HomeMy WebLinkAboutFY 2010 Basic Financial Statements - Final TOWN OF NORTH ANDOVER, MASSACHUSETTS
REPORT ON EXAMINATION OF
BASIC FINANCIAL STATEMENTS
FISCAL YEAR ENDED JUNE 30, 2010
TOWN OF NORTH ANDOVER, MASSACHUSETTS
REPORT ON EXAMINATION OF BASIC FINANCIAL STATEMENTS
JUNE 30, 2010
TABLE OF CONTENTS
IndependentAuditors' Report..........................................................................................................................................1
Management's Discussion and Analysis.........................................................................................................................3
BasicFinancial Statements...........................................................................................................................................11
Statementof Net Assets............................................................................................................................................13
Statementof Activities ...............................................................................................................................................14
Governmental funds— balance sheet........................................................................................................................16
Reconciliation of the governmental funds balance sheet total fund balances to the statement of net assets ..........17
Governmental funds—statement of revenues, expenditures and changes in fund balances...................................18
Reconciliation of the statement of revenues, expenditures, and changes in fund balances of governmental
funds to the statement of activities.............................................................................................................................19
Proprietary funds—statement of net assets..............................................................................................................20
Proprietary funds—statement of revenues, expenses and changes in fund net assets...........................................21
Proprietary funds—statement of cash flows..............................................................................................................22
Fiduciary funds—statement of fiduciary net assets...................................................................................................23
Fiduciary funds—statement of changes in fiduciary net assets................................................................................24
Notes to basic financial statements ...........................................................................................................................25
Required Supplementary Information............................................................................................................................50
Schedule of revenues, expenditures and changes in fund balance—general fund — budget and actual.................52
RetirementSystem Schedules...................................................................................................................................54
Retirement system schedule of funding progress..................................................................................................55
Retirement system schedule of employer contributions ........................................................................................56
Other postemployment benefit plan schedules..........................................................................................................57
Other postemployment benefit plan schedule of funding progress and schedule of employer contributions........58
Other postemployment benefit plan actuarial methods and assumptions.............................................................59
Notes to required supplementary information............................................................................................................60
Additionalinformation ................................................................................................................................................63
Enterprise funds—schedule of revenues, expenses and changes in fund net assets—budgetary basis— budget
andactual...............................................................................................................................................................64
Powers &Sullivan 1
(:aerrtified Public At;countrintw
100 Quannapowitt Parkway
Suite 101
Independent Auditors' Report Wakefield,MA 01880
T.781-914-1700
To the Honorable Board of Selectmen F.781-914-1701
Town of North Andover, Massachusetts www.powersandsullivan.com
We have audited the accompanying financial statements of the governmental activities, the business-type
activities, each major fund, and the aggregate remaining fund information of the Town of North Andover,
Massachusetts, as of and for the fiscal year ended June 30, 2010, which collectively comprise the Town's basic
financial statements as listed in the table of contents. These financial statements are the responsibility of the
Town of North Andover, Massachusetts' management. 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 examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and significant estimates made by management,
as well as evaluating the overall financial statement presentation. We believe that our audit provides a
reasonable basis for our opinions.
In our opinion, the financial statements referred to above present fairly, in all material respects, the respective
financial position of the governmental activities, the business-type activities, each major fund, and the aggregate
remaining fund information of the Town of North Andover, Massachusetts, as of June 30, 2010, and the
respective changes in financial position and cash flows, where applicable, thereof for the fiscal year then ended in
conformity with accounting principles generally accepted in the United States of America.
In accordance with Government Auditing Standards, we have also issued our report dated January 26, 2011, on
our consideration of the Town of North Andover, Massachusetts' internal control over financial reporting and our
tests of its compliance with certain provisions of laws, regulations, contracts and 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 read in conjunction with this report in considering the results of
our audit.
Management's discussion and analysis, located on the following pages, and the schedule of revenues,
expenditures and changes in fund balance -general fund— budgetary basis, retirement system schedule of
funding progress, retirement system schedule of employer contributions, other postemployment benefit plan
schedule of funding progress and schedule of employer contributions, and other postemployment benefit plan
actuarial methods and assumptions, located after the notes to the basic financial statements, are not a required
part of the basic financial statements but is supplementary information required by accounting principles generally
accepted in the United States of America. We have applied certain limited procedures, which consisted
principally of inquiries of management regarding the methods of measurement and presentation of the required
supplementary information. However, we did not audit the information and express no opinion on it.
1
Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise
the Town of North Andover, Massachusetts' basic financial statements. The additional information, as listed in
the table of contents, is presented for purposes of additional analysis and is not a required part of the basic
financial statements. Such information has been subjected to the auditing procedures applied in the audit of the
basic financial statements and , in our opinion, is fairly stated in all material respects in relation to the basic
financial statements taken as a whole.
4z
January 26, 2011
2
Management's Discussion and Analysis
Town of North Andover, Massachusetts 3 Basic Financial Statements
Management's Discussion and Analysis
As management of the Town of North Andover, we offer readers of these financial statements this narrative
overview and analysis of the financial activities for the fiscal year ended June 30, 2010. We encourage readers to
consider the information presented in this report. All amounts, unless otherwise indicated, are expressed in whole
dollars.
The Governmental Accounting Standards Board (GASB) is the authoritative standard setting body that provides
guidance on how to prepare financial statements in conformity with generally accepted accounting principles
(GAAP). Users of these financial statements (such as investors and rating agencies) rely on the GASB to
establish consistent reporting standards for all governments in the United States. This consistent application is the
only way users (including citizens, the media, legislators and others) can assess the financial condition of one
government compared to others.
Financial Overview
• Governmental net assets decreased by$6.4 million in fiscal 2010, primarily due to an increase in the
Town's other postemployment benefit liability (see below).
• At the close of the current fiscal year, the Town's general fund reported an ending fund balance of$2
million, an increase of approximately $437,000 in comparison with the prior year. Total fund balance
represents 3% of total general fund expenditures.
• The Town's total debt (short-term and long-term combined) decreased by $1.3 million during the current
fiscal year. This was due to the net effect of$11.3 million from the issuance of new debt and $12.6
million in principal payments on outstanding debt.
• The Town's other postemployment benefit (OPEB) liability increased by$7.3 in fiscal year 2010, bringing
the total liability to $14.3 million at year end. Based on the most recent actuarial report, dated July 1,
2008, the total accrued unfunded liability totaled $126 million. See note 11 for further discussion of this
liability.
Overview of the Financial Statements
This discussion and analysis are intended to serve as an introduction to the Town of North Andover's basic
financial statements. These basic financial statements comprise of three components: 1) government-wide
financial statements, 2) fund financial statements, and 3) notes to the financial statements.
Government-wide financial statements. The government-wide financial statements are designed to provide
readers with a broad overview of finances, in a manner similar to private-sector business.
The statement of net assets presents information on all assets and liabilities, with the difference between the two
reported as net assets. Over time, increases or decreases in net assets may serve as a useful indicator of
whether the financial position is improving or deteriorating.
The statement of activities presents information showing how the government's net assets changed during the
most recent fiscal year. All changes in net assets 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).
Town of North Andover, Massachusetts 4 Basic Financial Statements
Both of the government-wide financial statements distinguish functions that are principally supported by taxes and
intergovernmental revenues (governmental activities)from other functions that are intended to recover all or a
significant portion of their costs through user fees and charges (business-type activities). The governmental
activities include general government, public safety, education, public works, health and human services, culture
and recreation and interest. The business-type activities include the activities of the water, sewer, and Osgood
Hill Estate operations.
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. Fund accounting is used to ensure and
demonstrate compliance with finance-related legal requirements. All of the funds can be divided into three
categories: governmental funds, proprietary funds, and fiduciary funds.
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 statements focus on near-term inflows of spendable resources, as well
as on balances of spendable resources available at the end of the fiscal year. Such information may be useful in
evaluating a government's near-term financing requirements.
Because the focus of governmental funds is narrower than that of the government-wide financial statements, it is
useful to compare the information presented for governmental funds with similar information presented for
governmental activities in the government-wide financial statements. By doing so, readers may better understand
the long-term impact of the government's near-term financing decisions. Both the governmental fund balance
sheet and the governmental fund statement of revenues, expenditures, and changes in fund balances provide a
reconciliation to facilitate this comparison between governmental funds and governmental activities.
The Town of North Andover adopts an annual appropriated budget for its general fund. 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 its water, sewer, and Osgood Hill
Estate operations, all of which are considered to be major funds.
The Town of North Andover adopts annual appropriated budgets for each enterprise fund. A budgetary
comparison schedule has been provided, as additional information, to demonstrate compliance with these
budgets.
The Internal Service fund is used to account for the financing of services provided by one department to other
departments or governmental units. This fund is used to account for risk-financing activities related to active
employees' and retirees' health insurance.
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 propriety funds.
Private-purpose trust funds and agency funds are reported and combined into a single, aggregate presentation in
the fiduciary fund financial statements under the captions "private purpose trust funds" and "agency funds,"
respectively.
Town of North Andover, Massachusetts 5 Basic Financial Statements
Notes to the basic 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.
Government-wide Financial Analysis
As noted earlier, net assets may serve overtime as a useful indicator of a government's financial position. North
Andover's assets exceeded liabilities by $141.3 million at the close of fiscal 2010.
Net assets of$133.8 million (95%) reflects its investment in capital assets (e.g., land, buildings and building
improvements, machinery and equipment and infrastructure), less any related debt used to acquire those assets
that are still outstanding. The Town uses these capital assets to provide services to citizens; consequently, these
assets are not available for future spending. Although the investment in its capital assets is reported net of its
related debt, it should be noted that the resources needed to repay this debt must be provided from other
sources, since the capital assets themselves cannot be used to liquidate these liabilities.
An additional portion of the net assets, $6.5 million (4%), represents resources that are subject to external
restrictions on how they may be used. The remaining balance of unrestricted net assets, $998,000 (1%), may be
used to meet the government's ongoing obligations to citizens and creditors.
At the end of the current fiscal year, the Town of North Andover, as a whole, is able to report positive balances in
all three categories of net assets as well as its separate governmental and business-type activities, with the
exception of governmental activities unrestricted net assets, which report a $2.6 million deficit balance.
The governmental activity and business-type activity components of the Town are presented below.
Governmental Activities
The Town of North Andover's assets exceeded liabilities for governmental activities by $104.8 million at the close
of fiscal 2010.
FY 2010 FY 2009
Assets:
Current assets............................................. $ 29,267,806 $ 29,456,684
Noncurrent assets (excluding capital)............... 1,516,574 1,863,607
Capital assets.............................................. 134,046,177 132,584,737
Total assets........................................... 164,830,557 163,905,028
Liabilities:
Current liabilities (excluding debt).................... 7,134,598 7,175,230
Noncurrent liabilities (excluding debt):
Other postemployment benefits................... 13,322,006 6,203,725
Other..................................................... 1,371,000 1,383,060
Current debt................................................ 6,689,004 5,155,571
Noncurrent debt........................................... 31,516,714 32,746,494
Total liabilities........................................ 60,033,322 52,664,080
Net Assets:
Capital assets net of related debt..................... 100,868,439 98,988,296
Restricted................................................... 6,539,198 8,753,852
Unrestricted................................................ (2,610,402) 3,498,800
Town of North Andover, Massachusetts 6 Basic Financial Statements
Total net assets...................................... $ 104,797,235 $ 111,240,948
FY 2010 FY 2009
Program revenues:
Charges for services..................................... $ 6,212,690 $ 6,558,039
Operating grants and contributions.................. 16,448,490 16,503,311
Capital grants and contributions...................... 455,022 2,243,011
General Revenues:
Real estate and personal property taxes........... 55,855,205 54,443,171
Tax liens..................................................... 908,371 85,265
Motor vehicle and other excise taxes................ 3,165,811 4,033,853
Penalties and interest on taxes........................ 277,662 307,534
Payments in lieu of taxes............................... 1,838,821 1,815,176
Community preservation surcharges................ 1,263,566 511,703
Grants and contributions not restricted to
specific programs..................................... 2,748,904 3,847,997
Unrestricted investment income....................... 449,199 504,476
Total revenues....................................... 89,623,741 90,853,536
Expenses:
General government..................................... 4,021,067 4,123,262
Public safety................................................ 14,654,536 14,509,962
Education................................................... 66,409,142 64,495,293
Public works................................................ 6,227,974 7,382,073
Health and human services............................ 2,054,742 2,041,742
Culture and recreation................................... 2,109,924 2,052,225
Interest....................................................... 1,506,325 1,202,891
Total expenses....................................... 96,983,710 95,807,448
Excess (deficiency) before transfers................. (7,359,969) (4,953,912)
Transfers....................................................... 916,256 807,971
The governmental expenses totaled $97 million of which $23.1 million (24%) was directly supported by program
revenues consisting of charges for services, operating and capital grants and contributions. General revenues
totaled $66.5 million, primarily coming from property taxes, motor vehicle excise, payments in lieu of taxes and
non-restricted state aid.
The governmental net assets decreased by $6.4 million during the current fiscal year. This was primarily due to a
$7.1 million increase in the other postemployment benefit liability, which was offset by an increase in the
stabilization fund that was raised on the tax rate.
Town of North Andover, Massachusetts 7 Basic Financial Statements
Business-type Activities
For the Town's business-type activities, assets exceeded liabilities by $36.5 million at the close of fiscal 2010.
FY 2010 FY 2009
Assets:
Current assets............................................. $ 11,512,413 $ 10,140,270
Noncurrent assets (excluding capital)............... 993,664 1,093,936
Capital assets.............................................. 56,259,161 56,147,387
Total assets........................................... 68,765,238 67,381,593
Liabilities:
Current liabilities (excluding debt).................... 758,466 569,474
Noncurrent liabilities (excluding debt):
Other postemployment benefits................... 950,071 782,788
Other..................................................... 56,000 112,000
Current debt................................................ 3,939,351 3,797,263
Noncurrent debt........................................... 26,554,462 28,293,617
Total liabilities........................................ 32,258,350 33,555,142
Net Assets:
Capital assets net of related debt..................... 32,898,415 32,209,814
Unrestricted................................................ 3,608,473 1,616,637
Total net assets...................................... $ 36,506,888 $ 33,826,451
Program revenues:
Charges for services..................................... $ 10,295,194 $ 9,029,240
Operating grants and contributions................... 177,861 201,398
Total revenues....................................... 10,473,055 9,230,638
Expenses:
Water......................................................... 2,972,303 3,591,641
Sewer........................................................ 3,644,464 3,878,647
Osgood Hill ................................................ 259,595 381,463
Total expenses....................................... 6,876,362 7,851,751
Excess (deficiency) before transfers................. 3,596,693 1,378,887
Transfers....................................................... (916,256) (807,971)
Business-type net assets of$32.9 million (90%) represent the investment in capital assets while $3.6 million
(10%) are unrestricted. The Town's business-type activities net assets increased by$2.7 million in the current
fiscal year.
The water enterprise fund net assets increased by $1.7 million. This was due to increased consumption and a
reduction in the cost of services, primarily in utilities, contract services, chemicals, and materials and supplies.
The sewer enterprise fund net assets increased by$829,000. The main components of this change include a
$386,000 increase in user fee revenue that was due to increased usage, a $167,000 decrease in interest and a
$264,000 decrease in cost of services.
Town of North Andover, Massachusetts 8 Basic Financial Statements
The Osgood Hill enterprise fund net assets increased by$117,000,which was primarily due to the funding of a
prior year operating deficit that was raised on the tax rate and transferred in from the general fund.
