2010 FERGUSON TOWNSHIP CENTRE COUNTY, PENNSYLVANIA COMPREHENSIVE ANNUAL FINANCIAL REPORT For the Calendar Year Ended December 31, 2010 Prepared by

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1 2010 FERGUSON TOWNSHIP CENTRE COUNTY, PENNSYLVANIA COMPREHENSIVE ANNUAL FINANCIAL REPORT For the Calendar Year Ended December 31, 2010 Prepared by the Township Department of Finance Eric Endresen, Director

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6 June 24, 2011 To the Citizens of Ferguson Township, Centre County, Pennsylvania: The Township Manager and Financ e Director are pleased to submit the Comprehensive Annual Financial Report (CAFR) of the Township of Ferguson, Centre County, Pennsylvania for the year ended December 31, This CAFR is prepared to inform the Board of Supervisors, Township staff, our citizens, bondholders and other interested parties, detailed information concernin g the financial condition of the Township gover nment. Responsibility for the accuracy, completeness and fairness of the data presented, including all disclosures, rests with Township management. The CAFR was prepared by the Township Finance office and the financial statements were audited by the firm ParenteBeard LLC, State College, PA. The Government Finance Officers Associati on of the United Stat es and Canada (GFOA) awarded a Certificate of Achiev ement for Exc ellence in Fin ancial Reporting to Ferguson Township for its comprehensiv e annual financial report for t he fiscal year ended December 31, This was t he first year that the gove rnment has achieved this prestigious award. In order to be awarded a certif icate of achievement, a government must publis h an easily readable and efficiently organized comprehensive annual financial report. This report must satisfy both generally accepted accounting principles and applicable legal requirements. A Certificate of Achievement is valid for one year only. We believ e that our current comprehensive annual financial report continues to meet the Certific ate of Achieveme nt Program s requirements and we are submitting to the GFOA to determine its eligibility for another certificate. The Management Discussion and Analysis (MD&A) is a narrative introduction, overview and analysis of the acc ompanying basic financial statements. The MD&A can be f ound immediately following the report of the independent auditors. An annual budget is adopted on a basis consistent with generally accep ted accounting principles for all funds except the employ ee benefit, internal s ervices, pension trust, and agency funds. The appropriated budgets are prepared by fund, function, and department. Expenditures cannot legally ex ceed budgeted appropriations at t he fund level. Additiona lly, management cannot revise the total budget obligation by fund lev el without the approval of the Board of Supervisors. Although not legally obligated t o do so, f or management control purpos es, the Boa rd of Supervisors reviews and approves inter departmental budget transfers. All annual appropriations lapse at calendar year end. The Supervisors may at any time, by resolution, make supplemental appropriations for any lawf ul purpose from any funds on hand or 5

7 estimated to be received within the year and not otherwise appropri ated, including the proceeds of any borrowing authorized by law. The Supervisors may authorize the transfer of any unencumbered balance of any appropriation item or any portion thereof. This internal control function does not guarant ee that fraud or all misapprop riation of funds will be discovered. Rather, the combinat ion of various controls within the Township reduces the opportunity and risk that such activities may occur. To the best of our knowledge and belief, the data is accurate in all material respects and is organized in a manner designed to fairly present t he financial position and the results of operations of the Township as measured by the financial activ ity of the various funds. We believe that all dis closures necessary to enable the reader to gain a reasona ble understanding of the Township s financial affairs have been included. FERGUSON TOWNSHIP PROFILE Ferguson Township is one of 36 municipalities in Centre County. In terms of population, the Township is the second larges t municipality in the County. If the student population was removed from the census information, the Township may actually have the largest permanent resident population in the County. The Centre Region is comprised of six muni cipalities: The Borough of State College, and the Townships of College, Ferguson, Half moon, Harris, and Patton. These municipalitie s have approximately 54 percent of the total County population living within their boundaries and are c onsidered the urban ar ea of the County. Within th e Centre Region, F erguson Township is the second largest municipalit y in terms of population and the largest in terms of land area. Ferguson Township is a home ru le municipality. On January 1, 1976, the electorate, by referendum, adopted a home rule c harter that institutes a council-manager form of government. The Board of Supervisors as the gov erning body is comprised of five elected officials: two are elected at large and three are elected by ward. The Board of Supervisors is the policy-making body and is responsible for setting tax rates, approving an annual budget, and enacting ordinances to carry out policy. The Board of Supervisors represents the Township as members of the Centre Region Council of Governments (COG). Each board member serves in various capacities on committees of the COG dealing with regional issues such as transportation, code enforcement, public services, finance and personnel. The Board of Supervisors appoints the Township Solicitor, Auditor and Township Manager. Of the top 20 to 25 employers in the Centre Region, the Township is home to at least 5 of these firms ranging from its largest employ er Penn State University to suc h companies as Minitab Inc., a software company. New s mall and medium bu sinesses are continuing to establish their offices in the Township to be close to the ongoing growth and development. The local economy has weather ed the downturn in the national economy, in a large part, due to the employment impact that Penn State Univ ersity has on the region. Penn State University has been a strong ec onomic force for the Township and the Centre Region in general for many years. The loss of property tax revenue as Penn Stat e continues to 6

