HomeMy WebLinkAbout2019 Mp
RECEIVED
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Southold Town Clerk
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�= CERTIFIED PUBLIC ACCOUNTANTS
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TOWN OF SOUTHOLD
FINANCIAL STATEMENTS
Year Ended December 31, 2019
FINANCIAL SECTION
IndependentAuditors' Report.................................................................................................................... 1-3
REQUIRED SUPPLEMENTARY INFORMATION
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Management's Discussion and Analysis................................................................................................... 4-15
BASIC FINANCIAL STATEMENTS
Government-Wide Financial Statements:
Statementof Net Position....................................................................................................................... 16
Statementof Activities............................................................................................................................ 17
Fund Financial Statements:
_ Governmental Fund Financial Statements:
Balance Sheet and Reconciliation of the Governmental Funds Balance Sheet to
the Statement of Net Position....................................................................................... 18-19
Statement of Revenues, Expenditures, and Changes in Fund Balances and
Reconciliation of the Governmental Funds Statement of Revenues, Expenditures
and Changes in Fund Balances to the Statement of Activities........................................................ 20-21
Fiduciary Fund Financial Statements
Statement of Fiduciary Assets and Liabilities................................................................................... 22
Notes to Financial Statements.................................................................................................................. 23-56
REQUIRED SUPPLEMENTARY INFORMATION OTHER THAN
MANAGEMENT DISCUSSION AND ANALYSIS
Schedule of Revenues, Expenditures, and Changes in Fund Balance-Budget and Actual:
GeneralFund.......................................................................................................................................... 57
HighwayFund......................................................................................................................................... 58
Community Preservation Fund.......................................................................................... 59
Schedule of Changes in the Town's Total Other Postemployment Benefits Liability and
RelatedRatios............................................................................................................... 60
Schedule of Pension Contributions....................................................................................... 61
Schedule of Proportionate Share of the Net Pension Liability...................................................... 62
I
OTHER SUPPLEMENTARY INFORMATION
Combining Fund Statements:
Nonmajor Governmental Funds:
CombiningBalance Sheet................................................................................................................... 63
Combining Statement of Revenues, Expenditures, and Changes in Fund Balances........................ 64
OTHER REPORTS
Independent Auditors' Report on Internal Control over Financial Reporting and on
Compliance and Other Matters based on an audit of Financial Statements Performed in
Accordance with Governmental Auditing Standards............................................................ 65-66
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FINANCIAL
SECTION
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CERTIFIED PUBLIC ACCOUNTANTS
INDEPENDENT AUDITORS' REPORT
�> Honorable Supervisor and Town Board
Town of Southold
Southold, New York
We have audited the accompanying financial statements of the governmental activities, each major fund, and
the aggregate remaining fund information of the Town of Southold, New York (the "Town"), as of and for the
year ended December 31, 2019, and the related notes to the financial statements. We were not engaged to
audit the financial statements of the aggregate discretely presented component units. These financial
statements 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 did not audit the
financial statements of the component units. Fishers Island Ferry District and Fishers Island Waste
Management District, which represent 75.4%, 68.7% and 83.5%, of the assets and deferred outflows, net
position, and revenues of the aggregate discretely presented component units. Those statements were
audited by other auditors whose report has been furnished to us, and our opinion, insofar as it relates to the
amounts included for those,two component units, is based solely on the reports of the other auditors. The
remaining five component units have not been audited. 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. The
financial statements of the Fishers Island Waste Management District was not audited in accordance with
Government Auditing Standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material misstatement. Because of
the matter described in the "Basis for Disclaimer of Opinion" paragraph, however, we were not able to obtain
sufficient appropriate audit evidence to provide a basis for an audit opinion on the aggregate discretely
presented component units.
' 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 Town'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 Town'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.
Except for the matter described in the "Basis for Disclaimer of Opinion on the Aggregate Discretely Presented
Component Units" paragraph, we believe that the audit evidence we have obtained is sufficient and appropriate
to provide a basis for our audit opinions. BEYOND THE NUMBERS...
ALBRECHT,VIGGIANO,ZURECK&COMPANY, RC
245 PARK AVENUE,39TH FLOOR 25 SUFFOLK COURT
NEW YORK, NY 10167 HAUPPAUGE, NY 11788-3715
rte, T:212.792 4075 T 631.434.9500 F•631 434 9518
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www.avz com
INDEPENDENT MEMBER OF BKR INTERNATIONAL
Basis for Disclaimer of Opinion on the Aggregate Discretely Presented Component Units
The financial statements of five of the component units, Cutchogue-New Suffolk Park District, Southold Park
District, Orient-East Marion Park District, Mattituck Park District and Orient Mosquito District have not been
audited, and we were not engaged to audit these financial statements as part of our audit of the Town of
v Southold, New York's basic financial statements. These financial activities are included in the Town's basic
financial statements as discretely presented component units and represent 24.6%, 31.3% and 16.5%,
respectively, of the assets, net position, and revenues of the Town's aggregate discretely presented
component units.
Disclaimer of Opinion
Because of the significance of the matter described in the "Basis for Disclaimer of Opinion on the Aggregate
Discretely Presented Component Units" paragraph, we have not been able to obtain sufficient appropriate
audit evidence to provide a basis for an audit opinion on the financial statements of the aggregate discretely
presented component units of the Town of Southold, New York. Accordingly, we do not express an opinion on
these discretely presented component units'financial statements.
Unmodified Opinions
In our opinion, the financial statements referred to above present fairly, in all material respects, the respective
financial position of the governmental activities, each major fund and the aggregate remaining fund information
of the Town of Southold, New York as of December 31, 2019, and the respective changes in financial position
for the year then ended in accordance with accounting principles generally accepted in the United States of
America.
Other Matters
Required Supplementary Information
Accounting principles generally accepted in the United States of America require that the management's
discussion and analysis, schedule of changes in the Town's other postemployment benefit liability and related
ratios, schedule of pension contributions, schedule of proportionate share of the net pension liability and the
budgetary comparison information 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 and other auditors 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 Southold, New York's basic financial statements. The combining nonmajor fund financial
statements are presented for purposes of additional analysis and are not a required part of the basic financial
statements.
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I�
Other Matters (continued)
Other Information(continued)
The combining nonmajor fund financial statements are the responsibility of management and were derived
from and relate directly to the underlying accounting and other records used to prepare the basic financial
statements. Such information has been subjected to the auditing procedures applied in the audit of the basic
financial statements and certain additional procedures, including comparing and reconciling such information
directly to the underlying accounting and other records used to prepare the basic financial statements or 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, based on our audit, the procedures
performed as described above, the combining nonmajor fund financial statements are fairly stated, in all
material respects, in relation to the basic financial
/statements as a whole.
Hauppauge, New York J
November 9, 2020
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REQUIRED SUPPLEMENTARY INFORMATION
Management's Discussion and Analysis
TOWN OF SOUTHOLD
MANAGEMENT'S DISCUSSION AND ANALYSIS
December 31, 2019
As management of the Town of Southold, New York (the "Town"), we offer readers of the financial statements
this narrative overview and analysis of the financial activities for the year ended December 31, 2019.
FINANCIAL HIGHLIGHTS
• The assets and deferred outflows of the primary governmental activities of the Town exceeded its
liabilities and deferred inflows at the close of 2019 by$101,643,608 (net position).
• The Town's primary governmental activities net position increased by$8,626,919.
• As of the close of 2019, the Town's governmental funds reported combined ending fund balances
of $23,347,762. Of this amount, $961,245 is not in spendable form or is required to remain intact.
The remaining $22,386,517 or approximately 95.9% of total fund balance is in spendable form with
various levels of spending constraint: restricted, committed, assigned, or unassigned (see Note
B.2).
• At the end of 2019, the Town's total fund balance for the General Fund was $12,847,702, an
increase of $1,526,114 or 13.5% from the prior year. The assigned and unassigned fund balance
for the General Fund was $11,943,272 or 37.6% of total General Fund expenditures and other
uses.
• The Town's total bonded debt was $26,725,000, excluding premiums of $1,952,347, a decrease of
8.1%from the prior year.
OVERVIEW OF THE FINANCIAL STATEMENTS
The discussion and analysis is intended to serve as an introduction to the Town's basic financial statements.
The Town's basic financial statements comprise these components: (1) government-wide financial statements,
(2) fund financial statements, and (3) notes to basic financial statements. This report also contains
supplementary information in addition to the basic financial statements themselves.
Government-wide Financial Statements
The government-wide financial statements are designed to provide readers with a broad overview of the
Town's finances, in a manner similar to a private-sector business. The intent of the government-wide financial
statements is to give the reader a long-term view of the Town's financial condition.
The Statement of Net Position presents financial information on all of the Town's assets, deferred outflows of
resources, liabilities, and deferred inflows of resources with the difference between the four reported as net
position. This statement combines and consolidates the Town's current financial resources with capital assets
and long-term obligations. Over time, increases or decreases in the Town's net position is one indicator of
whether its financial health is improving or deteriorating. You will need to consider other nonfinancial factors,
however, such as changes in the Town's property tax base and the condition of the Town's buildings, roads,
drainage and other assets to assess the overall health of the Town.
The Statement of Activities presents information showing how the Town's net position changed during the
most recent year. Revenues and expenses are reported by activity to give the reader an understanding of how
each of the Town's activities are being supported. All changes in net position are reported as soon as the
underlying event giving rise to the change occurs, regardless of the timing of related cash flows. Thus,
revenues and expenses are reported in this statement for some items that will only result in cash flows in
future periods. This method is known as the accrual basis of accounting and is different from the modified
accrual basis of accounting used in the Town's fund financial statements.
The Town's government-wide financial statements include both the governmental activities of the Town itself
(known as the primary government) and of its legally separate component units for which the Town is
financially accountable. Financial information for all component units is reported separately (discretely
presented)from the financial information presented for the primary government.
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TOWN OF SOUTHOLD
MANAGEMENT'S DISCUSSION AND ANALYSIS
December 31, 2019
OVERVIEW OF THE FINANCIAL STATEMENTS (continued)
Government-wide Financial Statements (continued)
Governmental Activities - The Town's basic services are reported here, including: general government
support; public safety; public health; transportation; economic assistance and opportunity; culture and
recreation and home and community services. Property taxes, mortgage taxes, franchise fees, fines, and state
and federal grants finance these activities. The Town also charges fees to help cover the cost of certain
services it provides.
Component Units- Component units are legally separate organizations for which the Town is either financially
accountable, or the nature and significance of their relationship with the Town is such that exclusion would
cause the Town's financial statements to be misleading or incomplete. All of these entities are reported in a
separate column in the government-wide statements as discretely presented.
Information on separately issued financial statements is shown in Note E to the financial statements.
Fund Financial Statements
The fund financial statements focus on current available resources and are organized and operated on the
basis of funds, each of which is defined as an accounting entity with a self-balancing set of accounts
established for the purpose of carrying on specific or attaining certain objectives in accordance with special
regulations, restriction or limitations. The Town, like other 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 two categories: governmental funds and fiduciary funds.
Governmental Funds
The Town's activities are reported in governmental funds. Governmental funds are used to account for
essentially the same functions reported as governmental activities in the government-wide financial
statements. However, unlike the government-wide financial statements, governmental fund financial
statements focus on near-term inflows and outflows of spendable resources, as well as on balances of
spendable resources available at the end of the year. Such information may be useful in evaluating a
government's near-term financial requirements.
Because the focus of governmental funds is narrower than that of the government-wide financial statements, it
is useful to compare the information presented for governmental funds with similar information presented for
governmental activities in the government-wide financial statements. By doing so, readers may better
understand the long-term effect of the Town's near-term financial decisions. Both the governmental fund
balance sheet and governmental fund statement of revenues, expenditures, and change in fund balances
provide a reconciliation to facilitate this comparison between governmental funds and governmental activities.
The Town maintains ten (10) individual governmental funds. Information is presented separately in the
governmental fund balance sheet and in the governmental fund statement of revenues, expenditures, and
changes in fund balances for the four (4) major funds. The General Fund, Highway Fund, Capital Projects
Fund, and the Community Preservation Fund are reported as major funds. Data from the six (6) other
governmental funds are combined into a single, aggregated presentation.
The Town adopts an annual appropriated budget for its general and special revenue funds, except for the
Capital Projects Fund, and special grant fund. A budgetary comparison schedule for the General Fund,
Highway Fund, and Community Preservation Fund can be found in the section labeled "Required
Supplementary Information Other Than Management's Discussion and Analysis".
Fiduciary Funds
All of the Town's fiduciary activities are reported in a separate Statement of Fiduciary Assets and Liabilities.
We exclude these activities from the Town's other financial statements because the Town cannot use these
assets to finance its operations. The Town is responsible for ensuring that the assets reported in these funds
are used for their intended purposes.
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TOWN OF SOUTHOLD
MANAGEMENT'S DISCUSSION AND ANALYSIS
December 31, 2019
OVERVIEW OF THE FINANCIAL STATEMENTS (continued)
Notes to the Financial Statements
The notes provide additional information that is essential to a full understanding of the data provided in the
government-wide and fund financial statements. The notes to the financial statements can be found following
the basic financial statements.
Other information
In addition to the basic financial statements this report contains supplementary information immediately
following the notes to the financial statements.
GOVERNMENT-WIDE FINANCIAL ANALYSIS
As noted earlier, net position may serve over time as a useful indicator of a government's financial position. In the
case of the Town, assets and deferred outflows of resources exceeded liabilities and deferred inflows by
$101,643,608 at the close of the most recent year.
Condensed Statement of Net Position
Primary Governmental Activities
Aft December 31,
2019 2018
Assets
Current and other assets $ 41,540,617 $ 48,314,948
Capital assets 193,123,300 177,891,265
Total Assets 234,663,917 226,206,213
Deferred Outflows of Resources 17,025,911 13,355,877
Liabilities
Current and other liabilities 14,843,725 13,901,909
Long-term liabilities 119,431,142 120,650,921
Total Liabilities 134,274,867 134,552,830
Deferred Inflows of Resources 15,771,353 11,992,571
Net Position
Net investment in capital assets 158,990,173 142,631,153
Restricted 9,848,669 17,781,986
Unrestricted (67,195,234) (67,396,450)
Total Net Position $ 101,643,608 $ 93,016,689
Total assets and deferred outflows of resources of the primary government as of December 31, 2019 were
$251,689,828, an increase of $12,127,738 from 2018. Total liabilities and deferred inflows of resources as of
December 31, 2019 were $150,046,220, which represents an increase of $3,500,819 from December 31,
2018. This resulted in a net position of $101,643,608, an increase of $8,626,919 from net position of
$93,016,689. Of the Town's net position, $158,990,173 was invested in capital assets and $9,848,669 was
restricted for future land acquisition, leaving a$67,195,234 unrestricted deficit.
By far, the largest portion of the Town's net position is $158,990,173 which reflects its investment in capital
assets (i.e. land, buildings, machinery and equipment, intangibles, and infrastructure) less any related debt
used to acquire those assets that is still outstanding. The Town uses these capital assets to provide services to
citizens; consequently, these assets are not available for future spending. Although the Town's investment in
its capital assets is reported net of related debt, it should be noted that the resources needed to repay this debt
must be provided from other sources, since the capital assets themselves will not be used to liquidate these
liabilities.
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TOWN OF SOUTHOLD
MANAGEMENT'S DISCUSSION AND ANALYSIS
December 31, 2019
GOVERNMENT-WIDE FINANCIAL ANALYSIS (continued)
The deficit in the unrestricted net position does not necessarily indicate fiscal stress. At the end of the current
year, the Town is able to report a positive balance in the categories of investment in capital assets, and
restricted net position. The same situation held true for the prior year. The deficit balance in unrestricted arose
primarily due to long-term liabilities, which includes other postemployment benefits, net pension liability,
compensated absences, and landfill closure and postclosure costs that will be funded through future budgetary
appropriations when they become payable in future periods.
2019 2018
Program Revenues
Charges for services $ 4,744,461 $ 4,409,830
Operating grants and contributions 816,446 737,687
Capital grants and contributions 1,538,573 1,068,978
7,099,480 6,216,495
General Revenues
Real property taxes 37,080,032 35,745,326
Other real property tax items 108,101 68,631
Non-property tax items 9,639,337 10,082,325
Interest earnings 546,769 474,320
State aid - unrestricted 1,968,775 1,422,685
Other 582,180 819,300
49,925,194 48,612,587
Total Revenues 57,024,674 54,829,082
Program Expenses
General government support 12,379,137 11,943,924
Public safety 19,559,438 19,914,484
Public health 33,300 43,300
Transportation 6,274,846 6,610,839
Economic assistance and opportunity 2,174,629 2,196,932
Culture and recreation 573,766 570,143
Home and community services 6,185,595 6,208,546
Interest on debt 1,217,044 1,045,869
Total Expenses 48,397,755 48,534,037
Increase in Net Position 8,626,919 6,295,045
Net Position, beginning of year, as reported 93,016,689 108,659,640
Cumulative effect of change in accounting principle* (21,937,996)
Net Position, beginning of year, as restated 93,016,689 86,721,644
AL
Net Position, end of year $ 101,643,608 $ 93,016,689
*The Town's 2018 condensed statement presented above reflect the cumulative effect of applying the GASB
Statement No. 75, "Accounting and Financial Reporting for Postemployment Benefits Other Than Pension".
Accordingly, the condensed financial information presented above also reflects this cumulative effect of the
accounting change to beginning net position of fiscal year 2018.
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TOWN OF SOUTHOLD
MANAGEMENT'S DISCUSSION AND ANALYSIS
December 31, 2019
GOVERNMENT-WIDE FINANCIAL ANALYSIS (continued)
` Net position, from all government activities, increased by$8,626,919 in the current year.
Key elements of the governmental activities are:
• Overall program revenues increased by $882,985 from the prior year. Capital grants and contributions
increased $469,595 from the prior year due to the Town receiving new grants and contributions in the
current year that were not received in 2018 for the following: $400,000 in NYS DEC Grant for a Solid
Waste grinder, an additional $70,500 from NYSERDA the for Animal Shelter Solar Project. Charges for
services increased $334,631 from the prior year due to the introduction of a new fee for rental permits
which generated $52,600, an increase in park and recreation fees of $232,806, an increase in building
inspection fees of$87,131 offset by a decrease in licenses and permits in the highway fund for$42,790.
• General revenues increased $1,312,607 from the prior year. This was due to the increase in property
taxes of$1,334,706 and an increase in state aid- unrestricted of$546,090, which was primarily a result of
an increase in mortgage tax of$271,531 offset by a decrease in non-property tax items of$442,988 which
is due to the decrease in revenue from the 2%transfer tax in the Community Preservation Fund and other
revenues due to a decrease in insurance recoveries.
• Overall expenses decreased by $136,282. General government support expenses increased $435,213
due to increase in the judgments and claims liability of approximately$233,000 along with an increase in
personal costs of approximately$297,000 and$104,000 for insurance and claims offset with decreases in
the employee benefit allocation of approximately$85,000 and decreases in various other expenses. This
was offset by decreases in public safety expenses of$355,046 which is due to the decrease in employee
benefit allocation of approximately $360,000 and decreases in transportation expenses of $335,993 due
to decreases in personnel costs of approximately $175,000 and a decrease in the employee benefit
allocation of approximately $283,000. In addition, interest on debt increased $171,175 is due to the
payment of BAN interest.
