HomeMy WebLinkAbout2012 Annual Town Report
TOWN OF NORTH ANDOVER
MASSACHUSETTS
COMPREHENSIVE ANNUAL FINANCIAL REPORT
For Fiscal Year Ended June 30, 2012
Board of Selectmen
Town Manager
Front row: Rosemary C. Smedile, Andrew Maylor (Town Mgr), Tracy M. Watson
Back row: William F. Gordon, Donald B. Stewart, Richard M. Vaillancourt
TOWN OF NORTH ANDOVER, MASSACHUSETTS
COMPREHENSIVE ANNUAL FINANCIAL REPORT
For the Fiscal Year Ended
June 30, 2012
Prepared by:
Lyne M. Savage, Budget Director/Town Accountant
TOWN OF NORTH ANDOVER, MASSACHUSETTS
COMPREHENSIVE ANNUAL FINANCIAL REPORT
JUNE 30, 2012
TABLE OF CONTENTS
IntroductorySection...................................................................................................................................................... 1
Letter of Transmittal .....................................................................................................................................................3
Organization Chart .......................................................................................................................................................9
Principal Town Officials ..............................................................................................................................................10
FinancialSection .........................................................................................................................................................11
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Independent Auditors’ Report ....................................................................................................................................13
Management’s Discussion and Analysis ................................................................................................................... 15
Basic Financial Statements........................................................................................................................................ 23
Statement of Net Assets ......................................................................................................................................... 25
Statement of Activities ............................................................................................................................................26
Governmental funds – balance sheet ....................................................................................................................28
Reconciliation of the governmental funds balance sheet total fund balances to the statement of net assets ....... 29
Governmental funds – statement of revenues, expenditures and changes in fund balances ............................... 30
Reconciliation of the statement of revenues, expenditures, and changes in fund balances of governmental
funds to the statement of activities .........................................................................................................................31
Proprietary funds – statement of net assets ...........................................................................................................32
Proprietary funds – statement of revenues, expenses and changes in fund net assets ....................................... 33
Proprietary funds – statement of cash flows ..........................................................................................................34
Fiduciary funds – statement of fiduciary net assets ...............................................................................................35
Fiduciary funds – statement of changes in fiduciary net assets .............................................................................36
Notes to basic financial statements ........................................................................................................................37
RequiredSupplementaryInformation ........................................................................................................................64
Schedule of revenues, expenditures and changes in fund balance – general fund – budget and actual.............. 66
Retirement System Schedules ...............................................................................................................................68
Retirement system schedule of funding progress ..............................................................................................69
Retirement system schedule of employer contributions .....................................................................................70
Other postemployment benefit plan schedules ......................................................................................................71
Other postemployment benefit plan schedule of funding progress and schedule of employer contributions .... 72
Other postemployment benefit plan actuarial methods and assumptions ..........................................................73
Notes to required supplementary information ........................................................................................................74
Combining Statements ...............................................................................................................................................77
Nonmajor Governmental Funds .............................................................................................................................78
Nonmajor governmental funds – combining balance sheet ...............................................................................80
Nonmajor governmental funds – combining statement of revenues, expenditures, and changes in fund
balances .............................................................................................................................................................84
Agency Fund ..........................................................................................................................................................88
Agency fund – statement of changes in assets and liabilities ............................................................................89
StatisticalSection ........................................................................................................................................................91
Net assets by component – last ten fiscal years ........................................................................................................92
Changes in net assets – last ten fiscal years .............................................................................................................93
Fund balances, governmental funds – last ten fiscal years .......................................................................................95
Changes in fund balances, governmental funds – last ten fiscal years .....................................................................96
Assessed value and actual value of taxable property by classification and tax rates – last ten fiscal years ............ 97
Principal taxpayers – current year and nine years ago .............................................................................................98
Property tax levies and collections – last ten fiscal years ..........................................................................................99
Ratios of outstanding debt and general bonded debt – last ten fiscal years ...........................................................100
Direct and overlapping governmental activities debt – as of June 30, 2012. ..........................................................101
Computation of legal debt margin – last ten fiscal years .........................................................................................102
Demographic and economic statistics – last ten fiscal years ..................................................................................103
Principal employers (excluding Town) – current year and nine years ago ..............................................................104
Full-time equivalent Town employees – last ten fiscal years ...................................................................................105
Operating indicators by function/program – last ten calendar years .......................................................................106
Capital asset statistics by function/program – last ten fiscal years ..........................................................................108
Additionalinformation ..............................................................................................................................................109
Enterprise funds – schedule of revenues, expenses and changes in fund net assets – budgetary basis – budget
and actual ................................................................................................................................................................. 110
Introductory Section
North Andover High School
Introductory Section
Town of North Andover, Massachusetts 1 Comprehensive Annual Financial Report
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Town of North Andover, Massachusetts 2 Comprehensive Annual Financial Report
Town of North Andover
120 Main Street
North Andover, Massachusetts 01845
(978) 688-9523
FAX (978) 688-9522
Letter of Transmittal
December 14, 2012
To Members of the Board of Selectmen and Citizens of the Town of North Andover:
At the close of each fiscal year, state law requires the Town of North Andover to publish a complete set of
financial statements in conformity with accounting principles generally accepted in the United States of America
(GAAP), and that are audited in accordance with generally accepted auditing standards by a firm of licensed
certified public accountants. Pursuant to that requirement, we hereby issue the Comprehensive Annual Financial
Report (CAFR) of the Town of North Andover, Massachusetts, for the fiscal year ending June 30, 2012 for your
review.
This report consists of management’s representations concerning the finances of the Town of North Andover.
Consequently, management assumes full responsibility for the completeness and reliability of all the information
presented in this report. To provide a reasonable basis for making these representations, management of the
Town of North Andover has established a comprehensive internal control framework that is designed both to
protect the government’s assets from loss, theft, or misuse and to compile sufficient reliable information for the
preparation of the Town of North Andover’s financial statements in conformity with GAAP. Because the cost of
internal controls should not outweigh their benefits, the Town of North Andover’s comprehensive framework of
internal controls has been designed to provide reasonable rather than absolute assurance that the financial
statements for the fiscal year ended June 30, 2012, are fairly presented in conformity with GAAP. The
independent auditor’s report is presented as the first component of the financial section of this report.
The Town of North Andover’s financial statements have been audited by Powers & Sullivan, LLC, a firm of
licensed certified public accountants. The goal of the independent audit was to provide reasonable assurance
that the financial statements of the Town of North Andover for the fiscal year ended June 30, 2012, are free of
material misstatement. The independent audit involved examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements; assessing the accounting principles used and significant
estimates made by management; and evaluating the overall financial statement presentation. The independent
auditor concluded, based upon the audit, that there was a reasonable basis for rendering an unqualified opinion
that the Town of North Andover’s financial statements for the fiscal year ended June 30, 2012, are fairly
presented in conformity with GAAP. The independent auditor’s report is presented as the first component of the
financial section of this report.
Town of North Andover, Massachusetts 3 Comprehensive Annual Financial Report
The independent audit of the financial statements of the Town of North Andover was part of a broader, federally
mandated “Single Audit” designed to meet the special needs of federal grantor agencies. The standards
governing Single Audit engagements require the independent auditor to report not only on the fair presentation of
the financial statements, but also on the audited government’s internal controls and compliance with legal
requirements, with special emphasis on internal controls and legal requirements involving the administration of
federal awards. These reports are available in the Town of North Andover’s separately issued Single Audit
Report.
GAAP requires that management provide a narrative introduction, overview, and analysis to accompany the basic
financial statements in the form of Management’s Discussion and Analysis (MD&A). This letter of transmittal is
designed to complement that analysis and should be read in conjunction with it. The Town of North Andover’s
MD&A can be found immediately following the report of the independent auditors.
Profile of the Town
The Town of North Andover is located in Essex County, approximately 24 miles north of Boston. The Town is
26.63 square miles and lies along the banks of the Merrimack River and is surrounded by the Towns of Boxford,
Andover, Middleton, North Reading, and the Cities of Lawrence, Methuen and Haverhill. The settlement of the
Town began in 1640 and was incorporated as Andover in 1646. The community was split into the North Parish
(now North Andover) and South Parish (now Andover) in 1709 and North Andover was incorporated as a
separate entity in 1855. North Andover is governed by an open Town Meeting form of government, a five-member
Board of Selectmen and a Town Manager pursuant to a Home Rule Charter that went into effect in 1986.
Although North Andover contains several Commercial Office Parks, the Town has retained a rural character and
contains over 3,000 acres of preserved open space. North Andover is served by the following interstates: Route
495, Route 125, Route 133 and Route 114. North Andover is a thriving community with an excellent school
system, efficient services and a strong commitment to its citizens. As of the 2010 U.S Census the Town’s
population is 28,352.
The Town provides general governmental services for its citizens, including police and fire protection, collection
and disposal of refuse, public education for pre-kindergarten through grade twelve, water and sewer services,
parks and recreation, health and social services, libraries/culture as well as maintenance of streets and other
infrastructures. The Merrimac Valley Transit Authority ("MVTA") provides bus coverage for certain routes around
the Town with connections to the surrounding communities within the Merrimac Valley area.
The Town is governed by a home rule charter that provides for an Open Town Meeting - Board of Selectmen -
Town Manager form of town government; with Town Meeting defined as the Legislative body, Board of Selectmen
as the Executive body and the Manager as the chief administrative officer. In accordance with Chapter 2 “the
legislative powers of the town shall be exercised by a town meeting open to all registered voters of the town.” As
defined in Chapter 3 “the Board of Selectmen shall serve as the chief goal-setting and policy-making agency of
the town and, as such, shall not normally administer the day-to-day affairs of the town, but shall instead regularly
direct the Town Manager to help it in carrying out its administrative duties, and make recommendations to the
town meeting relating to actions required to be taken by that body.” As defined in Chapter 4 “the Town Manager
shall be the chief administrative officer of the town and shall be responsible for administering and coordinating all
employees, activities and departments placed by general law, this charter or by-law under the control of the Board
of Selectmen and of the Town Manager.”
The School Committee has general charge and superintendence of the public schools of the Town. The School
Committee is comprised of five members elected at large. The School Committee has the power to select and
terminate a superintendent of schools, establish educational goals and policies for the schools consistent with the
requirements of the laws of the commonwealth and standards established by the Commonwealth. The School
Committee also has all the power and duties given to school committees by the laws of the Commonwealth.
Town of North Andover, Massachusetts 4 Comprehensive Annual Financial Report
In addition to being shaped and influenced by the Town’s elected officials and appointed staff, Town policy and
programs are impacted by the actions of the Town’s Boards and Commissions. The size, responsibility and
source of authority of the Town’s Boards and Commissions vary. With the exception of those members who
derive their appointments as a result of their position in Town government and the Town Charter mandating their
membership, the Board of Selectmen and Town Manager appoint members in accordance with the Town Charter
or Massachusetts General Law.
The Town provides a full array of high quality services to the general public, including: full-time police and fire
protection; schools for grades kindergarten through 12, (five elementary, one middle, one senior high, and one
regional vocational technical high school); solid waste disposal and recycling; street maintenance and snow
removal; public health and natural resource protection; community development and planning; elder, youth and
veteran services; a full service library; and various parks, playgrounds, conservation lands, and recreational
programs. The Town also operates its own water supply, purification, and distribution system, and provides
sanitary waste disposal via connections to a regional treatment facility (Greater Lawrence Sanitary District).
During the summer months the Town operates Steven’s Pond, a family and youth oriented recreation area
located off Pleasant Street, which includes recreational and instructional swimming, shaded picnic tables,
volleyball, horseshoe pits and a children’s playground. The Town of North Andover is committed to a high degree
of community responsiveness, providing high quality services to its citizens, and conducting all its affairs in a
professional manner.
Factors Affecting Economic Condition
The information presented in the financial statements is perhaps best understood when it is considered from the
broader perspective of the specific environment within which the Town of North Andover operates.
Local economy: North Andover is a well-balanced mix of commercial development situated in three distinct
areas throughout Town. Downtown North Andover serves the local community with small retail and office space
as well as providing a mix of fast food and full service restaurants. The downtown is also home to a large mix-use
mill complex that houses larger companies, rental housing, manufacturing, restaurants and offices.
North Andover is bisected by two state highways that connect to an interstate highway. These two corridors,
which comprise the other commercial districts, boast three industrial parks that serve larger national and
international businesses. The state highways also provide a mix of regional commercial and retail businesses that
serve residents and neighboring communities. Located at the intersection of the two state highways, on a 220-
acre campus, is the Merrimack College with over 2,300 students. The college was recently ranked as one of the
nation’s best liberal arts colleges.
Long-term financial planning: The Town of North Andover has a proud history of maintaining a solid financial
position in all economies, as indicated by its “AA/Stable” bond rating. The Town’s financial actions are generally
guided by a number of formal financial policies including long range planning tools such as a five year Capital
Improvement Program, prioritizing spending plans and identifying discretionary spending, pay-as-you go financing
strategies, long-term planning for all liabilities including pension and insurance reserves, and municipal best
practices, which are reviewed annually at the beginning of each budget development cycle.
Given a number of years of reduced state aid, the Town has been able to minimize the impact to municipal and
school services through a combination of prudent budgeting, user fee adjustments, strong tax collections, and
continued property growth. The Town has also been able to continue to make transfers into their reserve funds
during these challenging years. At June 30, 2012 the Town’s General Stabilization Fund totaled $2.6 million.
Town of North Andover, Massachusetts 5 Comprehensive Annual Financial Report
The Town is currently managing approximately $59 million of long debt. This indebtedness consists of
approximately $33.8 million of general obligation bonds. Approximately $8.8 million or 15% of the $59 million is
scheduled to be paid by the end of fiscal 2013 and the remaining $50.2 million by fiscal 2030. Approximately
$24.7 million is self-supporting through enterprise fund revenues. Also, the Massachusetts School Building
Authority will be reimbursing the Town approximately $1.2 million of the general obligation bonds future principal
and interest payments through a program to assist communities in the completion of green repair projects on
school facilities.
The Town has authorized but not issued debt for, school construction, water and sewer infrastructure, and other
various projects totaling $4 million as of June 30, 2012.
The Town of North Andover has enhanced its revenue flexibility by establishing enterprise funds and many other
user supported programs. This has allowed the Town to shift the operating costs to the users of certain services
so that little or no tax support goes towards providing these services. By doing so, the Town is able to provide the
maximum tax dollars available to all other services.
The Town has several committees which assist the Town Manager on different levels. In May 2004, Town
Meeting adopted the Revenue/Fixed Cost Committee whose main purpose is to advise the Town Manager and
other Town officials on projected revenues, other financial sources and fixed cost to facilities as part of the annual
budget development process. The Audit Committee assists the Town Manager with the selection of the
independent auditor, oversight of the audit process, and resolution of audit findings.
Cash management policies and practices: It is the policy of the Town of North Andover to comply with the laws
of the Commonwealth of Massachusetts regarding the investment of public funds while achieving the highest
return with the maximum security and meeting the daily cash flow demands of the Town.
At fiscal year-end, the carrying amount of deposits totaled $33,725,320 and the bank balance totaled
$35,436,735. Of the bank balance, $5,020,185 was covered by Federal Depository Insurance, $21,004,437 was
covered by the depositor’s insurance fund, and $9,412,113 was collateralized.
Risk management: The Town of North Andover manages its risk through a combination of self-insured programs
and premium based coverage with commercial insurance carriers. (Health care and workers compensation are a
combination of self-insured and premium based plans). The Town is exposed to various risks of loss related to
general liability, property and casualty, workers’ compensation and unemployment compensation claims.
Buildings and property are fully insured against fire, theft and natural disaster to the extent that losses exceed the
Town’s deductible per incident. These deductibles vary by type of incident, none of which exceed $25,000.
Pension and other postemployment benefits: The Town of North Andover contributes to the Essex Regional
Retirement System. Using an estimated 8.25% annual return on funds the System recently reported that the total
unfunded liability for the pension plan totaled $257.8 million, an increase of $114 million, or more than 79%, from
its January 1, 2008 actuarial valuation. North Andover’s share of this liability is determined annually based on
payroll cost. The Town estimates its share of the unfunded liability to be approximately $36.6 million.
The Town of North Andover also provides postemployment health care benefits for certain retirees and their
dependents. At year end there were 417 retired employees, beneficiaries, and dependents receiving these
benefits which are currently financed on a pay-as-you-go basis. In accordance with GASB 45 the Town
conducted an actuarial valuation to determine its net unfunded liability which, at July 1, 2010, was determined to
be $118.6 million; and while the Town established an Other Postemployment Benefit Trust fund in 2010, no
contributions yet have been made to Trust. Additional information on the Town of North Andover’s pension and
postemployment benefits can be found in the notes to the financial statements.
Town of North Andover, Massachusetts 6 Comprehensive Annual Financial Report
Recently, significant improvements in financial reporting have been made and more are currently proposed. In
2009, GASB required the full disclosure of other postemployment benefits (OPEB) in footnotes and the recording
of the cumulative actuarial liability owed as of a balance sheet date over a thirty year period beginning in 2009.
Among the proposals GASB recently made is a requirement that the total cumulative OPEB liability owing workers
for past services performed, or (the cumulative actuarial liability owed as of a balance sheet date) would be fully
recognized as a liability as of a balance sheet date.
GASB has also approved changes in accounting for governments that provide pension benefits and others that
report and administer pension plans for governmental entities. While these changes only relate to financial
reporting and do not extend to how governments approach pension plan funding, there is a close connection in
existing GASB standards between how governments account for and report information about them in their
financial statements. Under these proposals, the Town would be required to record the entire unfunded
actuarially owed pension obligation as a liability on the statement of net position, rather than the current method of
just disclosing these future obligations in a footnote and supplemental data and only recording the current year’s
funding requirement as an expense. In effect, this proposal would require the Town’s financial statements to
reflect actual liabilities, when incurred, rather than the current method of not recording them as liabilities and
accounting for them as a future costs, even though these were incurred in prior periods. By way of example, the
cost of a wage increase would not only increase current payroll requirements for budgeting purposes, but the
financial statements would also account for the actuarial costs of pension related benefits attributable to these
raises in the period(s) when these raises were incurred. Second, pension plan administrators, such as the Essex
County Retirement Board (ECRB) would be required to calculate pension obligations using realistic expected
rates of returns (presently ECRB uses 8.25%) and more accurate and conservative assumptions than what have
been used in the past to dramatically understate the amount of the unfunded liabilities owed employees.
