HomeMy WebLinkAbout2020
TOWN OF SOUTHOLD, NEW YORK
FINANCIAL STATEMENTS
AND SUPPLEMENTARY INFORMATION
(WITH INDEPENDENT AUDITORSÓ REPORT)
For the Year Ended December 31, 2020
FINANCIAL
SECTION
FINANCIAL SECTION
Independent Auditors' Report ...................................................................................................................... 1-3
REQUIRED SUPPLEMENTARY INFORMATION
ManagementÓs Discussion and Analysis ..................................................................................................... 4-15
BASIC FINANCIAL STATEMENTS
Government-Wide Financial Statements:
Statement of Net Position .......................................................................................................................... 16
Statement of Activities ................................................................................................................................ 17
Fund Financial Statements:
Governmental Fund Financial Statements:
Balance Sheet and Reconciliation of the Governmental Funds Balance Sheet to
the Statement of Net PositionÈÈÈÈÈÈÈÈÈÈÈÈÈÈÈÈÈÈÈÈÈÈ. ......................... 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 Net Position ....................................................................................................... 22
Statement of Changes in Fiduciary Net Position ................................................................................... 23
Notes to Financial Statements ...................................................................................................................... 24-57
REQUIRED SUPPLEMENTARY INFORMATION OTHER THAN
MANAGEMENT DISCUSSION AND ANALYSIS
Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual:
General Fund .............................................................................................................................................. 58
Highway Fund ............................................................................................................................................. 59
Community Preservation FundÈÈÈÈÈÈÈÈÈÈÈÈÈÈÈÈÈÈÈÈÈÈÈÈÈÈÈÈÈÈ 60
Schedule of Changes in the TownÓs Total Other Postemployment Benefits Liability and
Related RatiosÈÈÈÈÈÈÈÈÈÈÈÈÈÈÈÈÈÈÈÈÈÈÈÈÈÈÈÈÈÈÈÈÈÈÈÈÈ 61
Schedule of Pension ContributionsÈÈÈÈÈÈÈÈÈÈÈÈÈÈÈÈÈÈÈÈÈÈÈÈÈÈÈÈÈ 62
Schedule of Proportionate Share of the Net Pension LiabilityÈÈÈÈÈÈÈÈÈÈÈÈÈÈÈÈÈÈ 63
OTHER SUPPLEMENTARY INFORMATION
Combining Fund Statements:
Nonmajor Governmental Funds:
Combining Balance Sheet ...................................................................................................................... 64
Combining Statement of Revenues, Expenditures, and Changes in Fund Balances ......................... 65
OTHER REPORTS
Independent AuditorsÓ 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 StandardsÈÈÈÈÈÈÈÈÈÈÈÈÈÈÈÈÈÈÈÈ .. 66-70
Independent AuditorsÓ Report
Honorable Supervisor and Town Board
of the Town of 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 ÐTownÑ),
as of and for the year ended December 31, 2020, 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 TownÓs basic financial
statements as listed in the table of contents.
ManagementÓs 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.
AuditorÓs 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 78.4%, 71.6% and 84.6%, respectively, 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 discretely
presented 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 were
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 ÐBasis for Disclaimer of
Opinion on the Aggregate Discretely Presented Component UnitsÑ 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 auditorsÓ judgment,
including the assessment of the risks of material misstatement of the financial statements, whether
due to fraud or error. ln 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.
PKF OÓCONNOR DAVIES, LLP
878 Veterans Memorial Highway, Fourth Floor, Hauppauge, NY 11788 I Tel: 631.434.9500 I Fax: 631.434.9518 I www.pkfod.com
PKF OÓConnor Davies, LLP is a member firm of the PKF International Limited network of legally independent firms and does not accept any responsibility
or liability for the actions or inactions on the part of any other individual member firm or firms.
AuditorÓs Responsibility (continued)
Except for the matter described in the ÐBasis for Disclaimer of Opinion on the Aggregate Discretely
Presented Component UnitsÑ paragraph, we believe that the audit evidence we have obtained is
sufficient and appropriate to provide a basis for our audit opinions.
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 Southold, New YorkÓs basic financial statements. These financial
activities are included in the TownÓs basic financial statements as discretely presented component
units and represent 22.8%, 28.4% and 15.4%, respectively, of the assets, net position, and revenues
of the TownÓs aggregate discretely presented component units.
Disclaimer of Opinion
Because of the significance of the matter described in the ÐBasis for Disclaimer of Opinion on the
Aggregate Discretely Presented Component UnitsÑ 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 unitsÓ
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, 2020, 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.
Emphasis of Matter
New Accounting Guidance
We draw attention to Note A7 in the notes to financial statements which discloses the effects of the
TownÓs adoption of the provisions of Governmental Accounting Standards Board (ÐGASBÑ)
Statement No. 84, Ð Fiduciary Activities.Ñ
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 TownÓs 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 the 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
managementÓs 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.
-2-
Other Matters (continued)
Other Information
Our audit was conducted for the purpose of forming opinions on the financial statements that
collectively comprise the Town of Southold, New YorkÓs 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.
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, and the procedures 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.
Other Reporting Required by Government Auditing Standards
In accordance with Government Auditing Standards, we have also issued our report dated December
29, 2022 on our consideration of the TownÓs internal control over financial reporting and on our tests of
its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other
matters. The purpose of that report is solely to describe the scope of our testing of internal control over
financial reporting and compliance and the results of that testing, and not to provide an opinion on
internal control over financial reporting or on compliance. That report is an integral part of an audit
performed in accordance with Government Auditing Standards in considering the TownÓs internal
control over financial reporting and compliance.
Hauppauge, New York
December 29, 2022
-3-
REQUIRED SUPPLEMENTARY INFORMATION
ManagementÓs Discussion and Analysis
TOWN OF SOUTHOLD
MANAGEMENTÓS DISCUSSION AND ANALYSIS
December 31, 2020
As management of the Town of Southold, New York (the ÐTownÑ), we offer readers of the financial statements
this narrative overview and analysis of the financial activities for the year ended December 31, 2020.
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 2020 by $105,655,161 (net position).
The TownÓs primary governmental activities net position increased by $4,011,553.
As of the close of 2020, the TownÓs governmental funds reported combined ending fund balances
of $42,055,476. Of this amount, $1,186,969 is not in spendable form or is required to remain intact.
The remaining $40,868,507 or approximately 97.2% 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 2020, the TownÓs total fund balance for the General Fund was $14,682,813, an
increase of $1,835,111 or 14.3% from the prior year. The assigned and unassigned fund balance
for the General Fund was $13,599,113 or 43.0% of total General Fund expenditures and other
uses.
The TownÓs total bonded debt was $24,480,000, excluding premiums of $1,769,604, a decrease of
8.4% from the prior year.
OVERVIEW OF THE FINANCIAL STATEMENTS
This discussion and analysis is intended to serve as an introduction to the TownÓs basic financial statements.
The TownÓs 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
TownÓs 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 TownÓs financial condition.
The Statement of Net Position presents financial information on all of the TownÓs 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 TownÓs current financial resources with capital assets
and long-term obligations. Over time, increases or decreases in the TownÓs 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 TownÓs property tax base and the condition of the TownÓs buildings, roads,
drainage and other assets to assess the overall health of the Town.
The Statement of Activities presents information showing how the TownÓs 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 TownÓs 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 TownÓs fund financial statements.
The TownÓs 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.
-4-
TOWN OF SOUTHOLD
MANAGEMENTÓS DISCUSSION AND ANALYSIS
December 31, 2020
OVERVIEW OF THE FINANCIAL STATEMENTS (continued)
Government-wide Financial Statements (continued)
Governmental Activities - The TownÓs 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 TownÓs 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.
I 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 TownÓs 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
governmentÓs 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 TownÓs 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 ÐRequired
Supplementary Information Other Than ManagementÓs Discussion and AnalysisÑ.
Fiduciary Funds
Fiduciary funds are used to account for resources held for the benefit of parties outside the government and as
the resources are not available to support the TownÓs programs, these funds are not reflected in the
government-wide financial statements. The Town has one fiduciary fund, a custodial fund, which primarily
accounts for real property taxes billed and collected on behalf of other municipalities, and bail collected and
held on behalf of bailees.
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TOWN OF SOUTHOLD
MANAGEMENTÓS DISCUSSION AND ANALYSIS
December 31, 2020
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 and accompanying notes, this report also presents required
supplementary information concerning the TownÓs budget to actual comparisons for the major governmental
funds, and progress in funding its obligation to provide pension and other postemployment benefits to its
employees. Required supplementary information immediately follows the notes to the financial statements.
The combining nonmajor governmental funds financial statements are presented immediately following the
required supplementary information.
GOVERNMENT-WIDE FINANCIAL ANALYSIS
As noted earlier, net position may serve over time as a useful indicator of a governmentÓs financial position. In the
case of the Town, assets and deferred outflows of resources exceeded liabilities and deferred inflows by
$105,655,161 at the close of the most recent year.
Condensed Statement of Net Position
Primary Governmental Activities
December 31,
20202019
Assets
Current and other assets57,753,099$ 41,540,617$
Capital assets193,490,025 193,123,300
Total Assets251,243,124 234,663,917
Deferred Outflows of Resources38,371,034 17,025,911
Liabilities
Current and other liabilities8,389,420 14,843,725
Long-term liabilities164,419,538 119,431,142
Total Liabilities172,808,958 134,274,867
Deferred Inflows of Resources11,150,039 15,771,353
Net Position
Net investment in capital assets160,910,897 158,990,173
Restricted17,899,336 9,848,669
Unrestricted (73,155,072) (67,195,234)
Total Net Position105,655,161$ 101,643,608$
Total assets and deferred outflows of resources of the primary government as of December 31, 2020 were
$289,614,158, an increase of $37,924,330 from 2019. Total liabilities and deferred inflows of resources as of
December 31, 2020 were $183,958,997, which represents an increase of $33,912,777 from December 31,
2019. This resulted in a net position of $105,655,161, an increase of $4,011,553 from net position of
$101,643,608 as of December 31, 2019. Of the TownÓs net position, $160,910,897 was invested in capital
assets and $17,899,336 was restricted for future land acquisition and capital projects, leaving an unrestricted
deficit of $73,155,072.
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TOWN OF SOUTHOLD
MANAGEMENTÓS DISCUSSION AND ANALYSIS
December 31, 2020
GOVERNMENT-WIDE FINANCIAL ANALYSIS (continued)
By far, the largest portion of the TownÓs net position is $160,910,897 which reflects its investment in capital
assets (i.e. land, buildings, machinery and equipment, intangibles, and infrastructure) less any related debt
used to acquire those assets that is still outstanding. The Town uses these capital assets to provide services to
citizens; consequently, these assets are not available for future spending. Although the TownÓs investment in
its capital assets is reported net of related debt, it should be noted that the resources needed to repay this debt
must be provided from other sources, since the capital assets themselves will not be used to liquidate these
liabilities.
The deficit in the unrestricted net position does not necessarily indicate fiscal stress. At the end of the current
year, the Town is able to report a positive balance in the categories of investment in capital assets, and
restricted net position. The same situation held true for the prior year. The deficit balance in unrestricted arose
primarily due to long-term liabilities, which includes other postemployment benefits, net pension liability,
compensated absences, and landfill closure and postclosure costs that will be funded through future budgetary
appropriations when they become payable in future periods.
Statement of Activities
Primary Governmental Activities
For the years ended December 31,
20202019
Program Revenues
Charges for services4,382,025$ 4,744,461$
Operating grants and contributions900,208 816,446
Capital grants and contributions1,385,832 1,538,573
7,099,4806,668,065
General Revenues
Real property taxes37,899,351 37,080,032
Other real property tax items93,655 108,101
Non-property tax items12,782,215 9,639,337
Interest earnings358,823 546,769
State aid - unrestricted2,156,653 1,968,775
Other604,449 582,180
49,925,19453,895,146
57,024,67460,563,211
Total Revenues
Program Expenses
General government support14,165,865 12,379,137
Public safety23,517,468 19,559,438
Public health43,300 33,300
Transportation7,108,224 6,274,846
Economic assistance and opportunity2,586,521 2,174,629
Culture and recreation730,094 573,766
Home and community services7,330,262 6,185,595
Interest on debt1,069,924 1,217,044
48,397,75556,551,658
Total Expenses
Increase in Net Position4,011,553 8,626,919
Net Position, beginning of year101,643,608 93,016,689
Net Position, end of year105,655,161$ 101,643,608$
-7-
TOWN OF SOUTHOLD
MANAGEMENTÓS DISCUSSION AND ANALYSIS
December 31, 2020
GOVERNMENT-WIDE FINANCIAL ANALYSIS (continued)
Net position, from all government activities, increased by $4,011,553 in the current year.
Key elements of the governmental activities are:
Overall program revenues decreased by $431,415 from the prior year. Capital grants and contributions
decreased $152,741 from the prior year due to the Town receiving grants and contributions in the prior
year that were not received in 2020 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. This was partially
offset by a new airport improvement grant received in 2020 for $362,282. Charges for services decreased
$362,436 from the prior year due to mandated closures as a result of the COVID-19 pandemic which
resulted in a decrease in user fees for several programs, include daycare, youth programs, and parks and
recreation fees. Operating grants and contributions increased by $83,762 primarily due to an increase in
federal aid for meal programs.
General revenues increased $3,969,952 from the prior year. This was due to the increase in property
taxes of $819,319, and an increase in non-property tax items of $3,142,878 due to an increase in land
transfer tax resulting from an increase in home sales activity.
Overall expenses increased by $8,153,903. General government support expenses increased $1,786,728
due to an increase in the employee benefit allocation of approximately $1,738,000. Public safety
expenses increased $3,958,030 which is due to an increase in employee benefit allocation of
approximately $4,000,000. Transportation expenses increased by $833,378 due to an increase in the
employee benefit allocation of approximately $605,000. Home and community services expenditures
increased $1,144,667 due to an increase in the employee benefit allocation of approximately $1,458,000.
Total Revenue (Cost) of Services
Net Cost of Services for Governmental Activities
For the years ended December 31,
Total Cost of ServicesProgram RevenuesNet Revenue (Cost) of Services
202020192020201920202019
General government support14,165,865$ 12,379,137$ 759,513$ 789,980$ (13,406,352)$ (11,589,157)$
Public safety23,517,468 19,559,438 1,174,137 1,056,383 (22,343,331) (18,503,055)
Public health43,300 33,300 10,904 15,475 (32,396) (17,825)
Transportation7,108,224 6,274,846 973,576 645,212 (6,134,648) (5,629,634)
Economic assistance and opportunity2,586,521 2,174,629 550,806 459,234 (2,035,715) (1,715,395)
Culture and recreation730,094 573,766 147,123 612,948 (582,971) 39,182
Home and community services7,330,262 6,185,595 3,052,006 3,520,248 (4,278,256) (2,665,347)
Interest on debt1,069,924 1,217,044 (1,069,924) (1,217,044)
$ 48,397,75556,551,658$ 6,668,065$ 7,099,480$ (49,883,593)$ (41,298,275)$
The total cost of all governmental activities this year was $56,551,658. The net cost of these services after being
subsidized by program revenues of $6,668,065 was $49,883,593.
