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CITY OF

SHELTON

CONNECTICUT

COMPREHENSIVE ANNUAL FINANCIAL REPORT

For the Fiscal Year Ended June 30, 2011

Financial Section

Introductory Section

Statistical Section

CITY OF SHELTON, CONNECTICUT

COMPREHENSIVE ANNUAL FINANCIAL REPORT TABLE OF CONTENTS

INTRODUCTORY SECTION

Letter of Transmittal

Principal Officials

Organizational Chart

FINANCIAL SECTION

Independent Auditor's Report

Management's Discussion and Analysis

Basic Financial Statements:

Government-Wide Financial Statements: Exhibit

Statement of Net Assets A

Statement of Activities B

Fund Financial Statements:

Balance Sheet- Governmental Funds c

Statement of Revenues, Expenditures, and Changes In Fund Balances (Deficit)- Governmental Funds D

Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances (Deficit)

of Governmental Funds to the Statement of Activities E

Statement of Revenues, Expenditures and Changes in Fund Balance - Budgetary Basis - Budget and Actual - General Fund F

Statement of Net Assets - Proprietary Funds G

Statement of Revenues, Expenses and Changes in Fund Equities (Deficit) - Proprietary Funds H

Statement of Cash Flows - Proprietary Funds

Statement of Fiduciary Net Assets - Fiduciary Funds J

Statement of Changes in Fiduciary Net Assets - Fiduciary Funds K

Notes to Financial Statements

Page Number

i-iii

iv

v

1-2

3a-3g

4

5-6

7

8

9

10

11

12

13

14

15

16-44



Supplemental and Combining Nonmajor Fund Statements and Schedules

General Fund

General Fund Revenues and Other Financing

Schedules

Sources Budget and Actual (Non-GAAP Budgetary Basis) 1

General Fund Expenditures, Encumbrances and Other Financing Uses

- Budgetary Basis - Budget and Actual

Non-Major Governmental Funds

Combining Balance Sheet

Combining Statement of Revenues, Expenditures And Changes in Fund Balances (Deficits)

W.P.C.A

General Fund Expenditures, - Budgetary Basis - Budget and Actual

Fiduciary Funds

Combining Statement of Net Assets -Private Purpose Trust Funds

Combining Statement of Changes in Net Assets Private Purpose Trust Funds

Combining Statement of Fiduciary Net Assets -Agency Funds

Combining Statement of Changes in Assets and Liabilities - Agency Funds

Other Schedules

Schedule of Property Taxes Levied, Collected And Outstanding

Schedule of Debt Limitation

2

3

4

5

6

7

8

9

10

11

Page Number

45

46-47

48-59

60-71

72

73-76

77-79

80-81

82-83

84-85

86-87



STATISTICAL SECTION

Table

Financial Trends

Net Assets By Component A-1 Changes in Net Assets A-2 Fund Balances A-3 Changes in Fund Balances A-4

Revenue Capacity

Assessed Value and Actual Value of Taxable Property B-1 Direct and Overlapping Property Tax Rates B-2 Principal Property Taxpayers B-3 Property Tax Levied and Collections B-4

Debt Capacity

Ratios of Outstanding Debt By Type C-1 Ratios of General Bonded Debt Outstanding C-2 Legal Debt Margin Information C-3

Demographic and Economic Information

Demographic and Economic Statistics D-1 Principal Employers D-2

Operating Information

Full-Time Equivalent City Government Employees E-1 Capital Assets Statistics By Function/Program E-2

Page Number

88 89 90

91-92

93 94 95 96

97-98 99 100

101 102

103 104

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J$ltcl:fntt. <Htu:ttr..JJS4.84

December 20, 2011

To the Honorable Mayor, Members of the Board of Aldermen, And the Citizens of the City of Shelton

State law requires that every general-purpose local government publish within six months of the close of

each fiscal year a complete set of audited financial statements. The report is published to fulfill that

requirement for the fiscal year ended June 30, 2011.

Management assumes full responsibility for the completeness and reliability of the information

contained in this report, based upon a comprehensive frame-work of internal control that it has

established for this purpose. Because the cost of internal controls should not exceed anticipated

benefits, the objective is to provide reasonable, rather than absolute, assurance that the financial

statements are free of any material misstatements.

Levitsky & Berney P.C., Certified Public Accountants, have issued a qualified opinion of the C,ity of

Shelton's financial statements for the year ended June 30, 2011 because an independent actuary did not

complete a report on the post-employment benefits other than pension. The independent auditor's

report is located at the front of the financial section of this report.

Description of the Municipality

The City of Shelton (formerly known as Huntington) was incorporated in 1789 from Stratford as a town

and incorporated in 1919 as a City. Comprised of 31.4 square miles in northern Fairfield County,

contiguous to Stratford, Trumbull and Monroe to the Southwest and Derby, Orange and Milford lie

across the Housatonic River to the Northeast.

Form of Government

The City of Shelton operates under a Charter established in 1919, which was most recently revised in

1994. The City operates under a Mayor/Aldermen form of government. The Mayor is the Chief

Executive Officer of the City with all the executive powers, duties and responsibilities that the State

general statutes provide, as well as those assigned under the City Charter. The Mayor appoints the

Parks and Recreation Commission, the Administrative Assistant, Corporate Counsel, the Director of

Public Works, the Welfare Director, the Chairman of the Board of Fire Commissioners, and the Civil

Preparedness Director. The Mayor presides at the meetings of the Board of Aldermen and the Board of

Apportionments and Taxation but votes only to resolve a tie vote.

In addition to all powers granted to towns and cities under the constitution and general statutes of the

State of Connecticut, the City Board of Alderman, an eight member body, acts as the City's legislative

body which has specific powers to be executed through the enactment and enforcement of ordinances

and by-laws which protect or promote the peace, safety, good government and welfare of the City and

its habitants. The Board also has the power to provide for the organization, conduct, and operation of

the departments, agencies and offices of the City; for the number, titles qualifications, powers, duties

and compensation of all officers and employees of the City; and for the making of rules and regulations

necessary for the control, management and operation of all public buildings, grounds, parks, cemeteries

or other property of the City. Two members are elected for each of the City's four voting districts to

two-year terms. The board meets on a monthly basis.

The Board of Apportionment and Taxation consists of six elected members. The Board is responsible for

certain budgetary matters, including review of the Mayor's proposed budget and submittal to the Board

of Alderman of the recommended budget and mill rate.

Principal Municipal Officials

Manner of Length of Office Name Selection/Term Service

Mayor Mark A. Lauretti Elected- 2 years 19 Treasurer Frank C. Pagliaro, Jr. Elected- 2 years 15 President- Board of Aldermen John F. Anglace, Jr. Elected- 2 years 19 Chairman- Board of Education Win Oppel Elected- 2 years 2 Superintendent of Schools Freeman Burr Appointed -Contract 1 Director of Finance Louis M. Marusic Appointed - Indefinite 27

Economic Conditions and Development

The City of Shelton works in partnership with the private sector and local residents and stakeholders to

retain its competitive advantage. Growth has continued in Shelton through the recent economic

downtown with significant future growth anticipated. Strategic investments are regularly made in

Shelton's infrastructure and in particular in the downtown revitalization area to respond to business and

job growth objectives. Shelton recognizes the value of "Smart Growth" planning and development

principles.

The City's manufacturing heritage traces to the late 1600's and was focused about the resources of the

Housatonic River. By 1880 over twelve manufacturing firms were located in the Canal Street Area. Over

time, Shelton transitioned from a manufacturing center to a more diverse economic base. Today,

Shelton is home to over 1,400 businesses of all sizes. The manufacturing sector has been bolstered by

the healthcare, insurance and financial services industries. Over 150 businesses are headquartered or

have significant corporate facilities within the City of Shelton. Prominent names include Pitney Bowes,

Pitney Bowes Credit Corporation, Perkin Elmer, Sure Source, Wai-Mart, BIC, and most recently the

Hubbell Corporation. The City now boasts five major hotels.

The City's economic success owes much to its location, the availability of affordable land, a well-trained

workforce and stable finances. A network of interstate and state highways serve the City and five

ii

national and international airports are within approximately one hour drive. Deep-water ports are in

Bridgeport, New Haven and New York City. Also favoring Shelton are attractive workforce

demographics, a respectable school system, and consistent grand list growth, stable taxes and well

managed finances. The City adheres to a policy of amortizing all debt over a ten-year period to ensure

that its resources do not become over-leveraged.

Shelton's development points to a stable economy of consistent growth in all development sectors

(Commercial/industrial and residential). Shelton has been recognized for two consecutive years as the

most affordable community in Connecticut for businesses.

It is estimated that over 350 acres remain available for appropriate commercial and industrial

development in the City. Development is in accordance with a comprehensive plan of development to

ensure that the growth does not exceed the City's resources. The local Planning and Zoning Commission

continually reviews and updates its plans. The Planning and Zoning Commission is currently updating its

downtown revitalization component of the Plan of Development.

The Downtown Revitalization area is continuing to significantly attract new private investment with 103

condominiums recently completed and 250 rental units under construction.

The City has in place a "Fast Track" procedure to assist developers with appropriate City Approvals. All

economic development activity is coordinated under the direction of the Office of the Mayor. The

Mayor acts as the economic development director with the technical assistance provided by the Shelton

Economic Development Corporation (SEDC), a not for profit private/public partnership, and the City of

Shelton Economic Development Commission (EDC) which has been given the responsibility for the

development and implementation of the City's marketing program. The SEDC and the EDC prepares and

disseminates a community and business newsletter four times a year. The publication provides updates

on the community and business activities in the City.

Acknowledgements

The preparation of the report would not have been possible without the efficient and dedicated services

of the entire staff of t~e finance department. Each member has my sincere appreciation for their

contributions made in the preparation of this report.

The comprehensive annual financial report reflects a commitment to the citizens of the City of Shelton,

The Honorable Mayor, the City Alderman and all concerned readers of this report, to provide

information in conformance with the highest standards of accountability.

Respectfully Submitted,

Louis Marusic

Director of Finance

iii

Administrative Assistant City Clerk Corporate Counsel Director of Finance Fire Chief

CITY OF SHELTON. CONNECTICUT

PRINCIPAL OFFICIALS JUNE 30, 2011

Mark A. Lauretti ·

Board of Alderman

John "Jack" Finn, First Ward Anthony F. Simonetti, First Ward Eri~ McPherson, Second Ward Stanley Kudej, Second Ward

Lynne Farrell, Third Ward John F. Anglace, Jr., Third Ward

John P. Papa, Fourth Ward Noreen McGorty, Fourth Ward

ADMINISTRATION Thomas Taylor

Marge Domorod Thomas Welch

Louis M.Marusic Fran Jones

Director of Economic Development Mayor Mark A. Lauretti,(Acting) Director of Emergency Management Management Information Systems Director of Parks and Recreation Benefits Administrator Library.Director Police Chief Director of Public Works Purchasing Agent

BOARD OF EDUCATION

Timothy Walsh John Francino-Quinn

Kate Kutash Paula Ellis

Kathleen Yolish Arlene Liscinsky

Win Oppel Thomas Minotti

Michael Pacowta

BOARD OF EDUCATION ADMINISTRATION

Freeman Burr, Superintendent of Schools Lorraine Rossner, Assistant Superintendant of Schools

iv

John Millo Louis M. Marusic

Ronald Herrick, Jr. Robin Skowronski

Elspeth Lyden Joel Hurliman Paul DiMauro Gene Sullivan

BoardofTax Review

Sewer Commission

Public Building Commission

Employees

Accounting & Control

Purchasing Department

Tax Collector

Appoints Approves I I

I Drug and Alcoho,l

Member Valley Transit

Organization Chart

Elect

Appoints

J I

Member Valley Board of Health

Board of ~lhlcs

Department Heads (Merlt

System/Unions)

Treasury Management

Assessor

Information Technology

v

Director of Director of Board of

Inland Wetland Public Works

Economic Building Commissioner

A eals

Corporation Board of

Sheriffs Counsel

Civil Defense Admission of

Welfare Chief of Pollee

Parkl~g Conservation Commission Authorlty Commlssl~n

Director of Board of Parks Housing Health and Recreation Authority

Board of Fire Energy Commissioners Commission

Zoning Board of Jury • Appeals Commission

Economic Housing Code Development Board of

LEVITSKY & BERNEY A PROFESSIONAL CORPORATION OF CERTIFIED PUBLIC ACCOUNTANTS 100 BRADLEY ROAD • WOODBRIDGE, CONNECTICUT 06525-2394

-~--- 203389-5371 • FAX203389-4430

Board of Aldermen City of Shelton Shelton, Connecticut

INDEPENDENT AUDITOR'S REPORT

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 City of Shelton, Connecticut, as of and for the year ended June 30, 2011, which collectively comprise the City's basic financial statements as listed in the table of contents. These financial statements are the responsibility of the City of Shelton, Connecticut's management. 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 of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinions.

Management has not provided for an independent actuarial report on the other post employment benefits (OPES) that would be considered current for the fiscal year ended June 30, 2011. Accounting principles accepted in the United States of America require that such report would be necessary for proper disclosure and to accurately calculate the net OPES obligation, which would affect the long-term liabilities in the governmental activities of the government- wide financial statements. The affects these would have had on the liabilities, net assets and expenses of the government-wide financial statements were not reasonably determinable.

In our opinion, except for the effects of not providing an adequate calculation of the net OPES obligation in the governmental activities of the government-wide financial statements, as described in the preceding paragraph, the financial statements referred to previously present fairly, in all material respects, the respective financial position of the government wide financial statements of the City of Shelton as of June 30, 2011, and the respective changes in financial position thereof for the year then ended in conformity with accounting principles generally accepted in the United States of America.

-1-

In addition, in our opinion, the financial statements referred to previously present fairly, in all material respects, the respective financial position of the business-type activities, each major fund, and the aggregate remaining information for the City of Shelton as of June 30, 2011 and the respective changes in financial position and where applicable, cash flows thereof for the year then ended in conformity with accounting principles generally accepted in the United States of America.

In accordance with Government Auditing Standards, we have also issued our report December 20, 2011, on our consideration of the City of Shelton, Connecticut's internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing and not to provide an opinion on the internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be considered in assessing the results of our audit.

The management's discussion and analysis on pages 3a through 3g is not a required part of the basic financial statements but is supplementary information required by accounting principles generally accepted in the United States of America. We have applied certain limited procedures, which consisted principally of inquiries of management regarding the methods of measurement and presentation of the required supplementary information. However, we did not audit the information and express no opinion on it.

Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City of Shelton, Connecticut's basic financial statements. The introductory section, detailed budgetary information,· combining and individual nonmajor fund financial statements, other supplemental information presented as schedules and statistical tables are presented for purposes of additional analysis and are not a required part of the basic financial statements. The budgetary information, the combining and individual non-major fund financial statements, and the other supplemental information presented as schedules, have been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, are fairly stated in all material respects in relation to the basic financial statements taken as a whole. The introductory and statistical sections have not been subjected to the auditing procedures applied in the audit of the basic financial statements, and, accordingly, we express no opinion on them.

December 20, 2011

-2-


MANAGEMENT'S DISCUSSION AND ANALYSIS

JUNE 30, 2011

This discussion and analysis of the City of Shelton, Connecticut's (the City) financial performance is provided by management to provide an overview of the City's financial activities for the fiscal year ended June 30, 2011. Please read this MD&A in conjunction with the City's financial statements.

Financial Highlights

• Net assets of our governmental activities increased by $15.5 million • Net assets of our business-type activities decreased by $.3 million • The General Fund reported a fund balance this year of $12.35 million;

$3.1 million more than the general fund balance reported in the prior year • The resources available for appropriation were $6.9 million more than

expended through the General Fund operating budget.

Overview of the Financial Statements

This annual report consists of a series of financial statements. The statement of net assets and the statement of activities (Exhibits A and B, respectively) provide information about the activities of the City as a whole and present a longer-term view of the City's finances. Fund financial statements are presented in Exhibits C and D. For governmental activities, these statements tell how these services were financed in the short term as well as what remains for future spending. Fund financial statements also report the City's operations in more detail than the government-wide statements by providing information about the City's most significant funds. In addition, beginning in fiscal year 2008, the City maintains the water pollution control authority as a proprietary fund (Exhibit G, Hand 1). The remaining statements provide financial information about activities for which the City acts solely as a trustee or agent for the benefit of those outside of the government.

Government- Wide Financial Statements

The analysis of the City as a whole begins on Exhibits A and B. The statement of net assets and the statement of activities reports information about the City as a whole and about its activities for the current period. These statements include all assets and liabilities using the accrual basis of accounting, which is similar to the accounting used by most private-sector companies. All of the current year's revenues and expenses are taken into account regardless of when cash is received or paid.

These two statements report the City's net assets and changes in them. The City's net assets, the difference between assets and liabilities, are one way to measure the City's financial health, or financial position. Over time, increases or decreases in the City's net assets are one indicator of whether its financial health is improving or deteriorating. The reader needs to consider other nonfinancial factors, such as changes in the City's property tax base and the condition of the City's capital assets, to assess the overall health of the City.

3a

In the statement of net assets and the statement of activities, the City reports its activities as follows:

• Governmental activities - The City's basic services are reported here, including general government, public safety, community services, public works, education, public library and municipal facilities. Property taxes, charges for services and state and federal grants finance most of these activities.

• Business-type activities- The Water Pollution Control Authority's activity is reported here.

Fund Financial Statements

The fund financial statements begin with Exhibit C and provide detailed information about the most significant funds - not the City as a whole. Some funds are required to be established by Charter. However, the Board of Aldermen establishes many other funds to help control and manage financial activities for particular purposes or to show that it is meeting legal responsibilities for using grants and other money (like grants received for education from the State and Federal governments). The City's funds are divided into three categories: governmental, proprietary and fiduciary.

• Governmental funds (Exhibits C and D) - Most of the City's basic services are reported in governmental funds, which focus on how money flows into and out of those funds and the balances left at year-end that are available for spending. These funds are reported using an accounting method called modified accrual accounting, which measures cash and all other financial assets that can readily be converted to cash. The governmental fund statements provide a detailed short-term view of the City's general government operations and the basic services it provides. Governmental fund information helps you determine whether there are more or fewer financial resources that can be spent in the near future to finance the City's programs. The relationship (or differences) between governmental activities (reported in the statement of net assets and the statement of activities) and governmental funds is described in a reconciliation at the bottom of the fund financial statements.

• Proprietary funds (Exhibits G, H and I) - When the City charges customers for the services it provides, whether to outside customers or to other units of the City, these services are generally reported in proprietary funds. Proprietary funds are reported in the same way that all activities are reported in the statement of net assets and the statement of activities. Internal service funds (the component of proprietary funds) are used to report activities that provide supplies and services for the City's other programs and activities, such as the City's Worker's Compensation Internal Service Fund.

• Fiduciary funds (Exhibits J and K) - The City is the trustee, or fiduciary, for its employees' pension plans. All of the City's fiduciary activities are reported in separate statements of fiduciary net assets and changes in fiduciary net assets. These activities are excluded from the City's other financial statements because the City cannot use these assets to finance its operations. The City is responsible for ensuring that the assets reported in these funds are used for their intended purposes.

3b

Government-Wide Financial Analysis

The analysis below focuses on the net assets (Table 1) and changes in net assets (Table 2) of the City's governmental activities and business-type activities. The City's net assets for governmental activities increased $16 million from $125 million in 2010 to $141 million in 2011.

The City's net assets for the business-type activities decreased $3 million for the fiscal year ending June 30, 2011. The net assets went from $36.3 million at June 30, 2010 to $36.0 million at the end of this fiscal year. The majority of this decrease can be attributed to a large increase in Transfers in from other funds, which recognizes the City's payment to the Clean Water Fund loan on-behalf of the W.P.C.A. Contributed Capital increased $.6 million mainly due to construction in progress for upgrades to the waste water treatment plant.

TABLE 1 NET ASSETS:

Governmental Activities 2011 2010

Current and other assets $ 14,181,324 13,335,121 Capital assets 210,297,793 203,849,354

Total Assets $ 224,479,117 217,184,475

Current and other liabilities $ 10,388,326 22,709,291 Long-term liabilities 73,269,109 69,173,142 Total liabilities $ 83,657,435 91,882,433

Net assets: Investment in capital assets, net $ 141,955,562 140,429,354

Restricted 314,779 314,713 Unrestricted (1 ,448,659} ( 15,442,025} Total net assets $ 140,821,682 125,302,042

Business-t~~e Activities 2011 2010

Current and other assets $ 1,216,934 897,483 Capital assets 52,212,087 53,752,075 Total Assets $ 53,429,021 54,649,558

Current and other liabilities $ 768,412 1,664,076 Long-term liabilities 16,629,079 16,629,076 Total liabilities $ 17,397,491 18,293,152

Net assets: Investment in capital assets,

net of related debt $ 35,583,008 36,313,359 Restricted Unrestricted 448,522 43,047

Total net assets $ 36,031,530 36,356,406

3c

TABLE 2 CHANGE IN NET ASSETS

Governmental Activities

2011 2010 Revenues:

Program revenues:

Charges for services $ 5,298,914 4,704,189 Operating grants and contributions 14,696,829 15,447,769 Capital grants and contributions 1,670,500 8,396,542

General revenues: Property taxes 97,584,875 95,334,065 Grants and contributions not restricted to specific

purposes 1,366,012 1,516,198 Unrestricted investment earnings 337,722 259,647 Other general revenues (and transfers) (875,758) (2,062,846)

Total revenues $ 120,079,094 123,595,564

Program expenses:

General government $ 11,507,155 13,038,212 Public safety 6,674,856 7,555,241 Public works 7,911,124 8,246,010 Health and welfare 222,752 220,858 Culture and recreation 3,242,617 4,768,891 Education 73,517,755 72,103,106 Miscellaneous

Interest and fiscal charges 1,483,195 2,253,448

Total program expenses $ 104,559,454 108,185,766

Increase in Net Assets $ 15,519,640 15,409,798

Business-type Activities

2011 2010

Revenues:

Operating revenues:

Charges for services $ 2,532,044 2,470,409 Employer Contribution

Nonoperating revenues:

Capital Contribution 506,836 1,628,072 Interest Income 1,273 1,163 Other general revenues (and transfers) 1,151,019 2,155,477

Total revenues $ . 4,191,172 6,255,121 Operating expenses:

Salaries & Benefits $ 596,946 564,673 Claims Materials and Supplies 110,946 146,415

Utilities 413,974 381,100

Depreciation 2,215,412 1,210,507 Administration 837,391 950,413 Miscellaneous Interest and fiscal charges 341,379 647,629

Total expenses $ 4,516,048 3,900,737 (Decrease) Increase in Net Assets $ (324,876) 2,354,384

3d

City Funds Financial Analysis

Governmental Funds

As the City completed the year, its governmental funds (as presented in the balance sheet- Exhibit C) reported a combined fund balance of $5.9 million which is a $12.9 million increase from the previous year. Included in this year's total change in fund balance is an increase of $9.6 million in the City's Capital Projects Fund. This is mainly due to the large ongoing school construction project, which was mostly bonded by the end of the fiscal year. Fur;ther bonding will be completed when the project is fully closed and audited by the State of Connecticut.

