Comprehensive Annual Financial Report

Transcription

1 COUNTY OF LINN, IOWA Comprehensive Annual Financial Report For the Fiscal Year Ended June 30, 2017

2 COUNTY OF LINN, IOWA COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE FISCAL YEAR ENDED JUNE 30, 2017 PREPARED BY OFFICE OF FINANCE AND BUDGET

3 COUNTY OF LINN, IOWA TABLE OF CONTENTS JUNE 30, 2017 INTRODUCTORY SECTION Page Table of Contents... 1 County Officials... 3 County Organizational Chart... 4 Letter of Transmittal... 5 GFOA Certificate of Achievement... 9 FINANCIAL SECTION Independent Auditor's Report Management s Discussion and Analysis Basic Financial Statements: Government-wide Financial Statements: Statement of Net Position Statement of Activities Fund Financial Statements: Balance Sheet Governmental Funds Reconciliation of the Governmental Funds Balance Sheet to the Statement of Net Position Statement of Revenues, Expenditures, and Changes in Fund Balances Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances of Governmental Funds to the Statement of Activities Statement of Net Position Proprietary Funds Statement of Revenues, Expenses, and Changes in Fund Net Position Proprietary Funds Statement of Cash Flows Proprietary Funds Statement of Fiduciary Net Position Statement of Changes in Fiduciary Net Position Notes To Financial Statements Required Supplementary Information: Budgetary Comparison Schedule All Governmental Funds Budget to GAAP Reconciliation Note to Required Supplementary Information Budgetary Reporting Schedule of the Proportionate Share of the Net Pension Liability 64 Schedule of County Contributions Note to Required Supplementary Information Pension Liability 67 Schedule of Funding Progress for the Retiree Health Plan Combining Fund Statements: Combining Balance Sheet Nonmajor Governmental Funds Combining Statement of Revenues, Expenditures, and Changes in Fund Balances Nonmajor Governmental Funds Combining Statement of Net Position Internal Service Funds Combining Statement of Revenues, Expenses, and Changes in Fund Net Position Internal Service Funds Combining Statement of Cash Flows Internal Service Funds Combining Statement of Changes in Assets and Liabilities All Agency Funds (Continued) -1-

4 COUNTY OF LINN, IOWA TABLE OF CONTENTS JUNE 30, 2017 (CONTINUED) STATISTICAL SECTION Page Net Position by Component Changes in Net Position Governmental Activities Tax Revenues by Source Fund Balances of Governmental Funds Changes in Fund Balances of Governmental Funds Assessed Value and Estimated Actual Value of Taxable Property Property Tax Rates Per $1,000 Taxable Valuation All Direct and Overlapping Governments Principal Property Taxpayers Property Tax Levies and Collections Ratios of Outstanding Debt by Type Ratios of General Bonded Debt Outstanding Legal Debt Margin Direct and Overlapping Governmental Activities Debt Demographics and Economic Statistics Principal Employers Operating Indicators by Function Capital Asset Statistics by Function Full-time Equivalent Employees by Department COMPLIANCE SECTION Independent Auditor s 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

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6 INTRODUCTORY SECTION

7 COUNTY OF LINN, IOWA COUNTY OFFICIALS TERM NAME TITLE EXPIRES James Houser Board of Supervisors 2018 Stacey Walker Board of Supervisors 2018 Ben Rogers Board of Supervisors 2018 Brent Oleson Board of Supervisors 2018 John Harris Board of Supervisors 2018 Jerry Vander Sanden Attorney 2018 Joel Miller Auditor 2020 Joan McCalmant Recorder 2018 Brian Gardner Sheriff 2020 Sharon Gonzalez Treasurer

8 COUNTY ORGANIZATIONAL CHART Residents of Linn County Board of Auditor Treasurer Recorder Attorney Sheriff Supervisors Court Expense Juvenile Justice Linn County Community Services State Welfare Facilities Planning & Development Board of Health Conservation Board Public Health Conservation Veteran Affairs Information Technology Risk Management Human Resources Engineer Finance & Budget Purchasing LIFTS Soil Conservation Emergency Management Medical Examiner Civil Service Blue = Elected Official Green = Board or Commission Grey = Department -4-