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 governmental funds is to provide information on near-term inflows, outflows,
and balances of spendable resources. Such information is useful in assessing financing requirements. In
particular, unreserved 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 end of the current fiscal year, governmental funds reported combined ending fund balances of$14.7
million, of which $2 million is for the general fund, $10,000 is for the state fiscal stabilization fund, $2.2 million is
for the stabilization fund, $4.2 million is for the community preservation fund and $6.3 million is for non-major
governmental funds. Cumulatively there was an increase of$607,000 in fund balances from the prior year.
The general fund is the chief operating fund. At the end of the current fiscal year, unreserved fund balance of the
general fund totaled $659,000, while total fund balance was $2 million. Reservations of fund balance for
encumbrances and continuing appropriations and debt service totaled $267,000 and $1.1 million, respectively.
Total fund balance represents 3% of total general fund expenditures.
The Town's general fund increased by $437,000 in fiscal 2010, which was primarily due to $298,000 of
unexpended appropriations, of which, $267,000 were encumbered and carried forward to the subsequent fiscal
year, a $254,000 reduction in the estimated tax refunds liability and a $111,000 reduction in real estate and
personal property taxes recognized on the modified accrual basis of accounting.
The state fiscal stabilization fund is used to account for federal funds that were received through the American
Recovery and Reinvestment Act. Fund balance for this grant fund increased by$10,000 during fiscal 2010.
The stabilization fund increased by$957,000 in fiscal 2010. This was due to $52,000 of investment income
earned and a $905,000 transfer from the general fund.
The community preservation fund decreased by$1.2 million in fiscal 2010, which is due to the purchase of a
parcel of land for$2.3 million, which was offset by surcharges and state revenue totaling $1.8 million.
The nonmajor governmental funds increased by$389,000 in fiscal 2010, which is primarily due to timing
differences between the receipt and expenditure of grant funds.
General Fund Budgetary Highlights
The $240,000 decrease between the original budget and the final amended budget was primarily due to increases
in public safety, health and human services and debt service that were offset by decreases in general
government, education and employee benefits that were approved by the May, 2010 Annual Town Meeting.
Town of North Andover, Massachusetts 9 Basic Financial Statements
Capital Asset and Debt Administration
Capital Assets. In conjunction with the annual operating budget, the Town annually prepares a capital budget for
the upcoming fiscal year and a five-year Capital Improvement Plan (CIP) that is used as a guide for future capital
expenditures.
The Town's investment in capital assets for its governmental and business-type activities as of June 30, 2010,
amounts to $190.3 million (net of accumulated depreciation). This investment in capital assets includes land, land
improvements, buildings and building improvements, machinery and equipment, library books, vehicles and
infrastructure. The Town invested $8.8 million for new capital asset additions in the fiscal 2010. Overall the
Town's investment in capital assets for the current year was $1.7 million, net of depreciation of$7.1 million.
The major governmental capital asset events during the current fiscal year included the purchase of land,
construction of the new police station, school facility construction, road construction and acquisition of vehicles
and equipment and infrastructure improves to water and sewer.
The major business-type capital asset events during the current fiscal year consisted of improvements to several
of the booster pump stations, meter replacements, and infrastructure improvements.
Debt Administration. Outstanding gross long-term general government debt, as of June 30, 2010, totaled $37.7
million. The general government's gross bonded debt decreased $1.2 million, which was due to the issuance of
$4.2 million of general obligation bonds and principal payments totaling $5.4 million.
Outstanding gross long-term debt of the water enterprise fund, as of June 30, 2010, totaled $14.5 million. The
water gross bonded debt decreased $224,000, which was due to the issuance of$2 million of general obligation
bonds and principal payments totaling $2.2 million.
Outstanding gross long-term debt of the sewer enterprise fund, as of June 30, 2010, totaled $16.5 million. The
sewer gross bonded debt decreased $1.3 million, which was due to the issuance of$4 million of general
obligation bonds and principal payments totaling $5.3 million.
The Town had $1.3 million in outstanding bond anticipation notes (BAN) at year-end.
Please refer to the notes to the basic financial statements for further discussion of the major capital and debt
activity.
Requests for Information
This financial report is designed to provide a general overview of the Town of North Andover's finances for all
those with an interest in the government's finances. Questions concerning any of the information provided in this
report or requests for additional financial information should be addressed to the Budget Director/Town
Accountant, Town Hall, 120 Main Street, North Andover, Massachusetts 01845.
Town of North Andover, Massachusetts 10 Basic Financial Statements
Basic Financial Statements
Town of North Andover, Massachusetts 11 Basic Financial Statements
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Town of North Andover, Massachusetts 12 Basic Financial Statements
STATEMENT OF NET ASSETS
JUNE 30,2010
Primary Government
Governmental Business-type
Activities Activities Total
ASSETS
CURRENT:
Cash and cash equivalents.................................. $ 23,694,957 $ 8,535,943 $ 32,230,900
Investments...................................................... 199,790 - 199,790
Receivables,net of allowance for uncollectibles:
Real estate and personal property taxes............ 626,231 - 626,231
Tax and utility liens........................................ 1,573,938 127,390 1,701,328
Motor vehicle and other excise taxes................. 305,192 - 305,192
User charges................................................ - 2,709,033 2,709,033
Community preservation................................. 17,225 - 17,225
Departmental and other.................................. 294,341 - 294,341
Intergovernmental......................................... 2,163,619 140,047 2,303,666
Tax foreclosures................................................ 392,513 - 392,513
NONCURRENT:
Receivables,net of allowance for uncollectibles:
Intergovernmental......................................... 1,516,574 993,664 2,510,238
Capital assets,nondepreciable............................. 24,715,820 6,116,268 30,832,088
Capital assets,net of accumulated depreciation....... 109,330,357 50,142,893 159,473,250
TOTAL ASSETS................................................... 164,830,557 68,765,238 233,595,795
LIABILITIES
CURRENT:
Warrants payable.............................................. 1,814,261 442,102 2,256,363
Accrued payroll................................................. 2,881,932 - 2,881,932
Accrued health claims payable............................. 839,000 839,000
Tax refunds payable.......................................... 747,000 - 747,000
Accrued interest................................................ 509,659 260,364 770,023
Other liabilities.................................................. 67,586 - 67,586
Liabilities due depositors..................................... 106,160 106,160
Compensated absences..................................... 169,000 - 169,000
Court judgments................................................ - 56,000 56,000
Bonds and notes payable.................................... 6,689,004 3,939,351 10,628,355
NONCURRENT:
Compensated absences..................................... 1,371,000 - 1,371,000
Court judgments................................................ - 56,000 56,000
Other postemployment benefits............................ 13,322,006 950,071 14,272,077
Bonds and notes payable.................................... 31,516,714 26,554,462 58,071,176
TOTAL LIABILITIES............................................... 60,033,322 32,258,350 92,291,672
NET ASSETS
Invested in capital assets,net of related debt.............. 100,868,439 32,898,415 133,766,854
Restricted for:
Debt service..................................................... 1,102,818 - 1,102,818
Community preservation..................................... 4,592,213 4,592,213
Permanent funds:
Expendable.................................................. 459,616 459,616
Nonexpendable............................................. 29,111 29,111
Gifts and grants................................................ 355,440 355,440
Unrestricted.......................................................... (2,610,402) 3,608,473 998,071
TOTAL NET ASSETS............................................. $ 104,797,235 $ 36,506,888 $ 141,304,123
See notes to basic financial statements.
Town of North Andover,Massachusetts 13 Basic Financial Statements
STATEMENT OF ACTIVITIES
FISCAL YEAR ENDED JUNE 30, 2010
Program Revenues
Operating Capital
Charges for Grants and Grants and Net(Expense)
Functions/Programs Expenses Services Contributions Contributions Revenue
Primary Government:
Governmental Activities:
General government.................. $ 4,021,067 $ 512,205 $ 362,370 $ - $ (3,146,492)
Public safety............................ 14,654,536 2,266,216 153,647 - (12,234,673)
Education............................... 66,409,142 3,229,655 15,206,781 - (47,972,706)
Public works............................ 6,227,974 53,581 79,135 455,022 (5,640,236)
Health and human services......... 2,054,742 134,014 445,435 - (1,475,293)
Culture and recreation............... 2,109,924 17,019 113,553 - (1,979,352)
Interest................................... 1,506,325 - 87,569 - (1,418,756)
Total Governmental Activities... 96,983,710 6,212,690 16,448,490 455,022 (73,867,508)
Business-Type Activities:
Water..................................... 2,972,303 5,327,867 2,833 - 2,358,397
Sewer.................................... 3,644,464 4,682,139 175,028 - 1,212,703
Osgood Hill............................. 259,595 285,188 - - 25,593
Total Business-Type Activities.. 6,876,362 10,295,194 177,861 - 3,596,693
Total Primary Government....... $ 103,860,072 $ 16,507,884 $ 16,626,351 $ 455,022 $ (70,270,815)
See notes to basic financial statements. (Continued)
Town of North Andover,Massachusetts 14 Basic Financial Statements
STATEMENT OF ACTIVITIES
FISCAL YEAR ENDED JUNE 30, 2010
Primary Government
Governmental Business-Type
Activities Activities Total
Changes in net assets:
Net (expense) revenue from previous page.... $ (73,867,508) $ 3,596,693 $ (70,270,815)
General revenues:
Real estate and personal property taxes,
net of tax refunds payable.................... 55,855,205 - 55,855,205
Tax liens............................................. 908,371 - 908,371
Motor vehicle and other excise taxes......... 3,165,811 - 3,165,811
Penalties and interest............................. 277,662 - 277,662
Payments in lieu of taxes........................ 1,838,821 - 1,838,821
Community preservation surcharges......... 1,263,566 - 1,263,566
Grants and contributions not restricted to
specific programs............................... 2,748,904 - 2,748,904
Unrestricted investment income............... 449,199 - 449,199
Transfers, net.......................................... 916,256 (916,256) -
Total general revenues and transfers............ 67,423,795 (916,256) 66,507,539
Change in net assets.......................... (6,443,713) 2,680,437 (3,763,276)
Net Assets:
Beginning of year.................................. 111,240,948 33,826,451 145,067,399
End of year.......................................... $ 104,797,235 $ 36,506,888 $ 141,304,123
(Concluded)
Town of North Andover, Massachusetts 15 Basic Financial Statements
GOVERNMENTALFUNDS
BALANCE SHEET
JUNE 30,2010
State Fiscal Nonmajor Total
Stabilization Stabilization Community Governmental Governmental
ASSETS General Fund Fund Preservation Funds Funds
Cash and cash equivalents.................................... $ 6,472,529 $ 69,345 $ 2,222,033 $ 5,497,621 $ 6,503,401 $ 20,764,929
Investments......................................................... - - - - 199,790 199,790
Receivables,net of uncollectibles:
Real estate and personal property taxes............... 626,231 - 626,231
Tax liens......................................................... 1,573,938 1,573,938
Motor vehicle and other excise taxes.................... 305,192 - 305,192
Community preservation.................................... - 17,225 - 17,225
Departmental and other..................................... 194,463 - 99,878 294,341
Intergovernmental............................................ 1,902,989 386,099 1,391,105 3,680,193
Tax foreclosures................................................... 392,513 - - - 392,513
TOTALASSETS.................................................. $ 11,467,855 $ 69,345 $ 2,222,033 $ 5,900,945 $ 8,194,174 $ 27,854,352
LIABILITIES AND FUND BALANCES
LIABILITIES:
Warrants payable............................................. $ 1,197,834 $ - $ $ 20,732 $ 555,680 $ 1,774,246
Accrued payroll................................................ 2,543,633 59,345 - 278,954 2,881,932
Tax refunds payable......................................... 747,000 - - 747,000
Liabilities due depositors.................................... 106,160 106,160
Other liabilities................................................. 67,586 - - 67,586
Deferred revenues............................................ 4,777,443 403,324 1,073,095 6,253,862
Notes payable................................................. - 1,288,000 - 1,288,000
TOTAL LIABILITIES............................................. 9,439,656 59,345 1,712,056 1,907,729 13,118,786
FUND BALANCES:
Reserved for
Encumbrances and continuing appropriations.... 266,692 266,692
Debt service................................................ 1,102,818 - 1,102,818
Perpetual permanent funds............................ - 29,111 29,111
Unreserved:
Undesignated,reported in:
General fund........................................... 658,689 - - - 658,689
Special revenue funds............................... - 10,000 2,222,033 4,188,889 2,634,595 9,055,517
Capital projects funds................................ - - - 3,163,123 3,163,123
Permanent funds...................................... - 459,616 459,616
TOTAL FUND BALANCES..................................... 2,028,199 10,000 2,222,033 4,188,889 6,286,445 14,735,566
TOTAL LIABILITIES AND FUND BALANCES............ $ 11,467,855 $ 69,345 $ 2,222,033 $ 5,900,945 $ 8,194,174 $ 27,854,352
See notes to basic financial statements.
Town of North Andover,Massachusetts 16 Basic Financial Statements
RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET
TOTAL FUND BALANCES TO THE STATEMENT OF NET ASSETS
JUNE 30, 2010
Total governmental fund balances....................................................................... $ 14,735,566
Capital assets(net)used in governmental activities are not financial resources
and,therefore, are not reported in the funds.................................................... 134,046,177
Accounts receivable are not available to pay for current-period
expenditures and,therefore, are deferred in the funds....................................... 6,253,862
Internal service funds are used by management to account for unemployment,
health insurance activities. The assets and liabilities of the internal service funds
are included in the governmental activities in the statement of net assets.............. 2,051,013
In the statement of activities, interest is accrued on outstanding long-term debt,
whereas in governmental funds interest is not reported until due......................... (509,659)
Long-term liabilities are not due and payable in the current period and,therefore,
are not reported in the governmental funds.
Bonds and notes payable, net of unamortized premiums
and deferred losses on refundings........................................................... (36,917,718)
Other postemployment benefits................................................................. (13,322,006)
Compensated absences.......................................................................... (1,540,000)
Net effect of reporting long-term liabilities.............................................. (51,779,724)
Net assets of governmental activities................................................................... $ 104,797,235
See notes to basic financial statements.
