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Home My WebLink AboutAUDIT 1990Peat Marwick Certified Public Accountants TOWN OF NORTH ANDOVER, MASSACHUSETTS General Purpose Financial Statements Year Ended June 30, 1990 (With Independent Auditors' Report Thereon) TOWN OF NORTH ANDOVER, MASSACHUSETTS General Purpose Financial Statements Year Ended June 30, 1990 Table of Contents Independent Auditors' Report General Purpose Financial Statements: Combined Balance Sheet - Ail Fund Types and Account Group Combined Statement of Revenues, Expenditures and Changes in Fund Equity - Ail Governmental Fund Types and Expendable Trust Funds Statement of Revenues and Expenditures - Budgetary Basis Statement of Revenues, Expenses and Changes in Fund Equity - Nonexpendable Trust Funds Statement of Cash Flows - Nonexpendable Trust Funds Page Notes to General Purpose Financial Statements 7-20 Peat Marwick Certified Public Accountants One Boston Place Boston, MA 02108 Telephone 617 723 7700 Telex 617 443 0082 PMMBOST Telecopier 617 723 6864 INDEPENDENT AUDITORS' REPORT To the Board of Selectmen Town of North Andover, Massachusetts: We have audited the general purpose financial statements of the Town of North Andover, Massachusetts, as of and for the year ended 3une 30, 1990, as listed in the accompanying table of contents. These general purpose financial statements are the responsibility of the Town's management. Our responsibility is to express an opinion on these general purpose financial statements based on our audit. We conducted our audit in accordance with generally accepted auditing standards and the Government Auditing Standards, issued by the Comptroller Genera of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the general purpose financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the general purpose 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 opinion. The Town has not maintained records of the cost of its general fixed assets and, therefore, a general fixed assets account group is not presented in the accompanying general purpose financial statements as required by generally accepted accounting principles. In our opinion, except that the omission of a general fixed asset group of accounts results in an incomplete presentation as discussed in the preceding paragraph, the general purpose financial statements referred to above present fairly, in all material respects, the financial position of the Town of North Andover, Massachusetts, at June 30, 1990, and the results of its operations and cash flows of its nonexpendable trust funds for the year then ended, in conformity with generally accepted accounting principles. October 5, 1990 B/lB Member Firm Of Klynveld Peat Marwick Goerdeler TOWN OF NORTH ANDOVER, MASSACHUSETTS Combined Balance Sheet - All Fund Types and Account Group June 30, 1990 (with comparative amounts for the General Fund for 19893 Assets Cash and investments Receivables: Property taxes Motor vehicle excise Intergovernmental Other Total receivables Due from other funds (note 103 Amounts to be provided for the retirement of general long-term obligations Total assets Liabilities and Fund Equity (I)efic~t) Pooled cash overdraft Warrants and accounts payable Other liabilities Accrued liabilities: Vacation Payroll Guaranteed deposits Due to other funds (note 103 General obligation bonds and notes payable (notes 7 and 8) Deferred revenue and allowance for uncollectible accounts Total liabilities Fund equity (deficit): Reserved for: Encumbrances and continuing appropriations Non-expendable trust purposes Abatements and exemptions Unreserved: ~esignated for subsequent year's expenditures Undesignated Total fund equity (deficit) (note 9) Contingencies (note 12) Total liabilities and fund equity Governmental Fund T_~y_pes General Special Capital 1990 1989 Revenue Vroiects $ - $ 8,074,959 $ 527,241 $ 5,959,219 706,541 1,272,987 378,620 249,946 2,100,941 4,650 1~821,490 636,694 5,007,592 2,164,277 64,613 - 82,68l 82,681 $ ~ $ ~ $ 609.92~ Fiduciary Account Fund Type Group Total Trust General (Memorandum and Long-term only) Agency Obligations 1990 $ 1,232,290 $ - $ 7,718,750 _ 706,541 _ 378,620 _ - 2,183,622 _ - 1,821,490 5,090,273 _ _ 64,613 - 7~865,490 7,865,490 518,311 $ $ - 465,251 1,540,797 8,595 372,445 198,654 - 900,603 974,708 - - 5,086,860 64,613 2~789~403 2~004,339 5~046,013 9,805,358 73,208 $ $ 456,227 995 - 892,362 16,915,104 17,371,331 893,3~7 325,206 218,815 256,732 50.000 - (605,74~) 215,06~ 26,19~2 433,878 70,536 536,7).4. (11,412,112) 268,39? 