The implementation of these significant GASB requirements would dramatically alter the presentation of the
Town’s financial position and its operating results to methods required to be used by industry and other non-
governmental units.
Finally, as previously indicated, the implementation of these GASB requirements could fundamentally change the
way government’s budget costs and negotiate labor contracts, as well as force local town and cities to seek state
legislative relief on future obligations due employees, either new or existing.
Annual budget process and controls: The Town Manager is responsible for preparing and presenting the
budget to the Finance Committee and the Board of Selectmen. The Selectmen review all requests and Town
wide issues and present a budget to Town Meeting for approval. A nine member Finance Committee reviews the
budget and makes its independent recommendations to Town Meeting.
The level of budgetary control is established by Town Meeting and this approval defines the level at which
expenditures may not exceed appropriations. The Town Accountant is responsible for ensuring all payroll and
invoices are within the budgetary control level before authorizing payment. Additional appropriations may be
approved at subsequent Town Meetings. These controls ensure compliance with the budget approved by Town
Meeting.
Awards and Acknowledgements
The Town received E-Government awards in FY08, FY09 and FY10 from Common Cause Massachusetts in
recognition of its commitment to open government by posting all key government records on its website. North
Andover’s Police Department is a Massachusetts Accredited Police Department since May 2010. The Town has
also submitted their FY13 budget to the Government Finance Officers Association to determine the eligibility for
the Distinguished Budget Presentation Award.
Town of North Andover, Massachusetts 7 Comprehensive Annual Financial Report
The preparation of this report would not have been possible without the efficient and dedicated services of the
Finance and Accounting department staffs. We would like to express our appreciation to all the members of the
departments who assisted and contributed to the preparation of this report. Credit must also be given to the Town
Selectmen, Finance Committee and Audit Committee for their unfailing support for maintaining the highest
standards of professionalism in the management of the Town of North Andover’s finances.
Respectfully submitted,
Andrew W. Maylor Lyne M. Savage
Town Manager Budget Director/Town Accountant
Town of North Andover, Massachusetts 8 Comprehensive Annual Financial Report
Comprehensive Annual Financial Report
9
Organization Chart Town of North Andover, Massachusetts
Principal Town Officials
Elected Officials
Board of Selectmen William F. Gordon, Chairman
Rosemary C. Smedile, Licensing Chairman
Donald B. Stewart
Richard M. Vaillancourt, Clerk
Tracy M. Watson
Town Moderator Mark DiSalvo
School Committee Laurie Burlaff, Chair
Christine Allen, Vice Chair
Brian Gross, Member
Stan Limpet, Member
Andrew McDevitt, Clerk
Appointed Officials – by Board of Selectmen
Town Manager Andrew W. Maylor
Superintendent Kevin Hutchinson
Budget Director/Town Accountant Lyne M. Savage
Fire Chief Andrew Melnikas
Police Chief Paul J. Gallagher
Town Council Urbelis & Fieldsteel, LLP
Appointed Officials – by Town Manager
Assistant Town Manager/Purchasing Raymond Santilli
Community Development Director Curt T. Bellavance
Conservation Administrator Jennifer A. Hughes
Director of Elder Services Irene M. O’Brien
Human Resources Cathy J. Darby
Inspector of Building Gerald A. Brown
Library Director Mary Rose Quinn
Public Works Director Bruce D. Thibodeau
Public Health Director Susan Y. Sawyer
Town Clerk Joyce A. Bradshaw
Town Treasurer Jennifer A. Yarid
Town Planner Judy Tymon
Veterans Director Edward V. Mitchell
Youth Services Director Richard Gorman
Town of North Andover, Massachusetts 10 Comprehensive Annual Financial Report
Financial Section
Hay Scales
Financial Section
Town of North Andover, Massachusetts 11 Comprehensive Annual Financial Report
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Town of North Andover, Massachusetts 12 Comprehensive Annual Financial Report
Independent Auditors’ Report
To the Honorable Board of Selectmen
Town of North Andover, Massachusetts
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, 2012, 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
andthe standards applicable to financial audits contained inGovernment 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, 2012, 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 December 14, 2012,
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 grantagreements 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.
Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise
the Town of North Andover’s basic financial statements. The combining statements, as listed in the table of
contents, are presented for the purpose of additional analysis and are not a required part of the financial
statements. Such information is the responsibility of management and was derived from and relates directly to
the underlying accounting and other records used to prepare the financial statements. The information has been
subjected to the auditing procedures applied in the audit of the financial statements and certain additional
procedures, including comparing and reconciling such information directly to the underlying and other records
used to prepare the financial statements or to the financial statements themselves, and other additional
procedures in accordance with auditing standards generally accepted in the United States of America. In our
opinion, the information is fairly stated in all material respects in relation to the financial statements taken as a
whole.
Town of North Andover, Massachusetts 13 Comprehensive Annual Financial Report
Accounting principles generally accepted in the United States of America require that the management’s
discussion and analysis and required supplementary information, as listed in the table of contents, be presented
to supplement the basic financial statements. Such information, although not a part of the basic financials
statements, is required by the Governmental Accounting Standards Board who considers it to be an essential part
of financial reporting for placing the basic financial statements in an appropriate operational, economic, or
historical context. We have applied certain limited procedures to the required supplementary information in
accordance with auditing standards generally accepted in the United States of America, which consisted of
inquiries of management about the methods of preparing the information and comparing the information for
consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge
we obtained during our audit of the basic financial statements. We do not express an opinion or provide any
assurance on the information because the limited procedures do not provide us with sufficient evidence to
express an opinion or provide any assurance.
The introductory, statistical sections and additional information, as listed in the table of contents, are presented for
purposes of additional analysis and are not a required part of the financial statements. Such information has not
been subjected to the auditing procedures applied in the audit of the financial statements and, accordingly, we
express no opinion on them.
December 14, 2012
Town of North Andover, Massachusetts 14 Comprehensive Annual Financial Report
Management’s Discussion and Analysis
Town of North Andover, Massachusetts 15 Comprehensive Annual Financial Report
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, 2012. 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) for states and local governmental entities. Users of these financial statements (such as investors, rating
agencies and management) 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 $2.4 million in fiscal 2012. The major factor contributing to this
decrease is the long term amortization of the OPEB liability, which increased by $7.8 million in fiscal 2012
to bring the total recorded liability to $29.5 million at year end. The impact of this expense was offset by
several positive factors that are more fully described later in this section.
At the close of the current fiscal year, the Town’s general fund reported a fund balance of $6.8 million, an
increase of $2.1 million in comparison with the prior year. Total fund balance represents 8% of general
fund expenditures.
The Town’s governmental debt (short-term and long-term combined) decreased by $3.2 million during the
current fiscal year. This was due to the net effect of $6.5 million in principal payments on short and long-
term debt and the issuance of $3.3 million in long-term debt for building renovations, communication and
computer equipment, and infrastructure.
The Town’s business–type activities debt increased by $2.3 million during the current fiscal year. This
was due to the net effect of $3.6 million in principal payments and the issuance of $1.3 million of debt for
various infrastructure improvements.
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.
Thestatement 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.
Town of North Andover, Massachusetts 16 Comprehensive Annual Financial Report
Thestatement 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).
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 governmental-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.
TheInternal 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.
Town of North Andover, Massachusetts 17 Comprehensive Annual Financial Report
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.
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 over time as a useful indicator of a government’s financial position. North
Andover’s assets exceeded liabilities by $137.9 million at the close of fiscal 2012.
Net assets include $142.4 million as an 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, $8.2 million, represents resources that are subject to external restrictions
on how they may be used. The remaining balance of unrestricted net assetshas a year-end deficit balance of
($12.7) million. The primary reason for this deficit balance is the recognition of the $30.9 million other
postemployment benefits liability.
At the end of the current fiscal year, the Town is able to report positive balances in two of the three categories of
net assets, for the Town as a whole and for its governmental activities. Its business-type activities report positive
balances in both categories.
The governmental activity and business-type activity components of the Town are presented on the following
pages.
Town of North Andover, Massachusetts 18 Comprehensive Annual Financial Report
Governmental Activities. The Town of North Andover’s assets exceeded liabilities for governmental activities by
$96.2 million at the close of fiscal 2012.
FY 2012FY 2011
Assets:
Current assets………………………………………$31,543,640 $28,372,788
Noncurrent assets (excluding capital)…………… 784,791 1,144,264
Capital assets……………………………………… 134,216,792 135,538,168
Total assets………………………………………166,545,223165,055,220
Liabilities:
Current liabilities (excluding debt)………………… 6,217,551 6,832,998
Noncurrent liabilities (excluding debt)…………… 30,786,413 23,055,499
Current debt………………………………………… 5,082,747 6,492,129
Noncurrent debt……………………………………… 28,215,337 30,042,741
Total liabilities…………………………………70,302,048 66,423,367
Net Assets:
Capital assets net of related debt………………… 105,155,466102,101,444
Restricted…………………………………………… 8,225,177 7,574,263
Unrestricted………………………………………… (17,137,468) (11,043,854)
Total net assets…………………………………96,243,175 98,631,853
$$
Program revenues:
Charges for services…………………………………$7,169,899 $6,564,295
Operating grants and contributions……………… 18,209,285 18,853,013
Capital grants and contributions…………………… 1,540,050 1,856,297
General Revenues:
Real estate and personal property taxes………… 60,060,304 57,726,043
Tax liens……………………………………………… 355,176 576,219
Motor vehicle and other excise taxes……………… 3,923,189 3,748,360
… 258,471 223,861
Penalties and interest on taxes…………………
Payments in lieu of taxes…………………………… 1,903,510 1,867,094
… 1,363,553 1,312,401
Community preservation taxes…………………
Grants and contributions not restricted to
… 2,133,066 2,222,543
specific programs………………………………
Unrestricted investment income…………………… 194,547 445,515
Total revenues………………………………… 95,395,64197,111,050
Expenses:
General government………………………………… 3,794,618 4,559,013
Public safety………………………………………… 14,825,939 15,134,400
Education…………………………………………… 69,540,668 70,860,920
Public works………………………………………… 5,715,405 6,485,227
Health and human services………………………… 2,146,195 2,080,778
Culture and recreation……………………………… 2,015,651 2,192,035
Support services…………………………………… 1,266,046 -
Interest……………………………………………… 1,354,251 1,370,287
Total expenses…………………………………100,658,773102,682,660
Excess (deficiency) before transfers……………… (7,287,019)(3,547,723)
Transfers………………………………………………… 1,121,6371,159,045
Change in net assets…………………………………$(2,388,678) $(6,165,382)
Town of North Andover, Massachusetts 19 Comprehensive Annual Financial Report
The governmental expenses totaled $100.7 million of which $26.9 million (27%) was directly supported by
program revenues consisting of charges for services, operating and capital grants and contributions. General
revenues totaled $70.2 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 $2.4 million during the current fiscal year. This was due to a $7.8
million increase in the other postemployment benefits liability that was offset by positive budgetary results of $2
million in the general fund, the recognition of $1.5 million in capital grants, a $1.4 million increase in the
community preservation and nonmajor funds and an increase of $1.1 million in the internal service fund.
In fiscal 2012, The Town consolidated support services into a separate functional line-item. Prior to fiscal 2012,
the support services were primarily blended within the general government functional line-item.
Business-type Activities. For the Town’s business-type activities, assets exceeded liabilities by $41.7 million at
the close of fiscal 2012.
FY 2012FY 2011
Assets:
Current assets………………………………………$10,805,712 $9,927,896
Noncurrent assets (excluding capital)…………… 777,790 875,504
Capital assets……………………………………… 56,756,744 56,875,340
Total assets……………………………………… 67,678,74068,340,246
Liabilities:
Current liabilities (excluding debt)………………… 641,096 756,965
Noncurrent liabilities (excluding debt)…………… 1,520,968 1,219,505
Current debt………………………………………… 3,535,647 3,537,069
Noncurrent debt……………………………………… 20,959,743 23,242,392
Total liabilities…………………………………26,657,454 28,755,931
Net Assets:
Capital assets net of related debt………………… 37,264,739 36,443,088
Unrestricted………………………………………… 4,418,053 2,479,721
Total net assets…………………………………$41,682,792$ 38,922,809
Program revenues:
Charges for services…………………………………$10,732,749 $10,787,070
Operating grants and contributions……………… 234,388 141,724
Total revenues………………………………… 10,928,79410,967,137
Expenses:
Water………………………………………………… 3,180,102 3,188,559
Sewer………………………………………………… 3,572,401 3,877,585
Osgood Hill ………………………………………… 295,606 325,092
Total expenses………………………………… 7,391,2367,048,109
Excess (deficiency) before transfers……………… 3,537,5583,919,028
Transfers………………………………………………… (1,121,637)(1,159,045)
Change in net assets………………………………… 2,759,983 2,415,921
$$
Town of North Andover, Massachusetts 20 Comprehensive Annual Financial Report
Business-type net assets of $37.3 million represent the investment in capital assets while $4.4 million is
unrestricted. The Town’s business-type activities net assets increased by $2.8 million in the current fiscal year.
The water enterprise fund net assets increased by $1.6 million. This increase was due to debt service principal
payments exceeding depreciation expense by $1.1 million and water hookup and other fees exceeding the
budget.
The sewer enterprise fund net assets increased by $1.2 million. This increase was due to debt service principal
payments exceeding depreciation expense by $741,000 and a $572,000 reduction in the sewer assessment from
the Greater Lawrence Sanitary District.
The Osgood Hill enterprise fund net assets increased by $2,700 which was in line with anticipated results.
Financial Analysis of the Government’s Funds
As noted earlier, the Town uses fund accounting to ensure and demonstrate compliance with finance-related legal
requirements.
Governmental funds. The focus of the Town of North Andover’s governmental funds is to provide information on
near-term inflows, outflows, and balances of spendable resources. Such information is useful in assessing the
Town of North Andover’s financing requirements. In particular, unassigned fund balance may serve as a useful
measure of a government’s net resources available for spending at the end of the fiscal year.
As of the end of the current fiscal year, governmental funds reported combined ending fund balances of $18.5
million, of which $6.8 million is for the general fund, $5.8 million is for the community preservation fund, and $5.9
million is for non-major governmental funds. Cumulatively there was an increase of $3.5 in fund balances from
the prior year.
The general fund is the chief operating fund. At the end of the current fiscal year, unassigned fund balance of the
general fund totaled $5.4 million, while total fund balance was $6.8 million. $965,000 of fund balance was
restricted for debt service. Fund balance has been assigned for encumbrances in the amount of $412,000. Total
fund balance represents 8% of general fund expenditures. The Town’s general fund increased by $2.1 million in
fiscal 2012 which was due to $1.2 million of better than anticipated revenue collections, such as tax liens, motor
vehicle and other excise taxes, and miscellaneous nonrecurring revenue. Also contributing to the increase were
various underspent appropriations that included general government, public safety, and public works.
The community preservation fund increased by $888,000 in fiscal 2012, which is due to timing differences
between the receipt and expenditure of surcharge and state grant revenues.
The nonmajor governmental funds increased by $512,000 in fiscal 2012, which is due to timing differences
between the receipt and expenditure of bond proceeds.
General Fund Budgetary Highlights
The original fiscal year 2012 approved budget for the General Fund authorized $78.9 million in appropriations and
other amounts to be raised. This includes $184,000 of encumbrances and continuing appropriations carried
forward from the prior year. During fiscal year 2012 there were no supplemental appropriations.
Town of North Andover, Massachusetts 21 Comprehensive Annual Financial Report
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, 2012,
amounts to $191 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 $6.2 million for capital asset additions in fiscal 2012.
The major governmental capital asset events during the current fiscal year included the purchase of a new
internet telephone system, a new HVAC system at the library, roof and window replacements at various schools,
a new dump truck, as well as various sidewalk and roadway improvements.
The major business-type capital asset events during the current fiscal year consisted of a new pickup truck, as
well as various water and sewer main improvements.
Debt Administration. Outstanding gross long-term governmental debt, as of June 30, 2012, totaled $33.8
million, a decrease of $2.7 million from the prior fiscal year. This was due to the issuance of $3.3 million of
general obligation bonds and principal payments totaling $6 million.
Outstanding gross long-term debt of the water enterprise fund, as of June 30, 2012, totaled $11.6 million, a
decrease of $743,000 from the prior fiscal year. This was due to the issuance of $1.2 million of general obligation
bonds and principal payments totaling $1.9 million.
Outstanding gross long-term debt of the sewer enterprise fund, as of June 30, 2012, totaled $13.2 million, a
decrease of $1.6 million. This was due to the issuance of $78,000 of general obligation bonds and principal
payments totaling $1.7 million.
Please refer to notes 4, 7 and 8 to the basic financial statements for further discussion of the major capital and
debt activity.
Requests for Information
This financial report is designed to provide a general overview of the Town of North Andover’s finances for all
those with an interest in the government’s finances. Questions concerning any of the information provided in this
report or requests for additional financial information should be addressed to the Budget Director/Town
Accountant, Town Hall, 120 Main Street, North Andover, Massachusetts 01845.
