HomeMy Public PortalAboutTritown 6-30-16 final FSORLEANS, BREWSTER, AND EASTHAM
GROUNDWATER PROTECTION DISTRICT
FINANCIAL STATEMENTS AND
MANAGEMENT’S DISCUSSION AND ANALYSIS
WITH INDEPENDENT AUDITOR’S REPORT
FOR THE YEAR ENDED JUNE 30, 2016
ORLEANS, BREWSTER, AND EASTHAM GROUNDWATER PROTECTION DISTRICT
FINANCIAL STATEMENTS AND MANAGEMENT’S DISCUSSION AND ANALYSIS
WITH INDEPENDENT AUDITOR’S REPORT
FOR THE YEAR ENDED JUNE 30, 2016
TABLE OF CONTENTS
Independent Auditor’s Report i
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 iii
MANAGEMENT’S DISCUSSION AND ANALYSIS v
BASIC FINANCIAL STATEMENTS:
Statement of Net Position 1
Statement of Revenues, Expenses, and Changes in Net Position 2
Statement of Cash Flows 3
Notes to Financial Statements 4
REQUIRED SUPPLEMENTARY INFORMATION:
Schedule of Pension Plan Contributions 17
Schedule of Funding Progress –District’s Other Post-Employment
Benefit (OPEB) Plan 18
MANAGEMENT’S DISCUSSION AND ANALYSIS
ORLEANS, BREWSTER, AND EASTHAM GROUNDWATER PROTECTION DISTRICT
Management’s Discussion and Analysis
June 30, 2016
v
As management of the Orleans, Brewster, and Eastham Groundwater Protection
District (the District), we offer readers of the District’s financial statements this narrative
overview and analysis of the financial activities of the District for the year ended June 30, 2016.
Basic Financial Statements
The basic financial statements are prepared using the accrual basis of accounting.
Revenue is recorded when earned, and expenses are recorded when incurred. The basic
financial statements include a statement of net position, a statement of revenues, expenses, and
changes in net position; a statement of cash flows and notes to the financial statements.
The statement of net position presents information on the assets, deferred outflows of
resources,liabilities and deferred inflows of resources of the District, with the difference being
reported as net position.
The statement of revenues, expenses, and changes in net position report the operating
and non-operating revenues and expenses of the District for the fiscal year. The net result of
these activities combined with the beginning of the year net position reconciles to the net
position at the end of the current fiscal year.
The statement of cash flows reports the changes in cash for the year resulting from
operating and investing activities. The net result of the changes in cash for the year, when
added to the balance of cash at the beginning of the year, equals cash at the end of the year.
The notes to the financial statements provide additional information that is essential to
a full understanding of the data provided in the financial statements. The notes to the financial
statements follow the basic financial statements described above.
Required supplementary information as mandated by the Government Accounting
Standards Board (GASB) is presented following the financial statements and related notes to
provide additional analysis.
Financial Highlights
The assets and deferred outflows of resources of the District were exceeded by its liabilities
and deferred inflows of resources at the end of the most recent fiscal year by approximately
$1.1 million (net position).This deficit was due primarily to the District’s net pension
liability and net other post-employment benefit (OPEB) obligation of approximately $900
thousand and $370 thousand,respectively.
The total cost of all District services for fiscal year 2016 was approximately $1.3 million.
Overall, net position of the District decreased by approximately $900,000. This is after
providing for $302,000 of depreciation and a capital asset impairment loss of $552,000 in
fiscal year 2016.
ORLEANS, BREWSTER, AND EASTHAM GROUNDWATER PROTECTION DISTRICT
Management’s Discussion and Analysis
June 30, 2016
vi
Current Financial Conditions
In accordance with votes of the member towns, on February 11, 2016, the Board of
Managers approved to cease the operations of the District on June 1, 2016. Certain employees
will continue to work until the end of August, 2016.
Condensed Financial Information
As noted earlier, net position was in a deficit of approximately $1.1 million at the close
of the most recent fiscal year as demonstrated in the following table.
2016 2015
Cash and cash equivalents $ 309,725 $ 132,353
Other current assets 274 84,666
Capital assets, net of accumulated depreciation - 854,822
Total assets 309,999 1,071,841
Deferred outflows of resources 73,033 1,382
Total assets and deferred outflows $ 383,032 $ 1,073,223
Current liabilities $ 195,755 $ 64,454
Long-term liabilities 1,269,713 1,181,854
Total liabilities 1,465,468 1,246,308
Deferred inflows of resources 229 -
Total liabilities and deferred inflows $ 1,465,697 $ 1,246,308
Net investment in capital assets $$ 854,822
Unrestricted (1,082,665) (1,027,907)
Total net position $(1,082,665)$( 173,085)
Operating revenues $ 989,776 $1,005,438
Operating expenses (1,347,085) (1,420,133)
Operating loss ( 357,309) ( 414,695)
Investment income 290 141
Impairment loss (552,561) -
Change in net position $( 909,580)$( 414,554)
Capital Assets
As of June 30, 2016, the District had no capital assets due to an impairment loss
recognized in the amount of $553 thousand. The District’s investment in capital assets as of
June 30,2015 amounted to approximately $850 thousand,which is net of accumulated
depreciation of $19.38 million. The investment in capital assets includes the plant facility and
improvements, including machinery and equipment.