Town of North Andover,Massachusetts 17 Basic Financial Statements
GOVERNMENTALFUNDS
STATEMENT OF REVENUES,EXPENDITURES AND CHANGES IN FUND BALANCES
FISCAL YEAR ENDED JUNE 30,2010
State Fiscal Nonmajor Total
Stabilization Stabilization Community Governmental Governmental
General Fund Fund Preservation Funds Funds
REVENUES:
Real estate and personal property taxes,
net of tax refunds................................ $ 56,703,210 $ $ $ $ $ 56,703,210
Tax and utility liens.................................. 282,122 282,122
Payments in lieu of taxes.......................... 1,707,282 131,539 1,838,821
Community Preservation Surcharges.......... - 1,257,548 - 1,257,548
Motor vehicle and other excise taxes........... 3,515,205 - - 3,515,205
Charges for services................................ 793,374 3,417,450 4,210,824
Penalties and interest on taxes.................. 355,251 - 355,251
Licenses and permits............................... 227,766 403,750 631,516
Fines and forfeitures................................ 120,877 - - 120,877
Intergovernmental................................... 14,824,029 439,018 489,834 4,081,451 19,834,332
Departmental and other............................ 1,103,852 - - 335,573 1,439,425
Contributions.......................................... - - 466,352 466,352
Investment income................................. 396,306 - 52,497 55,027 13,068 516,898
TOTAL REVENUES........................ 80,029,274 439,018 52,497 1,802,409 8,849,183 91,172,381
EXPENDITURES:
Current:
General government............................ 2,566,775 - - - 143,540 2,710,315
Public safety....................................... 8,885,597 - 2,959,124 11,844,721
Education.......................................... 36,709,223 429,018 7,187,513 44,325,754
Public works....................................... 4,071,651 - 1,597,414 5,669,065
Health and human services................... 921,834 - 441,996 1,363,830
Culture and recreation.......................... 807,017 2,988,023 108,642 3,903,682
Pension benefits................................. 8,959,530 - - 8,959,530
Property and liability insurance............... 294,085 294,085
Employee benefits............................... 7,636,441 7,636,441
State and county charges......................... 2,307,758 2,307,758
Debt service:
Principal............................................ 5,348,471 5,348,471
Interest............................................. 1,299,581 1,299,581
TOTAL EXPENDITURES.................. 79,807,963 429,018 2,988,023 12,438,229 95,663,233
EXCESS(DEFICIENCY)OF REVENUES
OVER EXPENDITURES........................... 221,311 10,000 52,497 (1,185,614) (3,589,046) (4,490,852)
OTHER FINANCING SOURCES(USES):
Issuance of bonds and notes..................... - - - 4,171,222 4,171,222
Premium from issuance of bonds............... 10,417 - - 10,417
Transfers in............................................ 1,241,193 905,000 975,555 3,121,748
Transfers out.......................................... (1,036,380) - (1,169,112) (2,205,492)
TOTAL OTHER FINANCING
SOURCES(USES)...................... 215,230 - 905,000 3,977,665 5,097,895
NET CHANGE IN FUND BALANCES.............. 436,541 10,000 957,497 (1,185,614) 388,619 607,043
FUND BALANCES AT BEGINNING OF YEAR.. 1,591,658 - 1,264,536 5,374,503 5,897,826 14,128,523
FUND BALANCES AT END OF YEAR............ $ 2,028,199 $ 10,000 $ 2,222,033 $ 4,188,889 $ 6,286,445 $ 14,735,566
See notes to basic financial statements.
Town of North Andover,Massachusetts 18 Basic Financial Statements
RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES,
AND CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS
TO THE STATEMENT OF ACTIVITIES
FISCAL YEAR ENDED JUNE 30,2010
Net change in fund balances-total governmental funds................................................... $ 607,043
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.
Capitaloutlay.............................................................................................. 6,957,120
Depreciation expense.................................................................................... (5,495,680)
Net effect of reporting capital assets......................................................... 1,461,440
Revenues in the Statement of Activities that do not provide current financial
resources are fully deferred in the Statement of Revenues, Expenditures and
Changes in Fund Balances. Therefore,the recognition of revenue for various
types of accounts receivable(i.e., real estate and personal property, motor
vehicle excise,etc.)differ between the two statements. This amount represents
the net change in deferred revenue...................................................................... (1,559,058)
The issuance of long-term debt(e.g., bonds and leases)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
transaction, however, has any effect on net assets. Also,governmental funds
report the effect of premiums,discounts,and similar items when debt is
first issued,whereas these amounts are deferred and amortized in the
Statement of Activities.
Issuance of bonds and notes.......................................................................... (4,171,222)
Debt service principal payments...................................................................... 5,348,471
Amortization of deferred losses on refundings.................................................... (192,901)
Net effect of reporting long-term debt........................................................ 984,348
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.
Net change in compensated absences accrual................................................... 14,000
Net change in accrued interest on long-term debt................................................ (13,846)
Net change in other postemployment benefits.................................................... (7,118,281)
Net effect of recording long-term liabilities and amortizing deferred losses........ (7,118,127)
Internal service funds are used by management to account for health
insurance and workers'compensation activities.
The net activity of internal service funds is reported with Governmental Activities...... (819,359)
Change in net assets of governmental activities.............................................................. $ (6,443,713)
See notes to basic financial statements.
Town of North Andover,Massachusetts 19 Basic Financial Statements
PROPRIETARY FUNDS
STATEMENT OF NET ASSETS
JUNE 30,2010
Business-type Activities-Enterprise Funds Governmental
Activities-
Osgood Internal Service
Water Sewer Hill Total Funds
ASSETS
CURRENT:
Cash and cash equivalents.................................... $ 3,144,146 $ 5,324,547 $ 67,250 $ 8,535,943 $ 2,930,028
Receivables,net of allowance for uncollectibles:
Userfees....................................................... 1,324,768 1,384,265 - 2,709,033 -
Utility liens...................................................... 98,396 28,994 127,390
Intergovernmental............................................ - 140,047 - 140,047 -
Total current assets...................................... 4,567,310 6,877,853 67,250 11,512,413 2,930,028
NONCURRENT:
Receivables,net of allowance for uncollectibles:
Intergovernmental............................................ - 993,664 - 993,664 -
Capital assets,nondepreciable............................... 1,982,535 133,733 4,000,000 6,116,268
Capital assets,net of accumulated depreciation......... 26,600,105 22,026,893 1,515,895 50,142,893
Total noncurrent assets................................. 28,582,640 23,154,290 5,515,895 57,252,825
TOTAL ASSETS...................................................... 33,149,950 30,032,143 5,583,145 68,765,238 2,930,028
LIABILITIES
CURRENT:
Warrants payable................................................. 55,025 387,077 - 442,102 40,015
Health claims payable........................................... - - - 839,000
Accrued interest................................................... 96,422 163,942 260,364 -
Court judgments.................................................. - 56,000 56,000
Bonds and notes payable...................................... 2,297,889 1,641,462 3,939,351 -
Total current liabilities................................... 2,449,336 2,248,481 4,697,817 879,015
NONCURRENT:
Court judgments.................................................. - 56,000 56,000 -
Other postemployment benefits.............................. 604,642 345,429 950,071
Bonds and notes payable...................................... 11,967,162 14,587,300 26,554,462
Total noncurrent liabilities.............................. 12,571,804 14,988,729 27,560,533
TOTAL LIABILITIES................................................. 15,021,140 17,237,210 32,258,350 879,015
NET ASSETS
Invested in capital assets,net of related debt................. 15,715,989 11,666,531 5,515,895 32,898,415 -
Unrestricted............................................................ 2,412,821 1,128,402 67,250 3,608,473 2,051,013
TOTAL NET ASSETS............................................... $ 18,128,810 $ 12,794,933 $ 5,583,145 $ 36,506,888 $ 2,051,013
See notes to basic financial statements.
Town of North Andover,Massachusetts 20 Basic Financial Statements
PROPRIETARY FUNDS
STATEMENT OF REVENUES,EXPENSES AND CHANGES IN FUND NET ASSETS
FISCAL YEAR ENDED JUNE 30,2010
Business-type Activities-Enterprise Funds Governmental
Activities-
Osgood Internal Service
Water Sewer Hill Total Funds
OPERATING REVENUES:
Employee contributions....................................... $ $ $ $ $ 1,974,766
Employer contributions........................................ 6,925,546
Charges for services........................................... 5,305,889 4,661,370 285,188 10,252,447 -
Penaltiesandinterest........................................... 21,978 20,769 - 42,747 -
TOTAL OPERATING REVENUES....................... 5,327,867 4,682,139 285,188 10,295,194 8,900,312
OPERATING EXPENSES:
Cost of service and administration.......................... 1,516,431 695,242 171,017 2,382,690 -
GLDS assessment.............................................. - 1,371,463 - 1,371,463
Repairs and maintenance..................................... 129,788 70,981 6,613 207,382
Depreciation....................................................... 784,981 890,965 81,965 1,757,911 -
Employee benefits............................................... - - - - 9,735,646
TOTAL OPERATING EXPENSES....................... 2,431,200 3,028,651 259,595 5,719,446 9,735,646
OPERATING INCOME(LOSS)............................ 2,896,667 1,653,488 25,593 4,575,748 (835,334)
NONOPERATING REVENUES(EXPENSES):
Investment income.............................................. 2,833 4,214 - 7,047 15,975
Interest expense................................................. (541,103) (615,813) (1,156,916) -
Intergovernmental............................................... 170,814 170,814 -
TOTAL NONOPERATING
REVENUES(EXPENSES),NET........................ (538,270) (440,785) - (979,055) 15,975
INCOME(LOSS)BEFORE TRANSFERS.............. 2,358,397 1,212,703 25,593 3,596,693 (819,359)
TRANSFERS:
Transfers in........................................................ - - 131,380 131,380
Transfers out...................................................... (623,712) (383,783) (40,141) (1,047,636)
TOTAL OPERATING TRANSFERS...................... (623,712) (383,783) 91,239 (916,256)
CHANGE IN NET ASSETS................................. 1,734,685 828,920 116,832 2,680,437 (819,359)
NET ASSETS AT BEGINNING OF YEAR................... 16,394,125 11,966,013 5,466,313 33,826,451 2,870,372
NET ASSETS AT END OF YEAR............................. $ 18,128,810 $ 12,794,933 $ 5,583,145 $ 36,506,888 $ 2,051,013
See notes to basic financial statements.
Town of North Andover,Massachusetts 21 Basic Financial Statements
PROPRIETARY FUNDS
STATEMENT OF CASH FLOWS
FISCAL YEAR ENDED JUNE 30,2010
Business-type Activities-Enterprise Funds
Activities-
Osgood Internal Service
Water Sewer Hill Total Funds
CASH FLOWS FROM OPERATING ACTIVITIES:
Receipts from customers and users.....................................................$ 5,316,214 $ 4,618,523 $ 285,188 $ 10,219,925 $ 1,974,766
Receipts from interfund services provided............................................. - - - - 6,925,546
Payments to vendors........................................................................ (862,024) (1,286,652) (142,548) (2,291,224) -
Paymentstoemployees.................................................................... (728,007) (511,994) (113,469) (1,353,470)
Payments for interfund services used................................................... (9,674,323)
NET CASH FROM OPERATING ACTIVITIES........................................... 3,726,183 2,819,877 29,171 6,575,231 (774,011)
CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES:
Transfers in.................................................................................... - - 131,380 131,380
Transfers out.................................................................................. (623,712) (383,783) (40,141) (1,047,636)
Advances to/from other funds............................................................ (252,327) (48,860) (301,187)
NET CASH FROM NONCAPITAL FINANCING ACTIVITIES........................ (876,039) (383,783) 42,379 (1,217,443)
CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES:
Proceeds from the issuance of bonds and notes.................................... 2,025,000 3,844,499 - 5,869,499
Acquisition and construction of capital assets........................................ (826,590) (1,038,795) (4,300) (1,869,685)
Principal payments on bonds and notes............................................... (2,150,107) (5,228,443) (7,378,550)
Interest expense.............................................................................. (524,683) (477,985) (1,002,668)
NET CASH FROM CAPITAL AND RELATED FINANCING ACTIVITIES......... (1,476,380) (2,900,724) (4,300) (4,381,404) -
CASH FLOWS FROM INVESTING ACTIVITIES:
Investment income........................................................................... 2,833 4,214 - 7,047 15,975
NET CHANGE IN CASH AND CASH EQUIVALENTS................................. 1,376,597 (460,416) 67,250 983,431 (758,036)
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR..................... 1,767,549 5,784,963 - 7,552,512 3,688,064
CASH AND CASH EQUIVALENTS AT END OF YEAR $ 3,144,146 $ 5,324,547 $ 67,250 $ 8,535,943 $ 2,930,028
RECONCILIATION OF OPERATING INCOME(LOSS)TO NET CASH
FROM OPERATING ACTIVITIES:
Operating income(loss).................................................................... $ 2,896,667 $ 1,653,488 $ 25,593 $ 4,575,748 $ (835,334)
Adjustments to reconcile operating income(loss)to net
cash from operating activities:
Depreciation............................................................................... 784,981 890,965 81,965 1,757,911
Changes in assets and liabilities:
User fees............................................................................... 15,140 (33,327) - (18,187)
Utility liens............................................................................. (26,793) 9,486 (17,307)
Intergovernmental................................................................... (39,775) (39,775)
Warrants payable.................................................................... (77,262) 301,187 (18,367) 205,558 (23,677)
Health claims payable.............................................................. - - 85,000
Court judgments...................................................................... - (56,000) (56,000) -
Other postemployment benefits.................................................. 133,450 93,853 (60,020) 167,283 -
Total adjustments................................................................ 829,516 1,166,389 3,578 1,999,483 61,323
NET CASH FROM OPERATING ACTIVITIES........................................... $ 3,726,183 $ 2,819,877 $ 29,171 $ 6,575,231 $ (774,011)
NONCASH INVESTING,CAPITAL,AND FINANCING ACTIVITIES:
Intergovernmental debt service subsidy(MWPAT)................................. $ - $ 88,016 $ $ 88,016 $
Net change in deferred charges.......................................................... 98,677 (214,978) (116,301)
See notes to basic financial statements.
Town of North Andover,Massachusetts 22 Basic Financial Statements
FIDUCIARY FUNDS
STATEMENT OF FIDUCIARY NET ASSETS
JUNE 30, 2010
Private
Purpose Agency
Trust Funds Funds
ASSETS
CURRENT:
Cash and cash equivalents........................................ $ 70,738 $ 4,223,322
LIABILITIES
Warrants payable..................................................... - 3,037
Liabilities due depositors........................................... - 4,220,285
TOTAL LIABILITIES..................................................... - 4,223,322
NET ASSETS
Held in trust for other purposes................................... $ 70,738 $ -
See notes to basic financial statements.
Town of North Andover, Massachusetts 23 Basic Financial Statements
FIDUCIARY FUNDS
STATEMENT OF CHANGES IN FIDUCIARY NET ASSETS
FISCAL YEAR ENDED JUNE 30, 2010
Private
Purpose
Trust Funds
ADDITIONS:
Net investment income:
Interest.................................................................. $ 55
NET ASSETS AT BEGINNING OF YEAR.......................... 70,683
NET ASSETS AT END OF YEAR.................................... $ 70,738
See notes to basic financial statements.
Town of North Andover, Massachusetts 24 Basic Financial Statements
Notes to Basic Financial Statements Fiscal Year Ended June 30, 2010
NOTE 1 -SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accompanying basic financial statements of the Town of North Andover, Massachusetts (the Town) have
been prepared in accordance with accounting principles generally accepted in the United States of America
(GAAP). The Governmental Accounting Standards Board (GASB) is the recognized standard-setting body for
establishing governmental accounting and financial reporting principles. The significant accounting policies are
described herein.
A. Reporting Entity
The Town is a municipal corporation that is governed by an elected Board of Selectmen (the Board).
For financial reporting purposes, the Town has included all funds, organizations, account groups, agencies,
boards, commissions and institutions. The Town has also considered all potential component units for which it is
financially accountable as well as other organizations for which the nature and significance of their relationship
with the Town are such that exclusion would cause the basic financial statements to be misleading or incomplete.
As required by GAAP, these basic financial statements present the Town (the primary government) and its
component units. It has been determined that there are no component units that meet the requirements for
inclusion in the Town's financial statements.
Joint Venture
A joint venture is an organization (resulting from a contractual arrangement) that is owned, operated and
governed by two or more participants as a separate and specific activity subject to joint control in which the
participants retain an ongoing financial interest or ongoing financial responsibility. Joint control means that no
single participant has the ability to unilaterally control the financial or operating policies of the joint venture.
The Town participates in the following joint ventures with other municipalities to pool resources and share the
costs, risks, and rewards of providing goods and services to venture participants directly, or for the benefit of the
general public or specified recipients.
