MACON COUNTY NORTH CAROLINA COMPREHENSIVE ANNUAL FINANCIAL REPORT

Transcription

1 MACON COUNTY NORTH CAROLINA COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED JUNE 30, 2012

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3 MACON COUNTY NORTH CAROLINA COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED JUNE 30, 2012 Prepared by: Finance Department Finance Director: Lori M. Hall

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5 MACON COUNTY, NORTH CAROLINA COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED JUNE 30, 2012 TABLE OF CONTENTS Introductory Section Letter of Transmittal Organizational Chart List of Principal Officials 2011 GFOA Certificate of Achievement for Excellence in Financial Reporting Page i-v vi vii viii Financial Section: Independent Auditors' Report 1-2 Management's Discussion and Analysis 3-11 Exhibit Basic Financial Statements - Overview Government-Wide Financial Statements: A Statement of Net Assets 12 B Statement of Activities Fund Financial Statements: C Balance Sheet - Governmental Funds 15 D E F Statement of Revenues, Expenditures, and Changes in Fund Balances - Governmental Funds 16 Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances - Governmental Funds to the Statement of Activities 17 Statement of Revenues, Expenditures, and Changes in in Fund Balance - Budget and Actual - General Fund 18 G Statement of Net Assets - Proprietary Funds 19

6 Exhibit MACON COUNTY, NORTH CAROLINA COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED JUNE 30, 2012 TABLE OF CONTENTS Fund Financial Statements - continued: Page H Statement of Revenues, Expenses, and Changes in Fund Net Assets - Proprietary Funds 20 I Statement of Cash Flows - Proprietary Funds 21 J Statement of Fiduciary Net Assets - Fiduciary Funds 22 Notes to the Financial Statements Required Supplementary Financial Data: A-1 Law Enforcement Officers' Special Separation Allowance 58 A-2 Other Post-Employment Benefits - Retiree Health Plan 59 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 73 C-2 Combining Statement of Revenues, Expenditures, and Changes in Fund Balances 74 Nonmajor Special Revenue Funds: D-1 Combining Balance Sheet 75 D-2 Combining Statement of Revenues, Expenditures, and Changes in Fund Balances 76 D-3 Emergency Telephone System Fund: Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual 77

7 Schedule MACON COUNTY, NORTH CAROLINA COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED JUNE 30, 2012 TABLE OF CONTENTS Supplementary Information - continued: Nonmajor Special Revenue Funds - continued: Page D-4 Fire Districts Fund: Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual 78 D-5 Clean Water Management Trust Fund: Schedule of Revenues and Expenditures - Budget and Actual 79 D-6 Housing Grants Fund: Schedule of Revenues and Expenditures - Budget and Actual 80 Major Capital Projects Funds: E-1 Consolidated Capital Projects: Schedule of Revenues and Expenditures - Budget and Actual 81 Nonmajor Capital Projects Funds: E-2 Combining Balance Sheet E-3 Combining Statement of Revenues, Expenditures, and Changes in Fund Balance E-4 Airport Improvements Fund: Schedule of Revenues and Expenditures - Budget and Actual 86 E-5 County Building Projects: Schedule of Revenues and Expenditures - Budget and Actual 87 E-6 SCC Campus/Library Project: Schedule of Revenues and Expenditures - Budget and Actual 88

8 Schedule MACON COUNTY, NORTH CAROLINA COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED JUNE 30, 2012 TABLE OF CONTENTS Supplementary Information - continued: Page Nonmajor Capital Projects Funds - continued: E-7 Riverbend Estates Waterline Project: Schedule of Revenues and Expenditures - Budget and Actual 89 E-8 Little Tennessee River/Cartoogechaye Creek Sewer Trunk Project - Major: Schedule of Revenues and Expenditures - Budget and Actual 90 E-9 Schools Capital Fund: Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual 91 E-10 Capital Reserve Fund: Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual 92 Enterprise Fund: F-1 Solid Waste Fund: Schedule of Revenues and Expenditures - Budget and Actual (Non-GAAP) Internal Service Fund: G-1 Nonmajor Self-Insurance Fund - Balance Sheet 95 G-2 Nonmajor Self-Insurance Fund - Schedule of Revenues, Expenses, and Changes in Fund Net Assets-Financial Plan and Actual 96 G-3 Nonmajor Self-Insurance Fund - Statement of Cash Flows 97