8 purchase local real estate and convert it to tax exempt status does affect the Township negatively, although due to the low property tax ra tes levied by the township, this impact is minimized. The Township has worked on or completed several projects during 2010 that have shaped the Township finances. These are: Fairbrook Drive, Beaverbrook Drive, Greenlee Lane reclamation. Westwood Circle, Yorkshire Circle, Cherry Ridge Road and Allen Street Improvements. Tudek Dog Park improvements. Haymarket Park Improvements.The Centre Region Parks and Rec, of whic h the Township is a member, is involved in a multimillion dollar project to develop two regional parks. This is currently being negotiated and the funding is being evaluated. The Centre Region Parks and Rec is also nearing completion of two multimillion dollar area pool projects. The annual debt service influences the Township ability to use the funds for other uses and will continue to do so for the term of the debt s. Finally, funding is set aside annu ally to replace aging public works vehicles and to replace aging building equipment. The long term financial planning outlook for the Township is highly dependent on the size and number of road and park projects, the size of the polic e force, the cost of technology, and the continued growth of the Township population which has largely offset tax increases. The Township has sufficient financial rese rves in place for the current planned transportation improvement projects. A substantial portion of t hese reserves will be used to complete the Old Gatesburg Ro ad and W hitehall Road pr ojects. In addition, the cost of debt service for the pools and pl anned regional park pr ojects will affect the long term finances of the Township. ACKNOWLEDGEMENTS I would lik e to express my sincere thanks fo r all the people that have made this report possible. Without the information they pr ovided, support and t heir efforts, this report would not be realized. I would like to again s pecifically thank the Board of Supervisors and Mark Kunkle for their support in this project. In no specific order they are: Mark Kunkle, Township Manager, Ferguson Township Board of Supervisors, Ferguson Township Angela Kalke, Executive Assistant, Ferguson Township Rick Bair, William Kelly, and Renee McDevitt, ParenteBeard LLC, CPAs Randy Brown, State College School District Ferguson Township Tax Office Ferguson Township Planning and Zoning Department Diane Conrad, Chief of Police, Ferguson Township Dave Modricker, Director of Public Works, Ferguson Township 7

9 Ron Seybert, Township Engineer, Ferguson Township Steve McDonald, Road Superintendent, Ferguson Township Weidenhammer Software Centre Region Finance Directors Ferguson Township Police Joe Viglione, Centre Region Council of Governments Ronald Woodhead, Centre Region Parks & Rec. If I have omitted anyone, please accept my apologies. Respectfully Submitted, Eric R Endresen, CPA, Director of Finance 8

10 Ferguson Township Mission, Vision, and Core Values Ferguson Township Mission Statement Ferguson Township provides efficient, cost effective, professional services to our residents. This is achieved in a fair, cooperative, ethical and honest manner. The Township manages resources allowing planned sustainable growth while preserving the quality of life and its unique characteristics. Ferguson Township Vision Statement The Township has appropriate staff and resources to maintain the infrastructure in good condition, provide good service, keep Township operations financially stable and keep pace with technology. As a result, the Township is a leader and model for the Centre Region and other Home Rule municipalities. Ferguson Township Core Values The Township values: ethical and honest behavior, teamwork, a clean and safe environment, effective, efficient, professionalism in delivering services to our residents, managing resources wisely, preserving the unique character of the Township, partnering with our neighboring municipalities to provide cost effective services. 9

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12 Ferguson Township Organizational Chart 11

13 LIST OF PRINCIPAL OFFICIALS Richard E. Killian, Chair, Board of Supervisors Steve Miller, Vice Chair, Board of Supervisors George Pytel, Supervisor Robert Heinsohn, Supervisor William Keough, Supervisor Mark A. Kunkle, Township Manager David J. Modricker, Director of Public Works Eric R. Endresen, Director of Finance Diane M. Conrad, Chief of Police Trisha A. Lang, Director of Planning and Zoning 12

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65 Township of Ferguson, Pennsylvania Notes To Financial Statements December 31, 2010 If the Township has m any claims under $30,000 that ex ceed the amount in t he Township s claim fund, this amount is paid from the Cross Share deductible. This fund is created through mut ual agreement of the member s to share some of the surpluses of member s. As of t he date of this report, there have been no cl aims against the Aggregate Stop Loss since the member contributions have been sufficient to cover the claims. DENTAL INSURANCE The Township provides self insured dental insurance for the non uni formed employees and thei r dependents. The pl an provides fo r a three tier payment structure and is capped at $1,500 of benefits per employee per year. Coverage i s limited to $1,500 per em ployee per year no matte r how many de pendents the employee may have. The first $500 of c laims are paid at 100%, t he second $500 of claims are paid at 80% and the third tier $1,000 of claims is paid at 60%. Any claims above the $2,000 in the calendar year are not paid. 10. PENDING CHANGES IN ACCOUNTING PRINCIPLES In March 2009, the G ASB issued Statement No. 54 Fund Balance Reporting and Governmental Fund Type Definitions. This statement establishes accounting and financial reporting standards for all governments that report governmental funds. It establishes criteria for classifying fund balances into specifically defined classifications and c larifies definitions for governmental fund types GASB 54 is effective for the Township s calendar year 2011 financial statements. 64

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67 Required Supplementary Information Supplementary Pension Trend Information 66

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69 Combining Statements Of Non-Major Governmental Funds 68

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73 Schedule of Revenues, Expenditures, and Changes in Fund Balances Budget-To-Actual Comparisons - Transportation Improvement Fund - Capital Reserve Fund - Non-Major Governmental Fund- - Debt Service Fund - Non-Major Governmental Fund- - Special Revenue Fund - Non-Major Governmental Fund- - Capital Projects Fund 72

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80 Combining Statements Of Pension Trust Funds 79

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83 Combining Statement Of Changes In Assets And Liabilities All Agency Funds 82

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85 Statistical Section 84

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