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Home My WebLink About2009 Cutchogue Fire District ANNUAL FINANCIAL REPORT UPDATE DOCUMENT December 31, 2009 ~ COMP,~J~IY TABLE OF CONTENTS INDEPENDENT AUDITORS' REPORT ........................................ ANNUAL FINANCIAL REPORT UPDATE DOCUMENT: FINANCIAL SECTION ............................................... SUPPLEMENTAL SECTION .......................................... NOTES TO ANNUAL FINANCIAL REPORT UPDATE DOCUMENT ......... PAGE A 1 22 29 ~COMPANY COMPANY 230 Park Avenue, 23rd Floor, New York, NY 10169 · 212.962,4470 A PROFESSIONAL CORPORATION OF CERTIFIED 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) (Financial Section) of Cutchogue Fire District (the District), as of and for the year ended December 31, 2009, as listed in the table of contents. The AUD is the responsibility of the District's management. Our responsibility is to express opinions on the AUD 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 AUD is free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the AUD. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall AUD 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 the variances between these regulatory accounting practices and accounting principles generally accepted in the United States of America, although not reasonably determinable, are 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 the District, as of December 31, 2009, and the revenues it received and expenditures made for the year then ended in conformity with the basis of accounting described in Note 1. Our audit was conducted for the purpose of forming an opinion on the AUD (Financial Section) taken as a whole. The Supplemental Section listed on Page 2 of the AUD is presented for purposes of additional analysis and is not a required part of the basic financial statements. Such information, except for the Fire District Questionnaire, has not been subjected to the auditing procedures applied in our audit of the AUD (Financial Section) and, accordingly, we express no opinion on it. An Independent Member of the BDO Seidman At[lance To the Board of Fire Commissioners In accordance with Government Auditing Standards, we have also issued our report dated March 18, 2010, 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 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. March 18, 2010 egCOMP Y 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 12/31/2009 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 Comptreller 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 2008 and has been used by the OSC as the basis for preparing this update document for the fiscal year ended 2009: (A) GENERAL (K) GENERAL FIXED ASSETS (R) Reserve (TA) AGENCY (W) GENERAL LONG-TERM DEBT All amounts included in this update document for 2008 represent data filed by your government with OSC as reviewed and adjusted where necessary. *** ARRA SECTION *** The American Recovery and Reinvestment Act (ARRA) section of your Annual Financial Report is designed to report revenues and expenditures of federal stimulus money for the current fiscal year ended. *** 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 (A) GENERAL Balance Sheet Cutchogue FIRE DISTRICT Annual Update Document For the Fiscal Year Ending 2009 Assets Cash Cash tn Time Deposits State & Federal Other TOTAL state And Federal Aid Receivabies Cash, Specia[ Reserves Cash in Time Deposits, Spec Res TOTAL ReStfi~d As%~ ; TOTAL As%TM 2i025;571 512,675 A200 281,362 A201 $12i675 281;362 A410 0 0 A230 1,706,433 1,512,896 A231 i;$12,895 1,706i433 1;987;795 Page 3 OSC Municipality Code 471179002500 Cutchogue FIRE DISTRICT Annual Update Document For the Fiscal Year Ending 2009 (A) GENERAL Balance Sheet Liabilities Accounts Payable TOTAL Accounts Payable Accrued L~abd~bes TOTAL Accrued Liabilities TOTAL Liabilities Capital Reserve TOTAL Special Reserves unreserved Fund Balance ADDrODrtateQ TOTAL Unreserved Funti Balance. Appropriated unreserved Fund Balance UnaoDroDna[ea TOTAL Unreserved Fund Balance - Unappropriated TOTAL Fund Equity TOTAL Uabilifies AndFufld Equity 54.966 A600 27,353 54,966 27,353 19.595 A601 16.500 19,595 16,500 74,561 43,85:3 1.512.896 A878 1.706.433 1,512,896 1,706,433 246.750 A91[ 100.00( 246,750 100,000 191.364 A911 137.509 ~191.364 137.509 %951,0ri0 1,943,942 2.025.57t 