Audited Financial Statements. County of Arenac. Year Ended December 31, 2016 with Report of Independent Auditors

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1 Audited Financial Statements Year Ended with Report of Independent Auditors

2 Audited Financial Statements Year Ended Contents Report of Independent Auditors...1 Required Supplementary Information Management s Discussion and Analysis...4 Basic Financial Statements Government-wide Financial Statements Statement of Net Position...13 Statement of Activities...14 Fund Financial Statements Governmental Funds Balance Sheet...15 Reconciliation of the Governmental Funds Balance Sheet to the Statement of Net Position...17 Governmental Funds Statement of Revenues, Expenditures, and Changes in Fund Balances...18 Reconciliation of the Governmental Funds Statement of Revenues, Expenditures, and Changes in Fund Balances to the Statement of Activities...20 Statement of Net Position - Proprietary Funds...21 Statement of Revenues, Expenses, and Changes in Net Position Proprietary Funds...22 Statement of Cash Flows Proprietary Funds...23 Statement of Fiduciary Net Position...24 Combining Statement of Net Position Component Units...25 Combining Statement of Activities Component Units...26 Notes to Financial Statements...27 Required Supplementary Information Defined Benefit Pension Plan (MERS) Primary Government Schedule of Changes in the Employer s Net Pension Liability and Related Ratios...80 Schedule of Employer s Contributions...81 Defined Benefit Pension Plan (MERS) Road Commission Schedule of Changes in the Employer s Net Pension Liability and Related Ratios...82 Schedule of Employer s Contributions...83 Postemployment Health Benefits Schedule of Funding Progress and Employer Contributions...84

3 Audited Financial Statements Year Ended Contents (continued) Required Supplementary Information Budgetary Comparison Schedule General Fund...85 Budgetary Comparison Schedule 911 Service Fund...86 Budgetary Comparison Schedule Road Patrol Millage Fund...87 Budgetary Comparison Schedule Senior Citizen Millage Fund...88 Budgetary Comparison Schedule Housing Commission Fund...89 Other Supplementary Information Combining Balance Sheet Nonmajor Governmental Funds...90 Combining Statement of Revenues, Expenditures, and Changes in Fund Balances Nonmajor Governmental Funds...96 Combining Statement of Net Position Nonmajor Enterprise Funds Combining Statement of Revenues, Expenses, and Changes in Net Position Nonmajor Enterprise Funds Combining Statement of Cash Flows Nonmajor Enterprise Funds Combining Statement of Fiduciary Net Position Agency Funds Statement of Net Position and Governmental Funds Balance Sheet Drain Commission Component Unit Statement of Activities and Governmental Funds Revenues, Expenditures, and Changes in Fund Balances Drain Commission Component Unit Balance Sheet Economic Development Corporation Component Unit Statement of Revenues, Expenditures, and Changes in Fund Balances Economic Development Corporation Component Unit Balance Sheet Brownfield Redevelopment Authority Component Unit Statement of Revenues, Expenditures, and Changes in Fund Balances Brownfield Redevelopment Authority Component Unit Reports Required by Government Auditing Standards Independent Auditors 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...112

4 ANDREWS HOOPER PAVLIK PLC 5915 EASTMAN AVENUE SUITE 100 MIDLAND, MI p: f: Report of Independent Auditors To the Board of Commissioners Standish, Michigan We have audited the accompanying financial statements of the governmental activities, the business-type activities, the aggregate discretely presented component units, each major fund, and the aggregate remaining fund information of the, Michigan (County), as of and for the year ended, and the related notes to the financial statements, which collectively comprise the County s basic financial statements as listed in the table of contents. Management s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Auditors Responsibility Our responsibility is to express opinions on these financial statements based on our audit. We did not audit the financial statements of the Arenac County Road Commission, which represents 86% of the assets, and 92% of the revenues of the aggregate discretely presented component units of the County. Those statements were audited by other auditors whose reports have been furnished to us, and our opinion, insofar as it relates to the amounts included for the Arenac County Road Commission, is based on the reports of the other auditors. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. ANN ARBOR AUBURN HILLS BAY CITY GRAND RAPIDS GREATER LANSING MIDLAND OWOSSO SAGINAW Andrews Hooper Pavlik PLC is a member of Allinial Global, an association of legally independent firms.

5 We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. Opinions In our opinion, based on our audit and the reports of other auditors, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business-type activities, the aggregate discretely presented component units, each major fund, and the aggregate remaining fund information of Arenac County, Michigan, as of, and the respective changes in financial position and, where applicable, cash flows thereof for the year then ended in conformity with accounting principles generally accepted in the United States of America. Other Matters Required Supplementary Information Accounting principles generally accepted in the United States of America require that the management s discussion and analysis, schedules of funding progress and employer contributions, and budgetary comparison information as listed in the table of contents be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Other Information Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the s basic financial statements. The combining and individual nonmajor fund financial statements are presented for purposes of additional analysis and are not a required part of the financial statements. 2

