FINANCIAL REPORT Year Ended December 31,2011
TABLE OF CONTENTS FIRE DISTRICT OF CORTLANDVILLE For the Year Ended December 31,2011 Independent Auditor's Report... 1 Balance Sheets - Government Funds... 3 Statements of Revenue, Expenditures and Changes In Fund Equity - Government Funds....4 Statement of Fiduciary Net Assets - Fiduciary Fund... 5 Long-Term Debt... 6 General Fixed Assets... 7 Required Supplementary Information: Schedule of Revenue, Expenditures and Changes In Fund Balance - Budget and Actual- General Fund... 8 Bank Reconciliation... 9 Employee and Retirement Benefits... 1 0 Fire District Questionnaire... 11 Energy Costs and Consumption... 12 Notes to Financial Statements... 13
CERTIFIED PUBLIC ACCOUNTANTS Kane, Bowles & Moore, P.C. 209 SECOND STREET LIVERPOOL, NEW YORK 13088 (315) 451-6167 FAX (315) 451-6093 MEMIlERS OF THE AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS Independent Accountant's Report Board of Fire Commissioners Fire District of Cortlandville Cortland, NY 13045 We have audited the accompanying financial statements of each major fund of the Fire District of Cortlandville (the Fire District), as of and for the year ended December 31, 2011, which collectively comprise the Fire District's basic financial statements as listed in the table of contents. These financial statements are the responsibility of the Fire District's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statements presentation. We believe that our audit provides a reasonable basis for our opinion. As described in Note A, the Fire District prepares its financial statements on a prescribed basis of accounting that demonstrates compliance with the regulatory basis of accounting and budget laws of New York State, which is a comprehensive basis of accounting principles generally accepted in the United States of America. The differences between the regulatory basis of accounting and accounting principles generally accepted in the United States of America are also described in Note A. These differences, while not reasonably determinable, are presumed to be material. In our opinion, because the Fire District policy is to prepare its financial statements on the basis of accounting discussed in the preceding paragraph, the financial statements referred to above do not present fairly, in conformity with accounting principles generally accepted in the United States of America, the financial position of the Fire District of Cortlandville as of December 31, 2011, or changes in financial position or cash flows thereof for the years then ended. Further, the Fire District of Cortland has not presented a management's discussion and analysis that accounting principles generally accepted in the United States has determined is necessary to supplement, although not required to be part of the basic financial statements. 1
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of each major fund of the Fire District as of December 31, 2011 and the respective changes in financial position of the Fire District of Cortlandville for the years then ended, on the basis of accounting described in Note A. In accordance with Government Auditing Standards, we have also issued a report dated July 12, 2012 on our consideration of the Fire District of Cortlandville's 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 important for assessing the results of our audit. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management's responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Liverpool, New York July 12, 2012 2
BALANCE SHEETS-GOVERNMENTAL FUNDS December 31, 2011 ASSETS General Capital Total Fund Projects Governmental Cash $ 168,164 $ $ 168,164 Cash, Capital Reserve 1 1 Certificate of Deposit 195,757 195,757 Total Assets $ 363,921 $ 1 $ 363,922 LIABILITIES AND FUND EQUITY Accounts Payable $ 6,762 $ $ 6,762 Accrued Liabilities 300 300 Total Liabilities 7,062 7,062 Fund Equity Capital Reserve 1 1 Unrestricted 356,859 356,859 356,859 1 356,860 Total Liabilities and Fund Equity $ 363,921 $ 1 $ 363,922 See independent accountant's report and notes to financial statements. 3
