44,880 60,698 - 60,698 (15,818) Pension Assessments: Barnstable Retirement 4,420,540 4,420,540 4,420,538 - 4,420,538 2 4,420,540 4,420,540 4,420,538 - 4,420,538 2 Other Employee Benefits: Salary 1,100,000 449,997 - - - 449,997 1,100,000 449,997 - - - 449,997 Total Pension and Fringe Benefits 18,712,102 17,804,103 16,520,980 - 16,520,980 1,283,123 Town of Nantucket, Massachusetts Page 114 of 157 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, 2019 Budgeted Amounts Actual Actual Variance Original Final Budgetary Budgetary Positive Budget Budget Amounts Encumbrances Adjusted (Negative) Debt Service 7,063,518 7,298,078 7,125,456 - 7,125,456 172,622 Total Expenditures 87,091,671 87,611,455 80,453,182 2,770,085 83,223,267 4,388,188 Other Financing Sources (Uses) Transfers in 616,300 616,300 616,300 616,300 - Transfers out (16,300,106) (16,850,106) (16,850,106) (16,850,106) - Total Other Financing Sources (Uses)(15,683,806) (16,233,806) (16,233,806) (16,233,806)$ - Excess (Deficiency) of Revenues and Other Financing Sources Over Expenditures/Uses Of Prior Year Budgetary Fund Balance (8,784,242) (9,854,026) 721,819$ 7,805,760$ Other Budgetary Items Use of unassigned fund balance (free cash)5,531,316$ 6,576,100$ Use of excess abatement reserve (overlay surplus)- 25,000 Prior year encumbrances 1,726,604 1,726,604 Prior year articles 1,650,772 1,650,772 Prior year deficits (124,450) (124,450) Other - - Total Other Budgetary Items 8,784,242 9,854,026 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 115 of 157 Comprehensive Annual Financial Report TOWN OF NANTUCKET, MASSACHUSETTS NOTES TO REQUIRED SUPPLEMENTARY INFORMATION YEAR ENDED JUNE 30, 2019 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 Select Board, 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 2019, Town Meeting approved various supplemental budgetary appropriations between functions that did not materially increase the total original voted budget. 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, 2019, is as follows: Basis of Accounting Fund Perspective Differences Differences Total Revenues on a budgetary basis 97,408,807$ Stabilization revenue -$ 352,475$ 352,475 Nursing home revenues - 4,784,063 4,784,063 Landfill revenues - 3,331,490 3,331,490 Change in revenue accruals (169,195) - (169,195) On behalf payments 5,624,613 -5,624,613 Revenues on a GAAP basis 5,455,418$ 8,468,028$ 111,332,253$ Expenditures on a budgetary basis 80,453,182$ Reclass indirect transfers against expenditures (409,000)$ -$ (409,000) Nursing home expenditures - 7,442,888 7,442,888 Landfill expenditures - 9,385,413 9,385,413 Change in expenditure accruals 45,064 - 45,064 Bond issuance costs 95,742 - 95,742 On behalf payments 5,624,613 -5,624,613 Reclass transfers to private purpose fund - 300,000 300,000 Expenditures on a GAAP basis 5,356,419$ 17,128,301$ 102,937,902$ Town of Nantucket, Massachusetts Page 116 of 157 Comprehensive Annual Financial Report Excess of Expenditures Over Appropriations – During the fiscal year ended, the Town overspent its appropriation for state and county assessments by $68,707 which was funded from available revenues. Basis of Accounting Fund Perspective Differences Differences Total Other financing (uses) on a budgetary basis (16,233,806)$ Reclass indirect transfers against expenditures (409,000)$ -$ (409,000) Premiums from bonds and notes 95,742 - 95,742 Nursing home transfers - 1,419,146 1,419,146 Landfill transfers - 5,999,524 5,999,524 Reclass transfers to private purpose fund - 300,000 300,000 Other financing (uses) on a GAAP basis (313,258)$ 7,718,670$ (8,828,394)$ Town of Nantucket, Massachusetts Page 117 of 157 Comprehensive Annual Financial Report This page intentionally left blank. Town of Nantucket, Massachusetts Page 118 of 157 Comprehensive Annual Financial Report Combining Statements Town of Nantucket, Massachusetts Page 119 of 157 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 120 of 157 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 121 of 157 Comprehensive Annual Financial Report School School Town Town School Federal State Federal State Lunch Grants Grants Grants Grants Assets: Cash and cash equivalents 125,929$ 139,085$ 230,950$ 114,098$ 1,289,375$ Investments - - - - - Receivables, net of allowance for uncollectibles: Property taxes - - - - - Departmental and other - - - - - Intergovernmental - - 92,726 44,290 1,876,000 Total Assets 125,929 139,085 323,676 158,388 3,165,375 Total Deferred Outflows of Resources - - - - - Total Assets and Deferred Outflows of Resources 125,929$ 139,085$ 323,676$ 158,388$ 3,165,375$ Liabilities and Fund Balances: Liabilities: Warrants and accounts payable 81,168$ 13,747$ -$ 14,597$ 16,696$ Accrued payroll and withholdings - 6,830 1,963 5,670 - Other liabilities - - - - - Due to other funds - - - - - Bond anticipation notes payable - - - - 3,000,000 Total Liabilities 81,168 20,577 1,963 20,267 3,016,696 Deferred Inflows of Resources Unavailable revenue - property taxes - - - - - Unavailable revenue - other - - - - - Total Deferred Inflows of Resources - - - - - Fund Balances: Nonspendable - - - - - Restricted 44,761 118,508 321,713 138,121 1,029,949 Unassigned - - - - (881,270) Total Fund Balances 44,761 118,508 321,713 138,121 148,679 Total Liabilities, Deferred Inflows of Resources and Fund Balances 125,929$ 139,085$ 323,676$ 158,388$ 3,165,375$ JUNE 30, 2019 COMBINING BALANCE SHEET NONMAJOR GOVERNMENTAL FUNDS Special Revenue Funds Town of Nantucket, Massachusetts Page 122 of 157 Comprehensive Annual Financial Report Sub-total Community Road School Town Property Sale Gift Special Preservation Improvements Revolving Revolving Proceeds Funds Revenue Funds 4,871,024$ -$ 1,479,087$ 7,444,574$ 2,038,261$ 1,051,409$ 18,783,792$ - - - - - - - 192,817 - - - - - 192,817 - - - 523,365 - - 523,365 - 651,154 - - - - 2,664,170 5,063,841 651,154 1,479,087 7,967,939 2,038,261 1,051,409 22,164,144 - - - - - - - 5,063,841$ 