HomeMy WebLinkAbout2016 Cutchogue Fire District
RECEIVED
ANNUAL FINANCIAL REPORT
JUN 2 1 2017
December 31,2016
Southold Town Clerk
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TABLE OF CONTENTS
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INDEPENDENT AUDITOR'S REPORT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A
ANNUAL FINANCIAL REPORT UPDATE DOCUMENT
FINANCIAL SECTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
' SUPPLEMENTAL SECTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
NOTES TO ANNUAL FINANCIAL REPORT UPDATE DOCUMENT. . . . . . . . . 25
INDEPENDENT AUDITOR'S REPORT ON INTERNAL CONTROL
OVER FINANCIAL REPORTING AND ON COMPLIANCE AND
OTHER MATTERS BASED ON AN AUDIT OF ANNUAL FINANCIAL
REPORT UPDATE DOCUMENT PERFORMED IN ACCORDANCE WITH
GOVERNMENT AUDITING STANDARDS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
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437 Madison Avenue, 29th Floor
New York,NY 10022 • 212 962 4470
_ IM
165 Onnoco Drive,Bnghtwaters, NY 11718
I s 631 665 7040 • Fax 631 665 7014
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,C�2 COQ M/(n/►PA 1 A� 15 South Bayles Avenue, Port Washiiigton, NY 11050
516 883 5510 • Fax 516 767 7438
A PROFESSIONAL CORPORATION OF CERTIFIED PUBLIC ACCOUNTANTS www shcehancpa coni
INDEPENDENT AUDITOR'S REPORT
To the Board of Fire Commissioners
Cutchogue Fire District
Report on the Annual Financial Report Update Document(Financial Section)
We have audited the accompanying Annual Financial Report Update Document (Financial
j Section) of Cutchogue Fire District, as of and for the year ended December 31, 2016 and the
related notes to the Annual Financial Report Update Document, as listed in the table of contents.
Management's Responsibility for the Annual Financial Report Update Document
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Management is responsible for the preparation and fair presentation of the Annual Financial
Report Update Document in accordance with accounting practices prescribed orpermitted by the
New York State Office of the State Comptroller (regulatory basis), which is a special purpose
framework of accounting other than United States of America generally accepted accounting
principles. Management is also responsible for the design, implementation and maintenance of
internal control relevant to the preparation and fair presentation of the Annual Financial Report
Update Document that is free from material misstatement, whether due to fraud or error.
Auditor's Responsibility
Our responsibility is to express an opinion on the Annual Financial Report Update Document
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 Annual Financial Report Update Document is free from material
I misstatement.
i An audit involves performing procedures to obtain audit evidence about the amounts and
1 disclosures in the Annual Financial Report Update Document. The procedures selected depend
on the auditor's judgment, including the assessment of the risks of material misstatement of the
Annual Financial Report Update Document, whether due to fraud or error. In making those risk
assessments, the auditor considers internal control relevant to the Cutchogue Fire District's
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An Independent Member of the BDO Alliance USA
` To the Board of Fire Commissioners
Cutchogue Fire District
preparation and fair presentation of the Annual Financial Report Update Document in order to
design audit procedures that are appropriate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of the Cutchogue Fire District's internal control.
Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness
1 of accounting policies used and the reasonableness of significant accounting estimates made by
management, as well as evaluating the overall presentation of the Annual Financial Report
Update Document.
+- We believe that the audit evidence we have obtained is sufficient and appropriate to provide a
basis for our audit opinion.
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Basis for Adverse Opinion on U.S. Generally Accepted Accounting Principles
As described more fully in Note 1, the Annual Financial Report Update Document is prepared by
Cutchogue Fire District on the basis of the financial reporting provisions of the New York State
Office of the State Comptroller, which is a basis of accounting other than accounting principles
generally accepted in the United States of America, to meet the requirements of the New York
State Office of the State Comptroller.
The effects on the Annual Financial Report Update Document of the variances between the
regulatory basis of accounting described in Note 1 and accounting principles generally accepted
in the United States of America, although not reasonably determinable, are presumed to be
material.
Adverse Opinion on U.S. Generally Accepted Accounting Principles
In our opinion, because of the significance of the matter discussed in the "Basis for Adverse
Opinion on U.S. Generally Accepted Accounting Principles" paragraph, the Annual Financial
Report Update Document referred to above does not present fairly, in accordance with
accounting principles generally accepted in the United States of America, the financial position
�- of the Cutchogue Fire District, as of December 31, 2016, or changes in financial position for the
year then ended.
Unmodified Opinion on Regulatory Basis of Accounting
In our opinion, the Annual Financial Report Update Document (Financial Section) referred to
above presents fairly, in all material respects, the assets, liabilities and fund balances of
1 Cutchogue Fire District, as of December 31, 2016 and the revenues it received and expenditures
it paid for the year then ended in accordance with the basis of accounting described in Note 1.
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To the Board of Fire Commissioners
Cutchogue Fire District
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Our audit was conducted for the purpose of forming an opinion on the Annual Financial Report
Update Document (Financial Section)taken as a whole. The Supplemental Section listed on page
2 of the Annual Financial Report Update Document is presented for purposes of additional
analysis and is not a required part of the Annual Financial Report Update Document.
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i_ The information, except for the Fire District Questionnaire, has not been subjected to the
auditing procedures applied in the audit of the Annual Financial Report Update Document and,
accordingly, we express no opinion on it.
Other Reporting Required by Government Auditing Standards
In accordance with Government Auditing Standards, we have also issued our report dated June 2,
2017, on our consideration of Cutchogue Fire District's internal control over financial reporting
and on our tests of its compliance with certain provisions of laws, regulations, contracts, grant
agreements and other matters. The purpose of that report is to describe the scope of our testing of
internal control over financial reporting and compliance and the results of that testing and not to
provide an opinion on internal control over financial reporting or on compliance. That report is
an integral part of an audit performed in accordance with Government Auditing Standards in
considering Cutchogue Fire District's internal control over financial reporting and compliance.
- cw P, C .
Brightwaters,New York
June 2, 2017
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All Numbers in This Report
Have Been Rounded To
�- The Nearest Dollar
ANNUAL FINANCIAL REPORT
UPDATE DOCUMENT
f For The
FIRE DISTRICT of Cutchogue
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County of Suffolk
For the Fiscal Year Ended 12/31/2016
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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***
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State of NEW YORK
_ Office of The State Comptroller
} Division of Local Government and School Accountability
Albany, New York 12236
Page 1
I; FIRE DISTRICT OF Cutchogue
! *** FINANCIAL SECTION ***
i 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 2015 and has been used by the OSC as the basis for preparing this
update document for the fiscal year ended 2016
(A) GENERAL
(K) GENERAL FIXED ASSETS
(TA)AGENCY
(W)GENERAL LONG-TERM DEBT
All amounts included in this update document for 2015 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
7) Schedule of Other Post Employment Benefits (OPEB)
All numbers in this report will be rounded to the nearest dollar.
