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HomeMy WebLinkAbout1998 . . . TOWN OF SOUTHOLD AUDIT REPORTS . December 31,1998 . . . . . . . . TABLE OF CONTENTS Paqe Independent Auditors' Report 1 . GENERAL PURPOSE FINANCIAL STATEMENTS Combined Balance Sheet All Fund Types, Account Groups and Discreteiy Presented Component Units.. ...... ..... ...... 2 . Combined Statement of Revenues, Expenditures and Changes in Fund Balances All Governmental Fund Types, Account Groups and Discretely Presented Component Units. 3 Combined Statement of Revenues, Expenditures, and Changes in Fund Balances-Budget to Actual: General Fund........................................................ ................................................. 4 . Special Revenue Funds......................................................................................... .......... 5 Notes to Financial Statements..................... .................. ... ................................................. .......... 6-27 SUPPLEMENTARY INFORMATION . Special Revenue Funds: Combining Balance Sheet.......... ................................................................................. 28 Combining Statement of Revenues, Expenditures and Changes in Fund Baiance ...... 29 Special Districts: . Combining Balance Sheet.................................................................. ...... ...................... 30 Combining Statement of Revenues, Expenditures and Changes in Fund Baiance ...... 31 Fiduciary Funds: Combining Balance Sheet............ ............ .................................... ............. .................... 32 . Discretely Presented Component Units: Combining Balance Sheet........................................................................................... 33 Combining Statement of Revenues, Expenditures and Changes in Fund Balance ...... 34 . . . . -1- ALBRECHT, VIGGIANO, ZURECK & COMPANY, P.C. CERTIFIED PUBLIC ACCOUNTANTS . 25 SUFFOLK COURT HAUPPAUGE, NY 11788 (516) 434-9500 INDEPENDENT AUDITORS' REPORT . Town Board Town of South old 53095 Main Road Southold, New York . We have audited the accompanying general purpose financial statements of the Town of Southold, as of and for the year ended December 31, 1998 as listed in the table of contents. These general purpose financiai statements are the responsibility of the Town of Southold's management. Our responsibility is to express an opinion on these general purpose financial statements based on our audit. . Except as discussed in the following paragraph, we conducted our audit in accordance with generally accepted auditing standards and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures . in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. The financial statements supporting the financial activities of the Town of Southold's discretely presented component units were not available as of the report date, nor were we able to satisfy ourselves as to those . financial activities by other auditing procedures. Those financial activities are included in the component unit column and represent 100% of the assets and revenues, respectively, of the discretely presented component unit's column. Our audit was made for the purposes of forming an opinion on the general purpose financial statements taken as a whole. The supplemental information listed in the table of contents is presented for purposes of additional . analysis and is not a required part of the general purpose financial statements of the Town Southold, New York. Such information, except for the information pertaining to the Town of Southold's discretely presented component units on page 33 and 34 on which we express no opinion, has been subjected to the auditing procedures applied in the audit of the general purpose financial statements and, in our opinion, is fairly stated in all material respects in relation to the general purpose financial statements taken as a whole. In our opinion, except for the effects of such adjustments, if any, as might have been determined to be necessary had the unaudited component units mentioned above, been audited, or had we been able to satisfy ourselves as to those financial activities by other auditing procedures, the general purpose financiai statements referred to above present fairly, in all materiai respects, the financial position of the Town of Southold, as of December 31, 1998, and the results of its operations for the year then ended in conformity with generally accepted accounting principles. ~ V:$-1;""', ?.--.J--.-j- ~,t:L. I Hauppauge, New York June 10, 1999 E Nt'--('I)C\I.q-U')........q-OCO(ON.,....a.nt-- ....... 0 U')O)O"'llt.........,.O.......ON N CO "","om I"-f"'o. U') ....... mC'\lCOcocnNmmmLOCOLO"CtNm ('I) It) "'IIt<Dommmomo"'lt co T"" LOlOM mm L() ('I) 00-5 en ('I)~Lt)~(J)~OR"""h<DRN..~CX)R""":"IIt..~T""..LC)..('I).. 0.. U').. M..m_o_........ ('I).......... 0.. 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TOWN OF SOUTHOLD COMBINED STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES, BUDGET AND ACTUAL GENERAL FUND Year ended December 31, 1998 . Variance Favorable Budget Actual (Unfavorable) . REVENUES Real Property Taxes $ 9,401,669 $ 9,401,669 Other Real Property Tax Items 72,000 37,443 $ (34,557) Non,Property Tax Items 235,000 241,018 6,018 Departmental Income 407,140 333,677 (73,463) Intergovernmental Charges 252,876 183,655 (69,221) . Use of Money and Property 547,609 635,665 88,056 Licenses and Permits 150,900 158,542 7,642 Fines and Forfeitures 71,500 116,782 45,282 Sale of Property and Compensation for Loss 3,000 235,887 232,887 Miscellaneous Local Sources 135,632 117,879 (17,753) State Aid 496,964 796,217 299,253 . Federal Aid 113,000 186,919 73,919 Total Revenues 11 ,887,290 12,445,353 558,063 EXPENDITURES General Govemment Support 2,698,873 2,421,560 277,313 . Public Safety 5,090,731 4,847,155 243,576 Health 42,800 40,008 2,792 Transportation 388,582 357,529 31,053 Economic Assistance and Opportunity 666,604 620,448 46,156 Culture and Recreation 532,105 467,212 64,893 Home and Community Services 184,495 182,076 2,419 . Employee Benefits 2,432,276 2,083,188 349,088 Debt Service - Principal and Interest 1,138,300 1 ,080,685 57,615 Total Expenditures 13,174,766 12,099,861 1,074,905 Excess (Deficiency) of Revenues Over Expenditures (1,287,476) 345,492 1,632,968 . Other financing sources (uses) Operating Transfers In 440,800 461,894 21,094 Operating Transfers Out (216,878) (123,573) 93,305 Total Other Financing Sources (Uses) 223,922 338,321 114,399 . Excess (Deficiency) of