The URL can be used to link to this page

2012 (2) TOWN OF WAPPINGER, NEW YORK FINANCIAL STATEMENTS AS OF AND FOR THE YEAR ENDED DECEMBER 31, 2012 ~O ~~o~ ~~ ~.~~ tio~~ ~G~e2 ~~ ~~~ C3~ ~` ~~ ~_, ~~ ~~~~a ~. is ~r TOWN OF WAPPINGER, NEW YORK TABLE OF CONTENTS DECEMBER 31, 2012 ~ DESCRIPTION PA- GE (S~ Independent Auditors' Report 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 Government Auditing Standards ............................................. ..................... 4-5 Management's Discussion and Analysis (unaudited) For The Year Ended December 31, 2012 ............................................................ ................... 6-13 BASIC FINANCIAL STATEMENTS: ~„ Government-Wide Financial Statements: Statement of Net Position -December 31, 2012 .................................................... .......................14 Statement of Activities and Changes in Net Position -For the Year Ended December 31, 2012 .....................................................................................................................15 4w Fund Financial Statements: Balance Sheet -Governmental Funds -December 31, 2012 ................................ ........................16 Reconciliation of Governmental Funds Balance Sheet To The Statement of Net Position -December 31, 2012 ................................... ........................17 Statement of Revenues, Expenditures and Changes In Fund Balances- Governmental Funds - For the Year Ended December 31, 2012 ............................................................ ........................18 Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balance of Governmental Funds to the Statement of Activities -For the Year Ended December 31, 2012 .................... ........................19 w Statement of Net Position -Fiduciary Fund -December 31, 2012 ...................... ........................20 ~` Notes to the Basic Financial Statements ................................................ ...............21-40 ~. it REQUIRED SUPPLEMENTAL INFORMATION: Exhibit I Budgetary Comparison Schedule - General Fund, Highway Fund, Water Fund and Sewer Fund For the Year Ended December 31, 2012 ................................................. ............................. 41-45 Exhibit II Other Post-Employment Benefits Plan Schedule of Funding Progress -December 31, 2012 ............................... ..................................46 OTHER SUPPLEMENTAL INFORMATION: Exhibit III Combining Balance Sheet -Non-Major Governmental Funds -December 31, 2012 .......................................... .................................. 47 Exhibit IV Combining Statement of Revenues, Expenditures and Changes in Fund Balances -Non-Major Governmental Funds For the Year Ended December 31, 2012 ..................................... ..................................48 Exhibit V Schedule of Findings, Recommendations and Responses For the Year Ended December 31, 2012 ................................................ .............................. 49-51 ~~ SEDORE & COMPANY CERTIFIED PUBLIC ACCOUNTANTS, P.C. Navigating Your Success INDEPENDENT AUDITORS' REPORT To the Supervisor and Members of the Town Board Town of Wappinger, New York 20 Middlebush Road Wappingers Falls, New York 12590 ' Report on the Financial Statements Partners Mark S. O'Su/liuan, CPA ,lames FLetterio,Jr., CPA Linda M. Hannigan, CPA James L. Sedore, Jr., CPA Charles R. Rae, Jr., CPA We have audited the accompanying financial statements of the governmental activities, each major fund, and the aggregate remaining fund information of the Town of Wappinger, New York, as of and for the year ended December 31, 2012, which collectively comprise the Town's basic financial statements as listed in the Table of Contents, and the related notes to the financial ,~ statements. 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. Auditor's Responsibility Our responsibility is to express opinions on these financial statements based on our audit. We ~ conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government t'~ Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial W"' statements. The procedures selected depend on the auditor's 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 entity'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 entity'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. Poughkeepsie Office 2678 South Road Suite 101 I Poughkeepsie,NewYork 12601 Tel: (845) 485-5510 Fax: (845) 485-5547 I Email: info@sedoreco.com I Web: wwwsedoreco.com POUGHKEEPSIE • PORT JERV[S • FISHKILL We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. r' Basis for Adverse Opinion on Goverizmental Activities As discussed in Note A.S.C, to the financial statements, the Town has not recorded certain infrastructure assets in governmental activities and, accordingly, has not recorded depreciation expense on those assets. Accounting principles generally accepted in the United States of America require that those general infrastructure assets be capitalized and depreciated, which ~ would increase the assets, net assets, and expenses of the governmental activities. The amount by which this departure would affect the assets and expenses of the governmental activities is not reasonably determinable. Adverse Opinion In our opinion, because of the effects of the matter discussed in the preceding paragraph, the financial statements of the governmental activities do not present fairly, in all material respects, the respective financial position of the governmental activities, of the Town of Wappinger, New York, as of December 31, 2012, or the changes in financial position for the year then ended. Unmodified Opinions ~' In our opinion, the financial statements referred to previously present fairly, in all material respects, the respective financial position of each major fund, and the aggregate remaining fund information of the Town of Wappinger, New York, as of December 31, 2012, and the respective changes in financial position for the year then ended in conformity with accounting principles generally accepted in the United States of America. Other-Matters Required Supplementary Information 11r Accounting principles generally accepted in the United States of America require that the management's discussion and analysis, budgetary comparison information, and Other Post- Employment Benefits Schedule of Funding Progress, as listed in the Table of Contents, 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 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 ~w 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. 2 it ~. it ~` Other Information Our audit was conducted for the purpose of forming opinions on the financial statements that ~' collectively comprise the Town of Wappinger, New York's basic financial statements. The combining non-major fund financial statements are presented for purposes of additional analysis and are not a required part of the basic financial statements. The combining non-major fund financial statements are the responsibility of management and were derived from and relate directly to the underlying accounting and other records used to r" 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 to 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, the combining non- major fund financial statements are fairly stated, in all material respects, in relation to the basic financial statements as a whole. Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated September 10, 2013, on our consideration of the Town of Wappinger, New York's internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering Town of Wappinger, New York's internal control over financial reporting and compliance. Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the Town of Wappinger, New York's financial statements as a whole. ~ c~~~ .r Poughkeepsie, New York September 10, 2013 3 a,. ~' SEDORE & COMPANY CERTIFIED PUBLIC ACCOUNTANTS, P.C. Navigating Your Success 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 GOVERNMENT AUDITING STANDARDS ar W To the Supervisor and Members of the Town Board Town of Wappinger, New York 20 Middlebush Road Wappingers Falls, New York 12590 Partners Mark S. O'Sullivan, CPA James PLetterio,Jr., CPA Linda M. Hannigan, CPA James L. Sedore, Jr., CPA Charles R. Rae, Jr., CPA We have audited, in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Aa~diting Standards, issued by the Comptroller General of the United States, the financial statements of governmental activities, each major fund, and the aggregate remaining fund information of the Town of Wappinger, New York (the "Town"), as of and for the year ended December 31, 2012, and the related notes to the financial statements, which collectively comprise the Town's basic financial statements and have issued our report thereon dated September 10, 2013. Internal Control Over Financial Reporting In planning and performing our audit, we considered the Town of Wappinger, 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 opinion on the financial statements but not for the purpose of expressing an opinion on the effectiveness of the Town of Wappinger, New York's internal control. Accordingly, we do not express an opinion on the effectiveness of the Town'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 combination of deficiencies, in internal control such that there is a reasonable possibility that a material misstatement of the entity's financial statements will not be prevented, or detected and corrected on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance. Our consideration of the internal control over financial reporting was for the limited purpose described in the first paragraph of the 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. Poughkeepsie Office 4 2678 South Road Suite 101 Poughkeepsie, Newyork 12601 Tel: (845) 485-5510 Fax: (845) 485-5547 Email: info@sedoreco.com I Web: www.sedoreco.com POUGHKEEPSIE • PORT JERVIS • FISHKILL r We did identify certain deficiencies in internal control, described in the accompanying ~" Schedule of Findings, Recommendations and Responses (Findings 1, 2, and 3) that we consider to be significant deficiencies. Compliance and Other Matters As part of obtaining reasonable assurance about whether the Town of Wappinger, New York's financial statements are free of 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 and which are described in the accompanying Schedule of Findings, Recommendations and Responses (Findings 1, 2, and 3). Purpose of this Report The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the entity'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 entity's internal control and compliance. Accordingly, this communication is not suitable for any other purpose. 1w V ~ C fJ/} -S Poughkeepsie, New York September 10, 2013 rr 5 ~r v MANAGEMENT'S DISCUSSION AND ANALYSIS Required Supplemental Information For the Year Ended December 31, .2012 (Un-audited) i~- 1.Overview of the Financial Statements These Audited Financial Statements consist of five parts. The Independent Auditors' Report on our Financial Statements, Management's Discussion and Analysis (this section), Government Wide Financial Statements, Fund Financial Statements and Notes to the Financial Statements. W -Government-Wide Financial Statements provide both long term and short term information about the Town's overall financial status. They report information about the Town as a whole using accounting methods similar to private sector companies. -Fund Financial Statements focus on the individual parts of Town government, reporting the Town's operations in more detail than the Government -Wide Financial Statements. They focus on the most significant or "major" funds-not the Town as a whole. See Note A in the notes to the financial statements for information regarding individual types of funds. -Notes to the Financial Statements provide further explanation and support for the information contained in the Financial Statements. 