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Home My WebLink AboutAUDIT 03-30-1988Peat Marwick Certified Public Accountants TOWN OF NORTH ANDOVER, MASSACHUSETTS General Purpose Financial Statements and Supplementary Schedule Year Ended June 30, 1988 (With Independent Auditors' Report Thereon) TOWN OF NORTH ANDOVER, MASSACHUSETTS General Purpose Financial Statements and Supplementary Schedule Year Ended June 30, 1988 Table of Contents Independent Auditors' Report on General Purpose Financial Statements Page 1-2 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 Changes in Financial Position - Nonexpendable Trust Funds Notes to General Purpose Financial Statements Supplementary Schedule: Schedule of Cash Balances 8-20 21 Peat Marwick Certified Public Accountants Peat Marwick Main & Co. 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, 1988, 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 standards for financial audits contained in the Standards for Audit of Govermmenta! Organizations~ Programs~ ActivitieS.. and Functions, issued by the U.S. General Accounting Office. 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. As more fully described in note 6 to the general purpose financial statements, the Town does not provide for pension costs in accordance with generally accepted accounting principles. In our opinion, except that the omission of a general fixed asset group of accounts results in an incomplete presentation and, except for the effects of such adjustments, if any, that would have been recorded had the Town provided for pension costs in accordance with generally accepted accounting principles, Member Firm of Klynveld Peat Marwick Goerdeler ~Peat Marwick The Board of Selectmen Town of North Andover, Massachusetts Page Two as discussed in the preceding paragraphs, 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, 1988, and the results of its operations and the changes in financial position of its nonexpendable trust funds for the year then ended, in conformity with generally accepted accounting principles. October 14, 1988 TONN OF NORTH ANDOVER, MASSACHUSETTS Combined Balance Sheet - All Fund Types and Account Group June 30, 1988 .............. Gave~nmental Fund Types Special Capital Assets General Revenue Projects Cash and short-term investments (note 5) Other investments (note 5) Receivables: Property taxes (note 3) ~otor vehicle excise taxes Inter&overnmental Other Total receivables Due from other funds Amounts to be provided for the retirement of general long-term obligations .Total assets Liabilities and Fund Equity Warrants and accounts payable Accrued liabilities: Accrued payroll Sick and vacation Guaranteed deposits Other Due to other funds General obligation bonds and notes payable (notes ? and 8) Deferred revenue Total liabilities Fund equity (deficit): Reserved for: Encumbrances and continuing appropriations Other Unreserved: Desisnated for subsequent year expenditures Undesignated Total fund equity (deficit) (note 9) Total liabilities and fund equity Fiduciary Fund Type Group Trust - General -- Tota~ and Long-Term (Memorandum ARency Obligations only) 5,616,783 $ 60,628 $ 532,6?2 $ - $ 6,210,083 125,233 - 125,233 1,034,433 - 584,678 - 4,650 328,974 309,~40' - 1,933,201 328,974 - - 1,034,433 - - 584,678 - - 333,624 6~8 - 310,058 618 - 2,262,793 392,840 2,063,755 74,498 - 2,531,093 3,627,611 3,627,611 1,199,171 $ 6,414 $ - $ - $ - $ 1,205,585 864,826 .... 864,826 .... 612,611 612,611 2,400 .... 2,600 91,114 - - 74,498 - 165,612 2,530,475 - - 618 - 2,531,093 - - 3,827,990 - 3,015,000 6,842,990 1,774,684 .... !,77%684 6,462,670 6,~14 3,827,990 75~!16 3,627,611 13,999,801 230,432 51,322 - 78,600 - 360,354 167,760 .... 167,760 400,000 .... 400,000 289,1~2 724,706 (1,76~,235) 579,305 - (171,102) 1,087,314 77~,0~ (1,764,235) 657,905 - 757,012 See accompanyins notes to general purpose financial statements. TONN OF NORTH ANDOVER, HASSAGHUSETTS Combined Statement of Revenues, Expenditures and Changes in Fund Equity - All Governmental Fund Types and Expendable Trust Funds Year ended June 30, 1988 Revenues: Rea! and persona! property taxes, net (note 3) Hotor vehicle excise taxes Investment income Intergovernmental ~ater and sewer revenue Departmental and other revenue Fines Other Total revenues Expenditures: Current: General government Public safety Public works Culture and recreation Education Pension and fringe State and district assessments Hiscellaneous Capital outlay Debt service (principal and interest) Total expenditures Excess (deficiency) of revenues over expenditures Other financing sources (uses): 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 Governmental Fund Types Special Capital Expendable General Revenue Project~ Trust $ 