TOWN OF CAPE ELIZABETHFINANCIAL OVERVIEWPresented by: Casey Leonard and Jennifer ConnersRUNYON KERSTEEN OUELLETTE

Recently, the Town of Cape Elizabeth completed the financial audit process. The School Department is part of the Town and has been included in the Town’s financial statements. We are pleased to report that the Town received an unmodified opinion, which means the financial statements are fairly stated in all material respects. Further, the Town reported no significant deficiencies or material weaknesses related to its internal controls. However, the Town did report a finding for its Local Entitlement program. The remainder of this publication is dedicated to providing you with the financial results for fiscal year 2015. We hope you find this information useful and understandable. Finally, we wish to express our appreciation to all those who were so helpful to us during the audit process. It truly is a pleasure working with your staff.

INSIDE

2. General Fund – Assets3. General Fund – Liabilities and Deferred Inflows of Resources4. General Fund – Equity5. General Fund – Revenues 6. General Fund – Expenditures7. General Fund – Revenues – School Department Only8. General Fund – Expenditures – School Department Only9. Property Tax Collection Rates 10. Fund Balance Analysis, FY 2006 – FY 201511. Unassigned Fund Balance as a Percentage of Budget

About this presentation

This presentation is intended as a tool to assist the Town Council, School Board and management in understanding its financial operating results. The information contained in this publication should be read in conjunction with the audited financial statements and related disclosures and should not be used for any other purposes without the expressed consent of RUNYON KERSTEEN OUELLETTE.

Please contact us at 207-773-2986 or 1-800-486-178420 Long Creek Drive, South Portland, ME 04106

2

TOWN OF CAPE ELIZABETHGENERAL FUND – ASSETS

Cash and cash equivalents Accounts receivable Taxes and liens receivable

2015 8119891 109459 239296

2014 7541938 437 259631

$500,000

$1,500,000

$2,500,000

$3,500,000

$4,500,000

$5,500,000

$6,500,000

$7,500,000

$8,500,000

SUMMARY OF SIGNIFICANT CHANGES

• The 2015 cash balance (which is net of interfund loans payable) increased by approximately $578K. This was due to revenues exceeding expenditures, the collection of prior year receivables, and the timing of payments on current year liabilities.

• Accounts receivable increased by approximately $109k due to the timing of payments received at year end.

• Outstanding taxes and liens had a slight decrease due to the timing of collections at year end.

3

TOWN OF CAPE ELIZABETHGENERAL FUND – LIABILITIES AND DEFERRED INFLOWS OF RESOURCES

Accounts payable and other cur-rent liabilities

Accrued payroll and benefits Unavailable revenue - property taxes

2015 330375 2159428 195000

2014 321183 2030959 160000

$250,000

$750,000

$1,250,000

$1,750,000

$2,250,000

SUMMARY OF SIGNIFICANT CHANGES

• Changes in accounts payable and accrued payroll are the result of the timing of payments at year end. Accrued payroll represent wages earned prior to June 30, but paid in July and August, the largest portion of which is composed of summer salaries and benefits for teachers ($1,905,402).

• Unavailable revenue – property taxes represents taxes still unpaid 60 days after the end of the year. These amounts are not recognized as revenues in the current year per Generally Accepted Accounting Principles.

4

TOWN OF CAPE ELIZABETHGENERAL FUND – EQUITY

Nonspendable - Town Restricted - Town Restricted - Educa-tion

Assigned - Town Unassigned - Town

2015 0 2500 1188133 1335818 3238780

2014 240810 2500 921915 1209566 2904699

$250,000

$750,000

$1,250,000

$1,750,000

$2,250,000

$2,750,000

$3,250,000

SUMMARY OF SIGNIFICANT CHANGES

• Nonspendable fund balance for the Town represented interfund advances to the Library Project Fund in the prior year. These amounts were paid back to the General Fund in the current year.

• Restricted fund balance for the Town includes unspent grant and donation balances.

• Restricted fund balance for Education increased by $266K from 2014 to 2015, as the School Department spent less than anticipated.

• Assigned fund balance changes annually based on the status of projects and appropriations. Full detail is available in the footnotes of the financial statements.

• Town unassigned fund balance increased by $334K primarily due to the $241K interfund advance to the Library Project Fund that was repaid in the current year.

5

TOWN OF CAPE ELIZABETHGENERAL FUND - REVENUES

Budget Actual Variance

Taxes $ 29,877,747 $29,994,072 $116,325

Licenses and permits 158,000 201,491 43,491

Intergovernmental 3,319,654 3,460,981 141,327

Investment income 45,000 23,408 (21,592)

Other revenues 359,500 444,823 85,323

Total revenues 33,759,901 34,124,775 364,874

Carryforward balances and subsequent authorizations 1,417,053 - (1,417,053)

Transfer from other funds 75,000 315,189 240,189

Utilization of prior year surplus (Town and School) 752,000 - (752,000)

Total revenues and other sources $ 36,003,954 $ 34,439,964 $ (1,563,990)

SUMMARY OF SIGNIFICANT VARIANCES

• Taxes exceeded budget due to higher-than-expected excise tax collections.

• Licenses and permits revenues exceeded budget due to higher-than-expected building, electrical and pluming fees.

• Intergovernmental revenues exceeded budget primarily due to the receipt of unbudgeted grants.

• Investment income was lower-than-anticipated as interest rates remain low.

• Other revenues exceeded budget due to the receipt of unbudgeted revenues.