STATEMENTS OF REVENUE, EXPENDITURES AND CHANGES IN FUND EQUITY - GOVERNMENTAL FUNDS For the Year Ending December 31,2011 General Capital Governmental Fund Project Total REVENUE Real Property Taxes $ 752,460 $ $ 752,460 Interest and Earnings 2,768 6 2,774 Sales of Equipment 550 550 Donations In Kind 46,868 Other Income 3,000 3,000 Total Revenue $ 758,778 $ 46,874 $ 805,652 EXPENDITURES Fire - Personal Service $ 12,600 $ $ 12,600 Fire - Equipment and Capital Outlay 25,720 25,720 Fire - Other Expenses 296,403 296,403 Total Fire 334,723 334,723 Employees - Local Pension Fund 72,000 72,000 Employees - Social Security 964 964 Total Employee Benefits 72,964 72,964 Debt - Principal 183,000 183,000 Debt - Interest 73,023 73,023 Total Debt Service 256,023 256,023 Capital Outlay (Station II) 102,820 102,820 Total Expenditures 663,710 102,820 766,530 Other Sources and (Uses) Transfer (to) from Capital Projects Fund {227,389~ 227,389 Total Sources and Other Uses (227,389) 227,389 Net Change (132,321 ) 171,443 39,122 Beginning Fund Equity 489,180 {171,442) 317,738 Ending Fund Equity $ 356,859 $ $ 356,860 See independent accountant's report and notes to financial statements. 4
STATEMENT OF FIDUCIARY NET ASSETS - FIDUCIARY FUND December 31,2011 ASSETS - SERVICE AWARDS 2011 Annuities Oppenheimer Fund $ 606,466 173,923 Total Assets $ 780,389 LlABILITITES Service Awards $ 780,389 Total Liabilitites $ 780,389 See independent accountant's report and notes to financial statements. 5
LONG-TERM DEBT December 31,2011 ASSETS Provision to be Made in Future Budget 2011 $ 1,875,001 LlABILITITES Bonds Payable $ 1,875,001 See independent accountant's report and notes to financial statements. 6
GENERAL FIXED ASSETS December 31, 2011 ASSETS 2011 Land Buildings Machinery and Equipment $ 480,000 2,550,083 3,370,259 Total Noncurrent Governmental Assets $ 6,400,342 See independent accountant's report and notes to financial statements. 7
SCHEDULE OF REVENUE, EXPENDITURES AND CHANGES IN FUND BALANCE BUDGET AND ACTUAL - GENERAL FUND Year Ending December 31,2011 General Fund Various Budget Original/Modified Actual Encumbrance Fav - (Unfav) REVENUE Real Property Taxes $ 752,460 $ 752,460 $ $ Interest and Earnings 5,000 2,768 (2,232) Sales of Equipment 550 550 Donations In Kind Other Income 3,000 3,000 Total Revenue $ 760,460 $ 758,778 $ $ EXPENDITURES Fire - Personal Service $ 12,600 $ 12,600 $ $ Fire - Equipment and Capital Outlay 27,553 25,720 Fire - Other Expenses 360,026 294,474 Total Fire 400,179 332,794 Employees - Local Pension Fund 72,000 72,000 Employees - Social Security and unemployment 1,000 963 Total Employee Benefits 73,000 72,963 Debt - Principal 183,000 183,000 Debt - Interest 74,300 73,023 Contingency 9,981 1,929 Building Reserve 5,000 Equipment Reserve 15,000 Total Expenditures 760,460 663,709 Other Sources and (Uses) Transfer (to) from Capital Projects Fund (227,390) Total Sources and Other Uses (227,390) Net Change $ (132,321) Beginning Fund Balance 489,180 Ending Fund Balance $ 356,859 $ $ (1,682) 1,833 65,552 67,385 37 37 1,277 8,052 5,000 15,000 91,751 (227,390) (227,390) (132,321) 489,180 356,859 See paragraph on supplementary schedules included in independent accountant's report. 8
ANNUAL FINANCIAL REPORT UPDATE DOCUMENT BANK RECONCILIATION For the Year Ending December 31,2011 Include All Checking, Savings and C.D. Accounts Bank Add: Less: Adjusted Account Bank Deposits In Outstanding Bank Number Balance Transit Checks Balance 1267848 $ 144,145 $ $ $ 144,145 1267855 17,090 17,090 1267863 6,812 6,812 3002136 1,857 (1,740) 117 3007101 1 1 27021 195,757 195,757 Total Adjusted Bank Balance 363,922 Petty Cash Adjustments Total Cash $ 363,922 See paragraph on supplementary schedules included in independent accountant's report. 9
EMPLOYEE AND RETIREE BENEFITS For the Year Ending December 31, 2011 Total Full Time Employees: 0 Total Part Time Employees: 2 Total # of Full # of Part Account Expenditures Time Time Code Description (All Funds) Employees Employees 90108 State Retirement System $ 0 0 90158 Police and Fire Retirement 0 0 90258 Local Pension Fund 0 0 90308 Social Security 964 0 2 90408 Worker's Compensation Insurance 0 0 90458 Life Insurance 0 0 90508 Unemployment Insurance 188 0 2 90558 Disability Insurance 0 0 90608 Hospital & Medical (Dental) Insurance 0 0 90708 Union Welfare Benefits 0 0 90858 Supplemental Benefit Pmt to Disabled Fire Fighters 0 0 91890 Other Employee Benefits 0 0 # of Retirees 0 0 0 0 0 0 0 0 0 0 0 0 Total 1,152 Computed Total From Financial Section $ 1,152 (comparative purposes only) See paragraph on supplementary schedules included in independent accountant's report. 10
