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Home My WebLink About2016 Comprehensive Annual Financial ReportTOWN OF COHASSET, MASSACHUSETTS Comprehensive Annual Financial Report Cohasset Common Photo: Mary Quill For the Year Ended June 30, 2016 Prepared By: The Fiscal Team TOWN OF COHASSET, MASSACHUSETTS COMPREHENSIVE ANNUAL FINANCIAL REPORT For the Year Ended June 30, 2016 Prepared by: The Fiscal Team Town of Cohasset, Massachusetts TOWN OF COHASSET, MASSACHUSETTS COMPREHENSIVE ANNUAL FINANCIAL REPORT JUNE 30, 2016 TABLE OF CONTENTS Introductory Section ...................................................................................................................................................... 1 Letter of Transmittal ..................................................................................................................................................... 2 GFOA Certificate of Achievement ................................................................................................................................ 7 Organizational Chart .................................................................................................................................................... 8 Principal Town Officials ................................................................................................................................................ 9 Financial Section ......................................................................................................................................................... 11 Independent Auditor’s Report .................................................................................................................................... 13 Management’s Discussion and Analysis ................................................................................................................... 15 Basic Financial Statements ........................................................................................................................................ 25 Statement of Net Position ....................................................................................................................................... 27 Statement of Activities ............................................................................................................................................ 28 Governmental Funds – Balance Sheet .................................................................................................................. 30 Reconciliation of the Governmental Funds Balance Sheet Total Fund Balances to the Statement of Net Position .............................................................................................................................................................. 31 Governmental Funds – Statement of Revenues, Expenditures and Changes in Fund Balances ......................... 32 Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances of Governmental Funds to the Statement of Activities ................................................................................................................. 33 Proprietary Funds – Statement of Net Position ...................................................................................................... 34 Proprietary Funds – Statement of Revenues, Expenses and Changes in Net Position ........................................ 35 Proprietary Funds – Statement of Cash Flows ...................................................................................................... 36 Fiduciary Funds – Statement of Fiduciary Net Position ......................................................................................... 37 Fiduciary Funds – Statement of Changes in Fiduciary Net Position ...................................................................... 38 Notes to Basic Financial Statements ..................................................................................................................... 39 Required Supplementary Information ........................................................................................................................ 73 General Fund Budgetary Comparison Schedule ................................................................................................... 75 General Fund Schedule of Revenues, Expenditures and Changes in Fund Balance – Budget and Actual ...... 76 Pension Plan Schedules - Town ............................................................................................................................ 78 Schedule of the Town’s proportionate share of the net pension liability ............................................................ 79 Schedule of the Town contributions ................................................................................................................... 80 Schedule of the special funding amounts of the net pension liability ................................................................. 81 Other Postemployment Benefits Plan Schedules .................................................................................................. 82 Other Postemployment Benefits Plan Schedule of Funding Progress and Employer Contributions ................. 83 Other Postemployment Benefits Plan Actuarial Methods and Assumptions ...................................................... 84 Notes to Required Supplementary Information ...................................................................................................... 85 Combining and Individual Fund Statements .............................................................................................................. 89 Nonmajor Governmental Funds ............................................................................................................................. 90 Nonmajor Governmental Funds – Combining Balance Sheet............................................................................ 92 Nonmajor Governmental Funds – Combining Statement of Revenues, Expenditures, and Changes in Fund Balances ............................................................................................................................................................. 96 Agency Fund ........................................................................................................................................................ 100 Agency Fund – Statement of Changes in Assets and Liabilities ...................................................................... 101 Statistical Section ...................................................................................................................................................... 103 Net Position By Component ..................................................................................................................................... 104 Changes in Net Position .......................................................................................................................................... 105 Fund Balances, Governmental Funds ..................................................................................................................... 106 Changes in Fund Balances, Governmental Funds .................................................................................................. 107 Assessed Value and Actual Value of Taxable Property by Classification and Tax Rates ....................................... 108 Principal Taxpayers ................................................................................................................................................. 109 Property Tax Levies and Collections ....................................................................................................................... 110 Ratios of Outstanding Debt and General Bonded Debt ........................................................................................... 111 Direct and Overlapping Governmental Activities Debt............................................................................................. 112 Computation of Legal Debt Margin .......................................................................................................................... 113 Demographic and Economic Statistics .................................................................................................................... 114 Principal Employers ................................................................................................................................................. 115 Full-Time Equivalent Town Employees by Function ................................................................................................ 116 Operating Indicators by Function/Program .............................................................................................................. 117 Capital Asset Statistics by Function/Program .......................................................................................................... 118 Introductory Section MS Bike Tour Photo: Chief William Quigley Town of Cohasset, Massachusetts 1 Comprehensive Annual Financial Report Introductory Section Town of Cohasset, Massachusetts 2 Comprehensive Annual Financial Report Letter of Transmittal Letter of Transmittal December 19, 2016 To the Honorable Members of the Board of Selectmen and the Citizens of the Town of Cohasset: It is with pleasure that the Comprehensive Annual Financial Report (CAFR) for the fiscal year ended June 30, 2016 for the Town of Cohasset, Massachusetts is hereby presented for review. This report is the primary means of reporting the Town’s financial activities, and the financial reports contained within have been prepared and presented in conformity with generally accepted accounting principles (GAAP). Management assumes full responsibility for the accuracy of the presented data and the completeness and fairness of the presentation, including all disclosures, based upon an internal control framework that has been established for this purpose. Recognizing that the cost of a system of internal control should not exceed its anticipated benefits, this system has been designed to provide reasonable rather than absolute assurance that the financial statements are free of any material misstatements. To the best of management’s knowledge and belief, this report is complete and reliable in all material respects. The Town’s financial statements have been audited by Powers & Sullivan, LLC, a firm of licensed certified public accountants. The goal of the independent audit was to provide reasonable assurance that the financial statements of the Town for the fiscal year ended June 30, 2016, 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 of Cohasset’s financial statements for the fiscal year ended June 30, 2016 are fairly presented in conformity with GAAP. The independent auditors report is presented as the first component of the financial section of this report. The independent audit of the financial statements of the Town of Cohasset was part of a broader, federally mandated “Single Audit” designed to meet the special needs of federal grantor agencies. The standards governing Single Audit engagements require the independent auditor to report not only on the fair presentation of the financial statements, but also on the audited government’s internal controls and compliance with legal requirements, with special emphasis on internal controls and legal requirements involving the administration of federal awards. These reports are available in the Town of Cohasset’s separately issued Single Audit Report. GAAP requires that management provide a narrative introduction, overview, and analysis to accompany the basic financial statements in the form of Management’s Discussion and Analysis (MD&A). This letter of transmittal is designed to complement that analysis and should be read in conjunction with it. The Town of Cohasset’s MD&A can be found immediately following the report of the independent auditors. Profile of the Town The Town of Cohasset was incorporated in 1770, some 150 years after its first recorded mention in the logs of English explorer Captain John Smith, and its early development as part of the Town of Hingham. CHRISTOPHER G. SENIOR TOWN MANAGER EMAIL: csenior@cohassetma.org OFFICE: 781-383-4105 x109 FAX: 781-383-0228 OFFICE OF THE TOWN MANAGER COHASSET TOWN HALL 41 HIGHLAND AVENUE COHASSET, MA 02025 Town of Cohasset, Massachusetts 3 Comprehensive Annual Financial Report Located in Norfolk County (as a non-geographically contiguous member community, along with the Town of Brookline), Cohasset is a coastal community 20 miles south of Boston, and is bordered by Hull to the north, Hingham to the west, Scituate to the south, and Massachusetts Bay to the east. Cohasset’s 9.89 square miles were home to 7,542 residents according to the 2010 US Census, and 8,225 residents according to the 2016 census conducted by the Cohasset Town Clerk. While the Town remains home to an active fishing fleet, it is primarily a residential community. The main highways include State routes 3A and 228, with connecting access to Route 3, the primary north-south highway on the South Shore. The Massachusetts Bay Transportation Authority (MBTA) provides easy access to Boston through a commuter rail station in Cohasset, a subway station in Braintree, and commuter boat service in Hingham. Logan International Airport, which can be reached via all three MBTA mass transit options, is approximately 22 miles away by car. The Town operates under an Open Town Meeting form of government, which is vested with all legislative and budgetary approval authority. A five-member Board of Selectmen is responsible for general policy implementation, and appoints a Town Manager who directs all day-to-day governmental operations, other than schools, as Chief Administrative and Chief Financial Officer. A five-member School Committee oversees a K-12 school system, and appoints a full-time Superintendent. Elected Water and Sewer boards oversee the water and sewer enterprise funds, respectively. General governmental services provided within the Town’s boundaries include police and fire protection, collection and treatment of sewage, water distribution, public works (including roads, cemeteries, and tree and park maintenance), harbor management, recreation, health, veteran’s services, aging support services, and a public library. The water and sewer enterprise funds are self-supporting. The Town also maintains a solid waste recycling and transfer station. Local Economy Cohasset’s unemployment rate of 3.4% in June, 2016 was 21% lower than the statewide average (according to data from the Mass. Department of Labor and Workforce Development), a figure influenced by a highly-educated workforce (67.7% of residents have a Bachelor’s degree or higher according to MAPC data), and proximity to high tech, higher education, health care and financial sector employers in metropolitan Boston. The Town’s per capita income of more than $89,411 is more than twice the statewide average, according to the Mass. Department of Revenue. While many of the Town’s residents work in other communities, Cohasset is home to diverse mix of local businesses, including the South Shore Music Circus, the South Shore Arts Center, the headquarters of Pilgrim Bank, an active fishing fleet, and the Sunrise assisted living facility. The Cohasset Village district, which includes a mix of small businesses including restaurants, shops and realtors, has no retail vacancies. There are two new developments underway in the district, one mixed use, the other residential, which will add 13 housing units and 3 business condominiums between them. The community’s natural beauty and abundant opportunities for outdoor activities, including a fine harbor, two beaches, the Whitney Woods Reservation, and Wompatuck State Park, have not only attracted active residents drawn to hiking, running, biking, swimming and sailing, but have also begun influencing the local economy. Cohasset now plays host to more than a dozen charitable and for-profit road race events, among them the Cohasset Triathlon which attracts 1,200 racers and supporters to Town, the Road Race by the Sea, a pre-Boston Marathon 10K event run since 1975, and a Town-sponsored Thanksgiving Day 5K which draws some 750 annual racers. Town of Cohasset, Massachusetts 4 Comprehensive Annual Financial Report The commuter rail station is adjacent to the Town’s first transit-oriented development, Old Colony Square, which continues to operate fully leased. Anchored by a co-working location called Workspace which provides office and meeting space, as well as support services, to the burgeoning local population that work from home, the complex also includes a juice bar, a gourmet wine store, a restaurant, a clothing store, a health club, a tutoring center, and sixteen living units. Two luxury residential subdivisions are also nearing completion in Town: a 41-unit complex of single-family homes being built by Toll brothers; and a 27-unit complex known as Cook Estates. In addition an upscale self- storage building is being developed on Route 3A near the Avalon Apartment complex. The Town Assessor projects these three projects will provide steady increases in the Town’s property tax base over the next several years. Financial Planning and Management Policy and Program Development After many years of hard work, Cohasset received its first ever AAA rating from the Standard & Poor’s rating agency. The Town’s financial management team, with strong support from volunteer boards and commissions, have been building toward the AAA designation, focusing on crafting and adopting a series of financial policies, improving day-to-day management practices, and increasing transparency. The Town’s administrative team welcomed a Human Resources Director during the fiscal year, highlighting an increased emphasis on employee support and retention. The new HR Director has been working closely with departments, including Schools, to update job descriptions, craft and update policies, develop an employee evaluation program, establish training and development goals, and to be a resource for individual employees. OPEB/Employee Health Care Cohasset continues to actively address both long and short term health care expenses. The Town’s OPEB trust fund has been placed in an actively managed investment program under the direction of the Treasurer-Collector. This strategy is expected to generate increased growth for the fund. In FY 16 the Town contributed more than $500,000 to this fund, bring the total to $1.5 million. Cohasset’s staff wellness program, designed to build a healthier workforce (and reduce long term medical costs) received two awards and a grant during the fiscal year. The awards – one from Blue Cross/Blue Shield and the other from MIIA (a public sector health benefits trust) – recognized Cohasset for building a “culture of health and wellness.” The grant, from the Massachusetts Department of Health’s “Working on Wellness” program, has helped fund a number of programs, including making repurposed police bikes available to staff for travel and fitness, a series of healthy living programs focused on exercise, healthy eating, and stress reduction, and ongoing staff wide education. Over time, wellness programs have been shown to both increase employee productivity and decrease long term costs for chronic medical conditions. Technology Planning and Implementation Two full-time and one part-time staff joined the Town CIO. The new team spent the year hard at work implementing the School Department’s digital learning initiative, crafting a Town-wide fiber network, and improving day-to-day network operations. It is expected that the fiber network will become the foundation of a series of new tech projects designed to improve service delivery, including a VoIP phone system, e-permitting, and digital document management. Town of Cohasset, Massachusetts 5 Comprehensive Annual Financial Report Infrastructure Planning The Town is engaged in three major projects with the State: one to replace a more than 50-year-old bridge on Atlantic Avenue; another to repair a 150-year-old culvert and water control structure under Beechwood Street, which also regulates the Town’s reservoir system; and a third to raise a regularly flooded stretch of Jerusalem Road out of the floodplain. By actively seeking grants and other financial support, the Town will have only minimal costs for the bridge replacement, modest expenses for the road raising, and significant support for the culvert work from State and Federal sources. The conclusion of the MAPC’s facility assessment turns attention in FY 17 to a renovation plan for Town Hall, as well as study of a new public safety facility. The Town also acquired a new Senior Center from a local organization, adding significant public meeting and program space, and begun an assessment of the newly combined Library and Recreation complex. The new Senior Center, which includes space for the Town Public Health Nurse as well as a full commercial kitchen, has allowed for substantially increased programing for elderly residents and volunteer opportunities for many more. Awards and Acknowledgments The Government Finance Officers Association (GFOA) awarded a Certificate of Achievement for Excellence in Financial Reporting to the Town of Cohasset for its CAFR for the fiscal year ended June 30, 2015. This was the fourth time that the Town submitted a CAFR to the GFOA. The Town was awarded this Certificate in each year. In order to receive this prestigious award, a government had to publish an easily readable and efficiently organized CAFR that satisfied both generally accepted accounting principles and applicable legal requirements. A Certificate of Achievement is valid for a period of one year only. We believe that our current CAFR continues to meet the Certificate of Achievement Program’s requirements and we are submitting it to the GFOA to determine its eligibility for another certificate. The preparation of this report on a timely basis could not be accomplished without efficient and dedicated staff. I would like to express my appreciation to all members of the Town’s staff who assisted and contributed to the preparation of this report. I would particularly like to thank Director of Finance Mary Gallagher, Treasurer-Collector Paula Linhares, and the staff at Powers & Sullivan. I would also like to thank the Board of Selectmen and the Advisory Committee for their strong interest and support in planning and conducting the financial operations of the Town. Respectfully Submitted Christopher Senior Cohasset Town Manager Town of Cohasset, Massachusetts 6 Comprehensive Annual Financial Report This page intentionally left blank. Town of Cohasset, Massachusetts 7 Comprehensive Annual Financial Report GFOA Certificate of Achievement Town of Cohasset, Massachusetts 8 Comprehensive Annual Financial Report Organizational Chart Town of Cohasset, Massachusetts 9 Comprehensive Annual Financial Report Principal Town Officials Elected Officials Term Expires Board of Selectmen Kevin McCarthy, Chairman 2017 Paul Schubert, Vice Chairman 2018 Diane Kennedy, Clerk 2017 Steve Gaumer, Selectman 2019 Jack Keniley, Selectman 2019 Moderator Daniel Evans 2017 Town Clerk Carol L. St. Pierre 2017 Board of Assessors Mary E. Granville 2017 Debra J. Krupczak 2019 Melissa Browne 2018 School Committee Jeanne M. Astino 2019 Katherine C. Dugan 2018 Ellen M. Maher 2018 Amanda Zani 2017 Barbara Stefan 2019 Sewer Commission William B. McGowan, Jr. 2019 Wayne Sawchuk 2017 John Beck 2017 Water Commission Rolf N. Gjesteby 2017 Leonora C. Jenkins 2018 John W. Steinmetz 2019 Appointed Officials Town Manager Christopher G. Senior 2020 Director of Finance/Town Accountant Mary J. Gallagher 2018 Treasurer/Collector Paula M. Linhares Director of Assessing Mary Quill Superintendent of Schools Barbara Cataldo 7/1/2016 Interim Superintendent of Schools Louise Demas Interim School Business Manager John Tuffy Police Chief William Quigley Fire Chief Robert Silvia Director of Public Works Brian Joyce Town of Cohasset, Massachusetts 10 Comprehensive Annual Financial Report This page intentionally left blank. Financial Section South Shore Arts Festival Photo: Courtesy of South Shore Art Center Town of Cohasset, Massachusetts 11 Comprehensive Annual Financial Report Financial Section Financial Section Town of Cohasset, Massachusetts 12 Comprehensive Annual Financial Report This page intentionally left blank. Town of Cohasset, Massachusetts 13 Comprehensive Annual Financial Report Independent Auditor’s Report To the Honorable Board of Selectmen Town of Cohasset, 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 Cohasset, Massachusetts as of and for the year ended June 30, 2016, and the related notes to the financial statements, 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 from material misstatement. An audit involves 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 our audit opinions. Opinions In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the Town of Cohasset, Massachusetts, as of June 30, 2016, 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. Town of Cohasset, Massachusetts 14 Comprehensive Annual Financial Report Other Matters Required Supplementary Information Accounting principles generally accepted in the United States of America require that the management’s discussion and analysis and required supplementary information, as listed in the table of contents, be presented to supplement the basic financial statements. Such information, although not a part of the basic 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 of Cohasset, Massachusetts’ basic financial statements. The introductory section, combining and individual fund 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 fund 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 with auditing standards generally accepted in the United States of America. In our opinion, the combining and individual fund 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 our report dated December 19, 2016, on our consideration of the Town of Cohasset, Massachusetts’ internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and 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 in considering the Town of Cohasset, Massachusetts’ internal control over financial reporting and compliance. December 19, 2016 Town of Cohasset, Massachusetts 15 Comprehensive Annual Financial Report Management’s Discussion and Analysis Town of Cohasset, Massachusetts 16 Comprehensive Annual Financial Report This page intentionally left blank. Town of Cohasset, Massachusetts 17 Comprehensive Annual Financial Report Management’s Discussion and Analysis As management of the Town of Cohasset, Massachusetts, we offer readers of these financial statements this narrative overview and analysis of the financial activities of the Town of Cohasset for the year ended June 30, 2016. We encourage readers to consider the information presented in this report in conjunction with additional information that we have furnished in our letter of transmittal. The Governmental Accounting Standards Board (GASB) is the authoritative standard setting body that provides guidance on how to prepare financial statements in conformity with generally accepted accounting principles (GAAP). Users of these financial statements (such as investors and rating agencies) rely on the GASB to establish consistent reporting standards for all governments in the United States. This consistent application is the only way users (including citizens, the media, legislators and others) can assess the financial condition of one government compared to others. Governments must adhere to GASB pronouncements in order to issue their financial statements in conformity with GAAP. The users of financial statements also rely on the independent auditor’s opinion. If the Town’s financial statements have significant departures from GAAP the independent auditors may issue a qualified opinion or a disclaimer (where no opinion is given). These types of opinions may have an adverse effect on the Town’s bond rating and our ability to borrow money at favorable interest rates. The Town has enjoyed an unmodified opinion on its financial statements for many years. Overview of the Financial Statements This discussion and analysis is intended to serve as an introduction to the Town of Cohasset’s basic financial statements. The Town’s basic financial statements comprise three components: 1) government-wide financial statements 2) fund financial statements, and 3) notes to the financial statements. This report also contains other supplementary information in addition to the basic financial statements. 