Greater Lawrence Sanitary District(GLSD)
GLSD operates a wastewater treatment plant for five member communities and is located within the Town. The
GLSD is governed by a seven member board consisting of one appointed representative from the Town. The
Town is indirectly liable for the GLSD's debt and other expenditures and is assessed annually for its share of
operating and capital costs. For the fiscal year ended June 30, 2010, the Town's assessment totaled $1,371,463.
Separate financial statements may be obtained by writing to the Treasurer of the GLSD at 240 Charles Street,
North Andover, MA 01845.
Greater Lawrence Regional Technical Vocational School(GLRTVS)
The GLRTVS is governed by a seven member school committee consisting of one elected representative from
the Town. The Town is indirectly liable for the GLRTVS' debt and other expenditures and is assessed annually
for its share of operating and capital costs. For the fiscal year ended June 30, 2010, the Town's assessment
totaled $257,553. Separate financial statements may be obtained by writing to the Treasurer of the GLRTVS at
57 River Road, Andover, MA 01810.
Town of North Andover, Massachusetts 25 Basic Financial Statements
Notes to Basic Financial Statements Fiscal Year Ended June 30, 2010
B. Government-Wide and Fund Financial Statements
Government-Wide Financial Statements
The government-wide financial statements (i.e., statement of net assets and the statement of changes in net
assets) report information on all of the non-fiduciary activities of the primary government and its component units.
Governmental activities, which are primarily supported by taxes and intergovernmental revenues, are reported
separately from business-type activities, which are supported primarily by user fees and charges.
Fund Financial Statements
Separate financial statements are provided for governmental funds, proprietary funds, and fiduciary funds, even
though fiduciary funds are excluded from the government-wide financial statements. Major individual
governmental funds and major individual enterprise funds are reported as separate columns in the fund financial
statements. Nonmajor funds are aggregated and displayed in a single column.
Major Fund Criteria
Major funds must be reported if the following criteria are met:
• If the total assets, liabilities, revenues, or expenditures/expenses of an individual governmental or
enterprise fund are at least 10 percent of the corresponding element (assets, liabilities, etc.) for all
funds of that category or type (total governmental or total enterprise funds), and
• If the total assets, liabilities, revenues, or expenditures/expenses of the individual governmental
fund or enterprise fund are at least 5 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.
Fiduciary funds are reported by fund type.
C. Measurement Focus, Basis of Accounting and Financial Statement Presentation
Government-Wide Financial Statements
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 the liabilities are incurred. Real estate and personal 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 have been met.
The statement of activities demonstrates the degree to which the direct expenses of a particular function or
segment are offset by program revenues. Direct expenses are those that are clearly identifiable with a specific
function or segment. Program revenues include the following:
• Charges to customers or applicants who purchase, use, or directly benefit from goods, services, or
privileges provided by a given function or segment.
Town of North Andover, Massachusetts 26 Basic Financial Statements
Notes to Basic Financial Statements Fiscal Year Ended June 30, 2010
• Grants and contributions that are restricted to meeting the operational requirements of a particular
function or segment.
• Grants and contributions that are restricted to meeting the capital requirements of a particular function or
segment.
Taxes and other items not identifiable as program revenues are reported as general revenues.
For the most part, the effect of interfund activity has been removed from the government-wide financial
statements. However, the effect of interfund services provided and used between functions is not eliminated as
the elimination of these charges would distort the direct costs and program revenues reported for the functions
affected.
Fund Financial Statements
Governmental fund financial statements are reported using the flow of current financial resources measurement
focus and the modified accrual basis of accounting. Under the modified accrual basis of accounting, revenues
are recognized when susceptible to accrual (i.e., measurable and available). Measurable means the amount of
the transaction can be determined and available means 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, and certain
compensated absences, claims and judgments which are recognized when the obligations are expected to be
liquidated with current expendable available resources.
Real estate and personal property tax revenues are considered available if they are collected within 60 days after
fiscal year-end. Investment income is susceptible to accrual. Other receipts and tax revenues become
measurable and available when the cash is received and are recognized as revenue at that time.
Entitlements and shared revenues are recorded at the time of receipt or earlier if the susceptible to accrual criteria
is met. Expenditure driven grants recognize revenue when the qualifying expenditures are incurred and all other
grant requirements are met.
The following major governmental funds are reported:
The general fund is the primary operating fund. It is used to account for all financial resources, except those that
are required to be accounted for in another fund.
The state fiscal stabilization fund is used to account for federal funds that were received through the American
Recovery and Reinvestment Act.
The stabilization fund is a special revenue fund used to account for the accumulation of resources to provide
general and/or capital reserves. Use of this fund is subject to Town Meeting approval.
The community preservation fund is a special revenue fund used to account for the 3% local real estate tax
surcharge on nonexempt property (and matching state trust fund distribution) that can be used for open space,
historic resource and affordable housing purposes. Property exempt from the surcharge consists of the first
$100,000 of all residential property and also property owned by low income seniors with a low or moderate
income as defined by Massachusetts Department of Revenue (DOR) guidelines. Disbursements from this fund
must originate from the Community Preservation Committee and be approved by Town Meeting.
Town of North Andover, Massachusetts 27 Basic Financial Statements
Notes to Basic Financial Statements Fiscal Year Ended June 30, 2010
The nonmajor governmental funds consist of other special revenue, capital projects 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 fund is used to account for the proceeds of specific revenue sources (other than permanent
funds or capital projects funds)that are restricted by law or administrative action to expenditures for specified
purposes.
The capital projects fund is used to account for financial resources to be used for the acquisition or construction of
major capital facilities (other than those financed by Enterprise Funds).
The permanent fund is used to account for financial resources that are legally restricted to the extent that only
earnings, not principal, may be used for purposes that support the governmental programs.
Proprietary fund financial statements are reported using the flow of economic resources measurement focus and
use the accrual basis of accounting. Under this method, revenues are recorded when earned and expenses are
recorded when the liabilities are incurred.
Proprietary funds distinguish operating revenues and expenses from nonoperating items. Operating revenues
and expenses generally result from providing services and producing and delivering goods in connection with the
proprietary funds principle ongoing operations. All revenues and expenses not meeting this definition are
reported as nonoperating revenues and expenses.
The following major proprietary funds are reported:
The water enterprise fund is used to account for the water activities.
The sewer enterprise fund is used to account for the sewer activities.
The Osgood Hill enterprise fund is used to account for the operation of Osgood Hill Estate activities.
Additionally, the following proprietary fund type is reported:
The internal service fund is used to account for the financing of services provided by one department to other
departments or governmental units. This fund is used to account for risk financing activities related to employees'
health insurance.
Fiduciary fund financial statements are reported using the flow of economic resources measurement focus and
use the accrual basis of accounting. Fiduciary funds are used to account for assets held in a trustee capacity for
others that cannot be used to support the governmental programs.
The following fiduciary fund types are reported:
The private-purpose trust fund is used to account for trust arrangements that exclusively benefit individuals,
private organizations, or other governments. Some of these trusts have donor restrictions and trustee policies
that do not allow the endowment portion and any unrealized appreciation to be spent. The donor restrictions and
trustee policies only allows the trustees to authorize spending of the realized investment earnings. The Town's
educational scholarship trusts are accounted for in this fund.
Town of North Andover, Massachusetts 28 Basic Financial Statements
Notes to Basic Financial Statements Fiscal Year Ended June 30, 2010
The agency fund is used to account for assets held in a custodial capacity. Such assets consist primarily of
performance bonds and bid deposits. Agency funds do not present the results of operations or have a
measurement focus.
Government-Wide and Fund Financial Statements
Private-sector standards of accounting and financial reporting issued prior to December 1, 1989, generally are
followed in both the government-wide and proprietary fund financial statements to the extent that those standards
do not conflict with or contradict guidance of the Governmental Accounting Standards Board. Governments also
have the option of following subsequent private-sector guidance for their business-type activities and enterprise
funds, subject to this same limitation. The government has elected not to follow subsequent private-sector
guidance.
D. Cash and Investments
Government-Wide and Fund Financial Statements
Cash and cash equivalents are considered to be cash on hand, demand deposits and short-term investments with
an original maturity of three months or less from the date of acquisition. Investments are carried at fair value.
E. Accounts Receivable
Government-Wide and Fund Financial Statements
The recognition of revenue related to accounts receivable reported in the government-wide financial statements
and the proprietary funds and fiduciary funds financial statements are reported under the accrual basis of
accounting. The recognition of revenue related to accounts receivable reported in the governmental funds
financial statements are reported under the modified accrual basis of accounting.
Real Estate, Personal Property Taxes and Tax Liens
Real estate and personal property taxes are levied and based on values assessed on January 1St of every year.
Assessed values are established by the Board of Assessor's for 100% of the estimated fair market value. Taxes
are due on August 1 st, November 1 st, February 1 st and May 1 st and are subject to penalties and interest if they are
not paid by the respective due date.
Real estate tax liens are processed one year after the close of the valuation year on delinquent properties and are
recorded as receivables in the fiscal year they are processed.
Real estate receivables are secured via the tax lien process and are considered 100% collectible. Accordingly,
an allowance for uncollectibles is not reported.
Personal property taxes cannot be secured through the lien process. The allowance for uncollectibles is
estimated based on historical trends and specific account analysis.
Motor Vehicle Excise
Motor vehicle excise taxes are assessed annually for each vehicle registered and are recorded as receivables in
the fiscal year of the levy. The Commonwealth is responsible for reporting the number of vehicles registered and
the fair values of those vehicles. The tax calculation is the fair value of the vehicle multiplied by $25 per$1,000 of
value.
Town of North Andover, Massachusetts 29 Basic Financial Statements
Notes to Basic Financial Statements Fiscal Year Ended June 30, 2010
The allowance for uncollectibles is estimated based on historical trends and specific account analysis.
Community Preservation Surcharges
Community preservation surcharges are levied annually at a rate of 3% of resident's real estate tax bills with
exemptions for the first$100,000 of residential property and property owned by qualified persons with low income
and seniors (60+)with low or moderate income defined by DOR guidelines. The surcharge is due with the real
estate tax on August 1st, November 1st, February 1st and May 1st and are subject to penalties and interest if they
are not paid by the respective due date. Overdue surcharges are included on the tax liens processed on
delinquent real estate taxes. Surcharges are recorded as receivables in the fiscal year of the levy.
Since the receivables are secured via the lien process, these accounts are considered 100% collectible and
therefore do not report an allowance for uncollectibles.
Water and Sewer User Charges and Utility Liens
User fees are levied monthly based on individual meter readings and are subject to penalties and interest if they
are not paid by the respective due date. Water and sewer liens are processed approximately six months after the
end of the fiscal year and are included as a lien on the property owner's tax bill. Water and sewer charges and
liens are recorded as receivables in the fiscal year of the levy.
Since the receivables are secured via the lien process, these accounts are considered 100% collectible and
therefore do not report an allowance for uncollectibles.
Departmental and Other
Departmental and other receivables consist primarily of amounts due from ambulance charges and police details.
These receivables are recorded when the applicable service has been performed.
The allowance for uncollectibles is estimated based on historical trends and specific account analysis.
Intergovernmental
Various federal and state grants for operating and capital purposes are applied for and received annually. For
non-expenditure driven grants, receivables are recorded as soon as all eligibility requirements imposed by the
provider have been met. For expenditure driven grants, receivables are recorded when the qualifying
expenditures are incurred and all other grant requirements are met.
These receivables are considered 100% collectible and therefore do not report an allowance for uncollectibles.
F. Inventories
Government-Wide and Fund Financial Statements
Inventories are recorded as expenditures at the time of purchase. Such inventories are not material in total to the
government-wide and fund financial statements, and therefore are not reported.
Town of North Andover, Massachusetts 30 Basic Financial Statements
Notes to Basic Financial Statements Fiscal Year Ended June 30, 2010
G. Capital Assets
Government-Wide and Proprietary Fund Financial Statements
Capital assets, which include land, land improvements, buildings and improvements, machinery and equipment,
library books, vehicles, infrastructure (e.g., roads, treatment plants, pump stations ,sewer mains and similar items)
and construction-in-progress, are reported in the applicable governmental or business-type activity column of the
government-wide financial statements and in the proprietary fund financial statements. Capital assets are
recorded at historical cost, or at estimated historical cost, if actual historical cost is not available. Donated capital
assets are recorded at the estimated fair market value at the date of donation. Except for the capital assets of the
governmental activities column in the government-wide financial statements, construction period interest is
capitalized on constructed capital assets.
All purchases and construction costs in excess of$10,000 are capitalized at the date of acquisition or
construction, respectively, with expected useful lives of greater than one year.
Capital assets (excluding land) are depreciated on a straight-line basis. The estimated useful lives of capital
assets are as follows:
Estimated
Useful
Life
Capital Asset Type (in years)
Land improvements................................. 20-30
Buildings and improvements..................... 7-50
Machinery and equipment......................... 3-20
Library books......................................... 10
Vehicles................................................ 5
Treatment plants..................................... 10-40
Pump stations........................................ 20-40
Reservoirs............................................. 20-40
Infrastructure.......................................... 20-60
The cost of normal maintenance and repairs that do not add to the value of the assets or materially extend asset
lives are not capitalized and are treated as expenses when incurred. Improvements are capitalized.
Governmental Fund Financial Statements
Capital asset costs are recorded as expenditures in the acquiring fund in the fiscal year of the purchase.
H. Interfund Receivables and Payables
During the course of its operations, transactions occur between and within individual funds that may result in
amounts owed between funds.
Government-Wide Financial Statements
Transactions of a buyer/seller nature between and within governmental funds are eliminated from the
governmental activities in the statement of net assets. Any residual balances outstanding between the
governmental activities and business-type activities are reported in the statement of net assets as "internal
balances".
Town of North Andover, Massachusetts 31 Basic Financial Statements
Notes to Basic Financial Statements Fiscal Year Ended June 30, 2010
Fund Financial Statements
Transactions of a buyer/seller nature between and within funds are not eliminated from the individual fund
statements. Receivables and payables resulting from these transactions are classified as "Due from other funds"
or"Due to other funds" on the balance sheet.
I. 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.
Government-Wide Financial Statements
Transfers between and within governmental funds are eliminated from the governmental activities in the
statement of net assets. Any residual balances outstanding between the governmental activities and business-
type activities are reported in the statement of activities as "Transfers, net".
Fund Financial Statements
Transfers between and within funds are not eliminated from the individual fund statements and are reported as
transfers in and transfers out.
J. Deferred Revenue
Deferred revenue at the governmental fund financial statement level represents billed receivables that do not
meet the available criterion in accordance with the current financial resources measurement focus and the
modified accrual basis of accounting. Deferred revenue is recognized as revenue in the conversion to the
government-wide (full accrual) financial statements.
K. Net Assets and Fund Equity
Government-Wide Financial Statements(Net Assets)
Net assets reported as "invested in capital assets, net of related debt" 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 assets.
Net assets are reported as restricted when amounts that are not available for appropriation or are legally
restricted by outside parties for a specific future use.
Net assets have been "restricted for"the following:
"Debt service" represents amounts accumulated from the Massachusetts School Building Authority (MSBA)to
reduce school construction excluded debt service costs over the life of the loans.
"Community preservation" represents amounts restricted for the purpose of acquiring land for conservation,
recreational, and affordable housing purposes.
"Permanent funds—expendable" represents the amount of realized and unrealized investment earnings of donor
restricted trusts. The donor restrictions and trustee policies only allows the trustees to approve spending of the
realized investment earnings that support governmental programs.