Revenues and Other Sources Over Expenditures and Other Uses $ (1,063,554) 683,813 $ 1,747,367 Fund Balances at Beginning of Year 2,746,984 . Fund Balances at End of Year $ 3,430,797 . See notes to the financial statements. ,5- . TOWN OF SOUTHOLD COMBINED STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL SPECIAL REVENUE FUNDS . Year ended December 31, 1998 Variance Favorable Budget Actual (Unfavorable) . REVENUES Real Property Taxes $ 3,914,230 $ 3,893,310 $ (20,920) Other Real Property Tax Items 10,731 1,776 (8,955) Non,Property Tax Items 65,000 122,840 57,840 Departmental Income 1,728,100 1,649,198 (78,902) . Intergovernmental Charges 46,500 28,800 (17,700) Use of Money and Property 170,991 158,012 (12,979) Licenses and Permits 124,700 123,955 (745) Sale of Property and Compensation for Loss 105,183 104,336 (847) Miscellaneous Local Sources 5,000 12,480 7,480 I nterfund Revenues 28,351 28,351 . State Aid 220,368 651,169 430,801 Federal Aid 419,969 254,370 (165,599) Total Revenues 6,810,772 7,028,597 217,825 EXPENDITURES . General Govemment Support 37,550 31,787 5,763 Public Safety 530,030 287,935 242,095 Health 3,950 3,700 250 Transportation 2,720,289 2,516,270 204,019 Home and Community Services 3,379,519 2,868,312 511,207 Employee Benefits 468,779 574,314 (105,535) . Debt Service, Principal and Interest 233,367 208,253 25,114 Total Expenditures 7,373,484 6,490,571 882,913 Excess (Deficiency) of Revenues Over Expenditures (562,712) 538,026 1,100,738 . Other financing sources (uses) Operating Transfers In 45,850 40,000 (5,850) Operating Transfers Out (478,450) (461,894) 16,556 Total Other Financing Sources (Uses) (432,600) (421,894) 10,706 . Excess (Deficiency) of Revenues and other Sources Over Expenditures and Other Uses $ (995,312) 116,132 $ 1,111,444 . Fund Balances at Beginning of Year 1,665,365 Fund Balances at End of Year $ 1,781,497 . See notes to the financial statements. . ,6, Town of South old Notes To The Financial Statements December 31, 1998 . A. Summary of SiQnificant AccountinQ Policies The financial statements of the Town of Southold have been prepared in conformity with generally accepted accounting principles (GAAP) as applied to government units. The . Governmental Accounting Standards Board (GAS B) 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. Financial Reporting Entity The Town of Southold, which was established in 1640, is governed by its Charter, the . Local Municipal 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 Supervisor serves as Chief Executive Officer and as Chief Fiscal Officer. Basic services provided included Public Safety, Health, Transportation, Economic Assistance and Opportunity, Culture and Recreation, and Home and Community . Services. All governmental activities and functions performed for the Town is its direct responsibility, No other governmental organizations have been included or excluded from the 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 as set forth in GASB Statement 14, . The decision to include a potential component unit in the Town's reporting entity is based on several criteria set forth in GASB 14 including legal standing, fiscal dependency, and financial accountability, Based on the application of these criteria, the following is a brief review of certain entities considered in determining the Town of Southold's reporting entity. . Certain special districts of the Town of Southold provide sanitation, ferry, and park services to residents and businesses within the districts. These special districts are organized under New York State Town law and have separately elected boards, Long,term debt backed by the full faith and credit of the Town and other financial matters result in a fiscal interdependency with the Town, Accordingly, these special . districts have been determined to be component units of the Town of Southold and are presented discretely in a separate column in the combined financial statements to emphasize that they are legally separate from the primary government. These districts include the following: The Fishers Island Ferry District, established in 1947 . Orient Mosquito District, established in 1916 Fishers Island Garbage and Refuse District, established in 1952 Cutchogue,New Suffolk Park District, established in 1953 Orient,East Marion Park District, established in 1969 South old Park District, established in 1907 . Mattituck Park District, established in 1941 . - 7 ' Town of Southold Notes To The Financial Statements December 31,1998 . A. Summary of Sicmificant AccountinQ Policies (continued) 1. Financial ReportinQ Entity (continued) . Complete financial statements of these component units can be obtained from their respective administrative offices: Orient Mosquito District Fishers Island Garbage Main Road & Refuse District . Orient, NY 11957 Fishers Island, NY 06390 Cutchogue,New Suffolk Orient-East Marion Park District Park District P,O. Box 311 Route 25 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 Main Street Southold, NY 11971 2. Fund AccountinQ . The Town of Southold uses funds and account groups to report on its financial position and the results of its operations, Fund accounting is designed to demonstrate legal compliance and to aid financial management by segregating transactions related to certain government functions or activities, . A fund is a separate accounting entity with a self-balancing set of accounts, An account group, on the other hand, is a financial reporting device designed to provide accountability for certain assets and liabilities that are not recorded in the funds because they do not directly affect net expendable available financial resources. The Town records its transactions in the fund types and account groups described . below, Fund CateQories Governmental Funds - Governmental funds are those through which most . governmental functions are financed, The acquisition, use and balance of expendable financial resources and the related liabilities are accounted for through governmental funds, The measurement focus of the governmental funds is upon determination of financial position and changes in financial position. The following are the Town's governmental fund types. . . ,8, Town of Southold Notes To The Financial Statements December 31,1998 . A. Summary of Siqnificant Accountinq Policies (continued) 2. Fund Accountinq (continued) . Fund Cateqories (continued) General Fund - the principal operating fund which includes all operations not required to be recorded in other funds. Special Revenue Funds ' used to account for the proceeds of specific revenue . sources that are legally restricted to expenditures for specific purposes. The following Special Revenue Funds are utilized: Hiqhway Funds - To maintain and operate highways. . General Fund Part Town, To provide general services outside the Village of Greenport, Special Grant Fund - Segregate and account for projects funded by Community Development revenue. . Special District Funds - To provide special services to areas that encompass less than the whole town, Capital Proiects Fund ,used to account for financial resources to be used for the acquisition or construction of major capital facilities (other than those financed by . special assessment funds and trust funds), Fiduciary Funds - used to account for assets held by the local government in a trustee or custodial capacity: Trust and Aqencv Funds ' used to account for money received and held in the . capacity of trustee, custodian or agent. These include expendable trusts, non expendable trusts, and agency funds. Account Groups Account Groups are used to establish accounting control and accountability for . general fixed assets and generallong,term debt. The two account groups are not "funds", They are concerned with measurement of financial position and not results of operations. The General Fixed Assets Account Group - used to account for land, buildings, . improvements other than buildings, and equipment utilized for general government purposes, except those accounted for in proprietary funds, The General Lonq-Term Debt Account Group - used to account for all long term debt except that accounted for in proprietary and special assessment funds. . . ,9, Town of Southold Notes To The Financial Statements . December 31, 1998 A. Summary of SiQnificant Accounting Policies (continued) . 3. Basis of Accounting/Measurement Focus Basis of accounting refers to when revenues and expenditures and the related assets and liabilities are recognized in the accounts and reported in the financial statements. Basis of accounting relates to the timing of the measurements made, regardless of the measurement focus, Measurement focus is the determination of what is . measured, Le, expenditures or expenses. Modified Accrual Basis - All governmental Funds and Expendable Trust Funds are accounted for using the modified accrual basis of accounting, . Under this basis of accounting, revenues are recorded when measurable and available. Available means collectible within the current period or soon enough thereafter to be used to pay liabilities of the current period. Material revenues that are accrued include real property taxes, state and federal aid, sales tax and certain user charges. If expenditures are the prime factor for . determining eligibility, revenues from federal and state grants are accrued when the expenditure is made, Expenditures are recorded when incurred except that: . Expenditures for prepaid expenses and inventory-type items are recognized at the time of purchase, Principal and Interest on indebtedness are not recognized as an expenditure until due. . Compensated absences, such as vacations and sick leave, which vests or accumulates, are charged as an expenditure when paid, Account Groups - General fixed assets are recorded at actual or estimated cost or, in the case of gifts and contributions, at the fair market value at the time received. No . provision for depreciation is made, Generallong,term debt liabilities are recorded at the par value of the principal amount. No liability is recorded for interest payable at maturity, 4. Encumbrances . Encumbrance accounting, under which purchase orders, contracts and other commitments for the expenditure of monies are recorded for budgetary control purposes to reserve that portion of the applicable appropriations is employed in all funds, Encumbrances are reported as reservations 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. . , 10 - Town of Southold Notes To The Financial Statements December 31, 1998 . A. Summary of Siqnificant Accountina Policies (continued) 5. Assets, Liabilities and Fund Eauity . Receivables Receivables include amounts due from Federal, State, and other governments and individuals for services provided by the Town, Receivables and revenues are recorded as earned or as specific program expenditures are incurred. . Inventory - Materials and Supplies Inventory in the General Fund is valued at cost, using weighted average cost method. Inventory in.these funds is accounted for under the consumption method. Property. Plant and Eauipment - General . Fixed assets purchased for general governmental purposes are recorded as expenditures in the governmental funds and are capitalized at costs (or estimated historical costs for assets purchased prior to 1976) in the General Fixed Assets Account Group. Contributed fixed assets are recorded at fair market value at the . date received, Fixed assets consisting of certain infrastructure type improvements other than buildings, including roads, bridges, curbs and gutters, streets and sidewalks, drainage and lighting systems, have not been capitalized, Such assets normally are . immovable and of value only to the Town. Therefore, the purposes of stewardship for capital expenditures can be satisfied without recording these assets. No depreciation has been provided on general fixed assets, nor has interest on general fixed assets construction in progress been capitalized, Deferred Revenue . Deferred revenues are those where asset recognition criteria have been met, but which revenue recognition criteria have not been met. Such amounts have been deemed to be "measurable" but not "available" pursuant to GAAP, . Lona-Term Obliaations Long,term debt is recognized as a liability of a governmental fund when due, For other long-term obligations, only that portion expected to be financed from expendable available financial resources is reported as a fund liability of a governmental fund. The remaining portion of such obligations is reported in the . General Long-Term Debt Account Group, . . - 11 . Town of Southold Notes To The Financial Statements December 31, 1998 . A. Summary of SiQnificant AccountinQ Policies (continued) 5. Assets. Liabilities and Fund Equity (continued) . Fund Equity - Reservations and DesiQnations Portions of fund equity are segregated for future use and therefore not available for future appropriation or expenditure, Amounts reserved for encumbrances, inventory, insurance claims, represent portions of fund equity which are required to