536,7.I.~. (11,412,112) 338,93_3 5.959-219 See accompanying notes to general purpose financial statements. 518,311 931,O68 372,445 365,490 365,490 - 900,603 - 892,362 - 64,613 7,500,000 2~,415,104 2,789,403 7,865,490 31,2~9,399 325,206 - 70,536 - 256,732 50,000 (11,212,7~73 (10,510,2733 TOWN OF NORTH ANDOVER, MASSACHUSETTS Combined Statement of Revenues, Expenditures and Changes in Fund Equity - All Governmental Fund Types and Expendable Trust Funds Year ended June 30, 1990 (with comparative amounts for the General Fund for 1989) Governmental Fund Types General 1990 1989 Fiduciary Fund Type Total Special Capital Expendable (Memorandum only) Revenue Projects Trust 1990 Revenues; Real and personal property taxes Motor vehicle excise Licenses and permits Investment income Intergovernmental Payments in lieu of taxes Water revenue Departmental and other revenue Fines Total revenues $ 17,748,674 $ 15,815,405 1,308,358 1,596,863 55,900 - 239,250 125,239 4,596,103 4,535,251 39,222 - 3,097,444 2,642,085 1,825,437 1,464,960 355,4~5 165,883 29,265,803 26,365,686 $ - $ - $ 17,748,674 - 1,308,358 - 55,900 22,954 - 13,961 276,165 438,262 5,470,936 - 10,505,301 - - 39,222 - - - 3,097,444 579,411 81,389 86,480 2,572,717 - 355~b15 1,040,627 5,552,324 100~4~1 35t959,195 Expenditures: Current: Education General government Public safety Public works Culture and recreation Pension and fringe Judgments and claims State and district assessments Miscellaneous Capital outlay Debt service Total expenditures Excess (deficiency) of revenues over expenditures Other financing sources (uses): Operating transfers in (out), net (note ll) Total other financing sources (uses), net Excess (deficiency) of revenues and other financing sources over expenditures and ether financing uses Fund equity (deficit), beginning of year, as previously reported Residual equity transfers Fund equity (deficit), beginning of year, as restated Fund equity (deficit), end of year 14,712,340 13,569,949 894,660 1,360,959 1,478,458 - 4,513,243 3,381,731 - 3,431,072 3,831,147 8,521 405,929 336,304 190,892 2,299,607 1,284,048 72,357 40,000 367,748 323,287 - 664,999 867,159 9,091 2,172,307 1,913,044 29,928,204 27,025,127 1,175,521 (662,~01) (679,~41) (134,894) 259,04! 26,005 259,04[ 26,005 (403,360) (653,436) 433,873 1,087,314 (4,321) 429,55~ 9,198,538 1,000,000 10~198,538 (4,646,214) 800 15,607,800 116 1,361,075 11,169 4,524,412 - 3,439,593 - 596,821 - 2,371,964 12,085 83,356 (36,941) - (222,190) (36,941) - (222,!00) (171,835) (4,646,214) (133,744) 701,970 (6,730,063) 368,564 6,579 (35,835) 33,~77 708,549 (6,765,898) 402,141 367,748 674,090 9,198,538 3,172~307 41,314,348 (5,355,153) (5,355,153) (5,225,656) (5,225,656) $ ~) See accompanying notes to general purpose financial statements. TONN OF NORTH ANDOVER, ~LRSSACHUSETTS Statement of Revenues and Expenditures - Budgetary Basis Budget and Actual Year ended June 30, 1990 (with comparative actual amounts for 1989) Final 1990 Budget Actual Variance Favorable {Unfavorable) Revenues: Rea! and persona! property taxes Motor vehicle excise Licenses and permits Investment income Intergovernmental Payments in lieu of ta~es Water revenue Departmental and other revenue Fines Total revenues 1989 Actual Expenditures: Education General government Public safety Public works Culture and recreation Pension and fringe Judgments and claims State and district assessments Miscellaneous Debt service Total expenditures Excess (deficiency) of revenues over expenditures 18,296,182 $ 17,841,307 $ (456,875) $ 15,997,084 1,750,000 1,308,358 (441,642) 1,596,863 30,879 55,900 25,02l 29,686 225,000 239,250 14,250 125,239 3,783,853 3,782,607 (1,246) 4,535,251 38.000 39,222 1,222 4,107,579 3,097,444 (1,010,135) 2,642,085 1,469,342 1,825,437 356,095 1,434,274 327,500 355,415 27,915 165,883 30,028m335 28,544,940 {1,483,39~) 26,526,365 Other financing sources (uses): Proceeds of bonds Operating transfers in (out): Stabilization fund Special revenue funds Overlay surplus Capital Projects Fund Total other financing sources (uses) Excess (deficiency) of revenues and other financing sources over expenditures and other financing uses 14,932,775 14,831,079 101,696 ~3,539,893 1,433,671 1,311,934 121,737 1,434,603 4,543,021 4,462,287 80,734 3,512,620 3,478,710 3,422,530 56,180 3,790,555 415,216 405,349 9,867 329,304 2,308,380 2,299,607 8,773 is391,100 _ - 40,000 377,967 367,748 10,219 323,287 673,683 667,495 6,188 858,391 2t175t958 2,171,977 3}98[ la762~S99 30,339,381 29~940~006 399~375 26a982~352 (311,046) (1,395,066) (1,084,020) (455,987) 36,941 222,100 222,100 - 36,941 Other budget items: Transfers from other available funds 222,100 259,041 36,94~ (88,9~6) ~La~(Lm~) (1.047.079) Net budget and actual (q8,946) See accompanying notes to general purpose financial statements. 