IREDELL COUNTY North Carolina COMPREHENSIVE ANNUAL FINANCIAL REPORT. For the Fiscal Year Ended June 30, Submitted to

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1 IREDELL COUNTY North Carolina COMPREHENSIVE ANNUAL FINANCIAL REPORT For the Fiscal Year Ended June 30, 2011 Submitted to THE BOARD OF COUNTY COMMISSIONERS Stephen D. Johnson, Chairman Marvin Norman, Vice-Chairman Kenneth M. Robertson, Jr. W. Frank Mitchell Renee C. Griffith by Ronald Smith, County Manager and Susan G. Blumenstein, Director of Finance

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3 Exhibit IREDELL COUNTY, NORTH CAROLINA Comprehensive Annual Financial Report For the Year Ended June 30, 2011 Introductory Section: TABLE OF CONTENTS Page Letter of Transmittal 1-7 GFOA Certificate of Achievement for Excellence 8 in Financial Reporting Organizational Chart 9 List of Principal Officials 10 Financial Section: Independent Auditors' Report Management's Discussion and Analysis Basic Financial Statements: Government-Wide Financial Statements: A Statement of Net Assets 28 B Statement of Activities Fund Financial Statements: C Balance Sheet - Governmental Funds D E F Statement of Revenues, Expenditures, and Changes in Fund Balances - Governmental Funds 33 Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances - Governmental Funds to the Statement of Activities 34 General Fund - Statement of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual 35

4 Exhibit IREDELL COUNTY, NORTH CAROLINA Comprehensive Annual Financial Report For the Year Ended June 30, 2011 TABLE OF CONTENTS Page Fund Financial Statements (continued): G Statement of Net Assets - Proprietary Funds 36 H Statement of Revenues, Expenses, and Changes in Fund Net Assets - Proprietary Funds 37 I Statement of Cash Flows - Proprietary Funds 38 J Statement of Fiduciary Net Assets - Fiduciary Fund 39 Schedule Notes to the Financial Statements Required Supplemental Financial Data: A-1 Law Enforcement Officers' Special Separation Allowance - Required Supplementary Information 75 A-2 Law Enforcement Officers' Special Separation Allowance - Required Supplementary Information - Notes to the Required Schedules 76 A-3 Health Care Plan of Iredell County - Required Supplementary Information 77 A-4 Health Care Plan of Iredell County - Required Supplementary Information - Notes to the Required Schedules 78 Supplementary Information: General Fund: B-1 Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual Nonmajor Governmental Funds: C-1 Combining Balance Sheet 87 C-2 Combining Statement of Revenues, Expenditures, and Changes in Fund Balances 88

5 Schedule IREDELL COUNTY, NORTH CAROLINA Comprehensive Annual Financial Report For the Year Ended June 30, 2011 TABLE OF CONTENTS Page Nonmajor Special Revenue Funds: D-1 Combining Balance Sheet D-2 Combining Statement of Revenues, Expenditures, and Changes in Fund Balances D-3 Emergency Telephone System Fund: Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual 93 D-4 Transportation Services Fund: Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual 94 D-5 Fire District Fund: Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual 95 D-6 Juvenile Crime Prevention Grant Fund: Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual 96 D-7 CDBG Housing Grant Fund: Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual 97 D-8 Department of Energy Lighting Upfit Grant - ARRA: Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual 98 D-9 Longitude 80: Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual 99 D-10 Talon Systems: Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual 100 D-11 Providencia USA Rail Project: Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual 101

6 Schedule IREDELL COUNTY, NORTH CAROLINA Comprehensive Annual Financial Report For the Year Ended June 30, 2011 TABLE OF CONTENTS Page Nonmajor Capital Project Funds: E-1 Combining Balance Sheet E-2 Combining Statement of Revenues, Expenditures, and Changes in Fund Balances E-3 Parks Capital Project Fund: Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual 106 E-4 Iredell County North Iredell Park: Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual 107 E-5 Community College Construction: Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual 108 E School Capital Fund: Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual 109 E-7 School Projects 2008 COPS: Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual 110 E School Capital Fund: Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual 111 E-9 Animal Services Facility Project: Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual 112 E-10 Jail and Courts Expansion Project: Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual 113

7 Schedule IREDELL COUNTY, NORTH CAROLINA Comprehensive Annual Financial Report For the Year Ended June 30, 2011 TABLE OF CONTENTS Page Enterprise Fund: F-1 Solid Waste Disposal Facility: Schedule of Revenues and Expenditures, and Other Financing Sources (Uses) - Budget and Actual (Non-GAAP) F-2 Expansion Project - COPS 2008: Schedule of Revenues and Expenditures - Budget and Actual (Non-GAAP) 116 F-3 Phase IV Construction and Land Purchase: Schedule of Revenues and Expenditures - Budget and Actual (Non-GAAP) 117 Internal Service Funds: G-1 Combining Statement of Net Assets 118 G-2 Combining Statement of Revenues, Expenses, and Changes in Net Assets 119 G-3 Combining Statement of Cash Flows 120 G-4 Employee Health Care Benefits: Schedule of Revenues and Expenditures - Financial Plan and Actual (Non-GAAP) 121 G-5 Workers' Compensation Benefits: Schedule of Revenues and Expenditures - Financial Plan and Actual (Non-GAAP) 122 G-6 Property & Liability Insurance Fund Schedule of Revenues and Expenditures - Financial Plan and Actual (Non-GAAP) 123 Agency Funds: H-1 Combining Statement of Changes in Assets and Liabilities

