HAMILTON COUNTY, TEXAS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2013

Transcription

1 HAMILTON COUNTY, TEXAS ANNUAL FINANCIAL REPORT FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2013 Prepared by HAMILTON COUNTY AUDITOR'S OFFICE L. MARLIESSA CLARK, CPA COUNTY AUDITOR

2 HAMIL TON COUNTY, TEXAS ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED SEPTEMBER 30, 2013 TABLE OF CONTENTS INTRODUCTORY SECTION Transmittal Letter... Organizational Chart List of Elected and Appointed Officials i ii iii FINANCIAL SECTION Independent Auditors' Report... 1 Management's Discussion and Analysis (Required Supplementary Information)... 3 Basic Financial Statements Government-wide Financial Statements: Statement of Net Position Statement of Activities Fund Financial Statements: Balance Sheet- Governmental Funds Reconciliation of the Governmental Funds Balance Sheet to the Statement of Net Position Statement of Revenues, Expenditures, and Changes in Fund Balances - Governmental Funds Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances of Governmental Funds to the Statement of Activities Statement of Fiduciary Net Position - Fiduciary Funds Notes to the Basic Financial Statements A-1 A-2 A-3 A-4 A-5 A-6 A-7 Required Supplementary lnformatio_f1 Budgetary Comparison Schedules: General Fund B-1 CQmbinlng Statements and Budgetary Comparison Schedules as Supplementary Information: Combining Balance Sheet- All Nonmajor Governmental Funds C-1 Combining Statement of Revenues, Expenditures and Changes in Fund Balances -All Non major Governmental Funds C-2 Special Revenue Funds: Combining Balance Sheet- Non major Special Revenue Funds C-3 Combining Statement of Revenues, Expenditures and Changes in Fund Balances - Non major Special Revenue Funds C-4

3 HAMIL TON COUNTY, TEXAS ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED SEPTEMBER 30, 2013 TABLE OF CONTENTS Eage Exhibit Budgetary Comparison Schedules: Road and Bridge Pet. #1 Fund C-5 Road and Bridge Pet. #2 Fund C-6 Road and Bridge Pet. #3 Fund C-7 Road and Bridge Pet. #4 Fund C-8 Vital Statistics Fund C-9 County Clerk Records Management Fund C-10 District Clerk Vital Statistics Fund C-11 County Clerk Records Archive Fund C-12 Justice Court Technology #3 Fund C-13 Court Reporter Fund C-14 Justice Court Technology Fund C-15 County Clerk Probate Fund C-16 Election Contracting Fund C-17 Transaction Fee JP 1/SO Fund C-18 County Court Technology Fund C-19 District Court Technology Fund C-20 Sheriff's Office LEOSE Fund C-21 LEOSE Special Fund C-22 Law Library Fund C-23 Records Management Preservation Fund C-24 Courthouse Security Fund C-25 District Clerk Records Preservation Fund C-26 County Judge Judiciary Fund C-27 Justice Court Building Security Fund C-28 Supplemental Guardianship Fund C-29 Sheriff's Trust Fund C-30 VIT Escrow Fund C-31 County Attorney Check Collection Fund C-32 Debt Service Funds: Budgetary Comparison Schedule: Debt Service Fund C-34 Fiduciary Funds: Agency Funds: Combining Statement of Fiduciary Assets and Liabilities C-35

4 INTRODUCTORY SECTION

5 Hamilton County Courthouse 102 N. Rice, Suite 117 Hamilton, TX July 15, 2014 L. Marliessa Clark, CPA Hamilton Coun~v Auditor Office: (254) Fax: (254) org Honorable Judge Phillip Robertson Judge, 220th Judicial District Honorable Members of Commissioners Court Hamilton County, Texas Gentlemen: In compliance with the statutory duties of the County Auditor as prescribed by Vernon's Texas Codes Annotated - Local Government Code, Title 3, Subtitle B. Chapter 84, I submit herewith the annual financial report of the government of Hamilton County, Texas for the fiscal year ended September This report covers only the finances of the government of Hamilton County and does not include financial information or financial statements on various dependent agencies, boards or commissions which may utilize the prefix of "Hamilton County" in their corporate or assumed name. ACCOUNTING SYSTEMS AND REPORTS The accounts and financial records of Hamilton County, Texas, are maintained in conformance with Vernon's Texas Codes Annotated- Local Government Code. This report is prepared in accordance with generally accepted accounting principles promulgated by the Governmental Accounting Standards Board. Additional details about the accounting system are provided in Note 1 of the "Notes to Basic Financial Statements". INDEPENDENT AUDIT The Hamilton County Commissioners Court selected the firm of Rutledge Crain & Company, PC. Certified Public Accountants. to make an independent audit for fiscal year 2013 and their report is included in this annual report. GENERAL REMARKS I wish to express my appreciation for the cooperation given me by the members of Commissioners Court and by all officials, department heads and employees in all matters related to the operation of this office. I hereby state that, to the best of my knowledge, this report is a true and correct statement of the financial position of Hamilton County, Texas, as of September 30, 2013, and the results of the County's operations and transactions for the year then ended. in accordance with generally accepted accounting principles applicable to governmental entities, subject to the notes to the financial statements. Respectfully submitted, r-1~ Ql"\.1\.. - j~ ~~~y Auditor

