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Home My WebLink About2008 Cutchogue Fire District ANNUAL FINANCIAL REPORT UPDATE DOCUMENT December 31, 2008 ~ouih~]4 To~¥n (lec[ ~COMPANY TABLE OF CONTENTS INDEPENDENT AUDITORS' REPORT ...................................... ANNUAL FiNANCIAL REPORT UPDATE DOCUMENT ....................... NOTES TO ANNUAL FINANCIAI, REPORT UPDATE DOCUMENT ............. PAGE A 1 29 COMPANY COiVI ANY A PROFESSIONAl CORPORATION OF CERI'IFIED PUBLIC ACCOUNTANTS INDEPENDENT AUDITORS' REPORT To the Board of Fire Commissioners Cutchogue, New York We have audited the accompanying Annual Financial Report Update Document (AUD) of Cutchogue Fire District (the District), as of and for the year ended December 31, 2008, as listed in the table of contents. These financial statements are the responsibility of the District's management Our responsibility is to express opiniuns on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are fi'ee of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in thc financial statements. An audit also includes assessing the accounting priuciples 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 opinions. As described more fully in Note 1, the District prepares its AUD using accounting practices prescribed or permitted by the New York State Office of the State Comptroller, which is a comprehensive basis of accounting other than accounting principles generally accepted in the United States of America. The effects on the AUD of thc variances between these regulatory accounting practices and accounting principles generally accepted in the United States of America, although not reasonably determinable, arc presumed to be material. In our opinion, the AUD referred to above presents fairly, in all material respects, the assets, liabilities and fund balances of thc District, as of December 31, 2008, and the revenues it received and expenditures made for the year then ended in conformity with the basis of accounting described in Note 1. In accordance with Governmen! Auditing Standards, we have also issued our report dated April 28, 2009, on our consideration of thc District's internal control over financial reporting and on our tests of its compliance with certain provisions of laxvs, regulations, contracts and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be considered in assessing the results of our audit. April 28, 2009 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 12/31/2008 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 within sixty days affer the close of the fiscal year of such Municipal Corporation *** 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 2007 and has been used by the OSC as the basis for preparing this update document for the fiscal year ended 2008: (A) GENERAL (K) GENERAL FIXED ASSETS (R) Reserve (TA) AGENCY (W) GENERAL LONG-TERM DEBT All amounts included in this update document for 2007 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 Annuar Update Document For the Fiscal Year Ending 2008 (A) GENERAL Balance Sheet Assets Cash TOTAL Cash State & Federal Other Additional Description n/a TOTAL State And Federal Aid Receivables TOTAL Assets 1,82%943 A200 2.025,571 1,821,943 2,025,571 150 A410 150 0 1,822,093 2,025,571 Page 3 OSC Municipality Code 471179002500 Cutchogue FIRE DISTRICT Annual Update Document For the Fiscal Year Ending 2008 (A) GENERAL Balance Sheet Liabilities And Fund Equity Accounts Payable TOTAL Accounts Payable Accrued Liabilities TOTAL Accrued Liabilities TOTAL Liabilities Capital Reserve TOTAL Special Reserves Unreserved Fund Balance Appropriated TOTAL Unreserved Fund Balance - Appropriated Unreserved Fund Balance Unappropriated TOTAL Unreserved Fund Balance - Unappropriated TOTAL Fund Equity TOTAL Liabilities And Fund Equity 170,898 A60O 54,966 170,898 54,966 23,654 A601 19,595 23,654 19,595 194,552 74,561 1,618,702 A878 1,512,896 1,618,702 1,512,896 8,839 A910 246750 8,839 246,750 A911 191,364 0 191,364 1,627,541 1,951,010 1,82Z,093 2,025,571 Page 4 OSC Municipality Code 471179002500 Cutchogue FIRE DISTRICT Annual Update Document For the Fiscal Year Ending 2008 (A) GENERAL Results of Operation Detail Revenues And Other Sources Real Property Taxes TOTAL Real Proper/y Taxes Interest And Earnings Rental of Real Properly TOTAL Use of Money And Property Sales of Real Properly Additional Description n/a TOTAL Sale of Property And Compensation For Loss Refunds of Prior Yearrs Expenditures Grants From Local Governments Unclassified (specify) AdditionaJ Description FOIL documents TOTAL Miscellaneous Local Sources TOTAL Revenues TOTAL Detail Revenues And