6 The combining nonmajor fund financial statements, Arenac County Drain Commission component unit fund financial statements, Economic Development Corporation component unit fund financial statements, and the Brownfield Redevelopment Authority component unit fund financial statements are the responsibility of management and were derived from and relate directly to the underlying accounting and other records used to prepare the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, based on our audit and the procedures performed as described above, the combining nonmajor fund financial statements, Arenac County Drain Commission component unit fund financial statements, Economic Development Corporation component unit fund financial statements, and the Brownfield Redevelopment Authority component unit fund financial statements are fairly stated, in all material respects, in relation to the basic financial statements as a whole. Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated June 13, 2017, on our consideration of the s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be considered in assessing the results of our audit. Midland, Michigan June 13,

7 Management s Discussion and Analysis Year Ended As management of the, Michigan (County), we offer readers of the County's financial statements this narrative overview and analysis of the financial activities of the County for the year ended. We encourage readers to consider the information presented here in conjunction with additional information that we have furnished in the accompanying basic financial statements. Financial Highlights The net position of the County was $3,954,333 as of. Of this amount, $36,414 is an unrestricted net deficit. The County s total net position decreased by $1,471,558 during The increase of the County s net pension liability as a result of GASB 68 contributed $904,347 to the decrease of net position. As of the close of the current year, the County s governmental funds (this includes the general fund, special revenue, debt service, and capital projects funds) reported combined ending fund balances of $1,077,115, an increase of $21,984 in comparison with the prior year. Approximately 41% of this total amount, or $439,840, is available for spending at the County s discretion (assigned or unassigned fund balance). At the end of the current year, the general fund had an unassigned fund balance of $439,840, or 9% of total general fund expenditures. Overview of the Financial Statements. This discussion and analysis is intended to serve as an introduction to the County s basic financial statements. The County s basic financial statements are comprised of three components: 1) government-wide financial statements, 2) fund financial statements, and 3) notes to the financial statements. This report also contains other supplementary information in addition to the basic financial statements themselves. Government-wide financial statements. The government-wide financial statements are designed to provide readers with a broad overview of the County s finances, in a manner similar to a private-sector business. The statement of net position presents information on all of the County s assets, liabilities, and deferred inflows/outflows, with the difference reported as net position. Over time, increases or decreases in net position may serve as a useful indicator of whether the financial position of the County is improving or deteriorating. The statement of activities presents information showing how the County s net position changed during the most recent year. All changes in net position are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of related cash flows. Thus, revenues and expenses are reported in this statement for some items that will only result in cash flows in future periods (e.g., uncollected special assessments and accrued interest expense). 4

8 , Michigan Management s Discussion and Analysis Year Ended Both of the government-wide financial statements distinguish functions of the 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 (business-type activities). The governmental activities of the County include legislative, judicial, general government, public safety, public works, health and welfare, community and economic development, recreation and culture, and other functions. The business-type activities of the County include the various delinquent tax revolving and reversion funds. The County s component units are comprised of the Arenac County Drain Commission, Arenac County Economic Development Corporation, Brownfield Redevelopment Authority, Arenac County Road Commission and the Arenac County Land Bank Authority. These component units are described in the Notes to the Financial Statements under Note 1 Summary of Significant Accounting Policies. The component units are separate and may buy, sell, lease, and mortgage property in their own name and can sue or be sued in their own name. The government-wide financial statements can be found on pages of this report. Fund financial statements. A fund is a grouping of related accounts that is used to maintain control over resources that have been segregated for specific activities or objectives. The County, like other state and local governments, uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. All of the funds of the County can be divided into three categories: governmental funds, proprietary funds, and fiduciary funds. Governmental funds. Governmental funds are used to account for essentially the same functions reported as governmental activities in the government-wide financial statements. However, unlike the government-wide financial statements, governmental fund financial statements focus on near-term inflows and outflows of spendable resources, as well as on balances of spendable resources available at the end of the year. Such information may be useful in evaluating the County s near-term financing requirements. Because the focus of governmental funds is narrower than that of the government-wide financial statements, it is useful to compare the information presented for governmental funds with similar information presented for governmental activities in the government-wide financial statements. By doing so, readers may better understand the long-term impact of the County s near-term financing decisions. Both the governmental fund balance sheet and the governmental fund statement of revenues, expenditures, and changes in fund balances provide a reconciliation to facilitate this comparison between governmental funds and governmental activities. 5