ORLEANS, BREWSTER, AND EASTHAM GROUNDWATER PROTECTION DISTRICT
Management’s Discussion and Analysis
June 30, 2016
vii
Requests for Information
This financial report is designed to provide a general overview of the District’s
finances for all those with an interest in the District's finances. Questions concerning any of the
information provided in this report or requests for additional financial information should be
addressed to the Orleans, Brewster, and Eastham Groundwater Protection District, Attn: John
Kelly, Town Administrator, 19 School Street, 2nd floor, Orleans, MA 02653-6773.
BASIC FINANCIAL STATEMENTS
ORLEANS, BREWSTER, AND EASTHAM GROUNDWATER PROTECTION DISTRICT
Statement of Net Position
June 30, 2016
Totals
Cash and cash equivalents 309,725$
User charges receivable 274
Total assets 309,999
Changes in proportionate share of collective pension contributions 1,659
Net difference between projected and actual pension earnings 71,374
Total deferred outflows of resources 73,033
Total assets and deferred outflows of resources 383,032$
Accounts payable 28,688$
Salaries and withholdings payable 4,828
Severance package payable 84,931
Compensated absences 77,308
Long-term liabilities:
Other post-employment benefits 370,290
Net pension liability 899,423
Total liabilities 1,465,468
Changes in proportionate share of collective pension amounts 229
Total deferred inflows of resources 229
Unrestricted (1,082,665)
Total net position (1,082,665)
Total liabilities, deferred inflows of resources and net position 383,032$
ASSETS
LIABILITIES
NET POSITION
DEFERRED OUTFLOWS OF RESOURCES
DEFERRED INFLOWS OF RESOURCES
The accompanying notes are an integral part of these financial statements.
1
ORLEANS, BREWSTER, AND EASTHAM GROUNDWATER PROTECTION DISTRICT
Statement of Revenues, Expenses, and Changes in Net Position
For the Year Ended June 30, 2016
Totals
Operating revenues:
User charges 971,600$
Capital member assessment 16,656
Finance charges 1,520
Total operating revenues 989,776
Operating expenses:
Payroll, fringe benefits, and related costs 711,618
Chemicals 22,893
Utilities 95,237
Lab testing 9,130
Uniform service 1,635
Maintenance, repairs, and supplies 37,716
Sludge/compost disposal 100,205
Professional fees 11,974
Insurance 25,908
Office expense and supplies 3,361
Computer expense and office equipment leases 11,951
Postage and freight 1,981
Vehicle maintenance and fuel 6,424
Miscellaneous 4,791
Depreciation 302,261
Total operating expenditures 1,347,085
Operating loss (357,309)
Nonoperating revenues:
Interest income 290
Special item:
Impairment loss on capital assets (552,561)
Change in net position (909,580)
Net position at beginning of year (173,085)
Net position at end of year (1,082,665)$
The accompanying notes are an integral part of these financial statements.
2
ORLEANS, BREWSTER, AND EASTHAM GROUNDWATER PROTECTION DISTRICT
Statement of Cash Flows
For the Year Ended June 30, 2016
Totals
Cash flows from operating activities:
Cash received from users 1,051,496$
Cash received from assessments 16,656
Cash paid to employees and for employee benefits (600,535)
Cash paid to vendors (290,535)
Net cash provided by operating activities 177,082
Cash flows from investing activities:
Cash received for interest 290
Net cash provided by investing activities 290
Net increase in cash 177,372
Cash and cash equivalents, beginning of year 132,353
Cash and cash equivalents, end of year 309,725$
Reconciliation of operating income to net cash provided
by operating activities:
Operating loss (357,309)$
Depreciation expense 302,261
Changes in operating assets and liabilities:
User charges receivable 78,376
Prepaid expense 6,016
Net changes in proportionate share of collective pension contributions (1,659)
Net change in projected and actual pension earnings (69,992)
Accounts payable (27,992)
Salaries and withholdings payable (2,946)
Severance package payable 84,931
Compensated absences 10,940
Other post-employment benefits 61,535
Net pension liability 92,692
Net change in proportionate share of collective pension amounts 229
Net cash provided by operating activities 177,082$
The accompanying notes are an integral part of these financial statements.
3
NOTES TO FINANCIAL STATEMENTS
ORLEANS, BREWSTER, AND EASTHAM GROUNDWATER PROTECTION DISTRICT
Notes to the Financial Statements
June 30, 2016
4
Note 1. Organization and Reporting Entity
A. Organization
Orleans, Brewster, and Eastham Groundwater Protection District (the District), Orleans,
Massachusetts, was established under Chapter 327 of the Acts of 1988 of the Massachusetts General Laws
for the purpose of treating and disposing of sewage and offal, including septic tank pumping’s. The
District commenced full operations on March 19, 1990, with plant and facilities used exclusively by the
District under an inter-municipal agreement with member towns of Orleans, Brewster, and Eastham. The
plant and facilities were developed, constructed, and financed by member towns with federal and state
grants and member contributions.
The District is governed by a three-member Board of Managers appointed by the Chairman of the
Board of Selectmen of each member town. The District does not have the authority to borrow money. Its
members are responsible for funding deficits of the District (See Note 12).
B. Reporting Entity
General
The accompanying financial statements present the District (the primary government) and its
component units. Component units are included in the reporting entity if their operational and financial
relationships with the District are significant. Pursuant to these criteria, the District did not identify any
component units requiring inclusion in the accompanying financial statements.