78,600 (58,5~7) 150,000 5,95~ 176,005 TOWN OF NORTH ANDOVER, MASSACHUSETTS Statement of Revenues, Expenses and Changes in Fund Equity - Nonexpendable Trust Funds Year ended June 30, 1990 Nonexpendable Trust Funds Revenues: Investment income Total revenues Expenses: Administrative and general Total expenses Net income (loss) Fund equity, beginning of year, as previously reported Residual equity transfer Fund equity, beginning of year, as restated Fund equity, end of year See accompanying notes to general purpose financial statements. ,,4~541 65 65 4,476 82,628 ~16,568) 66,060 TOWN OF NORTH ANDOVER, MASSACHUSETTS Statement of Cash Flows - Nonexpendable Trust Funds Year ended June 30, 1990 Nonexpendable Trust Funds Cash flows from operating activities: Cash payments for trust purposes Net cash used in operating activities Cash flows from investing activities: Interest on investments Net cash provided by investing activities Net increase in cash Cash, beginning of year Cash, end of year $ 65 65 4,541 4,476 66~060 70~536 See accompanying notes to general purpose financial statements. TOWN OF NORTH ANDOVER, MASSACHUSETTS Notes to General Purpose Financial Statements June 30, 1990 (1) Reporting Entity The Town's general purpose financial statements include the operations of all organizations for which the Board of Selectmen exercises oversight responsibility. Oversight responsibility is demonstrated by financial interdependency, selection of governing authority, designation of management, ability to significantly influence operations, and accountability for fiscal matters. Based on the aforementioned oversight criteria, the operations of the following entity have been excluded from the accompanying general purpose financial statements: · Town Housing Authority. Four of the Board members are elected and one member is appointed by the State. The Town has no oversight responsibility for the Authority's operations and no responsibility for the Authority's deficits or debt. (2) Summary of Significant Accounting Policies (a) Basis of Presentation The financial condition and results of operations of the Town's funds are presented as of and for the year ended June 30, 1990. The accounting policies of the Town conform with generally accepted accounting principles ("GAAP"), except that the Town does not maintain, and therefore does not report, a general fixed assets account group in accordance with generally accepted accounting principles. Such departure from GAAP is permissible under the Massachusetts Uniform Municipal Accounting System. (b) Fund Accounting The operations of the Town are recorded in the following fund types and account group: · Governmental Fund Types Governmental funds are used to account for the Town's expendable financial resources and related liabilities (except those accounted for in nonexpendable trust funds). The measurement focus is upon determination of changes in financial position. The following are the Town's governmental fund types: General Fund - The general fund is the general operating fund of the Town. It is used to account for all financial resources except those required to be accounted for in another fund. (Continued) TOWN OF NORTH AN-DOVER, MASSACHUSETTS Notes to General Purpose Financial Statements Special Revenue Funds - Special revenue funds are used to account for the proceeds of specific revenue sources (other than expendable trusts or major capital projects) that are legally restricted to specified purposes. Capital Project Funds - Capital project funds are used to account for financial resources to be used for the acquisition or construction of major capital facilities (other than those financed by trust funds). · Fiduciary Fund Types Trust and Agency Funds - Fiduciary funds are used to account for assets held by the Town in a trustee capacity or as