6 Ha milton County, Texas Organization Chart September 30, 2013 Hamilton County Citizens CSCD Board Community Supervision Corrections Division Road & Bridge Precincts (4) Juvenile Board Juvenile Probation and Detention County-Departments-and Intergovernmental Arrangements ~ Elected Officials I Board Appointed Officials I Comm. Court Oversight Direction of Authority I I Emergency Management DPS (Clerk only) Elections I Voter Registration Agricultural Extension Service Indigent Health Department Historical Commission Public Defender Information Technology Law Library Maintenance Department Records Manegement Veterans Services Septic System/Floodplain Department

7 HAMIL TON COUNTY, TEXAS LIST OF ELECTED AND APPOINTED OFFICIALS Elected Officials County Judge Commissioners Precinct No. 1 Precinct No. 2 Precinct No. 3 Precinct No th Judicial District Judge Tax Assessor-Collector County Clerk County Attorney District Attorney District Clerk County Treasurer County Sheriff Justices of the Peace Precinct No. 1 Precinct No. 3 Constable No. 3 Randy Mills Johnny Wagner Mark Tafel Lloyd Huggins Dickie Clary Phillip Robertson Terry Payne Short Debbie Rudolph Mark Henkes B. J. Shepherd Leoma Larance Debbie Broyles Eoff Gregg Bewley James Lively Laurie Brous Vacant Appointed Officials County Auditor Adult Probation District Director Chief Juvenile Probation Officer Adult Probation Officer Juvenile Probation Officer County Extension Office County Ag Agent Consumer and Family Science L. Marliessa Clark Regina Johnson Klye Baker Greg Ladesic Kristi Hitchcock Chelsa Dorward Shirley Gerald 111

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9 FINANCIAL SECTION v

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11 RUTLEDGE CRAIN & COMPANY, PC CERTIFIED PUBLIC ACCOUNTANTS 2401 Garden Park Court. Suite 8 Arlington, Texas To the Honorable Randy Mills, County Judge and Members of the Commissioners Court Hamilton County, Texas Report on the Financial Statements INDEPENDENT AUDITORS' REPORT We have audited the accompanying financial statements of the governmental activities, each major fund, and the aggregate remaining fund information of Hamilton County, Texas as of and for the year ended September 30, 2013, and the related notes to the financial statements, which collectively comprise the County's basic financial statements as listed in the table of contents. Management's Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Auditors' Responsibility Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America. 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 involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors' judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. Opinions In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, each major fund, and the aggregate remaining fund information of Hamilton County, Texas as of September 30, 2013, and the respective changes in financial position for the year then ended in accordance with accounting principles generally accepted in the United States of America. Other-Matters Required Supplementary Information Accounting principles generally accepted in the United States of America require that the management's discussion and analysis and budgetary comparison information, as noted in the table of contents, be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of Metro (817) Members: American Institute of Certified Public Accountants Texas Society of C(ertified Public Accountants 1 Fax (817)

12 To the Honorable Randy Mills, County Judge and Members of the Commissioners Court Hamilton County, Texas preparing the information and comparing the information for consistency with management's responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Other Information Our audit was conducted for the purpose of forming opinions on the financial statements which collectively comprise Hamilton County, Texas' financial statements as a whole. The introductory section, combining and individual nonmajor fund financial statements and schedules presented for purposes of additional analysis and are not a required part of the financial statements. The combining and individual nonmajor fund financial statements and schedules are the responsibility of management and were derived from and relate directly to the underlying accounting and other records used to prepare the financial statements. Such information has been subjected to the auditing procedures applied in the audit of the financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the financial statements or to the financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the combining and individual nonmajor fund financial statements and schedules are fairly stated in all material respects in relation to the financial statements as a whole. The introductory section has not been subjected to the auditing procedures applied in the audit of the basic financial statements and, accordingly, we do not express an opinion or provide any assurance on it. 2