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Cutchogue FIRE DISTRICT
Annual Update Document
For the Fiscal Year Ending 2016
(A)GENERAL
I
Balance
�Sheet
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.� MMR✓GV�it�tlV�t"� .. .„F;�t;�,.wC �ik�7i ;°i,.'•i q". ��y.. A ,h'.'7 t. ,,P' �""^� Lj„�.W.. ., n4pW4��i` ,�,L0;1_Vi ..
e
� - Assets - ------------- -------- ---
Cash 471,243 A200 433,094
:479,243. 433;094
Cash Special Reserves 1,844,427 A230 1,348,226
qTi Restricted Assets° :1;844,427 ,1,348,226"1
TOTAL Assets and.Deferred`Outflows of Resources Is, 2;316,670. mm4 781 320,
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Page 3 OSC Municipality Code 471179002500
Cutchogue FIRE DISTRICT
Annual Update Document
For the Fiscal Year Ending 2016
(A)GENERAL
Balance Sheet
ro
Accounts Payable26,122
136,312 A600
7-17
-7- -;-6,
122
Accrued Liabilities 15,627 A601 15,301
LT4tA!Qj�6:iu-i6f MILIgs,'LL.'
= 151;939 ^4114231
Deferred Inflows of Resources
Deferred Inflow of Resources A691
OTALPefeirred,lnflows,of Resourcesi, 0
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Fund Balance
Capital Reserve 1,759,604 A878 1,348,226
ko-s-ir q Fund Ba an e
iT '148,226
Assigned Appropriated Fund Balance 17,745 A614
Assigned Unappropriated Fund Balance 15,774 A915
ffi��TAL,�(j 7'
519'
Unassigned Fund Balance 370,608 A917 391,671
-- -111—-- '. .- I I;, , 1-11�,� -- -
U 371-§q8,
fYy`p2163731 -11-139.8971
TOTAL Fund,Balance
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es;Deferr6c!Jnflows
TOTAL Llai;i�;ii kwUnO 2,316i670 320:
Page 4 OSC Municipality Code 471179002500
Cutchogue FIRE DISTRICT
Annual Update Document
For the Fiscal Year Ending 2016
(A)GENERAL
Results of Operation
Revenues
Real Property Taxes 1,349,633 A1001 1,370,911
TOTAL Real Property Taxes M sw° _ "1,349;633<
Interest And Earnings 3,950 A2401 3,178
Rental of Real Property 1,375 A2410 1,000
TOTAL -7,To 7"'
41781
Sales of Equipment 12,001 A2665 3,552
And Compensation Fdr Cass
121001 3,662
Refunds of Prior Year's Expenditures 327 A2701
TOTAL stocal ..:.0.t
St Aid Emergency Disaster Assistance 695 A3960
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Fed Aid,Emergency Disaster Assistance 1,500 A4960 250,392
OTALIFed6ral
1600 '
,!v 1;629033ITL(�T!
!nue�L- 1",369;481
TOTAL.Det li;!tvenues,And'Othek,Sources,
1!3i59;4 11;629,033
Page 5 OSC Municipality Code 471179002500
I_ Cutchogue FIRE DISTRICT
Annual Update Document
For the Fiscal Year Ending 2016
r (A)GENERAL
Results of Operation
Expenditures
Fire,Pers Sery 176,883 A34101 175,012
Fire,Equip&Cap Outlay 293,547 A34102 966,461
Fire,Contr Expend 400,313 A34104 458,509
iTOTAL'Fire- '.a 870,743 1,599,982 i
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TOTAL Public Safety w. ,; ..:_ - ' 874;743 x.1,599,982 j
State Retirement System 9,368 A90108 5,888
Local Pension Fund,Empl Bnfts 339,755 A90258 353,283
Social Security,Employer Cont 13,471 A90308 13,562
Worker's Compensation, Empl Bnfts 49,832 A90408 40,139
Life Insurance,Empl Bnfts A90458 2,271
Unemployment Insurance,Empl Bnfts 1,862 A90508 1,394
Disability Insurance,Empl Bnfts 470 A90558 492
Hospital&Medical(dental)Ins, Empl Bnft 20,265 A90608 20,912
TOTAL Employee Benefits ,� :f 435;023 437,941
Install Pur Debt,Principal 13,749 A97856 14,004
16,OTAL Debt.Principal
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74004 t
Install Pur Debt, Interest 1,195 A97857 940
TOTAL i7ebt lriterest ......_ .. 1,195 . . 940
TOTAL Expenditures • . .,, °� :""; �1',32U;71,0 • 2,052,86?!
,L.Re Expenditures And;Other uses, " " - — ' -m m. w'•1.,320;7T0 z 2,052,867;
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ueFIRE DISTRICT
Annual Update Document
For the Fiscal Year Ending 2018
VVoEmsRuL
Analysis o,Changes inFund Balance
Analysis ofChanges inFund Balance
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Fund Balance'Beginning cfYear 2.114.960 A8021 2.163.731
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Restated Fund Balance'Beg oyYear 2.114.960 A0022 2.163.731
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ADD'REVENUES AND OTHER SOURCES 1.36e.481 1.629.033
DEDUCT'EXPENDITURES AND OTHER USES 1.320.710 2.052.867
Fund Balance-End o,Year 2.163.731 A8039 1.739.897
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Page 7 OGC Municipality Code 471179002500
Cutchogue FIRE DISTRICT
Annual Update Document
For the Fiscal Year Ending 2016
(A)GENERAL
Budget Summary
-P Ion.
Estimated Revenues
Est Rev-Real Property Taxes 1,370,905 Al 049N 1,494,655
Est Rev-Use of Money And Property 1,000 A2499N 1,000
Appropriated Fund Balance 17,745 A599N 0
11 746
A�C
7--
,f6TXUEstiriiWt—�d RevenWs An
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96,655
Page 8 OSC Municipality Code 471179002500
Cutchogue FIRE DISTRICT
Annual Update Document
For the Fiscal Year Ending 2016
(A)GENERAL
Budget Summary
='—NOIK ---7 -,-11JEO�no-qe— �!�,-.jb
Appropriations
App-Public Safety 826,950 A3999N 926,150
App-Employee Benefits 462,700 A9199N 469,505
13396,6
" - - , 1 11-1,
App-Interfund Transfer er 100,000 A9999N 100,000
A er'Uses, 0
Page 9 OSC Municipality Code 471179002500
Cutchogue FIRE DISTRICT
Annual Update Document
For the Fiscal Year Ending 2016
(K)GENERAL FIXED ASSETS
Bala,nce,^Sheet y / �fA �
Qiic I,Je^rv+uGTI(�ftOCl"> ,�..zJ t_. '_r p...�k h y�„i... ,.. ,f d y, �,. I m;,}• i �:J "' T'WV.a�Vi
i Assets
Deferred Outflows of Resources-Pensions18,635 K496 51,919
1 OTALOther ,' 18,635 s:;' "51;9191
ETOTAL Assets,and Det erred p:": - ry P
` er ed,QutFlows of R®sources 18,635 51,919,
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Page 10 OSC Municipality Code 471179002500
Cutchogue FIRE DISTRICT
Annual Update Document
ti For the Fiscal Year Ending 2016
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- (K)GENERAL FIXED ASSETS
Balance Sheet
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Liabilities,Deferred Inflows And Fund Balance
Total Non-Current Govt Assets 18,635 K159 51,919
- NOTAL inrrestments"inNon=Current Gove�rtment' ssets'
jtQtAL Fund Balance 'Fk 18,635 S1,919�
m18,535 51,919'
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Page 11 OSC Municipality Code 471179002500
Cutchogue FIRE DISTRICT
Annual Update Document
For the Fiscal Year Ending 2016
(TA)AGENCY
Balance Sheet
2
--, Assets
Service Award Program Assets 1,609,093 TA461 1,911,322
C}7AL lnves_t_ments 1,609,0931;911,322,
¢TATA 'Assets and•L�e#erred OutflloWs of Resoyrces 1,911,32 F
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Page 12 OSC Municipality Code 471179002500
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Annual Update Document
1 For the Fiscal Year Ending 2016
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_ (TA)AGENCY
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Balance Sheet
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oderbescriptron -
77, 5 `Edp ode
Service Awards
- 1,609,093 TA 13 1,911,322
TOT ALAOT ALA gency.Liaiiiities2 mm _ _ :' _..__. 1,609,093 1;511;322
�- TbfALLiabiities ~ ' 1,fi09093 1;911;322'
- "�'v^g'�"M`^ .www�3..~... _ ._....tip.._. ..«.eft�_ __ "+P^_'^:.W _ _ _..-• -+z�h±=.^_- - ;'�:"::...,..�_ :;..'�• »9 1
TOTAL Liabilities,Deferred infiowsAnd.Fund baianceil
_. �_.,.... 1,609,093'. Y 1 911,322
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lPage 13 OSC Municipality Code 471179002500
Cutchogue FIRE DISTRICT
Annual Update Document
For the Fiscal Year Ending 2016
- (W)GENERAL LONG-TERM DEBT
t
Balance Sheet
GIe ire'Gripti ..,:•...,. ., ��� �� .0 _ _:.. -° Mtl� Go-- t1---��=---------_..._...._— - - ---.'�•,, u ,, ._..� ..•.�„ -- - --r----- - .�, °2{315. ,':�dQ.,s..E�e•
^r.