651,154$ 1,479,087$ 7,967,939$ 2,038,261$ 1,051,409$ 22,164,144$ 37,936$ -$ 12,686$ 39,471$ -$ 2,272$ 218,573$ 3,130 - 38,028 74,899 - - 130,520 1,116 - 231,430 58,333 - - 290,879 - 651,154 - - - - 651,154 - -- - - - 3,000,000 42,182 651,154 282,144 172,703 - 2,272 4,291,126 192,817 - - - - - 192,817 - - - 523,365 - - 523,365 192,817 - - 523,365 - - 716,182 - - - - - - - 4,828,842 - 1,196,943 7,271,871 2,038,261 1,049,137 18,038,106 - - - - - - (881,270) 4,828,842 - 1,196,943 7,271,871 2,038,261 1,049,137 17,156,836 5,063,841$ 651,154$ 1,479,087$ 7,967,939$ 2,038,261$ 1,051,409$ 22,164,144$ Town of Nantucket, Massachusetts Page 123 of 157 Comprehensive Annual Financial Report NONMAJOR GOVERNMENTAL FUNDS COMBINING BALANCE SHEET JUNE 30, 2019 Permanent Funds Total Cemetery Other Sub-total Nonmajor Trust Trust Permanent Governmental Funds Funds Funds Funds Assets: Cash and cash equivalents -$ -$ -$ 18,783,792$ Investments 44,965 152,850 197,815 197,815 Receivables, net of allowance for uncollectibles: Property taxes - - - 192,817 Departmental and other - - - 523,365 Intergovernmental - - - 2,664,170 Total Assets 44,965 152,850 197,815 22,361,959 Total Deferred Outflows of Resources - - - - Total Assets and Deferred Outflows of Resources 44,965$ 152,850$ 197,815$ 22,361,959$ Liabilities and Fund Balances: Liabilities: Warrants and accounts payable -$ -$ -$ 218,573$ Accrued payroll and withholdings - - - 130,520 Other liabilities - - - 290,879 Due to other funds - - - 651,154 Bond anticipation notes payable - - - 3,000,000 Total Liabilities - - - 4,291,126 Deferred Inflows of Resources Unavailable revenue - property taxes - - - 192,817 Unavailable revenue - other - - - 523,365 Total Deferred Inflows of Resources - - - 716,182 Fund Balances: Nonspendable 44,305 660 44,965 44,965 Restricted 134,302 18,548 152,850 18,190,956 Unassigned - - - (881,270) Total Fund Balances 178,607 19,208 197,815 17,354,651 Total Liabilities, Deferred Inflows of Resources and Fund Balances 178,607$ 19,208$ 197,815$ 22,361,959$ (Concluded) Town of Nantucket, Massachusetts Page 124 of 157 Comprehensive Annual Financial Report This page intentionally left blank. Town of Nantucket, Massachusetts Page 125 of 157 Comprehensive Annual Financial Report School School Town Town School Federal State Federal State Lunch Grants Grants Grants Grants Revenues: Intergovernmental 303,909$ 613,478$ 478,155$ 317,619$ 1,005,647$ Motor vehicle and other excises - - - - - Community preservation surcharges - - - - - Investment income 2,981 - - 61 - Departmental and other revenue 386,444 - - - 69,238 Contributions and donations - - - - - Total Revenues 693,334 613,478 478,155 317,680 1,074,885 Expenditures: Current: General government - - - 258,544 63,550 Public safety - - - 21,749 540,612 Education 714,910 622,172 482,002 - - Public works - - - 2,596 - Health and human services - - - - 627,555 Culture and recreation - - - - 17,291 Debt service: Principal - - - - 324,902 Interest - - - - 96 Total Expenditures 714,910 622,172 482,002 282,889 1,574,006 Excess (Deficiency) Of Revenues Over (Under) Expenditures (21,576) (8,694) (3,847) 34,791 (499,121) Other Financing Sources (Uses): Issuance of bonds and notes - - - - - Premium from bonds and notes - - - - - Sale of capital assets - - - - - Transfers in - - - - - Transfers out - - - - - Total Other Financing Sources (Uses)- - - - - Net Change in Fund Balances (21,576) (8,694) (3,847) 34,791 (499,121) Fund Balances - Beginning of Year 66,337 127,202 325,560 103,330 647,800 Fund Balances - End of Year 44,761$ 118,508$ 321,713$ 138,121$ 148,679$ Special Revenue Funds FISCAL YEAR ENDED JUNE 30, 2019 COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES NONMAJOR GOVERNMENTAL FUNDS Town of Nantucket, Massachusetts Page 126 of 157 Comprehensive Annual Financial Report Sub-total Community Road School Town Property Sale Gift Special Preservation Improvements Revolving Revolving Proceeds Funds Revenue Funds 450,558$ 651,154$ -$ 311,721$ -$ -$ 4,132,241$ - - - 35,923 - - 35,923 2,240,059 - - - - - 2,240,059 29,551 - - 1,775 - - 34,368 11,256 - 1,340,920 3,177,718 - - 4,985,576 - - - - - 645,123 645,123 2,731,424 651,154 1,340,920 3,527,137 - 645,123 12,073,290 - - - 459,253 4,475 222,303 1,008,125 - - - 1,471,601 - 92,912 2,126,874 - - 1,793,106 - - 150,955 3,763,145 - 651,154 - 15,131 - - 668,881 - - - 96,252 - 20,000 743,807 2,074,974 - - 114,878 - 229 2,207,372 110,000 - - - - - 434,902 18,833 - - - - - 18,929 2,203,807 651,154 1,793,106 2,157,115 4,475 486,399 10,972,035 527,617 - (452,186) 1,370,022 (4,475) 158,724 1,101,255 464,500 - - - - - 464,500 22,239 - - - - - 22,239 - - - - 1,635,924 - 1,635,924 - - 700,000 - - - 700,000 - - - (22,416) - - (22,416) 486,739 - 700,000 (22,416) 1,635,924 - 2,800,247 1,014,356 - 247,814 1,347,606 1,631,449 158,724 3,901,502 3,814,486 - 1,199,129 5,674,265 406,812 890,413 13,255,334 4,828,842$ -$ 1,446,943$ 7,021,871$ 2,038,261$ 1,049,137$ 17,156,836$ (Continued) Town of Nantucket, Massachusetts Page 127 of 157 Comprehensive Annual Financial Report NONMAJOR GOVERNMENTAL FUNDS COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES FISCAL YEAR ENDED JUNE 30, 2019 Permanent Funds Total Cemetery Other Sub-total Nonmajor Trust Trust Permanent Governmental Funds Funds Funds Funds Revenues: Intergovernmental -$ -$ -$ 4,132,241$ Motor vehicle and other excises - - - 35,923 Community preservation surcharges - - - 2,240,059 Investment income 8,309 1,018 9,327 43,695 Departmental and other revenue 16,200 - 16,200 5,001,776 Contributions and donations - - - 645,123 Total Revenues 24,509 1,018 25,527 12,098,817 Expenditures: Current: General government - - - 1,008,125 Public safety - - - 2,126,874 Education - - - 3,763,145 Public works 2,500 - 2,500 671,381 Health and human services - - - 743,807 Culture and recreation - - - 2,207,372 Debt service: Principal - - - 434,902 Interest - - - 18,929 Total Expenditures 2,500 - 2,500 