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 private-sector businesses. The statement of net position presents information on all of the Town’s assets, deferred outflows, liabilities and deferred inflows, with the difference 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 Town’s net position changed during the most recent year. All changes in net position are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing or the related cash flows. Thus, revenues and expenses are reported in this statement for some items that will only result in cash flows in future periods (e.g., uncollected taxes and earned but unused vacation leave). Both of the government-wide financial statements distinguish functions that are principally supported by taxes and intergovernmental revenues (governmental activities) from other functions that are intended to recover all or a significant portion of their costs through user fees and charges (business-type activities). The governmental activities include administrative services, public safety, education, public works, health and welfare, culture and recreation, community preservation, and interest. The business-type activities include the activities of the sewer and water enterprise funds. Town of Cohasset, Massachusetts 18 Comprehensive Annual Financial Report 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 legal requirements. All of the funds of the Town can be divided into three categories: governmental funds, proprietary funds, and fiduciary funds. Governmental funds. Governmental funds are used to account for essentially the same functions reported as governmental activities in the government-wide financial statements. However, unlike the government-wide financial statements, governmental fund 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 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 government-wide financial statements, it is useful to compare the information presented for governmental funds with similar information presented for governmental activities in the government-wide financial statements. By doing so, readers may better understand the long-term impact of the government’s near-term financing decisions. Both the governmental fund balance sheet and the governmental fund statement of revenues, expenditures, and changes in fund balances provide a reconciliation to facilitate this comparison between governmental funds and governmental activities. The Town adopts an annual appropriated budget for its general fund. A budgetary comparison schedule has been provided for the general fund to demonstrate compliance with this budget. Proprietary funds. The Town maintains one type of proprietary fund. Enterprise funds are used to report the same functions as business-type activities in the government-wide financial statements. The Town uses enterprise funds to account for its sewer and water activities. Proprietary funds provide the same type of information as the government-wide financial statements, only in more detail. The proprietary fund financial statements provide separate information for sewer and water activities, all of which are considered major funds of the Town. 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 statements because the resources of those funds are not available to support the Town’s own programs. The accounting used for fiduciary funds is much like that used for proprietary funds. Notes to financial statements. The notes provide additional information that is essential to a full understanding of the data provided in the government-wide and fund financial statements. Government-wide Financial Analysis Governmental Activities As noted earlier, net position may serve over time as a useful indicator of a government’s financial position. For governmental activities, assets and deferred outflows of resources exceeded liabilities and deferred inflows of resources by $41.2 million at the close of year 2016. The overall financial condition of the Town’s governmental activities remained stable during year 2016. Town of Cohasset, Massachusetts 19 Comprehensive Annual Financial Report Governmental net position of $48.8 million (119%), reflects its investment in capital assets (e.g., land, buildings, machinery, and equipment), less any related debt used to acquire those assets that are still outstanding. The Town uses these capital assets to provide services to citizens; consequently, these assets are not available for future spending. Although the investment in its capital assets is reported net of its related debt, it should be noted that the resources needed to repay this debt must be provided from other sources, since the capital assets themselves cannot be used to liquidate these liabilities. An additional portion of the net position, $7.5 million (18%), represents resources that are subject to external restrictions on how they may be used. The remaining balance of unrestricted net position has a year-end deficit balance of $15.1 million. This deficit balance is primarily due to the recognition of the $19.8 million net pension liability, as well as the $11 million other postemployment benefits liability. The governmental net position increased by $965,000 during the current year due to several offsetting factors. Net position increased due to $923,000 of positive budgetary results in the general fund, as well as principal payments on long-term debt exceeding depreciation expense by $915,000. Net position decreased as a result of an $810,000 increase in the Town’s OPEB liability. The Town currently funds the other postemployment benefits on a pay-as-you-go basis which is lower than the annual required contribution. The governmental expenses totaled $49.5 million of which $12.5 million (25%) was directly supported by program revenues. General revenues and transfers totaled $38 million, primarily coming from property taxes, motor vehicle excise and non-restricted state aid. Condensed financial data for years 2016 and 2015 is presented below. 2016 2015 Assets: Current assets………………………………………………$ 21,029,355 $ 20,233,321 Noncurrent assets (excluding capital)…………………… 4,050,631 5,266,132 Capital assets, not being depreciated…………………… 7,627,196 7,513,471 Capital assets, net of accumulated depreciation……… 56,587,242 56,441,389 Total assets……………………………………………89,294,424 89,454,313 Deferred Outflows of Resources…………………………4,759,475 1,293,240 Liabilities: Current liabilities (excluding debt)……………………… 1,021,305 1,666,016 Noncurrent liabilities (excluding debt)…………………… 31,092,377 27,399,236 Current debt………………………………………………… 3,470,639 3,588,998 Noncurrent debt…………………………………………… 15,617,168 17,871,306 Total liabilities…………………………………………51,201,489 50,525,556 Deferred Inflows of Resources……………………………1,665,476 - Net Position: Net investment in capital assets………………………… 48,845,082 46,801,586 Restricted…………………………………………………… 7,488,345 6,995,791 Unrestricted………………………………………………… (15,146,493) (13,575,380) Total net position……………………………………$41,186,934 $40,221,997 Town of Cohasset, Massachusetts 20 Comprehensive Annual Financial Report 2016 2015 Program revenues: Charges for services………………………………………$ 3,331,816 $ 3,208,756 Operating grants and contributions……………………… 8,817,175 7,583,649 Capital grants and contributions………………………… 328,686 695,888 General revenues: Real estate, personal property taxes, and tax liens…… 34,635,305 33,093,668 Motor vehicle and other excise taxes…………………… 1,556,866 1,539,272 Community preservation taxes…………………………… 454,855 436,967 Penalties and interest on taxes…………………………… 280,132 166,014 Nonrestricted grants and contributions………………… 490,188 457,801 Unrestricted investment income………………………… 392,935 147,933 Total revenues…………………………………………50,287,958 47,329,948 Expenses: Administrative services…………………………………… 4,487,473 3,997,974 Public safety………………………………………………… 7,738,244 6,991,258 Education…………………………………………………… 29,217,508 27,464,152 Public works………………………………………………… 4,251,519 4,136,781 Health and welfare………………………………………… 863,580 735,795 Culture and recreation…………………………………… 2,062,098 1,673,178 Community preservation………………………………… 259,568 271,225 Interest……………………………………………………… 643,741 810,989 Total expenses………………………………………… 49,523,731 46,081,352 Excess (Deficiency) before transfers…………………… 764,227 1,248,596 Transfers………………………………………………………200,710 154,808 Change in net position……………………………………… 964,937 1,403,404 Net position, beginning of year…………………………… 40,221,997 38,818,593 Net position, end of year……………………………………$41,186,934 $40,221,997 Business-type Activities The Town’s business-type activities include water and sewer services. They are self-supporting and each fund maintained their financial condition in year 2016. Business-type sewer net position of $17.7 million (62%) represents the net investment in capital assets, while $11 million (38%) is unrestricted. Net position decreased by $627,000 which is primarily due to the planned use of reserves. Business-type water net position of $9 million (80%) represents the net investment in capital assets, while $2.3 million (20%) is unrestricted. Net position increased by $1.7 million which was primarily due to debt principal payments on long-term debt exceeding depreciation expense. At the end of the current year all business-type activities were able to report positive balances in all categories of net position. The same situation held true for the prior year. Town of Cohasset, Massachusetts 21 Comprehensive Annual Financial Report Condensed financial data for years 2016 and 2015 is presented below. 2016 2015 Assets: Current assets……………………………………………$ 6,669,537 $ 5,850,233 Noncurrent assets (excluding capital)………………… 7,628,985 8,266,715 Capital assets, not being depreciated………………… 1,308,558 1,308,558 Capital assets, net of accumulated depreciation…… 63,274,184 65,056,508 Total assets…………………………………………78,881,264 80,482,014 Deferred outflows of resources…………………………29,705 4,856 Liabilities: Current liabilities (excluding debt)……………………… 397,495 686,986 Noncurrent liabilities (excluding debt)………………… 136,703 117,584 Current debt……………………………………………… 2,832,217 2,997,595 Noncurrent debt………………………………………… 35,553,820 37,782,537 Total liabilities………………………………………38,920,235 41,584,702 Deferred inflows of resources……………………………11,521 - Net Position: Net investment in capital assets……………………… 26,675,077 25,773,697 Unrestricted……………………………………………… 13,304,136 13,128,471 Total net position……………………………………$39,979,213 $38,902,168 Program revenues: Charges for services - Sewer………………………… $ 1,819,131 $ 1,807,723 Charges for services - Water…………………………… 5,385,579 5,143,208 General Revenues: Unrestricted investment income……………………… 123,786 36,228 Total revenues………………………………………7,328,496 6,987,159 Expenses: Sewer………………………………………………..…… 2,466,017 2,315,178 Water………………………………………………..…… 3,584,724 3,447,642 Total expenses……………………………………… 6,050,741 5,762,820 Excess (Deficiency) before transfers…………………… 1,277,755 1,224,339 Transfers……………………………………………………(200,710) (154,808) Change in net position…………………………………… 1,077,045 1,069,531 Net position, beginning of year………………………… 38,902,168 37,832,637 Net position, end of year…………………………………$39,979,213 $38,902,168 Town of Cohasset, Massachusetts 22 Comprehensive Annual Financial Report 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 governmental funds is to provide information on near-term inflows, outflows and balances of spendable resources. Such information is useful in assessing 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 year. The General Fund is the chief operating fund. At the end of the current year, unassigned fund balance of the General Fund was $6.0 million, assigned fund balance was $275,000, committed fund balance was $381,000 and total fund balance was $6.7 million. Unassigned fund balance represents 13% of total general fund expenditures, while total fund balance represents 15% of that same amount. The General Fund’s fund balance increased by $673,000 primarily due to positive operating results. Massachusetts General Law Ch.40 §5B allows for the establishment of Stabilization funds for one or more different purposes. The creation of a fund requires a two-thirds vote of the legislative body and must clearly define the purpose of the fund. Any changes to the purpose of the fund along with any additions to or appropriations from the fund required a two-thirds vote of the legislative body. At year end the balance of the General Stabilization fund is $2,867,582, the Facilities Stabilization fund is $2,453, and the Capital Stabilization fund is $498,855. All stabilization balances have been reported as unassigned fund balance within the General Fund. General Fund Budgetary Highlights The Town has adopted a budget for the General Fund. Actual revenues exceeded budget amounts by $1.5 million. Unexpended appropriations totaled $1.2 million of which $662,000 was carried forward to year 2017. During 2016, $100,000 of supplemental appropriations were approved primarily for snow and ice costs. Capital Asset and Debt Administration In conjunction with the operating budget, the Town annually prepares a capital budget for the upcoming year. Governmental capital assets, net of accumulated depreciation, at year end amounted to $64.2 million which represented a net increase of $260,000 from the prior year. Major additions included the purchase of police vehicles, street paving, as well as building improvements and the purchase of the Senior Center. Enterprise capital assets, net of accumulated depreciation, were valued at $64.6 million at year end. There were no current year additions for both, water and sewer enterprise funds during the year. Depreciation of $1.8 million was recorded in 2016. In order to take advantage of favorable interest rates the Town issued $1,042,000 of General Obligation Refunding Bonds during 2016. $1 million of general obligation bonds were defeased as an advance refunding by placing the proceeds of the refunding bonds in an irrevocable trust to provide for all future debt service payments on the refunded bonds. Accordingly, the trust account’s assets and liabilities for the defeased bonds are not included in the basic financial statements. The Town has decreased its aggregate debt service payments by $86,532 and will experience an economic gain of $77,294. At June 30, 2016, $1 million of general obligation bonds outstanding are considered defeased. Town of Cohasset, Massachusetts 23 Comprehensive Annual Financial Report Outstanding long-term debt of governmental activities, as of June 30, 2016 totaled $19.1 million. In addition to the issuance of refunding bonds, $1.2 million of general obligation bonds were issued to finance the purchase of the senior center, an ambulance for the fire department, and a department of public works dump truck. The Water Enterprise fund had $26.3 million of long-term debt outstanding at year-end, a decrease of $2.1 million from the prior year. This decrease was due to the issuance of $655,000 of refunding bonds, offset by principal payments on long term debt of $2.8 million. The Sewer Enterprise fund had $12.1 million of long-term debt outstanding at year-end. In addition to the issuance of refunding bonds, $570,000 of general obligation bonds were issued to finance sewer inflow and infiltration project as well as a sewer extension. Please refer to footnotes 4, 6, and 7 for further discussion of the major capital asset and debt activity. Requests for Information This financial report is designed to provide a general overview of the Town of Cohasset’s finances for all those with an interest in the government’s finances. Questions concerning any of the information provided in this report or requests for additional financial information should be addressed to the Office of the Finance Director, Town Hall, 41 Highland Avenue, Cohasset, Massachusetts 02025. Town of Cohasset, Massachusetts 24 Comprehensive Annual Financial Report This page intentionally left blank. Town of Cohasset, Massachusetts 25 Comprehensive Annual Financial Report Basic Financial Statements Town of Cohasset, Massachusetts 26 Comprehensive Annual Financial Report This page intentionally left blank. STATEMENT OF NET POSITION JUNE 30, 2016 Primary Government Governmental Business-type Activities Activities Total ASSETS CURRENT: Cash and cash equivalents…………………………………………………$ 12,303,328 $ 2,670,516 $ 14,973,844 Investments…………………………………………………………………… 5,989,810 1,301,399 7,291,209 Receivables, net of allowance for uncollectibles: Real estate, personal property and tax deferrals……………………… 340,538 - 340,538 Tax liens……………………………………...…………………………… 947,180 - 947,180 Motor vehicle and other excise taxes………………………………… 83,463 - 83,463 User charges……………………………………………………………… - 2,058,309 2,058,309 Departmental and other………………………………………………… 114,590 - 114,590 Special assessments…………………………………………………… 384,936 639,313 1,024,249 Intergovernmental………………………………………………………… 865,510 - 865,510 Total Current Assets……………………………………………………… 21,029,355 6,669,537 27,698,892 NONCURRENT: Receivables, net of allowance for uncollectibles: Special assessments…………………………………………………… 1,863,635 7,628,985 9,492,620 Intergovernmental………………………………………………………… 2,186,996 - 2,186,996 Capital assets, non depreciable…………………………….……………… 7,627,196 1,308,558 8,935,754 Capital assets, net of accumulated depreciation………………………… 56,587,242 63,274,184 119,861,426 Total Noncurrent Assets………………………………………………… 68,265,069 72,211,727 140,476,796 TOTAL ASSETS………………………………………………………………… 89,294,424 78,881,264 168,175,688 DEFERRED OUTFLOWS OF RESOURCES Deferred charges on refunding……………………………………………… 465,264 - 465,264 Deferred outflows of resources related to pensions……………………… 4,294,211 29,705 4,323,916 TOTAL DEFERRED OUTFLOWS OF RESOURCES……………………… 4,759,475 29,705 4,789,180 LIABILITIES CURRENT: Warrants payable…………………………………………………………… 602,203 89,122 691,325 Accrued payroll……………………………………………………………… 163,802 - 163,802 Accrued interest……………………………………………………………… 183,087 308,373 491,460 Other liabilities………………………………………………………………… 14,114 - 14,114 Landfill closure……………………………………………………………… 24,500 - 24,500 Capital lease obligations…………………………………………………… 33,599 - 33,599 Bonds payable………………………………………………………………… 3,470,639 2,832,217 6,302,856 Total Current Liabilities…………………………………………………… 4,491,944 3,229,712 7,721,656 NONCURRENT: Landfill closure……………………………………………………………… 188,226 - 188,226 Capital lease obligations…………………………………………………… 148,204 - 148,204 Other postemployment benefits…………………………………………… 10,994,000 - 10,994,000 Net pension liability…………………………………………………………… 19,761,947 136,703 19,898,650 Bonds payable………………………………………………………………… 15,617,168 35,553,820 51,170,988 Total Noncurrent Liabilities………………………………………………… 46,709,545 35,690,523 82,400,068 TOTAL LIABILITIES……………………………………………………………… 51,201,489 38,920,235 90,121,724 DEFERRED INFLOWS OF RESOURCES Deferred inflows of resources related to pensions……………………… 1,665,476 11,521 1,676,997 NET POSITION Net investment in capital assets……………………………………………… 48,845,082 26,675,077 75,520,159 Restricted for: Debt service……………………………………………………...…………… 487,153 - 487,153 Permanent funds: Nonexpendable…………………………………………………………… 425,885 - 425,885 Expendable……….……………………………………………………… 1,949,266 - 1,949,266 Grants and gifts……………………………………………………………… 2,359,239 - 2,359,239 Community preservation…………………………………………………… 2,266,802 - 2,266,802 Unrestricted……………………………………………………………………… (15,146,493) 13,304,136 (1,842,357) TOTAL NET POSITION…………………………………………………………$ 41,186,934 $ 39,979,213 $ 81,166,147 See notes to basic financial statements. Town of Cohasset, Massachusetts 27 Comprehensive Annual Financial Report STATEMENT OF ACTIVITIES YEAR ENDED JUNE 30, 2016 Operating Capital Charges for Grants and Grants and Net (Expense) Functions/Programs Expenses Services Contributions Contributions Revenue Primary Government: Governmental Activities: Administrative services………………………$ 4,487,473 $ 572,046 $ 268,299 $ - $ (3,647,128) Public safety…………………………………… 7,738,244 1,293,966 26,238 - (6,418,040) Education……………………………………… 29,217,508 1,143,391 7,054,334 - (21,019,783) Public works…………………………………… 4,251,519 276,478 227,215 199,901 (3,547,925) Health and welfare…………………………… 863,580 25,905 173,236 - (664,439) Culture and recreation……………………… 2,062,098 20,030 820,283 - (1,221,785) Community preservation…………………… 259,568 - - 128,785 (130,783) Interest………………………………………… 643,741 - 247,570 - (396,171) Total Governmental Activities……………… 49,523,731 3,331,816 8,817,175 328,686 (37,046,054) Business-Type Activities: Sewer…………………………………………… 2,466,017 1,819,131 - - (646,886) Water…………………………………………… 3,584,724 5,385,579 - - 1,800,855 Total Business-Type Activities…………… 6,050,741 7,204,710 - - 1,153,969 Total Primary Government…………………$ 55,574,472 $ 10,536,526 $ 8,817,175 $ 328,686 $(35,892,085) See notes to basic financial statements.(Continued) Program Revenues Town of Cohasset, Massachusetts 28 Comprehensive Annual Financial Report STATEMENT OF ACTIVITIES YEAR ENDED JUNE 30, 2016 Governmental Business-Type Activities Activities Total Changes in net position: Net (expense) revenue from previous page………………………$(37,046,054) $1,153,969 $(35,892,085) General revenues: Real estate and personal property taxes, net of tax refunds……………………………………………… 34,635,305 - 34,635,305 Motor vehicle and other excise taxes………………………… 1,556,866 - 1,556,866 Community preservation tax………...………………………… 454,855 - 454,855 Penalties and interest on taxes………………………………… 280,132 - 280,132 specific programs……………………………………………… 490,188 - 490,188 Unrestricted investment income………………………………… 392,935 123,786 516,721 Transfers, net ………………………………………………………… 200,710 (200,710) - Total general revenues and transfers……………………………… 38,010,991 (76,924) 37,934,067 Change in net position………………………………………… 964,937 1,077,045 2,041,982 Net Position: Beginning of year, as revised………………..…………………… 40,221,997 38,902,168 79,124,165 End of year…………………………………………………………$ 41,186,934 $ 39,979,213 $ 81,166,147 See notes to basic financial statements.(Concluded) Primary Government Town of Cohasset, Massachusetts 29 Comprehensive Annual Financial Report GOVERNMENTAL FUNDS BALANCE SHEET JUNE 30, 2016 Nonmajor Total Governmental Governmental General Funds Funds ASSETS Cash and cash equivalents………………………………… $ 4,119,578 $ 8,183,750 $ 12,303,328 Investments…………………………………………………… 3,197,902 2,791,908 5,989,810 Receivables, net of uncollectibles: Real estate, personal property and tax deferrals ……… 340,538 - 340,538 Tax liens…………………………………….……………… 940,974 6,206 947,180 Motor vehicle and other excise taxes…………………… 83,463 - 83,463 Departmental and other…………………………………… 111,586 3,004 114,590 Special assessments……………………………………… 1,447,622 800,949 2,248,571 Intergovernmental………………………………………… 2,779,886 272,620 3,052,506 TOTAL ASSETS………………………………………………$ 13,021,549 $ 12,058,437 $ 25,079,986 LIABILITIES Warrants payable………………………………………… $ 444,031 $ 158,172 $ 602,203 Accrued payroll…………………………………………… 136,044 27,758 163,802 Other liabilities……………………………………………… 14,114 - 14,114 TOTAL LIABILITIES………………………………………… 594,189 185,930 780,119 DEFERRED INFLOWS OF RESOURCES Unavailable revenues……………………………………… 5,735,532 1,071,830 6,807,362 FUND BALANCES Nonspendable……………………………………………… - 425,885 425,885 Restricted…………………………………………………… - 10,374,792 10,374,792 Committed………………………………………………… 381,282 - 381,282 Assigned…………………………………………………… 274,535 - 274,535 Unassigned………………………………………………… 6,036,011 - 6,036,011 TOTAL FUND BALANCES…………………………………… 6,691,828 10,800,677 17,492,505 TOTAL LIABILITIES, DEFERRED INFLOWS OF RESOURCES AND FUND BALANCES……………$ 13,021,549 $ 12,058,437 $ 25,079,986 See notes to basic financial statements. Town of Cohasset, Massachusetts 30 Comprehensive Annual Financial Report RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET TOTAL FUND BALANCES TO THE STATEMENT OF NET POSITION JUNE 30, 2016 Total governmental fund balances……………………………………………………………………… $ 17,492,505 Capital assets (net) used in governmental activities are not financial resources and, therefore, are not reported in the funds…………………………………………………… 64,214,438 Certain changes in the net pension liability are required to be included in pension expense over future periods. These changes are reported as deferred outflows of resources or (deferred inflows of resources) related to pensions…………………………… 2,628,735 Accounts receivable are not available to pay for current-period expenditures and, therefore, are unearned in the funds……………………………………… 6,807,362 In the statement of activities, interest is accrued on outstanding long-term debt, whereas in governmental funds interest is not reported until due…………………………… (183,087) Long-term liabilities are not due and payable in the current period and, therefore, are not reported in the governmental funds Bonds payable……………………………………..