Canton, Massachusetts · Saved source text
FY 2015 Comprehensive Annual Financial Report
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TOWN OF CANTON, MASSACHUSETTS
COMPREHENSIVE ANNUAL FINANCIAL REPORT
For the Fiscal Year Ended
June 30, 2015Source page 2
On the cover and below: After acquiring a former Knights of Columbus hall, the Town made extensive renovations to transform the vacant building into a Senior Center to better serve the Town’s growing elderly population.
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Town of Canton, Massachusetts
Comprehensive Annual Financial Report
For the Fiscal Year
July 1, 2014 through June 30, 2015
Prepared by the Finance DepartmentSource page 4
This page intentionally left blank.
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Introductory Section The Town’s Department of Veterans Services installed six new flagpoles, representing each branch of the military, at the American Legion Walk of Honor located at Canton Corner Cemetery.
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TOWN OF CANTON, MASSACHUSETTS
COMPREHENSIVE ANNUAL FINANCIAL REPORT
YEAR ENDED JUNE 30, 2015
TABLE OF CONTENTS
Page(s)
INTRODUCTORY SECTION
Letter of Transmittal ....................................................................................................................... 1-10
Certificate of Achievement For Excellence in Financial Reporting................................................. 11
Organizational Chart Town .............................................................................................................. 12
Organizational Chart Schools ........................................................................................................... 13
Principal Town Officials .................................................................................................................. 14
FINANCIAL SECTION
Independent Auditor’s Report ....................................................................................................... 15-17
Management’s Discussion and Analysis ....................................................................................... 19-31
Basic Financial Statements:
Statement of Net Position .......................................................................................................... 34
Statement of Activities ............................................................................................................... 35
Balance Sheet – Governmental Funds ....................................................................................... 36
Reconciliation of the Governmental Funds Balance Sheet Total Fund Balances to
the Statement of Net Position ............................................................................................ 37
Statement of Revenues, Expenditures and Changes in Fund Balances –
Governmental Funds ........................................................................................................... 38
Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund
Balances of Governmental Funds to the Statement of Activities ..................................... 39
Statement of Net Position – Proprietary Funds .......................................................................... 40
Statement of Revenues, Expenses, and Changes in Net Position – Proprietary Funds.............. 41
Statement of Cash Flows – Proprietary Funds ........................................................................... 42
Statement of Fiduciary Net Position .......................................................................................... 43
Statement of Changes in Fiduciary Net Position ....................................................................... 44
Notes to Basic Financial Statements ....................................................................................... 45-74
Required Supplementary Information:
Schedule of the Town’s Proportionate Share of the Net Pension Liability ............................... 76
Schedule of the Town’s Contribution to Pension Plan .............................................................. 76
Schedule of the Commonwealth’s Collective Share of Net Pension Liability –
Massachusetts Teachers’ Retirement System...................................................................... 77
Schedule of Funding Progress – Other Postemployment Benefits ............................................ 78
Schedule of Contribution Funding – Other Postemployment Benefits ...................................... 78
Schedule of Revenues, Expenditures and Changes in Fund Balances – Budget and
Actual – General Fund .................................................................................................. 79-81
Notes to Required Supplementary Information ....................................................................... 82
Combining Statements:
Nonmajor Governmental Funds ............................................................................................ 83-85
Combining Balance Sheet – Nonmajor Governmental Funds ........................................ 86-88
Combining Statement of Revenues, Expenditures, and Changes in Fund
Balances – Nonmajor Governmental Funds ........................................................... 90-92
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TOWN OF CANTON, MASSACHUSETTS
COMPREHENSIVE ANNUAL FINANCIAL REPORT
YEAR ENDED JUNE 30, 2015
TABLE OF CONTENTS
Page(s)
Internal Service Funds ............................................................................................................ 93
Combining Statement of Net Position – Internal Service Funds ...................................... 94
Combining Statement of Revenues, Expenses and Changes in Net Position –
Internal Service Funds ............................................................................................. .95
Combining Statement of Cash Flows – Internal Service Funds ....................................... .96
Fiduciary Funds ...................................................................................................................... .98
Statement of Changes in Assets and Liabilities – Agency Fund ..................................... .99
STATISTICAL SECTION
Narrative ..................................................................................................................................... 101
Net Position by Component – Last Ten Fiscal Years...................................................................... 102
Changes in Net Position – Last Ten Fiscal Years ....................................................................... 103-104
Fund Balances, Governmental Funds – Last Ten Fiscal Years ....................................................... 105
Changes in Fund Balances, Governmental Funds – Last Ten Fiscal Years .................................... 106
Assessed Value and Estimated Actual Value of Taxable Property By Classification
and Tax Rates – Last Ten Fiscal Years............................................................................ 107
Principal Taxpayers – Current Year and Nine Years Ago .............................................................. 108
Property Tax Levies and Collections – Last Ten Fiscal Years........................................................ 109
Ratios of Outstanding Debt by Type – Last Ten Fiscal Years ........................................................ 111
Ratios of General Bonded Debt Outstanding .................................................................................. 111
Computation of Legal Debt Margin – Last Ten Fiscal Years ......................................................... 112
Direct and Overlapping Governmental Activities Debt .................................................................. 113
Demographic and Economic Statistics – Last Ten Fiscal Years ..................................................... 114
Principal Employers (Excluding Town) – Current Year and Nine Years Ago ............................... 115
Full-time Equivalent Town Employees by Functions – Last Ten Fiscal Years .............................. 116
Operating Indicators by Function/Program – Last Ten Fiscal Years .............................................. 117
Capital Asset Statistics by Function/Program – Last Ten Fiscal Years .......................................... 118
iiSource page 9
Letter of Transmittal
November 4, 2015
Honorable Board of Selectmen and Citizens of the Town of Canton, Massachusetts:
I am pleased to acknowledge that the Town of Canton has completed its tenth Comprehensive Annual
Financial Report (CAFR). The report is for the fiscal year ended June 30, 2015, and I am proud that we
have continued this annual tradition of preparing a report that communicates to our constituents and
investors the highest degree of transparency in financial reporting for municipalities.
The Town is responsible for the accuracy, completeness and fairness of the data presented in the CAFR.
This letter of transmittal and the management’s discussion and analysis, located in the financial section
of the CAFR, provide a comprehensive financial overview of the Town and ensure that the financial and
general operations of Town government remain open for easy viewing.
The CAFR represents a complete set of financial statements in conformity with generally accepted
accounting principles in the United States of America (GAAP), that are audited in accordance with
generally accepted auditing standards by a firm of licensed certified public accountants. This CAFR
meets and exceeds those requirements and presents itself as an informative resource for all those
interested in the financial activities of the Town.
The report is designed to be used by the elected and appointed officials of the Town and others who are
concerned with its management and progress such as bond analysts, banking institutions and rating
agencies as well as the citizens and taxpayers of the Town of Canton.
Since the report consists of management’s representations concerning the finances of the Town,
management assumes full responsibility for the completeness and reliability of all of the information
presented. In addition, management of the Town is responsible for establishing and maintaining an
internal control structure designed to ensure the assets of the Town are protected from loss, theft or
misuse and to ensure that adequate accounting data is compiled to allow for the preparation of financial
statements in conformity with GAAP. Because the cost of internal controls should not outweigh their
benefits, the Town of Canton’s comprehensive framework of internal controls has been designed to
provide reasonable rather than absolute assurance that the financial statements will be free from material
misstatement.