9 Schedule MACON COUNTY, NORTH CAROLINA COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED JUNE 30, 2012 TABLE OF CONTENTS Supplementary Information - continued: Page Agency Funds: H-1 Combining Balance Sheet H-2 Combining Statement of Changes in Assets and Liabilities Debt Service Fund: I-1 Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual 102 Additional Financial Data: J-1 Schedule of Ad Valorem Taxes Receivable - General Fund 103 J-2 Analysis of Current Tax Levy - County-Wide Levy 104 J-3 Schedule of Ad Valorem Taxes Receivable - Fire Districts 105 J-4 Analysis of Current Tax Levy - Fire Districts 106 Table Statistical Section: 1 Net Assets by Components Changes in Net Assets Governmental Activities Tax Revenues By Source Fund Balances of Governmental Funds Changes in Fund Balances of Governmental Funds 112

10 MACON COUNTY, NORTH CAROLINA COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED JUNE 30, 2012 TABLE OF CONTENTS Table Page Statistical Section - Continued: 6 Assessed Value and Estimated Actual Value of Taxable Property Property Tax Rates, Direct and Overlapping Governments Principal Property Taxpayers Property Tax Levies and Collections Ratio of Outstanding Debt by Type Ratios of General Bonded Debt Outstanding Direct and Overlapping Governmental Activities Debt Legal Debt Margin Information Demographic and Economic Statistics Principal Employers Full-Time Equivalent County Government Employees by Function Operating Indicators by Function Capital Asset Statistics by Function 125

11 INTRODUCTORY SECTION

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18 Macon County Government Macon County Board of Commissioners County Manager s Office Legal Services Staff Support 1 Shared Authority 2 Direct Line 3 Social Services Tax Department HR/Deputy Clerk Health Department Building & Grounds Finance Department Cooperative Extension Service Housing Information Technology Board of Elections Emergency Management Register of Deeds Veterans Services Sheriff s Department Garage Soil Conservation Solid Waste Criminal Justice Recreation Department Transit Services Permitting, Planning, and Development 1. County departments whose main function is overall county government support. 2. County departments that have shared resources, supervision and/or local boards. 3. All other county departments are headed by elected officials. vi

19 MACON COUNTY, NORTH CAROLINA List of Principal Officials June 30, 2012 Board of Commissioners Kevin Corbin, Chairman Bobby Kuppers, Vice-Chairman Ronnie Beale, Commissioner Jimmy Tate, Commissioner Ron Haven, Commissioner Principal Officials Jack Horton, County Manager Lori M. Hall, Finance Director Chester Jones, County Attorney Mike Decker, Deputy Clerk to the Board/Human Resources Director Richard Lightner, Tax Supervisor Margaret D. Perry, Tax Collector Jack Morgan, Permitting, Planning, and Development Director Kim M. Bishop, Board of Elections Director Todd Raby, Register of Deeds Andy Muncey, Information Technology Director Steve Ledford, Buildings and Grounds Director Robert L. Holland, Sheriff David Key, Emergency Medical Services Director John Hook, Animal Control Director M. Chris Stahl, Solid Waste Director Mike Breedlove, Soil and Water Conservation Alan Durden, Cooperative Extension Chairman Jane C. Kimsey, Social Services Director Kim Angel, Transit Director James Bruckner, Health Director Daylon Plemens, Veterans Service Officer Seth D. Adams, Recreation Director Larry D. Conley, Garage Services Tommy Jenkins, Economic Development Director John Fay, Housing Director vii

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21 FINANCIAL SECTION

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23 INDEPENDENT AUDITORS' REPORT To the Board of Commissioners Macon County, North Carolina We have audited the accompanying financial statements of the governmental activities, the business-type activities, the discretely presented component unit, each major fund, and the aggregate remaining fund information of Macon County, North Carolina, as of and for the year ended June 30, 2012, which collectively comprise the County s basic financial statements as listed in the table of contents. These financial statements are the responsibility of the Macon County's management. 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 basic financial statements are free of material misstatement. The financial statements of the Macon County Airport Authority were not audited in accordance with Government Auditing Standards. 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 financial statement presentation. We believe that our audit provides a reasonable basis for our opinions. In our opinion, based on our audit, the financial statements referred to above present fairly, in all material respects, the financial position of the governmental activities, the business-type activities, the discretely presented component unit, each major fund, and the aggregate remaining fund information of Macon County, North Carolina, as of June 30, 2012, the respective changes in financial position and cash flows, where appropriate, 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 19, 2012, on our consideration of Macon 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 considered in assessing the results of our audit th Avenue Drive SE Hickory, North Carolina Phone Fax South Center Street Taylorsville, North Carolina Phone Fax Toll Free Both Locations Website:

24 Accounting principles generally accepted in the United States of America require that the Management s Discussion and Analysis, budgetary comparison information, 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 the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information, because the limited procedures do not provide us with sufficient evidence to express an opinion or provide assurance. Our audit was performed for the purpose of forming an opinion on the financial statements that collectively comprise the basic financial statements of Macon 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 combining and individual fund financial statements, budget and actual schedules, and supplemental ad valorem tax schedules are the responsibility of management and were derived from, and relate directly to, the underlying accounting and other records used to prepare the financial statements. 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 tables have not been subjected 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 19,

25 Management s Discussion and Analysis As management of Macon County, we offer readers of Macon County s financial statements this narrative overview and analysis of the financial activities of Macon County for the fiscal year ended June 30, We encourage readers to consider the information presented here in conjunction with additional information furnished in the County s financial statements, which follow this narrative. Financial Highlights The assets of Macon County s governmental activities exceeded its liabilities at the close of the fiscal year by $6,895,369. The County s net assets of governmental activities decreased by $5,952,647, primarily due to a decrease in restricted cash and cash equivalents and a decrease in liabilities. As of the close of the current fiscal year, Macon County s General Fund reported an ending fund balance of $21,366,558, an increase of $2,162,543 in comparison with the prior year. Approximately 17.0 percent of this total amount, or $3,692,987, is restricted or non-spendable. At the end of the current fiscal year, unassigned fund balance for the General Fund was $15,992,802, or 38 percent of total General Fund expenditures and transfers out for the fiscal year. Macon County's total debt decreased by $4,409,338 (9%) during the fiscal year. The key factors in this decrease are regular debt payments and a drawdown on the NC Clean Water Loan. The County holds the following bond ratings: Moody s Aa3 and Standard & Poor s A+. Overview of the Financial Statements This discussion and analysis are intended to serve as an introduction to Macon County s basic financial statements. Macon 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 (Figure 1). 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 Macon County. 3

26 Required Components of Annual Financial Report Figure 1 Management's Discussion and Analysis Basic Financial Statements Government- Wide Financial Statements Summary Fund Financial Statements Notes to the Financial Statements 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 final section of the basic financial statements is the Notes to the Financial Statements. The notes to the financial statements offer a detailed explanation about various information contained in the statements. After the notes, supplemental information is provided to show details about the County s nonmajor 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 North Carolina General Statutes can also be found in this part of the statements. Immediately following the notes is the required supplementary information. funding information about the County's pension plans. This section contains 4

27 Government-Wide Financial Statements The government-wide financial statements are designed to provide the reader with a broad overview of the County 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. 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 the net assets is one way to gauge the County's financial condition. The government-wide financial statements are divided into three categories: 1) governmental activities; 2) business-type activities; and 3) component unit. The governmental activities include most of the County's basic services, such as general governmental, public safety, transportation, public education, economic development, and general administration. Property taxes and federal and State grant funds finance most of these activities. The business-type activities are those that the County charges customers to provide. This includes the solid waste (landfill) operation offered by Macon County. The final category is the component unit. Macon County is financially accountable for the Macon County Airport Authority. Financial information for this component unit is reported separately from the financial information presented for the primary government itself. The government-wide financial statements can be found on Exhibits A and B of this report. 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. Macon County, like all other governmental entities in North Carolina, uses fund accounting to ensure and reflect compliance (or non-compliance) with financerelated legal requirements, such as the General Statutes or the County's budget ordinance. All of the funds of Macon County can be divided into three categories: governmental funds, proprietary funds, and agency/fiduciary 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 governmental 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. 5

28 Macon County 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 of Commissioners 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 as 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. Proprietary Funds. Macon County maintains two types of proprietary funds: Enterprise Fund and Internal Service Fund. Enterprise funds report the same functions presented as business-type activities in the government-wide financial statements. Macon County uses an Enterprise Fund to account for its Solid Waste operations. Macon County uses an Internal Service Fund to account for health insurance on a cost reimbursement basis. As these services predominantly benefit governmental rather than businesstype 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. The proprietary fund financial statements provide separate information for Solid Waste and Health Insurance. Fiduciary Funds. Fiduciary funds are used to account for resources held for the benefit of parties outside the government. Macon County has seven 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 follow Exhibit J of this report. Other Information. In addition to the basic financial statements and accompanying notes, this report also presents certain required supplementary information concerning Macon County s progress in funding its obligation to provide pension benefits to its employees. Required supplementary information immediately follows the notes to the financial statements. 6