…………………………………………… (18,611,214) Unamortized premium on bonds payable……………………………………………………… (476,593) Unamortized deferred loss on refunding……………………………………………………… 465,264 Capital lease financing…………………………………………………………………………… (181,803) Landfill closure…………………………………………………………………………………… (212,726) Other postemployment benefits………………………………………………………………… (10,994,000) Net pension liability……………………………………………………………………………… (19,761,947) Net effect of reporting long-term liabilities……………………………………………… (49,773,019) Net position of governmental activities………………………………………………………………… $ 41,186,934 See notes to basic financial statements. Town of Cohasset, Massachusetts 31 Comprehensive Annual Financial Report GOVERNMENTAL FUNDS STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES YEAR ENDED JUNE 30, 2016 Nonmajor Total Governmental Governmental General Funds Funds REVENUES: Real estate and personal property taxes, net of tax refunds………………………………………………$ 34,705,407 $ - $ 34,705,407 Motor vehicle and other excise taxes…………………………… 1,545,914 - 1,545,914 Fees and rentals…………………………………………………… 959,411 - 959,411 Penalties and interest on taxes…………………………………… 278,552 1,580 280,132 Fines and forfeitures……………………………………………… 35,719 - 35,719 Licenses and permits……………………………………………… 852,840 - 852,840 Charges for services……………………………………………… - 1,135,036 1,135,036 Intergovernmental………………………………………………… 6,902,979 2,112,382 9,015,361 Departmental and other…………………………………………… 259,393 481,504 740,897 Community preservation taxes…………………………………… - 457,336 457,336 Contributions……………………………………………………… - 1,106,298 1,106,298 Special assessments……………………………………………… 400,430 99,878 500,308 Investment income………………………………………………… 264,636 128,299 392,935 TOTAL REVENUES………………………………………… 46,205,281 5,522,313 51,727,594 EXPENDITURES: Current: Administrative services………………………………………… 2,728,265 831,987 3,560,252 Public safety…………………………………………………… 4,809,527 318,335 5,127,862 Education………………………………………………………… 17,491,634 2,880,664 20,372,298 Public works…………………………………………………… 2,775,990 1,126,875 3,902,865 Health and welfare……………………………………………… 516,629 1,117,982 1,634,611 Culture and recreation………………………………………… 714,276 874,580 1,588,856 Pension benefits………………………………………………… 4,859,456 - 4,859,456 Employee benefits……………………………………………… 5,792,801 - 5,792,801 Community preservation……………………………………… - 259,568 259,568 State and county charges………………………………………… 418,365 - 418,365 Debt service: Principal………………………………………………………… 3,223,085 - 3,223,085 Interest…………………………………………………………… 705,104 - 705,104 TOTAL EXPENDITURES………………………………… 44,035,132 7,409,991 51,445,123 EXCESS (DEFICIENCY) OF REVENUES OVER (UNDER) EXPENDITURES……………………………… 2,170,149 (1,887,678) 282,471 OTHER FINANCING SOURCES (USES): Issuance of long-term debt……………………………………… - 1,208,000 1,208,000 Issuance of refunding bonds……………………………………… 193,500 - 193,500 Premium from issuance of bonds………………………………… 52,401 - 52,401 Payments to refunded bond escrow agent……………………… (203,216) - (203,216) Capital lease financing…………………………………………… - 181,803 181,803 Transfers in………………………………………………………… 371,719 1,968,624 2,340,343 Transfers out……………………………………………………… (1,911,475) (228,158) (2,139,633) TOTAL OTHER FINANCING SOURCES (USES)……… (1,497,071) 3,130,269 1,633,198 NET CHANGE IN FUND BALANCES……………………………… 673,078 1,242,591 1,915,669 FUND BALANCES AT BEGINNING OF YEAR…………………… 6,018,750 9,558,086 15,576,836 FUND BALANCES AT END OF YEAR………………………………$ 6,691,828 $ 10,800,677 $ 17,492,505 See notes to basic financial statements. Town of Cohasset, Massachusetts 32 Comprehensive Annual Financial Report RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS TO THE STATEMENT OF ACTIVITIES YEAR ENDED JUNE 30, 2016 Net change in fund balances - total governmental funds…………………………………………………… $ 1,915,669 Governmental funds report capital outlays as expenditures. However, in the Statement of Activities the cost of those assets is allocated over their estimated useful lives and reported as depreciation expense. Capital outlay………………………………………………………………………………………… 2,881,515 Depreciation expense………………………………………………………………………………… (2,621,937) Net effect of reporting capital assets………………………………………………………… 259,578 Revenues in the Statement of Activities that do not provide current financial resources are fully unearned in the Statement of Revenues, Expenditures and Changes in Fund Balances. Therefore, the recognition of revenue for various types of accounts receivable (i.e., real estate and personal property, motor vehicle excise, etc.) differ between the two statements. This amount represents the net change in unearned revenue…………………………………………………………………… (1,439,636) The issuance of long-term debt (e.g., bonds and leases) provides current financial resources to governmental funds, while the repayment of the principal of long- term debt consumes the financial resources of governmental funds. Neither transaction, however, has any effect on net position. Also, governmental funds report the effect of premiums, discounts, and similar items when debt is first issued, whereas these amounts are deferred and amortized in the Statement of Activities. Capital lease financing……………………………………………………………………………… (181,803) Issuance of long-term debt…………………………………………………………………………… (1,208,000) Debt service principal payments…………………………………………………………………… 3,223,085 Amortization of bond premiums……………………………………………………………………… 129,113 Amortization of deferred charge on refunding……………………………………………………… (134,545) Net effect of reporting long-term debt……………………………………………………… 1,827,850 Some expenses reported in the Statement of Activities do not require the use of current financial resources and, therefore, are not reported as expenditures in the governmental funds. Net change in accrued interest on long-term debt………………………………………………… 24,110 Net change in landfill closure accrual……………………………………………………………… 24,500 Net change in other postemployment benefits accrual…………………………………………… (810,000) Net change in deferred outflow/(inflow) of resources related to pensions……………………… 1,926,803 Net change in net pension liability…………………………………………………………………… (2,763,937) Net effect of recording long-term liabilities………………………………………………… (1,598,524) Change in net position of governmental activities…………………………………………………………… $ 964,937 See notes to basic financial statements. Town of Cohasset, Massachusetts 33 Comprehensive Annual Financial Report PROPRIETARY FUNDS STATEMENT OF NET POSITION JUNE 30, 2016 Business-type Activities - Enterprise Funds Sewer Water Total ASSETS CURRENT: Cash and cash equivalents…………………………………… $ 1,552,700 $ 1,117,816 $ 2,670,516 Investments……………………………………………………… 1,296,549 4,850 1,301,399 Receivables, net of allowance for uncollectibles: User charges………………………………………………… 569,936 1,488,373 2,058,309 Special assessments………………………………………… 639,313 - 639,313 Total current assets……………………………………… 4,058,498 2,611,039 6,669,537 NONCURRENT: Receivables, net of allowance for uncollectibles: Special assessments………………………………………… 7,628,985 - 7,628,985 Capital assets, nondepreciable………………………………… 1,009 1,307,549 1,308,558 Capital assets, net of accumulated depreciation…………… 29,352,949 33,921,235 63,274,184 Total noncurrent assets………………………………… 36,982,943 35,228,784 72,211,727 TOTAL ASSETS…………………………………………………… 41,041,441 37,839,823 78,881,264 DEFERRED OUTFLOWS OF RESOURCES Deferred outflows of resources related to pensions………… 29,705 - 29,705 LIABILITIES CURRENT: Warrants payable………………………………………………… 31,879 57,243 89,122 Accrued interest………………………………………………… 106,769 201,604 308,373 Bonds payable…………………………………………………… 734,463 2,097,754 2,832,217 Total current liabilities…………………………………… 873,111 2,356,601 3,229,712 NONCURRENT: Net pension liability……………………………………………… 136,703 - 136,703 Bonds payable…………………………………………………… 11,357,691 24,196,129 35,553,820 TOTAL LIABILITIES………………………………………………… 12,367,505 26,552,730 38,920,235 DEFERRED INFLOWS OF RESOURCES……………………… 11,521 - 11,521 NET POSITION Net investment in capital assets…………………………………… 17,655,691 9,019,386 26,675,077 Unrestricted………………………………………………………… 11,036,429 2,267,707 13,304,136 TOTAL NET POSITION……………………………………………$ 28,692,120 $ 11,287,093 $ 39,979,213 See notes to basic financial statements. Town of Cohasset, Massachusetts 34 Comprehensive Annual Financial Report PROPRIETARY FUNDS STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET POSITION YEAR ENDED JUNE 30, 2016 Business-type Activities - Enterprise Funds Sewer Water Total OPERATING REVENUES: Charges for services ………………………………………… $ 1,602,683 $ 5,385,579 $ 6,988,262 OPERATING EXPENSES: Cost of service and administration…………………………… 1,435,056 1,702,277 3,137,333 Depreciation…………………………………………………… 770,884 1,011,440 1,782,324 TOTAL OPERATING EXPENSES ……………………… 2,205,940 2,713,717 4,919,657 OPERATING INCOME (LOSS)…………………………… (603,257) 2,671,862 2,068,605 NONOPERATING REVENUES (EXPENSES): Investment income…………………………………………… 121,517 2,269 123,786 Interest expense……………………………………………… (260,077) (871,007) (1,131,084) Penalties and interest…………………………………….…… 216,448 - 216,448 TOTAL NONOPERATING REVENUES (EXPENSES), NET………………………… 77,888 (868,738) (790,850) INCOME (LOSS) BEFORE CONTRIBUTIONS AND TRANSFERS………………………………………… (525,369) 1,803,124 1,277,755 TRANSFERS: Transfers out…………………………………………………… (102,160) (98,550) (200,710) CHANGE IN NET POSITION……………………………… (627,529) 1,704,574 1,077,045 NET POSITION AT BEGINNING OF YEAR…………………… 29,319,649 9,582,519 38,902,168 NET POSITION AT END OF YEAR…………………………… $ 28,692,120 $ 11,287,093 $ 39,979,213 See notes to basic financial statements. Town of Cohasset, Massachusetts 35 Comprehensive Annual Financial Report Sewer Water Fund Fund Total CASH FLOWS FROM OPERATING ACTIVITIES: Receipts from customers and users……………………………………………$ 1,772,010 $ 5,322,545 $ 7,094,555 Payments to vendors……………………………………………………………… (1,678,171) (1,684,971) (3,363,142) Payments to employees………………………………………………………… (30,731) - (30,731) NET CASH FROM OPERATING ACTIVITIES…………………………………… 63,108 3,637,574 3,700,682 CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES: Transfers out……………………………………………………………………… (102,160) (98,550) (200,710) CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES: Proceeds from the issuance of bonds and notes……………………………… 570,000 - 570,000 Proceeds from the issuance of refunding bonds……………………………… 193,500 655,000 848,500 Special assessments……………………………………………………………… 679,443 - 679,443 Principal payments on bonds and notes……………………………………… (856,138) (2,141,457) (2,997,595) Principal payments on refunded bonds………………………………………… (185,000) (630,000) (815,000) Interest expense…………………………………………………………………… (263,393) (894,851) (1,158,244) NET CASH FROM CAPITAL AND RELATED FINANCING ACTIVITIES……… 138,412 (3,011,308) (2,872,896) CASH FLOWS FROM INVESTING ACTIVITIES: Purchase of investments………………………………………………………… (148,122) (4,850) (152,972) Investment income………………………………………………………………… 121,517 2,269 123,786 NET CASH FROM INVESTING ACTIVITIES……………………………………… (26,605) (2,581) (29,186) NET CHANGE IN CASH AND CASH EQUIVALENTS…………………………… 72,755 525,135 597,890 CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE YEAR…… 1,479,945 592,681 2,072,626 CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR………………$ 1,552,700 $ 1,117,816 $ 2,670,516 RECONCILIATION OF OPERATING INCOME (LOSS) TO NET CASH FROM OPERATING ACTIVITIES: Operating income (loss)………………………………………………………… $ (603,257) $ 2,671,862 $ 2,068,605 Adjustments to reconcile operating income (loss) to net cash from operating activities: Depreciation…………………………………………………………………… 770,884 1,011,440 1,782,324 Deferred (outflows)/inflows related to pensions…………………………… (13,328) - (13,328) Penalties and interest receipts…………………………………….………… 216,448 - 216,448 Changes in assets and liabilities: User fees…………………………………………………………………… (47,121) (63,034) (110,155) Warrants payable………………………………………………………… (276,941) 17,306 (259,635) Accrued payroll…………………………………………………………… (2,696) - (2,696) Net pension liability………………………………………………………… 19,119 - 19,119 Total adjustments……………………………………………………… 666,365 965,712 1,632,077 NET CASH FROM OPERATING ACTIVITIES……………………………………$ 63,108 $ 3,637,574 $ 3,700,682 See notes to basic financial statements. PROPRIETARY FUNDS STATEMENT OF CASH FLOWS YEAR ENDED JUNE 30, 2016 Business-type Activities - Enterprise Funds Town of Cohasset, Massachusetts 36 Comprehensive Annual Financial Report Other Postemployment Private Benefit Purpose Agency Trust Fund Trust Funds Fund ASSETS Cash and cash equivalents……...…………………………………………$ 872 $ 13,906 $ 652,973 Investments: Mutual funds……………………………………………………………… 827,508 - - PRIT……………………………………………………………………… 664,096 - - Equity securities………………………………………………………… - 857,037 - Receivables, net of allowance for uncollectibles: Departmental and other receivables…………………………………… - - 177,887 TOTAL ASSETS………………………………………………………………… 1,492,476 870,943 830,860 LIABILITIES Payroll withholdings………………………………………………………… - - 637,040 Liabilities due depositors…………………………………………………… - - 193,820 TOTAL LIABILITIES…………………………………………………………… - - 830,860 NET POSITION Held in trust for OPEB benefits and other purposes…………………… $ 1,492,476 $ 870,943 $ - See notes to basic financial statements. FIDUCIARY FUNDS STATEMENT OF FIDUCIARY NET POSITION JUNE 30, 2016 Town of Cohasset, Massachusetts 37 Comprehensive Annual Financial Report Other Postemployment Private Benefit Purpose Trust Fund Trust Funds ADDITIONS: Contributions: Employer……………………………………………………………………………………$ 550,000 $ - Private donations………………………………………………………………………… - 400 Total contributions…………………………………………………………………… 550,000 400 Net investment income: Interest……………………………………………………………………………………… 41,755 78,588 TOTAL ADDITIONS…………………………………………………………………… 591,755 78,988 DEDUCTIONS: Educational scholarships………………………………………………………………… - 10,650 CHANGE IN NET POSITION………………………………………………………… 591,755 68,338 NET POSITION AT BEGINNING OF YEAR……………………………………………… 900,721 802,605 NET POSITION AT END OF YEAR…………………………………………………………$ 1,492,476 $ 870,943 See notes to basic financial statements. FIDUCIARY FUNDS STATEMENT OF CHANGES IN FIDUCIARY NET POSITION YEAR ENDED JUNE 30, 2016 Town of Cohasset, Massachusetts 38 Comprehensive Annual Financial Report Notes to Basic Financial Statements Year Ended June 30, 2016 Town of Cohasset, Massachusetts 39 Comprehensive Annual Financial Report NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Notes to Basic Financial Statements The accompanying basic financial statements of the Town of Cohasset, Massachusetts (the Town) have been prepared in accordance with accounting principles generally accepted in the United States of America (GAAP). The Governmental Accounting Standards Board (GASB) is the recognized standard-setting body for establishing governmental accounting and financial reporting principles. The significant accounting policies are described herein. A. Reporting Entity The Town of Cohasset, Massachusetts, was incorporated in 1770, and has an open Town Meeting form of government with administrative authority vested in a five member Board of Selectmen and an appointed Town Manager. The Town’s major operations include police and fire protection, parks, library, recreation, public works, education, and general administrative services. In addition, the Town owns and operates a water system and sewer system. For financial reporting purposes, the Town has included all funds, organizations, agencies, boards, commissions and institutions. The Town has also considered all potential component units for which it is financially accountable as well as other organizations for which the nature and significance of their relationship with the Town are such that exclusion would cause the basic financial statements to be misleading or incomplete. As required by GAAP, these basic financial statements present the Town (the primary government) and its component units. Pursuant to these criteria, the Town includes one entity, The Cohasset Library Trust, as a blended component unit within the basic financial statements. Blended Component Unit Chapter 368, of the Acts of 2006, of the Massachusetts General Court granted the Cohasset Board of Library Trustees the right to establish a nonprofit corporation to be called the Cohasset Library Trust, Inc. under chapter 180 of the General Laws. Chapter 368 requires the Town Treasurer to serve as ex officio Treasurer of the Trust. The criteria used to determine the Trust being reported as a blended component unit within the permanent funds include the following. The legislation granted the Trustees the power to appoint the board of directors and remove any director with or without cause. The Town is financially accountable for the Trust as it has access to the resources and a financial benefit exists. Upon establishment of the Trust, the legislation required the Town Treasurer to turn over the Town Library Endowment funds. The Board of Library Trustees solicits donations to increase the endowment and directs the donors to make the donations directly to the Trust. The Trust’s purpose is to invest endowment funds and ultimately provide resources to support the capital and operating needs of the Town Library as determined by the Trustees. This support can be in the form of a transfer to the Town or minor expenses made directly from the Trust. The Trust is blended primarily due to the fact the directors of the Trust provide services exclusively to the Town Treasurer to assist in management of the endowment fund of the Paul Pratt Memorial Library, the public library of the Town. The legislation states that the Trust shall have no role in the governance of the Library. The Trust does not issue publically available financial statements. Joint Venture The Town is a member of the South Shore Vocational Technical High School that provides educational services to eight area communities. This joint venture assesses each community its share of operating and debt service costs based on student population and other factors. In 2016, Cohasset’s share of the operating and debt expenses was $73,471. There is no equity interest reported in these financial statements. Complete audited financial statements can be obtained directly from the School’s administrative office located at 476 Webster Street, Hanover, MA 02339. Notes to Basic Financial Statements Year Ended June 30, 2016 Town of Cohasset, Massachusetts 40 Comprehensive Annual Financial Report The Town has also entered into a joint venture for the South Shore Regional Emergency Communications Center (SSRECC) along with the Town of Hingham, Hull, and Norwell to pool resources and share costs, risks, and rewards of operating a regional 911 call center. The Center became operational as of January 1, 2012, and the Town’s 2016 assessment totaled $273,850. Since the assets of the SSRECC were acquired with State grants, there is currently no significant equity interest accruing to the member communities. The annual assessments are based on and equal to the operating costs of the Center. The SSRECC issues a publically available financial report that includes its financial statements. Copies of these financial statements may be obtained by writing to the SSRECC’s Executive Director, 210 Central Street, Hingham, MA 02043. B. Government-Wide and Fund Financial Statements Government-Wide Financial Statements The government-wide financial statements (i.e., statement of net position and the statement of changes in net position) report information on all of the non-fiduciary activities of the primary government and its component units. Governmental activities, which are primarily supported by taxes and intergovernmental revenues, are reported separately from business-type activities, which are supported primarily by user fees and charges. Fund Financial Statements Separate financial statements are provided for governmental funds, proprietary funds, and fiduciary funds, even though fiduciary funds are excluded from the government-wide financial statements. Major individual governmental funds and major individual enterprise funds are reported as separate columns in the fund financial statements. Non-major funds are aggregated and displayed in a single column. Major Fund Criteria Major funds must be reported if the following criteria are met: • If total assets and deferred outflows of resources, liabilities and deferred inflows of resources, revenues, or expenditures/expenses of an individual governmental or enterprise fund are at least 10 percent of the corresponding element (assets and deferred outflows of resources, liabilities and deferred inflows or resources, etc.) for all funds of that category or type (total governmental or total enterprise funds), and • If the total assets and deferred outflows of resources, liabilities and deferred inflows of resources, revenues, or expenditures/expenses of the individual governmental fund or enterprise fund are at least 5 percent of the corresponding element for all governmental and enterprise funds combined. Additionally, any other governmental or enterprise fund that management believes is particularly significant to the basic financial statements may be reported as a major fund. Fiduciary funds are reported by fund type. C. Measurement Focus, Basis of Accounting and Financial Statement Presentation Government-Wide Financial Statements The government-wide financial statements are reported using the economic resources measurement focus and the accrual basis of accounting. Under this method, revenues are recorded when earned and expenses are Notes to Basic Financial Statements Year Ended June 30, 2016 Town of Cohasset, Massachusetts 41 Comprehensive Annual Financial Report recorded when the liabilities are incurred. Real estate and personal property taxes are recognized as revenues in the year for which they are levied. Grants and similar items are recognized as revenue as soon as all eligibility requirements imposed by the provider have been met. The statement of activities demonstrates the degree to which the direct expenses of a particular function or segment are offset by program revenues. Direct expenses are those that are clearly identifiable with a specific function or segment. Program revenues include the following: • Charges to customers or applicants who purchase, use, or directly benefit from goods, services, or privileges provided by a given function or segment. • Grants and contributions that are restricted to meeting the operational requirements of a particular function or segment. • Grants and contributions that are restricted to meeting the capital requirements of a particular function or segment. Taxes and other items not identifiable as program revenues are reported as general revenues. For the most part, the effect of interfund activity has been removed from the government-wide financial statements. Exceptions are charges between the general fund and sewer and water funds. Elimination of these charges would distort the direct costs and program revenues reported for the functions affected. Fund Financial Statements Governmental fund financial statements are reported using the flow of current financial resources measurement focus and the modified accrual basis of accounting. Under the modified accrual basis of accounting, revenues are recognized when susceptible to accrual (i.e., when measurable and available). Measurable means the amount of the transaction can be determined and available means collectible within the current period or soon enough thereafter to pay liabilities of the current period. Expenditures are recorded when a liability is incurred, as under accrual accounting. However, debt service expenditures, as well as expenditures related to compensated absences, and claims and judgments are recorded only when payment is due. General capital asset acquisitions are reported as expenditures in governmental funds. Issuance of long-term debt and acquisitions under capital leases are reported as other financing sources. Real estate and personal property tax revenues are considered available if they are collected within 60 days after year-end. Investment income is susceptible to accrual. Other receipts and tax revenues become measurable and available when the cash is received and are recognized as revenue at that time. Entitlements and shared revenues are recorded at the time of receipt or earlier if the susceptible to accrual criteria is met. Expenditure driven grants recognize revenue when the qualifying expenditures are incurred and all other grant requirements are met. The following major governmental funds are reported: The General fund is the primary operating fund. It is used to account for all financial resources, except those that are required to be accounted for in another fund. The nonmajor governmental funds consist of special revenue and permanent funds that are aggregated and presented in the nonmajor governmental funds column on the governmental funds financial statements. The following describes the general use of these fund types: Notes to Basic Financial Statements Year Ended June 30, 2016 Town of Cohasset, Massachusetts 42 Comprehensive Annual Financial Report The special revenue fund is used to account for and report the proceeds of specific revenue sources that are restricted or committed to expenditure for specified purposes other than permanent funds or capital projects. The capital projects fund is used to account for financial resources that are restricted, committed or assigned to expenditures for capital outlays. The permanent fund is used to account for and report financial resources that are legally restricted to the extent that only earnings, not principal, may be used for purposes that support the governmental programs. Proprietary fund financial statements are reported using the flow of economic resources measurement focus and use the accrual basis of accounting. Under this method, revenues are recorded when earned and expenses are recorded when the liabilities are incurred. Proprietary funds distinguish operating revenues and expenses from nonoperating items. Operating revenues and expenses generally result from providing services and producing and delivering goods in connection with the proprietary funds principal ongoing operations. All revenues and expenses not meeting this definition are reported as nonoperating revenues and expenses. The following major proprietary funds are reported: The Sewer enterprise fund is used to account for sewage treatment operations of the department of public works that are financed and operated in a manner similar to private business enterprises where the intent of the governing body is that the costs (expenses, including depreciation) of providing goods and services to the general public on a continuing basis be financed or recovered primarily through user charges. The Water enterprise fund is used to account for water distribution operations of the department of public works that are financed and operated in a manner similar to private business enterprises where the intent of the governing body is that the costs (expenses, including depreciation) of providing goods and services to the general public on a continuing basis be financed or recovered primarily through user charges. Fiduciary fund financial statements are reported using the flow of economic resources measurement focus and use the accrual basis of accounting. Fiduciary funds are used to account for assets held in a trustee capacity for others that cannot be used to support the governmental programs. The following fiduciary fund types are reported: The other postemployment benefit trust fund is used to accumulate resources to provide funding for future OPEB liabilities. The private purpose trust fund is used to account for trust arrangements that exclusively benefit individuals, private organizations, or other governments. Some of these trusts have donor restrictions and trustee policies that do not allow the endowment portion and any unrealized appreciation to be spent. The restrictions and trustee policies only allows the trustees to approve spending of the realized investment earnings. The Town’s mainly uses this fund to account for educational scholarships. The agency fund is used to account for assets held in a purely custodial capacity. The Town’s agency accounts consist of off-duty work details, performance bonds, and fees collected on behalf of other governments. The Agency fund applies the accrual basis of accounting but does not have a measurement focus. Notes to Basic Financial Statements Year Ended June 30, 2016 Town of Cohasset, Massachusetts 43 Comprehensive Annual Financial Report D. Cash and Investments Government-Wide and Fund Financial Statements Cash and cash equivalents are considered to be cash on hand, demand deposits and short-term investments with an original maturity of three months or less from the date of acquisition. Investments are carried at fair value. The fair values were determined by the closing price for those securities traded on national stock exchanges and the average bid-and-ask quotation for those securities traded in the over- the-counter market. E. Fair Value Measurements The Town reports required types of financial instruments in accordance with the fair value standards. These standards require an entity to maximize the use of observable inputs (such as quoted prices in active markets) and minimize the use of unobservable inputs (such as appraisals or valuation techniques) to determine fair value. Fair value standards also require the government to classify these financial instruments into a three-level hierarchy, based on the priority of inputs to the valuation technique or in accordance with net asset value practical expedient rules, which allow for either Level 2 or Level 3 depending on lock up and notice periods associated with the underlying funds. Instruments measured and reported at fair value are classified and disclosed in one of the following categories: Level 1 – Quoted prices are available in active markets for identical instruments as of the reporting date. Instruments, which are generally included in this category, include actively traded equity and debt securities, U.S. government obligations, and mutual funds with quoted market prices in active markets. Level 2 – Pricing inputs are other than quoted in active markets, which are either directly or indirectly observable as of the reporting date, and fair value is determined through the use of models or other valuation methodologies. Certain fixed income securities, primarily corporate bonds, are classified as Level 2 because fair values are estimated using pricing models, matrix pricing, or discounted cash flows. Level 3 – Pricing inputs are unobservable for the instrument and include situations where there is little, if any, market activity for the instrument. The inputs into the determination of fair value require significant management judgment or estimation. In some instances the inputs used to measure fair value may fall into different levels of the fair value hierarchy and is based on the lowest level of input that is significant to the fair value measurement. Market price is affected by a number of factors, including the type of instrument and the characteristics specific to the instrument. Instruments with readily available active quoted prices generally will have a higher degree of market price observability and a lesser degree of judgment used in measuring fair value. It is reasonably possible that change in values of these instruments will occur in the near term and that such changes could materially affect amounts reported in these financial statements. For more information on the fair value of the Town’s financial instruments, see Note 2 – Cash and Investments. F. Accounts Receivable Government-Wide and Fund Financial Statements The recognition of revenue related to accounts receivable reported in the government-wide financial statements and the proprietary funds and fiduciary funds financial statements are reported under the accrual basis of Notes to Basic Financial Statements Year Ended June 30, 2016 Town of Cohasset, Massachusetts 44 Comprehensive Annual Financial Report accounting. The recognition of revenue related to accounts receivable reported in the governmental funds financial statements are reported under the modified accrual basis of accounting. Real Estate, Personal Property Taxes and Tax Liens Real estate and personal property taxes are levied and based on values assessed on January 1st of every year. Assessed values are established by the Board of Assessor’s for 100% of the estimated fair market value. Real estate and personal property taxes are billed on a quarterly basis. The first two quarters (August 1st and November 1st) are preliminary tax bills based upon the previous year’s total annual tax. The second two quarters (February 1st and May 1st) are actual tax, reflecting the current year assessment and the current tax rate. Taxes due and unpaid are subject to penalties and interest if they are not paid by the respective due date. The Town has an ultimate right to foreclose on property for which taxes have not been paid. Real estate and personal property taxes levied are recorded as receivables in the year of the levy and are recorded under the modified accrual basis of accounting. Real estate tax liens are