HomeMy WebLinkAbout2017 RECEIVED
DEC 3 2010
Southold Town Clerk
TOWN OF SOUTHOLD
AUDIT REPORTS
Year Ended December 31, 2017
FINANCIAL
SECTION
FINANCIAL SECTION
IndependentAuditors' Report.................................................................................................................... 1-3
REQUIRED SUPPLEMENTARY INFORMATION
Management's Discussion and Analysis................................................................................................... 4-15
BASIC FINANCIAL STATEMENTS
Government-Wide Financial Statements
Statementof Net Position....................................................................................................................... 16
Statementof Activities............................................................................................................................ 17
Fund Financial Statements
Governmental Fund Financial Statements
Balance Sheet and Reconciliation of the Governmental Funds Balance Sheet to
the Statement of Net Position....................................................................................... 18-19
Statement of Revenues, Expenditures, and Changes in Fund Balances and
Reconciliation of the Governmental Funds Statement of Revenues, Expenditures
and Changes in Fund Balances to the Statement of Activities........................................................ 20-21
Fiduciary Fund Financial Statements
Statement of Fiduciary Assets and Liabilities......................................................................................... 22
Notesto Financial Statements.................................................................................................................. 23-57
REQUIRED SUPPLEMENTARY INFORMATION OTHER THAN MANAGEMENT DISCUSSION
AND ANALYSIS
Schedule of Revenues, Expenditures, and Changes in Fund Balance—Budget and Actual
GeneralFund....................................................................................................................................... 58
HighwayFund...................................................................................................................................... 59
Community Preservation Fund........................................................................................ 60
Postemployment Benefits Healthcare Costs—Schedule of Funding Progress..................................... 61
Schedule of Pension Contributions....................................................................................... 62
Schedule of Proportionate Share of the Net Pension Liability...................................................... 63
OTHER SUPPLEMENTARY INFORMATION
Combining Fund Statements:
Nonmajor Governmental Funds
CombiningBalance Sheet................................................................................................................... 64
Combining Statement of Revenues, Expenditures, and Changes in Fund Balances........................ 65
OTHER REPORTS
Independent Auditors' Report on Internal Control over Financial Reporting and on
Compliance and Other Matters based on an audit of Financial Statements Performed in
Accordance with Governmental Auditing Standards............................................................ 66-67
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CERTIFIED PUBLIC ACCOUNTANTS
INDEPENDENT AUDITORS' REPORT
Honorable Supervisor and Town Board
Town of Southold
Southold, New York
We have audited the accompanying financial statements of the governmental activities, each major fund, and
the aggregate remaining fund information of the Town of Southold, New York (the "Town"), as of and for the
year ended December 31, 2017, and the related notes to the financial statements. We were not engaged to
audit the financial statements of the aggregate discretely presented component units. These financial
statements collectively comprise the Town's basic financial statements as listed In the table of contents.
Management's Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial statements in
accordance with accounting principles generally accepted in the United States of America; this includes the
design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of
financial statements that are free from material misstatement, whether due to fraud or error.
Auditors' Responsibility
Our responsibility is to express opinions on these financial statements based on our audit. We did not audit the
financial statements of the component units. Fishers Island Ferry District and Fishers Island Waste
Management District, which represent 73.7%, 68.0%, and 80.4%, respectively, of the assets, net position, and
revenues of the aggregate discretely presented component units were audited by other auditors whose report
thereon have been furnished to us, and our opinion, insofar as it relates to the amounts Included for those two
component units, is based solely on the reports of the other auditors. The remaining five component units have
not been audited. 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. The financial statements of the Fishers
Island Waste Management District were not audited in accordance with Government Auditing Standards.
Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. Because of the matter described in the "Basis for
Disclaimer of Opinion" paragraph, however, we were not able to obtain sufficient appropriate audit evidence to
provide a basis for an audit opinion on the aggregate discretely presented component units.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the
financial statements. The procedures selected depend on the auditors' judgment, including the assessment of
the risks of material misstatement of the financial statements, whether due to fraud or error. In making those
risk assessments, the auditor considers internal control relevant to the Town's preparation and fair
presentation of the financial statements 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 Town's internal
control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of
accounting policies used and the reasonableness of significant accounting estimates made by management,
as well as evaluating the overall presentation of the financial statements.
Except for the matter described in the "Basis for Disclaimer of Opinion on the Aggregate Discretely Presented
Component Units" paragraph, we believe that the audit evidence we have obtained is sufficient and appropriate
to provide a basis for our audit opinions.
BEYOND THE NUMBERS... —�
ALBRECHT,VIGGIANO,ZURECK&COMPANY, P.0
245 PARK AVENUE,39TH FLOOR 25 SUFFOLK COURT
NEW YORK, NY 10167 HAUPPAUGE, NY 11788-3715
T 212.792.4075 T 631.434.9500 F:631.434.9518
_ www.avz com
_1 INDEPENDENT MEMBER OF BKR INTERNATIONAL
Basis for Disclaimer of Opinion on the Aggregate Discretely Presented Component Units
The financial statements of five of the component units, Cutchogue-New Suffolk Park District, Southold Park
District, Orient-East Marion Park District, Mattituck Park District and Orient Mosquito District have not been
audited, and we were not engaged to audit these financial statements as part of our audit of the Town of
Southold, New York's basic financial statements. These financial activities are included in the Town's basic
financial statements as discretely presented component units and represent 26.3%, 32.0%, and 19.6%,
respectively, of the assets, net position, and revenues of the Town's aggregate discretely presented
component units.
Disclaimer of Opinion
Because of the significance of the matter described in the "Basis for Disclaimer of Opinion on the Aggregate
Discretely Presented Component Units" paragraph, we have not been able to obtain sufficient appropriate
audit evidence to provide a basis for an audit opinion on the financial statements of the aggregate discretely
presented component units of the Town of Southold, New York. Accordingly, we do not express an opinion on
these discretely presented component units'financial statements.
Unmodified Opinions
In our opinion, the financial statements referred to above present fairly, in all material respects, the respective
financial position of the governmental activities, each major fund and the aggregate remaining fund information
of the Town of Southold, New York as of December 31, 2017, and the respective changes in financial position
for the year then ended in accordance with accounting principles generally accepted in the United States of
America.
Other Matters
Required Supplementary Information
Accounting principles generally accepted in the United States of America require that the management's
discussion and analysis, postemployment benefits healthcare costs— schedule of funding progress, schedule
of pension contributions, schedule of proportionate share of the net pension liability and the budgetary
comparison information be presented to supplement the basic financial statements. Such information, although
not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who
considers it to be an essential part of financial reporting for placing the basic financial statements in an
appropriate operational, economic, or historical context. We and other auditors have applied certain limited
procedures to the required supplementary information in accordance with auditing standards generally
accepted in the United States of America, which consisted of inquiries of management about the methods of
preparing the information and comparing the information for consistency with management's responses to our
inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic
financial statements. We do not express an opinion or provide any assurance on the information because the
limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance.
Other Information
Our audit was conducted for the purpose of forming opinions on the financial statements that collectively
comprise the Town of Southold, New York's basic financial statements. The combining nonmajor fund financial
statements are presented for purposes of additional analysis and are not a required part of the basic financial
statements.
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Other Information(continued)
The combining nonmajor fund financial statements are the responsibility of management and were derived
from and relate directly to the underlying accounting and other records used to prepare the basic financial
statements. Such information has been subjected to the auditing procedures applied in the audit of the basic
financial statements and certain additional procedures, including comparing and reconciling such information
directly to the underlying accounting and other records used to prepare the basic financial statements or the
basic financial statements themselves, and other additional procedures in accordance with auditing standards
generally accepted in the United States of America. In our opinion, based on our audit, the procedures
performed as described above, the combining nonmajor fund financial statements are fairly stated, in all
material respects, in relation to the basic financial statements as a whole.
Hauppauge, New York
September 28,2018
L�
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r
REQUIRED SUPPLEMENTARY INFORMATION
Management's Discussion and Analysis
TOWN OF SOUTHOLD
MANAGEMENT'S DISCUSSION AND ANALYSIS
December 31,2017
As management of the Town of Southold, New York(the`Town"), we offer readers of the financial statements
_ this narrative overview and analysis of the financial activities for the year ended December 31,2017.
L-
FINANCIAL HIGHLIGHTS
• The assets and deferred outflows of the primary governmental activities of the Town exceeded its
liabilities and deferred inflows at the close of 2017 by$108,659,640 (net position).
_ • The Town's primary governmental activities net position increased by$5,694,068.
J • As of the close of 2017, the Town's governmental funds reported combined ending fund balances
of $32,038,163. Of this amount, $979,872 is not in spendable form or is required to remain intact.
The remaining $31,058,291 or approximately 96.9% of total fund balance is in spendable form with
various levels of spending constraint: restricted, committed, assigned, or unassigned making them
available for spending at the Town's discretion (See Note 13.2.)
• At the end of 2017, the Town's total fund balance for the General Fund was $10,718,809, an
increase of $1,908,361 or 21.7% from the prior year. The assigned and unassigned fund balance
for the General Fund was$9,789,154 or 34.0% of total General Fund expenditures and other uses.
• The Town's total bonded debt was $31,850,000, excluding premiums of $2,317,834, a decrease of
8.1%from the prior year.
OVERVIEW OF THE FINANCIAL STATEMENTS
The discussion and analysis is intended to serve as an introduction to the Town's basic financial statements.
The Town's basic financial statements comprise these components: 1) government-wide financial statements,
2) fund financial statements and 3) notes to basic financial statements. This report also contains
supplementary information in addition to the basic financial statements themselves.
Government-wide Financial Statements
I
The government-wide financial statements are designed to provide readers with a broad overview of the
Town's finances, in a manner similar to a private-sector business. The intent of the government-wide financial
statements is to give the reader a long-term view of the Town's financial condition.
The Statement of Net Position presents financial information on all of the Town's assets, deferred outflows of
resources, liabilities, and deferred inflows of resources with the difference between the two reported as net
position. This combines and consolidates the Town's current financial resources with capital assets and long-
term obligations. Over time, increases or decreases in the Town's net position is one indicator of whether its
financial health is improving or deteriorating. You will need to consider other nonfinancial factors, however,
such as changes in the Town's property tax base and the condition of the Town's buildings, roads, drainage
and other assets to assess the overall health of the Town.
The Statement of Activities presents information showing how the Town's net position changed during the
most recent year. Revenues and expenses are reported by activity to give the reader an understanding of how
each of the Town's activities are being supported. All changes in net position are reported as soon as the
underlying event giving rise to the change occurs, regardless of the timing of related cash flows. Thus,
revenues and expenses are reported in this statement for some items that will only result in cash flows in
future periods. This method is known as the accrual basis of accounting and is different from the modified
accrual basis of accounting used in the Town's fund financial statements.
The Town's government-wide financial statements include both the governmental activities of the Town itself
(known as the primary government) and of its legally separate component units for which the Town is
financially accountable. Financial information for all component units is reported separately (discretely
presented)from the financial information presented for the primary government.
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-' TOWN OF SOUTHOLD
MANAGEMENT'S DISCUSSION AND ANALYSIS
December 31, 2017
OVERVIEW OF THE FINANCIAL STATEMENTS (continued)
Government-wide Financial,Statements (continued)
Governmental Activities - The Town's basic services are reported here, including: general government
support; public safety; public health; transportation; economic assistance and opportunity; culture and
recreation and home and community services. Property taxes, mortgage taxes, franchise fees, fines, and state
and federal grants finance these activities. The Town also charges fees to help cover the cost of certain
r' > services it provides.
Component Units- Component units are legally separate organizations for which the Town is either financially
accountable, or the nature and significance of their relationship with the Town is such that exclusion would
cause the Town's financial statements to be misleading or incomplete. All of these entities are reported in a
separate column in the government-wide statements as discretely presented.
Information on separately issued financial statements is shown in Note E to the financial statements.
Fund Financial Statements
The fund financial statements focus on current available resources and are organized and operated on the
basis of funds, each of which is defined as an accounting entity with a self-balancing set of accounts
established for the purpose of carrying on specific or attaining certain objectives in accordance with special
regulations, restriction or limitations. The Town, like other governments, uses fund accounting to ensure and
demonstrate compliance with finance-related legal requirements. All of the funds of the Town can be divided
into two categories: governmental funds and fiduciary funds.
Governmental Funds
The Town's activities are reported in governmental funds. Governmental funds are used to account for
essentially the same functions reported as governmental activities in the government-wide financial
statements. However, unlike the government-wide financial statements, governmental fund financial
statements focus on near-term inflows and outflows of spendable resources, as well as on balances of
spendable resources available at the end of the year. Such information may be useful in evaluating a
government's near-term financial requirements.
Because the focus of governmental funds is narrower than that of the government-wide financial statements, it
is useful to compare the information presented for governmental funds with similar information presented for
governmental activities in the government-wide financial statements. By doing so, readers may better
understand the long-term effect of the Town's near term financial decisions. Both the governmental fund
balance sheet and governmental fund statement of revenues, expenditures, and change in fund balances
provide a reconciliation to facilitate this comparison between governmental funds and governmental activities.
G.�
The Town maintains ten (10) individual governmental funds. Information is presented separately in the
governmental fund balance sheet and in the governmental fund statement of revenues, expenditures, and
changes in fund balances for the four (4) major funds. The General Fund, Highway Fund, Capital Projects
Fund, and the Community Preservation Fund are reported as major funds. Data from the six (6) other
governmental funds are combined into a single, aggregated presentation.
The Town adopts an annual appropriated budget for its general and special revenue funds, except for the
Capital Projects Fund, and special grant fund. A budgetary comparison schedule for the general fund, highway
fund, and community preservation fund, can be found in the section labeled "Required Supplementary
Information Other Than Management's Discussion and Analysis".
Fiduciary Funds
All of the Town's fiduciary activities are reported in a separate Statement of Fiduciary Assets and Liabilities.
We exclude these activities from the Town's other financial statements because the Town cannot use these
assets to finance its operations. The Town is responsible for ensuring that the assets reported in these funds
are used for their intended purposes.
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TOWN OF SOUTHOLD
MANAGEMENT'S DISCUSSION AND ANALYSIS
December 31,2017
OVERVIEW OF THE FINANCIAL STATEMENTS (continued)
r Notes to the financial statements
The notes provide additional information that is essential to a full understanding of the data provided in the
government-wide and fund financial statements. The notes to the financial statements can be found following
the basic financial statements.
Other information
L'
In addition to the basic financial statements this report contains supplementary information immediately
following the required supplementary information other than the management' s discussion and analysis.
GOVERNMENT-WIDE FINANCIAL ANALYSIS
As noted earlier, net position may serve over time as a useful indicator of a government's financial position. In the
case of the Town, assets and deferred outflows of resources exceeded liabilities and deferred inflows by
$108,659,640 at the close of the most recent year.
Condensed Statement of Net Position
Primary Governmental Activities
December 31,
2017 2016
Assets
Current and other assets $ 44,970,965 $ 36,400,223
Capital assets 169,093,587 164,603,418
( Total Assets 214,064,552 201,003,641
Deferred Outflows of Resources 9,837,942 16,338,233
Liabilities
Current and other liabilities 6,518,438 5,091,814
Long-term liabilities 97,396,718 101,296,979
Total Liabilities 103,915,156 106,388,793
Deferred Inflows of Resources 11,327,698 7,987,509
Net Position
Net Investment in Capital Assets 134,651,075 127,951,617
Restricted 17,427,433 15,771,985
Unrestricted (43,418,868) (40,758,030)
Total Net Position $ 108,659,640 $ -102,965,572
Total assets and deferred outflows of resources of the primary government as of December 31, 2017 were
$223,902,494, an increase of $6,560,620 from December 31, 2016. Total liabilities and deferred inflows of
resources as of December 31, 2017 were $115,242,854, which represents an increase of $866,552 from
December 31, 2016. This resulted in a net position of $108,659,640 an increase of $5,694,068 from
$102,965,572. Of the Town's net position, $134,651,075 was invested in capital assets and $17,427,433 was
restricted for future land acquisition leaving a$43,418,868 unrestricted deficit.
By far, the largest portion of the Town's net position is $134,651,075 which reflects its investment in capital
assets (i.e. land, buildings, machinery and equipment, intangibles, and infrastructure) less any related debt
used to acquire those assets that is still outstanding. The Town uses these capital assets to provide services to
citizens; consequently, these assets are not available for future spending. Although the Town's investment in
its capital assets is reported net of related debt, it should be noted that the resources needed to repay this debt
must be provided from other sources, since the capital assets themselves will not be used to liquidate these
liabilities.
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TOWN OF SOUTHOLD
MANAGEMENT'S DISCUSSION AND ANALYSIS
December 31, 2017
GOVERNMENT-WIDE FINANCIAL ANALYSIS (continued)
The deficit in the unrestricted net position does not necessarily indicate fiscal stress. At the end of the current
year, the Town is able to report a positive balance in the categories of investment in capital assets, and
restricted net position. The same situation held true for the prior year. The deficit balance in unrestricted arose
primarily due to long-term liabilities, which includes other postemployment benefits, net pension liability,
compensated absences, and landfill closure and postclosure costs that will be funded through future budgetary
appropriations when they become payable in future periods.
Changes in Net Position
Primary Governmental Activities
For the years ended December 31,
(_t 2017 2016
Program Revenues
Charges for services $ 4,620,268 $ 3,834,984
Operating grants and contributions 450,719 1,006,277
Capital grants and contributions 890,994 2,182,933
`1 5,961,981 7,024,194
General Revenues
Real property taxes 34,943,409 32,476,800
Other real property tax items 87,812 78,088
rJ Non-property tax items 9,765,162 8,895,805
Interest earnings 316,702 160,145
State aid- unrestricted 1,552,227 1,341,622
Other 570,980 466,493
47,236,292 43,418,953
Total Revenues 53,198,273 50,443,147
Program Expenses
General government support 11,235,899 10,981,659
Public safety 20,017,741 20,521,101
Public health 33,300 33,300
Transportation 6,487,587 6,327,804
Economic assistance and opportunity 2,161,725 2,229,640
Culture and recreation 524,709 503,382
Home and community services 5,846,049 5,955,218
L- Interest on debt 1,197,195 1,489,071
Total Expenses 47,504,205 48,041,175
Increase in Net Position $ 5,694,068 $ 2,401,972
-7-
t� TOWN OF SOUTHOLD
MANAGEMENT'S DISCUSSION AND ANALYSIS
. December 31, 2017
GOVERNMENT-WIDE FINANCIAL ANALYSIS (continued)
�) Net position,from all government activities, increased by$5,694,068 in the current year.
Key elements of the governmental activities are:
• Overall program revenues decreased by$1,062,213 from the prior year. Capital grants and contributions
decreased $1,291,939 from the prior year due to the Town receiving grants and contributions in the prior
year that were not recurring in 2017 for the following: $340,000 in donations for the radio room projects,
$464,522 from New York State Agriculture and Markets for the purchase of land and$235,000 for a NYS
DEC grant. Operating grants and contributions also decreased $555,558 in the current year due to the
Town receiving less funds for FEMA related projects which were mostly completed in 2016. Charges for
services increased $785,284 which was due to housing fund fees assessed during the year for affordable
housing of$424,750.
• General revenues increased $3,817,339 from the prior year. This was due to the increase in property
taxes of$2,466,609 and an increase in non-property tax items of$869,357 which is due to the increase in
the 2%transfer tax in the Community Preservation Fund.