Assets
Total Non-Current Govt Liabilities 64,862 W129 96,018
i6 ij]L Provision To Be Made 16 Future Budgets 64,862 '96,418
40TAL Assets and Deferred 4utfiows of Resources '64,862 96,018
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Cutchogue FIRE DISTRICT
Annual Update Document
For the Fiscal Year Ending 2016
(W)GENERAL LONG-TERM DEBT
Balance Sheet
-- - -== �`�---- --��: ':201<5'` � �EdpGdde._ .20,16•.
Net Pension Liability-Proportionate Share 7,270 W638 44,880
Installment Purchase Debt 57,592 W685 43,588
?.~M d — w. ., . ,
L tfeS 'r; j z:ya, ag 64,862_ $81468
Deferred Inflows of Resources-Pensions �W697 7,550
[T
of
esources
OTAL Deferred Inflows fi R 0, ;... .•.
.... _ ._...._. _. _ .... ; .. ... . ._. - - -.. 7,550
T07_ALLiabilities_ .._.... _ a° 64,8625 96;018;
7OTAL Liabilities64;862 96,018
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Page 15 OSC Municipality Code 471179002500
J1 Ung ---j a,V[ WI _uic--_a r 11__1.7 t L--__ ueu13/20 i i
Statement of Indebtedness
For the Fiscal Year Ending 2016
County of:Suffolk
Municipal Code:471179002500
First Debt Cops Comp Date of Date of Int. Amt.Orig. O/S Beg. Paid Redeemed Prior Yr. Accreted O/S End
Year Code Description Flag Flag Issue Maturity Rate Var? Issued of Year Dur.Year Bond Proc. Adjust. Interest of Year
2014 IPC E EMS equipment 11/18/2014 12/18/2019 1.90% $71,341 $57,592 $14,004 $0 $0 $43,588
'otal for Type/Exempt Status-Sums Issued Amts only made in AFR Year $0 $57,592 $14,004 $0 $0 $0 $43,588
AFR Year Total for All Debt Types-Sums Issued Amts only made in AFR Year $0 $57,592 $14,004 $0 $0 $0 $43,588
Page 16
Cutchogue FIRE DISTRICT
Schedule of Time Deposits and Investments
For the Fiscal Year Ending 2016
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Page 17
- Cutchogue FIRE DISTRICT
Bank Reconciliation
l - For the Fiscal Year Ending 2016
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Include All Checking, Savings and C.D.Accounts
Bank Add. Less Adjusted
Account Bank Deposit Outstanding Bank
Number Balance In Transit Checks Balance
*****-2534 $268,437 $5,201 $24,169 $249,469
*****-2609 $170,429 $0 $0 $170,429
*****-2617 $564,687 $0 $0 $564,687
*****-2591 $418,740 $0 $5,201 $413,539
*****-6570 $370,000 $0 $0 $370,000
*****-1113 $12,896 $0 $0 $12,896
Total Adjusted Bank Balance $1,781,020
Petty Cash $.00
Adjustments $300.00
Total Cash 9ZCASH * $1,781,320
Total Cash Balance All Funds 9ZCASHB * $1,781,320
* Must be equal
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jPage 18 OSC Municipality Code 471179002500
Cutchogue FIRE DISTRICT
Fire District Questionnaire
For the Fiscal Year Ending 2016
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! 1) Has your district adopted a written procurement prolicy and is it complied with? Y
2) Has your district contracted to have an independent audit of its financial statements? Y
If not, has the Board of Fire Commissioners performed an internal audit of the
Treasurer's records and reports?
3) Does your district have a written travel policy and is it complied with? Y
4) Are monthly bank reconciliations performed? Y
5) What is your district's statutory spending limitation margin (amount)for the next fiscal $1,132,806
L_ 6) Does your district have a Length of Service Award Program
(LOSAP)for volunteer firefighters?
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If so, how are the LOSAP funds invested?
Marketable Securities N
Annuities Y
Life Insurance Y
Other(describe)
7) Has your Fire District adopted an investment policy as required by General Municipal Y
Law, Section 39?