9 November 28, 2017 Board of Supervisors and Citizens County of Linn, Iowa The Comprehensive Annual Financial Report (CAFR) for the County of Linn, Iowa (the "County") for the fiscal year ended June 30, 2017, is hereby submitted in accordance with the provisions of Section of the Code of Iowa. This report consists of management s representations concerning the finances of the County. Consequently, management assumes full responsibility for the completeness and reliability of all of the information presented in this report. To provide a reasonable basis for making these representations, management of the County has established a comprehensive internal control framework that is designed both to protect the government s assets from loss, theft, or misuse and to compile sufficient reliable information for the preparation of the County s financial statements in conformity with generally accepted accounting principles (GAAP). Because the cost of internal controls should not outweigh their benefits, the County s comprehensive framework of internal controls has been designed to provide reasonable rather than absolute assurance that the financial statements will be free from material misstatement. As management, we assert that, to the best of our knowledge and belief, this financial report is complete and reliable in all material respects. Eide Bailly LLP, a firm of licensed certified public accountants, has audited the County s financial statements. The goal of the independent audit was to provide reasonable assurance that the financial statements of the County for the fiscal year ended June 30, 2017 are free of material misstatement. The independent audit involved examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements; assessing the accounting principles used and significant estimates made by management; and evaluating the overall financial statement presentation. The independent auditor concluded, based upon the audit, that there was a reasonable basis for rendering an unmodified opinion that the County s financial statements for the fiscal year ended June 30, 2017 are fairly presented in conformity with GAAP. The independent auditor s report is presented as the first component of the financial section of this report. The independent audit of the financial statements of the County was part of a broader, federally mandated Single Audit designed to meet the special needs of federal grantor agencies. The standards governing Single Audit engagements require the independent auditor to report not only on the fair presentation of the financial statements, but also on the audited government s internal controls and compliance with legal requirements, with special emphasis on internal controls and legal requirements involving the administration of federal awards. These reports will be available in the County s separately issued Single Audit Report. GAAP requires that management provide a narrative introduction, overview, and analysis to accompany the basic financial statements in the form of Management s Discussion and Analysis (MD&A). This letter of transmittal is designed to complement MD&A and should be read in conjunction with it. The County s MD&A can be found immediately following the report of the independent auditors. -5-

10 PROFILE OF LINN COUNTY The County was organized on June 10, It currently is operated under a five-member Board of Supervisors. The members are elected by district to four-year terms. In the November 2016 election, more than 50 percent of voters approved a changed that will reduce the size of the Board to three members. All five supervisor seats will expire at the end of 2018 after redistricting is completed. The Board is the legislative body of the County, which annually adopts a budget and establishes tax rates to support County programs. Other elected officials (Attorney, Auditor, Recorder, Sheriff, and Treasurer) and appointed department heads have the responsibility of administering these programs in accordance with the policies and the annual budget adopted by the Board of Supervisors. The County provides a full range of services to its citizens including public safety, social services, services to people with disabilities, parks, planning and development, public health, and general administrative services. In addition, the County provides a secondary roads department and an information technology department utilized by other governmental entities. The State of Iowa requires the adoption of an annual budget for total County operating expenditures by function area. Activities of the general fund, special revenue funds, debt service fund, and capital projects fund are included in the annual appropriated budget, prepared on a cash basis. The level of budgetary control (that is, the level at which expenditures cannot legally exceed the appropriated amount) is at the total function level. As demonstrated by the statements included in the financial section of this report, the County continues to meet its responsibility for sound financial management. Significant Financial Policies FACTORS AFFECTING FINANCIAL CONDITION Except for the implementation of GASB Statements No. 77 as described in note 5 of the financial statements, Linn County did not implement any new financial policies that had a significant impact on the current period s financial statements. Major Budgetary Initiatives Linn County did not implement any new budgetary initiatives that had a significant impact on the current period s financial statements. Local Economy Linn County is the second largest population center in the state of Iowa. The adjoining metropolitan areas of Cedar Rapids, Marion, Hiawatha, and Robins include approximately 80 percent of the County s population, with the remainder living in small towns and rural areas. The fiscal year 2017 population of Linn County is estimated at 222,142 an increase of 0.7 percent from The local unemployment rate was 3.6 percent in August, significantly less than the national average of 4.4 percent. A proposed $103 million, 28-story building called One Park Place includes a hotel, grocery store, rooftop restaurant, apartments, condominiums and parking. The high-rise building will be located at the corner of Third Avenue and First Street SE, next to the Paramount Theatre. The City Council unanimously selected One Park Place over other proposals to redevelop the last of the city-owned properties in downtown Cedar Rapids that were acquired after the flood of Developers for One Park Place still need to secure financing by the end of 2017 to move forward with the project and to access the city subsidy worth $20 million. Midwest Logistics, a warehousing, transportation and supply chain management company has announced plans to invest $30 million in three new warehouse and distribution facilities in southwest Cedar Rapids. Company officials are projecting at least 25 new jobs will be created by the expansion with 10 jobs or more at each facility meeting the high quality wage threshold of $20.76 per hour in Cedar Rapids. The company has applied for $2.3 million in tax incentives for the project over 10 years. Construction is underway for a new mixed-use commercial-residential development in the Cedar Rapids New Bohemia arts and entertainment district. The 329 Building at th Avenue SE, across from the NewBo City Market, is a 38,400 squarefoot project with an estimated cost of $5 million. There will be 9,600 square feet of commercial space on the first floor, 18 apartments on the second and third floors and five condominiums on the top floor. Up to four commercial tenants could occupy the first floor. The developer for this project, Ahmann Companies, is currently nearing completion of a $17.8 million, -6-