Town of North Andover, Massachusetts 22 Comprehensive Annual Financial Report
Basic Financial Statements
Town of North Andover, Massachusetts 23 Comprehensive Annual Financial Report
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Town of North Andover, Massachusetts 24 Comprehensive Annual Financial Report
STATEMENT OF NET ASSETS
JUNE 30, 2012
Primary Government
GovernmentalBusiness-type
ActivitiesActivitiesTotal
ASSETS
CURRENT:
Cash and cash equivalents……………………………$ 23,864,273$ 7,661,854 $ 31,526,127
Investments……………………………………………
… 400,886 - 400,886
Receivables, net of allowance for uncollectibles:
Real estate and personal property taxes………… 1,100,313 - 1,100,313
Tax and utility liens………………………………… 1,967,983 106,8502,074,833
Motor vehicle and other excise taxes……………… 269,206 - 269,206
User charges………………………………………… - 2,939,294 2,939,294
Community preservation…………………………… 24,551 - 24,551
Departmental and other…………………………… 563,374 - 563,374
Intergovernmental…………………………………… 2,912,310 97,7143,010,024
Tax foreclosures………………………………………… 440,744 - 440,744
NONCURRENT:
Intergovernmental…………………………………… 784,791 777,790 1,562,581
Capital assets, nondepreciable……………………… 22,687,629 6,106,297 28,793,926
Capital assets, net of accumulated depreciation…… 111,529,163 50,650,447 162,179,610
TOTAL ASSETS…………………………………………… 166,545,223 68,340,246 234,885,469
LIABILITIES
CURRENT:
Warrants payable……………………………………… 1,555,953 424,511 1,980,464
Accrued payroll………………………………………… 2,524,252 - 2,524,252
Accrued health claims payable………………………… 518,000 - 518,000
Tax refunds payable…………………………………… 855,000 - 855,000
Accrued interest………………………………………… 425,152 207,585 632,737
Other liabilities…………………………………………… 71,034 - 71,034
Liabilities due depositors……………………………… 106,160 - 106,160
Compensated absences……………………………… 162,000 9,000 171,000
Bonds payable………………………………………… 5,082,747 3,535,647 8,618,394
NONCURRENT:
Compensated absences……………………………… 1,313,000 75,000 1,388,000
Other postemployment benefits……………………… 29,473,413 1,445,968 30,919,381
Bonds payable………………………………………… 28,215,337 20,959,743 49,175,080
TOTAL LIABILITIES……………………………………… 70,302,048 26,657,454 96,959,502
NET ASSETS
Invested in capital assets, net of related debt…………… 105,155,466 37,264,739 142,420,205
Restricted for:
Debt service……………………………………………… 964,966 - 964,966
Community preservation……………………………… 6,205,683 - 6,205,683
Permanent funds:
Expendable……….………………………………… 488,487 - 488,487
Nonexpendable……………………………………… 29,159 - 29,159
Gifts and grants………………………………………… 536,882 - 536,882
Unrestricted………………………………………………… (17,137,468) 4,418,053 (12,719,415)
TOTAL NET ASSETS………………………………………$ 96,243,175$ 41,682,792 $ 137,925,967
See notes to basic financial statements.
Town of North Andover, Massachusetts25Comprehensive Annual Financial Report
STATEMENT OF ACTIVITIES
FISCAL YEAR ENDED JUNE 30, 2012
Program Revenues
OperatingCapital
Charges forGrants andGrants andNet (Expense)
Functions/ProgramsExpensesServicesContributionsContributionsRevenue
Primary Government:
Governmental Activities:
General government……………… $ 3,794,618 $ 643,728 $ 520,141 $ - $ (2,630,749)
… 14,825,939 2,851,539 148,232 - (11,826,168)
Public safety………………………
Education…………………………… 69,540,668 3,443,280 16,720,192 960,154 (48,417,042)
… 5,715,405 104,007 189,618 - (5,421,780)
Public works………………………
Health and human services……… 2,146,195 120,000 444,199 - (1,581,996)
Culture and recreation…………… 2,015,651 7,345 92,886 579,896 (1,335,524)
Support Services…………………… 1,266,046 - - - (1,266,046)
… 1,354,251 - 94,017 - (1,260,234)
Interest……………………………
Total Governmental Activities… 100,658,773 7,169,899 18,209,285 1,540,050 (73,739,539)
Business-Type Activities:
Water………………………………… 3,180,102 5,436,873 11,308 - 2,268,079
Sewer……………………………… 3,572,401 5,015,808 223,080 - 1,666,487
Osgood Hill………………………… 295,606 280,068 - - (15,538)
Total Business-Type Activities… 7,048,109 10,732,749 234,388 - 3,919,028
Total Primary Government……… $ 107,706,882 $ 17,902,648 $ 18,443,673 $ 1,540,050 $ (69,820,511)
See notes to basic financial statements.(Continued)
Town of North Andover, Massachusetts26Comprehensive Annual Financial Report
STATEMENT OF ACTIVITIES
FISCAL YEAR ENDED JUNE 30, 2012
Primary Government
GovernmentalBusiness-Type
ActivitiesActivitiesTotal
Changes in net assets:
Net (expense) revenue from previous page……$ (73,739,539)$ 3,919,028 $ (69,820,511)
General revenues:
Real estate and personal property taxes,
net of tax refunds payable………………… 60,060,304 - 60,060,304
Tax liens………………………………………… 355,176 - 355,176
Motor vehicle and other excise taxes……… 3,923,189 - 3,923,189
Penalties and interest………………………… 258,471 - 258,471
Payments in lieu of taxes…………………… 1,903,510 - 1,903,510
Community preservation taxes……………… 1,363,553 - 1,363,553
Grants and contributions not restricted to
specific programs…………………………… 2,133,066 - 2,133,066
Unrestricted investment income……………… 194,547 - 194,547
Transfers, net…………………………………… 1,159,045 (1,159,045) -
Total general revenues and transfers………… 71,350,861 (1,159,045) 70,191,816
Change in net assets……………………… (2,388,678) 2,759,983 371,305
Net Assets:
Beginning of year……………………………… 98,631,853 38,922,809 137,554,662
End of year……………………………………$ 96,243,175 $ 41,682,792 $ 137,925,967
(Concluded)
Town of North Andover, Massachusetts27Comprehensive Annual Financial Report
GOVERNMENTAL FUNDS
BALANCE SHEET
JUNE 30, 2012
NonmajorTotal
CommunityGovernmentalGovernmental
ASSETSGeneralPreservationFundsFunds
Cash and cash equivalents………………………………$ 10,211,207$ 5,856,946$ 5,619,366 $ 21,687,519
Investments………………………………………………… - - 400,886 400,886
Receivables, net of uncollectibles:
Real estate and personal property taxes…………… -1,100,313 - 1,100,313
Tax liens………………………………………………… 1,967,983 - - 1,967,983
Motor vehicle and other excise taxes………………… 269,206 - - 269,206
Community preservation……………………………… - 24,551 - 24,551
Departmental and other………………………………… 492,879 - 70,495 563,374
Intergovernmental……………………………………
… 1,157,101 341,010 2,198,990 3,697,101
Tax foreclosures…………………………………………… 440,744 - - 440,744
Due from other funds……………………………………… 492,777 - - 492,777
TOTALASSETS……………………………………………$ 16,132,210$ 6,222,507 $ 8,289,737 $ 30,644,454
LIABILITIES AND FUND BALANCES
LIABILITIES:
Warrants payable………………………………………$ 727,529 $ 16,824 $ 811,531 $ 1,555,884
Accrued payroll………………………………………… 2,239,143 - 285,109 2,524,252
Tax refunds payable…………………………………… 855,000 - - 855,000
Liabilities due depositors……………………………… 106,160 - - 106,160
Other liabilities………………………………………… 71,034 - - 71,034
Deferred revenues……………………………………… 5,343,968 365,561 796,372 6,505,901
Due to other funds……………………………………… - - 492,777 492,777
TOTAL LIABILITIES……………………………………… 382,3859,342,834 2,385,789 12,111,008
FUND BALANCES:
… - - 29,184 29,184
Nonspendable…………………………………………
Restricted……………………………………………… 964,9665,840,1225,874,76412,679,852
Assigned………………………………………………… 411,861 - - 411,861
Unassigned……………………………………………… 5,412,549 - - 5,412,549
TOTAL FUND BALANCES……………………………… 5,840,1226,789,376 5,903,948 18,533,446
TOTAL LIABILITIES AND FUND BALANCES…………$ 16,132,210$ 6,222,507 $ 8,289,737 $ 30,644,454
See notes to basic financial statements.
Town of North Andover, Massachusetts28Comprehensive Annual Financial Report
RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET
TOTAL FUND BALANCES TO THE STATEMENT OF NET ASSETS
JUNE 30, 2012
Total governmental fund balances………………………………………………………………$18,533,446
Capital assets (net) used in governmental activities are not financial resources
and, therefore, are not reported in the funds……………………………………………… 134,216,792
Accounts receivable are not available to pay for current-period
expenditures and, therefore, are deferred in the funds………………………………… 6,505,901
Internal service funds are used by management to account for unemployment,
health insurance activities. The assets and liabilities of the internal service funds
… 1,658,685
are included in the governmental activities in the statement of net assets…………
In the statement of activities, interest is accrued on outstanding long-term debt,
… (425,152)
whereas in governmental funds interest is not reported until due……………………
Long-term liabilities are not due and payable in the current period and, therefore,
are not reported in the governmental funds.
Bonds payable, net of unamortized premiums
… (33,298,084)
and deferred losses on refundings……..…………………………………………
… (29,473,413)
Other postemployment benefits………………………………………………………
… (1,475,000)
Compensated absences………………………………………………………………
… (64,246,497)
Net effect of reporting long-term liabilities………………………………………
Net assets of governmental activities……………………………………………………………$96,243,175
See notes to basic financial statements.
Town of North Andover, Massachusetts29Comprehensive Annual Financial Report
GOVERNMENTAL FUNDS
STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
FISCAL YEAR ENDED JUNE 30, 2012
NonmajorTotal
Community GovernmentalGovernmental
GeneralPreservationFundsFunds
REVENUES:
Real estate and personal property taxes,
net of tax refunds…………………………
…$ 59,803,225 $ - $ - $ 59,803,225
Tax and utility liens…………………………… 250,143 - - 250,143
Payments in lieu of taxes……………………… 1,767,275 - 136,235 1,903,510
Community preservation taxes……………… - 1,358,246 - 1,358,246
Motor vehicle and other excise taxes………… 3,917,020 - - 3,917,020
Charges for services…………………………… 948,455 - 3,714,681 4,663,136
Penalties and interest on taxes……………… 336,400 - - 336,400
Licenses and permits…………………………… 223,695 - 374,973 598,668
Fines and forfeitures…………………………
… 116,343 - - 116,343
Intergovernmental……………………………… 16,293,245 568,626 5,379,721 22,241,592
Departmental and other……………………… 1,531,370 - 176,483 1,707,853
Contributions…………………………………… - - 532,183 532,183
Investment income …………………………… 150,408 39,448 4,691 194,547
TOTAL REVENUES…………………… 85,337,579 1,966,320 10,318,967 97,622,866
EXPENDITURES:
Current:
General government………………………… 2,048,938 - 815,452 2,864,390
Public safety………………………………… 8,630,957 - 799,966 9,430,923
Education…………………………………… 37,204,469 - 8,570,941 45,775,410
Public works………………………………… 3,599,486 - 1,809,824 5,409,310
Health and human services………………… 986,355 - 442,231 1,428,586
Culture and recreation……………………… 821,653 1,006,888 384,142 2,212,683
Support Services…………………………… 1,039,174 - - 1,039,174
Pension benefits…………………………… 9,969,374 - - 9,969,374
Property and liability insurance…………… 271,059 - - 271,059
Employee benefits………………………… 11,100,080 - - 11,100,080
State and county charges……………………… 1,813,511 - - 1,813,511
Debt service:
Principal……………………………………… 5,995,123 - - 5,995,123
Interest……………………………………… 1,247,417 6,835 - 1,254,252
TOTAL EXPENDITURES……………… 84,727,596 1,013,723 12,822,556 98,563,875
EXCESS (DEFICIENCY) OF REVENUES
… 609,983 952,597 (2,503,589) (941,009)
OVER EXPENDITURES……………………
OTHER FINANCING SOURCES (USES):
Issuance of bonds and notes………………… - - 3,255,348 3,255,348
Premium from issuance of bonds…………… 41,359 - - 41,359
Transfers in……………………………………… 1,463,962 - 355,084 1,819,046
Transfers out…………………………………… - (64,691) (595,310) (660,001)
TOTAL OTHER FINANCING
SOURCES (USES)…………………… 1,505,321 (64,691) 3,015,122 4,455,752
NET CHANGE IN FUND BALANCES…………… 2,115,304 887,906 511,533 3,514,743
FUND BALANCES AT BEGINNING
OF YEAR………………………………………… 4,674,072 4,952,216 5,392,415 15,018,703
FUND BALANCES AT END OF YEAR…………$ 6,789,376 $ 5,840,122 $ 5,903,948 $ 18,533,446
See notes to basic financial statements.
Town of North Andover, Massachusetts30Comprehensive Annual Financial Report
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, 2012
Net change in fund balances - total governmental funds…………………………………………… $ 3,514,743
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.
…4,529,652
Capital outlay…………………………………………………………………………………
Depreciation expense…………………………………………………………………………(5,851,028)
Net effect of reporting capital assets………………………………………………… (1,321,376)
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
… (553,174)
the net change in deferred revenue……………………………………………………………
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.
…(3,255,348)
Issuance of bonds and notes………………………………………………………………
Debt service principal payments………………………………………………………………5,995,123
… (155,801)
Amortization of deferred losses on refundings……………………………………………
… 2,583,974
Net effect of reporting long-term debt………………………………………………
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……………………………………………61,000
Net change in accrued interest on long-term debt………………………………………… 55,799
…(7,784,914)
Net change in other postemployment benefits……………………………………………
… (7,668,115)
Net effect of recording long-term liabilities and amortizing deferred losses……
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…… 1,055,270
Change in net assets of governmental activities………………………………………………………$ (2,388,678)
See notes to basic financial statements.
Town of North Andover, Massachusetts31Comprehensive Annual Financial Report
PROPRIETARY FUNDS
STATEMENT OF NET ASSETS
JUNE 30, 2012
Business-type Activities - Enterprise FundsGovernmental
Activities-
Health Insurance
Osgood Internal Service
WaterSewerHillTotalFund
ASSETS
CURRENT:
Cash and cash equivalents………………………………$ 4,053,420 $ 3,551,324 $ 57,110 $ 7,661,854 $ 2,176,754
Receivables, net of allowance for uncollectibles:
User fees………………………………………………… 1,465,674 1,473,620 - 2,939,294 -
Utility liens……………………………………………… 70,259 36,591 - 106,850 -
Intergovernmental……………………………………… - 97,714 - 97,714 -
Total current assets………………………………… 5,589,353 5,159,249 57,110 10,805,7122,176,754
NONCURRENT:
Receivables, net of allowance for uncollectibles:
Intergovernmental……………………………………… - 777,790 - 777,790 -
Capital assets, nondepreciable…………………………… 1,982,535 123,762 4,000,0006,106,297-
Capital assets, net of accumulated depreciation……… 26,911,39722,318,445 1,420,605 50,650,447-
Total noncurrent assets…………………………… 28,893,93223,219,997 5,420,605 57,534,534-
TOTAL ASSETS……………………………………………… 34,483,28528,379,246 5,477,715 68,340,2462,176,754
LIABILITIES
CURRENT:
Warrants payable…………………………………………… 383,064 25,218 16,229 424,511 69
Health claims payable……………………………………… - - - -518,000
Accrued interest…………………………………………… 66,631 140,954 - 207,585 -
Compensated absences…………………………………… 4,000 5,000 - 9,000 -
Bonds payable……………………………………………… 1,861,337 1,674,310 - 3,535,647 -
Total current liabilities……………………………… 2,315,032 1,845,482 16,229 4,176,743 518,069
NONCURRENT:
Compensated absences…………………………………… 35,000 37,000 3,000 75,000 -
Other postemployment benefits…………………………… 891,062 554,906 - 1,445,968 -
yable……………………………………………… 9,638,251 11,321,492 - 20,959,743 -
Bonds pa
Total noncurrent liabilities………………………… 10, 11,913,398564,313 3,000 22,480,711 -
TOTAL LIABILITIES……………………………………………12,879,34513,758,880 19,229 26,657,454 518,069
NET ASSETS
Invested in capital assets, net of related debt……………… 18,858,591 12,985,543 5,420,605 37,264,739-
Unrestricted…………………………………………………… 2,745,3491,634,823 37,881 4,418,0531,658,685
TOTAL NET ASSETS…………………………………………$ 21,603,940$ 14,620,366 $ 5,458,486$ 41,682,792 $ 1,658,685
See notes to basic financial statements.
Town of North Andover, Massachusetts32Comprehensive Annual Financial Report
PROPRIETARY FUNDS
STATEMENT OF REVENUES, EXPENSES AND CHANGES IN FUND NET ASSETS
FISCAL YEAR ENDED JUNE 30, 2012
Business-type Activities - Enterprise FundsGovernmental
Activities-
Health Insurance
Osgood Internal Service
WaterSewerHillTotalFund
OPERATING REVENUES:
Employee contributions………………………………………… $ $ - $ - $ - $ 2,638,714-
Employer contributions…………………………………………… - - - - 10,314,933
Charges for services……………………………………………… 5,416,2564,995,936280,06810,692,260-
Penalties and interest…………………………………………… 20,617 19,872 - 40,489 -
TOTAL OPERATING REVENUES …………………………… 5,436,873 280,0685,015,808 10,732,749 12,953,647
OPERATING EXPENSES:
Cost of service and administration……………………………… 1,844,677 904,008 207,484 2,956,169 -
GLSD assessment………………………………………………… - 1,152,317 - 1,152,317 -
Repairs and maintenance……………………………………… 124,968 4,26964,390 193,627 -
Depreciation……………………………………………………… 838,085 865,071 83,853 1,787,009 -
Employee benefits………………………………………………… - - - - 11,900,408
TOTAL OPERATING EXPENSES …………………………… 2,807,730 2,985,786 295,606 6,089,122 11,900,408
OPERATING INCOME (LOSS)……………………………… 2,629,143 2,030,022 (15,538) 4,643,627 1,053,239
NONOPERATING REVENUES (EXPENSES):
Investment income……………………………………………… 11,308 5,751 - 17,059 2,031
Interest expense………………………………………………… (372,372) (586,615) (958,987)- -
Intergovernmental………………………………………………… - 217,329 - 217,329 -
TOTAL NONOPERATING
REVENUES (EXPENSES), NET…………………………… (361,064) (363,535) - (724,599) 2,031
INCOME (LOSS) BEFORE TRANSFERS…………………… 2,268,079 1,666,487 (15,538) 3,919,028 1,055,270
TRANSFERS:
Transfers in………………………………………………………… - 64,691- 64,691 -
Transfers out……………………………………………………… (705,722) (471,554) (46,460) (1,223,736) -
TOTAL OPERATING TRANSFERS………………………… (705,722) (471,554) 18,231 (1,159,045) -
CHANGE IN NET ASSETS…………………………………… 1,562,357 1,194,933 2,693 2,759,983 1,055,270
NET ASSETS AT BEGINNING OF YEAR……………………… 20,041,583 13,425,433 5,455,793 38,922,809 603,415
NET ASSETS AT END OF YEAR………………………………… $ 21,603,940 $ 14,620,366 $ 5,458,486 $ 41,682,792 $ 1,658,685
See notes to basic financial statements.