Other Sources 1.41%116 A1001 1,392,006 1,411,116 1,392,006 127160 A2401 68031 3,900 A2410 225 131,060 68,256 4100 A2660 63O 630 1,546,906 1 ~546,906 A2701 A2706 A2770 0 4.934 45 4,979 1,465,241 1,465,241 Page 5 OSC Municipality Code 471179002500 (A) GENERAL Results of Operation Detail Expenditures And Other Uses Fire, Pers Serv Fire, Equip & Cap Outlay Fire, Contr Expend TOTAL Fire TOTAL Public Safety State Retirement System Local Pension Fund Empl Bn[~s Social Security, Employer Cont Worker's Compensation, Empl Bnfts Unemployment insurance Empl Bnf~s Disability Insurance Empl ~3nfts Hospital & Medical (dental) Ins, Empl Bnfi Additional Description employee health insurance TOTAL Employee Benefits TOTAL Expenditures TOTAL Detail Expenditures And Other Uses Cutchogue FIRE DISTRICT Annual Update Document For the Fiscal Year Ending 2008 157578 A34101 176,958 553,396 A34102 330,413 366,905 A34104 386791 1,077,879 894,162 1,077,879 894,162 20,985 A90108 7,724 176,802 A90258 178,242 12,054 A90308 13,703 41.935 A90408 39593 815 A90508 895 540 A90558 660 4.876 A90608 6,793 258,007 247,610 1~35,886 1,141,772 Page 6 OSC Municipality Code 471179002500 Cutchogue FIRE DISTRICT Annual Update Document For the Fiscal Year Ending 2008 (A) GENERAL Changes in Fund Equity ANALYSIS OF CHANGES IN FUND EQUITY Fund Equity-Beginning of Year Restated Fund Equity - Beg of Year ADD- REVENUES AND OTHER SOURCES DEDUCT - EXPENDITURES AND OTHER USES Fund Equity-End of Year 1,416,521 A8021 1,627,541 1,416,521 A8922 1,627,541 1,546.906 1 465,241 1,335,886 1141,772 1,627,541 A8029 1,951,010 Page 7 OSC Municipality Code 471179002500 Cutchogue FIRE DISTRICT Annual Update Document For the Fiscal Year Ending 2008 fA) GENERAL Budget Summary 2006 Estimated Revenues And Other Sources Est Rev - Real Property Taxes Est Rev - Use of Money And Property TOTAL Estimated Revenues Appropriated Reserve TOTAL Estimated Other Sources TOTAL Estimated Revenues And Other Sources 1.392,000 A1049N 883600 20,000 A2499N 20,000 1,412,000 903,600 A511N 246750 0 246,750 1,412,000 1,150,350 Page 8 OSC Municipality Code 471179002500 Cutchogue FIRE DISTRICT Annual Update Document For the Fiscal Year Ending 2008 (A) GENERAL Budget Summary Appropriations And Other Uses App Public Safety App - Employee Benefits App - Debt Service TOTAL Appropriations App - Interfund Transfer TOTAL Other Uses TOTAL Appropriations And Other Uses 724,100 A3999N 778350 263,200 A9199N 272000 246,750 A9899N 0 1,234,050 1,050,350 177,950 A9999N 100 000 177,950 100,000 1,412,000 1,150,350 Page 9 OSC Municipality Code 471179002500 Cutchogue FIRE DISTRICT Annual Update Document For the Fiscal Year Ending 2008 Balance Sheet Page 10 Cutchogue FIRE DISTRICT Annual Update Document For the Fiscal Year Ending 2008 Balance Sheet Page 11 Cutchogue FIRE DISTRICT Annual Update Document For the Fiscal Year Ending 2008 Balance Sheet Page 12 Cutchogue FIRE DISTRICT Annual Update Document For the Fiscal Year Ending 2008 Balance Sheet ~iio~ ii~i ~; __ _~ 'i! 200? Page 13 Cutchogue FIRE DISTRICT Annual Update Document For the Fiscal Year Ending 2008 Resdlts of Operation ~odeDes~p~on~ ...... :: ........ Page 14 Cutchogue FIRE DISTRICT Annual Update Document For the Fiscal Year Ending 2008 Results of Operation Page15 Cutchogue FIRE DISTRICT Annual Update Document For the Fiscal Year Ending 2008 (R) Reserve Changes in Fund Equity D~ De$~ptio~ ..... ..... ANALYSIS OF CHANGES IN FUND EQUITY Fund Equity - Beginning of Year R8021 Restated Fund Equity - Beg of Year R8022 Fund Equity - End of Year R8029 Page 16 OSC Municipality Code 471179002500 Cutchogue FIRE DISTRICT Annual Update Document For the Fiscal Year Ending 2008 (TA) AGENCY Balance Sheet [CodeDescfipti~.n~ .... ~' ~ ..... ~-- ...... ~ ~2007 _~,'--E~l~Code F~ 2-01~8. Assets Sen/ice Award Program Assets 659,859 TA461 692,598 TOTAL Investments 659,859 692,598 TOTAL Assets 659,859 692,598 Page I7 OSC Municipality Code 471179002500 Cutchogue FIRE DISTRICT Annual Update Document For the Fiscal Year Ending 2008 (TA) AGENCY Balance Sheet ~ 5escri~iio~ ' ~5~ ; f~pCo~e 2~6~ - Liabilities And Fund Equity Service Awards 659,859 TA13 692,598 TOTAL Agency Liabilities 659,859 692,598 TOTAL Liabilities 659,859 692,598 TOTAL Liabilities And Fund Equity 659,859 692,598 Page 18 OSC Municipality Code 471179002500 Cutchogue FIRE DISTRICT Annual Update Document For the Fiscal Year Ending 2008 Balance Sheet Page 19 Cutchogue FIRE DISTRICT Annual Update Document For the Fiscal Year Ending 2008 ~3alance Sheet Page 20 Cutchogue FIRE DISTRICT Financial Comments For the Fiscal Year Ending 2008 Page 21 Cutchogue FIRE DISTRICT Statement of Indebtedness