The general fund provided savings through the reduction of payroll, the reimbursement of highway and bridges expenses through federal grants, and the savings from the Board of Education found in the fringe benefit's unemployment. This savings in expenditures were netted against a better than anticipated collection in taxes to produce a $6.9 million budgetary surplus. The $5.1 million of the surplus was appropriated by the Board of Alderman to reduce taxes in the subsequent year's budget and provide funding to the Perry School Project.

Proprietarv Funds

The City reports the Water Pollution Control Authority as a proprietary fund (Exhibit G, H, and 1). Under this presentation, the operating loss was $324,876, mainly due to depreciation expense of $2,215,412.

The Internal Service Fund recorded a negative change in net assets. Operating revenues were less than operating expenses by $578,556. Management is aware of the $5.5 million deficit in this fund and has a long term financing plan to fund this deficit through growing employer contributions, reducing the worker's compensation expenses and reorganizing the funding structure.

General Fund Budgetary Highlights

Exhibit F shows the summary information of budget to actual revenues, expenditures and changes in undesignated, unreserved fund balance (funds available to be appropriated).

• Property tax collections were better than expected.

• The General government and Public safety expenditures came in below the budget by $2,467,993 and $1,572,286 respectively due to payroll reductions.

• Public work's expenditures came in under budget due to new CRRA rates and the funding of highway and bridges projects by the federal government.

3e

Capital Assets

At June 30, 2011, the City had $210.3 million invested in a broad range of capital assets, including land, buildings, park facilities, vehicles and equipment, roads, bridges, and water and sewer lines. In separating the Water Pollution Control Authority from the government funds, $52.2 million in capital assets were reclassified into this fund, which mainly includes sewers and the newly constructed facility. The total City's amount represents a net increase (including additions and deductions) of $4.9 million.

TABLE3

CAPITAL ASSETS (Net of Depreciation)

Land

Buildings and improvements Furniture, fixtures and equipment Infrastructure

Construction in progress

Totals

Buildings and improvements Infrastructure

Construction in progress

Totals

$

Governmental

Activities 2011 2010

31,939,289 46,126,771

3,132,858 45,852,783

83,246,231

31,713,509 42,522,832

3,154,860 47,264,361

79,193,792

$ 210,297,932 203,849,354

$

=====

Business-type

Activities 2011 25,957,723 25,153,997

1,100,367

2010 27,422,628 25,904,504

$ 52,212,087

424,943

53,752,075 =====

This year's major additions included the continuation of several school improvements projects, continuing purchases of Open Space, further sewer projects and the annual capital projects. The largest continuing projects include the education upgrades, which will be partially funded through State grants.

Long-Term Debt

At June 30, 2011 the City's governmental activities had $67.8 million in long term liabilities versus $63.4 million last year- an increase of 7% -as shown in Table 4. This does not include the bond anticipation note of $3.16 million.

3f

TABLE4 OUTSTANDING DEBT (In Thousands)


2011 2010 $ ====6='=7J.,;,,8.;;,.30~ 63,420

General obligation bonds (backed by the City)

Standard & Poor's reaffirmed its rating on the City's GO Bonds of "AA" from "A+" and its rating of "SP-1+" on the City's G.O. BANS.

The S&P rating specified improved financial performance, a strong and diverse economic base, continued property value growth, ongoing development of down town and riverfront properties, wealth indicators above both State and national averages, low property tax rate compared to surrounding municipalities and a low debt burden with rapid amortization.

Moody's Investors Service has reaffirmed an "Aa3" rating to the General Obligation Bonds and a "MI G-1" rating to Bond Anticipation Notes. The ratings are primarily based upon the City's demonstrated access to capital markets, a favorable trend of tax base expansion, modest debt burden and a rapid retirement of outstanding obligations.

Other obligations include accrued vacation pay and sick leave. More detailed information about the City's long-term liabilities is presented in Note 8 to the financial statements. Included in the Business-type activities is $16,629,079 in notes payable, which was Clean Water Notes closed during the fiscal year for the construction of the new water pollution control facilities.

ECONOMIC FACTORS AND NEXT YEAR'S BUDGETS AND RATES

The City's elected and appointed officials considered many factors when setting the fiscal-year 2012 budget tax rates. One of those factors is the economy.

These indicators along with a projected modest inflationary increase were taken into account when adopting the General Fund budget for 2010-11. Amounts allocated for appropriation in the General Fund budget of 2010-11 from current surplus is $4,393,096. Property taxes (benefiting from the increase in Grand List allowed the City to maintain the same mill rate in 2010-2011 and reducing the mill rate in the 2011-2012 budget.

CONTACTING THE CITY'S FINANCIAL MANAGEMENT

This financial report is designed to provide citizens, taxpayers, customers, investors and creditors with a general overview of the City's finances and to show the City's accountability for the money it receives. If you have questions about this report or need additional financial information, contact the Director of Finance, City of Shelton, 54 Hill Street, Shelton, Connecticut, 06484.

3g


STATEMENT OF NET ASSETS June 30, 2011

Assets: Cash and cash equivalents Investments Receivables, net Prepaid assets Inventory Internal balances Capital assets:

Capital assets, not being depreciated Capital assets, being depreciated, net

Total assets

Liabilities: Accounts payable and accrued expenses Unearned revenue Accrued interest Bond anticipation notes Claims incurred, but not reported Noncurrent liabilities:

Due within one year Due in more than one year

Total liabilities

Net Assets: Invested in capital assets, net of related debt Restricted for:

Nonexpendable trust purposes Debt service

Unrestricted Total net assets

* After internal balances have been eliminated


$ 10,208,069 28,365

4,482,626 6,000

80,449 (624,324)

115,185,520 95,112,412

$ 224,479,117

$ 1,753,239 3,240,878

229,863 3,160,000 2,004,346

11,247,110 62,021!999

$ 83,657,435

$ 141,955,562

47,817 266,962

(1 ,448!659} $ 140,821,682

The accompanying notes are an integral part of the financial statements.

-4-

EXHIBIT A

Business-type Activities Total*

478,350 10,686,419 28,365

114,260 4,596,886 6,000

80,449 624,324

115,185,520 52,212!087 147,324!499 53,429,021 277,908,138

120,225 1,873,464 648,187 3,889,065

229,863 3,160,000 2,004,346

712,733 11,959,843 15,916,346 77,938,345 17,397,491 101,054,926

35,583,008 177,538,570

47,817 266,962

448,522 (1,000!137} 36,031,530 176,853,212


STATEMENT OF ACTIVITIES For the Year Ended June 30, 2011

Program Revenues

Charges for Functions/programs Expenses Services

Primary Government: Governmental activities:

General government $ 11,507,155 1,199,319 Public safety 6,674,856 1,044,326 Public works 7,911,124 606,606 Health and welfare 222,752 Cultural and recreation 3,242,617 522,461

· Education 73,517,755 1,926,202 Interest on long-term debt 1,483,195

Total governmental activities $ 104,559,454 5,298,914

Business-type activities: Water Pollution Control Authority $ 4,174,669 2,532,044 Interest on long-term debt 341,379

Total business-type activities $ 4,516,048 2,532,044

Total primary government $ 109,075,502 7,830,958

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

-5-

Program Revenues Operating Capital

Grants and Grants and Contributions Contributions

50,520 30,000 250,961 292,489

14,395,348 1,348,011

14,696,829 1,670,500

14,696,829 1,670,500

General revenues: Property taxes $ Grants and contributions not

restricted for specific programs Unrestricted investment earnings Disposal of capital assets Capital contributions Other unrestricted income

Transfers

Total general revenues and transfers $

Change in net assets $

Net assets, beginning $

Net assets, ending $

Net (Expenses) Revenue and Changes in Net Assets Primary Government


(10,307,836) (5,550,010) (6, 761,068)

(222,752) (2, 720,156)

(55,848,194) (1 ,483,195}

(82,893,211)

(82,893,211)

97,584,875

1,366,012 337,722 (75,960)

351,221 {1,151,019)

98,412,851

15,519,640

125,302,042

140,821,682

-6-


(1,642,625) (341,379}

(1,984,004)

(1,984,004)

1,273

506,836

1,.151,019

1,659,128

(324,876)

36,356,406

36,031,530

Total

(10,307,836) (5,550,010) (6,761,068)

{222,752) (2, 720,156)

(55,848,194) (1,483,195}

(82,893,211)

(1,642,625) (341,379}

(1,984,004)

(84,877,215)

97,584,875

1,366,012 338,995 (75,960) 506,836 351,221

100,071,979

15,194,764

161,658,448

176,853,212

EXHIBIT B

CITY OF SHELTON, CONNECTICUT EXHIBITC

BALANCE SHEET GOVERNMENTAL FUNDS June 30, 2011

Other Total Capital Governmental Governmental

General Projects Funds Funds Assets

Cash and cash equivalents $ 6,374,339 221,459 3,612,194 10,207,992 Investments 27,397 968 28,365 Receivables, net 3,625,755 73,150 783,721 4,482,626 Due from other funds 10,473,198 324,026 594,762 11,391,986 Inventories 57,293 22,856 80,149 Prepaid expenses 6,000 6!000

Total assets $ 20,563,982 619,603 5,013,533 26,197,118

Liabilities and Fund Balances

Liabilities: Accounts and other payables $ 864,773 409,003 479,463 1,753,239 Due to other funds 1,270,850 5,994,460 1,230,454 8,495,764 Deferred revenue 6,079,888 97,713 737,141 6,914,742 Bond anticipation notes 3,160,000 3,160,000

Total liabilities $ 8,215,511 9,661,176 2,447,058 20,323,745

Fund balances: Nonspendable $ 63,293 70,973 134,266 Restricted for:

Debt service 266,962 266,962 Committed for:

Subsequent Year's Operating Budget 4,393,096 4,393,096 Open Space 32,266 32,266 Perry School Project 750,000 750,000 Special Projects 186,616 186,616 Other 919,932 795,847 1,715,779

Assigned 212,000 2,136,339 2,348,339 Unassigned 6,010,150 (9,837,420} (126,681} (3,953,951}

Total fund balances $ 12,348,471 (9,041 ,573) 2,566,475 5,873,373

Total liabilities and fund balances $ 20,563,982 619,603 5,013,533

Amounts reported for governmental activities in the statement of net assets (Exhibit A) are different because :

Capital assets used in the governmental activities are not financial resources and therefore, are not reported in the funds.

Other long-term assets are not available to pay for current period expenditures, and, therefore, are deferred in the funds.

Internal service funds are used by management to charge the costs of risk management to individual funds. The assets and liabilities of the internal service funds are included in the governmental

activities column in the statement of net assets.

Long-term liabilities, including bonds payable, are not due and payable in the current period and therefore are not reported in the funds.

Net assets of governmental activities (Exhibit A)

The accompanying notes are an integral part of the financial statement.

-7-

210,297,932

3,673,864

(5,524,515)

(73,498,972}

$ 140,821,682

CITY OF SHELTON, CONNECTICUT EXHIBIT D

STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES (DEFICITS) GOVERNMENTAL FUNDS For the Year Ended June 30, 2011

Other Total Capital Governmental Governmental

General Projects Funds Funds Revenues:

Property taxes and assessments $ 97,607,161 97,607,161 Intergovernmental 11,947,574 1,348,011 4,437,756 17,733,341 Charges for services 2,269,750 1,926,202 4,195,952 Investment income 333,475 3 4,244 337,722 Miscellaneous 1,325,265 36,000 341,888 1 ,703,153

Total revenues $ 113,483,225 1,384,014 6,710,090 121,577,329

Expenditures: Current:

General government $ 11,301,650 206,988 11,508,638 Public safety 6,175,224 208,204 6,383,428 Public works 6,002,661 281,887 6,284,548 Public health 222,752 222,752 Culture and recreation 3,122,826 51,265 3,174,091 Education 67,380,683 5,521,921 72,902,604 Other 3,098,745 55,599 3,154,344

Capital outlay 5,742,154 312,500 6,054,654 Debt service 12,072,249 12,072,249

Total expenditures $ 109,376,790 5,742,154 6,638,364 121,757,308

Excess (deficiency) of revenues over (under) expenditures $ 4,106,435 (4,358, 140) 71,726 (179,979}

Other financing sources (uses) Transfer from other funds $ 597,500 460,267 1,057,767 Transfer to other funds (1 ,611 ,286) (312,500) (285,000) (2,208,786) Proceeds from sale of bonds 14,235,000 14,235,000

Total other financing sources (uses) $ (1,013,786} 13,922,500 175,267 13,083,981

Net changes in fund balances $ 3,092,649 9,564,360 246,993 12,904,002

Fund balances (deficits)· beginning 9,255,822 (18,605,933) 2,319,482 (7,030,629}

Fund balances (deficits)- ending $ 12,348,471 (9,041 ,573) 2,566,475 5,873,373


-8-


RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES (DEFICIT) OF GOVERNMENTAL FUNDS TO THE STATEMENT OF ACTIVITIES For the Year Ended June 30, 2011

EXHIBIT E

Differences in amounts reported for government wide activities in the Statement of Activities are due to:

Net change in fund balances - total governmental funds (Exhibit D)

Governmental funds report capital outlays as expenditures; however, in the statement of activities the cost of those assets is allocated over their estimated useful lives and reported as depreciation expense. This is the amount by which capital outlays exceeded depreciation in the current period.

Revenues previously recognized in the statement of activities that provided current financial resources in the current year.

The issuance of long-term debt (e.g., bonds, leases) provide current financial resources to governmental funds, while the repayment of the principal of long-term debt consumes the current financial resources of governmental funds. Neither transaction, however, has any effect on net assets. Also, governmental funds report the effect of issuance costs, premiums, discounts, and similar items when debt is first issued, whereas these amounts are deferred and amortized in the statement of activities. This amount is the net effect of these differences in the treatment of long-term debt and related items.

The net expense of certain activities of internal service funds is reported with governmental activities.

Change in net assets of governmental activities (Exhibit B)


-9-

$ 12,904,002

6,448,578

241,114

(3,495,798)

(578,256)

$ ==1=5~,5=19"'=\'='=64=0=


STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCEBUDGETARY BASIS· BUDGET AND ACTUAL· GENERAL FUND For the Year Ended June 30, 2011

Budgeted Amounts Original Final

Revenues: Property taxes $ 96,386,500 96,386,500 Intergovernmental 7,406,387 7,406,387 Charges for services 1,951,969 2,131,969 Investment income 100,000 100,000 Other revenues 1 '136,447 1 '136,447

Total revenues $ 106,981,303 107,161,303


General government $ 13,583,786 13,690,714 Public safety 7,604,308 7,643,593 Public works 6,613,689 6,644,176 Health and welfare 222,753 222,753 Cultural and recreation 3,468,592 3,468,592 Education 63,100,000 63,100,000 Other 3,557,998 3,561,298

Debt service: Principal retirements 7,560,000 7,560,000 Interest and other charges 4,512,253 4,512,253 Payment on behalf of W.P.C.A. 1,151,020 1,151,020

Total expenditures $ 111,374,399 111,554,399

Revenues over (under) expenditures $ (4,393,096) (4,393,096)

Other financing sources (uses): Contributions from Fund Balance $ 4,393,096 4,393,096

Total other financing sources (uses) $ 4,393,096 4,393,096

Revenues Over Expenditures and Other Financing Sources (Uses) $

Less: Transfer restricted funds to Special revenue Change in nonspendable Committed for Perry School Designated surplus for subsequent fiscal year

Net Change in unassigned fund balance $

Unassigned fund balance, July 1, 2010

Unassigned fund balance, June 30, 2011 $


-10-

EXHIBIT F

Actual Variance With Amounts Final Budget Budgetary Positive/

Basis (Negative)

97,607,161 1,220,661 6,902,858 (503,529) 2,269,750 137,781

333,475 233,475 1,325,265 188,818

108,438,509 1,277,206

11,222,721 2,467,993 6,071,307 1,572,286 5,846,055 798,121

222,752 1 3,116,054 352,538

63,045,971 54,029 3,100,561 460,737

9,825,000 (2,265,000) 2,247,249 2,265,004 1,151,019 1

105,848,689 5,705,710

2,589,820 6,982,916

4,393,096 4,393,096

6,982,916 6,982,916

(147,767) (6,000)

(750,000) {4,393,096)

1,686,053

4,324,097

6,010,150

CITY OF SHELTON, CONNECTICUT EXHIBITG

STATEMENT OF NET ASSETS PROPRIETARY FUNDS June 30, 2011

Business-type Governmental Activities Activities

Water Workers' Pollution Compensation Control Fund

Assets Current assets:

Cash and cash equivalents $ 478,350 77 Receivables, net of allowance 114,260 Due from other funds 624,324

Total current assets $ 1,216,934 77

Noncurrent assets: Capital assets; net of accumulated

depreciation $ 52;212,087 Total noncurrent assets $ 52,212,087

Total assets $ 53,429,021 77

Liabilities Current liabilities:

Accounts payable & accrued liabilities $ 120,225 Payments in advance 648,187 Due to other funds 3,520,546 Notes payable - current 712,733

Total current liabilities $ 1,481 '145 3,520,546

Noncurrent liabilities: Incurred, but not reported claims $ 2,004,046 Notes payable, less current portion 15,916,346

Total noncurrent liabilities $ 15,916,346 2,004,046

Total liabilities $ 17,397,491 5,524,592

Net Assets Invested in capital assets, net of

related debt $ 35,583,008 Unrestricted 448,522 (5,524,515}

Total net assets $ 36,031,530 (5,524,515)


-11-


STATEMENT OF REVENUES, EXPENSES AND CHANGES IN FUND EQUITIES (DEFICIT) PROPRIETARY FUNDS For the Year Ended June 30, 2011


Water Pollution Control

Operating revenues: Charges for services $ 2,532,044 Employer's contribution

Total operating revenues $ 2,532,044

Operating expenses: Salaries and benefits $ 596,946 Claims Material and supplies 110,946 Utilities 413,974 Depreciation 2,215,412 Administration and operation 837,391

Total operating expenses $ 4,174,669

Operating income (loss) $ (1 ,642,625)

Nonoperating revenues (expenses): Interest income $ 1,273 Interest expense (341,379}

Total nonoperating revenues (expenses) $ (340,106)

Capital contributions $ 506,836

Transfer in from other funds $ 1,151,019

Change in Net Assets $ (324,876)

Fund Equities, (Deficit), beginning 36,356,406

Fund Equities, (Deficit), ending $ 36,031,530

The notes to the financial statements are an integral part of this statement. -12-

EXHIBITH

Governmental Activities Workers'

Compensation Fund

1,273,120 1,273,120

1,643,450

207,926 1,851,376

{578,256)

(578,256)

(4,946,259)

(5,524,515)


STATEMENT OF CASH FLOWS PROPRIETARY FUNDS For the Year Ended June 30, 2011

Cash Flows From Operating Activities Receipts from customers Payments to suppliers Payments to employees

Net cash flows from operating activities

Cash Flows From Capital and Related Financing Activities Purchase of fixed assets Principal payments on capital debt Interest paid on capital debt

Net cash provided by (used in) capital and related financing activities

Cash Flows From Noncapital and Related Financing Activities Transfer in and payments made through governmental activities

Net cash provided by (used in) Noncapital and related financing activities

Cash Flows From Investing Activities Interest received on investments

Net cash provided by investing activities

Net increase (decrease) in cash and cash equivalents

Cash and Cash Equivalents, beginning

Cash and Cash Equivalents, ending


Water Pollution Control

$ 2,482,619 (1 ,470,246)

(596,946}

$ 415,427

$ (168,588) (809,639) (341,379}

$ (1,319,606)

$ 1,151,019

$ 1,151,019

$ 1,273 $ 1,273

$ 248,113

230,237

$ 478,350

Reconciliation of Operating Income (Loss) to Net Cash Provided by (Used In) Operating Activities:

Operating Income (Loss) $ (1,642,625) Adjustments to reconcile operating loss to net cash provided by

(used in) operating activities: Depreciation Changes in assets and liabilities:

Decrease (increase) in receivable accounts Decrease (increase) in due from other funds Increase (decrease) in accounts payable Increase (decrease) in payments in advance Increase (decrease) in claims incurred but not reported

Net cash flows from operating activities

Noncash investing, capital, and financing activities Contributions of capital assets from government activities


-13-

2,215,412

(49,425) (21,911) (14,159) (11,865)

$==~4~75==·=42~7=

$====5=06=·=83=6=

EXHIBIT I

Governmental Activities Workers'

Compensation Fund

1,273,120 (1,881,935)

(608,815)

608,420

608,420

(395)

472

(578,556)

(30,259)

(608,815)


STATEMENT OF FIDUCIARY NET ASSETS FIDUCIARY FUNDS June 30, 2011

Assets Cash and cash equivalents Accounts receivable Investments, at fair value:

U.S. government obligations Money markets Other

Total assets

Liabilities Other liabilities Held for deposit for others

Total liabilities

Net Assets: Held in trust for pension benefits

and other purposes

-14-

EXHIBIT J

Private Purpose Agency

Trust Funds Funds

$ 1,307,063 587,923

39,607 220,533

1,546,811

$ 3,114,014 587,923

$ 421 4,500 583,423

$ 421 587,923

$ 3,113,593


STATEMENT OF CHANGES IN FIDUCIARY NET ASSETS FIDUCIARY FUNDS For the Year Ended June 30, 2011

ADDITIONS Contributions:

Contributions and donations Other

Total contributions

Investment earnings: Net increase in fair value of investments Interest and dividends Less: Investment expenses

Total investment earnings

Total additions

DEDUCTIONS Other deductions

Total deductions

Change in net assets

NET ASSETS, beginning

NET ASSETS, ending


-15-

EXHIBITK

Private Purpose

Trust Funds

$ 10,054 37,283

$ 47,337

$ 227,496 41,520

{12,987} $ 256,029

$ 303,366

$ 172,039

$ 172,039

$ 131,327

$ 2,982,266

$ 3,113,593

CITY OF SHELTON CONNECTICUT

NOTES TO FINANCIAL STATEMENTS June 2011

Note 1 - Summary of Significant Accounting Policies

Reporting Entity

The City of Shelton, Connecticut (the City) was settled in 1789 and incorporated as a City in 1919. It operates under an elected mayor and an eight-member Board of Alderman.

