FINAL OFFICIAL STATEMENT DATED DECEMBER 10, $21,642,000 TOWN OF TEWKSBURY Massachusetts GENERAL OBLIGATION MUNICPAL PURPOSE LOAN OF 2009 BONDS

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1 NEW ISSUE Standard & Poor s Ratings Services: AA- (See Rating ) FINAL OFFICIAL STATEMENT DATED DECEMBER 10, 2009 In the opinion of Bond Counsel, based upon an analysis of existing law and assuming, among other matters, compliance with certain covenants, interest on the Bonds is excluded from gross income for federal income tax purposes under the Internal Revenue Code of 1986 (the Code ). Interest on the Bonds is not a specific preference item for purpose of the federal individual or corporate alternative minimum taxes and such interest is not taken into account in determining adjusted current earnings for the purpose of computing the alternative minimum tax imposed on corporation, although interest on the Bonds will be taken into account in computed certain other federal taxes imposed on corporations. Under existing law, interest on the bonds is exempt from Massachusetts personal income taxes, and the Bonds are exempt from Massachusetts personal property taxes. The Bonds will be designated as "qualified tax-exempt obligations" for purposes of Section 265(b)(3) of the Code. Bond Counsel expresses no opinion regarding any other tax consequences related to the ownership or disposition of, or the accrual or receipt of interest on, the Bonds. (See Tax Exemption and Appendix C - Proposed Form of Legal Opinion herein.) $21,642,000 TOWN OF TEWKSBURY Massachusetts GENERAL OBLIGATION MUNICPAL PURPOSE LOAN OF 2009 BONDS Dated: December 15, 2009 Due: January 15, MATURITIES, AMOUNTS, INTEREST RATES, PRICES AND/OR YIELDS Principal Interest Price/ Principal Interest Price/ Year Amount Rate Yield Year Amount Rate Yield 2011 $ 692, % 0.40% 2021 $1,230, % 3.30% , ,270, , ,310, , ,350, , ,390, , ,435, , ,470, , ,505, , ,480, , ,510, Principal of the Bonds will be payable January 15 of the years in which the Bonds mature. Interest from the date of the Bonds will be payable on July 15, 2010, and semi-annually thereafter on each January 15 and July 15. The Bonds are subject to redemption prior to their stated dates of maturity as described herein. The Bonds are issuable only in fully registered form without coupons, and, when issued, will be registered in the name of Cede & Co., as Bondowner and nominee for The Depository Trust Company ("DTC"), New York, New York, or its custodial agent. DTC will act as securities depository for the Bonds. Purchases of the Bonds will be made in book-entry form, in the denomination of $5,000 or any integral multiple thereof, with one denomination of $2,000 of the Bonds which will mature in (See "Book- Entry Transfer System" herein.) The legality of the Bonds will be approved by Devine, Millimet & Branch, Professional Association of Manchester, New Hampshire, Bond Counsel to the Town. UniBank Fiscal Advisory Services, Inc., Whitinsville, Massachusetts, serves as financial advisor to the Town. It is expected that the Bonds, in definitive form, will be delivered to DTC, or its custodial agent, on or about December 21, 2009, for the Bonds, against payment in federal reserve funds. CITI

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3 Table of Contents Page Issue Summary Statement... ii Notice of Sale... iii Official Statement... 1 Introduction... 1 Part I. The Bonds... 2 Description of the Bonds... 2 Record Date... 2 Book-Entry Transfer System... 3 DTC Practices... 4 Authorization and Use of Proceeds... 5 Redemption Prior to Maturity... 5 Source of Payment and Remedies... 6 Use of State Distributions to Pay Debt Service... 7 Opinion of Bond Counsel... 7 Tax Exemption... 8 Rating... 9 Closing Certificates... 9 Continuing Disclosure Part II. The Town Governing Bodies and Officers Services Indebtedness Types of Obligations Debt Authorized Unissued Debt and Prospective Financings Bonded Debt vs. Population, Valuations and Income Five Years Outstanding Debt Revenue Anticipation Borrowing Annual Debt Service Contracts Overlapping Debt Retirement Plan Other Post-Employment Benefits Property Taxation and Valuation Classification of Real Property Property Tax Limitation Page Valuations Classification of Property Tax Rates Largest Taxpayers Calculation of Tax Levies and Levy Limits Tax Collections and Abatements Town Finances Budget and Appropriation Process Budget Comparison State Aid State School Building Assistance Program Motor Vehicle Excise Water and Sewer Services Other Taxes Investments Community Preservation Act Tax Increment Financing for Development Districts Undesignated General Fund Balance and Free Cash Stabilization Fund Collective Bargaining Principal Employers Employment by Industry Building Permits Public School Enrollments Public School Facilities Other Data Litigation Appendix A. Summary Financial Statements... A-1 Appendix B Comprehensive Annual Financial Report... B-1 Appendix C. Proposed Form of Legal Opinion... C-1 Appendix D. Proposed Form of Continuing Disclosure... D-1 Appendix E. Bid Form...E-1 The information and expressions of opinion in this Official Statement are subject to change without notice. Neither the delivery of this Official Statement nor any sale of the Bonds shall, under any circumstances, create any implication that there has been no material change in the affairs of the Town since the date of this Official Statement.

4 Issuer: Date of Sale: Method of Sale: Location of Sale: Issue: Minimum Bid: ISSUE SUMMARY STATEMENT Thursday, December 10, 2009, until 11:00 a.m. (Boston Time) Electronic and Sealed Bids Dated Date of Bonds: December 15, 2009 Maturity Date of Bonds: Redemption: Credit Rating: Security: Tax Exemption: Continuing Disclosure: Bank Qualification: Paying Agent: Legal Opinion: Delivery and Payment: Issue Contacts: UniBank Fiscal Advisory Services, Inc., 49 Church Street, Whitinsville, MA $21,642,000 General Obligation Municipal Purpose Loan of 2009 Bonds, Book- Entry Only (See Book-Entry Transfer System, herein.) $21,642,000 plus accrued interest to the date of delivery On January 15, 2011 through 2030, inclusive, as detailed herein. The Bonds are subject to redemption prior to their stated maturity dates as described herein. Standard & Poor s Ratings Services rating is pending. The Bonds are valid general obligations of the Town of Tewksbury, Massachusetts and the principal of and interest on the Bonds are payable from ad valorem taxes which may be levied upon all property within the territorial limits of the Town and taxable by it, subject to the limitations imposed by Chapter 59, Section 21C of the General Laws (Proposition 2½). Refer to Tax Exemption and Appendix C Proposed Form of Legal Opinion herein. Refer to Continuing Disclosure and Appendix D Proposed Form of Continuing Disclosure Certificate herein. The Bonds will be designated qualified tax-exempt obligations for purposes of Section 265(b)(3) of the Internal Revenue Code of 1986, as amended. U.S. Bank National Association, Boston, Massachusetts. Devine, Millimet & Branch, Professional Association, Manchester, New Hampshire. It is expected that the Bonds will be delivered to The Depository Trust Company, or its custodial agent, against payment to the account of the Town at UniBank For Savings, Whitinsville, Massachusetts in federal reserve funds on or about December 21, Janet K. Smith, Treasurer, Town of Tewksbury, Telephone (978) Clark H. Rowell, Vice President, UniBank Fiscal Advisory Services, Inc., Telephone (508) David H. Barnes, Devine, Millimet & Branch, Professional Association, Telephone (603) Additional Information: Refer to the Preliminary Official Statement dated November 25, ii

5 NOTICE OF SALE TOWN OF TEWKSBURY Massachusetts $21,642,000 GENERAL OBLIGATION MUNICIPAL PURPOSE LOAN OF 2009 BONDS The, will receive electronic and sealed proposals until 11:00 a.m. (local time), on Thursday, December 10, 2009 at UniBank Fiscal Advisory Services, Inc., Whitinsville, Massachusetts, for the purchase of the following described Bonds: $21,642,000 GENERAL OBLIGATION MUNICIPAL PURPOSE LOAN OF 2009 BONDS payable January 15 of the years and in the amounts as follows: Year Principal Amount Year Principal Amount 2011 $ 692, $1,230, , ,270, , ,310, , ,350, , ,390, , ,435, , ,470, , ,505, , ,480, , ,510,000 The Bonds will be dated December 15, Interest from the date of the Bonds will be payable on July 15, 2010 and semi-annually thereafter on each January 15 and July 15. Principal of and interest on the Bonds will be paid as described below. The Bonds maturing in the years 2011 through 2018, inclusive, are not subject to optional redemption prior to their stated dates of maturity; the Bonds may be subject to mandatory redemption as provided herein. The Bonds maturing in the years 2019 through 2030, inclusive, are subject to optional redemption prior to maturity and may be subject to mandatory redemption as provided herein. See Redemption Prior to Maturity herein. For any and all of the Bonds, bidders may specify that all of the principal amount of such bonds having any two or more consecutive maturities may, in lieu of having separate maturity dates, be combined to comprise one or more Term Bonds, and shall be subject to mandatory redemption or mature at par in each of the years and in the principal amounts specified in the foregoing maturity schedule. Each mandatory redemption shall be allocated to the payment of the Term Bond having the nearest subsequent maturity date. Term Bonds, if any, shall be subject to mandatory redemption on January 15 in the year or years immediately prior to the stated maturity of such Term Bonds (the particular Bonds of such maturity to be redeemed to be iii

6 selected by lot), as indicated in the foregoing maturity schedule at the principal amount thereof plus accrued interest to the redemption date, without premium. The Bonds will be issued by means of a book-entry system with no physical distribution of certificates made to the public. One certificate for each maturity of the Bonds will be issued to The Depository Trust Company, New York, New York, (DTC), and immobilized in its custody. A book-entry system will be employed, evidencing ownership of the Bonds in principal amounts of $5,000 or integral multiples thereof, with one denomination of $2,000 of the Bonds which will mature in 2011, with transfers of ownership affected on the records of DTC and its participants pursuant to rules and procedures adopted by DTC and its participants. The winning bidder, as a condition to delivery of the Bonds, shall be required to deposit the Bond certificates with DTC, registered in the name of Cede & Co. Principal of and interest on the Bonds will be payable to DTC or its nominee as registered owner of the Bonds. Transfer of principal and interest payments to participants of DTC will be the responsibility of DTC; transfer of principal and interest payments to beneficial owners by participants of DTC will be the responsibility of such participants and other nominees of beneficial owners. Neither the Town nor the Paying Agent will be responsible or liable for maintaining, supervising or reviewing the records maintained by DTC, its participants or persons acting through such participants. The legality of the Bonds will be approved by Devine, Millimet & Branch, Professional Association, Manchester, New Hampshire, whose opinion will be furnished to the original purchaser without charge. The original opinion of Bond Counsel and copies of the supporting documents incident to the Bonds will be filed with UniBank Fiscal Advisory Services, Inc., Whitinsville, Massachusetts, where they may be inspected. Electronic proposals will be submitted through i-deal. If any provisions in this Notice of Sale conflict with information provided by i-deal, this Notice of Sale shall control. Further information about i-deal, including any fees charged, may be obtained from i-deal at (212) The Town assumes no responsibility or liability for bids submitted through i-deal. An electronic bid made in accordance with this Notice of Sale shall be deemed an irrevocable offer to purchase the Bonds in accordance with the terms provided in this Notice of Sale and shall be binding upon the bidder as if made by a signed and sealed written bid delivered to the Town. Other bids, including bids by delivered telegram, should be sealed, marked "Proposal for Bonds" and addressed to Ms. Janet K. Smith, Treasurer, Town of Tewksbury, c/o UniBank Fiscal Advisory Services, Inc., 49 Church St., Whitinsville, Massachusetts Proposals delivered as specified will be accepted. Blank bid forms with signature may be sent to UniBank Fiscal Advisory Services, Inc. or faxed to (508) prior to submitting the bids, with actual bids telephoned to (508) at least one-half hour prior to the 11:00 a.m. (local time) sale. UniBank Fiscal Advisory Services, Inc. will act as agent for the bidder in submitting the bid but neither UniBank Fiscal Advisory Services, Inc., nor the Town is responsible for any errors with respect to bids submitted in this manner. A good faith deposit is not required. Bidders shall state the rate or rates of interest per annum which the Bonds are to bear in a multiple of 1/8th or 1/20th of 1% but shall not state (a) more than one interest rate for any Bonds having a like maturity, and (b) any interest rate which exceeds the interest rate stated for any other Bonds by more than 3%. No bid of less than $21,642,000 plus accrued interest to date of delivery will be considered. As between proposals which comply with this Notice of Sale, the award will be to the bidder who offers to purchase all the Bonds at the lowest net effective interest rate to the Town. Such interest rate shall be determined on a true interest cost (TIC) basis, which shall mean that rate which, as of December 15, 2009 discounts semi-annually all future payments on account of principal and interest to the price bid, not including iv

7 interest accrued to the date of delivery, which accrued interest shall be paid by the successful bidder. The award is subject to approval by the Board of Selectmen. The Town has not contracted for the issuance of any policy of municipal bond insurance for the Bonds. If the Bonds qualify for the issuance of any such policy or commitment therefore, any purchase of such insurance or commitment shall be at the sole option and expense of the bidder. Proposals shall not be conditioned upon the issuance of any such policy or commitment. Any failure of the Bonds to be so insured or of any such policy or commitment to be issued shall not in any way relieve the purchaser of the contractual obligations arising from the acceptance of a proposal for the purchase of the Bonds. Should the successful bidder purchase municipal bond insurance, all expenses associated with such policy or commitment will be borne by the bidder, except for the fee paid to Standard & Poor s Ratings Services for the rating on the Bonds. Any such fee paid to Standard & Poor s Ratings Services would be borne by the Town. It shall be a condition to the obligation of the successful bidder to accept delivery of and pay for the Bonds that the bidder shall be furnished, without cost, with (a) the approving opinion of the firm of Devine, Millimet & Branch, Professional Association, substantially in the form of Appendix C of the Preliminary Official Statement dated November 25, 2009, included herein, (see "Tax Exemption" and Appendix C in the Preliminary Official Statement), (b) a certificate in form satisfactory to said firm dated as of the date of delivery of the Bonds and receipt of payment therefore to the effect that there is no litigation pending or, to the knowledge of the signers thereof, threatened affecting the validity of the Bonds or the power of the Town to levy and collect taxes to pay them, (c) a certificate of the Town Treasurer to the effect that, to the best of her knowledge and belief, both as of the date of sale and of the date of delivery of the Bonds, the Preliminary Official Statement referred to below does not contain any untrue statement of a material fact and does not omit to state a material fact necessary to make the statements made therein, in the light of the circumstances under which they were made, not misleading, and (d) a Continuing Disclosure Certificate to be dated as of the date of the Bonds and incorporated by reference in the Bonds. It is anticipated that CUSIP identification numbers will be printed on the Bonds, but neither the failure to print such numbers on any Bond, nor any error with respect thereto shall constitute cause for a failure or refusal by the purchaser thereof to accept delivery of and pay for the Bonds. All expenses in relation to the printing of CUSIP numbers on the Bonds shall be paid for by the Town; provided, however, that the Town assumes no responsibility for any CUSIP Service Bureau or other charge that may be imposed for the assignment of such numbers. The Bonds will be designated as "qualified tax-exempt obligations" for purposes of Section 265(b)(3) of the Internal Revenue Code of 1986, as amended. Accordingly, a deduction will be allowed to a financial institution for eighty percent of its interest expense allocable to the Bonds. Rule 15c2-12 (the Rule ) under the Securities Exchange Act of 1934, as amended, provides that underwriters may not purchase or sell municipal securities unless the issuer of the municipal securities undertakes to provide continuing disclosure with respect to those securities, subject to certain exemptions not applicable to the Bonds. The Town will covenant, at the time of delivery of the Bonds, to provide continuing disclosure consistent with the terms of the Rule, as provided in a Continuing Disclosure Certificate to be dated as of the date of the Bonds and incorporated by reference in the Bonds. The Bonds, in definitive form, will be delivered to the purchaser at The Depository Trust Company, or its custodial agent, on or about December 21, 2009, against payment in federal reserve funds. v

8 Additional information concerning the Town and the Bonds is contained in the Preliminary Official Statement dated November 25, 2009, to which prospective bidders are directed. The Preliminary Official Statement is provided for informational purposes only and is not a part of this Notice of Sale. Such Preliminary Official Statement is deemed final by the Town except for the omission of the reoffering prices, interest rates and any other items of the Bonds depending on such matters and the identity of the underwriters. Copies of the Preliminary Official Statement and a suggested form of proposal for the Bonds may be obtained from Clark H. Rowell, Vice President, UniBank Fiscal Advisory Services, Inc., 49 Church St., Whitinsville, Massachusetts, telephone (508) Within seven (7) business days following award of the Bonds in accordance herewith, 100 copies of a Final Official Statement will be furnished to the successful bidder. Additional copies may be obtained at the purchaser's expense. The right is reserved to reject any or all bids and to reject any bid not complying with this Notice of Sale and, so far as permitted by law, to waive any irregularity with respect to any proposal. Dated: November 25, 2009 TOWN OF TEWKSBURY MASSACHUSETTS /s/ Janet K. Smith Treasurer vi

9 OFFICIAL STATEMENT TOWN OF TEWKSBURY Massachusetts $21,642,000 GENERAL OBLIGATION MUNICIPAL PURPOSE LOAN OF 2009 BONDS INTRODUCTION This Official Statement is provided for the purpose of presenting certain information relating to the Town of Tewksbury, Massachusetts (the "Town") in connection with the sale of the $21,642,000 General Obligation Municipal Purpose Loan of 2009 Bonds dated December 15, 2009, (the "Bonds") of the Town. The Bonds are being offered for sale at public bidding and a Notice of Sale dated November 25, 2009, has been furnished to prospective bidders. Reference is hereby made to the Notice of Sale for the terms and conditions of bidding. The Bonds will be general obligations of the Town for which its full faith and credit are pledged. They are not guaranteed by The Commonwealth of Massachusetts (the "Commonwealth") or any other entity. The security for the Bonds is more fully described under the caption Source of Payment and Remedies herein. See also the caption Opinion of Bond Counsel. Questions regarding information contained in this Official Statement or other matters should be directed to Janet K. Smith, Town Treasurer, (978) , Clark H. Rowell, Vice President, UniBank Fiscal Advisory Services, Inc. (508) , or David H. Barnes, Devine, Millimet & Branch, Professional Association (603) The information contained herein has been obtained from the sources indicated or from the Town. 1

10 PART I THE BONDS DESCRIPTION OF THE BONDS The Bonds will be dated December 15, 2009 and will mature on January 15 of the years and in the principal amounts as follows: Due January 15 Principal Amount Due January 15 Principal Amount 2011 $ 692, $1,230, , ,270, , ,310, , ,350, , ,390, , ,435, , ,470, , ,505, , ,480, , ,510,000 The Bonds will bear interest at the rate or rates per annum as specified by the successful bidder. The Bonds maturing in the years 2011 through 2018, inclusive, are not subject to optional redemption prior to their stated dates of maturity; the Bonds may be subject to mandatory redemption as provided herein. The Bonds maturing in the years 2019 through 2030, inclusive, are subject to optional redemption prior to maturity and may be subject to mandatory redemption as provided herein. See Redemption Prior to Maturity herein. Principal and semi-annual interest will be paid by U.S. Bank National Association, Boston, Massachusetts, or its successor acting as paying agent (the "Paying Agent"). Interest from the date of the Bonds will be payable on July 15, 2010, and semi-annually thereafter on each January 15 and July 15. So long as The Depository Trust Company ("DTC"), New York, New York or its nominee, Cede & Co., is the Bondowner, such payments of principal and interest on the Bonds will be made directly to DTC. Disbursement of such payments to the DTC Participants is the responsibility of DTC and disbursement of such payments to the Beneficial Owners is the responsibility of the DTC Participants and Indirect Participants, as more fully described herein. The Bonds are issuable only in fully registered form without coupons, and, when issued, will be registered in the name of Cede & Co., as Bondowner and nominee for DTC. DTC will act as securities depository for the Bonds. Purchases of the Bonds will be made in book-entry form, in the denomination of $5,000 or any integral multiple thereof, with one denomination of $2,000 of the Bonds which will mature in Purchasers will not receive certificates representing their interest in Bonds purchased. So long as Cede & Co. is the Bondowner, as nominee of DTC, references herein to the Bondowners or registered owner shall mean Cede & Co., as aforesaid, and shall not mean the Beneficial Owners (as defined herein) of the Bonds. (See Book-Entry Transfer System herein.) RECORD DATE The record date for each payment of interest is the last business day of the month preceding the interest payment date, provided that, under certain circumstances, the Paying Agent may establish a special record date. The special record date may not be more than twenty (20) days before the date set for payment. The Paying 2

11 Agent will mail notice of a special record date to the bondholders at least ten (10) days before the special record date. BOOK-ENTRY TRANSFER SYSTEM The Depository Trust Company ("DTC"), New York, NY, will act as securities depository for the Bonds. The Bonds will be issued in fully registered form and registered in the name of Cede & Co. (DTC's partnership nominee) or such other name as may be requested by an authorized representative of DTC. One-fully registered certificate will be issued for each maturity of the Bonds, each in the aggregate principal amount of such maturity, and will be deposited with DTC. DTC, is the world's largest depository, a limited-purpose trust company organized under the New York Banking Law, a "banking organization" within the meaning of the New York Banking Law, a member of the Federal Reserve System, a "clearing corporation" within the meaning of the New York Uniform Commercial Code, and a "clearing agency" registered pursuant to the provisions of Section 17A of the Securities Exchange Act of DTC holds and provides asset servicing for over 3.5 million issues of U.S. and non-u.s. equity issues, corporate and municipal debt issues, and money market instruments from over 100 countries that DTC's participants ("Direct Participants") deposit with DTC. DTC also facilitates the post-trade settlement among Direct Participants of sales and other securities transactions in deposited securities, through electronic computerized book-entry transfers and pledges between Direct Participants' accounts. This eliminates the need for physical movement of securities certificates. Direct Participants include both U.S. and non-u.s. securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations. DTC is a wholly-owned subsidiary of The Depository Trust & Clearing Corporation ("DTCC"). DTCC is the holding company for DTC, National Securities Clearing Corporation and Fixed Income Clearing Corporation, all of which are registered clearing agencies. DTCC is owned by the users of its regulated subsidiaries. Access to the DTC system is also available to others such as both U.S. and non-u.s. securities brokers and dealers, banks, trust companies, and clearing corporations that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly ("Indirect Participants"). DTC has Standard & Poor's highest rating: AAA. The DTC Rules applicable to its Participants are on file with the Securities and Exchange Commission. More information about DTC can be found at and Purchases of securities, including the Bonds, under the DTC system must be made by or through Direct Participants, which will receive a credit for such securities on DTC's records. The ownership interest of each actual purchaser of each security ("Beneficial Owner") is in turn to be recorded on the Direct and Indirect Participants' records. Beneficial Owners will not receive written confirmation from DTC of their purchases. Beneficial Owners are, however, expected to receive written confirmations providing details of the transaction, as well as periodic statements of their holdings, from the Direct or Indirect Participant through which the Beneficial Owner entered into the transaction. Transfers of ownership interests in the securities are to be accomplished by entries made on the books of Direct and Indirect Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive certificates representing their ownership interests in the securities, except in the event that use of the book-entry system for the securities is discontinued. To facilitate subsequent transfers, securities deposited by Direct Participants with DTC are registered in the name of DTC's partnership nominee, Cede & Co. or such other name as requested by an authorized representative of DTC. The deposit of securities with DTC and their registration in the name of Cede & Co. or such other DTC nominee do not effect any change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the securities; DTC's records reflect only the identity of the Direct Participants to whose accounts such securities are credited, which may or may not be the Beneficial Owners. The Direct and Indirect Participants will remain responsible for keeping account of their holdings on behalf of their customers. 3

12 Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time. Redemption notices shall be sent to DTC. If less than all of a maturity is being redeemed, DTC s practice is to determine by lot the amount of the interest of each Direct Participant in such maturity to be redeemed. Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent to vote with respect to securities held by DTC unless authorized by a Direct Participant in accordance with DTC's MMI Procedures. Under its usual procedures, DTC mails an Omnibus Proxy to the issuer of such securities as soon as possible after the record date. The Omnibus Proxy assigns Cede & Co.'s consenting or voting rights to those Direct Participants to whose accounts the securities are credited on the record date (identified in a listing attached to the Omnibus Proxy). Principal and interest payments on securities held by DTC will be made to Cede & Co., or such other nominee as may be requested by an authorized representative of DTC. DTC's practice is to credit Direct Participants' accounts upon DTC's receipt of funds and corresponding detail information from the issuer of the securities or its paying agent, on payable date in accordance with their respective holdings shown on DTC's records. Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices, as is the case with securities held for the accounts of customers in bearer form or registered in "street name," and will be the responsibility of such Participant and not of DTC (nor its nominee), the issuer of the securities or its paying agent, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of principal and interest to Cede & Co. (or such other nominee as may be requested by an authorized representative of DTC) is the responsibility of the issuer of the securities or its paying agent, disbursement of such payments to Direct Participants will be the responsibility of DTC, and disbursement of such payments to the Beneficial Owners will be the responsibility of Direct and Indirect Participants. DTC may discontinue providing its services as depository with respect to the Bonds at any time by giving reasonable notice to the Town or its Paying Agent. Under such circumstances, in the event that a successor depository is not obtained, physical certificates are required to be printed and delivered to the Beneficial Owners. The Town may decide to discontinue use of the system of book-entry transfers through DTC (or a successor securities depository). In that event, physical certificates will be printed and delivered to the Beneficial Owners. The information in this section concerning DTC and DTC's book-entry system has been obtained from sources that the Town believes to be reliable, but the Town takes no responsibility for the accuracy thereof. DTC PRACTICES The Town can make no assurances that DTC, Direct Participants, Indirect Participants or other nominees of the Beneficial Owners of the Bonds will act in a manner described in this Official Statement. DTC is required to act according to rules and procedures established by DTC and its participants which are on file with the Securities and Exchange Commission. 4

13 AUTHORIZATION AND USE OF PROCEEDS OF THE BONDS The Bonds are authorized as follows: $18,000,000 pursuant to Section 8(15) of Chapter 44 of the Massachusetts General Laws and a vote of the Town on May 6, 2008, for the purpose of designing and constructing sewerage improvements in the Town. The Town is currently in the process of constructing sewerage improvements that would make collection and treatment services available for the entire Town. The Town authorized $80,600,000 for this purpose in 2002; this is an additional authorization to meet the total funding requirements of the project. Debt service on this portion of the Bonds is expected to be paid from user fees. $ 1,500,000 pursuant to Section 8(7A) of Chapter 44 of the Massachusetts General Laws and votes of the Town on May 5, 2008, and May 4, 2009, for the purpose of purchasing and installing new water meters in the Town. Debt service on this portion of the Bonds is expected to be paid from user fees. $ 1,200,000 pursuant to Section 8(15) of Chapter 44 of the Massachusetts General Laws and a vote of the Town on May 7, 2007, for the purpose of designing and constructing sewage pump stations in the Town. Debt service on this portion of the Bonds is expected to be paid from user fees. $ 475,000 pursuant to Section 8(4) of Chapter 44 of the Massachusetts General Laws and a vote of the Town on May 4, 2009, for the purpose of making major repairs to an existing water storage tank in the Town. Debt service on this portion of the Bonds is expected to be paid from user fees. $ 200,000 pursuant to Section 7(3A) of Chapter 44 of the Massachusetts General Laws and a vote of the Town on May 4, 2009, for the purpose of making major repairs to the Town s Department of Public Works facility. $ 187,000 pursuant to Section 8(4) of Chapter 44 of the Massachusetts General Laws and a vote of the Town on May 7, 2007, for the purpose of constructing additional water system improvements in the Town. Debt service on this portion of the Bonds is expected to be paid from user fees. $ 80,000 pursuant to Section 8(5) of Chapter 44 of the Massachusetts General Laws and votes of the Town on May 6, 2008, and May 4, 2009, for the purpose of purchasing and installing fire hydrants in the Town. The proceeds of the Bonds will be used to redeem $18,087,000 bond anticipation notes (of a total of $18,487,000, the $400,000 balance of which will be renewed as notes) outstanding against these authorizations, dated December 23, 2008, and payable December 23, REDEMPTION PRIOR TO MATURITY Bonds maturing in the years 2011 through 2018, inclusive, are not subject to optional redemption prior to their stated dates of maturity. Bonds maturing on and after January 15, 2019, are subject to redemption prior to maturity, at the option of the Town, on and after January 15, 2018, either in whole or in part at any time, and if in part by lot within a maturity at par plus accrued interest to the date set for redemption. If any Term Bonds are specified by the successful bidder for the Bonds, the Bonds will be subject to mandatory redemption on January 15 in each year or years immediately prior to the stated maturity of such Term Bonds 5

14 (the particular Bonds of such maturity to be redeemed to be selected by lot) as indicated on the cover page of the Preliminary Official Statement at the principal amount thereof plus accrued interest to the redemption date. So long as DTC is the registered owner of the Bonds, notice of any redemption of Bonds, prior to their maturities, specifying the Bonds (or the portions thereof) to be redeemed and the place or places of payment shall be mailed to DTC not more than 60 days nor less than 30 days prior to the redemption date. Any failure on the part of DTC to notify the DTC Participants of the redemption or failure on the part of the DTC Participants or of a nominee of a Beneficial Owner (having received notice from a DTC Participant or otherwise) to notify the Beneficial Owner shall not affect the validity of the redemption. If moneys for the redemption are held by the Paying Agent on the redemption date and if notice of the redemption shall have been duly mailed, then from and after the redemption date interest on the Bonds (or portions thereof) called for redemption shall cease to accrue. SOURCE OF PAYMENT AND REMEDIES General obligation bonds and notes of a Massachusetts city or town constitute a pledge of its full faith and credit. To the extent not paid from other sources, the Bonds are payable from ad valorem taxes which may be levied upon all property within the Town and taxable by it subject to the limitations imposed by Chapter 59, Section 21C of the General Laws (Proposition 2½). Payment is not limited to a particular fund or revenue source. Except for "qualified bonds" as described under Indebtedness below, no provision is made by the Massachusetts statutes for priorities among general obligations, although the use of certain moneys may be restricted. A city or town may vote to exempt from the statutory limit (see Property Tax Limitation below) the amounts required for payment of debt service on all bonds and notes outstanding as of November 4, 1980 (the date of passage of Proposition 2½) and/or specific bonds or notes issued or to be issued since that date. The Town has voted to exclude the debt service on $15,337,125 of currently outstanding bonds from the limits of Proposition 2½. The Massachusetts statutes direct the municipal assessors to include annually in the tax levy for the next fiscal year "all debt and interest charges matured and maturing during the next fiscal year and not otherwise provided for (and) all amounts necessary to satisfy final judgments." Specific provision is also made for including payments of notes in anticipation of federal aid or state reimbursement in the next tax levy if the aid or reimbursement is no longer forthcoming. Except for taxes on the increased value of certain property in designated development districts which may be pledged for the payment of debt service on bonds issued to finance economic development projects within such districts, no provision is made for a lien on any portion of the tax levy to secure bonds or notes (or judgments on bonds or notes) in priority to other claims. Provision is made, however, for borrowing to pay judgments rendered after the tax levy has been fixed, subject to the General Debt Limit. With the approval of the State Director of Accounts, judgments may also be paid from available funds without appropriation and included in the next tax levy unless other provision is made. In the opinion of Bond Counsel, Massachusetts cities and towns are subject to suit on their general obligation bonds and notes and courts of competent jurisdiction have power in appropriate proceedings to order payment of a judgment on the bonds or notes from lawfully available funds or, if necessary, to order the city or town to take lawful action to obtain the required money, including the raising of it in the next annual tax levy. In exercising their discretion as to whether to enter such an order, the courts could take into account all relevant factors including the current operating needs of the city or town and the availability and adequacy of other remedies. 6

15 State grants and distributions may, in some circumstances, be unavailable to pay general obligation bonds and notes of a city or town in that the State Treasurer is empowered to deduct any sums due and payable by the city or town to the Commonwealth, including any unpaid assessments for costs of any public transportation authority. Enforcement of a claim for payment of principal of or interest on general obligation bonds or notes would also be subject to the applicable provisions of Federal bankruptcy laws and to the provisions of other statutes if any, hereafter enacted by the Congress or the State legislature extending the time for payment or imposing other constraints upon enforcement insofar as the same may be constitutionally applied. Massachusetts s laws do not presently authorize the filing of bankruptcy proceedings by cities and towns. USE OF STATE DISTRIBUTIONS TO PAY DEBT SERVICE Section 19A of Chapter 44 of the General Laws provides a mechanism by which any sums payable (or estimated to become payable during the then current fiscal year) from the State treasury to any city, town or district, including a regional school district (hereinafter sometimes called the "issuer") may be diverted directly to the paying agent for bonds or notes of the issuer if it is determined that the issuer is unable, or is likely to be unable, to pay principal or interest, or both, on those bonds and notes when due. Sums paid to the paying agent are held by it in trust solely for payment of principal and interest and are exempt under the act from any levy, taking, sequestering or other application. The mechanism is activated when the treasurer of the issuer certifies to the manager or mayor of a city, the selectmen of a town, or the committee or commissioners of a district that it appears to the treasurer that the issuer is, or is likely to be, unable to pay the principal or interest on any bonds or notes when due. If, after investigation, such official or body agrees, he or they must certify the inability or likely inability to the State Commissioner of Revenue. The Commissioner of Revenue must undertake an investigation of the circumstances and, if the Commissioner concurs, the amount of the shortfall and the name of the paying agent is certified to the State Treasurer who proceeds as described herein. The act does not provide for the initiation of the process by any party other than the issuer. If the sums available to be paid to the paying agent from the State treasury in any fiscal year are not sufficient to cover the entire amount of principal and interest due, payment to the paying agent must be made as soon as possible in the following year from sums otherwise payable to the issuer in such year. The sums payable from the State treasury to the issuer are determined or estimated on the basis of the total state distribution to the issuer, after deduction of any sums owed the State by the issuer and deduction of charges to and assessments made against the issuer under State law. The State has not agreed to maintain any level of distribution to cities, towns, and districts and all such distributions are subject to annual appropriation by the State legislature. OPINION OF BOND COUNSEL A copy of the legal opinion of the firm of Devine, Millimet & Branch, Professional Association of Manchester, New Hampshire, (see Appendix C Proposed Form of Legal Opinion ) will be attached to the Bonds except that the date of the opinion will be omitted from the printed copy. The opinion will be to the effect that the Bonds are valid general obligations of the and the principal of and interest on the Bonds are payable from ad valorem taxes which may be levied upon all property within the territorial limits of the Town and taxable by it, subject to the limitations imposed by Chapter 59, Section 21C of the 7