Total Revenue(Cost)of Services
Net Cost of Services for Govemmental Activities
For the years ended December 31,
Total Cost of Services Program Revenues Net Revenue(Cost)of Seances
2019 2018 2019 2018 2019 2018
General govemment support $ 12,379,137 $ 11,943,924 $ 789,980 $ 700,611 $ (11,589,157) $ (11,243,313)
Public safety 19,559,438 19,914,484 1,056,383 977,419 (18,503,055) (18,937,065)
Public health 33,300 43,300 15,475 8,157 (17,825) (35,143)
Transportation 6,274,846 6,610,839 645,212 758,762 (5,629,634) (5,852,077)
Economic assistance and opportunity 2,174,629 2,196,932 459,234 443,414 (1,715,395) (1,753,518)
Culture and recreation 573,766 570,143 612,948 373,144 39,182 (196,999)
Home and community services 6,185,595 6,208,546 3,520,248 2,954,988 (2,665,347) (3,253,558)
Interest on debt 1,217,044 1,045,869 (1,217,044) (1,045,869)
$ 48,397,755 $ 48,534,037 $ 7,099,480 $ 6,216,495 $ (41,298,275) $ (42,317,542)
The total cost of all governmental activities this year was $48,397,755. The net cost of these services after being
subsidized by program revenues of$7,099,480 was$41,298,275.
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TOWN OF SOUTHOLD
MANAGEMENT'S DISCUSSION AND ANALYSIS
December 31, 2019
GOVERNMENT-WIDE FINANCIAL ANALYSIS (continued)
Expenses and Program Revenues-Governmental Activities for the Year Ended December 31 2019
$25,000,000
Expenses and Program Revenues
Governmental Activities
$20,000,000 •Expenses
■Program Revenues
$15,000,000
$10,000,000
$5,000,000
$0
Gere at goverrvnentsupport Pudic satety Public health Transportation Economc assistance and Cuitum and recreation Home and conmrnity Interest on debt
opportunity services
Revenues by Source - Governmental Activities for the Year Ended December 31 2019
Capital grants and
Operating grants and contributions
contributions 1% Other general revenues
1% `�— 2%
Non-propertytax
items
18%
Charges for services
9%
State aid - Real property taxes
unrestricted 66%
3%
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TOWN OF SOUTHOLD
MANAGEMENT'S DISCUSSION AND ANALYSIS
December 31, 2019
FINANCIAL ANALYSIS OF THE TOWN'S FUNDS
Governmental Funds
The focus of the Town's governmental funds is to provide information on near term inflows, outflows, and
balances of spendable resources. Such information is useful in assessing the Town's financing requirements.
In particular, spendable fund balance may serve as a useful measure of a government's net resources
available for spending at the end of the year.
_ Nonspendable fund balance - $961,245 (inherently nonspendable) includes the portion of net
resources that cannot be spent because they must be maintained intact.
• Restricted fund balance - $9,841,776 (externally enforceable limitations on use) includes amounts
subject to limitations imposed by creditors, grantors, contributors, or laws and regulations of other
governments.
Committed fund balance - $869,858 includes amounts subject to constraints placed on the use of its
own resources by the Town's highest level of decision-making authority.
• Assigned fund balance - $5,840,967 (limitation resulting from intended use) consists of amounts
where the intended use is established by the Town Board, but do not meet the criteria to be classified
as restricted or committed.
� • Unassigned fund balance - $5,833,916 (residual net resources) is the total fund balance in the
general fund in excess of nonspendable, restricted, committed and assigned fund balance and
negative fund balances in funds other than the general fund.
The following schedule presents a summary of the Governmental Funds - (general, special revenue, and
capital projects) revenues and expenditures for the year ended December 31, 2019, and the amount of
ldk change in relation to the prior year.
Increase
2019 2018 (Decrease)
Revenues.
Real propertytaxes $ 37,080,032 $ 35,745,326 $ 1,334,706
Otherreal property tax items 108,102 68,631 39,471
Non-property tax items 9,639,337 10,082,325 (442,988)
Departmental income 3,714,382 3,084,522 629,860
"
Intergovernmental charges 9 9 200,391 209,138 (8,747)
Use of money and property 762,509 490,817 271,692
Licenses and permits 687,799 645,509 42,290
Fines and forfeitures 299,053 323,547 (24,494)
Sale of propertyand compensation for loss 530,003 884,785 (354,782)
Mscellaneous local sources 373,211 210,682 162,529
Interfund revenues 123,589 94,221 29,368
State aid 3,221,531 2,488,544 732,987
Federal aid 286,864 309,180 (22,316)
Total Governmental Fund Revenues $ 57,026,803 $ 54,637,227 $ 2,389,576
Expenditures:
General government support $ 7,838,312 $ 7,623,121 $ 215,191
Public safety 12,024,024 11,898,725 125,299
Public health 33,300 43,300 (10,000)
Transportation 4,019,786 4,206,697 (186,911)
Economic assistance and opportunity 1,416,859 1,331,918 84,941
Culture and recreation 356,683 334,143 22,540
Home and commumtyservices 17,574,453 9,468,004 8,106,449
Employee benefits 13,074,277 12,880,784 193,493
Capital Outlay 3,792,920 5,279,628 (1,486,708)
Debt service principal and interest 3,390,927 3,766,570 (375,643)
Total Governmental Fund Expenditures $ 63,521,541 $ 56,832,890 $ 6,688,651
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TOWN OF SOUTHOLD
MANAGEMENT'S DISCUSSION AND ANALYSIS
December 31, 2019
FINANCIAL ANALYSIS OF THE TOWN'S FUNDS (continued)
Governmental Funds(continued)
• Although the Town appropriated $11,214,084 (which includes $9,954,084 of appropriated fund balance
from the Community Preservation Fund) of prior year fund balance to finance the 2019 operations,
excluding open purchase orders brought forward, the total fund balance decreased $6,494,738.
Governmental revenues increased by$2,389,576. The increase is due to the following: increases in real
property taxes of $1,334,706, increases in departmental income of $629,860 due to an increase in
$239,806 in park and recreation fees and $225,806 in housing fund fees over the prior year along with an
increase of$82,000 in tipping fees, increases in use of money and property of$271,692 and increases of
state aid of $732,987 due to an increase in mortgage tax of $271,531. In addition, the Capital Projects
Fund had increased state funding from the Department of Environmental Conservation of $399,430 for
the Solid Waste Management District grinder and $45,500 for additional funding for the Animal Shelter
Solar Project. This was offset by decreases in non-property tax items of $442,988 due to less amounts
earned from the 2% transfer tax. Sales of property and compensation for loss also decreased by
$354,782 due to the Town receiving large insurance recoveries in the prior year which were not recurring
in the current year.
• Overall, governmental expenditures increased $6,688,651. The increase is due to the following:
increases in home and community services $8,106,449 due to more land acquisitions made during 2019
in the Community Preservation Fund.This was offset by decreases in capital outlay of$1,486,708 due to
less spending on Town projects as a significant number of projects were closed in the prior year. Debt
service principal and interest also decreased by$375,643 due to the amortization of outstanding general
obligation bonds.
General Fund
The General Fund is the chief operating fund of the Town. At the end of the current year, the total fund
balance of the General Fund was $12,847,702, increasing by$1,526,114 or 13.5%from the prior year. Of this
amount, $685,188 is not in spendable form (i.e. inventory and prepaid items). The committed fund balance of
$219,242 represents park and recreation subdivision fees assessed through Town Code which can only be
expended on park, playground, or other recreational purposes. The remaining $11,943,272 of the fund
balance is in spendable form as follows: $257,302 is assigned for insurance claims; $900,000 has been
assigned by the Town Board for the subsequent year's budget and $149,688 has been assigned for
encumbrances resulting from open purchase orders, and the remaining $10,636,282 represents unassigned
fund balance.
As a measure of the general funds' liquidity, it may be useful to compare spendable fund balance and total
fund balance to total fund expenditures and other financing uses. Spendable and total fund balance
represents 37.6% and 40.5%, respectively, of total general fund expenditures and other financing uses.
The key elements of the fund balance increase of$1,526,114 are as follows:
• General government support was $882,649 under budget primarily due unused contingency items of
$198,000, personal services coming in under budget by$60,000 due to conservative overtime budgeting,
$345,000 in budgeted grant expenditures not being expended and $280,000 in various department
spending being less than anticipated.
• Public safety was $396,877 less than budgeted of $195,000 which resulted mainly from the savings in
personnel costs due to unfilled positions and conservative overtime usage. In addition, the Town
budgeted $65,000 in grant expenditures which were not spent and various departments spending was
lower than budgeted by$134,000.
• Employee benefits were $925,721 under budget due to the Town conservatively budgeting for retirement
contributions and medical insurance,which amounted to$388,000 and$349,000, respectively.
-11-
TOWN OF SOUTHOLD
MANAGEMENT'S DISCUSSION AND ANALYSIS
December 31, 2019
FINANCIAL ANALYSIS OF THE TOWN'S FUNDS (continued)
' Governmental Funds(continued)
Highway Fund
At the end of the current year, the total fund balance of the highway fund was $1,905,699 increasing by$475,503
or 33.3%from the prior year. Of this amount, $184,434 is not in spendable form (i.e. prepaid and inventory items).
40 The remaining$1,721,265 of the fund balance is in spendable form as follows: $75,000 has been assigned by the
Town Board for the subsequent year's budget, $9,931 has been assigned for encumbrances resulting from open
purchase orders, and the remaining$1,636,334 is assigned for highway purposes.
The key elements of the fund balance increase of$475,503 are as follows:
• Transportation costs were $285,032 under budget as personal services came in under budget by
$104,000 due to conservative overtime usage, $97,000 in unspent CHIPS and other capital expenditures,
and$84,000 in various department spending being lower than budgeted.
• Employee benefits savings of $274,475 resulted from conservative budgeting for retirement and health
insurance costs.
� Capital Projects Fund
At the end of the current year,the capital projects fund had a fund deficit of$4,802,366.
The fund balance decreased in the capital projects fund by $1,281,883 from the prior year. This decrease
resulted from the Town using short-term borrowings to finance the current year capital outlay.
Community Preservation Fund
The Community Preservation Fund's total fund balance, which is restricted for land preservation acquisitions,
decreased by $7,933,317 to $9,848,669. The decrease in fund balance is attributable to the utilizing fund
balance to purchase land with community preservation purposes using the 2%transfer tax.
Nonmajor Governmental Funds
At the end of the current year, the total fund balance of the nonmajor governmental funds was $3,548,058,
increasing $718,845 from the prior year. Of this amount, $84,730 is not in spendable form (i.e. prepaids and
inventory). The committed fund balance of $650,616 is related to housing fund fees assessed through Town
Code which can only be expended on affordable housing projects in the Town. The remaining $2,812,712 of
the fund balance is in spendable form as follows; $200,000 for subsequent year's budget, $53,906 assigned
for encumbrances resulting from open purchase orders, and the remaining $2,558,806 of fund balance is
assigned for nonmajor governmental fund purposes.
The key elements of the fund balance increase of$718,845 are as follows:
• The Part Town's fund balance is $2,367,329, an increase of $418,072 from the prior year which was
mainly due to expenditures coming in lower than budgeted by $299,000 which consisted of $101,000
in employee benefits, $22,000 in personal services, $130,000 in unspent consultant items, $46,000 in
various department spending being lower than budgeted coupled with building department revenues
exceeding the budget by$85,000.
• Solid Waste Management's District fund balance is $1,113,293, an increase of $293,446, which was
due to an insurance reimbursement of $150,000 for equipment damage along with lower than
budgeted expenditures, including $47,000 in personal services and$107,000 in employee benefits.
i
-12-
TOWN OF SOUTHOLD
MANAGEMENT'S DISCUSSION AND ANALYSIS
December 31, 2019
FINANCIAL ANALYSIS OF THE TOWN'S FUNDS (continued)
Governmental Funds (continued)
General Fund Budgetary Highlights
The Town appropriated expenditures in the original general fund budget in excess of estimated revenues in the
amounts of$1,257,086, inclusive of$272,086 of encumbrances, by assigning fund balance from the prior year.
Actual revenues were less than anticipated by $85,322. Actual expenditures and other uses in all budgetary
line items were less than the budgetary appropriation by$2,707,394.
Over the course of the year,the Town Board revises the budget as needed so that expenditures do not exceed
appropriations. In all Town funds, various transfers between appropriations were approved for this purpose.
The following are the main components of the increase in appropriations:
• The Town increased the departmental revenues budget by $65,001 due to additional projects funded
by park and recreation revenue being authorized.
• Miscellaneous local sources increased appropriations of$97,883 due to $16,000 in donations received
exceeding budgeted amounts, $59,000 from a Suffolk'County grant approved mid-year and $23,000
from various reimbursements for police and professional services.
• The Town increased their appropriations by $347,800 in public safety to account for employee
retirement payments made budgeted in contingency.
CAPITAL ASSET AND DEBT ADMINISTRATION
Capital Assets
As of December 31, 2019, the primary government had $1'93,123,300 in net capital assets including land and
land development rights, buildings, improvements, machinery and equipment, and infrastructure. The Town's
component units had $14,048,750 in net capital assets including land, buildings, improvements, machinery and
equipment, and infrastructure.
Capital Assets at December3l,
�.J
Primary Government 2019 2018
Land $ 17,236,339 $ 11,519,469
Land development rights 136,120,927 128,533,182
Construction in progress 501,213 346,440
Buildings 21,402,348 20,510,301
Improvements other than buildings 16,757,437 16,697,956
Machineryand equipment 14,694,678 13,108,448
Software 1,301,261 1,153,366
Infrastructure 85,799,629 84,054,426
Total Capital Assets 293,813,832 275,923,588
Less:accumulated depreciation 100,690,532 98,032,323
PrimaryGovernment-Total Net Capital Assets $ 193,123,300 $ 177,891,265
Component Units
Land $ 2,103,162 $ 2,103,162
Construction in progress 153,690 66,323
Buildings 14,187,407 14,162,781
Improvements other than buildings 2,557,247 2,565,954
Machinery and equipment 5,075,446 4,131,751
Infrastructure 4,739,093 4,739,093
Total Capital Assets 28,816,045 27,769,064
Less:accumulated depreciation 14,767,295 14,017,940
Component Units-Total Net Capital Assets $ 14,048,750 $ 13,751,124
-13-
TOWN OF SOUTHOLD
MANAGEMENT'S DISCUSSION AND ANALYSIS
December 31, 2019
CAPITAL ASSET AND DEBT ADMINISTRATION (continued)
Capital Assets(continued)
In 2019, the primary government's major capital asset acquisitions were as follows:
• Land and land development rights of$13,304,615.
0 Buildings of$908,286.
• Machinery and equipment of$1,802,652.
• Infrastructure of$1,745,203.
The capital program is a long-range financing guide and not a definitive plan. Each appropriation must be
authorized by Town Board resolution before being undertaken. Each may be financed by issuance of general
obligation bonds, which, at times, are preceded by issuance of bond anticipation notes for various periods of
time depending on the period of probable usefulness of the purpose of expenditure. The Town's three-year
capital plan is summarized below:
2020 2021 2022
Machinery and Equipment
General Fund $ 1,002,853 $ 80,000 $ -0-
Highway Fund 170,605 -0- -0-
Building and Improvements
General Fund 167,000 -0- -0-
Highway Fund 150,000
Infrastructure
General Fund 1,000,000 -0- -0-
Highway Fund 600,000 -0- -0-
Software
General Fund 500,000 -0- -0-
Totals $ 3,590,458 $ 80,000 $ -0-
Additional information on the Town's capital assets can be found in Note C.3 to the financial statements.
Debt
At December 31, 2019, the Town had approximately $34.6 million in long-term general obligation bonds and
bond anticipation notes outstanding.
Outstanding Debt Governmental Activities
2019 2018
General obligation bonds payable* $ 26,725,000 $ 29;075,000
Bond anticipation notes 7,884,117 7,210,000
$ 34,609,117 $ 36,285,000
*This did not include the bond premium as presented in the Statement of Net Position.
The Town of Southold's bond credit rating from Moody's Investors Services was Aa1 as of December 31,2019.
-14-
TOWN OF SOUTHOLD
MANAGEMENT'S DISCUSSION AND ANALYSIS
December 31, 2019
CAPITAL ASSET AND DEBT ADMINISTRATION (continued)
Debt (continued)
Debt Limit - The Town has the power to contract indebtedness for any Town purpose so long as the principal
amount thereof, subject to certain limited exceptions, shall not exceed seven percent of the average full
valuation of taxable real estate of the Town, and subject to certain enumerated exclusions and deductions
such as water and certain sewer facilities and cash or appropriations for current debt service.
The constitutional method for determining full valuation is calculated by taking the assessed valuation of
taxable real estate as shown upon the latest completed assessment roll and dividing the same by the
equalization rate as determined by the State Board of Equalization and Assessment. The State Legislature is
required to prescribe the manner by which such ratio shall be determined. Average full valuation is determined
by taking the sum of the full valuation of the last completed assessment roll and the four preceding
assessment rolls and dividing such sum by five. Tu/he percentage of debt contracting power exhausted at
December 31, 2019 was 5.07%.
Additional information on the Town's debt activity can be found in Note CA to the financial statements.
ECONOMIC FACTORS AND NEXT YEAR'S BUDGETS AND RATES
Property Tax
The Town has adopted a budget for the 2020 fiscal year which factors in inflation and other adjustments to
revenues and expenditures as well as prior year positive and negative fund balances. The 2019 budget
includes an overall increase in real property tax revenues from the prior year of approximately 3.73% for the
general Town governmental activities.
In June 2011, New York State enacted Chapter 97, Laws of 2011 Real Property Tax Levy Cap and Mandate
Relief Provisions, which includes a 2% property tax cap for municipalities that affects the Town and its
municipal component units. Beginning in 2012, no local government is authorized to increase its property tax
levy by more than 2% or the rate of inflation (whichever is less). Local governments can exceed the tax levy
limit by a 60% vote of the governing body, or local law. There are permitted exceptions and adjustments. The
Town is currently evaluating the effect of the cap on future year's budgets.
State Aid and Local Assistance
The Town receives financial assistance from New York State and from Suffolk County. During 2019, financial
assistance included state aid consisting of mortgage tax of $1,231,024 and consolidated highway aid of
$597,017. State aid per capita was $88,328, County sales tax of$1,288,673 and local government assistance
was $149,998. Additionally, if the State should not adopt its budget in a timely manner, municipalities and
school districts in the State, including the Town, may be affected by a delay in the payment of state aid. The
State is not constitutionally obligated to maintain or continue state aid to the Town. The Town's 2020 budget
included similar amounts for this financial assistance.
COVID-19
The Town will continue to monitor closely the 2020 economic environment and the global COVID-19 pandemic
situation and take the proactive measures as required to ensure the strong financial condition of the Town of
Southold. While certain revenues have been impacted, the Town is in a healthy financial position and is
currently evaluating the long-term impact, if any.
CONTACTING THE TOWN'S FINANCIAL MANAGEMENT
This financial report is designed to provide our citizens, taxpayers, customers, and creditors with a general
overview of the Town's finances and to show the Town's accountability for the money it receives. If you have
questions about this report or need additional financial information, contact the Town of Southold, Office of the
Town Comptroller, Southold, New York.
-15-
BASIC FINANCIAL
STATEMENTS
D
TOWN OF SOUTHOLD
GOVERNMENT-WIDE FINANCIAL STATEMENT
STATEMENT OF NET POSITION
December 31, 2019
Primary Nonmajor
Governmental Component
Activities Units
ASSETS
Current Assets:
Cash and investments $ 37,109,441 $ 2,476,631
Accounts receivable 279,071 41,392
State and federal aid receivables 864,774 3,667
Due from fiduciary funds 328,277
Due from other governments 1,997,809
Due from primary Government 474,346
Inventory of material and supplies 127,985
Prepaids 833,260 115,300
Total Current Assets 41,540,617 3,111,336
Noncurrent Assets:
Non-depreciable capital assets 153,858,479 2,256,852
Depreciable capital assets,net of depreciation 39,264,821 11,791,898
Total Noncurrent Assets 193,123,300 14,048,750
Total Assets 234,663,917 17,160,086
DEFERRED OUTFLOWS OF RESOURCES
Deferred charges on refundings 1,373,990
Pensions 5,845,715 295,833
Other postemployment benefits 9,806,206 57,195
Total Deferred Outflows of Resources 17,025,911 353,028
LIABILITIES
Current Liabilities:
Accounts payable and accrued liabilities 1,909,645 377,458
Accrued interest payable 322,828 13,555
Bond anticipation notes payable 7,884,117 1,395,000
Due to fiduciary funds 2,415
Due to component units 474,346
Due to other governments 725
Unearned revenue 634,761
Noncurrent liabilities due within one year.