29 Government-Wide Financial Analysis Macon County s Net Assets Figure 2 Governmental Activities Business-Type Activities Current and other assets $ 44,229,066 $ 36,538,679 $ 8,068,254 $ 8,673,266 $ 52,297,320 $ 45,211,945 Capital assets 24,156,626 23,459,314 2,536,224 2,271,354 26,692,850 25,730,668 Total assets 68,385,692 59,997,993 10,604,478 10,944,620 78,990,170 70,942,613 Long-term liabilities outstanding 47,338,503 45,449,420 5,643,286 5,512,126 52,981,789 $ 50,961,546 Other liabilities 8,199,173 7,653, , ,909 8,816,562 8,151,113 Total liabilities 55,537,676 53,102,624 6,260,675 6,010,035 61,798,351 59,112,659 Net assets: Invested in capital assets, net of related debt 20,496,868 18,601,883 1,836,224 2,071,354 22,333,092 20,673,237 Restricted 6,089,293 6,934, ,089,293 6,934,514 Unrestricted (13,738,145) (18,641,028) 2,507,579 2,863,231 (11,230,566) (15,777,797) Total net assets $ 12,848,016 $ 6,895,369 $ 4,343,803 $ 4,934,585 $ 17,191,819 $ 11,829,954 Total As noted earlier, net assets, over time, may serve as one useful indicator of a government s financial condition. For Macon County, assets exceeded liabilities by $11,829,954 at the close of the most recent fiscal year. The County's net assets decreased by $5,361,865 for the fiscal year ended June 30, Total Assets 69,128,946 60,481,659 10,749 By far, the largest portion of Macon County s net assets, $20,673,237 reflects its investment in capital assets (e.g., land, buildings, machinery, and equipment), Long-term less any liabilities related outstanding debt used to acquire 36,103,969 those assets 36,322,293 6,446 that are still outstanding. Macon County uses these Other capital liabilities assets to provide services 7,312,346 to citizens; 6,917, consequently, these assets are not available for future spending. Total liabilities Although Macon County s 43,416,315 investment 43,239,644 in 6,997 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 repay Net assets: these liabilities. Invested in capital assets, net of related debt 21,515,203 20,884,555 2,373 At the end of the current fiscal year, Macon County is reporting a negative balance in unrestricted net assets in the amount of $15,777,797 for the government Restricted as a whole. The primary reason 207,996 for the deficit 207,708 is due to the fact that under North Carolina law, the County Unrestricted is responsible for providing capital 3,989,432 funding (3,850,248) for 1,377 the school system. The County has chosen to meet its legal obligation to provide the school system Total net assets $ 25,712,631 $ 17,242,015 capital funding by using a mixture of County funds and debt financings. The assets, funded by the $ 3,751 County, however, are titled to and utilized by the school system. Since the County, as the issuing government, acquires no assets, the County has incurred a liability without a corresponding increase in assets. 7

30 Macon County's Changes in Net Assets Governmental Activities Figure 3 Business-Type Activities Revenues: Program revenues Charges for services $ 4,521,633 $ 4,319,383 $ 3,654,347 $ 3,458,349 $ 8,175,980 $ 7,777,732 Operating grants and contributions 7,645,348 10,647, ,645,348 10,647,327 Capital grants and contributions 5,814, , ,814, ,681 General revenues: Property taxes 28,883,855 28,747, ,883,855 28,747,033 Other taxes 6,695,601 7,609, ,695,601 7,609,640 Other 446, ,806 18,830 13, , ,819 Total revenues 54,007,718 51,894,870 3,673,177 3,471,362 57,680,895 55,366,232 Expenses: General government 10,770,642 10,544, ,770,642 10,544,326 Public safety 12,147,316 13,462, ,147,316 13,462,012 Transportation 638, , , ,086 Economic and physical development 8,671,741 2,977, ,671,741 2,977,859 Human Services 7,734,446 9,376, ,734,446 9,376,517 Cultural and recreational 2,430,596 2,349, ,430,596 2,349,816 Education 14,553,807 16,309, ,553,807 16,309,605 Interest on long-term debt 1,887,654 2,118, ,887,654 2,118,296 Solid waste - - 3,351,735 2,880,580 3,351,735 2,880,580 Total expenses 58,834,617 57,847,517 3,351,735 2,880,580 62,186,352 60,728,097 Total Increase (decrease) in net assets before special items (4,826,899) (5,952,647) 321, ,782 (4,505,457) (5,361,865) Special item - gain on sale of property 432, ,900 - Increase (decrease) in net assets (4,393,999) (5,952,647) 321, ,782 (4,072,557) (5,361,865) Net Assets: Beginning of year - July 1 17,242,015 12,848,016 4,022,361 4,343,803 21,264,376 17,191,819 End of year - June 30 $ 12,848,016 $ 6,895,369 $ 4,343,803 $ 4,934,585 $ 17,191,819 $ 11,829,954 8

