COUNTY OF ESCAMBIA FLORIDA

Transcription

1 COUNTY OF ESCAMBIA FLORIDA ANNUAL AUDIT REPORT FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2009

2 ANNUAL AUDIT REPORT FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2009 COUNTY-WIDE FINANCIAL STATEMENTS AND NOTES BOARD OF COUNTY COMMISSIONERS CONSTITUTIONAL OFFICERS

3 ANNUAL AUDIT REPORT FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2009 COUNTY-WIDE FINANCIAL STATEMENTS AND NOTES BOARD OF COUNTY COMMISSIONERS CONSTITUTIONAL OFFICERS CONTENTS County-Wide Financial Statements and Notes Board of County Commissioners Clerk of the Circuit Court Sheriff Tax Collector Property Appraiser Supervisor of Elections Single Audit Report and Schedule of State Financial Assistance

4 ANNUAL AUDIT REPORT COUNTY-WIDE FINANCIAL STATEMENTS AND NOTES SEPTEMBER 30, 2009

5 ANNUAL AUDIT REPORT COUNTY-WIDE FINANCIAL STATEMENTS YEAR ENDED SEPTEMBER 30, 2009 TABLE OF CONTENTS Page REPORT OF INDEPENDENT AUDITORS MANAGEMENTS DISCUSSION AND ANALYSIS (REQUIRED SUPPLEMENTARY INFORMATION) BASIC FINANCIAL STATEMENTS Government-Wide Financial Statements Statement of Net Assets Statement of Activities FUND FINANCIAL STATEMENTS Balance Sheet Governmental Funds Reconciliation of the Balance Sheet to the Statement of Net Assets Statement of Revenues, Expenditures, and Changes in Fund Balances Reconciliation of the Statement of Revenues Expenditures, and Changes in Fund Balances of Governmental Funds to the Statement of Activities Statement of Revenues, Expenditures, and Changes in Fund Balances Budget and Actual General Fund, Disaster Recovery Fund, Community Redevelopment Agency Fund, and Transportation and Drainage Fund Statement of Net Assets Proprietary Funds Statement of Revenues, Expenses, and Changes in Net Assets Proprietary Funds Statement of Cash Flows Proprietary Funds Statement of Fiduciary Net Assets Fiduciary Funds Component Units Financial Statements Statement of Net Assets Statement of Activities Notes to Financial Statements REQUIRED SUPPLEMENTARY INFORMATION Schedule of Funding Progress Escambia County Other Post-employment Benefit Plan 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 Management Letter County s Response to Management Letter... 72

6 FINANCIAL SECTION This section contains the following subsections: REPORT OF INDEPENDENT AUDITORS MANAGEMENT S DISCUSSION AND ANALYSIS BASIC FINANCIAL STATEMENTS

7

8

9 Management s Discussion and Analysis As Clerk of the Circuit Court and Comptroller for Escambia County, we offer readers of Escambia County s financial statements this narrative overview and analysis of the financial activities of Escambia County for the fiscal year ended September 30, Financial Highlights Escambia County s assets exceeded its liabilities (net assets) as of September 30 th, by $579,736,233 for fiscal year Of this amount, $101,685,738 (unrestricted net assets) may be used to meet the government s ongoing obligations to citizens and creditors. Unrestricted net assets increased $10,295,564 from the previous year. The County s total net assets this fiscal year increased $32,753,495 from the previous year with an increase of $29,862,465 resulting from governmental activities and an increase of $2,891,030 resulting from business-type activities. At September 30, Escambia County s governmental funds reported combined ending fund balances of $141,758,207, an increase of $7,113,629 in comparison with the prior year. Of this amount, $84,123,131 remains in the various fund types of the County as unreserved. The General Fund reported an unreserved fund balance of $31,635,915; a decrease from last fiscal year of $15,322,551. Escambia County s total bonded debt, leases and loans decreased $4,940,718 from the previous fiscal year. One new loan was entered into for $1,227,000. Principal repayments account for the decrease. Governmental Funds revenues decreased $21,622,084 or 7% over the prior fiscal year. Due to the reduction in the ad valorem millage rate along with reductions in assessed property values, property tax revenues decreased in fiscal year 2009 by approximately $23 million. Additionally, due to the State s audit efforts, the telecommunications service tax due to Escambia County increased approximately $1.7 million. Electric franchise fees increased approximately $800,000, and the local option sales tax (LOST) collections decreased approximately $2.8 million Closure estimates of the County s Perdido Landfill approved by the Florida Department of Environmental Protection and interest earned on the account during the fiscal year resulted in a decrease to the cash closure escrow account of $1,395,732. The county now holds $4,981,394 in escrow for closure purposes. The decrease in the required cash escrow allows the Solid Waste Fund to use those funds for on-going projects at the landfill. Interest rates continued to decline during fiscal year 2009, resulting in decreased interest earnings for the County. The County s average investment portfolio yield declined from 3.23% in 2008 to.92% in

10 Overview of the Financial Statements This discussion and analysis is intended to serve as an introduction to Escambia County s basic financial statements, which include government-wide financial statements, fund financial statements, and notes to the financial statements. This report also contains other supplementary information in addition to the basic financial statements which may be of interest to the reader. Government-Wide Financial Statements Government-wide financial statements are designed to provide a broad overview of the financial position of Escambia County and are similar to private-sector financial statements. They include a Statement of Net Assets and a Statement of Activities. These appear on pages of the report. The Statement of Net Assets shows the County s assets less its liabilities at September 30, The difference between these assets and liabilities is reported as net assets. Changes in net assets over time may be helpful in indicating an improving or deteriorating financial position. The Statement of Activities presents information showing how the net assets changed during the most recent fiscal year. The statement presents all underlying events giving rise to the change, regardless of the timing of the related cash flows. Some included items, such as accounts payable or earned but unused vacation leave, will produce changes in cash in a future fiscal period. These two government-wide statements distinguish functions of Escambia County that are principally supported by taxes and intergovernmental revenues (governmental activities) from other functions that are intended to recover all or a significant portion of their costs through user fees and charges (businesstype activities). Governmental activities reported in the statements include general government, public safety, physical environment, transportation, economic environment, human services, culture and recreation, and court related functions. Major business activities in Escambia County include landfill operations and ambulance service. Other business activities include inspections and the Civic Center. The governmentwide financial statements include not only Escambia County itself (known as the primary government), but also the Santa Rosa Island Authority, the Housing Finance Authority, and the Escambia County Law Library, all legally separate entities for which Escambia County is financially accountable or with which the County is financially integrated. Financial information for these component units is reported separately from the financial information for the primary government itself. 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. Like other state and local governments, Escambia County uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. All funds of Escambia County government can be divided into three categories: governmental, proprietary and fiduciary funds. Governmental Funds. Governmental funds are used to account for essentially the same functions as those reported in the government-wide statement of net assets and statement of activities. However, unlike the government-wide financial statements, governmental fund financial statements focus on events that produce near-term inflows and outflows of spendable resources as well as on the balances of spendable resources available at the end of the fiscal year and is a narrower focus than the governmentwide financial statements. Such information may be useful in evaluating Escambia County s near-term financing requirements and available resources. By comparing functions between the two sets of statements for governmental funds and governmental activities, 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. 4

11 Governmental funds individually presented in Escambia County s statements include five major funds: the General Fund, the Disaster Recovery Fund, the Community Redevelopment Agency (CRA) Fund, the Transportation and Drainage Fund, and the Local Option Sales Tax (LOST) Fund. Although there are many smaller governmental funds in Escambia County s government, they have been aggregated in a total column termed as other governmental funds. Combining statements for these other governmental funds have been presented in the Combining Statements and Schedules section of this report. Escambia County adopts an annual appropriated budget for all governmental funds. Budgetary comparison statements and schedules have been provided for these funds to demonstrate budgetary compliance. Proprietary Funds. Escambia County maintains and presents two different types of proprietary funds-- enterprise and internal service. Enterprise funds report, in detail, the same information presented as business-type activities in the government-wide financial statements for landfill operations, building inspections, ambulance and emergency medical services, and Civic Center operations. Inspections and Civic Center are presented in one total column but may be separately reviewed in the combining statements elsewhere in the report. The internal service fund is an accounting mechanism to accumulate and allocate costs internally for Escambia County s government. The County uses an internal service fund to account for the risk financing activities for the County s insurance program. Although the risk management program has transitioned to being fully insured in all areas, there are several residual workers compensation cases that were incurred prior to June 9, 2008, that are still considered self insured. Garage and fuel activities provided to other County departments and the administration of employee benefits are also included in the internal service fund. The Sheriff and Clerk each use an Internal Service Fund to account for the annual costs related to the Compensated Absences Policy activities provided for by each respective office, as well as to accumulate certain compensated absences liabilities. The internal service fund is presented in one total column in the Proprietary Funds financial statements but may be separately reviewed in the combining statements elsewhere in the report. Fiduciary Funds. Escambia County uses fiduciary agency funds to account for resources held for the benefit of parties outside of county government. Although these funds are presented in the fund financial statements, they do not appear in the government-wide financial statements because the resources of these agency funds are not available to support Escambia County s own programs. Agency funds are unlike all other fund types in that agency funds report only assets and liabilities. They do however, use the accrual basis of accounting to recognize receivables and payables. Notes to the Financial Statements. The notes provide additional information that is essential to a full understanding of the data provided in both the government-wide and fund financial statements. Other Information. Combining and individual statements and schedules referred to earlier, which present more detailed views of nonmajor funds used in governmental and proprietary funds, includes schedules for nonmajor special revenue funds, capital project funds, enterprise funds, internal service funds, and agency funds. Additional information about the County is found under the Statistical and Continuing Disclosure sections of this report. 5

12 Government-Wide Financial Analysis Comparative data for fiscal years ending September 30, 2009 and 2008 are included in the analysis. Escambia County, Florida Net Assets (in thousands) Governmental Business-type Activities Activities Total Current and other assets $204,656 $195,310 $19,076 $21,905 $223,732 $217,215 Capital assets 528, ,240 47,589 43, , ,396 Total assets 732, ,550 66,665 65, , ,611 Long-term liabilities 152, ,351 14,335 16, , ,718 Other liabilities 48,880 32,795 3,861 3,115 52,741 35,910 Total liabilities 201, ,146 18,196 19, , ,628 Net assets: Invested in capital assets net of related debt 421, ,670 47,589 43, , ,827 Restricted 9, , Unrestricted 100,805 88, , ,685 91,390 $531,266 $501,404 $48,469 $45,579 $579,735 $546,983 The overall financial position of the County is favorable in both fiscal years 2009 and As noted earlier, changes in net assets over time can be one of the best and most useful indicators of the County s financial position. Escambia County s increase in net assets for the fiscal years ending September 30, 2009 and 2008 amounted to $32,753,495 and $13,651,764, respectively. Overall, the County experienced an increase in net assets of approximately 6%. Escambia County s commitment to maintaining and improving infrastructure in order to foster economic development is a major component of net asset growth. As in the prior year, at the end of the fiscal year 2009, the County as a whole, is able to report positive balances in all three categories of net assets. The County s unrestricted net assets at September 30, 2009 increased $10,295,564 from This increase is mainly due to favorable outcomes in both the General Fund and the LOST Fund. The General Fund experienced a favorable outcome even though property taxes decreased nearly $23 million. This decrease in taxes was accompanied by reduced general government expenses of approximately $6 million, increased culture/recreation expenses of nearly $500,000, and reduced public safety expenses of roughly $7.3 million. There was nearly $2 million less expenses for transportation related projects during fiscal year Additionally, as explained further on page 12, the LOST Fund received an unexpected refund of $11 million due to the cancellation of a joint Public Safety Building project between the County and Pensacola Junior College (PJC). The County s restricted net assets increased from 2008 by $8,656,329. This increase reflects the County s action to set aside and reserve cash reserves from the general fund to be used for future debt service payments. By doing so, current year non-ad valorem revenues can be used for on-going projects and expenses. Unrestricted net assets are County resources that may be used to meet the County s ongoing obligations to citizens and creditors while restricted net assets are resources subject to external restriction. Escambia County s investment in capital assets such as land, roads, parks, buildings, machinery and equipment, as a percentage of net assets, amounts to 80.83% and 83.15% at September 2009, and 2008, respectively. These asset values are presented less any outstanding debt related to the acquisition and accumulated depreciation of those assets. The County uses capital assets to provide services to the citizens and consequently these assets are not available for future spending. Although our investment in capital assets is reported net of related debt, it should be noted that the resources needed to repay this 6

13 debt must be provided from other sources, since the capital assets themselves cannot be used to liquidate these liabilities. The graph below illustrates the allocation of government-wide net assets for fiscal year 2009 compared to fiscal year Government-Wide Net Assets (in thousands) 500, , , , ,000 0 Invested in capital assets net of related debt Retricted Unrestricted Cash and investment accounts of the County s funds increased a total of $7,835,022 from the previous year, increasing $9,232,647 of that amount in the current asset category and decreasing $1,397,625 in the restricted asset category. The aforementioned reductions in expenses along with the $11 million refund from PJC were the major reasons for the positive cash accumulations in the current asset category and positive changes resulting in less cash accumulation for the landfill closure estimates explains the decrease in the restricted cash category. A comparison of current unrestricted assets as compared to current unrestricted liabilities for both governmental and business-type activities can be a good indication of the County s ability to meet its current and existing operational responsibilities. The ratios for both years are as follows: Escambia County, Florida Comparison of Current Unrestricted Assets and Liabilities (in thousands) Fiscal year ending September 30, 2009: Governmental Activities Business-type Activities Current unrestricted assets $203,058 $13,694 Current unrestricted liabilities $34,656 $3,354 Ratio of current assets to current liabilities Fiscal year ending September 30, 2008: Current unrestricted assets $193,617 $15,106 Current unrestricted liabilities $32,748 $2,728 Ratio of current assets to current liabilities The County continues to maintain healthy ratios as noted above which indicates more than adequate cash flows of Escambia County. 7

14 Changes in net assets are reflected in the next table. Changes in the governmental and business activities will be discussed in the pages to follow. Escambia County, Florida Changes In Net Assets Year Ended September 30, 2009 (in thousands) Governmental Business-type Activities Activities Totals Revenues: Program Revenues: Charges for Services $54,857 $55,019 $29,374 $32,006 $84,231 $87,025 Operating Grants and Contributions 15,183 10, ,189 10,844 Capital Grants and Contributions 33,056 22, ,647 34,028 24,397 General Revenues: Property Taxes 107, , , ,009 Sales Taxes 49,756 54, ,756 54,403 Other Taxes 18,774 19, ,774 19,283 Other 24,987 17, ,416 17,869 Total Revenues 303, ,485 30,781 34, , ,830 Expenses: General Government/Court Related 77,170 83, ,170 83,107 Public Safety 118, , , ,128 Physical Environment 4,348 7, ,348 7,352 Transportation 43,887 45, ,887 45,859 Economic Environment 11,326 16, ,326 16,955 Human Services 3,386 4, ,386 4,654 Culture/Recreation 5,851 5, ,851 5,312 Interest on Long-Term Debt 6,471 5, ,471 5,909 Solid Waste 0 0 7,861 10,330 7,861 10,330 Inspections 0 0 3,141 3,448 3,141 3,448 Ambulance ,195 15,036 14,195 15,036 Civic Center 0 0 5,523 6,197 5,523 6,197 Total Expenses 271, ,276 30,720 35, , ,287 Increase (Decrease) in Net Assets before Transfers 32,692 14, (557) 32,753 13,543 Transfers (2,830) (214) 2, Increase in Net Assets 29,862 13,995 2,891 (343) 32,753 13,543 Net Assets, beginning 501, ,409 45,579 45, , ,331 Net Assets, ending $531,266 $501,404 $48,470 $45,579 $579,736 $546,874 8

15 Governmental Activities Legislative changes and constitutional amendments to the Florida State Constitution during 2008 placed restrictions on the amount of property tax revenues received by the County. Fiscal year 2009 was the second full year impacted by these changes. Despite these restrictions, the Board of County Commissioners reduced the millage rate in order to give some tax relief to the citizens. The millage rate was reduced to 6.976, a 13% reduction from the fiscal year 2008 millage rate of The reduction in millage taken with a 5.8% reduction in assessed property values resulted in an approximate $23 million reduction in property tax revenue. The $4.7 million reduction in sales tax revenues reflects the continued general decline in the State s economy. The reduction in other taxes includes a reduction in gas taxes as the price of gasoline has fallen in comparison to record highs during fiscal year Overall, the County experienced a 1.8% decline in governmental activities revenue and a corresponding 8.9% decrease in governmental activities expenses. Changes for fiscal year 2009 occurred with a 7% decrease in general government, a 5.8% decrease in public safety, a 41% decrease in physical environment, a 4.5% decrease in transportation, a 33% decrease in economic environment, a 27% decrease in human services, and a 10% increase in culture/recreation. Interest costs on debt increased 9.5% as a result of interest paid on an interfund loan between the Disaster Recovery Fund and the LOST Fund. Overall, these decreased costs reflect the County s continuing commitment to manage the basic needs of our growing population with the available resources. This combination of increases and decreases in various functional areas described above resulted in an increase in governmental net assets of $29,862,465 which is $15,867,567 more than last year s net assets increase of $13,994,898. The graph below illustrates the sources of governmental activities revenues. Governmental Activities - Revenue by Source For the Fiscal Year 2009 Unrestricted interest 1% Sales taxes 16% State shared revenue 3% Gas taxes 4% Sale of assets 0% Miscellaneous revenues 4% Charges for Services 18% Operating grants and contributions 5% Tourist development taxes 2% Property taxes 36% Capital grants and contributions 11% 9

16 Governmental Function Expenses The general government, public safety, and transportation functions account for most of the total governmental activities expense (85.25%). On a percentage basis, public safety generates the smallest amount of program revenues with $95,163,868 of costs paid for with taxpayer dollars. The table below illustrates the net cost of each of the County s programs. The net cost of service reflected below identifies the extent to which each governmental function draws from the general revenues of the County rather than being self-supporting through fees or charges. In other words, the financial burden for these functions is placed on the County s taxpayers. Governmental Activities Total Cost Percentage of Net Cost Percentage of Function of Service Total of Service Total General government $68,563, % $39,530, % Public safety 118,798, % 95,163, % Physical environment 4,348, % 455, % Transportation 43,887, % 19,497, % Economic environment 11,326, % 2,653, % Human services 3,385, % 2,831, % Culture and recreation 5,850, % 5,413, % Court related 8,606, % (3,874,783) -2.30% Interest on long term debt 6,470, % 6,470, % Total $271,238, % $168,142, % Business-type Activities Business-type activities increased the County s net assets slightly by $2,891,030 for the fiscal year 2009 as compared to a decrease of $343,134 for fiscal year Revenues in most funds decreased, accompanied by a decrease in expenses. This curtailing of expenses has helped put these funds in better condition by building equity reserves. Key elements of decreased revenues and expenses between the years can be explained as follows: The Solid Waste fund experienced an 18% decrease in charges for services revenue partially due to the new voluntary curbside recycling program that went into effect during fiscal year The Solid Waste Fund does not charge Emerald Coast Utilities Authority (ECUA) a tipping fee for recyclables that had previously been included in the dumping fee calculation. The Solid Waste Fund experienced a reduction in the closure cost estimates of almost $2 million, which overall reduced their operating expenses. New landfill mining techniques that were initiated during fiscal year 2008 have enabled the landfill to increase capacity of the landfill while reducing the costs for long-term closure and maintenance of the Perdido Landfill. The Inspections Fund continues to experience a decline in the number of permits issued. Fiscal year 2009 licenses and permits revenues decreased 21.3% which is reflective of the trend of reduced activity in the real estate market not only nationally, but locally as well. The Civic Center Fund experienced a 4.3% decrease in revenues in fiscal year There was a 37.3% increase in the amount of transfer subsidy from the Tourist Development Tax. The decrease in revenue was accompanied by a 10.48% decrease in contractual services which when combined, resulted in a slight decrease in net assets of $204,797. The Civic Center Fund faired much better in fiscal year 2009 with an 83% improvement over the $1,204,959 reduction in net assets during fiscal year The Ambulance Fund experienced a marked improvement in fiscal year 2009 with an increase in net assets of $2,231,946 compared to fiscal 2008 s increase of $389,208. Several reasons contributed to this improvement, namely a 6.45% decrease in personal services expense, a 4.10% decrease in bad debt expense, and an 11.80% decrease in materials and supplies expense, a $1.5 million subsidy from the General Fund, and capital contributions from LOST of 10

17 approximately $962,000. The decrease in bad debt expense is especially significant because it equates to a better collection rate on the outstanding accounts receivable which improves cash flow and reduces overall expenses for the fund. The graph below compares the expenses to the program revenues supporting the operations. Business-type Activities Expenses and Program Revenues For the Fiscal Year 2009 $16,000,000 $15,000,000 $14,000,000 $13,000,000 $12,000,000 $11,000,000 $10,000,000 $9,000,000 $8,000,000 $7,000,000 Expenses Program Revenues $6,000,000 $5,000,000 $4,000,000 $3,000,000 $2,000,000 $1,000,000 $0 Solid Waste Inspections Ambulance Civic Center Financial Analysis of Escambia County s Funds As noted earlier, Escambia County employs fund accounting to ensure and demonstrate compliance with finance-related legal requirements. Governmental Funds. Governmental funds focus on providing information on near-term inflows, outflows, and balances of spendable resources. In assessing Escambia County s financing requirements, unreserved fund balance is a particularly useful measure of net resources available for spending at the end of the fiscal year. The governmental fund types include the general fund, special revenue, debt service, and capital projects funds. As of September 30, 2009, Escambia County governmental funds reported combined fund balances of $141,758,207, an increase of $7,113,629 compared to prior year balances. Governmental funds reserved $29,495,632 of fund balance to meet current commitments in the next fiscal year, $1,034,944 for inventory, $17,682,355 for advances made to other funds, and $9,422,145 to meet debt service requirements next fiscal year. 11

18 The General Fund is the chief operating fund of the County. At September 30, 2009, total fund balance in the general fund was $33,164,961 of which $31,635,915 was unreserved. As a measure of the general fund s liquidity, a comparison of both total and unreserved fund balances compared to total fund expenditures shows percentages of 23.26% and 22.18%, respectively. The fund balance of the County s General Fund decreased by $15,734,689 during the current fiscal year. Key factors in this decrease are as follows: Total revenues decreased 13.97% from fiscal year 2008 and expenditures decreased 7.33% from fiscal year Transfer activity from the general fund overall increased 48.32%, with increased transfers going to the Development Fund, Debt Service Fund, Mass Transit Fund, Disaster Recovery Fund, Code Enforcement Fund, and the Ambulance Fund. The General Fund transferred $9 million of reserves to the Debt Service Fund to hold for future bond payments. In so doing, current year revenues are available to cover operating expenses during the next couple of years as the County weathers the economic downturn. However, increased transfer amounts were needed for the Mass Transit Fund due to increased costs in this fund. The Other Major Governmental Funds include the Disaster Recovery Fund, the CRA Fund, the Transportation and Drainage Fund, and the LOST Fund. The Disaster Recovery Fund was established to account for all the financing provided from various State and Federal grants, such as the Federal Emergency Management Agency (FEMA). The County also receives various insurance reimbursements through this fund. Escambia County was struck by Hurricane Ivan (a Category 3 hurricane) in September 2004 and Hurricane Dennis in July The County s ongoing recovery efforts and FEMA reimbursements are tracked in this fund. Reimbursements from FEMA have come to a standstill while the County waits for the final disposition and close-out of projects connected with Hurricanes Ivan and Dennis. During 2009, the County received $2.08 million from FEMA for the construction of the County s new One Stop Building and new Pensacola Beach Fire Station. In addition to FEMA, the County received $2 million in insurance reimbursements and a $1 million transfer from the General Fund to help cover the costs that are not grant or FEMA eligible. The CRA Fund accounts for the revenues and expenditures for the redevelopment areas established in the County. There are currently five established redevelopment areas included under the CRA jurisdiction. The CRA is funded through transfers from the General Fund of tax increment (TIF) portions of property taxes for each respective district. The County s new budgeting policy for the CRA allows for 50% of the TIF to be transferred from the General Fund. By State Statute, the County must pay at least 50% of the taxes collected on the TIF districts to the CRA. In fiscal year 2008, the County transferred 75% of the TIF compared to the 50% transfer in 2009, decreasing revenue into the CRA Fund by 31.37%. Expenses within the CRA districts remained relatively constant between 2009 and 2008 which allowed for a modest increase in net assets for the CRA Fund of $102,728 compared to the 2008 increase of $1,081,096. The CRA enjoys a healthy fund balance at the end of fiscal year 2009 of $5,988,114 and is well positioned to weather economic fluctuations. Taxes are a major source of revenue for both the Transportation and Drainage Fund and the LOST Fund. Gas taxes are used by the Transportation Fund for the construction and maintenance of roads in the County. Gas taxes increased 16.48% in fiscal year 2009 due to more stable demand as gasoline prices have leveled out this fiscal year. Revenues and expenditures in the Transportation and Drainage Fund reflect the continuation of multiple road improvement projects and drainage in which the County is engaged. The local option sales tax imposed on Escambia County is used by the LOST Fund to acquire and construct capital projects within the County. Sales tax revenues decreased 8% over fiscal year The LOST Fund received a refund of $11 million due to the cancellation of a joint Public Safety Building project between the County and Pensacola Junior College (PJC). Funds that had been paid to PJC in a prior year were returned to the County to be reallocated to other projects. This refund accounts for the majority of the $13 million increase to net assets during fiscal year The remaining $2 million increase in net assets is due to fewer transfers out to other funds during Interlocal agreements with 12

19 the City of Pensacola and ECUA help the County complete several major road and building projects. Expenditures increased 32.5% over fiscal year 2008 due to the purchase of two properties that will be renovated for use as community centers. Additionally, park upgrades and park equipment along with continuing work on the new Pensacola Bay Fishing Bridge contributed to the overall increase in expenditures. Proprietary Funds. Proprietary fund statements provide the same information as in the business activities column of the government-wide statements, but in greater detail, and on a fund basis for enterprise funds and the internal service fund. The major enterprise funds reported are the Solid Waste Fund and the Ambulance Fund. Enterprise Funds. At September 30, 2009, total net assets amounted to $48,469,782 for enterprise funds, as compared to $45,578,752 at September 30, Changes to net assets are a result of operations, other non-operating revenues and expenses, capital contributions and grants. The increase in net assets for enterprise funds was $2,891,030 compared to a decrease of $343,134 for fiscal year Operating income is the result of operating revenues less operating expenses. The chart below compares operating income or loss for all enterprise funds. Business-type Activities Operating Income (Loss) $2,000,000 $1,000,000 $0 ($1,000,000) ($2,000,000) ($3,000,000) Solid Waste Fund Inspection Fund Ambulance Fund Civic Center Fund Operating revenues in the Solid Waste Fund decreased 18.26% along with a 23% decrease in operating expenses. The main reason for the decrease in revenue was due to the implementation of a County-wide voluntary recycling program. As an incentive to recycle, the Perdido Landfill does not charge for the dumping of recyclable materials. Decreased expenses were noted in materials and supplies, and insurance. Engineering estimates of future landfill maintenance and closure costs decreased $1,969,072 as a result the Landfill s active landfill mining initiative started in 2008 which has added life and capacity to the landfill cells at the Perdido Landfill. The Civic Center saw a decrease in operating revenues of $155,452 or 4.28%. Even though the Civic Center experienced a 10.89% decrease in operating expenses, the County gave the Civic Center a cash subsidy of $520,158 during fiscal year Tourist Development Tax dollars are used to subsidize operating losses at the Civic Center. The Inspection Fund experienced a 21.29% decrease in charges for services revenues this year as compared to fiscal year 2008 which was directly attributable to diminished activity in the housing and commercial real estate market in general. While a 6.21% decrease in salaries, along with modest 13

20 decreases in materials, insurance, and other miscellaneous expenses were noted, the revenues generated were not sufficient to cover the costs, resulting in an operating loss of $1,101,808. The Ambulance Fund experienced a 1.77% increase in their charges for services revenue during fiscal year For the first time, the Ambulance Fund received a $1.5 million subsidy from the General Fund. The increase in revenue was accompanied by a 6.45% decrease in salary and benefit costs, and a 7.76% decrease in materials and supplies. Additionally, due to increased efforts and a new contract with a collection agency, the collection rate of billing increased, which resulted in a decrease of $191,767 (4.10%) in the bad debt expense. The Ambulance Fund ended the fiscal year with a net operating loss of $114,636 compared to the operating loss in fiscal year 2008 of $1,205,890. Major enterprise funds are shown in the Financial Statements Section and the Non-Major enterprise funds are shown in the Combining Statements section of the annual report. Other factors concerning the finances of these funds have been addressed in the discussion of the County s business-type activities. Internal Service Funds. The Internal Service Fund as presented is a combination of the internal service fund of the Board of County Commissioners, the Sheriff, and the Clerk of the Circuit Court. The combining statements for the three internal service funds can be found in the Combining Statements section of this annual report. The Internal Service Fund is designed to recover the internal costs of general services provided to the other fund groups and to accumulate amounts required to fund the compensated absences liability of the Sheriff s and the Clerk of Court s employees. The Sheriff and Clerk continue to methodically fund the compensated absences liability of $17,649,553 and $1,745,421, respectively. The Board s Internal Service Fund experienced an operating loss of $311,849. The net asset deficits for the combined internal service funds are ($3,437,483) and ($3,083,563) for the fiscal years 2009 and 2008, respectively. General Fund Budgetary Highlights Operating a government the size of Escambia County is a dynamic business and budget amendments are approved throughout the year. The General Fund budget to actual statement is provided in the Basic Financial Statements section of this report on page 27. Budget columns are provided for both the original budget adopted for fiscal year 2009, as well as the final budget. Budgeted Revenues: A comparison of original budget to final budget for general fund revenues shows slight decreases in taxes, intergovernmental revenue, charges for services, investment income, and miscellaneous revenues. These changes are related to changes in estimates of various collections and receipts or changes in amounts to be received from grants and state-shared revenues. This is an indication that the County remains committed to a conservative approach when developing the budget for the general fund. A comparison of final budget to actual general fund revenues shows a difference for taxes mainly due to less than expected ad valorem receipts, better than expected fee collections, less than expected state revenue sharing and half-cent sales tax dollars, better than expected interest earnings, and better than expected miscellaneous receipts in the form of inter-agency contributions to help offset medical costs in the indigent population. Budgeted Expenditures: Minor differences between the original budgeted expenditures and the final amended budget can be briefly summarized as follows: Decrease in general government activities of $5,659,624 mainly due to a reduction in the amount budgeted for operating reserves Increase in public safety activities of $1,756,321 due to several reasons including an increase of $50,000 in personal services due to a reorganization within the Public Safety Bureau; increases 14

21 of $103,000 for current year operating supplies and maintenance, and a re-budget of $1 million in unfinished purchase commitments from the prior year Increase in physical environment activities of $109,877 due to an increase in costs associated with a reorganization within the Land Management Division Decrease in human services activities of $13,412 due to decreases in cost estimates for repair and maintenance, operating supplies, and communications expenditures Increase is culture/recreation activities of $2,500 due to an increase in the cost of umpires for the Adult Sports Division of the Parks and Recreation Program Increase in transfers out of $11,818,421 The favorable difference between the final amended budget for total expenditures and the actual total expenditures is chiefly due to the $24 million roll-forward of prior year funding that is appropriated as reserves in the general government category to be used for unanticipated events. The increase in the transfers out category was to allow for approximately $9 million of General Fund reserves to be transferred to the Debt Service Fund for future bond payments. The remaining $3 million was transferred to the Development Fund to be used for economic development initiatives in the form of payments and incentives to organizations promising job creation within Escambia County. Prior to the transfer out of revenues of approximately $12 million, as mentioned above, the General Fund had roughly a $3.7 million decrease in net assets, which represents a shortfall in current year revenue and the use of existing fund balance. Capital Asset and Debt Administration Capital Assets. The financial statements present capital assets in two groups: those assets subject to depreciation, such as equipment or operational facilities and those assets not subject to depreciation such as land and construction-in-progress. Escambia County s capital assets for both governmental and business-type activities, net of accumulated depreciation totaled $575,618,531 and $550,396,778 for fiscal years 2009 and 2008, respectively. This investment in capital assets, both purchased and donated, includes land, buildings, improvements, machinery and equipment, parks, roads, bridges and other major infrastructure. A comparison of the increase in Escambia County s investment in capital assets, net of depreciation is depicted in the graph below. Governmental net capital assets increased by $20,788,904 or 4.10% and business-type net capital assets increased $4,432,849 or 10.27% Capital Asset and Debt Administration 600,000, ,000, ,000, ,000, ,000, ,000,000 0 Governmental Business-type Sources of donated assets each year stem from new subdivisions in the County. New subdivisions are required to meet the County s comprehensive planning requirements and, in doing so, provide additions 15

22 to the County s infrastructure for roads, sidewalks, stormwater drainage, and in some cases parks and recreational facilities. Major capital asset events during the current fiscal year include the following: Donated general government assets consist of developer funded road and drainage infrastructure and sidewalks in new planned developments and subdivisions. Donated infrastructure in fiscal year 2009 amounted to $382,128 as compared to $2,537,239 last fiscal year. Additionally, the Santa Rosa Island Authority transferred $16 million of roads to the County. The roads were built on Santa Rosa Island with bond proceeds from prior years. Approximately $2 million of land was purchased as right-of-way acquisitions for on-going road projects. Two properties, the Wedgewood School and the Old Molino School, were purchased from the Escambia County School Board District for $3,347,367. The County plans to renovate these properties for use as community centers. These projects are part of a continuing revitalization effort throughout the County. Construction began on a new County facility to house the building inspections and engineering departments. Costs to date on the building are nearly $5 million. The facility has been dubbed the One-Stop Building because citizens will be able to get all their permitting and plan development reviews, etc. taken care of all at this one site. Construction continued on many of the County s capital projects including: Road improvements in excess of $16 million Drainage improvements in excess of $900,000 Right-of-ways and sidewalks $419,126 Pensacola Bay Fishing Bridge $7.3 million Various other parks approximately $1.0 million Perdido Key improvements $208,000 Various Fire Station renovations $346,000 Various County facilities $288,000 Renovations and improvements to various County facilities, including the completion of the Pensacola Beach Fire Station, the MC Blanchard Judicial Building s security system, and the Old County Courthouse totaled approximately $3 million. Various departments purchased approximately $616,700 of general computer equipment and upgrades. The Roads and Bridges Department purchased approximately $390,000 of heavy equipment for use at the Road Department, and various other light equipment items to be used for road operations. The Fire Department purchased approximately $295,000 of fire fighting and rescue equipment and vehicles. Court-related functions purchased computer equipment and upgrades of $31,000. The Supervisor of Elections purchased approximately $41,000 of new voting machines and software as required by the State guidelines. Emergency Management purchased communication tower sites, new 911-Equipment, and various vehicles and equipment for approximately $1.7 million. Parks and Recreation purchased nearly $64,000 of large vehicles and mowing equipment for purposes of parks maintenance and operations. 16

23 Governmental Activities Escambia County, Florida Capital Assets (net of depreciation) as of 09/30/09 Equipment 5% Construction in Progress 7% Land 6% Buildings and Improvements 24% Infrastructure 58% Business-type Activites Escambia County, Florida Capital Assets (net of accumulated depreciation) as of 09/30/09 Equipment 15% Land 10% Infrastructure 39% Buildings and Improvements 36% Additional information on Escambia County s capital assets can be found in the Notes Section of this report. Long-Term Debt. At the end of the fiscal year 2009, the County had total bonded debt of $111,930,000, or approximately $378 per capita, which is secured solely by specified revenue sources (e.g., toll bridge revenues, tourist development taxes, and half-cent sales taxes). The County has no general obligation debt. The County s outstanding notes, leases, and bonded debt decreased by a net amount of $4,940,718 during fiscal year There was one new draw of $1,227,000, on the FNMA loan of which was subsequently paid off in total of $1,500,000. Further discussion of this loan and other County debt can be found on pages of this report. 17

24 Escambia County, Florida Long-Term Debt Governmental Activities Revenue Bonds: Sales tax revenue bonds $80,915,000 $82,780,000 Tourist development bonds 11,385,000 12,320,000 Capital improvement bonds 19,630,000 20,110,000 Total revenue bonds 111,930, ,210,000 Notes and loans: Capital improvement notes 9,005,000 9,705,000 State of Florida Toll Fac. Note 0 52,500 FNMA Loan 0 273,000 Capital Leases 1,164,512 1,799,730 Total notes/loans/leases 10,169,512 11,830,230 Total Long-Term Debt $122,099,512 $127,040,230 Standard & Poor s affirmed that Escambia County maintains a bond rating of AA- with a stable rating. The stable rating indicates that a rating is not likely to change. The County has met and complied with all technical and financial covenants in the bond contracts. No legal debt limit is set by the Constitution of the State of Florida or Escambia County. Additional information on Escambia County s long-term debt can be found in the Notes section of this report. Economic Factors and Year 2010 Budgets and Rates The fiscal 2010 budget was balanced holding the County-wide millage rate at and the Law Enforcement MSTU rate remaining at.685 mils. The County is committed to responsible levels of taxation for the taxpayers of Escambia County. Factors considered in preparing Escambia County s budget for the 2010 fiscal year included: The reduction in assessed values on the property in Escambia County contributed to a total overall budget reduction of over $24 million for fiscal 2010, even though the millage rate remained at the 2009 level. The Consumer s Price Index (CPI) decreased 1.3% over the previous year s rate. While the CPI is not specific to Escambia County, it does provide an indication of the overall economic condition of the nation and provides economic guidance for budgeting. One focus has been on continuing to reduce staffing levels paid from general fund revenues. Anticipation of higher levels of grant funding for various projects and activities to continue in the years to come. The purchase of heavy equipment will be based on life-cycle costing to include the annual maintenance cost of a vehicle. Maintenance of existing infrastructure consisting of transportation systems, County facilities, drainage and parks are a first priority. Continue to provide urban-type services including parks and recreation, public works, growth management, code enforcement, and fire protection services at a fiscally responsible cost. 18

25 The entire organization is now mobilized to aggressively pursue capitalizing on and maximizing the use of all available resources, particularly in identifying and implementing alternative services. User fees will be implemented when appropriate. Funds that are receiving subsidies will be monitored so that subsidies do not get out of control. During the current fiscal year, unreserved fund balance in the general fund decreased to $31,365,915. An amount of $24,880,751is available for spending in the 2010 fiscal year budget, a 42% decrease from the prior fiscal year. However, this healthy fund balance still allows Escambia County Government to continue maintaining basic levels of service to the residents during fiscal Escambia County continues to review various service fees and charges to meet the ongoing needs of infrastructure and services for County residents. The fiscal year 2010 budget development was challenging in that the County is faced with severely limited funding while trying to address the everexpanding needs of the community. Escambia County remains committed to providing efficient and responsive services that enhance the quality of life, meet common needs, and promote a safe and healthy community. Requests for Information. This financial report is designed to provide a general overview of Escambia County Government s finances. Questions concerning any of the information provided in this report or requests for additional financial information may be addressed to the Clerk of the Circuit Court & Comptroller, Finance Department, 221 Palafox Place, Suite 130, Pensacola, Florida The Clerk s office may also be contacted through the Website address: 19

26 STATEMENT OF NET ASSETS AS OF SEPTEMBER 30, 2009 Primary Government Component Units Governmental Business-type Total Activities Activities Primary Government Total ASSETS Cash and cash equivalents $22,142,087 $681,743 $22,823,830 $4,541,720 Equity in pooled cash and investments 156,182,633 14,387, ,570,337 0 Investments ,925,171 Receivables (net of allowance for uncollectibles) 2,975,630 3,841,820 6,817,450 1,062,618 Internal balances 5,470,021 (5,470,021) 0 0 Due from other governmental units 13,667, ,667, ,139 Inventory 1,358, ,515 1,577,898 0 Other current assets 1,262,212 33,531 1,295, ,499 Restricted assets 31,191 5,382,181 5,413,372 5,450,028 Bank participation agreements ,548 Unamortized bond issuance costs 1,566, ,566,647 0 Other assets ,569,946 Capital assets: Land and construction in progress non-depreciable 71,325,252 4,849,859 76,175,111 0 Depreciable (net) 456,703,938 42,739, ,443,420 15,987,781 Total assets 732,685,261 66,665, ,351,075 32,090,450 LIABILITIES Vouchers payable 7,024,873 2,349,542 9,374, ,676 Contracts payable 1,649,580 3,306 1,652,886 0 Salaries and benefits payable 9,052, ,868 9,770,050 86,790 Due to other governmental units 5,898,802 7,852 5,906,654 57,464 Other current liabilities 11,030, ,898 11,306, ,804 Payable from restricted assets 31, , ,978 0 Non-current liabilities: Due within one year: Notes, bonds, and loans payable 4,145, ,145,000 0 Capital leases 657, ,008 2,143 Compensated absences 4,779, ,779,001 0 Landfill closure and postclosure care payable 0 105, ,398 0 Claims liabilities 4,611, ,611,673 0 Due in more than one year: Compensated absences 23,718,908 1,657,313 25,376, ,705 Notes, bonds, and loans payable 116,790, ,790,000 0 Unearned revenues ,703 Capital leases 507, ,504 0 Unamortized bond premium 812, ,418 0 Landfill closure and postclosure care payable 0 12,179,411 12,179,411 0 Other post-employment benefits 4,255, ,657 4,754,502 71,291 Claims liabilities 6,454, ,454,589 0 Total liabilities 201,418,810 18,196, ,614,842 1,934,576 NET ASSETS Invested in capital assets (net of related debt) 421,039,009 47,589, ,628,350 15,985,638 Restricted: Bond covenants 9,422, ,422,145 1,243,867 Unrestricted 100,805, , ,685,738 12,926,369 Total net assets $531,266,451 $48,469,782 $579,736,233 $30,155,874 The accompanying notes are an integral part of the financial statements. 20

27 STATEMENT OF ACTIVITIES FOR THE YEAR ENDED SEPTEMBER 30, 2009 Program Revenues Operating Capital Charges for Grants and Grants and Expenses Services Contributions Contributions Function/Program Activities Governmental activities: General government $68,563,393 $26,578,120 $967,387 $1,487,478 Public safety 118,798,741 14,589,424 3,514,513 5,530,936 Physical environment 4,348,338 2,451,703 39,798 1,400,935 Transportation 43,887,309 1,023,400 3,768,760 19,597,709 Economic environment 11,326,435 18,000 3,701,976 4,952,850 Human services 3,385, ,115 0 Culture and recreation 5,850, ,839 85,675 85,727 Court related 8,606,824 9,930,403 2,551,204 0 Interest on long term debt 6,470, Total governmental activities 271,238,205 54,856,889 15,183,428 33,055,635 Business-type activities: Solid waste 7,861,459 9,829,611 6,288 10,238 Inspection fund 3,141,498 1,996, Ambulance 14,194,517 14,074, ,175 Civic center 5,522,645 3,473, Total business-type activities 30,720,119 29,373,762 6, ,413 Total primary government $301,958,324 $84,230,651 $15,189,847 $34,028,048 Component units: Law Library Board $117,593 $88,977 $0 $0 Santa Rosa Island Authority 27,736,866 6,435, ,999 0 Housing Finance Authority 657,656 2,978, Total component units $28,512,115 $9,503,431 $107,999 $0 The accompanying notes are an integral part of the financial statements General Revenues: Property taxes Tourist development taxes Intergovernmental, unrestricted Sales taxes Gas taxes Unrestricted interest Gain/(Loss) on sale of assets Miscellaneous revenues Transfers - internal activities Total general revenues, special items, and transfers Change in net assets Net assets - beginning Net assets - ending 21

28 Net (Expense) Revenue and Changes in Net Assets Primary Government Governmental Business-type Component Activities Activities Total Units ($39,530,408) $0 ($39,530,408) $0 (95,163,868) 0 (95,163,868) 0 (455,902) 0 (455,902) 0 (19,497,440) 0 (19,497,440) 0 (2,653,609) 0 (2,653,609) 0 (2,831,484) 0 (2,831,484) 0 (5,413,719) 0 (5,413,719) 0 3,874, ,874,783 0 (6,470,606) 0 (6,470,606) 0 (168,142,253) 0 (168,142,253) 0 0 1,984,678 1,984, (1,144,598) (1,144,598) , , (2,049,541) (2,049,541) 0 0 (367,525) (367,525) 0 (168,142,253) (367,525) (168,509,778) 0 $0 $0 $0 ($28,616) (21,193,198) ,321, (18,900,685) 107,316, ,316, ,332, ,332, ,151, ,151, ,756, ,756, ,441, ,441, ,364, ,256 3,540, , , , ,471,644 54,688 13,526, (2,829,839) 2,829,839 (0) 0 198,004,718 3,258, ,263, ,928 29,862,465 2,891,030 32,753,495 (18,557,757) 501,403,986 45,578, ,982,738 48,713,631 $531,266,451 $48,469,782 $579,736,233 $30,155,874 22

29 BALANCE SHEET GOVERNMENTAL FUNDS Community SEPTEMBER 30, 2009 Redevelopment Transportation Other Total Disaster Agency and Governmental Governmental General Recovery Fund Drainage LOST Funds Funds ASSETS Cash and cash equivalents $10,467,806 $0 $0 $10,800 $0 $7,945,271 $18,423,877 Equity in pooled cash and investments 32,584, ,468 6,153,346 3,920,973 59,218,686 39,231, ,389,445 Receivables (net of allowance for uncollectibles) 1,338, , ,928 1,725,458 Due from other funds 460, , ,698 Due from other governmental units 3,232,585 1,600, ,492,539 4,583,060 2,495,884 13,404,246 Inventory 639, , ,090 1,034,944 Other current assets 69, ,537 Advance to other funds ,682, ,682,355 Total assets $48,793,015 $1,880,646 $6,153,346 $5,658,360 $81,484,101 $50,448,092 $194,417,560 LIABILITIES Vouchers payable $1,619,373 $227,924 $109,137 $347,921 $2,907,008 1,045,152 $6,256,515 Contracts payable 11, ,118 33, ,127, ,909 1,649,580 Salaries payable 7,000, , ,264 13,719 1,113,415 9,009,146 Due to other funds 157, , , ,132 Due to other governmental units 579,620 2, , ,396 5,077,532 5,898,761 Other current liabilities 6,260,029 2,569, , ,820,398 10,748,385 Long-term liabilities: Advance from other funds 0 17,682, ,479 18,236,834 Total liabilities 15,628,054 20,795, ,232 1,306,310 4,364,756 10,399,340 52,659,353 FUND BALANCES Reserved for encumbrances 889,438 50, , ,905 18,364,199 8,999,496 29,495,632 Reserved for advances to other funds ,682, ,682,355 Reserved for debt service ,422,145 9,422,145 Reserved for inventory 639, , ,090 1,034,944 Unreserved, reported in: General fund 31,635, ,635,915 Special revenue funds 0 (18,965,027) 5,369,532 3,552, ,473,461 14,430,865 Capital projects ,072,791 (3,016,440) 38,056,351 Total fund balances 33,164,961 (18,915,015) 5,988,114 4,352,050 77,119,345 40,048, ,758,207 Total liabilities and fund balances $48,793,015 $1,880,646 $6,153,346 $5,658,360 $81,484,101 $50,448,092 $194,417,560 The accompanying notes are an integral part of the financial statements. 23

30 RECONCILIATION OF THE BALANCE SHEET TO THE STATEMENT OF NET ASSETS GOVERNMENTAL FUNDS AS OF SEPTEMBER 30, 2009 Fund balances - total governmental funds $141,758,207 Amounts reported for governmental activities in the statement of net assets are different because: Capital assets used in governmental activities are not financial resources and therefore are not reported in the governmental funds. The cost of the assets is $965,877,516 and the accumulated 527,318,212 depreciation is $438,559,304. Long-term liabilities, including bonds payable are not due and payable in the current period and therefore are not reported in the governmental funds. Governmental bonds, notes and loans payable ($120,935,000) Compensated absences (8,806,073) Leases (1,164,512) Unamortized bond issuance costs 1,566,647 Unamortized original issue bond premium (812,418) Other post-employment benefits (4,221,129) (134,372,485) Internal service funds are used by management to charge the costs of certain activities to individual funds. The assets and liabilities of the internal service fund are reported with governmental activities. (3,437,483) Net assets of governmental activities $531,266,451 The accompanying notes are an integral part of the financial statements. 24

