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HomeMy WebLinkAbout2008 Town of Ithaca Audit Report (Independent Auditor) oy aall 1vaa1 Yg DS mien gal. Boma 1 UMQL soot :, r 9n11 a3A130!U A U U U El U TOWN OF ITHACA AGREED UPON PROCEDURES YEAR ENDED DECEMBER 31,2008 U U O a 0 U )1 SCIARABBA I WALKERiW CERTIFIED PUBLIC ACCOUNTANTS BUSINESS CONSULTANTS INDEPENDENT ACCOUNTANT'S REPORT ON APPLYING AGREED-UPON PROCEDURES May 4,2009 r The Town of Ithaca and Office of State Comptroller i_ Bureau of Justice Court Fund: • `i We haveperformed theprocedures enumerated below, which were agreed to byThe �' Town of Ithaca and Office of State Comptroller Bureau of Justice Court Fund, solely to assist you with respect to the accounting records of the Town Justices of the Town of Ithaca for the year ended December 31, 2008. This engagement to apply agreed-upon procedures was 1 performed in accordance with standards established by the American Institute of Certified Public Accountants. The sufficiency of the procedures is solely the responsibility of the specified users ` of the report. Consequently, we make no representation regarding the sufficiency of the u 1 procedures described below either for the purpose for which this report has been requested or for any other purpose. Our procedures and findings are summarized on an attached page. Also attached is a Jsummary of activity for the Town Justices. ,1 We were not engaged to, and did not, perform an audit, the objective of which would be i the expression of an opinion on the specified elements, accounts, or items. Accordingly, we do not express such an opinion. Had we performed additional procedures, other matters might have Icome to our attention that would have been reported to you. This report is intended solely for the use of the specified users listed above and should not be used by those who have not agreed to the procedures and taken responsibility for the j sufficiency of the procedures for their purposes. I dip 1 Certified Public Accountants I200 East Buffalo Street, Suite 402 28 North Main Street Ithaca,New York 14850 Cortland,New York 13045 1 607-272-5550/607-273-6357(Fax) 607-756-0073/607-756-0052 (Fax) www.sciarabbawalker.com • k. } PROCEDURES: 1. Reviewed monthly bank reconciliations for unusual items and tied monthly checkbook 9 balances to bank statements. D 2. Traced reconciling items appearing on period ending bank reconciliations to supporting documentation. U 3. Tested the daily receipts journal for mathematical accuracy. 4. Traced total fines, surcharges and miscellaneous fees to monthly report issued to New York State Comptroller's Office. ill 5. Reviewed the monthly reports issued to the New York State Comptroller's Office for timely filing. 6. Traced a sample of receipts from the cash receipts journal to the supporting receipt book noting proper dates, names and amounts. 7. Traced a sample of receipt transactions to the Office of State Comptroller's Office by Justice Court Fund monthly report. 8. Reviewed a sample of invoices from the New York State Comptroller's Office and payments U to the Town of Ithaca Chief Fiscal Officer by examining daily summary, cancelled checks, and invoices. a 9. Traced a sample of tickets issued through the daily receipts journal, Justice Court Fund Report, carbon receipt and deposit slips. U 10. Reviewed the bail account receipts and disbursements folder tracing a sample to bank statements noting proper dates and amounts. U 11. Traced a sample of bail amounts received to defendant file noting a carbon receipt and traced return or forfeiture of bond to corresponding check. '" 12. Traced a sample of three percent poundage amount on returned bail money to cancelled checks submitted to Town of Ithaca account. U 13. Identified year-end cash balances and determined if any funds should be remitted to New York State. ill 1 -2 - E (�{ FINDINGS: D1. All procedures listed above were performed for both Justices. 2. No findings to report as a result of the procedures. U I El El E 0 U D U 0 ci D , 11 - 3 - TOWN OF ITHACA SUMMARY OF TOWN COURT ACTIVITY o Judge Judge Klein Salk CASES: Number of cases closed 2,180 379 Number of cases open 2,762 722 Arraignment for other courts 17 12 Charges transferred to County Court 15 13 DTOTAL CASES 4,974 1,126 FINES AND FEES: Criminal, Motor Vehicle $ 123,395 $ 36,670 Surcharges 79,365 23,355 Civil 2,228 3,450 ITHACA TOWN COURT COLLECTIONS $ 204,988 $ 63 475 ElBAIL RECEIVED $ 9 800 $ 19,750 CASH BALANCES: • Regular $ 22,255 $ - Bail 6,465 6,5;65 D $ 28.720 $ 6 565 OAGGREGATE NEW YORK STATE JUSTICE COURT REMITTANCE: $ 268,463 Q U O CJ Li -4 - SCIARABBA WALKER'° CERTIFIED PUBLIC ACCOUNTANTS BUSINESS CONSULTANTS INDEPENDENT AUDITOR'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS August 3, 2009 :-.1 Supervisor and Town Board Town of Ithaca Ithaca,New York 14850 iWe have audited the accompanying financial statements of the governmental activities, each major fund, and the aggregate remaining fund information of the Town of Ithaca, as of and for the 1 year ended December 31, 2008, which collectively comprise the Town's basic financial statements, and have issued our report thereon dated August 3, 2009. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards 'i applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. J Internal Control over Financial Reporting In planning and performing our audit, we considered the Town of Ithaca's internal control 1 over financial reporting as a basis for designing our auditing procedures for the purpose of J expressing our opinion on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the Town of Ithaca's internal control over financial reporting. i Accordingly, we do not express an opinion on the effectiveness of the Town of Ithaca's internal control over financial reporting. ri A control deficiency exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent or detect misstatements on a timely basis. A significant deficiency is a control deficiency, or combination of control deficiencies, that adversely affects the Town of Ithaca's ability to initiate, authorize, record, process, or report financial data reliably in accordance with generally accepted accounting principles such that there is more than a remote likelihood that a misstatement of the Town of Ithaca's financial statements that is more than inconsequential will , 1 not be prevented or detected by the Town of Ithaca's internal control. ! A material weakness is a significant deficiency, or combination of significant deficiencies, that results in more than a remote likelihood that a material misstatement of the Jfinancial statements will not be prevented or detected by the Town of Ithaca's internal control. Our consideration of the internal control over financial reporting was for the limited I purpose described in the first paragraph of this section and would not necessarily identify all deficiencies in the internal control that might be significant deficiencies or material weaknesses. We did not identify any deficiencies in internal control over financial reporting that we consider 1 to be material weaknesses, as defined above. j200 East Buffalo Street, Suite 402 28 North Main Street Ithaca,New York 14850 Cortland,New York 13045 1 607-272-5550/607-273-6357(Fax) 607-756-0073/607-756-0052(Fax) www.sciarabbawalker.com I The following is a discussion and analysis of the Town ofIthaca's financial performance for the year ended December 31, 2008. The Town of Ithaca discussion and analysis is designed to (a) assist the reader in focusing on significant financial issues, (b) provide an overview of the Town's financial activity, (c) identify changes in the Town's financial position (its ability to address the next and subsequent year challenges), (d) identify any material deviations from the financial plan (the approved budget), and(e) identify individual fund issues or concerns. The section is a summary of the Town's financial activities based on currently known facts, decisions, or conditions as provided by the Town's Budget Officer. It is also based on both the government-wide and fund-based financial statements. The results of the current year are discussed in comparison with the prior year, with an emphasis placed on the current.year. This section is only an introduction and should be read in conjunction with the Town's financial statements, which immediately follow this section. �} HIGHLIGHTS LJ Financial Highlights: a • The Town's net assets, as reflected in the Statement of Net Assets, increased by$270,415 (2.1%). D • Revenue, as reflected in the statement of activities, increased$259,752 (2.0%). • Government-wide expenditures increased by$798,014 (6.7%). • The General Townwide Fund (the primary operating fund) unreserved fund balance increased by$329,515 (or 18.1%) for the year ending December 31, 2008. Town Highlights: • In 2005 the Ithaca Town Board established a "General Townwide Fringe Benefit Cash Reserve" savings account. The purpose for establishing this reserve is to fiscally meet a unanticipated economic increases in employee fringe benefits that may occur within the current budgeted operating cycle. (E.g. NYS Retirement, Health Insurance) At the beginning of 2008, $297,704 was on reserve for future budgetary expenditures. For the D year ending 2008 the cash reserve increased to $300,000. This increase is attributed to 2008 interest earnings. 0 • The Town's five (5) year capital plan continues to make strides. In/2008 $54,026 of annual funding was deposited to the Parks and Open Space Cash Reserve. Construction of the multi-purpose recreational and commuter Pew Trail on the East Hill was . ri completed in 2008. This project had an approximate cost of $265,000, with �J • approximately $87,000 provided by taxpayer funds and the remaining $178,000 coming from a Federal Transportation Enhancement Program Grant implemented by the NYS (� Department of Transportation. �f • Persistent monitoring of budgeted and actual revenue and expenses continues to help the 1 Town Board maintain a stable, affordable tax rate while delivering quality services to 1 Town residents. At January 1, 2008, the Town's General Townwide Fund (the primary T I • Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the Town of Ithaca's basic financial statements. The supplementary information presented on pages 34 through 35 is presented for the purpose of additional analysis and is not a required part of the basic financial statements. The information has been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole. 111 icietiat vs/ did n Certified Public Accountants • • • U U 1 ci D J Doperating fund) had a beginning unreserved fund.balance-of$1,740,390,. At December 31, 2008, the unreserved fund balance was increased by net revenues and expenses to $2,069,740. This reflects a net increase of$329,350 or 18.9%. For 2009, $430,773 of the fund balance has been appropriated to help fund 2009 budgeted General Townwide Fund expenditures. 0 OVERVIEW OF THE FINANCIAL STATEMENTS This annual report consists of three parts: MD&A (this section), the basic financial statements, D and required supplementary information. The basic financial statements include two kinds of statements that present different views of the Town: 111 • The first two statements are government-wide financial statements that provide both short-term and long-term information about the Town's overall financial status. • The remaining statements are fund financial statements that focus on individual parts of Dthe Town, reporting the Town's operations in more detail than the government-wide statements. The fund financial statements concentrate on the Town's most significant 1 funds. • The governmental funds statements tell how basic services such as water and sewer awere financed in the short term as well as what remains for future spending. • Fiduciary funds statements provide information about the financial relationships in (1 which the Town acts solely as a trustee or agent for the benefit of others. (J The financial statements also include notes that explain some of the information in the statements a and provide more detailed data. The statements are followed by a section of required supplementary information that further explains and supports the financial statements with a n comparison of the Town's budget for the year. D 0 • a • U . 0 U II • (l Figure A-1 summarizes the major features of the Town's financial statements, including the u portion of the Town's activities they cover and the types of information they .contain. The • remainder of this overview section of MD&A highlights the structure and contents of each of the n statements. LJ Figure A-1 Major Features of the Government-wide and Fund Financial Statements u Fund Financial Statements Government-wide Governmental Fiduciary Funds UFunds Scope Entire Government The activities of the Instances in•which the (except fiduciary Town that are not Town administers Uthuds) proprietary or resources on behalf of fiduciary. someone else. Required financial • Statement of net • Balance sheet • Statement of fiduciary statements assets • Statement of net assets •Statement of revenues, • Statement of changes in activities expenditures, and fiduciary net assets changes in fund balances Accounting basis Accrual accounting Modified accrual Accrual accounting and Uand measurement and economic accounting and economic resources focus focus resources focus current financial y� focus UType of All assets and Generally, assets All assets and liabilities, asset/liability liabilities,both expected to be used both short-term and u information financial and up and liabilities long-term; funds do not capital, short-term that come due currently contain capital and long-term during the year or assets, although they can n soon thereafter; no capital assets or long-term liabilities included U Type ofinflow/out All revenues and Revenues for which All additions and flow information expenses during cash is received deductions during the year, 11 year,regardless of during or soon after regardless of when cash is when cash is the end of the year; received or paid received or paid expenditures when goods or services have been received and the related D liability is due and payable III a • TOWN OF ITHACA MANAGEMENT'S DISCUSSION AND ANALYSIS DECEMBER 31, 2008 - Government-Wide Statements The government-wide statements report information about the Town as a whole using accounting methods similar to those used by private-sector companies. The statement of net assets includes all of the Town's assets and liabilities. All of the current year's revenues and expenses are accounted for in the statement of activities regardless of when cash is received or paid. 111 The two government-wide statements report the Town's net assets and how they have changed. Net assets, the difference between the Town's assets and liabilities, are one way to measure the Town's financial health or position. 1111 • Over time, increases or decreases in the Town's net assets are an indicator of whether its financial position is improving or deteriorating,respectively. • To assess the Town's overall health, you need to consider additional non-financial factors such as changes in the Town's property tax base and the condition of facilities and infrastructures In the government-wide financial statements, the Town's activities are shown as governmental activities: Most of the Town's basic services are included here, such as water and sewer services (home and community services), road maintenance (transportation), and administration (general governmental support). Property taxes and charges for services finance most of these activities. Fund Financial Statements The fund financial statements provide more detailed information about the Town's funds, U focusing on its most significant or "major" funds — not the Town as a whole. Funds are accounting devices the Town uses to keep track of specific sources of funding and spending on particular programs: CI • Some funds are required by State law and by bond covenants. D • The Town establishes other funds to control and to manage money for particular purposes (such as repaying its long-term debts) or to show that it is properly using certain revenues. N - r TOWN OF ITHACA MANAGEMENT'S DISCUSSION AND ANALYSIS DECEMBER 31, 2008 The Town has two kinds of funds: • Governmental Funds: Most of the Town's basic services are included in governmental funds, which generally focus on (1).how cash and other financial assets that can readily be r converted to cash flow in and out and (2) the balances left at year end that are available for spending. Consequently, the governmental funds statements provide a detailed short-term view that helps you determine whether there are more or fewer financial resources that can D be spent in the near future to fmance the Town's programs. Because this information does not encompass the additional long-term focus of the government-wide statements, reconciling statements (page 4 and pages 7-8) have been added to explain the relationship (or adifferences)between them. • Fiduciary Funds-Agency Funds: The Town acts in an agency capacity for assets that are ultimately transferred to others, such as payroll withholdings. The Town also reports deposits associated with its rental activities in this fund. The Town excludes these activities from the government-wide financial statements because it cannot use these assets to finance its operations. (� FINANCIAL ANALYSIS OF THE TOWN AS A WHOLE Ll The Town's combined net assets increased by$270,415 or 2.1%. aCurrent assets decreased by$706,467 or 9.7%. aCapital assets increased by$357,693 (net of 2008 depreciation expense of$483,636) or 2.9%. Long-term debt decreased by $717,000 or 14.4%. The decrease reflects 2008 principal payments. Investments in capital assets- net of related debt increased by$1,074,692 or 14.7%. The increase reflects the net increase in 2008 capital assets of $357,692 and the 2008 decrease in debt of $717,000. U • • TOWN OF ITHACA MANAGEMENT'S DISCUSSION AND ANALYSIS DECEMBER 31,2008 111 Unrestricted net assets decreased by$860,619 or 18.0%. The Town's current ratio (ratio of current assets to current liabilities) was 3.7:1 at December 31, 2008. The Town's quick ratio (cash and assets easily converted to cash compared to current liabilities)was 2.8: 1 at December 31, 2008. Figures A-2 and A-3 present condensed information derived from the Town's government-wide statements. D r FIGURE A-2 4 a r k �+-7F ' 9 F„ '[i u Yy 'Y r A t5. r $1 T" ota1DollarAP,`�a �s�y .f`fi f4 � � �` �t1 i 9wY i ♦ `3-. s. r a D Condensed ztement,of�VetAssets a .k}'{, Z 4Goveinmenta14gti rhes` * r?N irk _,.te`h _s 2007 t 2008,.