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Cutchogue FIRE DISTRICT
Employee and Retiree Benefits
For the Fiscal Year Ending 2016
Total Full Time Employees:
Total Part Time Employees: 1
Account Description Total #of Full #of Part #of Retirees
Code Expenditures Time Time
(All Funds) Employees Employees
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90108 State Retirement System $5,888.00 2
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9015 Police and Fire Retirement
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90258 Local Pension Fund $353,283.0
90308 Social Security $13,56200 2 1
90408 Worker's Compensation $40,139.00 2 1
Insurance
90458 Life Insurance $2,271 0
90508 Unemployment Insurance $1,39400 1
90558 Disability Insurance $49200 2 1
90608 Hospital and Medical $20,91200 2
(Dental)Insurance
90708 Union Welfare Benefits
90858 Supplemental Benefit Payment to
Disabled Fire Fighters
9189 Other Employee Benefits
Total $437,941.00
Computed Total From Financial $437,941.00
Section(comparative purposes only)
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Page 20 OSC Municipality 471179002500
Cutchogue FIRE DISTRICT
Energy Costs and Consumption
For the Fiscal Year Ending 2016
Energy Type Total Total Volume Units Of Alternative
Expenditures Measure Units Of
Measure
asohne $7,763 4,17 gallons
Diesel Fuel $3,61 1,908 gallons
' Fuel Oil gallons
Natural Gas $5,21 4,948 cubic feet herms
Electricity $20,42�1 118,421 kilowatt-hours
coal 1 11 tons
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Propane $41 28 gallons 11
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Cutchogue FIRE DISTRICT
Schedule of Other Post Employment Benefits(OPEB)
For the Fiscal Year Ending 2016
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FIRE DISTRICT DEMOGRAPHICS
Postal or Mailing Address:
260 New Suffolk Road Cutchogue NY 11935
Street Address or PO Box City State Zip
(631)734-6_907 ! (631)734-7079
Fire District Telephone Number Fire District Fax Number
cutfdtreas@optonline net cutchoguefiredept org
l Official Email Address Website
---, Physical Address:(If Different From Postal Address)
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Street Address City State Zip
BOARD DEMOGRAPHICS
I CHIEF FISCAL OFFICER
Peter J.Zwerlein Treasurer
Name Title
260 New Suffolk Road Cutchogue NY ;11935
Street Address or PO Box City State Zip
(631)734-6907 (631)734-7079
Telephone Number Fax Number
cutfdtreas@optonline net 12/31/2017
Email Address Term End Date
CHAIRMAN OF THE BOARD
Joseph S Zuhoski,Jr Commissioner
Name Title
260 New Suffolk Road Cutchogue NY ,11944
Street Address or PO Box City State Zip
(63
(631)734-6907 1)734-7079
Telephone Number _ Fax Number
cutfdtreas@optonline net 12/31/2021
Email Address Term End Date
I, Peter J Zwerlein hereby certify that I am the Chief Fiscal Officer of the
Cutchogue Fire District and that the information provided in the annual
financial report of the Cutchogue Fire_ District for the fiscal year ended
12/31/2016 j,is true and correct to the best of my knowledge and belief By entering the personal
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_ . 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 lqutchpue Fire District 's annual
financial report, I am evidencing my express intent to authenticate my certification of the
Cutchogue Fire District ''s annual financial report report for the fiscal year
ended 12/31/2016 and filed by means of electronic data transmission
Sheehan&Company CPA, PC .... " 00/00/0000
Name of Report Preparer Personal Identification Number Date
if different than Chief Fiscal Officer of Chief Fiscal Officer
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Cutchogue FIRE DISTRICT
Financial Comments
For the Fiscal Year Ending 2016
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Cutchogue Fire District
NOTES TO ANNUAL FINANCIAL REPORT UPDATE DOCUMENT
1. Summary of significant accounting policies:
The Annual Financial Report Update Document (AUD) of the Cutchogue Fire District
(the District), as of and for the year ended December 31, 2016 has been prepared in
conformity with accounting practices prescribed or permitted by the New York State
Office of the State Comptroller (regulatory basis), which is a special purpose framework
of accounting other than U.S. generally accepted accounting principles.
Financial reporting entity: The District is a governmental entity that provides fire
protection to the local community. The District receives most of its funding from
property taxes.
The District is governed by laws of the State of New York. The Board of Fire
Commissioners is the legislative body responsible for the overall operation of the
District. All activities and functions performed for the District are its direct responsibility.
The Treasurer serves as Chief Fiscal Officer of the District.
Basis of presentation: The AUD provides information about the District's funds,
including Fiduciary Fund. 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.
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Cutchogue Fire District
NOTES TO ANNUAL FINANCIAL REPORT UPDATE DOCUMENT
1. Summary of significant accounting policies (continued):
Governmental(continued):
For AUD purposes, these funds are all combined and shown as the General Fund.
Fiduciary Fund 11
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 regulatory basis
of accounting using the current financial resources measurement focus. Revenues are
recognized when measurable and available. "Available" means collectible within the
current period or within 60 days after year end. Expenditures are generally recognized
under the modified accrual basis of accounting when the related liability is incurred. The
exception to this general rule is that principal and interest on general obligation long-term
debt, if any, is recognized when due.
Cash and cash equivalents: Cash and cash equivalents include demand deposits and
temporary investments with original maturities of three months or less from the date of
acquisition.
Investments: An investment is a security or other asset (a) that a government holds
primarily for the purpose of income or profit and (b) with present service capacity that is
based solely on its ability to generate cash or to be sold to generate cash.
Investments are generally reported at fair value, except certificates of deposit, which are
r
reported at cost.
Interfund transfers: The operations of the District give rise to certain transactions
between funds, including transfers of expenditures and revenues to provide services and
construct assets. This is either by budget, Board resolution, permissive referendum or
mandatory referendum.
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Cutchogue Fire District
NOTES TO ANNUAL FINANCIAL REPORT UPDATE DOCUMENT
1. Summary of significant accounting policies (continued):
Encumbrances: Encumbrance accounting is used for budget control and monitoring
purposes and is reported as part of the governmental funds. Under this method, purchase
orders, contracts and other commitments for the expenditures of monies are recorded to
reserve applicable appropriations. Outstanding encumbrances as of year end are
presented as assigned unappropriated fund balance and do not represent expenditures or
liabilities. These commitments will be honored in the subsequent period. Related
expenditures are recognized at that time, as the liability is incurred or the commitment is
paid.
Fund balance: In accordance with Governmental Accounting Standards Board (GASB)
Statement No. 54, Fund Balance Reporting and Governmental Fund Type Definitions,
(GASB Statement 54), fund balance is broken down into five different classifications:
non-spendable, restricted, committed, assigned and unassigned.
Non-spendable consists of assets that are inherently non-spendable in the current period
either because of their form or because they must be maintained intact, including prepaid
items, inventories, long-term portions of loan receivable, financial assets held for resale
and principal of endowments.
Restricted consists of amounts that are subject to externally enforceable legal purpose
restrictions imposed by creditors, grantors, contributors or laws and regulations of other
governments or through constitutional provisions or enabling legislation.
Committed consists of amounts that are subject to a purpose constraint imposed by a
formal action of the government's highest level of decision-making authority before the
end of the fiscal year and that require the same level of formal action to remove the
constraint. The Board of Fire Commissioners is the decision-making authority that can,
by Board resolution,prior to the end of the fiscal year, commit fund balance.
Assigned consists of amounts that are subject to a purpose constraint that represents an
intended use established by the government's highest level of decision-making authority
or by their designated body or official. The purpose of the assignment must be narrower
than the purpose of the General Fund and in funds other than the General Fund, assigned
fund balance represents the residual amount of fund balance. The Board of Fire
Commissioners, by Board resolution, can authorize the Treasurer to assign fund balance.
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Cutchogue Fire District
' NOTES TO ANNUAL FINANCIAL REPORT UPDATE DOCUMENT
i .
1. Summary of significant accounting policies (continued):
Fund balance (continued):
'i
Unassigned represents the residual classification for the government's General Fund and
could report a surplus or deficit. In funds other than the General Fund, the unassigned
classification should be used only to report a deficit balance resulting from overspending
for specific purposes for which amounts had been restricted, committed or assigned.
When resources are available from multiple classifications, the District spends funds in
the following order:
• Restricted amounts are deemed to have been spent when an expenditure is
incurred for purposes for which both restricted and unrestricted (committed,
assigned or unassigned) amounts are available.
• Within unrestricted fund balance, expenditures are deemed to be spent first from
committed amounts, followed by assigned amounts and then unassigned amounts
when expenditures are incurred for purposes for which amounts in any of those
unrestricted fund balance classifications could be used.
Real property taxes: All real property assessments are made by the Town of Southold.
Real property tax payments are due in two equal installments; the first half payable on
December 1 (lien and levy date) preceding the year for which the same is levied and the
second half payable May 10, with the first half payable without penalty to January 10 and
the second half payable without penalty to May 31. After May 31, all taxes must be paid
to Suffolk County Treasurer with a 5% penalty charge and interest at the rate of 1% per
month from February 1.
j 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 turns over uncollected items to the Suffolk
County Treasurer who continues the collection of these items. Responsibility for the
collection of unpaid taxes rests with Suffolk County.