General obligation bonds payable 2,245,000 265,000
Compensated absences 1,094,765 56,931
Claims and judgments payable 257,678
Estimated liability for landfill closure and post closure care costs 17,445
Total Current Liabilities 14,843,725 2,107,944
Noncurrent Liabilities.
General obligation bonds payable 26,432,347 265,000
Compensated absences 7,983,479 170,791
Claims and judgments payable 548,751
Estimated liability for landfill closure
and postclosure care costs 358,987
Net pension liability 5,834,772 343,917
Other postemployment benefits payable 78,272,806 646,886
L Total Noncurrent Liabilities 119,431,142 1,426,594
Total Liabilities 134,274,867 3,534,538
DEFERRED INFLOWS OF RESOURCES
Unearned revenue from real property taxes 6,876,278 474,345
Pensions 2,123,429 121,496
Other postemployment benefits 6,771,646 131,084
Total Deferred Inflows of Resources 15,771,353 726,925
NET POSITION
Net Investment in capital assets 158,990,173 12,123,750
Restricted-Community Preservation 9,848,669
Unrestricted (67,195,234) 1,127,901
Total Net Position $ 101,643,608 $ 13,251,651
See notes to the financial statements.
-16-
TOWN OF SOUTHOLD
GOVERNMENT-WIDE FINANCIAL STATEMENT
STATEMENT OF ACTIVITIES
Year Ended December 31, 2019
Net Revenues(Expenses)and
Program Revenues Change in Net Position
Operating Capital
Charges for Grants and Grants and Primary Component
Function/Program Expenses Services Contributions Contributions Government Units
PRIMARY GOVERNMENT
Government Activities:
General government support $ 12,379,137 $ 435,429 $ 11,537 $ 343,014 $ (11,589,157)
Public safety 19,559,438 900,132 156,251 (18,503,055)
Public health 33,300 15,475 (17,825)
Transportation 6,274,846 48,017 597,195 (5,629,634)
Economic assistance and opportunity 2,174,629 171,683 277,551 10,000 (1,715,395)
Culture and recreation 573,766 612,948 39,182
Home and community services 6,185,595 2,576,252 355,632 588,364 (2,665,347)
Interest on debt 1,217,044 (1,217,044)
Total Primary Government $ 48,397,755 $ 4,744,461 $ 816,446 $ 1,538,573 (41,298,275)
COMPONENT UNITS
General government support $ 175,815 $ (175,815)
Public health 84,340 (84,340)
Transportation 4,150,487 $ 3,020,835 $ 134,507 (995,145)
Culture and recreation 1,371,494 55,175 (1,316,319)
Home and community services 981,875 48,586 (933,289)
Interest on debt 54,891 (54,891)
Total Component Units $ 6,818,902 $ 3,124,596 $ 134,507 $ -0- (3,559,799)
GENERAL REVENUES
Real property taxes 37,080,032 2,581,421
Other real property tax items 108,101
Non-property tax items 9,639,337
Interest earnings 546,769 63,175
State aid-unrestricted 1,968,775
Other 582,180 58,927
Total General Revenues 49,925,194 2,703,523
Change in Net Position 8,626,919 (856,276)
Net Position at Beginning of Year 93,016,689 14,107,927
Net Position at End of Year $ 101,643,608 $ 13,251,651
See notes to financial statements.
-17-
TOWN OF SOUTHOLD
BALANCE SHEET
GOVERNMENTAL FUNDS
December 31, 2019
MAJOR GOVERNMENTAL FUNDS
Non-Major
Capital Community Governmental
General Highway Projects Preservation Funds Totals
ASSETS
Cash and investments $ 20,464,480 $ 1,654,088 $ 2,835,105 $ 8,589,564 $ 3,566,204 $ 37,109,441
Accounts receivable 20,389 1,452 1,648 978 254,604 279,071
Due from other funds 515,841 1,238,489 568,087 789,532 3,111,949
Due from fiduciary funds 160,006 95,039 8,438 64,794 328,277
State and federal aid receivable 51,269 295,362 333,295 800 184,048 864,774
Due from other governments 657,197 56,300 1,276,812 7,500 1,997,809
L_ Inventory of material and supplies 9,372 112,835 5,778 127,985
Prepaids 675,816 71,599 6,893 78,952 833,260
Total Assets $ 22,554,370 $ 3,468,864 $ 3,794,435 $ 9,883,485 $ 4,951,412 $ 44,652,566
LIABILITIES
Accounts payable and accrued
liabilities $ 1,086,887 $ 191,963 $ 227,104 $ 21,227 $ 382,464 $ 1,909,645
Judgments and claims 32,678 32,678
Bond anticipation notes payable 7,884,117 7,884,117
Due to other funds 2,359,264 229,048 485,580 13,589 24,468 3,111,949
Due to fiduciary funds 2,415 2,415
Due to component units 474,346 474,346
Due to other governments 565 160 725
Unearned revenue 317,619 6,759 310,383 634,761
Total Liabilities 4,273,774 427,930 8,596,801 34,816 717,315 14,050,636
DEFERRED INFLOWS OF RESOURCES
Unavailable revenue 377,890 377,890
I Unearned revenue from
real property taxes 5,055,004 1,135,235 686,039 6,876,278
Total Deferred Inflows of Resources 5,432,894 1,135,235 -0- -0- 686,039 7,254,168
FUND BALANCES
Nonspendable 685,188 184,434 6,893 84,730 961,245
I Restricted 9,841,776 9,841,776
Committed 219,242 650,616 869,858
Assigned 1,306,990 1,721,265 2,812,712 5,840,967
Unassigned 10,636,282 (4,802,366) 5,833,916
Total Fund Balances 12,847,702 1,905,699 (4,802,366) 9,848,669 3,548,058 23,347,762
t Total Liabilities,Deferred Inflows of
Resources and Fund Balances $ 22,554,370 $ 3,468,864 $ 3,794,435 $ 9,883,485 $ 4,951,412 $ 44,652,566
See notes to the financial statements.
I"�' -18-
TOWN OF SOUTHOLD
RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET TO THE
STATEMENT OF NET POSITION
December 31, 2019
Total Fund Balances - Governmental Funds $ 23,347,762
Amounts reported for governmental activities in the
Statement of Net Position are different because:
Capital assets less accumulated depreciation are
included in the Statement of Net Position:
Capital assets - non-depreciable $ 153,858,479
Capital assets -depreciable 139,955,353
Accumulated depreciation (100,690,532)
193,123,300
Deferred outflows of resources are included in the Statement of Net Position 17,025,911
Long-term liabilities applicable to the Town's
governmental activities are not due and payable
in the current period, and accordingly, are not
reported in the funds. However,these liabilities
are included in the Statement of Net Position:
General obligation bonds payable (28,677,347)
Compensated absences (9,078,244)
Claims and judgments payable (773,751)
Estimated liability for landfill closure
and postclosure care costs (376,432)
Net pension liability (5,834,772)
Other postemployment benefits payable (78,272,806)
(123,013,352)
Revenues in the Statement of Activities that do not provide current
financial resources are not reported as revenues in the funds. 377,890
Deferred inflows of resources are included in the Statement of Net Position (8,895,075)
Interest payable applicable to the Town's governmental
activities are not due and payable in the current period,
and accordingly, are not reported in the funds. However,
these liabilities are included in the Statement of Net Position. (322,828)
Net Position of Governmental Activities $ 101,643,608
See notes to financial statements.
-19-
TOWN OF SOUTHOLD
STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES
GOVERNMENTAL FUNDS
For the Year Ended December 31, 2019
MAJOR GOVERNMENTAL FUNDS
Non-Major
Capital Community Governmental
General Highway Projects Preservation Funds Totals
REVENUES
Real property taxes $ 27,661,824 $ 5,924,127 $ 3,494,081 $ 37,080,032
Other real property tax items 106,608 1,331 163 108,102
Non-property tax items 1,288,673 $ 7,666,589 684,075 9,639,337
Departmental income 627,553 3,086,829 3,714,382
Intergovernmental charges 200,391 200,391
Use of money and property 418,554 40,788 $ 80,976 184,120 38,071 762,509
Licenses and permits 402,289 43,870 241,640 687,799
Fines and forfeitures 299,053 299,053
Sale of property and compensation
for loss 184,068 4,589 341,346 530,003
Miscellaneous local sources 162,223 2,113 207,325 1,550 373,211
Interfund revenues 123,589 123,589
State aid 1,645,297 597,195 693,350 11,714 273,975 3,221,531
Federal aid 149,364 137,500 286,864
Total Revenues 33,269,486 6,614,013 981,651 7,862,423 8,299,230 57,026,803
EXPENDITURES
Current:
General government support 7,254,140 63,154 43,957 477,061 7,838,312
Public safety 10,517,515 1,506,509 12,024,024
Public health 33,300 33,300
Transportation 513,511 3,506,275 4,019,786
Economic assistance and
opportunity 1,416,859 1,416,859
Culture and recreation 356,683 356,683
Home and community services 348,847 13,521,765 3,703,841 17,574,453
Employee benefits 9,720,142 1,833,720 84,000 1,436,415 13,074,277
Capital Outlay 3,792,920 3,792,920
Debt Service:
Principal 495,936 117,474 1,490,846 245,744 2,350,000
Interest 237,053 57,887 655,172 90,815 1,040,927
Total Expenditures 30,893,986 5,578,510 3,792,920 15,795,740 7,460,385 63,521,541
Excess(Deficiency)of Revenues
Over(Under)Expenditures 2,375,500 1,035,503 (2,811,269) (7,933,317) 838,845 (6,494,738)
OTHER FINANCING SOURCES(USES):
Transfers in 1,529,386 1,529,386
Transfers out (849,386) (560,000) (120,000) (1,529,386)
Total Other Financing
Sources(Uses) (849,386) (560,000) 1,529,386 -0- (120,000) -0-
Net Change in Fund Balance 1,526,114 475,503 (1,281,883) (7,933,317) 718,845 (6,494,738)
Fund Balances at Beginning of Year 11,321,588 1,430,196 (3,520,483) 17,781,986 2,829,213 29,842,500
Fund Balances at End of Year $ 12,847,702 $ 1,905,699 $ (4,802,366) $ 9,848,669 $ 3,548,058 $ 23,347,762
See notes to the financial statements.
-20-
TOWN OF SOUTHOLD
RECONCILIATION OF THE GOVERNMENTAL FUNDS STATEMENT OF REVENUES,
EXPENDITURES AND CHANGES IN FUND BALANCES TO THE STATEMENT OF ACTIVITIES
For the Year Ended December 31, 2019
Net Change in Fund Balance $ (6,494,738)
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.The amount
by which capital outlay exceeds depreciation in the current period is:
Capital asset additions $ 18,106,666
Depreciation expense (2,874,631)
15,232,035
Revenues in the Statement of Activities that do not provide current financial
resources are not reported as revenues in the funds. (30,783)
Net change in deferred outflows of resources not reported in the governmental
fund statements:
Deferred charges on refundings (127,882)
Pension related amounts (456,992)
Other postemployment benefits 4,254,908
3,670,034
Net change in deferred inflows of resources not reported in the governmental
fund statements:
Pension related amounts 2,462,357
Other postemployment benefits (6,771,646)
(4,309,289)
Premiums on bond issuances recognized in governmental fund statements
when issued and capitalized and amortized in the Statement of Activities. 182,743
Long-term liabilities applicable to the Town's governmental activities are not
due and payable in the current period and accordingly are not reported in the
funds. However, these liabilities are included in the Statement of Net Position:
Repayment of bond principal 2,350,000
Compensated absences 185,817
Claims and judgments payable (232,806)
Estimated liability for landfill closure
and postclosure care costs 16,614
Net pension liability (2,554,917)
Other postemployment benefits payable 585,173
Accrued interest payable 27,036 376,917
Change in Net Position of Governmental Activities $ 8,626,919
See notes to financial statements.
-21-
TOWN OF SOUTHOLD
STATEMENT OF FIDUCIARY ASSETS AND LIABILITIES
December 31, 2019
Totals
ASSETS
Cash and investments $ 18,962,285
Due from governmental funds 2,415
Total Assets $ 18,964,700
LIABILITIES
Due to other governments $ 18,445,447
Due to governmental funds 328,277
Other liabilities 53,855
Deposits held 137,121
Total Liabilities $ 18,964,700
See notes to financial statements.
-22-
TOWN OF SOUTHOLD
NOTES TO FINANCIAL STATEMENTS
A. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The Town of Southold (the "Town"), which was established in 1640, is governed by Town Law and other
general laws of the State of New York and various local laws. The Town Board is the legislative body
responsible for overall operations. The Town Board consists of the Supervisor who is elected for a term of four
years and five council members who are elected for terms of four years. The Town Board appoints the Town
Attorney and Town Comptroller. The Town Clerk, Receiver of Taxes, Superintendent of Highways, Justices
and Town Trustees are all elected and serve for four years, respectively. The Town provides a full range of
municipal services, including public safety, transportation, home and community services, public works and
road maintenance, recreation and parks, and general and administrative services.
The financial statements of the Town of Southold have been prepared in conformity with accounting principles
generally accepted in the United States of America (GAAP) as applied to governmental units. The
Governmental Accounting Standards Board (GASB) is the accepted standard setting body for establishing
governmental accounting and financial reporting principles.
The more significant of the government's accounting policies are described below.
1. REPORTING ENTITY
The financial reporting entity consists of: (a) the primary government, which is the Town of Southold;
(b) organizations for which the primary government is financially accountable; and (c) other organizations
for which the nature and significance of their relationship with the primary government are such that
exclusion would cause the reporting entity's financial statements to be misleading or incomplete.
The decision to include a potential component unit in the Town of Southold reporting entity is based on
several criteria including legal standing, dependency and financial accountability. The current guidance
also clarifies the status as a major or nonmajor component unit. Based on the application of these criteria,
the following is a summary of certain entities considered in determining the Town's reporting entity.
Discretely Presented Component Units:
The following entities are discretely presented component units of the Town of Southold:
a) Fishers Island Ferry District was established in 1947 by a special act of legislation within the State of
New York, known as the Ferry District Enabling Act. The Board of Commissioners is the legislative
body responsible for the overall operations. The Board of Commissioners consists of five members,
all of whom are elected by the residents of the District. The primary function of the District is to
provide ferry operations and services to District residents. Special districts cannot issue bonded debt
without the approval and the backing of the full faith and credit of the Town. The Town issues
indebtedness on behalf of the District which is responsible for the payment of annual debt service on
the obligations. Budgets and tax rates are not approved by the Town. Tax levies of the District are
collected by the Town Receiver of Taxes. This District is included in the Town's reporting entity since
the primary government issues debt on behalf of the District as these districts cannot issue bonded
debt without the approval and the backing of the full faith and credit of the Town.
b) Fishers Island Waste Management District was established in 1952 and is governed by the laws of
New York State. The Board of Commissioners is the legislative body responsible for the overall
operations. The Board of Commissioners consists of five members, all of whom are elected by the
residents of the District. The primary function of the District is to provide waste management and
disposal services to District residents. Special districts cannot issue bonded debt without the approval
and the backing of the full faith and credit of the Town. The Town issues indebtedness on behalf of
the District which is responsible for the payment of annual debt service on the obligations. Tax levies
of the District are collected by the Town Receiver of Taxes. This District is included in the Town's
reporting entity since the primary government issues debt on behalf of the District as these districts
cannot issue bonded debt without the approval and the backing of the full faith and credit of the Town.
-23-
TOWN OF SOUTHOLD
NOTES TO FINANCIAL STATEMENTS
A. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
1. REPORTING ENTITY(continued)
Discretely Presented Component Units(continued):
c) Cutchogue-New Suffolk Park District was established in 1953 and is governed by the laws of New
York State. The Board of Commissioners is the legislative body responsible for the overall operations.
The Board of Commissioners consists of three members, all of whom are elected by the residents of
the District.The primary function of the District is to maintain and operate the specific private beaches
of residents who reside within the park district. Special districts cannot issue bonded debt without the
approval and the backing of the full faith and credit of the Town. The Town issues indebtedness on
behalf of the District which is responsible for the payment of annual debt service on the obligations.
Tax levies of the District are collected by the Town Receiver of Taxes. This District is included in the
Town's reporting entity since the primary government issues debt on behalf of the District as these
districts cannot issue bonded debt without the approval and the backing of the full faith and credit of
the Town.
d) Southold Park District was established in 1907 and is governed by the laws of New York State. The
Board of Commissioners is the legislative body responsible for the overall operations. The Board of
Commissioners consists of three members, all of whom are elected by the residents of the District.
The primary function of the District is to maintain and operate the specific private beaches of residents
who reside within the park district. Special districts cannot issue bonded debt without the approval
and the backing of the full faith and credit of the Town. The Town issues indebtedness on behalf of
the District which is responsible for the payment of annual debt service on the obligations. Tax levies
of the District are collected by the Town Receiver of Taxes. This District is included in the Town's
reporting entity since the primary government issues debt on behalf of the District as these districts
cannot issue bonded debt without the approval and the backing of the full faith and credit of the Town.
e) Orient-East Marion Park District was established in 1969 and is governed by the laws of New York
State. The Board of Commissioners is the legislative body responsible for the overall operations. The
Board of Commissioners consists of three members, all of whom are elected by the residents of the
District. The primary function of the District is to maintain and operate the specific private beaches of
residents who reside within the park district. Special districts cannot issue bonded debt without the
approval and the backing of the full faith and credit of the Town. The Town issues indebtedness on
behalf of the District which is responsible for the payment of annual debt service on the obligations.
Tax levies of the District are collected by the Town Receiver of Taxes. This District is included in the
Town's reporting entity since the primary government issues debt on behalf of the District as these
districts cannot issue bonded debt without the approval and the backing of the full faith and credit of
the Town.
f) Mattituck Park District was established in 1941 and is governed by the laws of New York State. The
Board of Commissioners is the legislative body responsible for the overall operations. The Board of
Commissioners consists of three members, all of whom are elected by the residents of the District.
The primary function of the District is to maintain and operate the specific private beaches of residents
who reside within the park district. Special districts cannot issue bonded debt without the approval
and the backing of the full faith and credit of the Town. The Town issues indebtedness on behalf of
the District which is responsible for the payment of annual debt service on the obligations. Tax levies
of the District are collected by the Town Receiver of Taxes. This District is included in the Town's
reporting entity since the primary government issues debt on behalf of the District as these districts
cannot issue bonded debt without the approval and the backing of the full faith and credit of the Town.
-24-
TOWN OF SOUTHOLD
NOTES TO FINANCIAL STATEMENTS
A. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
1. REPORTING ENTITY(continued)
Discretely Presented Component Units(continued):
g) Orient Mosquito District was established in 1916 and is governed by the laws of New York State.The
Board of Commissioners is the legislative body responsible for the overall operations. The Board of
Commissioners consists of five members, all of whom are elected by the residents of the District.The
primary function of the District is to provide pest control services to District residents. Special districts
cannot issue bonded debt without the approval and the backing of the full faith and credit of the Town.
The Town issues indebtedness on behalf of the District which is responsible for the payment of
annual debt service on the obligations.Tax levies of the District are collected by the Town Receiver of
Taxes. This District is included in the Town's reporting entity since the primary government issues
debt on behalf of the District as these districts cannot issue bonded debt without the approval and the
backing of the full faith and credit of the Town.