The City provides a full range of services including public safety, roads, sanitation, health, social services, culture and recreation, education, planning, zoning and general administrative services to its residents.

Measurement Focus, Basis of Accounting and Financial Statement Presentation

The financial statements of the City have been prepared in conformity with accounting principles generally accepted in the United States of America as applied to government units. The Governmental Accounting Standards Board (GASB) is the accepted standard setting board for governmental accounting financial reporting principles. These principles require that the City report government-wide and fund financial statements, which are described below.

Government-wide financial statements

The government-wide financial statements (i.e., the statement of net assets and the statement of changes in net assets) report information on all of the non-fiduciary activities of the primary government. Government activities, which is normally supported by taxes and intergovernmental revenues, are reported separately than 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 of, are offset by program revenues. Direct expenses are those that are clearly identifiable with a specific function or segment. Program revenues include (1) charges to customers or applicants 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 rest~icted 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.

The government-wide financial statements are reported using the economic resources measurement focus and the accrual basis of accounting, as are proprietary fund and fiduciary fund financial statements. Under this method, revenues are recorded when earned and expenses are recorded at the time liabilities are incurred. Property taxes are recognized as revenues in the year for which they are levied. Grants and similar items are recognized as revenues as soon as all eligibility requirements imposed by the provider have been met.

-16-


NOTES TO THE FINANCIAL STATEMENTS, Continued June 30 2011

As a general rule, the effect of inter-fund activity, or internal balances, has been eliminated from the government-wide financial statements. Exceptions to this rule are charges between the business-type funds and the various other functions of the City. Elimination of these charges would distort the direct costs and program revenues reported for the various functions.

Fund financial statements

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

The 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 measurable 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. Expenditures are generally recorded when a liability has occurred, as under accrual accounting. However expenditures related to long-term liabilities, such as debt service payments and compensated absences, are recorded only when payment is due.

Property taxes are levied on all taxable assessed property on the grand list of October 1 prior to the beginning of the fiscal year. Real estate taxes are payable in two installments (July 1 and January 1). Personal property taxes are payable annually (July 1) and motor vehicle taxes are due in one single payment on July 1. Liens are filed on delinquent real estate taxes within one year. Revenues from property taxes are recognized when they become available. Available means due, or past due, and receivable within the current period or expected to be collected soon enough thereafter to be used to pay liabilities of the current period. For this purpose, the City considers property tax revenue to be available if they are collected within 60 days of the end of the fiscal year.

Those revenues susceptible to accrual are property taxes, special assessments and interest revenue. Fines, permits and charges for services are not susceptible to accrual because generally they are not measurable until received in cash.

Intergovernmental revenues grants and similar items are recognized as soon as all eligible requirements imposed by the provider have been met and are collected soon enough to pay liabilities of the current period. For this purpose, grants may be recognized and received after 60 days of the fiscal year end.

-17-



The City reports the following major governmental funds:

The general fund is the general operating fund of the City's government. All unrestricted resources, except those required to be accounted for in another fund, are accounted for in this fund. From this fund are paid general operating expenditures, fixed charges, principal and interest on long-term debt and capital improvement costs of the City, which were not paid through a special fund.

The capital projects fund is used to account for resources used for capital expenditures or for the acquisition or construction of capital facilities, improvements and equipment. Most of the capital outlays are financed by the issuance of general obligation bonds and capital grants. Other sources include current tax revenues and low interest state loans.

The City reports the following major proprietary funds:

The Water Pollution Control Authority (W.P.C.A.) accounts for the operations of the City's wastewater treatment system. The City operates its own sewage treatment plant, sewage pumping stations and collection system. Its operations are financed from direct charges to the users of the service.

Additionally, the City reports the following fund types:

The internal service fund account for employee heart and hypertension and workers' compensation insurance provided to departments of the City.

The private-purpose trust fund is used to account for assets held by the City in a trustee capacity or as an agent on behalf of others. An example includes the Plum Memorial Library, which maintains the assets received through contributions, fees and charges of the library.

The agency funds account for monies held as a custodian for outside groups and agencies such as student activity funds, senior trip funds and performance bonds.

Private-sector standards of accounting anq financial reporting issued prior to December 1, 1989, generally are followed in both the government-wide and the enterprise funds reported in the 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 following subsequent private-sector guidance for their government-wide and propriety fund financial statements subject to this same limitation. The City has elected not to follow subsequent private-sector guidance.

-18-



Proprietary funds distinguish operating revenues and expenses from non-operating items. Operating revenues and expenses generally result from providing services in connection with a proprietary fund's principal ongoing operations.

The principal operating revenues of the proprietary funds are charges to customers for services. Operating expenses for enterprise and internal service funds include the cost of operations and maintenance, provisions for doubtful accounts, and depreciation on capital assets. All revenues and expenses not meeting this definition are reported as non-operating revenues and expenses.

Assets, Liabilities and Net Assets or Equity

Cash and cash equivalents

The City considers cash on hand, deposits and short-term investments, with an original maturity of three months or less, to be cash and cash equivalents.

Investments

Investments are stated at the fair value using quoted market prices.

Inventories

Inventories are stated at the lower of cost or market using the consumption method on the firstin, first-out basis for governmental fund types.

Receivables and payables

Activities between funds that are representative of lending or borrowing arrangements outstanding at the end of the fiscal year are referred to as either "due to/from other funds" (current portion of interfund loans) or "advances to/from other funds" (noncurrent portion of interfund loans). Any residual balances outstanding between governmental activities and business type activities are reported in the government-wide financial statements as "internal balances".

Advances between funds, as reported in the fund financial statements, are offset by a fund balance reserve account in applicable funds to indicate that they are not available for appropriation and are not expendable as financial resources.

All trade and property tax receivables, including those for W.P.C.A. funds, are shown net of an allowance for uncollectible accounts. Trade account receivables allowance for uncollectible accounts is estimated based on the inherent risk associated with the accounts.

-19-



Capital assets

Capital assets, which include property, plant and equipment and infrastructure assets (e.g., roads, bridges, sidewalks and similar items) are reported in the applicable governmental or business-type activities columns in government-wide financial statements. Capital assets are defined by the government as assets with an initial individual cost of more than $20,000 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 value at the date of donation. The cost of normal maintenance and repairs that do not add to the value of the net assets 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 the business-type activities is included as part of the capitalized value of the assets constructed.

Property, plant and equipment of the City are depreciated using the straight-line method over the following estimated U!:)eful lives:

Asset Buildings and improvements Infrastructure Machinery and equipment

Years 25-50 10-65 5-20

Capital assets are reported as expenditures and no depreciation expense is reported in the governmental fund financial statements.

Compensated absences

Under the terms of its various union contracts, City and Board of Education employees are granted vacation and sick time in varying amounts based on length of service. Certain employees may also carry over a limited number of unused vacation days to subsequent years based on the terms of an employment or union contract. In the event of termination, these employees are reimbursed for accumulated vacation. The City recognizes a liability in the government-wide financial statements for the vested portion, as well as the unvested portion to the extent expected to be paid, as compensated absences.

Deferred revenue

Deferred revenue arises when potential revenue does not meet both the measurable and available criteria for recognition in the current period. Deferred revenue also arises when resources are received by the City before it has a legal claim to them, as when grant monies are received prior to the incurrence of qualifying expenditures. In subsequent periods, when both revenue recognition criteria are met, or when the City has a legal claim to the resources, the liability for deferred revenue is removed and revenue is recognized.

-20-



Long-term obligations

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

In the fund financial statements, governmental fund types recognize bond premiums and discounts, as well as bond issuance costs, during the current period. The face amount of the debt issued is reported as other financial sources. Premiums received on debt issuances are reported as other financing sources while discounts on debt issuances are reported as other financing uses. Issuance costs, whether or not withheld from the actual debt proceeds received, are reported as debt service expenditures.

Fund equity and net assets

In the government-wide financial statements, net assets are classified in the following categories:

Investment in capital assets, net of related debt - This category groups all capital assets, including infrastructure, into one component of net assets. Accumulated depreciation and the outstanding balances of debt that are attributable to the acquisition, construction or improvement of these assets reduce this category.

The restricted net assets represent amounts of external restrictions imposed by creditors, grantors, contributors and laws or regulations of other governments and restrictions imposed by law through constitutional provisions or enabling legislation.

The unrestricted net assets represent the net assets of the City which are not restricted for any project or other purpose.

In the fund financial statements, fund balances of governmental funds are classified into two separate categories. The five categories and their general meanings are as follows:

The nonspendable are those net assets that are not in expendable form or are legally or contractually required to be maintained.

The restricted fund balances are defined in the same manner as for the restricted government-wide net assets.

Committed fund balances are those balances that can only be used for a specific purpose as a result of constraints imposed by formal action of the government's highest level of decision-making authority. For the City of Shelton, that was considered to be the Board of Alderman.

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Assigned fund balance are amounts that are contained by the government's intent to be used as a specific purpose.

Unassigned fund balance is defined as the residual classification for the general fund and includes those remaining balances that cannot be categorized in the four categories.

Note 2- Budgets and BudgetarY' Accounting

General Fund

The Statement of Revenues and Expenditures, and Change in Fund Balance- Budgetary Basis - Budget to Actual presented in the financial statements for the General Fund is on the budgetary basis of accounting which is a basis of accounting other than the accrual basis and the modified basis of accounting. The budgetary basis of accounting and the City's general budget policies are as follows:

A. The manager of each department, office and agency submits to the Mayor, by January 15, estimates of revenues and expenditures for the following year.

B. The Mayor reviews these estimates and may revise them as he deems advisable, except that in the case of the department of education, he has the authority to revise only the total estimated expenditures.

C. On or before February 22, the Mayor, with the assistance of the Director of Finance, submits to the Board of Apportionment and Taxation. The Board, by majority vote of full membership, approves the budget and submits it to the Board of Alderman by April 1.

D. The City's Board of Apportionments and Taxation is authorized to transfer budgeted amounts within one department. However, any transfers between departments or additional appropriations, must be approved by the City Alderman. Additional appropriations. by the Aldermen may be approved from any contingency fund or the general fund's undesignated fund balance, without levying a special tax. There were additional appropriations of approximately $303,210 during the year ended June 30, 2011, which were funded through additional revenues received.

E. All unencumbered appropriations lapse at year-end except those for capital projects and nonrecurring special revenue funds. Appropriations for these funds are continued until completion of applicable projects, which generally last more than one year.

F. Encumbrances are recognized as a valid and proper charge against a budget appropriation in the year in which the purchase order, contract or other commitment is issued and, accordingly, encumbrances outstanding at year-end are reflected in budgetary reports as expenditures of the current year.

G. The legal level of budgetary control is at the department level.

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A reconciliation of General Fund operations and fund balance presented on a budgetary basis to the amounts presented in accordance with accounting principles generally accepted in the United States of America (GAAP) is as follows:

Balance, budgetary basis

Encumbrances of June 30, 2010 Encumbrances of June 30, 2011

The budgetary expenditure for education was netted against the amount received from students to participate in athletic activities

State Teachers' Retirement "on-behalf' payment, not recognized for budgetary purposes

Department of Education included a savings portion of self insured dental to be available for dental payments in the future

Payment on-behalf of W.P.C.A was made through the operating budget, but was recorded as a transfer for budgetary purposes

Balance, GAAP basis

Revenues

$ 108,438,509

5,044,716

$ =~11,;,;3~,4;,;8.;,;3,~22,;,5~

Expenditures and

Encumbrances

1 05,848,689

481,336 (919,932)

285,000

5,044,716

(212,000)

(1,151,019)

109,376,790

The other financial sources (uses) were adjusted as follows:

Balance, budgetary basis

Transfer to W.P.C.A. Transfer to COP Earmark Pay to Play Reimbursements Designated surplus Balance, GAAP basis

Special Revenue Funds

$ 4,393,096

(1,151,019) (147,767)

285,000 (4,393,096)

The City does not have legally adopted annual budgets for the Special Revenue Funds. Budgets for the various special revenue funds which are utilized to account for specific grant programs are established in accordance with the requirements of the grantor agencies. Such budgets carry over until completion of the grants and, therefore, may comprise more than one fiscal year.

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Capital Projects Funds

Legal authorization for expenditures of the Capital Projects Funds is provided by the related bond ordinances and/or intergovernmental grant agreements or Connecticut State Statutes. Capital appropriations do not lapse until the purpose for which the appropriation was made has been accomplished or abandoned.

Note 3 - Reconciliation of Government-wide and Fund Financial Statements

Explanation of Certain Differences between the Government Fund Balance Sheet and the Government-wide Statement of Net Assets

The details of the components included in Exhibit C are as follows:

Capitalized assets are expensed in the fund financial statements in the period the expense is incurred while the expense is incurred over the useful life of the related asset in the government-wide financial statements:

Land $ Construction in progress Net capital assets being depreciated Net adjustment to increase fund balance to arrive at net assets of government activities $

31,939,289 83,246,231 95,112,412

210,297,932

Long-term liabilities, including bonds payable, are not due and payable in the current period and, therefore, are not reported in the funds. The detail of this difference is as follows:

Long-term debt $ Compensated absences Net Other Post employment benefits obligation Bond premium, net of accrual Accrued interest on debt Net adjustment to reduce fund balance to arrive at net assets of government activities $

(67,830,000) (3,998,593)

(928, 146) (512,370) (229,863)

(73,498,972)

Other long-term assets are not available to pay for current period expenditures, and, therefore, are deferred in the funds. This amount includes the following:

Delinquent property tax and interest $ 2,196,569 Delinquent accounts receivable 14,917 Notes receivable - assessments 1,462,378 Net adjustment to increase fund balance to arrive at net assets of government activities $ 3,673,864

======="'===

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Explanation of Certain Differences Between the Governmental Fund Statement of Revenues, Expenditures and Changes in Fund Balance and the Government-wide Statement of Activities

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

Acquisitions Disposals Depreciation Net Adjustment to increase net changes in fund balances to arrive at changes in net assets of governmental activities

$ 10,098,493 (75,960)

(3,573,955)

$ ==6=k,4=4=8,~5=78=

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

New issuances Payments of debt Premium received on new issuance Amortization of bond premiums Net change in accrued interest Net change in other long-term liabilities Net adjustment to reduce net changes in fund balances to arrive at changes in net assets of governmental activities

-25-

$ (14,235,000) 9,825,000 (512,370)

163,885 600,169 662,518

$ (3,495,798)



Note 4 - Deposits and Investments

The City's d~posits and investments are presented in the accompanying balance sheets as follows:

De~osit Investments Total Cash and cash equivalents:

Governmental activities $ 10,145,169 62,900 10,208,069

Business-type activities 478,350 478,350 Fiduciary funds 1,699,188 195,798 1,894,986

Investments:

Governmental activities 28,365 28,365

Fiduciary funds 1,806,951 1,806,951

Total Deposits and Investments $ 12,322,707 2,094,014 14,416,721

Deposits

The carrying amounts of the City's deposits at June 30, 2011 consist of the following:

Custodial Credit Risk

Bank Deposit Accounts Certified Deposits Cash on Hand

Total Deposits

$ 12,074,883 247,224

600

$ 12,322,707

As of June 30, 2011, the carrying amount of the City's deposits had bank balances of approximately $14,143,453. The amount of the bank balance covered under federal depository insurance was approximately $1,003,843. The remaining deposits were uninsured, however, provisions of the Connecticut General Statutes provide for protection against loss in excess of deposit insurance by requiring all qualified public depositories to maintain segregated collateral for public deposits. As of June 30, 2011 approximately $1,300,000 of uninsured deposits were collateralized under the provision.

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Investments

As of June 30, 2011, the City held the following investments:

Investment Type State Investment Fund State Investment Fund State Investment Fund

State Investment Fund U.S. government obligations* Money Markets* Corporate Bonds*

Total Investments

• Held in the Plumb Library trust fund

Interest Rate Risk

Fund General Fund $

Capital Projects Special

Revenue Trust Funds Trust Funds Trust Funds Trust Funds

$

Fair Value 27,397

968

62,900 195,798 39,607

220,533 1,546,811

2,094,014

Weighted Average to

Maturity (years)

.2

.2

.2

.2

.5

.2 6.5

Risk

AAA

BBB+/AA+

Interest rate risk is the risk that changes in the market interest rates which will adversely affect the fair value of an investment. The City has no formal policy specifically related to interest rate risk. The City minimizes its exposure to interest rate risk by investing its operating funds in short-term investments.

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. This is measured by the assignment of a rating by a nationally recognized statistical rating organization. It is the City's policy to invest only in securities that meet the ratings requirements set by General State Statute Chapter 112, Section 7-400 as follows:

The treasurer of any municipality, as defined in section 7-359, upon approval by the budget-making authority, as defined in said section, of any metropolitan district, of any regional school district, of any district as defined in section 7-324, and of any other municipal corporation or authority authorized to issue bonds, notes or other obligations under the provisions of the general statutes or any special act may invest the proceeds received from the sale of bonds, notes or other obligations, or other funds, including the general fund, as hereinafter provided:

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(1) In (A) the obligations of the United States of America, including the joint and several obligations of the Federal Home Loan Mortgage Corporation, the Federal National Mortgage Association, the Government National Mortgage Association, the Federal Savings and Loan Insurance Corporation, obligations of the United States Postal Service, all the federal home loan banks, all the federal land banks, all the federal intermediate credit banks, the Central Bank for Cooperatives, The Tennessee Valley Authority, or any other agency of the United States government, or (B) shares or other interests in any custodial arrangement, pool or no-load, open-end management-type investment company or investment trust registered or exempt under the Investment Company Act of 1940, 15 USC Section BOa-1 et seq. as from time to time amended, provided (i) the portfolio of such custodial arrangement, pool, investment company or investment trust is limited to obligations described in subparagraph (A) of this subdivision and repurchase agreements fully collateralized by any such obligations; (ii) such custodial arrangement, pool, investment company or investment trust takes delivery of such collateral either directly or through an authorized custodian; (iii) such custodial arrangement or pool is managed to maintain its shares at a constant net asset value or such investment company or investment trust is rated within one of the top two credit rating categories and, for any investment company or investment trust not managed to maintain its shares at a constant net asset value, within one of the top two risk rating categories of any nationally recognized rating service or of any rating service recognized by the Banking Commissioner; and (iv) the municipal corporation or authority only purchases and redeems shares or other interests in such investment company or investment trust through the use of, or the custodian of such custodial arrangement or pool is, a bank, as defined in section 36a-2, or an out-of-state bank, as defined in said section, having one or more branches in this state.

(2) In the obligations of any state of the United States or of any political subdivision, authority or agency thereof, provided that at the time of investment such obligations are rated within one of the top two rating categories of any nationally recognized rating service or of any rating service recognized by the Banking Commissioner.

(3) In the obligations of the State of Connecticut, or any regional school district, town, city, borough or metropolitan district in the State of Connecticut, provided that at the time of investment the obligations of such government entity are rated within one of the top . three rating categories of any nationally recognized rating service or of any rating service recognized by the Banking Commissioner.

Investment Policies

The City maintains an investment policy, which excludes certain private purpose fund investments. The City's investment policy strictly prohibits all funds to invest in investments not included in Chapter 12, Section 7-400 of the State Connecticut's General Statutes.

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Note 5 - Receivables, Deferred Revenue and Payables

Receivables

The receivables as of June 30, 2011 for the City's individual major funds and non-major, internal service and fiduciary funds in the aggregate, including the applicable allowance for uncollectible accounts are as follows:

Property taxes $

Property tax interest

Intergovernmental

Accounts

Assessments

Net Total Receivables $

Deferred Revenue

General Fund

2,145,344

341,943

314,034

73,107

751,327

3,625,755

Government funds Non-major

Funds Total

137,389

8,431

711,051

856,871

2,145,344

341,943

451,423

81,538

1,462,378

4,482,626

Governmental funds report deferred revenue in connection with receivables for revenue that are not considered to be available to liquidate liabilities in the current period. Governmental funds also defer revenue recognition in connection with resources that have been received but not yet earned. At the end of the fiscal year the components of deferred revenue and unearned revenues reported in the governmental fund were as follows:

General Fund:

Delinquent property taxes

Delinquent interest

Delinquent receivable

Advanced tax collections

Assessments

Tax overpayments

Other Governmental Funds:

Advanced payments on grants

Assessments

Total Deferred Revenue

$

Unavailable

1,885,971

310,598

14,917

751,327

711,051

$ ====3b;;;,6~73;;,4,,;;,86;,.,4~

-29-

Unearned

3,081,691

35,384

123,803

3,240,878

Total

1,885,971

310,598

14,917

3,081,691

751,327

35,384

123,803

711,051

6,914,742



Payables

Payables as of June 30, 2011 for the City's individual major funds and non-major funds were as follows:

General Fund

Capital Projects Fund

Non-major Funds

Total governmental funds

W.P.C.A.