- f i_s 20072008! , Current assets $ 7,275,026 $ 6,568,559 $ ( 706,467) Non-current assets 12,286,040 12,643 732 357,692 :Tbtal'Assets =,,;JS_r,:_y,,�_..r., _5;$r 19,561t066 $ `, 1;9"212291? Current liabilities 2,366,584 1,775,259 ( 591,325) Non-current liabilities 4,372,890 4,345 026 ( 27,864) :Totald7abilrtre:Mnaj It.>m i$ 6,739,47,4 $_.r n ;6;120,285.r C w(.,_7 19;1$Q). Invested in capital assets,net of debt 7,323,040 8,397,732 1,074,692 fl Restricted 710,031 766,373 56,342 Unrestricted net assets 4,788,520 3,927,901 ( 860,619) 4:161lisfe- Assetsli,V ,.Iw_, C",ir 637i $ SE. I2,821 9.1 $; �13 092;b06`''$ 270;41'S U 6J U D . U L r L TOWN OF ITHACA MANAGEMENT'S DISCUSSION AND ANALYSIS 9 . DECEMBER 31,2008 Figure A-3 , ar ¢ bF �i-w ' fo { 1Lt { 'I' a1D0lla Perc entage SS * ?, 4t o 1 ' Governmenal Actvrtie . `X' y 9- F + tAi fChanges u Net 9sseu .,, r P n , -- Change Change , i{ p p _.1 ..�. r�. �1.,�': i.i'.t"'Y}--'� .'le .. i�lt2oo7./If$^T vfi-�io-.- O0OF.w.t. ._..'t 2,007,200.0.} )cc. i [Y%.- .. l; fI REVENUES U . Program revenues: Charges for services $ 3,250,403 $ 3,354,059 $ 103,656 3.2% U Operating grants and contributions 178,073 175,725 ( 2,348) -1.3% Capital grants and contributions 146,358 117,541 ( 28,817) -19.7% General revenues: DProperty taxes 5,477,173 5,717,800 240,627 4.4% Non property taxes 2,732,871 2,809,417 76,546 2.8% Unrestricted state aid 314,698 376,221 61,523 19.5% LIInterest earnings 355,847 148,400 ( 207,447) -58.3% Other general revenues 315,571 331,583 16,012 5.1% A _ Toiallteve`nues , ,>. a t, ta1`2,770;994 $ •r13 030,746` ',$1`.1 259 752 -.):3111o,Vii,:flici PROGRAM EXPENSES General government support $ 2,205,137 $ 2,279,088 $ 73,951 3.4% U Public safety 2,981,835 3,184,929 203,094 6.8% Transportation 2,242,791 2,521,867 279,076 12.4% Culture and recreation 827,047 787,612 ( 39,435) -4.8% U Home and community services 3,705,507 3,986,835 281,328 7.6% as r',0,551-dtaliExpen"ses rit,._:; ;I $,Z1- 62;317z $:'.,12 760,3312 $_ 94:498 914 .1:56 7"/a.fi ! k ]NGI2EASE,7N±NETiASS.ETS. '. $._,._1 S08,67,7' $ 1A7%270,415; $ " i:138 262) >' .. ..i la:i r L Lr VII f TOWN OF ITHACA MANAGEMENT'S DISCUSSION AND ANALYSIS .� DECEMBER 31,2008 Figure A-4 shows the sources of revenue for 2008 1 1 FIGURE A-4 Sources of Revenue for 2008 :-] r1 Interest State sources 1 t 4% Federal sources 4.33% 0.28% Fines and fees „� 1.95% JCharges for services 25.74% Other 1.12% • r.i Taxes_ 65.44% li jFigure A-5 represents the Town's 2008 expenditures by program. j FIGURE A-5 Expenditures by Program Interest on long-term e ______ri Depreciation debt _General support alo-_____ 3.79% 1.66.4 17.13% Home and community services 28.45% Public safety 24.96% Culture and recreation_ 6.02% Transportation 18.00% 1 VIII - , TOWN OF ITHACA , MANAGEMENT'S DISCUSSION AND ANALYSIS - DECEMBER 31,2008 Total costs of services provided by the Town (Figure A-6) were$12,760,331. These charges were offset by grants and contributions of$293,266 and charges for services of$3,354,059,resulting in flnet cost of services of$9,113,006. Figure A-6 u ,,f.'-.-ZY,t•-i ,ii; , E fti d r f '. M1t�45 j t ' r-'te a J ! ! -�x =Total Cost of'Serv1ces +' eir Programs - < , t ' E ,h ik.=,Tn--- - -llar s 0 t£i -14 ... :4 t_„t _a` .» . 4 a0Q7..-' .< : . -M-Ma. t A, . Changes .,,r D General government support 2,205,137 $ 2,279,088 $ 73,951 Public safety 2,981,835 3,184,929 203,094 Transportation 2,242,791 2,521,867 279,076 UCulture and recreation 827,047 787,612 ( 39,435) Home and community services 3,705,507 • 3,986,835 281,328 " Ndtale� " "Y - i i �', , t $f 14,962,317P $, 12 760,331; $ 7J8,014, III 2 a , f , fcJ . + .. s. c$ C '.NCt(:.'OSt_OfjSCYV.ICCS 1;F c z £ ' S1 Pi ograniS r+r.' Ka, .+ ''��a:.�TOta1D' 011ar s ti '4` ,1;p:: , `e �4 ati `,., ��2007 ' .- Y2008 _.I1 elikang +Si General government support $ 1,922,593 $ 2,009,025 $ 86,432 D Public safety 2,980,783 3,183,678 202,895 Transportation 2,220,485, 2,496,990 276,505 Culture and recreation 768,285 725,703 ( 42,582) a Home and community services 495,337 697,610 202,273 .m„a.„ ...n tiff-t `��S-AE -( C''�'3]. ,3°.. .E- fF a( !Z G` ,,��1'otal,�_. .» „.. .'�,���z��, �.�r „�_�,..,..,, $�� .,�$,387,483E�.$#_� .. _91�13,006';�,$�, _. �725;5230 r FINANCIAL ANALYSIS OF THE TOWN'S FUNDS Figure A-7 shows the changes in fund balances for the year for the Town's funds as presented in the D Town's Statement of Revenues, Expenditures and Changes in Fund Balance-Governmental Funds. At December 31, 2008, the Town reported a combined fund balance of $4,930,619. Total fund balance decreased by$504,632 in 2008. Figure A-7 ' a "',Ma , 4 i GovernmentalT'unds - - *r J Governmert't&IFunil Balances i + r't .-. x l h iv%- s ry �� t + Ts -P� n 0 x JM1 a M1+ t e .. R p. Total Dollar ' 1 7 -.�r P a i r _ yy�z h r C 1`" , 4 ri J r r. " ` .., 200K �: .., .:2008�j.,, r't Change,w�rt+ , General Fund - $ 2,580,597 $ 3,063,727 $ 483,130 Highway Fund 854,979 570,118 ( 284,861) Water Fund 471,510 526,010 54,500 Sewer Fund 2,124,738 2,012,201 ( 112,537) Fire Fund 74,197 31,970 ( 42,227) Capital Projects Fund - ( 734,985) ( 1,340,930) ( 605,945) Other Funds i 64,215 . 67,523 3,308 total`I} ndBalance ;,;";, -„a„„ $' :5,435,251 l $-rs J .4 930;619 $ c(_,v,',5043632), UIX r TOWN OF ITHACA MANAGEMENT'S DISCUSSION AND ANALYSIS DECEMBER 31, 2008 aGENERAL FUND BUDGETARY HIGHLIGHTS ' -., El Over the course of the year, the town revised the General Fund budget to reflect additional changes in budgeted revenues and expenditures. Actual revenues fall short of revised budget estimates by$134,878 and actual expenditures were under budgeted expenditures by$195,816. DFigure A-8 summarizes the General Fund original and revised budgets, actual expenditures and the variances for the year ended December 31, 2008. I] Figure A 8 t. -p 74.,,7 e'.., , v D 1ti"'" r., e' s 13a YT-�' `W $S 71+"f "4� 6 ' t 4 F 'sN_"r �n�y < tu�p < .:� Ti: p z V ���`ilr tru{�iF'i S' �' i '��'rr tf i'.. '� ,r '' ^u4 .ei } rl��:s n�'. �Cb ., c Y y� M. +< r + .1 r M f a r . Cotzdetzsed Budgetary � F . + r + �' n � �' � a �. ; � 1 i _A Vananceµ 3 Cotnlpartson GeneraGft that ; x ' i; � ; , x Favozable s' �� v' pp .rt:;:%;. 1 ! t, B y t l r r , i�FF � M Y 4.2��0� � 4'.1� r F �` ' ' `�,G�� +�� a On °a1+Bud et Revised°Bud et H .:Actual �` ,` t nfavurable``,� l REVENUES U REVENUES Real $ 1,815,001 $ 1,827,755 $ 1,827,755 $ UNon-property taxes 757,981 1,207,610 1,266,576 58,966 State sources 354,200 467,947 467,951 4 All other 567,777 840,077 t 646,229 ( 193,848) 'UffTotal Re;en teri;s; ' $1: 11:r_',W494;959 ' $,,,i, -7743.43,389!; $ . ._T-0008,511 $ ( _, 3,4,878_}. EXPENDITURES General government support $ 1,559,928 $ 1,475,553 $ 1,475,553 $ - U Public safety 125,362 55,401 55,401 - Transportation _ 284,849 287,450 287,450 - Culture and recreation 896,062 690,166 690,166 - Home and community services 732,568 733,419 733,418 1 Employee benefits 778,430 832,883 . 637,068 195,815 t +T6tal Iapend tyures L i ,,, r4 377,199?:S t-s 4907,4,872v'$ ,.,3;87i,05'C $:`, s","195,816< U Other financing sources 536,187 338,671 338,671 - Other financing uses $ 184,996 $ 184,996 $ 184,997 $ 1 U U CAPITAL ASSETS The town records expenditures for land, buildings, equipment, machinery and infrastructures (roads, water and sewer systems) as capital ,assets in the Statement of Net Assets. Annual Udepreciation expense is recorded in the Statement of Activities to reflect the use of these assets over their useful lives. Land and construction in progress are not subject to depreciation. The Town's depreciation methods, assumptions regarding useful lives and capitalization thresholds _- are described in Notes 1J and 1K in the current year's Notes to the Financial Statements. In 2008, the Town expended $918,748 on capital additions. Equipment with a cost basis of 1 $138,784 was sold or retired in 2008. Figure A-9 reflects the changes in net capital assets. X J IT TOWN OF ITHACA — MANAGEMENT'S DISCUSSION AND ANALYSIS DECEMBER 31, 2008 Cl �I p Figure A-9 lJ iY } t £t_ .G nsi e Z tr r - q- q ! r G ox 1 iY L - f m yr�' i'} 24 ;. >-~ `4: r� F GoWernmentalActlVrtles`, '^ 3•T '' , t s Changes 1nWet�.'agltal AssBti q..3 '.i U nl l.1.1 s r q`. r ,5,Jn , .a y ° x< r TOta1Dollaryt l! D ._. __�` , . .e_:�._., _�3�_a..,� , ' .3 fi_- ` .. , _2007 f_2008�. . _ � Changey,r .. Land $ 293;163 $ 293,163 $ - Construction in progress 1,570,895 2,274,913 704,018 UBuildings 3,342,040 3,226,307 ( 115,733) Equipment and machinery 1,945,008 1,881,440 ( 63,568) U Furniture and furnishings 52,653 34,284 ( 18,369) Non-building improvements 32,779 25,659 ( 7,120) Infrastructures 5,049,502 4,907,967 ( 141,535) • .it. _Total __,.„-a-:,„::,,., _ "-.:wairr,z $ .42286040 $;::12,643,70. $ , : _'357,693; DMajor additions in 2008 included: Capital projects related to water and sewer improvements $ 697,415 Equipment acquisitions 214,730 Park infrastructure 6,603 U Total I $ 918,748 D DEBT ADMINISTRATION Long-term debt decreased by$717,000. F L The Town's liability for compensated absences increased$8,160 to $135,050 during 2008. 1 In 2008, the Town implemented the provisions of Governmental Accounting Standards Board Statement No. 45, Accounting and Financial Reporting by Employers for Postemployment Benefits Other Than Pensions. The standard requires that a liability be recognized based on an 1 actuarial measure of the current year funding costs associated with long-term liabilities for post- employment benefits. The Town recorded a liability of $322,544 in the Government-wide statements. - The Town continues to recognize a liability for accumulated sick time that can be credited to employee's portions of health insurance at the date of retirement. The liability was $254,860 at 1 December 31,2008. The Town's most recent bond rating, as determined by Moody's Investor Service, Inc., is Aa3. X LJ Q TOWN OF ITHACA MANAGEMENT'S DISCUSSION AND ANALYSIS DECEMBER 31, 2008 QConstitutional Debt Limit The Town of Ithaca is restricted by the New York State Constitution, Article VIII, Section 2, on the manner of creating and paying local indebtedness. The Town can- only create debt for "Town"purposes. The outstanding payback period for indebtedness is restricted to the period of usefulness. As the issuer of debt (borrower) the Town is required to pledge in full faith and credit for the payments of principal and interest to the bondholder(investor). . As required under the New York State Constitution, the Town of Ithaca cannot create debt in excess of 7% of the five(5) year average full valuation of taxable property. • The following summary provides information regarding the Town's indebtedness, debt limit and net debt-contracting margin as of December 31,2008. Five-year average full valuation of taxable property $ 1,058,337,733 Debt limit- 7% thereof 74,083,641 0 Inclusions: Bonds 4,246,000 Bond anticipation notes Total inclusions 4,246,000 Exclusions: Water and sewer debt (1) ( 3,486,000) Total exclusions $ ( 3,486;000) Total net indebtedness $ 760,000 Net debt contracting margin t $ 73,323,641 The percent of debt contracting power exhausted is 1.0% (1) Sewer and Water indebtedness are excluded pursuant to Section 136.00(4-a) and Q136.00(2),respectively, of the Local Finance Law Detailed information regarding the Town's long-term liabilities is presented in Note 6C in 2008 Notes to the Financial Statements. Figure A-10 reflects changes in the Town's debt for 2008. 1 LI XII TOWN OF ITHACA MANAGEMENT'S DISCUSSION AND ANALYSIS DECEMBER 31,2008 Figure A 10 t { 4f r�Y40 I it � � 1 �d 1 x +r } Governmental Achvzhes t d r a � � Oritsta�:dtngDebi " Tota1Do11ar { ', ' i ,..� , . t�., ,W i.:;1. ,1 A ^.:is- ' .. ,200,7 z : .�2008,A , Change_t Serial Bonds $ 4,963,000 $ 4,246,000 $ ( 717,000) DBond anticipation notes - - - Compensated absences 126,890 135,050 8,160 Q Other post-employment benefits 322,544 322,544 Liability for accrued sick time to be applied to retirees health coverage 229,972 254,860 • 24,888 D "To tals � .•u -._ �.._,; ' __ .,.- . $_ i��5,319,$62 S --,4;958,454s $ (:.:361,408) 1] Figure A-11 depicts historical changes in fund balances for the Town of Ithaca for the period 2004 through 2008. Information for the Capital Projects Fund is omitted. Figure A-12 reflects revenues generated through water and sewer benefit assessments in comparison to debt service (principal and interest payments) associated with debt incurred to expand infrastructures associated with providing the services. Historical information is provided for the years 2000 through 2008, budgeted information for 2009 and estimated information for the years 2010 through 2011. 0 a D U XIII TOWN OF ITHACA MANAGEMENT'S DISCUSSION AND ANALYSIS DECEMBER 31, 2008 Factors Bearing on the Town's Future L7 • In 2008 residential construction, as in most all local communities across the Nation, within the Town of Ithaca has slowed down. Current building permits are for home renovations, and updating. Large developers have future construction plans in the pipeline but are finding financing and materials costly and in some cases difficult to come by. While residential and commercial construction has slowed down the real property . revenue tax base continues to expand, however, the continued expansion of both residential and commercial properties push lasting fiscal stress for water, sewer, highway,parks and recreational infrastructure services. • In 2008 it became clear that the Town's sewer infrastructure system will need upgrades; U repairs and maintenance. Key to the success of the Town's sewer infrastructure is the Town settling its financial share for newly laid interceptors throughout the system with the City of Ithaca. The Town's Capital Improvement Plan has addressed this on-going need over future periods. Annual estimated costs range from $250,000 to $500,000. Major infrastructure improvements will be financed by issuing short-term (bond anticipation notes) and long-term serial bonds borrowing. • In 2008, sales tax revenues exceeded budget. However,with the rise in gasoline costs and other consumer goods, local buying has begun to decrease. In 2009 the Tot is expecting a sales tax revenue loss of 12.7% to 17%. The Town is also anticipating a sharp decline in two other major municipal resource streams; they are mortgage tax and interest income. These expected declines are directly attributed to the slow housing and financial Ii markets. Like other local communities across the United States, a downward shift in consumer spending, a slow down in all new construction and declining real estate sales accompanied by the Federal Reserve adjustments in interest rates will greatly impact ( j revenue resources and create a greater need to utilize fund balance. Heavy declines in - revenue resources, excessive increases in expenses (E.g. capital indebtedness, expanding labor costs) and surplus fund balance will have a direct impact on real property taxes. These concerns make it ever more important for the Town of Ithaca or any local community to monitor its fund balance position throughout the current and ensuing operating cycle. U FINANCIAL CONTACT LIThe Town's fmancial statements are designed to present users (citizens, taxpayers, customers, investors and creditors) with a general overview of the Town's finances and to demonstrate the Town's accountability. If you have questions about the report or need additional financial information, contact the Town's Supervisor, Town of Ithaca, 215 North Tioga Street, Ithaca,NY, 14850. XVIII 0 TOWN OF ITHACA STATEMENT OF NET ASSETS December 31,2008 . T ASSETS • CURRENT ASSETS: El Cash $ 4,937,470 Cash,restricted 766,373 Accounts receivable: State and federal aid Water and sewer rents 481,422 fl Due from other governments 313,441 Other receivables 915 Prepaid expenses 68,938 9 TOTAL CURRENT ASSETS 6,568,559 iIJ CAPITAL ASSETS,net: 10,368,819 U Construction in progress 2,274,913 TOTAL CAPITAL ASSETS 12,643,732 • TOTAL ASSETS $ 19,212,291 9 LIABILITIES u CURRENT LIABILITIES:Accounts payable $ - Accrued liabilities 1,142,532 fl Deferred revenues 2,035 Bond interest payable 53,692 Long-term debt,current portion 577,000 .11 TOTAL CURRENT LIABILITIES 1,775,259 LONG-TERM DEBT,noncurrent 3,669,000 9 LONG-TERM LIABILITIES 676,026 TOTAL LIABILITIES • 6,120,285 0 NET ASSETS INVESTED IN CAPITAL ASSETS,net of related debt 8,397,732 a RESTRICTED: Culture and recreation 463,779 Equipment 2,593 9 Benefits 300,001 UNRESTRICTED 3,927,901 TOTAL NET ASSETS 13,092,006 TOTAL LIABILITIES AND NET ASSETS $ 19,212,291 See Notes to Financial Statements. - 1 - TOWN OF ITHACA 1 STATEMENT OF ACTIVITIES December 31, 2008 • Governmental Activities Program Revenue Functions/Programs Charges for Operating Grants Expenses Services and Contributions General governmental support $ 2,279,088 $ 38,706 $ 113,816 Public safety 3,184,929 1,251 - I Transportation 2,521,867 24,877 - Culture and recreation 787,612 - 61,909 Home and community services 3,986,835 3,289,225 - I` $ 12,760,331 $ 3,354,059 $ 175,725 GENERAL REVENUES: I Real property taxes and related tax items 44 Non-property taxes Interest earnings Fines and fees-town court State aid not restricted to specific purposes Other miscellaneous revenues TOTAL GENERAL REVENUES CHANGE IN NET ASSETS NET ASSETS,beginning of year NET ASSETS, end of year • l C I' C C See Notes to Financial Statements. Q Q Program Revenue Net (Expenses) Capital Grants Revenues and and Contributions Changes in Net Assets $ 117,541 $ ( 2,009,025) ( 3,183,678) ( 2,496,990) _ ( 725,703) ( 697,610) $ 117,541 ( 9,113,006) 5,717,800 2,809,417 148,400 254,673 I 376,221 76,910 9,383,421 270,415 12,821,591 $ 13,092,006 1 1 1 1 1 - 2- • TOWN OF ITHACA BALANCE SHEET-GOVERNMENTAL FUNDS December 31,2008 Major Funds General Highway Water ASSETS AND OTHER DEBITS: Unrestricted cash $ 2,348,606 $ 577,641 $ 385,034 _Restricted cash 659,524 85,587 13,546 Bond anticipation notes receivable - - - Due from other funds - - _ Due from state and federal governments - - - Due from other governments 257,849 .1,142 - Prepaid expenses 49,342 14,527 3,213 Other receivables 915 -. 