FIRE DISTRICT QUESTIONNAIRE For the Year Ending December 31,2011 Response 1) Has your district adopted a written procurement policy and is it compiled with? 2) Has your district contracted to have an independent audit of its financial statements? y y If not, has the Board of Fire Commissioners performed an internal audit of the Treasurer's records and reports? 3) Does your district have a written travel policy and is it complied with? 4) Are monthly bank reconciliations performed? y y 5) What is your district's statutory spending limitation margin (amount) for the next fiscal? $ 285,885 6) Does your district have a Length of Service Award Program (LOSAP) for volunteer firefighters? Y If so, how are the LOSAP funds invested? Marketable Securities Annuities y y Life Insurance N Other (describe) 7) Has your Fire District adopted an investment policy as required by General Municipal Law, Section 39? Y See paragraph on supplementary schedules included in independent accountant's report. 11
ENERGY COSTS AND CONSUMPTION For the Year Ending December 31,2011 Alternative Total Units of Units of Energy Type Expenditures Total Volume Measure Measure Gasoline $ 15,381 5,064 gallons Diesel Fuel $ 9,349 2,826 gallons Fuel Oil $ gallons Natural Gas $ 10,482 12,191 cubic feet Electricity $ 18,132 107,730 kilowatts Coal $ tons See paragraph on supplementary schedules included in independent accountant's report. 12
NOTES TO FINANCIAL STATEMENTS For the Year Ending December 31,2011 NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Management has elected to prepare its financial statements on the statutory basis required by the Office of the Comptroller of the State of New York for Annual Reports to that office and are not intended to present the financial statements in accordance with accounting principles generally accepted in the United States. This statutory basis varies from accounting principles generally accepted in the United States primarily because it does not reflect the adoption of GASB 34. Basic Financial Statements-and Management's Discussion and Analysis-for State and Local Governments; GASB #43, Financial Reporting for Postemployment Benefit Plans Other Than Pension Plans; GASB #45, Accounting and Financial Reporting by Employers for Postemployment Benefits Other Than Pension; and GASB #54, Fund Balance Reporting and Governmental Fund Type Definitions. GASB #34 financial statements are reported using the economic resources measurement focus and the accrual basis of accounting. Revenues are recorded when earned and expenses are recorded at the time liabilities are incurred, regardless of when the related cash transaction takes place. Non-exchange transactions, in which the District gives or receives value without directly receiving or giving equal value in exchange, including property taxes, grants and donations. Net assets are to be reported invested in capital assets net of related debt, restricted and unrestricted. Reconciliation from government fund financial statements is required. In addition, management is required to preface the financial statements with a Management Discussion and Analysis. The statutory method is the same method used by the Fire District for fiscal year ended December 31, 2010. Use of Estimates In preparing the financial statements in conformity with accounting principles as prescribed by the New York State Comptroller, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statement, and the reported amounts of revenues and expenditures during the reported period. Actual results could differ from those estimates. Financial Reporting Entity The Fire District of Cortlandville (the "District"), established in 1981, is governed by the Board of Fire Commissioners and the General Municipal Law, Article 3, Section 30. The District provides its residents with fire protection and various other services. All governmental activities and functions performed for the District are the direct responsibility of the Board of Fire Commissioners. No other governmental organizations have been included or excluded from the reporting entity. 13