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Cutchogue Fire District
NOTES TO ANNUAL FINANCIAL REPORT UPDATE DOCUMENT
1. Summary of significant accounting policies (continued):
Real property taxes (continued):
f
' In June 2011, New York State passed Chapter 97 of the Laws of 2011 (Tax Cap Law).
This law applies to alf local governments in New York State. The Tax Cap Law restricts
the amount of real property taxes that may be levied by the District in a particular year,
beginning with the 2012 - 2013 fiscal year. The growth in annual levy is limited to the
lesser of 2% or annual change in the national unadjusted Consumer Price Index for All
Urban Consumers -All Items (CPI-U), subject to certain exceptions and adjustments.
Budgetary data: The District prepares an operating budget for the General Fund each
year. The budget is'adopted by the Board of Fire Commissioners as its final budget for
the coming year as it relates to total spending. The District can adjust the budget as
needed by transferring certain budgeted amounts between accounts. The budget is not
subject to referendum. All budget appropriations lapse at the end of each year.
Use of estimates: The preparation of the AUD in conformity with the regulatory basis of
accounting requires management to make estimates and assumptions that affect certain
reported amounts and disclosures. Accordingly, actual results could differ from those
estimates.
2. Deposits with financial institutions and investments:
The District's investment policies are governed by state statutes and District policy.
Resources must be deposited in Federal Deposit Insurance Corporation (FDIC) insured
commercial banks or trust companies located within the state. Permissible investments
include special time deposit accounts, certificates of deposit, obligations of the United
States of America, obligations guaranteed by agencies of the United States of America
j and obligations of the State of New York. Collateral is required for demand and time
deposits and certificates of deposit not covered by FDIC insurance.
Custodial credit risk is the risk that in the event of a bank failure, the District's deposits
may not be returned to it. The District's risk exposure can be categorized as follows:
1. Insured by FDIC insurance.
2. Collateralized by securities held by the pledging financial institution's trust
department or agent, but not in the District's name.
3. Collateralized by securities held by the pledging financial institution, but not
in the District's name.
4. Uncollateralized.
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Cutchogue Fire District
NOTES TO ANNUAL FINANCIAL REPORT UPDATE DOCUMENT
2. Deposits with financial institutions and investments (continued):
The District's deposits held are categorized, based on the above criteria, as follows:
Category Amount
1. $ 250,000
2. 1,632,949
3. -
4. -
Total1 882 949
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.
3. Long-term liabilities:
Long-term liability activity for the year ended December 31, 2016 was as follows:
Beginning Ending
Balance Additions Reductions Balance
Installment purchase $ 57,592 $ - $04,004) $43,588
Total 57 592 14 004 43 558
Emergency Medical Service (EMS) installment lease: In 2014, the District entered
into a five year lease purchase financing agreement with U.S. Bank Equipment Finance
for the purchase of EMS equipment. The value of the equipment at the inception of the
lease was $71,341. Interest and principal payments are being provided for in the General
Fund. Interest is at an annual rate of 1.90%.
Maturities of long-term indebtedness, principal and interest, at December 31, 2016, are as
follows:
EMS Equipment installment lease:
Due in Fiscal Year Ended Principal Interest Total
2017 $14,263 $ 681 $14,944
2018 14,528 417 14,945
2019 14,797 148 14,945
43 588
SL246 44 834
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Cutchogue Fire District
NOTES TO ANNUAL FINANCIAL REPORT UPDATE DOCUMENT
4. Pension Plan:
Plan description: The District participates in the New York State and Local Employees'
Retirement System (ERS) which is part of the New York State and Local Retirement
System (the System). This is a cost-sharing, multiple-employer defined benefit retirement
system. The net position of the System is held in the New York State Common
Retirement Fund (the Fund), which was established to hold all net assets and record
changes in fiduciary net position allocated to the System. The Comptroller of the State of
New York serves as the trustee of the Fund and is the administrative head of the System.
System benefits are established under the provisions of the New York State Retirement
and Social Security Law (NYSRSSL). Once a public employer elects to participate in the
System, the election is irrevocable. The New York State Constitution provides that
pension membership is a contractual relationship and plan benefits cannot be diminished
or impaired. Benefits can be changed for future members only by enactment of a State
statute. The District also participates in the Public Employees' Group Life Insurance Plan
(GLIP), which provides death benefits in the form of life insurance. The System is
included in the State's financial report as a pension trust fund. That report may be found
at www.ose.state.ny.us/retire/publications/index.php or obtained by writing to the New
York State and Local Retirement System, 110 State Street, Albany,New York 12244.
Benefits provided: The System provides retirement benefits as well as death and
disability benefits.
Tiers I and 2
Eligibility: Tier 1 members, with the exception of those retiring under special retirement
plans, must be at least age 55 to be eligible to collect a retirement benefit. There is no
minimum service requirement for Tier 1 members. Tier 2 members, with the exception of
those retiring under special retirement plans, must have five years of service and be at
least age 55 to be eligible to collect a retirement benefit. The age at which full benefits
�._ may be collected for Tier 1 is 55, and the full benefit age for Tier 2 is 62.
Benefit calculation: Generally, the benefit is 1.67% of final average salary for each year
of service if the member retires with less than 20 years. If the member retires with 20 or
more years of service, the benefit is 2% of final average salary for each year of service.
Tier 2 members with five or more years of service can retire as early as age 55 with
reduced benefits. Tier 2 members age 55 or older with 30 or more years of service can
retire with no reduction in benefits. As a result of Article 19 of the NYSRSSL, Tier 1 and
Tier 2 members who worked continuously from April 1, 1999 through October 1, 2000
received an additional month of service credit for each year of credited service they have
at retirement, up to a maximum of 24 additional months.
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?_ Cutchogue Fire District
I NOTES TO ANNUAL FINANCIAL REPORT UPDATE DOCUMENT
! 4. Pension Plan (continued):
Tiers I and 2 (continued)
Y Benefit calculation (continued):
Final average salary is the average of the wages earned in the three highest consecutive
years. For Tier 1 members who joined on or after June 17, 1971, each year of final
average salary is limited to no more than 20% of the previous year. For Tier 2 members,
each year of final average salary is limited to no more than 20% of the average of the
previous two years.
Tiers 3, 4 and 5
Eli ibili : Tier 3 and 4 members, with the exception of those retiring under special
retirement plans, must have five years of service and be at least age 55 to be eligible to
collect a retirement benefit. Tier 5 members, with the exception of those retiring under
special retirement plans, must have 10 years of service and be at least age 55 to be
eligible to collect a retirement benefit. The full benefit age for Tiers 3, 4 and 5 is 62.
Benefit calculation: Generally, the benefit is 1.67% of final average salary for each year
of service if the member retires with less than 20 years. If a member retires with between
20 and 30 years of service, the benefit is 2% of final average salary for each year of
service. If a member retires with more than 30 years of service, an additional benefit of
1.5% of final average salary is applied for each year of service over 30 years. Tier 3 and 4
members with five or more years of service and Tier 5 members with 10 or more years of
service can retire as early as age 55 with reduced benefits. Tier 3 and 4 members age 55
or older with 30 or more years of service can retire with no reduction in benefits.