For the Fiscal Year Ending 2008 Page 22 Cutchogue FIRE DISTRICT Schedule of Time Deposits and Investments For the Fiscal Year Ending 2008 CASH: On Hand Demand Deposits Time Deposits Total COLLATERAL: ~ FDIC Insurance Col/ateralized with securities held in possession of municipality or its agent Total EDP Code Amount 9Z2001 S0.00 9Z2011 $1,764,636.00 9Z2021 $265,000.00 $2,029,636.00 9Z2014 $500,000.00 9Z2014A $3,770,153.00 $4.270.153.00 INVESTMENTS: * Securities (450) Book Value (cost) Market Value at Balance Sheet Date 9Z4501 $0.00 9Z4502 $0,00 Collateralized with securities held ~n possession of municipality or its agent 9Z4504A $0.00 - Repurchase Agreements (451) Book Value (cost) Market Value at Balance Sheet Date Collateralized with securities held in possession of municipality or its agent 9Z4511 $0.00 9Z4512 $0.00 9Z4514A $0.00 Page 23 OSC Municipality Code 471179002500 Cutchogue FIRE DISTRICT Bank Reconciliation For the Fiscal Year Ending 2008 Include All Checking, Savings and C.D. Accounts Bank Account Number ..... -2534 ..... -2591 ..... -2609 ..... ~2617 ..... -0214 Add: Less: Adjusted Bank Deposit Outstanding Bank Balance In Transit Checks Balance $148,363 $0 $4,065 $144,298 $226,737 $0 $0 $226,737 $103,377 $0 $0 $103,377 $1.286,159 $0 $0 $1 .~6.159 $265,000 $0 $0 $265.000 Total Adiusted Bank Balance $2,025,571 Petty Cash $.00 Adjustments $.00 Total Cash 9ZCASH $2,025,571 Total Cash Balance Ail Funds 9ZCASHB $2,025,571 * Must be equal Page 24 OSC Municipality Code 471179002500 Cutchogue FIRE DISTRICT Fire District Questionnaire For the Fiscal Year Ending 2008 1 ) Has your district adopted a written procurement prolicy and is it complied with? 2) Has your district contracted to have an independent audit of its financial statements? If not, has the Board of Fire Commissioners pedormed an internal audit of the Treasurer's records and reports? 3) Does your district have a written travel policy and Js it complied with? 4) Are monthly bank reconciliations performed? 5) What is your district's statutory spending limitation margin (amount) for the next fisca 6) Does your district have a Length of Service Award Program (LOSAP) for volunteer firefighters? If so, how are the LOSAP funds invested? Marketable Securities Annuities Life Insurance Other (describe) 7) Has your Fire District adopted an investment policy as required by General Municipal Law, Section 39? Response Y Y N Y $1,547,890 N Y Y Y Page 25 Cutchogue FIRE DISTRICT Employee and Retiree Benefits For the Fiscal Year Ending 2008 3 Total Full Time Employees: Total Part Time Employees: 13 Account Description ~otal # of Full --- # of~ .......... ~ o~ R~e~ti}ee~ Code Expenditures Time Time (Ali Funds) Employees Employees 90108 State Retirement System 57,724 00 2 90158 Police and Fire Retirement 90258 Local Pension Fund S178,242 00 90308 Social Security $1370300 3 13 90408 Worker's Compensation $39.59300 3 13 Insurance 90458 Life Insurance 9050~ Dnemp~meni [~u~anc~ S[~95 O[~- - 3 13 -- - 90558 Disabflity insurance $660 00 3 13 90608 Hospital and Medical S6.793 00 1 (Dental) Insurance 9070~ Union Welfare Benefits 90858 Supplemental Benefit Payment to Disabled Fire Fighters 91890 Other Employee Benefits Computed Total From Financial Section (comparative purposes only) $247 6i0.00' Page 26 OSC Municipality 471179002500 Cutchogue FIRE DISTRICT Energy Costs and Consumption For the Fiscal Year Ending 2008 Energy Type Total Total Volume Units Of Alternative Expenditures Measure Units Of Measure Gasoline ~ 5,579 gallons in/a Diesel Fuel $7,522 2118 gallons In/a Fuel Oil $ gallons ~n/a !Natural Gas $8 765 5 146 cubic feet ~THERMS Electricity ~86T ~331i~7 kilowatts in/a Coal $ tons in/a Page 27 OSC Municipality 471179002500 CERTIFICATION OF CHIEF FISCAL OFFICER I, Peter J. Zwerlein . hereby certify that I am the Chief Fiscal Officer of the , and that the information provided in the annual financial report of the , for the fiscal year ended 12/31/2008 , is TRUE and correct to the best of my knowledge and belief By entering the personal indentification number assigned by the Office of the State Comptroller to me as the Chief Fiscal Officer of the , and adopted by me as my signature for use in conjunction with the filing of the 's annual financial report, I am evidencing my express intent to authenticate my certification of the annual financial report for the fiscal year ended 12/31/2008 and filed by means of electronic data transmission. Name of Report Preparer if different than Chief Fiscal Officer Peter J Zwerlein Name Treasurer Telephone Number Title 00/00/0000 Date of Certification 260 New Suffolk Road Official