-8-
TOWN OF SOUTHOLD
MANAGEMENTÓS DISCUSSION AND ANALYSIS
December 31, 2020
GOVERNMENT-WIDE FINANCIAL ANALYSIS (continued)
Expenses and Program Revenues - Governmental Activities for the Year Ended December 31, 2020
$25,000,000
$20,000,000
Expenses
Program Revenues
$15,000,000
$10,000,000
$5,000,000
$0
General government supportPublic safetyPublic healthTransportationEconomic assistance andCulture and recreationHome and communityInterest on debt
opportunityservices
Revenues by Source - Governmental Activities for the Year Ended December 31, 2020
Operating grants and
Capital grants and
contributions
contributions
1%
2%
Other general
revenues
2%
Non-property
tax items
21%
Charges for
services
7%
Real property
taxes
State aid -
unrestricted63%
4%
-9-
TOWN OF SOUTHOLD
MANAGEMENTÓS DISCUSSION AND ANALYSIS
December 31, 2020
FINANCIAL ANALYSIS OF THE TOWNÓS FUNDS
Governmental Funds
The focus of the TownÓs governmental funds is to provide information on near term inflows, outflows, and
balances of spendable resources. Such information is useful in assessing the TownÓs financing requirements.
In particular, spendable fund balance may serve as a useful measure of a governmentÓs net resources
available for spending at the end of the year.
Nonspendable fund balance - $1,186,969 (inherently nonspendable) includes the portion of net
resources that cannot be spent because they must be maintained intact.
Restricted fund balance - $20,299,794 (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 - $1,202,328 includes amounts subject to constraints placed on the use of
its own resources by the TownÓs highest level of decision-making authority.
Assigned fund balance - $7,090,037 (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 - $12,276,348 (residual net resources) is the total fund balance in the
general fund in excess of nonspendable, restricted, committed and assigned fund balance and
negative fund balances in funds other than the general fund.
The following schedule presents a summary of the Governmental Funds - (general, special revenue, and
capital projects) revenues and expenditures for the years ended December 31, 2020 and 2019, and the
amount of change in relation to the prior year.
Increase
20202019(Decrease)
Revenues:
Real property taxes37,899,351$ 37,080,032$ 819,319$
Other real property tax items93,655 108,102 (14,447)
Non-property tax items12,782,215 9,639,337 3,142,878
Departmental income3,302,828 3,714,382 (411,554)
Intergovernmental charges110,821 200,391 (89,570)
Use of money and property458,623 762,509 (303,886)
Licenses and permits601,512 687,799 (86,287)
Fines and forfeitures460,247 299,053 161,194
Sale of property and compensation for loss231,197 530,003 (298,806)
Miscellaneous local sources199,209 373,211 (174,002)
Interfund revenues129,225 123,589 5,636
State aid 3,221,5312,669,413 (552,118)
Federal aid1,224,980 286,864 938,116
Total Governmental Fund Revenues60,163,276$ 57,026,803$ 3,136,473$
Expenditures:
General government support7,928,883$ 7,838,312$ 90,571$
Public safety11,806,693 12,024,024 (217,331)
Public health43,300 33,300 10,000
Transportation3,941,439 4,019,786 (78,347)
Economic assistance and opportunity1,408,028 1,416,859 (8,831)
Culture and recreation351,171 356,683 (5,512)
Home and community services4,786,979 17,574,453 (12,787,474)
Employee benefits13,086,304 13,074,277 12,027
Capital Outlay2,264,831 3,792,920 (1,528,089)
Debt service principal and interest3,145,656 3,390,927 (245,271)
Total Governmental Fund Expenditures48,763,284$ 63,521,541$ (14,758,257)$
Other financing sources and uses:
Debt proceeds7,307,722$ -0-$ 7,307,722$
Transfers in1,716,795 1,529,386 187,409
Transfers out(1,716,795) (1,529,386) (187,409)
Total Governmental Fund Other Sources and Uses7,307,722$ -0-$ 7,307,722$
-10-
TOWN OF SOUTHOLD
MANAGEMENTÓS DISCUSSION AND ANALYSIS
December 31, 2020
FINANCIAL ANALYSIS OF THE TOWNÓS FUNDS (continued)
Governmental Funds (continued)
Although the Town appropriated $8,933,879 (which includes $7,818,879 of appropriated fund balance
from the Community Preservation Fund) of prior year fund balance to finance the 2020 operations,
excluding open purchase orders brought forward, the total fund balance increased $18,707,714.
Governmental revenues increased by $3,136,473, which is primarily due to increases in real property
taxes of $819,319, non-property tax items of $3,142,878, and federal aid of $938,116. These increases
were partially offset by decreases in departmental income of $411,554, use of money and property of
$303,886, sale of property and compensation for loss of $298,806, and State aid of $552,118.
Overall, governmental expenditures decreased by $14,758,257, which is primarily due to decreases in
public safety of $217,331, home and community services of $12,787,474, capital outlay of $1,528,089
and debt service of $245,271. The decrease in home and community services is the result of land
acquisitions in the community preservation fund in the prior year.
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 $14,682,813, an increase of $1,835,111 or 14.3% from the prior year. Of
this amount, $717,665 is not in spendable form (i.e. inventory and prepaid items). The committed fund
balance of $366,035 represents park and recreation subdivision fees assessed through Town Code which
can only be expended on park, playground, or other recreational purposes. The remaining $13,599,113 of the
fund balance is in spendable form as follows: $373,307 is assigned for insurance claims; $900,000 has been
assigned by the Town Board for the subsequent yearÓs budget and $49,458 has been assigned for
encumbrances resulting from open purchase orders, and the remaining $12,276,348 represents unassigned
fund balance.
As a measure of the general fundsÓ 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 44.2% and 46.5%, respectively, of total general fund expenditures and other financing uses.
The key elements of the fund balance increase of $1,835,111 are as follows:
General government support was $1,071,646 under budget primarily due to unused contingency items of
$123,000, personal services coming in under budget by $249,000 due to conservative overtime
budgeting, $345,000 in budgeted grant expenditures not being expended and $350,000 in various
department spending being less than anticipated.
Public safety was $552,356 less than budgeted which resulted mainly from savings of $350,000 in
personnel costs due to unfilled positions and conservative overtime usage, and various departments
spending was lower than budgeted by $200,000.
Employee benefits were $1,009,509 under budget due to the Town conservatively budgeting for
retirement contributions and medical insurance.
Highway Fund
At the end of the current year, the total fund balance of the highway fund was $2,973,660, an increase of
$1,067,961 or 56.0% from the prior year. Of this amount, $193,086 is not in spendable form (i.e. prepaid and
inventory items). The remaining $2,780,574 of fund balance is in spendable form as follows: $75,000 has been
assigned by the Town Board for the subsequent yearÓs budget, $14,615 has been assigned for encumbrances
resulting from open purchase orders, and the remaining $2,690,959 is assigned for highway purposes.
-11-
TOWN OF SOUTHOLD
MANAGEMENTÓS DISCUSSION AND ANALYSIS
December 31, 2020
FINANCIAL ANALYSIS OF THE TOWNÓS FUNDS (continued)
Governmental Funds (continued)
Highway Fund (continued)
The key elements of the fund balance increase of $1,067,961 are as follows:
Transportation costs were $546,586 under budget as personal services came in under budget by
$380,000 due to a decrease in hourly wages as a result of stay-at-home orders during the COVID-19
pandemic, and $165,000 in various department spending being lower than budgeted.
Employee benefits savings of $441,610 resulted from conservative budgeting for retirement and health
insurance costs, and the decrease in wages noted above.
Licenses and permit fees exceeded budgeted expectations by $111,200.
Capital Projects Fund
At the end of the current year, the capital projects fund had total fund balance of $2,622,434, an increase of
$7,424,800 from the prior year. This increase resulted from debt proceeds of $7,307,722 from the issuance of
bond anticipation notes which were refinanced prior to the issuance of these financial statements, transfers in
of $1,716,795, and revenues of $665,114, offset by capital outlay expenditures of $2,264,831.
Community Preservation Fund
The Community Preservation FundÓs total fund balance, which is restricted for land preservation acquisitions,
increased by $8,050,667 to $17,899,336. The increase in fund balance is attributable non-property tax
revenues over budget of $3,828,223 and home and community services under budget of $11,831,915 due to
the Town not making any significant land purchases during the year.
Nonmajor Governmental Funds
At the end of the current year, the total fund balance of the nonmajor governmental funds was $3,842,239,
increasing $294,181 from the prior year. Of this amount, $164,541 is not in spendable form (i.e. prepaids and
inventory). The committed fund balance of $836,293 is related to housing fund fees assessed through Town
Code which can only be expended on affordable housing projects in the Town. The remaining $2,841,405 of
the fund balance is in spendable form as follows; $140,000 for subsequent yearÓs budget, $27,539 assigned
for encumbrances resulting from open purchase orders, and the remaining $2,673,866 of fund balance is
assigned for nonmajor governmental fund purposes.
The key elements of the fund balance increase of $294,181 are as follows:
The Part TownÓs fund balance is $2,557,720, an increase of $190,391 from the prior year which was
mainly due to expenditures coming in lower than budgeted by $370,000 which consisted of $98,000 in
employee benefits, $96,000 in personal services, $176,000 in various department spending being
lower than budgeted offset by revenues coming in under budget by $187,000.
Solid Waste ManagementÓs District fund balance is $1,246,060, an increase of $132,767, which was
due to expenditures coming in lower than budgeted by $250,000 which consisted of $145,000 in BAN
principal, $138,000 in employee benefits, and revenues exceeding budgeted amounts by $65,000,
offset by various department spending exceeding budgeted amounts by $33,000, and planned use of
fund balance of $60,000.
-12-
TOWN OF SOUTHOLD
MANAGEMENTÓS DISCUSSION AND ANALYSIS
December 31, 2020
FINANCIAL ANALYSIS OF THE TOWNÓS 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 $1,049,688, inclusive of $149,688 of encumbrances, by assigning fund balance from the prior year.
Actual revenues were less than anticipated by $60,916. Actual expenditures and other uses in all budgetary
line items were less than the budgetary appropriation by $3,150,566.
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:
Miscellaneous local sources increased appropriations of $25,898 due to $15,400 in donations, and
$10,498 in unbudgeted miscellaneous local sources.
The Town increased their appropriations by $362,282 in transportation to account for a federal grant
passed through to Fishers Island Ferry District for the airport improvement program.
CAPITAL ASSET AND DEBT ADMINISTRATION
Capital Assets
As of December 31, 2020, the primary government had $193,490,025 in net capital assets including land and
land development rights, buildings, improvements, machinery and equipment, and infrastructure. The TownÓs
component units had $14,137,288 in net capital assets including land, buildings, improvements, machinery and
equipment, and infrastructure.
Capital Assets at December 31,
Primary Government20202019
Land17,236,339$ 17,236,339$
Land development rights136,534,294 136,120,927
Construction in progress761,985 501,213
Buildings21,458,581 21,402,348
Improvements other than buildings16,764,337 16,757,437
Machinery and equipment16,009,813 14,778,072
Software1,233,802 1,217,867
Infrastructure87,178,108 85,799,629
Total Capital Assets297,177,259 293,813,832
Less: accumulated depreciation103,687,234 100,690,532
Primary Government - Total Net Capital Assets193,490,025$ 193,123,300$
Component Units
Land2,103,162$ 2,103,162$
Construction in progress638,722 153,690
Buildings14,187,407 14,187,407
Improvements other than buildings2,557,247 2,557,247
Machinery and equipment5,094,354 5,075,446
Infrastructure5,071,574 4,739,093
Total Capital Assets29,652,466 28,816,045
Less: accumulated depreciation15,515,178 14,767,295
Component Units - Total Net Capital Assets14,137,288$ 14,048,750$
-13-
TOWN OF SOUTHOLD
MANAGEMENTÓS DISCUSSION AND ANALYSIS
December 31, 2020
CAPITAL ASSET AND DEBT ADMINISTRATION (continued)
Capital Assets (continued)
In 2020, the primary governmentÓs capital asset acquisitions were as follows:
Land development rights of $413,367.
Construction in progress of $260,772.
Buildings of $56,233.
Improvements other than buildings of $6,900.
Machinery and equipment of $1,231,741.
Software of $15,935.
Infrastructure of $1,378,479.
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 TownÓs three-year
capital plan is summarized below:
2021 2022 2023
Machinery and Equipment
General Fund $ 361,754 $ -0- $ -0-
Highway Fund 37,000 -0- -0-
Building and Improvements
General Fund 290,000 -0- -0-
Highway Fund -0- -0- -0-
Infrastructure
General Fund 45,000 -0- -0-
Highway Fund 400,000 -0- -0-
Software
General Fund 60,500 -0- -0-
Totals $ 1,194,254 $ -0- $ -0-
Additional information on the TownÓs capital assets can be found in Note C.3 to the financial statements.
Debt
At December 31, 2020, the Town had approximately $32.3 million in long-term general obligation bonds and
bond anticipation notes outstanding.
Outstanding Debt
Governmental Activities
20202019
General obligation bonds payable*24,480,000$ 26,725,000$
Bond anticipation notes7,861,722 7,884,117
$ 34,609,11732,341,722$
*This did not include the bond premium as presented in the Statement of Net Position.
The Town of SoutholdÓs bond credit rating from MoodyÓs Investors Services was Aa1 as of December 31, 2020.
-14-
TOWN OF SOUTHOLD
MANAGEMENTÓS DISCUSSION AND ANALYSIS
December 31, 2020
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. The percentage of debt contracting power exhausted at
December 31, 2020 was 4.0%.
Additional information on the TownÓs debt activity can be found in Note C.4 to the financial statements.
ECONOMIC FACTORS AND NEXT YEARÓS BUDGETS AND RATES
Property Tax
The Town has adopted a budget for the 2021 fiscal year which factors in inflation and other adjustments to
revenues and expenditures as well as prior year positive and negative fund balances. The 2021 budget
includes an overall increase in real property tax revenues from the prior year of approximately 3.90% 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 yearÓs budgets.
State Aid and Local Assistance
The Town receives financial assistance from New York State and from Suffolk County. During 2020, financial
assistance included state aid consisting of mortgage tax of $1,721,908 and consolidated highway aid of
$477,773. State aid per capita was $88,328, County sales tax of $1,288,673 and local government assistance
was $64,429. 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 TownÓs 2021 budget
included similar amounts for this financial assistance.
