West Haven Financial Report 6-30-10

8/7/2019 West Haven Financial Report 6-30-10

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CITY OF WEST HAVEN, CONNECTICUT

FINANCIAL REPORTJUNE 30, 2010


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FINANCIAL REPORT

TABLE OF CONTENTS

Page

I. FINANCIAL SECTION

Independent Auditors Report ...................................................................................... 1-2

Managements Discussion and Analysis ..................................................................... 3-8

BASIC FINANCIAL STATEMENTS

Government-Wide Financial Statements:

Statement of Net Assets.................................................................................... 9

Statement of Activities ....................................................................................... 10

Fund Financial Statements:

Balance Sheet Governmental Funds ............................................................. 11

Statement of Revenues, Expenditures and Changes in Fund Balances

(Deficits) Governmental Funds .................................................................... 12

Reconciliation of the Statement of Revenues, Expenditures and Changes

in Fund Balances of Governmental Funds to the Statement of Activities ...... 13

Statement of Net Assets (Deficits) - Proprietary Funds .................................... 14

Statement of Revenues, Expenses and Changes in Fund Net Assets

(Deficits) - Proprietary Funds .......................................................................... 15

Statement of Cash Flows - Proprietary Funds .................................................. 16

Statement of Fiduciary Net Assets Fiduciary Funds ...................................... 17

Statement of Changes in Fiduciary Net Assets Fiduciary Funds ................... 18

Notes to Financial Statements .................................................................................. 19-46


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FINANCIAL REPORT

TABLE OF CONTENTS

REQUIRED SUPPLEMENTARY INFORMATION

Page

Schedule of Revenues and Expenditures Budgetary Basis Budget and

Actual General Fund ............................................................................................ 47

A Reconciliation of General Fund Budgetary Basis ............................................... 48

Schedule of Funding Progress Police Pension Plan .............................................. 49

Schedule of Employer Contributions Police Pension Plan ..................................... 49

Schedule of Funding Progress OPEB Plan ............................................................ 50

Schedule of Employer Contributions OPEB Plan ................................................... 50

Note to Required Supplementary Information ........................................................... 51-52

SUPPLEMENTAL COMBINING AND NONMAJORFUND STATEMENTS AND SCHEDULES

GENERAL FUND

General Fund Revenues Budgetary Basis Budget and Actual ................... 53-54

General Fund Expenditures and Transfers Out Budgetary Basis

Budget and Actual .......................................................................................... 55-57

NONMAJOR GOVERNMENTAL FUNDS

Combining Balance Sheet ................................................................................. 60-65

Combining Statement of Revenues, Expenditures and Changes in Fund

Balances (Deficits) .......................................................................................... 66-71

INTERNAL SERVICE FUNDS

Combining Statement of Net Assets (Deficits) - Internal Service Funds .......... 73

Combining Statement of Revenues, Expenses and Changes in Fund Net

Assets (Deficits) - Internal Service Funds ...................................................... 74

Combining Statement of Cash Flows - Internal Service Funds ........................ 75

FIDUCIARY FUNDS

Combining Statement of Fiduciary Net Assets - Agency Funds ....................... 77

Combining Statement of Changes in Assets and Liabilities Agency Funds .. 78

OTHER SCHEDULES

Schedule of Property Taxes Levied, Collected and Outstanding ..................... 80-81


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McGladrey & Pullen, LLPCertified Public Accountants

INDEPENDENT AUDITOR'S REPORT

To the Honorable Mayor andMembers of the City CouncilCity of West Haven, Connecticut

We have audited the accompanying financial statements of the governmental activities, each major fund,and the aggregate remaining fund information of the City of West Haven, Connecticut as of and for theyear ended June 30, 2010, which collectively comprise the Citys basic financial statements, as listed inthe table of contents. These financial statements are the responsibility of the Citys management. Ourresponsibility is to express opinions on these financial statements based on our audit.

We conducted our audit in accordance with auditing standards generally accepted in the United States ofAmerica 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 andperform the audit to obtain reasonable assurance about whether the financial statements are free ofmaterial misstatement. An audit includes examining, on a test basis, evidence supporting the amountsand disclosures in the financial statements. An audit also includes assessing the accounting principlesused and significant estimates made by management, as well as evaluating the overall financialstatement presentation. We believe that our audit provides a reasonable basis for our opinions.

In our opinion, the financial statements referred to above present fairly, in all material respects, therespective financial position of the governmental activities, each major fund, and the aggregate remainingfund information of the City of West Haven, Connecticut as of June 30, 2010, and the respective changesin financial position and, where applicable, cash flows thereof, for the year then ended in conformity with

accounting principles generally accepted in the United States of America.

In accordance with Government Auditing Standards, we have also issued our report dated April 15,2011, on our consideration of the City of West Haven , Connecticuts internal control over financialreporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, andgrant agreements and other matters. The purpose of that report is to describe the scope of our testing ofinternal control over financial reporting and compliance and the results of that testing, and not to providean opinion on the internal control over financial reporting or on compliance. That report is an integral partof an audit performed in accordance with Government Auditing Standards and should be considered inassessing the results of our audit.

The management discussion and analysis, budgetary comparison information and the pension plan andother post-employment benefit plan schedules of funding progress and schedules of employer

contributions are not a required part of the basic financial statements, but are supplementary informationrequired by accounting principles generally accepted in the United States of America. We have appliedcertain limited procedures, which consisted principally of inquiries of management regarding the methodsof measurement and presentation of the required supplementary information. However, we did not auditthe information and express no opinion on it.


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Our audit was conducted for the purpose of forming opinions on the financial statements that collectivelycomprise the Citys basic financial statements. The budgetary details and the supplemental combiningand individual nonmajor fund statements and schedules are presented for purposes of additional analysisand are not a required part of the basic financial statements. The budgetary details, combining andindividual nonmajor fund statements and schedules have been subjected to the auditing proceduresapplied in the audit of the basic financial statements and, in our opinion, are fairly stated in all materialrespects in relation to the basic financial statements taken as a whole.

New Haven, ConnecticutApril 15, 2011


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The statement of net assets presents information on all of the Citys assets and liabilities, with thedifference reported as net assets. The Citys net assets the difference between assets and liabilities is one way to measure the Citys financial health or financial position. Over time, increases or decreasesin net assets may serve as an indicator of whether the financial position of the City is improving ordeteriorating. It speaks to the question of whether or not the City, as a whole, is better or worse off as aresult of this years activities. Other non-financial factors will need to be considered, however, such aschanges in the Citys property tax base and the condition of the Citys roads, to assess the overal l health

of the City of West Haven.

The statement of activities presents information showing how the Citys net assets changed during themost recent fiscal year. All of the current years revenues and expenses are taken into accountregardless of when cash is received or paid. Thus, revenues and expenses are reported in this statementfor some items that will only result in cash flow in some future fiscal period, for example uncollected taxesand earned but unused vacation leave.

Activities of the City of West Haven encompass the Citys basic services and include governmental andcommunity services, administration, public safety, health and welfare, and education. Property taxes,charges for services and state and federal grants finance most of these activities.

The government-wide financial statements (statement of net assets and statement of activities) can befound on pages 9-10 of this report.

Fund Financial Statements

A fund is a grouping of related accounts that is used to maintain control and accountability over resourcesthat have been segregated for specific activities or objectives. The City of West Haven, like other stateand local governments, uses fund accounting to ensure and demonstrate compliance with finance-relatedlegal requirements. All of the funds of the City can be divided into three categories: governmental funds,proprietary funds, and fiduciary funds.

Governmental funds. Governmental funds are used to account for essentially the same functionsreported as governmental activities in the government-wide financial statements. However, unlike thegovernment-wide financial statements, governmental fund financial statements focus on near-term inflowsand outflows of spendable resources available at the end of the fiscal year. Such information may be

useful in evaluating a governments near-term financing requirements.

Because the focus of governmental funds is narrower than that of the government-wide financialstatements, it is useful to compare the information presented for governmental funds with similarinformation presented for governmental activities in the government-wide financial statements. By doingso, readers may better understand the long-term impact of the governments near-term financingdecisions. Both the governmental fund balance sheet and the governmental fund statement of revenues,expenditures, and changes in fund balances provide a reconciliation to facilitate this comparison betweengovernmental funds and governmental activities.

