1

THE TOWN OF DRACUT, MASSACHUSETTS

Dracut, incorporated in 1701, is governed by an open town meeting and a five member Board of Selectmen. The
Town is located in northeastern Middlesex County, about 28 miles north of Boston. It is bordered on the north
by Pelham, New Hampshire, on the east by Methuen, Massachusetts, on the south by Lowell and Tewksbury,
Massachusetts and on the west by Tyngsborough, Massachusetts. The Town occupies a land area of 20.84
square miles.

CONSTITUTIONAL STATUS AND FORM OF GOVERNMENT

Massachusetts cities and towns are subject to the plenary legislative power of the Commonwealth. As stated by
the Supreme J udicial Court:

A town is not an independent sovereignty. It is merely a subordinate agency of the State
government. It is a creature of the Commonwealth, from which are derived all its powers
and those of its voters and officers.

Cities and towns provide general governmental services at the local level. Municipalities were traditionally
authorized to exercise only those powers granted by the State legislature, but Massachusetts adopted a Home
Rule Amendment to its Constitution in 1966, under which a city or town may exercise by ordinance or by-law
any power which the State legislature could confer upon it, provided that the ordinance or by-law is consistent
with the laws enacted by the State legislature. Certain powers are excluded from home rule and may still be
exercised only when authorized by State law; these powers include the power to levy taxes, the power to borrow
money, and the power to enact private or civil law governing civil relationships except as an incident to the
exercise of an independent municipal power. Under the Home Rule Amendment the State legislature may enact
general laws relating to a class of two or more municipalities but (except in limited circumstances) may enact a
special law relating to a particular city or town only on request of the city or town or on recommendation of the
Governor and passage by a two-thirds vote of both houses of the legislature.

An amendment to the State Constitution provides that any law imposing additional costs on two or more cities or
towns by regulating aspects of municipal employment will not be effective within a city or town until the city
council or town meeting accepts the law. Local acceptance is not required if the legislature has either passed the
law by a two-thirds vote or provided that the additional costs would be assumed by the State.

Cities and towns may change their form of government by adopting home rule charters or amending existing
charters. A town of less than 12,000 population may not change to a city form of government and a town of less
than 6,000 inhabitants may not change from the open town meeting form of government to a limited or
representative town meeting form.

Cities are generally governed by a city council and an elected mayor who has the power to veto council actions;
the council may override a mayoral veto by a two-thirds vote of the councilors. Some cities are governed by a
city council and an appointed city manager who has no power to veto council actions; some municipalities,
although still called "towns," have adopted a similar city form of government with a town council and town
manager or administrator. Provision is often made for a referendum on council actions, and for initiation of
measures, upon petition of a sufficient number of voters.
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Most towns are governed by open town meetings in which any voter may participate. Others have an elected
representative town meeting, often with public officers serving as ex officio members of the town meeting.
Provision is usually made for a referendum on actions of the representative town meeting upon petition of a
sufficient number of voters. Administrative affairs are generally managed by a board of three or more
selectmen, sometimes with the assistance of a town manager or executive secretary.

School affairs of cities and towns are administered by an elected school committee except in those towns whose
educational functions are carried out entirely through a regional school district.

GOVERNING BODIES AND OFFICERS

Local legislative decisions are made by an open town meeting. Subject to the legislative decisions made by the
town meeting, the affairs of the Town are generally administered by a board of five selectmen who are elected on
an at-large basis for staggered three-year terms. The operations of the Town are under the direction of a Town
Manager appointed by the Board of Selectmen.

Local school affairs are administered by an elected school committee of five persons while local taxes are
assessed by a board of three assessors all appointed on an at-large basis for staggered three-year terms.

The following is a list of the principal executive officers:
Manner of Selection Term
Office Name and Term Expires
Selectmen Cathy Richardson, Chairman Elected/3 years 2016
J oseph DiRocco, J r., Vice Chair Elected/3 years 2015
Robert O. Cox, Clerk Elected/3 years 2014
J ohn Zimini Elected/3 years 2014
Anthony Archinski Elected/3 years 2016
Acting
Town Manager Ann M. Vandal (1) Appointed Indefinite

Tax Collector Deborah A. Barton Appointed Indefinite

Finance Director/
Treasurer Ann M. Vandal Appointed Indefinite

Town Accountant Linda Wright Appointed 2015

Town Clerk Kathleen M. Graham Appointed Indefinite

Town Counsel J ames A. Hall Appointed Indefinite
______________________
(1) A search is currently underway to find a replacement for the recently retired Town Manager.

SERVICES

The Town provides general governmental services for the territory within its boundaries including police and fire
protection, disposal of garbage and rubbish, public education in grades K to 12, sewer services, streets, parks and
recreation. Water services are provided by the Town and the Dracut Water Supply District.

The Dracut Housing Authority provides housing for eligible low income families and handicapped persons. The
Greater Lowell Regional Vocational School District provides vocational training for students in grades 9-12.
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Legislation enacted in 1997 abolished the county governments of Franklin and Middlesex Counties as of J uly 1,
1997, with their assets, functions, debts and other obligations being assumed by the Commonwealth. The
abolishment of the Middlesex County government was in part in response to a default by the County in the
payment of general obligation notes of the County. The legislation also abolished the county governments of
Hampden and Worcester Counties as of J uly 1, 1998. Legislation enacted in 1998 abolished the county
governments of Hampshire, Essex and Berkshire counties as of J anuary 1, 1999, J uly 1, 1999 and J uly 1, 2000,
respectively. The legislation also requires the state secretary for administration and finance to establish a plan to
recover the Commonwealths expenditures for the liabilities and other debts assumed and paid by the
Commonwealth on behalf of an abolished county. Unless these provisions are changed by further legislation, the
state treasurer shall assess upon each city and town within the jurisdiction of an abolished county an amount
equal to the county tax paid by each such city and town for the fiscal year immediately prior to the abolishment
of the county (or two years prior in the case of Essex County) until such expenditures by the Commonwealth are
recovered. It is possible that similar legislation will be sought to provide for the abolishment of county
government in other counties.

AUTHORIZATION OF GENERAL OBLIGATION BONDS AND NOTES

Serial bonds and notes are authorized by a two-thirds vote of the town meeting. Refunding bonds and notes are
authorized by the selectmen. Borrowings for some purposes require State administrative approval.

When serial bonds or notes have been authorized, bond anticipation notes may be issued by the officers
authorized to issue the serial bonds or notes. Temporary debt in anticipation of the revenue of the fiscal year in
which the debt is incurred or in anticipation of authorized federal and state aid may be incurred by the Treasurer
with the approval of the selectmen.

DEBT LIMITS

General Debt Limit. The General Debt Limit of the Town consists of a Normal Debt Limit and a Double Debt
Limit. The Normal Debt Limit is 5 percent of the valuation of taxable property as last equalized by the State
Department of Revenue. The Town can authorize debt up to this amount without state approval. It can authorize
debt up to twice this amount (the Double Debt Limit) with the approval of the State Municipal Finance
Oversight Board composed of the State Treasurer, the State Auditor, the Attorney General and the Director of
Accounts.

There are many categories of general obligation debt which are exempt from and do not count against the General
Debt Limit. Among others, these exempt categories include revenue anticipation notes and grant anticipation notes;
emergency loans; loans exempted by special laws; certain school bonds, sewer bonds, solid waste disposal facility
bonds and economic development bonds supported by tax increment financing; and subject to special debt limits,
bonds for water (limited to 10 percent of equalized valuation), housing, urban renewal and economic development
(subject to various debt limits), and electric, gas, community antenna television systems, and telecommunications
systems (subject to separate limits). Revenue bonds are not subject to these debt limits. The General Debt Limit and
the special debt limit for water bonds apply at the time the debt is authorized. The other special debt limits generally
apply at the time the debt is incurred.

Revenue Anticipation Notes. The amount borrowed in each fiscal year by the issue of revenue anticipation
notes is limited to the tax levy of the prior fiscal year, together with the net receipts in the prior fiscal year from
the motor vehicle excise and certain payments made by the Commonwealth in lieu of taxes. The fiscal year ends
on J une 30. Notes may mature in the following fiscal year, and notes may be refunded into the following fiscal
year to the extent of the uncollected, unabated current tax levy and certain other items, including revenue
deficits, overlay deficits, final judgments and lawful unappropriated expenditures, which are to be added to the
next tax levy, but excluding deficits arising from a failure to collect taxes of earlier years (see Taxation to Meet
Deficits herein). In any event, the period from an original borrowing to its final maturity cannot exceed one
year.
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TYPES OF OBLIGATIONS

General Obligations. Massachusetts cities and towns are authorized to issue general obligation indebtedness of
these types:

Serial Bonds and Notes. These are generally required to be payable in annual principal amounts beginning no
later than the end of the next fiscal year commencing after the date of issue and ending within the terms
permitted by law. A level debt service schedule, or a schedule that provides for a more rapid amortization of
principal than level debt service, is permitted. The principal amounts of certain economic development bonds
supported by tax increment financing may be payable in equal, diminishing or increasing amounts beginning
within 5 years after the date of issue. The maximum terms of serial bonds and notes vary from one year to 40
years, depending on the purpose of the issue. The maximum terms permitted are set forth in the statutes. In
addition, for many projects, the maximum term may be determined in accordance with useful life guidelines
promulgated by the State Department of Revenue (DOR). Serial bonds and notes may be issued for the
purposes set forth in the statutes. In addition, serial bonds and notes may be issued for any other public work
improvement or asset not specifically listed in the statutes that has a useful life of at least 5 years. Bonds or
notes may be made callable and redeemed prior to their maturity, and a redemption premium may be paid.
Refunding bonds or notes may be issued subject to the maximum applicable term measured from the date of the
original bonds or notes and must produce present value savings over the debt service of the refunded bonds.
Generally, the first required annual payment of principal of the refunding bonds cannot be later than the first
principal payment of any of the bonds or notes being refunded thereby however, principal payments made before
the first principal payment of any of the bonds or notes being refunded thereby may be in any amount.

Serial bonds may be issued as qualified bonds with the approval of the state Municipal Finance Oversight Board
subject to such conditions and limitations (including restrictions on future indebtedness) as may be required by the
Board. Qualified bonds may mature not less than 10 nor more than 30 years from their dates and are not subject to
the amortization requirements described above. The State Treasurer is required to pay the debt service on qualified
bonds and thereafter to withhold the amount of the debt service from state aid or other state payments;
administrative costs and any loss of interest income to the State are to be assessed upon the city or town.

Tax Credit Bonds or Notes. Subject to certain provisions and conditions, the officers authorized to issue bonds
or notes may designate any duly authorized issue of bonds or notes as tax credit bonds to the extent such bonds
and notes are otherwise permitted to be issued with federal tax credits or other similar subsidies for all or a
portion of the borrowing costs. Tax credit bonds may be made payable without regard to the annual installments
required by any other law, and a sinking fund may be established for the payment of such bonds. Any
investment that is part of such a sinking fund may mature not later than the date fixed for payment or redemption
of the applicable bonds.

Bond Anticipation Notes. These generally must mature within two years of their original dates of issuance but
may be refunded from time to time for a period not to exceed five years from their original dates of issuance,
provided that for each year that the notes are refunded beyond the second year they must be paid in part from
revenue funds in an amount at least equal to the minimum annual payment that would have been required if the
bonds had been issued at the end of the second year. For certain school projects, however, notes may be
refunded from time to time for a period not to exceed seven years without having to pay any portion of the
principal of the notes from revenue funds. The maximum term of bonds issued to refund bond anticipation notes
is measured (except for certain school projects) from the date of the original issue of the notes.

Revenue Anticipation Notes. These are issued to meet current expenses in anticipation of taxes and other
revenues. They must mature within one year but, if payable in less than one year, may be refunded from time to
time up to one year from the original date of issue.
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Grant Anticipation Notes. These are issued for temporary financing in anticipation of federal grants and state
and county reimbursements. They must generally mature within two years but may be refunded from time to
time as long as the municipality remains entitled to the grant or reimbursement.

Revenue Bonds. Cities and towns may issue revenue bonds for solid waste disposal facilities, for projects
financed under the Commonwealth's Water Pollution Abatement or Drinking Water Revolving Loan Programs
and for certain economic development projects supported by tax increment financing. In addition, cities and
towns having electric departments may issue electric revenue bonds, and notes in anticipation of such bonds,
subject to the approval of the State Department of Telecommunications and Energy. The Town does not have an
electric department.

DEBT (1)

The following shows the direct debt to be outstanding as of March 15, 2014:

General Obligation Bonds:
Within General Debt Limit (2)
Sewers & Drains (3) $23,577,484
Schools 458,000
Other Building 17,226,000
Streets, Sidewalks & Parking 280,000
Athletic & Recreational Facilities (4) 819,000 $42,360,484
Outside General Debt Limit:
Sewer (3) $20,260,303
Schools (5) 30,010,000
Other Outside General 823,151
Water (3) 261,000 51,354,454
Total Outstanding General Obligation Bonds $93,714,938 (6)
Temporary Loans in Anticipation of:
Revenue $ 0
Bonds 0
Grants 0
Total Temporary Loans 0
Total Direct Debt $93,714,938
_____________________
(1) Principal amount only. Excludes lease and installment purchase obligations, overlapping debt, unfunded pension liability and
other post-employment benefits liability.
(2) At the present time, the normal General Debt Limit is $150,903,030 and the Double General Debt Limit (see Debt Limits herein) is
$301,806,060.
(3) Debt service on sewer and water bonds are self-supporting through user fees.
(4) Debt service on these bonds is expected to be paid from Community Preservation Funds.
(5) Outstanding school debt is currently reimbursed by Massachusetts School Building Authority at the rate of 71% of approved
construction and interest costs. Such grants are payable in equal annual installments over the life of the school bonds.
(6) $29,791,151 has been exempted from the provisions of Proposition 2 .
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Authorized Unissued Debt and Prospective Financing

The Town has $61,299,068 authorized unissued debt for the following purposes:

Amount Purpose Expected Issuance Date
$36,964,642 High School Addition Reflects MSBA grant of 62.50% and remaining Town
share
19,546,426 Sewer Various dates- To be issued through MWPATs 2%
loan program and repaid through user fees
1,500,000 Landfill Closure Unknown
1,420,000 Land Acquisition Unknown
1,300,000 Town Hall Addition 2015
350,000 School Feasibility Study Town Share $125,000, MSBA $225,000
50,000 Canney Farm Development Balance to be rescinded
75,000 Salt Shed Unknown
30,000 Water Meters Unknown, to be repaid through user fees.
63,000 Land Acquisition Unknown
$61,299,068

Capital Expenditures Projection

The Municipal Charter for the Town of Dracut provides for the development of a five-year Capital Improvement
Program. This program is developed by the Capital Planning Committee appointed by the Town Manager. The
Committee has the responsibility for the initial plan as well as revising, updating and amending the plan. The
Capital Plan, which is an integral part of the budgetary process, is submitted to the Finance Committee in the late
winter/spring of each year. The following is the plan for the fiscal years beginning J uly 1, 2013 and ending J une
30, 2018:

2014 2015 2016 2017 2018
Fire Equipment (1) $ 87,500 $ 87,500 $ 87,500 $ 87,500 $ 87,500
Fire Building 0 0 0 2,000,000

Public Works Equipment (1) 135,000 171,000 135,000 135,000 135,000
Sewer (2) 7,100,000 5,000,000 0 0 0
Sidewalks & Roads 0 195,000 0 600,000 0
Total $7,322,500 $5,453,500 $222,500 $2,822,500 $222,500
_______________
(1) Funded through the operation equipment replacement fund.
(2) Construction work on previously authorized projects, expected to be financed through MWPAT.

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Five Years Outstanding Debt (1)
(000 omitted)
As of June 30
2013 2012 2011 2010 2009
Long-Term Indebtedness
Within General Debt Limit:
Sewers & Drains $25,555 $21,827 $23,765 $25,681 $27,602
Schools 598 750 890 1,030 1,170
Other Building 9,284 10,170 11,014 11,871 12,728
Streets, Sidewalks & Parking 280 350 422 494 570
Departmental Equipment 0 0 3 6 9
Architectural & Engineering Services 0 0 4 8 12
Athletic & Recreational Facilities 1,154 1,540 1,925 150 175
Total Within General Debt Limit 36,871 34,637 38,023 39,240 42,266
Outside General Debt Limit:
Sewers 19,734 21,385 14,824 1,040 1,120
Schools 7,010 8,966 10,475 12,018 13,561
Other Outside General 990 1,156 6,875 1,525 1,711
Water 313 365 421 0 0
Total Outside General Debt Limit 28,047 31,872 32,595 14,583 16,392
Total Long-Term Indebtedness 64,918 66,509 70,618 53,823 58,658
Short-Term Indebtedness:
Revenue 0 0 0 0 0
Bonds 16,400 12,950 0 4,697 1,375
Grants 0 0 0 0 0
Total Short-Term Indebtedness 16,400 12,950 0 4,697 1,375
Total Outstanding Indebtedness $81,318 $79,459 $70,618 $58,520 $60,033
________________
(1) Excludes lease and installment purchase obligations, overlapping debt, unfunded pension liability and other post-employment benefits
liability.

Bond Debt vs. Population, Valuations and Income

As of June 30
2013 2012 2011 2010 2009
Amount (1) (000 omitted) $64,918 $66,509 $70,618 $53,823 $58,658
Per Capita (2) $2,148 $2,200 $2,372 $1,827 $1,994
Percent of Assessed Valuation (3) 2.32% 2.31% 2.49% 1.82% 1.89%
Percent of Equalized Valuation (4) 2.15% 2.09% 2.22% 1.54% 1.68%
Per Capita as a Percent of
Personal Income per Capita (2) 6.81% 6.98% 7.52% 5.79% 6.32%
___________________
(1) Outstanding principal on general obligation bonds. Excludes lease and installment purchase obligations, overlapping debt,
unfunded pension liability and other post-employment benefits liability.
(2) Source: U.S. Department of Commerce, Bureau of the Census - Latest applicable actuals or estimates.
(3) Assessed valuation used here is the assessed valuation for that fiscal year.
(4) Equalized valuation used here is the equalized valuation in effect for that fiscal year.

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Annual Debt Service (1)
Cumulative
Fiscal Outstanding as of 03/15/14 % Principal
Year Principal (2) Interest (2) Total Retired
2014 $ 2,375,000 $ 409,380 $ 2,784,380 2.5%
2015 7,719,174 3,346,917 11,066,091 10.8
2016 7,696,591 2,874,759 10,571,350 19.0
2017 6,909,918 2,608,317 9,518,235 26.4
2018 6,848,859 2,351,941 9,200,800 33.7
2019 6,713,432 2,118,236 8,831,669 40.8
2020 5,521,917 1,886,615 7,408,532 46.7
2021 4,859,280 1,683,244 6,542,523 51.9
2022 4,892,208 1,502,189 6,394,397 57.1
2023 4,915,710 1,319,310 6,235,020 62.4
2024 4,549,798 1,149,605 5,699,403 67.2
2025 4,379,485 993,063 5,372,549 71.9
2026 3,699,783 840,386 4,540,168 75.8
2027 3,460,704 721,022 4,181,726 79.5
2028 3,272,001 613,637 3,885,638 83.0
2029 3,302,400 511,437 3,813,836 86.6
2030 3,182,275 409,232 3,591,506 90.0
2031 3,220,060 304,404 3,524,464 93.4
2032 2,210,344 207,826 2,418,170 95.7
2033 2,236,001 122,395 2,358,396 98.1
2034 1,750,000 38,281 1,788,281 100.0%
$93,714,938 $26,012,195 $119,727,132
___________________
(1) Excludes revenue anticipation notes, grant anticipation notes, bond anticipation notes, lease and installment purchase obligations,
overlapping debt, unfunded pension liability and other post-employment benefits liability.
(2) Principal totaling $29,791,151 and interest totaling $11,520,097 has been exempted from the provisions of Proposition 2 .
(3) Principal totaling $45,311,787 and interest totaling $9,152,523 is self-supporting.

Revenue Anticipation Borrowing

The Town has not borrowed in anticipation of revenue in any of the last five fiscal years.

CONTRACTS

Municipal contracts are generally limited to currently available appropriations. A city or town generally has
authority to enter into contracts for the exercise of any of its corporate powers for any period of time deemed to
serve its best interests, but generally only when funds are available for the first fiscal year; obligations for
succeeding fiscal years generally are expressly subject to availability and appropriation of funds. Municipalities
have specific authority in relatively few cases to enter into long-term contractual obligations that are not subject
to annual appropriation, including contracts for refuse disposal and sewage treatment and disposal.
Municipalities may also enter into long-term contracts in aid of housing and renewal projects. There may be
implied authority to make other long-term contracts required to carry out authorized municipal functions, such as
contracts to purchase water from private water companies.
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Municipal contracts relating to solid waste disposal facilities may contain provisions requiring the delivery of
minimum amounts of waste and payments based thereon and requiring payments in certain circumstances
without regard to the operational status of the facilities.

Municipal electric departments have statutory power to enter into long-term contracts for joint ownership and
operation of generating and transmission facilities and for the purchase or sale of capacity, including contracts
requiring payments without regard to the operational status of the facilities. The Town does not have an electric
department.

Pursuant to the Home Rule Amendment to the Massachusetts Constitution, (see CONSTITUTIONAL STATUS
AND FORM OF GOVERNMENT herein), cities and towns may also be empowered to make other contracts and
leases.