an agent. Trust funds include expendable trust funds and nonexpendable trust funds. Expendable trust funds are accounted for similar to governmental funds. Nonexpendable trust funds are accounted for similar to proprietary funds. Agency funds are custodial in nature and do not involve measurement of results of operations. · Account Group General Long-term Obligation~ Account Group - This account group is used to account for all long-term obligations of the Town. (c) Basis of Accounting The modified accrual basis of accounting is followed by governmental funds, expendable trust funds, and agency funds. Under the modified accrual basis of accounting, revenues are recorded when they become measurable and available to pay liabilities of the current period. Revenues not considered available are recorded as deferred revenues. Expenditures are recorded when the liability is incurred except for (1) interest on general long-term obligations, which is recorded when due, and (2) the noncurrent portion of accrued vacation leave and judgments and claims, which are recorded in the general long-term obligations account group. In applying the susceptible to accrt~l concept to intergovernmental revenues, there are essentially two types of revenues. In one, moneys must be expended on the specific purpose or project before any ~ounts will be paid to the Town; therefore, revenues are recognized based upon the expenditures incurred. In the other, moneys are virtually unrestricted and are usually revocable only for failure to comply with prescribed compliance requirements. These resources are reflected as revenues at the time of receipt or earlier if the susceptible to accrual criteria are met. (Continued) 8 TOWN OF NORTH ANDOVER, MASSACHUSETTS Notes to General Purpose Financial Statements Property taxes are recognized as revenue in the year for which taxes have been levied, provided they are collected within 60 days after year-end. Licenses and permits, fines and forfeitures, and miscellaneous revenues are recorded as revenues when received in cash because they are generally not measurable until actually received. Investment earnings are recorded as earned. The accrual basis of accounting is used by nonexpendable trust funds. (d) Encumbrances and Continuing Appropriations Encumbrance accounting, under which purchase orders, contracts, and other commitments for the expenditure of funds are recorded in order to reserve that portion of the applicable appropriation, is employed in governmental funds. Open encumbrances at year-end are reported as reservations of fund balances. Encumbrances do not constitute expenditures or liabilities, except for budgetary purposes (see note 4). Certain unexpended and unencumbered appropriations for uncompleted projects are carried over to succeeding years. Such continuing appropriations are accounted for similar to encumbrances. (e) Accrued Vacation Employees are granted vacation in varying amounts. Upon retirement, termination or death, certain employees are compensated for unused vacation (subject to certain limitations) at their then current rates of pay. The amount of vacation costs which are not due and payable is recorded in the General Long-Term Obligations Account Group. The amount recorded is the unused days earned at the current rate of pay. (f) Total Columns Total columns on the general purpose financial statements are captioned "Memorandum only" to indicate that they are presented only to facilitate financial analysis. Data in these columns do not present financial position, results of operations or changes in financial position in conformity with generally accepted accounting principles. Such data are not comparable to a consolidation since interfund eliminations have not been made. (3) Property Taxes Real and personal property taxes are based on values assessed as of each January 1 and are normally due on the subsequent November 1 and May 1. By law, all taxable property in the Commonwealth must be assessed at 100% of fair cash value. Taxes due and unpaid after the respective due dates are subject to interest and penalties. The Town has an ultimate right to foreclose on property for which taxes have not been paid. Property taxes levied are recorded as receivables in the fiscal year of the levy. (Continued) TOWN OF NORTH ANDOVER, MASSACHUSETTS Notes to General Purpose Financial Statements A statewide tax