CONTACTING THE TOWNÓS FINANCIAL MANAGEMENT
This financial report is designed to provide our citizens, taxpayers, customers, and creditors with a general
overview of the TownÓs finances and to show the TownÓs 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
TOWN OF SOUTHOLD
GOVERNMENT-WIDE FINANCIAL STATEMENT
STATEMENT OF NET POSITION
December 31, 2020
PrimaryNonmajor
GovernmentalComponent
ActivitiesUnits
ASSETS
Current Assets:
$ 3,339,95151,521,882$
Cash and investments
112,598402,328
Accounts receivable
44,165779,219
State and federal aid receivables
Due from other governments 3,991,145
446,319
Due from primarygovernment
128,421
Inventory of material and supplies
164,403930,104
Prepaids
Total Current Assets 4,107,43657,753,099
Noncurrent Assets:
2,741,884154,532,618
Non-depreciable capital assets
De
preciable capital assets, net of depreciation38,957,407 11,395,404
Total Noncurrent Assets 14,137,288193,490,025
Total Assets251,243,124 18,244,724
DEFERRED OUTFLOWS OF RESOURCES
Deferred charges on refundings 1,246,107
Pensions 760,13215,875,334
Other postemployment benefits 243,07521,249,593
Total Deferred Outflows of Resources38,371,034 1,003,207
LIABILITIES
Current Liabilities:
Accounts payable and accrued liabilities2,062,063 346,918
Accrued interest payable 3,233316,042
Bond anticipation notes payable 2,600,000554,000
Due to component units 830,553
Due to other governments 1,71937,163
Unearned revenue 853,266
Noncurrent liabilities due within one year:
General obligation bonds payable 265,0002,310,000
Compensated absences 55,7421,129,940
Claims and judgments payable 278,076
Estimated liability for landfill closure and post closure care costs18,317
Total Current Liabilities 3,272,6128,389,420
Noncurrent Liabilities:
General obligation bonds payable 23,939,604
Bond anticipation notes payable 7,307,722
Compensated absences 167,2268,427,056
Claims and judgments payable 546,686
Estimated liabilit
y for landfill closure
and postclosure care costs 340,670
Net pension liability 1,035,81220,172,518
Other postemployment benefits payable103,685,282 779,040
Total Noncurrent Liabilities 1,982,078164,419,538
Total Liabilities172,808,958 5,254,690
DEFERRED INFLOWS OF RESOURCES
property taxes10,583,195 446,319
Unearned revenue from real
Pensions 26,693566,844
Total Deferred Inflows of Resources11,150,039 473,012
NET POSITION
Net Investment in capital assets 11,272,288160,910,897
Restricted - Community Preservation 17,899,336
Unrestricted 2,247,941(73,155,072)
Total Net Position105,655,161$ 13,520,229$
See notes to the financial statements.
-16-
TOWN OF SOUTHOLD
GOVERNMENT-WIDE FINANCIAL STATEMENT
STATEMENT OF ACTIVITIES
Year Ended December 31, 2020
Net Revenues (Expenses) and
Program RevenuesChange in Net Position
OperatingCapital
Charges forGrants and Grants and PrimaryComponent
Function/ProgramExpensesServicesContributionsContributionsGovernmentUnits
PRIMARY GOVERNMENT
General government support14,165,865$ 563,159$ 12,195$ 184,159$ (13,406,352)$
Public safety23,517,468 769,80856,727347,602 (22,343,331)
Public health43,300 10,904 (32,396)
Transportation7,108,224 133,521 840,055(6,134,648)
Economic assistance and opportunity2,586,521 124,090426,716 (2,035,715)
Culture and recreation730,094 147,123 (582,971)
Home and community services7,330,262 2,644,324393,66614,016 (4,278,256)
Interest on debt1,069,924 (1,069,924)
Total Primary Government56,551,658$ 4,382,025$ 900,208$ 1,385,832$ (49,883,593)
COMPONENT UNITS
General government support135,093$ $ (135,093)
Public health104,564 (104,564)
Transportation3,446,628 2,956,295$ 19,575$ 362,282 (108,476)
Culture and recreation1,159,164 47,148 (1,112,016)
Home and community services947,262 38,773 (908,489)
Interest on debt47,303 (47,303)
Total Component Units5,840,014$ 3,042,216$ 19,575$ 362,282$ (2,415,941)
GENERAL REVENUES
Real property taxes37,899,351 2,629,341
Other real property tax items93,655
Non-property tax items12,782,215
Interest earnings358,8237,014
State aid - unrestricted2,156,653
Other604,44948,164
Total General Revenues53,895,146 2,684,519
Change in Net Position4,011,553 268,578
Net Position at Beginning of Year101,643,608 13,251,651
Net Position at End of Year$ 13,520,229105,655,161$
See notes to financial statements.
-17-
TOWN OF SOUTHOLD
BALANCE SHEET
GOVERNMENTAL FUNDS
December 31, 2020
MAJOR GOVERNMENTAL FUNDS
Non-Major
CapitalCommunityGovernmental
GeneralHighwayProjectsPreservationFundsTotals
ASSETS
Cash and investments26,751,129$ 3,233,949$ 2,366,792$ 15,208,541$ 3,961,471$ 51,521,882$
Accounts receivable19,622 4,020 410 86,272 292,004 402,328
Due from other funds331,855 1,560,837 1,144,466 1,066,865 4,104,023
State and federal aid receivable20,511 478,205 88,825 191,678 779,219
Due from other governments950,932 56,300 2,630,520 353,393 3,991,145
Inventory of material and supplies3,919 114,870 9,632 128,421
Prepaids713,746 78,216 7,689 130,453 930,104
Total Assets28,791,714$ 5,470,097$ 3,656,793$ 17,933,022$ 6,005,496$ 61,857,122$
LIABILITIES
Accounts payable and accrued
liabilities967,370$ 226,540$ 351,308$ 10,871$ 505,974$ 2,062,063$
Judgments and claims53,076 53,076
Bond anticipation notes payable554,000 554,000
Due to other funds3,041,471 714,350 122,067 22,815 203,320 4,104,023
Due to component units830,553 830,553
Due to other governments37,003 160 37,163
Unearned revenue425,308 6,984 420,974 853,266
Total Liabilities5,354,781 941,050 1,034,359 33,686 1,130,268 8,494,144
DEFERRED INFLOWS OF RESOURCES
Unavailable revenue724,307 724,307
Unearned revenue from
real property taxes8,029,813 1,555,387997,995 10,583,195
Total Deferred Inflows of Resources8,754,120 1,555,387 -0- -0- 997,995 11,307,502
FUND BALANCES
Nonspendable717,665 193,086 103,988 7,689 164,541 1,186,969
Restricted2,408,147 17,891,647 20,299,794
Committed366,035 836,293 1,202,328
Assigned1,322,765 2,780,574 110,299 2,876,399 7,090,037
Unassigned12,276,348 12,276,348
Total Fund Balances14,682,813 2,973,660 2,622,434 17,899,336 3,877,233 42,055,476
Total Liabilities, Deferred Inflows of
Resources and Fund Balances28,791,714$ 5,470,097$ 3,656,793$ 17,933,022$ 6,005,496$ 61,857,122$
See notes to the financial statements.
-18-
TOWN OF SOUTHOLD
RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET TO THE
STATEMENT OF NET POSITION
December 31, 2020
Total Fund Balances - Governmental Funds42,055,476$
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-depreciable154,532,618$
Capital assets - depreciable142,644,641
Accumulated depreciation(103,687,234)
193,490,025
Deferred outflows of resources are included in the Statement of Net Position38,371,034
Long-term liabilities applicable to the Town's
governmental activities are not due and payable
in the current period, and accordingly, are not
s
reported in the funds. However, these liabilitie
are included in the Statement of Net Position:
Bond anticipation notes payable (7,307,722)
e (26,249,604)
General obligation bonds payabl
Compensated absences(9,556,996)
Claims and judgments payable(771,686)
Estimated liability for landfill closure
and postclosure care costs(358,987)
Net pension liability (20,172,518)
Other postemployment benefits payable(103,685,282)
(168,102,795)
Revenues in the Statement of Activities that do not provide current
financial resources are not reported as revenues in the funds.724,307
Deferred inflows of resources are included in the Statement of Net Position(566,844)
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.(316,042)
Net Position of Governmental Activities105,655,161$
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, 2020
MAJOR GOVERNMENTAL FUNDS
Non-Major
CapitalCommunityGovernmental
GeneralHighwayProjectsPreservationFundsTotals
REVENUES
Real property taxes$ 6,292,69827,804,178$ 3,802,475$ 37,899,351$
Other real property tax items91,781 1,641 233 93,655
Non-property tax items1,288,673 10,828,223$ 665,319 12,782,215
Departmental income358,044 2,944,784 3,302,828
Intergovernmental charges 110,821 110,821
Use of money and property 14,919256,942 124,337$ 47,698 14,727 458,623
Licenses and permits271,159 131,200 199,153 601,512
Fines and forfeitures460,247 460,247
Sale of property and compensation
for loss67,336 28,993 612134,256 231,197
Miscellaneous local sources91,751 7,557 95,037 397 4,467 199,209
Interfund revenues129,225 129,225
State aid1,883,953 477,773 184,159 123,528 2,669,413
Federal aid617,506 261,581 345,893 1,224,980
Total Revenues33,431,616 6,954,781 665,114 10,876,930 8,234,835 60,163,276
EXPENDITURES
Current:
t 66,7947,312,566 31,152518,371 7,928,883
General government suppor
Public safety10,244,531 1,562,162 11,806,693
Public health43,300 43,300
Transportation814,585 3,126,854 3,941,439
Economic assistance and
opportunity1,408,028 1,408,028
Culture and recreation351,171 351,171
Home and community services382,775 604,253 3,799,951 4,786,979
Employee benefits9,788,209 1,745,402 84,888 1,467,805 13,086,304
Capital Outlay2,264,8312,264,831
Debt Service:
Principal381,000 113,000 1,508,655 242,345 2,245,000
Interest178,045 40,270 597,315 85,026 900,656
Total Expenditures30,904,210 5,092,320 2,264,831 2,826,263 7,675,660 48,763,284
Excess (Deficiency) of Revenues
Over (Under) Expenditures 1,862,4612,527,406 (1,599,717) 8,050,667 559,175 11,399,992
OTHER FINANCING SOURCES (USES):
Debt proceeds7,307,722 7,307,722
Transfers in 1,716,795 1,716,795
Transfers out(692,295) (794,500) (230,000) (1,716,795)
Total Other Financing
Sources (Uses)(692,295) (794,500) 9,024,517 -0- (230,000) 7,307,722
Net Change in Fund Balance1,835,111 1,067,961 7,424,800 8,050,667 329,175 18,707,714
Fund Balances at Beginning of Year 1,905,69912,847,702 (4,802,366) 9,848,669 3,548,058 23,347,762
Fund Balances at End of Year14,682,813$ 2,973,660$ 2,622,434$ 17,899,336$ 3,877,233$ 42,055,476$
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, 2020
Net Change in Fund Balance$ 18,707,714
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 3,363,427$
Depreciation expense(2,996,702)
366,725
Revenues in the Statement of Activities that do not provide current financial
resources are not reported as revenues in the funds.346,417
Net change in deferred outflows of resources not reported in the governmental
fund statements:
Deferred charges on refundings(127,883)
Pension related amounts10,029,619
Other postemployment benefits11,443,387
21,345,123
Net change in deferred inflows of resources not reported in the governmental
fund statements:
Pension related amounts1,556,585
Other postemployment benefits6,771,646
8,328,231
Premiums on bond issuances recognized in governmental fund statements
. 182,743
when issued and capitalized and amortized in the Statement of Activities
The issuance of long-term debt providse current financial resources, however the issuance of
long-term debt has no impact on net position.
Issuance of long-term bond anticipation notes(7,307,722)
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 principal2,245,000
Compensated absences(478,752)
Claims and judgments payable2,065
e
Estimated liability for landfill closur
and postclosure care costs17,445
Net pension liability (14,337,746)
Other postemployment benefits payable(25,412,476)
Accrued interest payable (37,957,678)6,786
Change in Net Position of Governmental Activities4,011,553$
See notes to financial statements.
-21-
TOWN OF SOUTHOLD
STATEMENT OF FIDUCIARY NET POSITION
December 31, 2020
Custodial Fund
ASSETS
Cash and cash equivalents32,688,384$
Total Assets32,688,384$
LIABILITIES
Due to other governments32,597,588$
Other liabilities90,796
Total Liabilities32,688,384$
See notes to financial statements.
-22-
TOWN OF SOUTHOLD
STATEMENT OF CHANGES IN FIDUCIARY NET POSITION
Year Ended December 31, 2020
Custodial Fund
ADDITIONS
Real property taxes collected for other governments149,954,508$
Bail collected 26,008
Total Additions149,980,516
DEDUCTIONS
Payments of real property taxes to other governments149,954,508
Bail returned or remitted 26,008
Total Deductions149,980,516
Change in Net Position -0-
Net Position - Beginning of year -0-
Net Position - End of year$ -0-
See notes to financial statements.
-23-
TOWN OF SOUTHOLD
NOTES TO FINANCIAL STATEMENTS
December 31, 2020
A. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The Town of Southold (the ÐTownÑ), 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 Board 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. 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 TownÓs 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 TownÓs 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 TownÓs
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
December 31, 2020
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
TownÓs 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 TownÓs
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
TownÓs 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 TownÓs
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.
-25-
TOWN OF SOUTHOLD
NOTES TO FINANCIAL STATEMENTS
December 31, 2020
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 TownÓs 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 SoutholdÓs discretely presented component units are considered nonmajor.
2. GOVERNMENT-WIDE AND FUND FINANCIAL STATEMENTS
The TownÓs basic financial statements include both government-wide (reporting the Town as a whole)
and fund financial statements (reporting the TownÓs 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
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:
-26-
TOWN OF SOUTHOLD
NOTES TO FINANCIAL STATEMENTS
December 31, 2020
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 - 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 - 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 - 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 - 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 - 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 - used to account for federal aid for the Community Development Block
Grant Program.
Special District Funds - 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 Fund (Not included in government-wide financial statements) Î is used to account for
assets held by the Town on behalf of others.
The Town has presented the following fiduciary fund:
Custodial Fund - is used primarily to account for amounts due to other governments for general
and school taxes collected, as well as amounts due to others for bail.
-27-
TOWN OF SOUTHOLD
NOTES TO FINANCIAL STATEMENTS
December 31, 2020
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 TownÓs 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. State statutes govern the TownÓs 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).
-28-
TOWN OF SOUTHOLD
NOTES TO FINANCIAL STATEMENTS
December 31, 2020
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)
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
TownÓs collateral agreements are based on the TownÓs 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 Ðavailable spendable
resourcesÑ 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
-29-
TOWN OF SOUTHOLD
NOTES TO FINANCIAL STATEMENTS
December 31, 2020
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 assets 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, changes of assumptions, 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 assets that applies to a future period(s) and so will not be
recognized as an inflow of resources (revenue) until that time. The TownÓs 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 relates to the current year but
does 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 TownÓs contributions and proportionate share of
contributions, changes of assumptions, the differences between expected and actual experience and net
difference between projected and actual investment earnings on pension plan investments.
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 future periods.