2. Financial Analysis of the Town as a whole Non-Capital Capital Assets 2012 $ 12,798,911 30,653,205 2011 $ 7,529,600 30,350,244 Change $ 5,269,311 302,961 $ 5,572,272 Total Assets Liabilitie s $ 43,452,116 $ 37,879,844 $ 4,515,232 (1,690,640) 2,824,592 $ 10,977,299 23,355,293 34,332,592 $ 6,462,067 25,045,933 31,508,000 1,439,803 14,175 1,293,702 2,747,680 Current Non-Current Total Liabilities Net Position: Capital Restricted Unrestricted Total Net Position 12,226,307 391,795 (6,246,258) 6,371,844 $ 37,879,844 $ 5,572,272 13,666,110 405,970 (4,952,556) 9,119,524 Total Liabilities and Net Position $ 43,452,116 6 MANAGEMENT'S DISCUSSION AND ANALYSIS Required Supplemental Information For the Year Ended December 31, 2012, Contd. ~" (Un-audited) Revenues a Program Fines, Fees & Charges Operating Grants Capital Grants General Revenues Property Taxes Other Taxes Investment Earnings State Aid Other Revenues Total Revenues Expenses General Government Support Public Safety Health Transportation Economic Assistance Culture and Recreation Home and Community Service Other Total Expenses Change in Net Position Governmental Funds: GENERAL FUND 2012 $ 3,969,918 3,534 981,679 7,737,721 2,234,296 409,940 266,900 242,994 15, 846,982 2,509,754 255,140 400,525 3,819,088 5,703 823,233 4,249,145 1,036,714 13,099,302 $ 2,747,680 2011 $ 3,859,293 62,223 221,210 7,659,099 2,455,911 442,797 209,409 97, l 29 15,007,071 1,792,945 599,104 401,108 3,424,846 10,614 1,187,441 3,350,606 1,202,262 11,968,926 $ 3,038,145 Change $ 110,625 (58,689) 760,469 78,622 (221,615) (32,857) 57,491 145,865 839,911 716,809 (343,964) (583) 394,242 (4,911) (364,208) 898,539 (165,548) 1,130,376 $ (290,465) The majority of activity for the Town is presented in the General Funds, Town-Wide and Part-Town. Fund Balance for the General Funds increased by $551,204 and $118,322 from 2011 to 2012 respectively. The main reason for the surplus was setting aside funds in the 2012 budget for the reduction of the General Fund -Town-Wide's debt to other funds and improved mortgage tax returns. General Fund Balance for 2012 is $674,592 -Town-Wide and $1,209,862 -Part-Town in total of which $99,689 is non-spendable, $972,920 is restricted, and $811,845 is assigned or ir. unassigned. 7 MANAGEMENT'S DISCUSSION AND ANALYSIS Required Supplemental Information For the Year Ended December 31, 2012, Contd. (Un-audited) The Following Charts describe significant categories of General Fund revenues and ~" expenses: General. Fund Revenues 2012 17% ~ 4°/0 ;. \ 2% ~~~ ^Property Taxes R: Tax Items ^State & Federal Aid ^Sales and Franchise Tax oInterest & Earnings ^Departmental Income ^Fines, Licenses and Permits ^All Other General Fund Expenses 2012 o°i° r. ~r 4°io ^ Public safety ^ Transportation ^ Culture and Recreation ^ H ome and community services ^Employee benefits ^Debt Service ^ All Other 8 i1r MANAGEMENT'S DISCUSSION AND ANALYSIS Required Supplemental Information For the Year Ended December 31, 2012, Contd. (Un-audited) HIGHWAY FUND The Highway Fund ended the year with $637,636 in Fund Balance, of which $256,245 is non-spendable and $381,391 is assigned. The following charts describe the significant categories of Highway Fund revenues and expenses: Highway Fund Revenues 2012 0% 5% o Property Taxes ^ Sales Tax .~-: ,~~ °:' ^State & Federal Aid ~,.- , 796 ; t70ther Revenue Highway Fund Ezpenses 2012 5% ~ 12% aStreet tvtaintenance ^Permanent Road Improvements oSnow Removal OOther ^Machinery Purchase and Maintenance ^Employee Benefds 9 I ^Debt Service 1~r ~` MANAGEMENT'S DISCUSSION AND ANALYSIS Required Supplemental Information For the Year Ended December 31, 2012, Contd. (Un-audited) WATER FUND The Town operated four water districts during 2012 with an overall Fund Balance of ~ $1,430,192. Operating revenues totaled $1,754,611 with the expenses totaling $1,704,027 resulting in an excess of revenues over expenditures in the amount of $50,584. The modest surplus is the result of management's determination to keep spending as close as possible to the budget. SEWER FUND The Town operated fourteen sewer and drainage districts during 2012, with an overall fiend balance of $1,199,405, the main sewer district being the United Wappinger Sewer District, i`,,, with a fund balance of $1,036,504. Operating revenues for the fourteen sewer and drainage districts totaled $4,374,502 with the expenses totaling $3,948,575 resulting in an excess of revenues over expenditures in the amount of $425,927. The excess is the result of controlling spending amidst rising costs. BUDGETARY HIGHLIGHTS The Town Budget is adopted in November for the following year and is modified throughout the year as necessary. Variances in budgetary revenues and expenditures have been explained in the paragraphs above. 3. Activities regarding capital assets, long and short term debt The Town spent approximately $1.6 million dollars on five capital projects in 2012. The top three projects were: Cider Mill Loop Water Tank Rehabilitation, Wappinger Water Main '~ Extension project sponsored by New York City Department of Environmental Protection (NYCDEP), highway equipment Expenditures for the three projects accounted for ninety- nine percent (96°Io) of the total capital expenditures. The main project of the Town in 2012 was Phase I of the Wappinger Water Main Extension project, which involves the construction of the water main from United Wappinger Water District to NYCDEP Shaft 6 parcel on River Road, at a cost of $6,290,000, with estimated completion date in August 2013. raw 10 ~w MANAGEMENT'S DISCUSSION AND ANALYSIS Required Supplemental Information For the Year Ended December 31, 2012, Contd. (Un-audited) 3. Activities regarding capital assets, long and short term debt (Continued) Long Term Debt The Town has maintained a rating of Al since May 2011 by Moody's Investors Service. This rating allows for competitive bidding and lower interest rates on future borrowing. Total long term serial bond debt at the end of 2012 was $22,665,000. Of this debt, $4,325,231 belongs to the General Fund and $2,790,965 to the Highway Fund. The majority of the Town's debt relates to its water and sewer districts amounting to $7,700,844 and $7,847,960, respectively. Water and sewer debt is paid by the property owners in the respective districts. In March 2013, the Town refinanced its various purpose Public Improvement (Serial) Bonds (2003), in the amount of $1,440,000 with a net present value potential savings in interest of approximately $129,000 over ten years. In August 2012, the Town Board approved the replacement of Roberts Road Pump Station with a gravity sewer main that connects Roberts Road to the sewer main in Rosewood Court. This initiative would increase and improve facilities of the United Wappinger Sewer District through the purchase and installation of approximately 800 linear feet of 8" gravity sewer line along with manholes from the existing sewer line by the Roberts Road Pump Station to the existing sewer line located at Rosewood Court at an estimated cost of $385,000. The Town plans to use internal funds for this project instead of bonding. In December 2012, the Town Board authorized bonding for the Town's share of the cost of improvements to the Wappinger Creek Pump Station, a facility of Tri-Municipal Sewer Commission, at an estimated cost of $385,000. In June 2013, the cost was revised upwards to $580,000 and the Town is in the process of issuing bonds in October 2013 to finance the improvements. In April 2013, the Town Board authorized bonding for the purchase and installation of cartridge filter facilities at the Atlas and Hilltop Wells, and the installation of approximately 7,2501inear feet of 8" water main from the Meadowood Wells to All Angels Hill Road (Route 94) and at Route 9 at MacFarland Road in the United Wappinger Water District, at a cost of $4,040,000. Initial funding for the filters of $500,000 will be available in October, 2013. The water main loops projects are scheduled to commence in 2014 and may attract funding from third party sources. In June 2013, the Board authorized bonding for the construction of drainage improvements at '~"' Wildwood Drive and Granger Place at an estimated cost of $500,000. Financing will be issued in October 2013. 11 '~ MANAGEMENT'S DISCUSSION AND ANALYSIS Required Supplemental Information For the Year Ended December 31, 2012, Contd. (Un-audited) 3. Activities regarding capital assets, long and short term debt (Continued) Short Term Debt ~ The Town has one Bond Anticipation Note (BAN) outstanding of $1,547,843 as of December 31, 2013 ft-nding various projects within the Town. The BAN was renewed on March 29, 2013 for $1,663,375 at an interest rate of 0.64% per annum and is payable in full at maturity on March 28, 2014. The Town plans to convert the BAN into permanent financing in 2014. 4. Currently Known Facts Bearing on the Future The Town participated in the Southern Dutchess Consortium for the 2007 revaluation of i,,,, property assessments. The 2007 revaluation successfully brought all property assessments to full valuation and provided equitable tax distribution among all homeowners within the town, county and shared school districts. This revaluation went into effect for the 2008 tax levy and ~„ has continued every year. The Town continues to have a shared service agreement with the Town of Fishkill for a Joint ,;, Assessor. This program is known as the Coordinated Assessment Program or CAP. The CAP has and will continue to deliver cost savings to the Town. The Town is current with all tax certiorari cases to those filed in 2012, thereby limiting unexpected retroactive exposures. The assessment roll established in 2012 for 2013 taxes resulted in homestead assessments decreasing by an average of 4.81%. However, overall, the proportion of non-homestead to homestead assessments changed by approximately 2%. Non-homestead assessments for 2013 are 42% of the total and homestead assessments are 58%, instead of 41 % and 59% in 2012, representing a shift in the tax burden away from homeowners to commercial properties. The Town adopted an overall tax levy increase of 1.83% in 2013 down from 1.97% in 2012. In June 2013, the Town signed a Memorandum of Agreement with CSEA for highway employees covering the fiscal year 2013, with an agreement to open negotiations for wages and longevity effective January 1, 2014 and January 1, 2015. In January 2013, Town Hall employees also secured a collective bargaining agreement with the Teamsters covering the period 2011 through 2013. 12 rr. ~s '~ MANAGEMENT'S DISCUSSION AND ANALYSIS Required Supplemental Information For the Year Ended December 31, 2012, Contd. (Un-audited) 4. Currently Known Facts Bearing on the Future, (Continued) During the 2013 budget deliberations, the Town Board set aside $155,000 in the General Fund for reduction of its indebtedness to other Funds. This had a positive impact in the General Fund balance at the end of the year. The Town is currently considering bonding for a project to replace its entire fleet of 2,500 water meters at a cost of approximately $750,000 due to potential problem of meter reading equipment failure. Meters are essential in recording water consumption. In the absence of these meters, every household/benefit unit would be billed a minimum, with potential for huge revenue loss to the Town. ~„ In May 2012, The Town entered into an agreement with the NYCDEP to prepare design plans and specifications and a Map, Plan and Report for the United Wappinger Water District water main extension to the NYCDEP Shaft 6 parcel on River Road (Phase I). The installation and construction phase of the project commenced in October 2012 and is expected to be finalized by August 2013 at a projected cost of $6,290,000. Upon completion, the Town's United Wappinger Water District is expected to supply approximately 160,000 i,,, gallons of water per day to NYCDEP at a price of approximately $180,000 a year. This additional revenue stream will help boost the district's financial position. Phase II construction will involve construction of the water main from NYCDEP to Chelsea Hamlet at a projected cost of $4,700,000. NYC DEP provided funding for phase 1 and has agreed to principle to provide funding for phase II. The Town is positioned for the development of 225 new homes by a private developer. In August 2013, the developer paid $1,125,000 in subdivision fees to the Town's Parklands Trust