11 four-building complex that includes 90,000 square feet of residential, office, and retail space, also located near the NewBo City Market. Art Tech Village, an apartment and retail complex proposed for the New Bohemia District, will include a single, three-sided building with four stories on the southeast side of 16 th Avenue and a courtyard in the middle. The first floor will be reserved for approximately 34,000 square feet of retail or office space. The top three floors, with a combined 120,000 square feet, will have a total of 107 apartments, two co-working spaces and a fitness center. The project will cost an estimated $25 million to build and will begin in the spring of Long-Term Financial Planning Construction of a flood control system that includes pump stations and a river walk is just beginning. One of the pump stations is being built in New Bohemia, incorporating the style of the former brick Czech school building located nearby. The pump station is two stories high and will cost $5 million. Another pump station located at the former Sinclair plant site was completed this fall, with a large water detention area included in the design. There will also be two pump stations located near Quaker Oats, but the city is focusing its early work on the flood control system in New Bohemia and Czech Village because both spots are low-lying commercial areas. Construction of earthen levees in New Bohemia were recently completed with removable flood walls to protect Czech Village. All of the work at New Bohemia and Czech Village is being financed with state flood control funds. In total, the city s $600 million system will feature 11 pump stations to remove rain water that collects behind flood walls and levees when the river is higher than the storm sewer outlets in the river. Solid waste has been transported to the former Linn County landfill at County Home Road for several years. New cells are being added, extending the estimated life of the landfill by another 20 to 30 years. The first of the new cells has been in use since Another cell was opened in 2010, and cells three and four were operational in The next cell will be placed in service in 2023, based on current waste flows. Board members will continue exploring new technological advances in solid waste disposal to avoid the necessity of siting another landfill in 20 years. The Solid Waste Agency s Board is comprised of five members from the Cedar Rapids City Council, the city s solid waste director, two of the Linn County Board of Supervisors, and a member from an at-large member community. Awards and Acknowledgements The Government Finance Officers Association of the United States and Canada (GFOA) awarded a Certificate of Achievement for Excellence in Financial Reporting to the County for its Comprehensive Annual Financial Report for the fiscal year ended June 30, This was the 28th consecutive year that the County has received this prestigious award. In order to be awarded a Certificate of Achievement, the government published an easily readable and efficiently organized CAFR. This report satisfied both GAAP and applicable legal requirements. A Certificate of Achievement is valid for a period of one year only. We believe that our current CAFR continues to meet the Certificate of Achievement Program s requirements and we are submitting it to the GFOA to determine its eligibility for another certificate. In addition, the government also received the GFOA s Distinguished Budget Presentation Award for its annual budget for fiscal year In order to qualify for the Distinguished Budget Presentation Award, the County s budget document was judged to be proficient in several categories including as a policy document, a financial plan, an operations guide, and a communication device. Preparation of the Comprehensive Annual Financial Report could not have been accomplished without the services of the entire staff of the Office of Finance and Budget. The excellent services provided by the County's independent auditors, Eide Bailly LLP, are greatly appreciated. We would also like to thank the Board of Supervisors for their leadership and support without which preparation of this report would not have been possible.