9 , Michigan Management s Discussion and Analysis Year Ended The County maintains 30 individual governmental funds. Information is presented separately in the governmental funds balance sheet and in the governmental funds statement of revenues, expenditures, and changes in fund balances for the General Fund, 911 Services Fund, Road Patrol Millage Fund, Senior Citizen Millage Fund, and Housing Commission Fund, each of which is considered to be a major fund. Data from the other 25 governmental funds are combined into a single aggregated presentation. Individual fund data for each of these nonmajor governmental funds is provided in the form of combining statements elsewhere in this report. The County adopts an annual appropriated budget for its general and special revenue funds. Budgetary comparison schedules for each of the major funds have been provided herein to demonstrate compliance with those budgets. The basic governmental fund financial statements can be found on pages of this report. Proprietary funds. The County maintains one type of proprietary fund: enterprise funds. Enterprise funds are used to report the same functions presented as business-type activities in the government-wide financial statements. The County uses enterprise funds to account for its various delinquent tax revolving and reversion fund operations. Proprietary funds provide the same type of information as the government-wide financial statements, only in more detail. The proprietary fund financial statements provide separate information for the Delinquent Tax Revolving Fund and the County Parks Fund, both of which are considered to be major funds. Data from the other proprietary funds are combined in separate single aggregated presentations in the proprietary fund financial statements. Individual fund data for each of these nonmajor enterprise funds is provided in the form of combining statements elsewhere in this report. The basic proprietary fund financial statements can be found on pages of this report. Fiduciary funds. Fiduciary funds are used to account for resources held for the benefit of parties outside the County. Fiduciary funds are not reflected in the government-wide financial statements because the resources of those funds are not available to support the County s own programs. The accounting used for fiduciary funds is much like that used for proprietary funds. The basic fiduciary fund financial statements can be found on page 24 of this report. Notes to the financial statements. The notes provide additional information that is essential to a full understanding of the data provided in the government-wide and fund financial statements. The notes to the financial statements can be found on pages of this report. Other information. In addition to the basic financial statements and accompanying notes, this report also presents certain required supplementary information concerning the County's postemployment health benefits schedule of funding progress and employer contributions and the major funds budgetary comparison schedules. 6

10 , Michigan Management s Discussion and Analysis Year Ended The combining statements referred to earlier in connection with nonmajor governmental funds are presented immediately following the required supplementary information. Government-Wide Financial Analysis As noted earlier, net position may serve over time as a useful indicator of the County s financial position. As the following table demonstrates, the County's net position was $3,984,333 as of. Arenac County s Net Position Governmental Activities Business-type Activities Total Assets Current and other assets $ 3,968,540 $ 3,358,607 $ 2,403,137 $ 2,599,934 $ 6,371,677 $ 5,958,541 Other noncurrent assets 1,537,920 1,467, ,537,920 1,467,554 Capital assets, net 1,881,206 2,039,733 1,634,480 1,646,305 3,515,686 3,686,038 Total assets 7,387,666 6,865,894 4,037,617 4,246,239 11,425,383 11,112,133 Deferred outflows of resources - 32, ,103 Liabilities Current liabilities 1,004, , ,825 1,004, ,202 Long-term liabilities 4,537,139 3,733, ,537,139 3,733,134 Total liabilities 5,541,570 4,155, ,825 5,541,890 4,161,336 Deferred inflows of resources 1,899,060 1,527, ,899,060 1,527,009 Net position Invested in capital assets, net of related debt 1,881,206 2,039,733 1,634,480 1,646,305 3,515,686 3,686,038 Restricted 505, , , ,739 Unrestricted (deficit) (2,439,231) (1,477,995) 2,402,817 2,594,109 (36,414) 1,116,114 Total net position (deficit) $ (52,964) $ 1,215,477 $ 4,037,297 $ 4,240,414 $ 3,984,333 $ 5,455,891 7

11 , Michigan Management s Discussion and Analysis Year Ended The portion of the County's net deficit, $36,414 (-1%), is considered unrestricted. An additional portion of net position, $505,061 (13%), represents resources that are subject to external restrictions on how they may be spent. The remaining balance of $3,515,686 reflects the County s investment in capital assets (i.e., land, buildings and improvements, vehicles and boats, and equipment and furniture); less any related debt used to acquire those assets that is still outstanding. The County uses these capital assets to provide services to citizens; consequently, these assets are not available for future spending. Although the County's investment in its capital assets is reported net of related debt, it should be noted that the resources needed to repay this debt must be provided from other sources, since the capital assets themselves cannot be used to liquidate these liabilities. At, the County reported a net deficit of $52,964 in the governmental activities category of the government-wide Statement of Net Position. This was due to an increase in the actuarial value of the County s pension liability. 8

12 , Michigan Management s Discussion and Analysis Year Ended Arenac County's Changes in Net Position Governmental Activities Business-type Activities Total Revenues Program revenues: Charges for services $ 1,088,381 $ 1,087,244 $ 514,350 $ 490,692 $ 1,602,731 $ 1,577,936 Operating grants and contributions 1,155,116 1,109, ,225 50,250 1,301,341 1,159,498 Capital grants and contributions General revenues: Property taxes 4,616,127 4,571, ,616,127 4,571,730 State revenue sharing 1,249, , ,249, ,207 Interest earnings 2,948 1,758 3,986 4,018 6,934 5,776 Rent Income G/L on disposal of CA Other - - (4,987) (10,380) (4,987) (10,380) Total revenues 8,112,047 7,528, , ,580 8,771,621 8,063,293 Expenses General government 2,980,567 2,569, ,980,567 2,569,132 Public safety 2,922,968 2,367, ,922,968 2,367,799 Public works 546,186 68, ,186 68,538 Health and welfare 1,246,625 1,255, ,246,625 1,255,716 Community and economic development 290, , , ,548 Other 1,389,026 1,303, ,389,026 1,303,871 Capital Outlay 724, , , ,991 Recreation and culture Interest on long-term debt 10,366 12, ,366 12,908 County Park , , , ,000 Delinquent tax revolving - - 9,317 6,045 9,317 6,045 Tax foreclosure ,418 75,913 70,418 75,913 Jail Commissary - - 3,827 5,446 3,827 5,446 Total expenses 10,110,993 8,009, , ,404 10,445,853 8,260,907 Change in net position before transfers (1,998,946) (480,790) 324, ,176 (1,674,232) (197,614) Transfers 486, ,174 (531,690) (401,908) (45,616) (40,734) Change in net position (1,512,872) (119,616) (206,976) (118,732) (1,719,848) (238,348) Cumulative effect of prior period adjustment 244,431 (3,172,215) 3, ,290 (3,172,215) Net position-beginning 1,215,477 4,507,308 4,240,414 4,359,146 5,455,891 8,866,454 Net position(deficit)-ending $ (52,964) $ 1,215,477 $ 4,037,297 $ 4,240,414 $ 3,984,333 $ 5,455,891 9