Town of Canton, Massachusetts Page 1 of 118 Comprehensive Annual Financial ReportSource page 10
The Town's financial statements have been audited by Roselli, Clark and Associates, a firm of licensed
certified public accountants. The goal of the annual independent audit is to provide reasonable assurance
that the financial statements of the Town are free of material misstatement. The independent audit
involved examining, on a test basis, evidence supporting the amounts and disclosures in the financial
statements; assessing the accounting principles used and significant estimates made by management; and
evaluating the overall financial statement presentation. The independent auditor concluded, based upon
the audit, that there was a reasonable basis for rendering an unmodified opinion that the Town's financial
statements for the fiscal year ended June 30, 2015 are fairly presented in conformity with GAAP. The
independent auditor’s report is presented as the first component of the financial section of this report.
The independent audit of the financial statements of the Town was part of a broader, federally
mandated “Single Audit” designed to meet the special needs of federal grantor agencies. The standards
governing Single Audit engagements require the independent auditor to report not only on the fair
presentation of the financial statements, but also on the audited government’s internal controls and
compliance with legal requirements, with special emphasis on internal controls and legal requirements
involving the administration of federal awards. These reports are available in the Town 's separately
issued Single Audit Reports Pursuant to OMB Circular A-133.
GAAP requires that management provide a narrative introduction, overview, and analysis to accompany
the basic financial statements in the form of Management’s Discussion and Analysis (MD&A). This
letter of transmittal is designed to complement that analysis and should be read in conjunction with it.
The MD&A can be found immediately following the report of the independent auditors.
Profile of the Town
Canton was incorporated as a Town in 1797. The Town is located in eastern Massachusetts,
approximately 18 miles southwest of Boston, has a population of approximately 21,000 and a land area of
approximately 19 square miles. It is situated at the junction of Interstates 95 and 93, with access to Routes
24 and 138, providing an excellent location for residents, businesses and commuters.
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MBTA commuter rail trains on the Providence/Stoughton Line pass through Canton. Some stop at Canton
Junction. This line crosses the Neponset River on the Canton Viaduct, a prominent local landmark. Route
128 Station in neighboring Westwood also carries many Canton commuters into Boston. Amtrak trains
(including the Acela Express high-speed trains) also stop at Route 128, but pass through Canton without
stopping. Another line branches into Stoughton, stopping at Canton Center.
Bus service is available to Mattapan Station in the MBTA system, and Canton’s close proximity to
Boston also places it within a reasonable distance from Logan International Airport, the largest
transportation center in New England.
The Town has a rich and varied industrial heritage, serving as the location of Paul Revere’s copper rolling
mills in post-Colonial times, and as the site of rubber, chemical and woolen manufacturing in more recent
times. Present commercial enterprises play a key role in the Town’s fiscal stability and are considered a
major asset to the community. The prime commercial areas are well located so as to allow direct highway
access without affecting the community’s small town charm.
Many of the Town’s lakes, ponds and wetlands have been protected and preserved for present enjoyment
and future generations. Among the protected areas are the Eleanor Cabot Bradley Reservation, an 82 acre
estate that blends open fields, woodlands and gardens in the shadow of Great Blue Hill and Pequitside
Farm, a town-owned 38 acre conservation and recreation area which offers playing fields, picnicking,
hiking and cross country skiing.
The Town offers a full range of traditional municipal services including police and fire protection,
ambulance and rescue services, education, maintenance of streets and infrastructure, solid waste
collection and disposal, health and human services, cultural and recreational, administrative and financial
services. The Town is a member community of the Massachusetts Water Resources Authority (MWRA)
for its water and sewer services.
Canton prides itself on its quality school system. Canton students consistently perform well on national
and state tests and over 90% of students graduating from the high school go on to higher education. The
Town is the location of the Blue Hills Regional Technical School which provides expanded vocational
education opportunities for high school students of Canton and eight other area communities. Canton is
also home to one of the two campuses of Massasoit Community College. The campus is a multi-level
facility with specialized labs and art studios that support the technical and visual arts programs of the
College. The campus also includes the Milton Art Museum, Akillian Gallery and the College’s
Professional Development Center.
Several years ago, the Town reached its 10% affordable housing requirement mandated by the
Commonwealth of Massachusetts (Commonwealth), which is an important milestone as communities
under the 10% threshold are subject to an appeals process that can overturn local zoning board decisions.
This will allow the Town to maintain its commitment to developing much needed affordable housing
units in areas of the Town that can accommodate the growth.
The Town operates under the Selectmen, Town Administrator, and Open Town Meeting form of
government. The five elected Selectmen make policy decisions, and the Town Administrator is
responsible for carrying out the policies of the Selectmen and for managing the day-to-day operations of
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the Town. The policies and procedures of the Board of Selectmen are detailed in the administrative
code that will continue to evolve and be created over time to best serve the community.
An elected, five-member School Committee appoints a School Superintendent who administers the public
school system of the Town. School Committee members, like the Selectmen, are elected at-large to three-
year staggered terms.
An annual operating budget is approved by Town Meeting two months prior to the start of the fiscal year.
This annual budget serves as the foundation for the Town’s financial planning and control. The budget is
prepared by fund, function (e.g. general government) and department (e.g. finance) allowing the
department heads to allocate resources within the department as they see fit. Transfers between
departments, however, need special approval by Town Meeting unless specifically exempted by state
statute.
Factors Affecting Economic Condition
Canton continues to take a pro-active approach encouraging well planned economic development. The
Town fully appreciates the significance of commercial and industrial growth and development (and
redevelopment) especially in terms of long term fiscal stability. The Town continues its focus on future
growth, which is sustainable and “complimentary” for economic development including employment
opportunities for our residents.
Municipal officials continue to work closely with and receive valuable support from the State Office of
Business Development as well as regional planning support from the Metropolitan Area Planning Council
(MAPC). In addition business advocacy organizations, such as Canton Association of Business and
Industry (CABI) play a vital role. The Town strives to take full advantage of the latest initiatives and
incentives made available to it notably under Chapter 43D for expedited permit approvals and Tax
Incremental Financing (TIF).
The Town’s Economic Development Committee (EDC) is also a special resource. The Town regularly
takes advantage of local talent from the community who specialize in finance, banking, development and
real estate.
The Town continues to update and publish an economic development recruitment guide which includes
pertinent information sought by private company CEO’s when making siting and expansion decisions.
Recently, the Board of Selectmen published a new business and community guide and has made that
information available online as well.
As previously discussed, the Town surpassed its required l0% affordable housing goal as required by
State regulation. The Town has incorporated a continued affordable housing unit goal, within the Housing
Action Plan, to ensure the Town keeps pace with any new market rate unit starts. This year the
construction by Avalon Development of additional affordable housing will commence on Randolph Street
and further increase the Town’s 40B compliance.
The Town’s commitment to sound economic development is further demonstrated by creating
partnerships with (MAPC) Metropolitan Area Planning Council and Neponset Valley Chamber of
Commerce to ensure that the coordination and resource allocation on key planning issues facing the
Town. The Town reactivated the Economic Development Committee and created, with Town Meeting,
the Permit Advisory Committee both of which provide technical assistance to new businesses to Canton.
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The Town has instituted a Google-based web search device, which identifies Canton as a business
friendly community. The web product highlights, via a series of videos, the Town of Canton as a solid
and desirable business and family destination. The Town’s continued status as a 43D Expedited
Permitting Community has benefitted the Town greatly and has led to the actual designation of many new
priority development sites. This 43D designation, which was granted to the Town in 2008, came with a
$150,000 grant to hire a permit specialist who has completed the administrative and organizational work
necessary to implement the issuance of permits via an integrated and automated town wide permit system
which better serves the public and the Town in terms of real time tracking of permits.