13 HAMILTON COUNTY, TEXAS MANAGEMENT'S DISCUSSION AND ANALYSIS The Management's Discussion and Analysis of the County of Hamilton's Annual Financial Report (AFR) presents a discussion and analysis of the County's financial performance during the fiscal year that ended September 30,2013. Financial Highlights The assets ofthe County exceeded its liabilities at the close of the most recent fiscal year by 10,378,620 (net position). Ofthis amount, 2,300,746 (unrestricted net position) may be used to meet the government's ongoing obligations to citizens and creditors. The County's total net position decreased by 268,552. As of the close of the current fiscal year, the County's governmental funds reported a combined ending fund balance of 1,869,428, an increase of 228,565 from the prior year. At the end of the current fiscal year 1,269,036 is available for spending at the government's discretion (unassigned general fund balance). This fund balance amounts to 39% of total general fund expenditures in The County's total long-term liabilities increased 12,917 during the current fiscal year. This was due to scheduled debt service payments, addition of a new capital lease, and the recognition of an OPEB liability. In 2012 the County was awarded a 335 thousand dollar grant from the Texas State Soil and Conservation Board to implement the Leon River Watershed Protection Plan through technical and financial assistance to repair or replace on-site sewage facilities in Hamilton County. This grant covers a three year period. Overview of the Financial Statements This discussion and analysis is intended to serve as an introduction to the County's basic financial statements. The County's basic financial statements comprise three components: ( 1) government-wide financial statements, (2) fund financial statements, and (3) notes to the financial statements. This report also contains other supplementary information in addition to the basic financial statements themselves. Government-wide financial statements The government-wide financial statements are designed to provide readers with a broad overview of the County's finances, in a manner similar to a private-sector business. The Statement of Net Position presents information on all of the County's assets, deferred outflows of resources, liabilities, and deferred inflows of resources with the difference between the two reported as net position. Over time, increases or decreases in net position may serve as a useful indicator of whether the financial position of the County is improving or deteriorating. The statement of activities presents information showing how the government's net position changed during the most recent fiscal year. All changes in net position are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of related cash flows. Thus, revenues and expenses are reported in this statement for some items that will result in cash flows in future fiscal periods (e.g., uncollected taxes and earned-but-unused vacation leave). The government-wide financial statements present functions of the County that are principally supported by property taxes. The governmental activities of the County include general government, administration 3

14 HAMIL TON COUNTY, TEXAS MANAGEMENT'S DISCUSSION AND ANALYSIS of justice, law enforcement, public safety, highway and streets, health and welfare, conservation, and interest on long-term debt. The government-wide financial statements can be found on pages 13 and 14 of this report. Fund financial statements A fund is a grouping of related accounts that is used to maintain control over resources that have been segregated for specific activities or objectives. The County uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. All of the funds of the County are categorized as governmental funds or fiduciary funds. Governmental funds Governmental funds are used to account for essentially the same functions reported as governmental activities in the government-wide financial statements. However, unlike the government-wide financial statements, governmental fund financial statements focus on near-term inflows and outflows of spendable resources, as well as, on balances of spendable resources available at the end of the fiscal year. Such information may be useful in evaluating a government's near-term financing requirements. Because the focus of governmental funds is narrower than that of the government-wide financial statements, it is useful to compare the information presented for governmental funds with similar information presented for governmental activities in the government-wide financial statements. By doing so, readers may better understand the long-term impact of the government's near-term financing decisions. Both the governmental fund balance sheet and the governmental fund statement of revenues, expenditures, and changes in fund balances provide a reconciliation to facilitate this comparison between governmental funds and governmental activities. The County maintains 33 individual governmental funds. Information is presented separately in the governmental fund balance sheet and in the governmental fund statement of revenues, expenditures, and changes in fund balances for the General Fund, which is considered to be a major fund. Data from the other 32 governmental funds are combined into a single, aggregated presentation. Individual fund data for each of these non-major governmental funds is provided in the form of combining statements elsewhere in the annual financial report. Hamilton County adopts an annual appropriated budget for its General Fund and other funds. Budgetary comparison statements have been provided for all these funds to demonstrate compliance with these budgets. The basic governmental fund financial statements can be found on pages 16 through 19 of this report. Fiduciary funds Fiduciary funds are used to account for resources held for the benefit of parties outside the government. Fiduciary funds are not reflected in the government-wide financial statements because the resources of those funds are not available to support the County's own programs. The accounting used for fiduciary funds is much like that used for proprietary funds in that the measurement focus emphasizes changes in economic resources, much like that of a private-sector business. The basic fiduciary fund financial statement can be found on page 20 of this report. Notes to the financial statements The notes provide additional information that is essential to a full understanding of the data provided in the government-wide and fund financial statements. The notes to the basic financial statements can be found on pages 21 through 35 ofthis report. 4

15 HAMILTON COUNTY, TEXAS MANAGEMENT'S DISCUSSION AND ANALYSIS Other information In addition to the basic financial statements and accompanying notes, this report also presents certain required supplementary information concerning the County's progress in funding its obligation to provide pension benefits to its employees. The County adopts an annual appropriated budget for its general, debt service, road and bridge funds and certain special revenue funds. Budgetary comparison statements have been provided for the General Fund to demonstrate compliance with this budget. Required supplementary information can be found on pages 39 through 41 of this report. Government-wide Financial Analysis As noted earlier, net position may serve over time as a useful indicator of a government's financial position. In the case of Hamilton County, assets exceeded liabilities by 10,3 78,620 at the close of the most recent fiscal year. By far, the largest portion of the County's net position, 7,952,249 (77%), reflects its investment in capital assets (e.g., land, buildings, vehicles, road equipment, office furniture and equipment, infrastructure, and construction in progress), less any related debt used to acquire those assets that is still outstanding. The County uses these capital assets to provide services to citizens. Consequently, these assets are not available for future spending. Although the County's investment in its capital assets is reported net of related debt, it should be noted that the resources needed to repay this debt must be provided from other sources, since the capital assets themselves cannot be used to liquidate these liabilities. Primary Government Governmental Activities Change Assets: Current and other assets 3,115,433 3,001, ,622 Capital assets (net of accumulated depreciation) 8,730,780 9,095,470 (364,690) Total assets 11,846,213 12,097,281 (251,068) Liabilities: Current and other liabilities 393, ,522 30,401 Long-term liabilities 1,073,670 1,086,587 (12,917) Total liabilities 1,467,593 1,450, ,484 Net position: Invested in capital assets, net of related debt 7,952,249 8,040,465 (88,216) Restricted 125, ,636 (368,011) Unrestricted 2,300,746 2,113, ,675 Total net position (FY2012 restated) 10,378,620 10,647,172 (268,552) A portion of the County's net position, 125,625, represents resources that are subject to external restrictions on how they may be used. The remaining balance of unrestricted net position, 2,300,746, may be used to meet the government's ongoing obligations to citizens and creditors in accordance with the County's fund designation, state statutes, and fiscal policies. The overall financial condition of the County decreased by 268,552 from 2012 to 2013 as shown by the decrease in net position. Overall total assets decreased due to the retirement of assets and current depreciation. 5