The City of West Haven maintains 38 individual governmental funds. Information is presented separatelyin the governmental fund balance sheet and in the governmental fund statement of revenues,expenditures, and changes in fund balances for the General Fund, and the Capital Improvement Fund.

Data from the other governmental funds are combined into a single, aggregated presentation asNonmajor Governmental Funds.

The City of West Haven adopts an annual budget for its general fund. A budgetary comparison statementhas been provided for the General Fund to demonstrate compliance with the authorized budget. Thestatement of revenues and expenditures on a budgetary basis can be found on page 16.

The basic governmental fund financial statements (balance sheet and statement of revenues,expenditures and changes in fund balance) can be found on pages 1112 of this report.

Proprietary funds. The City maintains one type of proprietary fund. Internal service funds are anaccounting device used to accumulate and allocate costs internally among the Citys various functions.


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The City uses internal service funds to account for its self-insured medical benefits, general liability andworkers compensation. Individual fund data for the internal service funds is provided in the form ofcombining statements elsewhere in this report. Because both of these services predominantly benefitgovernmental rather than business-type activities, they have been included within governmental activitiesin the government-wide financial statements.

The basic proprietary fund financial statements can be found on pages 14-15 of this report.

Fiduciary funds. Fiduciary funds are used to account for resources held for the benefit of parties outsidethe government. Fiduciary funds are not reflected in the government-wide financial statements becausethe resources of those funds are not available to provide services to the Citys constituency. The City hasone police pension trust fund, and two agency funds. The basic fiduciary fund financial statements canbe found on pages 17-18.

Notes to the Financial Statements

The notes provide additional information that is essential to a full understanding of the data provided inthe government-wide and fund financial statements. The notes to the financial statements can be foundon pages 19-46 of this report.

Certain required supplementary information concerning the City of West Havens progress in funding itsobligation to provide pension benefits to the police employees, can be found within the schedule offunding Progress on pages 49-50 of this report.

Government-wide Financial Analysis

As noted earlier, net assets may serve over time as a useful indicator of a governments financial positionand an important determinant of its ability to finance services in the future. City of West Havengovernmental activities assets exceeded liabilities by $35.8 million on June 30, 2010.

June 30, 2010 June 30, 2009

Current and other assets 85,451$ 87,581$

Capital assets 167,272 165,130

Total assets 252,723 252,711

Current and other liabilities 29,822 28,843

Noncurrent liabilities 187,108 182,919

Total liabilities 216,930 211,762

Net assets:

Investment in capital assets - net of related debt 57,222 52,451

Unrestricted (21,429) (11,502)

Total net assets 35,793$ 40,949$

City of West Haven, Connecticut

Net Assets

(In 000's)

By far the largest portion of the City of West Havens net assets, reflects its investment in capital assets(such as land, buildings, machinery, equipment and infrastructure), less any related debt used to acquirethose assets that is still outstanding. The City uses these capital assets to provide services to citizens;


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consequently, these assets are not available for future spending. Although the City of West Havensinvestment in its capital assets is reported net of related debt, it should be noted that the resourcesneeded to repay this debt must be provided from other sources, since the capital assets themselvescannot be used to liquidate these liabilities.

Year Ended Year Ended

June 30, 2010 June 30, 2009

Revenues:

Program revenues:

Charges for services 10,934$ 10,329$

Operating grants and contributions 65,595 66,299

Capital grants and contributions 4,407 4,735

General revenues:

Property taxes 80,619 85,344

Grants not restricted to specific purposes 5,429 4,392

Unrestricted investment earnings 58 173

Total revenues 167,042 171,272

Expenses:

General Government and Library 12,135 11,837

Education 114,734 113,420

Public safety 13,660 15,409

Public works 18,660 17,839

Health and welfare 3,592 3,596

Parks and recreation 2,089 2,164

Interest on long-term debt 7,328 7,709

Total expenses 172,198 171,974

Changes in net assets (5,156) (702)

Net assets, beginning 40,949 41,651

Net assets, ending 35,793$ 40,949$


Changes in Net Assets

(In 000's)

Governmental Activities

Approximately 48.3% of the total of $167.0 million in governmental activity revenues were derived fromproperty taxes. Another 6.5% of governmental activity revenues were derived from permits and fees forlocal services and investment income. The remaining 45.2% of governmental activity revenues weregrants and payments from the State of Connecticut and the Federal Government.

For governmental activities, approximately 66.6% of the Citys expenditures relate to education. Publicsafety, public works, health and welfare, and parks and recreation account for 22.1% of expenditures.The remaining 11.3% relates to government administration, library services and interest on long-termdebt.


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Financial Analysis of the Governments Funds

As noted earlier, the City of West Haven uses fund accounting to ensure and demonstrate compliancewith finance-related legal requirements.

Governmental funds. The focus of the City of West Havens governmental funds is to provide

information on near-term inflows, outflows, and balances of spendable resources. Such information isuseful in assessing the City of West Havens financing requirements. In particular, unreserved fundbalance may serve as a useful measure of a governments net resources available for spending at theend of the fiscal year.

The General Fund is the chief operating fund of the City of West Haven. At the end of the current fiscalyear, the unreserved fund deficit in the general fund was $14.3 million. Advances to Other Funds of $3.0million were reserved for in the fund balance resulting in a $5.9 million reduction in the total general funddeficit to $10.7 million.

The Clean Water Fund has a total fund deficit of $4.9 million, a decrease of $3.8 million from the prioryear as a result of its expenses exceeding its revenues.

General Fund Budgetary Highlights

The revised final budget established by the City was $144.7 million which included a $.4 million plannedreduction to its deficit. Revenue and other financing sources were under budget by $6.1 million;additionally, expenditures were less than their budget by $.5 million. The impact net of transfers in andout is a $.4 million gain from the revised budget.

A $1.7 million lesser than budgeted tax collection was due to the $0.9 million not collected from prior yearlevies, $0.8m from interest less interest & liens. Investment income fell short of its budget by $0.4 milliondue to less investments than planned. City Clerk revenue fell short of its budget by $0.5 million dueprimarily to a lower than expected conveyance taxes. Funding from the state was down $1.5 million, andthere was a general $0.6 million shortfall from permits & general charges for services. In addition therewas $1.5 million of excess cost revenue that was credited to the Board of Education, traditionally this itemwas recorded as City revenue.

Capital Asset and Debt Administration

Capital Assets. The City of West Havens investment in capital assets for its governmental activities as ofJune 30, 2010, amounts to $301.4 million on a gross basis and $167.3 million net of accumulateddepreciation. This investment in capital assets includes land, buildings, land improvements, machineryand equipment, park facilities, roads and bridges.

June 30, 2010 June 30, 2009

Governmental funds capital assets:

Land 16,319$ 16,319$

Land Improvements 4,396 4,674

Buildings and improvements 63,440 66,388

Machinery and equipment 10,954 12,194

Infrastructure 40,121 42,961

Construction in progress 32,042 22,594

Total 167,272$ 165,130$


Capital Assets Net of Depreciation


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Long-term debt. At the end of the current fiscal year, the City of West Haven had total bonded debtoutstanding of $142.9 million; 100% of this debt is backed by the full faith and credit of the Citygovernment. The City of West Haven received a Baa2 rating from Moody's Investors Service inSeptember of 2006 and a rating of BBB- from Standard and Poors in April of 2007.

The Citys long-term debt, all in the form of general obligation bonds, increased by $2.7 during the2009/2010 fiscal year.

June 30, 2010 June 30, 2009

General obligation bonds 142,876$ 140,250$

Clean water fund 11,470 12,994

Capital leases 158 43

Total long term debt 154,504$ 153,287$

The overall statutory debt limit for the City of West Haven is equal to seven times annual receipts fromtaxation or $593,876,219. As of June 30, 2010, the City recorded general obligation debt of $142.9million, less than one-quarter of its statutory debt limits. Additional information on the Citys long-term

debt can be found on pages 33 through 37 of this report.

Economic Factors

The City receives relatively minimal State and Federal aid, it is far more insulated from the impact of Staterevenue shortfalls than many other cities and towns in Connecticut. With the Citys policy to pay as yougo for many of its capital projects, the Citys use of cash saves debt service costs from the annualoperating budget, thus helping to minimize local taxation. With an overwhelming reliance on propertytaxes, West Havens income stream is stable.

Requests for Information

This financial report is designed to provide a general overview of the City of West Havens finances for all

those with an interest in the governments finances. Questions concerning any of the informationprovided in this report or requests for additional financial information should be addressed to the FinanceDirector at City Hall, 355 Main Street, West Haven, CT 06516.


