1. TOWN OF CAPE ELIZABETH FINANCIAL OVERVIEW Presented by: Casey Leonard and Jennifer Conners RUNYON KERSTEEN OUELLETTE Recently, the Town of Cape Elizabeth completed the financial audit process. The School Department is part of the Town and has been included in the Town’s financial statements. We are pleased to report that the Town received an unmodified opinion, which means the financial statements are fairly stated in all material respects. Further, the Town reported no significant deficiencies or material weaknesses related to its internal controls. However, the Town did report a finding for its Local Entitlement program. The remainder of this publication is dedicated to providing you with the financial results for fiscal year 2015. We hope you find this information useful and understandable. Finally, we wish to express our appreciation to all those who were so helpful to us during the audit process. It truly is a pleasure working with your staff. INSIDE 2.General Fund – Assets 3.General Fund – Liabilities and Deferred Inflows of Resources 4.General Fund – Equity 5.General Fund – Revenues 6.General Fund – Expenditures 7.General Fund – Revenues – School Department Only 8.General Fund – Expenditures – School Department Only 9.Property Tax Collection Rates 10.Fund Balance Analysis, FY 2006 – FY 2015 11.Unassigned Fund Balance as a Percentage of Budget About this presentation This presentation is intended as a tool to assist the Town Council, School Board and management in understanding its financial operating results. The information contained in this publication should be read in conjunction with the audited financial statements and related disclosures and should not be used for any other purposes without the expressed consent of RUNYON KERSTEEN OUELLETTE. Please contact us at 207-773-2986 or 1-800-486-1784 20 Long Creek Drive, South Portland, ME 04106

2. TOWN OF CAPE ELIZABETH GENERAL FUND – ASSETS 2 SUMMARY OF SIGNIFICANT CHANGES The 2015 cash balance (which is net of interfund loans payable) increased by approximately $578K. This was due to revenues exceeding expenditures, the collection of prior year receivables, and the timing of payments on current year liabilities. Accounts receivable increased by approximately $109k due to the timing of payments received at year end. Outstanding taxes and liens had a slight decrease due to the timing of collections at year end.

3. TOWN OF CAPE ELIZABETH GENERAL FUND – LIABILITIES AND DEFERRED INFLOWS OF RESOURCES 3 SUMMARY OF SIGNIFICANT CHANGES Changes in accounts payable and accrued payroll are the result of the timing of payments at year end. Accrued payroll represent wages earned prior to June 30, but paid in July and August, the largest portion of which is composed of summer salaries and benefits for teachers ($1,905,402). Unavailable revenue – property taxes represents taxes still unpaid 60 days after the end of the year. These amounts are not recognized as revenues in the current year per Generally Accepted Accounting Principles.

4. TOWN OF CAPE ELIZABETH GENERAL FUND – EQUITY 4 SUMMARY OF SIGNIFICANT CHANGES Nonspendable fund balance for the Town represented interfund advances to the Library Project Fund in the prior year. These amounts were paid back to the General Fund in the current year. Restricted fund balance for the Town includes unspent grant and donation balances. Restricted fund balance for Education increased by $266K from 2014 to 2015, as the School Department spent less than anticipated. Assigned fund balance changes annually based on the status of projects and appropriations. Full detail is available in the footnotes of the financial statements. Town unassigned fund balance increased by $334K primarily due to the $241K interfund advance to the Library Project Fund that was repaid in the current year.

5. TOWN OF CAPE ELIZABETH GENERAL FUND - REVENUES BudgetActualVariance Taxes$ 29,877,747$29,994,072$116,325 Licenses and permits158,000201,49143,491 Intergovernmental3,319,6543,460,981141,327 Investment income45,00023,408(21,592) Other revenues359,500444,82385,323 Total revenues33,759,90134,124,775364,874 Carryforward balances and subsequent authorizations1,417,053-(1,417,053) Transfer from other funds75,000315,189240,189 Utilization of prior year surplus (Town and School)752,000-(752,000) Total revenues and other sources$ 36,003,954$ 34,439,964$ (1,563,990) 5 SUMMARY OF SIGNIFICANT VARIANCES Taxes exceeded budget due to higher-than-expected excise tax collections. Licenses and permits revenues exceeded budget due to higher-than-expected building, electrical and pluming fees. Intergovernmental revenues exceeded budget primarily due to the receipt of unbudgeted grants. Investment income was lower-than-anticipated as interest rates remain low. Other revenues exceeded budget due to the receipt of unbudgeted revenues.