8 Schedule IREDELL COUNTY, NORTH CAROLINA Comprehensive Annual Financial Report For the Year Ended June 30, 2011 TABLE OF CONTENTS Page Additional Financial Data: I-1 Schedule of Ad Valorem Taxes Receivable 127 I-2 Analysis of Current Year Levy 128 Statistical Section: 1 Net Assets by Component, Last Nine Fiscal Years Changes in Net Assets, Last Nine Fiscal Years Fund Balances, Governmental Funds, Last Nine Fiscal Years Changes in Fund Balances, Governmental Funds, Last Ten Fiscal Years Assessed Value and Actual Values of Taxable Property, Last Ten Fiscal Years Direct and Overlapping Property Tax Rates, Last Ten Fiscal Years Principal Property Taxpayers, Current Year and Nine Years Ago Property Tax Levies and Collections, Last Ten Fiscal Years Ratios of Outstanding Debt by Type, Last Ten Fiscal Years Ratios of Net General Bonded Debt Outstanding, Last Ten Fiscal Years Legal Debt Margin Information, Last Ten Fiscal Years Pledged-Revenue Coverage, Last Ten Fiscal Years 141

9 Schedule IREDELL COUNTY, NORTH CAROLINA Comprehensive Annual Financial Report For the Year Ended June 30, 2011 Statistical Section (continued): TABLE OF CONTENTS Page 13 Demographics and Economic Statistics, Last Ten Fiscal Years Principal Employers, Current Year and Seven Years Ago Full-Time Equivalent County Government Employees by Function, Last Ten Fiscal Years Operating Indicators by Function/Program, Last Ten Fiscal Years Capital Asset Statistics by Function/Program, Last Ten Fiscal Years 146 Compliance Section: 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 Report On Compliance With Requirements That Could Have A Direct and Material Effect On Each Major Federal Program and On Internal Control Over Compliance In Accordance With OMB Circular A-133 and the State Single Audit Implementation Act Report On Compliance With Requirements That Could Have A Direct and Material Effect On Each Major State Program And Internal Control Over Compliance In Accordance With Applicable Sections of OMB Circular A-133 and the State Single Audit Implementation Act Schedule of Findings and Questioned Costs Summary Schedule of Prior Year's Audit Findings 156 Schedule of Expenditures of Federal and State Awards

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11 INTRODUCTORY SECTION

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21 Iredell County Organizational Chart **Board of Commissioners **Sheriff *County Manager **Register of Deeds *Clerk to Board *County Attorney Finance & Admin Finance Purchasing ITS Veterans Services Dept of Planning, Development & Transportation Services Planning Zoning Erosion Control ICATS Deputy County Manager EMS Fire Marshal ECOM/Emergency Mgt. Human Resources Library Elections Dept of Code Enforcement & Special Projects Bldg. Code Enforcement Special Projects Recreation and Facility Services Tax Admin & Land Records *County Assessor *Tax Collector Mapping Revaluation Animal Control Solid Waste Mgt. Landfill Transfer Stations Recycling Vehicle Services Health Social Services NC Cooperative Extension Service *Appointed by the Board of Commissioners **Elected Updated September 6,

22 IREDELL COUNTY, NORTH CAROLINA Board of County Commissioners Stephen D. Johnson, Chairman Marvin Norman, Vice-Chairman Kenneth M. Robertson W. Frank Mitchell Renee C. Griffith County Officials Ronald R. Smith County Manager William P. Pope County Attorney Jean C. Moore Clerk to the Board Phillip H. Redmond Sheriff Matthew McCall Register of Deeds W. Tracy Jackson Deputy County Manager Joey Raczkowski Director of Planning Susan G. Blumenstein Director of Finance F. William Furches, Jr. Tax Administration/Collector Sandra F. Gregory Director of Human Services Lynn S. Niblock Director of Code Enforcement and Special Projects Donna M. Campbell Director of Heath Yvette Smith Director of Social Services 10