129,806 TOTAL ASSETS AND OTHER DEBITS $ 3,316,236 $ 678,897 $ 531,599 LIABILITIES, FUND EQUITY AND OTHER CREDITS: • LIABILITIES: Accounts payable - - - Accrued liabilities 250,474 108,779 5,509 Due to other funds - - 80 Other liabilities 2,035 - - Bond anticipation notes payable - - - TOTAL LIABILITIES 252,509 108,779 5,589 FUND BALANCES - RESERVED Special reserve 659,524 82,994 13,546 Reserved for highway machinery - 2,593 - 659,524 85,587 13,546 FUND BALANCES - UNRESERVED Appropriated- ensuing year's budget 458,920 459,339 •142,087 Unappropriated 1,945,283 25,192 370,377 TOTAL UNRESERVED 2,404,203 484,531 512,464 I TOTAL FUND BALANCE 3,063,727 570,118 526,010 TOTAL FUND EQUITY AND OTHER CREDITS 3,063,727 570,118 526,010 f TOTAL LIABILITIES, FUND EQUITY AND OTHER CREDITS $ 3,316,236 $ 678,897 $ 531,599 c 1 I [ See Notes to Financial Statements. 11 U • D Nonmajor Major Funds Funds Total n Capital Other Governmental Sewer Fire Projects Funds Funds III $ 748,253 $ 604,522 $ 205,891 $ 67,523 $ 4,937,470 7,716 766,373 1,125,725 - - - 1,125,725 El - 80 = • _ = 80 - - - 258,991 D 1,856 - - 68,938 131,125 261,846 $ 2,014,755 $ 604,522 $ 205,891 • $ 67,523 $ 7,419,423 D 0 - 2,554 572,552 421,096 i - 1,360,964 U - - - 80 2,035 1,125,725 - 1,125,725 2,554 572,552 1,546,821 - 2,488,804 D 7,716 -- - - 763,780 2,593 (� 7,716 - - • - 766,373 U 552,606 31,970 - - 1,644,922 1,451,879 ( 1,340,930) 67,523 2,519,324 U2,004,485 31,970 ( 1,340,930) 67,523 4,164,246 2,012,201 31,970 ( 1,340,930) . , 67,523 4,930,619 - 2,012,201 31,970 ( 1,340,930) 67,523 4,930,619 $ 2,014,755 $ 604,522 $ 205,891 $ 67,523 $ 7,419,423 r L 1 3 0 111 TOWN OF ITHACA RECONCILIATION OF THE TOTAL FUND BALANCES SHOWN IN THE GOVERNMENTAL FUNDS TO THE STATEMENT OF NET ASSETS J As of December 31, 2008 JTotal fund balances in the fund financial statements for the government funds. $ 4,930,619 UThis amount differs from the balance of Net Assets in the Statement of Net Assets due to the following: Capital assets are included as assets in the government-wide statements and are added,net of accumulated depreciation 12,643,732 DLong term liabilities for bonded debt are included as liabilities in the government- wide statements and are deducted (4,246,000) El Receivables for revenues earned and measurable,but not available to provide D financial resources, are included in the government-wide statements as assets and are added 274,942 Long term liabilities for compensated absences and other post employment benefits are included in the government-wide statements as liabilities and are deducted ( 457,595) DCurrent liabilities for bond interest payable are included in the government- wide statements as liabilities and are deducted ( 53,692) Total Net Assets -End of Year $ 13,092,006 EI • D 0 See notes to financial statements. - 4 • TOWN OF ITHACA • STATEMENT OF REVENUES,EXPENDITURES AND CHANGES IN FUND BALANCES GOVERNMENTAL FUNDS For The Year Ended December 31, 2008 Major Funds General Highway Water REVENUES: Real propertytaxes $ 1,771,501 $ - $ 704,863 Real property tax items 56,254 - - Non-property tax items: Sales tax 1,190,298 1,542,841 - Other non-property tax items 76,278 - - Departmental income 230,291 - 1,794,286 tl Intergovernmental charges 61,909 24,877 441 Use of money and property 67,045 6,641 3,733 Rental Income 45,779 - - Licenses and permits 10,593 - - Fines and forfeitures 254,673 - - Sale of property and compensation for loss 2,479 19,160 - Local sources ( 26,540) 26,481 17,029 State sources: 6j Mortgage tax 372,390 - - State aid per capita 95,200 - - NYS highway improvement(CHIPS) - 74,019 - Miscellaneous 361 - - Federal aid - - - TOTAL REVENUES 4,208,511 1,694,019 2,520,352 Other Sources: Inter-fund transfers 338,671 - 30,425 Proceeds of obligations - - - TOTAL REVENUES AND OTHER SOURCES 4,547,182 1,694,019 2,550,777 t� • See Notes to Financial Statements. a _ • Nonmajor Major Funds Funds Total Capital Other Governmental Sewer Fire Projects Funds Funds $ 154,863 $ 3,008,606 $ - $ 12,132 $ 5,651,965 D - 9,580 " - - 65,834 - - - - 2,733,139 - - - - 76,278 1,293,645 3,318,222 1,368 -- - - 88,595 D11,871 48,101 7,400 3,608 148,399 - - - - 45,779 [I - _ - 10,593 -- 254,673 - - - . - 21,639 - - - - _ 16,970 - - - - 372,390 D - _ - - 95,200 - 74,019 _ - 18,258 - - 18,619 r - - 36,427 - 36,427 1,461,747 3,084,545 43,827 • 15,740 13,028,741 60,850 - 91,275 1,093,762 1,614,983 r- - - - - - 1,522,597 3,084,545 135,102 1,109,502 14,643,724 r • TOWN OF ITHACA- STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES GOVERNMENTAL FUNDS For The Year Ended December 31, 2008 (continued) Major Funds General Highway Water EXPENDITURES: General governmental support 1,475,553 315 53,517 Public safety 55,401 - - Transportation 287,450 1,541,562 - Culture and recreation 690,166 Home and community services 733,418 - 1,511,001 Employee benefits 637,067 399,092 72,242 Debt service(principal and interest) - - - TOTAL EXPENDITURES 3,879,055 1,940,969 1,636,760 Other Uses: Interfund transfers 184,997 37,911 859,517 TOTAL EXPENDITURES AND OTHER USES 4,064,052 1,978,880 2,496,277 EXCESS (DEFICIT) OF REVENUES OVER EXPENDITURES 483,130 ( 284,861) 54,500 OTHER CHANGES IN FUND BALANCES - NET INCREASE (DECREASE) 483,130 ( 284,861) 54,500 FUND BALANCE,beginning of year 2,580,597 854,979 471,510 • FUND BALANCE, end of year $ 3,063,727 $ 570,118 $ 526,010 • . r E I See Notes to Financial Statements. Flonmaj or a Major Funds Funds Total Capital Other Governmental Sewer Fire Projects Funds Funds 40,664 3,745 - - 1,573,794 3,123,027 - 1,484 3,179,912 _ - 12,848 1,841,860 690,166 1,211,173 - 6,604 - 3,462,196 33,289 ,- 704,018 _ - 1,845,708 939,737 939,737 1,285,126 3,126,772 710,622 954,069 13,533,373 El 350,008 30,425 152,125 1,614,983 1,635,134 3,126,772 741,047 1,106,194 15,148,356 ( 112,537) ( 42,227) ( 605,945) 3,308 ( 504,632) ( 112,537) ( 42,227) ( 605,945) 3,308 ( 504,632) 2,124,738 74,197 ( 734,985) 64,215 5,435,251 $ 2,012,201 $ 31,970 $ ( 1,340,930) $ 67,523 $ 4,930,619 1 r L - 6 - TOWN OF ITHACA RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE OF THE GOVERNMENTAL FUNDS TO THE CHANGE IN NET ASSETS SHOWN IN THE STATEMENT OF ACTIVITIES FOR TILE YEAR ENDED DECEMBER 31,2008 ElNet change in Fund Balances shown for total Governmental Funds. $ ( 504,632) This amount differs from the change in net assets reflected in the Statement of Activities due to the following: • Capital outlays for the acquisition of capital assets and capital projects • are reported in the Governmental Funds as expenditures.In the Statement , of Activities,the cost of those assets is allocated over their useful lives and reported annually as depreciation expense. In the Statement of Activities, acquisition costs are removed and depreciation expense is added as follows: Capital expenditures 918,748 Depreciation expense ( 483,636) 435,112 Major revenues are recorded in the Governmental Funds when they are . earned,measurable and available to provide current fmancial resources. U In the Statement of Activities,major revenues are recognized when they are earned and measurable,regardless of when they become available. Current year revenues, earned and measurable,are recognized in the Statement D of Activities.The Governmental Funds include amounts that were earned and measurable in the prior year, and these amounts are removed to prevent overstating revenues on the Statement of Activities: Current year revenues 274,942 Prior year revenues ( 254,864) 20,078 • Bond principal payments are reflected as expenditures in the Governmental Funds. These payments are reflected on the Statement of Net Assets as a reduction of debt obligations and are not included in the Statement of Activities. Bond principal payments for the current year are as'follows: 717,000 Interest on debt is reported in the Governmental Funds when the payments are r rendered. In the Statement of Activities, interest expense is allocated over the time periods it pertains to.Interest expense allocated to applicable periods is less than Governmental Funds interest expense by the following amount: 10,981 DPayments for compensated absences are reported in the Governmental Funds as they are due.In the Statement of Activities,these amounts are reported in the periods that the liabilities are incurred. Current year expenditures for amounts due from prior years are removed and an expense is recognized for current year liabilities that have not been paid: Prior year expenses 126,890 L. Current year expenses ( 135,050) ( 8,160) -- 7 - 0 • TOWN OF ITHACA RECONCILIATION OF THE STATEMENT OF REVENUES,EXPENDITURES AND CHANGES IN FUND BALANCE OF CHE GOVERNMENTAL FUNDS TO THE CHANGE IN NET ASSETS SHOWN IN THE STATEMENT OF ACTIVITIES FOR THE YEAR ENDED DECEMBER 31,2008 Payments for other post employment benefits are reported in the Governmental Funds Jas they are due. In the Statement of Activities, an expense is recognized based on an actuarial estimate of the the current year cost associated with amortizing Dthe estimated present value of future benefits over a thirty-year period. ( 322,544) Proceeds from equipment sales are reported as revenue in the Governmental Funds. 111 In the Statement of Activities,the proceeds of sales are measured against the net book value(cost less accumulated depreciation) of the disposed assets and a gain or loss is recognized. The difference between the proceeds from equipment sales per the Governmental Funds and the loss per the Statement of Activities is the following: ( 77,420) Interfund transactions are eliminated in the Statement of Activities. The amounts D offset, and have a zero effect on operations: Transfers In 1,614,983 • Transfers Out 1,614,983 Change in net assets $ 270,415 • J _ 8 - c • TOWN OF ITIIACA D STATEMENT OF FIDUCIARY NET ASSETS AGENCY FUNDS December 31, 2008 9 ASSETS: D Cash $ 58,489 TOTAL ASSETS $ 58,489 ULIABILITIES: Accounts payable $ 58,489 TOTAL LIABILITIES 58,489 • NET ASSETS lJ TOTAL LIABILLTIL+S AND NET ASSETS $ 58,489 D U 8 D U U 0 r 7 See Notes to Financial Statements. - 9 - a a TOWN OF ITHACA NOTES TO FINANCIAL STATEMENTS December 31, 2008 aNOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: n The accompanying financial statements of the Town of Ithaca have been prepared in conformity with generally accepted accounting principles (GAAP) as applied to government units. The Governmental Accounting Standards Board (GASB) is the accepted standard setting abody for establishing governmental accounting and financial reporting principles. In June 1999, the GASB unanimously approved Statement No. 34, Basic Financial Statements — and Management's Discussion and Analysis — for State and Local Governments. Certain of the significant changes in the Statement include the following: • A Management's Discussion and Analysis (MD&A) section providing an analysis of the f 1 Town's overall financial position and results of operations. �J • Financial statements prepared using full accrual accounting for all of the Town's Dactivities. • A change in the fund financial statements to focus on the major funds. D These and other changes are reflected in the accompanying financial statements (including notes to financial statements). DA. Financial Reporting Entity The Town of Ithaca, which was established in 1821, is governed by the Town •D Law, other general municipal laws of the State of New York, and various local laws. The Town Board is the legislative body responsible for the overall operation, the Town Supervisor serves as Chief Executive Officer and Chief Fiscal Officer. DThe Town provides the following principal services: fire protection, transportation (streets and highways), recreation, planning and zoning, general administration, Ipublic improvements, water and sewer. Street lighting is provided by the Town Board in nine separate areas of the Town I called lighting districts. It is funded by means of a tax on the real property situated within each district. The Town provides for intersection street lighting from the General Fund appropriations. I Fire protection for certain areas of the Town outside the village is provided by the Town Board via the Ithaca Fire Protection District. This district is funded by means of a tax on the real property situated within the district. Services for fire protection are contracted out through the City of Ithaca and the Village of Cayuga Heights. I - 10 - 0 . All governmental activities and functions performed for the Town of Ithaca are its direct responsibility. No other governmental organization has been included or excluded from the reporting entity. • The financial reporting entity consists of the following, as defined by Governmental Accounting Standards Board (GASB) Statement #14, "The Financial Reporting Entity:" 1. The primary government which is the Town of Ithaca. 2. Organizations for which the primary government is financially accountable, and; 3. Other organizations for which the nature and significance of their relationship with the primary government is such that exclusion would cause the reporting entity's general purpose financial statements to be misleading or incomplete. The decision to include a potential component unit in the reporting entity is based on the criteria set forth in GASB Statement #14, including legal standing, fiscal • dependency, and financial accountability. Excluded from the Reporting Entity: 1. Joint Venture- Other Municipalities Southern Cayuga Lake Intermunicipal Water Commission (SCLIWC) is a joint venture involving the Towns of Ithaca, Dryden, Lansing and the Villages of Cayuga Heights and Lansing: The joint venture operates under terms of an original agreement dated March 1, 1977 and has been amended several times, the last on which is dated January 1, 1992. SCLIWC's executive body consists of ten members, two members being appointed by each municipality. The Treasurer of _ ' SCLIWC is traditionally the Town of Ithaca's Supervisor. The Town of Ithaca owns a majority (51.87%) of the Commission and must adopt its budget and any subsequent amendments. Although the Commission is related to the Town of Ithaca, it is not included in the Town of Ithaca reporting entity. A separate audited financial statement is available from the administrative offices of the Southern Cayuga Lake Intermunicipal Water Commission, Ithaca, New York. For the year ended December 31, 2008, the audited financial statements of the Commission show: Total Assets $ 7,349,594 a Total Liabilities $ 4,006,631 Net Assets $ 3,342,963 In 2005, the Water Commission completed construction on a facility expansion and renovation. The total project cost of$2.14 million was financed through fund balance appropriations and $1.5 million in 20 year statutory installment bonds. Also in 2007, the Commission completed construction on a 3 million gallon water tank on East Hill in the Town of Ithaca at a cost of$2.08 million. The project was financed through fund balance appropriations and $1.5 million in 20 year statutory installment bonds. The Town of Ithaca will bear responsibility for approximately 44% of the principal and interest payments on the debt associated with these projects, which will be reflected in the rate the Water Commission charges for water sales. - 11 - • 2. Joint Venture- City of Ithaca, Town of Dryden The Town of Ithaca is also a participant in the joint sewer activity known asthe Ithaca Area Wastewater Treatment Plant. The other participants are the Town. of Dryden and the City of Ithaca. The City of Ithaca has custody of the joint activity D money. The governing body has established charges at rates intending to be self- sustaining to cover all operating costs and debt service. Any shortfall in revenues is to be provided by equal share contributions from the participants. The following information regarding the Wastewater Treatment Plant is from the separately issued financial statements of the joint venture issued for the year • December 31, 2007: Q Year Ending • December 31, 2007 Total Assets $ 28,523,256 Total Liabilities 2,470,869 Total Equity 26,052,387 111 Total Revenues 2,890,284 Total Expenses 3,991,801 • aB. Basis of Presentation - 1. Government-wide Statements The Statement of Net Assets and the Statement of Activities present financial information about the Town's governmental activities. These statements 1 include the financial activities of the overall government in its entirety, except those that are fiduciary. Eliniinations have been made to minimize the double counting of internal transactions. Governmental activities generally are financed through taxes, state aid, intergovernmental revenues, and other exchange and nonexchange transactions. Operating grants include operating- specific and discretionary(either operating or capital) grants, while the capital grants column reflects capital-specific grants. The Statement of Activities presents a comparison between direct expenses and program revenues for each function of the Town's governmental activities. Direct expenses are those that are specifically associated with and are clearly identifiable to a particular function. Program revenues include charges paid by the recipients of goods or services offered by the programs, r and grants and contributions that are restricted to meeting the operational or capital requirements of a particular program. Revenues that are not classified as program revenues, including all taxes, are presented as general revenues. 