HomeMy WebLinkAboutFinancial Reports - 198841.j'89
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TOWN OF MAVSFIELD, MASSACHUSETTS
General Purpose Financial Statements
and Supplementary Schedule
Year Ended June 30, 1988
(With Independent Auditors' Report Thereon)
u
TO'`.: OF :SF'.E%D, 21 SSACHTUSETTS
General Purpose =inancial Statements
and Supp e :entary Schedule
Year --ded ITune 30, 1988
':'able of Contents
Paz-
=ndependenc Auditors' Report on General Purpose Financial Statements
Cereral Purpose Financial Statements:
Combined Balance Sheet - All Fund Types and Account Group 3
-ombined Statement of Revenues, Expenditures and Changes `n
Find Equity - All Governmental Find Types and Expendable
'rust Funds
Statement of Revenues and Expenditures - Budgetary Bass 8
Combined Statement of Revenues, -Expenses and Changes in
?and Equity - Mansfield Electr'.- Department, Pension
Trust Find and Nonexpendabie Tr_,st Funds 6
Statement of Changes in Financial Position- Mansfield
-_ectric Department 7
Combined Statement of Charges in Financial Position -
Pension Trust Fund and None:c�endable Trust Funds 3
Votes to General Purpose Financial Statements 9-26
Supplementary Schedule:
Schedule of Cash Balances 27
KPMG Peat Marwick
Certified Public Accountants
Peat Marwick Main & Co.
One Boston Place Telephone 617 723 7700 Telecopier 617 723 6864
Boston, MA 02108 Telex 617 443 0082 PMMBOST
INDEPENDENT AUDITORS' REPORT
To the Board of Selectmen
Town of Mansfield, Massachusetts:
We have audited the general purpose financial statements of the Town of
Mansfield, Massachusetts, as of and for the year ended June 30, 1988, as
listed in the accompanying table of contents. These general purpose financial
statements are the responsibility of the Town's management. Our
responsibility is to express an opinion on these general purpose financial
statements based on our audit. We did not audit the financial statements of
Mansfield Electric Department, which are as of and for the year ended December
31, 1987. Those financial statements were audited by other auditors whose
report thereon has been furnished to us and our opinion expressed herein,
insofar as it relates to the amounts included for Mansfield Electric
Department, is based solely upon the report of the other auditors.
The other auditors were not able to perform auditing procedures to determine
the propriety of the original cost of utility plant in service, since the
accounting records supporting the original cost of utility plant in service
were destroyed in a fire, and they were unable to satisfy themselves regarding
the original cost of utility plant in service by means of other auditing
procedures.
We conducted our audit in accordance with generally accepted auditing
standards and the standards for financial audits contained in the Standards
for Audit of Governmental Organizations, Programs, Activities and Functions,
issued by the U.S. General Accounting Office. Those standards require that we
plan and perform the audit to obtain reasonable assurance about whether the
general purpose financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the general purpose financial statements. An audit also
includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our
opinion.
The Town has not maintained records of the cost of its general fixed assets
and, therefore, a general fixed assets account group is not presented in the
accompanying general purpose financial statements as required by generally
accepted accounting principles.
As more fully described in note 6 to the general purpose financial statements,
the Town does not provide for pension costs in accordance with generally
accepted accounting principles.
Member Firm of
1
' -- Klynveltl Peal Marwick Goertleler
r'-7':'1 rIrt.
KPMG peat Marwick
To the Board of Selectmen
Town of Mansfield, Massachusetts
Page Two
In our opinion, based upon our audit and the report of the other auditors,
except that the omission of a general fixed asset group of accounts results in
an incomplete presentation and, except for the effects of such adjustments, if
any, that would have been recorded had the Town provided for pension costs in
accordance with generally accepted accounting principles, as discussed in the
preceding paragraphs, and had the scope of work performed by the other
auditors regarding the original cost of utility plant in service been
sufficient to enable them to express an opinion on the financial statements of
the Mansfield Electric Department which are as of December 31, 1987, the
general purpose financial statements referred to above present fairly, in all
material respects, the financial position of the Town of Mansfield,
Massachusetts, at June 30, 1988, and the results of its operations and the
changes in financial position of its proprietary and similar trust fund types
for the applicable years then ended, in conformity with generally accepted
accounting principles.
Our audit was made for the purpose of forming an opinion on the general
purpose financial statements taken as a whole. The schedule of cash balances
on page 27 is presented for purposes of additional analysis and is not a
required part of the general purpose financial statements of the Town of
Mansfield, Massachusetts. Such information has been subjected to the auditing
procedures applied in the audit of the general purpose financial statements
and, in our opinion, is fairly presented in all material respects in relation
to the general purpose financial statement's taken as a whole.
vpej� Ao�.� *MAO. � te- 0
June 30, 1989
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W
TOWN OF MANSFIELD, MASSACHUSETTS
Statement of
Revenues and Expenditures - Budgetary
Basis
Tune 30,
1988
Variance
Original
Final
Favorable
Budget
Budget
Actual
(Unfavorable)
Revenues:
Real and personal property taxes, net
$ 10,807.224
$ 10,807,224
$ 10,807,224
$ -
Motor vehicle excise taxes
891,999
891,999
774,501
(117,498)
Licenses and permits
91,208
91,208
130,360
39,152
Investment income
236,753
236,753
252.710
15,957
Intergovernmental
4,165,908
4,165,908
4,164,451
(1,457)
Payments in lieu of taxes
2,110
2,110
5,610
3,500
Water and sewer revenue
1,976,324
1,976,324
1,868,462
(107,862)
Departmental
410,327
410,327
338,604
(71,723)
Fines and forfeits
128,236
128,236
134,146
5,910
Penalties and interest
159,486
159,486
145,891
(13,595)
Electric Department in lieu of taxes
150,000
150,000
150,000
-
Hotel -motel tax
184,368
184,368
250,914
66,546
Miscellaneous
347,215
347,215
265,805
(81,410)
Total revenues
19,551,158
19,551,158
19,288,678
(262,480)
Expenditures:
General government
853,262
836,550
776,706
59,844
Public safety ,
2,010,709
2,208,989
2,184,600
24,389
Public works
706,943
715,630
714,565
1,065
Culture and recreation
241,414
242,373
241,754
619
Education
9,715,880
9,725,112
9,725,112
-
Pension and fringe
1,931,660
2,005,641
1,952,756
52,885
Water and sewer
1,727,424
1,716,424
1,712,718
3,706
Debf service
972,115
1,007,115
994,365
12,750
Environmental
90,929
101,820
99,295
2,525
Sanitation
826,389
796,429
796,006
423
Human services
176,166
176,460
167,046
9,414
Claims and judgments
22,433
22,433
22,433
-
State and county assessments
403,332
403,332
400,692
2,640
Total expenditures
19,678,656
19,958,308
19,788,048
170,260
Excess (deficiency) of revenues
over expenditures
(127,498)
(407,150)
(499,370)
(92,220)
Other financing sources (uses):
Operating transfers in (out):
Special revenue fund
31,460
31,460
31,460
-
Nonexpendable trust funds
(2,000)
(21000)
(2,000)
Total operating transfers
29,460
29,460
29,460
Excess (deficiency) of revenues and other
financing sources over expenditures
and other financing uses (note 4)
$ (98,039) $ (377.690)
$ (469,910)
$ (92.220)
See accompanying notes to general purpose financial statements.