6

TOWN OF CAPE ELIZABETHGENERAL FUND - EXPENDITURES

Budget Actual Variance

General government $1,684,757 $1,099,424 $585,333

Public works 1,757,210 1,678,117 79,093

Facilities 382,045 349,120 32,925

Public safety 1,954,792 1,865,193 89,599

Cultural and parks 1,054,788 985,897 68,891

Human services 60,000 59,086 914

Education 23,176,174 22,901,418 274,756

Intergovernmental assessments 1,130,590 1,130,272 318

Insurance and benefits 1,199,717 1,208,523 (8,806)

Unclassified 43,822 220,044 (176,222)

Debt service (Town) 906,144 900,097 6,047

Capital improvements 2,075,001 1,343,822 731,179

Total expenditures 35,425,040 32,741,013 1,684,027

Transfers to other funds 578,914 578,914 -

Total expenditures and other sources $ 36,003,954 $ 33,319,927 $ 1,684,027

SUMMARY OF SIGNIFICANT VARIANCES

• General government expenditures were under budget due to overlay that was budgeted but not spent.

• Public works expenditures were under budget due to a budget amendment that increased the budget by $141K; offset by overspending for vehicle maintenance, diesel and gasoline of $76K.

• Public safety expenditures were under budget due to lower-than-anticipated part-time payroll costs, gasoline and training in the Police Department and part-time payroll costs in the Fire Department.

• Cultural and parks expenditures were under budget due to lower-than-expected costs related to tree planting, stonewall repairs and part-time payroll for parks and Fort Williams.

• Education expenditures - see slide 8.

• Unclassified expenditures were over budget due to unbudgeted grant expenditures. These expenditures were offset by related grant revenues.

• Capital improvement expenditures were under budget due to the timing of projects, which will carry over to the next fiscal year.

7

TOWN OF CAPE ELIZABETHGENERAL FUND – REVENUES – SCHOOL DEPARTMENT ONLY

Budget Actual Variance

State education subsidy $ 2,533,079 $ 2,482,137 (50,942)

State agency clients 7,000 4,753 (2,247)

Activity Fees 63,500 66,920 3,420

Miscellaneous 2,000 26,585 24,585

Total revenues 2,605,579 2,580,395 (25,184)

Town appropriation 20,234,595 20,234,595 -

Transfer from Town unassigned fund balance - 50,942 50,942

Budgeted use of surplus 400,000 - (400,000)

Total revenues and other sources $ 23,240,174 $ 22,865,932 $ (374,242)

SUMMARY OF SIGNIFICANT VARIANCES

• State education subsidy was lower-than-anticipated due to budget changes at the State level. This was offset by transfers from the Town General Fund unassigned fund balance.

• Miscellaneous revenues were higher-than-anticipated due to the receipt of small, unbudgeted revenues.

8

TOWN OF CAPE ELIZABETHGENERAL FUND - EXPENDITURES – SCHOOL DEPARTMENT ONLY

Budget Actual Variance

Regular instruction 10,871,153 10,856,620 14,533

Special education instruction 3,036,778 3,000,850 35,928

Career and technical education 40,626 40,626 -

Other instruction 788,169 772,030 16,139

Student and staff support 2,183,123 2,143,060 40,063

System administration 773,316 772,774 542

School administration 1,138,135 1,121,631 16,504

Transportation 746,268 732,792 13,476

Facilities maintenance 2,430,341 2,327,260 103,081

Debt service 1,168,265 1,133,775 34,490

Total expenditures 23,176,174 22,901,418 274,756

Transfers to other funds 64,000 64,000 -

Total expenditures and transfers out 23,240,174 22,965,418 274,756

SUMMARY OF SIGNIFICANT VARIANCES

• Special education expenditures were under budget due to lower-than-anticipated legal, psychological, and speech service costs.

• Student and staff support expenditures were under budget due to lower-than-anticipated technology and assessment costs.

• Facilities maintenance expenditures were under budget due to the timing of capital improvements, many of which were completed after year-end.

• Debt service expenditures were under budget due to the savings recognized from the refunding of bonds.

9

TOWN OF CAPE ELIZABETHPROPERTY TAX COLLECTION RATES

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Current Year 0.994 0.9901 0.9927 0.9886 0.9933 0.9933 0.9911 0.9936 0.993 0.9943

98.55%

98.65%

98.75%

98.85%

98.95%

99.05%

99.15%

99.25%

99.35%

99.45%

SUMMARY OF SIGNIFICANT CHANGES

• The tax collection rate increased to 99.43%, which is the highest collection rate in the past 10 years.

10

TOWN OF CAPE ELIZABETHFUND BALANCE ANALYSIS, FY 2006 – 2015 (IN THOUSANDS)

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Unassigned - Town 2050 2093 2152 2165 3065 2787 2938 3139 2905 3239

Assigned - Town 945 1057 814 953 987 1241 1166 851 1209 1336

Restricted - Education 704 755 562 1170 555 825 1002 1222 922 1188

Retricted - Town 0 0 0 0 0 11 207 3 3 3

Nonspendable - Town 0 0 0 0 0 0 0 0 241 0

$500

$1,500

$2,500

$3,500

$4,500

$5,500

$6,500

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TOWN OF CAPE ELIZABETHUNASSIGNED FUND BALANCE AS A PERCENTAGE OF BUDGET

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Percentage 0.072 0.076 0.073 0.071 0.086 0.09 0.0836000000000

001

0.0915 0.0849 0.09

0.50%

1.50%

2.50%

3.50%

4.50%

5.50%

6.50%

7.50%

8.50%

9.50%

OBSERVATIONS

• Fund balance provides working capital for the Town and enhances its credit worthiness. The Town’s policy is to target unassigned fund balance of 8.33% of annual operating revenues. The current percentage calculated in accordance with the Town’s policy equals 9.49%.

• RKO generally recommends one to two months of expenditures which equals 8.33% to 16.66%.