be . segregated in accordance with State law or GAAP. Designations of fund balances in governmental funds indicate the utilization of these resources in the subsequent year's budget or tentative plans for future use. 6. Revenue and Expenditures . Property Taxes Real property taxes for the ensuing year are levied annually and become a lien on December 1, Taxes are collected during the period December 1 to May 31, with the first half due January 10 and the second half due May 31. Tax payments made . during the period December 1 to December 31 are recognized as revenue in the subsequent year, Taxes for county purposes (apportioned to the area of the county inside the Town of Southold) are levied together with taxes for town and special district purposes as a single bill. The towns and special districts receive the full amount of their levies . annually out of the first amounts collected on the combined bills, The county assumes enforcement responsibility for all taxes levied in the towns (and for unpaid county taxes in the Town), Unpaid village taxes and school district taxes are turned over to the county for . enforcement. Any such taxes remaining unpaid at year end are relieved as county taxes in the subsequent year. Interfund Transactions Interfund Revenues . Interfund revenues, quasi-external transactions, in the operating funds represent amounts charged for services or facilities provided by that operating funds. The amounts paid by the fund receiving the benefit of the service or facilities are reflected as an expenditure of that fund. . OperatinQ Transfers Operating transfers represent payments to the Risk Retention Fund and Capital Projects Fund from other funds for their appropriate share of the risk retention and capital projects. . . , 12 ' Town of Southold Notes To The Financial Statements December 31, 1998 . A. Summary of Significant Accountinq Policies (continued) Insurance . The Town assumes the liability for most risk including, but not limited to, property damage and personal injury liability. Judgments and claims are recorded when it is probable that an asset has been impaired or a liability has been incurred and the amount of loss can be reasonably estimated. . Compensated Absences Vested or accumulated vacation or sick leave of governmental funds that is expected to be liquidated with expendable available financial resources is reported as an expenditure and a fund liability of the respective fund that will pay it. Amounts of . vested or accumulated vacation or sick leave of governmental funds that are not expected to be liquidated with expendable available financial resources are reported in the General Long-Term Debt Account Group, No expenditure is reported for these amounts. In accordance with the provisions of Statement No. 16 of the Governmental Accounting Standards Board, Accounting for Compensated Absences, . no liability is recorded for non,vesting accumulating rights to receive sick pay benefits, Total Columns on the General Purpose Financial Statements Total columns on the general purpose financial statements are captioned . "Memorandum Only" to indicate that they are presented only to facilitate financial analysis, Data in these columns do not present financial position, results of operations or changes in financial position in conformity with generally accepted accounting principles, nor is such data comparable to a consolidation. Interfund elimination's have not been made in the aggregation of the data, . B. Stewardship, Compliance. Accountability Budgetary Data 1. Budqet Basis of Accountinq . 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, . Budgetary controls for special revenue funds are established in accordance with the applicable grant agreement, which may cover a period other than the Town's fiscal year. Appropriate budgetary adjustments have been made to reflect these grant agreements during the Town's fiscal year. . . , 13 ' Town of Southold Notes To The Financial Statements . December 31, 1998 B. Stewardship, Compliance, Accountability (continued) Budgetary Data (continued) . 2. BudQet Policies - The budget policies are as follows: a, No later than October 1, the SupeNisor 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, All modifications of the budget must be approved by the Town Board. However, the SupeNisor is authorized to transfer certain budgeted amounts within departments, . 3. Material Violations of Finance Related Activities There are no material violations of finance,related provisions, 4. Fund Balances . 1, Certain funds of the Town apply to areas less than the entire Town. The fund equity at December 31, 1998 is allocated as follows: General Fund (Townwide) $3,430,797 Special Revenue Funds . General Fund Part Town 327,172 Highway Fund -- Townwide 389,972 Highway Fund -- Part Town 206,577 Special District Funds Shorecrest Road Improvement 594 . Lands End Road Improvement 569 East-West Fire Protection 58,779 Southold Wastewater Disposal 318,831 Fishers Island Sewer 45,233 Solid Waste Management 433,770 . Discretely Presented Component Units Fishers Island Refuse & Garbage 455,261 Fishers Island Ferry 650,856 Cutchogue'New Suffolk Park 26,222 Southold Park 5,496 . Orient,East Marion Park 12,550 Mattituck Park 15,763 Orient Mosquito 9.452 Total $ 6,387,894 . . . 14. Town of Southold Notes To The Financial Statements December 31, 1998 . B. Stewardship. Compliance, Accountability (continued) Budgetary Data (continued) . 4. Fund Balances (continued) Deficit Fund Balances The capital projects fund had a deficit fund balance at December 31, 1998, The deficit will be eliminated as short.term debt is redeemed or converted to . permanent financing, 2. Reserves The capital projects fund equity includes capital reserve funds established for the following purpose: . Purpose Balance End of Year Agricultural Land Development Rights $ 1,556,999 Preservation of Open Spaces (718) Vault Improvements 24,200 Mattituck Creek Drainage Mitigation 12,680 . Seaview Trails of the North Fork 6,964 Scenic Byways (4,400) Shorecrest Road Improvement (9,000) Trammel Screen & Leaf Shredder (180,000) Police Dept. Computer System (153,160) . Park Land Acquisition (202,580) Garbage Truck Acquisition (72,003) Cutchogue Landfill Capping & Closure (501,902) Highway Sweeper & Payloader (35,000) Landfill Payloader (72,000) . Computer Equipment Upgrade (150,083) Landfill Truck Tractor & Payloader (102,000) Highway Drain Cleaner (124,000) Landfill Equipment & Scale House (150.654) Total ($ 156.657) . 