2. Fund Financial Statements The fund statements provide information about the Town's funds, including fiduciary funds. Separate statements for each fund category (governmental and fiduciary) are presented. The emphasis of fund financial statements is on major Governmental Funds, each displayed in a separate column. All remaining Governmental Funds are aggregated and reported as non-major funds. `� 12 The Town of Ithaca reports the following major Governmental Funds: • General Fund: This is the Town's primary operating fund. It accounts for all financial transactions that are not required by law or other provision to be accounted for in other funds. • Highway Fund: Used to account for revenues and expenditures for parttown highway purposes. • Water Fund: Established by law to account for revenues derived from charges for water consumption and benefit assessments and the application of such revenues toward related operating expenses and 0 debt retirement. �J • Sewer Fund: Established by law to account for revenues derived from sewer rents and benefit assessments and used for related operating expenses and debt retirement. • Fire Protection District Fund: Used to record transactions involving 0 the Town Fire Protection District and the contracts for fire protection with the City of Ithaca and Village of Cayuga Heights. 0 • • Capital Projects Fund: Used to account for capital improvements finances from current monies transferred from other funds, federal and state grants and proceeds of obligations. aThe Town also reports the following non-major funds: • Lighting District Fund: Used to record operation and maintenance transactions. Revenues derived from special districts' assessment. • Debt Service Fund: Used to account for interest earned on proceeds of borrowing for water and sewer capital projects. . Interest earned is transferred to the Debt Service Fund from the Capital Projects Fund and then to the Operating Funds for payment of principal and interest. Annual principal and interest payments due on serial bonds is transferred from the water and sewer funds. Payments are made directly from the Debt Service Fund to the respective paying agents. The Town reports the following fiduciary funds: • Agency Fund: Used to account for those funds held in custody and a subsequent distributions, transmittal or release to other governments, individuals or to other funds. C. Measurement Focus and Basis of Accounting The Government-Wide 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 L incurred, regardless of when the related cash transaction takes place. Nonexchange transactions, in which the Town gives or receives value without directly receiving or giving equal value in exchange, include property taxes, grants and donations. On an accrual basis, revenue from property taxes is recognized in the fiscal year for which the taxes are levied. Revenue from grants - 13 - r a and donations is recognized in the fiscal year in which all eligibility requirements have been satisfied. The Governmental Funds are reported using the current financial resources measurement focus and 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. D Material revenues that are 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 Dthe expenditure is made. Expenditures are recorded when the related fund liability is incurred, except for principal and interest on general long-term debt, claims and judgments, and compensated absences, which are recognized as expenditures to the extent they have matured. General capital asset acquisitions are reported as expenditures in Governmental Funds. Proceeds of general long-term debt and acquisitions under (1 capital leases are reported as other financing sources. • jJ D. Property Taxes 1] Town real property taxes are levied annually on January 1, and become a lien on that date. Property owners can elect to pay their taxes using one of two options. Taxpayers may elect to pay their bill in two installments equal to %2 the total bill, plus a 2.5%processing fee. If the installment option is selected, the first payment is due between January 1 and January 14;without penalty, or between January 15, and January 20, with 1% interest (election to pay in installments ceases January 20). The second installment is due on or before July 1, payable to the County Division of Budget and Finance. Taxpayers may elect to pay their tax bill in full. Using this method, taxes are collected during the period January 1 to January 31 at face value and from February 1 to May 31 with interest added. The Town Receiver of Taxes collects all real estate taxes for Town and County purposes. The Town Receiver Q distributes the collected tax money to the Town Supervisor prior to distributing the balance collected to the County on June 1. The Town thereby is assured of 100% tax collection. Responsibility for the collection of unpaid taxes rests with the County. Uncollected tax liens are sold annually by the County. E. Budgetary Data 1. Budget Policies—The budget policies are as follows: a. No later than October 5, the budget officer submits a tentative j budget to the Town Board for the fiscal year commencing the following January 1. 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 20, the Town Board adopts the budget. E - 14- 0 c. All modifications of the budget must be approved by the Town Board. However, the Town Supervisor is authorized to transfer ( � certain budgeted amounts within departments. u d. Appropriations lapse at year-end. 2. Encumbrances Encumbrance accounting, under which purchase orders, contracts and D other commitments for the expenditure of monies are recorded for budgetary control purposes to reserve that portion of the applicable appropriations, is employed in all funds. Encumbrances are reported as J 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. aF. Cash and Investments The Town of Ithaca's investment policies are governed by State statutes. In Q addition, the Town of Ithaca has its own written investment policy. Town of Ithaca's monies must be deposited in FDIC insured commercial banks or trust companies located.within the State. The supervisor is authorized to use demand account 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. a Collateral is required for demand deposits and certificates of deposit not covered by federal deposit insurance. Obligations that may be pledged as collateral are obligations of the United States and its agencies and obligations of the State and Dits municipalities and school districts. The written investment policy requires repurchase agreements to be purchased from banks located within the state and that underlying securities must be obligations of the federal government and New York State. Underlying securities must have market value of at least the cost of the repurchase agreement. G. Accounts Receivable Accounts receivable are shown gross, with uncollectible amounts recognized Q under the direct write-off method. No allowance for uncollectible accounts has been provided since it is believed that such allowance would not be material. All receivables are expected to be collected within the subsequent fiscal year. r H. Due To/From Other Funds Amounts due to and due from within the same fund type are eliminated in the D Government-wide statements. Inter-fund receivables and payables are detailed in Note 4 on page 22. n I. Inventories and Prepaid Items l- Purchases of inventoriable items are recorded as expenditures in the Governmental Funds at the time of purchase. Inventory-type items are considered immaterial and, consequently, are not provided in the Government-wide statements. 15 r Prepaid items represent payments made by the Town for which_benefits extend beyond year-end. ] J. Capital Assets • d Capital assets are reported at historical costs. The Town depreciates capital assets using the straight-line method over the estimated useful life of the assets. Capitalization thresholds (the dollar value above which capital asset acquisitions are added to the capital asset accounts) and estimated useful lives of capital assets D •reported in the Government-wide statements are as follows: Estimated UCapitalization Useful LJ Threshold Life Building and improvements $ 5,000 30-40 years Non-building improvements 5,000 15-20 years DEquipment and machinery ' 5,000 5-15 years Furniture and furnishings 5,000 10 years 0 K. Infrastructure The Town includes long-lived improvements to roads,water and sewer systems as U capital assets in the Government-wide statements.' Infrastructures are reported at historical costs and are depreciated using the straight-line method over their estimated useful lives. U Capitalization thresholds and estimated useful lives for infrastructures are as follows: . Estimated Capitalization Useful Threshold Life Road systems $ 10,000 20 years Water and sewer systems 10,000 40 years L. Vested Employee Benefits Employees accrue (earn) vacation leave based on the number of years employed up to a maximum of 20 days a year. Upon separation from service, employees are I] paid for unused vacation time. . Employees accrue (earn) sick leave at the rate of one day per month and may — accumulate such credits up to a total of 120 days. Employees who retire apply any unused sick leave to pay for individual cost employee health insurance benefits and potentially add accumulated sick time to be credited to their service time in the New York State Retirement System. In 2008, the Town has recognized a liability of$254,860 based on accumulated sick time balances currently being -_ spent down by retirees and accumulated sick time balances of current Town employees who have reached minimum retirement age and would be eligible to — apply accumulated sick time towards the payment of health insurance premiums. The balance is allocated to a current ($36,428) and long-term ($218,432) liability in the Government-wide statements. The liability for accrued vacation time is - reflected in the Government-wide statements under as a long-term liability. - 16 - U The Town's employees participate in the New York State Employee's Retirement DSystem. In addition to providing pension benefits, the Town of Ithaca provides health Q insurance coverage for retired employees. Substantially all of the Town's employees may become eligible for these benefits if they reach normal retirement age while working for the Town. Health care benefits are provided through an insurance company whose premiums are based on the benefits paid during the year for the community. These benefits are further discussed in Note 9. M. Unemployment Insurance DAs of January 1, 1978, Town employees are covered by unemployment insurance. The Town has chosen to discharge its liability to the New York State a Unemployment Insurance Fund by means of the benefit reimbursement method. This is a dollar-for-dollar reimbursement to the Unemployment Insurance Fund for the benefits paid to former employees and charged to the Town's account. The Town is exempt for federal unemployment insurance tax. D • N. Deferred Compensation 0 The Town offers their employees a Deferred Compensation Plan (the Plan) created in accordance with Internal Revenue Code Section 457. The'Plan, which is available to all eligible participants, permits participants to defer a portion of their salary (25% of Gross wages not to exceed $8,000) until future years. Amounts deferred under the Plan are not available to the employee until termination,retirement, death or unforeseeable emergency. Effective, January 1, 1998, all amounts of compensation deferred under the Plan, all property and rights purchased with the amounts, and all income attributable to these amounts are the sole property of the employee. As required, the Town D Supervisor is the Chairman of the Town's Deferred Compensation Committee and Trustee. O. Risk Retention QThe Town of Ithaca is exposed to various risks of loss related to employee injury. During 1996 the Town established reservations of fund balance to finance certain D uninsured risks of loss in the interest of lower annual insurance costs. Claims that will be paid from these reserves are for small employee medical claims. During the year ended December 31, 2008, $11,205 was paid out on behalf of the employees. P. Restricted Resources When an expense is incurred for purposes for. which both restricted and unrestricted net assets are available, it is the Town's policy to apply restricted funds before unrestricted funds, unless otherwise prohibited by legal requirements. Ir- L - 17 - 0 Q. Equity Classification 1. Government-wide Statements Equity is classified as net assets and displayed in three components: D • Invested in Capital Assets,Net of Related Debt Consists of capital assets including restricted capital assets, net, of accumulated depreciation and reduced by the outstanding balances of any bonds, mortgages, notes or other borrowings that are attributable to the acquisition, construction, or improvement of those assets. E - • Restricted Net Assets Consists of net assets with constraints placed on the use either by 1) external groups such as creditors, grantors, contributors, or laws or regulations of other governments; or 2) law through constitutional provisions or enabling legislation. • Unrestricted Net Assets • All other net assets that do not meet the definition of "restricted" or "invested in capital assets, net of related debt." 2. Fund Financial Statements -Reserves a. The General Town-Wide Fund equity includes reserve funds established D for the purpose of future park development and purchasing rights as outlined in the Town's Open Space Plan. The balance at the end of 2008 was $463,779. This Reserve Fund was designated by Board Resolution EI No. 170 of October 2, 1997. Interest earnings and additional funding for the year both increased the Reserve Fund. D b. The Highway Equipment equity includes reserve funds established for highway machinery. The balance at the end of 2008 was $2,593. This Reserve Fund was designated by Board resolution No. 193 of November • 8, 1984, and any unexpended appropriation for machinery at year end is to be transferred to the Reserve Fund. The Reserve Fund is also increased by - interest earned for the year. c. The General Town-Wide Fund, the General-Part Town Highway Fund, the Water Fund, and the Sewer Fund equity includes funds established for fiscally managing annual economic increases and decreases in employee fringe benefits (E.g. NYS Retirement Costs, Health Insurance). The a aggregate balance at the end of 2008 was $300,001. This Reserve Fund was established at the June 13, 2005 Town Board meeting under Board Resolution No. 084. The reserve is funded on an annual basis as assessed by the Town Board. The reserve cash is increased by interest earned for the year. The balance by fund is as follows: - 18 - General Town Wide Fund $ 151,170 General Part-Town Fund 44,575 General Part-Town Highway Fund 82,994 Water Fund 13,546 Sewer Fund 7,716 $ 300,001 R. Inter-fund Transfers The operations of the Town gives rise to certain transactions between funds, including transfers to provide services and construct assets. The amounts reported on the Statement of Revenues, Expenditures and Changes in Fund Balance- Governmental Funds for inter-fund transfers have been eliminated for the Statement of Activities. A detailed description of the individual fund transfers that occurred during the year is provided subsequently in these Notes. S. Change in Accounting Policy In 2008, The Town implemented the provisions of Governmental Accounting Standards Board Statement No. 45, Accounting and Financial Reporting by Q Employers for Postemployment Benefits Other Than Pensions. The standard is being applied prospectively by the Town and establishes measurement and disclosure criteria for non-pension postemployment benefits (Note 9). D In 2008, the Town implemented the Governmental Accounting Standards Board Statement No. 50, Pension Disclosures—an amendment of GASB Statements No. 25 and No. 27. This statement more closely aligns the financial reporting 1111 requirements for pensions with those for other postemployment benefits (OPEB) and, in doing so, enhances information disclosed in notes to financial statements or presented as required supplementary information (RS1) by pension plans and a by employers that provide pension benefits. The applicable provisions of this statement are reflected in Note 6. T. New Accounting Pronouncements 1111 GASB Statement No. 49 In November 2006, the GASB issued Statement No. 49, "Accounting and D Financial Reporting for Pollution Remediation Obligations." This statement addresses accounting and financial reporting standards for pollution (including contamination) remediation obligations, which are obligations to address the • current or potential detrimental effects of existing pollution by participating in pollution remediation activities such as site assessments and cleanups. Statement No. 49 had no impact on the 2008 financial statements. GASB Statement No. 51 In June 2007, the GASB issued Statement