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Basic Financial Statements


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STATEMENT OF NET ASSETS

June 30, 2010

Primary

Government

Governmental

Activities

Assets

Cash and cash equivalents 4,465,085$

Receivables, net of allowance for collection losses:

Property taxes 4,816,840

Intergovernmental and other 6,840,096

Loans 768,077

Inventories 606,467

Noncurrent assets:

Long-term intergovernmental and other receivable 824,852Capital assets not being depreciated 48,361,260

Capital assets being depreciated, net of accumulated depreciation 118,910,704

Pension asset 67,130,195

Total assets 252,723,576

Liabilities

Accounts payable and accruals 19,933,980

Unearned revenue 5,039,661

Loans and notes payable 4,848,389

Noncurrent liabilities:

Due in less than one year 12,498,970

Due in more than one year 174,609,184Total liabilities 216,930,184

Net Assets

Investment in capital assets, net of related debt 57,222,245

Unrestricted (deficit) (21,428,853)

Total net assets 35,793,392$

The notes to the financial statements are an integral part of this statement.


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STATEMENT OF ACTIVITIES

For the Year Ended June 30, 2010

Net (Expense)

Revenue and

Change in

Net Assets

Operating Capital Primary

Charges for Grants and Grants and GovernmentFunctions/Programs Expenses Services Contributions Contributions Total

Primary government:

Governmental activities:

General government (10,156,411)$ 1,075,493$ 1,105,878$ -$ (7,975,040)$

Education (114,733,755) 451,161 61,049,337 1,229,357 (52,003,900)

Public safety (13,660,389) 1,331,757 125,515 - (12,203,117)

Public works (18,660,033) 6,989,208 - 3,177,312 (8,493,513)

Health and welfare (3,591,450) 184,970 3,314,724 - (91,756)

Parks and recreation (2,088,704) 901,411 - - (1,187,293)

Library and other (1,978,359) - - - (1,978,359)

Interest on long-term debt (7,328,303) - - - (7,328,303)

Total primary government (172,197,404)$ 10,934,000$ 65,595,454$ 4,406,669$ (91,261,281)

General revenues:Property taxes 80,619,411

Grants and contributions not restricted

to specific programs 5,428,729

Unrestricted investment earnings 58,032

Total general revenues 86,106,172

Change in net assets (5,155,109)

Net assets - beginning 40,948,501

Net assets - ending 35,793,392$

The notes to the financial statements are an integral part of this statement

Program Revenues


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BALANCE SHEET - GOVERNMENTAL FUNDS

June 30, 2010

Clean Nonmajor Total

General Water Governmental Governmental

Fund Fund Funds Funds

Assets

Cash and cash equivalents 3,492,892$ -$ 972,193$ 4,465,085$

Receivables (net of allowances for collection losses):

Taxes 4,816,840 - - 4,816,840

Loans - - 768,077 768,077

Intergovernmental and other 1,892,025 2,314,677 2,633,394 6,840,096

Inventory 540,924 - 65,543 606,467

Due from other funds 893,878 927,514 1,049,360 2,870,752

Advances to other funds 3,028,175 - - 3,028,175

Total assets 14,664,734$ 3,242,191$ 5,488,567$ 23,395,492$

Liabilities

Accounts payable and accruals 8,597,636$ 3,272,442$ 1,675,110$ 13,545,188$

Accrued wages 2,693,986 - - 2,693,986

Deferred revenues 5,898,112 - 2,310,425 8,208,537Unearned revenue 4,709,456 - 330,205 5,039,661

Due to other funds 3,505,522 - 569,526 4,075,048

Loans and notes payable - 4,848,389 - 4,848,389

Advances from other funds - - 3,028,175 3,028,175

Total liabilities 25,404,712 8,120,831 7,913,441 41,438,984

Fund Balances (Deficits)

Reserved for:

Inventory 540,924 - 65,543 606,467

Advances to other funds 3,028,175 - - 3,028,175

Unreserved, reported in:

General Fund (14,309,077) - - (14,309,077)

Special revenue funds - - (38,384) (38,384)Capital projects funds - (4,878,640) (2,452,033) (7,330,673)

Total fund balances (deficits) (10,739,978) (4,878,640) (2,424,874) (18,043,492)

Total liabilities and

fund balances (deficits) 14,664,734$ 3,242,191$ 5,488,567$

Amounts reported for governmental activities in the statement of

net assets are different because:

Capital assets used in governmental activities are not financial resources

and therefore, are not reported in the funds. 167,271,964

Pension and other long term assets 67,630,695

Deferred revenue 8,208,537

Internal service funds are used by management to charge the costs of

risk management to individual funds. The assets and liabilities ofthe internal service funds are included in governmental activities in

the statement of net assets. (6,402,841)

Long-term liabilities, including bonds payable, are not due and payable

in the current period and therefore are not reported in the funds. (180,705,312)

Accrued interest (2,166,159)

Net assets of governmental activities 35,793,392$


Major Fund


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STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES (DEFICITS) -

GOVERNMENTAL FUNDS


Clean Nonmajor Total

General Water Governmental Governmental

Fund Fund Funds Funds

REVENUES

Property taxes 84,739,371$ -$ -$ 84,739,371$

Intergovernmental 50,217,139 3,821,624 15,536,834 69,575,597

State on-behalf payments 6,220,000 - - 6,220,000

Income from investments 54,486 - 3,546 58,032

Charges for services 1,443,921 - 8,721,246 10,165,167

Other revenue 1,780,221 - 155,613 1,935,834

Total revenues 144,455,138 3,821,624 24,417,239 172,694,001

EXPENDITURES

Current:

General government 5,355,904 - - 5,355,904

Public safety 12,789,563 - 820,874 13,610,437

Public works 10,474,263 - 5,122,656 15,596,919

State on-behalf payments 6,220,000 - 6,220,000

Benefits and insurance 13,667,488 - - 13,667,488

Health and welfare 1,135,292 - 2,014,466 3,149,758

Library and other 1,810,410 - - 1,810,410

Parks and recreation 897,770 - 737,192 1,634,962

Education 81,807,025 - 12,459,294 94,266,319

Debt service 17,946,681 - - 17,946,681

Capital outlay - 7,588,474 3,452,580 11,041,054

Total expenditures 152,104,396 7,588,474 24,607,062 184,299,932

Revenues over (under) expenditures (7,649,258) (3,766,850) (189,823) (11,605,931)

OTHER FINANCING SOURCES (USES)

Transfers in 2,276,195 - 585,728 2,861,923

Transfers out (585,728) - (2,276,195) (2,861,923)

Capital lease proceeds - - 242,000 242,000

Issuance of bonds - - 11,716,000 11,716,000

Issuance of refunding bonds 7,420,000 - - 7,420,000

Payment to escrow (7,366,610) - - (7,366,610)

Total other financing

sources (uses) 1,743,857 - 10,267,533 12,011,390

Change in fund balances (deficits) (5,905,401) (3,766,850) 10,077,710 405,459

FUND BALANCES (DEFICITS), beginning, (4,834,577) (1,111,790) (12,502,584) (18,448,951)

FUND BALANCES (DEFICITS), ending (10,739,978)$ (4,878,640)$ (2,424,874)$ (18,043,492)$


Major Fund


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RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN

FUND BALANCES OF GOVERNMENTAL FUNDS TO THE STATEMENT OF ACTIVITIES


Amounts reported for governmental activities in the statement of activities are different because:

Net change in fund balances (deficits) total governmental funds 405,459$

Governmental funds report capital outlays as expenditures. However, in the statement of

activities, the cost of those assets is allocated over their estimated useful lives and

reported as depreciation expense. This is the amount by which outlays exceeded

depreciation in the current period. 2,142,107

Net change in previously recognized revenues in the statement of activities. (5,651,706)

Change in pension and other assets. 2,168,234

The issuance of long-term debt (e.g., bonds, leases) provides current financial resources togovernmental funds, while the repayment of the principal of long-term debt consumes the

current financial resources of governmental funds. Neither transaction, however, has any effect

on net assets. Also, governmental funds report the effect of issuance costs, premiums,

discounts, and similar items when debt is first issued, whereas these amounts are deferred

and amortized in the statement of activities. This amount is the net effect of these differences

in the treatment of long-term debt and related items. (1,366,393)