-30-
TOWN OF SOUTHOLD
NOTES TO FINANCIAL STATEMENTS
December 31, 2020
A. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
4. ASSETS, LIABILITIES, DEFERRED OUTFLOWS/INFLOWS OF RESOURCES, AND NET
POSITION/FUND 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, bond anticipation notes, 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 ÐrestrictedÑ or
Ðnet investment in capital assetsÑ.
-31-
TOWN OF SOUTHOLD
NOTES TO FINANCIAL STATEMENTS
December 31, 2020
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 TownÓs
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 TownÓs ÐintentÑ 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 TownÓs 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 TownÓs 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 TownÓs Board will develop
a plan to replenish the fund balance to the established minimum level within the current or ensuing
fiscal year.
-32-
TOWN OF SOUTHOLD
NOTES TO FINANCIAL STATEMENTS
December 31, 2020
A. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
5. REVENUES AND EXPENDITURES
REAL PROPERTY TAX ASSESSMENT AND COLLECTION PROCEDURES
st
Real property taxes are levied annually no later than December 1 and are recognized as revenue
st
January 1 of the year for which they were levied. The Town has its own AssessorÓs Office whose
responsibilities are independent and distinct from those of the Receiver of Taxes (ÐReceiverÑ). 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 (ÐCountyÑ) 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 TownÓs 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 ÐEmpire PlanÑ) 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 TownÓs 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.
-33-
TOWN OF SOUTHOLD
NOTES TO FINANCIAL STATEMENTS
December 31, 2020
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 EmployeesÓ 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
st
same basis as reported by the Systems, utilizing the year end of March 31.
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 PRONOUNCEMENTS
The Town has adopted all of the current Statements of the Governmental Accounting Standards Board
(ÐGASBÑ) that are applicable. The following statement had a significant impact on the financial statements:
GASB Statement No. 84, Ð Fiduciary Activities,Ñ establishes criteria for identifying fiduciary
activities of all state and local governments. The criteria focus I generally on 1) whether a
government is controlling the assets of the fiduciary activity, and 2) the beneficiaries with whom
a fiduciary relationship exists. The Statement establishes the four fiduciary funds that should be
reported (as applicable): 1) pension and other employee benefit trust funds, 2) investment trust
funds, 3) private purpose trust funds, and 4) custodial funds. This Statement also provides
guidance for the recognition of a liability when an event has occurred that compels the
government to disburse fiduciary resources. The implementation of this Statement did not affect
the TownÓs fund balance or net position as of December 31, 2019.
8. SUBSEQUENT EVENTS
Management has evaluated subsequent events for disclosure and/or recognition in the financial
statements through the date of the financial statements.
-34-
TOWN OF SOUTHOLD
NOTES TO FINANCIAL STATEMENTS
December 31, 2020
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. The Town
exceeded the 2% property tax cap for the years ended December 31, 2019 and December 31,
2020 without adopting a local law in accordance with the New York State enacted Chapter 97,
Laws of 2011 Real Property Tax Levy Cap and Mandate Relief Provisions. As a result, the Town
has recorded an accrued liability in the amount of $214,720, which will be utilized to reduce the
levy for the year ending December 31, 2023.
-35-
TOWN OF SOUTHOLD
NOTES TO FINANCIAL STATEMENTS
December 31, 2020
B. STEWARDSHIP, COMPLIANCE AND ACCOUNTABILITY (continued)
2. FUND BALANCE
The following table provides the detail regarding fund balance categories and classifications for the
governmental funds which show components of nonspendable fund balances, as well as the purposes for
restricted and assigned fund balance. The unassigned fund balance is also shown.
CapitalCommunityOther
General HighwayProjectsPreservationGovernmental
FundFundFundFundFundsTotal
Fund Balances:
Nonspendable:
Long-term receivables103,988$ 24,456$ 128,444$
Inventory 3,919$ 114,870$ 9,632 128,421
Prepaids713,746 78,216 7,689$ 130,453 930,104
Total Nonspendable717,665 193,086 103,988 7,689 164,541 1,186,969
Restricted for:
Unspent debt proceeds1,883,506 1,883,506
Grantors and donor restrictions524,641 524,641
Land/Land right purchases 17,891,64717,891,647
Total Restricted-0- -0- 2,408,147 17,891,647 -0- 20,299,794
Committed for:
Parks and Recreation366,035 366,035
Affordable Housing 836,293836,293
Total Committed366,035 -0- -0- -0- 836,293 1,202,328
-
Assigned to:
Subsequent year's budget900,000 75,000 140,000 1,115,000
Purchases on order
or contractual obligations49,458 14,615 27,539 91,612
Special revenue funds2,690,959 2,708,860 5,399,819
Capital projects110,299 110,299
Judgments and claims373,307 373,307
Total Assigned1,322,765 2,780,574 110,299 -0- 2,876,399 7,090,037
Unassigned, reported in:
General Fund12,276,348 12,276,348
-0- -0- 12,276,348
Total Unassigned12,276,348 -0- -0-
Total Fund Balances14,682,813$ 2,973,660$ 2,622,434$ 17,899,336$ 3,877,233$ 42,055,476$
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 TownÓs 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.
Credit Risk - The TownÓs 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.
-36-
TOWN OF SOUTHOLD
NOTES TO FINANCIAL STATEMENTS
December 31, 2020
C. DETAILED NOTES ON ALL FUNDS (continued)
1. CASH AND INVESTMENTS (continued)
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 Î Concentration of 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, 2020, the TownÓs cash book balance was $74,152,009. This amount is inclusive of
fiduciary fund deposits of $22,688,384 but exclusive of petty cash of $1,470 and CLASS of $56,787. The
available bank balance was $75,032,331 exclusive of CLASS deposits. Of the bank balance, $9,861,421
was covered by Federal deposit insurance, and $65,170,911 was covered by collateral held by the
TownÓs agents, third-party financial institutions, in the TownÓs 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
DistrictÓs 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, ÐFair Value Measurement and
DisclosureÑ 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 CLASSÓs 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.
-37-
TOWN OF SOUTHOLD
NOTES TO FINANCIAL STATEMENTS
December 31, 2020
C. DETAILED NOTES ON ALL FUNDS (continued)
1. CASH AND INVESTMENTS (continued)
The TownÓs $56,787 CLASS investment consists of U.S. Treasury Obligations and repurchase
agreements relating to Treasury obligations and is not subject to risk categorization.
The above amounts represent the cost of the investment pool shares and are considered to approximate
market value. Additional information concerning the cooperative is presented in the annual report of the
New York CLASS, which can be found on its website at www.newyorkclass.org.
As of December 31, 2020, the Town did not have any investments subject to credit risk, interest-rate risk
or concentration of credit risk.
2. INTERFUND RECEIVABLES, PAYABLES AND TRANSFERS
Interfund receivable and payable balances for the primary government at December 31, 2020 are
expected to be paid currently. These balances represent various temporary loans, recharges, and
reimbursements between funds for operating and capital expenditures and are stated as follows:
Amount Amount
ReceivablePayable
Major Governmental Funds:
General Fund - Town-wide331,855$ 3,041,471$
Highway Fund1,560,837 714,350
Capital Projects Fund1,144,466 122,067
Community Preservation Fund-0- 22,815
Total Major Funds3,037,158 3,900,703
Nonmajor Governmental Funds:
General Fund - Part-Town256,385 -0-
Special Grant-0- 203,320
East-West Fire Protection District224,772 -0-
Southold Wastewater District185 -0-
Fishers Island Sewer District11,520 -0-
Solid Waste Management District574,003 -0-
Total Nonmajor Funds1,066,865 203,320
Total4,104,023$ 4,104,023$
Interfund transfer balances for the primary government at December 31, 2020 represent capital project
transfers and are stated as follows:
Transfers InTransfers Out
Major Governmental Funds:
General Fund - Town-wide-0-$ 692,295$
Highway Fund-0- 794,500
Capital Projects Fund1,716,795 -0-
Total Major Funds1,716,795 1,486,795
Nonmajor Governmental Funds:
Special Grant-0- 195,000
Solid Waste Management District-0- 35,000
Total Nonmajor Funds-0- 230,000
Total1,716,795$ 1,716,795$
-38-
TOWN OF SOUTHOLD
NOTES TO FINANCIAL STATEMENTS
December 31, 2020
C. DETAILED NOTES ON ALL FUNDS (continued)
3. CAPITAL ASSETS
Balance Balance
Primary Government 1/1/2020AdditionsDeletions12/31/2020
Capital assets not being depreciated:
Land17,236,339$ 17,236,339$
Land development rights136,120,927 413,367$ 136,534,294
Construction in progress501,213 260,772 761,985
Total Capital Assets Not Being Depreciated153,858,479 674,139 - 154,532,618
Depreciable capital assets:
Buildings21,402,348 56,233 21,458,581
Improvements other than buildings16,757,437 6,900 16,764,337
Machinery and equipment14,778,072 1,231,741 16,009,813
Software1,217,867 15,935 1,233,802
Infrastructure85,799,629 1,378,479 87,178,108
Total Depreciable Capital Assets139,955,353 2,689,288 - 142,644,641
Less accumulated depreciation:
Buildings7,120,835 616,610 7,737,445
Improvements other than buildings10,021,703 563,553 10,585,256
Machinery and equipment10,373,765 812,017 11,185,782
Software1,200,705 58,822 1,259,527
Infrastructure71,973,524 945,700 72,919,224
Total Accumulated Depreciation100,690,532$ 2,996,702$ -$ 103,687,234
Total Net Depreciable Capital Assets 38,957,407
Total Net Capital Assets$ 193,490,025
Depreciation expense was charged to governmental functions as follows:
General government support$ 608,269
Public safety 414,578
Transportation 1,226,993
Economic assistance and opportunity 31,542
Culture and recreation 71,964
Home and community services 643,356
$ 2,996,702
-39-
TOWN OF SOUTHOLD
NOTES TO FINANCIAL STATEMENTS
December 31, 2020
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 TownÓs 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, 2020, the Town has not recorded any such impairment losses.
Balance Balance
1/1/2020AdditionsDeletions12/31/2020
Nonmajor Component Units
Capital assets not being depreciated:
Land2,103,162$ 2,103,162$
Construction in progress153,690 514,149$ 29,117$ 638,722
Total Capital Assets Not Being Depreciated2,256,852 514,149 29,117 2,741,884
Depreciable capital assets:
Buildings14,187,407 14,187,407
Improvements other than buildings2,557,247 2,557,247
Machinery and equipment5,075,446 18,908 5,094,354
Infrastructure4,739,093 332,481 5,071,574
Total Depreciable Capital Assets26,559,193 351,389 -0- 26,910,582
Less accumulated depreciation:
Buildings6,662,028 443,835 7,105,863
Improvements other than buildings1,223,178 85,697 1,308,875
Machinery and equipment3,804,534 95,854 3,900,388
Infrastructure3,077,555 122,497 3,200,052
Total Accumulated Depreciation14,767,295$ 747,883$ -$ 15,515,178
Total Net Depreciable Capital Assets 11,395,404
Total Net Capital Assets$ 14,137,288
Depreciation expense was charged to governmental functions as follows:
Transportation$ 508,502
Culture and recreation 104,715
Home and community services 134,666
$ 747,883
-40-
TOWN OF SOUTHOLD
NOTES TO FINANCIAL STATEMENTS
December 31, 2020
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 $2,250,605 of bond anticipation notes, of
which $1,265,000 relate to Fishers Island Ferry District, in September 2020. These BANs bear interest at
1.75% and matured in September 2021.
A summary of changes in BANs for the year ended December 31, 2020 is as follows:
BalanceBalance
1/1/2020IncreasesReductions12/31/2020
Primary Government7,884,117$ 985,605$ 8,315,722$ 554,000$
Component Units1,395,000 1,265,000 60,000 2,600,000
Total BANs Payable$ 9,279,117$ 2,250,605$ 8,375,722$3,154,000
LONG-TERM DEBT
General Obligation Bonds - The Town borrows money in order to acquire land, equipment or construct
buildings and improvements. This enables the cost of these capital assets to be borne by the present and
future taxpayers receiving the benefit of the capital assets.
Arbitrage provisions of the Internal Revenue Tax Act of 1986 require the Town to rebate excess arbitrage
earnings from bond proceeds to the federal government. There were no excess arbitrage earnings for the
year ended December 31, 2020.
These long-term liabilities are backed by the full faith and credit of the Town which are payable from tax
revenues of the General Fund and Special Revenue Funds. Interest rates on these bonds vary from
2.00% to 5.00% and have maturity dates in 2021 through 2034.
At December 31, 2020, bonds payable consisted of the following individual issues:
Primary Government
InterestOutstanding
IssuePurposeFinal MaturityIssue DateRateAmount
2015 Refunding Serial BondsRefunding BondMarch 1, 2030July 29, 20152.00% - 5.00%5,945,000$
2016 Refunding Serial BondsRefunding BondFebruary 15, 2030October 4, 20162.00% - 4.00%15,065,000
2016 Public Improvement Serial BondsPublic ImprovementAugust 15, 2034August 25, 20162.00% - 2.25%3,470,000
$ 24,480,000
Component Units
InterestOutstanding
IssuePurposeFinal MaturityIssue DateRateAmount
2015 Refunding Serial BondsRefunding BondMarch 1, 2021July 29, 20152.00% - 4.76%185,000$
2016 Public Improvement Serial BondsPublic ImprovementAugust 15, 2021August 25, 20161.25% - 1.50%80,000
$ 265,000
-41-
TOWN OF SOUTHOLD
NOTES TO FINANCIAL STATEMENTS
December 31, 2020
C. DETAILED NOTES ON ALL FUNDS (continued)
4. INDEBTEDNESS (continued)
LONG-TERM DEBT (continued)
Future principal and interest payments to maturity for both the primary government and the component
units are as follows:
Primary GovernmentComponent Units
Years Ending
December 31,PrincipalInterestTotalsPrincipalInterestTotals
20212,310,000$ 736,313$ 3,046,313$ 265,000$ 4,999$ 269,999$
20222,340,000 650,762 2,990,762
20232,435,000 556,312 2,991,312
20242,465,000 457,912 2,922,912
20252,510,000 356,388 2,866,388
2026-203011,480,000 798,247 12,278,247
2031-2034940,000 51,702 991,702
Total24,480,000$ 3,607,636$ 28,087,636$ 265,000$ 4,999$ 269,999$
Bond Anticipation Notes Payable Î The bond anticipation note in the amount of $10,461,722 that was
issued on September 23, 2020 with an interest rate of 1.75% was partially renewed on September 22,
2021. The Town, pursuant to GASB guidance, did not record the portion of this note which was renewed,
totaling $7,307,722, as a liability in the fund financial statements since it demonstrated an ability to
consummate refinancing. The ability to consummate refinancing was evidenced by obtaining a renewal of
financing prior to the issuance of the current yearÓs financial statements. See Note G.
