HomeMy WebLinkAbout2009 Annual Report - Accounting and Finance DepartmentsACCOUNTING AND FINANCE DEPARTMENTS
In April 2007, Annual Town Meeting voted to allow the Town to make
technology improvements to the 20-year old financial systems infrastructure. The
Accounting and Finance Departments have completed over three-quarters of this project.
This includes the completed construction of a secure data center, a fiber wide-area
network connecting all Town and school buildings, full redesign of all accounting and
financial record conventions, implementation of a new invoice and payroll system, a
complete renumbering of all parcels in Town in conjunction with the recent Geographic
Information System (GIS) flyover, and brand, new tax and utility billing - including the
much requested quarterly tax bills.
Document storage and permits tracking efforts are underway, and a new website
customer request tracking system is planned for the next 12-18 months. The end result
has been, a significant improvement in communications with a flow of high quality
management information for staff, and timely financial information for residents and
businesses in Reading.
Accounting Department
The Accounting Department, under the direction of the Town Accountant, is
responsible for maintaining financial records. These records facilitate the preparation of
financial reports and schedules that provide meaningful, accurate information for
comparability and for management's decision making process. The Accounting
Department ensures that all financial transactions are in compliance with legal
requirements, and are properly recorded on a timely basis. The Town used the auditing
firm of Melanson & Heath in FY 2009.
Finance Department
The Finance Department, under the direction of the Assistant Town
Manager/Finance Director, supports a wide variety of financial and administrative
functions. The Department is divided into six divisions: ' Assessment, Collection,
General Finance, Human Resources, Technology and Town Clerk. The Finance
Department support staff are designed to be flexible and experienced in 'many of these
divisions as work flows vary throughout the year.
Finance: Assessment Division
Assessment of.property is the first step in the process of tax revenue collection for
the Town of Reading. The Assessment Division's function is to provide for the fair and
equitable assessment of all taxable real and personal property. The Assessors trend the
values each year so that the revaluations done every three years won't result in substantial
changes. The Assessors must annually determine the tax levy and obtain State approval
of the tax rate so that bills can be issued in a timely manner.
The tax rate for FY 2010 was set at $13.75 per thousand, a $0.54 increase per
thousand from the FY 2009 rate. The total assessed value of all 8,900+ properties and
accounts for FY 2009 is $3,645,760,801'(a 2% decrease from the previous year). The
average house in Reading is now valued at $432,939 which is a 2.4% decrease from FY
2008 and the third consecutive year of similar modest declines in value.
3
Accounting/Finance Departments
The breakdown of Reading property for FY 2010 is as follows:
Assessed Value
Share
Change
Residential
$3,308,115,508
90.74%
-2.74%0
Commercial
$ 270,816,033
7.42%
+3.00%
Industrial
$ 21,050,500
0.58%
-0.52%
Personal
$ 45,778,760
1.26%
+33.47%
TOTAL
$ 3,645,760,801
100%
-1.99%
Finance: Collection Division
The Collection Division is responsible for collecting all taxes and other charges
(including ambulance and water/sewer/storm water bills). This Division also receives and
processes all deposits (such as schools and recreation).
Massachusetts does not allow Towns to pay any charges associated with
electronic collection of tax bills - such as a flat fee or credit card fee. Debit card usage is
comparatively inexpensive, and an economical method to pay online.
Electronic Payments (to 3/1/10)
CY10
CY09
CY08
CY07
CY06
Registered Users
1562
1109
873
508
258
Real Estate
42
167
141
95
38
Excise
317
402
329
352
220
Water/Sewer/Storm Water.
48
174
125
75
NA
Municipal lien certificates have increased slightly despite the relatively low
property sales and mortgage refinancing activities. Foreclosures dropped off from a high
in 2008, in sharp contrast to economic measures nationally.
Municipal Lien Certificates (to 3/1/10)
Issued
Fees
FY10
529
$15,850
FY09
969
$26,901
FY08
743
$22,350
FY07
698
$21,252
FY06
930
$30,800
FY05
991
$28,327
FY04
1,627
$43,856
Foreclosures (Foreclosure deeds
recorded at the Registry of Deeds
as of 3/01/10)
2010
4
2009
11
2008
20
2007
10
2006
1
4
Accounting/Finance Departments
Real estate taxes collected were $48.5 million - a 3% increase from the $47.1 million in
the previous year. Personal property taxes collected also increased to $0.49 million from $0.31
million, and Excise tax collections decreased along with sharp drops in new cars sales nationally
from $2.96 million in FY 2008 to $2.79 million in FY 2009. See the Appendix for more
complete details.
Finance: General Division
This Division is responsible for providing the cash for the operation of all Town and
School functions on a timely basis. In addition, it conducts all borrowing and investing
activities, including those on behalf of the Town's Trust Funds.(at the direction of the Trust Fund
Commissioners).
Interest earnings for the General Fund during FY 2009 were $938,506 - a sharp drop
from over $1.7 million in FY 2008 as interest rates plummeted to historic lows. Further drops in
earning are expected as rates continue to decline to well below 1.0%.
The Town has maintained strong AA debt ratings despite the difficult economic climate,
due to a combination of strong financial management practices and a stable reserve position. In
February 2009, the Town issued $1.55 million of short-term debt at an interest cost of only
1.36%. Of this amount, $1.1 million was for technology improvements approved by April 2007
Town Meeting, and $0.45 million was for Water Treatment Plant demolition and other
associated water system work approved by June 2008 Town Meeting.
In August 2009, the Town issued $5.525 million of long-term debt at a cost of only
2.96% to finance $5 million of energy improvements approved by April 2009 Town Meeting,
and $525,000 for a fire truck approved by November 2008 Town Meeting.
General Finance - Trust Funds
FY 2006
FY 2007
FY 2008
FY 2009
Beginning Balances
$7,383,405
$7,620,268
$8,029,097
$8,263,26
Contributions
$ 118,112
$ 96,565
$91,885
$125,896
Disbursements
312,312)
226,608)
($215,912)
($233,641)
Interest
$ 431,064
$ 538,873
$358,255
$346,277
Ending Balances
$7,620,268
$8,029,097
$8,263,326
$8,501,857
The Trust Funds disbursed almost $1 million in the past four years as shown in the table
above. The Hospital Trust Fund continued to provide aid through the Reading Response Program
which provides skilled health care services, respite care, medical transportation and Lifeline
Emergency call systems to Reading residents who meet specific health and income guidelines. It
disbursed $176,250 in FY 2005, $162,368 in FY 2006, $100,270 in FY 2007, $95,373 in FY
2008 and $82,469 in FY 2009. The Cemetery Trust Funds distributed $81,000 in FY 2005,
$85,000 in FY 2006, $87,000 in FY 2007, $100,000 in FY 2008 and $105,000 in FY 2009.
5
Accounting/Finance Departments
Ending
Balance
FY 2008
Ending
Balance
FY 2009
One year
Change
Previous
one year
Change
Cemetery
$3,463,268
$3,629,468
+4.8%
+4.2%
Hospital
$4,069,260
$4,156,231
+2.1%
+2.0%
Library
$66,002
$66,622
+0.9%
+4.5%
Scholarships
$124,106
$123,600
-0.4%
-0.0%
Veterans Memorial
$103,195
$103,135
-0.1%
+0.4%
Celebration
$59,506
$47,086
-20.9%
+4.5%
Historic Preservation
$70,287
$66,815
-4.9%
+4.8%
Elder Services
$285,942
$286,227
+0.1%
-2.1%
Loans
$21,760
$22,672
+4.2%
+4.5%
Finance: Human Resources Division
The Human Resources Division supports the Town (under the direction of the Town
Manager), Schools (under the direction of the Superintendent), Light Department (under the
direction of the RMLD General Manager) and Retiree benefit activities.
Employee benefits administered through this Division include health, dental and life
insurance, deferred compensation, flexible spending accounts, the sick-leave bank, the Employee
Assistance Program, paid time off, leave of absences and unemployment benefits. Job related
injuries covered by Worker's Compensation or M.G.L. Chapter 41, Section 111F (for public
safety employees) are also handled by this Division.
Worker's Compensation is a premium-based program through the Massachusetts Inter-
Local Insurance Association (MIIA). The Town is self-insured for job-related injuries to public
safety employees. The health insurance program is self-insured through the MIIA Health
Benefits Trust with large losses shared by all members of the Trust. The sharp increases in
premiums seen a few years ago have ameliorated due to a combination of benefit changes and
industry trends.
Finance: Technology Division
The Technology Division provides centralized computer network and
telecommunications services as well as distributed internet, audio/video, software and personal
computer support and geographic information systems (GIs) mapping for the municipal
government (Town Hall, the Library, the Senior Center, Police, Fire/Emergency Management,.
Public Works, Water and Sewer). This Division also coordinates many technology activities with
both the School and Light Departments.
Last year, the Technology Division had the following list of accomplishments:
• GIs: Completed transition to new map and parcel numbers, QAQC completed on
deliverables from Spring 2008 flyover, mapped and reviewed traffic signage Downtown,
supplied mapping needed for Downtown Smart Growth and Fall Street Faire, supported
public safety for Laramie Project planning, Trails Committee on completion of REI grant
($5,000) and in successful application- for State Recreation Trails Grant ($16,539; and
Historical Commission historic property inventory grant.
6
Accounting/Finance Departments
• Document Storage: All cemetery cards scanned and placed on server, completed two of
four phases of document storage and retrieval, including decades of Board of Selectmen
Minutes.
• Networks: A unified storage device was added to provide faster, more reliable, fault
tolerant storage that is also scalable as our storage needs grow; in an effort to reduce
energy and hardware costs, we have implemented a virtual environment for our servers.
This environment will not only provide us with scalability that we were lacking but we
should also realize an increase in uptime and flexibility as new requests come into the
Technology Division; our e-mail archiving system is up and running which will allow us
to quickly retrieve messages that have passed through our e-mail server; in order to
securely implement some additional services that various Town Departments have
requested for both internal and external access, our firewall was upgraded this year.
• Systems: Completed first full year of MUNIS receivables including utility billing, real
estate/personal tax billing and excise tax billing; installed MUNIS internet updater so all
enhancements are updated weekly; inventoried, updated and renumbered all of the
equipment in the system; maintained website to highest level of government transparency
as judged by Common Cause.
Finance: Town Clerk
Laura Gemme was appointed as the new Town Clerk in September replacing Assistant
Town Clerk Julia Rodger who had acted as Interim Town Clerk for several months upon the
departure of long-serving Town Clerk Cheryl Johnson.
Elections
In 2009, there were two Elections in the Town of Reading, a Local Election in April and
a Special Senate Primary Election in December to fill the Senate seat due to the passing of
Senator Ted Kennedy. On April 7, 2009, there were 655 votes cast in the Local Election with 28
Absentee Ballots totaling in a 4% turnout. On December 8, 2009, there were 4,038 votes cast in
the Special Senate Primary Election with 124 Absentee Ballots totaling in a 25% turnout.
Board of Registrars
Registrars Krissandra Holmes, Gloria Hulse, Harry Simmons and Town Clerk Laura
Gemme registered 677 voters, made 3245 voter changes (name, address, status), and deleted 702
voters in 2009. There were over 1700 signatures certified on nomination and petition papers for
the 2009 voting year. Registrars also offered assistance to voters on election days.
Census
The Annual Town Census was conducted in January, entirely by mail, with a total of
9462 forms mailed to residences. The local census assists Town Clerks in putting together the
Street List (resident book) and the Jury List.
Major functions served by an annual local census are:
• Information collected for municipal purposes
• School needs
• Growth and planning needs
• Resident identification for police and fire
7
Accounting/Finance Departments
• Collection of dog information
• Veteran Information
• Information for the Jury Commissioners
• Determining inactive voter status for voter purge as required by the National
Voter Registration Act
Town Meeting
Town of Reading held an Annual, Subsequent and Special Town Meeting in 2009. The
Annual Town Meeting was held in three nights on April 27 and 30 and May 4, 2009. The
Subsequent Town Meeting was held on November 9, 2009. A Special Town Meeting was held
on November 30, 2009 to consider rezoning for the 40R Smart Growth, District and passed with a
vote of 126 for and 7 against.
Vital Statistics and Licensing
During the calendar year 2009, the following Vital Statistics were recorded in the Town
Clerk's Office:
Births - 260 Marriages - 89 Deaths - 376
The Town Clerk's Office issued 2186 dog licenses, two commercial dog kennels licenses
and four residential kennels licenses, 134 business certificates, 22 renewals for 69 underground
storage tanks and 45 cemetery deeds.
Reading is one of a few towns north of Boston still selling fishing and hunting licenses.
A total of 320 Fish and Wildlife licenses and 79 stamps were issued during the year for a total of
$6891.45. Of these, the Town of Reading issued 85 licenses free of charges to those citizens over
70 years of age.
The Town retained $127.45 in fees from the sale of licenses. Total receipts collected in
the Town Clerk's Office for the calendar year 2009 amounted to $86,391.18.
Respectfully submitted,
Gail LaPointe
Town Accountant
Robert W. LeLacheur, Jr., CFA
Assistant Town Manager/Finance Director
8
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10
TOWN OF READING
REPORT OF THE COLLECTOR
12 MONTHS ENDING JUNE 30, 2009
2009 REAL ESTATE
Committed 2008-2009
48,963,214.24
Refunds
124,033.70
Interest and Costs Collected
45,953.93
Abatements and Exemptions
208,729.15
Paid to Treasurer
48,586,846.57
Subsequent Tax Title
119,512.94
Deferred Taxes
20;384.10
Uncollected June 30, 2009
197,729.11
49,133,201.87
49,133,201.87
2008 REAL ESTATE
Balance June 30, 2008
382,451.03
Refunds
78,308.22
Interest and Costs Collected
38,284.02
Abatements
30,188.34
Paid to Treasurer
417,349.78
Tax Title Taking
51,505.15
Uncollected June 30, 2009
0
499,043.27
499,043.27
2,009 PERSONAL PROPERTY
Committed 2008-2009 453,085.20
Refunds 208.42
Interest and Costs Collected 1062.88
Abatements
Paid to Treasurer
Uncollected June 30, 2009
454,356,50
181.64
448,660.48
5,514.38
454,356.50
11
Balance June 30, 2008
Refunds
Interest and Costs Collected
Abatements
Paid to Treasurer
Uncollected June 30, 2009
Committed 2009
Refunds
Interest and Costs Collected
Abatements
Paid to Treasurer
Uncollected June 30, 2009
Balance June 30, 2008
Committed 2008-2009
Refunds
Interest and Costs Collected
Abatements
Paid to Treasurer
Uncollected June 30, 2009
2008 PERSONAL PROPERTY
17,775.87
11.14
428.83
0
14,141.20
4,4074.64
18,215.84
2009 MOTOR VEHICLE EXCISE
2A84,981.14,
37,265.79
19,930.53
145,366.66
2,317,406-.08
79,404.72
2,542,177.46 2,542,177.46
2008 MOTOR VEHICLE EXCISE
97,804.61
379,306.64
34,724.87
13,559.31
54,771.89
441,318.55
29,301.99
525,392.43
525,392.43
12
2007 MOTOR VEHICLE EXCISE
Balance June 30, 2008
Committed 2008-2009
Refunds
Interest and Costs Collected
Abatements
Paid to Treasurer
Uncollected June 30, 2009
Balance June 30, 2008
Committed 2008-2009
Refunds
Interest and Costs Collected
Abatements
Paid to Treasurer
Uncollected June 30, 2009
Balance June 30, 2008
Interest and Costs Collected
Paid to Treasurer
Uncollected June 30, 2009
36,589.54
6,218.54
3,158.83
6,652.94
52,619.85
2006 MOTOR VEHICLE EXCISE
15,517.42
96.25
1,514.48
2,242.37
6,733.52
26,586.59
19,299.74
52,619.85
1,536.56
7,087.78
10,746.1$
19,370.52 19,370.52
OLD EXCISE - 2005 AND PRIOR
173,640.20
2,792.40
176,432.60
5,408.47
171,024.13
176,432.60
13.
Balance June 30, 2008
Committed 2008-2009
Charges
Refunds
Abatements
Paid to Treasurer
Discount for Timely Payments
Added to 2009 Taxes
Uncollected June 30, 2009
Balance June 30, 2008
'Committed 2008-2009
Refunds
Abatements
Paid to Treasurer
Discount for Timely Payments
Added to 2009 Taxes
Uncollected June 30, 2009
4,485,619.77
380,580.09
174,573.72
1,153,148.53
6,207,750.28 6,207,750.28
STORM WATER FEES
Uncollected June 30, 2008 88,332.64
Committed 2008-2009 416,164.71
Refunds 28.22
Abatements 306.86
Paid to Treasurer 376,443.36
Discount for Timely Payments 31,227.54
Added to 2009 Taxes 10,998.64
Uncollected June 30, 2009 85,549.17
504,525.57 504,525.57
WATER CHARGES
1,074,252.82
5,300,368.71
75.00
4,199.96
8,677.41
4,626,928.82
390,073.54
183,901.76
1,169,314.96
6,378,896.49 6,378,896.49
SEWER CHARGES
1,031,754.16,.