3
TOWN OF MANSFIELD, MASSACHUSETTS
Combined Statement of Revenues, Expenses and Changes
in Fund Equity - Mansfield Electric Department, Pension Trust Fund
and Nonexpendable Trust Funds
Year ended June 30, 1988
(except for the Mansfield Electric Department
which is for the year ended December 31, 1987)
Proprietary
Fund Type
Fiduciary
Fund Types
Mansfield
Total
Electric
Pension
Nonexpendable
(Memorandum
Department
Trust
Trusts
Only)
Charges for services
$ 13,688,175
-
-
13,688,175
Operating revenues:
Investment income
-
13,921
151
14,072
Pension contribution
-
100,000
-
100,000
Total revenues
13,688,175
113,921
151
13,802,247
Operating expenses:
Power production, trans-
mission and distribution
12,815,805
-
-
12,815,805
Customer accounts
130,777
-
-
130,777
Administrative and general
564,703
-
-
564,703
Depreciation
307,376
-
-
307,376
Payment in lieu of taxes
150,000
-
-
150,000
Total expenses
13,968,661
-
-
13,968,661
Operating income
(loss)
(280,486)
113,921
151
(166,414)
Other income:
Interest
2,857
-
-
2,857
Forfeited discounts
300,401
-
-
300,401
Other
27,764
-
-
27,764
Total other income
331,022
-
-
331,022
Other deductions:
Interest expense
20,620
-
-
20,620
Other
5,144
-
-
5,144
Total other
deductions
25,764
-
-
25,764
Income before opera-
ting transfers
24,772
113,921
151
138,844
Operating transfers in
(note 11)
-
-
2,000
2,000
Net income
24,772
113,921
2,151
140,844
Fund equity, beginning of year
4,309,410
217,271
88,489
4,615,170
Fund equity, end of year
$ 4.334.182
b�
4.756.014
See accompanying notes to general purpose financial statements.
O
TOWN OF MANSFIELD, MASSACHUSETTS
Statement of Changes in Financial Position -
Mansfield Electric Department
Year ended December 31, 1987
Proprietary Fund Type
Mansfield
Electric
Department
Sources of working capital:
Operations:
Net income
$
24,772
Depreciation
307,376
Working capital provided by operations
332,148
Uses of working capital:
Additions to property, plant and equipment
440,275
Long-term portion of obligation under
capital lease
14,737
Total uses of working capital
455,012
Net decrease in working capital
$
22 4)
Elements of net increase (decrease) in working capital:
Cash and temporary investments
(763,779)
Receivables, net of allowance
936,470
Other assets
324,894
Prepayments
96,970
Materials and supplies
(9,406)
Cash overdraft
(795,602)
Accounts payable
46,844
Guaranteed deposits
(3,880)
Accrued expenses
(105,178)
Current portion of obligation under capital lease
(9,304)
Other liabilities
(32,583)
Deferred revenue
(21,019)
Accumulated provision
212,709
Net decrease in working capital
$
2 4)
See accompanying notes to general purpose financial statements.
7
TOWN OF %kNSFIELD, MASSACHUSETTS
Combined Statement of Changes in Financial Position -
Pension Trust Fund and Nonexpendable Trust Funds
Year ended June 30, 1988
Fiduciary Fund Types
Pension Total
Trust Vonexpendable (Memorandum
Fund Trust Funds Only)
Sources of cash:
From operations:
Net income $ 113,921 21151 114,072
Cash provided from
operations 113,921 2,151 114,072
Proceeds from maturity of
investments - - -
Proceeds from sale of securities - - -
Other sources of cash - - -
Total sources of cash
113,921
2,151
114,072
Increase in cash
$
z_ _1�g_
j 14
See accompanying notes to general purpose financial statements.
T06N OF MAINSFIELD, MASSACHUSETTS
Notes to General Purpose Financial Statements
June 30, 1988
(1) Financial Statement Presentation
The general purpose financial statements present information on
organizations and activities of the Town of Mansfield, Massachusetts,
(the "Town") for which the Board of Selectmen ("Board") has oversight
responsibility. The criteria, as established by the Governmental
Accounting Standards Board, for inclusion of organizations and
activities in the oversight entity's general purpose financial
statements are selection of governing authority, designation of
management, ability to significantly influence operations,
accountability over fiscal matters and scope of public service.
The inclusion of organizations and activities in the Town's general
purpose financial statements does not affect their separate legal
standing. In addition to the routine operations of the Town itself,
the following entity is included in the Town's general purpose
financial statements:
The Mansfield Electric Department ("Department") under the direction of
the Board acting as the Mansfield Electric Commission, which appoints
the Mansfield Electric Department Manager, functions as an autonomous
entity. The Town processes all bill payments, borrowings and debt
repayments for the Department which provides the funds for these
payments and repayments. All funds are collected by the Town and the
Department's cash is in the custody of the Town of Mansfield Treasurer
and is commingled with other Town funds.