31 STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES GOVERNMENTAL FUNDS FOR THE YEAR ENDED SEPTEMBER 30, 2009 Community Transportation Other Total Disaster Redevelopment and Governmental Governmental General Recovery Fund Drainage LOST Funds Funds Revenues: Taxes $112,968,836 $0 $0 $8,368,940 $31,542,431 $5,707,186 $158,587,393 Permits, fees and special assessments 13,125, , ,383,297 25,174,398 Intergovernmental 25,323,416 2,853, ,931,950 2,326,678 23,566,682 59,001,903 Charges for services 5,944, , ,533 12,340,792 18,612,179 Fines and forfeitures 49, ,708,486 3,757,488 Investment income 532, ,479 37,427 2,051, ,559 3,126,365 Miscellaneous 2,497, ,588 12,472,565 1,109,100 16,400,988 Total revenues 160,440,454 2,853,177 64,479 14,551,496 48,495,006 58,256, ,660,714 Expenditures: Current: General government 55,150, ,927, ,873,841 68,952,051 Public safety 82,483,330 4,766, ,012, ,740, ,003,240 Physical environment 953, , ,350,581 4,831,150 Transportation ,554, ,060,208 24,614,855 Economic environment ,731,470 11,731,470 Human services 2,400, ,127 2,871,949 Culture and recreation 1,623, ,842 1,644,732 Capital improvements: ,521,531 2,398,643 37,920,174 Debt service: Principal retirement ,167,718 6,167,718 Interest and fiscal charges 0 860, ,610,555 6,470,606 Total expenditures 142,612,430 5,626,530 1,927,655 21,093,992 35,521,531 71,425, ,207,945 Excess (deficiency) of revenue over (under) expenditures 17,828,024 (2,773,353) (1,863,176) (6,542,496) 12,973,475 (13,169,705) 6,452,769 Other financing sources (uses): Note(s) issuance ,227,000 1,227,000 Transfers to State Clerk of Court Trust Fund (48,401) (48,401) Insurance reimbursements 73,394 2,016, ,162 85,675 66,091 2,312,100 Transfers in 1,474,382 1,000,000 1,965,904 7,172, ,935,607 40,548,239 Transfers out (35,110,489) (8,267,589) (43,378,078) Total other financing sources (uses) (33,562,713) 3,016,778 1,965,904 7,242,508 85,675 21,912, ,860 Net change in fund balances (15,734,689) 243, , ,012 13,059,150 8,743,003 7,113,629 Fund balances at beginning of year 48,899,650 (19,158,440) 5,885,386 3,652,038 64,060,195 31,305, ,644,578 Fund balances (deficit) at end of year $33,164,961 ($18,915,015) $5,988,114 $4,352,050 $77,119,345 $40,048,752 $141,758,207 The accompanying notes are an integral part of the financial statements 25

32 RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES OF GOVERNMENT FUNDS TO THE STATEMENT OF ACTIVITIES FOR THE YEAR ENDED SEPTEMBER 30, 2009 Net change in fund balances - total governmental funds $7,113,629 Amounts reported for governmental activities in the statement of activities are different because: Governmental funds report capital outlays as expenditures. However, in the statement of activities, the cost of those assets is depreciated over their estimated useful lives: Expenditures for capital assets $46,809,042 Less current year depreciation (41,979,202) 4,829,840 Repayment of borrowed funds - principal is an expenditure in governmental funds, but the repayment reduces long-term liabilities in the statement of net assets: Principal payments 6,167,718 Governmental funds report new issues of debt as revenue. However, in the statement of activities, the issuance of debt is recorded as a long term liability as follows: Loans payable (1,227,000) (1,227,000) Expenses and revenues related to the issuance of bonds is amortized over the life of the bonds: Bond issuance costs (79,649) Original issue premium/discount 42,882 (36,767) Some expenses reported in the statement of activities do not require the use of current financial resources and therefore are not reported as expenditures in governmental funds: Salary expense associated with compensated absences 161,303 Salary expense associated with other post-employment benefits (2,091,678) Internal service funds are used by management to charge the costs of certain activities to individual funds. The net (expenses) revenue of the internal service fund is reported with governmental activities (919,832) Losses on disposal of capital assets do not reduce financial resources of governmental funds. (1,161,074) Donations of capital items increase financial resources of governmental funds. 17,026,326 Change in net assets of governmental activities $29,862,465 The accompanying notes are an integral part of the financial statements 26

33 GENERAL FUND STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL FOR THE YEAR ENDED SEPTEMBER 30, 2009 Variance with Final Budget Original Final Positive Budget Budget Actual (Negative) Revenues: Taxes $116,706,299 $114,402,116 $112,968,836 ($1,433,280) Permits, fees and special assessments 11,855,191 11,855,191 13,125,173 1,269,982 Intergovernmental 27,902,271 25,626,612 25,323,416 (303,196) Charges for services 6,240,259 5,860,420 5,944,191 83,771 Fines and forfeitures 64,993 64,993 49,002 (15,991) Investment income 35,500 10, , ,579 Miscellaneous 3,972,128 2,061,417 2,497, ,318 Total revenues 166,776, ,881, ,440, ,183 Expenditures: Current: General government 83,982,801 78,323,177 55,150,555 23,172,622 Public safety 82,947,293 84,703,614 82,483,330 2,220,284 Physical environment 865, , ,833 21,652 Human services 3,054,420 3,041,008 2,400, ,186 Culture and recreation 1,934,386 1,936,886 1,623, ,996 Total expenditures 172,784, ,980, ,612,430 26,367,740 Excess (deficiency) of revenue over (under) expenditures (6,007,867) (9,098,899) 17,828,024 26,926,923 Other financing sources (uses): Insurance reimbursements ,394 73,394 Transfers in 1,307,325 1,458,159 1,474,382 16,223 Transfers out (23,801,182) (35,619,603) (35,110,489) 509,114 Total other financing sources (uses) (22,493,857) (34,161,444) (33,562,713) 598,731 Net change in fund balances (28,501,724) (43,260,343) (15,734,689) 27,525,654 Fund balances at beginning of year 28,501,724 43,260,343 48,899,650 5,639,307 Fund balances (deficit) at end of year $0 $0 $33,164,961 $33,164,961 The accompanying notes are an integral part of the financial statements 27

34 DISASTER RECOVERY STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL FOR THE YEAR ENDED SEPTEMBER 30, 2009 Variance with Final Budget Original Final Positive Budget Budget Actual (Negative) Revenues: Intergovernmental $0 $168,810 $2,853,177 $2,684,367 Total revenues 0 168,810 2,853,177 2,684,367 Expenditures: Current: General government 370, , ,168 Public safety 0 12,672,325 4,766,479 7,905,846 Debt service Interest and fiscal charges 0 1,000, , ,949 Total expenditures 370,168 14,042,493 5,626,530 8,415,963 Excess (deficiency) of revenue over (under) expenditures (370,168) (13,873,683) (2,773,353) 11,100,330 Other financing sources (uses): Insurance reimbursement 0 0 2,016,778 2,016,778 Transfers in 0 1,000,000 1,000,000 0 Total other financing sources (uses) 0 1,000,000 3,016,778 2,016,778 Net change in fund balances (370,168) (12,873,683) 243,425 13,117,108 Fund balances at beginning of year 370,168 12,873,683 (19,158,440) (32,032,123) Fund balances (deficit) at end of year $0 $0 ($18,915,015) ($18,915,015) The accompanying notes are an integral part of the financial statements 28

35 COMMUNITY REDEVELOPMENT AGENCY STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL FOR THE YEAR ENDED SEPTEMBER 30, 2009 Variance with Final Budget Original Final Positive Budget Budget Actual (Negative) Revenues: Investment income $0 $0 $64,479 $64,479 Miscellaneous 0 2,206 0 (2,206) Total revenues 0 2,206 64,479 62,273 Expenditures: Current: General government 2,901,030 8,797,573 1,927,655 6,869,918 Total expenditures 2,901,030 8,797,573 1,927,655 6,869,918 Excess (deficiency) of revenue over (under) expenditures (2,901,030) (8,795,367) (1,863,176) 6,932,191 Other financing sources (uses): Transfers in 1,956,953 1,965,904 1,965,904 0 Total other financing sources (uses) 1,956,953 1,965,904 1,965,904 0 Net change in fund balances (944,077) (6,829,463) 102,728 6,932,191 Fund balances at beginning of year 944,077 6,829,463 5,885,386 (944,077) Fund balances (deficit) at end of year $0 $0 $5,988,114 $5,988,114 The accompanying notes are an integral part of the financial statements 29

36 TRANSPORTATION AND DRAINAGE STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL FOR THE YEAR ENDED SEPTEMBER 30, 2009 Variance with Final Budget Original Final Positive Budget Budget Actual (Negative) Revenues: Taxes $7,400,000 $8,573,539 $8,368,940 ($204,599) Permits, fees and special assessments 706, , ,928 (40,216) Intergovernmental 4,804,750 4,804,750 4,931, ,200 Charges for services 215, , ,663 9,804 Investment income ,427 37,427 Miscellaneous 531, , ,588 2,158 Total revenues 13,658,003 14,619,722 14,551,496 (68,226) Expenditures: Current: Public safety 5,529,445 6,015,223 6,012,609 2,614 Physical environment 554, , ,736 66,598 Transportation 14,101,488 18,655,363 14,554,647 4,100,716 Total expenditures 20,185,227 25,263,920 21,093,992 4,169,928 Excess (deficiency) of revenue over (under) expenditures (6,527,224) (10,644,198) (6,542,496) 4,101,702 Other financing sources (uses): Note(s) issuance 0 475,000 0 (475,000) Insurance reimbursements ,162 70,162 Transfers in 7,172,410 7,172,346 7,172,346 0 Total other financing sources (uses) 7,172,410 7,647,346 7,242,508 (404,838) Net change in fund balances 645,186 (2,996,852) 700,012 3,696,864 Fund balances at beginning of year (645,186) 2,996,852 3,652, ,186 Fund balances (deficit) at end of year $0 $0 $4,352,050 $4,352,050 The accompanying notes are an integral part of the financial statements 30

37 STATEMENT OF NET ASSETS PROPRIETARY FUNDS SEPTEMBER 30, 2009 Business-type Activities Governmental Activities ASSETS Solid Waste Ambulance Other Non-major Total Internal Service Fund Current assets: Cash and cash equivalents $2,625 $300 $678,818 $681,743 $3,718,210 Equity in pooled cash and investments 7,022,645 2,610,687 4,754,372 14,387,704 14,793,188 Receivables (net of allowance for uncollectibles) 695,413 3,029, ,618 3,841,820 1,351,583 Due from other funds ,058 Due from other governmental units ,021 Inventory 0 172,856 46, , ,439 Restricted cash and cash equivalents 100, , ,787 31,191 Other current assets ,531 33,531 1,192,675 Total current assets 7,821,253 5,813,632 5,930,215 19,565,100 21,744,365 Noncurrent assets: Restricted assets Cash and cash equivalents 4,981, ,981,394 0 Capital assets: Land and other non-depreciable assets 4,843,416 6, ,849,859 0 Capital assets (net of depreciation) 29,812,656 2,659,945 10,266,881 42,739, ,978 Advance to other funds ,024,479 Total noncurrent assets 39,637,466 2,666,388 10,266,881 52,570,735 6,735,457 Total assets 47,458,719 8,480,020 16,197,096 72,135,835 28,479,822 LIABILITIES Current liabilities: Vouchers payable 1,484,349 29, ,997 2,349, ,358 Contracts payable 3, ,306 0 Salaries, compensated absences and benefits payable 149, , , ,868 2,714,267 Due to other funds Due to other governmental units 924 5,730 1,198 7, Payable from restricted assets: Customer deposits 100, , ,787 31,191 Landfill closure 105, ,398 0 Other current liabilities 2, , , ,851 Claims liabilities ,611,673 Total current liabilities 1,846, ,888 1,543,445 3,860,672 8,407,395 Non-current liabilities: Compensated absences 548, , ,262 1,657,313 17,022,891 Advance from other funds 5,470, ,470,000 0 Other post-employment benefits 109, ,369 95, ,657 32,430 Landfill closure and postclosure care payable 12,179, ,179,411 0 Claims liabilities ,454,589 Total non-current liabilities 18,308, , ,700 19,805,381 23,509,910 Total liabilities 20,154,523 1,423,385 2,088,145 23,666,053 31,917,305 NET ASSETS Invested in capital assets, net of related debt 34,656,072 2,666,388 10,266,881 47,589, ,978 Unrestricted (7,351,876) 4,390,247 3,842, ,441 (4,148,461) Total net assets $27,304,196 $7,056,635 $14,108,951 $48,469,782 ($3,437,483) The accompanying notes are an integral part of the financial statements. 31

38 STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN NET ASSETS PROPRIETARY FUNDS FOR THE YEAR ENDED SEPTEMBER 30, 2009 Business-type Activities Governmental Activities Solid Waste Ambulance Other Non-major Total Internal Service Fund Operating revenues: Permits, fees and special assessments $0 $0 $1,944,339 $1,944,339 $0 Intergovernmental 3, ,288 0 Charges for services 9,829,611 13,913,231 3,480,619 27,223,461 14,244,144 Fines and forfeitures ,046 45,046 0 Miscellaneous income 4, ,624 49, , ,043 Total operating revenues 9,837,283 14,074,855 5,519,600 29,431,738 14,476,187 Operating expenses: Personal services 2,849,693 7,489,751 2,439,696 12,779,140 4,363,941 Contractual services 1,531, ,679 4,379,116 6,080, ,376 Claims expense, changes in estimate, and fees ,540,904 Materials and supplies 653, ,164 63,835 1,346,274 3,336,112 Travel and vehicle costs 42,506 4,288 1,977 48,771 1,324 Depreciation 2,373, ,584 1,083,285 4,254,275 55,617 Bad debts 251 4,482,199 1,459 4,483,909 1,515,402 Memberships, dues and subscriptions 11,192 11,302 4,956 27,450 2,305 Insurance and bonds 301, , , ,079 2,671,936 Communications and freight services 35,160 68,672 49, ,063 3,074 Utilities 406, , ,020 1,488 Maintenance 454, ,865 99, ,407 56,160 Rentals and leases 263,389 14, , , Provision for closure and long-term care (1,790,561) 0 0 (1,790,561) 0 Training 34,899 3,398 3,854 42,151 3,569 Advertising and promotion 41, ,708 0 Miscellaneous 651,434 21, , ,599 2,209 Total operating expenses 7,861,459 14,189,491 8,664,143 30,715,093 15,724,358 Operating income (loss) 1,975,824 (114,636) (3,144,543) (1,283,355) (1,248,171) Non-operating revenues (expenses): Interest income 115,031 10,367 50, , ,916 Insurance reimbursements ,323 Gain (loss) on disposal of assets 196,276 (5,026) 1, ,746 (35) Other income 3, , Total non-operating revenues (expenses) 314,307 5,472 52, , ,304 Income (loss) before contributions and transfers 2,290,131 (109,164) (3,092,189) (911,222) (919,867) Other financing sources (uses): Capital contributions 10, , , ,947 Transfers in 0 1,522,330 1,834,636 3,356,966 0 Transfers (out) (383,732) (143,395) 0 (527,127) 0 Total contributions and transfers (373,494) 2,341,110 1,834,636 3,802, ,947 Change in net assets 1,916,637 2,231,946 (1,257,553) 2,891,030 (353,920) Net assets at beginning of year 25,387,559 4,824,689 15,366,504 45,578,752 (3,083,563) Net assets at ending of year $27,304,196 $7,056,635 $14,108,951 $48,469,782 ($3,437,483) The accompanying notes are an integral part of the financial statements. 32

39 STATEMENT OF CASH FLOWS PROPRIETARY FUNDS FOR THE YEAR ENDED SEPTEMBER 30, 2009 Business-type Activities Governmental Activities Solid Waste Ambulance Other Non-major Total Internal Service Fund Cash flows from operating activities: Cash received from customers $9,909,795 $13,975,418 $5,345,637 $29,230,850 $14,835,729 Cash payments to suppliers for goods and services (4,253,991) (5,924,514) (4,815,040) (14,993,545) (12,121,321) Cash payments to employees for services (2,812,389) (7,320,570) (2,370,666) (12,503,625) (2,592,810) Other non-operating revenues (expenses) 3, ,131 90,423 Net cash provided by (used in) operating activities 2,846, ,465 (1,840,069) 1,736, ,021 Cash flows from noncapital financing activities: Transfers in 0 1,522,330 1,834,636 3,356,966 0 Transfers out (383,732) (143,395) 0 (527,127) 0 Principal (paid)/received on interfund advance 5,470,000 0 (231,198) 5,238,802 (5,470,000) Net cash provided by (used in) noncapital financing activities 5,086,268 1,378,935 1,603,438 8,068,641 (5,470,000) Cash flows from capital and related financing activities: Acquisition and construction of capital assets (7,721,640) (6,320) (51,395) (7,779,355) (149,429) Proceeds from sale of assets 210, , ,871 0 Net cash used in capital and related financing activities (7,511,318) (6,320) (41,846) (7,559,484) (149,429) Cash flow from investing activities: Interest on investments 115,031 10,367 50, , ,916 Net cash provided by investing activities 115,031 10,367 50, , ,916 Net increase (decrease) in cash & cash equivalents 536,396 2,113,447 (227,619) 2,422,224 (5,169,492) Cash and cash equivalents at beginning of year 11,570, ,540 5,961,026 18,029,404 23,712,081 Cash and cash equivalents at end of year $12,107,234 $2,610,987 $5,733,407 $20,451,628 $18,542,589 Non-cash investing, capital and financing activities Capital contributions $10,238 $962,175 $0 $972,413 $565,947 The accompanying notes are an integral part of the financial statements (Continued) 33

40 STATEMENT OF CASH FLOWS PROPRIETARY FUNDS (CONTINUED) FOR THE YEAR ENDED SEPTEMBER 30, 2009 Business-type Activities Governmental Activities Solid Waste Ambulance Other Non-major Total Internal Service Fund Reconciliation of cash and cash equivalents at end of year to Statement of Net Assets: Current assets: Cash and cash equivalents $2,625 $300 $678,818 $681,743 $3,718,210 Equity in pooled cash and investments 7,022,645 2,610,687 4,754,372 14,387,704 14,793,188 Restricted assets: Cash and cash equivalents 5,081, ,217 5,382,181 31,191 Total cash and cash equivalents at end of year $12,107,234 $2,610,987 $5,733,407 $20,451,628 $18,542,589 Reconciliation of operating income (loss) to net cash provided by (used in) operating activities: Operating income (loss) $1,975,824 ($114,636) ($3,144,543) ($1,283,355) ($1,248,171) Other non-operating revenues 3, ,131 90,423 Adjustments to reconcile operating income (loss) to net cash provided by (used in) operating activities: Depreciation 2,373, ,584 1,083,285 4,254,275 55,617 Provision for uncollectible accounts 251 4,482,199 1,459 4,483,909 1,515,402 (Increase) decrease in assets: Accounts receivable 82,937 (4,581,636) 49,592 (4,449,107) (704,751) Due from other funds Due from other governments (124,179) Inventory 0 (6,293) (17,496) (23,789) 176,727 Prepaid expense (1,192,675) Increase (decrease) in liabilities: Vouchers payable 553,827 (18,844) 278, ,542 (9,637) Salaries and benefits payable (6,613) 39,664 (1,336) 31,715 20,666 Compensated absences (12,272) (18,163) 24,546 (5,889) 1,154,768 Accrued taxes payable ,193 65,193 0 Deposits (10,676) 0 9,815 (861) (15,280) Due to other governments 945 2,779 (607) 3,117 (23,292) Deferred revenue 0 0 (234,829) (234,829) 247,847 Landfill closure and long-term care payable (2,170,403) 0 0 (2,170,403) 0 Other post-employment benefits 56, ,680 45, ,689 20,830 Claims payable ,636 Net cash provided by (used in) operating activities $2,846,415 $730,465 ($1,840,069) $1,736,811 $212,021 The accompanying notes are an integral part of the financial statements 34

41 STATEMENT OF FIDUCIARY NET ASSETS FIDUCIARY FUNDS SEPTEMBER 30, 2009 ASSETS Cash and cash equivalents $16,526,397 Receivables (net of allowance for uncollectibles) 115,161 Due from other funds 101,411 Due from other governments 1,200 Total assets $16,744,169 LIABILITIES Payable to others $633,691 Due to other governmental units 5,327,907 Other current liabilities 10,782,571 Total liabilities $16,744,169 The accompanying notes are an integral part of the financial statements. 35

42 STATEMENT OF NET ASSETS COMPONENT UNITS SEPTEMBER 30, 2009 Governmental Activities Business-Type Activities Total Escambia Escambia Governmental County County and Law Library Santa Rosa Housing Finance Business-Type ASSETS Board Island Authority Authority Activities Current assets: Cash and cash equivalents $56,976 $1,810,226 $2,674,518 $4,541,720 Investments 0 0 1,925,171 1,925,171 Receivables (net of allowance for uncollectibles) , ,552 1,062,618 Due from other governmental units 6, , ,139 Other current assets 0 85,239 19, ,499 Total current assets 63,643 2,428,003 5,277,501 7,769,147 Noncurrent assets: Restricted assets Cash and cash equivalents 0 339, ,364 Investments 0 2,488,939 2,621,725 5,110,664 Capital assets (net of depreciation) 1,112,905 13,765,024 1,109,852 15,987,781 Supplemented mortgage loans , ,648 Bank participation agreements , ,548 Other noncurrent assets 0 0 2,182,298 2,182,298 Total noncurrent assets 1,112,905 16,593,327 6,615,071 24,321,303 Total assets 1,176,548 19,021,330 11,892,572 32,090,450 LIABILITIES Current liabilities: Vouchers payable 18, ,419 74, ,676 Salaries, benefits and compensated absences payable 5,489 81, ,790 Due to other governmental units 0 57, ,464 Notes, loans, leases and bonds payable 0 2, ,143 Other current liabilities 0 422, ,804 Total current liabilities 24, ,131 74, ,877 Non-current liabilities: Compensated absences 0 227, ,705 Other post-employment benefits 0 71, ,291 Deferred revenues 0 673, ,703 Total non-current liabilities 0 972, ,699 Total liabilities 24,082 1,835,830 74,664 1,934,576 NET ASSETS Invested in capital assets, net of related debt 1,112,905 13,762,881 1,109,852 15,985,638 Restricted net assets 0 1,243, ,243,867 Unrestricted net assets 39,561 2,178,752 10,708,056 12,926,369 Total net assets $1,152,466 $17,185,500 $11,817,908 $30,155,874 The accompanying notes are an integral part of the financial statements. 36

43 STATEMENT OF ACTIVITIES COMPONENT UNITS FOR THE YEAR ENDED SEPTEMBER 30, 2009 Program Revenues Operating Capital Charges for Grants and Grants and Expenses Services Contributions Contributions Function/Program Activities Governmental Activities: Escambia County Law Library $117,593 $88,977 $0 $0 Total Governmental activities 117,593 88, Business-type activities: Santa Rosa Island Authority 27,736,866 6,435, ,999 0 Housing Finance Authority 657,656 2,978, Total business-type activities 28,394,522 9,414, ,999 0 Total component units $28,512,115 $9,503,431 $107,999 $0 General Revenues Investment earnings Miscellaneous Total general revenues Change in net assets Net assets - beginning Net assets - ending The accompanying notes are an integral part of the financial statements. 37

44 Net (Expense) Revenue and Changes in Net Assets Governmental Activities Business-type Activities Law Santa Rosa Housing Finance Library Island Authority Authority Totals ($28,616) $0 $0 ($28,616) (28,616) 0 0 (28,616) (21,193,198) 0 (21,193,198) 0 2,321,129 2,321,129 0 (21,193,198) 2,321,129 (18,872,069) (28,616) (21,193,198) 2,321,129 (18,900,685) 3, , , , , ,928 (25,424) (21,193,198) 2,660,865 (18,557,757) 1,177,890 38,378,698 9,157,043 48,713,631 $1,152,466 $17,185,500 $11,817,908 $30,155,874 38

45 NOTES TO FINANCIAL STATEMENTS

46 ANNUAL AUDIT REPORT COUNTY-WIDE NOTES TO COMBINED FINANCIAL STATEMENTS SEPTEMBER 30, 2009 NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Escambia County, Florida (the County) is a political subdivision of the State of Florida created pursuant to Chapter 7 of the Florida Statutes. The County is governed by a five member Board of County Commissioners (the Board), elected from single-member districts. The Board has no powers other than those expressly vested in it by State Statute and their governmental powers cannot be delegated. The Board appoints an administrator to administer all policies emanating from its statutory powers and authority. In addition to the Board, there are five elected Constitutional Officers, pursuant to Article 8, Section 1(d), of the Constitution of the State of Florida: Clerk of the Circuit Court & Comptroller (the Clerk), Sheriff, Tax Collector, Property Appraiser, and Supervisor of Elections. The accounting policies of the County conform to accounting principles generally accepted in the United States (US) as applicable to governments. The following is a summary of the more significant accounting policies. A. Financial Reporting Entity These combined financial statements include the operations of the Board of County Commissioners, Clerk of the Circuit Court & Comptroller, Sheriff, Tax Collector, Property Appraiser, Supervisor of Elections and those separately administered organizations for which the government is considered to be financially accountable. Blended component units, although legally separate entities, are, in substance, part of the government operations. Discretely presented component units are reported in a separate column in the government-wide financial statements to emphasize that they are legally separate from the government. Blended Component Units Community Redevelopment Agency (CRA) In 1995, the Board of County Commissioners adopted Ordinance No which established the Community Redevelopment Agency (CRA) of Escambia County pursuant to The Community Redevelopment Act of The Board serves as the CRA Board and has all rights, powers, duties, privileges and immunities authorized by the Act. The CRA is reported as a special revenue fund. Five redevelopment areas are included under the CRA jurisdiction. Discretely Presented Component Units Governmental Fund Type: Escambia County Law Library Board The Escambia County Law Library Board, created under Special Act, Chapter , Laws of Florida, provides for the maintenance of a central law library for the use of citizens, county officials, judges and officers of the courts of Escambia County. The Law Library is financially integrated with the County in that it is funded by collection of certain court fees. The Law Library is housed in a County facility and shares in administrative services provided by the County. The Law Library Board is composed of two (2) circuit judges, two (2) county judges and one (1) lawyer appointed by the local bar association. The operations of the Law Library are reported in the Law Library Fund, a special revenue fund, as a discrete component unit. Financial statements for the Escambia County Law Library Board can be obtained at 190 Governmental Center, Pensacola, Florida

47 ANNUAL AUDIT REPORT COUNTY-WIDE NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED) SEPTEMBER 30, 2009 Proprietary Fund Type: Santa Rosa Island Authority (SRIA) The Santa Rosa Island Authority (SRIA) was established by the provisions of Chapter , Laws of Florida, Special Acts of 1947, as amended. The County appoints five (5) members of the Authority s six (6) member Board, and one (1) member is elected by the eligible voters who are full time residents of the Island. The County approves the Authority s budget and issuance of debt. The County has veto power over decisions of the Authority. The SRIA serves as the County s leasing agent for property on Santa Rosa Island owned by the County. The operations of SRIA are reported in the SRIA Fund, a discrete component unit in this report. Financial statements for the SRIA can be obtained at 1 Via Deluna, Pensacola Beach, Florida Escambia County Housing Finance Authority The Escambia County Housing Finance Authority (HFA) was created in 1982 by Ordinance No pursuant to Chapter 78-89, Laws of Florida codified as Chapter 159, Part IV, Section through The County appoints five (5) members of the HFA and must approve by resolution any rules or regulations, the issuance of revenue bonds and all contracts and agreements. The Escambia County HFA and the County are not substantially the same. The HFA does not provide services almost entirely for the County. Therefore, the operations of the Escambia County HFA are reported as a discrete component unit in this report. Financial statements for the Escambia County HFA can be obtained at 25 West Cedar Street, Suite 530, Pensacola, Florida Because these component units have been reported as a part of the County, there are limited instances where special note references or separation will be required. If no separate note reference or categorization is made, the user should assume that information presented is equally applicable. Joint Ventures As defined in Governmental Accounting Standards Board (GASB) Statement Number 14, a joint venture is a separate legal entity or other organization that results from a contractual arrangement (or interlocal agreement) and that is owned, operated or governed by two or more participants as a separate and specific activity subject to joint control in which the participants retain (a) an on-going financial interest or (b) an on-going financial responsibility. The County participates and provides financial support to the following nonequity joint ventures: Human Relations Commission (HRC) The Commission was created by an Interlocal Agreement between Escambia County and the City of Pensacola in 1978, pursuant to Florida Statutes, Chapter , for the purpose of being responsible for the promotion of fair treatment and equal opportunity to all citizens of the local community. The Commission is composed of fourteen (14) members; seven (7) selected by the County and seven (7) selected by the City of Pensacola. The duration of this agreement is for a period of two (2) years, with a renewal provision. The County does not control budgeting or financing for the Commission. Separate financial statements are available from the Commission at 2257 Baylen Street, Pensacola, Florida Pensacola Escambia County Promotion and Development Commission (PEDC) This Commission was created in 1967 by Chapter , Laws of Florida, amended in 1980 by Chapter , to promote and develop tourism and industry in Escambia County and in the City of Pensacola. The nine (9) member Commission consists of two (2) members of the Pensacola City Council, two (2) members of the Escambia County Commission, one (1) member of the Century City Council, the President of the Chamber of Commerce (1), one (1) representative of the Committee of 100 or the Tourist Advisory Council, one (1) at-large member appointed by the Pensacola City Council and one (1) at-large member appointed by the Escambia County Commission. The County and the City of Pensacola each contribute funds annually for the operation of the Commission, but neither has control of the budget or finances of the 40

48 ANNUAL AUDIT REPORT COUNTY-WIDE NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED) SEPTEMBER 30, 2009 Commission. The Commission has no outstanding debt. Separate financial statements are available from the Pensacola Escambia County Promotion and Development Commission at 117 West Garden Street, Pensacola, Florida Summary financial statements as of September 30, 2009 for the joint ventures are as follows: STATEMENTS OF NET ASSETS SEPTEMBER 30, 2009 HRC PEDC Assets and other debits $31,379 $8,692,301 Liabilities 14,725 8,362,390 Net assets Invested in capital assets 4,560 0 Restricted assets 0 61,198 Unrestricted 12, ,713 Total net assets $16,654 $329,911 STATEMENTS OF ACTIVITIES FISCAL YEAR ENDED SEPTEMBER 30, 2009 HRC PEDC Revenues $242,125 $270,841 Expenses (237,447) (270,544) Change in net assets 4, Net assets beginning 11, ,614 Net assets ending $16,654 $329,911 B. Basic Financial Statements Government-Wide and Fund Financial Statements The basic financial statements consist of the government-wide (based on the County as a whole, including its component units) and fund financial statements. Both sets of statements categorize primary activities as either governmental or business-type activities. The government-wide financial statements include a Statement of Net Assets and a Statement of Activities which report on the government as a whole and provide a consolidated financial picture of the government. For the most part, interfund activities are eliminated to avoid distorted financial results. The amounts reported as internal balances represent the residual amounts due between governmental and business-type activities. Fiduciary funds of the government are also eliminated from this presentation since these resources are not available for general government funding purposes. The Statement of Activities reports functional categories of programs provided by the County and demonstrates how and to what degree those programs are supported by specific revenue. Governmental activities, which normally are supported by taxes and intergovernmental revenues, are reported separately from business-type activities, which rely to a significant extent on external fees and charges for support. Likewise, the primary government is reported separately from certain legally separate component units for which the primary government is financially accountable. 41

49 ANNUAL AUDIT REPORT COUNTY-WIDE NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED) SEPTEMBER 30, 2009 The statement of activities demonstrates the degree to which the direct expenses of a given program are supported by specific revenues. Direct expenses are those that are clearly identifiable with a specific program. Program revenues include 1) charges to customers or applicants who purchase, use, or directly benefit from goods, services, or privileges provided by a given function or segment and 2) grants and contributions that are restricted to meeting the operational or capital requirements of a particular function or segment. General revenues consist of all taxes and other items collected that help support all functions of Escambia County government. Individual fund financial statements are provided for governmental funds, proprietary funds and fiduciary funds, even though the latter are excluded from the government-wide financial statements. Major individual governmental funds and major individual enterprise funds are reported as separate columns in the fund financial statements. The County reports the following major governmental funds: The General Fund is the government s primary operating fund. It accounts for all financial resources of the general government, except those required to be accounted for in another fund. The Disaster Recovery Fund accounts for financing provided from various State and Federal grants, such as Federal Emergency Management Agency (FEMA). The Community Redevelopment Agency (CRA) accounts for the revenues and expenditures of the redevelopment areas established within the County. The Transportation and Drainage Fund accounts for monies collected through permits, fees, and certain taxes and assessments. These monies are expended on engineering, street lighting, transportation, and road projects that benefit those citizens of the unincorporated areas of the County. The Local Option Sales Tax Fund accounts for monies collected pursuant to Florida Statutes , which authorizes the County to impose a one percent (1%) local option infrastructure sales surtax upon taxable transactions occurring within Escambia County, to provide for road and drainage projects and improvements, recreation projects, public safety, expansion of jail and court facilities, and community redevelopment projects. The County reports the following major proprietary funds: The Solid Waste Fund accounts for solid waste disposal (landfill) operations, primarily financed through franchise fees and user charges. The Ambulance Fund accounts for the cost of emergency medical services provided in Escambia County. All activities necessary to provide such services are accounted for in this fund. Additionally, the government reports the following fund types: The Internal Service Fund accounts for risk management activities and garage and fuel activities provided to other County departments, as well as the administration of employee benefits. Additionally, it is used to account for balances and activity related to compensated absences policies of the Clerk and Sheriff. Agency Funds which are custodial in nature (assets equal liabilities) have no measurement focus since they serve only as clearing accounts for assets held by the County in a custodial or agency 42

50 ANNUAL AUDIT REPORT COUNTY-WIDE NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED) SEPTEMBER 30, 2009 capacity for others. They do, however, use the accrual basis of accounting to recognize receivables and payables. Agency funds are utilized by the Clerk of the Circuit Court, the Tax Collector and the Sheriff for various client related funds held by each entity until returned to the client. C. Basis of Presentation, Basis of Accounting The government-wide financial statements and the proprietary fund and fiduciary fund financial statements are reported using the economic resources measurement focus and the accrual basis of accounting. Revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. Property taxes are recognized as revenues in the year for which they are levied. Grants and similar items are recognized as revenue as soon as all eligibility requirements imposed by the provider have been met. 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. 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, except for certain grant revenues which are recognized as revenues in the same period the grant expenditures occurred. State shared revenues, sales taxes, franchise taxes, and interest associated with the current fiscal period are all considered to be susceptible to accrual and have been recognized as revenues of the current fiscal period. Expenditures generally are recorded when a liability is incurred, except debt service expenditures and expenditures related to compensated absences and claims and judgments, which are recorded only when payment is due. Capital asset acquisitions are recorded as expenditures in governmental funds. Monies received from issuing long-term debt and acquisitions under capital leases are reported as other financing sources. Escambia County allocates indirect costs comprised of administrative overhead costs to functional activities using various allocation charge methods. Therefore, expenses reported for functional activities include these allocated indirect costs. Elimination of these charges would distort the direct costs of the functions concerned. Under the terms of some grant agreements, the County funds certain programs by a combination of specific cost-reimbursement grants, categorical block grants, and general revenues. Thus, when program expenses are incurred, there are both restricted and unrestricted net assets available to finance the program. It is the County s policy to first apply cost-reimbursement grant resources to such programs, followed by categorical block grants, and then by general revenues. The County has elected to follow FASB statements and interpretations issued on or before November 30, 1989, for all governmental and business-type activities and enterprise funds, unless those standards conflict with or contradict guidance of the GASB pronouncements. As a general rule, the effect of interfund activity has been eliminated from the government-wide financial statements, with the exception of administrative overhead components as discussed above. Amounts reported as program revenue 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. Internally dedicated resources are reported as general revenues rather than program revenues. Likewise, general revenues include all taxes. Proprietary fund financial statements are reported using the accrual basis of accounting, distinguishing operating revenues and expenses from nonoperating items. Operating revenues and expenses generally 43

51 ANNUAL AUDIT REPORT COUNTY-WIDE NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED) SEPTEMBER 30, 2009 result from providing services and producing and delivering goods in connection with a proprietary fund s principal ongoing operations. The principal operating revenues of the County s enterprise funds are charges to customers for sales and services. Operating expenses for enterprise funds and the internal service fund include the cost of sales and services, administrative expenses, and depreciation on capital assets. All revenues and expenses not meeting this definition are reported as non-operating revenues and expenses. D. Assets, Liabilities and Net Assets or Equity Cash or Cash Equivalents consists of cash on hand, demand deposits, and short-term investments with original maturities of three months or less from date of acquisition. Equity in Pooled Cash and Investments represent assets pooled for investment purposes with each individual fund and/or account maintained on a daily transaction basis. Such investments consist of demand deposits, certificates of deposit, U.S. Treasury Bills, and notes of certain instrumentalities. Investment earnings are allocated to the participating funds on a pro-rata basis. As defined by GASB Statement No. 31, money market investments are reported at amortized cost rather than fair value. The County has adopted an investment policy in accordance with specific requirements of Florida Statute (1) (16). This policy authorizes investments in direct obligations of the U.S. Treasury, Federal Instrumentalities, time deposits and savings accounts in qualified public depositories, tax exempt obligations of the State of Florida, the Florida Counties Investment Trust, Securities and Exchange qualified open-end money market mutual funds, the State of Florida s Local Government Surplus Trust Fund (SBA), and repurchase agreements. Trade Receivables are shown net of an allowance for uncollectible accounts. The Solid Waste Fund records an allowance for receivables older than 90 days, while the Internal Service Fund provides an allowance on those receivables where there have been no collections during the past year. All other County Funds record an allowance on accounts older than 120 days. The County records unbilled service receivables for services that have been rendered but not billed at the end of the fiscal year. Real and Personal Property Valuations are determined each year as of January 1 by the Property Appraiser s Office. Florida Statutes require all property be assessed at 100% of just value. For 2009, the Countywide millage rate was mills. All property taxes are billed in arrears and become due and payable on November 1 and are delinquent on April 1, of the following year. The legal lien date is January 1 of each year. Discounts of 4, 3, 2, and 1 percent are allowed for early payment in November through February, respectively. Virtually all unpaid taxes are collected via the sale of tax certificates prior to year end. Due From/(To) Other Funds are activities between funds. Such amounts are representative of lending/borrowing arrangements outstanding at the end of the fiscal year and referred to as either due to /from other funds (i.e., the current portion of interfund loans) or advances to/from other funds (i.e., the non current portion of interfund loans). Any residual balances outstanding between the governmental activities and business-type activities are reported in the government-wide financial statements as internal balances. Advances To/(From) Other Funds, as reported in the fund financial statements, are offset by a fund balance reserve account in applicable governmental funds to indicate that they are not available for appropriation and are not expendable available financial resources. 44

52 ANNUAL AUDIT REPORT COUNTY-WIDE NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED) SEPTEMBER 30, 2009 Inventory amounts are valued at cost (first-in, first-out). Inventory balances in general, special revenue and enterprise funds are accounted for on the consumption method, i.e., expenditures and expenses are recognized when inventories are used. Reported inventories are equally offset by a fund balance reserve to indicate that they are not available spendable resources even though they are a component of net current assets. Restricted Assets are assets of both governmental and business-type activities that are restricted per resolutions or other agreements. Capital Assets, which include property, plant, equipment, and infrastructure assets (e.g., roads, bridges, sidewalks, and similar items), are reported in the applicable governmental or business-type activities columns in the government-wide financial statements. Purchased or constructed assets are recorded at historical costs or estimated costs. Donated capital assets are recorded at estimated fair market value at the date of donation. The County capitalizes items costing $1,000 and having an estimated useful life in excess of one year. Buildings, public domain and system infrastructure assets which represent major expenditures for such items as roads, water and sewer lines, landfill improvements, and parks and drainage systems are capitalized at historical cost. Major outlays for capital assets and improvements are capitalized as projects are constructed. The costs of normal maintenance and repairs that do not add to the value of the asset or materially extend assets lives are not capitalized. Depreciation has been provided using the straight-line method. The estimated useful lives of the various classes of depreciable capital assets are as follows: Buildings Improvements Infrastructure Equipment years years years 3 10 years Compensated Absences are accrued in accordance with GASB Statement No. 16. It is the policy of the County to permit employees to accumulate a limited amount of earned but unused leave benefits which will be paid to employees upon separation from service. Unpaid compensated absences are recorded as a liability when the benefits are earned in the government-wide and proprietary fund financial statements. For governmental funds, there is no legal requirement to accumulate expendable available financial resources to liquidate the obligation; these expenditures are recognized in the governmental funds when payments are made to employees. Other Post-Employment Benefits provisions were adopted by the County effective October 1, 2007 under the provisions of GASB Statement No. 45, Accounting and Financial Reporting by Employers for Postemployment Benefits Other Than Pensions. The effect of this adoption was to establish uniform reporting standards for Other Postemployment Benefit (OPEB) expense and related liabilities (assets), note disclosures, and required supplementary information (RSI) in annual financial reports of governmental entities. GASB Statement No. 45, improves the relevance and usefulness of financial reporting by: (a) requiring systematic, accrual-basis measurement and recognition of Other Postemployment Benefit (OPEB) cost (expense) over a period that approximates employees years of service and (b) providing information about actuarial accrued liabilities associated with OPEB and whether and to what extent progress is being made in funding the plan. Unearned Revenues include amounts collected before revenue recognition criteria are met. 45

53 ANNUAL AUDIT REPORT COUNTY-WIDE NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED) SEPTEMBER 30, 2009 Self Insurance Claims Payable represents liabilities for reported claims and incurred but not reported claims based on an actuarial review of claims pending and historical experience. Landfill Closure and Postclosure Care Payable represents the recognition of Municipal Solid Waste Landfill (MSWLF) closure and postclosure care costs under the State of Florida s Solid Waste Management Act of 1988 (the 1988 Act ), regulations of the Federal Environmental Protection Agency (EPA) and GASB Statement No. 18. MSWLF costs incurred for landfills accepting solid waste after final implementation of the 1988 Act and EPA regulations are recognized as an expense and a liability in each year that the MSWLF accepts solid waste based upon the landfill capacity used during that year. Long Term Obligations in the government-wide and the proprietary fund financial statements are reported as liabilities in the statement of net assets. Bond premiums, as well as issuance costs, are deferred and amortized over the life of the bonds using the straight-line method. The County reports pollution (including contamination) remediation obligations, which are obligations to address the current or potential detrimental effects of existing pollution, in accordance with GASB Statement No. 49, Accounting and Financial Reporting for Pollution Remediation Obligations. The circumstances under which the County will have to estimate, record, and disclose its expected outlays for pollution remediation include: the pollution is an imminent danger to public health or welfare; the County is in violation of a pollution prevention-related permit or license; the County has been named as a responsible party under Superfund or similar state laws; the County is named in a lawsuit that would require participation in remediation activities; or the County legally commits itself to conduct remediation activities. 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 debt issued is reported as other financial sources. Premiums received on debt issuances are reported as other financing sources while discounts and debt issuance costs are reported as other financing uses. Issuance costs, whether or not withheld from the actual debt proceeds received, are reported as expenditures of the funds in which proceeds of debt issuances are recorded. Fund Equity in the governmental fund s financial statements report reservations of fund balance for amounts that are not available for appropriation or are legally restricted by outside parties for use for a specific purpose. Designations of fund balance represent tentative management plans that are subject to change. Net Assets The government-wide and business type fund financial statements utilize a net asset presentation. Net assets are categorized as invested in capital assets (net of related debt), restricted and unrestricted. Invested in Capital Assets (net of related debt) is intended to reflect the portion of net assets which are associated with non-liquid, capital assets less outstanding capital asset related debt. Restricted Net Assets are liquid assets (generated from revenues and net bond proceeds) which are not accessible for general use because of third-party (statutory, bond covenant or granting agency) limitations. Unrestricted Net Assets represent unrestricted liquid assets. While County management may have categorized and segmented portions for various purposes, the Board of County Commissioners has the unrestricted authority to revisit or alter these managerial decisions. 46

54 ANNUAL AUDIT REPORT COUNTY-WIDE NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED) SEPTEMBER 30, 2009 Budgetary Information NOTE 2 STEWARDSHIP, COMPLIANCE AND ACCOUNTABILITY Annual budgets are adopted on a basis consistent with generally accepted accounting principles as required by Florida Statute 129 for all governmental funds. All annual appropriations lapse at fiscal year end. On or before May 1 of each year, the Sheriff, Clerk, Tax Collector, Property Appraiser, and Supervisor of Elections each submit to the Board of County Commissioners a tentative budget for the ensuing fiscal year. Within fifteen days after certification of the ad valorem tax roll by the Property Appraiser, the County Budget Officer submits to the Board a proposed budget for the fiscal year commencing the following October 1 st. The Budget includes proposed expenditures and the means of financing them. The Board holds public hearings and a final budget must be prepared and adopted no later than September 30. The County s budget is legally enacted through passage of a resolution. The appropriated budget is prepared by fund, function and department. The Management and Budget Services Bureau is authorized to transfer budgeted amounts within departments of a fund and between departments of a fund; however, the Board of County Commissioners must approve any revisions that alter the total expenditures of any fund. The legal level of budgetary control (i.e., the level at which expenditures may not legally exceed appropriations) is the fund level. The Board of County Commissioners approved supplemental budget amendments during the year that increased the original budget. A. Assets Deposits and Investments NOTE 3 DETAIL NOTES ON ALL FUNDS As of September 30, 2009, the carrying value of the County s deposits and investments with their respective credit ratings was as follows: Weighted Fair Credit Average Investment Type Value Rating Maturity (days) Demand and time deposits $61,876,515 N/A N/A Certificates of Deposit 25,000,000 N/A 276 days Money Market Accounts 73,562,116 N/A N/A US Treasuries 29,950,855 N/A days US Agencies 24,944,450 N/A days Total Deposits and Investments $215,333,936 47

55 ANNUAL AUDIT REPORT COUNTY-WIDE NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED) SEPTEMBER 30, 2009 Credit Risk: The County s Investment Policy (Policy), limits credit risk by restricting authorized investments to the following: direct obligations of the United States or its agencies and instrumentalities, repurchase agreements, the Local Government Surplus Funds Trust Fund administered by Florida s State Board of Administration (a 2a7-like pool), certificates of deposit, money market mutual funds investing in direct obligations of the United States or its agencies and instrumentalities regulated by the SEC, and the Florida Local Government Investment Trust, an investment pool administered by the Florida Association of Court Clerks and Comptrollers. The credit ratings indicated in the above table are Moody s Investors Services (Moody s) ratings. Concentration of Credit Risk: The Policy requires that bank deposits be secured as provided by Chapter 280, Florida Statutes. This law requires local governments to deposit funds only in financial institutions designated as qualified public depositories by the Chief Financial Officer of the State of Florida, and creates the Public Deposits Trust Fund, a multiple financial institution pool with the ability to assess its member financial institutions for collateral shortfalls if a default or insolvency has occurred. As of September 30, 2009, all of the County s bank deposits were in qualified public depositories. The Policy requires the assets shall be diversified to control the risk of loss resulting from the over concentration of assets. The Policy establishes guidelines for limiting the percentage of the portfolio by permissible investment category as well as issuer limits within an investment category. The Policy requires execution of a third-party custodial safekeeping agreement for all purchased securities, and requires that securities be held in the County s name. As of September 30, 2009, all of the County s investments were held in a bank s trust department in the County s name. Interest Rate Risk: The Policy limits the investment of current operating funds to no longer than one (1) year. Investments of current operating funds will be matched to cash flow needs. Investment of bond reserves, construction funds and other non-operating funds shall have a term appropriate to the need for funds, and in accordance with debt covenants, but shall not exceed five (5) years. 48

56 ANNUAL AUDIT REPORT COUNTY-WIDE NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED) SEPTEMBER 30, 2009 Receivables at year end for the government s individual major funds, nonmajor, and internal service funds in the aggregate, including the applicable allowances for uncollectible accounts, are as follows: Allowance Accrued Gross for Accounts Notes Interest Receivables Uncollectible Net Governmental activities: General $17,436,740 $0 $38,682 $17,475,422 ($16,136,694) $1,338,728 Transportation and drainage 8, , ,802 Other non major funds 398,300 43, ,851 (63,923) 377,928 Internal Service Fund 3,473, ,473,201 (2,121,618) 1,351,583 Total governmental activities $21,317,043 $43,551 $38,682 $21,399,276 ($18,322,235) $3,077,041 Business-type activities: Solid Waste $695,664 $0 $0 $695,664 ($251) $695,413 Ambulance 9,386, ,386,682 (6,356,893) 3,029,789 Non major and other funds 119, ,407 (2,789) 116,618 Total business-type activities $10,201,753 $0 $0 $10,201,753 ($6,359,933) $3,841,820 Component units: Santa Rosa Island Authority $404,035 $0 $0 $404,035 $0 $404,035 Housing Finance Authority 2,840, ,840, ,840,850 Total component units $3,244,885 $0 $0 $3,244,885 $0 $3,244,885 There were no unbilled receivables at September 30, The General Fund receivable contains approximately $16.1 million contested property taxes billed on Pensacola Beach. Due to pending litigation, this receivable is fully offset with an allowance for uncollectible accounts. 49

57 ANNUAL AUDIT REPORT COUNTY-WIDE NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED) SEPTEMBER 30, 2009 Capital Assets activity for the year ended September 30, 2009 was as follows: Balance at Transfers / Balance at 10/01/2008 Increases Decreases 09/30/2009 Primary Government: Governmental activities: Capital assets not depreciated: Land $29,257,944 $3,320,861 $0 $32,578,805 Construction in progress 32,475,192 38,746,447 (32,475,192) 38,746,447 Total capital assets not depreciated 61,733,136 42,067,308 (32,475,192) 71,325,252 Capital assets depreciated: Infrastructure 552,149,000 39,660,577 (71,339) 591,738,238 Buildings and improvements 187,969,466 6,962, ,931,605 Equipment 111,888,532 7,204,019 (10,044,470) 109,048,081 Total capital assets depreciated 852,006,998 53,826,735 (10,115,809) 895,717,924 Less accumulated depreciation: Infrastructure 266,236,827 24,851,158 (27,753) 291,060,232 Building and improvements 60,891,111 6,610, ,501,414 Equipment 79,371,910 10,573,358 (9,492,928) 80,452,340 Total accumulated depreciation 406,499,848 42,034,819 (9,520,681) 439,013,986 Total capital assets depreciated, net 445,507,150 11,791,916 (595,128) 456,703,938 Governmental-type activities capital assets, net $507,240,286 $53,859,224 ($33,070,320) $528,029,190 Business-type activities: Land $3,428,615 $1,421,244 $0 $4,849,859 Capital assets depreciated: Buildings 33,482,185 4,048,755 (173,153) 37,357,787 Infrastructure 29,790, , ,335,128 Equipment 16,879,404 2,678,028 (586,020) 18,971,412 Total capital assets depreciated 80,152,248 7,271,252 (759,173) 86,664,327 Less accumulated depreciation: Buildings 19,223,541 1,075,645 (173,153) 20,126,033 Infrastructure 10,502,427 1,285, ,787,886 Equipment 10,698,403 1,893,171 (580,648) 12,010,926 Total accumulated depreciation 40,424,371 4,254,275 (753,801) 43,924,845 Total capital assets depreciated, net 39,727,877 3,016,977 (5,372) 42,739,482 Business-type activities capital assets, net $43,156,492 $4,438,221 ($5,372) $47,589,341 50