1,987,795 Page 4 OSC Municipality Code 471179002500 Cutchogue FIRE DISTRICT Annual Update Document For the Fiscal Year Ending 2009 (A) GENERAL Results of Operation Real Properb/Taxes TOTAL Real Property Taxes Interest And Earnings Rental of Real Properly ToTALiLIse of Money And Property Sales of Real Property insurance Recoveries TOTAL Sale of Property And Compensation For Loss Refunds of Prior Year's Expenditures Grants From Local Governments Unclassified (specify) Additional Description refunds TOTAL Miscellane0us Local Sources 1,392,006 A1001 883,612 1,392;006 8B3,612 68,031 A2401 31,568 225 A2410 75 68,256 31,643 A2660 A2680 765 0 765 4,934 A2701 677 A2706 45 A2770 2 Page 5 OSC Municipality Code 471179002500 (A) GENERAL Results of Operation Expenditures Payment of Mta Payroll Tax,contr Expend TOTAL payment ~fMta Payroll Tax ToTAl_General Government Supp0rt Fire, Pets Serv Fire, Equip & Cap Outlay Fire, Contr Expend TOTAL Public Safety State Retirement System Local Pension Fund, Empl Bnfts Social Security, Employer Cant Worker's Compensation, Empl Bnfts Unemployment insurance, Empl Bnfts Disability Insurance, Empl Bnfts Hospital & Medical (dental) Ins, Empl ~3nfi Cutchague FIRE DISTRICT Annual Update Document For the Fiscal Year Ending 2009 A19804 556 0 556 0 556 176,958 A34101 194,223 330,413 A34102 138,827 386,791 A34104 350,510 894~162 683;560 7,724 A90108 5,463 178,242 A90258 174,612 13,703 A90308 14,694 39,593 A90408 35415 895 A90508 967 660 A90558 675 6,793 A90608 7,825 Page 6 OSC Municipality Code 471179002500 Cutchogue FIRE DISTRICT Annual Update Document For the Fiscal Year Ending 2009 (A) GENERAL Changes in Fund Equity ANALYSTS 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 1,627,541 Ago21 1,951,010 1,627,541 A8022 1,951,010 1,485,241 916,699 1,141,772 923,767 1,951,010 A8029 1,943,942 Page 7 OSC Municipality Code 471179002500 (A) GENERAL Budget Summary Estimated Revenues Est Rev ~ Real Property Taxes Est Rev - Use of Money And Properiy TOTAL EStimated Revenues Appropriated Reserve TOTAL Estimated Other Sources TOTAL Estimated Revenues And Other SourCes Cutchogue FIRE DISTRICT Annual Update Document For the Fiscal Year Ending 2009 883,600 A1049N 991,050 20,000 A2499N 7,500 903,600 998,550 246,750 A511N 100,000 246,750 100~000 Page 8 OSC Municipality Code 471179002500 Cutchogue FIRE DISTRICT Annual Update Document For the Fiscal Year Ending 2009 (A) GENERAL Budget Summary Appropriations App - Public Safety App - Employee Benefits App - Debt Service TOTAL Appropriations App ~ Inter[u~d Transfer TOTAl. Other Uses TOTAL A~)Dr0;}riati0ns And Other Uses 778,350 A3999N 726,350 272,000 A9199N 272,200 0 A9899N 0 1 ;050,350 998,550 100.000 A9999N 100,000 ~oO,ooo ~oo,ooo 1;150;350 1,098;550 Page 9 OSC Municipality Code 471179002500 Cutchogue FIRE DISTRICT Annual Update Document For the Fiscal Year Ending 2009 Balance Sheet Page 10 Balance Sheet Cutchogue FIRE DISTRICT Annual Update Document For the Fiscal Year Ending 2009 Page 11 Balance Sheet Cutchogue FIRE DISTRICT Annual Update Document For the Fiscal Year Ending 2009 Page 12 Balance Sheet Cutchogue FIRE DISTRICT Annual Update Document For the Fiscal Year Ending 2009 Page 13 Results of Operatien Cutchogue FIRE DISTRICT Annual Update Document For the Fiscal Year Ending 2009 Page 14 Results of Operation Cutchogue FIRE DISTRICT Annual Update Document For the Fiscal Year Ending 2009 Page 15 (R) Reserve Changes in Fund Equity ANALYSIS OF CHANGES IN FUND EQUITY Fund Equity · Beginning of Year Restated Fund Equity - Beg of Year Fund Equity- End of Year Cutchogue FIRE DISTRICT Annuai Update Document For the Fiscal Year Ending 2009 R8021 R8022 R8029 Page 16 OSC Municipality Code 471179002500 (TA) AGENCY Balance Sheet Cutchogue FIRE DISTRICT Annual Update Document For the Fiscal Year Ending 2009 Assets Service Award Program Assets TOTAL Investments TOTAL Assets 692,598 TA461 702,802 692,598 702,802 692,598 702,802 · Page 17 OSC Municipality Code 471179002500 (TA) AGENCY Balance Sheet Cutchogue FiRE DISTRICT Annual Update Document For the Fiscal Year Ending 2009 Liabilities Service Awards TOTAL Agency Liabilities TOTAL Liabilities TOTAL Liabilities And Fund Equity 692,598 692,598 692~598 692,598 TA13 702,802 702;802 702,802 702;802 Page 'i 8 OSC Municipality Code 471179002500 Balance Sheet Cutchogue FIRE DISTRICT Annual Update Document For the