10,974,535 Excess (Deficiency) Of Revenues Over (Under) Expenditures 22,009 1,018 23,027 1,124,282 Other Financing Sources (Uses): Issuance of bonds and notes - - - 464,500 Premium from bonds and notes - - - 22,239 Sale of capital assets - - - 1,635,924 Transfers in - - - 700,000 Transfers out - - - (22,416) Total Other Financing Sources (Uses)- - - 2,800,247 Net Change in Fund Balances 22,009 1,018 23,027 3,924,529 Fund Balances - Beginning of Year 156,598 18,190 174,788 13,430,122 Fund Balances - End of Year 178,607$ 19,208$ 197,815$ 17,354,651$ (Concluded) Town of Nantucket, Massachusetts Page 128 of 157 Comprehensive Annual Financial Report This page intentionally left blank. Town of Nantucket, Massachusetts Page 129 of 157 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 130 of 157 Comprehensive Annual Financial Report INTERNAL SERVICE FUNDS COMBINING STATEMENT OF NET POSITION JUNE 30, 2019 Total Health Workers'Internal Claims Compensation Service Funds Assets: Current assets: Cash and cash equivalents 4,811,575$ 78,736$ 4,890,311$ Investments - 258,291 258,291 Reinsured claims receivable 442,792 - 442,792 Prepaid items 1,206,380 - 1,206,380 Total Assets 6,460,747 337,027 6,797,774 Total Deferred Outflows of Resources - - - Total Assets and Deferred Outflows of Resources 6,460,747 337,027 6,797,774 Liabilities: Current liabilities: Warrants and accounts payable 81,317$ 22,019$ 103,336$ Health claims incurred but not reported 1,129,769 - 1,129,769 Workers' compensation claims - 114,965 114,965 Total Current Liabilities 1,211,086 136,984 1,348,070 Total Deferred Inflows of Resources - - - Total Liabilities and Deferred Inflows of Resources 1,211,086 136,984 1,348,070 Net Position: Unrestricted 5,249,661 200,043 5,449,704 TOTAL NET POSITION 5,249,661$ 200,043$ 5,449,704$ Town of Nantucket, Massachusetts Page 131 of 157 Comprehensive Annual Financial Report INTERNAL SERVICE FUNDS COMBINING STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET POSITION FISCAL YEAR ENDED JUNE 30, 2019 Total Health Workers'Internal Service Claims Compensation Funds Operating Revenues: Employee contributions 2,242,738$ -$ 2,242,738$ Employer contributions 13,817,385 416,972 14,234,357 Reinsured claims proceeds 1,706,947 - 1,706,947 Total Operating Revenues 17,767,070 416,972 18,184,042 Operating Expenditures: Employee benefits 16,639,688 373,414 17,013,102 Operating Income (loss)1,127,382 43,558 1,170,940 Nonoperating Revenues: Investment income - 13,711 13,711 Income (loss) Before Transfers 1,127,382 57,269 1,184,651 Change in Net Position 1,127,382 57,269 1,184,651 Fund Balances - Beginning of Year 4,122,279 142,774 4,265,053 Fund Balances - End of Year 5,249,661$ 200,043$ 5,449,704$ Town of Nantucket, Massachusetts Page 132 of 157 Comprehensive Annual Financial Report INTERNAL SERVICE FUNDS COMBINING STATEMENT OF CASH FLOWS FISCAL YEAR ENDED JUNE 30, 2019 Total Health Workers'Internal Service Claims Compensation Funds Cash Flows From Operating Activities: Receipts from employees 2,242,738$ -$ 2,242,738$ Receipts from employer 13,817,385 416,972 14,234,357 Receipts from reinsured claims 1,457,567 - 1,457,567 Payments for interfund services used (16,441,232) (338,284) (16,779,516) Net Cash Provided by (Used in) Operating Activities 1,076,458 78,688 1,155,146 Cash Flows From Investing Activities: Investment income - 13,711 13,711 Investment of operating cash - (13,721) (13,721) Net Cash Provided by (Used in) Investing Activities - (10) (10) Net Change in Cash and Cash Equivalents 1,076,458 78,678 1,155,136 Cash and Cash Equivalents: Beginning of the Year 3,735,117 58 3,735,175 End of the Year 4,811,575$ 78,736$ 4,890,311$ Reconciliation of Operating Income to Net Cash Provided by (Used in) Operating Activities: Operating income (loss)1,127,382$ 43,558$ 1,170,940$ Adjustments to reconcile operating income (loss) to net cash provided by (used in) operating activities: Changes in assets and liablities: Receivables (249,380) - (249,380) Prepaid items 197,147 - 197,147 Accounts payable and accrued expenses 9,757 15,970 25,727 Accrued benefits payable (8,448) 19,160 10,712 Net Cash Provided by (Used in) Operating Activities 1,076,458$ 78,688$ 1,155,146$ Town of Nantucket, Massachusetts Page 133 of 157 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 134 of 157 Comprehensive Annual Financial Report AGENCY FUND STATEMENT OF CHANGES IN ASSETS AND LIABILITIES FISCAL YEAR ENDED JUNE 30, 2019 Beginning End of Year Additions Deletions of Year Assets Current assets: Cash and cash equivalents 1,316,729$ 1,582,325$ (1,403,418)$ 1,495,636$ Receivables, net of allowance 83,385 965,517 (947,711) 101,191 Total Assets 1,400,114$ 2,547,842$ (2,351,129)$ 1,596,827$ Liabilities Current liabilities: Warrants and accounts payable 37,000$ 594,258$ (543,705)$ 87,553$ Accrued payroll and withholdings 32,933 40,400 (32,933) 40,400 Agency liabilities 402,206 1,013,538 (887,075) 528,669 Planning board deposits 927,975 148,167 (135,937) 940,205 Total Liabilities 1,400,114$ 1,796,363$ (1,599,650)$ 1,596,827$ Town of Nantucket, Massachusetts Page 135 of 157 Comprehensive Annual Financial Report This page intentionally left blank. Town of Nantucket, Massachusetts Page 136 of 157 Comprehensive Annual Financial Report STATISTICAL SECTION The Hadwen House is a Greek Revival mansion built at the peak of Nantucket’s prosperity as the whaling capital of the world in 1846. Whaling merchant and silver retailer, William Hadwen, was responsible for its’ construction. The home is one of the most elaborate examples of Greek revival architecture on the Island; and the only publicly accessible mansion of its age in the area. Photo Credit: William DeSousa-Mauk Town of Nantucket, Massachusetts Page 137 of 157 Comprehensive Annual Financial Report This page intentionally left blank. Town of Nantucket, Massachusetts Page 138 of 157 Comprehensive Annual Financial Report 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 139 of 157 Comprehensive Annual Financial Report LAST TEN FISCAL YEARS 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Governmental activities: Invested in capital assets……….