Joint Ventures
The District has entered into a joint venture with other municipalities to pool resources and share
the costs, risks, and rewards of providing goods or services to venture participants directly, or for the
benefit of the general public or specific recipients. The following is the District’s joint venture, its
purpose, and the annual amounts paid by the District. Financial statements may be obtained from the joint
venture by contacting them directly. The District does not have an equity interest in the joint venture.
2016
Joint venture and address Purpose District’s Payments
Cape Cod Municipal Health Group
c/o Group Benefit Strategies
27 Midstate Office Park, Suite 204
Auburn, MA 01501
Barnstable County Retirement Assoc.
To provide employee health benefits
Employee pension
$57,183
$ 78,594
The health care benefits consists of the total amounts billed to the District for all plans and is paid by
a 75% and 25% primary care premium formula by the District and employees, respectively. The District
budgets annually for its estimated share of contributions (See Note 12).
ORLEANS, BREWSTER, AND EASTHAM GROUNDWATER PROTECTION DISTRICT
Notes to the Financial Statements
June 30, 2016
5
Note 2. Summary of Significant Accounting Policies
A. Basis of Presentation
The accounting policies of the District conform to generally accepted accounting principles
applicable to governmental units and the financial statements conform to the reporting presentation set
forth in “Governmental Accounting and Financial Reporting Standards” issued by the Governmental
Accounting Standards Board (GASB). Accordingly, the District uses the accrual basis of accounting,
which recognizes revenue when earned and liabilities when incurred, regardless of the timing of the related
cash flows.
B. Operating and Non-operating Revenue and Expense
Operating revenues and expenses are distinguished from non-operating items. Operating revenues
and expenses are principally derived from user charges billed to property owners, and haulers on the basis
of weight and gallons of sewage discharged for treatment. Operating revenues are recognized when sewage
is discharged and are considered fully collectible. Operating expenses include salaries and benefits for
District personnel, sewage treatment and monitoring costs, as well as general administrative expenses and
depreciation on the plant facility. All revenues and expenses not meeting this definition are reported as
non-operating revenues and expenses.
C. Fair Value Measurement
The District measures assets and liabilities at fair value according to the hierarchy established by
generally accepted accounting principles. Fair value is the price that would be received to sell an asset or
paid to transfer a liability in an orderly transaction between market participants at the measurement date.
The hierarchy is based upon valuation inputs, which are assumptions that market participants would use
when pricing an asset or a liability, including assumptions about risk. The following are levels considered:
Level 1 inputs are quoted prices in active markets for identical assets or liabilities at the
measurement date.
Level 2 inputs are directly observable for an asset or a liability (including quoted prices
for similar assets or liabilities), as well as inputs that are indirectly observable for the
asset or liability.
Level 3 inputs are unobservable for the asset or liability.
D. Cash, Cash Equivalents and Investments
Cash balances from all funds, except those required to be segregated by law, are combined to form
consolidated cash. For the purpose of the financial statements cash and cash equivalents include all
demand and savings accounts. Massachusetts General Laws and local provisions place certain limitations
on the nature of deposits and investments available. Deposits in any financial institution may not exceed
certain levels within the financial institution.
ORLEANS, BREWSTER, AND EASTHAM GROUNDWATER PROTECTION DISTRICT
Notes to the Financial Statements
June 30, 2016
6
Investments are defined as securities or other assets that (a) a government holds primarily for the
purpose of income or profit and (b) has a present service capacity based solely on its ability to generate
cash or be sold to generate cash. Generally, investments are reported according to the fair value hierarchy
established by generally accepted accounting principles. Certain investments, such as money market
investments and 2a7-like external investment pools, are reported at amortized cost. 2a7-like pools are
external investment pools that operate in conformity with the Securities and Exchange Commission’s
(SEC) Rule 2a7 as promulgated under the Investment Company Act of 1940, as amended and should be
measured at the net asset value per share provided by the pool. The District considers certificates of
deposits as investments.
Additional cash and investment note disclosures are presented in these Notes.
E. Receivables
Receivables consist of all revenues earned at year-end and not yet received, net of an allowance for
uncollectible accounts and write-offs. Allowances for uncollectible accounts receivable and write-offs are
based upon historical trends and the periodic aging of accounts receivable.
F. Capital Assets
Capital assets or leasehold improvements, if any, over the District’s capitalization threshold, are
stated at historical cost. The District generally utilizes a $5,000 per unit capitalization threshold.
Depreciation is provided over the asset’s estimated useful lives using the straight-line method of
depreciation. The range of estimated useful lives by type of asset is as follows:
Buildings 25-50 years
Improvements 10-40 years
Machinery and Equipment 3-20 years
G. Deferred Outflows and Deferred Inflows
Deferred outflows of resources, as applicable, represent a consumption of assets by the
government that is applicable to a future reporting period. These deferred outflows of resources have a
positive effect on net position and are reported after assets when applicable. Deferred inflows of
resources, as applicable, represent the acquisition of assets by the government that is applicable to a future
reporting period. These deferred inflows of resources have a negative effect on net position and are
reported after liabilities when applicable.
H. Liabilities
Liabilities represent present obligations to sacrifice resources for which the government has little
or no discretion to avoid. The primary focus is on the obligation for the government to perform. The
accounting treatment for these obligations depends on whether they are reported in the government-wide or
fund financial statements.
Current liabilities are reported in both the fund and government-wide financial statements.