The Town has a limited number of contractual obligations. These include school busing and solid waste disposal
and collection.

For the fiscal years beginning J uly 1, 2010 and ending J une 30, 2015, the Town has a long-term contract with
Coventa Energy for solid waste disposal. The contract includes an option to renew through fiscal 2020. The
cost per ton for fiscal 2011 was $67, for a fiscal 2011 cost of $756,834. The cost per ton for fiscal 2012 was
$69, for a fiscal 2012 cost of $708,163. The cost per ton for fiscal 2013 was $71, for a fiscal 2013 cost of
$765,874. The cost per ton for fiscal 2014 is $73 for a budgeted fiscal 2014 cost of $771,000.

The current year school busing contract is with North Reading Transportation, Inc. which expires J une 30, 2015.
The amount expended for fiscal 2011 was $1,523,475, the amount expended for fiscal 2012 was $1,523,475 and
the amount expended for fiscal 2013 was $1,573,000.

On J uly 1, 2003 the Town contracted with F.W. Russell Disposal, Inc. for the collection of solid waste in the
Town. The Town has extended this contract for an additional three years to 2013. Fiscal year 2011 cost for this
purposes was $812,040, for fiscal 2012 the cost was $844,200 and for fiscal 2013 the cost was $869,400. The
Town also has a contract with FW Russell Disposal Inc. for the collection of recycling. The fiscal 2011 cost for
this purpose was $275,580, the cost for fiscal 2012 was $283,860 and the cost for fiscal 2013 was $261,010. The
Town also has a contract with FW Russell Disposal Inc. for hazardous waste collection. The fiscal 2011 cost
was $3,400, the fiscal 2012 cost was $3,500 and for fiscal 2013 the cost was $3,500. The Town has renewed the
contract through 2016 with an extention option to 2018. The costs associated with collection of trash will be as
follows:


Fiscal Year
Trash
Collection
Collection of
Recycling
2014 $679,896 $409,560
2015 696,876 419,796
2016 714,288 430,236
2017 735,660 443,100
2018 757,680 456,384
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OVERLAPPING DEBT

The following table sets forth the portion of overlapping debt relating to the Town (1):

Assessment
for Operations
Authorized and Debt Service
Outstanding Unissued Fiscal Year 2014
Greater Lowell Regional
Vocational Technical School
District (2) $0 $0 $3,612,786

Lowell Regional Transit Authority (3) $0 $0 $ 133,464
__________________
(1) Excludes temporary loans in anticipation of revenue. Omits debt of the Commonwealth.
(2) Source: Greater Lowell Regional Technical Vocational High School. Debt is projected as of March 15, 2014. The shares of the member
municipalities vary from year to year according to pupil enrollment. The share shown here has been estimated by the District based on present
circumstances, which are subject to change. The other District members are the Towns of Dunstable and Tyngsboro, and the City of Lowell.
(3) Source: Lowell Regional Transit Authority. Debt is projected as of March 15, 2014. The municipal share is based on a percentage furnished by
the Lowell Regional Transit Authority as that used in the most recent assessment of aggregate net cost of service of the Authority, including debt
service and net operating expenses, although assessments for various categories of service are separately calculated by various formulas.

RETIREMENT PLAN

The Massachusetts General Laws provide for the establishment of contributory retirement systems for state
employees, for teachers and for county, city and town employees other than teachers. Teachers are assigned to a
separate statewide teachers system and not to the city and town systems. For all employees other than teachers, this
law is subject to acceptance in each city and town. Substantially all employees of an accepting city or town are
covered. If a town has a population of less than 10,000 when it accepts the statute, its non-teacher employees
participate through the county system and its share of the county cost is proportionate to the aggregate annual rate of
regular compensation of its covered employees. In addition to the contributory systems, cities and towns provide
non-contributory pensions to a limited number of employees, primarily persons who entered service prior to July 1,
1937 and their dependents. The Public Employee Retirement Administration Commission (PERAC) provides
oversight and guidance for and regulates all state and local retirement systems.

The obligations of a city or town, whether direct or through a county system, are contractual legal obligations and
are required to be included in the annual tax levy. If a city or town, or the county system of which it is a member,
has not established a retirement system funding schedule as described below, the city or town is required to provide
for the payment of the portion of its current pension obligations which is not otherwise covered by employee
contributions and investment income. Excess earnings, or earnings on individual employees retirement accounts
in excess of a predetermined rate, are required to be set aside in a pension reserve fund for future, not current,
pension liabilities. Cities and towns may voluntarily appropriate to their systems pension reserve fund in any given
year up to five percent of the preceding years tax levy. The aggregate amount in the fund may not exceed ten
percent of the equalized valuation of the city or town.

If a city or town, or each member city and town of a county retirement system, has accepted the applicable law, it is
required to annually appropriate an amount sufficient to pay not only its current pension obligations, but also a
portion of its future pension liability. The portion of each such annual payment allocable to future pension
obligations is required to be deposited in the pension reserve fund. The amount of the annual city or town
appropriation for each such system is prescribed by a retirement system funding schedule which is periodically
reviewed and approved by PERAC. Each systems retirement funding schedule is designed to reduce the unfunded
actuarial pension liability of the system to zero by not later than June 30, 2030, with annual increases in the
scheduled payment amounts of not more than 4.5 percent. The funding schedule must provide that payment in any
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year of the schedule is not less than 95 percent of the amount appropriated in the previous fiscal year. City, town
and county systems which have an approved retirement funding schedule receive annual pension funding grants
from the Commonwealth for the first 16 years of such funding schedule. Pursuant to recent legislation, a system
(other than the state employees retirement system and the teachers retirement system) which conducts an actuarial
valuation as of January 1, 2009, or later, may establish a revised schedule which reduces the unfunded actuarial
liability to zero by not later than June 30, 2040, subject to certain conditions. If the schedule is so extended under
such provisions and a later updated valuation allows for the development of a revised schedule with reduced
payments, the revised schedule shall be adjusted to provide that the appropriation for each year shall not be less than
that for such year under the prior schedule, thus providing for a shorter schedule rather than reduced payments. The
Town is a member of the Middlesex Retirement System. The Middlesex Retirement Board, with its members
approval, has set its fully funded target date at 2035.

City, town and county systems may choose to participate in the Pension Reserves Investment Trust Fund (the PRIT
Fund), which receives additional state funds to offset future pension costs of participating state and local systems. If
a local system participates in the PRIT Fund, it must transfer ownership and control of all assets of its system to the
Pension Reserves Investment Management Board, which manages the investment and reinvestment of the PRIT
Fund. Cities and towns with systems participating in the PRIT Fund continue to be obligated to fund their pension
obligations in the manner described above. The additional state appropriations to offset future pension liabilities of
state and local systems participating in the PRIT Fund are required to total at least 1.3 percent of state payroll. Such
additional state appropriations are deposited in the PRIT Fund and shared by all participating systems in proportion
to their interests in the assets of the PRIT Fund as of July 1 for each fiscal year.

Cost-of-living increases for each local retirement system may be granted and funded only by the local system, and
only if it has established a funding schedule. Those statutory provisions are subject to acceptance by the local
retirement board and approval by the local legislative body, which acceptance may not be revoked.

The Town participates in the contributory retirement system of Middlesex County. The annual contributions to
the contributory retirement system for the current and most recent years are set forth below:

Fiscal Year Amount
2014 (budgeted) $3,933,300
2013 3,406,221
2012 3,289,736
2011 3,222,411
2010 3,141,804
2009 2,831,464

As of J une 30, 2012 the Town's share of the total estimated accrued liability of the Middlesex County Retirement
System was $79,865,516, and its assets were $34,040,500 leaving an estimated unfunded accrued liability of
$45,825,016 based on an investment return assumption of 8.125% which was lowered from 8.25% (1).

A portion of the Towns share of the unfunded liability attributed to the additional benefits payable by the Town
as a results of its 2002 Early Retirement Incentive Program was funded with the proceeds of $2,175,000 bonds in
November, 2005.

The foregoing data do not include the retirement system costs or liabilities attributable to employees of the
county or the retirement system costs or liabilities of any other entity of which the Town is a constituent part.
______________________
(1) Source: The Segal Group, Inc. actuarial study as approved by the Division of Public Employee Retirement Administration.
12

OTHER POST-EMPLOYMENT BENEFITS

In addition to pension benefits, cities and towns may provide retired employees with health care and life
insurance benefits. The portion of the cost of such benefits paid by cities or towns is generally provided on a
pay-as-you-go basis. The Governmental Accounting Standards Boards (GASB) Statements 43 and 45 require
public sector entities to report the future costs of these non-pension, post-employment benefits in their financial
statements. These accounting standards do not require pre-funding such benefits, but the basis applied by the
standards for measurement of costs and liabilities for these benefits is conservative if they continue to be funded on a
pay-as-you-go basis and will result in larger yearly cost and liability accruals than if such benefits were pre-funded
in a trust fund in the same manner as traditional pension benefits. Cities and towns that choose to self-insure all or a
portion of the cost of the health care benefits they provide to employees and retirees may establish a trust fund for
the purpose of paying claims. In addition cities and towns may establish a trust fund for the purpose of pre-funding
other post-employment benefits liability in the same manner as traditional pension benefits.

The Town was required to implement the GASB reporting requirements for other post-employment benefits
beginning in fiscal year 2009. The Town has completed its GASB 43 and 45 actuarial valuation of its non-
pension, post-employment benefit liability. The actuarial accrued liability for the Town of Dracut as of J anuary
1, 2011 is estimated to be $141,452,538 on a pay-as-you-go basis 4.50% investment rate of return assumed). This
would require an additional annual contribution by the Town of $5,264,468 on a pay-as-you-go basis. The Town is
considering establishing a budget line to begin to address this liability. The Town is incorporating $100,000 in the
Fiscal 2015 budget to begin funding the OPEB liability. In June, 2014 the Town intends to establish a Trust Fund
for this purpose.

PROPERTY TAXATION

Tax Rate and Valuation-General. Property is classified for the purpose of taxation according to its use. The
legislature has in substance created three classes of taxable property: (1) residential real property, (2) open space
land, and (3) all other (commercial, industrial and personal property). Within limits, cities and towns are given the
option of determining the share of the annual levy to be borne by each of the three categories. The share required to
be borne by residential real property is at least 50 percent of its share of the total taxable valuation; the effective rate
for open space must be at least 75 percent of the effective rate for residential real property; and the share of
commercial, industrial and personal property must not exceed 175 percent of their share of the total valuation. A
city or town may also exempt up to 20 percent of the valuation of residential real property (where used as the
taxpayers principal residence) and up to 10 percent of the valuation of commercial real property (where occupied
by certain small businesses). Property may not be classified in a city or town until the State Commissioner of
Revenue certifies that all property in the city or town has been assessed at its fair cash value. Such certification must
take place every three years, or pursuant to a revised schedule as may be issued by the Commissioner. Related
statutes provide that certain forest land, agricultural or horticultural land (assessed at the value it has for these
purposes) and recreational land (assessed on the basis of its use at a maximum of 25 percent of its fair cash
value) are all to be taxed at the rate applicable to commercial property. Land classified as forest land is valued
for this purpose at five percent of fair cash value but not less than ten dollars per acre.

In order to determine appropriate relative values for the purposes of certain distributions to and assessments
upon cities and towns, the Commissioner of Revenue biennially makes his own redetermination of the fair cash
value of the taxable property in each municipality. This is known as the "equalized valuation". See DEBT
LIMITS herein.
13

Valuations

The following shows the assessed and equalized valuations for the current and most recent fiscal years:

For Fiscal Year
2014 2013 2012 (3) 2011 2010
Real Property (1) $2,697,835,500 $2,709,723,900 $2,792,437,400 $2,755,867,500 $2,870,812,400
Personal Property (1) 80,555,623 82,816,425 81,498,686 81,306,698 82,065,174
Total $2,778,391,123 $2,792,540,325 $2,873,936,086 $2,837,174,198 $2,952,877,574

Equalized Valuation (2) $3,018,060,600 $3,018,060,600 $3,175,898,800 $3,175,898,800 $3,486,807,900
Percent of Total Assessed
to Equalized Valuation 92.1% 92.5% 90.5% 89.3% 84.7%
______________________________
(1) As of January 1 of the prior fiscal year.
(2) Based on equalized valuation in effect for each year as determined biennially by the State Department of Revenue as of January 1
of even numbered years effective for the next two fiscal years.
(3) Reflects revaluation.

The following table shows the breakdown of the total assessed valuation for fiscal years 2014, 2013 and 2012 by
classification:
2014 2013 2012
Assessed % of Assessed % of Assessed % of
Class Valuation Total Valuation Total Valuation Total
Residential $2,504,925,425 90.2% $2,517,610,845 90.1% $2,599,243,865 90.5%
Commercial 142,870,485 5.1 142,641,165 5.1 143,470,035 5.0
Industrial 50,039,590 1.8 49,471,890 1.8 49,723,500 1.7
Personal 80,555,623 2.9 82,816,425 3.0 81,498,686 2.8
Total $2,778,391,123 100.% $2,792,540,325 100.0% $2,873,936,086 100.0%

Tax Rates

The following shows the actual tax rates per $1,000 of assessed valuation and the full value rate for the current
and most recent fiscal years:

Fiscal Actual Full Value
Year Tax Rate Tax Rate
2014 $14.49 $13.34
2013 13.79 12.76
2012 12.93 11.70
2011 12.69 11.34
2010 11.81 10.00
14

LARGEST TAXPAYERS (1)

The following is a list of the ten largest taxpayers for fiscal year 2014:

Nature Total Assessed
of Valuation for Amount Percent of
Name Business 2014 of Tax Total Levy
Massachusetts Electric Utility $ 17,806,364 $ 258,014 0.63%
Maritimes & Northeast Co. Utility 14,467,200 209,630 0.53
Corcoran Skyline, LLC Rental Apartments 14,232,600 206,230 0.52
Colonial Gas Utility 12,678,875 185,021 0.46
Verizon New England Utility 9,805,500 142,082 0.35
Draco Homes, Inc. Contractor 8,556,600 123,985 0.31
Princeton Dracut LLC Rental Apartments 7,953,700 115,249 0.29
Gerald J . Lussier Contractor 7,957,500 115,304 0.29
Brox Industries Quarry 7,906,800 114,570 0.28
Dracut Real Estate Real Estate 6,957,575 100,815 0.25
$108,322,714 $1,570,900 3.91%
__________________
(1) All of the largest taxpayers listed above are current on their real estate and personal property taxes.

TAX LEVIES

Levy - General. The principal tax of Massachusetts cities and towns is the tax on real and personal property.
The amount to be levied in each year is the amount appropriated or required by law to be raised for municipal
expenditures less estimated receipts from other sources and less appropriations voted from funds on hand. The
total amount levied is subject to certain limits prescribed by law; for a description of those limits see Tax
Limitations herein. As to the inclusion of debt service and final judgments, see SECURITY AND REMEDIES
herein.

The estimated receipts for a fiscal year from sources other than the property tax may not exceed the actual
receipts during the preceding fiscal year from the same sources unless approved by the State Commissioner of
Revenue. Excepting special funds the use of which is otherwise provided for by law, the deduction for
appropriations voted from funds on hand for a fiscal year cannot exceed the "free cash" as of the beginning of the
prior fiscal year as certified by the State Director of Accounts plus up to nine months' collections and receipts on
account of earlier years' taxes after that date. Subject to certain adjustments, free cash is surplus revenue less
uncollected overdue property taxes from earlier years.

Although an allowance is made in the tax levy for abatements (see Abatements and Overlay herein) no reserve
is generally provided for uncollectible real property taxes. Since some of the levy is inevitably not collected, this
creates a cash deficiency which may or may not be offset by other items (see Taxation to Meet Deficits
herein).

Taxation to Meet Deficits. As noted elsewhere (see Abatements and Overlay herein) overlay deficits, i.e. tax
abatements in excess of the overlay included in the tax levy to cover abatements, are required to be added to the
next tax levy. It is generally understood that revenue deficits, i.e. those resulting from non-property tax revenues
being less than anticipated, are also required to be added to the tax levy (at least to the extent not covered by
surplus revenue).

15

Amounts lawfully expended since the prior tax levy and not included therein are also required to be included in
the annual tax levy. The circumstances under which this can arise are limited since municipal departments are
generally prohibited from incurring liabilities in excess of appropriations except for major disasters, mandated
items, contracts in aid of housing and renewal projects and other long-term contracts. In addition, utilities must
be paid at established rates and certain established salaries, e.g. civil service, must legally be paid for work
actually performed, whether or not covered by appropriations.

In the opinion of Bond Counsel, cities and towns are authorized to appropriate sums, and thus to levy taxes, to
cover deficits arising from other causes, such as "free cash" deficits arising from a failure to collect taxes. This
is not generally understood, however, and it has not been the practice to levy taxes to cover free cash deficits.
Except to the extent that such deficits have been reduced or eliminated by subsequent collections of uncollected
taxes (including sales of tax titles and tax possessions), lapsed appropriations, non-property tax revenues in
excess of estimates, other miscellaneous items or funding loans authorized by special act, they remain in
existence.

Tax Limitations. Chapter 59, Section 21C of the General Laws, known as "Proposition 2 1/2", imposes two
separate limits on the annual tax levy of a city or town.

The primary limitation is that the tax levy cannot exceed 2 1/2 percent of the full and fair cash value. If a city or
town exceeds the primary limitation, it must reduce its tax levy by at least 15 percent annually until it is in
compliance, provided that the reduction can be reduced in any year to not less than 7 1/2 percent by majority
vote of the voters, or to less than 7 1/2 percent by two-thirds vote of the voters.

For cities and towns at or below the primary limit, a secondary limitation is that the tax levy cannot exceed the
maximum levy limit for the preceding fiscal year as determined by the State Commissioner of Revenue by more
than 2 1/2 percent subject to exceptions for property added to the tax rolls or property which has had an increase,
other than as part of a general revaluation in its assessed valuation over the prior year's valuation.

This growth limit on the tax levy may be exceeded in any year by a majority vote of the voters, but an increase in
the secondary or growth limit under this procedure does not permit a tax levy in excess of the primary limitation,
since the two limitations apply independently. In addition, if the voters vote to approve taxes in excess of the
growth limit for the purpose of funding a stabilization fund, such increased amount may only be taken into
account for purposes of calculating the maximum levy limit in each subsequent year if the board of selectmen of a
town or the city council of a city votes by a two-thirds vote to appropriate such increased amount in such subsequent
year to the stabilization fund. The applicable tax limits may also be reduced in any year by a majority of the voters.

The applicable tax limits may also be reduced in any year by a majority of the voters.

The State Commissioner of Revenue may adjust any tax limit "to counterbalance the effects of extraordinary,
non-recurring events which occurred during the base year".

The statute further provides that the voters may exclude from the taxes subject to the tax limits and from the
calculations of the maximum tax levy (a) the amount required to pay debt service on bonds and notes issued
before November 4, 1980, if the exclusion is approved by a majority vote of the voters, and (b) the amount
required to pay debt service on any specific subsequent issue for which similar approval is obtained. Even with
voter approval, the holders of the obligations for which unlimited taxes may be assessed do not have a statutory
priority or security interest in the portion of the tax levy attributable to such obligations. As noted above, debt
service on $29,791,151 of currently outstanding bonds is exempt from the tax levy limitations of
Proposition 2 , subject to the provisions of Chapter 44, Section 20 of the General Laws. It should be
noted that Massachusetts General Laws Chapter 44, Section 20 requires that the taxes excluded from the levy
limit to pay debt service on any such bonds and notes be calculated based on the true interest cost of the issue.
16

Accordingly, the Department of Revenue limits the amount of taxes which may be levied in each year to pay
debt service on any such bonds and notes to the amount of such debt service, less a pro rata portion of any
original issue premium received by the city or town that was not applied to pay costs of issuance.

Voters may also exclude from the Proposition 2 1/2 limits the amount required to pay specified capital outlay
expenditures. In addition, the city council of a city, with the approval of the Mayor if required, or the board of
selectmen or the town council of a town may vote to exclude from the Proposition 2 limits taxes raised in lieu
of sewer or water charges to pay debt service on bonds or notes issued by the municipality (or by an independent
authority, commission or district) for water or sewer purposes, provided that the municipality's sewer or water
charges are reduced accordingly.

In addition, Proposition 2 limits the annual increase in the total assessments on cities and towns by any county,
district, authority, the Commonwealth or any other governmental entity (except regional school districts, the MWRA
and certain districts for which special legislation provides otherwise) to the sum of (a) 2 percent of the prior years
assessments and (b) any increases in costs, charges or fees for services customarily provided locally or for services
subscribed to at local option. Regional water districts, regional sewerage districts and regional veterans districts
may exceed these limitations under statutory procedures requiring a two-thirds vote of the districts governing body
and either approval of the local appropriating authorities (by two-thirds vote in districts with more than two
members or by majority vote in two-member districts) or approval of the registered voters in a local election (in the
case of two-member districts). Under Proposition 2 any State law to take effect on or after January 1, 1981
imposing a direct service or cost obligation on a city or town will become effective only if accepted or voluntarily
funded by the city or town or if State funding is provided. Similarly, State rules or regulations imposing additional
costs on a city or town or laws granting or increasing local tax exemptions are to take effect only if adequate State
appropriations are provided. These statutory provisions do not apply to costs resulting from judicial decisions.

Pledged Taxes. Taxes on certain property in designated development districts may be pledged for the payment of
costs of economic development projects within such districts and may therefore be unavailable for other municipal
purposes.