5,174,637.78
1,358.34
13,828.17
14
ADDITIONAL WATER
CHARGES (SPM, SPC, SPR)
Balance June 30, 2008 1,145.26
Committed 2008-2009 42,106.04
Paid to Treasurer 40,727.17
Added to 2009Taxes 0
Uncollected June 30, 2009 2,524.13
43,251.30 43,251.30
AMBULANCE FEES
Balance June 30, 2008 210,103.56
Committed 2008-2009 1,251,543.94
Refunds 6,938.11
Abatements - 604,053.57
Paid to Treasurer 640,724.75
Uncollected June 30, 2009 223,807.29
1,468,585.61 1,468,585.61
CERTIFICATES OF MUNICIPAL LIENS
Certificates Issued 26,900.00
Paid to Treasurer
26,900.00
BETTERMENTS ADDED TO TAXES
Committed 2009 8,127.05
Paid to Treasurer
8,127.05
26,900.00
26,900.00
8,127.05
8,127.05
15
TOWN OF READING
REAL ESTATE ABATEMENTS
FOR PERIOD 01JAN2009 TO 31DEC2009
OWNER NAME
PARCEL ADDRESS
AMOUNT
DATE
ARETUSI DANIEL F
NELSON AVE
$68,200
2/10/2009
BHAT CHAITANYA
TENNYSON CIR
$48,100
4/14/2009
BOUTIN GARY ETAL
E ST
$67,700
3/10/2009
CALLAHAN RUSSELL
WASHINGTON ST
$63,800
2/10/2009
CATURELLO ANTHONY F
VAN NORDEN RD
$37,200
2/10/2009
CINTRON JENNIE
GAZEBO CIRCLE
$17,200
1/27/2009
DINING OSCAR
LISA LN
$36,100
3/10/2009
DOWNING WILLIAM H
AVON ST
$18,600
2/10/2009
FALLON JOHN L JR
SALEM ST
$13,600
4/6/2009
GALLO MATTEO GUISEPPE
AVON ST
$31,400
4/29/2009
GENTILE PAULA M
SOUTH ST
$31,600
2/23/2009
GILLIES PETER
MINERAL ST
$28,500
2/23/2009
GLEASON STEPHEN J
HARNDEN ST
$88,300
3/10/2009
GOHR GREGORY J
SCOTLAND RD
$61,200
2/23/2009
HALL MARK G TRUSTEE
HAVEN ST
$.17,800
3/24/2009
HALL MARK G TRUSTEE
HAVEN ST
$32,000
3/24/2009
HALL MARK G TRUSTEE
HAVEN ST
$29,400.
3/24/2009
HALL MARK G TRUSTEE
HAVEN ST
$65,500
3/24/2009
HALL MARK G TRUSTEE
HAVEN ST
$22,900
3/24/2009
HATFIELD DOROTHY (L.E.)
TENNYSON RD
$14,300
1/2712009
HAVEN ATLANTIC LLC
HAVEN ST
$478,100
3/24/2009
KAY STREET READING REALTY LLC
AZALEA CIR
$56,500
2/23/2009
LANNON AMY F
RIVERSIDE DR
$3,900
3/4/2009
LANZILLO JOSEPH J
TERRACE PARK
$64,800
1/27/2009
LAVANCHER CHRISTIAN A
SMITH AVE
$28,600
2/17/2009
LEARY TIMOTHY F
LONGWOOD RD
$15,200
3/24/2009
MCKINLEY WILLIAM T
WEST ST
$17,900
1/27/2009
MELLY BRENDAN J
JAMES RD
$34,400
2/23/2009
MENDEZ MELISSA W
SUMMER AVE
$86,200
2/23/2009
NEW ENGLAND TEL & TEL CO
LINDEN ST
$147,100
4/29/2009
NICHOLS BENJAMIN E
AVON ST
$65,000
2/10/2009
PORTER HARRY D
ENOS CIR
$26,500
4/6/2009
QUINN MARK A
JEFFERSON CIR
$72,900
2/17/2009
RAJADURAI MAHENDRA
SANBORN LN
$51,600
4/21/2009
RAUSEO PAUL W
HAVEN ST
$27,100
2/17/2009
READING OPEN LAND TRUST
SLEDGE WOODS
$5,800
1/13/2009.
REGAN R ROBERT
PROSPECT ST
$21,500
1/27/2009
SACCOCCIO REMO
ENOS CIR
$25,700
2/23/2009
SARGENT ERIKA
PIERCE ST
$25,600
3/24/2009
SARTELL ERNEST E
BRETON CIR
$21,900
1/27/2009
SHUMAN DAVINA L
CHARLES ST
$9,000
3/10/2009
SKVORTSOV ALEXANDER
HOWARD ST
$16,600
1/13/2009
SPEZZAFERRO TODD
PIERCE ST
$16,900
3/24/2009
STEMPECK JOHN W
AVALON RD
$20,100
3/4/2009
SUTARIA DHIREN K
DUCK RD
$13,000
3/10/2009
TAVOLETTI STEVEN
WILLIAM RD
$82,000
3/24/2009
TEEL DONALD T
PRESCOTT ST
$18,600
3/10/2009
TOSCANO ANN MARIE
HIGH ST
$20,200
3/10/2009
VENTURA PATRICIA
SALEM ST
$13,000
2/10/2009
VITARISI BRUCE G
GEORGE ST
$29,200
2/10/2009
2009 ABATEMENTS: 50
AMOUNT
$2,308,300
16
TABLE OF CONTENTS
PAGE
INDEPENDENT AUDITORS' REPORT
1
MANAGEMENT'S DISCUSSION AND ANALYSIS
3
BASIC FINANCIAL STATEMENTS:
Government-Wide Financial Statements:
Statement of Net Assets
12
Statement of Activities
13
Fund Financial Statements:
Governmental Funds:
Balance Sheet
14
Reconciliation of Total Governmental Fund Balances to
Net Assets of Governmental Activities in the Statement
of Net Assets
15
Statement of Revenues, Expenditures, and Changes
in Fund Balances
16
Reconciliation of the Statement of Revenues, Expenditures,
and Changes in Fund Balances of Governmental Funds to
the Statement of Activities
17
Statement of Revenues and Other Sources, and Expenditures
and Other Uses - Budget and Actual - General Fund
18
Proprietary Funds:
Statement of Net Assets
19
Statement of Revenues, Expenses, and Changes in Fund
Net Assets
20
Statement of Cash Flows
21
Fiduciary Funds:
Statement of Fiduciary Net Assets
22
Statement of Changes in Fiduciary Net Assets
23
Notes to Financial Statements
24
Electric Light Plant Notes to the Financial Statements
48
REQUIRED SUPPLEMENTARY INFORMATION:
Schedule of Funding Progress
62
18
SUPPLEMENTARY INFORMATION:
Combining Balance Sheet - Nonmajor Governmental Funds 64
Combining Statement of Revenues, Expenditures and
Changes in Fund Balances - Nonmajor Governmental Funds 68
Combining Schedule of Net Assets - Nonmajor Proprietary Funds 71
Combining Schedule of Revenues, Expenses and Changes
in Fund Net Assets - Nonmajor Proprietary Funds 72
Combining Schedule of Cash Flows - Nonmajor Proprietary Funds 73
19
Melanson Heath & Company, PC
Certified Public Accountants
Management Advisors
10 New England Business Center Drive Suite 112
Andover, MA 01810
Tel (978) 749-0005 Fax (978) 749-0006
www. mel ans onheath. com
INDEPENDENT AUDITORS' REPORT
To the Board of Selectmen
Town of Reading, Massachusetts
We have audited the accompanying financial statements of the governmental activi-
ties, the business-type activities, each major fund, and the aggregate remaining fund
.information of the Town of Reading, Massachusetts, as of and for the year ended
June 30, 2009, which collectively comprises the Town's basic financial statements
as listed in the table of contents. These financial statements are the responsibility of
the Town of Reading's management. Our responsibility is to express an opinion 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 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
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinions.
In our opinion, the financial statements referred to above present fairly, in all mate-
rial respects, the respective financial position of the governmental activities, the
business-type activities, each major fund, and the aggregate remaining fund infor-
mation of the Town of Reading as of June 30, 2009, and the respective changes
in financial position and cash flows, where applicable, thereof and the respective
budgetary comparison for the General Fund for the year then ended in conformity
with accounting principles generally accepted in the United States of America.
The management's discussion and analysis, appearing on the following pages,
and the supplementary information, appearing on page 62, are not a required
part of the basic financial statements but are supplementary information required
by accounting principles generally accepted in the United States of America. We
Additional Offices:
20 Greenfield, MA Ellsworth, ME Nashua, NH Manchester, NH
have applied certain limited procedures, which consisted principally of inquiries of
management regarding the methods of measurement and presentation of the
required supplementary information. However, we did not audit the information
and express no opinion on it.
Our audit was conducted for the purpose of forming opinions on the financial
statements that collectively comprise the Town of Reading's basic financial
statements. The combining financial statements as listed in the accompanying
table of contents are presented for purposes of additional analysis and are not
a required part of the basic financial statements. Such information has been
subjected to the auditing procedures applied in the audit of the basic financial
statements and, in our opinion, is fairly stated in all material respects in relation
to the basic financial statements taken as a whole.
In accordance with Government Auditing Standards, we have also issued a report
dated January 27, 2010 on our consideration of the Town'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 report-
ing and compliance and the results of that testing, and not to provide an opinion on
the internal control over financial reporting or on compliance. That report is an inte-
gral part of an audit performed in accordance with Government Auditing Standards
and should be considered in assessing the results of our audit.
Andover, Massachusetts
January 27, 2010
2
21
MANAGEMENT'S DISCUSSION AND ANALYSIS
As management of the Town of Reading we offer readers this narrative overview
and analysis of the financial activities of the Town of Reading for the fiscal year
ended June 30, 2009.. Unless otherwise noted, all amounts reported in this
analysis are expressed in thousands.
A. OVERVIEW OF THE FINANCIAL STATEMENTS
This discussion and analysis is intended to serve as an introduction to the basic
financial statements. The basic financial statements are comprised of three
components: (1) government-wide financial statements, (2) fund financial state-
ments, and (3) notes to the financial statements. This report also contains
other supplementary information in addition to the basic financial statements
themselves.
Government-wide financial statements. The government-wide financial state-
ments are designed to provide readers with a broad overview of our finances in
a manner similar to a private-sector business.
The statement of net assets presents information on all assets and liabilities, with
the difference between the two reported as net assets. Over time, increases or
decreases in net assets may serve as a useful indicator of whether the financial
position is improving or deteriorating.
The statement of activities presents information showing how the government's
net assets changed during the most recent fiscal year. All changes in net assets
are reported as soon as the underlying event giving rise to the change occurs,
regardless of the timing of related cash flows. Thus, revenues and expenses
are reported in this statement for some items that will only result in cash flows
in future fiscal periods (e.g., uncollected taxes and earned but unused vacation
leave).
Both of the government-wide financial statements distinguish functions that are
principally supported by taxes and intergovernmental revenues (governmental
activities) from other functions that are intended to recover all or a significant
portion of their costs through user fees and charges (business-type activities).
The governmental activities include general government, public safety, educa-
tion, public works, health and human services, and culture and recreation. The
business-type activities include water supply and distribution, sewer disposal,
landfill, electricity, and storm water activities.
Fund financial statements. A fund is a grouping of related accounts that is
used to maintain control over resources that have been segregated for specific
activities or objectives. Fund accounting is used to ensure and demonstrate
compliance with finance-related legal requirements. All of the funds can be
3
22
divided into three categories: governmental funds, proprietary funds and fiduck
ary funds.
Governmental funds. Governmental funds are used to account for essentially
the same functions reported as governmental activities in the government-wide
financial statements. However, unlike the government-wide financial statements,
governmental fund financial statements focus on near-term inflows and outflows
of spendable resources, as well as on balances of spendable resources available
at the end of the fiscal year. Such information may be useful in evaluating
a government's near-term financing requirements.
Because the focus of governmental funds is narrower than that of the government-
wide financial statements, it is useful to compare the information presented for
governmental funds with similar information presented for governmental activities
in the government-wide financial statements. By doing so, readers may better
understand the long-term impact of the government's near-term financing deck
sions. Both the governmental fund balance sheet and the governmental fund
statement of revenues, expenditures and changes in fund balances provide
a reconciliation to facilitate this comparison between governmental funds and
governmental activities.
An annual appropriated budget is adopted for the general fund. A budgetary
comparison statement has been provided for the general fund to demonstrate
compliance with this budget.
Proprietary funds. Proprietary funds are maintained as follows:
Enterprise funds are used to report the same functions presented as business-
type activities in the government-wide financial statements. Specifically, enter-
prise funds are used to account for water, sewer, landfill, and electricity opera-
tions.
Proprietary funds provide the same type of information as the business-type
activities reported in the government-wide financial statements, only in more
detail. The proprietary fund financial statements provide separate information
for the water, sewer, landfill, electricity, and storm water operations. Water and
electricity are considered to be major funds.
Fiduciary funds. Fiduciary funds are used to account for resources held for the
benefit of parties outside the government. Fiduciary funds are not reflected in the
government-wide financial statements because the resources of those funds are
not available to support the Town's own programs. The accounting used for
fiduciary funds is much like that used for proprietary funds.
Notes to financial statements. The notes provide additional information that is
essential to a full understanding of the data provided in the government-wide and
fund financial statements.
4
23
Other information. In addition to the basic financial statements and accom-
panying notes, this report also presents certain required supplementary infor-
mation which is required to be disclosed by accounting principles generally
accepted in the United States of America.
B. FINANCIAL HIGHLIGHTS
• As of the close of the current fiscal year, the total of assets exceeded liabili-
ties by $ 210,850 (i.e., net assets), a change of $ (2,051) in comparison to the
prior year.
• As of the close of the current fiscal year, governmental funds reported com-
bined ending fund balances of $ 25,468, a change of $ (4,136) in comparison
with the prior year.
• At the end of the current fiscal year, unreserved fund balance for the general
fund was $ 6,486, a change of $ 35 in comparison with the prior year.
• Total bonds payable at the close of the current fiscal year was $ 60,853, a
change of $ (8,374) in comparison to the prior year.
C. GOVERNMENT-WIDE FINANCIAL ANALYSIS
The following is a summary of condensed government-wide financial data for the
current and prior fiscal years.
Governmental
Activities
Current and other assets
Capital assets
Total assets
Long-term liabilities outstanding
Other liabilities
Total liabilities
Net assets:
Invested in capital assets, net
Restricted
Unrestricted
Total net assets
Business-Type
Activities
2009
$ 41,525
86,482
128,007
17,890
7,203
25,093
2008
$ 47,314
82,947
130,261
18,687
8,316
27,003
68,369
2,938
31,951
$ 103,258
2009
$ 73,994
219,210
Total
2009
2008
$ 32,469
$ 36,683
132,728
134,684
-
165,197
171,36T
50,755
55,239
6,506
6,485
57,261
61,724
88,095 82,245 72,977
13,376 12,566 4,404
6,465 14,832 25,533
$ 107,936 $ 109,643 $ 102,914
5
24
293,204
68,645
13,709
82,354
161,072
17,780
31,998
$ 210,850
2008
$ 83,997
217,631
301,628
73,926
14,801
88,727
150,614
15,504
46,783
$ 212,901
CHANGES IN NET ASSETS
Governmental
Busine
ss-Type
Activities
Activities
Total
2009
2008
2009
2008
2009
2008
Revenues:
Program revenues:
Charges for services
$ 5,762
$ 5,211
$ 100,990
$ 95,738
$ 106,752 $
100,949
Operating grants and
contributions
20,321
19,710
3,057
1,464
23,378
21,174
Capital grants and
contributions
788
765
178
516
966
1,281
General revenues:
Property taxes
48,917
47,398
-
-
48,917
47,398
Excises
2,659
2,897
-
-
2,659
2,897
Penalties and interest and
othertaxes
493
693
-
-
493
693
Grants and contributions
not restricted to,specific
programs
4,675
11,958 (a)
-
-
4,675
11,958
Investment income
1,143
1,821
442
761
1,585
2,582
Other
792
33
410
-
1,202
33
Total revenues
85,550
90,486
105,077
98,479
190,627
188,965
Expenses:
General government
4,737
3,635
-
-
4,737
3,635
Public safety
10,146
9,792
-
-
10,146
9,792
Education
59,911
54,485
-
-
59,911
54,485
Public works
9,261
8,304
-
-
9,261
8,304
Human services
1,080
681
-
-
1,080
681
Culture and recreation
1,926
1,910
-
-
1,926
1,910
Interest on long-term debt
2,054
2,422
-
-
2,054
2,422
Intergovernmental
1,012
1,001
-
-
1,012
1,001
Electric
-
-
92,624
84,673
92,624
84,673
Water
-
-
5,451
5,367
5,451
5,367
Other
-
-
4,476
4,981
4,476
4,981
Total expenses
127
90
82
230
102,551
95,021
192,678
177,251
,
,
Excess of revenues over
,
expenses
(4,577)
8,256
2,526
3,458
(2,051)
11,714
Permanent fund contributions
-
91
-
-
-
91
Transfers in (out)
2,870
2,073
2,870
2,073
-
Change in net assets
(1,707)
10,420
(344)
1,385
(2,051)-
11,805
Net assets - beginning of
year
109,643
99,223
103,258
101,873
212,901
201,096
Net assets - end of year
$ 107,936
$ 109,643
$ 102,914
$ 103,258
$ 210,850 $
212,901
(a) 2008 Includes MSBA grants of $7,110
As noted earlier, net assets may serve over time as a useful indicator of a
government's financial position. At the close of the most recent fiscal year,
total net assets were $ 210,850, a change of $ (2,051) from the prior year.