…………………. 171,102,098$ 177,625,537$ 180,988,633$ 179,338,227$ 175,687,378$ 181,710,594$ 186,717,700$ 203,168,454$ 222,919,137$ 229,696,540$ Restricted………………………………………………………………………….. 13,294,995 3,150,056 2,459,409 15,818,386 20,511,155 20,995,512 27,381,162 23,523,901 24,663,139 18,070,833 Unrestricted……………………………………………………………… (7,324,139) 2,459,785 1,293,781 (1,831,770) 1,501,847 (36,480,970) (45,200,433) (59,910,475) (110,316,541) (111,963,882) Total governmental activities net position……………………………………….. 177,072,954$ 183,235,378$ 184,741,823$ 193,324,843$ 197,700,380$ 166,225,136$ 168,898,429$ 166,781,880$ 137,265,735$ 135,803,491$ Business-type activities: Invested in capital assets……….…………………. 114,762,981$ 119,408,316$ 118,502,610$ 116,596,172$ 112,541,419$ 119,242,898$ 120,659,914$ 105,477,803$ 121,715,832$ 126,071,273$ Restricted……………………………...…………………..… - - - - - - - - - - Unrestricted………………………………………………………………. 7,264,425 3,199,868 9,865,892 11,287,299 15,914,047 (1,523,044) 6,361,265 25,927,826 11,798,292 6,668,726 Total business-type activities net position……………………………. 122,027,406$ 122,608,184$ 128,368,502$ 127,883,471$ 128,455,466$ 117,719,854$ 127,021,179$ 131,405,629$ 133,514,124$ 132,739,999$ Primary government: Invested in capital assets……….…………………. 285,865,079$ 297,033,853$ 299,491,243$ 295,934,399$ 288,228,797$ 300,953,492$ 307,377,614$ 308,646,257$ 344,634,969$ 355,767,813$ Restricted………………………………………………………………………. 13,294,995 3,150,056 2,459,409 15,818,386 20,511,155 20,995,512 27,381,162 23,523,901 24,663,139 18,070,833 Unrestricted…………………………………………………………… (59,714) 5,659,653 11,159,673 9,455,529 17,415,894 (38,004,014) (38,839,168) (33,982,649) (98,518,249) (105,295,156) Total primary government net position…………………………………………………. 299,100,360$ 305,843,562$ 313,110,325$ 321,208,314$ 326,155,846$ 283,944,990$ 295,919,608$ 298,187,509$ 270,779,859$ 268,543,490$ NET POSITION BY COMPONENT Town of Nantucket, Massachusetts Page 140 of 157 Comprehensive Annual Financial Report CHANGES IN NET POSITION LAST TEN FISCAL YEARS 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Expenses - Governmental activities: General government…...……………………………………………………10,319,800$ 10,940,662$ 10,015,072$ 9,765,641$ 10,068,331$ 11,574,757$ 13,375,694$ 15,652,032$ 13,660,766$ 15,765,219$ Public safety…..………………………………………………………………14,684,244 12,172,241 13,601,442 14,042,554 14,779,274 15,484,735 17,211,310 17,548,899 19,236,351 22,887,964 Education……..………………………………………………………………….30,380,350 28,867,553 29,011,944 35,190,752 36,829,209 38,839,302 40,296,659 46,524,011 47,854,776 52,485,059 Public works……...……………………………………………………………….4,514,082 4,082,163 4,692,304 4,171,361 4,862,640 5,131,842 5,404,039 20,248,200 19,697,228 20,574,322 Health and human services………………………………………………………9,714,459 2,765,497 3,741,941 2,301,279 1,641,325 1,528,171 1,544,941 7,705,797 7,817,065 8,194,864 Culture and recreation………...……………………………………………………..3,392,381 2,119,755 2,170,903 2,327,315 5,622,457 5,397,098 4,646,084 4,770,808 4,034,143 3,867,395 Interest expense……………………………………………………………………2,351,987 2,354,427 2,082,337 2,368,538 2,075,324 1,616,600 1,478,749 2,147,432 2,486,810 3,004,920 Total government activities expenses……………………………………………….75,357,303 63,302,298 65,315,943 70,167,440 75,878,560 79,572,505 83,957,476 114,597,179 114,787,139 126,779,743 Business-type activities: Siasconset Water……………………………………………………………………602,507 719,668 682,682 712,820 724,927 738,719 811,237 749,495 617,825 692,972 Wannacomet Water……………………………………………………………………3,582,097 3,570,999 3,674,493 3,785,742 3,624,731 3,544,191 4,088,800 4,345,647 4,428,396 4,856,369 Sewer……………………………………………………………………5,491,001 5,613,007 5,760,776 6,149,616 6,002,582 6,255,624 6,338,700 6,110,762 7,912,679 7,463,953 Solid waste……………………………………………………………………8,114,794 8,679,984 8,851,378 11,302,336 8,963,029 10,324,817 11,587,152 - - - Nantucket Memorial Airport……………………………………………………………………13,541,915 13,158,406 15,331,231 14,523,220 15,592,198 15,096,177 14,287,119 15,087,914 15,379,560 16,842,531 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……………………………………..31,332,314 40,550,718 41,224,276 43,553,410 42,577,981 43,905,487 45,471,358 26,293,818 28,338,460 29,855,825 Total primary government expenses……………………………………….106,689,617$ 103,853,016$ 106,540,219$ 113,720,850$ 118,456,541$ 123,477,992$ 129,428,834$ 140,890,997$ 143,125,599$ 156,635,568$ Program Revenues - Governmental activities: Charges for services: General government…………………………………………………General government…...……………………………………………………1,358,150$ 426,552$ 741,512$ 622,049$ 917,730$ 771,006$ 1,121,165$ 1,215,294$ 1,414,603$ 1,542,176$ Public safety………………………………………………………………..Public safety…..………………………………………………………………1,418,330 1,362,466 1,668,420 2,771,517 3,213,998 3,203,714 3,703,493 4,145,232 4,006,734 4,206,210 Education……………………………………………………………….Education……..………………………………………………………………….498,985 501,915 780,977 1,488,121 1,490,713 1,433,969 1,500,573 1,817,891 1,710,119 1,728,718 Public works……………………………………………………………….Public works……...……………………………………………………………….55,092 59,430 276,502 300,317 340,272 376,600 278,408 3,505,449 3,469,380 3,458,221 Health and human services………………………………………………………3,661,973 35,445 82,788 132,655 188,221 190,627 227,273 5,977,366 5,246,151 5,145,194 Culture and recreation………...……………………………………………………..289,279 325,010 522,063 248,089 295,416 346,626 329,022 433,829 455,763 404,014 Operating grants and contributions……………………………………5,090,233 3,989,493 2,131,096 6,022,440 6,230,362 6,761,994 9,241,317 10,995,900 11,348,091 12,857,189 Capital grants and contributions…………………………………………..1,230,625 1,067,782 1,030,215 1,874,830 289,066 1,886,943 1,881,938 508,050 14,502,773 2,571,891 Total government activities program revenues...