Total Payables

Temporary Notes Payables

Bond anticipation notes

$

Vendors

528,858

409,003

172,993

$ 1,110,854

$ __ 4-'-4-'-'-, 1-'--'8;...;;;6_

$ 1,155,040

Payroll

335,915

335,915

76,039

411,954

Cash Overdraft

306,470

306,470

306,470

Total

864,773

409,003

479,463

1,753,239

120,225

1,873,464

The City uses short-term notes payable in anticipation of bond-issuances to provide interim funding for various capital projects. Activity for the current fiscal year was as follows:

Beginning Balance Issued

Bond anticipation notes:

School Construction $ 10,750,000 3,160,000

Total governmental funds $ 10,750,000 3,160,000

Note 6 - Inter-fund Receivables, Payables and Transfers

Inter-funds Receivables and Payables

Ending Bond Issued Balance

10,750,000 3,160,000

10,750,000 3,160,000

Inter-fund receivables and payables at June 30, 2011 consisted of the following:

Receivable Fund Pa~able Fund Amount General Fund Worker's Compensation $ 3,520,546 General Fund Capital Projects 5,722,198 General Fund Nonmajor 1,230,454 Capital Projects General Fund 324,026 Debt Service Capital Project 266,962 Special Revenue Capital Project 5,300 Special Revenue General Fund 322,500 W.P.C.A. General Fund 624,324

Total $ 12,016,310

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Inter-fund Transfers

The government subsidized the activities of the W.P.C.A. through the payments to the clean water loan on behalf of the W.P.C.A. in an amount of $1,151,019.

The general fund transferred $312,500 to the open space fund in accordance with the City Charter to subsidize a purchase of property. The general fund was then subsequently reimbursed for this transfer by the capital projects fund.

Funds earmarked for the purchase of public safety equipment was deposited in the general fund during the prior year, these funds, totaling $147,767 were subsequently transferred to a special revenue fund.

Note 7 - Capital Assets

Capital assets activity for the year ended June 30, 2011 was as follows:

Beginning Ending Balance Additions Dis~osals Balance

Governmental Activities Capital assets not being depreciated:

Land $ 31,713,509 482,410 256,630 31,939,289 Construction in progress 79,193,792 13,608,795 9,556,356 83,246,231

Total capital assets, not being deprec. $ 110,907,301 14,091,205 9,812,986 115,185,520

Capital assets being depreciated: Buildings and improvements $ 93,756,439 5,303,811 99,060,250

· Machinery and equipment 8,098,658 480,463 227,580 8,351,541 Infrastructure 72,342,916 36,000 72,378,916 Total capital assets being depreciated $ 174,198,013 5,820,274 227,580 179,790,707

Less: Accumulated depreciation: Buildings and improvements $ 51,233,607 1,699,872 52,933,479 Machinery and equipment 4,943,798 426,505 151,620 5,218,683 Infrastructure 25,078,555 1,447,578 26,526,133 Total accumulated depreciation $ 81,255,960 3,573,955 151,620 84,678,295

Net capital assets, being depreciated $ 92,942,053 2,246,319 75,960 95,112,412

Total capital assets, governmental $ 203,849,354 16,337,524 9,888,946 210,297,932

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

Governmental Activities: General government $ 82,809 Education 1,492,495 Public safety 283,818 Public works 1,646,307 Community Services 68,526

Total depreciation expense-$ 3,573,955 governmental activities

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Beginning Ending Balance Additions Dis~osals Balance

Business-type Activities Capital assets not being depreciated: Construction in progress $ 424,943 675,424 1,100,367

Capital assets being depreciated: Buildings and improvements $ 48,122,628 48,122,628 Sewers 37,525,333 37,525,333 Total capital assets being depreciated $ 85,647,961 85,647,961

Less: Accumulated depreciation: Buildings and improvements $ 20,700,000 1,464,905 22,164,905 Sewers 11,620,829 750,507 12,371,336 Total accumulated depreciation $ 32,320,829 2,215,412 34,536,241

Net capital assets being depreciated $ 53,327,132 {2,215,412} 51,111,720

Total capital assets, business-type $ 53,752,075 (1,539,988} 52,212,087

Note 8- Long-Term Liabilities

Long-term debt liabilities activity for the year ended June 30, 2011 was as follows:

Beginning Due In Balance Additions Reductions Balance One Year

Governmental Activities:

Long-Term Debt:

General obligation bonds $ 61,155,000 14,235,000 7,560,000 67,830,000 10,315,000 G.O.B refunding bonds 2,265,000 2,265,000 Total Long-Term Debt $ 63,420,000 14,235,000 9,825,000 67,830,000 10,315,000 Less, deferred amount on refunding

Premium on Bonds 163,885 512,370 163,885 512,370 7,110 Net long-term debt $ 63,583,885 14,747,370 9,988,885 68,342,370 10,322,110

Other Long-Term Liabilities:

Compensated absence 4,612,933 614,340 3,998,593 Net OPEB obligations 976,324 885,719 928,146 933,897 925,000

Total governmental activities long-term liabilities $ 69,173,142 15,633,089 11,531,371 73,274,860 11,247,110

Business-type Activities:

Clean water fund notes $ 17,438,716 809,637 16,629,079 712,733 Total business-type

activities long-term liabilities $ 17,438,716 809,637 16,629,079 712,733 Total long-term liabilities $ 86,611,858 15,633,089 12,341,008 89,903,939 11,959,843

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General Obligation Bonds The City issues general obligation bonds to provide funds for the acquisition and construction of major capital facilities. General obligation bonds have been issued for both governmental and business type activities and are direct obligations and pledge the good faith and credit of the government. Certain general obligation bonds are to be repaid by revenues of the enterprise funds. These bonds generally are issued as 5 year and 1 0 year serial bonds with equal amounts of principal maturing each year. As of June 30, 2011, the outstanding general obligation bonded indebtedness of the City was as follows:

$8,500,000 GOB 2001, issue of 11/15/2001, due 11/15/2011, interest at 6. 75% to 7%, annual principal payments of $800,000.

$18,085,000 GOB 2005, issue of 1/15/2005, due 11/1/2014, interest at 3% to 5%, annual principal payments of $1,825,000.

$3,905,000 GOB 2006, issue of 10/01/2006, due 10/1/2011, interest at 4.5% to 3.5%, annual principal payments of $785,000

$14,555,000 GOB 2006, issue of 10/01/2006, due 10/01/2016, interest at 3.625% to 5.0%, annual principal payments of $1,200,000


$9,200,000 GOB 2007, issue of 10/15/2007, due 10/15/2012, interest at 3.5% to 5%, annual principal payments of $750,000


$2,165,000 GOB 2009, issue of 8/1/2009, due 8/1/2014, interest at 2% to 2.75%, annual principal payments of $425,000 to 435,000

$20,950,000 GOB 2009, issue of 8/1/2009, due 8/1/2019, interest at 2.0% to 4.0%, annual principal payments of $1,775,000 to $2,625,000



Total general obligation bonds

-33-

$

$

General

1,050,000

8,610,000

765,000

10,555,000

980,000

7,700,000

1,255,000

1,730,000

20,950,000

2,205,000

12,030,000 67,830,000



Annual debt service requirements to maturity for general obligation bonds are as follows:

Year Ended, June 30

2012 $ 2013 2014 2015 2016

2017-2021

Governmental Activity Principal Interest

10,315,000 1,969,661 9,870,000 1,502,474 9,730,000 1,221,961 9,390,000 944,780 7,270,000 702,943

21,255,000 1,168,844

Total $ ====67=~=,8=3-=0,==00~0= 7,510,663

Bonds authorized but unissued

Under regulations issued by the Internal Revenue Service, effective March 2, 1992, in order for capital projects to be funded through tax-exempt debt, all projects must be appropriated and designated as being funded through debt prior to any expenditure on these projects.

The City has authorized but unissued bonds relating to capital projects at June 30, 2011, as follows:

Sewer General purpose Schools

Total

$

$

4,259,771 1,000,701

305,531

5,566,003

A portion of bonds authorized and unissued will be reduced by grants received.

Clean Water Fund Loans Payable

The City has an outstanding balance on loans payable to the State of Connecticut's Department of Environmental Protection, under its Clean Water Fund Program, for sanitary sewer projects. The individual loans were as follows:

Note 165-C 104-C

Total Clean Water Fund Loans

Closing Date August 19,2008

May 30,2008

-34-

$

$

Balance 2,178,484

14,450,595

16,629,079



These loans bear interest at 2% per annum and the annual debt service requirements to maturity are as follows:

Year Ended. Business-type Activity June 30,

2012 2013 2014 2015 2016

2017-2020 2021-2023 2024-2028

$ Principal

825,982 842,654 859,662 877,014 894,716

4,751,871 5,251,192 2,325,988

$ ==1=6==,6=29='=07=9=

Note 9 - Commitments and Contingencies

Lawsuits

Interest 325,037 308,365 291,357 274,005 256,303

1,003,227 503,905

51,048

3,013,247

There were several personal injury, negligence and personnel related lawsuits pending against the City. The outcome and eventual liability of the City, if any in these cases, is not known at this time: Based upon consultation with counsel, the City's management estimates that potential claims against the City not covered by insurance resulting from such litigation would not materially affect the financial position of the City.

Operating Contracts

School transportation

The City contracts for the transportation of students. The future payments the City is obligated to pay the bus company under the current contract is based on per bus per day charges. The current contract will end on June 30, 2013. The expense for the 2011 fiscal year was $2,337,665.

Municipal solid waste management services contract

The City has entered into the municipal solid waste management services contract, as amended, (the Service Contract) with the Connecticut Resources Recovery Authority (the Authority) pursuant to which it participates with four other Connecticut Municipalities (the five constituting the Contracting Municipalities), in the Shelton Resource Recovery System (the System). The System consists of mass-burn solid waste, recovery resource steam and electric generation facility (the Facility) located in the City of Shelton, Connecticut and various improvements and facilities related thereto, including landfills. The facility is complete and presently receiving waste from the Contracting Municipalities.

Under the Service Contract, the City is required to deliver, or cause to be delivered, to the System solid waste generated within its boundaries with a minimum commitment of 18,102 tons per year and to pay a uniform per ton disposal service payment (the Service Payment). The current fee is $61 per ton. The aggregated minimum commitment of the five Contracting Municipalities is 265,000 tons per year. The City's Service Payment commitment is a "put-or-

-35-



pay" commitment in that if the aggregate minimum commitment of the Contracting Municipalities is not met by the total deliveries of all the Contracting Municipalities in any year, the City must pay the Service Payment for its full portion of the aggregate minimum commitment even if it did not deliver that full portion.

The service payment applicable in any contract year is calculated by estimating the net cost of operation, which is the cost of operation less revenues other than Service Payments, as such terms are defined in the Service Contract. The sum of all Service Payments and other payments from the Contracting Municipalities are required to be sufficient to pay or provide for the net cost of operations.

The City has pledged its full faith and credit to the payment of Service Payments and has also agreed to enforce or levy and collect all taxes, cost sharing or other assessments or charges. and take all such other action as may be necessary to provide for the payment of the Service Payments.

Construction Contracts

The City has several construction contracts in progress at June 30, 2011. A summary of the larger amounts remaining in these contracts is as follows:

Education projects $ _ _..:_7 4..:.::5<.>..:,0:::..:::0:..:::.0

Total $ 745.000

Risk Management and Self-Insurance

The City is exposed to various risks of loss including torts, theft of, damage to, and destruction of assets; error and omissions; injuries to employees; employee health; and natural disasters. The City generally obtains commercial insurance for these risks, but has chosen to retain the risks for workers' compensation, including heart and hypertension, and physical damage of the City's vehicles.

The worker's compensation fund purchases a self insured retention worker's compensation excess policy for claims exceeding $500,000. All other claims are funded by the General Fund. Payments to the fund are estimated based on payroll amounts, job classification rates, experience and second injury fund assessments.

Under Public Act 9-342, health insurance for retired teachers, subsidy equal to the equivalents flat dollar premium amount of Blue Cross 65/Biue Shield 65 is paid by the State directly to the local school districts. Where it is applied to reduce premium payments of the retired members' 1% supplemental contributions, since July 1, 1989, have been directly to a dedicated health insurance fund. There is no cost to the City.

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Changes in the balance of claims liabilities for the worker's compensation and heart and hypertension were as follows:

Claims Claims and Claims Fiscal Year Ended Payable Changes in Claims Payable

June 30, Beginning Estimates Paid Ending

Worker's Compensation 2010 $ 1,429,075 525,436 309,581 1,644,930 2011 1,644,930 162,441 203,781 1,603,590

Heart and Hypertension 2010 440,202 1,072,286 1,122,813 389,675 2011 389,675 1,080,419 1,069,339 400,755

Total Internal Service 2010 1,869,277 1,597,722 1,432,394 2,034,605 2011 2,034,605 1,242,860 1,273,120 2,004,345

Note 10 - Employee Retirement Plans

Merit Em~loyees Retirement Plan

The City of Shelton maintains a contributory money purchase defined contribution pension plan (City of Shelton Money Purchase Plan) which covers merit employees who work more than 20 hours per week and more than 5 months per year, except policemen who participate in a defined benefit pension plan administered by the Connecticut Municipal Emplqyees' Retirement Fund, and teachers who participate in a contributory retirement plan administered by the Connecticut State Teachers' Retirement System.

The defined contribution pension plan provides pension benefits in return for services rendered, provides an individual account for each participant, and specifies how contributions to the individual's account are to be determined instead of specifying the amount of benefits the individual is to receive. Under a defined contribution pension plan, the benefits a participant will receive depend solely on the amount contributed to the participant's account, the returns earned on investments of those contributions, and forfeitures of other participant's benefits that may be allocated to such participant's account.

Employees are eligible to participate once they have completed one year of continuous service, with no minimum age requirement. The City contributes an amount equal to 6% of the employee's annual base wages, while employees must contribute 3%. Employees may also make voluntary contributions up to 1 0% of annual wages.

Contributions made by an employee vest immediately and contributions made by the City for each employee (and interest allocated to the employee's account) are 20% vested for each year of service until 100% vested after 5 years of service. Both participant and employer contributions are invested in a fixed income interest accumulation account designed under the plan.

-37-



The City's total payroll under the plan, excluding the Board of Education, for the fiscal year ended June 30, 2011 was $7,251,767. The City's contribution was calculated using a salary amount of $435,106 covering 6% merit plan employees. The employee's contribution was $217,553 (3.0% of covered payroll).

No pension provision changes occurred during the year that affected the required contributions to be made by the City or its employees. The City of Shelton's Money Purchase Plan held no securities of the City or other related parties during, or as of the close of, the fiscal year.

Policemen's Retirement Fund

The policemen participate in the Municipal Employees' Retirement Fund (MERF), a cost-sharing multiple-employer public employee retirement system (PERS) established by the State of Connecticut and administered by the State Retirement Commission to provide retirement and disability benefits, annual cost-of-living adjustments and death benefits to the employees and beneficiaries of participating municipalities. Chapter 113 Part II of the General Statutes of Connecticut, which can be amended by legislative action, establishes PERS benefits, member contribution rates and other plan provisions. MERF is considered to be a part of the State of Connecticut financial reporting entity and is included in the State's financial reports as a pension trust fund. Those reports may be obtained by writing to the State of Connecticut, Office of the State Comptroller, 55 Elm Street, Hartford, Connecticut 06106 or by calling 860-702-3480.

Funding Policy- Plan members are required by State Statute to contribute 2-1/4% of earnings upon which Social Security tax is paid plus 5% of earnings on which no Social Security tax is paid. Each participating municipality is required to contribute at an actuarially determined rate. The current rate is 15.3% of annual covered payroll. The contribution requirements of the City are established and may be amended by the State Retirement Commission. The City's contributions to MERF for the years ended June 30, 2011, 2010 and 2009 were $781,964, $692,052, and $549,239 respectively, equal to the required contributions for each year.

Teachers' Retirement

All City of Shelton Board of Education certified employees participate in the State of Connecticut Teachers' Retirement System under Section 10.183 of the General Statutes of the State of Connecticut. A teacher is eligible to receive a normal retirement benefit if he or she has: 1) attained age 60 and has accumulated 20 years of credited service in the public schools of Connecticut, or 2) attained any age and has accumulated 35 years of credited service, at least 25 years of which are services in the public schools of Connecticut.

The Board of Education withholds 7.25% of all teachers' annual salaries and transmits the funds to the State Teachers' Retirement Board. For the year ended June 30, 2010 there were 416 teachers from the City of Shelton participating in the plan, and they contributed $2,300,263 to the system. Teacher payroll subject to retirement amounted to $31,727,765.

The retirement system for teachers is funded by the State based upon the recommendation of the Teachers' Retirement Board. The City does not have any liability for teacher pensions. For the year ended June 30, 2011 the City has recorded, in the General Fund, intergovernmental revenue and education expenditures in the amount of $5,044,716 as payments made by the State of Connecticut on behalf of the City.

-38-



Postemployment Benefits Other than Pension

Plan description

The City is the administrator of a single-employer, contributory, defined benefit OPES plan. The OPES plan provides post-employment medical, dental, and life insurance benefits to eligible retirees and their spouses. A bi-annual actuarial valuation is made to determine whether the contributions are sufficient to meet the plan obligations. The OPES does not issue a separate, stand-alone financial report.

Classes of employees covered

As of December 31, 2008, the date of the last actuarial report, the plans' membership consisted of:

Active Employees Retired Employees, spouses, and beneficiaries Retired Employees with lifE? insurance Total

Funding Policy

BOE 482 109

31 622

City 54 18

3 75

Total 536 127 34

697

The obligations of the plan members, employers and other entities are established by action of the City pursuant to applicable collective bargaining and employment agreements. The required contribution rate of the employer and the members varies depending on the applicable agreement. The City currently contributes enough money to the plan to satisfy current obligations on a pay-as-you go basis. The costs of administering the plan are paid by the City.

The OPES obtained its latest actuarial valuation as of December 31, 2008 upon which the annual required contribution for the fiscal year ended June 30, 2010 was determined based on a 4.5% discount rate.

Actuarial Valuation

Date 12/31/08

Actuarial Value of Assets

(a)

Supplementary Information Schedule of Funding Progress

Based on the Actuarial Value of Assets

Actuarial Accrued Unfunded Liability AAL Funded Covered (AAL) (UAAL) Ratio Payroll

{b} {b-a} {alb} {c} 13,491,074 13,491,074 -% N/A

-39-

UAAL as a Percentage of

Covered Payroll {b-a}/{c}

N/A



The schedule of funding progress, which will be presented as required supplementary information following the notes to the financial statements after the second year, presents multiyear trend information about whether the actuarial value of plan assets is increasing or decreasing over time relative to the actuarial accrued liabilities for benefits.

The accrued liability is equal to the portion of the present value of future benefits that is allocated to years of service before the valuation date. The accrued liability is amortized over 30 years using an amortization method of payments increasing at 3.5% per year.

The projection of future benefit payments for an ongoing plan involves estimates of the value of reported amounts and assumptions about the probability of occurrence of events far into the future. Examples include assumptions about future employment, mortality, and the healthcare cost trend rate. Amounts determined regarding the funding status of the plans 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.

Year Ended June

2009 2010 2011

$

Schedule of Employer Contributions

Annual Required Contribution Percentage Contributed

885,719 885,719 885,719*

0 93.8 104.8

* Estimated amount, based on prior years and not but an independent actuarial study

Annual OPEB Cost and Net OPEB Obligation

%$

Actual Contribution

0 831,672

(928, 146)

The City's annual post-employment benefit (OPEB) cost (expense) is calculated based on the annual required contribution of the employer (ARC). The City has engaged an actuary to calculate the ARC and related information per the provisions of GASB Statement 45 for employers in plans with more than 1 00 total plan members. The ARC represents a level of funding that, if paid on an ongoing basis, is projected to cover normal costs each year and to amortize any unfunded liabilities (or funding excess) over a period not to exceed thirty years.

The calculation of the change in the net OPEB obligation for the year ended June 30, 2011 follows:

Actuarially Required 1. Contribution (ARC) $ 885,719 2. Interest on NOO * 3. Adjustment To (ARC) * 4. Annual OPEB Cost (AOC) $ 885,719 5. Contribution Made 928,146 6. Increase In NOO $ (42,427) 7. NOO Beginning of Year 976,324 8. NOO End of Year $ 933,897

-40-



Plan Eligibility:

Board of Education Groups:

Teacher/Administrator: Per Teachers' Retirement Boards requirements Cafeteria: No post-retirement benefits All Others: Age 60 and 1 0 years of service, or any age with 25 years of service

City Groups:

NU Police: Age 55 and 15 years of service, or any age with 25 years of service Police Union: Age 55 and 15 years of service, or any age with 25 years of service All Others: No post-retirement benefits

Benefit Types:

Medical and prescription drug benefits are provided to all eligible pre-Medicare retirees through a variety of plans offered by HealthNet, Medicare retirees are offered 3 Medicare supplemental plans through Anthem. Dental (Assurant Dental) coverage is offered but it is 100% retiree paid. Vision benefits are provided through some medical plans. Life insurance benefits are provided through Boston Mutual.

Duration of Coverage:

City: Coverage continues until age 65. Two retirees are covered by special contracts and are covered for life.

BOE: Coverage continues for life. Most retirees over age 65 move to the State Stirling Medicare Plan offered through the Teachers Retirement Board and therefore no costs are assumed after age 65.

Dependent Benefits:

Medical, prescription drugs, dental (optional) and vision (provided with some medical plans).

Dependent Coverage: Same as Retirees.

Retiree Contributions: Premium rates and retiree contributions are as of July 1, 2009 and are summarized below.