CHANGES IN LONG-TERM LIABILITIES
Long-term liability activity for the year ended December 31, 2020 is as follows:
Noncurrent
BalanceBalanceLiabilities DueNoncurrent
1/1/2020IncreasesReductions12/31/2020Within One YearLiabilities
Primary Government:
General obligation bonds26,725,000$ 2,245,000$ 24,480,000$ 2,310,000$ 22,170,000$
Add: premiums on obligations1,952,347 182,743 1,769,604 1,769,604
Total general obligation bonds
payable28,677,347 2,427,743 26,249,604 2,310,000 23,939,604
Bond anticipation notes 7,307,722$ 7,307,722 7,307,722
Compensated absences9,078,244 1,073,856 595,104 9,556,996 1,129,940 8,427,056
General claims and judgments
liability806,429 43,333 25,000 824,762 278,076 546,686
Estimated liability for landfill closure
and postclosure care costs376,432 17,445 358,987 18,317 340,670
Net pension liability5,834,772 17,635,063 3,297,317 20,172,518 20,172,518
Other postemployment benefits
payable78,272,806 27,919,968 2,507,492 103,685,282 103,685,282
$ 53,979,942123,046,030$ 8,870,101$ 196,175,079$ 3,736,333$ 190,669,142$
Noncurrent
BalanceBalanceLiabilities DueNoncurrent
1/1/2020IncreasesReductions12/31/2020Within One YearLiabilities
Component Units:
General obligation bonds530,000$ 265,000$ 265,000$ 265,000$
Compensated absences227,722 4,754 222,968 55,742 167,226$
Net pension liability343,917 691,895$ 1,035,812 1,035,812
Other postemployment benefits
payable646,886 132,154 779,040 779,040
$ 824,0491,748,525$ 269,754$ 2,302,820$ 320,742$ 1,982,078$
-42-
TOWN OF SOUTHOLD
NOTES TO FINANCIAL STATEMENTS
December 31, 2020
C. DETAILED NOTES ON ALL FUNDS (continued)
4. INDEBTEDNESS (continued)
LONG-TERM DEBT (continued)
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 post closure 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 EmployeesÓ Retirement System
(ÐNYSERSÑ) and Local Police and Fire Retirement System (ÐPFRSÑ), which are collectively referred to as
the New York State and Local Retirement System (the ÐSystemÑ). 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 ÐFundÑ), 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 (ÐRSSLÑ). Once a public
employer elects to participate in the System, the election is irrevocable.
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 EmployeesÓ Group Life Insurance
Plan (ÐGLIPÑ), which provides death benefits in the form of life insurance. The System is included in the
StateÓs 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
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.
-43-
TOWN OF SOUTHOLD
NOTES TO FINANCIAL STATEMENTS
December 31, 2020
C. DETAILED NOTES ON ALL FUNDS (continued)
5. RETIREMENT SYSTEM (continued)
Benefits Provided (continued)
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 yearÓs 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.
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 yearÓs compensation used in the final average salary
calculation is limited to no more than 10% greater than the average of the previous two years.
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 yearÓs 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 memberÓs tier, years of service, and plan.
-44-
TOWN OF SOUTHOLD
NOTES TO FINANCIAL STATEMENTS
December 31, 2020
C. DETAILED NOTES ON ALL FUNDS (continued)
5. RETIREMENT SYSTEM (continued)
Benefits Provided (continued)
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 memberÓs 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%.
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
employersÓ contributions based on salaries paid during the SystemÓs 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 primary government, for the current year is:
ERS PFRS
$ 1,718,149 $ 1,579,168
Pension Liabilities, Pension Expense, Deferred Outflows of Resources and Deferred Inflows of
Resources Related to Pension
At December 31, 2020, the primary government reported a liability of $10,795,228 and $9,377,290 for
ERS and PFRS, respectively, for its proportionate share of the net pension liability for the Systems.
The net pension liability was measured as of March 31, 2020 and the total pension liability used to
calculate the net pension liability was determined by an actuarial valuation as of April 1, 2019. The
primary government proportion of the net pension liability was based on a projected contribution of all
participating members, actuarially determined.
Below is the primary governmentÓs proportionate share of the net pension liability of the System and its
related employer allocation percentage as of March 31, 2020.
-45-
TOWN OF SOUTHOLD
NOTES TO FINANCIAL STATEMENTS
December 31, 2020
C. DETAILED NOTES ON ALL FUNDS (continued)
5. RETIREMENT SYSTEM (continued)
Pension Liabilities, Pension Expense, Deferred Outflows of Resources and Deferred Inflows of
Resources Related to Pension (continued)
Allocation of the
Net PensionSystem's Total
Measurement DateLiabilityNet Liability
ERSMarch 31, 202010,795,228$ 0.0446782%
PFRSMarch 31, 20209,377,290$ 0.1754425%
There was no significant change in the primary governmentÓs proportionate share from March 31,
2019 to March 31, 2020.
For the year ended December 31, 2020, the primary government recognized pension expense of
$7,094,168, of which $3,770,536 relates to ERS and $3,323,632 relates to PFRS. At December 31,
2020, the primary government reported deferred outflows of resources and deferred inflows of
resources related to pensions from the following sources:
ERSPFRSTotals
Deferred Outflows of Resources:
Difference between expected and actual experience635,343$ 624,429$ 1,259,772$
Changes of assumptions217,365 801,531 1,018,896
Net difference between projected and actual investment
earnings on pension plan investments5,534,158 4,222,889 9,757,047
Changes in proportion and differences between employer
contributions and proportionate share of contributions183,395 179,566 362,961
Contributions made subsequent to the measurement date1,857,925 1,618,733 3,476,658
Total Deferred Outflows of Resources - pension amounts8,428,186$ 7,447,148$ 15,875,334$
Deferred Inflows of Resources:
Differences between expected and actual experience 157,069$ 157,069$
Changes of assumptions187,691$ 187,691
Net difference between projected and actual investment
earnings on pension plan investments
Changes in proportion and differences between the Town's
contributions and proportionate share of contributions90,506 131,578 222,084
Total Deferred Inflows of Resources - pension amounts278,197$ 288,647$ 566,844$
Contributions subsequent to the measurement date will be recognized as a reduction of the net pension
liability in the year ended December 31, 2021. Other amounts reported as deferred outflows of resources
and deferred inflows of resources related to pensions will be recognized in pension expense as follows:
-46-
TOWN OF SOUTHOLD
NOTES TO FINANCIAL STATEMENTS
December 31, 2020
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)
ERSPFRS
Years ended December 31, 20211,077,446$ 1,194,855$
20221,569,747 1,284,088
20232,018,517 1,626,257
20241,626,354 1,356,664
202577,904
$ 5,539,7686,292,064$
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 SystemÓs experience with adjustments for mortality
improvements based on the Society of ActuariesÓ Scale MP-2018. The actuarial assumptions were
based on the results of an actuarial experience study for the period April 1, 2010 - March 31,
2015.
ERSPFRS
Measurement date
March 31, 2020March 31, 2020
Actuarial valuation date
April 1, 2019April 1, 2019
Interest rate
6.80%6.80%
Salary increases
4.20%5.00%
Decrement tablesApril 1, 2010 -April 1, 2010 -
March 31, 2015March 31, 2015
System's ExperienceSystem's Experience
Inflation rate
2.50%2.50%
The long-term expected rate of return on pension plan investments was determined in accordance
with Actuarial Standard of Practice (ÐASOPÑ) No. 27, Ð Selection of Economic Assumptions for
Measuring Pension Obligations.Ñ ASOP No. 27 provides guidance on the selection of an appropriate
assumed investment rate of return. Consideration was given to expected future real rates of return
(expected returns net of pension plan investment expenses and inflation) for equities and fixed
income, as well as historical investment data and plan performance.
Best estimates of the arithmetic real rates of return for each major asset class included in the target
asset allocation as of March 31, 2020 are summarized below:
-47-
TOWN OF SOUTHOLD
NOTES TO FINANCIAL STATEMENTS
December 31, 2020
C. DETAILED NOTES ON ALL FUNDS (continued)
5. RETIREMENT SYSTEM (continued)
Actuarial Assumptions (continued)
Long-term
TargetExpected Real
Asset Type:AllocationRate of Return
Equity:
Domestic equity36.00%4.05%
International equity14.00%6.15%
Private equity10.00%6.75%
Real estate10.00%4.95%
Absolute return strategies2.00%3.25%
Opportunistic portfolio3.00%4.65%
Real assets3.00%5.95%
Bonds and mortgages17.00%0.75%
Cash1.00%0.00%
Inflation indexed bonds4.00%0.50%
100.00%
The discount rate used to calculate the total pension liability was 6.8% 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 SystemsÓ 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 primary governmentÓs proportionate share of the net pension liability
calculated using the discount rate of 6.8%, as well as what the primary governmentÓs proportionate
share of the net pension liability would be if it were calculated using a discount rate that is 1-
percentage point lower (5.8%) or 1-percentage point higher (7.8%) than the current rate:
1.00%Current1.00%
DecreaseAssumptionIncrease
5.80%6.80%7.80%
Town's proportionate share of the
collective net pension liability
ERS19,812,292$ 10,795,228$ 2,490,475$
PFRS16,766,785 9,377,290$ 2,759,829
-48-
TOWN OF SOUTHOLD
NOTES TO FINANCIAL STATEMENTS
December 31, 2020
D. DETAILED NOTES ON ALL FUNDS (continued)
5. RETIREMENT SYSTEM (continued)
Pension Plan Fiduciary Net Position
The components of the current-year net employeesÓ retirement system pension liability of the
employers as of the respective valuation date of April 1, 2019 were as follows:
ERSPFRS
(Dollars in thousands)(Dollars in thousands)
Employers' total pension liability$ 35,309,017194,596,261$
Plan net position(168,115,682) (29,964,080)
Employers' net pension liability26,480,579$ 5,344,937$
Ratio of plan net position to the
Employers' total pension liability86.39%84.86%
Detailed information about the System pension planÓs fiduciary net position is available in the SystemÓs
separately issued financial statements.
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 TownÓs 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.
-49-
TOWN OF SOUTHOLD
NOTES TO FINANCIAL STATEMENTS
December 31, 2020
C. DETAILED NOTES ON ALL FUNDS (continued)
6. OTHER POSTEMPLOYMENT BENEFITS (OBLIGATIONS FOR HEALTH INSURANCE) (continued)
Total OPEB Liability
The TownÓs total OPEB liability of $103,685,282 was measured as of January 1, 2020 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, 2020.
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 events far into the future. Amounts
determined regarding the funded status of a plan and the employerÓs 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.
The total OPEB liability in the January 1, 2020 measurement date was determined using the following
actuarial assumptions and other inputs:
Discount Rate 2.73%
Healthcare cost trend rates 8% for 2020 decreasing .5% per year to an ultimate trend rate
of 5.0% after 7 years.
The discount rate was based on the January 1, 2020 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 EmployeesÓ Retirement
System and New York State Police and Fire Retirement System.
The actuarial assumptions used in the January 1, 2020 valuation were based on standard tables modified
for certain plan features such as eligibility for full and early retirement where applicable.
-50-
TOWN OF SOUTHOLD
NOTES TO FINANCIAL STATEMENTS
December 31, 2020
C. DETAILED NOTES ON ALL FUNDS (continued)
6. OTHER POSTEMPLOYMENT BENEFITS (OBLIGATIONS FOR HEALTH INSURANCE)
(continued)
Changes in the Total OPEB Liability
Balance at December 31, 201978,272,806$
Changes for the year:
Service cost3,340,354
Interest3,226,259
Differences between expected and actual experience-0-
Changes in assumptions and other inputs21,353,355
Benefit payments(2,507,492)
Balance at December 31, 2020103,685,282$
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 TownÓs total OPEB liability
would be if it were calculated using a discount rate that is 1-percentage-point lower (1.73%) or
1-percentage-point higher (3.73%) than the discount rate.
1.00%Discount1.00%
DecreaseRateIncrease
1.73%2.73%3.73%
$ 103,685,282124,332,035$ 88,640,189$
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 TownÓs 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%Trend1.00%
DecreaseRateIncrease
(starts at 7%)(starts at 8%)(starts at 9%)
$ 103,685,28287,977,980$ 123,266,310$
For the year ended December 31, 2020, the Town recognized OPEB expense of $9,704,937. At
December 31, 2020, the Town reported deferred outflows or inflows of resources related to OPEB
from the following sources.
Deferred OutflowsDeferred Inflows
of Resourcesof Resources
Differences Between Actual and Expected Experience6,082,261$
Changes of assumptions12,659,839
Contributions made subsequent to the measurement date2,507,493
Total Deferred Outflows of Resources - OPEB21,249,593$ -$
-51-
TOWN OF SOUTHOLD
NOTES TO FINANCIAL STATEMENTS
December 31, 2020
C. DETAILED NOTES ON ALL FUNDS (continued)
6. OTHER POSTEMPLOYMENT BENEFITS (OBLIGATIONS FOR HEALTH INSURANCE)
(continued)
The amounts reported as deferred inflows of resources related to OPEB will be recognized in OPEB
expense as follows:
Year ending December 31, 20213,138,324$
20223,138,324
20233,138,324
20243,138,324
20253,138,324
20263,050,480
$ 18,742,100
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, 2020, the value of the accumulated vacation time and sick leave was $9,556,996 for the
primary government.
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 $824,762 which is reported as claims and judgments payable
in the government-wide financial statements, $53,076 of which 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 TownÓs financial position.
For the year ended December 31, 2020, 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 $10,000,000 in the aggregate.
There have been no significant reductions in insurance coverage as compared to the prior year and there
were no settlements in excess of insurance coverage over the last three years.
-52-
TOWN OF SOUTHOLD
NOTES TO FINANCIAL STATEMENTS
December 31, 2020
D. COMMITMENTS AND CONTINGENCIES (continued)
Risk Management (continued)
The Town liability for general liability claims is determined and reported by a third-party administrator and is
reported when it is probable that a loss has occurred, and the amount of that loss can be reasonably
estimated. Claims reserves for general liability claims are re-evaluated periodically to take into consideration
recently settled claims and any new developments and changes.
The TownÓs discretely presented component units are not included in the TownÓs self-insurance risk
management program for any claims.
Fund balance is assigned for future catastrophic losses. Changes in the long-term liability for claims and
judgments for the years ended December 31, 2020 and 2019 are as follows:
General Liability
20202019
Unpaid Claims as of December 31st, prior year806,429$ 580,707$
Incurred claims:
Provision for insured events of the current
fiscal year25,000 143,751
Increase (decrease) in net provision for insured
events of prior fiscal years18,333 120,971
Total incurred claims and claim adjustments849,762 845,429
Payments of claims during the fiscal year(25,000) (39,000)
Unpaid claims as of December 31st824,762$ 806,429$
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,
2020, the Town has recorded a liability of $358,987, 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,
2020, these commitments amounted to $760,975 in the capital projects fund.