• Overall expenses decreased by$536,970. Public safety expenditures decreased $503,360 as a result of
the decrease in employee benefits being allocated to this function due to the decrease in the net pension
liability and compensated absences. Interest on debt decreased due to the Town refunding debt the past
two years which resulted in lower interest rates and less interest paid on the outstanding bonds.This was
offset by increase in general government support of $254,240 due to the increase of general liability
claims in the current year and increase in transportation of $159,783 due to an increase in depreciation
expense.
Total Revenue(Cost)of Services
Net Cost of Services for Governmental Activities
l�
For the years ended December 31,
Total Cost of Services Program Revenues Net Revenue(Cost)of Services
2017 2016 2017 2016 2017 2016
4 General government support $ 11,235,899 $ 10,981,659 $ 399,567 $ 664,038 $ (10,836,332) $ (10,317,621)
Public safety 20,017,741 20,521,101 879,280 1,274,947 (19,138,461) (19,246,154)
Public health 33,300 33,300 8,157 8,848 (25,143) (24,452)
Transportation 6,487,587 6,327,804 869,779 1,360,561 (5,617,808) (4,967,243)
Economic assistance and
opportunity 2,161,725 2,229,640 867,860 877,251 (1,293,865) (1,352,389)
Culture and recreation 524,709 503,362 544,081 330,302 19,372 (173,080)
Home and community service 5,846,049 5,955,218 2,393,257 2,508,247 (3,452,792) (3,446,971)
Interest on debt 1,197,195 1,489,071 (1,197,195) (1,489,071)
$ 47,504,205 $ 48,041,175 $ 5,961,981 $ 7,024,194 $ (41,542,224) $ (41,016,981)
The total cost of all governmental activities this year was $47,504,205. The net cost of these services after being
subsidized by program revenues of$5,961,981 was$41,542,224.
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TOWN OF SOUTHOLD
MANAGEMENT'S DISCUSSION AND ANALYSIS
December 31, 2017
GOVERNMENT-WIDE FINANCIAL ANALYSIS (continued)
Expenses and Program Revenues—Governmental Activities for the Year Ended December 31,2017
$25,000,000 -
Expenses and Program Revenues
Governmental Activities
r
-.i $20,000,000 DExpenses
6Program Revenues
$15,000,000
$10,000,000
x -
$5,000,000
IL
FQ
$0 - - -
General government Public safety Public health Transportation Economic assistance and Culture and recreation Home and community Interest on debt
support opportunity services
Revenues by Source—Governmental Activities for the Year ended December 31, 2017
Ca petal grants and
Opera ting grants contrlbuttons
andcontrlbubons 1% Other general Revenue by Source
1% i
revenues
2% Primary Governmental Activities
Non-property_
taxltems \ For the year ended December 31,
18% 2017 2016
Real property taxes $34,943,409 $ 32,476,800
Chargesfor
State aid-unrestricted 1,552,227 1,341,622
'
services Charges for services 4,620,268 3,834,984
9%
Non-property tax items 9,765,162 8,895,805
Other general revenues 975,494 704,726
State aid- Rea l property
unrestncted taxes Operating grants and contributions 450,719 1,006,277
3% 66% Capital grants and contributions 890,994 2,182,933
l
$ 53,198,273 $ 50,443,147
FINANCIAL ANALYSIS OF THE TOWN'S FUNDS
Governmental Funds
The focus of the Town's governmental funds is to provide information on near term inflows, outflows, and
balances of spendable resources. Such information is useful in assessing the Town's financing requirements.
In particular, spendable fund balance may serve as a useful measure of a government's net resources
available for spending at the end of the year.
• Nonspendable fund balance - $979,872 (inherently nonspendable) includes the portion of net
resources that cannot be spent because they must be maintained intact.
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TOWN OF SOUTHOLD
MANAGEMENT'S DISCUSSION AND ANALYSIS
December 31, 2017
FINANCIAL ANALYSIS OF THE TOWN'S FUNDS (continued)
Governmental Funds (continued)
• Restricted fund balance - $17,420,522 (externally enforceable limitations on use) includes amounts
subject to limitations imposed by creditors, grantors, contributors, or laws and regulations of other
governments.
• Committed fund balance - $631,935 includes amounts subject to constraints placed on the use of its
own resources by the Town's highest level of decision-making authority.
-� • Assigned fund balance - $4,887,033 (limitation resulting from intended use) consists of amounts
where the intended use is established by the Town Board, but do not meet the criteria to be classified
as restricted or committed.
• Unassigned fund balance - $8,118,801 (residual net resources) is the total fund balance in the
general fund in excess of nonspendable, restricted, committed and assigned fund balance and
negative fund balances in funds other than the general fund.
The following schedule presents a summary of the Governmental Funds - (general, special revenue, and
capital projects) revenues and expenditures for the year ended December 31, 2017, and the amount of
change and percentage of total in relation to the prior year.
Increase
r; 2017 2016 (Decrease)
REVENUES
Real property taxes $ 34,943,409 $ 32,476,800 $ 2,466,609
Other real property tax items 87,812 78,088 9,724
Non-property tax items 9,765,162 8,895,805 869,357
C) Departmental income 3,379,264 2,663,875 715,389
Intergovernmental charges 92,746 132,936 (40,190)
Use of money and property 285,095 236,307 48,788
Licenses and permits 580,004 540,401 39,603
Fines and forfeitures 342,835 343,332 (497)
j Sale of property and compensation for loss. 551,281 489,169 62,112
Miscellaneous local sources 247,197 533,871 (286,674)
Interfund revenues 32,450 41,680 (9,230)
State aid 2,687,641 2,751,400 (63,759)
Federal aid 170,068 644,490 (474,422)
Total Governmental Fund Revenues $ 53,164,964 $ 49,828,154 $ 3,336,810
EXPENDITURES
General government support $ 6,790,925 $ 6,602,121 $ 188,804
Public safety 11,335,177 11,067,429 267,748
Public health 33,300 33,300
Transportation 3,975,642 4,644,702 (669,060)
Economic assistance and opportunity 1,310,983 13313,636 (2,653)
Culture and recreation 314,957 333,819 (18,862)
Home and community services 7,464,985, 7,801,507 (336,522)
Employee benefits 12,229,150 11,421,845 807,305
Capital Outlay 2,357,731 3,223,085 (865,354)
Debt service principal and interest 3,759,435 3,594,806 164,629
Bond issuance costs 283,673 (283,673)
Total Governmental Fund Expenditures $ 49,572,285 $ 50,319,923 $ (747,638)
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TOWN OF SOUTHOLD
MANAGEMENT'S DISCUSSION AND ANALYSIS
December 31, 2017
FINANCIAL ANALYSIS OF THE TOWN'S FUNDS (continued)
Governmental Funds(continued)
• Although the Town appropriated $9,598,683 of prior year fund balance to finance the 2017 operations,
excluding open purchase orders brought forward, the total fund balance increased $3,592,679.
Governmental revenues increased by$3,336,810. The increase is due to the following: increases in real
property taxes of$2,466,609, increases in non-property tax items of$869,357 which is mainly attributable
to an additional revenue from the 2%transfer tax, and increases in department income of$715,389 due to
$631,935 in additional parks and housing fund fees. This was offset by decreases in miscellaneous local
sources of$286,674 due to the Town receiving a large donation for the radio room project in the prior year
of $340,000. There were no such large donations in the current year. Federal aid also decreased due to
less funds received in federal aid to complete Sandy related projects as most of these projects were
completed in the prior year.
• Overall, governmental expenditures decreased $747,638. The decrease is due to the following:
decreases in transportation of $669,060 due to the Town moving larger paving projects into the capital
fund in the current year. Home and community decreased $336,522 due to less land acquisitions made
during 2017 in the Community Preservation Fund. Decreases in capital outlay of $865,354 related to
large projects closing in the prior year and new ones not starting in 2017. In addition, these decreases
were offset by the Town transferring large paving projects from the Highway Fund into the Capital Fund
in 2017.These decreases were offset by increases in employee benefits of$807,305 due to increases in
medical and workers compensation benefits.
General Fund
The General Fund is the chief operating fund of the Town. At the end of the current year, the total fund
balance of the General Fund was$10,718,809, increasing by$1,908,361 or 21.7%from the,prior year. Of this
amount, $722,470 is not in spendable form (i.e. inventory and prepaid items). The committed fund balance of
$207,185 represents park and recreation subdivision fees assessed through Town Code which can only be
expended on park, playground, or other recreational purposes. The remaining $9,789,154 of the fund balance
is in spendable form as follows: $373,307 is assigned for insurance claims; $1,025,000 has been assigned by
the Town Board for the subsequent year's budget and $272,046 has been assigned for encumbrances
resulting from open purchase orders, and the remaining$8,118,801 represents unassigned fund balance.
As a measure of the general funds' liquidity, it may be useful to compare spendable fund balance and total
fund balance to total fund expenditures and other financing uses. Spendable and total fund balance
represents 34.7%and 37.2%, respectively, of total general fund expenditures and other financing uses.
The key elements of the fund balance increase of$1,908,361 are as follows:
• General government support was $726,523 under budget primarily due to lower than anticipated
insurance premiums of approximately $53,000, personnel costs of approximately $134,000, unused
contingency amounts of$500,000 along with cost savings across various Town departments.
• Public safety was $799,454 less than budgeted which resulted mainly from the lower than expected
personal services of$506,000 and vehicle and equipment purchases of approximately$309,000.
• Employee benefits were $799,258 under budget due to the Town conservatively budgeting for health
insurance premiums and retirement contributions which amounted to approximately$490,000. In addition,
the Town estimates Social Security benefits based on salaries and positions to be filled.These costs were
approximately$276,000 under budget.
• Offset by a planned fund balance reduction of $1,375,000, excluding prior year encumbrances brought
forward,a result of appropriations in the current year's budget.
Highway Fund
At the end of the current year, the total fund balance of the highway fund was $1,162,010 increasing by$502,394
or 76.2%from the prior year. Of this amount, $163,191 is not in spendable form (i.e. prepaid and inventory items).
The remaining $998,819 of the fund balance is in spendable form as follows: $60,000 has been assigned by the
Town Board for the subsequent year's budget, $1,627 has been assigned for encumbrances resulting from open
purchase orders,and the remaining$937,192 is assigned for highway purposes.
-11-
r TOWN OF SOUTHOLD
MANAGEMENT'S DISCUSSION AND ANALYSIS
December 31, 2017
FINANCIAL ANALYSIS OF THE TOWN'S FUNDS'(continued)
Governmental Funds(continued)
Highway Fund (continued)
The key elements of the fund balance increase of$502,394 are as follows:
L� • State aid received was more than budgeted by $250,000 due to the receiving a grant from New York
State Dormitory Authority that was not originally budgeted.
• Transportation savings of $236,415 primarily due to cost savings in personnel from CSEA employees
working out of contract which resulted in budgeted salary increases that did not occur.
• Employee benefits savings of $71,120 resulted from conservative budgeting for retirement and health
insurance costs.
Capital Projects Fund
At the end of the current year,the capital projects fund had a fund balance of$185,151.
The fund balance decreased in the capital projects fund by $1,082,582 from the prior year. This decrease
resulted from the Town using bond proceeds issued in the prior year to finance the current year capital outlay.
Community Preservation Fund
The Community Preservation Fund's total fund balance, which is restricted for land preservation acquisitions,
increased by$1,655,448 to $17,427,433. The increase in fund balance is attributable to an excess of the 2%
transfer tax over land acquisitions and related debt service costs.
Nonmajor Governmental Funds
At the end of the current year, the total fund balance of the nonmajor governmental funds was $2,544,760,
increasing $609,058 from the prior year. Of this amount $87,300 is not in spendable form (i.e. prepaids and
inventory). The committed fund balance of $424;750 is related to housing fund fees assessed through Town
Code which can only be expended on affordable housing projects in the Town. The remaining $2,032,710 of
the fund balance is in spendable form as follows; $210,000 for subsequent year's budget, $41,737 assigned
for encumbrances resulting from open purchase orders, and the remaining $1,780,973 of fund balance is
assigned for nonmajor governmental fund purposes.
r� The key elements of the fund balance increase of$609,058 are as follows:
,
• The Part Town's fund balance is $1,747,854 which is an increase of $759,151 from the prior year
which was primarily due to the housing fees collected in 2017.
• Part Town's actual revenues exceeded budgeted expectations by$766,972 due to additional franchise
fee revenue of $119,285 and housing fund donations of $424,750 received in the current year offset
by lower than anticipated departmental income. Overall, total expenditures were less than expected by
$153,630 due to savings in consultant costs of $77,500 and employee benefits of $159,017. In
addition, the Town appropriated $135,000 of fund balance from the prior year.
General Fund Budgetary Highlights
The Town appropriated expenditures in the original general fund budget in excess of estimated revenues in the
amounts of$1,594,862, inclusive of$219,862 of encumbrances, by assigning fund balance from the prior year.
Actual revenues were more than anticipated by$446,374. Actual expenditures and other uses in all budgetary
line items were less than the budgetary appropriation by$2,777,157.
-12-
TOWN OF SOUTHOLD
MANAGEMENT'S DISCUSSION AND ANALYSIS
December 31, 2017
FINANCIAL ANALYSIS OF THE TOWN'S FUNDS (continued)
Governmental Funds(continued)
General Fund Budgetary Highlights
Over the course of the year, the Town Board revises the budget as needed so that expenditures do not exceed
appropriations. In all Town funds, various transfers between appropriations were approved for this purpose.
The following are the main components of the increase in appropriations:
• Departmental revenues increased appropriations of $60,000 due to additional park and playground
revenue received.
• Increase to sale of property and compensation for loss was due to amounts added for costs of a
lightning strike that occurred at police department headquarters.
• The Town decreased appropriations in general government support of$104,961 due to the movement
of unused contingency funds to other functions.
• Town increased their appropriations by $80,065 in public safety due to an increase from contingency
for retirements offset by a transfer to employee benefit function for 207C costs.
CAPITAL ASSET AND DEBT ADMINISTRATION
Capital Assets
As of December 31, 2017 the primary government had $169,093,587 in net capital assets including land and
land development rights, buildings, improvements, machinery and equipment, and infrastructure. The Town's
component units had$14,489,087 in net capital assets including land, buildings, improvements, machinery and
equipment, and infrastructure.
Capital Assets at December 31,
Primary Government 2017 2016
Land $ 8,686,728 $ 8,686,728
Land development rights 125,268,886 121,575,610
Construction in progress 228,536 1,371,822
r; Buildings 17,129,926 15,576,538
Improvements other than buildings 16,376,677 16,370,677
Machinery and equipment 13,036,054 11,858,071
Software 1,144,497 1,144,497
-Infrastructure 82,798,533 81,190,412
(" Total Capital Assets 264,669,837 257,774,355
Less:accumulated depreciation 95,576,250 93,170,937
Primary Government-Total Net Capital Assets $ 169,093,587 $ 164,603,418
Component Units
Land $ 2,103,162 $ 2,103,162
Construction in progress 66,323
Buildings 14,145,321 14,145,321
Improvements other than buildings 2,557,294 2,545,238
Machinery and equipment 4,117,286 4,011,124
Infrastructure 4,739,093 4,366,330
Total Capital Assets 27,728,479 27,171,175
Less:accumulated depreciation 13,239,392 12,395,877
Component Units-Total Net Capital Assets $ 14,489,087 $ 14,775,298
-13-
TOWN OF SOUTHOLD
MANAGEMENT'S DISCUSSION AND ANALYSIS
December 31, 2017
CAPITAL ASSET AND DEBT ADMINISTRATION (continued)
Capital Assets(continued)
In 2017, the primary government's major capital asset acquisitions were as follows:
• Land and land development rights of$3,693,276.
0 Buildings of$1,553,388.
• Machinery and equipment of$1,312,220.
• Highway resurfacing and drainage of$1,608,121.
The capital program is a long-range financing guide and not a definitive plan. Each appropriation must be
authorized by Town Board resolution before being undertaken. Each may be financed by issuance of general
obligation bonds, which, at times, are preceded by issuance of bond anticipation notes for various periods of
time depending on the probable usefulness of the purpose of expenditure. The Town's three-year capital plan
is summarized below:
2018 2019 2020
Machinery and Equipment
General Fund $ 587,230 $ 148,730 $ 13,453
Highway Fund 77,000 -0- -0-
Solid Waste District Fund 88,000 -0- -0-
Building and Improvements
General Fund 86,500 -0- -0-
Infrastructure
General Fund 80,397 -0- -0-
Highway Fund 1,675,554 -0- -0-
Totals $ 2,594,681 $ 148,730 $ 13,453
Additional information on the Town's capital assets can be found in Note C.3 to the financial statements.
Long-Term Debt
At December 31, 2017, the Town had approximately $32.6 million in long term general obligation bonds and
bond anticipation notes outstanding.
Outstanding Debt Governmental Activities
2017 2016
General obligation bonds payable $ 31,850,000 $ 34,664,000
Bond anticipation notes 760,000
$ 32,610,000 $ 34,664,000
*This did not include the bond premium as presented in the Statement of Net Position.
-14-
` TOWN OF SOUTHOLD
MANAGEMENT'S DISCUSSION AND ANALYSIS
December 31, 2017
CAPITAL ASSET AND DEBT ADMINISTRATION (continued)
Long-Term Debt(continued)
The Town of Southold's bond credit rating from Moody's Investors Services was Aa1 as of December 31,2017.
Debt Limit -The Town has the power to contract indebtedness for any Town purpose so long as the principal
amount thereof, subject to certain limited exceptions, shall not exceed seven percent of the average full
valuation of taxable real estate of the Town, and subject to certain enumerated exclusions and deductions
such as water and certain sewer facilities and cash or appropriations for current debt service.
The constitutional method for determining full valuation is calculated by taking the assessed valuation of
taxable real estate as shown upon the latest completed assessment roll and dividing the same by the
equalization rate as determined by the State Board of Equalization and Assessment. The State Legislature is
�- required to prescribe the manner by which such ratio shall be determined. Average full valuation is determined
by taking the sum of the full valuation of the last completed assessment roll and the four preceding
assessment rolls and dividing such sum by five. The percentage of debt contracting power exhausted at
December 31, 2017 was 5.03%.
Additional information on the Town's debt activity can be found in Note CA to the financial statements.
ECONOMIC FACTORS AND NEXT YEAR'S BUDGETS AND RATES
Property Tax
The Town has adopted a budget for the 2018 fiscal year which factors in inflation and other adjustments to
revenues and expenditures as well as prior year positive and negative fund balances. The 2018 budget
includes an overall decrease in real property tax revenues from the prior year of approximately 3.42% for the
�� general Town governmental activities.
In June 2011, New York State enacted Chapter 97, Laws of 2011 Real Property Tax Levy Cap and Mandate
Relief Provisions, which includes a 2% property tax cap for municipalities that affects the Town and its
municipal component units. Beginning in 2012, and lasting through at least June 15, 2020, no local
government is authorized to increase its property tax levy by more than 2%or the rate of inflation (whichever is
less). Local governments can exceed the tax levy limit by a 60% vote of the governing body, or local law.
`l There are permitted exceptions and adjustments. The Town is currently evaluating the effect of the cap on
future year's budgets.