5. The Year 2000 Issue The Governmental Accounting Standards Board requires state and local governments to disclose information about the effect of the year 2000 issue. The year 2000 issue is the result of shortcomings in many electronic data processing systems and other equipment that make operations beyond the year 1999 . troublesome, Problems affecting a wide range of governmental activities could result if computers and other electronic equipment that are dependent upon date. sensitive coding are not corrected, These problems have the potential for causing a disruption of government services and an increased demand for government services. . . . 15. Town of Southold Notes To The Financial Statements December 31, 1998 . S. Stewardship. Compliance, Accountabilitv (continued) Budgetary Data (continued) . 5. The Year 2000 Issue (continued) The Town is currently upgrading its software and hardware for year 2000 compliance, and does not expect that expenditures for converting, upgrading, or replacing its data . processing systems so they are fully "Year 2000" compliant will have a significant impact on it's budgets for the current fiscal year or the subsequent fiscal year commencing January 1, 2000, The Town does expect to be fully "Year 2000" compliant prior to January 1, 2000 in order that its financial and other areas critical to conducting operations will continue without interruption, However, the town has not . set a timetable of the stages of work completed and work to be completed to make systems and other equipment critical to continued operations "Year 2000" compliant. The Town is aware that the year 2000 compliance issue is a global data processing problem that affects other governments and the private sector whose operations are . interdependent in many situations. While this makes predictions troublesome, the year 2000 issue is not expected to cause a significant disruption of services in the Town of Southold. C. Detail Notes on all Funds and Account Groups . 1. Assets 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. . Town investment policies are governed by state statutes. In addition, the Town has its own written investment policy. Town monies are deposited in FDIC insured commercial banks or trust companies located within the state, The Supervisor is authorized to use demand accounts and certificates of deposits. Permissible . investments include obligations of the U.S. Treasury and U,S. Agencies, repurchase agreements, obligations of New York State or its localities, and investments made by the Cooperative Liquid Asset Security System (C, L. A. S. S.). C.LAS.S. is a cooperative investment plan consisting of U.S, Treasury obligations and repurchase agreements relating to treasury obligations. . The written investment policy requires that repurchase agreements be purchased from banks located within the State and that underlying securities must be obligations of the federal government. Underlying securities must have a market value of at least 102 percent of the cost of the repurchase agreement. . . - 16 . Town of Southold Notes To The Financial Statements December 31, 1998 . C. Detail Notes on all Funds and Account Groups 1. Assets (continued) Cash and Investments (continued) . Collateral is required for demand deposits and certificates of deposit at 102 percent of all deposits not covered by federal deposit insurance, Obligations that may be pledged as collateral are obligations of the United States and its agencies and obligations of the State and its municipalities and school districts. Deposits - All deposits, including certificates of deposits, are carried at cost plus . accrued interest. Deposits at year-end were entirely covered by federal depository insurance or by collateral held by the Town's custodial banks in the Town's name. At December 31,1998, the cash in banks was $5,485,990 and collateral held against cash in banks was $7,320,868 consisting of FDIC insurance andlor securities held in . the name of the Town of Southold. Restricted Cash Restricted cash consists of assessments collected by the Receiver of Taxes not yet remitted to the appropriate governmental entity, . 2. Fixed Assets A summary of changes within the General Fixed Assets Account Group for the Town of Southold for the year ended December 31, 1998 is as follows: . Balance Balance 1/1/98 Additions Deletions 12131/98 Primary Government: Land $ 7,556,515 $ 795,920 $ 8,352,435 . Building and improvements 2,432,855 2,432,855 Machinery and equipment 9.313.109 747,493 $ 84.073 9.976.529 Total $19.302,479 $ 1,543,413 $ 84.073 $ 20.761,819 Balance Balance . 1/1/98 Additions Deletions 12131/98 Component Units: Land $ 41,717 $ 41,717 Building and improvements 4,283,540 $ 155,746 4,439,286 Machinery and equipment 3.517.254 92.742 0 3.609.996 . Total $ 7.842,511 $ 248,488 $ 0 $ 8.090.999 . . , 17 - Town of Southold Notes To The Financial Statements . December 31, 1998 C. Detail Notes on all Funds and Account Groups (continued) 3. Interfund Receivables and Pavables . Interfund receivables and payables for the primary government at December 31, 1998 were as follows: Interfund Interfund Fund Receivables Pavables General Fund Whole Town $ 210,959 $ 4,652,301 . General Fund Part Town 473,611 Highway Fund Whole Town 967,027 Highway Fund Part Town 1,789,378 Shorecrest Road Imp, District 8,667 East-West Fire Protection District 277,060 . Solid Waste Management District 1,109,915 Wastewater Disposal District 6,257 Fishers Island Sewer District 9,155 Capital Projects 52,165 205,119 Trust & Agency 46,774 . Totallnterfund $4.904.194 $4,904.194 4. Due To/From Primary Government and Component Units Amount Amount Receivable Pava~ _ . Component Units: Fishers Island Refuse & Garbage District $ 438,750 Fishers Island Ferry District 290,934 Orient Mosquito District 50,000 Cutchogue-New Suffolk Park District 80,750 . Southold Park District 204,250 Orient,East Marion Park District 16,000 Mattituck Park District 228,510 Primary Government General Fund $ 1,309.194 . Totals $1,309,194 $ 1,309.194 5. Indebtedness Short-Term Debt . Liabilities for bond anticipation notes (BAN's) are generally accounted for in the capital projects fu nds, 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. . . - 18 ' Town of Southold Notes To The Financial Statements December 31,1998 . C. Detail Notes on all Funds and Account Groups (continued) 5. Indebtedness (continued) . Short-Term Debt (continued) State law requires that BAN's issued for capital purposes be converted to long term obligations within five years after the original