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Home My WebLink About2022 CUTCHOGUE FIRE DISTRICT ANNUAL FINANCIAL REPORT December 31, 2022 TABLE OF CONTENTS PAGE INDEPENDENT AUDITOR'S REPORT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A ANNUAL FINANCIAL REPORT UPDATE DOCUMENT FINANCIAL SECTION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 SUPPLEMENTAL SECTION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 NOTES TO ANNUAL FINANCIAL REPORT UPDATE DOCUMENT . . . . . . . . 27 INDEPENDENT AUDITOR'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF ANNUAL FINANCIAL REPORT UPDATE DOCUMENT PERFORMED IN ACCORDANCE WITH GOVERNMENT A UDITING STANDARDS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46 bQ,HEEHAN ACCOUNTANTSID I 165 Orinoco Drive Brightwaters,NY 11718 T:631.665.7040 1 F:631.665.7014 15 South Bayles Avenue Port Washington,NY 11050 T:516.883.5510 1 F:516.767.7438 www.sheehancpa.com INDEPENDENT AUDITOR'S REPORT To the Board of Fire Commissioners Cutchogue Fire District Cutchogue, New York Report on the Audit of the Annual Financial Report Update Document Unmodified Opinion on Regulatory Basis of Accounting We have audited the accompanying Annual Financial Report Update Document (Financial Section) of Cutchogue Fire District (the District), as of and for the year ended December 31, 2022 and the related notes to the Annual Financial Report Update Document, which collectively comprise the District's basic financial statements as listed in the table of contents. In our opinion, the Annual Financial Report Update Document (Financial Section) referred to above presents fairly, in all material respects, the assets, liabilities and fund balances of the District, as of December 31, 2022, and the revenues it received, and expenditures made for the year then ended in conformity with the basis of accounting described in Note 1. Adverse Opinion on U.S. Generally Accepted Accounting Principles In our opinion, because of the significance of the matter discussed in the Basis for Adverse Opinion on U.S. Generally Accepted Accounting Principles paragraph, the Annual Financial Report Update Document (Financial Section) referred to above does not present fairly, in accordance with accounting principles generally accepted in the United States of America, the financial position of the District as of December 31, 2022, or changes in financial position for the year then ended. Basis for Adverse Opinion on U.S. Generally Accepted Accounting Principles and Unmodified Opinion on Regulatory Basis of Accounting As described more fully in Note 1, the District prepares its Annual Financial Report Update Document (Financial Section) using accounting practices prescribed or permitted by the New York State Office of the State Comptroller, which is a basis of accounting other than accounting -A- An Independent Member of the BDO Alliance USA To the Board of Fire Commissioners Cutchogue Fire District Page A2 principles generally accepted in the United States of America, to meet the requirements of the New York State Office of the State Comptroller. The effects on the Annual Financial Report Update Document (Financial Section) of the variances between the regulatory basis of accounting described in Note 1 and accounting principles generally accepted in the United States of America, although not reasonably determinable, are presumed to be material. 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. Our responsibilities under those standards are further described in the Auditor's Responsibilities for the Audit of the Annual Financial Report Update Document (Financial Section) section of our report. We are required to be independent of the District and to meet our other ethical responsibilities, in accordance with the relevant ethical requirements relating to our audit. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our unmodified audit opinion on the regulatory basis of accounting. Responsibilities of Management for the Annual Financial Report Update Document (Financial Section) Management is responsible for the preparation and fair presentation of the Annual Financial Report Update Document (Financial Section) in accordance with the financial reporting provisions of the New York State Office of the State Comptroller, as described in Note 1. Management is also responsible for the design, implementation and maintenance of internal control relevant to the preparation and fair presentation of the Annual Financial Report Update Document (Financial Section) that is free from material misstatement, whether due to fraud or error. In preparing the financial statements, management is required to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the District's ability to continue as a going concern within one year after the date the financial statements are available to be issued. Auditor's Responsibilities for the Audit of the Annual Financial Report Update Document (Financial Section) Our objectives are to obtain reasonable assurance about whether the Annual Financial Report Update Document (Financial Section) as a whole is free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with generally accepted auditing standards and Government Auditing Standards will always detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting To the Board of Fire Commissioners Cutchogue Fire District Page A3 from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Misstatements are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgement made by a reasonable user based on the Annual Financial Report Update Document(Financial Section). In performing an audit in accordance with generally accepted auditing standards and Government Auditing Standards, we: • Exercise professional judgement and maintain professional skepticism throughout the audit. • Identify and assess the risks of material misstatement of the Annual Financial Report Update Document (Financial Section), whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the Annual Financial Report Update Document(Financial Section). • Obtain an understanding of internal control relevant to the audit 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 District's internal control. Accordingly, no such opinion is expressed. • Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the Annual Financial Report Update Document(Financial Section). • Conclude whether, in our judgement there are conditions or events, considered in the aggregate, that raise substantial doubt about the District's ability to continue as a going concern for a reasonable period of time. We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit, significant audit findings, and certain internal control-related matters that we identified during the audit. Other Information Management is responsible for the other information included in the Annual Financial Report Update Document. The other information comprises the supplemental section, except for the Fire District Questionnaire, listed on page two of the Annual Financial Report Update Document but does not include the basic financial section and our auditor's report thereon. Our opinion on the Annual Financial Report Update Document (Financial Section) does not cover the supplemental section except for the Fire District Questionnaire, and we do not express an opinion or any form of assurance thereon. bSHEEHAN To the Board of Fire Commissioners Cutchogue Fire District Page A4 In connection with out audit of the Annual Financial Report Update Document (Financial Section), our responsibility is to read the other information and consider whether a material inconsistency exists between the other information and the basic financial statements, or the other information otherwise appears to be materially misstated. If, based on the work performed, we conclude that an uncorrected material misstatement of the other information exists, we are required to describe it in our report. Other Reporting Required by Government Auditinz Standards In accordance with