Town of North Andover, Massachusetts 32 Basic Financial Statements
Notes to Basic Financial Statements Fiscal Year Ended June 30, 2010
"Permanent funds— nonexpendable" represents amounts held in trust for which only investment earnings may be
expended.
"Gifts and grants" represents restrictions placed on assets from outside parties.
Fund Financial Statements(Fund Balances)
Fund balances are reserved for amounts that are not available for appropriation or are legally restricted by outside
parties for a specific future use. Designations of fund balance represent tentative management plans that are
subject to change.
Fund balances have been "reserved for"the following:
"Encumbrances and continuing appropriations" represents amounts obligated under purchase orders, contracts
and other commitments for expenditures that are being carried over to the ensuing fiscal year.
"Debt service" represents amounts accumulated from the Massachusetts School Building Authority (MSBA)to
reduce school construction excluded debt service costs over the life of the loans.
"Perpetual permanent funds" represents amounts held in trust for which only investment earnings may be
expended.
L. Long-term debt
Government-Wide and Proprietary Fund Financial Statements
Long-term debt is reported as liabilities in the government-wide and proprietary fund statement of net assets.
Material bond premiums and discounts are deferred and amortized over the life of the bonds using the straight-
line method. Bonds payable are reported net of the applicable bond premium or discount.
Governmental Fund Financial Statements
The face amount of governmental funds long-term debt is reported as other financing sources. Bond premiums
and discounts, as well as issuance costs, are recognized in the current period. Bond premiums are reported as
other financing sources and bond discounts are reported as other financing uses. Issuance costs, whether or not
withheld from the actual bond proceeds received, are reported as general government expenditures.
M. 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 Massachusetts General Law (MGL).
N. Compensated Absences
Employees are granted vacation and sick leave in varying amounts based on collective bargaining agreements,
state laws and executive policies. Compensated absences liabilities related to both governmental and business-
type activities are normally paid from the funds reporting payroll and related expenditures.
Town of North Andover, Massachusetts 33 Basic Financial Statements
Notes to Basic Financial Statements Fiscal Year Ended June 30, 2010
Government-Wide and Proprietary Fund Financial Statements
Vested or accumulated vacation and sick leave are reported as liabilities and expensed as incurred.
Governmental Fund Financial Statements
Vested or accumulated vacation and sick leave, which will be liquidated with expendable available financial
resources, are reported as expenditures and fund liabilities upon maturity of the liability.
O. Use of Estimates
Government-Wide and Fund Financial Statements
The preparation of basic financial statements in conformity with GAAP requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and disclosure for contingent assets
and liabilities at the date of the basic financial statements and the reported amounts of the revenues and
expenditures/expenses during the fiscal year. Actual results could vary from estimates that were used.
P. Total Column
Government-Wide Financial Statements
The total column presented on the government-wide financial statements represents consolidated financial
information.
Fund Financial Statements
The total column on the fund financial statements is presented only to facilitate financial analysis. Data in this
column is not the equivalent of consolidated financial information.
Q. Individual Fund Deficits
Several individual fund deficits exist at June 30, 2010, within the special revenue funds. These deficits will be
funded with grant proceeds in subsequent fiscal years.
NOTE 2 -CASH 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 the
trust funds are held separately from those of other funds.
Statutes authorize the investment in obligations of the U.S. Treasury, agencies, and instrumentalities, certificates
of deposit, repurchase agreements, money market accounts, bank deposits and the State Treasurer's Investment
Pool (the Pool). The Treasurer may also invest trust funds in securities, other than mortgages or collateral loans,
which are legal for the investment of funds of savings banks under the laws of the Commonwealth. In addition,
there are various restrictions limiting the amount and length of deposits and investments.
The Pool meets the criteria of an external investment pool. The Pool is administered by the Massachusetts
Municipal Depository Trust(MMDT), which was established by the Treasurer of the Commonwealth who serves
as Trustee. The fair value of the position in the Pool is the same as the value of the Pool shares.
Town of North Andover, Massachusetts 34 Basic Financial Statements
Notes to Basic Financial Statements Fiscal Year Ended June 30, 2010
Custodial Credit Risk—Deposits
In the case of deposits, this is the risk that in the event of a bank failure, the Town's deposits may not be returned
to it. The Town's policy is to minimize custodial credit risk by only investing in highly rated banks, which is
determined through the utilization of a bank rating service. At fiscal year-end, the carrying amount of deposits
totaled $27,497,685 and the bank balance totaled $28,601,813. Of the bank balance, $1,665,780 was covered by
Federal Depository Insurance, $16,723,401, was covered by the depositor's insurance fund, and $10,212,632
was collateralized.
Investments
As of June 30, 2010, the Town had the following investments and maturities.
Maturities
Investment Type Fair Value 1-5 Years 6-10 Years
Debt Securities
Bond Mutual Funds....................................$ 92,949 $ - $ 92,949
Repurchase Agreements............................. 3,530,000 3,530,000 -
Total Debt Securities......................................... 3,622,949 $ 3,530,000 $ 92,949
Other Investments
Equity Mutual Funds.......................................... 106,841
Money Market Mutual Funds........................ 225,479
MMDT..................................................... 5,271,796
Total Investments..............................................$ 9,227,065
Custodial Credit Risk— Investments
For an investment, this is the risk that, in the event of a failure by the counterparty, the Town will not be able to
recover the value of its investments or collateral security that are in the possession of an outside party. The Town
did not have investments that were exposed to custodial credit risk. The Town's policy to minimize custodial
credit risk is to obtain from brokerage houses and broker/dealers 1) audited financial statements, 2) proof of
National Association of Security Dealers certification, 3) a statement that the dealer has read the Town's
investment policy and will comply with it and 4) be in business for no less than five years and have a minimum
capitalization of$10 million.
Interest Rate Risk
The Town's investment policy limits investment maturities to one year as a means of managing its exposure to fair
value losses arising from increasing interest rates. The Town participates in MMDT, which maintains a cash
portfolio and a short-term bond fund with combined average maturities of approximately three months.
Credit Risk
Standard and Poor's Investors Service rated $92,949 of bond mutual funds AAA. The $3,530,000 of repurchase
agreements and $5,271,796 of MMDT deposits were unrated. The Town's investment policy limits investments in
debt securities to U.S. Treasuries and U.S. Agency Obligations, which are AAA rated, and like-kind investments
that are fully collateralized.
Town of North Andover, Massachusetts 35 Basic Financial Statements
Notes to Basic Financial Statements Fiscal Year Ended June 30, 2010
Concentration of Credit Risk
The Town limits the amount the Town may invest in any one issuer to 10%. The Town does not have
investments in corporate bonds or equity securities and therefore does not have exposure to concentration of
credit risk.
NOTE 3 -RECEIVABLES
At June 30, 2010, receivables for the individual major and non-major governmental funds including the applicable
allowances for uncollectible accounts are as follows:
Allowance
Gross for Net
Amount Uncollectibles Amount
Receivables:
Real estate and personal property taxes......................... $ 722,231 $ (96,000) $ 626,231
Tax liens.................................................................. 1,573,938 - 1,573,938
Motor vehicle and other excise taxes.............................. 610,192 (305,000) 305,192
Community preservation surcharges.............................. 17,225 - 17,225
Departmental and other............................................... 872,633 (578,292) 294,341
Intergovernmental...................................................... 3,680,193 - 3,680,193
Total...................................................................... $ 7,476,412 $ (979,292) $ 6,497,120
At June 30, 2010, receivables for the water and sewer enterprise funds are as follows:
Allowance
Gross for Net
Amount Uncollectibles Amount
Receivables:
User charges............................................................ $ 2,709,033 $ - $ 2,709,033
Utility liens................................................................ 127,390 - 127,390
Intergovernmental...................................................... 1,133,711 - 1,133,711
$ 3,970,134 $ - $ 3,970,134
Governmental funds report deferred revenue in connection with receivables for revenues that are not considered
to be available to liquidate liabilities of the current period. At the end of the current fiscal year, the various
components of deferred revenue reported in the governmental funds were as follows:
Other
General Governmental
Fund Funds Total
Receivable and other asset type:
Real estate and personal property taxes......................... $ 456,688 $ - $ 456,688
Tax liens.................................................................. 1,573,938 - 1,573,938
Tax foreclosures........................................................ 392,513 - 392,513
Motor vehicle and other excise taxes.............................. 305,192 - 305,192
Community preservation surcharges.............................. - 17,225 17,225
Departmental and other............................................... 185,505 99,878 285,383
Intergovernmental (highway construction assistance)........ - 973,217 973,217
Intergovernmental (school construction assistance)........... 1,863,607 - 1,863,607
Intergovernmental (CPA state match)............................. - 386,099 386,099
Total...................................................................... $ 4,777,443 $ 1,476,419 $ 6,253,862
Town of North Andover, Massachusetts 36 Basic Financial Statements
Notes to Basic Financial Statements Fiscal Year Ended June 30, 2010
NOTE 4 -CAPITAL ASSETS
Capital asset activity for the fiscal year ended June 30, 2010, is as follows:
Beginning Ending
Governmental Activities: Balance Increases Decreases Balance
Capital assets not being depreciated:
Land.........................................................$ 17,657,609 $ 2,258,481 $ - $ 19,916,090
Construction in progress............................... 1,618,810 3,180,920 - 4,799,730
Total capital assets not being depreciated.... 19,276,419 5,439,401 - 24,715,820
Capital assets being depreciated:
Land improvements..................................... 3,257,450 - - 3,257,450
Buildings and building improvements............... 127,323,588 7,015 - 127,330,603
Machinery and equipment............................. 7,529,833 15,657 (42,000) 7,503,490
Library books............................................. 3,586,350 - - 3,586,350
Vehicles.................................................... 4,721,746 50,145 (23,000) 4,748,891
Infrastructure.............................................. 33,468,175 1,444,902 - 34,913,077
Total capital assets being depreciated......... 179,887,142 1,517,719 (65,000) 181,339,861
Less accumulated depreciation for:
Land improvements..................................... (1,936,591) (126,761) - (2,063,352)
Buildings and improvements.......................... (38,602,990) (3,353,696) - (41,956,686)
Machinery and equipment............................. (4,738,543) (473,644) 42,000 (5,170,187)
Library books............................................. (3,420,332) (55,640) - (3,475,972)
Vehicles.................................................... (3,296,420) (384,544) 23,000 (3,657,964)
Infrastructure.............................................. (14,583,948) (1,101,395) - (15,685,343)
Total accumulated depreciation.................. (66,578,824) (5,495,680) 65,000 (72,009,504)
Total capital assets being depreciated, net........... 113,308,318 (3,977,961) - 109,330,357
Total governmental activities capital assets, net.....$ 132,584,737 $ 1,461,440 $ - $ 134,046,177
Town of North Andover, Massachusetts 37 Basic Financial Statements
Notes to Basic Financial Statements Fiscal Year Ended June 30, 2010
Beginning Ending
Business-Type Activities: Balance Increases Decreases Balance
Capital assets not being depreciated:
Land.........................................................$ 6,097,262 $ - $ - $ 6,097,262
Construction in progress............................... 9,035 9,971 - 19,006
Total capital assets not being depreciated.... 6,106,297 9,971 - 6,116,268
Capital assets being depreciated:
Land improvements..................................... 221,142 4,300 - 225,442
Buildings and improvements.......................... 1,952,335 - - 1,952,335
Machinery and equipment............................. 1,860,262 224,850 - 2,085,112
Vehicles.................................................... 437,599 46,116 - 483,715
Treatment plants......................................... 16,573,234 - - 16,573,234
Pump stations............................................. 3,002,150 370,341 - 3,372,491
Reservoirs................................................. 1,477,296 - - 1,477,296
Infrastructure.............................................. 49,393,297 1,214,107 - 50,607,404
Total capital assets being depreciated......... 74,917,315 1,859,714 - 76,777,029
Less accumulated depreciation for:
Land improvements..................................... (80,712) (9,282) - (89,994)
Buildings and improvements.......................... (590,891) (70,617) - (661,508)
Machinery and equipment............................. (1,015,747) (129,834) - (1,145,581)
Vehicles.................................................... (246,153) (79,791) - (325,944)
Treatment plants......................................... (8,956,550) (446,772) - (9,403,322)
Pump stations............................................. (1,860,788) (112,540) - (1,973,328)
Reservoirs................................................. (1,032,541) (52,321) - (1,084,862)
Infrastructure.............................................. (11,092,843) (856,754) - (11,949,597)
Total accumulated depreciation.................. (24,876,225) (1,757,911) - (26,634,136)
Total capital assets being depreciated, net........... 50,041,090 101,803 - 50,142,893
Total business-type activities capital assets, net.... $ 56,147,387 $ 111,774 $ - $ 56,259,161
Depreciation expense was charged to functions/programs of the primary government as follows:
Governmental Activities:
General government................................................. $ 297,504
Public safety........................................................... 433,480
Education............................................................... 3,090,245
Public works........................................................... 1,327,800
Human services....................................................... 131,230
Culture and recreation.............................................. 215,421
Total depreciation expense- governmental activities............ $ 5,495,680
Business-Type Activities:
Water..................................................................... $ 784,981
Sewer..................................................................... 890,965
Osgood Hill.............................................................. 81,965
Total depreciation expense- business-type activities............ $ 1,757,911
Town of North Andover, Massachusetts 38 Basic Financial Statements
Notes to Basic Financial Statements Fiscal Year Ended June 30, 2010
NOTE 5 - INTERFUND TRANSFERS
Interfund transfers for the fiscal year ended June 30, 2010, are summarized as follows:
Operating Transfers In:
Nonmajor Osgood Hill
General Stabilization Governmental Enterprise
Operating Transfers Out: Fund Fund Funds Fund Total
General Fund............................ $ - $ 905,000 $ - $ 131,380 $ 1,036,380 (1)
Nonmajor Governmental Funds..... 193,557 - 975,555 - 1,169,112 (2)
Water Enterprise Fund................ 623,712 - - - 623,712 (3)
Sewer Enterprise Fund................ 383,783 - - - 383,783 (3)
Osgood Hill Enterprise Fund......... 40,141 - - - 40,141 (3)
$ 1,241,193 $ 905,000 $ 975,555 $ 131,380 $ 3,253,128
(1) Represents a budgeted transfer from General Fund to the Stabilization fund and the funding of the prior year
Osgood Hill enterprise fund deficit.
(2) Represents budgeted transfers of miscellaneous non-recurring revenues and other available funds to the
General Fund as well as transfers between non-major governmental funds.
(3) Represents budgeted transfers for indirect costs.
NOTE 6— LEASES
Operating Lease
The Town entered into a commercial lease for office space for the North Andover Public Schools on June 1, 2009,
that expires May 31, 2012. The future minimum lease payments are as follows:
Governmental
Fiscal Years Ending June 30, Activities
2011................................................................ $ 91,098
2012................................................................ 91,098
Total................................................................ $ 182,196
Town of North Andover, Massachusetts 39 Basic Financial Statements
Notes to Basic Financial Statements Fiscal Year Ended June 30, 2010
NOTE 7 -SHORT-TERM FINANCING
Short-term debt may be authorized and issued to fund the following:
• Current operating costs prior to the collection of revenues through issuance of revenue or tax anticipation
notes (RANS or TANS).
• Capital project costs and other approved expenditures incurred prior to obtaining permanent financing through
issuance of bond anticipation notes (BANS) or grant anticipation notes (GANS).