Changes in expenses reported in the statement of activities do not require the use of

current financial resources and, therefore, are not reported as expenditures in

governmental funds until they are paid. (2,605,595)

Internal service funds are used by management to charge the costs of liability and medical

insurance to individual funds. The net revenue (expense) of certain internal service funds isreported with governmental activities. (247,215)

Change in net assets of governmental activities (5,155,109)$


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STATEMENT OF NET ASSETS (DEFICITS) - PROPRIETARY FUNDS

June 30, 2010

GovernmentalActivities

Internal

Service

Funds

ASSETS

Due from other funds 1,528,648$

Total assets 1,528,648

LIABILITIES

Accounts payable 1,528,647

Claims payable 6,402,842

Total liabilities 7,931,489

NET DEFICIT

Unrestricted deficit (6,402,841)

Net deficit (6,402,841)$



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STATEMENT OF REVENUES, EXPENSES AND CHANGES IN

FUND NET ASSETS (DEFICITS) - PROPRIETARY FUNDS


Governmental

Activities

Internal

Service

Funds

OPERATING REVENUES

Charges for premiums 24,117,416$

Total operating revenues 24,117,416

OPERATING EXPENSES

Cost of claims and administration 24,364,631

Total operating expenses 24,364,631

Change in net assets (247,215)

NET ASSETS (DEFICITS), beginning (6,155,626)

NET ASSETS (DEFICITS), ending (6,402,841)$



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STATEMENT OF CASH FLOWS - PROPRIETARY FUNDS


GovernmentalActivities

Internal

Service

Funds

Cash Flows From Operating Activities

Cash received for premiums 24,218,806$

Cash paid for claims and administration (24,218,806)

Net cash used in operating activities -

Net decrease in cash and cash equivalents -

Cash and Cash Equivalents

Beginning -

Ending -$

Reconciliation of Operating Loss to Net Cash

Used in Operating Activities

Operating loss (247,215)$

Changes in assets and liabilities:

Increase in due to other funds 101,391

Increase in accounts payable (101,391)

Increase in claims payable 247,215

Net cash used in operating activities -$



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STATEMENT OF FIDUCIARY NET ASSETS - FIDUCIARY FUNDS

June 30, 2010

Pension AgencyTrust Fund Funds

ASSETS

Cash and cash equivalents 1,723,855$ 290,663$

Investments 96,724,858 -

Other Assets

Accounts receivable 12,500 14,885

Total assets 98,461,213 305,548

LIABILITIES

Due to student groups and other - 305,548

Due to other funds 324,352 -

Total liabilities 324,352 305,548

NET ASSETS HELD IN TRUST 98,136,861$ -$



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STATEMENT OF CHANGES IN FIDUCIARY NET ASSETS - FIDUCIARY FUNDS


PensionTrust Fund

ADDITIONS

Contributions

Employer 1,157,342$

Plan members 554,409

Total contributions 1,711,751

Investment Income

Interest and dividends 2,424,256

Net appreciation in fair value of investments 7,148,055

9,572,311

Less investment expenses:

Investment management fees 569,199

Net investment income 9,003,112

DEDUCTIONS

Benefits and other 4,511,315

Change in net assets 6,203,548

NET ASSETS

Beginning of year 91,933,313

End of year 98,136,861$



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Note 1. Significant Accounting Policies

Reporting entity

The City operates under a Mayor-Council form of government established by a charter and adopted by areferendum of voters on June 27, 1961. The City offers a full range of services authorized by the charter,including public safety, public works, social services, parks and recreation, education, planning, zoning,and general administrative services to its residents. The accompanying financial statements conform toaccounting principles generally accepted in the United States of America as applicable to governments.

Accounting principles generally accepted in the United States of America require that the reporting entityinclude (1) the primary government, (2) organizations for which the primary government is financiallyaccountable and (3) other organizations for which the nature and significance of their relationship with theprimary government are such that exclusion would cause the reporting entity's financial statements to be

misleading or incomplete. The criteria provided in the Governmental Accounting Standards BoardCodification, Section 2100, has been considered and there are no agencies or entities which should bepresented with the City.

Government-wide and fund financial statements

The government-wide financial statements (i.e., the statement of net assets and the statement of changesin net assets) report information on all of the nonfiduciary activities of the primary government. For themost part, the effect of interfund activity has been removed from these statements. Governmentalactivities normally are supported by taxes and intergovernmental revenues.

The statement of activities demonstrates the degree to which the direct expenses of a given function orsegment are offset by program revenues. Direct expenses are those that are clearly identifiable with a

specific function or segment. Program revenues include 1) charges to customers or applicants whopurchase, use, or directly benefit from goods, services, or privileges provided by a given function orsegment and 2) grants and contributions that are restricted to meeting the operational or capitalrequirements of a particular function or segment. Taxes and other items not properly included amongprogram revenues are reported instead as general revenues.

Separate financial statements are provided for governmental funds, proprietary funds (internal service)and fiduciary funds, even though the latter are excluded from the government-wide financial statements.Major individual governmental funds are reported as separate columns in the fund financial statements.

Measurement focus, basis of accounting, and financial statement presentation

The government-wide financial statements and the proprietary and fiduciary fund financial statements arereported using the economic resources measurement focus and the accrual basis of accounting.

Revenues are recorded when earned and expenses are recorded when a liability is incurred, regardlessof the timing of related cash flows. Property taxes are recognized as revenues in the year for which theyare levied for. Grants and similar items are recognized as revenue as soon as all eligibility requirementsimposed by the provider have been met.

Governmental fund financial statements are reported using the current financial resources measurementfocus and the modified accrual basis of accounting. Revenues are recognized as soon as they are bothmeasurable and available. Revenues are considered to be available when they are collectible within thecurrent period or soon enough thereafter to pay liabilities of the current period. For this purpose, the Cityconsiders revenues to be available if they are collected within 60 days of the end of the current fiscalperiod. Expenditures generally are recorded when a liability is incurred except for 1) debt service


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expenditures, 2) expenditures related to compensated absences, pension, other post-employment

benefits and claims and judgments, which are recorded only when payment is due (matured).

Property taxes, when levied for, licenses, user charges and charges for service, and interest associatedwith the current fiscal period and intergovernmental revenue when eligibility requirements are met, are allconsidered to be measurable and so have been recognized as revenues of the current fiscal period, ifavailable. All other revenue items are considered to be measurable and available only when cash isreceived by the City.

The City reports the following major governmental fund:

The General Fund is the Citys primary operating fund. It accounts for all financial resources of thegeneral government, except those required to be accounted for in another fund.

The Clean Water Fund accounts for the construction and maintenance of the Citys wastewater

treatment plant. Its operations are financed from state loans and grants.

Additionally, the City reports the following fund types:

The Internal Service Funds account for general liability, employee health insurance and workerscompensation insurance provided to departments of the City and Board of Education.

The Pension Trust Fund is used to account for the accumulation of resources to be used forretirement benefits.

Agency Fundsaccount for monies held as a custodian for outside groups and agencies.

Private-sector standards of accounting and financial reporting issued prior to December 1, 1989,

generally are followed in government-wide financial statements to the extent that those standards do notconflict with or contradict guidance of the Governmental Accounting Standards Board.

Amounts reported as program revenues include 1) charges to customers or applicants for goods,services, or privileges provided, 2) operating grants and contributions, and 3) capital grants andcontributions, including special assessments. Internally dedicated resources are reported as generalrevenues rather than as program revenues. Likewise, general revenues include all taxes.

When both restricted and unrestricted resources are available for use, it is the City's policy to userestricted resources first, then unrestricted resources as they are needed.

Pension plan accounting

Pension Trust Fund:

The Pension Trust Fund is reported on the accrual basis of accounting. Employee contributions arerecognized in the period in which the contributions are due. Employer contributions to the plan arerecognized when due and the City has made a formal commitment to provide the contributions. Benefitsand refunds are recognized when due and payable in accordance with the terms of each plan.Administrative costs are financed through investment earnings. Stand-alone statements are not issued.

Governmental Funds/Activities:

The net pension asset, the cumulative difference between annual pension cost and the City'scontributions to the plan since 1986, is calculated on an actuarial basis consistent with the requirementsof Government Accounting Standards Board Statement No. 27. Expenditures are recognized when they


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are paid or are expected to be paid with current available resources. The pension asset is recorded as a

non-current asset in the government-wide financial statements.