Initiative Petitions. Various other proposals have been made in recent years for legislative amendments to the
Massachusetts Constitution to impose limits on state and local taxes. To be adopted such amendments must be
approved by two successive legislatures and then by the voters at a state election.
17

CALCULATION OF TAX LEVIES AND LEVY LIMITS

The following table shows the details of the calculation of the tax levies for the current and most recent fiscal
years:

(000 omitted)
For Fiscal Year
2014 2013 2012 2011 2010
Gross Amount To Be Raised:
Appropriations $80,729 $78,369 $74,860 $72,275 $70,401
Other Local Expenditures 361 208 369 177 219
State & County Charges 1,681 1,130 991 826 847
Overlay Reserve 343 313 334 336 315
Total Gross Amount To Be Raised $83,114 $80,020 $76,554 $73,614 $71,782
Less Estimated Receipts & Other Revenue:
Estimated Receipts from State $24,000 $23,266 $22,623 $22,664 $22,319
Estimated Receipts Local 17,330 17,183 15,553 13,760 13,500
Available Funds Appropriated:
Free Cash 0 0 0 200 315
Other Available Funds 1,525 1,062 1,050 987 775
Free Cash & Other Revenue Used to
Reduce the Tax Rate 0 0 168 0 0
Total Estimated Receipts & Revenue $42,855 $41,511 $39,394 $37,611 $36,909
Net Amount To Be Raised (Tax Levy) $40,259 $38,509 $37,160 $36,003 $34,873

The following shows the calculation of levy limits for the current and most recent fiscal years:

(000 omitted)
For Fiscal Year
2014 2013 2012 2011 2010
Primary Levy Limit (1) $69,460 $69,814 $71,848 $70,929 $73,822

Prior Fiscal Year Levy Limit 37,570 36,228 35,032 33,890 32,714
2.5% Levy Growth 939 906 876 847 818
New Growth (2) 383 437 319 294 358
Overrides 0 0 0 0 0
Growth Levy Limit 38,892 37,571 36,227 35,031 33,890
Debt Exclusions 1,370 964 944 978 999
Capital Expenditure Exclusions 0 0 0 0 0
Tax Levy Limit 40,262 38,535 37,171 36,009 34,889
Tax Levy (3) 40,289 38,509 37,160 36,004 34,873
Unused Levy Capacity (4) $ 3 $ 26 $ 11 $ 5 $ 16
Unused Primary Levy Capacity (5) $30,567 $32,243 $35,621 $35,898 $39,932
__________________
(1) 2.5% of assessed valuation.
(2) Allowed addition for new valuations - certified by the Department of Revenue.
(3) Exclusive of the surcharge property tax levied under the Community Preservation Act, which is not included in the total taxes
assessed for purposes of calculating and determining compliance with the levy limits. (See Community Preservation Act herein.)
(4) Tax Levy Limit less Tax Levy.
(5) Primary Levy Limit less Growth Levy Limit.
18

TAX COLLECTIONS & ABATEMENTS

Payment Dates. The taxes for each fiscal year are due in two installments on November 1 (subject to deferral if tax
bills are sent out late) and May 1, unless the city or town accepts a statute providing for quarterly tax payments.
Under that statute, preliminary tax payments are due on August 1 and November 1 with payment of the actual tax
bill (after credit is given for the preliminary payments) in installments on February 1 and May 1 if actual tax bills are
mailed by December 31. Interest accrues on delinquent taxes at the rate of 14 per cent per annum. The Town has
had quarterly tax billing for many years.

Lien. Real property (land and buildings) is subject to a lien for the taxes assessed upon it, subject to any paramount
federal lien and subject to bankruptcy and insolvency laws. (In addition, real property is subject to a lien for certain
unpaid municipal charges or fees.) If the property has been transferred, an unenforced lien expires on the fourth
December 31 after the end of the fiscal year to which the tax relates. If the property has not been transferred by the
fourth December 31, an unenforced lien expires upon a later transfer of the property. Provision is made, however,
for continuation of the lien where it could not be enforced because of a legal impediment.

Personal Liability. The persons against whom real or personal property taxes are assessed are personally liable for
the tax (subject to bankruptcy and insolvency laws.) In the case of real property, this personal liability is effectively
extinguished by sale or taking of the property as described below.

The following shows the total tax levy, the reserve for abatements, the net levy and the amounts collected during each
fiscal year and as of a more recent date for the current and each of the most recent fiscal years, exclusive of the
surcharge on the property tax levied under the Community Preservation Act:

For Fiscal Year
2014 2013 2012 2011 2010
Total Tax Levy (1) $40,258,887 $38,509,131 $37,159,994 $36,003,741 $34,873,484
Overlay Reserve for Abatements 343,380 313,458 333,945 336,435 315,128
Net Tax Levy (2) $39,915,507 $38,195,673 $36,826,049 $35,667,306 $34,558,356
Amount Collected
During Fiscal Year Payable (3) N/A $37,500,652 $36,450,114 $35,283,953 $34,201,280
Percent of Net Tax Levy N/A 98.2% 98.9% 98.9% 99.0%
Amount Collected
Through 2/1/14 (3) $25,160,625 $38,022,962 $36,714,207 $35,640,220 $34,410,767
Percent of Net Tax Levy 63.0% 99.5% 99.6% 99.9% 99.6%
_____________________
(1) Exclusive of the surcharge on the property tax accrued under the Community Preservation Act.
(2) Net after deduction of overlay reserve for abatements.
(3) Actual collections of levy less refunds and amounts refundable but including proceeds of tax titles and tax possessions attributed to
such levy but not including abatements or other credits.

Abatements and Overlay. A city or town is authorized to increase each tax levy by an amount approved by the
State Commissioner of Revenue as an overlay to provide for tax abatements. If abatements are granted in excess
of the applicable overlay, the excess is required to be added to the next tax levy.

Abatements are granted where exempt real or personal property has been assessed or where taxable real or personal
property has been overvalued or disproportionately valued. The assessors may also abate uncollectible personal
property taxes. They may abate real and personal property taxes on broad grounds (including inability to pay) with
the approval of the State Commissioner of Revenue. But uncollected real property taxes are ordinarily not written
off until they become municipal tax titles by purchase at the public sale or by taking, at which time the tax is
written off in full by reserving the amount of the tax and charging surplus.
19

The following shows the abatements granted during the fiscal year as well as through a more recent date for each
of the most recent fiscal years:

For Fiscal Year
2014 2013 2012 2011 2010
Tax Levy (1) $40,258,887 $38,509,131 $37,159,994 $36,003,741 $34,873,484
Overlay Reserve for Abatements 343,380 313,458 333,945 336,435 315,128
Percent of Tax Levy 0.9% 0.8% 0.9% 0.9% 0.9%
Abatements Granted:
During Fiscal Year of Levy N/A $269,187 $269,068 $297,840 $306,897
Through 2/1/14 $236,480 $269,187 $269,480 $299,518 $308,904
_____________________
(1) Exclusive of the surcharge on the property tax levied pursuant to the Community Preservation Act (see Community Preservation
Act herein).

Taking and Sale. Massachusetts law permits a municipality either to sell by public sale (at which the municipality
may become the purchaser) or to take real property for nonpayment of taxes. In either case the property owner can
redeem the property by paying the unpaid taxes, with interest and other charges, but if the right of redemption is not
exercised within six months (which may be extended an additional year in the case of certain installment payments),
it can be foreclosed by petition to the Land Court. Upon foreclosure, a tax title purchased or taken by the
municipality becomes a tax possession and may be held and disposed of in the same manner as other land held for
municipal purposes.

Sale of Tax Receivables. Cities and towns are authorized to sell delinquent property tax receivables by public sale
or auction, either individually or in bulk.

Taxes Outstanding

The following shows taxes outstanding at the end of each of the last five fiscal years:

For Fiscal Year (000)
2013 2012 2011 2010 2009
Aggregate (1) $594 $361 $544 $339 $593
For Current Year (1) 477 345 470 334 583
Tax Titles and Possessions 775 947 648 903 572

____________________
(1) Excludes tax titles, tax possessions and abated taxes. Includes taxes in litigation, if any.

TOWN FINANCES

Budget and Appropriation Process

The annual appropriations of a town are ordinarily made at the annual meeting which takes place in J une.
Appropriations may also be voted at special meetings. Every town must have an appropriation, advisory or
finance committee. The committee (or the board of selectmen if authorized by by-laws) is required to submit a
budget of proposed expenditures at the annual town meeting.

Under certain circumstances and subject to certain limits and requirements, the city council of a city, upon the
recommendation of the mayor, may transfer amounts appropriated for the use of one department (except for a
municipal light department or a school department) to another appropriation for the same department or for the use
of any other department. Town meeting may at any time vote to transfer any amount previously appropriated to any
other authorized use by law, and, under certain circumstances and subject to certain limits and requirements, the
selectmen of a town, with the concurrence of the finance committee, may transfer amounts appropriated for the use
of any department to any other appropriation for the same department or to any other department.
20


Water and sewer department expenditures are generally included in the budgets adopted by town meetings but
electric and gas department funds may be appropriated by the municipal light boards. Under certain legislation
any city or town which accepts the legislation may provide that the appropriation for the operating costs of any
department may be offset, in whole or in part, by estimated receipts from fees charged for services provided by
the department. It is assumed that this general provision does not alter the pre-existing power of an electric or
gas department to appropriate its own receipts.

The school budget is limited to the total amount appropriated by the town meeting, but the school committee
retains full power to allocate the funds appropriated. State legislation known as the Education Reform Act of
1993, as amended, imposes certain minimum expenditure requirements on municipalities with respect to funding
for education. The requirements are determined on the basis of formulas affected by various measures of wealth
and income, enrollments, prior levels of local spending and state aid, and other factors. From fiscal 1994 to the
present, the Towns net school spending has exceeded the minimum required local contribution.

State and county assessments, abatements in excess of overlays, principal and interest not otherwise provided for
and final judgments are included in the tax levy whether or not included in the budget. Revenues are not
required to be set forth in the budget but estimated non-tax revenues are taken into account by the assessors in
fixing the tax levy. (See Property Taxation and Valuation herein.)

Budget Comparison

The following table sets forth the budgets for fiscal years 2010-2014:

Category
2014

2013

2012

2011

2010
General Government $ 2,505,025 $ 2,481,850 $ 2,450,200 $ 2,370,300 $ 2,347,950
Public Safety 7,164,775 6,873,275 6,750,675 6,604,625 6,441,400
Education 32,402,786 31,776,513 31,544,129 31,138,734 30,359,819
Public Works 5,056,550 5,003,975 4,888,175 4,852,975 4,764,700
Human Services 681,700 679,300 657,900 698,775 696,600
Culture & Recreation 919,750 913,575 899,450 900,525 875,825
Debt Service 4,337,900 4,279,050 4,138,050 4,165,000 4,184,925
Miscellaneous (1) 13,798,300 13,405,000 12,272,200 11,957,000 11,452,925
Reserves 255,000 245,000 245,000 80,000 90,000
Total $66,121,786 $65,657,538 $63,845,779 $62,767,934 $61,214,144
__________
(1) Includes pension and employee insurance expenses and snow and ice deficits.

STATE AID

In addition to grants for specified capital purposes (some of which are payable over the life of the bonds issued
for the projects), the Commonwealth provides financial assistance to cities and towns for current purposes.
Payments to cities and towns are derived primarily from a percentage of the State's personal income, sales and
use, and corporate excise tax receipts, together with the net receipts from the State Lottery. A municipality's
state aid entitlement is based on a number of different formulas, of which the "schools" and "lottery" formulas
are the most important. Both of the major formulas tend to provide more state aid to poorer communities. The
formulas for determining a municipalitys state aid are subject to amendment by the State legislature and, while a
formula might indicate that a particular amount of state aid is owed, the amount of state aid actually paid is
limited to the amount appropriated by the state legislature. The state annually estimates state aid, but the actual
state aid payments may vary from the estimate.
21

The following table sets forth the actual State aid received in each of the most recent fiscal years and the
budgeted amount for fiscal 2014:.

For Fiscal Year
2014 2013 2012 2011 2010 2009 (1)
Total State Aid $22,569,383 $21,834,146 $21,543,384 $21,661568 $21,252,763 $20,734,381
_________________
(1) For fiscal 2009, the Towns initial state aid estimate, upon which it based its operating budget, was $23,178,822. On January 28,
2009, Massachusetts Governor Deval Patrick announced mid-year reductions in state aid for most communities, including Dracut, in
response to growing fiscal pressures on the Commonwealth of Massachusetts. The Towns reduction, which was in its Lottery and
Additional Assistance aid totaled $424,928. The Town used budgetary reductions and reserve allocations to respond to this reduction.

State School Building Assistance Program

Under its school building assistance program, The Commonwealth of Massachusetts provides grants to cities,
towns and regional school districts for school construction projects. Until J uly 26, 2004, the State Board of
Education was responsible for approving grants for school projects and otherwise administering the program.
Grant amounts ranged from 50% to 90% of approved project costs. Municipalities generally issued bonds to
finance the entire project cost, and the Commonwealth disbursed the grants in equal annual installments over the
term of the related bonds.

Pursuant to legislation which became effective on J uly 26, 2004, the state legislature created the Massachusetts
School Building Authority (the Authority) to finance and administer the school building assistance program.
The Authority has assumed all powers and obligations of the Board of Education with respect to the program. In
addition to certain other amounts, the legislation dedicates a portion of Commonwealth sales tax receipts to the
Authority to finance the program.

Projects previously approved for grants by the State Board of Education are entitled to receive grant payments
from the Authority based on the approved project cost and reimbursement rate applicable under the prior law.
The Authority has paid and is expected to continue to pay the remaining amounts of the grants for such projects
either in annual installments to reimburse debt service on bonds issued by the municipalities to finance such
projects, or as lump sum payments to contribute to the defeasance of such bonds.

Projects on the priority waiting list as of J uly 1, 2004 are also entitled to receive grant payments from the
Authority based on the eligible project costs and reimbursement rates applicable under the prior law. With
limited exceptions, the Authority is required to fund the grants for such projects in the order in which they
appear on the waiting list. Grants for any such projects that have been completed or substantially completed
have been paid and are expected to continue to be paid by the Authority in lump sum payments, thereby
eliminating the need for the Authority to reimburse interest expenses that would otherwise be incurred by the
municipalities to permanently finance the Authoritys share of such project costs. Interest on debt issued by
municipalities prior to J uly 1, 2004 to finance such project costs, and interest on temporary debt until receipt of
the grant, is included in the approved costs of such projects. Grants for any such projects that have not yet
commenced or that are underway have been and are expected to continue to be paid by the Authority as project
costs are incurred by the municipality pursuant to a project funding agreement between the Authority and the
municipality eliminating the need for the municipality to borrow even on a temporary basis to finance the
Authoritys share of the project costs in most cases.

The range of reimbursement rates for new project grant applications submitted to the Authority on or after J uly
1, 2007 has been reduced to between 40% and 80% of approved project costs. The Authority promulgated new
regulations with respect to the application and approval process for projects submitted after J uly 1, 2007. The
Authority expects to pay grants for such projects as project costs are incurred pursuant to project funding
agreements between the Authority and the municipalities. None of the interest expense incurred on debt issued
by municipalities to finance their portion of the costs of new projects will be included in the approved project
costs eligible for reimbursement.
22

MOTOR VEHICLE EXCISE

An excise is imposed on the registration of motor vehicles (subject to exemptions) at the rate of $25 per $1,000
of valuation. The excise is collected by and for the benefit of the municipality in which the motor vehicle is
customarily kept. Valuations are determined by a statutory formula based on manufacturer's list price and year
of manufacture. Bills not paid when due bear interest at 12 percent per annum. Provision is also made, after
notice to the owner, for suspension of the owner's operating license or registration by the registrar of motor
vehicles.

The following table shows the actual motor vehicle receipts in each of the most recent fiscal years and the
budgeted amount for fiscal 2014:

For Fiscal Year (1)
2014 2013 2012 2011 2010
Motor Vehicle Excise Taxes $3,400,000 $3,515,602 $3,347,356 $3,329,458 $3,136,582
_________________
(1) Net after refunds. Includes receipts for prior years.

SEWER ENTERPRISE

The financial operations of the Towns sewer services are accounted as an enterprise fund. It is the Towns
policy to maintain sewer rates to be sufficient to cover the full costs of providing the service, including debt
service, depreciation, and administrative costs incurred by the Town.

Current Sewer Rates

Residential - $520.00 annually with quarterly billings at $130.00.

Commercial - Semi-annual metered billing receiving a minimum sewer bill of $260.00 on November 1st and
May 1
st
, plus for usage over 4,000 cubic feet, the excess rate is $6.50 per 100 cubic feet.

The following table shows operating revenues and retained earnings for the sewer funds.

SEWER FUNDS

Fiscal Year
Operating
Revenues

Net Assets
2013 $6,203,961 $28,215,621
2012 6,071,742 26,253,236
2011 5,415,872 24,141,860
2010 5,493,854 22,584,031
2009 3,965,426 19,722,432


23

COMMUNITY PRESERVATION ACT

The Massachusetts Community Preservation Act (the CPA) permits cities and towns that accept its provisions
to levy a surcharge on its real property tax levy and to receive state matching funds for the acquisition, creation,
preservation, rehabilitation and restoration of open space, historic resources and affordable housing. The
provisions of the CPA must be accepted by the voters of the city or town at an election after such provisions
have first been accepted by either a vote of the legislative body of the city or town or an initiative petition signed
by 5% of its registered voters.

A city or town may approve a surcharge of up to 3% of the real property tax levy, and it may accept one or more
exemptions to the surcharge under the CPA, including an exemption for low-income individuals and families
and for low and moderate-income senior citizens, an exemption for $100,000 of the value of each taxable parcel
of residential real property, and an exemption for commercial and industrial properties in cities and towns with
classified tax rates. The surcharge is not counted in the total taxes assessed for the purpose of determining the
permitted levy amount under Proposition 2 (see Tax Limitations under PROPERTY TAX above). A city
or town may revoke its acceptance of the provisions of the CPA at any time after 5 years from the date of such
acceptance and may change the amount of the surcharge or the exemptions to the surcharge at any time, provided
that any such revocation or change must be approved pursuant to the same process as acceptance of the CPA.

Any city or town that accepts the provisions of the CPA will receive annual state matching grants to supplement
amounts raised by its surcharge on the real property tax levy. The state matching funds are raised from certain
recording and filing fees of the registers of deeds. Those amounts are deposited into a state trust fund and are
distributed to cities and towns that have accepted the provisions of the CPA, which distributions are not subject
to annual appropriation by the state legislature. The amount distributed to each city and town is based on a
statutory formula which requires that 80% of the amount in the state trust fund be used to match an equal
percentage of the amount raised locally by each city and town, and that the remaining 20% of the amount in the
fund be distributed only to those cities and towns that levy the maximum 3% surcharge based on a formula
which takes into account equalized property valuation and population, resulting in larger distributions to those
communities with low valuations and small populations. The total state distribution made to any city or town
may not, however, exceed 100% of the amount raised locally by the surcharge on the real property tax levy.

The amounts raised by the surcharge on real property taxes and received in state matching funds are required to
be deposited in a dedicated community preservation fund. Each city or town that accepts the provisions of the
CPA is required to establish a community preservation committee to study the community preservation needs of
the community and to make recommendations to the legislative body of the city or town regarding the
community preservation projects that should be funded from the community preservation fund. Upon the
recommendations of the committee, the legislative body of the city or town may appropriate amounts from the
fund for permitted community preservation purposes or may reserve amounts for spending in future fiscal years,
provided that at least 10% of the total annual revenues to the fund must be spent or set aside for open space
purposes, 10% for historic resource purposes and 10% for affordable housing purposes.

The CPA authorizes cities and towns that accept its provisions to issue bonds and notes in anticipation of the
receipt of surcharge revenues to finance community preservation projects approved under the provisions of the
CPA. Bonds and notes issued under the CPA are general obligations of the city or town and are payable from
amounts on deposit in the community preservation fund. In the event that a city or town revokes its acceptance
of the provisions of the CPA, the surcharge shall remain in effect until all contractual obligations incurred by the
city or town prior to such revocation, including the payment of bonds or notes issued under the CPA, have been
fully discharged.
24

The Town has accepted the Community Preservation Act and set a rate at 2% minus certain exemptions. The
Town collected $532,032 in fiscal 2004, $528,624 in fiscal 2005, $553,612 in fiscal 2006, $588,278 in fiscal
2007, $618,063 in fiscal 2008, $635,314 in fiscal 2009, $656,160 in fiscal 2010, $682,528 in fiscal 2011,
$706,756 in fiscal 2012 and $729,860 in fiscal 2013. The current balance in the fund as of J une 30, 2013 is
$7,682,821.

TAX INCREMENT FINANCING FOR DEVELOPMENT DISTRICTS

Under recent legislation, cities and towns are authorized to establish development districts to encourage
increased residential, industrial and commercial activity. All or a portion of the taxes on growth in assessed
value in such districts may be pledged and used solely to finance economic development projects pursuant to the
city or towns development program for the district. This includes pledging such tax increments for the
payment of bonds issued to finance such projects. As a result of any such pledge, tax increments raised from
new growth properties in development districts are not available for other municipal purposes. Tax increments
are taken into account in determining the total taxes assessed for the purpose of calculating the maximum
permitted tax levy under Proposition 2 1/2 (see Tax Limitations under Property Tax herein). The Town has
not established any such development districts.