State Aid and Local Assistance
The Town receives financial assistance from New York State and from Suffolk County. During 2017, financial
assistance included state aid consisting of mortgage tax of $1,580,883, consolidated highway aid of$500,735,
and a grant from the New York State Dormitory Authority of $250,000. State aid per capita was $88,328,
County sales tax of $1,288,673 and local government assistance was $149,166. Additionally, if the State
should not adopt its budget in a timely manner, municipalities and school districts in the State, including the
Town, may be affected by a delay in the payment of state aid. The State is not constitutionally obligated to
maintain or continue state aid to the Town. The Town's 2018 budget included similar amounts for this financial
assistance.
CONTACTING THE TOWN'S FINANCIAL MANAGEMENT
This financial report is designed to provide our citizens, taxpayers, customers, and creditors with a general
overview of the Town's finances and to show the Town's accountability for the money it receives. If you have
questions about this report or need additional financial information, contact the Town of Southold, Office of the
Town Comptroller, Southold, New York.
-15-
BASIC FINANCIAL
STATEMENTS
r ,
TOWN OF SOUTHOLD
GOVERNMENT-WIDE FINANCIAL STATEMENT
STATEMENT OF NET POSITION
December 31, 2017
Primary Nonmajor
Governmental Component
Activities Units
ASSETS
Current Assets:
Cash and investments $ 41,705,654 $ 3,183,460
Accounts receivable 247,576 98,281
State and federal aid receivables 288,257
Due from other governments 1,749,606
Due from primary government 702,157
Inventory of material and supplies 99,869
Prepaids 880,003 115,791
Total Current Assets 44,970,965 4,099,689
Noncurrent Assets:
Non-depreciable capital assets 134,184,150 2,169,485
Depreciable capital assets,net of depreciation 34,909,437 12,319,602
Total Noncurrent Assets 169,093,587 14,489,087
Total Assets 214,064,552 18,588,776
DEFERRED OUTFLOWS OF RESOURCES
Deferred charges on refundings 1,629,754
Pensions 8,208,188 411,169
LIABILITIES Total Deferred Outflows of Resources 9,837,942 411,169
Current Liabilities:
Accounts payable and accrued liabilities 960,356 457,666
Accrued interest payable 423,447 14,187
Bond anticipation notes payable 760,000 680,000
Revenue anticipation note payable 400,000
Due to component units 702,157
Due to other governments 6,089
Unearned revenue 377,184
Noncurrent liabilities due within one year:
General obligation bonds payable 2,775,000 320,000
Compensated absences 463,798 50,944
Claims and judgments payable 33,793
Estimated liability for landfill closure and postclosure care costs 16,614
Total Current Liabilities 6,518,438 1,922,797
Noncurrent Liabilities:
General obligation bonds payable 31,392,834 850,000
Compensated absences 8,812,166 152,833
Claims and judgments payable 513,145
Estimated liability for landfill closure
and postclosure care costs 393,046
Net pension liability 8,072,644 437,306
Other postemployment benefits payable 48,212,883 313,613
Total Noncurrent Liabilities 97,396,718 1,753,752
Total Liabilities 103,915,156 3,676,549
DEFERRED INFLOWS OF RESOURCES
Unearned revenue from real property taxes 9,817,882 702,157
Pensions 1,509,816 68,237
NET POSITION Total Deferred Inflows of Resources 11,327,698 770,394
Net Investment in capital assets 134,651,075 13,319,087
Restricted-Community Preservation 17,427,433
Unrestricted (43,418,868) 1,233215
Tota Net Position $ 108.659,640 $ 14,553,002
See notes to the financial statements.
-16-
TOWN OF SOUTHOLD
GOVERNMENT-WIDE FINANCIAL STATEMENT
STATEMENT OF ACTIVITIES
Year Ended December 31, 2017
Net Revenues(Expenses)and
Program Revenues Change in Net Position
Operating Capital
Charges for Grants and Grants and Primary Component
Function/Program Expenses Services Contributions Contributions Government Units
PRIMARY GOVERNMENT
Government Activities:
General government support $ 11,235,899 $ 398,594 $ 973 $ (10,836,332)
Public safety 20,017,741 745,876 89,150 $ 44,254 (19,138,461)
Public health 33,300 8,157 (25,143)
Transportation 6,487,587 22,336 703 846,740 (5,617,808)
_ Economic assistance and opportunity 2,161,725 607,411 260,449 (1,293,865)
Culture and recreation 524,709 544,081 19,372
Home and community services 5,846,049 2,301,970 91,287 (3,452,792)
Interest on debt 1,197,195 (1,197,195)
Total Primary Government $ 47,504,205 $ 4,620,268 $ 450,719 $ 890,994 $ (41,542,224)
COMPONENT UNITS
General government support 208,783 $ (208,783)
Public health 69,904 (69,904)
Transportation 3,854,310 3,005,862 50,619 (797,829)
Culture and recreation 1,135,061 48,370 (1,086,691)
Home and community services 936,193 56,188 8,726 (871,279)
Interest on debt 32,326 (32,326)
Total Component Units $ 6,236,577 $ 3,110,420 $ 59,345 $ -0- $ (3,066,812)
GENERALREVENUES
Real property taxes $ 34,943,409 $ 2,388,947
Other real property tax items 87,812
Non-property tax items 9,765,162
Interest earnings 316,702 55,192
State aid-unrestricted 1,552,227
Other 570,980 77,071
Total General Revenues 47,236,292 2,521,210
Change in Net Position 5,694,068 (545,602)
Net Position at Beginning of Year 102,9659572 15,098,604
Net Position at End of Year $ 108,659,640 $ 14,553,002
See notes to financial statements.
-17-
u TOWN OF SOUTHOLD
BALANCE SHEET
GOVERNMENTAL FUNDS
December 31, 2017
MAJOR GOVERNMENTAL FUNDS
Non-Major
Capital Community Governmental
General Highway Projects Preservation Funds Totals
ASSETS
Cash and investments $ 21,203,379 $ 800,861 $ 805,060 $ 16,245,171 $ 2,651,183 $ 41,705,654
Accounts receivable 1,004 174 151 1,457 244,790 247,576
Due from other funds 229,947 1,675,862 401,478 1,071,006 3,378,293
State and federal aid receivable 15,393 250,301 3,666 18,897 288,257
Due from other governments 492,783 80,142 1,176,681 1,749,606
Inventory of material and supplies 6,764 83,878 9,227 99,869
Prepaids 715,706 79,313 6,911 78,073 880,003
Total Assets $ 22,664,976 $ 2,970,531 $ 1,210,355 $ 17,430,220 $ 4,073,176 $ 48,349,258
LIABILITIES
Accounts payable and accrued
liabilities $ 423,430 $ 111,115 $ 136,538 $ 2,787 $ 286,486 $ 960,356
Judgments and claims 3,793 3,793
Bond anticipation notes payable 760,000 760,000
Due to other funds 3,124,347 24,969 128,666 100,311 3,378,293
Due to component units 702,157 702,157
Due to other governments 5,929 160 6,089
Unearned revenue 196,855 180,329 377,184
Total Liabilities 4,456,511 136,244 1,025,204 2,787 567,126 6,187,872
DEFERRED INFLOWS OF RESOURCES
Unavailable revenue 305,341 305,341
Unearned revenue from
real property taxes 7,184,315 1,672,277 961,290 9,817,882
Total Deferred Inflows of Resources 7,489,656 1,672,277 961,290 10,123,223
L
FUND BALANCES
Nonspendable 722,470 163,191 6,911 87,300 979,872
Restricted 17,420,522 17,420,522
Committed 207,185 424,750 631,935
Assigned 1,670,353 998,819 185,151 2,032,710 4,887,033
`-' Unassigned 8,118,801 8,118,801
Total Fund Balances 10,718,809 1,162,010 185,151 17,4279433 2,544,760 32,038,163
Total Liabilities,Deferred Inflows of
Resources and Fund Balances $ 22,664,976 $ 29970,531 $ 1,210,355 $ 17,430,220 $ 4,073,176 $ 48,349,258
See notes to the financial statements.
-18-
TOWN OF SOUTHOLD
RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET TO THE
STATEMENT OF NET POSITION
December 31,2017
Total Fund Balances- Governmental Funds $ 32,038,163
Amounts reported for governmental activities in the
Statement of Net Position are different because:
Capital assets less accumulated depreciation are
included in the Statement of Net Position:
Capital assets- non-depreciable $ 134,184,150
Capital assets-depreciable 130,485,687
Accumulated depreciation (95,576,250)
169,093,587
Deferred outflows of resources are included in the Statement of Net Position 9,837,942
Long-term liabilities applicable to the Town's
governmental activities are not due and payable
in the current period, and accordingly, are not
reported in the funds. However, these liabilities
are included in the Statement of Net Position:
General obligation bonds payable (34,167,834)
Compensated absences (9,275,964)
Claims and judgments payable (543,145)
Estimated liability for landfill closure
l and postclosure care costs (409,660)
Net pension liability (8,072,644)
Other postemployment benefits payable (48,212,883)
(100,682,130)
Revenues in the Statement of Activities that do not provide current
financial resources are not reported as revenues in the funds. 305,341
Deferred inflows of resources are included in the Statement of Net Position (1,509,816)
Interest payable applicable to the Town's governmental
activities are not due and payable in the current period,
and accordingly, are not reported in the funds. However,
these liabilities are included in the Statement of Net Position. (423,447)
Net Position of Governmental Activities $ 108,659,640
See notes to financial statements.
-19-
TOWN OF SOUTHOLD
STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES
GOVERNMENTAL FUNDS
For the Year Ended December 31, 2017
MAJOR GOVERNMENTAL FUNDS
Non-Major
Capital Community Governmental
General Highway Protects Preservation Funds Totals
REVENUES
Real property taxes $25,530,030 $6,082,537 $3,330,842 $ 34,943,409
Other real property tax items 84,708 2,728 376 87,812
Non-property tax items 1,288,673 $ 7,732,204 744,285 9,765,162
Departmental income 590,253 2,789,011 3,379,264
Intergovernmental charges 92,746 92,746
Use of money and property 220,211 8,267 $ 933 46,895 8,789 285,095
Licenses and permits 369,046 20,550 190,408 580,004
Fines and forfeitures 342,835 342,835
Sale of property and compensation
for loss 262,027 20,354 268,900 551,281
Miscellaneous local sources 82,905 256 92,580 4,032 67,424 247,197
Interfund revenues 32,450 32,450
State aid 1,727,626 846,740 113,275 2,687,641
Federal aid 113,165 703 56,200 170,068
Total Revenues 30,736,675 6,982,135 93,513 7,783,131 7,569,510 53,164,964
EXPENDITURES
Current:
General government support 6,330,908 460,017 6,790,925
Public safety 10,055,810 1,279,367 11,335,177
Public health 33,300 33,300
Transportation 501,639 3,474,003 3,975,642
Economic assistance and
opportunity 1,310,983 1,310,983
Culture and recreation 314,957 314,957
Home and community services 358,957 3,911,155 3,194,873 7,464,985
Employee benefits 9,024,282 1,819,880 20,734 1,364,254 12,229,150
Capital Outlay 2,357,731 2,357,731
Debt Service:
Principal 610,932 121,281 1,513,150 568,637 2,814,000
Interest 140,115 29,372 682,644 93,304 945,435
Total Expenditures 28,681,883 5,444,536 2,357,731 6,127,683 6,960,452 49,572,285
Excess(Deficiency)of Revenues
Over Expenditures 2,054,792 1,537,599 (2,264,218) 1,655,448 609,058 3,592,679
OTHER FINANCING SOURCES(USES):
Transfers in 1,181,636 1,181,636
Transfers out (146,431) (1,035,205)
(1,181,636)
Total Other Financing
Sources(Uses) (146,431) (1,035,205) 1,181,636 -0- -0- -0-
Net Change in Fund Balance 1,908,361 502,394 (1,082,582) 1,655,448 609,058 3,592,679
Fund Balances
at Beginning of Year 8,810,448 659,616 1,267,733 15,771,985 1,935,702 28,445,484
Fund Balances at End of Year $ 10,718,809 $1,162,010 $ 185,151 $17,427,433 $2,544,760 $ 32,038,163
See notes to the financial statements.
-20-
TOWN OF SOUTHOLD
RECONCILIATION OF THE GOVERNMENTAL FUNDS STATEMENT OF REVENUES,
EXPENDITURES AND CHANGES IN FUND BALANCES TO THE STATEMENT OF ACTIVITIES
For the Year Ended December 31, 2017
Net Change in Fund Balance $ 3,592,679
Governmental funds report capital outlays as expenditures. However, in
the Statement of Activities, the cost of those assets is allocated over their
estimated useful lives and reported as depreciation expense.The amount
by which capital outlay exceeds depreciation in the current period is:
Capital asset additions $ 7,029,719
Depreciation expense (2,539,550)
4,490,169
Revenues in the Statement of Activities that do not provide current financial
resources are not reported as revenues in the funds. (116,984)
Net change in deferred outflows of resources not reported in the governmental
fund statements:
Deferred charges on refundings (127,882)
Pension related amounts (6,372,409)
(6,500,291)
Net change in deferred inflows of resources related to pensions 382,930
Premiums on bond issuances recognized in governmental fund statements
when issued and capitalized and amortized in the Statement of Activities 182,743
The issuance of long-term debt provides current financial resources to
governmental funds, while the repayment of the principal of long-term debt
consumes the current financial resources of governmental funds. Neither
transaction has any effect on net position.
Repayment of bond principal 2,814,000
Some expenses reported in the Statement of Activities do not require the use
of current financial resources, and therefore, are not reported as expenditures
in the governmental funds:
Compensated absences 97,692
Claims and judgments payable (141,645)
Estimated liability for landfill closure
and postclosure care costs 16,614
Net pension liability 4,682,617
Other postemployment benefits payable (3,707,875)
Accrued interest payable (98,581)
Change in Net Position of Governmental Activities $ 5,694,068
See notes to financial statements.
-21-
TOWN OF SOUTHOLD
STATEMENT OF FIDUCIARY ASSETS AND LIABILITIES
December 31, 2017
Totals
ASSETS
Cash and investments $ 26,939,294
Other receivables 5,236
Total Assets $ 26,944,530
LIABILITIES
Due to other governments $ 26,757,605
Other liabilities 18,068
Deposits held 168,857
Total Liabilities $ 26,944,530
See notes to financial statements.
-22-
TOWN OF SOUTHOLD
NOTES TO FINANCIAL STATEMENTS
December 31, 2017
A. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The Town of Southold (the `Town"), which was established in 1640, is governed by Town Law and other
general laws of the State of New York and various local laws. The Town Board is the legislative body
responsible for overall operations.The Town Board consists of the Supervisor who is elected for a term of four
years and five council members who are elected for terms of four years. The Town Board appoints the Town
Attorney and Town Comptroller. The Town Clerk, Receiver of Taxes, Superintendent of Highways, Justices
and Town Trustees are all elected and serve for four years, respectively. The Town provides a full range of
municipal services, including public safety, transportation, home and community services, public works and
road maintenance, recreation and parks,and general and administrative services.
The financial statements of the Town of Southold have been prepared in conformity with accounting principles
generally accepted in the United States of America (GAAP) as applied to governmental units. The
Governmental Accounting Standards Board (GASB) is the accepted standard setting body for establishing
governmental accounting and financial reporting principles.
The more significant of the government's accounting policies are described below.
1. REPORTING ENTITY
The financial reporting entity consists of: (a) the primary government, which is the Town of Southold; (b)
organizations for which the primary government is financially accountable; and (c) other organizations for
which the nature and significance of their relationship with the primary government are such that exclusion
would cause the reporting entity's financial statements to be misleading or incomplete.
The decision to include a potential component unit in the Town of Southold reporting entity is based on
several criteria including legal standing, dependency and financial accountability. The current guidance
also clarifies the status as a major or nonmajor component unit. Based on the application of these criteria,
the following is a summary of certain entities considered in determining the Town's reporting entity.
Discretely Presented Component Units:
The following entities are discretely presented component units of the Town of Southold:
a) Fishers Island Ferry District was established in 1947 by a special act of legislation within the State of
New York, known as the Ferry District Enabling Act. The Board of Commissioners is the legislative
body responsible for the overall operations. The Board of Commissioners consists of five members,
all of whom are elected by the residents of the District. The primary function of the District is to
provide ferry operations and services to District residents. Special districts cannot issue bonded debt
without the approval and the backing of the full faith and credit of the Town. The Town issues
indebtedness on behalf of the District which is responsible for the payment of annual debt service on
the obligations. Budgets and tax rates are not approved by the Town. Tax levies of the District are
collected by the Town Receiver of Taxes. This District is included in the Town's reporting entity since
the primary government issues debt on behalf of the District as these districts cannot issue bonded
debt without the approval and the backing of the full faith and credit of the Town.
b) Fishers Island Waste Management District was established in 1952 and is governed by the laws of
New York State. The Board of Commissioners is the legislative body responsible for the overall
operations. The Board of Commissioners consists of five members, all of whom are elected by the
residents of the District. The primary function of the District is to provide waste management and
disposal services to District residents. Special districts cannot issue bonded debt without the approval
and the backing of the full faith and credit of the Town. The Town issues indebtedness on behalf of
the District which is responsible for the payment of annual debt service on the obligations. Tax levies
of the District are collected by the Town Receiver of Taxes. This District is included in the Town's
reporting entity since the primary government issues debt on behalf of the District as these districts
cannot issue bonded debt without the approval and the backing of the full faith and credit of the Town.
-23-
TOWN OF SOUTHOLD
NOTES TO FINANCIAL STATEMENTS
December 31, 2017
A. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
1. REPORTING ENTITY(continued)
Discretely Presented Component Units(continued):
c) Cutchogue-New Suffolk Park District was established in 1953 and is governed by the laws of New
York State.The Board of Commissioners is the legislative body responsible for the overall operations.
The Board of Commissioners consists of three members, all of whom are elected by the residents of
the District.The primary function of the District is to maintain and operate the specific private beaches
of residents who reside within the park district. Special districts cannot issue bonded debt without the
approval and the backing of the full faith and credit of the Town. The Town issues indebtedness on
behalf of the District which is responsible for the payment of annual debt service on the obligations.
Tax levies of the District are collected by the Town Receiver of Taxes. This District is included in the
Town's reporting entity since the primary government issues debt on behalf of the District as these
districts cannot issue bonded debt without the approval and the backing of the full faith and credit of
the Town.
d) Southold Park District was established in 1907 and is governed by the laws of New York State. The
Board of Commissioners is the legislative body responsible for the overall operations. The Board of
Commissioners consists of three members, all of whom are elected by the residents of the District.
The primary function of the District is to maintain and operate the specific private beaches of residents
who reside within the park district. Special districts cannot issue bonded debt without the approval
and the backing of the full faith and credit of the Town. The Town issues indebtedness on behalf of
the District which is responsible for the payment of annual debt service on the obligations. Tax levies
of the District are collected by the Town Receiver of Taxes. This District is included in the Town's
reporting entity since the primary government issues debt on behalf of the District as these districts
cannot issue bonded debt without the approval and the backing of the full faith and credit of the Town.
e) Orient-East Marion Park District was established in 1969 and is governed by the laws of New York
State.The Board of Commissioners is the legislative body responsible for the overall operations.The
Board of Commissioners consists of three members, all of whom are elected by the residents of the
District. The primary function of the District is to maintain and operate the specific private beaches of
residents who reside within the park district. Special districts cannot issue bonded debt without the
approval and the backing of the full faith and credit of the Town. The Town issues indebtedness on
behalf of the District which is responsible for the payment of annual debt service on the obligations.