All of the Town of Southold's discretely presented component units are considered nonmajor.
2. GOVERNMENT-WIDE AND FUND FINANCIAL STATEMENTS
The Town's basic financial statements include both government-wide (reporting the Town as a whole)
and fund financial statements (reporting the Town's major funds).
Government-wide Financial Statements
The government-wide financial statements (i.e. the Statement of Net Position and the Statement of
Activities) report information on all of the non-fiduciary activities of the Town as a whole with separate
columns for the primary governmental activities, as well as the discretely presented component units.
For the most part, the effect of interfund activity has been eliminated from the government-wide
financial statements, except for interfund services provided and used.
The government-wide Statement of Activities demonstrates the degree to which the direct expenses of
a given function are offset by program revenue. Direct expenses are those that are clearly identifiable
with a specific function. Program revenues include (1) charges to customers or applicants who
purchase, use, or directly benefit from goods, services, or privileges provided by a given function,
(2) grants and contributions that are restricted to meeting the operation and capital requirements of a
particular function, or (3) interest earned on grants or capital projects that is required to be used to
support a particular program or project. Taxes and other items not properly included among program
revenues are reported as general revenues. The Town does not allocate indirect expenses to specific
functions in the Statement of Activities.
Fund Financial Statements
Separate financial statements are provided for governmental funds and fiduciary funds, even though the
fiduciary funds are excluded from the government-wide financial statements. Major individual
governmental funds are reported as separate columns in the fund financial statements.
The accounts of the Town are organized on the basis of funds, each of which is considered a separate
accounting entity. The operations of each fund are accounted for with a separate set of self-balancing
accounts that comprise its assets, liabilities, deferred inflows of resources, fund balances, revenues, and
expenditures, which are segregated for the purpose of carrying on specific activities or attaining certain
objectives in accordance with special regulations, restrictions or limitations. The various funds are
presented by type in the fund financial statements. Certain funds of the Town are utilized to account for
resources derived from and/or expenditures applicable to an area less than the entire Town. The focus of
the governmental funds financial statements is on the major funds. Accordingly, the Town maintains the
following fund types:
-25-
TOWN OF SOUTHOLD
NOTES TO FINANCIAL STATEMENTS
A. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
2. GOVERNMENT-WIDE AND FUND FINANCIAL STATEMENTS (continued)
Fund Financial Statements (continued)
Governmental Funds - Governmental funds are those through which most governmental functions
are financed. The acquisition, use, and balances of expendable financial resources and the related
liabilities are accounted for through governmental funds.The measurement focus of the governmental
funds is upon the determination of financial position and changes in financial position. Governmental
funds are further classified as major and nonmajor funds.
The Town reports the following major governmental funds:
General Fund - is the principal operating fund of the Town. This fund is used to account for all
financial resources not accounted for and reported in another fund.
Special Revenue Funds - are used to account for and report the proceeds of specific revenue
sources that are restricted, committed, or assigned to expenditures for specified purposes other
than debt service or capital projects.
Highway Fund - is a Special Revenue Fund used to account for revenues and expenditures
for highway purposes provided to the Town and to the area of the Town located outside of the
Village of Greenport. The major areas of expenditures are repairs and improvements to
roadways, machinery, and snow removal. The major source of revenue is real property taxes.
Community Preservation Fund - is used to account for and report financial resources that are
restricted for the purchase of land and land development rights. The major source of revenue
is the transfer tax. See Note F.
Capital Projects Fund - used to account for and report financial resources that are restricted,
committed, or assigned to expenditures for capital outlays, including the acquisition or construction
of major capital facilities and other capital assets.
Additionally,the Town accounts for and reports the following nonmajor funds:
Special Revenue funds include the following:
General Fund Part Town - is used to account for revenues and expenditures for certain
services provided to the area of the Town located outside of the Village of Greenport. The
major source of revenue is real property taxes, non-property tax items and building permits.
Special Grant Fund - is used to account for federal aid for the Community Development Block
Grant Program.
Special District Funds - are used to account for taxes or other revenues, which are raised or
received to provide special services to areas that encompass less than the whole town. The
Special District Funds consist of a number of separate districts, which are administered by the
Town Board as follows: East-West Fire Protection District, Southold Wastewater District,
Fishers Island Sewer District, and the Solid Waste Management District.
Fiduciary Funds - Fiduciary Funds are used to account for assets held by the Town in a trustee or
custodial capacity.
Agency Fund - is used to account for money (and/or property) received and held in the capacity
of trustee, custodian or agent.
-26-
TOWN OF SOUTHOLD
NOTES TO FINANCIAL STATEMENTS
A. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
3. MEASUREMENT FOCUS, BASIS OF ACCOUNTING, AND FINANCIAL STATEMENT
PRESENTATION
The accounting and financial reporting treatment is determined by the applicable measurement focus
and basis of accounting. Measurement focus refers to what is being measured, whereas the basis of
accounting refers to when revenues and expenditures are recognized in the accounts and reported in
the financial statements. Basis of accounting relates to the timing of the measurement made,
regardless of the measurement focus applied.
The government-wide statements are reported using the economic resources measurement focus and the
accrual basis of accounting. Under the accrual basis of accounting, revenues are recognized when
earned and expenses are recorded when the liability is incurred, regardless of the timing of related cash
flows. 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.
Governmental fund financial statements are reported using the current financial resources measurement
focus and the modified accrual basis of accounting. Revenues are recognized as soon as they are both
measurable and available. Revenues are considered available when they are collectible within the current
period or soon enough thereafter to pay liabilities of the current period. For this purpose, the Town
generally considers revenues to be available if they are collected within 60 days after the year end. In
certain circumstances this application of the Town's normal availability period for a given revenue source
might distort revenue trends from one year to the next. In such unusual circumstances, revenues may be
considered available if received beyond 60 days. However, to the extent the revenue remains uncollected
after one year the Town would classify the fund balance as nonspendable.
Revenues susceptible to accrual include Suffolk County local assistance at year end on behalf of the
Town, franchise fees, mortgage taxes and certain charges for services and intergovernmental revenues.
Permits, fees, and other similar revenues are not susceptible to accrual because generally they are not
measurable until they are received in cash. In those instances where expenditures are the prime factor in
determining eligibility for state and federal grants, revenues are recognized when the expenditure is
incurred. In the governmental funds,the issuance of long-term debt is reported as other financing sources
upon receipt of the proceeds. Expenditures generally are recorded when a liability is incurred, as under
accrual accounting. However, debt service expenditures, as well as expenditures related to compensated
absences, claims and judgments, landfill closure and postclosure care costs, other postemployment
benefits payable and the proportionate share of the net pension liability are recorded when payment is
due. General capital asset acquisitions are reported as expenditures in governmental funds.
Because governmental fund statements are presented using a measurement focus and a basis of
accounting different from that used in the government-wide statements governmental column, a
reconciliation is presented that briefly explains the adjustment necessary to reconcile ending net position
and the change in net position.
4. ASSETS, LIABILITIES, DEFERRED OUTFLOWS/INFLOWS OF RESOURCES, AND NET
POSITION/FUND BALANCE
CASH AND INVESTMENTS
Cash consists of funds deposited in demand accounts, time deposit accounts and certificates of deposit
with maturities of less than three months.
-27-
TOWN OF SOUTHOLD
NOTES TO FINANCIAL STATEMENTS
A. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
4. ASSETS, LIABILITIES, DEFERRED OUTFLOWS/INFLOWS OF RESOURCES, AND NET
POSITION/FUND BALANCE (continued)
CASH AND INVESTMENTS (continued)
State statutes govern the Town's investment policies.The Town's investments are governed by a formal
investment policy. The Town's monies must be deposited in FDIC-insured commercial banks or trust
companies located within the State. The Town is authorized to use demand accounts and certificates
of deposit. Permissible investments include obligations of the U.S. Treasury, U.S. Agencies and
investments made by the Cooperative Liquid Asset Security System (CLASS).
Collateral is required for demand deposits and time deposit accounts at 100% of all deposits not covered
by federal deposit insurance. Obligations that may be pledged as collateral include obligations of the
United States and its agencies, obligations of the State and its municipalities, and school districts. The
Town's collateral agreements are based on the Town's available balance.
RECEIVABLES
Receivables include amounts due from Federal, State and other governments or entities for services
provided by the Town. Receivables are recorded, and revenues recognized as earned or as specific
program expenditures are incurred.
DUE FROM/TO OTHER FUNDS
During the course of operations, the government has activity between funds for various purposes. Any
residual balance outstanding at year-end is reported as due from/due to other funds. While these
balances are reported in fund financial statements, certain eliminations are made in the preparation of the
government-wide financial statements.
INVENTORY AND PREPAID ITEMS
Inventory in the General and Special Revenue Funds is valued at cost, using weighted average cost
method. Inventory in these funds is accounted for under the consumption method.
Certain payments to vendors reflect costs applicable to future accounting periods and are reported as
prepaid items in both the government-wide and fund financial statements. Prepaids represent health
insurance and retirement benefits that will benefit a future period.
In governmental funds, amounts reported as inventories and prepaid items are equally offset by
nonspendable fund balance amounts, indicating that they do not constitute "available spendable
resources"even though they are a component of assets.
CAPITAL ASSETS
Capital assets purchased or acquired with an original cost of$5,000 or more are reported at historical
cost or estimated historical cost. Contributed assets are reported at acquisition value as of the date of
donation. Additions, improvements and other capital outlays that significantly extend the useful life of
an asset are capitalized. Other costs incurred for repairs and maintenance are expensed as incurred.
Depreciation and amortization on all assets is provided on the straight-line basis over the following
estimated useful lives:
Buildings 10-40 years
Improvements other than buildings 20 years
Machinery and equipment 5-10 years
Software 5-10 years
Infrastructure 20-30 years
-28-
TOWN OF SOUTHOLD
NOTES TO FINANCIAL STATEMENTS
A. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
4. ASSETS, LIABILITIES, DEFERRED OUTFLOWS/INFLOWS OF RESOURCES, AND
NET/POSITION/FUND BALANCE (continued)
CAPITAL ASSETS (continued)
Infrastructure assets, consisting of certain improvements other than buildings including roads, curbs,
sidewalks, bridges, drainage and street lighting are capitalized along with other capital assets.
Intangible assets lack physical substance, are nonfinancial in nature, and have an estimated useful life
extending beyond a single reporting period. The term depreciation, as used in these footnotes, includes
amortization of intangible assets.
In the fund financial statements, capital assets are recorded as capital outlay expenditures in the
governmental fund upon acquisition.
DEFERRED OUTFLOWS/INFLOWS OF RESOURCES
In addition to assets, the Statement of Net Position will sometimes report a separate section for deferred
outflows of resources. Deferred outflows of resources represent a consumption of net position that applies
to a future period(s) and so will not be recognized as an outflow of resources (expenditure/expense) until
that time. Deferred outflows of resources consist of deferred charges on refunding, pension related
amounts, and other postemployment benefits related amounts. The deferred charges on refunding stem
from advanced refunding of debt.The difference between the cost of securities placed in a trust for future
payment of refunded debt and the net carrying value of that debt is deferred and amortized as a
component of interest expense over the shorter of the term of the refunding issue or the original term of
the refunded debt. The amounts related to pensions consists of contributions made subsequent to the
measurement date, changes in proportion and differences between employer contribution and
proportionate share of contributions, changes of assumptions, and differences between the pension plans
expected and actual experience. The amounts related to other postemployment benefits consists of
differences between actual and expected experience and contributions made subsequent to the
measurement date.
In addition to liabilities, the Statement of Net Position and balance sheet 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. The Town's deferred inflows of resources
consists of the following: unavailable revenue, unearned revenue from real property taxes and pension
related amounts. In the governmental funds, unavailable revenue represents amounts that do not meet
the availability criteria applicable to revenue recognition under the modified accrual basis of accounting.
These amounts are deferred and recognized as an inflow of resources in the period the amounts become
available. The unavailable revenue includes amounts for mortgage tax that relate to the current year that
do not meet the availability criteria. The unearned revenue relates to the collection of real estate taxes for
a future period and are accordingly reported as a deferred inflow in the government-wide Statement of Net
Position as well as the governmental Balance Sheet. In the Statement of Net Position, the Town reports
deferred inflows of resources associated with its pension and the amounts are derived from the changes
in proportion and differences between the Town's contributions and proportionate share of contributions,
the differences between expected and actual experience and net difference between projected and actual
investment earnings on pension plan investments.The amounts related to other postemployment benefits
consists of the changes in assumptions.
UNEARNED REVENUE
Unearned revenues, reported as liabilities in the fund and government-wide financial statements, are
those which asset recognition criteria have been met, but which revenue recognition criteria have not
been met for exchange type transactions. Such amounts include collections in advance for fee income
relating to 2020.
-29-
TOWN OF SOUTHOLD
NOTES TO FINANCIAL STATEMENTS
A. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
4. ASSETS, LIABILITIES, DEFERRED OUTFLOWS/INFLOWS OF RESOURCES, AND NET
POSITIOWFUND BALANCE (continued)
PREMIUMS OF DEBT ISSUANCE
Premiums related to the issuance of long-term debt are amortized on a straight-line basis over the life of
the issue and are presented as part of the general obligation bonds payable in the non-current liabilities.
LONG-TERM OBLIGATIONS
In the government-wide financial statements, liabilities for long-term obligations consisting of general
obligation bonds, compensated absences, claims and judgments, liability for landfill closure and
postclosure costs, net pension liability, and other postemployment benefits payable are recognized in the
Statement of Net Position. Bond premiums or discounts are deferred and amortized on a straight-line
basis over the life of the bonds. Bonds payable are reported net of applicable bond premium or discount.
Bond issuance costs are expensed as incurred.
In the fund financial statements, long-term obligations are not reported as liabilities. Governmental funds
recognize bond premiums and discounts, as well as bond issuance costs, during the current period. The
face amount of the debt issued is reported as other financing sources and the payment of principal and
interest is reported as expenditures. Premiums received on debt issuances are reported as other
financing sources while discounts on debt issuances are reported as other financing uses. Issuance costs,
whether or not withheld from actual debt proceeds received, are reported as debt service expenditures.
INTERFUND TRANSACTIONS
Interfund transactions, exclusive of interfund services provided and used, have been eliminated from the
government-wide financial statements. In the funds statements, interfund transactions include:
a) Interfund Revenues
In the general fund, interfund revenues, which are quasi-external transactions, represent amounts
charged for services or facilities provided by the general fund. The amount paid by the fund
receiving the benefit of the service or facilities is reflected as an expenditure of that fund.
b) Transfers
Transfers primarily represent payments to the capital projects fund from the other funds for their
appropriate share of the capital project costs or related BAN debt service amounts.
NET POSITION AND FUND EQUITY CLASSIFICATIONS
In the government-wide statements, equity is classified as net position and displayed in three
components:
a) Net investment in capital assets - Consists of capital assets including restricted capital assets,
net of accumulated depreciation and reduced by the outstanding balances of any bonds,
notes, or other borrowings that are attributable to the acquisition, construction, or improvement
of those assets. Accounts payable in the capital projects fund is considered capital related
debt and is used in the calculation of net investment in capital assets.
b) Restricted - Consists of net position with constraints placed on the use either by (1) external
groups such as creditors, grantors, contributors, or laws or regulations of other governments;
or(2) law through constitutional provisions or enabling legislation.
c) Unrestricted - All other net position that does not meet the definition of "restricted" or
net investment in capital assets".
-30-
TOWN OF SOUTHOLD
NOTES TO FINANCIAL STATEMENTS
A. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
4. ASSETS, LIABILITIES, DEFERRED OUTFLOWS/INFLOWS OF RESOURCES, AND NET
POSITION/FUND BALANCE (continued)
NET POSITION AND FUND EQUITY CLASSIFICATIONS (continued)
In the fund financial statements, governmental funds report aggregate amounts for five classifications
of fund balances based on the constraints imposed on the use of these resources; they are
(1) nonspendable, (2) restricted, (3) committed, (4) assigned, or(5) unassigned.
1) Nonspendable fund balance includes amounts that cannot be spent because they are either
(a) not in spendable form (i.e. prepaid items or inventories), or (b) will not convert to cash
within the current period (i.e. long-term receivables and financial assets held for resale), or
(c) legally or contractually required to be maintained intact (i.e. the principal of a permanent
fund).
The spendable portion of the fund balance comprises the remaining four classifications: restricted,
committed, assigned, and unassigned.
2) Restricted fund balance reflects the constraints imposed on resources either (a) externally by
creditors, grantors, contributors, or laws or regulation of other governments; or(b) imposed by
law through constitutional provisions or enabling legislation.
3) Committed fund balance reflects amounts that can only be used for specific purposes by a
government using its highest and most binding level of decision-making authority. The Town's
highest decision-making authority is the Town Board, who by adoption of a Town ordinance
prior to year-end, can commit fund balance. Those committed amounts cannot be used for
any other purpose unless the Town Board removes or changes the specified use by taking the
same type of action imposing the commitment.
4) Assigned fund balance reflects the amounts constrained by the Town's "intent" to be used for
specific purposes but are neither restricted nor committed. The Town Board has the authority
to assign amounts to be used for specific purposes. Assigned fund balances include all
remaining amounts (except negative balances) that are reported in governmental funds, other
than the general fund, that are not classified as nonspendable and are neither restricted nor
committed.
5) Unassigned fund balance is the residual classification for the general fund. It is also used to
report negative fund balances in other governmental funds.
NET POSITION AND FUND BALANCE FLOW ASSUMPTIONS
When outlays for a particular purpose can be funded from both restricted and unrestricted net position
resources it is the Town's policy to consider restricted - net position to have been depleted before
unrestricted - net position is applied.
When both restricted and unrestricted resources are available for use, it is the Town's default policy to
use restricted resources first, and then unrestricted resources - committed, assigned and unassigned -
in order as needed.
FUND BALANCE POLICIES
The Town has, by resolution, adopted a fund balance policy that states the Town must maintain a
minimum unassigned fund balance in the general fund equal to 10% of general fund expenditures. In
the event that the balance drops below the established minimum level, the Town's Board will develop
a plan to replenish the fund balance to the established minimum level within the current or ensuing
fiscal year.
-31-
TOWN OF SOUTHOLD
NOTES TO FINANCIAL STATEMENTS
A. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
5. REVENUES AND EXPENDITURES
REAL PROPERTY TAX ASSESSMENT AND COLLECTION PROCEDURES
Real property taxes are levied annually no later than December 1st and are recognized as revenue
January 1st of the year for which they were levied. The Town has its own Assessor's Office whose
responsibilities are independent and distinct from those of the Receiver of Taxes ("Receives"). The Town
assessment rolls are used for the levy of property taxes by the Town and the school districts, as well as by
the County of Suffolk, New York("County') and by special districts based upon a single tax bill.
The Town of Southold Receiver of Taxes collects all real property taxes for the Town, Suffolk County,
Town Special Districts and School Districts. These taxes are levied on December 1, and are due in two
installments, 50% on December 1 and 50% on May 10, payable without penalty to January 10 and May
31, respectively. Penalties are imposed thereafter at the rate of one-twelfth of the rate of interest
determined by the State Commissioner of Taxation and Finance, after which taxes are payable to the
County Treasurer.The Town retains the total amount of Town, Highway and Town Special Districts levies
from the amount collected, and forwards the balance collected to the County which assumes collection
responsibility. The Town and Town's Special Districts therefore realize annually the 100% collection of
real property taxes.
OTHER POSTEMPLOYMENT BENEFITS
In addition to providing pension benefits, the Town provides health insurance coverage and survivor
benefits for retired employees. Substantially all of the Town's employees may become eligible for these
benefits if they reach normal retirement age while working for the Town.