Town of North Andover, Massachusetts33Comprehensive Annual Financial Report
PROPRIETARY FUNDS
STATEMENT OF CASH FLOWS
FISCAL YEAR ENDED JUNE 30, 2012
Business-type Activities - Enterprise FundsGovernmental
Activities-
Health Insurance
OsgoodInternal Service
WaterSewerHillTotalFund
CASH FLOWS FROM OPERATING ACTIVITIES:
Receipts from customers and users……………………………………………$ 5,286,141 $ 4,849,308 $ 280,068 $ 10,415,517 $ 2,638,714
Receipts from interfund services provided…………………………………… - - - 10,314,933-
Payments to vendors…………………………………………………………… (988,491) (1,783,401) (119,167) (2,891,059)-
… (659,299) (463,025) (82,905) (1,205,229) -
Payments to employees………………………………………………………
Payments for interfund services used………………………………………… - - - (12,150,523)-
NET CASH FROM OPERATING ACTIVITIES…………………………………… 3,638,351 2,602,882 77,996 6,319,229 803,124
CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES:
Transfers in……………………………………………………………………… - 64,691- 64,691-
Transfers out……………………………………………………………………… (705,722) (471,554) (46,460) (1,223,736) -
NET CASH FROM NONCAPITAL FINANCING ACTIVITIES…………………… (705,722) (471,554) 18,231 (1,159,045) -
CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES:
Proceeds from the issuance of bonds and notes……………………………… 1,175,000 78,000 - 1,253,000 -
Acquisition and construction of capital assets………………………………… (602,948) (1,000,774) (64,691) (1,668,413) -
Principal payments on bonds and notes……………………………………… (1 (1,606,845),917,627) - (3,524,472) -
Interest expense………………………………………………………………… (341,767)(331,997) - (673,764) -
NET CASH FROM CAPITAL AND RELATED FINANCING ACTIVITIES……… (1,677,572) (2,871,386) (64,691) (4,613,649) -
CASH FLOWS FROM INVESTING ACTIVITIES:
Investment income……………………………………………………………… 11,308 5,751 - 2,03117,059
NET CHANGE IN CASH AND CASH EQUIVALENTS………………………… 1,266,365 (734,307) 31,536 563,594 805,155
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR………………… 2,787,055 4,285,631 25,574 7,098,260 1,371,599
CASH AND CASH EQUIVALENTS AT END OF YEAR $ 4,053,420 $ 3,551,324 $ 57,110 $ 7,661,854 $ 2,176,754
RECONCILIATION OF OPERATING INCOME (LOSS) TO NET CASH
FROM OPERATING ACTIVITIES:
Operating income (loss)………………………………………………………… $ 2,629,143 $ 2,030,022 $ (15,538) $ 4,643,627 $ 1,053,239
Adjustments to reconcile operating income (loss) to net
cash from operating activities:
Depreciation…………………………………………………………………… 838,085 865,071 83,853 1,787,009 -
Changes in assets and liabilities:
User fees…………………………………………………………………… (153,482) (140,229) - (293,711) -
Utility liens………………………………………………………………… 2,750 (26,271) - (23,521) -
Warrants payable………………………………………………………… (209,939)154,620 6,681 (48,638) (115)
Health claims payable…………………………………………………… - - - -(250,000)
Accrued compensated absences………………………………………… 39,000 42,000 3,000 84,000 -
Court judgments…………………………………………………………… - (56,000) - (56,000) -
Other postemployment benefits………………………………………… 98,228128,235 - 226,463 -
Total adjustments……………………………………………………… 1,009,208 572,860 93,534 1,675,602 (250,115)
…$ 3,638,351 $ 2,602,882 $ 77,996 $ 6,319,229 $ 803,124
NET CASH FROM OPERATING ACTIVITIES…………………………………
NONCASH INVESTING, CAPITAL, AND FINANCING ACTIVITIES:
Intergovernmental debt service subsidy (MWPAT)……………………………$ - $ 100,724 $ - $ 100,724 $ -
Net change in deferred charges………………………………………………… 50,053 38,072 -88,125-
See notes to basic financial statements.
Town of North Andover, Massachusetts34Comprehensive Annual Financial Report
FIDUCIARY FUNDS
STATEMENT OF FIDUCIARY NET ASSETS
JUNE 30, 2012
Private
PurposeAgency
Trust FundsFunds
ASSETS
CURRENT:
Cash and cash equivalents…………………………………
…$ 70,856 $ 4,069,009
LIABILITIES
Warrants payable……………………………………………… - 5,896
Liabilities due depositors……………………………………
… - 4,063,113
TOTAL LIABILITIES……………………………………………… - 4,069,009
NET ASSETS
Held in trust for other purposes………………………………$ 70,857 $ -
See notes to basic financial statements.
Town of North Andover, Massachusetts35Comprehensive Annual Financial Report
FIDUCIARY FUNDS
STATEMENT OF CHANGES IN FIDUCIARY NET ASSETS
FISCAL YEAR ENDED JUNE 30, 2012
Private
Purpose
Trust Funds
ADDITIONS:
Interest…………………………………………………………$ 62
NET ASSETS AT BEGINNING OF YEAR……………………
… 70,795
NET ASSETS AT END OF YEAR………………………………$ 70,857
See notes to basic financial statements.
Town of North Andover, Massachusetts36Comprehensive Annual Financial Report
Notes to Basic Financial Statements Fiscal Year Ended June 30, 2012
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Notes to basic financial statements
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. TheTown 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, 2012, the Town’s assessment totaled $1,467,854.
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, 2012, the Town’s assessment
totaled $243,954. 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 37 Comprehensive Annual Financial Report
Notes to Basic Financial Statements Fiscal Year Ended June 30, 2012
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 38 Comprehensive Annual Financial Report
Notes to Basic Financial Statements Fiscal Year Ended June 30, 2012
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:
Thegeneral 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.
Thecommunity 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 39 Comprehensive Annual Financial Report
Notes to Basic Financial Statements Fiscal Year Ended June 30, 2012
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:
Thespecial revenue fund is used to account for and report the proceeds of specific revenue sources that are
restricted or committed to expenditure for specified purposes other than permanent funds or capital projects.
Thecapital projects fund is used to account for and report financial resources that are restricted, committed, or
assigned to expenditure for capital outlays, including the acquisition or construction of capital facilities and other
capital assets of the governmental funds.
Thepermanent fund is used to account for and report 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:
Thewater enterprise fund is used to account for the water activities.
Thesewer enterprise fund is used to account for the sewer activities.
TheOsgood Hill enterprise fund is used to account for the operation of Osgood Hill Estate activities.
Additionally, the following proprietary fund type is reported:
Theinternal 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, except for agency funds which have no measurement focus. 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:
Theprivate-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 40 Comprehensive Annual Financial Report
Notes to Basic Financial Statements Fiscal Year Ended June 30, 2012
Theagency 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
st
Real estate and personal property taxes are levied and based on values assessed on January 1 of every year.
Assessed values are established by the Board of Assessor’s for 100% of the estimated fair market value. Taxes
stststst
are due on August 1, November 1, February 1 and May 1 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 41 Comprehensive Annual Financial Report
Notes to Basic Financial Statements Fiscal Year Ended June 30, 2012
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 42 Comprehensive Annual Financial Report
Notes to Basic Financial Statements Fiscal Year Ended June 30, 2012
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
… 20-60
Infrastructure…………………………………
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 43 Comprehensive Annual Financial Report
Notes to Basic Financial Statements Fiscal Year Ended June 30, 2012
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 44 Comprehensive Annual Financial Report
Notes to Basic Financial Statements Fiscal Year Ended June 30, 2012
“Permanent funds - nonexpendable” represents the endowment portion of donor restricted trusts that support
governmental programs.
“Gifts and grants” represents restrictions placed on assets from outside parties.
Fund Financial Statements (Fund Balances)
Governmental fund balances are classified as nonspendable, restricted, committed, assigned, or unassigned
based on the extent to which the government is bound to honor constraints on the specific purposes for which
amounts in those funds can be spent.
The governmental fund balance classifications are as follows:
“Nonspendable” fund balance includes amounts that cannot be spent because they are either not in spendable
form or they are legally or contractually required to be maintained intact.
“Restricted” fund balance includes amounts subject to constraints placed on the use of resources that are either
externally imposed by creditors, grantors, contributors, or laws or regulations of other governments; or that are
imposed by law through constitutional provisions or enabling legislation.
“Committed” fund balance includes amounts that can only be used for specific purposes pursuant to constraints
imposed by formal action of the government’s highest level of decision-making authority. Town Meeting is the
highest level of decision-making authority for the government that can, by adoption of an article prior to the end of
the fiscal year, commit fund balance. Once adopted, the limitation imposed by the article remains in place until a
similar action is taken to remove or revise the limitation.
“Assigned” fund balance includes amounts that are constrained by the Town’s intent to be used for specific
purposes, but are neither restricted nor committed. Town Meeting may assign fund balance as it does when
appropriating fund balance to cover a gap between estimated revenue and appropriations in the subsequent
year’s appropriated budget. Unlike commitments, assignments generally only exist temporarily. In other words,
an additional action does not normally have to be taken for the removal of an assignment. Conversely, as
discussed above, an additional action is essential to either remove or revise a commitment.
“Unassigned” fund balance includes the residual classification for the general fund. This classification represents
fund balance that has not been assigned to other funds and that has not been restricted, committed, or assigned
to specific purposes within the general fund.
The Town’s spending policy is to spend restricted fund balance first, followed by committed, assigned and
unassigned fund balance. Most governmental funds are designated for one purpose at the time of their creation.
Therefore, any expenditure from the fund will be allocated to the applicable fund balance classifications in the
order of the aforementioned spending policy. The general fund and certain other funds may have more than one
purpose.
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.
Town of North Andover, Massachusetts 45 Comprehensive Annual Financial Report
Notes to Basic Financial Statements Fiscal Year Ended June 30, 2012
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 absence liabilities related to both governmental and business-
type activities are normally paid from the funds reporting payroll and related expenditures. Compensated
absences are reported in governmental funds only if they have matured.
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.
Town of North Andover, Massachusetts 46 Comprehensive Annual Financial Report
Notes to Basic Financial Statements Fiscal Year Ended June 30, 2012
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.
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 $33,725,320 and the bank balance totaled $35,436,735. Of the bank balance, $5,020,185 was covered by
Federal Depository Insurance, $21,004,437 was covered by the depositor’s insurance fund, and $9,412,113 was
collateralized.
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.
As of June 30, 2012, the Town had the following investments and maturities:
Maturities
Investment TypeFair Value1-5 Years6-10 Years
Debt Securities
Bond Mutual Funds………………………………$101,679 $- $101,679
Repurchase Agreements………………………… 380,000 380,000 -
Total Debt Securities......................................... $380,000481,679 $101,679
Other Investments
Equity Mutual Funds......................................... 299,207
Money Market Mutual Funds…………………… 74,897
MMDT……………………………………………… 1,485,775
Total Investments..............................................$2,341,558
The Town participates in MMDT, which maintains a cash portfolio and a short-term bond fund with combined
average maturities of approximately 3 months.
Town of North Andover, Massachusetts 47 Comprehensive Annual Financial Report
Notes to Basic Financial Statements Fiscal Year Ended June 30, 2012
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.
Credit Risk
Standard and Poor’s Investors Service rated $101,679 of bond mutual funds AAA. The $380,000 of repurchase
agreements and $1,485,775 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.
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, 2012, receivables for the individual major and non-major governmental funds including the applicable
allowances for uncollectible accounts are as follows:
Allowance
GrossforNet
AmountUncollectiblesAmount
Receivables:
Real estate and personal property taxes………………………$1,208,313 $(108,000) $1,100,313
Tax liens………………………………………………………… 1,967,983 - 1,967,983
Motor vehicle and other excise taxes………………………… 630,206 (361,000) 269,206
Community preservation surcharges………………………… 24,551 - 24,551
Departmental and other………………………………………… 838,453 (275,079) 563,374
Intergovernmental……………………………………………… 3,697,101 - 3,697,101
Total………………………………………………………………$8,366,607 $(744,079) $7,622,528
Town of North Andover, Massachusetts 48 Comprehensive Annual Financial Report
Notes to Basic Financial Statements Fiscal Year Ended June 30, 2012
At June 30, 2012, receivables for the water and sewer enterprise funds are as follows:
Allowance
GrossforNet
AmountUncollectiblesAmount
Receivables:
User charges……………………………………………………$2,939,294 $- $2,939,294
Utility liens………………………………………………………… 106,850 - 106,850
Intergovernmental……………………………………………… 875,504 - 875,504
$3,921,648 $- $3,921,648
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
FundFundsTotal
Receivable and other asset type:
Real estate and personal property taxes………………………$1,016,055 $- $1,016,055
Tax liens………………………………………………………… 1,967,983 - 1,967,983
Motor vehicle and other excise taxes………………………… 269,206 - 269,206
… - 24,551 24,551
Community preservation surcharges………………………
Departmental and other………………………………………… 492,879 70,495 563,374
Intergovernmental (highway construction assistance)……… - 725,877 725,877
Intergovernmental (school construction assistance)………… 1,157,101 - 1,157,101
Intergovernmental (CPA state match)………………………… - 341,010 341,010
Tax foreclosures………………………………………………… 440,744 - 440,744
Total………………………………………………………………$5,343,968 $1,161,933 $6,505,901
Town of North Andover, Massachusetts 49 Comprehensive Annual Financial Report
Notes to Basic Financial Statements Fiscal Year Ended June 30, 2012
NOTE 4 - CAPITAL ASSETS
Capital asset activity for the fiscal year ended June 30, 2012, is as follows:
BeginningEnding
Governmental Activities:BalanceIncreasesDecreasesBalance
Capital assets not being depreciated:
Land…………………………………………………$20,787,405 $- $- $20,787,405
… 119 1,900,105 - 1,900,224
Construction in progress…………………………
Total capital assets not being depreciated…… 20,787,524 1,900,105 - 22,687,629
Capital assets being depreciated:
Land improvements………………………………… 3,257,450 - - 3,257,450
Buildings and building improvements…………… 133,761,705 1,800 - 133,763,505
Machinery and equipment………………………… 8,588,325 702,854 - 9,291,179
Library books……………………………………… 4,117,437 100,849 4,218,286-
… 6,277,844 276,483 (921,284) 5,633,043
Vehicles……………………………………………
Infrastructure……………………………………… 35,989,587 1,547,561 - 37,537,148
Total capital assets being depreciated……… 191,992,348 2,629,547 (921,284) 193,700,611
Less accumulated depreciation for:
Land improvements………………………………… (2,162,613) (99,261) - (2,261,874)
Buildings and improvements.……………………… (45,382,434) (3,497,739) - (48,880,173)
Machinery and equipment………………………… (4,857,637) (678,616) - (5,536,253)
Library books……………………………………… (3,952,674) (46,570) (3,999,244)-
Vehicles.…………………………………………… (4,038,509) (348,427) 921,284 (3,465,652)
Infrastructure……………………………………… (16,847,837) (1,180,415) (18,028,252)-
Total accumulated depreciation……………… (77,241,704) (5,851,028) 921,284 (82,171,448)
Total capital assets being depreciated, net………… 114,750,644 (3,221,481) - 111,529,163
Total governmental activities capital assets, net……$135,538,168$(1,321,376) $- $134,216,792
Town of North Andover, Massachusetts 50 Comprehensive Annual Financial Report
Notes to Basic Financial Statements Fiscal Year Ended June 30, 2012
EndingEnding
Business-Type Activities:
BalanceIncreasesDecreasesBalance
Capital assets not being depreciated:
Land…………………………………………………$6,097,262 $- $- $6,097,262
… 19,006 - (9,971) 9,035
Construction in progress…………………………
… 6,116,268 - (9,971) 6,106,297
Total capital assets not being depreciated…
Capital assets being depreciated:
Land improvements………………………………… 231,451 - - 231,451
… 1,952,335 64,691 - 2,017,026
Buildings and improvements……………………
… 2,167,892 64,859 - 2,232,751
Machinery and equipment………………………
… 460,715 24,437 - 485,152
Vehicles……………………………………………
Treatment plants…………………………………… 16,573,234 - - 16,573,234
Pump stations……………………………………… 4,250,998 150,373 - 4,401,371
Reservoirs…………………………………………… 1,477,296 - - 1,477,296
Infrastructure……………………………………… 51,992,216 1,374,024 - 53,366,240
Total capital assets being depreciated……… 79,106,137 1,678,384 - 80,784,521
Less accumulated depreciation for:
Land improvements………………………………… (99,448) (9,554) - (109,002)
Buildings and improvements……………………… (732,125) (72,234) - (804,359)
Machinery and equipment………………………… (1,157,251) (11,670) - (1,168,921)
Vehicles.…………………………………………… (340,029) (36,708) - (376,737)
Treatment plants…………………………………… (9,844,608) (441,286) - (10,285,894)
Pump stations……………………………………… (2,095,479) (125,262) - (2,220,741)
Reservoirs…………………………………………… (1,137,183) (52,321) - (1,189,504)
Infrastructure……………………………………… (12,940,942) (1,037,974) - (13,978,916)
Total accumulated depreciation……………… (28,347,065) (1,787,009) - (30,134,074)
Total capital assets being depreciated, net………… 50,759,072 (108,625) - 50,650,447
Total business-type activities capital assets, net……$56,875,340 $(108,625) $(9,971) $56,756,744
Depreciation expense was charged to functions/programs of the primary government as follows:
Governmental Activities:
General government…………………………………………
…$316,468
Public safety…………………………………………………… 597,855
Education……………………………………………………… 3,238,887
… 1,385,554
Public works…………………………………………………
Human services……………………………………………… 133,413
Culture and recreation………………………………………… 178,851
Total depreciation expense - governmental activities…………$5,851,028
Business-Type Activities:
…$838,085
Water…………………………………………………………
Sewer…………………………………………………………… 865,071
Osgood Hill……………………………………………………… 83,853
Total depreciation expense - business-type activities…………$1,787,009
Town of North Andover, Massachusetts 51 Comprehensive Annual Financial Report
Notes to Basic Financial Statements Fiscal Year Ended June 30, 2012
NOTE 5 - INTERFUND RECEIVABLES, PAYABLES AND TRANSFERS
Interfund receivables and payables totaled $492,777 and consisted of an amount due to the general fund from the
highway construction fund. The outstanding balances resulted from the time lag between the dates that
reimbursable expenditures are incurred and reimbursements from the Massachusetts Highway Department are
received.