limitation statute known as "Proposition 2-1/2" limits the property tax levy to an amount equal to 2-1/2% of the value of all taxable property in the Town. A secondary limitation is that no levy in a fiscal year may exceed the preceding year's allowable tax levy by more than 2-1/2%, plus taxes levied on certain property newly added to the tax rolls. In 1990, Proposition 2-1/2 was overridden by a Town-wide referendum vote. (4) Budgetary Basis of Accounting The Town must establish its property tax rate each year so that the resulting property tax levy will comply with the limits required by Proposition 2-1/2 and also constitute that amount which will equal the sum of (a) the aggregate of all annual appropriations for expenditures and transfers, plus (b) provision for the prior fiscal year's deficits, if any, less (c) the aggregate of all non-property tax revenue and transfers projected to be received by the Town, including available surplus funds. The budgets for all departments and operations of the Town, except that of public schools, are prepared under the direction of the Town Manager who presents the budget to the Board of Selectman. The School Department budget is prepared under the direction of the School Committee. Original and supplemental appropriations are acted upon by Town Meeting Vote. The Town's General Fund budget is prepared on a basis other than generally accepted accounting principles ("GAAP"). The "actual" results column of the Statement of Revenues and Expenditures - Budgetary Basis is presented on a "budget basis" to provide a meaningful comparison with the budget. The major differences between the budget and GAAP bases are that: (a) Real estate and personal property taxes, which are recorded as revenue when levied (budget), as opposed to when susceptible to accrual (GAAP). (b) Encumbrances and continuing appropriations are recorded as the equivalent of expenditures (budget), as opposed to a reservation of fund balance (GAAP). (c) Certain state aid has been accrued (GAAP) as opposed to applied to subsequent year's revenue (budget). (Continued) 10 TOWN OF NORTH ANDOVER, MASSACHUSETTS Notes to General Purpose Financial Statements The following reconciliation summarizes the differences between budget and GAAP basis accounting principles for the year ended June 30, 1990: Other financing sources ~venue Expenditures (uses) net As reported on a budgetary basis $ 28,544,940 29,940,006 259,061 Adjustment of property tax revenues to a modified accrual basis (92,633) Adjustment of Supreme Judicial Court revenues to be used in subsequent year 813,496 Adjustment for encumbrances and continuing appropriations (11, 92) As reported on a GAAP basis (5) Cash and Investments State and local statutes place certain limitations on the nature of deposits and investments available to the Town. Deposits (including demand deposits, term deposits and certificates of deposit) in any one financial institution may not exceed certain prescribed levels without collateralization by the financial institutions involved. Investments can also be made in securities issued by or unconditionally guaranteed by the U.S. government or agencies that have a maturity of less than one year from the date of purchase, repurchase agreements guaranteed by the U.S. government or agencies that have a maturity of less than one year from the date of purchase, repurchase agreements guaranteed by such securities with maturity dates of no more than 90 days from the date of purchase, and units in the Massachusetts Municipal Depository Trust ("MMDT"). (Continued) 11 TOWN OF NORTH ANDOVER, MASSACHUSETTS Notes to General Purpose Financial Statements Deposits The following summary presents the amount of Town deposits which are fully insured or collateralized with securities held by the Town or its agent in the Town's name (Category 1), those deposits which are collateralized with securities held by the pledging financial institution's trust department or agent in the Town's name (Category 2) and those deposits which are not collateralized (Category 3) at June 30, 1990. Bank Balance Total Cate§ory Bank Carrying 1 2 3 Balance Amount Cash $ 1.010.939 - ~ ~ ~ Investments The Town categorizes investments according to the level of risk assumed by the Town. Category 1 includes investments that are insured, registered or held by the Town's agent in the Town's name. Category 