13 , Michigan Management s Discussion and Analysis Year Ended The County s net position decreased by $1,719,848 during the current year; a $1,512,872 decrease for governmental activities and a $206,976 decrease for business-type activities. Governmental activities. Governmental activities decreased the County s net position by $1,512,872. Key elements of this decrease are as follows: Revenues increased compared to the prior year by $583,334, or 8%. This was primarily a result of an increase in state revenue. Expenses increased compared to the prior year by $2,101,490, or 26%. This was primarily a result of the increase in the actuarial value of the pension liability. Business-type activities. Business-type activities decreased the County s net position by $206,976. Key elements of this decrease are as follows: Revenues increased compared to the prior year by $124,994, or 23%. The increase was a result of higher collection fees, operating grants received, interest on property taxes, and other various fees. Expenses increased compared to the prior year by $83,456, or 33%. The increase was a result of higher fees and charges, as well as the use of operating grants in the County Parks fund. Financial Analysis of the County's Funds As noted earlier, the County uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. Governmental funds. The focus of the County s governmental funds is to provide information on near-term inflows, outflows, and balances of spendable resources. Such information is useful in assessing the County s financing requirements. In particular, unassigned fund balance may serve as a useful measurement of County s net resources available for spending at the end of the year. As of, the County s governmental funds reported combined ending fund balances of $1,077,115, a decrease of $218,980 in comparison with the prior year. Approximately 59% of the ending fund balances is subject to the underlying limitations applicable to the particular special revenue, debt service, or capital projects fund and is not available for new spending because it has already been spent or has been restricted or assigned for various functions/activities. The remaining 41% of the total fund balance amount constitutes unassigned fund balance, which is available for spending at the County s discretion. The General Fund is the chief operating fund of the County. At the end of the current year, the unassigned fund balance of the General Fund was $439,840 while total fund balance amounted to $486,840. As a measure of the General Fund s liquidity, it may be useful to compare unassigned fund balance and total fund balance to total fund expenditures. Unassigned fund balance represents 9% of total General Fund expenditures, while total fund balance represents approximately that same amount. 10

14 , Michigan Management s Discussion and Analysis Year Ended The fund balance of the County s General Fund increased by $199,827 during the current year. This increase resulted from the combination of a 1% increase in revenue, a 3% increase in expenditures, and a 95% increase in the net transfers in to the General Fund. The 911 Services Fund had a decrease in fund balance for the current year of $55,054, for an ending deficit of $2,319. This decrease was primarily the result of transfers out and expenditures in excess of property taxes collected. The Road Patrol Millage fund had a decrease in fund balance for the current year of $67,625, for an ending total of $3,972. This decrease was primarily the result of a decrease of expenditures in the current year. The Senior Citizen Millage fund had an increase in fund balance for the current year of $117, for an ending total of $1,713. This decrease was primarily the result of expenditures in excess of property taxes collected. The Housing Commission fund had a decrease in fund balance for the current year of $52,138, for an ending deficit of $145. This increase was primarily the result of property taxes collected in excess of expenditures. Proprietary funds. The County s proprietary fund statements provide the same type of information found in the government-wide financial statements, but in more detail. Unrestricted net position of the Delinquent Tax Revolving fund at the end of the year amounted to $2,205,274 and unrestricted net position of the County Park fund at the end of the year amounted to $9,216. The combined unrestricted net position of the nonmajor enterprise funds were $188,327 at the end of the year. The Delinquent Tax Revolving fund had a decrease in net position for the year of $280,357. The County Parks fund had a decrease in net position for the year of $5,902. The combined increase in net position of the nonmajor enterprise funds was $79,283 for the year. The decreases in the enterprise funds were largely a result of transfers out of the various funds. General Fund Budgetary Highlights Overall during the year, General Fund revenues (revenue and other financing sources) were less than the budgetary estimates by $480,650 or 10%. This was caused primarily by a negative variance with the budget of property taxes and related fees. Expenditures (expenditures and other financing uses) were less than budgetary estimates overall by $50,290 or 1%. This was caused primarily by under spending in most line items. This activity resulted in a decrease in fund balance of $41,