The largest portion of net assets $ 161,072 reflects our investment in capital
assets (e.g., land, buildings, machinery, and equipment), less any related debt
used to acquire those assets that is still outstanding.. These capital assets are
used to provide services to citizens; consequently, these assets are not available
6
25
for future spending. Although the investment in capital assets is reported net of
related debt, it should be noted that the resources needed to repay this debt
must be provided from other sources, since the capital assets themselves cannot
be used to liquidate these liabilities.
An additional portion of net assets $ 17,780 represents resources that are
subject to external restrictions on how they may be used. The remaining balance
of unrestricted net assets $ 31,998 may be used to meet the government's
ongoing obligations to citizens and creditors.
Governmental, activities. Governmental activities for the year resulted in a
change in net assets of $ (1,707). Key elements of this change are as follows:
General fund expenditures exceeding revenues
Special revenue and permanent fund
revenues exceeding expenditures
Current year revenue used for the acquisition
of capital assets
PILOT from RMLD
Debt service principal in excess of depreciation
expense
Increase in OPEB liability
Other
Total
$ (7,144)
745
2,499
2,113
2,425
(2,454)
109
$ 1,707
Business-type activities. Business-type activities for the year resulted in a
change in net assets of $ (344). Key elements of this change are as follows:
The electric operations had revenues of $ 95,154 and expenses and transfers
of $ 94,737, resulting in a change in net assets of $ 417.
The water operations had revenues of $ 4,839 and expenses and transfers of
$ 5,889, resulting in a change in net assets of $ (1,050).
The sewer operations had revenues of $ 4,701 and expenses and transfers of
$ 4,687, resulting in a change in net assets of $ 14.
The landfill operations did not report any revenues or expenditures.
The storm water management operations had revenues of $ 382 and
expenses of $ 107, resulting in a change in net assets of $ 275.
7
26
D. FINANCIAL ANALYSIS OF THE GOVERNMENT'S FUNDS
As noted earlier, fund accounting is used to ensure and demonstrate compliance
with finance-related legal requirements.
Governmental funds. The focus of governmental funds is to provide infor-
mation on near-term inflows, outflows and balances of spendable resources.
Such information is useful in assessing financing requirements'. In particular,
unreserved fund balance may serve as a useful measure of a government's net
resources available for spending at the end of the fiscal year.
As of the end of the current fiscal year, governmental funds reported combined
ending fund balances of $25,468, a change of $ (4,136) in comparison with the
prior year. Key elements of this change are as follows:
General fund expenditures exceeding revenues
$ (7,144)
Special revenue, and permanent fund
revenues exceeding expenditures
745
Capital project fund revenues and bond proceeds
expenditures exceeding
(607)
Pilot from RMLD
2,113
Enterprise fund indirect costs
784
Other
27
Total
$ 4,136
The general fund is the chief operating fund. At the end of the current fiscal year,
unreserved fund balance of the general fund was $ 6,486, while total fund
balance was $ 10,299. As a measure of the general fund's liquidity, it may be
useful to compare both unreserved fund balance and total fund balance to total
fund expenditures. Unreserved fund balance represents 7.9 percent of total
general fund expenditures, while total fund balance represents 12.5 percent of
that same amount.
The fund balance of the general fund changed by $ (3,792) during the current
fiscal year. The majority of this change is due to the MSBA refunded debt
payment, which was made on July 1, 2008 from the debt refunding completed at
the end of the prior year. Key factors in this change are as follows:
Use of free cash and overlay surplus as a funding source $ (1,587)
Revenues in excess of budget 244
Expenditures less than budget 1,898
MSBA refunded debt paydown (4,362)
Other 15
Total $ 3,792
8
27
The following table reflects the trend in all the components of the general fund's
fund balance:
General Fund Balances
Last Five Fiscal Years
Subsequent
As of
Reserved for
Year's Stabilization
Debt
Total Fund
30-Jun
Encumbrances
Expenditures Fund
Unreserved Service
Balance
2004
$ 641
$ 555 $ 704
$ 3,721 $ -
$ 5,621
2005
.679
706 820
3,513 -
5,718
2006
881
662 851
4,221 -
6,615
2007
1,435
264 896
5,788 -
8,383
2008
1,597
227 1,454
6,451 4,362
14,091
2009
1,210
763 1,840
6,486 -
10,299,
Proprietary funds. Proprietary funds provide the same type of information
found in the business-type activities reported in the government-wide financial
statements, but in more detail.
Net assets of the enterprise.funds at the end of the year amounted to $ 102,914,
a change of $ (344) in comparison with the prior year. Factors concerning the
finances of proprietary funds have already been addressed in the entity-wide
discussion of business-type activities.
E. GENERAL FUND BUDGETARY HIGHLIGHTS
Differences between the original budget and the final amended budget resulted
in an overall change in appropriations of $ 499.
The budget and actual statement reflects an under collection of Intergovern-
mental revenue primarily resulting from State Aid (Chapter 70) reductions
implemented by the Commonwealth in fiscal year 2009. The Chapter 70
reductions were partially offset by an American Recovery and Reinvestment Act
(ARRA) grant which is reported in a separate major fund in accordance with the
transparency requirements of the Act. The general fund revenue shortfall is
offset by budgetary turn backs in education and employee benefits expenditures.
The turn backs result from the Town transferring cost to the ARRA major fund.
F. CAPITAL ASSET AND DEBT ADMINISTRATION
Capital assets. Total investment in capital assets for governmental and business-
type activities at year end amounted to $ 219,210 (net of accumulated deprecia-
tion), a change of $ 1,579 from the prior year. This investment in capital assets
includes land, buildings and system, improvements, and machinery and equip-
ment.
9
28
Major capital asset events during the current fiscal year included the following:
Governmental additions:
• $
899
in roadway improvements
• $
895
in various recreation improvements
• $
836
in education additions
• $
610
in general government additions
• $
360
in public safety additions
Business-type additions:
• $ 6,852 in electric improvements
• $ 1,344 in water improvements
• $ 283 in sewer improvements
Additional information on capital assets can be found in the footnotes to the
financial statements.
Long-term debt. At the end of the current fiscal year, total bonded debt out-
standing was $ 60,853, all of which was backed by the full faith and credit of the
government.
Additional information on capital assets and long-term debt can be found in the
footnotes to the financial statements.
G. ECONOMIC FACTORS AND NEXT YEAR'S BUDGETS AND RATES
The adopted FY10 General Fund budget of $ 73,335 is a .3% decrease from
the prior year. In recognition of the poor general economic conditions, State
Revenue Aid and Local Receipts were anticipated to be much lower. We are
required to budget to the expected revenues which explain the decrease in our
budget. The FY10 budget is balanced. Federal Stimulus money of approxi-
mately $ 1,000 is replacing state aid. The estimated revenues include a further
decrease in State Aid of $ 326. Local Receipts are budgeted $ 710 lower. This
general fund budget includes an allocation from the unreserved fund balance of
$ 249. The tax levy for FY10 of $ 50,129 represents a 2.0% increase over the
prior year, and the FY10 tax rate is $ 13.75 per thousand, compared to $ 13.21
in the prior year. Overall, property values declined 2.0% to $ 3,645,760.
10
29
REQUESTS FOR INFORMATION
This financial report is designed to provide a general overview of the Town of
Reading's finances for all those with an interest in the government's finances.
Questions. concerning any of the information provided in this report or requests
for additional financial information should be addressed to:
Town Accountant
Town Hall
16 Lowell Street
Reading, MA 01867
11'
30
TOWN OF READING, MASSACHUSETTS
STATEMENT OF NET ASSETS
JUNE 30, 2009
Governmental
Business-Type
Activities
Activities
Total
ASSETS
Current:
Cash and short-term investments
$ 18,010,448
$ 13,248,715
$ 31,259,163
Restricted cash
-
11,573,437
11,573,437
Investments
13,110,072
-
13,110,072
Receivables, net of allowance for uncollectibles:
Property taxes
180,510
180,510
Excises
79,337
-
79,337
User fees
-
9,703,031
9,703,031
Departmental and other
246,851
-
246,851
Intergovernmental
337,860
-
337,860
Prepaid assets
-
753,345
753,345
Unamortized discounts on bonds
9,909
296
10,205
Inventory
-
1,706,163
1,706,163
Other assets
78,949
189
79,138
Noncurrent:
Restricted investments
-
4,400,000
4,400,000
Investment in associated companies
-
122,391
122,391
Receivables, net of allowance for uncollectibles:
Property taxes
315,541
-
315,541
Deferred charges
99,993
17,468
117,461
Capital assets being depreciated, net
128,463,958
83,859,027
212,322,985
Capital assets not being depreciated
4,263,927
2,622,631
6,886,558
TOTAL ASSETS
165,197,355
128,006,693
293,204,048
LIABILITIES
Current:
Warrants payable
1,368,770
5,555,428
6,924,198
Accrued liabilities
3,124,648
376,500
3,501,148
Customer advances for construction
-
696,517
696,517
Customer deposits
-
496,335
496,335
Retainage payable
1,104,105
-
1,104,105
Other current liabilities
908,327
78,637
986,964
Current portion of long-term liabilities:
Bonds and loans payable
3,720,000
2,106,501
5,826,501
Accrued employee benefits
80,050
81,713
161,763
Unamortized premiums on notes and bonds
24,762
777
25,539
Noncurrent:
Bonds and loans payable, net of current portion
42,705,000
12,321,598
55,026,598
Accrued employee benefits
1,520,950
2,871,423
`4,392,373
Unamortized premiums on notes and bonds
249,943
3,881
253,824
OPEB liability
2,454,449
503,867
2,958,316
TOTAL LIABILITIES
57,261,004
25,093,177
82,354,181
NET ASSETS
Invested in capital assets, net of related debt
88,095,331
72,977,051
161,072,382
Restricted for:
Grants and other statutory restrictions
5,628,680
4,403,130
10,031,810
Permanent funds:
Nonexpendable
2,374,100
-
2,374,100
Expendable
5,373,466
-
5,373,466
Unrestricted
6,464,774
25,533,335
31,998,109
TOTAL NET ASSETS
$ 107,936,351
$ 102,913,516
$ 210,849,867
See notes to financial statements. 12
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33
TOWN OF READING, MASSACHUSETTS
RECONCILIATION OF TOTAL GOVERNMENTAL FUND
BALANCES TO NET ASSETS OF GOVERNMENTAL-
ACTIVITIES IN THE STATEMENT OF NET ASSETS
JUNE 30, 2009
Total governmental fund balances
$ 25,468,144
• Capital assets used in governmental activities are not financial
resources and, therefore, are not reported in the funds.
132,727,885
• Revenues are reported on the accrual basis of accounting
and are not deferred until collection.
822,681
• Governmental funds report the effect of long-term debt
issuance costs, premiums, and discounts when debt is first
issued, whereas these amounts are deferred and amortized
in the statement of activities.
(164,803)
• In the statement of activities, interest is accrued on outstanding
long-term debt, whereas in governmental funds interest is not
reported until due.
(437,107)
• Long-term liabilities, (bonds payable, accrued employee benefits
and OPEB Liability) are not due and payable in the current period,
and, therefore, are not reported in the governmental funds.
(50,480,449)
Net assets of governmental activities
$ 107,936,351
See notes to financial statements.
15
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r
TOWN OF READING, MASSACHUSETTS
RECONCILIATION OF THE STATEMENT OF REVENUES
EXPENDITURES, AND CHANGES IN FUND BALANCES OF
GOVERNMENTAL FUNDS TO THE STATEMENT OF ACTIVITIES
FOR THE YEAR ENDED JUNE 30, 2009
NET CHANGES IN FUND BALANCES - TOTAL GOVERNMENTAL FUNDS
• Governmental funds report capital outlays as expenditures. However, .
in the statement of activities the cost of those assets is allocated
over their estimated useful lives and reported as depreciation expense:
Capital outlay purchases
Depreciation
• Revenues in the statement of activities that do not provide current
financial resources are fully deferred in the statement of revenues,
expenditures and changes in fund balances. Therefore, the
recognition of revenue for various types of accounts receivable
(i.e., real estate and personal property, motor vehicle excise, etc.)
differ between the two statements. This amount represents the
net change in deferred revenue.
• The issuance of long-term debt (e.g., bonds) provides current
financial resources to governmental funds, while the repayment
of the principal of long-term debt consumes the financial
resources of governmental funds. Neither transaction, however,
has any effect on net assets:
Issuance of debt
Repayments of debt
Current year amortization of bond premiums and costs
Increase in other long-term liabilities (OPEB)
• In the statement of activities, interest is accrued on outstanding
long-term debt, whereas in governmental funds interest is not
reported until due.
• Some expenses reported in the statement of activities, such as
compensated absences, do not require the use of current financial
resources and therefore, are not reported as expenditures in the
governmental funds.
CHANGE IN NET ASSETS OF GOVERNMENTAL ACTIVITIES.
See notes to financial statements.
$ (4,136,439)
3,600,300
(5,556,420)
(230,597)
(1,100,000)
7,980,000
14,854
(2,454,449)
142,006
33,628
$ (1,707,117)
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37
TOWN OF READING, MASSACHUSETTS
PROPRIETARY FUNDS
STATEMENT OF NET ASSETS
JUNE 30, 2009
Electric
Division
Water
Non Major
Fund
Fund
Funds
Total
ASSETS
Current:
Cash and short-term investments
$ 8,625,772
$ 2,093,097
$ 2,529,846
$ 13,248,715
net of allowance for uncollectibles
User fees
7,087,246
1,264,920
1,350,865
9,703,031
,
Prepaid expenses
753,34:5
-
-
753,345
296
Deferred charges
Inventory
-
1,563,070
296
141,637
-
1,456
1,706,163
Other assets
-
189
189
Total current assets
18,029,433
3,499,950
3,882,356
25,411,739
Noncurrent:
Restricted cash and cash equivalents
11,573,437
-
11,573,437
Restricted investments
4,400,000
4,400,000
391
122
Investment in associated companies
122,391
-
,
468
17
Deferred charges, net of current portion
Capital assets being depreciated, net
15,988
63,391,248
1,480
14,740,565
5,727,214
,
83,859,027
Capital assets not being depreciated
1,265,842
1,295,028
61,761
2,622,631
Total noncurrent assets
80,768,906
16,037,073
5,788,975
102,594,954
TOTAL ASSETS
98,798,339
19,537,023
9,671,331
128,006,693
LIABILITIES
Current:
Warrants payable
5,448,255
53,148
54,025
5,555,428
Accrued liabilities
258,000
114,992
3,508
376,500
Customer advances for constriction
696,517
-
-
-
696,517
496
335
Customer deposits
496,335
-
-
637
78
,
78,637
Other current liabilities
-
,
Current portion of long-term liabilities:
Bonds and loans payable
550;000
1,375,000
181,501
2,106,501
Accrued employee benefits
81,713
-
-
81,713
777
Unamortized premiums on bonds
777
-
Total current liabilities
7,530,820
1,543,917
317,671
9,392,408
Noncurrent:
Bonds and loans payable
-
12,145,000
176,598
12,321,598
Accrued employee benefits
2,791,401
59,000
21,022
2,871,423
Unamortized premiums on bonds
-
402
436
3,881
47
050
-
.20,415
3,881
503,867
OPEB liability
,
,
TOTAL LIABILITIES
10,758,623
13,798,848
535,706
25,093,177
NET ASSETS
Invested in capital assets, net of related debt
64,107,090
3,123,377
5,746,584
72,977,051
Restricted for depreciation fund
4,403,130
496
529
19
-
614
798
2
-
3,389,041
4,403,130
25,533,335
Unrestricted
,
,
,
,
TOTAL NET ASSETS
$ 88,039,716
$ 5,738,175
$ 9,135,625
$ 102,913,516
See notes to financial statements.
19
38
TOWN OF READING, MASSACHUSETTS
PROPRIETARY FUNDS
STATEMENT OF REVENUES, EXPENSES AND CHANGES IN FUND NET ASSETS
FOR THE YEAR ENDED JUNE 30, 2009
Electric
Division
Water
Non Major
Fund
Fund
Funds
Total
Operating Revenues:
Charges for services
$ 91,111,013
$ 4,798,886
$ 5,080,650
$ 100,990,549
Other
3,056,972
-
-
3,056,972
Total Operating Revenues
94,167,985.
