Fixed Income 29.0% 1.4%
Global Equity 42.0% 5.3%
Real Estate 8.0% 4.3%
Alternatives 8.0% 8.9%
Credit 7.0% 6.0%
Inflation Protection 6.0% 4.0%
Total 100%
The information above is based on 30 year expectations developed with the consulting actuary for the 2017 asset, liability, and investment policy study for the North Carolina Retirement Systems, including LGERS. The long-term nominal rates of return underlying the real rates of return are arithmetic annualized figures. The real rates of return are calculated from nominal rates by multiplicatively subtracting a long-term inflation assumption of 3.00%. All rates of return are
annualized.
Discount rate. The discount rate used to measure the total pension liability was 7.00%. The projection of cash flows used to determine the discount rate assumed that contributions from plan members will be made at the current contribution rate and that contributions from employers will be made at statutorily required rates, actuarially determined. Based on these assumptions, the pension plan's fiduciary net position was projected to be available to make all projected future benefit payments of the current plan members. Therefore, the long-term expected rate of return on pension plan investments was applied to all periods of projected benefit payments to determine the total pension liability.
Sensitivity of the Town's proportionate share of the net pension asset to changes in the discount rate.
The following presents the Town's proportionate share of the net pension asset calculated using the discount rate of 7.00 percent, as well as what the Town's proportionate share of the net pension asset or
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net pension liability would be if it were calculated using a discount rate that is one percentage point lower (6.00 percent) or one percentage point higher (8.00 percent) than the current rate:
1% Decrease
(6.00%)
Discount Rate
(7.00%)
1% Increase (8.00%) Town's proportionate share of the net
pension liability (asset) $ 432,231 $ 188,980 $ (13,212)
Pension plan fiduciary net position. Detailed information about the pension plan's fiduciary net position is available in the separately issued Comprehensive Annual Financial Report (CAFR) for the State of
North Carolina.
2. Other Employment Benefits
The Town has elected to provide death benefits to employees through the Death Benefit Plan for members of the Local Governmental Employees' Retirement System (Death Benefit Plan), a multiple-employer, State-administered, cost-sharing plan funded on a one-year term cost basis. The beneficiaries of those employees who die in active service after one year of contributing membership in the System, or who die within 180 days after retirement or termination of service and have at least one year of contributing membership service in the System at the time of death are eligible for death benefits. Lump sum death benefit payments to beneficiaries are equal to the employee's 12 highest month's salary in a row during the 24 months prior to the employee's death, but the benefit may not exceed $50,000 or be less than $25,000. All death benefit payments are made from the Death Benefit Plan. The Town has no liability beyond the payment of monthly contributions. The contributions to the Death Benefit Plan cannot be separated between the post-employment benefit amount and the other benefit amount. The
Tovra considers these contributions to be immaterial.
For the fiscal year ended June 30, 2020, the Town made contributions to the State for death benefits of
$878. The Town's required contributions for employees represented 0.09% of covered payroll.
3. Deferred Outflows and Inflows of Resources
The Town has several deferred outflows and inflows of resources.
Deferred outflows of resources at year-end are comprised of the following:
Source Amount
Contributions to pension plan in current fiscal year Differences between expected and actual experience Changes of assumptions
Net differences between projected and actual earnings employer contributions and proportionate share of
contributions Total
38,001 32,358 30,801 4,609
43,655 149,424
Deferred inflows of resources at year-end are comprised of the following:
Statement of Net General Fund
Differences between expected and actual experience Position Balance Sheet
Taxes Receivable, less penalties (General Fund) - $ 20,440
Changes in proportion and differences between employer
contributions and proportionate share of contributions 172 Differences between expected and actual experience
Total $ 172 $ 20,440
2. Risk Management
The Town is exposed to various risks of loss related to torts; theft of, damage to, and destruction of assets; errors and omissions; injuries to employees; and natural disasters. The Town participates in self-funded risk financing pools administered by the North Carolina League of Municipalities.
Through these pools, the Town obtains general liability and auto liability coverage of $1 million per occurrence, property coverage up to the total insured values of the property policy, worker's compensation coverage up to statutory limits, and employee health coverage. The liability and property exposures are reinsured through commercial carriers for claims in excess of retentions as selected by the Board of Trustees each year. Stop loss insurance is purchased by the Board of Trustees to protect against large medical claims that exceed certain dollar cost levels. Specific information on the limits of the reinsurance, excess and stop loss policies purchased by the Board of Trustees can be obtained by contacting the Risk Management Services Department of the NC League of Municipalities. The pools are audited annually by certified public accountants, and the audited financial statements are available to the Town upon request.
The Town carries commercial insurance for all other risks of loss. There have been no significant reductions in insurance coverage in the prior year and, settled claims resulting from these risks have not exceeded coverage in any of the past three fiscal years.
The Town has not experienced significant flooding in the past years; therefore, the Town does not consider flood insurance necessary at this time.