Final average salary is the average of the wages earned in the three highest consecutive
years. For Tier 3, 4 and 5 members, each year of final average salary is limited to no
more than 10% of the average of the previous two years.
i
Tier 6
Eligibility: Tier 6 members, with the exception of those retiring under special retirement
plans, must have 10 years of service and be at least age 55 to be eligible to collect a
retirement benefit. The full benefit age for Tier 6 is 63 for ERS members.
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Cutchogue Fire District
I NOTES TO ANNUAL FINANCIAL REPORT UPDATE DOCUMENT
J ,
1 4. Pension Plan (continued):
c
Tier 6(continued)
i
Benefit calculation: Generally, the benefit is 1.67% of final average salary for each year
of service if the member retires with less than 20 years. If a member retires with 20 years
of service, the benefit is 1.75% of final average salary for each year of service. If a
member retires with more than 20 years of service, an additional benefit of 2% of final
average salary is applied for each year of service over 20 years. Tier 6 members with 10
or more years of service can retire as early as age 55 with reduced benefits.
Final average salary is the average of the wages earned in the five highest consecutive
years. For Tier 6 members, each year of final average salary is limited to no more than
10% of the average of the previous four years.
Ordinary Disability Benefits
Generally, ordinary disability benefits, usually one-third of salary, are provided to
eligible members after 10 years of service; in some cases, they are provided after five
years of service.
Accidental Disability Benefits
For all eligible Tier 1 and Tier 2 ERS members, the accidental disability benefit is a
pension of 75% of final average salary, with an offset for any Workers' Compensation
benefits received. The benefit for eligible Tier 3, 4, 5 and 6 members is the ordinary
disability benefit with the years-of-service eligibility requirement dropped.
Ordinary Death Benefits
Death benefits are payable upon the death, before retirement, of a member who meets
eligibility requirements as set forth by law. The first $50,000 of an ordinary death benefit
�^ is paid in the form of group term life insurance. The benefit is generally three times the
member's annual salary. For most members, there is also a reduced post-retirement
ordinary death benefit available.
s"
1
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Cutchogue Fire District
NOTES TO ANNUAL FINANCIAL REPORT UPDATE DOCUMENT
1 4. Pension Plan (continued):
ti-
Post-Retirement Benefit Increases
A cost-of-living adjustment is provided annually to: (i) all pensioners who have attained
age 62 and have been retired for five years, (ii) all pensioners who have attained age 55
and have been retired for 10 years, (iii) all disability pensioners, regardless of age, who
have been retired for five years, (iv) ERS recipients of an accidental death benefit,
regardless of age, who have been receiving such benefit for five years and (v) the spouse
of a deceased retiree receiving a lifetime benefit under an option elected by the retiree at
retirement. An eligible spouse is entitled to one-half the cost-of-living adjustment amount
that would have been paid to the retiree when the retiree would have met the eligibility
criteria. This cost-of-living adjustment is a percentage of the annual retirement benefit of
the eligible member as computed on a base benefit amount not to exceed $18,000 of the
annual retirement benefit. The cost-of-living percentage shall be 50% of the annual
Consumer Price Index as published by the U.S. Bureau of Labor, but cannot be less than
1% or exceed 3%.
Contributions: The System is non-contributory except for employees who joined the
New York State and Local Employees' Retirement System after July 27, 1976, who
contribute 3% of their salary for the first 10 years of membership, and employees who
joined on or after January 1, 2010 who generally contribute 3% of their salary for their
entire length of service. For Tier 6 members, the contribution rate varies from 3% to 6%
depending on_salary. Generally, Tier 5 and 6 members are required to contribute for all
years of service. Under the authority of the NYSRSSL, the Comptroller annually certifies
the actuarially determined rates expressly used in computing the employers' contributions
based on salaries paid during the Systems' fiscal year ending March 31. Contributions for
the current year and two preceding years were equal to 100% of the contributions
required, and were as follows:
Year Ending December 31, Amount
2016 $ 5,888
2015 9,368
2014 20,242
i
!- Chapter 57 of the Laws of 2013 of the State of New York was enacted that allows local
employers to amortize a portion of their retirement bill for up to 12 years in accordance
with the following stipulations:
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Cutchogue Fire District
NOTES TO ANNUAL FINANCIAL REPORT UPDATE DOCUMENT
} 4. Pension Plan (continued):
_ Contributions (continued):
The maximum amount an employer can amortize is the difference between the
normal annual contribution (total bill, excluding payments for deficiency, group life,
previous amortizations, incentive costs and prior year adjustments) and the graded
contribution.
For subsequent State fiscal years (SFYs), the graded rate will increase or decrease by
up to one-half of 1% depending on the gap between the increase or decrease in the
System's average rate and the previous graded rate.
The interest rate will be set annually and will be comparable to a 12 year U.S.
Treasury Bond plus I%.
For subsequent SFYs in which the System's average rates are lower than the graded
rates, the employer will be required to pay the graded rate. Any additional
contributions made will first be used to pay off existing amortizations and then any
excess will be deposited into a reserve account and will be used to offset future
increases in contribution rates.
This law requires participating employers to make payments on a current basis, while
amortizing existing unpaid amounts relating to the System's fiscal years when the local
employer opts to participate in the program.
The District's total pension liability was paid as of December 31, 2016.
Pension liabilities, pension expense and deferred outflows of resources and deferred
inflows of resources related to pensions: At December 31, 2016, the District reported a
liability of$44,880 for its proportionate share of the net pension liability. The net pension
liability was measured as of March 31, 2016 and the total pension liability used to
calculate the net pension liability was determined by an actuarial valuation as of that date.
The District's proportion of the net pension liability was based on a projection of the
District's long-term share of contributions to the pension plan relative to the projected
contributions of all participating members, actuarially determined.
At March 31, 2016,the District's proportion was 0.0002796%.
For the year ended December 31, 2016, the District recognized pension expenditures of
$5,888. At December 31, 2016, the District reported deferred outflows of resources and
deferred inflows of resources related to pensions from the following sources:
i
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I NOTES TO ANNUAL FINANCIAL REPORT UPDATE DOCUMENT
i
4. Pension Plan (continued):
Pension liabilities, pension expense and deferred outflows of resources and deferred
j inflows of resources related to pensions (continued):
Deferred Deferred
Outflows of Inflows of
Resources Resources
Differences between expected and actual
experience $ 227 $5,320
Changes of assumptions 11,968 -
Net difference between projected and actual
earnings on pension plan investments 26,625 -
Changes in proportion and differences between
District contributions and proportionate share of
contributions 7,211 2,230
District contributions subsequent to the measurement
date 5,888 -
Total 51 919 7 550
$5,888 reported as deferred outflows of resources related to pensions resulting from
District contributions subsequent to the measurement date will be recognized as a
reduction of the net pension liability in the year ended March 31, 2017. Other amounts
reported as deferred outflows of resources and deferred inflows of resources related to
pensions will be recognized in pension expense as follows:
Year Ended March 31: Amount
' 2017 $10,227
2018 $10,227
2019 $10,227
2020 $ 7,799
f
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Cutchogue Fire District
i '
NOTES TO ANNUAL FINANCIAL REPORT UPDATE DOCUMENT
4., Pension Plan (continued):
Actuarial assumptions: The total pension liability at March 31, 2016 was determined
5 by using an actuarial valuation as of April 1, 2015, with update procedures used to roll
forward the total pension liability to March 31, 2016. The actuarial valuation used the
following actuarial assumptions:
Inflation 2.5%
Salary increases 3.8%
Investment rate of return(net of
investment expense, including
inflation) 7.0%
t
�- Annuitant mortality rates are based on April 1, 2010 through March 31, 2015 System
experience with adjustments for mortality improvements based on the Society of
Actuaries' Scale MP-2014.