issue date, However, BAN's issued for assessable improvement projects may be renewed for periods equivalent to the . maximum life of the permanent financing, provided that stipulated annual reductions of principal are made, To Be Redeemed 1999 , Interest Budget Description Amount Rate Appropriations Bonds . Various Purposes $ 426,000 3,89% $ 123,000 $ 303,000 Various Purposes 996,000 3,52% 278,000 718,000 Landfill Closure 330,969 300,000 30.969 Total $ 1,752,969 $ 701,000 $1,051,969 . Lonq-Term Debt a, At December 31,1998 the total outstanding indebtedness of the Town, excluding the above obligations aggregated $8,305,000, Of this amount, $8,305,000 was subject to the constitutional debt limit and represented approximately 3.71% of its . debt limit. b, Serial Bonds - The Town borrows money in order to acquire land or equipment or construct buildings and improvements. This enables the cost of these capital assets to be borne by the present and future taxpayers receiving the benefit of the . capital assets, These long term liabilities, which are full faith and credit debt of the local government, are recorded in the General Long-Term Debt Account Group. The provision to be made in future budgets for capital indebtedness represents the amount exclusive of interest, authorized to be collected in future years from taxpayers and others for liquidation of the long-term liabilities. . Other Long,Term Debt ' In addition to the above long,term debt, the local c. government had the following non,current liabilities: . Due to New York State Department of Environmental Conservation (NYSDEC) . Represents the non-current portion of the liability due under the settlement in which all charges of operational violations at the Cutchogue landfill were dropped. . Compensated Absences - Represents the value of earned and unused portion of the liability for compensated absences. . . - 19- Town of Southold Notes To The Financial Statements December 31, 1998 . C. Detail Notes on all Funds and Account Groups (continued) 5. Indebtedness (continued) . Long-Term Debt (continued) d. Summary Lonq.Term Debt. The following is a summary of long-term liabilities outstanding at December 31, 1998 by fund type and account group: . General Long Term Discretely Presented Liabilitv Debt Account Group Component Unit Total Serial Bonds $ 8,089,208 $ 215,792 $ 8,305,000 Due to NYSDEC 195,000 195,000 Judgments and Claims 1,000,000 1,000,000 Compensated Absences 2,145,397 2,145,397 . Total Long-Term Debt Account Group $ 11,429,605 $ 215,792 $ 11,645,397 e, The following is a summary of changes in the long term liabilities for the period . ended December 31,1998: Bonds and Due to Compensated Notes NYSDEC Absences Payable at beginning of Fiscal Year $ 6,805,000 $ 260,000 $ 2,103,836 . Additions 2,000,000 Deletions 500,000 65,000 Payable at end of Fiscal Year $ 8,305,000 $ 195,000 $ 2,145,397 . Additions and deletions to compensated absences are shown net since it is impracticable to determine these amounts separately, f, Lonq Term Debt Maturity Schedule - The following is a statement of serial bonds with corresponding maturity schedules: . Payable from: General Fund, Special Revenue Fund, Discretely Presented Component Unit Description: Various Purposes Dated: October 1, 1984 . Issue Amount: $2,172,500 Interest Rate: 9.1% Final Maturity Date: April 1 , 2005 Balance as of December 31, 1998: $870,000 . . .20. Town of Southold Notes To The Financial Statements December 31, 1998 . C. Detail Notes on all Funds and Account Groups (continued) 5. Indebtedness (continued) . LonCl-Term Debt (continued) f. Lona Term Debt Maturitv Schedule (continued) Payable from: General Fund, Special Revenue Fund . Description: Various Purposes Dated: February 15, 1991 Issue Amount: $2,708,500 Interest Rate: 6,375% Final Maturity Date: February 15, 2011 . Balance as of December 31, 1998: $1,300,000 Payable from: General Fund, Special Revenue Fund Description: Various Purposes . Dated: April 15, 1993 Issue Amount: $2,695,000 Interest Rate: 5.00% Final Maturity Date: February 15, 2012 Balance as of . December 31, 1998: $1,850,000 Payable from: General Fund, Special Revenue Fund, Discretely Presented Component Unit Description: Pension System . Dated: October 1, 1993 Issue Amount: $678,000 Interest Rate: October 1, 1993 to October 1, 2001 - 6,000% October 1, 2001 to October 1, 2003 - 6.100% October 1, 2003 to October 1, 2005 . 6.125% . Final Maturity Date: October 1, 2005 Balance as of December 31, 1998: $430,000 . . . .21 . Town of Southold Notes To The Financial Statements . December 31, 1998 C. Detail Notes on all Funds and Account Groups (continued) 5, Indebtedness (continued) . LonQ-Term Debt (continued) f. Lonq Term Debt Maturity Schedule (continued) Payable from: General Fund Description: Agricultural Land Development Rights . Dated: November 1, 1995 Issue Amount: $1,750,000 Interest Rate: November 1, 1995 to November 1, 1997 - 5.00% November 1, 1997 to November 1, 2008 - 5.10% November 1, 2008 to November 1, 2009 - 5,20% . November 1, 2009 to November 1, 2010. 5.30% November 1, 2010 to November 1, 2011 - 5,375% November 1, 2011 to November 1, 2012 - 5.40% November 1, 2012 to November 1, 2015 . 5,50% Final Maturity Date: November 1 , 2015 . Balance as of December 31,1998: $1,600,000 Payable from: General Fund Description: NYS Environmental Facilities Corporation - State . Water Pollution.Control Revolving Fund Revenue Bonds Dated: February 15, 1996 Issue Amount: $300,000 Interest Rate: 2,95% Final Maturity Date: December 15, 2014 . Balance as of December 31,1998: $255,000 Payable from: General Fund Description: Agricultural Land Development Rights . Dated: May 1, 1998 Issue Amount: $2,000,000 Interest Rate: May 1, 1998 to May 1, 1999 - 4.80% May 1, 1999 to May 1, 2014 .4,85% May 1, 2015 to May 1,2018.4.875% . Final Maturity Date: May 1, 2018 Balance as of December 31, 1998: $2,000,000 . . - 22- Town of Southold Notes To The Financial Statements December 31, 1998 . C. Detail Notes on all Funds and Account Groups (continued) 5. Indebtedness (continued) . Long-Term Debt (continued) g. The following table summarizes the Town's future debt service requirements for Serial Bonds as of December 31, 1998: Year EndinQ Principal Interest 1999 $ 585,000 $ 459,248 . 2000 585,000 423,517 2001 615,000 386,833 2002 565,000 350,218 2003 585,000 314,879 2004-2008 2,505,000 1,078,098 . 