Government Auditing Standards, we have also issued our report dated March 29, 2023 on our consideration of the District's internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, 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 the effectiveness of the District's 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 District's internal control over financial reporting and compliance. Brightwaters, New York March 29, 2023 All Numbers in This Report Have Been Rounded To The Nearest Dollar ANNUAL FINANCIAL REPORT UPDATE DOCUMENT For The FIRE DISTRICT of Cutchogue County of Suffolk For the Fiscal Year Ended 12/31/2022 ************************************************************************************************************************************* AUTHORIZATION ARTICLE 3, SECTION 30 of the GENERAL MUNICPAL LAW: 1. ***Every Municipal Corporation ***shall annually make a report of its financial condition to the Comptroller. Such report shall be made by the Chief Fiscal Officer of such Municipal Corporation *** 5. All reports shall be certified by the officer making the same and shall be filed with the Comptroller*** It shall be the duty of the incumbent officer at the time such reports are required to be filed with the Comptroller to file such report*** State of NEW YORK Office of The State Comptroller Division of Local Government and School Accountability Albany, New York 12236 Page 1 FIRE DISTRICT OF Cutchogue *** FINANCIAL SECTION *** Financial Information for the following funds and account groups are included in the Annual Financial Report filed by your government for the fiscal year ended 2021 and has been used by the OSC as the basis for preparing this update document for the fiscal year ended 2022: (A) GENERAL (H) CAPITAL PROJECTS (K) GENERAL FIXED ASSETS (W) GENERAL LONG-TERM DEBT All amounts included in this update document for 2021 represent data filed by your government with OSC as reviewed and adjusted where necessary. *** SUPPLEMENTAL SECTION *** The Supplemental Section includes the following sections: 1) Statement of Indebtedness 2) Schedule of Time Deposits and Investments 3) Bank Reconciliation 4) Local Government Questionnaire 5) Schedule of Employee and Retiree Benefits 6) Schedule of Energy Costs and Consumption All numbers in this report will be rounded to the nearest dollar. Page 2 Cutchogue FIRE DISTRICT Annual Update Document For the Fiscal Year Ending 2022 (A)GENERAL Balance Sheet Assets Cash 650,485 A200 963,373 Cash Special Reserves 1,682,071 A230 1,885,942 Service Award Program Assets 3,269,922 A461 3,502,929 Page 3 OSC Municipality Code 471179002500 Cutchogue FIRE DISTRICT Annual Update Document For the Fiscal Year Ending 2022 (A)GENERAL Balance Sheet NOMW Accounts Payable 56,033 A600 56,217 Accrueedr Liabililliitiesrrr�/ 15,793 A601 16,165 Fund Balance Capital Reserve 1,682,071 A878 1,885,942 Restricted for Service Award Program 3,269,922 A895 3,502,929 Assigned Unappropriated Fund Balance 33,484 A915 106,127 Unassigned Fund Balance 545,175 A917 784,8644 1{1f��iffill�iffr�r((f1m`RIIII�IIIy��f�ffff'fff�ff/ffffffffffffffffffff�frffff(f/ff�fffffffffffffffffffffffffffffffffff�ffffrfffffffffffffffff�ff�ffffrfffffffffffffffff�ffffffffffff/fffffffffffffffffffffffffffffffffffffffffffffffffffffffffffffffffffffffffffffffffffffffffffffffffffffffffffffffffffffffffffffffffffffffffffffffffffffffffffffffffffffffffff�l��(f��,'��rrr �rr Page 4 OSC Municipality Code 471179002500 Cutchogue FIRE DISTRICT Annual Update Document For the Fiscal Year Ending 2022 (A)GENERAL Results of Operation Revenues Real Property Taxes 1,691,135 A1001 1,956,185 Other Payments In Lieu of Taxes A1081 13,894 Interest And Earnings 99,011 A2401 96,667 Rental of Real Property 1,075 A2410 1,625 Sales of Equipment 16,128 A2665 1,000 Refunds of Prior Year's Expenditures 120 A2701 50 {Unclassified(specify) r �5 A2770 Page 5 OSC Municipality Code 471179002500 Cutchogue FIRE DISTRICT Annual Update Document For the Fiscal Year Ending 2022 (A)GENERAL Results of Operation Expenditures Fire, Pers Sery 215,780 A34101 220,088 Fire, Equip&Cap Outlay 261,061 A34102 107,397 Fire, Contr Expend 504,201 A34104 589,505 State Retirement System 3,863 A90108 5,797 Local Pension Fund, Empl Bnfts 199,733 A90258 246,219 Social Security, Employer Cont 16,509 A90308 16,837 Worker's Compensation, Empl Bnfts 77,615 A90408 51,838 Life Insurance, Empl Bnfts 6,173 A90458 8,669 Unemployment Insurance, Empl Bnfts 2,182 A90508 2,724 Disability Insurance, Empl Bnfts 587 A90558 637 Hospital&Medical(dental) Ins, Empl Bnft 11,392 A90608 14,579 Install Pur Debt, Principal 47,961 A97856 Leases, Principal A97886 49,220 ��f � i��(rrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrr ��jjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjj�r Install Pur Debt, Interest 7,962 A97857 Leases, Interest A97887 6,701 Page 6 OSC Municipality Code 471179002500 Cutchogue FIRE DISTRICT Annual Update Document For the Fiscal Year Ending 2022 (A)GENERAL Analysis of Changes in Fund Balance Analysis of Changes in Fund Balance Fund Balance-Beginning of Year 5,078,197 A8021 5,530,652 Prior Period Adj-Increase In Fund Balance A8012 Restated Fund Balance-Beg of Year 5,078,197 A8022 5,530,652 ADD-REVENUES AND OTHER SOURCES 1,807,474 2,069,421 DEDUCT-EXPENDITURES AND OTHER USES 1,355,019 1,320,211 Fund Balance-End of Year 5,530,652 A8029 6,279,862 Page 7 OSC Municipality Code 471179002500 Cutchogue FIRE DISTRICT Annual Update Document For the Fiscal Year Ending 2022 (A)GENERAL Budget Summary NN Estimated Revenues Est Rev-Real Property Taxes 1,956,178 A1049N 2,022,529 Est Rev-Use of Money And Property 2,500 A2499N 3,050 Page 8 OSC Municipality Code 471179002500 Cutchogue FIRE DISTRICT Annual Update Document For the Fiscal Year Ending 2022 (A)GENERAL Budget Summary NN Appropriations App-Public Safety 1,084,600 A3999N 1,120,450 App-Employee Benefits 568,050 A9199N 534,100 App-Debt Service 56,028 A9899N 56,029 Other Budgetary Purposes 250,000 A962N 315,000 Page 9 OSC Municipality Code 471179002500 Cutchogue FIRE DISTRICT Annual Update Document For the Fiscal Year Ending 2022 Balance Sheet Page 10 Cutchogue FIRE DISTRICT Annual Update Document For the Fiscal Year Ending 2022 Balance Sheet Page 11 Cutchogue FIRE DISTRICT Annual Update Document For the Fiscal Year Ending 2022 Results of Operation Page 12 Cutchogue FIRE DISTRICT Annual Update Document For the Fiscal Year Ending 2022 Results of Operation Page 13 Cutchogue FIRE DISTRICT Annual Update Document For the Fiscal Year Ending 2022 (H)CAPITAL PROJECTS Analysis of Changes in Fund Balance Analysis of Changes in Fund Balance Fund Balance-Beginning of Year H8021 Restated Fund Balance-Beg of Year H8022 Fund Balance-End of Year H8029 Page 14 OSC Municipality Code 471179002500 Cutchogue FIRE DISTRICT Annual Update Document For the Fiscal Year Ending 2022 (K)GENERAL FIXED ASSETS Balance Sheet Assets Land 1,053,403 K101 1,053,403 Buildings 1,579,876 K102 1,579,876 Improvements Other Than Buildings 297,207 K103 297,207 Machinery And Equipment 4,753,942 K104 4,037,311 Infrastructure 425,648 K106 425,648 Net Pension Asset-Proportionate Share K108 4,984 Accum Deprec, Buildings -795,879 K112 -795,879 Accum Depr, Imp Other Than Bld -178,424 K113 -178,424 Accum Depr, Machinery& Equip -2,812,887 K114 -2,651,643 Accum Deprec, Infrastructure -382,146 K116 -382,146 Intangible Lease Asset-Mach& Equip K124 716,631 Accum Amort, Intang�Lease Asset-Mach& Equ K134 -197,076 Page 15 OSC Municipality Code 471179002500 Cutchogue FIRE DISTRICT Annual Update Document For the Fiscal Year Ending 2022 (K)GENERAL FIXED ASSETS Balance Sheet Liabilities Total Non-Current Govt Assets � 3,940,740 K159 3,909,892 ��II�I� ��rll��ll � r�rrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrr�� rrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrr�,/, ei IIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIII�Y+�� Page 16 OSC Municipality Code 471179002500 Cutchogue FIRE DISTRICT Annual Update Document For the Fiscal Year Ending 2022 (W)GENERAL