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13 FINANCIAL SECTION

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16 Independent Auditor s Report To the Officials of the County of Linn, Iowa: Report on the Financial Statements We have audited the accompanying financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the County of Linn, Iowa, (County) as of and for the year ended June 30, 2017, 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. Auditor s Responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America 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 auditor s 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 County 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 County s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions What inspires you, inspires us. Let s talk. eidebailly.com 1545 Associates Dr., Ste. 101 Dubuque, IA T F EOE

17 Opinions In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the County of Linn, Iowa, as of June 30, 2017, and the respective changes in financial position and, where applicable, cash flows thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America. Other Matters Required Supplementary Information Accounting principles generally accepted in the United States of America require that the management s discussion and analysis and the other required supplementary information 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 inquires of management about the methods or preparing the information and comparing the information for consistency with management s responses to our inquires, 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 County s financial statements. The introductory section, combining nonmajor fund financial statements, and statistical section are presented for purposes of additional analysis and are not a required part of the financial statements. The combining nonmajor 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, the combining nonmajor fund financial statements are fairly stated, in all material respects, in relation to the basic financial statements as a whole. The introductory and statistical sections have not been subjected to the auditing procedures applied in the audit of the basic financial statements and, accordingly, we do not express an opinion or provide any assurance on them

18 Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated November 28, 2017 on our consideration of the County of Linn, Iowa 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 solely 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 effectiveness of the County s internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the County s internal control over financial reporting and compliance. Dubuque, Iowa November 28,

19 Management s Discussion and Analysis As management of the County, we offer readers of the County s financial statements this narrative overview and analysis of the financial activities of the County for the fiscal year ended June 30, We encourage readers to consider the information presented here in conjunction with additional information that we have furnished in our letter of transmittal which can be found on pages 5 7 of this report. Financial Highlights The assets and deferred outflows of resources of the County exceeded the liabilities and deferred inflows of resources at the close of the most recent fiscal year by $201,808,556 (net position). The County s total net position increased by $14,831,617 As of the close of the fiscal year, the County s governmental funds reported combined ending fund balances of $55,321,873, an increase of $7,779,958 in comparison with the prior year At the end of the current fiscal year, the fund balance for the general fund was $22,186,986, or 32 percent of total general fund expenditures Total general obligation bonded debt increased by $6,055,000 during the current fiscal year Overview of the Financial Statements The discussion and analysis are 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. 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 of resources 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 fiscal year. All changes in net position are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of related cash flows. Thus, revenues and expenses are reported in this statement for some items that will only result in cash flows in future fiscal periods (e.g., uncollected taxes). 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 government activities of the County include public safety and legal services, physical health and social services, mental health, county environment and education, roads and transportation, governmental services to residents, and administration. Options of Linn County is the sole business-type activity of the County. 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 fiscal year. Such information may be useful in evaluating a government s near-term financing requirements. -13-

20 Because the focus of governmental funds is narrower than that of the government-wide financial statements, it is useful to compare the information presented for governmental funds with similar information presented for governmental activities in the government-wide financial statements. By doing so, readers may better understand the long-term impact of the government s near-term financing decisions. Both the governmental fund balance sheet and the governmental fund statement of revenues, expenditures, and changes in fund balances provide a reconciliation to facilitate this comparison between governmental funds and governmental activities. The County maintains 13 individual governmental funds. Information is presented separately in the governmental fund balance sheet and in the governmental fund statement of revenues, expenditures, and changes in fund balances for the general fund, the mental health fund, the secondary roads fund, and the capital projects fund, all of which are considered to be major funds. Data from the other 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 all governmental funds by fund and by ten major classes of expenditures. These ten classes are: public safety and legal services, physical health and social services, mental health, county environment and education, roads and transportation, governmental services to residents, administration, nonprogram services, debt service, and capital projects. The ultimate legal level of control is by function for all governmental funds. The basic governmental fund financial statements can be found on pages of this report. Proprietary funds. Linn County maintains two different types of proprietary funds. An enterprise fund is used to report the same functions presented as business-type activities in the government-wide financial statements. The County uses its enterprise fund, Options of Linn County, to account for employment opportunities provided for the County s mentally challenged and developmentally disabled individuals. Internal service funds are an accounting device used to accumulate and allocate costs internally among Linn County s various functions. Linn County uses internal service funds to account for its employee health and dental benefits and for its self-insurance of worker s compensation, auto liability, and tort claims. Because these services predominantly benefit governmental rather than business-type functions, they have been included within governmental activities in the government-wide financial statements. Proprietary funds provide the same type of information as the government-wide financial statements, only in more detail. Both the internal service funds are combined into a single, aggregated presentation in the proprietary fund financial statements. Individual fund data for the internal service 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 government. Fiduciary funds are not reflected in the government-wide financial statement 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 pages 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. The combining statements referred to earlier in connection with nonmajor governmental funds and internal service funds are presented immediately following the required supplementary information. Combining fund statements can be found on pages of this report. -14-