2009-2013 2,035,000 463,568 2014-2018 830,000 92.071 Totals $ 8,305.000 $ 3.568.432 h, The following table summarizes the Town's future payment requirements for the . stipulation of settlement with the NYS Dept. of Environmental Conservation as of December 31, 1998: Year EndinQ Amount 1999 $ 65,000 2000 65,000 . 2001 65,000 Total $ 195,000 i. In addition to the debt shown above, the following long-term debt has been authorized but remains unissued at December 31, 1998: . Payable from: General Fund Description: Preservation of Open Spaces Rights Authorized Amount: $ 2,000,000 Payable from: General Fund . Description: Preservation of Open Spaces Authorized Amount: $ 2,000,000 Payable from: General Fund Description: Garbage Truck Acquisition . Authorized Amount: $ 88,000 Payable from: Southold Solid Waste Management District Description: Cutchogue Landfill Capping and Closure Authorized Amount: $ 5.469,031 . . ,23 - Town of Southold Notes To The Financial Statements December 31,1998 . C. Detail Notes on al/ Funds and Account Groups (continued) 6. Retirement System . Plan Description The Town participates in the New York Employee's Retirement System, the New York State Policemen's and Firemen's Retirement System and the Public Employee's Group Life Insurance Plan (Systems). These are cost,sharing multiple-employer . retirement systems, The Systems provide retirement benefit as well as death and disability benefits, Obligations of employers to contribute and benefits to employees are governed by the New York State Retirement and Social Security Law (NYSRSSL), As set forth in the NYSRSSL, the Comptroller of the State of New York (Comptroller) serves as sole trustee and administrative head of the Systems, The . Comptroller shall adopt and may amend rules and regulations for the administration and transactions of the business of the Systems and for the custody and control of their funds. The Systems issue a publicly available financial report that includes financial statements and required supplementary information, That report may be obtained by writing the New York State and Local Retirement System, Gov. Alfred E. . Smith State Office Building, Albany, N, Y. 12244, Fundinq Policv The Systems are noncontributory except for employees who joined the New York . State and Local Employees' Retirement System after July 27, 1976 who contribute 3% of their salary, Under the authority of the NYSRSSL, the Comptroller shall certify annually the rates expressed as proportions of payroll of members, which shall be used in computing the contributions required to be made by employers to the pension accumulation fund. . The Town of South old is required to contribute at an actuarially determined rate, The required contributions for the current year and two preceding years were as follows: ERS PERS . 1998 $ 71,505 $ 68,060 1997 $ 84,275 $ 273,906 1996 $ 155,243 $ 300,392 The Town's contributions made to the Systems were equal to 100% of the . contributions required for each year. . . - 24- Town of Southold Notes To The Financial Statements . December 31,1998 C. Detail Notes on all Funds and Account Groups (continued) 6. Retirement System (continued) . Fundinq Policy (continued) Since 1989, the Systems' billings have been based on Chapter 62 of the Laws of 1989 of the State of New York, This legislation requires participating employers to make payments on a current basis, while amortizing existing unpaid amounts relating . to the Systems' fiscal years ending March 31, 1988 and 1989 (which otherwise were to have been paid on June 30, 1989 and 1990, respectively) over a 17.year period, with an 8.75% interest factor added, Local governments were given the option to prepay this liability, The Town elected to make the full payment on December 15, 1993, by issuing serial bonds to replace this debt. . Pursuant to Chapter 12 of the Laws of 1995 and Chapter 30 of the Laws of 1996, the State Legislature authorized local governments to make available a retirement . incentive program with total costs of $32,300 plus interest, of which $8,445 was' charged to expenditures/expense in the governmental funds in the current fiscal year. . The cost of the programs are billed and paid over five years and began December 15, 1996 for Chapter 12 and December 15, 1997 for Chapter 30. Furthermore, another incentive was made available pursuant to Chapter 47 of the Laws of 1998 with a total estimated cost of $9,880 plus interest, and will be billed and paid over five years beginning December 15, 1999. . 7. Post Retirement Benefits In addition to providing pension benefits, the Town provides health insurance coverage and survivor benefits for retired employees and their survivors. Substantially, all Town employees may become eligible for these benefits if they . reach normal retirement age while working for the Town, Health care benefits and survivors' benefits are provided through either an insurance company or a self.funded plan whose premiums are based on the benefits paid during the year. The Town recognizes the cost of providing benefits by recording its share of insurance premiums or the actual benefits paid from the General Fund as an expenditure in the . year paid, During the year, $1,437,548 was paid on behalf of 80 retirees and 190 active employees and is recorded as expenditures in the General Fund. The cost of providing benefits for retirees is not separable from the cost of providing benefits for active employees, . 8. Compensatory 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. . .25 - Town of Southold Notes To The Financial Statements December 31, 1998 . C. Detail Notes on all Funds and Account Groups (continued) 8. Compensatory Absences (continued) . Estimated vacation and sick leave and compensatory absences accumulated by governmental fund type employees have been recorded in the general long term obligations account group. Vested vacation and sick leave are recorded as a long-term liability in the general . long term debt account group if payable from future financial resources, or as a fund liability and expenditures if payable from current resources. 