HomeMy WebLinkAboutAUDIT GENERAL PURPOSE 06-30-1992Peat Marwick
Certified Public Accountants
TOWN OF NORTH ANDOVER, MASSACHUSETTS
General Purpose Financial Statements
Year Ended June 30, 1992
(With Independent Auditors' Report Thereon)
TOWN
OF NORTH ANDOVER, MASSACHUSETTS
General Purpose Financial Statements
Year Ended June 30, 1992
Table of Contents
Independent Auditors' Report
General Purpose Financial Statements:
Combined Balance Sheet - All Fund Types and Account Group
Combined Statement of Revenues, Expenditures and Changes in
Fund Equity (Deficit) - All 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
Notes to General Purpose Financial Statements
Pa_fie
2
3
4
5
6
7-17
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
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 June 30, 1992, 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 General 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 f'mancial 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 £mancial position of the Town
of North Andover, Massachusetts, at June 30, 1992, 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 16, 1992, except for note 13
which is as of November 1, 1992
Member Firm ol
Klynveld Peat Marwick Goerdeler
-1-
TOWN OF NORTH ANDOVER, MASSACHUSETTS
Combined Balance Sheet - All Fund Types and Account Group
June 30, 1992
(with comparative amounts for thc General Fund for 1991)
Asses
Cash and investments (note 5)
Receivables:
Property taxes
Motor vehicle excise
Intergovernmental
Other
Total receivables
Due from other funds {note 10)
Other assets
Amounts to be provided for the retirement of general
long-term obligations
Fiduciary
Governmental Fund T _vpes Fund T_v~
Trust
General Special Capital and
1992 1991 reven~ projects agency
$ - - 608,843 1,232,068 1,300,803
1,542,122 1,169,369
265,242 269,905
86,183 4,027 160,467
2.165.108 2.356.018 -
4.058.655 3.799.319 160.467
376,362 397,988
81,603 18,214
$ 4,516,620 4,215,521 769,310 1,232,068_ .1,300,803
Total assets
Liabilities and Fund F4u_i~/Defici0
Pooled cash overdraft {note 5)
Warrants and accounts payable
Other liabilities
Accrued liabilities:
Vacation (note 7)
Payroll and related withholdings
Tax abatements
Guaranteed deposits
Due to other funds (note 10)
Notes payable (notes 7 and 8)
General obligation bonds (notes 7 and 8)
Deferred revenue and allowance for uncollectible accounts
Total liabilities
Fund equity (deficit):
Reserved for:
Encumbrances and continuing appropriations
Nonexpendable trust purposes
Undesignated
Total fund equity (deficit) (note 9)
Contingencies (note 12)
Total liabilities and fund equity
320,478 1,084,523
603,863 301,698
81,743 93,409
24,321 368,373
112
1,246,787 1,154,650 1,493
315,860 .
1,007,137
216,362 160,000 -
- 1,565,018
3.513.677 3.615.742 160.467
6.082.408 6.250.022 ~02.6~3 2.093,391 1.007,249
77~78
366,667 (861.323) . 216.076
366,667 (861.323) 293,554
~ 1,232,068 1,300,803
382,606 227,445
(1.948.394) (2.261,946)
(1.565.788) (2.034.501)
4,516,620 _4,215,521
See accompanying notes to general purpose financial statements.