16 HAMIL TON COUNTY, TEXAS MANAGEMENT'S DISCUSSION AND ANALYSIS Primary Government Governmental Activities Change Revenues: Net Program Revenues: Charges for services 1,362,323 1,454,306 (91,983) Operating grants and contributions 58, ,432 (186,548) Capital grants and contributions 162,007 1,086,612 (924,605) General Revenues: Property taxes 2,809,800 2,955,151 (145,351) Sales and beverage taxes 292, ,141 36,471 Miscellaneous 278,628 (278,628) Unrestricted investments earnings 4,211 4,901 (690) Total revenues 4,689,837 6,281,171 (1,591,334) Expenses: General administration 1,235,177 1,449,626 (214,449) Administration of justice 660, ,500 24,412 Highways and streets 1,273,279 1,374,406 (101,127) Health and welfare 254,623 56, ,491 Conservation 55,374 44,377 10,997 Public safety 1,454,964 1,595,355 (140,391) Interest on long-term debt 24, ,839 (112,779) Total expenses 4,958,389 5,293,235 (334,846) Change in net position (268,552) 987,936 (1,256,488) Net position -beginning 10,647,172 9,659,236 Net position- ending (FY 2012 restated) 10,378,620 10,647,172 The total cost of all functions and programs was 4,958,389. Ninety-nine percent (99%) of these costs relate directly to the costs of providing services. Total grant revenues decreased due to decreased capital grants for the Courthouse Restoration project. Tax revenues decreased primarily due to the levy of the 2011 I&S taxes collected in The most concerning decrease, (91,983), is in charges for services. 6

17 HAMILTON COUNTY, TEXAS MANAGEMENT'S D/SCUSS/0 AND ~NA L YSIS Governmental revenues fqr fi scal year 2q 13 are graphically di splayed as follows: "- J Sales and beveragej taxes 6% Unrestricted investments earnings 0% Charges for sen ices 27% Operating grants and contributions 1% Property tax@s 62% Capital grants and contributions 4% P ~ bl ' c safety 29% Interest pn l o ~ g term debt 1% Governmental administration 25% ConseNation -----r 1% Administration of j ~ s ti ce 13% 5~ Higr ways and streets 26% 7

18 HAMILTON COUNTY, TEXAS MANAGEMENT'S DISCUSSION AND ANALYSIS Financial Analysis of the County's Funds As noted earlier, fund accounting is used to demonstrate and ensure compliance with finance-related legal requirements. Governmental Funds- The focus ofthe County's governmental funds is to provide information of nearterm inflows, outflows, and balances of spendable resources. Such information is useful in assessing the County's financing requirements. In particular, unreserved fund balance may serve as a useful measure of the County's net resources available for spending at the end of the fiscal year. The County's governmental funds reflect a combined fund balance of 1,869,428. Of this amount, 1,269,036 is unassigned and available for day-to-day operations ofthe County. In addition, 56,533 and 60,351 are restricted, respectively, for debt service and capital projects. The remaining special revenue fund balance of483,508 is committed for specific purposes of the special revenue funds. There was an increase in the combined fund balance of all governmental funds of 228,565 over the prior year. This increase primarily relates to an increase in the General Fund of 201,434 and an increase in nonmajor funds of 27,131. General Fund Budgetary Highlights The County uses the cash basis for budgeting purposes. Over the course of the year, the County revised the General Fund budget several times as necessary. Even with these adjustments, actual expenditures were 1 77,799 below final budget amounts. This positive variance is attributable to reduced spending in departmental budgets throughout all functions. Revenues were a total of 192,356 more than expected. Negative variances were experienced in Fines and Fees and Intergovernmental Revenues, while positive variances existed in other areas. Capital Assets and Debt Administration Capital Assets - At the end of fiscal year 2013, the County's governmental actlvlttes had invested 8,730,780 (net of accumulated depreciation) in capital assets. This investment in capital assets includes land, buildings, equipment, vehicles, infrastructure and construction in progress, as reflected in the following schedule. Equipment acquisitions were 54,000, capital improvements were 56,830, and vehicle acquisitions were 17,250. Additions were offset by 493,111 in depreciation expense, showing a net decrease in capital assets of 365,031 from the previous fiscal year. 8