9. Deferred Compensation Plan . In October 1997, the Governmental Accounting Standards Board issued Statement No, 32 Accounting and Financial Reporting for Internal Revenue Service Code Section 457 Deferred Compensation Plans, This statement established accounting and financial reporting standards for Internal Revenue Service Code Section 457 deferred compensation plans for state and local governments. . On October 1, 1998, the Town of South old Deferred Compensation Committee created a Trust and Custody agreement making Nationwide Trust Company F,S,B. and FMB Trust Company N.A. the Trustees and Custodians of the Town of Southold Deferred Compensation Plan. Consequently, Statement No, 32 became effective for . the Town's Deferred Compensation Plan as of October 1, 1998, Since the Town is no longer the trustee of the plan, the plan no longer meets the' criteria for inclusion in the Town's financial statements, Therefore, effective October 1, 1998, the market value of the plan assets are no longer displayed in the financial statements. . D. Commitments and ContinQencies The Town has received grants, which are subject to audit by agencies of the State and Federal Governme.nts. Such audits may result in disallowances and a request for a return of funds to the federal and state governments, Based on past audits, the local . government administration believes disallowances, if any, will be immaterial. In addition there is a matter under discussion with the United States Coast Guard regarding the reconstruction of the Brushes Creek Bridge. The town believes it is at least reasonably possible that there will be $500,000 of potential forced capital outlay to . reconstruct the bridge, This amount has been provided for in the General Long.Term debt account group. . . - 26. Town of Southold Notes To The Financial Statements December 31,1998 . D. Commitments and Contingencies (continued) 1, Landfill Closure and Postclosure Care Costs . The Town ceased accepting waste at its Cutchogue landfill as of October 8, 1993. The Town entered into a stipulation of settlement with the New York State Department of Environmental Conservation in October of 1994 in which all charges of operational violations at the Cutchogue landfill were dropped. Under the stipulation, the Town agreed to close and place a final cover over the landfill and to pay a civil . penalty of $650,000 over seven years. In addition to placement of the final cover on the landfill, state and federal regulations presently require the Town to perform certain maintenance and monitoring functions at the site for up to thirty years, Actual costs associated with the placement of the final cover are estimated at . $5,800,000, Financing for closure activities will be provided through a grant from the New York State Department of Environmental Conservation up to the maximum of $2,000,000 with the balance provided with a State subsidized loan through the New York State Environmental Facilities Corporation, Costs associated with postclosure care will be covered by charges to future landfill users and future tax revenue. . 2. Litigation The State of New York has commenced a lawsuit against the Town for unlawful discharge of gasoline and petroleum products at the Town's Highway department on Peconic Lane, As of the date of this report, the likelihood of an unfavorable outcome . is uncertain, but is at least reasonably possible that cleanup costs and interest could total up to.$1,OOO,OOO. Any amounts reserved on all lawsuits have been recorded in the General Long.Term debt account group and in the opinion of the Town's management and legal counsel, all other claims are expected to be resolved with no further anticipated reserves . considered necessary. E. Lease Commitments and Leased Assets The Town leases property and equipment under operating leases, Total rental expenditures on such leases for the fiscal year ended December 31, 1998 were . approximately $27,942, Future obligations over the primary terms of the Town's leases as of December 31, 1997 are as follows: 1999 $ 15,712 2000 9,145 I. 2001 6,802 2002 6,802 2003 6,802 2004 & thereafter 2.400 Total $ 47,663 . . .27 - Town of Southold Notes To The Financial Statements . December 31, 1998 F. Condensed Financial Statements for the Discretelv Presented Component Units The following represents condensed financial statements for the discretely presented component units as of and for the year ended December 31, 1998: . Condensed Balance Sheet Assets and Other Debits Liabilities Amounts 10 be Bonds and Due From Property Provided for Other . Current Primary Building & Lon9.Term Current Long.Term Assets Government Equipment Debt Liabilities Liabilities Fishers Island Ferry District $ 677 ,202 $ 290,934 $ 7,566,745 $ 215,792 $ 317,280 $ 215,792 Fishers Island Refuse District 459,019 438,750 453,602 442,508 Cutchogue.New Suffolk Park Dist. 26,222 80,750 80,750 Southold Park District 5.496 204,250 204,250 . Orient.East Marion Park District 18,354 16,000 21,804 Mattituck Park District 22,815 228,510 70,652 235,562 Orient Mosquito District 9.452 50,000 50,000 $ 1.218,560 $ 1,309,194 $ 8,090,999 $ 215,792 $ 1.352.154 $ 215.792 . Condensed Statement of Revenues, Expenditures and changes in Fund Balances Excess (Deficiency) Expenditures of Revenues Capital Debt and Revenues Current Outlav Service Expenditures . $ 1,066,323 $ Fishers Island Ferry District $ 1,343,819 192,547 $ 47,370 $ 37,579 Fishers Island Refuse District 420,843 403,251 17,592 Cutchogue.New Suffolk Park Dist. 71,659 53,963 14,195 3,501 Southold Park District 144,637 120,137 5,895 20,160 (1,555) Orient.East Marion Park District 16,792 23,625 (6,833) Mattituck Park District 211,852 192,528 9,822 9,502 . Orient Mosquito District 53,890 51.462 2.428 $ 2,263.492 $ 1.911,289 $ 222.459 $ 67,530 $ 62,214 G. Subsequent Event . Subsequent to year-end, the Town issued a bond in the amount of $1,900,000 for the Preservation of Open Spaces, This bond, which was approved for $2,000,000 but not issued as of December 31,1998, is previously described in note C(5)(i). 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CII 0> 0> ~ 0 CII ~ 0> ... <9 ... CII -c ,- - (,) II. 2 GI -c (l)oo>g-EO>:::!:"'a.c-c ::J C111:c3!C: '; cO> ~ '; Q. g C W C: c:: ~ 1: ~ ... 0> ... CII <i: !::: (ij (/) g, CII >-(/)O> C CII:S ~ c ~ CII :J ::J ~a.CllO>O~oo> c~o",o>o - CCII _ _ - II. Z (ij~ C c.Qj 0> 0> 0> ~'* Z ~:c c Ea.:E tII u:: Qj a tII ~ ~ W 0> _ 0 0> _ '" 0 CII ,- _ W 0> :J !!! 0 E 0> tII ... C. - '" > >c::azo.E::::>:.::i(/):::!:(/) a. <9a.I-J:wo !I! Gla.!!I!O 'tI w X _.c 0- C _ I( .. I- I( :J ... W wOw II. . . . . . -32- TOWN OF SOUTHOLD FIDUCIARY FUNDS . COMBINING BALANCE SHEET December 31, 1998 Agency and Trust . Fishers Island Town Ferry District Totals ASSETS Cash and Investments $ 134,400 $ 22,464 $ 156,864 Other Receivables 20,890 20,890 . Due from Other Funds Total Assets $ 134,400 $ 43,354 . $ 177,754 - LIABILITIES AND FUND EQUITY . LIABILITIES Due to Other Funds $ 5,839 $ 40,934 $ 46,773 Other Liabilities 216 2,420 2,636 Deposits Held 128,345 128,345 . 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