16 General Laws (Proposition 2½). The opinion will be dated and given on and will speak only as of the date of original delivery of the Bonds to the original purchaser. Bond Counsel are not passing upon and do not assume responsibility for the accuracy or adequacy of any statements made in this Official Statement other than matters expressly set forth as their opinion and they make no representation that they have independently verified the same. TAX EXEMPTION In the opinion of Devine, Millimet & Branch, Professional Association, Bond Counsel to the Town ( Bond Counsel ), based upon an analysis of existing laws, regulations, rulings, and court decisions, and assuming, among other matters, compliance with certain covenants, interest on the Bonds is excluded from gross income for federal income tax purposes under Section 103 of the Internal Revenue Code of 1986 (the Code ). Bond Counsel is of the further opinion that interest on the Bonds is not a specific preference item for purposes of the federal individual or corporate alternative minimum taxes and that such interest is not included in adjusted current earnings when calculating corporate alternative minimum taxable income. In the opinion of Bond Counsel, the Bonds are qualified tax-exempt obligations for purposes of Section 265(b)(3) of the Code. Accordingly, in the opinion of Bond Counsel, a deduction will be allowed to a financial institution for eighty percent of interest expense allocable to the Bonds. The foregoing reflects the enactment of the American Recovery and Reinvestment Act of 2009 which includes provisions that modify the treatment under the alternative minimum tax of interest on certain bonds of state and local government entities and that modify Section 265(b)(3) of the Code. Bond Counsel expresses no opinion regarding any other federal tax consequences arising with respect to the ownership or disposition of, or the accrual or receipt of interest on, the Bonds. The Code imposes various requirements relating to the exclusion from gross income for federal income tax purposes of interest on obligations such as the Bonds. Failure to comply with these requirements may result in interest on the Bonds being included in gross income for federal income tax purposes, possibly from the date of original issuance of the Bonds. The Town has covenanted to comply with these requirements to ensure that interest on the Bonds will not be included in federal gross income. The opinion of Bond Counsel assumes compliance with these requirements. Bond Counsel is also of the opinion that, under existing law, interest on the Bonds is exempt from Massachusetts personal income taxes, and the Bonds are exempt from Massachusetts personal property taxes. Bond Counsel has not opined as to other Massachusetts tax consequences arising with respect to the Bonds. Prospective purchasers of the Bonds should be aware, however, that the Bonds are included in the measure of Massachusetts estate and inheritance taxes, and the Bonds and the interest thereon are included in the measure of certain Massachusetts corporate excise and franchise taxes. Bond Counsel has not opined as to the taxability of the Bonds or the income therefrom under the laws of any state other than Massachusetts. A complete copy of the proposed form of opinion of Bond Counsel is set forth in Appendix C hereto. To the extent the issue price of any maturity of the Bonds is less than the amount to be paid at maturity of such Bonds (excluding amounts stated to be interest and payable at least annually over the term of such Bonds), the difference constitutes original issue discount, the accrual of which, to the extent properly allocable to each owner thereof, is treated as interest on the Bonds which is excluded from gross income for federal income tax purposes and is exempt from Massachusetts personal income taxes. For this purpose, the issue price of a particular maturity of the Bonds is the first price at which a substantial amount of such maturity of the Bonds is sold to the public (excluding bond houses, brokers, or similar persons or organizations acting in the capacity of underwriters, placement agents or wholesalers). The original issue discount with respect to any maturity of the Bonds accrues daily over the term to maturity of such Bonds on the basis of a constant interest rate compounded semiannually (with straight-line 8

17 interpolations between compounding dates). The accruing original issue discount is added to the adjusted basis of such Bonds to determine taxable gain or loss upon disposition (including sale, redemption, or payment on maturity) of such Bonds. Holders of the Bonds should consult their own tax advisors with respect to the tax consequences of ownership of Bonds with original issue discount, including the treatment of purchasers who do not purchase such Bonds in the original offering to the public at the first price at which a substantial amount of such Bonds is sold to the public. Bonds purchased, whether at original issuance or otherwise, for an amount greater than the stated principal amount to be paid at maturity of such Bonds, or, in some cases, at the earlier redemption date of such Bonds ( Premium Bonds ), will be treated as having amortizable bond premium for federal income tax purposes and Massachusetts personal income tax purposes. No deduction is allowable for the amortizable bond premium in the case of obligations, such as the Premium Bonds, the interest on which is excluded from gross income for federal income tax purposes. However, a Bondholder s basis in a Premium Bond will be reduced by the amount of amortizable bond premium properly allocable to such Bondholder. Holders of Premium Bonds should consult their own tax advisors with respect to the proper treatment of amortizable bond premium in their particular circumstances. Bond Counsel has not undertaken to determine (or to inform any person) whether any actions taken (or not taken) or events occurring (or not occurring) after the date of issuance of the Bonds may adversely affect the value of, or the tax status of interest on, the Bonds. Further, no assurance can be given that any pending, proposed or future legislation, including amendments to the Code, if enacted into law, or any regulatory or administrative development with respect to existing law, will not adversely affect the value of, or the tax status of interest on, the Bonds. Prospective holders of the Bonds are urged to consult their own tax advisors with respect to proposals to restructure the federal income tax. Although Bond Counsel is of the opinion that interest on the Bonds is excluded from gross income for federal income tax purposes and is exempt from Massachusetts personal income taxes, the ownership or disposition of, or the accrual or receipt of interest on, the Bonds may otherwise affect the federal or state tax liability of a Bondholder. Among other possible consequences of ownership or disposition of, or the accrual or receipt of interest on, the Bonds, the Code requires recipients of certain social security and certain railroad retirement benefits to take into account receipts or accruals of interest on the Bonds in determining the portion of such benefits that are included in gross income. The nature and extent of all such other tax consequences will depend upon the particular tax status of the Bondholder or the Bondholder s other items of income or deduction. Bond Counsel expresses no opinion regarding any such other tax consequences, and Bondholders should consult with their own tax advisors with respect to such consequences. RATING Application has been made to Standard & Poor s Ratings Services for a rating on the Bonds. Such rating, if obtained, will reflect only the rating agency s view and will be subject to revision or withdrawal, which could affect the market price of the Bonds. CLOSING CERTIFICATES At the time of original delivery of the Bonds, there will also be furnished to the successful bidder a certificate of certain officers of the Town stating that there is no litigation then pending, or to their knowledge threatened, affecting the validity of the Bonds or the power of the Town to levy and collect taxes to pay them. There will also be furnished, at that time, a certificate of the Town Treasurer to the effect that, to the best of her knowledge and belief, both as of the date of sale and of the date of delivery of the Bonds, this Official Statement does not contain any untrue statement of a material fact and does not omit to state a material fact 9

18 necessary to make the statements made therein, in the light of the circumstances under which they were made, not misleading. CONTINUING DISCLOSURE In order to assist the Underwriters in complying with Rule 15c2-12(b)(5) promulgated by the Securities and Exchange Commission (the Rule ), the Town will covenant for the benefit of owners of the Bonds to provide, certain financial information and operating data relating to the Town by not later than 270 days after the end of each fiscal year, (the Annual Report ), and to provide notices of the occurrence of certain enumerated events, if material. The covenants will be contained in a Continuing Disclosure Certificate, the proposed form of which is provided in Appendix D. The Certificate will be executed by the signers of the Bonds, and incorporated by reference in the Bonds. The Town has never failed to comply in any material respect with any previous undertakings to provide financial information or notices of material events in accordance with the Rule. 10

19 PART II THE TOWN The Town of Tewksbury was incorporated in 1734 and is located in Middlesex County approximately 21 miles north of Boston. The Town covers an area of approximately 21 square miles and is bordered on the north by the Merrimack River, northeast by the Town of Andover, southeast by the Town of Wilmington, southwest by the Town of Billerica and by the City of Lowell on the west. GOVERNING BODIES AND OFFICERS Local legislative decisions are made by an open town meeting consisting of all registered voters in the Town. Subject to the legislative decisions made by Town Meeting, the affairs of the Town are generally administered by a board of five selectmen elected for staggered three-year terms on an at-large basis and assisted by a Town Manager. Local taxes are assessed by a board of three assessors appointed for indefinite terms. Local school affairs are administered by a school committee of five persons elected for staggered three-year terms. The following are the principal executive officers of the Town: Manner of Selection Term Office Name and Term Expires Selectmen Todd R. Johnson, Chairman Elected/3 years 2010 Anne Marie Stronach, Vice Chairman Elected/3 years 2010 Scott Wilson, Clerk Elected/3 years 2012 Douglas W. Sears Elected/3 years 2011 David H. Gay Elected/3 years 2012 Interim Town Manager John J. Kelley, Jr. Appointed by Board of Selectmen (1) Finance Director/ Town Auditor Donna M. Walsh Appointed by Town Manager/ 3 years 2010 Town Treasurer Janet K. Smith Appointed by Town Manager Indefinite Tax Collector Lorraine Langlois Appointed by Town Manager Indefinite Accountant Donna J. Gill Appointed by Town Manager Indefinite Town Clerk Mary-Ann O Brien Nichols Elected/3 years 2011 Town Counsel Charles Zaroulis, Esq. Appointed/1 year 2010 (1) Interim Town Manager is to serve in the position until a new permanent Town Manager takes office. SERVICES The Town provides general governmental services for the territory within its boundaries, including police and fire protection, public education in grades kindergarten through 12, water and sewer services, streets, parks and recreation. Students in grades 9 through 12 may also attend Shawsheen Valley Regional Vocational Technical High School located in the bordering Town of Billerica. Commuter rail service is available in the bordering municipalities of the City of Lowell to the west and the Towns of Billerica and Wilmington to the south. Interstate Routes 495 (the outer belt) and 93 and State Route 3 provide excellent highway facilities for competitive freight service locally and to long distance points. 11

20 Limousine service is available to Logan Airport in Boston and to the airport in Manchester, New Hampshire. Lowell Regional Transit Authority provides public bus transportation to surrounding communities. Electricity and natural gas are supplied by National Grid. Coal is available in nearby Lowell and LP gas may be obtained in numerous surrounding towns. The Tewksbury Housing Authority presently operates and manages 234 housing units for elderly, handicapped, and eligible low-income families. Legislation enacted in 1997 abolished the county governments of Franklin and Middlesex counties as of July 1, 1997, with their assets, functions, debts and other obligations being assumed by the Commonwealth. The abolishment of the Middlesex County government was in part response to a default by the County in the payment of general obligation notes. The legislation also abolished the county governments of Hampden and Worcester counties as of July 1, Legislation enacted in 1998 abolished the county governments of Hampshire, Essex, and Berkshire counties as of January 1, 1999, July 1, 1999, and July 1, 2000, respectively. The legislation also required the state secretary for administration and finance to establish a plan to recover the Commonwealth s expenditures for the liabilities and other debts assumed and paid by the Commonwealth on behalf of an abolished county. Unless these provisions are changed by further legislation, the state treasurer shall assess upon each city and town within the jurisdiction of an abolished county an amount equal to the county tax paid by each such city and town for the fiscal year immediately prior to the abolishment of the county (or two years prior in the case of Essex County) until such expenditures by the Commonwealth are recovered. It is possible that similar legislation will be sought to provide for the abolishment of county governments in other counties. INDEBTEDNESS Bonds and notes are generally authorized on behalf of the Town by two-thirds vote of the open Town meeting. Borrowing for certain purposes requires state administrative approval. Temporary loans in anticipation of certain state and county reimbursements are generally authorized by majority vote but provision is made for temporary loans in anticipation of current revenues and State and Federal grants and for other purposes in certain circumstances without Town meeting authorization. The general debt limit, which applies at the time debt is authorized, consists of a normal debt limit and a double debt limit. The normal debt limit is five percent of the valuation of taxable property as last equalized by the Department of Revenue of the Commonwealth. The present debt limit of the Town, based on the 2008 equalized valuation, is $225,648,685. The Town can authorize debt up to this amount without State approval. The Town can authorize debt up to twice this amount (the double debt limit) with the approval of the Municipal Finance Oversight Board. There are many categories of debt which are exempt from and do not count against either the normal debt limit or the double debt limit. Among others, these exempt categories include temporary loans in anticipation of current revenues, temporary loans in anticipation of grants and reimbursements, certain school bonds and sewer bonds, and, subject to special debt limits, bonds for water, urban renewal and electric and gas purposes. Industrial revenue bonds not backed by the credit of the Town are also exempt and are not reflected in any statement of indebtedness herein. 12

21 TYPES OF OBLIGATIONS General Obligations. Massachusetts cities and towns are authorized to issue general obligation indebtedness of these types: Serial Bonds and Notes. These are generally required to be payable in equal or diminishing annual principal amounts beginning no later than the end of the next fiscal year commencing after the date of issue and ending within the terms permitted by law. Level debt service is permitted for bonds or notes issued for certain purposes, including self-supporting enterprise purposes, certain state-aided school projects and certain community preservation and open space projects as well as for those projects for which debt service has been exempted from property tax limitations. The principal amount of certain economic development bonds supported by tax increment financing may be payable in equal, diminishing or increasing amounts beginning within 5 years of the date of issue. The maximum terms of serial bonds and notes vary from one year to forty years, depending on the purpose of the issue. Most of the purposes are capital projects. They may be made callable and redeemed prior to their maturity, and a redemption premium may be paid. Refunding bonds or notes may be issued subject to the maximum term measured from the date of the original bonds or notes. Serial bonds may be issued as "qualified bonds" with the approval of the Municipal Finance Oversight Board, subject to such conditions and limitations (including restriction on future indebtedness) as may be required by the board. Qualified bonds may mature not less than 10 nor more than 30 years from their dates and are not subject to the amortization requirements described above. The State Treasurer is required to pay the debt service on qualified bonds and thereafter to withhold the amount of the debt service from state aid or other state payments. Administrative costs and any loss of interest income to the State are to be assessed upon the city or town. Bond Anticipation Notes. These must mature within two years of their original dates of issuance, but may be refunded from time to time for a period not to exceed five years from their original dates of issuance, provided that (except for notes issued for certain school projects that can be refunded for a period not to exceed seven years) for each year that the notes are refunded beyond the second year they must be paid in part from revenue funds in an amount at least equal to the minimum annual payment that would have been required if the bonds had been issued at the end of the second year. For certain school projects however, notes may be refunded from time to time for a period not to exceed seven years without having to pay any portion of the principal of the notes from revenue funds. The maximum term of bonds issued to refund bond anticipation notes is measured from the date of the original issue of the notes, except for bonds issued for such school projects. Revenue Anticipation Notes. These are issued to meet current expenses in anticipation of taxes and other revenues. They must mature within one year but, if payable in less than one year, may under statute be refunded from time to time up to one year from the original date of issue. Grant Anticipation Notes. These are issued for temporary financing in anticipation of federal grants and state reimbursements. They must generally mature within two years but may be refunded from time to time as long as the municipality remains entitled to the grant or reimbursement. Revenue Bonds. Cities and towns may issue revenue bonds for solid waste disposal facilities, for projects financed under the Commonwealth's Water Pollution Abatement or Drinking Water Revolving Loan Programs and for certain economic development projects supported by tax increment financing. In addition, cities and towns having electric departments may issue revenue bonds, and notes in anticipation of such bonds subject to the approval of the State Department of Telecommunications and Energy. The Town does not have an electric department. 13

22 DEBT (1) The following shows the direct debt to be outstanding as of December 15, 2009, including the Bonds: General Obligation Bonds: Within General Debt Limit (2) Sewers and Drains (3)(4) $ 4,911,834 Schools 4,920,000 Other Building 7,002,000 Athletic and Recreational Facilities 20,000 Streets Sidewalks & Parking 186,000 The Bonds 200,000 Architectural and Engineering Services 84,000 Total Within the General Debt Limit $ 17,323,834 Outside General Debt Limit: Sewer (4) $75,575,441 Schools 3,859,250 Water (4) 16,457,597 Other Outside General 80,000 The Bonds 21,442,000 Total Outside the General Debt Limit 117,414,288 Total General Obligation Bonds (5) $134,738,122 Temporary Loans in Anticipation of: Revenue $ 0 Bonds (6) 700,000 Grants 0 Total Temporary Loans 400,000 Total Direct Debt $135,138,122 (1) Principal amount only. Excludes lease and installment purchase obligations, overlapping debt, unfunded pension liability, and the Bonds. Includes the Refunded Bonds. (2) At the present time, the normal general debt limit is $225,648,685 and the double general debt limit is $451,297,370. (3) $2,127,910 (of an original par amount of $4,198,596) of the sewer debt has been issued through the Massachusetts Water Pollution Abatement Trust. The loan repayments are subsidized through the application of loan subsidy amounts received by the Trust for the benefit of the Town. This results in a 50% grant equivalency, or, effectively, a zero percent interest loan. (4) Sewer and water debt is self-supporting from user fees. (5) $15,337,125 of currently outstanding bonds has been excluded from the provisions of Proposition 2½. (6) Does not include $18,087,000 of a total of $18,487,000 bond anticipation notes maturing on December 23, 2009, of which $18,087,000 will be paid from the proceeds of the Bonds, and $400,000 will be renewed and $300,000 new money added to that amount. AUTHORIZED UNISSUED DEBT AND PROSPECTIVE FINANCINGS After the issuance of the Bonds, the Town will have a total of $7,521,000 authorized and unissued debt for the following purpose: $5,000,000 for the purpose of funding a portion of its pension obligation related to early retirement incentives provided in 2002 and The Town is currently determining whether to proceed with this borrowing. 14

23 $1,390,000 for the purpose of conducting a feasibility study for a new high school project. Preliminary estimated total cost for the project is $70,000,000, and the Town intends to apply to the Massachusetts School Building Authority for a grant that is expected to fund at least fifty-seven percent of the project costs. The project is expected to be presented for consideration by Town Meeting before the end of fiscal year The Town has issued $400,000 Bond Anticipation Notes, payable December 23, 2009, and will renew that amount and issue $300,000 new money at that time, to mature in fiscal The Town expects to permanently fund this authorization within the next two years. $ 520,000 for the purpose of constructing water system improvements on River Road. The Town expects to proceed with this project in fiscal year Debt service related to this authorization is expected to be paid from user fees. $ 400,000 for the purpose of constructing sewerage in the Town. This is the remainder of the authorization being funded by the Bonds. The Town has not determined whether is will need to borrow against this remaining authorization. $ 100,000 remaining of a total authorization of $300,000 to construct improvements to the Department of Public Works building in the Town. Of this authorization, $200,000 is included in the Bonds. The Town has not determined whether it will need the remaining authorization. $ 61,000 remaining authorization from the Michael Street Road reconstruction, which authorization the Town expects to rescind at a future Town Meeting. $ 50,000 remaining of a total authorization of $500,000 to construct a new water tank in the Town. Of this authorization, $250,000 is included in the Bonds. The Town expects to issue bonds for the remainder of this authorization in fiscal year BONDED DEBT vs. POPULATION, VALUATIONS AND INCOME As of June Amount (000 omitted)(1) $114,459 $104,938 $89,781 $60,714 $50,924 Per Capita (2) $3,874 $3,544 $3,032 $2,064 $1,749 Percent of Assessed Valuation (3) 2.84% 2.51% 2.12% 1.51% 1.34% Percent of Equalized Valuation (4) 2.54% 2.40% 2.06% 1.61% 1.35% Per Capita as a percent of Personal Income per Capita (2) 14.33% 13.11% 11.22% 7.64% 6.47% (1) Excludes lease and installment obligations, overlapping debt and unfunded pension liability. (2) Source: U.S. Department of Commerce, Bureau of the Census - Latest applicable actuals or estimates. (3) Source: Board of Assessors - Assessed valuation as of the prior January 1. (4) Source: Massachusetts Department of Revenue - Equalized valuation in effect for that fiscal year. 15

24 FIVE YEARS OUTSTANDING DEBT (1) As of June Long Term-Indebtedness: Within the General Debt Limit: Sewers & Drains (2) $ 5,092,000 $ 4,749,473 $ 5,231,849 $ 5,444,906 $ 6,192,559 Schools 5,030,000 8,602,500 9,703,700 10,108,390 11,164,232 Streets Sidewalks & Parking 186, , , , ,000 Architectural & Engineering Services 84, , , , ,000 Athletic & Recreational Facilities 20,000 30,000 40,000 50,000 60,000 Other Building 7,457,000 8,223,789 9,012,259 8,060,729 6,124,199 Total Within the General Debt Limit $ 17,869,000 $ 21,992,762 $ 24,402,808 $ 24,149,025 $ 24,145,990 Outside the General Debt Limit: Sewers (2) $ 75,575,441 $ 62,485,059 $ 43,896,000 $ 22,176,000 $ 11,776,000 Schools 3,859,250 4,210,175 4,561,100 4,912,025 5,262,950 Other Outside General 80,000 90, , Water (2) 17,075,356 16,160,437 16,821,481 9,476,512 9,739,086 Total Outside the General Debt Limit $ 96,590,047 $ 82,945,671 $ 65,378,581 $ 36,564,537 $ 26,778,036 Total Long-Term Indebtedness $114,459,047 $104,938,433 $ 89,781,389 $ 60,713,562 $ 50,924,026 Short-Term Indebtedness: Revenue Anticipation Notes $ 0 $ 0 $ 0 $ 0 $ 0 Grant Anticipation Notes Bond Anticipation Notes 18,487,000 17,915,941 20,648,941 26,067,000 32,250,000 Total Short-Term Indebtedness $ 18,487,000 $ 17,915,941 $ 20,648,941 $ 26,067,000 $ 32,250,000 Total Outstanding Indebtedness $114,459,047 $122,854,374 $110,430,330 $ 86,780,562 $ 83,174,026 (1) Principal amount only. Excludes lease and installment purchase obligations, overlapping debt and unfunded pension liability. (2) Self-supporting through user fees. REVENUE ANTICIPATION BORROWING The Town has not borrowed in anticipation of revenue in the last five fiscal years and does not anticipate the need to borrow for this purpose in the future, as it has instituted quarterly tax billing. 16

25 ANNUAL DEBT SERVICE (1) The following table presents the total amount of debt service payable by the Town, including the Bonds, as of December 15, Cumulative Fiscal Outstanding as of 12/15/09 Current Issue (3) Total Debt % Principal Year Principal (2) Interest Principal Interest Service Retired (4) 2010 $ 4,735,856 $ 2,333,732 $ 0 $ 0 $ 7,069, % ,105,892 4,462, , ,820 12,197, ,904,265 4,234, , ,000 11,721, ,728,221 4,030, , ,200 11,342, ,602,527 3,826, , ,200 10,991, ,412,463 3,618, , ,800 10,556, ,442,854 3,385, , ,600 10,348, ,478,646 3,155, , ,400 10,136, ,641,356 2,939, , ,600 10,064, ,193,656 2,698, , ,200 10,268, ,446,103 2,424, , ,800 10,151, ,123,701 2,122,200 1,230, ,000 10,033, ,296,453 1,856,680 1,270, ,800 9,931, ,169,361 1,603,840 1,310, ,000 9,541, ,357,429 1,355,977 1,350, ,600 9,469, ,210,660 1,098,010 1,390, ,600 9,050, ,814, ,874 1,435, ,000 8,383, ,897, ,032 1,470, ,600 8,200, ,520, ,756 1,505, ,800 5,552, ,755, ,638 1,480, ,600 3,538, , ,700 1,510,000 60,400 2,052, ,000 84, , ,000 67, , ,000 50, , ,000 33, , ,000 16, , % Total $113,096,122 $47,464,130 $21,642,000 $10,532,020 $192,734,270 (1) Excludes revenue anticipation notes, grant anticipation notes, bond anticipation notes, lease and installment purchase obligations, overlapping debt and unfunded pension liability. (2) Principal of $15,337,125 and corresponding interest have been voted excluded from Proposition 2½. (3) Interest expense estimated at an interest rate of 4.00 percent. (4) Includes the current issue. CONTRACTS Obligations to make payments on account of municipal contracts are generally limited to currently available appropriations. A Massachusetts city or town has general statutory authority to enter into contracts for the exercise of any of its corporate powers for any period of time deemed to serve its best interests, but generally only when funds are available for the first fiscal year; obligations for succeeding fiscal years generally will be expressly subject to availability and appropriation of funds. Specific authority exists in relatively few cases for long-term contractual obligations that are not subject to annual appropriation, including contracts for refuse disposal. Municipalities may also enter into long-term contracts in aid of housing and renewal projects. There 17

26 may be implied authority to make other long-term contracts required to carry out authorized municipal functions, such as contracts to purchase water from private water companies. Municipal electric departments have statutory power to enter into long-term contracts for joint ownership and operation of generating and transmission facilities and for the purchase or sale of capacity, including contracts requiring payments without regard to the operational status of the facilities. The Town does not have an electric light department. Cities and towns are authorized to lease (as lessee) off-street parking facilities, school buildings, hospital equipment, data processing equipment, energy conservation equipment and educational equipment for periods ranging up to 10 years. They may also lease equipment, with options to purchase, for a period up to 10 years. Contracts may also be made for the installment purchase of energy conservation equipment over a period up to 10 years. Cities and towns may also lease various properties as lessor. The Town has not entered into any lease or installment purchase contracts of a substantial nature. Pursuant to the Home Rule Amendment to the Massachusetts Constitution, cities and towns may also be empowered to make other contracts and leases. The Town has several long-term contracts of a material nature. The Town has an agreement with Allied Waste Services, Inc. for trash collection through June 30, 2013, at a budgeted cost of $1,333,442 for fiscal The Town also has a five-year agreement with Wheelabrator North Andover Inc. for solid waste disposal at a current year estimated cost of $800,000. The Town has a thirty-year agreement with the City of Lowell for use of its sewerage plant. The operating costs of the sewerage plant are paid by user fees. The Town also has three three-year contracts for school busing services; the Town has budgeted $1,493,733 for such services in fiscal It also contracts with the Merrimack Education Collaborative for the busing of SPED students; the Town has appropriated $744,266 for such services in fiscal OVERLAPPING DEBT (1) The following table indicates the portion of overlapping debt relating to the Town: Assessment Estimated for Operations Authorized Share of and Debt Service Outstanding Unissued Tewksbury Fiscal Year 2010 Shawsheen Valley Regional Vocational Technical School (2) $2,620,000 $ 0 26% $4,735,773 Lowell Regional Transit Authority (3) % $ 217,269 (1) Principal amount only. Excludes temporary loans in anticipation of revenue. Omits debt of the Commonwealth. (2) Source: Shawsheen Valley Regional Technical Vocational High School. Debt is as of December 15, The shares of the member municipalities vary from year to year according to pupil enrollment. The share shown here has been estimated by the District based on present circumstances, which are subject to change. The other District members are the Towns of Burlington, Billerica, Bedford and Wilmington. (3) Source: Lowell Regional Transit Authority. 18

27 RETIREMENT PLAN The Massachusetts General Laws (Chapter 32, Sections 1-28) provide for the establishment of contributory retirement systems for state employees, for teachers and for county, city and town employees other than teachers. Teachers are assigned to the separate statewide teachers' system and not to the city and town systems. For all employees other than teachers, this law is subject to acceptance in each city and town. Substantially all employees of an accepting city or town are covered. If a town has a population of less than 10,000 when it accepts the statute, its non-teacher employees participate through the county system and its share of the county cost is proportionate to the aggregate annual rate of regular compensation of its covered employees. The Public Employee Retirement Administration Commission ( PERAC ) provides oversight and guidance for and regulates all state and local retirement systems. The obligations of a city or town, whether direct or through a county system, are contractual legal obligations and are required to be included in the annual tax levy. If a city or town, or the county system of which it is a member, has not established a retirement system funding schedule as described below, the city or town is required to provide for the payment of the portion of its current pension obligations which is not otherwise covered by employee contributions and investment income. Excess earnings, or earnings on individual employees retirement accounts in excess of a predetermined rate, are required to be set aside in a pension reserve fund for future, not current, pension liabilities. Cities and towns may voluntarily appropriate to their system s pension reserve fund in any given year up to five percent of the preceding year s tax levy. The aggregate amount in the fund may not exceed ten percent of the equalized valuation of the city or town. If a city or town, or each member city and town of a county retirement system, has accepted the applicable law, it is required to annually appropriate an amount sufficient to pay not only its current pension obligations, but also a portion of its future pension liability. The portion of each such annual payment allocable to future pension obligations is required to be deposited in the pension reserve fund. The amount of the annual city or town appropriation for each such system is prescribed by a retirement system funding schedule which is periodically reviewed and approved by PERAC. Each system s retirement funding schedule is designed to reduce the unfunded actuarial pension liability of the system to zero by not later than June 30, 2030, with annual increases in the scheduled payment amounts of not more than 4.5 percent. City, town and county systems which have an approved retirement funding schedule receive annual pension funding grants from the Commonwealth for the first 16 years of such funding schedule. City, town and county systems may choose to participate in the Pension Reserves Investment Trust Fund (the PRIT Fund ), which receives additional state funds to offset future pension costs of participating state and local systems. If a local system participates in the PRIT Fund, it must transfer ownership and control of all assets of its system to the Pension Reserves Investment Management Board, which manages the investment and reinvestment of the PRIT Fund. Cities and towns with systems participating in the PRIT Fund continue to be obligated to fund their pension obligations in the manner described above. The additional state appropriations to offset future pension liabilities of state and local systems participating in the PRIT Fund are required to total at least 1.3 percent of state payroll. Such additional state appropriations are deposited in the PRIT Fund and shared by all participating systems in proportion to their interests in the assets of the PRIT Fund as of July 1 for each fiscal year. In addition to the contributory systems, cities and towns provide non-contributory pensions to a limited number of employees, primarily persons who entered service prior to July 1, 1937 and their dependents. The Town has no such non-contributory system. 19

28 The Town participates in the contributory retirement system of Middlesex County. The annual contributions of the Town to the retirement system for the current and most recent fiscal years are as follows: Fiscal Year Amount 2010 (budgeted) $5,701, (unaudited) 5,426, ,904, ,281, ,791,631 As of January 1, 2008, the Town's share of the total estimated actuarial liability of the system was $103,302,709. Assets were $42,881,604 leaving an estimated unfunded actuarial liability of $60,421,105. (Source: Segal actuarial study as approved by the Division of Public Employee Retirement Administration as of January 1, 2008.) The foregoing data do not include the retirement system costs or liabilities attributable to employees of the county or the retirement system costs or liabilities of any other entity of which the Town is a constituent part. OTHER POST-EMPLOYMENT BENEFITS In addition to pension benefits, cities and towns may provide retired employees with health care and life insurance benefits. The portion of the cost of such benefits paid by cities or towns is generally provided on a pay-as-you-go basis. The Governmental Accounting Standards Board ( GASB ) recently promulgated its Statement Nos. 43 and 45, which will for the first time require public sector entities to report the future costs of these non-pension, postemployment benefits in their financial statements. These new accounting standards do not require pre-funding such benefits, but the basis applied by the standards for measurement of costs and liabilities for these benefits is conservative if they continue to be funded on a pay-as-you-go basis and will result in larger yearly cost and liability accruals than if such benefits were pre-funded in a trust fund in the same manner as traditional pension benefits. Although cities and towns that choose to self-insure all or a portion of the cost of the health care benefits they provide to employees and retirees may establish a trust fund for the purpose of paying claims, Massachusetts General Laws do not currently provide cities and towns with general legal authority to establish a trust fund for the purpose of pre-funding this liability in the same manner as traditional pension benefits. The Town is required to implement the new GASB reporting requirements for other post-employment benefits beginning in fiscal year The Town has not yet performed an actuarial valuation of its non-pension, postemployment benefit liability, but it expects to do so in time to satisfy the new GASB reporting requirements. The valuation of its liability is currently being prepared. PROPERTY TAXATION AND VALUATION The principal source of revenue of the Town is the tax on real and personal property. The amount to be levied in each year is the amount appropriated or required by law to be raised for municipal expenditures, less estimated receipts from other sources, and less appropriations voted from available funds. The amount of property tax that may be levied is limited as provided in Chapter 59 Section 21C of the Massachusetts General Laws, as amended. (See Property Tax Limitation herein.) The estimated receipts may not exceed the actual receipts during the preceding fiscal year from the same sources unless approved by the State Department of Revenue. Excepting special funds, the use of which is otherwise provided for by law, the deduction for appropriations voted from available funds for a fiscal year cannot exceed the certified "free cash" as of the 20

29 beginning of the prior fiscal year plus, with the approval of the State Director of Accounts, certain collections on account of prior year's taxes after that date. Among the sums required by law to be included in the tax levy are debt and interest charges not otherwise provided for, amounts necessary to pay final judgments and, as described below, abatements of taxes in excess of applicable reserves. At present, the taxable valuation is required by law to be based on 100 percent of fair cash value. Legislation was enacted in 1975 to provide that, subject to limited state review, assessors may determine fair cash value by one or a combination of accepted methods, including comparison of sales prices, capitalization of income and replacement cost less depreciation. The constitutionality of the statute has not been judicially determined. It is generally understood that, in the past there had been substantial discrepancies in fact between fair cash values and taxable valuations within certain municipalities and relative discrepancies as between municipalities. In order to determine appropriate relative values for the purposes of certain distributions to and assessments upon cities and towns, the Commissioner of Revenue biennially makes a redetermination of the fair cash value of the taxable property in each municipality. This is known as the "equalized value". CLASSIFICATION OF REAL PROPERTY The State Constitution authorizes the legislature to provide for the classification of real property according to its use for the purpose of taxation. Legislation has been passed which provides in substance for three classes of taxable property: 1) residential real property, 2) open space land and 3) all other (commercial, industrial and personal property). Within limits, cities and towns are given the option of determining the share (based on full cash value) of the total tax burden to be carried by each of the three categories. If the option is exercised by a city or town, this could have the effect of permitting such property to carry less than its proportionate share of the total tax burden of the city or town and leave other classes to carry the balance of the property tax burden. The share required to be borne by residential real property is at least 50 percent of its share of the total taxable valuation; the effective rate for open space must be at least 75 percent of the effective rate for residential real property; and the share of commercial, industrial and personal property must not exceed 175 percent of their share of the total valuation. A city or town may also exempt up to 20 percent of the valuation of residential real property (where used as the taxpayer s principal residence) and up to 10 percent of the valuation of commercial real property (where occupied by certain small businesses). Property may not be classified in a city or town until the State Commissioner of Revenue certifies that all property in the city or town has been assessed at its fair cash value. Such certification must take place every three years. Legislation allows cities and towns to elect to provide that taxes will be due in quarterly installments. The Town voted to exercise this option as of July 1, 1991 for fiscal 1992 and subsequent fiscal years real estate taxes. Real property (land and buildings) is subject to lien for the taxes assessed upon it (subject to any paramount federal lien and subject to bankruptcy and insolvency laws). If the property has been transferred, an unenforced lien expires on the fourth December 31 after the end of the fiscal year to which it relates; otherwise, an unenforced lien expires upon a later transfer of the property. Provision is made, however, for continuation where the lien could not be enforced because of a legal impediment. The persons against whom real or personal property taxes are assessed are personally liable therefore (subject to bankruptcy and insolvency laws). In the case of real property, this personal liability is effectively extinguished by the sale or taking of the property as described below and the personal liability is not ordinarily utilized for collecting purposes. Massachusetts law permits a municipality either to sell by public sale, at which the municipality may become the purchaser, or to take real property for nonpayment of taxes thereon. In either case the property owner can redeem the property by paying the unpaid taxes, with interest and other charges, but if the right of redemption is not exercised within six months, which may be extended an additional year in the case of certain installment payments, it can be foreclosed by petition to the land court. Upon such foreclosure, a tax title purchased or 21