Fiscal Year Ending 2009 Page 19 Balance Sheet Cutchogue FIRE DISTRICT Annual Update Document For the Fiscal Year Ending 2009 Page 20 Cutchogue FIRE DISTRICT Financial Comments For the Fiscal Year Ending 2009 Page 21 Cutchogue FIRE DISTRICT Statement of Indebtedness For the Fiscal Year Ending 2009 Page 22 Cutchogue FIRE DISTRICT Schedule of Time Deposits and Investments For the Fiscal Year Ending 2009 CASH: On Hand Demand Deposits Time Deposits Total COLLATERAL: - FDIC Insurance Collateralized with securities held in possession of municipality or its agent Total EDP Code 9Z2001 9Z2011 9Z2021 9Z2014 9Z2014A Amount $0,00 2,ob0,41o.oo $0.00 $2,000,410,00 $250,000.00 $1,837,930.00 $2,087,930.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 INVESTMENTS: - Securities (450) Book Value (cost) Market Value at Balance Sheet Date Collateraiized with securities held in possession of municipality or its agent 9Z4501 9Z4502 9Z4504A - Repurchase Agreements (451) Book Value (cost) Market Value at Balance Sheet Date Collateralized with securities held in possession of municipality or its agent 9Z4511 9Z4512 9Z4514A Page 23 OSC Municipality Code 471179002500 Cutchogue FIRE DISTRICT Bank Reconciliation For the Fiscal Year Ending 2009 Include All Checking, Savings and C,D. Accounts Bank Add: Account Bank Deposit Number Balance In Transit ..... -2534 $170.599 $0 ..... -2591 $400,232 $0 ..... -2609 $123,424 $0 Less: Adjusted Outstanding Bank Checks Balance $12,669 $157,930 $0 $400,232 ..... -2617 $1,306,155 $0 Total Adjusted Bank Balance Betty Cash Adjustments Total Cash 9ZCASH Total Cash Balance All Funds 9ZCASHB Must be equal $0 $123,424 $0 $1,306,155 $1,987,741 $.00 $54.00 $1,987,795 $1,987,795 Page 24 OSC Municipality Code 471179002500 Cutchogue FIRE DISTRICT Fire District Questionnaire For the Fiscal Year Ending 2009 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 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? 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) Response Y Y Y Y $1,413,644 N Y Y Y 7) Has your Fire District adopted an investment policy as required by General Municipal Law, Section 39? Page 25 Cutchogue FIRE DISTRICT Employee and Retiree Benefits For the Fiscal Year Ending 2009 Total Full Time Employees: ~j Total Part Time Employees:i 14J Account Description Total # of Full I # of Part J # of Retirees Code Expenditures Time I Time (All Funds) Employees EmpJoyee$ 90108 State Retirement System $5,463.00 90158 Po)ice and Fire Retirement 90258 Local Pension Fund $174,61200 98308 Social Security $14,694 00 3 14 90408 Worker's Compensation $35,41500 14~ Insurance 90458 Life Insurance 90508 Unemployment Insurance $967.00 14 90558 Disability Insurance $675.00 14I 90608 Hospital and Medical $7,825.00 1, (Dental) Insurance 90708, Union Welfare Benefits 90858' Supplemental Benefit Payment to Disabled Fire Fighters i 91890 Other Employee Benefits ~ ..... ....... Total ~ !Computed Total Crom Financial $239,651 Section (comparative. purposes only) Page 26 OSC Municipality 471179002500 Cutchogue FIRE DISTRICT Energy Costs and Consumption For the Fiscal Year Endin9 2009 Energy Type Total Total Volume Units Of Alternative Expenditures Measure Units Of Measure IGasotine $11,713~ 5,588 gallons in/a !Diesel Fuel $4 ,~2~ 2,044 gallons IFuel Oil !Natural Gas $9,583: 5,695 cubic feet ~therms IEiectricity 'Coal tons j'n/a Page 27 OSC Municipality 471179002500 FIRE DISTRICT DEMOGRAPHICS Postal or Mailing Address: i260 New Suffolk Road !Cutchogue Street Address or PO Box City i(631 ) 734-6907 Fire District Telephone Number !cuffdtreas~optonline.net Official Email Address Physical Address: (If Different From Postal Address) Street Address !NY 111935 State Zip t(631 ) 734-7079 Fire District Fax Number iwww.cutchogueflredept.org Website City State Zip BOARD DEMOGRAPHICS CHIEF FISCAL OFFICER IPeter J. Zwedein ~reasurer Name Title !260 New Suffolk Road !Cutchogue !NY 111935 Street Address or PO Box City State Zip i(631) 734-6907 i(631) 734-7079 Telephone Number Fax Number !cuffdtreas~optonline.net Email Address Term End Date CHAIRMANOFTHEBOARD ~James R, Fogarty, Sr !commissioner Name Title 1260 New Suffolk Road !Cutchogue !NY ~11935 Street Address or PO Box City State Zip i(631 )734-6907 i(631 )734-707g Telephone Number Fax Number icutfd@opt°nline.net i 1213112010 Email Address Term End Date I, !Peter J. Zwerlein