LONG-TERM DEBT Balance Sheet Assets Total Non-Current Govt Liabilities 259,549 W129 210,144 Page 17 OSC Municipality Code 471179002500 Cutchogue FIRE DISTRICT Annual Update Document For the Fiscal Year Ending 2022 (W)GENERAL LONG-TERM DEBT Balance Sheet somw Net Pension Liability-Proportionate Share 185 W638 Lease Liability W682 210,144 Installment Purchase Debt 259,364 W685 rr rr Page 18 OSC Municipality Code 471179002500 z/ o = n2- CD } § % ]> R /\ \ Cl) E2 )CO Q \� \ LO Lo Lo z 01 C'I_ C11_ _ � # \ f2 / $ d \ \ ) \2 ® _ LO - / � � ` C- r 0. Im LO c-4 \ \ co 5f § \ §§ \ § » « - 0 \� \ \ 0 k E0 U) 2 G- \ § 0 k K ] § w 2 k / k 7 § 2 - / - | § E ] / ) \ a - ■ § � CO2 L % & CO u :a 2 2 / L �° u \ § ) ) A=$( / Cutchogue FIRE DISTRICT Schedule of Time Deposits and Investments For the Fiscal Year Ending 2022 EDP Code Amount CASH: On Hand 9Z2001 $0.00 Demand Deposits 9Z2011 $0.00 Time Deposits 9Z2021 $0.00 Total $0.00 COLLATERAL: - FDIC Insurance 9Z2014 $0.00 Collateralized with securities held in possession of municipality or its agent 9Z2014A $0.00 Total $0.00 INVESTMENTS: - Securities (450) Book Value (cost) 9Z4501 $0.00 Market Value at Balance Sheet Date 9Z4502 $0.00 Collateralized with securities held in 9Z4504A $0.00 possession of municipality or its agent - Repurchase Agreements (451) Book Value (cost) 9Z4511 $0.00 Market Value at Balance Sheet Date 9Z4512 $0.00 Collateralized with securities held in 9Z4514A $0.00 possession of municipality or its agent Page 20 OSC Municipality Code 471179002500 Cutchogue FIRE DISTRICT Bank Reconciliation For the Fiscal Year Ending 2022 Include All Checking, Savings and C.D.Accounts Bank Add: Less: Adjusted Account Bank Deposit Outstanding Bank Number Balance In Transit Checks Balance *****-6692 $259,095 $0 $14,509 $244,586 *****-3080 $1,066,325 $0 $0 $1,066,325 *****-3591 $707,910 $0 $0 $707,910 *****-6693 $11,063 $0 $186 $10,877 *****-9529 $819,617 $0 $0 $819,617 Total Adjusted Bank Balance $2,849,315 P-etty Cash $.00 Adjustments $.00 Total Cash 9ZCASH * $2,849,315 Total Cash Balance All Funds 9ZCASHB * $2,849,315 * Must be equal Page 21 OSC Municipality Code 471179002500 Cutchogue FIRE DISTRICT Fire District Questionnaire For the Fiscal Year Ending 2022 Response 1) Has your district adopted a written procurement prolicy and is it complied with? Y 2) Has your district contracted to have an independent audit of its financial statements? Y If not, has the Board of Fire Commissioners performed an internal audit of the Treasurer's records and reports? 3) Does your district have a written travel policy and is it complied with? Y 4) Are monthly bank reconciliations performed? Y 5) What is your districts statutory spending limitation margin (amount) for the next fiscal $1,551,713 g) Does your fire district have a Length of Service Award Program (LOSAP) for volunteer firefighters? If so, how are the LOSAP funds invested? Marketable Securities N Annuities Y Life Insurance N Other(describe) 7) Has your Fire District adopted an investment policy as required by General Municipal Y Law, Section 39? Page 22 Cutchogue FIRE DISTRICT Employee and Retiree Benefits For the Fiscal Year Ending 2022 Total Full Time Employees: 1 Total Part Time Employees: 13 Account Description Total #of Full #of Part #of Retirees Code Expenditures Time Time (All Funds) Employees Employees 9010 State Retirement System $5,797.00 1 9015 Police and Fire Retirement 9025 Local Pension Fund $246,219.00 90308 Social Security $16,837.00 1 13 90408 Worker's Compensation $51,838.00 1 13 Insurance 9045 Life Insurance $8,669.00 9050 Unemployment Insurance $2,724.00 1 13 9055 Disability Insurance $637.00 1 13 9060 Hospital and Medical $14,579.00 (Dental)Insurance 9070 Union Welfare Benefits 90851 Supplemental Benefit Payment to Disabled Fire Fighters 9189 Other Employee Benefits Total $347,300.00 Computed Total From Financial $347,300.00 Section(comparative purposes only) Page 23 OSC Municipality 471179002500 Cutchogue FIRE DISTRICT Energy Costs and Consumption For the Fiscal Year Ending 2022 Energy Type Total Total Volume Units Of Alternative Expenditures Measure Units Of Measure Gasoline $12,73711 37170 gallons Diesel Fuel $6,918 1,56 gallons Fuel Oil gallons Natural Gas $11,151 6,519 cubic feet Therms Electricity $25,97211 110,928 kilowatt-hours Coal tons Propane $4,017 1,801 gallons Page 24 OSC Municipality 471179002500 FIRE DISTRICT DEMOGRAPHICS Postal or Mailing Address: 260 New Suffolk Road ICutchogue NY 11035 Street Address or PO Box City State Zip (631)734-6907 (631)734-7079 Fire District Telephone Number Fire District Fax Number Fcutfd@optonline.net www.cutchoguefiredept.org Official Email Address Website Physical Address: (If Different From Postal Address) Street Address City State Zip BOARD DEMOGRAPHICS CHIEF FISCAL OFFICER (Peter J.Zwerlein (Treasurer Name Title 260 New Suffolk Road IFC utchogue NY 11935 Street Address or PO Box City State Zip ((631)734-6907 (631)734-7079 Telephone Number Fax Number Icutfdtreas@optonline.net -12/31/2023 Email Address Term End Date CHAIRMAN OF THE BOARD (David Blados (Commissioner Name Title 260 New Suffolk Road ICutchogue NY 11935 Street Address or PO Box City State Zip ((631)734-6907 ((631)734-7079 Telephone Number Fax Number Icutfd@optonline.net 12/31/2023 Email Address Term End Date I, Peter J.Zwerlein hereby certify that I am the Chief Fiscal Officer of the ICutchogue Fire District and that the information provided in the annual financial report of the ICutchogue Fire District for the fiscal year ended 112/31/2022 is true and correct to the best of my knowledge and belief. By entering the personal identification number assigned by the Office of the State Comptroller to me as the Chief Fiscal Officer of the ICutchogue Fire District and adopted by me as my signature for use in conjunction with the filing of the Cutchogue Fire District 's annual financial report, I am evidencing my express intent to authenticate my certification of the Cutchogue Fire District 's annual financial report report for the fiscal year ended 112/31/2022 and filed by means of electronic data transmission. """ 02/23/2024 Name of Report Preparer Personal Identification Number Date if different than Chief Fiscal Officer of Chief Fiscal Officer Page 25 Cutchogue FIRE DISTRICT Financial Comments For the Fiscal Year Ending 2022 (K) GENERAL FIXED ASSETS Account Code Comment Account Code K108 Reclassified negative W638 to K108 per NYSLRS Account Code K159 Reclassified negative W638 to K108 per NYSLRS (W) GENERAL LONG-TERM DEBT Account Code Comment Account Code W638 Reclassified negative W638 to K108 per NYSLRS Account Code W129 Reclassified negative W638 to K108 per NYSLRS Page 26 OSC Municipality Code 471 CUTCHOGUE FIRE DISTRICT NOTES TO ANNUAL FINANCIAL REPORT UPDATE DOCUMENT 1. Summary of Significant Accounting Policies: The Annual Financial Report Update Document (AUD) of the Cutchogue Fire District (the District), as of and for the year ended December 31, 2022, has been prepared in conformity with accounting practices prescribed or permitted by the New York State Office of the State Comptroller (regulatory basis), which is a special purpose framework of accounting other than U.S. generally accepted accounting principles. Financial reporting entity: The District is a governmental entity that provides fire protection to the local community. The District receives most of its funding from property taxes. The District is governed by laws of the State of New York. The Board of Fire Commissioners is the legislative body responsible for the overall operation of the District. All activities and functions performed for the District are its direct responsibility. The Treasurer serves as Chief Fiscal Officer of the District. Basis of presentation: The AUD provides information about the District's funds. The accounts of the District are organized on the basis of funds, each of which is considered a separate accounting entity. The operations of each fund are segregated for the purpose of carrying on specific