30 taken by the municipality becomes a "tax possession" and may be held and disposed of like any land held for municipal purposes. The Town is authorized by law to increase each tax levy by an amount approved by the State Department of Revenue for an "overlay" reserve against tax abatements. If abatements are granted in excess of the applicable overlay reserve, the excess is added to the next tax levy. Abatements are ordinarily granted where exempt real or personal property has been assessed or where taxable real or personal property has been overvalued or disproportionately valued. The assessors may also abate uncollectible personal property taxes. Uncollectible real property taxes are ordinarily not written off until they become municipal tax titles at which time the tax is reclassified in full by reserving the amount of the tax. PROPERTY TAX LIMITATION Chapter 59, Section 21C of the Massachusetts General Laws "Proposition 2½" among other things, generally limits the property taxes that may be assessed in any city or town to not more than 2.50 percent of the full and fair cash valuation of the real estate and personal property therein. The law (as amended to date) is subject to further amendment or repeal by the legislature. The law provides that no city or town may levy property taxes in any year in excess of 2.50 percent of the full and fair cash valuation of the taxable real and personal property therein, as that valuation is certified or determined by the State Commissioner of Revenue (the Primary Limit ). In addition to the Primary Limit, the law imposes a limit upon the amount by which the annual tax levy may increase from year to year in any city or town in which the total property tax levy is at or below the Primary Limit. The property tax levy in any fiscal year may not increase by more than 2.50 percent of the "Maximum Levy Limit" for the preceding fiscal year, as determined by the Commissioner of Revenue, plus a limited additional amount on account of property added to the tax rolls for the first time and property that has realized certain other increases in assessed valuation (other than as a result of a general revaluation of all property in the city or town). In no event may the total taxes, which are subject to the limits, be increased to an amount, which would cause the total levy to exceed the Primary Limit of 2.50 percent of valuation. The law provides for several actions affecting the Primary and Maximum Levy Limits that cities and towns may authorize by vote at a regular, special or state election: (1) Any city or town may, by majority vote, exempt altogether from the Primary and Maximum Levy Limits debt service on all bonds or notes issued prior to November 4, 1980 or debt service on any particular bonds or notes issued or to be issued after that date. The Town has voted to exclude the debt service on $15,337,125 of currently outstanding bonds from the limits of Proposition 2½. (2) Any city or town may by majority vote, exempt altogether from the Primary and Maximum Levy Limits specified amounts appropriated to be raised in the tax levy of a single fiscal year for certain specified capital outlay expenditures. (3) Any city or town whose tax levy is below the Primary Limit may, by majority vote, increase for any single fiscal year its allowable annual increase, but in no event may the tax levy as so increased exceed the Primary Limit. 22

31 (4) Any city or town, which is required to reduce its tax levy because it exceeds the Primary Limit, may, by majority vote, limit the reduction to one-half of that otherwise required or, by two-thirds vote, limit the reduction to a lesser amount. (5) Any city or town may, by majority vote, reduce the amount of taxes that may be levied in a fiscal year. The law also provides limits on the total amount the Commonwealth, a county, district, public authority or other governmental entity (other than regional school, regional water and regional sewerage districts) may assess upon cities and towns for any fiscal year to percent of the amount assessed upon cities and towns for the preceding fiscal year plus any increases in costs, charges or fees for services customarily provided locally or subscribed to at local option. Former statutory provisions for binding arbitration in connection with labor disputes involving police or fire department employees collective bargaining units and for fiscal autonomy of school committees were repealed, although school committees retain the power to allocate expenditures within the total amount appropriated for school purposes. Voters may also exclude from the Proposition 2½ limits the amount required to pay specified capital outlay expenditures. In addition, the city council of a city, with the approval of the mayor if required, or the board of selectmen or the town council of a town may vote to exclude from the Proposition 2½ limits taxes raised in lieu of sewer or water charges to pay debt service on bonds or notes issued by the municipality (or by an independent authority, commission or district) for water or sewer purposes, provided that the municipality s sewer or water charges are reduced accordingly. VALUATIONS The following shows the assessed and equalized valuations for the current and most recent fiscal years: Fiscal Year 2010 (1) (2) 2006 Real Property (3) $3,725,174,400 $3,879,357,600 $4,051,624,800 $4,116,854,100 $3,905,761,100 Personal Property (3) 167,561, ,555, ,477, ,826, ,103,390 Total $3,892,736,160 $4,033,912,840 $4,178,102,720 $4,230,680,780 $4,010,864,490 Equalized Valuation (4) $4,512,973,700 $4,512,973,700 $4,365,175,800 $4,365,175,800 $3,772,192,300 Percent of Total Assessed to Equalized Valuation 86.3% 89.4% 95.7% 96.9% 106.3% (1) Revaluation year. Figures for 2010 as estimated by the Town Assessor. (2) Revaluation year. (3) As of January 1 of the prior year. (4) Based on the equalized valuation in effect for each year as determined biennially by the State Department of Revenue as of January 1 of even numbered years effective for the next two fiscal years. CLASSIFICATION OF PROPERTY The table on the following page shows the breakdown of the total assessed valuation for fiscal years 2010, 2009, and 2008 by classification: 23

32 Fiscal 2010 (1) % of Total Fiscal 2009 % of Total Fiscal 2008 % of Total Assessed Assessed Assessed Assessed Assessed Assessed Class Valuation Valuation Valuation Valuation Valuation Valuation Residential $3,139,370, % $3,321,690, % $3,489,169, % Open Space 921, , ,852, Commercial 344,865, ,207, ,401, Industrial 240,017, ,747, ,200, Personal 167,561, ,555, ,477, Total $3,892,736, % $4,033,912, % $4,178,102, % (1) Fiscal 2010 figures as estimated by the Town Assessor. TAX RATES The following table shows the actual tax rates per $1,000 of assessed valuation, the average tax rate, and the estimated full value rate based on the equalized valuation for the current and most recent fiscal years: Fiscal Year Actual Tax Rate Average Rate Full Value Rate 2009 $11.35 (Residential/Open Space) $12.84 $ (Commercial/Industrial/Personal (Residential/Open Space) (Commercial/Industrial/Personal (Residential/Open Space) (Commercial/Industrial/Personal (Residential/Open Space) (Commercial/Industrial/Personal (Residential/Open Space) (Commercial/Industrial/Personal) LARGEST TAXPAYERS The following shows the ten largest taxpayers for fiscal year 2009: Nature Assessed Amount Percent of Valuation for of of Total Business Fiscal 2009 Tax (1) Levy Raytheon Manufacturing Corp. Electronics/Research $ 45,078,900 $ 891, % New England Power Company Utility 47,325, , RREEF America RIET I Office Park 30,414, , Lowell Gas Utility 29,129, , DSM Realty/Valley Prop. Shopping Center & Warehouse 22,253, , Demoulas Supermarkets, Inc. Shopping Center 18,049, , Valley Properties Shopping Center 17,946, , Highwood Holdings Office Buildings 16,861, , Massachusetts Electric Utility 17,799, , Tewksbury Apartments Apartments 28,020, , $263,773,190 $5,074, % (1) All personal property and real estate taxes payable to the Town by the above taxpayers are current. 24

33 CALCULATION OF TAX LEVIES AND LEVY LIMITS The following table shows the details of the calculation of the tax levies for the most recent fiscal years: For Fiscal Year (000 omitted) Gross Amount to be Raised: Appropriations $90,024 $89,375 $81,846 $79,221 $72,067 Other Local Expenditures 2, State & County Charges Overlay Reserve 1, Total Gross Amount to be Raised $93,952 $91,333 $83,936 $81,356 $73,796 Less Estimated Receipts & Other Revenue: Estimated Receipts from State $18,447 $17,942 $17,432 $16,379 $15,760 Estimated Receipts Local 20,536 19,343 16,182 14,259 12,029 Available Funds Appropriated: Free Cash Other Available Funds ,664 1, Free Cash & Other Revenue Used to Reduce the Tax Rate 2,880 3, ,152 1,551 Total Estimated Receipts & Revenue $42,176 $41,679 $36,401 $35,744 $29,842 Net Amount To Be Raised (Tax Levy) $51,776 $49,654 $47,535 $45,612 $43,954 The following shows the calculation of levy limits for the most recent fiscal years: For Fiscal Year (000 omitted) Primary Levy Limit (1) $100,848 $104,453 $105,767 $100,272 $94,767 Prior Fiscal Year Levy Limit 47,335 45,377 43,588 41,940 40, % Levy Growth 1,183 1,134 1,090 1,048 1,004 New Growth (2) 1, Overrides Growth Levy Limit 49,559 $47,335 $45,377 $43,588 $41,940 Debt Exclusion 2,253 2,336 2,161 2,048 2,048 Capital Expenditure Exclusions Tax Levy Limit 51,812 49,671 47,538 45,636 43,988 Tax Levy 51,776 49,654 47,535 45,612 43,954 Unused Levy Capacity (3) $ 36 $ 17 $ 3 $ 24 $ 34 Unused Primary Levy Capacity (4) $51,289 $57,118 $60,390 $56,684 $52,828 (1) 2.5% of assessed valuation. (2) Allowed increase for new valuations certified by the Department of Revenue. (3) Tax Levy Limit less the Tax Levy. (4) Primary Levy Limit less Growth Levy Limit. 25

34 TAX COLLECTIONS AND ABATEMENTS Payment Dates. Effective July 1, 1991, the Town accepted a statute providing for quarterly tax payments. Under that statute, preliminary tax payments are due on August 1 and November 1 with payment of the actual tax bill (after credit is given for the preliminary payments) in installments on February 1 and May 1 if actual tax bills are mailed by December 31. Interest accrues on delinquent taxes at the rate of 14 per cent per annum. The following shows the total tax levy, the reserve for abatements, the net levy and the amounts collected during the last five fiscal years as of the end of each fiscal year and as of a more recent date: For Fiscal Year Total Tax Levy $51,775,827 $49,653,716 $47,534,975 $45,612,442 $43,953,567 Overlay Reserve for Abatements 1,063, , , , ,755 Net Tax Levy (1) $50,711,859 $48,936,015 $46,833,777 $44,972,531 $43,232,812 Amount Collected During Fiscal Year Payable (2) $50,255,947 $48,334,219 $46,336,427 $44,165,081 $42,994,345 Percent of Net Tax Levy 99.1% 98.8% 98.9% 98.2% 99.4% Amount Collected Through 09/30/09(2) $50,471,165 $48,826,964 $46,821,965 $44,568,614 $42,786,568 Percent of Net Tax Levy 99.5% 99.8% 99.9% 99.1% 99.0% (1) Net after deduction of overlay reserve for abatements. (2) Actual collections of levy less refunds and amounts refundable but not including proceeds of tax titles and tax possessions attributed to such levy but not including abatements or other credits. As of September 30, 2009, the Town has collected $13,327,328 against its fiscal 2010 tax levy. Abatements and Overlay. A city or town is authorized to increase each tax levy by an amount approved by the State Commissioner of Revenue as an "overlay" to provide for tax abatements. If abatements are granted in excess of the applicable overlay, the excess is required to be added to the next tax levy. Abatements are granted where exempt real or personal property has been assessed or where taxable real or personal property has been overvalued or disproportionately valued. The assessors may also abate uncollectible personal property taxes. They may abate real and personal property taxes on broad grounds (including inability to pay) with the approval of the State Commissioner of Revenue. But uncollected real property taxes are ordinarily not written off until they become municipal "tax titles" by purchase at the public sale or by taking, at which time the tax is written off in full by reserving the amount of the tax and charging surplus. The following shows the abatements granted during each of the last five fiscal years as of the end of each fiscal year and as of a more recent date: For Fiscal Year Tax Levy $51,775,827 $49,653,716 $47,534,975 $45,612,442 $43,953,567 Overlay Reserve for Abatements 1,063, , , , ,755 Percent of Tax Levy 2.1% 1.4% 1.5% 1.4% 1.6% Abatements Granted: During Fiscal Year of Levy $ 169,898 $ 240,941 $ 238,905 $ 626,243 $ 381,986 Through 09/30/09 $ 228,989 $ 369,310 $ 400,014 $ 714,270 _$1,041,420 26

35 Taking and Sale. Massachusetts law permits a municipality either to sell by public sale (at which the municipality may become the purchaser) or to take real property for nonpayment of taxes. In either case the property owner can redeem the property by paying the unpaid taxes, with interest and other charges, but if the right of redemption is not exercised within six months (which may be extended an additional year in the case of certain installment payments), it can be foreclosed by petition to the Land Court. Upon foreclosure, a tax title purchased or taken by the municipality becomes a "tax possession" and may be held and disposed of in the same manner as other land held for municipal purposes. Sale of Tax Receivables. Legislation enacted in 1996 authorized public sale by cities and towns of delinquent property tax receivable, either individually or in bulk. TOWN FINANCES Budget and Appropriation Process The annual appropriations of the Town are made at the annual meeting, which takes place in May. Appropriations may also be voted at special meetings. Water and sewer department expenditures are included in the budgets adopted by town meetings but electric and gas department funds may be appropriated by the municipal light boards. Under legislation enacted in 1981 any city or town which accepts the legislation may provide that the appropriation for the operating costs of any department may be offset, in whole or in part, by estimated receipts from fees charged for services provided by the department. It is assumed that this general provision does not alter the pre-existing power of an electric or gas department to appropriate its own receipts. As a result of an initiative law adopted in November 1980, school committees are no longer autonomous with respect to school expenditures for current purposes. The school budget is limited to the total amount appropriated by the town meeting, but the school committee retains full power to allocate the funds appropriated. State and county assessments, the overlay for abatements in excess of overlays, principal and interest not otherwise provided for and final judgments are included in the tax levy whether or not included in the budget. Revenues are not required to be set forth in the budget but estimated non-tax revenues are taken into account by the assessors in fixing the tax levy. (See Property Taxation and Valuation herein). The Town was awarded the Certificate of Achievement for Excellence in Financial Reporting by the Government Finance Officers Association for its 2005, 2006, 2007 and 2008 Comprehensive Annual Financial Reports. 27

36 BUDGET COMPARISON (1) The following table sets forth the budgets for fiscal years 2010 through 2006: General Government $ 9,778,104 $ 9,444,749 $ 9,222,836 $ 8,724,491 $ 8,191,078 Public Safety 9,986,580 10,269,421 10,568,330 10,322,411 9,901,014 Education 50,541,447 50,495,570 49,888,413 46,294,085 43,494,119 Public Works 1,833,346 1,978,642 1,963,209 2,032,793 2,141,935 Health and Sanitation 2,601,321 2,792,746 2,685,704 2,636,266 2,349,660 Human Services 373, , , , ,244 Culture and Recreation 1,214,405 1,286,155 1,516,231 1,690,768 1,573,659 Debt Service: Principal Retirement 914, , , , ,071 Interest 359, , , , ,985 Total $77,602,461 $77,934,647 $77,555,768 $73,362,639 $69,110,765 Enterprise Funds: Sewer $ 8,735,266 $ 7,502,728 $ 6,732,218 $ 5,226,345 $ 3,620,076 Water (2) 5,637,289 5,384,337 5,054,271 4,271,372 4,231,984 Total $14,372,255 $12,887,065 $11,786,489 $ 9,497,717 $ 7,852,060 (1) Group Health, Retirement, Medicare, Unemployment, Fire and Liability Insurance and principal and interest costs were allocated to Education beginning in Fiscal 2006 for a total amount of $9,717,068. Previously those costs were budgeted under General Government. (2) The Water Enterprise was voted as a separate budget at the Town Meeting June, 2005, effective as of July 1, STATE AID In addition to grants for specified capital purposes (some of which are payable over the life of the bonds issued for the projects), The Commonwealth of Massachusetts provides financial assistance to cities and towns for current purposes. Payment of local aid to cities and towns is derived primarily from a percentage of the State's personal income, sales and use and corporate excise tax receipts, together with the net receipts from the State Lottery. Payments of state aid to cities and towns are based upon numerous separate formulas, of which the "schools" and "lottery" formulas are the most important. Both of the major formulas tend to provide more state aid to poorer communities. None of the major programs has a termination date under existing law, but most of their funding is subject to annual appropriations by the State Legislature. The State annually provides municipalities with estimates of state aid for the next fiscal year, but the actual state aid payments may vary from the estimates. In 1986, both the State Legislature (by statute, repealed as of July 1, 1999) and the voters (by initiative petition) placed limits on the growth of state tax revenues. Although somewhat different in detail, each measure essentially limited the annual growth in state tax revenues to an average rate of growth in wages and salaries in the Commonwealth over the three previous calendar years. If not amended, the remaining law could restrict the amount of state revenues available for state aid to local communities. Legislation was enacted in 1991 to help municipalities compensate for additional local aid reductions by the Commonwealth for fiscal Under the law, municipalities could defer budgeting for teachers summer compensation payable by the end of the fiscal years 1992 and Municipalities that chose to defer such 28

37 amounts were required to amortize the resulting budget deficiency by raising at least one fifteenth of the deferred amount in each of the fiscal years 1997 through 2011, or in accordance with a more rapid amortization schedule. The Town rejected the deferral in fiscal 1992; however, in 1993 the Town chose the deferral in the amount of $500,000. The Town is amortizing the funds over the full fifteen years, which started in fiscal In addition, under the provisions of Chapter 119 of the Acts of 2007, the Town is allowed to defer teachers summer salary commencing in fiscal 2008 and each year thereafter. Beginning in fiscal 2009, the Town is required to amortize the amount of compensation deferred in its budget in equal installments of 1/15 th per year of the deferred amount. State legislation known as the Education Reform Act of 1993, as amended, imposes certain minimum expenditure requirements on municipalities with respect to funding for education and related programs, and may affect the level of state aid to be received for education. The requirements are determined on the basis of formulas affected by various measures of wealth and income, enrollments, prior levels of local spending and state aid, and other factors. Since enactment, the Town s net school spending exceeded the minimum required local contribution. The following table sets forth the actual state aid received in each of the most recent fiscal years as well as the amount budgeted to be received in fiscal 2010: Fiscal Year Total From State 2010 (budgeted) $16,002, ,628, ,874, ,511, ,297,590 As a result of lower than anticipated state revenues in fiscal year 2009, the state legislature authorized the Governor to make significant reductions in the amount of state aid originally appropriated for cities and towns for the 2009 fiscal year. The amount of state aid originally appropriated to the Town was reduced by $337,555; the figure shown reflects that reduction. This reduction was addressed through the reduction of budget line items. Due to lower than anticipated state revenues to date in fiscal year 2010, it is possible that the Town will receive less state aid in fiscal 2010 than the amount budgeted for such year as indicated in the above table. STATE SCHOOL BUILDING ASSISTANCE PROGRAM Under its school building assistance program, the Commonwealth of Massachusetts provides grants to cities, towns and regional school districts for school construction projects. Until July 26, 2004, the State Board of Education was responsible for approving grants for school projects and otherwise administering the program. Grant amounts ranged from 50% to 90% of approved project costs. Municipalities generally issued bonds to finance the entire project cost, and the Commonwealth disbursed the grants in equal annual installments over the term of the related bonds. Approved project costs included the interest expense incurred on debt issued by a municipality to finance the school project. In recent years, demand for school building assistance grants far exceeded available funds. As of July 1, 2004, a total of 425 projects for which completed grant applications had been submitted were still on the Department of Education s project priority list awaiting approval of a grant. Pursuant to legislation which became effective on July 26, 2004, the Commonwealth created the Massachusetts School Building Authority (the Authority ) to finance and administer the school building assistance program. The Authority has assumed all powers and obligations of the Board of Education with respect to the program. 29

38 In addition to certain other amounts, the legislation dedicates a portion of Commonwealth sales tax receipts to the Authority to finance the program. Projects previously approved for grants by the State Board of Education are entitled to receive grant payments from the Authority based on the approved project cost and reimbursement rate applicable under the prior law. The Authority has paid and is expected to continue to pay the remaining amounts of the grants for such projects in annual installments to reimburse debt service on bonds issued by the municipalities to finance such projects. Projects on the priority waiting list as of July 1, 2004 are also entitled to receive grant payments from the Authority based on the eligible project costs and reimbursement rates applicable under the prior law. With limited exceptions, the Authority is required to fund the grants for such projects in the order in which they appear on the waiting list. Grants for any such projects that have been completed or substantially completed have been paid and are expected to continue to be paid by the Authority in lump sum payments, thereby eliminating the need for the Authority to reimburse interest expenses that would otherwise be incurred by the municipalities to permanently finance the Authority s share of such project costs. Interest on debt issued by municipalities prior to July 1, 2004 to finance such project costs, and interest on temporary debt until receipt of the grant, is included in the approved costs of such projects. Grants for any such projects that have not yet commenced or that are underway have been and are expected to continue to be paid by the Authority as project costs are incurred by the municipality pursuant to a project funding agreement between the Authority and the municipality. In most cases, the receipt of these progress payments from the Authority eliminates the need for the municipality to borrow even on a temporary basis to finance the Authority s share of the project costs. Grant applications for new projects could be submitted to the Authority beginning July 1, The range of reimbursement rates for such projects has been reduced to between 40% and 80% of approved project costs. The Authority recently promulgated new regulations with respect to the application and approval process for new projects. The Authority expects to pay grants for such projects as project costs are incurred pursuant to project funding agreements between the Authority and the municipalities. None of the interest expense incurred on debt issued by municipalities to finance their portion of the costs of new projects will be included in the approved project costs eligible for reimbursement. MOTOR VEHICLE EXCISE An excise is imposed on the registration of motor vehicles (subject to exemptions) at a uniform rate of $25 per $1,000 of valuation. The excise is collected by and for the benefit of the municipality in which the motor vehicle is customarily kept. Valuations are determined by a statutory formula based on manufacturer's list price and year of manufacture. Bills are payable in 30 days of their issue, and when not paid when due, bear interest at 12 percent per annum. Provision is also made for suspension of registration by the registrar of motor vehicles, who may also, after a hearing, suspend the owner s operating license. The following table sets forth the amount of motor vehicle excise taxes received in each of the most recent fiscal years and the amount budgeted to be received in fiscal 2010: Fiscal Year Receipts (1) 2010 (budgeted) $2,851, (unaudited) 3,435, ,830, ,594, ,813,216 (1) Net after refunds. Includes receipts for prior years. 30

39 WATER AND SEWER SERVICES Water service is available to the entire Town, and approximately 97% of the Town makes use of the service. Sewerage is available to approximately 90 percent of the Town, and to date, approximately 55 percent of the Town has connected to the service. The revenues and expenditures associated with such services are accounted for as enterprise funds and are intended to be fully supported from service revenues. Town Meeting annually approves the budgets for each service, and the Town Manager sets service rates. The sewer service enterprise was established commencing July 1, Summary statement of revenues, expenditures and changes in the sewer fund net assets for the sewer fund for years 2004 through 2008 are presented in Appendix A. The water service enterprise was established commencing July 1, Summary statement of revenues, expenditures and changes in the water fund net assets for the water fund for years 2006, 2007 and 2008 are presented in Appendix A. Water rates were increased eight percent in fiscal 2008 and were increased ten percent in fiscal 2009, effective January 1, OTHER TAXES Two additional sources of revenue for local governments are the room occupancy excise tax and an aviation fuel tax. Both taxes take effect only where accepted by individual municipalities. Under the room occupancy excise tax, local governments may tax the provision of hotel, motel and lodging houserooms at a rate not to exceed four per cent of the cost of renting such rooms. The tax is paid by the operator of the hotel, motel, or lodging house to the State Commissioner of Revenue, who in turn pays the tax back to the municipality in which the rooms are located. The Town has voted to impose the room occupancy excise tax. The following table shows the actual room occupancy receipts for the most recent fiscal years and budgeted to be received in fiscal 2010: INVESTMENTS Fiscal Year Receipts 2010 (budgeted) $478, (unaudited) 505, , , ,922 Investments of funds of cities and towns, except for trust funds, are generally restricted by Massachusetts General Laws Chapter 44, section 55. That statute permits investments of available revenue funds and bond and note proceeds in term deposits and certificates of deposits of banks and trust companies, in obligations issued or unconditionally guaranteed by the federal government or an agency thereof with a maturity of not more than one year, in repurchase agreements, with a maturity of not more than 90 days secured by federal or federal agency securities, or in participation units in the Massachusetts Municipal Depository Trust ( MMDT ) or in shares of beneficial interest by money market funds registered with the Securities and Exchange Commission, that have the highest possible rating from at least one nationally recognized statistical rating organization. MMDT is an investment pool created by the Commonwealth under the supervision of the State Treasurer s office. According to the State Treasurer the Trust s investment policy is designed to maintain an average weighted maturity of 90 days or less and is limited to high-quality, readily marketable fixed income 31

40 instruments, including U.S. Government obligations and highly-rated corporate securities with maturities of one year or less. Trust funds, unless otherwise provided by the donor, may be invested in accordance with Section 54 of Chapter 44, which permits a broader range of investments than Section 55, including any bonds or notes that are legal investments for savings banks in the Commonwealth. The restrictions imposed by Sections 54 and 55 do not apply to city and town retirement systems. COMMUNITY PRESERVATION ACT The Massachusetts Community Preservation Act (the CPA ), enacted in September, 2000, permits cities and towns that accept its provisions to levy a surcharge on its real property tax levy and to receive state matching funds for the acquisition, creation, preservation, rehabilitation and restoration of open space, historic resources and affordable housing. The provisions of the CPA must be accepted by the voters of the city or town at an election after such provisions have first been accepted by either a vote of the legislative body of the city or town or an initiative petition signed by 5% of its registered voters. A city or town may approve a surcharge of up to 3% of the real property tax levy, and it may accept one or more exemptions to the surcharge under the CPA, including an exemption for low-income individuals and families and for low and moderate-income senior citizens, an exemption for $100,000 of the value of each taxable parcel of residential real property, and an exemption for commercial and industrial properties in cities and towns with classified tax rates. The surcharge is not counted in the total taxes assessed for the purpose of determining the permitted levy amount under Proposition 2½. A city or town may revoke its acceptance of the provisions of the CPA at any time after 5 years from the date of such acceptance and may change the amount of the surcharge or the exemptions to the surcharge at any time, provided that any such revocation or change must be approved pursuant to the same process as acceptance of the CPA. Any city or town that accepts the provisions of the CPA will receive annual state matching grants to supplement amounts raised by its surcharge on the real property tax levy. The state matching funds are raised from certain recording and filing fees of the registers of deeds. Those amounts are deposited into a state trust fund and are distributed to cities and towns that have accepted the provisions of the CPA, which distributions are not subject to annual appropriation by the state legislature. The amount distributed to each city and town is based on a statutory formula which requires that 80% of the amount in the state trust fund be used to match an equal percentage of the amount raised locally by each city and town, and that the remaining 20% of the amount in the fund be distributed only to those cities and towns that levy the maximum 3% surcharge based on a formula which takes into account equalized property valuation and population, resulting in larger distributions to those communities with low valuations and small populations. The total state distribution made to any city or town may not, however, exceed 100% of the amount raised locally by the surcharge on the real property tax levy. The amounts raised by the surcharge on real property taxes and received in state matching funds are required to be deposited in a dedicated community preservation fund. Each city or town that accepts the provisions of the CPA is required to establish a community preservation committee to study the community preservation needs of the community and to make recommendations to the legislative body of the city or town regarding the community preservation projects that should be funded from the community preservation fund. Upon the recommendations of the committee, the legislative body of the city or town may appropriate amounts from the fund for permitted community preservation purposes or may reserve amounts for spending in future fiscal years, provided that at least 10% of the total annual revenues to the fund must be spent or set aside for open space purposes, 10% for historic resource purposes and 10% for affordable housing purposes. 32

41 The CPA authorizes cities and towns that accept its provisions to issue bonds and notes in anticipation of the receipt of surcharge revenues to finance community preservation projects approved under the provisions of the CPA. Bonds and notes issued under the CPA are general obligations of the city or town and are payable from amounts on deposit in the community preservation fund. In the event that a city or town revokes its acceptance of the provisions of the CPA, the surcharge shall remain in effect until all contractual obligations incurred by the city or town prior to such revocation, including the payment of bonds or notes issued under the CPA, have been fully discharged. The Town accepted this legislation in fiscal 2006, and imposed a 1.50 percent surcharge on its tax rate commencing in fiscal There was $2,101,742 in the Community Preservation Fund as of June 30, 2009, of which $435,000 has been appropriated for use in fiscal TAX INCREMENT FINANCING FOR DEVELOPMENT DISTRICTS Under recent legislation, cities and towns are authorized to establish development districts to encourage increased residential, industrial and commercial activity. All or a portion of the taxes on growth in assessed value in such districts may be pledged and used solely to finance economic development projects pursuant to the city or town s development program for the district. This includes pledging such tax increments for the payment of bonds issued to finance such projects. As a result of any such pledge, tax increments raised from new growth properties in development districts are not available for other municipal purposes. Tax increments are taken into account in determining the total taxes assessed for the purpose of calculating the maximum permitted tax levy under Proposition 2½. The Town has not established any development districts, and it currently has no plans to do so. UNDESIGNATED GENERAL FUND BALANCE AND FREE CASH Under Massachusetts law an amount known as "free cash" is certified as of the beginning of each fiscal year by the State Bureau of Accounts and this, together with certain subsequent tax receipts, is used as the basis for subsequent appropriations from available funds, which are not required to be included in the annual tax levy. Subject to certain adjustments, free cash is surplus revenue less uncollected and overdue property taxes from prior years. The Town Accountant may certify as available for appropriation an adjusted free cash figure by adding back those uncollected and overdue property taxes which are subsequently collected between July 1 and the following March 31 of any year. The following table sets forth the surplus revenue, the undesignated general fund balance and the certified free cash for the most recent fiscal years: Undesignated Surplus General Fund June 30, Revenue (1) Balance (2) Free Cash 2009 $2,689,313 n.a. $1,102,352 (3) ,082,821 $1,497,854 2,064, ,534, ,135 1,942, ,969,053 3,128,128 2,685, ,065,063 2,335, ,793 (1) As prepared by the Town Accountant. (2) As extracted from the audited financial statements of the Town. (3) In addition to this amount, the Town has $2,020,972 and $153,926 Free Cash certified for the Sewer Enterprise Fund and the Water Enterprise Fund, respectively. 33

42 STABILIZATION FUND The Town has maintained a Stabilization Fund for several years with a minimal balance. In recent years, the Town has set a goal of increasing the monies in this account with the intent of using the funds for future capital projects in lieu of borrowing. The balance in this account on November 30, 2009, was $507,534. In addition, as of November 30, the Town has designated Stabilization Funds of $85,277 and $343,153 for fire equipment purchases and for Other Post Employment Benefits, respectively. COLLECTIVE BARGAINING Under Massachusetts Law, strikes by municipal employees are prohibited. Employees of Massachusetts municipalities have certain organizational and representational rights, which include the right to organize, to bargain collectively by representatives of their choice on questions of wages, hours and other terms and conditions of employment, and to engage in lawful concerted activities for bargaining or other mutual aid or protection. The Town has approximately 850 full and part-time employees, of which approximately 68 percent belong to unions or other collective bargaining groups as follows: Number Contract Union Department of People Expires Tewksbury Municipal Employees Public Works, Clerical Assn. American Federation of State, and Others 61 6/30/09 (1) County & Municipal Employees, #93 Local #1646, International Assn. Fire 48 6/30/09 (1) Of Fire Fighters AFL-CIO Tewksbury Massachusetts Police Police 34 6/30/09 (1) Patrolman s Association Tewksbury Police Superior Police Superior Officers 18 6/30/09 (1) Officers Association Tewksbury Administrators Group, School Administrators 8 6/30/09 (1) Local 380 of Teamsters Tewksbury Teachers Association Teachers 274 8/31/10 School Secretaries Association School Secretaries 15 8/30/09 (1) Tewksbury Educational Support Personal School Aides 52 8/30/10 Tewksbury School Custodians School Custodians 27 6/30/09 (1) AFSCME Local 1703 Tewksbury School Food Food Service 32 6/30/08 (1) Service Association Tewksbury School Nurses Local 380 School Nurses 9 6/30/ (1) These contracts are currently in negotiations. 34

43 PRINCIPAL EMPLOYERS (1) The following are the largest employers, other than the Town itself, located in the Town: Company Nature of Business Number of Employees Raytheon Manufacturing Co. Electronics & Research 2,000 Tewksbury State Hospital Hospital 950 DeMoulas Warehouse/Stores Grocery Store Warehouse 900 Avid Technology, Inc.(2) Computer Systems 658 Starent Networks, Corp. Communications 610 Walmart Department Store 270 Home Depot Building/Hardware 204 Comp-U-Com Electronics 198 Sears Department Store 110 Holiday Inn Motel 76 ECRM Manufacturing Printers 72 Eastern Bag and Paper` Paper products manufacturer 71 (1) Source: Each company, November (2) Avid Technology has announced that it plans to relocate to Burlington, Massachusetts. The new site will remain within commuting distance of the Town of Tewksbury. EMPLOYMENT BY INDUSTRY Calendar Year Average Construction 996 1,030 1,036 1,179 1,260 Trade, Transportation & Utilities 3,352 3,197 3,103 3,073 3,136 Information & Other 971 1, ,046 1,104 Financial Activities Professional & Business Services 2,096 1,953 2,002 2,474 2,467 Education & Health Services 2,007 1,953 1,836 1,823 1,807 Leisure & Hospitality 1,580 1,614 1,583 1,583 1,576 Public Administration Total Employment 11,874 11,825 11,459 12,086 12,373 Number of Establishments Average Weekly Wages $1,258 $1,182 $1,102 $1,038 $1,048 Total Wages (000) $1,020,778 $960,454 $876,427 $827,233 $847,003 Source: Massachusetts Department of Employment and Training. BUILDING PERMITS Calendar Year Number Estimated Value 2009 (as of November 1, 2009) 682 $35,011, ,007,689 (1) ,593, ,774, ,132,159 (1) Includes Ames Hill, a 364 unit apartment complex, the first phase of which is under construction. 35

44 PUBLIC SCHOOL ENROLLMENTS The following table presents the public school enrollments for the past five years (as of October 1 of those years). Preschool students and out-of-district placements are not included in the figures. Actual K-5 2,278 2,240 2,174 2,055 1, ,453 2,403 2,304 2,226 2,105 4,731 4,643 4,478 4,281 4,087 Shawsheen Valley Regional Vocational / Technical School (1) ,041 4,986 4,848 4,661 4,495 (1) Tewksbury students only. The Town believes it has adequate capacity in its school system for the foreseeable future. The proposed school project referenced herein is to replace an existing building (See Authorized Unissued Debt and Prospective Financings herein). PUBLIC SCHOOL FACILITIES The following table presents the school facilities in the Town, including the capacity and current enrollment at each facility. The Center School is being used to house the administrative offices of the School Department. Name Date Built Added to or Remodeled Capacity Tewksbury Memorial High / John W. Wynn Middle School / John F. Ryan School 1999 n.a. 800 Elementary: Loella Dewing School Heath Brook School Louise D. Trahan School / North Street School / Center School / Ella Flemings ,157 OTHER DATA Unemployment (1) Year Tewksbury Massachusetts United States 2009 (September) 9.3% 9.3% 9.5% (1) Massachusetts Department of Employment and Training. Full year averages except for 2009 which is for the month indicated. 36