19 HAMILTON COUNTY, TEXAS MANAGEMENT'S DISCUSSION AND ANALYSIS CAPlT AL ASSETS Capital assets, not being depreciated: Land Construction in progress Capital assets, being depreciated Buildings Equipment Vehicles Infrastructure Governmental Activities Balance Balance 9/30/13 9/ ,407 30,407 6,782,137 7,727,339 1,060, , ,270 64, , , ,250 8,730,780 9,095,811 Additional information on capital assets is available in Note 6. Long-Term Debt - At the end of the current fiscal year, the County had total debt outstanding of 1,073,670. This is an increase from prior year of 12,917. A new capital lease obligation in Road & Bridge Pet. #I in the amount of 44,000 was entered into and the initial OPEB obligation was recognized. These additions were offset by the payment of required debt service. 9/30/13 9/30/I 2 GOVERNMENTAL ACTIVITIES: Refunding bonds 234, ,000 Certificates of obligation 582, ,000 Capital lease obligation 115, ,475 Compensated absences payable 38,327 41,112 OPEB obligation 104,049 1,073,670 1,086,587 Additional information on long-term debt is available in Note 7. ECONOMIC FACTORS Other economic factors include the following: Appraised value used for the 2014 budget preparation was up almost 1 0 million, or 2%, from New construction for 2014 is up from the previous year at 6.7 million. In 2004, Hamilton County adopted a provision for a tax ceiling for a home owner age 65 or older or disabled. The total appraised value of "frozen values" for 2014 is 93 million which is up 1 0 million from 2013 and amounts to 24% of appraised values. As tax rates continue to decline and the percentage of "frozen values" continue to rise, more of the tax burden will shift to the under 65 taxpayer. Beginning with the 2013 budget, a fund was established to commit monies for the anticipated need to fund a portion of Retiree Health Insurance in future years. Although this benefit is determined each budget cycle at the discretion of the Commissioners Court, the need to supplement the funding remains a concern if it is to continue. 9

20 HAMILTON COUNTY, TEXAS MANAGEMENT'S DISCUSSION AND ANALYSIS Overall property tax revenue will continue to decrease if tax rates are not increased. The County will likely be unable to continue to finance programs it currently offers. REQUESTS FOR INFORMATION The financial report is designed to provide our citizens, customers, investors and creditors with a general overview of the County's finances. If you have questions about this report or need any additional information, contact the Hamilton County Auditor, L. Marliessa Clark, at I 02 North Rice Street, suite 117, Hamilton, Texas

21 BASIC FINANCIAL STATEMENTS 1 1

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23 HAMIL TON COUNTY, TEXAS STATEMENT OF NET POSITION SEPTEMBER 30, 2013 EXHIBIT A-1 ASSETS Cash and cash equivalents Receivables (net of allowances for uncollectibles): Property tax Sales tax Accounts Fines Intergovernmental Capital assets not being depreciated: Land Capital assets (net, of accumulated depreciation): Buildings Equipment Vehicles Infrastructure Total Assets LIABILITIES Accounts payable Accrued liabilities Intergovernmental payable Due to others Accrued interest payable Noncurrent liabilities: Due within one year Due in more than one year Total Liabilities NET POSITION Net Investment in Capital Assets Restricted For: Debt Service Capital Projects Unrestricted Total Net Position Governmental Activities 2,100, ,163 66,085 2, ,027 70,594 30,407 7,727, ,161 64, ,186 11,846, ,536 75,917 28,799 83,609 6, , ,907 1,467,593 7,952,249 65,273 60,352 2,300,746 10,378,620 The accompanying notes are an integral part of this statement. 13

24 HAMIL TON COUNTY, TEXAS STATEMENT OF ACTIVITIES FOR THE YEAR ENDED SEPTEMBER 30, 2013 Functions/Programs PRIMARY GOVERNMENT Governmental Activities: General administration Administration of justice Highways and streets Health and welfare Conservation Public safety Interest on long-term debt Total Governmental Activities Total Primary Government Program Revenues_ Operating Charges for Grants and Expenses Services Contributions 1,235, , , ,588 1,273, , ,623 55,374 1,454, ,306 24,060 4,958,389 1,362,323 4,958,389 1,362,323 57,234 1,650 58,884 58,884 Capital Grants and Contributions 162, , ,007 General Revenues: Property taxes Sales and beverage taxes Unrestricted investment earnings Total General Revenues and Transfers Change in Net Assets Net Assets - Beginning Prior Period Adjustment Net Assets - Ending The accompanying notes are an integral part of this statement. 14

25 EXHIBIT A-2 Net (Expense) Revenue and Changes in Net Position Governmental Activities (695,472) (493,324) (739,314) (252,973) (55,374) (1 '114,658) (24,060) --(-3,-375,175) Q,_375,_1?. 2 2,809, ,612 4,211 3;ro { (26i3;5.52) 10,638,642 8,530 10,378,620 15