No. 51, "Accounting and Financial Reporting for Intangible Assets." This statement clarifies pertinent provisions of GASB Statement No. 34, which address capital asset reporting requirements. The Town is required to adopt GASB Statement No. 51 for its 2010 financial statements. • • - 19 - r . GASB Statement No. 52 In November 2007, the GASB issued Statement No. 52, "Land and Other Real Estate Held as Investments by Endowments." This statement establishes D consistent standards for the reporting of land and other real estate held as investments by essentially similar entities. It requires endowments to report their land and other real estate investments at fair value. Governments also are required to report the changes in fair value as investment income and to disclose the methods and significant assumptions employed to determine fair value, and other information that they currently present for other investments reported at fair value. The Town is required to adopt GASB Statement No. 52 for its 2009 financial statements. GASB Statement No. 53 D In June 2008, the GASB issued Statement No. 53, "Accounting and Financial Reporting for Derivative Instruments." This statement addresses the recognition, measurement, and disclosure of information regarding derivative instruments entered into by state and local governments. The Town is required to adopt GASB Statement No. 53 for its 2010 financial statements. D GASB Statement No. 54 In March 2009,the GASB issued Statement No. 54, "Fund Balance Reporting and Governmental Fund Type Definitions." This statement enhances the usefulness of fund balance information by providing clearer fund balance classifications that D can be more consistently applied and by clarifying the existing governmental fund type definitions. This statement establishes fund balance classifications that comprise a hierarchy based primarily on the extent to which a government is D bound to observe constraints imposed upon the use of the resources reported in governmental funds. The Town is required to adopt GASB Statement No. 54 for its 2011 financial statements. NOTE 2-EXPLANATION OF CERTAIN DFFERENCES BETWEEN GOVERNMENTAL FUND STATEMENTS AND GOVERNMENT-WIDE STATEMENTS Due to the differences in the measurement focus and basis of accounting used in the governmental fund statements and the Government-wide statements, certain financial transactions are treated differently. The differences result primarily from the economic focus of the Statement of Activities, compared with the current financial resources focus of the Government Funds. A. Total Fund Balances of Governmental Funds vs. Net Asset of Governmental Activities: 1 Total fund balances of the Town's Governmental Funds differ from "net assets" of governmental activities reported in the Statement of Net Assets. This difference primarily results from the additional long-term economic focus of the Statement of Net Assets versus the solely current financial resources focus of the Governmental Fund Balance Sheet. 20 The basic financial statements contain a detailed reconciliation of the items creating the differences between fund balance reported in the Governmental Fund Statements and Net Assets reported on the Statement of Net Assets. • • B. Explanation of Difference between Governmental Funds Operating Statement and the Statement of Activities: Differences between the Governmental Funds Statement of Revenues, Expenditures and Changes in Fund Balance and the Statement of Activities fall into one of three broad categories. The amounts shown below represent these differences as follows: • Long-term revenue differences arise because Governmental Funds report I� revenues only when they are considered "available," whereas the Statement of (J Activities reports revenues when earned.. Differences in long-term expenses arise because Governmental Funds report on a modified accrual basis, n whereas the accrual basis of accounting is used on the Statement of Activities. L� • • Capital related differences include the difference between proceeds for the sale of capital assets reported on governmental fund statements and the gain or Q loss on the sale of assets as reported on the Statement of Activities, and the difference between recording an expenditure for the purchase of capital items in the governmental fund statements and depreciation expense on those items as recorded in the Statement of Activities. • Long-term debt transaction differences occur because both interest and principal payments are recorded as expenditures in the Governmental Fund statements, whereas interest payments are recorded in the Statement of Activities as incurred, and principal payments are recorded as a reduction of liabilities in the Statement of Net Assets. The basic financial statements contain a detailed reconciliation of the items creating the differences between the change in fund balance reported in the D Governmental Fund Statements and the change in net assets reported in the Statement of Activities. NOTE 3—CASH • A. Cash The Town of Ithaca's investment policies are governed by State statutes, as previously described in these Notes. Deposits are valued at cost or cost plus interest and are categorized as either: _ 1. Insured or collateralized with securities held by the entity or by its agent in the entity's name; 2. Collateralized with securities held by the pledging financial institution's trust department or agency in the entity's name; or 3. Uncollateralized. Total financial institution (bank) balances at December 31, 2008,per the bank, were$5,706,008 and$58,547. 1 2 - 3 Governmental funds $ 5.703 843 $ $ Agency funds $ 58,489 $ - $ - -21 r- NOTE 4—INTER-FUND ACTIVITY Inter-fund-receivables and payables at December 31, 2008, were as follows: D Inter-Fund Inter-Fund Fund Type Receivables Payables General town-wide $ - $ - General-part town - - 1 Highway - - D Water - 80 Sewer 80 Capital Projects - - Debt Service Agency $ 80 $ 80 a nInter-fund revenues and expenditures at December31, 2008, were as follows: • U • U Inter-Fund Inter-Fund Fund Type Revenues Expenditures General town-wide $ 338,671 $ 147,085 DGeneral -part town - 37,912 Highway 37,911. Q Water 30,425 60,850 859,517 Sewer 350,008 Capital Projects 91,275, 30,425 Debt Service 1,093,762 152,125 $ 1,614,983 $ 1,614,983 • • C - 22 - 1 J llNOTE 5-CAPITAL ASSETS , Capital asset balances and activity for the year ended December 31, 2008, were as ifollows: Beginning Disposals & Ending D Balance Additions Reclassifications Balance Governmental Activities CAPITAL ASSETS THAT ARE D NOT DEPRECIATED: Land $ 293,163 $ - $ - $ 293,163 �''1 Construction in progress 1,570,895 704,018 - 2,274,913 0 TOTAL NON-DEPRECIABLE �( HISTORICAL COST 1,864,058 704,018 • - i 2,568,076 DCAPITAL ASSETS THAT ARE DEPRECIATED • ' Buildings 3,959,825 - - 3,959,825 U . Equipment and machinery 3,009,573 214,730 138,784 3,085,519 Furniture and furnishings 183,691 - 183,691 Non-building improvements 288,830 - - 288,830 aiInfrastructures 5,641,394 - - 5,641,394 (((-- TOTAL DEPRECIABLE HISTORICAL COST 13,083,313 214,730 138,784 13,159,259 1 1 LESS ACCUMULATED DEPRECIATION U Buildings 617,785 115,733 - 733,518 Equipment and machinery 1,064,565 200,879 61,364 1,204,080 9 Furniture and furnishings 131,038 18,369 - 149,407 Non-building improvements 256,051 , 7,120 - 263,171 II:/ Infrastructures 591,892 141,535 - 733,427 TOTAL ACCUMULATED DEPRECIATION 2,661,331 '483,636 61,364 3,083,603 oTOTAL HISTORICAL COST, net $ 12,286,040 $ 435,112 $ 77,420 $ 12,643,732 QDepreciation was charged to governmental functions as follows: , General government support _ $ 93,456 DTransportation 192,947 Culture and recreation 19,599 Home and community services 177,634 r L Total Depreciation Expense $ - 483,636 r L J f -23 - L.. NOTE 6-LIABILITIES • A. Pension Plans Plan Description 0 The Town of Ithaca participates in the New York State and Local Employees' Retirement System (ERS) and the Public Employees' Group Life Insurance Plan (Systems). These are cost-sharing multiple-employer retirement systems. The D Systems provide retirement benefits as well as death and disability benefits. Obligations of employers and employees to contribute and benefits to employees are governed by the New York State Retirement and Social Security Law (NYSRSSL). As set forth in the NYSRSSL, the Comptroller of the State of New York (Comptroller) serves as sole trustee and administrative head of the Systems. The Comptroller shall adopt and may amend rules and regulations for the administration and transaction of the business of the Systems and for the custody U and control of their funds. The Systems issue a publicly available financial report • that includes financial statements and required supplementary information. That report may be obtained by writing to the New York State and Local Retirement Systems, Gov. Alfred E. Smith State Office Building, Albany,NY 12244. Funding Policy The Systems are noncontributory except for employees who joined the New York State and Local Employees' Retirement System after July 27, 1976 who contribute 3% of their salary. Under the authority of the NYSRSSL, the Comptroller shall certify annually the rates expressed as proportions of member payroll and employer contributions, used in computing the contributions required to be made by employers to the pension accumulation fund. Chapter 126 adds Article 19 "Benefits Enhancements" of the New York State and Local Employees Retirement System. An Eligible Tier III or IV member with ten or more years of membership or ten years credited service, will not be required to contribute to the Retirement System. Effective in 2000 the Town adopted Section 41j of the (� Retirement System. This allows a retiring municipal employee to add service �f credit by using accumulated sick time. D The Town of Ithaca is required to contribute at an actuarially determined rate. The required contributions for the current year and four preceding years were: ERS 2008 $ 233,032 2007 $ 235,438 O • 2006 $ 240,374 2005 $ 246,646 2004 $ 273,864 • • D -24 - U Town contributions made to the Systems were equal to 100% of the contributions 111 required for each year. Since 1989, the Systems' billings have been based on Chapter 62 of the Laws of 1989 of the State of New York. This legislation requires participating employers to make payments on a current basis, while amortizing existing unpaid amounts relating to the Systems' fiscal years ended March 31, 1988 and 1989 (which otherwise were to have been paid on June 30, 1989 and 1990, respectively) over a 17 year period, with an 8.75% interest factor D added. Local governments were given the option to prepay this liability. The Town's total unpaid liability at the end of 2008 fiscal year was $0. a. Southern Cayuga Lake Intermunicipal Water Commission Pension Plan The Southern Cayuga Lake Intermunicipal Water Commission's payroll is prepared through the Town of Ithaca, resulting in the New York State and O Local Retirement Plan billings being a combination of the Town's and the Water Commission's. The Water Commission is remitted along with the Town's share. B. 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 five years beyond the original date of issue unless a portion is redeemed within five years and within each 12 month period thereafter. For short-term financing (j the Town of Ithaca redeems (pays down) one-fifth (1/5) of the original BAN �J borrowing. 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 improvement projects may be renewed for periods equivalent to the maximum life of the permanent financing, provided that stipulated annual reductions of principal are made. In 2007, the Town borrowed $1,217,000 from the Sewer Fund through the D issuance of two bond anticipation notes in the amounts of$693,000 and $594,000. The BANs bear annual interest at 4.50% and the proceeds are being used to fund water improvement projects. The BANs are expected to be redeemed with the proceeds from the issuance of serial bonds. The BANs are considered interfund obligations and the receivable and the payable are eliminated in the government- wide statements. C. Long-Term Debt Bonds: The Town of Ithaca borrows money in order to acquire land or equipment a or construct buildings and improvements. This enables the cost of these capital assets to be borne by the present and future taxpayers. At December 31, 2008, the total principal indebtedness outstanding of the Town of Ithaca aggregated $4,246,000. Of this amount, $760,000 was subject to the Town's constitutional debt limit and represented 1.1% of its debt limit. Further calculations disclosed that the Town of Ithaca meets the 7% indebtedness requirement and has not exhausted its borrowing and repayment abilities. D -25 - 0 0 The following is a summary of the Town of Ithaca's outstanding serial bonds and bond anticipation notes for the year ending December 31, 2008: [I Original Date Original Interest Maturity Outstanding 1] Description of Issue Amount Rate Date 12/31/2008 1991 Public Improvement 7/26/91 4,465,000 6.63% 7/26/11 $ 750,000 2003 Public Improvement 12/29/03 1,000,000 3.95% 12/29/17 640,000 ill2004 Water Improvement 2/12/04 1,000,000 3.88% 2/12/19 736,000 2004 Public Improvement 11/15/04 2,000,000 4.35% 11/15/24 1,600,000 U 2005 Water Improvement 9/28/05 500,000 3.60% 9/28/15 400,000 2006 Public Improvement 1/7/06 200,000 . 3.75% 1/7/11 120,000 1 Total Serial Bonds Payable $ 4,246,000 U Interest on long-term debt paid during the year was: Interest paid $' 222,736 El Less interest accrued-prior year ( 64,675) Plus interest accrued- current year 53,693 $ 211,754 Interest expense has been allocated to the following government functions: Transportation $ 32,604 Home and community services 179,150 U $ 211,754 n Long-tun liability balances and activity for the year are summarized below: ll Beginning Ending U Governmental Activities Balance Issued Redeemed Balance Serial bonds $ 4,963,000 $ $ ( 717,000) $ 4,246,000 Bond anticipation notes - - - - Total serial bonds and Illbond anticipation notes $ 4,963,000 $ - $ ( 717,000) $ 4,246,000 Other liabilities: Compensated absences 126,890 8,160 - 135,050 Other post-employment benefits - 558,449 - 558,449 9 Total long-term liabilities $ 126,890 $ 566,609 $ ( 717,000) $ 693,499 -26 - [11 Activity for compensated absences is shown at net due to the impracticability of determining these amounts separately. Payments of compensated absences are dependent fl upon future factors and, therefore, the timing of such payments cannot be determined. Compensated absences are reflected as a long-term liability in the Statement of Net Assets. 0 The following is a summary of the maturity of long-term indebtedness: Serial Bonds Year Principal Interest Total Eli2009 577,000 187,080 764,080 2010 578,000 157,699 735,699 I] 2011 588,000 128,281 716,281 2012 298,000 98,511 396,511 2013 298,000 86,803 384,803 2014-2018 1,240,000 264,947 1,504,947 2019 -2023 567,000 79,489 •646,489 2024&beyond 100,000 2,250 102,250 UTotal Serial Bonds $ 4,246,000 $ 1,005,060 $ 5,251,060 9 NOTE 7-UNRESTRICTED BALANCES Of the$3,910,428 in unrestricted net assets, $950,229 has been appropriated by the Town 9 for 2008 expenditures. NOTE 8-DEFICIT FUND BALANCE-CAPITAL PROJECTS FUND IThe deficit fund balance in the Capital Projects Fund is expected to be eliminated through recognition of the proceeds of long-term financing to fund ongoing projects. NOTE 9 -POSTEMPLOYMENT BENEFITS OTHER THAN PENSIONS U Plan Description. The Town of Ithaca administers a single-employer defined benefit healthcare plan ("the Retiree Health Plan"). The plan provides lifetime healthcare insurance for eligible retirees and their spouses through the Town's group health insurance plan, which covers both active and retired members. The Town pays a portion U of retiree's premiums for healthcare insurance based on the number of years of service to the Town at the time of retirement. D In addition, retiring employees can covert unused sick and vacation time to offset portions healthcare premiums that are the .retiree's responsibility. The Town tracks the accumulated balances and makes premium payments on behalf of the retirees until the balances are exhausted. U The Retiree Health Plan does not issue a publicly available financial report. U 9 -27 - U LIFunding Policy. The Town contributes a portion of the retiree's healthcare premium according to the following schedule: 0 Years of Town Service Contribution 30 and over 75.0% 25-29 50.0% a ' 15-24 35.0%. 5-14 20.0% less than 5 0.0% - 0 For fiscal year 2008, the Town contributed $26,898 to the plan. U Annual OPEB Cost and Net OPEB Obligation. The Town's annual other postemployment benefit (OPEB) cost (expense) is calculated based on the annual required contribution of the employer (ARC). The Town has elected to calculate the ARC and related information using the alternative measurement method permitted by GASB Statement 45 for employers in plans with fewer than one hundred total plan members. U The ARC represents a level of funding that, if paid on an ongoing basis, is projected to cover normal cost each year and to amortize any unfunded actuarial liabilities (or funding ii excess) over a period not to exceed thirty years. The following table shows the U components of the Town's annual OPEB cost for the year, the amount actually contributed to the plan, and changes in the Town's net OPEB obligation to the Retiree Health Plan (the Town implemented GASB 45 in 2008, so there was no prior calculation Uof an OPEB obligation): Annual required contribution $ 349,442 UInterest on net OPEB obligation Adjustment to annual required contribution - U Annual OPEB expense 349,442 (Contributions made 26,898) Increase in net OBEB obligation 322,544 U Net OPEB obligation-beginning of year - Net OPEB obligation- end of year $ 322,544 The Town's annual OPEB cost, the percentage of annual OPEB cost contributed to the plan, and the net OPEB obligation for fiscal year 2008 is as follows (Note: Information fl for the two preceding years is not available due to implementation of GASB 45 in 2008): r Percentage of Net UYear Annual Annual OPEB OPEB Ended OPEB Cost Cost Contributed Obligation I- 12/31/2008 $ 349,442 7.70% $ 322,544 L 9 -2 • 8 - Funded Status and Funding Progress. As of December 31, 2008, the actuarial accrued liability for benefits was $3,302,265, all of which was unfunded. The covered payroll (annual payroll of active employees covered by the plan) was $2,461,734 and the ratio of • the unfunded actuarial accrued liability to the covered payroll was 134.1 percent. 