Funding Policy:

The City makes contributions at the discretion of management. These contributions have been at least inthe amount recommended by the City's actuary.

OPEB accounting

Governmental Funds/Activities:

The net OPEB obligation, the cumulative difference between annual OPEB cost and the Cityscontributions to the plan since July 1, 2007, is calculated on an actuarial basis consistent with therequirements of Government Accounting Standards Board Statement No. 45. OPEB obligation (OPEB) isrecorded as a noncurrent liability in the government-wide financial statements. Expenditures arerecognized when they are paid or expected to be paid with current available resources. The OPEBliability is reported with government-wide financial statements.

Funding Policy:

The City makes annual contributions based on the pay-as-you-go basis. The employees contribute to theplan.

Accounting estimates

The preparation of financial statements in conformity with accounting principles generally accepted in theUnited 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 ofthe financial statements and the reported amounts of revenues, expenses and expenditures during thereporting period. Actual results could differ from those estimates.

Property taxes

Property taxes are assessed as of October 1, levied on the following July 1, and generally due in twoinstallments, July 1 and the following January 1. Liens are filed on June 1 following the due date.

Allowances for doubtful accounts

Accounts and notes receivable for the primary government are reported net of allowance for doubtfulaccounts totaling $2,263,000. The majority related to property taxes and sewer use fees. The allowancefor doubtful accounts represents those accounts which are deemed uncollectible based upon collectionhistory and an analysis of the creditor's ability to pay.

Cash equivalents

The City considers certificates of deposit and highly liquid short-term investment funds with originalmaturities of three months or less when purchased to be cash equivalents.


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Encumbrances

Encumbrances represent commitments related to contracts for goods or services. Encumbranceaccounting, under which purchase orders, contracts and other commitments for the expenditure ofresources are recorded to reserve that portion of the applicable appropriation, is utilized in thegovernmental funds. Encumbrances outstanding at year-end are reported as a reservation of fundbalance as they do not constitute either expenditures or liabilities.

Investments

Investments for the City are reported at fair value. The Connecticut State Treasurers Short-TermInvestment Fund is an investment pool managed by the State of Connecticut Office of the StateTreasurer. Investments must be made in instruments authorized by Connecticut General Statutes 3-27c

through 3-27e. Investment guidelines are adopted by the State Treasurer. The fair value of the positionin the pool is the same as the value of the pool shares.

The pension funds allow for investments in certain alternative investments. Alternative investments mayinclude private equity partnerships, hedge and absolute return funds for which there may be no readymarket to determine fair value. These investments are valued using the most recent valuation availablefrom the external fund manager. These estimated values do not necessarily represent the amounts thatwill ultimately be realized upon the disposition of those assets, which may be materially higher or lowerthan values determined if a ready market for the securities existed.

The balance of the pooled fixed income investments were invested in a pool similar to a 2a-7. The valueof the position in the pool is the same as the value of the pool shares and is recorded at amortized cost.

Inventories

Inventories are stated at the lower of cost or market, using the consumption method on the first-in, first-out basis. USDA donated commodities are valued at market value plus the amount disbursed forprocessing and storage charges. Inventory is accounted for on the consumption method.

Capital assets

Capital assets, which include property, plant, equipment, and infrastructure assets (e.g., roads, bridges,sidewalks, and similar items), are reported in the governmental column in the government-wide financialstatements. Capital assets are defined by the government as assets with an initial, individual cost ofmore than the capitalization threshold. Such assets are recorded at historical cost or estimated historicalcost if purchased or constructed. Donated capital assets are recorded at fair value at the date ofdonation.

The costs of normal maintenance and repairs that do not add to the value of the asset or materiallyextend assets lives are not capitalized. Major outlays for capital assets and improvements are capitalizedas projects are constructed.


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Capital assets of the City are depreciated using the straight-line method over the following estimateduseful lives:

Capitalization

Assets Threshold Years

Land 10,000$ 0

Land and improvements 50,000 25

Buildings 100,000 40

Building improvements 100,000 25

Infrastructure 300,000 15-50

Machinery and equipment 10,000 5-30Vehicles 10,000 5-10

In the governmental fund financial statements, capital outlay (assets) is reported as an expenditure andno depreciation expense is recorded.

Compensated absences

City employees accumulate vacation and sick leave hours for subsequent use or for payment upontermination or retirement. Vacation and sick leave expenses to be paid in future periods are accruedwhen incurred in the government-wide and proprietary fund financial statements. A liability for theseamounts is reported in governmental funds only for amounts due, for example, as a result of employeeresignations and retirements. The General Fund is typically used to liquidate the liability.

Long-term obligations

In the government-wide financial statements, long-term debt and other long-term obligations are reportedas liabilities in the applicable governmental activities statement of net assets. Bond premiums anddiscounts, as well as issuance costs, are deferred and amortized over the life of the bonds using theeffective interest method. Bonds payable are reported net of the applicable bond premium or discount.Bond issuance costs are reported as deferred charges and amortized over the term of the related debt.

In the fund financial statements, governmental fund types recognize bond premiums and discounts, aswell as bond issuance costs, during the current period. The face amount of debt issued is reported asother financing sources. Debt principal payments are reported as expenditures. Premiums received on

debt issuances are reported as other financing sources while discounts on debt issuances are reportedas other financing uses. Issuance costs, whether or not withheld from the actual debt proceeds received,are reported as debt service expenditures.

Fund equity and net assets (deficits)

In the Government-Wide Financial Statements, net assets are classified in the following categories:

Invested in Capital Assets, Net of Related Debt- This category groups all capital assets, includinginfrastructure, into one component of net assets. Accumulated depreciation and the outstandingbalances of debt that are attributable to the acquisition, construction or improvement of these assetsreduces this category.


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Unrestricted Net Assets - This category represents the net assets of the City, which are not

restricted for any project or other purpose. Deficits will require future funding.

In the fund financial statements, fund balances of governmental funds are classified in three separatecategories. The categories, and their general meanings, are as follows:

Reserved fund balance indicates that portion of fund equity that is not available for appropriationor which has been legally segregated for specific purposes.

Unreserved/Designated fund balance indicates that portion of fund equity for which the City hasmade tentative plans.

Unreserved fund balance (deficits) indicates that portion of fund equity which is available forappropriation and expenditure in future periods. Deficits will require future funding.

Note 2. Reconciliation of Government-Wide and Fund Financial Statements

Explanation of certain differences between the governmental fund balance sheet and thegovernment-wide statement of net assets

The governmental fund balance sheet includes a reconciliation between fund balance totalgovernmental funds and net assets governmental activities as reported in the government-widestatement of net assets. One element of that reconciliation explains that long-term liabilities, includingbonds payable, are not due and payable in the current period and therefore are not reported in the funds.The details of this difference is as follows:

Bonds payable 142,876,000$

Less: Deferred charges (to be amortized over life of debt) (1,571,500)

Capital leases 157,849

Clean Water Fund notes 11,470,330

Claims and judgments 1,242,000

Heart & Hypertension 1,086,500

Compensated absences 11,236,035

Other post-employment obligation 14,208,098

Net adjustment to reduce fund balance - total governmental funds

to arrive at net assets - governmental activities 180,705,312$


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Explanation of certain differences between the governmental fund statement of revenues,expenditures, and changes in fund balances and the government-wide statement of activities

The governmental fund statement of revenues, expenditures, and changes in fund balances includes areconciliation between net changes in fund balances total governmental funds and changes in netassets of governmental activities as reported in the government-wide statement of activities. Oneelement of that reconciliation explains that Governmental funds report capital outlays as expenditures.However, in the statement of activities the cost of those assets is allocated over their estimated usefullives and reported as depreciation expense. The details of this difference is as follows:

Capital outlay 10,197,547$

Depreciation expense (8,055,440)

Net adjustment to increase net changes in fund balances - total

governmental funds to arrive at changes in net assets of

governmental activities 2,142,107$

Another element of that reconciliation states that "the issuance of long-term debt (e.g., bonds, leases)provides current financial resources to governmental funds, while the repayment of the principal of long-term debt consumes the current financial resources of governmental funds. Neither transaction, however,has any effect on net assets." Also, governmental funds report the effect of issuance costs, premiums,discounts, and similar items when debt is first issued, whereas these amounts are deferred and amortizedin the statement of activities. The details of this difference is as follows:

Long-Term Liabilities issued or incurred:

Amortization of premiums on refunding (149,500)$

Issuance of bonds (11,716,000)

Capital lease proceeds (242,000)

Issuance of refunding bonds (7,420,000)

Principal repayments:

General obligation debt 9,380,000

Refunded bonds 7,130,000

Capital lease 127,303

Clean Water Fund notes 1,523,804

Net adjustment to decrease net changes in fund balances - total

governmental funds to arrive at changes in net assets of

governmental activities (1,366,393)$


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Another element of that reconciliation states that Some expenses reported in the statement of activit iesdo not require the use of current financial resources and therefore are not reported as expenditures ingovernmental funds. The details of this difference is as follows:

Compensated absences 66,920$

Net change in accrued interest 29,621

Heart and hypertension (287,500)

Claims and judgements (2,000,000)

Other post-employment obligation 4,796,554

Net adjustment to decrease net changes in fund balances - total

governmental funds to arrive at changes in net assets ofgovernmental activities 2,605,595$

Note 3. Cash, Cash Equivalents and Investments

Deposits: The City's policy for deposits and custodial credit risk follows the State of Connecticut GeneralStatutes. The State of Connecticut requires that each depository maintain segregated collateral in anamount equal to the defined percentage of its public deposits based upon the bank's risk based capitalratio.