6. TOWN OF CAPE ELIZABETH GENERAL FUND - EXPENDITURES BudgetActualVariance General government$1,684,757$1,099,424$585,333 Public works1,757,2101,678,11779,093 Facilities382,045349,12032,925 Public safety1,954,7921,865,19389,599 Cultural and parks1,054,788985,89768,891 Human services60,00059,086914 Education23,176,17422,901,418274,756 Intergovernmental assessments1,130,5901,130,272318 Insurance and benefits1,199,7171,208,523(8,806) Unclassified43,822220,044(176,222) Debt service (Town)906,144900,0976,047 Capital improvements2,075,0011,343,822731,179 Total expenditures35,425,04032,741,0131,684,027 Transfers to other funds578,914 - Total expenditures and other sources$ 36,003,954$ 33,319,927$ 1,684,027 6 SUMMARY OF SIGNIFICANT VARIANCES General government expenditures were under budget due to overlay that was budgeted but not spent. Public works expenditures were under budget due to a budget amendment that increased the budget by $141K; offset by overspending for vehicle maintenance, diesel and gasoline of $76K. Public safety expenditures were under budget due to lower-than-anticipated part- time payroll costs, gasoline and training in the Police Department and part-time payroll costs in the Fire Department. Cultural and parks expenditures were under budget due to lower-than-expected costs related to tree planting, stonewall repairs and part-time payroll for parks and Fort Williams. Education expenditures - see slide 8. Unclassified expenditures were over budget due to unbudgeted grant expenditures. These expenditures were offset by related grant revenues. Capital improvement expenditures were under budget due to the timing of projects, which will carry over to the next fiscal year.

7. TOWN OF CAPE ELIZABETH GENERAL FUND – REVENUES – SCHOOL DEPARTMENT ONLY BudgetActualVariance State education subsidy$ 2,533,079$ 2,482,137(50,942) State agency clients7,0004,753(2,247) Activity Fees63,50066,9203,420 Miscellaneous2,00026,58524,585 Total revenues2,605,5792,580,395(25,184) Town appropriation20,234,595 - Transfer from Town unassigned fund balance-50,942 Budgeted use of surplus400,000-(400,000) Total revenues and other sources$ 23,240,174$ 22,865,932$ (374,242) 7 SUMMARY OF SIGNIFICANT VARIANCES State education subsidy was lower-than-anticipated due to budget changes at the State level. This was offset by transfers from the Town General Fund unassigned fund balance. Miscellaneous revenues were higher-than-anticipated due to the receipt of small, unbudgeted revenues.

8. TOWN OF CAPE ELIZABETH GENERAL FUND - EXPENDITURES – SCHOOL DEPARTMENT ONLY BudgetActualVariance Regular instruction10,871,15310,856,62014,533 Special education instruction3,036,7783,000,85035,928 Career and technical education40,626 - Other instruction788,169772,03016,139 Student and staff support2,183,1232,143,06040,063 System administration773,316772,774542 School administration1,138,1351,121,63116,504 Transportation746,268732,79213,476 Facilities maintenance2,430,3412,327,260103,081 Debt service1,168,2651,133,77534,490 Total expenditures23,176,17422,901,418274,756 Transfers to other funds64,000 - Total expenditures and transfers out23,240,17422,965,418274,756 8 SUMMARY OF SIGNIFICANT VARIANCES Special education expenditures were under budget due to lower-than-anticipated legal, psychological, and speech service costs. Student and staff support expenditures were under budget due to lower-than- anticipated technology and assessment costs. Facilities maintenance expenditures were under budget due to the timing of capital improvements, many of which were completed after year-end. Debt service expenditures were under budget due to the savings recognized from the refunding of bonds.

9. TOWN OF CAPE ELIZABETH PROPERTY TAX COLLECTION RATES 9 SUMMARY OF SIGNIFICANT CHANGES The tax collection rate increased to 99.43%, which is the highest collection rate in the past 10 years.

10. TOWN OF CAPE ELIZABETH FUND BALANCE ANALYSIS, FY 2006 – 2015 (IN THOUSANDS) 10

11. TOWN OF CAPE ELIZABETH UNASSIGNED FUND BALANCE AS A PERCENTAGE OF BUDGET 11 OBSERVATIONS Fund balance provides working capital for the Town and enhances its credit worthiness. The Town’s policy is to target unassigned fund balance of 8.33% of annual operating revenues. The current percentage calculated in accordance with the Town’s policy equals 9.49%. RKO generally recommends one to two months of expenditures which equals 8.33% to 16.66%.