58 ANNUAL AUDIT REPORT COUNTY-WIDE NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED) SEPTEMBER 30, 2009 Depreciation expense was charged to functions/programs of the primary government as follows: Governmental activities: Business-type activities: General government $5,355,137 Solid waste $2,373,406 Public safety 10,289,020 Inspections (non-major) 95,660 Physical environment 302,559 Ambulance 797,584 Transportation* 21,326,840 Civic center (non-major) 987,625 Economic environment 734,702 Total depreciation expense $4,254,275 Human services 505,797 Culture and recreation 3,520,764 Total depreciation expense $42,034,819 *Transportation includes depreciation of general infrastructure assets. Depreciation on capital assets held by the government s internal service funds are charged to the general government function. Discretely Presented Component Units reported the following capital asset balances at September 30, 2009: SANTA ROSA ISLAND AUTHORITY HOUSING FINANCE AUTHORITY Buildings $3,669,342 Land $1,100,000 Improvements other than buildings 13,971,358 Improvements other than buildings 0 Equipment 1,318,756 Equipment 52,001 Construction in progress 898,085 Total at historical cost 1,152,001 Total at historical cost 19,857,541 Less accumulated depreciation (6,092,517) Less accumulated depreciation (42,149) Santa Rosa Island Authority Housing Finance Authority capital assets, net $13,765,024 capital assets, net $1,109,852 51

59 ANNUAL AUDIT REPORT COUNTY-WIDE NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED) SEPTEMBER 30, 2009 Interfund Receivables / Payables: During the course of its operations, the County has numerous transactions between funds to finance operations, provide services, construct assets, and service debt to the extent that certain interfund receivables and payables exist as of September 30, Balances of interfund receivables, payables, and advances are as follows: Interfund Interfund Advances Advances Receivables Payables To From General fund $460,278 $157,630 $0 $0 Disaster recovery ,682,355 Local option sales tax 0 78,047 17,682,355 0 Nonmajor governmental funds 227, , , , ,132 17,682,355 18,236,834 Solid waste fund ,470,000 Internal service 71, ,024,479 0 Fiduciary - agency 101, Total major and nonmajor $860,167 $860,167 $23,706,834 $23,706,834 Interfund Transfers: Transfer Transfer In Out Major Governmental Funds: General fund $1,474,382 $35,110,489 Disaster recovery 1,000,000 0 Community redevelopment agency 1,965,904 0 Transportation and drainage 7,172,346 0 Non-major Governmental Funds: Escambia restricted 58,943 0 Development 4,031,599 0 Mass transit 3,317,735 0 Grant projects 1,475,177 1,675,177 Tourist promotion 0 3,371,913 Public safety programs 343,375 1,569,809 Bob Sikes toll facilities 0 1,597,938 Sheriff's programs 1,041,363 0 Debt service 18,667,415 0 Capital projects 0 52,752 Major Business-type Activities: Solid waste 0 383,732 Ambulance 1,522, ,395 Non-major Business-type Activities: Civic center 1,834,636 0 Total $43,905,205 $43,905,205 Transfers to or from other funds are based on budgetary requirements. Transfers are also used to move receipts restricted for debt service from the funds collecting the receipts to the debt service fund as required for bond coverage. 52

60 ANNUAL AUDIT REPORT COUNTY-WIDE NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED) SEPTEMBER 30, 2009 Restricted Assets for business activities contain the following balances: Total Internal Solid Enterprise Service Waste Inspections Funds Fund Deposits $100,570 $300,217 $400,787 $31,191 Landfill closure 4,981, ,981,394 0 $5,081,964 $300,217 $5,382,181 $31,191 B. Liabilities Payable from Restricted Assets in the business-type activities contain the following balances: Total Solid Enterprise Internal Waste Inspections Funds Service Deposits $100,570 $300,217 $400,787 $31,191 Landfill closure and postclosure 105, ,398 0 $205,968 $300,217 $506,185 $31,191 53

61 ANNUAL AUDIT REPORT COUNTY-WIDE NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED) SEPTEMBER 30, 2009 Long-Term Debt Changes in long-term bonds, notes payable, loans, capital leases, and compensated absences during 2009 are as follows: Long-Term Amounts Due Beginning Balance Within Balance Outstanding One Year Long-Term Debt 10/1/2008 Additions (Retirements) 9/30/2009 of 09/30/2009 Governmental-type activities: Sales Tax Revenue Bonds $82,780,000 $0 ($1,865,000) $80,915,000 $1,925,000 Capital Improvement Bonds 20,110,000 0 (480,000) 19,630, ,000 Tourist Development Bonds 12,320,000 0 (935,000) 11,385, ,000 Capital Improvement Notes 9,705,000 0 (700,000) 9,005, ,000 State of Florida's Toll Facility Note 52,500 0 (52,500) 0 0 FNMA Loan 273,000 1,227,000 (1,500,000) 0 0 Capital Leases 1,799,730 0 (635,218) 1,164, ,008 General Compensated Absences: Board of County Commissioners 7,086,336 2,391,625 (2,019,904) 7,458,057 2,110,056 Tax Collector 1,147, ,642 (619,985) 678,187 8,384 Property Appraiser 536, ,360 (351,727) 494,429 0 Supervisor of Elections 196, ,100 (140,030) 183,784 0 Internal Service Compensated Absences: Board of County Commissioners 154, ,335 (35,702) 288,478 0 Clerk of the Circuit Court 1,778, ,238 (660,724) 1,745, ,939 Sheriff 16,594,932 2,680,272 (1,625,651) 17,649,553 2,432,622 Total $154,536,290 $7,682,572 ($11,621,441) $150,597,421 $9,581,009 Compensated Absences: Solid Waste Compensated Absences $561,195 $95,928 ($108,200) $548,923 $0 Inspections Compensated Absences 424, ,758 (102,212) 449,262 0 Ambulance Compensated Absences 677, ,377 (203,540) 659,128 0 Total $1,663,202 $408,063 ($413,952) $1,657,313 $0 The General Fund generally liquidates claims and judgments, and compensated absences for governmental activities. 54

62 ANNUAL AUDIT REPORT COUNTY-WIDE NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED) SEPTEMBER 30, 2009 Long-term Debt for governmental activities consists of the following: Amount Interest Annual Final Outstanding Governmental Activities Rates % Principal Maturity 9/30/2009 Bonds: Sales Tax Revenue Bonds Serial Bonds - Series ,925,000 to 3,290,000 10/01/22 32,540,000 Term Bond - Series ,450,000 to 5,485,000 10/01/33 48,375,000 Total Sales Tax Revenue Bonds 80,915,000 Capital Improvement Bonds Serial Bonds - Series ,000 to 675,000 10/01/17 4,113,000 Term Bonds - Series ,130,000 to 6,260,000 10/01/32 15,517,000 Total Road Improvement Bonds 19,630,000 Tourist Development Bonds Series ,000 to 1,355,000 10/01/19 11,385,000 Total Long-term Bonds 111,930,000 Notes: Capital Improvement Notes City of Gulf Breeze - Series 1997 Variable 535,000 to 1,085,000 10/01/17 7,050,000 City of Gulf Breeze - Series 2003 Variable 220,000 to 240,000 10/01/17 1,955,000 Total Capital Improvement Notes 9,005,000 Capital Leases SunTrust - Central Chiller Lease ,297 to 300,304 04/01/11 532,600 SunTrust - Leonard Street Chiller ,208 to 356,704 05/28/11 631,912 Total Capital Leases 1,164,512 Compensated Absences: Board of County Commissioners N / A N / A 7,458,057 BOCC Self Insurance Fund N / A N / A 288,478 Clerk of the Circuit Court N / A N / A 1,745,421 Sheriff N / A N / A 17,649,553 Tax Collector N / A N / A 678,187 Property Appraiser N / A N / A 494,429 Supervisor of Elections N / A N / A 183,784 Subtotal 28,497,909 Current (4,779,001) Long-term compensated absences 23,718,908 Total Outstanding Compensated Absences 28,497,909 Total Long-Term Debt $150,597,421 55

63 ANNUAL AUDIT REPORT COUNTY-WIDE NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED) SEPTEMBER 30, 2009 Business activity long-term debt consists of the following: Amount Interest Annual Final Outstanding Business Activities Rates % Principal Maturity 9/30/2009 Compensated Absences-Business Activities: Solid Waste Fund N / A N / A $548,923 Inspections Fund N / A N / A 449,262 Ambulance Fund N / A N / A 659,128 Total Outstanding Business Activities Compensated Absences $1,657,313 Annual debt service requirements to maturity to retire long-term bonds, notes, and loans are as follows: Governmental Long-Term Debt Fiscal Total Year Principal Ending Revenue Bonds Notes and Loans and September 30, Principal Interest Principal Interest Interest 2010 $3,390,000 $5,237,575 $755,000 $61,492 $9,444, ,490,000 5,128, ,000 55,973 9,484, ,605,000 5,011, ,000 49,621 9,526, ,735,000 4,887, ,000 42,800 9,595, ,880,000 4,743, ,000 35,477 9,654, ,450,000 20,648,751 4,655,000 57,680 47,811, ,720,000 15,254, ,974, ,225,000 9,747, ,972, ,435,000 2,890, ,325,413 Total governmental debt $111,930,000 $73,549,311 $9,005,000 $303,043 $194,787,354 Long-Term Debt Bonds Sales Tax Revenue Refunding Bonds Series 2002 in aggregate principal amount of $89,730,000, were issued under and pursuant to the Constitution and laws of the State of Florida, particularly Chapter 125, Florida Statutes, as amended, Home Rule Ordinance No of the County, as amended, and ordinances and resolutions adopted by the Commission of the County. The Bonds are limited special obligations of the County collateralized by a lien on and pledge of, among other things, the proceeds of the local government half-cent sales tax distributed to the County from the Local Government Half-Cent Sales Tax Clearing Trust Fund. The proceeds of the bonds were used to finance the costs of a current refunding of all of the County s Sales Tax Revenue Refunding Bonds Series 1993, originally issued in the amount of $50,355,000, with a balance of $48,830,000 at the date of refunding, and to provide approximately $39,000,000 to finance the cost of certain capital improvement projects of the County including (1) renovating and expanding the Sheriff s administrative building; (2) renovating the jail infirmary; (3) expanding the jail annex; (4) expanding the road prison; (5) acquiring and constructing a parking garage; (6) constructing, renovating, and expanding certain facilities contained within the administrative master plan; (7) constructing a library facility in Perdido Key; (8) renovating the juvenile justice addition; (9) constructing a new one-stop permitting building; (10) finishing out the third, fourth and fifth floors of the M.C. Blanchard Judicial Building; and (11) making certain stormwater improvements. The Project also includes construction and/or equipping of other capital improvements to be determined by the County. 56

64 ANNUAL AUDIT REPORT COUNTY-WIDE NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED) SEPTEMBER 30, 2009 Capital Improvement Revenue Bonds Series 2002 in aggregate principal amount of $22,305,000 were issued pursuant to the authority of the Constitution, the laws of the State of Florida, County ordinances, the Santa Rosa Island Authority Special Act and various resolutions, including the interlocal agreement entered into by the Authority and the County. The proceeds were spent to finance the construction of certain capital improvements on Santa Rosa Island including road improvements to Via DeLuna Drive and Fort Pickens Road, constructing a water reclamation and reuse system, making improvements to the stormwater management system, burying existing above-ground utilities, and making certain landscaping improvements. The 2002 Bonds are special limited obligations of the County, payable solely from and secured by pledge of residential and commercial lease revenues collected by Santa Rosa Island Authority from island leaseholders (per interlocal agreement) and net toll revenues collected for passage across Bob Sikes Bridge to Santa Rosa Island. Tourist Development Revenue Refunding Bonds Series 2002 in aggregate principal amount of $16,885,000 were issued pursuant to the authority of the Constitution, the laws of the State of Florida, including the County s Home Rule Ordinances 74-8 and 89-7, and resolutions adopted by the Board of County Commissioners. The proceeds, together with other available moneys, were used to finance the costs of refunding all of the County s Tourist Development Revenue Bonds, Series 1992, originally issued in the amount of $6,915,000, with a balance of $4,650,000 at the date of refunding, and the County s outstanding promissory note payable to the Florida Local Government Finance Commission in the amount of $850,000, and to provide approximately $12,000,000 for certain improvements on Santa Rosa Island consisting of beach nourishment and certain capital improvements to the Civic Center. The principal and interest on the 2002 Bonds are payable solely from and collateralized by a lien upon and a pledge of the Tourist Development Tax levied and collected by the County. Long-Term Debt Notes Capital Improvement Revenue Note Series 1997 allowed the Board to borrow $10,000,000 from the Gulf Breeze, Florida Capital Funding Program to fund the acquisition and construction of certain capital improvement projects. Pledged revenues toward payment of the loan are the electric franchise fees. The loan requires monthly interest payments at variable rates equal to the PSA Municipal Market, plus a maximum 34 basis points. At September 30, 2009, the rate was.74%. Capital Improvement Revenue Note Series 2003 permitted the Board to borrow $3,000,000 from the Gulf Breeze, Florida Capital Funding Program to fund a capital building project for the Work Release Facility. There is a covenant by the Board to annually budget and appropriate sufficient funds to pay the debt service. The Board intends to use revenues generated from the Work Release Program. Repayments under the loan require monthly interest payments at variable rates equal to the PSA Municipal Market, plus a maximum 34 basis points. At September 30, 2009, the rate was.74%. Florida s Toll Facilities Revolving Trust Fund (TFRTF) allowed the County, in 1996, to enter into a loan agreement with the State of Florida s TFRTF. The TFRTF was created by the Florida Legislature to encourage the development and enhancement of the financial feasibility of revenue-producing road projects undertaken by local governmental entities. These interest-free advances are to be repaid either from proceeds from the project s anticipated bond issue or by installment payments over a five year period beginning in the seventh year from the date of the advance. Payments began in These advances were used to conduct feasibility studies on the proposed Escambia Expressway (extension of I- 110). The final payment on this loan was made during fiscal year 2009; therefore, the balance at September 30, 2009 was $0.00. Federal National Mortgage Association (FNMA) provided a $1,500,000 Community Express Loan for the County to provide a construction bridge loan to the Interfaith Housing Coalition (IHC), a non-profit 57

65 ANNUAL AUDIT REPORT COUNTY-WIDE NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED) SEPTEMBER 30, 2009 agency building low-income affordable housing in Escambia County. The loan was to provide a partial funding for the IHC s planned community named Journey, a 150-home subdivision within the Englewood Community Redevelopment Area. Loan repayment provisions required quarterly interest payments at variable rates equal to the 3-month LIBOR, plus 150 basis points, as posted on the last business day of the preceding quarter. Due to the economic conditions in the mortgage market, the project was cancelled by IHC, and the loan was repaid to FNMA during fiscal year Capital Leases The Board is obligated under lease-purchase agreements for the purchase of new chiller equipment. These leases qualify as capital leases for accounting purposes and are recorded at the present value of the future minimum lease payments at the inception of the lease. The acquired assets have been recorded in the governmental assets at a book value of $3,710,711. Amortization of $213,614 on the leased equipment is included in current year depreciation expense. The Santa Rosa Island Authority has entered into several capital leases for office equipment with terms of months. The acquired assets have been recorded at a book value of $70,071. Amortization on equipment under capital lease is included in depreciation expense. Maturities of the obligations under capital lease are as follows: Board of Santa Rosa County Island Commissioners Authority Balance 10/01/2008 $1,799,730 $6,539 Additions 0 0 Principal payments (635,218) (4,396) Balance 09/30/2009 $1,164,512 $2,143 Future lease payments 2010 $688,166 $2, ,124 0 Total minimum lease payments 1,204,290 2,309 Less amount representing interest (39,778) (166) Net minimum lease payments $1,164,512 $2,143 Refunding of Outstanding Debt in prior years permitted the Board to defease certain special obligation and other revenue bonds by placing the proceeds of new bonds in irrevocable trusts to provide for all future debt service payments on the old bonds. Accordingly, the trust account asset and liabilities are not included in the County s financial statements. On September 30, 2009, four bond issues are outstanding with an aggregate principal amount of $38,950,

66 ANNUAL AUDIT REPORT COUNTY-WIDE NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED) SEPTEMBER 30, 2009 Long-Term Debt Arbitrage Liability represents the excess of interest earned from the investment of certain debt proceeds and pledged revenues over the yield rate of the applicable debt. Pursuant to Section 148 (f) of the U.S. Internal Revenue Code, the County must rebate any excess to the United States Government. Arbitrage rebate, if any, is due and payable on each five-year anniversary of the respective bond issue. For the fiscal year ended September 30, 2009, there is no arbitrage rebate liability outstanding. Conduit Debt Obligations have been established in the County s name by private-sector entities for the acquisition and construction of industrial and commercial facilities deemed to be in the public interest. The bonds are secured by the property financed and are payable solely from payments received on the underlying mortgage loans. Neither the Board, nor the State, nor any political subdivision thereof, is obligated in any manner for repayment of the bonds. Accordingly, the bonds are not reported as liabilities in the accompanying financial statements. As of September 30, 2009, the outstanding conduit debt of Escambia County is $3,651,255,277. Landfill Closure and Postclosure Care Payable represents the accrued liability for closure and postclosure costs for the County s landfills. Regulations require the Board to cover landfills when they stop accepting waste and to perform certain maintenance and monitoring functions for thirty years after closure. Although closure and postclosure care costs will be paid only near or after the date the landfills stop accepting waste, the Board reports a portion of these closure and postclosure care costs as an operating expense in each period based on landfill capacity used as of each statement of net assets date. Currently, the Beulah, Klondike, Mobile Highway and Camp Five sites are closed. The Perdido Landfill is the only site accepting waste. At year end, $12,284,809 was reported ($105,398 payable from restricted assets and $12,179,411 as long-term liability) as the landfill closure and postclosure care liability in the statement of net assets. This amount is based upon estimated costs to perform closure and postclosure care in 2009, determined from the most recently available engineering studies computed on the ratio of landfill capacity filled at year end to total estimated capacity. Capacity is measured in space utilized by the type of waste being accepted. The Class I capacity is at 63.33% and the Class III capacity is at 64.00%. The Board will recognize the remaining estimated costs of closure and postclosure care of approximately $4.9 million as the remaining estimated capacity is filled. Actual cost may be higher due to inflation, changes in technology or changes in regulations. During 2008, a landfill mining initiative was instituted at the Perdido Landfill. These mining efforts have added significant capacity and life to the landfill. The landfill mining project has resulted in a significant reduction in the long-term care estimates, while continuing to provide the citizens of Escambia County an efficient and effective landfill operation. Closure and Postclosure Care Liability: Beginning Ending Balance Balance 10/1/2008 Additions Deletions 9/30/2009 Current: $103,331 $2,067 $0 $105,398 Long-term Liability 14,351,881 0 (2,172,470) 12,179,411 Total $14,455,212 $2,067 ($2,172,470) $12,284,809 State and federal laws and regulations require the Board to make annual contributions to a cash escrow account to meet financial assurance requirements. The Board is in compliance with these requirements at September 30, 2009 with restricted cash and investments of $4,981,394 for these purposes. In the event closure escrows and interest earnings prove inadequate due to inflation, changes in technology or 59

67 ANNUAL AUDIT REPORT COUNTY-WIDE NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED) SEPTEMBER 30, 2009 additional closure/postclosure care requirements, these costs may need to be covered by increased user charges. Pollution Remediation Obligation The County has identified several potential pollution sites within the County which may require remediation. The preliminary results of the County s analysis indicated several of the sites are not owned by the County and that the State or Federal government may be responsible for any required remediation. The County-owned sites are being evaluated further for any pollution remediation obligations. At September 30, 2009, no pollution obligations are reported by the County. NOTE 4 OTHER INFORMATION The Risk Management program was established by the County to insure certain types of claims against the Board of County Commissioners, Constitutional Officers, and Santa Rosa Island Authority including losses related to theft, damage and destruction of assets; torts; errors and omissions; injuries to employees; and natural disasters. The following are the types of risks and coverage: Workers Compensation The County is covered for workers compensation claims through a policy with the Florida Municipal Insurance Trust. Coverage limits under the policy include statutory limits, as well as $1,000,000 bodily injury for each accident and $1,000,000 bodily injury by disease for each employee with an aggregate $1,000,000 policy limit. Casualty and Property Casualty limits are self-insured for $100,000 per claim with a $200,000 aggregate limit. Property limits are $50,000 - $250,000 self insured retentions per occurrence with excess limits of $500 million, $410 million excluding wind and $90 million including wind. Prior to June 9, 2008, the County was self-insured for worker s compensation claims up to a limit of $450,000 per occurrence with statutory limits. The County will continue to contract with a third party administrator to service all worker s compensation claims with dates of loss prior to June 9, During the fiscal year ended September 30, 2009, there have been no settlements which exceeded the County s insurance coverage for the last three fiscal years. The County currently reports all of its risk management activities, including claims liabilities, in the Internal Service Fund. Liabilities are reported when it is probable that a loss has occurred and the amount of the loss can be reasonably estimated. Liabilities on claims prior to June 9, 2008 include an amount for claims that have been incurred but not reported (IBNR). The claims liabilities totaling $11,066,262 reported in the Internal Service Fund at September 30, 2009 are actuarially determined based on historical and current information regarding the Fund. Changes in the estimated liability for self-insured losses for the past two years are as follows: Unpaid claims, beginning $10,818,626 $11,701,265 Claims incurred and changes in estimates 4,756,111 3,930,749 Less: claims paid (4,508,475) (4,813,388) Unpaid claims, ending 11,066,262 10,818,626 Estimated claims due within one year (4,611,673) (4,460,309) Estimated claims due longer than one year $6,454,589 $6,358,317 Pension and Retirement Plan Substantially all full-time employees of the Board are covered by the Florida Retirement System (FRS). The FRS was established in 1970 by Chapter 121, Florida Statutes and is administered by the Florida Department of Management Services, Division of Retirement. Changes to the FRS can be made only by an act of the Florida Legislature. Rules governing the operation and administration of the system may be found in Chapter 60S of the Florida Administrative 60

68 ANNUAL AUDIT REPORT COUNTY-WIDE NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED) SEPTEMBER 30, 2009 Code. The FRS issues a publicly available financial report that includes financial statements and required supplementary information. The report may be obtained by writing to FRS, 2639-C North Monroe Street, Tallahassee, Florida The FRS offers two retirement plans the FRS Pension Plan and the FRS Investment Plan. An employee may participate in only one of the plans. The FRS Pension Plan is a multiple employer cost sharing defined benefit plan which provides retirement and disability benefits, annual cost-of-living adjustments, and death benefits to plan members and beneficiaries. Normal retirement benefits are available to employees who retire at age 62 with 6 or more years of service, or to those employees who have at least 30 years of creditable service, regardless of age. Retirement age and years of service requirements vary depending on membership class. Early retirement is available after 6 years of service with a 5% reduction of benefits for each year prior to the normal retirement age. Retirement benefits are based upon age, average compensation and years-ofservice credit where average compensation is computed as the average of an individual s five highest years of earnings. The FRS Investment Plan is a defined contribution plan in which participants are vested after one year of service. The employer makes contributions each month based on a percentage of the employee s gross salary and membership class. The contribution percentage is the same whether participating in the Pension Plan or Investment Plan. Members in the Investment Plan decide how their funds are allocated between various investment accounts and the funds are portable upon termination if the participant is vested. Members in the Investment Plan are not eligible for participation in the Deferred Retirement Option Program (DROP). Deferred Retirement Option Program (DROP) is an elective program available for members of the FRS who are eligible for normal retirement. Under this program, a member effectively retires and continues covered employment for up to 5 years. While in DROP, the member s deferred monthly retirement benefits accumulate, earning interest and cost-of-living increases. When the DROP period is over, the participant terminates covered employment and begins receiving his/her predetermined monthly retirement benefit, as well as the accrued DROP benefit. Disability retirees are not eligible to participate in DROP and DROP participants do not qualify for disability retirement. The plans are noncontributory for employees and all contributions are made by participating FRS employers. Participating employer contributions are based upon state-wide rates established by the State of Florida. Average contribution rates for the fiscal year ended September 30, 2009 were as follows: regular employees, 9.85%, special risk employees, 20.92%, elected officials, 16.53%, senior management employees, 13.12%, and DROP participants, 10.91%. Contributions made to the Pension Plan, funded on a pay-as-you-go basis, were equal to the actuarially determined contribution requirements for each year. Contributions to the Investment Plan, based on legislature-mandated contribution rates, were equal to a percentage of the participant s gross monthly salary based on the participant s membership class. Contributions for the past three years were as follows: Primary government $14,179,598 $14,897,685 $14,887,053 Discretely presented component units: Santa Rosa Island Authority 141, , ,706 Law Library Board 3,090 3,090 2,755 $14,324,161 $15,042,644 $15,044,514 61

69 ANNUAL AUDIT REPORT COUNTY-WIDE NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED) SEPTEMBER 30, 2009 Post-employment benefits other than pension (OPEB) are provided by the County in the form of health insurance for retired participants (and their dependents/beneficiaries) at the same rate as active participants. In health insurance plans where a government s retirees and current employees are insured together as a group, the premiums paid by the retirees may be lower than they would have been if the retirees were insured separately. This is called an implicit rate subsidy. Under this single-employer plan, benefit provisions are essentially the same for the county s employees. A stand-alone financial report is not prepared for the OPEB plan, however, a summary of each Constitutional Officer s participation in this OPEB plan can be found in their separately issued financial statements. In conjunction with the implementation of GASB Statement No. 45 during fiscal year 2008, the County engaged an actuarial firm to determine the estimated obligation associated with the post employment health insurance plan. The actuary, using the same data and assumptions provided in 2008, updated the actuary report for The County may amend the OPEB plan at its discretion. At October 1, 2008, the date of the latest actuarial valuation, plan participation consisted of: OPEB plan participants 2,521 Retirees receiving benefits 718 The County has the authority to establish and amend the OPEB funding policy, and is not required by law or other contractual agreement to provide funding for the implicit rate subsidy other than the pay-as-yougo amount necessary to provide current benefits for participants in its health insurance plan. During 2009, the County paid $1,445,578 as funding of the implicit rate subsidy OPEB. The County s annual OPEB cost (expense) is calculated based on the Annual Required Contribution (ARC) of the employer, an amount actuarially determined in accordance with GASB Statement No. 45. The ARC represents a level of funding that, if paid on an ongoing basis, is projected to cover normal cost each year and to amortize any unfunded actuarial liabilities (or funding excess) over a period not to exceed thirty years. The following table shows the components of the County s OPEB cost for the year, the amount actually contributed to the plan, and changes in the County s net OPEB obligation: For the fiscal year ended 9/30/2009 Determination of Annual Required Contribution (ARC) Normal Cost at year end $1,680,030 Amortization of the unfunded actuarial liability (UAAL) 2,172,589 Annual Required Contribution (ARC) $3,852,619 Annual OPEB Cost and Net OPEB Obligation Annual Required Contribution (ARC) $3,852,619 Interest on net OPEB obligation 95,471 Adjustment to annual required contribution (138,029) Annual OPEB cost (expense) 3,810,061 Employer contributions made* (1,445,578) Increase in net OPEB obligation 2,364,483 Net OPEB obligation - beginning of year 2,390,019 Estimated Net OPEB obligation - end of year $4,754,502 *Actuarially estimated employer contributions for

70 ANNUAL AUDIT REPORT COUNTY-WIDE NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED) SEPTEMBER 30, 2009 The County s annual OPEB cost, the percentage of annual OPEB cost contributed to the plan, and the net OPEB obligation for 2009 and the two preceding years were as follows: Annual Percentage of Net OPEB OPEB Cost OPEB Fiscal year ended Cost Contributed Obligation 9/30/2007 N/A N/A N/A 9/30/2008 $3,693, % $2,390,019 9/30/2009 $3,810, % $4,754,502 Funding Policy and Status - As of October 1, 2008, the most recent actuarial valuation date, the plan was 0% funded. The actuarial accrued liability for benefits (AAL) was $37,568,452 and the actuarial value of assets was $0, resulting in an unfunded actuarial accrued liability (UAAL) of $37,568,452. The covered payroll (annual payroll of active employees covered by the OPEB Plan) was $143.8 million, and the ratio of the UAAL to the covered payroll was 26.13%. Actuarial Methods and Assumptions: Actuarial valuations of an ongoing plan involve 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. Amounts determined regarding the funded status of the plan and the annual required contributions of the employer are subject to continual revision as actual results are compared with past expectations and new estimates are made about the future. The schedule of funding progress, presented as required supplementary information following the notes to the financial statements, presents multiyear trend information about whether the actuarial value of plan assets is increasing or decreasing over time relative to the actuarial accrued liabilities for benefits. Calculations for financial reporting purposes are based on the plan as understood by the employer and the plan members and include the types of benefits provided at the time of each valuation and the historical pattern of sharing of benefit costs between the employer and plan members to that point. The actuarial methods and assumptions used include techniques that are designed to reduce the effects of short-term volatility in actuarial accrued liabilities and the actuarial value of assets, consistent with the long-term perspective of the calculations. The OPEB-specific actuarial assumptions used in the actuarial valuation described below are consistent with those used by the Florida Retirement System actuary and adopted by the Florida Retirement System. The actuarial methods are: Actuarial cost method: Amortization method: Amortization period (closed) Asset valuation method Projected Unit Credit actuarial cost method Level dollar 30 years Market value of assets, if any, as of valuation date The actuarial assumptions are: Investment rate of return 4.0%, compounded annually 63

71 ANNUAL AUDIT REPORT COUNTY-WIDE NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED) SEPTEMBER 30, 2009 Healthcare cost trend rate 8.75% reduced by decrements of 0.25% to 0.50% annually to an ultimate rate of 4.25% after 14 years. Leasing Arrangements provide almost all of the revenues for the Santa Rosa Island Authority. The Authority leases the land on County-owned Santa Rosa Island to residents and businesses under residential and commercial leases that typically run for a period of 99 years. Many of the 99-year leases have options to renew for another 99-year term. Many leases, particularly those for restaurants and concessions, are generally for a shorter period. Lease payments in future years are estimated to average approximately $3.7 million per year. Construction Commitments - The County has active construction projects as of September 30, 2009 as follows: Engineering Services - Building $8,203,579 Engineering Services - Road Paving and Drainage 6,163,592 Engineering Services - Various 8,440,165 Engineering Services - Beach Restoration 455,150 Engineering Services - Solid Waste 4,623,982 $27,886,468 Of these commitments, $23,037,327 is reported in the governmental fund financial statements as reserved for encumbrances. The remaining $4,849,141 represents commitments in proprietary type funds which are not included in the financial statements in accordance with GAAP. These commitments are evidenced by signed purchase orders and contracts which were entered into prior to September 30, Other Commitments - The County has various non-construction contractual commitments at fiscal year end that will be re-appropriated in the new fiscal year. These commitments of $6,458,305 are included in Reserve for Encumbrances at September 30, On September 30, 2002, the Santa Rosa Island Authority s Board of Directors approved an interlocal agreement with Escambia County in connection with certain plans for economic development, transportation and beach improvements at Pensacola Beach. By resolution approved by the Santa Rosa Island Authority Board, the Authority s lease fee revenues are pledged for repayment of Tourist Development Refunding Revenue Bonds, Series 2002 and the Capital Improvement Revenue Bonds, Series The Authority is scheduled to make payments to Escambia County of at least $600,000 each year through Significant Commitments The Sheriff contracted with a vendor under a cancelable agreement to provide for the delivery of medical care to individuals under the custody and control of the Sheriff. The agreement expired September 2009, and was not renewed by the Sheriff. Under the agreement, the Sheriff paid a base price plus a per inmate day fee for those inmates assigned to the Work Camp. Financial considerations were based on estimated inmate populations and were subject to adjustment. Medical service expense for the year ended September 30, 2009 was approximately $5 million. The Sheriff entered into a cancelable agreement with a vendor to provide management services, food, materials, and supplies necessary to feed the inmate population at the corrections facility and the Escambia County Jail, through February 28, Upon mutual agreement, the agreement may be 64

72 ANNUAL AUDIT REPORT COUNTY-WIDE NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED) SEPTEMBER 30, 2009 renewed for two one-year periods and each year thereafter. Food service expense under this contract for the year ended September 30, 2009 was approximately $1.9 million. Operating leases for the Board of County Commissioners are for various spaces throughout the County containing minimum guaranteed rentals averaging $31,250 monthly. The Board of County Commissioners has the option to extend lease terms annually. Lease expense for the year ended September 30, 2009 was $255,216. The Tax Collector is obligated under operating leases for office space with noncancellable terms in excess of one year as of September 30, Rent expense for the year ended September 30, 2009 was $340,000. Future minimum payments, as of September 30, 2009 for the Tax Collector, are as follows: Tax Collector Year Amount 2010 $299, , , , , ,055 $1,335,382 NOTE 5 RELATED PARTY TRANSACTIONS During 2009, the Santa Rosa Island Authority transferred infrastructure assets, valued at $16,078,251, to the Board. The assets are included in governmental activities capital assets in the government-wide financial statements. NOTE 6 CONTINGENT LIABILITIES The County is a defendant in various lawsuits. Although the outcome of these lawsuits is not presently determinable, in the opinion of the County Attorney the resolution of these matters will not have a material adverse effect on the financial condition of the County. The County receives significant financial assistance from federal and state agencies primarily in the form of capital and operating grants. The disbursement of funds received under these programs generally requires compliance with terms and conditions specified in the grant agreements and is subject to audit by grantor agencies. Disallowed claims, if any, resulting from such audits may become liabilities of the County. However, in the opinion of management, disallowed claims, if any, will not have a material effect on the County s financial statements. During 2009, the Office of Inspector General (OIG) of the US Department of Homeland Security concluded its review of funding provided to the Sheriff from FEMA relating to Hurricane Ivan and recommended that approximately $2.1 million of the $6.6 million awarded the Sheriff should be disallowed. At September 30, 2009, the County has reported within the Sheriff s Programs non-major governmental fund balance sheet a due to other governmental units of approximately $2.1 million; 65

73 ANNUAL AUDIT REPORT COUNTY-WIDE NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED) SEPTEMBER 30, 2009 however, the Sheriff is appealing the OIG s recommendations and a final resolution has not yet been reached. NOTE 7 INTERNAL SERVICE FUNDS The Sheriff and Clerk each established an internal service fund in 2004 to record the annual costs related to their respective compensated absences policies, to record the short-term and long-term components of such liabilities (including payments to employees), and to collect and hold cash and investments necessary to liquidate such liabilities. The related costs associated with these funds will be recovered via charges to the respective general funds and other funds having employees, in accordance with generally accepted criteria for establishment and use of an internal service fund. At September 30, 2009, the Sheriff s and Clerk s internal service funds have accumulated deficits of ($15,216,931) and ($522,313), respectively, which will be eliminated over a reasonable period of time. NOTE 8 SIGNIFICANT EVENTS In 2009, the Board conceptually agreed to assume ownership of the abandoned Saufley Construction and Demolition (C&D) Debris Facility located at 5660 Saufley Field Road. Upon assumption of ownership, the County intends to close the facility and convert it to a beneficial use. The Board has entered into an agreement with the Florida Department of Environmental Protection (FDEP) whereby the Board agrees to become responsible for the closure within twenty-four months of ownership, and the long-term care and groundwater monitoring of the Facility in accordance with applicable FDEP rules. As part of this agreement, FDEP shall direct Evanston Insurance Company to reimburse the Board for authorized closure costs incurred to the extent such funds are available from the insurer. Closure costs are estimated to be $5.9 million, with an additional $300,000 estimated for groundwater monitoring. At September 30, 2009, title to the property had not been assumed by the Board. 66

74 REQUIRED SUPPLEMENTARY INFORMATION

75 ANNUAL AUDIT REPORT COUNTY-WIDE NOTES TO COMBINED FINANCIAL STATEMENTS SEPTEMBER 30, 2009 Escambia County, Florida Other Postemployment Benefit Plan Schedule of Funding Progress Unfunded UAAL as a Actuarial Actuarial Actuarial Actuarial Percentage of Valuation Value Liabilities Liabilities Funded Covered Covered Date of Assets (AAL) (1) (UAAL) (2) Ratio Payroll Payroll October 1, 2006 N/A N/A N/A N/A N/A N/A October 1, 2007 $0 $35,895,656 $35,895,656 0% $152,785, % October 1, 2008 $0 $37,568,452 $37,568,452 0% $143,780, % (1) (2) Actuarial liability determined under the unit credit cost method. Actuarial liability less actuarial value of assets, if any. 67

76

77

78

79

80

81 ANNUAL AUDIT REPORT BOARD OF COUNTY COMMISSIONERS SEPTEMBER 30, 2009

82 ANNUAL AUDIT REPORT BOARD OF COUNTY COMMISSIONERS SEPTEMBER 30, 2009 REPORT OF INDEPENDENT AUDITORS SPECIAL PURPOSE BASIC FINANCIAL STATEMENTS FUND FINANCIAL STATEMENTS Balance Sheet Governmental Funds...3 Statement of Revenues, Expenditures, and Changes in Fund Balances Governmental Funds... 4 Statement of Revenues, Expenditures, and Changes in Fund Balances Budget and Actual General Fund, Disaster Recovery Fund, Community Redevelopment Agency Fund and Transportation Trust Fund Statement of Net Assets Proprietary Funds... 9 Statement of Revenues, Expenses, and Changes in Net Assets Proprietary Funds Statement of Cash Flows Proprietary Funds Balance Sheet Governmental Funds Component Units Statement of Revenues, Expenditures and Changes in Fund Balances Governmental Funds Component Units Statement of Net Assets - Proprietary Funds Component Units Statement of Revenues, Expenditures and Changes in Net Assets Proprietary Funds Component Units Notes to Financial Statements REQUIRED SUPPLEMENTARY INFORMATION Schedule of Funding Progress Board of County Commissioners Other Post-employment Benefit Plan COMBINING FINANCIAL STATEMENTS Combining Balance Sheet - Non-major Governmental Funds Combining Statement of Revenues, Expenditures, and Changes in Fund Balances Non-major Governmental Funds Schedule of Revenues, Expenditures, and Changes in Fund Balances Budget and Actual Comparison All Other Governmental Funds Combining Statement of Net Assets Non-major Enterprise Funds Combining Statement of Revenues, Expenses, and Changes in Net Assets Non-major Enterprise Funds Combining Statement of Cash Flows Non-major Enterprise Funds

83 ANNUAL AUDIT REPORT BOARD OF COUNTY COMMISSIONERS SEPTEMBER 30, 2009 REPORTS AND MANAGEMENT LETTER 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 Management Letter Including Board of County Commissioners Responses

84 FINANCIAL SECTION This section contains the following subsections: REPORT OF INDEPENDENT AUDITORS BASIC FINANCIAL STATEMENTS FUND FINANCIAL STATEMENTS

85

86

87 BOARD OF COUNTY COMMISSIONERS BALANCE SHEET GOVERNMENTAL FUNDS SEPTEMBER 30, 2009 Community Non-major Total Disaster Redevelopment Transportation Governmental Governmental General Recovery Agency Trust LOST II LOST III Funds Funds ASSETS Cash and cash equivalents $5,990 $0 $0 $70 $0 $0 $3,060,267 $3,066,327 Equity in pooled cash and investments 32,584, ,468 6,153,346 1,957,882 11,288,533 47,285,189 41,839, ,389,445 Receivables (net of allowance for uncollectibles) 1,331, , ,225 1,672,371 Due from other funds 200, ,000 Due from other governmental units 8,744,978 1,600, ,493,126 1,459,910 3,123,150 2,797,192 19,218,534 Inventory 224, , , ,772 Advance to other funds ,682, ,682,355 Total assets $43,091,221 $1,880,646 $6,153,346 $3,685,126 $30,430,798 $50,408,339 $48,199,328 $183,848,804 LIABILITIES Vouchers payable $830,707 $227,924 $109,137 $289,460 $1,725,598 $1,181,410 $1,071,911 $5,436,147 Contracts payable 11, ,118 33, , , ,824 1,643,495 Salaries payable 2,479, , , , ,398 3,995,807 Due to other funds , ,000 Due to other governmental units 571,463 2, , ,443 1,952,654 2,843,747 Other current liabilities 6,033,010 2,569, , ,581,980 10,282,948 Long-term liabilities: Advance from other funds 0 17,682, ,479 18,236,834 Total liabilities 9,926,260 20,795, ,232 1,247,823 2,587,499 1,777,257 6,139,246 42,638,978 FUND BALANCES Reserved for encumbrances 889,438 50, , ,032 9,729,055 8,635,144 9,377,369 29,495,632 Reserved for advances to other funds ,682, ,682,355 Reserved for debt service ,422,145 9,422,145 Reserved for inventory 224, , , ,772 Unreserved, reported in: General fund 32,051, ,051,087 Special revenue funds 0 (18,965,027) 5,369,532 2,016, ,461,954 13,882,484 Capital projects ,889 39,995,938 (2,371,476) 38,056,351 Total fund balances 33,164,961 (18,915,015) 5,988,114 2,437,303 27,843,299 48,631,082 42,060, ,209,826 Total liabilities and fund balances $43,091,221 $1,880,646 $6,153,346 $3,685,126 $30,430,798 $50,408,339 $48,199,328 $183,848,804 The accompanying notes are an integral part of the financial statements 3

88 BOARD OF COUNTY COMMISSIONERS STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES GOVERNMENTAL FUNDS FOR THE YEAR ENDED SEPTEMBER 30, 2009 Community Non-major Total Disaster Redevelopment Transportation Governmental Governmental General Recovery Agency Trust LOST II LOST III Funds Funds Revenues: Taxes $112,968,836 $0 $0 $8,368,940 $0 $31,542,431 $5,707,186 $158,587,393 Permits, fees and special assessments 13,125, , ,048,175 25,174,398 Intergovernmental 25,092,789 2,853, ,931,950 1,471, ,571 19,874,778 55,067,872 Charges for services 2,091, , ,533 8,570,853 10,989,182 Fines and forfeitures 49, , ,139 Investment income 528, ,479 15,240 1,381, , ,879 3,075,232 Miscellaneous 2,363, ,588 5,630,720 6,483,056 1,372,709 16,171,847 Total revenues 156,218,727 2,853,177 64,479 13,864,431 8,483,695 39,613,837 48,963, ,062,063 Expenditures: Current: General government 37,982, ,927, ,392,526 43,302,347 Public safety 4,761,006 4,766, ,012, ,763,895 31,303,989 Physical environment 953, ,877,317 4,831,150 Transportation ,317, ,297,246 24,614,855 Economic environment ,731,470 11,731,470 Human services 2,400, ,127 2,871,949 Culture and recreation 1,623, ,842 1,644,732 Capital improvements ,645,041 17,868,944 2,406,189 37,920,174 Debt service: Principal retirement ,167,718 6,167,718 Interest and fiscal charges 0 860, ,610,555 6,470,606 Total expenditures 47,721,717 5,626,530 1,927,655 20,330,218 17,645,041 17,868,944 59,738, ,858,990 Excess (deficiency) of revenue over (under) expenditures 108,497,010 (2,773,353) (1,863,176) (6,465,787) (9,161,346) 21,744,893 (10,775,168) 99,203,073 Other financing sources (uses): Note issuance ,227,000 1,227,000 Insurance reimbursements 73,394 2,016, , ,675 66,091 2,312,100 Transfers in 3,690,537 1,000,000 1,965,904 7,172, ,894,244 41,723,031 Transfers out (127,995,630) (8,267,589) (136,263,219) Total other financing sources (uses) (124,231,699) 3,016,778 1,965,904 7,242, ,675 20,919,746 (91,001,088) Net change in fund balances (15,734,689) 243, , ,721 (9,161,346) 21,830,568 10,144,578 8,201,985 Fund balances at beginning of year 48,899,650 (19,158,440) 5,885,386 1,660,582 37,004,645 26,800,514 31,915, ,007,841 Fund balances (deficit) at end of year $33,164,961 ($18,915,015) $5,988,114 $2,437,303 $27,843,299 $48,631,082 $42,060,082 $141,209,826 The accompanying notes are an integral part of the financial statements 4

89 BOARD OF COUNTY COMMISSIONERS GENERAL FUND STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL FOR THE YEAR ENDED SEPTEMBER 30, 2009 Variance with Final Budget Original Final Positive Budget Budget Actual (Negative) Revenues: Taxes $116,706,299 $114,402,116 $112,968,836 ($1,433,280) Permits, fees and special assessments 11,855,191 11,855,191 13,125,173 1,269,982 Intergovernmental 27,797,271 25,379,080 25,092,789 (286,291) Charges for services 1,888,594 1,945,244 2,091, ,889 Fines and forfeitures 64,993 64,993 49,002 (15,991) Investment income , ,020 Miscellaneous 3,724,340 1,813,629 2,363, ,145 Total revenues 162,036, ,460, ,218, ,474 Expenditures: Current: General government 65,743,484 60,008,667 37,982,166 22,026,501 Public safety 4,229,448 5,916,609 4,761,006 1,155,603 Physical environment 865, , ,833 21,652 Human services 3,054,420 3,041,008 2,400, ,186 Culture and recreation 1,934,386 1,936,886 1,623, ,996 Total expenditures 75,827,346 71,878,655 47,721,717 24,156,938 Excess (deficiency) of revenue over (under) expenditures 86,209,342 83,581, ,497,010 24,915,412 Other financing sources (uses): Insurance Reimbursements ,394 73,394 Transfers in 1,307,676 1,474,382 3,690,537 2,216,155 Transfers out (116,018,742) (128,316,323) (127,995,630) 320,693 Total other financing sources (uses) (114,711,066) (126,841,941) (124,231,699) 2,610,242 Net change in fund balances (28,501,724) (43,260,343) (15,734,689) 27,525,654 Fund balances at beginning of year 28,501,724 43,260,343 48,899,650 5,639,307 Fund balances (deficit) at end of year $0 $0 $33,164,961 $33,164,961 The accompanying notes are an integral part of the financial statements 5

90 BOARD OF COUNTY COMMISSIONERS DISASTER RECOVERY STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL FOR THE YEAR ENDED SEPTEMBER 30, 2009 Variance with Final Budget Original Final Positive Budget Budget Actual (Negative) Revenues: Intergovernmental $0 $168,810 $2,853,177 $2,684,367 Total revenues 0 168,810 2,853,177 2,684,367 Expenditures: Current: General government 370, , ,168 Public safety 0 12,672,325 4,766,479 7,905,846 Debt service Interest and fiscal charges 0 1,000, , ,949 Total expenditures 370,168 14,042,493 5,626,530 8,415,963 Excess (deficiency) of revenue over (under) expenditures (370,168) (13,873,683) (2,773,353) 11,100,330 Other financing sources (uses): Insurance reimbursements 0 0 2,016,778 2,016,778 Transfers in 0 1,000,000 1,000,000 0 Total other financing sources (uses) 0 1,000,000 3,016,778 2,016,778 Net change in fund balances (370,168) (12,873,683) 243,425 13,117,108 Fund balances at beginning of year 370,168 12,873,683 (19,158,440) (32,032,123) Fund balances (deficit) at end of year $0 $0 ($18,915,015) ($18,915,015) The accompanying notes are an integral part of the financial statements 6

91 BOARD OF COUNTY COMMISSIONERS COMMUNITY REDEVELOPMENT AGENCY STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL FOR THE YEAR ENDED SEPTEMBER 30, 2009 Variance with Final Budget Original Final Positive Budget Budget Actual (Negative) Revenues: Investment income $0 $0 $64,479 $64,479 Miscellaneous 0 2,206 0 (2,206) Total revenues 0 2,206 64,479 62,273 Expenditures: Current: General government 2,901,030 8,797,573 1,927,655 6,869,918 Total expenditures 2,901,030 8,797,573 1,927,655 6,869,918 Excess (deficiency) of revenue over (under) expenditures (2,901,030) (8,795,367) (1,863,176) 6,932,191 Other financing sources (uses): Transfers in 1,956,953 1,965,904 1,965,904 0 Total other financing sources (uses) 1,956,953 1,965,904 1,965,904 0 Net change in fund balances (944,077) (6,829,463) 102,728 6,932,191 Fund balances at beginning of year 944,077 6,829,463 5,885,386 (944,077) Fund balances (deficit) at end of year $0 $0 $5,988,114 $5,988,114 The accompanying notes are an integral part of the financial statements 7