……………………………..13,602,667 7,768,093 7,233,573 13,460,018 12,965,778 14,971,479 18,283,189 28,599,011 42,153,614 31,913,613 Business-type activities: Charges for services……………….………………………………….24,820,469 27,568,533 32,847,185 31,799,794 33,592,609 33,738,945 39,612,392 27,063,403 28,655,420 30,055,443 Operating grants and contributions……………………………………776,060 1,287,762 746,499 85,992 91,000 90,820 133,570 70,458 123,647 133,619 Capital grants and contributions…………………………………………..7,057,702 3,307,275 2,146,931 1,989,292 2,479,717 6,078,185 3,175,470 2,680,075 3,186,264 2,111,745 Total business-type activities program revenues……………………………………..32,654,231 32,163,570 35,740,615 33,875,078 36,163,326 39,907,950 42,921,432 29,813,936 31,965,331 32,300,807 Total primary government program revenues……………………………………….46,256,898$ 39,931,663$ 42,974,188$ 47,335,096$ 49,129,104$ 54,879,429$ 61,204,621$ 58,412,947$ 74,118,945$ 64,214,420$ Net (Expense)/Program Revenue Governmental activities……………………....……………………………..(61,754,636)$ (55,534,205)$ (58,082,370)$ (56,707,422)$ (62,912,782)$ (64,601,026)$ (65,674,287)$ (85,998,168)$ (72,633,525)$ (94,866,130)$ Business-type activities……………………....……………………………..1,321,917 (8,387,148) (5,483,661) (9,678,332) (6,414,655) (3,997,537) (2,549,926) 3,520,118 3,626,871 2,444,982 Total primary government net (expense)/program revenue……………………………………….(60,432,719)$ (63,921,353)$ (63,566,031)$ (66,385,754)$ (69,327,437)$ (68,598,563)$ (68,224,213)$ (82,478,050)$ (69,006,654)$ (92,421,148)$ Note: Beginning in 2017, Our Island Home and Solid Waste business-type activities have been reported as governmental activities; fiscal year 2010 - 2016 were not restated to reflect this.(continued) Town of Nantucket, Massachusetts Page 141 of 157 Comprehensive Annual Financial Report CHANGES IN NET POSITION LAST TEN FISCAL YEARS 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 General Revenues and other Changes in Net Position - Governmental activities: Real estate and personal property taxes, net of tax refunds payable…………………………………………………. 60,956,838$ 61,948,050$ 61,863,287$ 63,594,267$ 64,160,459$ 65,895,498$ 68,978,062$ 74,061,321$ 77,739,238$ 79,997,125$ Motor vehicle and other excise taxes…………………………………………………… 1,852,563 1,867,286 2,066,878 2,338,423 2,314,472 2,607,277 2,801,463 2,949,704 3,154,909 3,212,027 Hotel and meals excise……………………………………………..1,035,291 2,726,360 2,745,571 3,092,446 3,558,082 4,026,389 4,486,662 4,535,824 4,743,787 5,005,958 Penalties and interest on taxes………………………………………………………………659,062 633,008 687,221 677,906 598,411 882,916 657,303 687,316 584,164 605,321 Community Preservation Fund surcharges………………………………………………………………1,669,975 1,666,540 1,724,556 1,745,927 1,782,598 1,835,287 1,944,202 2,088,375 2,190,884 2,254,544 Grants and contributions not restricted to specific programs………………………………………………………………587,474 935,761 307,901 737,402 278,049 186,666 179,523 190,963 193,824 246,669 Unrestricted investment income……………………………………………. 160,970 65,960 173,698 66,235 159,229 257,230 389,334 231,448 284,739 937,170 Gain on sale of capital assets……………………………………………. 1,143,075 73,530 813,011 736,256 1,379,639 2,430,079 - - 201,248 1,536,070 Land fill revenue sharing……………………………………………………………… - - - - - - - - - - Unrealized loss on investments………………………………………………………………- - - - - - - - - - Other revenue………………………………………………………………789,238 748,060 438,678 604,871 - - - - - - Transfers………………………………………………………………(3,534,310) (8,967,926) (11,231,986) (8,303,291) (6,942,620) (7,881,295) (8,659,384) - 285,264 - Total governmental activities………………………………………………………………… 65,320,176 61,696,629 59,588,815 65,290,442 67,288,319 70,240,047 70,777,165 84,744,951 89,378,057 93,794,884 Business-type activities: Unrestricted investment income……………………………………………………………… - - 11,993 55,748 44,030 32,935 62,084 71,855 95,529 161,926 Gain on sale of capital assets……………………………………….- - - - - 829,212 - - - - Transfers………………………………………………………………3,534,310 8,967,926 11,231,986 8,303,291 6,942,620 7,881,295 8,659,384 - (285,264) - Total business-type activities….………..…………………………………..3,534,310 8,967,926 11,243,979 8,359,039 6,986,650 8,743,442 8,721,468 71,855 (189,735) 161,926 Total primary government general revenues and other changes in net position………………………………………………….68,854,486$ 70,664,555$ 70,832,794$ 73,649,481$ 74,274,969$ 78,983,489$ 79,498,633$ 84,816,806$ 89,188,322$ 93,956,810$ Changes in Net Position Governmental activities……………………....……………………………..9,785,971$ 3,614,259$ 2,881,393$ 2,377,660$ 2,687,293$ 4,565,760$ (15,221,003)$ 12,111,426$ (5,488,073)$ (1,071,246)$ Business-type activities……………………....……………………………..(4,852,838) 3,484,265 1,565,647 1,944,384 2,989,113 6,193,516 12,241,586 3,698,726 2,255,247 2,606,908 Total primary government changes in net position………………………………………. 4,933,133$ 7,098,524$ 4,447,040$ 4,322,044$ 5,676,406$ 10,759,276$ (2,979,417)$ 15,810,152$ (3,232,826)$ 1,535,662$ (concluded) Town of Nantucket, Massachusetts Page 142 of 157 Comprehensive Annual Financial Report 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 General Fund: Nonspendable………………………………. -$ -$ -$ -$ -$ 11,406$ -$ -$ -$ 3,113,226$ Restricted………………………………. 250,000 - 1,485,147 1,577,323 650,518 488,344 414,514 346,780 285,872 231,468 Committed…………………………….. 2,471,550 2,136,060 1,941,738 2,114,218 8,061,318 4,013,474 2,267,807 13,140,419 10,884,444 9,245,767 Assigned…………………………….. 3,136,435 4,488,570 2,182,323 5,146,635 2,047,757 6,323,207 3,028,651 7,295,378 7,257,920 7,539,217 Unassigned…………………………… 11,047,142 12,186,769 14,373,770 13,881,601 14,745,606 15,470,669 17,571,873 17,942,453 21,550,897 22,764,258 Total general fund…………………………….. 16,905,127$ 18,811,399$ 19,982,978$ 22,719,777$ 25,505,199$ 26,307,100$ 23,282,845$ 38,725,030$ 39,979,133$ 42,893,936$ All Other Governmental Funds: Nonspendable……………………………….308,153$ 288,280$ 44,305$ 44,305$ 114,762$ 44,805$ 44,805$ 44,805$ 44,805$ 44,965$ Restricted………………………………. 