hereby cedify that I am the Chief Fiscal Officer of the !Cutchogue Fire District , and that the information provided in the annual financial repod of the iCutchogue Fire District , for the fiscal year ended 112/31/2009 , is true and correct to the best of my knowledge and belief. By entedng the personal identification number assigned by the Office of the State Comptroller to me as the Chief Fiscal Officer of the !Cutchogue Fire District , and adopted by me as my signature for use in conjunction with the filing of the !Cutchogue Fire District 's annual financial repor(, I am evidencing my express intent to authenticate my certification of the !Cutchogue Fire District 's annual financial report report for the fiscal year endedi12/31/2009 and 5led by means of electronic data transmission Name of Report P~*eparer Personal identification Number Date if different than Chief Fiscal Officer of Chief Fiscal Officer Page 28 Cutchogue Fire District NOTES TO ANNUAL FINANCIAL REPORT UPDATE DOCUMENT 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, 2009 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 AUD 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 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. -29- ~CO~Y Cutchogue Fire District NOTES TO ANNUAL FINANCIAL REPORT UPDATE DOCUMENT Summary of significant accounting oolicies (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 AUD 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 with original maturities of three months or less from the date of acquisition. 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. Fund balance - reserves and designations: Portions of fund balance are reserved or designated to either satisfy legal restrictions or to plan for future expenditures. The following 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- Cutchogue Fire District NOTES TO ANNUAL FINANCIAL REPORT UPDATE DOCUMENT Summary of significant accounting policies (continued): Real proper ,ty 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 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 Town 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: The preparation of the AUD 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 are govemed 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 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- COMPAN'Y Cutchogue Fire District NOTES TO ANNUAL FINANCIAL REPORT UPDATE DOCUMENT 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. Collateralized by securities held by the pledging financial institution's trust department or agent, but not in the District's name. 3. Coltateralized 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 follows: Categor~ Amount 1. $ 25O,000 2. 3. 1,837,930 4. Total $2.087.93~00 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 and disability benefits. Obligations of employers and employees 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 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 includes financial statements and required supplementary 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. -32- Cutchogue Fire District NOTES TO ANNUAL FINANCIAL REPORT UPDATE DOCUMENT Pension Plan (continued): Fundin~ oolicv: 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 31~ Amount 2009 $ 5,463 2008 $ 7,724 2007 $20,985 The District's contributions made to the System were equal to 100% of the contributions required. Chapter 49 of the Laws of 2003 of the State of New York was enacted, which made the following changes to the System: Requires minimum contributions by employers of 4.50% of payroll every year, including years in which the investment performance would make a lower contribution possible. Changes the cycle of annual billing, such that the contribution for a given fiscal year will be based on the value of the pension fund on the prior April 1 st. Chapter 260 of the Laws of 2004 of the 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 fiscal 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 pensionable salaries. For SFY 2007-08, the amount in excess of 10.50% of employees' covered pension salaries. -33- COMP Y Cutchogue Fire District NOTES TO ANNUAL FINANCIAL REPORT UPDATE DOCUMENT Pension Plan (continued): Funding policy (continued): 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 through 2007. Length of Service Award