The Town has available a permit guidebook, which lays out the Town’s permitting requirements in an
easy to use format. The goal is to identify key requirements and improve communications, saving
applicants time and money. The Permit Advisory Committee has been a successful endeavor by bringing
together key permit granting agency representatives to counsel and guide any proponent of a proposed
commercial endeavor. Participation and results continue to be overwhelmingly positive. The Town has
also published a Tax Incremental Financing Evaluation Policy document designed to provide a rational
and consistent intake evaluation of TIF requests. The new approach allows the Town to quantify and
better evaluate any request to reduce taxes for a business seeking to locate or expand. Also, the Town
launched a Payment in Lieu of Taxes Program (PILOT) that encourages non-taxable property owners to
voluntarily participate in the
support of public services.
The Town has completed
construction of the downtown
revitalization project
commonly referred to as the
Streetscape Improvement
Project. This work was funded
as a result of a $2.6 million
dollar Commonwealth grant
received due to the Town’s
Smart Growth efforts and
rezoning of the Downtown.
The Town has also completed safety and efficiency improvement work on two key intersections ($2.2
million dollar Commonwealth grant) located in the heart of the Route 138 business district. These
intersections are located at the Randolph and Washington Street Intersections with Route 138. These
projects have improved both the safety and efficiency of this commercial roadway. In addition, the Board
of Selectmen has also empanelled a multi-disciplined group of volunteers who have completed a
visioning process which has led to a variety of re-zoning recommendations with a goal of improving the
business climate and enhance zoning flexibility to spur additional economic development potential along
this vital commercial roadway.
The Town was also a participant in a regional planning study to evaluate the effects of new growth in
both residential and commercial construction. The study’s focus was to identify growth related problems
such as transportation, infrastructure, environmental, and economic development issues. In addition, a
build-out analysis was completed to assist and improve public policy decision-making with regard to
growth and development related to educational planning. These studies have been coordinated with other
immediate area communities.
The Town is in the process of evaluating the opportunities and or impacts of the South Coast Rail Project
which is advancing through preliminary and environmental design. The State initiative would provide rail
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service from Boston to Fall River/New Bedford via a route now determined by the State, known as the
Stoughton Alternative, which will include impacts in Canton.
The Town had submitted approximately $76,000,000 in requests as part of the Federal Stimulus Funding
Initiative with a goal to benefit overall
capacity and infrastructure. In 2010 the
Town received a MORE grant in the
amount of $850,000 and completed
infrastructure improvements along Dan
Road, an important commercial area of
Town. After much effort, the Town
secured the commitment of
Organogenesis, a bio tech firm, now
located on Dan Road, which was
contemplating relocation. Their
commitment to stay in Canton and
expand was an important part of the
Town’s success in obtaining this new
funding.
Canton’s Master Plan Initiative required a careful review and analysis of existing conditions balanced
with a vision for the future. The work program is designed to enlist public interest and participation in
shaping the Town’s future. Workshops, neighborhood meetings, leadership interviews and community
surveys were conducted. The Town has conducted an extensive public outreach campaign to better assure
good attendance at workshops and neighborhood focus groups. Existing planning, engineering reports and
documents have been reviewed and a written report, which summarizes their major issues and relevant
recommendations were prepared and remains available. The overall objective of the Master Plan initiative
was to develop a sustainable residential and business development strategy for the Town.
Another objective of the Master Plan Initiative was to address the often-conflicting goals of economic
development and resource protection. Sustainable development providing for economic growth that is
compatible with resource protection remains an important Town focus. The Town’s approach includes
promoting economic development that is supported by adequate infrastructure. Thus, the dual objectives
of the Master Plan Initiative remain to provide for economic growth which is (1) compatible with
resource protection and (2) supported by adequate infrastructure. To ensure this, the Town embarked on a
four-town regional planning initiative, which is still ongoing. The Towns of Canton, Dedham, Norwood
and Westwood share a common watershed and an interlinked highway system. The Towns continue to
work together and meet regularly to discuss economic development on a regional basis. This regional
planning initiative encourages and reminds area towns that, despite borders, what happens in another
neighboring community may have an impact, both positive and potentially negative, on one another. The
Towns plan and communicate to shape growth, protect water resources, transportation infrastructure and
to insure support and advocacy for growth in the region - to everyone’s benefit. This group continues to
pursue State and Federal funding for the replacement of the Interstate 95 and Interstate 93 Interchange, a
source of safety concerns and traffic tie-ups.
Town of Canton, Massachusetts Page 6 of 118 Comprehensive Annual Financial ReportSource page 15
Residential developments such as Windsor Woods,
Indian Woods, Pequit View and Blue Hill
Commons are complimented by commercial
developments such as Dunkin Brands with their
worldwide corporate headquarters along with other
top Canton companies such as Meditech, Network
Engines, One Beacon, Boston Mutual,
Computershare, LoJack and Pepsi.
The Town’s planning focus also includes
improvements to the highway system that serves the
Town and the region. Now underway is the Route 128
Add-a-Lane Project, which is federally funded with
expected completion in calendar 2016.
The Town recently entered into a long-term lease of its
capped landfill to be used by a private entity to install
solar panels on fifteen acres of the site at no cost to
Canton. The lease provides the Town with guaranteed payments of $20,000 per acre, per year, while
allowing the Town the ability to purchase all the electricity generated by this 5.6 megawatt facility at a
substantial savings. The Pine Street Solar Facility went online August 15, 2012 (one of the largest in the
Northeast) and provided over $100,000 in net metering credits savings to the Town, along with lease
payments totaling $300,000 in new recurring operating revenue increasing annually by 2.5%.
In summary, Town leaders recognize the importance of maintaining a stable tax situation for its residents.
Development on the commercial side helps accomplish this goal and the Town continues to seek out the
means to maintain vigilance in this area.
Property Taxes The growth of the Town’s main source of revenues, property taxes, is capped by
Proposition 2 ½ and can only be overridden through a ballot by the voters. While revenue increases have
been limited in recent years, fixed costs, including health insurance and pension costs, have increased
more proportionally. As a result, balancing the annual budget is a challenge without an appropriation
from free cash. The Town attempts to mitigate this impact by conservatively forecasting revenues thus
creating free cash in the subsequent year.
Several years ago, the Town’s management made the difficult choice to cut services and raise fees in
order to balance the budget. With more cuts looming in future years, the Town’s voters approved a $4.5
million Proposition 2 ½ tax override for fiscal year 2009 that allowed for the restoration of most of the
budget cuts from the prior years. The tax override was planned to be phased in over a three year period
with an annual cost to the average residential homeowner of $450. In addition, effective fiscal year
2013, the Town negotiated changes to its health insurance plans that required higher out of pocket costs
from its employees and retirees but stabilized rates. These initiatives have allowed the Town to maintain a
consistent level of reserves from year to year and continue to make contributions to its OPEB Trust Fund.
Town of Canton, Massachusetts Page 7 of 118 Comprehensive Annual Financial ReportSource page 16
The Town’s available reserves on a
GAAP basis represent the amount in
Unassigned Fund Balances (Millions)
unassigned fund balance. As 12.0
discussed previously, the Town’s
reserves have been increasing on an 10.0
annual basis since the stabilization 8.0
of the recession in 2011. This has
been a direct result of the initiatives 6.0
implemented by management as
discussed in the previous paragraph. 4.0
These strong reserve levels, when 2.0
combined with the Town’s strong 0.0
management practices, desirable 2010 2011 2012 2013 2014 2015
location in a strong metropolitan
statistical area, assessed valuations and strong wealth factors directly contributed to an upgrade in the
Town’s bond rating from ‘AA+’ to ‘AAA’. This is the highest investment grade possible. The override
and the resulting revenue flexibility to restore lost services and stabilize budgets in future fiscal years
were cited as prominent factors in the upgrade. The Town is committed to maintaining its reserves at a
level expected from communities that engender the highest bond rating.