19,427,291 16,039,900 18,987,991 17,267,229 18,709,640 20,950,707 27,086,357 23,331,672 24,282,474 31,414,635 Unassigned…………………………… - (138,806) (104,106) - - (1,109,351) (17,737,453) (9,779,936) (5,012,857) (3,451,045) Total all other governmental funds…………….. 19,735,444$ 16,189,374$ 18,928,190$ 17,311,534$ 18,824,402$ 19,886,161$ 9,393,709$ 13,596,541$ 19,314,422$ 28,008,555$ Note: The Town implemented GASB 54 in fiscal year 2011. Fiscal year 2010 data presented were restated to conform to GASB 54 presentation. Note: The Town consolidated Our Island Home and Solid Waste activities into the General Fund in fiscal year 2017; none of the previous years were restated for this change. FUND BALANCES - GOVERNMENTAL FUNDS LAST TEN FISCAL YEARS Town of Nantucket, Massachusetts Page 143 of 157 Comprehensive Annual Financial Report 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Revenues: Real estate and personal property taxes, net of tax refunds……………………………………………………. 59,769,412$ 62,486,485$ 62,120,715$ 63,517,709$ 63,434,664$ 66,805,456$ 69,040,526$ 73,938,122$ 78,224,629$ 79,748,325$ Motor vehicle and boat excise………………………………………… 1,757,392 2,090,373 1,986,900 1,913,789 2,512,609 2,592,035 2,747,276 2,823,655 3,026,951 3,410,343 Hotel and meals excise………………………………………………. 1,035,291 2,726,360 2,745,571 3,092,446 3,558,082 4,026,389 4,486,662 4,535,824 4,743,787 5,005,958 User charges………………………………………………. - - - - - - - 9,229,547 8,345,708 8,093,931 Departmental and other……………………………………….. 7,834,515 4,032,108 6,414,807 4,910,252 4,641,243 4,606,897 5,218,934 5,844,352 5,912,072 7,079,014 Communities Preservation surcharges……………………………………… 1,669,975 1,666,540 1,724,556 1,739,157 1,773,519 1,844,628 1,930,955 2,072,835 2,188,658 2,240,059 Penalties and interest on taxes………………………………………………………..659,062 633,008 687,221 677,906 598,411 882,916 657,303 687,316 584,164 605,321 Licenses and permits………………………………………………………..932,004 1,015,424 1,058,052 1,075,074 1,405,911 1,455,080 1,712,506 1,698,765 1,613,059 1,688,035 Fines and forfeitures…………………………………………………………….248,231 254,285 223,054 208,503 296,917 283,179 269,441 334,451 367,483 408,220 Intergovernmental………………………………………………………..6,946,282 7,131,244 7,280,969 7,148,723 8,119,346 8,728,025 10,894,441 11,007,339 25,667,485 13,582,182 Contributions………………………………………………………..83,320 1,249,415 - 258,425 372,331 107,578 408,337 687,574 377,203 1,046,223 Investment income……………………………………………………….. 278,439 159,602 164,936 63,751 147,521 252,185 375,220 228,864 286,452 923,459 Total Revenue………………………………………………… 81,213,923 83,444,844 84,406,781 84,605,735 86,860,554 91,584,368 97,741,601 113,088,644 131,337,651 123,831,070 Expenditures: General government……………………………………………………………. 5,837,165 6,209,441 7,179,875 7,114,409 7,596,379 8,658,027 8,946,404 8,960,868 10,155,695 11,448,203 Public safety……………………………………………………………… 10,513,956 10,437,125 10,041,235 9,018,372 9,284,157 9,444,096 10,698,049 10,711,350 11,981,461 13,524,480 Education………………………………………………………………… 23,175,994 23,764,115 23,829,685 23,139,532 24,585,011 25,775,358 25,329,925 29,017,484 30,442,447 32,773,059 Public works…………………………………………………………….. 2,323,502 2,406,506 2,582,349 2,242,399 2,700,144 2,977,129 2,981,431 11,974,875 14,356,435 14,371,492 Health and human services………………………………………………… 5,845,124 889,848 1,305,274 1,899,449 1,236,079 1,080,864 1,051,897 6,830,966 7,134,552 7,311,155 Culture and recreation……………………………………………….. 2,312,808 2,037,840 1,492,926 1,842,298 5,083,442 4,875,189 4,128,951 4,335,613 3,722,357 3,394,866 Pension and fringe benefits………………………………………………………… 12,698,735 11,662,320 11,479,906 14,831,570 15,661,255 16,212,172 18,393,297 23,325,610 23,225,437 24,274,664 State and county charges………………………………………… 458,657 461,358 531,772 546,250 566,814 574,275 591,536 606,206 632,692 734,866 Capital outlay and other………………………………………………………………. 16,296,496 8,912,763 5,047,157 7,481,872 5,202,852 8,504,352 26,106,919 37,467,736 27,044,203 19,565,622 Debt service: Principal……………………………………………………………… 7,778,503 7,558,823 6,657,855 5,496,332 5,405,944 5,478,306 5,511,741 5,785,385 5,651,238 4,694,769 Interest……………………………………………………………………. 2,501,019 2,401,588 2,171,097 2,260,152 2,186,325 1,746,458 1,550,529 1,599,106 3,131,571 2,936,359 Total Expenditures……………………………………………………….. 89,741,959 76,741,727 72,319,131 75,872,635 79,508,402 85,326,226 105,290,679 140,615,199 137,478,088 135,029,535 Excess of revenues over (under) expenditures………………………………………………… (8,528,036) 6,703,117 12,087,650 8,733,100 7,352,152 6,258,142 (7,549,078) (27,526,555) (6,140,437) (11,198,465) Other Financing Sources (Uses): Issuances from bonds and notes………………...………………………………………… 13,070,000 - 3,200,000 478,449 - 993,000 1,188,709 35,735,550 11,730,000 16,804,000 Issuances from refunding bonds………………...…………………………………………- - 1,329,900 8,685,000 - 758,200 3,935,000 3,515,450 - - Premiums from debt issuances………………………….279,138 - 212,513 808,509 - 51,600 123,130 1,700,430 895,909 1,018,631 Payments to refunded bond escrow agent………………………….- - (1,519,037) (9,505,125) - (790,820) (3,995,000) (3,976,820) - - Sale of capital assets………………………………………………… 1,143,075 73,530 - 865,210 3,888,758 2,474,833 1,439,916 208,199 201,248 1,635,924 Transfers in……………………………………………………………………………… 4,008,898 1,554,704 1,008,975 919,323 2,101,972 1,631,000 15,779,728 2,448,154 9,294,704 8,946,552 Transfers out…………………………………………………………………………… (7,543,208) (9,971,149) (12,409,606) (9,864,323) (9,044,592) (9,512,295) (24,439,112) (2,448,154) (9,009,440) (8,946,552) Total other financing sources (uses)………………………………………………………………….. 10,957,903 (8,342,915) (8,177,255) (7,612,957) (3,053,862) (4,394,482) (5,967,629) 37,182,809 13,112,421 19,458,555 Net change in fund balance…………………………………………………………………. 2,429,867$ (1,639,798)$ 3,910,395$ 1,120,143$ 4,298,290$ 1,863,660$ (13,516,707)$ 9,656,254$ 6,971,984$ 8,260,090$ Debt service as a percentage of noncapital expenditures………………………………………………. 