processed after the tax bills are sent and are recorded as receivables in the year they are processed. Real estate receivables are secured via the tax lien process and are considered 100% collectible. Accordingly, an allowance for uncollectible accounts is not reported. Personal property taxes cannot be secured through the lien process. The allowance of uncollectible accounts is estimated based on historical trends and specific account analysis. Motor Vehicle and Other Excise Taxes Motor vehicle excise taxes are assessed annually for each vehicle registered and are recorded as receivables in the year of the levy. The Commonwealth is responsible for reporting the number of vehicles registered and the fair values of those vehicles. The tax calculation is the fair value of the vehicle multiplied by $25 per $1,000 of value. Boat excise taxes are assessed annually for each boat registered and are recorded as receivables in the year of the levy. The Commonwealth is responsible for reporting the number of boats registered and the fair value of those boats. The tax calculation is the fair value of the boat multiplied by $10 per $1,000 of value. The allowance for uncollectible accounts is estimated based on historical trends and specific account analysis. User Charges User fees are levied quarterly based on individual meter readings and are subject to penalties and interest if they are not paid by the respective due date. Unbilled user fees are estimated at year-end and are recorded as revenue in the current period. Water and Sewer liens are processed in December of every year and included as a lien on the property owner’s tax bill. Water and Sewer charges and liens are recorded as receivables in the year of the levy. Since the receivables are secured via the lien process, these accounts are considered 100% collectible and therefore do not report an allowance for uncollectible accounts. Departmental and Other Departmental and other receivables consist primarily of ambulance charges and veterans benefits and are recorded as receivables in the year accrued. The allowance of uncollectible accounts is estimated based on historical trends and specific account analysis. Notes to Basic Financial Statements Year Ended June 30, 2016 Town of Cohasset, Massachusetts 45 Comprehensive Annual Financial Report Special Assessments Special assessments consist of sewer construction and particular apportioned street and water line betterments. These receivables are considered to be 100% collectible and therefore do not report an allowance for uncollectible accounts. Intergovernmental Various federal and state grants for operating and capital purposes are applied for and received annually. For non-expenditure driven grants, receivables are recorded as soon as all eligibility requirements imposed by the provider have been met. For expenditure driven grants, receivables are recorded when the qualifying expenditures are incurred and all other grant requirements are met. These receivables are considered 100% collectible and therefore do not report an allowance for uncollectible accounts. G. Inventories Government-Wide and Fund Financial Statements Inventories are recorded as expenditures at the time of purchase. Such inventories are not material in total to the government-wide and fund financial statements, and therefore are not reported. H. Capital Assets Government-Wide and Proprietary Fund Financial Statements Capital assets, which include land, land improvements, buildings, machinery and equipment, vehicles and infrastructure (e.g., roads, water mains, sewer mains, and similar items), are reported in the applicable governmental or business-type activity column of the government-wide financial statements, and the proprietary fund financial statements. Capital assets are recorded at historical cost, or at estimated historical cost, if actual historical cost is not available. Donated capital assets are recorded at the estimated fair market value at the date of donation. Except for the capital assets of the governmental activities column in the government-wide financial statements, construction period interest is capitalized on constructed capital assets. All purchases and construction costs in excess of $25,000 are capitalized at the date of acquisition or construction, respectively, with expected useful lives of greater than one year. Capital assets (excluding land and construction-in-progress) are depreciated on a straight-line basis over the estimated useful life of the assets. The estimated useful lives of capital assets are as follows: Estimated Useful Life Capital Asset Type (in years) Land improvements…………………………… 20 Buildings and improvements…………………… 40 Machinery and equipment……………………… 5 Vehicles………………………………………… 5 Infrastructure…………………………………… 40 Notes to Basic Financial Statements Year Ended June 30, 2016 Town of Cohasset, Massachusetts 46 Comprehensive Annual Financial Report The cost of normal maintenance and repairs that do not add to the value of the assets or materially extend asset lives are not capitalized and are treated as expenses when incurred. Improvements are capitalized. Governmental Fund Financial Statements Capital asset costs are recorded as expenditures in the acquiring fund in the year of the purchase. I. Deferred Outflows/Inflows of Resources Government-Wide Financial Statements (Net Position) In addition to assets, the statement of financial position will sometimes report a separate section for deferred outflows of resources. This separate financial statement element, deferred outflows of resources, represents a consumption of net position that applies to a future period(s) and so will not be recognized as an outflow of resources (expense/expenditure) until then. As of June 30, 2016 the Town reported both deferred charges on refunding, as well as deferred outflows related to pensions within this category. In addition to liabilities, the statement of financial position will sometimes report a separate section for deferred inflows of resources. This separate financial statement element, deferred inflows of resources, represents an acquisition of net position that applies to a future period(s) and so will not be recognized as an inflow of resources (revenue) until that time. As of June 30, 2016 the Town reported deferred inflows of resources related to pensions within this category. Governmental Fund Financial Statements Unavailable revenue at the governmental fund financial statement level represents outstanding receivables that do not meet the available criterion for revenue recognition in accordance with the current financial resources measurement focus and the modified accrual basis of accounting. Unavailable revenues are reported as deferred inflows of resources. Unavailable revenues are recognized as revenue during the conversion to the government- wide (full accrual) financial statements. J. Interfund Receivables and Payables During the course of its operations, transactions occur between and within individual funds that may result in amounts owed between funds. Government-Wide Financial Statements Transactions of a buyer/seller nature between and within governmental funds are eliminated from the governmental activities in the statement of net position. Any residual balances outstanding between the governmental activities and business-type activities are reported in the statement of net position as “internal balances”. Fund Financial Statements Transactions of a buyer/seller nature between and within funds are not eliminated from the individual fund statements. Receivables and payables resulting from these transactions are classified as “Due from other funds” or “Due to other funds” on the balance sheet. Notes to Basic Financial Statements Year Ended June 30, 2016 Town of Cohasset, Massachusetts 47 Comprehensive Annual Financial Report K. Interfund Transfers During the course of its operations, resources are permanently reallocated between and within funds. These transactions are reported as transfers in and transfers out. Government-Wide Financial Statements Transfers between and within governmental funds and internal service funds are eliminated from the governmental activities in the statement of net position. Any residual balances outstanding between the governmental activities and business-type activities are reported in the statement of activities as “Transfers, net”. Fund Financial Statements Transfers between and within funds are not eliminated from the individual fund statements and are reported as transfers in and transfers out. L. Net Position and Fund Equity Government-Wide Financial Statements (Net Position) Net position reported as “net investment in capital assets” includes capital assets, net of accumulated depreciation, less the principal balance of outstanding debt used to acquire capital assets. Unspent proceeds of capital related debt are not considered to be capital assets. Outstanding receivables related to future subsidies from the Massachusetts Water Pollution Abatement Trust are not considered to be capital related debt. Net position is reported as restricted when amounts are not available for appropriation or are legally restricted by outside parties for a specific future use. Net position has been “restricted for” the following: “Debt service” represents a capital grant to fund debt service on the school debt that will be amortized over the remaining life of the debt in accordance with state governmental regulations “Permanent funds – expendable” represents the amount of realized and unrealized investments earnings of donor restricted trusts. The restrictions and trustee policies only allows the trustees to approve spending of the realized investment earnings. “Permanent funds – nonexpendable” represent the endowment portion of donor restricted trusts. “Grants and Gifts” represents restrictions placed on assets from outside parties. “Community preservation” represents amounts held for uses restricted by law for community preservation purposes. Sometimes the Town will fund outlays for a particular purpose from both restricted (e.g., restricted bond or grant proceeds) and unrestricted resources. In order to calculate the amounts to report as restricted – net position and unrestricted – net position in the government-wide and proprietary fund financial statements, a flow assumption must be made about the order in which the resources are considered to be applied. It is the Town’s policy to consider restricted – net position to have been depleted before unrestricted – net position is applied. Notes to Basic Financial Statements Year Ended June 30, 2016 Town of Cohasset, Massachusetts 48 Comprehensive Annual Financial Report Fund Financial Statements (Fund Balances) Governmental fund balances are classified as nonspendable, restricted, committed, assigned, or unassigned based on the extent to which the government is bound to honor constraints on the specific purposes for which amounts in those funds can be spent. The governmental fund balance classifications are as follows: “Nonspendable” fund balance includes amounts that cannot be spent because they are either not in spendable form or they are legally or contractually required to be maintained intact. “Restricted” fund balance includes amounts subject to constraints placed on the use of resources that is either externally imposed by creditors, grantors, contributors, or laws or regulations of other governments; or that are imposed by law through constitutional provisions or enabling legislation. “Committed” fund balance includes amounts that can only be used for specific purposes pursuant to constraints imposed by formal action of the government’s highest level of decision-making authority. Town Meeting is the highest level of decision-making authority for the government that can, by adoption of a Town Meeting article (resolution) prior to the end of the year, commit fund balance. Once adopted, the limitation imposed by the article remains in place until a similar action is taken to remove or revise the limitation. “Assigned” fund balance includes amounts that are constrained by the Town’s intent to be used for specific purposes, but are neither restricted nor committed. The Board of Selectmen has by resolution authorized the Finance Director to assign fund balance. The Board may also assign fund balance as it does when appropriating fund balance to cover a gap between estimated revenue and appropriations in the subsequent year’s budget. Unlike commitments, assignments generally only exist temporarily. In other words, an additional action does not normally have to be taken for the removal of an assignment. “Unassigned” fund balance includes the residual classification for the general fund. This classification represents fund balance that has not been assigned to other funds and that has not been restricted, committed, or assigned to specific purposes within the general fund. The Town’s spending policy is to spend restricted fund balance first, followed by committed, assigned and unassigned fund balance. Most governmental funds are designated for one purpose at the time of their creation. Therefore, any expenditure from the fund will be allocated to the applicable fund balance classifications in the order of the aforementioned spending policy. The general fund and certain other funds may have more than one purpose. M. Unavailable Revenue Unavailable revenue at the governmental fund financial statement level represents billed receivables that do not meet the availability criterion in accordance with the current financial resources measurement focus and the modified accrual basis of accounting. Unavailable revenue is recognized as revenue in the conversion to the entity-wide (full accrual) financial statements. N. Pensions For purposes of measuring the net pension liability, deferred outflows of resources and deferred inflows of resources related to pensions, and pension expense, information about the fiduciary net position of the Norfolk County Contributory Retirement System and the Massachusetts Teachers Retirement System and additions to/deductions from the System’s fiduciary net position have been determined on the same basis as they are Notes to Basic Financial Statements Year Ended June 30, 2016 Town of Cohasset, Massachusetts 49 Comprehensive Annual Financial Report reported by the Systems. For this purpose, benefit payments (including refunds of employee contributions) are recognized when due and payable in accordance with the benefit terms. Investments are reported at fair value. O. Long-term debt Government-Wide and Proprietary Fund Financial Statements Long-term debt is reported as liabilities in the government-wide and proprietary fund statement of net position. Material bond premiums and discounts are deferred and amortized over the life of the bonds using the effective interest method. Bonds payable are reported net of the applicable bond premium or discount. Governmental Fund Financial Statements The face amount of governmental funds long-term debt is reported as other financing sources. Bond premiums and discounts, as well as issuance costs, are recognized in the current period. Bond premiums are reported as other financing sources and bond discounts are reported as other financing uses. Issuance costs, whether or not withheld from the actual bond proceeds received, are reported as administrative services expenditures. P. Investment Income Excluding the permanent funds, investment income derived from major and nonmajor governmental funds is legally assigned to the general fund unless otherwise directed by Massachusetts General Law (MGL). Investment income from Enterprise Funds is retained in their respective funds. Q. Compensated Absences Employees are granted vacation and sick leave in varying amounts based on collective bargaining agreements, state laws and executive policies. Government-Wide and Proprietary Fund Financial Statements Vested or accumulated vacation and sick leave are reported as liabilities and expensed as incurred. Governmental Fund Financial Statements Vested or accumulated vacation and sick leave, which will be liquidated with expendable available financial resources, are reported as expenditures and fund liabilities upon maturity of the liability, i.e. unused reimbursable leave still outstanding following an employee’s resignation or retirement. R. Use of Estimates Government-Wide and Fund Financial Statements The preparation of basic financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure for contingent assets and liabilities at the date of the basic financial statements and the reported amounts of the revenues and expenditures/expenses during the year. Actual results could vary from estimates that were used. Notes to Basic Financial Statements Year Ended June 30, 2016 Town of Cohasset, Massachusetts 50 Comprehensive Annual Financial Report S. Total Column Government-Wide Financial Statements The total column presented on the government-wide financial statements represents consolidated financial information. Fund Financial Statements The total column on the fund financial statements is presented only to facilitate financial analysis. Data in this column is not the equivalent of consolidated financial information. NOTE 2 – CASH AND INVESTMENTS A cash and investment pool is maintained that is available for use by all funds. Each fund type's portion of this pool is displayed on the balance sheet as "Cash and Cash Equivalents". The deposits and investments of the trust funds are held separately from those of other funds. Statutes authorize the investment in obligations of the U.S. Treasury, agencies, and instrumentalities, certificates of deposit, repurchase agreements, money market accounts, bank deposits and the State Treasurer's Investment Pool (the Pool). The Treasurer may also invest trust funds in securities, other than mortgages or collateral loans, which are legal for the investment of funds of savings banks under the laws of the Commonwealth. The Pool meets the criteria of an external investment pool. The Pool is administered by the Massachusetts Municipal Depository Trust (MMDT), which was established by the Treasurer of the Commonwealth who serves as Trustee. The fair value of the position in the Pool is the same as the value of the Pool shares. Custodial Credit Risk – Deposits In the case of deposits, this is the risk that in the event of a bank failure, the Town of Cohasset’s deposits may not be returned to it. The Town does not have a deposit policy for custodial credit risk. At year-end, the carrying amount of deposits totaled $14,933,097 and the bank balance totaled $15,603,039. Of the bank balance, $1,500,000 was covered by Federal Depository Insurance, $1,753,569 was covered by DIF Insurance, $3,471,234 was covered by SIF Insurance, and $8,878,236 was exposed to custodial credit risk because it was uninsured and uncollateralized. At year-end the carrying amount of deposits for the Pratt Memorial Library Trust totaled $47,133. The bank balance totaled $47,133, all of which was covered by Federal Depository Insurance. Notes to Basic Financial Statements Year Ended June 30, 2016 Town of Cohasset, Massachusetts 51 Comprehensive Annual Financial Report Investments As of June 30, 2016, the Town had the following investments: Under Fair Value 1 Year 1 - 5 Years 6-10 Years Rating Investment Type Debt Securities Government Sponsored Enterprises……… $ 1,939,690 $ 831,577 $ 708,837 $ 399,276 AAA U.S. Treasury Notes………………………… 1,511,417 101,934 1,020,920 388,563 AAA Corporate Bonds……………………………… 511,059 - 511,059 - AAA-BAA Total Debt Securities............................... 3,962,166 $ 933,511 $ 2,240,816 $ 787,839 Other Investments Equity Securities................................... 2,739,432 Mutual Funds........................................ 945,304 PRIT……………………………………… 664,096 MMDT…………………………………… 31,567 Money Market Mutual Funds…………… 629,798 Total Investments.............................. $ 8,972,363 Maturity The Other Postemployment Benefit Trust Fund participates in PRIT. The effective weighted duration rate for PRIT investments ranged from 1.33 to 21.81 years. As of June 30, 2016, the Pratt Memorial Library Trust had the following investments: Other Investments Mutual Funds………………………………$ 1,328,852 Custodial Credit Risk – Investments For an investment, this is the risk that, in the event of a failure by the counterparty, the Town will not be able to recover the value of its investments or collateral security that are in the possession of an outside party. Of the Town’s investments, $3,962,166 of debt securities, and $2,739,432 of equity securities are exposed to custodial credit risk because the related securities are uninsured, unregistered and held by the counterparty. The Town’s investment policy requires all securities not held directly by the Town to be held in the Town’s name and tax identification number by a third party custodian approved by the Treasurer. Interest Rate Risk Interest rate risk exists when there is a possibility that changes in interest rates could adversely affect the fair value of the Town’s investments. The Town’s investment policy limits investment maturities as a means of managing its exposure to fair value losses arising from increasing interest rates. Notes to Basic Financial Statements Year Ended June 30, 2016 Town of Cohasset, Massachusetts 52 Comprehensive Annual Financial Report Credit Risk The Town’s investment policy limits investments in debt securities to United States Treasuries and United States Government Agency obligations, which carry a AA rating, and other investments that must be in high grade securities, a high concentration of which must be rated A and above. Additionally the Treasurer may invest in the Massachusetts Municipal Depository Trust (MMDT) with no limit to the amount of funds placed in this fund. Concentration of Credit Risk The Town will minimize the concentration of credit risk by diversifying the investment portfolio, so that the impact of potential losses from any one type of security or issuer will be minimized. No more than 5% of the Town’s investments are invested in any one issuer. Fair Market Value of Investments The Town holds investments that are measured at fair value on a recurring basis. Because investing is not a core part of the Town’s mission, the Town determines that the disclosures related to these investments only need to be disaggregated by major type. The Town chooses a tabular format for disclosing the levels within the fair value hierarchy. The Town categorizes its fair value measurements within the fair value hierarchy established by generally accepted accounting principles. The hierarchy is based on the valuation inputs used to measure the fair value of the asset. Level 1 inputs are quoted prices in active markets for identical assets; Level 2 inputs are significant other observable inputs; Level 3 inputs are significant unobservable inputs. The Town has the following fair value measurements as of June 30, 2016: Quoted Prices in Active Significant Markets for Other Significant Identical Observable Unobservable June 30, Assets Inputs Inputs Investment Type 2016 (Level 1) (Level 2) (Level 3) Investments by fair value level: Debt Securities: Government Sponsored Enterprises……………………………………$ 1,939,690 $ 1,939,690 $- $ - U.S. Treasury Notes……………………………………………………… 1,511,417 1,511,417 - - Corporate Bonds………………………………………………………… 511,059 - 511,059 - Total debt securities………………………………………………… 3,962,166 3,451,107 511,059 - Other investments: Equity Securities....................................……………………… 2,739,432 2,739,432 - - Mutual Funds.........................................……………………… 945,304 945,304 - - Money Market Mutual Funds…………………………………… 629,798 629,798 - - Total other investments………………………..…………………… 4,314,534 4,314,534 - - Total investments measured at fair value…………………………8,276,700 $ 7,765,641 $ 511,059 $ - Investments measured at the net asset value (NAV): PRIT………………………………………………………………… 664,096 Investments measured at amortized cost: MMDT………………………………………………………………… 31,567 Total investments……………………………………………………$8,972,363 Fair Value Measurements Using Notes to Basic Financial Statements Year Ended June 30, 2016 Town of Cohasset, Massachusetts 53 Comprehensive Annual Financial Report Government sponsored enterprises, U.S. Treasury notes, equity securities, mutual funds, money market mutual funds classified in Level 1 of the fair value hierarchy are valued using prices quoted in active markets for those securities. Corporate bonds classified in Level 2 of the fair value hierarchy are valued using a matrix pricing technique. Matrix pricing is used to value securities based on the securities’ relationship to benchmark quoted prices. PRIT Investments are valued using the net asset value method. This investment pool was established by the Treasurer of the Commonwealth of Massachusetts, who serves as Trustee. PRIT is administered by the Pension Reserves Investment Management Board (PRIM). The fair values of the positions in each investment Pool are the same as the value of each Pool’s shares. The Town does not have the ability to control any of the investment decisions relative to its funds in PRIT. MMDT investments are valued at amortized cost. Under the amortized cost method, an investment is valued initially at its cost and adjusted for the amount of interest income accrued each day over the term of the investment to account for any difference between the initial cost and the amount payable at its maturity. If amortized cost is determined not to approximate fair value, the value of the portfolio securities will be determined under procedures established by the Advisor. The Pratt Memorial Library Trust investments at June 30, 2016 of $1,328,852 are measured at fair value using quoted prices in active markets for identical assets (Level 1). NOTE 3 – RECEIVABLES At June 30, 2016, receivables for the individual major and non-major governmental funds in the aggregate, including the applicable allowances for uncollectible accounts, are as follows: Gross Allowance for Net Amount Uncollectibles Amount Receivables: Real estate, personal property and tax deferrals ………$ 348,538 $ (8,000) $ 340,538 Tax liens…………………………………………………… 947,180 - 947,180 Motor vehicle and other excise taxes…………………… 119,463 (36,000) 83,463 Departmental and other………………………………… 557,272 (442,682) 114,590 Special assessments……………………………………… 2,248,571 - 2,248,571 Intergovernmental…………………….