Long-term Financial Planning
Several years ago, the Town implemented a policy of preparing rolling projections. The Town believes
this will provide better insight when preparing annual budgets and will also alert the Town to any
potential budgeting issues far ahead of when these situations become real issues.
The following represents the Town’s summarized budgets for each of the next five years:
2016 2017 2018 2019 2020
Revenues and Other Sources
Real Estate and Personal Property Taxes $ 66,219,138 $ 68,406,028 $ 70,615,401 $ 72,519,961 $ 74,620,909
State Aid 7,892,369 7,892,369 7,892,369 7,892,369 7,892,369
Local Receipts 5,933,121 5,913,040 5,918,816 5,924,736 5,930,804
Transfers and Other Sources 2,583,119 2,171,543 2,204,235 2,237,949 2,272,714
Total Revenues 82,627,747 84,382,980 86,630,821 88,575,015 90,716,796
Expenditures and Other Uses
Education Budget 36,259,994 37,345,776 38,201,152 39,123,423 40,195,822
Municipal Budget 18,101,726 18,643,770 19,070,791 19,531,208 20,066,572
Fixed Costs 25,764,480 26,217,658 27,058,708 27,595,210 28,003,599
State and County Charges 954,663 975,776 1,000,170 1,025,174 1,050,803
Capital costs 1,876,000 1,200,000 1,300,000 1,300,000 1,400,000
Total Expenditures 82,956,863 84,382,980 86,630,821 88,575,015 90,716,796
Surplus/(Deficit) $ (329,116) $ - $ - $ - $ -
Town of Canton, Massachusetts Page 8 of 118 Comprehensive Annual Financial ReportSource page 17
Capital Improvements and Financing
The Town continues to invest in infrastructure improvements such as roads, sewers, and water supply
facilities, as well as various municipal and school facility upgrades. These include: Town Hall, Library,
Public Safety Facilities, Public Works and School building improvement projects.
In addition, the Town has completed the construction of two new water filtration plants. These water
filtration plants will provide state of the art water filtration capabilities and allow for the use of local
source water to reduce operating costs, improve water availability (including redundancy) and filtrate
water for customers with the most technologically advanced system available today.
This year the Town completed renovations of a former Knights of Columbus Hall and turned it into the
new Senior Center located at 500 Pleasant Street to address the growing, aging population in need of
expanded and updated senior services. In addition the Town completed repairs to Shepard Pond dam
which was classified by the state as being a Significant Hazard Dam in poor condition. To help fund this
repair project, the Town received a grant award of $665,000 from the Commonwealth and a $335,000 low
interest loan from the Executive Office of Environmental Affairs.
As part of the annual budget process, the Capital Planning Committee (CPC) recommends the capital
budget for the upcoming year and prepares a five-year plan to address the long-term capital needs of the
Town. The capital spending plan for the five year period from fiscal year 2016 through fiscal year 2020
has an estimated cost of $25.8 million, with $8.0 million to be funded from estimated revenues with the
remainder to be funded from the issuance of bonds. The CPC’s capital plan has allocated $6.2 million for
municipal departments, $5.9 million for the school department, $9.0 million for the water enterprise
fund, $4.2 million for the sewer enterprise fund, and $415,000 for the rink enterprise fund.
The Town’s target set aside to finance its capital plan is 5% to 6% of recurring revenues. A portion of its
annual capital plan funds smaller capital projects on a pay-as-you-go basis through recurring revenues
while larger capital projects are financed through borrowing.
Awards and Acknowledgements
The Government Finance Officers Association of the United States and Canada (GFOA) awards a
Certificate of Achievement for Excellence in Financial Reporting. This is a very prestigious award and
in order to be awarded a Certificate of Achievement, a government must publish an easily readable and
efficiently organized comprehensive annual financial report. This report must satisfy both generally
accepted accounting principles and applicable legal requirements.
The GFOA awarded this Certificate of Achievement for Excellence in Financial Reporting to the Town of
Canton for its comprehensive annual financial report for the fiscal year ended June 30, 2014. This was the
ninth year that the Town has achieved this prestigious award.
A Certificate of Achievement is valid for a period of one year only. We believe that our current
comprehensive annual financial report will meet the Certificate of Achievement Program’s requirements,
and we are submitting it to the GFOA to determine its eligibility for this certificate.
The publication of this CAFR represents an important achievement in the ability of the Town of Canton
to provide enhanced financial information and accountability to its citizens, elected and appointed
officials, and investors. The preparation of this report would not have been possible without the efficient
and dedicated services of the entire staff of the Finance Office.
Town of Canton, Massachusetts Page 9 of 118 Comprehensive Annual Financial ReportSource page 18
Special thanks also go to the certified public accounting firm of Roselli, Clark and Associates for their
advice and assistance in the preparation of this report.
Respectfully submitted,
William T. Friel
Town Administrator
James R. Murgia
Finance Director
Town of Canton, Massachusetts Page 10 of 118 Comprehensive Annual Financial ReportSource page 19
Government Finance Officers Association
Certificate of
Achievement
for Excellence
in Financial
Reporting
Presented to
Town of Canton
Text38:
Massachusetts
For its Comprehensive Annual
Financial Report
for the Fiscal Year Ended
June 30, 2014
Executive Director/CEO
Town of Canton, Massachusetts Page 11 of 118 Comprehensive Annual Financial ReportSource page 20
Board Planning of Health Board TOWN OF CANTON, MASSACHUSETTS ORGANIZATIONAL CHART Board of Selectmen Appointed Multiple Member Bodies Moderator Personnel Adv. Board Building [Renovations Committee Building & Zoning Department Building Commissioner Canton Representative Veteran's Office Veteran's Director Director Public Health -Industrial Development Commission Building Police Fire Dept. of Human Department Council Recreation Conservation Maintenance ‘ Resource of Finance ‘ ws ae Department | [Department | | Public Works Densikwank on Aging | | Commission Commission Police Fire Superintendent Human Finance CoA Recreation Conservation - _ o! Resource 2 , . Commission Chief Chief Public Works | | Administrator Director Director Director Agent Page 12 of 118 Comprehensive Annual Financial Report Town of Canton, Massachusetts an Board Board of Library Clerks y of Selectmen Trustees Office Town Town Town Planner Clerk Administrator Executive Town Counsel Assistant Town Planner Administrative Secretary Sealer of Weights and Measures Secretary Register of Voters Comm. on Disability -Zoning Board.of Appeals -Water/Sewer Rate Policy Commission -Youth Commission -Historical Commission -Fair Housing Committee Cable Advisory Committee Beautification Committee -Conservation Commission Council on Aging -Industrial Develop. Financing Authority -Local Emergency Planning Committee -Traffic Study Committee [Original embedded text, retained for comparison] Town of Canton, Massachusetts Page 12 of 118 Comprehensive Annual Financial Report
Source page 21
CANTON PUBLIC SCHOOLS
CANTON SCHOOL COMMITTEE
ADMINISTRATIVE ASSISTANT TO THE
SUPERINTENDENT/SCHOOL COMMITTEE
SUPERINTENDENT OF SCHOOLS
DIRECTOR .OF CURRICULUM SCHOOL BUSINESS
BUILDING PRINCIPALS DIRECTOR OF
and INSTRUCTION ADMINISTRATOR
STUDENT SERVICES
WIDE AREA EDUCATIONAL SCHOOL
NETWORK TECHNOLOGY SECRETARIES ASSISTANT
SCHOOL COUNCIL SECRETARIES
ADM. ADM.. PRINCIPALS ADMINISTRATIVE ASST.
CAPT.