NOTES TO FINANCIAL STATEMENTS For the Year Ending December 31, 2011 NOTE B - FUND ACCOUNTING The District uses funds to report on its financial position and the results of its operations. Fund accounting is designed to demonstrate legal compliance and to aid financial management by segregating transactions related to certain government functions or activities. A fund is a separate accounting entity with a self-balancing set of accounts. The District records its transactions in the fund types described below. Fund Types Governmental Funds are those through which most governmental functions of the District are financed. The acquisition, use, and balances of the District's expendable financial resources and related liabilities are accounted for through governmental funds. The measurement focus is based upon determination of financial position, and changes in financial position, rather than upon net income. The District's governmental fund types are as follows: a. General Fund is the principal operating fund of the District and includes all operations not required to be recorded in other funds. This fund operates within the financial limits of an annual budget adopted by the Board of Fire Commissioners. b. Capital Projects Fund is used to account for financial resources to be used for the acquisition or construction of major capital facilities. Financing is generally provided from proceeds of bonds and notes. Fiduciary Funds are used to account for assets held by the government in a trustee or custodial capacity as follows: c. Agency Funds are used to account for agency funds money received and held in the capacity of trustee, custodian, or agent. Account Groups are used to establish accounting control and accountability for general long-term debt and for general fixed assets. They are concerned with measurement of financial position and not results of operations. d. General Fixed Assets Account Group is maintained by the District, as required by accounting principles generally accepted in the United States of America but does not include all infrastructure assets. e. General Long-Term Debt Account Group is used to establish accounting control for the District's long-term obligations payable from governmental funds which will not be liquidated from current resources. Such obligations include long-term debt. 14
NOTES TO FINANCIAL STATEMENTS For the Year Ending December 31,2011 NOTE B - FUND ACCOUNTING (CONTINUED) Basis of Accounting/Measurement Focus Basis of accounting refers to when revenues and expenditures/expenses and the related assets and liabilities are recognized in the accounts and reported in the financial statements. Basis of accounting relates to the timing of the measurements made, regardless of measurement focus. Measurement focus is the determination of what is measured, i.e., expenditures or expenses. Modified Accrual Basis - All Government Funds are accounted for using the modified accrual basis of accounting. Under this basis of accounting, revenues are recorded when measurable and available. Available means collectible within the current period or soon enough thereafter to be used to pay liabilities of the current period. Revenues are considered to be available if collected within 60 days. Material revenues that can be accrued include real property taxes, State and Federal Aid, sales tax and certain user charges. If expenditures are the prime factor for determining eligibility, revenues from Federal and State grants are accrued when the expenditure is made and the resources are available. Expenditures are recorded when incurred except that: a. Expenditures for prepaid expenses and inventory-type items are recognized at the time of purchase. b. Principal and interest on indebtedness are not recognized as an expenditure until due. c. Pension contributions are charged as an expenditure when paid. d. General long-term debt liabilities are recorded at the par value of the principal amount, no liability is recorded for interest payable to maturity. Property Taxes Real property taxes are levied annually no later than December 1 st and become a lien on December 31 st. Taxes are collected during the period January 1 st to May 31 st Unpaid taxes are turned over to the county for enforcement. Any such taxes remaining unpaid at year-end are relevied as county taxes in the subsequent year. 15
NOTES TO FINANCIAL STATEMENTS For the Year Ending December 31,2011 NOTE B - FUND ACCOUNTING (CONTINUED) Capital Assets All capital assets are valued at historical cost or estimated historical cost. Contributed assets are reported at fair market value as of the date received. Additions, improvements, and other capital outlays that significantly extend the useful, life of an asset are capitalized. Other costs incurred for repair and maintenance are expensed as incurred. Capital assets purchased or acquired with an original cost of at least $500 and having a useful life of greater than one year are capitalized. Budgetary Data 1. Budget Policies - the budget policies are as follows: a. No later than September 29th, the budget officer submits a tentative budget to the Board of Fire Commissioners for the fiscal year commencing the following January 1 st. The tentative budget includes proposed expenditures and the proposed means of financing for all funds. b. After public hearings are conducted to obtain taxpayer comments, no later than November ih, the governing board adopts the budget. c. All modifications of the budget must be approved by the Board of Fire Commissioners. 