31 Governmental Activities. Of total net assets, governmental activities accounted for $6,895,369 (58.3 percent). Property taxes provided 55.4 percent of funding at $28,747,033, charges for services funded $4,319,383, local option sales tax funded $7,609,940, and operating grants funded $10,647,327 of Macon County s governmental activities. Governmental activities decreased Macon County s net assets by $5,952,647. Net assets decreased due to the spending down of debt proceeds for school construction, which reduced the restricted cash on hand. Also, the non-current liabilities decreased due to regular debt payments. Business-Type Activities. Business-type activities increased Macon County s net assets by $590,782. That increase is primarily attributable to a decrease in depreciation expense, closure costs, and postclosure costs. Financial Analysis of the County s Funds As noted earlier, Macon County uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. Governmental Funds. The focus of Macon County s governmental funds is to provide information on near-term inflows, outflows, and balances of usable resources. Such information is useful in assessing Macon 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. As of the end of the current fiscal year, Macon County s governmental funds reported combined ending fund balances of $27,664,090, a decrease of $6,333,236 in comparison with the prior year. The decrease is primarily due to the spending down of debt proceeds for the Iotla Valley Elementary School construction. The General Fund is the chief operating fund of Macon County. At the end of the current fiscal year, fund balance available in the General Fund was $17,951,009, while total fund balance reached $21,366,558. The County currently has an available fund balance of 42% of General Fund expenditures and transfers out, while total fund balance represents 50% of that same amount. Total fund balance in the general fund increased $2,162,543. This increase is primarily attributable to under spending the budget in general government, public safety, and human services. The Consolidated Capital Project Fund's fund balance at year-end was $2,586,363, a decrease of $8,052,927 over the prior year, due to the spending down of debt proceeds. General Fund Budgetary Highlights During the fiscal year, the County revised the budget on several occasions. Generally, budget amendments fall into 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. Total amendments to the General Fund increased the revenue budget by $2,999,707. The majority of this increase was attributable to additional restricted intergovernmental revenues received after the beginning of the year. The difference between the final budgeted amount and the actual expenditures was $3,320,668. This difference is primarily due to under spending the budget in general government, public safety, and human services, the decision not to fill certain positions, and incomplete contracts to be continued in

32 Proprietary Funds. Macon County s proprietary funds provide the same type of information found in the government-wide financial statements, but in more detail. Unrestricted net assets of Solid Waste at the end of the year totaled $2,863,231. The increase of $355,652 over the prior year is primarily attributable to an increase in tipping fee revenues and the under spending of the budget on post closure costs. Capital Asset and Debt Administration Capital Assets. Macon County s investment in capital assets for its governmental and business-type activities as of June 30, 2012 amounts to $25,730,668, (net of accumulated depreciation). This investment in capital assets includes land, buildings and systems, improvements, machinery and equipment. There was a decrease of 3.6 percent in Macon County s investment in capital assets for the current fiscal year after accumulated depreciation (a 2.9 percent decrease for governmental activities and a 10.4 percent decrease for business-type activities). Macon County's Capital Assets Governmental Activities Figure 4 Business-Type Activities Land $ 9,104,281 $ 9,104,281 $ 460,837 $ 460,837 $ 9,565,118 $ 9,565,118 Buildings and improvements 25,499,397 26,089,890 9,395,567 9,395,567 34,894,964 35,485,457 Furniture and equipment 2,624,463 2,539,709 2,116,215 2,221,473 4,740,678 4,761,182 Vehicles 4,851,302 5,180, , ,863 5,543,417 5,885,107 Construction in progress 375, ,952-23, , ,131 Subtotal 42,455,140 43,269,076 12,664,734 12,805,919 55,119,874 56,074,995 Less accumulated depreciation (18,298,514) (19,809,762) (10,128,510) (10,534,565) (28,427,024) (30,344,327) Total $ 24,156,626 $ 23,459,314 $ 2,536,224 $ 2,271,354 $ 26,692,850 $ 25,730,668 Total Additional information on Macon County s capital assets can be found in the notes to the financial statements beginning on page 38. Long-Term Debt. At the end of the current fiscal year, Macon County had no bonded debt outstanding. The Municipal Finance Law of North Carolina limits the amount of net bonded debt a County may have outstanding to 8 percent of the appraised value subject to taxation. The current debt limitation for Macon County is $700,772,885, which is significantly greater than Macon County s outstanding general obligation debt. More detailed information on Macon County s long-term debt can be found in the notes to the financial statements beginning on page