Account
Group
General
long~telm
obligations
21.748,2~J7
21,748,257
397457
7,000,5O0
14,350,000
21.748.257
.21,748,25~
Total
(memorandum
only)
1992
3,141,714
1,542,122
265,242
246,650
~..165.108
376,362
81,603
29,567.058
320,478
996,557
81,855
397,757
1,248,280
315,860
1,007,137
376,362
8,565,518
14,350,000
3.674.144
31.333.948
382,606
77378
t2.226,974)
(1.766.890)
29,567,058
-2-
TOWN OF NORTH ANDOVER, MASSACHUSETTS
Combined Statement of Revenues, Expenditures and changes in Fund Equity (Deficit) -
All Governmental Fund Types and Expendable Trust Funds
Year ended June 30, 1992
(with comparative amounts for the General Fund for 1991)
Revenues:
Real and personal property taxes
Motor vehicle excise
Licenses and permits
Investment income
Intergovemmental
Payments in lieu of taxes
Water revenue
Departmental and other revenue
Fines
Total revenues
Expenditures:
Cmxent:
Education
General government
Public safety
Public works
Culture and recreation
Pension and fringe
State and district assessments
Human services and other
Capital outlay
Total expenditures
Excess (deficiency) of revenues over expenditures
Other financing sources (uses):
Bond proceeds (notes 7 and 8)
Operating transfers in (out), net (note 11 )
Total other financing sources (uses), net
Excess (deficiency) of revenues and other financing
sources over expenditures and other financing uses
Fund equity (deficit), beginning of year
Fund equity (deficit), end of year
See accompanying notes to general purpose financial statements.
19~2
Governmental Fund T _vpes
General Special Capital
1991 revenue projects
19,438,914 17,814,082
1,511,638 1,377,847
239,517 104,905
82,789 258,600 2,880
2,515,827 3,515,839 1,014,451
20,315 19,643
5,249,107 4,606,011
1,423,031 1,176,198 557,661
162.320 268.678
30.643.458 29.141.803 1.574.992
13,581,209 14,886,413 1,008,151
1,832,213 1,791,368 4,322
3,840,356 4,467,458 59,971
3,527,972 3,385,277 218,144
344,392 351,544 238,695
3,088,714 2,514,665 1,894
455,191 430,389
277,768 287,169 48,356
3.245.80~ 3.089.703
30.193.617 31.203.986 1.579.533
449.841 (2.062.183) (4.541 )
176,832
176.832
3,120,403
3.12o.403
(2.943.571)
7,000,500
18.872 lag0 ~
18.872 1.490 ~ 7.000.500
468,713 (2,060,693) (23,413) 4,056,929
(2.034.501) 26.192 390.080 ~)
(1,565,788) (2,034,501) 366,667_ (861,323)
Fiduciary
Fund Type
Expendable
trust
2,939
1,49O
4.429
1,571
1.57!
2.858
2,858
216,076
Total
(memorandum
only)
1992
19,438,914
1,511,638
239,517
88,608
3,707,110
20,315
5,249,107
! ,982,182
162.320
32.399.711
14,589,360
1,836,535
3,900,327
3,746,116
583,087
3,092,179
455,191
326,124
3,120,403
3.245.802
34.895.124
(2.495.413)
7,000,500
7.000.500
4,505,087
(6.349.455)
(1,844,368)
-3-
TOWN OF NORTH ANDOVER, MASSACHUSETTS
Statement of Revenues and Expenditures - Budgetary Basis
Budget and Actual
Year ended June 30, 1992
(with comparative actual amounts for 1991)
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
Final 1992
budget Actual
Variance
favorable
(unfavorable)
1991
Actual
Expenditures: Education
General government
Public safety
Public works
Culture and recreation
Pension and fringe
State and district assessments
Human services and other
Debt service
Total expenditures
Excess of revenues over
expenditures
19,366,287 19,353,261 (13,026) 18,771,527
1,378,000 1,511,638 133,638 1,377,847
56,000 239,517 183,517 104,905
250,000 82,789 (167,211) 258,600
2,487,570 2,475,025 (12,545) 4,329,335
20,000 20,315 315 19,643
5,313,163 5,249,107 (64,056) 4,606,011
1,431,500 1,423,031 (8,469) 1,176,594
.. 260,000 162,320 (97.680) 268.678
30.562.520 30.517.003 (45.517) 30.913.140
9,651
50,153
37,860
35,950
2,692
(201,516)
(4,194)
I74
87.091
17.861
13,674,336 13,664,685
1,852,677 1,802,524
3,866,461 3,828,601
3,677,313 3,641,363
343,036 340,344
2,881,668 3,083,184
450,997 455,191
280,304 280,130
3,332,893 3.245.802
30,359,685 30.341.824
Other financing sources:
Operating transfers in, net
Total other financing sources
Excess of revenues and other
financing sources over
expenditures
14,822,740
1,777,695
4,408,562
3,412,987
352,306
2,519,819
437,770
289,313
3.089.703
31.110.895
202,835 175.179 (27.656) (197.755)
18,872
18,872
Other budget items:
Prior year deficits raised
Other
Total other budget items
18.872
18.872
Net budget $
1,490
1,490
202,835 194,05! (8,784) (196,265)
(212,467)
9,632
(202.835)
See accompanying notes to general purpose financial statements.