45 Population (1) Tewksbury Middlesex County Massachusetts Year Number % Change Number % Change Number %Change 2020 (Proj.) 30, % 1,469,494 (0.4%) 6,767, % 2010 (Proj.) 29, ,474,917 (0.5) 6,557, (Est.) 29, ,482, ,497, , ,465, ,349, , ,398, ,016, , ,367,034 (2.2) 5,737, ,755 1,398,397 5,689,170 (1) Source: U.S. Department of Commerce for actuals and estimates, Massachusetts Institute for Social & Economic Research for projections. Population Density (1) Tewksbury Middlesex County Massachusetts Year Number Density (2) Number Density Number Density 2020 (Proj.) 30,002 1, ,469,494 1, ,767, (Proj.) 29,641 1, ,474,917 1, ,557, (Est.) 29,543 1, ,482,478 1, ,497, ,851 1, ,465,396 1, ,349, ,266 1, ,398,468 1, ,016, ,635 1, ,367,034 1, ,737, ,755 1, ,398,397 1, ,689, (1) Source: U.S. Department of Commerce. (2) Based on 20.7 square miles. Population Composition 2000 (1) Tewksbury Middlesex County Massachusetts Age Number Percent Number Percent Number Percent Under 5 Years 2, % 92, % 397, % 5 Years to 17 Years 5, , ,277, Years to 64 Years 17, , ,813, Years & Over 3, , , Total 28, % 1,465, % 6,349, % Median Age Median Age (1990) (1) Source: U.S. Department of Commerce. 37

46 Income Levels (1) Tewksbury Middlesex County Massachusetts % Change from % Change from % Change from Year Amount Previous Census Amount Previous Census Amount Previous Census Per Capita-Personal 1999 $27, % $31, % $25, % , , , ,097 8,439 7,457 Median Family Income (1999) $76,443 $74,194 $61,664 Median Household Income (1999) $68,800 $60,821 $50,502 % Below Poverty Level (1990) 3.8% 6.5% 9.3% (1) Source: U.S. Department of Commerce. Family Income Distribution 1999 (1) Tewksbury Middlesex County Massachusetts Income for Families Families Percent Families Percent Families Percent Less than $10, % 10, % 71, % $10,000 - $24, , , $25,000 - $49,999 1, , , $50,000 - $74,999 1, , , $75,000 - $99,999 1, , , $100,000 - $149,999 1, , , $150,000 or more , , Total 7, % 363, % 1,587, % (1) Source: U.S. Department of Commerce. Household Income Distribution 1999 (1) Tewksbury Middlesex County Massachusetts Income for Households Households Percent Households Percent Households Percent Less than $10, % 35, % 214, % $10,000 - $24, , , $25,000 - $49,999 2, , , $50,000 - $74,999 2, , , $75,000 - $99,999 1, , , $100,000 - $149,999 2, , , $150,000 or more , , Total 9, % 561, % 2,444, % (1) Source: U.S. Department of Commerce. 38

47 Value Distribution Of Specified Owner-Occupied Housing Units 2000 (1) Tewksbury Middlesex County Massachusetts Units Number Percent Number Percent Number Percent Less than $100, % 6, % 113, % $100,000 - $149, , , $150,000 - $199,999 3, , , $200,000 - $299,999 3, , , $300,000 - $499, , , $500,000 or more , , Total 8, % 268, % 1,187, % Median Value $200,700 $247,900 $185,700 (1) Source: U.S. Department of Commerce. Age Distribution Housing Units 2000 (1) Tewksbury Middlesex County Massachusetts Year Built Number Percent Number Percent Number Percent 1990 to March , % 41, % 218, % 1980 to , , , to , , ,205, or Earlier , , Total 10, % 576, % 2,621, % (1) Source: U.S. Department of Commerce. Housing Unit Inventory 2000 (1) Tewksbury Middlesex County Massachusetts Units in Structure Number Percent Number Percent Number Percent 1, Detached 7, % 282, % 1,374, % 1, Attached , , to , , to , , to , , or More , , Mobil Home, Trailer, or Other , , Total 10, % 576, % 2,621, % (1) Source: U.S. Department of Commerce. 39

48 Educational Attainment 2000 (1) Tewksbury Middlesex County Massachusetts Years of School Completed Number Percent Number Percent Number Percent Less than 9th Grade % 43, % 247, % 9th to 12th Grade, No Diploma 1, , , High School Graduate 6, , ,165, Some College, No Degree 4, , , Associate s Degree 1, , , Bachelor s Degree 3, , , Graduate or Professional Degree 1, , , Total 19, % 1,006, % 4,273, % High School Graduate or Higher 17, % 890, % 3,622, % Bachelor s Degree or Higher 5, % 438, % 1,418, % (1) Source: U.S. Department of Commerce. LITIGATION At present there are a number of suits pending in which the Town is a defendant. In one such case, the Town has been named a responsible party in an environmental case associated with the closing of a private landfill at which Town solid waste had been disposed. The Town had estimated that its liability could exceed $3,000,000; and in such case, the Town expected to issue bonds to fund the payment of the liability. However, the Town has reached a settlement where it is allowed to pay its respective share of the cost on an annual, pay-as-you-go basis over a thirty year term. In the opinion of the Town, with the exception of the litigation previously referenced, none of the other pending litigation is considered likely to result, either individually or in the aggregate, in final judgments which would materially affect the Town's financial position. TOWN OF TEWKSBURY Massachusetts By: /s/ Janet K. Smith Treasurer Dated: November 25,

49 APPENDIX A The General Fund Balance Sheet for June 30, 2009, is unaudited and has been provided by the Town Accountant. The General Fund Balance Sheets and Statements of Revenue, Expenditure and Change in General Fund Balance for fiscal years 2004 through 2008 follow thereafter and have been extracted from the audited financial statements of the firm of Powers & Sullivan, Certified Public Accountants of Woburn, Massachusetts. The Statement of Revenue, Expenses and Change in Fund Net Assets for the Sewer Enterprise for fiscal years 2004 through 2008 follow thereafter and have been extracted from the audited financial statements of the firm of Powers & Sullivan, Certified Public Accountants of Woburn, Massachusetts. The Statement of Revenue, Expenses and Change in Fund Net Assets for the Water Enterprise for fiscal years 2006 through 2008 follow thereafter and have been extracted from the audited financial statements of the firm of Powers & Sullivan, Certified Public Accountants of Woburn, Massachusetts. The, including the audited financial statements, for fiscal year ending June 30, 2008, is presented in Appendix B.

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51 TOWN OF TEWKSBURY, MASSACHUSETTS General Fund Balance Sheet (1) JUNE 30, 2009 ASSETS Cash and Cash Equivalents $10,558,557 Receivables Property and Excise Taxes 3,453,122 Departmental and Other 526,870 Due From Other Funds 0 Total Assets $14,538,549 LIABILITIES AND FUND BALANCES Liabilities: Warrants Payable and Accruals $ 1,437,108 Accrued Payroll 245,588 Amounts Withheld from Employees 51,139 Other Liabilities 51,265 Deferred Revenues Taxes and Fees 2,011,834 Departmental and Other 520,874 Allowance for Abatements 1,441,288 Taxes Paid in Advance 12,111 Total Liabilities $ 5,771,207 Fund Balances: Reserved for Expenditures $ 1,900,000 Reserved for Encumbrances 1,913,401 Reserved for Appropriation Deficit (673,359) Reserved for Future Year Debt 4,216,438 Reserved for Petty Cash 550 Unreserved Designated for Authorized Deferral of Teachers pay (1,279,000) Undesignated 2,689,313 Total Fund Balance $ 8,767,342 Total Liabilities and Fund Balance $14,538,549 (1) As prepared by the Town Accountant. A-1

52 TOWN OF TEWKSBURY, MASSACHUSETTS General Fund Balance Sheet (1) JUNE 30, ASSETS AND OTHER DEBITS Cash and short-term investments $ 7,132,328 $ 7,556,275 $ 7,997,784 $ 7,559,799 $ 6,856,717 Receivables, net of allowance for uncollectibles: Real estate and personal property taxes 883, , , , ,621 Real estate liens 2,348,279 1,430,979 1,121,599 1,169,875 1,070,264 Excise taxes 215, , , , ,363 User charges , ,316 Departmental and other 388, , , , ,384 Intergovernmental (2) 7,376,000 7,965,000 8,055,000 20,773,000 9,106,000 Due from other funds 59, Other assets: Investments in joint venture 0 437, ,013,047 1,744,094 TOTAL ASSETS AND OTHER DEBITS $18,402,884 $18,708,649 $18,396,529 $32,333,238 $20,199,759 LIABILITIES AND FUND EQUITY LIABILITIES: Warrants payable $ 2,040,950 $ 1,230,697 $ 1,513,018 $ 1,239,557 $ 1,575,313 Accrued payroll 1,967,750 3,200,395 1,711,571 1,563,230 1,626,738 Reserve for abatements , , ,000 Tax refunds payable 263, , Accrued interest on short-term debt , , ,749 Deferred revenues 10,606,772 10,512,621 10,075,845 23,429,534 11,198,496 Other liabilities 0 101,665 77, , ,218 TOTAL LIABILITIES 14,952,563 15,278,378 14,128,699 27,445,719 15,868,514 FUND EQUITY: Fund balances: Reserved for encumbrances and continuing appropriations 344, , , , ,794 Stabilization Funds at the North East Solid Waste Committee ,013,047 1,744,094 Designated for Subsequent Year s Expenditures 1,607,910 2,411, ,264 1,224,146 1,368,602 Unreserved 1,497, ,135 3,128,128 2,335, ,755 TOTAL FUND EQUITY (DEFICIT) 3,450,321 3,430,271 4,267,830 4,887,519 4,331,245 TOTAL LIABILITIES AND FUND EQUITY $18,402,884 $18,708,649 $18,396,529 $32,333,238 $20,199,759 (1) Extracted from the audited reports of Powers & Sullivan, C.P.A. (2) Fiscal 2005 figure includes receipt of Massachusetts School Building Authority grant. A-2

53 TOWN OF TEWKSBURY, MASSACHUSETTS Combined Statement of Revenues, Expenditures and Changes in General Fund Balances (1) JUNE 30, REVENUES Real estate and personal property taxes, Net of tax refunds $48,945,246 $46,873,817 $43,611,338 $43,361,398 $41,183,476 Tax liens 459,074 28, , Motor vehicle excise taxes 3,834,103 3,601,763 3,813,215 3,899,761 3,820,870 Hotel/motel and other excise taxes 551,513 38, ,922 1,214, ,612 Penalties and interest on taxes 318,247 29, , , ,154 Payments in lieu of taxes 37,716 2,176 46,031 20,328 27,720 Water and sewer user charges (2) ,167,975 3,103,006 Charges for services 651,021 12, , , ,835 Intergovernmental 25,042,611 24,312,858 24,546,725 22,257,999 19,663,251 Fees 431, , , , ,669 Rentals 493, , , , ,697 Licenses and permits 937, , , , ,106 Fines 86,392 93, , , ,139 Investment earnings 328, , , , ,627 Other 339, , , , ,434 Total Revenues $82,455,716 $78,956,887 $75,552,406 $76,471,072 $70,615,596 EXPENDITURES General government $ 2,466,700 $ 2,476,070 $ 2,486,262 $ 2,474,864 $ 2,762,847 Public safety 10,550,096 10,192,150 9,870,949 9,565,273 11,075,246 Education 51,242,045 50,185,938 46,343,245 37,529,681 35,861,418 Public works 2,330,372 2,865,261 3,207,818 4,834,977 4,521,896 Health and sanitation 2,534,800 2,494,836 3,224,221 3,481,795 2,631,051 Human services 358, , , , ,318 Culture and recreation 1,410,963 1,597,124 1,520,917 1,444,871 1,367,959 Employee benefits 4,250,321 4,032,212 3,601,758 8,347, ,710 Pensions 2,419,341 2,074,711 1,892,813 2,961,251 6,731,924 Claims and judgments ,000 State and county charges 586, , , , ,683 Debt service 3,494,641 3,256,418 3,676,520 4,703,040 4,870,400 Total Expenditures $81,644,292 $80,064,484 $76,662,520 $76,106,781 $71,488,452 Excess (Deficiency) of Revenues Over Expenditures 811,424 (1,107,597) (1,110,114) 364,291 (872,856) OTHER FINANCING SOURCES (USES) Premium from issuance of bonds 0 7,910 25, , ,738 Capital lease financing 78, , , Transfers in 39,400 49,935 53,001 53,733 44,242 Transfers out (908,774) (408,807) (438,047) (366,750) (498,462) Total Other Financing Sources (Uses) (791,374) 270, , ,983 (331,482) Excess (Deficiency) of Revenues and Other Financing Sources (Uses) Over Expenditures 20,050 (837,559) (619,689) 556,274 (1,204,338) Fund Balances At Beginning: 3,430,271 4,267,830 4,887,519 4,331,245 5,535,583 Fund Balances (Deficit) At End: $ 3,450,321 $ 3,430,271 $ 4,267,830 $ 4,887,519 $ 4,331,245 (1) Extracted from the audited financial reports of Powers & Sullivan, C.P.A. (2) Sewer and water services are accounted for as enterprise funds commencing July 1, 2003, and July 1, 2005, respectively. A-3

54 TOWN OF TEWKSBURY, MASSACHUSETTS Statement of Revenues, Expenditures and Changes in Fund Net Assets (1) SEWER ENTERPRISE JUNE 30, Operating Revenues: Charges for Services $ 6,608,792 $ 5,545,830 $ 6,159,404 $ 3,886,270 $ 3,015,810 Total Operating Revenues 6,608,792 5,545,830 6,159,404 3,886,270 3,015,810 Operating Expenses: Cost of services and administration 1,872,356 1,818,599 $ 1,488,775 $ 1,087,771 $ 1,475,238 Depreciation 1,816, , , , ,694 Total Operating Expenses 3,688,453 2,806,202 3,886,270 1,820,191 2,182,932 Operating Income (Loss) 2,920,339 2,739,628 2,379,867 2,066, ,878 Nonoperating Revenues (Expenses): Investment income 696, ,549 $ 492,247 $ 6,979 $ 0 Interest expense (2,026,814) (743,882) (394,548) (155,803) (539,692) Intergovernmental 161, , , , ,517 Total Nonoperating Revenues (Expenses), Net (1,168,380) 269, ,271 30,421 (352,175) Income (Loss) Before Transfers 1,751,959 3,009,027 4,050,808 2,096, ,703 Transfers: Transfers in 352, , , , ,472 Change In Net Assets 2,104,862 3,353,796 4,403,455 2,456, ,175 Net Assets at Beginning of Year 27,408,513 24,054,717 19,651,262 17,194,662 16,346,487 Net Assets at End of Year $29,513,375 $27,408,513 $24,054,717 $19,651,262 $17,194,662 (1) Extracted from the audited financial reports of Powers & Sullivan, C.P.A. A-4

55 TOWN OF TEWKSBURY, MASSACHUSETTS Statement of Revenues, Expenditures and Changes in Fund Net Assets (1) WATER ENTERPRISE JUNE 30, Operating Revenues: Charges for Services $ 5,027,645 $ 4,161,392 $ 4,534,863 Total Operating Revenues 5,027,645 4,161,392 4,534,863 Operating Expenses: Cost of services and administration $ 3,014,413 $ 2,550,324 $ 3,027,628 Depreciation 2,305,379 2,053,642 2,033,943 Total Operating Expenses 5,319,792 4,603,966 5,061,571 Operating Income (Loss) (292,147) (422,574) (526,708) Nonoperating Revenues (Expenses): Investment income $ 46,049 $ 67,098 $ 73,571 Interest expense (561,005) (535,646) (496,788) Intergovernmental Total Nonoperating Revenues (Expenses), Net (514,956) (468,548) (423,217) Income (Loss) Before Transfers (807,103) (911,122) (949,925) Transfers: Transfers in 244,983 16,429 - Change In Net Assets (562,120) (894,693) (949,925) Net Assets at Beginning of Year 34,068,685 34,963,378 35,913,303 Net Assets at End of Year $33,506,565 $34,068,685 $34,963,378 (1) Extracted from the audited financial reports of Powers & Sullivan, C.P.A. A-5

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57 APPENDIX B The of the Town, including the audited financial statement of the Town as of June 30, 2008, prepared by Powers & Sullivan, Certified Public Accountants, is presented hereafter.

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59 APPENDIX B TOWN OF TEWKSBURY, MASSACHUSETTS COMPREHENSIVE ANNUAL FINANCIAL REPORT For the fiscal year ended June 30, 2008

60 On the cover: Springtime blooms at the Public Library. Photo by Donna Gill. Photo by Donna Gill CPA funds help to reconstruct the entry way at Town Hall.

61 TOWN OF TEWKSBURY, MASSACHUSETTS COMPREHENSIVE ANNUAL FINANCIAL REPORT For the Fiscal Year Ended June 30, 2008 Prepared by: Finance Department

62 TOWN OF TEWKSBURY, MASSACHUSETTS COMPREHENSIVE ANNUAL FINANCIAL REPORT JUNE 30, 2008 TABLE OF CONTENTS Introductory Section...B-1 Letter of Transmittal...B-3 Organizational Chart...B-5 Principal Town Officials...B-6 Certificate of Achievement for Excellence in Financial Reporting...B-7 Financial Section...B-9 Independent Auditors Report...B-11 Management s Discussion and Analysis...B-13 Basic Financial Statements...B-25 Statement of Net Assets...B-27 Statement of Activities...B-28 Governmental funds balance sheet...b-30 Reconciliation of the governmental funds balance sheet total fund balances to the statement of net assets...b-31 Governmental funds statement of revenues, expenditures and changes in fund balances...b-32 Reconciliation of the statement of revenues, expenditures, and changes in fund balances of governmental funds to the statement of activities...b-33 Proprietary funds statement of net assets...b-34 Proprietary funds statement of revenues, expenses and changes in fund net assets...b-35 Proprietary funds statement of cash flows...b-36 Fiduciary funds statement of fiduciary net assets...b-37 Fiduciary funds statement of changes in fiduciary net assets...b-38 Notes to basic financial statements...b-39 Required Supplementary Information...B-61 General Fund Budgetary Comparison Schedule...B-63 Schedule of revenues, expenditures and changes in fund balance general fund budget and actual...b-64 Other post-employment benefit plan schedules...b-74 Retirement system schedule of funding progress...b-75 Retirement system schedule of employer contributions...b-76 Notes to Required Supplementary Information...B-77

63 Combining Statements...B-81 Nonmajor Governmental Funds...B-82 Nonmajor governmental funds combining balance sheet...b-84 Nonmajor governmental funds combining statement of revenues, expenditures, and changes in fund balances...b-88 Agency Fund...B-91 Agency fund statement of changes in assets and liabilities...b-92 Statistical Section...B-95 Net asset by component last six fiscal years...b-96 Changes in net assets last six fiscal years...b-97 Fund balances, governmental funds last ten fiscal years...b-98 Changes in fund balance, governmental funds last ten fiscal years...b-99 Assessed value and actual value of taxable property by classification and tax rates last ten fiscal years...b-100 Principal taxpayers current year and nine years ago...b-101 Property tax levies and collections...b-102 Ratios of outstanding debt and general bonded debt last ten fiscal years...b-103 Direct and overlapping governmental activities debt...b-104 Computation of legal debt margin last ten fiscal years...b-105 Demographic and economic statistics last ten fiscal years...b-106 Principal employers (excluding town) current year and nine years ago...b-107 Full-time equivalent town employees by function last ten fiscal years...b-108 Operational indicators/capital assets statistics by function/program last ten fiscal years...b-109

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65 Introductory Section Photo by Donna Gill One of the many spectacular neighborhood views of Fall in Town.

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67 TOWN OF TEWKSBURY TOWN HALL ANNEX 11 TOWN HALL AVE TEWKSBURY, MASSACHUSETTS FINANCE DEPARTMENT DONNA M. WALSH (978) FINANCE DIRECTOR FAX (978) Letter of Transmittal December 19, 2008 At the close of each fiscal year, state law requires the Town of Tewksbury to publish a complete set of financial statements in conformity with accounting principles generally accepted in the United States of America (GAAP), and that are audited in accordance with generally accepted auditing standards by a firm of licensed certified public accountants. Pursuant to that requirement, we hereby issue the Comprehensive Annual Financial Report (CAFR) of the, for the fiscal year ending June 30, 2008 for your review. This report consists of management s representations concerning the finances of the Town. Consequently, management assumes full responsibility for the completeness and reliability of all of the information presented in this report. To provide a reasonable basis for making these representations, management of the Town has established a comprehensive internal control framework that is designed both to protect the Town s assets from loss, theft, or misuse and to compile sufficient reliable information for the preparation of the Town s financial statements in conformity with GAAP. Because the cost of internal controls should not outweigh their benefits, the Town s comprehensive framework of internal controls has been designed to provide reasonable rather than absolute assurance that the financial statements for the fiscal year ended June 30, 2008, are fairly presented in conformity with GAAP. The Town of Tewksbury s financial statements have been audited by Powers & Sullivan, a firm of licensed certified public accountants. The goal of the independent audit was to provide reasonable assurance that the financial statements of the Town for the fiscal year ended June 30, 2008, are free of material misstatement. The independent audit involved examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements; assessing the accounting principals used and significant estimates made by management; and evaluating the overall financial statement presentation. The independent auditor concluded, based upon the audit, that there was a reasonable basis for rendering an unqualified opinion that the Town s financial statements for the fiscal year ended June 30, 2008 are fairly presented in conformity with GAAP. The independent auditor s report is presented as the first component of the financial section of this report. B-1

68 administration of federal awards. These reports are available in the Town of Tewksbury s separately issued Single Audit Report. GAAP requires that management provide a narrative introduction, overview, and analysis to accompany the basic financial statements in the form of Management s Discussion and Analysis (MD&A). This letter of transmittal is designed to complement that analysis and should be read in conjunction with it. The Town s MD&A can be found immediately following the report of the independent auditors. Profile of the Town The Town of Tewksbury was incorporated as a Town in With a population of approximately 30,000, Tewksbury is located in the Merrimack Valley, 21 miles north of Boston, and occupies approximately 21 square miles. Bordered by two major highway systems, Routes 93 and 495, and a number of secondary roadways including Routes 38 and 133, Tewksbury provides an excellent location for its residents and its businesses. Local legislative decisions are made by an open town meeting consisting of all registered voters in the Town. Subject to the legislative decisions made by Town Meeting, the affairs of the Town are generally administered by a board of five selectmen elected for staggered three-year terms on an at-large basis and assisted by a Town Manager. Local taxes are assessed by a Board of Assessors appointed for indefinite terms. The School Committee, whose five members are elected for staggered three-year terms, has jurisdiction over the Town s public school system and appoints a Superintendent to administer the day-to-day affairs of the system. The Town offers a full range of services including police and fire protection, public education in grades kindergarten through 12, maintenance of streets and infrastructure, solid waste collection and disposal, water and sewer services, health and human services, parks and recreation, community development, administrative and financial services. The Lowell Regional Transit Authority provides bus coverage throughout the Town to surrounding communities. Electricity and natural gas are supplied by National Grid. The Tewksbury Housing Authority provides public housing for eligible low income families, the elderly and the handicapped. The Town manages its risk through a combination of self-insured programs and premium based coverage with commercial insurance carriers. Health care and workers compensation are a combination of selfinsured and premium based plans. The Town is exposed to various risks of loss related to general liability, property and casualty, workers compensation and unemployment compensation claims. Buildings and property are fully insured against fire, theft and natural disaster to the extent that losses exceed the Town s deductible per incident. These deductibles vary by type of incident, none of which exceed $100,000. B-2

69 Factors Affecting Economic Condition The information presented in the financial statements is perhaps best understood when it is considered from the broader perspective of the specific environment within which the Town of Tewksbury operates. The Town is a mature community with industrial and commercial activity concentrated along the major interstates that border the Town. Retail trade is concentrated along Route 38. Several nationally known companies have chosen to locate in the Town. The Town continues to focus on providing high end services while maintaining its economic health. The per capita income is higher than state averages, and the unemployment rate has been low. The Town remains a very desirable community given its close proximity to Boston and quality of services provided. The Town continues to manage its financial affairs in a prudent manner as is demonstrated by its Standard & Poor s investment grade bond rating of AA-, an upgrade from the prior year s rating. This occurred even with the constraints of the Commonwealth of Massachusetts funding and the relatively flat economy. The Town s financial actions are generally guided by long range planning tools such as a fiveyear Capital Improvement Program; prioritizing spending plans and identifying discretionary spending; pay-as-you go financing strategies; long-term planning for all liabilities including pension and insurance reserves, and municipal best practices, which are reviewed annually at the beginning of each budget development cycle. Additionally the Town has enhanced its revenue flexibility by establishing enterprise funds for its sewer operations (FY04) and water operations (FY06). This has allowed the Town to shift the operating costs to the users of certain services so that little or no tax support goes towards providing these services. The Town s commercial and industrial tax base represents 14% of the total Town value. The Town continues to experience better than average residential sales and new home growth, which demonstrates the desirability of the Town. The Town's proximity to Boston and major highways, its quality of life, and dedication to public education and public safety maintains the community's popular reputation. At the State level it is anticipated that state aid will at best be level funded and most likely decrease in following years. This will leave the Town in a position of having to rely mainly on property taxes to cover the increasing cost of providing services and replace the revenue lost from the state. The Town is currently managing $122.9 million in long and short-term debt. This indebtedness consists of $104.2 million of general obligation bonds, of which $82.7 million is self-supporting through enterprise fund revenues, and $12.1 is related to the Town s Ryan and Wynn schools. Under its school building assistance program, the Commonwealth is committed under a capital grant program to annually reimburse the Town for construction costs and debt service interest of general obligation bonds outstanding related to the Ryan School. This entitles the Town to future reimbursements totaling $7.4 million. The Town has authorized and unissued debt for school purposes, water and sewer improvements, departmental equipment, land acquisition, and other various projects totaling $40.7 million as of June 30, B-3

70 Awards and Acknowledgements The Government Finance Officers Association (GFOA) awarded a Certificate of Achievement for Excellence in Financial Reporting to the Town of Tewksbury for its Comprehensive Annual Financial Reports (CAFR) for the fiscal year ended June 30, The Certificate of Achievement is a prestigious national award recognizing conformance with the highest standards for preparation of a state and local government financial report. In order to be awarded the Certificate of Achievement, a government must publish an easily readable and efficiently organized, whose contents conform to program standards. The report must satisfy both generally accepted accounting principles and applicable legal requirements. The preparation of this report would not have been possible without the efficient and dedicated services of the Finance Department s staff. We would like to express our appreciation to all the members of the departments who assisted and contributed to the preparation of this report. Credit must also be given to the Board of Selectmen and Town Manager for their unfailing support for maintaining the highest standards of professionalism in the management of the Town of Tewksbury s finances. Respectfully submitted, Donna M. Walsh Finance Director B-4

71 B-5 Organizational Chart

72 Principal Town Officials Elected Officials Board of Selectmen David Gay, Vice Chairperson Todd Johnson, Chairperson Douglas W. Sears, Clerk Jerome E. Selissen Ann Marie Stronach School Committee Town Clerk Scott J. Consaul, Esq., Chairperson Michael P. Kelley, Clerk Richard O Neill, Esq. Dennis J. Peterson Michael Sitar, III, Vice Chairperson Mary-Ann O Brien Nichols Principal Executive Officers Town Manager Finance Director/Town Auditor Accountant Town Treasurer Tax Collector Town Counsel David G. Cressman Donna M. Walsh Donna J. Gill Janet K. Smith Lorraine M. Langlois Charles Zaroulis, Esq. B-6

73 Certificate of Achievement for Excellence in Financial Reporting B-7

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75 Financial Section Photo by Jan Sutton After years of dreams, fundraising and a lot of hard work, the Senior Center becomes a reality. B-9

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77 Independent Auditors Report To the Honorable Board of Selectmen We have audited the accompanying financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the Town of Tewksbury, Massachusetts, as of and for the fiscal year ended June 30, 2008, which collectively comprise the Town of Tewksbury s basic financial statements as listed in the table of contents. These financial statements are the responsibility of the ' management. 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 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 opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the, as of June 30, 2008, and the respective changes in financial position and cash flows, where applicable, thereof for the fiscal year then ended in conformity with accounting principles generally accepted in the United States of America. In accordance with Government Auditing Standards, we have also issued our report dated December 19, 2008, on our consideration of the internal control over financial reporting and our tests of its compliance with certain provisions of laws, regulations, contracts and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be read in conjunction with this report in considering the results of our audit. Our audit was made for the purpose of forming an opinion on the financial statements taken as a whole. The combining fund statements, as listed in the table of contents, are presented for the purpose of supplementary analysis and are not a required part of the financial statements of the. Such supplementary information has been subjected to the auditing procedures applied in the audit of the financial statements and, in our opinion, is fairly presented in all material respects in relation to the financial statements taken as a whole. B-11

78 Management s discussion and analysis, located on the following pages, and schedule of revenues, expenditures and changes in fund balance general fund budgetary basis, schedule of funding progress, and schedule of employer contributions located after the notes to the basic financial statements, are not a required part of the basic financial statements but is supplementary information required by accounting principles generally accepted in the United States of America. We 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. The introductory and statistical sections, as listed in the table of contents, are presented for purposes of additional analysis and are not a required part of the financial statements. Such information has not been subjected to the auditing procedures applied in the audit of the financial statements and, accordingly, we express no opinion on it. December 19, 2008 B-12

79 Management s Discussion and Analysis Management s Discussion and Analysis B-13

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81 Management s Discussion and Analysis As management of the Town of Tewksbury, we offer readers of these financial statements this narrative overview and analysis of the financial activities for the fiscal year ended June 30, The Town complies with financial reporting requirements issued by the Governmental Accounting Standards Board (GASB). Management s discussion and analysis are part of these requirements. Financial Highlights The assets of the Town exceeded its liabilities at the close of the most recent fiscal year by $126.9 million (net assets). Of this amount, $17.3 million (unrestricted net assets) may be used to meet the government s ongoing obligations to citizens and creditors. The government s total net assets increased by $5.5 million.. As of the close of the current fiscal year, the Town s governmental funds reported combined ending fund balance of $9.6 million, an increase of $2.4 in comparison with the prior year. At the end of the current fiscal year, unreserved fund balance for the general fund was $3.1 million, or 4% percent of total government expenditures. The Town issued long-term debt totaling approximately $574,000 for various water projects, $20 million for sewer projects and $75,000 for governmental activities during the fiscal year. Overview of the Financial Statements This discussion and analysis is intended to serve as an introduction to the Town of Tewksbury s basic financial statements. These basic financial statements comprise three components: 1) government-wide financial statements, 2) fund financial statements, and 3) notes to the financial statements. Government-wide financial statements. The government-wide financial statements are designed to provide readers with a broad overview of finances in a manner similar to 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 the 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 (i.e. uncollected taxes and earned but unused vacation leave). Both of the government-wide financial statements distinguish functions that are primarily 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, education, public works, human services, health and sanitation, culture and recreation, and interest. B-15

82 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 divided into three categories: governmental funds, proprietary funds, and fiduciary 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 statements focus on near-term inflows 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 decisions. 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. The Town of Tewksbury adopts an annual appropriated budget for its general fund. A budgetary comparison statement has been provided for the general fund to demonstrate compliance with this budget. Proprietary funds. The Town of Tewksbury maintains two types of proprietary funds: Enterprise funds are used to report the same functions presented as business-type activities in the governmentwide financial statements. The Town uses enterprise funds to account for its sewer and water operations. Internal service funds are an accounting device used to accumulate and allocate costs internally among various functions. The Town uses internal service funds to account for health insurance activities and workers compensation benefits. Because these services primarily benefit governmental rather than business-type activities, they have been included within governmental activities in the government-wide financial statements. 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 statement 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 the basic 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. Government-wide Financial Analysis As noted earlier net assets may serve, over time, as a useful indicator of a government s financial position. The assets of Town exceeded liabilities by $126.9 million at the close of the FY2008. Key components of the Town s governmental and business type financial position follow. B-16

83 For the Town s governmental activities, assets exceeded liabilities by $63.9 million at the close of fiscal Governmental Activities: Fiscal Fiscal Assets: Current assets $ 23,397,130 $ 18,979,245 Noncurrent assets (excluding capital) 6,654,000 7,280,000 Capital assets 65,888,452 68,887,468 Total assets 95,939,582 95,146,713 Liabilities: Current liabilities (excluding debt) 8,231,958 8,716,865 Noncurrent liabilities (excluding debt) 2,259,057 2,532,834 Current debt 2,209,095 2,438,595 Noncurrent debt 19,334,369 21,468,464 Total liabilities 32,034,479 35,156,758 Net Assets: Capital assets net of related debt 50,335,154 51,155,892 Restricted 1,797, ,752 Unrestricted 11,772,012 7,955,311 Total net assets $ 63,905,103 $ 59,989,955 A significant portion of the Town s net assets, $50.3 million (79%), reflects its investment in capital assets (i.e. land, buildings, infrastructure, machinery and equipment) less any related debt used to acquire those assets that is still outstanding. The Town uses these capital assets to provide services to citizens: consequently these assets are not available for future spending. Although the Town s investment in its capital assets is reported net of its related debt, it should be noted that the resources needed to pay this debt must be provided from other sources, since capital assets themselves cannot be used to liquidate these liabilities. An additional portion of the Town s net assets $1.8 million (3%) represents resources that are subject to external restrictions on how they may be used. The remaining balance of unrestricted net assets, $11.4 million (18%) may be used to meet the government s ongoing obligations to citizens and creditors. B-17

84 For the Town s business type activities, assets exceeded liabilities by $63 million at the close of fiscal Business-type Activities: Fiscal Fiscal Assets: Current assets $ 32,419,599 $ 33,509,324 Capital assets 135,772, ,139,805 Total assets 168,191, ,649,129 Liabilities: Current liabilities (excluding debt) 3,516,109 6,564,660 Noncurrent liabilities (excluding debt) 344,905 84,000 Current debt 21,547,173 23,703,302 Noncurrent debt 79,763,737 62,819,969 Total liabilities 105,171,924 93,171,931 Net Assets: Capital assets net of related debt 57,534,816 57,908,772 Unrestricted 5,485,124 3,568,426 Total net assets $ 63,019,940 $ 61,477,198 Business type net assets of $57.5 million (91%) represent investments in capital assets net of related debt. The remaining $5.5 million (9%) is available to be used for the ongoing operation of the Town s sewer and water enterprises. At the end of the current fiscal year, the Town is able to report positive balances in all three categories of net assets, both for the government as a whole, as well as for its separate governmental and business-type activities. Revenues and Expenses The governmental activities net assets increased by $3.9 million during the current fiscal year. This was due to a better than expected increase in revenues of $2.0 million and the positive impact of a favorable claims experience in the internal service fund ($1.9 million). Key elements of governmental activities are as follows: Governmental Activities: Fiscal Fiscal Program revenues: Charges for services $ 8,063,146 $ 6,874,072 Operating grants and contributions 25,179,777 23,771,003 General Revenues: Real estate and personal property taxes 48,744,833 46,990,762 Motor vehicle and other excise taxes 3,859,384 3,617,989 Nonrestricted grants 3,716,874 3,689,997 Unrestricted investment income 424, ,725 Other revenues 2,283,850 1,428,477 Total revenues $ 92,271,926 $ 87,038,025 B-18