Tax levies of the District are collected by the Town Receiver of Taxes. This District is included in the
Town's reporting entity since the primary government issues debt on behalf of the District as these
districts cannot issue bonded debt without the approval and the backing of the full faith and credit of
the Town.
f) Mattituck Park District was established in 1941 and is governed by the laws of New York State. The
Board of Commissioners is the legislative body responsible for the overall operations. The Board of
Commissioners consists of three members, all of whom are elected by the residents of the District.
The primary function of the District is to maintain and operate the specific private beaches of residents
who reside within the park district. Special districts cannot issue bonded debt without the approval
and the backing of the full faith and credit of the Town. The Town issues indebtedness on behalf of
the District which is responsible for the payment of annual debt service on the obligations. Tax levies
of the District are collected by the Town Receiver of Taxes. This District is included in the Town's
reporting entity since the primary government issues debt on behalf of the District as these districts
cannot issue bonded debt without the approval and the backing of the full faith and credit of the Town.
-24-
TOWN OF SOUTHOLD
NOTES TO FINANCIAL STATEMENTS
December 31, 2017
A. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
1. REPORTING ENTITY(continued)
Discretely Presented Component Units(continued):
g) Orient Mosquito District was established in 1916 and is governed by the laws of New York State.The
Board of Commissioners is the legislative body responsible for the overall operations. The Board of
Commissioners consists of five members, all of whom are elected by the residents of the District.The
primary function of the District is to provide pest control services to District residents. Special districts
cannot issue bonded debt without the approval and the backing of the full faith and credit of the Town.
The Town issues indebtedness on behalf of the District which is responsible for the payment of
annual debt service on the obligations.Tax levies of the District are collected by the Town Receiver of
Taxes. This District is included in the Town's reporting entity since the primary government issues
debt on behalf of the District as these districts cannot issue bonded debt without the approval and the
' backing of the full faith and credit of the Town.
All of the Town of Southold's discretely presented component units are considered nonmajor.
2. GOVERNMENT-WIDE AND FUND FINANCIAL STATEMENTS
The Town's basic financial statements include both government-wide (reporting the Town as a whole)
and fund financial statements (reporting the Town's major funds).
Government-wide Financial Statements
The government-wide financial statements (i.e. the Statement of Net Position and the Statement of
Activities) report information on all of the non-fiduciary activities of the Town as a whole with separate
columns for the primary governmental activities as well as the discretely presented component units.
For the most part, the effect of interfund activity has been eliminated from the government-wide
financial statements, except for interfund services provided and used.
The government-wide Statement of Activities demonstrates the degree to which the direct expenses of
a given function are offset by program revenue., Direct expenses are those that are clearly identifiable
with a specific function. Program revenues include (1) charges to customers or applicants who
purchase, use, or directly benefit from goods, services, or privileges provided by a given function, (2)
grants and contributions that are restricted to meeting the operation and capital requirements of a
particular function, (3) interest earned on grants or capital projects that is required to be used to
support a particular program or project. Taxes and other items not properly included among program
revenues are reported as general revenues. The Town does not allocate indirect expenses to specific
functions in the Statement of Activities.
Fund Financial Statements
Separate financial statements are provided for governmental funds and fiduciary funds, even though the
fiduciary funds are excluded from the government-wide financial statements. Major individual
governmental funds are reported as separate columns in the fund financial statements.
The accounts of the Town are organized on the basis of funds, each of which is considered a separate
accounting entity. The operations of each fund are accounted for with a separate set of self-balancing
accounts that comprise its assets, liabilities, deferred inflows of resources, fund balances, revenues, and
expenditures, which are segregated for the purpose of carrying on specific activities or attaining certain
objectives in accordance with special regulations, restrictions or limitations. The various funds are
presented by type in the fund financial statements. Certain funds of the Town are utilized to account for
resources derived from and/or expenditures applicable to an area less than the entire Town. The focus of
the governmental funds financial statements is on the major funds. Accordingly, the Town maintains the
following fund types:
-25-
TOWN OF SOUTHOLD
NOTES TO FINANCIAL STATEMENTS
December 31, 2017
A. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
2. GOVERNMENT-WIDE AND FUND FINANCIAL STATEMENTS
Governmental Funds- Governmental funds are those through which most governmental functions are
financed.The acquisition, use and balances of expendable financial resources and the related liabilities
are accounted for through governmental funds. The measurement focus of the governmental funds is
upon the determination of financial position and changes in financial position. Governmental funds are
,f further;classified as major and nonmajor funds.
The Town reports the following major governmental funds:
General Fund - is the principal operating fund of the Town. This fund is used to account for all financial
resources not accounted for and reported in another fund.
Special Revenue Funds - are used to account for and report the proceeds of specific revenue
sources that are restricted or committed to expenditures for specified purposes other than debt
service or capital projects.
Highway Fund - is a Special Revenue Fund used to account for revenues and expenditures for
highway purposes. The major areas of expenditures are repairs and improvements to roadways,
machinery, and snow removal. The major source of revenue is real property taxes.
Community Preservation Fund - is used to account for and report financial resources that are
restricted for the purchase of land and land development rights. The major source of revenue is
the transfer tax. See Note F.
'^ Capital Projects Fund - used to account for and report financial resources that are restricted,
committed, or assigned to expenditures for capital outlays, including the acquisition or construction
of major capital facilities and other capital assets.
Additionally,the Town accounts for and reports the following nonmajor funds:
Special Revenue funds include the following:
General Fund Part Town — is used to account for revenues and expenditures for certain services
provided to the area of the Town located outside of the Village of Greenport. The major source of
revenue is real property taxes, non-property tax items and building permits.
Special Grant Fund — is used to account for federal aid for the Community Development Block
Grant Program.
Special District Funds — are used to account for taxes or other revenues, which are raised or
received to provide special services to areas that encompass less than the whole town. The
Special District Funds consist of a number of separate districts, which are administered by the
Town Board as follows: East-West Fire Protection District, Southold Wastewater District, Fishers
Island Sewer District, and the Solid Waste Management District.
Fiduciary Funds - Fiduciary Funds are used to account for assets held by the Town in a trustee or
custodial capacity.
Agency Fund - is used to account for money (and/or property) received and held in the capacity of
trustee,custodian or agent.
-26-
TOWN OF SOUTHOLD
NOTES TO FINANCIAL STATEMENTS
December 31, 2017
A. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
3. MEASUREMENT FOCUS, BASIS OF ACCOUNTING, AND FINANCIAL STATEMENT
PRESENTATION
The accounting and financial reporting treatment is determined by the applicable measurement focus
and basis of accounting. Measurement focus refers to what is being measured whereas the basis of
accounting refers to when revenues and expenditures are recognized in the accounts and reported in
the financial statements. Basis of accounting relates to the timing of the measurement made,
regardless of the measurement focus applied.
The government-wide statements are reported using the economic resources measurement focus and the
accrual basis of accounting. Under the accrual basis of accounting, revenues are recognized when
earned and expenses are recorded when the liability is incurred, regardless of the timing of related cash
flows. Property taxes are recognized as revenues in the year for which they are levied. Grants and similar
items are recognized as revenue as soon as all eligibility requirements imposed by the provider have
been met.
Governmental fund financial statements are reported using the current financial resources measurement
focus and the modified accrual basis of accounting. Revenues are recognized as soon as they are both
measurable and available. Revenues are considered available when they are collectible within the current
_ period or soon enough thereafter to pay liabilities of the current period. For this purpose, the Town
generally considers revenues to be available if they are collected within 60 days after the year end. In
certain circumstances this application of the Town's normal availability period for a given revenue source
might distort revenue trends from one year to the next. In such'unusual circumstances, revenues may be
considered available if received beyond 60 days. However,to the extent the revenue remains uncollected
after one year the Town would classify the fund balance as nonspendable.
Revenues susceptible to accrual include Suffolk County local assistance at year end on behalf of the
Town, franchise fees, mortgage taxes and certain charges for services and intergovernmental revenues.
Permits, fees, and other similar revenues are not susceptible to accrual because generally they are not
measurable until they are received in cash. In those instances where expenditures are the prime factor in
determining eligibility for state and federal grants, revenues are recognized when the expenditure is
incurred. In the governmental funds,the issuance of long-term debt is reported as other financing sources
upon receipt of the proceeds. Expenditures generally are recorded when a liability is incurred, as under
accrual accounting. However, debt service expenditures, as well as expenditures related to compensated
absences, claims and judgments, landfill closure and postclosure care costs, other postemployment
benefits payable and the proportionate share of the net pension liability are recorded when payment is
due. General capital asset acquisitions are reported as expenditures in governmental funds. Issuance of
long-term debt is reported as other financing sources.
Because governmental fund statements are presented using a measurement focus and a basis of
accounting different from that used in the government-wide statements governmental column, a
reconciliation is presented that briefly explains the adjustment necessary to reconcile ending net position
and the change in net position.
4. ASSETS, LIABILITIES, DEFERRED OUTFLOWS/INFLOWS' OF RESOURCES, AND NET
POSITION/FUND BALANCE
CASH AND INVESTMENTS
Cash consists of funds deposited in demand accounts, time deposit accounts and certificates of deposit
with maturities of less than three months.
-27-
TOWN OF SOUTHOLD
NOTES TO FINANCIAL STATEMENTS
December 31, 2017
A. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES(continued)
4. ASSETS, LIABILITIES, DEFERRED OUTFLOWS/INFLOWS OF RESOURCES, AND NET
POSITIOWFUND BALANCE(continued)
CASH AND INVESTMENTS (continued)
State statutes govern the Town's investment policies.The Town's investments are governed by a formal
investment policy. The Town's monies must be deposited in FDIC-insured commercial banks or trust
companies located within the State. The Town is authorized to use demand accounts and certificates
of deposit. Permissible investments include obligations of the U.S. Treasury, U.S. Agencies and
investments made by the Cooperative Liquid Asset Security System (CLASS).
Collateral is required for demand deposits and time deposit accounts at 100%of all deposits not covered
by federal deposit insurance. Obligations that may be pledged as collateral include obligations of the
United States and its agencies, obligations of the State and its municipalities, and school districts. The
Town's collateral agreements are based on the Town's available balance.
RECEIVABLES
Receivables include amounts due from Federal, State and other governments or entities for services
provided by the Town. Receivables are recorded, and revenues recognized as earned or as specific
program expenditures are incurred.
DUE FROM/TO OTHER FUNDS
During the course of operations, the government has activity between funds for various purposes. Any
residual balance outstanding at year-end is reported as due from/due to other funds. While these
balances are reported in fund financial statements, certain eliminations are made in the preparation of the
government-wide financial statements.
INVENTORY AND PREPAID ITEMS
Inventory in the General and Special Revenue Funds is valued at cost, using weighted average cost
method. Inventory in these funds is accounted for under the consumption method.
Certain payments to vendors reflect costs applicable to future accounting periods and are reported as
prepaid items in both the government-wide and fund financial statements. Prepaids represent health
insurance and retirement benefits that will benefit a future period.
In governmental funds, ,amounts reported as inventories and prepaid items are equally offset by
nonspendable fund balance amounts, indicating that they do not constitute "available spendable
resources"even though they are a component of net current assets.
CAPITAL ASSETS
Capital assets purchased or acquired with an original cost of $5,000 or more are reported at historical
cost or estimated historical cost. Contributed assets are reported at acquisition value as of the date of
donation. Additions, improvements and other capital outlays that significantly extend the useful life of
an asset are capitalized. Other costs incurred for repairs and maintenance are expensed as incurred.
Depreciation and amortization on all assets is provided on the straight-line basis over the following
estimated useful lives:
Buildings 10-40 years
Improvements other than buildings 20 years
Machinery and equipment 5-10 years
Software 5-10 years
Infrastructure 20-30 years
-28-
TOWN OF SOUTHOLD
NOTES TO FINANCIAL STATEMENTS
December 31, 2017
A. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
4. ASSETS, LIABILITIES, DEFERRED OUTFLOWS/INFLOWS OF RESOURCES, AND
NET/POSITIOWFUND BALANCE(continued)
CAPITAL ASSETS(continued)
Infrastructure assets, consisting of certain improvements other than buildings including roads, curbs,
f, sidewalks, bridges,drainage and street lighting are capitalized along with other capital assets.
Intangible assets lack physical substance, are nonfinancial in nature, and have an estimated useful life
extending beyond a single reporting period. The term depreciation, as used in these footnotes, includes
amortization of intangible assets.
In the fund financial statements, capital assets are recorded as capital outlay expenditures in the
governmental fund upon acquisition.
DEFERRED OUTFLOWS/INFLOWS OF RESOURCES
In addition to assets, the Statement of Net Position will sometimes report a separate section for deferred
outflows of resources. Deferred outflows of resources represent a consumption of net position that applies
to a future period(s) and so will not be recognized as an outflow of resources (expenditure/expense) until
that time. Deferred outflows of resources consist of deferred charges on refundings and pension related
amounts. The deferred charges on refundings stem from advanced refunding of debt. The difference
between the cost of securities placed in a trust for future payment of refunded debt and the net carrying
value of that debt is deferred and amortized as a component of interest expense over the shorter of the
term of the refunding issue or the original term of the refunded debt. The amounts related to pensions
consists of contributions made subsequent to the measurement date, differences between the pension
plans projected and actual investment earnings, changes of assumptions, and differences between the
pension plans expected and actual experience.
In addition to liabilities, the Statement of Net Position and balance sheet will sometimes report a separate
section for deferred inflows of resources. This separate financial statement element, deferred inflows of
resources, represents an acquisition of net position that applies to a future period(s) and so will not be
recognized as an inflow of resources (revenue) until that time. The Town's deferred inflows of resources
consists of the following: unavailable revenue, unearned revenue from real property taxes and pension
related amounts. In the governmental funds, unavailable revenue represents amounts that do not meet
the availability criteria applicable to revenue recognition under the modified accrual basis of accounting.
These amounts are deferred and recognized as an inflow of resources in the period the amounts become
available. The unavailable revenue includes amounts for mortgage tax that relate to the current year that
' do not meet the availability criteria. The unearned revenue relates to the collection of real estate taxes for
a future period and are accordingly reported as a deferred inflow in the government-wide Statement of Net
Position as well as the governmental Balance Sheet. In the Statement of Net Position, the Town reports
deferred inflows of resources associated with its pension and the amounts are derived from the changes
in proportion and differences between the Town's contributions and proportionate share of contributions
and the differences between expected and actual experience.
UNEARNED REVENUE
Unearned revenues, reported as liabilities in the fund and government-wide financial statements, are
those which asset recognition criteria have been met, but which revenue recognition criteria have not
been met for exchange type transactions. Such amounts include collections in advance for fee income
_ relating to 2018.
PREMIUMS OF DEBT ISSUANCE
Premiums related to the issuance of long-term debt are amortized on a straight-line basis over the life of
the issue and are presented as part of the general obligation bonds payable in the non-current liabilities.
-29-
TOWN OF SOUTHOLD
NOTES TO FINANCIAL STATEMENTS
December 31, 2017
A. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
( 4. ASSETS, LIABILITIES, DEFERRED OUTFLOWS/INFLOWS OF RESOURCES, AND
NET/POSITIOWFUND BALANCE(continued)
LONG-TERM OBLIGATIONS
In the government-wide financial statements, liabilities for long-term obligations consisting of general
obligation bonds, compensated absences, claims and judgments, liability for landfill closure and
postclosure costs, net pension liability, and other postemployment benefits payable are recognized in the
Statement of Net Position. Bond premiums or discounts are deferred and amortized on a straight-line
basis over the life of the bonds. Bonds payable are reported net of applicable bond premium or discount.
Bond issuance costs are expensed as incurred.
In the fund financial statements, long-term obligations are not reported as liabilities. Governmental funds
recognize bond premiums and discounts, as well as bond issuance costs, during the current period. The
face amount of the debt issued is reported as other financing sources and the payment of principal and
interest is reported as expenditures. Premiums received on debt issuances are reported as other
financing sources while discounts on debt issuances are reported as other financing uses. Issuance costs,
whether or not withheld from actual debt proceeds received,are reported as debt service expenditures.
INTERFUND TRANSACTIONS
Interfund transactions, exclusive of interfund services provided and used, have been eliminated from the
government-wide financial statements. In the funds statements, interfund transactions include:
a) Interfund Revenues
In the general fund, interfund revenues, which are quasi-external transactions, represent amounts
charged for services or facilities provided by the general fund. The amount paid by the fund receiving
the benefit of the service or facilities is reflected as an expenditure of that fund.
b) Transfers
t Transfers primarily represent payments to the capital projects fund from the other funds for their
appropriate share of the capital project costs or related BAN debt service amounts.
NET POSITION AND FUND EQUITY CLASSIFICATIONS
In the government-wide statements, equity is classified as net position and displayed in three
components:
`a
a) Net investment in capital assets — Consists of capital assets including restricted capital assets,
net of accumulated depreciation and reduced by the outstanding balances of any bonds, notes, or
other borrowings that are attributable to the acquisition, construction, or improvement of those
assets.Accounts payable in the capital projects fund is considered capital related debt and is used
in the calculation of net investment in capital assets.
b) Restricted — Consists of net position with constraints placed on the use either by (1) external
groups such as creditors, grantors, contributors, or laws or regulations of other governments; or
(2) law through constitutional provisions or enabling legislation.
c) Unrestricted — All other net position that does not meet the definition of "restricted" or "net
investment in capital assets."
In the fund financial statements, governmental funds report aggregate amounts for five classifications
of fund balances based on the constraints imposed on the use of these resources; they are (1)
nonspendable, (2) restricted, (3) committed, (4) assigned, or(5) unassigned.
-30-
TOWN OF SOUTHOLD
NOTES TO FINANCIAL STATEMENTS
December 31, 2017
A. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES(continued)
4. ASSETS, LIABILITIES, DEFERRED OUTFLOWS/INFLOWS OF RESOURCES, AND NET
POSITION/FUND BALANCE (continued)
NET POSITION AND FUND EQUITY CLASSIFICATIONS (continued)
1) Nonspendable fund balance includes amounts that cannot be spent because they are either (a)
not in spendable form (i.e. prepaid items or inventories), or (b) will not convert to cash within the
current period (i.e. long-term receivables and financial assets held for resale), or (c) legally or
contractually required to be maintained intact (i.e. the principal of a permanent fund).
The spendable portion of the fund balance comprises the remaining four classifications: restricted,
committed, assigned, and unassigned.
2) Restricted fund balance reflects the constraints imposed on resources either (a) externally by
creditors, grantors, contributors, or laws or regulation of other governments; or (b) imposed by law
through constitutional provisions or enabling legislation.
3) Committed fund balance reflects amounts that can only be used for specific purposes by a
government using its highest and most binding level of decision making authority. The Town's
highest decision-making authority is the Town Board, who by adoption of a Town ordinance prior
to year-end, can commit fund balance. Those committed amounts cannot be used for any other
purpose unless the Town Board removes or changes the specified use by taking the same type of
action imposing the commitment.
4) Assigned fund balance reflects the amounts constrained by the Town's "intent" to be used for
_ specific purposes but are neither restricted nor committed. The Town Board has the authority to
assign amounts to be used for specific purposes. Assigned fund balances include all remaining
amounts (except negative balances) that are reported in governmental funds, other than the
general fund,that are not classified as nonspendable and are neither restricted nor committed.