21 Government-wide Financial Analysis As noted earlier, net position may serve over time as a useful indicator of a government s financial position. In the case of Linn County, assets and deferred outflows of resources exceeded liabilities and deferred inflows of resources by $201,809,000 at the close of the most recent fiscal year. The largest portion of the County s net position, 83 percent, reflects its investment in capital assets (e.g., infrastructure, land, buildings, and machinery and equipment), 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. Statement of Net Position for the Fiscal Year Ended June 30, 2017 The County s combined net position increased to $201,809,000 for fiscal year A condensed version of the Statement of Net Position as of June 30, 2017 and June 30, 2016 follows: County of Linn Net Position (in thousands) Governmental Business-type Total Activities Activities Government Current and other assets $ 140,463 $ 130,825 $ - $ 590 $ 140,463 $ 131,415 Capital assets 192, , , ,054 Total assets 332, , , ,469 Deferred outflows of resources 11,121 5, ,121 5,024 Long-term liabilities 65,114 51, ,114 51,488 Other liabilities 5,317 7, ,317 7,526 Total liabilities 70,431 58, ,431 59,014 Deferred inflows of resources 71,647 70, ,647 70,501 Net position: Net investment in capital assets 168, , , ,972 Restricted 30,473 23, ,473 23,450 Unrestricted 3, ,209 1,556 Total net position $ 201,809 $ 186,402 $ - $ 576 $ 201,809 $ 186,

22 Comparison of Net Position Dollars 180, , , , ,000 80,000 60,000 40,000 20, Capital assets Restricted Unrestricted The largest portion of the County s net position is the Net Investment in Capital Assets (e.g., land, infrastructure, buildings, and machinery and equipment). The debt related to the Investment in Capital Assets is liquidated with sources other than capital assets. The $6,155,000 increase includes a $12,249,000 increase in capital assets and a $6,055,000 net increase in general obligation bonds. Unrestricted net position the part of net position that can be used to finance day-to-day operations without constraints established by debt covenants, enabling legislation, or other legal requirements increased $1,653,000 at June 30, Current and other assets increased $9,048,000 to $140,463,000. Included was an increase of $5,308,000 or 10 percent in pooled cash and investments, and an increase in succeeding year property tax deferred inflows of $3,294,000 or 5 percent. The increase in pooled cash includes a $815,000 increase in the capital projects fund and a $1,279,000 increase in the MH-DD fund. Capital projects approved by the Board of Supervisors as part of the five-year plan have yet to be initiated resulting in the pooled cash increase. Linn County is one of nine counties included in a consortium created to redesign mental health services. The East Central Region (ECR) continues to collect property taxes for services previously provided by each county. The Region then requests payments from the counties for services rendered. The Region has yet to fully implement those programs. As a result, the Region has not requested all the property taxes collect by Linn County from the MH-DD fund. The increase in unavailable property taxes is to support fiscal year 2018 operational increases. The County Direct Services special revenue fund increased $1,067,000 in part from the transfer of $569,000 from the closed Options Enterprise fund program. The succeeding year property tax receivable represents taxes certified by the Board of Supervisors to be collected in the next fiscal year for the purposes set out in the budget for the next fiscal year. -16-