UNDESIGNATED GENERAL FUND BALANCE AND FREE CASH

Under Massachusetts law an amount known as "free cash" is certified as of the beginning of each fiscal year by
the State Bureau of Accounts and this, together with certain subsequent tax receipts, is used as the basis for
subsequent appropriations from available funds, which are not required to be included in the annual tax levy.
Subject to certain adjustments, free cash is surplus revenue less uncollected and overdue property taxes from
prior years. The Town Accountant may certify as available for appropriation an adjusted free cash figure by
adding back those uncollected and overdue property taxes which are subsequently collected between J uly 1 and
the following March 31 of any year.

The following table sets forth the undesignated general fund balance and certified free cash for the most recent
fiscal years:
Unassigned and
Undesignated General Fund
FISCAL Balance (Deficit) (1) Free Cash
2013 $3,515,321 $ 821,001
2012 1,765,393 1,646,835
2011 (1) 1,303,574 1,390,469
2010 1,335,271 1,345,518
2009 909,537 1,499,903
___________________
(1) Effective fiscal 2011, due to GASB 54 compliance, the Undesignated General Fund Balance is now titled Unassigned on the
General Fund Balance Sheet. In Fiscal 2013, the General Stabilization Fund of approximately $1,706,000 was included in the
Unassigned General Fund Balance.
25

STABILIZATION FUND

The Town maintains two stabilization funds. Funded by appropriations, these Stabilization Funds, plus interest
income, may be appropriated at an annual or special town meeting for any project. The first is the general
stabilization fund and the second is to offset increases in trash disposal charges. The following shows the
balance in the accounts for the most recent fiscal years:

June 30, General Trash Disposal
2013 $1,119,237 $221,401
2012 2,167,159 (1) 465,457
2011 1,640,319 458,749
2010 1,337,897 448,165
2009 1,190,056 434,555
___________________
(1) Includes the Town Hall Stabilization Fund balance. This fund was established to pay a portion of the debt service on the Town Hall
Bonds included in the Series B Bonds. These funds show under the Committed Fund on the General Fund Balance Sheet. In Fiscal
2013, the General Stabilization Fund was moved to the Unassigned Fund Balance leaving only the Town Hall and Trash Disposal
Stabilization Funds under Committed Fund.

INVESTMENTS

Investments of funds of cities and towns, except for trust funds, are generally restricted by Massachusetts
General Laws Chapter 44 section 55. That statute permits investments of available revenue funds and bond and
note proceeds in term deposits and certificates of deposits of banks and trust companies, in obligations issued or
unconditionally guaranteed by the federal government or an agency thereof with a maturity of not more than one
year, in repurchase agreements with a maturity of not more than 90 days secured by federal or federal agency
securities, or in participation units in the Massachusetts Municipal Depository Trust (MMDT), or in shares in
SEC-registered money market funds with the highest possible rating from at least one nationally recognized
rating organization.

MMDT is an investment pool created by the Commonwealth. The State Treasurer is the sole trustee and the
funds are managed under contract by an investment firm under the supervision of the State Treasurers office.
According to the State Treasurer the Trusts investment policy is designed to maintain an average weighted
maturity of 90 days or less and is limited to high-quality, readily marketable fixed income instruments, including
U.S. Government obligations and highly-rated corporate securities with maturities of one year or less.

Trust funds, unless otherwise provided by the donor, may be invested in accordance with section 54 of Chapter
44, which permits a broader range of investments than section 55, including any bonds or notes that are legal
investments for savings banks in the Commonwealth. The restrictions imposed by sections 54 and 55 do not
apply to city and town retirement systems. The Town has voted a formal investment policy.

COLLECTIVE BARGAINING

City and town employees (other than managerial and confidential employees) are entitled to join unions and to
bargain collectively on questions of wages, hours and other terms and conditions of employment.

26

The Town has approximately 1,038 full and part-time permanent employees of whom approximately 50 percent
belong to unions or other collective bargaining groups as follows:
Number of Contract
Union Department Members Expires (1)
Dracut Teachers Association Teachers 245 6/30/14
Massachusetts Teachers Association Nurses 7 6/30/11
Massachusetts Teachers Association Paraprofessionals 102 6/30/14
AFSCME-AFL-CIO, Council 93, Local 1404 Custodians 18 6/30/14
AFSCME-AFL-CIO, Council 93, Local 1404 Maintenance 8 6/30/14
AFSCME-AFL-CIO, Council 93, Local 1404 Secretaries 21 6/30/14
AFSCME-AFL-CIO, Council 93, Local 1404 Administrators 5 6/30/14
Dracut Cafeteria Association Cafeteria 25 6/30/13
International Association of Firefighters Firefighters & Dispatchers 37 6/30/15
International Brotherhood of Police Police 39 6/30/14
Officers-Local 379 Police Dispatchers 3 6/30/15
National Association of Government Town Secretaries 23 6/30/13
American Federation of State & County
Municipal Employees, Local 1404,
Council 93, AFL-CIO Tree & Highway 23 6/30/13
533
___________________
(1) The expired contracts are in negotiation. The Town does not expect any major impasse as a result of the present negotiations.

PHYSICAL AND ECONOMIC CHARACTERISTICS

The Town of Dracut is located in northeastern Massachusetts along the New Hampshire border in Middlesex
County. The principal highways serving the Town are State Routes 113 and 110, and Interstate Route 93 with
access to Route 495. Route 93 provides easy access to Boston (south) and New Hampshire (north). With a
population of approximately 31,000, the Town occupies a land area of approximately 21 square miles and is
primarily a residential community with some commercial and industrial activity. Meadow Creek, a new golf
course recently constructed, is surrounded by 180 homes with a projected selling price between $500,000 to
$1,000,000. The current average cost of a new home in the Town is $450,000.

The Lowell Regional Transit Authority provides bus service between Dracut and Lowell. Commuter rail service
to Boston is available on a regular basis in nearby Lowell.

Principal Employers

The following are the principal employers located in the Town, excluding the Town itself:
Approximate
Company Nature of Business Current Employees
Hannaford Supermarket 225
George Brox Inc. Contractor/Construction 181
Dunkin Donuts Franchise 155
Verizon New England Inc. Communications 125
Old Dominion Freight Lines Inc. Trucking 81
Toupin Rigging Co., Inc. Contractor 64
Poland Springs Warehouse 64
Lenzi Catering Restaurant/Functions 60
Masili Manufacturer 52
________________
Source: Individual employers listed, February 2014.
27

OTHER DATA

Unemployment (1)

Year Dracut Massachusetts United States
2013 (December) 6.2% 6.7% 6.5%
2012 6.7 6.7 8.1
2011 7.3 6.8 8.9
2010 9.0 8.5 9.6
2009 8.7 8.2 9.3
________________
(1) Source: Massachusetts Executive Office of Labor & Worforce Development. Full year annual adjusted averages except for 2013
which is the month indicated and unadjusted.

Population (1)

Dracut Middlesex County Massachusetts
Year Number % Change Number % Change Number % Change
2012 (Est.) 30,220 2.6% 1,537,215 2.3% 6,646,144 1.5%
2010 29,457 3.1 1,503,085 2.6 6,547,629 3.1
2000 28,562 11.6 1,465,396 4.8 6,349,097 5.5
1990 25,594 20.4 1,398,468 2.3 6,016,425 4.9
1980 21,249 16.7 1,367,034 (2.2) 5,737,037 0.8
_______________
(1) Source: U.S. Department of Commerce for actuals and estimates.

Population Density (1)

Dracut Middlesex County Massachusetts
Year Number Density (2) Number Density Number Density
2012 (Est.) 30,220 1,445.9 1,537,215 1,866.6 6,646,144 847.9
2010 29,457 1,409.4 1,503,085 1,825.1 6,547,629 835.4
2000 28,562 1,366.6 1,465,396 1,779.4 6,349,097 810.0
1990 25,594 1,224.6 1,398,468 1,698.1 6,016,425 767.6
1980 21,249 1,016.7 1,367,034 1,659.9 5,737,037 732.0
_______________
(1) Source: U.S. Department of Commerce for actuals and estimates.
(2) Based on 20.8 square miles.
28

Population Composition 2012 5-year estimates (1)

Dracut Middlesex County Massachusetts
Age Number Percent Number Percent Number Percent
Under 5 Years 1,881 6.4% 85,858 5.7% 366,952 5.6%
5 Years to 19 Years 5,875 19.9 277,546 18.4 1,257,302 19.2
20 Years to 64 Years 18,063 61.1 945,456 62.7 4,025,262 61.4
65 Years & Over 3,754 12.7 198,698 13.2 911,079 13.9
Total 29,573 100.0% 1,507,558 100.0% 6,560,595 100.0%

Median Age 39.3 38.5 39.1
Median Age (2000) 36.1 36.4 36.5
__________________________
(1) Source: U.S. Department of Commerce.


Income Levels (1)

Dracut Middlesex County Massachusetts
% Change from % Change from % Change from
Age Amount Previous Census Amount Previous Census Amount Previous Census
Per Capita-Personal
2012 5-yr est. $31,540 32.8% $42,289 35.5% $35,485 36.7%
1999 23,750 43.9 31,199 53.4 25,952 50.7
1989 16,508 136.7 20,343 141.1 17,224 131.0
1979 6,974 8,439 7,457

Median Family
Income (2012) $89,258 $102,480 $84,380
Median Household
Income (2012) $73,331 $81,420 $66,658
% Below Poverty
Level (2012) 4.4% 7.9% 11.0%
________________
(1) Source: U.S. Department of Commerce.


Family Income Distribution 2012 5-year estimates (1)

Dracut Middlesex County Massachusetts
Income for Families Families Percent Families Percent Families Percent
Less than $10,000 63 0.8% 8,758 2.4% 57,204 3.6%
$10,000 - $24,999 556 7.0 22,381 6.1 132,790 8.3
$25,000 - $49,999 1,002 12.6 47,577 12.9 260,930 16.3
$50,000 - $74,999 1,532 19.2 50,166 13.6 257,973 16.1
$75,000 - $99,999 1,594 20.0 50,766 13.7 235,746 14.7
$100,000 - $149,999 2,113 26.5 84,320 22.8 331,738 20.7
$150,000 or more 1,111 13.9 105,960 28.6 327,825 20.4
Total 7,971 100.0% 369,928 100.0% 1,604,206 100.0%
_______________
(1) Source: U.S. Department of Commerce.
29

Household Income Distribution 2012 5-year estimates (1)
Dracut Middlesex County Massachusetts
Income for Households Households Percent Households Percent Households Percent
Less than $10,000 254 2.3% 27,350 4.7% 159,535 6.3%
$10,000 - $24,999 1,148 10.5 62,187 10.7 345,816 13.7
$25,000 - $49,999 1,917 17.5 91,079 15.7 472,301 18.7
$50,000 - $74,999 2,261 20.6 87,693 15.1 412,921 16.3
$75,000 - $99,999 1,843 16.8 76,803 13.3 329,572 13.0
$100,000 - $149,999 2,282 20.8 111,082 19.2 422,194 16.7
$150,000 or more 1,256 11.5 123,015 21.2 383,355 15.2
Total 10,961 100.0% 579,209 100.0% 2,525,694 100.0%
_______________
(1) Source: U.S. Department of Commerce.


Value Distribution Of Specified Owner-Occupied Housing Units 2012 5-year estimates (1)

Dracut Middlesex County Massachusetts
Units Number Percent Number Percent Number Percent
Less than $100,000 286 3.3% 8,186 2.2% 55,908 3.5%
$100,000 - $199,999 1,265 14.4 20,196 5.5 201,702 12.6
$200,000 - $299,999 3,212 36.5 58,603 16.0 402,530 25.2
$300,000 - $499,999 3,621 41.2 162,541 44.4 603,907 37.8
$500,000 - $999,999 361 4.1 98,530 26.9 276,805 17.3
$1,000,000 or more 54 0.6 18,069 4.9 55,107 3.5
Total 8,799 100.0% 366,125 100.0% 1,595,959 100.0%

Median Value $289,000 $401,300 $335,500
_______________
(1) Source: U.S. Department of Commerce.


Age Of Distribution Of Housing Units 2012 5-year estimates (1)

Dracut Middlesex County Massachusetts
Year Built Number Percent Number Percent Number Percent
2000 or later 884 7.7% 43,257 7.1% 199,233 7.1%
1980 to 1999 3,971 34.4 99,270 16.2 508,334 18.1
1940 to 1979 5,156 44.6 244,858 40.1 1,115,159 39.8
1939 or Earlier 1,537 13.3 223,953 36.6 981,480 35.0
Total 11,548 100.0% 611,338 100.0% 2,804,206 100.0%
_______________
(1) Source: U.S. Department of Commerce.

30


Housing Unit Inventory (1)

Dracut Middlesex County Massachusetts
Units Number Percent Number Percent Number Percent
1, Detached 7,822 67.7% 298,215 48.8% 1,471,460 52.5%
1, Attached 842 7.3 37,571 6.1 141,098 5.0
2 to 4 963 8.3 136,346 22.3 596,892 21.3
5 to 9 626 5.4 31,742 5.2 168,231 6.0
10 to 19 570 4.9 28,685 4.7 120,233 4.3
20 or More 696 6.0 76,246 12.5 281,775 10.0
Mobile Home, Trailer, or Other 29 0.3 2,533 0.4 24,517 0.9
Total 11,548 100.0% 611,338 100.0% 2,804,206 100.0%
_______________
(1) Source: U.S. Department of Commerce.


Educational Attainment 2012 5-year estimates (1)

Dracut Middlesex County Massachusetts
Years of School Completed Number Percent Number Percent Number Percent
Less than 9th Grade 741 3.6% 39,450 3.8% 216,669 4.9%
9th to 12th Grade, No Diploma 1,458 7.1 44,636 4.3 268,218 6.0
High School Graduate 6,660 32.6 228,467 21.9 1,156,650 25.9
Some College, No Degree 4,444 21.7 143,456 13.7 739,171 16.6
Associates Degree 2,001 9.8 63,971 6.1 344,724 7.7
Bachelors Degree 3,447 16.9 268,306 25.7 989,299 22.2
Graduate or Professional Degree 1,685 8.2 255,610 24.5 751,167 16.8
Total 20,436 100.0% 1,043,896 100.0% 4,465,898 100.0%

High School Graduate or Higher 18,237 89.2% 959,810 91.9% 3,981,011 89.1%
Bachelors Degree or Higher 5,132 25.1% 523,916 50.2% 1,740,466 39.0%
_______________
(1) Source: U.S. Department of Commerce.

Public School Enrollments
Actual Projected
09/10 10/11 11/12 12/13 13/14 14/15
Elementary 2,222 2,203 2,223 2,215 2,229 2,220
J unior High 736 701 657 619 622 640
Senior High 1,154 1,116 1,088 1,033 962 1,013
Totals 4,112 4,020 3,968 3,867 3,813 3,873
_________________
Source: School Department as of October 1
st
, each year.

31

Employment by Industry

Calendar Year Average
2012 2011 2010 2009 2008
Construction & Natural Resources 739 655 646 681 731
Manufacturing 461 453 433 403 427
Trade, Transportation & Utilities 1,236 1,239 1,184 1,193 1,264
Financial Activities 196 199 176 177 178
Professional & Business Services 276 237 229 224 234
Education & Health Services 448 436 348 340 371
Leisure & Hospitality 777 797 777 676 728
Information & Other Services 404 377 248 435 264
Total Employment 5,245 5,124 4,910 4,809 5,052

Number of Establishments 625 635 602 569 579
Annual Wage $212,282 $200,154 $190,463 $191,756 $200,350
Total Annual Payroll (000) $778 $751 $746 $767 $763
____________________
Source: Massachusetts Executive Office of Labor & Workforce Development.

Building Permits

Calendar Estimated
Year Number Value
2013 814 $14,205,125
2012 853 16,195,115
2011 1,035 28,374,000
2010 1,037 26,479,126
2009 1,054 33,578,271
________________
Source: Town of Dracut Building Department.

LITIGATION

At present there are a number of suits pending in which the Town is a defendant. In the opinion of Town
Counsel, none of the pending litigation is considered likely to result, either individually or in the aggregate, in
final judgments which would materially affect the Town's financial position.


TOWN OF DRACUT
Massachusetts


By: /s/ Ann Vandal
Finance Director/ Treasurer


Dated: March 15, 2014
A-1
APPENDIX A

The following Balance Sheets for fiscal years ending J une 30, 2013 through 2009 and the Combined Statement
of Revenues, Expenditures and Changes in Fund Balance for fiscal years 2013 through 2009 are taken from the
audited financial reports of the Town.

The Town engaged the firm of Melanson, Heath & Company, P.A., Certified Public Accountants to audit the
accounts of the Town for fiscal 2013. This audit is reproduced in Appendix B.


A-2
TOWN OF DRACUT
MASSACHUSETTS
Balance Sheets (1)
General Fund
June 30,



2013 2012 2011 2010 2009
Assets and Other Debits:
Cash and Cash Investments $14,688,176 $ 8,207,199 $5,693,471 $4,579,656 $6,082,305
Receivables:
Property Taxes 1,008,436 956,119 836,134 913,102 616,905
Excise Taxes 592,398 419,306 393,141 370,931 323,768
User fees 0 0 181,748 130,173 126,091
Intergovernmental 179,901 161,597 99,694 0 0
Departmental/Other Assets 447,925 508,331 1,495,970 793,271 977,457
Total Assets and Other Debits $16,916,836 $10,252,552 $8,700,158 $6,787,133 $8,126,526

Liabilities:
Warrants Payable/Accrued
Liabilities

$ 9,836,246

$ 3,775,205

$3,103,090

$3,186,424

$4,478,012
Deferred Revenues 0 1,916,381 1,805,588 1,948,232 1,942,004
Other Liabilities 7,918 4,582 6,969 6,629 6,629
Total Liabilities 9,844,164 5,696,168 4,915,647 5,141,285 6,426,645

Deferred Inflow of Resources (3) $ 2,039,933

Equity & Other Credits:
Fund Balances - Reserved 0 0 0 110,577 290,344
Committed (2) 1,340,638 2,632,616 2,099,069 0 0
Assigned (2) 176,780 158,375 381,868 0 0
Unreserved, Designated 0 0 0 200,000 500,000
Unassigned (2) 3,515,321 1,765,393 1,303,574 0 0
Unreserved, Undesignated 0 0 0 1,335,271 909,537
Total Equity & Other Credits 5,032,739 4,556,384 3,784,511 1,645,848 1,699,881

Total Liabilities & Equity $16,916,836 $10,252,552 $8,700,158 $6,787,133 $8,126,526
___________________
(1) Excerpts taken from audited financial statements of the Town prepared by Melanson, Heath & Company, P.A., Certified Public
Accountants.
(2) Effective fiscal 2011, due to GASB 54, there are changes in how Fund Balances are categorized and all the Stabilization Funds
are now classified as part of the General Fund under Committed Funds for fiscal 2011 and 2012, with General Stabilization moved to
the Unassigned Fund Balance for fiscal 2013.
(3) Represents property tax revenues applicable to the next fiscal year.
A-3
TOWN OF DRACUT
MASSACHUSETTS
Combined Statement of Revenue, Expenditures
and General Fund Balances (1)
General Fund
June 30,

2013 2012 2011 2010 2009
Revenues:
Taxes and Excises $41,473,123 $39,928,501 $38,874,637 $ 37,683,161 $ 36,734,264
Charges for Services 489,394 507,090 467,100 470,954 437,317
Licenses and Permits 340,350 345,768 357,692 378,695 366,226
Intergovernmental 31,395,393 30,977,414 29,871,621 29,086,940 27,610,089
Interest Penalties 413,176 348,840 548,170 166,526 197,567
Investment Income 111,500 124,245 98,938 162,802 171,156
Other 288,723 109,189 471,536 210,572 117,448
Total Revenues $74,511,659 $72,341,047 $70,689,694 $68,159,650 $65,634,067

Expenditures:
General Government $ 2,579,724 $ 2,138,509 $ 2,111,194 $ 2,009,521 $ 2,147,805
Public Safety 6,874,420 6,766,974 6,603,310 6,445,478 6,722,459
Education 39,690,100 39,413,617 38,514,524 36,888,289 35,584,359
Public Works 4,626,385 4,689,972 4,817,305 4,682,240 5,010,953
Human Services 670,484 642,850 653,870 684,875 691,621
Culture & Recreation 838,895 879,628 890,183 832,797 793,283
Debt Service 3,718,608 3,867,284 3,956,491 4,074,904 4,225,754
Intergovernmental 1,184,332 783,362 929,043 888,952 797,887
Insurance & Benefits 14,193,534 12,677,991 12,098,286 11,855,346 10,492,909
Total Expenditures $74,376,482 $71,860,187 $70,574,206 $68,362,402 $66,467,030

Excess of Revenues Over
(Under) Expenditures 135,177 480,860 115,488 (202,752) (832,963)

Other Financing Sources (Uses):
Transfers In 468,678 337,513 359,575 429,769 369,602
Proceeds of Refunding Bonds 12,965,000
Premiums on Refunding Bonds 892,476
Payment to Refunding Escrow (13,857,476)
Transfers Out (127,500) (46,500) (223,650) (281,050) (261,849)
Total Other Financing 341,178 291,873 135,925 148,719 107,753

Excess of Revenues and
Other Sources Over
(Under) Expenditures 476,355 771,873 251,413 (54,033) (725,210)

Fund Balances Begin (2) 4,556,384 3,784,511 3,533,098 1,699,881 2,425,091
Fund Balances Ending $ 5,032,739 $ 4,556,384 $ 3,784,511 $ 1,645,848 $ 1,699,881
__________________________
(1) Excerpts taken from audited financial statements of the Town prepared by Melanson, Heath & Company, P.A., Certified Public
Accountants.
(2) Effective fiscal 2011, due to GASB 54, there were changes in how Fund Balances are categorized and the Stabilization Fund is
now on the General Fund Balance Sheet.