SPED
K-5 READING PARENT GROUPS
PARENT
BUILDING SPECIALISTS SPECIAL EDUCATION, ADVISORY
TECHNOLOGY DISTRICT ACCOUNTS
FACULTY BUILDING 504, ALT. ED. COUNCIL PAYROLL
SPECIALISTS DEPARTMENT PAYABLE
AND STAFF DEPARTMENT STUDENT SERVICES
COORDINATORS
COORDINATORS FACULTY AND STAFF
COMPUTER PROFESSIONAL
DIRECTOR OF
TEACHERS DEVELOPMENT
CHARMSS FOOD SERVICES
COMMITTEE
CUSTODIANS COLLABORATIVE
FACILITIES
PRIVATE SCHOOLS
DIRECTOR
CAFETERIA
MANAGERS/
CUSTODIANS/ WORKERS
MAINTENANCE
TRANSPORTATION
COORDINATOR
HEALTH
SERVICES
Town of Canton, Massachusetts Page 13 of 118 Comprehensive Annual Financial ReportSource page 22
PRINCIPAL TOWN OFFICIALS
Elected Officials
Board of Selectmen John J. Connolly, Chairman
Robert E. Burr Jr., Vice Chairman
Kevin T. Feeney, Clerk
Victor D. Del Vecchio, Member
Mark J. Porter, Member
School Committee Robert Golledge, Chairman
Reuki B. Schutt, Vice Chairman
Michael Loughran, Secretary
John Bonnanzio, Member
Kristin Mirliani, Member
Principal Executive Officers
Town Administrator William T. Friel
Finance Director James R. Murgia
Town Accountant Kathy Dooley Butters
Superintendent of Schools Jennifer Henderson
School Business Administrator Barry Nectow
Police Chief Kenneth N. Berkowitz
Fire Chief Charles E. Doody
DPW Superintendent Michael T. Trotta
Town of Canton, Massachusetts Page 14 of 118 Comprehensive Annual Financial ReportSource page 23
Financial Section The Town’s Department of Public Works repaired and upgraded the Shepard Pond Dam utilizing $1 million in grants and loans from the state. Originally built in 1880 to power a mill, the dam was considered to be a significant hazard dam.
Source page 25
INDEPENDENT AUDITOR’S REPORT
Honorable Board of Selectmen
Town of Canton, Massachusetts
Report on the Financial Statements
We have audited the accompanying financial statements of the governmental activities, the business-type
activities, each major fund and the aggregate remaining fund information of the Town of Canton,
Massachusetts, (the “Town”) as of and for the year ended June 30, 2015 which collectively comprise the
Town’s basic financial statements as listed in the table of contents.
Management’s Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial statements in
accordance with accounting principles generally accepted in the United States of America; this includes
the design, implementation, and maintenance of internal control relevant to the preparation and fair
presentation of financial statements that are free from material misstatement, whether due to fraud or
error.
Auditor’s Responsibility
Our responsibility is to express opinions on these financial statements based on our audit. We conducted
our audit in accordance with auditing standards generally accepted in the United States of America and
the standards applicable to financial audits contained in Government Auditing Standards, issued by the
Comptroller General of the United States. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of material misstatement.
An audit includes performing procedures to obtain audit evidence about the amounts and disclosures in the
financial statements. The procedures selected depend on the auditor’s judgment, including the assessment
of the risks of material misstatement of the financial statements, whether due to fraud or error. In making
those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair
presentation of the financial statements in order to design audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal
control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness
of accounting policies used and the reasonableness of significant accounting estimates made by
management, as well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
out audit opinions.
Town of Canton, Massachusetts Page 15 of 118 Comprehensive Annual Financial ReportSource page 26
Town of Canton
Page Two
Opinions
In our opinion, the financial statements referred to above present fairly, in all material respects, the
respective financial position of the governmental activities, the business-type activities, each major fund
and the aggregate remaining fund information of the Town, as of June 30, 2015, and the respective
changes in financial position and, where applicable, cash flows thereof for the year then ended in
accordance with accounting principles generally accepted in the United States of America.
Change in Accounting Principle
As disclosed in the Note III to the financial statements, the Town of Canton implemented GASB
Statement No. 68, Accounting and Financial Reporting for Pensions – an amendment of GASB Statement
No. 27, and GASB Statement No. 71, Pension Transition for Contributions Made Subsequent to the
Measurement Date – an amendment of GASB Statement No. 68, during the fiscal year 2015. Our opinion
was not modified with respect to this matter.
Other Matters
Required Supplementary Information
Accounting principles generally accepted in the United States of America require that the management’s
discussion and analysis, the schedules of the Town’s proportionate share of net pension liability and the
Town’s contributions to pension plan, the schedule of the Commonwealth’s share of the net pension
liability of the Massachusetts Teacher’s Retirement System, the funding progress and contribution
funding for other postemployment benefits, and budgetary comparison information as listed in the table
of contents, be presented to supplement the basic financial statements. Such information, although not
part of the basic financial statements, is required by the Governmental Accounting Standards Board,
who considers it to be an essential part of financial reporting for placing the basic financial statements
in an appropriate operational, economic or historical context.
We have applied certain limited procedures to the required supplementary information in accordance with
auditing standards generally accepted in the United States of America, which consisted of inquiries of
management about the methods of preparing the information and comparing the information for
consistency with management’s responses to our inquiries, the basic financial statements, and other
knowledge we obtained during our audit of the basic financial statements. We do not express an opinion
or provide any assurance on the information because the limited procedures do not provide us with
sufficient evidence to express an opinion or provide any assurance.
Other Information
Our audit was conducted for the purpose of forming opinions on the financial statements that collectively
comprise the Town’s basic financial statements. The introductory section, combining and individual
nonmajor fund financial statements, and statistical section are presented for purposes of additional
analysis and are not a required part of the basic financial statements. The combining and individual
nonmajor fund financial statements are the responsibility of management and were derived from and
relate directly to the underlying accounting and other records used to prepare the basic financial
statements. Such information has been subjected to the auditing procedures applied in the audit of the
basic financial statements and certain additional procedures, including comparing and reconciling such
information directly to the underlying accounting and other records used to prepare the basic financial
statements or to the basic financial statements themselves, and other additional procedures in accordance
Town of Canton, Massachusetts Page 16 of 118 Comprehensive Annual Financial ReportSource page 27
Town of Canton
Page Three
with auditing standards generally accepted in the United States of America. In our opinion, the
combining and individual nonmajor fund financial statements are fairly stated, in all material respects, in
relation to the basic financial statements as a whole. The introductory and statistical sections have not
been subjected to the auditing procedures applied in the audit of the basic financial statements and,
accordingly, we do not express an opinion or provide any assurance on them.
Other Reporting Required By Government Auditing Standards
In accordance with Government Auditing Standards, we have also issued a report dated November 4,
2015, on our consideration of the Town of Canton, Massachusetts’ internal control over financial
reporting and our tests of its compliance with certain provisions of laws, regulations, contracts, grant
agreements and other matters. The purpose of that report is to describe the scope of our testing of internal
control over financial reporting and compliance and the results of that testing, and not to provide an
opinion on the internal control over financial reporting or on compliance. That report is an integral part
of an audit performed in accordance with Government Auditing Standards and should be considered in
assessing the results of our audit.
Roselli, Clark and Associates
Certified Public Accountants
Woburn, Massachusetts 01801
November 4, 2015
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Management’s Discussion and Analysis Town of Canton, Massachusetts Page 19 of 118 Comprehensive Annual Financial Report
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MANAGEMENT’S DISCUSSION AND ANALYSIS
As the management of the Town, we offer readers of the accompanying financial statements this narrative
overview and analysis of the financial activities of the Town for the fiscal year ended June 30, 2015.