Address (631) 734-6907 Official Telephone Number Page 28 Municipality Code 471179002500 Cutchogue Fire District NOTES TO ANNUAL FINANCIAL REPORT UPDATE DOCUMENT Summary of significant accounting policies: The Annual Financial Report Update Document of the Cutchogue Fire District (the "District"), as of and for the year ended December 31, 2008 has been prepared in conformity with the modified accrual regulatory basis of accounting as prescribed by the State Comptroller's Office, which is a comprehensive basis 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 Annual Financial Report Update Document provides information about the District's funds, including fiduciary 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 Resc~wc 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. -29- c~wCOMPANY Cutchogue Fire District NOTES TO ANNUAL FINANCIAL REPORT UPDATE DOCUMENT Summary of significant accounting policies (continued): .Fiduciary Fund Fiduciary funds are used to account for assets held by the District in a trustee or custodial capacity. The District utilizes the following fund: Agency Fund The Agency Fund is used to account for and report assets held by the District in the capacity of trustee, custodian or agent for individuals. Agency funds are custodial in nature and do not involve measurement of results of operations. Basis of accounting: The accompanying Annual Financial Report Update Document has been prepared on the modified accrual 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 regulatory 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 ~vith original maturities of twelve months or less from the date of acquisition. lnterfund transfers: The operations of the District give rise to certain transactions bctween funds, including transfers of expenditures and revenues to provide services and construct assets. This is eithcr by budget, Board resolution or pem~issivc referendum. Fund balance - reserves and designations: Portions of fnnd balance are reserved or designated to either satisfy legal restrictions or to plan for future expenditures. The folloxving is a description of the reserves utilized by the District: Reserve for equipment - used for the acquisition of equipment. Reserve for building - used for the acquisition, construction or renovation of major capital Facilities. -30- ~C0M?ANY Cutchogue Fire District NOTES TO ANNUAL FINANCIAL REPORT UPDATE DOCUMENT Summary of significant accounting policies (continued): 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 3 l. 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 l. The Town of Southold Receiver of Taxes collects all real estate taxes for the District. The Town of Southold Receiver of Taxes 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 To~vn of Southold Receiver of Taxes tums 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. The budget is not subject to referendum. All budget appropriations lapse at the end of each year. Use of estimates: Thc preparation of the Ammal Financial Report Update Document in conformity with the modified accrual 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. Deposits with financial institutions and investments: The District's investment policies arc governed by state statutes and District policy. Resources must be deposited in Federal Deposit Insurance Corporation (FDIC) insured commercial bap, ks or trust companies located ~vithin the state. Permissible investments include special time deposit accounts, certificates of deposit, obligations of tile United States of America, obligations guaranteed by agencies of the United States of America where the payment and interest are guaranteed by 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. -31- ~COMPANY Cutchogue Fire District NOTES TO ANNUAL FINANCIAL REPORT UPDATE DOCUMENT o o Deposits with financial institutions and investments (continued): 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. Collateralizcd 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 by the banks are categorized, based on the above criteria, as folloxvs: Category Amount 1. $ 500,000 2. 3. 