(2) Summary of Significant Accounting Policies
(a) Basis of Presentation
The financial condition and results of operations of the Town's funds are
presented as of and for the year ended June 30, 1988, except for the
Mansfield Electric Department which is presented as of and for the year
ended December 31, 1987. The accounting policies of the Town conform
with generally accepted accounting principles ("GAAP"), except that the
Town does not maintain, and therefore does not report, a general fixed
assets account group and does not provide for retirement costs in
accordance with generally accepted accounting principles. Such
departures from GAAP are permissible under the Massachusetts Uniform
Municipal Accounting System.
(b) Fund Accounting
Transactions are recorded in the funds and account group described below.
The operations of each fund are accounted for with a set of
self -balancing accounts that comprise its assets, liabilities, fund
equity, revenues and expenditures, and other financing sources and
uses. Transactions between funds within a fund type, if any, have been
eliminated. The funds and account group are organized into four
categories as follows:
(Continued)
N
TOWN OF MA]NSFIELD, MASSACHUSETTS
Votes to General Purpose Financial Statements
Governmental Fund Types
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 is on
determination of changes in financial position, rather than on net
income. The governmental fund types are as follows:
General Fund - This fund is the general operating fund of the Town.
It is used to account for all financial resources except those
required to be accounted for in other funds.
Special Revenue Funds - These funds are used to account for the
proceeds of specific revenue sources (other than expendable
trusts and capital projects) that are legally restricted to
expenditures for specified purposes.
Capital Projects Funds - These funds are used to account for
financial resources to. be used for the acquisition or
construction of major capital facilities (other than those
financed by proprietary funds and trust funds). Such resources
are derived principally from proceeds of general obligation bonds
and from federal and state grants.
Proorietary Fund Type
These funds are used to account for activities operated in a manner
similar to a private business enterprise or where periodic
determination of revenues, expenses and net income is needed.
Fiduciary Fund Types
Fiduciary Funds are used to account for assets held in a trustee
capacity (Trust Funds) or as an agent (Agency Funds) for
individuals, private organizations, other governmental units, and/or
other funds. Trust funds include expendable trust funds,
nonexpendable trust funds and pension trust funds.
Account Group
The general long-term obligations account group is used to establish
control and accountability for general long-term obligations of the
Town.
(Continued)
10
TOWN OF MANSFIELD, MASSACHUSETTS
Notes to General Purpose Financial Statements
(c) Basis of Accounting
Governmental fund types, expendable trust funds and agency funds are
accounted for on the modified accrual basis of accounting. Revenues
are recorded in the accounting period when susceptible to accrual
(i.e., both measurable and available). Available means expected to be
collectible within the current period or soon enough thereafter to be
used to pay liabilities of the current period. In applying this
principle, the Town accrues as revenue the amount of property taxes due
to the Town prior to year-end and collected within 60 days after the
end of its fiscal year; all other revenues, except revenue from
expenditure driven grants (see below), and investment income which is
accrued as earned, are recorded when cash is received. Expenditures,
other than interest on long-term debt, judgments and claims, and sick
and vacation pay are recorded in the accounting period that the
liability is incurred. Interest on long-term debt, sick and vacation
pay, and judgments and claims are expendable when due.
Under the modified accrual basis of accounting, capital outlay and
principal payments on long-term debt are recorded as expenditures when
purchased or when due, respectively.
Revenues related to expenditure driven grants, where moneys must be
expended for the specific purpose or project before any amounts are
earned, are recognized when expenditures are recorded.
Proprietary type funds, nonexpendable trust funds, and Pension Trust Funds
follow the full accrual method of accounting.
(d) Accrued Sick and Vacation
Employees, including those of the Mansfield Electric Department, are
granted sick leave and vacation in varying amounts. Unused sick leave
accumulates for non -union employees to one hundred forty-three (143)
days and for union employees to a maximum number of days as specified
in their respective union contracts. Upon the termination, retirement
or death of an employee, all unused accumulated sick leave is
cancelled. Vacation pay does not accumulate from year to year, but may
be taken as a payment with the approval of the Town Manager and the
Board. Upon the termination, retirement or death of an employee, an
amount equivalent to his unused vacation for the year would be paid.
Therefore, all amounts of sick leave and vacation costs are due and
payable in the current fiscal year.
(e) Deferred Revenue
Deferred revenue is recognized for receivables which are measurable but
not available to finance current operations.
(f) Encumbrances and Continuing Appropriations
Encumbrance accounting, under which purchase orders, contracts and other
commitments for expenditure- of funds are recorded to reserve that
portion of the applicable appropriation, is employed in the
Governmental Fund Types as a significant aspect of budgetary control.
(Continued)
TOWN OF MANSFIELD, MASSACHUSETTS
Notes to General Purpose Financial Statements
Unencumbered appropriations which are carried over to the ensuing fiscal
year are reported as "continuing appropriations." Continuing appropri-
ations represent amounts appropriated for specific programs or projects
which were not completed during the fiscal year.
Encumbrances and continuing appropriations are reported as a reservation
of fund balance in the accompanying balance sheet because they do not
constitute expenditures or liabilities. Encumbrances and continuing
appropriations are combined with expenditures for budgetary comparison
purposes (see note 4).
(g) Fixed Assets
The provision for depreciation of the Department utility plant is computed
on a straight-line basis at 5% of the cost of utility plant in service
at the beginning of the year, exclusive of land and land rights. Under
Commonwealth of Massachusetts General Law, the Department may change
its depreciation rate only with the approval of the Department of
Public Utilities.
The accounting records supporting the
service were destroyed in a fire at
are necessary to assure thati
original cost of utility plant in
the Town Hall in 1970. The records
Utility plant in service _s fairly presented in the Department's
balance sheet,
Depreciation expense is prope-ly computed, and
Net income does not exceed a maximum amount permitted by the General
Laws of the Commonwealth, which maximum is a function of utility plant
in service.