Fund. In addition, they paid $243,000 as capital buy in fees to hook up the new homes ~ to the Town's water and sewer facilities. ;{ `r 13 F, TOWN OF WAPPINGER, NEW YORK STATEMENT OF NET POSITION ~ DECEMBER 31, 2012 ASSETS Current assets: Cash and cash equivalents Cash and cash equivalents, restricted Receivables (net) Inventories Prepaid expenses Total current assets Capital assets: Land Infrastructure, net of depreciation Buildings, machinery and equipment, net of depreciation Construction in progress Total capital assets Total assets LIABILITIES Current Liabilities: Accounts Payable Accrued liabilities and retainage payable Notes payable Overpayments Deferred revenue Due to other governments Current portion of long-term liabilities Landfill remediation liability Bonds payable -Capital Bonds payable -Non-capital Total current liabilities Non-current liabilities: Deferred revenues Judgment and claims Compensated absence liabilities Other postemployment benefits liability Landfill remediation liability Bonds payable -Capital Bonds payable -Non-capital Total non-current liabilities Total liabilities NET POSITION Invested in Capital Assets, net of related debt Restricted for: Recreation Unrestricted Total net position ~" ~ Total liabilities and net position f See independent auditors' report GOVERNMENTAL $ 10,478,754 5,000 1,958,432 145,013 211,712 12,798,911 7,782,217 13,991,370 7,173,033 1,706,585 $ 43,452,116 $ 605,515 357,465 1,663,375 28,368 5,573,044 515,971 8,561 990,834 1,234,166 10,977,299 3 l ,496 80,000 320,180 2,252,442 231,175 14,332,887 6,107,113 23,355,293 34,332,592 13,666,109 405,970 (4,952,556) 9,119,524 $ 43,452,116 14 ~~; €s Irs z O ~, H O a E~ W ~~ w ze ax W U zz ~ ~ a 3~ O ~ 3Q 0 E-~ z W w F a H W W ,z„ RW'r ~ W Wz~ Q avw Wzz ..Q H w z a z~ H O d A z 0 QQH a~"~ Qz ~~z ~o U C7A0 ~, H~-7 ~z~ W ~ F a z °~o U W as d W x~ ~a rOr_~ I~ W z W a W .--. ...-..~..-..-. ~ O ~ ~ V'1 ~ M ~ .~. ~-+ M W •--~ M N O O~ V1 O r, o . . .-~ M .--~ ~ l~ M 00 M V1 V' [~ l~ ~h Vl 00 -i N O~ ~ ~ O [~ ~ ~ ~--~ ~/1 O O N O~ O N ~!1 00 ~O ~ 00 ~D N ~ ~ ~ ~ tt ~ 00 O M •--~ ~ [~ [~ ~ ,-~ ~ 0o O O~ ~O ~ M N M 'V' ~ ~ ~ ~ ~ O r N O ~ ~t d' M m ~O ~O N O •-, ~O N ~n m~ N N oo [~ N M •--~ oo l~ .--~ O N ~ i i M ' •--' Vl ' 01 ~o i v i O~ N o0 M V'1 M ~ M M ~ O ~~ ~ o . ~ ~, , U ~ O ' Y b ~n O o ~ ~ ~ oo ~ ' ~ M O~ t~ O N N O M O ^^ O~ b ~ ~ N ~ ~ OHO O\ ~ ~ ~ N vl N O~ v ~ M M cd ~ O ~~ Y f}y ~ ~ ~ ~ ~ ~ ~, C Q ~, o ~ M ~ ~ O ~ v1 ~ N oo O M~ O v ~ Y ~ ~ ~ i-. [~ .-. vl O t ~ N ~--~ l~ M ~ iG k ~ ~ ~ C ~ ~ Y ~ ~ ~ ~ ~ yam., O v~ O ~n N ~ o0 N ~ M 0o N O 01 O ~ t1. CL k ~ ~ ,~ ~ Q Q ~ ~ ~~ ~~ ~ V7 ~ N (~ ; O yam„ ~ _ fA Y . ~ ~ .~ O ~,,.,~ ~ ~ ~ x a w ~ ~ ~ ~ V H ~C7rn~ ~ d ~ ~~ /. O ~1+ U CC y p ~-. ~ • ~ as d ~ ~ ~ Y a ~ ~ U ~ bA L 6> z~>~ O ~°~b ~ o~ ~ a ~ ~ .b o U ~ ~ ~ ~ p' ~ °' a~i y c ~ ' wC7C7a.x [~W UxS .o ~. .~ b~A ~I U ~ ~ ~ ~ M ~--~ ~~ ~ ~~ O O .~ .~ •~ z z 0 ~. 0 N .b N ~a E-+ i ° a° ~rnoo `"~ Nn Nr~orvr~ N 'noroorn M v~ ~ v i o r o rn 00 ^ ^ cn o o r o 'n r v, M r, .- rn o ~a r o a, rn r o~ ~ o , W A r v' 7 N 0 'r!1 ~ V •-• ~ V1 M lD 00 M O ~/1 M o.-..~N~oo-.r lD .-.• ~D v, V N Vl a0 ~oooov N x O~ o~ E" L, ~ V -- N M ~ --~ --~ N O ~D ~O ~ 'f1 '/1 r M V d' r ~D M O ~ w F ^ ~ ~ O ~ ~ ~ ~ C7 O i i N N ~ ~ ~ i ~ O~ i ~ i i ~ i ~ ~ ~ i i i vi ~ 'n oro M M 7 O N 00 O~ ~ O ^' o 'n rn N r r O z, O A oo ~ O N ~ ~ ~ w~ vj ~ a, o ~ o, ~ ~ ~ ~ o r~ v vi r o0 0 ' 0 , ~ ~ ~ ~ A N 0 N 0 rn 00 ~ M O N r oo n r U A o; 'n r ~ ~ ~ o0 0O F~' W~ M m r ~~ o ~ ~ m r OM p \D ~ ~ Q U a P. ~ y3 v3 ~ ~ i 1 Q~ i i i r. M '/1 ~ i i i i/1 vl O i O cy i ~ O~ M ~ .-. 7 ~D M M T N M O oc r O O ~ O <I M 7 ~ 3 ~ ^ ~ ~• N ~ ^ ~ LL E/j EA V3 E~ ' O O ~ ~ 0 0 M V1 00 V ~ ~ ~ ~ ~ A W A r rn M oo r rn N rn ~ N o o, w ~ F ~ ~ ~ ~ 7 R ~ F., ~ Q L ^ ~ W W N i ~ W `n ~ Q ~ `n ~ ~ W z w Ir U ~ _ C7 a ~ ' '" ~ ~ i i V1 T M_ N M M M 00 Vl •--~ O 0 O 0 ' N N V1 V O~ ~p M 00 V'1 ~ M r3 d Oi U 3 ~ h ~ ~ ^ N ~ O~ 0 00 Vl DO M N z O M N M 0 O ~ z v x ~„ ~, ~„ ~.' 5 O ~ ~ ~ ~ ~ ~ v~ ~ ~ ~ ~ a, ~ ' ~ ~ o 00 M 1 O ~ ~ U 3 ago ~ N o 0 N o 0 T W ~D ~ O N O O~ ~D 00 00 r a O A -- ~~~ O r O M ~D ~D R Cr oo r M V N N .-. `0 ~ 00 F z ~ M M ~ C ~ M O 0 N M W V z~w ~ ^ 4 W ~ i ~ N r ' ' ' M ao D\ goo ~oa, O~ ~ O ' ~ ° ~ ~ C7Ni ~O A r O N O 7 W ~ O 00 ~D V'1 N 7 CT N '/~ a0 fX 3 A ,- 'n r ~ r ~o 00 0. ~o N O M O o; `~ v~ rn ~ v r W z ~~ M V 0 ... ~ M ~ r. ~ ~D 00 j w ^ W V O es, ~ ~ ~, .o F a y W A .~ i U ~ u ~„ ~ , a = o v a H ~ ~ , ; ~ Z = a ~~~ ~.> y r ti ~ F. Q K _ ~ F ~ R ~ „ ~ O c E ~ ~ ~ ~ ~ ~~ ,~ v v ~ v c F ~ ... >, «t is `~ on ~ o > Z ci cAa cd c o v ;9 0 'o N ti .. o ~ s .a ,~ is a c ` W , ..7 cap ~ c a .. ~ > F a y o ~ ~" ~ v u ' o w v E` fl..~ a i 6 • ~ ~ s `' w °a a°i m v ~ aitli ~ m E •v ~o ~ v 6 E v ~ v ~' .,~ on >, C o o v c ^~ ~a n, a. .~ D u ~° y ~ c c A R ca en o o c o v ~ ttl ~ ~ s y v ca ca A ° ~ ° ~ '~ ~ a v ~ . ~ ~ ~ c ~ L ~ E' v ~ 0 2 ~ ~ ~v o cG ~, D c y y + N 6 N N . U U 0 7 7 > v Q . N C N N W V u .. u c~ N> O~~ u C~ ~ L1: Q ca ~a Uv N ;? i , cG QQvJ~a QQ~Oa1DQQ w , O v O '~ G v TOWN OF WAPPINGER, NEW YORK RECONCILIATION OF GOVERNMENTAL FUNDS BALANCE SHEET '~"' TO THE STATEMENT OF NET POSITION DECEMBER 31, 2012 +r Total fund equity for governmental funds $ 4,382,436 Total net position reported for governmental activities in the statement of net position are different because: r. Capital assets used in governmental activities are not t, financial resources and therefore are not reported in the funds. 30,653,205 Long-term liabilities, including bonds payable, ~ compensated absences, other postemployment benefits, judgement and claims and landfill remediation liabilities are not due and payable in the current period t t d i th f d d th f (25 557 358) repor e n e un s. an ere ore are no , , Grants received for capital assets are deferred and amortized over the life of the asset. (31,496) Accrued interest is not reported in the funds. (327,263) Total net position of governmental activities $ 9,119,524 jr ~" See independent auditors' report. 17 ~. w ~r W U z_ Q a a m c z a 7w C ~w U O Q ~'x~ ~U°z w°a 7z~. a ~~F x W Q Q 7 3Ww ox'o w ~ V z. a LL O E"' 7 w W F F h M co M o~ 0 0 h ~ 'n V O N ~l 00 00 O h~ V O~ h N h M ~n N 'n O O~ O~ ~O N a\ 7 00 ra (n Q\ oo .--. ~ rn V oo I~ T ~O M Q Q V oo h V1 O Vl ~O N N o0 7 (..i ~' ~D ~D d: V N N O 01 00 [- w o, c~ ~~ o ^ ~ ~ ~ ~ ~ O a~ °'^ ~o~ ooz ~~ ~ ~ ~~w ~ . i i t`l -7 ~ o rn O Q V Q M oo N ~ W 7 M (~ 7 n h aaW U y [~ ' ' N ' M ' ' ' O 1 N a ~ n1 ~ ~ O 3z ~ o M ~ w -~ ~; v Si ~ i~ i~ i ~~ i 1 N a0 00 ~ W Q F 7 ~ ~ T r! ~D i - w ~ o v i ~ M ' M O ' ' ~D O ~'^ ' O O M ~°° N a ` ~ o ~ ~ 3z v o ri o M h r~i = o o O h v i v i ~ c~ w ~; ~; x .a ~ ~~~ M \O o000 h V• oho O ° N ~o 7 ~ ~ O~ N M ~ V] W 1 N ' ~ Q` M ao N T ~O O d' h - ~' vi 'n N OO o0 '-~ 7 00 ~ h ~ rn a ~ 00 M O~ M N \O Z O W h M N O z ~ `v N a 0 N N `~ W 3 ~' [-~ ~ 0 W ~ o W w ~ y L ~' 0. _ ~ ~ E u ~ ~ Q.. c ~ ~' T ~' ed ~ T R ~ ~ 7 N N y C F~ W O L 0 0° o E> E c a ~'d nayC o~w °~ ~ o aJ y xxzC]5~aiLrn~v~ ^ ~O O ~D ~ t~ Q\ V't O~ M d ~ N L w °' a ~' F ~ b d C a, „ a C o a 5 a d W a ° ~ °~' u a' ~ 3S c ~ c X aJ ,g ~` o W ~¢~^+++ F A 2 F y E. d C ~ ~ k W' C t E > ~ ~ o ~'~' ~ o aGi ~ q V A U V ~ o'~ ~ >. w ~ s ~ o ~ _o °~ '^ c ~ ~ ~ o ~ ~ n.D u C7aYF` W Ux W Q W N M~ M h T 0 O~ ^~ D\ [~ Q` oo b M h M O O~ h Vt vi V ~ ~ lip OM0 7 h '~i N N N M ~--~ M ~/1 00 ' o v ' ' o ~o v ~~ o v v, ~! o ~ ~ ~, O V'1 M 00 f~ ~ rn v 7V ... M ' h ' M ~O ' ' h \O ~ ~ r `r°{ rn rn ~ ^ ^ M '/1 M r V M ~ b ~ M ~ ~ i ~ i N O 7 'n O~ --^ .M. N O\ 00 Vt ~ O ~ V ^ N M N ~-^ M h V1 N Oh. V M O Vl ^ ~ 'n oh.' 0 0 o ~o h r ~ i~ ~ ~ i~ M O N M lD ~O D\ b T h M M M 00 00 M h ~ ~ Vl ~ ~D N JO N V't o~0 1~ O b 7 00 N ~O N ~D ~O 01 V1 V'1 V~ N M M M r M M V h 00 Vt 00 00 M O~ M h h 0 D, N ^ M N -- N ^ ~ ~ h ~ ~ N Q' 0~0 O ON ~ ~ M ~ ~ O O O ~ ~ V'J .-. Vl N ~ V1 b M ^ M O o0 0o O O ~n 'n O O o0 0o O C h V M ~--~ M ~i O , ~ O O O V 7 M M ' o0 00 ~ ~ ~~ h .h. i ~ r 1 i ,~, i i ~ 1 i d L 7 N O pp ~ e 'u 0. ~ o ~ u a F:. ~ t0 u fi c ~ ,.~. h ~ O C b ~ y ~ `e ~ ~ ~ F A ~-' C b 00 h0 ~, v c c d v w LQ ma o. O m O O M M lp O~ 7 7 O~ N N N Vl 00 M O M a v v h ^ a, V n m 1~ h F~ ~D V N M M O O~ f N ~ M ~ 00 00 h oo v~ o' v °v Vl M O~ 7 h ~ vt h N 00 O O~ ~ b 0 0; o V1 h M M V a. h ~o O~ h ~D 00 0o h V1 h M ~ ~ N O N N c} ~O M V1 00 Oo ^ D\ D` O ^ O J N O N O O~ ~ N M Vl M 7 V1 t^! h d d VL .-i N 7 L O O y y N N L L ~' Y O M M ~ ~ L L o m ~ ~ 'O E E e > > A O C c ~ ~ ~ R O d ~ ~ L C7 0~ y > 'C 9 u O C C W fi [z 0 v 0 v v v C W TOWN OF WAPPINGER, NEW YORK RECONCILIATION OF STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE OF GOVERNMENTAL FUNDS TO THE STATEMENT OF ACTIVITIES '~` FOR THE YEAR ENDED DECEMBER 31 2012 l Net change in fund balance -total govenvnent funds The change in net position reported for governmental activities in the statement of activities is different because: Governmental funds report all capital outlays as expenditures. However, in the statement of activities, the cost of certain assets is allocated over their estimated useful lives and reported as depreciation expense. This is the amount by which capital outlays exceeded depreciation expense in the current period. Grants received for capital projects are amorized over the life of the asset. This is the amount by which the grant exceeded the amortization in the current period. Bond proceeds are reported on the financing sources in governmental funds and thus contribute to the change in fund balance. In the statement of net position, however, issuing debt increases long-term liabilities and does not affect the statement of activities. Similarly, repayment of principal is an expenditure in the governmental funds ~r but reduces the liability in the statement of net position. Debt issued: Bonds payable issued Less: non-cash refunding issue Bond anticipation notes redeemed F' Repayments: Bond anticipation note principal Bond principal In the statement of activities, interest is accrued on outstanding bonds, whereas in governmental funds, an interest expenditure is ~, reported when due. This amount represents the change between what was paid and what was accrued through 2012. 329,984 302,961 3,150 (34,000) 34,000 2,526,000 Some expenses reported in the statement of activities, such as compensated absences, landfill liabilities and postemployment benefits do not require the use of current financial resources and therefore are not reported as expenditures in governmental funds. This amount represents the change between what was paid and what was accrued through 2012. Net change in net position of governmental activities See independent auditors' report. 2,526,000 122,401 (536,816) $ 2,747,680 19 ftir TOWN OF WAPPINGER, NEW YORK STATEMENT OF NET POSITION r" FIDUCIARY FUND DECEMBER 31, 2012 AGENCY FUNDS ASSETS Cash and cash equivalents $ 146,785 Total assets $ 146,785 LIABILITIES Escrow funds returnable and other liabilities $ 146,785 Total liabilities 146,785 NET POSITION - Total liabilities and net position $ 146,785 See independent auditors' report. 20 hr. TOWN OF WAPPINGER, NEW YORK NOTES TO THE FINANCIAL STATEMENTS DECEMBER 31, 2012 NOTE A - Summary of Significant Accounting Policies The Town of Wappinger, New York (the "Town") was incorporated on May 20, 1875, under the provisions of the State of New York. The Town operates under a Town Board form of government, consisting of a Supervisor and four Councilmen women. The Supervisor serves as the Chief Executive Officer and as the Chief Fiscal Officer of the Town. The Town provides the following services: highway maintenance, water, sewer, planning, zoning, building and safety inspection, lighting, and culture and recreation. The Town's financial statements are prepared in accordance with accounting principles generally accepted in the United States of America as applied to governmental units (GAAP). The Governmental Accounting Standards Board (GASB) is responsible for establishing GAAP for state and local governments through its pronouncements (Statements and Interpretations). The y,,,, Town is also required to follow the pronouncements of the Financial Accounting Standards Board (FASB) issued through November 30, 1989 (when applicable) that do not conflict with or contradict GASB pronouncements, .in preparing its government-wide financial statements. ~" The more significant accounting policies established by GAAP and used by the Town in preparing its government-wide and fund financial statements are discussed below. i 1. The Reporting Entity The Town, for financial purposes, includes all of the funds relevant to the operations of ~" the Town of Wappinger, New York. The financial statements include organizations, function and activities that are controlled by or dependent upon the Town. Control or dependence is determined on the basis of budget adoption, taxing authority, funding and appointment of the respective governing board. Under these criteria, no other entities are iir included in the Town's financial statements. 