-4-
TOWN OF NORTH ANDOVER, MASSACHUSETTS
Statement of Revenues, Expenses and Changes
in Fund Equity - Nonexpendable Trust Funds
Year ended June 30, 1992
Revenues:
Investment income
Contributions
Total revenues
Expenses:
Administrative and general
Total expenses
Net income
Fund equity, beginning of year
Fund equity, end of year
3,299
100
3.399
1,412
1,412
1,987
75,491
77,478
See accompanying notes to general purpose financial statements.
-5-
TOWN OF
NORTH ANDOVER, MASSACHUSETTS
Statement of Cash Flows -
Nonexpendable Trust Funds
Year ended June 30, 1992
Cash flows from operating activities:
Cash contributions received from individuals
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 and investments
Cash and investments, beginning of year
Cash and investments, end of year
$ 100
(1,412)
..(1,312)
3.299
3,299
1,987
75.49!
$ 77,478
See accompanying notes to general purpose financial statements.
-6-
TOWN OF NORTH ANDOVER, MASSACHUSETTS
Notes to General Purpose Financial Statements
June 30, 1992
(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 fmancial 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 Authofity'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 fi~r
the year ended June 30, 1992. 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 a 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.
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).
(Continued)
-7-
TOWN OF NORTH ANDOVER, MASSACHUSETTS
Notes to General Purpose Financial Statements
· 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, where the measurement focus is upon determination of net income and capital
maintenance. Agency funds are custodial in nature and do not involve measurement of
results of operations.
· Account Group
General Long-term Obligations 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, which is
recorded in the general long-term obligations account group.
applying the susceptible to accrual 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 amounts 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.
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 carded over
to succeeding years. Such continuing appropriations are accounted for similar to
encumbrances.
(Continued)
-8-
TOWN OF NORTH ANDOVER, MASSACHUSETTS
Notes to General Purpose Financial Statements
(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) Self-Insurance
The Town has established a self-insured medical program which is accounted for as an
expendable trust fund. Both employees and the Town contribute to the Fund based upon a
65% (Town) and 35% (Employee)primary care formula.
The Town carries insurance on individual medical claims in excess of $50,000 annually. The
purpose of this program is to pay medical claims of the Town's employees and their covered
dependents. The Town accrues for claims incurred for medical services rendered prior to June
30, 1992.
(g) Total Columns
Total columns on the general purpose financial statements are captioned "Memorandum only" to
indicate that they are presehted only to facilitate financial analysis. Data in these columns do
not present financiaI position, results of operations or changes in financial position in
conformity with generally accepted accounfin~ principles. Such data are not comparable to a
consolidation since inteffund eliminations have not been made.
(h) Reclassifications
Certain reclassifications were made to the 1991 general purpose financial statements to conform
with the 1992 presentation.
(3) Property Taxes
Real and personal property taxes are based on values assessed as of each January 1 and are due in
quarterly installments. 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.
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 alltaxable property in the Town. A secondary
limitation ~s 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 cer/ain property newly added to the tax rolls. In 1992,
Proposition 2-1/2 was overridden by a Town-w~de 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
nonproperty tax revenue and transfers projected to be received by the Town, including
available surplus funds. - -
(Continued)
-9-
TOWN OF NORTH ANDOVER, MASSACHUSETTS
Notes to General Purpose Financial Statements
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
Selectmen. The School Department budget is prepared under the direction of the School
Committee. Original and supplemental appropriations are acted upon by Town Meeting vote.