26 ~--~ HAMIL TON COUNTY, TEXAS BALANCE SHEET- GOVERNMENTAL FUNDS SEPTEMBER 30, 2013 EXHIBIT A-3 ASSETS General Fund Other Governmental Funds Total Governmental Funds Cash and cash equivalents Receivables (net of allowances for uncollectibles): Taxes Sales tax Accounts Fines Intergovernmental Due from other funds 1,230, ,640 66,085 1, ,865 49,722 1, ,862 1,903,987 46, ,163 66,085 1,042 2,430 24, ,026 20,872 70,594 1,334 Total Assets 2,154, ,460 2,920,619 LIABILITIES AND FUND BALANCES Liabilities: Accounts payable Accrued liabilities Due to other funds Due to others Total Liabilities 36,667 56,241 92,908 66, ,436 19,676 75,917 1,334 1,334 12,363 12, , ,050 DEFERRED INFLOWS OF RESOURCES Deferred property tax revenue Deferred fine revenue Total Deferred Inflows of Resources 113, , ,215 41, ,113 24, ,028 65, ,141 Fund Balances: Restricted Committed Unassigned Total Fund Balances 1,269,036 1,269, , , , ,508 1,269, ,392 1,869,428 Total Liabilities, Deferred Inflows of Resources, and Fund Balances 2,154, ,460 2,920,619 The accompanying notes are an integral part of this statement. 16

27 HAMIL TON COUNTY, TEXAS RECONCIL/A TION OF THE GOVERNMENTAL FUNDS BALANCE SHEET TO THE STATEMENT OF NET POSITION SEPTEMBER 30, 2013 EXHIBIT A-4 Total fund balances- governmental funds balance sheet Amounts reported for governmental activities in the Statement of Net Position are different because: Capital assets used in governmental activities are not reported in the funds. Property taxes receivable unavailable to pay for current period expenditures are deferred in the funds. Payables for bond principal which are not due in the current period are not reported in the funds. Payables for capital leases which are not due in the current period are not reported in the funds. Payables for bond interest which are not due in the current period are not reported in the funds. Payables for compensated absences which are not due in the current period are not reported in the funds. Payables for OPEB which are not due in the current period are not reported in the funds. Court fines receivable unavailable to pay for current period expenditures are deferred in the funds. Net position of governmental activities - Statement of Net Position 1,869,428 8,730, ,113 (816,000) (115,294) (6,062) (38,327) (104,049) 703,032 10,378,620 The accompanying notes are an integral part of this statement. 17

28 ~~-~ ~-- HAMIL TON COUNTY, TEXAS STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES- GOVERNMENTAL FUNDS FOR THE YEAR ENDED SEPTEMBER 30, 2013 EXHIBIT A-5 General Fund Revenue: Property taxes, penalties and interest 2,182,877 Sales and use taxes 292,612 Fees and fines 404,831 Intergovernmental 567,177 Licenses and permits Contributions Investment earnings 3,253 Miscellaneous 4,999 Total revenues ----3,455-,74ff Expenditures: Current: General government 990,924 Public safety 1,320,410 Highways and streets Administration of justice 625,078 Health and welfare 253,582 Conservation 54,090 Capital outlay Debt service: Principal Interest and fiscal charges Total expenditures 3,244,084 Excess (deficiency) of revenues (under) expenditures 211,665 Other financing sources (uses): Transfers in 161 Transfers out (10,392) Capital/eases Total other financing sources (uses) (10,231) Net change in fund balances 201,434 Fund Balances, October 1 1,067,602 Fund Balances, September 30 1,269,036 Other Governmental Funds Total Governmental Funds 766,077 2,948, , , ,634 54, , , , ,210 40,529 45,528 1,385,337 4,841,086 55,672 1,046, ,321,348 1,129,190 1,129,190 19, , ,582 54,090 56,829 56, , ,000 30,308 30,308 1,412,437 4,656,521 (27, 1 00) 184,565 15,117 15,278 (4,886) (15,278) 44,000 44,000 54, ,000 27, , ,261 1,640, ,392 1,869,428 The accompanying notes are an integral part of this statement. 18

29 HAMIL TON COUNTY, TEXAS RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS TO THE STATEMENT OF ACTIVITIES FOR THE YEAR ENDED SEPTEMBER 30, 2013 EXHIBIT A-6 Net change in fund balances - total governmental funds 228,565 Amounts reported for governmental activities in the Statement of Activities ("SOA'') are different because: Capital outlays are not reported as expenses in the SOA. The depreciation of capital assets used in governmental activities is not reported in the funds. Certain property tax revenues are deferred in the funds. This is the change in these amounts this year. Repayment of bond principal is an expenditure in the funds but is not an expense in the SOA. Repayment of capital lease principal is an expenditure in the funds but is not an expense in the SOA. (Increase) decrease in accrued interest from beginning of period to end of period. Compensated absences are reported as the amount earned in the SOA but as the amount paid in the funds. OPEB are reported as the amount earned in the SOA but as the amount paid in the funds. Revenues in the SOA for court fines not providing current financial resources are not reported in the funds. Proceeds of leases do not provide revenue in the SOA, but are reported as current resources in the funds. 128,080 (493, 111) (139, 151) 120,000 38,180 6,248 2,785 (104,049) (12, 1 00) (44,0QQ2 Change in net position of governmental activities - Statement of Activities =~(.::::26::::8~,5~52~) The accompanying notes are an integral part of this statement. 19