Interfund transfers for the fiscal year ended June 30, 2012, are summarized as follows:
Operating Transfers In:
NonmajorOsgood Hill
GeneralGovernmentalEnterprise
Operating Transfers Out:FundFundsFundTotal
Community Preservation Act Fund…………$- $ $64,691- $64,691 (1)
Nonmajor Governmental Funds…………… 240,226 355,084 595,310- (2)
Water Enterprise Fund……………………… 705,722 - - 705,722 (3)
Sewer Enterprise Fund……………………… 471,554 - - 471,554 (3)
… 46,460 - - 46,460 (3)
Osgood Hill Enterprise Fund………………
$1,463,962 $355,084 $64,691 $1,883,737
(1) Represents a transfer to the Osgood Hill enterprise fund from the community preservation act fund for
conservation purposes.
(2) Represents budgeted transfers to the general fund from other available funds, as well as various transfers
between capital project funds.
(3) Represents budgeted transfers to the general fund for indirect costs.
NOTE 6 – LEASES
Operating Lease
The Town entered into a commercial lease for office space for the Schools Business Office that expires May 31,
2015. The future minimum lease payments are as follows:
Governmental
Fiscal Years Ending June 30,Activities
2013………………………………………………$91,098
2014……………………………………………… 91,098
2015……………………………………………… 91,098
Total………………………………………………$273,294
Town of North Andover, Massachusetts 52 Comprehensive Annual Financial Report
Notes to Basic Financial Statements Fiscal Year Ended June 30, 2012
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, 2012, are as follows:
RateBeginningEnding
TypePurpose(%)Due DateBalanceAdditionsReductionsBalance
BANLand Acquisition………… 1.056/15/2012$652,812 $- $652,812 $ -
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".
Details related to the outstanding indebtedness at June 30, 2012, and the debt service requirements are as
follows:
Bonds and Notes Payable – Governmental Funds
OriginalInterest
MaturitiesLoanRateBeginningEnding
ProjectThroughAmount(%)BalanceAdditionsReductionsBalance
Municipal Purpose Loan of 2002………………… 2012$15,370,250 4.00 - 4.50$1,200,000 $ $1,200,000- $ -
Municipal Purpose Loan of 2003………………… 2013895,813 2.30 - 4.00190,087 - 98,087 92,000
Municipal Purpose Loan of 2004………………… 201612,705,555 2.00 - 5.004,508,094 1,360,800- 3,147,294
Municipal Purpose Loan of 2005………………… 20258,205,261 3.00 - 4.003,849,181 - 466,214 3,382,967
High School Construction………………………… 20263,000,000 3.30 - 5.002,250,000 - 150,000 2,100,000
Municipal Purpose Loan of 2007………………… 2016406,805 3.60 - 4.50199,750 - 39,950 159,800
Municipal Purpose Loan of 2008………………… 20281,486,026 4.00 - 4.40977,697 - 124,443 853,254
Land Acquisition - Refunding…………………… 20182,960,000 3.00 - 4.002,155,000 - 280,000 1,875,000
Municipal Purpose Loan of 2008 - Refunding… 20199,540,000 3.00 - 4.007,015,000 - 865,000 6,150,000
Municipal Purpose Loan of 2009………………… 20297,122,134 2.75 - 5.005,971,148 - 580,976 5,390,172
Municipal Purpose Loan of 2010………………… 20294,171,222 2.25 - 4.003,840,400 - 326,800 3,513,600
Municipal Purpose Loan of 2011………………… 20214,365,353 2.00 - 3.754,365,353 - 502,853 3,862,500
Municipal Purpose Loan of 2012………………… 20293,255,348 2.00 - 2.50- 3,255,348 - 3,255,348
Sub-total…………………………………………… 36,521,710 3,255,348 5,995,123 33,781,935
Deferred loss on refundings……………………… (639,652) - (155,801) (483,851)
Total governmental bonds payable……………… $35,882,058$3,255,348 $5,839,322 $33,298,084
Town of North Andover, Massachusetts 53 Comprehensive Annual Financial Report
Notes to Basic Financial Statements Fiscal Year Ended June 30, 2012
Debt service requirements for principal and interest for Governmental bonds payable in future fiscal years are as
follows:
Fiscal YearPrincipalInterestTotal
2013…………$5,219,330 $1,112,160$6,331,490
2014………… 5,187,657 946,273 6,133,930
2015………
… 3,862,584 790,814 4,653,398
2016………… 3,506,974 661,988 4,168,962
2017………… 3,346,699 548,133 3,894,832
2018………… 3,151,031 429,084 3,580,115
2019………… 1,751,364 329,510 2,080,874
2020………… 1,272,600 269,9291,542,529
2021………… 1,227,600 227,254 1,454,854
2022………… 875,100 189,802 1,064,902
2023………… 830,400 158,618 989,018
2024………… 830,399 127,959 958,358
2025………… 830,399 95,961 926,360
2026………… 600,399 68,097 668,496
2027………… 450,399 48,186 498,585
2028………… 429,000 31,238 460,238
2029………… 410,000 15,213 425,213
…$33,781,935 $6,050,217 $39,832,152
Totals……
Bonds and Notes Payable – Water Enterprise Fund
OriginalInterest
MaturitiesLoanRateBeginningEnding
ProjectThroughAmount(%)BalanceAdditionsReductionsBalance
Municipal Purpose Loan of 2002………………… 2012$2,756,750 4.00 - 4.50$145,000 $- $145,000 $-
Municipal Purpose Loan of 2003………………… 20154,401,970 2.30 - 4.001,115,584 - 419,455 696,129
Municipal Purpose Loan of 2004 - Refunding… 2016985,438 2.00 - 4.20506,905 - 109,200 397,705
Municipal Purpose Loan of 2005………………… 20162,942,000 3.00 - 4.001,272,447 - 303,129 969,318
Municipal Purpose Loan of 2007………………… 2016815,000 3.60 - 4.50407,500 - 81,500 326,000
MWPAT…………………………………………… 20285,532,288 2.004,843,907 - 241,643 4,602,264
Municipal Purpose Loan of 2008………………… 20181,000,000 3.70 - 5.0 0700,000 - 100,000 600,000
Municipal Purpose Loan of 2008 - Refunding… 20181,888,108 3.00 - 4.00839,300 - 322,000 517,300
Municipal Purpose Loan of 2009………………… 2019450,000 2.75 - 5.00360,000 - 45,000 315,000
Municipal Purpose Loan of 2010………………… 20302,025,000 2.25 - 4.001,894,600 - 128,200 1,766,400
Municipal Purpose Loan of 2011………………… 2021225,000 2.00 - 3.75225,000 - 22,500 202,500
Municipal Purpose Loan of 2012………………… 20221,175,000 2.00 - 2.50- 1,175,000 - 1,175,000
Subtotal…………………………………………… 12,310,243 1,175,000 1,917,627 11,567,616
Deferred loss on refundings……………………… (118,081) - (50,053) (68,028)
Total Water Enterprise bonds payable………… $12,192,162$1,175,000 $1,867,574 $11,499,588
Town of North Andover, Massachusetts 54 Comprehensive Annual Financial Report
Notes to Basic Financial Statements Fiscal Year Ended June 30, 2012
Debt service requirements for principal and interest for Water Enterprise fund bonds and notes payable in future
fiscal years are as follows:
Fiscal YearPrincipalInterestTotal
2013…………$1,888,578 $308,572 $2,197,150
2014………… 1,330,843254,6191,585,462
… 1,347,122 213,6041,560,726
2015………
2016………… 972,699 171,8681,144,567
… 742,058 145,196887,254
2017………
2018………… 747,453124,917872,370
2019………… 597,953 104,719702,672
2020………… 513,573 89,750603,323
… 494,301 78,156572,457
2021………
2022………… 477,646 67,459545,105
2023………… 366,108 56,873422,981
2024………… 372,191 48,514420,705
2025………… 378,397 39,708418,105
2026………… 384,729 30,777415,506
2027………… 391,188 21,717412,905
2028………… 397,777 12,528410,305
2029………… 65,000 6,600 71,600
2030………… 100,000 4,000104,000
Totals………$11,567,616 $1,779,577 $13,347,193
Bonds and Notes Payable – Sewer Enterprise Fund
OriginalInterest
MaturitiesLoanRateBeginningEnding
ProjectThroughAmount(%)BalanceAdditionsReductionsBalance
MWPAT…………………………………………… 2021$7,356,555 3.70 - 5.40$4,022,890 $- $468,323 $3,554,567
Municipal Purpose Loan of 2003………………… 20184,091,216 2.30 - 3.701,814,327 - 282,458 1,531,869
Municipal Purpose Loan of 2005………………… 20161,979,739 3.00 - 4.00843,370 - 200,657 642,713
Municipal Purpose Loan of 2007………………… 2016720,000 3.60 - 4.50477,750 - 98,550 379,200
Municipal Purpose Loan of 2008………………… 20283,925,290 3.70 - 5.003,437,303 - 200,557 3,236,746
Municipal Purpose Loan of 2008 - Refunding… 20191,156,892 3.00 - 4.00824,550 - 127,024 697,526
Municipal Purpose Loan of 2010………………… 20223,830,001 2.75 - 5.003,160,001 - 305,000 2,855,001
Municipal Purpose Loan of 2010 - Refunding… 2020250,000 2.25 - 3.50225,000 - 25,000 200,000
Municipal Purpose Loan of 2012………………… 2022 2.00 - 2.5078,000 78,000- 78,000-
Subtotal…………………………………………… 14,805,191 78,000 1,707,569 13,175,622
Deferred loss on refundings……………………… (217,892) - (38,072) (179,820)
Total Sewer Enterprise bonds payable………… $14,587,299$78,000 $1,669,497 $12,995,802
Town of North Andover, Massachusetts 55 Comprehensive Annual Financial Report
Notes to Basic Financial Statements Fiscal Year Ended June 30, 2012
Debt service requirements for principal and interest for Sewer Enterprise fund bonds and notes payable in future
fiscal years are as follows:
Fiscal YearPrincipalInterestTotal
2013…………$1,708,669 $487,715 $2,196,384
2014………… 1,748,589 434,3972,182,986
2015………… 1,780,707 368,8352,149,542
2016………… 1,430,552 306,5051,737,057
2017………… 1,148,300 253,4351,401,735
2018………… 1,163,970 206,3821,370,352
2019………… 963,636 159,6151,123,251
2020………… 902,397 121,8891,024,286
2021………… 652,400 90,247742,647
2022………… 502,399 68,867571,266
2023………… 209,600 50,327259,927
… 204,601 41,681246,282
2024………
2025………… 204,601 62,986267,587
… 194,601 24,290218,891
2026………
2027………… 189,601 15,776205,377
… 170,999 7,481178,480
2028………
…$13,175,622 $2,700,428 $15,876,050
Totals……
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 $875,504 and interest costs of $526,596. Thus, net
MWPAT loan repayments, including interest, are schedule to be $3,027,632. The principal subsidies are
guaranteed and therefore an $875,504 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 2012 principal and interest
subsidies totaled $100,724 and $117,336, 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 2012, $412,000 of such assistance was received.
Approximately $1,236,000 will be received in future fiscal years. Of this amount, $79,000 represents
reimbursement of long-term interest costs, and $1,157,000 represents reimbursement of approved construction
costs. Accordingly, a $1,157,000 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 56 Comprehensive Annual Financial Report
Notes to Basic Financial Statements Fiscal Year Ended June 30, 2012
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, 2012, the Town had the following authorized and unissued debt.
Revenue Billing System…………………………$75,000
Middle School Roof Replacements…………… 888,960
Sargent School Roof Replacement…………… 260,876
Atkinson School Window Replacement……… 745,732
Fire Alarm Boxes and Panels………………… 91
Roadways and Sidewalk Reconstruction……… 526,700
Building Maintenance…………………………… 50,000
Fire Chief Vehicle……………………………… 34,000
Mobile Data Terminals………………………… 90,258
School and General IT………………………… 205,098
School Design Work…………………………… 359,500
Water Main Replacement……………………… 573,000
Water Meter Replacement……………………… 60,000
Flocculation & Sedimentation Building………… 65,000
Concrete Repairs and Coating………………… 97,000
Total………………………………………………$4,031,215
Changes in Long-term Liabilities
During the fiscal year ended June 30, 2012, the following changes occurred in long-term liabilities:
BeginningEndingDue within
BalanceAdditionsReductionsBalanceOne Year
Governmental Activities:
Long-term bonds and notes…………$36,521,710 $3,255,348 $(5,995,123) $33,781,935 $5,219,330
Unamortized deferred loss
on refundings………………………… (639,652) - 155,801 (483,851) (136,583)
… 35,882,058 3,255,348 (5,839,322)33,298,0845,082,747
Bonds and notes payable net………
Other postemployment benefits……… 21,688,499 11,851,571 (4,066,657)29,473,413 -
Compensated absences……………… 1,536,000 108,000 (169,000) 1,475,000 162,000
Total governmental……………………$59,106,557 $15,214,919$(10,074,979)$64,246,497 $5,244,747
BeginningEndingDue within
BalanceAdditionsReductionsBalanceOne Year
Business-Type Activities:
Long-term bonds and notes…………$27,115,434 $1,253,000 $(3,625,196) $24,743,238 $3,597,247
Unamortized deferred loss
on refunding………………………… (335,973) - 88,125 (247,848) (61,600)
Bonds and notes payable net………… 26,779,461 1,253,000 (3,537,071) 24,495,390 3,535,647
Other postemployment benefits……… 1,219,505 344,762 (118,299) 1,445,968 -
Compensated absences……………… 95,000 - (11,000) 84,000 9,000
Court judgments……………………… 56,000 - (56,000) - -
Total business-type……………………$28,149,966 $1,597,762 $(3,722,370) $26,025,358 $3,544,647
Town of North Andover, Massachusetts 57 Comprehensive Annual Financial Report
Notes to Basic Financial Statements Fiscal Year Ended June 30, 2012
The governmental activities long-term liabilities are generally liquidated by the general fund and the business-type
activities long-term liabilities are generally liquidated by the applicable enterprise fund.
NOTE 9 – GOVERNMENTAL FUND BALANCE CLASSIFICATIONS
GASB 54 provides for two major types of fund balances, which are nonspendable and spendable. Nonspendable
fund balances are balances that cannot be spent because they are not expected to be converted to cash or they
are legally or contractually required to remain intact. Examples of this classification are prepaid items, inventories,
and principal (corpus) of an endowment fund. The Town has reported principal portions of endowment funds as
nonspendable.
In addition to the nonspendable fund balance, GASB 54 has provided a hierarchy of spendable fund balances,
based on a hierarchy of spending constraints.
Restricted: fund balances that are constrained by external parties, constitutional provisions, or enabling
legislation.
Committed: fund balances that contain self-imposed constraints of the government from its highest level
of decision making authority.
Assigned: fund balances that contain self-imposed constraints of the government to be used for a
particular purpose.
Unassigned: fund balance of the general fund that is not constrained for any particular purpose
Massachusetts General Law Ch.40 §5B allows for the establishment of stabilization funds for one or more
different purposes. The creation of a fund requires a two-thirds vote of the legislative body and must clearly
define the purpose of the fund. Any change to the purpose of the fund along with any additions to or
appropriations from the fund requires a two-thirds vote of the legislative body.
At year end, the balance of the general stabilization fund is $2,678,268 and is reported as unassigned fund
balance within the general fund.
Town of North Andover, Massachusetts 58 Comprehensive Annual Financial Report
Notes to Basic Financial Statements Fiscal Year Ended June 30, 2012
The Town has classified its fund balances with the following hierarchy.
GOVERNMENTAL FUNDS
NonmajorTotal
Community GovernmentalGovernmental
GeneralPreservationFundsFunds
FUND BALANCES
Nonspendable:
Permanent fund principal…………………….$- $- $29,184 $29,184
Restricted for:
Municipal federal and state grants…………… - - 108,929 108,929
Education federal and state grants…………… - - 69,593 69,593
Receipts reserved for appropriations………… - - 158,010 158,010
Municipal revolving funds……………………… - - 374,965 374,965
Education revolving funds…………………… - - 247,276 247,276
School lunch funds…………………………… - - 269,987 269,987
CPA fund………………………………………… - 5,840,122 - 5,840,122
Other special revenue funds………………… - - 714,472 714,472
Affordable housing trust fund………………… - - 1,054,237 1,054,237
Other trust funds……………………………… - - 58,766 58,766
Municipal capital projects……………………… - - 582,760 582,760
Education capital projects…………………… - - 1,747,307 1,747,307
Other permanent funds………………………… - - 488,462 488,462
Debt service…………………………………… 964,966 - - 964,966
Assigned to:
General government…………………………… 33,193 - - 33,193
Public safety…………………………………… 15,610 - - 15,610
Education……………………………………… 55,989 - - 55,989
Public works…………………………………… 241,570 - - 241,570
Human and human services………………… 5,581 - - 5,581
Culture and recreation………………………… 6,514 - - 6,514
Support services……………………………… 49,266 - - 49,266
Employee benefits……………………………… 4,138 - - 4,138
Unassigned……………………………………….. 5,412,549 - - 5,412,549
TOTAL FUND BALANCES…………………………$6,789,376 $5,840,122 $5,903,948 $18,533,446
NOTE 10 - 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.