-41-



Retiree Premium Cost Sharing

BOE Teachers and Admin

CMS & Nurse Paras and Cafeteria

All Others

City Police Union and NU Police

All Other

Retiree or TRB Pays 1 00% of Premium 1 02% of Premium

No post-retirement medical coverage 1 00% of Premium

Retiree Pays 25% of Base Plan premium if single or 40% of

Base Plan premium if married. No post retirement medical coverage

Actuarial Assumptions and Actuarial Cost Method

Valuation Date: December 31, 2008

Actuarial Cost Method: Projected Unit Credit

Asset Valuation Method: Market Value

Amortization Method: Payments increasing at 3.5%

Remaining Amortization Period: 30 years as of July 1, 2009

Discount Rate: 4.5% pay-as-you-go

Investment Rate of Return: 4.5% pay-as-you-go

Inflation Rate: 3.5%

Per Capita Cost Development: Per capita costs were based on the fully-insured premium rates effective July 1, 2008. Actuarial factors were applied to the premium to estimate individual retiree and spouse cost by age and by gender.

Mortality Rates:

BOE

City (Pre-Retirement)

City (Post-Retirement)

RP-2000 Combined Healthy Annuitant Mortality Table Rates from the July 1 , 2007 valuation report of the Connecticut Municipal Employees' Retirement System 1983 Group Annuity Mortality Table set back one year.

-42-



Termination Rates Before Retirement: Assumptions regarding mortality, disability, withdrawal and retirement are taken from the July 1, 2007 valuation of the Connecticut Municipal Employees' Retirement System (City) or the July 1, 2008 valuation of the Connecticut State Teachers' Retirement System (BOE).

Medical/Drug Cost Trend Rates: Healthcare trend measures the anticipated overall rate at which health plan costs are expected to increase in future years. The rates are "net" and are applied to the net per capita costs. The trend for a particular plan year is the rate that must be applied to that year's cost to yield the next year's projected cost. The medical/drug cost trend rate, as of the valuation date of December 31, 2008, is 9.0% graded to 5.0% over 6 years.

Retiree Contribution Increase Rate: Retiree contributions are expected to increase with medical trend.

Participation and Coverage Election: 100% of active employees with coverage are assumed to elect retiree coverage.

100% of retirees over age 65 are assumed to remain in their current medical plan for life.

For future retirees and current retirees of BOE under age 65, 100% are assumed to be eligible for Medicare and are assumed to enroll in the Stirling Medicare plan offered through the Teachers Retirement Board (TRB) and thus represent no liability to the BOE once they reach age 65.

Plan Design: Development of plan liabilities was based on substantive plan benefits.

Administrative Expenses: Administrative expenses for insured plans were assumed to be included in the fully insured premium rates.

Annual Maximum Benefits: No increase in the annual maximum benefit levels was assumed.

Lifetime Maximum Benefits: No information was available regarding accumulations toward lifetime maximum benefits and no such accumulations were assumed.

Missing Participant Data: A missing census item for a given participant was assumed to equal the average value of that item over all other participants of the same status for whom the item is known.

-43-



Note 11 - Fund Deficits and Restrictions to Net Assets

Fund Deficits

The City has the following Fund Deficits at June 30, 2011 and expects to eliminate the deficits in the future as follows:

Fund Homeland Security Grant Education Grants Worker's Compensation Capital Projects

Note 12 - Subsequent Events

General Obligation Refunding Bond

Deficit $ 26,236

100,445 5,524,515 9,041,573

Plan For Elimination Future grant receipts Future grant receipts Future employer payments Future general obligation bonds

On August 10, 2011, the City issued a general obligation refunding bond in the amount of $20,460,000. The Bond will be paid over a 6 year period with an interest rate of 2% to 5%. The bond will refund a portion of the 2001, 2005, 2006 and 2007 general obligation bonds.

General Obligation Bond

On July 21, 2011, the City issued a general obligation bond in the amount of $2,225,000. The Bond will be paid over a 5 year period with an interest rate of 2.0%. The bond will fund Capital projects.

General Obligation Bond Anticipation Note

On July 21, 2011, the City issued a note in anticipation of a general obligation bond in the amount of $8,820,000. The Bond will be paid in full on August 1, 2012 with an interest rate of 1.0%.

-44-

GENERAL FUND

The General Fund is used to account for resources traditionally associated with government which are not required legally or by sound financial management to be accounted for in another fund.


GENERAL FUND REVENUES AND OTHER FINANCING SOURCES BUDGET AND ACTUAL (NON-GAAP BUDGETARY BASIS) For the Year Ended June 30, 2011

Budgeted Amounts Original Final

PROPERTY TAXES Current years' levy $ 95,509,500 95,509,500 Prior years' levies 639,000 639,000 Interest and penalties 378,000 378,000 Statutory refunds {140,000} {140,000}

Total property taxes $ 96,386,500 96,386,500

INTERGOVERNMENTAL State grants for education $ 5,205,105 5,205,105 Other state grants 2,201,282 2,201,282

Total intergovernmental $ 7,406,387 7,406,387

CHARGES FOR SERVICES Licenses and permits $ 1,096,599 1,096,599 Fines and forfeits 30,500 30,500 Charges 824,870 1,004,870

Total charges for services $ 1,951,969 2,131,969

INVESTMENT INCOME $ 100,000 100,000

MISCELLANEOUS REVENUES $ 1,136,447 1,136,447

OTHER FINANCING SOURCES Appropriation of fund balance $ 4,393,096 4,393,096

Total other financing sources $ 4,393,096 4,393,096

Total revenue & other financing sources $ 111,374,399 111,554,399

-45-

SCHEDULE 1

Actual Variance With Amounts Final Budget Budgetary Positive/

Basis (Negative)

96,022,931 513,431 1,145,666 506,666

578,750 200,750 (140,186} {186}

97,607,161 1,220,661

5,281,366 76,261 1,621,492 {579,790} 6,902,858 (503,529)

1,160,975 64,376 25,917 (4,583)

1,082,858 77,988 2,269,750 137,781

333,475 233,475

1,325,265 188,818

4,393,096 4,393,096

112,831,605 1,277,206

CITY OF SHELTON, CONNECTICUT SCHEDULE 2 Page 1 of 2

GENERAL FUND EXPENDITURES, ENCUMBRANCES AND OTHER FINANCING USES -BUDGETARY BASIS- BUDGET AND ACTUAL For the Year Ended June 30, 2011

Actual Variance With Amounts Final Budget

Budgeted Amounts Budgetary Positive/ Original Final Basis (Negative)

.GENERAL GOVERNMENT Administrative $ 449,693 467,711 444,444 23,267 Employee resources 6,502,055 6,445,647 4,924,070 1,521,577 Legislative 133,880 137,114 114,062 23,052 Board of ethics 1,500 1,500 1,500 Elections 134,002 163,222 161,487 1,735 Inland wetlands 84,617 84,617 79,013 5,604 Economic development committee 65,200 65,655 13,817 51,838 Economic development 90,000 90,000 90,000 Planning and zoning 325,312 326,607 320,106 6,501 Probate court 11,300 11,300 9,123 2,177 Elected/appointed officials 18,450 18,450 15,525 2,925 Conservation commission 39,852 43,014 25,833 17,181 City/Town clerk 416,806 416,806 324,103 92,703 Drug and alcohol commission 200 200 1,200 (1 ,000) Appeals board 2,500 2,500 2,500 Zoning appeals board 18,060 18,410 17,308 1,102 Legal services corporate counsel 181,160 181,160 137,841 43,319 Management information systems 329,582 329,582 267,624 61,958 Assessor 450,988 497,476 435,374 62,102 Tax collector 321,202 321,202 270,070 51,132 Purchasing 314,320 314,320 267,239 47,081 Public r.isk management 1,863,692 1,916,656 1,910,695 5,961 Accounting and control 510,840 510,840 490,023 20,817 Miscellaneous 1,142,375 1,326,475 903,764 422,711 Board of Aldermen 176,200 250 250

Total general government $ 13,583,786 13,690,714 11,222,721 2,467,993

PUBLIC SAFETY Public safety and energy services $ 62,936 70,382 18,549 51,833 EMS commission 117,884 117,884 108,810 9,074 Fire marshal 298,949 298,949 208,324 90,625 Animal control 113,186 113,186 88,151 25,035 Fire department 758,326 768,636 484,149 284,487 Police department 6,253,027 6,274,556 5,163,324 1,111,232

Total public safety $ 7,604,308 7,643,593 6,071,307 1,572,286

PUBLIC WORKS Municipal parking authority $ 5,000 5,000 5,000 Building department 232,129 251,659 173,961 77,698 Highways and bridges 2,791,860 2,801,845 2,294,300 507,545 Road repairs 125,000 125,900 448,929 (323,029) Public works director 21,805 21,805 20,431 1,374 Engineering 269,878 269,878 252,945 16,933 Tree warden 85,000 85,000 62,855 22,145 Recycling program 463,139 463,139 399,529 63,610 Sanitation 2,619,878 2,619,950 2,193,105 426,845

Total public works $ 6,613,689 6,644,176 5,846,055 798,121

-46-(Continued)


GENERAL FUND EXPENDITURES, ENCUMBRANCES AND OTHER FINANCING USES -BUDGETARY BASIS- BUDGET AND ACTUAL For the Year Ended June 30, 2011


Budgeted Amounts Budgetary Positive Original Final Basis (Negative)

HEALTH AND WELFARE Public health $ 222,753 222,753 222,752 1

Total health and welfare $ 222,753 222,753 222,752 1

CULTURE AND RECREATION Recreation $ 1,493,852 1,493,852 1,379,070 114,782 Senior center 303,266 303,266 213,772 89,494 Youth service bureau 203,540 203,540 188,885 14,655 Library 1,077,658 1,077,658 948,698 128,960 Community development 66,001 66,001 63,004 2,997 Outside agency contributions 324,275 324,275 322,625 1,650

Total cultural and recreation $ 3,468,592 3,468,592 3,116,054 352,538

EDUCATION Board of Education $ 63,100,000 63,100,000 63,045,971 54,029

Total education $ 63,100,000 63,100,000 63,045,971 54,029

OTHER Utilities $ 2,689,400 2,691,400 2,303,492 387,908 Municipal property maintenance 868,598 869,898 797,069 72,829

Total other $ 3,557,998 3,561,298 3,100,561 460,737

DEBT SERVICE Principal $ 7,560,000 7,560,000 9,825,000 (2,265,000) Interest 4,512,253 4,512,253 2,247,249 2,265,004 W.P.C.A transfer 1,151,020 1,151,020 1,151,019 1

Total debt service $ 13,223,273 13,223,273 13,223,268 5

Total expenditures and other financing uses $ 111,374,399 111 ,554,399 105,848,689 5,705,710

-47-

NONMAJOR GOVERNMENTAL FUNDS

Special Revenue Funds - are used to account for specific revenues that are legally restricted to expenditures for particular purposes.

Town Road Aid- is used to account for the State funded program.

Conservation and Open Space - maintains monies reserved for the purchase of land to be used for open space.

Vehicle Risk Retention - is used to account for revenues received from the vehicle retention risk fund.

Street Opening and Final Patch - is used to account for the revenues and expenditures related to the street opening and final patch program.

Valley Street Crime B - is used to account for revenues and expenditures related to the Valley Street Crime Division B program.

Emergency Medical Service Training - is used to account for revenues and expenses related to the emergency medical service training program.

Police Seizure Fund - is used to account for the funds that are seized by the police in the City.

Surface Transportation - is used to account for expenses and income received from surface transportation.

Uninsured Loss Fund- is used to account for unexpected insurance claim funds.

Pine Rock Park- is used to account for the operation of Pine Rock Park.

Gristmill Lane Maintenance - is used to account for the renovation of the Gristmill Lane.

Asset Seizure Account- is used to account for assets seized from the State and Federal Governments.

Pine Rock Improvements - is used to account for Pine Rock improvements.

Valley Regional Adult Ed - is used to account for the funds received for adult education which includes some grant money.

Small Cities Grant - is used to account for grants received under the small city grant program.

Trails Committee - is used to account for funds collected through the trails committee.

Sewer Assessments - is used to account for revenues received from the use of sewers from the people in the City.

One Time Use Grant - is used to account for the one time use grant revenues.

CRRA Consent Order- is used to account for revenues received under the CRRA.

DWI Grant- is used to account for state and federal grants received for DUI enforcement.

Radio Grant- is used to account for grants received to buy new radios for the City.

Senior Center - is used to account for revenues received from the operations of the senior center.

Homeland Security Grant - is used to account for federal grant money received under the homeland security grant.

Recreation Path Grants- is used to account for grants received for recreation paths, in the City.

COPS Tech Earmark- is account for funds earmarked for police equipment.

Housatonic River Estuary - is used to account for revenue and expenses as a result of the Housatonic River estuary which includes some grant money.

Dog Fund - is used to account for revenue from dog license fees and related expenditures.

School Lunch - is used to account for operations of the school lunch program.

Educational Grants - is used to account for education related grants from State and Federal Governments.

Athletic Association - is used to account for funds received under the vocational trade account.

Summer School - is used for to account for revenues and expenses received under the summer school program.

Play to Pay - is used to account for revenues and expenses received under Saturday exploration and enrichment.

Comp Voice Stress Analyzer - is used to account for revenues and expenses received under the voice stress analyzer program.

Shelton Housing Authority - is used to account for revenues and expenditures received under the housing authority's activities.

Town Clerk- is used to account for revenues received as a result from the operations of the town clerk office.

Conservation Commission - is used to account for revenues and expenses received as a result of the conservation commission's activities.

Smoke Detector Grant - is used to account for grants received from State and Federal governments, in connection with the smoke detector grant.

Debt Service - is used to account for revenues and expenses used for the purpose of debt payments and revenues.

Permanent Funds

Edward C. Finn Scholarship - is used to account for the scholarship fund given to a high school student.

David Clark Scholarship - is used to account for the scholarship fund given to a high school student.

Paul Gerst Memorial - is used to account for the donations and additional funds for the Paul Gerst memorial.

Lucy Beard - is used to account for a scholarship fund given to a high school.

Hanson Edwards Legacy - is used to account for a scholarship fund given to a high school student.

Permanent War Memorial Scholarship - is used to account for a scholarship fund given to a high school student.

Mary & Charles Lavietes Memorial - is used to account for the donations and additional funds for Mary & Charles Lavietes Memorial.


COMBINING BALANCE SHEET NON-MAJOR GOVERNMENTAL FUNDS June 30, 2011

ASSETS Cash and cash equivalents Receivables, net Due from other funds Inventory

Total assets

LIABILITIES AND FUND BALANCES (DEFICITS)

Liabilities Accounts payable and accrued liabilities Deferred revenue Due to other funds

Total liabilities

Fund Balance (Deficit) Nonspendable Restricted for:

Debt service Committed for:

Open Spaces Special Projects

Assigned Unassigned

Total fund balance (deficit)

Total liabilities and fund balances (deficits)

$

$

$

$

$

$

$

-48-

Special Revenue

Town Conservation Vehicle Road and Risk

Aid Open Space Retention

38,481 92,395

312,500

38,481 92,395

280,234

32,946

32,946 280,234

32,266 5,535

92,395

5,535 32,266 92,395

38,481 92,395

Street Valley Opening and Street Final Patch Crime B

177,415 46,927 8,431

185,846 46,927

38,717

38,717

147,129 46,927

147,129 46,927

185,846 46,927

Special Revenue

Em. Medical Service Training

4,414

4,414

4,414

4,414

4,414

-49-

Police Seizure

Fund

13,856

13,856

13,856

13,856

13,856

SCHEDULE 3 Page 1 of 6

Surface Transportation

3,547

3,547

3,547

3,547

3,547

(Continued)


COMBINING BALANCE SHEET NON-MAJOR GOVERNMENTAL FUNDS, Continued June 30, 2011


Total assets

LIABILITIES AND FUND BALANCE (DEFICITS)


Total liabilities



. Open Spaces Special Projects

Assigned Unassigned



-50-

Special Revenue

Uninsured Pine Gristmill Loss Rock Lane Fund Park Maintenance

$ 502,948 297,754 1,867

15,000

$ 517,948 297,754 1,867

$

$

$

517,948 297,754 1,867

$ 517,948 297,754 1,867

$ 517,948 297,754 1,867

Asset Pine Seizure Rock Account Improvements

88,113 21,515

88,113 21,515

88,113 21,515

88,113 21,515

88,113 21,515

Special Revenue

V. Regional Small Adult Cities

Education Grant

460,064 57,374

460,064 57,374

69,532 26,090

334,256

403,788 26,090

56,276 31,284

56,276 31,284

460,064 57,374

-51-


Trails Committee

5,287

5,287

5,287

5,287

5,287

(Continued)




Total assets



Total liabilities




Assigned Unassigned


Total liabilities and fund balances {deficits)

-52-

Special Revenue

One CRRA Sewer Time Use Consent

Assessments Grant Order

$ 290,894 1,468 10,732 711,051

$ 1,001,945 1,468 10,732

$ 64,529 711,051

$ 775,580

$

226,365 1,468 10,732

$ 226,365 1,468 10,732

$ 1,001,945 1,468 10,732

DUI Grant

14,194

14,194

14,194

14,194

14,194

Radio Grant

Special Revenue

Senior Center

9,375

9,375

9,375

9,375

9,375

Homeland Security

Grant

26,236

26,236

(26,236)

(26,236)

-53-

SCHEDULE 3 Page 3 of6

Recreation Path

Grants

952

952

952

952

952

(Continued)




Total assets



Total liabilities




Assigned Unassigned



-54-

Special Revenue

COPS Housatonic TECH River Dog

Earmark Estuary Fund

$ 79,112 4,851 5,340

$ 79,112 4,851 5,340

$ 215

$ 215

$

79,112 4,636 5,340

$ 79,112 4,636 5,340

$ 79,112 4,851 5,340

School Educational Lunch Grants

221,076 595,980 64,239

300 22,856

244,232 660,219

73,045 760,664

73,045 760,664

23,156

148,031 (100,445)

171,187 (100,445)

244,232 660,219

Special Revenue

Athletic Summer Association School

157,553 91,070

157,553 91,070

6,991

6,991

157,553 84,079

157,553 84,079

157,553 91,070

-55-

SCHEDULE 3 Page4 of6

Pay to Play

2,479

2,479

2,479

2,479

2,479

(Continued)




Total assets



Total liabilities




Assigned Unassigned



Special Revenue

CompVoice Saturday Shelton Stress Exploration Housing Anal~er & Enrichment Authority

$ 1,051 168,787

$ 1,051 168,787

$

18,565

$ 18,565

$

1,051 150,222

$ 1,051 150,222

$ 1 168,787

-56-

Special Revenue

Smoke Town Conservation Detector Clerk Commission Grant

97,390 116

97,390 116

3,987

3,987

93,403 116

93,403 116

97,390 116

Total Sp. Rev Funds

3,564,377 783,721 327,800

22,856

4,698,754

479,463 737,141

1,230,454

2,447,058

23,156

32,266 186,616

2,136,339 (126,681}

2,251,696

4,698,754

-57-


Debt Service

266,962

266,962

266,962

266,962

266,962

(Continued)




Total assets



Total liabilities




Assigned Unassigned



$

$

$

$

$

$

$

-58-

Permanent Funds

Edward C. David Paul Finn Clark Gerst

Scholarship Scholarship Memorial

2,225 995 888

2,225 995 888

2,225 995 888

2,225 995 888

2,225 995 888

Permanent Funds Permanent

Hanson War Mary & Charles Lucy Edwards Memorial Lavietes Beard Legacy Scholarship Memorial

1,446 1,002 40,440 821

1,446 1,002 40,440 821

1,446 1,002 40,440 821

1,446 1,002 40,440 821

1,446 1,002 40,440 821

-59-

Total Permanent

47,817

47,817

47,817

47,817

47,817

SCHEDULE3 Page 6 of6

Total Nonmajor

Governmental Funds

3,612,194 783,721 594,762

22,856

5,013,533

479,463 737,141

1,230,454

2,447,058

70,973

266,962

32,266 186,616

2,136,339 (126,681)

2,566,475

5,013,533

'·"


COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES (DEFICITS)- NON-MAJOR GOVERNMENTAL FUNDS For the Year Ended June 30, 2011

Special Revenue

Town Conservation Road and Aid Open Space

Revenues Intergovernmental $ 250,961 Charges for services Investment income 73 104 Other 17,724

Total revenues $ 251,034 17,828

Expenditures Public safety $ Public works 229,913 Culture and recreation Education Other 312,500

Total expenditures $ 229,913 312,500

Revenue over (under) expenditures $ 21,121 (294,672)

Other Financing Sources Transfers in $ 312,500 Transfers (out)

Total other financing sources $. 312,500

Changes in Fund Balances (Deficits) $ 21,121 17,828

Fund Balances (Deficits)- beginning (15,586) 14,438

Fund Balances (Deficits) -ending $ 5,535 32,266

-60-

Vehicle Risk

Retention

303 6,102

6,405

1,955

1,955

4,450

4,450

87,945

92,395

Special Revenue

Street Valley E. Medical Opening and Street Service Final Patch Crime B Training

247 68 7 31,615 517

31,862 585 7

971 7,610

7,610 971

24,252 (386) 7

24,252 (386) 7

122,877 47,313 4,407

147,129 46,927 4,414

Police Seizure

Fund

4,395

24

4,419

13,304

13,304

(8,885)

(8,885)

22,741

13,856

-61-


Surface Transportation

5

5

5

5

3,542

3,547

(Continued)


COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES (DEFICITS)- NON-MAJOR GOVERNMENTAL FUNDS, (Continued) For the Year Ended June 30, 2011

Special Revenue

Uninsured Pine Loss Rock Fund Park

Revenues Intergovernmental $ Charges for services Investment income 747 422 Other 20,899

Total revenues $ 21,646 422

Expenditures Public safety $ Public works Culture and recreation Education Other 53,644

Total expenditures $ 53,644

Revenue Over (Under) Expenditures $ (31,998) 422

Other Financing Sources Transfers in $ Transfers (out)

