TOWN OF LANCASTER,
NEW YORK
Basic Financial Statements, Required Supplementary
Information, Supplementary Information and Other
Information for the Year Ended December 31, 2016 and
Independent Auditors’ Reports
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Auditor's Report on Lancaster Town's Financial Statements for 2016, Slides of Accounting
An independent auditor's report on the financial statements of the Town of Lancaster, New York for the year ended December 31, 2016. It includes information on the town's unassigned fund balance, governmental funds, proprietary funds, fiduciary funds, and required supplementary information. The report also presents a reconciliation of the statement of revenues, expenditures, and changes in fund balances for governmental funds to the government-wide statement of activities.
What you will learn
- What is the net change in fund balances for total governmental funds?
- What are the three categories of funds for the Town of Lancaster?
- What is the total unassigned fund balance for the General Fund at the end of the current fiscal year?
- What percentage of total General Fund expenditures and transfers out is represented by the unassigned fund balance?
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TOWN OF LANCASTER,
N EW YORK
Basic Financial Statements, Required Supplementary
Information, Supplementary Information and Other
Information for the Year Ended December 31, 2016 and
Independent Auditors’ Reports
TOWN OF LANCASTER , N EW YORK
Table of Contents
Year Ended December 31, 2016
(concluded) Page
Schedule of Revenues, Expenditures, and Changes in Fund Balances—
Budget and Actual—Police Fund.................................................................................................... 57
Schedule of Revenues, Expenditures, and Changes in Fund Balances—
Budget and Actual—Highway Fund - Town Outside Village ........................................................ 58
Schedule of Revenues, Expenditures, and Changes in Fund Balances—
Budget and Actual—Fire Protection District Fund ......................................................................... 59
Schedule of Revenues, Expenditures, and Changes in Fund Balances—
Budget and Actual—Refuse District Fund......................................................................................
Note to the Required Supplementary Information ................................................................................. 61
Supplementary Information:
Combining Balance Sheet —Nonmajor Governmental Funds............................................................... 62
Combining Statement of Revenues, Expenditures, and Changes in Fund
Balances—Nonmajor Governmental Funds ................................................................................... 63
Other Information:
Schedule of Revenues, Expenditures, and Changes in Fund Balances—
Budget and Actual—General Fund - Town Outside Village .......................................................... 64
Schedule of Revenues, Expenditures, and Changes in Fund Balances —
Budget and Actual—Highway Fund - Townwide .......................................................................... 65
Schedule of Revenues, Expenditures, and Changes in Fund Balances—
Budget and Actual—Lighting District Fund................................................................................... 66
Schedule of Revenues, Expenditures, and Changes in Fund Balances—
Budget and Actual—Consolidated Water District Fund................................................................. 67
Schedule of Revenues, Expenditures, and Changes in Fund Balances—
Budget and Actual—Miscellaneous Special Revenue Fund........................................................... 68
Independent Auditors’ Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards ..................................................................... 69
Schedule of Findings................................................................................................................................. 71
Certified Public Accountants
Drescher & Malecki LLP 3083 William Street, Suite 5 Buffalo, New York 14227 Telephone: 716.565. Fax: 716.565.
INDEPENDENT AUDITORS’ REPORT
Honorable Town Board Town of Lancaster, New York:
Report on the Financial Statements
We have audited the accompanying financial statements of the governmental activities, the discretely presented component unit, each major fund, and the aggregate remaining fund information of the Town of Lancaster, New York (the “Town”), as of and for the year ended December 31, 2016, and the related notes to the financial statements, which collectively comprise the Town’s basic financial statements as listed in the table of contents.
Management’s Responsibility for the Financial Statements
The Town’s management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.
Auditor’s Responsibility
Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards , issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions.
Opinions
In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the discretely presented component unit, each major fund, and the aggregate remaining fund information of the Town, as of December 31, 2016, and the respective changes in financial position and, where applicable, cash flows thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America.
Other Matters
Required Supplementary Information
Accounting principles generally accepted in the United States of America require that the Management’s Discussion and Analysis and other Required Supplementary Information, as listed in the table of contents, be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance.
Other Information
Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the Town's basic financial statements. The Supplementary Information and Other Information, as listed in the table of contents, are presented for purposes of additional analysis and are not a required part of the basic financial statements.
The Supplementary Information, as listed in the table of contents, is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the Supplementary Information, as listed in the table of contents is fairly stated in all material respects in relation to the basic financial statements as a whole.