Town of North Andover, Massachusetts 59 Comprehensive Annual Financial Report
Notes to Basic Financial Statements Fiscal Year Ended June 30, 2012
Health Insurance
Health insurance claims are administered by a third party administrator and are funded on an as needed basis
from the Town’s internal service fund. The estimated “Incurred But Not Reported (IBNR)” claims are based on
actual and historical lag claims. The Town purchases individual stop loss insurance for claims in excess of the
coverage provided by the Town in the amount of $100,000 per claim. The amount of claim settlements has not
exceeded the insurance coverage in any of the previous three fiscal years.
The liability at June 30, 2012 totaled $518,000. Changes in the reported liability since July 1, 2010, are as
follows:
Current Year
Balance atClaims andBalance at
Beginning ofChanges inClaimsFiscal
Fiscal YearEstimatePaymentsYear-End
.$839,000 $12,251,000 $(12,322,000) $768,000
Fiscal Year 2011……….
Fiscal Year 2012……….. 768,000 11,900,000 (12,150,000) 518,000
NOTE 11 - 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 $6,967,000 for the fiscal year ended June 30, 2012, 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, 2012, 2011, and 2010 totaled $3,002,374, $2,803,785, and
$2,596,530, 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
increasing or decreasing over time 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
Town of North Andover, Massachusetts 60 Comprehensive Annual Financial Report
Notes to Basic Financial Statements Fiscal Year Ended June 30, 2012
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 12 – 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 2012, the Town contributed $4.2 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……………………………………$12,141,886
Interest on net OPEB obligation……………………………… 1,030,860
Adjustment to annual required contribution………………… (976,412)
Annual OPEB Cost (expense)………………………………… 12,196,334
Contributions made……………………………………………… (4,184,956)
Increase in net OPEB obligation……………………………… 8,011,378
Net OPEB obligation - beginning of year……………………… 22,908,004
Net OPEB obligation - end of year……………………………$30,919,382
The Town’s annual OPEB cost, the percentage of annual OPEB cost contributed to the plan, and the net OPEB
obligation for fiscal year 2012 was as follows:
Percentage of
Fiscal YearAnnual Annual OPEBNet OPEB
EndedOPEB CostCost ContributedObligation
6/30/2012$12,196,334 34%$30,919,382
6/30/201112,475,335 31%22,908,004
6/30/201011,632,440 36%14,272,077
Town of North Andover, Massachusetts 61 Comprehensive Annual Financial Report
Notes to Basic Financial Statements Fiscal Year Ended June 30, 2012
Funded Status and Funding Progress – As of July 1, 2010 the actuarial accrued liability for benefits was $118.6
million, all of which was unfunded. The covered payroll (annual payroll of active employees covered by the plan)
was $39.3 million, and the ratio of the UAAL to the covered payroll was 301.5 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, 2010 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% initially, graded to 5% over 8 years. The UAAL is being amortized
with a level dollar amount over a 30 year period on an open basis. The remaining amortization period at June 30,
2012 is 30 years.
NOTE 13 – 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, 2012, cannot be ascertained, management believes any resulting liability should not materially affect the
financial position of the Town at June 30, 2012.
Town of North Andover, Massachusetts 62 Comprehensive Annual Financial Report
Notes to Basic Financial Statements Fiscal Year Ended June 30, 2012
NOTE 14 – IMPLEMENTATION OF NEW GASB PRONOUNCEMENTS
During fiscal year 2012, the following GASB pronouncements were implemented:
The GASB issued Statement #62, Codification of Accounting and Financial Reporting Guidance
Contained in Pre-November 30, 1989 FASB and AICPA Pronouncements. The implementation of this
pronouncement did not impact the basic financial statements.
The GASB issued Statement #64, Derivative Instruments: Application of Hedge Accounting Termination
Provisions, an amendment of GASB Statement No. 53. The implementation of this pronouncement did
not impact the basic financial statements.
The following GASB pronouncements will be implemented in future fiscal years:
The GASB issued Statement #60, Accounting and Financial Reporting for Service Concession
Arrangements, which is required to be implemented in fiscal year 2013.
The GASB issued Statement #61, The Financial Reporting Entity: Omnibus, which is required to be
implemented in fiscal year 2013.
The GASB issued Statement #63, Financial Reporting of Deferred Outflows of Resources, Deferred
Inflows of Resources, and Net Position, which is required to be implemented in fiscal year 2013.
The GASB issued Statement #65, Items Previously Reported as Assets and Liabilities, which is required
to be implemented in fiscal year 2013.
The GASB issued Statement #66, Technical Corrections – 2012, an amendment of GASB Statements
No. 10 and No. 62, which is required to be implemented in fiscal year 2013.
The GASB issued Statement #67, Financial Reporting for Pension Plans, an amendment of GASB
Statement No. 25, which is required to be implemented in fiscal year 2014.
The GASB issued Statement #68, Accounting and Financial Reporting for Pensions, an amendment of
GASB Statement No. 27, which is required to be implemented in fiscal year 2015.
Management is currently assessing the impact that the implementation of these pronouncements will have on the
basic financial statements.
Town of North Andover, Massachusetts 63 Comprehensive Annual Financial Report
Required Supplementary Information
Town of North Andover, Massachusetts 64 Comprehensive Annual Financial Report
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Town of North Andover, Massachusetts 65 Comprehensive Annual Financial Report
GENERAL FUND
SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE -
BUDGET AND ACTUAL
FISCAL YEAR ENDED JUNE 30, 2012
Budgeted Amounts
AmountsCurrent Year
Carried forwardInitialOriginalFinal
From Prior YearBudgetBudgetBudget
REVENUES:
Real estate and personal property taxes,
net of tax refunds……………………………………………$ - $ 60,166,386 $ 60,166,386 $ 60,166,386
Tax liens………………………………………………………… - - - -
Motor vehicle and other excise taxes………………………… - 3,516,000 3,516,000 3,516,000
Charges for services…………………………………………… - 900,000 900,000 900,000
Penalties and interest on taxes……………………………… - 310,000 310,000 310,000
Payments in lieu of taxes……………………………………… - 1,810,293 1,810,293 1,810,293
Licenses and permits………………………………………… - 168,875 168,875 168,875
Fines and forfeitures…………………………………………… - 165,500 165,500 165,500
Intergovernmental……………………………………………… - 8,741,169 8,741,169 8,741,169
Departmental and other……………………………………… - 1,391,874 1,391,874 1,391,874
Investment income……………………………………………… - 101,000 101,000 101,000
TOTAL REVENUES…………………………………… - 77,271,097 77,271,097 77,271,097
EXPENDITURES:
Current:
General government……………………………………… 64,770 2,182,398 2,247,168 2,247,168
Public safety………………………………………………… 12,798 8,806,071 8,818,869 8,818,872
Education…………………………………………………… 43,885 37,161,105 37,204,990 37,270,345
Public works………………………………………………… 58,587 4,028,969 4,087,556 4,030,556
Health and human services……………………………… - 982,289 982,289 1,039,290
Culture and recreation……………………………………… 636 828,357 828,993 828,992
Support services…………………………………………… - 1,197,063 1,197,063 1,132,064
Pension benefits…………………………………………… - 3,002,779 3,002,779 3,002,374
Property and liability insurance…………………………… - 301,030 301,030 301,030
Employee benefits………………………………………… 3,638 11,170,567 11,174,205 11,149,147
State and county charges……………………………………… - 1,880,972 1,880,972 1,880,972
Debt service:
Principal……………………………………………………… - 5,993,623 5,993,623 5,995,123
Interest……………………………………………………… - 1,223,813 1,223,813 1,247,417
TOTAL EXPENDITURES……………………………… 184,314 78,759,036 78,943,350 78,943,350
EXCESS (DEFICIENCY) OF REVENUES
OVER EXPENDITURES……………………………………… (184,314) (1,487,939) (1,672,253) (1,672,253)
OTHER FINANCING SOURCES (USES):
Premium from issuance of bonds…………………………… - - - -
Transfers in……………………………………………………… - 1,463,962 1,463,962 1,463,962
TOTAL OTHER FINANCING SOURCES (USES)…… - 1,463,962 1,463,962 1,463,962
NET CHANGE IN FUND BALANCE……………………………… (184,314) (23,977) (208,291) (208,291)
BUDGETARY FUND BALANCE, Beginning of year…………… - 2,686,380 2,686,380 2,686,380
BUDGETARY FUND BALANCE, End of year……………………$ (184,314) $ 2,662,403 $ 2,478,089 $ 2,478,089
See notes to required supplementary information.
Town of North Andover, Massachusetts66Comprehensive Annual Financial Report
ActualAmountsVariance
BudgetaryCarried ForwardTo Final
AmountsTo Next YearBudget
$ 59,915,382 $ $ (251,004)-
250,143 250,143-
3,917,020 401,020-
948,455 48,455-
336,400 26,400-
1,767,275 (43,018)-
223,695 54,820-
116,343 (49,157)-
9,326,245 585,076-
1,531,370 139,496-
118,418 17,418-
78,450,746 1,179,649-
2,048,938 33,193 165,037
8,630,957 15,610 172,305
37,204,469 55,989 9,887
3,599,486 241,570 189,500
986,355 5,581 47,354
821,653 6,514 825
1,039,174 49,266 43,624
3,002,374 - -
271,059 29,971-
11,100,080 4,138 44,929
1,813,511 67,461-
5,995,123 - -
1,247,417 --
411,86177,760,596 770,893
(411,861)690,150 1,950,542
-41,359 41,359
-1,463,962 -
-1,505,321 41,359
(411,861)2,195,471 1,991,901
-2,686,380 -
$ 4,881,851 $ (411,861) $ 1,991,901
Town of North Andover, Massachusetts67Comprehensive Annual Financial Report
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.
Retirement System Schedules
Town of North Andover, Massachusetts 68 Comprehensive Annual Financial Report
ESSEX REGIONAL RETIREMENT SYSTEM
SCHEDULE OF FUNDING PROGRESS
ActuarialUAAL as a
ActuarialAccruedUnfundedPercentage
ActuarialValue ofLiability (AAL)AALFundedCoveredof Covered
ValuationAssetsEntry Age(UAAL)RatioPayrollPayroll
Date(A)(B)(B-A)(A/B)(C)((B-A)/C)
01/01/11$278,332,006$536,115,536 $257,783,530 51.9%$119,707,156215.3%
01/01/08301,420,965 445,171,554 143,750,58967.7%111,726,856128.7%
01/01/06261,327,047 376,034,621 114,707,57469.5%98,641,094 116.3%
01/01/04229,852,971 333,396,222 103,543,25168.9%93,404,002 110.9%
01/01/02218,346,198 287,390,715 69,044,51776.0%85,005,338 81.2%
01/01/00190,363,700 253,847,100 63,483,40075.0%69,525,900 91.3%
01/01/99180,034,700 268,386,000 88,351,30067.1%89,645,300 98.6%
The Town's share of the UAAL, as of January 1, 2011 is approximately 14%.
See notes to required supplementary information.
Town of North Andover, Massachusetts69Comprehensive Annual Financial Report
ESSEX REGIONAL RETIREMENT SYSTEM
SCHEDULE OF EMPLOYER CONTRIBUTIONS
System WideTown of North Andover
(B/A)
Fiscal YearAnnual(A)(B)Town's Percentage
EndedRequiredActualPercentageActualof System Wide
June 30ContributionsContributionsContributedContributionsActual Contributions
2012$21,084,190 $21,084,190 100%$3,002,374 14.2%
201119,093,942 19,093,942 100%2,803,785 14.7%
201017,648,487 17,648,487 100%2,596,530 14.7%
200915,601,671 15,601,671 100%2,468,667 15.8%
200815,788,864 15,788,864 100%2,261,142 14.3%
200716,622,274 16,622,274 100%2,227,020 13.4%
200613,080,011 13,080,011 100%2,181,588 16.7%
200512,223,776 12,223,776 100%1,946,329 15.9%
200412,516,569 12,516,569 100%1,693,461 13.5%
The Town's Actual Contributions equaled 100% of its Required Contributions for each year presented.
See notes to required supplementary information.
Town of North Andover, Massachusetts70Comprehensive Annual Financial Report
Other Postemployment Benefit Plan
Schedules
Other postemployment benefit plan schedules
The Schedule of Funding progress compares, over time, the actuarial accrued liability for benefits with the
actuarial value of accumulated plan assets.
The Schedule of Employer Contributions compares, overtime, the annual required contributions to the actual
contributions made.
The Schedule of Actuarial Methods and Assumptions presents factors that significantly affect the identification of
trends in the amounts reported.
Town of North Andover, Massachusetts 71 Comprehensive Annual Financial Report
OTHER POSTEMPLOYMENT BENEFIT PLAN
SCHEDULE OF FUNDING PROGRESS AND SCHEDULE OF EMPLOYER CONTRIBUTIONS
Schedule of Funding Progress
Actuarial
AccruedUAAL as a
ActuarialLiability (AAL)UnfundedPercentage
ActuarialValue ofProjectedAALFundedCoveredof Covered
ValuationAssetsUnit Credit(UAAL)RatioPayrollPayroll
Date(A)(B)(B-A)(A/B)(C)((B-A)/C)
07/01/10$- $118,595,377 $118,595,377 0.0%$39,329,676 301.5%
07/01/08- 125,963,157 125,963,157 0.0%39,189,469 321.4%
Schedule of Employer Contributions
Annual Actual
Fiscal YearRequiredContributionsPercentage
EndedContributionMadeContributed
6/30/12$12,141,886$4,184,956 34.5%
6/30/1112,441,414 3,839,40830.9%
6/30/1011,241,110 4,346,87638.7%
6/30/0910,964,622 3,978,10936.3%
The Town implemented GASB Statement No. 45 for the fiscal year ended June 30, 2009.
Information for prior years is not available.
See notes to required supplementary information.
Town of North Andover, Massachusetts72Comprehensive Annual Financial Report
OTHER POSTEMPLOYMENT BENEFIT PLAN
ACTUARIAL METHODS AND ASSUMPTIONS
Actuarial Methods:
… July 1, 2010
Valuation date…………………………………………
Actuarial cost method…………………………………… Projected Unit Credit
Amortization method…………………………………… Level dollar amount over thirty years
based on an open group, open basis
… 30 years, open basis
Remaining amortization period………………………
Actuarial Assumptions:
… 4.5%
Investment rate of return………………………………
Medical/drug cost trend rate…………………………… 9.0% graded to 5.0% over 8 years
Plan Membership:
Current retirees, beneficiaries, and dependents……… 417
… 1,060
Current active members………………………………
Total………………………………………………………1,477
See notes to required supplementary information.
Town of North Andover, Massachusetts73Comprehensive Annual Financial Report
Notes to Required Supplementary Information Fiscal Year Ended June 30, 2012
NOTE A - STEWARDSHIP, COMPLIANCE AND ACCOUNTABILITY
Notes to required supplementary information
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 2012 approved budget for the General Fund authorized $78.9 million in appropriations and
other amounts to be raised. During fiscal year 2012 there were no supplemental appropriations.
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, 2012, is presented below:
Net change in fund balance - budgetary basis…………………………………………$2,195,471
Perspective difference:
Activity of the stabilization fund recorded in the
general fund for GAAP………………………………………………………………… 31,990
Basis of accounting differences:
Net change in recording 60 day receipts…………………………………………… (39,157)
Net change in recording tax refunds payable……………………………………… (73,000)
Recognition of revenue for on-behalf payments…………………………………… 6,967,000
Recognition of expenditures for on-behalf payments……………………………… (6,967,000)
…$2,115,304
Net change in fund balance - GAAP basis…………………………………………
Town of North Andover, Massachusetts 74 Comprehensive Annual Financial Report
Notes to Required Supplementary Information Fiscal Year Ended June 30, 2012
NOTE B – PENSION PLAN
The Town contributes to the System, a cost-sharing multiple-employer defined benefit pension plan administered
by the Essex Regional Retirement System. Substantially all employees are members of the System, except for
public school teachers and certain administrators who are members of the Massachusetts Teachers Retirement
System, to which the Town does not contribute. Pension benefits and administrative expenses paid by the
Teachers Retirement Board are the legal responsibility of the Commonwealth. The amount of these on-behalf
payments totaled $6,967,000 for the fiscal year ended June 30, 2012, and, accordingly, are reported in the
general fund as intergovernmental revenues and pension 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 Andover Contributory Retirement Board and are borne
by the System.
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, 2012, 2011, and 2010 totaled $3,002,374, $2,803,785, and $2,596,530, respectively,
which equaled its required contribution for each fiscal year.
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, 2011
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…………………24 years remaining as of July 1, 2011
Asset Valuation Method…………………………Sum of actuarial value at beginning of year and increase in cost value during
year excluding realized appreciation or losses plus 20 percent of market value
at end of year (as reported in the Annual Statement) in excess of that preliminary
value, adjusted to be within 20 percent of their market value.
Actuarial Assumptions:
Investment rate of return………………………8.25%
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……………………… 1,624
Inactive participants..............................................................................……… 794
Disabled...............................................................................………………… 120
Active participants………………………………………………………………… 3,013
Total………………………………………………………………………………… 5,551
The schedule of funding progress presents multiyear trend information relating to the cost-sharing plan as a
whole, of which the Town is one participating employer, about whether the actuarial value of plan assets is
increasing or decreasing over time relative to the actuarial accrued liability for benefits. Additionally, the schedule
of employer contributions presents multiyear trend information for required and actual contributions relating to the
Town of North Andover, Massachusetts 75 Comprehensive Annual Financial Report
Notes to Required Supplementary Information Fiscal Year Ended June 30, 2012
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 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, over time, 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.