5) Unassigned fund balance is the residual classification for the general fund. It is also used to report
negative fund balances in other governmental funds.
U NET POSITION AND FUND BALANCE FLOW ASSUMPTIONS
When outlays for a particular purpose can be funded from both restricted and unrestricted net position
resources it is the Town's policy to consider restricted — net position to have been depleted before
unrestricted—net position is applied.
' When both restricted and unrestricted resources are available for use, it is the Town's default policy to
use restricted resources first, and then unrestricted resources —committed, assigned and unassigned
—in order as needed.
FUND BALANCE POLICIES
Aft The Town has, by resolution, adopted a fund balance policy that states the Town must maintain a
minimum unassigned fund balance in the general fund equal to 10% of general fund expenditures. In
the event that the balance drops below the established minimum level, the Town's Board will develop
a plan to replenish the fund balance to the established minimum level within the current or ensuing
fiscal year.
-31-
TOWN OF SOUTHOLD
NOTES TO FINANCIAL STATEMENTS
December 31, 2017
A. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
5. REVENUES AND EXPENDITURES
REAL PROPERTY TAX ASSESSMENT AND COLLECTION PROCEDURES
Real property taxes are levied annually no later than December 1st and are recognized as revenue
January 1St of the year for which they were levied. The Town has its own Assessor's Office whose
responsibilities are independent and distinct from those of the Receiver of Taxes ("Receiver"). The Town
t- assessment rolls are used for the levy of property taxes by the Town and the school districts, as well as by
the County of Suffolk, New York("County') and by special districts based upon a single tax bill.
The Town of Southold Receiver of Taxes collects all real property taxes for the Town, Suffolk County,
Town Special Districts and School Districts. These taxes are levied on December 1, and,are due in two
installments, 50% on December 1 and 50% on May 10, payable without penalty to January 10 and May
31, respectively. Penalties are imposed thereafter at the rate of one-twelfth of the rate of interest
determined by the State Commissioner of Taxation and Finance, after which taxes are payable to the
County Treasurer.The Town retains the total amount of Town, Highway and Town Special Districts levies
from the amount collected, and forwards the balance collected to the County which assumes collection
responsibility. The Town and Town's Special Districts therefore realize annually the 100% collection of
real property taxes.
OTHER POSTEMPLOYMENT BENEFITS
In addition to providing pension benefits, the Town provides health insurance coverage and survivor
benefits for retired employees. Substantially all of the Town's employees may become eligible for these
benefits if they reach normal retirement age while working for the Town.
Health care benefits in accordance with New York State Health Insurance Rules and Regulations
(administered by the New York State Department of Civil Service), are provided through the New York
State Empire Plan (the "Empire Plan") whose premiums are based on the benefits paid throughout the
State during the year.
The Town recognizes the cost of providing benefits by recording its share of insurance premiums as an
expenditure in the year paid.The Town's union contracts and ordinances require that it provide its eligible
enrollees with Empire Plan benefit coverage, or if another provider is utilized, the equivalent coverage.
Under the provisions of the Empire Plan, premiums are adjusted on a prospective basis for any losses
experienced by the Empire Plan.The Town has the option to terminate its participation in the Empire Plan
at any time without liability for its respective share of any previously incurred loss. The liability for other
postemployment benefits payable is recorded as a non-current liability in the government-wide
statements.The current year increase in the liability is based on the most recent actuarial valuation.
-'' COMPENSATED ABSENCES
The liability for vested or accumulated vacation or sick leave (compensated absences) is recorded as
current and non-current obligations in the government-wide statements. The current portion of this
debt is estimated based on historical trends and currently known facts. Compensated absence
liabilities and expenditures are reported in governmental funds only if they have matured, for example,
as a result of employee resignations, terminations, and retirements. The amount that is expected to be
liquidated with expendable available financial resources is reported as expenditures and a liability in the
funds statement in the respective fund that will pay the liability.
-32-
TOWN OF SOUTHOLD
NOTES TO FINANCIAL STATEMENTS
December 31, 2017
A. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES(continued)
5. REVENUES AND EXPENDITURES(continued)
PENSIONS
The Town, as a participant in the New York State and Local Employees' Retirement System and Local
Police and Fireman Retirement System, recognizes the proportionate share of the net pension liability,
deferred outflows of resources, and deferred inflows of resources in the government-wide financial
statements, using the accrual basis of accounting, regardless of the amount recognized as pension
expenditures in the fund financial statements. The amounts recognized have been determined on the
same basis as reported by the Systems, utilizing the year end of March 31St.
ENCUMBRANCES
.ti Encumbrance accounting, under which purchase orders, contracts and other commitments for the
expenditures of monies are recorded for budgetary control purposes, is employed in the governmental
funds. Encumbrances are reported as restrictions, commitments, or assignments of fund balances since
they do not constitute expenditures or liabilities. Expenditures for such commitments are recorded in the
period in which the liability is incurred.
6. USE OF ESTIMATES
The preparation of basic financial statements, in conformity with accounting principles generally accepted
in the United States of America, requires management to make estimates and assumptions that affect the
reported amounts of assets, deferred outflows of resources, liabilities and deferred inflows of resources
and, disclosure of contingent amounts, at the date of the financial statements, and the reported amounts
of revenues and expenditures during the reporting period.Actual results could differ from those estimates.
7. NEW ACCOUNTING PRINCIPLES
The Town has adopted all of the current Statements of the Governmental Accounting Standards Board
(GASB)that are applicable. During the year ended December 31,2017,the Town adopted:
Statement No. 73, "Accounting and Financial Reporting for Pensions and Related Assets that Are
Not Within the Scope of GASB 68 - an amendment to Certain Provisions of GASB 67 and 68,"the
objective is to clarify the existing guidance as well as new requirements for pensions not covered by
Statement No. 67 and No. 68. The implementation of the Statement had no impact on the Town's
financial statements.
Statement No. 80, "Blending Requirements for Certain Component Units—an Amendment of Statement
Q
No.14," the objective of which is to improve financial reporting by clarifying the financial statement
presentation requirements for certain component units. The implementation of the Statement had no
impact on the Town's financial statements.
Statement No. 81, "Irrevocable Split-Interest Agreements," provides guidance over financial
reporting for irrevocable split-interest agreements where the government is a beneficiary of the
agreement. The implementation of this Statement had no impact on the Town's financial statement.
Statement No. 82, "Pension Issues — an Amendment of statements No. 67, 68 and 73," the
objective of which is to address issues regarding (a) the presentation of payroll related measures in
required supplementary information, (b) the selection of assumptions and the treatment of
deviations from the guidance in an Actuarial Standard of Practice for financial reporting purposes,
and (c) the classification of payments made by employers to satisfy employee (plan member)
contribution requirements. The requirements of this Statement have been implemented in the
current year, except for the requirements for selection of assumption in a certain circumstance in
which an employer's pension liability is measured as of a date other than the employers' most
recent fiscal year end, which is required to be implemented in the first reporting period in which the
measurement date of the pension liability is on or after June 15, 2017. The implementation of this
Statement had no significant impact on the Town's financial statements.
Amk
-33-
' TOWN OF SOUTHOLD
NOTES TO FINANCIAL STATEMENTS
December 31, 2017
A. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
8. SUBSEQUENT EVENTS
Management has evaluated subsequent events for disclosure and/or recognition in the financial
statements through the date of the financial statements.
B. STEWARDSHIP,COMPLIANCE AND ACCOUNTABILITY
1. BUDGETARY INFORMATION
Budgets are adopted annually on a basis consistent with generally accepted accounting principles.
Appropriations authorized for the current year are increased by the amount of encumbrances carried
forward from the prior year.
Budgets for the general and special revenue funds, exclusive of the special grant fund, are legally
adopted for each year. The budgets are adopted on a basis of accounting consistent with GAAP,
except that appropriations authorized for the current year are increased by the amount of
encumbrances carried forward from the prior years. In the event that unanticipated revenues are
received (i.e. specific grant revenues) and exceed budgeted amounts, additional budgetary
appropriations may be made. The capital projects and special grant funds are budgeted on a project
or grant basis.
The Town follows the procedures enumerated below in establishing the budgetary data reflected in the
financial statements:
a) No later than October 1, the Supervisor submits a tentative budget to the Town Board for the fiscal
year commencing the following fiscal year. The tentative budget includes the proposed means of
` financing for all funds.
b) After public hearings are conducted to obtain taxpayer comments, no later than November 20, the
Town Board adopts the budget.
c) The Town Board must approve all modifications of the budget. However, the Comptroller is
authorized to transfer certain budgeted amounts within departments.
d) In June 2011, New York State enacted Chapter 97, Laws of 2011 Real Property Tax Levy Cap
,and Mandate Relief Provisions, which includes a 2% property tax cap for municipalities. Beginning
in 2012 and lasting through at least June 15, 2020, no local government is authorized to increase
its property tax levy by more than 2% or the rate of inflation (whichever is less); however local
t`) governments can exceed the tax levy limit by a 60% vote of the governing body and annually
adopting a local law.
r�
t ;
-34-
TOWN OF SOUTHOLD
NOTES TO FINANCIAL STATEMENTS
December 31, 2017
B. STEWARDSHIP,COMPLIANCE AND ACCOUNTABILITY(continued)
2. FUND BALANCE
The following table provides the detail regarding fund balance categories and classifications for the
governmental funds which show components of nonspendable fund balances, as well as the purposes for
restricted and assigned fund balance.The unassigned fund balance is also shown.
• Capital Community Other
General Highway Projects Preservation Governmental
Fund Fund Fund Fund Funds Total
Fund Balances:
Nonspendable:
i Inventory $ 6,764 $ 83,878 $ 90,642
Prepaids 715,706 79,313 $ 6,911 $ 87,300 889,230
Total Nonspendable 722,470 163,191 $ -0- 6,911 87,300 979,872
Restricted for:
Land/Land right purchases 17,420,522 17,420,522
Total Restricted -0- -0- -0- 17,420,522 -0- 17,420,522
Committed for:
Parks and Recreation 207,185 207,185
Affordable Housing 424,750 424,750
lab
141111F Total Committed 207,185 -0- -0- -0- 424,750 631,935
Assigned to:
Subsequent year's budget 1,025,000 60,000 210,000 1,295,000
Purchases on order
or contractual obligations 272,046 1,627 41,737 315,410
Special revenue funds 937,192 1,780,973 2,718,165
Capital projects 185,151 185,151
Judgments and claims 373,307 373,307
Total Assigned 1,670,353 998,819 185,151 -0- 2,032,710 4,887,033
Z
Unassigned,reported in
General Fund 8,118,801 8,118,801
Total Unrestricted 8,118,801 -0- -0- -0- -0- 8,118,801
Total Fund Balances $10,718,809 $ 1,162,010 $ 185,151 $ 17,427,433 $2,544,760 $32,038,163
C. DETAILED NOTES ON ALL FUNDS
1. CASH AND INVESTMENTS
Custodial Credit Risk-Deposits/Investments-Custodial credit risk for deposits exists when, in the event
of the failure of a depository financial institution, a government may be unable to recover deposits, or
recover collateral securities that are in possession of an outside agency. Custodial credit risk for
investments exists when, in the event of the failure of the counterparty, a government will not be able to
recover the value of its investments or collateral securities that are in possession of an outside party.
-35-
TOWN OF SOUTHOLD
NOTES TO FINANCIAL STATEMENTS
December 31,2017
C. DETAILED NOTES ON ALL FUNDS(continued)
1. CASH AND INVESTMENTS (continued)
The Town's investments policy defines permissible investments, limits the amount of deposits at any time
at any one bank or trust company, requires that bank balances in excess of the Federal Deposit
Insurance Corporation insurance limits of $250,000 be protected with custodial agreements which
requires that balances are fully collateralized in accordance with New York State General Municipal Law
(GML) and limits the form of acceptable collateralization.
Credit Risk—The Town's written investment guidelines and policies are designed to protect principal by
limiting risk. State and Town law limit investments to those authorized by State statutes.
Interest-Rate Risk—Interest-rate risk arises because potential purchasers of debt securities will not agree
J to pay face value for those securities if interest rates substantially increase, thereby affording potential
purchasers more favorable rates on essentially equivalent securities. Accordingly, such investments
would have to be held to maturity to avoid a potential loss.
Concentration of Credit Risk — Credit risk can arise as a result of failure to adequately diversify
investments. Concentration risk disclosure is required for positions of 5 percent or more in securities of a
- single issuer.
�J
Financial institutions can satisfy collateral requirements by furnishing an eligible letter of credit, an eligible
surety bond, by pledging eligible securities as specified in Section 10 of GML or participating in a deposit
placement program pursuant to section 9-r of the banking law. Irrevocable letters of credit issued as
collateral in certain situations may require a threshold of up to 140% of aggregate deposits. Eligible
securities that may be pledged as collateral includes but is not limited to obligations of the United States
' 1 or its agencies,obligations of New York State and obligations of municipalities of New York State.
The use of available daily balances to determine collateral requirements may result in the available
balance being under-collateralized at various times during the year.
At December 31, 2017, the Town's cash book balance was $68,589,452. This amount is inclusive of
fiduciary fund deposits of$27,571,229 but exclusive of petty cash of $1,111 and CLASS of$54,385. The
available bank balance was $68,797,718 exclusive of CLASS deposits. Of the bank balance, $9,505,858
was covered by Federal deposit insurance, and $59,291,860 was covered by collateral held by the
Town's agents,third-party financial institutions, in the Town's name.
External Investment Pool
r�
The Town participates in the Cooperative Liquid Assets Securities System - New York (CLASS), a multi-
municipal cooperative investment pool consisting of U.S. Treasury Obligations and repurchase
agreements relating to treasury obligations. Investments are stated at cost, which approximates market
value. CLASS was established as a cooperative investment arrangement organized under the CLASS
Municipal Cooperation Agreement made pursuant to New York General Municipal Law, Article 3A and 5-
s, G.The pool is not registered with the SEC and is overseen by an elected Governing Board.The District's
fair value of its position in the pool is the same as the value of pool shares.
In accordance with FASB guidance, CLASS utilizes ASC 820 "Fair Value Measurement and
Disclosure"to define fair value, establish a framework for measuring fair value, and expand disclosure
requirements regarding fair value measurements. ASC 820 does not require new fair value
measurements but is applied to the extent that other accounting pronouncements require or permit fair
value measurements. This standard emphasizes that fair value is a market-based measurement that
should be determined based on the assumptions that market participants would use in pricing an asset
or liability. Various inputs are used in determining the value of CLASS's portfolio investments defined
pursuant to this standard.
-36-
TOWN OF SOUTHOLD
NOTES TO FINANCIAL STATEMENTS
December 31,2017
C. DETAILED NOTES ON ALL FUNDS (continued)
1. CASH AND INVESTMENTS (continued)
Securities, other than repurchase agreements, are valued at the most recent market bid price as
obtained from one or more market makers for such securities. Repurchase agreements are recorded
at cost, which approximates market value. There have been no significant changes in valuation
techniques used in valuing any such positions held by CLASS since the beginning of their fiscal year.
The inputs or methodology used for valuing securities are not necessarily an indication of the risk
associated with investing in those securities.
The Town's $54,385 CLASS investment consists of U.S Treasury Obligations and repurchase
agreements relating to Treasury obligations and is not subject to risk categorization.
The above amounts represent the cost of the investment pool shares and are considered to approximate
market value. Additional information concerning the cooperative is presented in the annual report of the
New York CLASS,which can be found on its website at www.newvorkciass.org.
As of December 31, 2017, the Town did not have any investments subject to credit risk, interest-rate risk
or concentration of credit risk.
2. INTERFUND RECEIVABLES, PAYABLES AND TRANSFERS
Interfund receivable and payable balances for the primary government at December 31, 2017 are
expected to be paid currently. These balances represent various temporary loans, recharges, and
reimbursements between funds for operating and capital expenditures and are stated as follows:
Amount Amount
Receivable Payable
Major Governmental Funds:
General Fund-Town wide $ 229,947 $ 3,124,347
Highway Fund 1,675,862 24,969
Capital Projects Fund 401.478 128.666
Major Funds 2.307,287 3.277,982
Nonmajor Governmental Funds:
General Fund-Part Town 260,129 100,000
Special Grant 106
East-West Fire Protection District 215,683
Southold Wastewater District 80
Fishers Island Sewer District 17,100
Solid Waste Management District Fund 578.014 205
Nonmajor Funds 1.071,006 100,311
Total $ 3,378-293 $ 3,378.293
Interfund transfer balances for the primary government at December 31, 2017 represent capital project
transfers and are stated as follows:
Transfers Transfers
In Out
Major Governmental Funds:
General Fund-Town wide $ 146,431
Highway Fund 1,035,205
Capital Projects Fund $ 1,181.636
Total $ 1.181 636 $ 1,181,636
-37-
TOWN OF SOUTHOLD
NOTES TO FINANCIAL STATEMENTS
December 31, 2017
C. DETAILED NOTES ON ALL FUNDS(continued)
3. CAPITAL ASSETS
Balance Deletions/ Balance
Primary government 1/1/2017 Additions Reclassifications 12/31/2017
Capital assets not being depreciated
Land $ 8,686,728 $ 8,686,728
Land development rights 121,575,610 $ 3,693,276 125,268,886
Construction in progress 1,371,822 20,002 $ 1,163,288 228,536
Total capital assets not being depreciated 131,634,160 3,713,278 1,163,288 134,184,150
Depreciable capital assets
Buildings 15,576,538 1,553,388 17,129,926
Improvements other than buildings 16,370,677 6,000 16,376,677
Machinery and equipment 11,858,071 1,312,220 134,237 13,036,054
Software 1,144,497 1,144,497
Infrastructure 81,190,412 1,608,121 82,798,533
Total depreciable capital assets 126,140,195 4,479,729 134,237 130,485,687
Less accumulated depreciation
Buildings 5,629,496 403,209 6,032,705
Improvements other than buildings 8,164,370 561,440 8,725,810
Machinery and equipment 8,922,401 652,940 134,237 9,441,104
Software 1,024,894 107,040 1,131,934
Infrastructure 69,429,776 814,921 70,244,697
Total accumulated depreciation $ 93,170,937 $ 2,539,550 $ 134,237 95,576,250
Total net depreciable capital assets 34,909,437
Total net capital assets $ 169,093,587
Depreciation expense was charged to governmental functions as follows:
General government support $ 478,157
Ash
Public safety 362,058
Transportation 1,115,940
Economic assistance and opportunity 29,679
Culture and recreation 38,446
AIL Home and community services 515,270
$ 2,539,550
r
-38-
TOWN OF SOUTHOLD
NOTES TO FINANCIAL STATEMENTS
December 31, 2017
C. DETAILED NOTES ON ALL FUNDS(continued)
r 3. CAPITAL ASSETS (continued)
The Town evaluates prominent events or changes in circumstances affecting capital assets to
determine whether impairment of a capital asset has occurred. The Town's policy is to record an
impairment loss in the period when the Town determines that the carrying amount of the asset will not
be recoverable.At December 31, 2017, the Town has not recorded any such impairment losses.