The Department maintains a depreciation fund into which cash in an amount
equivalent to annual depreciation expense is transferred each year.
Cash in the fund may be used only to pay for additions to utility plant
or to repay debt issued to finance utility plant additions.
(h) Total (Memorandum Only) Columns on General Purpose Financial Statements
Total (memorandum only) columns on the general purpose financial
statements are presented to aggregate financial data of the fund types
and account group. No consolidating or eliminating entries were made
in arriving at the totals; thus, they do not present consolidated
information.
(i) Mansfield Electric Department - Rates
The Department is subject to regulation by the Massachusetts Department of
Public Utilities with respect to its rates.
(Continued)
12
TOWN OF MA.NSFIELD, MASSACHUSETTS
Notes to General Purpose Financial Statements
(3) Property Taxes
Real and personal property taxes are based on values assessed as of each
January 1 and are normally due on the subsequent November 1 and May 1.
By law, all taxable property in the Commonwealth must be assessed at
100% of fair cash value. Taxes due and unpaid after the respective d.e
dates are subject to interest and penalties. The Town has an ultimate
right to foreclose on property for which taxes have not been paid.
Property taxes levied are recorded as receivables in the fiscal year of
the levy.
A statewide tax limitation statute known as "Proposition 2-1/2" limits the
property tax levy to an amount equal to 2-1/2% of the value of all
taxable property in the Town. A secondary limitation is that no levy
in a fiscal year may exceed the preceding year's allowable tax levy by
more than 2-1/2%, plus taxes levied on certain property newly added to
the tax rolls. Certain Proposition 2-1/2 taxing limitations can be
overridden by a Town -wide referendum vote.
(4) Budgetary Basis of Accounting
The Town must establish its property tax rate each year so that the
resulting property tax levy will comply with the limits required by
Proposition 2-1/2 and also constitute that amount which will equal the
sum of (a) the aggregate of all annual appropriations for expenditures
and transfers, plus (b) provision for the prior fiscal year's deficits,
if any, less (c) the aggregate of all non -property tax revenue and
transfers projected to be received by the Town, including available
surplus funds.
The budgets for all departments and operations of the Town, except that of
public schools, are prepared under the direction of the Town Manager.
The School Department budget is prepared by the School Committee.
Original and supplemental appropriations are acted upon by the Town
Meeting Vote.
The Town budget as presented in the Statement of Revenues and Expenditures
- Budgetary Basis was developed as follows:
Budgeted expenditures:
Operations $ 19,969,308
Transfers to other funds 22,000
Total budgeted expenditures $ 9.991.308
To be funded as follows:
Budgeted revenue $ 19,562,158
Budgeted transfers from other funds 51,460
Available surplus 377,690
Total funding $ 19.991.308
(Continued)
13
TOWN OF YAMFIELD, `LASSACHUSETTS
Votes to General Purpose Financial Statements
The Town's General Fund budget is prepared on a basis other than generally
accepted accounting principles ("GAAP"). The "actual" results column
of the Statement of Revenues and Expenditures - Budgetary Basis is
presented on a "budget basis" to provide a meaningful comparison with
the budget. The major differences between the budget and GAP.? bases
are that:
(a) Budgeted revenues are recorded when cash is received, except for real
estate and personal property taxes, which are recorded as revenue when
levied (budget), as opposed to when susceptible to accrual (GAAP).
(b) Encumbrances and continuing appropriations are recorded as the
equivalent of expenditures (budget), as opposed to a reservation of
fund balance (GAAP).
(c) Water and sewer fund operations and revenue sharing are presented in
separate funds (GAAP), rather than as a component of the General Fund
(budget).
In addition, there are certain differences in classifications between
revenues, expenditures and transfers.
The following reconciliation summarizes the differences between budget and
GAAP basis accounting principles for the year ended June 30, 1988:
Other financing
sources
Revenue Expenditures (uses) net
As reported on a budgetary basis $ 19,288,678 19,788,048
Adjustment of property tax
revenues to a modified
accrual basis 138,667 -
Reclassification of Water and
Sewer Fund operations to
Special Revenue Funds (1,868,462) (1,712,718)
Adjustment for encumbrances
and continuing appropriations - 149,868
As reported on a GAAP basis $ 7,5 1 ,225,198
(5) Deposits
29,460
202,784
2 244
State and local statutes place certain limitations on the nature of
deposits and investments available to the Town. Deposits (including
demand deposits, term deposits and certificates of deposit) in any one
financial institution may not exceed certain levels within
collateralization by the financial institutions involved.
(Continued)
14
TOWN OF MAVSFHLD, MASSACHUSETTS
Notes to General Purpose Financial Statements
The following summary presents the amount of Town deposits which are fully
insured or collateralized with securities held by the Town or its agent
in the Town's name (Category 1), those deposits which are
collateralized with securities held by the pledging financial
institution's trust department or agent in the Town's name (Category
2), and those deposits which are not collateralized (Category 3) at
June 30, 1988.
Total
Category Bank Carrying
1 2 3 Balance Amount
Cash and short-term
investments $ 664,621 - 8,576,340 9,240,961 8,256,855
Total , '$ - 57 4.240.961 8.256.855
(6) Employees' Retirement Systems
(a) Plan Description
The Town participates in a retirement system administered by the Bristol
County Retirement System ("System"), a cost -sharing, multiple -employer
public employee retirement system. Each participating employer's share
of the total annual contribution is determined on the basis of active
payroll. The Town's payroll for employees covered by the Retirement
System for the year ended June 30, 1988 was $4,118,634. Public school
teachers are covered ,by the Commonwealth of Massachusetts Teachers'
Retirement System (TRS) to which the"Town does not contribute. The
Town's payroll for teachers covered by the TRS for the year ended June
30, 1988, was $6,327,734. The total payroll for the Town was
$11,883,905.
The System and the TRS are contributory defined benefit plans covering all
Town employees and teachers deemed eligible. Certain Town employees
are covered by the System's noncontributory pension plan.