Financial Highlights
The assets and deferred outflows of the Town exceeded its liabilities and deferred inflows at the close
of the most recent fiscal year by approximately $50.7 million (total net position).
The government’s total net position increased by approximately $10.2 million. This consisted
primarily of an increase in governmental activities’ net position by approximately $7.3 million
(25.9% of total governmental activities’ net position) and an increase in Business - type activities’ net
position of approximately $2.9 million (12.9% of Business-type activities).
The Town’s Unassigned Fund Balance reported in the General Fund was approximately $11.4 million
(13.9% of General Fund expenditures). Total Fund Balance in the General Fund was approximately
$12.6 million (15.3% of General Fund expenditures). The Town reported total fund balances of over
$10.6 million in the Combined Nonmajor Governmental Funds. Over $10.5 million in Restricted
Fund Balances, combined with over $0.4 million in Nonspendable Fund Balances was offset by
Unassigned Fund Deficits of over $0.3 million.
The Town’s total debt decreased by approximately $2.8 million during the fiscal year. Detail of this
net decrease is illustrated as follows:
Issuances of debt
Governmental Activities $ 2,861,150
Business-Type Activities 1,163,000
Debt payments:
Governmental Activities (3,819,900)
Business-Type Activities (2,466,765)
Amortization of premium:
Governmental Activities (414,813)
Business-Type Activities (101,497)
$ (2,778,825)
Overview of the Financial Statements
This discussion and analysis are intended to serve as an introduction to the Town’s basic financial
statements. The Town’s basic financial statements comprise three components: 1) government-wide
financial statements, 2) fund financial statements, 3) notes to the financial statements. This report also
contains other supplementary information in addition to the basic financial statements themselves.
The layout and relationship of the financial statements and supplementary information is visually
illustrated as follows:
Town of Canton, Massachusetts Page 21 of 118 Comprehensive Annual Financial ReportSource page 32
Required Supplementary Management Discussion and Analysis
Information
Government-wide Financial Statements
Governmental Fund Financial Statements
Basic Proprietary Fund Financial Statements
Financial Statements
Fiduciary Fund Financial Statements
Notes to the Basic Financial Statements
Required Supplementary
Information – Budgetary Reporting with Notes, Pension and
Other than MD&A Other Postemployment Benefits
Other Supplementary
Combining Fund Financial Statements/Schedules
Information
Government-wide Financial Statements – The government-wide financial statements are designed to
provide readers with a broad overview of the Town’s finances, in a manner similar to a private-sector
business. The statement of position presents information on all of the Town’s assets, deferred outflows,
liabilities and deferred inflows, with the net result reported as net position. Over time, increases or
decreases in net position may serve as a useful indicator of whether the financial position of the Town is
improving or deteriorating. The statement of activities presents information showing how the
government’s net position changed during the most recent fiscal year. All changes in net position are
reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of
related cash flows. Thus, revenues and expenses are reported in this statement for some items that will
only result in cash flows in future fiscal periods (e.g., uncollected taxes and earned but unused vacation
leave.)
The government-wide financial statements consist of two classifications; (1) those whose activities are
principally supported by taxes and intergovernmental revenue (governmental activities), and (2) those
whose activities are intended to recover all or a significant portion of their costs through user fees and
charges (business-type activities).
The governmental activities of the Town include general government, public safety, highways and streets,
sanitation, education, economic development, debt service, fringe benefits and culture and recreation.
The business-type activities of the Town are comprised of water, sewer and rink enterprise funds.
Fund Financial Statements - A fund is a grouping of related accounts that is used to maintain control
over resources that have been segregated for specific activities or objectives. The Town, like other state
and local governments, uses fund accounting to ensure and demonstrate compliance with finance-related
Town of Canton, Massachusetts Page 22 of 118 Comprehensive Annual Financial ReportSource page 33
legal requirements. All of the funds of the Town can be divided into three categories: governmental
funds, proprietary funds, and fiduciary funds.
Accounting guidelines distinguish fund balance between amounts that are considered nonspendable, such
as fund balance associated with inventories, and other amounts that are classified based on the relative
strength of the constraints that control the purposes for which specific amounts can be spent. Beginning
with the most binding constraints, fund balance amounts will be reported in the following classifications:
• Restricted—amounts constrained by external parties, constitutional provision, or enabling
legislation
• Committed—amounts constrained by a government using its highest level of decision-making
authority
• Assigned—amounts a government intends to use for a particular purpose
• Unassigned—amounts that are not constrained at all will be reported in the general fund or in
other major funds if negative
Governmental funds – Governmental funds are used to account for essentially the same functions
reported as governmental activities in the government-wide financial statements. However, unlike the
government-wide financial statements, governmental fund financial statements focus on near-term
inflows and outflows of spendable resources, as well as on balances of spendable resources available at
the end of the fiscal year. Such information may be useful in evaluating a government’s near-term
financing requirements.
Because the focus of governmental funds is narrower than that of the government-wide financial
statements, it is useful to compare the information presented for governmental funds with similar
information presented for governmental activities in the government-wide financial statements. By doing
so, readers may better understand the long-term impact of the government’s near-term financing
decisions.
The Town maintains 16 individual governmental funds. Information is presented separately in the
governmental fund balance sheet and in the governmental fund statement of revenues, expenditures,
and changes in fund balances for the General Fund, and Capital Projects Funds which are considered to
be major funds. Data from the other 14 governmental funds are combined into a single, aggregated
presentation. Individual fund data for each of these Nonmajor governmental funds is provided in the
form of combining statements.
The Town adopts an annual appropriated budget for its general fund and its enterprise fund. A budgetary
comparison schedule has been provided for the general fund to demonstrate compliance with this budget.
Proprietary funds – The Town maintains two types of proprietary funds. Enterprise funds are used to
report the same functions presented as business-type activities in the government-wide financial
statements. The Town uses an enterprise fund to account for its water, sewer and rink enterprise funds.
Internal service funds are used to report activities that service all other Town Departments. The Town
uses internal service funds to account for self-insured health insurance claims.
Fiduciary funds – Fiduciary funds are used to account for resources held for the benefit of parties outside
the government. Fiduciary funds are not reflected in the government-wide financial statement because
Town of Canton, Massachusetts Page 23 of 118 Comprehensive Annual Financial ReportSource page 34
the resources of those funds are not available to support the Town’s own programs. The accounting used
for fiduciary funds is much like that used for proprietary funds.
Notes to the Financial Statements - The notes provide additional information that is essential to a full
understanding of the data provided in the government-wide and fund financial statements.
Other Information - In addition to the basic financial statements and accompanying notes, this report
also presents certain required supplementary information which includes the schedules of the Town's
proportionate share of the net pension liability, contributions to the pension plan, the Commonwealth's
share of the net pension liability of the Massachusetts Teachers' Retirement System, the funding progress
and contribution funding of its obligation to provide other postemployment benefits to its employees as
well as the Schedule of Revenues, Expenditures and Changes in Fund Balances – Budget and Actual –
General Fund and notes to this schedule.
New Significant Accounting Standards Implemented – In fiscal year 2015 the Town adopted two new
statements of financial accounting standards issued by the Governmental Accounting Standards board
(GASB) that relate to pension activity:
- Statement No. 68, “Accounting and Financial Reporting for Pensions – an amendment of
GASB Statement No. 27,” and
- Statement No. 71, “Pension Transition for Contributions Made Subsequent to the
Measurement Date – an amendment of GASB Statement No. 68”
Statement No. 68 (Statement) establishes standards of accounting and financial reporting, but not funding
or budgetary standards, for the Town’s defined benefit pension plans. This statement replaces the
requirements of prior GASB statements impacting account and disclosure of pensions.