23 Statement of Activities for the Fiscal Year Ended June 30, 2017 A condensed version of the Statement of Activities as of June 30, 2017 and June 30, 2016 follows: County of Linn Changes in Net Position (in thousands) Governmental Activities Business-type Activities Total Revenues: Program revenues: Charges for services $ 21,598 $ 21,754 $ - $ 247 $ 21,598 $ 22,001 Operating grants and contributions 19,846 18, ,846 18,867 Capital grants and contributions 4,962 3, ,962 3,388 General revenues and transfers: Property taxes 59,897 59, ,897 59,403 Other county taxes 4,667 4, ,667 4,480 State replacements and credits 3,182 2, ,182 2,884 Investment income Other general revenue 2,664 2, ,664 2,919 Transfers - internal activity (569) Total revenues 117, ,001 (567) , ,249 Expenses: Public safety and legal services 26,452 25, ,452 25,292 Physical health and social services 14,415 14, ,415 14,607 Mental health 12,754 13, ,763 13,725 County environment and education 7,446 3, ,446 3,460 Roads and transportation 17,844 25, ,844 25,746 Governmental services to residents 4,700 3, ,700 3,458 Administration 18,201 14, ,201 14,571 Interest on long-term debt Total expenses 102, , , ,535 Change in net position 15,407 12,719 (576) (5) 14,831 12,714 Beginning net position 186, , , ,264 Ending net position $ 201,809 $ 186,402 $ - $ 576 $ 201,809 $ 186,978 Governmental activities Revenues for the County s governmental activities increased $3,868,000 or 3.4% while total expenses increased $1,180,000 or 1.2% Key elements include: The $494,000 or 0.8% increase in County property taxes represented overall valuation growth of 1.3% and no change in the countywide levy rate. Public safety operating grants increased $979,000, the result of increased care of prisoner revenue. The $4,962,000 in capital grants and contributions, an increase of $1,574,000, reflects an increase in non-county funded road projects placed into service Included in the county environment and education increase of $3,986,000 were costs associated with construction of the Red Cedar Lodge, the Cedar Valley Nature Trail, and additional storage facilities. A number of LOST-funded projects were completed prior to FY 17. Those expense decreases as well as less road maintenance costs reduced roads and transportation costs in FY 17. The governmental services increase to residents of $1,242,000 was the result of the 2016 presidential election. Increasing IT staffing and operational costs of $409,000, and increased chargeback of workers compensation expenses to the Self Retained Insurance fund of $132,000, as well as additional policy and administration costs, were part of the administration increase of $3,630,

24 All functional activities were impacted by wage and benefit changes. These costs, comprising slightly more than half of total expenses, included a wage increase of $2,143,000 or 5.04% for the current 763 employees and a net decrease of $1,360,000 for 24 eliminated positions. Since the end of fiscal 2012, 20 Child Support Recovery positions were assumed by the State of Iowa and 50 Community Services positions, primarily mental health, were eliminated. During that same period, an additional 11 positions were added to the Sheriff s Office and 11 in Information Technology. Business-type activities Options of Linn County, the County s sole business-type activity, discontinued operations in February of Options clients began transitioning to other vocational providers and to Day Habilitation programs in FY16. Vocational services ended on June 30, Included in the $9,000 of operating expenses were $8,000 of asset disposal loss. Individual Major Fund Analysis As the County completed the year, its governmental funds reported a combined fund balance of $55,322,000, $7,780,000 more than last year. The nonspendable fund balance of $1,996,000 is for inventories and prepaid expenses while all of the restricted fund balances relate to fund balances of a number of restricted funds. Total unassigned fund balance at year end was $21,017,000. General fund General fund revenues increased $957,000 or 1.3% while expenditures increased $2,403,000 or 3.8%. The revenue increase includes a $730,000 increase in property tax revenue, a $335,000 or 28.1% decrease in licenses and permits, and an $84,000 or 12.7% increase in use of money and property. The property tax increase was the result of valuation growth of 1.3% and no change in the levy rate. The licenses and permit decrease included a $234,000 decrease in air pollution permit revenue, the result of a State of Iowa change in the fee collection process. The increase in use of money and property, investment income, is primarily the result of continued consolidation of funds into higher yielding bank and investment accounts. The $531,000 increase in governmental services relates to the 2017 presidential election. The administration increase of $1,205,000 included information technology staffing and operational cost increases of $409,000 and policy and administration increases of $476,000. The decrease in capital projects is related to $826,000 expended for voting equipment in FY 16. No voting equipment was purchased in FY 17. Mental health fund Total fund balance increased $1,261,000 as a result of the Region delay in implementing new programs for which property tax dollars had been levied. The East Central Region (ECR) continues to collect property taxes for services previously provided by each county. The Region then requests payments from the counties for services rendered. The Region has yet to fully implement those programs. As a result, the Region has not requested all the property taxes collect by Linn County from the MH-DD fund. Secondary roads fund Revenue increased $1,133,000 from FY 16. Road Use Tax Funding from the State increased $277,000 while 28E agreement reimbursements from other governmental jurisdictions increased $771,000. The roads and transportation expenditures decrease of $3,690,000 related to seasonal delays in approved projects. Capital projects fund The increase in expenditures of $6,254,000 resulted from the $7,200,000 purchase of 485 acres of property to carry out urban renewal projects. General Fund Budgetary Highlights In accordance with the Code of Iowa, the Board of Supervisors annually adopts a budget following required public notice and hearing for all governmental funds. The County budget is prepared on the cash basis. Over the course of the year, the County amended its general fund budget twice. The first amendment was made in December 2016 and resulted in an increase to the general fund expenditure budget of $917,000 for an amended budget of $72,056,000. The amendment included $400,000 for election appropriations related to the 2016 presidential election, $204,000 in CDBG housing grants, and $138,000 for the State Innovation Model grant. -18-