0 The projection of future benefit payments for an ongoing plan involves estimates of the value of reported amounts and assumptions about the probability of occurrence of events far into the future. Examples include assumptions about future employment, mortality, and the healthcare cost trend. Amounts determined regarding the funded status of the plan and the annual required contributions of the employer are subject to continual revision as actual results are compared with past expectations and new estimates are made about the future. The schedule of funding progress, presented as required supplementary U • information following the notes to the financial statements, presents multi-year trend information about whether the actuarial value of plan assets is increasing or decreasing over time relative to the actuarial accrued liabilities for benefits. Methods and Assumptions. Projections of benefits for financial reporting purposes are based on the substantive plan(the plan as understood by the employer and plan members) and include the types of benefits provided at the time of each valuation and the historical D pattern of sharing of benefit costs between the employer and plan members to that point. The methods and assumptions used include techniques that are designed to reduce the effects of short-term volatility in actuarial accrued liabilities and the actuarial value of assets, consistent with the long-term perspective of the calculations. The following simplifying assumptions were made: a Retirement age for active employees—Based on the historical average retirement age for the covered group, active plan members were assumed to retire at age 62, or at the first subsequent year in which the member would qualify for benefits. LIMarital status Marital status of members at the calculation date was assumed to continue throughout retirement. Mortality—Life expectancies were based on mortality tables from the National Center for Health Statistics. The 1999 United States Life Tables for Males and for Females were used. Turnover—Non-group-specific age-based turnover data from GASB Statement 45 were used as the basis for assigning active members a probability of remaining employed until the assumed retirement age and for developing an expected future working lifetime assumption for purposes of allocating to periods the present value of total benefits to be paid. Healthcare cost trend rate—The expected rate of increase in healthcare insurance premiums was based on current premium rates and projections of the Office of the • Actuary at the Centers for Medicare & Medicaid Services. A rate of 15.0 percent was used initially, reduced to an ultimate rate of 6.0 percent after six years. Health insurance premiums-2008 health insurance premiums for retirees were used as the basis for calculation of the present value of total benefits to be paid. Inflation rate—The expected long-term inflation assumption of 2.8 percent was based on projected changes in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) in The 2007 Annual Report of the Board of Trustees of the Federal -29 - 0 Old Age and Survivors Insurance and Disability Insurance Trust Funds for an intermediate growth scenario. OPayroll growth rate—The expected long-term payroll growth rate was assumed to equal • the rate of inflation. a Based on the historical and expected returns of the Town's short-term investment portfolio, a discount rate of 4.0 percent was used. In addition, a simplified version of the entry age actuarial cost method was used. The unfunded actuarial accrued liability is a being amortized as a level percentage of projected payroll on an open basis. The remaining amortization period at December 31, 2008,was thirty years. D 0 • 0 8 D U 0 U J - 30 - U 0 UAAL as a . Percentage Covered of Covered Payroll Payroll U (c) ((b-a) /c) $ 2,461,734 134.1% U U U U U U D . j - 31 - 0 . 0 0 HIGHWAY Original Modified 0 Budget Budget Actual 0 $ $ $1,542,841 1,542,841 1,542,841 - . 0 12,000 24,877 24,877 10,000 6,641 6,641 0 - 16,000 19,160 19,160 57,676 26,481 61,000 74,019 74,019 1,641,841 1,725,214 1,694,019 0 . 0 336,518 - - 1,978,359 1,725,214 1,694,019 a 420 315 315 0 1,559,328 1,541,562 1,541,562 0 380,700 426,617 399,092 0 1,940,448 1,968,494 1,940,969 37,911 37,911 37,911 U 1,978,359 2,006,405 1,978,880 LI ( 281,191) ( 284,861) 854,979 854,979 854,979 $ 854,979 $ 573,788 $ 570,118 J 1 - 32 - U 0 111 SEWER FIRE Original Modified Original Modified 111 Budget Budget Actual Budget Budget Actual a $ 147,763 $ 147,763 $ 154,863 $ 3,008,606 $ 3,008,606 $ 3,008,606 6,700 7,100 9,400 9,580 9,580 U 1,427,000 1,293,645 1,293,645 - - 1,000 1,368 1,368 ,101 48,101 ,54000 72,721 11,871 50,000 48_ _U = _ _ - - 19,000 18,258 18,258 1,636,463 1,522,597 1,461,747 3,087,006 3,084,545 3,084,545 U60,850 - - - 560,752 - - - 2,197,215 1,522,597 1,522,597 3,087,006 3,084,545 3,084,545ri 44,117 40,664 40,664• 600 3,746 3,745 0 - - - 3,268,281 3,227,742 3,123,027 W 1,756,320 1,211,173 1,211,173 - - - 46,770 34,324 33,289 - - - u 1,847,207 1,286,161 1,285,126 3,268,881 3,231,488 3,126,772 LI350,008 350,008 350,008 - - - 2,197,215 1,636,169 1,635,134 3,268,881 3,231,488 3,126,772 ( 113,572) ( 112,537) ( 181,875) ( 146,943) ( 42,227) 2,124,738 2,124,738 2,124,738 74,197 74,197 74,197 $ 2,124,738 $ 2,011,166 $ 2,012,201 $ ( 107,678) $ ( 72,746) $ 31,970 a - 33 - 0 ,, , f ii U . DCompleted" Project Hanshaw Rd Pew Water Bike Main Trail Total U $ 22,779 $ - $ 205,891 9 22,779 - 205,891 9 $ 22,779 $ - $ 205,891 U $ - $ - 421,096 484,062 1,125,725 484,062 - 1,546,821 U ( 461,283) - ( 1,340,930) ( 461,283) ( 1,340,930) $ 22,779 $ - $ 205,891 U 0 U 34 0 0 I . D D Completed Project Hanshaw Rd Pew El Water Bike Main Trail Total fl $ 1,405 $ 444 $ 7,400 39,248 91,275 36,427 36,427 D $ 40,653 $ 36,871 $ 135,102 9 $ - . $ - $ 421,591 6,603 6,603 Q 1,000 - 11,000 2,000 6,000 2,500 - 5,000 139,785 237,977 13,083 - 30,425 D 1,000 - 2,000 - 16,964 1,566 - 3,487 U $ 160,934 $ 6,603 $ 741,047 Q I . I J j J - 35 - 0 L U L 0 TOWN OF ITHACA D INDEPENDENT AUDITORS' REPORT ON ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND 0 1'HER MA 1TERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS YEAR ENDED DECEMBER 31,2008 D D L U 1 _ • - 36 - U U D Compliance and Other Matters As part of obtaining reasonable assurance about whether the Town of Ithaca's financial statements are free of material misstatement, we performed tests of its compliance with certain D provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of u noncompliance or other matters that are required to be reported under Government Auditing Standards. O We noted certain matters that we reported to management of the Town of Ithaca in a separate letter dated August 3, 2009. Q This report is intended solely for the information and use of the Town Board, management and others within the entity, and is not intended to be and should not be used by anyone other than these specified parties. However, this report is a matter of public record and its Q . distribution is not limited. — � � DCertified Public Accountants • U D Q D U 0 II TOWN OF ITHACA TABLE OF CONTENTS December 31, 2008 Page Independent Auditor's Report UManagement's Discussion and Analysis I-XVIII Statement of Net Assets 1 • Statement of Activities 2 Balance Sheet—Governmental Funds • 3 111 Reconciliation of the Total Fund Balances Shown in the Governmental Funds to the Statement of Net Assets 4 DStatement of Revenues, Expenditures, and Changes in Fund Balances 5-6 El . Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balance of the Governmental Funds to the Change in Net Assets Shown in the Statement of Activities 7-8 Statement of Fiduciary Net Assets 9 allotes to Financial Statements 10-30 Schedule of Funding Progress for the Retiree Health Plan 31 a Schedule of Revenues and Expenditures Compared to Budget— Major Funds 32-33 aCapital Projects Fund -Detailed Balance.Sheet 34 Capital Projects Fund-Detailed Revenues and Expenditures 35 Independent Auditor's Report on Compliance and on Internal Control over Financial Reporting Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards 36-37 • U • LI • L'1 SCIARABBA WALKERW CERTIFIED PUBLIC ACCOUNTANTS BUSINESS CONSULTANTS INDEPENDENT AUDITOR'S REPORT August 3,2009 lSupervisor and Town Board Town of Ithaca 1 Ithaca, New York 14850 We have audited the accompanying financial statements of the governmental activities, each 1 major fund, and the aggregate remaining fund information of the Town of Ithaca, as of and for the year ended December 31, 2008, which collectively comprise the Town's basic fmancial statements as listed in the table of contents. These basic financial statements are the responsibility of the Town } of Ithaca's management. Our responsibility is to express an opinion on these financial statements based on our audit. I 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 basic 1 financial statements are free of material misstatements.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 1 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 in the first paragraph present fairly, in all material respects, the respective financial position of the governmental activities, each major fund, and the aggregate remaining fund information of the Town of Ithaca, as of December 31, 2008, and the respective changes in financial position for the year then ended, in conformity with accounting principles generally accepted in the United States of America. J In accordance with Government Auditing Standards, we have also issued our report dated 1 August 3, 2009, on our consideration of the Town of Ithaca's internal control structure and on our tests of its compliance with laws and regulations. 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. IThe Management Discussion and Analysis (pages I-XVIII), the Schedule of Funding Progress for the Retiree Health Plan (page 31) and the Schedule of Revenues and Expenditures I Compared to Budget- Major Funds (pages 32-33) are not a required part of the basic financial statements, but are supplementary information required by accounting principles generally accepted in the United States of America. We 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. 200 East Buffalo Street, Suite 402 28 North Main Street Ithaca,New York 14850 Cortland,New York 13045 607-272-5550/607-273-6357(Fax) 607-756-0073/607-756-0052(Fax) www.sciarabbawalker.com U TOWN OF I1'HACA INDEX flDecember 31, 2008 U . Tab Independent Auditor's Report 1 Management's Discussion and Analysis 2 Financial Statements 3 Independent Auditor's Report on Compliance,and on Internal Control over Financial Reporting Based on an Audit of D Financial Statements Performed in Accordance with Government Auditing Standards 4 a 0 o o . D Q LI 0 • L r L 9 Cl 0 El 1] FINANCIAL STATEMENTS OF �j TOWN OF ITHACA �J ITHACA, NEW YORK n FOR THE YEAR ENDED DECEMBER 31, 2008 0 Li J �.l . I ' TOWN OF ITHACA I CAPITAL PROJECTS FUND DETAILED REVENUES AND EXPENDITURES December 31,2008 Active projects First Trumansburg Street Gateway Water Interceptors Trail Main REVENUE: Interest earnings $ 3,181 $ 772 $ 1,598 Interfund transfers - - 52,027 State and federal grants - - - TOTAL REVENUE $ 3,181 $ 772 $ 53,625 I EXPENDITURES: p Sewer construction contract $ 421,591 $ - $ - Park and development costs - - - Engineering design - - 10,000 Contract administration - - 4,000 Bidding process - - 2,500 Water construction contract - - 98,192 Interfund transfers - - 17,342 Survey - - 1,000 Inspection - - 16,964 Legal services - - 1,921 TOTAL EXPENDITURES $ 421,591 , $ - $ 151,919 I i I I I I r See Independent Auditor's Report. TOWN OF ITHACA CAPITAL PROJECT FUND DETAILED BALANCE SHEET December 31,2008 ASSETS Active Projects First Trumansburg Street Gateway Water Interceptors trail Main CASH: p Cash in savings $ 55,670 $ 84,969 $ 42,473 TOTAL CASH 55,670 84,969 42,473 TOTAL ASSETS $ 55,670 $ 84,969. $ 42,473 LIABILITIES AND FUND BALANCE LIABILITIES: Accrued liabilities $ 421,096 $ Ban payable - - 641,663 TOTAL LIABILITIES 421,096 - 641,663 FUND BALANCE: Unappropriated fund balance ( 365,426) 84,969 ( 599,190) TOTAL FUND BALANCE ( 365,426) 84,969 ( 599,190) TOTAL LIABILITIES & FUND EQUITY $ 55,670 $ 84,969 $ 42,473 See Independent Auditor's Report. - TOWN OF ITHACA SCHEDULE OF REVENUES AND EXPENDITURES COMPARED TO BUDGET MAJOR FUNDS (continued) December 31,2008 WATER Original Modified Budget Budget Actual REVENUES: Real property taxes $ 697,763 $ 697,763 $ 697,763 Real property tax items 6,000 7,100 7,100 Nonproperty tax items - - - Departmental income 1,772,000 1,794,286 . 1,794,286 Intergovernmental charges 500 441 441 Interest income 3,000 3,733 3,733 Licenses and permits - - - Fines and forfeitures - - - Sale of property and compensation for loss - - - Local sources - 50,714 17,029 State sources - - - TOTAL REVENUES 2,479,263 2,554,037 2,520,352 OTHER SOURCES: Interfund transfers - - - Proceeds of obligations 1,500,000 - 30,425 Appropriated fund balance ( 5,200) - - TOTAL REVENUES AND OTHER SOURCES 3,974,063 '2,554,037 2,550,777 EXPENDITURES: General governmental support 51,417 53,517 53,517 Public safety - - . - Transportation - , - - Culture and recreation - - - Home and community services 2,988,723 1,511,001 1,511,001 Employee benefits 94,400 77,578 72,242 Debt service(principal and interest) - ' - - TOTAL EXPENDITURES 3,134,540 1,642,096 1,636,760 Ei OTHER USES: r Interfund transfers 839,523 859,517 859,517 TOTAL EXPENDITURES AND OTHER USES 3,974,063 2,501,613 2,496,277 EXCESS (DEFICIT) OF REVENUES OVER EXPENDITURES - 52,424 54,500 FUND BALANCE,beginning of year 471,510 471,510 , 471,510 FUND BALANCE, end of year $ 471,510 $ 523,934 $ , 526,010 See Independent Auditor's Report. 1 • TOWN OF ITHACA SCHEDULE OF REVENUES AND EXPENDITURES COMPARED TO BUDGET MAJOR FUNDS December 31, 2008 - • i GENERAL ' Original Modified Budget Budget Actual REVENUES: ' Real property taxes $ 1,771,501 $ 1,771,501 $ 1,771,501 Real property tax items 43,500 56,254 56,254 Nonproperty tax items 757,981 1,207,610 1,266,576 Departmental income 100,350 230,292 230,291 Intergovernmental charges . 54,427 61,909 61,909 Interest income 110,000 112,066 112,824 Licenses and permits - 3,000 10,593 ' 10,593 Fines and forfeitures 300,000 254,673 254,673 Sale of property and compensation for loss - 2,066 2,479 Local sources - 168,478 ( 26,540)1 State sources 354,200 467,947 467,951 TOTAL REVENUES 3,494,959 4,343,389 '4,208,51.1 • OTHER SOURCES: - i Interfund transfers 395,871 338,671 338,671 Proceeds of obligations 140,316 - - I Appropriated fund balance 531,049' - TOTAL REVENUES AND OTHER SOURCES 4,562,195 4,682,060 4,547,182 EXPENDITURES: - General governmental support 1,559,928 1,475,553 1,475,553 Public safety 125,362 55,401 55,401 ry Transportation 284,849 287,450 287,450 Culture and recreation 896,062 690,166 690,166 Home and community services 732,568 733,419 733,418 f Employee benefits 778,430 832,883 637,067 ! Debt service(principal and interest) - - - TOTAL EXPENDITURES '4,377,199 4,074,872 3,879,055 OTHER USES: Interfund transfers 184,996 184,996 184,997 TOTAL EXPENDITURES AND OTHER USES 4,562,195 4,259,868 4,064,052 , EXCESS (DEFICIT) OF REVENUES OVER EXPENDITURES - 422,192 483,130 FUND BALANCE,beginning of year 2,580,598 2,580,598' 2,580,598 FUND BALANCE, end:of year $ 2,580,598 $ 3,002,790 $ 3,063,728 1 See Independent Auditor's Report. TOWN OF ITHACA SCHEDULE OF FUNDING PROGRESS FOR THE RETIREE HEALTH PLAN • December 31,"2008 Actuarial Accrued Actuarial Liability Value (AAL) Unfimded Actuarial of Simplified AAL Funded Valuation Assets Entry Age (UAAL) Ratio Date (a) (b) (b-a) (a/b) 12/31/2008 $ - $ 3,302,265 $ 3,302,262 0.00% • 1 • See Independent Auditor's Report. SCIARABBA WALKER LLP CERTIFIED PUBLIC ACCOUNTANTS BUSINESS CONSULTANTS April 20, 2009 Town of Ithaca 215 N. Tioga St. Ithaca, NY 14850 We are pleased to confirm our understanding of the services we are to provide the Town of Ithaca for the year ended December 31, 2008. We will audit the financial statements of the governmental activities, each major fund, and the aggregate remaining fund information, which collectively comprise the entity's basic financial statements, of the Town of Ithaca as of and for the year ended December 31, 2008. Also, the document we submit to you will include the following additional information that will not be subjected to the auditing procedures applied in our audit of the financial statements and for which our accountant's report will disclaim an opinion Management's discussion and analysis Schedule of Revenues and Expenditures Compared to Budget—Major Funds Capital Projects Fund - Detailed Balance Sheet Capital Projects Funds - Detailed Revenues and Expenditures Audit Objective The objective of our audit is the expression of an opinion as to whether your financial statements are fairly presented, in all material respects, in conformity with U.S. generally accepted accounting principles and to report on the fairness of the additional information presented in the first paragraph when considered in relation to the financial statements taken as a whole. Our audit will be conducted in accordance with U.S. generally accepted auditing standards and the standards contained in Government Auditing Standards issued by the Comptroller General of the United states, and will include tests of the accounting records and other procedures we consider necessary to enable us to express such an opinion. If our opinion on the financial statements is other than unqualified, we will fully discuss the reasons with you in advance. If, for any reason, we are unable to complete the audit or are unable to form or have not formed an opinion, we may decline to express an opinion or to issue a report as.a result of this engagement. We will also provide a report (that does not include an opinion)on internal control related to the financial statements and compliance with laws, regulations, and the provisions of contracts or grant agreements, noncompliance with which could have a material effect on the financial statements as required by Government Auditing Standards. The report will include a statement that the report is intended solely for the information and use of the audit committee, management, and specific legislative or regulatory bodies and is not intended to be and should not be used by anyone other than these specified parties. 