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 76 Comprehensive Annual Financial Report
Combining Statements
Combining Statements
Town of North Andover, Massachusetts 77 Comprehensive Annual Financial Report
Nonmajor Governmental Funds
Nonmajor Governmental Funds
Special Revenue Funds
Special revenue funds are used to account for specific revenues that are legally restricted to expenditure for
particular purposes.
Municipal Federal and State Grants – This fund is used to account for grant funds received from state and federal
governments which are designated for specific non-school related programs.
Education Federal and State Grants – This fund is used to account for grant funds received from state and federal
governments which are designated for specific education related programs.
Receipts Reserved for Appropriation – This fund is used to account for receipts from a specific revenue source
that by law is accounted for separately from the general fund and must be spent by appropriation.
Municipal Revolving Funds – This fund is used to account for various municipal department’s revolving funds
established in accordance with MGL Chapter 44, Section 53E ½ and other applicable statutes.
Education Revolving Funds – This fund is used to account for the school department’s revolving funds
established in accordance with MGL Chapter 44, Section 53E ½ and Chapter 71.
School Lunch Funds – This fund is used to account for all cafeteria activities and is funded by user charges,
federal and state grants, and commodities received.
Other Special Revenue Funds – This fund is used to account for the activity of donated funds, gifts, and public
safety details.
Affordable Housing Trust Fund – This fund is used to account for activities relating to the preservation and
creation of affordable housing in the Town.
Other Trust Funds – This fund is used to account for activities of conservation and public safety trust funds.
Capital Projects Funds
Capital projects funds are used to account for the acquisition and construction of major capital facilities other than
those financed by proprietary funds and trust funds.
Highway Chapter 90 Projects – This fund is used to account for construction and reconstruction of the Town’s
roadways. These projects are funded by state grants from the Massachusetts Highway Department.
Municipal Capital Projects – This fund is used to account for the acquisition of non-school related capital assets
that are funded through both appropriations and borrowings.
Education Capital Projects – This fund is used to account for the acquisition of school related capital assets that
are funded through both appropriations and borrowings.
Town of North Andover, Massachusetts 78 Comprehensive Annual Financial Report
Permanent Funds
Permanent funds are used to report resources that are legally restricted to the extent that only earnings, not
principal, may be used for purposes that support governmental programs.
Permanent Funds Principal – This fund is used to account for all non-library related gifts, bequests and
contributions for which only earnings may be expended to benefit the Town.
Library Permanent Funds – This fund is used to account for gifts, bequests and contributions held for which only
earnings may be expended for purposes specified by the donor in relation to library activities.
Town of North Andover, Massachusetts 79 Comprehensive Annual Financial Report
NONMAJOR GOVERNMENTAL FUNDS
COMBINING BALANCE SHEET
JUNE 30, 2012
Special Revenue Funds
MunicipalEducationReceipts Municipal
Federal andFederal andReserved forRevolving
ASSETSState GrantsState GrantsAppropriationFunds
Cash and cash equivalents………………..…………$110,328 $ 294,804$ 158,209$ 385,572
Investments…………………………………………… - - - -
Receivables, net of uncollectibles:
Departmental and other…………………………… ---70,495
Intergovernmental………………………………… - - - -
TOTAL ASSETS………………………………………$110,328 $ 294,804$ 158,209$ 456,067
LIABILITIES AND FUND BALANCES
LIABILITIES:
Warrants payable……………………………………$1,399 $ 17,257$ 199$ 10,607
Accrued payroll…………………………………… - 207,954 - -
Deferred revenues………………………………… - - - 70,495
Due to other funds………………………………… - - - -
TOTAL LIABILITIES…………………………………… 1,399 225,211 199 81,102
FUND BALANCES:
Nonspendable……………………………………… - - - -
Restricted…………………………………………… 108,929 69,593 158,010 374,965
TOTAL FUND BALANCES…………………………… 108,929 69,593 158,010 374,965
TOTAL LIABILITIES AND FUND BALANCES………$110,328 $ 294,804$ 158,209$ 456,067
Town of North Andover, Massachusetts80Comprehensive Annual Financial Report
Special Revenue Funds
EducationSchoolOtherAffordableOther
RevolvingLunchSpecial RevenueHousingTrust
FundsFundsFundsTrust FundFundsSubtotal
$ 335,225$ $287,094 $1,054,237716,543$58,766 $3,400,778
- - - - - -
----- 70,495
- - - - - -
$ 335,225$ $287,094 716,543$1,054,237$ 58,766$ 3,471,273
$ 21,729$ $6,172 $2,071 -$ -$ 59,434
66,220 10,935 - - - 285,109
- - - - - 70,495
- - - - - -
87,949 17,107 2,071 - - 415,038
- - - - - -
247,276 269,987 714,4721,054,237 58,766 3,056,235
247,276 269,987 714,4721,054,237 58,766 3,056,235
$ 335,225$ $287,094 716,543$1,054,237$ 58,766$ 3,471,273
(Continued)
Town of North Andover, Massachusetts81Comprehensive Annual Financial Report
NONMAJOR GOVERNMENTAL FUNDS
COMBINING BALANCE SHEET
JUNE 30, 2012
Capital Project Funds
MunicipalEducation
HighwayCapitalCapital
ASSETSChapter 90ProjectsProjectsSubtotal
Cash and cash equivalents………………..………$- $587,890 $1,513,938 $2,101,828
Investments………………………………………… -- - -
Receivables, net of uncollectibles:
Departmental and other…………………………----
Intergovernmental……………………………… -960,1541,238,836 2,198,990
TOTAL ASSETS……………………………………$1,238,836$587,890 $2,474,092$4,300,818
LIABILITIES AND FUND BALANCES
LIABILITIES:
Warrants payable…………………………………$20,182 $5,130 $ 726,785$ 752,097
Accrued payroll…………………………………… -- - -
Deferred revenues……………………………… 725,877 - - 725,877
Due to other funds……………………………… 492,777 - - 492,777
TOTAL LIABILITIES………………………………… 1,238,836 5,130 726,785 1,970,751
FUND BALANCES:
Nonspendable…………………………………… - - - -
Restricted………………………………………… - 582,760 1,747,307 2,330,067
TOTAL FUND BALANCES………………………… - 582,760 1,747,307 2,330,067
TOTAL LIABILITIES AND FUND BALANCES……$1,238,836 $587,890 $2,474,092$4,300,818
Town of North Andover, Massachusetts82Comprehensive Annual Financial Report
Permanent Funds
Total
Permanent LibraryNonmajor
FundsPermanentGovernmental
PrincipalFundsSubtotalFunds
$ 29,184$ 87,576$ $5,619,366116,760
-400,886400,886 400,886
--- 70,495
- - - 2,198,990
$ 29,184$ $517,646488,462 $8,289,737
$- $ - $ - $ 811,531
- - - 285,109
- - - 796,372
- - - 492,777
- - - 2,385,789
29,184 - 29,184 29,184
-488,462488,462 5,874,764
29,184488,462517,646 5,903,948
$ 29,184$ $517,646488,462 $8,289,737
(Concluded)
Town of North Andover, Massachusetts83Comprehensive Annual Financial Report
NONMAJOR GOVERNMENTAL FUNDS
COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
FISCAL YEAR ENDED JUNE 30, 2012
Special Revenue Funds
MunicipalEducationReceiptsMunicipal
Federal andFederal andReserved forRevolving
State GrantsState GrantsAppropriationFunds
REVENUES:
Charges for services……………………………………………$- $ $- $509,171-
Payments in lieu of taxes……………………………………… - - - -
Licenses and permits…………………………………………… - - 45,367 88,398
Intergovernmental……………………………………………… 179,167 3,312,944 - -
Departmental and other………………………………………… - - - 12,571
Contributions…………………………………………………… - - - 324,105
Investment income……………………………………………… 73 - - -
TOTAL REVENUES……………………………………… 179,240 3,312,944 45,367 934,245
EXPENDITURES:
Current:
General government………………………………………… 153,895 - 57,360 18,676
Public safety………………………………………………… 119,992 - - 506,212
Education……………………………………………………… - 3,388,274 - -
Public works………………………………………………… 8,357 - 2,282 15,550
Human services……………………………………………… 31,017 - - 382,939
Culture and recreation……………………………………… 3,700 - - -
TOTAL EXPENDITURES……………………………… 316,961 3,388,274 59,642 923,377
EXCESS (DEFICIENCY) OF REVENUES
OVER EXPENDITURES……………………………………… (137,721) (75,330) (14,275) 10,868
OTHER FINANCING SOURCES (USES):
Issuance of bonds and notes………………………………… ----
… - - - -
Transfers in……………………………………………………
Transfers out…………………………………………………… - - - (40,000)
… - - - (40,000)
TOTAL OTHER FINANCING SOURCES (USES)…
… (137,721) (75,330) (14,275) (29,132)
NET CHANGE IN FUND BALANCES…………………………
… 246,650 144,923 172,285 404,097
FUND BALANCES AT BEGINNING OF YEAR………………
…$108,929 $69,593 $158,010 $374,965
FUND BALANCES AT END OF YEAR…………………………
Town of North Andover, Massachusetts84Comprehensive Annual Financial Report
Special Revenue Funds
EducationSchoolOtherAffordableOther
RevolvingLunchSpecial RevenueHousingTrust
FundsFundsFundsTrust FundFundsSub-total
$1,929,452$1,271,958 $4,100 $ $- $3,714,681-
--136,235- 136,235-
241,208--- 374,973-
--153,716-25,4003,671,227
102-150,00012,000 176,4831,810
90,481659116,938- 532,183-
-189-938 1,23838
2,261,2431,272,806560,98912,938 8,607,02027,248
--112,73324,650 367,314-
--11,217- 651,82914,408
2,465,1181,188,61612,696- 7,054,704-
--4,396- 30,585-
--28,275- 442,231-
--16,901- 20,601-
2,465,1181,188,616186,21824,650 8,567,26414,408
(203,875)84,190374,771(11,712) 39,75612,840
---- --
---- --
(65,700) (134,526)-- (240,226)-
(65,700) (134,526)-- (240,226)-
(269,575)84,190240,245(11,712) (200,470)12,840
516,851185,797474,2271,065,949 3,256,70545,926
$247,276 $269,987 $714,472 $1,054,237$58,766 $3,056,235
(Continued)
Town of North Andover, Massachusetts85Comprehensive Annual Financial Report
NONMAJOR GOVERNMENTAL FUNDS
COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
FISCAL YEAR ENDED JUNE 30, 2012
Capital Project Funds
MunicipalEducation
HighwayCapitalCapital
Chapter 90ProjectsProjectsSub-total
REVENUES:
Charges for services………………………………………………$- $ $- $--
Payments in lieu of taxes………………………………………… - - --
Licenses and permits…………………………………………… - ---
Intergovernmental………………………………………………… 748,340 - 960,1541,708,494
Departmental and other………………………………………… - ---
Contributions……………………………………………………… - ---
Investment income……………………………………………… - ---
TOTAL REVENUES……………………………………… 748,340 960,154-1,708,494
EXPENDITURES:
Current:
General government………………………………………… - 448,138 - 448,138
Public safety…………………………………………………… - 148,137 148,137-
Education……………………………………………………… - - 1,516,237 1,516,237
Public works…………………………………………………… 748,340 1,030,899 1,779,239-
Human services……………………………………………… ----
Culture and recreation………………………………………… - 363,541 363,541-
TOTAL EXPENDITURES………………………………… 748,340 1,990,7151,516,2374,255,292
EXCESS (DEFICIENCY) OF REVENUES
… - (1,990,715)(556,083)(2,546,798)
OVER EXPENDITURES………………………………………
OTHER FINANCING SOURCES (USES):
Issuance of bonds and notes…………………………………… - 1,285,7801,969,5683,255,348
… - 135,218219,866355,084
Transfers in………………………………………………………
… - (119,517)(235,567)(355,084)
Transfers out……………………………………………………
… - 1,301,4811,953,8673,255,348
TOTAL OTHER FINANCING SOURCES (USES)……
… - (689,234)1,397,784708,550
NET CHANGE IN FUND BALANCES……………………………
… - 1,271,994349,5231,621,517
FUND BALANCES AT BEGINNING OF YEAR…………………
FUND BALANCES AT END OF YEAR……………………………$- $582,760 $1,747,307 $2,330,067
Town of North Andover, Massachusetts86Comprehensive Annual Financial Report
Permanent Funds
Total
Permanent LibraryNonmajor
FundsPermanentGovernmental
PrincipalFundsSub-totalFunds
$- $- $- $3,714,681
- - - 136,235
- - - 374,973
- - - 5,379,721
- - - 176,483
- - - 532,183
50 3,403 3,453 4,691
50 3,403 3,453 10,318,967
- - - 815,452
- - - 799,966
- - - 8,570,941
- - - 1,809,824
- - - 442,231
- - - 384,142
- - - 12,822,556
50 3,403 3,453 (2,503,589)
- - - 3,255,348
- - - 355,084
- - - (595,310)
--3,015,122
-
503,4033,453511,533
29,134485,059514,1935,392,415
$29,184 $488,462 $517,646 $5,903,948
(Concluded)
Town of North Andover, Massachusetts87Comprehensive Annual Financial Report
Agency Fund
Agency Fund
This fund is used to account for assets held by the Town in a trustee capacity or as an agent for individuals,
private organizations, and other governmental units. The majority of the assets in the agency fund relate to
conservation, highway and planning board bid deposits as well as student activity deposits.
Town of North Andover, Massachusetts 88 Comprehensive Annual Financial Report
AGENCY FUND
STATEMENT OF CHANGES IN ASSETS AND LIABILITIES
FISCAL YEAR ENDED JUNE 30, 2012
BeginningEnd
of YearAdditionsDeletionsof Year
ASSETS
CURRENT:
Cash and cash equivalents…………………$3,913,718 $4,061,817 $(3,906,526)$4,069,009
LIABILITIES
Guaranteed deposits………………………$3,364,503$2,329,164$(2,174,421)$3,519,246
Other deposits……………………………… 354,687 586,224 357,210(583,701)
Student Activities…………………………… 194,528 1,146,429 (1,148,404) 192,553
…$3,913,718 $4,061,817 $(3,906,526) $4,069,009
TOTAL LIABILITIES…………………………
Town of North Andover, Massachusetts89Comprehensive Annual Financial Report
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Town of North Andover, Massachusetts 90 Comprehensive Annual Financial Report
Statistical Section
Statistical Section
Statistical Section
This part of the comprehensive annual financial report presents detailed information as a context for
understanding what the information in the financial statements, note disclosures, and required supplementary
information says about the Town’s overall financial health.
Financial Trends
These schedules contain trend information to help the reader understand how the Town’s financial
performance and well-being have changed over time.
Revenue Capacity
These schedules contain information to help the reader assess the Town’s most significant local revenue
source, the property tax.
Debt Capacity
These schedules present information to help the reader assess the affordability of the Town’s current
levels of outstanding debt and the Town’s ability to issue additional debt in the future.
Demographic and Economic Information
These schedules offer demographic and economic indicators to help the reader understand the
environment within which the Town’s financial activities take place.
Operating Information
These schedules contain service and infrastructure data to help the reader understand how the
information in the Town’s financial report relates to the services the Town provides and the activities it
performs.
SOURCES: Unless otherwise noted, the information in these schedules is derived from the comprehensive
annual financial reports for the relevant year. The Town implemented GASB Statement 34 in 2003; schedules
presenting government-wide information include information beginning in that year.
Town of North Andover, Massachusetts 91 Comprehensive Annual Financial Report
Assessed Value and Actual Value of Taxable Property by Classification and Tax Rates
Town of North Andover
Last Ten Fiscal Years
Assessed and Actual Values and Tax Rates
TotalTotalTotal
FiscalResidentialResidentialCommercialIndustrialPersonalCommercialCommercialDirectTown
YearValueTax RateValueValuePropertyValueTax RateRateValue
2003 2,664,778,762$ 13.12$ 194,027,412$ 157,745,200$ 51,697,870$ 403,470,482$ 15.92$ 13.49$ 3,068,249,244$
2004(1)3,244,746,811$ 11.76$ 240,998,289$ 184,695,300$ 56,331,150$ 482,024,739$ 14.28$ 12.09$ 3,726,771,550$
20053,437,798,500$ 11.52$ 239,818,629$ 176,063,300$ 77,626,380$ 493,508,309$ 12.59$ 11.65$ 3,931,306,809$
20063,743,701,112$ 11.14$ 240,357,988$ 175,698,300$ 81,016,630$ 497,072,918$ 13.47$ 11.41$ 4,240,774,030$
2007(1)4,113,245,116$ 10.45$ 286,085,303$ 174,371,400$ 77,931,290$ 538,387,993$ 12.63$ 10.70$ 4,651,633,109$
20084,001,584,703$ 11.40$ 283,789,944$ 167,088,600$ 82,002,220$ 532,880,764$ 13.78$ 11.68$ 4,534,465,467$
20093,910,976,509$ 11.76$ 280,591,491$ 163,741,100$ 99,814,430$ 544,147,021$ 16.69$ 12.36$ 4,455,123,530$
2010(1)3,670,178,348$ 12.74$ 286,494,949$ 168,247,500$ 108,138,260$ 562,880,709$ 17.69$ 13.40$ 4,233,059,057$
20113,563,558,199$ 13.52$ 283,140,851$ 162,024,800$ 112,827,760$ 557,993,411$ 18.63$ 14.21$ 4,121,551,610$
20123,586,332,274$ 13.92$ 278,839,111$ 158,456,800$ 121,400,010$ 558,695,921$ 19.16$ 14.63$ 4,145,028,195$
Total Assessed Value by Classification
Total Assessed Value by Classification
Fiscal Year Ended June 30, 2011
Fiscal Year Ended June 30, 2012
3%
3%
4%
4%
7%
7%
86%
86%
ResidentialCommercialIndustrialPersonal PropertyResidentialCommercialIndustrialPersonal Property
Commercial Value as % of Total Value
18.0%
16.0%
14.0%
12.0%
10.0%
2003200420052006200720082009201020112012
(1) Revaluation year.