Balance Balance
Nonmajor component units 1/1/2017 Additions Deletions 12/31/2017
Capital assets not being depreciated
Land $ 2,103,162
.- $ 2,103,162
Construction in progress $ 66,323 66,323
Total capital assets not being depreciated 2,103,162 66,323 $ -0- 2,169,485
Depreciable capital assets
Buildings 14,145,321 14,145,321
4 Improvements other than buildings 2,545,238 12,056 2,557,294
Machinery and equipment 4,011,124 106,162 4,117,286
Infrastructure 4,366,330 372,763 4,739,093
Total depreciable capital assets 25,068,013 490,981 -0- 25,558,994
Less accumulated depreciation
Buildings 5,311,535 451,613 5,763,148
Improvements other than buildings 954,335 92,994 1,047,329
Machinery and equipment 3,574,117 129,922 3,704,039
Infrastructure 2,555,890 168,986 2,724,876
Total accumulated depreciation $12,395,877 $ 843,515 $ -0- 13,239,392
Total net depreciable capital assets 12,319,602
Total net capital assets $ 14,489,087
Depreciation expense was charged to governmental functions as follows:
Transportation $ 594,844
Culture and recreation 105,863
Home and community services 142,808
$ 843,515
�� -39-
TOWN OF SOUTHOLD
NOTES TO FINANCIAL STATEMENTS
December 31, 2017
C. DETAILED NOTES ON ALL FUNDS(continued)
4. INDEBTEDNESS
SHORT TERM DEBT
Bond Anticipation Notes (BANs)—Bond anticipation notes (BANs) are used as a temporary means of
financing capital expenditures in the capital projects fund. State law requires that BANs issued for capital
purposes be converted to long-term obligations within five years after the original issue date.The notes or
renewal thereof may not extend more than two years beyond the original date of issue unless a portion is
redeemed within two years and within each 12-month period thereafter. Liabilities for BANs are generally
accounted for in the Capital Projects Fund. BANs are expected to be paid from the proceeds of future
bond issues after renewal of these notes. The Town issued $1,440,000 of bond anticipation notes, of
which $680,000 relate to Fishers Island Ferry District, in December 2017. These BANs bear interest at
2.25%and will mature in December 2018.
' - A summary of changes in BANs for the year ended December 31,2017 is as follows:
Balance Balance
1/1/17 Increases Reductions 12/31/17
Primary Government $ -0- $ 760,000 $ -0- $ 760,000
Component Units -0- 680,000 -0- 680.000
-0- $ 1,440.000 $ -0- $ 1,440.000
Revenue Anticipation Notes (RANs) — Revenue Anticipation Notes (RANs) are used as a temporary
means of financing cash flow deficit for Fishers Island Ferry District for 2017. This RAN, with an interest
rate of 2.25%was redeemed on February 7,2018 from federal aid.
This note is summarized as follows:
Balance Balance
1/1/17 Increases Reductions 12/31/17
Component Units $ -0- $ 400,000 $ 70- _$__400 000
LONG TERM DEBT
General Obligation Bonds The Town borrows money in order to acquire land, equipment or construct
buildings and improvements.This enables the cost of these capital assets to be borne by the present and
future taxpayers receiving the benefit of the capital assets.
O
These long-term liabilities are backed by the full faith and credit of the Town which are payable from tax
revenues of the General Fund and Special Revenue Funds. Interest rates on these bonds vary from
2'.00%to 5.00%and have maturity dates in 2018 through 2034.
-40-
TOWN OF SOUTHOLD
NOTES TO FINANCIAL STATEMENTS
December 31, 2017
C. DETAILED NOTES ON ALL FUNDS(continued)
t_ 4. INDEBTEDNESS(continued)
LONG TERM DEBT(continued)
Future principal and interest payments to maturity for both the primary government and the component
units are as follows:
Primary Government Component Units
Years Ending
December 31, Principal Interest Totals Principal Interest Totals
2018 $ 2,775,000 $ 1,008,790 $ 3,783,790 $ 320,000 $ 28,961 $ 348,961
2019 2,350,000 918,901 3,268,901 320,000 22,424 342,424
2020 2,245,000 829,663 3,074,663 265,000 14,299 279,299
2021 2,310,000 740,713 3,050,713 265,000 4,999 269,999
2022 2,340,000 650,763 2,990,763
2023-2027 11,975,000 1,857,788 13,832,788
2028-2032 7,385,000 346,909 7,731,909
2033-2034 470,000 15,863 485,863
Total $31,850,000 $ 6,369,390 $38,219,390 $ 1,170,000 $ 70,683 $ 1,240,683
CHANGES IN LONG-TERM LIABILITIES
Long-term liability activity for the year ended December 31,2017 is as follows:
Noncurrent
Balance Balance liabilities due Noncurrent
1/1/2017 Increases Reductions 12/31/2017 within one year liabilities
Primary Government:
General obligation bonds $ 34,664,000 $ $2,814,000 $ 31,850,000 $ 2,775,000 $29,075,000
Add:premiums on obligations 2,500,577 182,743 2,317,834 2,317,834
Total general obligation bonds
payable 37,164,577 2,996,743 34,167,834 2,775,000 31,392,834
Compensated absences 9,373,656 267,163 364,855 9,275,964 463,798 8,812,166
General claims and judgments
�
liability 405,105 180,026 41,986 543,145 30,000 513,145
Estimated liability for landfill closure
and postclosure care costs 426,274 16,614 409,660 16,614 393,046
Net pension liability 12,755,261 5,061,052 9,743,669 8,072,644 .8,072,644
Other postemployment benefits
payable 44,505,008 5,579,222 1,871,347 48,212,883 48,212,883
-41-
TOWN OF SOUTHOLD
NOTES TO FINANCIAL STATEMENTS
December 31, 2017
C. DETAILED NOTES ON ALL FUNDS(continued)
4. INDEBTEDNESS(continued)
CHANGES IN LONG-TERM LIABILITIES (continued)
Noncurrent
Balance Balance liabilities due Noncurrent
1/1/2017 Increases Reductions 12/31/2017 within one year liabilities
Component Units:
General obligation bonds $ 1,494,000 $ 324,000 $ 1,170,000 $ 320,000 $ 850,000
Compensated absences 194,082 $ 9,695 203,777 50,944 152,833
Net pension liability 652,907 215,601 437,306 437,306
Other postemployment benefits
payable 319,717 33,557 39,661 313,613 313,613
The liabilities for compensated absences, net pension liability and other postemployment benefits
payable will be liquidated through future budgetary appropriations in the funds that gave rise to the
liability. In most instances, these amounts will be liquidated from the general fund, highway fund, and
certain special revenue funds. Payments for estimated claims and judgments will be liquidated
primarily from the general fund. The estimated liability for landfill closure and postclosure costs will be
liquidated by the solid waste management fund.
5. RETIREMENT SYSTEM
Plan Description
The Town of Southold participates in the New York State and Local Employees' Retirement System
(NYSERS) and Local Police and Fire Retirement System (PFRS), which are collectively referred to as
the New York State and Local Retirement System (the "System"). These are cost-sharing multiple-
employer defined benefit pension plans.The net position of the System is held in the New York 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. The Comptroller is an elected official
determined in a direct statewide election and serves a four year term. System benefits are established
under the provisions of the New York State Retirement and Social Security Law ("RSSL"). 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 Town 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 hftp://www.osc.state.ny.us/
retire/publications/index.php or obtained by writing to the New York State and Local Retirement
System, 110 State Street, Albany, NY 12244-0001.
Benefits Provided
The System provides retirement benefits as well as death and disability benefits.
Tiers 1 and 2
Eligibility: Tier 1 members, with the exception of those retiring under special retirement plans, must be at
least age 55 to be eligible to collect a retirement benefit, there is no minimum service requirement.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 and Tier 2, is 55 and 62 respectively.
-42-
TOWN OF SOUTHOLD
NOTES TO FINANCIAL STATEMENTS
December 31, 2017
C. DETAILED NOTES ON ALL FUNDS(continued)
5. RETIREMENT SYSTEM (continued)
Benefits Provided(continued)
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 RSSL, Tier 1 and 2
members who worked continuously from April 1, 1999 through October 1, 2000 received an additional
month of service credit for each year of credited service they have at retirement, up to a maximum of 24
additional months.
Final average salary is the average of the wages earned in the three highest consecutive years of
employment. For Tier 1 members who joined on or after June 17, 1971, each year's compensation used
in the final average salary calculation is limited to no more than 20% greater than the previous year. For
Tier 2 members, each year of final average salary is limited to no more than 20%than the average of the
previous two years.
Tiers 3, 4, and 5
Eligibility: Tier 3 and 4 members, with the exception of those retiring under special retirement plans, must
have five years of service and be at least age 55 to be eligible to collect a retirement benefit. Tier 5
members, with the exception of those retiring under special retirement plans, must have ten years of
service and be at least 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 ten 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 of
employment. For Tier 3, 4, and 5 members, each year's compensation used in the final average salary
calculation is limited to no more than 10%greater than the average of the previous two years.
Tier 6
Eligibility: Tier 6 members, with the exception of those retiring under special retirement plans, must have
ten years of service and be at least age 55 to be eligible to collect a retirement benefit.The full benefit age
for Tier 6 members is age 63 for ERS members and 62 for PFRS members.
Benefit calculation: Generally, the benefit is 1.67% of final average salary for each year of service if the
member retires with less than 20 years. If a member retires with 20 years of service,the benefit is 1.75%
of final average salary for each year of service. If a member retires with more than 20 years of service, an
additional benefit of 2% of final average salary is applied for each year of service over 20 years. Tier 6
members with ten or more years of service can retire as early as age 55 with reduced benefits.
Final average salary is the average of the wages earned in the five highest consecutive years of
employment. For Tier 6 members, each year's compensation used in the final average salary calculation
is limited to no more than 10%greater than the average of the previous four years.
-43-
TOWN OF SOUTHOLD
NOTES TO FINANCIAL STATEMENTS
December 31, 2017
C. DETAILED NOTES ON ALL FUNDS (continued)
_ 5. RETIREMENT SYSTEM (continued)
Benefits Provided (continued)
Special Plans
The 25-Year Plan allow a retirement after 25 years of service with a benefit of one-half of final average
salary, and the 20-Year Plan allow a retirement after 20 years of service with a benefit of one-half of final
average salary.These plans are available to certain PFRS members, sheriffs, and correction officers.
Disability Retirement Benefits
Disability retirement benefits are available to members unable to perform their job duties because of
permanent physical or mental capacity. There are three general types of disability benefits: ordinary,
performance of duty and accidental disability benefits. Eligibility, benefit amounts, and other rules such as
any offsets of other benefits depend on a member's tier,years of service, and plan.
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
life term life insurance. The benefit is generally three times the member's annual salary. For most
members,there is also a reduced post-retirement ordinary death benefit available.
Post-Retirement Benefit Increases
A cost-of-living adjustment is provided annually to: 1) all pensioners who have attained age 62 and have
been retired for five years; 2) all pensioners who have attained age 55 and have been retired for ten
years; 3) all disability pensioners, regardless of age, who have been retired for five years; 4) recipients of
an accidental death benefit, regardless of age,who have been receiving such benefit for five years; and 5)
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
Plan members who joined the system before July 27, 1976 are not required to make contributions.
Those joining after July 27, 1976 and before January 1, 2010 with less than ten years of membership
are required to contribute 3% of their annual salary. Those joining on or after January 1, 2010 and
before April 1, 2012 are required to contribute 3% of their salary for NYSERS members throughout
active membership. Those joining on or after April 1, 2012 are required to contribute between 3% and
6%, depending upon their salary, throughout active membership. Under the authority of the NYSRSSL,
the Comptroller shall certify annually the actuarially determined rates expressly used in computing the
employers' contributions based on salaries paid during the System's year ended March 31. The actual
contributions were equal to 100% of the actuarially required amounts. The required contributions as
billed by the Plan,for the Town,for the current year is:
ERS PFRS
$ 1,740,156 $ 1,677,894
-44-
TOWN OF SOUTHOLD
NOTES TO FINANCIAL STATEMENTS
December 31, 2017
C. DETAILED NOTES ON ALL FUNDS(continued)
5. RETIREMENT SYSTEM (continued)
Pension Liabilities, Pension Expense Deferred Outflows of Resources and Deferred Inflows of
Resources Related to Pension
At December 31, 2017 the Town reported a liability of$4,073,415 and $3,999,229 for ERS and PFRS,
respectively for its proportionate share of the net pension liability for the Systems. The net pension
liability was measured as of March 31, 2017 and the total pension liability used to calculate the net
pension liability was determined by an actuarial valuation as of April 1, 2016. The Town proportion of
the net pension liability was based on a projected contribution of all participating members, actuarially
determined.
Below is the Town's proportionate share of the net pension liability of the System and its related
employer allocation percentage as of March 31, 2017.
Allocation of the
Net Pension System's Total
Measurement Date Liability Net Liability
ERS March 31,2017 $ 4,073,415 0.0431599%
PFRS March 31,2017 $ 3,999,229 0.1929522%
There was no significant change in the Town's proportionate share from March 31, 2016 to March 31,
2017.
For the year ended December 31, 2017, the Town recognized pension expense of $4,724,912 of
which $2,397,773 relates to ERS and $2,327,139 relates to PFRS. At December 31, 2017, the Town
reported deferred outflows of resources and deferred inflows of resources related to pensions from the
following sources:
ERS PFRS Totals
Deferred Outflows of Resources:
Difference between expected and actual experience $ 101,625 $ 524,630 $ 626,255
Changes of assumptions 1,385,474 1,970,252 3,355,726
Net difference between projected and actual investment
earnings on pension plan investments 810,028 597,279 1,407,307
Changes in proportion and differences between employer
contributions and proportionate share of contributions 132,664 109,990 242,654
Contributions made subsequent to the measurement date 1,295,246 1,281,000 2,576,246
c
Total Deferred Outflows of Resources-pension amounts $3,725,037 $4,483,151 $8,208,188
Deferred Inflows of Resources:
Differences between expected and actual experience $ 615,836 $ 690,978 1,306,814
Changes in proportion and differences between the Town's
contributions and proporationate share of contributions 16,971 186,031 203,002
i
Total Deferred Inflows of Resources-pension amounts $ 632,807 $ -877,009 $1,509,816
-45-
TOWN OF SOUTHOLD
NOTES TO FINANCIAL STATEMENTS
December 31, 2017'
C. DETAILED NOTES ON ALL FUNDS(continued)
5. RETIREMENT SYSTEM (continued)
Pension Liabilities, Pension Expense, Deferred Outflows of Resources and Deferred Inflows of
Resources Related to Pension (continued)
Contributions subsequent to the measurement date will be recognized as a reduction of the net pension
liability in the year ended December 31, 2018. Other amounts reported as deferred outflows of resources
and deferred inflows of resources related to pensions will be recognized in pension expense as follows:
ERS PFRS
Years ended December 31,2018 $ 795,562 $ 767,766
2019 795,562 767,766
2020 728,593 723,187
2021 (522,733) (17,230)
2022 83,653
$ 1,796,984 $ 2,325,142
Actuarial Assumptions
The total pension liability as of the measurement date was determined by using an actuarial valuation
` as noted in the table below, with update procedures used to roll forward the total pension liability to the
measurement date.The actuarial valuations used the following actuarial assumptions:
ERS PFRS
Actuarial Valuation Date April 1,2016 April 1,2016
Investment rate of return
(net of investment expenses) 7.00% 7.00%
Inflation rate 2.50% 2.50%
Salary Increases 3.80% 4.50%
Cost of living adjustments 1.30% 1.30%
Annuitant mortality rates are based on the April 1, 2010 — March 31, 2015 System's experience with
adjustments for mortality improvements based on the Society of Actuaries' Scale MP-2014.
The actuarial assumptions used in the April 1, 2016 valuation are based on the results of an actuarial
experience study for the period April 1, 2010—March 31, 2015.
-46-
TOWN OF SOUTHOLD
NOTES TO FINANCIAL STATEMENTS
December 31, 2017
C. DETAILED NOTES ON ALL FUNDS (continued)
5. RETIREMENT SYSTEM (continued)
Actuarial Assumptions (continued)
The long-term rate of return on pension plan investments was determined using a building-block
method in which best-estimate ranges of expected future real rates of return (expected return, net of
c investment expenses and inflation) are developed for each major asset class. These ranges are
combined to produce the long-term expected rate of return by weighting the expected future real rates
of return by the target asset allocation percentage and by adding expected inflation.
Best estimates of the arithmetic real rates of return for each major asset class included in the target
asset allocation as of March 31, 2017 are summarized below:
Long-term
Target Expected Real
Asset Type: Allocation Rate of Return
Equity:
Domestic equity 36.00% 4.55%
International equity 14.00% 6.35%
Alternatives:
Private equity 10.00% 7.75%
Real estate 10.00% 5.80%
+^ Aboslute return strategies 2.00% 4.00%
Opportunistic portfolio 3.00% 5.89%
Real assets 3.00% 5.54%
Bonds and mortgages 17.00% 1.31%
Cash 1.00% -0.25%
Inflation indexed bonds 4.00% 1.50%
100.00%
The discount rate used to calculate the total pension liability was 7.0%for the System. The projection
't 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 Systems' 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.
-47-
TOWN OF SOUTHOLD
NOTES TO FINANCIAL STATEMENTS
December 31, 2017
C. DETAILED NOTES ON ALL FUNDS(continued)
5. RETIREMENT SYSTEM (continued)
Sensitivity of the Proportionate Share of the Net Pension Liability to the Discount Rate Assumption
The following presents the Town's proportionate share of the net pension liability calculated using the
discount rate of 7.0%, as well as what the Town'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:
1.00% Current 1.00%
Decrease Assumption Increase
6.00% 7.00% 8.00%
Town's proportionate share of the
collective net pension liability/(asset)
ERS $ 12,952,150 $ 4,073,415 $ (3,466,782)
PFRS 11,337,580 3,999,229 (2,155,852)
Pension Plan Fiduciary Net Position
The components of the current-year net employees' retirement system pension liability of the
employers as of the respective valuation date of April 1, 2016 were as follows:
r ERS PFRS
(Dollars in thousands) (Dollars in thousands)
Employers'total pension liability $ 177,400,586 $ 31,670,483
Plan net position (168,004,363) (29,597,830)
Employers'net pension liability $ 9,396,223 $ 2,072,653
Ratio of plan net position to the
Employers'total pension liability 94.70% 93.50%
Detailed information about the System pension plan's fiduciary net position is available in the System's
separately issued financial statements.
6. OTHER POSTEMPLOYMENT BENEFITS(OBLIGATIONS FOR HEALTH INSURANCE)
In the government-wide financial statements, the cost of postemployment healthcare benefits, like the
cost of pension benefits, generally should be associated with the period in which the cost occurs,
rather than in the future year when it will be paid. The Town recognizes the costs of postemployment
healthcare in the year when the employee benefits are received, reports the accumulated liability from
prior years, and provides information useful in assessing potential demands on the Town's future cash
flows. Recognition of the liability accumulated from prior years will be phased in over 30 years, which
commenced with the 2008 liability.
-48-
TOWN OF SOUTHOLD
NOTES TO FINANCIAL STATEMENTS
December 31, 2017
C. DETAILED NOTES ON ALL FUNDS(continued)
6. OTHER POSTEMPLOYMENT BENEFITS(OBLIGATIONS FOR HEALTH INSURANCE) (continued)
Plan Description
The Town, as a single-employer defined benefit OPEB plan, per its contracts with employees, will pay
full premium costs for medical insurance coverage (currently provided by the Empire Plan) at
retirement. Employees are eligible for retiree health insurance provided that the employee has been
eligible for coverage under the Town's health insurance plan for at least 10 consecutive years and is
employed by the Town on the last date immediately prior to retirement. The retiree and spouse are
eligible for full Medicare premium reimbursement. Healthcare benefits for non-union employees are
similar to those of union employees. Surviving spouses of deceased employees may continue
coverage by paying the premium equivalent for participants.