25 The second amendment in May of 2017 increased general fund expenditures $966,000. The increase included sheriff grant and federally reimbursement expenditure increases of $487,000, an additional $164,000 related to the 2017 presidential election, and $136,000 related to LCCS retirement and staffing changes. Capital Assets and Debt Administration County of Linn s Capital Assets (Net of Depreciation, in thousands) Governmental Activities Business-type Activities Totals Land $ 19,784 $ 11,996 $ - $ - $ 19,784 $ 11,996 Buildings 57,960 58, ,960 58,549 Improvements other than buildings 12,853 9, ,853 9,366 Machinery and equipment 12,206 12, ,206 12,225 Infrastructure 65,535 63, ,535 63,401 Construction in progress 23,965 24, ,965 24,517 Total $ 192,303 $ 180,041 $ - $ 13 $ 192,303 $ 180,054 Capital Assets The County s investment in capital assets for its governmental and business-type activities as of June 30, 2017 was $192,303,000 (net of accumulated depreciation). The investment in capital assets includes land, buildings, improvements other than buildings, machinery and equipment, and infrastructure. The net increase in the County s investment in capital assets for the current fiscal year was 6.7%. Major capital asset events during the fiscal year included the following: Purchase of the 485 acres of property to carry out urban renewal projects for $7,200,000 Improvements to the Cedar Valley Nature Trail of $3,413,000 Purchase of various park lands of $586,000 Completion of $6,010,000 in roadway and bridge projects Machinery and equipment acquisitions of $2,216,000 including $862,000 in secondary roads and $659,000 in public safety Additional information on the County s capital assets can be found in note 4 pages of this report. -19-

26 Long-Term Debt At the end of the current fiscal year, the County had total outstanding bonded debt of $23,980,000. The full faith and credit of the County back all the general obligation debt. The limited obligation bonds are payable only from taxes levied on property within Monroe Township. County of Linn s Outstanding Bonded Debt (in thousands) 2016 Additions Payments 2017 Governmental - General obligation bonds $ 17,925 $ 7,300 $ 1,245 $ 23,980 Limited obligation bonds - Monroe Township Total $ 18,435 $ 7,300 $ 1,265 $ 24,470 Moody s Investor Services rate all the County s general obligation bonds Aaa. This rating enhances the sale of future County bonds by broadening the market and minimizing the interest rate for borrowing. For more detailed information on the County s debt and amortization terms, please refer to note 6 on pages of this report. Economic Factors and Next Year s Budgets and Rates The unemployment rate for the County was 3.5 percent at the end of fiscal year 2017, below the national average of 4.5 percent. Total estimated employment increased 2,272 in fiscal year 2017 to 163,085. Personal income increased 2.2 percent to $ billion while per capita personal income increased $667 to $45,483. For FY 18, property taxes levied will increase $3,495,000 or 5.5 percent from the fiscal 2017 budget. Valuation growth allows the County to maintain the countywide levy rate of $6.14 per thousand dollars of taxable value. Net property tax revenue represents 56.1 percent of total revenues compared to 56.9 percent for fiscal Rural residents will pay $8.85 per thousand dollars of taxable value, including the rural services levy rate of $2.71. Requests for Information This financial report is designed to provide a general overview of the County s finances for 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 Linn County Office of Finance and Budget, 935 Second Street, SW, Cedar Rapids Iowa