2. Basic Financial Statements -Government-Wide 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). Both the government-wide and fund financial statements categorize primary activities as either r"' governmental or business type activities. The Town's parks and recreation, public works, and general administrative services are classified as governmental activities. The Town's water services are also classified as governmental activities since user fees are not ~„ intended to cover all costs including depreciation. ~, In the government-wide Statement of Net Position, the governmental activities columns is presented on a consolidated basis by column, and is reported on a full accrual, economic resource basis, which recognizes all long-term assets and receivables as well as long-term debt and obligations. The Town's net position is reported in three parts- invested in capital assets, net of related debt; restricted net assets; and unrestricted net assets. The Town first utilizes restricted resources to finance qualifying activities. s. 21 TOWN OF WAPPINGER, NEW YORK 1~ NOTES TO THE FINANCIAL STATEMENTS (CONT'D) DECEMBER 31, 2012 NOTE A - Summary of Significant Accounting Policies (Cont'd) 2. Basic Financial Statements -Government-Wide Statements (Cont'd) The government-wide Statement of Activities reports both the gross and net cost of each of the Town's functions or activities. The functions are also supported by general government revenues (property and sales taxes, certain intergovernmental revenues, ~ fines, permits and charges, etc.). The Statement of Activities reduces gross expenses (including depreciation) by related program revenues, operating and capital grants. Program revenues must be directly associated with the function (public works, community and youth services, etc.). Operating grants include operating-specific and discretionary (either operating or capital) grants while the capital grants column reflects capital-specific grants. The net costs are normally covered by general revenue (property, sales or mortgage taxes, intergovernmental revenues, interest income, etc). This government-wide focus is more on the sustainability of the Town as an entity and the change in the Town's net position resulting from the current year's activities. 3. Basic Financial Statements -Fund Financial Statements The financial transactions of the Town are reported in individual funds in the fund financial statements. Each fund is accounted for by providing a separate set of self- balancing accounts that comprises its assets, liabilities, reserves, fund equity, revenues and expenditures/expenses. Funds are organized into three major categories: governmental, proprietary, and fiduciary. An emphasis is placed on major funds within the governmental and proprietary categories. A fund is considered major if it is the primary operating fund of the Town or meets the following criteria: a. Total assets, liabilities, revenues, or expenditures/expenses of that individual governmental fund are at least 10 percent of the corresponding total for all funds of that category or type; and b. Total assets, liabilities, revenues, or expenditures/expenses of the individual governmental fund or enterprise fund are at least 5 percent of the corresponding total ~ for all governmental and enterprise funds combined. The following fund types are used by the Town: A. Governmental Funds The focus of the governmental funds' measurement (in the fund statements) is upon determination of financial position and changes in financial position (sources, uses, and balances of financial resources) rather than upon net income. 22 it TOWN OF WAPPINGER, NEW YORK irrr NOTES TO THE FINANCIAL STATEMENTS (CONT'D) DECEMBER 31, 2012 NOTE A - Summary of Significant Accounting Policies (Cont'd) ir` 3. Basic Financial Statements -Fund Financial Statements (Cont'd) The following is a description of the governmental funds of the Town: General Fund -Town-wide 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 another fund. The General Fund is considered a major fund and is presented separately. 2. General Fund -Part-Town is used to record revenues and expenditures related to services provided to residents living outside the Village of Wappingers Falls, such as police protection, planning and zoning services. The General Fund -Part-Town is considered a major fund and is presented separately. 3. Highway Fund is used to record the revenues and expenditures related to the maintenance of Town roadways. The Highway Fund is considered a major fund and is presented separately. 4. Water Fund is used to record the revenues and expenditures related to the delivery of water to the Town's customers. The Water Fund is considered a major fund and is presented separately. 5. Sewer Fund is used to record the revenues and expenditures related to the delivery of sewer services to the Town's customers. The Sewer Fund is considered a major fund and is presented separately. 6. Capital Projects Fund is used to account for financial resources to be used for the acquisition and construction of major capital facilities. The Capital Projects Fund is considered a major fund and is presented separately. However, no budgetary comparison schedule is presented as required supplemental information, as the Town is not legally required to adopt an annual budget for the Capital Projects Fund. 7. Non-major Funds include those that are used to account for the proceeds of specific revenue sources that are legally restricted to expenditures for specified purposes. These include the Special Grant, Lighting and Miscellaneous (Ambulance) Funds. B. Fiduciary Funds Fiduciary Funds are used to report assets held in a trustee or agency capacity for others and therefore are not available to support Town programs. The reporting focus is on net position and changes in net position and are reported using accounting principles similar to proprietary funds. rr The Town's fiduciary funds are presented in the fiduciary fund financial statements. Since by definition these assets are being held for the benefit of a third party and cannot ~,,, be used to address activities or obligations of the government, these funds are not incorporated into the government-wide statements. 23 TOWN OF WAPPINGER, NEW YORK `r NOTES TO THE FINANCIAL STATEMENTS (CONT'D) DECEMBER 31, 2012 NOTE A - Summary of Significant Accounting Policies (Cont'd1 rr. 4. Basis of Accounting fir. Basis of accounting refers to the point at which revenues or expenditures/expenses are recognized in the accounts and reported in the financial statements. It relates to the timing of the measurements made regardless of the measurement focus applied. ~ A. Accrual The governmental activities in the government-wide financial statements and fiduciary ~. fund financial statements are presented on the accrual basis of accounting. Revenues are recognized when earned and expenses are recognized when incurred. ., B. Modified Accrual The governmental funds financial statements are presented on the modified accrual basis of accounting. Under the modified accrual basis of accounting, revenues are recorded ~ when susceptible to accrual; i.e., both measurable and available. "Available" means collectible within the current period or within 60 days after year-end. Expenditures are generally recognized under the modified accrual basis of accounting when the related liability is incurred. The exception to this general rule is that principal and interest on general obligation long-term debt, if any, is recognized when due. 5. Financial Statement Amounts A. Cash and Investments Cash includes amounts in demand and time deposits, as well as, short-term investments. State statutes and the Town's own written investment policy govern the investment policies of the Town. The Town may invest its funds in banks or trust companies authorized to do business in the State of New York, as well as investing in obligations of the U. S. Treasury, U.S. Agencies, and obligations of the State of New York and its political subdivisions. Deposits not covered by Federal Deposit Insurance, are collateralized by the banking institutions with investments governed under state statutes. Short-term investments consist of investments in repurchase agreements. The repurchase agreements involve purchases by a broker of portfolio securities concurrently with an agreement by the broker to sell the same securities at a later date at a fixed price. Generally, the effect of such a transaction is that the Town can invest its excess cash balances at competitive interest rates. The Town reports its repurchase agreements at market value, which approximates cost plus accrued interest. 24 TOWN OF WAPPINGER, NEW YORK i~ NOTES TO THE FINANCIAL STATEMENTS (CONT'D) DECEMBER 31, 2012 t': NOTE A -Summary of Si>?nificant Accounting Policies (Cont'd) 5. Financial Statement Amounts (Cont'd) A. Cash and Investments (Cont'd) The cash and investments of the Town at December 31, 2012, are as follows: CAPITAL NON- GENERAL IIIGHWAY WATER SEWER PROJECTS MAJOR FUNDS FUND FUND FUND FUND FUNDS TOTAL Non-Interest Bearrctg Accounts $ 850 $ - $ - $ - $ _ $ - $ 850 Interest Bearing Accounts 1,734,759 545,639 1,097,210 653,207 6,359,739 R7,350 10,477,904 T07'ALS $ 1,735,609 $ 545,639 $ 1,097,210 $ 653,207 $ 6,359,739 $ 87,350 $ 10,478,754 Custodial credit risk is the risk that in the event of a bank failure, the Town's deposits may not be returned to it. While the Town does not have a specific policy for custodial "" credit risk, New York State statues govern the Town's investment policies, as discussed previously in these Notes. Governmental Accounting Standards Board Statement No. 40 Deposit and Investment Risk Disclosure directs that deposits be disclosed as exposed to custodial credit risk if they are not covered by depository insurance, or collateralized by securities held by the Town or its agent in the Town's name. The Town's cash balances were fully collateralized with securities held by the Town's third party custodian and not subject to custodial credit risk. r« B. Inventories Inventories consist of significant expendable supplies primarily sand and road salt and are carried at cost. C. Capital Assets Capital assets purchased or acquired with an original cost of $500 or more are reported at historical cost or estimated historical cost. Contributed assets are reported at fair market r" value as of the date received. 