4,798,886
5,080,650
104,047,521
Operating Expenses:
Personnel expenses
-
860,432
426,354
1,288,786
Non-personnel expenses
-
938,719
129,568
1,068,287
Intergovernmental
1,207,979
1,636,165
3,555,143
6,399,287
Depreciation
3,134,387
1,444,746
326,148
4,905,281
Energy purchases
77,172,343
25,306
29,452
77,227,101
Other
11,019,736
-
-
11,019,736
Total Operating Expenses
92,534,445
4,905,368
4,466,665
101,906,478
Operating Income (Loss)
1,633,540
(106,482)
613,985
2,141,043
Nonoperating Revenues (Expenses):
Investment income
398,369
40,457
3,257
.442,083
Interest expense
(49,911)
(545,754)
(9,522)
(605,187)
Loss on disposal of capital assets
(39,767)
-
-
(39,767)
Other
409,501
-
-
409,501
Total Nonoperating Revenues (Expenses)
718,192
(505,297)
6,265
206,630
Income (Loss) Before Transfers and Contributions
2,351,732
(611,779)
607,720
2,347,673
Capital contributions
177,680
-
-
177,680
Transfers (out)
(2,112,725)
(438,600)
318,302
(2,869,627)
Change in Net Assets
416,687
(1,050,379)
289,418
(344,274)
Net Assets at Beginning of Year
87,623,029
6,788,554
8,846,207
103,257,790
Net Assets at End of Year
$ 88,039,716
$ 5,738,175
$ 9,135,625
$ 102,913,516
See notes to financial statements. 20
39
TOWN OF READING, MASSACHUSETTS
PROPRIETARY FUNDS
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED JUNE 30, 2009
Cash Flows From Operating Activities:
Receipts from customers and users
Payments to vendors and employees
Customer refund, purchase power, and fuel charge adjustments
Payments to other governments
Net Cash Provided By (Used For) Operating Activities
Cash Flows From Noncapital Financing Activities:
MMWEC refund
Other
Transfer out
Net Cash Provided By (Used. For) Noncapital Financing Activities
Cash Flows From Capital and Related Financing Activities:
Proceeds from issuance of bonds and notes
Acquisition of capital assets
Capital contributions and customer advances
Principal payments on bonds and notes
Interest expense
Net Cash (Used For) Capital and Related Financing Activities
Cash Flows From Investing Activities:
^Increase (decrease) in restricted cash and investments
Investment income
Net Cash Provided By Investing Activities
Net Change in Cash and Short-Term Investments
Unrestricted Cash and Short Term Investments, Beginning of Year
Unrestricted Cash and Short Term Investments, End of Year
Reconciliation of Operating Income (Loss) to Net Cash
Provided By (Used For) Operating Activities:
Operating income (loss)
Adjustments to reconcile operating income (loss) to net
cash provided by (used for) operating activities:
Depreciation
Changes in assets and liabilities:
User fees receivables
Inventory and prepayments
Other assets
Warrants payable
Accrued liabilities
Other liabilities
OPEB liability
Net Cash Provided By (Used For) Operating Activities
* = includes restricted cash
See notes to financial.statements.
Electric
Division Water Non Major
Fund Fund Funds Total
$ 93,182,410
$ 4,851,791
$ 5,117,077
$ 103,151,278
(90,332,097)
(1,248,287)
(625,262)
(92,205,646)
3,056,972
3,056,972
-
(1,636,165)
(3,555,143)
(5,191,308)
5,907,285
1,967,339
936,672
8,811,296
107,879
-
107,879
301,622
301,622
(2,122,725)
(438,600)
(318,302)
(2,879,627)
(1,713,224)
(438,600)
(318,302)
(2,470,126)
450,000
450,000
(6,852,061)
(1,343,982)
(283,382)
(8,479,425)
177,680
177,680
(550,000)
(1,225,000)
(168,709)
(1,943,709)
(49,911)
(545,754)
(9,522)
(605,187)
(7,274,292)
(2,664,736)
(461,613)
(10,400,641)
(551,658)
-
(551,658)
398,369
40,457
3,257
442,083
(153,289)
40,457.
3,257
(109,575)
(3,233,520)
(1,095,540)
160,014
(4,169,046)
11,859,292
3,188,637
2,369,832
17,417,761
$ 8,625,772
$ 2,093,097
$ 2,529,846
$ 13,248,715
$ 1,633,540
$ (106,482)
$ 613,985
$ 2,141,043
3,134,387
1,444,746
326,148
4,905,281
2,056,390
52,905
36,427
2,145,722
(497,600)
532,006
1,041
35,447
599
(189)
410
(1,001,875)
(2,989)
(49,118)
(1,053,982)
145,054
(1,897)
2,998
146,155
987
1,401
(15,035)
(12,647)
436,402
47,050
20,415
503,867
$ 5,907,285
$ 1,967,339
$ 936,672
$ 8,811,296
21
40
TOWN OF READING, MASSACHUSETTS
FIDUCIARY FUNDS
STATEMENT OF FIDUCIARY NET ASSETS
JUNE 30, 2009
ASSETS
Cash and short term investments
Investments
Accounts receivable
Other
Total Assets
LIABILITIES AND NET ASSETS
Warrants payable
Other liabilities
Total Liabilities
Municipal
Light
Pension
Pension
Trust
Agency
Trust Fund
Funds
Funds
$ 404,486
$ 3,616,255
$ 422,313
69,083,769
3,000,000
-
12,813
-
-
-
-
3,413
69,501,068
6,616,255
425,726
- - 64,253
171,496 - 361,473
171,496 - 425,726
NET ASSETS
Total net assets held in trust for pension benefits
and other purposes $ 69,329,572
See notes to financial statements.
22
41
$ 6,616,255 $ -
TOWN OF READING, MASSACHUSETTS
FIDUCIARY FUNDS
STATEMENT OF CHANGES IN FIDUCIARY NET ASSETS
FOR THE YEAR ENDED JUNE 30, 2009
Municipal
Light
Pension Pension
Trust Fund Trust Funds
Additions:
Contributions:
Employers
$ 3,600,826
$ 360,000
Intergovernmental
432,110
-
Plan members
1,988,078
-
Total contributions
6,021,014
360,000
Investment Income (Loss):
Increase (decrease) in fair value of investments
(22,666,920)
212,085
Less: management fees
(364,745)
-
Net investment income (loss)
(23,031,665).
212,085
Total additions
(17,010,651)
572,085
Deductions:
Benefit payments to plan members, beneficiaries,
and other systems
6,921,635
-
Refunds and transfers to other systems
345,110
-
Administrative expenses
67,390
-
Other
-
892,540
Total deductions
7,334,135
892,540
Net increase (decrease)
(24,344,786)
(320,455)
Net assets:
Beginning of year
93,674,358
6,936,710
End of year
$ 69,329,572
$ 6,616,255
See notes to financial statements.
-23
42
TOWN OF READING, MASSACHUSETTS
Notes to Financial Statements
1. Summary of Significant Accounting Policies
The accounting policies of the Town of Reading (the Town) conform to
generally accepted accounting principles (GAAP) as applicable to govern-
mental units. The following is a summary of the more significant policies:
A. Reporting Entit
The government is a municipal corporation governed by an elected Board
of Selectmen. As required by generally accepted accounting principles,
these financial statements present the government and applicable com-
ponent units for which the government is considered to-be financially
accountable. The Reading Contributory Retirement System was estab-
lished to provide retirement benefits primarily to employees and their
beneficiaries. The System is presented using the accrual basis of
accounting and is reported as a pension trust fund in the fiduciary fund -
financial statements.
B. Government-Wide and Fund Financial Statements
Government-Wide Financial Statements
The government-wide financial statements (i.e., the statement of net
assets and the statement of changes in net assets) report information
on all of the nonfiduciary activities of the primary government. For the
most part, the effect of interfund activity has been removed from these
statements. Governmental activities, which normally are supported by
taxes and intergovernmental revenues, are reported separately from
business-type activities, which rely to a significant extent on fees and
charges for support.
The statement of activities demonstrates the degree to which the direct
expenses of a given function or segment are offset by program revenues.
Direct expenses are those that are clearly identifiable with a specific func-
tion or segment. Program revenues include (1) charges to customers
or applicants who purchase, use, or directly benefit from goods, services,
.or privileges provided by a given function or segment and (2) grants and
contributions that are restricted to meeting the operational or capital
requirements of a particular function or segment. Taxes and other items
not properly included among program revenues are reported instead as
general revenues.
24
43
Fund Financial Statements
Separate financial statements are provided for governmental funds,
proprietary funds and fiduciary funds, even though the latter are excluded
from the government-wide financial statements. Major individual govern-
mental funds and major individual enterprise funds are reported as sepa-
rate columns in the fund financial statements.
C. Measurement Focus Basis of Accounting and Financial Statement
Presentation
Government-Wide Financial Statements
The government-wide financial statements are reported using the econ-
omic resources measurement.focus and the accrual basis of accounting,
as is the proprietary fund and fiduciary fund financial statements. Reve-
nues are recorded when earned and expenses are recorded when a
liability is incurred, regardless of the timing of related cash flows. Property
taxes are recognized as revenues in the year for which they are levied.
Grants and similar items are recognized as revenue as soon as all elig-
ibility requirements imposed by the provider have been met. As a general
rule, the effect of interfund activity has been eliminated from the govern-
ment-wide financial statements.
Amounts reported as program revenues include (1) charges to customers
or applicants for goods, services, or privileges provided, (2) operating
grants and contributions, and (3) capital grants and contributions, includ-
ing special assessments. Internally dedicated resources are reported as-
general revenues rather than as program revenues. Likewise, general
revenues include all taxes and excises.
Fund Financial Statements
Governmental fund financial statements are reported using the current
financial resources measurement focus and the modified accrual basis of
accounting., Revenues are recognized as soon as they are both measur-
able and available. Revenues are considered to be available when they
are collectible within the current period or soon enough thereafter to pay
liabilities of the current period. For this purpose, the government con-
siders property tax revenues to be available if they are collected within
60 days of the end of the current fiscal period. All other revenue items
are considered to be measurable and available only when cash is received
by the government. Expenditures generally are recorded when a liability is
incurred, as under accrual accounting. However, debt service expendi-
tures, as well as expenditures related to compensated absences and
claims and judgments, are recorded only when payment is due.
The government reports the following major governmental funds:
• The general fund is the government's primary operating fund.
It accounts for all financial resources of the general government,
except those required to be accounted for in another fund.
25
44
• The ARRA (American Recovery and Reinvestment Act) Fund is
used to account for the receipt and expenditure of federal "stimulus"
funds awarded the community to replace some of the fiscal year
2009 Chapter 70 State aid reductions.
Proprietary funds distinguish operating revenues and expenses from non-
operating items. Operating revenues and expenses generally result from
providing services and producing and delivering goods in connection with
a proprietary fund's principal ongoing operations. The principal operating
revenues of the enterprise fund are charges to customers for sales and
services. Operating expenses for enterprise funds include the cost of
sales and services, administrative expenses and depreciation on.capital
assets. All revenues and expenses not meeting this definition are
reported as nonoperating revenues and expenses.
Private-sector standards of accounting and financial reporting issued prior
to December 1, 1989 generally are followed in both the government-wide
and proprietary fund financial statements to the extent that those stan-
dards do not conflict with or contradict guidance of the Governmental .
Accounting Standards Board. Governments also have the option of fol-
lowing subsequent private-sector guidance for their business-type activi-
ties and enterprise funds, subject to this same limitation. The government
has elected not to follow subsequent private-sector guidance.
The government reports the following major proprietary funds:
• Electric Enterprise Fund
• Water Enterprise Fund
The government reports the following fiduciary funds:
The pension trust fund accounts for the activities of the Employees
Contributory Retirement System, which accumulates resources for
pension benefit payments to qualified employees.
The municipal light pension trust fund accounts for the activities of the
Municipal Light Employees Contributory Retirement System, which
accumulates resources for pension benefit payments to qualified
employees.
The agency fund is used to account for student activity funds.
D. Cash and Short-Term Investments
Cash balances from all funds, except those required to be segregated by
law, are combined to form a consolidation of cash. Cash balances are
invested to the extent available, and interest earnings are recognized in
the General Fund. Certain special revenue, proprietary, and fiduciary
26
45
funds segregate cash, and investment earnings become a part of those
funds.
Deposits with financial institutions consist primarily of demand deposits,
certificates of deposits, and savings accounts. A cash and investment
pool is maintained that is available for use by all funds. Each fund's
portion of this pool is reflected on the combined financial statements
under the caption "cash and short-term investments". The interest
earnings attributable to each fund type are included under investment
income.
For purpose of the statement of cash flows, .the proprietary funds consider
investments with original maturities of three months or less to be short-
term investments.
E. Investments
State and local statutes place certain limitations on the nature of deposits
and investments. available. Deposits in any financial institution may not
exceed certain levels within the financial institution. Non-fiduciary fund
investments can be made in securities issued by or unconditionally
guaranteed by the U.S. Government or agencies that have a maturity of
one year or less from the date of purchase and repurchase agreements
guaranteed by such securities with maturity dates of no more than 90 days
from the date of purchase.
Investments for the Contributory Retirement System and Trust Funds
consist of marketable securities, bonds and short-term money market
investments. Investments are carried at market value.
F. Property Tax Limitations
Legislation known as "Proposition 2'/2" limits the amount of revenue that
can be derived from property taxes. The prior fiscal year's tax levy limit is
used as a base and cannot increase by more than 2.5 percent (excluding
new growth), unless an override or debt exemption is voted. The actual
fiscal year 2009 tax levy reflected an excess capacity of $ 2,437. .
G. Inventories
Inventories are valued at cost using the first-in/first-out (FIFO) method.'
The costs of governmental fund-type inventories are recorded as expendi-
tures when purchased rather than when consumed. No significant inven-
tory balances were on hand in governmental funds.
27
46
H. Capital Assets
Capital assets, which include property, plant, equipment, and infra-
structure assets are reported in the applicable governmental or business-
type activities columns in the government-wide financial statements.
Capital assets are defined by the government as assets with an initial
individual cost of more than $ 5,000 and an estimated useful life in excess
of two years. Such assets are recorded at historical cost or estimated
historical cost if purchased or constructed. Donated capital assets are
recorded at estimated fair market value at the date of donation.
The costs of normal maintenance and repairs that do not add to the value
of the asset or materially extend assets lives are not capitalized.
Major outlays for capital assets and improvements are capitalized as
projects are constructed. Interest incurred during the construction phase
of capital assets of business-type activities is included as part of the
capitalized value of the assets constructed.
Property, plant and equipment is depreciated using the straight-line
method over the following estimated useful lives:
Assets Years
Land improvements 20
Buildings and improvements 20-40
Machinery, equipment, and
furnishings 3-20
Infrastructure 50
1. Compensated Absences
It is the government's policy to permit employees to accumulate earned
but unused vacation and sick pay benefits. All vested sick and vacation
pay is accrued when incurred in the government-wide, proprietary, and
fiduciary fund financial statements. A liability for these amounts is
reported in governmental funds only if they have matured, for example,
as a result of employee resignations and retirements.
J. Long-Term Obligations
In the government-wide financial statements, and proprietary fund types in
the fund financial statements; long-term debt, and other long-term obliga-
tions are reported as liabilities in the applicable governmental activities,
business-type activities, or proprietary fund type statement of net assets.
28
47
K. Fund Equity
In the fund financial statements, governmental funds report reservations
of fund balance for amounts that are not available for appropriation or are
legally restricted by outside parties for use for a specific purpose. Desig-
nations of fund balance represent tentative management plans that are
subject to change.
L. Use of Estimates
The preparation of basic financial .statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities
and disclosures for contingent assets and liabilities at the date of the basic
financial statements, and the reported amounts of the revenues and
expenditures/expenses during the fiscal year. Actual results could vary
from estimates that were used.
2. Stewardship, Compliance, and Accountability
A. Budgetary Information
At the annual town meeting, the Finance Committee presents an operating
and capital budget for the proposed expenditures of.the fiscal year com-
mencing the following July 1. The budget, as enacted by town meeting,
establishes the legal level of control and specifies that certain appropria-
tions are to be funded by particular revenues. The original budget is
amended during the fiscal year at special town meetings as required by
changing conditions. In cases of extraordinary or unforeseen expenses,
the Finance Committee is empowered to transfer funds from the Reserve
Fund (a contingency appropriation) to a departmental appropriation.
"Extraordinary" includes expenses which are not in the usual line, or are
great or exceptional. "Unforeseen" includes expenses which are not
foreseen as of the time of the annual meeting when appropriations are
voted.
Departments are limited to the line items as voted. Certain items may
exceed the line item budget as approved if it is for an emergency and for
the safety of the general public. These items are limited by the Massa-
chusetts General Laws and must be raised in the next year's tax rate.
Formal budgetary integration is employed as a management control
device during the year for the General Fund and Proprietary Funds.
Effective budgetary control is achieved for all other funds through
provisions of the Massachusetts General Laws.
29
48
At year end, appropriation balances lapse, except for certain unexpended.
capital items and encumbrances which will be honored during the subse-
quent year.
B. Budgetary Basis
The General Fund final appropriation appearing on the "Budget and
Actual" page of the fund financial statements represents the final amended
budget after all reserve fund transfers and supplemental appropriations.
C. Bu0get1GAAP Reconciliation
The budgetary data for the general and proprietary funds is based upon
accounting principles that differ from generally accepted accounting prin-
ciples (GAAP). Therefore, in addition to the GAAP basis financial state-
ments, the results of operations of the general fund are presented in
accordance with budgetary accounting principles to provide a meaningful
comparison with budgetary data.
The following is a summary.of adjustments made to the actual revenues
and other sources, and expenditures and other uses, to conform to the
budgetary basis of accounting.
General Fund
Revenues/Expenditures
(GAAP basis)
Other financing sources/uses
(GAAP basis)
Subtotal (GAAP basis)
(excluding bond issue)
To record use of free cash and overlay
surplus
Reverse beginning of year
appropriation carryforwards
from expenditures
Add end of year appropriation
carryforwards to expenditures
Other
To reverse the effects of non-
budgeted refunded debt
payments from escrow.