27 BASIC FINANCIAL STATEMENTS -21-

28 COUNTY OF LINN, IOWA STATEMENT OF NET POSITION JUNE 30, 2017 Governmental Business-type ASSETS: Activities Activities Total Pooled cash and investments $ 57,311,859 $ - $ 57,311,859 Receivables: Accounts 292, ,228 Property taxes: Delinquent 174, ,505 Succeeding year 69,397,809-69,397,809 Interest and penalties on property taxes 50,381-50,381 Accrued interest 37,117-37,117 Due from other governments 6,425,975-6,425,975 Due from individuals and private entities 179, ,429 Inventories and prepaid expenses 1,996,117-1,996,117 Investment in joint venture 4,598,000-4,598,000 Capital assets: Land and construction in progress 43,748,885-43,748,885 Other capital assets net of accumulated depreciation 148,554, ,554,132 Total capital assets 192,303, ,303,017 TOTAL ASSETS 332,766, ,766,437 DEFERRED OUTFLOWS OF RESOURCES - Pension related deferred outflows 11,120,638-11,120,638 LIABILITIES: Accounts payable 4,370,504-4,370,504 Salaries and benefits payable 823, ,788 Advances from grantors 70,872-70,872 Accrued interest payable 52,147-52,147 Long-term liabilities: Portion due or payable within one year: General obligation bonds payable 1,295,000-1,295,000 Capital lease obligations 91,750-91,750 Compensated absences 4,042,167-4,042,167 Portion due or payable after one year: General obligation bonds payable 23,175,000-23,175,000 Capital lease obligations 104, ,458 Net pension liability 32,965,226-32,965,226 Other post employment benefits 1,948,837-1,948,837 Compensated absences 1,491,665-1,491,665 Total long-term liabilities 65,114,103-65,114,103 TOTAL LIABILITIES 70,431,414-70,431,414 DEFERRED INFLOWS OF RESOURCES: Succeeding year property tax 69,397,809-69,397,809 Pension related deferred inflows 2,249,296-2,249,296 TOTAL DEFERRED INFLOWS OF RESOURCES 71,647,105-71,647,105 NET POSITION: Net investment in capital assets 168,126, ,126,809 Restricted for: Supplemental levy purposes 361, ,136 MH-DD services 11,807,608-11,807,608 Secondary roads 6,572,725-6,572,725 Capital projects 6,517,573-6,517,573 Other purposes 5,054,754-5,054,754 Debt service 158, ,758 Unrestricted 3,209,193-3,209,193 TOTAL NET POSITION $ 201,808,556 $ - $ 201,808,556 See notes to financial statements. -22-

29 COUNTY OF LINN, IOWA STATEMENT OF ACTIVITIES YEAR ENDED JUNE 30, 2017 Program Revenues Charges for Operating Grants Capital Grants Functions/Programs Expenses Services and Contributions and Contributions Governmental activities: Public safety and legal services $ 26,451,655 $ 6,706,001 $ 1,491,715 $ - Physical health and social services 14,414, ,766 3,929,231 - Mental health 12,753,748 5,976, County environment and education 7,446,217 1,705,357 3,190,087 - Roads and transportation 17,843,906 2,030,292 10,935,366 3,997,685 Governmental services to residents 4,700,123 3,809, ,268 Administration 18,200,391 1,034, , ,563 Interest on long-term debt 650, Total governmental activities 102,461,409 21,597,969 19,846,390 4,961,516 Business-type activities - Options of Linn County 8, Total $ 102,470,247 $ 21,597,969 $ 19,846,390 $ 4,961,516 See notes to financial statements. General revenues: Property and other county taxes levied for: General purposes Debt service Penalties, interest and costs on taxes Other county taxes: Utility tax replacement excise taxes Other Unrestricted state replacements and credits Investment income Other general revenue Transfers - internal activities Total general revenues and transfers Change in net position Net position - beginning Net position - ending -23-