15 , Michigan Management s Discussion and Analysis Year Ended Capital Asset and Debt Administration Capital assets. The County's investment in capital assets for its governmental activities as of, amounted to $1,881,206 (net of accumulated depreciation). This investment in capital assets includes land, buildings and improvements, equipment and furniture, and vehicles and boats. Arenac County Capital Assets (Net of Accumulated Depreciation) Land $ 154,517 $ 154,517 Buildings and improvements 1,387,551 1,495,793 Equipment and furniture 192, ,172 Vehicles 146, ,251 $ 1,881,206 $ 2,039,733 Additional information on the County's capital assets can be found in Note 3B of this report. Long-term debt. The long-term debt of the, as noted on the financial statements contained herein, is comprised of debt related to direct business transactions by the County Board of Commissioners or business trade activity on the part of a local unit of government. At year s end, long-term debt (due in more than one year) amounted to $370,039. Such debt includes Bonds Payable, Loans Payable, Installment Purchase Agreements Payable, Capital Lease Payable, and Compensated Absences. That is, accumulated vested vacation benefits payable and contingent liability for the accumulated sick leave benefits of County employees. Additional information on the County's longterm debt can be found in Note 3E of this report. Component units. Complete financial statements for the Arenac County Drain Commission, Arenac County Economic Development Corporation, Brownfield Redevelopment Authority, and Arenac County Land Bank Authority are included in this audit report. Arenac County Road Commission may be obtained from the Arenac County Road Commission s administrative office located at 4271 Airpark Drive, Standish, Michigan Contacting the County's Management This financial report is designed to provide a general overview of the County's finances to all those with an interest in the government's finances. Questions concerning any of the information provided in this report or requests for additional financial information should be addressed to the Arenac County Clerk s Office, 120 N. Grove St, Standish, Michigan

16 Statement of Net Position Primary Government Governmental Business-type Component Activities Activities Total Units Assets Cash and cash equivalents $ 829,534 $ 846,303 $ 1,675,837 $ 1,840,907 Investments 805, ,788 1,445,800 - Accounts receivable 43,800-43,800 89,653 Taxes receivable 2,119, ,858 2,941, ,903 Advances to other funds - 12,994 12,994 60,038 Special assessments receivable ,985 Due from other governmental units 104, , ,980 Advances to component unit 66,642 81, ,836 - Inventory ,800 Prepaid expenses ,422 Long-term mortgage receivable 1,537,920-1,537,920 - Capital assets: Assets not being depreciated 154,517 1,455,372 1,609, ,987 Assets being depreciated, net 1,726, ,108 1,905,797 20,038,869 Total assets 7,387,666 4,037,617 11,425,283 24,497,544 Deferred outflows of resources Related to pension ,156 Liabilities Accounts payable 655, ,981 79,456 Accrued expenses 82,258-82,258 21,059 Escrow deposits payable 6,808-6,808 - Due to other funds ,350 Due to component units 155, ,502 - Unearned revenue 18,118-18, ,148 Due to state ,808 Long-term liabilities: Due within one year 86,084-86, ,758 Due in more than one year 370, ,039 1,033,658 Net OPEB obligation ,118 Net pension obligation 4,167,100-4,167,100 4,209,072 Total liabilities 5,541, ,541,890 6,084,427 Deferred inflows of resources Property taxes levied for a subsequent period 1,529,497-1,529,497 - Related to pension 369, ,563 - Special assessments levied for a subsequent period ,646 Total deferred inflows of resources 1,899,060-1,899, ,646 Net position Invested in capital assets, net of related debt 1,881,206 1,634,480 3,515,686 20,001,407 Restricted 505, ,061 - Unrestricted (deficit) (2,439,231) 2,402,817 (36,414) (1,653,780) Total net position (deficit) $ (52,964) $ 4,037,297 $ 3,984,333 $ 18,347,627 See accompanying notes. 13