B-1
APPENDIX B

There follows in this Appendix a copy of the J une 30, 2013 audit prepared by Melanson, Heath & Company,
P.A., Certified Public Accountants.
TOWN OF DRACUT, MASSACHUSETTS
Annual Financial Statements
For the Year Ended June 30, 2013
TABLE OF CONTENTS
INDEPENDENT AUDITORS' REPORT
MANAGEMENT'S DISCUSSION AND ANALYSIS
BASIC FINANCIAL STATEMENTS:
Government-wide Financial Statements:
Statement of Net Position
Statement of Activities
Fund Financial Statements:
Governmental Funds:
PAGE
1
3
12
13
Balance Sheet 14
Reconciliation of Total Governmental Fund Balances to
Net Position of Governmental Activities in the Statement
of Net Position 15
Statement of Revenues, Expenditures, and Changes
in Fund Balances 16
Reconciliation of the Statement of Revenues, Expenditures,
and Changes in Fund Balances of Governmental Funds to
the Statement of Activities 17
Schedule of Revenues and Other Sources, and Expenditures
and Other Uses - Budget and Actual - General Fund 18
Proprietary Funds:
Statement of Net Position 19
Statement of Revenues, Expenses, and Changes in Fund
NetPosWon 20
Statement of Cash Flows 21
Fiduciary Funds:
Statemeflt of Fiduciary Net Position 22
Statement of Chang*5 in Fiduciary Net Position 23
Notes to Financial Statements
REQUtRED SUPPLEMENTARY INFORMATION
Schedule of Funding Progress
PAGE
24
50
MELANSON HEATH & COMPANY, PC
8P-RTIFJEiJ PuBi.l<':
MANAGEMENT ADV'ISQRS
INDEPENDENT AUDITORS' REPORT
To the Board of Selectmen
Town of Dracut, Massachusetts
Report on the Financial Statements
We have audited the accompanying financial statements of the governmental
activities, the business-type activities, each major fund, and the aggregate remaining
fund information of the Town of Dracut, Massachusetts, as of and for the year ended
June 30, 2013, and the related notes to the financial statements, which collectively
comprise the Town of Dracut, Massachusetts' basic financial statements as listed in
the Table of Contents.
Management's Responsibility for the Financial Statements
The Town of Dracut, Massachusetts management is responsible for the preparation
and fair presentation of these financial statements in accordance with accounting
principles generally accepted in the United States of America; this includes the
design, implementation, and maintenance of internal control relevant to the prepara-
tion and fair presentation of financial statements that are free from material misstate-
ment, whether due to fraud or error.
Auditor's Responsibility
Our responsibility 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 of America 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 and perform the
audit to obtain reasonable assurance about whether the financial statements are
free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts
and disclosures ill the financial statements. The procedures selected depend on the
auditor's judgment, including the assessment of the risks of material misstatement of
the financial statements, whether due to fraud or error. In making those risk assess-
ments, the auditor considers internal control relevant to the entity's preparation and
!OZPerimeter Road 149 Hanover Street 10 New England Business Center Dri<e, 107 51 Da1is Street, Suite 1 P.O. Box 646
Naslwa, NH 03063 Manchester, NH 03101 Andetvcr, MA 01810 Greenfield, MA 01301 Ellsworth, ME 04605
800-282-2440 www.melansonheath.com.
fair presentation of the financial statements in order to design audit procedures that
are appropriate in the circumstances, but not for the purpose of expressing an opin-
ion on the effectiveness of the entity's internal control. Accordingly, we express no
such opinion. An audit also includes evaluating the appropriateness of accounting
policies used and the reasonableness of significant accounting estimates made
by management, as well as evaluating the overall presentation of the financial state-
ments.
We believe that the audit evidence we have obtained is sufficient and appropriate to
provide a basis for our audit opinions.
Opinions
In our opinion, the financiai statements referred to above present fairly. in all material
respects, the respective financial position of the governmental activities, the business-
type activities, each major fund, and the aggregate remaining fund information of the
Town of Dracut, Massachusetts, as of June 30, 2013, and the respective changes in
financial position and, where applicable, cash flows thereof and the r.espective budg-
etary comparison for the general fund for the year then ended in accordance with
accounting principles generally accepted in the United States of America.
Othei Matters
Required Supplementary Information
Accounting principles generally accepted in the United States of America require
that Management's Discussion and Analysis, and the Schedule of Funding Progress
be presented to supplement the basic financial statements. Such information,
although not a part of the basic financial statements, is required by the Govern-
mental Accounting Standards Board, who considers it to be an essential part of
financial reporting for placing the basic financial statements in an appropriate opera-
tional, economic, or historical context. We have applied certain limited procedures to
the required supplementary information in accordance with auditing standards
generally accepted in the United States of America, which consisted of inquiries of
management about the methods of preparing the information and comparing the
information for consistency with management's responses to our inquiries, the basic
financial statements, and other knowledge we obtained during our audit of the basic
financial statements. We do not express an opinion or provide any assurance on the
information because the limited procedures do not provide us with evidence suffi-
cient to express an opinion or provide any assurance.
~ ~ 1 / ~ r ~ jJ.c.
Andover, Massachusetts
November 8, 2013
2
MANAGEnliENT'S DISCUSSION AND ANALYSIS
As management of the Town of Dracut, we offer readers this narrative overview
and analysis of the financial activities of the Town of Dracut for the fiscal year
ended June 30, 2013. Unless otherwise noted, all amounts are expressed in
thousands.
A. OVERVIEW OF THE FINANCIAL STATEMENTS
This discussion and analysis is intended to serve as an introduction to the basic
financial statements. The basic financial statements are comprised of three com-
ponents: (1) government-wide financial statements, (2) fund financial state-
ments, and (3) notes to the financial statements. This report also contains other
supplementary information in addition to the basic financial statements them-
selves.
Government-wide financial statements. The government-wide financial state-
ments are designed to provide readers with a broad overview of our finances in
a manner similar to a private-sector business.
The Statement of Net Position presents information on .all assets and liabilities,
with the difference between the two reported as net position. Over time,
increases or decreases in net position may serve as a useful indicator of whether
the financial position is improving or deteriorating.
The Statement of Activities presents information showing how the government's
net position changed during the most recent fiscal year. All changes in net
position are reported as soon as the underlying event giving rise to the change
occurs, regardless of the timing of related cash flows. Thus, revenues and
expenses are reported in this statement for some items that will only result in
cash flows in future fiscal periods (e.g., uncollected taxes and earned but unused
vacation leave).
Both of the government-wide financial statements distinguish functions that are
principally supported by taxes and intergovernmental revenues (governmental
activities) from other functions that are intended to recover all or a significant
portion of their costs through user fees and charges (business-type activities).
The governmental activities include general government, public safety, educa-
tion, public works, health and human services, and culture and recreation. The
business-type activities include water and sewer activities.
Fund f i n n c i ~ statements. A fund is a grouping of related accounts that is used
to maintain control over resources that have been segregated for specific activi-
ties or objectives. Fund accounting is used to ensure and demonstrate compli-
ance with finance-related legal requirements. All of the funds can be divided into
three categories: governmental funds, proprietary funds and fiduciary funds.
3
Governmental funds. Governmental funds are used to account for essentially
the same functions reported as governmental activities in the government-wide
financial statements. However, unlike the government-wide financial statements,
governmental fund financial statements focus on near-term inflows and outflows
of spendable resources, as well as on balances of spendable resources available
at the end of the fiscal year. Such information may be useful in evaluating a gov-
ernment's near-term financing requirements.
Because the focus of governmental funds is narrower than that of the government-
wide financial statements, it is useful to compare the information presented for
governmental funds with similar information presented for governmental activities
in the government-wide financial statements. By doing so, readers may better
understand the long-term impact of the government's near-term financing deci-
sions. 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 between governmental funds and gov-
ernmental activities.
An annual appropriated budget is adopted for the general fund. A budgetary
comparison statement has been provided for the general fund to demonstrate
compliance with this budget.
Proprietary funds. Proprietary funds are maintained as follows:
Enterprise funds are used to report the same functions presented as business-
type activities in the government-wide financial statements. Specifically, enter-
prise funds are used to account for water and sewer operations.
Internal service funds are an accounting device used to accumulate and allocate
costs internally among various functions. Specifically, internal service funds are
used to account for self-insured employee health programs. Because these ser-
vices predominantly benefit governmental rather than business-type functions,
they have been included within governmental activities in the government-wide
financial statements.
Proprietary funds provide the same type of information as the business-type
activities reported in the government-wide financial statements, only in more
detail. The proprietary fund financial statements provide separate information
for the water and sewer operations. The sewer operations is considered to be
a major fund, while water operations is reported as a nonmajor fund.
Fiduciary funds. Fiduciary funds are used to account for resources held for the
benefit of parties outside the government. Fiduciary funds are not reflected in the
government-wide financial statements because the resources of those funds are
not available to support the Town's own programs. The accounting used for fidu-
ciary funds is much like that used for proprietary funds.
4
..
Notes to financial statements. The notes provide additional information that is
essential to a full understanding of the data provided in the government-wide and
fund financial statements.
Other information. In addition to the basic financial statements and accom-
panying notes, this report also presents certain required supplementary infor-
mation which is required to be disclosed by accounting principles generally
accepted in the United States of America.
B. FINANCIAL HIGHLIGHTS
As of the close of the current fiscal year, the total of assets exceeded liabili-
ties by $94,754 (i.e., net position), a change of $9,204 in comparison to the
prior year.
As of the close of the current fiscal year, governmental funds reported com-
bined ending fund balances of $1,226, a change of $(12,571) in comparison
to the prior year.
At the end of the current fiscal year, unassigned fund balance for the general
fund was $3,515, a change of $245 in comparison to the prior year.
Total long-term debt (i.e., bonds payable) at the close of the current fiscal
year was $60,204, a change of $(6,304) in comparison to the prior year.
C. GOVERNMENT -WIDE FINANCIAL ANALYSIS
The following is a summary of condensed government-wide financial data for the
current and prior fiscal years.
NET POSITION
Governmental Business-Type
Activities Activities Total
2013 2012 2013 2012 2013
Current and other assets $ 28,908 $ 32,893 $ 4,855 $ 8,077 $ 33,763 $
Capital assets 113,448 91,222 74,569 71,909 188,017
Total assets 142,356 124,115 79,424 79,986 221,780
Long-term liabilities outstanding 50,639 49,191 41,012 43,667 91,651
Other liabilities 26,783 17,454 8,591 8,239 35,374
Total liabilities 77,422 66,645 49,603 51,906 127,025
Net position:
Net investment in capital assets 81,448 67,751 26,793 25,105 108,241
Restricted 9,854 11,442 9,854
Unrestricted (26,368) (21 ,723) 3,027 2,975 (23,341}
Total net position $ 64,934 $ 57,470 $ 29,820 $ 28,080 $ 94,754 $
5
2012
40,970
163,131
204,101
92,858
25,693
118,551
92,856
11,442
(18,748)
85,550
CHANGES IN NET POSITION
Governmental Business-Type
Activities Activities Iota I
2013 2012 2013 2012 2013 2012
Revenues:
Program revenues:
Charges for services $ 2,269 $ 2,405 $ 7,158 $ 6,997 $ 9,427 $ 9,402
Operating grants and
contributions 30,078 30,416 30,078 30,416
Capital grants and
contributions 13,336 4,518 13,336 4,518
General revenues:
Property taxes 38,999 37,222 38,999 37,222
Excises 3,604 3,305 3,604 3,305
Penalties and interest and
other taxes 192 564 192 564
Grants and contributions
not restricted to specific
programs 3,329 3,353 3,329 3,353
Investment income 56 379 11 49 67 428
Other 373 284 373 284
Total revenues 92,236 82,446 7,169 7,046 99,405 89,492
Expenses:
General government 2,775 2,319 2,775 2,319
Public safety 7,328 7,009 7,328 7,009
Education 44,583 45,445 44,583 45,445
Public works 6,008 5,876 6,008 5,876
Health and human services 797 771 797 771
Culture and recreation 1,548 1,234 1,548 1,234
Employee benefits 19,469 19,137 19,469 19,137
Interest on long-term debt 1,249 1,216 1,249 1,216
Intergovernmental 1,184 783 1,184 783
Sewer services 4,165 3,916 4,165 3,916
Water services 1,095
1 '113
1,095
1 '113
Total expenses 84,941 83,790 5,260 5,029 90,201 88,819
Change in net position
before transfers 7,295 (1 ,344) 1,909 2,017 9,204 673
Transfers in (out) 169 150 (169) (150)
Change in net position 7,464 (1,194) 1,740 1,867 9,204 673
Net position - beginning of year 57,470 .. 58,664 28,080 26,213 85,550 84,877
Net position - end of year $ 64,934 $ 57,470 $ 29,820 $ 28,080 $ 94,754 $ 85,550
6
As noted earlier, net position may serve over time as a useful indicator of a gov-
ernment's financial position. At the close of the most recent fiscal year, total net
position was $94,754, a change of $9,204 from the prior year.
The largest portion of net position $108,241 reflects our investment in capital
assets (e.g., land, buildings, machinery, equipment, and infrastructure); less any
related debt used to acquire those assets that is still outstanding. These capital
assets are used to provide services to citizens; consequently, these assets are
not available for future spending. Although the investment in capital assets is
reported net of related debt, it should be noted that the resources needed to
repay this debt must be provided from other sources, since the capital assets
themselves cannot be used to liquidate these liabilities.
An additional portion of net position $9,854 represents resources that are subject
to external restrictions on how they may be used. The remaining balance is
unrestricted net position $(23,341 ).
Governmental activities. Governmental activities for the year resulted in a
change in net position of $7,464. Key elements of this change are as follows:
MSBA High School funding
CPA funds used for land purchases
Other capital asset additions from revenue
Depreciation expense exceeding principal debt service
Increase in net OPEB obligation
Other
Total
$ 10,606
1,197
1,469
(209)
(5,231)
(368)
$ 7,464
Business-tvpe activities. Business-type activities for the year resulted in a
change in net position of $1,740:
Sewer operations
Water operations
Total
$ 1,962
(222)
$==1=,7=40=
The Sewer fund increase primarily results from a 13% rate increase put in place
in fiscal year 2013 on user fees. The rate increase will be used to fund the future
debt service for the ongoing capital projects.
D. FINANCIAL ANALYSIS OF THE GOVERNMENT'S FUNDS
As noted earlier, fund is used to ensure and demonstrate compliance
with financeMrelated legal requirements.
7
Governmental funds. The focus of governmental funds is to provide information
on near-term inflows, outflows and balances of spendable resources.
Such information is useful in assessing financing requirements. In particular,
unassigned fund balance may serve as a useful measure of a government's net
resources available for spending at the end of the fiscal year.
As of the end of the current fiscal year, governmental funds reported combined
ending fund balances of $1,226, a change of $(12,571) in comparison to the prior
year. Key elements of this change are as follows:
General fund revenues exceeding expenditures
Enterprise fund transfers
High School Construction fund expenditures exceeding revenues
Community Preservation fund expenditures exceeding revenues
Special Revenue fund revenues exceeding expenditures
Trust fund expenditures exceeding revenues
Other capital project fund expenditures exceeding revenues
Total
$
$
135
169
(11 ,737)
(642)
140
(61)
{575}
{12,571}
The Town implemented Governmental Accounting Standards Board Statement
#54 Fund Balance Reporting and Governmental Fund Type Definitions. Full
definitions of all fund balance classifications can be found in the notes to the
financial statements. Additionally, amounts previously reported in stabilization,
are now required to be presented in the general fund.
The general fund is the chief operating fund. At the end of the current fiscal year,
unassigned fund balance of the general fund was $3,515, while total fund bal-
ance was $5,033. As a measure of the general fund's liquidity, it may be useful to
compare both unassigned fund balance and total fund balance to total general
fund expenditures. Refer to the table below.
%of
Total General
General Fund 6/30/13 6/30/12 Change Fund Ex12enditures
Unassigned fund balance $ 3,515 $ 3,270 $ 245 4.7%
Total fund balance 5,033 4,556 477 6.8%
The total fund balance of the general fund changed by $477 during the current
fiscal year. Key factors in this change are as follows:
8
Revenues in excess of budget $ 285
Expenditures less than budget 26
Change in stabilization accounts 413
Property tax collections less than budget (288)
Other 41
Total $ 477
Included in the total general fund balance are the Town's stabilization accounts
with the following balances:
6/30/13 6/30/12 Change
General (unassigned) $ 1,706 $ 1,506 $ 200
Town Hall (committed)
1 '119
662 457
Other (committed) 221 465 {244}
Total $ 3,046 $ 2,633 $ 413
Proprietary funds. Proprietary funds provide the same type of information found
in the business-type activities reported in the government-wide financial state-
ments, but in more detail.
Unrestricted net position of the enterprise funds at the end of the year amounted
to $3,027, a change of $52 in comparison to the prior year.
Unrestricted net position of the Internal Service fund at the end of the year
amounted to $(651 ), which resulted from the estimated IBNR liability at year-end.
The Town switched from a self-insured employee health plan to the Common-
wealth of Massachusetts premium based Group Insurance Commission on July 1,
2013. The IBNR is an estimate of the liability for the self-insured health insurance
claims that have taken place as of June 30, 2013, but have not yet been reported
to the Town. The Town appropriated the funding of this liability as a component of
the fiscal year 2014 general fund budget.
Other factors concerning the finances of proprietary funds have already been
addressed in the entity-wide discussion of business-type activities.
E. GENERAL FUND BUDGETARY HIGHLIGHTS
There were no increases to the original budget during fiscal year 2013. The only
differences between the original and finaL general fund budgets are a result of
transfers between departments authorized by the Town Manager.
9
F. CAPITAL ASSET AND DEBT ADMINISTRATION
Capital assets. Total investment in capital assets for governmental and business-
type activities at year-end amounted to $188,017 (net of accumulated deprecia-
tion), a change of $24,886 from the prior year. This investment in capital assets
includes land, buildings and improvements, machinery, equipment and furnishings,
construction in progress, and infrastructure.
Major capital asset activity included:
Governmental:
$ 22,344 High school construction
666 Various road improvements
599 New roads accepted
1,198 Property acquisition for Town Hall construction
359 Town Hall design
Business-Type:
$ 3,655 Sewer Infrastructure
Long-term debt. At the end of the current fiscal year, total bonded debt out-
standing was $60,204, all of which was backed by the full faith and credit of the
government.
The Town's credit rating remained unchanged at A+.
Additional information on capital assets and long-term debt can be found in the
Notes to Financial Statements.
G. ECONOMIC FACTORS AND NEXT YEAR'S BUDGETS AND RATES
Fiscal year 2013 was a year when the Town saw some improvements in revenue
and signs of economic stability at both the State and Local level. Although we are
seeing an improved trend with the state of the economy, we are still holding the
line on expenditures and revenue expectations.
During FY13, Phase I of the High School Project was completed; the project contin-
ues to move forward on schedule and on budget. Along with the High School, the
Town Hall has broken ground; it is expected it will be completed during the summer
of 2014.
Fiscal year 2014, the Town has successfully begun to implement some new pro-
grams and initiatives that will have a positive impact on the overall budget. First,
effegtive July 1st, all health insurance subscribers have been transferred to the
Group Insurance Commission (GIC). The GIC is a state controlled health
10
insurance program that affords municipalities the opportunity to benefit from a
large membership pool, essentially resulting in lower costs. This change will
provide stability to the budget in forecasting yearly cost estimates, ultimately