The System is a member of the Massachusetts Contributory System and is
governed by Chapter 32 of the Massachusetts General Laws. Membership
in both the System and the TRS is mandatory immediately upon the
commencement of employment for all permanent, full-time employees.
Current membership in the System consists of the following:
Number of Employees
Active employees
223
Inactive members
29
Retired members
105
Total 357
(Continued)
15
TOWN OF MAXSFIELD, MASSACHUSETTS
Notes to General Purpose Financial Statements
Both systems provide for retirement allowance benefits up to a maximum of
80% of a member's highest three-year average annual rate of regular
compensation. Benefit payments are based upon a member's age, length
of creditable service, level of compensation and group classification.
Members joining the systems after January 1, 1979, are subject to a cap
of $30,000 on the level of compensation upon which their benefits are
calculated.
Members of both systems become vested after 10 years of creditable
service. A retirement allowance may be received upon reaching age 65
or upon attaining 20 years of service. The Plan also provides for
early retirement at age 55 if the Participant (1) has a record of 10
years of creditable service, (2) was on the Town payroll on January 1,
1978, (3) voluntarily left Town employment on or after that date, and
(4) left accumulated annuity deductions in the Fund. Active members
contribute either 5, 7 or 8% of their gross regular compensation
depending on the date upon which their membership began.
The systems also provide death and disability benefits. The accounting
records of the Retirement System are maintained on a calendar year
basis in accordance •with the standards and procedures established by
the Commissioner of the Public Employee Retirement Administration.
(b) Funding Status and Progress
The amount shown below as the "Pension Benefit Obligation" for the System
is a standardized disclosure measure of the present value of pension
benefits, adjusted for the effects of projected salary increases and
step -rate benefits, estimated to be"payable in the future as a result
of employee service to date. The measure is intended to help users
assess the funding status of the System on a going -concern basis,
assess progress made in accumulating sufficient assets to pay benefits
when due, and make comparisons among employers. The measure is the
actuarial present value of credited projected benefits and is
independent of the funding method used to determine contributions to
the System.
The pension benefit obligation was computed as part of an actuarial
valuation performed as of January 1, 1987. Significant actuarial
assumptions used in the valuation include (a) a rate of return on the
investment of present and future assets of 8% a year compounded
annually, (b) projected salary increases of 4.5% a year compounded
annually, attributed to inflation, (c) additional projected salary
increases of 1.5% a year, attributable to seniority/merit, and (d) no
post -retirement benefit increases.
(Continued)
16
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TOWN OF MANSFIELD, MASSACHUSETTS
Votes to General Purpose Financial Statements
(7) General Long-term Obligations (Continued)
The annual requirements to amortize all general obligation bonds outstanding
as of June 30, 1988, including interest, are as follows:
Principal Interest Total
Year ending June 30,
1989
$ 612,200
347,915
960,115
1990
602,200
309,457
911,657
1991
517,100
269,454
786,554
1992
482,100
235,152
717,252
1993
377,100
204,314
581,414
Thereafter
2,750,400
1,396,080
4,146,480
$ 41.100
2.762.372
.103.472
The Commonwealth of Massachusetts has approved school construction
assistance to the Town. The assistance program which is administered by
the School Building Assistance Bureau (SBAB) provides resources for
future debt service of general obligation school bonds outstanding.
These resources are subject to annual appropriation by the State
legislature and the Town's compliance with certain reporting
requirements. During 1988, the Town received $190,559 of such
assistance. Assuming satisfactory audit results and annual
appropriations by the State legislature, $102,713 will be received
annually for fiscal years 1989 through 1992.
The Town is subject to a dual level general debt limit; the normal debt
limit and the double debt limit. Such limits are equal to 5% of the
valuation of taxable property in the Town as last equalized by the
Commonwealth's Department of Revenue. Debt may be authorized up to the
normal debt limit without state approval. Authorizations under the
double debt limit, however, require the approval of the Commonwealth's
Emergency Finance Board. Additionally, there are many categories of
general obligation debt which are exempt from the debt limit but are
subject to other limitations.
Authorized and unissued debt at June 30, 1988, is as follows:
Water Projects II $ 150,000
Water-Downtown/Route 106 1,100,000
Waste water treatment plant 26,660,000
Highway garage 200,000
High school roof 680,000
Airport 30,000
Library/COA 2,500,000
$ 31.320.000
As of June 30, 1988, the Town may issue approximately $54,490,000 additional
general obligation debt under the normal debt limit. The Town has
approximately $4,806,100 of debt exempt from the debt limit.
(Continued)
18
TOW?! OF MANSFIELD, MASSACHUSETTS
Notes to General Purpose Financial Statements
(7) General Long-term Obligations (Continued)
The Town pays assessments which include debt service payments to other local
governmental units providing services within the Town's boundaries
(commonly referred to as overlapping debt). The primary overlapping debt
relates to the Southeast Regional School District (District) and Bristol
County. The following summary sets forth the Long-term debt of each
entity at June 30, 1988, the estimated share of such debt being serviced
by the Town and the total of its share of estimated indirect debt.
District
Bristol
County
(8) Temporary Borrowings
Long -Term
Debt Town's
Outstanding Estimated
(Unaudited) Share
$ 236,025
5,330,000
5.76%
5.75
Town's
Estimated
Indirect
Debt
$ 13,595
306,475
Under state law and by authorization of the Board of Selectmen, the Town is
authorized to borrow on a temporary basis to fund the following:
• Current operating costs prior to the collection of revenues through
issuance of revenue or tax anticipation notes (RAMS or TANS)
• Capital project costs incurred prior to obtaining permanent financing
through issuance of bond anticipation notes (BANS)
• Federal and state aided capital projects and other program expenditures
prior to receiving reimbursement through issuance of federal and state
aid anticipation notes (FANS and SANs)
Temporary loans are general obligations of the Town and carry maturity dates
which are limited by statute. Interest expenditures for temporary
borr-:wings were approximately $32,000 and are accounted for in the
General Fund. At June 30, 1988, $500,000 of 4.98% BANS and $1,830,000 of
FANS with rates ranging from 4.32% to 6.00% were outstanding.