Health care benefits in accordance with New York State Health Insurance Rules and Regulations
(administered by the New York State Department of Civil Service), are provided through the New York
State Empire Plan (the "Empire Plan") whose premiums are based on the benefits paid throughout the
State during the year.
The Town recognizes the cost of providing benefits by recording its share of insurance premiums as an
expenditure in the year paid. The Town's union contracts and ordinances require that it provide its eligible
enrollees with Empire Plan benefit coverage, or if another provider is utilized, the equivalent coverage.
Under the provisions of the Empire Plan, premiums are adjusted on a prospective basis for any losses
experienced by the Empire Plan.The Town has the option to terminate its participation in the Empire Plan
at any time without liability for its respective share of any previously incurred loss. The liability for other
postemployment benefits payable is recorded as a non-current liability in the government-wide
statements.The current year increase in the liability is based on the most recent actuarial valuation.
COMPENSATED ABSENCES
The liability for vested or accumulated vacation or sick leave (compensated absences) is recorded as
current and non-current obligations in the government-wide statements. The current portion of this
debt is estimated based on historical trends and currently known facts. Compensated absence
liabilities and expenditures are reported in governmental funds only if they have matured, for example,
as a result of employee resignations, terminations, and retirements. The amount that is expected to be
liquidated with expendable available financial resources is reported as expenditures and a liability in the
funds statement in the respective fund that will pay the liability.
-32-
TOWN OF SOUTHOLD
NOTES TO FINANCIAL STATEMENTS
A. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES(continued)
5. REVENUES AND EXPENDITURES(continued)
PENSIONS
The Town, as a participant in the New York State and Local Employees' Retirement System and Local
Police and Fireman Retirement System, recognizes the proportionate share of the net pension liability,
deferred outflows of resources, and deferred inflows of resources in the government-wide financial
statements, using the accrual basis of accounting, regardless of the amount recognized as pension
expenditures in the fund financial statements. The amounts recognized have been determined on the
same basis as reported by the Systems, utilizing the year end of March 31St.
ENCUMBRANCES
Encumbrance accounting, under which purchase orders, contracts and other commitments for the
expenditures of monies are recorded for budgetary control purposes, is employed in the governmental
funds. Encumbrances are reported as restrictions, commitments, or assignments of fund balances since
they do not constitute expenditures or liabilities. Expenditures for such commitments are recorded in the
period in which the liability is incurred.
6. USE OF ESTIMATES
The preparation of basic financial statements, in conformity with accounting principles generally accepted
in the United States of America, requires management to make estimates and assumptions that affect the
reported amounts of assets, deferred outflows of resources, liabilities and deferred inflows of resources
and, disclosure of contingent amounts, at the date of the financial statements, and the reported amounts
of revenues and expenditures during the reporting period.Actual results could differ from those estimates.
7. NEW ACCOUNTING PRINCIPLES
The Town has adopted all of the current Statements of the Governmental Accounting Standards
Board (GASB) that are applicable. For the year ended December 31, 2019 the Town adopted:
Statement No. 95, "Postponement of the Effective Dates of Certain Authoritative Guidance",
the primary objective of this Statement is to provide temporary relief to governments and other
stakeholders in light of the COVID-19 pandemic. That objective is accomplished by postponing
the effective dates of certain provisions in Statements and Implementation Guides that first
became effective or are schedule to become effective for periods beginning after June 15,
2018, and later.
The effective dates of certain provisions contained in the following pronouncements are
postponed by one year" Statement No. 83, "Certain Asset Retirement Obligations', Statement
No. 85, "Fiduciary Activities", Statement No. 88, "Certain Disclosures Related to Debt, Including
Direct Borrowings and Direct Placements", Statement No. 89, "Accounting for Interest Cost
Incurred before the End of a Construction Period", Statement No. 90, "Majority Equity
Interests'; Statement No. 91, "Conduit Debt Obligations', Statement No. 92, "Omnibus 2020
and Statement No. 93, "Replacement of Interbank Offered Rates"
The effective dates of the following pronouncements are postponed by eighteen months:
Statement No. 87, "Leases".
The implementation of this Statement had no impact on the Town's financial statements.
8. SUBSEQUENT EVENTS
Management has evaluated subsequent events for disclosure and/or recognition in the financial
statements through the date of the financial statements.
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TOWN OF SOUTHOLD
NOTES TO FINANCIAL STATEMENTS
B. STEWARDSHIP, COMPLIANCE AND ACCOUNTABILITY
1. BUDGETARY INFORMATION
Budgets are adopted annually on a basis consistent with generally accepted accounting principles.
Appropriations authorized for the current year are increased by the amount of encumbrances carried
forward from the prior year.
Budgets for the general and special revenue funds, exclusive of the special grant fund, are legally
` adopted for each year. The budgets are adopted on a basis of accounting consistent with GAAP,
except that appropriations authorized for the current year are increased by the amount of
encumbrances carried forward from the prior years. In the event that unanticipated revenues are
received (i.e. specific grant revenues) and exceed budgeted amounts, additional budgetary
appropriations may be made. The capital projects and special grant funds are budgeted on a project
or grant basis.
The Town follows the procedures enumerated below in establishing the budgetary data reflected in the
financial statements:
a) No later than October 1, the Supervisor submits a tentative budget to the Town Board for the
fiscal year commencing the following fiscal year. The tentative budget includes the proposed
means of financing for all funds.
b) After public hearings are conducted to obtain taxpayer comments, no later than November 20,
the Town Board adopts the budget.
c) The Town Board must approve all modifications of the budget. However, the Comptroller is
authorized to transfer certain budgeted amounts within departments.
d) In June 2011, New York State enacted Chapter 97, Laws of 2011 Real Property Tax Levy Cap
and Mandate Relief Provisions, which includes a 2% property tax cap for municipalities.
Beginning in 2012, no local government is authorized to increase its property tax levy by more
than 2% or the rate of inflation (whichever is less); however, local governments can exceed the
tax levy limit by a 60%vote of the governing body and annually adopting a local law.
-34-
TOWN OF SOUTHOLD
NOTES TO FINANCIAL STATEMENTS
B. STEWARDSHIP, COMPLIANCE AND ACCOUNTABILITY(continued)
2. FUND BALANCE
The following table provides the detail regarding fund balance categories and classifications for the
governmental funds which show components of nonspendable fund balances, as well as the purposes for
restricted and assigned fund balance.The unassigned fund balance is also shown.
Capital Community Other
General Highway Projects Preservation Governmental
Fund Fund Fund Fund Funds Total
Fund Balances
Nonspendable
Inventory $ 9,372 $ 112,835 $ 5,778 $ 127,985
Prepatds 675,816 71,599 $ 6,893 78,952 833,260
Total Nonspendable 685,188 184,434 $ -0- 6,893 84,730 961,245
Restricted for
Land/Land right purchases 9,841,776 9,841,776
Total Restricted -0- -0- -0- 9,841,776 .0---- 9,841,776
Cor tutted for
Parks and Recreation 219,242
219,242
Affordable Housing 650,616 650,616
Total Committed 219,242 -0- -0- -0- 650,616 869,858
Assigned to
Subsequent year's budget 900,000 75,000 200,000 1,175,000
Purchases on order
or contractual obligations 149,688 9,931 53,906 213,525
Special revenue funds 1,636,334 2,558,806 4,195,140
Judgments and claims 257,302 257,302
Total Assigned 1,306,990 1,721,265 -0- -0- 2,812,712 5,840,967
Unassigned,reported in
General Fund 10,636,282 10,636,282
Capital Projects (4,802,366) (4,802,366)
Total Unassigned 10,636,282 -0- (4,802,366) -0- -0- 5,833,916
Total Fund Balances $ 12,847,702 $ 1,905,699 $ (4,802,366) $ 9,848,669 $ 3,548,058 $ 23,347,762
3. FUND DEFICIT
The Capital Projects Fund, unassigned fund balance deficit of$4,802,366 at December 31, 2019 resulted
from differences in timing between project expenditures and encumbrances and the recognition of
corresponding permanent financing source. This deficit will be eliminated as authorized debt becomes
issued.
C. DETAILED NOTES ON ALL FUNDS
1. CASH AND INVESTMENTS
Custodial Credit Risk- Deposits/Investments - Custodial credit risk for deposits exists when, in the event
of the failure of a depository financial institution, a government may be unable to recover deposits, or
recover collateral securities that are in possession of an outside agency. Custodial credit risk for
investments exists when, in the event of the failure of the counterparty, a government will not be able to
recover the value of its investments or collateral securities that are in possession of an outside party.
The Town's investments policy defines permissible investments, limits the amount of deposits at any time
at any one bank or trust company, requires that bank balances in excess of the Federal Deposit
Insurance Corporation insurance limits of $250,000 be protected with custodial agreements which
requires that balances are fully collateralized in accordance with New York State General Municipal Law
(GML) and limits the form of acceptable collateralization.
-35-
TOWN OF SOUTHOLD
NOTES TO FINANCIAL STATEMENTS
C. DETAILED NOTES ON ALL FUNDS (continued)
1. CASH AND INVESTMENTS (continued)
Credit Risk - The Town's written investment guidelines and policies are designed to protect principal by
limiting risk. State and Town law limit investments to those authorized by State statutes.
Interest-Rate Risk- Interest-rate risk arises because potential purchasers of debt securities will not agree
to pay face value for those securities if interest rates substantially increase, thereby affording potential
purchasers more favorable rates on essentially equivalent securities. Accordingly, such investments
would have to be held to maturity to avoid a potential loss.
Concentration of Credit Risk - Credit risk can arise as a result of failure to adequately diversify
investments. Concentration risk disclosure is required for positions of 5 percent or more in securities of a
single issuer.
Financial institutions can satisfy collateral requirements by furnishing an eligible letter of credit, an eligible
surety bond, by pledging eligible securities as specified in Section 10 of GML or participating in a deposit
placement program pursuant to Section 9-r of the banking law. Irrevocable letters of credit issued as
collateral in certain situations may require a threshold of up to 140% of aggregate deposits. Eligible
securities that may be pledged as collateral includes but is not limited to obligations of the United States
or its agencies,obligations of New York State and obligations of municipalities of New York State.
The use of available daily balances to determine collateral requirements may result in the available
balance being under-collateralized at various times during the year.
At December 31, 2019, the Town's cash book balance was $56,013,810. This amount is inclusive of
fiduciary fund deposits of$18,962,285 but exclusive of petty cash of$1,421 and CLASS of$56,495. The
available bank balance was$56,177,672 exclusive of CLASS deposits. Of the bank balance, $10,121,731
was covered by Federal deposit insurance, and $46,055,941 was covered by collateral held by the
Town's agents,third-parry financial institutions, in the Town's name.
External Investment Pool
The Town participates in the Cooperative Liquid Assets Securities System - New York (CLASS), a multi-
municipal cooperative investment pool consisting of U.S. Treasury Obligations and repurchase
agreements relating to treasury obligations. Investments are stated at cost, which approximates market
value. CLASS was established as a cooperative investment arrangement organized under the CLASS
Municipal Cooperation Agreement made pursuant to New York General Municipal Law, Article 3A and
5-G. The pool is not registered with the SEC and is overseen by an elected Governing Board. The
District's fair value of its position in the pool is the same as the value of pool shares.
In accordance with FASB guidance, CLASS utilizes ASC 820, "Fair Value Measurement and
Disclosure"to define fair value, establish a framework for measuring fair value, and expand disclosure
requirements regarding fair value measurements. ASC 820 does not require new fair value
measurements but is applied to the extent that other accounting pronouncements require or permit fair
value measurements. This standard emphasizes that fair value is a market-based measurement that
should be determined based on the assumptions that market participants would use in pricing an asset
or liability. Various inputs are used in determining the value of CLASS's portfolio investments defined
pursuant to this standard.
Securities, other than repurchase agreements, are valued at the most recent market bid price as
obtained from one or more market makers for such securities. Repurchase agreements are recorded
at cost, which approximates market value. There have been no significant changes in valuation
techniques used in valuing any such positions held by CLASS since the beginning of their fiscal year.
The inputs or methodology used for valuing securities are not necessarily an indication of the risk
associated with investing in those securities.
-36-
TOWN OF SOUTHOLD
NOTES TO FINANCIAL STATEMENTS
C. DETAILED NOTES ON ALL FUNDS(continued)
1. CASH AND INVESTMENTS (continued)
The Town's $56,495 CLASS investment consists of U.S. Treasury Obligations and repurchase
agreements relating to Treasury obligations and is not subject to risk categorization.
The above amounts represent the cost of the investment pool shares and are considered to approximate
market value. Additional information concerning the cooperative is presented in the annual report of the
New York CLASS,which can be found on its website at www.newvorkclass.org.
As of December 31, 2019, the Town did not have any investments subject to credit risk, interest-rate risk
or concentration of credit risk.
2. INTERFUND RECEIVABLES, PAYABLES AND TRANSFERS
Interfund receivable and payable balances for the primary government at December 31, 2019 are
expected to be paid currently. These balances represent various temporary loans, recharges, and
reimbursements between funds for operating and capital expenditures and are stated as follows:
Amount Amount
Receivable Payable
Major Governmental Funds:
General Fund-Town wide $ 515,841 $ 2,359,264
Highway Fund 1,238,489 229,048
Capital Projects Fund 568,087 485,580
Community Preservation Fund -0- 13,589
Major Funds 2.322,417 3,087,481
Nonmajor Governmental Funds:
General Fund- Part Town 168,766 16,129
Special Grant 8,320
East-West Fire Protection District 150,800
Southold Wastewater District 40
Fishers Island Sewer District 9,450 19
Solid Waste Management District Fund 460.476
Nonmajor Funds 789,532 24,468
Total $ 3,111,949 $ 3,111,949
Interfund transfer balances for the primary government at December 31, 2019 represent capital project
transfers and are stated as follows:
Transfers Transfers
In Out
Major Governmental Funds:
General Fund-Town wide $ 849,386
Highway Fund 560,000
Capital Projects Fund $ 1,529,386
Major Funds 1,529,386 1,409,386
_ Nonmajor Governmental Funds
Solid Waste Management District Fund 120,000
Non Major Funds -0- 120,000
Total $ 1,529,386 $ 1,529,386
-37-
TOWN OF SOUTHOLD
NOTES TO FINANCIAL STATEMENTS
C. DETAILED NOTES ON ALL FUNDS (continued)
3. CAPITAL ASSETS
Balance Balance
Primary Government 1/1/2019 Reclassifications Additions Deletions 12131/2019
Capital assets not being depreciated:
Land $ 11,519,469 $ 5,716,870
$ 17,236,339
Land development rights 128,533,182 7,587,745 136,120,927
Construction in progress 346,440 258,427 $ 103,654 501,213
Total Capital Assets Not Being Depreciated 140,399,091 13,563,042 103,654 153,858,479
Depreciable capital assets.
Buildings 20,510,301 $ (16,239) 908,286 21,402,348
Improvements other than buildings 16,697,956 16,239 43,242 16,757,437
Machinery and equipment 13,108,448 1,802,652 216,422 14,694,678
Software 1,153,366 147,895 1,301,261
Infrastructure 84,054,426 1,745,203 85,799,629
Total Depreciable Capital Assets 135,524,497 $ -0- 4,647,278 216,422 139,955,353
Less accumulated depreciation:
Buildings 6,532,282 588,553 7,120,835
Improvements other than buildings 9,445,402 576,301 10,021,703
Machinery and equiprmnt 9,830,411 759,776 216,422 10,373,765
Software 1,131,934 68,771 1,200,705
Infrastructure 71,092,294 881,230 71,973,524
Total Accurrulated Depreciation $ 98,032,323 $ -0. $ 2,874,631 $ 216,422 100,690,532
Total Net Depreciable Capital Assets 39,264,821
Total Net Capital Assets $ 193,123,300
Depreciation expense was charged to governmental functions as follows-
General government support
$ 611,400
Public safety 426,291
Transportation 1,160,311
Economic assistance and opportunity 33,472
Culture and recreation 49,838
Horn and community services 593,319
$ 2,874,631
-38-
TOWN OF SOUTHOLD
NOTES TO FINANCIAL STATEMENTS
C. DETAILED NOTES ON ALL FUNDS(continued)
3. CAPITAL ASSETS (continued)
The Town evaluates prominent events or changes in circumstances affecting capital assets to
determine whether impairment of a capital asset has occurred. The Town's policy is to record an
impairment loss in the period when the Town determines that the carrying amount of the asset will not
be recoverable. At December 31, 2019, the Town has not recorded any such impairment losses.
` Balance Balance
Nonmajor Component Units 1/1/2019 Reclassifications Additions Deletions 12/31/2019
Capital assets not being depreciated.
Land $ 2,103,162
$ 2,103,162
Construction in progress 203,403 $ 127,930 $ 177,643 153,690
Total Capital Assets Not Being Depreciated 2,306,565 $ -0- 127,930 177,643 2,256,852
Depreciable capital assets:
Buildings 14,162,781 8,707 15,919 14,187,407
Improvements other than buildings 2,565,954 (8,707) 2,557,247
Machinery and equipment 4,131,751 995,634 51,939 5,075,446
Infrastructure 4,739,093 4,739,093
Total Depreciable Capital Assets 25,599,579 -0- 1,011,553 51,939 26,559,193
Less accumulated depreciation:
Buildings 6,212,153 449,875 6,662,028
Improvements other than buildings 1,135,853 1,206 86,119 1,223,178
Machinery and equipment 3,765,548 90,925 51,939 3,804,534
Infrastructure 2,904,386 (1,206) 174,375 3,077,555
Total Accumulated Depreciation $ 14,017,940 $ -0- $ 801,294 $ 51,939 14,767,295
Total Net Depreciable Capital Assets 11,791,898
Total Net Capital Assets $ 14,048,750
Depreciation expense was charged to governmental functions as follows:
Transportation $ 559,406
Culture and recreation 105,767
Home and community services 136,121
$ 801,294
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TOWN OF SOUTHOLD
NOTES TO FINANCIAL STATEMENTS
C. DETAILED NOTES ON ALL FUNDS (continued)
4. INDEBTEDNESS
SHORT-TERM DEBT
Bond Anticipation Notes (BANS) - Bond anticipation notes (BANs) are used as a temporary means of
financing capital expenditures in the Capital Projects Fund. State law requires that BANs issued for capital
purposes be converted to long-term obligations within five years after the original issue date.The notes or
renewal thereof may not extend more than two years beyond the original date of issue unless a portion is
redeemed within two years and within each 12-month period thereafter. Liabilities for BANs are generally
accounted for in the Capital Projects Fund. BANs are expected to be paid from the proceeds of future
bond issues after renewal of these notes. The Town issued $1,758,000 of bond anticipation notes, of
which $460,000 relate to Fishers Island Ferry District, in September 2019. These BANs bear interest at
2.0%and matured in September 2020.
A summary of changes in BANs for the year ended December 31,2019 is as follows:
Balance Balance
1/1/19 Increases Reductions 12/31/19
Primary Government $ 7,210,000 $ 1,298,000 $ 623,883 $ 7,884,117
Component Units 970,000 460,000 35,000 1,395,000
$ 8,180,000 $ 1,758,000 $ 658,883 $ 9,279,117
LONG-TERM DEBT
General Obligation Bonds -The Town borrows money in order to acquire land, equipment or construct
buildings and improvements.This enables the cost of these capital assets to be borne by the present and
'
future taxpayers receiving the benefit of the capital assets.
These long-term liabilities are backed by the full faith and credit of the Town which are payable from tax
revenues of the General Fund and Special Revenue Funds. Interest rates on these bonds vary from
2.00%to 5.00% and have maturity dates in 2020 through 2034.