92 BOARD OF COUNTY COMMISSIONERS TRANSPORTATION TRUST STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL FOR THE YEAR ENDED SEPTEMBER 30, 2009 Variance with Final Budget Original Final Positive Budget Budget Actual (Negative) Revenues: Taxes $7,400,000 $8,573,539 $8,368,940 ($204,599) Permits, fees and special assessments 0 0 1,050 1,050 Intergovernmental 4,804,750 4,804,750 4,931, ,200 Charges for services 215, , ,663 9,804 Investment income ,240 15,240 Miscellaneous 531, , ,588 2,158 Total revenues 12,951,859 13,913,578 13,864,431 (49,147) Expenditures: Current: Public safety 5,529,445 6,015,223 6,012,609 2,614 Transportation 13,947,231 16,083,691 14,317,609 1,766,082 Total expenditures 19,476,676 22,098,914 20,330,218 1,768,696 Excess (deficiency) of revenue over (under) expenditures (6,524,817) (8,185,336) (6,465,787) 1,719,549 Other financing sources (uses): Insurance reimbursements ,162 70,162 Transfers in 7,172,410 7,172,346 7,172,346 0 Total other financing sources (uses) 7,172,410 7,172,346 7,242,508 70,162 Net change in fund balances 647,593 (1,012,990) 776,721 1,789,711 Fund balances at beginning of year (647,593) 1,012,990 1,660, ,592 Fund balances (deficit) at end of year $0 $0 $2,437,303 $2,437,303 The accompanying notes are an integral part of the financial statements 8

93 BOARD OF COUNTY COMMISSIONERS STATEMENT OF NET ASSETS PROPRIETARY FUNDS SEPTEMBER 30, 2009 Business-type Activities Governmental Activities Non-major Internal Service ASSETS Solid Waste Ambulance Funds Total Fund Current assets: Cash and cash equivalents $2,625 $300 $678,818 $681,743 $62,480 Equity in pooled cash and investments 7,022,645 2,610,687 4,754,372 14,387,704 14,793,188 Receivables (net of allowance for uncollectibles) 695,413 3,029, ,618 3,841,820 1,351,583 Due from other governmental units ,079 Inventory 0 172,856 46, , ,439 Restricted cash and cash equivalents 100, , ,787 31,191 Prepaid expenses ,531 33,531 1,192,675 Total current assets 7,821,253 5,813,632 5,930,215 19,565,100 18,088,635 Noncurrent assets: Restricted cash and cash equivalents 4,981, ,981,394 0 Capital assets: Land and other non-depreciable assets 4,843,416 6, ,849,859 0 Capital assets (net of depreciation) 29,812,656 2,659,945 10,266,881 42,739, ,978 Advance to other funds ,024,479 Total noncurrent assets 39,637,466 2,666,388 10,266,881 52,570,735 6,735,457 Total assets 47,458,719 8,480,020 16,197,096 72,135,835 24,824,092 LIABILITIES Current liabilities: Vouchers payable 1,484,349 29, ,997 2,349, ,358 Contracts payable 3, ,306 0 Salaries and benefits payable 149, , , ,868 53,706 Due to other governmental units 945 5,730 1,198 7, Other current liabilities 2, , , ,851 Claims liabilities ,611,673 Payable from restricted assets: Customer deposits 100, , ,787 31,191 Landfill closure and postclosure care payable 105, ,398 0 Total current liabilities 1,846, ,888 1,543,445 3,860,672 5,746,834 Non-current liabilities: Compensated absences 548, , ,262 1,657, ,478 Other post-employment benefits 109, ,369 95, ,657 32,430 Advance from other funds 5,470, ,470,000 0 Landfill closure and postclosure care payable 12,179, ,179,411 0 Claims liabilities ,454,589 Total non-current liabilities 18,308, , ,700 19,805,381 6,775,497 Total liabilities 20,154,523 1,423,385 2,088,145 23,666,053 12,522,331 NET ASSETS Invested in capital assets, net of related debt 34,656,072 2,666,388 10,266,881 47,589, ,978 Unrestricted (7,351,876) 4,390,247 3,842, ,441 11,590,783 Total net assets $27,304,196 $7,056,635 $14,108,951 $48,469,782 $12,301,761 The accompanying notes are an integral part of the financial statements. 9

94 BOARD OF COUNTY COMMISSIONERS STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN NET ASSETS PROPRIETARY FUNDS FOR THE YEAR ENDED SEPTEMBER 30, 2009 Business-type Activities Governmental Activities Non-major Internal Solid Waste Ambulance Funds Total Service Fund Operating revenues: Permits, fees and special assessments $0 $0 $1,944,339 $1,944,339 $0 Intergovernmental 3, ,288 0 Charges for services 9,829,611 13,913,231 3,480,619 27,223,461 11,872,957 Fines and forfeitures ,046 45,046 0 Miscellaneous income 4, ,624 49, , ,043 Total operating revenues 9,837,283 14,074,855 5,519,600 29,431,738 12,105,000 Operating expenses: Personal services 2,849,693 7,489,751 2,439,696 12,779,140 1,056,432 Contractual services 1,531, ,679 4,379,116 6,080, ,376 Claims expense, changes in estimate, and fees ,540,904 Materials and supplies 653, ,164 63,835 1,346,274 3,336,112 Travel and vehicle costs 42,506 4,288 1,977 48,771 1,324 Depreciation 2,373, ,584 1,083,285 4,254,275 55,617 Bad debts 251 4,482,199 1,459 4,483,909 1,515,402 Memberships, dues and subscriptions 11,192 11,302 4,956 27,450 2,305 Insurance and bonds 301, , , ,079 2,671,936 Communications and freight services 35,160 68,672 49, ,063 3,074 Utilities 406, , ,020 1,488 Maintenance 454, ,865 99, ,407 56,160 Rentals and leases 263,389 14, , , Provisions for closure and long-term care (1,790,561) 0 0 (1,790,561) 0 Advertising and promotion 41, ,708 0 Training 34,899 3,398 3,854 42,151 3,569 Miscellaneous 651,434 21, , ,599 2,209 Total operating expenses 7,861,459 14,189,491 8,664,143 30,715,093 12,416,849 Operating income (loss) 1,975,824 (114,636) (3,144,543) (1,283,355) (311,849) Non-operating revenues (expenses): Interest income 115,031 10,367 50, , ,916 Gain (loss) on disposal of assets 196,276 (5,026) 1, ,746 (35) Insurance reimbursements ,323 Other income 3, , Total non-operating revenues (expenses) 314,307 5,472 52, , ,304 Income (loss) before contributions and transfers 2,290,131 (109,164) (3,092,189) (911,222) 16,455 Other financing sources (uses): Capital contributions 10, , , ,947 Transfers in 0 1,522,330 1,834,636 3,356,966 0 Transfers out (383,732) (143,395) 0 (527,127) 0 Total contributions and transfers (373,494) 2,341,110 1,834,636 3,802, ,947 Change in net assets 1,916,637 2,231,946 (1,257,553) 2,891, ,402 Net assets at beginning of year 25,387,559 4,824,689 15,366,504 45,578,752 11,719,359 Net assets at ending of year $27,304,196 $7,056,635 $14,108,951 $48,469,782 $12,301,761 The accompanying notes are an integral part of the financial statements. 10

95 BOARD OF COUNTY COMMISSIONERS STATEMENT OF CASH FLOWS PROPRIETARY FUNDS FOR THE YEAR ENDED SEPTEMBER 30, 2009 Business-type Activities Governmental Non-major Activities Solid Waste Ambulance Funds Total Internal Service Fund Cash flows from operating activities: Cash received from customers $9,909,795 $13,975,418 $5,345,637 $29,230,850 $13,039,409 Cash payments to suppliers for goods and services (4,253,991) (5,924,514) (4,815,040) (14,993,545) (12,121,321) Cash payments to employees for services (2,812,389) (7,320,570) (2,370,666) (12,503,625) (881,303) Other non-operating revenues (expenses) 3, ,131 90,423 Net cash provided by (used in) operating activities 2,846, ,465 (1,840,069) 1,736, ,208 Cash flows from noncapital financing activities: Transfers in 0 1,522,330 1,834,636 3,356,966 0 Transfers out (383,732) (143,395) 0 (527,127) 0 Principal (paid)/received on interfund advance 5,470,000 0 (231,198) 5,238,802 (5,470,000) Net cash provided by (used in) noncapital financing activities 5,086,268 1,378,935 1,603,438 8,068,641 (5,470,000) Cash flows from capital and related financing activities: Acquisition and construction of capital assets (7,721,640) (6,320) (51,395) (7,779,355) (149,429) Proceeds from sale of assets 210, , ,871 0 Net cash used in capital and related financing activities (7,511,318) (6,320) (41,846) (7,559,484) (149,429) Cash flow from investing activities: Interest on investments 115,031 10,367 50, , ,916 Net cash provided by investing activities 115,031 10,367 50, , ,916 Net increase (decrease) in cash & cash equivalents 536,396 2,113,447 (227,619) 2,422,224 (5,254,305) Cash and cash equivalents at beginning of year 11,570, ,540 5,961,026 18,029,404 20,141,164 Cash and cash equivalents at end of year $12,107,234 $2,610,987 $5,733,407 $20,451,628 $14,886,859 Non-cash investing, capital and financing activities Capital contributions $10,238 $962,175 $0 $972,413 $565,947 The accompanying notes are an integral part of the financial statements. 11

96 BOARD OF COUNTY COMMISSIONERS STATEMENT OF CASH FLOWS PROPRIETARY FUNDS Business-type Activities (CONTINUED) FOR THE YEAR ENDED SEPTEMBER 30, 2009 Governmental Non-major Activities Solid Waste Ambulance Inspections Total Internal Service Fund Reconciliation of cash and cash equivalents at end of year to Statement of Net Assets: Current assets: Cash and cash equivalents $2,625 $300 $678,818 $681,743 $62,480 Equity in pooled cash and investments 7,022,645 2,610,687 4,754,372 14,387,704 14,793,188 Restricted assets: Cash and cash equivalents 5,081, ,217 5,382,181 31,191 Total cash and cash equivalents at end of year $12,107,234 $2,610,987 $5,733,407 $20,451,628 $14,886,859 Reconciliation of operating income (loss) to net cash provided by (used in) operating activities: Operating income (loss) $1,975,824 ($114,636) ($3,144,543) ($1,283,355) ($311,849) Other non-operating revenues ,423 Adjustments to reconcile operating income (loss) to net cash provided by (used in) operating activities: Depreciation 2,373, ,584 1,083,285 4,254,275 55,617 Provision for uncollectible accounts 251 4,482,199 1,459 4,483,909 1,515,402 (Increase) decrease in assets: Accounts receivable 82,937 (4,581,636) 49,592 (4,449,107) (704,751) Due from other funds Due from other governments (124,179) Inventory 0 (6,293) (17,496) (23,789) 176,727 Prepaid expense (1,192,675) Increase (decrease) in liabilities: Vouchers payable 553,827 (18,844) 278, ,542 (9,637) Salaries and benefits payable (6,613) 39,664 (1,336) 31,715 20,666 Compensated absences (12,272) (18,163) 24,546 (5,889) 133,633 Accrued taxes payable ,193 65,193 0 Deposits (10,676) 0 9,815 (861) (15,280) Due to other governments 945 2,779 (607) 3,117 (23,292) Deferred revenue 0 0 (234,829) (234,829) 247,847 Landfill closure and long-term care payable (2,170,403) 0 0 (2,170,403) 0 Claims payable ,636 Other post-employment benefits 56, ,680 45, ,689 20,830 Net cash provided by (used in) operating activities $2,843,415 $730,465 ($1,840,069) $1,733,811 $127,208 The accompanying notes are an integral part of the financial statements 12

97 BOARD OF COUNTY COMMISSIONERS BALANCE SHEET GOVERNMENTAL FUNDS COMPONENT UNITS SEPTEMBER 30, 2009 Escambia County Law Library Board ASSETS Cash and cash equivalents $56,976 Receivables (net of allowance for uncollectibles) 31 Due from other governmental units 6,636 Total assets $63,643 LIABILITIES Vouchers payable $18,593 Salaries payable 619 Total liabilities 19,212 FUND BALANCES Unreserved 44,431 Total fund balances 44,431 Total liabilities and fund balances $63,643 The accompanying notes are an integral part of the financial statements 13

98 BOARD OF COUNTY COMMISSIONERS STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES GOVERNMENTAL FUNDS COMPONENT UNITS FOR THE YEAR ENDED SEPTEMBER 30, 2009 Escambia County Law Library Board Revenues: Charges for services $88,977 Investment income 3,057 Miscellaneous 135 Total revenues 92,169 Expenditures: Current: General government 118,596 Total expenditures 118,596 Excess (deficiency) of revenue over (under) expenditures (26,427) Fund balances at beginning of year 70,858 Fund balances at end of year $44,431 The accompanying notes are an integral part of the financial statements 14

99 BOARD OF COUNTY COMMISSIONERS STATEMENT OF NET ASSETS PROPRIETARY FUNDS COMPONENT UNITS SEPTEMBER 30, 2009 Business-Type Activities Escambia County Santa Rosa Housing ASSETS Island Authority Finance Authority Total Current assets: Cash and cash equivalents $1,810,226 $2,674,518 $4,484,744 Investments 0 1,925,171 1,925,171 Receivables (net of allowance for uncollectibles) 404, ,552 1,062,587 Due from other governmental units 128, ,503 Bank participation agreements 0 19,260 19,260 Other current assets 85, ,239 Total current assets 2,428,003 5,277,501 7,705,504 Noncurrent assets: Restricted assets: Cash and cash equivalents 339, ,364 Investments 2,488,939 2,621,725 5,110,664 Capital assets (net of depreciation) 13,765,024 1,109,852 14,874,876 Bank participation agreements 0 313, ,548 Other noncurrent assets 0 2,569,946 2,569,946 Total noncurrent assets 16,593,327 6,615,071 23,208,398 Total assets 19,021,330 11,892,572 30,913,902 LIABILITIES Current liabilities: Vouchers payable 299,419 74, ,083 Salaries, benefits and compensated absences payable 81, ,301 Due to other governmental units 57, ,464 Notes, loans, bonds and capital leases payable 2, ,143 Other current liabilities 422, ,804 Total current liabilities 863,131 74, ,795 Non-current liabilities: Compensated absences 227, ,705 Other post-employment benefits 71, ,291 Deferred revenues 673, ,703 Total non-current liabilities 972, ,699 Total liabilities 1,835,830 74,664 1,910,494 NET ASSETS Invested in capital assets, net of related debt 13,762,881 1,109,852 14,872,733 Restricted net assets 1,243, ,243,867 Unrestricted net assets 2,178,752 10,708,056 12,886,808 Total net assets $17,185,500 $11,817,908 $29,003,408 The accompanying notes are an integral part of the financial statements. 15

100 BOARD OF COUNTY COMMISSIONERS STATEMENT OR REVENUES, EXPENSES, AND CHANGES IN FUND NET ASSETS PROPRIETARY FUNDS COMPONENT UNITS FOR THE YEAR ENDED SEPTEMBER 30, 2009 Business-type Activities Escambia County Santa Rosa Housing Island Authority Finance Authority Total Operating revenues: Charges for services $6,435,669 $2,978,785 $9,414,454 Total operating revenues 6,435,669 2,978,785 9,414,454 Operating expenses: Personal services 2,921, ,613 3,305,989 Contractual services 355,176 96, ,175 Materials and supplies 250,008 30, ,217 Travel and vehicle costs 0 40,759 40,759 Depreciation 960,331 4, ,278 Memberships, dues and subscriptions 0 13,774 13,774 Utilities 316, ,936 Maintenance 60, ,476 Rentals and leases 0 40,677 40,677 Advertising and promotion 364, ,915 Miscellaneous 300,254 45, ,932 Total operating expenses 5,529, ,656 6,187,128 Operating income (loss) 906,197 2,321,129 3,227,326 Non-operating revenues (expenses): Interest income (19,386) 339, ,350 Interest expense (1,324) 0 (1,324) Gain (loss) on disposal of assets (12,201) 0 (12,201) Grant revenue 107, ,999 Grant expense Other income (expense) (188,922) 0 (188,922) Payments to Escambia County (800,000) 0 (800,000) Total non-operating revenues (expenses) (913,834) 339,736 (574,098) Income (loss) before contributions and transfers (7,637) 2,660,865 2,653,228 Capital contributions (21,185,561) 0 (21,185,561) Total contributions (21,185,561) 0 (21,185,561) Change in net assets (21,193,198) 2,660,865 (18,532,333) Net assets at beginning of year 38,378,698 9,157,043 47,535,741 Net assets at ending of year $17,185,500 $11,817,908 $29,003,408 The accompanying notes are an integral part of the financial statements. 16

101 NOTES TO FINANCIAL STATEMENTS

102 ANNUAL AUDIT REPORT BOARD OF COUNTY COMMISSIONERS NOTES TO COMBINED FINANCIAL STATEMENTS SEPTEMBER 30, 2009 NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Escambia County, Florida (the County) is a political subdivision of the State of Florida created pursuant to Chapter 7 of the Florida Statutes. The County is governed by a five member Board of County Commissioners (the Board ), elected from single-member districts. The Board has no powers other than those expressly vested in it by State Statute and their governmental powers cannot be delegated. The Board appoints an administrator to administer all policies emanating from its statutory powers and authority. In addition to the Board, there are five elected Constitutional Officers, pursuant to Article 8, Section 1(d), of the Constitution of the State of Florida: Clerk of the Circuit Court & Comptroller, Sheriff, Tax Collector, Property Appraiser, and Supervisor of Elections. The accounting policies of the Board conform to accounting principles generally accepted in the United States (US) as applicable to governments. The following is a summary of the more significant accounting policies. A. Financial Reporting Entity The combined financial statements include the operations of the Board and those separately administered organizations for which the government is considered to be financially accountable. Blended component units, although legally separate entities, are, in substance, part of the government operations. Discretely presented component units are reported in a separate statement in the basic financial statements to emphasize that they are legally separate from the primary government. These special-purpose financial statements are not intended to be a complete presentation of the financial position and results of operations of Escambia County, Florida taken as a whole. As permitted by Chapter (4), Rules of the Auditor General State of Florida, the special-purpose financial statements consists of only the fund level financial statements as defined in Governmental Accounting Standards Board (GASB) Statement No. 34, and do not include presentations of government-wide financial statements of the Board of County Commissioners. Blended Component Units Community Redevelopment Agency (CRA) In 1995, the Board adopted Ordinance No which established the Community Redevelopment Agency (CRA) of Escambia County pursuant to The Community Redevelopment Act of The Board serves as the CRA Board and has all rights, powers, duties, privileges and immunities authorized by the Act. The CRA is reported as a major special revenue fund. Five redevelopment areas are included under the CRA jurisdiction. Discretely Presented Component Units Governmental Fund Type: Escambia County Law Library Board The Escambia County Law Library Board, created under Special Act, Chapter , Laws of Florida, provides for the maintenance of a central law library for the use of citizens, county officials, judges and officers of the courts of Escambia County. The operations of the Law Library Board are funded by collection of fees by the Clerk of the Circuit Court & Comptroller on civil cases filed in the courts in addition to other costs provided by law. The Law Library Board is composed of two (2) circuit judges, two (2) county judges and one (1) lawyer appointed by the local bar association. The operations of the Law Library are reported in the Law Library Fund, a special revenue fund, as a discrete component unit. Financial statements for the Escambia County Law Library Board can be obtained at 190 Governmental Center, Pensacola, Florida

103 ANNUAL AUDIT REPORT BOARD OF COUNTY COMMISSIONERS NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED) SEPTEMBER 30, 2009 Proprietary Fund Type: Santa Rosa Island Authority (SRIA) The Santa Rosa Island Authority (SRIA) was established by the provisions of Chapter , Laws of Florida, Special Acts of 1947, as amended. The Board appoints five (5) members of the Authority s six (6) member Board, and one (1) member is elected by the eligible voters who are full time residents of the Island. The Board approves the Authority s budget, issuance of debt, and has veto power over decisions of the Authority. The SRIA serves as the Board s leasing agent for property on Santa Rosa Island owned by the Board. The operations of SRIA are reported in the SRIA Fund, a discrete component unit in this report. Financial statements for the SRIA can be obtained at 1 Via Deluna, Pensacola Beach, Florida Escambia County Housing Finance Authority The Escambia County Housing Finance Authority (HFA) was created in 1982 by Ordinance No pursuant to Chapter 78-89, Laws of Florida codified as Chapter 159, Part IV, Section through The Board appoints five (5) members of the HFA and must approve by resolution any rules or regulations, the issuance of revenue bonds and all contracts and agreements. The Escambia County HFA and the Board are not substantially the same. The HFA does not provide services almost entirely for the Board. Therefore, the operations of the Escambia County HFA are reported as a discrete component unit in this report. Financial statements for the Escambia County HFA can be obtained at 25 West Cedar Street, Suite 530, Pensacola, Florida Because these component units have been reported as a part of the Board, there are limited instances where special note references or separation will be required. If no separate note reference or categorization is made, the user should assume that information presented is equally applicable. Joint Ventures As defined in GASB Statement Number 14, a joint venture is a separate legal entity or other organization that results from a contractual arrangement (or interlocal agreement) and that is owned, operated or governed by two or more participants as a separate and specific activity subject to joint control in which the participants retain (a) an on-going financial interest or (b) an on-going financial responsibility. The Board participates and provides financial support to the following nonequity joint ventures: Human Relations Commission (HRC) The Commission was created by an Interlocal Agreement between Escambia County and the City of Pensacola in 1978, pursuant to Florida Statutes, Chapter , for the purpose of being responsible for the promotion of fair treatment and equal opportunity to all citizens of the local community. The Commission is composed of fourteen (14) members; seven (7) selected by the Board and seven (7) selected by the City of Pensacola. The duration of this agreement is for a period of two (2) years, with a renewal provision. The Board does not control budgeting or financing for the Commission. Separate financial statements are available from the Commission at 2257 Baylen Street, Pensacola, Florida Pensacola Escambia County Promotion and Development Commission (PEDC) This Commission was created in 1967 by Chapter , Laws of Florida, amended in 1980 by Chapter , to promote and develop tourism and industry in Escambia County and in the City of Pensacola. The nine (9) member Commission consists of two (2) members of the Pensacola City Council, two (2) members of the Escambia County Commission, one (1) member of the Century City Council, the President of the Chamber of Commerce (1), one (1) representative of the Committee of 100 or the Tourist Advisory Council, one (1) at-large member appointed by the Pensacola City Council, and one (1) at-large member appointed by the Escambia County Commission. The Board of County Commissioners and the City of Pensacola each contribute funds annually for the operation of the Commission, but neither has control of the budget or finances of the Commission. The Commission has no outstanding debt. Separate financial 18

104 ANNUAL AUDIT REPORT BOARD OF COUNTY COMMISSIONERS NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED) SEPTEMBER 30, 2009 statements are available from the Pensacola Escambia County Promotion and Development Commission at 117 West Garden Street, Pensacola, Florida Summary financial statements as of September 30, 2009 for the joint ventures are as follows: STATEMENTS OF NET ASSETS SEPTEMBER 30, 2009 HRC PEDC Assets and other debits $31,379 $8,692,301 Liabilities 14,725 8,362,390 Net assets Invested in capital assets 4,560 0 Restricted assets 0 61,198 Unrestricted 12, ,713 Total net assets $16,654 $329,911 STATEMENTS OF ACTIVITIES FISCAL YEAR ENDED SEPTEMBER 30, 2009 HRC PEDC Revenues $242,125 $270,841 Expenses (237,447) (270,544) Change in net assets 4, Net assets beginning 11, ,614 Net assets ending $16,654 $329,911 B. Basic Financial Statements Fund Financial Statements The basic financial statements consist of the fund financial statements. These statements categorize primary activities as either governmental or business-type activities. Individual fund financial statements are provided for governmental funds, proprietary funds and discrete component units. Major individual governmental funds and major individual enterprise funds are reported as separate columns in the fund financial statements. The Board reports the following major governmental funds: The General Fund is the government s primary operating fund. It accounts for all financial resources of the general government, except those required to be accounted for in another fund. The Disaster Recovery Fund accounts for resources provided from various State and Federal grants, such as Federal Emergency Management Agency (FEMA). The Community Redevelopment Agency (CRA) accounts for the revenues and expenditures of the redevelopment areas established within the County. 19

105 ANNUAL AUDIT REPORT BOARD OF COUNTY COMMISSIONERS NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED) SEPTEMBER 30, 2009 The Transportation Trust Fund accounts for gasoline taxes and other revenues to be expended on various transportation projects within the County. The Local Option Sales Tax II Fund accounts for monies collected pursuant to Florida Statutes , which authorized counties to impose a one percent (1%) local option infrastructure sales surtax upon taxable transactions occurring within Escambia County, to provide for road and drainage projects and improvements, recreation projects, public safety, expansion of jail and court facilities, and community redevelopment projects. This tax which was to expire May 31, 2007 was extended for an additional 11 years and is accounted for in the Local Option Sales Tax III Fund. The Local Option Sales Tax III Fund accounts for monies collected pursuant to Florida Statutes , authorizing counties to impose a one percent (1%) local option infrastructure sales tax as described above. This tax was approved by referendum for the period January 1, 2007 December 31, The Board reports the following major proprietary funds: The Solid Waste Fund accounts for solid waste disposal (landfill) operations, primarily financed through franchise fees and user charges. The Ambulance Fund accounts for the cost of emergency medical services provided in Escambia County. All activities necessary to provide such services are accounted for in this fund. Additionally, the Board reports the following fund type: The Internal Service Fund accounts for risk management activities and garage and fuel activities provided to other County departments, as well as the administration of employee benefits. C. Basis of Presentation, Basis of Accounting 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. For this purpose, the Board considers revenues to be available if they are collected within 60 days of the end of the current fiscal period, except for certain grant revenues which are recognized as revenues in the same period the grant expenditures occurred. State shared revenues, sales taxes, franchise taxes, and interest associated with the current fiscal period are all considered to be susceptible to accrual and have been recognized as revenues of the current fiscal period. Expenditures generally are recorded when a liability is incurred, except for debt service expenditures and expenditures related to compensated absences and claims and judgments, which are recorded when payment is due. Capital asset acquisitions are recorded as expenditures in governmental funds. Monies received from issuing longterm debt and acquisitions under capital leases are reported as other financing sources. Under the terms of some grant agreements, the Board funds certain programs by a combination of specific cost-reimbursement grants, categorical block grants, and general revenues. Thus, when the program expenses are incurred, there are both restricted and unrestricted net assets available to finance the program. It is the Board s policy to first apply cost-reimbursement grant resources to such programs, followed by categorical block grants, and then by general revenues. 20

106 ANNUAL AUDIT REPORT BOARD OF COUNTY COMMISSIONERS NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED) SEPTEMBER 30, 2009 The Board has elected to follow Financial Accounting Standards Board (FASB) statements and interpretations issued on or before November 30, 1989, for all governmental and business-type activities and enterprise funds, unless those standards conflict with or contradict guidance of the GASB pronouncements. Proprietary fund financial statements are reported using the accrual basis of accounting, distinguishing operating revenues and expenses from nonoperating items. Operating revenues and expenses generally result from providing services and producing and delivering goods in connection with a proprietary fund s principal ongoing operations. The principal operating revenues of the Board s enterprise funds are charges to customers for sales and services. Operating expenses for enterprise funds and the internal service fund include the cost of sales and services, administrative expenses, and depreciation on capital assets. All revenues and expenses not meeting this definition are reported as nonoperating revenues and expenses. D. Assets, Liabilities and Net Assets or Equity Cash or Cash Equivalents consists of cash on hand, demand deposits, and short-term investments with original maturities of three months or less from date of acquisition. Equity in Pooled Cash and Investments represent assets pooled for investment purposes with each individual fund and/or account maintained on a daily transaction basis. Such investments consist of demand deposits, certificates of deposit, U.S. Treasury Bills, and notes of certain instrumentalities. Investment earnings are allocated to the participating funds on a pro-rata basis. As defined by GASB Statement No. 31, money market investments are reported at amortized cost rather than fair value. The Board has adopted an investment policy in accordance with specific requirements of Florida Statute (1) (16). This policy authorizes investments in direct obligations of the U.S. Treasury, Federal Instrumentalities, time deposits and savings accounts in qualified public depositories, tax exempt obligations of the State of Florida, the Florida Counties Investment Trust, Securities and Exchange qualified open-end money market mutual funds, the State of Florida s Local Government Surplus Trust Fund (SBA), and repurchase agreements. Trade Receivables are shown net of an allowance for uncollectible accounts. The Solid Waste Fund records an allowance for receivables older than 90 days, while the Internal Service Fun provides an allowance on those receivables where there have been no collections during the past year. All other Board Funds record allowance on accounts older than 120 days. The Board records unbilled service receivables for services that have been rendered but not billed at the end of the fiscal year. Real and Personal Property Valuations are determined each year as of January 1 by the Property Appraiser s Office. Florida Statues require all property be assessed at 100% of just value. For fiscal year 2009, the County-wide millage rate was mills. All property taxes are billed in arrears and become due and payable on November 1, and are delinquent on April 1, of the following year. The legal lien date is January 1 of each year. Discounts of 4, 3, 2, and 1 percent are allowed for early payment in November through February, respectively. Virtually all unpaid taxes are collected via the sale of tax certificates prior to fiscal year end. Due From/(To) Other Funds are activities between funds. Such amounts are representative of lending/borrowing arrangements outstanding at the end of the fiscal year and are referred to as either due to /from other funds (i.e., the current portion of interfund loans) or advances to/from other funds (i.e., the non-current portion of interfund loans). 21

107 ANNUAL AUDIT REPORT BOARD OF COUNTY COMMISSIONERS NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED) SEPTEMBER 30, 2009 Advances To/(From) Other Funds, as reported in the governmental fund financial statements, are offset by a fund balance reserve to indicate such amounts are not available for appropriation and are not expendable available financial resources. Inventory amounts are valued at cost (first-in, first-out). Inventory balances in general, special revenue and enterprise funds are accounted for on the consumption method, i.e., expenditures and expenses are recognized when inventories are used. Inventories are equally offset by a fund balance reserve since such amounts are not available spendable resources even though they are a component of net current assets. Restricted Assets are assets of governmental and business-type activities that are restricted per bond resolutions or other agreements. Capital Assets, which include property, plant, equipment, and infrastructure assets (e.g., roads, bridges, sidewalks, and similar items), are reported in the applicable governmental or business-type activities columns in the government-wide financial statements. Purchased or constructed assets are recorded at historical cost or estimated cost. Donated capital assets are recorded at estimated fair market value at the date of donation. The Board capitalizes items costing $1,000 and having an estimated useful life in excess of one year. Buildings, public domain and system infrastructure assets which represent major expenditures for such items as roads, water and sewer lines, landfill improvements, and parks and drainage systems are capitalized at historical cost. Major outlays for capital assets and improvements are capitalized as projects are constructed. The costs of normal maintenance and repairs that do not add to the value of the asset or materially extend asset lives are not capitalized. Depreciation has been provided using the straight-line method. The estimated useful lives of the various classes of depreciable capital assets are as follows: Buildings Improvements Infrastructure Equipment years years years 3 10 years Compensated Absences are accrued in accordance with GASB Statement No. 16. It is the policy of the Board to permit employees to accumulate a limited amount of earned but unused leave benefits which will be paid to employees upon separation from service. Unpaid compensated absences are recorded as a liability in the proprietary fund financial statements. For governmental funds, there is no legal requirement to accumulate expendable available financial resources to liquidate the obligation; these expenditures are recognized in the governmental funds when payments are made to employees. Other Post-Employment Benefits provisions were adopted by the Board effective October 1, 2007 under the provisions of GASB Statement No. 45, Accounting and Financial Reporting by Employers for Postemployment Benefits Other Than Pensions. The effect of this adoption was to establish uniform reporting standards for Other Postemployment Benefit (OPEB) expense and related liabilities (assets), note disclosures, and required supplementary information (RSI) in annual financial reports of governmental entities. GASB Statement No. 45, improves the relevance and usefulness of financial reporting by: (a) requiring systematic, accrual-basis measurement and recognition of Other Postemployment Benefit (OPEB) cost (expense) over a period that approximates employees years of service and (b) providing information about actuarial accrued liabilities associated with OPEB and whether and to what extent progress is being made in funding the plan. 22

108 ANNUAL AUDIT REPORT BOARD OF COUNTY COMMISSIONERS NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED) SEPTEMBER 30, 2009 Self Insurance Claims Payable represents liabilities for reported claims and incurred but not reported claims based on an actuarial review of claims pending and historical experience. Landfill Closure and Post Closure Care Payable represents the recognition of Municipal Solid Waste Landfill (MSWLF) closure and postclosure care costs under the State of Florida s Solid Waste Management Act of 1988 (the 1988 Act ), regulations of the Federal Environmental Protection Agency (EPA) and GASB Statement No. 18. MSWLF costs incurred for landfills accepting solid waste after final implementation of the 1988 Act and EPA regulations are recognized as an expense and a liability in each year that the MSWLF accepts solid waste based upon the landfill capacity used during that year. Long Term Obligations in the proprietary fund types are reported as liabilities in the Statement of Net Assets. Long-term obligations related to governmental fund type activities are not reported in these special purpose financial statements. However, as required by Chapter (3)(g) Rules of the Auditor General State of Florida, the notes to the financial statements include disclosures related to such longterm obligations. The Board reports pollution (including contamination) remediation obligations, which are obligations to address the current or potential detrimental effects of existing pollution, in accordance with GASB Statement No. 49, Accounting and Financial Reporting for Pollution Remediation Obligations. The circumstances under which the Board will have to estimate, record, and disclose its expected outlays for pollution remediation include: the pollution is an imminent danger to public health or welfare; the Board is in violation of a pollution prevention-related permit or license; the Board has been named as a responsible party under Superfund or similar state laws; the Board is named in a lawsuit that would require participation in remediation activities; or the Board legally commits itself to conduct remediation activities. Fund Equity in the governmental fund s financial statements report reservations of fund balance for amounts that are not available for appropriation or are legally restricted by outside parties for use for a specific purpose. Designations of fund balance represent tentative management plans that are subject to change. Net Assets The proprietary fund financial statements utilize a net asset presentation. Net assets are categorized as invested in capital assets (net of related debt), restricted and unrestricted. Invested in Capital Assets (net of Related Debt) is intended to reflect the portion of net assets which are associated with non-liquid, capital assets less outstanding capital asset related debt. Unrestricted Net Assets represent unrestricted liquid assets. While Board management may have categorized and segmented portions for various purposes, the Board has the unrestricted authority to revisit or alter these managerial decisions. E. Revenues, Expenditures and Expenses Substantially all governmental fund revenues, expenditures and expenses are accrued. Property taxes are billed and generally collected within the same period in which the taxes are levied. 23

109 ANNUAL AUDIT REPORT BOARD OF COUNTY COMMISSIONERS NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED) SEPTEMBER 30, 2009 A. Budgetary Information NOTE 2 STEWARDSHIP, COMPLIANCE AND ACCOUNTABILITY Annual budgets are adopted on a basis consistent with generally accepted accounting principles as required by Florida Statute 129 for all funds. All annual appropriations lapse at fiscal year end. On or before May 1 of each year, the Sheriff, Clerk of the Circuit Court & Comptroller, Tax Collector, Property Appraiser, and the Supervisor of Elections each submit to the Board a tentative budget for the ensuing fiscal year. Within fifteen days after certification of the ad valorem tax roll by the Property Appraiser, the County Budget Officer submits to the Board a proposed budget for the fiscal year commencing the following October 1 st. The Budget includes proposed expenditures and the means of financing them. The Board holds public hearings and a final budget must be prepared and adopted no later than September 30. The County s budget is legally enacted through passage of a resolution. The appropriated budget is prepared by fund, function and department. The Management and Budget Services Bureau is authorized to transfer budgeted amounts within departments of a fund and between departments of a fund; however, the Board must approve any revisions that alter the total expenditures of any fund. The legal level of budgetary control (i.e., the level at which expenditures may not legally exceed appropriations) is the fund level. The Board approved supplemental budget amendments during the year that increased the original budget. A. Assets Deposits and Investments NOTE 3 DETAIL NOTES ON ALL FUNDS As of September 30, 2009, the carrying value of the County s deposits and investments with their respective credit ratings was as follows: Weighted Fair Credit Average Investment Type Value Rating Maturity (days) Demand and time deposits $26,336,838 N/A N/A Certificates of Deposit 25,000,000 N/A 276 days Money Market Accounts 73,562,116 N/A N/A US Treasuries 29,950,855 Aaa days US Agencies 24,944,450 Aaa days Total Deposits and Investments $179,794,259 Credit Risk: The Board s Investment Policy (Policy), limits credit risk by restricting authorized investments to the following: direct obligations of the United States or its agencies and instrumentalities, repurchase 24

110 ANNUAL AUDIT REPORT BOARD OF COUNTY COMMISSIONERS NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED) SEPTEMBER 30, 2009 agreements, the Local Government Surplus Funds Trust Fund administered by Florida s State Board of Administration (a 2a7-like pool), certificates of deposit, money market mutual funds investing in direct obligations of the United States or its agencies and instrumentalities regulated by the SEC, and the Florida Local Government Investment Trust, an investment pool administered by the Florida Association of Court Clerks and Comptrollers. The credit ratings indicated in the above table are Moody s Investors Services (Moody s) ratings. Concentration of Credit Risk: The Policy requires that bank deposits be secured as provided by Chapter 280, Florida Statues. This law requires local governments to deposit funds only in financial institutions designated as qualified public depositories by the Chief Financial Officer of the State of Florida, and creates the Public Deposits Trust Fund, a multiple financial institution pool with the ability to assess its member financial institutions for collateral shortfalls if a default or insolvency has occurred. As of September 30, 2009, all of the Board s bank deposits were in qualified public depositories. The Policy requires the assets shall be diversified to control the risk of loss resulting from the over concentration of assets. The Policy establishes guidelines for limiting the percentage of the portfolio by permissible investment category as well as issuer limits within an investment category. The Policy requires execution of a third-party custodial safekeeping agreement for all purchased securities, and requires that securities be held in the Board s name. As of September 30, 2009, all of the Board s investments are held in a bank s trust department in the Board s name. Interest Rate Risk: The Policy limits the investment of current operating funds to no longer than one (1) year. Investments of current operating funds will be matched to cash flow needs. Investment of bond reserves, construction funds and other non-operating funds shall have a term appropriate to the need for funds, and in accordance with debt covenants, but shall not exceed five (5) years. 25

111 ANNUAL AUDIT REPORT BOARD OF COUNTY COMMISSIONERS NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED) SEPTEMBER 30, 2009 Receivables as of September 30, 2009, including the applicable allowances for uncollectible accounts, are as follows: Allowance Accrued Gross for Accounts Notes Interest Receivables Uncollectible Net Governmental type funds: General $17,429,356 $0 $38,682 $17,468,038 ($16,136,694) $1,331,344 Transportation trust 8, , ,802 Other non major funds 313,941 43, ,492 (25,267) 332,225 Total governmental activities $17,752,099 $43,551 $38,682 $17,834,332 ($16,161,961) $1,672,371 Proprietary type funds: Solid Waste $695,664 $0 $0 $695,664 ($251) $695,413 Ambulance 9,386, ,386,682 (6,356,893) 3,029,789 Non major 119, ,407 (2,789) 116,618 Total business-type activities $10,201,753 $0 $0 $10,201,753 ($6,359,933) $3,841,820 Internal service fund $3,473,201 $0 $0 $3,473,201 ($2,121,618) $1,351,583 Component units: Santa Rosa Island Authority $404,035 $0 $0 $404,035 $0 $404,035 Housing Finance Authority 2,840, ,840, ,840,850 Total component units $3,244,885 $0 $0 $3,244,885 $0 $3,244,885 There were no unbilled receivables at September 30, The General Fund receivable contains approximately $16.1 million contested property taxes billed on Pensacola Beach. Due to pending litigation which may affect the assessed value of the property, this receivable is fully offset with an allowance for uncollectible accounts. 26

112 ANNUAL AUDIT REPORT BOARD OF COUNTY COMMISSIONERS NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED) SEPTEMBER 30, 2009 Governmental Capital Assets activity for the year ended September 30, 2009 was as follows: Balance at (Decreases)/ Balance at 10/1/2008 Increases Transfers 09/30/2009 Primary Government: Governmental activities: Capital assets not depreciated: Land $29,257,944 $3,320,861 $0 $32,578,805 Construction in progress 32,475,192 38,746,447 (32,475,192) 38,746,447 Total capital assets not depreciated 61,733,136 42,067,308 (32,475,192) 71,325,252 Capital assets depreciated: Infrastructure 552,149,000 39,539,945 (858,110) 590,830,835 Buildings and improvements 187,969,466 6,952,189 (10,585) 194,911,070 Equipment 85,997,490 3,387,845 (7,662,742) 81,722,593 Total capital assets depreciated 826,115,956 49,879,979 (8,531,437) 867,464,498 Less accumulated depreciation: Infrastructure 266,236,827 24,813,543 (248,833) 290,801,537 Building and improvements 60,891,111 6,610,006 (10,329) 67,490,788 Equipment 59,853,629 7,646,910 (7,272,580) 60,227,959 Total accumulated depreciation 386,981,567 39,070,459 (7,531,742) 418,520,284 Total capital assets depreciated, net 439,134,389 10,809,520 (999,695) 448,944,214 Governmental-type activities capital assets, net $500,867,525 $52,876,828 ($33,474,887) $520,269,466 Depreciation expense was charged by function/program of the governmental funds follows: Governmental activities: General government $5,299,520 Public safety 7,380,277 Physical environment 302,559 Transportation, including depreciation of general infrastructure assets 21,326,840 Economic environment 734,702 Human services 505,797 Culture and recreation 3,520,764 Total depreciation expense $39,070,459 27

113 ANNUAL AUDIT REPORT BOARD OF COUNTY COMMISSIONERS NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED) SEPTEMBER 30, 2009 Proprietary Fund Capital Assets activity for the year ended September 30, 2009 was as follows: Balance at Transfers / Balance at 10/01/2008 Increases Decreases 09/30/2009 Business-type activities: Land $3,428,615 $1,421,244 $0 $4,849,859 Capital assets depreciated: Buildings 33,482,185 4,048,755 (173,153) 37,357,787 Infrastructure 29,790, , ,335,128 Equipment 16,879,404 2,678,028 (586,020) 18,971,412 Total capital assets depreciated 80,152,248 7,271,252 (759,173) 86,664,327 Less accumulated depreciation: Buildings 19,223,541 1,075,645 (173,153) 20,126,033 Infrastructure 10,502,427 1,285, ,787,886 Equipment 10,698,403 1,893,171 (580,648) 12,010,926 Total accumulated depreciation 40,424,371 4,254,275 (753,801) 43,924,845 Total capital assets depreciated, net 39,727,877 3,016,977 (5,372) 42,739,482 Business-type activities capital assets, net $43,156,492 $4,438,221 ($5,372) $47,589,341 Internal service: Buildings $0 $9,950 $10,585 $20,535 Infrastructure 0 120, , ,403 Equipment 232,863 18,848 (13,989) 237,722 Total capital assets depreciated 232, , ,367 1,165,660 Less accumulated depreciation: Buildings ,329 10,626 Infrastructure 0 37, , ,695 Equipment 181,609 17,705 (13,953) 185,361 Total accumulated depreciation 181,609 55, , ,682 Internal service capital assets, net $51,254 $93,813 $565,911 $710,978 Depreciation expense was charged to functions/programs of the proprietary funds as follows: Depreciation Expense Enterprise funds Solid Waste $2,373,406 Inspections (non-major) 95,660 Ambulance 797,584 Civic center (non-major) 987,625 Total depreciation expense 4,254,275 Internal service fund 55,617 Total depreciation expense enterprise and internal service funds $4,309,892 28

114 ANNUAL AUDIT REPORT BOARD OF COUNTY COMMISSIONERS NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED) SEPTEMBER 30, 2009 Discretely Presented Component Units reported the following capital asset balances at September 30, 2009: SANTA ROSA ISLAND AUTHORITY HOUSING FINANCE AUTHORITY Buildings $3,669,342 Land $1,100,000 Improvements other than buildings 13,971,358 Improvements other than buildings 0 Equipment 1,318,756 Equipment 52,001 Construction in progress 898,085 Total at historical cost 1,152,001 Total at historical cost 19,857,541 Less accumulated depreciation (42,149) Less accumulated depreciation (6,092,517) Housing Finance Authority Santa Rosa Island Authority capital assets, net $1,109,852 capital assets, net $13,765,024 Interfund receivables, payables, and transfers: During the course of its operations, transactions occur between funds to finance operations, provide services, construct assets, and service debt resulting in interfund receivables, payables, and transfers at September 30, 2009 as follows: Due Due Advances Advances Transfers Transfers From To To From In Out General fund $200,000 $0 $0 $0 $3,690,537 $127,995,630 Disaster recovery ,682,355 1,000,000 0 Community redevelopment ,965,904 0 Transportation trust ,172,346 0 Local option sales tax II ,682, Local option sales tax III Non-major governmental funds 0 200, ,479 27,894,244 8,267, , ,000 17,682,355 18,236,834 41,723, ,263,219 Solid waste ,470, ,732 Ambulance ,522, ,395 Non-major business-type funds ,834,636 0 Internal service 0 0 6,024, Total major and nonmajor $200,000 $200,000 $23,706,834 $23,706,834 $45,079,997 $136,790,346 General fund transfers out include funding to the County's other Elected Officials (2,216,155) (93,926,504) $42,863,842 $42,863,842 29

115 ANNUAL AUDIT REPORT BOARD OF COUNTY COMMISSIONERS NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED) SEPTEMBER 30, 2009 Restricted Assets for business activities contain the following balances: Total Internal Solid Enterprise Service Waste Non-major Funds Fund Deposits $100,570 $300,217 $400,787 $31,191 Landfill closure 4,981, ,981,394 0 $5,081,964 $300,217 $5,382,181 $31,191 B. Liabilities Payable from Restricted Assets in the business-type activities contain the following balances: Total Solid Enterprise Internal Waste Non-major Funds Service Deposits $100,570 $300,217 $400,787 $31,191 Landfill closure and postclosure 105, ,398 0 $205,968 $300,217 $506,185 $31,191 Long-Term Debt Changes in long-term bonds, notes payable, loans, capital leases, and compensated absences during 2009 are as follows: Amounts Due Beginning Balance Within Balance Outstanding One Year Long-Term Debt 10/1/2008 Additions (Retirements) 9/30/2009 of 09/30/2009 Governmental-type activities: Sales Tax Revenue Bonds $82,780,000 $0 ($1,865,000) $80,915,000 $1,925,000 Capital Improvement Bonds 20,110,000 0 (480,000) 19,630, ,000 Tourist Development Bonds 12,320,000 0 (935,000) 11,385, ,000 Capital Improvement Notes 9,705,000 0 (700,000) 9,005, ,000 State of Florida's Toll Facility Note 52,500 0 (52,500) 0 0 FNMA Loan 273,000 1,227,000 (1,500,000) 0 0 Capital Leases 1,799,730 0 (635,218) 1,164, ,008 General Compensated Absences 7,086,336 2,391,625 (2,019,904) 7,458,057 2,110,056 Total $134,126,566 $3,618,625 ($8,187,622) $129,557,569 $6,912,064 Compensated Absences: Solid Waste Compensated Absences $561,195 $95,928 ($108,200) $548,923 $0 Inspections Compensated Absences 424, ,758 (102,212) 449,262 0 Ambulance Compensated Absences 677, ,377 (203,540) 659,128 0 Total $1,663,202 $408,063 ($413,952) $1,657,313 $0 Internal Service Compensated Absences $154,845 $169,335 ($35,702) $288,478 $0 30

116 ANNUAL AUDIT REPORT BOARD OF COUNTY COMMISSIONERS NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED) SEPTEMBER 30, 2009 The General Fund generally liquidates claims and judgments, and compensated absences for governmental activities. Long-term Debt for governmental activities consists of the following: Interest Annual Final Amount Governmental Activities Rates % Principal Maturity Outstanding Bonds: Sales Tax Revenue Bonds Serial Bonds - Series ,925,000 to 3,290,000 10/01/22 32,540,000 Term Bond - Series ,450,000 to 5,485,000 10/01/33 48,375,000 Total Sales Tax Revenue Bonds 80,915,000 Capital Improvement Bonds Serial Bonds - Series ,000 to 675,000 10/01/17 4,113,000 Term Bonds - Series ,130,000 to 6,260,000 10/01/32 15,517,000 Total Road Improvement Bonds 19,630,000 Tourist Development Bonds Series ,000 to 1,355,000 10/01/19 11,385,000 Total Long-term Bonds 111,930,000 Notes: Capital Improvement Notes City of Gulf Breeze - Series 1997 Variable 535,000 to 1,085,000 10/01/17 7,050,000 City of Gulf Breeze - Series 2003 Variable 220,000 to 240,000 10/01/17 1,955,000 Total Capital Improvement Notes 9,005,000 Total Long-term Notes 9,005,000 Capital Leases SunTrust - Central Chiller Lease ,297 to 300,304 04/01/11 532,600 SunTrust - Leonard Street Chiller ,208 to 356,704 05/28/11 631,912 Total Capital Leases 1,164,512 Compensated Absences: Board of County Commissioners N / A N / A 7,458,057 Total Long-Term Debt $129,557,569 31