The number of participants as of January 1,2017,the effective date of the OPEB valuation is as follows.
Active employees 190
Retirees and dependents 118
Total 308
There have been no significant changes in the number or type of coverage since that date.
Funding Policy
The Town currently pays for postemployment health care benefits on a pay-as-you-go basis.
Annual Other Postemployment Benefits Cost and Net Obligation
i
For the year ended December 31, 2017, the Town's annual other postemployment benefits cost
(expenses) were $5,579,222. Considering the annual expense as well as the payment of current health
insurance premiums, which totaled $1,871,347 for retirees and their beneficiaries, the result was an
increase in the other postemployment benefits liability of $3,707,875 for the year ended December 31,
2017. The Town's component unit's annual other postemployment benefits cost (expenses) were
$33,557. Considering the annual expense as well as the payment of current health insurance premiums,
'J which totaled$39,661 for retirees,the result was a decrease in the other postemployment benefits liability
of$6,104 for the year ended December 31,2017.
Benefit Obligations and Normal Cost as of December 31,2017
Governmental
`i Activities
Retired employees $ 42,756,526
Active employees 32,865,299
Unfunded actuarial accrued liability(UAAL) $ 75,621,825
The Town's annual other postemployment benefit cost is calculated based on the annual required
contribution (ARC) of the employer, an amount actuarially determined. The ARC represents a level of
funding that, if paid on an ongoing basis, is projected to cover the normal cost each year and amortize any
unfunded actuarial liabilities (or funding excess) over a period not to exceed thirty years. The Town's
unfunded actuarial accrued liability for the year ended December 31,2017 amounted to$75,621,825.
r�
-49-
TOWN OF SOUTHOLD
NOTES TO FINANCIAL STATEMENTS
December 31, 2017
C. DETAILED NOTES ON ALL FUNDS (continued)
% 6. OTHER POSTEMPLOYMENT BENEFITS(OBLIGATIONS FOR HEALTH INSURANCE) (continued)
Annual Other Postemployment Benefits Cost and Net Obligation (continued)
The Town's annual other postemployment benefits cost, the amount actually paid and changes to the
Town's net other postemployment benefits obligation to the Plan for the year ended December 31, 2017
are as follows:
.Normal Cost $ 1,913,791
Amortization of unfunded actuarial
liability(UAAL) over 30 years& Interest 5,033,329
Annual required contribution (ARC) 6,947,120
Interest on net other
postemployment benefits obligation 1,557,675
Adjustment to ARC (2.925,573)
Annual OPEB cost(expense) 5,579,222
Less:contribution for year ended
December 31,2017 1.871,347
Increase in net OPEB obligation 3,707,875
Net OPEB obligation-beginning of year 44.505.008
Net OPEB obligation-end of year $ 48,212,883
Percent of annual OPEB cost contributed 33.54%
Funded Status and Funding Progress:
t The percentage contributed, as it relates to the Town of Southold,for the current year and preceding year
was:
Annual
Annual Contribution Percentage Net OPEB
OPEB Cost Made Contributed Obligation
2017 $ 5,579,222 $ 1,871,347 33.54% $ 48,212,883
2016 6,476,820 1,760,632 27.18% 44,505,008
2015 5,973,325 1,580,053 26.45% 39,788,820
The schedule of funding progress presents trend information about whether the actuarial value of plan
assets is increasing or decreasing overtime relative to the actuarial accrued liability for benefits.
r-
The funded status of the plan projected as of January 1,2017, is as follows:
Actuarial UAAL as a
Actuarial Accrued Unfunded UAAL as a Percentage
Value of Liability AAL Funded Covered of Covered
Assets (AAL) (UAAL) Ratio Payroll Payroll
Town $ -0- $ 75,621,825 $ 75,621,825 0% $ 18,131,185 417.08%
Component Units -0- 536,259 539,259 0% 1,259,800 42.57%
-50-
' TOWN OF SOUTHOLD
NOTES TO FINANCIAL STATEMENTS
December 31, 2017
C. DETAILED NOTES ON ALL FUNDS(continued)
C 6. OTHER POSTEMPLOYMENT BENEFITS(OBLIGATIONS FOR HEALTH INSURANCE) (continued)
Actuarial Methods and Assumptions:
The projection of future benefits for an ongoing plan involves estimates of the value of reported amounts
and assumptions about the probability of occurrence of future events far into the future. Amounts
determined regarding the funded status of a plan and the employer's annual required contributions are
subject to continual revision as actual results are compared with past expectations and new estimates are
made about the future.
Projections of benefits for financial reporting purposes are based on the substantive plan (the plan as
understood by the employer and the plan members) and include the types of benefits provided at the time
of each valuation and the historical pattern of sharing benefit costs between the employer and plan
members to that point. The actuarial methods and assumptions used include techniques that are
designed to reduce the effects of short-term liability in actuarial accrued liabilities, consistent with the long-
term perspective of the calculations.
In the January 1, 2017, actuarial valuation, the liabilities were computed using the entry age normal
actuarial cost method, level dollar amortization method, and an open year amortization period to
{� amortize the initial unfunded liability. The actuarial assumptions utilized a 3.50% discount rate. The
valuation assumes a 10% healthcare cost trend increase for the year, reduced by decrements down to
5.00% in fiscal year 2022.
7. COMPENSATED ABSENCES
Town employees are granted vacation and sick leave and earn compensatory absences in varying
amounts. In the event of termination or upon retirement, an employee is entitled to payment for
accumulated vacation and sick leave and unused compensatory absences at various rates subject to
certain maximum limitations. Estimated vacation, sick leave and compensatory absences accumulated
by governmental fund type employees have been recorded in the Statement of Net Position. Payment of
vacation time and sick leave is dependent upon many factors; therefore, timing of future payments is not
readily determinable. However, management believes that sufficient resources will be made available for
-, the payments of vacation, sick leave and compensatory absences when such payments become due. As
of December 31, 2017,the value of the accumulated vacation time and sick leave was $9,275,964 for the
primary government.
D. COMMITMENTS AND CONTINGENCIES
Risk Management
In common with other municipalities,the Town receives numerous notices of claims.The Town established a
self-insurance risk management program for general liability insurance which is accounted for in the general
fund. Although the eventual outcome of these claims cannot be presently determined, the Town has
estimated unsettled claims and litigation to be $543,145 which is included as claims and judgments payable
in the government-wide financial statements and $3,793 is included as judgments and claims payable as a
current liability in the fund financial statements. The Town is of the opinion that the ultimate settlement of the
outstanding claims will not result in a material adverse effect on the Town's financial position.
For the year ended December 31, 2017, the Town has a deductible liability exposure of $50,000 per claim
for general liability, $25,000 per claim for automobile liability, police liability and employee benefits, and
$10,000 per claim for public officials and employment practices. Any liability exposure above the
deductible amounts is covered by primary insurance policies up to $1,000,000 per claim for general
liability, public officials, police and employment practices, and employee benefits.
Aggregate exposures are $1,000,000 per claim for public officials, police and employment practices,
$3,000,000 for employee benefits and general liability. After primary policy limits are exhausted, the
excess exposure above the per claim or aggregate limits is covered by an umbrella liability policy of
$10,000,000 per claim and$10,000,000 in the aggregate.
-51-
r
TOWN OF SOUTHOLD
NOTES TO FINANCIAL STATEMENTS
December 31, 2017
D. COMMITMENTS AND CONTINGENCIES (continued)
Risk Management(continued)
There have been no significant reductions in insurance coverage as compared to the prior year and there
were no settlements in excess of insurance coverage over the last three years.
The Town liability for general liability claims is determined and reported by a third-party administrator and is
C) reported when it is probable that a loss has occurred, and the amount of that loss can be reasonably
estimated. Claims reserves for general liability claims are re-evaluated periodically to take into consideration
recently settled claims and any new developments and changes.
The Town's discretely presented component units are not included in the Town's self-insurance risk
management program for any claims.
Fund balance is assigned for future catastrophic losses. Changes in the long-term liability for claims and
judgments for the year ended December 31, 2017 and 2016 are as follows:
General
Liability
2017 2016
(`, Unpaid Claims as of December 31,
prior year $ 405,105 $ 432,226
Incurred Claims:
Provision for insured events
of the current fiscal year 183,145 126,500
Increase(decrease) in net provision for
insured events of prior fiscal years (3,119) (81,63
Total incurred claims and
claim adjustments 585.131 477.093
Payments of:
Claims during the year 41.986 71.988
Unpaid Claims as of December 31, $ 543,145 $ 405,105
Contingent Liabilities
Amounts received or receivable from grant agencies are subject to audit and adjustment by grantor
^j agencies, principally the federal and state government. Any disallowed claims, including amounts already
collected, may constitute a liability of the applicable funds. The amount, if any, of expenditures that may be
disallowed by the grantor cannot be determined at this time, although the Town expects such amounts, if
any,to be immaterial.
Landfill Closure and Post-Closure Care Costs
�J State and federal laws and regulations required the Town to place a final cover on its landfill sites and to
perform certain maintenance and monitoring functions at the sites for thirty years after closure. The Town
ceased accepting waste at its Cutchogue landfill as of October 8, 1993. Accordingly, as of December 31,
2017 the Town has recorded a liability of $409,660, in the government-wide financial statements which
represents the provision to be made in future budgets for unfunded closure and postclosure landfill costs. As
the liability is based on 100%of capacity there are no estimated costs of closure or postclosure remaining to
be recognized. Actual costs may vary due to inflation or deflation, changes in technology, or changes in
regulations or applicable laws
-52-
i
TOWN OF SOUTHOLD
NOTES TO FINANCIAL STATEMENTS
December 31,2017
D. COMMITMENTS AND CONTINGENCIES(continued)
Construction and Other Capital Acquisition Commitments
The Town is committed to capital improvements to its various facilities and infrastructure. At December 31,
2017,these commitments amounted to$70,716 in the capital projects fund.
Animal Shelter Agreement
In May 2011, the Town entered into an agreement with the North Fork Animal Welfare League to operate
and manage the Town of Southold Animal Shelter. The agreement is for a term of four years commencing
on June 1, 2011. The agreement was renewed in March 2015 with the lease to begin March 2016 expiring
in February 2026.The future payments associated with this agreement are as follows:
For years ending December 31,2018 $ 232,484
2019 232,484
2020 232,484
2021 232,484
2022 232,484
2023-2026 736.199
Total $ 1,898,619
Lease Commitments and Leased Assets
The Town leases property and equipment under operating leases. Total rental expenditures on such
leases for the year ended December 31, 2017 were$237,224. Future obligations over the primary terms of
the Town's leases as of December 31, 2017 are as follows:
For years ending December 31,2018 $ 195,726
2019 86,238
2020 48,450
2021 43,034
2022 24,431
2023-2024 28.499
Total $ 426,378
-53-
TOWN OF SOUTHOLD
NOTES TO FINANCIAL STATEMENTS
December 31, 2017
E. CONDENSED FINANCIAL STATEMENTS FOR THE DISCRETELY PRESENTED COMPONENT UNITS
The following represents condensed financial statements for the discretely presented component units as of
and for the year ended December 31,2017:
Condensed Statement of Net Position:
Due from Capital Assets Deferred Other Deferred
Current Primary Net of Outflows Current Long-Term Inflows Net
Assets Government Depreciation of Resources Liabilities Liabilities of Resources Position
Fishers Island
Ferry District $ 1,440,732 $ 226,909 $ 8,970,982 $ 411,169 $ 1,900,959 $ 1,753,752 $ 295,146 $ 7,099,935
Fishers Island Waste
Management District 328,721 234,994 2,493,179 20,995 234,994 2,800,905
Cutchogue-New Suffolk
Park District* 167,596 35,706 113,253 35,706 280,849
Southold Park District* 235,051 90,014 788,673 90,014 1,023,724
Onent-East Marion
Park District* 32,817 11,261 457,329 11,261 490,146
Mattituck Park District* 1,131,082 77,729 1,665,671 77,729 2,796,753
Orient Mosquito District* 61,533 25,544 843 25,544 60,690
$3,397,532 $ 702,157 $14,489,087 $ 411,169 $ 1,922,797 $ 1,753,752 $ 770,394 $14,553,002
*unaudited component units
( Condensed Statement of Activities-
Program General Revenue Net Position
Property
Expenses Revenue Net Expense Tax Other Change 1/1/2017 12/31/2017
Fishers Island
Ferry District $4,107,620 $3,056,481 $ 1,051,139 $ 804,146 $ 57,968 $ (189,025) $ 7,288,960 $ 7,099,935
Fishers Island Waste
Management District 936,193 64,914 871,279 566,554 23,057 (281,668) 3,082,573 2,800,905
Cutchogue-New Suffolk
Park District* 127,499 127,499 133,130 109 5,740 275,109 280,849
Southold Park District* 346,772 346,772 327,726 50,348 31,302 992,422 1,023,724
Orient-East Marion
Park District* 35,975 35,975 44,000 8,025 482,121 490,146
Mattituck Park District* 612,614 48,370 564,244 420,391 757 (143,096) 2,939,849 2,796,753
Orient Mosquito District* 69,904 69,904 93,000 24 23,120 37,570 60,690
_ $6,236,577 $3,169,765 $3,066,812 $2,388,947 $ 132,263 $ (545,602) $15,098,604 $14,553,002
*unaudited component units
-54-
TOWN OF SOUTHOLD
NOTES TO FINANCIAL STATEMENTS
December 31, 2017
E. CONDENSED FINANCIAL STATEMENTS FOR THE DISCRETELY PRESENTED COMPONENT UNITS
(continued)
Complete financial statements and financial records of these component units can be obtained from their
respective administrative offices:
Orient Mosquito District Fishers Island Waste
145 Platt Road Management District
Orient, NY Fishers Island, NY 06390
Cutchogue-New Suffolk Orient-East Marion
Park District Park District
P.O. Box 311 P.O. Box 12
Cutchogue, NY 11935 Orient, NY 11957
j Southold Park District Mattituck Park District
P.O. Box 959 P.O. Box 1413
Southold, NY 11971 Mattituck, NY 11952
Fishers Island Ferry District
P.O. Box H
Fishers Island, NY 06390
r�
F. 2%TRANSFER TAX
Transfer tax receipts are recorded in the Community Preservation Fund and are used for the purchase and/or
preservation of agricultural land, open space, parks, or historic preservation sites. The tax applies to sales of
vacant land amounts in excess of$100,000 or sales of improved land in excess of$250,000. Conveyance of
real property for open space, parks or historic preservation purposes are exempt from this tax.
G. SUBSEQUENT EVENTS
In August 2018, the Town purchased a building for $3,100,000 from its landlord which is referred to as the
Town Hall Annex. The building holds the offices of the Comptroller, Town Attorney, Land Preservation,
Historian, Code Enforcement, Planning, Trustees and Building Department. The building was paid with
available General Fund cash and will be financed through general obligation bonds expected to be authorized
in March 2018 and issued in November 2018.
The Town settled the employment contact with the Police Benevolent Association Union which expired on
December 31, 2017.All retroactive payments made to employees in 2018 relate to the year ended December
31,2018.
r-`
H. NEW PRONOUNCEMENTS
Statement No. 75, "Accounting and Financial Reporting for Postemployment Benefits Other Than
Pensions,,, which outlines reporting by governments that provide OPEB to their employees and for
governments that finance OPEB for employees of other governments. The requirements of this
Statement are effective for financial statements for periods beginning after June 15, 2017.
Statement No. 82, "Pension Issues — an Amendment of Statements No. 67, 68, and 73," the objective of
which is to address issues regarding (a) the presentation of payroll-related measures in required
supplementary information, (b) the selection of assumptions and the treatment of deviations from the
guidance in an Actuarial Standard of Practice for financial reporting purposes, and (c) the classification of
payments made by employers to satisfy employee (plan member) contribution requirements. The
requirements of the Statement were effective for reporting beginning after June 15, 2016, except for the
requirements for selection of assumptions in a certain circumstance in which an employer's pension liability is
measured as of a date other than the employer's most recent fiscal year end. In that circumstance, the
requirements for the selection of assumptions are effective for that employer in the first reporting period in
which the measurement date of the pension liability is on or after June 15,2017.
-55-
C) TOWN OF SOUTHOLD
NOTES TO FINANCIAL STATEMENTS
December 31, 2017
_ H. NEW PRONOUNCEMENTS (continued)
�J
Statement No. 83, "Certain Assets Retirement Obligations,"establishes criteria for determining the timing and
pattern of recognizing a liability and corresponding deferred outflow of resources for asset retirement
obligations. It also addresses that the measurement of both the asset retirement obligation and deferred
outflows of resources should be based on the estimate of the current value of expected outlays. The
requirements of this Statement are effective for financial statements for periods beginning after June 15,
y� 2018.
Statement No. 84, "Fiduciary Activities,"establishes criteria for identifying fiduciary activities for accounting
and financial reporting purposes and how those activities should be reported. The focus of the criteria
generally is on (1) whether a government is controlling the assets of the fiduciary activity and (2) the
beneficiaries with whom a fiduciary relationship exists. Separate criteria are included to identify fiduciary
component units and postemployment benefit arrangements that are fiduciary activities. This Statement
describes four fiduciary funds that should be reported, if applicable: (1) pension (and other employee benefit)
trust funds, (2) investment trust funds, (3) private-purpose trust funds, and (4) custodial funds. Custodial
funds generally should report fiduciary activities that are not held in a trust or equivalent arrangement that
meets specific criteria. The requirements of this Statement are effective for financial statements for periods
beginning after December 15,2018.
Statement No. 85, "Omnibus 2017,"the objective of which is to address practice issues that have been
identified during implementation and application of certain GASB Statements. This Statement specifically
addresses issues related to blending component units, goodwill, fair value measurement and application and
postemployment benefits (pensions and OPEB). The requirements of this Statement are effective for
financial statements for periods beginning after June 15,2017.
Statement No. 86, "Certain Debt Extinguishment Issues," the objective of which is to is to improve
consistency in accounting and financial reporting for in-substance defeasance of debt by providing guidance
for transactions in which cash and other monetary assets acquired with only existing resources (resources
other than the proceeds of refunding debt) are placed in an irrevocable trust for the sole purpose of
extinguishing debt.This Statement also improves accounting and financial reporting for prepaid insurance on
debt that is extinguished and notes to financial statements for debt that is defeased in substance. The
requirements of this Statement are effective for financial statements for periods beginning after June 15,
2017.
Statement No. 87, "Leases,"requires the recognition of certain lease assets and liabilities for leases that
previously were classified as operating leases and the recognition of inflows of resources or outflows of
resources based on the payment provisions of the contract. It establishes a single model for lease accounting
based on the principle that leases are financings of the right to use an underlying asset. Under this
Statement, a lessee is required to recognize a lease liability and an intangible right-to-use lease asset, and a
lessor is required to recognize a lease receivable and a deferred inflow of resources, thereby enhancing the
relevance and consistency of information about governments' leasing activities. The requirements of this
Statement are effective for financial statements for periods beginning after December 15,2019.