200 East Buffalo Street,Suite 402 28 North Main Street Ithaca,New York 14850 Cortland,New York 13045 607-272-5550/607-273-6357(Fax) 607-756-0073/607-756-0052(Fax) www.sciarabbawalker.com Management Responsibilities Management is responsible for establishing and maintaining internal control and for compliance with laws, regulations, contracts, and agreements. In fulfilling this responsibility, estimates and judgments by management are required to assess the expected benefits and related costs of the controls. The objectives of internal control are to provide management with reasonable, but not absolute, assurance that assets are safeguarded against loss from unauthorized use or disposition, that transactions are executed in accordance with management's authorizations and recorded properly to permit the preparation of financial statements in accordance with generally accepted accounting principles. Management is responsible for making all financial records and related information available to us. We understand that you will provide us with such information required for our audit and that you are responsible for the accuracy and completeness of that information: We will advise you about appropriate accounting principles and their application and will assist in the preparation of your financial statements, but the responsibility for the financial statements remains with you. As part of our engagement, we may propose standard, adjusting, or correcting journal entries to your financial statements. You are responsible for reviewing the entries and understanding the nature of any proposed entries and the impact they have on the financial statements. That responsibility includes the establishment and maintenance of adequate records and effective internal control over financial reporting, the selection and application of accounting principles, and the safeguarding of assets. Management is responsible for adjusting the financial statements to correct material misstatements and for confirming to us in the representation letter that the effects of any uncorrected misstatements aggregated by us during the current engagement and pertaining to the latest period presented are immaterial, both individually and in the aggregate, to the financial statements taken as a whole. You are responsible for the design and implementation of programs and controls to prevent and detect fraud, and for informing us about all known or suspected fraud, or illegal acts affecting the government involving(1) management, (2) employees who have significant roles in internal control, and (3) others where the fraud or illegal acts could have a material effect on the financial statements. You are also responsible for informing us of your knowledge of any allegations of fraud or suspected fraud, or illegal acts affecting the government received in communications from employees, former employees, grantors, regulators, or others. In addition, you are responsible for identifying and ensuring that the entity complies with applicable laws and regulations and for taking timely and appropriate steps to remedy any fraud, illegal acts, violations of contracts or grant agreements, or abuse that we may report. As part of the audit, we will prepare a draft of your financial statements and related notes. In accordance with Government Auditing Standards, you will be required to review and approve those financial statements prior to their issuance and have a responsibility to be in a position in fact and appearance to make an informed judgment on those financial statements. Further, you are required to designate a qualified management-level individual to be responsible and accountable for overseeing our services. • • Audit Procedures—General An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements; therefore, our audit will involve judgment about the number of transactions to be examined and the areas to be tested. We will plan and perform the audit to obtain reasonable rather than absolute assurance about whether the financial statements are free of material misstatement, whether from (1) errors, (2) fraudulent financial reporting, (3)misappropriation of assets, or(4) violations of laws or governmental regulations that are attributable to the entity or to acts by management or employees acting on behalf of the entity. Because the determination of abuse is subjective, Government Auditing Standards do not expect auditors to provide reasonable assurance of detecting abuse. Because an audit is designed to provide reasonable, but not absolute assurance and because we will not perform a detailed examination of all transactions, there is a risk that material misstatements may exist and not be detected by us. In addition, an audit is not designed to detect immaterial misstatements or violations of laws or governmental regulations that do not have a direct and material effect on the financial statements. However, we will inform you of any material errors that come to our attention, and we will inform you of any fraudulent financial reporting or misappropriation of assets that comes to our attention. We will also inform you of any violations of laws or governmental regulations that come to our attention, unless clearly inconsequential. Our responsibility as auditors is limited to the period covered by our audit and does not extend to matters that might arise during any later periods for which we are not engaged as auditors. Our procedures will include tests of documentary evidence supporting the transactions recorded in the accounts, and may include tests of the physical existence of inventories, and direct confirmation of receivables and certain other assets and liabilities by correspondence with selected individuals, creditors, and financial institutions. We will request written representations from your attorneys as part of the engagement, and they may bill you for responding to this inquiry. At the conclusion of our audit, we will also require certain written representations from you about the financial statements and related matters. Identifying and ensuring that the Town of Ithaca complies with laws, regulations, contracts, and agreements is the responsibility of management. As part of obtaining reasonable assurance about whether the financial statements are free of material misstatement, we will perform tests of the Town of Ithaca's compliance with applicable laws and regulations and the provisions of contracts and agreements. However, the objective of our audit will not be to provide an opinion on overall Compliance and we will not express such an opinion. Audit Procedures—Internal Control In planning and performing our audits, we will consider the internal control sufficient to plan the audit in order to determine the nature, timing, and extent of our auditing procedures for the purpose of expressing our opinion on the Town of Ithaca's financial statements. We will obtain an understanding of the design of the relevant controls and whether they have been placed in operation,and we will assess control risk. Tests of controls may be performed to test the effectiveness of certain controls that we consider relevant to preventing and,detecting errors and fraud that are material to the financial statements and to preventing arid detecting misstatements resulting from illegal acts and other noncompliance matters that have a direct and material effect on the financial statements. Tests of controls are required only if control risk is assessed below the maximum level. Our tests, if performed, will be less in scope than would be necessary to render an opinion on internal control and, accordingly, no opinion will be expressed in our report on internal control issued pursuant to Government Auditing Standards. An audit is not designed to provide assurance on internal control or to identify reportable conditions. However, we will inform the governing body of any matters involving internal control and its operation that we consider to be reportable conditions under standards established by the American Institute of Certified Public Accountants. Reportable conditions involve matters coming to our attention relating to significant deficiencies in the design or operation of the internal control that, in our judgment, could adversely affect the entity's ability to record, process, summarize, and report financial data consistent with the assertions of management in the financial statements. Audit Administration, Fees, and Other We understand that your employees will prepare all cash or other confirmations we request and will locate any invoices selected by us for testing. The audit documentation for this engagement is the property of Sciarabba Walker&Co., LLP and constitutes confidential information. However, pursuant to authority given by law or regulation, we may be requested to make certain audit documentation available to the State of New York Division of Audit Control or its designee, a federal or state agency providing direct or indirect funding, or the U.S. General Accounting Office for purposes of a quality review of the audit, to•resolve audit findings, or carry out oversight responsibilities. We will notify you of any such request. If requested, access to such audit documentation will be provided under the supervision of Sciarabba Walker & Co., LLP personnel. Furthermore, upon request we may provide copies of selected audit documentation to the aforementioned parties. These parties may intend, or decide, to distribute the copies or information contained therein to others, including other government agencies. We expect to begin our audit on Monday, April 27, 2009 and to issue our report no later than May 30, 2009. Our fee for these services and the justice audits discussed below will be at our standard hourly rates. We estimate that those fees will range between $17,100 and $18,100 and we agree that our gross fee will not exceed $18,100. Our standard hourly rates vary according to the degree of responsibility involved and the experience level of the personnel assigned to your audit. Our invoices for these fees will be rendered each month as work progresses and are payable on presentation. The above fee is based on anticipated cooperation from your personnel and the assumption that unexpected circumstances will not be encountered during the audit. . If significant additional time is necessary, we will discuss it with you and arrive at a new fee estimate before we incur the additional costs. Our fee proposal does not include audit procedures to be performed with respect to the Town's Deferred Compensation Plan as those procedures are to be performed under a separate engagement described in our engagement letter dated September 2, 2008. As part of this year's engagement we will also perform an audit of the Town of Ithaca Justice Courts. These audits will begin in early summer and reports issued timely upon completion of fieldwork. Government Auditing Standards require that we provide you with a copy of our most recent external peer review report and any letter of comment, and any subsequent peer review reports and letters of comment received during the period of the contract. Our 2005 peer review report accompanies this letter. We appreciate the opportunity to be of service to the Town of Ithaca and believe this letter accurately summarizes the significant terms of our engagement. If you have any questions,please let us know. If you agree with the terms of our engagement as described in this letter, please sign the enclosed copy and return it to us. Very truly yours, (S/a Jo Certified Public Accountants RESPONSE: This letter correctly sets forth the understanding of the Town of Ithaca. By: Title: Budget Officer Date: Davie Kaplan Chapman Braverman Certified Public Accountants Business and Financial Consultants 1000 Frst Federal Pla"a Rochester,New Yak 14614 Tel:585-454 4161 To the Partners Fax:585-454-2573 Sciarabba Walker& Co., LLP We have reviewed the system of quality control for the accounting and auditing practice of Sciarabba Walker& Co., LLP (the firm)in effect for the year ended June 30, 2005. A system of • quality control encompasses the firm's organizational structure, the policies adopted and procedures established to provide it with reasonable assurance of conforming with professional standards. The elements of quality control are described in the Statements on Quality Control Standards issued by the American Institute of CPAs (AICPA). The firm is responsible for designing a system of quality control and complying with it to provide the firm reasonable assurance of conforming with professional standards in all material respects. Our responsibility is to express an opinion on the design of the system of quality control and the firm's compliance with its system of quality control based on our review. Our review was conducted in accordance with standards established by the Peer Review Board of the AICPA. During our review, we read required representations from the firm, interviewed firm personnel and obtained an understanding of the nature of the firm's accounting and auditing practice, and the design of the firm's system of quality control sufficient to assess the risks implicit in its practice. Based on our assessments, we selected engagements and administrative files to test for conformity with professional standards and compliance with the firm's system of quality control. The engagements selected represented a reasonable cross- section of the firm's accounting and auditing practice with emphasis on higher-risk engagements. The engagements selected included among others, audits of Employee Benefit Plans, audits of credit unions and engagements performed under Government Auditing Standards. Prior to concluding the review, we reassessed the adequacy of the scope of the peer review procedures and met with firm management to discuss the results of our review. We believe that the procedures we performed provide a reasonable basis for our opinion. In performing our review, we obtained an understanding of the system of quality control for the firm's accounting and auditing practice. In addition, we tested compliance with the firm's quality control policies and procedures to the extent we considered appropriate. These tests covered the application of the firm's policies and procedures on selected engagements. Our review was based on selected tests; therefore, it would not necessarily detect all weaknesses in the system of quality control or all instances of noncompliance with it. There are inherent limitations in the effectiveness of any system of quality control and, therefore, noncompliance with the system of quality control may occur and not be detected. Projection of any evaluation of a system of quality control to future periods is subject to the risk that the system of quality control may become inadequate because of changes in conditions, or because the degree of compliance with the policies or procedures may deteriorate. A Piurw..ional Corporation Independent Member-BKR International In our opinion, the system of quality control for the accounting and auditing practice of Sciarabba Walker & Co., LLP in effect for the year ended June 30, 2005, has been designed to meet the requirements of the quality control standards for an accounting and auditing practice established by the AICPA and was complied with during the year then ended to provide the firm with reasonable assurance of conforming with �professional standards. • January 12,2006 • • Davie Kaplan Chapman&Braverman Certified Public Accountants o F rT ., §fj 3. TOWN OF ITHACA Alie 215 N. Tioga Street, Ithaca, N.Y. 14850 �r?' Yo4- (607) 273-1721 www.town.ithaca.ny.us ACCOUNTING EXT 113 ACarvillctown.ithaca.ny.us HUMAN RESOURCES EXT 115 TOWN CLERK EXT 112 ENGINEERING EXT 128 PLANNING EXT 120 ZONING EXT 120 or 128 TOWN HALL FAX(607)273-1704 PUBLIC WORKS FACILITY(607)273-1656 August 4, 2009 Sciarabba Walker&Co, LLP 200 East Buffalo Street, Suite 402 Ithaca, New York 14850 In connection with your engagement to apply agreed-upon procedures to the year ended December 31, 2008, we confirm, to the best of our knowledge and belief, the following representations made to you during your engagement. 1. We are responsible for the presentation of the year in accordance with the following criteria: a. Monthly reports issued to NYS Comptroller are accurate and filed and submitted timely. b. Bank account reconciliations are prepared accurately and timely. c. Disbursements from bail accounts are reasonable. d. Receipt book agrees with tickets issued and receipts are issued in numeric and date order. 