Investments: The City's policy for investments other than the pension plan investments is summarized asfollows: The Treasurer of the City and the Director of Finance have the responsibility for the types ofinvestments the City makes. The City's policy for investments follows State statutes. The ConnecticutGeneral Statutes (Section 7-400) permit municipalities to invest in: (1) obligations of the United Statesand its agencies (2) highly rated obligations of any state of the United States or of any politicalsubdivision, authority or agency thereof; and (3) shares or other interests in custodial arrangements orpools maintaining constant net asset values and in highly rated no-load open end money market mutualfunds (with constant or fluctuating net asset values) whose portfolios are limited to obligations of theUnited States and its agencies, and repurchase agreements fully collateralized by such obligations. TheStatutes (Sections 3-24f and 3-27f) also provide for investment in shares of the Connecticut Short TermInvestment Fund and the Tax Exempt Proceeds Fund. Other provisions of the Statutes cover specificmunicipal funds with particular investment authority. The provisions of the Statutes regarding theinvestment of municipal pension funds do not specify permitted investments. Therefore, investment ofsuch funds is generally controlled by the laws applicable to f iduciaries and the provisions of the applicableplan.

The Police Pension Plans approved policies target an asset mix to provide the probability of meeting orexceeding the return objectives at the lowest possible risk. The set asset allocation parameters are asfollows:

Equities 30.0% - 60.0%

Fixed Income 15.0% - 50.0%

Alternative Investments 0.0% - 33.0%

Cash 3.0% - 25.0%


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Interest rate risk: The City does have a policy that limits investment maturities as a means of managingits exposure to fair value losses arising from increasing interest rates. This policy structures theinvestment portfolio so that securities mature to meet cash requirements for ongoing operations, therebyavoiding the need to sell securities on the open market prior to maturity, and investing operating fundsprimarily in shorter-term securities, money market mutual funds, or similar investment pools.

Concentrations: The City's policy limits the amounts invested in any one issuer by maintaining adiversified portfolio to minimize the risk of loss resulting from over-concentration of assets in a specificissuer.

Custodial credit risk:

Deposits: This is the risk that, in the event of failure of a depository financial institution, a government willnot be able to recover its deposits or will not be able to recover collateral securities that are in thepossession of an outside party. As of June 30, 2010, $5,767,000 of the Citys bank balance of$7,632,000 was uninsured and uncollateralized.

Investments: This is the risk that in the event of the failure of the counterparty (e.g., broker-dealer) to atransaction, a government will not be able to recover the value of its investment or collateral securitiesthat are in the possession of another party.

Cash and investments of the City consist of the following at June 30, 2010:

Cash and Cash Equivalents

Deposits with financial institutions 6,479,562$

State of Connecticut Short-Term Investment Fund 41

Total cash and cash equivalents 6,479,603

Investments

Pension Trust Funds:

Corporate Fixed Income 27,054,289 *

Government Securities 5,547,625 *

Common Stock 49,709,352 *

Mutual Funds 11,943,661

Alternative investments 2,469,931

Total pension investments 96,724,858

Total cash and investments 103,204,461$

* These investments are uninsured and unregistered, with securities held by the counterparty,

but not in the City's or the Pension Fund's name.


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Cash and investments are classified in the accompanying financial statements as follows:

Statement of Net Assets

Cash and cash equivalents 4,465,085$

Fiduciary Funds:

Cash and cash equivalents 2,014,518

Investments 96,724,858

98,739,376

Total cash and investments 103,204,461$

Interest rate risk: This is the risk that changes in market interest rates will adversely affect the fair valueof an investment. Generally, the longer the maturity of an investment, the greater the sensitivity of its fairvalue to changes in market interest rates. Information about the exposure of the entitys debt typeinvestments to this risk using the segmented time distribution model is as follows:

Fair Less Than

Summary of Investments Value 1 Year 1-5 6-10 Over 10

Corporate Fixed Income 27,054,289$ 7,514,942$ 3,812,173$ 15,727,174$ -$

Government Securities 5,547,625 - 2,972,982 1,564,921 1,009,722

Pooled fixed income 41 41 - - -

32,601,955$ 7,514,983$ 6,785,155$ 17,292,095$ 1,009,722$

Investment Maturities (In Years)


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Credit risk: Generally, credit risk is the risk that an issuer of a debt type investment will not fulfill itsobligation to the holder of the investment. This is measured by assignment of a rating by a nationallyrecognized rating organization. U.S. government securities or obligations explicitly guaranteed by theU.S. government are not considered to have credit risk exposure. Presented below is the minimum ratingas required for each debt type investment.

Corporate Fixed Government Pooled Fixed

Average Rating Income Securities Income

AAA 1,471,428$ 4,537,903$ 41$

AA 385,281 - -

AA+ 707,522 - -

AA- 1,281,330 - -

A+ 1,799,256 - -

A 8,753,533 - -

A- 1,991,753 - -

BBB+ 1,405,025 - -

BBB 1,038,880 - -

BBB- 832,177 - -

Unrated 7,388,104 1,009,722 -

27,054,289$ 5,547,625$ 41$


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Note 4. Deferred Revenue/Unearned Revenue Reconciliation

Governmental funds report deferred revenue in connection with receivables for revenues that are notconsidered to be available to liquidate liabilities of the current period. Governmental funds andgovernmental activities also report unearned revenue in connection with resources that have beenreceived, but not yet earned. At the end of the current fiscal year, the various components of unearnedrevenue and deferred revenue reported in the governmental funds and governmental activities were asfollows:

Unearned Deferred

Revenue Revenue

General Fund:

Taxes and accrued interest on delinquent

property taxes -$ 4,495,274$

School construction receivable - 1,297,963

Tax overpayments 201,017 -

Advanced collections 4,370,771 -

Other 137,671 104,872

Nonmajor Funds:

Grants and other - 395,428

Sewer taxes 330,202 856,302

Loans - 1,058,698

5,039,661$ 8,208,537$


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Note 5. Interfund Receivables, Payables and Transfers

As of June 30, 2010, interfund receivables and payables that resulted from various interfund transactionswere as follows:

Due From Due To

Other Funds Other Funds

General Fund 893,878$ 3,505,522$

Clean Water Fund 927,514 -

Non-Major Governmental Funds 1,049,360 569,526

Fiduciary Funds - 324,352

Internal Service Funds 1,528,648 -Totals 4,399,400$ 4,399,400$

All balances resulted from a lag between the dates payments occur between funds for various activities.

Advances Advances

From Other To Other

Funds Funds

General Fund -$ 3,028,175$

Non-Major Governmental Funds 3,028,175 -Totals 3,028,175$ 3,028,175$

The advances amongst funds relate to working capital loans made primarily between the General Fundand the Capital Improvement Fund and various nonmajor governmental funds. None of the balances arescheduled to be collected in the subsequent year.

Interfund transfers during the year ended June 30, 2010 were as follows:

Transfers From Transfers To

Other Funds Other Funds

General Fund 2,276,195$ 585,728$

Non-Major Governmental Funds 585,728 2,276,195

Totals 2,861,923$ 2,861,923$

The transfer from the Nonmajor funds to the General Fund is from the Sewer Fund to pay for principaland interest payments on debt. The transfers from the General Fund to the Nonmajor funds is to fund thedeficit in the Educational Grants Fund and the Capital and Nonrecurring Fund.