17 Statement of Activities Year Ended Program Revenues Operating Capital Net Charges for Grants and Grants and (Expense) Functions/Programs Expenses Services Contributions Contributions Revenue Governmental activities: General government $ 2,980,567 $ 979,547 $ 991,656 $ - $ (1,009,364) Public safety 2,922, ,834 80,104 - (2,734,030) Public works 546, (546,186) Health and welfare 1,246,625-81,885 1 (1,164,739) Community and economic development 290,300-1,471 - (288,829) Other 1,389, (1,389,026) Capital outlay 724, (724,955) Interest on long-term debt 10, (10,366) Total governmental activities 10,110,993 1,088,381 1,155,116 1 (7,867,495) Business-type activities: County park 251,298 56, ,225 - (48,402) Delinquent tax revolving 9, , ,834 Tax foreclosure 70, , ,877 Jail commissary 3,827 4, Total business-type activities 334, , , ,715 Total primary government $ 10,445,853 $ 1,602,731 $ 1,301,341 $ 1 $ (7,541,780) Component units: Road Commission $ 4,399,193 $ 1,688,603 $ 2,598,137 $ 542,298 $ 429,845 Economic Development Corporation 9,338-6,339 - (2,999) Drain Commission 619, , (159,320) Brownfield Redevelopment Authority Arenac County Land Bank Authority 507 5, ,558 Total component units $ 5,028,921 $ 2,154,231 $ 2,604,476 $ 542,298 $ 272,084 Primary Government Governmental Business-type Component Activities Activities Total Units Change in net position Net (expense) revenue $ (7,867,495) $ 325,715 $ (7,541,780) $ 272,084 General revenues: Property taxes 4,616,127-4,616, ,801 State revenue sharing 1,249,474-1,249,474 - Interest earnings 2,948 3,986 6,934 4,003 Gain on sale of assets ,700 Other - (4,987) (4,987) 9,985 Transfers 486,074 (531,690) (45,616) - Total general revenues and transfers 6,354,623 (532,691) 5,821, ,489 Change in net position (1,512,872) (206,976) (1,719,848) 790,573 Net position at beginning of year 1,215,477 4,244,273 5,459,750 17,557,054 Cumulative effect of prior period adjustments 244, ,431 - Net position at beginning of year 1,459,908 4,244,273 5,704,181 17,557,054 Net position (deficit) at end of year $ (52,964) $ 4,037,297 $ 3,984,333 $ 18,347,627 See accompanying notes. 14

18 Governmental Funds Balance Sheet 911 Road General Services Patrol Fund Fund Millage Assets Cash and cash equivalents $ - $ - $ 26,425 Investments 712,807 92,205 - Accounts receivable 30,478 15, Taxes receivable 452, , ,346 Due from other governmental units 58, Advances to component units 60, Long-term mortgages receivable Total assets $ 1,314,681 $ 550,956 $ 580,783 Liabilities Accounts payable $ 476,566 $ 97,274 $ 2,799 Due to other funds Accrued expenses 45,548 12,537 19,666 Total liabilities 522, ,811 22,465 Deferred inflows of resources Property taxes levied for , ,346 Unavailable revenue - property taxes 305, Unavailable revenue - long-term receivable Total deferred inflows of resources 305, , ,346 Fund balances Nonspendable 47, Restricted - (2,319) 3,972 Assigned Unassigned 439, Total fund balances 486,840 (2,319) 3,972 Total liabilities, deferred inflows of resources, and fund balances $ 1,314,681 $ 550,956 $ 580,783 See accompanying notes. 15

19 Governmental Funds Balance Sheet Assets Cash and cash equivalents Investments Accounts receivable Taxes receivable Due from other governmental units Advances to component units Long-term mortgages receivable Total assets Liabilities Accounts payable Due to other funds Accrued expenses Total liabilities Deferred inflows of resources Property taxes levied for 2016 Unavailable revenue - property taxes Unavailable revenue - long-term receivable Total deferred inflows of resources Fund balances Nonspendable Restricted Assigned Unassigned Total fund balances Total liabilities, deferred inflows of resources, and fund balances Senior Other Citizen Housing Governmental Millage Commission Funds Total $ 1,713 $ 19,272 $ 782,114 $ 829, ,012-1,795 2,151 49, , ,424 2,119, , , ,730-1,537,920-1,537,920 $ 421,713 $ 1,558,987 $ 1,079,341 $ 5,506,461 $ - $ 21,212 $ 64,736 $ 662, , , ,507 82,258-21, , , , ,542 1,685, ,727-1,537,920-1,537, ,000 1,537, ,542 3,528, ,000 1,713 (145) 501, , ,214 85, ,840 1,713 (145) 587,054 1,077,115 $ 421,713 $ 1,558,987 $ 1,079,341 $ 5,506,461 See accompanying notes. 16

20 Reconciliation of the Governmental Funds Balance Sheet to the Statement of Net Position Total fund balances for governmental funds $ 1,077,115 Total net position reported for governmental activities in the statement of net position is different because: Capital assets used in governmental activities are not financial resources and, therefore, are not reported in the funds. Those assets consist of: Add - capital assets 5,498,037 Deduct - accumulated depreciation (3,616,831) Other long-term assets are not available to pay for current period expenditures and their inflows are deferred in the funds. Those items consist of: Add - deferred inflows related to taxes receivable 461,582 Add - deferred inflows related to accounts receivable 1,519,919 Deduct - net pension liability and related deferred inflow (4,536,663) Long-term liabilities applicable to the County's governmental activities are not due and payable in the current period and accordingly are not reported as fund liabilities. All liabilities, both current and long-term, are reported in the statement of net position. Those liabilities consist of: Deduct - bonds payable (165,000) Deduct - intallment purchase agreement payable (50,000) Deduct - compensated abscenses payable (237,882) Deduct - capital lease payable (3,241) Total net position (deficit) of governmental activities $ (52,964) See accompanying notes. 17