2. As of December 31, 2008, the year is presented in accordance with the criteria outlined above. 3. We are responsible for selecting the criteria and for determining that such criteria are appropriate for our purposes. 4. We have made available to you all information that we believe is relevant to the year. 5. We have responded fully to all inquiries made to us by you during the engagement. 6. No events have occurred subsequent to December 31, 2008 that would require adjustment to or modification of the year. 7. Your report is intended solely for the information and use of The Town of Ithaca and Office of State Comptroller Bureau of Justice Court Fund and is not intended to be and should not be used by anyone other than those specified parties. Signature: 94 L.Lt.[,( Title: Budget Officer OF IT H -�- 9 TOWN OF ITHACA +� + 215 N. Tioga Street, Ithaca, N.Y. 14850 w Yo4 (607) 273-1721 www.town.ithaca.ny.us ACCOUNTING EXT 113 ACarvill@town.ithaca.ny.us HUMAN RESOURCES EXT 115 TOWN CLERK EXT 112 ENGINEERING EXT 128 PLANNING EXT 120 ZONING EXT 120 or 128 TOWN HALL FAX(607)273-1704 PUBLIC WORKS FACILITY(607)273-1656 August 3, 2009 Sciarabba Walker & Co., LLP 200 East Buffalo St., Ste 402 Ithaca, NY 14850 We are providing this letter in connection with your audit of the financial statements of the Town of Ithaca as of December 31, 2008 and for the period then ended for the purpose of expressing an opinion as to whether the financial statements present fairly, in all material respects, the respective financial position of the governmental activities, each major fund, and the aggregate remaining fund information of the Town of Ithaca and the respective changes in financial position in conformity with U.S. generally accepted accounting principles. We confirm that we are responsible for the fair presentation of the previously mentioned financial statements in conformity with U.S. generally accepted accounting principles. We are also responsible for adopting sound accounting policies, establishing and maintaining internal control, and preventing and detecting fraud We confirm, to the best of our knowledge and belief, as of August 3, 2009, the following representations made to you during your audit. 1 . The financial statements referred to above are fairly presented in conformity with U.S. generally accepted accounting principles and include all properly classified funds and other financial information of the primary government and all component units required by generally accepted accounting principles to be included in the financial reporting entity. 2. We have made available to you all— a. Financial records and related data. b. Minutes of the meetings of the Town Board or summaries of actions of recent meetings for which minutes have not yet been prepared. 3. There have been no communications from regulatory agencies concerning noncompliance with, or deficiencies in, financial reporting practices. 4. There are no material transactions that have not been properly recorded in the accounting records underlying the financial statements. 5. We believe the effects of the uncorrected financial statement misstatements summarized in the attached schedule are immaterial, both individually and in the aggregate, to the financial • statements taken as a whole. 6. We acknowledge our responsibility for the design and implementation of programs and controls to prevent and detect fraud. 7. We have no knowledge of any fraud or suspected fraud affecting the entity involving: a. Management, b. Employees who have significant roles in internal control, or c. Others where the fraud could have a material effect on the financial statements. 8. We have no knowledge of any allegations of fraud or suspected fraud affecting the entity received in communications from • employees, former employees, analysts, regulators, or others. • 9. The Town of Ithaca has no plans or intentions that may materially affect the carrying value or classification of assets, liabilities, or fund equity. 10. The following, if any, have been properly recorded or disclosed in the financial statements: a. Related party transactions, including revenues, expenditures/expenses, loans, transfers, leasing arrangements, and guarantees, and amounts receivable from or payable to related parties. • b. Guarantees, whether written or oral, under which the Town of Ithaca is contingently liable. c. All accounting estimates that could be material to the financial statements, including the key factors and significant assumptions underlying those estimates, and we believe the estimates are reasonable in the circumstances, consistently applied and adequately disclosed. 11. We are responsible for compliance with the laws, regulations, and provisions of contracts applicable to us, including tax or debt limits and debt contracts; and we have identified and disclosed to you all laws, regulations and provisions of contracts that we believe have a direct and material effect on the determination of financial statement amounts, or other financial data significant to the audit objectives, including legal and contractual provisions for reporting specific activities in separate funds. 12. There are no— a. Violations or possible violations of budget ordinances, laws and regulations (including those pertaining to adopting, approving, and amending budgets), provisions of contracts, tax or debt limits, and any related debt covenants whose effects should be considered for disclosure in the financial statements or as a basis for recording a loss contingency. b. Unasserted claims or assessments that our lawyer has advised us are probable of assertion and must be disclosed in accordance with Financial Accounting Standards Board (FASB) Statement No. 5, Accounting for Contingencies. We have disclosed to you potential litigation involving the Southern Cayuga Lake Intermunicipal Water Commission, which is a joint venture that the Town of Ithaca participates in. c. Other liabilities or gain or loss contingencies that are required to be accrued or disclosed by FASB Statement No. 5. d. Reservations or designation of fund equity that were not properly authorized and approved. 13. The Town of Ithaca has satisfactory title to all owned assets, and there are no liens or encumbrances on such assets nor has any asset been pledged as collateral. 14. The Town of Ithaca has complied with all aspects of contractual agreements that would have a material effect on the financial statements in the event of noncompliance. 15. We have designated a competent management-level individual to oversee your services and have made all management decisions and performed all management functions. We have reviewed, approved and accepted responsibility for those financial statements and related notes. 16. The financial statements include all component units as well as joint ventures with an equity interest, and properly disclose all other joint ventures and other related organizations. 17. We have followed all applicable laws and regulations in adopting, approving, and amending budgets. 18. The financial statements properly classify all funds and activities. 19. All funds that meet the quantitative criteria in GASB Statement Nos. 34 and 37 for presentation as major are identified and presented as such and all other funds that are presented as major are particularly important to financial statement users. 20. Net asset components (invested in capital assets, net of related debt; restricted; and unrestricted) and fund balance reserves and designations are properly classified and, if applicable, approved. 21. Expenses have been appropriately classified in or allocated to functions and programs in the statement of activities, and allocations have been made on a reasonable basis. 22. Revenues are appropriately classified in the statement of activities within program revenues, general revenues, contributions to term or permanent endowments, or contributions to permanent fund principal. 23. Interfund, internal, and intra-entity activity and balances have been appropriately classified and reported. 24. Deposits and investment securities are properly classified in category of custodial credit risk. 25. Capital assets, including infrastructure assets, are properly capitalized, reported, and, if applicable, depreciated. 26. Required supplementary information (RSI) is measured and presented within prescribed guidelines. To the best of our knowledge and belief, no events, including instances of noncompliance, have occurred subsequent to the balance sheet date and through the date of this letter that would require adjustment to or disclosure in the aforementioned financial statements. Signed: p Budget Officer Title: , '.l • REGULAR MEETING OF THE ITHACA TOWN BOARD MONDAY, APRIL 7, 2008 TB RESOLUTION NO. 2008- : Amend and Restate the Model Plan of the Deferred Compensation , Plan WHEREAS, the New York State Deferred Compensation Board (the "Board"), pursuant to Section 5 of the New York State Finance Law ("Section 5') and the Regulations of the New York State Deferred Compensation Board (the "Regulations"), has promulgated the Plan Document of the Deferred Compensation Plan for Employees of the Town of Ithaca (the "Model Plan") and offers the Model Plan for adoption by local employers; WHEREAS, Town of Ithaca, pursuant to Section 5 and the Regulations, has adopted and currently administers the Model Plan known as the Deferred Compensation Plan for Employees of Town of Ithaca; WHEREAS, effective December 7, 2007 the Board amended the Model Plan to adopt provisions • Expanding the eligibility for unforeseeable emergency withdrawals • Permitting law enforcement officers, firefighters, members of a rescue squad or ambulance crew who have retired for service or disability to request a plan distribution of up to $3,000 annually to pay for health insurance or qualified long-term care premiums for themselves, their spouse or dependents. • Permitting a beneficiary who is not the spouse of the deceased Participant to transfer their Plan account directly to an IRA. • Permitting a Participant who is eligible for a distribution to rollover all or a portion of their Plan account to a Roth IRA. WHEREAS, the Board has offered for adoption the amended and restated Model Plan to each Model Plan sponsored by a local employer in accordance with the Regulations; and WHEREAS, upon due deliberation, Town of Ithaca has concluded that it is prudent and appropriate to amend the Deferred Compensation Plan for Employees of the Town of Ithaca by adopting the amended Model Plan. NOW,THEREFORE, BE IT RESOLVED, that the Town of Ithaca hereby amends the Deferred Compensation Plan for Employees of the Town of Ithaca by adopting the amended Model Plan effective December 7, 2007, in the form attached hereto as Exhibit A. MOVED: SECONDED: IN WITNESS WHEREOF, the undersigned have executed this Resolution in Tompkins County, New York this 71h day of April 2008 and directed that it be filed as appropriate. 011/16 f4 ,III ' NYS DEFERRED v ) FREDER CK J.JACOBS C it COMPENSATION DIANA JONES BITTER P � ' I BOARD MICHAEL A. AVELLA - ''Ex s,oa�"' www.nysdcp.com January 30, 2008 Ms. Catherine Valentino Town of Ithaca 215 N. Tioga Street Ithaca, NY 14850 Dear Ms. Valentino: This letter is to provide you with notice of recent amendments to the plan document for the Deferred Compensation Plan for Employees of the Town of Ithaca (the "Model Plan'), which have been adopted effective December 7, 2007 (unless otherwise indicated). This letter is also to provide you with information regarding amendments to Board Regulations that affect the filing of your Model Plan and other relevant issues. Issues Relating to the Model Plan The new version of the Model Plan is the only version sponsored by the Deferred Compensation Board of the State of New York (the "Board'). A copy of the amended Model Plan document and related materials has been sent to you or your designee via e-mail at the following address: jdrake@town.ithaca.ny.us. The amendments to the Model Plan, which are more fully explained in the e-mail attachment, include the following provisions: • Expands the eligibility for an unforeseeable emergency withdrawal to include an unforeseeable emergency related to a participant's beneficiary even if the beneficiary is not a spouse or dependent. • Permits law enforcement officers, firefighters, members of a rescue squad or ambulance crew who have retired for service or disability to request a distribution of up to $3,000 annually to pay for health insurance or qualified long-term care premiums for themselves, their spouse or dependents. The distribution must be paid to the insurance provider. • Permits a beneficiary who is not the spouse of the deceased Participant to transfer assets directly to an IRA. • Permits a Participant who is eligible for a distribution to rollover all or a portion of their Plan account to a Roth IRA. The Participant's income cannot exceed $100,000 and the Participant will be required to pay income taxes on the rollover in the year of the rollover. The e-mail attachment includes information pertaining to the amendments as well as the contribution limits that are effective for calendar year 2008. NEW YORK STATE DEFERRED COMPENSATION BOARD ROOM 124,EMPIRE STATE PT.AZA CONCOURSE—NORTH P.O.BOX 2103 ALBANY,NY 12220-2103 (518)473-6619 Fax: (518)473-7255 � • Model Plan Sponsors must adopt the amended Model Plan as soon as possible but no later than December 31, 2011. To assist you in adopting the amended Model Plan, the following materials are included in the electronic copy being provided to you or your designee: • Instructions Regarding the Adoption of the amended Model Plan and Affidavit • Summary of Changes to the Model Plan Document • Sample Adoption Resolution • Civil Service Sample Filing Package • • Affidavit • E-mail Address Request Form (also included in hardcopy) • Model Plan, including amendments through December 7, 2007 • Rules and Regulations of the New York State Deferred Compensation Board Effective June 21, 2006 - Amendments to Board Regulations The Board adopted the following amendments to the Rules and Regulations of the New York State Deferred Compensation Board at a public meeting on June 2, 2006. A copy of the amended Rules and Regulations, effective June 21, 2006, has been sent to you or your designee via the above referenced e-mail. The following is a summary of the changes due to these amendments: Amendment # 1 — Amends subdivision (c) of section 9002.2. This amendment permits a local model plan sponsor to submit an affidavit attesting that the materials required to be submitted upon adopting an approved amendment to the model plan document are identical to those submitted in the most recent filing or to submit only those documents that are not identical. The Board has prepared an affidavit for this purpose. Reference is made to this change in procedure in the Instructions Regarding the Adoption of the amended Model Plan and Affidavit. Amendment # 2 — Provides that a financial organization selected in a competitive selection process to manage the assets of a stable income fund may be allowed to engage in the following fund management activities: (1) investing in a guaranteed investment contract, (2) purchasing a wrap contract applicable to the assets of the stable income fund, or (3) allocating the assets of a stable income fund between or among other financial organizations selected by the Board or deferred compensation committee, as applicable. This amendment gives an overall manager for a stable income fund authority to allocate assets of the fund among sub-advisers, wrap providers and Guaranteed Investment Contracts. Subsection (c) of section 9003.5 is amended, with conditions, to include these powers. Section 9000.2 is amended to add definitions for the terms "guaranteed investment contract," "stable income fund" and "wrap contract." Amendment # 3 — Amends Section 9003.1 by inserting paragraph (b). Permits a model plan committee to select and contract with a firm of public accountants through an RFP issued by the • • plan sponsor for other employer purposes provided that specific requirements are met. While the firm of certified public accountants may be the same firm that is under contract with the local employer for other auditing services, the contract for plan auditing purposes must be separate from other auditing services and must comply with the Board's Rules. Amendment # 4 —Amends section 9004.1 to clarify that information obtained by a contractor may be used only for plan purposes and that the contractor may not use plan information to solicit or induce any person to invest in or purchase any product offered by that contractor. Amendment # 5 — This is a technical amendment of section 9003.6 to conform to the definitions added to section 9000.2 regarding Guaranteed Investment Contracts. If you did not receive an electronic copy of the above-referenced material, please contact the Board's staff at the following address to request a copy. Electronic versions of these materials may also be obtained from the Board's website www.goer.state.ny.us/nysdcp. If you have any questions or need assistance regarding these issues, you may contact the Board's staff. New York State Deferred Compensation Plan Empire State Plaza Station P.O. Box 2103 Albany, NY 12220-2103 Attention: Edward Lilly, Executive Director David Fischer, Deputy Executive Director E mail: dfischer©nysdcp.com Telephone: 518-473-6619 Facsimile: 518-473-7255 Thank you for your attention to this matter. Very truly yours, Edward Lilly Executive Director Enclosure cc: Kevin Hill, Department of Civil Service