14,667,153 $ - $ - $ - 1,403,643 - - - 217,284 37,009 - 45,894 4,441,873 2,096,570 - - 1,398,981 - - - 636.029 110,850 - 202,138 168,983 - - - 637t002 496t807 - 10~046 23t570t948 2,741,236 - 258~078 1,526,969 390,613 - - 3,364,854 13,440 - - 3,460,244 1,053,262 - - 396,703 33,800 - 47,921 12,293,796 990,210 - 9,990 1,686,642 - - - 482,739 - - - 530,479 13,047 - - - - 1,600,365 - 1~187t743 - - - 24,930,169 2,494,372 lt600t365 ,,57t911 ~1,359~221) 246~864 (1~600t365) 200~167 86t,~24 (186,000) 99~876 - 86~124 (!86~000) 99~876 - (1,273,097) 60,864 2~360~411 715~164 (263t746) Fiduciary -Fu~ Type ~ To~al (Hemorandum only) 14,667,153 1,403,643 300,187 6,538,443 1,398,981 949,017 168,983 lt!43t855 26t570~262 1,917,582 3,378,294 4,513,506 478,424 13,293,996 1,686,642 482,739 543,526 1,600,365 lt187~743 29~082~8!7 (2~512s555) 200,167 403t139 (2,512,555) 3t214t968 See accompanying notes to general purpose financial statements. TOWN OF NORTRANDOVER, MASSACHUSETTS Statement of Revenues and Expenditures - Budgetary Basis June 30, 1988 Revenues: Real and personal property taxes, net Motor vehicle excise taxes Investment income Intergovernmental Charges for services Water and sewer revenue Departmental and other revenue Fines Total revenues Expenditures: General government Public safety Public works Culture and recreation Education Pension and fringe Miscellaneous Debt service State and district assessments Total expenditures Excess (deficiency) of revenues over expenditures Otker financing sources: Operating transfer from revenue sharing Total other financing sources Excess (deficiency) of revenues and other financing sources over expenditures Final Budget Actual $ 14,921,857 $ 14,943,394 1,440,000 1,403,643 150,000 217,284 4,568,424 4,479,602 663,375 637,002 1,535,000 1,398,981 481,625 636,029 140,310 168,983 23,900,591 23,884,9!.8 1,605,936 1,584,282 3,421,211 3,412,801 3,606,002 3,501,513 415,278 396,703 12,382,219 12,368,333 1,503,000 1,503,000 559,612 547,858 1,338,112 1,144,615 492~669 482,739 25,324,099 (1,423,448) 24,941,844 (1,056,926) 186,000 186,000 186,000 186,~p0 $ $ (870.926) Variance Favorable (Unfavorable) 21,537 (36,357) 67,284 (88,822) (26,373) (136,019) 154,404 ~8~673 (15,673) 21,654 8,410 104,489 18,575 13,886 11,754 193,497 9,930 382,195 366~522 See accompanying notes to general purpose financial statements. TONN OF NORTH ANDOVER, MASSACHUSETTS Statement of Revenues, Expenses and Ch~anges in Fund Equity - Nonexpendable Trust Funds Year ended June 30,.1988 Revenues: Investment income Other Total revenues Expenses: Administrative and general Total expenses Net income Fund equity, beginning of year Fund equity, end of year Nonexpendable Trusts 3,178 5O0 3~678 1~059 1,059 2,619 51~980 See accompanying notes to general purpose financial statements. 6 TOWN OF NORTH ANDOVER, MASSACRUSETTS Statement of Changes in F£nancial Position - Nonexpendable Trust Funds Year ended June 30, 1988 Sources of cash: Net income Total sources of cash Uses of cash Increase in cash Nonexpendable Trusts $ 2,619 2,619 See accompanying notes to general purpose financial statements. TOWN OF NORTH ANDOVER, MASSACHUSETTS Notes to General Purpose Financial Statements June 30, 1988 (1) Financial Statement Presentation The general purpose financial statements present information on organizations and activities of the Town of North Andover, Massachusetts (the "Town") for which the Board of Selectmen has oversight responsibility. The criteria, as established by the Governmental Accounting Standards Board, for inclusion of organizations and activities in the oversight entity's general purpose financial statements are selection of governing authority, designation of management, ability to significantly influence operations, accountability over fiscal matters and scope of public service. Pursuant to the above criteria, the Town is the only entity included in the accompanying general purpose financial statements. (2) Su~ry of Significant Accounting Policies (a) Basis of Presentation 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 and does not provide for retirement costs in accordance with generally accepted accounting principles. Such departures from GAAP are permissible under the Massachusetts Uniform Municipal Accounting System. (b) Fund Accounting Transactions are recorded in the funds and account group described below. The operations of each fund are accounted for with a set of self-balancing accounts that comprise its assets, liabilities, fund equity, revenues, and expenditures and other financing sources and uses. Transactions between funds within a fund type, if any, have been eliminated. The funds and account group are organized into three categories as follows: Governmental Fund Types Governmental