In accordance with G.S. 159-29, the Town's employees that have access to $100 or more at any given time of the Town's funds are performance bonded through a commercial surety bond. The finance officer is bonded for $50,000. Graham County collects the Town's property taxes so no bonding is needed for a tax collector. The remaining employees that have access to funds are bonded under a blanket bond for $50,000.
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3. Long Term Obligations
a. Installment Purchases
Serviced by Water and Sewer Fund:
Drinking Water - Long's Creek Storage Tank, executed March 2011 for
$748,471, due in annual installments of $37,424 through May 2031,
interest calculated additional at 2.22%. $ 446,800
Sanitary Sewer - TaUulah Creek and Atoah Street, executed April 2013 for $139,536, due in annual installments of $6,977 through May 2032,
interest calculated additional at 2.00%, 83,721
Total installment purchases serviced by the water and sewer fund $ 530,521
Annual debt service requirements to maturity for installment purchases are as follows:
Business-type Activities Year Ending
June 30 Principal Interest
2021 $ 47,595 $ 11,593
2022 47,595 10,552
2023 47,595 9,511
224 47,595 8,470
2025 47,595 7,428
2026-2030 237,976 21,522
2031 54,570 1,322
Total $ 530,521 $ 70,398
b. Revenue Bonds
The future payments of the revenue bonds are as follows:
$1,665,000 Water and Sewer Revenue Bond, Series 2013A, issued for the construction of a waste water treatment facility. Principle and interest
installments are due annually on June 1, at an annual interest rate of 2.75%. $ 1,486,000
$385,000 Water and Sewer Revenue Bond, Series 2013B issued for the construction of a waste water treatment facility. Principle and interest
installments are due annually on June 1, at an annual interest rate of 2.00%. 336,000
$250,000 Water and Sewer Revenue Bond, Series 2016A issued for the construction of a lime stabilization facility. Principle and interest
installments due annually in December, at an annual interest rate of 1.875%. 235,140
$83,000 Water and Sewer Revenue Bond, Series 2016B issued for the construction of a lime stabilization facility. Principle and interest
installments due annually in December, at an annual interest rate of 1.875%. 76,754
Total Revenue Bonds $ 2,133,894
Business-type Activities Year Ending
June 30 Principal Interest
2021 $ 41,067 $ 53,504
2022 42,101 52,482
2023 44,215 51,430
2024 45,332 50,328
2025 46,451 49,197
2026-2030 246,112 227,871
2031-2035 278,433 195,780
2036-2040 316,077 158,984
2041-2045 359,075 117,080
2046-2050 406,461 69,434
2051-2055 289,270 17,657
2056-2057 19,300 654
Total $2,133,894 $ 1,044,401
The Town is in compliance with bond requirements to establish a loan reserve by making annual deposits equal to one-tenth of the Debt Service Reserve Fund until the total is reached. The Final Debt Service Reserve Fund requirement is defined in the Bond Order at approximately $82,500. At June 30, 2020, the Town had set aside $61,412 into this loan reserve, meeting the required reserve
amount set forth.
The Town has pledged future water and sewer customer revenues, net of specified operating expenses, to repay $2,050,000 in water and sewer system revenue bonds issued in December 2013 and December 2016, respectively. Proceeds from the bonds provided financing for the construction of a waste water treatment and sludge dewatering facility on Sandhole Road. The bonds are payable solely from water and sewer customer net revenues and are payable through 2053 and 2057, respectively. Annual principal and interest payments are expected to be approximately $82,500 on the 2013 bonds and $11,900 on the 2016 bonds. The total principal and interest remaining to be paid on the bonds is $3,178,295. Principal and interest paid for the current year was $95,324.
The remaining legal debt margin of the Town at June 30, 2020, was $3,386,304.
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c. Changes in Long-Term Liabilities
Beginning Ending Current Portior
Balance Increases Decreases Balance of Balance
Governmental activities:
Net pension obligation (LGERS) $ 39,099 $ 17,595 $ - $ 56,694 $
-Compensated absences 9,196 6,753 9,074 6,875 6,875
Governmental activity
long-term liabilities $ 48,295 $ 24^48 $ 9,074 $ 63,569 $ 6,875
Business-type activities:
Revenue Bonds $2,176,440 $ - $ 42,546 $2,133,894 $ 41,042
Installment purchase 578,116 - 47,595 530,521 47,595
Net pension obligation (LGERS) 95,650 36,636 - 132,286
-Compensated absences 29,820 23,882 20,741 32,961 24,000
Business-type long-term
activity $2,880,026 $ 60,518 $ 110,882 $2,829,662 $ 112,637
C. Interfund Balances and Activity
Balances due to/ffom other funds at June 30, 2020 consist of the following:
Due from the General Fund from the Water and Sewer Fund $ 18,869
The interfund balances resulted from the time lag between the dates that (1) interfund goods and services are provided or reimbursable expenditures occur, (2) transactions are recorded in the accounting system, and (3) payments between funds are made.
D. Net Investment in Capital Assets
Governmental
Capital assets $ 106,041 $ 15,112,866
Less: long-term debt - 2,664,415
Net investment in capital assets $ 106,041 $ 12,448,451
E. Fund Balance