Future principal and interest payments to maturity for both the primary government and the component
units are as follows: -
Primary Government Component Units
Years Ending
December 31, Principal Interest Totals Principal Interest Totals
2020 $ 2,245,000 $ 829,663 $ 3,074,663 $ 265,000 $ 14,299 $ 279,299
2021 2,310,000 740,713 3,050,713 265,000 4,999 269,999
2022 2,340,000 650,763 2,990,763
2023 2,435,000 556,313 2,991,313
2024 2,465,000 457,913 2,922,913
2025.2029 11,685,000 1,104,466 12,789,466
2030-2034 3,245,000 101,869 3,346,869
Total $ 26,725,000 $ 4,441,700 $ 31,166,700 $ 530,000 $ 19,298 $ 549,298
-40-
TOWN OF SOUTHOLD
NOTES TO FINANCIAL STATEMENTS
C. DETAILED NOTES ON ALL FUNDS (continued)
4. INDEBTEDNESS (continued)
LONG-TERM DEBT(continued)
CHANGES IN LONG-TERM LIABILITIES
Long-term liability activity for the year ended December 31, 2019 is as follows:
Noncurrent
Balance Balance Liabilities Due Noncurrent
1/1/2019 Increases Reductions 12/31/2019 Within One Year Liabilities
Primary Government:
General obligation bonds $ 29,075,000 $2,350,000 $ 26,725,000 $ 2,245,000 $24,480,000
Add:premiums on obligations 2,135,090 182,743 1,952,347 1,952,347
Total general obligation bonds
payable 31,210,090 2,532,743 28,677,347 2,245,000 26,432,347
Compensated absences 9,264,061 $ 49,006 234,823 9,078,244 1,094,765 7,983,479
General claims and judgments
liability 580,707 264,722 39,000 806,429 257,678 548,751
Estimated liability for landfill closure
and postclosure care costs 393,046 16,614 376,432 17,445 358,987
Net pension liability 3,279,855 8,210,692 5,655,775 5,834,772 5,834,772
Other postemployment benefits
payable 78,857,979 13,137,140 13,722,313 78,272,806 78,272,806
Noncurrent
Balance Balance Liabilities Due Noncurrent
1/1/2019 increases Reductions 12/31/2019 Within One Year Liabilities
Component Units:
General obligation bonds $ 850,000 $ 320,000 $ 530,000 $ 265,000 $ 265,000
Compensated absences 223,159 $ 4,563 227,722 56,931 170,791
Net pension liability 158,365 185,552 343,917 343,917
Other poster ployrrent benefits
payable,as restated' 694,599 47,713 646,886 646,886
The liabilities for compensated absences, net pension liability and other postemployment benefits
payable will be liquidated through future budgetary appropriations in the funds that gave rise to the
liability. In most instances, these amounts will be liquidated from the general fund, highway fund, and
certain special revenue funds. Payments for estimated claims and judgments will be liquidated
primarily from the general fund. The estimated liability for landfill closure and postclosure costs will be
liquidated by the solid waste management fund.
5. RETIREMENT SYSTEM
Plan Description
The Town of Southold participates in the New York State and Local Employees' Retirement System
("NYSERS") and Local Police and Fire Retirement System ("PFRS"), which are collectively referred to as
the New York State and Local Retirement System (the "System"). These are cost-sharing multiple-
employer defined benefit pension plans. The net position of the System is held in the New York Common
Retirement Fund (the "Fund"), which was established to hold all net assets and record changes in
fiduciary net position allocated to the System. The Comptroller of the State of New York serves as the
trustee of the Fund and is the administrative head of the System. The Comptroller is an elected official
determined in a direct statewide election and serves a four-year term. System benefits are established
under the provisions of the New York State Retirement and Social Security Law ("RSSL"). Once a public
employer elects to participate in the System,the election is irrevocable.
-41-
TOWN OF SOUTHOLD
NOTES TO FINANCIAL STATEMENTS
C. DETAILED NOTES ON ALL FUNDS(continued)
5. RETIREMENT SYSTEM (continued)
Benefits Provided (continued)
The New York State Constitution provides that pension membership is a contractual relationship and plan
benefits cannot be diminished or impaired. Benefits can be changed for future members only by
enactment of a State statute. The Town also participates in the Public Employees' Group Life Insurance
Plan ("GLIP"), which provides death benefits in the form of life insurance. The System is included in the
State's financial report as a pension trust fund. That report may be found at http://www.osc.state.ny.us/
retire/publications/index.php or obtained by writing to the New York State and Local Retirement
System, 110 State Street, Albany, New York 12244-0001.
Benefits Provided
Aft
The System provides retirement benefits as well as death and disability benefits.
Tiers 1 and 2
Eligibility: Tier 1 members, with the exception of those retiring under special retirement plans, must be at
least age 55 to be eligible to collect a retirement benefit, there is no minimum service requirement. Tier 2
members, with the exception of those retiring under special retirement plans, must have five years of
service and be at least age 55 to be eligible to collect a retirement benefit. The age at which full benefits
may be collected for Tier 1 ,and Tier 2, is 55 and 62, respectively.
Benefit calculation: Generally, the benefit is 1.67% of final average salary for each year of service if the
member retires with less than 20 years. If the member retires with 20 or more years of service,the benefit
is 2% of final average salary for each year of,service. Tier 2 members with five or more years of service
can retire as early as age 55 with reduced benefits.Tier 2 members age 55 or older with 30 or more years
of service can retire with no reduction in benefits. As a result of Article 19 of the RSSL, Tiers 1 and 2
members who worked continuously from April 1, 1999 through October 1, 2000 received an additional
month of service credit for each year of credited service they have at retirement, up to a maximum of 24
additional months.
W Final average salary is the average of the wages earned in the three highest consecutive years of
employment. For Tier 1 members who joined on or after June 17, 1971, each year's compensation used
in the final average salary calculation is limited to no more than 20% greater than the previous year. For
Tier 2 members, each year of final average salary is limited to no more than 20%than the average of the
previous two years.
Tiers 3, 4 and 5
Eligibility:Tiers 3 and 4 members,with the exception of those retiring under special retirement plans, must
have five years of service and be at least age 55 to be eligible to collect a retirement benefit. Tier 5
members, with the exception of those retiring under special retirement plans, must have ten years of
service and be at least 55 to be eligible to collect a retirement benefit. The full benefit age for Tiers 3, 4
and 5 is 62.
a
Benefit calculation: Generally, the benefit is 1.67% of final average salary for each year of service if the
member retires with less than 20 years. If a member retires with between 20 and 30 years of service, the
benefit is 2%of final average salary for each year of service. If a member retires with more than 30 years
of service, an additional benefit of 1.5%of final average salary is applied for each year of service over 30
years. Tiers 3 and 4 members with five or more years of service and Tier 5 members with ten or more
years of service can retire as early as age 55 with reduced benefits. Tiers 3 and 4 members age 55 or
older with 30 or more years of service can retire with no reduction in benefits.
Final average salary is the average of the wages earned in the three highest consecutive years of
employment. For Tiers 3, 4 and 5 members, each year's compensation used in the final average salary
calculation is limited to no more than 10%greater than the average of the previous two years.
AL
-42-
TOWN OF SOUTHOLD
NOTES TO FINANCIAL STATEMENTS
C. DETAILED NOTES ON ALL FUNDS (continued)
5. RETIREMENT SYSTEM (continued)
Benefits Provided (continued)
Tier 6
Eligibility: Tier 6 members, with the exception of those retiring under special retirement plans, must have
' ten years of service and be at least age 55 to be eligible to collect a retirement benefit.The full benefit age
for Tier 6 members is age 63 for ERS members and 62 for PFRS members.
Benefit calculation: Generally, the benefit is 1.67% of final average salary for each year of service if the
member retires with less than 20 years. If a member retires with 20 years of service, the benefit is 1.75%
of final average salary for each year of service. If a member retires with more than 20 years of service,an
additional benefit of 2% of final average salary is applied for each year of service over 20 years. Tier 6
members with ten or more years of service can retire as early as age 55 with reduced benefits.
Final average salary is the average of the wages earned in the five highest consecutive years of
employment. For Tier 6 members, each year's compensation used in the final average salary calculation
is limited to no more than 10%greater than the average of the previous four years.
Special Plans
The 25-Year Plan allows a retirement after 25 years of service with a benefit of one-half of final average
salary, and the 20-Year Plan allows a retirement after 20 years of service with a benefit of one-half of final
average salary.These plans are available to certain PFRS members, sheriffs, and correction officers.
Disability Retirement Benefits
Disability retirement benefits are available to members unable to perform their job duties because of
permanent physical or mental capacity. There are three general types of disability benefits: ordinary,
performance of duty and accidental disability benefits. Eligibility, benefit amounts, and other rules such as
any offsets of other benefits depend on a member's tier,years of service, and plan.
Ordinary Death Benefits
Death benefits are payable upon the death, before retirement, of a member who meets eligibility
requirements as set forth by law.The first$50,000 of an ordinary death benefit is paid in the form of group
life term life insurance. The benefit is generally three times the member's annual salary. For most
members,there is also a reduced post-retirement ordinary death benefit available.
Post-Retirement Benefit Increases
A cost-of-living adjustment is provided annually to: (1) all pensioners who have attained age 62 and have
been retired for five years; (2) all pensioners who have attained age 55 and have been retired for ten
years; (3)all disability pensioners, regardless of age,who have been retired for five years; (4) recipients of
an accidental death benefit, regardless of age, who have been receiving such benefit for five years; and
(5) the spouse of a deceased retiree receiving a lifetime benefit under an option elected by the retiree at
retirement. An eligible spouse is entitled to one-half the cost-of-living adjustment amount that would have
been paid to the retiree when the retiree would have met the eligibility criteria. This cost-of-living
adjustment is a percentage of the annual retirement benefit of the eligible member as computed on a base
benefit amount not to exceed $18,000 of the annual retirement benefit. The cost-of-living percentage shall
be 50%of the annual consumer price index as published by the U.S. Bureau of Labor but cannot be less
than 1%or exceed 3%.
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TOWN OF SOUTHOLD
NOTES TO FINANCIAL STATEMENTS
C. DETAILED NOTES ON ALL FUNDS (continued)
5. RETIREMENT SYSTEM (continued)
Contributions
Plan members who joined the system before July 27, 1976 are not required to make contributions.
Those joining after July 27, 1976 and before January 1, 2010 with less than ten years of membership
are required to contribute 3% of their annual salary. Those joining on or after January 1, 2010 and
' before April 1, 2012 are required to contribute 3% of their salary for NYSERS members throughout
active membership. Those joining on or after April 1, 2012 are required to contribute between 3% and
6%, depending upon their salary,throughout active membership. Under the authority of the NYSRSSL,
the Comptroller shall certify annually the actuarially determined rates expressly used in computing the
employers' contributions based on salaries paid during the System's year ended March 31. The actual
contributions were equal to 100% of the actuarially required amounts. The required contributions as
billed by the Plan,for the Town,for the current year is:
ERS PFRS
$ 1,702,061 $ 1,573,263
Pension Liabilities, Pension Expense Deferred Outflows of Resources and Deferred Inflows of
Resources Related to Pension
At December 31, 2019, the Town reported a liability of $2,909,885 and $2,924,887 for ERS and
PFRS, respectively, for its proportionate share of the net pension liability for the Systems. The net
pension liability was measured as of March 31, 2019 and the total pension liability used to calculate
the net pension liability was determined by an actuarial valuation as of April 1, 2018. The Town
proportion of the net pension liability was based on a projected contribution of all participating
members, actuarially determined.
Below is the Town's proportionate share of the net pension liability of the System and its related
employer allocation percentage as of March 31,2019.
Allocation of the
Net Pension System's Total
Measurement Date Liability Net Liability
ERS March 31,2019 $ 2,909,885 0.0404714%
PFRS March 31,2019 $ 2,924,887 0.1744053%
There was no significant change in the Town's proportionate share from March 31, 2018 to March 31,
2019.
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TOWN OF SOUTHOLD
NOTES TO FINANCIAL STATEMENTS
C. DETAILED NOTES ON ALL FUNDS (continued)
5. RETIREMENT SYSTEM (continued)
Pension Liabilities, Pension Expense Deferred Outflows of Resources and Deferred Inflows of
Resources Related to Pension (continued)
For the year ended December 31, 2019, the Town recognized pension expense of $3,840,524, of
which $1,946,191 relates to ERS and $1,894,333 relates to PFRS. At December 31, 2019, the Town
reported deferred outflows of resources and deferred inflows of resources related to pensions from the
following sources:
ERS PFRS Totals
Deferred Outflows of Resources:
Difference between expected and actual experience $ 564,675 $ 710,536 $ 1,275,211
Changes of assurrptions 720,778 1,062,690 1,783,468
Changes in proportion and differences between errployer
contributions and proportionate share of contributions 144,301 169,027 313,328
Contributions made subsequent to the rreasurerrent date 1,288,612 1,185,096 2,473,708
Total Deferred Outflows of Resources-pension amounts $ 2,718,366 $ 3,127,349 $ 5,845,715
Deferred Inflows of Resources:
Differences between expected and actual experience $ 192,491 $ 312,280 $ 504,771
Net difference between projected and actual investment
earnings on pension plan investments 735,965 585,784 1,321,749
Changes in proportion and differences between the Town's
contributions and proportionate share of contributions 84,550 212,359 296,909
Total Deferred Inflows of Resources-pension amounts $ 1,013,006 $ 1,110,423 $ 2,123,429
Contributions subsequent to the measurement date will be recognized as a reduction of the net pension
liability in the year ended December 31, 2020. Other amounts reported as deferred outflows of resources
and deferred inflows of resources related to pensions will be recognized in pension expense as follows:
ERS FI=RS
Years ended December 31,2020 $ 628,911 $ 563,125
2021 (545,232) (102,338)
2022 (56,183) (13,796)
2023 389,252 326,431
2024 58,408
$ 416,748 $ 831,830
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TOWN OF SOUTHOLD
NOTES TO FINANCIAL STATEMENTS
C. DETAILED NOTES ON ALL FUNDS(continued)
5. RETIREMENT SYSTEM (continued)
Actuarial Assumptions
The total pension liability as of the measurement date was determined by using an actuarial valuation
as noted in the table below, with update procedures used to roll forward the total pension liability to the
measurement date. The actuarial valuations used the following actuarial assumptions:
Annuitant mortality rates are based on the April 1, 2010 - March 31, 2015 System's experience
with adjustments for mortality improvements based on the Society of Actuaries' Scale MP-2014.
The actuarial assumptions used in the April 1, 2018 valuation are based on the results of an
actuarial experience study for the period April 1, 2010- March 31, 2015.
ERS PFRS
Actuarial Valuation Date April 1,2018 April 1,2018
Investment rate of return
(net of investment expenses) 7.00% 7.00%
Inflation rate 2.50% 2.50%
Salary increases 4.20% 5.00%
Cost of living adjustments 1.30% 1.30%
The long-term 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
investment expenses 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 the arithmetic real rates of return for each major asset class included in the target
asset allocation as of March 31, 2019 are summarized below:
Long-term
Target Expected Real
Asset Type: Allocation Rate of Return
Equity:
Domestic equity 36.00% 4.55%
International equity 14.00% 6.35%
Private equity 10.00% 7.50%
Real estate 10.00% 5.55%
Absolute return strategies" 2.00% 3.75%
Opportunistic portfolio 3.00% 5.68%
Real assets 3.00% 5.29%
Bonds and mortgages 17.00% 1.31%
Cash 1.00% -0.25%
Inflation indexed bonds 4.00% 1.25%
100.00%
The real rate of return is net of the long-term inflation assumption of 2.50%.
'Excludes equity-oriented long-only global funds of $2.82 billion. For investment management purposes, these funds are
included in domestic equity and international equity.
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TOWN OF SOUTHOLD
NOTES TO FINANCIAL STATEMENTS
D. DETAILED NOTES ON ALL FUNDS (continued)
5. RETIREMENT SYSTEM (continued)
Actuarial Assumptions (continued)
The discount rate used to calculate the total pension liability was 7.0% for the System. The projection
of cash flows used to determine the discount rate assumes that contributions from plan members will
be made at the current contribution rates and that contributions from employers will be made at
statutorily required rates, actuarially. Based upon the assumptions, the Systems' 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 Proportionate Share of the Net Pension Liability to the Discount Rate Assumption
The following presents the Town's proportionate share of the net pension liability calculated using the
discount rate of 7.0%, as well as what the Town's proportionate share of the net pension liability would
be if it were calculated using a discount rate that is 1-percentage point lower (6.0%) or 1-percentage
point higher(8.0%)than the current rate:
1.00% Current 100%
Decrease Assumption Increase
6.00% 700% 8.00%
Town's proportionate share of the
collective net pension liability/(asset)
ERS $ 12,537,273 $ 2,909,885 $ (5,886,101)
PFRS 10,570,107 2,924,888 (3,459,758)
Pension Plan Fiduciary Net Position
The components of the current-year net employees' retirement system pension liability of the
employers as of the respective valuation date of April 1, 2018 were as follows:
ERS PFRS
(Dollars in thousands) (Dollars in thousands)
Brployers'totalpension liability $ (189,803,429) $ (34,128,100)
Plan net position 182,718,124 32,451,037
Enployers'net pension liability $ (7,085,305) $ (1,677,063)
Ratio of plan net position to the
Brployers'total pension liability 96.27% 95.09%
Detailed information about the System pension plan's fiduciary net position is available in the System's
separately issued financial statements.
-47-
TOWN OF SOUTHOLD
NOTES TO FINANCIAL STATEMENTS
C. DETAILED NOTES ON ALL FUNDS(continued)
6. OTHER'POSTEMPLOYMENT BENEFITS (OBLIGATIONS FOR HEALTH INSURANCE)
Plan Description
The Town established and administers a single-employer defined benefit OPEB plan for its
employees. Article 11 of the State Compiled Statutes grants the authority to establish and amend the
benefit terms and financial requirements to the Town Board. No assets are accumulated in a trust that
meets the criteria in paragraph 4 of GASB Statement No. 75.
The Town, as a single-employer defined benefit OPEB plan, per its contracts with employees, will pay
full premium costs for medical insurance coverage (currently provided by the Empire Plan) at
retirement with the exception of PBA members hired after 2013 who pay 15% while active and into
retirement. Employees are eligible for retiree health insurance provided that the employee has been
eligible for coverage under the Town's health insurance plan for at least 10 consecutive years and is
employed by the Town on the last date immediately prior to retirement. The retiree and spouse are
eligible for full Medicare premium reimbursement. Healthcare benefits for non-union employees are
similar to those of union employees. Surviving spouses of deceased employees may continue
coverage by paying the premium equivalent for participants.
Employees Covered by Benefit Terms
The number of participants as of January 1,2019,the effective date of the OPEB valuation is as follows:
Active employees 211
Retirees and dependents 131
Total 342
There have been no significant changes in the number or type of coverage since that date.
Total OPEB Liabilitv
The Town's total OPEB liability of$78,272,806 was measured as of January 1,2019 and was determined
by an actuarial valuation as of January 1, 2019 with updated procedures used to rollforward the OPEB
liability to the reporting date of December 31,2019.
Funding Policy
The Town currently pays for other postemployment health care benefits on a pay-as-you-go basis.
Actuarial Assumptions and Other Inputs
The projection of future benefits for an ongoing plan involves estimates of the value of reported
amounts and assumptions about the probability of occurrence of future events far into the future.
Amounts determined regarding the funded status of a plan and the employer's annual required
contributions are subject to continual revision as actual results are compared with past expectations
and new estimates are made about the future.
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 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 liability in actuarial accrued liabilities, consistent with the
long-term perspective of the calculations.
-48-
TOWN OF SOUTHOLD
NOTES TO FINANCIAL STATEMENTS
C. DETAILED NOTES ON ALL FUNDS(continued)
6. OTHER POSTEMPLOYMENT BENEFITS (OBLIGATIONS FOR HEALTH INSURANCE) (continued)
Actuarial Assumptions and Other Inputs (continued)
The total OPEB liability in the January 1, 2019 valuation was determined using the following actuarial
assumptions and other inputs:
Discount Rate 4.10%
Healthcare cost trend rates 8%for 2019 decreasing .5%per year to an ultimate trend rate
of 5.0%after 7 years.
i
The discount rate was based on the January 1,2019 Bond Buyer GO-20 municipal bond index rate.