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Note 6. Capital Assets

Capital asset activity for the year ended June 30, 2010 was as follows:

Beginning Decreases/ Ending

Balance Increases Transfers Balance


Capital assets, not being depreciated:

Land 16,319,046$ -$ -$ 16,319,046$

Construction in progress 22,593,937 9,448,277 - 32,042,214

Total capital assets, not being depreciated 38,912,983 9,448,277 - 48,361,260

Capital assets, being depreciated:

Land improvements 6,601,689 - - 6,601,689

Buildings and improvements 116,109,118 472,374 - 116,581,492

Machinery and equipment 31,917,999 276,896 - 32,194,895

Infrastructure 97,729,563 - - 97,729,563

Total capital assets being depreciated 252,358,369 749,270 - 253,107,639

Less accumulated depreciation for:

Land improvements 1,927,600 278,192 - 2,205,792

Buildings and improvements 49,721,152 3,419,832 - 53,140,984

Machinery and equipment 19,723,910 1,517,404 - 21,241,314

Infrastructure 54,768,833 2,840,012 - 57,608,845

Total accumulated depreciation 126,141,495 8,055,440 - 134,196,935

Total capital assets, being depreciated, net 126,216,874 (7,306,170) - 118,910,704

Governmental activities capital assets, net 165,129,857$ 2,142,107$ -$ 167,271,964$

Depreciation expense was charged to functions/programs of the primary government as follows:

General government 2,933,077$

Education 2,623,976

Public safety 515,169Public works 1,570,963

Health & welfare 255,971

Parks & Rec 156,284

Total depreciation expense - governmental activities 8,055,440$


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Note 7. Bond Anticipation Notes

Bond anticipation notes matured in March 2010. Transactions for the year ended June 30, 2010 were asfollows:

BANS

Outstanding, June 30, 2009 11,475,000$

New borrowings -

Repayments (11,475,000)

Outstanding, June 30, 2010 -$

Note 8. Long-Term Obligations

Long-term liability activity for the year ended June 30, 2010 was as follows. Amounts due within one yearare based on current year payouts.

Beginning Ending Due Within

Balance Increases Decreases Balance One Year


Bonds payable:

General obligation bonds 140,250,000$ 19,136,000$ (16,510,000)$ 142,876,000$ 10,136,000$

Less deferred amounts:

Unamortized premium

and loss on refunding (1,721,000) - 149,500 (1,571,500) -

Clean Water Fund notes 12,994,134 - (1,523,804) 11,470,330 1,553,499

Capital leases 43,152 242,000 (127,303) 157,849 84,471

Total bonds and

notes payable 151,566,286 19,378,000 (18,011,607) 152,932,679 11,773,970

Other Long-Term Liabilities:

Claims, judgments and other 3,242,000 - (2,000,000) 1,242,000$ -

Heart and hypertension 1,374,000 26,953 (314,453) 1,086,500 300,000

Compensated absences 11,169,115 891,884 (824,964) 11,236,035 125,000Risk management claims 6,155,626 24,541,758 (24,294,542) 6,402,842 300,000

OPEB liability 9,411,544 4,796,554 - 14,208,098 -

Total other long-term

liabilities 31,352,285 30,257,149 (27,433,959) 34,175,475 725,000

Governmental activity

ong- erm a es 182,918,571$ 49,635,149$ (45,445,566)$ 187,108,154$ 12,498,970$


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General obligation bonds

As of June 30, 2010, the outstanding general obligation bonded indebtedness of the City was as follows:

Balance

Outstanding

Interest Issue Maturity Original June 30,

Description Rate Date Date Amount 2010

General Purpose, Schools and Sewer Projects 3.50-5.00 02/01/02 02/01/22 21,540,000 1,250,000

Refunding-Multiple Years and Projects 3.00-5.00 06/15/02 01/15/20 12,370,000 7,815,000

General Pension Obligation 2.27-5.84 09/24/02 03/15/22 67,305,000 49,145,000

General Purpose, Schools and Sewer Projects 3.00-5.00 07/15/04 07/21/25 23,115,000 1,400,000



General Purpose and School Projects 3.75-5.75 12/15/05 12/15/25 32,130,000 22,980,000

General Obligation 5.05 03/31/10 02/15/25 11,716,000 11,716,000

General Obligation Refunding Bond 3.27 04/01/10 08/01/15 7,420,000 7,420,000

Total 142,876,000$

The annual debt service requirements of general obligation bonds are as follows:

Principal Interest Total

2011 10,136,000$ 6,585,536 16,721,536

2012 10,010,000 6,250,260 16,260,260

2013 10,430,000 5,786,778 16,216,778

2014 11,290,000 5,285,752 16,575,752

2015 11,670,000 4,772,229 16,442,229

2016-2020 55,515,000 15,925,578 71,440,578

2021-2025 31,835,000 3,661,035 35,496,035

2026-2030 1,990,000 44,775 2,034,775

142,876,000$ 48,311,943$ 191,187,943$

State of Connecticut Clean Water Fund

The City signed an agreement with the State of Connecticut Department of Environmental Protection (theAgreement) under the Clean Water Fund Program. The Agreement provides Clean Water Fundfinancing for renovations to the Citys wastewater treatment plant and sewer system. The permanentlyfinanced loans mature over twenty years with a coupon rate of 2%.


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A schedule of permanently financed Clean Water Fund loans is presented below:

Balance

Outstanding

Issue Maturity Original June 30,

Description Date Date Amount 2010

State of Connecticut Serial Note CWF 166-C 04/29/94 10/31/13 9,213,384$ 1,785,359$

State of Connecticut Series Note CWF 166-CDI 01/01/96 10/31/13 2,769,461 579,102

State of Connecticut Series Note CWF 167-D 10/31/96 04/30/16 293,596 97,143

State of Connecticut Serial Note CWF 167-C 10/30/98 10/31/17 4,858,956 1,991,697

State of Connecticut Serial Note CWF 347-C 05/31/00 11/30/19 1,618,947 835,063

State of Connecticut Serial Note CWF 444-C 03/31/01 09/30/20 1,603,000 892,791State of Connecticut Serial Note CWF 348-C 11/30/01 11/30/20 4,407,222 2,490,508

State of Connecticut Serial Note CWF 346-C 12/31/03 12/31/22 801,945 533,038

State of Connecticut Serial Note CWF 348-C1 12/31/03 12/31/22 1,728,831 1,149,110

State of Connecticut Serial Note CWF 343-CD 09/29/06 12/31/22 1,418,763 1,116,519

Total 11,470,330$

The annual debt service requirements of the City's Clean Water Fund notes are as follows:

Principal Interest Total

2011 1,553,499 215,153 1,768,652

2012 1,583,828 183,796 1,767,624

2013 1,614,739 151,857 1,766,596

2014 1,154,208 122,130 1,276,338

2015-2019 4,267,796 332,439 4,600,235

2020-2024 1,296,260 33,500 1,329,760

11,470,330$ 1,038,875$ 12,509,205$

Interim financing reported as fund liability

The Town received interim financing from the State of Connecticut of $4,848,389 for renovations on theirwastewater plant. When the project is complete, the short-term interim financing will be restructured into

long-term debt.

Capital Leases

Property and equipment carried at approximately $242,000, with approximately $84,000 in accumulateddepreciation, in the governmental activities is being acquired under capital lease arrangements.


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The following is a summary of capital lease commitments at June 30, 2009:

Fiscal Year Amount

2011 84,471$

2012 84,471

168,942

Less: interest 11,093

Principal balance 157,849$

Prior Years Debt Defeasance

In prior years, the City has defeased various bond issues by creating separate irrevocable trust funds.New debt has been issued and the proceeds have been used to purchase U.S. government securitiesthat were placed in the trust funds. The investments and fixed earnings from the investments aresufficient to fully service the defeased debt until the debt is called or matures. For financial reportingpurposes, the debt has been considered defeased and therefore removed as a liability from the Citysgovernment-wide financial statements. As of June 30, 2010, the amount of defeased debt outstanding,but removed from the government-wide statements, amounted to the following:

2002 Refunding 10,025,000$

2004 Refunding 31,515,000

2010 Refunding 7,130,000

Total 48,670,000$

2009/2010 General Obligation Bond- In-substance Defeasance

On April 1, 2010, the City issued $7,420,000 of general obligation bonds with interest rates at 3.27% ofwhich were used to advance refund portions of the outstanding principal amounts of the generalobligation bonds of the Town dated February 15, 1999, July 1, 2004 and December 15, 2005 (theRefunding Bonds). Of the net proceeds of $7,420,000 (after payment of $53,390 in underwriters feesand other costs), $7,366,610 was placed in an irrevocable trust fund under an Escrow Agreement datedApril 2010 between the City and the Escrow Holder. The Escrow Holder used the proceeds to purchasea portfolio of non-callable direct obligations of the United States of America (Government Obligations).The Government Obligations will have maturities and interest rates sufficient to pay principal and interestpayments and redemption premiums on the Refunding Bonds on the date the payments are due.