saving the Town in the long term. Another initiative that is in full-swing is the
adoption of automated trash collection and single stream recycling. It is expected
that the Town will see a reduction in the total# of tons disposed, ultimately
reducing the strain on the budget for trash collection/disposal.
The Town of Dracut continues to enjoy one of the lowest tax rates in the Merrimack
Valley. Dracut does not have an extensive business/industrial segment (only about
9% of its assessable base); we are heavily reliant on the residential tax base.
Although this is the case, we have seen and continue to see activity in the busi-
ness districts. As a whole we do not expect to see a large swing in assessed
values for the FY14 actual billing cycle.
REQUESTS FOR INFORMATION
This financial report is designed to provide a general overview of the Town of
Dracut's finances for all those with an interest in the government's finances.
Questions concerning any of the information provided in this report or requests
for additional financial information should be addressed to:
Office of Finance Director
Town of Dracut, Massachusetts
62 Arlington Street
Dracut, Massachusetts 01826
11
TOWN OF DRACUT, MASSACHUSETIS
STATEMENT OF NET POSITION
JUNE 30, 2013
Governmental Business-Type
Activities Activities Total
ASSETS
Current:
Cash and short-term investments $ 22,921,258 $ 2,389,773 $ 25,311,031
Investments 3,193,867 3,193,867
Receivables, net of allowance for uncollectibles:
Property taxes 472,963 472,963
Excises 369,621 369,621
User fees 648,796 648,796
Intergovernmental 1,088,248 1,816,075 2,904,323
Departmental and other 447,925 447,925
Noncurrent:
Receivables, net of allowance for uncollectibles:
Property taxes 414,483 414,483
Capital assets, being depreciated, net 71,571,592 67,860,166 139,431,758
Capiial assets, not being depreciated 41,876,182 6,708,447 48,584,629
TOTAL ASSETS 142,356,139 79,423,257 221,779,396
LIABILITIES
Current:
Warrants payable 8,082,042 8,082,042
Accrued liabilities 3,743,378 824,315 4,567,693
Notes payable 14,950,000 7,764,568 22,714,568
Other current liabilities 7,918 1,975 9,893
Current portion of long-term liabilities:
Bonds payable 3,032,630 3,050,133 6,082,763
Other liabilities 166,080 166,080
Noncurrent:
Bonds payable, net of current portion 16,283,152 37,837,752 54,120,904
Other liabilities, net of current portion 5,898,931 5,898,931
Net OPES obligation 25,257,590 124,179 25,381,769
TOTAL LIABILITIES 77,421,721 49,602,922 127,024,643
NET POSITION
Net investment in capital assets 81,448,291 26,792,899 108,241,190
Restricted for:
Grants and other statutory contributions 9,490,110 9,490,110
Permanent funds:
Non expendable 214,882 214,882
Expendable 149,306 149,306
Unrestricted (26,368,171) 3,027,436 (23,340,735)
TOTAL NET POSITION $ 64,934,418 $ 29,820,335 $ 94,754,753
The accompanying notes are an integral part of these financial statements.
12
TOWN OF DRACUT, MASSACHUSETTS
STATEMENT OF ACTIVITIES
FOR THE YEAR ENDED JUNE 30, 2013
Program Revenues Net Revenues and Chan!;Jes in Net Position
Operating Capital Business-
Charges for Grants and Grants and Type
Exgenses Services Contributions Contributions Activities Activities Total
Governmental Activities:
General government $ 2,774,862 $ 350,756 $ 231,173 $ $ (2, 192,933) $ $ (2, 192,933)
Public safety 7,327,794 478,787 254,525 (6,594,482) (6,594,482)
Education 44,583,275 1,116,713 29,458,923 12,036,995 (1 ,970,644) (1 ,970,644)
Public works 6,007,787 29,386 9,900 1,299,481 (4,669,020) (4,669,020)
Health and human services 796,761 52,007 57,649 (687,105) (687,105)
Culture and recreation 1,547,632 240,964. 65,712 (1 ,240,956) (1 ,240,956)
Employee benefits 19,468,820 (19,468,820) (19,468,820)
Interest 1,248,822 (1 ,248,822) (1 ,248,822)
Intergovernmental 1,184,332 !1 '184,332) !1 '184,332)
Total Governmental Activities 84,940,085 2,268,613 30,077,882 13,336,476 (39,257, 114) (39,257,114)
Business-Type Activities:
Sewer services 4,165,078 6,203,961 2,038,883 2,038,883
Water services 1,094,772 953,779 (140,993) (140,993)
Total Business Activities 5,259,850 7,157,740 1,897,890 __ 1 ,897,890
Total $ 90,199,935 $ 9,426,353 $ 30,077,882 $ 13,336,476 (39,257, 114) 1,897,890 (37,359,224)
General Revenues and Transfers:
Property taxes 38,998,569 38,998,569
Excises 3,604,200 3,604,200
Penalties, interest and other taxes 192,446 192,446
Grants and contributions not restricted
to specific programs 3,328;882 3,328,882
Investment income 55,707 11,475 67,182
Miscellaneous 372,513 372,513
Transfers 169,000 (169,000)
Total general revenues and transfers 46,721,317 (157,525) 46,563,792
Change in Net Position 7,464,203 1,740,365 9,204,568
Net Position:
Beginning of year 57,470,215 28,079,970 85,550,185
End of year $ 64,934,418 $ 29,820,335 $ 94,754,753
The accompanying notes are an integral part of these financial statements.
13
ASSETS
Cash and short-term investments $
Investments
Receivables:
Property taxes
Excises
Intergovernmental
Departmental and other
TOTAL ASSETS $
LIABILITIES AND FUND BALANCES
Liabilities:
Warrants payable $
Accrued liabilities
Notes payable
Other liabilities
TOTAL LIABILITIES
DEFERRED INFLOWS OF RESOURCES
Fund Balances:
Nonspendable
Restricted
Committed
Assigned
Unassigned
TOTAL FUND BALANCES
TOTAL LIABILITIES, DEFERRED INFLOWS
OF RESOURCES, AND FUND BALANCES $
TOWN OF DRACUT, MASSACHUSETTS
GOVERNMENTAL FUNDS
BALANCE SHEET
JUNE 30, 2013
High School Community
Construction Preservation
General Fund Fund
13,730,423 $ 183,844 $ 5,906,755
957,753 1,766,139
1,008,436 9,927
592,398
179,901
447,925
16,916,836 $ 183,844 $ 7,682,821
8,082,042 $ $
1,754,204 1,043,430
12,300,000
7,918
9,844,164 13,343,430
2,039,933 9,926
7,672,895
1,340,638
176,780
3,515,321 (13, 159,586)
5,032,739 (13, 159,586) 7,672,895
16,916,836 $ 183,844 $ 7,682,821
The accompanying notes are an integral part of these financial statements.
14
Nonmajor Total
Governmental Governmental
Funds Funds
$ 2,951,205 $ 22,772,227
469,975 3,193,867
1,018,363
592,398
908,347 1,088,248
447,925
$ 4,329,527 $ 29,113,028
$ $ 8,082,042
2,797,634
2,650,000 14,950,000
7,918
2,650,000 25,837,594
2,049,859
230,047 230,047
2,192,744 9,865,639
1,340,638
176,780
(743,264) (10,387,529)
1,679,527 1,225,575
$ 4,329,527 $ 29,113,028
TOWN OF DRACUT, MASSACHUSEITS
RECONCILIATION OF TOTAL GOVERNMENTAL FUND
BALANCES TO NET ASSETS OF GOVERNMENTAL
ACTIVITIES IN THE STATEMENT OF NET POSITION
JUNE 30, 2013
Total governmental fund balances $
Capital assets used in governmental activities are not financial
resources and, therefore, are not reported in the funds.
Revenues are reported on the accrual basis of accounting
and are not deferred until collection.
Internal service funds are used by management to account for
health insurance and workers' compensation activities. The
assets and liabilities of the internal service funds are included
in the governmental activities in the Statement of Net Assets.
In the Statement of Activities, interest is accrued on outstanding
long-term debt, whereas in governmental funds interest is not
reported until due.
Long-term liabilities, including bonds payable and Net OPEB
obligation, are not due and payable in the current period and,
therefore, are not reported in the governmental funds.
Net position of governmental activities $
The. accompanying notes are an integral part of these finanCial statements.
15
1,225,575
113,447,774
1,696,165
(650,969)
(145,744)
(50,638,383)
64,934,418
i
;-
TOWN OF DRACUT, MASSACHUSETIS
~
GOVERNMENTAL FUNDS
? . ~
~ f
STATEMENT OF RE;\VENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
"I:
FOR THE YEAR ENDED JUNE 30, 2013
High School Community Non major Total
Construction Preservation Governmental Governmental
General Fund Fund Funds Funds
Revenues:
Property taxes $ '38,012,896 $ -
$ 729,860 $ $ 38,742,756
Excises 3,460,227 - -
3,460,227
Penalties, interest and other taxes 413,176 - - 413,176
Charges for services 489,394
- - 1,438,869 1,928,263
Intergovernmental 31,395,393 10,606,066 189,418 4,020,835 46,211,712
Licenses and permits 340,350 - - -
340,350
Investment income (Loss) 111,500 - 129,495 (93,980) 147,015
Contriputions
- - 44,375 44,375
Miscellaneous 288,723 1,232 - 82,558 372,513
Total Revenues 74,511,659 10,607,298 1,048,773 5,492,657 91,660,387
Expenditures:
Current:
General government 2,579,724 - 1,219,734 560,349 4,359,807
Public safety 6,874,420 - 258,090 7,132,510
Education 39,690,100 22,343,814 - 3,974,947 66,008,861
Public works 4,626,385 - - 704,312 5,330,697
Health and human services 670,484 - - 65,805 736,289
Culture and recreation 838,895 - 425,804 1,264,699
Employee benefits 14,193,534 - - 14,193,534
Debt service 3,718,608 471,443 4,190,051
Intergovernmental 1,184,332 - - - 1,184,332
Total Expenditures 74,376,482 22,343,814 1,691,177 5,989,307 104,400,780
Excess (deficiency) of revenues
over expenditures 135,177 (11,736,516) (642,404) (496,650) (12,740,393)
Other Financing Sources (Uses):
Proceeds of refunding bonds 12,965,000 - - 12,965,000
Prerniurns on refunding bonds 892,476
- - -
892,476
Payment to refunding escrow agent (13,857,476) - - (13,857,476)
Transfers in 468,678
-
334,258 802,936
Transfers out (127,500) -
(219,579) (286,857) (633,936)
Total Other Financing Sources (Uses) 341,178
-
(219,579) 47,401 169,000
Change in fund balance 476,355 (11,736,516) (861,983) (449,249) (12,571 ,393)
Fund Equity, at Beginning of Year 4,556,384 !1 ,423,070) 8,534,878 2,128,776 13,796,968
Fund Equity, at End of Year $ 5,032,739 $ (13, 159,586) $ 7,672,895 $ 1,679,527 $ 1,225,575
The accompanying notes are an integral part of these financial statements.
16
TOWN OF DRACUT, MASSACHUSETIS
RECONCILIATION OF THE STATEMENT OF REVENUES
EXPENDITURES, AND CHANGES IN FUND BALANCES OF
GOVERNMENTAL FUNDS TO THE STATEMENT OF ACTIVITIES
FOR THE YEAR ENDED JUNE 30,2013
Net change in fund balances- Total governmental funds
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:
Capital outlay purchases, net of dispositions
Depreciation
Revenues in the Statement of Activities that do not provide current
financial resources are fully deferred in the Statement of Revenues,
Expenditures and Changes in Fund Balances. Therefore, the
recognition of revenue for various types of accounts receivable
(i.e., real estate and personal property, motor vehicle excise, etc.)
differ between the two. statements. This amount represents the
net change in deferred revenue.
The issuance of long-term debt (e.g., bonds and leases) provides
current financial resources to governmental funds, while the
repayment of the principal of long-term debt consumes the financial
resources of governmental funds. Neither transaction, however,
has any effect on net position:
Repayments of debt
In the Statement of Activities, interest is accrued on outstanding
long-term debt, whereas in governmental funds interest is not
reported until due.
Some expenses reported in the Statement of Activities do not require
the use of current financial resources and therefore, are not reported
as expenditures in the governmental funds:
Change in compensated absences
Amortization of refunding
Change in landfill liability
Change in OPES liability
Internal service funds are used by management to account for heahh
insurance and workers' compensation activities. The net activity of
internal service funds is reported with Governmental Activities.
Change in net position of governmental activities
The accompanying notes are an integral part of these financial statements.
17
$ (12,571 ,393)
25,529,291
(3,303,270)
67,457
3,094,630
(30,093)
122,483
(215,496)
45,000
(5,231,182)
(43,224)
$ 7,464,203
TOWN OF DRACUT, MASSACHUSETTS
GENERAL FUND
SCHEDULE OF REVENUES AND OTHER SOURCES, AND EXPENDITURES AND OTHER USES- BUDGET AND ACTUAL
FOR THE YEAR ENDED JUNE 30, 2013
u d ~ e t e d Amounts Variance with
Final Budget
Original Final Actual Positive
Budget Budget Amounts (Neqative)
Revenues and Other Sources:
Taxes $ 38,351,176 $ 38,351,176 $ 38,351,176 $
Excise 3,353,800 3,353,800 3,460,227 106,427
Penalties, interest and other taxes 200,000 200,000 363,176 163,176
Charges for services 577,500 577,500 489,394 (88,106)
Intergovernmental 23,057,539 23,057,539 23,172,057 114,518
Licenses and permits 319,500 319,500 340,350 20,850
Investment income 100,000 100,000 74,614 (25,386)
Miscellaneous 648,811 648,811 607,929 (40,882)
Transfers in 334,503 334,503 368,678 34,175
Total Revenues and Other Sources 66,942,829 66,942,829 67,227,601 284,772
Expenditures and Other Uses:
General government 2,483,528 2,394,460 2,376,616 17,844
Public safety 6,805,775 6,874,423 6,874,423
Education 31,776,513 31,801,432 31,785,970 15,462
Public works 4,881,975 4,512,833 4,624,290 (111,457)
Health and human services 679,300 666,776 666,776
Culture and recreation 947,578 842,602 842,295 307
Debt service 3,829,050 3,741,020 3,741,020
Intergovernmental 1,184,332 1,184,332 1,184,332
Employee benefits 13,702,278 14,272,451 14,168,534 103,917
Transfers out 652,500 652,500 652,500
Total Expenditures and Other Uses 66,942,829 66,942,829 66,916,756 26,073
Excess of revenues and other sources
over expenditures and other uses $ - $ - $ 310,845 $ 310,845
The accompanying notes are an integral part of these financial statements.
18
TOWN OF DRACUT, MASSACHUSETTS
PROPRIETARY FUNDS
STATEMENT OF NET POSITION
JUNE 30,2013
Governmental
Activities Enterprise Funds Activities
Internal
Sewer Non-Major Service
Fund Fund Total Funds
ASSETS
Current:
Cash and short-term investments $ 1,721,748 $ 668,025 $ 2,389,773 $ 149,031
User fees, net of allowance for uncollectibles 541,437 107,359 648,796
Intergovernmental 1,816,075 1,816,075
Total current assets 4,079,260 775,384 4,854,644 149,031
Noncurrent:
Capital assets, being depreciated, net 66,708,686 1,151,480 67,860,166
Capital assets, not being depreciated 6,708,447 6,708,447
Total noncurrent assets 73,417,133 1,151,480 74,568,613
TOTAL ASSETS 77,496,393 1,926,864 79,423,257 149,031
LIABILITIES
Current:
Accrued liabilities 824,315 824,315 800,000
Notes payable 7,764,568 7,764,568
Other current liabilities 1,975 1,975
Current portion of long-term liabilities:
Bonds payable 2,998,133 52,000 3,050,133
Total current liabilities 11,588,991 52,000 11,640,991 800,000
Noncurrent:
Bonds payable, net of current portion 37,576,752 261,000 37,837,752
Net OPEB Obligation 115,029 9,150 124,179
TOTAL LIABILITIES 49,280,772 322,150 49,602,922 800,000
NET POSITION
Net investment in capital assets 25,954,419 838,480 26,792,899
Unrestricted 2,261,202 766,234 3,027,436 (650,969)
TOTAL NET POSITION $ 28,215,621 $ 1,604,714 $ 29,820,335 $ (650,969)
The accompanying notes are an integral part of these financial statements.
19
TOWN OF DRACUT, MASSACHUSETIS
PROPRIETARY FUNDS
STATEMENT OF REVENUES, EXPENSES AND CHANGES IN FUND NET POSITION
FOR THE YEAR ENDED JUNE 30,2013
Governmental
Business-Tyee Activities Entererise Funds Activities
Internal
Sewer Non-Major Service
Fund Fund Total Fund
Operating Revenues:
Charges for services $ 6,203,961 $ 953,779 $ 7,157,740 $
Employee and employer contributions 12,333,426
Total Operating Revenues 6,203,961 953,779 7,157,740 12,333,426
Operating Expenses:
Personnel services 343,715 39,063 382,778
Non-personnel services 1,705,613 970,934 2,676,547
Depreciation 922,816 72,760 995,576
Employee benefits 12,377,530
Total Operating Expenses 2,972,144 1,082,757 4,054,901 12,377,530
Operating Income (Loss) 3,231,817 (128,978) 3,102,839 (44,104)
Nonoperating Revenues (Expenses):
Investment income 8,002 3,473 11 ,475 880
Interest expense (1 '192,934) (12,015)
Total Nonoperating Revenues (Expenses), Net (1 '184,932) 880
Income Before Transfers 2,046,885 {137,520) 1,909,365 (43,224)
Transfers
Transfers out
Change in Net Position 1,962,385 {222,020) 1,740,365 (43,224)
Net Position at Beginning of Year 26,253,236 1,826,734 28,079,970 (607,745)
Net Position at End of Year $ 28,215,621 $ 1,604,714 $ 29,820,335 $ (650,969)
The accompanying notes are an integral part of these financial statements.
20
TOWN OF DRACUT, MASSACHUSETTS
PROPRIETARY FUNDS
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED JUNE 30, 2013
Governmental
Business-Tyee Activities Ente!:Erise Funds Activities
Internal
Sewer Non-Major Service
Fund Fund Total Fund
Cash Flows From Activities:
Receipts from customers and users $ 6,187,727 $ 946,148 $ 7,133,875 $ 12,333,426
Payments to vendors and employees (2,399,870) (1 ,006,970) (3,406,840)
Payments of employee benefits and expenses (13,007 ,395)
Net Cash Provided By (Used For) Operating Activities 3,787,857 (60,822) 3,727,035 (673,969)
Cash Flows From Financing Activities:
Transfers out (84,500) (84,500) (169,000)
Net Cash (Used For) Noncapital Financing Activities (84,500). (84,500) (169,000)
Cash Flows From and Related Financing Activities:
Acquisition and construction of capital assets (3,655, 156) (3,655, 156)
Payments on notes and bonds (3,636,348) (52,000) (3,688,348)
Proceeds from notes and bonds 4,177,752 4,177,752
Interest expense (1 '192,934) (12,015) (1 ,204,949)
Net Cash (Used For) Capital and Related Financing Activities (4,306,686) (64,015) (4,370,701)
Cash Flows From Investing Activities:
Disposition of investments 536,156 536,156
Investment income 8,002 3,473 11,475 880
Net Cash Provided By (Used For) Investing Activities 8,002 539,629 547,631 880
Net Change in Cash and Short-Term Investments (595,327) 330,292 (265,035) (673,089)
Cash and Short-Term Investments, Beginning of Year 2,317,075 337,733 2,654,808 822,120
Cash and Short-Term Investments, End of Year $ 1,721,748 $ 668,025 $ 149,031
Reconciliation of OQerating Income to Net Cash
Provided B:t Activities:
Operating income (loss) $ 3,231,817 $ (128,978) $ 3,102,839 $ (44,104)
Adjustments to reconcile operating income to net
cash provided by operating activities:
Depreciation 922,816 72,760 995,576
Changes in assets and liabilities:
User fees (16,234) (7,631) (23,865)
Accrued liabilities (381,426) (381,426) (629,865)
Other liabilities 30,884 3,027 33,911
Net Cash Provided By (Used For) Operating Activities $ 3,787,857 $ (60,822) $ 3,727,035 $ (673,969)
The accompanying notes are an integral part of these financial statements.
21
TOWN OF DRACUT, MASSACHUSETTS
FIDUCIARY FUNDS
STATEMENT OF FIDUCIARY NET POSITION
JUNE 30, 2013
Private
Purpose
Trust Agency
Funds Funds
ASSETS
Cash and short-term investments $ 48,601 $ 3,168,956
Other assets 59,829
Total Assets 48,601 3,228,785
LIABILITIES AND NET POSITION
Other liabilities 3,228,785
Total Liabilities 3,228,785
NET POSITION
Total net position held in trust $ 48,601 $
The accompanying notes are an integral part of these financial statements.
22
TOWN OF DRACUT MASSACHUSETTS
FIDUCIARY FUNDS
STATEMENT OF CHANGES IN FIDUCIARY NET POSITION
FOR THE YEAR ENDED JUNE 30, 2013
Private
Purpose
Trust Funds
Additions:
Investment Income $ 423
Total additions 423
Deductions:
Benefits 2,356
Total deductions 2,356
Net decrease (1,933)
Net position:
Beginning of year 50,534
End of year $ 48,601
The accompanying notes are an integral part of these financial statements.
23
TOWN OF DRACUT, MASSACHUSETTS
Notes to Financial Statements
1. Summary of Significant Accounting Policies
The accounting policies of the Town of Dracut (the Town) conform to gener-
ally accepted accounting principles (GAAP) as applicable to governmental
units. The following is a summary of the more significant policies:
A. Reporling Entity
The government is a municipal corporation governed by an elected Board
of Selectmen. As required by generally accepted accounting principles,
these financial statements present the government and applicable compo-
nent units for which the government is considered to be financially account-
able.
B. Government-wide and Fund Financial Statements
Government-wide Financial Statements
The government-wide financial statements (i.e., the Statement of Net
Position and the Statement of Activities) report information on all of the
nonfiduciary activities of the primary government. For the most part,
the effect of interfund activity has been removed from these statements.
Governmental activities, which normally are supported by taxes and
intergovernmental revenues, are reported separately from business-type
activities, which rely to a significant extent on fees and charges for
support.
The Statement of Activities demonstrates the degree to which the direct
expenses of a given function or segment are offset by program revenues.
Direct expenses are those that are clearly identifiable with a specific func-
tion or segment. Program revenues include (1) charges to customers
or applicants who purchase, use, or directly benefit from goods, services,
or privileges provided by a given function or segment and (2) grants and
contributions that are restricted to meeting the operational or capital
requirements of a particular function or segment. Taxes and other items
not properly included among program revenues are reported instead as
general revenues.
Fund Financial Statements
Separate financial statements are provided for governmental funds, p r ~
prietary funds and fiduciary funds, even though the latter are excluded
from the government-wide financial statements. Major individual govern-
24
mental funds and major individual enterprise funds are reported as
~ p r t e columns in the fund financial statements.
C. Measurement Focus. Basis of Accounting, and Financial Statement
Presentation
Government-Wide Financial Statements
The government-wide financial statements are reported using the eco-
nomic resources measurement focus and the accrual basis of accounting,
as is the proprietary fund and fiduciary fund financial statements. Reve-
nues are recorded when earned and expenses are recorded when a lia-
bility is incurred, regardless of the timing of related cash flows. Property
taxes are recognized as revenues in the year for which they are levied.
Grants and similar items are recognized as revenue as soon as all eligi-
bility requirements imposed by the provider have been met. As a general
rule, the effect of interfund activity has been eliminated from the govern-
ment-wide financial statements.
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 and contributions, includ-
ing special assessments. Internally dedicated resources are reported as
general revenues rather than as program revenues. Likewise, general
revenues include all taxes and excises.
Fund Financial Statements
Governmental fund financial statements are reported using the current
financial resources measurement focus and the modified accrual basis of
accounting. Revenues are recognized as soon as they are both measur-
able and available. Revenues are considered to be available when they
are collectible within the current period or soon enough thereafter to pay