3,770, I53 4. Total $4,270,15~33 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. Pension Plan: Plan description: The District participates in the New York State and Local Employees' Retirement System (ERS). This is a cost-sharing, multiple-employer retirement system. The System provides retirement benefits as well as death m~d disability benefits. Obligations of employers aod employees to contribute and benefits to employees are governed by the New York State Retirement and Social Security Law (NYSRSSL). As set forth in thc NYSRSSL, the Comptroller of thc State of Ne~v York (Comptroller) serves as sole trustee m~d administrative head of the System. The Comptroller shall adopt and may amend rules and regulations for the administration and transaction of the business of the System and for the custody and control of their funds. The System issues a publicly available financial report that inclndes financial statements and required snppleinentary information. That report may be obtained by writing to the New York State and Local Employees' Retirement Systems, 110 State Street, Albany, New York 12244. c?COMPANY Cutchogue Fire District NOTES TO ANNUAL FINANCIAL REPORT UPDATE DOCUMENT Pension Plan (continued): Plan description (continued): Funding policy: The System is non-contributory except for employees who joined the ERS 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 required contributions for the current year and two preceding years were: Year Ending December 3L .Amount 2008 $7,724 2007 $ 20,985 2006 $ 8,215 The District's contributions made to the System were equal to 100% of the contributions required. Since 1989, the System's 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 System's 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 District elected to make full payment in 1989. Chapter 49 of the Laws of 2003 of the State of New York was enacted, which made thc following changes to the System: Requires minimum contributions by employers of 4.50% of pa)q-oil every year, including years in which the investment performance would make a lower contribution possible. Changes the cycle of annual billing, such that thc contribution for a given fiscal year will be based on the value of the pension t'und on the prior April 1 st. -33- ~e COMPANY Cutchogue Fire District NOTES TO ANNUAl. FINANCIAL REPORT UPDATE DOCUMENT Pension Plan (continued): Funding policy (continued): Chapter 260 of the Laws of 2004 of thc State of New York was enacted that allows local employers to bond or amortize a portion of their retirement bill for up to 10 years in accordance with the following schedule: For State Fiscal Year (SFY) 2004-05, the amount in excess of 7.00% of employees' covered pensionable salaries, with the first payment of those pension costs not due until the fiscaI year succeeding that fiscal year in which the bonding/amortization was instituted. For SFY 2005-06, the amount in excess of 9.50% of employees' covered pensiouable salar/es. For SFY 2006-07, the amount in excess of 10.50% of employees' covered pension salaries. This law requires participating employers to make payments on a current basis, while bonding or amortizing existing unpaid amounts relating to the System's fiscal years ending March 31, 2005 tl~rough 2007. Change in payment due date: Chapter 260 of the Laws of New York State changed the annual payment due date for employers who participate in the New York State and Local Employees' Retirement System and the New York State and Local Police and Fire Retirement System. The December 15 payment due date changed to February 1. The covered salary period (April 1 - March 31 ) will not change for the calculation. Length of Service Award Program (LOSAP): The Cutchoguc Fire District's Annual Financial Report Update Document is for the year ended December 31, 2008. However, the infomaation contained in this note is based on information for the Length of Service Award Program for the plan year ending on February 28, 2009, which is the most recent plan year for which complete information is available. Thc funding detail is for the period March 1, 2007 through February 29, 2008. The Cutchogue Fire District cstablisbed a defined benefit LOSAP for the active volunteer firefigbters of the District. The program took effect on March 1, 1993. The program was established pursuant to Article l l-A oF thc General Municipal Law. The program provides municipally funded pension-like benefits to facilitate the recruitment and retention of active volunteer firefighters. The Cutcbogue Fire District is the sponsor of the program. -34- ~COMPANY Cutchogue Fire District NOTES TO ANNUAL FINANCIAL REPORT UPDATE DOCUMENT o Length of Service Award Program (LOSAP) (continued): Program description: Participation~ vesting and service credit: Active volunteer firefighters who have reached the age of 18 and who have completed their probationary period are eligible to participate in the program. Participants acquire a nonforfeitable fight 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 on the basis of 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 thirty. 