activities or attaining certain objectives in accordance with special regulations, restrictions, or limitations. The following fund types are used: Governmental: General Fund The General Fund is the principal operating fund of the District and is used to account for all financial resources except those required to be accounted for in another fund. Debt service is also accounted for in the General Fund. Equipment Reserve Fund The Equipment Reserve Fund is used to account for and report financial resources to be used for the acquisition of equipment needed by the District. Building Reserve Fund The Building Reserve Fund is used to account for and report financial resources to be used for the acquisition, construction, or renovation of major capital facilities. -27- CUTCHOGUE FIRE DISTRICT NOTES TO ANNUAL FINANCIAL REPORT UPDATE DOCUMENT 1. Summary of Significant Accounting Policies (continued): Basis of presentation (continued): Governmental (continued): Service Award Program Fund The Service Award Program Fund is used to account for and report financial resources related to the District's length of service award program (LOSAP). For reporting purposes, these funds are all combined and shown within the General Fund. Basis of accounting: The accompanying AUD has been prepared on the regulatory basis of accounting using the current financial resources measurement focus. Revenues are recognized when measurable and available. "Available" means collectible within the current period or within 60 days after year-end. Expenditures are generally recognized under the modified accrual basis of accounting when the related liability is incurred. The exception to this general rule is that principal and interest on general obligation long-term debt, if any, is recognized when due. Cash and cash equivalents: Cash and cash equivalents include demand deposits and temporary investments with original maturities of three months or less from the date of acquisition. Investments: An investment is a security or other asset (a) that a government holds primarily for the purpose of income or profit and (b) with present service capacity that is based solely on its ability to generate cash or to be sold to generate cash. Investments are generally reported at fair value, except certificates of deposit, which are reported at cost. Interfund transfers: The operations of the District give rise to certain transactions between funds, including transfers of expenditures and revenues to provide services and construct assets. This is either by budget, Board resolution, permissive referendum, or mandatory referendum. Encumbrances: Encumbrance accounting is used for budget control and monitoring purposes and is reported as part of the governmental funds. Under this method, purchase orders, contracts, and other commitments for the expenditures of monies are recorded to reserve applicable appropriations. Outstanding encumbrances as of year-end are presented as assigned unappropriated fund balance and do not represent expenditures or liabilities. These commitments will be honored in the subsequent period. Related expenditures are recognized at that time, as the liability is incurred, or the commitment is paid. -28- CUTCHOGUE FIRE DISTRICT NOTES TO ANNUAL FINANCIAL REPORT UPDATE DOCUMENT 1. Summary of Significant Accounting Policies (continued): Fund balance: In accordance with Governmental Accounting Standards Board (GASB) Statement No. 54, Fund Balance Reporting and Governmental Fund Type Definitions, (GASB 54), fund balance is broken down into five different classifications: non- spendable, restricted, committed, assigned, and unassigned. Non-spendable consists of assets that are inherently non-spendable in the current period, either because of their form or because they must be maintained intact, including prepaid items, inventories, long-term portions of loan receivable, financial assets held for resale, and principal of endowments. Restricted consists of amounts that are subject to externally enforceable legal purpose restrictions imposed by creditors, grantors, contributors or laws and regulations of other governments or through constitutional provisions or enabling legislation. Committed consists of amounts that are subject to a purpose constraint imposed by a formal action of the government's highest level of decision-making authority before the end of the fiscal year and that require the same level of formal action to remove the constraint. The Board of Fire Commissioners is the decision-making authority that can, by Board resolution,prior to the end of the fiscal year, commit fund balance. Assigned consists of amounts that are subject to a purpose constraint that represents an intended use established by the District's highest level of decision-making authority or by their designated body or official. The purpose of the assignment must be narrower than the purpose of the General Fund and in funds other than the General Fund, assigned fund balance represents the residual amount of fund balance. The Board of Fire Commissioners, by Board resolution, can authorize the Treasurer to assign fund balance. Unassigned represents the residual classification for the District's General Fund and could report a surplus or deficit. In funds other than the General Fund, the unassigned classification should be used only to report a deficit balance resulting from overspending for specific purposes for which amounts had been restricted, committed or assigned. When resources are available from multiple classifications, the District spends funds in the following order: • Restricted amounts are deemed to have been spent when an expenditure is incurred for purposes for which both restricted and unrestricted (committed, assigned or unassigned) amounts are available. • Within unrestricted fund balance, expenditures are deemed to be spent first from committed amounts, followed by assigned amounts and then unassigned amounts when expenditures are incurred for purposes for which amounts in any of those unrestricted fund balance classifications could be used. -29- CUTCHOGUE FIRE DISTRICT NOTES TO ANNUAL FINANCIAL REPORT UPDATE DOCUMENT 1. Summary of Significant Accounting Policies (continued): Fixed assets: Fixed assets, which include land, buildings, improvements other than buildings, machinery and equipment, and infrastructure, are reported on the Schedule K (General Fixed Assets) on the AUD. The District defines fixed assets as assets with an initial, individual cost of more than $2,500. Such assets are recorded at historical cost or estimated historical cost if purchased or constructed. Major outlays for fixed assets and improvements are capitalized as projects are constructed. The cost of normal maintenance and repairs that do not add to the value of the asset or materially extend assets life are not capitalized. The costs associated with the acquisition or construction of fixed assets are shown as capital outlay expenditures in governmental funds. Real property taxes: All real property assessments are made by the Town of Southold. Real property tax payments are due in two equal installments; the first half payable on December 1 (lien and levy date) preceding the year for which the same is levied and the second half payable May 10, with the first half payable without penalty to January 10 and the second half payable without penalty to May 31. After May 31, all taxes must be paid to Suffolk County Treasurer with a 5% penalty charge and interest at the rate of 1% per month from February 1. The Town of Southold Receiver of Taxes collects all real estate taxes and distributes the tax collections to the District. All payments made to the District are made in the year for which the tax has been levied. The Town of Southold Receiver of Taxes turns over uncollected items to the Suffolk County Treasurer who continues the collection of these items. Responsibility for the collection of unpaid taxes rests with Suffolk County. Budgetary data: The District prepares