23 FINANCIAL SECTION

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25 INDEPENDENT AUDITORS' REPORT To the Board of Commissioners Iredell County Statesville, North Carolina 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 Iredell County, North Carolina, as of and for the year ended June 30, 2011, which collectively comprise the County s basic financial statements as listed in the table of contents. These financial statements are the responsibility of Iredell County s management. Our responsibility is to express an opinion on these basic 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 of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall basic financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. 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 Iredell County, North Carolina, as of June 30, 2011, and the respective changes in financial position and cash flows, where applicable thereof, and the respective budgetary comparison for the General Fund for the year then ended in conformity with accounting principles generally accepted in the United States of America. In accordance with Government Auditing Standards, we have also issued our report dated October 26, 2011, on our consideration of Iredell County s internal control over financial reporting and our tests of its compliance with certain provisions of laws, regulations, contracts, 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 read in conjunction with this report in considering the results of our audit. 11

26 Accounting principles generally accepted in the United States of America require that the Management s Discussion and Analysis and the Law Enforcement Officers Special Separation Allowance and the Other Post-Employment Benefits' Schedules of Funding Progress and Employer Contributions be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by 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 assurance. Our audit was performed for the purpose of forming opinions on the basic financial statements that collectively comprise the basic financial statements of Iredell County, North Carolina as a whole. The introductory section, combining and individual fund financial statements, budget and actual schedules, supplemental ad valorem tax schedules, and statistical tables are presented for purposes of additional analysis and are not a required part of the basic financial statements. The accompanying Schedule of Expenditures of Federal and State Awards is presented for purposes of additional analysis as required by U.S. Office of Management and Budget Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations, and the State Single Audit Implementation Act, and is also not a required part of the basic financial statements. The combining and individual fund financial statements, budget and actual schedules, supplemental ad valorem tax schedules, and the Schedule of Expenditures of Federal and State Awards are the responsibility of management and were derived from, and relate directly to, the underlying accounting and other records used to prepare the financial statements. The information has been subjected to the auditing procedures applied in the audit of the financial statements and certain other procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the financial statements or to the financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the information is fairly stated, in all material respects, in relation to the basic financial statements taken as a whole. The introductory section and statistical section have not been subject to the auditing procedures applied in the audit of the basic financial statements and; accordingly, we express no opinion on them. Martin Starnes & Associates, CPAs, P.A. October 26,

27 Iredell County, North Carolina Management s Discussion and Analysis June 30, 2011 As management of Iredell County, North Carolina, 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 read the information presented here in conjunction with additional information that we have furnished in the County s financial statements following this narrative. Financial Highlights The assets of Iredell County, North Carolina exceeded its liabilities at the close of the fiscal year by $197,500,033 (net assets). The government s total net assets increased by $13,446,789 primarily due to increased net assets in the Governmental Activities funds net assets. As of the close of the current fiscal year, Iredell County, North Carolina s governmental funds reported combined ending fund balances of $53,276,363, a decrease of $4,488,056 in comparison with the prior year. The Fund Balances in the General Fund increased $4,331,694. Non-Major Funds decreased $8,819,750. The total amount of the increase in the General Fund, $4,331,694, resulted in an increase of $5,303,710 in the amount available for spending at the government s discretion (unassigned fund balance). At the end of the current fiscal year, fund balance available for appropriation in the General Fund was $34,763,916 or 23.04% of total general fund expenditures and transfers to other funds for the fiscal year. The County continued its public school construction and renovation projects at a cost of over $6.07 million. Iredell County maintained its Moody s Investors Service Aa3 general obligation bond ratings for the eleventh consecutive year, and maintained AA ratings with Fitch ratings and Standard & Poor s. Overview of the Financial Statements This discussion and analysis are intended to serve as an introduction to Iredell County, North Carolina s basic financial statements. The County s basic financial statements consist of three components; 1) government-wide financial statements, 2) fund financial statements, and 3) notes to the financial statements. The basic financial statements present two different views of the County through the use of government-wide statements and fund financial statements. In addition to the basic financial statements, this report contains other supplemental information that will enhance the reader s understanding of the financial condition of the County. 13

28 Required Components of Annual Financial Report Management s Discussion and Analysis Basic Financial Statements Government-wide Financial Statements Fund Financial Statements Notes to the Financial Statements Summary Detail Basic Financial Statements The first two statements (Exhibits A and B) in the basic financial statements are the Government-wide Financial Statements. They provide both short and long-term information about the County s financial status. The next statements (Exhibits C through J) are Fund Financial Statements. These statements focus on the activities of the individual parts of the County s government. These statements provide more detail than the government-wide statements. There are four parts to the Fund Financial Statements: 1) the governmental funds statements; 2) the budgetary comparison statements; 3) the proprietary fund statements; and 4) the fiduciary and agency fund statements. The next section of the basic financial statements is the notes. The notes to the financial statements explain in detail some of the data contained in those statements. Required supplemental information is reported immediately after the notes. This section contains funding information about the County s pension plan. The next section is supplemental information provided to show details about the County s non-major governmental funds and internal service funds, all of which are added together in one column on the basic financial statements. Budgetary information required by the NC General Statutes also can be found in this part of the statements. Government-wide Financial Statements The government-wide financial statements are designed to provide the reader with a broad overview of Iredell County, North Carolina s finances, similar in format to a financial statement of a private-sector business. The government-wide statements provide short and long-term information about the County s financial status as a whole. 14