2. Encumbrances Encumbrance accounting, under which purchase order, contracts and other commitments for the expenditure of monies are recorded for budgetary control purposes to reserve that portion of the applicable appropriations, is employed in the governmental funds. Encumbrances are reported as reservations of fund balances since they do not constitute expenditures or liabilities. Expenditures for such commitments are recorded in the period in which the liability is incurred. 3. Budget Basis of Accounting The Budget(s) are adopted annually on a basis consistent with generally accepted accounting principles as prescribed by the New York State Comptroller. Appropriations authorized for the current year are increased by the amount of encumbrances carried forward from the prior year. 16
NOTES TO FINANCIAL STATEMENTS For the Year Ending December 31,2011 NOTE C - STEWARDSHIP, COMPLIANCE, ACCOUNTABILITY Cumulative expenditures for the capital project at December 31, 2011 materially exceeded appropriations: Fund Appropriations as Modified Cumulative Expenditures Unfavorable Variance Capital Projects 696,868 974,918 (278,050) The interfund transfers of the general fund exceed the budgeted amount by $227,389. The general fund had a deficit in total of ($132,321) for the year ending December 31, 2011. Principal factors which caused the deficits were construction costs for Station II significantly exceeded the $650,000 estimates approved by the voters October 2009 to be funded by a $450,000 serial bond and $200,000 from the capital reserve. Appropriations were modified by Donations In Kind of $46,868 received in 2011. NOTE D - DETAILED NOTES ON ALL FUNDS Cash and Investments The District's investment policies are governed by State statues. In addition, the District has its own written investment policy. District monies must be deposited in Federal Depository Insurance Corporation (FDIC) insured commercial banks or trust companies located within the State. The Treasurer is authorized to use demand accounts and certificates of deposit. Permissible investments include obligations of the U.S. Treasury and U.S. Agencies, repurchase agreements, and obligations of New York State or its localities. Collateral is required for demand deposits and certificates of deposit as provided for by law of all deposits not covered by FDIC insurance. Obligations that may be pledged as collateral are obligations of the United States and its agencies and obligations of the State and its municipalities and school districts. Deposits and investments at year-end were entirely covered by federal depository insurance or by collateral held by the District's custodial bank in the District's name. Deposits All deposits, including money market accounts and certificate of deposit, are carried at cost plus accrued interest. 17
NOTES TO FINANCIAL STATEMENTS For the Year Ending December 31,2011 NOTE D - DETAILED NOTES ON ALL FUNDS (CONTINUED) Bank Carrying Fund Balance Amount General $ 169,904 $ 168,164 Insured General $ 195,757 $ 195,757 Collateral Held by District's Custodial Bank Capital $ 1 $ 1 Insured Property Taxes The total real property tax assets receivable is $0 at December 31,2011. There is no allowance for uncollectable tax or deferred revenue as the total amount has been collected and earned in 2011. Fixed Assets General fixed assets are not capitalized in the funds used to acquire or construct them. Instead, capital acquisition and construction are reflected as expenditures in the governmental fund types. Changes In Capital Assets A summary of changes in capital fixed assets follows: Balance Reclassifications Balance Type 12/31/2010 Additions Deletions 12/31/2011 Land $ 480,000 $ $ $ 480,000 Buildings 1,575,165 55,952 918,966 2,550,083 Machinery and Equipment 3,297,671 72,588 3,370,259 Construction Work In Progress 918,966 (918,966) Total $ 6,271,802 $ 128,540 $ $ 6,400,342 Insurance The District assumes the liability for most risk including, but not limited to, property damage and personal injury liability. Judgments and claims are recorded when it is probable that an asset has been impaired or a liability has been incurred and the amount of loss can be reasonably estimated. See Note H - Commitment and Contingencies. 18