85 Governmental Activities: Fiscal Fiscal Expenses: General government $ 3,655,345 $ 3,892,891 Public safety 13,445,232 13,828,618 Education 59,527,722 56,963,315 Public works 4,292,536 4,207,529 Human services 793, ,696 Health and sanitation 2,664,641 2,641,590 Culture and recreation 2,282,784 2,452,453 Interest 1,096,687 1,038,814 Total expenses 87,758,892 85,418,906 Excess before transfers 4,513,034 1,619,119 Transfers (597,886) (361,198) Change in net assets $ 3,915,148 $ 1,257,921 Governmental expenses totaled $87.8 million of which $32.9 million (36%) was directly supported by program revenues consisting of charges for services, operating and capital grants and contributions. General revenues totaled $59 million, primarily from property taxes, motor vehicle excise, lottery and other revenues. Charges for services represent about 9% of governmental activities resources. The Town can exercise more control over this category of revenue than any other. Fees charged for services rendered that are set by Town Meeting, the Board of Selectmen, Town boards and commissions, and the Town Manager are included in this category. Operating grants and contributions account for 27% of the governmental activities resources. Most of these resources apply to education operations. These resources offset costs within the school department in addition to their general fund operating budget. Property taxes are the most significant revenue source for the Town s governmental activities. They comprise 53% of all resources. Other taxes comprise 11% of the governmental activity s resources. Education is by far the largest governmental activity of the Town. A total of $59.5 million was expended for education, of which $25 million was funded by program revenues. The remaining $34.5 million was funded by taxes and other revenue. Public safety is the second largest activity of the Town. $11.5 million of general revenues were needed to cover FY08 operating expenses. B-19

86 Business-type activities net assets increased by $1.5 million during the current fiscal year. The primary reasons for the increase were rate adjustments made for water and sewer activities and the fact that the rates are designed to support principal payments on long-term debt. The key elements of the business-type activities are as follows: Business-type Activities: Fiscal Fiscal Program revenues: Charges for services $ 11,636,437 $ 9,707,222 Nonperating grants and contributions 161, ,732 General revenues: Unrestricted investment income 742, ,647 Total revenues 12,540,920 10,787,601 Expenses 11,596,064 8,689,696 Excess before transfers 944,856 2,097,905 Transfers 597, ,198 Change in net assets $ 1,542,742 $ 2,459,103 Financial Analysis of the Government s Funds As noted earlier, the Town uses fund accounting to ensure and demonstrate compliance with finance related legal requirements. Governmental funds. The focus of governmental funds is to provide information 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. At the end of the current fiscal year, the Town s governmental funds reported combined ending fund balances totaling $9.6 million. Of this amount $3.5 million is for the general fund and $6.1 million is for nonmajor governmental funds. Cumulatively there was an increase of $2.4 million in fund balances from the prior year. The general fund is the chief operating fund of the Town. At the end of the current fiscal year, unreserved fund balance of the general fund was $3.1 million while total fund balance was $3.5 million. As a measure of the general fund s liquidity, it may be useful to compare both unreserved fund balance and the total fund balance to total fund expenditures. Unreserved fund balance represents 3.8% of the total general fund expenditures, while total fund balance represents 4.2% of that same amount. Reservation of fund balance for encumbrances and continuing appropriations totaled $345,000. Additionally, $1.6 million was designated for amounts voted to be used in FY09. General fund operations essentially broke even in fiscal 2008, posting a small increase of $20,000. This result was better than anticipated, as the Town had expected to use a significant portion of reserves to offset current year expenditures. However, due to better than anticipated revenue collections in every area other than investment income, combined with the timing of expenditures that will not be incurred until FY09, the net result was a small increase B-20

87 Financial Summary General Fund Revenue Other 5% Intergovernmental 30% Real Estate and Personal Property Taxes 59% Motor Vehicle Excise 5% Overall, general fund revenue increased 4% compared to FY07. This increase is primarily due to an increase in taxes and user charges. Tax revenue continues to be the most significant revenue source for the Town, representing 59% of total general fund revenue. Tax revenue increased in accordance with the provisions of the Massachusetts law, which limits such increase to 2 ½% over the preceding year plus an allowance for new growth. Tax revenue increased by 4% in FY08. Intergovernmental revenue represents 30% of total general fund revenues. This includes state aid as well as $6.6 million in payments made by the State to the Massachusetts Teachers' Retirement Association for teachers' pension benefits. Intergovernmental revenue increased by 3% from FY07. Motor vehicle revenue represents 5% of the total general fund revenues. Motor vehicle revenue continued to be a strong source of revenue increasing by 6% from FY07. License and permit revenue totaled $938,000, reflecting continuing home renovation and building activity in the Town. B-21

88 General Fund Expenditures Culture/Human Services 2% Other 4% Debt Service 4% General Government 3% Employee Benefits 5% Public Safety 13% Pension 3% Public Works 3% Education 63% Expenditures in the general fund increased 2% as compared to FY07 with education and employee benefits being the primary contributors. Education continues to represent the largest category of general fund expenditures, approximating 63% in FY08. The Town is committed to providing a high-quality education through its public schools. Public Safety and Public Works represent a combined 16% of general fund expenditures. This reflects the Town's commitment to providing a safe, secure environment and essential public services. Debt service costs in FY08 were 4% of total general fund expenditures, reflecting the Town s ongoing commitment to its school building program, public safety facilities and recreation and cultural facilities. Employee benefits and pension costs increased from the prior year, continuing a trend of escalating costs.. General Fund Budgetary Highlights The increase from the original budget to the final amended budget of $1,791,000 (2.3%) resulted mainly from the fall Special Town Meeting votes to use available funds for the rubbish operating budget and to establish the Other Post Employment Benefits Stabilization Fund. General Fund revenues came in approximately $2,080,000 more than budgeted. There were several factors that contributed to this increase. Licenses and permits had a surplus of $427,000 due to more building permits being issued. Motor vehicle and other excise had a surplus of $334,000 which was better than expected due to the economy. Departmental and other revenue had a surplus of $279,000, coming mainly from supplemental taxes. B-22

89 Intergovernmental revenue came in $424,000 more than budgeted due to surpluses of $252,000 in Medicaid receipts and $156,000 in Medicare Part D revenue. General fund expenditures came in $32,000 more than budgeted. Mostly all departments came in under budget. The exception to this was Snow and Ice which exceeded appropriations by $515,000. Capital Asset and Debt Administration In conjunction with the annual operating budget the Town of Tewksbury annually prepares a capital budget for the upcoming fiscal year and a five year Capital Improvement Plan (CIP) that is used as a guide for future capital expenditures. Capital assets. The Town of Tewksbury s investment in capital assets for its governmental and business-type activities as of June 30, 2008, amounts to $201.7 million (net of accumulated depreciation). This investment in capital assets includes land, buildings, water and sewer system improvements, machinery and equipment, park facilities, roads, highways, and bridges. The total increase in the Town s investment in capital assets for the current year was $11.6 million. Governmental Business Type Capital Asset Activities Activities Total Land $ 1,845,881 $ 204,000 $ 2,049,881 Construction in progress 40,000 16,918,693 16,958,693 Artwork , ,500 Land improvements 229, ,532 Buildings 40,554,827 12,617,401 53,172,228 Buildings improvements 3,165,984 3,066,329 6,232,313 Machinery and equipment 2,931, ,221 3,373,739 Library and school books 852, ,681 Infrastructure 15,371, ,523, ,895,150 Total $ 65,888,452 $ 135,772,265 $ 201,660,717 Major capital asset events during the current fiscal year included the following: Construction on the Master Sewer project is continuing with $16.2 million expended in fiscal This is a multi-phase, $99 million project that, when completed, will provide sewer services to the remainder of the Town. Construction of the water storage tank, which began in FY06, has had $7.3 million spent through fiscal 2008 and went on-line in fiscal Additionally, another $2 million was spent on machinery and equipment and various infrastructure projects. Debt Administration The Town maintains an AA- bond rating from Standard & Poor s. The Town continues to maintain strong market access for both note and bond sales. At the end of the fiscal year the Town had total bonded debt outstanding of $104.9 million of which $12.9 million is related to school projects, $16.2 million is for water projects, $67.2 million is related to sewer projects, $1.4 million is related to the Town library, $3.9 million is related to the Senior Center, and $2.4 million relates to public safety projects, leaving a balance of $900,000 for other CIP related projects. The entire amount is classified as general obligation debt and is backed by the full faith and credit of the Town. B-23

90 The Town issued long-term debt in FY2008 totaling $20.7 million. Of this, $574,000 was for water, $20 million was for sewer projects, and $75,000 was for sidewalk construction. Additionally, $17.9 million in bond anticipation notes (BANS) were issued during the year to continue the funding of the water infrastructure projects, and the master sewer project. The Commonwealth of Massachusetts is obligated to provide school construction assistance for approved school projects. The assistance is paid annually to support the debt service payments over time. The Town has been approved for a 70% reimbursement of approved construction costs. At June 30, 2008 the Town is scheduled to receive $9.2 million of future reimbursements for the Ryan School. State statutes limit the amount of general obligation debt a government entity may issue to 5% of its total equalized property valuation as determined by the Massachusetts Department of Revenue. This limit could go to 10% with approval of a state oversight board. In addition certain general obligation debt is exempt from the limit such as debt associated with school construction and many water improvement projects. The current debt limitation for the Town of Tewksbury is approximately $218 million, which is significantly in excess of the Town s outstanding general obligation debt that is subject to this limit. Please refer to notes 4, 7 and 8 for further discussion of the major capital and debt activity. Economic Factors and Next Year Budget and Rates The Commonwealth of Massachusetts is likely to decrease state aid in FY08. The extent of the decrease is uncertain. New property growth has been planned for in FY09 with the Town budgeting approximately $800,000 in new tax revenue. This equates to approximately $63 million in property value. Labor costs are budgeted to increase approximately 3.5% as well as the overall budget. Health insurance costs are expected to increase, but not as dramatically as in prior years, as more employees migrate to more economical plans. All these factors were considered in preparing the Town s budget for fiscal year At the end of the current fiscal year, unreserved fund balance in the general fund is $3.5 million. The Town has appropriated $1.6 million of this amount to balance the fiscal year 2009 budget. The Town s residential tax rate of $10.45 per thousand of valuation will be $11.35 for fiscal year The valuation of all Town property totaled $4 billion. This is approximately the same as the FY 2007 property valuation. The Town s commercial tax rate of $19.21 per thousand of valuation will be $19.77 for fiscal year Water rates increased 8% in fiscal year Sewer rates were adjusted midyear from a flat rate of $5.60 per thousand gallons to a multi-tiered rate system ranging from 7.53 to per thousand gallons. Management is considering a rate adjustment in the third quarter of fiscal year 2009 to mitigate anticipated cost increases associated with the ongoing sewer project. Requests for Information This financial report is designed to provide a general overview of the Town of Tewksbury 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 the Finance Director, Town Hall Annex, 11 Town Hall Avenue, Tewksbury, MA B-24

91 Basic Financial Statements Basic Financial Statements B-25

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93 STATEMENT OF NET ASSETS JUNE 30, 2008 Primary Government Governmental Business-type Activities Activities Total ASSETS CURRENT: Cash and cash equivalents $ 14,103,489 $ 23,073,461 $ 37,176,950 Investments 2,120,235-2,120,235 Receivables, net of allowance for uncollectibles: Real estate and personal property taxes 883, ,095 Tax liens.. 2,351,575-2,351,575 Motor vehicle and other excise taxes 215, ,691 Water fees - 1,450,486 1,450,486 Sewer fees - 7,836,663 7,836,663 Departmental and other 724, ,708 Intergovernmental 1,213,337 58,989 1,272,326 Working capital deposit 1,785,000-1,785,000 Total current assets 23,397,130 32,419,599 55,816,729 NONCURRENT: Receivables, net of allowance for uncollectibles: Intergovernmental 6,654,000-6,654,000 Capital assets, nondepreciable 2,782,381 17,122,693 19,905,074 Capital assets, net of accumulated depreciation 63,106, ,649, ,755,643 Total noncurrent assets 72,542, ,772, ,314,717 TOTAL ASSETS 95,939, ,191, ,131,446 LIABILITIES CURRENT: Warrants payable 2,273,442 1,777,214 4,050,656 Accrued payroll 1,977,448 30,797 2,008,245 Health claims payable 1,360,599-1,360,599 Tax refunds payable 263, ,000 Accrued interest 375,261 1,451,903 1,827,164 Other liabilities 74,431 74, ,531 Capital lease obligations 499,777 42, ,872 Compensated absences 1,408, ,000 1,548,000 Bonds and notes payable 2,209,095 21,547,173 23,756,268 Total current liabilities 10,441,053 25,063,282 35,504,335 NONCURRENT: Capital lease obligations 886, ,905 1,062,962 Compensated absences 1,373, ,000 1,541,000 Bonds and notes payable 19,334,369 79,763,737 99,098,106 Total noncurrent liabilities 21,593,426 80,108, ,702,068 TOTAL LIABILITIES 32,034, ,171, ,206,403 NET ASSETS Invested in capital assets, net of related debt 50,335,154 57,534, ,869,970 Restricted for: Permanent funds: Expendable. 44,850-44,850 Gifts and grants 1,753,087-1,753,087 Unrestricted 11,772,012 5,485,124 17,257,136 TOTAL NET ASSETS $ 63,905,103 $ 63,019,940 $ 126,925,043 See notes to basic financial statements. B-27

94 STATEMENT OF ACTIVITIES FISCAL YEAR ENDED JUNE 30, 2008 Program Revenues Operating Charges for Grants and Net (Expense) Functions/Programs Expenses Services Contributions Revenue Primary Government: Governmental Activities: General government $ 3,655,345 $ 2,439,126 $ 1,676,839 $ 460,620 Public safety 13,445,232 1,573, ,961 (11,519,409) Education 59,527,722 3,601,470 21,349,386 (34,576,866) Public works 4,292, , ,932 (3,252,981) Human services 793,945 68, ,490 (226,069) Health and Sanitation 2,664,641 8,950 - (2,655,691) Culture and recreation 2,282, ,729 53,908 (1,971,147) Interest 1,096, ,261 (774,426) Total Governmental Activities 87,758,892 8,063,146 25,179,777 (54,515,969) Business-Type Activities: Sewer 5,715,267 6,608, ,690 1,055,215 Water 5,880,797 5,027,645 - (853,152) Total Business-Type Activities 11,596,064 11,636, , ,063 Total Primary Government $ 99,354,956 $ 19,699,583 $ 25,341,467 $ (54,313,906) See notes to basic financial statements. (Continued) B-28

95 STATEMENT OF ACTIVITIES (Continued) FISCAL YEAR ENDED JUNE 30, 2008 Governmental Business-Type Activities Activities Total Changes in net assets: Net (expense) revenue from previous page $ (54,515,969) $ 202,063 $ (54,313,906) General revenues: Real estate and personal property taxes, net of tax refunds payable 48,744,833-48,744,833 Tax liens 1,376,374-1,376,374 Motor vehicle and other excise taxes 3,859,384-3,859,384 Hotel/motel tax 551, ,513 Penalties and interest on taxes 318, ,247 Payments in lieu of taxes 37,716-37,716 Grants and contributions not restricted to specific programs 3,716,874-3,716,874 Unrestricted investment income 424, ,793 1,166,855 Transfers, net (597,886) 597,886 - Total general revenues and transfers 58,431,117 1,340,679 59,771,796 Change in net assets 3,915,148 1,542,742 5,457,890 Net Assets: Beginning of year 59,989,955 61,477, ,467,153 End of year $ 63,905,103 $ 63,019,940 $ 126,925,043 (Concluded) B-29

96 GOVERNMENTAL FUNDS BALANCE SHEET JUNE 30, 2008 Nonmajor Total Governmental Governmental ASSETS General Funds Funds Cash and cash equivalents $ 7,132,328 $ 4,218,820 $ 11,351,148 Investments - 2,120,235 2,120,235 Receivables, net of uncollectibles: Real estate and personal property taxes 883, ,095 Tax liens. 2,348,279 3,296 2,351,575 Motor vehicle and other excise taxes 215, ,691 Departmental and other 388, ,058 Intergovernmental 7,376, ,337 7,867,337 Due from other funds 59,433-59,433 TOTAL ASSETS $ 18,402,884 $ 6,833,688 $ 25,236,572 LIABILITIES AND FUND BALANCES LIABILITIES: Warrants payable $ 2,040,950 $ 229,517 $ 2,270,467 Accrued payroll 1,967,750 9,698 1,977,448 Tax refunds payable 263, ,000 Other liabilities 74, ,431 Deferred revenues 10,606, ,490 10,990,262 Due to other funds - 59,433 59,433 TOTAL LIABILITIES 14,952, ,478 15,635,041 FUND BALANCES: Reserved for: Encumbrances and continuing appropriations 344, ,557 Unreserved: Designated for subsequent year's expenditures 1,607,910-1,607,910 Undesignated, reported in: General fund 1,497,854-1,497,854 Special revenue funds - 5,760,374 5,760,374 Capital projects funds - 345, ,986 Permanent funds - 44,850 44,850 TOTAL FUND BALANCES 3,450,321 6,151,210 9,601,531 TOTAL LIABILITIES AND FUND BALANCES $ 18,402,884 $ 6,833,688 $ 25,236,572 See notes to basic financial statements. B-30

97 RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET TOTAL FUND BALANCES TO THE STATEMENT OF NET ASSETS JUNE 30, 2008 Total governmental fund balances $ 9,601,531 Capital assets (net) used in governmental activities are not financial resources and, therefore, are not reported in the funds 65,888,452 Accounts receivable are not available to pay for current-period expenditures and, therefore, are deferred in the funds 10,990,262 Internal service funds are used by management to account for retirees' health insurance and workers' compensation activities: The assets and liabilities of the internal service funds are included in the governmental activities in the statement of net assets 3,510,417 In the statement of activities, interest is accrued on outstanding long-term debt, whereas in governmental funds interest is not reported until due (375,261) Long-term liabilities are not due and payable in the current period and, therefore, are not reported in the governmental funds: Bonds and notes payable (21,543,464) Capital lease obligations (1,385,834) Compensated absences (2,781,000) Net effect of reporting long-term liabilities (25,710,298) Net assets of governmental activities $ 63,905,103 See notes to basic financial statements. B-31

98 GOVERNMENTAL FUNDS STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES FISCAL YEAR ENDED JUNE 30, 2008 Nonmajor Total Governmental Governmental General Funds Funds REVENUES: Real estate and personal property taxes, net of tax refunds $ 48,945,246 $ - $ 48,945,246 Tax liens 459, ,074 Motor vehicle and other excise taxes 3,834,103-3,834,103 Hotel/motel tax 551, ,513 Charges for services 651, ,487 1,648,508 Penalties and interest on taxes 318, ,247 Fees.. 431,175 1,492,386 1,923,561 Rentals.. 493,352 8, ,639 Payments in lieu of taxes 37,716-37,716 Licenses and permits 937, ,784 Fines and forfeitures 86,392-86,392 Intergovernmental 25,042,611 4,864,681 29,907,292 Departmental and other 339,020 1,890,355 2,229,375 Investment income 328,462 46, ,226 TOTAL REVENUES 82,455,716 9,299,960 91,755,676 EXPENDITURES: Current: General government 2,466, ,253 2,863,953 Public safety 10,550, ,715 10,802,811 Education 51,242,045 4,741,370 55,983,415 Public works 2,330,372 1,171,680 3,502,052 Human services 358, , ,355 Health and sanitation 2,534,800-2,534,800 Culture and recreation 1,410, ,994 1,741,957 Pension benefits 2,419,341-2,419,341 Employee benefits 4,250,321-4,250,321 State and county charges 586, ,575 Debt service: Principal 2,363,595-2,363,595 Interest 1,131,046-1,131,046 TOTAL EXPENDITURES 81,644,292 7,296,929 88,941,221 EXCESS (DEFICIENCY) OF REVENUES OVER (UNDER) EXPENDITURES 811,424 2,003,031 2,814,455 OTHER FINANCING SOURCES (USES): Issuance of bonds and notes - 75,000 75,000 Capital lease financing 78,000-78,000 Transfers in 39, , ,288 Transfers out (908,774) (54,400) (963,174) TOTAL OTHER FINANCING SOURCES (USES) (791,374) 346,488 (444,886) NET CHANGE IN FUND BALANCES 20,050 2,349,519 2,369,569 FUND BALANCES AT BEGINNING OF YEAR... 3,430,271 3,801,691 7,231,962 FUND BALANCES AT END OF YEAR $ 3,450,321 $ 6,151,210 $ 9,601,531 See notes to basic financial statements. B-32

99 RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS TO THE STATEMENT OF ACTIVITIES FISCAL YEAR ENDED JUNE 30, 2008 Net change in fund balances - total governmental funds $ 2,369,569 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 559,493 Depreciation expense (3,558,509) Net effect of reporting capital assets (2,999,016) 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 467,414 The issuance of long-term debt (e.g., bonds and leases) provides current financial resources to governmental funds, while the repayment of the principal of longterm debt consumes the financial resources of governmental funds. Neither transaction, however, has any effect on net assets. Also, governmental funds report the effect of premiums, discounts, and similar items when debt is first issued, whereas these amounts are deferred and amortized in the Statement of Activities. Issuance of bonds and notes (75,000) Capital lease financing (78,000) Debt service principal payments 2,363,595 Principal payments on capital leases 481,683 Net effect of reporting long-term debt 2,692,278 Some expenses reported in the Statement of Activities do not require the use of current financial resources and, therefore, are not reported as expenditures in the governmental funds. Net change in compensated absences accrual (271,000) Net change in accrued interest on long-term debt 34,359 Net effect of recording long-term liabilities and amortizing deferred losses (236,641) Internal service funds are used by management to account for health insurance. The net activity of internal service funds is reported with Governmental Activities 1,621,544 Change in net assets of governmental activities $ 3,915,148 See notes to basic financial statements. B-33

100 PROPRIETARY FUNDS STATEMENT OF NET ASSETS JUNE 30, 2008 Governmental Activities - Sewer Water Internal Service Enterprise Enterprise Total Funds ASSETS CURRENT: Cash and cash equivalents $ 20,399,952 $ 2,673,509 $ 23,073,461 $ 2,752,341 Receivables, net of allowance for uncollectibles: Water fees - 1,450,486 1,450,486 - Sewer fees 7,836,663-7,836,663 - Departmental and other ,650 Intergovernmental - 58,989 58,989 - Working capital deposit ,785,000 Total current assets 28,236,615 4,182,984 32,419,599 4,873,991 NONCURRENT: Capital assets, nondepreciable 16,230, ,480 17,122,693 - Capital assets, depreciable 71,099,021 47,550, ,649,572 - Total noncurrent assets 87,329,234 48,443, ,772,265 - TOTAL ASSETS 115,565,849 52,626, ,191,864 4,873,991 LIABILITIES CURRENT: Warrants payable 1,631, ,437 1,777,214 2,975 Accrued payroll 4,694 26,103 30,797 - Health claims payable ,360,599 Accrued interest 1,245, ,473 1,451,903 - Other liabilities 74,100-74,100 - Capital lease obligations 15,569 26,526 42,095 - Compensated absences 27, , ,000 - Bonds and notes payable 18,031,092 3,516,081 21,547,173 - Total current liabilities 21,029,662 4,033,620 25,063,282 1,363,574 NONCURRENT: Capital lease obligations 65, , ,905 - Compensated absences 33, , ,000 - Bonds and notes payable 64,924,381 14,839,356 79,763,737 - Total noncurrent liabilities 65,022,812 15,085,830 80,108,642 - TOTAL LIABILITIES 86,052,474 19,119, ,171,924 1,363,574 NET ASSETS Invested in capital assets, net of related debt 24,773,713 32,761,103 57,534,816 - Unrestricted 4,739, ,462 5,485,124 3,510,417 TOTAL NET ASSETS $ 29,513,375 $ 33,506,565 $ 63,019,940 $ 3,510,417 See notes to basic financial statements. B-34

101 PROPRIETARY FUNDS STATEMENT OF REVENUES, EXPENSES AND CHANGES IN FUND NET ASSETS FISCAL YEAR ENDED JUNE 30, 2008 Governmental Activities - Sewer Water Internal Service Enterprise Enterprise Total Funds OPERATING REVENUES: Employee contributions $ - $ - $ - $ 2,203,882 Employer contributions ,642,061 Charges for services 6,608,792 5,027,645 11,636,437 - Other ,985 TOTAL OPERATING REVENUES 6,608,792 5,027,645 11,636,437 13,201,928 OPERATING EXPENSES: Cost of services and administration 1,872,356 3,014,413 4,886,769 - Depreciation 1,816,097 2,305,379 4,121,476 - Employee benefits ,629,220 TOTAL OPERATING EXPENSES 3,688,453 5,319,792 9,008,245 11,629,220 OPERATING INCOME (LOSS) 2,920,339 (292,147) 2,628,192 1,572,708 NONOPERATING REVENUES (EXPENSES): Investment income 696,744 46, ,793 48,836 Interest expense (2,026,814) (561,005) (2,587,819) - Intergovernmental 161, ,690 - TOTAL NONOPERATING REVENUES (EXPENSES), NET (1,168,380) (514,956) (1,683,336) 48,836 INCOME (LOSS) BEFORE TRANSFERS 1,751,959 (807,103) 944,856 1,621,544 TRANSFERS: Transfers in 352, , ,886 - CHANGE IN NET ASSETS 2,104,862 (562,120) 1,542,742 1,621,544 NET ASSETS AT BEGINNING OF YEAR 27,408,513 34,068,685 61,477,198 1,888,873 NET ASSETS AT END OF YEAR $ 29,513,375 $ 33,506,565 $ 63,019,940 $ 3,510,417 See notes to basic financial statements. B-35

102 PROPRIETARY FUNDS STATEMENT OF CASH FLOWS FISCAL YEAR ENDED JUNE 30, 2008 Governmental Activities - Sewer Water Internal Service Enterprise Enterprise Total Funds CASH FLOWS FROM OPERATING ACTIVITIES: Receipts from customers and users $ 5,209,351 $ 7,298,034 $ 12,507,385 $ 2,203,882 Receipts from interfund services provided ,766,420 Payments to vendors (4,169,226) (1,925,597) (6,094,823) (11,778,647) Payments to employees (509,910) (1,401,825) (1,911,735) - NET CASH FROM OPERATING ACTIVITIES 530,215 3,970,612 4,500,827 1,191,655 CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES: Transfers in 352, , ,886 - CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES: Proceeds from the issuance of bonds and notes 15,722,000 2,195,000 17,917,000 - Capital leases.. 81, , ,000 - Acquisition and construction of capital assets (15,348,056) (2,442,723) (17,790,779) - Principal payments on bonds and notes (1,838,464) (1,234,985) (3,073,449) - Interest paid on capital debt (2,756,791) (575,264) (3,332,055) - NET CASH FROM CAPITAL AND RELATED FINANCING ACTIVITIES (4,140,311) (1,919,972) (6,060,283) - CASH FLOWS FROM INVESTING ACTIVITIES: Investment income 696,744 46, ,793 48,836 NET CHANGE IN CASH AND CASH EQUIVALENTS (2,560,449) 2,341,672 (218,777) 1,240,491 CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 22,960, ,837 23,292,238 1,511,850 CASH AND CASH EQUIVALENTS AT END OF YEAR $ 20,399,952 $ 2,673,509 $ 23,073,461 $ 2,752,341 RECONCILIATION OF OPERATING INCOME (LOSS) TO NET CASH FROM OPERATING ACTIVITIES: Operating income (loss) $ 2,920,339 $ (292,147) $ 2,628,192 $ 1,572,708 Adjustments to reconcile operating income (loss) to net cash from operating activities: Depreciation 1,816,097 2,305,379 4,121,476 - Changes in assets and liabilities: Water fees - (125,150) (125,150) - Sewer fees (1,399,441) - (1,399,441) - Departmental and other (231,626) Intergovernmental - 2,395,539 2,395,539 - Working capital deposit (191,300) Warrants payable (2,712,857) (429,247) (3,142,104) (6,726) Accrued payroll 688 7,238 7,926 - Health claims payable ,599 Other liabilities (100,611) - (100,611) - Accrued compensated absences 6, , ,000 - Total adjustments (2,390,124) 4,262,759 1,872,635 (381,053) NET CASH FROM OPERATING ACTIVITIES $ 530,215 $ 3,970,612 $ 4,500,827 $ 1,191,655 NONCASH INVESTING, CAPITAL, AND FINANCING ACTIVITIES: Intergovernmental subsidy of principal and interest payments $ 161,690 See notes to basic financial statements. B-36

103 FIDUCIARY FUNDS STATEMENT OF FIDUCIARY NET ASSETS JUNE 30, 2008 Private Purpose Agency Trust Funds Funds ASSETS Cash and cash equivalents $ 627 $ 782,815 Investments 2,669 32,547 Receivables, net of allowance for uncollectibles: Departmental and other - 338,741 TOTAL ASSETS 3,296 1,154,103 LIABILITIES Warrants payable - 2,419 Accrued payroll - 35,586 Liabilities due depositors - 998,087 Other liabilities - 118,011 TOTAL LIABILITIES - 1,154,103 NET ASSETS Held in trust... $ 3,296 $ - See notes to basic financial statements. B-37

104 FIDUCIARY FUNDS STATEMENT OF CHANGES IN FIDUCIARY NET ASSETS FISCAL YEAR ENDED JUNE 30, 2008 Private Purpose Trust Funds ADDITIONS: Net investment income (loss): Interest $ 155 NET ASSETS AT BEGINNING OF YEAR 3,141 NET ASSETS AT END OF YEAR $ 3,296 See notes to basic financial statements. B-38

105 Notes to Basic Financial Statements Fiscal Year Ended June 30, 2008 NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Notes to basic financial statements The accompanying basic financial statements of the (the Town) have been prepared in accordance with accounting principles generally accepted in the United States of America (GAAP). The Governmental Accounting Standards Board (GASB) is the recognized standard-setting body for establishing governmental accounting and financial reporting principles. The significant Town accounting policies are described herein. A. Reporting Entity The Town is a Massachusetts municipal corporation that is governed by an elected Board of Selectmen and an appointed Town Manager. For financial reporting purposes, the Town has included all funds, organizations, agencies, boards, commissions and institutions. The Town has also considered all potential component units for which it is financially accountable as well as other organizations for which the nature and significance of their relationship with the Town are such that exclusion would cause the basic financial statements to be misleading or incomplete. As required by GAAP, these basic financial statements present the Town (the primary government) and its component units. It has been determined that there are no component units that meet the requirements for inclusion in the Town s basic financial statements. Joint Venture The Town has entered into a joint venture for the Shawsheen Valley Technical High School along with other municipalities to pool resources and share the costs, risk and rewards of providing goods or services to venture participants directly, or for the benefit of the general public or specified recipients. The Town has no equity interest in this joint venture. As of June 30, 2008 the Town s annual assessment was $4,108,278. Complete financial statements for the Shawsheen Valley Technical High School can be obtained by contacting their administrative offices at 100 Cook Street, Billerica, MA B. Government-Wide and Fund Financial Statements Government-Wide Financial Statements The government-wide financial statements (i.e., statement of net assets and the statement of changes in net assets) report information on all of the non-fiduciary activities of the primary government. Governmental activities are primarily supported by taxes and intergovernmental revenues. Fund Financial Statements Separate financial statements are provided for governmental funds, proprietary funds, and fiduciary funds, even though fiduciary funds are excluded from the government-wide financial statements. Major individual governmental funds are reported as separate columns in the fund financial statements. Nonmajor funds are aggregated and displayed in a single column. Major Fund Criteria Major funds must be reported if the following criteria are met: If the total assets, liabilities, revenues, or expenditures/expenses of an individual governmental or enterprise fund are at least 10 percent of the corresponding element (assets, liabilities, etc.) for all funds of that category or type (total governmental or total enterprise funds), and B-39

106 Notes to Basic Financial Statements Fiscal Year Ended June 30, 2008 If the total assets, liabilities, revenues, or expenditures/expenses of the individual governmental fund or enterprise fund are at least 5 percent of the corresponding element for all governmental and enterprise funds combined. Additionally, any other governmental or enterprise fund that management believes is particularly significant to the basic financial statements may be reported as a major fund. Internal service funds and fiduciary funds are reported by fund type. C. Measurement Focus, Basis of Accounting and Financial Statement Presentation Government-Wide Financial Statements The government-wide financial statements are reported using the economic resources measurement focus and the accrual basis of accounting. Under this method, revenues are recorded when earned and expenses are recorded when the liabilities are incurred. Real estate and personal property taxes are recognized as revenues in the fiscal year for which they are levied. Grants and similar items are recognized as revenue as soon as all eligibility requirements imposed by the provider have been met. The statement of activities demonstrates the degree to which the direct expenses of a particular function or segment are offset by program revenues. Direct expenses are those that are clearly identifiable with a specific function or segment. Program revenues include the following: Charges to customers or applicants who purchase, use, or directly benefit from goods, services, or privileges provided by a given function or segment. Grants and contributions that are restricted to meeting the operational requirements of a particular function or segment. Taxes and other items not identifiable as program revenues are reported as general revenues. For the most part, the effect of interfund activity has been removed from the government-wide financial statements. However, the effect of interfund services provided and used between functions is not eliminated as the elimination of these charges would distort the direct costs and program revenues reported for the functions affected. Fund Financial Statements Governmental fund financial statements are reported using the flow of current financial resources measurement focus and the modified accrual basis of accounting. Under the modified accrual basis of accounting, revenues are recognized when susceptible to accrual (i.e., measurable and available). Measurable means the amount of the transaction can be determined and available means collectible within the current period or soon enough thereafter to pay liabilities of the current period. Expenditures are recorded when the related fund liability is incurred, except for unmatured interest on general long-term debt which is recognized when due, and certain compensated absences, claims and judgments which are recognized when the obligations are expected to be liquidated with current expendable available resources. Real estate and personal property tax revenues are considered available if they are collected within 60 days after fiscal year-end. Investment income is susceptible to accrual. Other receipts and tax revenues become measurable and available when the cash is received and are recognized as revenue at that time. B-40

107 Notes to Basic Financial Statements Fiscal Year Ended June 30, 2008 Entitlements and shared revenues are recorded at the time of receipt or earlier if the susceptible to accrual criteria is met. Expenditure driven grants recognize revenue when the qualifying expenditures are incurred and all other grant requirements are met. The following major governmental funds are reported: The general fund is the primary operating fund. It is used to account for all financial resources, except those that are required to be accounted for in another fund. The nonmajor governmental funds consist of other special revenue, capital projects and permanent funds that are aggregated and presented in the nonmajor governmental funds column on the governmental funds financial statements. The following describes the general use of these fund types: The special revenue fund is used to account for the proceeds of specific revenue sources (other than permanent funds or capital projects funds) that are restricted by law or administrative action to expenditures for specified purposes. The capital projects fund is used to account for financial resources to be used for the acquisition or construction of major capital facilities (other than those financed by Trust Funds). The permanent fund is used to account for financial resources that are legally restricted to the extent that only earnings, not principal, may be used for purposes that support the governmental programs. Proprietary fund financial statements are reported using the flow of economic resources measurement focus and use the accrual basis of accounting. Under this method, revenues are recorded when earned and expenses are recorded when the liabilities are incurred. 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 connection with the proprietary funds principal ongoing operations. All revenues and expenses not meeting this definition are reported as nonoperating revenues and expenses. The following proprietary fund types are reported: The sewer enterprise fund accounts for the Town s sewer activities. The water enterprise fund accounts for the Town s water activities. The internal service fund is used to account for the financing of services provided by one department to other departments or governmental units. This fund is used to account for risk financing activities related to the Town s health insurance and workers compensation. Fiduciary funds are used to account for financial 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. B-41