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 requircd rccords on forms prescribed by the governing board. The governing board of thc sponsor has retained and designated Volunteers Firemen's insurance Services, Inc. (VF1S) to assist in the administration of the program. The desigmated program administrator's functioos include providing basic annual administration services as follows: -35- ~COMPANY Cutchogue Fire District NOTES TO ANNUAl. FINANCIAL REPORT UPDATE DOCUMENT o Length of Service Award Program (LOSAP) (continued): Fiduciary investment and control (continued): 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 mmually e) participants' benefit calculation at time of severance or retirement f) Auxiliary Fund valuation and suggested deposit g) summary of required almual 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: Entitlement benefits - VFIS 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, thc Plan Sponsor signs and returns the paperwork to VFIS authorizing VFIS to disburse entitlement benefits. Death benefits - Upon notification from the Plan Sponsor of a participmlt's death, VFIS prepares a Verification of Benefits statement and a Lump Sum Death Benefit form. Following review fbr accuracy, thc Plan Sponsor signs and returns the paperwork accompanied by a death certificate to VFIS authorizing VF1S to disburse a death benefit. Disability benefits - Upon notification from the Plan Sponsor of a participant total and permanent disability, VFIS prepares a Verification of Benefits statement, a Physician Statement form and a Lump Sum Disability Benefit form. Following review for accuracy, tile Plan Sponsor signs and returns tile paperwork authorizing VFIS to disburse a disability benefit. -36~ ~COMPA~Y Cutchogue Fire District NOTES TO ANNUAL FINANCIAL REPORT UPDATE DOCUMENT Length of Service Award Program (LOSAP) (continued): Payment of administrative expenses: Per the executed Service Fee Agreement, the Plan Sponsor agrees to payment as contracted. Authority to invest program assets is vested in The Hartford Life Insurance Company. 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 Group Annuity Contract with guarantees of both principal and interest. The sponsor is required to retain ma actuary to determine the amount of sponsor's contributions to the plan. Thc actuary retained by the sponsor for this purpose is JF Actuarial Services of thc following information are derived from a report prepared by the actuary dated August 18, 2008 Program financial condition: Assets and Liabilities % of Total Actuarial present value of accrued benefits at February 29, 2008: Vested Non-vested Less assets available for benefits: Group Annuity Fixed Funds Total net assets available for bencfits Total unfunded benefits 100% $603,751 $1,116,261 17,902 1,134,163 603,751 $ 530,412 Prior service cost: The unfunded liability is associated with the fi-ozen initial liability that was established at March 1, 1993 fbr prior service costs. The initial liability was $731,356, of which $542,675 is still unpaid at this tinre. The prior service costs are being amortized over 30 years aI a discount rate of 6.5%. -37- ~COMPANY Cutchogue Fire District NOTES TO ANNUAl. FINANCIAL REPORT UPDATE DOCUMENT Length of Service Award Program (LOSAP) (continued): Program financial condition (continued): Receipts and Disbursements Plan net assets, beginning ol~ year Changes during thc year (increascs/(decreases): Plan contributions $ 176,973 Investment income earned 32,053 Change in fair market value of investments 8,156 Plan benefit withdrawals (147,268) Administrative and other fees/charges (3,236) Life insurance premium (15,600) $552,673 51,078 Plan net assets, end of year $ Q3,751 Contributions Amount of sponsor's contribution recommended by actuary Amount of sponsor's actual contribution $171,8Q1_ $! 76~973 Contributions paid in excess of recommended amount are for administration fees and other adjustments. Administration Fees Fees paid to designated program administrator $ 3,236 Funding methodology and actaarial assumptions: Normal costs: The actuarial valnation methodology used by the actuary to determine the sponsor's contribution is Entry Age Normal Frozen Initial Liability. The assumptions used by the actuary to determine the sponsor's contribution and the actuarial present value of benefits Assnmed rate of return on investment 6.50% Mortality tables uscd for: Pre-retirement Post retirement U8400 U8400 -38- COMPANY Cutchogue Fire District NOTES TO ANNUAL FINANCIAL REPORT UPDATE DOCUMENT Commitments and contingencies: 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. -39- c~COMPANY