Current liabilities represent obligations incurred in the operating cycle for acquisition goods, services,
accruals for salaries/wages,vacation accruals, and other obligations due or generally expected to be
liquidated within one year from the balance sheet date. Government-wide financial statements also report
other current liabilities such as accrued interest, which is reported on a full accrual basis.
ORLEANS, BREWSTER, AND EASTHAM GROUNDWATER PROTECTION DISTRICT
Notes to the Financial Statements
June 30, 2016
7
I.Equity Classifications
Equity is classified as net position and displayed in three components:
Net investment in capital assets –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. Deferred outflows of resources and deferred inflows of resources that are attributable
to the acquisition, construction, or improvement of those assets or related debt are also included in
this component of net position.
Restricted net position –Consists of restricted assets reduced by liabilities and deferred inflows of
resources related to those assets. These assets may be restricted by 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 position –Represents the net amount of the assets, deferred outflows of resources,
liabilities and deferred inflows of resources that are not included in the determination of net
investment in capital assets or the restricted component of net position.
J. Use of Estimates
The preparation of financial statements in conformity with accounting principles generally
accepted in the United States of America requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the
date of the financial statements and the reported amounts of revenues and expenditures during the
reporting period. Actual results may differ from those estimates.
Note 3. Budget Process
The District does not have a requirement for a legally adopted budget,however an annual
operating budget is adopted by the Board of Managers after January first of each year for the next fiscal
year.Budgeted items lapse at the end of the fiscal year unless otherwise voted by the Board of Managers.
The operating budget includes amounts for operation and maintenance costs of the facility.
The Board of Managers also adopts a multi-year capital plan. Capital costs not funded from
operating revenues are shared equally by the member Towns of the District as provided for in the
Intermunicipal Agreement.
Note 4. Cash and Cash Equivalents
Massachusetts General Laws, Chapter 44, Sections 54 and 55, place certain limitations on cash
deposits and investments available to the District. Authorized deposits include demand deposits, term
deposits, and certificates of deposit in trust companies, national banks, savings banks, and certain other
financial institutions. Deposits may not exceed certain levels without collateralization of the excess by the
financial institution involved. The District may also invest in securities issued by or unconditionally
guaranteed by the U.S. Government or an agency thereof, and having a maturity from date of purchase of
one year or less. The District may also invest in repurchase agreements guaranteed by such government
securities with maturity dates of not more than ninety days from date of purchase. The District may invest
in units of the Massachusetts Municipal Depository Trust (MMDT), a pooled investment account. The
District does not have a formal depository and investment policy which addresses the various risks
associated with maintaining its funds.
ORLEANS, BREWSTER, AND EASTHAM GROUNDWATER PROTECTION DISTRICT
Notes to the Financial Statements
June 30, 2016
8
The District maintains deposits in an authorized financial institution. In case of deposits, custodial
credit risk is the risk that in the event of a bank failure, the District’s deposits may not be returned. The
District does not have a formal deposit policy for custodial risk. At year-end,deposits totaled $316,302 and
had a carrying amount of $309,725, which included cash equivalents of $64,920 on deposit in MMDT. Of
the deposit amounts, $250,000 was covered by federal depository insurance. The difference between
deposit amounts and insured amounts consists of the investments in MMDT. The difference between bank
deposits and carrying amounts consists primarily of outstanding checks and deposits in transit.
The District does not have a formal investment policy; however, the District’s only investments/cash
equivalents consist of units of Massachusetts Municipal Depository Trust (MMDT), a pooled investment
account which qualifies as an external investment pool. The MMDT is managed on behalf of the
Treasurer of the Commonwealth of Massachusetts, who acts as trustee. Financial reports of the MMDT
are publicly available and may be obtained by contacting the MMDT directly. This account is valued at
amortized cost. The balance invested in MMDT at June 30, 2016 is $64,920 and is reported as a cash
equivalent for fiscal reporting purposes.
Note 5. User Charges Receivable
The District reports total amounts due from customers net of any applicable allowances for
uncollectible amounts and write-offs in the accompanying Statement of Net Position. Management
believes all receivables are fully collectible and as such as not recorded an allowance for uncollectible
amounts. The District reports the following receivables as of June 30, 2016:
Gross Amount
Allowance for
Uncollectible Net Amount
Accounts receivable $ 274 $ $ 274
Total $ 274 $ $ 274
Note 6. Capital Assets
Capital assets consisted of costs of constructing and equipping the District’s plant and facilities. In
accordance with votes of the member towns, on February 11, 2016 the Board of Managers approved to
cease operations of the District on June 1, 2016. Accordingly, the remaining net book value of capital
assets in the amount of $552,561 has been reported as an impairment loss at June 30, 2016. Changes in the
Districts capital assets are as follows:
Beginning
Balances Increases Decreases
Ending
Balances
Capital assets:
Facility construction and improvements $ 20,234,358 $ $(20,234,358) $
Total capital assets 20,234,358 (20,234,358)
Less accumulated depreciation 19,379,536 302,261 (19,681,797) .
Total capital assets, net $ 854,822 $ (302,261) $ (552,561) $ .
ORLEANS, BREWSTER, AND EASTHAM GROUNDWATER PROTECTION DISTRICT
Notes to the Financial Statements
June 30, 2016
9
Note 7. Deferred Outflows of Resources and Deferred Inflows of Resources
The District reported the following deferred outflows and deferred inflows of resources at June 30,
2016. Deferred outflows of resources and deferred inflows of resources associated with the District's
participation in the Barnstable County Retirement Association (the pension plan) are to be recognized in
future pension expense in subsequent years.