33 Economic Factors and Next Year s Budget and Rates The unemployment rate for Macon County is currently 10.1 percent, which is a slight decrease from a rate of 10.3 percent a year ago. Macon County s rate is slightly higher than the State s unemployment rate of 9.9 percent. Sales tax distributions increased 8% over prior year. The tax base is diverse, with the ten leading taxpayers making up 3.36% of total assessed value. All of these factors were considered in preparing Macon County s budget for the fiscal year. Budget Highlights for the Fiscal Year Ending June 30, 2013 Governmental Activities: Approximately one percent growth in the tax base is anticipated over last year, to a total $9.39 billion in property valuation. The collection rate dropped from 97.09% in 2011 to 96.38% in Sales tax revenues were budgeted with an anticipated 2% growth over FY projections. Budgeted expenditures in the General Fund for 2013 are $44,391,193, which includes new debt service for school technology. The 2013 budget has approximately $1.1 million capital outlay, an increase in Social Services due to the daycare subsidy payments passing through the County, and an increase in Human Services due to the addition of the Community Transformation Grant. Business-Type Activities: The budgeted expenditures for the Solid Waste Fund are $3,775,200, which represents an 8% percent increase over last year. The increase is due to capital outlay appropriations and preliminary planning costs for a new cell at the Macon County MSW landfill. Requests for information This financial report is designed to provide a general overview of Macon 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 Office of the Finance Director, 5 West Main Street, Franklin, North Carolina

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35 BASIC FINANCIAL STATEMENTS OVERVIEW

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37 MACON COUNTY, NORTH CAROLINA Exhibit A STATEMENT OF NET ASSETS JUNE 30, 2012 Component Primary Government Unit Macon County Governmental Business-Type Airport Activities Activities Total Authority Assets: Cash and cash equivalents $ 28,138,552 $ 8,350,321 $ 36,488,873 $ 48,311 Taxes receivable, net 1,225,422-1,225,422 - Interest receivable 15,388 6,184 21,572 - Accounts receivable, net 2,211, ,311 2,524,231 - Due from other governments 3,230,564 4,450 3,235,014 - Inventories 90,114-90,114 - Prepaid items 119, ,618 - Restricted cash and cash equivalents 1,507,101-1,507,101 - Construction in progress 354,952 23, ,131 - Non-depreciable capital assets 9,104, ,837 9,565,118 8,807,631 Depreciable capital assets, net 14,000,081 1,787,338 15,787,419 1,198,442 Total assets 59,997,993 10,944,620 70,942,613 10,054,384 Liabilities: Accounts payable and accrued liabilities 2,810, ,329 3,103,963 3,413 Unearned revenue 130, ,301 - Non-current liabilities: Due in less than one year 4,712, ,580 4,916,849 - Due in more than one year 45,449,420 5,512,126 50,961,546 - Total liabilities 53,102,624 6,010,035 59,112,659 3,413 Net Assets: Invested in capital assets, net of related debt 18,601,883 2,071,354 20,673,237 10,006,073 Restricted for: Stabilization by State statute 4,692,105-4,692,105 - Restricted for public safety 341, ,369 - Restricted for economic and physical development 252, ,562 - Restricted for education 1,648,478-1,648,478 - Unrestricted (18,641,028) 2,863,231 (15,777,797) 44,898 Total net assets $ 6,895,369 $ 4,934,585 $ 11,829,954 $ 10,050,971 The accompanying notes are an integral part of the financial statements. 12

38 MACON COUNTY, NORTH CAROLINA STATEMENT OF ACTIVITIES FOR THE YEAR ENDED JUNE 30, 2012 Program Revenues Operating Capital Charges for Grants and Grants and Functions/Programs: Expenses Services Contributions Contributions Primary Government: Governmental Activities: General government $ 10,544,326 $ 1,047,612 $ 1,309,983 $ - Public safety 13,462,012 2,110, ,766 - Transportation 709, ,237 - Economic and physical development 2,977, ,355 1,249, ,681 Human services 9,376, ,473 6,813,452 - Cultural and recreational 2,349, Education 16,309, ,841 - Interest on long-term debt 2,118, Total governmental activities 57,847,517 4,319,383 10,647, ,681 Business-Type Activities: Solid waste 2,880,580 3,458, Total primary government $ 60,728,097 $ 7,777,732 $ 10,647,327 $ 133,681 Component Unit: Airport Authority $ 135,753 $ 7,240 $ 40,000 $ 676,674 General Revenues: Ad valorem taxes Local option sales tax Unrestricted intergovernmental revenues: Other taxes Gross receipts tax Interest earned on investments Total general revenues Change In Net Assets Net Assets: Beginning of year - July 1 End of year - June 30 The accompanying notes are an integral part of the financial statements. 13