The significant impact to the Town of implementing Statement No. 68 is the reporting of the Town’s
unfunded pension liability on the Town’s full accrual basis of accounting government-wide financial
statements. There are also new note disclosure requirements and supplementary schedules required by the
Statement.
In order to implement the Statement, a prior period adjustment was made to the Town’s July 1, 2014 net
position. This prior period adjustment decreased the Town’s net position by $36,930,901 from
$77,489,810 to $40,558,909. Specific details of this restatement are in Note IV..
Government-wide Financial Analysis
As noted earlier, net position may serve over time as a useful indicator of a government’s financial
position. In the case of the Town, assets exceeded liabilities by approximately $50.7 million at the
close of the most recent fiscal year.
Town of Canton, Massachusetts Page 24 of 118 Comprehensive Annual Financial ReportSource page 35
Condensed net position data is presented as follows:
Governmental Activities Business-Type Activities Total
June 30, June 30, June 30, June 30, June 30, June 30,
2015 2014 2015 2014 2015 2014
Assets
Currrent and other assets $ 42,666,718 $ 39,902,504 $ 10,487,690 $ 9,002,755 $ 53,154,408 $ 48,905,259
Capital assets, net 104,451,895 100,407,535 46,382,802 47,322,552 150,834,697 147,730,087
Total assets 147,118,613 140,310,039 56,870,492 56,325,307 203,989,105 196,635,346
Deferred outflows of resources 1,517,174 651,390 102,700 - 1,619,874 651,390
Liabilities
Long-term liabilities 106,335,287 70,408,131 31,151,262 30,180,820 137,486,549 100,588,951
Other liabilities 14,305,453 15,206,827 3,092,633 4,001,148 17,398,086 19,207,975
Total liabilities 120,640,740 85,614,958 34,243,895 34,181,968 154,884,635 119,796,926
Deferred inflows of resources - - - - - -
Net Position
Net investment in capital assets 76,109,604 70,116,230 16,386,618 15,743,697 92,496,222 85,859,927
Restricted 9,193,516 8,912,488 - - 9,193,516 8,912,488
Unrestricted (57,308,073) (23,682,247) 6,342,679 6,399,642 (50,965,394) (17,282,605)
Total Net Position $ 27,995,047 $ 55,346,471 $ 22,729,297 $ 22,143,339 $ 50,724,344 $ 77,489,810
By far, the largest portion (approximately $92.5 million) of the Town’s net position reflects its investment
in capital assets (e.g. land, buildings, infrastructure, machinery, and equipment) less any related debt used
to acquire those assets that is still outstanding. The Town uses these capital assets to provide services to
citizens; consequently, these assets are not available for future spending. Although the Town’s
investment in its capital assets is reported net of related debt, the resources needed to repay this debt must
be provided from other sources, since the capital assets themselves cannot be used to liquidate these
liabilities.
An additional portion, approximately $9.2 million, of the Town’s net position represents resources that
are subject to external restrictions on how they may be used. Unrestricted net position is reported as a
deficit of approximately $51.0 million due to the recognition of net pension liabilities of approximately
$38.0 million in 2015 and other postemployment benefits of approximately $44.4 million since the
implementation of GASB 45 in 2009.
Town of Canton, Massachusetts Page 25 of 118 Comprehensive Annual Financial ReportSource page 36
Condensed changes in net position data is presented as follows:
Governmental Activities Business-Type Activities Total
June 30, June 30, June 30, June 30, June 30, June 30,
2015 2014 2015 2014 2015 2014
Revenues
Program revenues:
Charges for services $ 7,263,743 $ 6,884,720 $ 13,938,215 $ 13,419,115 $ 21,201,958 $ 20,303,835
Operating grants and contributions 13,609,976 18,811,622 37,338 6,250 13,647,314 18,817,872
Capital grants and contributions 2,832,069 611,930 - 463,500 2,832,069 1,075,430
General revenues:
Property taxes and tax liens 63,720,607 61,423,003 - - 63,720,607 61,423,003
Unrestricted grants and contributions 2,213,169 2,776,692 - - 2,213,169 2,776,692
Other 5,933,217 5,259,025 27,019 20,083 5,960,236 5,279,108
Total Revenues 95,572,781 95,766,992 14,002,572 13,908,948 109,575,353 109,675,940
Expenses
General government 5,683,805 6,231,894 - - 5,683,805 6,231,894
Public safety 15,312,760 16,625,726 - - 15,312,760 16,625,726
Education 54,772,830 64,153,101 - - 54,772,830 64,153,101
Public works 7,227,459 6,419,350 - - 7,227,459 6,419,350
Health and human services 1,609,060 1,346,871 - - 1,609,060 1,346,871
Culture and recreation 3,006,143 3,123,867 - - 3,006,143 3,123,867
Debt service 722,667 1,557,660 - - 722,667 1,557,660
Water - - 5,253,139 5,225,383 5,253,139 5,225,383
Sewer - - 5,416,303 5,366,166 5,416,303 5,366,166
Rink - - 405,752 353,666 405,752 353,666
Total Expenses 88,334,724 99,458,469 11,075,194 10,945,215 99,409,918 110,403,684
Change in net position before transfers 7,238,057 (3,691,477) 2,927,378 2,963,733 10,165,435 (727,744)
Transfers - 1,232,584 - (1,232,584) - -
Change in net position 7,238,057 (2,458,893) 2,927,378 1,731,149 10,165,435 (727,744)
Net position, beginning of year 55,346,471 57,805,364 22,143,339 20,412,190 77,489,810 78,217,554
Restatement for net pension liability (34,589,481) - (2,341,420) - (36,930,901) -
Net position, beginning of year,
as restated 20,756,990 57,805,364 19,801,919 20,412,190 40,558,909 78,217,554
Net position, end of year $ 27,995,047 $ 55,346,471 $ 22,729,297 $ 22,143,339 $ 50,724,344 $ 77,489,810
Governmental Activities – The governmental activities increased net position by over $7.2 million
(25.9% of governmental activities’ net position). The increase is primarily the result of capital additions
exceeding depreciation by approximately $4.0 million from the construction of a senior center and
roadway improvements; revenue surpluses of approximately $2.8 million due to higher than forecasted
motor vehicle excise and building permit revenues; and approximately $0.4 million in unspent budgeted
appropriations.
Town of Canton, Massachusetts Page 26 of 118 Comprehensive Annual Financial ReportSource page 37
Fiscal Year 2015 Expenses and Program Revenues – governmental activities are graphically presented as
follows:
$70,000,000
$60,000,000
$50,000,000
$40,000,000
$30,000,000
Functional expenses
$20,000,000
Program Revenues
$10,000,000
$0
Major revenue sources of governmental activities consist of revenue from; (1) Operating grants and
contributions which comprised approximately 14.2% of the total governmental activity revenues; down
from 19.6% due to developer contributions of approximately $1.7 million in the prior year and a
decrease of approximately $4.7 million due to the recognition of nonemployee special funding payments
from the Commonwealth reported in a manner required under GASB 68; and (2) Property taxes which
represented 66.7% of total revenues. This increased over the prior year by $2.3 million which
approximated the statutory allowable 2 1/2% increase in assessment and new growth. No other revenue
sources exceeded 10% of total revenues in either fiscal 2015 or 2014.
Revenues
2%
6%
3% 8%
Property taxes
14% Operating grants and contributions
Capital grants and contributions
67% Charges for services
Other
Intergovernmental (unrestricted)
Town of Canton, Massachusetts Page 27 of 118 Comprehensive Annual Financial ReportSource page 38
Major operating expenses were consistent with the prior year as the Town devoted nearly 80% of its
budget to education and public safety. More specifically, educational expenses, whose level is driven by
minimum per pupil spending requirements under State law was down to 62.0% as compared to 64.5%.