29 The two government-wide statements report the County s net assets and how they have changed. Net assets are the difference between the County s total assets and total liabilities. Measuring net assets is one way to gauge the County s financial condition. The government-wide statements are divided into two categories: 1) governmental activities and 2) business-type activities. The Iredell County Industrial Facility and Pollution Control Financing Authority is a component unit of the County; however, it has no reportable financial transactions or account balances and is not included in the governmentwide statements. The governmental activities include most of the County s basic services such as public safety, human services, parks and recreation, and general administration. Property taxes and State and federal grant funds finance most of these activities. There is one business-type activity provided by the County, landfill services, for which customers are charged. Exhibits A and B of this report are the government-wide financial statements. Fund Financial Statements The fund financial statements provide a more detailed look at the County s most significant activities. 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 all other governmental entities in North Carolina, uses fund accounting to ensure and reflect compliance (or non-compliance) with finance-related legal requirements, such as the General Statutes or the County s budget ordinance. All of the funds of Iredell County can be divided into two categories: governmental funds and proprietary funds. Governmental Funds Governmental funds are used to account for those functions reported as governmental activities in the government-wide financial statements. Most of the County s basic services are accounted for in governmental funds. These funds focus on how assets can readily be converted into cash flow in and out, and what monies are left at year-end that will be available for spending in the next year. Governmental funds are reported using an accounting method called modified accrual accounting. This method also has a current financial resources focus. As a result, the governmental fund financial statements give the reader a detailed short-term view that helps him or her determine if there are more or less financial resources available to finance the County s programs. The relationship between government activities (reported in the Statement of Net Assets and the Statement of Activities) and governmental funds is described in a reconciliation that is a part of the fund financial statements. Iredell County, North Carolina adopts an annual budget for its General Fund, as required by the General Statutes. The budget is a legally adopted document that incorporates input from the citizens of the County, the management of the County, and the decisions of the Board about which services to provide and how to pay for them. It also authorizes the County to obtain funds from identified sources to finance these current period activities. The budgetary statement provided for the General Fund demonstrates how well the County complied with the budget ordinance and whether or not the County succeeded in providing the services as planned when the budget was adopted. The budgetary comparison statement uses the budgetary basis of accounting and is presented using the same format, language, and classifications as the legal budget document. The statement shows four columns: 1) the original budget adopted by the board; 2) the final budget as amended by the board; 3) the actual resources, charges to appropriations, and ending balances in the General Fund; and 4) the difference or variance between the final budget and the actual resources and charges. To account for the difference between the budgetary basis of accounting and the modified accrual basis, a reconciliation showing the differences in the reported activities is shown at the end of the budgetary statement. Proprietary Funds The County has two kinds of proprietary 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 solid waste landfill operations. This fund is the same as the functions separate activity shown in the business-type activities in the Statement of Net Assets and the Statement of Activities. Internal Service Funds are an accounting device used to accumulate and allocate costs internally among the functions of Iredell County, North Carolina. The County uses an internal service fund to account for three activities the self-insured employee health care benefits fund, the self-insured property and liability fund and self-insured workers compensation benefits fund. Because these 15

30 activities benefit predominantly governmental rather than business-type activities, the internal service funds have been included within the governmental activities in the government-wide financial statements. Fiduciary Funds Fiduciary funds are used to account for resources held for the benefit of parties outside the government. Iredell County, North Carolina has eight fiduciary funds all of which are agency funds. 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 start on page 40 of this report. Other Information In addition to the basic financial statements and accompanying notes, this report includes certain required supplementary information concerning Iredell County, North Carolina s progress in funding its obligation to provide pension benefits to its employees. Required supplementary information can be found beginning on page 75 of this report. Government-Wide Financial Analysis As noted earlier, net assets may serve over time as one useful indicator of a government s financial condition. The assets of Iredell County exceeded liabilities by $197,500,033 as of June 30, One of the largest components of net assets $144,083,274 (72.95%) reflects the County s investment in capital assets (e.g. land, buildings, equipment, and vehicles), less any related debt still outstanding that was used to acquire those items. Iredell County uses these capital assets to provide services to citizens; consequently, these assets are not available for future spending. Although Iredell County s investment in its capital assets is reported net of the outstanding related debt, the resources needed to repay that debt must be provided by other sources since the capital assets cannot be used to liquidate these liabilities. 16