14.00%14.68% 13.12%11.34%10.22%9.40%8.92%7.16%7.95%6.61% LAST TEN FISCAL YEARS CHANGES IN FUND BALANCES - GOVERNMENTAL FUNDS Town of Nantucket, Massachusetts Page 144 of 157 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 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 21,682,664,300 94.75%3.36 5.93 3.38 2017 20,458,398,100 1,862,400 1,032,434,600 51,432,021 242,474,296 1,326,340,917 21,786,601,417 21,682,664,300 100.48%3.39 5.99 3.42 2018 20,839,860,173 1,917,600 1,098,763,770 54,697,357 260,672,715 1,414,133,842 22,255,911,615 23,796,647,900 93.53%3.53 5.97 3.56 2019 22,216,363,900 1,878,500 1,316,412,396 61,967,704 274,770,615 1,653,150,715 23,871,393,115 23,796,647,900 100.31%3.36 5.71 3.28 Source: Official Statements, State Division of Local Services Note: All property in the Commonwealth of Massachusetts is assessed at 100% of full and fair cash value. The State estimates this "equalized valuation" for all municipalities every two years. Chapter 59, Section 21C of the Massachusetts General Laws, known as "Proposition 2 1/2", imposes 2 separate limits on the annual tax levy of the Town. The primary limitation is that the tax levy cannot exceed 2 1/2% of the full and fair cash value. The secondary limitation is that the tax levy cannot exceed the maximum levy limit for the preceding fiscal year as determined by the State Commissioner of Revenue by more than 2 1/2%, subject to an exception for property added to the tax rolls and for certain valuation increases. This secondary limit may be exceeded in any fiscal year by majority approval of the voters, however, it cannot exceed the primary limitation. Assessed Value Tax Rates LAST TEN FISCAL YEARS ASSESSED VALUE AND ESTIMATED ACTUAL VALUE OF TAXABLE PROPERTY BY CLASSIFICATION AND TAX RATES Town of Nantucket, Massachusetts Page 145 of 157 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 118,681,500$ 1 0.53%115,831,100$ 1 0.58% Nantucket Electric Company Private Utility 63,107,915 2 0.28%55,007,427 4 0.27% Penant Realty LLC Residential 49,043,500 3 0.22% Nantucket Yacht Club Recreation 54,086,700 4 0.24%50,398,900 5 0.25% Richmond Great Point Development LLC Private 28,689,000 5 0.13% Nantucket Island Resort LLC Resort 44,836,200 6 0.20%44,197,700 2 0.22% Great Harbor Yacht Club Inc.Recreation 43,546,400 7 0.20% White Elephant Hotel LLC Resort 28,996,100 8 0.13% Sankaty Head Golf Club, Inc.Recreation 26,751,300 9 0.12%22,369,100 8 0.11% US REIF Marine Nantucket FEE LLC Retail 26,410,900 10 0.12% Walter Glowacki Private 70,597,200 3 0.35% NIR Retail III LLC Resort 27,206,500 6 0.14% Nantucket Golf Course Recreation 21,232,582 7 0.11% Wauwinet Inn, LLC Resort 16,718,775 9 0.08% Westmoor Club Resort 15,078,258 10 0.08% Totals 484,149,515$ 2.18%438,637,542$ 2.19% Source: Official Statements 2019 2010 Town of Nantucket, Massachusetts Page 146 of 157 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 2010 61,333,595 57,209,185 93.28%2,497,999 59,707,184 97.35% 2011 63,040,150 59,526,709 94.43%2,439,718 61,966,427 98.30% 2012 62,274,744 59,645,473 95.78%1,802,851 61,448,324 98.67% 2013 63,618,273 60,028,036 94.36%2,645,031 62,673,067 98.51% 2014 64,647,039 60,979,366 94.33%3,024,466 64,003,832 99.01% 2015 66,329,953 63,876,955 96.30%1,625,167 65,502,122 98.75% 2016 69,636,373 67,228,059 96.54%1,232,877 68,460,936 98.31% 2017 74,553,632 72,289,087 96.96%1,376,323 73,665,410 98.81% 2018 78,168,480 76,433,219 97.78%1,450,000 77,883,219 99.64% 2019 79,549,650 78,531,659 98.72%1,155,352 79,687,011 100.17% Source: Accounting Records and Official Statements PROPERTY TAX LEVIES AND COLLECTIONS LAST TEN FISCAL YEARS Collections Town of Nantucket, Massachusetts Page 147 of 157 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 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% 2017 10,298 550,016,180 21,786,601,417 78,299,239 7,603 14.24%0.36% 2018 10,298 550,016,180 22,255,911,615 84,972,254 8,251 15.45%0.38% 2019 10,298 550,016,180 23,871,393,115 97,800,207 9,497 17.78%0.41% 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 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% 2017 75,230,489 7,305 13.68%0.35%153,529,728 14,909 27.9%0.70% 2018 71,430,250 6,936 12.99%0.32%156,402,504 15,188 28.4%0.70% 2019 91,939,854 8,928 16.72%0.39%189,740,061 18,425 34.5%0.79% 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 148 of 157 Comprehensive Annual Financial Report 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Equalized Valuation………………………………….. 21,914,393,400$ 21,914,393,400$ 18,041,019,200$ 18,041,019,200$ 17,816,255,100$ 17,816,255,100$ 21,682,664,300$ 21,682,664,300$ 23,796,647,900$ 23,796,647,900$ Debt Limit…………………………..…………………. 1,095,719,670 1,095,719,670 902,050,960 902,050,960 890,812,755 890,812,755 1,084,133,215 1,084,133,215 1,189,832,395 1,189,832,395 Outstanding general obligation bonds………………. 150,040,866 153,072,902 144,200,827 137,176,623 133,498,025 124,250,817 153,529,728 156,402,504 189,740,061 184,274,078 Authorized and unissued debt…………………………. 68,310,085 72,315,737 48,369,825 51,318,862 24,976,578 87,611,526 166,096,099 124,200,429 157,015,166 204,519,266 Debt not applicable to debt limit…………………………. (51,917,004) (42,042,147) (47,042,147) (43,393,647) (42,671,460) (38,186,867) (48,673,610) (35,291,063) (33,240,034) (33,069,749) Legal debt margin………………………………………….. 825,451,715$ 828,288,884$ 662,438,161$ 670,161,828$ 689,666,692$ 640,763,545$ 715,833,778$ 768,239,219$ 809,837,134$ 767,969,302$ Total debt applicable to the limit as a percentage of debt limit………………………………….. 15.19%16.73%16.13%16.09%13.00%19.50%24.99%22.63%26.35%29.90% Source: State Division of Local Services, Accounting Records LAST TEN FISCAL YEARS COMPUTATION OF LEGAL DEBT MARGIN Town of Nantucket, Massachusetts Page 149 of 157 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……………………………………………………………. 