(Continued)
19
TOWN OF MANSFIELD, MASSACHUSETTS
Notes to General Purpose Financial Statements
(9) Fund Deficits
The following funds had deficit equity balances as of June 30, 1988:
Special revenue funds:
Sewer
The deficit in this fund will be eliminated through future user charges.
Capital project funds:
Highway/garage $ 164,831.
Water 115,515
Library 166,510
Forbes & West/Chapter 90 5,470
Sewer 36,319
The deficits in these funds will be eliminated through future bond issues or
federal and state grants.
(10) Interfund Receivable and Payable Balances
Individual fund interfund receivable and payable balances at June 30, 1988
were as follows:
Interfund Interfund
Fund Receivables Payables
Special Revenue:
Sewer
Municipal outside and school details
Capital Projects:
Waste water treatment plant
Agency:
Municipal outside and school details
$ - 472,165
9,278 -
472,165 -
9,278
(Continued)
20
TOWN :F MANSFIELD, MASSACHUSETTS
Votes to General Purpose Financial Statements.
(11) Operating Transfers
Operating transfers constitute the transfer of resources from the fund that receives
the resources to the fund that utilizes them. Operating transfers during the year
were as follows:
Purpose of operating transfer:
Ambulance receipts
Library aid
Water and sewer
Scholarship fund
Municipal outside details
Stabilization
(12) Contingencies
Special
Capital Expendable
Nonexpendable
General
Revenue
Projects Trusts
Trusts
$ 40,000
(40,000)
- -
-
11,460
(11,460)
- -
-
202,784
(202,784)
- -
-
(2,000)
-
- -
2,000
(20,000)
20,000
- -
-
516,000 (516,000)
$ � 44
� 4 44)
516.000 516.000)
Numerous lawsuits are pending or threatened against the Town, which arose from the
ordinary course of operations, including actions commenced and claims asserted
against it for property damage and personal injury, breaches of contract,
condemnation proceedings and other alleged violations of law. The outcome of
lawsuits and claims is not expected to have a material effect on the financial
condition of the Town.
(13) Power Sales Agreements
the Department is a partici:ant in the Massachusetts Municipal wholesale Electric
Company ("M!MWEC"), a public corporation of the Commonwealth of Massachusetts.
M4 EC is a coordinating and planning agency for the development of the bulk power
supply requirements of its members and Project Participants. `P.TWEC is authorized to
purchase ownership interests in, and to issue revenue bonds to finance generating
units ("Projects"). MMvEC sells the capability of each of its Projects co its
members and other utilities (Project Participants) under Power Sales Agreements.
The Power Sales Agreement for each Project requires each Project Participant to pay
its share of %VWEC's costs related to the Project which includes debt service on
bonds issued by %DMC to finance the Project plus 10% of debt service to be paid
into a Reserve and Contingency Fund. In addition, MMWEC has entered Into long -corm
take or pay power purchase contracts for which it has corresponding resale
agreements with certain of its members and other utilities. The Project and power
purchase contract amounts are payable from each Participant's electric system
revenue and are required to be made whether or not the Project is completed, t e
An is operating and notwithstanding the suspension or interruption of output of
the unit.
A substantial portion of %L%TWEC's construction program is its 11.59% ownership inceresc
in the Seabrook project being constructed by New Hampshire Yankee (NH Yark_e),
rrently a division of Public Service Company of New Hampshire (PSNd). N Yankee,
upon receipt of regulatory aDOrcval, is to be established as an independent entity
to construct and operate the Seabrook station on behalf of the joint owners.
Seabrook unit No. l construction has been completed. Seabrook joint owners have
authorized NH Yankee to begir. t e sale of all salvagable components and equipment
from Seabrook unit No. 2 and to return the construction permit for Unit No. 2 to the
Nuclear Regulatory Commission.
(Continued)
21
TOWN' OF NIANSFIELD, HASSACHCSEITS
Notes to General Purpose Financial Statements
The Seabrook nuclear station has experienced persistent and substantial
cost increases and significant schedule delays, has been the source of
continuing controversy and opposition from government officials,
regulators, intervenors and others and has created financial problems
for many of its joint owners, including NttWEC. Although problems
relating to the Seabrook Unit No. 1 construction schedule, with the
exception of emergency response plans, have been overcome and the unit
is now essentially complete, significant problems and uncertainties
relating to Seabrook's commercial operation remain.
PSNH has been experiencing substantial difficulty in sustaining its
financial obligations for its 35.6% share of the project as a result
of the continued delay in commercial operation of the Seabrook Unit
No. 1 and in its inability to secure cost recovery prior to commercial
operation.
In '_ate 1987, PSNH filed to obtain emergency rate relief that would
improve its present financial condition. The $71 million request
brought before New Hampshire's regulatory commission was viewed as a
necessary measure if PSNH was to avoid bankruptcy proceedings. PSNH
was also seeking debtholders' and regulatory approvals to implement a
complex financial restructuring package, the ultimate purpose of which
was to substantially reduce current interest costs. In addition, PSNH
challenged the constitutic-.ality of New Hampshire's anti-CWIP law
which prohibited PSNH fr.m charging customers for construction
projects that are not yet .n operation. On January 26, 1988, the New
Hampshire Supreme Court ur .nimously upheld the state's anti-CWIP law
that prohibits PSNH from =_tting rate increases for Seabrook related
costs until the plant be '.ns commercial operation. This decision
effectively bars approval by the New Hampshire Public Utilities
Commission of PSNH's emergency rate relief request. In addition, PSNH
did not make certain interest payments in October 1987, and at various
subsequent periods. Several holders and trustees for holders of
certain debt securities have initiated actions against PSNH for the
payment of principal and accrued and past -due interest on their
securities subsequent to PSNH's cessation of interest payments. PSNH
believes that these actions are not in the best interest of the
debtholders and will make it more difficult for PSNH to arrange a
restructuring plan to the best advantage of all its securities
holders. On January 28, 1988, PSNH filed for protection from its
creditors under Chapter 11 of the federal Bankruptcy Act. The
financial difficulties of PSNH could have a detrimental effect on the
start-up of Seabrook Unit No. 1 or could otherwise adversely affect
this project.