Total other financing sources $

Changes in Fund Balances (Deficits) $ (31,998) 422

Fund Balances (Deficits)- beginning 549,946 297,332

Fund Balances (Deficits) -ending $ 517,948 297,754

-62-

Gristmill Lane

Maintenance

3

3

3

3

1,864

1,867

Asset Pine Seizure Rock Account Improvement

46,125

83 31

46,208 31

46,208 31

46,208 31

41,905 21,484

88,113 21,515

Special Revenue

Adult Education

974,124

411

974,535

1,037,502

1,037,502

(62,967)

(62,967)

119,243

56,276

Small Cities Grant

82

82

82

82

31,202

31,284

-63-

SCHEDULE4 Page 2 of 6

Trails Committee

8

8

8

8

5,279

5,287

(Continued)


COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES (DEFICITS)- NON-MAJOR GOVERNMENTAL FUNDS, Continued For the Year Ended June 30, 2011

Special Revenue

One Sewer Time Use

Assessment Grant

Revenues Intergovernmental $ Charges for services Investment income 446 2 Other 1,100

Total revenues $ 1,546 2

Expenditures Public safety $ Public works 32,406 Culture and recreation Education Other


Revenue Over (Under) Expenditures $ (30,860} 2



Changes in Fund Balances (Deficits) $ (30,860) 2

Fund Balances (Deficits) - beginning 257,225 1,466

Fund Balances (Deficits)- ending $ 226,365 1,468

-64-

CRRA Consent

Order

11,958

11,958

{11,958}

(11,958)

22,690

10,732

DWI Grant

20

20

20

20

14,174

14,194

Radio Grant

95,183

95,183

(95, 183)

(95, 183)

95,183

Special Revenue

Senior Center

48,155

48,155

(48, 155)

(48, 155)

57,530

9,375

Homeland Security

Grant

(26,236)

(26,236)

-65-


Recreation Path

Grants

3

3

1,365

1,365

(1 ,362)

(1 ,362)

2,314

952

(Continued)



Special Revenue

COPS Housatonic TECH River

Earmark Estua!1

Revenues Intergovernmental $ 30,000 Charges for services Investment income 68 6 Other 2,000

Total revenues $ 30,068 2,006

Expenditures Public safety $ 98,723 Public works Culture and recreation 883 Education Other

Total expenditures $ 98,723 883

Revenue Over (Under) Expenditures $ (68,655) 1,123

Other Financing Sources Transfers in $ 147,767 Transfers (out)

Total other financing sources $ 147,767

Changes in Fund Balances (Deficits) $ 79,112 1,123

Fund Balances (Deficits) - beginning . 3,513

Fund Balances (Deficits} -ending $ 79,112 4,636

-66-

Dog Fund

7

7

7

7

5,333

5,340

Special Revenue

School Educational Athletic Lunch Grants Association

442,989 2,640,188 1,463,630 108,761

1,906,619 2,640,188 108,761

1,725,533 2,576,113 117,950

1,725,533 2,576,113 117,950

181,086 64,075 (9,189)

181,086 64,075 (9,189)

(9,899) (164,520) 166,742

171,187 (100,445) 157,553

Summer School

43,813 86

43,899

33,293

33,293

10,606

10,606

73,473

84,079

-67-


Pay to Play

309,998

309,998

22,519

22,519

287,479

(285,000}

(285,000)

2,479

2,479

(Continued)



Special Revenue

CompVoice Saturday Stress Exploration

Analyzer & Enrichment

Revenues Intergovernmental $ 11,965 Charges for services Investment income 2 Other

Total revenues $ 2 11,965

Expenditures Public safety $ Public works Culture and recreation Education 8,786 Other


Revenue Over (Under) Expenditures $ 2 3,179



Changes in Fund Balances (Deficits) $ 2 3,179

Fund Balances (Deficits)- beginning $ 1,049 147,043

Fund Balances (Deficits)- ending $ 1,051 150,222

-68-

Shelton Housing Authority

37,009

19

37,028

37,028

37,028

(37,028)

Special Revenue

Smoke Town Conservation Detector Clerk Commission Grant

108 261,637

261,745

23

206,988

206,988 23

54,757 (23)

54,757 (23)

38,646 116 23

93,403 116

Total Special

Revenues

4,437,756 1,926,202

3,366 341,613

6,708,937

208,204 281,887

50,403 5,521,696

575,087

6,637,277

71,660

460,267 {285,000}

175,267

246,927

2,004,769

2,251,696

-69-


Debt Service

266,962

266,962

(Continued)



Permanent Funds

Edward C. David Finn Clark

Scholarship Scholarship

Revenues Intergovernmental $ Charges for services Investment income 3 1 Other 75 50

Total revenues $ 78 51

Expenditures Public safety $ Public works Culture and recreation Education 75 50 Other

Total expenditures $ 75 50

Revenue Over (Under) Expenditures $ 3 1



Changes in Fund Balances (Deficits) $ 3 1

Fund Balances (Deficits)- beginning 2,222 994

Fund Balances (Deficits)- ending $ 2,225 995

-70-

Paul Gerst

Memorial .

1 50

51

50

50

1

887

888

Permanent Funds Permanent

Hanson War Lucy Edwards Memorial

Beard Legacy Scholarship

2 2 867 50

52 2 867

812 50

50 812

2 2 55

2 2 55

1,444 1,000 40,385

1,446 1,002 40,440

Mary & Charles Total Lavietes Permanent Memorial Funds

2 878 50 275

52 1,153

50 862 225

50 1,087

2 66

2 66

819 47,751

47,817

-71-

Totals


4,437,756 1,926,202

4,244 341,888

6,710,090

208,204 281,887

51,265 5,521,921

575,087

6,638,364

71,726

460,267 (285,000}

175,267

246,993

2,319,482

2,566,475

CITY OF SHELTON, CONNECTICUT SCHEDULE 5

W.P.C.A EXPENDITURES AND OTHER FINANCING USES· BUDGETARY BASIS ·BUDGET AND ACTUAL For the Year Ended June 30, 2011


Budgeted Amounts Budgetary Positive/ Original Final Basis (Negative)

Regular Payroll $ 528,112 528,112 505,161 22,951 Part Time Payroll 22,906 (22,906) Personnel Training 5,300 5,300 394 4,906 Overtime Pay 80,900 80,900 68,485 12,415 Mileage 300 300 68 232 Professional Services 50,000 50,000 11,285 38,715 lnnoculations 200 200 200 Printing & Advertising 3,000 3,000 1,242 1,758 Uniform Services 5,200 5,200 5,130 70 Diesel Generator Maintenance 3,000 3,000 1,880 1,120 Gasoline 8,400 8,400 8,112 288 Cleaning Supplies 500 500 443 57 Bottled Gas 150 150 117 33 Heating Fuel 16,560 16,560 11,827 4,733 Minor Tools 1,000 1,000 760 240 Protective Clothing 850 850 486 364 Chemicals 132,500 132,500 89,201 43,299 Fire Extinguishers 5,000 5,000 612 4,388 Motor Vehicle Maintenance 3,500 3,500 2,226 1,274 Legal Stenographer's Fee 3,760 3,760 3,850 (90) Stratford Sewage Fees 165,100 165,100 171,944 (6,844) Dep Permit Fees 2,243 2,243 999 1,244 City Hall Vehicles 300 300 90 210 Sewer Maintenance 49,000 49,000 16,418 32,582 Building Maintenance 1,500 1,500 1,195 305 Equipment Maintenance 221,420 221,420 178,954 42,466 Physicals 800 800 800 Sludge Dumping 243,056 243,056 202,020 41,036 Dep Nutrient Testing 19,000 19,000 18,821 179 Septic Haul WPCA Sewer Usage Refund 2,000 2,000 2,000 WPCA Capital Sink Fund 75,000 75,000 75,000 Digester Funding ST of CT Nutrient Reduct 105,474 105,474 105,474 Grit Removal 9,908 9,908 1,716 8,192 Municipal Electric 420,000 420,000 388,867 31,133 Municipal Water 27,925 27,925 20,239 7,686 Telephone Service 8,000 8,000 4,868 3,132 WPCA Reserve Social Security 47,000 47,000 45,527 1,473 WPCP Employee Insurance 136,000 136,000 129,689 6,311 Dental Plan 4,775 4,775 1,443 3,332 Union Pension WPCP 41,000 41,000 42,282 (1,282}

Total Expenditures $ 2,427,733 2,427,733 2,034,257 393,476

Depreciation expense 2,215,412 Reserved for Capital Expenditures (75,000} Total Operating Expenses $ 4,174,669

-72-

FIDUCIARY FUNDS

Fiduciary Funds are used to account for assets held in a trustee capacity for others, and include Pension Trusts and Agency Funds.

Private Purpose Trust Funds - utilize the accrual basis of accounting and are used for various purposes. The principal must be maintained intact and invested. The City's Private Purpose Funds are listed below:

Servicemen's Christmas Fund DWI Fund Dog Pound Trust Fund Police Department Pistol Range Municipal Parking Lot Improvements Shelton Park Commission Gazebo Fund Project D.A.R.E Youth Service Bureau Constitution Park Donations Local Schools Plumb Memorial Library Student Activity Special Response Team Animal Shelter Donations Civil War Monument


PRIVATE PURPOSE TRUST FUNDS COMBINING STATEMENT OF NET ASSETS June 30, 2011

Police Servicemen's Dog Department

Christmas DWI Pound Trust Pistol Fund Fund Fund Range

ASSETS Cash and cash equivalents $ 7,924 424 1,018 Investments

Total Assets $ 7,924 424 1,018

LIABILITIES Accounts payable 421 Other liabilities $

Total Liabilities $ 421

NET ASSETS Held in trust for specific purposes $ 7,924 424 (421) 1,018

-73-

Municipal Parking

Lot Improvements

1,366

1,366

1,366

Shelton Park

Commission

2,949

2,949

2,949

Gazebo Fund

45,359

45,359

45,359

Project D.A.R.E

2,546

2,546

2,546

-74-

Youth Service Bureau

385

385

385


Constitution Park

Donations

.5,684

5,684

5,684

(Continued}


PRIVATE PURPOSE TRUST FUNDS COMBINING STATEMENT OF NET ASSETS June 30, 2011

ASSETS Cash and cash equivalents $ Investments Due to other funds

Total Assets $

LIABILITIES Accounts payable Other liabilities $

Total Liabilities $

NET ASSETS Held in trust for specific purposes $

Local Schools

2,084

2,084

2,084

Plumb Special Memorial Student Response

Library Activtity Team

401,242 831,666 2,674 1,806,951

2,208,193 831,666 2,674

2,208,193 831,666 2,674

-75-

Animal Shelter

Donations

1,742

1,742

1,742

Civil War Monument Total

1,307,063 1,806,951

3,114,014

421

421

3,113,593

-76-



PRIVATE PURPOSE TRUST FUNDS COMBINING STATEMENT OF CHANGES IN NET ASSETS For the Year Ended June 30, 2011

Servicemen's Christmas

Fund

ADDITIONS Contributions $ Other 820

Total contributions $ 820

Investment earnings Net increase in fair value $ Interest and dividends 11 Less: Investment expense

Total investment earnings $ 11

DEDUCTIONS Benefits $ Other 350

Total deductions $ 350

Change in net assets $ 481

Net Assets - beginning 7,443

Net Assets - ending $ 7,924

-77-

Police Dog Department

DWI Pound Trust Pistol Fund Fund Range

1

1

1

423 (421) 1,017

424 (421) 1,018

Municipal Parking

Lot Improvements

1

1

1,365

1,366

Shelton Park

Commission

4

4

4

2,945

2,949

Gazebo Fund

3,875

3,875

58

58

3,933

41,426

45,359

Project D.A.R.E

4

4

4

2,542

2,546

-78-

Youth Services Bureau

Donation

1

1

384

385

Constitution Park

Donations

8

8

8

5,676

5,684


Local Schools

3

3

3

2,081

2,084

(Continued)


PRIVATE PURPOSE TRUST FUNDS COMBINING STATEMENT OF CHANGES IN NET ASSETS For the Year Ended June 30, 2011

Plumb Memorial Student Library Activity

ADDITIONS Contributions $ 6,044 Other 36,463

Total contributions $ 42,507

Investment earnings Net increase in fair value $ 227,496 Interest and dividends 41,422 Less: Investment expense {12,987}

Total investment earning:$ 255,931

DEDUCTIONS Benefits $ Other 66,382 104,400

Total deductions $ 66,382 104,400

Change in net assets $ 232,056 (104,400}

'Net Assets - beginning 1,976,137 936,066

Net Assets - ending $ 2,208,193 . 831,666

-79-

Special Animal Response Shelter

Team Donations

135

135

3 3

3 3

907 907

3 (769)

2,671 2,511

2,674 1,742


Total

10,054 371283 47,337

227,496 41,520

{12,987} 256,029

172,039 172,039

131,327

2,982,266

3,113,593


AGENCY FUNDS COMBINING STATEMENT OF FIDUCIARY NET ASSETS June 30, 2011

Argraves Refuse AHO Disposal Sec.

Easement Deposit

ASSETS Cash and cash equivalents $ 6,288 7,034 Accounts receivable

Total Assets $ 6,288 7,034

LIABILITIES Due to General Fund $ 4,200 300 Other liabilities Held for deposits for others 2,088 6,734

Total Liabilities $ 6,288 7,034

NET ASSETS $

-80-

Lane Street Sewer

Improvements SWEROC Escrows

22,502 2,022 1,542

22,502 2,022 1,542

22,502 2,022 1,542

22,502 2,022 1,542

SCHEDULES

Union Perry Hill Highway Security Turro PandZ Road

Reservoir Pension Deposit Sewer Developer Security Associates Escrow BHC Assessment Bonds Deposit Total

80,876 9,176 2,114 7,003 448,339 1,027 587,923

80,876 9,176 2,114 7,003 448,339 1,027 587,923

4,500

80,876 9,176 2,114 7,003 448,339 1,027 583,423

80,876 9,176 2,114 7,003 448,339 1,027 587,923

-81-


AGENCY FUNDS COMBINING STATEMENT OF CHANGES IN ASSETS AND LIABILITIES For the Year Ended June 30, 2011

Balance Balance July 1, June 30, 2010 Additions Deductions 2011

Argraves AHO Easement Assets

Cash and cash equivalents $ 6,280 8 6,288 Liabilities

Accounts payable $ 4,200 4,200 Deposits held for others 2,080 8 2,088

$ 6,280 8 6,288

Refuse Disposal Sec Dep Assets


Due to City of Shelton $ 300 300 Deposits held for others 6,724 10 6,734

$ 7,024 10 7,034

Lane Street Improvements Assets


Deposits held for others $ 22,471 31 22,502

SWEROC Assets

Cash and cash equivalents $ 2,019 2,022 Liabilities


Sewer Escrows Assets



Reservoir Associates Assets



(Continued)

-82-

CITY OF SHELTON, CONNECTICUT SCHEDULE 9 Page 2 of2

AGENCY FUNDS COMBINING STATEMENT OF CHANGES IN ASSETS AND LIABILITIES For the Year Ended June 30,2011

Balance Balance July 1, June 30, 2010 Additions Deductions 2011

Union Highway Pension Escrow Assets



Security Deposit - BHC Assets


Deposits held for others $ 2,111 2,114

Turro Sewer Assessment Escrow Assets



P and Z Developer Bonds Assets

Cash and cash equivalents $ 386,723 111,396 49,780 448,339 Other Assets

386,723 111,396 49,780 448,339 Liabilities

Deposits held for others $ 386,723 111,396 49,780 448,339

Perry Hill Road Security Deposit Assets

Cash and cash equivalents $ 1,025 1,027 Liabilities

Deposits held for others $ 1,025 1,027

Total Agency Funds Assets

Cash and cash equivalents $ 526,114 111,589 49,780 587,923 Other Assets

526,114 111,589 49,780 587,923 Liabilities

Accounts payable $ 4,500 4,500 Deposits held for others 521,614 111,589 49,780 583,423

$ 526,114 111,589 49,780 587,923

-83-

SCHEDULE10

Collections Uncollected

Lien Balance Taxes Interest Fees Total June 30, 2011

285 419 24 728 283 2,418 2,701 2,699 535 1,299 1,834 4,195 853 1,648 2,501 5,493 506 993 1,499 6,737

2,648 4,041 6,689 6,901 5,110 2,462 7,572 8,097 1,696 1,629 3,325 9,986 3,012 5,056 24 8,092 17,871 3,890 3,840 24 7,754 36,267 9,345 7,817 96 17,258 49,394

10,039 8,118 168 18,325 80,242 36,474 25,009 384 61,867 127,515

137,125 50,670 1,184 188,979 238,770 723,814 147,086 3,072 873,972 473,494 935,615 262,505 4,976 1,203,096 1,067,661

95,698,353 277,332 2,592 95,978,277 1,077,683

96,633,968 539,837 7,568 97,181,373 2,145,344

-85-


SCHEDULE OF DEBT LIMITATION For the Year Ended June 30, 2011

Debt Limitation: 2 1/4 Times Base 4 1/2 Times Base 3 3/4 Times Base 3 1/4 Times Base 3 Times Base ?Times Base

Total Debt Limitation

Indebtedness: Bonds payable Bonds authorized and unissued

Total Indebtedness

Less: School Construction Grants Receivable

Total Indebtedness of the City

Debt Limitation In Excess of Outstanding and Authorized Debt

-86-

General Purpose

$ 218,658,089

$ 218,658,089

$ 20,961,800 1,000,701

$ 21,962,501

$ 21,962,501

$ 196,695,588

Total Tax Collections (Including Interest and Lien Fees) For The Year Ended June 30, 2011

Reimbursement For Revenue Loss On: Elderly Tax Relief- Freeze

Base

Schools Sewers

437,316,179 364,4301 149

437,316,179 364,430,149

46,817,700 50,500 305,531 4,259,771

47,123,231 4,310,271

47,123,231 4,310,271

390,192,948 360,119,878

Urban Renewal

315,839,462

315,839,462

315,839,462

Pension Bonding

291,544,119

291,544,119

291,544,119

-87-

$

$

97,181,373

97,181,373

Total Debt

680,269,611

680,269,611

67,830,000 5,566,003

73,396,003

73,396,003

606,873,608

SCHEDULE11


NET ASSETS BY COMPONENT, Last Ten Years (In Thousands) !(Acc~ual Basis of Accounting)

Fiscal Year

2003* 2004 2005 2006 2007**

Government activities: Invested in capital assets

net of related debt $ 59,347 56,334 47,583 66,140 143,940 Restricted 48 48 48 49 50 Debt Service Unrestricted 5,560 6,106 11,889 6,473 6,941

Total Government Activities $ 64,955 62,488 59,520 72,662 150,931

Business Type Activities Invested in capital assets

net of related debt $ Restricted Unrestricted

Total Business-Type Activities

Total net assets $ 64,955 62,488 59,520 72,662 150,931

"' $200

Net Assets '"0 c ill $180 " 0 .c

$160 1-

$140

$120

$100

$80

$60

$40

$20

$-

2003* 2004 2005 2006

• The information was not maintained prior to fiscal year ended June 30, 2003.