117 ANNUAL AUDIT REPORT BOARD OF COUNTY COMMISSIONERS NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED) SEPTEMBER 30, 2009 Business activity long-term debt consists of the following: Amount Interest Annual Final Outstanding Business Activities Rates % Principal Maturity 9/30/2009 Compensated Absences-Business Activities: Solid Waste Fund N / A N / A $548,923 Inspections Fund N / A N / A 449,262 Ambulance Fund N / A N / A 659,128 Total Business Activities Compensated Absences $1,657,313 Internal Service Fund Compensated Absences $288,478 Annual debt service requirements to maturity to retire long-term bonds, notes, and loans are as follows: Governmental Long-Term Debt Fiscal Total Year Principal Ending Revenue Bonds Notes and Loans and September 30, Principal Interest Principal Interest Interest 2010 $3,390,000 $5,237,575 $755,000 $61,492 $9,444, ,490,000 5,128, ,000 55,973 9,484, ,605,000 5,011, ,000 49,621 9,526, ,735,000 4,887, ,000 42,800 9,595, ,880,000 4,743, ,000 35,477 9,654, ,450,000 20,648,751 4,655,000 57,680 47,811, ,720,000 15,254, ,974, ,225,000 9,747, ,972, ,435,000 2,890, ,325,413 Total governmental debt $111,930,000 $73,549,311 $9,005,000 $303,043 $194,787,354 Long-Term Debt Bonds Sales Tax Revenue Refunding Bonds Series 2002 in aggregate principal amount of $89,730,000, were issued under and pursuant to the Constitution and laws of the State of Florida, particularly Chapter 125, Florida Statutes, as amended, Home Rule Ordinance No of the County, as amended, and ordinances and resolutions adopted by the Commission of the County. The Bonds are limited special obligations of the County collateralized by a lien on and pledge of, among other things, the proceeds of the local government half-cent sales tax distributed to the County from the Local Government Half-Cent Sales Tax Clearing Trust Fund. The proceeds of the bonds were used to finance the costs of a current refunding of all of the County s Sales Tax Revenue Refunding Bonds Series 1993, originally issued in the amount of $50,355,000, with a balance of $48,830,000 at the date of refunding, and to provide approximately $39,000,000 to finance the cost of certain capital improvement projects of the County including (1) renovating and expanding the Sheriff s administrative building; (2) renovating the jail infirmary; (3) expanding the jail annex; (4) expanding the road prison; (5) acquiring and constructing a parking garage; (6) constructing, renovating, and expanding certain facilities contained within the administrative master plan; (7) constructing a library facility in Perdido Key; (8) renovating the juvenile justice addition; (9) constructing a new one-stop permitting building; (10) finishing out the third, fourth and fifth floors of the M.C. Blanchard Judicial Building; and (11) making certain stormwater improvements. 32

118 ANNUAL AUDIT REPORT BOARD OF COUNTY COMMISSIONERS NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED) SEPTEMBER 30, 2009 The Project also includes construction and/or equipping of other capital improvements to be determined by the County. Capital Improvement Revenue Bonds Series 2002 in aggregate principal amount of $22,305,000 were issued pursuant to the authority of the Constitution, the laws of the State of Florida, County ordinances, the Santa Rosa Island Authority Special Act and various resolutions, including the interlocal agreement entered into by the Authority and the County. The proceeds are being spent to finance the construction of certain capital improvements on Santa Rosa Island including road improvements to Via DeLuna Drive and Fort Pickens Road, constructing a water reclamation and reuse system, making improvements to the stormwater management system, burying existing above-ground utilities, and making certain landscaping improvements. The 2002 Bonds are special limited obligations of the County, payable solely from and secured by pledge of residential and commercial lease revenues collected by Santa Rosa Island Authority from island leaseholders (per interlocal agreement) and net toll revenues collected for passage across Bob Sikes Bridge to Santa Rosa Island. Tourist Development Revenue Refunding Bonds Series 2002 in aggregate principal amount of $16,885,000 were issued pursuant to the authority of the Constitution, the laws of the State of Florida, including the County s Home Rule Ordinances 74-8 and 89-7, and resolutions adopted by the Board of County Commissioners. The proceeds, together with other available moneys, were used to finance the costs of refunding all of the County s Tourist Development Revenue Bonds, Series 1992, originally issued in the amount of $6,915,000, with a balance of $4,650,000 at the date of refunding, and the County s outstanding promissory note payable to the Florida Local Government Finance Commission in the amount of $850,000, and to provide approximately $12,000,000 for certain improvements on Santa Rosa Island consisting of beach nourishment and certain capital improvements to the Civic Center. The principal and interest on the 2002 Bonds are payable solely from and collateralized by a lien upon and a pledge of the Tourist Development Tax levied and collected by the County. Long-Term Debt Notes Capital Improvement Revenue Note Series 1997 allowed the Board to borrow $10,000,000 from the Gulf Breeze, Florida Capital Funding Program to fund the acquisition and construction of certain capital improvement projects. Pledged revenues toward payment of the loan are the electric franchise fees. The loan requires monthly interest payments at variable rates equal to the PSA Municipal Market, plus a maximum 34 basis points. At September 30, 2009, the rate was.74% Capital Improvement Revenue Note Series 2003 permitted the Board to borrow $3,000,000 from the Gulf Breeze, Florida Capital Funding Program to fund a capital building project for the Work Release Facility. There is a covenant by the Board to annually budget and appropriate sufficient funds to pay the debt service. The Board intends to use revenues generated from the Work Release Program. Repayments under the loan require monthly interest payments at variable rates equal to the PSA Municipal Market, plus a maximum 34 basis points. At September 30, 2009, the rate was.74%. Florida s Toll Facilities Revolving Trust Fund (TFRTF) allowed the County, in 1996, to enter into a loan agreement with the State of Florida s TFRTF. The TFRTF was created by the Florida Legislature to encourage the development and enhancement of the financial feasibility of revenue-producing road projects undertaken by local governmental entities. These interest-free advances are to be repaid either from proceeds from the project s anticipated bond issue or by installment payments over a five year period beginning in the seventh year from the date of the advance. Payments began in These advances were used to conduct feasibility studies on the proposed Escambia Expressway (extension of I- 110). The final payment on this loan was made during fiscal year 2009; therefore, the balance at September 30, 2009 was $

119 ANNUAL AUDIT REPORT BOARD OF COUNTY COMMISSIONERS NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED) SEPTEMBER 30, 2009 Federal National Mortgage Association (FNMA) provided a $1,500,000 Community Express Loan for the County to provide a construction bridge loan to the Interfaith Housing Coalition (IHC), a non-profit agency building low-income affordable housing in Escambia County. The loan was to provide a partial funding for the IHC s planned community named Journey, a 150-home subdivision within the Englewood Community Redevelopment Area. Loan repayment provisions required quarterly interest payments at variable rates equal to the 3-month LIBOR, plus 150 basis points, as posted on the last business day of the preceding quarter. Due to the economic conditions in the mortgage market, the project was cancelled by IHC, and the loan was repaid to FNMA during fiscal year Capital Leases The Board is obligated under lease-purchase agreements for the purchase of new chiller equipment. These leases qualify as capital leases for accounting purposes and are recorded at the present value of the future minimum lease payments at the inception of the lease. The acquired assets have been recorded in the governmental assets at a book value of $3,710,711. Amortization of $213,614 on the leased equipment is included in current year depreciation expense. The Santa Rosa Island Authority has entered into several capital leases for office equipment with terms of months. The acquired assets have been recorded at a book value of $70,071. Amortization on equipment under capital lease is included in depreciation expense. Maturities of the obligations under capital lease are as follows: Board of Santa Rosa County Island Commissioners Authority Balance 10/01/2008 $1,799,730 $6,539 Additions Principal payments (635,218) (4,396) Balance 09/30/2009 $1,164,512 $2,143 Future lease payments 2010 $688,166 $2, ,124 0 Total minimum lease payments 1,204,290 2,309 Less amount representing interest (39,778) (166) Net minimum lease payments $1,164,512 $2,143 Refunding of Outstanding Debt in prior years permitted the Board to defease certain special obligation and other revenue bonds by placing the proceeds of new bonds in irrevocable trusts to provide for all future debt service payments on the old bonds. Accordingly, the trust account asset and liabilities are not included in the Board s financial statements. On September 30, 2009, four bond issues are outstanding with an aggregate principal amount of $38,950,000. Long-Term Debt Arbitrage Liability represents the excess of interest earned from the investment of certain debt proceeds and pledged revenues over the yield rate of the applicable debt. Pursuant to Section 148 (f) of the U.S. Internal Revenue Code, the County must rebate any excess to the United States Government. Arbitrage rebate, if any, is due and payable on each five-year anniversary of the respective bond issue. For the fiscal year ended September 30, 2009, there is no arbitrage rebate liability outstanding. 34

120 ANNUAL AUDIT REPORT BOARD OF COUNTY COMMISSIONERS NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED) SEPTEMBER 30, 2009 Conduit Debt Obligations have been established in the County s name by private-sector entities for the acquisition and construction of industrial and commercial facilities deemed to be in the public interest. The bonds are secured by the property financed and are payable solely from payments received on the underlying mortgage loans. Neither the Board, nor the State, nor any political subdivision thereof, is obligated in any manner for repayment of the bonds. Accordingly, the bonds are not reported as liabilities in the accompanying financial statements. As of September 30, 2009, the outstanding conduit debt of Escambia County is $3,651,255,277. Landfill Closure and Postclosure Care Payable represents the accrued liability for closure and postclosure costs for the County s landfills. Regulations require the Board to cover landfills when they stop accepting waste and to perform certain maintenance and monitoring functions for thirty years after closure. Although closure and postclosure care costs will be paid only near or after the date the landfills stop accepting waste, the Board reports a portion of these closure and postclosure care costs as an operating expense in each period based on landfill capacity used as of each statement of net assets date. Currently, the Beulah, Klondike, Mobile Highway and Camp Five sites are closed. The Perdido Landfill is the only site accepting waste. At year end, $12,284,809 was reported ($105,398 payable from restricted assets and $12,179,411 as long-term liability) as the landfill closure and postclosure care liability in the statement of net assets. This amount is based upon estimated costs to perform closure and postclosure care in 2009, determined from the most recently available engineering studies computed on the ratio of landfill capacity filled at year end to total estimated capacity. Capacity is measured in space utilized by the type of waste being accepted. The Class I capacity is at 63.33% and the Class III capacity is at 64.00%. The Board will recognize the remaining estimated costs of closure and postclosure care of approximately $4.9 million as the remaining estimated capacity is filled. Actual cost may be higher due to inflation, changes in technology or changes in regulations. During 2008, a landfill mining initiative was instituted at the Perdido Landfill. These mining efforts have added significant capacity and life to the landfill. The landfill mining project has resulted in a significant reduction in the long-term care estimates, while continuing to provide the citizens of Escambia County an efficient and effective landfill operation. Closure and Postclosure Care Liability: Beginning Ending Balance Balance 10/1/2008 Additions Deletions 9/30/2009 Current: $103,331 $2,067 $0 $105,398 Long-term Liability 14,351,881 0 (2,172,470) 12,179,411 Total $14,455,212 $2,067 ($2,172,470) $12,284,809 State and federal laws and regulations require the Board to make annual contributions to a cash escrow account to meet financial assurance requirements. The Board is in compliance with these requirements at September 30, 2009 with restricted cash and investments of $4,981,394 for these purposes. In the event closure escrows and interest earnings prove inadequate due to inflation, changes in technology or additional closure/postclosure care requirements, these costs may need to be covered by increased user charges. Pollution Remediation Obligation The Board has identified several potential pollution sites within the County which may require remediation. The preliminary results of the Board s analysis indicated several of the sites are not owned by the Board and that the State or Federal government may be responsible for 35

121 ANNUAL AUDIT REPORT BOARD OF COUNTY COMMISSIONERS NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED) SEPTEMBER 30, 2009 any required remediation. The Board-owned sites are being evaluated further for any pollution remediation obligations. At September 30, 2009, no pollution obligations are reported by the Board. NOTE 4 OTHER INFORMATION The Risk Management program was established by the Board to insure certain types of claims against the Board of County Commissioners, Constitutional Officers, and Santa Rosa Island Authority including losses related to theft, damage and destruction of assets; torts; errors and omissions; injuries to employees; and natural disasters. The following are the types of risks and coverage: Workers Compensation The County is covered for workers compensation claims through a policy with the Florida Municipal Insurance Trust. Coverage limits under the policy include statutory limits, as well as $1,000,000 bodily injury for each accident and $1,000,000 bodily injury by disease for each employee with an aggregate $1,000,000 policy limit. Prior to June 9, 2008, the County was self-insured up to a limit of $450,000 per occurrence with statutory limits. Casualty and Property Casualty limits are self-insured for $100,000 per claim with a $200,000 aggregate limit. Property limits are $50,000 - $250,000 self insured retentions per occurrence with excess limits of $500 million, $410 million excluding wind and $90 million including wind. Prior to June 9, 2008, the Board was self-insured for worker s compensation claims up to a limit of $450,000 per occurrence with statutory limits. The Board will continue to contract with a third party administrator to service all worker s compensation claims with dates of loss prior to June 9, During the fiscal year ended September 30, 2009, there have been no settlements which exceeded the Board s insurance coverage for the last three fiscal years. The Board currently reports all of its risk management activities, including claims liabilities, in the Internal Service Fund. Liabilities are reported when it is probable that a loss has occurred and the amount of the loss can be reasonably estimated. Liabilities on claims prior to June 9, 2008 include an amount for claims that have been incurred but not reported (IBNR). The claims liabilities totaling $11,066,262 reported in the Internal Service Fund at September 30, 2009 are actuarially determined based on historical and current information regarding the Fund Unpaid claims, beginning $10,818,626 $11,701,265 Claims incurred and changes in estimates 4,756,111 3,930,749 Less: claims paid (4,508,475) (4,813,388) Unpaid claims, ending 11,066,262 10,818,626 Estimated claims due within one year (4,611,673) (4,460,309) Estimated claims due longer than one year $6,454,589 $6,358,317 Pension and Retirement Plan Substantially all full-time employees of the Board are covered by the Florida Retirement System (FRS). The FRS was established in 1970 by Chapter 121, Florida Statutes and is administered by the Florida Department of Management Services, Division of Retirement. Changes to the FRS can be made only by an act of the Florida Legislature. Rules governing the operation and administration of the system may be found in Chapter 60S of the Florida Administrative Code. The FRS issues a publicly available financial report that includes financial statements and required supplementary information. The report may be obtained by writing to FRS, 2639-C North Monroe Street, Tallahassee, Florida The FRS offers two retirement plans the FRS Pension Plan and the FRS Investment Plan. An employee may participate in only one of the plans. 36

122 ANNUAL AUDIT REPORT BOARD OF COUNTY COMMISSIONERS NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED) SEPTEMBER 30, 2009 The FRS Pension Plan is a multiple employer cost sharing defined benefit plan which provides retirement and disability benefits, annual cost-of-living adjustments, and death benefits to plan members and beneficiaries. Normal retirement benefits are available to employees who retire at age 62 with 6 or more years of service, or to those employees who have at least 30 years of creditable service, regardless of age. Retirement age and years of service requirements vary depending on membership class. Early retirement is available after 6 years of service with a 5% reduction of benefits for each year prior to the normal retirement age. Retirement benefits are based upon age, average compensation and years-ofservice credit where average compensation is computed as the average of an individual s five highest years of earnings. The FRS Investment Plan is a multiple employer cost sharing defined contribution plan in which participants are vested after one year of service. The employer makes contributions each month based on a percentage of the employee s gross salary and membership class. The contribution percentage is the same whether participating in the Pension Plan or Investment Plan. Members in the Investment Plan decide how their funds are allocated between various investment accounts and the funds are portable upon termination if the participant is vested. Members in the Investment Plan are not eligible for participation in the Deferred Retirement Option Program (DROP). Deferred Retirement Option Program (DROP) is an elective program available for members of the FRS who are eligible for normal retirement. Under this program, a member effectively retires and continues covered employment for up to 5 years. While in DROP, the member s deferred monthly retirement benefits accumulate, earning interest and cost-of-living increases. When the DROP period is over, the participant terminates covered employment and begins receiving his/her predetermined monthly retirement benefit, as well as the accrued DROP benefit. Disability retirees are not eligible to participate in DROP and DROP participants do not qualify for disability retirement. The plans are noncontributory for employees and all contributions are made by participating FRS employers. Participating employer contributions are based upon state-wide rates established by the State of Florida. Average contribution rates for the fiscal year ended September 30, 2009 were as follows: regular employees, 9.85%, special risk employees, 20.92%, elected officials, 16.53%, senior management employees, 13.12%, and DROP participants, 10.91%. Contributions made are equal to the actuarially determined contribution requirements for each year and are funded on a pay-as-you-go basis. Contributions for the past three years were as follows: Board of County Commissioners $5,372,743 $5,765,709 $5,635,591 Discretely presented component units: Santa Rosa Island Authority 141, , ,706 Law Library 3,090 3,090 2,755 $5,517,306 $5,910,668 $5,793,052 Post-employment benefits other than pension (OPEB) are provided by the Board in the form of health insurance for retired participants (and their dependents/beneficiaries) at the same rate as active participants. In health insurance plans where a government s retirees and current employees are insured together as a group, the premiums paid by the retirees may be lower than they would have been if the retirees were insured separately. This is called an implicit rate subsidy. Under this single-employer plan, benefit provisions are essentially the same for the Board of County Commissioners and all of the other Constitutional Officers, except for the Sheriff, who maintains a separate health insurance contract and therefore has different costs associated with the premium payments on behalf of the Sheriff s employees. A stand-alone financial report is not prepared for the OPEB plan, however, a summary of each 37

123 ANNUAL AUDIT REPORT BOARD OF COUNTY COMMISSIONERS NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED) SEPTEMBER 30, 2009 Constitutional Officer s participation in this OPEB plan can be found in their separately issued financial statements. In conjunction with the implementation of GASB Statement No. 45 during fiscal year 2008, the Board engaged an actuarial firm to determine the estimated obligation associated with the post employment health insurance plan. The actuary, using the same data and assumptions provided in 2008, updated the actuary report for The Board may amend the OPEB plan at its discretion. At October 1, 2008, the date of the latest actuarial valuation, plan participation consisted of: OPEB plan participants 1,038 Retirees receiving benefits 243 The Board has the authority to establish and amend the OPEB funding policy, and is not required by law or other contractual agreement to provide funding for the implicit rate subsidy other than the pay-as-yougo amount necessary to provide current benefits for participants in its health insurance plan. During 2009, the Board paid approximately $715,000 as funding of the implicit rate subsidy OPEB. The Board s annual OPEB cost (expense) is calculated based on the Annual Required Contribution (ARC) of the employer, an amount actuarially determined in accordance with GASB Statement No. 45. The ARC represents a level of funding that, if paid on an ongoing basis, is projected to cover normal cost each year and to amortize any unfunded actuarial liabilities (or funding excess) over a period not to exceed thirty years. The following table shows the components of the Board s OPEB cost for the year, the amount actually contributed to the plan, and changes in the Board s net OPEB obligation: For the fiscal year ending 9/30/2009 Determination of Annual Required Contribution (ARC) Normal Cost at year end $824,684 Amortization of the unfunded actuarial liabilities (UAAL) 1,087,202 Annual Required Contribution (ARC) $1,911,886 Annual OPEB Cost and Net OPEB Obligation Annual Required Contribution (ARC) $1,911,886 Interest on net OPEB obligation 47,330 Adjustment to annual required contribution (68,428) Annual OPEB cost (expense) 1,890,788 Employer contributions made* (714,655) Increase in net OPEB obligation 1,176,133 Net OPEB obligation - beginning of year 1,193,220 Estimated Net OPEB obligation - end of year $2,369,353 *Actuarially estimated employer contributions for

124 ANNUAL AUDIT REPORT BOARD OF COUNTY COMMISSIONERS NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED) SEPTEMBER 30, 2009 The Board s annual OPEB cost, the percentage of annual OPEB cost contributed to the plan, and the net OPEB obligation for 2009 and the two preceding years were as follows: Annual Percentage of Net OPEB OPEB Cost OPEB Fiscal year ended Cost Contributed Obligation 9/30/2007 N/A N/A N/A 9/30/2008 $1,846, % $1,193,220 9/30/2009 $1,890, % $2,369,353 Funding Policy and Status - As of October 1, 2008, the plan was 0% funded. The actuarial accrued liability (AAL) for benefits was $18,799,924 and the actuarial value of assets was $0, resulting in an unfunded actuarial accrued liability (UAAL) of $18,799,924. The covered payroll (annual payroll of active employees covered by the OPEB Plan) was $58 million, and the ratio of the UAAL to the covered payroll was 32.15%. Actuarial Methods and Assumptions: Actuarial valuations of an ongoing plan involve 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. Amounts determined regarding the funded status of the plan and the annual required contributions of the employer are subject to continual revision as actual results are compared with past expectations and new estimates are made about the future. The schedule of funding progress, presented as required supplementary information following the notes to the financial statements, presents multiyear trend information about whether the actuarial value of plan assets is increasing or decreasing over time relative to the actuarial accrued liabilities for benefits. Calculations for financial reporting purposes are based on the plan as understood by the employer and the plan members and include the types of benefits provided at the time of each valuation and the historical pattern of sharing of benefit costs between the employer and plan members to that point. The actuarial methods and assumptions used include techniques that are designed to reduce the effects of short-term volatility in actuarial accrued liabilities and the actuarial value of assets, consistent with the long-term perspective of the calculations. The OPEB-specific actuarial assumptions used in the actuarial valuation described below are consistent with those used by the Florida Retirement System actuary and adopted by the Florida Retirement System. The actuarial methods are: Actuarial cost method: Amortization method: Amortization period (closed) Asset valuation method Unit Credit actuarial cost method Level dollar 30 years Market value of assets, if any, as of valuation date 39

125 ANNUAL AUDIT REPORT BOARD OF COUNTY COMMISSIONERS NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED) SEPTEMBER 30, 2009 The actuarial assumptions are: Investment rate of return Healthcare cost trend rate 4.0%, compounded annually 8.75% reduced by decrements of 0.25% to 0.50% annually to an ultimate rate of 4.25% after 14 years. Leasing Arrangements provide almost all of the revenues for the Santa Rosa Island Authority. The Authority leases the land on County-owned Santa Rosa Island to residents and businesses under residential and commercial leases that typically run for a period of 99 years. Many of the 99-year leases have options to renew for another 99-year term. Many leases, particularly those for restaurants and concessions, are generally for a shorter period. Lease payments in future years are estimated to average approximately $3.7 million per year. Construction Commitments - The Board has active construction projects as of September 30, 2009 as follows: Engineering Services - Building $8,203,579 Engineering Services - Road Paving and Drainage 6,163,592 Engineering Services - Various 8,440,165 Engineering Services - Beach Restoration 455,150 Engineering Services - Solid Waste 4,623,982 $27,886,468 Of these commitments, $23,037,327 is reported in the governmental fund financial statements as reserved for encumbrances. The remaining $4,849,141 represents commitments in proprietary type funds which are not included in the financial statements in accordance with GAAP. These commitments are evidenced by signed purchase orders and contracts which were entered into prior to September 30, Other Commitments - The Board has various non-construction contractual commitments at fiscal year end that will be re-appropriated in the new fiscal year. These commitments of $6,458,305 are included in Reserve for Encumbrances at September 30, On September 30, 2002, the Santa Rosa Island Authority s Board of Directors approved an interlocal agreement with Escambia County in connection with certain plans for economic development, transportation and beach improvements at Pensacola Beach. By resolution approved by the Santa Rosa Island Authority Board, the Authority s lease fee revenues are pledged for repayment of Tourist Development Refunding Revenue Bonds, Series 2002 and the Capital Improvement Revenue Bonds, Series The Authority is scheduled to make payments to Escambia County of at least $600,000 each year through Operating leases for the Board are for various facilities throughout the County containing minimum guaranteed rentals averaging $31,250 monthly. The Board has the option to extend lease terms annually. Lease expense for the year ended September 30, 2009 was $255,

126 ANNUAL AUDIT REPORT BOARD OF COUNTY COMMISSIONERS NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED) SEPTEMBER 30, 2009 NOTE 5 RELATED PARTY TRANSACTIONS During the fiscal year ended September 30, 2009, the Board purchased operating supplies of approximately $197,000 and fixed assets of $2.9 million on behalf of the Sheriff s office. These purchases are included in the Board of County Commissioner s expenditures for the year. The fixed assets were transferred to the Sheriff during the year and are included in the Sheriff s current year fixed asset additions. During 2009, the Santa Rosa Island Authority transferred infrastructure assets, valued at $16,078,251, to the Board. The assets are included in governmental activities capital assets in the government-wide financial statements. NOTE 6 CONTINGENT LIABILITIES The Board is a defendant in various lawsuits. Although the outcome of these lawsuits is not presently determinable, in the opinion of the County Attorney the resolution of these matters will not have a material adverse effect on the financial condition of the Board. The Board receives significant financial assistance from federal and state agencies primarily in the form of capital and operating grants. The disbursement of funds received under these programs generally requires compliance with terms and conditions specified in the grant agreements and is subject to audit by grantor agencies. Disallowed claims, if any, resulting from such audits may become liabilities of the Board. However, in the opinion of management, disallowed claims, if any, will not have a material effect on the Board s financial statements. NOTE 7 SIGNIFICANT EVENTS In 2009, the Board conceptually agreed to assume ownership of the abandoned Saufley Construction and Demolition (C&D) Debris Facility located at 5660 Saufley Field Road. Upon assumption of ownership, the County intends to close the facility and convert it to a beneficial use. The Board has entered into an agreement with the Florida Department of Environmental Protection (FDEP) whereby the Board agrees to become responsible for the closure within twenty-four months of ownership, and the long-term care and groundwater monitoring of the Facility in accordance with applicable FDEP rules. As part of this agreement, FDEP shall direct Evanston Insurance Company to reimburse the Board for authorized closure costs incurred to the extent such funds are available from the insurer. Closure costs are estimated to be $5.9 million, with an additional $300,000 estimated for groundwater monitoring. At September 30, 2009, title to the property had not been assumed by the Board. 41

127 REQUIRED SUPPLEMENTARY INFORMATION

128 ANNUAL AUDIT REPORT BOARD OF COUNTY COMMISSIONERS REQUIRED SUPPLEMENTARY INFORMATION FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2009 Escambia County Board of County Commissioners Other Postemployment Benefit Plan Schedule of Funding Progress Unfunded UAAL as a Actuarial Actuarial Actuarial Actuarial Percentage of Valuation Value Liabilities Liabilities Funded Covered Covered Date of Assets (AAL) (1) (UAAL) (2) Ratio Payroll Payroll October 1, 2006 N/A N/A N/A N/A N/A N/A October 1, 2007 $0 $18,100,680 $18,100,680 0% $64,379, % October 1, 2008 $0 $18,799,924 $18,799,924 0% $58,472, % (1) (2) Actuarial liability determined under the unit credit cost method. Actuarial liability less actuarial value of assets, if any. 42

129 NON-MAJOR FINANCIAL STATEMENTS

130 NON-MAJOR GOVERNMENTAL FUNDS SPECIAL REVENUE FUNDS Escambia County Restricted to account for monies donated to the County for a specific purpose. Industrial Parks to account for the development and operation of the industrial parks of Escambia County. Code Enforcement to account for the enforcement of ordinances and statutes to enhance the quality of life for and protect citizens from environmentally unsafe conditions. Mass Transit Fund - to account for the operation and maintenance of the Escambia County Transit System. Financing is provided from user fees, reimbursement from the City of Pensacola and an Urban Mass Transit Administration operating grant. M and A State I Fund to account for the cost of mosquito and other arthropod control. Financing is provided by State matching funds on a dollar for dollar basis. Tourist Promotion Fund - to account for revenues restricted for promotion, development and advertisement of Escambia County tourism. Financing is provided by a tourist development tax levied under Chapter Florida Statutes. Other Grant Projects Fund to account for financing provided from various State and Federal grants. Misdemeanor Probation Fund to account for the cost of supervision of the misdemeanor program. Financing is provided by a fee charged to a person on parole pursuant to Section , Florida Statutes. Article V to account for revenues and costs for court related fees, charges, costs, fines and other monetary penalties. Development Review to account for fees generated by the review of all development plans within the County and support of the Development Review Committee, the Planning Board, the Board of Adjustments, the Rezoning Hearing Examiner and the Board of County Commissioners. Perdido Key Beach Mouse to account for developmental impact fees on the natural habitat of the Perdido Key Beach Mouse, an endangered species, as determined by the Florida Fish and Wildlife Agency. These funds will be used to mitigate the negative impact on the mouse habitat. SHIP to account for the revenues and expenditures thereof. The grant is designed to provide stable and adequate funding for housing so that Public-Private partnerships can efficiently build, rehabilitate, and preserve affordable housing. HHRP to account for the state grant revenues and allowable expenditures of the Hurricane Housing Recovery Program. The State grant program is designed to provide stable and adequate funding to rebuild housing destroyed or damaged by hurricanes. Law Enforcement Trust Fund to account for revenues generated from Forfeiture proceedings. These monies are deposited into a special Law Enforcement Fund pursuant to Section , Florida Statutes. Escambia County Affordable Housing Fund to account for funding to assist with delivery of affordable housing assistance and support for low income families in Escambia County and the City of Pensacola, primarily in conjunction with the Escambia Consortium Home Program. The fund also provides a source for payment of up front costs while awaiting reimbursement from the HOME program letter of credit. CDBG HUD Entitlement Fund to account for Federal HUD Block Grant revenues and the expenditures thereof.

131 Handicapped Parking Fines Fund to account for monies collected under Chapter 316, Florida Statutes, also known as the State Uniform Traffic Control, which authorizes counties to regulate the parking of vehicles and to enforce regulations relating to disabled persons parking. Family Mediation Fund to account for monies provided through a private grant and authorized under Chapters and , Florida Statutes. These funds were used to assure each minor child frequent and continuing contact with both parents after separation or dissolved marriages and to encourage parents to share the rights and responsibilities of child rearing. Fire Protection Fund to account for monies assessed by the Board of County Commissioners to property owners in unincorporated areas of Escambia County to provide for fire protection. Emergency 911 Operations Fund to account for monies restricted for the operation of the E-911 operations. HUD-CDBG Housing Rehabilitation Loan Fund to account for funding to provide assistance for low/moderate income families within the unincorporated county through the rehabilitation of several substandard homes. Home Fund to account for HUD Housing Assistance revenues and the expenditures thereof. This grant provides for the rehabilitation of severely substandard homes. Southwest Sector Road Project to account for revenues and expenditures associated with the planning and development of the County s Southwest Corridor road project. Bob Sikes Toll Facilities Fund - to account for monies received from tolls, rates, fees, permits and passes for the operation, maintenance and debt service of the bridge, and other expenses for parks and recreation on Santa Rosa Island as approved by the Board of County Commissioners. MSBU Assessment Program to account for monies collected for Municipal Service Benefit Units (MSBU) pursuant to County Ordinance No and Chapter 125, Florida Statutes. Master Drainage Basin Fund to account for monies to provide drainage within specific districts. DEBT SERVICE FUND to account for the resources accumulated and payments made for principal and interest on long-term debt of governmental funds. CAPITAL PROJECTS FUNDS Federal Transit Administration Fund - to account for the cost of machinery, equipment, and office furniture for the Mass Transit activity for the County. Financing was provided by an Urban Mass Transportation Administration Grant (80%), State matching funds (10%), and Escambia County matching funds (10%). New Road Construction Fund to account for the Local Option Gas Tax monies to be used for the acquisition and construction of new roads. Local Option Sales Tax (LOST) Fund to account for monies collected pursuant to Florida Statutes and County Ordinance 92-10, which authorizes counties to impose a one percent (1%) local option infrastructure sales surtax upon taxable transactions occurring within Escambia County, as provided in Chapter , Florida Statutes. Ordinance was extended for an eight-year period. Monies collected under the extension are reported in the LOST II Fund.

132 BOARD OF COUNTY COMMISSIONERS NON-MAJOR GOVERNMENTAL FUNDS COMBINING BALANCE SHEET SEPTEMBER 30, 2009 Assets Cash and cash equivalents Equity in pooled cash and investments Receivables (net of allowance for uncollectibles) Due from other governmental units Inventory Total assets Special Revenue Funds Other Escambia Co. Industrial Code Mass M and A Tourist Grant Misdemeanor Restricted Parks Enforcement Transit State I Promotion Projects Probation $0 $0 $0 $0 $41,008 $0 $0 $0 1,301,872 3,251,967 1,609, , ,519, , ,305 65, ,557 99, , , ,807 9, ,260, , , $1,401,592 $3,251,967 $1,772,918 $743,010 $50,264 $2,520,394 $1,807,592 $379,755 Liabilities and Fund Balances Liabilities: Vouchers payable Contracts payable Salaries payable Due to other funds Due to other governmental units Other current liabilities Advance from other funds Total liabilities Fund balances: Reserved for encumbrances Reserved for debt service Reserved for inventory Unreserved - undesignated Total fund balances Total liabilities and fund balances $4,894 $0 $10,500 $25,427 $11 $231,800 $116,997 $40, , , , ,643 31,453 94, , , , ,394 15, , , , ,479 99, , , , , , , , , ,328,213 2,697,488 1,673, ,972 50,253 2,273, , ,149 1,338,695 2,697,488 1,673, ,580 50,253 2,282,951 1,445, ,149 $1,401,592 $3,251,967 $1,772,918 $743,010 $50,264 $2,520,394 $1,807,592 $379,755 (Continued) 43

133 BOARD OF COUNTY COMMISSIONERS NON-MAJOR GOVERNMENTAL FUNDS COMBINING BALANCE SHEET (Continued) SEPTEMBER 30, 2009 Assets Cash and cash equivalents Equity in pooled cash and investments Receivables (net of allowance for uncollectibles) Due from other governmental units Inventory Total assets Special Revenue Funds Escambia Law Couty Development Perdido Key Enforcement Affordable CDBG-HUD Article V Review Beach Mouse SHIP HHRP Trust Housing Entitlement $0 $0 $0 $3,018,659 $0 $0 $0 $0 3,495,602 92,861 78,467 1,164, , ,639 1,818, , , , , , $3,695,540 $92,861 $78,467 $4,190,557 $532,588 $892,775 $1,818,985 $299,528 Liabilities and Fund Balances Liabilities: Vouchers payable Contracts payable Salaries payable Due to other funds Due to other governmental units Other current liabilities Advance from other funds Total liabilities Fund balances: Reserved for encumbrances Reserved for debt service Reserved for inventory Unreserved - undesignated Total fund balances Total liabilities and fund balances $67,298 $2,951 $0 $105,000 $0 $0 $4,270 $105, ,525 12,230 12, ,668, , , , ,747,936 15, , ,107 4, ,101 38, , ,909,100 76,983 78,467 3,835, , ,668 1,814,715 58,782 1,947,604 76,983 78,467 3,835, , ,668 1,814, ,427 $3,695,540 $92,861 $78,467 $4,190,557 $532,588 $892,775 $1,818,985 $299,528 (Continued) 44

134 BOARD OF COUNTY COMMISSIONERS NON-MAJOR GOVERNMENTAL FUNDS COMBINING BALANCE SHEET (Continued) SEPTEMBER 30, 2009 Assets Cash and cash equivalents Equity in pooled cash and investments Receivables (net of allowance for uncollectibles) Due from other governmental units Inventory Total assets Special Revenue Funds HUD-CDBG Bob Emergency Housing Southwest Sikes Handicapped Family Fire 911 Rehab HUD Sector Toll Parking Fines Mediation Protection Operations Loan Home Road Project Facilities $0 $0 $0 $0 $0 $0 $0 $ , ,487 2,507, ,311 4,929 98,685 2,584,032 3,509, , ,928 6, , , , ,240 83,495 53, $226,125 $130,487 $2,758,794 $1,104,763 $16,857 $108,281 $2,667,527 $3,563,699 Liabilities and Fund Balances Liabilities: Vouchers payable Contracts payable Salaries payable Due to other funds Due to other governmental units Other current liabilities Advance from other funds Total liabilities Fund balances: Reserved for encumbrances Reserved for debt service Reserved for inventory Unreserved - undesignated Total fund balances Total liabilities and fund balances $661 $0 $139,045 $175 $0 $31,642 $85,263 $2, , , ,308 20, , , ,619 69, ,642 85,263 7, , ,140, , ,487 2,204, ,530 16,857 76,639 (1,558,227) 3,555, , ,487 2,204,175 1,035,430 16,857 76,639 2,582,264 3,555,785 $226,125 $130,487 $2,758,794 $1,104,763 $16,857 $108,281 $2,667,527 $3,563,699 (Continued) 45

135 BOARD OF COUNTY COMMISSIONERS NON-MAJOR GOVERNMENTAL FUNDS COMBINING BALANCE SHEET (Continued) SEPTEMBER 30, 2009 Assets Cash and cash equivalents Equity in pooled cash and investments Receivables (net of allowance for uncollectibles) Due from other governmental units Inventory Total assets Special Revenue Funds Capital Project Funds MSBU Federal New Assessment Master Debt Transit Road Program Drainage Service Administration Construction LOST Totals $0 $0 $0 $0 $0 $0 $3,060, ,565 1,690,526 10,601, , , ,964 41,839, ,225 10, , ,797, ,090 $282,708 $1,690,526 $10,601,299 $336,582 $537,923 $644,964 $48,199,328 Liabilities and Fund Balances Liabilities: Vouchers payable Contracts payable Salaries payable Due to other funds Due to other governmental units Other current liabilities Advance from other funds Total liabilities Fund balances: Reserved for encumbrances Reserved for debt service Reserved for inventory Unreserved - undesignated Total fund balances Total liabilities and fund balances $27,682 $30,779 $0 $39,060 $0 $0 $1,071, , , , ,952, ,179,154 3, ,581, ,479 27,708 30,779 1,179,154 42, ,139, ,821 23, ,820,358 27, ,377, ,422, ,422, ,090 (99,821) 1,636,695 0 (3,526,524) 510, ,964 23,090, ,000 1,659,747 9,422, , , ,964 42,060,082 $282,708 $1,690,526 $10,601,299 $336,582 $537,923 $644,964 $48,199,328 46

136 BOARD OF COUNTY COMMISSIONERS NON-MAJOR GOVERNMENTAL FUNDS COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES YEAR ENDED SEPTEMBER 30, 2009 Revenues: Taxes Permits, fees and special assessments Intergovernmental Charges for services Fines and forfeitures Investment income Miscellaneous Total revenues Special Revenue Funds Other Escambia Co. Industrial Code Mass M and A Tourist Grant Misdemeanor Restricted Parks Enforcement Transit State I Promotion Projects Probation $0 $0 $0 $0 $0 $5,332,852 $0 $ ,553, , , ,359,193 37,023 7,650 3,902, , , ,167 2,371, , ,183 5,200 13,351 5,540 10,993 6, ,088 3,859 3,316 46, ,384 27,678 2, ,404 21, , ,060 1,853,416 4,281,432 40,026 5,373,068 3,946,285 2,401,745 Expenditures: Current: General government Public safety Physical environment Transportation Economic environment Human services Culture and recreation Capital improvements Debt service: Principal retirement Interest and fiscal charges Total expenditures 12, , , ,764 2,262,331 69, ,092, ,524 1,053, , ,987, , , ,864,916 1,037, , , , , , , , , ,020 2,092,971 7,991,169 34,817 4,000,440 3,975,172 2,262,331 Excess (deficiency) of revenue over (under) expenditures 26,170 (27,960) (239,555) (3,709,737) 5,209 1,372,628 (28,887) 139,414 Other financing sources (uses): Note(s) issuance Insurance reimbursements Transfers in Transfers out Net other financing sources (uses) ,227, , ,943 3,000,000 1,031,599 3,317, (3,371,913) (1,475,177) (238,822) 58,943 3,000,000 1,031,599 3,328,070 0 (3,371,913) (248,177) (238,822) Net change in fund balances Fund balances at beginning of year Fund balances at end of year 85,113 2,972, ,044 (381,667) 5,209 (1,999,285) (277,064) (99,408) 1,253,582 (274,552) 881, ,247 45,044 4,282,236 1,722, ,557 $1,338,695 $2,697,488 $1,673,808 $515,580 $50,253 $2,282,951 $1,445,276 $229,149 (Continued) 47

137 BOARD OF COUNTY COMMISSIONERS NON-MAJOR GOVERNMENTAL FUNDS COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES (Continued) YEAR ENDED SEPTEMBER 30, 2009 Revenues: Taxes Permits, fees and special assessments Intergovernmental Charges for services Fines and forfeitures Investment income Miscellaneous Total revenues Special Revenue Funds Escambia Law County Development Perdido Key Enforcement Affordable CDBG-HUD Article V Review Beach Mouse SHIP HHRP Trust Housing Entitlement $0 $0 $0 $0 $0 $0 $0 $ ,769, ,756,291 1,446, , , , ,232 6,091 7,878 17,223 14, , ,380 37, , ,479, , ,860,808 43, , ,314 2,770,416 Expenditures: Current: General government Public safety Physical environment Transportation Economic environment Human services Culture and recreation Capital improvements Debt service: Principal retirement Interest and fiscal charges Total expenditures 1,106, , ,407 45, , ,693, , ,962 2,532, ,500, ,415 1,151, , ,693, , , ,962 4,102,016 Excess (deficiency) of revenue over (under) expenditures 327,756 76, ,167,005 (108,888) 159,775 65,352 (1,331,600) Other financing sources (uses): Note(s) issuance Insurance reimbursements Transfers in Transfers out Net other financing sources (uses) , ,475,177 (475,000) (200,000) (131,625) ,275,177 Net change in fund balances Fund balances at beginning of year Fund balances at end of year 196,131 76, ,167,005 (108,888) 159,775 65,352 (56,423) 1,751, ,664 2,668, , ,893 1,749, ,850 $1,947,604 $76,983 $78,467 $3,835,716 $532,588 $786,668 $1,814,715 $113,427 (Continued) 48

138 BOARD OF COUNTY COMMISSIONERS NON-MAJOR GOVERNMENTAL FUNDS COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES (Continued) YEAR ENDED SEPTEMBER 30, 2009 Revenues: Taxes Permits, fees and special assessments Intergovernmental Charges for services Fines and forfeitures Investment income Miscellaneous Total revenues Special Revenue Funds HUD-CDBG Southwest Bob Emergency Housing Sector Sikes Handicapped Family Fire 911 Rehab HUD Road Toll Parking Fines Mediation Protection Operations Loan Home Project Facilities $0 $0 $0 $0 $0 $0 $0 $ ,827,731 1, ,156 2,488, ,134 1,168, , , ,962, ,082 1,334 38,591 2, ,864 31,761 32, , , ,025 1,268 45,426 1,334 10,224,108 2,492, ,059 1,628,047 2,996,117 Expenditures: Current: General government Public safety Physical environment Transportation Economic environment Human services Culture and recreation Capital improvements Debt service: Principal retirement Interest and fiscal charges Total expenditures ,043,588 9, ,579,574 1,410, ,701, ,219 1,061, , , ,579,574 1,410,503 16,219 1,061,874 1,701,726 1,043,588 Excess (deficiency) of revenue over (under) expenditures 26,069 1,298 (355,466) 1,082,322 (15,545) (78,815) (73,679) 1,952,529 Other financing sources (uses): Note(s) issuance Insurance reimbursements Transfers in Transfers out Net other financing sources (uses) , (197,765) (658,222) (1,597,938) 0 0 (142,009) (658,222) (1,597,938) Net change in fund balances Fund balances at beginning of year Fund balances at end of year 26,069 1,298 (497,475) 424,100 (15,545) (78,815) (73,679) 354, , ,189 2,701, ,330 32, ,454 2,655,943 3,201,194 $225,464 $130,487 $2,204,175 $1,035,430 $16,857 $76,639 $2,582,264 $3,555,785 (Continued) 49

139 BOARD OF COUNTY COMMISSIONERS NON-MAJOR GOVERNMENTAL FUNDS COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES (Continued) YEAR ENDED SEPTEMBER 30, 2009 Revenues: Taxes Permits, fees and special assessments Intergovernmental Charges for services Fines and forfeitures Investment income Miscellaneous Total revenues Special Revenue Funds Capital Project Funds MSBU Federal New Assessment Master Debt Transit Road Program Drainage Service Administration Construction LOST Totals $0 $0 $0 $0 $374,334 $0 $5,707, ,050 64, ,048, , , ,500 19,874, $0 8,570, ,137 3,671 18,516 92,992 2,343 14,025 27, , ,667 1, ,789 1,372, ,721 83, , , , ,474 48,963,717 Expenditures: Current: General government Public safety Physical environment Transportation Economic environment Human services Culture and recreation Capital improvements Debt service: Principal retirement Interest and fiscal charges Total expenditures , ,392, ,763, , ,877,317 14, , ,297, ,731, , , ,115 1,904,528 7,546 2,406, ,667, ,167, ,538, ,610, , ,294 10,765, ,115 1,904,528 7,546 59,738,885 Excess (deficiency) of revenue over (under) expenditures 62,241 (138,950) (10,011,086) 5,687 (1,516,169) 389,928 (10,775,168) Other financing sources (uses): Note(s) issuance Insurance reimbursements Transfers in Transfers out Net other financing sources (uses) ,227, , ,667, ,894, (52,752) 0 (8,267,589) ,667,415 0 (52,752) 0 20,919,746 Net change in fund balances Fund balances at beginning of year Fund balances at end of year 62,241 (138,950) 8,656,329 5,687 (1,568,921) 389,928 10,144, ,759 1,798, , ,147 2,106, ,036 31,915,504 $255,000 $1,659,747 $9,422,145 $293,834 $537,923 $644,964 $42,060,082 50

140 BOARD OF COUNTY COMMISSIONERS ESCAMBIA COUNTY RESTRICTED SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL FOR THE YEAR ENDED SEPTEMBER 30, 2009 Variance with Final Budget Original Final Positive Budget Budget Actual (Negative) Revenues: Intergovernmental $19,000 $19,000 $18,886 ($114) Charges for services 162, , ,526 73,526 Investment income ,351 13,351 Miscellaneous 23,000 34,500 46,956 12,456 Total revenues 204, , ,719 99,219 Expenditures: Current: General government 21, ,860 12,748 99,112 Public safety 214, ,208 95, ,798 Physical environment 79, ,552 69, ,491 Transportation 0 77,073 15,000 62,073 Human services 18, ,747 90, ,762 Culture and recreation 0 31,872 5,345 26,527 Total expenditures 333,800 1,536, ,549 1,247,763 Excess (deficiency) of revenue over (under) expenditures (129,800) (1,320,812) 26,170 1,346,982 Other financing sources (uses): Transfers in 0 77,431 58,943 (18,488) Total other financing sources (uses) 0 77,431 58,943 (18,488) Net change in fund balances (129,800) (1,243,381) 85,113 1,328,494 Fund balances at beginning of year 129,800 1,243,381 1,253,582 10,201 Fund balances (deficit) at end of year $0 $0 $1,338,695 $1,338,695 51

141 BOARD OF COUNTY COMMISSIONERS INDUSTRIAL PARKS SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL FOR THE YEAR ENDED SEPTEMBER 30, 2009 Variance with Final Budget Original Final Positive Budget Budget Actual (Negative) Revenues: Intergovernmental $0 $0 $240,520 $240,520 Investment income 0 0 5,540 5,540 Total revenues , ,060 Expenditures: Current: Economic environment 0 3,475, ,751 3,234,729 Debt service: Interest and fiscal charges 0 55,000 33,269 21,731 Total expenditures 0 3,530, ,020 3,256,460 Excess (deficiency) of revenue over (under) expenditures 0 (3,530,480) (27,960) 3,502,520 Other financing sources (uses): Transfers in 0 3,000,000 3,000,000 0 Total other financing sources (uses) 0 3,000,000 3,000,000 0 Net change in fund balances 0 (530,480) 2,972,040 3,502,520 Fund balances at beginning of year 0 530,480 (274,552) (805,032) Fund balances (deficit) at end of year $0 $0 $2,697,488 $2,697,488 52

142 BOARD OF COUNTY COMMISSIONERS CODE ENFORCEMENT SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL FOR THE YEAR ENDED SEPTEMBER 30, 2009 Variance with Final Budget Original Final Positive Budget Budget Actual (Negative) Revenues: Permits, fees and special assessments $1,454,037 $1,454,037 $1,553,704 $99,667 Fines and forfeitures 75,000 75, , ,335 Investment income ,993 10,993 Miscellaneous 55,546 55,546 7,384 (48,162) Total revenues 1,584,583 1,584,583 1,853, ,833 Expenditures: Current: Physical environment 2,543,480 3,425,243 2,092,971 1,332,272 Total expenditures 2,543,480 3,425,243 2,092,971 1,332,272 Excess (deficiency) of revenue over (under) expenditures (958,897) (1,840,660) (239,555) 1,601,105 Other financing sources (uses): Transfers in 1,031,599 1,031,599 1,031,599 0 Total other financing sources (uses) 1,031,599 1,031,599 1,031,599 0 Net change in fund balances 72,702 (809,061) 792,044 1,601,105 Fund balances at beginning of year (72,702) 809, ,764 72,703 Fund balances (deficit) at end of year $0 $0 $1,673,808 $1,673,808 53