Mortality rates were based on the RP-2017 mortality table with projected mortality.
The decrement tables used for this valuation are based on the New York State Employees' Retirement
System and New York State Police and Fire Retirement System.
The actuarial assumptions used in the January 1, 2019 valuation were based on standard tables modified
for certain plan features such as eligibility for full and early retirement where applicable.
Changes in the Total OPEB Liability
Balance at December 31,2018 $ 78.857.979
Changes for the year:
Service cost 1,913,830
Interest 2,708,144
Differences between actual and expected experience 8,515,166
Changes in assumptions and other inputs (11,542,778)
Benefit payments (2,179,535)
Balance at December 31,2019 $ 78,272,806
Sensitivity of the Total OPEB Liability to Changes in the Discount Rate
The following presents the total OPEB liability of the Town, as well as what the Town's total OPEB liability
would be if it were calculated using a discount rate that is 1-percentage-point lower (3.10%) or
1-percentage-point higher(5.10%)than the discount rate.
1.00% Discount 1.00%
Decrease Rate Increase
3.10% 4.10% 5.10%
$ 93,859,197 $ 78,272,806 $ 66,915,152
-49-
TOWN OF SOUTHOLD
NOTES TO FINANCIAL STATEMENTS
C. DETAILED NOTES ON ALL FUNDS (continued)
6. OTHER POSTEMPLOYMENT BENEFITS(OBLIGATIONS FOR HEALTH INSURANCE) (continued)
Sensitivity of the Total OPEB Liability to Changes in the Healthcare Cost Trend Rate
The following presents the total OPEB liability of the Town, as well as what the Town's total OPEB liability
would be if it were calculated using a healthcare cost trend rate that is 1-percentage-point lower or
1-percentage-point higher than the healthcare cost trend rate.
1.00% Trend 1.00%
Decrease Rate Increase
(starts at 7%) (starts at 8%) (starts at 9%)
$ 66,415,245 $ 78,272,806 $ 93,054,673
For the year ended December 31, 2019, the Town recognized OPEB expense of $4,675,130. At
December 31, 2019, the Town reported deferred outflows or inflows of resources related to OPEB
from the following sources.
Deferred Outflows Deferred Inflows
of Resources of Resources
Differences Betw een Actual and Expected Experience $ 7,298,713
Changes of assumptions $ 6,771,646
Contributions made subsequent to the measurement date 2,507,493
Total Deferred Outflows of Resources-OPEB $ 9,806,206 $ 6,771,646
The amounts reported as deferred inflows of resources related to OPEB will be recognized in OPEB
expense as follows:
Years ending December 31, 2020 $ 87,844
2021 87,844
2022 87,844
2023 87,845
2024 87,845
2025 87,845
$ 527,067
7. COMPENSATED ABSENCES
Town employees are granted vacation and sick leave and earn compensatory absences in varying
amounts. In the event of termination or upon retirement, an employee is entitled to payment for
accumulated vacation and sick leave and unused compensatory absences at various rates subject to
certain maximum limitations. Estimated vacation, sick leave and compensatory absences accumulated
by governmental fund type employees have been recorded in the Statement of Net Position. Payment of
vacation time and sick leave is dependent upon many factors; therefore, timing of future payments is not
readily determinable. However, management believes that sufficient resources will be made available for
the payments of vacation, sick leave and compensatory absences when such payments become due. As
of December 31,2019, the value of the accumulated vacation time and sick leave was$9,078,244 for the
primary government.
-50-
TOWN OF SOUTHOLD
NOTES TO FINANCIAL STATEMENTS
D. COMMITMENTS AND CONTINGENCIES
Risk Management
In common with other municipalities,the Town receives numerous notices of claims.The Town established a
self-insurance risk management program for general liability insurance which is accounted for in the general
fund. Although the eventual outcome of these claims cannot be presently determined, the Town has
estimated unsettled claims and litigation to be $773,751 which is included as claims and judgments payable
in the government-wide financial statements and $32,678 is included as judgments and claims payable as a
current liability in the fund financial statements. The Town is of the opinion that the ultimate settlement of the
outstanding claims will not result in a material adverse effect on the Town's financial position.
For the year ended December 31, 2019, the Town has a deductible liability exposure of$50,000 per claim
for general liability, $25,000 per claim for automobile liability, police liability and employee benefits, and
$10,000 per claim for public officials and employment practices. Any liability exposure above the
deductible amounts is covered by primary insurance policies up to $1,000,000 per claim for general
liability, public officials, police and employment practices, and employee benefits.
Aggregate exposures are $1,000,000 per claim for public officials, police and employment practices,
$3,000,000 for employee benefits and general liability. After primary policy limits are exhausted, the
excess exposure above the per claim or aggregate limits is covered by an umbrella liability policy of
$10,000,000 per claim and $10,000,000 in the aggregate.
There have been no significant reductions in insurance coverage as compared to the prior year and there
were no settlements in excess of insurance coverage over the last three years.
The Town liability for general liability claims is determined and reported by a third-party administrator and is
reported when it is probable that a loss has occurred, and the amount of that loss can be reasonably
estimated. Claims reserves for general liability claims are re-evaluated periodically to take into consideration
recently settled claims and any new developments and changes.
The Town's discretely presented component units are not included in the Town's self-insurance risk
management program for any claims.
Fund balance is assigned for future catastrophic losses. Changes in the long-term liability for claims and
judgments for the years ended December 31, 2019 and 2018 are as follows:
General
Liability
2019 2018
Unpaid Claims as of December 31St,
prior year $ 580,707 $ 543,145
Incurred Claims:
Provision for insured events
of the current fiscal year 143,751 173,262
Increase(decrease) in net provision for
insured events of prior fiscal years 120,971 (70,700)
Total incurred claims and
claim adjustments 845,429 645,707
Payments of:
Claims during the year 39,000 65,000
Unpaid Claims as of December 31 St $ 806,429 $ 580,707
-51-
TOWN OF SOUTHOLD
NOTES TO FINANCIAL STATEMENTS
D. COMMITMENTS AND CONTINGENCIES (continued)
Contingent Liabilities
Amounts received or receivable from grant agencies are subject to audit and adjustment by grantor
agencies, principally the federal and state government. Any disallowed claims, including amounts already
collected, may constitute a liability of the applicable funds. The amount, if any, of expenditures that may be
disallowed by the grantor cannot be determined at this time, although the Town expects such amounts, if
_ any,to be immaterial.
Landfill Closure and Post-Closure Care Costs
State and federal laws and regulations required the Town to place a final cover on its landfill sites and to
perform certain maintenance and monitoring functions at the sites for thirty years after closure. The Town
ceased accepting waste at its Cutchogue landfill as of October 8, 1993. Accordingly, as of December 31,
2019, the Town has recorded a liability of $376,432, in the government-wide financial statements which
represents the provision to be made in future budgets for unfunded closure and postclosure landfill costs. As
the liability is based on 100% of capacity there are no estimated costs of closure or postclosure remaining to
be recognized. Actual costs may vary due to inflation or deflation, changes in technology, or changes in
regulations or applicable laws.
Construction and Other Capital Acquisition Commitments
The Town is committed to capital improvements to its various facilities and infrastructure. At December 31,
2019,these commitments amounted to $511,994 in the capital projects fund.
Animal Shelter Agreement
In May 2011, the Town entered into an agreement with the North Fork Animal Welfare League to operate
and manage the Town of Southold Animal Shelter. The agreement is for a term of four years commencing
on June 1, 2011. The agreement was renewed in March 2015 with the lease to begin March 2016 expiring
in February 2026. The future minimum payments associated with this agreement are as follows:
For years ending December 31, 2020 $ 232,484
2021 232,484
2022 232,484
2023 232,484
2024 232,484
2025-2026 271,231
Total $ 1,433,651
Lease Commitments and Leased Assets
The Town leases property and equipment under operating leases. Total rental expenditures on such
leases for the year ended December 31, 2019 were$138,405. Future obligations over the primary terms of
the Town's leases as of December 31, 2019 are as follows:
For years ending December 31, 2020 $ 138,251
2021 133,063
2022 63,011
2023 27,080
2024 7,844
Total $ 369,249
-52-
TOWN OF SOUTHOLD
NOTES TO FINANCIAL STATEMENTS
E. CONDENSED FINANCIAL STATEMENTS FOR THE DISCRETELY PRESENTED COMPONENT UNITS
The following represents condensed financial statements for the discretely presented component units as of
and for the year ended December 31,2019:
Condensed Statement of Net Position:
Due from Capital Assets Deferred Other Deferred
Current Primary Net of Outflows Current Long-Term Inflows Net
Assets Government Depreciation of Resources Liabilities Liabilities of Resources Position
Fishers Island
Ferry District $ 1,079,218 $ 155,744 $ 8,823,523 $ 353,028 $ 2,089,221 $ 1,426,594 $ 408,323 $ 6,487,375
Fishers Island Waste
Management District 417,414 159,011 2,218,168 16,448 159,011 2,619,134
Cutchogue-New Suffolk
Park District' 167,554 23,453 127,681 23,453 295,235
Southold Park District' 288,753 60,306 743,543 1,263 60,306 1,031,033
Orient-East Marion
Park District' 10,291 7,666 455,158 7,666 465,449
MattituckPark Dstrict' 575,668 51,055 1,680,677 51,055 2,256,345
Orient Mosquito District' 98,092 17,111 1,012 17,111 97,080
$ 2,636,990 $ 474,346 $ 14,048,750 $ 353,028 $ 2,107,944 $ 1,426,594 $ 726,925 $ 13,251,651
'Unaudited component units.
Condensed Statement of Activities:
Program General Revenue Net Position
Property
Expenses Revenue Net Expense Tax Other Change 111!2019 1213112019
Fishers Island
` Ferry District $ 4,422,016 $ 3,155,342 $ 1,266,674 $ 842,663 $ 59,502 $ (364,509) $ 6,851,884 $ 6,487,375
Fishers Island Waste
Management District 981,875 48,586 933,289 864,131 8,315 (60,843) 2,679,977 2,619,134
Cutchogue-New Suffolk
Park District' 123,523 123,523 130,000 105 6,582 288,653 295,235
Southold Park District' 383,246 383,246 327,627 51,518 (4,101) 1,035,134 1,031,033
Onent-East Marion
Park District' 57,717 57,717 41,000 112 (16,605) 482,054 465,449
Mattituck Park District' 766,185 55,175 711,010 283,000 2,515 (425,495) 2,681,840 2,256,345
Orient Mosquito District' 84,340 84,340 93,000 35 8,695 88,385 97,080
$ 6,818,902 $ 3,259,103 $ 3,559,799 $ 2,581,421 $ 122,102 $ (856,276) $ 14,107,927 $ 13,251,651
'Unaudited component units.
-53-
TOWN OF SOUTHOLD
NOTES TO FINANCIAL STATEMENTS
E. CONDENSED FINANCIAL STATEMENTS FOR THE DISCRETELY PRESENTED COMPONENT UNITS
(continued)
Complete financial statements and financial records of these component units can be obtained from their
respective administrative offices:
Orient Mosquito District Fishers Island Waste
145 Platt Road Management District
Orient, NY 11957 Fishers Island, NY 06390
Cutchogue-New Suffolk Orient-East Marion
Park District Park District
P.O. Box 311 P.O. Box 12
Cutchogue, NY 11935 Orient, NY 11957
Southold Park District Mattituck Park District
P.O. Box 959 P.O. Box 1413
Southold, NY 11971 Mattituck, NY 11952
Fishers Island Ferry District
P.O. Box H
Fishers Island, NY 06390
F. 2%TRANSFER TAX
Transfer tax receipts are recorded in the Community Preservation Fund and are used for the purchase and/or
preservation of agricultural land, open space, parks, or historic preservation sites. The tax applies to sales of
vacant land amounts in excess of$100,000 or sales of improved land in excess of$250,000. Conveyance of
real property for open space, parks or historic preservation purposes and certain first-time home buyers are
exempt from this taxa
G. SUBSEQUENT EVENTS
Bondlssuances
In September 2020, the Town issued $10,461,722 Bond Anticipation Notes with an annual interest rate of
1.75%which mature on September 23,2021.
Economic Conditions
On January 30, 2020, the World Health Organization declared the coronavirus outbreak a "Public-Health
Emergency of International Concern" and on March 10, 2020. Declared it to be a pandemic based on the
rapid increase of exposure globally. New York City and surrounding areas were particularly hard hit by the
coronavirus. Actions taken around the world to help mitigate the spread of the coronavirus included
restrictions on travel, and quarantines in certain areas, coerced closures for certain types of public places and
businesses. The coronavirus and actions taken globally and especially in New York State to mitigate it, have
had and are expected to continue to have an adverse impact on the economies and financial markets of many
countries, including the geographical areas the Town operates.While it is unknown how long these conditions
will last and'what the complete financial impact be to the Town, the Town is expecting it to negatively impact
its revenues and expenditures.
The full impact of the COVID-19 outbreak continues to evolve as of the date of this report. As such, it is
uncertain as to the full magnitude that the pandemic will have on the Town's future operations and result of its
operations. As of the date of this report, the Town is unable to estimate the effects of the COVID-19 outbreak
on the results of its operations for fiscal year 2020.
-54-
TOWN OF SOUTHOLD
NOTES TO FINANCIAL STATEMENTS
H. NEW PRONOUNCEMENTS
Statement No. 83, "Certain Assets Retirement Obligations" establishes criteria for determining the timing and
pattern of recognizing a liability and corresponding deferred outflow of resources for asset retirement
obligations. It also addresses that the measurement of both the asset retirement obligation and deferred
outflows of resources should be based on the estimate of the current value of expected outlays. The
requirements of this Statement are effective for financial statements for periods beginning after June 15,
2019.
Statement No. 84, "Fiduciary Activities". establishes criteria for identifying fiduciary activities for accounting
and financial reporting purposes and how those activities should be reported. The focus of the criteria
generally is on (1) whether a government is controlling the assets of the fiduciary activity, and (2) the
beneficiaries with whom a fiduciary relationship exists. Separate criteria are included to identify fiduciary
component units and postemployment benefit arrangements that are fiduciary activities. This Statement
describes four fiduciary funds that should be reported, if applicable: (1) pension (and other employee benefit)
trust funds, (2) investment trust funds, (3) private-purpose trust funds, and (4) custodial funds. Custodial
funds generally should report fiduciary activities that are not held in a trust or equivalent arrangement that
meets specific criteria. The requirements of this Statement are effective for financial statements for periods
beginning after December 15,2019.
Statement No. 87, "Leases", requires the recognition of certain lease assets and liabilities for leases that
previously were classified as operating leases and the recognition of inflows of resources or outflows of
resources based on the payment provisions of the contract. It establishes a single model for lease accounting
based on the principle that leases are financings of the right to use an underlying asset. Under this
Statement, a lessee is required to recognize a lease liability and an intangible right-to-use lease asset, and a
lessor is required to recognize a lease receivable and a deferred inflow of resources, thereby enhancing the
relevance and consistency of information about governments' leasing activities. The requirements of this
Statement are effective for financial statements for periods beginning after June 15, 2021.
Statement No. 88, "Certain Disclosures Related to Debt, Including Direct Borrowings and Direct Placements",
the objective of which is to improve the information that is disclosed in notes to government financial
statements related to debt, including direct borrowings and direct placements. This Statement (1) defines
debt for purposes of disclosure in notes to financial statements as a liability that arises from a contractual
obligation to pay cash (or other assets that may be used in lieu of cash) in one or more payments to settle an
amount that is fixed at the date the contractual obligation is established, (2) requires that additional
information related to debt be disclosed, including unused lines of credit; assets pledged as collateral for the
debt; and terms specified in debt agreements related to significant events of default with finance-related
consequences, significant termination events with finance-related consequences, and significant subjective
acceleration clauses, and (3) requires that existing and additional information be provided for direct
borrowings and direct placements of debt separately from other debt.The requirements of this Statement are
effective for financial statements for periods beginning after June 15,2019.
Statement No. 89, "Accounting for Interest Cost Incurred Before the End of a Construction Period", the
objectives of which are to enhance the relevance and comparability of information about capital assets and
the cost of borrowing for a reporting period and to simplify accounting for interest cost incurred before the
end of a construction period. This Statement requires that interest cost incurred before the end of a
construction period be recognized as an expense in the period in which the cost is incurred for financial
statements prepared using the economic resources measurement focus.The requirements of this Statement
are effective for financial statements for periods beginning after December 15, 2020.
Statement No. 90, "Majority Equity Interests - an Amendment of GASB Statements No. 14 and 61"
provides guidance regarding the accounting and financial reporting of a government's majority equity
interests in a legally separate organization. The requirements of this Statements are effective for financial
statements for periods beginning after December 15,2019.
-55-
TOWN OF SOUTHOLD
NOTES TO FINANCIAL STATEMENTS
H. NEW PRONOUNCEMENTS (continued)
Statement No. 91, "Conduit Debt Obligation", as amended by Statement No. 95, "Postponement of the
Effective Dates of Certain Authoritative Guidance', was issued to provide a single method of reporting
conduit debt obligations by issuers and eliminate diversity in practice associated with (1) commitments
extended by issuers, (2) arrangements associated with conduit debt obligations, and (3) related note
disclosures. The requirements of this Statements are effective for financial statements for periods beginning
after December 15,2021.
Statement No. 92, "Omnibus 2020" as amended by Statement No. 95, "Postponement of the Effective Dates
of Certain Authoritative Guidance",was issued to enhance comparability in accounting and financial reporting
and consistency of authoritative language on various topics.The requirements of this Statement are effective
for reporting periods as follows: paragraphs 4,5,6,7,8,9,10 and 12 effective years beginning after June 15,
2021.
Statement No. 93, "Replacement of Interbank Offered Rates" as amended by Statement No. 95,
"Postponement of the Effective Dates of Certain Authoritative Guidance", amends certain provisions of
GASB Statements No. 53, `Accounting and Financial Reporting for Derivative Instruments"as amended and
87, "Leases". It has been issued to address the various accounting and reporting implications that will result
from the replacement of LIBOR, as LIBOR will cease to exist in 2021. The requirements of this Statement,
except for paragraph 11 b, 13 and 14, are effective for reporting periods beginning after June 15, 2020. The
requirement of paragraph iib is effective for reporting periods ending after December 31, 2021 and
paragraphs 13 and 14 are effective for years beginning after June 15,2021.
Statement No. 94, "Public-Private and Public-Public Partnerships and Availability Payment Arrangements"
this Statement has been issued to improve financial reporting related to public-private and public-public
partnerships arrangements, in which one a government(transferor) contracts with an operator(governmental
or nongovernmental entity) to provide public services by conveying the right to operate or use a nonfinancial
assets.The requirements of this Statement are effective for years beginning after June 15,2022.
Statement No. 96, "Subscription-Based Information Technology Arrangements" this Statement has been
issued to provide guidance on the accounting and financial reporting for subscription-based information
technology arrangements (SBITAs) for government end users (governments). This Statement (1) defines a
SBITAs; (2) establishes that a SBITA results in a right-to-use subscription asset- an intangible asset- and a
corresponding subscription liability; (3) provides the capitalization criteria for outlays other than subsection
payments, including implementation costs of a SBITA; and (4) requires note disclosures regarding a SBITA.
To the extent relevant, the standards for SBITAs are based on the standards established in Statement No.
87, "Leases". as amended. The requirements of this Statement are effective for years beginning after
June 15,2022.
The Town is currently evaluating the impact of the above pronouncements.