Program (LOSAP): The District's AUD is for the year ended December 31, 2009. However, the information contained in this note is based on information for the LOSAP for the plan year ending on February 28, 2010, which is the most recent plan year for which complete information is available. The funding detail is for the period March 1,2008 through February 28, 2009. The District established a defined benefit LOSAP for the active volunteer firefighters of the District. The program took effect on March 1, 1993. The program was established pursuant to Article l l-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 18 and who have completed their probationary period are eligible to participate in the program. Participants acquire a nonforfeitable right to a service award after being credited with 5 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 5 years of firefighting service rendered prior to the establishment of the program. -34- Cutchogue Fire District NOTES TO ANNUAL FINANCIAL REPORT UPDATE DOCUMENT Length of Service Award Program (LOSAP) (continued): 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 1 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 fom~s prescribed by the governing board. The governing board of the sponsor has retained and designated Volunteers Firemen's Insurance Services, Inc. (VFIS) to assist in the administration of the program. The designated program administrator's functions include providing basic annual administration services 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: -35- ~COMPANY Cutchogue Fire District NOTES TO ANNUAL FINANCIAL REPORT UPDATE DOCUMENT Length of Service Award Program (LOSAP) (continued): 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, the 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 participant's death, VFIS 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 VFIS authorizing VFIS 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, the Plan Sponsor signs and returns the paperwork authorizing VFIS to disburse a disability benefit. 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 an actuary to determine the amount of sponsor's contributions to the plan. The actuary retained by the sponsor for this purpose is JF Actuarial Services. Portions of the following information were derived from a report prepared by the actuary dated February 1, 2010. -36- ~COMPANY Cutchogue Fire District NOTES TO ANNUAL FINANCIAL REPORT UPDATE DOCUMENT Length of Service Award Program (LOSAP) (continued): Program financial condition: Assets and Liabilities % of Total Actuarial present value of accrued benefits at February 28, 2009: Vested Non-vested Less assets available for benefits: Group Annuity Fixed Funds Total net assets available for benefits Total unfunded benefits 100% $700,176 $1,205,839 20,972 1,226,811 700,176 $ 526,635 Prior service cost: The unfunded liability is associated with the frozen initial liability that was established at March l, 1993 for prior service costs. The initial liability was $731,356, of which $518,144 is still unpaid at this time. The prior service costs are being amortized over 30 years at a discount rate of 6.5%. Receipts and Disbursements Plan net assets, beginning of year Changes during the year (increases/(decreases): Plan contributions $188,449 Investment income earned 32,556 Change in fair market value of investments 7,681 Plan benefit withdrawals (114,435) Administrative and other fees/charges (3,176) Life insurance premium (14,650) $603,751 96,425 Plan net assets, end of year $700~176 -37- ~CO~A~ Cutchogue Fire District NOTES TO ANNUAL FINANCIAL REPORT UPDATE DOCUMENT Length of Service Award Program (LOSAP) (continued): Program financial condition (continued): Contributions Amount of sponsor's contribution recommended by actuary Amount of sponsor's actual contribution $170,209 $188.44~9 Contributions paid in excess of recommended amount are for administration fees and other adjustments. Administration Fees Fees paid to designated program administrator $ 3~176 Funding methodology and actuarial assumptions: Normal costs: The actuarial valuation 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 are; Assumed rate of return on investment 6.50% Mortality tables used for: Pre-retirement Post-retirement U8400 U8400 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. -38- egCOUPANY