30 HAMIL TON COUNTY, TEXAS STATEMENT OF FIDUCIARY NET POSITION FIDUCIARY FUNDS SEPTEMBER 30, 2013 EXHIBIT A-7 ASSETS Cash Total Assets Agency Funds 198, ,400 LIABILITIES Accounts payable Intergovernmental payable Due to others Total Liabilities 95,719 29,180 73, ,400 The accompanying notes are an integral part of this statement. 20

31 HAMILTON COUNTY, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS SEPTEMBER 30, Summary of Significant Accounting Policies A. Financial Reporting Entity Hamilton County, Texas ("County") is an independent governmental entity created under the laws of the State of Texas. The County is governed by an elected Commissioners' Court. The financial statements of the County include all funds and agencies over which the County is considered to be financially accountable. The County is considered an independent entity for financial reporting purposes and is considered a primary government. As required by generally accepted accounting principles, these financial statements have been prepared based on considerations regarding the potential for inclusion of other entities, organizations, or functions as part of the County's financial reporting entity. Considerations regarding the potential for inclusion of other entities, organizations, or functions in the County's financial reporting entity are based on criteria prescribed by generally accepted accounting principles. These same criteria are evaluated in considering whether the County is a part of any other governmental or other type of reporting entity. The overriding elements associated with prescribed criteria considered in determining that the County's financial reporting entity status is that of a primary government are that it has a separately elected governing body; it is legally separate; and it is fiscally independent of other state and local governments. Additionally, prescribed criteria under generally accepted accounting principles include considerations pertaining to organizations for which the primary government is financially accountable; and considerations pertaining to other organizations for which the nature and significance of their relationship with the primary government are such that exclusion would cause the reporting entity's financial statements to be misleading or incomplete. B. Government-wide and Fund Financial Statements The basic financial statements include both government-wide (based on the County as a whole) and fund financial statements. Typically, both the government-wide and fund financial statements (within the basic financial statements) categorize primary activities as either governmental or business-type. All primary activities of the County are considered to be governmental type activities; therefore no business type activities are presented within the basic financial statements. In the government-wide Statement ofnet Position, governmental activities are presented on a full accrual, economic resource basis, which incorporates long-term assets and receivables, as well as long-term debt and obligations. The government-wide Statement of Activities reflects both the gross and net cost per functional category (general administration, financial administration, public safety, etc.), which are otherwise being supported by general government revenues (property taxes, earnings on investments, etc.). The Statement of Activities reduces gross expenses (including depreciation) by related program revenues. The program revenues must be directly associated with the function (general administration, financial administration, public safety, etc.). The governmental funds major fund statements in the fund financial statements are presented on a current financial resource and modified accrual basis of accounting. This is the manner in which these funds are normally budgeted. Since the governmental fund statements are presented on a different measurement focus and basis of accounting than the government-wide statements' governmental column, a reconciliation is presented which briefly explains the adjustments necessary to reconcile fund-based financial statements with the governmental column of the government-wide presentation. 21

32 HAMILTON COUNTY, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS SEPTEMBER 30,2013 The County's fiduciary funds are presented in the fund financial statements by type. Since, by definition, these assets are being held for the benefit of a third party and cannot be used to address activities or obligations of the government, these funds are not incorporated into the governmentwide statements. Since the County only reports agency funds, a statement of changes in fiduciary net position is not presented. All assets reported in agency funds should be offset by a corresponding liability, resulting in zero net position. In the fund financial statements, the accounts of the County are organized on the basis of funds, each of which is considered a separate accounting entity. The operations of each fund are accounted for with a separate set of self-balancing accounts that comprise its assets, liabilities, fund equity, revenues, and expenditures or expenses, as appropriate. The County reports the following major governmental fund: General Fund The General Fund is the County's primary operating fund. It is used to account for all financial transactions not properly includable in other funds. The principal source of revenue is local property taxes. Expenditures include all costs associated with the daily operations of the County. C. Basis of Accounting The accounting and financial reporting treatment applied to a fund is determined by its measurement focus. All governmental fund-types are accounted for using a current financial resources measurement focus. With this measurement focus, only current assets and current liabilities generally are included on the balance sheet. Operating statements of these funds present increases (i.e., revenues and other financing resources) and decreases (i.e., expenditures and other financing uses) in net current assets. The government-wide statements of net position and statements of are accounted for on a flow of economic resources measurement focus. With this measurement focus, all assets and all liabilities associated with the operations of these activities are included on the balance sheet. Proprietary fund equity consists of net position. The accounts of the Governmental Fund Types (the General Fund, Special Revenue Funds, Debt Service Funds, and Capital Projects Funds) are maintained, and the financial statements have been prepared, on the modified accrual basis of accounting. Under this basis of accounting, revenues are recognized when they become susceptible to accrual (i.e., both measurable and available). Available means collectible within the current year or soon enough thereafter to pay liabilities of the current year. For this purpose, the County considers revenues to be available if they are collected within 60 days of the end of the current fiscal period. Substantially all revenues, except property taxes, are considered to be susceptible to accrual. Expenditures are generally recognized under the modified accrual basis of accounting when the related fund liability is incurred. Principal and interest on long-term debt are recognized as expenditures when due. As a general rule, the effect of interfund activity has been eliminated from the government-wide financial statements. An exception to this general rule is that interfund services provided and used within the County are not eliminated in the process of consolidation. Elimination of these services would distort the direct costs and program revenues reported for the various functions concerned. 22