All General Fund functions are budgeted. The 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)
Budgeted revenues are recorded when cash is received, except for 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
(budge0, as opposed to a reservation of fund balance (GAAP).
The following reconciliation summarizes the differences between budget and GAAP basis
accounting principles for the year ended June 30, 1992:
Other financing
sources
Revenue ,F~lp_~10Jllll~ (usesk net
As reported on a budgetary basis
$ 30,517,003 30,341,824 18,872
Adjustment of property tax revenues to a
modified accrual basis
126,455
Adjustment for encumbrances and continuing
appropriations
(148.207)
As reported on a GAAP basis
$ 30,643,458 30,193,617 18,872
(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
CMMDT").
(Continued)
- 10-
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, 1992.
Bank balance Total
Category bank Carrying
1 2 3 balance amount
Cash $ 679,831 2,193,256 2,873,087 2,696,003
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
Market
Category_ 1 ~ Category_ 3 Total value
Common and preferred
stock
Corporate bond and notes
Money market and
related investments
$ 25,246 25,246 46,267
- 67,570 67,570 74,966
32.417 32,417 201,721
Totals $ - 125,233 125,233 322,954
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.
(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 System for the year ended June 30, 1992 was $6,488,836; the
Town's total payroll was $16,633,303. Public school teachers are covered by the
Commonwealth of Massachusetts Teachers' Retirement System CTRS") 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, 1992, was $8,716,165.
(Continued)
-11-
TOWN OF NORTH ANDOVER, MASSACHUSETTS
Notes to General Purpose Financial Statements
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 (MGL). 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.
(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, 1992. 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 5.5% a year compounded annually, attributed to inflation.
(Continued)
12-
TOWN OF NORTH ANDOVER, MASSACHUSETTS
Notes to General Purpose Financial Statements
The total unfunded pension benefit obligation applicable to the System was $78,518,000 at
January 1, 1992, 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
$ 64,165
28,692
33,278
13.308
139,443
Net assets available for benefits, at
market value
60.925
Unfunded pension benefit obligation
$ 78,518
(c) Contribution Requirements and Contribution Made
The System assesses participating employers for their share of pension benefits (less certain
interest credits) expected to be paid during the year Cpay-as-you-go" method). This amount is
determined in advance by the Public Employee Retirement Administration (PERA) and is based
in part on the previous year's benefit payout. No actuarial information is used in determining
this amount. 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 was $1,210,954 (18.7% of covered payroll) and the
employees contributed $356,332 (5.5% of covered payroll) for a total contribution of
$1,567,286 in 1992. The Town's contribution represents 14% of System-wide employer
contributions for that calendar year.
(d) Trend Information
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 that report will contain the required historical trend information.
(Continued)
- 13-
TOWN OF NORTH ANDOVER, MASSACHUSETTS
Notes to General Purpose Financial Statements
(7) Long-term Debt
The following is a summary of changes in long-term debt for the year ended June 30, 1992:
Bonds:
General purpose,
serial maturities
through 5/15/09
Schools, serial
maturities through
9/15/94
Water, serial
maturities
through 9/15/10
Interest
mtes June 30. 1991 ~ ~ June 90. 1992
6.2% to 10.2% $ 4,227,600 699,700 3,527,900
5.3% tO 7.4% 593,104 193,000 400,104
6.2% to 7A% 11.059.296 637.300 ~
15.880.000 1.530.000 14.350.000
Notes payable (see note 8)
7,000,500 7,000,500
Other long-term obligations:
Vacation 454.847 57.090 397.757
$ 16,334,847 7,000,500 1,587,090 21,748,257
The annual requirements to amortize all general obligation bonds outstanding as of June 30, 1992.
including interest, are as follows:
Principal Interest Total
YearendingJune 30,
1993 $ 1,520,000 991,405 2,511,405
1994 1,500,000 884,755 2,384,755
1995 965,000 779,405 1,744,405
1996 935,000 713,760 1,648,760
1997 740,000 650,005 1,390,005
Thereafter 8.690.000 3,947,585 12,637,585
$ 14,350,000 7,966,915 22,316,915
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 funds for furore 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 1992, the Town received $25,113 of
such assistance.