21 Governmental Funds Statement of Revenues, Expenditures, and Changes in Fund Balances Year Ended 911 Road Senior General Services Patrol Citizen Fund Fund Millage Millage Revenues Property taxes and related fees $ 2,852,686 $ 448,713 $ 549,361 $ 420,348 Licenses and permits 6, Federal revenue 6, State revenue 959, ,276 40,000 - Charges for services 867,259 55, Fines and forfeits 12, Interest earnings 2, Reimbursements 110, ,486 - Other revenue Miscellaneous 8,035 9, Total revenues 4,825, , , ,348 Expenditures Current: General government 2,184, Public safety 1,106, , ,186 - Public works 56, Health and welfare 330, ,231 Community and economic development 7, Other 1,389, Capital outlay 77,854 5,660 86,165 - Debt service: Principal Interest and fiscal charges Total expenditures 5,153, , , ,231 Excess (deficiency) of revenues over expenditures (327,685) (44,027) (67,625) 117 Other financing sources (uses) Transfers in 535, Transfers out (248,916) (11,027) - - Total other financing sources (uses) 286,545 (11,027) - - Net change in fund balances (41,140) (55,054) (67,625) 117 Fund balances at beginning of year (restated) 527,980 52,735 71,597 1,596 Fund balances at end of year $ 486,840 $ (2,319) $ 3,972 $ 1,713 See accompanying notes. 18

22 Governmental Funds Statement of Revenues, Expenditures, and Changes in Fund Balances Year Ended Revenues Property taxes and related fees Licenses and permits Federal revenue State revenue Charges for services Fines and forfeits Interest earnings Reimbursements Other revenue Miscellaneous Total revenues Expenditures Current: General government Public safety Public works Health and welfare Community and economic development Other Capital outlay Debt service: Principal Interest and fiscal charges Total expenditures Other Housing Governmental Commission Funds Total $ - $ 345,019 $ 4,616,127-74,581 80, , , ,979 10, ,497 1,249, ,004 1,024,038-1,143 13, ,948-40, ,645-32,525 32,525 1, , , ,654 1,370,801 8,099, ,915 2,490, ,366 2,510, , ,574 1,246, , , ,389, , ,955-85,000 85,000-10,366 10, ,792 1,584,497 8,804,173 Excess (deficiency) of revenues over expenditures Other financing sources (uses) Transfers in Transfers out Total other financing sources (uses) Net change in fund balances Fund balances at beginning of year (restated) Fund balances at end of year (52,138) (213,696) (705,054) - 256, ,635 - (45,618) (305,561) - 210, ,074 (52,138) (3,140) (218,980) 51, ,194 1,296,095 $ (145) $ 587,054 $ 1,077,115 See accompanying notes. 19

23 Reconciliation of the Governmental Funds Statement of Revenues, Expenditures, and Changes in Fund Balances to the Statement of Activities Year Ended Net change in fund balances - total governmental funds $ (218,980) The change in net position reported for governmental activities in the statement of activities is different because: Governmental funds report capital outlays as expenditures. However, in the statement of activities the cost of those assets is allocated over their estimated useful lives and reported as depreciation expense. Add - capital outlay 33,585 Deduct - depreciation expense (228,216) Mortgage receivable repayments and mortgage disbursements are revenue and expenditures respectively in the governmental funds, but the repayments and disbursements reduce and increase the mortgages receivable balances in the statement of net position. The activity in the governmental funds is as followed Current year mortgage receivable loan disbursement 62,784 Certain expenses reported in the statement of activities do not require the use of current financial resources and, therefore, are not reported as expenditures in the funds. Deduct - increase in pension liability (1,469,363) Add - decrease in accrued compensated absences 14,258 Bond proceeds provide current financial resources to governmental funds in the period issued, but issuing bonds increases long-term liabilities in the statement of net position. Repayment of bond principal is an expenditure in the governmental funds, but the repayment reduces long-term liabilities in the statement of net position. Add - principal payments on bonds payable 35,000 Add - principal payments on capital lease payable 1,084 Add - principal payments on installment purchase agreement payable 50,000 Change in net position of governmental activities $ (1,719,848) See accompanying notes. 20

24 Statement of Net Position - Proprietary Funds Delinquent Other Tax County Enterprise Revolving Park Funds Total Assets Cash and cash equivalents $ 651,898 $ 6,097 $ 188,308 $ 846,303 Investments 640, ,788 Taxes receivable 821, ,858 Advances to othergovernmental units 9,555 3,439-12,994 Advances to component unit 81, ,194 Capital assets: Assets not being depreciated - 1,455,372-1,455,372 Assets being depreciated, net - 167,783 11, ,108 Total Assets 2,205,274 $ 1,632, ,652 4,037,617 Liabilities Accounts payable Accrued expenses Total liabilities (all current) Net position Invested in capital assets, net of related debt - 1,623,155 11,325 1,634,480 Unrestricted 2,205,274 9, ,327 2,402,817 Total net position $ 2,205,274 $ 1,632,371 $ 199,652 $ 4,037,297 See accompanying notes. 21