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 on all assets is provided on the straight-line basis over the following estimated useful lives: Buildings ~' Infrastructure- ~' Infrastructure - Machinery anc Improvements wr ~r 15-40 years - Water & Sewer 40 years - Roads 15 years ~ equipment 5-15 years 10-30 years 25 ~. it TOWN OF WAPPINGER, NEW YORK NOTES TO THE FINANCIAL STATEMENTS (CONT'D) DECEMBER 31, 2012 NOTE A - Summary of Significant Accounting Policies (Cont'd) 5. Financial Statement Amounts (Cont'd) ~" C. Capital Assets (Cont'd) GASB Statement No. 34 requires the Town to report and depreciate new infrastructure ,,,, assets effective with the beginning of 2003. Infrastructure assets include roads, bridges, underground pipe (other than related to utilities), traffic signals, etc. These infrastructure assets are likely to be the largest asset class of the Town. Neither their historical cost nor related depreciation had historically been reported in the financial statements. The retroactive reporting of infrastructure is subject to an extended implementation period and is first effective for fiscal years ending in 2007. The Town implemented the general provisions of GASB Statement No. 34 in 2003 but had not implemented the retroactive ~. reporting of infrastructure assets by the end of 2007 as required. The Town currently does not have a timetable in place for implementing the retroactive infrastructure provisions. D. Fund Balance Classifications Fund balance is presented in five different classifications which focus on the constraints imposed on resources in governmental funds, rather than on availability for appropriation. The classifications include: non-spendable, restricted, committed, assigned, and unassigned. Non-spendable consists of assets that are inherently non-spendable in the current period either because of their form or because they must be maintained intact, including prepaid items, inventories, long-term portions of loans receivable, financial assets held for resale, and principal of endowments. Restricted consists of amounts that are subject to externally enforceable legal purpose restrictions imposed by creditors, grantors, contributors, or laws and regulations of other governments; or through constitutional provisions or enabling legislation. '' Committed consists of amounts that are subject to a purpose constraint imposed by a ~' formal action of the government's highest level of decision-making authority before the end of the fiscal year, and that require the same level of formal action to remove the constraint. The Board is the decision-making authority that can, prior to the end of the i,,, fiscal year, commit fund balance. Assigned consists of amounts that are subject to a purpose constraint that represents an intended use established by the government's highest level of decision-making authority, or by their designated body or official. The purpose of the assignment must be narrower than the purpose of the general fund, and in funds other than the general fund, assigned fund balance represents the residual amount of fund balance. Unassigned represents the residual classification for the government's general fund, and could report a surplus or deficit. In funds other than the general fund, the unassigned classification should be used only to report a deficit balance resulting from overspending ~"` for specific purposes for which amounts had been restricted, committed, or assigned. V~r 26 r TOWN OF WAPPINGER, NEW YORK ~,,,, NOTES TO THE FINANCIAL STATEMENTS (CONT'D) DECEMBER 31, 2012 NOTE A - Summary of Significant Accounting Policies (Cont'd) 5. Financial Statement Amounts (Cont'd) i ' "' d) D. Fund Balance Classifications, (Cont When resources are available from multiple classifications, the Town spends funds in the ~ following order: restricted, committed, assigned, unassigned. The following details the allocations and amounts of fund balance following the implementation of GASB 54 as of December 31, 2012: General Fund -Town Wide Nonspendable: Prepaids and Inventory $ 69,410 Restricted: Recreation: 405,970 Unassigned 199,212 Total General Fund -Town-Wide 674,592 General Fund -Part-Town ~' Nonspendable: Prepaids and Inventory 30,279 Restricted: Debt Service 164,050 Miscellaneous 402,900 Assigned 612,633 ~ Total General Fund- Part-Town 1,209,862 Highway Fund Nonspendable: Prepaids and Inventory 256,245 Assigned 381,391 Total Highway Fund 637,636 Water Fund Nonspendable: Prepaids and Inventory 791 ~ Assigned 1,429,40 I Total Water Fund 1,430,192 Sewer Fund 11r Assigned 1,199,405 Total Sewer Fund 1,199,405 Non-Major Assigned 78,951 Total Non-Major 78,951 TOTAL $ 5,230,638 27 TOWN OF WAPPINGER, NEW YORK NOTES TO THE FINANCIAL STATEMENTS (CONT'D) DECEMBER 31, 2012 NOTE A -Summary of Significant Accounting Policies (Cont'd) 5. Financial Statement Amounts (Cont'd ~- D. Fund Balance Classifications, (Cont'd The Town also has $405,970 of unassigned but restricted funds for recreation, which includes funds commonly referred to as Parkland Trust deposits, as well as funds set- aside for the Carnwath property. These amounts are accounted for in the Trust and Agency fund and transferred to the General Fund when released from restriction. For government-wide financial presentation purposes, these amounts are completely ~ reclassified to the General Fund and restricted. E. Accumulated Compensated Absences It is the Town's policy to permit employees of the Highway Department to accumulate a limited amount of earned but unused vacation and sick leave, which will be paid to employees upon separation from the Town's service. Other Town employees may accumulate a limited amount of unused compensated absences as well. However, for other Town employees, only unused vacation leave will be paid upon separation from the Town's service. The Town accrues a liability for compensated absences, which meet the following criteria: 1. The Town's obligations relating to employees' rights to compensation for future absences is attributable to employee's services already rendered; 2. The obligation relates to rights that vest or accumulate; 3. Payment of the compensation is probable; 4. The amount can be reasonably estimated. In accordance with the above criteria, the Town has accrued a liability for vacation pay, which has been earned and not taken by Town employees as of December 31, 2012, in the amount of $320,180. The non-current portion (the amount estimated to be used in ~"" subsequent fiscal years) for governmental funds is maintained separately and represents a reconciling item between the fund and government-wide presentations. It is anticipated that none of these liabilities will be liquidated with expendable available financial ~, resources. F. Interfund Activity '" Interfund activity is reported as either loans, services provided, reimbursements or transfers. Loans are reported as interfund receivables and payables as appropriate and are subject to elimination upon consolidation. Services provided, deemed to be at market or rr near market rates, are treated as revenues and expenditures/expenses. Reimbursements are when one fund incurs a cost, charges the appropriate benefiting fund and reduces its related cost as a reimbursement. All other interfund transactions are treated as transfers. Transfers between governmental or proprietary funds are netted as part of the reconciliation to the government-wide financial statements. ~lr 28 r. i'5 ~r TOWN OF WAPPINGER, NEW YORK ~„ NOTES TO THE FINANCIAL STATEMENTS (CONT'D) DECEMBER 31, 2012 NOTE A -Summary of Significant Accounting Policies (Cont'd) 5. Financial Statement Amounts (Cont'd) G. Budgets The Town employs formal budgetary accounting as a management tool, on a basis consistent with generally accepted accounting procedures. During the year, a budget was adopted and modified by the Town Council for the General Fund and Non-major Funds. Budgetary controls are established or adopted for the Capital Projects Fund on a project basis. Unused appropriations of the annually budgeted funds lapse at the end of the year. H. Pension Plans ~,,, Plan Description The Town of Wappinger participates in the New York State and Local Employees' Retirement System (ERS), the New York State and the Public Employees' Group Life ~' Insurance Plan (Systems). ERS is acost-sharing multiple-employer retirement system. The Systems provide retirement benefits as well as death and disability benefits. Obligations of employers and employees to contribute and benefits to employees are iirr governed by the New York State Retirement and Social Security Law (NYSRSSL). As set forth in the NYSRSSL, the Comptroller of the State of New York (Comptroller) serves as sole trustee and administrative head of the Systems. The Comptroller shall adopt and may amend rules and regulations for the administration and transaction of the business of the Systems and for the custody and control of their funds. The Systems issue a publicly available financial report that includes financial statements and required ~ supplementary information. That report may be obtained by writing to the New York State and Local Retirement Systems, 110 State Street, Albany, New York 12244. Funding Policy The Systems are noncontributory except for employees who joined the New York State ~ and Local Employees' Retirement System after July 27, 1976 who contribute 3% of their salary. Under the authority of the NYSRSSL, the Comptroller shall certify annually the rates expressed as proportions of payroll of members, which shall be used in computing the contributions required to be made by employers to the pension accumulation fund. ~r The Town of Wappinger is required to contribute at an actuarially determined rate. The required contributions for the current year and two preceding years were: ERS 2012 $ 440,265 2011 $ 323,973 2010 $ 248,337 The Town's contributions made to the Systems were equal to or in excess of 100 percent of the contributions required for each year. 29 ~: TOWN OF WAPPINGER, NEW YORK NOTES TO THE FINANCIAL STATEMENTS (CONT'D) DECEMBER 31, 2012 ~ NOTE A - Summary of Significant Accounting Policies (Cont'd) 5. Financial Statement Amounts (Cont'd) 7 I. Other Post-Employment Benefits The cost of post-employment healthcare benefits, like the cost of pension benefits, generally should be associated with the periods in which the cost occurs, rather than in the future year when it will be paid, which is the accrual accounting perspective. In adopting the requirements of GASB Statement No. 45, Accoarnting and Financial Reporting by Employers for Post-employment Benefits Other Than Pensions, the Town ~"' recognizes the cost of post-employment healthcare in the year when the employee services 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. The Town calculated its annual required contribution (ARC) and related information using the alternative measurement method permitted by GASB No. 45 for employers in plans with fewer than 100 total plan members. The Town provides continuation of medical insurance coverage to employees that retire under the New York Retirement Systems at the same time they end their service to the Town. This plan is a single employer plan, established by authority of the Town Board and administered by the Town. Currently, there are approximately 14 retirees or beneficiaries receiving post employment benefits. Based on the current employment policy, the retiree and his or her beneficiaries receive coverage for the life of the retiree based on the retiree's years of service at retirement. A copy of the report on these benefits can be requested at Town Hall. A summary of benefits is as follows: +rr w Paid by Town Under 65 Over 65 Years of Service 10-14 Years 35% 35% 15-19 Years 50% 50% 20-24 Years 60% 60% 25 or More Years 70% 70% Funding Policy The Town provides funding on the pay-as-you-go method by payment of current insurance premiums. Currently, New York's General Municipal Laws do not permit ~„ funding of the OPEB obligation, therefore there are no plan assets. rr Lr 30 `r TOWN OF WAPPINGER, NEW YORK NOTES TO THE FINANCIAL STATEMENTS (CONT'D) DECEMBER 31, 2012 NOTE A -Summary of Significant Accounting Policies (Cont'd) 5. Financial Statement Amounts (Cont'd) I. Other Post-Employment Benefits (Cont'd) Annual Other Postemployment Benefit Cost The Town's OPEB cost (expense) amounted to $461,910 for the year ended December 31, 2012. The Town's OPEB cost was equal to the Annual Required Contribution (ARC), an amount actuarially determined in accordance with the parameters of GASB Statement 45 less the amount that the Town paid in the current year for retirees. The ARC represents a level of funding that, if paid on an ongoing basis, is projected to cover normal costs plus a past service cost each year and amortize any unfunded actuarial liabilities over a period of 30 years. iir Actuarial Accrued Liability (AAL) Retirees & Dependents $ - Actives Fully Eligible - Actives Not Fully Eligible - Total Actuarial Accrued Liability $ - Past Service Costs $ 206,897 Nom~al Costs 339,706 rir Annual Required Confibution (ARC) $ 546,603 Net OPEB Obligation -beginning of the year $ 1,790,532 ~' Annual OPEB cost 524,731 Actual Employer Confibutions* (62,821) Net OPEB Obigation -end ofthe year $ 2,252,442 ~. Percent