108 Notes to Basic Financial Statements Fiscal Year Ended June 30, 2008 The following fiduciary fund types are reported: The private-purpose trust fund is used to account for trust arrangements that exclusively benefit individuals, private organizations, or other governments. Some of these trusts have donor restrictions and trustee policies that do not allow the endowment portion and any unrealized appreciation to be spent. The donor restrictions and trustee policies only allows the trustees to authorize spending of the realized investment earnings. The Town s educational scholarship trusts are accounted for in this fund. The agency fund is used to account for assets held in a purely custodial capacity, such as collection and payment of charges for special details, escrow accounts, deposits and deputy collector accounts. Government-Wide and Fund Financial Statements 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 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 business-type activities and enterprise funds, subject to this same limitation. The government has elected not to follow subsequent private-sector guidance. D. Cash and Investments Government-Wide and Fund Financial Statements Cash and cash equivalents are considered to be cash on hand, demand deposits and short-term investments with an original maturity of three months or less from the date of acquisition. Investments are carried at fair value. E. Accounts Receivable Government-Wide and Fund Financial Statements The recognition of revenue related to accounts receivable reported in the government-wide financial statements and the proprietary funds and fiduciary funds financial statements are reported under the accrual basis of accounting. The recognition of revenue related to accounts receivable reported in the governmental funds financial statements are reported under the modified accrual basis of accounting. Real Estate, Personal Property Taxes and Tax Liens 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 August 1 st, November 1 st, February 1 st and May 1 st 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 of the levy. Real estate tax liens are processed during the second and fourth quarter of every fiscal year on delinquent properties and are recorded as receivables in the fiscal year they are processed. Real estate receivables are secured via the tax lien process and are considered 100% collectible. Accordingly, an allowance for uncollectibles is not reported. B-42

109 Notes to Basic Financial Statements Fiscal Year Ended June 30, 2008 Personal property taxes cannot be secured through the lien process. The allowance for uncollectibles is estimated based on historical trends and specific account analysis. Motor Vehicle Excise Motor vehicle excise taxes are assessed annually for each vehicle registered in the Town and are recorded as receivables in the fiscal year of the levy. The Commonwealth is responsible for reporting the number of vehicles registered and the fair values of those vehicles. The tax calculation is the fair value of the vehicle multiplied by $25 per $1,000 of value. The allowance for uncollectibles is estimated based on historical trends and specific account analysis. Sewer Sewer user fees are levied semi-annually for individual and small commercial meter readings and quarterly for large commercial meter readings. These fees are subject to penalties and interest if they are not paid by the respective due date. Sewer liens are processed in December of every year and included as a lien on the property owner s tax bill. Sewer charges and liens are recorded as receivables in the fiscal year of the levy. Since the receivables are secured via the lien process, these accounts are considered 100% collectible and therefore do not report an allowance for uncollectibles. Water Water user fees are levied semi-annually for individual and small commercial meter readings and quarterly for large commercial meter readings. These fees are subject to penalties and interest if they are not paid by the respective due date. Water liens are processed in December of every year and included as a lien on the property owner s tax bill. Water charges and liens are recorded as receivables in the fiscal year of the levy. Since the receivables are secured via the lien process, these accounts are considered 100% collectible and therefore do not report an allowance for uncollectibles. Departmental and Other Departmental and other receivables consist primarily of ambulance and Veteran s receivables which are recorded as receivables in the fiscal year accrued. The allowance of uncollectibles is estimated based on historical trends and specific account analysis. Intergovernmental Various federal and state grants for operating and capital purposes are applied for and received annually. For non-expenditure driven grants, receivables are recorded as soon as all eligibility requirements imposed by the provider have been met. For expenditure driven grants, receivables are recorded when the qualifying expenditures are incurred and all other grant requirements are met. These receivables are considered 100% collectible and therefore do not report an allowance for uncollectibles. B-43

110 Notes to Basic Financial Statements Fiscal Year Ended June 30, 2008 F. Inventories Government-Wide and Fund Financial Statements Inventories are recorded as expenditures at the time of purchase. Such inventories are not material in total to the government-wide and fund financial statements, and therefore are not reported. G. Capital Assets Government-Wide and Proprietary Fund Financial Statements Capital assets, which include land, land improvements, buildings, machinery and equipment, and infrastructure (e.g., roads, water mains, sewer mains, and similar items), are reported in the governmental activity column of the government-wide financial statements, and the proprietary fund financial statements. Capital assets are recorded at historical cost, or at estimated historical cost, if actual historical cost is not available. Donated capital assets are recorded at the estimated fair market value at the date of donation. Except for the capital assets of the governmental activities column in the government-wide financial statements, construction period interest is capitalized on constructed capital assets. All purchases and construction costs in excess of $10,000 are capitalized at the date of acquisition or construction, respectively, with expected useful lives of greater than one year. Capital assets (excluding land) are depreciated on a straight-line basis. The estimated useful lives of capital assets are as follows: Capital Asset Type Estimated Useful Life (in years) Land improvements 5-50 Buildings 5-50 Building improvements Machinery and equipment 3-20 Library and school books 3-10 Computer software 5-10 Infrastructure The cost of normal maintenance and repairs that do not add to the value of the assets or materially extend asset lives are not capitalized and are treated as expenses when incurred. Improvements are capitalized. Governmental Fund Financial Statements Capital asset costs are recorded as expenditures in the acquiring fund in the fiscal year of the purchase. H. Interfund Receivables and Payables During the course of its operations, transactions occur between and within individual funds that may result in amounts owed between funds. B-44

111 Notes to Basic Financial Statements Fiscal Year Ended June 30, 2008 Government-Wide Financial Statements Transactions of a buyer/seller nature between and within governmental funds and internal service funds are eliminated from the governmental activities in the statement of net assets. Fund Financial Statements Transactions of a buyer/seller nature between and within funds are not eliminated from the individual fund statements. Receivables and payables resulting from these transactions are classified as Due from other funds or Due to other funds on the balance sheet. I. Interfund Transfers During the course of its operations, resources are permanently reallocated between and within funds. These transactions are reported as transfers in and transfers out. Government-Wide Financial Statements Transfers between and within governmental funds and internal service funds are eliminated from the governmental activities in the statement of net assets. Fund Financial Statements Transfers between and within funds are not eliminated from the individual fund statements and are reported as transfers in and transfers out. J. Deferred Revenue Deferred revenue at the governmental fund financial statement level represents billed receivables that do not meet the available criterion in accordance with the current financial resources measurement focus and the modified accrual basis of accounting. Deferred revenue is recognized as revenue in the conversion to the government-wide (full accrual) financial statements. K. Net Assets and Fund Equity Government-Wide Financial Statements (Net Assets) Net assets are reported as restricted when amounts are not available for appropriation or are legally restricted by outside parties for a specific future use. Net assets have been restricted for the following: Permanent funds expendable represents the endowment and the amount of realized and unrealized investment earnings of donor restricted trusts that support governmental programs. Gifts and grants represents restrictions placed on assets from outside parties and consists primarily of gifts and federal and state grants. B-45

112 Notes to Basic Financial Statements Fiscal Year Ended June 30, 2008 Fund Financial Statements (Fund Balances) Fund balances are reserved for amounts that are not available for appropriation or are legally restricted by outside parties for a specific future use. Designations of fund balance represent tentative management plans that are subject to change. Fund balances have been reserved for the following: Encumbrances and continuing appropriations represents amounts obligated under purchase orders, contracts and other commitments for expenditures that are being carried over to the ensuing fiscal year. Fund balances have been designated for the following: Subsequent year s expenditures represents amounts appropriated for the fiscal year 2009 operating budget. L. Long-term debt Government-Wide and Proprietary Fund Financial Statements Long-term debt is reported as liabilities in the government-wide and proprietary fund statement of net assets. Material bond premiums and discounts are deferred and amortized over the life of the bonds using the effective interest method. Governmental Fund Financial Statements The face amount of governmental funds long-term debt is reported as other financing sources. Bond premiums and discounts, as well as issuance costs, are recognized in the current period. Bond premiums are reported as other financing sources and bond discounts are reported as other financing uses. Issuance costs, whether or not withheld from the actual bond proceeds received, are reported as general government expenditures. M. Investment Income Excluding the permanent funds, investment income derived from major and nonmajor governmental funds is legally assigned to the general fund unless otherwise directed by Massachusetts General Law (MGL). N. Compensated Absences Employees are granted vacation and sick leave in varying amounts based on collective bargaining agreements, state laws and executive policies. Government-Wide and Proprietary Fund Financial Statements Vested or accumulated vacation and sick leave are reported as liabilities and expensed as incurred. Governmental Fund Financial Statements Vested or accumulated vacation and sick leave, which will be liquidated with expendable available financial resources, are reported as expenditures and fund liabilities upon maturity of the liability. B-46

113 Notes to Basic Financial Statements Fiscal Year Ended June 30, 2008 O. Post Retirement Benefits Government-Wide and Fund Financial Statements In addition to providing pension benefits, health and other insurance coverage is provided for retired employees and their survivors in accordance with MGL, Chapter 32, on a pay-as-you-go basis. The cost of providing this insurance is recognized by recording the employer s share of insurance premiums, which range from 80% to 100%, in the general fund in the fiscal year paid. For the fiscal year ended June 30, 2008, this expense/expenditure totaled approximately $4,167,000. There were 446 participants eligible to receive benefits at June 30, P. Use of Estimates Government-Wide and Fund Financial Statements The preparation of basic financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure 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. Q. Fund Deficits The Street Projects special revenue fund has a deficit fund balance of $6,036. This deficit will be funded by state grants during fiscal year R. Total Column Government-Wide Financial Statements The total column presented on the government-wide financial statements represents consolidated financial information. Fund Financial Statements The total column on the fund financial statements is presented only to facilitate financial analysis. Data in this column is not the equivalent of consolidated financial information. NOTE 2 CASH AND INVESTMENTS A cash and investment pool is maintained that is available for use by all funds. Each fund type's portion of this pool is displayed on the balance sheet as "Cash and cash equivalents". The deposits and investments of the trust funds are held separately from those of other funds. Statutes authorize the investment in obligations of the U.S. Treasury, agencies, and instrumentalities, certificates of deposit, repurchase agreements, money market accounts, bank deposits and the State Treasurer's Investment Pool (the Pool). The Treasurer may also invest trust funds in securities, other than mortgages or collateral loans, which are legal for the investment of funds of savings banks under the laws of the Commonwealth. B-47

114 Notes to Basic Financial Statements Fiscal Year Ended June 30, 2008 The Pool meets the criteria of an external investment pool. The Pool is administered by the Massachusetts Municipal Depository Trust (MMDT), which was established by the Treasurer of the Commonwealth who serves as Trustee. The fair value of the position in the Pool is the same as the value of the Pool shares. Custodial Credit Risk Deposits In the case of deposits, this is the risk that in the event of a bank failure, the Town s deposits may not be returned to it. The Town does not have a formal deposit policy for custodial credit risk. At fiscal year-end, the carrying amount of deposits totaled $20,254,279 and the bank balance totaled $20,608,462. Of the bank balance, $798,643 was covered by Federal Depository Insurance, $2,934,731 was covered by the Depositors Insurance Fund, $976,302 was covered by Securities Investor Protector Corporation, and $15,898,786 was exposed to custodial credit risk because it was uninsured and uncollateralized. Investments As of June 30, 2008, the Town of Tewksbury had the following investments: Investment Type Maturity Fair Value 1-5 Years 6-10 Years Debt Securities: Government Sponsored Enterprises $ 1,837,209 $ 1,367,466 $ 469,743 Corporate Bonds , ,572 - Total Debt Securities... 2,111,781 $ 1,642,038 $ 469,743 Other Investments: Equity Securities... 43,670 MMDT 17,706,113 Total Investments... $ 19,861,564 Custodial Credit Risk Investments For an investment, this is the risk that, in the event of a failure by the counterparty, the Town will not be able to recover the value of its investments or collateral security that are in the possession of an outside party. The Town s investments are not subject to custodial credit risk because their existence is not evidenced by securities that exist in physical or book-entry form. The Town s $2,111,781 in debt securities are fully insured by Securities Investor Protector Corporation and are not exposed to custodial credit risk. The Town does not have a formal investment policy for custodial credit risk. Interest Rate Risk The Town does 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. B-48

115 Notes to Basic Financial Statements Fiscal Year Ended June 30, 2008 Credit Risk The Town has not adopted a formal policy related to Credit Risk. The Town s government sponsored enterprises of $1,837,209 are rated AAA and corporate bonds of $274,572 are rated A+. Concentration of Credit Risk The Town places no limit on the amount the government may invest in any one issuer. The Town did not have any securities exceeding 5 percent of their total investments. NOTE 3 RECEIVABLES At June 30, 2008, receivables for the individual major governmental funds and nonmajor, internal service, and fiduciary funds in the aggregate, including the applicable allowances for uncollectible accounts, are as follows: Gross Allowance for Net Amount Uncollectibles Amount Receivables: Real estate and personal property taxes $ 945,700 $ (62,605) $ 883,095 Tax liens 2,351,575-2,351,575 Motor vehicle excise taxes 298,437 (82,746) 215,691 Departmental and other 1,242,701 (179,252) 1,063,449 Intergovernmental 7,867,337-7,867,337 Total $ 12,705,750 $ (324,603) $ 12,381,147 At June 30, 2008, receivables for the sewer and water enterprise funds are as follows: Gross Allowance for Net Amount Uncollectibles Amount Receivables: Sewer fees $ 7,836,663 $ - $ 7,836,663 Water fees 1,450,486-1,450,486 Intergovernmental 58,989-58,989 Total $ 9,346,138 $ - $ 9,346,138 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. At the end of the current fiscal year, the various components of deferred revenue reported in the governmental funds were as follows: Other General Governmental Fund Funds Total Receivable type: Real estate and personal property taxes $ 291,837 $ - $ 291,837 Tax liens 2,348,279 3,296 2,351,575 Motor vehicle excise taxes 215, ,691 Departmental and other 374, ,965 Intergovernmental.. 7,376, ,194 7,756,194 Total $ 10,606,772 $ 383,490 $ 10,990,262 B-49

116 Notes to Basic Financial Statements Fiscal Year Ended June 30, 2008 NOTE 4 CAPITAL ASSETS Capital asset activity for the governmental activities for the fiscal year ended June 30, 2008, was as follows: Beginning Ending Balance Increases Decreases Balance Governmental Activities: Capital assets not being depreciated: Land $ 1,845,881 $ - $ - $ 1,845,881 Construction in progress 4,677,123 - (4,637,123) 40,000 Artwork , ,500 Total capital assets not being depreciated 7,419,504 - (4,637,123) 2,782,381 Capital assets being depreciated: Land improvements 547, ,237 Buildings 49,204,790 4,774,714-53,979,504 Buildings improvements 11,518, ,518,727 Machinery and equipment 6,488, ,229 (102,102) 6,582,247 Library and school books 3,261, ,261,757 Computer software 122, ,920 Infrastructure 41,550, ,673-41,775,780 Total capital assets being depreciated 112,693,658 5,196,616 (102,102) 117,788,172 Less accumulated depreciation for: Land improvements (300,544) (17,161) - (317,705) Buildings (12,069,160) (1,355,517) - (13,424,677) Buildings improvements (7,979,388) (373,355) - (8,352,743) Machinery and equipment (3,106,111) (646,720) 102,102 (3,650,729) Library and school books (2,084,603) (324,473) - (2,409,076) Computer software (122,920) - - (122,920) Infrastructure (25,562,968) (841,283) - (26,404,251) Total accumulated depreciation (51,225,694) (3,558,509) 102,102 (54,682,101) Total capital assets being depreciated, net 61,467,964 1,638,107-63,106,071 Total governmental activities capital assets, net $ 68,887,468 $ 1,638,107 $ (4,637,123) $ 65,888,452 B-50

117 Notes to Basic Financial Statements Fiscal Year Ended June 30, 2008 Capital asset activity for the business type activities for the fiscal year ended June 30, 2008, was as follows: Beginning Ending Balance Increases Decreases Balance Sewer Activities: Capital assets not being depreciated: Construction in progress $ 41,019,680 $ 16,230,213 $ (41,019,680) $ 16,230,213 Capital assets being depreciated: Machinery and equipment - 81,000 81,000 Infrastructure 46,328,091 41,019,680-87,347,771 Total capital assets being depreciated 46,328,091 41,100,680-87,428,771 Less accumulated depreciation for: Machinery and equipment - (8,100) (8,100) Infrastructure. (14,513,653) (1,807,997) - (16,321,650) Total accumulated depreciation (14,513,653) (1,816,097) - (16,329,750) Total sewer capital assets being depreciated, net 31,814,438 39,284,583-71,099,021 Total sewer capital assets, net $ 72,834,118 $ 55,514,796 $ (41,019,680) $ 87,329,234 Water Activities Capital assets not being depreciated: Land $ 204,000 $ - $ - $ 204,000 Construction in progress 6,812, ,480 (6,812,596) 688,480 Total capital assets not being depreciated 7,016, ,480 (6,812,596) 892,480 Capital assets being depreciated: Buildings. 15,175,000 7,280,883-22,455,883 Building improvements. 4,339, ,339,085 Machinery and equipment 118, , ,066 Infrastructure. 67,913, ,580-68,897,841 Total capital assets being depreciated 87,546,036 8,566,839-96,112,875 Less accumulated depreciation for: Buildings. (9,150,869) (687,613) - (9,838,482) Building improvements. (1,086,679) (186,077) - (1,272,756) Machinery and equipment (6,869) (43,876) - (50,745) Infrastructure. (36,012,528) (1,387,813) - (37,400,341) Total accumulated depreciation (46,256,945) (2,305,379) - (48,562,324) Total water capital assets being depreciated, net 41,289,091 6,261,460 - $ 47,550,551 Total water capital assets, net $ 48,305,687 $ 6,949,940 $ (6,812,596) $ 48,443,031 B-51

118 Notes to Basic Financial Statements Fiscal Year Ended June 30, 2008 Approximately $963,000 of interest related to the master sewer project was capitalized and included in construction in progress at June 30, Depreciation expense was charged to functions/programs of the primary government as follows: Governmental Activities: General government $ 24,347 Public safety 424,138 Education 1,551,509 Public works 1,143,038 Health and human services 125,718 Culture and recreation 289,759 Total depreciation expense - governmental activities $ 3,558,509 NOTE 5 INTERFUND RECEIVABLES, PAYABLES AND TRANSFERS Interfund transfers for the fiscal year ended June 30, 2008, are summarized as follows: Transfers In: Nonmajor Sewer Water General Governmental Enterprise Enterprise Transfers Out: Fund Funds Fund Fund Total General Fund $ - $ 325,888 $ 352,903 $ 229,983 $ 908,774 (1) Nonmajor Governmental Funds 39, ,000 54,400 (2) Total $ 39,400 $ 325,888 $ 352,903 $ 244,983 $ 963,174 (1) Represents budgeted transfers from the general fund to the special revenue nonmajor funds and the sewer and water enterprise funds. (2) Represents a budgeted transfer of $34,000 and other transfers from special revenue nonmajor funds to the general fund. Also represents a transfer from capital project nonmajor funds to the water enterprise fund. An interfund receivable/payable of $59,433 exists between the general fund and the street projects nonmajor special revenue fund. Its purpose is to cover short-term cash needs that will be funded by future grant proceeds. B-52

119 Notes to Basic Financial Statements Fiscal Year Ended June 30, 2008 NOTE 6 CAPITAL LEASES The Town has entered into several lease agreements to finance the acquisition of machinery and equipment. These lease agreements qualify as capital leases for accounting purposes and, therefore, have been recorded at the present value of their future minimum lease payments as of the inception date. The Town has reported $2,502,286 in governmental activities and $219,000 in business-type activities for these assets acquired through capital lease agreements. The future minimum lease obligations and the net present value of these minimum lease payments at June 30, 2008, are as follows: Fiscal Years Governmental Business-Type Ending June 30 Activities Activities 2009 $ 556,735 $ 49, ,376 49, ,108 48, ,259 47, ,541 46,442 Total minimum lease payments 1,502, ,077 Less: amounts representing interest (116,185) (22,077) Present value of minimum lease payments $ 1,385,834 $ 219,000 NOTE 7 SHORT-TERM FINANCING Short-term debt may be authorized and issued to fund the following: Current operating costs prior to the collection of revenues through issuance of revenue or tax anticipation notes (RANS or TANS). Capital project costs and other approved expenditures incurred prior to obtaining permanent financing through issuance of bond anticipation notes (BANS) or grant anticipation notes (GANS). Short-term loans are general obligations and carry maturity dates that are limited by statute. Interest expenditures and expenses for short-term borrowings are accounted for in the general fund and water and sewer enterprise funds, respectively. B-53

120 Notes to Basic Financial Statements Fiscal Year Ended June 30, 2008 Details related to the short-term debt activity for the fiscal year ended June 30, 2008, is as follows: Balance at Balance at Rate June 30, Renewed/ Retired/ June 30, Type Purpose (%) Due Date 2007 Issued Redeemed 2008 Governmental Funds BAN Sidewalks /28/08 $ 75,000 $ - $ (75,000) $ - Enterprise Funds BAN Water /15/08 $ 573,941 $ - $ (573,941) $ - BAN Sewer /28/08 20,000,000 - (20,000,000) - BAN Sewer /10/09-15,720,941-15,720,941 BAN Water /10/09-1,820,000-1,820,000 BAN Water /10/09-375, ,000 Total enterprise funds $ 20,573,941 $ 17,915,941 $ (20,573,941) $ 17,915,941 NOTE 8 LONG-TERM DEBT Under the provisions of Chapter 44, Section 10, Municipal Law authorizes indebtedness up to a limit of 5% of the equalized valuation. Debt issued in accordance with this section of the law is designated as being "inside the debt limit". In addition, however, debt may be authorized in excess of that limit for specific purposes. Such debt, when issued, is designated as being "outside the debt limit". Details related to the outstanding indebtedness at June 30, 2008, and the debt service requirements are as follows: Bonds and Notes Payable Schedule Governmental Funds Interest Outstanding Outstanding Rate at June 30, at June 30, Project (%) 2007 Issued Redeemed 2008 Schools $ 14,356,619 $ - $ (1,460,525) $ 12,896,094 Fire ,002,400 - (97,750) 904,650 Library ,588,800 - (156,800) 1,432,000 Police ,740,000 - (250,000) 1,490,000 Town Hall/Annex ,910 - (43,180) 334,730 Public Works ,480 - (8,690) 86,790 Roofs ,850 - (11,650) 139,200 Recreation ,000 - (10,000) 30,000 Senior Center ,200,000 - (290,000) 3,910,000 Landfill ,000 - (10,000) 90,000 Sidewalks ,000 75,000 (25,000) 230,000 Total governmental bonds and notes payable $ 23,832,059 $ 75,000 $ (2,363,595) $ 21,543,464 B-54

121 Notes to Basic Financial Statements Fiscal Year Ended June 30, 2008 Debt service requirements for principal and interest for Governmental bonds payable in future fiscal years are as follows: Fiscal Year Principal Interest Total 2009 $ 2,209,095 $ 1,030,652 $ 3,239, ,107, ,227 3,041, ,046, ,578 2,886, ,967, ,157 2,712, ,808, ,506 2,461, ,808, ,781 2,374, ,548, ,938 2,033, ,523, ,272 1,927, ,498, ,138 1,822, ,402, ,134 1,650, ,046, ,755 1,221, , ,243 1,020, ,000 74, , ,000 52, , ,000 30, , ,000 21, , ,000 12, , ,000 3,613 88,613 Total $ 21,543,464 $ 6,723,700 $ 28,267,164 Bonds and Notes Payable Schedule Sewer Enterprise Fund Interest Outstanding Outstanding Rate at June 30, at June 30, Project (%) 2007 Issued Redeemed 2008 Sewer $ 46,539,074 $ 20,001,059 $ (1,667,010) $ 64,873,123 MWPAT-Sewer - 2,588,775 - (227,366) 2,361,409 Total sewer enterprise bonds and notes payable $ 49,127,849 $ 20,001,059 $ (1,894,376) $ 67,234,532 B-55

122 Notes to Basic Financial Statements Fiscal Year Ended June 30, 2008 Debt service requirements for principal and interest for the sewer enterprise fund bonds and notes payable in future fiscal years are as follows: Fiscal Year Principal Interest Total 2009 $ 2,310,151 $ 2,956,490 $ 5,266, ,352,941 2,859,034 5,211, ,397,232 2,759,202 5,156, ,413,133 2,659,160 5,072, ,461,614 2,564,119 5,025, ,509,315 2,465,471 4,974, ,567,512 2,356,006 4,923, ,621,028 2,228,366 4,849, ,679,806 2,104,339 4,784, ,096,051 1,986,317 5,082, ,807,450 1,841,166 5,648, ,900,299 1,660,420 5,560, ,000,500 1,474,734 5,475, ,130,500 1,300,023 5,430, ,233,500 1,129,629 5,363, ,368, ,167 5,320, ,305, ,262 5,073, ,045, ,262 4,627, ,200, ,188 4,606, ,195, ,162 2,416, , , , , , , ,000 84, , ,000 67, , ,000 50, , ,000 33, , ,000 16, ,875 Total $ 67,234,532 $ 35,747,892 $ 102,982,424 Bonds and Notes Payable Schedule Water Enterprise Fund Interest Outstanding Outstanding Rate at June 30, at June 30, Project (%) 2007 Issued Redeemed 2008 Water $ 9,630,867 $ 573,941 $ (951,395) $ 9,253,413 MWPAT-Water ,190,614 - (283,590) 6,907,024 Total water enterprise bonds and notes payable $ 16,821,481 $ 573,941 $ (1,234,985) $ 16,160,437 B-56

123 Notes to Basic Financial Statements Fiscal Year Ended June 30, 2008 Debt service requirements for principal and interest for the water enterprise fund bonds and notes payable in future fiscal years are as follows: Fiscal Year Principal Interest Total 2009 $ 1,321,081 $ 523,208 $ 1,844, ,307, ,390 1,785, ,296, ,570 1,728, ,164, ,117 1,549, ,108, ,181 1,455, , ,667 1,249, , ,063 1,218, , ,701 1,190, , ,632 1,162, , , , , , , , , , ,201 99, , ,953 81, , ,861 63, , ,929 45, , ,660 27, , ,056 14, , ,623 4, ,949 Total $ 16,160,437 $ 3,975,052 $ 20,135,489 The Town is scheduled to be subsidized by the Massachusetts Water Pollution Abatement Trust (MWPAT) on a periodic basis for principal in the amount of $653,429 and interest costs for $495,025. Thus, net MWPAT loan repayments, including interest, are scheduled to be $1,881,280. The interest subsidies are guaranteed. The principal subsidies are supported through future investment income and are expected to be made, although not guaranteed. Since the Town is legally obligated for the total amount of the debt, such amounts have been reported in the accompanying basic financial statements. The fiscal year 2008 principal and interest subsidies totaled $55,912 and $105,778, respectively. The Commonwealth of Massachusetts has approved school construction assistance to the Town. The assistance program, which is administered by the Massachusetts School Building Authority, provides resources for construction costs and debt service interest of general obligation bonds outstanding. The Town is currently receiving annual state grant payments for the Ryan School. During fiscal year 2008 approximately $911,000 of such assistance was received. Approximately $9,165,000 will be received in future years. Of this amount, $1,789,000 represents reimbursement of long-term interest costs and $7,376,000 represents reimbursement of approved construction costs. Accordingly, an intergovernmental receivable and corresponding deferred revenue have been reported in these basic financial statements for $7,376,000 which represents the Commonwealth s share of construction and interest costs for the Ryan School project. B-57

124 Notes to Basic Financial Statements Fiscal Year Ended June 30, 2008 The Town is subject to various debt limits by statute and may issue additional general obligation debt under the normal debt limit. At June 30, 2008, the Town had the following authorized and unissued debt: Purpose Amount Sewer.. $ 35,720,941 Water. 2,962,445 School Purposes 1,390,000 Senior Center. 350,000 Fire Hydrants 160,000 Other.. 91,000 Total $ 40,674,386 Changes in Long-term Liabilities During the fiscal year ended June 30, 2008, the following changes occurred in long-term liabilities: Balance Balance June 30, June 30, Current 2007 Additions Reductions 2008 Portion Governmental Activities: Long-Term Bonds and Notes.. $ 23,832,059 $ 75,000 $ (2,363,595) $ 21,543,464 $ 2,209,095 Capital Leases 1,789,517 78,000 (481,683) 1,385, ,777 Compensated Absences.. 2,510,000 1,556,000 (1,285,000) 2,781,000 1,408,000 Total $ 28,131,576 $ 1,709,000 $ (4,130,278) $ 25,710,298 $ 4,116,872 Business-Type Activities: Long-Term Bonds and Notes.. $ 65,949,330 $ 20,575,000 $ (3,129,361) $ 83,394,969 $ 3,631,232 Capital Leases - 219, ,000 42,095 Compensated Absences.. 193, ,000 (109,000) 308, ,000 Total $ 66,142,330 $ 21,018,000 $ (3,238,361) $ 83,921,969 $ 3,813,327 Compensated absence liabilities related to governmental and business-type activities are normally paid from the funds reporting payroll and related expenditures. With the exception of compensated absence liabilities, the governmental long-term liabilities are generally liquidated by the general fund NOTE 9 RISK FINANCING 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 Town carries commercial insurance. In addition, the Town is self-insured for damages not covered by commercial insurance. The amount of claim settlements has not exceeded insurance coverage in any of the previous three fiscal years. The Town is self-insured for its health insurance and workers compensation activities. The health insurance and workers compensation activities are accounted for in the internal service fund where revenues are recorded when earned and expenses are recorded when the liability is incurred. Incurred But Not Reported claims for workers compensation are immaterial and therefore not reported. B-58

125 Notes to Basic Financial Statements Fiscal Year Ended June 30, 2008 Health Insurance The estimate of Incurred But Not Reported (IBNR) claims is based on a one and one half-month claims paid average. The Town purchases individual stop loss insurance for claims in excess of the coverage provided by the Town in the amount of $100,000 per claim. This liability is the best estimate based on available information. Changes in the reported liability since July 1, 2006, are as follows: Current Year Balance at Claims and Balance at Beginning of Changes in Claims Fiscal Fiscal Year Estimate Payments Year-End Fiscal Year $ 1,123,000 $ (11,538,348) $ 11,727,348 $ 1,312,000 Fiscal Year $ 1,312,000 $ (11,580,621) $ 11,629,220 $ 1,360,599 NOTE 10 PENSION PLAN Plan Description - The Town contributes to the Middlesex Contributory Retirement System (the System), a costsharing multiple-employer defined benefit pension plan administered by the Middlesex Retirement Board (the Board). Substantially all employees are members of the System, except for public school teachers and certain administrators who are members of the Massachusetts Teachers Retirement System, to which the Town does not contribute. Pension benefits and administrative expenses paid by the Teachers Retirement Board are the legal responsibility of the Commonwealth. The amount of these on-behalf payments totaled approximately $6,608,000 for the fiscal year ended June 30, 2008, and, accordingly, are reported in the general fund as intergovernmental revenues and pension benefit expenditures. The System provides retirement, disability and death benefits to plan members and beneficiaries. Chapter 32 of the MGL assigns authority to establish and amend benefit provisions of the plan. Cost-of-living adjustments granted between 1981 and 1997 and any increase in other benefits imposed by the Commonwealth s state law during those years are borne by the Commonwealth and are deposited into the pension fund. Cost-of-living adjustments granted after 1997 must be approved by the Board and are borne by the System. The System issues a publicly available unaudited financial report in accordance with guidelines established by the Commonwealth s Public Employee Retirement Administration Commission. That report may be obtained by contacting the System located at 25 Linnell Circle, Billerica, MA Funding Policy - Plan members are required to contribute to the System at rates ranging from 5% to 11% of annual covered compensation. The Town is required to pay into the System its share of the system-wide actuarial determined contribution that is apportioned among the employers based on active current payroll. The contributions of plan members and the Town are governed by Chapter 32 of the MGL. The Town s contributions to the System for the fiscal years ended June 30, 2008, 2007, and 2006 were $4,912,106, $4,289,132, and $3,799,131, respectively, which equaled its required contribution for each fiscal year. B-59

126 Notes to Basic Financial Statements Fiscal Year Ended June 30, 2008 NOTE 11 COMMITMENTS The Town continued its Master Sewer Project whose purpose is to provide sewer services to the remaining 60% of the Town. The total cost of the project is expected to be funded through the issuance of approximately $99,000,000 in debt that will be self-supported through user fees. As of June 30, 2008 the Town has expended approximately $64,137,000 for this project. NOTE 12 CONTINGENCIES The Town participates in a number of federal award programs. Although the grant programs have been audited in accordance with the provisions of the Single Audit Act Amendments of 1996 through June 30, 2008, these programs are still subject to financial and compliance audits. The amount, if any, of expenditures which may be disallowed by the granting agencies cannot be determined at this time, although it is expected such amounts, if any, to be immaterial. The Town has been named a potentially responsible party in an environmental case associated with a landfill. Additionally, the Town has other various legal actions and claims pending. Litigation is subject to many uncertainties, and the outcome of individual litigated matters is not always predictable. Although the amount of liability, if any, at June 30, 2008, cannot be ascertained, management believes any resulting liability should not materially affect the financial position at June 30, NOTE 13 IMPLEMENTATION OF NEW GASB PRONOUNCEMENTS During fiscal year 2008, the following GASB pronouncements were implemented: The GASB issued Statement #43, Financial Reporting for Postemployment Benefit Plans Other Than Pension Plans. The standards in this statement did not impact the basic financial statements. The GASB issued Statement #50, Pension Disclosures an amendment of GASB Statements No. 25 and No. 27. This GASB has changed the disclosures related to pensions. The GASB issued Statement #53, Accounting and Financial Reporting for Derivative Instruments. The standards requires governments to measure most derivative instruments at fair value in their financial statements that are prepared using the economic resources measurement focus and the accrual basis of accounting. Management elected to implement this standard early and this standard did not impact the basic financial statements. Future Implementation of GASB Pronouncements: The GASB issued Statement #45, Accounting and Financial Reporting by Employers for Postemployment Benefits Other Than Pensions, which is required to be implemented in fiscal year Management expects that this pronouncement will require additional disclosure and impact the basic financial statements. The GASB issued Statement #52, Land and Other Real Estate Held as Investments by Endowments, which is required to be implemented in fiscal year Management believes this statement will not effect the basic financial statements. B-60

127 Required Supplementary Information Required Supplementary Information B-61

128 This page intentionally left blank. B-62

129 General Fund Budgetary Comparison Schedule General Fund Budgetary Comparison Schedule The General Fund is the general operating fund of the Town. It is used to account for all the financial resources, except those required to be accounted for in another fund. B-63