The Other Information, as listed in the table of contents, has not been subjected to the auditing procedures applied in the audit of the basic financial statements, and, accordingly, we do not express an opinion or provide any assurance on it.
TOWN OF LANCASTER , N EW YORK Management’s Discussion and Analysis Year Ended December 31, 2016
As management of the Town of Lancaster, New York (the “Town”), we offer readers of the Town’s financial statements this narrative overview and analysis of the financial activities of the Town for the year ended December 31, 2016. This document should be read in conjunction with additional information that we have furnished in the Town’s financial statements, which follow this narrative.
Financial Highlights
The assets and deferred outflows of resources of the primary government exceeded its liabilities and deferred inflows of resources at the close of the most recent fiscal year by $57,346,391 ( net position ). This consists of $51,832,616 net investment in capital assets, $1,862,808 restricted for specific purposes, and an unrestricted portion of $3,650,967 for amounts available to meet the Town’s ongoing obligations to citizens and creditors.
The Town’s primary government net position increased by $4,301 during the year ended December 31, 2016.
At the end of the current fiscal year, the Town’s governmental funds reported a combined ending fund balance of $12,580,199, an increase of $7,005,599 in comparison with the prior year’s fund balance of $5,574,600. This increase was primarily due to the conversion of $7,800,000 in bond anticipation notes to general obligation serial bonds.
At the end of the current fiscal year, unassigned fund balance for the General Fund was $1,805,719, or approximately 19.7 percent of General Fund expenditures and transfers out. This total amount is available for spending at the Town’s discretion and constitutes approximately 49.5 percent of the General Fund’s total fund balance of $3,646,037 at December 31, 2016.
During the year ended December 31, 2016, the Town’s total serial bonds outstanding increased by $6,460,000. During the year, the Town issued 2016 general obligation serial bonds of $7,800,000 and made scheduled principal payments of $1,340,000.
Overview of the Financial Statements
The discussion and analysis provided here are intended to serve as an introduction to the Town’s basic financial statements. The Town’s basic financial statements comprise three components: 1) government-wide financial statements, 2) fund financial statements, 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 statements are designed to provide readers with a broad overview of the Town’s finances, in a manner similar to a private-sector business.
The statement of net position presents information on all of the Town’s assets, liabilities, and deferred outflows/inflows of resources, with the difference reported as net position. Over time, increases or decreases in net position may serve as a useful indicator of whether the financial position of the Town is improving or deteriorating.
Proprietary funds —The Town maintains an Internal Service Fund to account for the operation of its self-insured programs. Because these services benefit only governmental type activities, they have been included within governmental activities in the government-wide financial statements.
The proprietary fund financial statements can be found on pages 19-21 of this report.
Fiduciary funds —Fiduciary funds are used to account for resources held for the benefit of parties outside the Town. 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 Town is responsible for ensuring that the assets reported in these funds are used for their intended purpose. The Town maintains one fiduciary fund, the Agency Fund.
The fiduciary fund financial statement can be found on page 22 of this report.
Notes to the financial statements —The notes provide additional information that is essential to a full understanding of the data provided in the government-wide and fund financial statements. The notes to the financial statements can be found on pages 23-50 of this report.
Other information —In addition to the basic financial statements and accompanying notes, this report also presents required supplementary information concerning the Town’s progress in funding its obligation to provide other post-employment benefits to its employees, the Town’s net pension liability, and the Town’s budgetary comparison schedules for the General Fund, Police Fund, Highway Fund—Town Outside Village, Fire Protection District Fund, and Refuse District Fund. Required Supplementary Information and a related note to the required supplementary information can be found on pages 51-61 of this report.
The combining statements referred to earlier in connection with nonmajor governmental funds are presented immediately following the Required Supplementary Information in the Supplementary Information section of this report on pages 62-63.
Finally, budgetary comparison schedules for each nonmajor fund with a legally adopted budget are presented immediately following their respective combining statements in the Other Information section of this report on pages 64-68.
Government-wide Overall Financial Analysis
As noted earlier, net position over time may serve as a useful indicator of a government’s financial position. In the case of the Town, assets and deferred outflows of resources exceeded liabilities and deferred inflows of resources by $57,346,391 at the close of the most recent fiscal year, as compared to $57,342,090 at the close of the fiscal year ended December 31, 2015.
Table 1, shown below, presents a condensed statement of net position compared to the prior year.