97,800,207 Total direct and overlapping debt…………………………………………… 97,800,207$ *Outstanding debt as of June 30, 2018. Source: Official Statements, Accounting Records The estimated percentage applicable is based 100% to the Town. AS OF JUNE 30, 2018 DIRECT AND OVERLAPPING GOVERNMENTAL ACTIVITIES DEBT Town of Nantucket, Massachusetts Page 150 of 157 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 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 5.50% 2016 10,298 550,016,180 53,410 39.4 1,595 4.20% 2017 10,298 550,016,180 53,410 39.4 1,588 4.20% 2018 10,298 550,016,180 53,410 39.4 1,610 2.00% 2019 10,298 550,016,180 53,410 39.4 1,686 2.00% 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 151 of 157 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 691 1 9.91%710 1 10.83% Nantucket Cottage Hospital Medical 180 2 2.58%90 2 1.37% Nantucket Island Resorts Hospitality 125 3 1.79%105 3 1.60% Marine Home Center Retail 90 4 1.29%95 4 1.45% Stop & Shop Retail 90 5 1.29%65 6 0.99% Blue Hills Bank Finance 60 6 0.86%0.00% Myles Reis Trucking Haulage 30 7 0.43% Steamship Authority Transportation 28 8 0.40%32 7 0.49% Don Allen Auto Dealership 25 9 0.36% Bartlett Oceanview Farm Farm/Retail 25 10 0.36% Harbor Fuel Petroleum Products 30 8 0.46% Pacific National Bank/Fleet Finance 28 9 0.43% The Brotherhood Restaurant 22 10 0.34% Nantucket Bank Finance 60 5 0.92% Source: Official Statements 2019 2010 CURRENT YEAR AND NINE YEARS AGO PRINCIPAL EMPLOYERS (INCLUDING TOWN) Town of Nantucket, Massachusetts Page 152 of 157 Comprehensive Annual Financial Report Function 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 General government…………………………………………………………….60 60 63 60 66 68 73 75 76 82 Public safety……………………………………………..77 77 81 81 81 81 83 85 85 88 Education……………………………………………………295 292 299 299 301 301 310 315 321 332 Public works……………………………………………………………..24 26 28 27 30 30 32 31 32 35 Health and human services…………………………………………………………..74 74 74 75 75 75 75 75 67 70 Culture and recreation…………………………………………………16 17 9 10 10 10 10 10 10 10 Sub-total governmental activities ……………………………………………………….. 546 546 554 552 563 565 583 591 591 617 Nantucket Memorial Airport…………………………45 47 44 44 41 41 44 44 46 48 Siasconset Water…………………………………………………………………1 1 - - - - - - - - Wannacomet Water…………………………..11 11 11 11 11 11 11 11 12 13 Sewer…………………………………………………………………12 12 10 10 10 10 10 10 11 13 Sub-total business-type activities ……………………………………………………….. 69 71 65 65 62 62 65 65 69 74 Total Town employees…………….…………………...……..615 617 619 617 625 627 648 656 660 691 Source: Town personnel records Health and human services includes Our Island Home employees LAST TEN FISCAL YEARS FULL-TIME EQUIVALENT TOWN EMPLOYEES BY FUNCTION Town of Nantucket, Massachusetts Page 153 of 157 Comprehensive Annual Financial Report OPERATING INDICATORS BY FUNCTION/PROGRAM Function 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 General Government: Town Clerk Registered voters…………………………………….. 7,907 7,907 8,394 8,394 8,546 8,618 8,618 9,100 9,263 9,150 Public Safety: Police Criminal offenses Arrests……………………………….. 1,169 1,062 1,160 1,531 992 584 568 887 952 369 Reported crimes…………………….. 621 716 499 479 490 501 356 345 345 2,116 Motor vehicle responses………………………… 2,910 2,600 2,994 3,469 3,411 3,432 3,493 4,322 4,625 6,283 Other responses………………………… 17,659 15,913 18,553 20,648 17,899 21,576 23,678 22,023 24,327 10,762 Total criminal offenses…………. 22,359 20,291 23,206 26,127 22,792 26,093 28,095 27,577 30,249 19,530 Fire Incidents Fires…………………………….. 40 66 41 52 67 82 86 66 68 70 Non-fire incidents……………………………………………………….. 3,783 3,637 3,640 3,721 4,915 3,893 3,942 4,011 4,234 4,081 Total fire calls………………… 3,823 3,703 3,681 3,773 4,982 3,975 4,028 4,077 4,302 4,151 Inspectional Services: Number of building permits…………………………………. 1,156 1,145 1,406 1,639 1,797 2,010 2,137 1,996 1,875 1,985 Education: Number of students…………………………………. 1,255 1,230 1,282 1,322 1,378 1,535 1,595 1,588 1,610 1,686 Public Works: Landfill Solid waste tonnage………………………….. 24,687 34,933 34,000 33,710 37,400 38,000 39,000 38,000 33,237 35,689 Health and Human Services: Board of Health Inspections Food establishments…………………. 210 205 212 230 247 262 668 675 675 814 Other………………………….. 329 302 341 358 367 380 1,373 1,563 1,563 744 Total inspections………………….. 539 507 553 588 614 642 2,041 2,238 2,238 1,558 Our Island Home - Nursing Home Number of beds………………… 45 45 45 45 45 45 45 45 45 45 Culture and Recreation: Beaches Beach Stickers 3,838 3,628 3,845 3,795 3,973 4,102 4,259 4,559 4,680 4,992 Transportation: Nantucket Memorial Airport Number of enplanements……… 201,638 179,410 175,420 178,303 174,129 164,290 138,752 124,321 122,356 127,733 Number of tower operations…… 127,575 120,806 125,960 126,898 119,976 109,225 106,186 104,913 102,678 69,817 Gallons of jet fuel sold……………. N/A 1,127,270 1,217,635 1,164,958 1,194,978 1,207,361 1,277,228 1,309,802 1,346,285 1,616,388 N/A - Information not available Source: Various Town Departments, State websites and annual Town Report. LAST TEN FISCAL YEARS Town of Nantucket, Massachusetts Page 154 of 157 Comprehensive Annual Financial Report CAPITAL ASSET STATISTICS BY FUNCTION/PROGRAM ` Function 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 General Government: Number of buildings………………………………..7 7 7 7 7 7 7 7 7 7 Public Safety: Police Number of stations…………………………….1 1 2 2 2 2 2 2 2 2 Fire Number of stations…………………………….2 2 2 2 2 2 2 2 2 3 Education: Number of elementary schools…………………………………….1 1 1 1 1 1 1 2 2 2 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. LAST TEN FISCAL YEARS Town of Nantucket, Massachusetts Page 155 of 157 Comprehensive Annual Financial Report This page intentionally left blank. Town of Nantucket, Massachusetts Page 156 of 157 Comprehensive Annual Financial Report The Nantucket window box planter can be seen in the windows of many homes on the Island. Above is a fabulous Fall arrangement to match the season. Town of Nantucket, Massachusetts Page 157 of 157 Comprehensive Annual Financial Report