To reverse the effects of non-
budgeted State contributions
for teacher retirements
Budgetary basis
Revenues Expenditures
and Other and Other
Financing Sources Financing Uses
$ 75,138,859 $ 82,282,982
3,352,344
78,491,203 82,282,982
1,587,312 -
- (1,597,001)
- 1,210,954
119,052 520,916
(4,362,144)
(6,208,161) (6,208,161)
$ 73,989,406 $ 71,847,546
30
49
D. Deficit Fund Equity
The Town reflects several special revenue fund deficits, primarily caused
by grant expenses occurring in advance of grant reimbursements. The
deficits in these funds will be eliminated through future intergovernmental
revenues and transfers from other funds.
3. Cash and Short-Term Investments
Custodial Credit Risk - Deposits. Custodial credit risk is the risk that in the
event of a bank failure, the Town+'s and Contributory Retirement System's (the
System) deposits may not be returned. Massachusetts General Law Chapter
44, Section 55, limits the Town's deposits "in a bank or trust company or
banking company to an amount not exceeding sixty percent of the capital and
surplus of such bank or trust company or banking company, unless satisfac-
tory security is given to it by such bank or trust company or banking company
for such excess. Massachusetts General Law Chapter 32, Section 23, limits
the System's deposits "in a bank or trust company to an amount not exceed-
ing ten percent of the capital and surplus of.such bank or trust company. The
Town and System do not have a deposit policy for custodial credit risk.
As of June 30, 2009, $ 3,218,112 of the Town's and $ 245,704 of the
System's bank balances of $ 47,607,857 and $ 405,912, respectively, was
exposed to custodial credit risk as uninsured, uncollateralized, and collateral
held by pledging bank's trust department not in the Town's and System's
name.
The System's exposed balance consists of $ 245,222 invested in PRIT and
$ 482 invested in MMDT.
4. Investments
A. Credit Risk
Generally, credit risk is the risk that an issuer of an investment will not
fulfill its obligation to the holder of the investment. For short-term invest-
ments that were purchased using surplus revenues, Massachusetts
General Law, Chapter 44, Section 55, limits the Town's investments to
the top rating issued by at least one nationally recognized statistical rating
organization (NRSROs).
The Town and System do not have a policy for credit risk.
Presented below (in thousands) is the actual rating as of year end for each
investment of the Town:
31
50
Investment Type
Corporate bonds
Corporate equities
Mutual funds
Certificates of deposit
Federal agency securities
Total investments
Exempt
Fair
From
Value
Disclosure
$ 151
$ - $
282
282
984
984
Rating as of Year End
Aaa Aa2 A2
$ 101 $ 50
6,716
12,377 - 12,377 - -
$ 20,510 $ 7,982 $ 12,377 $ 101 $ 50
Massachusetts General Law, Chapter 32, Section 23, limits the investment
of System funds, to the extent not required for current disbursements, in the
PRIT Fund or in securities, other than mortgages or collateral loans, which ,
are legal for the investment of funds in savings banks under the laws of the
Commonwealth, provided that no more than the established percentage of
assets, is invested in any one security.
At June 30, 2009, the Contributory Retirement System maintained its
investments in the State Investment Pool* with a fair value of $ 69,083,769.
This investment type is not rated.
*Fair value is the same as the value of the pool share. The Pension Reserves Investment Trust
was created under Massachusetts General Law, Chapter 32, Section 22, in December 1983. The
Pension Reserves Investment Trust is operated under contract with a private investment advisor,
approved by the Pension Reserves Investment Management Board. The Pension Reserves
Investment Management Board shall choose an investment advisor by requesting proposals from
advisors and reviewing such proposals based on criteria adopted under Massachusetts General
Law, Chapter 30B.
B. Custodial Credit Risk
The custodial credit risk for investments is the risk that, in the event of the
failure of the counterparty (e.g. broker-dealer) to a transaction, a govern-
ment will not be able to recover the value of its investment or collateral
securities that are in the possession of another party. The Town and
System do not have policies for custodial credit risk.
The System's investments of $ 69,083,769 were exposed to custodial
credit risk as uninsured and uncollateralized. However, the investments
were held in the State Investment Pool.
Of the investment in Corporate bonds of $ 151,436, the government has a
custodial credit risk exposure of $ 151,436 because the related securities
are uninsured, unregistered and held by the Town's brokerage firm, which
is also the Counterparty to these securities.
C. Concentration of Credit Risk
The Town places no limit on the amount the Town may invest in any one
issuer. Investments in any one issuer (other than U.S, Treasury securities
32
51
and mutual funds) that represent 5% or more of total investments are as
follows (in thousands):
Federal National Mortgage Association $ 1,501,875
Federal Home Loan Mortgage Corp. $ 6,335,802
Certificates of Deposit $ 5,739,561
Massachusetts General Law Chapter 32, Section 23 limits the amount the
System may invest in any one issuer or security type, with the exception of
the PRIT Fund.
The System does not have an investment in one issuer greater than 5% of
total investments, with the exception of the PRIT Fund.
D. Interest Rate Risk
Interest rate risk is the risk that changes in market interest rates will ad-
versely affect the fair value of an investment. Generally, the longer the
maturity of an investment, the greater the sensitivity of its fair value to
changes in market interest rates. The Town and System do not have
a formal investment policy that limits investment maturities as a means
of managing its exposure to fair value losses arising from increasing
interest rates.
Information about the sensitivity of the fair values of the Town's
investments to market interest rate fluctuations is as follows:
Fair
Investment Type Value
Debt Related Securities:
Corporate bonds $ 151
Certificates of Deposit 6,716
Federal agency securities 12,377
Total $ 19,244
Investment Maturities (in Years
Less
Than 1 11=5 6-10
$ 151 $ - $
6,716 - -
- 4,153 8,224
$ 6,867 $ 4,153 $ 8,224
E. Foreign Currency Risk
Foreign currency risk is the risk that changes in foreign exchange rates
will adversely affect the fair value of an investment. The Town and
System do not have policies for foreign currency risk,
33
52
5
6.
Taxes Receivable
Real estate and personal property taxes are levied and based on values
assessed on January 1 st of every year. Assessed values are established by
the Board of Assessor's for 100% of the estimated fair market value. Taxes
are due on a quarterly basis and are subject to penalties and interest if they
are not paid by the respective due date. Real estate and personal property
taxes levied are recorded as receivables in the fiscal year they relate to.
Fourteen days after the due date for the final tax bill for real estate taxes, a
demand notice may be sent to the delinquent taxpayer. Fourteen days after
the demand notice has been sent, the tax collector may proceed to file a lien
against the delinquent taxpayers' property. The Town has an ultimate right
to foreclose on property for unpaid taxes. Personal property taxes cannot be
secured through the lien process.
Taxes receivable at June 30, 2009 consist of the following (in thousands):
Real Estate
2009
Personal Property
2009
2008
2007
2006
Prior
Tax Liens
Deferred Taxes
Taxes in Litigation
Total
Allowance for Doubtful Accounts
171
18
316
97
1
$ 603
The receivables reported in the accompanying entity-wide financial state-
ments reflect the following estimated allowances for doubtful accounts (in
thousands):
Property taxes
Excises
Governmental
$ 106
35
34
$ 171
$ 6
4
2
2
4
53
7. Capital Assets
Capital asset activity for the year ended June 30, 2009 was as follows (in
thousands):
Beginning Ending
Balance Increases Decreases Balance
Governmental Activities:
Capital assets, being depreciated:
Land improvements
Buildings and improvements
Machinery, equipment, and furnishings
Infrastructure
Total capital assets, being depreciated
Less accumulated depreciation for:
Land improvements
Buildings and improvements
Machinery, equipment, and furnishings
Infrastructure
Total accumulated depreciation
Total capital assets, being depreciated, net
Capital assets, not being depreciated:
Land
Construction in progress
Total capital assets, being depreciated, net
Governmental activities capital assets, net
$ 1,678
$ 848 $
= $ 2,526
125,959
826
- 126,785
6,087
1,126
- 7,213
38,011
475
- 38,486
171,735
3,275
- 175,010
(435)
(92)
- (527)
(18,728)
(3,374)
- (22,102)
(2,045)
(581)
- (2,626)
19,782
1,509
- 21,291
40,990
5,556
- 46,546
130,745
(2,281)
- 128,464
3,939
-
- 3,939
-
325
325
3,939
325
- 4,264
$ 134,684
$ 1,956 $
- $ 132,728
35
54
Business-Type Activities:
Capital assets, being depreciated:
Land improvements
Buildings and improvements
Machinery, equipment, and furnishings
Infrastructure
Total capital assets, being depreciated
Less accumulated depreciation for:
Land improvements
Buildings and improvements
Machinery, equipment, and furnishings
Infrastructure
Total accumulated depreciation
Total capital assets, being depreciated, net
Capital assets, not being depreciated:
Land
Construction in progress
Total capital assets, being depreciated, net
Business-type activities capital assets, net
8.
Beginning
Ending
Balance
Increases
Decreases
Balance
$ 84
$ -
$ - $
84
16,620
119
-
16,739
24,544
5,729
(63)
30,210
96,714
3,295
737
99,272
137,962
9,143
(800)
146,305
(39)
(2)
-
(41)
(8,250)
(533)
-
(8,783)
(16,498)
(871)
32
(17,337)
33,514
(3,499)
728
36,285
58,301
4,905
760
62,446
79,661
4,238
(40)
83,859
1,450
-
-
1,450
1,837
1,173
1,837
1,173
3,287
1,173
1,837
2,623
$ 82,948
$ 5,411
$ 1,877 $
86,482
Depreciation expense was charged to functions of the Town as follows (in
thousands):
Governmental Activities:
General government
Public safety
Education
Public works
Health and human services
Culture and recreation
Total depreciation expense - governmental activities
Business-Type Activities:
Electric
Water
Other - Sewer
Total depreciation expense - business-type activities
Warrants Payable
$ 189
451
2,961
1,780
31
144
$ 5,556
$ 3,134
1,445
326
$ 4,905
Warrants payable represent 2009 expenditures paid by July 15, 2009.
36
55
9
10.
11.
Deferred Revenue
Governmental funds report deferred revenue in connection with receivables
for revenues that are not considered to be, available to liquidate liabilities of
the current period.
The balance of the General Fund deferred revenues account is equal to
the total of all June 30, 2009 receivable balances, except real and personal
property taxes that are accrued for subsequent 60 day collections.
Anticipation Notes Payable
The following summarizes activity in notes payable during fiscal year 2009 (in
thousands):
Computer equipment
Total
Long-Term Debt
Balance New
7/1/08 Issues
$ 1,250 $ -
$ 1,250 $ -
Balance
Repayments 6/30/09
$ 1,250 $ -
A. Bond Authorizations
Long-term debt authorizations which have not been issued or rescinded
as of June 30, 2009 are as follows:
Purpose
Amount.
High School $
187,000
MWRA loan program
299,400
Energy improvements
120,000
Birch meadow tennis courts
140,000
Turf field improvements
275,000
Sunnyside/Fairview sewer mains
65,000
Fire ladder truck
50,000
Fire engine
525,000
Energy improvements
5,000,000
Total $
6,661,400
B. General Obligation Bonds
The Town issues general obligation bonds to provide funds for the acquisi-
tion and construction of major capital facilities.
General obligation bonds
have been issued for both governmental and business-type activities.
General obligation bonds currently outstanding
are as follows:
37
56
Amount
Serial
Outstanding
Maturities
Interest
as of
Governmental Activities:
Through
Rates %
June 30, 2009
Police station
02/01/12
4.12%
$ 1,205,000
Coolidge Middle School
02/01/21
4.75%
5,675,000
Memorial High School
03/16/24
4.22%
28,610,000
Barrow Elementary School
06/30/24
3.96%
1,895,000
Wood End Elementary School
06/30/24
3.96%
2,250,000
Wood End Elementary School
06/30/24
3.92%
150,000
Wood End Elementary School
04/15/24
3.94%
450,000
Wood End Elementary School
04/15/24
3.94%
685,000
Downtown Improvement projects
11/01/17
3.45%
585,000
Fire Engine
11/01/12
3.45%
325,000
Turf Field improvements
11/01/12
3.45%
300,000
Joshua Eaton refunding
07/01/13
3.05%
195,000
Birch Meadow refunding
07/01/12
3.05%
70,000
Parker School refunding
07/01/17
3.05%
1,825,000
Ladder truck
07/01/17
3.05%
720,000
Tennis courts
07/01/12
3.05%
385,000
Financial hardware and software
01/27/13
2.00%
1,100,000
Total Governmental Activities:
$ 46,425,000
Amount
Serial
Outstanding
Maturities
Interest
as of
Business-Type Activities:
Through
Rates %
June 30. 2009
Water treatment plant
06/30/15
3.38%
$ 600,000
MWRA buy-in
04/15/27
4.00%
2,860,000
Water mains
04/15/12
3.66%
1,480,000
MWRA buy-in
11/01/17
3.05%
7,410,000
Water demo
07/01/17
3.05%
720,000
MWRA water supply
01/27/13
2.00%
450,000
MWRA inflow
0"5/15/10
0.00%
83,677
MWPAT septic
02/01/17
0.00%
13,958
MWRA sewer
08/15/12
0.00%
35,464
Fairview and Sunnyside sewer
11/01/11
3.05%
225,000
Light plant enlargement
09/01/09
4.61%
550,000
Total Business-Type Activities: $ 14,428,099
C. Future Debt Service
The annual payments to retire all general obligation long-term debt
outstanding as of June 30, 2009 are as follows:
38
57
Governmental
2010
2011
2012
2013
2014
2015-2019
2020-2024
Total
Principal
$ 3,720,000
3,725,000
3,745,000
3,370;000
2,870,000
14,800,000
14,195,000
$ 46,425,000
Interest
$ 1,942,238
1,821,464
1,692,143
1,556,344
1,555,438
5,263,815
1,969,356
$ 15,800,798
Total
$ 5,662,238
5,546,464
5,437,143
4,926,344
4,425,438
20,063,815
16,164, 356
$ 62,225,798
The general fund has been designated as the sole source to repay the
governmental-type general obligation debt outstanding as of June 30,
2009:
Business-Type
2010.
2011
2012
2013
2014
2015-2019
2020-2024
2025-2029
Total
Principal
$ 2,106,501
1,458,866
1,453,866
738,866
730,000
3,170,000
2,750,000
2,020,000
$ 14,428,099
Interest
$ 535,097
467,638
416,116
366,670
339,905
1,288,026
697,875
162,338
$ 4,273,665
Total
$ 2,641,598
1,926,504
1,869,982
1,105,536
1,069,905
4,458,026
3,447,875
2,182,338
D. Changes in General Lonq-Term Liabilities
$ 18,701,764
During the year ended June 30, 2009, the following changes occurred in
long-term liabilities (in thousands):
Governmental Activities
Equals
Total Total Less Long-Term
Balance Balance Current Portion
7/1/08 Additions Reductions 6/30/09 Portion 6/30/09
Bonds payable $
53,305 $
1,100
$ (7,980) $
46,425
$ (3,720) $
42,705
Other:
Accrued employee benefits
1,635
23
(57)
1,601
(80)
1,521
OPEB
-
2,454
-
2,454
-
2,454
Other
299
-
24
275
25
250
Totals $
55,239 $
3,577
$ 8,061 $
50,755
$ 3,825 $
46,930
39
58
Total
Total
Less
Long-Term
Balance
Balance
Current
Portion
7/1/08
Additions Reductions 6/30/09
Portion
6/30109
Business-Type Activities
Bonds and loans payable
Other:
Accrued employee benefits
Unamortized premium
on bonds
OPEB
Totals
$ 15,922 $ 450 $ (1,944) $ 14,428 $ (2,106) $ 12,322
2,759 272 (78) 2,953 (82) 2,871
6 - (1) 5 (1) 4
- 504 - 504 - 504
$ 18,687 $ 1,226 $ 2,023 $ 17,890 $ 2,189 $ 15,701
12. Restricted Net Assets
The accompanying entity-wide financial statements report restricted net
assets when external constraints from grantors or contributors are placed
on net assets.
Permanent fund restricted net assets are segregated between nonexpend-
able and expendable. The nonexpendable portion represents the original
restricted principal contribution, and the expendable represents accumulated
earnings which are available to be spent based on donor restrictions.
13. Reserves of Fund Equity
"Reserves" of fund equity are established to segregate fund balances which
are either not available for expenditure in the future or are legally set aside for
a specific future use.
The following types of reserves are reported at June 30, 2009:
Reserved for Encumbrances - An account used to segregate that portion of
fund balance committed for expenditure of financial resources upon vendor
performance.
Reserved for Expenditures - Represents the amount of fund balance
appropriated to be used for expenditures in the subsequent year budget.
Reserved for Stabilization - An account used to segregate reserves set aside
by the Town to fund unforeseen emergencies and to fund long-term capital
projects and equipment purchases.
Reserved for Perpetual Funds - Represents the principal of the nonexpend-
able trust fund investments. The balance cannot be spent for any purpose;
however, it may be invested and the earnings may be spent.
40
59
14.
15.
16.
Subsequent Events
Subsequent to June 30, 2009, the Town has incurred the following additional
debt:
Energy Imporvement bonds
Fire Truck bonds
Total Bonds
Interest
Issue
Maturity
Amount Rates
Date
Date
$ 5,000,000 2.00-3.75%
07/30/09
07/30/24
525,000 2.00%
07/30/09
07/30/14
$ 5,525,000
Commitments and Contingencies
Outstanding Lawsuits - There are several pending lawsuits in which the
Town is involved. The Town's management is of the opinion that the potential
future settlement of such claims would not materially affect its financial
statements taken as a whole.