Funds are those through which most governmental functions are financed. The acquisition, use and balances of expendable financial resources and the related liabilities are accounted for through governmental funds. The measurement focus is on determination of changes in financial position, rather than on net income. The governmental fund types are as follows: General Fund - This 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 other funds. (Continued) 8 TOWN OF NORTH ANDOVER, MASSACHUSETTS Notes to General Purpose Financial Statements Special Revenue Funds - These funds are used to account for the proceeds of specific revenue sources (other than expendable trusts and capital projects) that are legally restricted to expenditures for specified purposes. Capital Projects Funds - These funds are used to account for financial resources to be used for the acquisition or construction of major capital facilities. Such resources are derived principally from proceeds of general obligation bonds and from federal and state grants. Fiduciary Fund Types Fiduciary Funds are used to account for assets held in a trustee capacity (Trust Funds) or as an agent (Agency Funds) for individuals, private organizations, other governmental units, and/or other funds. Trust funds include expendable trust funds and nonexpendable trust funds. Account Group The general long-term obligations account group is used to establish control and accountability for general long-term obligations of the Town. (c) Basis of Accounting Governmental fund types, expendable trust funds and agency funds are accounted for on the modified accrual basis of accounting. Revenues are recorded in the accounting period when susceptible to accrual (i.e., both measurable and available). Available means expected to be collectible within the current period or soon enough thereafter to be used to pay liabilities of the current period. In applying this principle, the Town accrues as revenue the amount of property taxes due to the Town prior to year end and collected within 60 days after the end of its fiscal year; all other revenues, except revenue from expenditure driven grants (see below), and investment income which is accrued as earned, are recorded when cash is received. Expenditures, other than interest on long-term debt, judgments and claims, pension costs and sick and vacation pay, which are expended when due, are recorded in the accounting period that the liability is incurred. Under the modified accrual basis of accounting, capital outlay and principal payments on long-term debt are recorded as expenditures when purchased when due, respectively. Revenues related to expenditure driven grants, where monies must be expended for the specific purpose or project before any amounts are earned, are recognized when expenditures are recorded. Nonexpendable trust funds follow the full accrual method of accounting. (Continued) 9 TOWN OF NORTH ANDOVER, MASSACHUSETTS Notes to General Purpose Financial Statements (d) Accrued Sick and Vacation Employees are granted vacation and sick leave in varying amounts. Upon retirement, termination or death, certain employees are compensated for unused vacation and sick leave (subject to certain limitations) at their then current rates of pay. The amount of sick and vacation costs which are not due and payable are recorded in the General Long-Term Obligations Account Group. The amount recorded is the unused days earned at the current rate of pay. (e) Encumbrances and Continuing Appropriations Encumbrance accounting, under which purchase orders, contracts and other comitments for expenditure of funds are recorded to reserve that portion of the applicable appropriation, is employed in the Governmental Fund Types as a significant aspect of budgetary control. Unencumbered appropriations which are carried over to the ensuing fiscal year are reported as "continuing appropriations." Continuing appropri- ations represent amounts appropriated for specific programs or projects which were not completed during the fiscal year. Encumbrances and continuing appropriations are reported as a reservation of fund balance in the accompanying balance sheet because they do not constitute expenditures or liabilities. Encumbrances and continuing appropriations are combined with expenditures for budgetary comparison purposes (see note ~). (f) Total (Memorandum Only) Columns on General Purpose Financial Statements Total (memorandum only) columns on the general purpose financial statements are presented to aggregate financial data of the fund types and account group. No consolidating or eliminating entries were made in arriving at the totals; thus, they do not present consolidated information. (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) 