of annual OPEB cost contributed 0.00% *This contribution is the pay-as-you-go amount, as an actual plan has not been established, see Funding Policy. w 31 rr Ilr k TOWN OF WAPPINGER, NEW YORK NOTES TO THE FINANCIAL STATEMENTS (CONT'D) DECEMBER 31, 2012 NOTE A -Summary of Significant Accounting Policies (Cont'd) 5. Financial Statement Amounts (Cont'd) I. Other Post-Employment Benefits (Cont'd) Actuarial Methods and Assumptions 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 volatility in actuarial accrued liabilities and the actuarial value of assets, consistent with the long-term perspective of the calculations. In the December 31, 2012 actuarial valuation, the liabilities were computed using the entry age actuarial cost method and level percentage of payroll amortization. The actuarial assumptions utilized a 2% baseline discount rate. The valuation assumes the following rates of increase in health care costs: Fiscal Prescription Year Medical Drug Dental Vision Year 1 9.00% 9.00% 4.00% 3.00% Year 2 8.00% 8.00% 3.50% 3.00% Year 3 7.00% 7.00% 3.00% 3.00% Year 4 6.00% 6.00% 3.00% 3.00% Year 5 5.80% 5.80% 3.00% 3.00% Year 6 5.60% 5.60% 3.00% 3.00% Year 7 5.60% 5.60% 3.00% 3.00% Year 8 5.50% 5.50% 3.00% 3.00% Year 9 5.50% 5.50% 3.00% 3.00% Year 10+ 4.70% 4.70% 3.00% 3.00% - ------ Prescription Medical ~ Dental Vision Healthcare cost trend rate assumed for next fiscal year 9.00% 9.00% 4.00% 3.00% Rate to which the cost trend rate is assumed to decline (the ultimate trend rate) 5.50% 5.50% 25.00% 0.00% ~ Fiscal year that the rate reaches the ultimate trend rate 2018 2018 2018 2018 32 1r lir TOWN OF WAPPINGER, NEW YORK ir. NOTES TO THE FINANCIAL STATEMENTS (CONT'D) DECEMBER 31, 2012 { ~ NOTE A -Summary of Significant Accounting Policies (Cont'd) 5. Financial Statement Amounts (Cont'd) J. Property Taxes The Town submits an approved budget to the Dutchess County Commissioner of Finance by December 5th of the previous year. The County then establishes the warrant for the year, which is due and payable on or about January 1 of each year. The Town collects the taxes on behalf of the Town and County without penalty through February 28th and with penalties and interest through August 31st. The Town's portion of the taxes is recognized and transferred prior to the County's portion. Therefore, the Town receives its entire tax, leaving the unpaids to be collected by the County Commissioner of Finance. ~r K. Long-Term Liabilities Long-Term Debt is recognized as a liability of a governmental fund when due, or when resources have been accumulated for payment early in the following year. For other long-term obligations, only that portion expected to be financed from expendable available financial resources is reported as a fund liability of a governmental fund. The remaining portion of such obligations is only reported in the statement of net assets, Long-Term Liabilities. L. Risk Management The Town of Wappinger assumes the liability for most risk including, but not limited to, property damage and personal injury liability. Such risks are covered by the purchase of commercial insurance. Judgments and claims are recorded when it is probable that an asset has been impaired or a liability has been incurred and the amount of loss can be reasonably estimated. Workers compensation coverage is provided through a retrospective policy, wherein premiums are recorded based on the ultimate cost of the experience to date of workers in similar occupations. The Town does not estimate claims, which may have occurred but are not reported in areas where the Town is not insured. M. 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 amounts reported in the basic financial statements and the accompanying notes. Actual results could differ from those estimates. N. Subsequent Events Management has evaluated subsequent events for disclosure and/or recognition in the financial statements through the date that the financial statements were available to be issued, which date is September 10, 2013. 33 TOWN OF WAPPINGER, NEW YORK NOTES TO THE FINANCIAL STATEMENTS (CONT'D) DECEMBER 31, 2012 NOTE A -Summary of Significant Accounting Policies (Cont'd) 5. Financial Statement Amounts (Cont'd) N. Subsequent Events (Cont'd) The following subsequent events were noted during management's evaluation: In March 2013, the Town refinanced its various purpose public improvement serial bonds (2003) in the amount of $1,440,000 with a net present value potential savings in interest of approximately $129,000 over ten years. The Town authorized bonding for various projects as described in Note H. 4. tYr NOTE B -Other Receivables Other receivables and charges for service at December 31, 2012, consist of the following: cAPrrAL NoN GENERAL HIGHWAY WATER SEWER PROJECTS MAJOR FUNDS FUND FUND FUND FUND FUNDS TOTAL Accounts Receivable $ 210,649 $ - $ - $ - $ 229 $ 1,312 $ 212,190 Rents Receivable - - 381,653 760,190 - - 1,141,843 TOTALS $ 210,649 $ - $ 381,653 $ 760,190 $ 229 $ 1,312 $ 1,354,033 NOTE C -Interfund Receivables and Payables and Transfers The following is a summary of amounts due from and due to other funds, as of December 31, 2012. These Interfund balances have been eliminated as part of the aggregation of fund balances. Such balances arise through the use of a pooled cash disbursement account and the temporary funding of capital projects. AMOUNT AMOUNT FUND RECEIVABLE PAYABLE General- Town-Wide $ 461,478 $ 849,663 General -Part-Town 216,249 46,609 Highway 159,435 70,000 Water - 7,597 Sewer 33 12,831 Capital Projects 347,521 193,584 Non-Major 115,425 119,857 TOTALS $ 1,300,141 $ 1,300,141 TRANSFERS TRANSFERS FUND IN OUT General -Part-Town $ - $ Highway - Sewer 17,858 (17,858) Capital Projects - - Non-Major - _ TOTALS $ 17,858 $ (17,858) 34 r TOWN OF WAPPINGER, NEW YORK ~" NOTES TO THE FINANCIAL STATEMENTS (CONT'D) DECEMBER 31, 2012 NOTE D -Capital Assets The following is a summary of changes and adjustments in the Capital Assets, for the year ended December 31, 2012: BALANCE BALANCE JANUARY 1, DECEMBER 31, 2012 ADDITIONS (DISPOSALS) 2012 Land $ 7,782,217 $ - $ - $ 7,782,217 Buildings 5,988,120 2,038,233 - 8,026,353 Improvements Other Than Buildings 1,015,496 - - 1,015,496 Roads 4,190,378 - - 4,190,378 Infrastructure 3,150,464 9,156,196 - 12,306,660 Machinery and Equipment 5,350,880 1,041,046 (205,985) 6,185,941 Construction in Progress 12,477,276 1,243,811 (12,014,502) 1,706,585 Total 39,954,831 13,479,286 (12,220,487) 41,213,630 Less accumulated depreciation Buildings Improvements Other Than Buildings Roads Infrastructure Machinery and Equipment Total accumulated depreciation Governmental activities capital assets, net 2,956,807 137,018 - 3,093,825 629,376 46,605 - 675,981 1,363,392 279,359 - 1,642,751 555,251 307,666 - 862,917 4,099,761 185,190 - 4,284,951 9,604,587 955,838 - 10,560,425 $ 30,350,244 $ 12,523,448 $ (12,220,487) $ 30,653,205 *Depreciation was charged to governmental activities as follows: General government support $ 94,050 Public safety 47,790 Transportation 455,694 Culture and recreation 67,395 Home and community services 290,909 Total depreciation expense $ 955,838 In August 2012, the Town Board approved the replacement of Roberts Road pump station with a gravity sewer main that connects Roberts Road to the sewer main in Rosewood Court at an estimated cost of $385,000. The Town plans to use internal funds for this project instead of bonding. NOTE E -Bond Anticipation Notes Payable Bond Anticipation Notes can be used for any purpose for which bonds are authorized, and are generally accounted for in the Capital Projects Fund, since maturities cannot exceed one year. Local finance law allows the notes to be renewed, up to five years for capital purposes and up to the period of probable usefulness for assessable improvements, provided that stipulated annual reductions of principal are made. The Bond Anticipation Note financing the lawsuit settlement met the criteria for classification as long-term, the Town having the intention to pay the settlement through the use of bond anttcipation notes, and having renewed the note post-balance sheet in prior years. Ala 35 ~ir TOWN OF WAPPINGER, NEW YORK Irr NOTES TO THE FINANCIAL STATEMENTS (CONT'D) DECEMBER 31, 2012 ~ NOTE E -Bond Anticipation Notes Payable (Cont'd) The Bond Anticipation Notes outstanding as of December 31, 2012, are as follows: ` AMOUNT OUTSTANDING ORIGINAL ORIGINAL AT ~ ISSUE MATURITY INTEREST AMOUNT DECEMBER 31, PURPOSE DATE DATE RATE OF ISSUE 20]2 Various Equipment 07/28/11 03/30/13 1.13% $ 1,018,375 $ 869,375 Boilers & Garage Reconstruction 04/01/10 03/30/13 0.89% 490,000 426,000 Highway Paving 10/20/] 1 03/30/13 1.09% 250,000 250,000 Computer Software 03/21/11 03/30/13 0.89% 33,000 33,000 CarnwathFarms 12/]5/]0 03/30/13 0.89% 85,000 85,000 Short-Term Bond Anticipation Notes Subtotal 1,876,375 1,663,375 Long-Term Bond Anticipation Notes ~ Lawsuit Settlement 12/02/07 03/30/12 0.89% 300,000 - Total -Bond Anticipation Notes $ 2,176,375 $ 1,663,375 Changes in Bond Anticipation Notes Payable as of December 31, 2012, are as follo ws: BALANCE BALANCE JANUARY 1, NEW RE-FINANCE/ DECEMBER 31, ~ PURPOSE 2012 ISSUES PAYMENTS 2012 Various Equipment $ 1,018,375 $ - $ (149,000) $ 869,375 Boilers & Garage Reconstruction 460,000 - (34,000) 426,000 Highway Paving 250,000 - - 250,000 Computer Software 33,000 - - 33,000 Carnwath Farms 85,000 - - 85,000 Lawsuit Settlement 75,000 - (75,000) - TOTALS $ 1,921,375 $ - $ (258,000) $ 1,663,375 36 ~. Yr TOWN OF WAPPINGER, NEW YORK NOTES TO THE FINANCIAL STATEMENTS (CONT'D) DECEMBER 31, 2012 NOTE F - Long-Term Liabilities 1. Serial Bonds Serial Bonds !nay be issued for any object o r purpos e for which a period of probable usefulness has been established. The Serial Bonds Paya ble, as o f December 3 1, 2012, is as follows: A>`10UNT OUTSTANDING ORIGINAL FINAL ORIGINAL AT ISSUE MATURITY INTEREST AMOUNT DECEMBER 31, PURPOSE DATE DATE RATE OF ISSUE 2012 Sewer-Tri-Municipal 11/12/92 09/15/12 5.80%-6.65% $ 6,060,000 $ - Sewer-Tri-Municipal 03/14/02 04/15/21 1.21%-4.98% 9,836,556 4,905,000 Sewer -Tri-Municipal 1 1 /26/02 OS/I S/ l5 3.18%-5.99% 8,519,786 1,335,000 Sewer-Tri-Municipal 06/01/95 I1/IS/IS 3.70%-5.55% 2,610,054 495,000 Water -Fleetwood 07/30/98 10/15/l8 3.70%-5.15% 510,000 190,000 Sewer -Home & Community Services 06%02/11 04/01/21 2.75%-3.50% 316,000 295,000 Greystone Property Purchase (Refunding) 06/02/11 10/01/20 2.00%-3.50% 2,085,000 1,115,000 FmergencyServicesBuilding 06/01/95 11/15/15 3.70%-5.55% 1,275,000 240,000 SUB-TOTAL 31,212,396 8,575,000 Water 564,000 377,834 Sewer 905,000 606,279 Lighting 785,000 525,887 02/25/03 03/01/23 4.00%-4.50% 2,254,000 1,510,000 General 662,400 555,825 Water/Sewer 8,674,300 7,344,691 highway 2,243,300 1,904,484 08/01/07 08!01/27 4.00°rb-5.00% 11,580,000 9,805,000 General 1,070,000 883,179 Highway 1,074,000 886,48( Home & Community Services 1,218,000 1,005,340 04/02/09 04/01/22 2.00%-5.00°/u 3,362,000 2,775,000 TOTALS $ 48,408,396 $ 22,665,000 2. Changes The changes in the Town's indebtedness during the year ended December 31, 2012, are summarized as follows: BALANCE BALANCE AMOU(V"I'S JANUARY i, DECEMBER 31, DUE WiTIIIN 2012 INCREASE (DECREASE) 2012 ONEYEAR Serial Bonds Note F.l $ 25,191,000 $ - $ (2,526,000) $ 22,665,000 $ 2,225,000 Compensated Absences Note A.S.D 230,704 89,476 - 32Q,180 - Landfill Closure and Post Post Costs Note J 254,307 - (14,571) 239,736 8,561 Judgement & Claims Note L1 8Q000 - - 80,000 - TOTALS $ 25,756,011 $ 89,476 $ (2,540,571) $ 23,304,916 $ 2,233,56( 37 lr TOWN OF WAPPINGER, NEW YORK NOTES TO THE FINANCIAL STATEMENTS (CONT'D) DECEMBER 31, 2012 ~r NOTE F -Long-Term Liabilities (Cont'd) 3. Debt Service Requirements The annual requirements to amortize bonded debt, as of December 31, 2012, are as follows: YEAR ENDING DECEMBER 31, 2013 2014 2015 2016 2017 2018-2022 2023-2027 2028-2031 TOTALS NOTE G -Leases PRINCIPAL $ 2,225,000 2,315,000 1,905,000 1,560,000 1,625,000 7,960,000 3,525,000 1,550,000 $ 22,665,000 INTEREST $ 948,975 850,938 756,241 677,872 608,531 1,932,517 772,521 99,452 $ 6,647,047 TOTAL $ 3,173,975 3,165,938 2,661,241 2,237,872 2,233,531 9,892,517 4,297,521 1,649,452 $ 29,312,047 The Town is committed under various