NOTES TO FINANCIAL STATEMENTS For the Year Ending December 31,2011 NOTE D - DETAILED NOTES ON ALL FUNDS (CONTINUED) Interfund Transactions Quasi-external transactions are accounted for as revenues, expenditure, or expenses. Transactions that constitute reimbursements to a fund for expenditure initially made from it that are properly applicable to another fund are recorded as expenditures in the reimbursing fund and as reductions of expenditures in the fund that is reimbursed. All other interfund transactions, except quasi-external transactions and reimbursements, are reported as transfers. Nonrecurring or nonroutine permanent transfers of equity are reported as residual equity transfers. All other interfund transfers are reported as operating transfers. Interfund transactions were as follows: Receivable Payable Revenues Expenditures General $ $ $ $ 227,389 Capital Projects 227,389 Total $ $ $ 227,389 $ 227,389 The District typically loans resources between funds for the purpose of mitigating the effects of transient cash flow issues. The General Fund expenditures provided additional sources to the Capital Project Fund for Station II construction. Subsequent Events Management has evaluated subsequent events through July 12, 2012, the date the financial statements were available to be issued. NOTE E - LENGTH OF SERVICE AWARDS PROGRAM (LOSAP) Length of Service Awards Program (LOSAP) The District financial statements are for the year ended December 31, 2011. The Length of Service Awards Program is for the plan year ending on December 31, 2011 which is the most recent plan year for which complete information is available. The District established a defined benefit LOSAP for the active volunteer firefighters of the District. The program took effect on January 1, 1992. The program was established pursuant to Article 11-A of the General Municipal Law. The program provides municipally-funded pension-like benefits to facilitate the recruitment and retention of active volunteer firefighters. The District is the sponsor of the program. 19
NOTES TO FINANCIAL STATEMENTS For the Year Ending December 31, 2011 NOTE E - LENGTH OF SERVICE AWARDS PROGRAM (LOSAP) (CONTINUED) Participation, Vesting and Service Credit Active volunteer firefighters who have reached the age of 18 and who have completed 1 year of firefighting service are eligible to participate in the program. Participants acquire a nonforfeitable right to a service award after being credited with 5 years of firefighting service or upon attaining the program's entitlement age. The program's entitlement age is age 62. In general, an active volunteer firefighter is credited with a year of firefighting service for each calendar year after the establishment of the program in which he or she accumulates fifty points. Points are granted for the performance of certain activities in accordance with a system established by the sponsor on the basis of a statutory list of activities and point values. A participant may also receive credit for 5 years of firefighting service rendered prior to the establishment of the program during the first year of the program only. Benefits A participant's benefit under the program is the equivalent of a monthly payment for life equal to $20 multiplied by the person's total number of years of firefighting service. The number of years of firefighting service used to compute the benefit cannot exceed forty. Benefits are not payable until the participant reaches age 62. On and after that date, except in the case of disability or death, benefits are payable when a participant reaches entitlement age. The program provides statutorily mandated death and disability benefits. Fiduciary Investment and Control Service credit is determined by the Board of Fire Commissioners of the District, based on information certified to the governing board by each fire company having members who participate in the program. Each fire company must maintain all required records on forms prescribed by the governing board. The Board of Fire Commissioners of the District has retained and designated Standard Security Life Insurance Company of New York to assist in the administration of the program. The designated program administrator's functions include payment and calculation of claims and custodian of assets. Disbursements of program assets for the