…………………… 3,052,506 - 3,052,506 Total………………………………………………………$ 7,273,530 $ (486,682) $ 6,786,848 At June 30, 2016, receivables for the sewer and water enterprise funds consist of the following: Gross Allowance for Net Amount Uncollectibles Amount Receivables: Sewer user charges……………………………………… $ 569,936 $ - $ 569,936 Water user charges………………………………………… 1,488,373 - 1,488,373 Special assessments……………………………………… 8,268,298 - 8,268,298 Total………………………………………………………$ 10,326,607 $- $ 10,326,607 Notes to Basic Financial Statements Year Ended June 30, 2016 Town of Cohasset, Massachusetts 54 Comprehensive Annual Financial Report Governmental funds report unavailable revenue in connection with receivables for revenues that are not considered to be available to liquidate liabilities of the current period. At the end of the current year, the various components of unavailable revenue reported in the governmental funds were as follows: Nonmajor General Governmental Fund Funds Total Receivable and other asset type: Real estate and personal property taxes…………………$ 371,999 $ 1,098 $ 373,097 Tax liens…………………………………………………… 940,975 6,205 947,180 Motor vehicle and other excise…………………………… 83,463 - 83,463 Departmental and other…………………………………… 111,587 3,003 114,590 Special assessments……………………………………… 1,447,622 800,949 2,248,571 Intergovernmental………………………………………… 2,779,886 260,575 3,040,461 Total……………………………………………………… $ 5,735,532 $ 1,071,830 $ 6,807,362 NOTE 4 – CAPITAL ASSETS Capital asset activity for the year ended June 30, 2016, was as follows: Governmental Activities:Beginning Ending Balance Increases Decreases Balance Capital assets not being depreciated: Land……………………………………………………………$ 6,947,032 $ - $ - $ 6,947,032 Construction in progress…………………………………… 566,439 113,725 - 680,164 Total capital assets not being depreciated………………… 7,513,471 113,725 - 7,627,196 Capital assets being depreciated: Land improvements………………………………………… 1,022,162 - - 1,022,162 Buildings and improvements………………………………… 66,812,280 995,505 - 67,807,785 Machinery and equipment…………………………………… 2,121,214 446,489 (10,085) 2,557,618 Vehicles……………………………………………………… 3,451,984 513,125 (81,964) 3,883,145 Infrastructure………………………………………………… 27,520,215 812,671 - 28,332,886 Total capital assets being depreciated…………………… 100,927,855 2,767,790 (92,049) 103,603,596 Less accumulated depreciation for: Land improvements………………………………………… (188,665) (34,342) - (223,007) Buildings and improvements………………………………… (24,888,993) (1,557,851) - (26,446,844) Machinery and equipment…………………………………… (1,708,624) (127,869) 10,085 (1,826,408) Vehicles……………………………………………………… (2,694,291) (247,625) 81,964 (2,859,952) Infrastructure………………………………………………… (15,005,893) (654,250) - (15,660,143) Total accumulated depreciation…………………………… (44,486,466) (2,621,937) 92,049 (47,016,354) Total capital assets being depreciated, net…………………… 56,441,389 145,853 - 56,587,242 Total governmental activities capital assets, net………………$ 63,954,860 $ 259,578 $ - $ 64,214,438 Notes to Basic Financial Statements Year Ended June 30, 2016 Town of Cohasset, Massachusetts 55 Comprehensive Annual Financial Report Business-Type Activities Sewer Enterprise Fund:Beginning Ending Balance Increases Decreases Balance Capital assets not being depreciated: Land……………………………………………………………$1,009 $ - $ - $ 1,009 Capital assets being depreciated: Buildings and improvements………………………………… 1,121,784 - - 1,121,784 Machinery and equipment…………………………………… 4,827,061 - - 4,827,061 Infrastructure………………………………………………… 33,351,017 - - 33,351,017 Total capital assets being depreciated…………………… 39,299,862 - - 39,299,862 Less accumulated depreciation for: Buildings and improvements………………………………… (312,601) (18,696) - (331,297) Machinery and equipment……………………………………(2,155,541) (135,175) - (2,290,716) Infrastructure………………………………………………… (6,707,887) (617,013) - (7,324,900) Total accumulated depreciation…………………………… (9,176,029) (770,884) - (9,946,913) Total capital assets being depreciated, net…………………… 30,123,833 (770,884) - 29,352,949 Total sewer activities capital assets, net………………………$ 30,124,842 $ (770,884) $- $ 29,353,958 Water Enterprise Fund:Beginning Ending Balance Increases Decreases Balance Capital assets not being depreciated: Land……………………………………………………………$ 1,307,549 $ - $ - $ 1,307,549 Capital assets being depreciated: Buildings and improvements………………………………… 60,069 - - 60,069 Machinery, equipment and vehicles……………………… 132,912 - - 132,912 Infrastructure………………………………………………… 48,916,983 - - 48,916,983 Total capital assets being depreciated…………………… 49,109,964 - - 49,109,964 Less accumulated depreciation for: Buildings and improvements………………………………… (2,503) (3,003) - (5,506) Machinery, equipment and vehicles……………………… (51,931) (10,675) - (62,606) Infrastructure………………………………………………… (14,122,855) (997,762) - (15,120,617) Total accumulated depreciation…………………………… (14,177,289) (1,011,440) - (15,188,729) Total capital assets being depreciated, net…………………… 34,932,675 (1,011,440) - 33,921,235 Total water activities capital assets, net……………………… $ 36,240,224 $ (1,011,440) $ - $ 35,228,784 Notes to Basic Financial Statements Year Ended June 30, 2016 Town of Cohasset, Massachusetts 56 Comprehensive Annual Financial Report Depreciation expense was charged to functions/programs of the primary government as follows: Governmental Activities: Administrative services…………………………………………………………… $ 96,005 Public safety………………………………………………………………………… 206,513 Education…………………………………………………………………………… 1,418,893 Public works………………………………………………………………………… 728,472 Culture and recreation……………………………………………………………… 163,758 Health and Welfare………………………………………………………………… 8,296 Total depreciation expense - governmental activities……………………………… $ 2,621,937 Business-Type Activities: Sewer…………………………………………………………………………………$ 770,884 Water………………………………………………………………………………… 1,011,440 Total depreciation expense - business-type activities……………………………… $ 1,782,324 NOTE 5 – CAPITAL LEASES The Town has entered into non-cancelable long-term lease agreements for the purchase of certain equipment. The lease agreements qualify as capital leases for accounting purposes and, therefore, have been recorded at the present value of their future minimum lease payments as of the inception date. The following identifies the assets acquired through capital lease agreements: Governmental Activities Asset: Machinery and equipment…………………………………$ 181,803 Less: accumulated depreciation…………………………… (16,665) Total………………………………………………………$ 165,138 The future minimum lease obligations and the net present value of these minimum lease payments as of June 30, 2016 were as follows: Years Governmental Ending June 30, Activities 2017………………………………………………………$ 40,780 2018……………………………………………………… 40,780 2019……………………………………………………… 40,780 2020……………………………………………………… 40,780 2021……………………………………………………… 40,783 Total minimum lease payments……………………… 203,903 Less: amounts representing interest………………… (22,100) Present value of minimum lease payments………… $ 181,803 Notes to Basic Financial Statements Year Ended June 30, 2016 Town of Cohasset, Massachusetts 57 Comprehensive Annual Financial Report NOTE 6 – INTERFUND RECEIVABLES, PAYABLES AND TRANSFERS Interfund transfers for the year ended June 30, 2016, are summarized as follows: Nonmajor General Governmental Transfers Out: Fund Funds Total General Fund………………………………………$- $ 1,911,475 $ 1,911,475 (1) Nonmajor Governmental Funds………………… 171,009 57,149 228,158 (2) Sewer Enterprise Fund…………………………… 102,160 - 102,160 (3) Water Enterprise Fund…………………………… 98,550 - 98,550 (3) Total………………………………………………$ 371,719 $ 1,968,624 $ 2,340,343 Transfers In: (1) Budgeted transfers from the general fund and the capital stabilization fund to various capital project funds. Also, transfer to Town Capital Projects to fund construction costs. (2) Budgeted transfers from school construction surplus, wetlands, open space, and Title V betterments to the general fund. Also, transfers to and from various nonmajor governmental funds. (3) Budgeted transfers from the sewer and water enterprise funds for indirect costs. NOTE 7 – SHORT-TERM FINANCING Short-term debt may be authorized and issued to fund the following: • Current operating costs prior to the collection of revenues through issuance of revenue or tax anticipation notes (RANS or TANS). • Capital project costs and other approved expenditures incurred prior to obtaining permanent financing through issuance of bond anticipation notes (BANS) or grant anticipation notes (GANS). Short-term loans are general obligation of the Town and carry maturity dates that are limited by statute. Interest expenditures for short-term borrowings are accounted for in the General Fund and the Enterprise funds, where applicable. Details related to the Town’s short-term debt activity for the year ended June 30, 2016, is as follows: Balance at Balance at Rate June 30, Renewed/ Retired/ June 30, Type Purpose (%) Due Date 2015 Issued Redeemed 2016 Governmental funds BAN Bond Anticipation Note…………… 0.55% 5/27/2016 $ 236,800 $ - $ 236,800 $ - Business-type funds Sewer enterprise funds: BAN Bond Anticipation Note…………… 0.55% 5/27/2016 $ 190,000 $ - $ 190,000 $ - Notes to Basic Financial Statements Year Ended June 30, 2016 Town of Cohasset, Massachusetts 58 Comprehensive Annual Financial Report NOTE 8 – LONG-TERM DEBT Under the provisions of Chapter 44, Section 10, Municipal Law authorizes indebtedness up to a limit of 5% of the equalized valuation. Debt issued in accordance with this section of the law is designated as being "inside the debt limit". In addition, however, debt may be authorized in excess of that limit for specific purposes. Such debt, when issued, is designated as being "outside the debt limit". In order to take advantage of favorable interest rates the Town issued $1,042,000 of General Obligation Refunding Bonds during 2016. $1 million of general obligation bonds were defeased as an advance refunding by placing the proceeds of the refunding bonds in an irrevocable trust to provide for all future debt service payments on the refunded bonds. Accordingly, the trust account’s assets and liabilities for the defeased bonds are not included in the basic financial statements. The Town has decreased its aggregate debt service payments by $86,532 and will experience an economic gain of $77,294. At June 30, 2016, $1 million of general obligation bonds outstanding are considered defeased. Details related to the Town’s outstanding general obligation indebtedness at June 30, 2016, and the debt service requirements are as follow: Bonds and Notes Payable Schedule – Governmental Funds Original Interest Outstanding Outstanding Maturities Loan Rate at June 30, at June 30, Project Through Amount (%) 2016 Issued Redeemed 2016 MCWT………………………………………………… 2033 $ 20,206,877 0.00 - 5.30 $ 9,285,992 $ - $ 1,372,646 $ 7,913,346 General Obligation Refunding Bonds of 2005…… 2017 863,940 2.50 - 3.50 164,857 - 73,988 90,869 General Obligation Bonds of 2006………………… 2025 596,400 4.00 30,000 - 30,000 - General Obligation Refunding Bonds of 2008…… 2018 3,041,600 3.00 1,005,000 - 330,000 675,000 General Obligation Bonds of 2009………………… 2027 265,000 1.50 - 4.00 320,000 - 225,000 95,000 General Obligation Bonds of 2010………………… 2030 1,726,000 1.00 - 3.50 616,000 - 155,000 461,000 General Obligation Refunding Bonds of 2010…… 2021 835,000 1.50 - 2.50 485,000 - 85,000 400,000 General Obligation Refunding Bonds of 2012…… 2024 9,039,000 1.80 7,919,500 - 979,500 6,940,000 General Obligation Refunding Bonds of 2013…… 2026 696,450 2.00-3.00 696,450 - 101,950 594,500 General Obligation Bonds of 2013………………… 2024 215,000 2.00-3.00 95,000 - 55,000 40,000 General Obligation Bonds of 2016………………… 2026 1,208,000 2.00-3.00 - 1,208,000 - 1,208,000 General Obligation Refunding Bonds of 2016…… 2027 193,500 2.00-3.00 - 193,500 - 193,500 Total governmental bonds payable………………………………………………………………………… 20,617,799 1,401,500 3,408,084 18,611,215 Add: unamortized premium………………………………………………………………………………… 605,705 - 129,113 476,592 Total governmental bonds payable, net……………………………………………………………………$ 21,223,504 $ 1,401,500 $ 3,537,197 $ 19,087,807 Notes to Basic Financial Statements Year Ended June 30, 2016 Town of Cohasset, Massachusetts 59 Comprehensive Annual Financial Report Debt service requirements for principal and interest for governmental bonds payable in future years are as follows: Year Principal Interest Total 2017……………$ 3,356,122 $ 605,379 $ 3,961,501 2018…………… 3,110,480 473,387 3,583,867 2019…………… 2,760,622 363,350 3,123,972 2020…………… 2,400,881 259,581 2,660,462 2021…………… 2,162,657 166,189 2,328,846 2022…………… 1,169,352 101,804 1,271,156 2023…………… 1,153,264 66,583 1,219,847 2024…………… 1,136,194 35,010 1,171,204 2025…………… 282,944 16,360 299,304 2026…………… 262,912 10,900 273,812 2027…………… 143,900 5,707 149,607 2028…………… 129,908 4,089 133,997 2029…………… 130,937 2,900 133,837 2030…………… 131,986 1,691 133,677 2031…………… 129,056 541 129,597 2032…………… 75,000 - 75,000 2033…………… 75,000 - 75,000 Total……………$ 18,611,215 $ 2,113,471 $ 20,724,686 The Town receives subsidy assistance from the Massachusetts Clean Water Trust (MCWT). Future subsidies of capital expenses are structured as principal subsidies of principal payments. Interest on the outstanding bonds for MCWT is subsidized over the life of the bonds to assist the Town in repayment of this future debt. Future principal subsidies of $2,779,886 have been recorded as an intergovernmental receivable in the general fund. Future interest subsidies total $586,592 and will be recognized as revenue when received. During 2016, the Town’s principal and interest subsidy amounted to approximately $834,466. Notes to Basic Financial Statements Year Ended June 30, 2016 Town of Cohasset, Massachusetts 60 Comprehensive Annual Financial Report Bonds and Notes Payable Schedule – Sewer Enterprise Fund Original Interest Outstanding Outstanding Maturities Loan Rate at June 30, at June 30, Project Through Amount (%) 2015 Issued Redeemed 2016 MCWT………………………………………………… 2031 $ 12,600,000 2.00 $ 10,466,292 $- $ 560,638 $ 9,905,654 General Obligation Bonds of 2009………………… 2029 350,000 4.00 260,000 - 200,000 60,000 General Obligation Bonds of 2010………………… 2030 1,071,000 3.30 - 3.40 803,000 - 55,000 748,000 General Obligation Refunding Bonds of 2012…… 2023 46,000 1.80 40,500 - 5,500 35,000 General Obligation Bonds of 2013………………… 2033 669,348 2.00-3.00 610,000 - 30,000 580,000 General Obligation Bonds of 2016………………… 2026 570,000 2.00-3.00 - 570,000 - 570,000 General Obligation Refunding Bonds of 2016…… 2026 193,500 2.00-3.00 - 193,500 - 193,500 Total sewer bonds payable…………………………………………………………………………………$ 12,179,792 $ 763,500 $ 851,138 $ 12,092,154 Debt service requirements for principal and interest for Sewer Enterprise Fund bonds payable in future years are as follows: Year Principal Interest Total 2017……………$ 734,463 $ 256,726 $ 991,189 2018…………… 744,518 240,927 985,445 2019…………… 760,306 224,194 984,500 2020…………… 774,833 207,068 981,901 2021…………… 787,102 190,189 977,291 2022…………… 798,120 165,187 963,307 2023…………… 810,890 156,857 967,747 2024…………… 818,919 138,795 957,714 2025…………… 835,209 120,553 955,762 2026…………… 853,769 101,918 955,687 2027…………… 800,603 82,907 883,510 2028…………… 828,716 65,401 894,117 2029…………… 839,114 47,153 886,267 2030…………… 828,803 28,634 857,437 2031…………… 796,789 3,000 799,789 2032…………… 40,000 1,800 41,800 2033…………… 40,000 600 40,600 Total……………$ 12,092,154 $ 2,031,909 $ 14,124,063 Notes to Basic Financial Statements Year Ended June 30, 2016 Town of Cohasset, Massachusetts 61 Comprehensive Annual Financial Report Bonds and Notes Payable Schedule – Water Enterprise Fund Original Interest Outstanding Outstanding Maturities Loan Rate at June 30, at June 30, Project Through Amount (%) 2015 Issued Redeemed 2016 MCWT………………………………………………… 2027 $ 7,145,507 2.00 $ 6,640,647 $ - $ 377,397 $ 6,263,250 General Obligation Refunding Bonds of 2005…… 2017 1,311,060 3.30 220,143 - 121,010 99,133 General Obligation Bonds of 2006………………… 2026 5,245,000 3.40 - 4.10 345,000 - 345,000 - General Obligation Refunding Bonds of 2008…… 2018 474,700 3.00 135,000 - 45,000 90,000 General Obligation Bonds of 2009………………… 2029 1,051,000 4.00 820,000 - 675,000 145,000 General Obligation Bonds of 2010………………… 2030 16,379,000 3.50 13,246,000 - 780,000 12,466,000 General Obligation Refunding Bonds of 2010…… 2021 1,705,000 1.50 - 2.50 720,000 - 125,000 595,000 General Obligation Refunding Bonds of 2012…… 2017 50,000 1.80 20,000 - 10,000 10,000 General Obligation Refunding Bonds of 2013…… 2026 4,533,550 2.00-3.00 4,533,550 - 153,050 4,380,500 General Obligation Bonds of 2013………………… 2033 2,004,652 2.00-3.00 1,730,000 - 140,000 1,590,000 General Obligation Refunding Bonds of 2016…… 2029 655,000 2.00-3.00 - 655,000 - 655,000 Total water bonds payable………………………………………………………...…………………………$ 28,410,340 $ 655,000 $ 2,771,457 $ 26,293,883 Debt service requirements for principal and interest for Water Enterprise Fund bonds payable in future years are as follows: Year Principal Interest Total 2017……………$ 2,097,754 $ 780,314 $ 2,878,068 2018…………… 1,991,600 714,584 2,706,184 2019…………… 1,829,335 652,994 2,482,329 2020…………… 1,868,829 594,339 2,463,168 2021…………… 1,921,187 538,171 2,459,358 2022…………… 1,820,316 484,395 2,304,711 2023…………… 1,845,913 430,292 2,276,205 2024…………… 1,887,682 375,738 2,263,420 2025…………… 1,947,829 321,040 2,268,869 2026…………… 1,892,956 265,374 2,158,330 2027…………… 1,654,269 210,422 1,864,691 2028…………… 1,631,655 155,653 1,787,308 2029…………… 1,613,568 100,525 1,714,093 2030…………… 1,591,085 44,524 1,635,609 2031…………… 494,905 7,650 502,555 2032…………… 100,000 4,650 104,650 2033…………… 105,000 1,575 106,575 Total……………$ 26,293,883 $ 5,682,240 $ 31,976,123 Notes to Basic Financial Statements Year Ended June 30, 2016 Town of Cohasset, Massachusetts 62 Comprehensive Annual Financial Report The Town is subject to various debt limits by statute and may issue additional general obligation debt under the normal debt limit. At June 30, 2016, the Town had the following authorized and unissued debt: Purpose Amount Septic System……………………………………………………$ 1,500,000 Department of Public Works Vehicles and Equipment……… 264,000 IT Infrastructure…………………………………………………… 206,000 School Security Internal Cameras……………………………… 115,000 Bound Brook Dam……………………………………………… 1,191,400 Bear Hill Water Tank Painting & Repairs……………………… 400,000 Total………………………………………………………………$ 3,676,400 Changes in Long-term Liabilities During the year ended June 30, 2016, the following changes occurred in long-term liabilities: Balance Balance Due June 30, June 30, Within 2015 Additions Reductions 2016 One Year Governmental Activities: Long-term bonds payable………………………… $ 20,617,799 $ 1,401,500 $ (3,408,084) $ 18,611,215 $ 3,356,122 Unamortized premium on bonds payable……… 605,705 - (129,113) 476,592 - Total bonds payable………………………………… 21,223,504 1,401,500 (3,537,197) 19,087,807 3,356,122 Landfill closure……………………………………… 237,226 - (24,500) 212,726 24,500 Other postemployment benefits…………………… 10,184,000 2,622,000 (1,812,000) 10,994,000 - Net pension liability………………………………… 16,998,010 4,459,125 (1,695,188) 19,761,947 - Total Governmental Activities………………………$ 48,642,740 $ 8,482,625 $ (7,068,885) $ 50,056,480 $ 3,380,622 Business-Type Activities: Long-term bonds payable………………………… $ 40,590,132 $ 1,418,500 $ (3,622,595) $ 38,386,037 $ 2,832,217 Net pension liability………………………………… 117,584 30,845 (11,726) 136,703 - Total Business Type Activities….…………………$ 40,707,716 $ 1,449,345 $ (3,634,321) $ 38,522,740 $ 2,832,217 The governmental activities liabilities will be liquidated by the general fund. The business-type liabilities will be liquidated by the enterprise fund reporting the liability. Notes to Basic Financial Statements Year Ended June 30, 2016 Town of Cohasset, Massachusetts 63 Comprehensive Annual Financial Report NOTE 9 – GOVERNMENTAL FUND BALANCE CLASSIFICATIONS The Town has adopted GASB Statement No. 54 Fund Balance Reporting and Governmental Fund Types Definitions. The intention of the GASB is to provide a more structured classification of fund balance and to improve the usefulness of fund balance reporting to the users of the Town’s financial statements. The reporting standard establishes a hierarchy for fund balance classifications and the constraints imposed on the uses of those resources. Massachusetts General Law Ch.40 §5B allows for the establishment of Stabilization funds for one or more different purposes. The creation of a fund requires a two-thirds vote of the legislative body and must clearly define the purpose of the fund. Any changes to the purpose of the fund along with any additions to or appropriations from the fund required a two-thirds vote of the legislative body. At year end the balance of the General Stabilization fund is $2,867,582, the Facilities Stabilization fund is $2,453, and the Capital Stabilization fund is $498,855. All stabilization balances have been reported as unassigned fund balance within the General Fund. GASB 54 provides for two major types of fund balance, which are nonspendable and spendable and are more fully discussed in Note 1. Nonspendable fund balances are balances that cannot be spent because they are not expected to be converted to cash or they are legally or contractually required to remain intact. Examples of this classification are prepaid items, inventories, and principal (corpus) of an endowment fund. The Town has reported principal portions of endowment funds as nonspendable. The general fund is the only fund that reports a positive unassigned fund balance amount. In other governmental funds it is not appropriate to report a positive unassigned fund balance amount. However, in the governmental funds other than the general fund, if expenditures incurred for specific purposes exceed the amounts that are restricted, committed, or assigned to other purposes, it may be necessary to report a negative unassigned fund balance in that fund. In addition to the nonspendable fund balances, GASB 54 has provided a hierarchy of spendable fund balances, based on a hierarchy of spending constraints. • Restricted: fund balances that are constrained by external parties, constitutional provisions, or enabling legislation. • Committed: fund balances that contain self-imposed constraints of the government from its highest level of decision making authority. • Assigned: fund balances that contain self-imposed constraints of the government to be used for a particular purpose. • Unassigned: fund balance of the general fund that is not constrained for any particular purpose. The Town’s spending policy is to spend restricted fund balance first, followed by committed, assigned and unassigned fund balance. Most governmental funds are designated for one purpose at the time of their creation. Therefore, any expenditure from the fund will be allocated to the applicable fund balance classifications in the order of the aforementioned spending policy. The general fund and certain other funds may have more than one purpose. Notes to Basic Financial Statements Year Ended June 30, 2016 Town of Cohasset, Massachusetts 64 Comprehensive Annual Financial Report As of June 30, 2016, the governmental fund balance consisted of the following: Nonmajor Total Governmental Governmental General Funds Funds Fund Balances Nonspendable: Permanent fund principal………………………$- $ 425,885 $ 425,885 Restricted for: Town grants…………………………………… - 203,562 203,562 School grants…………………………………… - 462,389 462,389 Receipts reserved for appropriation………… - 1,097,076 1,097,076 MCWT septic loan program…………………… - 112,084 112,084 Town revolving funds…………………………… - 276,045 276,045 School revolving funds………………………… - 610,930 610,930 School lunch…………………………………… - 222,344 222,344 Community preservation……………………… - 2,266,802 2,266,802 Gifts and donations…………………………… - 1,581,204 1,581,204 Other Town special revenue………………… - 4,493 4,493 Capital projects bonded……………………… - 473,301 473,301 Capital projects non-bonded………………… - 1,114,906 1,114,906 Library expendable trust funds……………… - 1,151,422 1,151,422 Other expendable trust funds………………… - 797,844 797,844 Committed to: Administrative services…………………………167,295 - 167,295 Public safety…………………………………… 14,897 - 14,897 Education…………………………………………151,019 - 151,019 Public works…………………………………… 47,521 - 47,521 Culture and recreation………………………… 550 - 550 Assigned to: Encumbrances: Administrative services………………………… 92,483 - 92,483 Public safety…………………………………… 13,569 - 13,569 Education………………………………………… 25,961 - 25,961 Public works/facilities………………………… 142,158 - 142,158 Health & welfare………………………………… 364 - 364 Unassigned…………………………………………… 6,036,011 - 6,036,011 Total Fund Balances………………………………………$ 6,691,828 $ 10,800,677 $ 17,492,505 Governmental Funds Notes to Basic Financial Statements Year Ended June 30, 2016 Town of Cohasset, Massachusetts 65 Comprehensive Annual Financial Report NOTE 10 – RISK FINANCING The Town is exposed to various risks of loss related to torts: theft of, damage to and destruction of assets; errors and omissions; and natural disasters for which the Town carries commercial insurance. The amount of claim settlements has not exceeded insurance coverage in any of the previous three years. The Town is part of a premium-based self-insurance group which insures for health insurance, as well as general and personal liability, through the Massachusetts Inter-Local Insurance Association (MIIA). The Town essentially transfers risk through payment of its annual assessment which is adjusted according to the Town’s experience history. The Town is self-insured for worker’s compensation and unemployment benefits which are funded on a pay-as- you-go basis from annual appropriations. The estimated future workers’ compensation liability is based on history and injury type. At June 30, 2016, the amount of the liability for workers’ compensation claims and unemployment benefits were immaterial and are therefore not reported. NOTE 11 – PENSION PLAN The Town is a member of the Norfolk County Contributory Retirement System (System), a cost-sharing multiple- employer defined benefit pension plan covering eligible employees of the 43 member units. The system is administered by five board members (Board) on behalf of all current employees and retirees except for current teachers and retired teachers. Chapter 32 of the MGL assigns authority to establish and amend benefit provisions of the plan. The System issues a publicly available unaudited financial report in accordance with guidelines established by the Commonwealth’s Public Employee Retirement Administration Commission. That report may be obtained by contacting the System located at 480 Neponset Street, Building 15, Canton, MA 02021; or by visiting http:// http://www.norfolkcountyretirement.org/. The Town is a member of the Massachusetts Teachers’ Retirement System (MTRS), a cost-sharing multi- employer defined benefit plan. MTRS is managed by the Commonwealth of Massachusetts (Commonwealth) on behalf of municipal teachers and municipal teacher retirees. The Commonwealth is a nonemployer contributor and is responsible for 100% of the contributions and future benefit requirements of the MTRS. The MTRS covers certified teachers in cities (except Boston), towns, regional school districts, charter schools, educational collaboratives and Quincy College. The MTRS is part of the Commonwealth’s reporting entity and the audited financial report may be obtained by visiting http://www.mass.gov/osc/publications-and-reports/financial-reports/. Special Funding Situation The Commonwealth is a nonemployer contributor and is required by statute to make 100% of all actuarially determined employer contributions on behalf of the Town to the MTRS. Therefore, the Town is considered to be in a special funding situation as defined by GASB Statement No. 68, Accounting and Financial Reporting for Pensions and the Commonwealth is a nonemployer contributor in MTRS. Since the Town does not contribute directly to MTRS, there is no net pension liability to recognize. The total of the Commonwealth provided contributions have been allocated based on each employer’s covered payroll to the total covered payroll of employers in MTRS as of the measurement date of June 30, 2015. The Town’s portion of the collective pension expense, contributed by the Commonwealth, of $3,152,542 is reported in the general fund as intergovernmental revenue and pension expense in the current fiscal year. The portion of the Commonwealth’s collective net pension liability associated with the Town is $38,868,017 as of the measurement date. Notes to Basic Financial Statements Year Ended June 30, 2016 Town of Cohasset, Massachusetts 66 Comprehensive Annual Financial Report Benefits Provided Both Systems provide retirement, disability, survivor and death benefits to plan members and beneficiaries. Massachusetts Contributory Retirement System benefits are, with certain minor exceptions, uniform from system to system. The System provides for retirement allowance benefits up to a maximum of 80% of a member's highest three-year average annual rate of regular compensation. For persons who became members on or after April 2, 2012, average salary is the average annual rate of regular compensation received during the five consecutive years that produce the highest average, or, if greater, during the last five years (whether or not consecutive) preceding retirement. Benefit payments are based upon a member's age, length of creditable service, level of compensation, and group classification. Members become vested after ten years of creditable service. There were no changes in benefit terms that affected the measurement of the total pension liability at December 31, 2015. Employees who resign from service and who are not eligible to receive a retirement allowance or are under the age of 55 are entitled to request a refund of their accumulated total deductions. Survivor benefits are extended to eligible beneficiaries of members whose death occurs prior to or following retirement. Cost-of-living adjustments granted between 1981 and 1997 and any increase in other benefits imposed by the Commonwealth’s state law during those years are borne by the Commonwealth and are deposited into the pension fund. Cost-of-living adjustments granted after 1997 must be approved by the Board and are borne by the System. Contributions Chapter 32 of the MGL governs the contributions of plan members and member units. Active plan members are required to contribute to the System at rates ranging from 5% to 9% of gross regular compensation with an additional 2% contribution required for compensation exceeding $30,000. The percentage rate is keyed to the date upon which an employee's membership commences. The member units are required to pay into the ERRS a legislatively mandated actuarial determined contribution that is apportioned among the employers based on active current payroll. The Town’s proportionate share of the required contribution equaled its actual contribution for the year ended December 31, 2015 was $1,706,914, (17.35%) of covered payroll, actuarially determined as an amount that, when combined with plan member contributions, is expected to finance the costs of benefits earned by plan members during the year, with an additional amount to finance any unfunded accrued liability. Pension Liabilities At June 30, 2016, the Town reported a liability of $19,898,650 for its proportionate share of the net pension liability. The