leases for office equipment, communication equipment, and vehicles. For accounting purposes, these leases can be considered either operating or capital leases. Lease expenditures for the year ended December 31, 2012 amounted to $51,544. At December 31, 2012, the approximate annual lease commitments, subject to appropriation of funds, were as follows: YEAR ENDING DECEMBER 31, 2013 2014 2015 2016 2017 Total minimum lease payments NOTE H -Commitments and Contingent Liabilities 1. Lawsuits OPERATING LEASES $ 47,829 35,003 21,883 18,280 ~ i o~Q 3 1 J4,yb3 The Town is a defendant in various lawsuits and tax certiorari cases. The outcome of the majority of these cases and lawsuits, as determined by the Town Attorney, should not result in material unfavorable settlements. The Town has recorded an estimated liability amounting to $80,000 as Judgment and Claims, representing possible future settlements on tax certiorari cases. ~~. ~ 38 ~. it TOWN OF WAPPINGER, NEW YORK +r• NOTES TO THE FINANCIAL STATEMENTS (CONT'D) DECEMBER 31, 2012 ~ NOTE H -Commitments and Continent Liabilities (Cont'd) 2. Tri-Municipal Sewer Commission ~ As a result of a consent judgment signed between the Town and the New York State Department of Environmental Conservation, regarding alleged environmental violations, the Town was required to fund construction of a sewer line to the Tri-Municipal Sewer Treatment Plant, plus a one million gallon expansion of said plant. The plant is owned and operated by the Tri- Municipal Sewer Commission, made up of representatives of the Town of Poughkeepsie and the Village of Wappingers Falls. The Town, therefore, does not have ownership rights, nor does it have voting rights on the Commission's governing board. it Subsequently, in January 1999, the Town Board authorized the Phase 3A Sewer Improvement Project to further expand the Commission's sewage treatment facility, from 2.4 million gallon per ~„ day capacity to 3.4 million gallon per day capacity, the costs of which were also to be funded by the Town. Funding for these projects has been provided by the issuance of bond anticipation notes and serial bonds. Currently there are four serial bond issues outstanding, with an original issue total of $25,896,000 and a current total of $6,735,000. Debt service is provided by the residents of two sewer districts. 3. Central Wappinger Water Improvement Area 99-2R In February 2001, the Town Board adopted a Bond Resolution authorizing the issuance of $8,590,000 in serial bonds to pay the costs of water improvement. As of December 31, 2012, the Town has issued $8,490,000 of this authorization in bonds and notes to pay for the costs of aforesaid project. In August 2007, the Town issued $7,380,000 in serial bonds as permanent financing. The current outstanding balance is $6,248,782. The costs incurred on the project amounted to $8,840,347, as of December 31, 2012. 4. Authorized Debt As of December 31, 2012, the Town has authorized, but not issued, the following new debt: ~ Authorization Authorized Un-issued PURPOSE Date Amount Amount Refunding Bonds 02/01/99 $ 4,700,000 $ 1,430,000 ~ Central Wappinger Water 02/12/01 8,590,000 100,000 Road Improvement 05/27/03 3,300,000 1,220,000 ~ Computer Hardware and Software 03/12/03 550,000 200,000 Wappinger Creek Pump Station Improvements 12/10/12 385,000 385,000 TOTALS $17,525,000 $ 3,335,000 ~s In April 2013, the Town authorized bonding for the purchase and installation of cartridge filter facilities at the Atlas and Hilltop Wells, and the installation of 8" water main at a cost of $4,040,000. In June 2013, the Town revised the cost of the Wappinger Creek pump station improvements to $580,000, and authorized bonding for the construction of drainage improvements at an estimated cost of $500,000. 39 t~. TOWN OF WAPPINGER, NEW YORK ~„ NOTES TO THE FINANCIAL STATEMENTS (CONT'D) DECEMBER 31, 2012 NOTE I -Municipal Landfills 1. Castle Point Landfill The Town has voluntarily entered into a Consent Order with the New York State Department of Environmental Conservation to close, cap and monitor the landfill at Castle Point. The closing and capping project was completed in 1999. The costs of monitoring, which could be required for up to thirty years after closure, are currently estimated to amount to $70,768. The Town has recorded the long term liability of $66,345 and short term liability of $4,423 in the Statement of Net Position. The costs of both closure and post closure monitoring are ordinarily recognized over the expected useful life of the landfill. However, since the landfill has stopped accepting ~ refuse and is now closed, any additional costs over the estimate is being recognized as incurred. The Town incurred $4,423 in monitoring costs during 2012. The future costs may be higher due to inflation, changes in technology or subsequent changes in regulations. 2. Poughkeepsie-Wappingers-LaGrange Joint Landfill The Town has shared in the monitoring costs of a closed landfill, the Poughkeepsie-Wappinger- LaGrange Joint Landfill. This joint activity includes the City and Town of Poughkeepsie, New York, the Village of Wappingers Falls, New York, the Town of LaGrange, New York and the Town of Wappinger, New York. All costs associated with monitoring are recognized as incurred. The Town's share of monitoring costs, for the year ended December 31, 2012, amounted to $4,423. The following is a summary of unaudited financial information at December 31, 2012, which is included in the separate financial statements available from the Joint Landfill Board of Governors, Town of Poughkeepsie, One Overocker Road, Poughkeepsie, New York, 12603: Total Assets $ 81,879 Total Liab>7ities $ - Total Venture Equity $ 81,879 Total Revenues $ 1 Total Expenditures $ 16,220 During 2002, violations were documented at the landfill and in 2003 an Order of Consent was issued through the New York State Department of Environmental Conservation to remediate Environmental Conservation Law and New York Codes Rule and Regulations violations. To comply with this order the municipalities need to perform final closure of the landfill under current regulations by December 31, 2005 and perform post closure care and monitoring for a minimum of thirty years thereafter. The estimated cost of final closure is $10,000,000. All costs are borne proportionately by each municipality. the Town of Wappinger's share is 14.1728% or $1,417,280. The Town issued $1,425,368 in bond anticipation notes to finance its share. The notes were re-financed in 2009 into a serial bond and the amount outstanding as of December 31, 2012 is $1,005,340. Post closure and monitoring costs, which commenced in 2007 and continue for 30 years, are estimated to amount to $1,192,200, with the Town's share being $168,968. 40 itir r. Y. w REQUIRED SUPPLEMENTAL INFORMATION ~r EXHIBIT I TOWN OF WAPPINGER, NEW YORK BUDGETARY COMPARISON SCHEDULE DECEMBER 31, 2012 GENERAL FUND -TOWN-WIDE VARIANCE ORIGINAL F[NAL FAVORABLE BUDGET BUDGET ACTUAL (UNFAVORABLE) REVENUES Real property taxes $ 2,502,606 $ 2,502,606 $ 2,502,596 $ 10 Real property tax items 88,000 88,000 88,531 531 ~ Non property tax items - - - Departmental income 130,500 130,500 171,829 41,329 Intergovernmental charges - - - - Use of money and property 210,000 210,000 219,488 9,488 ~ Licenses and permits 7,080 7,080 7,821 741 Fines and forfeitures 260,900 260,900 268,693 7,793 Sale of property and compensation for loss - - 23,966 23,966 Miscellaneous local sources - 5,200 99,904 94,704 State aid 745,700 745,700 833,447 87,747 Federal aid - - Total revenues 3,944,786 3,949,986 4,216,275 266,309 Appropriation of prior year's fund balance - - - - Total revenues and appropriation of prior year's fund balance 3,944,786 3,949,986 4,216,275 266,309 lir EXPENDITURES AND ENCUMBRANCES General Government Support 1,880,642 1,880,642 1,584,200 296,442 Public safety 32,382 32,382 41,652 (9,270) Health 4,500 4,500 3,100 1,400 Transportation 138,725 138,725 141,779 (3,054) Economic assistance & opportunity 600 600 600 - Culture and recreation 435,521 440,721 541,701 (100,980) home and community service 241,500 241,500 220,215 21,285 Employee benefits 690,045 690,045 610,955 79,090 Ihr Debt service 520,871 520,871 520,869 2 Total expenditures and encumbrances 3,944,786 3,949,986 3,665,071 284,915 Excess (deficiency) of revenues and appropriation of prior year's fund balance over (under) expenditures and encumbrances - - 551,204 551,224 Other financing sources (uses) Operating transfers in - - - - s Operating transfers out - - - - r Total other financing sources - - - - Excess (deficiency) of revenues and appropriation of prior year's fund balance and other sources over (under) expenditures, encumbrances - - 551,204 551,224 Fund balance, December 31, 2011 - - 123,388 123,388 Fund balance, December 31, 2012 $ - $ - $ 674,592 $ 674,612 See independent auditors' report. 41 f; i k'' y' g' GENERAL FUND -PART-TOWN rr REVF,NUES Real property taxes Real property tax items Non property tax items Departmental income hitergovemmental charges Use of money and property Licenses and permits Fines and forfeitures Sale of property and compensation for loss Miscellaneous local sources State aid Federal aid Total revenues Appropriation of prior year's fund balance Total revenues and appropriation of prior year's fund balance EXPENDITURES AND ENCUMBRANCES General Government Support Public safety lIealth Transportation Economic assistance & opportunity Culture and recreation Dome and community service Employee benefits Debt service Total expenditures and encumbrances Excess (deficiency) of revenues and appropriation of prior year's fund balance over (under) expenditures and encumbrances Other financing sources (uses) Operating transfers in Operating transfers out Total other financing sources Excess (deficiency) of revenues and appropriation of prior year's fund balance and other sources over (under) expenditures, encumbrances Fund balance, December 31, 2011 Fund balance, December 31, 2012 VARIANCE ORIGINAL FINAL FAVORABLE BUDGET BUDGET ACTUAL UNFAVORABLE) $ - $ - $ - $ - 881,550 881,550 960,833 79,283 156,000 156,000 137,866 (18,134) 500 500 707 207 250,000 250,000 247,076 (2,924) _ _ 200 200 1,288,050 1,288,050 1,346,682 58,632 1,288,050 1,288,050 1,346,682 58,632 209,738 209,738 133,657 76,081 365,464 365,464 397,684 (32,220) 32,000 32,000 35,997 (3,997) 24,500 24,500 5,104 19,396 94,750 94,750 74,563 20,187 178,388 198,138 177,549 20,589 187,988 187,988 208,585 (20,597) 195,222 195,222 l 95,221 1 1,288,050 1,307,800 1,228,360 79,440 - (19,750) 118,322 138,072 - 19,750 - (19,750) - 19,750 - (19,750) _ - 118,322 118,322 - - 1,091,540 1,091,540 $ - $ - $ 1,209,862 $ 1,209,862 See independent auditors' report. 42 Jra HIGHWAY FUND REVENUES Real property taxes Real property tax items Non property tax items Departmental income Intergovernmental charges Use of money and property Licenses and permits Fines and forfeitures Sale of property and compensation for loss Miscellaneous local sources State aid Federal aid VARIANCE ORIGINAL FINAL FAVORABLE BUDGET BUDGET ACTUAL (UNFAVORABLE) $ 2,084,363 $ 2,084,363 $ 2,084,363 $ - 710,450 710,450 710,450 - - - 866 866 - - 50 50 - - 2,600 2,600 - - 6,180 6,180 150,000 150,000 153,023 3,023 Total revenues 2,944,813 2,944,813 2,957,532 12,719 Appropriation of prior year's fund balance - - - - Total revenues and appropriation of prior year's fund balance 2,944,813 2,944,813 2,957,532 12,719 EXPENDITURES AND ENCUMBRANCES General Government Support 121,875 121,875 137,371 (15,496) Public safety - - - - Health - - - - Transportation 1,942,337 1,922,587 1,813,629 108,958 Economic assistance & opportunity - - - - Culture and recreation - - - - Home and community service - - - - Employeebenefits 606,182 606,182 653,690 (47,508) Debt service 274,419 274,419 293,913 (19,494) Total expenditures and encumbrances 2,944,813 2,925,063 2,898,603 26,460 58,929 39,179 - 19,750 - 19.750 over (under) expenditures, encumbrances - - 58,929 58,929 Fund balance, December 31, 2011 - - 578,707 578,707 Fund balance, December 31, 2012 $ - $ - $ 637,636 $ 637,636 Excess (deficiency) of revenues and appropriation of prior year's fund balance over (under) expenditures and encumbrances - 19,750 Other financing sources (uses) Operating transfers in - - Operating transfers out - (19,750) Total other financing sources - (19,750) Excess (deficiency) of revenues and appropriation of prior year's fund balance and other sources See independent auditors' report. 