This was due primarily to the implementation of GASB 68 as described in the revenue explanation
above as the expense side of the nonemployer contributions from the Commonwealth were also reduced
by $4.7 million. Public safety expenses were up slightly to 17.3% from 16.7% in the prior year due to
capital spending not classified as capital assets. No other expenses represented greater than 10.0% of
total expenses in either fiscal 2015 or 2014.
Expenses
2% 1%
3% 7%
8%
17% General government
Public safety
Education
Public works
Health and human services
62% Culture and recreation
Interest expense
Business-type Activities – Net position of the business-type activities increased $2.9 million over the
prior year. This was due to an increase in the sewer usage rate, an increase in water and sewer
consumption, and a reduction in the reliance on water from outside sources. Predominantly all business-
type activities revenues were from user charges.
Business – type activities
20
15
10
5
User charges Expenses and indirect
charges
Town of Canton, Massachusetts Page 28 of 118 Comprehensive Annual Financial ReportSource page 39
Fund-wide Financial Analysis of the Government’s Funds
As noted earlier, the Town uses fund accounting to ensure and demonstrate compliance with finance-
related legal requirements.
Governmental funds – The focus of the Town’s governmental funds is to provide information on near-
term inflows, outflows, and balances of spendable resources. Such information is useful in assessing the
Town’s financing requirements. In particular, unassigned fund balance may serve as a useful measure of
a government’s net resources available for spending at the end of the fiscal year.
As of the close of the current fiscal year, the Town’s governmental funds balance sheet reported a
combined ending fund balance of approximately $23.3 million, an increase of approximately $1.5 million
over the prior year. The increase was primarily the result of revenues exceeding expenditures in the
general fund due to higher than expected motor vehicle excise and building permit revenues.
Unassigned fund balance in the general fund was approximately $11.4 million or 13.9% of general fund
expenditures. This is available for spending at the government’s discretion. Assigned fund balance, as a
result of encumbrances and amounts budgeted for next fiscal year of approximately $0.8 million, and
committed fund balance for carryover articles of approximately $0.4 million bring total fund balance in
the general fund to approximately $12.6 million or 15.3% of general fund expenditures.
The remainder of governmental fund balances are included as Combined Nonmajor Fund Balances and
are classified as either (1) non-spendable, due to being the corpus of an endowment in the amount of
approximately $0.4 million; (2) restricted due to constraints placed externally by third-parties in the
amount of approximately $10.5 million; (3) amounts restricted for capital projects of approximately $0.4
million, or (4) unassigned as they reflect negative balances due to grant deficits and the use of short-term
notes as funding sources for construction of approximately $0.6 million. These are expected to be funded
in future years through grant reimbursements and permanent financing.
Proprietary funds – The Town’s proprietary funds are made up of (1) the Water, Sewer and Rink
Enterprise Funds which provides the same type of information found in the government-wide
financial statements under business-type activities and discussed in that section, but in more detail;
and (2) the Town’s Internal Service Fund which accounts for the Town’s Health Claims Fund.
The Health Claims Fund has a Net Position balance of approximately $5.3 million. This represents an
increase of approximately $1.9 million over the prior year as claims were down from the prior year.
Health Claims Fund
15
14
13
12
11
10
Revenues Expenses
Town of Canton, Massachusetts Page 29 of 118 Comprehensive Annual Financial ReportSource page 40
General Fund Budgetary Highlights
Differences between the original budget and the final amended budget included revisions to the following
line items:
Approximately $0.2 million in increases allocated to public safety.
Approximately $0.2 million in decreases allocated to general government.
Approximately $1.0 million in increases allocated to public works.
Approximately $0.1 million in increases to education.
Approximately $0.1 million in increases to culture and recreation.
All of the amendments were between operating line items in the original budget and were for operating
purposes. The overall bottom line final budget increased $1.2 million from the original budget,
primarily as a result of funding snow and ice removal costs.
Major budget to actual differences on the revenue side included property tax and excise, which exceeded
budget by approximately $1.8 million, licenses and permits which exceeded budget by $0.6 million and
departmental revenues which exceeded budget by $0.4 million.
On the expenditure side, numerous minor favorable variances which in total approximated $0.5 million
existed.
Further detail of budget to actual comparisons may be reviewed as part of the Required Supplementary
Information following the footnotes to the report.
Capital Asset and Debt Administration
Capital Assets – The Town’s investment in capital assets for its governmental and business type
activities as of June 30, 2015 amounts to approximately $150.8 million (net of accumulated
depreciation) an increase from the previous year’s balance of approximately $3.1 million. as additions
exceeded the annual depreciation provision.
Major capital asset additions included a renovated senior center, school building improvements, dam
reconstruction and roadway improvements.
Additional information on the Town’s capital assets can be found in Note II subsection D.
Long-term Debt – State statutes limit the amount of general obligation debt a governmental entity may
issue to 5.0 % of its total assessed valuation. The current debt limitation for the Town is approximately
$204.2 million, which is significantly in excess of the Town’s outstanding general obligation debt
classified as inside the debt limit.
At the end of the current fiscal year, the Town had total debt outstanding of approximately $59.4 million.
The entire amount comprises debt backed by the full faith and credit of the government.
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The Town’s most recent credit evaluation resulted in the Town maintaining its “AAA” rating
from Standard and Poor‘s Investment Services for general obligation debt. This is the highest
investment grade possible.
The Town’s total debt decreased by approximately $2.8 million during the fiscal year as previously
detailed.
The Town also holds a proportionate share of debt of other governmental units that provide services
within the Town’s boundaries. The debt service from such arrangements is assessed annually to the
Town.
Bond anticipation note payable balances outstanding at year-end amount to approximately $0.8 million
and relate to departmental equipment, building repairs and school improvements.
Additional information on the Town’s short-term and long-term debt can be found in Note II under
subsections F and G.
Economic Factors and Next Year’s Budgets and Rates
Consistent with both State and National work force trends, the Town’s unemployment rates improved
dramatically and are exceeding historical unemployment rate data dating back at least 10 years.
The Town’s property tax base is made up predominantly of residential real estate taxes, which
comprise nearly 62.4% of the Town’s property tax base. The Town also relies heavily on its
commercial and industrial property tax base, which in aggregate comprise 37.6% of the Town’s
property tax base. The Town uses a split rate in assessing taxes, thus commercial, industrial and
personal property tax rates are just over double the residential rate. In addition, Chapter 580 of the
Acts of 1980, more commonly referred to as Proposition 2 ½, limits the Town’s ability to increase
taxes in any one year by more than two and one-half percent (2 ½%) of the previous year tax levy.
Consistent with both State and National indices, the Town’s housing market experienced a downward
trend from 2005 – 2010. Housing prices began to stabilize during fiscal year 2011 and recently are
beginning to see an upward trend. During 2015, houses in the Town continued selling at greater than
their assessed values, as a result, the Town expects its housing market to continue to maintain or
slightly outpace National indices. In addition, The Town has residential developments in various
stages of completion. These are expected to be completed in the near future.
The Town has responded well to the recent economic challenges. Reductions in local revenue,
primarily interest income and other reductions in revenue have caused the Town to aggressively seek
other revenue producing initiatives in order to maintain appropriations in ways that preserved local
service levels. The Town has been very successful in that regard.
All of the above items were considered when the Town developed its budget for fiscal year 2016. The
budget was adopted in May 2015 and the Town expects its tax rate to be certified in December 2015.
Requests for Information
This financial report is designed to provide a general overview of the Town’s finances for all those with
an interest in the government’s finances. Questions concerning any of the information provided in this
report or request for additional financial information should be addressed to the Office of the Finance
Director, 801 Washington Street, Canton, Massachusetts 02021.
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