payment of benefits or administrative expenses must be approved through the following process: Cortlandville Fire District submits claims to agent McNeil & Company. McNeil & Company reviews claims for accuracy and completeness and forwards claims to Standard Security Life Insurance Company who calculates and pays claims. Program assets are required to be held in trust by LOSAP legislation, for the exclusive purpose of providing benefits to participants and their beneficiaries or for the purpose of defraying the reasonable expenses of the operation and administration of the program. The trust agreement is dated January 1, 1992, and the trustee is the Cortlandville Board of Fire Commissioners. 20
NOTES TO FINANCIAL STATEMENTS For the Year Ending December 31,2011 NOTE E - LENGTH OF SERVICE AWARDS PROGRAM (LOSAP) (CONTINUED) Authority to invest program assets is vested in Oppenheimer and Standard Securities. Subject to restrictions in the program document, program assets are invested in accordance with a statutory "prudent person" rule. The sponsor is required to retain an actuary to determine the amount of the sponsor's contributions to the plan. The actuary retained by the sponsor for this purpose is Harbridge Consulting Group. Portions of the following information are derived from a report prepared by the actuary dated February 2012. Assets and Liabilities Actuarial Present Value of Benefits at December 31, 2011 $ 887,199 Less: Assets Available for Benefits % of Total Amount Standard Security Annuity Oppenheimer Funds Total Net Assets Available for Benefits 78% 22% $606,466 173,923 780,389 Total Unfunded Benefits Less: Unfunded Liability for Prior Service 106,810 (106,810) Unfunded Normal Benefits $ Prior Service Costs Prior service costs are being amortized over a range of 3 to 10 years at a discount rate of 5.25%. Receipts and Disbursements Plan Net Assets, beginning of year Changes during the year: + Plan contributions + Investment income earned +/- Changes in fair market value of investments - Plan Benefit Withdrawals Plan Net Assets, end of year $ $ 749,938 70,248 23,215 (4,118) (58,894) 780,389 21
NOTES TO FINANCIAL STATEMENTS For the Year Ending December 31,2011 NOTE E - LENGTH OF SERVICE AWARDS PROGRAM (LOSAP) (CONTINUED) Contributions Amount of sponsor's contribution recommended by actuary: Amount of sponsor's actual contribution: $ $ 64,305 70,248 Administration Fees Fees paid to designated program administrator: $ 1,752 Funding Methodology and Actuarial Assumptions Normal Costs The actuarial valuation methodology used by the actuary to determine the sponsor's contribution is unit credit cost method. The assumptions used by the actuary to determine the sponsor's contribution and the actuarial present value of benefits are: Assumed rate of return on investment Mortality Tables used for: Withdrawal Disability Retirement Death (Actives) Death (Inactives) Other - 5.25% - None - None - Within 1 year o~ ent. Date - 1983 GAM (Unisex) with 3% interest; - interest; and - 2 to 10 years from ent. Date - 10 year graded phase-in between the - None - None - None NOTE F - SHORT-TERM DEBT Liabilities for bond anticipation notes (BANs) are generally accounted for in the Capital Projects Fund. The notes or renewal thereof may not extend more than two years beyond the original date of issue unless a portion is redeemed within two years and within each 12-month period thereafter. State law requires that BANs issued for capital purposes be converted to long-term obligations within five years after the original issue date. However, BANs issued for assessable improvements projects may be renewed for period's equivalent to the maximum life of the permanent financing, provided that stipulated annual reductions of principal are made. The District has no outstanding BANs at December 31, 2011. 22