The Town advance refunded the above bonds to obtain an economic gain (difference between thepresent values of the debt service payments on the old and net debt of $565,404 and cash savings of$169,218.


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The balance in the escrow was $7,366,610, at June 30, 2010. The balance of the defeased bonds wasapproximately $7,130,000 at April 1, 2010. As a result, the refunded bonds are considered defeased andthe liability has been removed from the basic financial statements.

Bonds authorized but unissued

Total authorized but unissued debt at June 30, 2010 is as follows:

General purpose 16,215,875$

Schools 16,743,603

Sewers 3,988,545

36,948,023$

Legal debt limit

The Citys indebtedness (including authorized but not unissued bonds), net of principal reimbursementsexpected from the state, does not exceed the legal debt limitation as required by the Connecticut GeneralStatutes as reflected in the following schedule:

Category Debt Limit Indebtedness Balance

General purpose 190,888,785$ 77,077,282$ 113,811,503$

Unfunded Pension Benefit Obligation 254,518,380 49,145,000 205,373,380Schools 381,777,569 48,714,914 333,062,655

Sewers 318,147,974 20,827,217 297,320,757

Urban renewal 275,728,244 - 275,728,244

The total overall statutory debt limit for the City is equal to seven times annual receipts from taxation, or$593,876,219.

School Bond Reimbursements

The State of Connecticut reimburses the City for eligible school bond principal and interest costs. Theamount of such reimbursement for the year ended June 30, 2010 was approximately $866,000.Additional payments for principal and interest aggregating approximately $1,398,000 are to be receivedthrough the bonds maturity dates.

Note 9. Employee Retirement Systems

Defined Contribution Retirement Savings Plan

City employees are eligible to participate in a defined contribution retirement savings plan administeredby the City. In a defined contribution plan, benefits depend solely on amounts contributed to the Planplus investment earnings. Employer contributions are based on union contracts. Employees may makeadditional contributions subject to IRS regulations. The Plan is not reported as a fiduciary fund by theCity as it does not meet the reporting criterion.


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The Plan requires the City to contribute an amount equal to 5% of the employees annual salary.Employees elect to contribute 2% to 25% of their earnings. The City contributions for each employee(and interest allocated to the employees account) are vested as follows:

Years of Vesting

Credited Service Percentage

Under 2 0%

2 20%

3 40%

4 60%

5 80%

6 or more 100%

Voluntary contributions of up to 25% of compensation for all participating years of service may be madeby employees. These contributions may be withdrawn at any time, although earned interest will not bepaid until such time as benefits are otherwise payable to the employee.

Upon termination of employment, for any reason other than death or retirement, an employee shall beentitled to a deferred vested benefit based upon the number of years of credited service completed.Payment of benefits is deferred until the later of the employees normal retirement date, the seventhanniversary of the Plan year in which participation commenced or the date of termination. The unvestedaccrued benefit of the employee is forfeited and allocated to each participant.

The assets for the plan are held by Diversified Investments, Inc. and are not reflected in the

accompanying financial statements of the City, as the City's role in the administration of the Plan islimited. During the year, the City contributed $1,157,342 to the plan.

Police Pension Plan

Plan Description

The City is the administrator of a single-employer Public Employee Retirement System (PERS)established and administered by the City to provide pension benefits for officers and members of theWest Haven Police Department. The PERS is considered to be part of the Citys financial reporting entityand is included in the Citys financial reports as a pension trust fund. The pension plan does not issuestand-alone financial reports.

The plan provides for normal retirement at age 65 or twenty years of service, whichever is earlier. Fullvesting occurs after ten years of service. The plan provides for disability and death benefits in addition tothe retirement benefits.


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The Citys annual pension cost and net pension obligation (asset) to the Police Plan for the current yearwere as follows:

Annual required contribution 1,157,342$

Interest on net pension asset (5,564,309)

Adjustment to annual required contribution 3,896,575

Annual pension cost (510,392)

Contributions made (1,157,342)

Increase in net pension (asset) (1,667,734)

Net pension (asset) beginning of year (65,462,461)

Net pension (asset) end of year (67,130,195)$

Membership in the Plan consisted of the following at January 1, 2010, the date of the last actuarialvaluation:

Retirees, disabled members and beneficiaries receiving benefits 143

Terminated plan members entitled to, but not yet receiving benefits -

Active plan members 111

Total 254

Three Year Trend Information:

Annual Percentage Net Pension

Year Pension Actual of APC Obligation

Ending Cost (APC) Contribution Contributed (Asset)

6/30/08 (672,007)$ 1,111,822$ N/A (64,368,126)$

6/30/09 (482,513) 611,822 N/A (65,462,461)

6/30/10 (510,392) 1,157,342 N/A (67,130,195)


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SCHEDULE OF FUNDING PROGRESS

Actuarial AAL as a

Actuarial Accrued Percentage of

Value of Liability Unfunded Funded Covered Covered

Actuarial Assets (AAL) AAL (UAAL) Ratio Payroll Payroll

Valuation Date (A) (B) (B-A) (A/B) (C) (B-A)/(C)

Police Pension Plan

1/1/2010 103,217,463$ 116,990,872$ 13,773,409$ 88.2% 7,074,123$ 195%

Historical Trend Information The schedules of funding progress, presented as required supplementaryinformation (RSI) following the notes to the financial statements, present multi-year trend informationabout whether the actuarial values of plan assets are increasing or decreasing over time relative to theAALs for benefits.

Significant actuarial assumptions are as follows:

Valuation date January 1, 2010

Actuarial cost method Projected UnitCredit Cost

Amortization method Level Percent

Amortization period 40 decreasing

Asset valuation method Actuarial Value for determination of minimum contributionbased on recognition of asset gains and losses by calculatingan expected actuarial value of assets based on the prioryears actuarial value and the assumed rate of return.

Actuarial assumptions:Investment rate of return 8.5%Projected salary increases 5.5%

Mortality:

Active 1994 Group Annuity Mortality Table

Disabled 1965 Railroad Retirement Board Disabled Mortality Table

Retirement Ages: 40% are assumed to retire on the 25th anniversary ofemployment; 95% of the remaining are assumed to retire onthe 30th anniversary of employment; all remainingparticipants are assumed to retire no later than age 65 orattained age.


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Connecticut State Teachers' Retirement System

The faculty and professional personnel of the Board of Education participate in a contributory definedbenefit plan, established under Chapter 167a of the Connecticut General Statutes, which is administeredby the Connecticut State Teachers' Retirement Board. A teacher is eligible to receive normal retirementbenefits if he or she has attained age sixty and has accumulated twenty years of credited service in thepublic schools of Connecticut or has attained any age and has accumulated thirty-five years of creditedservice, at least twenty-five of which are service in the public schools of Connecticut. The financialstatements of the plan are available from the Connecticut State Teachers' Retirement Board, 55 ElmStreet Street, Hartford, CT 06106.

Certain part-time and full-time certified teachers are eligible to participate in the plan and are required tocontribute 7.25% of their annual earnings to the plan. The City does not, and is not legally responsible to,

contribute to the plan.

The State of Connecticut contributes based on actuarially determined amounts. The funding level wasdetermined based on an actuarial valuation of the plan as a whole, which does not provide actuarialinformation on an individual city/town basis.

In addition, the City has recognized revenues and expenditures for on-behalf payments for pensioncontributions paid directly to the Connecticut State Teachers' Retirement System by the State ofConnecticut. Such on-behalf payments were approximately $6,220,000 for the year ended June 30,2010.

Note 10. Other Postemployment Benefits

Post-retirement benefits

The City provides post-retirement benefits for certain employees for current and future health and

Documents

West Haven Financial Report 6-30-10