39 Exhibit B Net (Expense) Revenue and Changes in Net Assets Primary Government Component Unit Macon County Governmental Business-Type Airport Activities Activities Total Authority $ (8,186,731) $ - $ (8,186,731) $ - (10,708,303) - (10,708,303) - (450,849) - (450,849) - (1,118,775) - (1,118,775) - (1,878,592) - (1,878,592) - (2,349,816) - (2,349,816) - (15,935,764) - (15,935,764) - (2,118,296) - (2,118,296) - (42,747,126) - (42,747,126) , ,769 - (42,747,126) 577,769 (42,169,357) - 588,161 28,747,033-28,747,033-7,609,640-7,609, , ,854-16,488-16,488-78,464 13,013 91,477-36,794,479 13,013 36,807,492 - (5,952,647) 590,782 (5,361,865) 588,161 12,848,016 4,343,803 17,191,819 9,462,810 $ 6,895,369 $ 4,934,585 $ 11,829,954 $ 10,050,971 The accompanying notes are an integral part of the financial statements. 14

40 Exhibit C MACON COUNTY, NORTH CAROLINA BALANCE SHEET - GOVERNMENTAL FUNDS JUNE 30, 2012 Consolidated Debt Other Total General Capital Service Governmental Governmental Fund Project Fund Funds Funds Assets: Cash and cash equivalents $ 19,650,804 $ 1,066,505 $ 976,150 $ 2,460,542 $ 24,154,001 Taxes receivable, net 1,081, ,016 1,225,422 Interest receivable 15, ,388 Accounts receivable, net 1,062, ,538 44, ,847 2,211,920 Due from other funds 241, ,041 Due from other governments 2,893, ,758 3,230,564 Inventories 90, ,114 Prepaid items 119, ,618 Cash and cash equivalents, restricted 2,584 1,504, ,507,101 Total assets $ 25,157,151 $ 3,119,560 $ 1,020,295 $ 3,498,163 $ 32,795,169 Liabilities and Fund Balances: Liabilities: Accounts payable and accrued liabilities $ 1,572,078 $ 533,197 $ - $ 422,236 $ 2,527,511 Due to other funds , ,041 Deferred revenues 2,218, ,012 2,362,527 Total liabilities 3,790, , ,289 5,131,079 Fund Balances: Non-spendable, not in spendable form: Inventories 90, ,114 Prepaids 119, ,618 Stabilization by State statute 3,205, ,538 44, ,605 4,692,105 Restricted, all others 277,438 1,504, ,454 2,242,409 Committed - 533,308-1,663,942 2,197,250 Assigned 1,680, ,150-2,656,919 Unassigned 15,992, (327,127) 15,665,675 Total fund balances 21,366,558 2,586,363 1,020,295 2,690,874 27,664,090 Total liabilities and fund balances $ 25,157,151 $ 3,119,560 $ 1,020,295 $ 3,498,163 Capital assets used in governmental activities are not financial resources and, therefore, are not reported in the funds. 23,459,314 Internal service funds are used by management to charge the cost of health insurance. The assets and liabilities of the Internal Service Fund are included in governmental activities in the Statement of Net Assets. 3,701,428 Long-term liabilities and compensated absences are not due and payable in the current period and, therefore, are not reported in the funds. (50,161,689) Deferred revenues in the governmental funds are used to offset accounts receivable not expected to be available within 90 days of year-end. These receivables are a component of net assets in the Statement of Net Assets. 2,232,226 Net assets of governmental activities $ 6,895,369 The accompanying notes are an integral part of the financial statements. 15