Grants - Amounts received or receivable from grantor agencies are subject to
audit and adjustment by grantor agencies, principally the federal government.
Any disallowed claims, including amounts already collected, may constitute
a liability of the applicable funds. The amount of expenditures which may
be disallowed by the grantor cannot be determined at this time, although the
Town expects such amounts, if any, to be immaterial.
Post-Employment Health Care and Life Insurance Benefits
Other Post-Employment Benefits
During the year, the Town implemented GASB Statement 45, Accounting and
Financial Reporting by Employers for Postemployment Benefits Other Than
Pensions. Statement 45 requires governments to account for other post
employment benefits (OPEB), primarily healthcare, on an accrual basis rather
than on a pay-as-you-go basis. The effect is the recognition of an actuarially
required contribution as an expense on the Statement of Revenues,
Expenses, and Changes. in Net Assets when a future retiree earns their post-
employment benefits, rather than when they use their post-employment ben-
efit. To the extent that an entity does not fund their actuarially required contri-
bution, a post-employment benefit liability is recognized on the Statement of
Net Assets over time.
A. Plan Description
In addition to providing the pension benefits described in Note 17, the
Town provides post-employment health and life insurance benefits for
retired employees through the Town of Reading's Massachusetts
41
60
Interlocal Insurance Association (MIIA) Health Benefits Trust. Benefits,
benefit levels, employee contributions and employer contributions are
governed by Chapter 32 of the Massachusetts General Laws. As of
June 30, 2008, the actuarial valuation date, approximately 645 retirees
and 524 active employees meet the eligibility requirements. The plan
does not issue a separate financial report.
B. Benefits Provided
The Town provides post-employment medical, prescription drug, and life
insurance benefits to all eligible retirees and their surviving spouses. All
active employees who retire from the Department and meet the eligibility
criteria will be eligible to receive these benefits.
C. Funding Policy
Retirees contribute 30% of the cost of the medical and prescription drug
plan, as determined by the MIIA Health Benefits Trust. Retirees also
contribute 50% of the premium for a $ 5,000 life insurance benefit. The
Department contributes the remainder of the medical, prescription drug,
and life insurance plan costs on a pay-as-you-go basis.
D. Annual OPEB Costs and Net OPEB Obligation
The Town's fiscal 2009 annual OPEB expense is calculated based on
the annual required contribution of the employer (ARC), an amount actu-
arially determined in accordance with the parameters of GASB Statement
No. 45. The ARC represents a level of funding that, if paid on an ongoing
basis, is projected to cover the normal cost per year and amortize the
unfunded actuarial liability over a period of twenty years. The following
table shows the components of the Town's annual OPEB cost for the year
ending June 30, 2009, the amount actually contributed to the plan, and the
change in the Town's net OPEB obligation based on an actuarial valuation
as of June 30, 2008.
Annual Required Contribution (ARC)
Interest on net OPEB obligation
Adjustment to ARC
Annual OPEB cost
Contributions made
Increase in net OPEB obligation
Net OPEB obligation - beginning of year
Net OPEB obligation - end of year
$ 6,150,666
176,035
6,326,701
(3,368,385)
2,958,316
$ 2,958,316
42
61
The Town's annual OPEB cost, the percentage of annual OPEB cost
contributed to the plan, and the net OPEB obligation were as follows:
Fiscal year ended
2009
Annual OPEB
Cost
$ 6,326,701 46.07%
Percentage of
OPEB
Cost
Contributed
Net OPEB
Obligation
$ 2,958,316
The Town's net OPEB obligation as of June 30, 2009 is recorded asa
component of the "noncurrent liabilities" line item.
E. Funded Status and Funding Progress
The funded status of the plan as of June 30, 2008, the date of the most
recent actuarial valuation was as follows:
Actuarial accrued liability (AAL) $ 60,022,927
Actuarial value of plan assets -
Unfunded actuarial accrued liability (UAAL) $ 60,022,927
Funded ratio (actuarial value of plan assets/AAL) 0%
Covered payroll (active plan members) N/A
UAAL as a percentage of covered payroll N/A
Actuarial valuations of an ongoing plan involve estimates of the value of
reported amounts and assumptions about the probability of events far into
the future. Examples include assumptions about future employment,
mortality, and the healthcare cost trend: Amounts determined regarding
the funded status of the plan and the annual required contributions of the
employer are subject to continual revision as actual results are compared,
to past expectations and new estimates are made about the future. The
schedule of funding progress, presented as required supplementary
information following the notes to the financial statements, presents multi-
year trend information about whether the actuarial value of plan assets is
increasing or decreasing over time relative to the actuarial accrued liability
for benefits.
F. Actuarial Methods and Assumptions
Projections of benefits for financial reporting purposes are based on the
plan as understood by the Town and the plan members and include the
types of benefits provided at the time of each valuation and the historical
pattern of sharing of benefit costs between the Town and plan members
to that point. The actuarial methods and assumptions used include
techniques that are designed to reduce short-term volatility in actuarial
43
62
accrued liabilities and the actuarial value of assets, consistent with the
long-term perspective of the calculations:
17.
In the June 30, 2008 actuarial valuation, the Projected Unit Credit actuarial
cost method was used. The actuarial value of assets was not determined,
as the Town has not advance funded its obligation. The actuarial assump-
tions included a 7.75% investment rate of return and an initial annual
health care cost trend rate of 10.0% which decreases to a 5.0% long-term
rate for all health care benefits after seven years. The amortization costs
for the initial UAAL is a level percentage of payroll amortization, with
amortization payments increasing at 2.5% per year for a period of 20
years.
Contributory Retirement System
The Town follows the provisions of GASB Statement No. 27, Accounting for
Pensions for State and Local Government Employees, (as amended by
GASB 50) with respect to the employees' retirement funds.
A. Plan Description and Contribution Information
Substantially all employees of the Town (except teachers and administra-
tors under contract employed by the School Department) are members of.
the Reading Contributory Retirement System (Reading CRS), a cost
sharing, multiple employer defined benefit PERS. Eligible employees
must participate in the Reading CRS. The pension-plan provides pension
benefits, deferred allowances, and death and disability benefits. Chapter
32 of the Massachusetts General Laws establishes the authority of the
Reading CRS Retirement Board. Chapter 32 also establishes contribution
percentages and benefits paid. The Reading CRS Retirement Board does
not have the authority to amend benefit provisions. As required by
Massachusetts General Laws, the System issues a separate report to the
Commonwealth's Public Employee Retirement Administration Commis-
sion.
Membership of each plan consisted of the following at December 31,-
2008:
Retirees and beneficiaries receiving benefits 320
Terminated plan members entitled to but not yet
receiving benefits 27
Active plan members 354
Total 701
Number of participating employers 3
44
63
Employee contribution percentages are specified in Chapter 32 of the
Massachusetts General Laws. The percentage is determined by the
participant's date of entry into the system. All employees hired after
January 1, 1979 contribute an additional 2% on all gross regular earnings
over the rate of $ 30,000 per year. The percentages are as follows:
Before January 1, 1975 5%
January 1, 1.975 - December 31, 1983 7%
January 1, 1984 - June 30, 1996 8%
Beginning July 1, 1996 9%
Employers are required to contribute at actuarially determined rates as
accepted by the Public Employee Retirement Administration Commission
(PERAC).
Schedule of Emolover Contributions:
Year Ended
Annual Required
June 30
Contribution
2000
$ 2,293,800
2001
2,910,900
2002
2,980,400
2003
3,051,200
2004
3,124,800
2005
3,405,725
2006
3,488,686
2007
3,696,695
2008
3,785,501
2009
3,6007826
B. Summary of Significant Accounting Policies
Percentage
Contributed
100%
100%
100%
100%
100%
100%.
100%
100%
100%
100%
Basis of Accounting - Contributory retirement system financial statements
are prepared using the accrual basis of accounting. Plan member contri-
butions are recognized in the period in which the contributions are due.
Employer contributions are recognized when due and the employer has
made a formal commitment to provide the contributions. Benefits and
refunds are recognized when due and payable in accordance with the
terms of the plan.
Method Used to Value Investments - Investments are reported at fair
value in accordance with PERAC requirements.
C. Funded Status and. Funding Progress
The information presented below is from the Reading Contributory
Retirement System's most recent valuation.
45
64
Actuarial
UAAL as
Accrued
a Percent-
Actuarial
Liability
Unfunded
age of
Actuarial
Value of
(AAL) -
AAL
Funded
Covered
Covered
Valuation
Assets
Entry Age
(UAAL)
Ratio
Payroll
Payroll
Date
(a)
Lb
b-a
a/b
(c)
b-a /c
06/30/07
$ 84,784
$ 112,012
$ 27,228
75.7%
$ 19,313
141.0%
The Schedule of Funding Progress following the notes to the financial
statements presents multi-year trend information about the actuarial
value of plan assets relative to the actuarial accrued liability for benefits.
D. Actuarial Methods and Assumptions
The annual required contribution for the current year was determined
as part of the actuarial valuation using the entry age normal actuarial
cost method. Under this method an unfunded actuarial accrued liability
of $ 27.2 million was calculated. The actuarial assumptions included
(a) 7.75% investment rate of return and (b) a projected salary increase
of 5.00% per year. Liabilities for cost of living increases have been
assumed at an annual increase of 3%, on the first $ 12,000 of benefit
payments. The actuarial value of assets is determined by projecting the
market value of assets as of the beginning of the prior plan year with the
assumed rate of return during that year (7.75%) and accounting for
deposits and disbursements with interest at the assumed rate of return.
An adjustment is then applied to recognize the difference between the
actual investment return and expected return over a five-year period.
As of June 30, 2009, the unfunded actuarially accrued liability is being
amortized over 15 years using 1.5% increase in payments method.
E. Teachers
As required by State statutes, teachers of the Town are covered by the
Massachusetts Teachers Retirement System (MTRS). The MTRS is
funded by contributions from covered employees and the Commonwealth
of Massachusetts. The Town is not required to contribute.
All persons employed on at least a half-time basis, who are covered under
a contractual agreement requiring certification by the Board of Education
are eligible, and must participate in the MTRS.
Based on the Commonwealth of Massachusetts' retirement laws, employ-
ees covered by the pension plan must contribute a percentage of gross
earnings into the pension fund. The percentage is determined by the
participant's date of entry into the system and gross earnings, up to
$ 30,000, as follows:
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65
Before January 1, 1975 5%
January 1, 1975 - December 31, 1983 7% *
January 1, 1984 - June 30, 1996 8% *
July 1, 1996 - June 30, 2001 9% *
Beginning July 1, 2001 11%
18.
19.
*Effective January 1, 1990, all participants hired after January 1, 1979, who
have not elected to increase to 11 contribute an additional 2% of salary in
excess of $ 30,000.
The Town's current year covered payroll for teachers and administrators was
not available.
In fiscal year 2009, the Commonwealth of Massachusetts contributed
$ 6,208,161 to the MTRS on behalf of the Town. This is included in the
education expenditures and intergovernmental revenues in the general
fund.
Risk Management
The Town is exposed to various risks of loss related to torts; theft of, damage
to and destruction of assets; errors and omissions; and natural disasters for
which the government carries commercial insurance. There were no signifi-
cant reductions in insurance coverage from the previous year and have been
no material settlements in excess of coverage in any of the past three fiscal
years.
Beginning Fund Balance Reclassification
The Town's major governmental funds for fiscal year 2009, as defined by
GASB Statement 34, have changed from the previous fiscal year.
Accordingly, the following reconciliation is provided:
Fund Equity
6/30/08
(as previously
reported)
Nonmajor funds
$ 14,130,619
Memorial High
School capital
project fund
1,382,812
Total
$ 15,513,431
47
Reclassification
$ 1,382,812
(1,382,812)
Fund Equity
6/30/08
(as restated)
$ 15,513,431
$ 15,513,431
66
Town of Reading Municipal Light Department
Notes to Financial Statements
1. Summary of Significant Accounting Policies
The significant accounting policies of the Town of Reading Municipal Light
Department ("the Department") (an enterprise fund of the Town of Reading)
are as follows:
A. Business Activity - The Department purchases electricity which it distri-
butes to consumers within the towns of Reading, North Reading,
Wilmington, and Lynnfield.
B. Regulation and Basis of Accounting - Under Massachusetts General
Laws, the Department's electric rates are set by the Municipal Light Board.
Electric rates, excluding the fuel charge, cannot be changed more often
than once every three months. Rate schedules are filed with the Mass-
achusetts Department of Public Utilities (DPU). While the DPU exercises
general supervisory authority over the Department, the Department's
rates are not subject to DPU approval. The Department's policy is to
prepare its financial statements in conformity with generally accepted
accounting principles.
Proprietary funds distinguish operating revenues and expenses from
nonoperating items. Operating revenues and expenses generally result
from .providing services and producing and delivering goods in connec-
tion with a proprietary fund's principal ongoing operations. The principal
operating revenues of the enterprise fund are charges to customers for
sales and services. Operating expenses for enterprise funds include the
cost of sales and services, administrative expenses and depreciation on
capital assets. All revenues and expenses not meeting this definition
are reported as nonoperating revenues and expenses.
Private-sector standards of accounting and financial reporting issued
prior to December 1, 1989 generally are followed in the proprietary fund
financial statements to the extent that those standards do not conflict with
or contradict guidance of the Governmental Accounting Standards Board.
Governments also have the option of following subsequent private-sector
guidance for their enterprise funds, subject to this same limitation. The
Department has elected not to follow subsequent private-sector guidance.
C. Concentrations - The Department operates within the electric utility
industry which has undergone significant restructuring and deregulation.
Legislation was enacted by the Commonwealth of Massachusetts in
1998 which changed the electric industry. The law introduced competi-
tion and provided consumers with choices while assuring continued
67
reliable service. Municipal utilities are not currently subject to this
legislation.
D. Retirement Trust - The Reading Municipal Light Department Employees'
Pension Trust (the "Trust") was established on December 30, 1966, by
the Town of Reading's Municipal Light Board pursuant to Chapter 164 of
the General Laws of the Commonwealth of Massachusetts.
The Trust constitutes the principal instrument of a plan established by the
Municipal Light Board for the purpose of funding the Department's annual
required contribution to the Town of Reading Contributory Retirement
System (the System), a cost sharing, multi-employer public employee
retirement system.
E. Revenues - Revenues are based on rates established by the Department
and filed with the DPU. Revenues from sales of electricity are recorded
on the basis of bills rendered from monthly meter readings taken on a
cycle basis and are stated net of discounts. Recognition is given to the
amount of sales to customers which are unbilled at the end of the fiscal
period.
F. Cash and Short-term Investments - For the purposes of the Statement of
Cash Flows, the Department considers both restricted and unrestricted
cash on deposit with the Town Treasurer to be cash or short-term invest-
ments. For purpose of the Statement of Net Assets, the proprietary funds
consider investments with original maturities of three months or less to be
short-term investments.
G. Investments - State and local statutes place certain limitations on the
nature of deposits and investments available. Deposits in any financial
institution may not exceed certain levels within the financial institution.
Non-fiduciary fund investments can be made in securities issued or un-
conditionally guaranteed by the U.S. Government or agencies that have
a maturity of one year or less from the date of purchase and repurchase
agreements guaranteed by such securities with maturity dates of no more
than 90 days from date of purchase.
Investments for the Department and the Trust consist of U.S. government
bonds that are being held to maturity. Investments are carried at cost.
H. Inventory - Inventory consists of parts and accessories purchased for
use in the utility business for construction, operation and maintenance
purposes and is stated at average cost. Meters and transformers are
capitalized when purchased.
1. Capital Assets and Depreciation - Capital assets, which include property,
plant, equipment, and utility plant infrastructure, are recorded at historical
cost or estimated historical cost when purchased or constructed. Donated
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68
capital assets are recorded at estimated fair market value at the date of
the donation.
The cost of normal maintenance and repairs that do not add to the value
of the asset or materially extend asset lives are not capitalized.
Major outlays for capital assets and improvements are capitalized as
they are acquired. or constructed. Interest incurred during the construc-
tion phase of proprietary fund capital assets is included as part of the
capitalized value of the constructed asset. When capital assets are
retired, the cost of the retired asset, less accumulated depreciation,
salvage value and any cash proceeds, is charged to the Department's
unrestricted net assets account.
Massachusetts General Laws require utility plant in service to be depre-
ciated at an annual rate of 3%. To change this rate, the Department must
obtain approval from the DPU. Changes in annual depreciation rates
may be made for financial factors relating to cash flow for plant expansion,
rather than engineering factors relating to estimates of useful lives.
J. Amortization - Costs related to the issuance of bonds have been capital-
ized and are being amortized over the life of the bonds.
K. Accrued Compensated Absences - Employee vacation leave is vested
annually but may only be carried forward to the succeeding year with
supervisor approval and, if appropriate, within the terms of the applicable
Department policy or union contract. Generally, sick leave may accumu-
late according to union and Department contracts and policy, and is paid
upon normal termination at the current rate of pay. The Department's
policy is to recognize vacation costs at the time payments are made.
The Department records accumulated, unused, vested sick pay as a lia-
bility. The amount recorded is the amount to be paid at termination at the
current rate of pay.