Table 1 — Condensed Statements of Net Position — Primary Government
Current assets $ 16,367,973 $ 16,643, Capital assets 75,837,425 74,429, Total assets 92,205,398 91,073, Deferred outflows of resources 9,258,500 2,001, Current liabilities 2,814,729 9,663, Noncurrent liabilities 40,079,999 25,985, Total liabilities 42,894,728 35,648, Deferred inflows of resources 1,222,779 83, Net position: Net investment in capital assets 51,832,616 51,494, Restricted 1,862,808 1,628, Unrestricted (^) 3,650,967 4,219, Total net position $ 57,346,391 $ 57,342,
December 31,
Governmental Activities
The largest portion of the Town’s net position (90.4 percent), net investment in capital assets, reflects its investment in capital assets (e.g. land, buildings, machinery, equipment, and infrastructure), less any related outstanding debt used to acquire those assets. The Town uses these capital assets to provide a variety of services to citizens. Accordingly, these assets are not available for future spending. Although the Town’s investment in capital assets is reported net of related debt, it should be noted that the resources 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 the Town’s net position, $1,862,808, represents resources that are subject to external restrictions imposed by creditors, grantors, contributions, or laws and regulations of other governments and restrictions imposed by law through constitutional provisions or enabling legislation. The remaining balance of $3,650,967 represents unrestricted net position that may be used to meet the Town’s ongoing operations.
A summary of program expenses for the years ended December 31, 2016 and December 31, 2015 is presented below in Table 4.
Table 4 — Summary of Program Expenses — Primary Government
2016 2015 Dollars Percent (%) General government support $ 4,701,867 $ 4,666,567 $ 35,300 0. Public safety 13,980,169 13,792,689 187,480 1. Health 99,835 95,675 4,160 4. Transportation 5,488,634 5,830,353 (341,719) (5.9) Culture and recreation 2,795,840 2,767,402 28,438 1. Home and community services 4,359,457 4,179,626 179,831 4. Interest and other fiscal charges 997,398^ 672,527^ 324,871^ 48. Total program expenses $^ 32,423,200 $^ 32,004,839 $^ 418,361 1.
Year ended December 31, Increase/(Decrease)
The most significant expense items for the year ended December 31, 2016 were public safety of $13,980,169, or 43.1 percent of total expenses, transportation of $5,488,634, or 16.9 percent of total expenses, general government support of $4,701,867, or 14.5 percent of total expenses, and home and community services of $4,359,457, or 13.4 percent of total expenses. Similarly, for the year ended December 31, 2015, the most significant expense items were public safety of $13,792,689, or 43. percent of total expenses, transportation of $5,830,353, or 18.2 percent of total expenses, general government support of $4,666,567, or 14.6 percent of total expenses, and home and community services of $4,179,626, or 13.1 percent of total expenses.
Financial Analysis of Governmental Funds
Governmental funds —The focus of the Town’s governmental funds is to provide information on near-term inflows, outflows, and balances of spendable resources. Such information is useful in assessing the Town’s financing requirements. In particular, unassigned fund balance may serve as a useful measure of a government’s net resources available for discretionary use as they represent the portion of fund balance which has not yet been limited to use for a particular purpose by either an external party, the Town itself, or a group or individual that has been delegated authority to assign resources for use for particular purposes by the Town Board.
At December 31, 2016, the Town’s governmental funds reported combined ending fund balances of $12,580,199, an increase of $7,005,599 from prior year. Approximately 57.5 percent, $7,228,844, of the combined ending fund balance constitutes either unassigned fund balance or fund balance assigned for specific use , which is available for spending in accordance with the fund’s purpose. The remainder of fund balance is nonspendable, restricted, or assigned for other purposes to indicate that it is: (1) not in spendable form, $553,780, (2) restricted for particular purposes, $3,555,125, or (3) assigned for capital improvements and subsequent year’s expenditures, $1,245,450.
The General Fund is the chief operating fund of the Town. At the end of the current fiscal year, unassigned fund balance of the General Fund was $1,805,719, while total fund balance increased to $3,646,037. The total fund balance of the Town’s General Fund increased $102,179 during the current fiscal year. As a measure of the General Fund’s liquidity, it may be useful to compare both unassigned fund balance and total fund balance to total expenditures and transfers out. Unassigned fund balance represents approximately 19.7 percent of total General Fund expenditures and transfers out, while total fund balance represents 39.8 percent of that same amount.