Short-term loans are general obligations and carry maturity dates that are limited by statute. Interest
expenditures and expenses for short-term borrowings are accounted for in the general fund and enterprise funds,
respectively.
Details related to the short-term debt activity for the fiscal year ended June 30, 2010, are as follows:
Notes Payable—Governmental Funds
Rate Beginning Ending
Type Purpose (%) Due Date Balance Additions Reductions Balance
BAN Land Acquisition... 2.50 6/16/2011 $ - $ 1,288,000 $ - $ 1,288,000
NOTE 8 - LONG-TERM DEBT
State law permits the Town, under the provisions of Chapter 44, Section 10, to authorize indebtedness up to a
limit of 5% of its equalized valuation. Debt issued in accordance with this section of the law is designated as
being "inside the debt limit". In addition, however, 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".
In order to take advantage of favorable interest rates the Town issued $3,830,000 of General Obligation
Refunding Bonds during fiscal year 2010. $3,630,000 of general obligation bonds were defeased by placing the
proceeds of the refunding bonds in an irrevocable trust to provide for all future debt service payments on the
refunded bonds. Accordingly, the trust account's assets and liabilities for the defeased bonds are not included in
the basic financial statements. The Town has decreased its aggregate debt service payments by$189,297 and
will experience and economic gain of$200,099. At June 30, 2010, $3,315,000 of general obligation bonds
outstanding are considered defeased.
Town of North Andover, Massachusetts 40 Basic Financial Statements
Notes to Basic Financial Statements Fiscal Year Ended June 30, 2010
Details related to the outstanding indebtedness at June 30, 2010, and the debt service requirements are as
follows:
Bonds and Notes Payable-Governmental Funds
Interest
Rate Beginning Ending
Project (%) Balance Additions Reductions Balance
Municipal Purpose Loan of 2001......................... 4.00-4.20 $ 170,000 $ - $ 85,000 $ 85,000
Municipal Purpose Loan of 2002......................... 4.00-4.50 3,600,000 - 1,200,000 2,400,000
Municipal Purpose Loan of 2003......................... 2.30-4.00 397,870 - 107,609 290,261
Municipal Purpose Loan of 2004......................... 2.00-5.00 3,280,000 - 660,000 2,620,000
Refunding Bonds of 2004.................................. 2.00-4.20 3,917,019 - 680,725 3,236,294
Municipal Purpose Loan of 2005......................... 3.00-4.00 639,952 - 230,512 409,440
Municipal Purpose Loan of 2005......................... 3.00-4.00 4,300,279 - 389,324 3,910,955
High School Construction.................................. 3.30-5.00 2,550,000 - 150,000 2,400,000
Sargent School Ventilation................................ 3.60-4.50 56,195 - 8,000 48,195
School System Technology............................... 3.60-4.50 172,555 - 25,750 146,805
Roadwork...................................................... 3.60-4.50 86,800 - 43,400 43,400
Drainage Improvements.................................... 3.60-4.50 36,400 - 5,200 31,200
Town Garage Heating...................................... 3.60-4.50 17,500 - 2,500 15,000
Historic Center Roadway.................................. 4.00-4.40 238,500 - 30,500 208,000
Olde Center Roadway...................................... 4.00-4.40 352,702 - 39,189 313,513
Franklin School Roof........................................ 4.00-4.40 205,196 - 11,400 193,796
Front End Loader............................................ 4.00-4.40 162,000 - 18,000 144,000
Ambulance Replacement.................................. 4.00-4.40 142,685 - 15,854 126,831
Mosquito Brook Drainage.................................. 4.00-4.40 76,000 - 4,000 72,000
Tractor.......................................................... 4.00-4.40 49,500 - 5,500 44,000
Land Acquisition-Refunding............................. 3.00-4.00 2,680,000 - 260,000 2,420,000
Municipal Purpose Loan 1998-Refunding............ 3.00-4.00 1,885,000 - 155,000 1,730,000
Municipal Purpose Loan 1998-Refunding............ 3.00-4.00 6,770,000 - 650,000 6,120,000
Municipal Purpose Loan 2009............................ 2.75-5.00 7,122,134 - 571,008 6,551,126
Municipal Purpose Loan 2009, Series A............... 2.25-4.00 - 4,171,222 - 4,171,222
Sub-total........................................................ 38,908,287 4,171,222 5,348,471 37,731,038
Deferred loss on refundings............................... (1,006,222) - (192,901) (813,321)
Total governmental bonds and notes payable........ $ 37,902,065 $ 4,171,222 $ 5,155,570 $ 36,917,717
Town of North Andover, Massachusetts 41 Basic Financial Statements
Notes to Basic Financial Statements Fiscal Year Ended June 30, 2010
Debt service requirements for principal and interest for Governmental bonds payable in future fiscal years are as
follows:
Fiscal Year Principal Interest Total
2011.......... $ 5,574,681 $ 1,334,366 $ 6,909,047
2012.......... 5,492,270 1,149,196 6,641,465
2013.......... 4,343,782 933,759 5,277,541
2014.......... 4,320,457 785,383 5,105,840
2015.......... 2,995,382 649,780 3,645,162
2016.......... 2,639,774 543,323 3,183,097
2017.......... 2,604,499 449,963 3,054,462
2018.......... 2,623,831 350,948 2,974,779
2019.......... 1,224,167 268,524 1,492,691
2020.......... 745,400 225,622 971,022
2021.......... 745,400 198,969 944,369
2022.......... 740,400 170,733 911,133
2023.......... 730,400 142,243 872,643
2024.......... 730,399 113,709 844,108
2025.......... 730,399 83,836 814,235
2026.......... 500,399 58,097 558,496
2027.......... 350,399 40,686 391,085
2028.......... 329,000 26,238 355,238
2029.......... 310,000 12,713 322,713
Totals........ $ 37,731,038 $ 7,538,088 $ 45,269,127
Bonds and Notes Payable-Water Enterprise Fund
Interest
Rate Beginning Ending
Project (%) Balance Additions Reductions Balance
Municipal Purpose Loan of 1996......................... 4.00-5.20 $ 553,500 $ - $ 279,000 $ 274,500
Municipal Purpose Loan of 2001......................... 4.00-4.20 130,000 - 65,000 65,000
Municipal Purpose Loan of 2002......................... 4.00-4.50 610,000 - 235,000 375,000
Municipal Purpose Loan of 2003......................... 2.30-4.00 1,961,203 - 423,835 1,537,368
Refunding Bonds of 2004.................................. 2.00-4.20 722,980 - 104,275 618,705
Municipal Purpose Loan of 2005......................... 3.00-4.00 419,505 - 59,929 359,576
Municipal Purpose Loan of 2005......................... 3.00-4.00 1,459,200 - 243,200 1,216,000
Water Supply System Security........................... 3.60-4.50 150,500 - 21,500 129,000
Bear Hill Water Tank........................................ 3.60-4.50 38,000 - 19,000 19,000
Sutton Hill Water Tank...................................... 3.60-4.50 34,000 - 17,000 17,000
Lake Outlet Structure....................................... 3.60-4.50 420,000 - 60,000 360,000
MWPAT......................................................... 2.00 5,312,933 - 232,168 5,080,765
Water Mains................................................... 3.70-5.00 585,000 - 65,000 520,000
Water Meter Replacement................................. 3.70-5.00 315,000 - 35,000 280,000
Municipal Purpose Loan of 1998-Refunding........ 3.00-4.00 1,517,654 - 343,877 1,173,777
Municipal Purpose Loan of 2009......................... 2.75-5.00 450,000 - 45,000 405,000
Municipal Purpose Loan of 2009, Series A............ - 2,025,000 - 2,025,000
Subtotal......................................................... 14,679,475 2,025,000 2,248,784 14,455,691
Deferred loss on refundings............................... (289,317) - (98,677) (190,640)
Total Water Enterprise bonds and notes payable... $ 14,390,158 $ 2,025,000 $ 2,150,107 $ 14,265,051
Town of North Andover, Massachusetts 42 Basic Financial Statements
Notes to Basic Financial Statements Fiscal Year Ended June 30, 2010
Debt service requirements for principal and interest for Water Enterprise fund bonds and notes payable in future
fiscal years are as follows:
Fiscal Year Principal Interest Total
2011..........$ 2,370,448 $ 420,831 $ 2,791,279
2012.......... 1,895,127 340,749 2,235,876
2013.......... 1,748,578 279,054 2,027,632
2014.......... 1,190,843 227,900 1,418,743
2015.......... 1,207,122 189,798 1,396,920
2016.......... 832,699 151,087 983,786
2017.......... 602,058 127,440 729,498
2018.......... 607,453 110,270 717,723
2019.......... 457,953 93,266 551,219
2020.......... 373,573 81,462 455,035
2021.......... 354,301 73,034 427,335
2022.......... 360,146 65,109 425,255
2023.......... 366,108 56,873 422,981
2024.......... 372,191 48,514 420,705
2025.......... 378,397 39,708 418,105
2026.......... 384,729 30,777 415,506
2027.......... 391,188 21,717 412,905
2028.......... 397,777 12,528 410,305
2029.......... 65,000 6,600 71,600
2030.......... 100,000 4,000 104,000
Totals.........$ 14,455,691 $ 2,380,717 $ 16,836,408
Bonds and Notes Payable-Sewer Enterprise Fund
Interest
Rate Beginning Ending
Project (%) Balance Additions Reductions Balance
MWPAT......................................................... 3.70-5.40 $ 323,631 $ $ 45,031 $ 278,600
MWPAT......................................................... 3.40-5.40 279,597 40,412 239,185
MWPAT......................................................... 3.40-5.40 398,013 57,528 340,485
Municipal Purpose Loan of 1996.......................... 4.00-5.20 126,500 66,000 60,500
MWPAT......................................................... 2.80-3.40 250,035 20,035 230,000
MWPAT......................................................... 2.80-3.40 905,922 70,922 835,000
MWPAT......................................................... 2.80-3.40 107,117 7,117 100,000
MWPAT......................................................... 2.80-3.50 141,049 11,049 130,000
MWPAT......................................................... 2.80-3.50 173,281 13,281 160,000
MWPAT......................................................... 2.80-3.50 672,963 52,963 620,000
MWPAT......................................................... 2.60-2.80 1,661,488 116,597 1,544,891
Municipal Purpose Loan of 2001.......................... 4.00-4.80 670,000 670,000 -
Municipal Purpose Loan of 2002.......................... 4.00-5.10 2,960,000 2,960,000 -
Municipal Purpose Loan of 2003.......................... 2.30-3.70 2,390,927 288,557 2,102,370
Municipal Purpose Loan of 2005.......................... 3.00-4.00 965,848 166,288 799,560
Municipal Purpose Loan of 2005.......................... 3.00-4.00 285,212 40,745 244,467
Sewer Extension.............................................. 3.60-4.50 573,050 47,650 525,400
Waverly Road.................................................. 3.70-5.00 3,584,485 92,619 3,491,866
Sewer Watershed............................................. 3.70-5.00 180 20 160
Wastewater Management................................... 3.70-5.00 173,752 57,918 115,834
Municipal Purpose Loan of 1998-Refunding......... 3.00-4.00 252,346 46,123 206,223
Municipal Purpose Loan of 1998-Refunding......... 3.00-4.00 350,000 40,000 310,000
East Side Sewer............................................... 2.75-5.00 500,000 - 61,128 438,872
Municipal Purpose Loan 2010-Refunding............. 2.25-3.50 - 3,830,000 364,999 3,465,001
East Side Truck Sewer...................................... 2.25-3.25 - 250,000 - 250,000
Subtotal......................................................... 17,745,396 4,080,000 5,336,982 16,488,414
Deferred loss on refundings............................... (44,674) (235,501) (20,523) (259,652)
Total Sewer Enterprise bonds and notes payable... $ 17,700,722 $ 3,844,499 $ 5,316,459 $ 16,228,762
Town of North Andover, Massachusetts 43 Basic Financial Statements
Notes to Basic Financial Statements Fiscal Year Ended June 30, 2010
Debt service requirements for principal and interest for Sewer Enterprise fund bonds and notes payable in future
fiscal years are as follows:
Fiscal Year Principal Interest Total
2011.......... $ 1,683,222 $ 597,811 $ 2,281,033
2012.......... 1,707,568 546,875 2,254,443
2013.......... 1,700,869 486,155 2,187,024
2014.......... 1,740,789 432,993 2,173,782
2015.......... 1,772,907 367,587 2,140,494
2016.......... 1,422,752 305,413 1,728,165
2017.......... 1,140,500 252,499 1,392,999
2018.......... 1,156,170 205,602 1,361,772
2019.......... 955,836 158,991 1,114,827
2020.......... 894,599 121,421 1,016,020
2021.......... 644,600 89,935 734,535
2022.......... 494,599 68,711 563,310
2023.......... 209,600 50,327 259,927
2024.......... 204,601 41,681 246,282
2025.......... 204,601 62,986 267,587
2026.......... 194,601 24,290 218,891
2027.......... 189,601 15,776 205,377
2028.......... 170,999 7,481 178,480
Totals......... $ 16,488,414 $ 3,836,535 $ 20,324,949
The Sewer Enterprise Fund is scheduled to be subsidized by the Massachusetts Water Pollution Abatement Trust
(MWPAT) on a periodic basis for principal in the amount of$1,093,936 and interest costs of$806,974. Thus, net
MWPAT loan repayments, including interest, are schedule to be $3,949,989. The principal subsidies are
guaranteed and therefore a $1,093,936 intergovernmental receivable has been reported in the proprietary fund
financial statements. Since the Town is legally obligated for the total amount of the debt, such amounts have
been recorded in the accompanying basic financial statements. The fiscal year 2010 principal and interest
subsidies totaled $88,016 and $170,814, respectively.
The Commonwealth has approved school construction assistance. The assistance program, which is
administered by the Massachusetts School Building Authority, provides resources for future debt service of
general obligation school bonds outstanding. During fiscal year 2010, approximately$412,000 of such assistance
was received. Approximately $2,061,000 will be received in future fiscal years. Of this amount, approximately
$197,000 represents reimbursement of long-term interest costs, and approximately$1,864,000 represents
reimbursement of approved construction costs. Accordingly, a $1,864,000 intergovernmental receivable and
corresponding deferred revenue have been reported in the governmental fund financial statements. The deferred
revenue has been recognized as revenue in the conversion to the government-wide financial statements.
Town of North Andover, Massachusetts 44 Basic Financial Statements
Notes to Basic Financial Statements Fiscal Year Ended June 30, 2010
The Town is subject to various debt limits by statute and may issue additional general obligation debt under the
normal debt limit. At June 30, 2010, the Town had the following authorized and unissued debt.