Deferred Outflows of Resources Amount
Changes in proportionate share of collective pension contributions
during the measurement period $ 1,659
Net difference between projected and actual pension earnings 71,374
Total deferred outflows of resources $ 73,033
Deferred Inflows of Resources Amount
Changes in proportionate share of collective pension amounts of net
pension liability (NPL) and deferred outflows at the beginning of
the measurement period $ 229
Total deferred inflows of resources $ 229
Note 8. Long Term Obligations
The following is a summary of changes in long-term obligations for the year ended June 30, 2016.
Beginning Ending
Purpose Balance Additions Reductions Balance
Compensated absences $ 66,368 $ 10,940 $ 77,308 $
Net pension liability 806,731 92,692 899,423
Net other post-employment
benefits liability 308,755 61,535 __________ 370,290
Total governmental activities $ 1,181,854 $ 165,167 $ 77,308 $ 1,269,713
Note 9. Employee Benefits
A. Retirement Benefits
Barnstable County Retirement Association
Plan Description
The Barnstable County Retirement Association (the Plan) is a multiple-employer, cost sharing,
contributory defined benefit pension plan covering all employees of the governmental member units
deemed eligible by the Barnstable County Retirement Board (the Board). Membership in the Plan is
mandatory immediately upon the commencement of employment for all permanent employees working a
minimum of 25 hours per week. As of January 1, 2014, the Association had 50 participating employers.
ORLEANS, BREWSTER, AND EASTHAM GROUNDWATER PROTECTION DISTRICT
Notes to the Financial Statements
June 30, 2016
10
The Association is a member of the Massachusetts Contributory Retirement System and is
governed by Chapter 32 of the Massachusetts General Laws (MGL). The Public Employee Retirement
Administration Commission (PERAC) is the state agency responsible for oversight of the Commonwealth's
public retirement systems. The Association is governed by a five member Board who establish the policies
under which the Association operates. The Association issues an audited financial statement for the year
ended December 31, 2015, which may be obtained by contacting the Association directly at: Barnstable
County Retirement Association, 750 Attucks Lane, Hyannis, MA 02601.
Benefits Provided
The Association provides retirement, disability, survivor and death benefits to members and their
beneficiaries. Massachusetts General Laws (MGL) establishes uniform benefit and contribution
requirements for all contributory public employee retirement systems (PERS). Those requirements
provide for superannuation retirement allowance benefits up to a maximum of 80% of a member’s highest
three-year average annual rate of regular compensation. For employees hired after April 1, 2012,
retirement allowances are calculated on the basis of the last five years or any five consecutive years,
whichever is greater in terms of compensation. Benefit payments are based upon a member’s age, length of
credible service, and group creditable service, and group classification. The authority for amending these
provisions rests with the Legislature.
Contributions
There are three classes of membership in the retirement system: Group 1, Group 2 and Group 4.
Group 1 consists of general employees which includes clerical and administrative positions. Group 2
consists of positions that have specified as hazardous. Lastly, Group 4 consists of police officers,
firefighters and other hazardous positions.
Any individual in Group 1 or Group 2 whose membership began before January 1, 1978 and who
maintains an annuity savings fund account, is eligible to receive a superannuation retirement allowance at
age 55 or later, regardless of how many years or creditable service. There is no minimum vesting
requirements for individuals in Group 4.
Members in Group 1 and 2, hired after January 1, 1978 and prior to April 2, 2012, are eligible to
receive a superannuation retirement allowance upon the completion of 20 years of service or upon
completion of 10 years of service and upon reaching age 55.
Members in Group 1 and 2, hired on or after April 2, 2012, are eligible to receive a superannuation
retirement allowance upon the completion of 10 years of service and upon reaching age 60 (Group 1) or
age 55 (Group 2).
Governmental employers are required to pay an annual appropriation established by PERAC. The
total appropriation includes the amount to pay the pension portion of each member's retirement allowance,
an amount to amortize the actuarially determined unfunded liability to zero in accordance with the system's
funding schedule, and an additional appropriation in accordance with adopted early retirement incentive
programs. The total appropriations are payable July1 and January 1. Employers may choose to pay the
entire appropriation in July at a discount rate of approximately 2%. The pension fund appropriations are
allocated among employers based on covered payroll. The District's statutorily required contribution for
the year was $78,594.
ORLEANS, BREWSTER, AND EASTHAM GROUNDWATER PROTECTION DISTRICT
Notes to the Financial Statements
June 30, 2016
11
Pension Liabilities, expenses, and deferred outflows of resources related to pensions
The collective net pension liability of the Association was determined by an actuarial valuation as
of January 1, 2014/ At December 31, 2015:
2015
Total pension liability $ 1,502,651,474
Less: plan fiduciary net position (873,002,092)
Net pension liability $ 629,649,382
Plan’s fiduciary net position as a percentage
of total pension liability 58.10%
Total employer pension expense $ 69,712,851
The District's proportionate share of the collective net pension liability $ 899,423
The District's percentage share of the collective net pension liability 0.143%
District covered payroll $ 396,115
The District's proportionate share of pension expense recognized $ 99,581
The District's proportionate share of collective deferred outflows of resources was $73,033 and
share of collective deferred inflows of $229. The net effect of these are to be recognized in future pension
expense in future years as follows:
Net amount
recognized in future
Year pension expense
June 30, 2017 $ 18,216
June 30, 2018 18,216
June 30, 2019 18,216
June 30, 2020 17,870
June 30, 2021 286
Total $ 72,804
Actuarial Assumptions
Valuation date:January 1, 2014
Actuarial cost method:Entry Age Normal Cost Method
Amortization method:Payments to increase at 4.0%, except for 2010 Early Retirement Incentive,
which is a level payment.