liabilities of the current period. For this purpose, the government considers
property tax revenues to be available if they are collected within 60 days
of the end of the current fiscal period. All other revenue items are consid-
ered to be measurable and available only when cash is received by the
government. Expenditures generally are recorded when a liability is
incurred, as under accrual accounting. However, debt service expendi-
tures, as well as expenditures related to compensated absences and
claims and judgments, are recorded only when payment is due.
The government reports the following major governmental funds:
The General Fund is the government's primary operating fund.
It accounts for all financial resources of the general government,
except those required to be accounted for in another fund.
The High School Construction Fund is used to account for activity
related to the construction of a new Dracut High School.
25
The Community Preservation Fund was established by the Town for
the purpose of acquiring land for conservation purposes, developing
more affordable housing units in Town, and preserving and
acquiring historical property.
Proprietary funds distinguish operating revenues and expenses from non-
operating items. Operating revenues and expenses generally result from
providing services and producing and delivering goods in connection with
a proprietary fund's principal ongoing operations. The principal operating
revenues of the enterprise fund are charges to customers for sales and
services. Operating expenses for enterprise funds include the cost of sales
and services, administrative expenses and depreciation on capital assets.
All revenues and expenses not meeting this definition are reported as non-
operating revenues and expenses.
Private-sector standards of accounting and financial reporting issued
prior to December 1, 1989 generally are followed in both the government-
wide and proprietary fund financial statements to the extent that those
standards do not conflict with or contradict guidance of the Governmental
Accounting Standards Board. Governments also have the option of fol-
lowing subsequent private-sector guidance for their business-type activi-
ties and enterprise funds, subject to this same limitation. The government
has elected not to follow subsequent private-sector guidance.
The Town reports the sewer operations as a major proprietary fund, while
water operations are reported as a nonmajor enterprise fund.
The self-insured employee health program is reported as an internal
service fund in the accompanying financial statements.
The private-purpose trust fund is used to account for trust arrangements,
other than those properly reported in the permanent fund, under which
principal and investment income exclusively benefit individuals, private
organizations, or other governments.
The agency fund is custodial in nature and is used to account for funds
held for others.
D. Cash and Short-Term Investments
Cash balances from all funds, except those required to be segregated
by law, are combined to form a consolidation of cash. Cash balances
are invested to the extent available, and interest earnings are recognized
in the General Fund. Certain special revenue, proprietary, and fiduciary
funds segregate cash, and investment earnings become a part of those
funds.
26
Deposits with financial institutions consist primarily of demand deposits,
certificates of deposits, and savings accounts. A cash and investment pool
is maintained that is available for use py all funds. Each fund's portion of
this pool is reflected on the combined financial statements under the
caption "cash and short-term investments". The interest earnings attribut-
able to each fund type are included under investment income.
For purpose of the statement of cash flows, the proprietary funds consider
investments with original maturities of three months or less to be short-
term investments.
E. Property Tax Limitations
Legislation known as "Proposition 2%" limits the amount of revenue that
can be derived from property taxes. The prior fiscal year's tax levy limit is
used as a base and cannot increase by more than 2.5 percent (excluding
new growth); unless an override or debt exemption is voted. The actual
fiscal year 2013 tax levy reflected an excess capacity of $25,936.
F. Capital Assets
Capital assets, which include property, plant, equipment, and infrastruc-
ture assets (for enterprise funds only), are reported in the applicable gov-
ernmental or business-type activities columns in the government-wide
financial statements. Capital assets are defined by the government as
assets with an initial individual cost of more than $5,000 and an estimated
useful life in excess of two years. Such assets are recorded at historical
cost or estimated historical cost if purchased or constructed. Donated
capital assets are recorded at estimated fair market value at the date of
donation.
The costs of normal maintenance and repairs that do not add to the value
of the asset or materially extend assets' lives are not capitalized.
Major outlays for capital assets and improvements are capitalized as
projects are constructed. Interest incurred during the construction phase of
capital assets of business-type activities is included as part of the capital-
ized value of the assets constructed.
Property, plant and equipment of the primary government is depreciated
using the straight-line method over the following estimated useful lives:
Assets
Buildings and improvements
Machinery, equipment, and furnishings
Infrastructure
27
Years
20-40
5- 10
30-75
G. Compensated Absences
It is the government's policy to permit employees to accumulate earned
but unused vacation and sick pay benefits. All vested sick and vacation
pay is accrued when incurred in the government-wide, proprietary, and
fiduciary fund financial statements. A liability for these amounts is reported
in governmental funds only if they have matured, for example, as a result
of employee resignations and retirements.
H. Long-Term Obligations
In the government-wide financial statements, and proprietary fund types
in the fund financial statements, long-term debt, and other long-term obli-
gations are reported as liabilities in the applicable governmental activities,
business-type activities, or proprietary fund type statement of Net Position.
I. Fund Equitv
Fund equity at the governmental fund financial reporting level is classified
as "fund balance". Fund equity for all other reporting is classified as "Net
Position".
Fund Balance - Generally, fund balance represents the difference
between the current assets and current liabilities. The Town reserves
those portions of fund balance that are legally segregated for a specific
future use or which do not represent available, spendable resources
and therefore, are not available for appropriation or expenditure.
Unassigned fund balance indicates that portion of fund balance that is
available for appropriation in future periods.
The Town's fund balance classification policies and procedures are as
follows:
1) Nonspendable funds are either unspendable in the current form
(i.e., inventory) or can never be spent (i.e., perpetual care).
2) Restricted funds are used solely for the purpose in which the fund
was established. In the case of special revenue funds, these funds
are created by statute or otherwise have external constraints on
how the funds can be expended.
3) Committed funds are reported and expended as a result of motions
passed by the highest decision making authority in the government
(i.e., the Town Meeting).
4) Assigned funds are used for specific purposes as established by
management. These funds, which include encumbrances, have
been assigned for specific goods and services ordered but not yet
paid for. This account also includes fund balance (free cash) voted
to be used in the subsequent fiscal year.
28
5) Unassigned funds are available to be spent in future periods.
When an expenditure is incurred that would qualify for payment from multi-
ple fund balance types, the Town uses the following order to liquidate lia-
bilities: restricted, committed, assigned and unassigned.
Net Position - Net position represents the difference between assets and lia-
bilities. Net position invested in capital assets, net of related debt, consist of
capital assets, net of accumulated depreciation, reduced by the outstanding
balances of any borrowing used for the acquisition, construction or improve-
ment of those assets. Net position are reported as restricted when there are
limitations imposed on their use either through the enabling legislation
adopted by the Town or through external restrictions imposed by creditors,
grantors, or laws or regulations of other governments. All other net position
is reported as unrestricted.
J. Use of Estimates
The preparation of basic financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities
and disclosures for contingent assets and liabilities at the date of the basic
financial statements, and the reported amounts of the revenues and
expenditures/expenses during the fiscal year. Actual results could vary
from estimates that were used.
2. Stewardship, Compliance, and Accountability
A. Budgetary Information
At the annual town meeting, the Town Manager presents an operating
and capital budget for the proposed expenditures of the fiscal year com-
mencing the following July 1. The budget, as enacted by town meeting,
establishes the legal level of control and specifies that certain appropria-
tions are to be funded by particular revenues. The original budget is
amended during the fiscal year at special town meetings as required by
changing conditions. In cases of extraordinary or unforeseen expenses,
the Town Manager is empowered to transfer funds from the Reserve Fund
(a contingency appropriation) to a departmental appropriation. "Extra-
ordinary" includes expenses which are not in the usual line, or are great or
exceptional. "Unforeseen" includes expenses which are not foreseen as of
the time of the annual meeting when appropriations are voted.
Departments are limited to the line items as voted. Certain items may
exceed the line item budget as approved if it is for an emergency and for
29
the safety of the general public. These items are limited by the Massa-
chusetts General Laws and must be raised in the next year's tax rate.
Formal budgetary integration is employed as a management control
device during the year for the General Fund and Proprietary Funds.
Effective budgetary control is achieved for all other funds through pro-
visions of the Massachusetts General Laws.
At year-end, appropriation balances lapse, except for certain unexpended
capital items and encumbrances which will be honored during the subse-
quent year.
B. Budgetarv Basis
The General Fund final appropriation appearing on the "Budget and
Actual" page of the fund financial statements represents the final amended
budget after all reserve fund transfers and supplemental appropriations.
C. Budget/GAAP Reconciliation
The budgetary data for the general and proprietary funds is based upon
accounting principles that differ from generally accepted accounting prin-
ciples (GAAP). Therefore, in addition to the GAAP basis financial state-
ments, the results of operations of the general fund are presented in
accordance with budgetary accounting principles to provide a meaningful
comparison to budgetary data.
The following is a summary of adjustments made to the actual revenues
and other sources, and expenditures and other uses, to conform to the
budgetary basis of accounting.
30
Revenues Expenditures
and Other and Other
General Fund Financing Sources Financing Uses
Revenues/Expenditures
(GAAP Basis) $ 74,511,659 $ 74,376,482
Other financing sources/uses
(GAAP Basis, excluding refunding) 468,678 127,500
Subtotal (GAAP Basis) 74,980,337 74,503,982
Adjust tax revenue to accrual basis (288,280)
Reverse beginning of year
appropriation carryforwards
from expenditures (158,375)
To book current year appropriation
carryforwards 176,780
To reverse the effect of non-
budgeted State contributions
for teachers retirement (7,904,130) (7,904, 130)
To eliminate non-budgeted activity 439,674 298,499
Budgetary Basis $ 67,227,601 $ 66,916,756
D. Deficit Fund Equitv
The Town reflects several special revenue fund and capital project fund
deficits, primarily caused by grant expenses occurring in advance of grant
reimbursements. The deficits in these funds wiii be eliminated through
future intergovernmental revenues, transfers from other funds, and bond
proceeds. The Internal Service fund deficit will be funded by a budgeted
transfer from the General fund in fiscal year 2014.
3. Cash and Short-Term Investments
The carrying amount of the Town's deposits with financial institutions at
June 30,2013 was $29,167,348. The bank balances, which do not include
reconciling items such as deposits in transit and outstanding checks, are
categorized as follows (in thousands):
31
Amount insured by the FDIC and DIF, or collateralized
with securities held by the Town in its name
U ncollateralized
State investment pool
Total Bank Balance
Town
Deposits
6/30/13
$ 26,875
2,253
39
$ 29,167
Custodial Credit Risk- Deposits. Custodial credit risk is the risk that in the
event of a bank failure, the Town's deposits may not be returned. Massachu-
setts General Law Chapter 44, Section 55, limits the Town's deposits "in a
bank or trust company or banking company to an amount not exceeding sixty
percent of the capital and surplus of such bank or trust company or banking
company, unless satisfactory security is given to it by such bank or trust
company or banking company for such excess." The Town does not have a
deposit policy for custodial credit risk.
As of June 30,2013, $2,252,930 of the Town's bank balance of$29,167,348
was exposed to custodial credit risk as uninsured or uncollateralized.
4. Investments
A. Credit Risk and Concentration of Credit Risk
Generally, credit risk is the risk that an issuer of an investment will not
fulfill its obligation to the holder of the investment. For short-term invest-
ments that were purchased using surplus revenues, Massachusetts
General Law, Chapter 44, Section 55, limits the Town's investments to the
top rating issued by at least one nationally recognized statistical rating
organization (NRSROs).
100% of the Town's investments are CO's with Morgan Stanley which are
exempt for further credit risk disclosures (i.e. ratings).
B. Interest Rate Risk
Interest rate risk is the risk that changes in market interest rates will
adversely affect the fair value of an investment. Generally, the longer
the maturity of an investment, the greater the sensitivity of its fair value
to changes in market interest rates. The Town does not have a formal
investment policy that limits investment maturities as a means of manag-
ing its exposure to fair value losses arising from increasing interest rates.
32
Information about the sensitivity of the fair values of the Town's invest-
ments to market interest rate fluctuations is as follows:
Investment Type
Long-term C.D.'s
C. Foreign Currency Risk
$
Fair
Value
3,194 $
Investment
Maturities {in Years}
More
1-5 Than 5
3,119 $ 75
Foreign currency risk is the risk that changes in foreign exchange rates
will adversely affect the fair value of an investment. The Town does not
have policies for foreign currency risk.
5. Taxes Receivable
Real estate and personal property taxes are levied and based on values
assessed on January 1st of every year. Assessed values are established by
the Board of Assessor's for 100% of the estimated fair market value. Taxes
are due on a quarterly basis and are subject to penalties and interest if they
are not paid by the respective due date. Real estate and personal property
taxes levied are recorded as receivables in the fiscal year they relate to.
Fourteen days after the due date for the final tax bill for real estate taxes, a
demand notice may be sent to the delinquent taxpayer. Fourteen days after
the demand notice has been sent, the tax collector may proceed to file a lien
against the delinquent taxpayers' property. The Town has an ultimate right
to foreclose on property for unpaid taxes. Personal property taxes cannot
be secured through the lien process.
Taxes receivable at June 30, 2013 consist of the following (in thousands):
33
6.
Real Estate
2013 $ 467
2012 93
2011 1 -
561
Personal Property
2013 11
2012 10
2011 5
Prior 8
34
Tax Liens 414
Community Preservation 9
Total $ 1,018
Allowance for Doubtful Accounts
The receivables reported in the accompanying entity-wide financial state-
ments reflect the following estimated allowances for doubtful accounts (in
thousands):
Property taxes
Excises
$ 131
223
7. Intergovernmental Receivables
This balance represents reimbursements requested from Federal and State
agencies for expenditures incurred in fiscal 2013.
8. Transfers In/Out
The Town's routine transfers include transfers made to move (1) uri restricted
revenues or balances that have been collected or accumulated in the general
fund to other funds based on budgetary authorization, and (2) revenues from
a fund that by statute or budgetary authority must collect them to funds that
are required by statute or budgetary authority to expend them. The transfers
from the water and sewer funds to the general fund are made to cover indirect
costs of water and sewer funds incurred in the general fund.
The Town reports interfund transfers between many of its funds. The sum of
all transfers presented in the table agrees with the sum of interfund transfers
34
presented in the governmental fund financial statements. The following is an
analysis of interfund transfers made in fiscal year 2013.
Fund Transfers In Transfers Out
General fund $ 468,678 $ 127,500
Major Governmental Funds:
Community Preservation Fund 219,579
Nonmajor Governmental Funds:
Special revenue funds 2,179 284,678
Capital project funds 332,079
Trust funds 2,179
Enterprise Funds:
Sewer fund 84,500
Nonmajor fund (Water) 84,500
Total $ 802,936 $ 802,936
9. Capital Assets
Capital asset activity for the year ended June 30, 2013 was as follows (in
thousands):
Beginning Ending
Balance Increases Decreases Balance
Governmental Activities:
Capital assets, being depreciated:
Buildings and improvements $ 70,621 $ $ $ 70,621
Machinery, equipment, and furnishings 9,842 206 10,048
Infrastructure 39,869 1,264 (25) 41,108
Total capital assets, being depreciated 120,332 1,470 (25) 121,777
Less accumulated depreciation for:
Buildings and improvements (26,303) (1 ,598) (27,901)
Machinery, equipment, and furnishings (8,224) (463) (8,687)
Infrastructure (12,395) (1 ,242) 20 (13,617)
Total accumulated depreciation (46,922} (3,303} 20 (50,205}
Total capital assets, being depreciated, net 73,410 (1 ,833) (5) 71,572
Capital assets, not being depreciated:
Land 13,478 1,362 14,840
Construction in progress 4,334 22,702 27,036
Total capital assets, not being depreciated 17,812 24,064 41,876
Governmental activities capital assets, net $ 91,222 $ 22,231 $ (5) $ 113,448
35
Beginning
Balance Increases Decreases
Business-Type Activities:
Capital assets, being
Buildings and improvements $ 745 $ $ $
Machinery, equipment, and furnishings 699
Infrastructure 54,585 25,283
Total capital assets, being depreciated 56,029 25,283
Less accumulated depreciation for:
Buildings and improvements (431) (17)
Machinery, equipment, and furnishings (580) (7)
Infrastructure (11 ,444) (972)
Total accumulated depreciation (12,455)
Total capital assets, being depreciated, net 43,574 24,287
Capital assets, not being depreciated:
Construction in progress 28,335 3,540 (25,167}
Total capital assets, not being depreciated 28,335 3,540 (25,167}
Business-type activities capital assets, net $ 71,909 $ 27,827 $ (25,167) $
Depreciation expense was charged to functions of the Town as follows (in
thousands):
Governmental Activities:
General government $ 91
Public safety 460
Education 903
Public works 1,414
Health & Human Services 66
Culture and recreation 369
Total depreciation expense - governmental activities $ 3,303
Business-type Activities:
Sewer $ 923
Nonmajor (Water) 73
Total depreciation expense - business-type activities $ 996
10. Warrants Payable
Warrants payable represent 2013 expenditures paid by July 15, 2013.
36
Ending
Balance
745
699
79,868
81,312
(448)
(587)
(12,416)
(13,451)
67,861
6,708
6,708
74,569
11. Anticipation Notes Payable
The Town had the following notes outstanding at June 30, 2013:
Interest Date of Date of Balance at
Rate Issue Maturity 6/30/13
Governmental Activities:
High School 1.50% 02/16/13 07/19/13 $ 7,000,000
Town Hall 1.50% 02/16/13 07/19/13 2,400,000
Salt Storage 1.50% 02/16/13 07/19/13 50,000
Salt Shed 1.50% 02/16/13 07/19/13 50,000
Canny Farm Development 1.50% 02/16/13 07/19/13 50,000
Salt Shed 0.65% 02/16/13 07/19/13 100,000
High School 0.55% 07/20/12 07/19/13 2,300,000
High School 0.55% 05/22/13 07/19/13 3,000,000
Total Governmental Activities $ 14,950,000
Business-TyQe Activities:
Sewer notes 0.15% 01/01/12 N/A $ 4,714,475
Sewer notes 0.15% 06/30/12 N/A 1,600,093
Sewer notes 1.50% 02/22/12 07/19/13 1,450,000
Total Business-Type Activities $ 7,764,568
The following summarizes activity in notes payable during fiscal year 2013 (in
thousands):
Balance Balance
Beginning New End of
of Year Issues Maturities Year
Governmental notes $ 11,950 $ 14,950 $ (11 ,950) $ 14,950
Sewer notes 7,032 1,733 {1 ,000} 7,765
Total $ 18,982 $ 16,683 $ {12,950} $ 22,715
12. Long-Term Debt
A. General Obligation Bonds
The Town issues general obligation bonds to provide funds for the acqui-
sition and construction of major capital facilities. General obligation bonds
have been issued for both governmental and business-type activities.
General obligation bonds currently outstanding are as follows:
37
Amount
Serial Outstanding
Maturities Interest as of
Governmental Activities: Through Rate(s)% 6/30/13
Title 5 MWPAT 08/01/18 0.00 $ 9,782
Police station construction 01/15/24 3.0-6.0 324,000
Library construction 01/15/24 3.0-6.0 2,001,000
Pension obligation 11/01/18 4.75-5.50 980,000
Police station 06/15/26 4.0-6.5 4,897,000
Library 06/15/26 4.0-6.5 839,000
Robbins Road 06/15/26 4.0-6.5 493,000
Harmony Hall 06/15/26 4.0-6.5 280,000
Salt shed 06/15/26 4.0-6.5 24,000
CPA- Canney 12/15/15 2.0-4.0 1,080,000
School refunding 05/15/16 2.0-4.0 1,230,000
School refunding 05/15/20 2.0-4.0 5,780,000
Fire building construction 05/15/20 2.0-4.0 495,000
Fire building construction 08/15/17 2.0-4.0 211,000
School remodel 08/15/17 2.0-4.0 598,000
Outdoor recreational facility 08/15/15 2.0-4.0 74,000
Total Governmental Activities: $ 19,315,782
Amount
Serial Outstanding
Maturities Interest as of