Seabrook Unit No. 1 has received an operating license from the Nuclear
Regulatory Commission (NRC). The operating license is subject to
conditions which do not permit commercial operation until emergency
response plans are approved by federal authorities.
22
TOW`! OF MANSFIELD, MASSACHUSETTS
Notes to General Purpose Financial Statements
On :larch 25, 1987, the NRC's Atomic Safety and Licensing Board (ASLB),
dealing with emergency planning and safety issues, recommended
issuance of a license for low power (5%) testing. That decision has
been appealed. The issuance of a Low power license has been stayed by
the full NRC, which ruled on April 9, 1987, that emergency response
plans must be filed before such license may be issued. On October 27,
1987, the NRC issued a rule change that allows owners of completed
nuclear plants to obtain an operating license upon NRC approval of
utility -sponsored emergency evacuation plans in cases where states or
localities have refused to participate in formulating such plans. As
a result of this ruling, NH Yankee will seek to secure a low -power and
then a full -power operating license from the NRC upon approval of
emergency response plans, which have been submitted. On November 25,
1987, the NRC voted to drop its opposition to granting Seabrook a
low -power license because of earlier concerns about its emergency
evacuation plans. The NRC action does not immediately authorize
Seabrook to begin testing at 5% power. Before Seabrook can start up,
licensing boards at the NRC must resolve technical issues involving
the steam generation and cooling systems. The NRC predicts it will be
weeks before a license to perform tests can be granted. Opposition to
allowing Seabrook to in any way irradiate the reactor unit remains
active and strong. In view of the active opposition to the Seabrook
project by various Massachusetts officials including the Governor,
there can be no assurance as to whether or when Seabrook Unit No. 1
will become operational.
Other events have occurred a'fecting MMWEC and the Seabrook project in
general. Such events in�'_ude legal challenges by certain Project
Participants and others :f the validity of their Power Sales
Agreements with MM EC and unfavorable decisions and orders by
regulatory bodies in Maine, Vermont and Massachusetts such as
disallowance of recovery of some Seabrook project costs, disengagement
from or disposal of respective shares of the Seabrook project and
strict limitations on future Seabrook financing. On November 29,
1986, a Vermont Superior Court judge ruled that the Power Sales
Agreements for Project No. 6 between MMWEC and several consumer -owned
utilities in Vermont are valid under Vermont law. The ruling rejects
contentions by the Vermont Department of Public Service, Vermont
Electric Cooperative and the Village of Stowe Water and Light
Department that the contracts were invalid and therefore not binding
agreements. The plaintiffs have appealed this judgment to the Vermont
Supreme Court, which heard arguments on April 21, 1987; a decision of
the court is awaited.
(Continued)
23
TOWN JF MAVSF_E?D, `1ASSACHUSET_TS
Votes to General Purpose Financial Statements
In January 1986 the Hull Municipal Lighting Plant filed suit against
. seeking a declaration that its Power Sales Agreement, for
Nuclear Mix No. 1, Nuclear Projects Nos. 4 and 5 and ?roject No. 6
relating to Seabrook were invalid, an injunction against Mr!W7-C
collecting any amounts from Hull under the agreements and monetary
damages. The suit challenges the validity of t'.^.esa 'owes Sales
Agreements on various grounds and alleges, among other things, various
misrepresentations, breaches and imprudencies by MMWEC. On March 5,
1986, the Massachusetts Superior Court granted MLNTWEC's motions to stay
the legal proceedings and compel arbitration of the suit and for a
preliminary injunction requiring lull to pay its share of monthly
power costs as required by the Power Sales Agreements. On March 21,
1986 a single justice of the Massachusetts Appeals Court denied Hull's
petition for relief from the orders of the Superior Court, and the
:natter went to arbitration. On April 15, 1987, the Massachusetts
Supreme Judicial Court upheld the order requiring Hull to continue
making payments pending the outcome of the arbitration. In August
1981, the arbitrator ruled that the contracts signed by its light
board with MMWEC were invalid. The arbitrator has yet to rule on the
other alleged breaches, imprudencies and misrepresentations claimed
against MMWEC by Hull. After withholding payments, Hull is currently
mating payments under protest in accordance with the court order.
In January 1985, certain res'_ents of the Town of Groton brought suit
against the Town of Grotor Municipal Light Department, the Town of
Groton and MMWEC, challeng`_ng the validity of the Nuclear Mix No. 1,
Nuclear Projects Nos. 3, 4 and 5 and Project No. 6 Power Sales
Agreements. On February =, 1987, the Massachusetts Superior Court
granted the defendants' motions for summary judgment and upheld the
validity of Groton's Power Sales Agreements with MMWEC. The decision
has been appealed to the Massachusetts Supreme Judicial Court by the
plaintiffs.
Vermont Electric Cooperative (VEC), with a direct 0.41% ownership share
in the Seabrook project, ceased making Seabrook construction payments
in January 1986. Advance payments have been made by other joint
owners to cover the shortfall.
In addition to being a 0.41% direct joint owner in the Seabrook project,
VEC is also involved through its 7.2% interest in MMWEC's Project No.
5 and has failed to make its monthly payments to MMWEC since February
1986. VEC's share of the Project No. 6 costs is continuing to be paid
with other available project funds.
On August 31, 1987, Eastern Maine Electric Cooperative (EMEC), a 3.6%
participant in MMWEC's Project No. 6, filed for protection under
Chapter 11 of the Federal Bankruptcy Code. In its petition, EMEC is
asking the Court to reject its contract with %MEC. On September 2,
1987, the MMWEC Board of Directors voted to vigorously oppose
rejection of the contract in bankruptcy proceedings. EMEC noted that
it cannot continue to make payments under the Power Sales Agreement
with MMWEC and remain viable without some significant form of relief.
MEC has not made such payment since May 1987. EMEC's share of the
Project No. 6 costs is continuing to be paid with other available
project funds.