Inflation rate:4.0%
Asset valuation method:Sum of actuarial value at beginning of the year, contributions and
investment earnings based on the actuarial interest assumption less benefit
payments and operating expenses plus 20% of the market value at the end
of the year in excess of that sum, plus additional adjustment toward
market value as necessary so that the final actuarial value is within 20% of
market value.
Projected salary increases:Varies by length of service with ultimate rates of 4.25% for Group 1;
4.50% for Group 2 and 4.75% for Group 4.
ORLEANS, BREWSTER, AND EASTHAM GROUNDWATER PROTECTION DISTRICT
Notes to the Financial Statements
June 30, 2016
12
Mortality rates:
Pre-retirement:The RP-2000 Employee Mortality Table projected generationally
with a Scale AA from 2010.
Healthy retiree: The RP-2000 Healthy Annuitant Mortality Table projected
generationally with a Scale AA from 2010.
Disabled retiree:The RP-2000 Healthy Annuitant Mortality Table set forward three
years for males only projected generationally with Scale AA from 2010.
The pension plan's policy in regard to the allocation of invested assets is established by PRIT.
Plan assets are managed on a total return basis with a long term objective of achieving a fully funded status
for the benefits provided through the pension plan. The long term expected rate of return on pension plan
investments was determined using a building-block method in which best-estimate ranges of expected
future real rates of return (expected returns, net pension plan investment expense and inflation) are
developed for each major asset class. These ranges are combined to produce long-term expected rate of
return by weighing the expected future real rates of return by the target asset allocation percentage and by
adding expected inflation. Best estimates of arithmetic real rates of return for each major asset class
included in the pension plan's target asset allocation as of January 1, 2014 are summarized in the following
table:
Asset Class
Target
Allocation
Long-Term Expected
Rate of Return
Domestic equity 20.0%6.6%
International developed markets equity 16.0%7.1%
International emerging markets equity 7.0%9.4%
Core fixed income 13.0%2.2%
High-yield fixed income 10.0%4.7%
Real estate 10.0%4.4%
Commodities 4.0%4.4%
Hedge fund, GTAA, risk parity 10.0%3.9%
Private equity 10.0%11.7%
Total 100.0%
Discount Rate
The discount rate used to measure the total pension liability was 7.75%. The projection of cash
flows used to determine the discount rate assumed that plan member contributions will be made at the
current contribution rates and that contributions will be made at rates equal to the difference between
actuarially determined contribution rates and the member rates. Based on those assumptions, the pension
plan's fiduciary net position was projected to be available to make all projected future benefit payments of
current plan members. Therefore, the long-term expected rate of return on pension plan investments was
applied to all period of projected benefit payments to determine the total pension liability.
Sensitivity Analysis
The following illustrates the sensitivity of the collective net pension liability to changes in the
discount rate. In particular, the table presents the Plan's and the District's proportionate share of the
collective net pension liability assuming it was calculated using a single discount rate that is one-
percentage-point lower or one-percentage-point higher than the current discount rate at December 31,
2015:
ORLEANS, BREWSTER, AND EASTHAM GROUNDWATER PROTECTION DISTRICT
Notes to the Financial Statements
June 30, 2016
13
1% Decrease to 6.75%Current Discount Rate 7.75%1% Increase to 8.75%
BCRA -Total Plan $798,489,114 $629,649,382 $486,357,107
District's proportionate share $ 1,140,602 $ 899,423 $ 694,737
B. Compensated Absences
Employees are granted vacation leave under the terms of the District’s personnel by-laws.
Vacation days may be accumulated up to 20 days depending on years of service. Upon termination,
through no fault or delinquency on the part of the employee or by retirement, resignation, or entrance into
the military, the employee is entitled to be compensated for 100% of accumulated vacation days at the then
employee's regular rate of pay.
Employees are entitled under the District personnel by-laws to accumulate sick leave at the rate of
one day per month for each month actually worked, up to a maximum of 12 days per year. Sick leave may
be accumulated from year to year up to a maximum of 150 days. Upon retirement, employees are eligible
for payment of ten percent of the dollar value of unused sick leave. Payment shall be based on the wage or
salary the employee is earning at time of retirement.
At June 30, 2016, the District’s liability for vacation and sick leave amounted to $77,308. The
liability is classified as a current liability due to the termination of all employees as of August 31, 2016.
Accrued vacation and sick leave payables are included in the accompanying Statement of Net Position
(See Note 12).
C. Severance Package
The Board of Managers approved a severance package to be paid out to the employees at the end
of their employment for approximately $85,000, to assist with the close down of the plant through August
2016, after cessation of plant operations on June 1, 2016. These costs have been recorded as a current
liability in the District’s basic financial statements. The employees will continue to work until the end of
August 2016 (See Note 12).
D. Other Post-Employment Benefits
Plan Description
The District administers a single employer defined benefit plan which provides health and dental
insurance to substantially all retired employees and their spouses (plan members). Currently, the District
has 2 retirees. The District provides health and dental benefits for retirees, beneficiaries and dependents
on a pay as you go basis. These benefits are provided for and amended under various provisions of
Massachusetts General Law (MGL), District Ordinances and the terms of collective bargaining
agreements. The Plan does not issue separate financial statements.