-53-
TOWN OF SOUTHOLD
NOTES TO FINANCIAL STATEMENTS
December 31, 2020
D. COMMITMENTS AND CONTINGENCIES (continued)
Animal Shelter Agreement
In May 2011, the Town entered into an agreement with the North Fork Animal Welfare League to operate
and manage the Town of Southold Animal Shelter. The agreement is for a term of four years commencing
on June 1, 2011. The agreement was renewed in March 2015 with the lease to begin March 2016 expiring
in February 2026. The future minimum payments associated with this agreement are as follows:
Year ending December 31, 2021232,484$
2022232,484
2023232,484
2024232,484
2025232,484
202638,747
$ 1,201,167
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, 2020 were $387,703. Future obligations over the primary terms of
the TownÓs leases as of December 31, 2020 are as follows:
Year ending December 31, 2021387,703$
2022322,655
2023291,834
2024275,881
2025271,166
202646,090
$ 1,595,329
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, 2020:
Condensed Statement of Net Position:
Due fromCapital AssetsDeferredOtherDeferred
Current PrimaryNet ofOutflowsCurrentLong-TermInflowsNet
AssetsGovernmentDepreciationof ResourcesLiabilitiesLiabilitiesof ResourcesPosition
Fishers Island
Ferry District$ 2,185,372$ 138,227$ 9,132,534$ 1,003,207$ 3,229,342$ 1,982,078$ 7,164,920$ 083,000
Fishers Island Waste
Management District5 33,841 2,102,41038,759 2,597,492
Cutchogue-New Suffolk
Park District* 150,37449,686 125,947 49,686 276,321
Southold Park District*313,790 127,542 724,022 1,216 127,542 1,036,596
Orient-East Marion
ParkDistrict* 4,63822,700 454,072163 22,700 458,547
Mattituck Park District* 384,128 108,164 1,598,303 1,556 108,164 1,980,875
Orient Mosquito District* 88,974 1,576 87,398
$ 446,3193,661,117$ 14,137,288$ 1,003,207$ 3,272,612$ 1,982,078$ 473,012$ 13,520,229$
*Unaudited component units.
-54-
TOWN OF SOUTHOLD
NOTES TO FINANCIAL STATEMENTS
December 31, 2020
E. CONDENSED FINANCIAL STATEMENTS FOR THE DISCRETELY PRESENTED COMPONENT UNITS
(continued)
Condensed Statement of Activities:
ProgramGeneral RevenueNet Position
Property
ExpensesRevenueNet ExpenseTaxOtherChange1/1/202012/31/2020
Fishers Island
Ferry District3,646,792$ 3,338,152$ 308,640$ 863,298$ 40,967$ 595,625$ 6,487,375$ 7,083,000$
Fishers Island Waste
Management District947,262 38,773 908,489 881,413 5,434 (21,642) 2,619,134 2,597,492
Cutchogue-New Suffolk
Park District*149,011 149,011 130,000 97 (18,914) 295,235 276,321
Southold Park District*351,254 14,570 336,684 334,280 7,967 5,563 1,031,033 1,036,596
Orient-East Marion
Park District*49,402 49,402 42,500 (6,902) 465,449 458,547
Mattituck Park District*591,729 32,578 559,151 283,000 681 (275,470) 2,256,345 1,980,875
Orient Mosquito District*104,564 104,564 94,850 32 (9,682) 97,080 87,398
$ 3,424,0735,840,014$ 2,415,941$ 2,629,341$ 55,178$ 268,578$ 13,251,651$ 13,520,229$
*Unaudited component units.
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 tax.
G. SUBSEQUENT EVENTS
Bond Anticipation Note Issuances
On September 22, 2021, the Town issued $10,937,722 Bond Anticipation Notes with an annual interest rate of
1.25% which matured on September 22, 2022.
On September 21, 2022, the Town issued $13,780,000 Bond Anticipation Notes with an annual interest rate of
3.75% which mature on September 21, 2023.
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TOWN OF SOUTHOLD
NOTES TO FINANCIAL STATEMENTS
December 31, 2020
H. NEW PRONOUNCEMENTS
The Governmental Accounting Standards Board (GASB) has issued the following Statements that may have
an impact on the TownÓs financial reporting:
Statement No. 87, ÐLeasesÑ, 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 governmentsÓ leasing activities. The
requirements of this Statement are effective for financial statements for the year ending December 31,
2022.
Statement No. 89, Ð Accounting for Interest Cost Incurred Before the End of a Construction PeriodÑ, 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 the year ending December 31, 2021.
Statement No. 91, Conduit Debt ObligationsÑ - This statement provides 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 Statement are effective for financial statements for the year ending
December 31, 2022.
Statement No. 92, ÐOmnibus 2020Ñ, as amended by Statement No. 95, ÐPostponement of the
Effective Dates of Certain Authoritative GuidanceÑ, 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 for the year ending December 31, 2022.
Statement No. 93, ÐReplacement of Interbank Offered RatesÑ, as amended by Statement No. 95,
ÐPostponement of the Effective Dates of Certain Authoritative GuidanceÑ, amends certain provisions
of GASB Statement No. 53, ÐAccounting and Financial Reporting for Derivative InstrumentsÑ as
amended) and 87, ÐLeasesÑ. 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 are effective for the year ending December 31, 2022.
Statement No. 94, ÐPublic-Private and Public-Public Partnerships and Availability Payment
ArrangementsÑ, this Statement has been issued to improve financial reporting related to public-
private and public-public partnership 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 the year ending December 31, 2023.
Statement No. 96, Ð Subscription-Based Technology Arrangements (SBITAs)Ñ, this Statement has
been issued to improve financial reporting by establishing a definition for SBITAs and providing
uniform guidance for accounting and financial reporting for transactions that meet the definition. The
requirements of this Statement are effective for the year ending December 31, 2023.
-56-
TOWN OF SOUTHOLD
NOTES TO FINANCIAL STATEMENTS
December 31, 2020
H. NEW PRONOUNCEMENTS (continued)
Statement No. 97, Ð Certain Component Unit Criteria, and Accounting and Financial Reporting for
Internal Revenue Code Section 457 Deferred Compensation PlansÑ Î an amendment of GASB
Statements No. 14 and No. 84, and a supersession of GASB Statement No. 32, the primary
objectives of this Statement are to (1) increase consistency and comparability related to the
reporting of fiduciary component units in circumstances in which a potential component unit does
not have a governing board, and the primary government performs the duties that a governing board
typically would perform; (2) mitigate costs associated with the reporting of certain defined
contribution pension plans, defined contribution other postemployment benefit (OPEB) plans and
employee benefit plans other than pension plans or OPEB plans as fiduciary component units in
fiduciary fund financial statements; and (3) enhance the relevance, consistency, and comparability
of the accounting and financial reporting for Internal Revenue Code (IRC) Section 457 deferred
compensation plans (Section 457 plans) that meet the definition of a pension plan and for benefits
provided through those plans. The requirements of this Statement that (1) exempt primary
governments that perform the duties that a governing board typically performs from treating the
absence of a governing board the same as the appointment of a voting majority of a governing
board in determining whether they are financially accountable for defined contribution pension
plans, defined contribution OPEB plans, or other employee benefit plans, and (2) limit the
applicability of the financial burden criterion in paragraph 7 of Statement No. 84 to defined benefit
pension plans and defined benefit OPEB plans that are administered through trusts that meet the
criteria in paragraph 3 of Statement No. 67 or paragraph 3 of Statement No. 74, respectively, are
effective immediately. The requirements of this Statement that are related to the accounting and
financial reporting for Section 457 plans are effective for financial statements for the year ending
December 31, 2022.
Statement No. 99, ÐOmnibus 2022Ñ, 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 certain requirements effective for the year ending December 31,
2023. The remaining requirements are effective for the year ending December 31, 2024.
Statement No. 100, Ð Accounting Changes and Error Corrections Î an Amendment of GASB
Statement No. 62Ñ, this Statement has been issued to enhance accounting and financial reporting
requirements for accounting changes and error corrections to provide more understandable,
reliable, relevant and comparable information for making decisions or assessing accountability. The
requirements of this Statement are effective for the year ending December 31, 2024.
Statement No. 101, Ð Compensated AbsencesÑ, this Statement has been issued to update the
recognition and measurement guidance for compensated absences. The requirements of this
Statement are effective for the year ending December 31, 2024.
The Town is currently evaluating the impact of the above pronouncements.
-57-
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.
TOWN OF SOUTHOLD
GENERAL FUND
SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES
IN FUND BALANCE - BUDGET AND ACTUAL
REQUIRED SUPPLEMENTARY INFORMATION
Year Ended December 31, 2020
Variance
OriginalFinalPositive
BudgetBudget ActualEncumbrances(Negative)
REVENUES
Real property taxes28,018,898$ 28,018,898$ 27,804,178$ (214,720)$
Other real property tax items81,000 81,000 91,781 10,781
Non-property tax items1,288,673 1,288,673 1,288,673 -0-
Departmental income405,800 405,800 358,044 (47,756)
Intergovernmental charges 146,757 146,757 110,821 (35,936)
Use of money and property264,791 264,791 256,942 (7,849)
Licenses and permits388,670 388,670 271,159 (117,511)
Fines and forfeitures320,100 330,100 460,247 130,147
Sale of property and compensation for loss162,650 171,519 67,336 (104,183)
Miscellaneous local sources313,200 339,098 91,751 (247,347)
Interfund revenues185,000 185,000 129,225 (55,775)
State aid1,710,363 1,710,363 1,883,953 173,590
Federal aid12,875 376,583 617,506 240,923
Total Revenues33,298,777 33,707,252 33,431,616 (275,636)
EXPENDITURES
Current:
General government support8,917,041 8,409,315 7,312,566 25,103$ 1,071,646
Public safety10,277,214 10,811,431 10,244,531 14,544 552,356
Public health43,300 43,300 43,300 -0-
Transportation503,531 865,824 814,585 51,239
Economic assistance and opportunity1,480,445 1,497,152 1,408,028 3,471 85,653
Culture and recreation448,487 448,487 351,171 1,340 95,976
Home and community services415,876 418,376 382,775 5,000 30,601
Employee benefits10,797,718 10,797,718 9,788,209 1,009,509
Debt service:
Principal381,000 381,000 381,000 -0-
Interest216,000 216,000 178,045 37,955
Total Expenditures33,480,612 33,888,603 30,904,210 49,458 2,934,935
Excess (Deficiency) of Revenues
Over (Under) Expenditures (181,351)(181,835) 2,527,406 (49,458) 2,659,299
OTHER FINANCING USES
Transfers out(867,853) (907,926) (692,295) 215,631
Total Other Financing Uses(867,853) (907,926) (692,295) -0- 215,631
Net Change in Fund Balance$ (1,089,277)(1,049,688)$ 1,835,111 (49,458)$ 2,874,930$
Fund Balance at Beginning of Year 12,847,702
Fund Balance at End of Year14,682,813$
See Paragraph on Required Supplementary Information Included in Auditors' Report.
-58-
TOWN OF SOUTHOLD
HIGHWAY FUND
SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES
IN FUND BALANCE - BUDGET AND ACTUAL
REQUIRED SUPPLEMENTARY INFORMATION
Year Ended December 31, 2020
Variance
OriginalFinalPositive
BudgetBudget ActualEncumbrances(Negative)
REVENUES
Real property taxes6,292,698$ 6,292,698$ 6,292,698$ -0-$
Other real property tax items1,350 1,350 1,641 291
Use of money and property15,000 15,000 14,919 (81)
Licenses and permits20,000 20,000 131,200 111,200
Sale of property and compensation for loss500 19,316 28,993 9,677
Miscellaneous local sources7,5577,557
State aid420,995477,773 477,773 -
Total Revenues6,750,543 6,826,137 6,954,781 128,644
EXPENDITURES
Current:
General government support68,301 68,301 66,794 1,507
Transportation3,612,661 3,688,055 3,126,854 14,615$ 546,586
Employee benefits2,187,012 2,187,012 1,745,402 441,610
Debt Service:
Principal113,000 113,000 113,000 -0-
Interest49,500 49,500 40,270 9,230
Total Expenditures6,030,474 6,105,868 5,092,320 14,615 998,933
Excess (Deficiency) of Revenues
Over (Under) Expenditures 720,269720,069 1,862,461 (14,615) 1,127,577
OTHER FINANCING USES
Transfers out(805,000) (910,000) (794,500) 115,500
Total Other Financing Uses(805,000) (910,000) (794,500) -0- 115,500
Net Change in Fund Balance$ (189,731)(84,931)$ 1,067,961 (14,615)$ 1,243,077$
Fund Balance at Beginning of Year 1,905,699
Fund Balance at End of Year2,973,660$
See Paragraph on Required Supplementary Information Included in Auditors' Report.
-59-
TOWN OF SOUTHOLD
COMMUNITY PRESERVATION FUND
SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES
IN FUND BALANCE - BUDGET AND ACTUAL
REQUIRED SUPPLEMENTARY INFORMATION
Year Ended December 31, 2020
Variance
OriginalFinalPositive
BudgetBudget ActualEncumbrances(Negative)
REVENUES
Non-property tax items7,000,000$ 7,000,000$ 10,828,223$ 3,828,223$
Use of money and property50,000 50,000 47,698 (2,302)
Sale of property and compensation 612
for loss -
Miscellaneous local sources 397 397
Total Revenues7,050,000 7,050,000 10,876,930 3,826,318
EXPENDITURES
Current:
General government support210,620210,62031,152179,468
Home and community services12,447,168 12,447,168 604,253 11,000$ 11,831,915
Employee benefits105,121105,12184,88820,233
Debt service:
Principal1,508,655 1,508,655 1,508,655 -0-
Interest597,315 597,315 597,315 - -0-
Total Expenditures14,868,879 14,868,879 2,826,263 11,000 12,031,616
Excess (Deficiency) of Revenues
Over (Under) Expenditures (7,818,879)(7,818,879) 8,050,667 (11,000) 15,857,934
Net Change in Fund Balance$ (7,818,879)$ 8,050,66(7,818,879) 7$ 15,857,93(11,000)$ 4
Fund Balance at Beginning of Year 9,848,669
Fund Balance at End of Year$ 17,899,336
See Paragraph on Required Supplementary Information Included in Auditors' Report.
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TOWN OF SOUTHOLD
SCHEDULE OF CHANGES IN THE TOWN'S TOTAL OTHER POSTEMPLOYMENT
BENEFIT LIABILITY AND RELATED RATIOS
REQUIRED SUPPLEMENTARY INFORMATION
Year Ended December 31, 2020
202020192018
Total OPEB Liability
Service Cost$ 3,340,354$ 1,913,830$ 1,822,695
Interest3,226,2592,708,1442,721,521
Differences between Actual and Expected Experience 8,515,166
Changes in Assumptions 21,353,355 4,(11,542,778) 162,884
fit Payments(2,507,492) (2,179,535) (1,871,347)
Bene
Net Change in Total OPEB Liability25,412,476 (585,173) 6,835,753
Total OPEB Liability - Beginning78,272,806 78,857,979 72,022,226
Total OPEB Liability - Ending$ 103,685,282$ 78,272,806$ 78,857,979
Covered employee payroll21,800,313$ 18,729,794$ 17,995,841$
Total OPEB liability as a percentage of covered payroll475.61%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.
following are the discount rates used in each period:
The
Discount rateJanuary 1, 20202.73%
January 1, 20194.10%
January 1, 20183.44%
January 1, 20173.78%
Medical Trend AssumptionJanuary 1, 2020Started at 8% in current year decreasing by .5% per year to an ultimate trend rate
of 5% after 7 years.