2 includes uninsured and unregistered investments held by the counterparty's trust department or agent in the Town's name. Category 3 includes uninsured and unregistered investments held by the counterparty, its trust department or its agent, but not in the Town's name. Carrying Amount Category 1 C~tegory 2 Category 3 Market Total Value Common and preferred stock $ - Corporate bond and notes - Money market and related investments - U.S. Government obligations - - Totals $ -- - 25,246 25,246 87,799 4,733 4,733 - 32,417 32,417 233,337 62,837 62~837 - The composition of the Town's bank recorded deposits and investments fluctuates depending primarily on the timing of real estate tax receipts, proceeds from borrowings, collections of state and federal aid, and capital outlays throughout the year. 12 TOWN OF NORTH ANDOVER, MASSACHUSETTS Notes to General Purpose Financial Statements (6) Pension Plan (a) Plan Description The Town provides retirement benefits to employees through a contributory retirement system administered by the Essex County Retirement System ("System"), a cost-sharing, multiple-employer public employee retirement system. Each participating employer's share of the total annual contribution is determined on the basis of active payroll. The Town's payroll for employees covered by the Retirement System for the year ended June 30, 1990, was $6,770,323; the Town's total payroll was $16,448,967. Public school teachers are covered by the Con~onwealth of Massachusetts Teachers' Retirement System (TRS) to which the Town of North Andover, Massachusetts, does not contribute. The Town's payroll for teachers covered by the TRS for the year ended June 30, 1990, was $8,906,154. The System and the TRS are contributory defined benefit plans covering all Town employees and teachers deemed eligible. The System is a member of the Massachusetts Contributory System and is governed by Chapter 32 of the Massachusetts General Laws. Membership in the System and the TRS is mandatory immediately upon the commencement of employment for all permanent, full-time employees. Both systems provide for retirement allowance benefits up to a maximum of 80% of a member's highest three-year average annual rate of regular compensation. Benefit payments are based upon a member's age, length of creditable service, level of compensation and group classification. Members joining the system after January 1, 1979, were subject to a cap of $30,000 on the level of compensation upon which their benefits were calculated. Effective July 1, 1989, the $30,000 salary cap was removed. Members of both systems become vested after 10 years of creditable service. A retirement allowance may be received upon reaching age 65 or upon attaining 20 years of service. The System also provides for early retirement at age 55 if the participant (1) has a record of 10 years of creditable service, (2) was on the Town payroll on January 1, 1978, (3) voluntarily left Town employment on or after that date, and (4) left accumulated annuity deductions in the Fund. Active members contribute either 5, 7 or 8% of their gross regular compensation depending on the date upon which their membership began and certain employees contribute an additional 2% over $30,000 of annual compensation. The Town is required to contribute the remaining amounts necessary to pay benefits when due. The Systems also provide death and disability benefits. The accounting records of the System are maintained on a calendar year basis in accordance with the standards and procedures established by the Commissioner of the Public Employee Retirement Administration. (Continued) 13 TOWN OF NORTH ANDOVER, MASSACHUSETTS Notes to General Purpose Financial Statements (6) Pension Plan (Continued) (b) Funding Status and Progress The amount shown below as the "Pension Benefit Obligation" for the System is a standardized disclosure measure of the present value of pension benefits, adjusted for the effects of projected salary increases and step-rate benefits, estimated to be payable in the future as a result of employee service to date. The measure is intended to help users assess the funding status of the System on a going-concern basis, assess progress made in accumulating sufficient assets to pay benefits when due, and make comparisons among employers. The measure is the actuarial present value of credited projected benefits and is