Funding Policy
The contribution rates of retirees are established by collective-bargaining agreements,
Massachusetts General Law, and District ordinances. The required contribution is based on pay as you go
financing requirements. All benefits are provided through a third-party joint purchasing group that
administers, assumes, and pays all claims. The District contributes up to 75% of the insurance premiums
with the remainder funded through pension benefit deductions, as applicable.
ORLEANS, BREWSTER, AND EASTHAM GROUNDWATER PROTECTION DISTRICT
Notes to the Financial Statements
June 30, 2016
14
Annual OPEB Cost and Net OPEB Obligation
The District’s annual other post-employment benefit (OPEB) cost (expense) is calculated based on
the annual required contribution of the employer (ARC), an amount actuarially determined in accordance
with the provisions of GASB Statement No. 45. Under GASB No. 45, employers with fewer than one
hundred plan members are permitted the use of an alternative measurement method. The District has
elected to utilize this method in estimating their OPEB liability. The ARC represents a level of funding
that if paid on an ongoing basis, is projected to cover normal cost each year and amortize any unfunded
actuarial liabilities (or funding excess) over a period not to exceed thirty years. The following table shows
the components of the District’s annual OPEB cost for the fiscal year, the amount actually contributed to
the plan, and changes in the District’s net OPEB obligation.
Annual OPEB cost $ 61,535
Contributions made
Increase in net OPEB obligation 61,535
Net OPEB obligation, beginning of year 308,755
Net OPEB obligation, end of year $ 370,290
Funding Status and Schedule of Funding Progress
The unfunded actuarial liability was determined using the level dollar thirty year open
amortization basis.
Alternative
Valuation
Date
(a)
Value of
Assets
(b)
Alternative
Accrued
Liability
(AAL)
(b) –(a)
Unfunded
AAL
(UAAL)
(b) / (a)
Funded
Ratio
(c)
Covered
Payroll
[(b)-(a)]/(c)
UAAL as a
Percentage
of Covered
Payroll
6/30/13 $ $ 494,325 $ 494,325 0.00%N/A N/A
6/30/11 $ $ 478,822 $ 478,822 0.00%N/A N/A
Alternative valuations of an ongoing plan involve 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.
Alternative Method and Assumptions
Projections of the benefits for financial reporting purposes are based on the substantive plan (the
plan as understood by the employer and the plan members) and include the types of benefits provided at
the time of each valuation and the historical pattern of sharing of benefit costs between employer and plan
members to that point. The alternative method and assumptions used include techniques that are designed
to reduce the effects of short-term volatility in estimated accrued liabilities and the estimated value of
assets, consistent with the long-term perspective of the calculations.
ORLEANS, BREWSTER, AND EASTHAM GROUNDWATER PROTECTION DISTRICT
Notes to the Financial Statements
June 30, 2016
15
The following methods and assumptions were utilized in the June 30, 2013 valuation:
Amortization Period:30 years open
Asset Valuation Method:Market value
Investment Rate of Return: 5.00%
Inflation Rate:3.30%
Discount Rate:5.50%
Dental:None
Healthcare Trend Rates: 5.4% for 2015, 2016+ 5%
Note 10. Risk Management
The District was exposed to various risks of loss related to general liability, medical claims, property
and casualty, workers' compensation, and unemployment compensation claims.
Buildings and property are insured against fire, theft, and natural disaster. District vehicles are
insured for losses.
As discussed in Note 1, the District participates in the Cape Cod Municipal Health Group,a
municipal joint-purchase group consisting of 51 governmental units, formed pursuant to Massachusetts
General Law Chapter 32B to provide employee insurance benefits. Employees and the District both
contribute to the Group based upon a 75% (District) and 25% (Employee) primary care premium formula.
The District budgets, annually, for its estimated share of contributions. Additional information related to
the Group may be obtained by contacting the Group directly.
The District is insured for workers' compensation for District personnel to a limit of $1,000,000 per
occurrence for each employee.
Subsequent to cessation of operations of June 1, 2016, applicable changes were made to insurance
coverages for the District.
Note 11. Implementation of GASB pronouncements
The following are pronouncements issued by the Governmental Accounting Standards Board
(GASB), which may affect the District’s financial statements:
Current pronouncements
The GASB issued Statement #72, Fair Value Measurement and Application, which is required to be
implemented in fiscal year 2016. The pronouncement addresses accounting and financial reporting issues
related to fair value measurements. The District implemented the pronouncement as applicable.
The GASB issued Statement #76, The Hierarchy of Generally Accepted Accounting Principles for
State and Local Governments, which was required to be implemented in fiscal year 2016. The
pronouncement replaced previously issued guidance and improves financial reporting by redefining the
hierarchy of generally accepted accounting principles (GAAP).The District implemented the
pronouncement as applicable.
The GASB issued Statement #79, Certain External Investment Pools and Pool Participants, which
was required to be implemented in fiscal year 2016.The pronouncement issues accounting and financial
reporting guidance regarding qualifying external investment pools and state and local governments that
participate in such external investment pools. The District implemented the pronouncement as applicable.
ORLEANS, BREWSTER, AND EASTHAM GROUNDWATER PROTECTION DISTRICT
Notes to the Financial Statements
June 30, 2016
16
Note 12. Plant Closure and Going Concern
In accordance with votes of the member towns, on February 11, 2016, the Board of Managers
approved to cease the operations of the District on June 1, 2016.As of June 1, 2016 the District is no
longer open for business and have begun the decommissioning process of the plant.