-56-
REQUIRED SUPPLEMENTARY
INFORMATION OTHER THAN
MANAGEMENT DISCUSSION AND
ANALYSIS
Schedules of Revenues, Expenditures and
Changes in Fund Balance - Budget and
Actual Major Governmental Funds and
Schedule
NOTES TO REQUIRED SUPPLEMENTARY INFORMATION
The budgets are adopted on a basis of accounting consistent with
GAAP. In the event that actual revenues received exceed
budgeted amounts, additional budgetary appropriations are made.
The Capital Projects and Special Grant Funds are budgeted on a
project or grant basis.
C_
TOWN OF SOUTHOLD
GENERAL FUND
SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES
IN FUND BALANCE - BUDGET AND ACTUAL
Year Ended December 31, 2019
Variance
Original Final Positive
Budget Budget Actual Encumbrances (Negative)
REVENUES
i Real property taxes $ 27,661,824 $ 27,661,824 $ 27,661,824 $ -0-
Other real property tax items 90,000 90,000 106,608 16,608
Non-property tax items 1,288,673 1,288,673 1,288,673 -0-
Departmental income 410,400 475,401 627,553 152,152
Intergovernmental charges 265,794 265,794 200,391 (65,403)
Use of money and property 218,500 218,500 418,554 200,054
Licenses and permits 439,670 439,670 402,289 (37,381)
- Fines and forfeitures 260,100 260,100 299,053 38,953
Sale of property and compensation for loss 137,650 188,980 184,068 (4,912)
Miscellaneous local sources 307,383 405,266 162,223 (243,043)
Interfund revenues 166,000 166,000 123,589 (42,411)
State aid 1,880,000 1,880,000 1,645,297 (234,703)
Federal aid 14,600 14,600 149,364 134,764
Total Revenues 33,140,594 33,354,808 33,269,486 (85,322)
EXPENDITURES
Current:
General government support 8,592,321 8,192,555 7,254,140 $ 55,766 882,649
Public safety 10,630,246 10,978,046 10,517,515 63,654 396,877
Public health 43,300 43,300 33,300 10,000
Transportation 555,214 569,230 513,511 3,763 51,956
Economic assistance and opportunity 1,509,240 1,512,165 1,416,859 1,980 93,326
Culture and recreation 399,194 404,694 356,683 3,900 44,111
Home and community services 387,214 451,614 348,847 20,625 82,142
Employee benefits 10,862,451 10,645,863 9,720,142 925,721
Debt service:
Principal 505,000 505,000 495,936 9,064
Interest 326,500 326,500 237,053 89,447
Total Expenditures 33,810,680 33,628,967 30,893,986 149,688 2,585,293
Excess(Deficiency)of Revenues
Over(Under)Expenditures (670,086) (274,159) 2,375,500 (149,688) 2,499,971
OTHER FINANCING USES
Transfers out (587,000) (971,487) (849,386) 122,101
Total Other Financing Uses (587,000) (971,487) (849,386) -0- 122,101
Net Change in Fund Balance $ (1,257,086) $ (1,245,646) 1,526,114 $ (149,688) $ 2,622,072
Fund Balance at Beginning of Year 11,321,588
Fund Balance at End of Year $ 12,847,702
-57-
TOWN OF SOUTHOLD
HIGHWAY FUND
SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES
IN FUND BALANCE - BUDGET AND ACTUAL
Year Ended December 31, 2019
Variance
Original Final Positive
Budget Budget Actual Encumbrances (Negative)
REVENUES
Real property taxes $ 5,924,127 $ 5,924,127 $ 5,924,127 $ -0-
Other real property tax items 3,775 3,775 1,331 (2,444)
Use of money and property 7,500 7,500 40,788 33,288
Licenses and permits 20,000 20,000 43,870 23,870
Sale of property and compensation for loss 500 6,876 4,589 (2,287)
Miscellaneous local sources 2,113 2,113
State aid 597,026 692,724 597,195 (95,529)
Total Revenues 6,552,928 6,655,002 6,614,013 (40,989)
EXPENDITURES
Current:
General government support 113,053 113,053 63,154 49,899
Transportation, 3,676,164 3,801,238 3,506,275 $ 9,931 285,032
Employee benefits 2,232,195 2,108,195 1,833,720 274,475
Debt Service:
Principal 118,000 118,000 117,474 526
Interest 39,500 58,500 57,887 613
Total Expenditures 6,178,912 6,198,986 5,578,510 9,931 610,545
Excess(Deficiency)of Revenues
Over(Under)Expenditures 374,016 456,016 1,035,503 (9,931) 569,556
OTHER FINANCING USES
Transfers out (455,000) (560,000) (560,000) -0-
Total Other Financing Uses (455,000) (560,000) (560,000) -0- -0-
Net Change in Fund Balance $ (80,984) $ (103,984) 475,503 $ (9,931) $ 569,556
Fund Balance at Beginning of Year 1,430,196
Fund Balance at End of Year $ 1,905,699
L
0 -58-
TOWN OF SOUTHOLD
COMMUNITY PRESERVATION FUND
SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES
IN FUND BALANCE- BUDGET AND ACTUAL
Year Ended December 31, 2019
Variance
Original Final Positive
Budget Budget Actual (Negative)
REVENUES
Non-property tax items $ 7,500,000 $ 7,500,000 $ 7,666,589 $ 166,589
Use of money and property 35,000 35,000 184,120 149,120
State aid 11,714 11,714
Total Revenues 7,535,000 7,535,000 7,862,423 327,423
EXPENDITURES
Current:
General government support 66,331 72,058 43,957 28,101
Home and community services 15,173,292 15,176,792 13,521,765 1,655,027
Employee benefits 103,415 103,415 84,000 19,415
Debt service:
Principal 1,490,846 1,490,846 1,490,846 -0-
Interest 655,200 655,200 655,172 28
Total Expenditures 17,489,084 17,498,311 15,795,740 1,702,571
Excess(Deficiency)of Revenues
Over(Under)Expenditures (9,954,084) (9,963,311) (7,933,317) 2,029,994
Net Change in Fund Balance $ (9,954,084) $ (9,963,311) (7,933,317) $ 2,029,994
Fund Balance at Beginning of Year 17,781,986
Fund Balance at End of Year $ 9,848,669
-59-
TOWN OF SOUTHOLD
SCHEDULE OF CHANGES IN THE TOWN'S TOTAL OTHER POSTEMPLOYMENT
BENEFIT LIABILITY AND RELATED RATIOS
Year Ended December 31, 2019
2019 2018
Total OPEB Liability
Service Cost $ 1,913,830 $ 1,822,695
Interest 2,708,144 2,721,521
Differences between Actual and Expected Experience 8,515,166
Changes in Assumptions (11,542,778) 4,162,884
Benefit Payments (2,179,535) (1,871,347)
Net Change in Total OPEB Liability (585,173) 6,835,753
Total OPEB Liability-Beginning 78,857,979 72,022,226
Total OPEB Liability-Ending $ 78,272,806 $ 78,857,979
Covered employee payroll $ 18,729,794 $ 17,995,841
Total OPEB liability as a percentage of covered payroll 417.91% 438.20%
Note:
This schedule is intended to show information for 10 years.Since 2018 is the first year for this presentation,no other date prior to 2018
is available. However,additional years will be included as they become available.
Notes to Schedule:
No assets are accumulated in a trust that meets the criteria in GASB Statement No.75,paragraph 4,to pay other postemployment
benefits(OPEB).
The Town currently contributed enough money to the plan to satisfy current obligations on a pay-as-you-go basis.
Changes of Benefit Terms
None
Changes of Assumptions
Changes of assumptions and other inputs reflect the effects of changes in the discount rate each period.
The following are the discount rates used in each period:
Discount rate January 1,2019 4.10%
January 1,2018 3.44%
January 1,2017 3.78%
Medical Trend Assumption January 1,2019 Started at 8%in current year decreasing by.5%per year to an ultimate trend rate
of 5%after 7 years.
January 1,2018 Started at 10%decreasing by 1%over the next four years and 5%after 5 years.
Mortality Rates January 1,2019 RP-2017 mortality table with projected mortality
January 1,2018 RP-2014 mortality table with projected mortality
-60-
TOWN OF SOUTHOLD
SCHEDULE OF PENSION CONTRIBUTIONS
For the Year Ended December 31, 2019
Contributions
Recognized by the Plan Contribution
Contractually in Relation to the Contribution as a Percentage
Years Ended Required Contractually Required Deficiency Covered of Covered
December 31, Contributions Contributions (excess) Payroll Payroll
ERS
2019 $ 1,825,922 $ 1,825,922 $ -0- $ 13,396,868 13.63%
2018 1,709,862 1,709,862 -0- 12,081,905 14.15%
2017 1,740,156 1,740,156 -0- 11,706,859 14.86%
2016 1,783,174 1,783,174 -0- 11,594,297 15.38%
2015 1,981,226 1,981,226 -0- 11,429,154 17.33%
2014 2,053,052 2,053,052 -0- 11,076,674 18.53%
2013 2,362,280 2,362,280 -0- 10,713,710 22.05%
2012 1,915,070 1,915,070 -0- 10,813,507 17.71%
2011 1,649,526 1,649,526 -0- 10,343,478 15.95%
2010 1,145,410 1,145,410 -0- 10,193,620 11.24%
PFRS
2019 $ 1,583,285 $ 1,585,285 $ -0- $ 6,843,730 23.16%
2018 1,606,947 1,606,947 -0- 6,943,972 23.14%
2017 1,677,894 1,677,894 -0- 6,971,643 24.07%
2016 1,587,581 1,587,581 -0- 7,139,568' 22.24%
2015 1,762,500 1,762,500 -0- 6,769,147 26.04%
2014 1,455,243 1,455,243 -0- 6,737,987 21.60%
2013 2,073,878 2,073,878 -0- 6,127,253 33.85%
2012 1,209,715 1,209,715 -0- 6,410,344 18.87%
2011 1,308,331 1,308,331 -0- 6,057,237 21.60%
2010 957,407 957,407 -0- 5,999,280 15.96%
Note-Amounts presented for each year were determined as of December 31st and the contractually required
contributions are based on the amounts invoiced by the New York State Local Retirement System.
-61-
TOWN OF SOUTHOLD
SCHEDULE OF PROPORTIONATE SHARE OF THE NET PENSION LIABILITY
For the Year Ended December 31, 2019
2019 2018 2017 2016 2015 2014
ERS
Town's proportion of the net pension liability 00405% 04157% 0.4316% 04164% 0.4180% 0.4180%
Town's proportionate share of the net
collective pension liability $ 2,909,885 $ 1,380,222 $ 4,073,415 $ 6,686,629 $ 1,412,260 $ 1,889,088
Town's covered-employee payroll $ 12,170,400 $ 11,793,423 $ 11,677,075 $ 11,791,354 $ 11,043,895 $ 10,637,657
Town's proportionate share of the net pension
liability as a percentage of its covered-
employee payroll 23 91% 11.70% 34.88% 56.71% 12.79% 17.76%
Plan net position as a percentage of the total
pension liability coming from plan 96.27% 98.24% 94.70% 90.70% 97.90% 97.20%
PFRS
Town's proportion of the net pension liability 0.17441% 0.18794% 0.19295% 0.24967% 0.18691% 0.18691%
Town's proportionate share of the net collective
pension liability $ 2,924,887 $ 1,899,633 $ 3,999,229 $ 6,068,632 $ 514,888 $ 778,124
Town's covered-employee payroll $ 6,931,857 $ 6,934,979 $ 6,887,011 $ 6,750,958 $ 6,168,230 $ 6,519,957
Town's proportionate share of the net pension
liability as a percentage of its covered-
employee payroll 42.19% 27.39% 5807% 89.89% 8.35% 11.93%
Plan net position as a percentage of the total
pension liability coming from plan 95.09% 96.93% 93.50% 90.20% 99.90% 98.50%
-62-
OTHER SUPPLEMENTARY
INFORMATION
TOWN OF SOUTHOLD
COMBINING BALANCE SHEET
NON-MAJOR GOVERNMENTAL FUNDS
December 31, 2019
Special Revenue Funds
East-West Fire Southold Fishers Solid Waste Total
General Fund Special Protection Wastewater Island Sewer Management Non-Major
Part Town Grant District District District District Funds
ASSETS
Cash and investments $ 2,189,649 $ 145,331 $ 32,054 $ 4,805 $ 46,566 $1,147,799 $3,566,204
Accounts receivable 173,884 8 17 80,695 254,604
Due from other funds 168,766 150,800 40 9,450 460,476 789,532
Due from fiduciary funds 64,588 206 64,794
Due from other governments 7,500 7,500
State and federal aid receivables 127,277 56,771 184,048
Inventory of materials and supplies 5,778 5,778
Prepaids 40,986 37,966 78,952
Total Assets $ 2,765,150 $ 152,831 $ 182,862 $ 4,845 $ 56,239 $1,789,485 $4,951,412
LIABILITIES
Accounts payable and
accrued liabilities $ 96,937 $ 7,625 $ 13,138 $ 3,103 $ 261,661 $ 382,464
Due to other funds 16,129 8,320 19 249468
Unearned revenue 123,542 136,886 9,450 40,505 310,383
Total Liabilities 236,608 152,831 13,138 $ -0- 12,572 302,166 717,315
DEFERRED INFLOWS OF RESOURCES
Unearned revenue from
real property taxes 161,213 150,800 374,026 686,039
FUND BALANCES
Nonspendable 40,986 43,744 84,730
Committed 650,616 650,616
Assigned 1,675,727 18,924 4,845 43,667 1,069,549 2,812,712
Total Fund Balances 2,367,329 -0- 18,924 4,845 43,667 1,113,293 3,548,058
Total Liabilities,Deferred Inflows of
of Resources and Fund Balances $ 2,765,150 $ 152,831 $ 182,862 $ 4,845 $ 56,239 $1,789,485 $4,951,412
-63-
TOWN OF SOUTHOLD
COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES
IN FUND BALANCES - NON-MAJOR GOVERNMENTAL FUNDS
For the Year Ended December 31, 2019
Special Revenue Funds
East-West Fire Southold Fishers Solid Waste Total
General Fund Special Protection Wastewater Island Sewer Management Non-Major
Part Town Grant District District District District Funds
REVENUES
Real property taxes $ 724,246 $ 827,572 $ 1,942,263 $ 3,494,081
Other real property tax items 163 163
Non-property tax items 684,075 684,075
Departmental income 1,255,832 $ 1,740 $ 32,019 1,797,238 3,086,829
Use of money and property 17,973 1,249 357 18,492 38,071
Licenses and permits 77,110 164,530 241,640
Sales of property and compensation
for loss 341,346 341,346
Miscellaneous local sources 904 646 1,550
State aid 215,605 $ 33,552 24,818 273,975
Federal aid 137,500 137,500
Total Revenues 2,975,908 171,052 828,821 1,740 32,376 4,289,333 8,299,230
EXPENDITURES
Current:
General government support 203,197 5,018 268,846 477,061
Public safety 684,174 822,335 1,506,509
Home and community services 914,715 171,052 18,523 2,599,551 3,703,841
Employee benefits 755,750 342 680,323 1,436,415
Debt service-
Principal 7,304 238,440 245,744
Interest 2,088 88,727 90,815
Total Expenditures 2,557,836 171,052 822,335 -0- 33,275 3,875,887 7,460,385
Excess(Deficiency)of Revenues
Over Expenditures 418,072 -0- 6,486 1,740 (899) 413,446 838,845
Other Financing Uses:
Transfers out (120,000) (120,000)
Total Other Financing Uses -0- -0- -0- -0- -0- (120,000) (120,000)
® Net Change in Fund Balance 418,072 -0- 6,486 1,740 (899) 293,446 718,845
Fund Balances at Beginning of Year 1,949,257 -0- 12,438 3,105 44,566 819,847 2,829,213
Fund Balances at End of Year $ 2,367,329 $ -0- $ 18,924 $ 4,845 $ 43,667 $ 1,113,293 $ 3,548,058
-64-
OTHER REPORTS
- o
CERTIFIED PUBLIC ACCOUNTANTS
INDEPENDENT AUDITORS' REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON
COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS
PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS
Honorable Supervisor and Town Board
Town of Southold
Southold, New York
We have audited, in accordance with the auditing standards generally accepted in the United States of
America and the standards applicable to the financial audits contained in Government Auditing Standards
issued by the Comptroller General of the United States, the financial statements of the governmental activities,
the aggregate discretely presented component units, each major fund and the aggregate remaining fund
- information of the Town of Southold, New York as of and for the year ended December 31, 2019, and the
related notes to the financial statements, which collectively comprise the Town of Southold, New York's basic
financial statements and have issued our report thereon dated November 9, 2020. Our report includes a
reference to other auditors who audited the financial statements of Fishers Island Ferry District and the Fishers
Island Waste Management District, as described in our report on the Town of Southold, New York's financial
statements. This report does not include the results of the other auditors' testing of internal control over
financial reporting or compliance and other matters that are reported on separately by those auditors. The
financial statements of the Fishers Island Waste Management were not audited in accordance with
Governmental Auditing Standards.
The financial statements of the Town of Southold's discretely presented component units with the exception of
the two referenced above were not audited as of the report date, nor were we able to satisfy ourselves as to
those financial activities by other auditing procedures. The unaudited discretely presented component units
represent 24.6%, 31.3% and 16.5%, respectively, of the assets, net position, and revenues of the aggregate
discretely presented component units.
Internal Control Over Financial Reporting
In planning and performing our audit of the financial statements, we considered the Town of Southold, New York's
internal control over financial reporting (internal control) to determine the audit procedures that are appropriate in
the circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose
of expressing an opinion on the effectiveness of the Town of Southold, New York's internal control. Accordingly,
we do not express an opinion on the effectiveness of the Town of Southold, New York's internal control.
A deficiency in internal control exists when the design or operation of a control does not allow management or
employees, in the normal course of performing their assigned functions, to prevent, or detect and correct,
misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in
internal control such that there is a reasonable possibility that a material misstatement of the Town of
Southold, New York's financial statements will not be prevented, or detected and corrected on a timely basis.
A significant deficiency is a deficiency, or combination of deficiencies, in internal control that Is less severe
than a material weakness, yet important enough to merit attention by those charged with governance.
BEYOND THE NUMBERS... �—
ALBRECHT,VIGGIANO,ZURECK&COMPANY, PC
245 PARK AVENUE,39TH FLOOR 25 SUFFOLK COURT
NEW YORK, NY 10167 HAUPPAUGE, NY 11788-3715
i T•212.792 4075 T•631.434 9500 F:631.434.9518
www.avz.com
-65- INDEPENDENT MEMBER OF BKR INTERNATIONAL
Internal Control Over Financial Reporting (continued)
Our consideration of internal control was for the limited purpose described in the first paragraph of this section
and was not designed to identify all deficiencies in internal control that might be material weaknesses or
significant deficiencies. Given these limitations, during our audit we did not identify any deficiencies in internal
control that we consider to be material weaknesses. However, material weaknesses may exist that have not
been identified.
Compliance and Other Matters
As part of obtaining reasonable assurance about whether the Town of Southold, New York's financial
statements are free from material misstatement, we performed tests of its compliance with certain provisions
of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and
material effect on the determination of financial statement amounts. However, providing an opinion on
compliance with those provisions was not an objective of our audit, and accordingly, we do not express such
an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required
to be reported under Government Auditing Standards.
Purpose of Report
The purpose of this report is solely to describe the scope of our testing of internal control and compliance and
the results of that testing, and not to provide an opinion on the effectiveness of the Town of Southold, New
York's internal control or on compliance. This report is an integral part of an audit performed in accordance
with Government Auditing Standards in considering the Town of Southold, New York's internal control and
compliance. Accordingly, this communication is not suitable for any other purpose.
Hauppauge, New York
November 9, 2020
-66-