143 BOARD OF COUNTY COMMISSIONERS MASS TRANSIT SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL FOR THE YEAR ENDED SEPTEMBER 30, 2009 Variance with Final Budget Original Final Positive Budget Budget Actual (Negative) Revenues: Intergovernmental $4,182,608 $4,182,608 $3,359,193 ($823,415) Charges for services 2,136,853 1,711, ,926 (823,266) Investment income 35,000 35,000 6,635 (28,365) Miscellaneous 26,973 26,973 27, Total revenues 6,381,434 5,955,773 4,281,432 (1,674,341) Expenditures: Current: Transportation 9,562,138 9,866,808 7,987,325 1,879,483 Debt service: Interest and fiscal charges 30,000 30,000 3,844 26,156 Total expenditures 9,592,138 9,896,808 7,991,169 1,905,639 Excess (deficiency) of revenue over (under) expenditures (3,210,704) (3,941,035) (3,709,737) 231,298 Other financing sources (uses): Insurance reimbursements ,335 10,335 Transfers in 3,317,735 3,317,735 3,317,735 0 Total other financing sources (uses) 3,317,735 3,317,735 3,328,070 10,335 Net change in fund balances 107,031 (623,300) (381,667) 241,633 Fund balances at beginning of year (107,031) 623, , ,947 Fund balances (deficit) at end of year $0 $0 $515,580 $515,580 54

144 BOARD OF COUNTY COMMISSIONERS M AND A STATE I SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL FOR THE YEAR ENDED SEPTEMBER 30, 2009 Variance with Final Budget Original Final Positive Budget Budget Actual (Negative) Revenues: Intergovernmental $35,000 $33,821 $37,023 $3,202 Investment income Miscellaneous 0 0 2,901 2,901 Total revenues 35,000 33,821 40,026 6,205 Expenditures: Current: Human services 35,000 78,865 34,817 44,048 Total expenditures 35,000 78,865 34,817 44,048 Excess (deficiency) of revenue over (under) expenditures 0 (45,044) 5,209 50,253 Fund balances at beginning of year 0 45,044 45,044 0 Fund balances (deficit) at end of year $0 $0 $50,253 $50,253 55

145 BOARD OF COUNTY COMMISSIONERS TOURIST PROMOTION FUND SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL FOR THE YEAR ENDED SEPTEMBER 30, 2009 Variance with Final Budget Original Final Positive Budget Budget Actual (Negative) Revenues: Taxes $5,541,233 $5,541,233 $5,332,852 ($208,381) Permits, fees and special assessments Intergovernmental 0 0 7,650 7,650 Investment income ,088 32,088 Miscellaneous Total revenues 5,541,233 5,541,233 5,373,068 (168,165) Expenditures: Current: Physical environment 119, , ,524 9,552 Economic environment 3,543,606 4,835,227 3,864, ,311 Total expenditures 3,663,511 4,980,303 4,000, ,863 Excess (deficiency) of revenue over (under) expenditures 1,877, ,930 1,372, ,698 Other financing sources (uses): Loan issuance 332, Transfers out (2,401,390) (4,426,724) (3,371,913) 1,054,811 Total other financing sources (uses) (2,069,142) (4,426,724) (3,371,913) 1,054,811 Net change in fund balances (191,420) (3,865,794) (1,999,285) 1,866,509 Fund balances at beginning of year 191,420 3,865,794 4,282, ,442 Fund balances (deficit) at end of year $0 $0 $2,282,951 $2,282,951 56

146 BOARD OF COUNTY COMMISSIONERS OTHER GRANT PROJECTS SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL FOR THE YEAR ENDED SEPTEMBER 30, 2009 Variance with Final Budget Original Final Positive Budget Budget Actual (Negative) Revenues: Intergovernmental $788,974 $31,153,380 $3,902,672 ($27,250,708) Charges for services ,167 26,167 Fines and forfeitures 0 0 1,183 1,183 Investment income 6,000 67,089 3,859 (63,230) Miscellaneous 0 6,000 12,404 6,404 Total revenues 794,974 31,226,469 3,946,285 (27,280,184) Expenditures: Current: General government 362,300 1,420, ,000 1,097,871 Public safety 98,841 5,332, ,764 4,478,575 Physical environment 0 20,092,078 1,053,025 19,039,053 Transportation 0 1,540, ,157 1,184,633 Economic environment 92,312 2,016,310 1,037, ,314 Human services 148, , , ,176 Culture and recreation 100,000 1,793,004 15,497 1,777,507 Total expenditures 801,974 32,726,301 3,975,172 28,751,129 Excess (deficiency) of revenue over (under) expenditures (7,000) (1,499,832) (28,887) 1,470,945 Other financing sources (uses): Note(s) issuance 0 1,412,000 1,227,000 (185,000) Transfers in 0 18,669 0 (18,669) Transfers out 0 (1,475,177) (1,475,177) 0 Total other financing sources (uses) 0 (44,508) (248,177) (203,669) Net change in fund balances (7,000) (1,544,340) (277,064) 1,267,276 Fund balances at beginning of year 7,000 1,544,340 1,722, ,000 Fund balances (deficit) at end of year $0 $0 $1,445,276 $1,445,276 57

147 BOARD OF COUNTY COMMISSIONERS MISDEMEANOR PROBATION SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL FOR THE YEAR ENDED SEPTEMBER 30, 2009 Variance with Final Budget Original Final Positive Budget Budget Actual (Negative) Revenues: Charges for services $2,866,000 $2,866,000 $2,371,505 ($494,495) Fines and forfeitures 2,500 2,500 5,200 2,700 Investment income 30,000 30,000 3,316 (26,684) Miscellaneous 27,000 27,000 21,724 (5,276) Total revenues 2,925,500 2,925,500 2,401,745 (523,755) Expenditures: Current: Public safety 2,485,949 2,761,257 2,262, ,926 Total expenditures 2,485,949 2,761,257 2,262, ,926 Excess (deficiency) of revenue over (under) expenditures 439, , ,414 (24,829) Other financing sources (uses): Transfers out (347,125) (347,125) (238,822) 108,303 Total other financing sources (uses) (347,125) (347,125) (238,822) 108,303 Net change in fund balances 92,426 (182,882) (99,408) 83,474 Fund balances at beginning of year (92,426) 182, , ,675 Fund balances (deficit) at end of year $0 $0 $229,149 $229,149 58

148 BOARD OF COUNTY COMMISSIONERS ARTICLE V SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL FOR THE YEAR ENDED SEPTEMBER 30, 2009 Variance with Final Budget Original Final Positive Budget Budget Actual (Negative) Revenues: Intergovernmental $563,145 $0 $0 $0 Charges for services 1,533,842 1,383,842 1,446,475 62,633 Investment income ,584 32,584 Miscellaneous Total revenues 2,096,987 1,383,842 1,479,224 95,382 Expenditures: Current: General government 1,988,294 3,805,431 1,106,442 2,698,989 Public safety 117, ,095 45, ,069 Total expenditures 2,105,944 4,147,526 1,151,468 2,996,058 Excess (deficiency) of revenue over (under) expenditures (8,957) (2,763,684) 327,756 3,091,440 Other financing sources (uses): Transfers in 343, , ,375 0 Transfers out (475,000) (475,000) (475,000) 0 Total other financing sources (uses) (131,625) (131,625) (131,625) 0 Net change in fund balances (140,582) (2,895,309) 196,131 3,091,440 Fund balances at beginning of year 140,582 2,895,309 1,751,473 (1,143,836) Fund balances (deficit) at end of year $0 $0 $1,947,604 $1,947,604 59

149 BOARD OF COUNTY COMMISSIONERS DEVELOPMENT REVIEW SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL FOR THE YEAR ENDED SEPTEMBER 30, 2009 Variance with Final Budget Original Final Positive Budget Budget Actual (Negative) Revenues: Charges for services $594,104 $594,104 $371,183 ($222,921) Investment income Miscellaneous ,900 17,900 Total revenues 594, , ,288 (204,816) Expenditures: Current: General government 564, , , ,094 Total expenditures 564, , , ,094 Excess (deficiency) of revenue over (under) expenditures 29,705 29,705 76,983 47,278 Fund balances at beginning of year (29,705) (29,705) 0 29,705 Fund balances (deficit) at end of year $0 $0 $76,983 $76,983 60

150 BOARD OF COUNTY COMMISSIONERS PERDIDO KEY BEACH MOUSE SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL FOR THE YEAR ENDED SEPTEMBER 30, 2009 Variance with Final Budget Original Final Positive Budget Budget Actual (Negative) Revenues: Investment income $0 $0 $803 $803 Total revenues Excess (deficiency) of revenue over (under) expenditures Fund balances at beginning of year ,664 77,664 Fund balances (deficit) at end of year $0 $0 $78,467 $78,467 61

151 BOARD OF COUNTY COMMISSIONERS S.H.I.P. SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL FOR THE YEAR ENDED SEPTEMBER 30, 2009 Variance with Final Budget Original Final Positive Budget Budget Actual (Negative) Revenues: Intergovernmental $6,469,928 $8,469,928 $3,769,196 ($4,700,732) Investment income 30,000 45,000 18,232 (26,768) Miscellaneous 20,072 20,072 73,380 53,308 Total revenues 6,520,000 8,535,000 3,860,808 (4,674,192) Expenditures: Current: Economic environment 6,520,000 8,535,000 2,693,803 5,841,197 Total expenditures 6,520,000 8,535,000 2,693,803 5,841,197 Excess (deficiency) of revenue over (under) expenditures 0 0 1,167,005 1,167,005 Fund balances at beginning of year 0 0 2,668,711 2,668,711 Fund balances (deficit) at end of year $0 $0 $3,835,716 $3,835,716 62

152 BOARD OF COUNTY COMMISSIONERS HHRP SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL FOR THE YEAR ENDED SEPTEMBER 30, 2009 Variance with Final Budget Original Final Positive Budget Budget Actual (Negative) Revenues: Intergovernmental $2,220,000 $2,220,000 $0 ($2,220,000) Investment income 50,000 50,000 6,091 (43,909) Miscellaneous 600, ,000 37,776 (562,224) Total revenues 2,870,000 2,870,000 43,867 (2,826,133) Expenditures: Current: Economic environment 2,870,000 2,937, ,755 2,785,035 Total expenditures 2,870,000 2,937, ,755 2,785,035 Excess (deficiency) of revenue over (under) expenditures 0 (67,790) (108,888) (41,098) Fund balances at beginning of year 0 67, , ,686 Fund balances (deficit) at end of year $0 $0 $532,588 $532,588 63

153 BOARD OF COUNTY COMMISSIONERS LAW ENFORCEMENT TRUST FUND SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL FOR THE YEAR ENDED SEPTEMBER 30, 2009 Variance with Final Budget Original Final Positive Budget Budget Actual (Negative) Revenues: Fines and forfeitures $0 $560,000 $659,419 $99,419 Investment income 0 0 7,878 7,878 Total revenues 0 560, , ,297 Expenditures: Current: Public safety 0 1,186, , ,371 Total expenditures 0 1,186, , ,371 Excess (deficiency) of revenue over (under) expenditures 0 (626,893) 159, ,668 Fund balances at beginning of year 0 626, ,893 0 Fund balances (deficit) at end of year $0 $0 $786,668 $786,668 64

154 BOARD OF COUNTY COMMISSIONERS ESCAMBIA COUNTY AFFORDABLE HOUSING SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL FOR THE YEAR ENDED SEPTEMBER 30, 2009 Variance with Final Budget Original Final Positive Budget Budget Actual (Negative) Revenues: Investment income $3,500 $3,500 $17,223 $13,723 Miscellaneous 26,500 26, , ,591 Total revenues 30,000 30, , ,314 Expenditures: Current: Economic environment 1,182,757 1,779, ,962 1,648,401 Total expenditures 1,182,757 1,779, ,962 1,648,401 Excess (deficiency) of revenue over (under) expenditures (1,152,757) (1,749,363) 65,352 1,814,715 Fund balances at beginning of year 1,152,757 1,749,363 1,749,363 0 Fund balances (deficit) at end of year $0 $0 $1,814,715 $1,814,715 65

155 BOARD OF COUNTY COMMISSIONERS CDBG HUD ENTITLEMENT FUND SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL FOR THE YEAR ENDED SEPTEMBER 30, 2009 Variance with Final Budget Original Final Positive Budget Budget Actual (Negative) Revenues: Intergovernmental $2,479,683 $10,342,947 $2,756,291 ($7,586,656) Investment income 2,059,681 15,000 14,125 (875) Miscellaneous 0 150,000 0 (150,000) Total revenues 4,539,364 10,507,947 2,770,416 (7,737,531) Expenditures: Current: General government 0 34,407 34,407 0 Economic environment 4,339,364 10,307,947 2,532,194 7,775,753 Debt service: Principal retirement 0 1,360,770 1,500,000 (139,230) Interest and fiscal charges 0 80,000 35,415 44,585 Total expenditures 4,339,364 11,783,124 4,102,016 7,681,108 Excess (deficiency) of revenue over (under) expenditures 200,000 (1,275,177) (1,331,600) (56,423) Other financing sources (uses): Transfers in 0 1,475,177 1,475,177 0 Transfers out (200,000) (200,000) (200,000) 0 Total other financing sources (uses) (200,000) 1,275,177 1,275,177 0 Net change in fund balances 0 0 (56,423) (56,423) Fund balances at beginning of year , ,850 Fund balances (deficit) at end of year $0 $0 $113,427 $113,427 66

156 BOARD OF COUNTY COMMISSIONERS HANDICAPPED PARKING FEES SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL FOR THE YEAR ENDED SEPTEMBER 30, 2009 Variance with Final Budget Original Final Positive Budget Budget Actual (Negative) Revenues: Charges for services $35,000 $35,000 $43,344 $8,344 Investment income 0 0 2,082 2,082 Total revenues 35,000 35,000 45,426 10,426 Expenditures: Current: Public safety 11,084 77,549 9,765 67,784 Human services 22, ,096 9, ,504 Total expenditures 33, ,645 19, ,288 Excess (deficiency) of revenue over (under) expenditures 1,750 (197,645) 26, ,714 Fund balances at beginning of year (1,750) 197, ,395 1,750 Fund balances (deficit) at end of year $0 $0 $225,464 $225,464 67

157 BOARD OF COUNTY COMMISSIONERS FAMILY MEDIATION SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL FOR THE YEAR ENDED SEPTEMBER 30, 2009 Variance with Final Budget Original Final Positive Budget Budget Actual (Negative) Revenues: Investment income $0 $0 $1,334 $1,334 Total revenues 0 0 1,334 1,334 Expenditures: Current: General government 101, , ,153 Total expenditures 101, , ,153 Excess (deficiency) of revenue over (under) expenditures (101,400) (129,189) 1, ,487 Fund balances at beginning of year 101, , ,189 0 Fund balances (deficit) at end of year $0 $0 $130,487 $130,487 68

158 BOARD OF COUNTY COMMISSIONERS FIRE PROTECTION SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL FOR THE YEAR ENDED SEPTEMBER 30, 2009 Variance with Final Budget Original Final Positive Budget Budget Actual (Negative) Revenues: Permits, fees and special assessments $9,653,782 $9,653,782 $9,827,731 $173,949 Intergovernmental 6, ,456 16,156 (101,300) Charges for services 200, , ,908 25,908 Investment income 65,000 65,000 38,591 (26,409) Miscellaneous , ,722 Total revenues 9,925,742 10,036,238 10,224, ,870 Expenditures: Current: Public safety 10,755,001 12,043,836 10,579,574 1,464,262 Total expenditures 10,755,001 12,043,836 10,579,574 1,464,262 Excess (deficiency) of revenue over (under) expenditures (829,259) (2,007,598) (355,466) 1,652,132 Other financing sources (uses): Insurance reimbursements ,756 55,756 Transfers out (174,454) (197,765) (197,765) 0 Total other financing sources (uses) (174,454) (197,765) (142,009) 55,756 Net change in fund balances (1,003,713) (2,205,363) (497,475) 1,707,888 Fund balances at beginning of year 1,003,713 2,205,363 2,701, ,287 Fund balances (deficit) at end of year $0 $0 $2,204,175 $2,204,175 69

159 BOARD OF COUNTY COMMISSIONERS E-911 OPERATIONS SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL FOR THE YEAR ENDED SEPTEMBER 30, 2009 Variance with Final Budget Original Final Positive Budget Budget Actual (Negative) Revenues: Permits, fees and special assessments $856,777 $856,777 $1,462 ($855,315) Intergovernmental 594,107 1,357,653 2,488,577 1,130,924 Investment income 0 9,667 2,786 (6,881) Total revenues 1,450,884 2,224,097 2,492, ,728 Expenditures: Current: Public safety 720,118 2,104,661 1,410, ,158 Total expenditures 720,118 2,104,661 1,410, ,158 Excess (deficiency) of revenue over (under) expenditures 730, ,436 1,082, ,886 Other financing sources (uses): Transfers out (658,222) (658,222) (658,222) 0 Total other financing sources (uses) (658,222) (658,222) (658,222) 0 Net change in fund balances 72,544 (538,786) 424, ,886 Fund balances at beginning of year (72,544) 538, ,330 72,544 Fund balances (deficit) at end of year $0 $0 $1,035,430 $1,035,430 70

160 BOARD OF COUNTY COMMISSIONERS HUD CDBG HOUSING REHAB LOAN SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL FOR THE YEAR ENDED SEPTEMBER 30, 2009 Variance with Final Budget Original Final Positive Budget Budget Actual (Negative) Revenues: Intergovernmental $48,000 $48,000 $0 ($48,000) Investment income 2,000 2, (1,326) Total revenues 50,000 50, (49,326) Expenditures: Current: Economic environment 50,000 82,402 16,219 66,183 Total expenditures 50,000 82,402 16,219 66,183 Excess (deficiency) of revenue over (under) expenditures 0 (32,402) (15,545) 16,857 Fund balances at beginning of year 0 32,402 32,402 0 Fund balances (deficit) at end of year $0 $0 $16,857 $16,857 71

161 BOARD OF COUNTY COMMISSIONERS HUD HOME FUND SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL FOR THE YEAR ENDED SEPTEMBER 30, 2009 Variance with Final Budget Original Final Positive Budget Budget Actual (Negative) Revenues: Intergovernmental $3,247,625 $3,397,625 $943,134 ($2,454,491) Investment income 0 0 1,864 1,864 Miscellaneous ,061 38,061 Total revenues 3,247,625 3,397, ,059 (2,414,566) Expenditures: Current: Economic environment 3,247,625 3,866,127 1,061,874 2,804,253 Total expenditures 3,247,625 3,866,127 1,061,874 2,804,253 Excess (deficiency) of revenue over (under) expenditures 0 (468,502) (78,815) 389,687 Fund balances at beginning of year 0 468, ,454 (313,048) Fund balances (deficit) at end of year $0 $0 $76,639 $76,639 72

162 BOARD OF COUNTY COMMISSIONERS SOUTHWEST SECTOR ROAD PROJECT SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL FOR THE YEAR ENDED SEPTEMBER 30, 2009 Variance with Final Budget Original Final Positive Budget Budget Actual (Negative) Revenues: Intergovernmental $0 $3,750,000 $1,168,261 ($2,581,739) Investment income ,761 31,761 Miscellaneous 0 428, ,025 (1) Total revenues 0 4,178,026 1,628,047 (2,549,979) Expenditures: Current: Transportation 0 7,299,122 1,701,726 5,597,396 Total expenditures 0 7,299,122 1,701,726 5,597,396 Excess (deficiency) of revenue over (under) expenditures 0 (3,121,096) (73,679) 3,047,417 Fund balances at beginning of year 0 3,121,096 2,655,943 (465,153) Fund balances (deficit) at end of year $0 $0 $2,582,264 $2,582,264 73

163 BOARD OF COUNTY COMMISSIONERS BOB SIKES TOLL FACILITIES SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL FOR THE YEAR ENDED SEPTEMBER 30, 2009 Variance with Final Budget Original Final Positive Budget Budget Actual (Negative) Revenues: Charges for services $2,800,000 $2,800,000 $2,962,819 $162,819 Investment income ,030 32,030 Miscellaneous 0 0 1,268 1,268 Total revenues 2,800,000 2,800,000 2,996, ,117 Expenditures: Current: General government 1,056,702 1,825,445 1,043, ,857 Total expenditures 1,056,702 1,825,445 1,043, ,857 Excess (deficiency) of revenue over (under) expenditures 1,743, ,555 1,952, ,974 Other financing sources (uses): Transfers out (1,603,298) (1,603,298) (1,597,938) 5,360 Total other financing sources (uses) (1,603,298) (1,603,298) (1,597,938) 5,360 Net change in fund balances 140,000 (628,743) 354, ,334 Fund balances at beginning of year (140,000) 628,743 3,201,194 2,572,451 Fund balances (deficit) at end of year $0 $0 $3,555,785 $3,555,785 74

164 BOARD OF COUNTY COMMISSIONERS MSBU ASSESSMENT PROGRAM SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL Variance with FOR THE YEAR ENDED SEPTEMBER 30, 2009 Final Budget Original Final Positive Budget Budget Actual (Negative) Revenues: Permits, fees and special assessments $554,294 $554,294 $600,050 $45,756 Investment income 0 0 3,671 3,671 Total revenues 554, , ,721 49,427 Expenditures: Current: Physical environment 554, , ,736 66,598 Transportation 10, ,719 14, ,975 Total expenditures 564,294 1,222, , ,573 Excess (deficiency) of revenue over (under) expenditures (10,000) (667,759) 62, ,000 Other financing sources (uses): Notes issued 0 475,000 0 (475,000) Total other financing sources (uses) 0 475,000 0 (475,000) Net change in fund balances (10,000) (192,759) 62, ,000 Fund balances at beginning of year 10, , ,759 0 Fund balances (deficit) at end of year $0 $0 $255,000 $255,000 75

165 BOARD OF COUNTY COMMISSIONERS MASTER DRAINAGE SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL Variance with FOR THE YEAR ENDED SEPTEMBER 30, 2009 Final Budget Original Final Positive Budget Budget Actual (Negative) Revenues: Permits, fees and special assessments $151,850 $151,850 $64,828 ($87,022) Investment income ,516 18,516 Total revenues 151, ,850 83,344 (68,506) Expenditures: Current: Transportation 144,257 1,942, ,294 1,720,659 Total expenditures 144,257 1,942, ,294 1,720,659 Excess (deficiency) of revenue over (under) expenditures 7,593 (1,791,103) (138,950) 1,652,153 Fund balances at beginning of year (7,593) 1,791,103 1,798,697 7,594 Fund balances (deficit) at end of year $0 $0 $1,659,747 $1,659,747 76

166 BOARD OF COUNTY COMMISSIONERS DEBT SERVICE FUND SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL FOR THE YEAR ENDED SEPTEMBER 30, 2009 Variance with Final Budget Original Final Positive Budget Budget Actual (Negative) Revenues: Intergovernmental $600,000 $40,000 $660,000 $620,000 Investment income 35,725 35,725 92,992 57,267 Miscellaneous 0 0 1,667 1,667 Total revenues 635,725 75, , ,934 Expenditures: Current: General government 458, , ,000 0 Debt service: Principal retirement 4,760,437 6,006,667 4,667,718 1,338,949 Interest and fiscal charges 5,993,062 5,993,062 5,538, ,035 Total expenditures 11,211,943 12,559,729 10,765,745 1,793,984 Excess (deficiency) of revenue over (under) expenditures (10,576,218) (12,484,004) (10,011,086) 2,472,918 Other financing sources (uses): Transfers in 10,576,218 19,836,387 18,667,415 (1,168,972) Total other financing sources (uses) 10,576,218 19,836,387 18,667,415 (1,168,972) Net change in fund balances 0 7,352,383 8,656,329 1,303,946 Fund balances at beginning of year 0 (7,352,383) 765,816 8,118,199 Fund balances (deficit) at end of year $0 $0 $9,422,145 $9,422,145 77

167 BOARD OF COUNTY COMMISSIONERS FEDERAL TRANSIT ADMINISTRATION SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL FOR THE YEAR ENDED SEPTEMBER 30, 2009 Variance with Final Budget Original Final Positive Budget Budget Actual (Negative) Revenues: Intergovernmental $340,000 $5,515,749 $495,719 ($5,020,030) Investment income 0 0 2,343 2,343 Miscellaneous 0 0 1,740 1,740 Total revenues 340,000 5,515, ,802 (5,015,947) Expenditures: Capital improvements: Transportation 340,000 5,515, ,115 5,021,634 Total expenditures 340,000 5,515, ,115 5,021,634 Excess (deficiency) of revenue over (under) expenditures 0 0 5,687 5,687 Fund balances at beginning of year , ,147 Fund balances (deficit) at end of year $0 $0 $293,834 $293,834 78

168 BOARD OF COUNTY COMMISSIONERS ROAD CONSTRUCTION SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL FOR THE YEAR ENDED SEPTEMBER 30, 2009 Variance with Final Budget Original Final Positive Budget Budget Actual (Negative) Revenues: Taxes $1,690,000 $516,461 $374,334 ($142,127) Investment income ,025 14,025 Total revenues 1,690, , ,359 (128,102) Expenditures: Capital improvements: Transportation 1,605,500 2,485,554 1,904, ,026 Total expenditures 1,605,500 2,485,554 1,904, ,026 Excess (deficiency) of revenue over (under) expenditures 84,500 (1,969,093) (1,516,169) 452,924 Other financing sources (uses): Transfers out (53,250) (53,250) (52,752) 498 Total other financing sources (uses) (53,250) (53,250) (52,752) 498 Net change in fund balances 31,250 (2,022,343) (1,568,921) 453,422 Fund balances at beginning of year (31,250) 2,022,343 2,106,844 84,501 Fund balances (deficit) at end of year $0 $0 $537,923 $537,923 79

169 BOARD OF COUNTY COMMISSIONERS LOCAL OPTION SALES TAX (LOST) SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL FOR THE YEAR ENDED SEPTEMBER 30, 2009 Variance with Final Budget Original Final Positive Budget Budget Actual (Negative) Revenues: Intergovernmental $0 $0 $11,500 $11,500 Investment income 0 23,844 27,185 3,341 Miscellaneous 0 358, ,789 0 Total revenues 0 382, ,474 14,841 Expenditures: Capital improvements: General government 0 255,036 7, ,490 Transportation 0 23, ,000 Total expenditures 0 278,036 7, ,490 Excess (deficiency) of revenue over (under) expenditures 0 104, , ,331 Other financing sources (uses): Transfers out 0 (382,633) 0 382,633 Total other financing sources (uses) 0 (382,633) 0 382,633 Net change in fund balances 0 (278,036) 389, ,964 Fund balances at beginning of year 0 278, ,036 (23,000) Fund balances (deficit) at end of year $0 $0 $644,964 $644,964 80

170 BOARD OF COUNTY COMMISSIONERS LOCAL OPTION SALES TAX (LOST) II SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL FOR THE YEAR ENDED SEPTEMBER 30, 2009 Variance with Final Budget Original Final Positive Budget Budget Actual (Negative) Revenues: Intergovernmental $0 $14,592,996 $1,471,607 ($13,121,389) Investment income 0 1,368,754 1,381,368 12,614 Miscellaneous 0 5,630,720 5,630,720 0 Total revenues 0 21,592,470 8,483,695 (13,108,775) Expenditures: Capital improvements: General government 0 25,937,395 4,909,239 21,028,156 Public safety 0 1,866,901 68,579 1,798,322 Transportation 0 14,576,328 4,716,808 9,859,520 Culture and recreation 0 16,031,414 7,950,415 8,080,999 Total expenditures 0 58,412,038 17,645,041 40,766,997 Excess (deficiency) of revenue over (under) expenditures 0 (36,819,568) (9,161,346) 27,658,222 Other financing sources (uses): Transfers out 0 (185,078) 0 185,078 Total other financing sources (uses) 0 (185,078) 0 185,078 Net change in fund balances 0 (37,004,646) (9,161,346) 27,843,300 Fund balances at beginning of year 0 37,004,646 37,004,645 (1) Fund balances (deficit) at end of year $0 $0 $27,843,299 $27,843,299 81

171 BOARD OF COUNTY COMMISSIONERS LOCAL OPTION SALES TAX (LOST) III SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL FOR THE YEAR ENDED SEPTEMBER 30, 2009 Variance with Final Budget Original Final Positive Budget Budget Actual (Negative) Revenues: Taxes $34,953,269 $34,953,269 $31,542,431 ($3,410,838) Intergovernmental 0 8,742, ,571 (7,899,180) Charges for services 125, , ,533 (23,467) Investment income 0 332, , ,957 Miscellaneous 664,867 6,483,012 6,483, Total revenues 35,743,136 50,636,321 39,613,837 (11,022,484) Expenditures: Capital improvements: General government 6,133,379 18,405,081 3,862,853 14,542,228 Public safety 5,174,526 7,678,194 4,082,719 3,595,475 Physical environment 2,485,616 4,895,006 1,902,321 2,992,685 Transportation 18,710,000 35,090,231 7,088,471 28,001,760 Culture and recreation 1,485,702 2,888, ,580 1,955,483 Total expenditures 33,989,223 68,956,575 17,868,944 51,087,631 Excess (deficiency) of revenue over (under) expenditures 1,753,913 (18,320,254) 21,744,893 40,065,147 Other financing sources (uses): Insurance reimbursements 0 85,675 85,675 0 Transfers out 0 (5,332,289) 0 5,332,289 Total other financing sources (uses) 0 (5,246,614) 85,675 5,332,289 Net change in fund balances 1,753,913 (23,566,868) 21,830,568 45,397,436 Fund balances at beginning of year (1,753,913) 23,566,868 26,800,514 3,233,646 Fund balances (deficit) at end of year $0 $0 $48,631,082 $48,631,082 82

172 NON-MAJOR PROPRIETARY FUNDS Inspection Fund - to account for building inspection services provided to the residents of Escambia County. Civic Center Fund to account for the operation, maintenance and improvements of the County s Civic Center.

173 BOARD OF COUNTY COMMISSIONERS NON-MAJOR ENTERPRISE FUNDS COMBINING STATEMENT OF NET ASSETS SEPTEMBER 30, 2009 ASSETS Inspection Civic Center Totals Current assets: Cash and cash equivalents $700 $678,118 $678,818 Equity in pooled cash and investments 4,086, ,678 4,754,372 Receivables (net of allowance for uncollectibles) , ,618 Inventory 0 46,659 46,659 Prepaid expenses 0 33,531 33,531 Restricted cash and cash equivalents 300, ,217 Total current assets 4,387,790 1,542,425 5,930,215 Noncurrent assets: Capital assets (net of depreciation) 94,675 10,172,206 10,266,881 Total noncurrent assets 94,675 10,172,206 10,266,881 Total assets 4,482,465 11,714,631 16,197,096 LIABILITIES Current liabilities: Vouchers payable 2, , ,997 Salaries payable 132, ,157 Due to other governmental units 1, ,198 Other current liabilities 9, , ,876 Payable from restricted assets: Customer deposits 300, ,217 Total current liabilities 445,819 1,097,626 1,543,445 Non-current liabilities: Compensated absences 449, ,262 Other post-employment benefits 95, ,438 Total non-current liabilities 544, ,700 Total liabilities 990,519 1,097,626 2,088,145 NET ASSETS Invested in capital assets, net of related debt 94,675 10,172,206 10,266,881 Unrestricted 3,397, ,799 3,842,070 Total net assets $3,491,946 $10,617,005 $14,108,951 83

174 BOARD OF COUNTY COMMISSIONERS NON-MAJOR ENTERPRISE FUNDS COMBINING STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET ASSETS YEAR ENDED SEPTEMBER 30, 2009 Inspection Civic Center Totals Operating revenues: Permits, fees and special assessments $1,944,339 $0 $1,944,339 Charges for services 7,515 3,473,104 3,480,619 Fines and forfeitures 45, ,046 Miscellaneous income 42,790 6,806 49,596 Total operating revenues 2,039,690 3,479,910 5,519,600 Operating expenses: Personal services 2,439, ,439,696 Contractual services 90,616 4,288,500 4,379,116 Materials and supplies 63, ,835 Travel and vehicle costs 1, ,977 Depreciation 95, ,625 1,083,285 Bad debts ,459 Memberships, dues and subscriptions 4, ,956 Insurance and bonds 16, , ,373 Communications and freight services 49, ,231 Utilities 30, ,279 Maintenance 26,130 73,522 99,652 Rentals and leases 168, ,461 Training 3, ,854 Miscellaneous 149,210 41, ,969 Total operating expenses 3,141,498 5,522,645 8,664,143 Operating income (loss) (1,101,808) (2,042,735) (3,144,543) Non-operating revenues (expenses): Interest income 47,556 3,302 50,858 Gain (loss) on disposal of assets 1, ,496 Total non-operating revenues (expenses) 49,052 3,302 52,354 Income (loss) before contributions and transfers (1,052,756) (2,039,433) (3,092,189) Transfers in 0 1,834,636 1,834,636 Total other financing sources (uses) 0 1,834,636 1,834,636 Change in net assets (1,052,756) (204,797) (1,257,553) Net assets - beginning 4,544,702 10,821,802 15,366,504 Net assets - ending $3,491,946 $10,617,005 $14,108,951 84

175 BOARD OF COUNTY COMMISSIONERS NON-MAJOR ENTERPRISE FUNDS COMBINING STATEMENT OF CASH FLOWS YEAR ENDED SEPTEMBER 30, 2009 Inspection Civic Center Totals Cash flows from operating activities: Cash received from customers $2,049,580 $3,296,057 $5,345,637 Cash payments to suppliers for goods and services (645,673) (4,169,367) (4,815,040) Cash payments to employees for services (2,364,267) (6,399) (2,370,666) Net cash provided by (used in) operating activities (960,360) (879,709) (1,840,069) Cash flows from noncapital financing activities: Transfers in 0 1,834,636 1,834,636 Principal (paid)/received on interfund advance 0 (231,198) (231,198) Net cash provided by (used in) noncapital financing activities 0 1,603,438 1,603,438 Cash flows from capital and related financing activities: Acquisition and construction of capital assets 0 (51,395) (51,395) Proceeds from sale of assets 9, ,549 Net cash used in capital and related financing activities 9,549 (51,395) (41,846) Cash flow from investing activities: Interest on investments 47,556 3,302 50,858 Net cash provided by investing activities 47,556 3,302 50,858 Net increase (decrease) in cash & cash equivalents (903,255) 675,636 (227,619) Cash and cash equivalents at beginning of year 5,290, ,160 5,961,026 Cash and cash equivalents at end of year $4,387,611 $1,345,796 $5,733,407 85

176 BOARD OF COUNTY COMMISSIONERS NON-MAJOR PROPRIETARY FUND COMBINING STATEMENT OF CASH FLOWS (Continued) YEAR ENDED SEPTEMBER 30, 2009 Inspection Civic Center Totals Reconciliation of cash and cash equivalents at end of year to statement of net assets: Current assets: Cash and cash equivalents $700 $678,118 $678,818 Equity in pooled cash and investments 4,086, ,678 4,754,372 Restricted assets: Cash and cash equivalents 300, ,217 Total cash and cash equivalents at end of year $4,387,611 $1,345,796 $5,733,407 Reconciliation of operating income (loss) to net cash provided by (used in) operating activities: Operating income (loss) ($1,101,808) ($2,042,735) ($3,144,543) Adjustments to reconcile operating income (loss) to net cash provided by (used in) operating activities: Depreciation 95, ,625 1,083,285 Provision for uncollectible accounts ,459 (Increase) decrease in assets: Accounts receivable (797) 50,389 49,592 Inventory 0 (17,496) (17,496) Prepaid expense Increase (decrease) in liabilities: Vouchers payable (38,924) 317, ,559 Salaries and benefits payable 2,778 (4,114) (1,336) Compensated absences 24, ,546 Accrued taxes payable 0 65,193 65,193 Deposits 9, ,815 Due to other governments (607) 0 (607) Deferred revenue 0 (234,829) (234,829) Other post-employment benefits 48,105 (2,285) 45,820 Net cash provided by (used in) operating activities ($960,360) ($879,709) ($1,840,069) 86

177

178

179

180

181

182

183

184 ANNUAL AUDIT REPORT CLERK OF THE CIRCUIT COURT & COMPTROLLER SEPTEMBER 30, 2009

185 ANNUAL AUDIT REPORT CLERK OF THE CIRCUIT COURT & COMPTROLLER SEPTEMBER 30, 2009 TABLE OF CONTENTS Report of Independent Auditors Fund Financial Statements: Governmental Funds Balance Sheet... 3 Statement of Revenues, Expenditures, and Changes in Fund Balance... 4 Page Statement of Revenues, Expenditures, and Changes in Fund Balance Budget (GAAP Basis) and Actual Internal Service Fund Statement of Net Assets...7 Statement of Revenues, Expenses, and Changes in Net Assets... 8 Statement of Cash Flows... 9 Fiduciary Funds Statement of Fiduciary Net Assets Agency Funds Notes to the Financial Statements Combining Statement of Fiduciary Net Assets Agency Funds 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 Management Letter Clerk of the Circuit Court & Comptroller s Response to Management Letter... 24

186

187

188 CLERK OF THE CIRCUIT COURT & COMPTROLLER BALANCE SHEET GOVERNMENTAL FUNDS SEPTEMBER 30, 2009 Special Total Revenue Governmental General Court Fund Funds ASSETS Cash and cash equivalents $468,557 $1,968,460 $98,516 $2,535,533 Receivables (net of allowance for uncollectibles) 7, ,292 Due from other governmental units 10, ,532 99,744 Total assets $485,851 $1,968,670 $188,048 $2,642,569 LIABILITIES Vouchers payable $22,216 $19,130 $424 $41,770 Contracts payable 0 6, ,085 Salaries payable 128, ,999 30, ,128 Due to other funds 101, ,411 Due to other governmental units 208,469 1,355, ,564,139 Other current liabilities 5,967 53, ,693 Deferred revenue 19,524 3, ,125 Total liabilities 485,851 1,893,211 31,289 2,410,351 FUND BALANCES Unreserved Special revenue funds 0 75, , ,218 Fund balances 0 75, , ,218 Total liabilities and fund balances $485,851 $1,968,670 $188,048 $2,642,569 The accompanying notes are an integral part of the financial statements 3

189 CLERK OF THE CIRCUIT COURT & COMPTROLLER STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES GOVERNMENTAL FUNDS FOR THE YEAR ENDED SEPTEMBER 30, 2009 Special Total Revenue Governmental General Court Fund Funds Revenues: Intergovernmental $107,070 $2,538,802 $549,566 $3,195,438 Charges for services 1,285,185 2,503, ,255 4,305,227 Fines and forfeitures 0 2,236,400 48,838 2,285,238 Investment income 4,081 44, ,744 Miscellaneous 0 89, ,234 Total revenues 1,396,336 7,412,941 1,115,604 9,924,881 Expenditures: Current: General government Personal services 3,260,305 6,757, ,526 10,863,796 Operating expenditures 433, , ,089 1,301,483 Capital outlay 22, ,619 32,244 Total expenditures 3,716,208 7,289,081 1,192,234 12,197,523 Excess (deficiency) of revenue over (under) expenditures (2,319,872) 123,860 (76,630) (2,272,642) Other Financing Sources (Uses): Transfers in 2,327, ,327,290 Transfers out (7,418) 0 0 (7,418) Payments to Clerk of Court Trust Fund 0 (48,401) 0 (48,401) Total other financing sources (uses) 2,319,872 (48,401) 0 2,271,471 Net change in fund balances 0 75,459 (76,630) (1,171) Fund balances at beginning of year , ,389 Fund balances at end of year $0 $75,459 $156,759 $232,218 The accompanying notes are an integral part of the financial statements 4

190 CLERK OF THE CIRCUIT COURT & COMPTROLLER STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - ALL GOVERNMENTAL FUND TYPES BUDGET (GAAP BASIS) AND ACTUAL YEAR ENDED SEPTEMBER 30, 2009 General Fund Court Fund Variance- Variance- Original Final positive Original Final positive Budget Budget Actual (negative) Budget Budget Actual (negative) Revenues: Intergovernmental $105,000 $105,000 $107,070 $2,070 $683,314 $2,538,802 $2,538,802 $0 Charges for services 1,740,530 1,282,419 1,285,185 2,766 3,467,088 2,479,263 2,503,787 24,524 Fines and forfeitures ,630,055 2,217,348 2,236,400 19,052 Interest 35,500 10,522 4,081 (6,441) 80,000 38,241 44,718 6,477 Miscellaneous ,260 90,886 89,234 (1,652) Total revenues 1,881,030 1,397,941 1,396,336 (1,605) 7,942,717 7,364,540 7,412,941 48,401 Expenditures: Current: General government: Personal services 3,358,699 3,262,129 3,260,305 1,824 7,369,416 6,804,403 6,757,965 46,438 Operating expenditures 449, , ,278 7, , , ,116 29,021 Capital outlay 0 22,625 22, Total general government 3,808,320 3,725,231 3,716,208 9,023 7,942,717 7,364,540 7,289,081 75,459 Total expenditures 3,808,320 3,725,231 3,716,208 9,023 7,942,717 7,364,540 7,289,081 75,459 Excess (deficiency) of revenues over expenditures (1,927,290) (2,327,290) (2,319,872) 7, , ,860 Other financing sources (uses): Transfers in 1,927,290 2,327,290 2,327, Transfers out 0 0 (7,418) (7,418) Payments to Clerk of Court Trust Fund (48,401) (48,401) Total other financing sources (uses) 1,927,290 2,327,290 2,319,872 (7,418) 0 0 (48,401) (48,401) Net change in fund balances ,459 75,459 Fund balance at beginning of year Fund balance at end of year $0 $0 $0 $0 $0 $0 $75,459 $75,459 (Continued) The accompanying notes are an integral part of the financial statements. 5

191 CLERK OF THE CIRCUIT COURT & COMPTROLLER STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - ALL GOVERNMENTAL FUND TYPES BUDGET (GAAP BASIS) AND ACTUAL (Continued) YEAR ENDED SEPTEMBER 30, 2009 Revenues: Intergovernmental Charges for services Fines and forfeitures Interest Miscellaneous Total revenues Special Revenue Fund Totals Variance- Variance- Original Final positive Original Final positive Budget Budget Actual (negative) Budget Budget Actual (negative) $507,618 $549,568 $549,566 ($2) $1,295,932 $3,193,370 $3,195,438 $2, , , ,255 (224,162) 5,873,110 4,502,099 4,305,227 (196,872) 0 48,840 48,838 (2) 3,630,055 2,266,188 2,285,238 19,050 8,000 8, (7,055) 123,500 56,763 49,744 (7,019) ,260 90,886 89,234 (1,652) 1,181,110 1,346,825 1,115,604 (231,221) 11,004,857 10,109,306 9,924,881 (184,425) Expenditures: Current: General government: Personal services Operating expenditures Capital outlay Total general government Total expenditures Excess (deficiency) of revenues over expenditures Other financing sources (uses): Transfers in Transfers out Payments to Clerk of Court Trust Fund Total other financing sources (uses) Net change in fund balances Fund balance at beginning of year Fund balance at end of year 940, , , ,876 11,668,471 11,016,934 10,863, , , , ,089 49,715 1,263,676 1,387,418 1,301,483 85, ,619 9, ,244 32, ,181,110 1,346,825 1,192, ,591 12,932,147 12,436,596 12,197, ,073 1,181,110 1,346,825 1,192, ,591 12,932,147 12,436,596 12,197, , (76,630) (76,630) (1,927,290) (2,327,290) (2,272,642) 54, ,927,290 2,327,290 2,327, (7,418) (7,418) (48,401) (48,401) ,927,290 2,327,290 2,271,471 (55,819) 0 0 (76,630) (76,630) 0 0 (1,171) (1,171) , , , ,389 $0 $0 $156,759 $156,759 $0 $0 $232,218 $232,218 The accompanying notes are an integral part of the financial statements. 6

192 CLERK OF THE CIRCUIT COURT & COMPTROLLER STATEMENT OF NET ASSETS INTERNAL SERVICE FUND SEPTEMBER 30, 2009 ASSETS Current assets: Cash and cash equivalents $1,223,108 Total current assets 1,223,108 LIABILITIES Current liabilities: Compensated absences payable 227,939 Total current liabilities 227,939 Non-current liabilities: Compensated absences payable 1,517,482 Total non-current liabilities 1,517,482 Total liabilities 1,745,421 NET ASSETS Unrestricted (deficit) ($522,313) The accompanying notes are an integral part of the financial statements. 7

193 CLERK OF THE CIRCUIT COURT & COMPTROLLER STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET ASSETS INTERNAL SERVICE FUND FOR THE YEAR ENDED SEPTEMBER 30, 2009 Operating revenues: Charges for services $1,143,902 Total operating revenues 1,143,902 Operating expenses: Personal services 627,237 Total operating expenses 627,237 Change in net assets 516,665 Net assets (deficit) at beginning of year (1,038,978) Net assets (deficit) at ending of year ($522,313) The accompanying notes are an integral part of the financial statements. 8

194 CLERK OF THE CIRCUIT COURT & COMPTROLLER STATEMENT OF CASH FLOWS INTERNAL SERVICE FUND FOR THE YEAR ENDED SEPTEMBER 30, 2009 Cash provided by (used in) operating activities Receipts from interfund services provided $569,035 Payments on compensated absences liability (85,856) Net increase (decrease) in cash and cash equivalents 483,179 Cash and cash equivalents at beginning of year 739,929 Cash and cash equivalents at end of year $1,223,108 Reconciliation of change in net assets (loss) to net cash provided by (used in) operating activities: Change in net assets (loss) $516,665 Increase (decrease) in liabilities: Compensated absences payable (33,486) Net cash provided by (used in) operating activities $483,179 The accompanying notes are an integral part of the financial statements. 9

195 CLERK OF THE CIRCUIT COURT & COMPTROLLER STATEMENT OF FIDUCIARY NET ASSETS - AGENCY FUNDS SEPTEMBER 30, 2009 ASSETS Cash and cash equivalents $9,592,070 Receivables (net of allowance for uncollectibles) 25,141 Due from other funds 101,411 Total assets $9,718,622 LIABILITIES Payable to others $152,951 Due to other governmental units 2,841 Cash bonds 1,028,949 Court registry deposits 8,440,078 Advances - Juror payroll 93,803 Total liabilities $9,718,622 The accompanying notes are an integral part of the financial statements. 10

196 ANNUAL AUDIT REPORT CLERK OF THE CIRCUIT COURT & COMPTROLLER NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 2009 NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The Office of the Clerk of the Circuit Court & Comptroller ( Clerk ) of Escambia County, Florida, is established as a constitutional official by Article VIII, Section 1 (d) of the Constitution of the State of Florida. The accounting policies of the Clerk s Office conform to accounting principles generally accepted in the United States of America as applicable to local governments. The following is a summary of the more significant accounting policies. PRINCIPLES USED IN DETERMINING THE SCOPE OF ENTITY FOR FINANCIAL REPORTING PURPOSES Although the Clerk s Office is operationally autonomous from the Escambia County Board of County Commissioners (BOCC), it does not hold sufficient corporate powers of its own to be considered a legally separate entity for financial reporting purposes. Therefore, the Clerk is reported as a part of the primary government of Escambia County, Florida. These special-purpose financial statements are not intended to be a complete presentation of the financial position and results of operations of Escambia County, Florida taken as a whole. As permitted by Chapter (4), Rules of the Auditor General of the State of Florida, the special-purpose financial statements consists of only the fund level financial statements as defined in Government Accounting Standards Board (GASB) Statement No. 34, and do not include presentations of government-wide statements of the Clerk. BASIS OF PRESENTATION FUND ACCOUNTING The Clerk s financial records and accounts are maintained in accordance with the principles of fund accounting, whereby resources are classified for accounting and reporting purposes into funds to insure compliance with any special restrictions or limitations on the use of such resources. The Clerk s funds are defined as follows: Governmental Funds The Clerk reports the following major governmental funds: The General Fund is the general operating fund of the Clerk. It is used to account for all financial resources except those required to be accounted for in other funds. The Clerk s Court Fund accounts for court-related financial resources and activities of the Clerk. The Clerk s Special Revenue Fund accounts for monies collected according to Chapter 28.24, Florida Statutes to be used exclusively for the purchase and maintenance of equipment, personal training, and technical assistance in modernizing the official records system and for funding court-related technology needs of the Clerk as defined in Chapter , Florida Statutes. Effective July 1, 2009, Section 28.37(2), Florida Statutes specifies 10% of all court-related fines are to be deposited into this fund to be used exclusively for additional court-related operational needs and program enhancements. Also included in the Special Revenue Fund are activities related to Title IV-D child support cases. Title IV-D funding provides assistance to the plaintiff and enforcement of collections through the Office of Child Support Enforcement. 11

197 ANNUAL AUDIT REPORT CLERK OF THE CIRCUIT COURT & COMPTROLLER NOTES TO FINANCIAL STATEMENTS (CONTINUED) SEPTEMBER 30, 2009 Additionally, the Clerk reports the following fund types: The Internal Service Fund (a proprietary fund) accounts for the balances and activity related to the Clerk s compensated absences policies. Fiduciary Funds Agency Funds Agency funds are used to account for assets held for individuals, private organizations, or other governments. Agency Funds are custodial in nature (assets equal liabilities) and do not involve measurement of the results of operations. BASIS OF ACCOUNTING Governmental funds are reported using the current 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 thereafter to pay liabilities of the current period. For this purpose, the Clerk considers revenues to be available if they are collected within 60 days of the end of the current fiscal period. Expenditures generally are recorded when the related fund liability is incurred. Capital asset acquisitions are recorded as expenditures in governmental funds. Proprietary funds (the internal service fund) are reported using the accrual basis of accounting. Proprietary funds distinguish operating revenues and expenses from non-operating items. Operating revenues and expenses generally result from providing services and producing and delivering goods in connection with the proprietary fund s principal ongoing operations. The principal operating revenues of the Clerk s internal service fund are charges to funds related to the Clerk s compensated absences activity. Operating expenses for the internal service fund include recognition of changes in the compensated absences liabilities. All revenues and expenses not meeting these definitions are reported as non-operating revenues and expenses. Fiduciary fund financial statements are reported using the accrual basis of accounting. BUDGETS AND BUDGETARY ACCOUNTING The Clerk s Office operates under budget procedures pursuant to Florida Statutes. The budget is adopted on a basis consistent with accounting principles generally accepted in the United States of America. The legal level of budgetary control is at the fund level. CASH, CASH EQUIVALENTS AND INVESTMENTS Cash equivalents are highly liquid investments with original maturities of three months or less when purchased. Investments are recorded at fair value in accordance with GASB Statement No