an operating budget for the General Fund each year. The budget is adopted by the Board of Fire Commissioners as its final budget for the coming year as it relates to total spending. The District can adjust the budget as needed by transferring certain budgeted amounts between accounts. The budget is not subject to referendum. All budget appropriations lapse at the end of each year. Use of estimates: The preparation of the AUD in conformity with the regulatory basis of accounting requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates. Newly adopted accounting standards: During 2022, the District adopted Governmental Accounting Standards Board Statement No. 87, Leases (GASB 87). This statement requires recognition of certain lease assets and liabilities for leases that previously were classified as operating leases. -30- CUTCHOGUE FIRE DISTRICT NOTES TO ANNUAL FINANCIAL REPORT UPDATE DOCUMENT 1. Summary of Significant Accounting Policies (continued): Newly adopted accounting standards (continued): Under this statement, a lessee is required to recognize a lease liability and an intangible right-to-use asset, thereby enhancing the relevance and consistency of information about a government's leasing activities. Refer to Notes 3 and 4 for the related impact of adoption on the District's AUD. Subsequent events: Management has evaluated subsequent events through the date of the report, which is the date the financial statements were available to be issued. 2. Deposits with Financial Institutions and Investments: The District's investment policies are governed by state statutes and District policy. Resources must be deposited in Federal Deposit Insurance Corporation (FDIC) insured commercial banks or trust companies located within the state. Permissible investments include special time deposit accounts, certificates of deposit, obligations of the United States of America, obligations guaranteed by agencies of the United States of America and obligations of the State of New York. Collateral is required for demand and time deposits and certificates of deposit not covered by FDIC insurance. Custodial credit risk is the risk that in the event of a bank failure, the District's deposits may not be returned to it. The District's risk exposure can be categorized as follows: 1. Insured by FDIC insurance. 2. Collateralized by securities held by the pledging financial institution's trust department or agent, but not in the District's name. 3. Collateralized by securities held by the pledging financial institution, but not in the District's name. 4. Uncollateralized. The District's deposits held are categorized, based on the above criteria, as follows: Category Amount 1 $ 500,000 2 2,364,010 3 - 4 - Total 2.864.010 -31- CUTCHOGUE FIRE DISTRICT NOTES TO ANNUAL FINANCIAL REPORT UPDATE DOCUMENT 2. Deposits with Financial Institutions and Investments (continued): The District did not have any investments at year-end or during the year. Consequently, the District was not exposed to any material interest rate risk. Market risk includes global events which could impact the value of investment securities such as a pandemic, international conflict or bank failure. 3. Fixed Assets: A summary of changes in fixed assets follows: Reclassified Balance Balance 12/31/21 Additions Deletions 12/31/22 Fixed assets not being depreciated Land $1,053,403 $ - $ - $1,053,403 Fixed assets being depreciated Buildings 1,579,876 - - 1,579,876 Improvements other than buildings 297,207 - - 297,207 Machinery and equipment 4,037,311 - - 4,037,311 Infrastmeture 425,648 - - 425,648 Intangible lease asset-machinery and equipment 716,631 - - 716,631 Total fixed assets being depreciated 7,056,673 - - 7,056,673 Less:accumulated depreciation and amortization 4,169,336 35,832 - 4,205,168 Total fixed assets being depreciated,net 2,887,337 (35,832) - 2,851,505 Fixed assets,net $3,940,740 $ (35,832) $ - $3,904,908 The truck lease amortization and intangible lease asset are presented on the District's AUD, which is included in the above table as Intangible lease asset - machinery and equipment. With the implementation of GASB 87, a lease meeting the criteria of this Statement requires the lessee to recognize a lease liability and an intangible right-to-use asset. Total fixed assets at December 31, 2021 were not impacted by implementation of GASB 87. 4. Leases: In 2017, the District entered into a lease purchase finance agreement with M&T Bank Equipment Finance for the purchase of a 2017 Spartan Fire Truck that ends on November 21, 2026. The value of the equipment at the inception of the lease was $716,631 which is included in Note 3 as Intangible right-to-use lease - machinery and equipment. The District made a down payment of $216,631 and financed the remaining $500,000 balance. Interest and principal are being provided for in the General Fund. Interest is at an annual rate of 2.594%. Lease activity for the year ended December 31, 2022, was as follows: -32- CUTCHOGUE FIRE DISTRICT NOTES TO ANNUAL FINANCIAL REPORT UPDATE DOCUMENT 4. Leases (continued): Beginning Ending Balance Additions Reductions Balance M&T Bank Equipment Finance $259,364 $ - $(49,220) $210,144 Total 259 364 49 220 210 144 Annual requirements to amortize this lease liability and related interest are as follows: Due in Fiscal Year Ended Principal Interest Total 2023 $ 50,512 $ 5,516 $ 56,028 2024 51,838 4,190 56,028 2025 53,199 2,829 56,028 2026 54,595 1,433 56,028 Total JLa 968 224 112 5. Pension Plan: Plan description: The District participates in the New York State and Local Employees' Retirement System (ERS), which is part of the New York State and Local Retirement System (the System). This is a cost-sharing, multiple-employer-defined benefit retirement system. The net position of the System is held in the New York State Common Retirement Fund (the Fund), which was established to hold all net assets and record changes in fiduciary net position allocated to the System. The Comptroller of the State of New York serves as the trustee of the Fund and is the administrative head of the System. System benefits are established under the provisions of the New York State Retirement and Social Security Law (NYSRSSL). 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 District also participates in the Public Employees' Group Life Insurance Plan (GLIP),which provides death benefits in the form of life insurance. The System is included in the State's financial report as a pension trust fund. That report may be found at 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. Benefits provided: The System provides retirement benefits as well as death and disability benefits. -33- CUTCHOGUE FIRE DISTRICT NOTES TO ANNUAL FINANCIAL REPORT UPDATE DOCUMENT 5. Pension Plan (continued): Benefits provided(continued): 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 for Tier 1 members. 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 is 55 and the full benefit age for Tier 2 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 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 NYSRSSL, Tier 1 and Tier 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. Final average salary is the average of the wages earned in the three highest consecutive years. For Tier 1 members who joined on or after June 17, 1971, each year of final average salary is limited to no more than 20% of the previous year. For Tier 2 members, each year of final average salary is limited to no more than 20% of the average of the previous two years. Tiers 3. 4 and 5 Eligibility: Tier 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 10 years of service and be at least age 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. Tier 3 and 4 members with five or more years of service and Tier 5 members with 10 or more years of service can retire as early as age 55 with reduced benefits. Tier 3 and 4 members age 55 or older with 30 or more years of service can retire with no reduction in benefits. -34- CUTCHOGUE FIRE DISTRICT NOTES TO ANNUAL FINANCIAL REPORT UPDATE DOCUMENT 5. Pension Plan (continued): Benefits provided(continued): Tiers 3. 