Purpose Amount
Roadway improvements.......................... $ 380,000
Sidewalk reconstruction........................... 50,000
Senior center roof replacement................. 26,000
Facilities master plan.............................. 150,000
Police station equipment.......................... 405,000
School IT network equipment.................... 863,000
Revenue billing system........................... 90,000
Body armor replacement.......................... 40,000
Fire department radio equipment............... 432,000
Dump truck........................................... 55,000
Fire sprinkler system............................... 450,000
Meter replacement................................. 450,000
Total................................................... $ 3,391,000
Changes in Long-term Liabilities
During the fiscal year ended June 30, 2010, the following changes occurred in long-term liabilities:
Beginning Ending Due within
Balance Additions Reductions Balance One Year
Governmental Activities:
Long-term bonds and notes............ $ 38,908,287 $ 4,171,222 $ (5,348,471) $ 37,731,038 $ 5,574,681
Unamortized deferred loss
on refundings............................. (1,006,222) - 192,901 (813,321) (173,677)
Bonds and notes payable net.......... 37,902,065 4,171,222 (5,155,570) 36,917,717 5,401,004
Other postemployment benefits....... 6,203,725 11,329,538 (4,211,257) 13,322,006 -
Compensated absences................ 1,553,999 156,941 (170,940) 1,540,000 169,000
Total governmental....................... $ 45,659,789 $ 15,657,701 $ (9,537,767) $ 51,779,723 $ 5,570,004
Beginning Ending Due within
Balance Additions Reductions Balance One Year
Business-Type Activities:
Long-term bonds and notes............ $ 32,424,871 $ 6,105,000 $ (7,585,766) $ 30,944,105 $ 4,053,670
Unamortized deferred loss
on refunding.............................. (333,991) (235,501) 119,200 (450,292) (114,319)
Bonds and notes payable net.......... 32,090,880 5,869,499 (7,466,566) 30,493,813 3,939,351
Other postemployment benefits....... 782,788 302,902 (135,619) 950,071 -
Court judgments........................... 168,000 - (56,000) 112,000 56,000
Total business-type....................... $ 33,041,668 $ 6,172,401 $ (7,658,185) $ 31,555,884 $ 3,995,351
Town of North Andover, Massachusetts 45 Basic Financial Statements
Notes to Basic Financial Statements Fiscal Year Ended June 30, 2010
NOTE 9 -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 Town participates in
a premium-based workers' compensation plan for its active and retired employees.
The Town is self-insured for its health insurance activities. These activities are accounted for in the internal
service fund where revenues are recorded when earned and expenses are recorded when incurred.
Health Insurance
The estimated "Incurred But Not Reported (IBNR)" claims are based on actual and historical lag claims. The
liability at June 30, 2010 totaled $839,000. Changes in the reported liability since July 1, 2008, are as follows:
Current Year
Balance at Claims and Balance at
Beginning of Changes in Claims Fiscal
Fiscal Year Estimate Payments Year-End
Fiscal Year 2010........... $ 754,000 $ 9,735,646 $ (9,650,646) $ 839,000
Fiscal Year 2009........... 456,306 8,900,481 (8,602,787) 754,000
NOTE 10 - PENSION PLAN
Plan Description -The Town contributes to the Essex Regional Retirement System (the System), a cost sharing
multiple-employer defined benefit pension plan administered by the Essex County Retirement Board. School
teachers and certain administrators are members of the Commonwealth of Massachusetts' Teachers Retirement
System, to which the Town does not contribute. All pension benefits and expenses paid by the Teachers
Retirement System are funded by the Commonwealth of Massachusetts (Commonwealth). The amount of these
on-behalf payments totaled approximately $6,363,000 for the fiscal year ended June 30, 2010, and accordingly
are reported in the general fund as intergovernmental revenues and pension benefit expenditures.
The System provides retirement, disability and death benefits to plan members and beneficiaries. Chapter 32 of
the MGL assigns authority to establish and amend benefit provisions of the plan. Cost-of-living adjustments
granted between 1981 and 1997 and any increase in other benefits imposed by the Commonwealth's state law
during those years are borne by the Commonwealth and are deposited into the pension fund. Cost-of-living
adjustments granted after 1997 must be approved by the System and are borne by the System. The System
issues a publicly available financial report in accordance with guidelines established by the Commonwealth's
Public Employee Retirement Administration Commission. That report may be obtained by contacting the System
located at 36 Federal Street, Salem, Massachusetts, 01970.
Funding Policy- Plan members are required to contribute to the System at rates ranging from 5% to 11% of
annual covered compensation. The Town is required to pay into the System its share of the system-wide actuarial
determined contribution, which is apportioned among the employers based on active current payroll. The
contributions of plan members and the Town are governed by Chapter 32 of the MGL. The Town's contributions
to the System for the fiscal years ended June 30, 2010, 2009 and 2008 totaled $2,596,530, $2,468,667, and
$2,261,142, respectively, which equaled its required contribution for each fiscal year.
The schedule of funding progress, presented as required supplementary information, following the notes to the
basic financial statements, presents multiyear trend information about whether the actuarial value of plan assets is
Town of North Andover, Massachusetts 46 Basic Financial Statements
Notes to Basic Financial Statements Fiscal Year Ended June 30, 2010
increasing or decreasing overtime relative to the actuarial accrued liability for benefits. Additionally, the schedule
of employer contributions, presented as required supplementary information, following the notes to the basic
financial statements, presents multiyear trend information for required and actual contributions relating to the cost-
sharing plan as a whole, of which the Town is one participating employer, as well as the Town's proportionate
share of the plan's annual contributions. This information is designed to be helpful for understanding the scale of
the information presented relative to the Town.
NOTE 11 — POSTEMPLOYMENT BENEFITS OTHER THAN PENSIONS
Plan Description—The Town of North Andover administers a single-employer defined benefit healthcare plan
("the Retiree Health Plan"). The plan provides lifetime healthcare insurance for eligible retirees and their spouses
through the Town's group health insurance plan, which covers both active and retired members. Chapter 32B of
the MGL assigns authority to establish and amend benefit provisions of the plan. Benefit provisions are
negotiated between the Town and the unions representing Town employees and are renegotiated each
bargaining period. The Retiree Health Plan does not issue a publicly available financial report.
Funding Policy—Contribution requirements are also negotiated between the Town and union representatives.
The required contribution is based on a pay-as-you-go financing requirement. The Town contributes a variable
portion of the cost of current-year premiums, which varies by plan, for eligible retired plan members and their
spouses. Plan members receiving benefits contribute the remaining portion of their premium costs. For fiscal
year 2010, the Town contributed $4.3 million to the plan.
Annual OPEB Cost and Net OPEB Obligation—The Town's annual other postemployment benefit (OPEB) cost
(expense) is calculated based on the annual required contribution of the employer(ARC), an amount actuarially
determined in accordance with the parameters of GASB Statement 45. The ARC represents a level of funding
that, if paid on an ongoing basis, is projected to cover the normal cost each year and amortize any unfunded
actuarial liabilities (or funding excess) over a period not to exceed thirty years. The components of the Town's
annual OPEB cost for the year, the amount actually contributed to the plan, and changes in the Town's net OPEB
obligation are summarized in the following table:
Annual required contribution........................................ $ 11,241,110
Adjustment for timing.................................................. 505,850
Interest on net OPEB obligation.................................... 314,393
Adjustment to annual required contribution...................... (428,913)
Annual OPEB Cost (expense)...................................... 11,632,440
Contributions made.................................................... (4,346,876)
Increase in net OPEB obligation.................................... 7,285,564
Net OPEB obligation - beginning of year......................... 6,986,513
Net OPEB obligation - end of year................................. $ 14,272,077
Town of North Andover, Massachusetts 47 Basic Financial Statements
Notes to Basic Financial Statements Fiscal Year Ended June 30, 2010
The Town's annual OPEB cost, the percentage of annual OPEB cost contributed to the plan, and the net OPEB
obligation for fiscal year 2010 was as follows:
Percentage of
Fiscal Year Annual Annual OPEB Net OPEB
Ended OPEB Cost Cost Contributed Obligation
6/30/2010 $ 11,632,440 37% $ 14,272,077
6/30/2009 10,964,622 36% 6,986,513
Funded Status and Funding Progress—As of June 30, 2010 the actuarial accrued liability for benefits was $126
million, all of which was unfunded. The covered payroll (annual payroll of active employees covered by the plan)
was $40.4 million, and the ratio of the UAAL to the covered payroll was 312.1 percent.
Actuarial valuations of an ongoing plan involve estimates of the value of reported amounts and assumptions
about the probability of occurrence of events far into the future. Examples include assumptions about future
employment, mortality, and the healthcare cost trend. Amounts determined regarding the funded status of the
plan and the annual required contributions of the employer are subject to continual revision as actual results are
compared with past expectations and new estimates are made about the future. The schedule of funding
progress, presented as required supplementary information following the notes to the financial statements,
presents multiyear trend information about whether the actuarial value of plan assets is increasing or decreasing
over time relative to the actuarial accrued liabilities for benefits.
Actuarial Methods and Assumptions—Projections of benefits for financial reporting purposes are based on the
substantive plan (the plan as understood by the employer and the plan members) and include the types of
benefits provided at the time of each valuation and the historical pattern of sharing of benefit costs between the
employer and plan members to that point. The actuarial methods and assumptions used include techniques that
are designed to reduce the effects of short-term volatility in actuarial accrued liabilities and the actuarial value of
assets, consistent with the long-term perspective of the calculations.
In the July 1, 2008 actuarial valuation, actuarial liabilities were determined using the projected unit credit cost
method. The actuarial assumptions included a 4.5% investment return assumption, which is based on the
expected yield on the assets of the Town, calculated based on the funded level of the plan at the valuation date,
and an annual health care trend rate of 9.5% initially, graded to 5% over 9 years. The UAAL is being amortized
with a level dollar amount over a 30 year period. The remaining amortization period at June 30, 2010 is 28 years.
NOTE 12—CONTINGENCIES
The Town participates in a number of Federal award programs. These programs are subject to financial and
compliance audits. The amount, if any, of expenditures which may be disallowed by the granting agencies cannot
be determined at this time, although the Town expects such amounts, if any, to be immaterial.
Various legal actions and claims are pending against the Town. Litigation is subject to many uncertainties, and
the outcome of individual litigated matters is not always predictable. Although the amount of liability, if any, at
June 30, 2010, cannot be ascertained, management believes any resulting liability should not materially affect the
financial position of the Town at June 30, 2010.
Town of North Andover, Massachusetts 48 Basic Financial Statements
Notes to Basic Financial Statements Fiscal Year Ended June 30, 2010
NOTE 13— IMPLEMENTATION OF NEW GASB PRONOUNCEMENTS
During fiscal year 2010, the following GASB pronouncements were implemented:
• The GASB issued Statement#57, OPEB Measurements by Agent Employers and Agent Multiple-
Employer Plans. The standards in this statement permits an agent employer that has an individual
employer OPEB plan with fewer than 100 members to use an alternative measurement method to
produce actuarially based information for purposes of financial reporting, regardless of the number of total
plan members in the agent multiple-employer OPEB plan in which it participates. Management elected to
implement this standard early and this standard did not impact the basic financial statements.
• The GASB issued Statement#58, Accounting and Financial Reporting for Chapter 9 Bankruptcies. The
standards in this statement provide guidance for bankrupt state and local governments by establishing
requirements for recognizing and measuring the effects of the bankruptcy process on assets and liabilities
and for classifying changes in those items and related costs. Management elected to implement this
standard early and this standard did not impact the basic financial statements.
Other Future GASB Pronouncements:
• The GASB issued Statement#54, Fund Balance Reporting and Governmental Fund Type Definitions,
which is required to be implemented in fiscal 2011. Management believes this pronouncement will
require additional disclosure and will impact the basic financial statements.
• The GASB issued Statement#59, Financial Instruments Omnibus. The objective of this Statement is to
update and improve existing standards regarding financial reporting and disclosure requirements of
certain financial instruments and external investment pools for which significant issues have been
identified in practice. The provisions of this Statement are effective for financial statements for periods
beginning after June 15, 2010.
Town of North Andover, Massachusetts 49 Basic Financial Statements
Required Supplementary Information
Town of North Andover, Massachusetts 50 Required Supplementary Information
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Town of North Andover, Massachusetts 51 Required Supplementary Information
GENERALFUND
SCHEDULE OF REVENUES,EXPENDITURES AND CHANGES IN FUND BALANCE-
BUDGET AND ACTUAL
FISCAL YEAR ENDED JUNE 30,2010
Budgeted Amounts
Amounts Current Year
Carried forward Initial Original Final
From Prior Year Budget Budget Budget
REVENUES:
Real estate and personal property taxes,
net of tax refunds................................................ $ $ 56,343,763 $ 56,343,763 $ 56,343,763
Taxliens............................................................... - - -
Motor vehicle and other excise taxes.......................... 3,925,000 3,925,000 3,925,000
Charges for services............................................... 910,000 910,000 910,000
Penalties and interest on taxes.................................. 340,000 340,000 340,000
Payments in lieu of taxes......................................... 1,750,920 1,750,920 1,750,920
Licenses and permits.............................................. 215,000 215,000 215,000
Fines and forfeitures............................................... 154,000 154,000 154,000
Intergovernmental................................................... 8,361,773 8,361,773 8,361,773
Departmental and other........................................... 1,256,060 1,256,060 1,256,060
Investment income.................................................. 470,000 470,000 470,000
TOTAL REVENUES........................................ 73,726,516 73,726,516 73,726,516
EXPENDITURES:
Current:
General government........................................... 55,302 2,717,788 2,773,090 2,725,785
Public safety...................................................... 8,686 8,926,018 8,934,704 9,047,727
Education......................................................... 168,887 37,021,889 37,190,776 36,945,089
Public works...................................................... 15,216 3,921,707 3,936,923 3,899,319
Health and human services.................................. - 896,826 896,826 942,728
Culture and recreation......................................... 2,829 812,590 815,419 811,852
Pension benefits................................................ - 2,596,530 2,596,530 2,596,530
Property and liability insurance.............................. 300,641 300,641 294,085
Employee benefits.............................................. 7,922,970 7,922,970 7,762,543
State and county charges......................................... 2,336,140 2,336,140 2,336,140
Debt service:
Principal........................................................... 5,226,146 5,226,146 5,379,600
Interest............................................................. - 1,330,710 1,330,710 1,268,452
TOTAL EXPENDITURES................................. 250,920 74,009,955 74,260,875 74,009,850
EXCESS(DEFICIENCY)OF REVENUES
OVER EXPENDITURES........................................... (250,920) (283,439) (534,359) (283,334)
OTHER FINANCING SOURCES(USES):
Premium from issuance of bonds............................... - - -
Transfers in........................................................... 1,246,598 1,246,598 1,246,598
Transfers out......................................................... (1,025,000) (1,025,000) (1,036,380)
TOTAL OTHER FINANCING SOURCES(USES).. 221,598 221,598 210,218
NET CHANGE IN FUND BALANCE................................ (250,920) (61,841) (312,761) (73,116)
BUDGETARY FUND BALANCE,Beginning of year............ 2,311,590 2,311,590 2,311,590
BUDGETARY FUND BALANCE,End of year.................... $ (250,920) $ 2,249,749 $ 1,998,829 $ 2,238,474
See notes to required supplementary information.
Town of North Andover,Massachusetts 52 Required Supplementary Information
Actual Amounts Variance
Budgetary Carried Forward To Final
Amounts To Next Year Budget
$ 56,560,098 $ $ 216,335
282,122 282,122
3,515,205 (409,795)
793,374 (116,626)
355,251 15,251
1,707,282 (43,638)
227,766 12,766
120,877 (33,123)
8,461,029 99,256
1,103,852 (152,208)
396,306 (73,694)
73,523,162 (203,354)
2,566,775 71,694 87,316
8,885,597 17,337 144,793
36,709,223 102,544 133,322
4,071,651 43,894 (216,226)
921,834 5,460 15,434
807,017 1,264 3,571
2,596,530 - -
294,085 - -
7,636,441 24,500 101,602
2,307,758 - 28,382
5,348,471 31,129
1,299,581 - (31,129)
73,444,963 266,693 298,194
78,199 (266,693) 94,840
10,417 10,417
1,241,193 (5,405)
(1,036,380) -
215,230 5,012
293,429 (266,693) 99,852
2,311,590 -
$ 2,605,019 $ (266,693) $ 99,852
Town of North Andover,Massachusetts 53 Required Supplementary Information
Retirement System Schedules of Funding
Progress and Employer Contributions
The Retirement System Schedule of Funding Progress presents multiyear trend information about whether the
actuarial value of planned assets is increasing or decreasing over time relative to the actuarial accrued liability for
benefits.