L. Long-Term Obligations - The proprietary fund financial statements report
long-term debt and other long-term obligations as liabilities in the pro-
prietary fund statement of net assets.
M. Use of Estimates - The preparation of financial statements in conformity
with generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosures for contingent assets and liabilities
at the date of the financial statements, and the, reported amounts of the
revenues and expenses during the fiscal year. Actual results could vary
from estimates that were.used.
N. Rate of Return - The Department's rates must be set such that earnings
attributable to electric operations do not exceed eight percent of the net
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69
cost of plant. The.audited financial statements are prepared in accord-
ance with auditing standards generally accepted in the United States of
America. To determine the net income subject to the rate of return, the
Department performs the following calculation. Using the net income per
the audited financials, the return on investment to the Town of Reading
is added back, the fuel charge adjustment is added or deducted, and
miscellaneous debits/credits (i.e. gain/loss on disposal of fixed assets,
etc.) are added or deducted, leaving an adjusted net income figure for
rate of return purposes. Investment interest income and bond principal
payments are then deducted from this figure to determine the net income
subject to the rate of return. The net income subject to the rate of return
is then subtracted from the allowable eight percent rate*of return, which
is calculated by adding the book value of net plant and the investment in
associated companies less the contributions in aid of construction mult-
iplied by eight percent. From this calculation, the Municipal Light Board
will determine what cash transfers need to be made at year end.
2. Cash and Investments
Cash and investments as of June 30, 2009 are classified in the accom-
panying financial statements as follows:
Statement of net assets:
Unrestricted cash and short-term investments $ 8,635,772
Restricted cash and short-term investments 11,563,437
Restricted investments 4,400,000
Fiduciary funds:
Cash and short-term investments 3,616,255
Investments 3,000,000
Total cash and investments $ 31,215,464
Cash and investments at June 30, 2009 consist of the following:
Cash on hand $ 3,000
Deposits with financial institutions 23,812,464
Investments 7,400,000
Total cash and investments $ 31.215.464
Disclosures Relating to Interest Rate Risk
Interest rate risk is the risk that the fair value of an investment will be ad-
versely affected by changes in market interest rates. Generally, the longer
the maturity of an investment, the greater the sensitivity of its fair value to
changes in market interest rates. One of the ways that the Department
manages its exposure to interest rate risk is by purchasing a combination
of shorter term and longer term investments and by timing cash flows from
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70
maturities so that a portion of the portfolio is maturing or corning close to
maturity evenly over time as necessary to provide the cash flow and liquidity
needed for operations.
As of June 30, 2009, the Department (including the Pension Trust) had the
following investments:
Government aciencv bonds
Freddie Mac
Freddie Mac,
Freddie Mac
Federal Home Loan Bank
Federal Home Loan Mtg. Corp.
Federal Home Loan Mtg. Corp.
Total
Restricted
Pension
Investments
Trust
$ 2,000,000
-
1,400,000
-
500,000
-
500,000
-
-
1,200,000
-
1,800,000
$ 4.400:000 $ 33 0000 WO
Disclosures Relating to Credit Risk
Maturity Moody's
Date Ratin
01/15/13
AAA
07/15/14
AAA
05/15/15
AAA
06/01/16
AAA
01/15/13
AAA
12/15/14
AAA
Generally, credit risk is the risk that the issuer of an investment will not fulfill
its obligation to the holder of the investment. This is measured by the assign-
ing of a rating by a nationally recognized statistical rating organization. Pre-
sented below is the actual rating as of year end for each of the Department's
(including the Pension Trust) investment types:
Minimum Rating as of Year End
Legal Not
Investment Type Amount Rating AAA Rated
Government agency bonds $ 7,400,000 N/A $7,400,00 0 $ -
Total $ 7.400000 $ 7 400 000 $ -
Concentration of Credit Risk
The Department follows the Town of Reading's investment policy, which does
not limit the amount that can be invested in any one issuer beyond that stipu-
lated by Massachusetts General Laws. Investments in any one issuer (other
than U.S. Treasury securities, mutual funds, and external investment pools)
that represent more than 5% of the Department's total investments (including -
the Pension Trust investments) are as follows:
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71
Reported
Issuer Investment Type Amount
Freddie Mac Government agency bonds $ 3,900,000
Freddie Home Loan Mtg. Corp. Government agency bonds 3,000,000
Federal Home Loan Bank Government agency bonds 500,000
Custodial Credit Risk
Custodial Credit Risk for deposits is the risk that, in the event of the failure of
a depository financial institution, the. Department will not be able to recover its
deposits or will not be able to recover collateral securities that are in the poss-
ession of an outside party. The custodial credit risk for investments is the risk
that, in the event of the failure of the counterparty (e.g., broker-dealer) to a
transaction, the Department will not be able to recover the value of its invest-
ments or collateral securities that are in the possession of another party.
Massachusetts General Laws, Chapter 44, Section 55, limits deposits "in a
bank or trust company or banking company to an amount not exceeding sixty
per cent of the capital and surplus of such bank or trust company or banking
company, unless satisfactory security is given to it by such bank or trust com-
pany or banking company for such excess." The Department follows the
Massachusetts statute as written, as well as the Town of Reading's deposit
policy for custodial credit risk.
Because the Department pools its cash with the Town of Reading, the speci-
fic custodial credit risk of the Department's deposits could not be determined
at June 30, 2009. As of June 30, 2009, Department investments (including
the Pension Trust) in the following investment types were held by the same
broker-dealer (counterparty) that was used by the Department to buy the
securities:
Investment Type Reported Amount
0
Government agency bonds $7,400,00
Total $ 7 400,000
3. Restricted Cash and Investments
Restricted cash and investments consist of the following at June 30, 2009:
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72
Cash
Investments
Depreciation fund
$ 4,403,130
$ -
Construction fund
1,000,000
-
Deferred fuel reserve
1,739,394
-
Rate stabilization
2,347,224
2,900,000
Reserve for uncollectible accounts
28,988
-
Sick leave benefits
1,373,114
1,500,000
Insurance reserve
35,252
-
Hazardous waste fund
150,000
-
Customer deposits
496.335
-
Total
$ 91 573,437
0
$4,400,00
Restricted investments are invested in government agency bonds, which will
be held to maturity, and are reported at book value of $ 4,400,000. The fair
market value of the investments at June 30, 2009 was $ 4,347,636.
The Department maintains the following restricted cash accounts:
- Depreciation fund The Department is required to reserve 3.0% of
capital assets each year to fund capital improvements.
- Construction fund - This account reflects a balance set aside by the
Board of Commissioners to fund capital asset purchases.
- Deferred fuel reserve - The Department transfers the difference bet-
ween the customers' monthly fuel charge adjustment and actual fuel
costs into this account to be used in the event of a sudden increase
in fuel costs.
- Rate stabilization - The Department transfers funds in excess of 8%
of capital assets to this account to be used to stabilize customer rates.
- Reserve for uncollectible accounts - This account was set up to offset
a.portion of the Department's bad debt reserve.
- Sick leave benefits - This account is used to offset the Department's
actuarially determined compensated absence liability.
Insurance reserve - This account reflects a balance set aside by
the Board of Commissioners as an insurance deductible reserve.
Hazardous waste fund -This reserve was set up. by the Board of
Commissioners to cover the Department's insurance deductible in
the event of a major hazardous materials incident.
- Customer deposits - Customer deposits that are held in escrow.
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73
4. Accounts Receivable
Accounts receivable consists of the following at June 30, 2009:
Customer Accounts:
Billed $ 2,768,110
Less allowances:
Uncollectible accounts ( 200,000)
Sales discounts ( 183,604)
Total billed 2,384,506
Unbilled, net 4,172.945
Total customer accounts 6,557,451.
Other Accounts:
Merchandise sales 125,701
MMWEC Flush 107,879
Liens and other 296,215
Total other accounts 529,795
Total net receivables $ 7 087,246
5. Prepaid Expenses
Prepaid expenses consist of the following:
Insurances $ 266,383
Purchase power 154,886
PASNY prepayment fund 332,076
Total $ 753,345
6. Inventory
Inventory is comprised of supplies and materials at June 30, 2009, and is
valued using the average cost method.
7. Investment in Associated Companies
Under agreements with' the New England Hydro-Transmission Electric Com-
pany, Inc. (NEH) and the New England Hydro-Transmission Corporation
(NHH), the Department has made the following advances to fund its equity
requirements for the Hydro-Quebec Phase II interconnection. The Depart-
ment is carrying its investment at cost, reduced by shares repurchased.
The Department's equity position in the Project is less than one-half of one
percent.
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74
Investment in associated companies consists of the following, at June 30,
2009:
New England Hydro-Transmission
Electric Company, Inc. $ 46,153
New England Hydro-Transmission Corporation 76.238
Total $ 122,391
8. Capital Assets
The following is a summary of fiscal year 2009 activity in capital assets (in
thousands):
Beginning
Ending
Balance
Increases
Decreases
Balance
Capital assets, being depreciated:
Structures and improvements
$ 13,393
$ 119
$ -
$ 13,512
Equipment and furnishings
22,620
5,624
( 388)
27,856
Infrastructure
68,465
2.946
( 738)
70.673
Total capital assets, being depreciated
104,478
8,689
(1,126)
112,041
Less accumulated depreciation for:
Structures and improvements
( 6,132)
( 383)
-
( 6,515)
Equipment and furnishings
( 16,012)
( 720)
358
( 16,374)
Infrastructure
( 24.457)
(2,033)
728
( 25,762)
Total accumulated depreciation
( 46.601)
(3,136)
1,086
(48.651)
Total capital assets, being depreciated, net 57,877
5,553
( 40)
63,390
Capital assets, not being depreciated:
Land
1,266
-
-
1,266
Construction in progress
1,836
-
(1,836)
-
Total capital assets, not being depreciated
3,102
-
(1.836)
1,266
Capital assets, net
$ 60.979
$ x.553
$ (1 7)
9. Other Assets
This balance consists primarily of costs associated with the Department's
bonding, which are being amortized over the life of the bonds.
10. Accounts Payable
Accounts payable represent fiscal 2009 expenses that were paid after June 30,
2009.
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75
11. Customer Deposits
This balance represents deposits received from customers that are held in
escrow.
12. Customer Advances for Construction
This balance represents deposits received from vendors in advance for work to
be performed by the Department. The Department recognizes these deposits
as revenue after the work has been completed.
13. Accrued Liabilities
Accrued liabilities consist of the following at June 30, 2009:
Accrued payroll
$ 175,161
Accrued interest
13,186
Other
69,653
Total
$ 258,000
14. Bonds Payable
Bonds payable consist of the following at June 30, 2009:
Bonds issued December 1, 1999, in the
amount of $ 5,500,000. Principal is payable
annually on September 1 commencing 2000
and continuing to September 1, 2009. Interest
is payable semiannually on September 1 and
March 1 at 4.5% for five years with rates
thereafter ranging from 4.55% to 4.85%.
Total Bonds Payable
$ 550,000
Less: Current installments of bonds payable
(5501000)
Total Long-Term Bonds Payable
$ -
The future payments required on the long-term debt are as follows:
Principal Interest
Total
2010 $550,00 0 $13,33 7
$ 563,337
Total $ 550.000 $13,33 7
$ 563.337
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The following summarizes activity in bonds payable for the year ended
June 30, 2009:
Balance Balance Less Long-Term
07/01/08 Maturities 06/30/09 Current Portion
$ 1 100,000 000) $ 550,000 $ (550000) $ -
15. Accrued Employee Compensated Absences
Department employees are granted sick leave in varying amounts. Upon
retirement, termination, or death, employees are compensated for unused
sick leave (subject to certain limitations) at their then current rates of pay.
16. Restricted Net Assets
The proprietary fund financial statements report restricted net assets when ext-
ernal constraints are placed on net assets. Specifically, restricted net assets
represent depreciation fund reserves, which are restricted for future capital asset
purchases.
17. Participation in Massachusetts Municipal Wholesale Electric
Company
The Town of Reading, acting through its Light Department, is a participant in
certain Projects of the Massachusetts Municipal Wholesale Electric Company
(MMWEC).
MMWEC is a public corporation and a political subdivision of the Common-
wealth of Massachusetts, created as a means to develop a bulk power supply
for its Members and other utilities. MMWEC is authorized to construct, own,
or purchase ownership interests in, and. to issue revenue bonds to finance,
electric facilities (Projects). MMWEC has acquired ownership interests in
electric facilities operated by other entities and also owns and operates its
own electric facilities. MMWEC sells all of the capability (Project Capability)
of each of its Projects to its Members and other utilities (Project Participants)
under Power Sales Agreements (PSAs). Among other things, the PSAs
require each Project Participant to pay its pro rata share of MMWEC's costs
related to the Project, which costs include debt service on the revenue bonds
issued by MMWEC to finance the Project, plus 10% of MMWEC's debt ser-
vice to be paid into a Reserve and Contingency Fund. In addition, should a
Project Participant fail to make any payment when due, other Project Partici-
pants of that Project may be required to increase (step-up) their payments
and correspondingly their Participant's share of that Project's Project Capa-
bility to an additional amount not to exceed 25% of their original Participant's
58
77
share of that Project's Project Capability. Project Participants have coven-
anted to fix, revise, and collect rates at least sufficient to meet their obliga-
tions under the PSAs.
MMWEC has issued separate issues of revenue bonds for each of its eight
Projects, which are payable solely from, and secured solely by, the reve-
nues derived from the Project to which the bonds relate, plus available funds
pledged under MMWEC's Amended and Restated General Bond Resolution
(GBR) with respect to the bonds of that Project. The MMWEC revenues
derived from each Project are used solely to provide for the payment of the
bonds of any bond issue relating to such Project and to pay MMWEC's cost
of owning and operating such Project and are not used to provide for the
payment of the bonds of any bond issue relating to any other Project.
MMWEC operates the Stony Brook Intermediate Project and the Stony
Brook Peaking Project, both fossil-fueled power plants. MMWEC has a 3.7%
interest in the W.F. Wyman Unit No. 4 plant, which is operated and owned by
its majority owner, FPL Energy Wyman IV, LLC, an indirect subsidiary of
NextEra Energy Resources LLC (formerly FPL Energy LLC), and a 4.8%
ownership interest in the Millstone Unit 3 nuclear unit, operated by Dominion
Nuclear Connecticut, Inc. (DNCI), the majority owner and an indirect subsidi-
ary of Dominion Resources, Inc. DNCI also owns and operates the Millstone
Unit 2 nuclear unit. The operating license for the Millstone Unit 3 nuclear unit
extends to November 25, 2045.
A substantial portion of MMWEC's plant investment and financing program
is an 11.6% ownership interest in the Seabrook Station nuclear generating
unit operated by NextEra Energy Seabrook, LLC (NextEra Seabrook)
(formerly FPL Energy Seabrook LLC), the majority owner and an indirect
subsidiary of NextEra Energy Resources LLC (formerly FPL Energy LLC).
The operating license for Seabrook Station extends to March, 2030. NextEra
Seabrook has stated its intention to request an extension of the Seabrook
Station operating license beyond March 2030.
Pursuant to the PSAs, the MMWEC Seabrook and Millstone Project Partici-
pants are liable for their proportionate share of the costs associated with
decommissioning the plants, which costs are being funded through monthly
Project billings. Also the Project Participants are liable for their proportionate
share of the uninsured costs of a nuclear incident that might be imposed
under the Price-Anderson Act (Act). Originally enacted in 1957, the Act has
been renewed several times. In July 2005, as part of the Energy Policy Act
of 2005, Congress extended the Act until the end of 2025.
Reading Municipal Light Department has entered into PSAs and Power Pur-
chase Agreements (PPAs) with MMWEC. Under both the PSAs and PPAs,
the Department is required to make certain payments to MMWEC payable
solely from Department revenues. Under the PSAs, each Participant is
unconditionally obligated to make all payments due to MMWEC, whether
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78
or not the Project(s) is completed or operating, and notwithstanding the
suspension or interruption of the output of the Project(s).
MMWEC is involved in various legal actions. Seven municipal light depart-
ments that are Participants under PSAs with MMWEC have submitted a
demand for arbitration of a dispute relating to charges under the PSAs.
After the July 1, 2009 principal payment, total capital expenditures for
MMWEC's Projects amounted to $ 1,553,974,000, of which $ 112,010,000
represents the amount associated with the Department's share of Project
Capability of the Projects in which it participates, although such amount is
not allocated to the Department. MMWEC's debt outstanding for the Projects
includes Power Supply System Revenue Bonds totaling $ 570,245,000, of
which $ 30,338,000 is associated with the Department's share of Project
Capability of the Projects in which it participates, although such amount is
not allocated to the Department. After the July 1, 2009 principal payment,
MMWEC's total future debt service requirement on outstanding bonds issued
for the Projects is $ 614,973,000, of which $ 31,695,000 is anticipated to be
billed to the Department in the future.
The estimated aggregate amount of Reading Municipal Light Department's
required payments under the PSAs and PPAs, exclusive of the Reserve and
Contingency Fund billings, to MMWEC at June 30, 2009 and estimated for
future years is shown below.
Annual Costs
For years ended June 30, 2010
$ 4,867,000
2011
4,674,000
2012
4,657,000
2013
4,702,000
2014
4,154,000
2015-,2019
8,641,000
Total $ 31.695.000
In addition, under the PSA's, the Department is required to pay to MMWEC
its share of the Operation and Maintenance (O&M) costs of the Projects
in which it participates. The Department's total O&M costs including debt
service under the PSAs were $ 16,070,000 and $ 15,726,000 for the years
ended June 30, 2009 and 2008, respectively.