31 Iredell County, North Carolina's Net Assets Governmental Business-type Activities Activities Total Current and other assets $ 68,250,433 $ 73,710,455 $ 15,521,535 $ 15,036,126 $ 83,771,968 $ 88,746,581 Capital assets 358,011, ,324,186 24,533,815 24,676, ,544, ,000,613 Total assets 426,261, ,034,641 40,055,350 39,712, ,316, ,747,194 Long-term liabilities outstanding 236,472, ,374,969 10,541,975 13,155, ,014, ,530,943 Other liabilities 20,332,889 22,316,719 1,469,857 1,846,288 21,802,746 24,163,007 Total liabilities 256,805, ,691,688 12,011,832 15,002, ,816, ,693,950 Net assets: Invested in capital assets, net of related debt 125,148, ,613,514 18,934,565 17,355, ,083, ,969,203 Restricted 19,148,226 2,586, ,148,226 2,586,092 Unrestricted 25,159,580 38,143,347 9,108,953 7,354,602 34,268,533 45,497,949 Total net assets $ 169,456,515 $ 159,342,953 $ 28,043,518 $ 24,710,291 $ 197,500,033 $ 184,053,244 An additional portion of Iredell County s net assets $19,148,226 (9.70%) represents resources that are subject to external restrictions on how they may be used. The remaining balance of $34,268,533 (17.35%) is unrestricted and may be used to meet the government s ongoing obligations to citizens and creditors. At the end of the current fiscal year, Iredell County is able to report positive balances in all three categories of net assets, both for the government as a whole, as well as for its separate governmental and business type-activities. The same situation was true for the prior fiscal year. Of the $16,562,134 net increase in restricted net assets reported for Iredell County s governmental activities, $13,131,196 represents State Statute requirements, $187,979 in restricted revenue for Register of Deeds, $3,184,580 increase in restricted revenue for Public safety, $10,800 for Economic and Physical Development, $51,655 for Cultural and Recreational, $186,132 in restricted revenue for Health and DSS and $304,982 for the construction of school capital. These increases were offset by the following decreases of $205 in the total cash balances on deposit with the County s bond trustee and $494,985 restricted for Transportation. The County s net assets increased by $13,446,789 for the fiscal year ended June 30, This increase represents the degree to which increases in ongoing revenues have surpassed similar increases in ongoing expenses. 17

32 Governmental Activities. Governmental activities increased Iredell County s net assets by $10,113,562, thereby accounting for 75.21% of the total growth in the net assets of Iredell County. Key elements of this increase are as follows: Iredell County, North Carolina's Changes in Net Assets Governmental Business-type Activities Activities Total Revenues: Program revenues: Charges for services $ 13,774,445 $ 11,895,068 $ 7,060,160 $ 7,061,479 $ 20,834,605 $ 18,956,547 Operating grants and contributions 22,558,874 23,068, ,089 59,672 22,738,963 23,127,899 Capital grants and contributions 3,251,632 10,475, ,251,632 10,475,854 General revenues: Property taxes 100,503,348 98,701, ,503,348 98,701,421 Local option sales taxes 24,414,833 23,076, ,414,833 23,076,683 Other taxes 1,360,921 1,395, ,360,921 1,395,683 Grants and contributions not restricted to specific programs 767, , , ,857 Other 443, ,859 23,520 48, , ,287 Total revenues 167,075, ,156,652 7,263,769 7,169, ,339, ,326,231 Expenses: General government 12,762,362 12,603, ,762,362 12,603,797 Public safety 39,019,801 36,299, ,019,801 36,299,715 Transportation 1,943,719 1,756, ,943,719 1,756,281 Economic & physical development 3,793,966 3,461, ,793,966 3,461,102 Human services 33,517,403 34,731, ,517,403 34,731,978 Cultural and recreation 5,150,640 5,409, ,150,640 5,409,833 Education 48,929,038 55,523, ,929,038 55,523,654 Interest on long-term debt 11,845,142 12,358, ,845,142 12,358,103 Landfill - - 3,930,542 4,714,274 3,930,542 4,714,274 Total expenses 156,962, ,144,463 3,930,542 4,714, ,892, ,858,737 Increase in net assets 10,113,562 8,012,189 3,333,227 2,455,305 13,446,789 10,467,494 Net assets, July 1, ,342, ,330,764 24,710,291 22,254, ,053, ,585,750 Net assets, June 30, 2011 $ 169,456,515 $ 159,342,953 $ 28,043,518 $ 24,710,291 $ 197,500,033 $ 184,053,244 18