NOTES TO FINANCIAL STATEMENTS For the Year Ending December 31, 2011 NOTE G -INDEBTEDNESS Serial Bonds Outstanding indebtedness aggregated $1,875,001. The District borrows money in order to acquire land or equipment or construct buildings and improvements. This enables the cost of these capital assets to be borne by the present and future taxpayers receiving the benefit of the assets. These long-term liabilities, which are full faith and credit debt of the District, are recorded in the General Long-Term Debt Account Group. The provision to be made in future budgets for capital indebtedness represents the amount, exclusive of interest, authorized to be collected in future years from taxpayers and others for liquidation of the long-term liabilities. Summary of Long-Term Liabilities A summary of transactions in the General Long-Term Debt Account Group for the year ended December 31,2011, is as follows: Amounts Beginning Ending Due Within Balance Issued Redeemed Balance One Year 2011 Serial Bonds $ 2,058,001 $ $ 183,000 $ 1,875,001 $ 183,000 Long-Term Debt Maturity Schedule The following is a statement of serial bonds in the Capital Projects Fund with corresponding maturity schedules. Original Date Description Date Original Interest Final Outstanding of Issue Issued Amount Rate Maturity at 12/31/11 Serial Bond 2010 $ 1,330,000 2.0-4.15% 2028 $ 1,255,000 Serial Bond 2010 $ 450,000 4.50% 2021 $ 405,000 Serial Bond 2006 $ 630,000 4.50% 2016 $ 215,001 $ 1,875,001 23
NOTES TO FINANCIAL STATEMENTS For the Year Ending December 31,2011 NOTE G - INDEBTEDNESS (CONTINUED) The following table summarizes the District's future debt service requirements: Fiscal year ended December 31 Principal Interest Total 2012 2013 2014 2015 2016 5 subsequent years 5 subsequent years 2 subsequent years 183,000 183,000 183,000 141,000 115,000 545,000 375,000 150,001 53,000 46,640 40,280 36,431 34,125 135,701 70,969 9,000 236,000 229,640 223,280 177,431 149,125 680,701 445,969 159,001 Totals $ 1,875,001 $ 426,146 $ 2,301,147 Indebtedness Not Exempt From Constitutional Debt Limit Amount Bond No. Month and Year of Issue Purpose of Issue Current Interest Rate Outstanding Beginning of Year Issued During the Fiscal Year (do not include renewals here) Paid During the Fiscal Year (do not include renewals here) Outstanding End of the Fiscal Year 2007000001 12/27/2006 Equipment 4.50% $ 278,001 $ 63,000 $ 215,001 2010000001 06/29/2010 Building 2.00-4.15% $ 1,330,000 $ 75,000 $ 1,255,000 2010000002 08/06/2010 Building 4.50% $ 450,000 $ 45,000 $ 405,000 Final Maturity Date 11/01/2016 06/01/2028 08/06/2020 Total Bond Amount Outstanding Beginning of Year Issued During Fiscal Year Paid During Fiscal Year Outstanding End of Year $ 278,001 $ $ 63,000 $ 215,001 $ 1,330,000 $ $ 75,000 $ 1,255,000 $ 450,000 $ $ 45,000 $ 405,000 Total of All Indebtedness InClude Total of Bonds and Notes - Exempt and Not Exempt Total Bond Outstanding Beginning of Year Issued During Fiscal Year Paid During Fiscal Year Outstanding End of Year Amount $ 2,058,001 183,000 $ 1,875,001 24
NOTES TO FINANCIAL STATEMENTS For the Year Ending December 31,2011 NOTE G - INDEBTEDNESS (CONTINUED) Prior-Year Defeasance of Debt In prior years, the District defeased certain general obligations and other bonds by placing the proceeds of new bonds in an irrevocable trust to provide for all future debt service payments on the old bonds. Accordingly, the trust account assets and the liability for the defeased bonds are not included in the District's financial statements. At December 31, 2011, $1,170,000 of bonds outstanding are considered defeased. NOTE H - FUND EQUITY Allocation of Fund Balance Certain funds of the District apply to areas less than the entire District. The fund equity at balance sheet date is allocated as follows: 12/31/2011 General Fund Capital $ 356,859 $ 1 NOTE I - RELATED PARTY TRANSACTION The Cortlandville fire Company, a not-for-profit corporation, supports the Fire District by sponsoring social and fund raising events. In 2011, $46,868 of equipment was donated for use at Station II and recorded as a donation in kind in the Capital Projects Fund. NOTE J - COMMITMENTS AND CONTINGENCIES The District has entered into agreements at January 1, 2010 with the Village of McGraw and the Village of Homer to provide fire protection and EMS services for certain portions of geographic areas within the District that the villages are able to respond. The terms of the agreements are as follows: Village of McGraw Fire and EMS protection expenditures are $16,000/year from January 1, 2011 to December 31, 2014. Expenditures in 2011 were $16,000. 25
NOTES TO FINANCIAL STATEMENTS For the Year Ending December 31, 2011 NOTE J - COMMITMENTS AND CONTINGENCIES (CONTINUED) Village of Homer Fire and EMS protection expenditures are as follows from January 1, 2011 to December 31, 2014. Expenditures in 2011 were $27,000. Credit Cards 2012 $ 27,500 2013 $ 28,000 2014 $ 28,500 The District provides credit cards to the five Commissioners and Treasurer with a limit of $2,500 on each credit card. At December 31, 2011 one Commissioner's credit card balance was $71 and included in accounts payable. 26