130 GENERAL FUND SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE BUDGET AND ACTUAL FISCAL YEAR ENDED JUNE 30, 2008 Budgeted Amounts Amounts Current Year Carried Forward Initial Original Final From Prior Year Budget Budget Budget REVENUES: Real estate and personal property taxes, net of tax refunds $ - $ 47,272,851 $ 47,272,851 $ 48,857,402 Motor vehicle and other excise taxes - 3,500,000 3,500,000 3,500,000 Hotel/motel tax - 475, , ,000 Charges for services - 600, , ,000 Penalties and interest on taxes - 203, , ,000 Fees , , ,700 Rentals - 350, , ,000 Payments in lieu of taxes - 16,000 16,000 16,000 Licenses and permits - 510, , ,500 Fines and forfeitures - 80,000 80,000 80,000 Intergovernmental - 18,010,189 18,010,189 18,010,189 Departmental and other - 59,718 59,718 59,718 Investment income - 400, , ,000 TOTAL REVENUES - 71,822,958 71,822,958 73,407,509 EXPENDITURES: Current: General Government Moderator Salaries Operating Total Selectmen Salaries - 27,644 27,644 27,644 Operating , , ,709 Total , , ,353 Town Manager Salaries - 284, , ,894 Operating - 4,124 4,124 4,124 Total - 288, , ,018 Finance Committee Salaries 86 2,570 2,656 2,411 Operating ,383 Total 86 3,325 3,411 3,794 Reserve Fund - 100, ,000 38,594 Accounting Salaries - 184, , ,525 Operating - 7,705 7,705 9,705 Capital ,081 Total - 192, , ,311 Computer Services Salaries 2, , , ,887 Operating , , ,579 Capital 2,600 9,400 12,000 26,500 Total 4, , , ,966 Assessor Salaries - 201, , ,777 Operating - 24,414 24,414 24,414 Total - 225, , ,191 B-64

131 Actual Amounts Variance Budgetary Carried Forward to Final Amounts To Next Year Budget $ 49,043,647 $ - $ 186,245 3,834, , ,513-76, ,021-51, , , ,175-85, , ,352 37,716-21, , ,284 86,392-6,392 18,434, , , , ,462 - (71,538) 75,487,101-2,079, ,229-2,415 94, , , , , , , , , , , , ,887 2, , ,116 6,865 1, , ,104-1,475 23,938 2, ,923 2,500 1, , ,131-6, ,457-6,734 (Continued) B-65

132 GENERAL FUND SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE BUDGET AND ACTUAL FISCAL YEAR ENDED JUNE 30, 2008 Budgeted Amounts Amounts Current Year Carried Forward Initial Original Final From Prior Year Budget Budget Budget Treasurer/Collector Salaries - 263, , ,129 Operating - 142, , ,747 Total - 405, , ,876 Town Council Operating - 161, , ,452 Personnel Relations Review Board Salaries - 230, ,400 - Operating Total - 230, , Administration Services Salaries - 64,422 64,422 67,232 Operating - 17,944 17,944 17,944 Total - 82,366 82,366 85,176 Town Clerk Salaries - 210, , ,859 Operating 2,888 12,680 15,568 18,020 Total 2, , , ,879 Election Salaries - 20,300 20,300 57,547 Operating - 7,100 7,100 19,467 Total - 27,400 27,400 77,014 Registrar Salaries - 2,850 2,850 2,850 Operating - 1,440 1,440 1,440 Total - 4,290 4,290 4,290 Planning Board Salaries - 217, , ,603 Operating - 26,770 26,770 33,975 Total - 244, , ,578 Cable Television Salaries 154 2,301 2,455 2,530 Operating - 10,335 10, Total ,636 12,790 3,457 Town Hall Salaries - 19,160 19,160 19,160 Operating ,780 54,165 54,165 Total ,940 73,325 73,325 Auxiliary Building Operating - 36,937 36,937 38,329 Total General Government 8,393 2,733,264 2,741,657 2,609,378 Public Safety Police Salaries 76,763 5,153,856 5,230,619 5,123,497 Operating 22, , , ,519 Capital - 135, , ,900 Total 99,150 5,827,936 5,927,086 5,853,916 Auxiliary Police Operating - 1,800 1,800 1,800 B-66

133 Actual Amounts Variance Budgetary Carried Forward to Final Amounts To Next Year Budget 291,965-2, ,241-7, ,206-9, ,079-1, , , , ,869-6,990 12,478 2,565 2, ,347 2,565 9,967 55,884-1,663 16,001-3,466 71,885-5,129 2, , , ,567-10,036 31,323-2, ,890-12,688 1, ,349-1,108 18, ,224 1,036 6,905 64,656 1,094 7,575 37,101-1,228 2,466,700 13, ,350 5,080,466 9,502 33, ,669 41,679 7, , ,762,034 51,181 40,701 1, (Continued) B-67

134 GENERAL FUND SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE BUDGET AND ACTUAL FISCAL YEAR ENDED JUNE 30, 2008 Budgeted Amounts Amounts Current Year Carried Forward Initial Original Final From Prior Year Budget Budget Budget Fire Salaries 3,691 3,999,937 4,003,628 4,043,680 Operating 24, , , ,306 Capital - 129, , ,677 Total 28,178 4,405,464 4,433,642 4,476,663 Building Department Salaries 2, , , ,588 Operating - 5,286 5,286 5,286 Total 2, , , ,874 Emergency Management Salaries - 4,592 4,592 4,592 Operating ,400 15,245 33,724 Capital - 18,479 18,479 - Total ,471 38,316 38,316 Parking Clerk Salaries - 4,000 4,000 4,000 Operating - 1,800 1,800 1,800 Total - 5,800 5,800 5,800 Total Public Safety 130,793 10,489,881 10,620,674 10,600,369 Education School Salaries 1,495,296 24,744,566 26,239,862 25,722,579 Operating 154,900 19,418,706 19,573,606 20,066,963 Total 1,650,196 44,163,272 45,813,468 45,789,542 Regional Vocational School - 4,108,278 4,108,278 4,108,278 Total Education 1,650,196 48,271,550 49,921,746 49,897,820 Public Works Public Works Administration Salaries - 104, , ,312 Operating 5,415 63,524 68,939 68,439 Total 5, , , ,751 Highway Salaries - 553, , ,693 Operating 4, , , ,644 Capital - 157, , ,895 Total 4, , , ,232 Forestry Salaries - 155, , ,053 Operating - 44,900 44,900 44,900 Capital - 76,369 76,369 76,369 Total - 277, , ,322 Machinery Salaries - 109, , ,823 Operating , , ,971 Capital - 12,188 12,188 12,188 Total , , ,982 B-68

135 Actual Amounts Variance Budgetary Carried Forward to Final Amounts To Next Year Budget 4,020,693 1,625 21, ,677 3,653 3, , ,446,047 5,278 25, , , ,735-1,139 4, ,196 2, ,628 2, , ,348 4,452-1,348 10,472,096 58,919 69,354 24,084,148 1,638, ,903, ,774 27,633 43,987,704 1,774,174 27,664 4,108, ,095,982 1,774,174 27, ,899-28,413 50,926 1,536 15, ,825 1,536 44, ,428-15, ,052 17, , ,699 17,600 16, ,037-1,016 32,593 9,010 3,297 76, ,859 9,010 4, ,292-2,531 89,064 27,617 8,290 12, ,544 27,617 10,821 (Continued) B-69

136 GENERAL FUND SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE BUDGET AND ACTUAL FISCAL YEAR ENDED JUNE 30, 2008 Budgeted Amounts Amounts Current Year Carried Forward Initial Original Final From Prior Year Budget Budget Budget Electrician Salaries - 31,686 31,686 31,624 Operating - 3,240 3,240 8,241 Capital - 11,017 11,017 11,017 Total - 45,943 45,943 50,882 Snow and Ice Salaries - 75,500 75,500 75,500 Operating - 126, , ,000 Total - 201, , ,500 Street Lighting Operating - 157, , ,550 Cemetery Operating - 2,500 2,500 3,000 Total Public Works 10,377 1,963,127 1,973,504 1,966,219 Health and Sanitation Rubbish Operating 15, , ,329 2,328,433 Health Salaries - 257, , ,123 Operating ,398 17,156 21,792 Total , , ,915 Total Health and Sanitation 16,087 1,073,469 1,089,556 2,616,348 Human Services Council on Aging Salaries - 126, , ,347 Operating 5,419 92,071 97,490 97,490 Total 5, , , ,837 Veterans Salaries - 39,547 39,547 43,180 Operating - 103, , ,350 Total - 142, , ,530 Total Human Services 5, , , ,367 Culture and Recreation Exceptional Children Salaries - 12,195 12,195 15,237 Operating - 7,925 7,925 4,883 Total - 20,120 20,120 20,120 Patriotic Activities Operating - 1,500 1,500 1,500 Library Salaries - 763, , ,646 Operating - 344, , ,252 Total - 1,107,298 1,107,298 1,072,898 B-70

137 Actual Amounts Variance Budgetary Carried Forward to Final Amounts To Next Year Budget 30,545-1,079 2,784 4, , ,346 4,800 1, ,083 - (75,583) 565,192 - (439,192) 716,275 - (514,775) 145,824-11,726 3, ,330,372 60,563 (424,716) 2,253,278 20,476 54, ,535-4,588 19,987-1, ,522-6,393 2,534,800 20,476 61, , ,282-32, ,652-33,185 43, ,647-3, ,786-3, ,438-36,929 15, , , , ,423-28, ,159-21,093 1,023,582-49,316 (Continued) B-71

138 GENERAL FUND SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE BUDGET AND ACTUAL FISCAL YEAR ENDED JUNE 30, 2008 Budgeted Amounts Amounts Current Year Carried Forward Initial Original Final From Prior Year Budget Budget Budget Parks and Recreation Salaries - 214, , ,947 Operating 14,738 92, , ,191 Capital - 54,081 54,081 53,076 Total 14, , , ,214 Historical Commission Operating Total Culture and Recreation 14,738 1,489,508 1,504,246 1,481,832 Pension benefits - 2,419,097 2,419,097 2,419,341 Employee benefits Occupational Injury Reserve - 71,500 71, ,947 Unemployment Compensation - 55,591 55,591 50,591 Group Health Insurance - 3,481,761 3,481,761 3,481,761 Medicare - 165, , ,879 Liability Insurance - 379, , ,820 Total employee benefits - 4,153,295 4,153,295 4,274,998 State and county charges - 569, , ,071 Debt service: Principal - 903, , ,070 Interest: Maturing Debt - 427, , ,978 Temporary Loans - 10,000 10,000 10,000 Total - 437, , ,978 TOTAL EXPENDITURES 1,836,003 74,864,375 76,700,378 78,171,791 EXCESS (DEFICIENCY) OF REVENUES OVER (UNDER) EXPENDITURES (1,836,003) (3,041,417) (4,877,420) (4,764,282) OTHER FINANCING SOURCES (USES): Transfers in - 34,000 34,000 34,000 Transfers out - (588,934) (588,934) (908,774) TOTAL OTHER FINANCING SOURCES (USES) - (554,934) (554,934) (874,774) NET CHANGE IN FUND BALANCE (1,836,003) (554,934) (554,934) (5,639,056) BUDGETARY FUND BALANCE, Beginning of year 4,697,407 4,697,407 4,697,407 6,363,423 BUDGETARY FUND BALANCE, End of year $ 2,861,404 $ 4,142,473 $ 4,142,473 $ 724,367 See notes to required supplementary information. B-72

139 Actual Amounts Variance Budgetary Carried Forward to Final Amounts To Next Year Budget 225, ,954 16,530 1,707 50,738-2, ,078 16,809 4, ,410,963 16,809 54,060 2,419, , ,764-13,827 3,481, ,884-3, ,965-6,855 4,250,321-24, ,575 - (17,504) 903, , ,743-7, ,718-7,260 76,259,376 1,944,269 (31,854) (772,275) (1,944,269) 2,047,738 39,400-5,400 (908,774) - - (869,374) - 5,400 (1,641,649) (1,944,269) 2,053,138 6,363, $ 4,721,774 $ (1,944,269) $ 2,053,138 (Concluded) B-73

140 Other Post-Employment Benefit Plan Schedules Other post-employment benefit plan schedules The Schedule of Funding Progress compares, over time, the actuarial accrued liability for benefits with the actuarial value of accumulated plan assets. The Schedule of Actuarial Methods and Assumptions presents factors that significantly affect the identification of trends in the amounts reported. B-74

141 Middlesex Contributory Retirement System Schedule of Funding Progress Actuarial UAAL as a Actuarial Accrued Unfunded Percentage Actuarial Value of Liability (AAL) AAL Funded Covered of Covered Valuation Assets Entry Age (UAAL) Ratio Payroll Payroll Date (A) (B) (B-A) (A/B) (C) ((B-A)/C) 01/01/96 $ 373,750,361 $ 634,920,488 $ 261,170, % $ 218,345, % 01/01/98 476,708, ,093, ,384, % 215,380, % 01/01/00 570,263, ,280, ,017, % 253,228, % 01/01/02 599,699,143 1,020,828, ,129, % 280,740, % 01/01/04 618,163,380 1,223,828, ,664, % 306,025, % 01/01/06 653,156,866 1,364,582, ,426, % 330,999, % The Town's share of the UAAL, as of January 1, 2006, is approximately 7.45%. See notes to required supplementary information. B-75

142 Middlesex Contributory Retirement System Schedule of Employer Contributions System Wide Town of Tewksbury (B/A) Plan Year Annual (A) (B) Town's Percentage Ended Required Actual Percentage Actual of System Wide December 31 Contributions Contributions Contributed Contributions Actual Contributions 2004 $ 52,902,366 $ 52,902, % $ 2,566, % ,298,150 52,298, % 3,052, % ,553,642 57,553, % 3,799, % ,553,642 57,553, % 4,289, % The Town's Actual Contributions equaled 100% of its Required Contributions for each year presented. See notes to required supplementary information. B-76

143 Notes to Required Supplementary Information Fiscal Year Ended June 30, 2008 NOTE A STEWARDSHIP, COMPLIANCE AND ACCOUNTABILITY Notes to Required Supplementary Information 1. Budgetary Information Municipal Law requires the adoption of a balanced budget that is reviewed by the Finance Committee (Committee). The Committee presents the annual budget to the open Town Meeting, which includes estimates of revenues and other financing sources and recommendations of expenditures and other financing uses. Town Meeting, which has full authority to amend and/or reject the budget or any line item, adopts the expenditure budget by majority vote. Increases or transfers less than $1,500 within budget classifications require department and Town Manager approval while changes greater than $1,500 require the additional approval of the Finance Committee. Increases or decreases between budget classifications subsequent to the approval of the annual budget requires majority vote at a Special Town Meeting. The majority of appropriations are non-continuing and lapse at the end of each fiscal year. Others are continuing appropriations for which the governing body has authorized that an unspent balance from a prior fiscal year be carried forward and made available for spending in the current fiscal year. These carry forwards are included as part of the subsequent fiscal year s original budget. Generally, expenditures may not exceed the legal level of spending (salaries, expenses and capital) authorized for an appropriation account. However, the payment of debt service is statutorily required, regardless of whether such amounts are appropriated. Additionally, expenditures for disasters, natural or otherwise, and final judgments may exceed the level of spending authorized by majority vote at a Special Town Meeting. An annual budget is adopted for the general fund in conformity with the guidelines described above. The original fiscal year 2008 approved budget, including amounts carried forward from the prior fiscal years authorized approximately $77,289,000 in appropriations and other amounts to be raised. Changes to the original budget totaled approximately $1,791,000 and were primarily for education. The Town Auditor s Office has the responsibility to ensure that budgetary control is maintained. Budgetary control is exercised through the accounting system. B-77

144 Notes to Required Supplementary Information Fiscal Year Ended June 30, Budgetary - GAAP Reconciliation For budgetary financial reporting purposes, the Uniform Municipal Accounting System basis of accounting (established by the Commonwealth) is followed, which differs from the GAAP basis of accounting. A reconciliation of budgetary-basis to GAAP-basis results for the general fund for the fiscal year ended June 30, 2008, is as follows: Excess of revenues and other financing sources (uses) over expenditures - budgetary basis $ (1,641,649) Basis of accounting differences: Net change in revenues in recording 60 day receipts 390,673 Net change in revenues in recording tax refunds payable (30,000) Increase in revenues due to on-behalf payments. 6,607,942 Net difference in recognition of expenditures 1,301,026 Increase in expenditures due to on-behalf payments (6,607,942) Excess of revenues and other financing sources (uses) over expenditures - GAAP basis $ 20, Appropriation Deficits During fiscal year 2008, actual expenditures and encumbrances exceeded appropriations for public works snow and ice and state and county charges. These over expenditures will be funded by available funds and grants during fiscal year NOTE B PENSION PLAN The Town contributes to the Middlesex Contributory Retirement System (the System ), a cost-sharing, multipleemployer defined benefit pension plan (the Plan ) administered by the Middlesex Retirement Board (the Board). The System provides retirement, disability, and death benefits to plan members and beneficiaries. Chapter 32 of MGL assigns authority to establish and amend benefit provisions of the Plan. Plan members are required to contribute to the System at rates ranging from 5% to 11% of annual covered compensation. The Town is required to pay into the System its share of the system-wide actuarially determined contribution which is apportioned among the employers based on active current payroll. The schedule of funding progress, presented as required supplementary information, presents multiyear trend information about whether the actuarial value of plan assets is increasing or decreasing over time relative to the actuarial accrued liability for benefits. Additionally, the schedule of employer contributions, presented as required supplementary information, presents multiyear trend information for required and actual contributions relating to the cost-sharing plan as a whole, of which the Town is one participating employer, as well as the Town s proportionate share of the plan s annual contributions. This information is designed to be helpful for understanding the scale of the information presented relative to the Town. B-78

145 Notes to Required Supplementary Information Fiscal Year Ended June 30, 2008 The following actuarial methods and assumptions were used in the Retirement System s most recent actuarial valuation: Valuation Date January 1, 2006 Actuarial Cost Method Entry Age Normal Cost Method Amortization Method Level dollar for the 1992, 2002 and 2003 ERIs and 4.50% increasing for the remaining unfunded liability Remaining Amortization Period As of July 1, 2006, 4 years remaining for 1992 ERI liability; 13 years remaining for 2002 ERI liability, 14 years remaining for 2003 ERI liability and 22 years remaining for unfunded liability Asset Valuation Method The difference between the expected return and the actual investment return on a market value basis is recognized over a 5 year period as described by Revenue Procedure Actuarial Assumptions: Investment rate of return 8.25% Projected salary increases 4.00% for the next 4 years Cost of living adjustments 3.00% on first $12,000 Plan Membership: Retired participants and beneficiaries receiving benefits 4,763 Terminated participants entitled to a return of their employee contributions 3,080 Terminated participants with a vested right to a deferred or immediate benefit 78 Active participants 9,106 Total 17,027 B-79

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147 Combining Statements Combining Statements B-81

148 Nonmajor Governmental Funds Nonmajor Governmental Funds Special Revenue Funds Special revenue funds are used to account for specific revenues that are legally restricted to expenditure for particular purposes. Town Grant Funds accounts for non-school related grant funds received from state and federal governments which are designated for specific purposes. Town Revolving Funds accounts for non-school related activity of revolving funds established in accordance with MGL Chapter 44, Section 53E ½. Town Gift Funds accounts for gifts received from various sources to be used for the benefit of the Town. Town Receipts Reserved accounts for sale of real estate. Town Other Funds accounts for the Town s miscellaneous funds. Town Special Article Funds accounts for funds related to the Town s tri-annual revaluation. School Grant Funds accounts for educational programs specifically financed by grants and other restricted revenues. School Revolving Funds accounts for school department s revolving funds established in accordance with MGL Chapter 40, Section 53E ½ and Chapter 71. School Gift Funds accounts for gift received from various sources to be used for the benefit of the Schools. School Receipts Reserved accounts for telecommunication funds. School Other Funds accounts for the School s miscellaneous funds. Restricted Funds accounts for contributions where both principal and investment earnings may be spent to support the government. Street Projects accounts for the Town s street projects. Capital Projects Funds Capital projects funds are used to account for the acquisition and construction of major capital facilities other than those financed by proprietary funds and trust funds. Other Capital Project Funds accounts for the Town s miscellaneous capital projects. B-82

149 Permanent Funds Permanent funds are used to report resources that are legally restricted to the extent that only earnings, not principal, may be used for purposes that support governmental programs. Foster Trust Fund accounts for the beautification of the Foster School grounds. Cemetery Perpetual Care Trust Fund accounts for funds received to maintain the cemetery. B-83

150 GOVERNMENTAL FUNDS BALANCE SHEET JUNE 30, 2008 Special Revenue Funds Town Town Town Town Town Receipts Town Special ASSETS Grants Revolving Gifts Reserved Other Articles Cash and cash equivalents $ 66,030 $ 530,546 $ 1,407,157 $ 13,522 $ 324,770 $ 3,881 Investments - 1,306,601 5, Receivables, net of uncollectibles: Tax liens and foreclosures - 3, Intergovernmental 46, , ,140 - TOTAL ASSETS $ 112,636 $ 2,220,637 $ 1,412,318 $ 13,522 $ 335,910 $ 3,881 LIABILITIES AND FUND BALANCES LIABILITIES: Warrants payable $ 8,497 $ 18,279 $ 12,508 $ - $ 2,363 $ - Accrued payroll - 9, Other liabilities Deferred revenues - 383, Due to other funds TOTAL LIABILITIES 8, ,719 12,508-2,451 - FUND BALANCES: Unreserved: Undesignated, reported in: Special revenue funds 104,139 1,808,918 1,399,810 13, ,459 3,881 Capital projects funds Permanent funds TOTAL FUND BALANCES 104,139 1,808,918 1,399,810 13, ,459 3,881 TOTAL LIABILITIES AND FUND BALANCES $ 112,636 $ 2,220,637 $ 1,412,318 $ 13,522 $ 335,910 $ 3,881 B-84

151 School School School School Receipts School Restricted Street Grants Revolving Gifts Reserved Other Funds Projects Subtotal $ 267,830 $ 958,273 $ 19,057 $ 7,193 $ 4,463 $ 261,574 $ - $ 3,864, ,161-2,083, , , ,337 $ 267,830 $ 958,273 $ 19,057 $ 7,193 $ 4,463 $ 1,033,735 $ 53,397 $ 6,442,852 $ 36,755 $ 146,447 $ 994 $ - $ - $ 3,674 $ - $ 229, , , ,433 59,433 36, , ,674 59, , , ,826 18,063 7,193 4,463 1,030,061 (6,036) 5,760, , ,826 18,063 7,193 4,463 1,030,061 (6,036) 5,760,374 $ 267,830 $ 958,273 $ 19,057 $ 7,193 $ 4,463 $ 1,033,735 $ 53,397 $ 6,442,852 (Continued) B-85

152 GOVERNMENTAL FUNDS BALANCE SHEET JUNE 30, 2008 Permanent Funds Total Cemetery Nonmajor Capital Foster Trust Perpetual Care Governmental ASSETS Projects Fund Trust Fund Subtotal Funds Cash and cash equivalents $ 345,986 $ 4,424 $ 4,114 $ 8,538 $ 4,218,820 Investments - 18,812 17,500 36,312 2,120,235 Receivables, net of uncollectibles: Tax liens and foreclosures ,296 Intergovernmental ,337 TOTAL ASSETS $ 345,986 $ 23,236 $ 21,614 $ 44,850 $ 6,833,688 LIABILITIES AND FUND BALANCES LIABILITIES: Warrants payable $ - $ - $ - $ - $ 229,517 Accrued payroll ,698 Other liabilities Deferred revenues ,490 Due to other funds ,433 TOTAL LIABILITIES ,478 FUND BALANCES: Unreserved: Undesignated, reported in: Special revenue funds ,760,374 Capital projects funds 345, ,986 Permanent funds - 23,236 21,614 44,850 44,850 TOTAL FUND BALANCES 345,986 23,236 21,614 44,850 6,151,210 TOTAL LIABILITIES AND FUND BALANCES $ 345,986 $ 23,236 $ 21,614 $ 44,850 $ 6,833,688 (Concluded) B-86

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154 GOVERNMENTAL FUNDS STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES FISCAL YEAR ENDED JUNE 30, 2008 Special Revenue Funds Town Town Town Town Town Receipts Town Special Grants Revolving Gifts Reserved Other Articles REVENUES: Charges for services $ - $ - $ - $ - $ - $ - Fees , ,738 - Rentals Intergovernmental 413,520 1,129, ,259 - Other 4, ,147 1,011, ,783 - Investment income TOTAL REVENUES 417,667 1,427,885 1,011, ,780 - EXPENDITURES: Current: General government 6, , ,933-19,009 - Public safety 146,829 23,432 20,641-61,813 - Education Public works - 11, ,908 - Human services 251,101-14, Culture and recreation 13, ,538 26,165-38,421 - TOTAL EXPENDITURES 418, , , ,151 - EXCESS (DEFICIENCY) OF REVENUES OVER (UNDER) EXPENDITURES (458) 939, ,995-20,629 - OTHER FINANCING SOURCES (USES): Issuance of bonds and notes Transfers in ,168 - Transfers out (34,000) (5,400) - TOTAL OTHER FINANCING SOURCES (USES) (34,000) ,768 - NET CHANGE IN FUND BALANCES (34,458) 939, ,995-88,397 - FUND BALANCES AT BEGINNING OF YEAR 138, , ,815 13, ,062 3,881 FUND BALANCES AT END OF YEAR $ 104,139 $ 1,808,918 $ 1,399,810 $ 13,522 $ 333,459 $ 3,881 B-88

155 School School School School Receipts School Restricted Street Grants Revolving Gifts Reserved Other Funds Projects Subtotal $ - $ 997,487 $ - $ - $ - $ - $ - $ 997,487-1,257, ,492,386-8, ,287 1,210, , ,932 4,677, ,710 21,044 11, ,395-1,879,073-1, ,341-41,313 1,210,205 3,710,211 21,160 11, , ,932 9,095, , , ,715 1,100,191 3,601,094 17,641 19, ,738, , , , , ,994 1,100,191 3,601,094 17,641 19, , ,314 6,930, , ,117 3,519 (7,352) - 82,005 69,618 2,164, , , (39,400) , , , ,117 3,519 (7,352) - 334,725 69,618 2,451, , ,709 14,544 14,545 4, ,336 (75,654) 3,308,924 $ 231,075 $ 811,826 $ 18,063 $ 7,193 $ 4,463 $ 1,030,061 $ (6,036) $ 5,760,374 (Continued) B-89

156 GOVERNMENTAL FUNDS STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES FISCAL YEAR ENDED JUNE 30, 2008 Permanent Funds Total Capital Cemetery Nonmajor Project Foster Trust Perpetual Care Governmental Funds Fund Trust Fund Subtotal Funds REVENUES: Charges for services $ - $ - $ - $ - $ 997,487 Fees ,492,386 Rentals ,287 Intergovernmental 187, ,864,681 Other 11, ,890,355 Investment income 3,336 1,096 1,019 2,115 46,764 TOTAL REVENUES 202,118 1,096 1,019 2,115 9,299,960 EXPENDITURES: Current: General government ,253 Public safety ,715 Education 2, ,741,370 Public works 225, ,171,680 Human services 137, ,917 Culture and recreation ,994 TOTAL EXPENDITURES 366, ,296,929 EXCESS (DEFICIENCY) OF REVENUES OVER EXPENDITURES (164,046) 1,096 1,019 2,115 2,003,031 OTHER FINANCING SOURCES (USES): Issuance of bonds and notes 75, ,000 Transfers in ,888 Transfers out (15,000) (54,400) TOTAL OTHER FINANCING SOURCES (USES) 60, ,488 NET CHANGE IN FUND BALANCES (104,046) 1,096 1,019 2,115 2,349,519 FUND BALANCES AT BEGINNING OF YEAR 450,032 22,140 20,595 42,735 3,801,691 FUND BALANCES AT END OF YEAR $ 345,986 $ 23,236 $ 21,614 $ 44,850 $ 6,151,210 (Concluded) B-90

157 Agency Fund Agency Fund The Agency Fund is used to account for the collection and payment of charges for special details, escrow accounts, deposits and deputy collector accounts. B-91

158 AGENCY FUND COMBINING STATEMENT OF CHANGES IN ASSETS AND LIABILITIES FISCAL YEAR ENDED JUNE 30, 2008 July 1, 2008 Additions Deletions June 30, 2008 ASSETS CURRENT: Cash and cash equivalents $ 783,224 $ 2,130,634 $ (2,131,043) $ 782,815 Investments 207,696 32,547 (207,696) 32,547 Receivables, net of allowance for uncollectibles: Departmental and other 171,687 1,546,573 (1,379,519) 338,741 TOTAL ASSETS $ 1,162,607 $ 3,709,754 $ (3,718,258) $ 1,154,103 LIABILITIES Warrants payable $ 6,819 $ 389,738 $ (394,138) $ 2,419 Accrued payroll 46,973 35,586 (46,973) 35,586 Liabilities due depositors: Special details ,905 1,041,691 (1,038,961) 173,635 Escrow accounts 40, ,000 (225,000) 40,200 Deposits 780, ,407 (395,011) 782,284 Deputy collector 1,866 74,283 (74,237) 1,912 Student activity 6,473 26,497 (32,914) 56 Other liabilities 108, ,561 (246,033) 118,011 TOTAL LIABILITIES $ 1,162,607 $ 2,444,763 $ (2,453,267) $ 1,154,103 B-92

159 Statistical Section Photo by Jan Sutton Equestrian show at T.H.E. FARM B-93

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161 Statistical Section Statistical Section This part of the Town of Tewksbury s comprehensive annual financial report presents detailed information as a context for understanding what the information in the financial statements, note disclosures, and required supplementary information says about the Town s overall financial health. Financial Trends These schedules contain trend information to help the reader understand how the Town s financial performance and well-being have changed over time. Revenue Capacity These schedules contain information to help the reader assess the Town s most significant local revenue source, the property tax. Debt Capacity These schedules present information to help the reader assess the affordability of the Town s current levels of outstanding debt and the Town s ability to issue additional debt in the future. Demographic and Economic Information These schedules offer demographic and economic indicators to help the reader understand the environment within which the Town s financial activities take place. Operating Information These schedules contain service and infrastructure data to help the reader understand how the information in the Town s financial report relates to the services the Town provides and the activities it performs. SOURCES: Unless otherwise noted, the information in these schedules is derived from the comprehensive annual financial reports for the relevant year. The Town implemented GASB Statement 34 in 2003; schedules presenting government-wide information include information beginning in that year. B-95

162 Net Assets By Component Last Six Fiscal Years Governmental activities Invested in capital assets, net of related debt $ 25,905,322 $ 23,988,606 $ 32,653,097 $ 50,566,769 $ 51,155,892 $ 50,335,154 Restricted 671, , , , ,752 1,797,937 Unrestricted 23,633,687 6,812,048 11,582,531 7,388,546 7,955,311 11,772,012 Total governmental activities net assets $ 50,210,950 $ 31,386,974 $ 44,718,489 $ 58,732,034 $ 59,989,955 $ 63,905,103 Business-type activities Invested in capital assets, net of related debt - 16,582,939 19,353,410 54,884,113 57,908,772 57,534,816 Unrestricted - 611, ,852 4,133,982 3,568,426 5,485,124 Total business-type activities net assets $ - $ 17,194,662 $ 19,651,262 $ 59,018,095 $ 61,477,198 $ 63,019,940 Primary government Invested in capital assets, net of related debt 25,905,322 40,571,545 52,006, ,450, ,064, ,869,970 Restricted 671, , , , ,752 1,797,937 Unrestricted 23,633,687 7,423,771 11,880,383 11,522,528 11,523,737 17,257,136 Total primary government net assets $ 50,210,950 $ 48,581,636 $ 64,369,751 $ 117,750,129 $ 121,467,153 $ 126,925,043 Source: Audited Financial Statements Note: Town Meeting voted to establish a sewer enterprise fund (effective FY04) to account for the activity of the Master Sewer Project. Previously the activities of the sewer department and Master Sewer Project were reported as governmental funds. Town Meeting voted to establish a water enterprise fund (effective FY06) Previously the activities of the water department were reported in the governmental funds The Town reported general infrastructure assets acquired prior to the implementation of GASB 34 for the first time in fiscal year This resulted in a beginning net asset adjustment of $16.5 million. B-96

163 Changes in Net Assets Last Six Fiscal Years Fiscal Year Expenses Governmental activities: General government $ 3,814,056 $ 4,048,144 $ 3,438,876 $ 3,635,876 $ 3,922,631 $ 3,655,345 Public safety 14,633,118 15,399,741 12,274,105 13,022,549 13,797,878 13,445,232 Education 42,638,440 44,747,510 50,920,818 53,136,035 56,963,315 59,527,722 Public works 7,966,271 6,047,037 4,199,305 4,503,493 4,208,529 4,292,536 Sewer 1,858, Human services 668, , , , , ,945 Health and sanitation 3,029,102 2,882,528 3,604,493 3,357,013 2,641,590 2,664,641 Culture and recreation 2,440,159 2,577,406 2,011,778 2,102,484 2,452,453 2,282,784 Claims and judgments - 6, Interest 2,458,561 1,951,475 1,665,846 1,584,584 1,038,814 1,096,687 Total governmental activities expenses 79,507,572 78,311,185 78,742,264 81,763,797 85,418,906 87,758,892 Business-type activities: Sewer - 2,722,624 1,975,994 2,774,415 3,550,084 5,715,267 Water ,558,359 5,139,612 5,880,797 Total primary government expenses $ 79,507,572 $ 81,033,809 $ 80,718,258 $ 90,096,571 $ 94,108,602 $ 99,354,956 Program Revenues Governmental activities: Education charges for services $ 2,513,999 $ 2,800,310 $ 3,009,477 $ 3,400,907 $ 3,339,093 $ 3,601,470 Public Safety charges for services 940,401 1,247,467 1,355,772 1,556,071 1,410,713 1,573,862 Other charges for services 7,753,026 3,217,731 2,419,673 2,004,071 2,124,266 2,887,814 Operating grants and contributions 18,494,984 18,100,918 22,245,887 23,276,031 23,771,003 25,179,777 Capital grant and contributions 14, ,148 11,412, Total governmental activities program revenues... 29,716,414 26,268,574 40,442,978 30,237,080 30,645,075 33,242,923 Business-type activities: Charges for services - sewer - 3,015,810 3,886,270 6,159,404 5,545,830 6,608,792 Charges for services - water - 3,103,006 3,167,975 4,534,863 4,161,392 5,027,645 Nonoperating revenues , , ,390 1,080, ,483 Total business-type activities program revenues ,306,333 7,233,490 11,433,657 10,787,601 12,540,920 Total primary government program revenues $ 29,716,414 32,574,907 $ 47,676,468 $ 41,670,737 $ 41,432,676 $ 45,783,843 Net (Expense)/Revenue Governmental activities $ (49,791,158) (52,042,611) $ (38,299,286) $ (51,526,717) $ (54,773,831) $ (54,515,969) Business-type activities - 480,703 5,257,496 3,100,883 2,097, ,856 Total primary government net expense $ (49,791,158) $ (51,561,908) $ (33,041,790) $ (48,425,834) $ (52,675,926) $ (53,571,113) General Revenues and other Changes in Net Assets Governmental activities: Real estate and personal property taxes, net of tax refunds payable $ 39,071,407 $ 40,942,805 $ 43,214,802 $ 43,816,194 $ 46,990,762 $ 48,744,833 Tax liens 378, , , , ,241 1,376,374 Motor vehicle and other excise taxes 3,727,259 3,766,073 3,974,668 3,748,128 3,617,989 3,859,384 Hotel/motel tax 346, , , , , ,513 Penalties and interest on taxes 211, , , , , ,247 Payments in lieu of taxes ,031 22,176 37,716 Grants and contributions not restricted to specific programs 2,876,582 2,660,707 2,977,289 3,073,341 3,689,997 3,716,874 Unrestricted investment income 344, , , , , ,062 Miscellaneous 91,681 15,698 18, Transfers - (367,472) (360,100) (2,950,801) (361,198) (597,886) Total governmental activities 47,048,024 47,977,529 51,026,679 49,081,062 56,031,752 58,431,117 Business-type activities: Transfers - 367, ,100 2,950, , ,886 Total primary government $ 47,048,024 $ 48,345,001 $ 51,386,779 $ 52,031,863 $ 56,392,950 $ 59,029,003 Changes in Net Assets Governmental activities $ (2,743,134) $ (4,065,082) $ 12,727,393 $ (2,445,655) $ 1,257,921 $ 3,915,148 Business-type activities - 848,175 5,617,596 6,051,684 2,459,103 1,542,742 Total primary government $ (2,743,134) $ (3,216,907) $ 18,344,989 $ 3,606,029 $ 3,717,024 $ 5,457,890 Source: Audited Financial Statements Note: Town Meeting voted to establish a water enterprise fund (effective FY06) Previously the activities of the water department were reported in the governmental funds Town meeting voted to establish a sewer enterprise fund in Fiscal B-97