43 ilr r,. WATER FUND VARIANCE ORIGINAL FINAL FAVORABLE BUDGET BUDGET ACTUAL (UNFAVORABLE) REVENUES Real property taxes $ 676,388 $ 676,388 $ 676,388 $ - Real property tax items - - - - Non property tax items - - - - Departmental income 1,026,652 1,026,652 1,074,788 48,136 h~tergovernmental charges - - - Use of money and property 3,526 3,526 2,926 (600) Licenses and permits - - - - Fines and forfeitures - - - - Sale of property and compensation for loss - - 509 509 Miscellaneous local sources - - - - State aid - - - - Federal aid - - - - Total revenues 1,706,566 1,706,566 1,754,61 I 48,045 Appropriation of prior year's fund balance - - - - Total revenues and appropriation of prior year's fund balance 1,706,566 1,706,566 1,754,611 48,045 EXPENDITURES AND ENCUMBRANCES General Government Support 38,100 38,100 1,271 36,829 Public safety - - - - llealth - - - - Transportation - - - - Economic assistance & opportunity - - - - Culture and recreation - - - - Home and community service 981,052 981,052 1,017,972 (36,920) Employee benefits 8,050 8,050 5,421 2,629 Debt service 679,364 679,364 679,363 1 Total expenditures and encumbrances 1,706,566 1,706,566 1,704,027 2,539 Excess (deficiency) of revenues and appropriation of prior year's fund balance over (under) expenditures and encumbrances - - 50,584 50,584 Other financing sources (uses) Operating transfers in - - - - Operating transfers out - - - - Total other financing sources - - - - Excess (deficiency) of revenues and appropriation of prior year's fund balance and other sources over (under) expenditures, encumbrances - - 50,584 50,584 Fund balance, December 31, 2011 - - 1,379,608 1,379,608 Fund balance, December 31, 2012 $ - $ - $ 1,430,192 $ 1,430,192 See independent auditors' report. 44 lrt REVENUES Real property taxes Real property tax items Non property tax items Departmental income Intergovernmental charges Use of money and property Licenses and permits Fines and forfeitures Sale of property and compensation for loss Miscellaneous local sources State aid Federal aid Total revenues Appropriation of prior year's fund balance Total revenues and appropriation of prior year's fund balance EXPENDITURES AND ENCUMBRANCES General Government Support Public safety lfealth Transportation Economic assistance & opportunity Culture and recreation 1-Tome and community service Employee benefits Debt service Total expenditures and encumbrances Excess (deficiency) of revenues and appropriation o1 prior year's fund balance over (under) expenditures and encumbrances Other financing sources (uses) Operating transfers in Operating transfers out Total other financing sources Excess (deficiency) of revenues and appropriation of prior year's fund balance and other sources over (under) expenditures, encumbrances Fund balance, December 31, 2011 Fund balance, December 31, 2012 SEWER FUND VARIANCE ORIGINAL FINAL FAVORABLE BUDGET BUDGET ACTUAL (UNFAVORABLE) $ 1,969,157 $ 1,969,157 $ 1,943,577 $ (25,580) 1,989,290 1,989,290 2,063,312 74,022 168,855 168,855 182,763 13,908 - - 184,850 184,850 4,127,302 4,127,302 4,374,502 247,200 4,127,302 4,127,302 4,374,502 247,200 73,307 73,307 1,239 72,068 2,006,487 2,006,487 1,915,287 91,200 3,190 3,190 2,300 890 2,044,318 2,044,318 2,029,749 14,569 4,127,302 4,127,302 3,948,575 (78,727 - - 425,927 425,927 17,858 17,858 17,858 - (17,858) (17,858) (17,858) - - - 425,927 425,927 - - 773,478 773,478 $ - $ - $ 1,199,405 $ l ,199,405 See independent auditors' report. 45 ~M EXHIBIT II TOWN OF WAPPINGER, NEW YORK OTHER POST-EMPLOYMENT BENEFITS PLAN SCHEDULE OF FUNDING PROGRESS DECEMBER 31, 2012 Unfimded UAL as a Actuarial Accrued Percentage ~ Actuarial Value of Accrued Liability Funded Covered of Covered Valuation Assets Liability (UAL) Ratio Payroll Payroll Year Ended Date (a) (b) (b-a) (a/b) (c) ((b-a)/c) 12/31/2012 12/31/2011 $ - $6,237,176 $ 6,237,176 0.0% $ 2,271,310 274.61% 12/31/2011 12/31/2011 $ - $6,237,176 $ 6,237,176 0.0% $ 2,196,774 283.92% Ilir 12/31/2010 12/31/2010 $ - $4,925,385 $ 4,925,385 0.0% $ 2,326,424 211.71% it i~r See independent auditors' report. 46 OTHER SUPPLEMENTAL INFORMATION ~r ~r EXHIBIT III TOWN OF WAPPINGER, NEW YORK COMBINING BALANCE SHEET NON-MAJOR GOVERNMENTAL FUNDS DECEMBER 31, 2012 ASSETS Cash and cash equivalents Accounts receivable Due from other funds Total assets LIABILITIES AND FUND EQUITY LIABILITIES Accounts payable Due to other funds Total liabilities FUND BALANCE Fund balance (deficit): Unassigned Total fund balance Total liabilities and fund balance TOTAL SPECIAL MISC NON-MAJOR GRANT LIGHT AMBULANCE GOVERNMENTAL FUND FUND FUND FUNDS $ - $ 20,757 $ 66,593 $ 87,350 1,312 - - 1,312 115,013 - 412 115,425 $ 116,325 $ 20,757 $ 67,005 $ 204,087 $ 1,450 $ 3,829 119,703 154 121,153 3,983 $ - $ 5,279 - 119,857 - 125,136 (4,828) 16,774 67,005 78,951 (4,828) 16,774 67,005 78,951 $ 116,325 $ 20,757 $ 67,005 $ 204,087 See independent auditors' report. 47 it EXHIBIT IV TOWN OF WAPPINGER, NEW YORK COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES NON-MAJOR GOVERNMENTAL FUNDS FOR THE YEAR ENDED DECEMBER 31, 2012 TOTAL MISC NON-MAJOR SPECIAL LIGHT AMBULANCE GOVERMENTAL GRANT FUND FUND FUNDS REVENUES Property taxes $ - $ 47,209 $ 395,000 $ 442,209 Real property taxes items - - 57 57 Departmental Income 8,712 - - 8,712 Intergovernmental charges 1,070 - - 1,070 Use of money and property - 18 103 121 Miscellaneous local sources - - - - Total revenues 9,782 47,227 395,160 452,169 EXPENDITURES General government support (10,238) - - (10,238) Health - - 395,000 395,000 Transportation - 43,644 - 43,644 Home and community service 18,810 - - 18,810 Employee benefits - - - - Total expenditures 8,572 43,644 395,000 447,216 Excess (deficiency) of revenues over expenditures 1,210 3,583 160 4,953 Other financing sources: Operating transfers in - - - - Operating transfers out - - - - Total other financing sources - - - - Excess (deficiency) of revenue and other and other sources over expendiutes and other uses 1,210 3,583 160 4,953 Fund Balance, December 31, 2011 (6,038) 13,191 66,845 73,998 Fund Balance, December 31, 2012 $ (4,828) $ 16,774 $ 67,005 78,951 See independent auditors' report. 48 Exhibit V ~• TOWN OF WAPPINGER, NEW YORK SCHEDULE OF FINDINGS, RECOMMENDATIONS AND RESPONSES FOR THE YEAR ENDED DECEMBER 31, 2012 SECTION I -SIGNIFICANT DEFICIENCIES: PRIOR YEAR FINDINGS -CONTINUING: Finding 1-Infrastructure Reporting ~" Finding: As part of the implementation of GASB Statement #34, the Town was required to retroactively report and depreciate infrastructure assets as of December 31, 2003, by December 31, 2007. The Town has yet to do so. Cause: The Town has not completed an inventory of its infrastructure assets. Effect: The Town's government-wide financial statements can be materially mis- stated by this omission. Recommendation: The Town should develop and implement a plan to inventory all its infrastructure assets, record and depreciate them. Response: The Town made an inventory of all its water and sewer infrastructure assets and computed the related depreciation as of December 31, 2012. The remaining assets such as roads will be inventoried in 2014. Finding 2 -Escrow Recordkeepin~ ~, Finding: The Town has applied considerable effort in the reconciliation of applicant escrow subsidiary ledgers to the Town's general ledger balances, however material differences continue to exist, the amounts of which change from year to year. Such changes indicate an unreliable reconciliation methodology. Our examination of the escrow reconciliation revealed the following: • As of December 31, 2012, the escrow subsidiary ledgers exceeded the general ledger balances by $206,108. • Comments related to escrows have been made since 1993; Cause: In the past there existed a lack of communication between the Planning Department and the Accounting Department regarding fees charged to individual escrows. Individual schedules were not always updated and invoices were coded incorrectly. Reconciliations between the Planning Department and the Accounting Department were not performed regularly so that these errors were not caught on a timely basis. Effect: The Town is responsible for payment of fees that should be taken from escrow accounts. If not reconciled timely, the Town may not be able to recover these fees from the rightful applicant. ~r 49 ' TOWN OF WAPPINGER, NEW YORK SCHEDULE OF FINDINGS, RECOMMENDATIONS AND RESPONSES (CONT'D) FOR THE YEAR ENDED DECEMBER 31, 2012 Finding 2 -Escrow Recordkeepin~ (Cont'd.) Recommendation: No amounts should be returned to an applicant until a thorough review of all transactions has been made, including confirming receipt of escrow funds received and analysis of all disbursements made on that applicant's behalf. This will serve as a check that funds are not being returned appropriately. A significant portion of the outstanding escrow liability pertains to inactive applications. The Town should re-review these balances, including making inquiries of engineers and attorneys regarding their fees related to these applicants, to confirm that all appropriate disbursements have been charged to the appropriate applicants. The analysis of Escrow schedules should continue to be completed on a monthly basis, comparing department receipt records and charges posted to individual escrow schedules to general ledger transactions. Names of escrows should be consistent, such as code and name of property, to avoid confusion between department and general ledger transactions. Response: In order to minimize differences between the subsidiary ledgers and the general ledger, the town now enters all invoices into the subsidiary ledgers, as soon as they are received, not when they are paid as was the case in the past. However, past differences may continue to be reflected but going forward, we do not expect any new differences between the subsidiary ledgers and the general ledger. Finding 3 -Escrow Funds Negative Balances Finding: Payments have been made in excess of escrow amounts collected resulting in excess payments being made on behalf of individual project owners/developers. As of December 31, 2012, 91 escrow accounts indicated debit/negative balances totaling $92,647, of a total of 355 accounts amounting to $598,666. Cause: The Town collects escrow funds to ensure that costs incurred by the Town, while projects or subdivisions are being considered by the Planning "' Board, are borne by the applicants. The Town maintains records for each project/applicant so that balances can be monitored; however, in numerous cases the disbursements exceeded the escrow collected. Effect: Unanticipated liabilities could be incurred by the Town for which no revenues/fiends have been provided. 50 Y TOWN OF WAPPINGER, NEW YORK ~„ SCHEDULE OF FINDINGS, RECOMMENDATIONS AND RESPONSES (CONT'D) FOR THE YEAR ENDED DECEMBER 31.2012 Finding 3 -Escrow Funds Negative Balances (Cont'd.) Recommendation: We note that the Town Board authorized legislation during 2002 and 2006 which provided for policies and procedures to ensure that the Town does not subsidize applicant review costs. However, we note that debit balances have not significantly changed from 2006 through 2012, ($184,812, $171,058, $151,770, $138,115, $157,583, $154,279, and $143,344 respectively). Also, as noted above a significant portion of these balances pertain to inactive or old applications, amounting to $107,440. Along with the reconciliations noted above, we recommend that the Town make the confirmation and collection of these balances a priority, reviewing the pertinent documentation and determining a course of action for collection of each account. r"' Response: The Town continues to send letters to holders of escrow accounts with negative balances urging them to replenish their accounts. The town is working with the attorney to the town on the collection of outstanding `' escrow accounts. Status of Prior Year Findings: Findings #4 Was Satisfied OR No Longer Applicable 51 is