Statement No. 88,"Certain Disclosures Related to Debt, Including Direct Borrowings and Direct Placements,"
the objective of which is to improve the information that is disclosed in notes to government financial
statements related to debt, including direct borrowings and direct placements.This Statement 1) defines debt
for purposes of disclosure in notes to financial statements as a liability that arises from a contractual
obligation to pay cash (or other assets that may be used in lieu of cash) in one or more payments to settle an
amount that is fixed at the date the contractual obligation is established, 2) requires that additional
information related to debt be disclosed, including unused lines of credit; assets pledged as collateral for the
debt; and terms specified in debt agreements related to significant events of default with finance-related
consequences, significant termination events with finance-related consequences, and significant subjective
acceleration clauses, and 3) requires that existing and additional information be provided for direct
borrowings and direct placements of debt separately from other debt.The requirements of this Statement are
effective for financial statements for periods beginning after June 15,2018.
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TOWN OF SOUTHOLD
NOTES TO FINANCIAL STATEMENTS
December 31, 2017
l
H. NEW PRONOUNCEMENTS (continued)
Statement No. 89, "Accounting for Interest Cost Incurred Before the End of a Construction Period,"the
objectives of which are to enhance the relevance and comparability of information about capital assets and
the cost of borrowing for a reporting period and to simplify accounting for interest cost incurred before the
end of a construction period. This Statement requires that interest cost incurred before the end of a
construction period be recognized as an expense in the period in which the cost is incurred for financial
statements prepared using the economic resources measurement focus. The requirements of this Statement
are effective for financial statements for periods beginning after December 15,2019.
The Town is currently evaluating the impact of the above pronouncements.
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t ;
REQUIRED SUPPLEMENTARY
INFORMATION OTHER THAN
MANAGEMENT DISCUSSION AND
ANALYSIS
Schedules of Revenues, Expenditures and
Changes in Fund Balance — Budget and
Actual Major Governmental Funds and
Schedule
NOTES TO REQUIRED SUPPLEMENTARY INFORMATION
The budgets are adopted on a basis of accounting consistent with
GAAP. In the event that actual revenues received exceed
budgeted amounts, additional budgetary appropriations are made.
The Capital Projects and Special Grant Funds are budgeted on a
project or grant basis.
TOWN OF SOUTHOLD
GENERALFUND
SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES
IN FUND BALANCE- BUDGET AND ACTUAL
Year Ended December 31, 2017
Variance
Original Final Positive
Budget Budget Actual Encumbrances (Negative)
REVENUES
Real property taxes $ 25,530,030 $ 25,530,030 $ 25,530,030 $ -0-
Other real property tax items 72,500 72,500 84,708 12,208
Non-property tax items 1,154,273 1,154,273 1,288,673 134,400
Departmental income 427,362 487,362 590,253 102,891
Intergovernmental charges 262,843 272,843 92,746 (180,097)
Use of money and property 215,000 215,000 220,211 5,211
Licenses and permits 354,885 354,885 369,046 14,161
Fines and forfeitures 218,500 218,500 342,835 124,335
Sale of property and compensation for loss 127,500 169,508 262,027 92,519
Miscellaneous local sources 313,996 330,901 82,905 (247,996)
Interfund revenues 30,000 30,000 32,450 2,450
State aid 1,397,850 1,395,799 1,727,626 331,827
Federal aid 57,400 58,700 113,165 54,465
r-' Total Revenues 30,162,139 30,290,301 30,736,675 -0- 446,374
EXPENDITURES
Current:
General government support 7,177,353 7,072,392 6,330,908 $ 14,961 726,523
Public safety 11,025,369 11,105,434 10,055,810 250,170 799,454
Public health 33,300 33,300 33,300 -0-
Transportation 522,200 521,257 501,639 19,618
Economic assistance and opportunity 1,485,582 1,472,098 1,310,983 795 160,320
Culture and recreation 364,075 359,075 314,957 44,118
Home and community services 403,860 406,640 358,957 6,120 41,563
Employee benefits 9,755,000 9,823,540 9,024,282 799,258
Debt service:
Principal 611,000 611,000 610,932 68
Interest 141,000 141,000 140,115 885
Total Expenditures 31,518,739 31,545,736 28,681,883 272,046 2,591,807
Excess(Deficiency)of Revenues
Over Expenditures (1,356,600) (1,255,435) 2,054,792 (272,046) 3,038,181
OTHER FINANCING USES
Transfers out (238,262) (331,781) (146,431) 185,350
Total Other Financing Uses (238,262) (331,781) (146,431) -0- 185,350
Net Change in Fund Balance $ (1,594,862) $ (1,587,216) 1,908,361 $ (272,046) $ 3,223,531
Fund Balance at Beginning of Year 8,810,448
Fund Balance at End of Year $ 10,718,809
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TOWN OF SOUTHOLD
HIGHWAY FUND
SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES
IN FUND BALANCE- BUDGET AND ACTUAL
Year Ended December 31, 2017
Variance
Original Final Positive
Budget Budget Actual Encumbrances (Negative)
REVENUES
Real property taxes $ 6,082,537 $ 6,082,537 $ 6,082,537 $ -0-
Other real property tax items 2,275 2,275 2,728 453
Intergovernmental charges 9,000 9,000 (9,000)
Use of money and property 5,500 5,500 8,267 2,767
Licenses and permits 12,000 12,000 20,550 8,550
Sale of property and compensation for loss 500 500 20,354 19,854
Miscellaneous local sources 256 256
State aid 596,740 846,740 250,000
Federal aid 703 703
Total Revenues 6,111,812 6,708,552 6,982,135 -0- 273,583
EXPENDITURES
Current:
Transportation 3,123,516 3,712,045 3,474,003 $ 1,627 236,415
Employee benefits 1,891,000 1,891,000 1,819,880 71,120
Debt Service:
Principal 121,300 121,300 121,281 19
Interest 29,542 29,542 29,372 170
' Total Expenditures 5,165,358 55753,887 5,444,536 1,627 307,724
Excess(Deficiency)of Revenues
Over Expenditures 946,454 954,665 1,537,599 (1,627) 5815307
OTHER FINANCING USES
Transfers out (1,027,000) (1,035,211) (1,035,205) 6
Total Other Financing Uses (1,027,000) (1,035,211) (1,035,205) -0- 6
Net Change in Fund Balance $ (80,546) $ (80,546) 502,394 $ (1,627) $ 581,313
Fund Balance at Beginning of Year 659,616
Fund Balance at End of Year $ 1,162,010
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TOWN OF SOUTHOLD
COMMUNITY PRESERVATION FUND
SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES
IN FUND BALANCE- BUDGET AND ACTUAL
Year Ended December 31, 2017
Variance
Original Final Positive
Budget Budget Actual (Negative)
REVENUES
Non-property tax items $ 6,300,000 $ 6,300,000 $ 7,732,204 $ 1,432,204
Use of money and property 25,000 25,000 46,895 21,895
Miscellaneous local sources 4,032 4,032
Total Revenues 6,325,000 6,325,000 7,783,131 1,458,131
EXPENDITURES
' Current:
Home and community services 11,946,700 11,925,966 3,911,155 8,014,811
Employee benefits 20,734 20,734
Debt service:
Principal 1,513,200 1,513,200 1,513,150 50
Interest 683,000 683,000 682,644 356
Total Expenditures 14,142,900 14,142,900 6,127,683 8,015,217
Excess(Deficiency)of Revenues
Over Expenditures (7,817,900) (7,817,900) 1,655,448 9,473,348
Net Change in Fund Balance $ (7,817,900) $ (7,817,900) 1,655,448 $ 9,473,348
Fund Balance at Beginning of Year 15,771,985
Fund Balance at End of Year $ 17,427,433
r
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TOWN OF SOUTHOLD
POSTEMPLOYMENT BENEFITS HEALTHCARE COSTS - SCHEDULE OF FUNDING PROGRESS
Year Ended December 31, 2017
UAAL
Actuarial Valuation Actuarial Value Actuarial Accrued Unfunded AAL Funded Covered as a Percentage
Date January 1, of Assets Liability(AAL) (UAAL) Ratio Payroll of Covered Payroll
2017 $ -0- $ 75,621,825 $ 75,621,825 0.00% $ 18,131,185 417.08%
2016 * $ -0- $ 76,163,461 $ 76,163,461 0.00% $ 15,859,856 480.23%
2015 $ -0- $ 68,923,944 $ 68,923,944 0.00% $ 15,249,862 451.96%
2014 * $ -0- $ 68,001,588 * $ 68,001,588 000% $ 14,982,384 453.88%
2013 $ -0- $ 65,881,679 $ 65,881,679 0.00% $ 14,268,937 461.71%
2012 * $ -0- $ 82,121,236 * $ 82,121,236 0.00% $ 14,316,488 573.61%
2011 $ -0- $ 74,366,808 $ 74,366,808 0.00% $ 13,634,750 545.42%
2010 $ -0- $ 66,597,849 * $ 66,597,849 0.00% $ 15,492,700 429.87%
2009 * $ -0- $ 62,493,280 * $ 62,493,280 0.00% $ 14,754,952 423.54%
2008 $ -0- $ 45,806,258 $ 45,806,258 0.00% $ 13,830,871 331.19%
*These amounts are projected based on the rollforward calculation by the actuary.
Chanoes in assumptions:
In the January 1,2016 actuarial valuation,the discount rate used was 3.75%per annum.
In the January 1,2017 actuarial valuation,there was a change in acturarial cost method from projected unit credit cost method
to entry age normal actuarial cost method.
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TOWN OF SOUTHOLD
REQUIRED SUPPLEMENTARY INFORMATION
SCHEDULE OF PENSION CONTRIBUTIONS
For the Year Ended December 31, 2017
Contributions
Recognized by the Plan Contribution
Contractually in Relation to the Contribution as a Percentage
Years Ended Required Contractually Required Deficiency Covered of Covered
December 31, Contributions Contributions (excess) Payroll Payroll
ERS
2017 $ 1,740,156 $ 1,740,156 $ -0- $ 11,706,859 14.86%
2016 1,783,174 1,783,174 -0- 11,594,297 15.38%
2015 1,981,226 1,981,226 -0- 11,429,154 17.33%
2014 2,053,052 2,053,052 -0- 11,076,674 18.53%
2013 2,362,280 2,362,280 -0- 10,713,710 22.05%
2012 1,915,070 1,915,070 -0- 10,813,507 17.71%
2011 1,649,526 1,649,526 -0- 10,343,478 15.95%
2010 1,145,410 1,145,410 -0- 10,193,620 11.24%
2009 718,918 718,918 -0- 10,502,285 6.85%
2008 842,976 842,976 -0- 10,277,355 8.20%
PFRS
2017 $ 1,677,894 $ 1,677,894 $ -0- $ 6,971,643 24.07%
2016 1,587,581 1,587,581 -0- 7,139,568 22.24%
2015 1,762,500 1,762,500 -0- 6,769,147 26.04%
2014 1,455,243 1,455,243 -0- 6,737,987 21.60%
2013 2,073,878 2,073,878 -0- 6,127,253 33.85%
2012 1,209,715 1,209,715 -0- 6,410,344 18.87%
2011 1,308,331 1,308,331 -0- 6,057,237 21.60%
2010 957,407 957,407 -0- 5,999,280 15.96%
2009 861,865 861,865 -0- 6,222,524 13.85%
2008 905,458 905,458 -0- 5,997,070 15.10%
Note -Amounts presented for each year were determined as of December 31 st and
the contractually required contributions are based on the amounts invoiced by
the New York State Local Retirement System.
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TOWN OF SOUTHOLD
REQUIRED SUPPLEMENTARY INFORMATION
SCHEDULE OF PROPORTIONATE SHARE OF THE NET PENSION LIABILITY
For the Year Ended December 31, 2017
2017 2016 2015 2014
ERS
Town's proportion of the net pension liability 0.4316% 0.4164% 0.4180% 0.4180%
Town's proportionate share of the net collective
pension liability $ 4,073,415 $ 6,686,629 $ 1,412,260 $ 1,889,088
Town's covered-employee payroll $ 11,677,075 $ 11,791,354 $ 11,043,895 $ 10,637,657
Town's proportionate share of the net pension
liability as a percentage of its covered-employee
payroll 34.88% 56.71% 12.79% 17.76%
Plan net position as a percentage of the total
pension liability coming from plan 94.70% 90.70% 97.90% 97.20%
PFRS
Town's proportion of the net pension liability 0.19295% 0.24967% 0.18691% 0.18691%
Town's proportionate share of the net collective
pension liability $ 3,999,229 $ 6,068,632 $ 514,888 $ 778,124
Town's covered-employee payroll $ 6,887,011 $ 6,750,958 $ 6,168,230 $ 6,519,957
Town's proportionate share of the net pension
liability as a percentage of its covered-employee
payroll 58.07% 89.89% 8.35% 11.93%
Plan net position as a percentage of the total
pension liability coming from plan 93.50% 90.20% 99.90% 98.50%
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OTHER SUPPLEMENTARY
INFORMATION
TOWN OF SOUTHOLD
COMBINING BALANCE SHEET
NON-MAJOR GOVERNMENTAL FUNDS
December 31, 2017
Special Revenue Funds
East-West Fire Southold Fishers Solid Waste Total
General Fund Special Protection Wastewater Island Sewer Management Non-Mayor
Part Town Grant District District District District Funds
ASSETS
Cash and investments $1,667,822 $ 69,772 $ 19,489 $ 1,480 $ 64,728 $ 827,892 $2,651,183
Accounts receivable 178,064 5 66,721 244,790
Due from other funds 260,129 215,683 80 17,100 578,014 1,071,006
State and federal aid receivables 18,897 18,897
Inventory of materials and supplies 9,227 9,227
Prepaids 39,149 38,924 78,073
Total Assets $2,145,164 $ 69,772 $ 235,172 $ 1,560 $ 81,833 $1,539,675 $4,073,176
LIABILITIES
Accounts payable and accrued liab $ 22,808 $ 12,575 $ 13,138 $ 4,527 $ 233,438 $ 286,486
Due to other funds 100,000 106 205 100,311
Unearned revenue 77,848 57,091 17,100 28,290 180,329
Total Liabilities 200,656 69,772 13,138 $ -0- 21,627 261,933 567,126
DEFERRED INFLOWS OF RESOURCES
Unearned revenue from real proper 196,654 215,683 548,953 961,290
FUND BALANCES
Nonspendable 39,149 48,151 87,300
Committed 424,750 424,750
Assigned 1,283,955 6,351 1,560 60,206 680,638 2,032,710
Total Fund Balances 1,747,854 -0- 6,351 1,560 60,206 728,789 2,544,760
Total Liabilities,Deferred Inflows
of Resources and Fund Balances $2,145,164 $ 69,772 $ 235,172 $ 1,560 $ 81,833 $1,539,675 $4,073,176
' -64-
TOWN OF SOUTHOLD
COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES
IN FUND BALANCES - NON-MAJOR GOVERNMENTAL FUNDS
For the Year Ended December 31, 2017
Special Revenue Funds
East-West Fire Southold Fishers Solid Waste Total
General Fund Special Protection Wastewater Island Sewer Management Non-Major
Part Town Grant District District District District Funds
REVENUES
Real property taxes $ 775,754 $ 759,329 $ (18,168) $1,813,927 $3,330,842
Other real property tax items 348 8 20 376
Non-property tax items 744,285 744,285
Departmental income 1,219,320 1,165 $ 32,364 1,536,162 2,789,011
Use of money and property 3,946 334 47 4,462 8,789
Licenses and permits 16,730 173,678 190,408
Sales of property and compensation
for loss 268,900 268,900
Miscellaneous local sources $ 66,001 1,423 67,424
State aid 88,328 24,947 113,275
Federal aid 56,200 56,200
Total Revenues 2,848,711 122,201 759,671 (17,003) 32,411 3,823,519 7,569,510
EXPENDITURES
Current:
General government support 241,797 218,220 460,017
Public safety 513,615 765,752 1,279,367
Home and community services 653,165 122,201 17,990 2,401,517 3,194,873
Employee benefits 680,983 292 682,979 1,364,254
Debt service:
Principal 6,698 561,939 568,637
Interest 2,195 91,109 93,304
Total Expenditures 2,089,560 122,201 765,752 -0- 27,175 3,955,764 6,960,452
Net Change in Fund Balance 759,151 -0- (6,081) (17,003) 5,236 (132,245) 609,058
Fund Balances at Beginning of YeE 988,703 -0- 12,432 18,563 54,970 861,034 1,935,702
Fund Balances at End of Year $1,747,854 $ -0- $ 6,351 $ 1,560 $ 60,206 $ 728,789 $2,544,760
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OTHER REPORTS
Rawil
CERTIFIED PUBLIC ACCOUNTANTS
INDEPENDENT AUDITORS' REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON
COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS
PERFORMED IN ACCORDANCE WITH GOVERNMENTAUDITING STANDARDS
Honorable Supervisor and Town Board
Town of Southold
Southold, New York
We have audited, in accordance with the auditing standards generally accepted In the United States of
America and the standards applicable to the financial audits contained in Government Auditing Standards
issued by the Comptroller General of the United States, the financial statements of the governmental activities,
the aggregate discretely presented component units, each major fund and the aggregate remaining fund
information of the Town of Southold, New York as of and for the year ended December 31, 2017, and the
related notes to the financial statements, which collectively comprise the Town of Southold, New York's basic
financial statements and have issued our report thereon dated September 28, 2018. Our report includes a
reference to other auditors who audited the financial statements of Fishers Island Ferry District and the Fishers
Island Waste Management District, as described in our report on the Town of Southold, New York's financial
statements. This report does not include the results of the other auditors' testing of internal control over
financial reporting or compliance and other matters that are reported on separately by those auditors. The
financial statements of the Fishers Island Waste Management were not audited in accordance with
Governmental Auditing Standards.
The financial statements of the Town of Southold's discretely presented component units with the exception of
the two referenced above were not audited as of the report date, nor were we able to satisfy ourselves as to
those financial activities by other auditing procedures. The unaudited discretely presented component units
represent 26.4%, 32.0%, and 19.6%, respectively, of the assets, net position, and revenues of the aggregate
discretely presented component units.
Internal Control Over Financial Reporting
In planning and performing our audit of the financial statements, we considered the Town of Southold, New York'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 opinions on the financial statements, but not for the purpose
of expressing an opinion on the effectiveness of the Town of Southold, New York's internal control. Accordingly,
we do not express an opinion on the effectiveness of the Town of Southold, New York'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 Town of
Southold, New York's financial statements will not be prevented, or detected and corrected on a timely basis.
A significant deficiency is a deficiency, or 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.
BEYOND THE NUMBERS...
ALBRECHT,VIGGIANO,ZURECK&COMPANY, RC
245 PARK AVENUE,39TH FLOOR 25 SUFFOLK COURT
NEW YORK, NY 10167 HAUPPAUGE, NY 11788-3715
i
T:212.792.4075 T.631 434.9500 F•631.434.9518
-66- www.avz.com
INDEPENDENT MEMBER OF BKR INTERNATIONAL
Internal Control Over Financial Reporting (continued)
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.
Compliance and Other Matters
As part of obtaining reasonable assurance about whether the Town of Southold, New York's financial
statements are free from material misstatement, we performed tests of its compliance with certain provisions
of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and
material effect on the determination of financial statement 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 results of our tests disclosed no instances of noncompliance or other matters that are.
required to be reported under Government Auditing Standards.
Purpose of 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 Town of Southold, New
York'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 Town of Southold, New York's internal control and
compliance. Accordingly, this communication is not suitable for any other purpose.
n
Hauppauge, New York
September 28, 2018
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