33 Several particular aspects of the County s financial operations positively influenced the total unrestricted governmental net assets: The total property tax base increased from $20,608,555,760 for the fiscal year to $20,811,217,389 at June 30, 2011, a marginal 1% increase. This resulted in total receipts for the year of $100,503,348, exceeding prior year receipts by $1,801,927 or 17.82% of the increase. Growth in the receipt of charges for services. The total receipts for the year $13,774,445, exceeded prior fiscal year receipts by $1,879,377 or 18.58% of the increase. $654,206 were ambulance fees and $308,852 were building inspection and permit fees. Growth in Local Option Sales Taxes. The total receipts for the year $24,414,833, exceeded prior fiscal year receipts by $1,338,150 or 13.23% of the increase. Continued low cost of debt due to the County s high bond rating. Expenses were closely monitored to keep spending at a minimum while maintaining adequate response to service demands. For the fiscal year ended June 30, 2011, areas of change are as follows: No addition of full-time personnel occurred in All other departments remained at prior staffing levels or full-time personnel were reduced. Unfunded positions for the current were as follows: Personnel 1; Register of Deeds 1; Facility Services 1; Animal Control 1; Fire Marshal 1; Inspections 4; Planning 2; and Health 7. The County s Pay Plan was not adjusted for an across-the-board salary increase nor was merit salary increases given. The County s contribution to the Health Care Benefits Fund for each full-time employee saw a marginal increase from $6,960 to $6,980. The total General Fund contribution for Employee Health Care Benefits was $6,681,324. The County s contribution to the Worker s Compensation Fund was eliminated for this fiscal year resulting, in a savings of $335,000 for the General Fund. Decreasing total expenses for General Government. Expenses for General Government departments decreased by $63,177. This minimal decrease is due to several years of limiting spending in all of our governmental departments. The County has taken a pro-active approach during lean economic times to reduce capital spending and maintain payroll expenses. Therefore, this year basically maintained spending levels. Increasing total expenses for Public Safety. Expenses for all public safety departments increased $300,020 or 1.08% over the prior year. A pass-through grant to the State Highway Patrol Agency resulted in an $800,000 increase in the Office of Emergency Management department. Revenues from the North Carolina Department of Crime Control and Public Safety in the form of an Interoperable Communications Grant offset this expense. A reduction of capital expenditures in all public safety departments in the amount of $1,235,393 also provided a reduction of this increase. Salaries and Benefits showed a modest increase of $333,567 or 1.72% over the previous year. Operating costs increased $349,193, or 5.14% over the previous year. The Sheriff s Office is responsible for all law enforcement activities within the non-municipal areas of Iredell County, detention of arrestees awaiting trial and adjudicated criminals sentenced to six months or less, and security of the State courts. The Sheriff s Office handled 24,094 civil and criminal processes, investigated 3,935 crimes, and made 5,193 arrests or a slight case decrease over the prior fiscal year. Decreasing Economic and Physical Development expenses by $147,219 or 4.63%. Salaries and benefits in Planning and Enforcement decreased $155,791 or 6.13% due to unfilled positions, terminations, and due to decreased workload, re-assignments of Building Inspectors to other County departments. Operating expenses increased slightly by $16,677 or 6.05%. 19

34 Decreasing Human Services expenses by $877,048. Of the total, expenses for the Health Department decreased 5.13% from the prior year or $402,724. Salaries & Benefits decreased $101,104, operating costs decreased $174,679, and capital outlay decreased $126,941. $372,824 of the decrease in Human Services results from a 1.49% net decrease in Department of Social Services costs. The costs of Child Daycare, fully funded with State and federal grants, decreased $1,001,308 while Foster care slightly increased $60,772. Salaries and Benefits showed an increase of $352,451 as did capital outlay in the amount of $290,160. Decreasing Educational expenses. Current expense and capital outlay payments to the two individual public school units and the community college decreased actual spending by $7,173,274. While current expense decreased by $1,625,436 or 3.23% the largest decrease was in capital outlay payments of $5,432,882 or 10.76%. Large capital outlay payments were incurred in the prior fiscal year with Lottery Proceeds and Public School Building Capital funds as the source of revenue. Millions Expenses and Program Revenues - Governmental Activities Revenues Expenses General Government Public Safety Transportation Econ & Physical Dev Human Services Cultural & Recreation Education Interest on Long-term Debt 20

35 Revenues by Source - Governmental Activities Other Taxes 1% Capital Grants and Contributions 2% Other <1% Charges for Services 8% Operating Grants & Contributions 14% Sales Taxes 15% Property Taxes 60% Business-type activities: This year the Iredell County Solid Waste Disposal Facility, Iredell County, North Carolina s sole Business-type activity, had an increase in net assets of $3,333,227, or a 13.49% increase. During the year, the Solid Waste Disposal Facility reimbursed $117,067 to Governmental Activities for services provided by Human Resources, Finance, Information Systems Management, Administration, etc. Some of the factors contributing to the change are as follows: A % decrease in expenditures from the reduction in closure/post closure costs as a result of a new landfill capacity study. The decrease was $877,

36 Expenses and Program Revenues - Business-type Activities 8,000,000 7,000,000 6,000,000 5,000,000 4,000,000 3,000,000 2,000,000 1,000,000 - Revenues Expenses Transfers Revenues By Source - Business-type Activities Operating Grants & Contributions 2% Charges for Services 98% Investment Earnings 0% Miscellaneous 0% Financial Analysis of the County s Funds As noted earlier, Iredell County uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. Governmental Funds. The focus of Iredell County s governmental funds is to provide information on near-term inflows, outflows, and balances of usable resources. Such information is useful in assessing the County s financing requirements. Specifically, fund balance available for appropriation can be a useful measure of a government s net resources available for spending at the end of the fiscal year. The General Fund is the chief operating fund of the County. At the end of the current fiscal year, fund balance available for appropriation in the General Fund was $34,763,916, with total fund balance increasing to $47,410,565. As a measure of the General Fund s liquidity, it may be useful to compare both fund balance available for appropriation and total fund 22