(Continued)
- 14-
TOWN OF NORTH ANDOVER, MASSACHUSETTS
Notes to General Purpose Financial Statements
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, 1992, is as follows:
School building addition
Waste treatment plant
Street improvements
Water and sewer
Land purchase
Library
Departmental equipment
Portable school rooms
School - asbestos removal
$ 737,285
12,161,104
420,434
5,193,000
1,235,000
1,150,000
963,522
112,000
75.00O
$ 22,047,345
As of June 30, 1992, the Town may issue
obligation debt under the normal debt limit.
exempt from the debt limit.
approximately $80,606,500 additional general
The Town has approximately $15,221,000 of debt
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 and The
Merrimack Valley Regional Transit Authority. The following summary sets forth the long-term
debt of the entity at June 30, 1992, 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
Merrimack Valley Regional
Transit Authority
$ 11,285,000 7.53% 849,761
66.344 1.34% 889
$ 11,351,344 $ 850,650
(Continued)
- 15-
(8)
TOWN OF NORTH ANDOVER, MASSACHUSETTS
Notes to General Purpose Financial Statements
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 (RANS or TANS)
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 $366,106 and are accounted
for in the General Fund.
The following is a description of the temporary loans outstanding at June 30, 1992:
Type Amount Interest Rate ' Date
BAN $ 4,760,000 4.38% 11/10/92
BAN 350,000 4.38% 11/10/92
BAN 989,000 4.38% 11/10/92
BAN 902,522 4.38% 11/10/92
FAN 1,024,996 3.88% 10/15/92
FAN 539.000 4.38% 11/10/92
8,565,518
7,000.500
$ 1,565,018
Water filtration project
Sewer extension Great Pond
Replace water mains
Capital improvements
Water filtration project
Replace water mains
Less amount refinanced on a
long-term basis subsequent
to June 30, 1992 (see note 13)
(9) Fund Deficits
The following capital project funds had deficit fund balances as of June 30, 1992:
Water Filtration
DPW Equipment
Mazurenko Land Acquisition
Water Feedline
Asbestos Removal
School Frank Article
(611,069)
(24,375)
(160,000)
(755,582)
(56,573)
(18.075)
Total
$ (1,625,674)
(Continued)
- 16-
TOWN OF NORTH ANDOVER, MASSACHUSETTS
Notes to General Purpose Financial Statements
The deficits in these funds will be eliminated through future bond issues or federal and state
grants.
(10) lnterfund Receivable and Payable Balances
Individual fund interfund receivable and payable balances at June 30, 1992 were as follows:
Interfund Interfund
Fund receivables payables
General $ 376,362 -
Special revenue 216,362
Capital projects 160.000
$ 376,362 376,362
(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 tout)
Special
General Revenue
Purpose of operating transfer:
Library State-Aid
$ 18,872 (18,872)
(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 Events
On November 1, 1992, the Town issued $7,100,000 of 4.38% debentures due November 1,
2012. The debentures are payable in annual installments beginning November 1, 1993 with
interest payable semiannually. Of these proceeds, $99,500 was used to finance capital
projects and $7,000,500 was used to retire BANS outstanding at June 30, 1992.
Accordingly, the BANS have been presented in the general long-term obligations account
group as notes payable.
(14) Post-Employment Benefits
In addition to providing pension benefits, the Town provides the majority of retired employees
with payments for a portion of their health care. These benefits are provided through several
health care providers. Benefits paid by the Town are on a "pay-as-you-go" basis, and there
is no actuarial valuation available as of June 30, 1992, which would permit an estimation of
the unfunded past service cost liability, the future costs of current participants in the plan.
The estimated annual amounts needed to fund such costs are approximately $231,000.
- 17-