**First year the audited financial statements included infrastructure.

2007** 2008 2009

-88-

TABLE A-1

2008 2009 2010 2011

107,363 113,827 140,429 141,956 49 49 48 48

1,075 1,935 267 267 7,000 (18,524) (15,442) (1 ,449)

115,487 97,287 125,302 140,822

35,096 34,247 36,313 35,583

(1 ,584) (245) 43 448

33,512 34,002 36,356 36,031

148,999 131,289 161,658 176,853

2010 2011

CITY OF SHELTON, CONNECTICUT TABLEA-2

CHANGES IN NET ASSETS, Last Ten Fiscal Years (In Thousands) (Accrual Basis of Accounting)

Fiscal Year

2003* 2004 2005 2006 2007 2008* 2009 2010 2011 Expenses

Governmental activities: General government $ 7,907 8,643 8,980 10,611 10,657 6,120 14,361 13,038 11,507 Public safety 5,239 5,172 5,814 6,918 7,771 7,126 12,545 7,555 6,675 Community service 1,737 1,879 1,905 2,138 2,351 Public works 8,150 9,053 8,929 9,394 12,586 8,553 11,201 8,246 7,911 Health and welfare 368 225 221 223 Culture and recreation 3,580 3,429 4,769 3,243 Education 58,380 59,666 64,005 64,849 67,296 98,567 84,669 72,103 73,518 Public library 823 862 868 1,016 977 Municipal facilities 2,738 2,953 3,099 3,030 3,174 Miscellaneous 410 405 440 247 227 11,841 9,200 Interest on debt 1 586 1 521 1 522 1 879 1 514 2136 2 610 2 254 1,483

Total governmental activities $ 86,970 90,154 95,562 100,082 106,553 138,291 138,240 108,186 104,560

l3usiness-type activities Water Pollution Control Authority 3 213 3143 3 901 4 516

Total primary government expenses $ 86,970 90,154 95,562 100,082 106,553 141,504 141,383 112,087 109,076

Charges for services Governmental activities $ 8,690 7,233 8,107 10,115 8,691 8,061 5,774 4,704 5,299 Business-type activities 2 700 2 317 2470 2 532

Total primary government revenues $ 8,690 7,233 8,107 10,115 8,691 10,761 8,091 7,174 7,831

Operating Grants Governmental activities $ 8 957 10 049 9 044 11 431 11 902 28 481 13 424 15 448 14 697

Capital Contributions Governmental activities $ 576 145 1,448 8,666 4,404 7,322 3,139 8,397 1,671 Business-type activities 1 060 1 628 507

$ 576 145 1 448 8 666 4404 7 322 4199 10 025 2,178

Net (Expenses)Revenue and Changes in Net Assets Governmental activities $ (68,747) (72,727) $ (76,963) $ (69,870) (81,556} $ (94,427} $ (115,903} $ (79,637) (82,893) Business-type activities (513) 234 197 1,984

Total Net (Expenses) Revenue and Changes in Net Assets $ (68,747) (72,727) (76,963) (69,870) (81,556) (94,940) (115,669) (79,440) (80,909)

Unrestricted Revenues Governmental activities $ 70,634 70,261 76,806 83,011 88,068 100,967 97,703 95,047 98,413 Business-Type activities (5,246) 256 2,157 1,659

Total primary government $ 70,634 70,261 76,806 83,011 88,068 95,721 97,959 97,204 100,072

Changes in Net Assets Governmental activities $ 1,887 (2,466) (157) 13,141 6,512 6,540 (18,200) 15,410 15,520 Business-Type activities (5,759) 490 2,354 (325)

Total primary government $ 1,887 (2,466) (157) 13,141 6,512 781 (17,710) 17,764 15,195

• The information was not maintained prior to fiscal year ended June 30, 2003

• W.P.C.A was first reported as a business type aclivty during the fiscal year ended June 30, 2008

-89-


FUND BALANCES, Last Ten Fiscal Years (Modified Accrual Basis of Accounting)

General Fund

Not Fiscal Year unassigned unassigned

2002 1,113,732 8,125,395 2003 1,125,868 5,560,343 2004 916,984 4,098,277 2005 1,100,959 3,836,028 2006 1,231,158 7,094,022 2007 1,335,389 9,116,937 2008 4,190,903 6,758,145 2009 3,579,976 4,658,287 2010 4,861,594 4,394,228 2011 6,338,321 6,010,150

14,000,000

All Other Government Funds Special Total all other

Reserved and Revenue Capital projects Government Total Committeed Funds funds Funds

9,239,127 648,463 5,531,858 (8,966,721) (2,786,400) 6,686,211 113,816 7,134,136 (5,851,375) 1,396,577 5,015,261 156,984 5,972,839 (9,81 0,848) (3,681,025) 4,936,987 1,256,763 5,033,611 3,923,201 10,213,575 8,325,180 1,535,836 5,959,403 (201,563) 7,293,676

10,452,326 . 2,230,216 5,288,345 (4,948,661) 2,569,900 10,949,048 3,926,508 3,863,455 (4,177,436) 3,612,527

8,238,263 5,764,239 1,560,828 (19,045,772) (11,720,705) 9,255,822 4,290,731 1,790,384 (22,367,566) (16,286,451)

12,348,471 922,528 2,566,425 (9,964,1 01) (6,475,098)

General Fund Balance

12,000,000 +-·-··-----------···------·····-··---····-·-------·-····-----·····-··--···-·-·-··------·----·-·-···

10,000,000 -1-------------------

8,000,000

6,000,000

4,000,000

2,000,000

2002 2003 2004 2005 2006 2007 2008 2009 2010

o unassigned 1!1 Not unassigned

-90-

TableA-3

Total

6,452,727 8,082,788 1,334,236

15,150,562 15,618,856 13,022,226 14,561,575 (3,482,442) (7,030,629) 5,873,373

2011


CHANGES IN FUND BALANCES, Last Ten Fiscal Years (In Thousands) (Modified Accrual Basis of Accounting)

2002 Revenues:

Property taxes $ 65,769 Intergovernmental 13,675 Licenses and permits 1,248 Charges for services 3,851 Fines and forfeitures 30 Revenues from the use of money 879 Miscellaneous 3,784

Total revenues $ 89,236


General government $ 7,133 Public safety 5,135 Public works 6,513 Culture and recreation 2,939 Public health Municipal facilities 2,644 Education 53,066 Other 337 Capital outlay 8,673 Debt service 5,817 Total expenditures $ 92,257

Excess (deficiency) of revenues over (under) expenditures $ (3,021)

Other financing sources (uses) Transfers (to) from other funds Proceeds from sale of bonds and notes $ 8,500

Total other financing sources (uses) $ 8,500

Net changes in fund balances $ 5,479

2003

68,104 12,385 1,757 4,369

19 877

2,101 89,612

7,584 4,991 7,032 1,660

56,190 3,978 8,278 4,524

94,237

(4,625)

4,400 4,400

(225)

Changes in Primary Government Fund Balance $20,000

. ~\';~.:·.,· .';

2006 2007

$(20,000)

-91-

2004 2005

68,845 74,947 11,742 12,612

1,985 2,168 3,738 4,695

17 24 397 643

1,521 1,707 88,245 96,796

8,420 8,283 5,220 5,448 8,449 1,826 1,791 10,945

2,951 914 57,759 60,308

1,198 392 4,792 10,070 4,415 6,057

94,995 104,243

(6,750) (7,447)

22,335 22,335

(6,750) 14,888

TABLE A-4

Fiscal Year

2006 2007 2008 2009 2010 2011

79,815 83,387 86,880 94,018 95,334 97,607 22,104 18,256 43,745 18,152 25,361 19,197

2,786 2,874 4,952 5,527 4,506 3,955 3,865 2,732

32 37 1,099 2,100 1 '119 459 260 338 2,370 1,029 4,019 2,739 1,954 1,703

113,158 113,210 140,269 119,323 126,774 121,577

8,968 8,954 11,466 10,847 11,449 11,509 6,395 7,041 6,090 6,936 6,202 6,383 2,060 9,198 6,400 7,296 5,802 6,285

10,733 6,433 3,374 3,147 3,052 3,174 218 225 221 223

1,009 63,549 67,678 90,752 75,737 74,743 72,902

247 227 3,965 5,998 4,532 3,154 13,749 30,363 21,608 17,890 33,242 6,055 7,198 7,568 8,926 11,100 12,038 12,072

113,908 137,462 152,799 139,176 151,281 121,757

(750) (24,252) (12,530) (19,853) (24,507) (180)

5,271 (246) (2,156) (1,151) 27,421 11,650 2 055 23,115 14,235 27,421 16,921 1,809 20,959 13,084

(750) 3,169 4,391 (18,044) (3,548) 12,904

Changes in General Fund Balance

( 4,000) .i ............ --··-····-·-·····--··-····--···-·-··--···----··-····-·······-·---······--········---··········-·-·-·····-··--·-·-·--··········----····--···-·--···-

-92-


ASSESSED VALUE AND ACTUAL VALUE OF TAXABLE PROPERTY Last Ten Years (In Thousands)

Commercial/ Residential Industrial Personal

Fiscal Year

-

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

"' "0 c

"' "' ::l 0 .c 1-

Property

65.0 64.8 65.2 65.3 64.8 72.0 71.8 70.0 70.5 71.6

$6,000,000.00

$5,500,000.00

$5,000,000.00

$4,500,000.00

$4,000,000.00

$3,500,000.00

$3,000,000.00

$2,500,000.00

$2,000,000.00

$1,500,000.00

2002

Property

18.3 18.1 18.4 18.3 18.4 16.8 17.4 17.9 18.1 16.8

2003 2004

All Land Property

6.0 8.4 6.0 8.6 6.0 8.2 5.0 7.9 6.0 8.1 5.0 5.0 3.0 4.8 3.0 6.5 3.0 5.7 3.0 5.8

Total Assessed Value

2005 2006 2007

Fiscal Year

Gross Grand List

Motor Vehicle (Thousands)

7.7 3,211,716' 7.9 3,264,505 7.6 3,288,413 8.0 3,346,225 8.1 3,433,959 5.7 4,976,506 5.7 5,092,913 5.3 5,208,469 5.4 5,261,547 5.5 5,304,505

2008 2009 2010 2011

o Residential Property 0 Commercial/Industrial Property sa All Land 1!1 Personal Property m Motor Vehicle

SOURCE: City of Shelton, Assessor's Office

-93-

TABLE B-1

Net Taxable Grand List

(Thousands)

3,174,463 3,219,614 3,246,596 3,305,554 3,389,503 4,927,750 5,037,321 5,145,498 5,198,457 5,242,912


DIRECT AND OVERLAPPING PROPERTY TAX RATES Last Ten Years (Rates per $1,000 of Assessed Value)

Grand List Year

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

City Direct Rate

Basic Rate

24.10 24.60 25.59 20.89 20.89 22.73 23.59 24.31 17.47 18.61

City Direct Tax Rate

2000 2001 2002 2003 200furand List yQQp

SOURCE: City of Shelton, Tax Collector's Office

-94- .

TABLE B-2

2006 2007 2008 2009

CITY OF SHELTON, CONNECTICUT TABLE B-3

PRINCIPAL PROPERTY TAXPAYERS Current Year and Ten Years Ago

Fiscal Year Ended June 30, 2011 Percentage of Total

City Taxable TAXPAYER ASSESSMENT 1 Rank Assessed Value

Scinto, Robert $ 249,478,600 Pitney Bowes, Inc. Cre Ivy Brook LLC United !Illuminating Co. Aquarion Water Company Blakeman Construction LLC Health Net of California Real Estate Holding Armstrong Park Associates RA710 Bridgeport Avenue, LLC Shelton Square Limited Partnership

55,996,020 55,802,260 52,080,840 36,873,840 31,388,630 29,130,730 26,033,260 20,503,210 17,256,750

574,544,140 $=====~~=

1 4.85% 2 1.09% 3 1.08% 4 1.01% 5 0.72% 6 0.61% 7 0.57% 8 0.51% 9 0.40% 10 0.34%

11%

Fiscal Year Ended June 30, 2011

Percentage of Total City Taxable

TAXPAYER ASSESSMENT 1 Rank Assessed Value

Scinto Robert $ 69,929,650 1 2.81% Pitney Bowes, Inc. 56,858,760 2 2.28% Bridgeport Hydraulic Co 36,967,230 3 1.16% PHS Real Estate II, Inc 22,103,030 4 0.69% Armstrong Park Associates 19,045,600 5 0.59% Reckson Operating Partnership LP 13,655,460 6 0.41% America Skandia Information 21,627,700 7 0.64% Shelton Square Limited Partnership 10,936,450 8 0.22% United Illuminating Co 10,186,580 9 0.20% Div Research LLC 10,051,860 10 0.20%

$ 271,362,320 9%

1. Information from the City of Shelton, Assesor's Office

-95-

%

%


PROPERTY TAX LEVIES AND COLLECTIONS Last Ten Years (In thousands)

Collected Within the Fiscal Year of

Fiscal Year

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Ill 'C c

Taxes Levied for the Fiscal

Year

64,237 66,734 67,606 74,194 78,912 82,901 82,516 94,022 95,890 96,776

m 120 :::s 0 .c 1-

60

40

20

Levy

Percentage of Amount Original Levy

63,476 98.8 66,018 98.9 66,921 99.0 73,599 99.2 78,343 99.3 82,174 99.1 81,707 99.0 92,978 98.9 94,691 98.7 95,633 98.8

total Tax Collections

TABLE B-4

Total Collections to Date

Collections In Subsequent Percentage of

Years Amount Levy

752 64,228 100.0% 706 66,724 100.0% 667 67,588 100.0% 559 74,158 100.0% 520 78,863 99.9% 647 82,174 99.1% 681 81,707 99.0% 805 92,978 98.9% 726 95,417 99.5% 936 96,569 99.8%

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

CCollected Within the Fiscal Year of Levy cCollectlons In Subsequent Years

-96-


RATIOS OF OUTSTANDING DEBT BY TYPE Last Ten Years, (In Thousands)


Fiscal Year Ended June

30,

2002 $ 2003 2004 2005 2006 2007 2008 2009 2010 2011

General Obligation

Bonds

28,745 30,820 27,780 45,165 39,670 51,790 56,655 50,250 63,420 67,830

Capital Leases

Resources Restricted For Debt

Payments1

(1,175) (1,175) (1,935)

(267) (267)

Outstanding Debt by Type


Water Pollution

Control Notes

8,962 19,139 18,947 17,439 16,629

80,000 ·1---------------------------

70,000 ·1--------------------

60,000 ·1-----------------

50,000 -1-----------------

40,000 ·1-----------1

30,000 ~-==---~m------1

20,000 1-·H:!''?!I---1!':\ir;;:'J---I:':'i':H---

10,000 -1-L:'!:'\d--

0 -1-="-~--...-

2002 2003 2004 2005

CSeries1

2006 Fiscal Year

2007 2008

SSeries2

2009 2010

Total Primary

Governmenf

2011

28,745 30,820 27,780 45,165 39,670 59,577 74,619 67,262 80,592 84,192

1 Includes Intergovernmental Grants Receivable from the State Department of Education and restrictions from enabling legislation

2 All of the City of Shelton's debt is considered general obligation with no other revenues specifically pledged

-97-

TABLE C-1

Aggregate Percentage of Personal

Personal Income Income Population3 Per Capita3

2.51% $ 1,145,840 38,451 0.75 2.67% 1,153,171 38,697 0.80 2.39% 1,161,515 38,977 0.71 3.88% 1,164,226 39,068 1.16 3.41% 1,163,630 39,048 1.02 5.02% 1,187,172 39,838 1.50 6.26% 1,192,328 40,011 1.86 5.64% 1,192,328 40,011 1.68 6.84% 1,178,858 39,559 2.04 7.14% 1,178,858 39,559 2.13

% Debt Per Capita

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Fiscal Year

The source of this information is U.S. Bureau of Economic Analysis

-98-


RATIOS OF GENERAL BONDED DEBT OUTSTANDING Last Ten Fiscal Years

Net Fiscal Bonded Assessed

Year Ended Debt Value June 30, (Thousands) (Thousands)

2002 28,745 3,211,716 2003 34,685 3,264,505 2004 45,204 3,288,413 2005 45,780 3,346,225 2006 39,670 3,433,959 2007 60,779 4,976,506 2008 56,655 5,092,913 2009 50,250 5,145,497 2010 63,420 5,198,457 2011 67,830 5,873,373

Ratio of Net Bonded

Debt to Net Assessed

Value

0.90 1.06 1.37 1.37 1.16 1.22 1.11 0.98 1.22 1.15

Bonds Debt to Net Assessed Value

$1.60

$1.40

$1.20

$1.00

$0.80

$0.60

$0.40

$0.20

$-

2002 2003 2004 2005 2006 2007

-99-

TABLE C-2

Debt Per Population Capita

39,000 737 39,000 889 39,121 1,155 39,254 1,166 39,477 1,005 39,838 1,526 40,011 1,416 40,011 1,256 40,011 1,585 39,559 1,715

2008 2009 2010 2011


LEGAL DEBT MARGIN INFORMATION Last Ten Years, (In Thousands)

Legal Debt Margin Calculation for Fiscal Year 2011:

Fiscal Year Ended June

30,

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Property Taxes Collected Less: Elderly Tax

Total Base

Debt limitation Multiple

Legal Debt Limitation

Total Net Debt

Debt Applicable to Limitation Limit

452,969 64,710 469,364 67,052 475,870 67,981 521,954 74,565 554,827 79,261 579,849 82,836 578,341 109,372 657,451 105,924 671,143 88,565 676,445 73,396

97,181,373

$ 97,181,373

X 7

$ 680,269,611

Legal Debt Margin

388,259 402,312 407,889 447,389 475,566 497,013 468,969 551,527 582,578 603,049

-100-

TABLE C-3

Total Net Debt

Applicable to the limit as a percentage

of Debt Limit

14.3 14.3 14.3 14.3 14.3 14.3 18.9 16.1 13.2 10.9


DEMOGRAPHIC AND ECONOMIC STATISTICS Last Ten Calendar Years

Year Population

2002 38,451 2003 38,697 2004 38,977 2005 39,068 2006 39,048 2007 39,838 2008 40,011 2009 40,011 2010 40,011 2011 39,559

TABLE D-1

Per Capita Personal Unemployment Income Rate

29,893 2.9 29,893 3.8 29,893 5.2 29,893 6.8 29,893 5.9 29,893 5.9 29,893 5.4 29,893 * 5.1 29,893 7.0 29,893 8.1

Sources: Department of Labor, State of Connecticut, U.S. Census Bureau and the State Department of Economic and Community Development

* Information from the State Department of Economic and Community Development.

-101-


PRINCIPAL EMPLOYERS Current Year and Ten Years Ago

Employer

Prudential Annuities City of Shelton Pitney Bowes HealthNet/Call Center United Illuminating Company Perkin-Elmer Instruments Cablevision United Methodist/Bishop Wicke Hubbell, Inc. Dianon Systems

Employer

Pintey Bowes America Skandia City of Shelton Health Net Perkin-Elmer First Union National Bank Sikorsky Aircraft Ascom Hasler/Better Packages Wai-Mart lnline Plastics

Current Year

Employees

957 850 762 650 540 520 500 325 295 250

Ten Years Ago

Employees

1,570 1,389

904 700 600 400 392 314 310 300

Source of information: Connecticut Department of Labor

-102-

TABLE D-2

Percentage ofTotal City

Rank Employment

1 4.7% 2 4.i% 3 2.7% 4 2.3% 5 1.9% 6 1.9% 7 1.8% 8 1.2% 9 1.0% 10 0.9%

Percentage Rank ofTotal City

1 7~7%

2 6.8% 3 4.4% 4 3.4% 5 2.9% 6 2.0% 7 1.9% 8 1.5% 9 1.5%

10 1.5%


Full-Time Equivalent' City Government Employees By Function/Program Last Ten Fiscal Years*

Fiscal General Year Government Education

2002 302 602 2003 296 611 2004 301 617 2005 301 623 2006 315 615 2007 315 624 2008 313 634 2009 319 625 2010 311 549 2011 301 549

2011 Bargaining Organizations

3%

source: City of Shelton, Personnel Department and Superintendent's Office

-103-

Total

904 907 918 924 930 939 947 944 860 850

Administrative

Sewage Treatment 1%

Highway and Bridges 5%

TABLE E-1


Capital Asset Statistics By Function/Program Last Ten Fiscal Years*

Function I Operating Indicator

General Public Safety Public Works Health and Human Services Education Library

-· Park and Recreation Golf Course

2011

31,247,756 3,205,732

58,683,509 2,190,649

93,577,618 1,223,919

20,143,012 25,737

210,297,932

2010

30,681,559 3,659,459

59,574,924 2,102,474

87,434,930 539,759

19,830,512 25,737

203,849,354

Capital Assets by function, Current Year- 2011

Health and Human Services

* City began to collect information in fiscal year ended 2008

Public Safety

-104-

TABLE E-2

2009 2008*

15,083,429 15,193,896 7,573,438 7,456,735

42,938,174 44,314,779 2,132,417 2,102,474

98,953,623 97,767,155 618,868 697,977

21,961,680 19,830,512 25,737 42,896

189,287,366 187,406,424

CITY OF SHE.L TON

FEDERAL AND STATE SINGLE AUDIT REPORTS

JUNE 30, 2011

Financial Statements

CITY OF SHELTON

FEDERAL AND STATE SINGLE AUDIT REPORTS

TABLE OF CONTENTS

Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards

Federal Single Audit

Report on Compliance With Requirements That Could Have a Direct and Material Effect on Each Major Program and on Internal Control Over Compliance In Accordance With OMB Circular A-133

Schedule of Expenditures of Federal Awards

Notes To Schedule of Expenditures of Federal Awards

Schedule of Findings and Questioned Costs

Summary Schedule of Prior Years Audit Findings

State of Connecticut Single Audit

Report on Compliance With Requirements That Could Have a Direct and Material Effect on Each Major Program, and on Internal Control Over Compliance In Accordance With The State Single Audit Act

Schedule of Expenditures of State Financial Assistance

Notes To Schedule of Expenditures of State Financial Assistance Programs

Schedule of Findings and Questioned Costs

Page Number

1-2

3-4

5-6

7

8-10

11

12-14

15-16

17-18

19-20

LEVITSKY & BERNEY LB A PROFESSIONAL CORPORATION OF CERTIFIED PUBLIC ACCOUNTANTS 100 BRADLEY ROAD • WOODBRIDGE, CONNECTICUT 06525·2394

'------ 203 389·5371 • FAX 203 389·4430

REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN

AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS


To The Board of Aldermen City of Shelton Shelton, Connecticut, 06484

We have audited the financial statements of governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City of Shelton, Connecticut as of and for the year ended June 30, 2011, which collectively comprise the City of Shelton, Connecticut's basic financial statements and have issued our qualified opinion report thereon dated December 20, 2011. 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.

Internal Control Over Financial Reporting

Management of the City of Shelton is responsible for establishing and maintaining effective internal control over financial reporting. In planning and performing our audit, we considered the City of Shelton's internal control over financial reporting as a basis for designing our auditing procedures for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the City of Shelton's internal control over financial reporting. Accordingly, we do not express an opinion on the effectiveness of the City of Shelton's internal control over financial reporting.

Our consideration of internal control over financial reporting was for the limited purpose described in the preceding paragraph and was not designed to identify all deficiencies in internal control over financial reporting that might be significant deficiencies or material weaknesses and therefore, there can be no assurance that all deficiencies, significant deficiencies, or material weaknesses have been identified. However, we described in the accompanying schedule of findings and questioned costs, we identified a certain deficiency in internal control over financial reporting that we consider to be a material weakness.

A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, detect and correct misstatements on a timely basis. A material weakness is a deficiency, or combination of deficiencies, in internal control such that there is a reasonable possibility that a material misstatement of the entity's financial statements will not be prevented, or detected and corrected on a timely basis. We consider the deficiency described in the accompanying schedule of findings and questioned costs to be a material weakness. See finding 2011-1.

1

Compliance and Other Matters

As part of obtaining reasonable assurance about whether the City of Shelton's financial statements are free of material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grants agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards.

The City's response to the finding identified in our audit is described in the accompanying schedule of findings and questioned costs. We did not audit the Center's response and, accordingly, we express no opinion.

This report is intended solely for the information and use of management, the Board of Aldermen, others within the City of Shelton, Federal Awarding agencies, the Office of Policy and Management, State Awarding agencies, and pass-through entities and is not intended to be and should not be used by anyone other than these specified parties.

December 20, 2011

2

LEVITSKY & BERNEY A PROFESSIONAL CORPORATION OF CERTIFIED PUBLIC ACCOUNTANTS 100 BRADLEY ROAD • WOODBRIDGE, CONNECTICUT 06525·2394

----- 203389·5371 • FAX203 389·4430 .