37 balance to total fund expenditures and transfers out. Fund balance available for appropriation represents 23.04% of total General Fund expenditures and transfers out, while total fund balance represents 31.42% of that same amount. At June 30, 2011, the governmental funds of Iredell County, North Carolina reported a combined fund balance of $53,276,363, decreasing the prior year s combined fund balance by $4,488,056 or 7.77%. A $4,331,694 increase in the General Fund and a decrease of $8,819,750 in the governmental funds accounted for the net decrease in the combined fund balance. The $4,331,694 fund balance increase in the General Fund includes an increase in the amount of Ad Valorem taxes in the amount of $1,124,215 and Local Option Sales Taxes of $1,547,492. Furthermore, there was an increase in Sales and Services of $536,199 and Permits and Fees of $217,114. Actual revenues of the General Fund were approximately $2,638,000 greater than budgeted, actual expenditures, adjusting for encumbrances, were $9 million less than the budgeted amounts. Limitations on the use of fund resources in the General Fund include Non-spendable items which represent prepaids of $261,939. Also restrictions by State statute represent $12,384,710. Other restrictions are represented by the following: Register of Deeds $187,979, Public Safety $817,230, Debt Service $9,580, Human Services $1,601,519 and Cultural and Recreational of $41,815. Fund Balance in Non-major Governmental Funds realized a decrease of $8,819,750 for the fiscal year. Net decreases in Special Revenue Funds of $1,026,386 and net decreases in the non-major Capital Project Funds of $7,793,364 accounted for this change. Some major highlights of Non-major Governmental Funds include the Fire District Fund with an increase in expenditures of $1,545,306 resulting in a net decrease of $1,064,655. The Animal Services Facility Project fund realized a decrease in fund balance of $1,708,222 as this project nears completion. School Capital Project Funds realized a decrease of $6,093,681 as multi-year capital project construction and renovation projects continued. Limitations on the use of fund resources in the Non-major Governmental Funds include Non-spendable items which represent prepaids of $2,153. Also restrictions by State statute represent $746,486. Other restrictions are represented by the following: Public Safety $3,033,285, Economic and Physical Development $10,800, Cultural and Recreational $9,840 and School Capital of $304,982. Additional information on the County s limitations on the use of funds can be found in Note 9 beginning on page 46 of the Basic Financial Statements General Fund Budgetary Highlights: During the fiscal year, the County revised the budget on several occasions. Generally, budget amendments fall into one of three categories: 1) amendments made to adjust the estimates that are used to prepare the original budget ordinance once exact information is available; 2) amendments made to recognize new funding amounts from external sources, such as federal and State grants; and 3) increases in appropriations that become necessary to maintain services. There were amendments to the originally adopted budget totaling $9,676,708 bringing the final budget to $159,953,933. Those changes are summarized as follows: General government budgeted expenditures realized a net increase of $1,326,481. A major portion of the increase, $1,550,789, resulted from appropriations for services and supplies ordered in fiscal year but not performed or delivered until fiscal year The Elections Department realized an increase of $23,675 for an accessibility grant and an appropriation for an E-Panic system in the governmental buildings increased the budget by $10,000. $96,480 was reallocated from general governmental budgets to other departments for increased fuel costs and a reduction of $122,000 for reimbursement for services provided to the enterprise fund. Public safety budgeted expenditures increased $3,091,275. Of this increase, $1,905,690 resulted from appropriations for services and supplies ordered in fiscal year but not performed or delivered until this fiscal year. State and federal grants were recognized in the amount of $66,809. The Governor s Highway Safety Program provided $19,050 for a traffic equipment safety grant. A co-op gang initiative grant with the Statesville Police Department provided $21,842 and a full-time position. This was funded by the Governor s Crime Commission. A Justice Assistance Grant award totaled $25,917 for the support of a Youth Athletic League in the Sheriff s department. The revenues that were used were as follows: Federal Equity money of $110,959 and commissary funds of $70,854. Federal Equity money was appropriated as follows: 23