The Retirement System Schedule of Employer Contributions presents multiyear trend information for required and
actual contributions relating to the cost-sharing plan as a whole, of which the Town is one participating employer,
as well as the Town's proportionate share of the plan's annual contributions.
Town of North Andover, Massachusetts 54 Required Supplementary Information
ESSEX REGIONAL RETIREMENT SYSTEM
SCHEDULE OF FUNDING PROGRESS
Actuarial UAAL as a
Actuarial Accrued Unfunded Percentage
Actuarial Value of Liability(AAL) AAL Funded Covered of Covered
Valuation Assets Entry Age (UAAL) Ratio Payroll Payroll
Date (A) (B) (B-A) (A/B) (C) ((B-A)/C)
01/01/08 $ 301,420,965 $ 445,171,554 $ 143,750,589 67.7% $ 111,726,856 128.7%
01/01/06 261,327,047 376,034,621 114,707,574 69.5% 98,641,094 116.3%
01/01/04 229,852,971 333,396,222 103,543,251 68.9% 93,404,002 110.9%
01/01/02 218,346,198 287,390,715 69,044,517 76.0% 85,005,338 81.2%
01/01/00 190,363,700 253,847,100 63,483,400 75.0% 69,525,900 91.3%
01/01/99 180,034,700 268,386,000 88,351,300 67.1% 89,645,300 98.6%
The Town's share of the UAAL, as of January 1, 2008 is approximately 14%.
See notes to required supplementary information.
Town of North Andover, Massachusetts 55 Required Supplementary Information
ESSEX REGIONAL RETIREMENT SYSTEM
SCHEDULE OF EMPLOYER CONTRIBUTIONS
System Wide Town of North Andover
(B/A)
Fiscal Year Annual (A) (B) Town's Percentage
Ended Required Actual Percentage Actual of System Wide
June 30 Contributions Contributions Contributed Contributions Actual Contributions
2010 $ 17,648,430 $ 17,648,487 100% $ 2,596,530 14.7%
2009 15,601,671 15,601,671 100% 2,468,667 15.8%
2008 15,788,864 15,788,864 100% 2,261,142 14.3%
2007 16,622,274 16,622,274 100% 2,227,020 13.4%
2006 13,080,011 13,080,011 100% 2,181,588 16.7%
2005 12,223,776 12,223,776 100% 1,946,329 15.9%
2004 12,516,569 12,516,569 100% 1,693,461 13.5%
The Town's Actual Contributions equaled 100% of its Required Contributions for each year presented.
See notes to required supplementary information.
Town of North Andover, Massachusetts 56 Required Supplementary Information
Other Postemployment Benefit Plan
Schedules
The Schedule of Funding progress compares, overtime, the actuarial accrued liability for benefits with the
actuarial value of accumulated plan assets.
The Schedule of Employer Contributions compares, overtime, the annual required contributions to the actual
contributions made.
The Schedule of Actuarial Methods and Assumptions presents factors that significantly affect the identification of
trends in the amounts reported.
Town of North Andover, Massachusetts 57 Required Supplementary Information
OTHER POSTEMPLOYMENT BENEFIT PLAN
SCHEDULE OF FUNDING PROGRESS AND SCHEDULE OF EMPLOYER CONTRIBUTIONS
Schedule of Funding Progress
Actuarial
Accrued UAAL as a
Actuarial Liability(AAL) Unfunded Percentage
Actuarial Value of Projected AAL Funded Covered of Covered
Valuation Assets Unit Credit (UAAL) Ratio Payroll Payroll
Date (A) (B) (B-A) (A/B) (C) ((B-A)/C)
07/01/08 $ - $ 125,963,157 $ 125,963,157 0.0% $ 40,365,153 312.1%
Schedule of Employer Contributions
Annual Actual
Fiscal Year Required Contributions Percentage
Ended Contribution Made Contributed
6/30/10 $ 11,241,110 $ 4,346,876 38.7%
6/30/09 10,964,622 3,978,109 36.3%
See notes to required supplementary information.
Town of North Andover, Massachusetts 58 Required Supplementary Information
OTHER POSTEMPLOYMENT BENEFIT PLAN
ACTUARIAL METHODS AND ASSUMPTIONS
Actuarial Methods:
Valuation date................................................... July 1, 2008
Actuarial cost method......................................... Projected Unit Credit
Amortization method.......................................... Level dollar amount over thirty years
based on an open group.
Remaining amortization period............................. 28 years
Actuarial Assumptions:
Investment rate of return..................................... 4.5%
Plan Membership:
Current retirees, beneficiaries, and dependents....... 411
Current active members...................................... 806
Total 1,217
See notes to required supplementary information.
Town of North Andover, Massachusetts 59 Required Supplementary Information
Notes to Required Supplementary Information Fiscal Year Ended June 30, 2010
NOTE A-STEWARDSHIP, COMPLIANCE AND ACCOUNTABILITY
1. Budgetary Information
Municipal Law requires the Town to adopt a balanced budget that is approved by Town Meeting. The Finance
Committee presents an annual budget to Town Meeting, which includes estimates of revenues and other
financing sources and recommendations of expenditures and other financing uses. Town Meeting, which has full
authority to amend and/or reject the budget or any individual line item, adopts the expenditure budget by majority
vote. Increases or transfers between departments subsequent to the approval of the annual budget, requires
majority Town Meeting approval via a supplemental appropriation.
The majority of the Town's appropriations are non-continuing which lapse at the end of each fiscal year. Others
are continuing appropriations for which the governing body has authorized that an unspent balance from a prior
fiscal year be carried forward and made available for spending in the current fiscal year. These carry forwards
are included as part of the subsequent fiscal year's original budget.
Generally, expenditures may not exceed the legal level of spending authorized for an appropriation account.
However, the Town is statutorily required to pay debt service, regardless of whether such amounts are
appropriated. Additionally, expenditures for disasters, natural or otherwise, and final judgments may exceed the
level of spending authorized by majority vote of the Town Meeting.
The Town adopts an annual budget for the General Fund in conformity with the guidelines described above. The
original fiscal year 2010 approved budget for the General Fund authorized approximately$75.3 million in
appropriations and other amounts to be raised. During fiscal year 2010, Town Meeting approved appropriation
reductions totaling approximately $240,000.
The Town Accountant's office has the responsibility to ensure that budgetary control is maintained on an
individual line item appropriation account basis. Budgetary control is exercised through the Town's accounting
system.
2. Budgetary- GAAP Reconciliation
For budgetary financial reporting purposes, the Uniform Municipal Accounting System basis of accounting
(established by the Commonwealth of Massachusetts) is followed, which differs from the GAAP basis of
accounting. A reconciliation of budgetary-basis to GAAP-basis results for the General Fund for the fiscal year
ended June 30, 2010, is presented below:
Net change in fund balance- budgetary basis.............................................. $ 293,429
Basis of accounting differences:
Net change in recording 60 day receipts.................................................... (110,888)
Net change in recording tax refunds payable.............................................. 254,000
Recognition of revenue for on-behalf payments.......................................... 6,363,000
Recognition of expenditures for on-behalf payments.................................... (6,363,000)
Net change in fund balance -gaap basis..................................................... $ 436,541
3. Excess of Expenditures over Appropriations
During fiscal year 2010, expenditures exceeded budgeted appropriations for snow and ice removal and debt
interest payments. These over-expenditures will be raised on the fiscal 2011 Tax Recapitulation.
Town of North Andover, Massachusetts 60 Required Supplementary Information
Notes to Required Supplementary Information Fiscal Year Ended June 30, 2010
NOTE B— PENSION PLAN
The following actuarial methods and assumptions were used in the Retirement System's most recent actuarial
valuation:
Actuarial Methods and Assumptions:
Valuation Date......................................... January 1, 2008
Actuarial Cost Method............................... Entry Age Normal Cost Method
Amortization Method................................. Increasing at 4.5% per year, level dollar for ERI liability for certain units
Remaining Amortization Period....................19 years remaining as of July 1, 2009
Asset Valuation Method............................. A preliminary actuarial value is first determined by taking the actuarial value
of assets at the beginning of the year and adding assumed investment
earnings(at the assumed actuarial rate fo return)and the net new money
during the year(contributions less benefit payments and administrative
expenses). 20%of the difference between the market value of assets and
the preliminary actuarial value is added to the preliminary actuarial value.
In order that the actuarial value not differ too significantly from the market value
of assets, the final actuarial value of assets must be within 20%of the market
value of assets.
Actuarial Assumptions:
Investment rate of return...........................8.50%
Projected salary increases........................ 5.00%
Cost of living adjustments.........................3.0%of first$12,000 of retirement income.
Plan Membership:
Retired participants and beneficiaries receiving benefits.......................... 1,568
Inactive participants....................................................................................... 880
Disabled..................................................................................................... 65
Active participants........................................................................... 3,139
Total............................................................................................. 5,652
NOTE C—OTHER POSTEMPLOYMENT BENEFITS PLAN
The Town administers a single-employer defined benefit healthcare plan ("The Retiree Health Plan"). The plan
provides lifetime healthcare insurance for eligible retirees and their spouses through the Town's group health
insurance plan, which covers both active and retired members. Additionally, retired teachers and their spouses
receive health insurance through the Group Insurance Commission of the Commonwealth of Massachusetts
(GIC). Each participating municipality is assessed for the governmental share of health and life insurance
premiums paid on behalf of its teacher retirees by the state.
The Town currently finances its other postemployment benefits (OPEB) on a pay-as-you-go basis. As a result,
the funded ratio (actuarial value of assets expressed as a percentage of the actuarial accrued liability) is 0%. In
accordance with Governmental Accounting Standards, the Town has recorded its OPEB cost equal to the
actuarially determined annual required contribution (ARC) which includes the normal cost of providing benefits for
the year and a component for the amortization of the total unfunded actuarial accrued liability of the plan.
The Schedule of Funding Progress presents multi-year trend information which compares, overtime, the actuarial
accrued liability for benefits with the actuarial value of accumulated plan assets. Since this is the Town's initial
year of implementation of GASB Statement 45, information for prior years is not available. The Schedule of
Employer Contributions compares, overtime, the annual required contributions to the actual contributions made.
Town of North Andover, Massachusetts 61 Required Supplementary Information
Notes to Required Supplementary Information Fiscal Year Ended June 30, 2010
Projections of benefits for financial reporting purposes are based on the substantive plan and include the types of
benefits provided at the time of each valuation and the historical pattern of sharing of benefit costs between the
employer and plan members to that point. The actuarial methods and assumptions used include techniques that
are designed to reduce the effects of short-term volatility in actuarial accrued liabilities and the actuarial value of
assets, consistent with the long-term perspective of the calculations.
The Schedule of Actuarial Methods and Assumptions presents factors that significantly affect the identification of
trends in the amounts reported.
Town of North Andover, Massachusetts 62 Required Supplementary Information
Additional Information
Town of North Andover, Massachusetts 63 Additional Information
ENTERPRISE FUND
SCHEDULE OF REVENUES,EXPENSES AND CHANGES IN FUND NET ASSETS
BUDGETARY BASIS-BUDGET AND ACTUAL
FISCAL YEAR ENDED JUNE 30,2010
Water Fund
Amounts
Actual Carried Variance
Original Final Budgetary Forward To To Final
Budget Budget Amounts Next Year Budget
OPERATING REVENUES:
Charges for services........................................................................$ 5,550,486 $ 5,550,486 $ 5,140,745 $ $ (409,741)
Penalties and interest........................................................................ 23,000 23,000 21,978 (1,022)
TOTAL OPERATING REVENUES.................................................. 5,573,486 5,573,486 5,162,723 (410,763)
OPERATING EXPENSES:
Cost of service and administration....................................................... 2,138,452 2,138,452 1,562,982 59,909 515,561
GILDS assessment............................................................................ - - - - -
TOTAL OPERATING EXPENSES.................................................. 2,138,452 2,138,452 1,562,982 59,909 515,561
OPERATING INCOME(LOSS)....................................................... 3,435,034 3,435,034 3,599,741 (59,909) 104,798
NONOPERATING REVENUES(EXPENSES):
Investment income........................................................................... 8,000 8,000 2,833 (5,167)
Interest expense.............................................................................. (437,427) (437,427) (426,004) 11,423
Debt service-principal...................................................................... (2,248,784) (2,248,784) (2,248,784) -
TOTAL NONOPERATING
REVENUES(EXPENSES),NET.................................................... (2,678,211) (2,678,211) (2,671,955) 6,256
INCOME(LOSS)BEFORE TRANSFERS......................................... 756,823 756,823 927,786 (59,909) 111,054
TRANSFERS:
Transfersin.................................................................................... - - - -
Transfers out................................................................................... (650,036) (650,036) (650,036)
TOTAL OPERATING TRANSFERS................................................. (650,036) (650,036) (650,036) -
CHANGE IN NET ASSETS............................................................ 106,787 106,787 277,750 (59,909) 111,054
NET ASSETS AT BEGINNING OF YEAR.................................................. (98,834) (98,834) (98,834) -
NET ASSETS AT END OF YEAR............................................................ $ 7,953 $ 7,953 $ 178,916 $ (59,909) $ 111,054
Town of North Andover,Massachusetts 64 Additional Information
Sewer Fund Osgood Hill Fund
Amounts Amounts
Actual Carried Variance Actual Carried Variance
Original Final Budgetary Forward To To Final Original Final Budgetary Forward To To Final
Budget Budget Amounts Next Year Budget Budget Budget Amounts Next Year Budget
$ 4,546,253 $ 4,546,253 $ 4,791,024 $ $ 244,771 $ 287,947 $ 287,947 $ 285,188 $ $ (2,759)
20,000 20,000 20,769 769 - - -
4,566,253 4,566,253 4,811,793 245,540 287,947 287,947 285,188 (2,759)
739,871 851,649 800,079 2,024 49,546 242,596 242,596 237,648 10,158 (5,210)
1,367,010 1,371,463 1,371,463 - - - - - -
2,106,881 2,223,112 2,171,542 2,024 49,546 242,596 242,596 237,648 10,158 (5,210)
2,459,372 2,343,141 2,640,251 (2,024) 295,086 45,351 45,351 47,540 (10,158) (7,969)
4,000 4,000 4,153 153 - - -
(465,551) (531,240) (491,357) 39,883
(1,620,572) (1,620,572) (1,620,572) -
(2,082,123) (2,147,812) (2,107,776) 40,036 -
377,249 195,329 532,475 (2,024) 335,122 45,351 45,351 47,540 (10,158) (7,969)
- - - - 91,380 131,380 131,380 -
(383,783) (383,783) (383,783) 4( 6,460) 4( 6,460) (40,141) 6,319
(383,783) (383,783) (383,783) 44,920 84,920 91,239 6,319
(6,534) (188,454) 148,692 (2,024) 335,122 90,271 130,271 138,779 (10,158) (1,650)
227,596 227,596 227,596 9( 1,380) 9( 1,380) (91,380)
$ 221,062 $ 39,142 $ 376,288 $ (2,024) $ 335,122 $ (1,109) $ 38,891 $ 47,399 $ (10,158) $ (1,650)
Town of North Andover,Massachusetts 65 Additional Information