net pension liability was measured as of December 31, 2015, and the total pension liability used to calculate the net pension liability was determined by an actuarial valuation as of January 1, 2016. The Town’s proportion of the net pension liability was based on a projection of the Town’s long-term share of contributions to the pension plan relative to the projected contributions of all participating members. At December 31, 2015, the Town’s proportion was 3.66%. This compares to its proportion of 3.30% from the previous actuarial valuation dated January 1, 2014. Pension Expense For the year ended June 30, 2016, the Town recognized pension expense of $2,549,839. At June 30, 2016, the Town reported deferred outflows of resources related to pensions of $4,323,916 from the net difference between projected and actual experience, as well as between projected and actual investment earnings on pension plan investments. Deferred inflows of resources related to pensions totaled $1,676,997 from changes in assumptions, as well as changes in proportion. Notes to Basic Financial Statements Year Ended June 30, 2016 Town of Cohasset, Massachusetts 67 Comprehensive Annual Financial Report The balances of deferred outflows and inflows related to pensions at June 30, 2016 consist of the following: Deferred Deferred Outflows Inflows Deferred category of Resources of Resources Total Differences between expected and actual experience………………… $ 403,188 $ - $ 403,188 Net difference between projected and actual investment earnings…… 2,203,355 - 2,203,355 Changes in proportion……………………………………………………… 1,293,300 - 1,293,300 Recognition of previous deferred outflows………………………………… 424,073 - 424,073 Changes of assumptions…………………………………………………… - (1,676,996) (1,676,996) Total deferred outflows/(inflows) of resources……………………………$ 4,323,916 $ (1,676,996) $ 2,646,920 The Town’s net deferred outflows/(inflows) of resources related to pensions will be recognized in pension expense as follows: Year ended June 30: 2017…………………………………………………$ 697,196 2018………………………………………………… 697,196 2019………………………………………………… 697,196 2020………………………………………………… 555,332 Total…………………………………………………$ 2,646,920 Actuarial Assumptions The total pension liability in the January 1, 2016 actuarial valuation was determined using the following actuarial assumptions: Valuation date…………………………… January 1, 2016 Actuarial cost method…………………… Entry Age Normal Cost Method. Asset valuation method………………… Market value Investment rate of return………………… 8.00% Projected salary increases……………… 3.5% - 5.5% Inflation rate……………………………… 4.00% Cost of living adjustments……………… 3.0% of the first $15,000 of retirement income. Mortality…………………………………… The RP-2000 Blue Collar Mortality Table adjusted with Scale with MP-2014. Investment policy The pension plan’s policy in regard to the allocation of invested assets is established and may be amended by the Board. Plan assets are managed on a total return basis with a long-term objective of achieving and maintaining a fully funded status for the benefits provided through the pension plan. Notes to Basic Financial Statements Year Ended June 30, 2016 Town of Cohasset, Massachusetts 68 Comprehensive Annual Financial Report The long-term expected rate of return on pension plan investments was determined using a building-block method in which best-estimate ranges of expected future real rates of return (expected returns, net of pension plan investment expense and inflation) are developed for each major asset class. These ranges are combined to produce the long-term expected rate of return by weighting the expected future real rates of return by the target asset allocation percentage and by adding expected inflation. Best estimates of arithmetic real rates of return for each major asset class included in the pension plan’s target asset allocation as of January 1, 2016 are summarized in the following table: Target Long-Term Expected Asset Class Allocation Real Rate of Return Domestic equity……………… 32.00% 9.40% International equities………… 17.50% 9.70% Fixed income…………………… 19.00% 3.40% Real estate……………………… 9.00% 7.70% Private equity…………………… 8.50% 13.60% Hedge funds…………………… 9.00% 7.90% Real assets…………………… 5.00% 7.90% 100.00% Rate of return For the year ended December 31, 2015, the annual money-weighted rate of return on pension plan investments, net of pension plan investment expense, was -0.75%. The money-weighted rate of return expresses investment performance, net of investment expense, adjusted for the changing amounts actually invested. Discount rate The discount rate used to measure the total pension liability was 8.00%, a reduction from 8.25% from the last measurement date. The projection of cash flows used to determine the discount rate assumed plan member contributions will be made at the current contribution rate and that contributions will be made at rates equal to the actuarially determined contribution rated. Based on those assumptions, the pension plan’s fiduciary net position was projected to be available to make all projected future benefit payments of current plan members. Therefore, the long-term expected rate of return on pension plan investments was applied to all periods of projected benefit payments to determine the total pension liability. Sensitivity of the net position liability to changes in the discount rate The following presents the net position liability, calculated using the discount rate of 8.00%, as well as what the net position liability would be if it were calculated using a discount rate that is 1-percentage-point lower (7.00%) or 1-percentage-point higher (9.00%) than the current rate: Current 1% Decrease Discount 1% Increase (7.00%) (8.00%) (9.00%) The Town's proportionate share of the net pension liability………$ 24,955,467 $ 19,898,650 $ 15,582,514 Notes to Basic Financial Statements Year Ended June 30, 2016 Town of Cohasset, Massachusetts 69 Comprehensive Annual Financial Report NOTE 12 – POSTEMPLOYMENT BENEFITS OTHER THAN PENSIONS Plan Description – The Town of Cohasset administers a single-employer defined benefit healthcare plan (“the Retiree Health Plan”). The plan provides lifetime healthcare insurance for eligible retirees and their spouses through the Town’s group health insurance plan, which covers both active and retired members. Chapter 32B of the MGL assigns authority to establish and amend benefit provisions of the plan. Benefit provisions are negotiated between the Town and the unions representing Town employees and are renegotiated each bargaining period. The Retiree Health Plan does not issue a publicly available financial report. At year end the membership of the plan is as follows: Current retirees, beneficiaries, and dependents…… 271 Current active members………………………………… 319 Total………………………………………………………590 Funding Policy – Contribution requirements are also negotiated between the Town and union representatives. The required contribution is based on a pay-as-you-go financing requirement. The Town contributes between 50 - 90 percent of the cost of current-year premiums for eligible retired plan members and their spouses. Plan members receiving benefits contribute the remaining percent of their premium costs. For 2016, the Town contributed $1.8 million to the plan. Administrative costs of the Plan are included in both the rates and Town appropriations. The Town accepted legislation that established a Postemployment Benefit Trust and enables the Town to contribute funds to begin pre-funding the OPEB liability. In 2016 the Town contributed $550,000 to the Trust. Annual OPEB Cost and Net OPEB Obligation – The Town’s annual other postemployment benefit (OPEB) cost (expense) is calculated based on the annual required contribution of the employer (ARC), an amount actuarially determined in accordance with the parameters of GASB Statement 45. The ARC represents a level of funding that, if paid on an ongoing basis, is projected to cover the normal cost each year and amortize any unfunded actuarial liabilities (or funding excess) over a period not to exceed thirty years. The components of the Town’s annual OPEB cost for the year, the amount actually contributed to the plan, and changes in the Town’s net OPEB obligation are summarized in the following table: Annual required contribution………………………………………$ 2,545,000 Interest on net OPEB obligation………………………………… 484,000 Adjustments to annual required contribution…………………… (407,000) Annual OPEB cost/expense…………………..………………… 2,622,000 Contributions made………………………………………………… (1,812,000) Increase/(Decrease) in net OPEB obligation…………………… 810,000 Net OPEB obligation - beginning of year………………………… 10,184,000 Net OPEB obligation - end of year……………………………… $ 10,994,000 Notes to Basic Financial Statements Year Ended June 30, 2016 Town of Cohasset, Massachusetts 70 Comprehensive Annual Financial Report The Town’s annual OPEB cost, the percentage of annual OPEB cost contributed to the plan, and the net OPEB obligation for year 2016 and preceding two years are as follows: Percentage of Year Annual Annual OPEB Net OPEB Ended OPEB Cost Cost Contributed Obligation 6/30/2016 $ 2,622,000 69% $ 10,994,000 6/30/2015 2,492,000 61% 10,184,000 6/30/2014 3,239,000 50% 9,204,000 Funded Status and Funding Progress – The funded status of the Plan as of the most recent actuarial valuation date is as follows: Actuarial UAAL as a Actuarial Accrued Unfunded Percentage Actuarial Value of Liability (AAL) AAL Funded Covered of Covered Valuation Assets Projected Unit Credit (UAAL) Ratio Payroll Payroll Date (A) (B) (B-A) (A/B) (C) ((B-A)/C) 7/1/2014 $ 583,141 $ 32,942,616 $ 32,359,475 1.77% $ 20,324,842 159.21% Schedule of Funding Progress Actuarial valuations of an ongoing plan involve estimates of the value of reported amounts and assumptions about the probability of occurrence of events far into the future. Examples include assumptions about future employment, mortality, and the healthcare cost trend. Amounts determined regarding the funded status of the plan and the annual required contributions of the employer are subject to continual revision as actual results are compared with past expectations and new estimates are made about the future. The schedule of funding progress, presented as required supplementary information following the notes to the financial statements, presents multiyear trend information about whether the actuarial value of plan assets is increasing or decreasing over time relative to the actuarial accrued liabilities for benefits. Actuarial Methods and Assumptions – Projections of benefits for financial reporting purposes are based on the substantive plan (the plan as understood by the employer and the plan members) and include the types of benefits provided at the time of each valuation and the historical pattern of sharing of benefit costs between the employer and plan members to that point. The actuarial methods and assumptions used include techniques that are designed to reduce the effects of short-term volatility in actuarial accrued liabilities and the actuarial value of assets, consistent with the long-term perspective of the calculations. In the July 1, 2014 actuarial valuation, actuarial liabilities were determined using the projected unit credit cost method. The actuarial value of plan assets is equal to the market value. The actuarial assumptions included a 4.75% investment return assumption, which is based on the expected yield on the assets of the Town, calculated based on the funded level of the plan at the valuation date, an inflation rate of 3.0%, and an annual medical/drug cost trend rate of 8% initially, graded to 5% over 4 years. The UAAL is being amortized over a 30 year open period using a level percentage of projected payroll with amortization payments increasing at 3.5% per year. The remaining amortization period at July 1, 2014 is 30 years. Notes to Basic Financial Statements Year Ended June 30, 2016 Town of Cohasset, Massachusetts 71 Comprehensive Annual Financial Report NOTE 13 – LANDFILL CLOSURE State and federal laws and regulations require the Town to construct a final capping system on its landfill site when it stops accepting waste and to perform certain maintenance and monitoring functions at the site after closure. The Town closed and capped its landfill in 1997. The Town has reflected a $213,000 post-closure care liability at June 30, 2016 as an obligation of governmental funds. This amount is based upon estimates of what it would cost to perform all post-closure care. Actual costs may be higher due to inflation, changes in technology, or changes in regulations. Its cost was estimated based on annual sampling for the current monitoring network at the site and estimated costs to maintain the integrity of the landfill cap during the post-closure period. NOTE 14 – CONTINGENCIES The Town participates in a number of federal award programs. Although the grant programs have been audited in accordance with the provisions of the Single Audit Act Amendments of 1996 through June 30, 2016, these programs are still subject to financial and compliance audits. The amount, if any, of expenditures which may be disallowed by the granting agencies cannot be determined at this time, although it is expected such amounts, if any, to be immaterial. Various legal actions and claims are pending. Litigation is subject to many uncertainties, and the outcome of individual litigated matters is not always predictable. Although the amount of liability, if any, at June 30, 2016, cannot be ascertained, management believes any resulting liability should not materially affect the financial position at June 30, 2016. NOTE 15 – SUBSEQUENT EVENTS Management has evaluated subsequent events through December 19, 2016, which is the date the financial statements were available to be issued. NOTE 16 – IMPLEMENTATION OF NEW GASB PRONOUNCEMENTS During 2016, the following GASB pronouncements were implemented: • GASB Statement #72, Fair Value Measurement and Application. Notes to the basic financial statements were changed to provide additional disclosure on fair value measurement. • GASB Statement #73, Accounting and Financial Reporting for Pensions and Related Assets That Are Not within the Scope of GASB Statement 68, and Amendments to Certain Provisions of GASB Statements 67 and 68. This pronouncement did not impact the basic financial statements. • GASB Statement #76, The Hierarchy of Generally Accepted Accounting Principles for State and Local Governments. This pronouncement did not impact the basic financial statements. • GASB Statement #79, Certain External Investment Pools and Pool Participants. The basic financial statements and related notes were updated to be in compliance with this pronouncement. The following GASB pronouncements will be implemented in the future: • The GASB issued Statement #74, Financial Reporting for Postemployment Benefit Plans Other Than Pension Plans, which is required to be implemented in 2017. Notes to Basic Financial Statements Year Ended June 30, 2016 Town of Cohasset, Massachusetts 72 Comprehensive Annual Financial Report • The GASB issued Statement #75, Accounting and Financial Reporting for Postemployment Benefits Other Than Pensions, which is required to be implemented in 2018. • The GASB issued Statement #77, Tax Abatement Disclosures, which is required to be implemented in 2017. • The GASB issued Statement #78, Pensions Provided through Certain Multiple-Employer Defined Benefit Pension Plans, which is required to be implemented in 2017. • The GASB issued Statement #80, Blending Requirements for Certain Component Units – an amendment of GASB Statement #14, which is required to be implemented in 2017. • The GASB issued Statement #81, Irrevocable Split-Interest Agreements, which is required to be implemented in 2018. • The GASB issued Statement #82, Pension Issues – an amendment of GASB Statements #67, #68, and #73, which is required to be implemented in 2018. Management is currently assessing the impact the implementation of these pronouncements will have on the basic financial statements. Town of Cohasset, Massachusetts 73 Comprehensive Annual Financial Report Required Supplementary Information Town of Cohasset, Massachusetts 74 Comprehensive Annual Financial Report This page intentionally left blank. Town of Cohasset, Massachusetts 75 Comprehensive Annual Financial Report General Fund Budgetary Comparison Schedule The General Fund is the general operating fund of the Town. It is used to account for the entire Town’s financial resources, except those required to be accounted for in another fund. General Fund Budgetary Comparison Schedule Actual Amounts Original Final Budgetary Carried Forward Variance to Budget Budget Amounts To Next Year Final Budget REVENUES: Real estate and personal property taxes, net of tax refunds……………………………………………$ 34,236,741 $ 34,236,741 $ 34,890,083 $ - $ 653,342 Motor vehicle and other excise taxes………………………… 1,205,608 1,205,608 1,545,914 - 340,306 Penalties and interest on taxes……………………………… 162,750 162,750 278,552 - 115,802 Fees and rentals………………………………………………… 943,250 943,250 959,411 - 16,161 Licenses and permits…………………………………………… 550,000 550,000 852,840 - 302,840 Fines and forfeitures…………………………………………… 36,500 36,500 35,719 - (781) Intergovernmental……………………………………………… 2,923,209 2,923,209 2,915,971 - (7,238) Departmental and other………………………………………… 190,200 190,200 243,487 - 53,287 Special assessments…………………………………………… 375,000 375,000 400,430 - 25,430 Investment income……………………………………………… 30,900 30,900 33,972 - 3,072 TOTAL REVENUES…………………………………… 40,654,158 40,654,158 42,156,379 - 1,502,221 EXPENDITURES: ADMINISTRATIVE SERVICES Town Moderator…………………………………………… 500 500 - - 500 Board of Selectmen………………………………………… 270,116 270,116 227,306 35,875 6,935 Town Manager……………………………………………… 606,603 626,108 469,128 136,013 20,967 Human Resource Management…………………………… 70,000 70,000 58,051 - 11,949 School Support Officer……………………………………… 55,000 55,000 5,661 - 49,339 Advisory Committee………………………………………… 360 360 176 - 184 Reserve Fund……………………………………………… 200,000 18,125 - - 18,125 Director of Finance………………………………………… 278,304 278,304 273,221 - 5,083 Board of Assessors………………………………………… 216,608 216,608 203,209 - 13,399 Treasurer/Collector………………………………………… 312,069 312,069 286,839 800 24,430 Legal Services……………………………………………… 175,000 227,000 224,039 2,961 - Chief Technology Office…………………………………… 335,644 337,514 280,915 34,788 21,811 Town Clerk…………………………………………………… 153,608 154,433 151,094 350 2,989 Permits & Inspections……………………………………… 178,596 213,596 161,003 48,991 3,602 Unclassified………………………………………………… 367,210 387,210 387,094 - 116 Total Administrative services………………………………… 3,219,618 3,166,943 2,727,736 259,778 179,429 PUBLIC SAFETY Police………………………………………………………… 2,271,424 2,271,424 2,248,062 13,257 10,105 Fire…………………………………………………………… 2,341,739 2,293,739 2,276,871 6,207 10,661 Building Comissioner……………………………………… 141,563 141,563 135,128 - 6,435 Emergency Management…………………………………… 38,000 38,000 30,162 2,734 5,104 Harbor Master……………………………………………… 118,961 118,961 112,693 6,268 - Shellfish Constable………………………………………… 950 950 950 - - Total Public Safety……………………………………………… 4,912,637 4,864,637 4,803,866 28,466 32,305 EDUCATION Cohasset Schools…………………………………………… 17,743,955 17,743,956 17,418,163 176,980 148,813 South Shore Vocational…………………………………… 73,471 73,471 73,471 - - Total Education………………………………………………… 17,817,426 17,817,427 17,491,634 176,980 148,813 PUBLIC WORKS/FACILITIES Department of Public Works……………………………… 1,558,950 1,358,950 1,173,538 131,410 54,002 Snow & Ice Removal……………………………………… 125,000 190,906 190,906 - - Street Lighting……………………………………………… 45,000 95,000 94,008 - 992 Transfer Station……………………………………………… 469,877 493,977 467,214 16,906 9,857 Facilities Management……………………………………… 1,021,552 971,552 850,324 41,363 79,865 Total Public Works/Facilities…………………………………… 3,220,379 3,110,385 2,775,990 189,679 144,716 (Continued) Budgeted Amounts GENERAL FUND SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL YEAR ENDED JUNE 30, 2016 Town of Cohasset, Massachusetts 76 Comprehensive Annual Financial Report Actual Amounts Original Final Budgetary Carried Forward Variance to Budget Budget Amounts To Next Year Final Budget Budgeted Amounts GENERAL FUND SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL YEAR ENDED JUNE 30, 2016 HEALTH & WELFARE Board of Health……………………………………………… 152,089 152,089 149,290 364 2,435 Elder Affairs………………………………………………… 270,990 270,990 268,014 - 2,976 Veterans Services…………………………………………… 138,850 138,850 99,325 - 39,525 Total Health & Welfare………………………………………… 561,929 561,929 516,629 364 44,936 CULTURE AND RECREATION Library………………………………………………………… 590,868 594,068 589,769 550 3,749 Recreation…………………………………………………… 123,417 123,417 123,307 - 110 Common Historical Commission…………………………… 500 500 - - 500 Historical Preservation……………………………………… 1,200 1,200 1,200 - - Total Culture and Recreation………………………………… 715,985 719,185 714,276 550 4,359 DEBT SERVICE Principal……………………………………………………… 2,636,189 2,636,189 2,636,189 - - Interest……………………………………………………… 472,337 472,337 457,534 6,369 8,434 Total Debt Service……………………………………………… 3,108,526 3,108,526 3,093,723 6,369 8,434 BENEFITS & INSURANCE Pension Assessment……………………………………… 1,706,914 1,706,914 1,706,914 - - Workers Compensation…………………………………… 132,619 132,619 131,370 - 1,249 Unemployment……………………………………………… 7,500 2,611 1,860 - 751 Health Insurance…………………………………………… 5,106,164 5,106,164 5,058,652 - 47,512 Life Insurance……………………………………………… 9,547 9,547 7,333 - 2,214 Medicare Tax………………………………………………… 302,043 306,931 306,931 - - Property & Liability Insurance……………………………… 296,080 296,080 286,655 - 9,425 Total Benefits & Insurance…………………………………… 7,560,867 7,560,866 7,499,715 - 61,151 State and County Assessment………………………………… 424,779 424,779 418,365 - 6,414 TOTAL EXPENDITURES……………………………… 41,542,146 41,334,677 40,041,934 662,186 630,557 EXCESS (DEFICIENCY) OF REVENUES OVER (UNDER) EXPENDITURES…………………………………… (887,988) (680,519) 2,114,445 (662,186) 2,132,778 OTHER FINANCING SOURCES (USES): Premium from issuance of bonds…………………………… - - 52,401 - 52,401 Transfers in……………………………………………………… 592,453 592,453 592,453 - - Transfers out…………………………………………….……… (1,528,800) (1,836,270) (1,836,270) - - TOTAL OTHER FINANCING SOURCES (USES)…… (936,347) (1,243,817) (1,191,416) - 52,401 NET CHANGE IN FUND BALANCE……………………………… (1,824,335) (1,924,336) 923,029 (662,186) 2,185,179 BUDGETARY FUND BALANCE, Beginning of year…………… 2,364,370 2,364,370 2,364,370 - - BUDGETARY FUND BALANCE, End of year……………………$ 540,035 $ 440,034 $ 3,287,399 $ (662,186) $ 2,185,179 See notes to required supplementary information.(Concluded) Town of Cohasset, Massachusetts 77 Comprehensive Annual Financial Report Town of Cohasset, Massachusetts 78 Comprehensive Annual Financial Report Pension Plan Schedules - Town The Schedule of the Town’s Proportionate Share of the Net Pension Liability presents multi-year trend information on the Town’s net pension liability and related ratios. The Schedule of Town Contributions presents multi-year trend information on the Town’s required and actual contributions to the pension plan and related ratios. The Schedule of the Special Funding Amounts of the Net Pension Liability for the Massachusetts Teachers Contributory Retirement System presents multi-year trend information on the liability and expense assumed by the Commonwealth of Massachusetts on behalf of the Town along with related ratios. These schedules are intended to present information for ten years. Until a ten year trend is compiled, information is presented for those years for which information is available. Pension Plan Schedules - Town December 31, December 31, 2014 2015 Town's proportion of the net pension liability (asset)……………………………… 3.30% 3.66% Town's proportionate share of the net pension liability (asset)……………………$ 17,115,594 $ 19,898,650 Town's covered employee payroll……………………………………………………$ 8,086,454 $ 9,836,750 Net pension liability as a percentage of covered-employee payroll…………………………………………………………………………………… 211.66% 202.29% Plan fiduciary net position as a percentage of the total pension liability…………………………………………………………………… 60.10% 58.60% Note: this schedule is intended to present information for 10 years. Until a 10-year trend is compiled, information is presented for those years for which information is available. See notes to required supplementary information. SCHEDULE OF THE TOWN'S PROPORTIONATE SHARE OF THE NET PENSION LIABILITY NORFOLK COUNTY CONTRIBUTORY RETIREMENT SYSTEM Town of Cohasset, Massachusetts 79 Comprehensive Annual Financial Report December 31, December 31, 2014 2015 Actuarially determined contribution……………………$ 1,596,748 $ 1,706,914 Contributions in relation to the actuarially determined contribution……………………………… 1,596,748 1,706,914 Contribution deficiency (excess)……………………$- $ - Covered-employee payroll………………………………$ 8,086,454 $ 9,836,750 Contributions as a percentage of covered- employee payroll……………………………………… 19.75% 17.35% Note: this schedule is intended to present information for 10 years. Until a 10-year trend is compiled, information is presented for those years for which information is available. See notes to required supplementary information. SCHEDULE OF TOWN CONTRIBUTIONS NORFOLK COUNTY CONTRIBUTORY RETIREMENT SYSTEM Town of Cohasset, Massachusetts 80 Comprehensive Annual Financial Report Fiscal Year Commonwealth's 100% Share of the Net Pension Liability Associated with the Town Town's Expense and Revenue Recognized for the Commonwealth's Support Plan Fiduciary Net Position as a Percentage of the Total Liability 2016 $ 38,868,017 $ 3,152,542 55.38% 2015 29,555,851 2,053,387 61.64% Note: this schedule is intended to present information for 10 years. Until a 10-year trend is compiled, information is presented for those years for which information is available. See notes to required supplementary information. SCHEDULE OF THE SPECIAL FUNDING AMOUNTS OF THE NET PENSION LIABILITY MASSACHUSETTS TEACHERS' RETIREMENT SYSTEM The Commonwealth of Massachusetts is a nonemployer contributor and is required by statute to make all actuarially determined employer contributions on behalf of the member employers which creates a special funding situation. Since the Town does not contribute directly to MTRS, there is no net pension liability to recognize. This schedule discloses the Commonwealth's 100% share of the collective net pension liability that is associated with the Town; the portion of the collective pension expense as both a revenue and pension expense recognized by the Town; and the Plan's fiduciary net position as a percentage of the total liability. Town of Cohasset, Massachusetts 81 Comprehensive Annual Financial Report Town of Cohasset, Massachusetts 82 Comprehensive Annual Financial Report Other Postemployment Benefits Plan Schedules The Schedule of Funding Progress compares, over time, the actuarial accrued liability for benefits with the actuarial value of accumulated plan assets. The Schedule of Employer Contributions compares, over time, the annual required contributions to the actual contribution made. The Schedule of Actuarial Methods and Assumptions presents factors that significantly affect the identification of trends in the amounts reported. Other Postemployment Benefits Plan Schedules Actuarial UAAL as a Actuarial Accrued Unfunded Percentage Actuarial Value of Liability (AAL) AAL Funded Covered of Covered Valuation Assets Projected Unit Credit (UAAL) Ratio Payroll Payroll Date (A) (B) (B-A) (A/B) (C) ((B-A)/C) 7/1/2014 $ 583,141 $ 32,942,616 $ 32,359,475 1.77% $ 20,324,842 159.2% 7/1/2012 147,649 36,227,021 36,079,372 0.41% 16,716,994 215.8% 7/1/2010 - 32,380,795 32,380,795 0.00% 16,972,461 190.8% 7/1/2008 - 27,570,365 27,570,365 0.00% 15,431,785 178.7% Annual Actual Percentage of Year Required Contributions the ARC Ended Contribution (ARC) Made Contributed 2016 $ 2,545,000 $ 1,812,000 71.2% 2015 2,454,000 1,512,000 61.6% 2014 3,208,000 1,604,000 50.0% 2013 3,075,000 1,435,000 46.7% 2012 3,311,000 1,274,000 38.5% 2011 2,542,000 1,112,000 43.7% See notes to required supplementary information. Schedule of Employer Contributions OTHER POSTEMPLOYMENT BENEFITS PLAN SCHEDULE OF FUNDING PROGRESS AND EMPLOYER CONTRIBUTIONS Schedule of Funding Progress Town of Cohasset, Massachusetts 83 Comprehensive Annual Financial Report Actuarial Methods: Valuation date…………………………………………… July 1, 2014 Actuarial cost method…………………………………… Projected Unit Credit Amortization method…………………………………… Increasing at 3.50% over thirty years on an open amortization period. Remaining amortization period………………………… 30 years at July 1, 2014. Asset valuation method………………………………… Market value Actuarial Assumptions: Investment rate of return……………………………… 4.75% per annum. Inflation rate……………………………………………… 3.0% per annum. Medical/drug cost trend rate…………………………… 8% initially, graded to 5% over 4 years. Plan Membership: Current retirees, beneficiaries, and dependents…… 271 Current active