Business-T ~ 2 e Activities: Through Rate(s)% 6/30/13
Water 12/15/19 2.0-3.5 $ 313,000
MWPAT 08/01/13 0.00 10,647
2009 Refunding 02/01/19 2.0-3.5 890,000
MWPAT 07/25/20 2.00 1,212,001
Sewer 01/15/25 3.0-6.0 2,195,000
Sewer 01/15/25 3.0-6.0 3,935,000
Sewer 06/15/27 4.0-6.5 1,832,000
MWPAT - Kenwood 02/01/30 0.00 1,635,200
MWPAT- Long Pond 02/01/30 0.00 998,600
MWPAT 08/01/30 0.00 770,000
MWPAT 08/01/30 0.00 350,000
MWPAT 07/15/27 2.00 189,668
MWPAT 07/15/30 2.00 2,245,238
MWPAT 07115/30 2.00 1,883,907
MWPAT 07/15/30 2.00 7,848,790
MWPAT 07/15/30 2.00 3,952,544
MWPAT 07/15/32 2.00 3,517,290
Sewer 12/15/30 3.50-4.38 2,532,000
Sewer 08/15/22 2.0-4.0 672,000
Sewer 08/15/22 2.0-4.0 493,000
Sewer 08/15/22 2.0-4.0 115,000
Sewer 08/15/22 2.0-4.0 2,502,000
Sewer 08/15/22 2.0-4.0 795,000
Total Business-Type Activities: $ 40,887,885
38
B. Future Debt Service
The annual payments to retire all general obligation long-term debt
outstanding as of June 30, 2013 are as follows:
Governmental Princi12al Interest Total
2014 $ 3,032,630 $ 765,070 $ 3,797,700
2015 . 2,909,630 651,167 3,560,797
2016 2,840,630 533,542 3,374,172
2017 2,019,630 427,575 2,447,205
2018 1,923,630 346,953 2,270,583
2019-2023 5,111,632 839,979 5,951,611
2024-2026 1,478,000 107,651 1,585,651
Total $ 19,315,782 $ 3,671,937 $ 22,987,719
The general fund has been designated as the sole source to repay the
governmental-type general obligation long-term debt outstanding as of
June 30, 2013:
Business-tv12e Princi12al Interest Total
2014 $ 3,050,133 $ 1,214,618 $ 4,264,751
2015 3,069,965 1,044,505 4,114,470
2016 3,102,154 948,102 4,050,256
2017 3,120,161 861,585 3,981,746
.2018 3,148,686 794,216 3,942,902
2019-2023 12,741,538 2,780,321 15,521,859
2024-2028 8,410,981 1,133,871 9,544,852
2029-2033 4,244,267 173,288 4,417,555
Total $ 40,887,885 $ 8,950,506 $ 49,838,391
c. Changes in General Long-Term Liabilities
During the year ended June 30, 2013, the following changes occurred in
long-term liabilities (in thousands):
39
Equals
Total Total Less Long-Term
Balance Balance Current Portion
7/1/12 Additions Reductions 6/30/13 Portion 6/30/13
Governmental Activities
Bonds payable $ 22,932 $ 8,388 $ (12,004) $ 19,316 $ (3,033) $
Other:
Landfill closure 2,074 (45) 2,029 (45)
Accrued employee benefits 4,159 140 (263) 4,036 (121)
Net OPEB obligation 20,026 5,902 (670) 25,258
Total Governmental Activities $ 49,191 $ 14,430 $ (12,982) $ 50,639 $ (3,199) $
Activities
Bonds payable $ 43,576 $ 4,577 $ (7,265) $ 40,888 $ (3,050) $
Net OPEB obligation 91 59 (26) 124
Total Business-type Activities $ 43,667 $ 4,636 $ (7,291) $ 41,012 $ (3,050) $
D. Current Year Refundings
On July 10, 2012, the Town issued general obligation bonds in the amount
of $5,460,000 with a variable interest rate ranging from 2.0% to 4.0% to
refund $5,555,000 of term bonds with an interest rate of 4.0%.
On April 13, 2013, the Town issued general obligation bonds in the amount
of $7,505,000 with a variable interest rate ranging from 2.0% to 4.0% to
refund $8,01 0,000 of term bonds with an interest rate of 4.0%.
E. Prior Year Refundings
In prior years, the Town has defeased various bond issues by creating
separate irrevocable trust funds. The proceeds from the new issuance of the
general obligation bonds were used to purchase U.S. government securi-
ties, and those securities were deposited in an irrevocable trust with an
escrow agent to provide debt service payments until the refunded bonds
mature in 2020. For financial reporting purposes, the debt has been consid-
ered defeased and therefore removed as a liability from the Town's balance
sheet. As of June 30, 2013, the amount of defeased debt outstanding but
removed from the governmental activities and business-type activities was
$7,775,000.
13. Landfill Closure and Postclosure Care Costs
State and Fetlerallaws and regulations require the Town to place a final
cover on its landfill site and to perform certain maintenance and monitoring
functions at the site for thirty years after closure.
40
16,283
1,984
3,915
25,258
47,440
37,838
124
37,962
The Town reported $2,029,000 as landfill closure and postclosure care liability
at June 30, 2013. These amounts are based on an estimate of what it would
cost to perform all closure and postclosure care remaining on the landfill site,
which closed in 2007. Actual costs may be higher due to inflation, changes in
technology, or changes in regulations.
14. Deferred Inflows of Resources
Deferred inflows of resources are the acquisition of net assets by the Town
that are applicable to future reporting periods. Deferred inflows of resources
have a negative effect on fund balance, similar to liabilities.
The following is a summary of deferred inflow of resources balances as of
June 30, 2013 (in thousands):
Unearned property tax revenues
15. Restricted Net Position
General
Funds
Non major
Funds
$ 2,040 . $ 10
Total
Governmental
Funds
$ 2,050
The accompanying entity-wide financial statements report restricted net
position when external constraints from grantors or contributors are placed
on net position.
Permanent fund restricted net position are segregated between nonexpend-
able and expendable. The nonexpendable portion represents the original
restricted principal contribution, and the expendable represents accumulated
earnings which are available to be spent based on donor restrictions.
16. Governmental Funds - Balances
Fund balances are segregated to account for resources that are either not
available for expenditure in the future or are legally set aside for a specific
future use.
The Town implemented GASB Statement No. 54 (GASB 54), Fund Balance
Reporting and Governmental Fund Type Definitions, which enhances the
usefulness of fund balance information by providing clearer fund balance
classifications that can be more consistently applied and by clarifying existing
governmental fund type definitions.
The following types of fund balances are reported at June 30, 2013:
41
. .;,: ..... .
Nonspendable - Represents amounts that cannot be spent because they
are either (a) not in spendable form or (b) legally or contractually required to
be maintained intact. This fund balance classification includes general fund
reserves for prepaid expenditures and nonmajor governmental fund reserves
for the pri.!lcipal portion of permanent trust funds.
Restricted- Represents amounts that are restricted to specific purposes by
constraints imposed by creditors, grantors, contributors, or laws or regulations
of other governments, or constraints imposed by law through constitutional
provisions or enabling legislation. This fund balance classification includes
general fund encumbrances funded by bond issuances, various special reve-
nue funds, and the income portion of permanent trust funds.
Committed - Represents amounts that can only be used for specific purposes
pursuant to constraints imposed by formal action of the Town's highest level of
decision-making authority. This fund balance classification includes general
fund encumbrances for non-lapsing, special article appropriations appmved at
Town Meeting, certain stabilization funds set aside by Town Meeting vote (now
reported as part of the general fund per GASB 54), and various special
revenue funds.
Assigned- Represents amounts that are constrained by the Town's intent to
use these resources for a specific purpose. This fund balance classification
includes general fund encumbrances that have been established by various
Town departments for the expenditure of current year budgetary financial
resources upon vendor performance in the subsequent budgetary period. The
Town follows an informal policy that permits management to assign fund
balance amounts to a specific purpose, although fund balance to be applied
against a subsequent year's budget is voted by Town Meeting.
Unassigned - Represents amounts that are available to be spent in future
periods.
Following is a breakdown of the Town's fund balances at June 30, 2013:
42
High
School Community Nonmajor Total
General Construction Preservation Governmental Governmental
Fund Fund Fund Funds Funds
Nonspendable
Nonexpendable permanent funds $ $ $ $ 230,Q47 $ 230,Q47
Total Nonspendable 230,047 230,047
Restricted
Community preservation 7,672,895 7,672,895
Englesby school debt service 482,718 482,718
School general purpose (School Choice) 394,284 394,284
Gifts and donations 281,205 281,205
Revolving funds 138,742 138,742
Other receipts reserved for appropriation 208,144 208,144
Other special revenue funds 299,196 299,196
Capital project funds 239,149 239,149
Expendable permanent funds 149,306 149,306
Total Restricted 7,672,895 2,192,744 9,865,639
Committed
Town Hall stabilization 1,119,237 1,119,237
Other stabilization 221,401 221,401
Total Committed 1,340,638 1,340,638
Assigned
For encumbrances
General government 67,400 67,400
Public works 9,380 9,380
Employee benefits 100,000 100,000
Total Assigned 176,780 176,780
Unassigned (1) 3,515,321
Total Unassigned 3,515,321 (743,264) (1 0,387,529)
Total Fund Balance $ 5,032,739 $ $ 7,672,895 $ 1,679,527 $ 1,225,575
(1) Includes general stabilization accounts of $1 ,706 thousand.
17. Subsequent Events
Debt
Subsequent to June 30, 2013, the Town has incurred the following additional
debt:
Interest Issue Maturity
Rate Date Date Amount
School bonds 2.00-5.00% 7/15/2013 7/15/2029 $ 23,000,000
General obligation bonds 2.00-5.00% 7/15/2013 7/15/2029 8,250,000
Sewer bonds 2.00-5.00% 7/15/2013 7/15/2033 1,450,000
43
18. Commitments and Contingencies
Outstanding Legal Issues - There are several pending legal issues in which
the_Town is involved. The Town's management is of the opinion that the
potential future settlement of such claims would not materially affect its
financial statements taken as a whole.
Grants -Amounts received or receivable from grantor agencies are subject
to audit and adjustment by grantor agencies, principally the federal govern-
ment. Any disallowed claims, including amounts already collected, may
constitute a liability of the applicable funds. The amount of expenditures which
may be disallowed by the grantor cannot be determined at this time, although
the Town expects such amounts, if any, to be immaterial.
Abatements- There are several cases pending before the Appellate Tax
Board in regard to alleged discrepancies in property assessments. According
to Town Counsel, the probable outcome of these cases at the present time is
indeterminable, although the Town expects such amounts, if any, to be
immaterial.
19. Post-Employment Healthcare and Life Insurance Benefits
GASB Statement 45 requires governments to account for other post-employment
benefits (OPES), primarily healthcare, on an accrual basis rather than on a pay-
as-you-go basis. The effect is the recognition of an actuarially required contribu-
tion as an expense on the statement of revenues, expenses, and changes in net
position when a future retiree earns their post-employment benefits, rather than
when they use their post-employment benefit. To the extent that an entity does
not fund their actuarially required contribution, a post-employment benefit liability
is recognized on the Statement of Net Position over time.
A. Plan Description
In addition to providing the pension benefits described, the Town pro-
vides post-employment healthcare and life insurance benefits for retired
employees through the Town's plan. The benefits, benefit levels,
employee contributions and employer contributions are governed by
Chapter 32 of the Massachusetts General Laws. As of December 31,
2010, the actuarial valuation date, approximately 509 retirees and 536
active employees meet the eligibility requirements. The plan does not
issue a separate financial report.
B. Benefits Provided
The Town provides medical, dental, prescription drugs and life insurance
to retirees and their covered dependents. All active employees who retire
from the Town and meet the eligibility criteria will receive these benefits.
44
C. Funding Policv
Retirees contribute 20% of the cost of the health plan, as determined by
. the Town. The Town contributes the remainder of the health plan costs on
a pay-as-you-go basis.
D. Annual OPEB Costs and Net OPEB Obligation
The Town's fiscal2013 annual OPEB expense is calculated based on the
annual required contribution of the employer (ARC), an amount actuarially
determined in accordance with the parameters of GASB Statement
No. 45. The ARC represents a level of funding that, if paid on an ongoing
basis, is projected to cover the normal cost per year and amortize the
unfunded actuarial liability over a period of thirty years. The following table
shows the components of the Town's annual OPEB cost for the year
ending June 30, 2013, the amount actually contributed to the plan, and the
change in the Town's net OPEB obligation based on an actuarial valuation
as of December 31, 2010.
Annual Required Contribution (ARC) $ 9,231,297
Interest on net OPEB obligation 905,279
Adjustment to ARC (670,576}
Annual OPEB cost 9,466,000
Contributions made (4,201 ,532}
Increase in net OPEB obligation 5,264,468
Net OPEB obligation - beginning of year 20,117,301
Net OPEB obligation - end of year $ 25,381,769
The Town's annual OPEB cost, the percentage of annual OPEB cost
contributed to the plan, and the net OPEB obligation were as follows:
Percentage of
Annual OPEB OPEB Net OPEB
Fiscal ~ e r ended Cost Cost Contributed Obligation
2013 $ 9,406,149 37.1% $ 25,381,769
2012 $ 8,976,982 35.4% $ 25,381,769
2011 $ 8,670,668 58.2% $ 14,897,305
2010 $ 8,670,668 82.1% $ 10,563,864
The Town's net OPEB obligation as of June 30, 2013 is recorded as a
component of the "other long-term liabilities" line item.
45
E. Funded Status and Funding Progress
The funded status of the plan as of December 31, 2010, the date of the
most recent actuarial valuation was as follows:
Actuarial accrued liability (AAL)
Actuarial value of plan assets
Unfunded actuarial accrued liability (UAAL)
Funded ratio (actuarial value of plan assets/AAL)
Covered payroll (active plan members)
UAAL as a percentage of covered payroll
$ 141,452,538
$ 141 ,452,538
0%
N/A
N/A
Actuarial valuations of an ongoing plan involve estimates of the value of
reported amount <ind assumptions about the probability of occurrence of
events far into the future. Examples included assumptions about future
employment, mortality, and the healthcare cost trend. Amounts deter-
mined regarding the funded status of the plan and the annual required
contributions of the employer are subject to continual revision as actual
results are compared with past expectations and new estimates are made
about the future. The schedule of funding progress, presented as required
supplementary information following the notes to the financial statements,
presents multiyear trend information that shows whether the actuarial
value of plan assets is increasing or decreasing over time relative to the
actuarial accrued liabilities for benefits.
F. Actuarial Methods and Assumptions
Projections of benefits for financial reporting purposes are based on the
plan as understood by the Town and the plan members and include the
types of benefits provided at the time of each valuation and the historical
pattern of sharing of benefit costs between the Town and plan members
to that point. The actuarial methods and assumptions used include tech-
niques that are designed to reduce short-term volatility in actuarial
accrued liabilities and the actuarial value of assets, consistent with the
long-term perspective of the calculations.
In the December 31, 2010 actuarial valuation the projected unit credit cost
method was used. The actuarial value of assets was not determined as
the Town has not advance funded its obligation. The actuarial assump-
tions included a 4.50% investment rate of return and an initial annual
healthcare cost trend rate of 9.00% which decreases to a 5.00% long-term
rate for all healthcare benefits after seven years. The amortization costs
for the initial UAAL is a level percentage of payroll for a period of 30 years,
on a closed basis. This has been calculated assuming the amortization
payment increases at a rate of 4.50%.
46
20. Pension Plan
The Town follows the provisions of GASB Statement No. 27, Accounting for
Pensions for State and Local Government Employees, with respect to the
employees' retirement funds.
A. Plan Description
The Town contributes to the Middlesex Retirement System (the "System"),
a cost-sharing multiple-employer, defined benefit pension plan adminis-
tered by a county retirement board. The System provides retirement,
disability, and death benefits to plan members and beneficiaries. Chapter
32 of the Massachusetts General Laws assigns the System the authority
to establish and amend benefit provisions of the plan, and grant cost-of-
living increases, to the State legislature. The System issues a publicly
available financial report that can be obtained through the Middlesex
Retirement System at 40 Thorndike Street, New Superior Court House,
East Cambridge, Massachusetts 02141.
B. Funding Policy
Plan members are required to contribute to the System at rates ranging
from 5% to 11% of annual covered compensation. The Town is required to
pay into the System its share of the remaining system:..wide actuarially
determined contribution plus administration costs which are apportioned
among the employers based on active covered payroll. The contributions
of plan members and the Town are governed by Chapter 32 of the
Massachusetts General Laws. The Town's contributions to the System
for the years ended June 30, 2013, 2012, and 2011 were $3,406,221,
$3,297,164, and $3,249,512, respectively, which were equal to its annual
required contributions for each of these years.
C. Teachers
As required by State statutes, teachers of the Town are covered by the
Massachusetts Teachers Retirement System (MTRS). The MTRS is
funded by contributions from covered employees and the Commonwealth
of Massachusetts. The Town is not required to contribute.
All persons employed on at least a half-time basis, who are covered under
a contractual agreement requiring certification by the Board of Education
are eligible, and must participate in the MTRS.
Based on the Commonwealth of Massachusetts' retirement laws, employ-
ees covered by the pension plan must contribute a percentage of gross
earnings into the pension fund. The percentage is determined by the
participant's date of entry into the system and gross earnings, up to
$30,000, as follows:
47
Before January 1, 1975
January 1, 1975- December 31, 1983
January 1, 1984 - June 30, 1996
July 1, 1996 .., June 30, 2001
Beginning July 1, 2001
5%
7% *
8% *
9% *
11%
*Effective January 1, 1990, all participants hired after January 1, 1979,
who have not elected to increase to 11%, contribute an additional 2%
of salary in excess of $30,000. The Town's current year covered payroll
for teachers and administrators was $16,652,956.
In fiscal year 2013, the Commonwealth of Massachusetts contributed
$7,904.130 to the MTRS on behalf of the Town. This is included in the
education expenditures and intergovernmental revenues in the general
fund.
21. Self-Insurance
The Town self-insures against claims for workers compensation, unemploy-
ment and most employee health coverage. Annual estimated requirements for
claims are provided in the Town's annual operating budget.
Health Insurance
The Town contracts with an insurance carrier for excess liability coverage
and an insurance consultant for claims processing. Under the terms of its
coverage, the Town is liable for claims up to $125,000. The claims
liability represents an estimate of claims incurred but unpaid at year-end,
based on past historical costs and claims paid subsequent to year-end.
Changes in the aggregate liability for claims for the year ended June 30, 2013
are as follows:
Health
Coverage
Claims liability, beginning of year $ 1,429,865
Claims incurred/recognized
in fiscal year 2013 12,377,530
Claims paid in fiscal year 2013 {13,007,395}
Claims liability, end of year $ 800,000
The $800,000 estimated liability for claims incurred but not reported includes only
an estimate for known loss events expected to later be presented as claims. The
48
Town is unable to estimate the amount of unknown loss events expected to
become claims and expected future developments on claims already reported.
~ 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; and natural disasters for
which the government carries commercial insurance. There were no signifi-
cant reductions in insurance coverage from the previous year and have been
no material settlements in excess of coverage in any of the past three fiscal
years.
23. Implementation of New GASB Standard
The GASB has issued Statement 68 Accounting and Financial Reporting for
Pensions, which is required to be implemented in fiscal year 2015. Manage-
ment's current assessment is that this pronouncement will have a significant
impact on the Town's basic financial statements by recognizing as a liability
and expense, the Town's applicable portion of the Middlesex County Retire-
ment System's actuarially accrued liability.
49
Actuarial
Actuarial Value of
Valuation Assets
Date
fEl
01/01/11 $
01/01/09 $
Actuarial
Actuarial Value of
Valuation Assets
Date
fEl
01/01/12 $ 862,323
01/01/10 819,987
01/01/08 774,863
01/01/06 653,156
01/01/04 599,699
Annual
Plan Required
Year-end Contributions
12131112 $ 81,701
12131/11 78,100
12131/10 74,126
TOWN OF DRACUT, MASSACHUSETTS
SCHEDULE OF FUNDING PROGRESS
REQUIRED SUPPLEMENTARY INFORMATION
June 30, 2013
(Unaudited)
(Amounts Expressed in thousands)
Other Post-Employment Benefits
Actuarial
Accrued
Liability Unfunded
(AAL)- AAL Funded
Entry Age (UAAL) Ratio
!!?.l
(b-al .@&1
$ 141,453 $ 141,453 0.0%
$ 137,717 $ 137,717 0.0%
MIDDLESEX COUNTY RETIREMENT SYSTEM
REQUIRED SUPPLEMENTARY INFORMATION
(Unaudited)
(Amounts Expressed in Thousands)
Employees' Retirement System
Schedule of Funding Progress
Actuarial
Accrued
Liability Unfunded
(AAL)- AAL Funded
Entry Age (UAAL) Ratio
!!?.l
(b-a) .@&1
$ 1,974,144 $ 1,111,821 43.7%
1,743,581 923,594 47.0%
1,529,806 754,943 50.7%
1,223,828 570,672 53.4%
1,020,828 421,129 58.7%
Employees' Retirement System
Schedule of Employer Contributions
System Wide
Actual Percent
Contributions Contributed
$ 81,701 100%
78,100 100%
74,126 100%
See Independent Auditors' Report.
50
UAAL as
a Percent-
age of
Covered Covered
Payroll Payroll
!9
[(b-a\/cl
N/A N/A
N/A N/A
UAAL as
a Percent-
age of
Covered Covered
Payroll Payroll
!9
[(b-a)/cl
$ 393,100 282.8%
384,933 239.9%
360,206 209.6%
330,999 172.4%
306,025 137.6%
Town of Dracut
Town
Contributions
as a% of
Actual Actual
Contributions Contributions
$ 3,406 4.2%
3,297 4.2%
3,249 4.4%