164 Fund Balances, Governmental Funds Last Ten Fiscal Years Fiscal Year General Fund Reserved $ 1,269,591 $ 164,810 $ 417,792 $ 345,214 $ 436,752 $ 385,794 $ 314,351 $ 326,438 $ 429,211 $ 344,557 Unreserved 3,949,835 4,325,636 6,792,747 5,906,222 5,098,831 3,945,451 4,573,168 3,941,392 3,001,060 3,105,764 Total general fund $ 5,219,426 $ 4,490,446 $ 7,210,539 $ 6,251,436 $ 5,535,583 $ 4,331,245 $ 4,887,519 $ 4,267,830 $ 3,430,271 $ 3,450,321 All Other Governmental Funds Unreserved, reported in: Special revenue funds $ 1,488,448 $ 1,698,550 $ 2,542,917 $ 4,900,093 $ 2,696,863 $ 2,584,615 $ 2,119,255 $ 2,571,735 $ 3,308,924 $ 5,760,374 Capital projects funds (824,516) 1,458,265 (2,530,390) (7,818,737) (12,506,972) (12,730,396) (11,579,806) 1,163, , ,986 Permanent funds ,410 39,940 40,533 41,578 42,735 44,850 Total all other governmental funds. $ 663,932 $ 3,156,815 $ 12,527 $ (2,918,644) $ (9,770,699) $ (10,105,841) $ (9,420,018) $ 3,776,556 $ 3,801,691 $ 6,151,210 Fiscal years 1999 through 2002 exclude Expendable and Nonexpendable Trust Funds which were reported under the pre-gasb 34 format. Source: Audited Financial Statements B-98

165 Changes in Fund Balances, Governmental Funds Last Ten Fiscal Years Revenues: Real estate and personal property taxes, net of tax refunds $ 31,043,286 $ 33,433,785 $ 35,214,431 $ 37,820,568 $ 40,413,746 $ 41,183,476 $ 43,361,398 $ 43,611,338 $ 46,873,817 $ 48,945,246 Tax liens , , ,074 Motor vehicle and other excise taxes 2,782,972 3,222,265 4,188,853 4,000,072 4,082,840 4,127,482 5,114,625 3,813,215 3,601,763 3,834,103 Hotel/motel tax , , ,513 Charges for services 1,620,394 1,318,688 1,532,028 1,519,220 1,527,936 1,494,438 1,563,245 1,578,597 1,514,976 1,648,508 Water and sewer user charges 3,946,510 4,487,138 4,253,810 4,763,359 4,573,092 3,103,006 3,167, Penalties and interest on taxes 246, , , , , , , , , ,247 Fees.. 893,994 1,208,119 1,465,606 1,397,182 1,511,475 1,680,958 1,704,507 2,050,444 2,121,803 1,923,561 Rentals 173, , , , , , , , , ,639 Payment in lieu of taxes 33,672 30,192 36,758 36,523 33,688 27,720 20,328 46,031 22,176 37,716 Licenses and permits 519, , , , , , , , , ,784 Fines and forfeitures 104, , , , , , , ,815 93,009 86,392 Intergovernmental 17,933,084 19,798,293 19,149,389 22,068,592 22,415,290 21,794,338 25,752,246 39,904,560 28,374,587 29,907,292 Departmental and other 786, , , , , , ,572 1,207,917 1,152,037 2,229,375 Sale of land ,806, Investment income 681, , , , , , , , , ,226 Total Revenue 60,766,823 66,193,414 68,786,956 76,465,049 76,609,408 75,579,758 83,085,300 94,802,042 86,528,886 91,755,676 Fiscal Year Expenditures: General government 2,034,000 2,324,588 2,634,349 2,781,296 2,660,161 2,686,850 2,704,507 2,853,789 2,909,224 2,863,953 Public safety 8,212,109 8,733,414 9,123,710 9,801,269 9,948,405 9,859,617 9,892,398 10,259,578 9,933,413 10,606,582 Education 27,437,920 30,273,600 31,876,261 34,088,231 39,154,583 39,482,802 46,157,017 51,122,369 53,996,987 55,983,415 Public works 7,282,661 5,122,227 4,827,870 5,679,466 5,430,857 4,695,713 6,320,982 4,085,325 3,426,676 3,276,379 Human services 329, , , , , , , , , ,764 Health and sanitation 1,838,935 2,138,513 1,519,757 2,694,246 2,889,561 2,711,406 3,481,795 3,224,221 2,494,836 2,534,800 Culture and recreation 913,787 1,068,264 1,362,444 1,458,939 1,599,935 1,539,739 1,774,176 1,941,848 1,765,466 1,741,957 Pension benefits 1,602,987 4,466,852 1,687,740 4,675,097 5,553,874 6,731,924 2,961,251 1,892,813 2,074,711 2,419,341 Employee benefits 3,613,501 5,151,339 5,691,967 6,778,135 3,278,360 3,311,189 4,347,238 3,601,758 4,032,212 4,250,321 Claims and judgments , State and county charges , , , , , , , , , ,575 Capital outlay 13,510,742 8,340,291 5,627,455 11,585,878 7,626,489 2,673,607 2,302,410 1,817,961 5,260, ,493 Debt service Principal 3,248,080 3,266,210 3,394,837 3,553,724 3,898,982 2,944,669 3,041,740 2,100,237 2,233,085 2,363,595 Interest 1,844,529 2,163,610 2,476,532 2,394,527 2,518,970 1,925,731 1,661,300 1,576,283 1,023,333 1,131,046 Total Expenditures 72,128,483 73,665,983 70,776,151 86,253,700 85,351,732 79,324,687 85,441,103 85,348,245 90,058,022 88,941,221 Excess of revenues over (under) expenditures (11,361,660) (7,472,569) (1,989,195) (9,788,651) (8,742,324) (3,744,929) (2,355,803) 9,453,797 (3,529,136) 2,814,455 Other Financing Sources (Uses) Issuance of bonds and notes 6,315,000 9,995,000 1,565,000 6,106,000-2,246,000 3,453,000 2,500,000 2,449,000 75,000 Premium from issuance of bonds ,738-25,471 7,910 - Issuance of refunding bonds 2,535, Payments to refunded bond escrow agent (2,522,935) Issuance cost of refunding bonds (12,065) Capital lease financing , , ,000 78,000 Transfers in 90, , , ,834 3,434, ,232 67, , , ,288 Transfers out (90,477) (1,040,964) (105,855) (444,457) (3,434,523) (542,704) (427,870) (491,048) (475,171) (963,174) Total other financing sources (uses) 6,315,000 9,640,247 1,565,000 5,898,377-2,001,266 3,597,900 3,123,088 2,716,712 (444,886) Net change in fund balance $ (5,046,660) $ 2,167,678 $ (424,195) $ (3,890,274) $ (8,742,324) $ (1,743,663) $ 1,242,097 $ 12,576,885 $ (812,424) $ 2,369,569 Debt service as a percentage of noncapital expenditures 8.69% 8.31% 9.01% 7.97% 8.26% 6.40% 5.70% 4.43% 3.73% 3.95% Notes: Fiscal years 1999 through 2002 exclude Expendable and Nonexpendable Trust Funds which were reported under the pre-gasb 34 format. In fiscal year 2000, the on-behalf payments by the Commonwealth for teachers pension benefits were reported for the first time. In fiscal year 2003, sewer charges for services were reclassified to the Sewer Enterprise Fund which was established in accordance with GASB 34. In fiscal years , public works included sewer. In fiscal years , public works included water. Source: Audited Financial Statements B-99

166 Assessed Value and Actual Value of Taxable Property by Classification and Tax Rates Last Ten Fiscal Years Assessed and Actual Values and Tax Rates Total Total Total Fiscal Residential Residential Commercial Industrial Personal Commercial Commercial Direct Town Year Value Tax Rate Value Value Property Value Tax Rate Rate Value 1999 $ 1,429,883,900 $ $ 206,273,500 $ 180,610,700 $ 64,226,270 $ 451,110,470 $ $ $ 1,880,994, $ 1,456,772,100 $ $ 211,126,600 $ 186,100,300 $ 73,275,410 $ 470,502,310 $ $ $ 1,927,274, (1) $ 1,901,809,100 $ $ 250,734,900 $ 224,132,200 $ 83,422,345 $ 558,289,445 $ $ $ 2,460,098, $ 1,947,332,000 $ $ 258,935,700 $ 242,208,200 $ 85,787,785 $ 586,931,685 $ $ $ 2,534,263, $ 1,972,715,200 $ $ 263,377,400 $ 250,510,800 $ 97,098,230 $ 610,986,430 $ $ $ 2,583,701, (1) $ 2,788,132,061 $ $ 308,044,639 $ 287,900,100 $ 106,443,240 $ 702,387,979 $ $ $ 3,490,520, $ 3,076,067,654 $ $ 344,037,646 $ 261,642,000 $ 104,535,430 $ 710,215,076 $ $ $ 3,786,282, $ 3,325,236,688 $ $ 329,072,812 $ 246,793,400 $ 105,103,390 $ 680,969,602 $ $ $ 4,006,206, (1) $ 3,540,154,464 $ 9.91 $ 334,541,736 $ 237,319,700 $ 113,826,680 $ 685,688,116 $ $ $ 4,225,842, $ 3,489,169,813 $ $ 324,401,987 $ 233,200,300 $ 126,477,920 $ 684,080,207 $ $ $ 4,173,250,020 Total Assessed Value by Classification Fiscal Year Ended June 30, % 3% 8% Total Assessed Value by Classification Fiscal Year Ended June 30, % 6% 3% 83% Residential Commercial Industrial Personal Property 83% Residential Commercial Industrial Personal Property Commercial Value as % of Total Value % % % % % % 800.0% 600.0% 400.0% 200.0% 0.0% Source: Official Statements, Town of Tewksbury All property in the Commonwealth of Massachusetts is assessed at 100% of fair cash value. (1) Revaluation Year Note: Chapter 59, Section 21C of the Massachusetts General Laws, known as "Proposition 2 1/2", imposes 2 separate limits on the annual tax levy of the Town. The primary limitation is that the tax levy cannot exceed 2 1/2 percent of the full and fair cash value. The secondary limitation is that the tax levy cannot exceed the maximum levy limit for the preceding fiscal year as determined by the State Commissioner of Revenue by more than 2 1/2 percent, subject to an exception for property added to the tax rolls and for certain substantial valuation increases other than as part of a general revaluation. The secondary limit may be exceeded in any year by a majority vote of the voters, however it cannot exceed the primary limitation. B-100

167 Principal Taxpayers Current Year and Nine Years Ago Percentage of Percentage of Total Taxable Total Taxable Nature of Assessed Assessed Assessed Assessed Name Business Valuation Rank Value Valuation Rank Value Raytheon Manufacturing Corp. Electronics/Research $ 45,078, % $ 36,579, % New England Power Company Utility $ 45,528, % $ 26,356, % RREEF America RIET I Office Park $ 30,414, % N/A N/A N/A Tewksbury Apartments Apartments $ 34,800, % N/A N/A N/A Highwood Holdings Office Buildings $ 16,859, % N/A N/A N/A Demoulas Supermarkets, Inc. Shopping Center $ 18,015, % N/A N/A N/A Lowell Gas Utility $ 22,791, % $ 16,443, % DSM Realty/Valley Prop. Shopping Center & Warehouse $ 19,523, % $ 34,178, % Valley Properties Shopping Center $ 17,810, % N/A N/A N/A Ames Pond LLC Corporate Office Park $ 12,950, % $ 13,800, % RJR Vent LTD Electronics N/A N/A N/A $ 19,196, % Massachusetts Electric Company Utility N/A N/A N/A $ 11,110, % MGI Andover ST. Inc. Electronics N/A N/A N/A $ 8,616, % Walmart Shopping Center N/A N/A N/A $ 8,321, % Linda & Marianne Matarazzo Trustees Shopping Center N/A N/A N/A $ 8,094, % Metropolitan Life Insurance Insurance N/A N/A N/A N/A N/A N/A Totals $ 263,773,190 10% $ 182,699,100 14% Source: Official Statements, Town of Tewksbury B-101

168 Property Tax Levies and Collections change to amt on recap (3) Percent of (2) Less (2) First Year Percent of Delinquent Total Total Tax Fiscal Total Abatements & Net Current Net Levy Tax Tax Collections to Year Tax Levy Exemptions Tax Levy Tax Collections Collected Collections Collections Net Tax Levy 1999 $ 31,737,152 $ 659,969 $ 31,077,183 $ 30,814, % $ 491,424 $ 31,305, % 2000 $ 33,434,468 $ 919,696 $ 32,514,772 $ 32,509, % $ 557,831 $ 33,067, % 2001 (1) $ 35,975,838 $ 699,875 $ 35,275,963 $ 34,766, % $ 472,661 $ 35,239, % 2002 $ 38,080,992 $ 492,324 $ 37,588,668 $ 37,038, % $ 554,640 $ 37,593, % 2003 $ 40,619,921 $ 684,229 $ 39,935,692 $ 37,525, % $ 298,371 $ 37,824,337 95% 2004 (1) $ 42,274,260 $ 1,090,811 $ 41,183,449 $ 39,332, % $ 177,097 $ 39,509,787 96% 2005 $ 43,953,567 $ 720,755 $ 43,232,812 $ 42,994, % $ 231,064 $ 43,225, % 2006 $ 45,612,442 $ 604,960 $ 45,007,482 $ 44,226, % $ 485,250 $ 44,711,542 99% 2007 (1) $ 47,534,975 $ 701,199 $ 46,833,776 $ 46,404, % $ 433,097 $ 46,837, % 2008 $ 49,653,716 $ 717,701 $ 48,936,015 $ 48,334, % $ - $ 48,334,219 99% Real Estate Tax Levies vs. First Year Collections Last Ten Fiscal Years Millions (1) Revaluation year Note: Includes tax liens Note: Actual collections of levy less refunds and amounts refundable. Does not nclude collection of tax titles and tax possessions attributed to such levy. Real Estate Tax Levy First Year Current Tax Collections Source: Official Statements, Town of Tewksbury Annual Reports, Town of Tewksbury B-102

169 Ratios of Outstanding Debt and General Bonded Debt Last Ten Fiscal Years Governmental Activities Debt General Percentage Percentage Fiscal U. S. Census Personal Assessed Obligation Capital Per of Personal of Assessed Year Population Income Value Bonds Leases Capita Income Value ,074 $ 1,160,270,690 $ 1,821,526,400 $ 37,368,596 $ 749,758 $ 1, % 2.09% ,851 $ 1,174,868,691 $ 1,858,645,300 $ 44,097,386 $ 1,014,150 $ 1, % 2.43% ,935 $ 1,202,336,055 $ 2,381,851,500 $ 42,267,549 $ 1,145,068 $ 1, % 1.82% ,199 $ 1,237,572,168 $ 2,452,984,000 $ 44,819,825 $ 1,365,695 $ 1, % 1.88% ,310 $ 1,267,122,335 $ 2,491,171,700 $ 40,920,843 $ 971,448 $ 1, % 1.68% ,288 $ 1,291,494,661 $ 3,389,034,100 $ 32,544,207 $ 1,027,918 $ 1, % 0.99% ,130 $ 1,310,217,982 $ 3,686,162,700 $ 32,955,467 $ 1,178,622 $ 1, % 0.93% ,043 $ 1,332,430,967 $ 3,905,761,100 $ 23,616,144 $ 1,659,137 $ % 0.65% ,043 $ 1,332,430,967 $ 4,116,854,100 $ 23,832,059 $ 1,789,517 $ % 0.62% ,607 $ 1,445,446,076 $ 4,051,624,800 $ 21,543,464 $ 1,385,834 $ % 0.57% Business-type Activities (1) Total Primary Government General Total Percentage Percentage Fiscal Obligation Capital Debt Per of Personal of Assessed Year Bonds Leases Outstanding Capita Income Value 1999 $ - $ - $ 38,118,354 $ 1, % 2.09% 2000 $ - $ - $ 45,111,536 $ 1, % 2.43% 2001 $ - $ - $ 43,412,617 $ 1, % 1.82% 2002 $ - $ - $ 46,185,520 $ 1, % 1.88% 2003 $ - $ - $ 41,892,291 $ 1, % 1.68% 2004 $ 10,913,205 $ - $ 44,485,330 $ 1, % 1.31% 2005 $ 17,968,559 $ - $ 52,102,648 $ 1, % 1.41% 2006 $ 37,097,419 $ - $ 62,372,700 $ 2, % 1.60% 2007 $ 65,949,330 $ - $ 91,570,906 $ 3, % 2.22% 2008 $ 83,394,969 $ 219,000 $ 106,543,267 $ 3, % 2.63% Note: Sewer Fund established in Water Fund established in 2006 Source: Audited Financial Statements, U. S. Census B-103

170 Direct and Overlapping Governmental Activities Debt As of June 30, 2008 Estimated Estimated Share of Debt Percentage Overlapping Outstanding Applicable Debt Debt repaid with property taxes: Shawsheen Valley Regional Vocational Technical School $ 900, % $ 229,680 (1) Town direct debt 21,543,464 Total direct and overlapping debt $ 21,773,144 (1) Note: Debt is as of March Source: Shawsheen Valley Regional Technical Vocational High School. B-104

171 Computation of Legal Debt Margin Last Ten Fiscal Years (1) (1) (1) Equalized Valuation $ 1,992,894,400 $ 1,992,894,400 $ 2,314,582,000 $ 2,314,582,000 $ 3,003,930,000 $ 3,003,930,000 $ 3,772,192,300 $ 3,772,192,300 $ 4,365,175,800 $ 4,365,175,800 Debt Limit -5% of Equalized Valuation $ 99,644,720 $ 99,644,720 $ 115,729,100 $ 115,729,100 $ 150,196,500 $ 150,196,500 $ 188,609,615 $ 188,609,615 $ 218,258,790 $ 218,258,790 Less: Outstanding debt applicable to limit $ 29,166,791 $ 28,878,310 $ 27,761,068 $ 31,388,788 $ 28,663,321 $ 26,555,806 $ 50,924,026 $ 60,713,563 $ 89,781,389 $ 104,938,433 Authorized and unissued debt $ 13,120,925 $ 19,665,925 $ 20,940,925 $ 18,690,925 $ 99,536,925 $ 92,198,085 $ 94,812,085 $ 83,647,056 $ 59,792,056 $ 40,674,386 Legal debt margin $ 57,357,004 $ 51,100,485 $ 67,027,107 $ 65,649,387 $ 21,996,254 $ 31,442,609 $ 42,873,504 $ 44,248,996 $ 68,685,345 $ 72,645,971 Total debt applicable to the limit as a percentage of debt limit 42.44% 48.72% 42.08% 43.27% 85.36% 79.07% 77.27% 76.54% 68.53% 66.72% (1) Revaluation year Source: Official Statements, Town of Tewksbury and State Records B-105

172 Demographic and Economic Statistics Last Ten Fiscal Years Per Capita (1) Fiscal Population Personal Personal Median School Unemployment Year Estimates Income Income Age Enrollment Rate ,074 $ 1,160,270,690 $ 39, , % ,851 $ 1,174,868,691 $ 40, , % ,935 $ 1,202,336,055 $ 41, , % ,199 $ 1,237,572,168 $ 42, , % ,310 $ 1,267,122,335 $ 43, , % ,288 $ 1,291,494,661 $ 44, , % ,130 $ 1,310,217,982 $ 44, , % ,043 $ 1,332,430,967 $ 45, , % ,418 $ 1,376,615,310 $ 46, , % ,607 $ 1,445,446,076 $ 48, , % Note: Includes Shawsheen Valley Regional Vocational/Technical HS, Tewksbury students only As of October 1 of each year Source: Tewksbury Town Report, respective year Official Statements, Town of Tewksbury Massachusetts Department of Employment & Training ( B-106

173 Principal Employers (excluding Town) Current Year and Nine Years Ago Nature Percentage of Percentage of of Total Town Total Town Employer Business Employees Rank Employment Employees Rank Employment Raytheon Manufacturing Co. Electronics & Research 2, % 2, % Tewksbury State Hospital Hospital 1, % % Demoulas Warehouse/Stores Grocery Store Warehouse % % Avid Technology, Inc. Computer Systems % % Getronics Electronics % N/A N/A N/A Walmart Deparment Store % % Home Depot Building/Hardware % % ECRM Manufacturing Printers % N/A N/A N/A Sears Department Store % N/A N/A N/A Holiday Inn Motel % % Wang Laboratories Electronics N/A N/A N/A % Metropolitan Life Insurance Insurance N/A N/A N/A % Intergrated Solutions, Inc. Manufacturing Semi-Conductor Equipment N/A N/A N/A N/A N/A N/A Muro Pharmaceutical, Inc. Manufacturing Pharmaceuticals N/A N/A N/A % 6,370 42% 6,860 43% N/A - Information not available Source: Official Statements, Town of Tewksbury B-107

174 Full-time Equivalent Town Employees by Function Last Ten Fiscal Years Fiscal Year Function General government Public safety Education Public works Human services Health and sanitation Culture and recreation Total B-108

175 Operating Indicators/Capital Asset Statistics by Function/Program Last Ten Fiscal Years Fiscal Year Function/Program General Government Number of Buildings Police Motor vehicle citation 2,674 4,256 4,130 N/A N/A 3,076 N/A N/A N/A N/A Number of Stations Police personnel and officers Fire Inspections 1,215 1, N/A N/A N/A Fire stations Fire personnel and officers Education Number of elementary schools Number of middle schools Number of high schools Number of teachers Number of administrators Number of students 4,272 4,395 4,456 4,629 4,664 4,730 4,731 4,643 4,761 4,870 Public works Water mains (miles) Fire hydrants 1,472 1,486 1,501 1,517 1,532 1,547 1,563 1,564 1,567 1,567 Sanitary sewers (miles) Storm drains. 2,569 2,595 2,621 2,648 2,675 2,702 2,729 2,729 2,732 2,732 Culture and Recreation Parks and playgrounds Park and playground (acreage) Fields - baseball Fields - football Fields - soccer Tennis courts Source: Various Town Departments Tewksbury Town Report, respective year B-109

176 At T.H.E. FARM, Ben enjoys his time out on a sunny winter day. Unknown

177 ATTORNEYS AT LAW PROPOSED FORM OF LEGAL OPINION APPENDIX C (Closing Date) Town Hall 1009 Main Street Tewksbury, Massachusetts TOWN OF TEWKSBURY, MASSACHUSETTS, $21,642,000 GENERAL OBLIGATION MUNICIPAL PURPOSE LOAN OF 2009 BONDS, originally issued as of December 15, 2009 and due on January 15 in the years and amounts and bearing interest at the rates stated below Ladies and Gentlemen : We have examined the papers submitted in connection with the above-described bonds (the "Bonds") of the (the "Town") and, on the basis of such examination, are of the opinion that the Bonds are duly authorized. The Bonds are issued by means of a book-entry system evidencing ownership and transfer of the Bonds on the records of The Depository Trust Company and its participants. The Bonds bear interest from their date, payable on January 15 and July 15 each year, commencing July 15, 2010, at the respective rates per annum as follows : Year Principal Amount Interest Rate Year Principal Amount 2011 $692,000 % 2021 $1,230, $745,000 % 2022 $1,270, $775,000 % 2023 $1,310, $785,000 % 2024 $1,350, $780,000 % 2025 $1,390, $805,000 % 2026 $1,435, $820,000 % 2027 $1,470, $835,000 % 2028 $1,505, $760,000 % 2029 $1,480, $695,000 % 2030 $1,510,000 Interest Rate DEVINE, MILLIMET 43 NORTH MAIN STREET T MANCHESTER, NH & BRANCH CONCORD F ANDOVER, MA PROFESSIONAL NEW HAMPSHIRE DEVINEMILLIMET.COM CONCORD, NH ASSOCIATION NORTH HAMPTON, NH C-1

178 (Closing Date) The Bonds are subject to redemption prior to their stated maturity dates upon the terms and conditions and the redemption prices stated in the Bonds. Each Bond should bear the Town Seal or a facsimile thereof and should be signed by the manual or facsimile signature of the Town Treasurer and countersigned by the manual or facsimile signatures of at least a majority of the Selectmen. Of the issue described, we have examined one of the fully executed Bonds and we are of the opinion that the form of that Bond and the form of its execution are regular and proper. With respect to the Bonds, we are further of the opinion that under existing law : The Bonds, executed and certified as above indicated, are valid and binding general obligations of the Town, and, to the extent not paid from other sources, are payable as to both principal and interest from ad valorem taxes which may be levied upon all the property within the territorial limits of the Town and taxable by it, subject to the limitations imposed by Chapter 59, Section 21 C of the Massachusetts General Laws upon the amount of the total taxes which may be assessed in any fiscal year upon real estate and personal property within the Town. (2) The Bonds, including the interest thereon, are exempt from taxation imposed by Massachusetts laws, although the Bonds including such interest are included in the measure of estate and inheritance taxes and of applicable corporation excise and franchise taxes. The interest on the Bonds is not included in gross income for federal income tax purposes and is not an item of tax preference for purposes of computing the alternative minimum tax imposed on individuals and corporations, such interest is not taken into account in determining adjusted current earnings for purposes of computing the alternative minimum tax imposed on certain corporations (as defined for federal income tax purposes) but such interest is included in the measure of certain other taxes imposed on corporations and in the measure of income of certain recipients of Social Security and Railroad Retirement benefits for the purpose of determining whether such benefits shall be included in the taxable income of such recipients. We call to your attention certain requirements of the Internal Revenue Code of 1986, as amended (the "Code"), relating to the use, expenditure and investment of the proceeds of the Bonds and notes issued in anticipation thereof. Failure by the Town to comply with such requirements subsequent to the issuance of the Bonds may cause interest on the Bonds to become subject to federal income taxation retroactive to the date of their issuance. The Town has covenanted to take all lawful action necessary to comply with those provisions of the Code that, except C-2

179 (Closing Date) for such compliance, would affect adversely the excludability of interest on the Bonds from gross income for federal income tax purposes. We express no opinion with respect to other federal tax consequences arising with respect to the Bonds. This opinion is given as of the date hereof and we assume no obligation to update, revise or supplement this opinion to reflect any facts or circumstances that may hereafter come to our attention or any changes in law that may hereafter occur. The rights of the holders of the Bonds and the enforceability thereof may be subject to bankruptcy, insolvency, reorganization, moratorium and other similar laws affecting creditors' rights heretofore or hereafter enacted to the extent constitutionally applicable and that their enforcement may also be subject to the exercise of judicial discretion in appropriate cases. Very truly yours, DEVINE, MILLIMET & BRANCH, PROFESSIONAL ASSOCIATION C-3

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181 APPENDIX D CONTINUING DISCLOSURE CERTIFICATE This Continuing Disclosure Certificate (the "Disclosure Certificate") is executed and delivered by the (the "Issuer") in connection with the issuance of its $21,642,000 General Obligation Municipal Purpose Loan of 2009 Bonds dated as of December 15, 2009 (the "Bonds"). The Issuer covenants and agrees as follows : SECTION 1. Purpose of the Disclosure Certificate. This Disclosure Certificate is being executed and delivered by the Town for the benefit of the Owners of the Bonds and in order to assist the Participating Underwriters in complying with the Rule. SECTION 2. Definitions. For purposes of this Disclosure Certificate the following capitalized terms shall have the following meanings : "Annual Report" shall mean any Annual Report provided by the Town pursuant to, and as described in, Sections 3 and 4 of this Disclosure Certificate. "EMMA" shall mean the Electronic Municipal Market Access system of the MSRB for use in the collection and dissemination of information, which system the SEC has stated to be consistent with its Rule 15c2-12. Currently, the following is the website address for EMMA : emma.msrb.org. "Listed Events" shall mean any of the events listed in Section 5(a) of this Disclosure Certificate. "MSRB" shall mean the Municipal Securities Rulemaking Board, located at : th Street, NW, Suite 400 Washington, D.C Phone: (202) Fax : (202) Internet : "Owners of the Bonds" shall mean the registered owners, including beneficial owners, of the Bonds. "Participating Underwriter" shall mean any of the original underwriters of the Bonds required to comply with the Rule in connection with offering of the Bonds. "Rule" shall mean Rule 15c2-12 adopted by the Securities and Exchange Commission under the Securities Exchange Act of 1934, as the same may be amended from time to time. D-1

182 SECTION 3. Provision of Annual Reports. (a) The Town shall, not later than 270 days after the end of each fiscal year, provide to the MSRB in an electronic format as prescribed by the MSRB an Annual Report which is consistent with the requirements of Section 4 of this Disclosure Certificate. The Annual Report may be submitted as a single document or as separate documents comprising a package, and may cross-reference other information as provided in Section 4 of this Disclosure Certificate ; provided that the audited financial statements of the Town may be submitted when available separately from the balance of the Annual Report. (b) If the Town fails to provide to the MSRB an Annual Report by the date required in subsection (a), the Town shall send in a timely manner to the MSRB notice of such failure in substantially the form attached as Exhibit A. SECTION 4. Content of Annual Reports. The Town's Annual Report shall contain or incorporate by reference the following : (a) quantitative information for the preceding fiscal year of the type presented in the Town's Final Official Statement relating to the Bonds regarding (i) the revenues and expenditures of the Town relating to its operating budget, (ii) capital expenditures, (iii) fund balances, (iv) property tax information, (v) outstanding indebtedness and overlapping debt of the Town, and (vi) pension obligations of the Town ; and (b) the most recently available audited financial statements of the Town, prepared in accordance with generally accepted accounting principles. If audited financial statements for the preceding fiscal year are not available when the Annual Report is submitted, the Annual Report will include unaudited financial statements for the preceding fiscal year and audited financial statements for such fiscal year shall be submitted when available. Any or all of the items listed above may be incorporated by specific reference from other documents, including official statements of debt issues of the Town or related public entities, which have previously been submitted to the MSRB or to the Securities and Exchange Commission. If the document incorporated by reference is a final official statement, it must be available from the MSRB. The Town shall clearly identify each such other document so incorporated by reference. SECTION 5. Reporting of Material Events. (a) The Town shall give notice, in accordance with subsection 5(b) below, of the occurrence of any of the following events with respect to the Bonds, if material : 1. Principal and interest payment delinquencies. 2. Non-payment related defaults. D-2

183 3. Unscheduled draws on debt service reserves reflecting financial difficulties. 4. Unscheduled draws on credit enhancements reflecting financial difficulties. 5. Substitution of credit or liquidity providers, or their failure to perform. 6. Adverse tax opinions or events affecting the tax-exempt status of the Bonds. 7. Modifications to rights of the Owners of the Bonds. 8. Bond calls. 9. Defeasances. 10. Release, substitution or sale of property securing repayment of the Bonds. 11. Rating changes. It should be noted, however, that as of this date events of the types listed in paragraphs 2, 3 and 10 above are not applicable to the Bonds. (b) Whenever the Town obtains knowledge of the occurrence of a Listed Event, the Town shall as soon as possible determine if such an event would be material under applicable federal securities laws and if so, the Town shall promptly file a notice of such occurrence with the MSRB, if any. SECTION 6. Means of Reporting Information. The Town shall provide information to the MSRB's EMMA disclosure service as prescribed by the MSRB. As of the date hereof, submissions must be by electronic submission in electronic portable document format ("PDF") files configured to permit document to be saved, viewed, printed and retransmitted by electronic means and, as of January 1, 2010, shall have a word-search function permitting a user to search the document. The Town is authorized to transmit information to the MSRB by whatever means are mutually acceptable to the Town and the MSRB. SECTION 7. Tennination of Reporting Obligation. The Town's obligations under this Disclosure Certificate shall terminate upon the legal defeasance in accordance with the terms of the Bonds or payment in full of all of the Bonds. SECTION 8. Amendment ; Waiver. Notwithstanding any other provision of this Disclosure Certificate, the Town may amend this Disclosure Certificate and any provision of this Disclosure Certificate may be waived if such amendment or waiver is permitted by the Rule, as evidenced by an opinion of counsel expert in federal securities law (which may include bond counsel to the Town), to the effect that such amendment or waiver would not cause the D-3

184 Disclosure Certificate to violate the Rule. The first Annual Report filed after enactment of any amendment to or waiver of this Disclosure Certificate shall explain, in narrative form, the reasons for the amendment or waiver and the impact of the change in the type of information being provided in the Annual Report. If the amendment provides for a change in the accounting principles to be followed in preparing financial statements, the Annual Report for the year in which the change is made shall present a comparison between the financial statements or information prepared on the basis of the new accounting principles and those prepared on the basis of the former accounting principles. The comparison shall include a qualitative discussion of the differences in the accounting principles and the impact of the change in the accounting principles on the presentation of the financial information in order to provide information to investors to enable them to evaluate the ability of the Town to meet its obligations. To the extent reasonably feasible, the comparison shall also be quantitative. A notice of the change in the accounting principles shall be sent to the MSRB. SECTION 9. Additional Information. Nothing in this Disclosure Certificate shall be deemed to prevent the Town from disseminating any other information (using the means of dissemination set forth in this Disclosure Certificate or any other means of communication) or including any other information in any Annual Report or providing notice of occurrence of events, in addition to that which is required by this Disclosure Certificate. If the Town chooses to include any information in an Annual Report or provide notice of occurrence of events which are not Listed Events in additional to that which is specifically required by this Disclosure Certificate, the Town shall have no obligation to update such information or include it in any future Annual Report or notice of occurrence of a Listed Event. SECTION 10. Default. In the event of a failure of the Town to comply with any provision of this Disclosure Certificate any Owner of the Bonds may seek a court order for specific performance by the Town of its obligations under this Disclosure Certificate. A default under this Disclosure Certificate shall not constitute a default with respect to the Bonds, and the sole remedy under this Disclosure Certificate in the event of any failure of the Town to comply with this Disclosure Certificate shall be an action for specific performance of the Town's obligations hereunder and not for money damages in any amount. SECTION 11. Beneficiaries. This Disclosure Certificate shall inure solely to the benefit of the Owners of the Bonds from time to time, and shall create no rights in any other person or entity. Date : December, 2009 TOWN OF TEWKSBURY, MASSACHUSETTS By : Treasurer D-4