4 and 5 (continued) Final average salary is the average of the wages earned in the three highest consecutive years. For Tier 3, 4, and 5 members, each year of final average salary is limited to no more than 10% of 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 is 63 for ERS 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. For Tier 6 members, each year of final average salary is limited to no more than 10% of the average of the previous four years. Ordinary Disability Benefits Generally, ordinary disability benefits, usually one-third of salary, are provided to eligible members after ten years of service; in some cases, they are provided after five years of service. Accidental Disability Benefits For all eligible Tier 1 and Tier 2 ERS members, the accidental disability benefit is a pension of 75% of final average salary, with an offset for any Workers' Compensation benefits received. The benefit for eligible Tier 3, 4, 5, and 6 members is the ordinary disability benefit with the years-of-service eligibility requirement dropped. -35- CUTCHOGUE FIRE DISTRICT NOTES TO ANNUAL FINANCIAL REPORT UPDATE DOCUMENT 5. Pension Plan (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-term life insurance. The benefit is generally three times the member's annual salary. For most members, there is also a reduced post-retirement ordinary death benefit available. Post-Retirement Benefit Increases A cost-of-living adjustment is provided annually to: (i) all pensioners who have attained age 62 and have been retired for five years, (ii) all pensioners who have attained age 55 and have been retired for ten years, (iii) all disability pensioners, regardless of age, who have been retired for five years, (iv) ERS recipients of an accidental death benefit, regardless of age, who have been receiving such benefit for five years, and (v) 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: The System is non-contributory except for employees who joined the ERS after July 27, 1976, who contribute 3% of their salary for the first ten years of membership and employees who joined on or after January 1, 2010, who generally contribute 3% of their salary for their entire length of service. For Tier 6 members, the contribution rate varies from 3% to 6% depending on salary. Generally, Tier 5 and 6 members are required to contribute for all years of service. Under the authority of the NYSRSSL, the Comptroller annually certifies the actuarially determined rates expressly used in computing the employers' contributions based on salaries paid during the Systems' fiscal year ending March 31. Contributions for the current year and two preceding years were equal to 100% of the contributions required and were as follows: Year Ending December 31, Amount 2022 $5,797 2021 3,863 2020 7,293 -36- CUTCHOGUE FIRE DISTRICT NOTES TO ANNUAL FINANCIAL REPORT UPDATE DOCUMENT 5. Pension Plan (continued): Contributions (continued): Chapter 57 of the Laws of 2013 of the State of New York, Part BB, amending several sections of the Retirement and Social Security Law, was enacted that allows local employers to amortize a portion of their retirement bill for up to 10 years in accordance with the following stipulations: • The maximum amount an employer can amortize is the difference between the normal annual contribution (total bill, excluding payments for deficiency, group life, previous amortizations, incentive costs and prior year adjustments) and the graded contribution. • For subsequent State Fiscal Years (SFYs), the graded rate will increase or decrease by up to one-half of 1% depending on the gap between the increase or decrease in the System's average rate and the previous graded rate. • The interest rate will be set annually and will be comparable to a 12-year U.S. Treasury Bond plus 1%. • For subsequent SFYs in which the System's average rates are lower than the graded rates, the employer will be required to pay the graded rate. Any additional contributions made will first be used to pay off existing amortizations and then any excess will be deposited into a reserve account and will be used to offset future increases in contribution rates. This law requires participating employers to make payments on a current basis, while amortizing existing unpaid amounts relating to the System's fiscal years when the local employer opts to participate in the program. The District's total pension liability (asset) was paid as of December 31, 2022. Pension assets, pension expense and deferred outflows of resources and deferred inflows of resources related to pensions: At December 31, 2022, the District reported an asset of $4,984 for its proportionate share of the net pension asset. The net pension asset was measured as of March 31, 2022, and the total pension asset used to calculate the net pension asset was determined by an actuarial valuation as of that date. The District's proportion of the net pension asset was based on a projection of the District's long-term share of contributions to the pension plan relative to the projected contributions of all participating members, actuarially determined. At March 31, 2022, the District's proportion was 0.0000610%, which was a decrease of 0.0001245 from its proportion measured at March 31, 2021. For the year ended December 31, 2022, the District recognized pension expenditures of $5,797. At December 31, 2022, the District reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources: -37- CUTCHOGUE FIRE DISTRICT NOTES TO ANNUAL FINANCIAL REPORT UPDATE DOCUMENT 5. Pension Plan (continued): Pension assets, pension expense (benefit) and deferred outflows of resources and deferred inflows of resources related to pensions (continued): Deferred Deferred Outflows of Inflows of Resources Resources Differences between expected and actual experience $ 377 $ 490 Changes of assumptions 8,318 140 Net difference between projected and actual earnings on pension plan investments - 16,321 Changes in proportion and differences between District contributions and proportionate share of contributions 1,816 11,748 District contributions subsequent to the measurement date 5,797 - Total 16 308 28,699 The $5,797 reported as deferred outflows of resources related to pensions resulting from District contributions subsequent to the measurement date will be recognized as a reduction of the net pension liability in the year ended March 31, 2023. Other amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions will be recognized in pension expense (benefit) as follows: Year Ended March 31: Amount 2023 $ (4,371) 2024 (4,640) 2025 (6,141) 2026 (3,036) Actuarial assumptions: The total pension liability at March 31, 2022, was determined by using an actuarial valuation as of April 1, 2021, with update procedures used to roll forward the total pension liability to March 31, 2022. The actuarial valuation used the following actuarial assumptions: Inflation 2.7% Salary increases 4.4% -38- CUTCHOGUE FIRE DISTRICT NOTES TO ANNUAL FINANCIAL REPORT UPDATE DOCUMENT 5. Pension Plan (continued): Actuarial assumptions (continued): Investment rate of return (net of investment expense, including inflation) 5.9% Cost-of-living adjustments 1.4% Annuitant mortality rates are based on April 1, 2015 through March 31, 2020, System experience with adjustments for mortality improvements based on the Society of Actuaries' Scale MP-2020. The previous actuarial valuation as of April 1, 2020, used the same assumptions to measure the total pension liability. The actuarial assumptions used in the April 1, 2021, valuation are based on the results of an actuarial experience study for the period April 1, 2015 through March 31, 2020. The long-term expected rate of return on pension plan investments was determined using a building-block method in which best-estimate ranges of expected future real rates of return (expected return, net of investment expenses and inflation) are developed for each major asset class. These ranges are combined to produce the long-term expected rate of return by weighting the expected future real rates of return by the target asset allocation percentage and by adding expected inflation. The target allocation and best estimates of arithmetic real rates of return for each major asset class as of March 31, 2022, are summarized below: Long-term Expected Real Asset Class Target Allocation Rate of Return Domestic equity 32.00% 3.30% International equity 15.00% 5.85% Private equity 10.00% 6.50% Real estate 9.00% 5.00% Opportunistic/Absolute return strategy 3.00% 4.10% Credit 4.00% 3.78% Real assets 3.00% 5.80% Fixed Income 23.00% 0.00% Cash 1.00% (1.00)% 100.00% The real rate of return is net of the long-term inflation assumption of 2.50%. -39- CUTCHOGUE FIRE DISTRICT NOTES TO ANNUAL FINANCIAL REPORT UPDATE DOCUMENT 5. Pension Plan (continued): Discount rate: The discount rate used to calculate the total pension liability was 5.9%. 