33 HAMIL TON COUNTY, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS SEPTEMBER 30,2013 Amounts reported as program revenues include: ( 1) charges to customers for goods, services, or privileges provided, (2) operating grants and contributions, and (3) capital grants and contributions, including special assessments. Revenues that are generated internally are reported as general revenues, including property taxes. D. Cash and Cash Equivalents The County's cash and cash equivalents are considered to be cash on hand, demand deposits, and short-term investments with original maturities of three months or less from the date of acquisition. E. Temporary Investments The County's temporary investments are typically comprised of deposits in pooled investment accounts. Obligations with maturities of one year or less when purchased are reported on the balance sheet at their amortized cost, which approximates fair value. All other investments are typically reported at fair value. The County held no temporary investments at year end. F. Receivables All receivables are reported at their gross value and, where appropriate, are reduced by the estimated portion that is expected to be uncollectible. G. Due to and Due from Other Funds During the course of operations, transactions occur between individual funds for specified purposes, such as lending/borrowing arrangements. In addition, the County maintains numerous bank accounts among all the funds and occasionally monies are deposited into the incorrect account. Therefore, a receivable and payable are recorded in the proper funds. These receivables and payables are classified as "due from other funds" or "due to other funds" (or "due from component unit/primary government" or "due to component unit/primary government" if the transactions are between the primary government and its component unit). H. Interest Receivable Interest on investments is recorded as revenue in the year the interest is earned and available to pay liabilities of the current period. I. Capital Assets Capital assets used in governmental fund types of the government are recorded as expenditures of the General, Special Revenue and Capital Projects Funds and as assets in the government-wide financial statements to the extent the County's capitalization threshold (currently 5,000) is met. Depreciation is recorded on capital assets on a government-wide basis. Major outlays for capital assets and improvements are capitalized as projects are constructed and subsequently depreciated over their estimated useful lives on a straight-line basis at both the fund and government-wide levels. All capital assets are valued at historical cost or estimated historical cost if actual cost was not available. Donated capital assets are valued at their estimated fair value on the date of donation. The costs of normal maintenance and repairs that do not add to the value of the asset or materially extend assets' lives are charged to operations when incurred. Expenditures that materially change 23

34 HAMILTON COUNTY, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS SEPTEMBER 30, 2013 capacities or extend useful lives are capitalized. Upon sale or retirement of capital assets, the cost and related accumulated depreciation, if applicable, are eliminated from the respective accounts and resulting gain or loss is included in the results of operations. The County applies a half-year convention for depreciation on all assets. Therefore, one half of a year of depreciation is charged to operations the first and last year that an asset is in service. Depreciation has been provided for plant and equipment using the straight-line method over the estimated useful life for the type of assets as follows: Assets Buildings Equipment Vehicles Infrastructure Estimated Useful Life years 5-20 years 5-7 years years J. Deferred Outflows/Inflows of Resources In addition to assets, the statement of financial position will sometimes report a separate section for deferred outflows of resources. This separate financial statement element, deferred In addition to assets, the statement of financial position will sometimes report a separate section for deferred outflows of resources. This separate financial statement element, deferred outflows of resources, represents a consumption of net position that applies to a future period(s) and so will not be recognized as an outflow of resources (expense/ expenditure) until then. The government only has one item that qualifies for reporting in this category. It is the deferred charge on refunding reported in the government-wide statement of net position. A deferred charge on refunding results from the difference in the carrying value of refunded debt and its reacquisition price. This amount is deferred and amortized over the shorter of the life of the refunded or refunding debt. In addition to liabilities, the statement of financial position will sometimes report a separate section for deferred inflows of resources. This separate financial statement element, deferred inflows of resources, represents an acquisition of net position that applies to a future period(s) and so will not be recognized as an inflow of resources (revenue) until that time. The government has only one type of item, which arises only under a modified accrual basis of accounting, that qualifies for reporting in this category. Accordingly, the item, unavailable revenue, is reported only in the governmental funds balance sheet. The governmental funds report unavailable revenues from two sources: property taxes and special assessments. These amounts are deferred and recognized as an inflow of resources in the period that the amounts become available. K. Compensated Absences Vacation The County's full-time employees earn 10 to 20 days of vacation with pay per year based on years of continuous service. A maximum of 80 hours of vacation time is paid to employees upon termination after at least one year of service with the County. A liability for those amounts is recorded in the governmental funds only if the liability has matured as a result of employee resignations or retirements. The liability for compensated absences includes salary-related benefits, where applicable. 24