38 $45,000 for special operations, $42,398 for the purchase of two used vehicles, $8,195 for a computer voice stress analyzer, and $8,085 for a UFED analyzer. Commissary funds were appropriated as follows: $33,054 for the purchase of an AFIS Live Scan fingerprint system, $16,000 for road crew trailers, $9,000 for training, $6,000 for inventory purchases, $3,900 for a computer and $2,900 for a restraint chair. A Homeland Security grant was appropriated in the Office of Emergency Management department for $800,000. This is a pass-through grant to the State Highway Patrol department for Interoperable Communication. The NC Department of Emergency Management Domestic Preparedness Region 7 donated 4 VIPER radios with a value of $10,800. The NC Department of Emergency Management also provided $10,500 for a disaster preparedness exercise to be performed at the Statesville Regional Airport. Economic and Physical Development budgeted expenditures increased $83,795. Of this net increase, $71,490 resulted from appropriations for services and supplies ordered in fiscal year but not performed or delivered until this fiscal year. $3,600 was appropriated in the Cooperative Extension department for a summer intern and $7,200 was appropriated to purchase software in the Inspections department. Human Services budgeted expenditures increased $2,398,080. Of this increase, $923,706 resulted from appropriations for services and supplies ordered in fiscal year but not performed or delivered until this fiscal year. Social Services expenditure budget was increased $395,482 for Crisis Intervention, $235,930 for estimated additional Child Day Care costs, $192,005 for Work First Job Boost Program, $14,832 for the Domestic Violence program, and $12,000 for Special Children s Adoption Funds. The Health Department budget was increased $509,400 with the appropriation of Medicaid Max money to upgrade software, purchase computer equipment and perform building renovations. More than $98,603 was awarded for specific program costs for Emergency Preparedness, State Immunization and Women s Preventive Health. Cultural and recreation budgeted expenditures increased $178,225. Of this increase, $163,935 resulted from appropriations for services and supplies ordered in fiscal year but not performed or delivered until this fiscal year. A State Library Services and Technology Grant provided new computers for the Youth Services Area in the main Library. Educational budgeted expenditures increased $2,598,852. Of this increase, $38,556 resulted from Iredell- Statesville Schools capital outlay appropriations for fiscal year carried over to the fiscal year. Lottery proceeds provided additional funding for Iredell-Statesville Schools in the amount of $2,560,296. Revenues for the fiscal year were $1,811,396 over the amount budgeted. A positive variance was seen in Ad Valorem Taxes exceeding budget by $1,281,993 due to greater than anticipated growth in valuation. A negative variance of $(1,957,646) resulted in Intergovernmental Revenues. The greatest positive variance was Local Option Sales Tax resulting in a positive variance of $3,073,668. Other negative variances were in Permits and Fees, $(169,721), Other Taxes and Licenses $(40,579), Sales and Services $(298,653) and Investment Earnings $(222,300). Actual expenditures were $9,893,567 less than budget. Of this amount, $3,039,496 represents encumbrances that are reserved in Fund Balance and will be paid for in the subsequent fiscal year. Total Salaries & Benefits were $1,825,542 less than budget, which resulted from unfilled positions. Of the total amount budgeted for Child Daycare costs, $414,751 remained unspent at June 30 as well as $371,440 that were unspent in other programs in the Social Services department. $3,415,249 or 2.14% of expenditures budgeted for all other purposes remained unspent and unencumbered at year end. Proprietary Funds. Iredell County, North Carolina s proprietary funds provide the same type of information found in the government-wide statements but in more detail. Unrestricted net assets of the Solid Waste Disposal Enterprise Fund at the end of the fiscal year amounted to $9,108,

39 Capital Asset and Debt Administration Capital assets. Iredell County, North Carolina s capital assets for its governmental and business type activities as of June 30, 2011, totals $382,544,903 (net of accumulated depreciation). These assets include buildings, land, machinery and equipment, and vehicles. During the fiscal year, the County - Purchased new equipment for Governmental and Business-type activity departments. Purchased new vehicles for the Sheriff s Department. Disposed of old vehicles in the Sheriff s Department. Continued construction of multi-year capital projects. Iredell County Capital Assets (net of depreciation) Governmental Business-type Activities Activities Total Land $ 1,849,609 $ 1,849,609 $ 8,420,141 $ 8,391,760 $ 10,269,750 $ 10,241,369 Land Improvements 2,198,810 2,236,985 7,847,015 8,289,533 10,045,825 10,526,518 Buildings and system 342,906, ,304,994 2,947,095 3,163, ,853, ,468,141 Equipment 3,695,527 4,553,627 1,813,009 1,316,206 5,508,536 5,869,833 Vehicles and motorized equipment 2,055,007 2,690, , ,878 2,390,100 3,127,287 Construction in progress 5,305,509 2,688,562 3,171,462 3,078,903 8,476,971 5,767,465 $ 358,011,088 $ 357,324,186 $ 24,533,815 $ 24,676,427 $ 382,544,903 $ 382,000,613 Additional information on the County s capital assets can be found in Note 4 beginning on page 53 of the Basic Financial Statements. Long-term Debt. As of June 30, 2011, Iredell County, North Carolina had total bonded debt outstanding of $47,710,000 all of which is debt backed by the full faith and credit of the County. Iredell County, North Carolina's Outstanding Debt General Obligation Bonds Governmental Business-type Activities Activities Total General obligation bonds $47,710,000 $50,910,000 $ - $ - $47,710,000 $50,910,000 25