The Town’s Police Fund ending fund balance was $2,009,507. Approximately 80.6 percent, $1,619,444, of this amount is reported as fund balance assigned for specific police use_._ During the year ended December 31, 2016, the Police Fund fund balance increased $138,282 as a result of controlling costs and increased sales tax allocation.
The Town’s Highway Fund—Town Outside Village ending fund balance was $1,912,370. Approximately 68.7 percent, $1,313,385, of this amount is reported as fund balance assigned for specific highway, Town outside the Village use_._ During the year ended December 31, 2016, the Highway Fund—Town Outside Village fund balance increased by $353,686 mainly due to controlled costs related to chemicals and highway wages.
The Town’s Fire Protection District Fund ending fund balance was $165,078. Approximately 72. percent, $120,078, of this amount is reported as fund balance assigned for specific fire protection use. During the year ended December 31, 2016, the Fire Protection District Fund fund balance decreased by $37,618 as a result of planned use of fund balance.
The Town’s Refuse District Fund ending fund balance was $352,516. Approximately 67.4 percent, $237,516, of this amount is reported as fund balance assigned for specific refuse use. During the year ended December 31, 2016, the Refuse District Fund fund balance decreased by $121,609 as the result of planned use of fund balance.
The Town’s Capital Project Fund ending fund balance was $1,692,317. During the year ended December 31, 2016, fund balance increased $6,044,916 from a prior year fund balance deficit of $4,352,599 as the Town funded ongoing projects through a $7,800,000 bond issuance.
General Fund Budgetary Highlights
The Town’s General Fund budget generally contains budget amendments during the year. The budget is allowed to be amended upward (increased) for prior year’s encumbrances since the funds were allocated under the previous year’s budget. Furthermore, the budget is allowed to be amended upward (increased) for additional current year appropriations supported by an increase in budgeted revenues. A budgetary comparison schedule within the required supplementary information section of this report has been provided to demonstrate compliance with their budget.
A summary of the General Fund results of operations for the year ended December 31, 2016 is presented below in Table 5.
Table 5 — General Fund Budget
Original Final Actual Revenues and other financing sources $ 8,755,678 $ 8,849,030 $ 9,271,917 $ 422, Expenditures and other financing uses 9,315,678 9,540,154 9,169,738 370, Excess (deficiency) of revenues and other financing sources over expenditures and other financing uses $ (560,000) $ (691,124) $ 102,179 $ 793,
Budgeted Amounts Variance with Final Budget
Original budget compared to final budget —At the close of the fiscal year, the overall budgeted appropriations increased by $224,476. Significant transfers and amendments to the budget included $165,639 supplemental appropriations for general government support related to the new senior center parking lot rehabilitation project and unanticipated expenditures for professional legal services related to labor and employment matters. Estimated revenue increases totaling $93,352 offset a portion of the increased budgeted appropriations, while the remaining increase of $131,124 was appropriated from fund balance.
A summary of the Town’s long-term liabilities at December 31, 2016 and December 31, 2015 is presented in Table 7 below:
Table 7 — Summary of Long-Term Liabilities
Serial bonds $ 22,670,000 $ 16,210, Premium on serial bonds 1,544,791 786, Installment purchase debt 1,449,886 1,586, Compensated absences 2,637,622 2,659, OPEB obligation 3,626,471 3,323, Workers' compensation 266,604 318, Net pension liability 7,884,625 1,101, Total $ 40,079,999 $ 25,985,
Governmental Activities December 31,
Additional information on the Town’s long-term liabilities can be found in Note 11 to the financial statements.
Economic Factors and Next Year’s Budgets and Rates
The unemployment rate, not seasonally adjusted, for the Buffalo-Niagara region during December 2016 was 5.1 percent. This compares unfavorably to New York State’s unemployment rate of 4. percent and the national unemployment rate of 4.7 percent. These factors are considered in preparing the Town’s budget.
The Town’s 2017 General Fund budget includes the appropriation of $230,000 of fund balance and $245,000 of fund balance reserves. The General Fund tax rate is $2.38 per thousand of assessed value for the 2017 budget year.
Requests for Information
This financial report is designed to provide a general overview of the Town’s finances for all those with interest in the Town’s finances. Questions concerning any of the information provided in this report or requests for additional financial information should be addressed to the Supervisor’s Office, 21 Central Avenue, Lancaster, NY 14086.