198 ANNUAL AUDIT REPORT CLERK OF THE CIRCUIT COURT & COMPTROLLER NOTES TO FINANCIAL STATEMENTS (CONTINUED) SEPTEMBER 30, 2009 COMPENSATED ABSENCES Employees may accumulate a limited amount of earned but unused sick leave, annual leave, and compensatory time, which will be paid upon separation from service. The liabilities and expenses for compensated absences are recorded in the internal service fund. EVENTS OCCURRING AFTER REPORTING DATE The Clerk has evaluated events and transactions that occurred between September 30, 2009 and December 17, 2009, which is the date that the financial statements were available to be issued, for possible recognition or disclosure in the financial statements. NOTE 2 SPECIAL REPORTING TREATMENTS Appropriations from the BOCC are recorded as transfers in on the Statement of Revenues, Expenditures and Changes in Fund Balance. In accordance with Florida Statutes, the General Fund s excess of revenues over expenditures is returned to the BOCC at year end and is reported as a transfer out on the Statement of Revenues, Expenditures and Changes in Fund Balance. In accordance with Florida Statutes, the Court Fund s excess of revenues over expenditures is returned to the State of Florida Clerk of Court Trust Fund at year end and is reported as Payments to Clerk of Court Trust Fund on the Statement of Revenues, Expenditures and Changes in Fund Balance. This remittance is based on revenues and expenditures for the state fiscal year ending June 30 th. Any such revenues in excess of expenditures as of September 30, 2009, are included as Fund Balance for the Court Fund and are available for use within the Court Fund until June 30, Capital assets (vehicles, equipment and other tangible property costing at least $1,000 with a useful life of more than one year) are recorded as expenditures at the time of purchase. These assets are capitalized at cost and depreciated in Escambia County s government-wide financial statements. NOTE 3 DETAILED NOTES ON ALL FUNDS Cash Deposits The investment of surplus funds is governed by the provisions of Florida Statute as to the type of investments that can be made. Deposits may be exposed to custodial credit risk, which is the risk of loss in the event of a bank failure. The Clerk manages custodial credit risk by maintaining its deposits in financial institutions designated as Qualified Public Depositories by the State Treasurer. All deposits were fully insured through a combination of Federal depository insurance and participation of the financial institution in the multiple financial institution collateral pool as specified in Chapter 280, Florida Statutes. Accordingly, risk of loss due to bank failure is not significant. 13

199 ANNUAL AUDIT REPORT CLERK OF THE CIRCUIT COURT & COMPTROLLER NOTES TO FINANCIAL STATEMENTS (CONTINUED) SEPTEMBER 30, 2009 At September 30, 2009, the reported amount of the Clerk s deposits was approximately $13.3 million, and the bank balance was approximately $13.4 million consisting entirely of deposits in checking and saving accounts. Receivables The Clerk records an allowance for accounts receivable related to returned checks that may become uncollectible. At September 30, 2009, the allowance for returned checks in the Court Fund was $38,656. No other allowances for uncollectible accounts are maintained since other receivables are considered collectible. Interfund Balances At September 30, 2009, $101,411 was owed by the General Fund to the Court Registry Fund for tax deed payments collected by not yet remitted to the Court Registry Fund. Related Party Balances At September 30, 2009, the BOCC owed the Clerk $5,315, consisting mainly of expenditures paid on behalf of the BOCC. The Clerk also owed the BOCC $233,317, consisting of excess revenues over expenditures for the General Fund and portions of fines and fees collected by the Clerk on behalf of the BOCC. Pension and Retirement Plan All full-time employees of the Clerk are covered by the Florida Retirement System (FRS). The FRS was established in 1970 by Chapter 121, Florida Statutes and is administered by the Florida Department of Management Services, Division of Retirement. Changes to the FRS can be made only by an act of the Florida Legislature. Rules governing the operation and administration of the system may be found in Chapter 60S of the Florida Administrative Code. The FRS issues a financial report that includes financial statements and required supplementary information. The report may be obtained by writing to FRS, 2639-C North Monroe Street, Tallahassee, Florida The FRS offers two retirement plans the FRS Pension Plan and the FRS Investment Plan. An employee may participate in only one of the plans. The FRS Pension Plan is a multiple employer cost sharing defined benefit plan which provides retirement and disability benefits, annual cost-of-living adjustments, and death benefits to plan members and beneficiaries. Normal retirement benefits are available to employees who retire at age 62 with 6 or more years of service, or to those employees who have at least 30 years of creditable service, regardless of age. Retirement age and years of service requirements vary depending on membership class. Early retirement is available after 6 years of service with a 5% reduction of benefits for each year prior to the normal retirement age. Retirement benefits are based upon age, average compensation and years-ofservice credit where average compensation is computed as the average of an individual s five highest years of earnings. The FRS Investment Plan is a defined contribution plan in which participants are vested after one year of service. The employer makes contributions each month based on a percentage of the employee s gross salary and membership class. The contribution percentage is the same whether participating in the Pension Plan or Investment Plan. Members in the Investment Plan decide how their funds are allocated between various investment accounts and the funds are portable upon termination if the participant is vested. Members in the Investment Plan are not eligible for participation in the Deferred Retirement Option Program (DROP). 14

200 ANNUAL AUDIT REPORT CLERK OF THE CIRCUIT COURT & COMPTROLLER NOTES TO FINANCIAL STATEMENTS (CONTINUED) SEPTEMBER 30, 2009 Deferred Retirement Option Program (DROP) is an elective program available for members of the FRS who are eligible for normal retirement. Under this program, a member effectively retires and continues covered employment for up to 5 years. While in DROP, the member s deferred monthly retirement benefits accumulate, earning interest and cost-of-living increases. When the DROP period is over, the participant terminates covered employment and begins receiving his/her predetermined monthly retirement benefit, as well as the accrued DROP benefit. Disability retirees are not eligible to participate in DROP and DROP participants do not qualify for disability retirement. The plans are noncontributory for employees and all contributions are made by participating FRS employers. Participating employer contributions are based upon state-wide rates established by the State of Florida. Average contribution rates for the fiscal year ended September 30, 2009 were as follows: regular employees, 9.85%, special risk employees, 20.92%, elected officials, 16.53%, senior management employees, 13.12%, and DROP participants, 10.91%. The Clerk s contributions to the Pension Plan, funded on a pay-as-you-go basis, were equal to the actuarially determined contribution requirements for each year. The Clerk s contributions to the Investment Plan were equal to the legislature-mandated contribution rates, which are equal to a percentage of the members gross monthly salary based on the members membership class. Contributions to both plans totaled $754,149, $846,043, and $831,033, for the years ended September 30, 2009, 2008, and 2007, respectively. Other Post Employment Benefit (OPEB) Plan The Clerk participates in the health insurance plan offered to employees of the BOCC and other County Elected Officials (the Board plan). Additionally, retirees and eligible dependants have the option of continuing in the Board plan at the same group rate as for active employees. In conjunction with the implementation of GASB Statement No. 45 during fiscal year end 2008 the BOCC engaged an actuarial firm to determine the estimated obligation associated with the post employment health insurance benefits as of September 30, 2008 for all participants of the Board plan. The actuary, using the same data and assumptions provided in 2008, updated the actuarial report for Costs attributed to the Clerk have been allocated based on the Clerk s payroll compared to total payroll of all participants in the Board plan. The Clerk s Annual Other Post-Employment Benefit (OPEB) cost for fiscal year 2009 was $332,894, and the employer contributions included in Personal Services expenditures in the Statement of Revenues, Expenditures, and Changes in Fund Balance were $125,823. The net OPEB obligation of the Clerk was $422,071, and the Unfunded Actuarial Accrued Liability, which is being amortized over a thirty year period as part of the Annual Required Contribution (ARC), was $3,309,940. Because these financial statements focus on current financial resources, they do not include the net OPEB obligation or any other long-term liability. A full presentation of the OPEB liabilities, funding status, and actuarial methods and assumptions is included in the 2009 BOCC s Annual Financial Report. 15

201 ANNUAL AUDIT REPORT CLERK OF THE CIRCUIT COURT & COMPTROLLER NOTES TO FINANCIAL STATEMENTS (CONTINUED) SEPTEMBER 30, 2009 Following are the components of the Clerk s net OPEB obligation at September 30, 2009: Normal Cost $145,195 Amortization of Unfunded Actuarial Accrued Liability (UAAL) 191,414 Annual Required Contribution (ARC) 336,609 Annual Required Contribution (ARC) 336,609 Interest on Net OPEB Obligation 8,333 Adjustment to ARC (12,048) Annual OPEB Cost 332,894 Estimated Employer Contributions Made (125,823) Increase in net OPEB Obligation 207,071 Net OPEB Obligation, October 1, ,000 Net OPEB Obligation, September 30, 2009 $422,071 Risk Management - The County has a risk management program to insure claims against the BOCC, Constitutional Officers, and Santa Rosa Island Authority for the following types of risks: Workers Compensation The County is covered for workers compensation claims through a policy with the Florida Municipal Insurance Trust. Coverage limits under the policy include statutory limits, as well as $1,000,000 bodily injury for each accident and $1,000,000 bodily injury by disease for each employee with an aggregate $1,000,000 policy limit. Prior to June 9, 2008, the County was self-insured up to a limit of $450,000 per occurrence with statutory limits. Casualty and Property Casualty limits are self-insured for $100,000 per claim with a $200,000 aggregate limit. Property limits are $50,000 - $250,000 self insured retentions per occurrence with excess limits of $500 million, $410 million excluding wind and $90 million including wind. The Clerk participated in the County s insurance program during fiscal year 2009 at a cost of $42,196. There also were no significant reductions in insurance coverage from the prior year and there have been no settlements which exceeded the Clerk s insurance coverage in any of the past three fiscal years. Long-Term Liabilities - As required by Chapter (3)(g), Rules of the Auditor General of the State of Florida, disclosures regarding long-term liabilities are as follows: Compensated Absences Balance 10/01/08 $1,778,907 Additions 627,238 Deletions (660,724) Balance 09/30/09 1,745,421 Less current portion (227,939) Long term balance $1,517,482 16

202 ANNUAL AUDIT REPORT CLERK OF THE CIRCUIT COURT & COMPTROLLER NOTES TO FINANCIAL STATEMENTS (CONTINUED) SEPTEMBER 30, 2009 Internal Service Fund - The Internal Service Fund, established in 2004, is designed to record the annual costs related to the Clerk s compensated absences policies, to record the short-term and long-term components of such liabilities (including payments to employees), and to collect and hold cash and investments necessary to liquidate such liabilities. The related costs associated with the fund will be recovered via charges to the general and court funds, in accordance with generally accepted criteria for establishment and use of an internal service fund. At September 30, 2009, the fund has an accumulated deficit of $522,313, which management intends to fund in future years. NOTE 4 CLAIMS AND CONTINGENCIES The Clerk is contingently liable with respect to lawsuits and other claims which might be filed incidental to the ordinary course of operations. In the opinion of management, based on the advice of legal counsel, there are no lawsuits or claims outstanding which will have a material adverse effect on the financial position of the Clerk s Office. 17

203 CLERK OF THE CIRCUIT COURT & COMPTROLLER COMBINING STATEMENT OF FIDUCIARY NET ASSETS - ALL AGENCY FUNDS SEPTEMBER 30, 2009 Court Juror and Domestic General Registry Witness Restitution Relations Trust Totals ASSETS Cash and cash equivalents $8,338,667 $93,803 $106,383 $16,284 $1,036,933 $9,592,070 Accounts receivable (net of allowance for uncollectibles) , ,141 Due from other funds 101, ,411 Total assets $8,440,078 $93,803 $106,383 $41,425 $1,036,933 $9,718,622 LIABILITIES Payable to others $0 $0 $106,383 $38,584 $7,984 $152,951 Due to other governmental units , ,841 Cash bonds ,028,949 1,028,949 Deposits - court registry 8,440, ,440,078 Advances - juror and witness payroll 0 93, ,803 Total liabilities $8,440,078 $93,803 $106,383 $41,425 $1,036,933 $9,718,622 18

204

205

206

207

208

209

210 ANNUAL AUDIT REPORT SHERIFF SEPTEMBER 30, 2009

211 ANNUAL AUDIT REPORT SHERIFF SEPTEMBER 30, 2009 TABLE OF CONTENTS Report of Independent Auditors Fund Financial Statements: Governmental Funds Balance Sheet... 3 Statement of Revenues, Expenditures, and Changes in Fund Balances... 4 Page Statement of Revenues, Expenditures, and Changes in Fund Balances Budget (GAAP Basis) and Actual Internal Service Fund Statement of Net Assets Statement of Revenues, Expenses, and Changes in Net Assets Statement of Cash Flows Fiduciary Fund Information Statement of Fiduciary Net Assets Agency Funds Notes to the Financial Statements Required Supplementary Information Schedule of Funding Progress Other Post Employment Benefit Plan Supplementary Information: Combining Balance Sheet Non-major Governmental (Special Revenue) Funds Combining Statement of Revenues, Expenditures, and Changes in Fund Balances Non-Major Governmental (Special Revenue) Funds Combining Statement of Revenues, Expenditures, and Changes in Fund Balance Budget (GAAP Basis) and Actual Non-Major Governmental (Special Revenue) Funds Combining Statement of Fiduciary Net Assets All Agency Funds... 36

212 ANNUAL AUDIT REPORT SHERIFF SEPTEMBER 30, 2009 TABLE OF CONTENTS (CONTINUED) Page Other Communications: 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 Schedule of Findings and Responses Management Letter Sheriff s Response to Management Letter... 45

213

214

215 SHERIFF BALANCE SHEET GOVERNMENTAL FUNDS Other Major Funds Non-major Total SEPTEMBER 30, 2009 Hurricane Governmental Governmental General Commissary Ivan Justice Cops Tech Funds Funds ASSETS Cash and cash equivalents $4,502,456 $270,865 $2,136,710 $169,329 $0 $19,809 $7,099,169 Receivables (net of allowance for uncollectibles) , ,795 Due from other funds 56,979 11, ,930 Due from other governmental units 189, , ,895 Inventory 415, ,172 Total assets $5,164,717 $328,311 $2,136,710 $169,329 $0 $75,894 $7,874,961 LIABILITIES Vouchers payable $659,598 $12,148 $0 $0 $0 $0 $671,746 Salaries payable 3,904, ,153 3,911,877 Due to other funds ,979 56,979 Due to other governmental units 600, ,136, ,737,105 Deferred revenue , , ,091 Total liabilities 5,164,717 12,148 2,136, , ,894 7,558,798 FUND BALANCES Reserved for inventory 415, ,172 Unreserved, reported in: General fund (415,172) (415,172) Special revenue funds 0 316, ,163 Fund balances 0 316, ,163 Total liabilities and fund balances $5,164,717 $328,311 $2,136,710 $169,329 $0 $75,894 $7,874,961 The accompanying notes are an integral part of the financial statements 3

216 SHERIFF STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES GOVERNMENTAL FUNDS Other Major Funds Non-major Total FOR THE YEAR ENDED SEPTEMBER 30, 2009 Hurricane Governmental Governmental General Commissary Ivan Justice Cops Tech Funds Funds Revenues: Intergovernmental $0 $0 $0 $0 $350,738 $264,298 $615,036 Charges for services 0 749, ,897 Fines and forfeitures , ,111 Investment income , ,389 Miscellaneous 0 5, ,946 Total revenues 0 755, , , ,298 1,848,379 Expenditures: Current: Public safety Personal services 63,375, , ,724 64,015,877 Operating expenditures 14,237, ,786 1,663, ,428 10,579 79,128 16,742,486 Capital outlay 109, , , ,159 18, ,888 Total expenditures 77,722, ,681 2,136, , , ,298 81,699,251 Excess (deficiency) of revenue over (under) expenditures (77,722,324) 8,162 (2,136,710) (79,850,872) Other financing sources (uses): Insurance reimbursements 69, ,160 Transfers in 78,717, ,041, ,759,208 Transfers out (1,064,681) (1,064,681) Total other financing sources (uses) 77,722, ,041, ,763,687 Net change in fund balances 0 8,162 (1,095,347) (1,087,185) Fund balances at beginning of year 0 308,001 1,095, ,403,348 Fund balances at end of year $0 $316,163 $0 $0 $0 $0 $316,163 The accompanying notes are an integral part of the financial statements 4

217 SHERIFF GENERAL FUND STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET (GAAP BASIS) AND ACTUAL FOR THE YEAR ENDED SEPTEMBER 30, 2009 Variance with Final Budget Original Final Positive Budget Budget Actual (Negative) Expenditures: Current: Public safety Personal services 63,592,321 63,592,321 63,375, ,449 Operating expenditures 15,057,524 15,057,524 14,237, ,388 Capital outlay 68, , ,316 27,844 Total expenditures 78,717,845 78,787,005 77,722,324 1,064,681 Excess (deficiency) of revenue over (under) expenditures (78,717,845) (78,787,005) (77,722,324) 1,064,681 Other financing sources (uses): Insurance reimbursements 0 69,160 69,160 0 Transfers in 78,717,845 78,717,845 78,717,845 0 Transfers out 0 0 (1,064,681) (1,064,681) Total other financing sources (uses) 78,717,845 78,787,005 77,722,324 (1,064,681) Net change in fund balances Fund balances at beginning of year Fund balances at end of year $0 $0 $0 $0 The accompanying notes are an integral part of the financial statements 5

218 SHERIFF COMMISSARY FUND STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET (GAAP BASIS) AND ACTUAL FOR THE YEAR ENDED SEPTEMBER 30, 2009 Variance with Final Budget Original Final Positive Budget Budget Actual (Negative) Revenues: Charges for services $0 $749,897 $749,897 $0 Miscellaneous 0 5,946 5,946 0 Total revenues 0 755, ,843 0 Expenditures: Current: Public safety Operating expenditures 0 569, ,786 58,480 Capital outlay 0 236, ,895 (83) Total expenditures 0 806, ,681 58,397 Excess (deficiency) of revenue over (under) expenditures 0 (50,235) 8,162 58,397 Fund balances at beginning of year 0 308, ,001 0 Fund balances at end of year $0 $257,766 $316,163 $58,397 The accompanying notes are an integral part of the financial statements 6

219 SHERIFF HURRIANCE IVAN STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET (GAAP BASIS) AND ACTUAL FOR THE YEAR ENDED SEPTEMBER 30, 2009 Variance with Final Budget Original Final Positive Budget Budget Actual (Negative) Expenditures: Current: Public safety Personal services ,281 (473,281) Operating expenditures 0 0 1,663,429 (1,663,429) Total expenditures 0 0 2,136,710 (2,136,710) Excess (deficiency) of revenue over (under) expenditures 0 0 (2,136,710) (2,136,710) Other financing sources (uses): Transfers in 0 0 1,041,363 1,041,363 Total other financing sources (uses) 0 0 1,041,363 1,041,363 Net change in fund balance 0 0 (1,095,347) (1,095,347) Fund balance at beginning of year 0 0 1,095,347 1,095,347 Fund balance at end of year $0 $0 $0 $0 The accompanying notes are an integral part of the financial statements 7

220 SHERIFF JUSTICE FUND STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET (GAAP BASIS) AND ACTUAL FOR THE YEAR ENDED SEPTEMBER 30, 2009 Variance with Final Budget Original Final Positive Budget Budget Actual (Negative) Revenues: Fines and forfeitures $0 $645,440 $476,111 ($169,329) Investment income 0 1,389 1,389 0 Total revenues 0 646, ,500 (169,329) Expenditures: Current: Public safety Operating expenditures 0 357, , ,327 Capital outlay 0 289, ,072 53,002 Total expenditures 0 646, , ,329 Excess (deficiency) of revenue over (under) expenditures Fund balance at beginning of year Fund balance at end of year $0 $0 $0 $0 The accompanying notes are an integral part of the financial statements 8

221 SHERIFF COPS TECH FUND STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET (GAAP BASIS) AND ACTUAL FOR THE YEAR ENDED SEPTEMBER 30, 2009 Variance with Final Budget Original Final Positive Budget Budget Actual (Negative) Revenues: Intergovernmental $0 $350,738 $350,738 $0 Total revenues 0 350, ,738 0 Expenditures: Current: Public safety Operating expenditures 0 10,579 10,579 0 Capital outlay 0 340, ,159 0 Total expenditures 0 350, ,738 0 Excess (deficiency) of revenue over (under) expenditures Fund balance at beginning of year Fund balance at end of year $0 $0 $0 $0 The accompanying notes are an integral part of the financial statements 9

222 SHERIFF INTERNAL SERVICE FUND STATEMENT OF NET ASSETS SEPTEMBER 30, 2009 ASSETS Current assets: Cash and cash equivalents $2,432,622 Total current assets 2,432,622 LIABILITIES Current liabilities: Compensated absences payable 2,432,622 Total current liabilities 2,432,622 Non-current liabilities: Compensated absences payable 15,216,931 Total non-current liabilities 15,216,931 Total liabilities 17,649,553 NET ASSETS Unrestricted (deficit) ($15,216,931) The accompanying notes are an integral part of the financial statements. 10

223 SHERIFF INTERNAL SERVICE FUND STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN NET ASSETS FOR THE YEAR ENDED SEPTEMBER 30, 2009 Operating revenues: Charges for services $1,227,285 Total operating revenues 1,227,285 Operating expenses: Personal services 2,680,272 Total operating expenses 2,680,272 Change in net assets (1,452,987) Net assets (deficit) at beginning of year (13,763,944) Net assets (deficit) at end of year ($15,216,931) The accompanying notes are an integral part of the financial statements. 11

224 SHERIFF INTERNAL SERVICE FUND STATEMENT OF CASH FLOWS FOR THE YEAR ENDED SEPTEMBER 30, 2009 Cash used by operating activities: Receipts from interfund services provided $1,227,285 Payments for personal services (1,625,651) Net increase (decrease) in cash and cash equivalents (398,366) Cash and cash equivalents at beginning of year 2,830,988 Cash and cash equivalents at end of year $2,432,622 Reconciliation of change in net assets (loss) to net cash provided by (used in) operating activities: Change in net assets (loss) ($1,452,987) Increase in liabilities: Compensated absences payable 1,054,621 Net cash used in operating activities ($398,366) The accompanying notes are an integral part of the financial statements. 12

225 SHERIFF STATEMENT OF FIDUCIARY NET ASSETS - AGENCY FUNDS SEPTEMBER 30, 2009 ASSETS Cash and cash equivalents $1,339,445 Due from other governmental units 1,200 Total assets $1,340,645 LIABILITIES Vouchers payable $73,085 Deposits 1,217,850 Due to other funds 11,951 Due to other governmental units 35,868 Other current liabilities 1,891 Total liabilities $1,340,645 The accompanying notes are an integral part of the financial statements. 13

226 ANNUAL AUDIT REPORT SHERIFF NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 2009 NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The Office of the Sheriff of Escambia County, Florida (the Sheriff ), is established as a constitutional official by Article VIII, Section 1 (d) of the Constitution of the State of Florida. The accounting policies of the Sheriff conform to accounting principles generally accepted in the United States of America as applicable to local governments. The following is a summary of the more significant accounting policies. PRINCIPLES USED IN DETERMINING THE SCOPE OF ENTITY FOR FINANCIAL REPORTING PURPOSES Although the Sheriff is operationally autonomous from the Escambia County Board of County Commissioners (Board), it does not hold sufficient corporate powers of its own to be considered a legally separate entity for financial reporting purposes. Therefore, the Sheriff is reported as a part of the primary government of Escambia County, Florida. These special-purpose financial statements are not intended to be a complete presentation of the financial position and results of operations of Escambia County, Florida taken as a whole. As permitted by Chapter (4), Rules of the Auditor General State of Florida, the special-purpose financial statements consist of only the fund level financial statements as defined in Governmental Accounting Standards Board (GASB) No. 34, and do not include presentations of government-wide financial statements of the Sheriff. BASIS OF PRESENTATION FUND ACCOUNTING The Sheriff s financial records and accounts are maintained in accordance with the principles of fund accounting, whereby resources are classified for accounting and reporting purposes into funds to insure compliance with any special restrictions or limitations on the use of such resources. The Sheriff reports the following major governmental funds: General Fund The general fund is the general operating fund of the Sheriff. It is used to account for all financial resources except those required to be accounted for in other funds. Commissary Fund The fund accounts for inmate commissary sales, with revenues used to cover operational expenses of the fund with any remaining profits available for inmate welfare and recreation. Hurricane Ivan Fund The fund was established to account for costs and related grant reimbursements attributable to Hurricane Ivan. Justice Fund The fund was established to account for the costs and revenues related to the Department of Justice Law Enforcement Trust Fund. Cops Tech Fund The fund was established to account for costs and related grant reimbursements attributable to the Community Oriented Policing Services (COPS) technical grant. Additionally, the Sheriff reports the following funds: Special Revenue Funds The Sheriff maintains special revenue funds to account for grant activity. Proprietary Fund: Internal Service Fund The internal service fund accounts for balances and activity related to the Sheriff s compensated absences policies. 14

227 ANNUAL AUDIT REPORT SHERIFF NOTES TO FINANCIAL STATEMENTS (CONTINUED) SEPTEMBER 30, 2009 Fiduciary Funds: Agency Funds Agency funds are used to account for assets held as an agency for individuals, private organizations or other governments. Agency funds are custodial in nature (assets equal liabilities) and do not involve measurement of the results of operations. BASIS OF ACCOUNTING 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. For this purpose, the Sheriff considers revenues to be available if they are collected within 60 days of the end of the current fiscal period. Expenditures generally are recorded when a liability is incurred. Capital asset acquisitions are recorded as expenditures in governmental funds. Under terms of grant agreements, the Sheriff funds certain programs by a combination of specific costreimbursement grants, categorical block grants, and general revenues. Thus, when the program expenses are incurred, there are both restricted and unrestricted net assets available to finance the program. It is the Sheriff s policy to first apply cost-reimbursement grant resources to such programs, followed by categorical block grants, and then by general revenues. Proprietary funds (the internal service fund) are reported using the accrual basis of accounting. Proprietary funds distinguish operating revenues and expenses from nonoperating items. Operating revenues and expenses generally result from providing services and producing and delivering goods in connection with the proprietary fund s principal ongoing operations. The principal operating revenues of the Sheriff s internal service fund are charges to funds related to the Sheriff s compensated absences activity. Operating expenses for the internal service fund include recognition of increases in the compensated absences liabilities. All revenues and expenses not meeting these definitions are reported as nonoperating revenues and expenses. Fiduciary fund financial statements are reported using the accrual basis of accounting. BUDGETS AND BUDGETARY ACCOUNTING The Sheriff operates under budget procedures pursuant to Florida Statutes. The budget is adopted on a basis consistent with accounting principles generally accepted in the United States of America. The budget for the Sheriff s general fund is a legally adopted budget whereas budgets for the special revenue funds are prepared and used solely as an internal management tool and are not considered legally adopted. The legal level of budgetary control is at the fund level. CASH AND CASH EQUIVALENTS Cash equivalents are highly liquid investments with original maturities of three months or less when purchased. 15

228 ANNUAL AUDIT REPORT SHERIFF NOTES TO FINANCIAL STATEMENTS (CONTINUED) SEPTEMBER 30, 2009 INVENTORY Inventory, which consists of expendable supplies held for consumption, is stated at lower of cost or market, determined primarily by the first-in, first-out method. The cost is recorded as an expenditure at the time individual inventory items are purchased and reported as inventory based on physical inventory of supplies on hand at year end. COMPENSATED ABSENCES The Sheriff and the Florida Police Benevolent Association, Inc., the law enforcement bargaining unit, have several labor agreements representing employees of the Sheriff. Under these labor agreements, employees may accumulate a limited amount of earned but unused sick leave, annual leave, and compensatory time, which will be paid upon separation from service. CAPITAL ASSETS Capital assets (vehicles, equipment and other tangible property costing at least $1,000 with a useful life of more than one year) are recorded as expenditures in the acquiring fund when purchased. Donated capital assets are recorded at estimated fair market value on the date donated. Title to buildings and improvements vests with the Board and the Board records the capitalization of these assets and any related depreciation, in the County s government-wide financial statements. Depreciation of equipment is calculated using the straight-line method with an estimated useful life of five years. NOTE 2 SPECIAL REPORTING TREATMENTS Appropriations from the Board are recorded as transfers in in the General Fund on the Statement of Revenues, Expenditures and Changes in Fund Balance Budget (GAAP Basis) and Actual. In accordance with Florida Statutes, the excess of General Fund revenues and other financing sources (not otherwise transferred to another fund) over expenditures is returned to the Board at year-end and is reported in transfers out on the Statement of Revenues, Expenditures and Changes in Fund Balance Budget (GAAP Basis) and Actual. At September 30, 2009, Board transfers totaled $23,318. ASSETS NOTE 3 DETAILED NOTES ON ALL FUNDS Cash Deposits and Investments The Sheriff has an investment policy governed by the provisions of Florida Statute as to the type of investments that can be made. Authorized investments include the Local Government Surplus Trust Fund or any intergovernmental investment pool authorized pursuant to the Florida Interlocal Cooperation Act of 1969, Security and Exchange registered money market funds with the highest credit quality rating from a recognized rating agency, savings accounts or certificates of deposit in state-certified depositories, notes, bonds or T-bills or other direct obligations of the United 16

229 ANNUAL AUDIT REPORT SHERIFF NOTES TO FINANCIAL STATEMENTS (CONTINUED) SEPTEMBER 30, 2009 States Treasury, federal agencies and instruments, and repurchase agreements. Deposits may be exposed to custodial credit risk, which is the risk of loss in the event of a bank failure. The Sheriff manages custodial credit risk by maintaining deposits in financial institutions designated as Qualified Public Depositories by the State Treasurer. All deposits were fully insured through a combination of Federal depository insurance and participation of the financial institution in the multiple financial institution collateral pool as specified in Chapter 280, Florida Statutes. Accordingly, risk of loss due to bank failure is not significant. At September 30, 2009, the reported amount of the Sheriff s cash balances was $10,871,236, and the bank balance was $11,299,255 consisting entirely of deposits with financial institutions in checking and money market accounts. Changes in Capital Assets It is not appropriate to report capital assets and the related depreciation in the governmental fund financial statements. However, the following information is reported as a component of the County s government-wide financial statements and is required to be disclosed by Chapter (3)(g) Rules of the Auditor General of the State of Florida: Balance Balance 10/01/08 Additions Deletions 09/30/09 Equipment $25,658,179 $3,797,326 ($2,367,739) $27,087,766 Less accumulated depreciation (19,336,672) (2,908,743) 2,206,395 (20,039,020) Net $6,321,507 $888,583 ($161,344) $7,048,746 Depreciation expense for the year ended September 30, 2009 was $2,908,743. LIABILITIES Pension and Retirement Plan - Substantially all full-time employees of the Sheriff are covered by the Florida Retirement System (FRS). The FRS was established in 1970 by Chapter 121, Florida Statutes and is administered by the Florida Department of Management Services, Division of Retirement. Changes to the FRS can be made only by an act of the Florida Legislature. Rules governing the operation and administration of the system may be found in Chapter 60S of the Florida Administrative Code. The FRS issues a publicly available financial report that includes financial statements and required supplementary information. The report may be obtained by writing to FRS, 2639-C North Monroe Street, Tallahassee, Florida The FRS offers two retirement plans the FRS Pension Plan and the FRS Investment Plan. An employee may participate in only one of the plans. The FRS Pension Plan is a multiple employer cost sharing defined benefit plan which provides retirement and disability benefits, annual cost-of-living adjustments, and death benefits to plan members and beneficiaries. Normal retirement benefits are available to employees who retire at age 62 with 6 or more years of service, or to those employees who have at least 30 years of creditable service, regardless of age. Retirement age and years of service requirements may vary depending on membership class. 17

230 ANNUAL AUDIT REPORT SHERIFF NOTES TO FINANCIAL STATEMENTS (CONTINUED) SEPTEMBER 30, 2009 Early retirement is available after 6 years of service with a 5% reduction of benefits for each year prior to the normal retirement age. Retirement benefits are based upon age, average compensation and yearsof-service credit where average compensation is computed as the average of an individual s five highest years of earnings. The FRS Investment Plan is a defined contribution plan in which participants are vested after one year of service. The employer makes contributions each month based on a percentage of the employee s gross salary and membership class. The contribution percentage is the same whether participating in the Pension Plan or Investment Plan. Members in the Investment Plan decide how their funds are allocated between various investment accounts and the funds are portable upon termination if the participant is vested. Members in the Investment Plan are not eligible for participation in the Deferred Retirement Option Program (DROP). Deferred Retirement Option Program (DROP) is an elective program for members of the FRS who are eligible for normal retirement. Under this program, a member effectively retires and continues covered employment for up to 5 years. While in DROP, the member s deferred monthly retirement benefits accumulate, earning interest and cost-of-living increases. When the DROP period is over, the participant terminates covered employment and begins receiving his/her predetermined monthly retirement benefit, as well as the accrued DROP benefit. Disability retirees are not eligible to participate in DROP and DROP participants do not qualify for disability retirement. The plans are noncontributory for employees and all contributions are made by participating FRS employers. Participating employer contributions are based upon state-wide rates established by the State of Florida. Average contribution rates for the fiscal year ended September 30, 2009 were as follows: regular employees, 9.85%, special risk employees, 20.92%, elected officials, 16.53%, senior management employees, 13.12%, and DROP participants, 10.91%. The Sheriff s contributions to the Pension Plan, funded on a pay-as-you-go basis, were equal to the actuarially determined contribution for each year. Contributions to the Investment Plan were equal to the legislature-mandated contribution rates, which are equal to a percentage of the members gross monthly salary based on the members membership class. Contributions to both plans totaled $7,255,976, $7,450,765, and $7,584,963, for the years ended September 30, 2009, 2008, and 2007, respectively. Other Post Employment Benefit (OPEB) Plan Post Employment Benefits other than pension are provided by the Sheriff in the form of health insurance for retired participants at the same rate as active participants. In health insurance plans where a government s retirees and current employees are insured together as a group, the premiums paid by the retirees may be lower than they would have been if the retirees were insured separately. This is called an implicit rate subsidy. In conjunction with the implementation of GASB Statement No. 45 during fiscal year 2008, the Board, on behalf of the Sheriff, engaged an actuarial firm to determine the estimated obligation associated with the post employment single-employer health insurance plan. The actuary, using the same data and assumptions provided in 2008, updated the actuary report for The Sheriff may amend the Other Post Employment Benefit (OPEB) plan at its discretion. At October 1, 2008, the date of the latest actuarial valuation, plan participation consisted of: OPEB plan participants 1,072 Retirees receiving benefits 379 The Sheriff has the authority to establish and amend the OPEB funding policy, and is not required by law or other contractual agreement to provide funding for the implicit rate subsidy other than the pay-as-yougo amount necessary to provide current benefits for participants in its health insurance plan. During 2009, the Sheriff paid approximately $471,000 as funding of the implicit rate subsidy OPEB. 18

231 ANNUAL AUDIT REPORT SHERIFF NOTES TO FINANCIAL STATEMENTS (CONTINUED) SEPTEMBER 30, 2009 The Sheriff s annual OPEB cost (expense) is calculated based on the Annual Required Contribution (ARC) of the employer, an amount actuarially determined in accordance with GASB Statement No. 45. The ARC represents a level of funding that, if paid on an ongoing basis, is projected to cover normal cost each year and to amortize any unfunded actuarial liabilities (or funding excess) over a period not to exceed thirty years. The following table shows the components of the Sheriff s OPEB cost for the year, the amount actually contributed to the plan, and changes in the Sheriff s net OPEB obligation: For the Fiscal Year Ending 9/30/2009 Determination of Annual Required Contribution (ARC) Normal cost at year end $555,045 Amortization of UAAL 689,491 Annual Required Contribution (ARC) $1,244,536 Annual OPEB Cost and Net OPEB Obligation Annual Required Contribution (ARC) $1,244,536 Interest on net OPEB ogligation 30,906 Adjustment to annual required contribution (44,683) Annual OPEB cost (expense) 1,230,759 Employer contributions made* (470,688) Increase in net OPEB obligation 760,071 Net OPEB obligation - beginning of year 772,655 Estimated Net OPEB obligation - end of year $1,532,726 *Actuarially estimated employer contributions for 2009 The Sheriff s annual OPEB cost, the percentage of annual OPEB cost contributed to the plan, and the net OPEB obligation for 2009 and two preceding years were as follows: Annual Percentage of Net OPEB OPEB Cost OPEB Fiscal year ended Cost Contributed Obligation 9/30/2007 n/a n/a n/a 9/30/2008 $1,190, % $772,655 9/30/2009 $1,230, % $1,532,726 Funding Policy and Status As of October 1, 2008, the most recent actuarial valuation date, the plan was 0% funded. The actuarial accrued liability (AAL) was $11,922,700, and the actuarial value of assets was $0, resulting in an unfunded actuarial accrued liability (UAAL) of $11,922,700. The covered payroll (annual payroll of active employees covered by the OPEB plan) was $43.1 million, and the ratio of the UAAL to the covered payroll was 27.7%. Actuarial Methods and Assumptions: Actuarial valuations of an ongoing plan involve 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. Amounts determined regarding the funded status of the plan and the annual required contributions of the employer are subject to continual revision as actual results are compared with past expectations and new estimates are made about the future. The schedule of funding progress, presented as required 19

232 ANNUAL AUDIT REPORT SHERIFF NOTES TO FINANCIAL STATEMENTS (CONTINUED) SEPTEMBER 30, 2009 supplementary information following the notes to the financial statements, 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. Calculations for financial reporting purposes are based on the plan as understood by the employer and the plan members and include the types of benefits provided at the time of each valuation and the historical pattern of sharing of benefit costs between the employer and plan members to that point. The actuarial methods and assumptions used include techniques that are designed to reduce the effects of short-term volatility in actuarial accrued liabilities and the actuarial value of assets, consistent with the long-term perspective of the calculations. The OPEB-specific actuarial assumptions used in the actuarial valuation described below are consistent with those used by the FRS actuary and adopted by the FRS. The actuarial methods are: Actuarial cost method Amortization method Amortization period (closed) Asset valuation method Unit Credit actuarial cost method Level dollar 30 years Market value of assets, if any, as of valuation date The actuarial assumptions are: Investment rate of return Healthcare cost trend rate 4.0% compounded annually 8.75% reduced by decrements of 0.25% to 0.50% annually to an ultimate rate of 4.25% after 14 years Risk Management The Sheriff participates in the Florida Municipal Insurance Trust with an annual premium cost for the year ended September 30, 2009 of approximately $1,822,000. Coverage limits under the policy include $1,000,000 bodily injury for each accident and $1,000,000 bodily injury by disease for each employee with a $1,000,000 limit. The plan calls for an annual final premium calculation after fiscal year end using the actual premium basis, proper classifications, and experience modifications and rates that lawfully apply to the Sheriff. A final premium adjustment has not been calculated for the year ended September 30, During the fiscal year ended September 30, 2009, the Sheriff had no significant reductions in insurance coverage from the prior year. In addition, there have been no settlements which exceeded the Sheriff s insurance coverage in any of the three past fiscal years. 20

233 ANNUAL AUDIT REPORT SHERIFF NOTES TO FINANCIAL STATEMENTS (CONTINUED) SEPTEMBER 30, 2009 Long-Term Debt Compensated Absences As required by Chapter (3)(g), Rules of the Auditor General of the State of Florida, disclosures regarding long-term liabilities area as follows: Balance 10/01/08 $16,594,932 Additions 2,680,272 Deletions (1,625,651) Balance 09/30/09 17,649,553 Less current portion (2,432,622) Long term balance $15,216,931 Significant Commitments The Sheriff contracted with a vendor under a cancelable agreement to provide for the delivery of medical care to individuals under the custody and control of the Sheriff. The agreement expired September 2009, and was not renewed by the Sheriff. Under the agreement, the Sheriff paid a base price plus a per inmate day fee for those inmates assigned to the Work Camp. Financial considerations were based on estimated inmate populations and were subject to adjustment. Medical service expense for the year ended September 30, 2009 was approximately $5 million. The Sheriff entered into a cancelable agreement with a vendor to provide management services, food, materials, and supplies necessary to feed the inmate population at the corrections facility and the Escambia County Jail, through February 28, Upon mutual agreement, the agreement may be renewed for two one-year periods and each year thereafter. Food service expense under this contract for the year ended September 30, 2009 was approximately $1.9 million. Internal Service Fund The Internal Service Fund, established in 2004, is designed to record the annual costs related to the Sheriff s Compensated Absences Policies, to record the short-term and long-term components of such liabilities (including payments to employees), and to collect and hold cash and investments necessary to liquidate such liabilities. The related costs associated with the fund will be recovered via charges to the general fund and other funds having employees, in accordance with generally accepted criteria for establishment and use of an internal service fund. During 2009, the fund s accumulated deficit increased by approximately $1.45 million. Management plans to eliminate the $15.2 million accumulated deficit over a reasonable period of time. NOTE 4 CLAIMS AND CONTINGENCIES The Sheriff is contingently liable with respect to lawsuits and other claims incidental to the ordinary course of operations. In the opinion of management, based on the advice of legal counsel, the ultimate disposition of these lawsuits or claims will not have a material adverse effect on the financial position of the Sheriff. The Sheriff receives significant financial assistance from federal and state agencies primarily in the form of operating grants. The disbursement of funds received under these programs generally requires compliance with terms and conditions specified in the grant agreements and is subject to audit by grantor agencies. Disallowed claims, if any, resulting from such audits may become liabilities of the Sheriff. 21

234 ANNUAL AUDIT REPORT SHERIFF NOTES TO FINANCIAL STATEMENTS (CONTINUED) SEPTEMBER 30, 2009 During 2009, the Office of Inspector General (OIG) of the US Department of Homeland Security concluded its review of funding provided to the Sheriff from FEMA relating to Hurricane Ivan and recommended that approximately $2.1 million of the $6.6 million awarded to the Sheriff should be disallowed. At September 30, 2009, the Sheriff has reported on its balance sheet a due to other governmental units of approximately $2.1 million, however, the Sheriff is appealing the OIG s recommendations and a final resolution has not yet been reached. NOTE 5 FEDERAL AND STATE FINANCIAL ASSISTANCE During the year, the Sheriff received, or maintained assets to be used for, federal and state financial assistance under the following programs: United States Treasury Department Law Enforcement Trust United States Justice Department Law Enforcement Trust JAG Federal and State Grants VCDC Grants Safe Neighborhood Grant BPV Grant FBI Task Force Operation Falcon Disaster Recovery Fund Hurricane Ivan These programs are presented in the schedules of federal and state financial assistance within the Escambia County financial report. NOTE 6 INTERFUND RECEIVABLES, PAYABLES, AND TRANSFERS Transfers Transfers Fund Receivable Payable Out In General Fund $56,979 $0 $1,064,681 $0 Commissary Fund 11, Hurricane Ivan Fund ,041,363 Non-major Governmental Funds 0 56, Fiduciary Funds - Agency Funds 0 11, $68,930 $68,930 $1,064,681 $1,041,363 The General Fund receivable consists primarily of advances made to the nonmajor governmental funds, which will be paid back after reimbursement is received from grantors. The Commissary Fund receivable represents amounts owed from an agency fund for commissions earned on sales of commissary products. Of the $1,064,681 reported as transfers out in the General Fund $23,318 was transferred to the Board and $1,041,363 was transferred to the Hurricane Ivan Fund to fund amounts owed to a grantor. 22

235 ANNUAL AUDIT REPORT SHERIFF NOTES TO FINANCIAL STATEMENTS (CONTINUED) SEPTEMBER 30, 2009 NOTE 7 RELATED PARTY TRANSACTIONS During 2009, the Board purchased operating supplies of approximately $197,000 and capital assets of $2,900,000 on behalf of the Sheriff. These purchases are included in the Board s expenditures. The capital assets were transferred to the Sheriff during the year and are included in the Sheriff s current year capital asset additions. 23

236 REQUIRED SUPPLEMENTARY INFORMATION

237 ANNUAL AUDIT REPORT SHERIFF REQUIRED SUPPLEMENTARY INFORMATION SEPTEMBER 30, 2009 Other Post Employment Benefit Plan Schedule of Funding Progress Unfunded UAAL Actuarial Actuarial Acturial Actuarial % of Valuation Value Liabilities Liabilities Funded Covered Covered Date of Assets (AAL) (1) (UAAL) (2) Ratio Payroll Payroll October 1, 2006 n/a n/a n/a n/a n/a n/a October 1, 2007 $0 $11,360,889 $11,360,889 $0 $45,632, % October 1, 2008 $0 $11,922,700 $11,922,700 $0 $43,066, % (1) Actuarial liability determined under the unit credit cost method. (2) Actuarial liability less actuarial value of assets, if any. 24

238 SHERIFF COMBINING BALANCE SHEET NON-MAJOR GOVERNMENTAL FUNDS SPECIAL REVENUE FUNDS SEPTEMBER 30, 2009 Treasury Department Safe Law Enforcement JAG VCDC JAG State Neighborhood JAG Federal Assets Trust State G-Unit 2007 Grant Revolving II Grant III Grant Cash and cash equivalents $467 $3,953 $0 $0 $894 $0 $0 Due from other governmental units 0 38, Total assets $467 $42,289 $0 $0 $894 $0 $0 Liabilities and Fund Balances Liabilities: Salaries payable $0 $3,953 $0 $0 $0 $0 $0 Due to other funds 0 38, Deferred revenue Total liabilities , Fund balances: Unreserved - undesignated Total fund balances Total liabilities and fund balances $467 $42,289 $0 $0 $894 $0 $0 (Continued) 25

239 SHERIFF COMBINING BALANCE SHEET NON-MAJOR GOVERNMENTAL FUNDS SPECIAL REVENUE FUNDS (Continued) SEPTEMBER 30, 2009 Assets Cash and cash equivalents Due from other governmental units Total assets BPV FBI Disaster Operation VCDC VCDC Grant Task Force Relief Fund Falcon Klug Baby Girl Totals $0 $0 $11,295 $3,200 $0 $0 $19,809 5, , ,085 $5,999 $316 $11,295 $14,634 $0 $0 $75,894 Liabilities and Fund Balances Liabilities: Salaries payable Due to other funds Deferred revenue Total liabilities Fund balances: Unreserved - undesignated Total fund balances Total liabilities and fund balances $0 $0 $0 $3,200 $0 $0 $7,153 5, , , , ,762 5, ,295 14, , $5,999 $316 $11,295 $14,634 $0 $0 $75,894 26

240 SHERIFF COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - NONMAJOR GOVERNMENTAL FUNDS - SPECIAL REVENUE FUNDS FOR THE YEAR ENDED SEPTEMBER 30, 2009 Treasury Department Safe Law Enforcement JAG VCDC JAG State Neighborhood JAG Federal Trust State G-Unit 2007 Grant Revolving II Grant III Grant Revenues: Intergovernmental $0 $46,215 $1,209 $33,840 $0 $546 $23,092 Total revenues 0 46,215 1,209 33, ,092 Expenditures: Current: Public safety Personal services 0 10,024 1,209 30, Operating expenditures 0 36, , ,495 Capital outlay ,597 Total expenditures 0 46,215 1,209 33, ,092 Excess (deficiency) of revenue over (under) expenditures Fund balances at beginning of year Fund balances at end of year $0 $0 $0 $0 $0 $0 $0 (Continued) 27

241 SHERIFF COMBINING STATEMENT OF REVENUES, EXPENDITUR AND CHANGES IN FUND BALANCES - NONMAJOR GOVERNMENTAL FUNDS - SPECIAL REVENUE FUNDS (Continued) FOR THE YEAR ENDED SEPTEMBER 30, 2009 Revenues: Intergovernmental Total revenues Expenditures: Current: Public safety Personal services Operating expenditures Capital outlay Total expenditures Excess (deficiency) of revenue over (under) expenditures Fund balances at beginning of year Fund balances at end of year BPV FBI Disaster Operation VCDC VCDC Grant Task Force Relief Fund Falcon Klug Baby Girl Totals $5,999 $2,806 $29,256 $24,949 $15,177 $81,209 $264,298 5,999 2,806 29,256 24,949 15,177 81, , , ,949 15,177 81, ,724 5, , , , ,446 5,999 2,806 29,256 24,949 15,177 81, , $0 $0 $0 $0 $0 $0 $0 28

242 SHERIFF COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - BUDGET (GAAP BASIS) AND ACTUAL NON-MAJOR GOVERNMENTAL FUNDS - SPECIAL REVENUE FUNDS FOR THE YEAR ENDED SEPTEMBER 30, 2009 Treasury Law Enforcement Trust JAG State Variance- Variance- Original Final positive Original Final positive Budget Budget Actual (negative) Budget Budget Actual (negative) Revenues: Intergovernmental $0 $0 $0 $0 $0 $46,215 $46,215 $0 Fines and forfeitures (467) Total revenues (467) 0 46,215 46,215 0 Expenditures: Current: Public safety Personal services ,215 10,024 36,191 Operating expenditures ,191 (36,191) Capital outlay Total expenditures ,215 46,215 0 Excess (deficiency) of revenue over (under) expenditures Fund balances at beginning of year Fund balances at end of year $0 $0 $0 $0 $0 $0 $0 $0 (Continued) 29