January 1, 2019Started at 8% in current year decreasing by .5% per year to an ultimate trend rate
of 5% after 7 years.
1, 2018Started at 10% decreasing by 1% over the next four years and 5% after 5 years.
January
Mortality RatesJanuary 1, 2020RP-2017 mortality table with projected mortality
1, 2019RP-2017 mortality table with projected mortality
January
January 1, 2018RP-2014 mortality table with projected mortality
See Paragraph on Required Supplementary Information Included in Auditors' Report.
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TOWN OF SOUTHOLD
SCHEDULE OF PENSION CONTRIBUTIONS
REQUIRED SUPPLEMENTARY INFORMATION
For the Year Ended December 31, 2020
Contributions
Recognized by the PlanContribution
Contractually in Relation to the Contributionas a Percentage
Years EndedRequired Contractuall
y Required DeficiencyCoveredof Covered
December 31,ContributionsContributions(excess)PayrollPayroll
ERS
20201,857,925$ 1,857,925$ -0-$ 13,150,975$ 14.13%
20191,825,922 1,825,922 -0- 13,396,868 13.63%
20181,709,862 1,709,862 -0- 12,081,905 14.15%
20171,740,156 1,740,156 -0- 11,706,859 14.86%
20161,783,174 1,783,174 -0- 11,594,297 15.38%
20151,981,226 1,981,226 -0- 11,429,154 17.33%
20142,053,052 2,053,052 -0- 11,076,674 18.53%
20132,362,280 2,362,280 -0- 10,713,710 22.05%
20121,915,070 1,915,070 -0- 10,813,507 17.71%
20111,649,526 1,649,526 -0- 10,343,478 15.95%
PFRS
20201,618,733$ 1,618,733$ -0-$ 7,140,672$ 22.67%
20191,583,285 1,583,285 -0- 6,843,730 23.13%
20181,606,947 1,606,947 -0- 6,943,972 23.14%
20171,677,894 1,677,894 -0- 6,971,643 24.07%
20161,587,581 1,587,581 -0- 7,139,568 22.24%
20151,762,500 1,762,500 -0- 6,769,147 26.04%
20141,455,243 1,455,243 -0- 6,737,987 21.60%
20132,073,878 2,073,878 -0- 6,127,253 33.85%
20121,209,715 1,209,715 -0- 6,410,344 18.87%
20111,308,331 1,308,331 -0- 6,057,237 21.60%
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.
See Paragraph on Required Supplementary Information Included in Auditors' Report.
-62-
TOWN OF SOUTHOLD
SCHEDULE OF PROPORTIONATE SHARE OF THE NET PENSION LIABILITY
REQUIRED SUPPLEMENTARY INFORMATION
For the Year Ended December 31, 2020
2020201920182017201620152014
ERS
Town's proportion of the net pension liability0.0407666%0.0404714%0.0415681%0.4315994%0.4164301%0.4180449%0.4180449%
Town's proportionate share of the net collective
pension liability10,795,228$ 2,909,885$ 1,380,222$ 4,073,415$ 6,686,629$ 1,412,260$ 1,889,088$
Town's covered-employee payroll13,437,810$ 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 payroll80.33%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 plan86.39%96.27%98.24%94.70%90.70%97.90%97.20%
PFRS
Town's proportion of the net pension liability0.1754425%0.1744053%0.1879416%0.1929522%0.2049668%0.1869100%0.1869100%
Town's proportionate share of the net collective
pension liability9,377,290$ 2,924,887$ 1,899,633$ 3,999,229$ 6,068,632$ 514,888$ 778,124$
Town's covered-employee payroll6,890,101$ 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 payroll136.10%42.19%27.39%58.07%89.89%8.35%11.93%
Plan net position as a percentage of the total
pension liability coming from plan84.86%95.09%96.93%93.50%90.20%99.90%98.50%
Notes:
Amounts presented above were determined as of the System's measurement date of March 31st.
There were no significant changes in benefits for the years presented above.
Changes in assumptions were as follows:
a) The discount rate used to calculate the total pension liability was decreased from 7.0% to 6.8% for both ERS and PFRS effective with the March 31, 2020 measurement date.
b) The assumptions for salary increases was increased from 3.8% to 4.2% for ERS and 4.5% to 5.0% for PFRS effective with the March 31, 2019 measurement date.
Amounts presented are based on the fiscal year related to the measurement date of March 31st.
This schedule is presented to illustrate the requirement to show information for 10 years. However, until a full 10 year trend is compiled, the Town presents information for those years
for which
information is available.
The increase in the proportionate share of the net pension liabilities is primarily attributable to a decrease in the plan fiduciary net position due to investment losses.
See Paragraph on Required Supplementary Information Included in Auditors' Report.
-63-
OTHER SUPPLEMENTARY
INFORMATION
TOWN OF SOUTHOLD
COMBINING BALANCE SHEET
NON-MAJOR GOVERNMENTAL FUNDS
December 31, 2020
Special Revenue Funds
East-West FireSoutholdFishersSolid WasteTotal
General FundSpecialProtectionWastewaterIsland SewerManagementNon-Major
Part TownGrantDistrictDistrictDistrictDistrictFunds
ASSETS
Cash and investments2,291,244$ 142,019$ 31,672$ 5,965$ 51,753$ 1,438,818$ 3,961,471$
Accounts receivable157,030 - 134,974 292,004
Due from other funds256,385 224,772 185 11,520 574,003 1,066,865
Due from other governments353,393 353,393
State and federal aid receivables142,277 49,401 191,678
Inventory of materials and supplies9,6329,632
Prepaids90,49 39,9585 130,45 3
Total Assets2,937,431$ 495,412$ 256,44$ 6,1504$ 63,273$ 2,246,78$ 6,005,496$ 6
LIABILITIES
Accounts payable and
accrued liabilities38,566$ 143,518$ 13,138$ 3,929$ 306,823$ 505,974$
Due to other funds 203,320 203,320
Unearned revenue140,515 148,57410,575 121,310 420,974
Total Liabilities179,081 495,412 13,138 -0-$ 14,504 428,133 1,130,268
DEFERRED INFLOWS OF RESOURCES
Unearned revenue from
real property taxes200,630 224,772 572,593 997,995
FUND BALANCES
Nonspendable90,495 164,54174,046
Committed836,293 836,293
Assigned1,630,932 18,534 6,150 48,769 1,172,014 2,876,399
Total Fund Balances2,557,720 -0- 18,534 6,150 48,769 1,246,060 3,877,233
Total Liabilities, Deferred Inflows of
of Resources and Fund Balances$ 495,4122,937,431$ 256,44$ 6,1504$ 63,273$ 2,246,78$ 6,005,496$ 6
See Paragraph on Other Supplementary Information Included in Auditors' Report.
-64-
TOWN OF SOUTHOLD
COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES
IN FUND BALANCES - NON-MAJOR GOVERNMENTAL FUNDS
For the Year Ended December 31, 2020
Special Revenue Funds
East-West FireSoutholdFishersSolid WasteTotal
General FundSpecialProtectionWastewaterIsland SewerManagementNon-Major
Part TownGrantDistrictDistrictDistrictDistrictFunds
REVENUES
Real property taxes893,318$ 835,899$ 2,073,258$ 3,802,475$
Other real property tax items233 233
Non-property tax items665,319 665,319
Departmental income993,459 1,305$ 30,268$ 1,919,752 2,944,784
Use of money and property5,528 610 62 8,527 14,727
Licenses and permits73,985 199,153125,168
Sales of property and compensation
for loss 134,256134,256
Miscellaneous local sources1,075 3,392 4,467
State aid103,328 20,200$ 123,528
Federal aid 345,893 345,893
Total Revenues2,736,245 366,093 836,509 1,305 30,330 4,264,353 8,234,835
EXPENDITURES
Current:
General government support235,844 4,828277,699 518,371
Public safety725,263 836,899 1,562,162
Home and community services794,237 171,093 10,983 2,823,638 3,799,951
Employee benefits790,510 329 676,966 1,467,805
Debt service:
Principal 7,292 235,053 242,345
Interest 1,796 83,230 85,026
Total Expenditures2,545,854 171,093 836,899 -0- 25,228 4,096,586 7,675,660
Excess (Deficiency) of Revenues
Over Expenditures 195,000190,391 (390) 1,305 5,102 167,767 559,175
Other Financing Uses:
Transfers out (195,000) (35,000) (230,000)
Total Other Financing Uses-0- (195,000) -0- -0- -0- (35,000) (230,000)
Net Change in Fund Balance -0-190,391 (390) 1,305 5,102 132,767 329,175
Fund Balances at Beginning of Year -0-2,367,329 18,924 4,845 43,667 1,113,293 3,548,058
Fund Balances at End of Year2,557,720$ -0-$ 18,534$ 6,150$ 48,769$ 1,246,060$ 3,877,233$
See Paragraph on Other Supplementary Information Included in Auditors' Report.
-65-
OTHER REPORTS
Report on Internal Control Over Financial Reporting and on Compliance and
Other MattersBased on an Audit of Financial Statements Performed in Accordance
With Government Auditing Standards
Independent AuditorsÓ Report
The Honorable Supervisor and Town Board of
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,
each major fund and the aggregate remaining fund information of the Town of Southold, New York (the
ÐTownÑ) as of and for the year ended December 31, 2020, and the related notes to the financial statements,
which collectively comprise the Town of Southold, New YorkÓs basic financial statements and have issued our
report thereon dated December 29, 2022.
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 YorkÓs financial statements. This report does not include the results of the other auditorsÓ
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 Government Auditing Standards.
The financial statements of the Town of SoutholdÓs 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 21.6%, 28.4% and 15.4%, 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 TownÓs internal control over
financial reporting (internal control) as a basis for designing 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 TownÓs internal control. Accordingly, we do not express an
opinion on the effectiveness of the TownÓs 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 entityÓs financial
statements will not be prevented, or detected and corrected on a timely basis. A significant deficiency is a
deficiency, or a 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.
PKF OÓCONNOR DAVIES LLP
878 Veterans Memorial Highway, Fourth Floor, Hauppauge, NY 11788 I Tel: 631.434.9500 I Fax: 631.434.9518 I www.pkfod.com
PKF OÓConnor Davies LLP is a member firm of the PKF International Limited network of legally independent firms and does not accept any responsibility or
liability for the actions or inactions on the part of any other individual member firm or firms.
Internal Control Over Financial Reporting (continued)
Our consideration of internal control was for the limited purpose described in the preceding paragraph 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 TownÓs 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
financial statements. 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 instances
of noncompliance or other matters that are required to be reported under Government Auditing Standards,
which are described in the accompanying schedule of findings as items 2020-001, 2020-002 and 2020-003.
TownÓs Response to Findings
Government Auditing Standards requires the auditor to perform limited procedures on the Town's response to
the findings identified in our audit and described in the accompanying schedule of findings. the Town's
response was not subjected to the other auditing procedures applied in the audit of the financial statements
and, accordingly, we express no opinion on the response.
Purpose of This 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
YorkÓs 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 YorkÓs internal control and
compliance. Accordingly, this communication is not suitable for any other purpose.
Hauppauge, New York
December 29, 2022
-67-
TOWN OF SOUTHOLD
SCHEDULE OF FINDINGS
December 31, 2020
2020-001 JUSTICE COURT AUDIT Î COMPLIANCE AND OTHER MATTER
Criteria
New York State Law §2019-a of the Uniform Justice Court Act states that it is the duty of each
Justice, at least once a year and upon the last audit day, to present the records and docket to the
auditing board of the Town or to a certified public accountant or public accountant, which shall
examine the records and docket and a report be submitted and documented in the Board minutes
stating that the records and dockets were examined and that the fines therein collected have been
turned over to the proper officials of the Town as required by law.
Per the New York State Handbook for Town and Village Justices and Court Clerks, the Chief
Administrative Judge of the Office of the Court Administration will request that mayors and supervisors
submit a copy of the annual audit.
Condition
The Town has engaged a public accounting firm to complete the Justice Court annual audits for years
ended December 31, 2019, December 31, 2020, and December 31, 2021, however as of the date of
this report, the Town was not able to complete the annual audits. Therefore, the Town is not in
compliance with the laws and regulations applicable to Town Justice Courts.
Effect
The Town is not in compliance with State or Town Law.
Recommendation
We recommend the Town work with the Town of Southold, Justice Court to ensure that the annual
2019, 2020 and 2021 audits are completed as required, and that annual audits of the Justice Court for
future periods be completed in a timely manner.
Views of Responsible Officials
The aforementioned reports are completed and schedule to be issued soon. Due to various internal
and external factors, including COVID-19, these audits were performed later than usual. This
situation was highly unusual and is not expected to repeat.
-68-
TOWN OF SOUTHOLD
SCHEDULE OF FINDINGS
December 31, 2020
2020-002 REAL PROPERTY TAX CAP - COMPLIANCE AND OTHER MATTER
Criteria
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. If a municipality adopts a property tax levy that
exceeds the tax levy limit without proper authorization, any property taxes collected in excess of the tax
levy limit must be transferred to a reserve for excess levy, and be utilized to reduce the property tax levy
in the subsequent fiscal year.
Condition
The Town adopted a property tax levy in excess of the tax levy limit for fiscal years ended December
31, 2019, December 31, 2020 and December 31, 2021. The Town did not authorize the excess levy
by a 60% vote and adoption of a local law for any of these years.
Effect
The Town is not in compliance with Chapter 97 of the Laws of 2011, Real Property Tax Levy Cap
and Mandate Relief Provisions.
Recommendation
We recommend the Town implement procedures for a review of the tax levy limit calculation prior to
submission, and that the Town ensure that the annual property tax levy does not exceed the tax levy
limit without proper authorization. We also recommend that funds collected in excess of the Real
Property Tax Levy Cap be placed in a reserve and utilized to reduce the property tax levy in 2023.
Views of Responsible Officials
The excess amount levied resulted from erroneously including tax certiorari chargeback costs in the
TownÓs tax cap. Once that item was removed and the cap amount was recalculated retroactively, it
was determined that we exceeded the cap without authorization. The Town has removed this piece
from the calculation of the tax levy limit going forward and the excess will be recouped with the 2023
tax levy. Additional review procedures will also be implemented.
-69-
TOWN OF SOUTHOLD
SCHEDULE OF FINDINGS
December 31, 2020
2020-003 SINGLE AUDIT - COMPLIANCE AND OTHER MATTER
Criteria
Tile 2 CFR § 200.512 (a) of the Uniform Administrative Requirements, Cost Principles, and Audit
Requirements for Federal Awards requires non-federal entities that expend $750,000 or more in
federal awards during the entityÓs fiscal year to have a single audit for that year, which must be
submitted within the earlier of 30 calendar day after the receipt of the auditorÓs report, or nine months
after the end of the audit period.