REPORT ON COMPLIANCE WITH REQUIREMENTS THAT COULD HAVE A DIRECT AND MATERIAL EFFECT ON EACH MAJOR PROGRAM AND ON INTERNAL

CONTROL OVER COMPLIANCE IN ACCORDANCE WITH OMB CIRCULAR A-133

To the Board of Aldermen City of Shelton Shelton, Connecticut, 06484

Compliance


We have audited City of Shelton Connecticut's compliance with the types of compliance requirements described in the OMB Circular A-133 Compliance Supplement that could have a direct and material effect on each of City of Shelton's major federal programs for the year ended June 30, 2011. The City of Shelton's major federal programs are identified in the summary of auditor's results section of the accompanying schedule of findings and questioned costs. Compliance with the requirements of laws, regulations, contracts, and grants applicable to each of its major federal programs is the responsibility of the City of Shelton's management. Our responsibility is to express an opinion on the City of Shelton's compliance based on our audit.

We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and OMB Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations. Those standards and OMB Circular A-133 require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types of compliance requirements referred to above that could have a direct and material effect on a major federal program occurred. An audit includes examining, on a test basis, evidence about the City of Shelton's compliance with those requirements and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Our audit does not provide a legal determination of the City of Shelton's compliance with those requirements.

In our opinion, the City of Shelton complied, in all material respects, with the compliance requirements referred to above that could have a direct and material effect on each of its major federal programs for the year ended June 30, 2011.

3

Internal Control Over Compliance

Management of the City of Shelton is responsible for establishing and maintaining effective internal control over compliance with requirements of laws, regulations, contracts, and grants applicable to federal programs. In planning and performing our audit, we considered the City of Shelton's internal control over compliance with the requirements that could have a direct and material effect on a major federal program to determine the auditing procedures for the purpose of expressing our opinion on compliance and to test and report on internal control over compliance in accordance with OMB Circular A-133, but not for the purpose of expressing an opinion on the effectiveness of the internal control over compliance. Accordingly, we do not express an opinion on the effectiveness of the City of Shelton's internal control over compliance.

A deficiency in internal control over compliance exists when the design or operation of a control over compliance does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, noncompliance with a type of compliance requirement of a federal program on a timely basis. A material weakness in internal control over compliance is a deficiency, or combination of deficiencies, in internal control over compliance, such that there is a reasonable possibility that material noncompliance with a type of compliance requirement of a federal program will not be prevented, or detected and corrected, on a timely basis.

Our consideration of the internal control over compliance was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control over compliance that might be deficiencies, significant deficiencies, or material weaknesses. We did not identify any deficiencies in internal control over compliance that we consider to be material weaknesses, as defined above.

Schedule of Expenditures of Federal Awards

We have audited the financial statements of the governmental activities, the businesstype activities, each major fund, and the aggregate remaining fund information of the City of Shelton as of and for the year ended June 30, 2011 I and have issued our qualified opinion report thereon dated December 20, 2011. Our audit was performed for the purpose of forming our opinions on the financial statements that collectively comprise the City of Shelton's basic financial statements. The accompanying schedule of expenditures of federal awards is presented for purposes of additional analysis as required by OMB Circular A-133 and is not a required part of the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, is fairly stated, in all material respects, in relation to the basic financial statements taken as a whole.

This report is intended solely for the information and use of management, the members of the Board of Aldermen, federal awarding agencies, and pas ~rough entities, and is not intended to be and should not be used by anyone o er t n lhese ~arties.

SK~ & ~NEY, P~ Certi ied Public Accountants

December 20, 2011

4


SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS FOR THE YEAR ENDED JUNE 30, 2011

Federal Pass-Through Federal Grantor/Pass-Through CFDA Grantor's Number/

Grantor/Program Title or Cluster Title Number Project Number

U.S. Department of Agriculture: Passed Through the State Department of Education:

Child Nutrition Cluster: School Breakfast Program 10.553 12060-SDE64370-20508 $ National School Lunch Program 10.555 12060-SDE64370-20560 Special Milk Program for Children 10.556 12060-SDE64370-20500 U.S.D.A. Commodities 10.550

Total U.S. Department of Agriculture $

U.S. Department of Education: Passed Through the State Department of Education:

Adult Education 84.002 12060-SDE64370-20784 $ Adult Education 84.002 12060-SDE64370-20784 Title I Grants to Local Educational Agencies 84.010 12060-SDE64370-20679 Title I Grants to Local Educational Agencies 84.010 12060-SDE64370-20679 Special Education Cluster:

Special Education - Grant to States 84.027 12060-SDE64370-20977 Special Education - Grant to ·states 84.027 12060-SDE64370-20977 Special Education - Preschool Grants 84.173 12060-SDE64370-20983

Safe and Drug-Free Schools 84.184 12060-SDE64370-20873 Even Start - State Educational Agencies 84.213 12060-SDE64370-20682 Even Start - State Educational Agencies 84.318 12060-SDE64370-20682 English Language Acquisition Grants 84.365 12060-SDE64370-20868 English Language Acquisition Grants 84.365 12060-SDE64370-20868 Improving Teacher Quality State Grants 84.367 12060-SDE64370-20858 Improving Teacher Quality State Grants 84.367 12060-SDE64370-20858

Total U.S. Department of Education $

U.S. Department of Transportation: . Passed Through the State Department of Transportation:

Highway Safety Cluster: Highway Planning & Construction 20.205 12062-DOT57122-22108 $ Occupant Protection 20.602 12062-DOT57543-22086

Total U.S. Departmeryt of Transportation $

See Notes to Schedule of Expenditures of Federal Awards

5

Expenditures

49,293 391,387

29,800 . 132,460

602,940

29,400 100,800

6,439 357,402

19,276 245,773

41,753 483

1,678 111,057

5,350 7,938 9,071

130,003 1,066,423

118,991 6,609

125,600

(Continued)


SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS FOR THE YEAR ENDED JUNE 30, 2011

Federal Grantor/Pass-Through Grantor/Program Title or Cluster Title

U.S. Federal Emergency Management Agency: Passed Through the State Department of Emergency

and Homeland Security: FEMA Public Assistance

Federal CFDA

.Number

Emergency Management Performance Grant 83.552 Emergency Management Performance - Supplement

Total U.S. Federal Emergency Management Agency:

American Recovery & Reinvestment Act Programs

U.S. Department of Education: Passed Through the State Department of Education:

IDEA, Part B State Grants Special Education - Preschool Grants Stabilization Grant - Education

Total ARRA Department of Education Grants

U.S. Department of Transportation Urbanized Area Formula Grant

U.S. Department of Justice: Passed Through the State Department of Public Safety:

Drug Task Force

Total Expenditures of Federal Awards

See Notes to Schedufe·of Expenditures of Federal Awards

84.391 84.392 84.394

20.507

16.808

6

Pass-Through Grantor's Number/

Project Number Expenditures

12060-EH99660-21881 $ 24,818 12060-EH99660-21891 5,962 12060-EH99660-22233 1,991

$ 32,771 ------'---

12060-SDE64370-29011 $ 595,795

12060-SDE64370-29012 35,481 12060-SDE64370-29054 709,880

$ 1,341,156

12062-DOT57161-29015 $ 292,489

12060-DPS32523-29078 $ ___ _.:..18::.!'.::...00::..:0;...._

$ =====3,=4=79;:,;,,3=7=9=


NOTES TO THE SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS FOR THE YEAR ENDED JUNE 30, 2011

Note 1 - Basis of Presentation

The accompanying Schedule of Expenditures of Federal Awards (the "Schedule") includes the federal grant activity of the City of Shelton under programs of the federal government for the year ended June 30, 2011. The information in this schedule is presented in accordance with the requirements of the Office of Management and Budget (OMB) Circular A-133, Audits of States, Local Governments and Non-Profit Organizations. Because the schedule presents only a selected portion of operations of the City of Shelton, it is not intended to and does not present the financial position, changes in net assets or cash flows of the City of Shelton.

Note 2 - Summary of Significant Accounting Policies

Expenditures reported on the Schedule are reported on the accrual basis of accounting. Such expenditures are recognized following the cost principles contained in OMB Circular A-87, Cost Principles for State, Local, and Indian Tribal Governments wherein certain types of expenditures are not allowable or are limited as to reimbursement. Negative amounts shown on the Schedule represent adjustments or credits made in the normal course of business to amounts· reported as expenditures in prior years. Pass-through entity identifying numbers are presented where available,

Note 3 - Non-monetary Assistance

The City's National School Lunch Program receives noncash federal awards in the form of food commodities from the Department of Agriculture.

Non-monetary assistance is reported in the schedule at the fair market value of the items received and disbursed. The market value of the items issued is included in the Schedule of Expenditures of Federal Awards as follows:

Food Commodities $ 132.460

7


SCHEDULE OF FINDINGS AND QUESTIONED COSTS FOR THE YEAR ENDED JUNE 30, 2011

I SUMMARY OF AUDITORS RESULTS


Type of auditors report issued: Qualified

Internal Control over Financial Reporting:

Material weakness(es) identified?

Significant deficiency (ies) identified?

Noncompliance material to financial statements noted?

Federal Awards

Internal control over major programs Material weakness(es) identified?

Significant deficiency (ies) identified?

--'x'"'--- yes __ no

___ yes x none reported

___ yes x no

___ yes x no


Type of auditors report issued on compliance for major programs: Unqualified

Any audit findings disclosed that are required to be reported in accordance with §51 O(a) of OMS Circular A-133?

Identification of major programs:

___ yes

Name of Federal Program or Cluster Special Education Cluster ARRA- IDEA, Part B ARRA - Preschool Grants

x no

CFDA Number(s) 84.027 & 84.173

84.391 84.392 84.394 84.397

10.550-10.556

ARRA - Stabilization - Education Grants ARRA - Stabilization - Government Services Child Nutrition Cluster

Dollar threshold used to distinguish between type A and type B programs:

Auditee qualified as low-risk auditee? x yes __ no

8



SECTION II- FINANCIAL STATEMENT FINDINGS

2011-1 Actuarial Report for Other Post-Employment Benefits Other than Pension

Condition

The City of Shelton did not have an independent actuarial report prepared for the postemployment benefits other than pension during the past two fiscal years.

Criteria

Generally accepted accounting principles require an independent actuary report to be completed bi-annually for Municipalities that offer Post-employment benefits other than pension (OPEB).

Content

The City of Shelton last completed an actuary report for their OPEB during fiscal year ended June 30, 2009, which provided for an annual actuarial required contribution of $922,277, however the majority of these costs are covered by retiree reimbursements. The City manages these costs directly from the general fund rather than irrevocable trust, since less than 10 employee contracts provide for the City to fund for such retirement benefits. The remaining other postemployee benefits require the retiree to fully fund for benefit.

The net OPES obligation reported in the long-term liabilities of the government-wide financial statements lacks proper supporting documentation.

Cause

The budgetary restraints were compared to the cost of an independent actuary report. Management felt that, other than the six employees, benefits are fully funded through reimbursements of retirees and the additional information provided by such a report would not effect the management of the benefits.

Recommendation

The City should have an Independent Actuarial Report performed for the postemployment benefits other than the pension for the next fiscal year.

9



SECTION Ill- FEDERAL AWARDS FINDINGS AND QUESTIONED COST

No findings reported.

10


SUMMARY SCHEDULE OF PRIOR YEARS AUDIT FINDINGS JUNE 30, 2011

The City had no findings reported in the prior years' audit that are required to be reported in this schedule.

11

LEVITSKY & BERNEY A PROFESSIONAL CORPORATION OF CERTIFIED PUBLIC ACCOUNTANTS 100 BRADLEY ROAD • WOODBRIDGE, CONNECTICUT 06525-2394

....._____ 203 389-5371 • FAX 203 389-4430 .

REPORT ON COMPLIANCE WITH REQUIREMENTS THAT COULD HAVE A DIRECT AND MATERIAL EFFECT ON EACH MAJOR PROGRAM AND ON INTERNAL

CONTROL OVER COMPLIANCE IN ACCORDANCE WITH THE STATE SINGLE AUDIT ACT

Board of Aldermen City of Shelton Shelton, Connecticut

Compliance


We have audited the City of Shelton, Connecticut's compliance with the types of compliance requirements described in the Office of Policy and Management Compliance Supplement that could have a direct and material effect on each of the City of Shelton's major state programs for the year ended June 30, 2011. The major state programs are identified in the summary of auditors' results section of the accompanying schedule of findings and questioned costs. Compliance with the requirements of laws, regulations, contracts, and grants applicable to each of its major state programs is the responsibility of the City of Shelton, Connecticut's management. Our responsibility is to express an opinion on the City of Shelton, Connecticut's compliance based on our audit.

We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and the State Single Audit Act (C.G.S. Sections 4-230 to 4-236). Those standards and the State Single Audit Act require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types of compliance requirements referred to above that could have a direct and material effect on a major state program occurred. An audit includes examining, on a test basis, evidence about the City of Shelton, Connecticut's compliance with those requirements and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Our audit does not provide a legal determination of the City of Shelton, Connecticut's compliance with those requirements.

In our opinion, the City of Shelton, Connecticut complied, in all material respects, with the compliance requirements referred to above that could have a direct and material effect on each of its major state programs for the year ended June 30, 2011.

12

Internal Control Over Compliance

Management of the City of Shelton, Connecticut is responsible for establishing and maintaining effective internal control over compliance with requirements of laws, regulations, contracts, and grants applicable to state programs. In planning and performing our audit, we considered the City of Shelton, Connecticut's internal control over compliance with the requirements that could have a direct and material effect on a major state program to determine the auditing procedures for the purpose of expressing our opinion on compliance and to test and report on internal control over compliance in accordance with the State Single Audit Act, but not for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, we do not express an opinion on the effectiveness of the City of Shelton, Connecticut's internal control over compliance.

A deficiency in internal control over compliance exists when the design or operation of a control over compliance does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, noncompliance with a type of compliance requirement of a state program on a timely basis. A material weakness in internal control over compliance is a deficiency, or combination of deficiencies, in internal control over compliance, such that there is a reasonable possibility that material noncompliance with a type of compliance requirement of a state program will not be prevented, or detected and corrected, on a timely basis.

Our consideration of internal control over compliance was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control over compliance that might be deficiencies, significant deficiencies or material weaknesses. We did not identify any deficiencies in internal control over compliance that we consider to be material weaknesses, as defined above.

Schedule of Expenditures of State Financial Assistance

We have audited the financial statements of the governmental activities, the businesstype activities each major fund, and the aggregate remaining fund information of the City of Shelton, Connecticut as of and for the year ended June 30, 2011, and have issued our qualified opinion report thereon dated December 20, 2011. Our audit was performed for the purpose of forming opinions on the financial statements that collectively comprise the City of Shelton, Connecticut's basic financial statements. The accompanying schedule of expenditures of state financial assistance is presented for purposes of additional analysis as required by the State Single Audit Act and is not a required part of the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, is fairly stated in all material respects, in relation to the basic financial statements taken as a whole.

13

December 20, 2011

14


SCHEDULE OF EXPENDITURES OF STATE FINANCIAL ASSISTANCE FOR THE YEAR ENDED JUNE 30, 2011

State Grantor/Pass-Through Grantor/Program Title

Office of Policy and Management: Reimbursement of Property Taxes Disability Exemption Property Tax Relief for Elderly and Totally Disabled Homeowners Property Tax Relief for Veterans Property Tax Relief for Manufacturing Machinery & Commercial Vehicles Local Capital Improvement Program .

Total Office of Policy and Management

Office of State Comptroller: Payment in Lieu of Taxes (PILOT) on State Owned Property

Department of Education: Adult Education Health Services School Breakfast Youth Services Bureau Magnet Schools School Readiness

Total Department of Education

Connecticut State Library: Grants to Public Libraries Connecticard Payments Historical Document Preservation

Total Connecticut State Library

Department of Transportation: Town Road Aid Grant STO Town Road Aid Grant Transportation Fund

Total Department of Transportation

Department of Environmental Protection: Boat Grant

Total State Financial Assistance Before Exempt Programs

See Notes to Schedule of Expenditures of State Financial Assistance

15

State Grant Program Core-CT Number

11 OOO-OPM20600-17011 11 OOO-OPM20600-17018 11 OOO-OPM20600-17024 11000-0PM20600-17031 12050-0PM20600-40254

11 OOO-OSC1591 0-17004

11 OOO-SDE64000-17030 11 OOO-SDE64000-17034 11 OOO-SDE64370-16211 11 OOO-SDE64000-17052 11 OOO-SDE64370-17057 11 OOO-SDE64000-12113

11 OOO-CSL66051-17003 11 OOO-CSL66051-1701 0 12060-CSL66094-35150

12052-DOT57131-43459 12052-DOT57131-43455

12060-DEP44434-34907

·Expenditures.

$ 4,094 281,236

29,426 483,928 194,001

$ 992,685

$ 16,576

$ 773,324 32,616 21,042

7,550 33,800

107,000

$ 975,332

$ 2,319 3,725 6,000

$ 12,044

$ 184,038 66,923

$ 250,961

$ 20,244

$ 2,267,842

(continued)


SCHEDULE OF EXPENDITURES OF STATE FINANCIAL ASSISTANCE FOR THE YEAR ENDED JUNE 30, 2011

State Grantor/Pass-Through Grantor/Program Title

Exempt Programs

Office of State Comptroller: Mashantucket Pequot/Mohegan Fund

Department of Education: Public School Transportation Nonpublic School Transportation Educational Cost Sharing Excess Cost Student Based and Equity

School Construction Grants - Principal Total Exempt Programs

Total Expenditures of State Financial Assistance

See Notes to Schedule of Expenditures of State Financial Assistance

16

State Grant Program Core-CT Number

12009-0SC1591 0-17005

11 OOO-SDE64000-17027 11 OOO-SDE64000-17049 11 OOO-SDE64000-17041 11 OOO-SDE64000-17047 1301 O-SDE64370-40901

Expenditures

$ 79,621

160,466 32,775

4,277,422 745,810 902,373

$ 6,198,467

$ 8,466,309


NOTES TO THE SCHEDULE OF EXPENDITURES OF STATE FINANCIAL ASSISTANCE

FOR THE YEAR ENDED JUNE 30, 2011

Various departments and agencies of the State of Connecticut have provided financial assistance to the City of Shelton, Connecticut through grants and other authorizations in accordance with the General Statutes of the State of Connecticut. These financial assistance programs fund several programs including education, public safety and general government services.

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The accounting policies of the City of Shelton, Connecticut conform to generally accepted accounting principles as applicable to governments. The following is a summary of the more significant policies relating to the aforementioned grant programs.

Basis of Accounting

The financial statements contained in the City's annual audit report are prepared on the modified accrual basis. The following is a summary of such basis:

Revenues are recognized when earned and available. Certain grants are recognized based on grant award since they are considered entitlement grants; other grants, such as grants that are dependent upon expenditure factor for determining eligibility, recognize grant revenue to the extent of expenditures.

Expenditures are recorded when the related liability is incurred. Encumbrances are reflected as a reserve against fund balance and accordingly are not reflected as expenditures.

The Schedule of Expenditures of State Financial Assistance, contained in this report, is prepared based on regulations established by the State of Connecticut Office of Policy and Management. In accordance with these regulations (Section 4-236-22), certain grants are not dependent on expenditure activity, and accordingly, are considered to be expended in the fiscal year of receipt. These grant program receipts are reflected in the expenditures column of the Schedule of Expenditures of State Financial Assistance.

17


NOTES TO THE SCHEDULE OF EXPENDITURES STATE FINANCIAL ASSISTANCE

FOR THE YEAR ENDED JUNE 30, 2011

2. LOAN PROGRAMS

165-C 104-C

In accordance with Section 4-236-23(a)(4F) of the Regulations to the State Single Audit Act, the notes to the Schedule of Expenditures of State Financial Assistance shall include loans and loan activities. The following is a summary of the loan program activity for the year ended June 30, 2011:

Department of Environmental Protection: Clean Water Funds

Issue Interest Original Balance Balance Date Rate Amount Beginning Pa~ments Ending

August19, 008 2.00% $ 2,590,293 2,289,490 111,006 2,178,484 May 30,2008 2.00% 16,548,262 15,149,226 698,631 14,450,595

$ 19,138,555 17,438,716 809,637 16,629,079

18


SCHEDULE OF FINDINGS AND QUESTIONED COSTS FOR THE YEAR E:NDED JUNE 30, 2011

I. SUMMARY OF AUDIT RESULTS


Type of auditor's report issued: Qualified

Internal control over financial reporting: •Material weakness (es) identified?

•Significant deficiency (ies) identified?

Noncompliance material to financial statements noted?

State Financial Assistance

Internal control over major programs: •Material weakness (es) identified?

•Significant deficiency (ies) identified?

-~x!...- yes ___ no


__ yes x no

__ yes x no

__ yes _...:..x,__ none reported

Type of auditor's report issued on compliance for major programs: Unqualified

Any audit findings disclosed that are required to be reported in accordance with Section 4-236-24 of the Regulations to the State Single Audit Act? __ yes

19

x no


SCHEDULE OF FINDINGS AND QUESTIONED COSTS FOR THE FISCAL YEAR ENDED JUNE 30, 2011

The following schedule reflects the major programs included in the audit:

State Grantor and Program State Core- CT Number Expenditures Office of Policy and Management:

Property Tax Relief for Manufacturing and Equipment

Property Tax Relief for the Elderly and Totally Disabled Homeowners

Department of Education: Adult Education

11000-0PM20600-17031 $ 483,928

11 OOO-OPM20600-17018 281 ,236

11000-SDE64000-17030 773,324

Dollar threshold used to distinguish type A and type B Programs $ 200.000

II. FINANCIAL STATEMENTS FINDINGS

• We issued reports, dated December 20, 2011 on internal control over financial reporting and on compliance and other matters based on an audit of financial statements performed in accordance with Government Auditing Standards.

• Our report on compliance indicated no reportable instances of noncompliance.

• Our report on internal control over financial reporting indicated one significant deficiency, which was considered a material weakness.

Ill. STATE FINANCIAL ASSISTANCE FINDINGS AND QUESTIONED COSTS

No findings or questioned costs are reported relating to State Financial Assistance Programs.

20

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