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 System's fiduciary net position was projected to be available to make all projected future benefit payments of current plan members. Therefore, the long- term expected rate of return on pension plan investments was applied to all periods of projected benefit payments to determine the total pension liability. Sensitivity of the net pension liability (asset) to the discount rate assumption: The following presents the current period net pension liability of the District's proportionate share of the net pension liability (asset) calculated using the current period discount rate assumption of 5.9%, as well as what the District's collective net pension liability (asset) would be if it were calculated using a discount rate that is 1 percentage point lower (4.9%) or 1 percentage point higher(6.9%)than the current rate: 1% Current 1% Decrease Assumption Increase 4.9% 5.9% 6.9% District's proportionate share of the net pension liability (asset) $12,829 ($4,984) ($19,884) Pension plan fiduciary net position: The components of the collective net pension liability (asset) of the participating employers as of March 31, 2022, were as follows: (Dollars in Thousands) Employees' Retirement System Employers' total pension liability $ 223,874,888 Plan net position (232,049,473) Employers' net pension liability (asset) (8.174.5851 Ratio of plan net position to the employers' total pension liability 103.65% -40- CUTCHOGUE FIRE DISTRICT NOTES TO ANNUAL FINANCIAL REPORT UPDATE DOCUMENT 6. Length of Service Award Program (LOSAP): The District's AUD is for the year ended December 31, 2022. The information contained in this note is based on information for the District's Service Award Program for the program year ending on December 31, 2022, which is the most recent Program year for which complete information is available. The District established a defined benefit award program (referred to as a LOSAP, Length of Service Award Program, under section 457(e)(11) of the Internal Revenue Code), effective March 1, 1993 for the active volunteer firefighter members of the district. The Program was established pursuant to Article 11-A of the General Municipal Law. The Program provides municipally funded, pension-like benefits to facilitate the recruitment and retention of active volunteer firefighters. The District is the Sponsor of the Program. Program description: Participation, vesting, and service credit: Active volunteer firefighters who have reached the age of 17 and who have completed their probationary period are eligible to participate in the Program. Participants acquire a non-forfeitable right to a service award after being credited with five years of firefighting service or upon attaining the Program's entitlement age. The Program's entitlement age is age 65. In general, an active volunteer firefighter is credited with a year of firefighting service for each calendar year after the establishment of the Program in which he or she accumulates 50 points. Points are granted for the performance of certain activities in accordance with a system established by the sponsor based on a statutory list of activities and point values. A participant may also receive credit for five years of firefighting service rendered prior to the establishment of the Program. Benefits: A participant's benefit under the Program is the actuarial equivalent of a monthly payment for life equal to $20 multiplied by the person's total number of years of firefighting service. The number of years of firefighting service used to compute the benefit cannot exceed 30. Benefits are not payable until the first day of the month coincident with or following the attainment of age 65 and completion of one year of plan participation. Except in the case of disability or death, benefits are payable when a participant reaches entitlement age. The Program provides statutorily mandated death and disability benefits. Fiduciary investment and control: Service credit is determined by the Governing Board of the sponsor, based on information certified to the Governing Board by each fire company having members who participate in the Program. Each fire company must maintain all required records on forms prescribed by the Governing Board. -41- CUTCHOGUE FIRE DISTRICT NOTES TO ANNUAL FINANCIAL REPORT UPDATE DOCUMENT 6. Length of Service Award Program (LOSAP) (continued): Fiduciary investment and control(continued): The Governing Board of the sponsor has retained and designated Firefly Admin, Inc. to assist in the administration of the Program. The services provided by Firefly Admin, Inc. are described as follows: a) Providing participant enrollment forms. b) Providing an annual reminder letter with a review list for the current anniversary date. c) Preparation of Explanation of Plan Benefits. d) Calculation of Schedule of Benefits and costs annually. e) Participants' benefit calculation at time of severance or retirement. f) Auxiliary Fund valuation and suggested deposit. g) Summary of required annual contribution. h) Annual actuarial review and recommended benefit enhancements. Disbursements of Program assets for the payment of benefits or administrative expenses must be approved. The following is an explanation of the process for approving disbursements: Payment of benefits: 1. Entitlement benefits — Firefly Admin, Inc. prepares and submits to the plan sponsor a Verification of Benefits Statement and an Annuity Enrollment form for participants active at entitlement age and for vested participants upon termination from the plan. Following review for accuracy, the plan sponsor signs and returns the paperwork to Firefly Admin, Inc. authorizing Firefly Admin, Inc. to disburse entitlement benefits. 2. Death benefits - Upon notification from the plan sponsor of a participant's death, Firefly Admin, Inc. prepares a Verification of Benefits statement and a Lump- Sum Death Benefit form. Following review for accuracy, the plan sponsor signs and returns the paperwork accompanied by a death certificate to Firefly Admin, Inc. authorizing Firefly Admin, Inc. to disburse a death benefit. 