Source: Assessor's Department, Town of North Andover
All property in the Commonwealth of Massachusetts is assessed at 100% of fair cash value.
Note: Chapter 59, Section 21C of the Massachusetts General Laws, known as "Proposition 2 1/2", imposes 2 separate limits on the
annual tax levy of the Town. The primary limitation is that the tax levy cannot exceed 2 1/2 percent of the full and fair cash value.
The secondary limitation is that the tax levy cannot exceed the maximum levy limit for the preceding fiscal year as determined by
the State Commissioner of Revenue by more than 2 1/2 percent, subject to an exception for property added to the tax rolls and
for certain substantial valuation increases other than as part of a general revaluation. The secondary limit may be exceeded in any
year by a majority vote of the voters, however it cannot exceed the primary limitation.
Town of North Andover, Massachusetts97Comprehensive Annual Financial Report
---
----
alue
5.02%
V
Assessed
Total Taxable
Percentage of
2003
40.59%70.28%80.20%11.11%21.01%30.83%50.39%60.28%90.17%
100.16%
-------
8,974,2407,761,7006,969,700
Comprehensive Annual Financial Report
26,728,83012,454,50049,736,20045,427,00037,449,40017,541,76012,568,400
aluationRank
V
$$$$$$$$225,611,730
$ $ $
$ $ $ $ $ $ $
-------
alue
1.38%0.98%0.89%0.60%0.46%0.40%0.27%0.25%0.23%0.22%5.68%
V
AssessedAssessed
Total Taxable
Percentage of
123456789
10
2012
-------
9,601,6009,200,800
56,739,59040,458,72036,689,71024,646,00018,866,01016,295,90011,327,97010,228,000
98
aluationRank
V
Assessed
$234,054,300
$ $ $ $ $ $ $
$
$ $ $ $ $ $ $ $ $
Principal Taxpayers
Town of North Andover
Totals
Current Year and Nine Years Ago
UtilityUtility
Retail
OfficeOfficeOfficeOffice
Type
Office Par
Property Office Park
ApartmentsApartments
Shopping MallManufacturing
Co-op Housing
Office/ManufacturingOffice/Manufacturing
Congregate Care/Nursing Home
Name
AIMCO (Royal Crest)National GridEdgewood Retirement CommunityMansur InvestmentDelta/Delta Realty TrustOzzy PropertiesWood Ridge HomesRCG North Andover MillsNorth Andover 2004Eaglewood
PropertiesNAM Partners LimitedT.J. Flatley Co.Lucent TechnologiesMass ElectricJefferson Equity PartnersBF No, Andover Office ParkD & L Andover Prop. LLCSource: Official Statement for
Sale of Bonds
Town of North Andover, Massachusetts
First Year Current Tax Collections
Last Ten Fiscal Years
Real Estate Tax Levy
Real Estate Tax Levies vs. First Year Collections
2003200420052006200720082009201020112012
0
90,000,00080,000,00070,000,00060,000,00050,000,00040,000,00030,000,00020,000,00010,000,000
110,000,000100,000,000
Millions
17.58%
35,050,079
2012
$ $ $
23.44%
45,590,789
2011
4,031,215
$ 4,446,186,000$ 222,309,300 $ 183,228,006
21.46%
44,477,844
2010
6,688,916
$ 4,460,344,100$ 223,017,205 $ 170,737,500
22.76%
45,804,952
2009
Comprehensive Annual Financial Report
3,391,000
$ 4,460,344,100$ 223,017,205$ 175,148,361
23.44%
44,809,719
2008
10,111,025
$ 4,913,038,200$ 245,651,910$ 189,735,933
Fiscal Year
24.23%
48,332,581
2007
12,765,223
$ 4,913,038,200$ 245,651,910$ 188,076,968
28.59%
102
52,713,614
2006
Last Ten Fiscal Years
Town of North Andover
7,993,738
$ 4,648,968,500$ 232,448,425$ 176,122,106
Computation of Legal Debt Margin
48.73%
56,138,372
2005
13,747,450
$ 4,648,968,500$ 232,448,425$ 165,987,361
55.09%
52,738,117
2004
41,577,757
$ 4,010,449,200$ 200,522,460$ 102,806,331
68.22%
2003
57,734,453
$ 4,010,449,200$ 200,522,460$ 90,049,890
3,227,431,200 161,371,560 51,278,588
60,169,570
…
…
…
…
Equalized Valuation…………………………………Debt Limit -5% of Equalized Valuation……………Less: Outstanding debt applicable to limit……………… 49,923,402 Authorized and unissued debt……………………Legal debt
margin……………………………………Total debt applicable to the limit as a percentage of debt limit……………………… Source: Official Statement for Sale of Bonds
Town of North Andover, Massachusetts
Demographic and Economic Statistics
Town of North Andover
Last Ten Fiscal Years
Per
Capita
FiscalPopulationPersonalPersonalMedianUnemployment
YearEstimatesIncomeIncomeAgeRate
200326,9591,001,939,544$$ 37,165 375.3%
200427,0741,026,337,826$$ 37,909 374.5%
200527,0251,044,969,910$$ 38,667 374.2%
200627,3901,080,264,953$$ 39,440 374.1%
200727,4121,102,755,288$$ 40,229 373.9%
200827,5661,131,129,553$$ 41,034 374.6%
200927,7531,161,578,875$$ 41,854 377.7%
201028,3521,210,382,515$$ 42,691 377.3%
201128,3521,234,590,165$$ 43,545 375.9%
201228,3521,259,281,969$$ 44,416 375.2%
Source:Commonwealth of Mass, Division of Local Services, Executive Office of Labor and
Workforce Development. Median age is based on most recent census data.
Town of North Andover, Massachusetts103Comprehensive Annual Financial Report
t
------
Total Town
Employmen
Percentage of
k
2003
------
40051%23191%66022%32561%60032%40241%30071%25081%200101%
117514%
EmployeesRan
t
------
Comprehensive Annual Financial Report
2%2%1%1%1%1%1%1%1%1%
Total Town
Employmen
Percentage of
k
2012
------
46514562400335043345265623071938174915610
EmployeesRan
104
Town of North Andover
Current Year and Nine Years Ago
Principal Employers (excluding Town)
of
Nature
Business
Higher EducationGrocery StoreElectronic ControlsShoe ManufacturingHealthcareNewspaperManufacturingEducationHealthcareGrocery StoreManufacturingChemical ManufacturingUtility ServicesPlastics
ManufacturingManufacturungContractor
r
Employe
Merrimack CollegeDemoulas Supermarkets, Inc.A.E.G SchneiderConverseEdgewood Retirement CommunityLawrence Eagle TribuneWatts RegulatorsBrooks SchoolGenesis HealthcareStop & ShopLucent
TechnoligiesBorden ChemicalMass ElectricSweetheart PlasticsMorton International IncSolectron CorpSource: Massachusetts Department of Workforce Development
Town of North Andover, Massachusetts
72334929
2142113
146
64134827
2152114
146
64934421
2142114
146
53633427
2142113
146
Comprehensive Annual Financial Report
53243424
2142113
146
52141317
s
2142112
146
63153221
2142113
146
105
62363213
2142113
146
Last Ten Fiscal Years
Town of North Andover
42763216
2142113
146
Full-Time Equivalent Town Employee
73783110
2142114
146
2003200420052006200720082009201020112012
…
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Town…………………………………………Public Safety………………………………School………………………………………PCommunity services………………………Support Services …………………………Library…………………….…………………Total …………………………………………Source: Annual Budget
Report, School Dept
Full-Time Equivalents
Town of North Andover, Massachusetts
-
273430431459883532519638897
506781820384348342912238
332174215332
1590986
,,,,,,,,,
8812124
22
21
(continued)
-
265491165666357341719576748
5588769648985498407242213
322287326243
394426
,,,,,,,,
871224
22
21
-
295564793098845667418032664
5689918971064298121371251
312271436233
3079646
,,,,,,,,,
8813224
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-
391886026062201206718636344
5597691184034871507242110
70221671416243
376626
,,,,,,,,
781224
23
21
Comprehensive Annual Financial Report
-
67070896370290345591 0 5914 66
6818108482039256884434154
5733377141392583345
,,,,,,,,,
762141224
21
-
204488855305414741210017314
100874785518021420944882
4432771438253
302636
Fiscal Year
,,,,,,,,
762224
25
21
---
0870731410161556018167841
9281530899859935245147
312128 4315 1
011903776
,,,,,,,,,,
77112224
24
21
106
--
53730757090811369717953971
24129408851953209134389
003123763272516
9143444
,,,,,,,,
772224
13
21
Last Ten Fiscal Years
Town of North Andover
-----
43118212247560000919239
7520673329232412527705
07312234622 6
311089243
,,,,,,,,,,
76 111224
13
21
Operating Indicators by Function/Program
56849
44103
21192
,,,
113
2003200420052006200720082009201020112012
394 1,152 3,780 2,528 118 - 1 - 750 94 - - - 2,554 4,320
351 94 457 377
16,774
…
…
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Fire and Rescue……………………………Ambulance Calls……………………………Smoke Detectors……………………………Carbon Monoxide Detectors………………Fireworks Display Permits…………………Liquid Gas Storage Permits………………Open Air
Burning Permits…………………Oil Burner Install Permits…………………Sprinkler Inspections………………………Underground Tank Installation……………Underground Tank Removals……………
gm
sa
t
t
ooi
u
o
Births……………………………………………Marriages………………………………………Deaths…………………………………………… 317DBNew Voter Registrations………………………Passport Applications…………………………CArrests…………………………………………… 381Summons/Hearings……………………………CPar
king tickets issued…………………………TIncidentsPermits/certificates issuedPermits issued…………………………………
Police
Population…………………………………………… 26,959Registered Voters, Annual Town Election………Town ClerkFireBuilding DepartmentPublic school enrollment…………………………
Function/ProgramGeneral GovernmentPublic SafetyEducation
Town of North Andover, Massachusetts
-
76943952512458948
8
23517698712091612
21376353
86912
,,,,,,,,,,
6
8870547196.
111252
206,362
(concluded)
58342741381599713780
8531214002887120652
21185275531
27242
,,,,,,,,,,,
0
58614463183.
1111253
2
2934529628147549365
753122037636616747
1118149006
50928
,,,,,,,,,
8
547943684.
11252
882229530390368211
8
95243840176895037
1117688733
29030
,,,,,,,,,
7
94338969.
8
12242
212,970
Comprehensive Annual Financial Report
2820311728324549929
19533269840504336
41
111750692318596
,,,,,,,,,
9
833223849.
11252
2
201,961
213,598
3210731509145480156
1964237011872898242
11166736301
5612
Fiscal Year
,,,,,,,,,
8
743012733.
112252
67796909913813794898
14484549261078788799
11 149944339 6
4805
,,,,,,,,,,
9
3210126006.
1122242
2
206,606
107
61096909300491704610
15584742622820102984
1114889914876
170
,,,,,,,,,
8
311125886.
1121142
2
Last Ten Fiscal Years
Town of North Andover
--
47325165043323538
33734994681992888
11 659448111
327
,,,,,,,,
9
32121779.
112132
Operating Indicators by Function/Program
01788
75419
05
1
,,
36
2003200420052006200720082009201020112012
12
210,314
10 141 30 - 4,037 1,240 11,710 871 4,382 216,641 441 11,476 28,988 74
2.9354
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Restaurant …………………………………D
b
m
pp
i
o
ee
L
Plan reviews……………………………………InspectionsSSTrash Hauler Placards…………………………Trash Hauler Permits…………………………HOutreach Case Management…………………Community Education…………………………Recreation………………………………………Transportatio
n…………………………………
f
o
Planning
Board of HealthCouncil on AgingProgram attendance………………………………#Circulation …………………………………………PC & Internet Use…………………………………Reference Questions………………………………Inter-Library Loans…………………………………Service
connections………………………………Daily consumption (in million gallons)……………Source: Various Town Departments and Annual Town Report
Function/ProgramHuman ServicesLibrariesSewerWater
Town of North Andover, Massachusetts
125118216
3097019
14991913
1
125118216
3097019
14991913
1
1,515
12511216
38997019
14891913
1
1,511
125117216
38997019
8
14891913
4
1
,
1
1,489
Comprehensive Annual Financial Report
31251179897201196
147891913
14
,
1
31251177897201196
7
14891913
4
1
,
Fiscal Year
1
31251175797201196
147891913
14
,
1
108
31251160697201196
147891913
4
1
,
1
Last Ten Fiscal Years
Town of North Andover
31251168697201196
146891913
14
,
1
Capital Asset Statistics by Function/Program
1251126
1
13859917901139
2003200420052006200720082009201020112012
………………
…
……
…
……
……
…
…
…
…
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Number of Buildings…………………Number of Stations……………………Number of Stations……………………Number of elementary schools………Number of middle schools……………Number of high schools………………Water mains (miles)……………………146Fir
e hydrants……………………………1,465Sanitary sewers (miles)………………Storm sewers (miles)…………………Playgrounds……………………………Parks……………………………………Playgrounds - Acreage………………Parks - Acreage………………………PBall fields………………………………T
ennis courts…………………………Source: Various Town DepartmentsN/A: Information not available
Function/ProgramGeneral GovernmentPoliceCulture and Recreation
FireEducationPublic Works
Town of North Andover, Massachusetts
Additional Information
Additional information
Town of North Andover, Massachusetts 109 Additional Information
ENTERPRISE FUND
SCHEDULE OF REVENUES, EXPENSES AND CHANGES IN FUND NET ASSETS
BUDGETARY BASIS - BUDGET AND ACTUAL
FISCAL YEAR ENDED JUNE 30, 2012
Water Fund
Amounts
ActualCarriedVariance
Original FinalBudgetaryForward ToTo Final
BudgetBudgetAmountsNext YearBudget
OPERATING REVENUES:
Charges for services ………………………………………………………………$ 5,098,287 $ 5,098,287 $ 5,265,527 $ - $ 167,240
Penalties and interest……………………………………………………………… 22,000 22,000 20,617 - (1,383)
TOTAL OPERATING REVENUES …………………………………….……… 5,120,287 5,120,287 5,286,144 165,857-
OPERATING EXPENSES:
Cost of service and administration………………………………………………… 2,172,426 2,172,426 1,794,409 196,187 181,830
GLDS assessment……………………………………………………………..…… - - - - -
TOTAL OPERATING EXPENSES …………………………………….……… 2,172,426 2,172,426 1,794,409 196,187 181,830
OPERATING INCOME (LOSS)…………………………………………..…… 2,947,861 2,947,861 3,491,735 (196,187) 347,687
NONOPERATING REVENUES (EXPENSES):
Investment income………………………………………………………………… 5,500 5,500 11,308 - 5,808
Interest expense…………………………………………………………………… (352,504) (352,504) (331,997) 20,507-
Debt service - principal……………………………………………………………… (1,947,211) (1,947,211) (1,917,627) - 29,584
TOTAL NONOPERATING
REVENUES (EXPENSES), NET………………………………………..…… (2,294,215) (2,294,215) (2,238,316) - 55,899
INCOME (LOSS) BEFORE TRANSFERS…………………..………………… 653,646 653,646 1,253,419 (196,187) 403,586
TRANSFERS:
Transfers out………………………………………………………………………… (705,722) (705,722) (705,722) - -
TOTAL OPERATING TRANSFERS………………………………….………… (705,722) (705,722) (705,722) - -
CHANGE IN NET ASSETS…………………………………………………… (52,076) (52,076) 547,697 (196,187) 403,586
NET ASSETS AT BEGINNING OF YEAR……………………………..…………… 804,563 804,563 804,563 - -
NET ASSETS AT END OF YEAR……………………………………………………$ 752,487 $ 752,487 $ 1,352,260 $ (196,187) $ 403,586
Town of North Andover, Massachusetts110Additional Information
Sewer FundOsgood Hill Fund
AmountsAmounts
Actual CarriedVarianceActual CarriedVariance
OriginalFinal BudgetaryForward ToTo Final Original Final BudgetaryForward ToTo Final
BudgetBudgetAmountsNext YearBudgetBudgetBudgetAmountsNext YearBudget
$ 5,160,357 $ 5,160,357 $ 4,788,242 $ $ (372,115)- $ 3 16,822$ 3 16,822$ 280,068 $ -$ (36,754)
25,000 25,000 19,872 (5,128)- - - - - -
5,185,357 5,185,357 4,808,114 (377,243)- 3 16,822 3 16,822 2 80,068 - ( 36,754)
944,056 944,056 790,390 25,056 128,610 2 70,551 2 70,551 208,753 - 61,798
1,725,000 1,725,000 1,152,317 572,683- - - - - -
2,669,056 2,669,056 1,942,707 25,056 701,293 2 70,551 2 70,551 2 08,753 - 6 1,798
2,516,301 2,516,301 2,865,407 (25,056) 324,050 4 6,271 4 6,271 7 1,315 - 2 5,044
3,800 3,800 5,682 1,882- - - - - -
(442,635) (442,635) (441,759) 876- - - - - -
(1,606,845) (1,606,845) (1,606,845) - - - - - - -
(2,045,680) (2,045,680) (2,042,922) 2,758- - - - - -
470,621 470,621 822,485 (25,056) 326,808 4 6,271 4 6,271 7 1,315 - 2 5,044
(471,554) (471,554) (471,554) - - (46,460) (46,460) (46,460) - -
(471,554) (471,554) (471,554) - - ( 46,460) ( 46,460) (46,460) - -
(933) (933) 350,931 (25,056) 326,808 ( 189) (189) 2 4,855 - 2 5,044
433,542 433,542 433,542 - - 2,184 2,184 2,184 - -
$ 432,609 $ 432,609 $ 784,473 $ (25,056) $ 326,808 $ 1 ,995$ 1 ,995$ 2 7,039 $ - $ 2 5,044
Town of North Andover, Massachusetts111Additional Information