independent of the funding method used to determine contributions to the System. The pension benefit obligation was computed as part of an actuarial valuation performed as of January 1, 1987. Significant actuarial assumptions used in the valuation include (a) a rate of return on the investment of present and future assets of 8% a year compounded annually, and (b) projected salary increases of 4.5% a year compounded annually, attributed to inflation. The total unfunded pension benefit obligation applicable to the System was $55,686,000 at January 1, 1987, (the most recent information available) as follows (in thousands): Pension benefit obligation: Retirees and beneficiaries currently receiving benefits and terminated employees not yet receiving benefits Current employees: Accumulated employee contributions, including allocated investment earnings Employer-financed vested Employer-financed nonvested Total pension benefit obligation $ /,6,629 16,656 11,756 15,348 90,389 Net assets available for benefits, at market value 34,703 Unfunded pension benefit obligation (Continued) 14 TOWN OF NORTH ANDOVER, MASSACHUSETTS Notes to General Purpose Financial Statements (c) Contribution Requirements and Contribution Made The System assesses each participating employer for its share of pension benefits (less certain interest credits) expected to be paid during the year ("pay-as-you-go" method). This amount is determined in advance by the Public Employee Retirement Administration (PEP. A) and is based in part on the previous year's benefit payout. The Commonwealth of Massachusetts currently reimburses the System on a quarterly basis for the portion of benefit payments owing to cost-of-living increases granted after the implementation of Proposition 2-1/2. The Town's contribution to the System for 1990 of $980,075 was made in accordance with the funding policy described above which represented approximately 13.18% of System-wide employer contributions. (d) Trend Information Trend information showing the System's progress in accumulating sufficient assets to pay benefits when due is presented in the System's December 31st, annual financial report. Trend information showing the System's progress in accumulating sufficient assets to pay benefits when due is required by GAAP to be included in the System's annual financial report. It is not known whether this report will contain the required historical trend information. (Continued) 15 TOWN OF NORTH ANDOVER, MASSACHUSETTS Notes to General Purpose Financial Statements (7) Lon~-term Debt The following is a sung~ary of changes in long-term debt for the year ended June 30, 1990: Bonds: General purpose, serial maturities through 2/1/2004 Schools, serial maturities through 6/1/95 Water, serial maturities through Note payable - Mazurenko property Other long-term obligations: Vacation Interest Rates June 30, 1989 6.2% to IO.151 5.3% to 6.8% 6.2% to 7.10% $ 3,287,000 1,644,104 2,953,896 2~000~000 9,885,000 342z470 $~ Additions 23~020 23.02q Retirements 469,700 643,000 272,300 l~O00tO00 2~385~000 June 30, 1990 2,817,300 1,001,104 2,681,596 l~O00tO00 7~500,000 365t490 (Continued) 16 TOWN OF NORTH ANDOVER, MASSACHUSETTS Notes to General Purpose Financial Statements (7) Long-term Debt (Continued) The annual requirements to amortize all general obligation bonds outstanding as of June 30, 1990, including interest, are as follows: Principal Interest Total Year ending June 30, 1991 $ 2,320,000 436,719 2,756,719 1992 960,000 359,505 1,319,505 1993 950,000 291,920 1,241,920 1994 950,000 225,120 1,175,120 1995 415,000 158,320 573,320 Thereafter 1~905~000 612~210 2~517~210 The Commonwealth of Massachusetts has approved school construction assistance to the Town. The assistance program which is administered by the School Building Assistance Bureau (SBAB) provides resources for future debt service of general obligation school bonds outstanding. These resources are subject to annual appropriation by the state legislature and the Town's compliance with certain reporting requirements. During 1990, the Town received $~14,840 of such assistance. The Town is subject to a dual level general debt limit; the normal debt limit and the double debt limit. Such limits are equal to 5% and 10%, respectively, of the valuation of taxable property in the Town as last equalized by the Commonwealth's Department of Revenue. Debt may be