1. Town of Winthrop Town of Winthrop 1 Financial Overview Presented by: Greg Chabot RUNYON KERSTEEN OUELLETTE Recently, the Town of Winthrop completed the financial audit process. The Town received an unqualified opinion for fiscal year 2007. Our report on internal controls discloses three significant deficiencies, none of which was deemed to be material weaknesses. The remainder of this publication is dedicated to providing you with the financial results for fiscal year 2007 as well as trend information for certain areas. We hope you find this information useful and understandable. Finally, we wish to express our appreciation to Jan and Elaine and all the members of the Town’s finance staff who were so helpful to us during the audit process. FINANCIAL STATEMENT PRESENTATION June 30. 2007 INSIDE. 1. Assets 2. Liabilities And Fund Equity 3. Revenues And Expenditures Tables 5. Revenues And Expenditures - School 6. Property Tax Collections 7. Fund Balance Analysis 8. Revenues And Expenditures Charts 9. Other Funds and Conclusion SUMMARY OF SIGNIFICANT CHANGES GENERAL FUND Cash and investments increased overall by approximately $511k. For the purposes of this presentation, cash and investments are presented net of interfund loans, thereby representing General Fund cash only. The increase in cash was the result of an excess of revenues over expenditures of $571,117 offset by a decrease in payables and accruals and deferred tax revenue which represents a non cash revenue source. The decrease in receivables was primarily school department. Outstanding taxes and liens decreased by $23,040 as the collection rate remained steady increasing slightly from 95.09% to 95.54% on a commitment that increased by $179,846. Key Performance Indicators GENERAL FUND ASSETS

2. Town of Winthrop Town of Winthrop 2 GENERAL FUND LIABILITIES SUMMARY OF SIGNIFICANT CHANGES  The most significant liability, accrued wages represents payroll earned prior to June 30th but not yet paid. The majority ($659,239) consists of teachers summer pay.  Deferred revenue represents taxes still unpaid 60 days after the end of the year. These amounts are not recognized as revenues in the current year. SUMMARY OF SIGNIFICANT CHANGES Detail for designated balances is on page 26 of the financials. Town undesignated fund balance increased by $85,004 as a result of positive revenue and expenditure variances offset by the use of fund balance for the revaluation and for separation pay. School fund balances increased by $395,476 on a GAAP basis. Favorable expenditure variances of $401,784 were partially offset by unfavorable revenue variances of $6,308. Without the summer teacher salary accrual of $659,239, fund balance would be $563,358 including a reserve for teacher summer salaries of $142,283 and designated balances totaling $80,516.

3. Town of Winthrop Town of Winthrop 3 SUMMARY OF SIGNIFICANT CHANGES Tax revenues were more than anticipated as a result of a decrease in deferred tax revenues of $59,585.  Excise taxes exceeded budget by 3.49% and prior year excise by $3,982 (.4%).  Intergovernmental revenues was less than budget in State education subsidy ($29,646) and Medicaid ($20,337) but over budget in State revenue sharing ($32,110) and other categories.  Outside sources was under budget primarily as a result of dispatch revenues being less than anticipated.  Miscellaneous revenues exceeded budget primarily as a result of various transfer station revenues (including PERC distribution) exceeding budget as well as school department tuition exceeding budget. GENERAL FUND REVENUES

4. Town of Winthrop Town of Winthrop 4 SUMMARY OF SIGNIFICANT CHANGES  Health and welfare exceeded budget due primarily to solid waste disposal tipping fees, fuel and maintenance expenditures partially offset by general assistance payments.  The School Department was under budget in expenditures but also slightly under budget in revenues by $6,308. See A-3 for a more detailed breakdown of Education expenditures.  Transfers out were over budget due the establishment of the Winthrop Unites fund. GENERAL FUND EXPENDITURES

5. Town of Winthrop Town of Winthrop 5 SCHOOL DEPARTMENT REVENUES SCHOOL DEPARTMENT EXPENDITURES

6. Town of Winthrop Town of Winthrop 6 PROPERTY TAX COLLECTION RATES

7. Town of Winthrop Town of Winthrop 7 FUND BALANCE ANALYSIS FY 1998 - 2007 OBSERVATION  Winthrop’s undesignated fund balance increased by $399,964 as a result of overall positive revenue and expenditure variances. Undesignated fund balance increased by $85,004 for the Town and $314,960 for the school. Undesignated is currently at 11.17% of budget up from 8.97% of budget in 2006, after including teacher summer salaries liability of $659,239. Credit rating agencies typically look for a minimum ratio of 5%. RKO typically recommends one month of expenditures which equals 8.33%. The Town’s fund balance alone is 12.3% of budget offset by the school deficit of $176,397 that results from teacher summer salaries.

8. Town of Winthrop Town of Winthrop 8 UNDESIGNATED FUND BALANCE AS A % OF BUDGET

9. Town of Winthrop Town of Winthrop 9 UNDESIGNATED FUND BALANCE - TOWN AND SCHOOL

10. Town of Winthrop Town of Winthrop 10 2007 REVENUES AND EXPENDITURES – GENERAL FUND

11. Town of Winthrop Town of Winthrop 11 FINAL WORDS This presentation is intended as a tool to assist the Town Council, Board of Education 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 FINAL WORDS This presentation is intended as a tool to assist the Town Council, Board of Education 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