(Continued)
24
TORN OF MANSFIELD, MASSACHUSETTS
Notes to General Purpose Financial Statements
In September 1986 MMWEC replaced $120 million of 364-day Revenue Bond
Anticipation Notes (BANS) due October 17, 1986, with $110 million of
364-day BANS at an average annual interest rate of 14.08% to fund
MHWEC's share of Seabrook construction costs for its Nuclear Project
No. 4 and Project No. 6, to fund interest on the BA.Ns and to fund a
portion of the 1986 and 1987 interest on Project No. 6 outstanding
debt. The BANS were issued to bridge a financing gap until regulatory
approval of a long-term financing plan could be obtained. MMWEC
contemplated paying the BANS from the proceeds of long-term Revenue
Bonds (Bonds). A request for Long-term financing authority to
extinguish the BANS was filed in February 1986 and on January 14,
1987, the DPU authorized long-term financing up to MMWEC's requested
amount of $164,500,000. Utilizing this new authorization along with
previously unused ones, MMWEC issued $337,660,000 of 1987 Series A and
B Bonds on July 1, 1987. According to the Internal Revenue Code of
1986, certain of these Bonds required approval of the Governor of
Massachusetts to be issued on a tax-exempt basis. On June 1, 1987,
the Governor denied MMWEC's request for such approval; therefore, the
1987 Series B Bonds for Project No. 6 are taxable bonds. The
financing includes $198,260,000 in tax-exempt Series A Bonds and
$139,400,000 of taxable Series B Bonds. The tax-exempt bonds were
sold at an effective interest rate of 9.00% while the taxable bonds
carry an effective interest rate of 11.91%. The tax-exempt portion
includes $163,060,000 that will be used to refund outstanding, high
interest Bonds issued for P:ojects Nos. 3, 4 and 5. The balance of
the Bond issue of $174,E;0,000 is for Nuclear Project No. 4 and
Project No. 6. Proceeds rom this portion of the issue were used
primarily to retire the $1 0 million of outstanding BAYS. The bulk of
the remaining proceeds will be used to fund a portion of the interest
costs on %MWEC's outstandin_ Seabrook debt, enabling MMWEC to continue
its phase -in of Seabrook project 'costs. Under the phase -in, the
portion of interest costs funded by MMWEC is gradually decreasing,
while the portion billed to the Project Participants is gradually
increasing.
MMWEC is currently developing a financing proposal for its Nuclear
Projects Nos. 4 and 5 and Project No. 6 which is planned to be
submitted to the Massachusetts DPU in the first quarter of 1988. The
request for financing authorization is expected to be up to $85
million and is intended to be used to fund construction costs through
a commercial operation date, used for financial contingency planning
purposes, of Seabrook Unit 1 of November 1990 along with funding of
certain interest costs on these Projects. Development of the
financing request is in its earliest stage; therefore, estimates of
annual costs relative to it are not available.
(Continued)
25
0
TOWN OF `1ANSFIELD, MASSACHUSEETTS
Notes to General Purpose Financial Statements
As of December 31, 1987, the total estimated construction cost of ;T,%1WEC's
Projects under construction was $932,695,000 of which the amount
associated with the Department's Power Sales Agreements was
$36,911,000. Total construction expenditures amounted to $837,151,000
of which $51,131,000 represented the amount attributable to the
Department. It is estimated that $985,674,000 principal amount of
debt obligations will need to be issued by M'EC to finance the
Projects in its construction program, of which $60,373,000 is
attributable to the Department. Debt issued and outstanding included
Power Supply System Revenue Bonds totalling $981,258,000, of which
$60,105,000 is attributable to the Power Sales Agreements of the
Department. On bonds which have been issued, the debt service
requirement through the year 2018 is $3,112,104,000 of which
$194,129,000 is attributable to the Department.
In addition, MWEC has expended $390,772,000 and $489,882,000 of bonds
are outstanding for Projects in operation, with total debt service of
$1,140,360,000. The Department's portion of the expenditures, bonds
issued and debt service on these Projects is $17,718,000, $20,581,000
and $44,148,000, respectively.
The Light Department of the Town has entered into power purchase
contracts or Project Power Sales Agreements with MMWEC. Under the
above agreements, the Department is required to make capacity and/or
debt service payments to MMWEC. The aggregate amount of such required
payments on bonds outstanding and significant power purchase contracts
through M WEC at December 31, 1987, is shown below.
Annual Cost
For the years ended December 31, 1988 $ 8,517,000
1989 7,804,000
1990 8,579,000
1991 8,566,000
1992 8,633,000
Later fiscal years 197,821,000
Total $ 239.920.000
In addition, the Department is required to pay its share of the operation
and maintenance costs of the units. The Department's total payments
under the agreements were $2,050,000 for the year ended December 31,
1986 and $2,468,000 for the year ended December 31, 1987.
On June. 1, 1988, the MMWEC Board of Directors voted to withdraw from the
Seabrook nuclear project and as a first step in that direction, did not
make a payment due on June 2, of approximately $2,000,000. A
prepayment of approximately three months worth of payments existed at
that time, and MMWEC will draw on those payments while under
negotiations with other project owners.
26
Schedule I
TOWN OF MANSFIELD, MASSACHUSETTS
Schedule of Cash Balances
June 30, 1988
Non -interest -bearing bank accounts:
Bank of New England
$ 163,471
Durfee Attleboro Bank
9,303
Bank of Boston
2,541
Boston Safe Deposit and Trust
810
Total non -interest -bearing bank accounts
176,125
Interest -bearing bank accounts:
Bank of New England
1,682,395
BayBank
863,824
Boston Safe Deposit and Trust Co.
26,218
Mansfield Cooperative Bank
251,320
Bank of Boston
1,021,015
MMDT
6,657
Total interest -bearing bank accounts
32851,429
Cash and checks on hand
400
Short-term investments
174,796
Total Treasurer's cash balances
4,202,750
Warrants as of June 30, 1988
997,168
Cash after warrants
5,199,918
Add: Trust funds cash and short-term investments accounted
for separately by the Town at June 30, 1988
3,056,937
Total cash and short-term investments balance
as shown in general purpose financial statements
$ 256,855
27