10 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. Certain Proposition 2-1/Z taxing limitations can be 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 Finance Committee. The School Department budget is prepared by the School Committee. Original and supplemental appropriations are acted upon by Town Meeting Vote. The Town budget as presented in the Statement of Revenues and Expenditures - Budgetary Basis was developed as follows: Budgeted expenditures To be funded as follows: Budgeted revenue Budgeted transfer from revenue sharing Available surplus: Overlay Free cash Total funding 200,000 1~037,448 23,900,591 186,000 1,.237,448 25.324.039 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) 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); (Continued) 11 TOWN OF NORTH ANDOVER, MASSACHUSETTS Notes to General Purpose Financial Statements (b) Encumbrances and continuing appropriations are recorded as the equivalent of expenditures (budget) as opposed to a reservation of fund balance (GAAP); and (c) Certain activities and transactions are presented in separate funds (GAAP) rather than as a component of the General Fund (budget). The following reconciliation summarizes the differences between budget and GAAP basis accounting principles for the year ended June 30, 1988: Revenue Expenditures As reported on a budgetary basis $ 23,884,918 24,9~1,844 Adjustment of revenues to a modified accrual basis (313,970) Adjustment for encumbrances and continuing appropriations (11,675) As reported on a GAAP basis 24.930.169 (5) Deposits 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 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) 12 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, 1988. Total Category Bank Carrying 1 2 3 Balance Amount Cash and short- term investments 1~123~557 - 4,301,831 5,425~.388 6,210,083 Total $ 1.123.5~,7 ~ 4..:301.831 5~425~.388 6.210.083 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 Category 2 Category 3 Market Total Value Co.on and preferred stock - Corporate bond and notes - Money market and related investments - U.S. Government obligations - 25,246 25,246 80,850 4,733 4,733 15,150 32,417 32,417 32,417 62,837 §2,837 201,266 Totals !.25.233 !.~5.233 ~ (Continued) 13 TOWN OF NORTH ANDOVER, MASSACHUSETTS Notes to General Purpose Financial Statements (6) Pension Plan (a) Plan Description The Town participates in a 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, 1988 was $5,976,647. Public school teachers are covered by the Commonwealth 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, 1988 was $7,567,536. The total payroll for the Town was $13,544,183. The Essex County Retirement System and the TRS are contributory defined benefit plans covering all Town employees and teachers deemed eligible. The Essex County Retirement System is a member of the Massachusetts Contributory System and is governed by Chapter 32 of the Massachusetts General Laws. Membership in both the Essex County Retirement System and the TRS is mandatory inm~diately 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 systems after January 1, 1979 are subject to a cap of $30,000 on the level of compensation upon which their benefits are calculated. 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 twenty years of service. The Plan 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. The Systems also provide death and disability benefits. The accounting records of the Retirement 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) 14 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 Essex County Retirement 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. Total unfunded Pension Benefit Obligation applicable to the members of the Essex County Retirement System was $55,686,000 at January 1, 1987 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 46,629 16,656 11,756 15,348 909389 Net assets available for benefits, at market 34 ~ 703 Unfunded Pension Benefit Obligation (Continued) 15 TOWN OF NORTH ANDOVER, MASSACHUSETTS Notes to General Purpose Financial Statements (6) Pension Plan (Continued) (c) Contribution Requirements and Contribution Made The System funding amounts are not actuarially determined. The Town is required to contribute, each fiscal year, an amount approximating the 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 Employees 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 1988 of $783,000 was made in accordance with the funding policy described above and represented approximately 12.7% of total employer contributions to the System. (d) Trend Information Under generally accepted accounting principles, the Town is required to reference historical trend information included in the financial