25 Statement of Revenues, Expenses, and Changes in Net Position - Proprietary Funds Year Ended Delinquent Other Tax County Enterprise Revolving Parks Funds Total Operating revenues Interest earned on delinquent taxes $ 262,061 $ - $ - $ 262,061 Charges for services , ,528 Reimbursments Rentals - 56,195-56,195 Refunds Other revenue Total operating revenues 262,151 56, , ,350 Operating expenses Fees and charges 9, ,814 72, ,176 Total operating expenses 9, ,814 72, ,176 Operating income 252,834 (181,143) 123, ,174 Nonoperating revenues (expenses) Interest earnings 3, ,986 Grants - 146, ,225 Depreciation expense - (13,484) (2,200) (15,684) Miscellaneous (26) - (26) Capital outlay (4,961) - - (4,961) Net nonoperating revenues (expenses) (1,001) 132,741 (2,200) 129,540 Income before transfers 251,833 (48,402) 121, ,714 Transfers Transfers in - 42,500-42,500 Transfers out (532,190) - (42,000) (574,190) Total transfers (532,190) 42,500 (42,000) (531,690) Changes in net position (280,357) (5,902) 79,283 (206,976) Total net position at beginning of year 2,485,631 1,638, ,369 4,244,273 Total net position at end of year $ 2,205,274 $ 1,632,371 $ 199,652 $ 4,037,297 See accompanying notes. 22

26 Statement of Cash Flows - Proprietary Funds Year Ended Delinquent Other Tax County Enterprise Revolving Parks Funds Total Cash flows from operating activities Receipts from taxpayers and customers $ 262,151 $ 56,671 $ 195,528 $ 514,350 Net delinquent tax collections (purchases) (22,571) - - (22,571) Payments to employees for services - (49,747) - (49,747) Payments to suppliers for goods and services (93,136) (176,641) (75,227) (345,004) Net cash from operating activities 146,444 (169,717) 120,301 97,028 Cash flows from noncapital financing activities Proceeds from grants - 146, ,225 Transfers in - 42,500-42,500 Transfers out (532,190) - - (532,190) Net cash from noncapital financing activities (532,190) 188,725 - (343,465) Cash flows from capital financing activities Acquisition of capital assets (4,943) (13,486) - (18,429) Net cash from noncapital financing activities (4,943) (13,486) - (18,429) Cash flows from investing activities Purchases of investments (2,550) - (42,000) (44,550) Interest earnings 3, ,986 Net cash from investing activities 1,436 - (42,000) (40,564) Net change in cash and cash equivalents (389,253) 5,522 78,301 (305,430) Cash and cash equivalents at beginning of year 1,041, ,207 1,153,933 Cash and cash equivalents at end of year $ 651,898 $ 6,097 $ 190,508 $ 848,503 Reconciliation of operating income to net cash from operating activities: Operating income $ 252,834 $ (181,143) $ 123,483 $ 195,174 Adjustments to reconcile operating income to net cash from operating activities: Depreciation expense - 13,484 2,200 15,684 Change in assets and liabilities: Accounts receivable (106,390) (1,939) 4 (108,325) Accrued expenses - (70) - (70) Accounts payable - (49) (5,386) (5,435) Net cash from operating activities $ 146,444 $ (169,717) $ 120,301 $ 97,028 See accompanying notes. 23

27 Statement of Fiduciary Net Position Trust & Penal Agency Fines Total Assets Cash and cash equivalents $ 408,721 $ 74,305 $ 483,026 Investments 25,017-25,017 Total assets 433,738 74, ,043 Liabilities Due to other governmental units 303, ,093 Due to others 130,645 74, ,950 Total liabilities $ 433,738 $ 74,305 $ 508,043 See accompanying notes. 24

28 Combining Statement of Net Position - Component Units Economic Brownfield Arenac Road Development Drain Redevelopment Land Bank Commission Corporation Commission Authority Authority Total Assets Cash and cash equivalents $ 1,356,918 $ 57,832 $ 399,339 $ 4,756 $ 22,062 $ 1,840,907 Accounts receivable 89, ,653 Taxes receivable 472, ,903 Special assessments receivable , ,985 Due from other funds , ,038 Due from other governmental units 629, , ,980 Inventory 252, , ,800 Prepaid expenses 37, ,422 Capital assets: Assets not being depreciated 171, ,987 Assets being depreciated, net 18,095,184-1,943, ,038,869 Total assets 21,106,087 57,832 3,271,047 4,756 57,822 24,497,544 Deferred outflows of resources Related to pension 483, ,156 Liabilities Accounts payable 48,907-30, ,456 Accrued expenses 20, ,059 Due Advances to other from governmental primary units , ,350- Unearned revenue 289, ,148 Advances from other governmental units 100, ,808 Long-term liabilities: Net OPEB obligation 109, ,118 Net pension obligation 4,209, ,209,072 Due within one year , ,758 Due in more than one year 56, , ,033,658 Total liabilities 4,833,770-1,250, ,084,427 Deferred inflows of resources Unavailable revenue - due from governmental units Special assessments levied for a subsequent period 472,903-75, ,646 Total deferred inflows of resources 472,903-75, ,646 Net position Invested in capital assets, net of related debt 18,267,171-1,734, ,001,407 Unrestricted (1,984,601) 57, ,411 4,756 57,822 (1,653,780) Total net position $ 16,282,570 $ 57,832 $ 1,944,647 $ 4,756 $ 57,822 $ 18,347,627 See accompanying notes. 25