18. Risk Management
The government is exposed to various risks of loss related to torts; theft
of, damage to and destruction of assets; errors and omissions; and natural
disasters for which the government carries commercial insurance. There
were no significant reductions in insurance coverage from the previous year
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79
and have been no material settlements in excess of coverage in any of the
past four fiscal years.
19. Leases
Related, Party Transaction - Property Sub-Lease
The Department is sub-leasing facilities to the Reading Massachusetts
Town Employees Federal Credit Union. The original sub-lease agreement
commenced in December 2000 and ended in November 2005. A new agree-
ment, which extended the lease through November 30, 2008, was signed on
December 1, 2005. An additional amendment, effective December 1, 2008,
extends the lease through November 30, 2011. The following is the future
minimum rental income for the years ending June 30:
2010
$ 8,712
201.1
8,712
2012
3,630
Total
$ 21.054
Other Income - Property Sub-Lease
The Department is sub-leasing facilities to Reading Community Television
Inc. The original sub-lease agreement commenced in March 2000 and
ended in November 2008. An amendment effective December 1, 2008
extends the lease through November 30, 2009. Under the terms of the new
agreement, the future minimum rental income for the year ending June 30,
2010 is $ 8,000.
20. Power Authority of the State of New York (PASNY) Credit
The Department purchases power from the Power Authority of the State
of New York (PASNY). This power, which is generated at Niagara, is less
expensive than most other purchased power. Federal regulations require
that only residential customers get the benefit of this lower cost. The reduc-
tion in residential customer bills, compared to non-residential customers is
known as the PASNY credit.
Prior to fiscal year 2009, the Department accounted for this credit as a pur-
chase power operating expense. In fiscal year 2009, the Department began
accounting for this credit as a contra-revenue, similar to its accounting treat-
ment of other customer discounts and refunds.
61
80
TOWN OF READING, MASSACHUSETTS
SCHEDULE OF FUNDING PROGRESS
REQUIRED SUPPLEMENTARY INFORMATION
June 30, 2009
(Unaudited)
(Amounts Expressed in thousands)
Employees' Retirement System
Actuarial
UAAL as
Accrued
a Percent-
A
ctuarial
Liability
Unfunded
age of
Actuarial
Value of
(AAL) -
AAL
Funded
Covered
Covered
Valuation
Assets
Entry Age
(UAAL)
Ratio
Payroll
Payroll
Date
(a)
(b)
b-a
a/b
(c)
b-a /c
06/30/00
$
54,076
$
78,486
$
24,410
68.9%
$
15,798
154.5%
06/30/01
$
58,286
$
82,550
$
24,264
70.6%
$
16,129
150.4%
06/30/02
$
60,933
$
86,888
$
25,955
70.1%
$
16,855
154.0%
06/30/03
$
62,897
$
91,302
$
28,405
68.9%
$
16,734
169.7%
06/30/04
$
66,850
$
95,961
$
29,111
69.7%
$
17,487
166.5%
06/30/05
$
71,468
$
102,153
$
30,685
70.0%
$
18,048
170.0%
06/30/06
$
77,151
$
106,238
$
29,087
72.6%
$
18,860
154.2%
06/30/07
$
84,784
$
112,012
$
27,228
75.7%
$
19,313
141.0%
Other Post-Employment Benefits
Actuarial
Actuarial
Accrued
Actuarial
Value of
Liability
Valuation
Assets
(AAL)
Date
(a)
(b)
06/30/08
$ -
$ 60,022,927
UAAL as
a Percent-
Unfunded
age of
AAL
Funded
Covered
Covered
(UAAL)
Ratio
Payroll
Payroll
b-a
a/b
b-a /c
$ 60,022,927
0.0%
N/A
N/A
See Independent Auditor's Report
62
81
TOWN OF READING, MASSACHUSETTS
COMBINING BALANCE SHEET
NONMAJOR GOVERNMENTAL FUNDS
JUNE 30, 2009
Special Revenue Funds
Federal
State
Revolving
Receipts
Grants
Grants
Funds
Reserved
ASSETS
Cash and short-term investments
$
2,905
$
14,920
$
2,058,792
$
2,916,096
Investments
-
-
'
Receivables:
Intergovernmental
80,196
154,726
102,938
-
Total Assets
$
83,101
$
169,646
$ .
2,161,730
$
2,916,096
LIABILITIES AND FUND BALANCE
Liabilities:
Warrants payable
$
21,236
$
45,233
$
48,684
$
-
Accrued liabilities
-
-
7,703
-
Deferred revenue
-
444
-
Retainage payable
-
'
Total Liabilities
21,236
45,677
56,387
-
Fund Balances:
Reserved for:
Perpetual(nonexpendable)
Permanent funds
-
-
'
Unreserved:
Undesignated, reported in:
Special revenue funds
61,865
123,969
2,105,343
2,916,096
Capital project funds
-
-
-
-
Permanent funds
-
-
-
'
Total Fund Balance
61,865
123,969
2,105,343
2,916,096
Total Liabilities and
Fund Balance
$
83,101
$
169,646
$
2,161,730
$
2,916,096
64
83
Special Revenue Funds
Gifts and
Trust
Reserve
Donations
Funds
Funds
Subtotals
$
277,648
$
-
$
146,273
$
5,416,634
-
7,747,946
-
7,747,946
337,860
277,648
$
7,747,946
$
146,273
$
13,502,440
$
2,432
$
383
$
-
$
117,968
-
-
_
7,703
444
2,432
383
-
126,115
-
2,374,097
-
2,374,097
275,216
-
146,273
5,628,762.
5,373,466
-
5,373,466
275,216
7,747,563
146,273
13,376,325
$
277,648
$
7,747,946
$
146,273
$
13,502,440
(continued)
65
84
TOWN OF READING, MASSACHUSETTS
COMBINING BALANCE SHEET
NONMAJOR GOVERNMENTAL FUNDS
JUNE 30, 2009
(continued)
ASSETS
Cash and short-term investments
Investments
Receivables:
Intergovernmental
Total Assets
LIABILITIES AND FUND BALANCE
Liabilities:
Warrants payable
Accrued liabilities
Deferred revenue
Retainage payable
Total Liabilities
Fund Balances:
Reserved for:
Perpetual (nonexpendable)
permanent funds
Unreserved:
Undesignated, reported in:
Special revenue funds
Capital project funds
Permanent funds
Total Fund Balance
Total Liabilities and
Fund Balance
Capital Project Funds
Total
Town
School
Nonmajor
Capital
Capital
Governmental
Proiect Funds
Project Funds
Subtotals
Funds
$ 1,128,149
$ 1,868,043 $
2,996,192
$ 8,412,826
_
_
-
7,747,946
_
_
-
337,860
$ 1,128,149
$ 1,868,043 $
2,996,192
$ 16,498,632
$ 57,207
$ 42,435 $
99,642
$ 217,610
_
_
7,703
_
-
444
-
1,104,104
1,104,104
1,104,104
57,207
1,146,539
1,203,746
1,329,861
2,374,097
- 5,628,762
1,070,942 721,504 1,792,446 1,792,446
5,373,466
1,070,942 721,504 1,792,446 15,168,771
$ 1,128,149 $ 1,868,043 $ 2,996,192 $ 16,498,632
66
85
TOWN OF READING, MASSACHUSETTS
COMBINING STATEMENT OF REVENUES, EXPENDITURES
AND CHANGES IN FUND BALANCES
NONMAJOR GOVERNMENTAL FUNDS
FOR THE YEAR ENDED JUNE 30, 2009
Special Revenue Funds
Federal
State
Revolving
Receipts
Grants
Grants
Funds
Reserved
Revenues:
Departmental $
-
$ -
$ 3,696,603
$ 49,164
Intergovernmental
1,527,130
2,979,867
143,648
-
Investment income
-
-
22
43,876
Other
-
-
750
720,644
Total Revenues
1,527,130
2,979,867
3,841,023
813,684
Expenditures:
Current:
General government
-
86,206
120,084
-
Public safety
118,401
91,056
635,973,
-
Education
1,556,661
2,381,275
1,998,334
-
Public works
-
562,563
376
-
Health and human services
110,311
85,688
15,270
-
Culture and recreation
7,252
31,804
420,528
625
Total Expenditures
1,792,625
3,238,592
3,190,565
625
Excess (deficiency) of revenues over
(under) expenditures
(265,495)
(258,725)
650,458
813,059
Other Financing sources (Uses):
Issuance of bonds
-
"
Transfers in
Transfers out
-
-
'
-
125,052
387,665
Total Other Financing Sources (Uses)
-
(125,052)
387,665
Change in fund balances
(265,495)
(258,725)
525,406
425,394
Fund Balances, beginning of year, as restated
327,360
382,694
1,579,937
2,490,702
Fund Balances, end of year $
61,865
$ 123,969
$ 2,105,343
$ 2,916,096
68
87
Special Revenue Funds
Gifts and
Trust
Reserve
Donations
Funds
Funds
Subtotals
$
$ _
$ _
$ 3,745,767
-
4,650,645
-
93,627
6,357
143,882
153,107
1,830
-
876,331
153,107
95,457
6,357
9,416,625
1,206
-
-
207,496
10,519
-
855,949
135,376
-
5,950
6,077,596
74
105,000
668,013
13,165
99,002
-
323,436
76,940
2,061
-
539,210
237,280
206,063
5,950
8,671,700
(84,173)
(110,606)
407
744,925
(120,000)
-
-
(632,717)
(120,000)
-
-
(632,717)
(204,173)
(110,606)
407
112,208
479,389
7,858,169
145,866
13,264,117
$ 275,216
$ 7,747,563
$ 146,273
$ 13,376,325
(continued)
69
88
TOWN OF READING, MASSACHUSETTS
COMBINING STATEMENT OF REVENUES, EXPENDITURES
AND CHANGES IN FUND BALANCES
NONMAJOR GOVERNMENTAL FUNDS
FOR THE YEAR ENDED JUNE 30, 2009
(continued)
Capital Project Funds
Total
Town
School
Nonmajor
Capital
Capital.
Governmental
Project Funds
Proiect Funds
Subtotals
Funds
Revenues:
$ -
$ -
$ -
$ 3,745,767
Departmental
Intergovernmental
225,000
225,000
4,875,645
-
-
143,882
Investment income
-
-
-
876,331
Other
-
Total Revenues
225,000
-
225,000
9,641,625
Expenditures:
Current:
General government
929,113
-
929,113
1,136,609
Public safety
-
-
-
855,949
Education
16,906
661,308
678,214
6,755,810
Public works
324,541
-
324,541
992,554
Health and human services
-
-
-
323,436
Culture and recreation
-
539,210
Total Expenditures
1,270,560
661,308
1,931,868
10,603,568
Excess (deficiency) of revenues over
(under) expenditures
(1,045,560)
(661,308)
(1,706,868)
(961,943)
Other Financing Sources (Uses):
000
1
100
100,000
1
Issuance of bonds
1,100,000
-
,
,
150
000
,
150,000
Transfers in
150,000
-
-
-
,
-
(632,717)
Transfers out
Total Other Financing Sources (Uses)
1,250,000
1,250,000
617,283
Change in fund balances
204,440
(661,308)
(456,868)
(344,660)
Fund Balances, beginning of year, as restated
866,502
1,382,812
2,249,314
15,513,431
Fund Balances, end of year
$ 1,070,942
$ 721,504
$ 1,792,446
$ 15,168,771
70
89
TOWN OF READING, MASSACHUSETTS
NONMAJOR PROPRIETARY FUNDS
COMBINING SCHEDULE OF NET ASSETS
JUNE 30, 2009
Business-Type Activities
Enterprise Funds
Landfill
Sewer Closure and Stormwater
Fund Postclosure Management Total
ASSETS-
Current:
Cash and short-term investments
User fees, net of allowance for uncollectibles
Inventory
Other assets
Total current assets
Noncurrent:
Capital assets,being depreciated, net
Capital assets not being depreciated
Total noncurrent assets
TOTAL ASSETS
LIABILITIES
Current:
Warrants payable
Accrued liabilities
Other current liabilities
Current portion of long-term liabilities:
Bonds payable
Total current liabilities
Noncurrent:
Bonds payable, net of current portion
Accrued employee benefits
OPEB liability
TOTAL LIABILITIES
NET ASSETS
Invested in capital assets, net of related debt
Unrestricted
TOTAL NET ASSET:
See notes to financial statements.
$ 1,644,640 $ 85,644 $ 799,562 $ 2,529,846
1,270,883 79,982 1,350,865
1,456 - - 1,456
- - 189 189
2,916,979 85,644 879,733 3,882,356
5,727,214 - - 5,727,214
61,761 - - 61,761
5,788,975 - - 5,788,975
8,705,954 85,644 879,733 9,671,331
40,624 7,007
2,998 -
- 78,637
181,501 -
225,123 85,644
176,598
6,500 -
20,415 -
428,636 85,644
6,394
54,025
510
3,508
-
78,637
-
.181,501
6,904
317,671
-
176,598
14,522
21,022
20,415
21,426 535,706
5,746,584 - - 5,746,584
2,530,734 - 858,307 3,389,041
$ 8,277,318 $ - $ 858,307 $ 9,135,625
71
90
TOWN OF READING, MASSACHUSETTS
NONMAJOR PROPRIETARY FUNDS
COMBINING SCHEDULE OF REVENUES, EXPENSES AND CHANGES IN FUND NET ASSETS
FOR THE YEAR ENDED JUNE 30, 2009
Operating Revenues:
Business-Type Activities
Enterarise Funds
Landfill
Sewer Closure and Stormwater
Fund Postclosure Management Total
Charges for services $
4,699,499
Total Operating Revenues
4,699,499
Operating Expenses:
Personnel expenses
354,361
Non personnel expenses
94,186
Intergovernmental
3,555,143
Depreciation
326,148
Energy purchases
29,452
Total Operating Expenses
4,359,290
Operating Income (Loss)
340,209
Nonoperating Revenues (Expenses):
Investment income
1,501
Interest expense
(9,522)
Total Nonoperating Revenues (Expenses)
(8,021)
Income (Loss) Before Transfers
332,188
Transfers
Transfers (out)
318,302
Change in Net Assets
13,886
Net Assets at Beginning of Year
8,263,432
Net Assets at End of Year $
8,277,318
$ - $ 381,151
$ 5,080,650
- 381,151
5,080,650
71,993
426,354
35,382
129,568
3,555,143
326,148
29,452
- 107,375
4,466,665
- 273,776
613,985
- 1,756
3,257
_
(9,522)
_ 1,756
(6,265)
- 275,532
607,720
318,302
275,532 289,418
582,775 8,846,207
$ - $ 858,307 $ 9,135,625
See notes to financial statements.
72
91
TOWN OF READING, MASSACHUSETTS
NONMAJOR PROPRIETARY FUNDS
COMBINING SCHEDULE OF CASH FLOWS
FOR THE YEAR ENDED JUNE 30, 2009
Business-Type Activities
Enterprise Funds
Cash Flows From Operating Activities;
Receipts from customers and users
Payments to vendors and employees
Payments to other governments
Net Cash Provided By (Used For) Operating Activities
Cash Flows From Noncapital Financing Activities
Transfer out
Net Cash Provided By (Used For) Noncapital Financing Activities
Cash Flows From Capital and Related Financing Activities:
Acquisition of capital assets
Principal payments on bonds and notes
Interest expense
Net Cash (Used For) Capital and Related Financing Activities
Cash Flows From Investing Activities:
Investment income
Net Cash Provided By Investing Activities
Net Change in Cash and Short-Term Investments
Cash and Short Term Investments, Beginning of Year
Cash and Short Term Investments, End of Year
Reconciliation of Operating Income (Loss) to Net Cash
Provided By (Used For) Operating Activities;
Operating income (loss)
Adjustments to reconcile operating income (loss) to net
cash provided by (used for) operating activities:
Depreciation
Changes in assets and liabilities:
User fees receivables '
Inventory and prepayments
Other assets
Warrants payable
Accrued liabilities
Other liabilities
OPEB liability
Net Cash Provided By (Used For) Operating Activities
Landfill
Sewer Closure and Stormwater
Fund Postclosure Management Total
$ 4,730,192 $ - $ 386,885 $ 5,117,077
(415,985) (8,845) (200,432) (625,262)
(3,555,143) (3,555,143 )
759,064 (8,845) 186,453 936,672
(318,302) (318,302)
(318,302) (318,302)
(283,382)
(283,382)
(168,709)
(168,709)
(9,522)
(9,522)
(461,613)
(461,613)
1,501
1,756
3,257
1,501
1,756
3,257
(19,350)
(8,845) 188,209
160,014
1,663,990
94,489 611,353
2,369,832
$ 1,644,640
$ 85,644 $ 799,562
$ 2,529,846
$ 340,209
$ $ 273,776
$ 613,985
326,148 326,148
30,693
5,734
36,427
1,041
-
1,041
-
-
(189)
(189)
37,253
7,007
(93,378)
(49,118)
2,998
-
. 2,998
307
(15,852)
510
(15,035)
20,415
20,415
$ 759,064
$ 8,845
$ 186,453
$ 936,672
See notes to financial statements.
73
92