Condition
During fiscal years ended December 31, 2020 and December 31, 2021, the Town expended more
than $750,000 in federal awards. The single audits for these fiscal years were not submitted by the
statutory due dates.
Effect
The Town is not in compliance with Tile 2 CFR § 200.512 (a) of the Uniform Administrative
Requirements, Cost Principles, and Audit Requirements for Federal Awards.
Recommendation
We recommend the Town ensure that federal single audits are completed and submitted timely.
Views of Responsible Officials
During 2020, the Town received additional federal funding for various projects, including funding to
purchase a harbor patrol boat, and capital improvements to the airport, which is administered by a
component unit. This funding was not initially included in the calculations for Single Audit purposes.
In future periods, all federal funding, including amounts from certain component units, will be
considered in determining Single Audit requirements. Additionally, once 2021 is filed, the town will
ensure 2022 and forward is filed timely.
-70-
' COW
OCONNOR
DAVIES C C
ACCOUNTANTS AND ADVISORS RECEIVED
December 29, 2022 JAN 13 2023
Honorable Supervisor and Town Board Southold Town Clerk
Town of Southold
Southold, New York
We have audited the financial statements of the governmental activities, each major fund and the
aggregate remaining fund information*of the Town of Southold, New York (the "Town") for the year
ended December 31, 2020. Professional standards require that we provide you with information about
our responsibilities under auditing standards generally accepted in the United State of America, as
well as certain information related to the planned scope and timing of our audit. We have
communicated such information in our letter to you dated July 29, 2021. This letter provides additional
required communications related to our audit.
Our responsibility under professional standards
Our responsibility is to form and express an opinion about whether the financial statements, which are
the responsibility of management, are presented fairly, in all material respects, in conformity with
accounting principles generally accepted in the United States of America ("US GAAP"). Those
individuals charged with governance of the Town are responsible for the oversight of the financial
reporting process, and our audit does not relieve management and those charged with governance of
their respective responsibilities.
Our responsibility for the supplementary information accompanying the financial statements is to
evaluate the presentation of the supplementary information in relation to the financial statements as a
whole and to report on whether the supplementary information is fairly stated, in all material respects,
in relation to the financial statements as a whole.
With respect to such supplementary information, we made certain inquiries of management and
evaluated the form, content and methods of preparing the information to determine that the
information complies with US GAAP, the method of preparing it has not changed from the prior period,
and the information is appropriate and complete in relation to our audit of the financial statements. We
compared and reconciled the supplementary information to the underlying accounting records used to
prepare the financial statements or to the financial statements themselves.
Our responsibility as auditors for other information in documents containing the audited financial
statements does not extend beyond the financial information identified in the audit report, and we are
not required to perform any procedures to determine that such other information is properly stated.
However, in accordance with professional standards, we have read the information and considered
whether such information, or the manner of its presentation, was materially inconsistent with its
presentation in the financial statements.
Nothing came to our attention that caused us to believe that any such material inconsistencies exist or
that the information contains a material misstatement of fact.
PKF O'CONNOR DAVIES LLP
878 Veterans Memorial Highway,Fourth Floor,Hauppauge,NY 11788 1 Tel:631.434.9500 1 Fax:631.434.9518 1 www.pkfod.com
PKF O'Connor Davies LLP is a member firm of the PKF International Limited network of legally independent firms and does not accept any responsibility or
liability for the actions or inactions on the part of any other individual member firm or firms.
Qualitative aspects of significant accounting practices
Significant accounting policies
Management is responsible for the selection and use of appropriate accounting policies. The
significant accounting policies used by the Town are described in Note A to the financial statements.
As described in Note A7, the Town changed accounting policies related to fiduciary activities by
adopting Statement of Governmental Accounting Standards Board ("GASB") Statement No. 84,
"Fiduciary Activities" in 2020. This statement restructured the definition of fiduciary activities and
abolished the former terminology of trust and agency funds.
The impact of implementing this statement on the Town's financial statements is as follows:
• Assets and liabilities formerly reported in the trust and agency fund were reclassified to various
governmental funds balance sheet in 2020, resulting in an increase in cash and other liabilities
of $96,337, and accordingly reported in the governmental activities statement of net position
as well.
• The Town's fiduciary activities consist of primarily real property taxes billed and collected on
behalf of other municipalities/governments, and bail collected and held on behalf of others.
These amounts are reported in the statement of fiduciary net position and statement of
changes in fiduciary net position.
No matters have come to our attention that would require us to inform you about (1) the methods used
to account for significant unusual transactions, and (2) the effect of significant accounting policies in
controversial or emerging areas for which there is a lack of authoritative guidance or consensus.
Significant accounting estimates
Accounting estimates made by management are an integral part of the financial statements and are
based on management's knowledge and experience about past and current events and assumptions
about future events. Actual results could differ from those estimates.
Certain accounting estimates are particularly sensitive because of their significance to financial
statements and their susceptibility to change, such as:
• The Town recorded depreciation expense in the amount of $2,996,702. Management based
this estimate on the estimated useful lives of the capital assets determined by the Town. We
evaluated the key factors and assumptions used to develop the depreciation expense in
determining that it is reasonable in relation to the financial statements taken as a whole.
• Management's estimate of the claims and judgments liability of$824,762 is based on what the
Town expects their liability to be on open general and auto liability claims, workers'
compensation claims and all other claims against the Town. We evaluated the key factors and
assumptions used to develop the claims and judgments liability in determining that it is
reasonable in relation to the financial statements taken as a whole.
PKF O'CONNOR DAVIES LLP
878 Veterans Memorial Highway,Fourth Floor,Hauppauge,NY 11788 1 Tel:631.434.9500 1 Fax:631.434.9518 1 www.pkfod.com
PKF O'Connor Davies LLP is a member firm of the PKF International Limited network of legally independent firms and does not accept any responsibility or
liability for the actions or inactions on the part of any other individual member firm or firms.
1�f4
Qualitative aspects of significant accounting practices (continued)
Significant accounting estimates (continued)
• Management's estimate of the liability for compensated absences in the amount of$9,556,996,
is based on vested or accumulated vacation or sick leave for the Town's employees as of the
balance sheet date. We evaluated the key factors and assumptions used to develop the
liability for compensated absences in determining that it is reasonable in relation to the
financial statements taken as a whole.
• Management's estimate for landfill closure and post closure care costs of $358,987 is based
on what the Town expects to pay for the monitoring and maintenance costs of their landfill over
fourteen years based on an estimate provided by engineers. We evaluated the key factors and
assumptions used to develop the landfill closure and post-closure care costs in determining
that it is reasonable in relation to the financial statements taken as a whole.
• Management's estimate of the total other postemployment benefits ("OPEB") liability of
$103,685,282 is based on what the most recent actuarial valuation and has been measured
under the provisions of GASB Statement 75. We evaluated the key factors and assumptions
used to develop the other post-employment benefits liability in determining that it is reasonable
in relation to the financial statements taken as a whole.
• Management's estimate of the net pension liability of $20,172,518 is recorded as a liability at
December 31, 2020 and represents the Town's proportionate share of the collective net
pension liability of the Systems, measured as of the Systems' measurement date of March 31,
2020. We have evaluated key factors and assumptions used in developing the net pension
liability in determining that it is reasonable in relation to the financial statements taken as a
whole.
Management believes that the estimates used and assumptions made are adequate based on the
information currently available. We evaluated the key factors and assumptions used to develop the
estimates in determining that they are reasonable in relation to the financial statements as a whole.
Financial statement disclosures
Certain financial statement disclosures involve significant judgment and are particularly sensitive
because of their significance to financial statement users. The most sensitive disclosures affecting the
financial statements relate to implementation of GASB Statement No. 84, "Fiduciary Activities."
The financial statement disclosures are consistent and clear.
Significant difficulties encountered during the audit
We encountered no significant difficulties in dealing with management relating to the performance of
the audit.
Uncorrected and corrected misstatements
Professional standards require us to accumulate all known and likely misstatements identified during
the audit, other than those that we believe are trivial, and communicate them to the appropriate level
of management.
We are required to communicate to you misstatements that remain uncorrected, including any related
to prior periods, and the effect, if any, that they may have on the opinion in our report, and request
their correction. There are no such financial statement misstatements that remian uncorrected.
Uncorrected and corrected misstatements (continued)
In addition, we are required to communicate to you all material, corrected misstatements that were
brought to the attention of management as a result of our audit procedures. None of the
misstatements identified by us and corrected by management were material, either individually or in
the aggregate, to the financial statements taken as a whole.
Disagreements with management
For purposes of this letter, a disagreement with management is a matter, whether or not resolved to
our satisfaction, concerning financial accounting, reporting, or auditing, which could be significant to
the financial statements or the auditors' report. No such disagreements arose during the course of
the audit.
Representations requested from management
We have requested certain written representations from management in a separate letter dated
December 29, 2022.
Management's consultations with other accountants
In some cases, management may decide to consult with other accountants about auditing and
accounting matters. Management informed us that, and to the best of our knowledge, there were no
consultations with other accountants regarding auditing and accounting matters.
Other matters discussed with management
We generally discuss with management a variety of matters, including the application of accounting
principles and auditing standards, business conditions affecting the Company, and business plans
and strategies that may affect the risks of material misstatement. None of the matters discussed and
our responses thereto were a condition to our retention as auditors.
We have provided our comments regarding control deficiencies, a material weakness, and other
matters noted during our audit in a separate letter to you dated December 29, 2022.
Auditor independence
We affirm that PKF O'Connor Davies, LLP is independent with respect to the Town in accordance with
the AICPA's Code of Professional Conduct.
This communication is intended solely for the information and use of the Town Board and
management of the Town and is not intended to be and should not be used by anyone other than
these specified parties.
Yours sincerely,
PAF"N'&no.2.
PKF O'Connor Davies, LLP
Hauppauge, NY
J PKF
C CONNOR
DAVIES RECEIVED
ACCOUNTANTS AND ADVISORS
JAN
December 29, 2022 7 3 2023
To the Honorable Supervisor and Town Board Southold Town Clerk
Town of Southold, Southold New York
Auditors' Communication on Internal Control
In planning and performing our audit of the financial statements of the Town of Southold, New York (the
"Town") as of and for the year, ended December 31, 2020, 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,
we considered the Town's internal control over financial reporting as a basis for designing our auditing
procedures 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's internal control over financial
reporting. Accordingly, we do not express an opinion on the effectiveness of the Town's internal control
over financial reporting.
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
combination of deficiencies, in internal control, such that there is a reasonable possibility that a
material misstatement of the entity's financial statements will not be prevented, or detected and
corrected, on a timely basis. A separate report dated December 29, 2022 contains our report on
compliance and other matters in the Town's internal control. This letter does not affect our report,
dated December 29, 2022 on the financial statements of the Town of Southold, New York.
Our consideration of internal control was for the limited purpose described in the first paragraph and
was not designed to identify all deficiencies in internal control that might be material weaknesses.
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.
During the audit we became aware of several control deficiencies and other matters that are
opportunities for strengthening internal controls and operating efficiency. The memorandum that
accompanies this letter summarizes our comments and suggestions regarding these matters.
This communication is intended solely for the information and use of the Town Board, Audit
Committee, management, others you deem appropriate within the Town, and any governmental
authorities you need to share this information with. It is not intended for use by anyone other than these
specified parties.
AW iP 1 d mto-, �, LS P
PKF O'Connor Daviesi LLP
Hauppauge, NY
PKF O'CONNOR DAVIES LLP
878 Veterans Memorial Highway,Fourth Floor,Hauppauge,NY 11788 I Tel:631.434.9500 I Fax:631.434.9518 I www.pkfod.com
PKF O'Connor Davies LLP is a member firm of the PKF International Limited network of legally independent firms and does not accept any responsibility or liability for the
actions or inactions on the part of any other individual member firm or firms.
Town of Southold
December 29, 2022
Page 2
SEGREGATION OF DUTIES - RECEIVER OF TAXES (REPEAT FINDING)
Observation
Internal controls should be in place to provide for segregation of duties within accounting functions
relating to cash receipts, check signing and bank reconciliations to reduce the risk of potential errors
and fraud. We noted a lack of segregation of duties within the Office of the Receiver of Taxes. The
Receiver of Taxes is the only authorized check signer, prepares the deposit slips, brings the deposit
to the bank, receives the bank statements, and reconciles the bank accounts.
Recommendation
We recommend that the Receiver of Taxes duties of preparing the bank deposit, depositing the funds
and reconciling the bank statement be assigned to some other employee in order to establish a
proper segregation of duties over cash receipts.
SEGREGATION OF DUTIES AND DOCUMENT OF CASH COUNT AT SOLID WASTE
DEPARTMENT (REPEAT FINDING)
Observation
During the 2020 audit, we noted that the Solid Waste Management office personnel shares in the
daily accounting functions for cash received in the office which includes: access to cash receipts,
recording receipts in the software and depositing cash receipts into the bank account. In addition, the
daily cash log was discarded prematurely, therefore not allowing the auditors to review it during
fieldwork.
Recommendation
We recommend that the Solid Waste Department develop a procedure that would separate these
duties by having another employee verify the cash collected and document that second cash count
by initialing the documentation and another employee review the deposit slip by verifying the totals
match and initialing the deposit slip before it is sent to the bank. In addition, all records verifying cash
counts should be maintained properly and in accordance with the Town's records retention policy.
ANNUAL ADOPTION OF TOWN POLICIES (REPEAT FINDING)
Observation
During our audit, we noted that the Town's various significant policies (i.e. investment, etc.) are not
being adopted annually.
Recommendation
We recommend, in accordance with New York State Comptroller Guidance that these policies be
reviewed by the governing board at least annually at the Town's organizational meeting or soon
thereafter. In addition, the policies should also be reviewed and readopted if they are amended or
updated in any way.
�f
Town of Southold
December 29, 2022
Page 3
SICK AND VACATION ACCRUALS (REPEAT FINDING)
Observation
During our audit, it was noted that certain individuals balances at year end are in excess of allowable
amounts in accordance with contract agreements. It was also noted that all timekeeping records for
sick and vacation time are not centrally maintained in the Comptroller's office where the personnel
function operates.
Recommendation
These balances at year-end should be reviewed by department heads to ensure all accrual amounts
are capped in accordance with each employees' contract (i.e. CSEA, PBA) and then accurately
reported to the Comptroller's Office. In addition, it was noted that time keeping procedures and
record keeping are being maintained separately by specific departments (i.e. Police, Solid Waste and
Highway) regarding sick and vacation hours earned and taken. These functions should be
maintained in the Comptroller's office so that an independent review of these records can be
performed on a regular basis to be reported.
CAPITAL PROJECTS TRACKING
Observation
During our audit, it was noted that the Town does not have procedures in place to track fund balance
in the capital projects fund by individual project.
Recommendation
We recommend that the Town implement procedures to track fund balance in the capital projects
fund by individual project to ensure that funding is obtained within the authorized period, and to assist
in accounting for and returning unused funds for each project in accordance with the original funding
source.