The actuarial assumptions used in the April 1, 2015 valuation are based on the results of
an actuarial experience study for the period April 1, 2010 through March 31, 2015.
Best estimates of arithmetic real rates of return for each major asset class included in the
target asset allocation as of March 31, 2016 are summarized below:
Long-term
Expected Real
Asset Class Rate of Return
Domestic equity 7.30%
International equity 8.55%
Private equity 11.00%
Real estate 8.25%
Absolute return strategies 6.75%
Opportunistic portfolio 8.60%
Real assets 8.65%
Bonds and mortgages 4.00%
Cash 2.25%
Inflation-indexed bonds 4.00%
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Cutchogue Fire District
NOTES TO ANNUAL FINANCIAL REPORT UPDATE DOCUMENT
t-
4. Pension Plan (continued):
f
Discount rate: The discount rate used to calculate the total pension liability was 7.0%.
j The projection of cash flows used to determine the discount rate assumes that
contributions from plan members will be made at the current contribution rates and that
contributions from employers will be made at statutorily required rates, actuarially. Based
upon the assumptions, the System's fiduciary net position was projected to be available to
make all projected future benefit payments of current plan members. Therefore, the long-
term expected rate of return on pension plan investments was applied to all periods of
projected benefit payments to determine the total pension liability.
Sensitivity of the proportionate share of the net pension liability to the discount rate
assumption: The following presents the District's proportionate share of the net pension
liability calculated using the discount rate of 7.0%, as well as what the District's
proportionate share of the net pension liability would be if it were calculated using a
discount rate that is 1 percentage point lower (6.0%) or 1 percentage point higher (8.0%)
than the current rate:
1% Current 1%
Decrease Assumption Increase
(6.0%) (7.0%) 8( 0%)
District's proportionate share of
the net pension liability (asset) $101,201 $44,880 $(2,709)
Pension plan fiduciary net position: The components of the current-year net pension
liability of the employers as of March 31, 2016, were as follows:
(Dollars in Thousands)
Employees' Retirement
System
Employers' total pension liability $ 172,303,544
Plan net position (156,253,265)
Employers'net pension liability 16.050.279
i
'- Ratio of plan net position to the employers'
total pension liability 90.7%
I '
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- ' Cutchogue Fire District
I NOTES TO ANNUAL FINANCIAL REPORT UPDATE DOCUMENT
t
5. Length of Service Award Program (LOSAP):
-_ The District's AUD is for the year ended December 31, 2016. However, the information
contained in this note is based on information for the LOSAP for the plan year ending on
February 28, 2017, which is the most recent plan year for which complete information is
available. The funding detail is for the period March 1, 2016 through February 28, 2017.
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 11-A of the General Municipal Law. The Program provides
municipally funded, pension-like benefits to facilitate the recruitment and retention of
active volunteer firefighters. The District is the sponsor of the Program.
Program description:
Participation, vesting and service credit: Active volunteer firefighters who have
reached the age of 17 and who have completed their probationary period are eligible to
participate in the Program. Participants acquire a non-forfeitable right to a service award
after being credited with five years of firefighting service or upon attaining the Program's
entitlement age. The Program's entitlement age is age 65. In general, an active volunteer
firefighter is credited with a year of firefighting service for each calendar year after the
establishment of the Program in which he or she accumulates 50 points. Points are
granted for the performance of certain activities in accordance with a system established
by the sponsor 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.
r-
Benefits: A participant's benefit under the Program is the actuarial equivalent of a
monthly payment for life equal to $20 multiplied by the person's total number of years of
firefighting service. The number of years of firefighting service used to compute the
benefit cannot exceed 30. Benefits are not payable until the first day of the month
coincident with or following the attainment of age 65 and completion of one year of plan
participation. Except in the case of disability or death, benefits are payable when a
participant reaches entitlement age. The Program provides statutorily mandated death and
disability benefits.
I
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
fcompany having members who participate in the Program. Each fire company must
maintain all required records on forms prescribed by the Governing Board.
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Cutchogue Fire District
I ! NOTES TO ANNUAL FINANCIAL REPORT UPDATE DOCUMENT
i .
5. Length of Service Award Proeram (LOSAP) (continued):
Fiduciary investment and control (continued):
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:
Payment of benefits:
1. 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.
2. 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.
3. Disability benefits - Upon notification from the plan sponsor of a participant's
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.
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Cutchogue Fire District
NOTES TO ANNUAL FINANCIAL REPORT UPDATE DOCUMENT
5. Length of Service Award Program (LOSAP) (continued):
Payment of administrative expenses:
1. Per the executed Service Fee Agreement, the plan sponsor agrees to payment as
contracted.
Authority to invest Program assets is vested in Mass Mutual Financial Group. Subject to
restrictions in the Program document, Program assets are invested in accordance with a
statutory "prudent person" rule. The sponsor invested plan funds in a 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, Inc. Portions of the following information were derived from a report
prepared by the actuary dated May 20, 2016.
Program financial condition:
Assets and Liabilities
I �
% of Total
Actuarial present value of accrued benefits at
February 28, 2016:
Vested $2,367,773
Non-vested 71,047
2,438,820
Present value of accrued post entitlement benefits 467,359
Total present value of accrued benefits 2,906,179
Less assets available for benefits:
General investments 100% $1,591,806
Total net assets available for benefits 1,591,806
Total unfunded normal benefits 1 314 373*
* The unfunded liability was placed on a 10 year amortization effective March 1, 2013.
The unfunded liability was based upon data as of March 1, 2013 and will be affected
by plan experience over the 10 year period.
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I ,
�- Cutchogue Fire District
NOTES TO ANNUAL FINANCIAL REPORT UPDATE DOCUMENT
S. Length of Service Award Program (LOSAP) (continued):
Program financial condition (continued):
Funded ratio:
Plan assets $1,591,806
} Total present value of accrued benefits $2,906,179
Percent funded 54.7%
Receipts and Disbursements
Plan net assets, beginning of year $1,392,474
Changes during the year (increases/(decreases)):
Plan contributions $339,755
Fixed investment gain 48,951
j Cash value surrender policies 1,096
Plan benefit withdrawals (168,260)
Death claim (1,915)
Administrative and other fees/charges (3,777)
Life insurance premium (16,518) 199,332
Plan net assets, end of year 1 591 806
Contributions
Amount of sponsor's contribution recommended by actuary 349 788
1 Amount of sponsor's actual contribution 339 755
Contributions paid in excess of recommended amount are for administration fees and
other adjustments.