3. Disability benefits - Upon notification from the plan sponsor of a participant's total and permanent disability, Firefly Admin, Inc. prepares a Verification of Benefits statement, a Physician Statement form and a Lump-Sum Disability Benefit form. Following review for accuracy, the plan sponsor signs and returns the paperwork authorizing Firefly Admin, Inc. to disburse a disability benefit. -42- CUTCHOGUE FIRE DISTRICT NOTES TO ANNUAL FINANCIAL REPORT UPDATE DOCUMENT 6. Length of Service Award Program (LOSAP) (continued): Payment of administrative expenses: 1. Per the executed Service Fee Agreement, the plan sponsor agrees to payment as contracted. Authority to invest Program assets is vested in East End Financial Group. Subject to restrictions in the Program document, Program assets are invested in accordance with a statutory "prudent person" rule. The sponsor invested plan funds in a general investment account. The Board of Fire Commissioners is required to retain an actuary to determine the amount of the District's contributions to the plan. The actuary retained by the sponsor for this purpose is Craig T. Relyea of Firefly Admin, Inc. Mr. Relyea is an associate of the American Society of Actuaries. Portions of the following information are derived from a report prepared by the actuary dated March 10, 2023. Program financial condition: Assets and Liabilities Actuarial present value of accrued benefits $3,484,996 Total as of December 31, 2022 $ 3,484,996 Less: assets available for benefits: Cash and cash equivalents $ 134,383 Fixed income 288,343 Mutual funds 2,397,393 Equity funds 385,492 Exchange traded funds 281,218 3,486,829 January payments withdrawn in December 16,100 Total net assets available for benefits 3,502,929 Total unfunded benefits (surplus) 17 933) Receipts and Disbursements Plan net assets, beginning of year, l/l/22 $3,269,922 Changes during the year(increases/(decreases)): Plan contributions $394,504 Net investment earnings 94,703 Plan benefit withdrawals (246,219) Administrative and other fees/charges (9,981) 233,007 Plan net assets, end of year, 12/31/22 3.502929 -43- CUTCHOGUE FIRE DISTRICT NOTES TO ANNUAL FINANCIAL REPORT UPDATE DOCUMENT 6. Length of Service Award Program (LOSAP) (continued): Funding methodolo2y and actuarial assumptions: Funded ratio: Plan assets $ 3,502,929 Present value of accrued benefits $ 3,484,996 Funded ratio 100.5% The funded ratio is 100.5%, an increase from 84.4% in the prior year. The Plan's funded status has improved in recent years as investment returns have outpaced the actuarial assumed rate. Contributions Amount of sponsor's contribution recommended by actuary $ 302,972 Amount of sponsor's actual contribution $ 394,504 Administration Fees Fees paid for investment management $ 8,071 Fees paid for administrative services $ 9,981 Normal costs: The actuarial valuation methodology used by the actuary to determine the Sponsor's contribution is the Unit Credit Method. This Method is designed to fund the Program by requiring an annual contribution equal to the present value of the service earned in the previous year. The assumptions used by the actuary to determine the Sponsor's contribution and the actuarial present value of benefits are: Assumed rate of return on investment 4.50%,net of investment expenses Tables used for: Post entitlement age mortality RP-2014 Mortality Table (gender specific) with no projection for mortality improvement *Pre-entitlement age mortality None *Pre-entitlement age withdrawal None. Participants are assumed to commence collecting the monthly benefit at the entitlement date * For program cost calculation purposes, all pre-entitlement age active volunteer firefighter participants are assumed to survive to the entitlement age, remain active and earn 50 points each year and begin to be paid service awards upon attainment of the entitlement age. -44- CUTCHOGUE FIRE DISTRICT NOTES TO ANNUAL FINANCIAL REPORT UPDATE DOCUMENT 7. Commitments and Contingencies: Encumbrances: In the current year, the District has five reported encumbrances in the amount of $106,127. This amount is represented in the assigned unappropriated fund balance of $106,127 reported in the AUD. This amount is mainly for the purchase of a Chevrolet Tahoe, turnout gear and Gemtor FF harnesses. Assigned appropriated fund balance: The District, from time-to-time, will appropriate a portion of its unassigned unappropriated fund balance. During 2022, no such appropriation was made. Legal: The District is exposed to various risks of loss related to torts, theft of, damage to and destruction of assets, injuries to employees, errors and omissions, natural disasters, etc. These risks are covered by commercial insurance purchased from independent third- parties. Settled claims from these risks have not exceeded commercial insurance coverage. 8. Economic Dependency: For the year ended December 31, 2022, approximately 95% of the District's gross revenues were derived from real property taxes and PILOT provided by the Town of Southold. 9. Rental of Real Property: On December 13, 2016, the District entered into a lease agreement to lease ground space on its property to a company for the positioning of a communication tower, which has not yet been positioned on the property. The communication tower will not be District owned. This is a 30-year lease commencing on the date of commercial operation of the leased space. Upon notice of lessee, the lease will be renewed for three additional terms of five years each and one additional term of four years. The terms of the lease allow for the lessee to sublease the property and requires the lessee to pay the District 30% of all rents received from the first sub lessee, 35% for the second sublessee and 40% from all subsequent sublessees. There was no rental income related to this lease during the year ended December 31, 2022, and future rental income is not readily determinable. -45- bQ,HEEHAN ACCOUNTANTSID I 165 Orinoco Drive Brightwaters,NY 11718 T:631.665.7040 1 F:631.665.7014 15 South Bayles Avenue Port Washington,NY 11050 T:516.883.5510 1 F:516.767.7438 www.sheehancpa.com INDEPENDENT AUDITOR'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF ANNUAL FINANCIAL REPORT UPDATE DOCUMENT PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS To the Board of Fire Commissioners Cutchogue Fire District Cutchogue, New York We have audited, 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 Annual Financial Report Update Document of Cutchogue Fire District (the District), as of and for the year ended December 31, 2022, and the related notes to the Annual Financial Report Update Document (Financial Section), which collectively comprise the District's basic financial statements and have issued our report thereon dated March 29, 2023. Report on Internal Control Over Financial Reporting In planning and performing our audit of the Annual Financial Report Update Document (Financial Section), we considered the District's 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 opinion on the Annual Financial Report Update Document (Financial Section) but not for the purpose of expressing an opinion on the effectiveness of the District's internal control. Accordingly, we do not express an opinion on the effectiveness of the District's internal control. A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control such that there is a reasonable possibility that a material misstatement of the District's Annual Financial Report Update Document(Financial Section) will not be prevented or detected and corrected on a timely basis. -46- SACCOUNTANTS& N To the Board of Fire Commissioners Cutchogue Fire District 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. Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses or significant deficiencies may exist that have not been identified. Report on Compliance and Other Matters As part of obtaining reasonable assurance about whether the District's Annual Financial Report Update Document (Financial Section) is free from material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, non- compliance with which could have a direct and material effect on the determination of Annual Financial Report Update Document (Financial Section). However, providing an opinion on compliance with those provisions was not an objective of our audit and, accordingly, we do not express such an opinion. The results of our tests disclosed no instance of noncompliance or other matters that are required to be reported under Government Auditing Standards. 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 District's internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the District's internal control and compliance. Accordingly, this communication is not suitable for any other purpose. .57 , wzelz'�. ��r'&Mee'7 Brightwaters, New York March 29, 2023 -47- SACCOUNTANTS&SHEEHAN