members………………………………… 319 Total………………………………………………………590 See notes to required supplementary information. OTHER POSTEMPLOYMENT BENEFITS PLAN ACTUARIAL METHODS AND ASSUMPTIONS Town of Cohasset, Massachusetts 84 Comprehensive Annual Financial Report Notes to Required Supplementary Information Year Ended June 30, 2016 Town of Cohasset, Massachusetts 85 Comprehensive Annual Financial Report NOTE A – STEWARDSHIP, COMPLIANCE AND ACCOUNTABILITY Notes to Required Supplementary Information A. Budgetary Information Municipal Law requires the adoption of a balanced budget that is approved by the Advisory Committee (Committee). The Committee presents an annual budget to the Open Town Meeting, which includes estimates of revenues and other financing sources and recommendations of expenditures and other financing uses. The Town, which has full authority to amend and/or reject the budget or any line item, adopts the expenditure budget by majority vote. Increases or transfers between and within departments subsequent to the approval of the annual budget, requires majority vote at a Special Town Meeting. The majority of appropriations are non-continuing which lapse at the end of each year. Others are continuing appropriations for which the governing body has authorized that an unspent balance from a prior year be carried forward and made available for spending in the current year. These carry forwards are included as part of the subsequent year’s original budget. Generally, expenditures may not exceed the legal level of spending (salaries and expenses) authorized for an appropriation account. However, the payment of debt service is statutorily required, regardless of whether such amounts are appropriated. Additionally, expenditures for disasters, natural or otherwise, and final claims and judgments may exceed the level of spending authorized by majority vote at a Special Town Meeting. An annual budget is adopted for the general fund in conformity with the guidelines described above. The original 2016 approved budget authorized $43.1 million in appropriations and other amounts to be raised. During 2016, $100,000 of supplemental appropriations were approved primarily for snow and ice costs. The Finance Director/Town Accountant’s office has the responsibility to ensure that budgetary control is maintained. Budgetary control is exercised through the accounting system. B. Budgetary - GAAP Reconciliation For budgetary financial reporting purposes, the Uniform Municipal Accounting System basis of accounting (established by the Commonwealth) is followed, which differs from the GAAP basis of accounting. A reconciliation of budgetary-basis to GAAP-basis results for the general fund for the year ended June 30, 2016, is presented below: Net change in fund balance, budgetary basis…………………$ 923,029 Perspective difference: Activity of the stabilization fund recorded in the general fund for GAAP………………………………………… (65,275) Basis of accounting differences: Net change in recording revenue accruals…………………… (184,676) Recognition of revenue for on-behalf payments…………… 3,152,542 Recognition of expenditures for on-behalf payments……… (3,152,542) Net change in fund balance - GAAP basis…………………… $ 673,078 Notes to Required Supplementary Information Year Ended June 30, 2016 Town of Cohasset, Massachusetts 86 Comprehensive Annual Financial Report NOTE B – PENSION PLAN Pension Plan Schedules A. Schedule of the Town’s Proportionate Share of the Net Pension Liability The Schedule of the Town’s Proportionate Share of the Net Pension Liability details the allocated percentage of the net pension liability (asset), the proportionate share of the net pension liability, and the covered employee payroll. It also demonstrates the net position as a percentage of the pension liability and the net pension liability as a percentage of covered payroll. B. Schedule of Town’s Contributions Governmental employers are required to pay an annual appropriation as established by PERAC. The appropriation includes the amounts to pay the pension portion of each member’s retirement allowance, an amount to amortize the actuarially determined unfunded liability to zero in accordance with the system’s funding schedule, and additional appropriations in accordance with adopted early retirement incentive programs. The appropriations are payable on July 1 and January 1. The Town may choose to pay the entire appropriation in July at a discounted rate. Accordingly, actual contributions may be less than the “total appropriation”. The pension fund appropriation is allocated to the Town based on covered payroll. C. Schedule of the Special Funding Amounts of the Net Pension Liabilities The Commonwealth of Massachusetts is a nonemployer contributor and is required by statute to make all actuarially determined employer contributions on behalf of the member employers which creates a special funding situation. Since the Town does not contribute directly to MTRS, there is no net pension liability to recognize. This schedule discloses the Commonwealth's 100% share of the collective net pension liability that is associated with the Town; the portion of the collective pension expense as both a revenue and pension expense recognized by the Town; and the Plan's fiduciary net position as a percentage of the total liability. D. Changes in Assumptions: The January 1, 2016 actuarial valuation included an 8.00% assumed rate of return on Plan investments; this is a decrease from the 8.25% assumed rate included in the prior valuation. Additionally, the salary scale was changed to a tiered schedule ranging from 3.5% to 5.5% based on years of service, as compared to a level 4% assumption in the prior valuation. E. Changes in Plan Provisions: Chapter 176 of the Acts of 2011, An Act Providing for Pension Reform and Benefit Modernization made a number of changes to the Chapter 32 pension law. There are several changes that will have the most impact on decreasing plan liabilities over the longer term. These include an increase in the normal retirement age by two years (for example, from age 65 to age 67 for Group 1 members), an increase in the age (early retirement) reduction factor for ages below the maximum age (from a 4.0% to a 6.0% annual reduction), and an increase in the period for determining a member’s average annual compensation (from 3 years to 5 years). Since these changes are effective only for members hired after April 1, 2012, this is the first actuarial valuation to reflect these changes. Notes to Required Supplementary Information Year Ended June 30, 2016 Town of Cohasset, Massachusetts 87 Comprehensive Annual Financial Report NOTE C – OTHER POSTEMPLOYMENT BENEFITS The Town administers a single-employer defined benefit healthcare plan (“the Retiree Health Plan”). The plan provides lifetime healthcare for eligible retirees and their spouses through the Town’s health insurance plan, which covers both active and retired members, including teachers. The Town currently finances its other postemployment benefits (OPEB) on a pay-as-you-go basis plus an additional contribution to the Trust. As a result, the funded ratio (actual value of assets expressed as a percentage of the actuarial accrued liability) is low. In accordance with Governmental Accounting Standards, the Town has recorded its OPEB cost equal to the actuarial determined annual required contribution (ARC) which includes the normal cost of providing benefits for the year and a component for the amortization of the total unfunded actuarial accrued liability of the plan. The Schedule of Funding Progress presents multiyear trend information which compares, over time, the actuarial accrued liability for benefits with the actuarial value of accumulated plan assets. The Schedule of Employer Contributions presents multi-year trend information for required and actual contributions relating to the plan. Projections of benefits for financial reporting purposes are based on the substantive plan and included the types of benefits provided at the time of each valuation and the historical pattern of sharing of benefit cost between the employer and plan members to that point. The actuarial methods and assumptions used include techniques that are designed to reduce the effects of short-term volatility in actuarial accrued liabilities and the actuarial value of assets, consistent with the long-term perspective of the calculations. The Schedule of Actuarial Methods and Assumptions presents factors that significantly affect the identification of trends in the amounts reported. Town of Cohasset, Massachusetts 88 Comprehensive Annual Financial Report This page intentionally left blank. Town of Cohasset, Massachusetts 89 Comprehensive Annual Financial Report Combining and Individual Fund Statements Combining and Individual Fund Statements Town of Cohasset, Massachusetts 90 Comprehensive Annual Financial Report Nonmajor Governmental Funds Nonmajor Governmental Funds Special Revenue Funds Special revenue funds are used to account for the proceeds of specific revenue sources (other than permanent funds or capital project funds) that are restricted by law or administrative action to expenditures for specified purposes. The Town’s special revenue funds are grouped into the following categories: Town Grants – This fund accounts for all federal and state grants used for Town related projects and activities. School Grants – This fund is used to account for all federal and state grants used for school related projects and activities. Receipts Reserved for Appropriation – This fund is used to account for receipts from a specific revenue source that by law is accounted for separately from the general fund and must be spent by appropriation. MCWT Septic Loan Program – This fund is used to account for the activities related to septic loans issued to citizens, funded through the MCWT. Town Revolving Funds – This fund accounts for various Town operations such as insurance recoveries, and the law enforcement trust. School Revolving Fund – This fund accounts for school activity, such as transportation receipts, athletic receipts and tuition costs. School Lunch – This fund is used to account for all cafeteria activities and is funded by user charges, federal and state grants, and commodities received. Community Preservation – This fund is used to account for the 1.5% local real estate tax surcharge on nonexempt property (and matching state trust fund distribution) that can be used for open space, historic resource and affordable housing purposes. Property exempt from the surcharge consists of the first $100,000 of all residential property and also property owned by low income seniors with a low or moderate income as defined by Massachusetts Department of Revenue (DOR) guidelines. Disbursements from this fund must originate from the Community Preservation Committee and be approved by Town Meeting. Gifts and Donations – This fund is used to account for the activities of donated funds. Other Town Special Revenue Funds – This fund accounts for activities related to various Treasury bond premiums. Town of Cohasset, Massachusetts 91 Comprehensive Annual Financial Report Capital Project Funds Capital projects funds are used to account for the acquisition and construction of major capital facilities other than those financed by proprietary funds and trust funds. Chapter 90 – This fund accounts for roadway improvements for which expenditures are reimbursed 100% by the Commonwealth. Capital Projects Bonded – This fund is used to account for major Town and school capital acquisition and construction projects. These projects will be funded through the issuance of long-term bonds and notes. Capital Projects Non-Bonded – This fund is used to account for major Town and school capital acquisition and construction projects. These projects will be funded through available funds. Permanent Funds Permanent funds are used to report resources that are legally restricted to the extent that only earnings, not principal, may be used for purposes that support governmental programs. Library Trust Fund – This fund accounts for all endowment funds managed by the Treasurer and the Cohasset Library Trust, Inc., a blended component unit. The expendable portion of the endowment can only be spent to support the Paul Pratt Memorial Library. Other Trust Funds – These funds account for all contributions and bequests for which only earnings may be expended to benefit the government. Receipts MCWT Town Town School Reserved For Septic Loan Revolving Grants Grants Appropriation Program Funds ASSETS Cash and cash equivalents…………………………………………$ 200,478 $ 505,667 $ 1,097,076 $ 112,084 $ 281,197 Investments…………………………………………………………… - - - - - Receivables, net of uncollectibles: Tax liens…………………………………………………………… - - - - - Departmental and other………………………………………… -- --- Special assessments…………………………………………… - - 800,949 - - Intergovernmental………………………………………………… 4,482 7,563 - - - TOTAL ASSETS…………………………………………………… $ 204,960 $ 513,230 $ 1,898,025 $ 112,084 $ 281,197 LIABILITIES Warrants payable…………………………………………………$ 1,398 $ 49,536 $ - $ - $ 5,064 Accrued payroll…………………………………………………… - 1,305 - - 88 TOTAL LIABILITIES………………………………………………… 1,398 50,841 - - 5,152 DEFERRED INFLOWS OF RESOURCES Unavailable revenues…………………………………………… - - 800,949 - - FUND BALANCES Nonspendable…………………………………………………… - - - - - Restricted………………………………………………………… 203,562 462,389 1,097,076 112,084 276,045 TOTAL FUND BALANCES………………………………………… 203,562 462,389 1,097,076 112,084 276,045 TOTAL LIABILITIES, DEFERRED INFLOWS OF RESOURCES AND FUND BALANCES…………………$ 204,960 $ 513,230 $ 1,898,025 $ 112,084 $ 281,197 Special Revenue Funds NONMAJOR GOVERNMENTAL FUNDS COMBINING BALANCE SHEET JUNE 30, 2016 Town of Cohasset, Massachusetts 92 Comprehensive Annual Financial Report School Other Revolving School Community Gifts and Town Special Funds Lunch Preservation Donations Revenue Funds Sub-total $ 635,603 $ 224,361 $ 2,270,136 $ 1,060,410 $ 4,493 $ 6,391,505 - - - 558,855 - 558,855 - - 6,206 - - 6,206 - - 3,004 - - 3,004 -----800,949 - - - - - 12,045 $ 635,603 $ 224,361 $ 2,279,346 $ 1,619,265 $ 4,493 $ 7,772,564 $ 23,611 $ 56 $ 2,238 $ 14,719 $ - $ 96,622 1,062 1,961 - 23,342 - 27,758 24,673 2,017 2,238 38,061 - 124,380 - - 10,306 - - 811,255 - - - - - - 610,930 222,344 2,266,802 1,581,204 4,493 6,836,929 610,930 222,344 2,266,802 1,581,204 4,493 6,836,929 $ 635,603 $ 224,361 $ 2,279,346 $ 1,619,265 $ 4,493 $ 7,772,564 (Continued) Special Revenue Funds Town of Cohasset, Massachusetts 93 Comprehensive Annual Financial Report Capital Projects Capital Projects Chapter 90 Bonded Non-Bonded Sub-total ASSETS Cash and cash equivalents……………………………………………$ 390 $ 474,677 $ 1,175,080 $ 1,650,147 Investments…………………………………………………………… - - - - Receivables, net of uncollectibles: Tax liens…………………………………………………………… - - - - Departmental and other…………………………………………… - - - - Special assessments……………………………………………… - - - - Intergovernmental………………………………………………… 260,575 - - 260,575 TOTAL ASSETS………………………………………………………$ 260,965 $ 474,677 $ 1,175,080 $ 1,910,722 LIABILITIES Warrants payable………………………………………………… $ - $ 1,376 $ 60,174 $ 61,550 Accrued payroll…………………………………………………… - - - - TOTAL LIABILITIES…………………………………………………… - 1,376 60,174 61,550 DEFERRED INFLOWS OF RESOURCES Unavailable revenues……………………………………………… 260,575 - - 260,575 FUND BALANCES Nonspendable……………………………………………………… - - - - Restricted…………………………………………………………… 390 473,301 1,114,906 1,588,597 TOTAL FUND BALANCES…………………………………………… 390 473,301 1,114,906 1,588,597 TOTAL LIABILITIES, DEFERRED INFLOWS OF RESOURCES AND FUND BALANCES……………………$ 260,965 $ 474,677 $ 1,175,080 $ 1,910,722 Capital Project Funds NONMAJOR GOVERNMENTAL FUNDS COMBINING BALANCE SHEET JUNE 30, 2016 Town of Cohasset, Massachusetts 94 Comprehensive Annual Financial Report Total Nonmajor Library Other Governmental Trust Fund Trust Funds Sub-total Funds $ 47,133 $ 94,965 $ 142,098 $ 8,183,750 1,328,853 904,200 2,233,053 2,791,908 - - - 6,206 - - - 3,004 - - - 800,949 - - - 272,620 $ 1,375,986 $ 999,165 $ 2,375,151 $ 12,058,437 $- $ - $ - $ 158,172 - - - 27,758 - - - 185,930 - - - 1,071,830 224,564 201,321 425,885 425,885 1,151,422 797,844 1,949,266 10,374,792 1,375,986 999,165 2,375,151 10,800,677 $ 1,375,986 $ 999,165 $ 2,375,151 $ 12,058,437 (Concluded) Permanent Funds Town of Cohasset, Massachusetts 95 Comprehensive Annual Financial Report Receipts MCWT Town Town School Reserved For Septic Loan Revolving Grants Grants Appropriation Program Funds REVENUES: Charges for services………………………………………………………$- $ - $ 1,195 $ - $ - Penalties and interest on taxes………………………………………… - - 334 - - Intergovernmental………………………………………………………… 61,430 1,345,107 - - - Departmental and other…………………………………………………… - - 29,146 1,200 393,480 Community preservation tax……………………………………………… - - - - - Contributions……………………………………………………………… - - - - - Special assessments……………………………………………………… - - 99,878 - - Investment income………………………………………………………… - - - - - TOTAL REVENUES……………………………………………… 61,430 1,345,107 130,553 1,200 393,480 EXPENDITURES: Current: Administrative services………………………………………………… 14,692 - 10,818 - 153,876 Public safety…………………………………………………………… 18,895 - - - 11,563 Education……………………………………………………………… - 1,322,421 - - - Public works…………………………………………………………… - - - - 1,970 Health and welfare…………………………………………………… 22,977 - - 85,711 - Culture and recreation………………………………………………… 9,901 - - - 199,664 Community preservation……………………………………………… - - - - - TOTAL EXPENDITURES………………………………………… 66,465 1,322,421 10,818 85,711 367,073 EXCESS (DEFICIENCY) OF REVENUES OVER (UNDER) EXPENDITURES……………………………………… (5,035) 22,686 119,735 (84,511) 26,407 OTHER FINANCING SOURCES (USES): Issuance of long-term debt……………………………………………… - - - - - Capital lease financing…………………………………………………… - - - - - Transfers in………………………………………………………………… - - - - - Transfers out……………………………………………………………… - - (145,338) - - TOTAL OTHER FINANCING SOURCES (USES)……………… - - (145,338) - - NET CHANGE IN FUND BALANCES……………………………………… (5,035) 22,686 (25,603) (84,511) 26,407 FUND BALANCES AT BEGINNING OF YEAR…………………………… 208,597 439,703 1,122,679 196,595 249,638 FUND BALANCES AT END OF YEAR…………………………………… $ 203,562 $ 462,389 $ 1,097,076 $ 112,084 $ 276,045 NONMAJOR GOVERNMENTAL FUNDS COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES YEAR ENDED JUNE 30, 2016 Special Revenue Funds Town of Cohasset, Massachusetts 96 Comprehensive Annual Financial Report School Other Revolving School Community Gifts and Town Special Funds Lunch Preservation Donations Revenue Funds Sub-total $ 788,920 $ 344,921 $ - $ - $ - $ 1,135,036 - - 1,246 - - 1,580 - 67,725 128,785 1,000 - 1,604,047 44,878 - - 5,000 7,800 481,504 - - 457,336 - - 457,336 113,296 - - 977,186 - 1,090,482 - - - - - 99,878 - - 6,997 36,158 - 43,155 947,094 412,646 594,364 1,019,344 7,800 4,913,018 - - - 130,542 - 309,928 - - - 7,975 - 38,433 946,411 385,972 - - - 2,654,804 - - - - - 1,970 - - - 5,089 8,700 122,477 - - - 595,772 - 805,337 - - 259,568 - - 259,568 946,411 385,972 259,568 739,378 8,700 4,192,517 683 26,674 334,796 279,966 (900) 720,501 - - - - - - - - - - - - - - - 57,149 - 57,149 - - (25,671) - - (171,009) - - (25,671) 57,149 - (113,860) 683 26,674 309,125 337,115 (900) 606,641 610,247 195,670 1,957,677 1,244,089 5,393 6,230,288 $ 610,930 $ 222,344 $ 2,266,802 $ 1,581,204 $ 4,493 $ 6,836,929 (Continued) Special Revenue Funds Town of Cohasset, Massachusetts 97 Comprehensive Annual Financial Report Capital Projects Capital Projects Chapter 90 Bonded Non-Bonded Sub-total REVENUES: Charges for services……………………………………………$- $ - $ - $ - Penalties and interest on taxes………………………………… - - - - Intergovernmental……………………………………………… 508,335 - - 508,335 Departmental and other………………………………………… - - - - Community preservation tax…………………………………… - - - - Contributions…………………………………………………… - - - - Special assessments…………………………………………… - - - - Investment income……………………………………………… - - - - TOTAL REVENUES……………………………………… 508,335 - - 508,335 EXPENDITURES: Current: Administrative services……………………………………… - 114,005 408,054 522,059 Public safety………………………………………………… - 19,725 260,177 279,902 Education…………………………………………………… - - 225,860 225,860 Public works………………………………………………… 507,945 - 616,460 1,124,405 Health and human services………………………………… - 995,505 - 995,505 Culture and recreation……………………………………… - - - - Community preservation…………………………………… - - - - TOTAL EXPENDITURES……………………………… 507,945 1,129,235 1,510,551 3,147,731 EXCESS (DEFICIENCY) OF REVENUES OVER (UNDER) EXPENDITURES…………………………… 390 (1,129,235) (1,510,551) (2,639,396) OTHER FINANCING SOURCES (USES): Issuance of long-term debt…………………………………… - 1,208,000 - 1,208,000 Issuance of long-term debt…………………………………… - - 181,803 181,803 Transfers in……………………………………………………… - 282,396 1,629,079 1,911,475 Transfers out…………………………………………………… - - - - TOTAL OTHER FINANCING SOURCES (USES)…… - 1,490,396 1,810,882 3,301,278 NET CHANGE IN FUND BALANCES…………………………… 390 361,161 300,331 661,882 FUND BALANCES AT BEGINNING OF YEAR………………… - 112,140 814,575 926,715 FUND BALANCES AT END OF YEAR……………………………$ 390 $ 473,301 $ 1,114,906 $ 1,588,597 YEAR ENDED JUNE 30, 2016 COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES NONMAJOR GOVERNMENTAL FUNDS Capital Project Funds Town of Cohasset, Massachusetts 98 Comprehensive Annual Financial Report Total Nonmajor Library Other Governmental Trust Fund Trust Funds Sub-total Funds $- $ - $ - $ 1,135,036 - - - 1,580 - - - 2,112,382 - - - 481,504 - - - 457,336 10,995 4,821 15,816 1,106,298 - - - 99,878 - 85,144 85,144 128,299 10,995 89,965 100,960 5,522,313 - - - 831,987 - - - 318,335 - - - 2,880,664 - 500 500 1,126,875 - - - 1,117,982 69,243 - 69,243 874,580 - - - 259,568 69,243 500 69,743 7,409,991 (58,248) 89,465 31,217 (1,887,678) - - - 1,208,000 - - - 181,803 - - - 1,968,624 (57,149) - (57,149) (228,158) (57,149) - (57,149) 3,130,269 (115,397) 89,465 (25,932) 1,242,591 1,491,383 909,700 2,401,083 9,558,086 $ 1,375,986 $ 999,165 $ 2,375,151 $ 10,800,677 (Concluded) Permanent Funds Town of Cohasset, Massachusetts 99 Comprehensive Annual Financial Report Town of Cohasset, Massachusetts 100 Comprehensive Annual Financial Report Agency Fund Agency Fund The Agency Fund is used to account for assets held in a purely custodial capacity. The Town’s agency fund consists of off-duty work details, payroll withholdings, performance bonds, and fees collected on behalf of other governments. AGENCY FUND STATEMENT OF CHANGES IN ASSETS AND LIABILITIES YEAR ENDED JUNE 30, 2016 Beginning End of Year Additions Deletions of Year Cash and cash equivalents……………$ 626,870 $ 1,372,411 $ (1,346,308) $ 652,973 Special details receivables…………… 200,626 367,789 (390,528) 177,887 TOTAL ASSETS……………………………$ 827,496 $ 1,740,200 $ (1,736,836) $ 830,860 Accrued liabilities………………………$ 28,570 $ - $ (28,570) $ - Payroll withholdings…………………… 531,737 654,688 (549,385) 637,040 Liabilities due depositors……………… 267,189 1,085,512 (1,158,881) 193,820 TOTAL LIABILITIES………………………$ 827,496 $ 1,740,200 $ (1,736,836) $ 830,860 ASSETS LIABILITIES Town of Cohasset, Massachusetts 101 Comprehensive Annual Financial Report Town of Cohasset, Massachusetts 102 Comprehensive Annual Financial Report This page intentionally left blank. Statistical Section Sunset Cohasset Cove Photo: Chris Senior Town of Cohasset, Massachusetts 103 Comprehensive Annual Financial Report Statistical Section This part of the Town of Cohasset’s comprehensive annual financial report presents detailed information as a context for understanding what the information in the financial statements, note disclosures, and required supplementary information says about the Town’s overall financial health. Financial Trends • These schedules contain trend information to help the reader understand how the Town’s financial performance and well-being have changed over time. Revenue Capacity • These schedules contain information to help the reader assess the Town’s most significant local revenue source, the property tax. Debt Capacity • These schedules present information to help the reader assess the affordability of the Town’s current levels of outstanding debt and the Town’s ability to issue additional debt in the future. Demographic and Economic Information • These schedules offer demographic and economic indicators to help the reader understand the environment within which the Town’s financial activities take place. Operating Information • These schedules contain service and infrastructure data to help the reader understand how the information in the Town’s financial report relates to the services the Town provides and the activities it performs. SOURCES: Unless otherwise noted, the information in these schedules is derived from the Town’s financial reports for the relevant year. Statistical Section 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016Governmental activitiesNet investment in capital assets…………………………$ 48,068,232 $ 50,643,262 $ 51,522,827 $ 51,634,686 $ 52,393,141 $ 45,256,816 $ 45,149,347 $ 45,942,136 $ 46,801,586 $ 48,845,082 Restricted………………………………………………… 5,834,583 3,913,860 4,516,539 5,582,944 6,107,623 4,904,201 5,941,619 6,742,197 6,995,791 7,488,345 Unrestricted……………………………………………… 5,216,169 5,134,722 2,953,254 1,356,625 (867,326) 2,963,690 2,578,655 (13,865,740) (13,575,380) (15,146,493) Total governmental activities net position…………………$ 59,118,984 $ 59,691,844 $ 58,992,620 $ 58,574,255 $ 57,633,438 $ 53,124,707 $ 53,669,621 $ 38,818,593 $ 40,221,997 $ 41,186,934 Business-type activitiesNet investment in capital assets…………………………$ 19,555,307 $ 15,134,636 $ 14,652,348 $ 18,013,611 $ 30,478,145 $ 23,986,222 $ 23,598,624 $ 24,552,663 $ 25,773,697 $ 26,675,077 Restricted………………………………………………… - - 4,824,658 - - - - - - - Unrestricted……………………………………………… 326,249 4,809,853 498,502 2,446,486 1,593,511 13,812,098 14,040,400 13,279,974 13,128,471 13,304,136 Total business-type activities net position…………………$ 19,881,556 $ 19,944,489 $ 19,975,508 $ 20,460,097 $ 32,071,656 $ 37,798,320 $ 37,639,024 $ 37,832,637 $ 38,902,168 $ 39,979,213 Primary governmentNet investment in capital assets…………………………$ 67,623,539 $ 65,777,898 $ 66,175,175 $ 69,648,297 $ 82,871,286 $ 69,243,038 $ 68,747,971 $ 70,494,799 $ 72,575,283 $ 75,520,159 Restricted………………………………………………… 5,834,583 3,913,860 9,341,197 5,582,944 6,107,623 4,904,201 5,941,619 6,742,197 6,995,791 7,488,345 Unrestricted……………………………………………… 5,542,418 9,944,575 3,451,756 3,803,111 726,185 16,775,788 16,619,055 (585,766) (446,909) (1,842,357) Total primary government net position……………………$ 79,000,540 $ 79,636,333 $ 78,968,128 $ 79,034,352 $ 89,705,094 $ 90,923,027 $ 91,308,645 $ 76,651,230 $ 79,124,165 $ 81,166,147 The Town implemented GASB 68 in fiscal year 2015 and revised the fiscal year 2014 balance to reflect the net pension liability recorded for the first time.Last Ten YearsNet Position By ComponentTown of Cohasset, Massachusetts104Comprehensive Annual Financial Report 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Expenses Governmental activities: Administration…………………………………………………$ 2,411,532 $ 2,247,822 $ 2,077,306 $ 2,996,631 $ 3,194,742 $ 3,664,574 $ 3,447,387 $ 3,680,617 $ 3,997,974 $ 4,487,473 Public safety………………………………………………… 5,064,012 5,241,554 5,603,698 6,078,695 6,622,695 6,643,418 6,455,507 6,623,281 6,991,258 7,738,244 Education……………………………………………………… 21,182,820 22,824,221 24,592,648 24,660,716 25,743,937 26,247,926 27,666,185 28,305,008 27,464,152 29,217,508 Public works………………………………………………… 2,985,226 3,000,931 3,303,838 3,319,593 3,740,913 3,014,490 3,378,422 3,476,400 4,136,781 4,251,519 Health and human services………………………………… - - - 534,902 537,404 582,648 1,924,232 743,217 735,795 863,580 Culture and recreation……………………………………… 1,018,967 1,463,622 2,149,442 1,573,707 1,125,988 1,542,483 1,543,186 1,582,372 1,673,178 2,062,098 Community preservation…………………………………… 698,478 979,560 389,070 - - 46,183 161,798 438,778 271,225 259,568 Interest………………………………………………………… 1,240,749 1,728,188 1,138,051 902,237 921,343 1,244,644 1,146,440 966,501 810,989 643,741 Total governmental activities expenses……………………… 34,601,784 37,485,898 39,254,053 40,066,481 41,887,022 42,986,366 45,723,157 45,816,174 46,081,352 49,523,731 Business-type activities: Water and Sewer…………………………………………… 4,931,421 4,872,635 - - - - - - - - Sewer………………………………………………………… - - 2,574,878 3,247,261 4,165,164 2,810,623 2,741,823 2,379,793 2,315,178 2,466,017 Water………………………………………………………… - - 3,107,783 4,058,435 4,339,973 3,937,565 3,796,075 3,553,676 3,447,642 3,584,724 Total business-type activity expenses………………………… 4,931,421 4,872,635 5,682,661 7,305,696 8,505,137 6,748,188 6,537,898 5,933,469 5,762,820 6,050,741 Total primary government expenses…………………………$ 39,533,205 $ 42,358,533 $ 44,936,714 $ 47,372,177 $ 50,392,159 $ 49,734,554 $ 52,261,055 $ 51,749,643 $ 51,844,172 $ 55,574,472 Program Revenues Governmental activities: Charges for services: Administration………………………………………………$ 590,840 $ 608,963 $ 568,125 $ 326,584 $ 360,593 $ 495,669 $ 570,288 $ 594,218 $ 685,031 $ 572,046 Public safety charges for services……………………… 619,502 542,269 728,561 1,123,285 1,147,747 878,441 954,524 1,034,736 1,058,895 1,293,966 Education charges for services………………………… 1,134,297 1,046,450 1,111,911 1,111,911 1,145,164 975,482 1,064,381 1,090,505 1,129,365 1,143,391 Public works charges for services……………………… 345,301 348,594 332,941 338,641 178,356 238,427 314,016 303,932 292,558 276,478 Health and human Services……………………………… - - - 16,103 21,499 46,623 44,208 37,433 32,907 25,905 Culture and recreation…………………………………… 192,252 220,554 329,764 306,237 332,205 77,414 15,219 20,849 10,000 20,030 Operating grants and contributions………………………… 6,150,388 5,937,188 6,549,047 7,839,025 6,417,307 7,713,034 9,315,471 8,814,016 7,583,649 8,817,175 Capital grants and contributions…………………………… 252,305 621,442 1,118,972 470,782 662,105 928,013 517,534 470,004 695,888 328,686 Total government activities program revenues...