Administration Fees
Fees paid to designated program administrator 3 777
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COMPANY
Cutchogue Fire District
NOTES TO ANNUAL FINANCIAL REPORT UPDATE DOCUMENT
5. Length of Service Award Program (LOSAP) (continued):
Funding methodology and actuarial assumptions:
i
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
j used by the actuary to determine the sponsor's contribution and the actuarial present value
of benefits are:
Assumed rate of return on investment 4.75%
Mortality tables used for:
Pre-retirement
Male 1994 Group Annuity (GAR) 0
Female 1994 Group Annuity (GAR) 0
Post-retirement
Male 1994 Group Annuity (GAR) 0
Female 1994 Group Annuity (GAR) 0
Effective August 1, 2016, the District converted its Universal Life Insurance policy to
Group Term Life. This conversion removed the life insurance component from the
District's LOSAP plan, which will be reflected in the District's LOSAP report next year.
6. Commitments and contingencies:
Encumbrances: In the current year, the District has reported no encumbrances. This is
supported by the accounts payable and encumbrances summary provided by the District.
Assigned appropriated fund balance: The District, from time to time, will appropriate
a portion of its unassigned unappropriated fund balance. During 2016, no such
appropriation was made.
General legal: The District is exposed to various risks of loss related to torts, theft of,
damage to and destruction of assets, injuries to employees, errors and omissions, natural
disasters, etc. These risks are covered by commercial insurance purchased from
independent third parties. Settled claims from these risks have not exceeded commercial
insurance coverage.
Grant: During 2015, the District was approved for an $80,000 State and Municipal
Facilities Program (SAM) grant. The grant is for the renovation of the District's radio
room, including the purchase and installation of equipment. DASNY is the administrator
of the grant.
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r
&COMPANY
Cutchogue Fire District i
NOTES TO ANNUAL FINANCIAL REPORT UPDATE DOCUMENT
6. Commitments and contingencies (continued):
Grant (continued):
I ;
The District started renovation on its radio room during 2015 and completed the work
during 2016. During the two year period, the District expended approximately $224,041.
The District submitted for reimbursement under the grant in May 2016. As of December
31, 2016, the District has not been reimbursed. The District is currently seeking
reimbursement; however, since there is no time table of when reimbursement is
expected,no receivable has been reported at December 31, 2016.
7. Economic dependency:
I .
- For the year ended December 31, 2016, approximately 84% of the District's gross
revenues were derived from real property taxes provided by the Town of Southold.
8. Subsequent events:
Purchase of apparatus: On November 11, 2016, the District adopted a Board resolution
authorizing the purchase of a Class A Pumper Truck with an estimated maximum cost of
$755,000 which includes $55,000 for equipment and other incidentals relating to the
purchase of the pumper truck. The resolution authorized a down payment of$200,000 on
the purchase of the aforementioned apparatus and for the payment of the $55,000 for the
aforementioned equipment and other incidentals relating to the purchase of the pumper
truck from the District's Capital Reserve Apparatus and Equipment Fund. Additionally,
the resolution also authorized the financing of $500,000 for the balance of the pumper
truck.
The above purchase was subject to Mandatory Referendum and was approved by
qualified voters at a special election held on December 13, 2016. In connection with the
results of the aforementioned special election, the District is pursuing the purchase and
financing of the aforementioned apparatus.
Rental of real property: On December 13, 2016, the District entered into a lease
agreement to lease ground space on its property to a company for the positioning of cell
phone towers. This is a 30 year lease commencing on the date of commercial operation
of the leased space. Upon notice of lessee, the lease will be renewed for three additional
terms of five years each and one additional term of four years. The terms of the lease
allow for the lessee to sublease the property and requires the lessee to pay the District
30% of all rents received from the first sub lessee, 35% for the second sub lessee and
40% from all subsequent sub lessees.
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&COMPANY
Cutchogue Fire District
NOTES TO ANNUAL FINANCIAL REPORT UPDATE DOCUMENT
I ;
8. Subsequent events (continued):
Rental of real Property (continued):
There was no rental income related to this lease during the year ended December 31,
2016 and future rental income is not readily determinable.
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&COMPANY
437 Madison Avenue, 29th Flooi
New York,NY 10022 • 212 962 4470
„ 165 Orinoco Drive,Briehtwaters, NY 11718
t 631 665 7040 • Fax 631 665 7014
CCOMPANY
�®R 1if f]� R�7 15 South Bayles Avenue,Port Washington, NY 11050
M ll Y 1 516 883 5510 • Fax 516 767 7438
' A PROFESSIONAL CORPORATION OF CERTIFIED PUBLIC ACCOUNTANTS www sheehancpa coin
INDEPENDENT AUDITOR'S REPORT ON INTERNAL CONTROL OVER
FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED
ON AN AUDIT OF ANNUAL FINANCIAL REPORT UPDATE DOCUMENT
PERFORMED IN ACCORDANCE WITH GOVERNMENTAUDITING STANDARDS
To the Board of Fire Commissioners
Cutchogue Fire District
We have audited, in accordance with auditing standards generally accepted in the United States
of America and the standards applicable to financial audits contained in Government Auditing
Standards issued by the Comptroller General of the United States, the Annual Financial Report
Update Document of Cutchogue Fire District (the District), as of and for the year ended
December 31, 2016 and the related notes to the Annual Financial Report Update Document
(Financial Section), which collectively comprise the District's basic financial statements and
have issued our report thereon dated June 2, 2017.
Internal Control Over Financial Reporting
In planning and performing our audit of the Annual Financial Report Update Document, we
considered the District's internal control over financial reporting (internal control) to determine
the audit procedures that are appropriate in the circumstances for the purpose of expressing our
opinion on the Annual Financial Report Update Document but not for the purpose of expressing
an opinion on the effectiveness of the District's internal control. Accordingly, we do not express
an opinion on the effectiveness of the District's internal control.
A deficiency in internal control exists when the design or operation of a control does not allow
management or employees, in the normal course of performing their assigned functions, to
prevent or detect and correct misstatements on a timely basis. A material weakness is a
deficiency, or a combination of deficiencies, in internal control, such that there is a reasonable
possibility that a material misstatement of the District's Annual Financial Report Update
Document will not be prevented or detected and corrected on a timely basis. A significant
deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe
than a material weakness, yet important enough to merit attention by those charged with
governance.
Our consideration of internal control was for the limited purpose described in the first paragraph
of this section and was not designed to identify all deficiencies in internal control that might be
material weaknesses or significant deficiencies. Given these limitations, during our audit we did
not identify any deficiencies in internal control that we consider to be material weaknesses.
However, material weaknesses may exist that have not been identified.
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An Independent Member of the BDO Alliance USA
( ' To the Board of Fire Commissioners
Cutchogue Fire District
I�
Compliance and Other Matters
i As part of obtaining reasonable assurance about whether the District's Annual Financial Report
Update Document is free from material misstatement, we performed tests of its compliance with
certain provisions of laws, regulations, contracts and grant agreements, non-compliance with
which could have a direct and material effect on the determination of Annual Financial Report
Update Document amounts. However, providing an opinion on compliance with those provisions
was not an objective of our audit and, accordingly, we do not express such an opinion. The
j results of our tests disclosed no instance of non-compliance or other matters that are required to
be reported under Government Auditing Standards.
Purpose of this Report
The purpose of this report is solely to describe the scope of our testing of internal control and
compliance and the results of that testing and not to provide an opinion on the effectiveness of
the District's internal control or on compliance. This report is an integral part of an audit
performed in accordance with Government Auditing Standards in considering the District's
i internal control and compliance. Accordingly, this communication is not suitable for any other
purpose.
cwA ,p,c .
Brightwaters,New York
June 2, 2017
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COMPANY