According to Special Act, Chapter 327, Section 1 as amended 2012, upon the dissolution of the
Orleans, Brewster, Eastham Ground Water Protection District, the retirement benefits including, pension
and health benefits, of vested district employees, shall be paid by the towns of Brewster, Eastham and
Orleans in equal amounts with each town paying a one-third share. The Towns have entered into two
Supplemental Intermunicipal Agreements relating to health insurance and pension benefits for retirees of
the District and construction administration for the demolition of septage treatment facility and site
restoration.
Pursuant to the Supplemental Intermunicipal Agreement relative to health insurance and pension
benefits for retirees,the District continues for administrative purposes only for the purpose of paying
retiree health insurance and pension benefits. The employer cost for these benefits will be split equally
amongst the Towns in one-third shares. The Town of Brewster will serve as the financial administrator for
the costs of these benefits and will bill the respective Towns for such costs. This agreement is effective
from December 31, 2016 through December 31, 2021.
Pursuant to the Supplemental Intermunicipal Agreement relative to construction administration for
the demolition of the septage treatment facility, the Town of Orleans will serve as financial administrator
for the costs associated with the demolition and site restoration project, and will invoice each Town for
their respective one-third share of the costs, once any remaining District funds have been exhausted. The
Board of Managers were dissolved on June 30, 2017. This agreement is in effect from July 1, 2017
through June 30, 2018.
The closure is subject to normal closing costs associated with the decommissioning process of the
septage plant. The costs are estimated to cost between $2 and $3 million for the full decommissioning,
demolition of the plant and site restoration. AECOM of Pocasset has been selected to oversee the
decommissioning. The demolition is under contract with work scheduled to begin September 2017 and site
restoration completed by April 2018. No adjustments have been made to these financial statements for the
closing costs.
As a result of the issues noted above, the District is not a going concern as of June 30, 2016.
REQUIRED SUPPLEMENTARY INFORMATION
ORLEANS, BREWSTER, AND EASTHAM GROUNDWATER PROTECTION DISTRICT
Required Supplementary Information
Schedule of Pension Plan Contributions
June 30, 2016
Schedule of pension plan contributions
A. Barnstable County Retirement Association
The Barnstable County Retirement Association (the Plan) is a multiple-employer, cost sharing contributory defined benefit pension plan covering
eligible employees (except for school department employees who serve in a teaching capacity). Based upon the actuarial valuation date of the
Plan of January 1, 2014, (current year) the following is presented.
2015 2014
Total pension liability 1,502,651,474$ 1,426,632,712$
Less:
Plan fiduciary net position (873,002,092) (862,069,292)
Net pension liability 629,649,382$ 564,563,420$
Plan fiduciary net position as a
percentage of total pension liability 58.10%60.43%
District's proportionate/allocated share of collective net pension liability 899,423$ 806,731$
District's proportionate share of pension expense 99,581$ 75,844$
District's share of collective net pension liability as a percentage of the total 0.143%0.143%
Actuarially determined contribution 78,594$ 75,844$
Contributions in relation to actuarial determined contribution (78,594)$ (75,844)$
Contribution deficiency(excess)$ $
District's covered payroll 396,115$ 374,809$
District's contributions as a percentage of covered payroll 19.84%20.24%
District's proportionate share of the collective net pension liability as a
percentage of covered payroll 227.06%215.24%
Note: This schedule is intended to present information for 10 years. Until a 10 year trend is compiled,
information is presented for those years for which information is available.
See Independent Auditor's Report.
17
ORLEANS, BREWSTER, AND EASTHAM GROUNDWATER PROTECTION DISTRICT
Required Supplementary Information
Schedule of Funding Progress –District’s Other
Post-Employment Benefit (OPEB) Plan
June 30, 2016
See Independent Auditor’s Report.
18
Schedule of Funding Progress
The unfunded actuarial liability was determined using the level dollar thirty year open
amortization basis.
Alternative
Valuation
Date
(a)
Value of
Assets
(b)
Alternative
Accrued
Liability
(AAL)
(b) –(a)
Unfunded
AAL
(UAAL)
(b) / (a)
Funded
Ratio
(c)
Covered
Payroll
[(b)-(a)]/(c)
UAAL as a
Percentage
of Covered
Payroll
6/30/13 $ $ 494,325 $ 494,325 0.00%N/A N/A
6/30/11 $ $ 478,822 $ 478,822 0.00%N/A N/A
Alternative valuations of an ongoing plan involve 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.
Alternative Method and Assumptions
Projections of the benefits for financial reporting purposes are based on the substantive plan (the
plan as understood by the employer and the plan members) and include the types of benefits provided at
the time of each valuation and the historical pattern of sharing of benefit costs between employer and plan
members to that point. The alternative method and assumptions used include techniques that are designed
to reduce the effects of short-term volatility in estimated accrued liabilities and the estimated value of
assets, consistent with the long-term perspective of the calculations.
The following methods and assumptions were utilized in the June 30, 2013 valuation:
Amortization Period:30 years open
Asset Valuation Method:Market value
Investment Rate of Return: 5.00%
Inflation Rate:3.30%
Discount Rate:5.50%
Dental:None
Healthcare Trend Rates: 5.4% for 2015, 2016+ 5%