reports of the System. However, the System does not provide such information in its annual financial reports. (Continued) 16 TOWN OF NORTH ANDOVER, ~SSACHUSETTS Notes to General Purpose Financial Statements (7) General Long-Term Obligations The following is a stum~ary of bond transactions of the Town for the year as well as the composition of bonds outstanding at June 30, 1988 and 1987: General purpose, serial maturities through 6/1/96 Schools, serial maturities through 6/1/95 Water, serial maturities through 6/1/96 Interest Rates 6.2% to 6.3~. ~,.7% to 6.3'~ 6.2% to 6. Outstanding Outstanding June 30, 1987 Additions Reductions June 30t 1988 $ 1,030,000 - 150,000 880,000 1,680,000 - 450,000 1,230,000 1,025,000 - ~0,000. 905,000 (Continued) 17 TOWN OF NORTH ANDOVER, MASSACHUSETTS Notes to General Purpose Financial Statements (7) General Long-Term Obligations (Continued) The annual requirements to amortize all general obligation bonds outstanding as of June 30, 1988, including interest, are as follows: Principal Interest Total Year ending June 30, 1989 $ 660,000 177,693 837,693 1990 655,000 140,415 795,415 1991 590,000 102,908 692,908 1992 230,000 69,700 299,700 1993 230,000 55,440 285,440 Thereafter 650~000 79~695 729,695 .851 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 1988, the Town received $389,097 of such assistance. Assuming satisfactory audit results and annual appropriations by the State legislature, $375,426 will be received annually for fiscal years 1989 through 1991. 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 Comonwealth'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, 1988 is as follows: Water treatment plant Water main replacements Sewer projects Filtration plant Library project Fire ladder truck Public works projects Asbestos removal School architect fees Police con~munications Land acquisition Computer system 18 4,500,000 2,560,000 2,225,000 10,500,000 1,900,000 300,000 730,000 40,000 764,104 87,000 3,000,000 460~000 (Continued) TOWN OF NORTH ANDOVER, MASSACHUSETTS Notes to General Purpose Financial Statements (7) General Long-Term Obligations (Continued) As of June 30, 1988, the Town may issue approximately $92,558,800 additional general obligation debt under the normal debt limit. The Town has approximately $905,000 of debt exempt from the debt limit. 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 Regional Vocational Technical School District and Essex County. The following summary sets forth the long-term debt of each entity at June 30, 1988, 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 Essex County $ 835,000 4.7% $ 39,245 Greater Lawrence Regional Vocational Technical School District 300,000 3.5% 10,500 $ 49.745 (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 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 (FANS and SANS). (Continued) 19 TOWN OF NORTH ANDOVER, MASSACHUSETTS Notes to General Purpose Financial Statements Temporary loans are general obligations of the Town and carry maturity dates which are limited by statute. Interest expenditures for temporary borrowings were approximately $91,046 and were accounted for in the General Fund. At June 30, 1988, $3,800,000 of 4.8% - 4.9% BA/~S maturing December 6, 1988 and $27,990 of 5.5% BANS maturing August 19, 1988 were outstanding. (9) Fund Deficits The following capital projects funds had deficit equity balances as of June 30, 1988: Waverly Road Water Main Water Main Replacement Sewer Extension Water Filtration Plant Chestnut Street Water Main Asbestos Removal Computer System (81,059) (155,599) (14,500) (1,201,541) (27,989) (6,229) (277,317) The deficits in these funds will be eliminated through future bond issues. (10) Interfund Receivable and Payable Balances Interfund receivable and payable balances at June 30, 1988 were as follows: Interfund Interfund Fund Receivables Payables General $ - 2,530,475 Special revenue 392,840 - Capital projects 2,063,755 - Trust and agency 74~498 618 2.531.093 (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 Capital General Revenue Projects Purpose of operating transfer: Revenue sharing Capital projects $ 186,000 (186,000) - (99,876) - 99,876 86.124 ~) 99.876 2O TOWN OF NORTH ANDOVER, MASSACHUSETTS Schedule of Cash Balances June 30, 1988 Schedule I Interest-bearing bank accounts: Union National State Street Century Arlington Trust Bank of New England BayBank Essex Bank Eastern Bank Boston Safe Deposit Harbor National First Essex Andover Savings Bank Bank of Boston Lawrence Savings Bank Total interest-bearing bank accounts Total cash balances as shown in general purpose financial statements 14,220 17,585 8,038 1,844,439 2,272,460 85,066 21,955 500,596 1,308,094 1,030 5,715 35,676 92,709 2~500 $ 6,210.083 $ 6,~210.083 21