243 SHERIFF COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - BUDGET (GAAP BASIS) AND ACTUAL NON-MAJOR GOVERNMENTAL FUNDS - SPECIAL REVENUE FUNDS (Continued) FOR THE YEAR ENDED SEPTEMBER 30, 2009 Revenues: Intergovernmental Fines and forfeitures Total revenues Expenditures: Current: Public safety Personal services Operating expenditures Capital outlay Total expenditures Excess (deficiency) of revenue over (under) expenditures Fund balances at beginning of year Fund balances at end of year VCDC G-Unit JAG State 2007 Grant Variance- Variance- Original Final positive Original Final positive Budget Budget Actual (negative) Budget Budget Actual (negative) $0 $1,209 $1,209 $0 $0 $33,840 $33,840 $ ,209 1, ,840 33, ,209 1, ,840 30,804 3, ,036 (3,036) ,209 1, ,840 33, $0 $0 $0 $0 $0 $0 $0 $0 (Continued) 30

244 SHERIFF COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - BUDGET (GAAP BASIS) AND ACTUAL NON-MAJOR GOVERNMENTAL FUNDS - SPECIAL REVENUE FUNDS (Continued) FOR THE YEAR ENDED SEPTEMBER 30, 2009 Revenues: Intergovernmental Fines and forfeitures Total revenues Expenditures: Current: Public safety Personal services Operating expenditures Capital outlay Total expenditures Excess (deficiency) of revenue over (under) expenditures Fund balances at beginning of year Fund balances at end of year Revolving Safe Neighborhood II Grant Variance- Variance- Original Final positive Original Final positive Budget Budget Actual (negative) Budget Budget Actual (negative) $0 $0 $0 $0 $0 $546 $546 $ $0 $0 $0 $0 $0 $0 $0 $0 (Continued) 31

245 SHERIFF COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - BUDGET (GAAP BASIS) AND ACTUAL NON-MAJOR GOVERNMENTAL FUNDS - SPECIAL REVENUE FUNDS (Continued) FOR THE YEAR ENDED SEPTEMBER 30, 2009 Revenues: Intergovernmental Fines and forfeitures Total revenues Expenditures: Current: Public safety Personal services Operating expenditures Capital outlay Total expenditures Excess (deficiency) of revenue over (under) expenditures Fund balances at beginning of year Fund balances at end of year JAG Federal III Grant BPV Grant Variance- Variance- Original Final positive Original Final positive Budget Budget Actual (negative) Budget Budget Actual (negative) $0 $34,613 $23,092 ($11,521) $0 $5,999 $5,999 $ ,613 23,092 (11,521) 0 5,999 5, ,016 13,495 11, ,999 5, ,597 9, ,613 23,092 11, ,999 5, $0 $0 $0 $0 $0 $0 $0 $0 (Continued) 32

246 SHERIFF COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - BUDGET (GAAP BASIS) AND ACTUAL NON-MAJOR GOVERNMENTAL FUNDS - SPECIAL REVENUE FUNDS (Continued) FOR THE YEAR ENDED SEPTEMBER 30, 2009 Revenues: Intergovernmental Fines and forfeitures Total revenues Expenditures: Current: Public safety Personal services Operating expenditures Capital outlay Total expenditures Excess (deficiency) of revenue over (under) expenditures Fund balances at beginning of year Fund balances at end of year FBI Task Force Disaster Response Variance- Variance- Original Final positive Original Final positive Budget Budget Actual (negative) Budget Budget Actual (negative) $0 $7,500 $2,806 ($4,694) $0 $29,256 $29,256 $ ,500 2,806 (4,694) 0 29,256 29, ,500 2,806 4, ,407 20, ,849 8, ,500 2,806 4, ,256 29, $0 $0 $0 $0 $0 $0 $0 $0 (Continued) 33

247 SHERIFF COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - BUDGET (GAAP BASIS) AND ACTUAL NON-MAJOR GOVERNMENTAL FUNDS - SPECIAL REVENUE FUNDS (Continued) FOR THE YEAR ENDED SEPTEMBER 30, 2009 Revenues: Intergovernmental Fines and forfeitures Total revenues Expenditures: Current: Public safety Personal services Operating expenditures Capital outlay Total expenditures Excess (deficiency) of revenue over (under) expenditures Fund balances at beginning of year Fund balances at end of year Operation Falcon VCDC Klug Variance- Variance- Original Final positive Original Final positive Budget Budget Actual (negative) Budget Budget Actual (negative) $0 $30,000 $24,949 ($5,051) $0 $15,177 $15,177 $ ,000 24,949 (5,051) 0 15,177 15, ,000 24,949 5, ,177 15, ,000 24,949 5, ,177 15, $0 $0 $0 $0 $0 $0 $0 $0 (Continued) 34

248 SHERIFF COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - BUDGET (GAAP BASIS) AND ACTUAL NON-MAJOR GOVERNMENTAL FUNDS - SPECIAL REVENUE FUNDS (Continued) FOR THE YEAR ENDED SEPTEMBER 30, 2009 Revenues: Intergovernmental Fines and forfeitures Total revenues Expenditures: Current: Public safety Personal services Operating expenditures Capital outlay Total expenditures Excess (deficiency) of revenue over (under) expenditures Fund balances at beginning of year Fund balances at end of year VCDC Baby Girl Totals Variance- Variance- Original Final positive Original Final positive Budget Budget Actual (negative) Budget Budget Actual (negative) $0 $81,209 $81,209 $0 $0 $285,564 $264,298 ($21,266) (467) 0 81,209 81, , ,298 (21,733) 0 81,209 81, , ,724 48, ,889 79,128 (27,239) ,446 18, ,209 81, , ,298 21, $0 $0 $0 $0 $0 $0 $0 $0 35

249 SHERIFF COMBINING STATEMENT OF FIDUCIARY NET ASSETS - ALL AGENCY FUNDS SEPTEMBER 30, 2009 General Evidence Law Prisoners' Flex Auction Employee Recovery Trust Enforcement Trust Personal Benefits Fund Events Fund Fund Trust Fund Fund Account Totals ASSETS Cash and cash equivalents $805,292 $12,898 $25,492 $2,800 $240,426 $11,136 $33,544 $207,857 $1,339,445 Due from other governmental units , ,200 Total assets $805,292 $12,898 $25,492 $4,000 $240,426 $11,136 $33,544 $207,857 $1,340,645 LIABILITIES Vouchers payable $0 $0 $0 $0 $0 $0 $0 $73,085 $73,085 Deposits 803,452 12,847 25, , , ,319 1,217,850 Due to other funds ,951 11,951 Due to other governmental units , ,136 3,230 17,502 35,868 Other current liabilities 1, ,891 Total liabilities $805,292 $12,898 $25,492 $4,000 $240,426 $11,136 $33,544 $207,857 $1,340,645 36

250

251

252

253

254

255

256

257

258

259 ANNUAL AUDIT REPORT TAX COLLECTOR SEPTEMBER 30, 2009

260 ANNUAL AUDIT REPORT TAX COLLECTOR SEPTEMBER 30, 2009 TABLE OF CONTENTS Report of Independent Auditors Fund Financial Statements: General Fund Balance Sheet... 3 Statement of Revenues, Expenditures, and Changes in Fund Balance Budget (GAAP Basis) and Actual... 4 Fiduciary Fund Information Statement of Fiduciary Net Assets Agency Funds... 5 Page Notes to the Financial Statements Combining Statement of Fiduciary Net Assets All Agency Funds 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 Management Letter Tax Collector s Response to Management Letter... 17

261

262

263 TAX COLLECTOR BALANCE SHEET GENERAL FUND SEPTEMBER 30, 2009 ASSETS Cash and cash equivalents $1,872,535 Total assets $1,872,535 LIABILITIES Vouchers payable $32,840 Salaries payable 245,218 Due to other governmental units 1,411,922 Deferred revenue 182,555 Total liabilities 1,872,535 FUND BALANCE Unreserved 0 Fund balance 0 Total liabilities and fund balance $1,872,535 The accompanying notes are an integral part of the financial statements. 3

264 TAX COLLECTOR STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET (GAAP BASIS) AND ACTUAL GENERAL FUND YEAR ENDED SEPTEMBER 30, 2009 Variance- Original Final positive Budget Budget Actual (negative) Revenues: Charges for services $2,586,135 $2,586,135 $2,536,844 ($49,291) Miscellaneous 247, , ,143 (120,645) Total revenues 2,833,923 2,833,923 2,663,987 (169,936) Expenditures: Current: General government Personal services 4,885,025 4,808,605 4,787,018 21,587 Operating expenditures 1,351,747 1,418,747 1,385,260 33,487 Capital outlay 12,500 21,920 21, Total expenditures 6,249,272 6,249,272 6,194,183 55,089 Excess (deficiency) of revenues over expenditures (3,415,349) (3,415,349) (3,530,196) (114,847) Other financing sources (uses): Transfers in 4,847,338 4,847,338 4,847,338 0 Transfers out (1,431,989) (1,431,989) (1,317,142) 114,847 Total other financing sources (uses) 3,415,349 3,415,349 3,530, ,847 Net change in fund balance Fund balance at beginning of year Fund balance at end of year $0 $0 $0 $0 The accompanying notes are an integral part of the financial statements. 4

265 TAX COLLECTOR STATEMENT OF FIDUCIARY NET ASSETS - AGENCY FUNDS SEPTEMBER 30, 2009 ASSETS: Cash and cash equivalents $8,382,667 Accounts receivable (net of allowance for uncollectibles) 90,020 Total assets 8,472,687 LIABILITIES: Payable to others 407,655 Due to other governmental units 8,065,032 Total liabilities 8,472,687 NET ASSETS $0 The accompanying notes are an integral part of the financial statements. 5

266 ANNUAL AUDIT REPORT TAX COLLECTOR NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 2009 NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The Office of the Tax Collector of Escambia County, Florida (the Tax Collector ), is established as a constitutional official by Article VIII, Section 1 (d) of the Constitution of the State of Florida. The accounting policies of the Tax Collector conform to accounting principles generally accepted in the United States of America as applicable to local governments. The following is a summary of the more significant accounting policies. PRINCIPLES USED IN DETERMINING THE SCOPE OF ENTITY FOR FINANCIAL REPORTING PURPOSES Although the Tax Collector is operationally autonomous from the Escambia County Board of County Commissioners, it does not hold sufficient corporate powers of its own to be considered a legally separate entity for financial reporting purposes. Therefore, the Tax Collector is reported as a part of the primary government of Escambia County, Florida. These special-purpose financial statements are not intended to be a complete presentation of the financial position and results of operations of Escambia County, Florida taken as a whole. As permitted by Chapter (4), Rules of the Auditor General State of Florida, the special-purpose financial statements consists of only the fund level financial statements as defined in Governmental Accounting Standards Board (GASB) Statement No. 34, and do not include presentations of government-wide statements of the Tax Collector. BASIS OF PRESENTATION FUND ACCOUNTING The Tax Collector s financial records and accounts are maintained in accordance with the principles of fund accounting, whereby resources are classified for accounting and reporting purposes into funds to insure compliance with any special restrictions or limitations on the use of such resources. The funds used are defined as follows: Governmental Funds General Fund The general fund is the general operating fund of the Tax Collector. It is used to account for all financial resources except those required to be accounted for in other funds. Fiduciary Funds Agency Funds Agency funds are used to account for assets held for individuals, private organizations, or other governments. Agency funds are custodial in nature (assets equal liabilities) and do not involve measurement of the results of operations. 6

267 ANNUAL AUDIT REPORT TAX COLLECTOR NOTES TO FINANCIAL STATEMENTS (CONTINUED) SEPTEMBER 30, 2009 BASIS OF ACCOUNTING The general fund is accounted for using the current resources measurement focus and the modified accrual basis of accounting. Revenues are recognized when they become susceptible to accrual that is when they are both measurable and available to finance expenditures of the current period. The Tax Collector considers receivables collected within sixty days after year-end to be available and recognizes them as revenues of the current year. Expenditures are generally recognized under the modified accrual basis of accounting when the related fund liability is incurred. However, expenditures for compensated absences are recognized when payments are made to employees. Fiduciary fund financial statements are reported using the accrual basis of accounting. BUDGETS AND BUDGETARY ACCOUNTING The Tax Collector operates under budget procedures pursuant to Florida Statutes. The budget is adopted on a basis consistent with accounting principles generally accepted in the United States of America. The legal level of budgetary control is at the fund level. CASH AND CASH EQUIVALENTS Cash equivalents are highly liquid investments with original maturities of three months or less when purchased. COMPENSATED ABSENCES Employees may accumulate a limited amount of earned but unused paid time off (PTO) and compensatory time, which will be paid upon separation from service. These expenditures are not recognized in the general fund until payments are made to employees. EVENTS OCCURRING AFTER REPORTING DATE The Tax Collector has evaluated events and transactions that occurred between September 30, 2009 and December 22, 2009, which is the date that the financial statements were available to be issued, for possible recognition or disclosure in the financial statements. NOTE 2 SPECIAL REPORTING TREATMENTS Commissions earned from the Board of County Commissioners are recorded as transfers in on the Statement of Revenues, Expenditures and Changes in Fund Balance Budget (GAAP Basis) and Actual. In accordance with Florida Statutes, the excess revenues over expenditures is returned to the Board of County Commissioners at year end and is reported as a transfer out on the Statement of Revenues, Expenditures and Changes in Fund Balance Budget (GAAP Basis) and Actual. 7

268 ANNUAL AUDIT REPORT TAX COLLECTOR NOTES TO FINANCIAL STATEMENTS (CONTINUED) SEPTEMBER 30, 2009 Capital assets (vehicles, equipment and other tangible property costing at least $1,000 with a useful life of more than one year) are recorded as expenditures at the time of purchase. These assets are capitalized at cost and depreciated in Escambia County s government-wide financial statements. ASSETS NOTE 3 DETAILED NOTES Cash Deposits The investment of surplus funds is governed by the provisions of Florida Statute as to the type of investments that can be made. Deposits may be exposed to custodial credit risk, which is the risk of loss in the event of a bank failure. The Tax Collector manages custodial credit risk by maintaining its deposits in a financial institution designated as a Qualified Public Depository by the State Treasurer. All deposits were fully insured through a combination of Federal depository insurance and participation of the financial institution in the multiple financial institution collateral pool as specified in Chapter 280, Florida Statutes. Accordingly, risk of loss due to bank failure is not significant. At September 30, 2009, the reported amount of the Tax Collector s deposits was $10,255,202, and the bank balance was $10,249,484, consisting entirely of deposits in checking and savings accounts. LIABILITIES Pension and Retirement Plan - Substantially all full-time employees of the Tax Collector are covered by the Florida Retirement System (FRS). The FRS was established in 1970 by Chapter 121, Florida Statutes and is administered by the Florida Department of Management Services, Division of Retirement. Changes to the FRS can be made only by an act of the Florida Legislature. Rules governing the operation and administration of the system may be found in Chapter 60S of the Florida Administrative Code. The FRS issues a financial report that includes financial statements and required supplementary information. The report may be obtained by writing to FRS, 2639-C North Monroe Street, Tallahassee, Florida The FRS offers two retirement plans the FRS Pension Plan and the FRS Investment Plan. An employee may participate in only one of the plans. The FRS Pension Plan is a multiple employer cost sharing defined benefit plan which provides retirement and disability benefits, annual cost-of-living adjustments, and death benefits to plan members and beneficiaries. Normal retirement benefits are available to employees who retire at age 62 with 6 or more years of service, or to those employees who have at least 30 years of creditable service, regardless of age. Retirement age and years of service requirements vary depending on membership class. Early retirement is available after 6 years of service with a 5% reduction of benefits for each year prior to the normal retirement age. Retirement benefits are based upon age, average compensation and years-ofservice credit where average compensation is computed as the average of an individual s five highest years of earnings. The FRS Investment Plan is a defined contribution plan in which participants are vested after one year of service. The employer makes contributions each month based on a percentage of the employee s gross salary and membership class. The contribution percentage is the same whether participating in the 8

269 ANNUAL AUDIT REPORT TAX COLLECTOR NOTES TO FINANCIAL STATEMENTS (CONTINUED) SEPTEMBER 30, 2009 Pension Plan or Investment Plan. Members in the Investment Plan decide how their funds are allocated between various investment accounts and the funds are portable upon termination if the participant is vested. Members in the Investment Plan are not eligible for participation in the Deferred Retirement Option Program (DROP). Deferred Retirement Option Program (DROP) is an elective program available for members of the FRS who are eligible for normal retirement. Under this program, a member effectively retires and continues covered employment for up to 5 years. While in DROP, the member s deferred monthly retirement benefits accumulate, earning interest and cost-of-living increases. When the DROP period is over, the participant terminates covered employment and begins receiving his/her predetermined monthly retirement benefit, as well as the accrued DROP benefit. Disability retirees are not eligible to participate in DROP and DROP participants do not qualify for disability retirement. The plans are noncontributory for employees and all contributions are made by participating FRS employers. Participating employer contributions are based upon state-wide rates established by the State of Florida. Average contribution rates for the fiscal year ended September 30, 2009 were as follows: regular employees, 9.85%, special risk employees, 20.92%, elected officials, 16.53%, senior management employees, 13.12%, and DROP participants, 10.91%. The Tax Collector s contributions to the Pension Plan, funded on a pay-as-you-go basis, were equal to the actuarially determined contributions for each year. Contributions to the Investment Plan were equal to the legislature-mandated contribution rates, which are equal to a percentage of the members gross monthly salary based on the members membership class. Contributions to both plans totaled $373,338, $386,881, and $376,821, for the years ended September 30, 2009, 2008, and 2007, respectively. OTHER POSTEMPLOYMENT BENEFIT (OPEB) PLAN The Tax Collector participates in the health insurance plan offered to employees of the Board of County Commissioners and other County Elected Officials (the Board plan). Additionally, retirees and eligible dependants have the option of continuing in the Board plan at the same group rate as for active employees. In conjunction with the implementation of GASB Statement No. 45 during fiscal year end 2008 the Board of County Commissioners engaged an actuarial firm to determine the estimated obligation associated with the post employment health insurance benefits as of September 30, 2008 for all participants of the Board plan. The actuary, using the same data and assumptions provided in 2008, updated the actuarial report for Costs attributed to the Tax Collector have been allocated based on the Tax Collector s payroll compared to total payroll of all participants in the Board plan. The Tax Collector s Annual Other Post Employment Benefit (OPEB) Cost for fiscal year 2009 was $170,721, and employer contributions included in Personal Services expenditures in the Statement of Revenues, Expenditures, and Changes in Fund Balance were $64,527. The net OPEB obligation of the Tax Collector was $199,194, and the Unfunded Actual Accrued Liability, which is being amortized over a 30 year period as part of the Annual Required Contribution (ARC), was $1,697,465. Because these financial statements focus on current financial resources, they do not include the net OPEB obligation or any other long-term liability. A full presentation of the OPEB liabilities, funding status, and actuarial methods and assumptions is included in the 2009 Board of County Commissioners Annual Financial Report. 9

270 ANNUAL AUDIT REPORT TAX COLLECTOR NOTES TO FINANCIAL STATEMENTS (CONTINUED) SEPTEMBER 30, 2009 Following are the components of the Tax Collector s net OPEB obligation at September 30, 2009: Normal Cost $74,461 Amortization of Unfunded Actuarial Accrued Liability (UAAL) 98,165 Annual Required Contribution (ARC) 172,626 Annual Required Contribution (ARC) 172,626 Interest on Net OPEB Obligation 4,273 Adjustment to ARC (6,178) Annual OPEB Cost 170,721 Estimated Employer Contributions Made (64,527) Increase in net OPEB Obligation 106,194 Net OPEB Obligation, October 1, ,000 Net OPEB Obligation, September 30, 2009 $199,194 Risk Management - The County has a risk management program to insure claims against the Board of County Commissioners, Constitutional Officers, and Santa Rosa Island Authority for the following types of risks: Workers Compensation The County is covered for workers compensation claims through a policy with the Florida Municipal Insurance Trust. Coverage limits under the policy include statutory limits, as well as $1,000,000 bodily injury for each accident and $1,000,000 bodily injury by disease for each employee with an aggregate $1,000,000 policy limit. Prior to June 9, 2008, the County was self-insured up to a limit of $450,000 per occurrence with statutory limits. Casualty and Property Casualty limits are self-insured for $100,000 per claim with a $200,000 aggregate limit. Property limits are $50,000 - $250,000 self insured retentions per occurrence with excess limits of $500 million, $410 million excluding wind and $90 million including wind. The Tax Collector participated in the County s insurance program during the year at a cost of $23,190. There also were no significant reductions in insurance coverage from the prior year and there have been no settlements which exceeded the Tax Collector s insurance coverage in any of the past three fiscal years. 10

271 ANNUAL AUDIT REPORT TAX COLLECTOR NOTES TO FINANCIAL STATEMENTS (CONTINUED) SEPTEMBER 30, 2009 Long-Term Liabilities As required by Chapter (3)(g), Rules of the Auditor General, disclosures regarding long-term liabilities are as follows: Compensated Absences Balance 10/01/08 $715,515 Additions 150,642 Deletions (187,970) Balance 09/30/09 678,187 Less current portion (8,384) Long term balance $669,803 NOTE 4 CLAIMS AND CONTINGENCIES The Tax Collector is contingently liable with respect to lawsuits and other claims which might arise in the ordinary course of operations. In the opinion of management, based on the advice of legal counsel, there are no lawsuits or claims outstanding which could have a material adverse effect on the financial position of the Tax Collector. NOTE 5 COMMITMENTS The Tax Collector is committed to operating leases for office space with noncancellable terms in excess of one year. Future minimum lease payments are as follows: Year Amount 2010 $299, , , , , ,055 $1,335,382 Rent expense for the year ended September 30, 2009 was $340,

272 TAX COLLECTOR COMBINING STATEMENT OF FIDUCIARY NET ASSETS - AGENCY FUNDS SEPTEMBER 30, 2009 Tax Tag Fund Fund Total ASSETS: Cash and cash equivalents $7,758,144 $624,523 $8,382,667 Accounts receivable (net of allowance for uncollectibles) ,769 90,020 Total assets 7,758, ,292 8,472,687 LIABILITIES: Payable to others 294, , ,655 Due to other governmental units 7,463, ,452 8,065,032 Total liabilities 7,758, ,292 8,472,687 NET ASSETS $0 $0 $0 12

273

274

275

276

277

278 ANNUAL AUDIT REPORT PROPERTY APPRAISER SEPTEMBER 30, 2009

279 ANNUAL AUDIT REPORT PROPERTY APPRAISER SEPTEMBER 30, 2009 TABLE OF CONTENTS Report of Independent Auditors Fund Financial Statements: General Fund Balance Sheet... 3 Statement of Revenues, Expenditures, and Changes in Fund Balance Budget (GAAP Basis) and Actual... 4 Page Notes to the Financial Statements 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 Management Letter Property Appraiser s Response to Management Letter... 16

280

281

282 PROPERTY APPRAISER BALANCE SHEET GENERAL FUND SEPTEMBER 30, 2009 ASSETS Cash and cash equivalents $1,062,528 Prepaid items 69,537 Total assets $1,132,065 LIABILITIES Vouchers payable $61,880 Salaries payable 199,639 Due to other governmental units 870,546 Total liabilities 1,132,065 FUND BALANCE Unreserved 0 Fund balance 0 Total liabilities and fund balance $1,132,065 The accompanying notes are an integral part of the financial statements. 3

283 PROPERTY APPRAISER STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET (GAAP BASIS) AND ACTUAL GENERAL FUND YEAR ENDED SEPTEMBER 30, 2009 Variance- Original Final positive Budget Budget Actual (negative) Revenues: Charges for services $0 $16,222 $18,146 $1,924 Miscellaneous 0 0 6,818 6,818 Total revenues 0 16,222 24,964 8,742 Expenditures: Current: General government Personal services 4,959,958 4,865,263 4,441, ,191 Operating expenditures 1,126,052 1,180, , ,725 Capital outlay 35,000 76,068 56,450 19,618 Reserve for contingencies 100, , ,000 Total expenditures 6,221,010 6,221,360 5,361, ,534 Excess (deficiency) of revenues over expenditures (6,221,010) (6,205,138) (5,336,862) 868,276 Other financing sources (uses): Transfers in 6,221,010 6,205,138 6,205,138 0 Transfers out 0 0 (868,276) (868,276) Total other financing sources (uses) 6,221,010 6,205,138 5,336,862 (868,276) Net change in fund balance Fund balance at beginning of year Fund balance at end of year $0 $0 $0 $0 The accompanying notes are an integral part of the financial statements. 4

284 ANNUAL AUDIT REPORT PROPERTY APPRAISER NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 2009 NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The Office of the Property Appraiser (the Property Appraiser ) of Escambia County, Florida, is established as a constitutional official by Article VIII, Section 1 (d) of the Constitution of the State of Florida. The accounting policies of the Property Appraiser conform to accounting principles generally accepted in the United States of America as applicable to local governments. The following is a summary of the more significant accounting policies. REPORTING ENTITY Although the Property Appraiser is operationally autonomous from the Escambia County Board of County Commissioners, it does not hold sufficient corporate powers of its own to be considered a legally separate entity for financial reporting purposes. Therefore, the Property Appraiser is reported as a part of the primary government of Escambia County, Florida. These special-purpose financial statements are not intended to be a complete presentation of the financial position and results of operations of Escambia County, Florida taken as a whole. As permitted by Chapter (4), Rules of the Auditor General of the State of Florida, the special-purpose financial statements consists of only the fund level financial statements as defined in Governmental Accounting Standards Board (GASB) Statement No. 34, and do not include presentations of government-wide financial statements of the Property Appraiser. FUND ACCOUNTING The Property Appraiser s financial records and accounts are maintained in accordance with the principles of fund accounting, whereby resources are classified for accounting and reporting purposes into funds to insure compliance with any special restrictions or limitations on the use of such resources. The Property Appraiser s general fund (a governmental fund type) is the sole operating fund of the Property Appraiser. No additional funds are required to be maintained. BASIS OF ACCOUNTING The general fund is accounted for using the modified accrual basis of accounting. Revenues are recognized when they become susceptible to accrual that is when they are both measurable and available to finance expenditures of the current period. The Property Appraiser considers receivables collected within sixty days after year-end to be available and recognizes them as revenues of the current year. Expenditures are generally recognized under the modified accrual basis of accounting when the related fund liability is incurred. However, expenditures for compensated absences are recognized when payments are made to employees. 5

285 ANNUAL AUDIT REPORT PROPERTY APPRAISER NOTES TO FINANCIAL STATEMENTS (CONTINUED) SEPTEMBER 30, 2009 BUDGETS AND BUDGETARY ACCOUNTING The Property Appraiser operates under budget procedures pursuant to Chapter , Florida Statutes. The budget is adopted on a basis consistent with accounting principles generally accepted in the United States of America. The legal level of budgetary control is at the fund level. CASH AND CASH EQUIVALENTS Cash equivalents are highly liquid investments with original maturities of three months or less when purchased. PREPAID ITEMS Payments made to vendors for products or services that will benefit periods beyond 2009 are recorded as prepaid items in the accompanying balance sheet. COMPENSATED ABSENCES Employees may accumulate a limited amount of earned but unused sick leave, annual leave, and compensatory time, which will be paid upon separation from service. These expenditures are not recognized in the general fund until payments are made to employees. EVENTS OCCURRING AFTER REPORTING DATE The Property Appraiser has evaluated events and transactions that occurred between September 30, 2009 and December 21, 2009, which is the date that the financial statements were available to be issued, for possible recognition or disclosure in the financial statements. NOTE 2 SPECIAL REPORTING TREATMENTS Appropriations from the Board of County Commissioners are recorded as transfers in on the Statement of Revenues, Expenditures and Changes in Fund Balance Budget (GAAP Basis) and Actual. In accordance with Florida Statutes, the excess revenues over expenditures is returned to the Board of County Commissioners at year-end and is reported as a transfer out on the Statement of Revenues, Expenditures and Changes in Fund Balance Budget (GAAP Basis) and Actual. Capital assets (vehicles, equipment and other tangible property costing at least $1,000 with a useful life of more than one year) are recorded as expenditures at the time of the purchase. These assets are capitalized at cost and depreciated in Escambia County s government-wide financial statements. 6

286 ANNUAL AUDIT REPORT PROPERTY APPRAISER NOTES TO FINANCIAL STATEMENTS (CONTINUED) SEPTEMBER 30, 2009 NOTE 3 DETAILED NOTES ASSETS Cash Deposits The investment of surplus funds is governed by the provisions of Florida Statute as to the type of investments that can be made. Deposits may be exposed to custodial credit risk, which is the risk of loss in the event of bank failure. The Property Appraiser manages custodial risk by maintaining its deposits in a financial institution designated as a Qualified Public Depository by the State Treasurer. All deposits were fully insured through a combination of Federal depository insurance and participation of the financial institution in the multiple financial institution collateral pool as specified in Chapter 280, Florida Statutes. Accordingly, risk of loss due to bank failure is not significant. At September 30, 2009, the reported amount of the Property Appraiser s deposits was $1,062,528, and the bank balance was $1,151,361, consisting entirely of deposits in an interest bearing checking account. LIABILITIES Pension and Retirement Plan - Substantially all full-time employees of the Property Appraiser are covered by the Florida Retirement System (FRS). The FRS was established in 1970 by Chapter 121, Florida Statutes and is administered by the Florida Department of Management Services, Division of Retirement. Changes to the FRS can be made only by an act of the Florida Legislature. Rules governing the operation and administration of the system may be found in Chapter 60S of the Florida Administrative Code. The FRS issues a financial report that includes financial statements and required supplementary information. The report may be obtained by writing to FRS, 2639-C North Monroe Street, Tallahassee, Florida The FRS offers two retirement plans the FRS Pension Plan and the FRS Investment Plan. An employee may participate in only one of the plans. The FRS Pension Plan is a multiple employer cost sharing defined benefit plan which provides retirement and disability benefits, annual cost-of-living adjustments, and death benefits to plan members and beneficiaries. Normal retirement benefits are available to employees who retire at age 62 with 6 or more years of service, or to those employees who have at least 30 years of creditable service, regardless of age. Retirement age and years of service requirements vary depending on membership class. Early retirement is available after 6 years of service with a 5% reduction of benefits for each year prior to the normal retirement age. Retirement benefits are based upon age, average compensation and years-ofservice credit where average compensation is computed as the average of an individual s five highest years of earnings. The FRS Investment Plan is a defined contribution plan in which participants are vested after one year of service. The employer makes contributions each month based on a percentage of the employee s gross salary and membership class. The contribution percentage is the same whether participating in the Pension Plan or Investment Plan. Members in the Investment Plan decide how their funds are allocated between various investment accounts and the funds are portable upon termination if the participant is vested. Members in the Investment Plan are not eligible for participation in the Deferred Retirement Option Program (DROP). 7

287 ANNUAL AUDIT REPORT PROPERTY APPRAISER NOTES TO FINANCIAL STATEMENTS (CONTINUED) SEPTEMBER 30, 2009 Deferred Retirement Option Program (DROP) is an elective program for members of the FRS who are eligible for normal retirement. Under this program, a member effectively retires and continues covered employment for up to 5 years. While in DROP, the member s deferred monthly retirement benefits accumulate, earning interest and cost-of-living increases. When the DROP period is over, the participant terminates covered employment and begins receiving his/her predetermined monthly retirement benefit, as well as the accrued DROP benefit. Disability retirees are not eligible to participate in DROP and DROP participants do not qualify for disability retirement. The plans are noncontributory for employees and all contributions are made by participating FRS employers. Participating employer contributions are based upon state-wide rates established by the State of Florida. Average contribution rates for the fiscal year ended September 30, 2009 were as follows: regular employees, 9.85%, special risk employees, 20.92%, elected officials, 16.53%, senior management employees, 13.12%, and DROP participants, 10.91%. The Property Appraiser s contributions to the Pension Plan, funded on a pay-as-you-go basis, were equal to the actuarially determined contributions for each year. Contributions to the Investment Plan were equal to the legislature-mandated contribution rates, which are equal to a percentage of the members gross monthly salary based on the members membership class. Contributions to both plans totaled $335,608, $360,571, and $365,658, for the years ended September 30, 2009, 2008, and 2007, respectively. OTHER POST EMPLOYMENT BENEFIT (OPEB) PLAN The Property Appraiser participates in the health insurance plan offered to employees of the Board of County Commissioners and other County Elected Officials (the Board plan). Additionally, retirees and eligible dependants have the option of continuing in the Board plan at the same group rate as for active employees. In conjunction with the implementation of GASB Statement No. 45 during fiscal year end 2008 the Board of County Commissioners engaged an actuarial firm to determine the estimated obligation associated with the post employment health insurance benefits as of September 30, 2008 for all participants of the Board plan. The actuary, using the same data and assumptions provided in 2008, updated the actuarial report for Costs attributed to the Property Appraiser have been allocated based on the Property Appraiser s payroll compared to total payroll of all participants in the Board plan. The Property Appraiser s estimated Annual Other Post Employment Benefit (OPEB) Cost for fiscal year 2009 was $143,608, and employer contributions included in Personal Services expenditures in the Statement of Revenues, Expenditures, and Changes in Fund Balance were $54,279. The net OPEB obligation of the Property Appraiser was $180,329, and the Unfunded Actuarial Accrued Liability, which is being amortized over a thirty-year period as part of the Annual Required Contribution (ARC), was $1,427,879. Because these financial statements focus on current financial resources, they do not include the net OPEB obligation or any other long-term liability. A full presentation of the OPEB liabilities, funding status, and actuarial methods and assumptions is included in the 2009 Board of County Commissioners Annual Financial Report. 8

288 ANNUAL AUDIT REPORT PROPERTY APPRAISER NOTES TO FINANCIAL STATEMENTS (CONTINUED) SEPTEMBER 30, 2009 Following are the components of the Property Appraiser s net OPEB obligation at September 30, 2009: Normal Cost $62,636 Amortization of Unfunded Actuarial Accrued Liability (UAAL) 82,574 Annual Required Contribution (ARC) 145,210 Annual Required Contribution (ARC) 145,210 Interest on Net OPEB Obligation 3,595 Adjustment to ARC (5,197) Annual OPEB Cost 143,608 Estimated Employer Contributions Made (54,279) Increase in net OPEB Obligation 89,329 Net OPEB Obligation, October 1, ,000 Net OPEB Obligation, September 30, 2009 $180,329 Risk Management The County has a risk management program to insure claims against the Board of County Commissioners, Constitutional Officers, and Santa Rosa Island Authority for the following types of risks: Workers Compensation The County is covered for workers compensation claims through a policy with the Florida Municipal Insurance Trust. Coverage limits under the policy include statutory limits, as well as $1,000,000 bodily injury for each accident and $1,000,000 bodily injury by disease for each employee with an aggregate $1,000,000 policy limit. Prior to June 9, 2008, the County was self-insured up to a limit of $450,000 per occurrence with statutory limits. Casualty and Property Casualty limits are self-insured for $100,000 per claim with a $200,000 aggregate limit. Property limits are $50,000 - $250,000 self insured retentions per occurrence with excess limits of $500 million, $410 million excluding wind and $90 million including wind. The Property Appraiser participated in the County s insurance program during the year at a cost of $44,948. There were no significant reductions in insurance coverage from the prior year and there have been no settlements which exceeded the Property Appraiser s insurance coverage in any of the past three fiscal years. 9

289 ANNUAL AUDIT REPORT PROPERTY APPRAISER NOTES TO FINANCIAL STATEMENTS (CONTINUED) SEPTEMBER 30, 2009 Long-Term Liabilities As required by Chapter (3)(g), Rules of the Auditor General State of Florida, disclosures regarding long-term liabilities are as follows: Compensated Absences Balance 10/01/08 $536,796 Increase 309,360 Decrease (351,727) Balance 09/30/09 $494,429 NOTE 4 CLAIMS, CONTINGENCIES AND COMMITMENTS The Office of the Property Appraiser is contingently liable with respect to lawsuits and other claims which might arise in the ordinary course of operations. In the opinion of management, based on the advice of legal counsel, there are no lawsuits or claims outstanding which could have a material adverse effect on the financial position of the Property Appraiser. 10

290

291

292

293

294

295

296 ANNUAL AUDIT REPORT SUPERVISOR OF ELECTIONS SEPTEMBER 30, 2009

297 ANNUAL AUDIT REPORT SUPERVISOR OF ELECTIONS SEPTEMBER 30, 2009 TABLE OF CONTENTS Report of Independent Auditors... 1 Fund Financial Statement: General Fund Balance Sheet... 2 Statement of Revenues, Expenditures, and Changes in Fund Balance Budget (GAAP Basis) and Actual... 3 Notes to the Financial Statements Page 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 Management Letter Supervisor of Election s Response to Management Letter... 13

298

299 SUPERVISOR OF ELECTIONS BALANCE SHEET GENERAL FUND SEPTEMBER 30, 2009 General Fund ASSETS Due from other governmental units $73,678 Total assets $73,678 LIABILITIES Vouchers payable $12,132 Salaries payable 42,477 Due to other governmental units 96 Deferred revenue 18,973 Total liabilities 73,678 FUND BALANCE Unreserved 0 Fund balance 0 Total liabilities and fund balance $73,678 The accompanying notes are an integral part of the financial statements. 2

300 SUPERVISOR OF ELECTIONS STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET (GAAP BASIS) AND ACTUAL GENERAL FUND YEAR ENDED SEPTEMBER 30, 2009 Variance- Original Final positive Budget Budget Actual (negative) Revenues: Intergovernmental $0 $142,532 $123,557 ($18,975) Charges for services 25,000 30,400 12,883 (17,517) Total Revenues 25, , ,440 (36,492) Expenditures: Current: General government Personal services 1,295,139 1,315,500 1,276,889 38,611 Operating expenditures 725, , , ,852 Capital outlay 40,000 56,000 50,988 5,012 Total general government 2,060,715 2,218,647 1,896, ,475 Total expenditures 2,060,715 2,218,647 1,896, ,475 Excess (deficiency) of revenues over expenditures (2,035,715) (2,045,715) (1,759,732) 285,983 Other financing sources: Transfers in 2,035,715 2,045,715 1,759,732 (285,983) Total other financing sources 2,035,715 2,045,715 1,759,732 (285,983) Net change in fund balance Fund balance at beginning of year Fund balance at end of year $0 $0 $0 $0 The accompanying notes are an integral part of the financial statements. 3

301 ANNUAL AUDIT REPORT SUPERVISOR OF ELECTIONS NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 2009 NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The Office of the Supervisor of Elections (the Supervisor of Elections ) of Escambia County, Florida, is established as a constitutional official by Article VIII, Section 1 (d) of the Constitution of the State of Florida. The accounting policies of the Supervisor of Elections conform to accounting principles generally accepted in the United States of America as applicable to local governments. The following is a summary of the more significant accounting policies. REPORTING ENTITY Although the Supervisor of Elections is operationally autonomous from the Escambia County Board of County Commissioners, it does not hold sufficient corporate powers of its own to be considered a legally separate entity for financial reporting purposes. Therefore, the Supervisor of Elections is reported as a part of the primary government of Escambia County, Florida. These special-purpose financial statements are not intended to be a complete presentation of the financial position and results of operations of Escambia County, Florida taken as a whole. As permitted by Chapter (4), Rules of the Auditor General of the State of Florida, the special-purpose financial statements consists of only the fund level financial statements as defined in Governmental Accounting Standards Board (GASB) Statement No. 34, and do not include presentations of government-wide financial statements of the Supervisor of Elections. FUND ACCOUNTING The Supervisor of Elections financial records and accounts are maintained in accordance with the principles of fund accounting, whereby resources are classified for accounting and reporting purposes into funds to insure compliance with any special restrictions or limitations on the use of such resources. The Supervisor of Elections general fund (a governmental fund type) is the sole operating fund of the Supervisor of Elections. No additional funds are required to be maintained. BASIS OF ACCOUNTING The general fund is accounted for using the modified accrual basis of accounting. Revenues are recognized when they become susceptible to accrual that is when they are both measurable and available to finance expenditures of the current period. The Supervisor of Elections considers receivables collected within sixty days after year-end to be available and recognizes them as revenues of the current year. Expenditures are generally recognized under the modified accrual basis of accounting when the related fund liability is incurred. However, expenditures for compensated absences are recognized when payments are made to employees. BUDGETS AND BUDGETARY ACCOUNTING The Supervisor of Elections operates under budget procedures pursuant to Florida Statutes. The budget is adopted on a basis consistent with accounting principles generally accepted in the United States of America. The legal level of budgetary control is at the fund level. 4

302 ANNUAL AUDIT REPORT SUPERVISOR OF ELECTIONS NOTES TO FINANCIAL STATEMENTS (CONTINUED) SEPTEMBER 30, 2009 COMPENSATED ABSENCES Employees may accumulate a limited amount of earned but unused sick leave, annual leave, and compensatory time, which will be paid upon separation from service. These expenditures are not recognized in the general fund until payments are made to employees. EVENTS OCCURRING AFTER REPORTING DATE The Supervisor of Elections has evaluated events and transactions that occurred between September 30, 2009 and February 2, 2010, which is the date that the financial statements were available to be issued, for possible recognition or disclosure in the financial statements. NOTE 2 SPECIAL REPORTING TREATMENTS Appropriations from the Board of County Commissioners are recorded as transfers in on the Statement of Revenues, Expenditures and Changes in Fund Balance Budget (GAAP Basis) and Actual. Capital assets (vehicles, equipment and other tangible property costing at least $1,000 with a useful life of more than one year) are recorded as expenditures at the time of purchase. These assets are capitalized at cost and depreciated in Escambia County s government-wide financial statements. The Supervisor of Elections does not maintain a separate cash account. Rather, the Escambia County Clerk of the Circuit Court & Comptroller, serving as the accountant for the Supervisor of Elections, records all cash activity using a common cash account of the Board of County Commissioners. The Due from other governments reflected on the Supervisor of Elections balance sheet, represents the amount of cash held by the Board of County Commissioners on behalf of the Supervisor of Elections. Deferred revenues reflect grant amounts collected before revenue recognition criteria are met. PENSIONS AND RETIREMENT PLAN NOTE 3 DETAILED NOTES Substantially all full-time employees of the Supervisor of Elections are covered by the Florida Retirement System (FRS). The FRS was established in 1970 by Chapter 121, Florida Statutes and is administered by the Florida Department of Management Services, Division of Retirement. Changes to the FRS can be made only by an act of the Florida Legislature. Rules governing the operation and administration of the system may be found in Chapter 60S of the Florida Administrative Code. The FRS issues a financial report that includes financial statements and required supplementary information. The report may be obtained by writing to FRS, 2639-C North Monroe Street, Tallahassee, Florida The FRS offers two retirement plans the FRS Pension Plan and the FRS Investment Plan. An employee may participate in only one of the plans. The FRS Pension Plan is a multiple employer cost sharing defined benefit plan which provides retirement and disability benefits, annual cost-of-living adjustments, and death benefits to plan members and beneficiaries. Normal retirement benefits are available to employees who retire at age 62 with 6 or more 5

303 ANNUAL AUDIT REPORT SUPERVISOR OF ELECTIONS NOTES TO FINANCIAL STATEMENTS (CONTINUED) SEPTEMBER 30, 2009 years of service, or to those employees who have at least 30 years of creditable service, regardless of age. Retirement age and years of service requirements vary depending on membership class. Early retirement is available after 6 years of service with a 5% reduction of benefits for each year prior to the normal retirement age. Retirement benefits are based upon age, average compensation and years-ofservice credit where average compensation is computed as the average of an individual s five highest years of earnings. The FRS Investment Plan is a defined contribution plan in which participants are vested after one year of service. The employer makes contributions each month based on a percentage of the employee s gross salary and membership class. The contribution percentage is the same whether participating in the Pension Plan or Investment Plan. Members in the Investment Plan decide how their funds are allocated between various investment accounts and the funds are portable upon termination if the participant is vested. Members in the Investment Plan are not eligible for participation in the Deferred Retirement Option Program (DROP). Deferred Retirement Option Program (DROP) is an elective program for members of the FRS who are eligible for normal retirement. Under this program, a member effectively retires and continues covered employment for up to 5 years. While in DROP, the member s deferred monthly retirement benefits accumulate, earning interest and cost-of-living increases. When the DROP period is over, the participant terminates covered employment and begins receiving his/her predetermined monthly retirement benefit, as well as the accrued DROP benefit. Disability retirees are not eligible to participate in DROP and DROP participants do not qualify for disability retirement. The plans are noncontributory for employees and all contributions are made by participating FRS employers. Participating employer contributions are based upon state-wide rates established by the State of Florida. Average contribution rates for the fiscal year ended September 30, 2009 were as follows: regular employees, 9.85%, special risk employees, 20.92%, elected officials, 16.53%, senior management employees, 13.12%, and DROP participants, 10.91%. The Supervisor of Elections contributions to the Pension Plan, funded on a pay-as-you-go basis, were equal to the actuarially determined contributions for each year. Contributions to the Investment Plan were equal to the legislature-mandated contribution rates, which are equal to a percentage of the members gross monthly salary based on the members membership class. Contributions to both plans totaled $87,784, $87,716, and $92,987, for the years ended September 30, 2009, 2008, and 2007, respectively. OTHER POSTEMPLOYMENT BENEFIT (OPEB) PLAN The Supervisor of Elections participates in the health insurance plan offered to employees of the Board of County Commissioners and other County Elected Officials (the Board plan). Additionally, retirees and eligible dependants have the option of continuing in the Board plan at the same group rate as for active employees. In conjunction with the implementation of GASB Statement No. 45 during fiscal year end 2008, the Board of County Commissioners engaged an actuarial firm to determine the estimated obligation associated with the post employment health insurance benefits as of September 30, 2008 for all participants of the Board plan. The actuary, using the same data and assumptions provided in 2008, updated the actuarial report for Costs attributed to the Supervisor of Elections have been allocated based on the Supervisor of Elections payroll compared to total payroll of all participants in the Board plan. The Supervisor of Elections Annual Other Post Employment Benefit (OPEB) Cost for fiscal year 2009 was $41,291, and employer contributions included in Personal Services expenditures in the Statement of Revenues, Expenditures, and Changes in Fund Balance were $15,606. The net OPEB obligation of the 6

304 ANNUAL AUDIT REPORT SUPERVISOR OF ELECTIONS NOTES TO FINANCIAL STATEMENTS (CONTINUED) SEPTEMBER 30, 2009 Supervisor of Elections was $49,685, and the Unfunded Actuarial Accrued Liability, which is being amortized over a thirty year period as part of the Annual Required Contribution (ARC), was $410,544. Because these financial statements focus on current financial resources, they do not include the net OPEB obligation or any other long-term liability. A full presentation of the OPEB liabilities, funding status, and actuarial methods and assumptions is included in the 2009 Board of County Commissioners Annual Financial Report. Following are the components of the Supervisor of Elections net OPEB obligation at September 30, 2009: Normal Cost $18,009 Amortization of Unfunded Actuarial Accrued Liability (UAAL) 23,742 Annual Required Contribution (ARC) 41,751 Annual Required Contribution (ARC) 41,751 Interest on Net OPEB Obligation 1,034 Adjustment to ARC (1,494) Annual OPEB Cost 41,291 Estimated Employer Contributions Made (15,606) Increase in net OPEB Obligation 25,685 Net OPEB Obligation, October 1, ,000 Net OPEB Obligation, September 30, 2009 $49,685 LONG-TERM LIABILITIES As required by Chapter (3)(g), Rules of the Auditor General of the State of Florida, disclosures regarding long-term liabilities are as follows: Compensated Absences Balance 10/01/08 $196,714 Increases 127,100 Decreases (140,030) Balance 09/30/09 $183,784 RISK MANAGEMENT The County has a risk management program to insure claims against the Board of County Commissioners, Constitutional Officers, and Santa Rosa Island Authority for the following types of risks: Workers Compensation The County is covered for workers compensation claims through a policy with the Florida Municipal Insurance Trust. Coverage limits under the policy include statutory limits, as well as $1,000,000 bodily injury for each accident and $1,000,000 bodily injury by disease for each employee with an aggregate $1,000,000 policy limit. Prior to June 9, 2008, the County was self-insured up to a limit of $450,000 per occurrence with statutory limits. 7

305 ANNUAL AUDIT REPORT SUPERVISOR OF ELECTIONS NOTES TO FINANCIAL STATEMENTS (CONTINUED) SEPTEMBER 30, 2009 Casualty and Property Casualty limits are self-insured for $100,000 per claim with a $200,000 aggregate limit. Property limits are $50,000 - $250,000 self insured retentions per occurrence with excess limits of $500 million, $410 million excluding wind and $90 million including wind. The Supervisor of Elections participated in the County s insurance program during fiscal year 2009 at a cost of $5,223. There have been no settlements which exceeded the Supervisor of Elections insurance coverage in any of the past three fiscal years. CONTINGENT LIABILITIES The Supervisor of Elections received significant financial assistance from federal and state agencies primarily in the form of capital and operating grants. The disbursement of funds received under these programs generally requires compliance with the terms and conditions specified in the grant agreements and are subject to audit by grantor agencies. Disallowed claims, if any, resulting from such audits may become liabilities of the Supervisor of Elections. However, in the opinion of management, disallowed claims, if any, will not have a material effect on the financial statements. RELATED PARTY TRANSACTIONS During 2009 the Board of County Commissioners purchased capital assets totaling approximately $41,000 on behalf of the Supervisor of Elections. These purchases are included in the Board of County Commissioners expenditures. 8

306

307

308

309

310

311

312

313

314