…………… 9,284,885 9,325,460 10,739,321 11,532,568 10,264,976 11,353,103 12,795,641 12,365,693 11,488,293 12,477,677 Business-type activities: Charges for services: Water and Sewer………………………………………… 3,231,311 4,317,447 - - - - - - - - Sewer……………………………………………………… - - 1,132,954 3,994,707 1,684,014 2,175,548 1,936,177 1,840,085 1,807,723 1,819,131 Water……………………………………………………… - - 3,103,861 938,375 4,732,701 5,102,955 4,562,181 4,507,575 5,143,208 5,385,579 Capital grants and contributions…………………………… 711,849 729,889 521,528 772,599 13,875,299 222,911 37,676 4,152 - - Total business-type activities program revenues...………… 3,943,160 5,047,336 4,758,343 5,705,681 20,292,014 7,501,414 6,536,034 6,351,812 6,950,931 7,204,710 Total primary government program revenues………………$ 13,228,045 $ 14,372,796 $ 15,497,664 $ 17,238,249 $ 30,556,990 $ 18,854,517 $ 19,331,675 $ 18,717,505 $ 18,439,224 $ 19,682,387 Net (Expense)/Revenue Governmental activities…………………………………………$ (25,316,899) $ (28,160,438) $ (28,514,732) $ (28,533,913) $ (31,622,046) $ (31,633,263) $ (32,927,516) $ (33,450,481) $ (34,593,059) $ (37,046,054) Business-type activities………………………………………… (988,261) 174,701 (924,318) (1,600,015) 11,786,877 753,226 (1,864) 418,343 1,188,111 1,153,969 Total primary government net expense………………………$ (26,305,160) $ (27,985,737) $ (29,439,050) $ (30,133,928) $ (19,835,169) $ (30,880,037) $ (32,929,380) $ (33,032,138) $ (33,404,948) $ (35,892,085) General Revenues and other Changes in Net Position Governmental activities: Real estate, personal property taxes and tax liens, net of tax refunds payable………………………………$ 24,008,846 $ 25,363,080 $ 26,301,119 $ 27,205,991 $ 28,117,764 $ 29,542,428 $ 30,668,230 $ 31,786,548 $ 33,093,668 $ 34,635,305 Motor vehicle and other excise taxes…………………… 1,255,031 1,301,850 1,125,863 1,083,885 1,115,676 1,162,053 1,299,064 1,396,984 1,539,272 1,556,866 Community preservation tax…………….…………..…… 323,669 329,500 347,755 289,045 364,940 388,279 402,419 416,990 436,967 454,855 Penalties and interest on taxes…………………….…… - - 157,070 199,216 118,155 206,230 243,820 189,395 166,014 280,132 Grants and contributions not restricted to specific programs………………………………………… 1,097,648 1,281,172 577,913 478,507 531,931 507,739 441,823 445,448 457,801 490,188 Unrestricted investment income………………………… 652,672 345,926 261,154 289,538 353,846 109,608 239,803 426,962 147,933 392,935 Transfers…………………………………………………… (474,475) 111,770 (440,022) (1,430,634) (729,614) (172,726) 177,271 152,423 154,808 200,710 Total governmental activities………………………………… 26,863,391 28,733,298 28,330,852 28,115,548 29,872,698 31,743,611 33,472,430 34,814,750 35,996,463 38,010,991 Business-type activities: Unrestricted investment income (loss)………………… - - - - - 6,862 19,839 39,862 36,228 123,786 Transfers…………………………………………………… 474,475 (111,770) 440,022 1,430,634 729,614 172,726 (177,271) (152,423) (154,808) (200,710) Total business-type activities………………………………… 474,475 (111,770) 440,022 1,430,634 729,614 179,588 (157,432) (112,561) (118,580) (76,924) Total primary government………………………………………$ 27,337,866 $ 28,621,528 $ 28,770,874 $ 29,546,182 $ 30,602,312 $ 31,923,199 $ 33,314,998 $ 34,702,189 $ 35,877,883 $ 37,934,067 Changes in Net Position Governmental activities…………………………………………$ 1,546,492 $ 572,860 $ (183,880) $ (418,365) $ (1,749,348) $ 110,348 $ 544,914 $ 1,364,269 $ 1,403,404 $ 964,937 Business-type activities………………………………………… (513,786) 62,931 (484,296) (169,381) 12,516,491 932,814 (159,296) 305,782 1,069,531 1,077,045 Total primary government………………………………………$ 1,032,706 $ 635,791 $ (668,176) $ (587,746) $ 10,767,143 $ 1,043,162 $ 385,618 $ 1,670,051 $ 2,472,935 $ 2,041,982 Notes: Health and human services were combined with Culture and recreation prior to FY2009. Water and Sewer activities were combined prior to FY2009. Changes in Net Position Last Ten Years Town of Cohasset, Massachusetts 105 Comprehensive Annual Financial Report 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016General FundReserved………………………………$ 1,064,656 $ 946,813 $ 650,882 $ 635,676 $ - $ - $ - $ - $ - $ - Unreserved…………………………… 1,311,271 598,305 366,706 328,674 - - - - - - Committed……………………………… - - - - - 563,210 481,523 481,240 471,938 381,282 Assigned……………………………… - - - - 261,659 100,724 177,296 161,245 351,097 274,535 Unassigned…………………………… - - - - 1,654,551 2,194,199 3,080,514 4,640,534 5,195,715 6,036,011 Total general fund……………………… $ 2,375,927 $ 1,545,118 $ 1,017,588 $ 964,350 $ 1,916,210 $ 2,858,133 $ 3,739,333 $ 5,283,019 $ 6,018,750 $ 6,691,828 All Other Governmental FundsUnreserved, reported in:Special revenue funds………………$ 4,292,742 $ 4,171,263 $ 4,686,206 $ 4,447,470 $ - $ - $ - $ - $ - $ - Capital projects funds……………… 378,213 347,869 1,564,003 1,547,657 - - - - - - Permanent funds…………………… 1,078,638 929,869 470,507 602,861 - - - - - - Nonspendable………………………… - - - - 223,414 223,414 223,414 424,735 424,735 425,885 Restricted……………………………… - - - - 7,091,227 6,121,494 7,777,139 8,224,501 9,133,351 10,374,792 Unassigned…………………………… - - - - (216,907) - - - - - Total all other governmental funds…. $ 5,749,593 $ 5,449,001 $ 6,720,716 $ 6,597,988 $ 7,097,734 $ 6,344,908 $ 8,000,553 $ 8,649,236 $ 9,558,086 $ 10,800,677 The Town implemented GASB 54 in year 2011, fund balances prior to year 2011 have been reported in the pre-GASB 54 format.Last Ten YearsFund Balances, Governmental FundsTown of Cohasset, Massachusetts106Comprehensive Annual Financial Report 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016Revenues:Real estate, personal property taxes and tax liens, net of tax refunds……………………………………………$ 24,024,445 $ 25,068,139 $ 26,358,347 $ 26,911,817 $ 28,288,869 $ 29,566,547 $ 30,728,408 $ 31,740,271 $ 33,054,033 $ 34,705,407 Motor vehicle and other excise taxes……………………… 1,255,148 1,284,858 1,151,630 1,013,543 1,141,926 1,145,219 1,323,667 1,423,062 1,561,442 1,545,914 Licenses, permits, and fees…………………………………… 353,125 353,673 354,247 478,108 543,407 1,286,403 1,572,712 1,588,933 1,628,690 1,812,251 Penalties and interest on taxes……………………………… 113,820 165,983 157,070 199,216 118,155 206,230 243,820 189,395 166,014 280,132 Fines and Fees………………………………………………… 62,852 38,255 31,905 66,214 41,603 26,240 36,648 52,336 36,523 35,719 Charges for services…………………………………………… - - - - - 975,618 1,065,228 1,091,101 1,090,181 1,135,036 Intergovernmental……………………………………………… 7,291,370 11,852,317 7,902,111 6,815,415 7,283,379 8,276,896 7,869,826 9,043,567 7,644,901 9,015,361 Departmental and other……………………………………… 2,420,899 2,353,281 2,611,334 3,401,009 2,541,449 1,097,591 624,797 685,874 849,262 740,897 Community preservation taxes……………………………… 323,669 329,500 347,755 289,045 364,940 386,736 406,634 416,852 430,473 457,336 Contributions…………………………………………………… 434,322 359,123 343,821 1,231,690 327,964 685,050 1,199,670 712,636 811,760 1,106,298 Special assessments………………………………………… - - - - - 543,308 528,928 588,606 554,695 500,308 Investment income…………………………………………… 652,672 345,926 261,154 289,538 353,846 101,859 239,803 426,962 147,933 392,935 Total revenue…………………………………………………… 36,932,322 42,151,055 39,519,374 40,695,595 41,005,538 44,297,697 45,840,141 47,959,595 47,975,907 51,727,594 Expenditures: Administration………………………………………………… 1,730,736 1,948,258 2,021,005 2,371,786 2,233,776 2,928,984 2,752,661 2,872,276 3,094,345 3,560,252 Public safety…………………………………………………… 3,944,044 4,015,495 4,252,024 4,674,695 4,584,957 4,423,141 4,676,241 4,980,413 4,908,286 5,127,862 Education……………………………………………………… 14,900,817 16,140,775 16,866,182 17,614,538 17,678,808 17,790,989 18,395,033 18,736,662 20,039,676 20,372,298 Public works…………………………………………………… 3,390,864 4,318,823 3,566,755 2,432,446 3,144,958 2,274,672 2,239,202 2,737,423 3,289,689 3,902,865 Health and welfare…………………………………………… - - - 361,930 384,277 477,299 1,788,316 602,257 579,058 1,634,611 Culture and recreation………………………………………… 1,165,866 1,321,206 1,317,249 2,121,394 903,198 1,130,054 1,159,141 1,189,344 1,244,446 1,588,856 Pension benefits……………………………………………… 3,576,981 3,689,572 3,913,458 4,154,230 4,577,048 4,432,165 4,819,457 4,943,764 3,611,380 4,859,456 Employee benefits…………………………………………… 2,613,612 2,901,546 2,754,754 2,891,482 2,777,999 3,570,122 4,022,985 4,191,000 4,366,746 5,792,801 Community preservation……………………………………… 698,476 979,560 389,070 278,054 295,713 207,144 161,798 438,778 271,225 259,568 State and county charges…………………………………… 1,075,608 1,079,456 1,069,319 1,036,228 988,613 973,754 922,630 937,872 1,015,079 418,365 Debt service Principal……………………………………………………… 2,028,833 2,278,880 1,954,979 1,838,109 2,034,985 3,264,323 2,925,391 3,303,933 3,219,630 3,223,085 Interest……………………………………………………… 1,451,637 1,841,793 1,075,004 1,015,231 921,343 1,152,362 1,332,712 985,927 846,574 705,104 Total expenditures…………………………………………… 36,577,474 40,515,364 39,179,799 40,790,123 40,525,675 42,625,009 45,195,567 45,919,649 46,486,134 51,445,123 Excess (deficiency) of revenues over (under) expenditures……………………………………… 354,848 1,635,691 339,575 (94,528) 479,863 1,672,688 644,574 2,039,946 1,489,773 282,471 Other financing sources (uses): Premium from issuance of bonds…………………………… - - - - - 7,749 - - - - Issuance of long-term debt…………………………………… - 1,089,751 1,360,000 1,349,196 - - 1,715,000 - - 1,208,000 Issuance of refunding bonds………………………………… - - - - - 9,039,000 696,450 - - 193,500 Premium from issuance of refunding bonds………………… - - - - - 1,063,518 41,802 - - - Payment to refunded bond escrow agent…………………… - - - - - (9,973,238) (738,252) - - (203,216) Payments of current refunded debt………………………… - (3,974,951) - - - (200,000) - - - - Transfers in…………………………………………………… 556,532 414,857 348,660 487,366 632,099 1,726,682 809,333 890,222 1,483,532 2,340,343 Transfers out…………………………………………………… (1,031,007) (303,087) (788,682) (1,918,000) (1,361,713) (1,899,408) (632,062) (737,799) (1,328,724) (2,139,633) Total other financing sources (uses)…………………………… (474,475) (2,773,430) 919,978 (81,438) (729,614) (235,697) 1,892,271 152,423 154,808 1,398,994 Net change in fund balance…………………………………… $ (119,627) $ (1,137,739) $ 1,259,553 $ (175,966) $ (249,751) $ 1,436,991 $ 2,536,845 $ 2,192,369 $ 1,644,581 $ 1,681,465 Debt service as a percentage of noncapital expenditures…… 10.67% 11.32% 8.09% 7.41% 7.48% 11.04% 9.55% 9.97% 8.88% 8.09%Note: Charges for services were reported as departmental revenue prior to FY2012.Last Ten YearsChanges in Fund Balances, Governmental FundsTown of Cohasset, Massachusetts107Comprehensive Annual Financial Report Assessed and Actual Values and Tax Rates Personal Total Commercial Total Residential Residential Commercial Industrial Property Commercial Commercial % of Town Year Value Tax Rate Value Value Value Value Tax Rate Total Value Value 2007 $2,167,447,677 $10.50 $136,912,204 $7,685,900 $11,984,202 $156,582,306 $10.50 6.7% $2,324,029,983 2008 (1) $2,238,249,282 $10.60 $139,764,272 $9,809,100 $15,297,550 $164,870,922 $10.60 6.9% $2,403,120,204 2009 $2,285,017,876 $10.78 $142,386,023 $9,809,100 $17,961,230 $170,156,353 $10.78 6.9% $2,455,174,229 2010 $2,265,856,922 $11.22 $144,324,020 $9,809,100 $18,749,710 $172,882,830 $11.22 7.1% $2,438,739,752 2011 (1) $2,260,416,269 $11.59 $147,290,135 $10,439,000 $22,156,220 $179,885,355 $11.59 7.4% $2,440,301,624 2012 $2,289,907,980 $11.98 $152,768,381 $468,500 $22,610,360 $175,847,241 $11.98 7.1% $2,465,755,221 2013 $2,344,387,276 $12.20 $153,133,804 $526,500 $23,478,670 $177,138,974 $12.20 7.0% $2,521,526,250 2014 (1) $2,364,598,033 $12.54 $153,369,768 $526,500 $23,783,160 $177,679,428 $12.54 7.0% $2,542,277,461 2015 $2,423,560,624 $12.71 $165,225,922 $1,070,900 $23,639,620 $189,936,442 $12.71 7.3% $2,613,497,066 2016 $2,485,772,774 $12.88 $164,369,961 $1,070,900 $24,387,410 $189,828,271 $12.88 7.1% $2,675,601,045 (1) Revaluation year. Source: Assessor's Department, Town of Cohasset and Official Statements. All property in the Commonwealth of Massachusetts is assessed at 100% of fair cash value. Note: Chapter 59, Section 21C of the Massachusetts General Laws, known as "Proposition 2 1/2", imposes 2 separate limits on the annual tax levy of the Town. The primary limitation is that the tax levy cannot exceed 2 1/2 percent of the full and fair cash value. The secondary limitation is that the tax levy cannot exceed the maximum levy limit for the preceding year as determined by the State Commissioner of Revenue by more than 2 1/2 percent, subject to an exception for property added to the tax rolls and for certain substantial valuation increases other than as part of a general revaluation. The secondary limit may be exceeded in any year by a majority vote of the voters, however it cannot exceed the primary limitation. Assessed Value and Actual Value of Taxable Property by Classification and Tax Rates Last Ten Years 93% 6%0%1% Total Assessed Value by Classification Year Ended June 30, 2016 Residential Commercial Industrial Personal Property 93% 6%0%1% Total Assessed Value by Classification Year Ended June 30, 2015 Residential Commercial Industrial Personal Property 6.4% 6.5% 6.6% 6.7% 6.8% 6.9% 7.0% 7.1% 7.2% 7.3% 7.4% 7.5% 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Commercial Value as % of Total Value Town of Cohasset, Massachusetts 108 Comprehensive Annual Financial Report Principal Taxpayers Current Year and Nine Years AgoPercentage of Percentage ofTotal Taxable Total TaxableNature of Assessed Assessed Assessed AssessedName BusinessValuation RankValueValuation RankValueAvalon Cohasset Inc. Residential 49,500,000$ 1 1.85% -$ -Minot International Residential 17,535,800 2 0.66% - -Cushing Station LLC Retail 14,374,700 3 0.54% - -Toll MA Land Ltd. Partnership Residential/Retail 12,136,500 4 0.45% - -Roy, Peter A Residential 11,948,700 5 0.45% 8,908,900 4 0.41%Staszko, Donald E & Opray, Barbara Residential/Commercial 10,283,100 6 0.38% 11,200,100 3 0.52%Connell Cohasset Greenbush LLC Commercial 9,750,800 7 0.36% - -Hingham Lumber Company Inc. Commercial 9,568,600 8 0.36% 8,275,900 5 0.38%Chute, Ruth Residential 8,678,700 9 0.32% 5,886,800 9 0.27%Roy, Mary L. Residential 7,701,500 10 0.29% 6,377,900 6 0.29%Cedarmere Venture LLC Retail - - 14,151,000 1 0.65%CSDV Limited Partnership Retail - - 11,559,400 2 0.53%Metropolitan/Cohasset Senior Housing Assisted Living - - 6,333,500 7 0.29%RAJ LLC Residential - - 5,893,700 8 0.27%Tedeschi Realty Corp Retail - - 5,754,700 10 0.26%Totals151,478,400$ 5.66% 84,341,900$ 3.88%Source: Official Statements, Town of Cohasset2016 2007Town of Cohasset, Massachusetts109Comprehensive Annual Financial Report Percent ofLess First Year Percent of Delinquent Total Total TaxTotal Abatements & Net Net as % Current Net Levy Tax Tax Collections toYear Tax Levy Exemptions Tax Levy of Total Tax Collections Collected Collections Collections Net Tax Levy2007 $24,402,315 $300,000 $24,102,315 98.77% $23,722,764 98.43% $350,285 $24,073,049 99.88%2008 (1) $25,473,074 $200,161 $25,272,913 99.21% $24,778,582 98.04% $461,236 $25,239,818 99.87%2009 $26,466,778 $226,467 $26,240,311 99.14% $25,909,543 98.74% $330,665 $26,240,208 100.00%2010 $27,362,660 $193,471 $27,169,189 99.29% $26,682,972 98.21% $471,009 $27,153,981 99.94%2011 (1) $28,284,096 $137,105 $28,146,991 99.52% $27,767,687 98.65% $379,126 $28,146,813 100.00%2012 $29,539,748 $158,733 $29,381,015 99.46% $28,827,046 98.11% $304,413 $29,131,459 99.15%2013 $30,762,620 $145,021 $30,617,599 99.53% $30,225,220 98.72% $151,290 $30,376,510 99.21%2014 (1) $31,880,160 $192,772 $31,687,388 99.40% $31,155,908 98.32% $461,911 $31,617,819 99.78%2015 $33,217,548 $141,026 $33,076,522 99.58% $32,545,881 98.40% $562,904 $32,545,881 98.40%2016 $34,461,741 $118,371 $34,343,370 99.66% $33,666,964 98.03% $0 $33,666,964 98.03% (1) Revaluation year.Source: Assessor's Department and Official Statements, Town of CohassetProperty Tax Levies and CollectionsLast Ten Years$0$5,000,000$10,000,000$15,000,000$20,000,000$25,000,000$30,000,000$35,000,0002007 2008 2009 2010 2011 2012 2013 2014 2015 2016Real Estate Tax Levies vs. First Year CollectionsLast Ten YearsReal Estate Tax LevyFirst Year Current Tax CollectionsTown of Cohasset, Massachusetts110Comprehensive Annual Financial Report General Less Net General Percentage Percentage Percentage PercentageU. S. Census Personal Assessed Obligation Amounts Obligation Per of Personal of Assessed Per of Personal of AssessedYear Population Income Value Bonds Available (2) Bonds Capita Income Value Capita Income Value2007 7,525 716,627,000$ 2,324,029,983$ $27,316,455 ($1,035,198) $26,281,257 $3,630 3.81% 1.18% 3,493$ 3.67% 1.13%2008 7,617 627,893,000$ 2,403,120,204$ $22,177,463 ($974,304) $21,203,159 $2,912 3.53% 0.92% 2,784$ 3.38% 0.88%2009 7,777 539,625,000$ 2,455,174,229$ $21,622,991 ($913,410) $20,709,581 $2,780 4.01% 0.88% 2,663$ 3.84% 0.84%2010 7,874 455,330,000$ 2,438,739,752$ $21,134,078 ($852,516) $20,281,562 $2,684 4.64% 0.87% 2,576$ 4.45% 0.83%2011 7,846 528,494,000$ 2,440,301,624$ $18,784,897 ($791,622) $17,993,275 $2,394 3.55% 0.77% 2,293$ 3.40% 0.74%2012 7,490 539,280,000$ 2,465,755,221$ $28,375,584 ($730,728) $27,644,856 $3,788 5.26% 1.15% 3,691$ 5.13% 1.12%2013 7,895 629,121,000$ 2,521,526,250$ $28,043,018 ($669,834) $27,373,184 $3,552 4.46% 1.11% 3,467$ 4.35% 1.09%2014 7,870 655,067,320$ 2,542,277,461$ $24,587,105 ($608,940) $23,978,165 $3,124 3.75% 0.97% 3,047$ 3.66% 0.94%2015 8,084 672,879,824$ 2,613,497,066$ $21,223,504 ($548,047) $20,675,457 $2,590 3.15% 0.81% 2,523$ 3.07% 0.79%2016 8,273 739,697,203$ 2,675,601,045$ $19,087,807 ($487,153) $18,600,654 $2,307 2.58% 0.71% 2,248$ 2.51% 0.70%Business-TypeActivities (1)General Total Net Percentage Percentage Percentage PercentageObligation Debt Debt Per of Personal of Assessed Per of Personal of AssessedYear Bonds Outstanding Outstanding Capita Income Value Capita Income Value2007 31,560,891$ $58,877,346 $57,842,148 $7,824 8.22% 2.53% $7,687 8.07% 2.49%2008 49,629,563$ $71,807,026 $70,832,722 $9,427 11.44% 2.99% $9,299 11.28% 2.95%2009 66,414,491$ $88,037,482 $87,124,072 $11,320 16.31% 3.59% $11,203 16.15% 3.55%2010 63,506,979$ $84,641,057 $83,788,541 $10,749 18.59% 3.47% $10,641 18.40% 3.44%2011 60,953,569$ $79,738,466 $78,946,844 $10,163 15.09% 3.27% $10,062 14.94% 3.24%2012 45,681,585$ $74,057,169 $73,326,441 $9,887 13.73% 3.00% $9,790 13.60% 2.97%2013 46,185,305$ $74,228,323 $73,558,489 $9,402 11.80% 2.94% $9,317 11.69% 2.92%2014 43,504,411$ $68,091,516 $67,482,576 $8,652 10.39% 2.68% $8,575 10.30% 2.65%2015 40,590,132$ $61,813,636 $61,265,589 $7,543 9.19% 2.37% $7,476 9.10% 2.34%2016 26,293,883$ $45,381,690 $44,894,537 $5,486 6.14% 1.70% $5,427 6.07% 1.68%(1) Water and Sewer Funds(2) Amounts available are restricted resources from the Massachusetts School Building Administration.Source: Audited Financial Statements, U. S. Census, Division of Local ServicesTotal Debt Outstanding Net Debt OutstandingTotal Primary GovernmentRatios of Outstanding Debt and General Bonded DebtLast Ten YearsGovernmental ActivitiesGeneral Obligation Bonds Net General Obligation BondsTown of Cohasset, Massachusetts111Comprehensive Annual Financial Report Share of Debt Percentage Overlapping Town of Cohasset, Massachusetts Outstanding Applicable Debt Overlapping debt repaid with property taxes Norfolk County………………………………………………… $12,235,000 (a) 2.17% $ 129,245 Massachusetts Bay Transportation Authority……………… 5,634,750,025 (a) 0.11% 174,399 South Shore Regional Vocational School District…………… 805,000 (a) 1.16% 73,471 Subtotal, overlapping debt…………………………………………… 377,115 Total Town direct debt………………………………………………… 19,087,807 Total direct and overlapping debt…………………………………… $ 19,464,922 (a) Outstanding debt as of June 30, 2015 Source: Official Statement Town of Cohasset, Massachusetts Note: Overlapping governments are those that coincide, at least in part, with geographic boundaries of the Town. This schedule estimates the portion of the outstanding debt of those overlapping governments that is borne by the taxpayers of the Town. This process recognizes that, when considering the government's ability to issue and repay long-term debt, the entire debt burden borne by the property taxpayers should be taken into account. However, this does not imply that every taxpayer is a resident, and therefore responsible for repaying the debt, of each overlapping government. The overlap of Norfolk county is set by the Commonwealth based on property valuations and for the School District the overlap represents the Town's students proportionate share compared to all students. As of June 30, 2016 Direct and Overlapping Governmental Activities Debt Town of Cohasset, Massachusetts 112 Comprehensive Annual Financial Report 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016Equalized Valuation……………………………$ 2,324,029,983 $ 2,403,120,204 $ 2,455,174,229 $ 2,438,739,752 $ 2,440,301,624 $ 2,465,755,221 $ 2,521,526,250 $ 2,542,277,461 $ 2,613,497,066 $ 2,675,601,045 Debt Limit -5% of Equalized Valuation………$ 116,201,499 $ 120,156,010 $ 122,758,711 $ 121,936,988 $ 122,015,081 $ 123,287,761 $ 126,076,313 $ 127,113,873 $ 130,674,853 $ 133,780,052 Less: Outstanding debt applicable to limit………… 35,607,984 46,684,604 64,610,320 62,821,695 59,198,694 55,258,487 57,125,731 52,685,014 68,091,516 31,671,278 Legal debt margin…………………………$ 80,593,515 $ 73,471,406 $ 58,148,391 $ 59,115,293 $ 62,816,387 $ 68,029,274 $ 68,950,582 $ 74,428,859 $ 62,583,337 $ 102,108,774 Total debt applicable to the limit as a percentage of the limit………………… 30.64% 38.85% 52.63% 51.52% 48.52% 44.82% 45.31% 41.45% 52.11% 23.67%Source: Treasurer's Department, Town of CohassetLast Ten YearsComputation of Legal Debt MarginTown of Cohasset, Massachusetts113Comprehensive Annual Financial Report PerCapitaPopulation Personal Personal Median School UnemploymentYear Estimates Income Income Age Enrollment Rate2007 7,525 716,627,000$ 99,962$ 44 1,489 3.30%2008 7,617 627,893,000$ 84,727$ 44 1,421 3.90%2009 7,777 539,625,000$ 71,549$ 44 1,466 6.60%2010 7,874 455,330,000$ 57,827$ 44 1,496 5.90%2011 7,846 528,494,000$ 67,358$ 44 1,535 5.00%2012 7,490 539,280,000$ 72,000$ 44 1,530 5.00%2013 7,895 629,121,000$ 83,416$ 44 1,594 4.50%2014 7,870 655,067,320$ 83,236$ 44 1,632 4.50%2015 8,084 672,879,824$ 83,236$ 44 1,614 4.00%2016 8,273 739,697,203$ 89,411$ 44 1,637 3.40%Source: U. S. Census, Division of Local ServicesMedian age is based on most recent census dataDemographic and Economic StatisticsLast Ten YearsTown of Cohasset, Massachusetts114Comprehensive Annual Financial Report Nature Percentage of Percentage ofof Total Town Total TownEmployer Business Employees Rank Employment Employees Rank EmploymentSuper Stop & Shop Grocery Store 160 1 4.04% 155 1 4.39%Cohasset Harbor Resort Motel/Restaurant 157 2 3.97% 10 8 0.28%Shaw's Grocery Store 120 3 3.03% 130 2 3.68%South Shore Music Circus Seasonal Entertainment 88 4 2.22% 87 3 2.46%Hingham Lumber Building Supplies 82 5 2.07% 80 4 2.26%Golden Living Center Cohasset Rehabilitation Hospital 79 6 2.00% 60 6 1.70%Sunrise Assisted Living Facility 64 7 1.62% 80 5 2.26%Red Lion Inn Inn/Restaurant 40 8 1.01% 50 7 1.42%790 19.96% 652 18.45%The Town only has information on eight of the largest employers.Source: Massachusetts Workplace Development Agency & the Town's personnel and department records.2016 2007Principal EmployersCurrent Year and Nine Years AgoTown of Cohasset, Massachusetts115Comprehensive Annual Financial Report 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Function Administration…………… 18 15 15 20 21 21 24 22 22 23 Police…………………… 116 128 185 109 112 87 89 102 96 100 Fire……………………… 22 30 25 27 27 35 36 35 33 31 Education……………… 358 344 349 336 332 334 337 345 313 363 Sewer…………………… 1 1 1 1 1 1 1 1 1 1 Public works…………… 27 27 25 26 27 25 25 25 27 34 Human services………… 12 11 12 11 10 13 14 12 12 9 Culture and recreation… 45 52 44 43 53 68 69 74 75 118 Total …………………… 599 608 656 573 583 584 595 616 579 679 Source: Town personnel records and various Town departments. Last Ten Years Full-time Equivalent Town Employees by Function Town of Cohasset, Massachusetts 116 Comprehensive Annual Financial Report Function/Program2007 2008 2009 2010 2011 2012 2013 2014 2015 2016AdministrationPopulation……………………………………………… 7,525 7,617 7,777 7,874 7,846 7,490 7,895 7,870 8,064 8,225 Registered voters, annual town election…………… 1,240 873 272 5,239 5,398 5,424 5,814 5,679 5,675 5,857 Town Clerk Births………………………………………………… 70 75 66 70 58 65 49 61 73 69 Marriages…………………………………………… 28 32 33 27 29 35 27 23 35 33 Deaths……………………………………………… 79 73 83 60 77 67 87 73 88 67 Police Accidents covered by an officer……………………. 147 161 133 155 133 140 160 158 165 180 Citations issued……………………………………… 1,246 904 768 1,825 2,401 1,739 928 1,571 1,133 1,428 Arrests………………………………………………… 102 105 144 104 113 115 151 167 141 163 Larcenies………………………………….…………… 111 96 75 73 89 80 56 76 87 82 Fire Total Reponses……………………………………… 2,283 2,289 2,515 2,108 2,086 2,218 2,154 1,418 2,357 2,080 Fire related calls……………………………………… 90 101 78 45 71 70 48 59 77 84 EMS/Rescue related calls………………………….. 935 890 967 937 930 953 1,001 715 1,019 984 Building Department Building permits issued……………………………… 419 426 335 301 407 304 388 398 421 501 Education Public school enrollment……………………………… 1,489 1,421 1,466 1,496 1,535 1,530 1,594 1,632 1,614 1,637 Public Works Cemetery Interments…………………………………………… 42 32 31 28 42 33 28 38 37 43 Water Service connections………………………...……… 2,430 2,449 2,433 2,467 2,492 2,512 2,567 2,571 2,580 2,611 Consumption in billions of gallons……………… 0.275 0.344 0.306 0.281 0.305 0.269 0.272 0.268 0.275 0.290Daily consumption in millions of gallons………… 0.753 0.941 0.838 0.771 0.836 0.736 0.745 0.734 0.754 0.794Sewer Service connections………………………...……… 867 874 1,031 1,134 1,274 1,385 1,538 1,559 1,562 1,593 Daily average collection (MGD)………………… 0.272 0.279 0.226 0.223 0.2393 0.224 0.277 .274 .279 .299HighwayMiles of public road………………………………… 33.50 33.50 33.50 33.50 33.50 33.50 33.50 33.50 33.50 33.50 Human ServicesBoard of Health Permits/Septic……………………………………… 41 26 21 31 26 21 17 29 32 35 Council on AgingHome delivered meals…………………………… n/a n/a 5,000 2,302 3,470 3,630 2,936 3,607 3,613 3,029 Transportation……………………………………… 2,621 3,116 3,820 4,209 4,510 5,031 4,369 3,024 3,699 3,864 Volunteer service hours…………………………… 6,960 7,304 7,831 8,304 9,235 7,752 7,755 10,697 8,558 7,650 Fitness/exercise program participants…………… 172 204 190 212 172 301 319 219 255 297 Recreation/social event participants……………… 1,537 1,605 1,106 1,013 1,137 1,057 1,148 265 360 412 Libraries Volumes in collection………………………………… 65,223 66,319 62,306 64,924 70,364 68,404 67,396 222,020 220,014 542,906 Circulation…………………………………..………… 139,551 149,974 149,299 139,221 149,224 152,773 157,437 155,411 155,974 158,433 Program attendance………………………………… 4,913 5,441 5,962 6,314 7,067 8,454 9,683 10,636 10,675 12,899 Source: Various Town Departmentsn/a: Information not availableLast Ten YearsOperating Indicators by Function/ProgramTown of Cohasset, Massachusetts117Comprehensive Annual Financial Report Function/Program2007 2008 2009 2010 2011 2012 2013 2014 2015 2016AdministrationNumber of buildings…………….……… 1 1 1 1 1 1 1 1 1 1 PoliceNumber of stations……………………… 1 1 1 1 1 1 1 1 1 1 FireNumber of stations……………………… 1 1 1 1 1 1 1 1 1 1 Number of vehicles……………………… 8 8 10 10 10 10 10 10 10 10 EducationNumber of elementary schools………… 2 2 2 2 2 2 2 2 2 2 Number of middle schools……………… 1 1 1 1 1 1 1 1 1 1 Number of high schools………………… 1 1 1 1 1 1 1 1 1 1 Public WorksWater mains (miles)……………………… 31 31 46 46 46 46 46 46 46 46 Fire hydrants……………………………… 496 496 496 496 496 496 496 496 496 496 Sanitary sewers (miles)………………… 22 22 33 33 33 33 33 33 33 33 Number of wells………………………… 1 1 1 1 1 1 1 1 1 1 Number of water storage tanks………… 2 2 2 2 2 2 2 2 2 2 Number of pump stations……………… 9 9 9 9 9 9 9 9 9 9 Human ServicesSenior center……………………………… 1 1 1 1 1 1 1 1 1 1 Culture and RecreationRecreation building……………………… 1 1 1 1 1 1 1 1 1 1 Library…………………………………… 1 1 1 1 1 1 1 1 1 1 Source: Various Town Departments Last Ten YearsCapital Asset Statistics by Function/ProgramTown of Cohasset, Massachusetts118Comprehensive Annual Financial Report