authorized up to the normal debt limit without state approval. Authorizations under the double debt limit, however, require the approval of the Commonwealth's Emergency Finance Board. Additionally, there are many categories of general obligation debt which are exempt from the debt limit but are subject to other limitations. Authorized and unissued debt at June 30, 1990, is as follows: School building addition Waste treatment plant Street improvements Water and sewer Land purchase Library School - asbestos removal 666,285 12,831,104 180,467 6,612,000 3,025,000 1,900,000 75,000 As of June 30, 1990, the Town may issue approximately 389,073,800 additional general obligation debt under the normal debt limit. The Town has approximately $3,76R~700 of debt exempt from the debt limit. (Continued) 17 TOWN OF NORTH ANDOVER, MASSACHUSETTS Notes to General Purpose Financial Statements (7) Long-term Debt (Continued) The Town pays assessments which include debt service payments to other local governmental units providing services within the Town's boundaries (commonly referred to as overlapping debt). The primary overlapping debt relates to the Greater Lawrence Sanitary District. The following summary sets forth the long-term debt of the entity at June 30, 1990, the estimated share of such debt being serviced by the Town, and the total of its share of estimated indirect debt. Long-term Town's Debt Town's Estimated Outstanding Estimated Indirect (Unaudited) Share Debt Greater Lawrence Sanitary District $ 13~295~000 6.208% 825~354 13.295.000 (8) Temporary Borrowings Under state law and by authorization of the Board of Selectmen, the Town is authorized to borrow on a temporary basis to fund the following: · Current operating costs prior to the collection of revenues through issuance of revenue or tax anticipation notes (PANS or ZANS ) · Capital project costs incurred prior to obtaining permanent financing through issuance of bond anticipation notes (BANS) · Federal and state aided capital projects and other program expenditures prior to receiving reimbursement through issuance of federal and state aid anticipation notes (FAANs and SAANs) Temporary loans are general obligations of the Town and carry maturity dates which are limited by statute. Interest expenditures for temporary borrowings were $258,576 and are accounted for in the General Fund. At June 30, 1990, $1,927,000 of 6.14%-7.15% BANS maturing September 30, 1990, $5,698,000 of 6.26% SAANs maturing September 20, 1990, and $9,175,104 of 6.9%-7.15% BANS maturing October 5, 1990 were outstanding. (Continued) 18 TOWN OF NORTH ANDOVER, MASSACHUSETTS Notes to General Purpose Financial Statements (9) Fund Deficits The following capital project funds had deficit fund balances as of June 30, 1990: Water filtration Sewer extension Waverly Road Replacement of water mains Extending sewers Davis and Furber Water A6 #6 1988 Calzetta farm New school project Water A6 #7 1988 $ (8,601,975) (77,328) (417,339) (965,170) (171,237) (181,286) (5,000) (951,274) (42,113) 610 The deficits in these funds will be eliminated through future bond issues or federal and state grants. (10) Interfund Receivable and.Payable Balances Individual fund interfund receivable and payable balances at June 30, 1990, were as follows: Interfund Interfund Fund Receivables Payables General Special Revenue: Highway improvements 64,613 - - 64~613 (11) Operating Transfers Operating transfers constitute the transfer of resources from the fund that receives the resources to the fund that utilizes them. Operating transfers during the year were as follows: Transfers In (Out) Special Expendable General Revenue Trusts Purpose of operating transfer: Educational grants Stabilization Group insurance costs $ (11,695) 11,695 222,100 48,636 (48,636) $ 259~041 (~6.941) (222,100) ~) (Continued ) ]9 TOWN OF NORTH ANDOVER, MASSACHUSETTS Notes to General Purpose Financial Statements (12) Contingencies There are several pending lawsuits in which the Town is involved. The Town Attorney estimates that the potential claims against the Town not covered by insurance resulting from such litigation would not materially affect the financial statements of the Town. (13) Subsequent Event On September 15, 1990, the Town issued $6,860,000 of General Obligation Bonds due in various installments through the year 2010 with the interest rates ranging from 7.3% to 7.4%. 2O