41 Exhibit D MACON COUNTY, NORTH CAROLINA STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - GOVERNMENTAL FUNDS FOR THE YEAR ENDED JUNE 30, 2012 Consolidated Debt Other Total General Capital Service Governmental Governmental Fund Project Fund Funds Funds Revenues: Ad valorem taxes $ 25,924,926 $ - $ - $ 2,709,230 $ 28,634,156 Local option sales taxes 6,095, ,514,031 7,609,640 Unrestricted intergovernmental revenues 359, ,342 Restricted intergovernmental revenues 7,645,173-1,131,384 1,595,279 10,371,836 Permits and fees 1,432, ,432,807 Sales and services 2,697, ,697,408 Interest earned on investments 65,589 8, ,535 75,819 Miscellaneous 43, ,092 53, , ,172 Total revenues 44,263, ,221 1,185,471 5,968,607 51,590,180 Expenditures: Current: General government 6,295, ,503 6,449,113 Public safety 10,069, ,637,436 13,707,106 Transportation 754, ,920 Economic and physical development 844, ,159,415 3,004,228 Human services 9,649, ,649,735 Education 8,084,457 8,225, ,309,605 Cultural and recreational 2,021, ,021,075 Debt service: Principal repayments - - 4,637,634-4,637,634 Interest - - 2,118,296-2,118,296 Total expenditures 37,720,280 8,225,148 6,755,930 5,950,354 58,651,712 Revenues over (under) expenditures 6,543,601 (8,052,927) (5,570,459) 18,253 (7,061,532) Other Financing Sources (Uses): Issuance of long-term debt , ,296 Transfers in 351,125-5,576, ,324 6,780,477 Transfers out (4,732,183) - - (2,048,294) (6,780,477) Total other financing sources (uses) (4,381,058) - 5,576,028 (466,674) 728,296 Net change in fund balances 2,162,543 (8,052,927) 5,569 (448,421) (6,333,236) Fund Balances: Beginning of year - July 1 19,204,015 10,639,290 1,014,726 3,139,295 33,997,326 End of year - June 30 $ 21,366,558 $ 2,586,363 $ 1,020,295 $ 2,690,874 $ 27,664,090 The accompanying notes are an integral part of the financial statements. 16

42 MACON COUNTY, NORTH CAROLINA Exhibit E RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - GOVERNMENTAL FUNDS TO THE STATEMENT OF ACTIVITIES FOR THE YEAR ENDED JUNE 30, 2012 Amounts reported for governmental activities in the Statement of Activities (Exhibit B) are different due to the following items: Net change in fund balances - total governmental funds $ (6,333,236) Property tax revenues in the Statement of Activities that do not provide current financial resources are not reported as revenues in the governmental funds statement. 112,877 Exhibit D reports revenues using a current financial resources basis, which generally means revenue is recognized when collected, or is expected to be collected, within 90 days of year-end. Exhibit B reports revenues when the earning process is complete, regardless of when it is collected. This measurement difference causes timing of revenue recognition differences for the following revenues types: Ambulance revenues in the Statement of Activities that do not provide current financial resources are not reported as revenues in the governmental funds statement. (77,918) Public Health fees in the Statement of Activities that do not provide current financial resources are not reported as revenues in the governmental funds statement. 44,362 Expenses related to compensated absences and Law Enforcement Officers' Separation Allowance that do not require current financial resources are not reported as expenditures in the governmental funds statement. (2,117,029) Capital assets disposed of during the year are not recognized on the modified accrual basis. (4,750) Capital outlays are reported as expenditures in the governmental funds statement. However, in the Statement of Activities, capital outlay is not an expense, rather it is an increase in capital assets. 912,731 The issuance of long-term debt provides current financial resources to governmental funds. However, in the Statement of Activities, these transactions are not revenue, rather they are an increase in liabilities. (728,296) Depreciation expense allocates the costs of capital assets over their useful lives. It is not reported as an expenditure in the governmental funds statement. (1,605,293) Principal repayments are reported as expenditures in the governmental funds statement. However, in the Statement of Activities, these transactions are not an expense, rather they are a decrease in liabilities. 4,637,634 The net revenue (expense) of the internal service funds are reported with governmental activities. (793,729) Change in net assets of governmental activities (Exhibit B) $ (5,952,647) The accompanying notes are an integral part of the financial statements. 17

43 MACON COUNTY, NORTH CAROLINA Exhibit F STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL GENERAL FUND FOR THE YEAR ENDED JUNE 30, 2012 Variance from Budgeted Amounts Final Budget Original Final Actual Over/Under Revenues: Ad valorem taxes $ 26,102,970 $ 26,102,970 $ 25,924,926 $ (178,044) Local option sales taxes 5,790,000 5,790,000 6,095, ,609 Unrestricted intergovernmental revenues 365, , ,342 (5,658) Restricted intergovernmental revenues 5,869,931 8,435,574 7,645,173 (790,401) Permits and fees 1,146,300 1,321,300 1,432, ,507 Sales and services 2,193,200 2,448,101 2,697, ,307 Investment earnings 48,000 48,000 65,589 17,589 Miscellaneous 16,862 21,025 43,027 22,002 Total revenues 41,532,263 44,531,970 44,263,881 (268,089) Expenditures: Current: General government 6,848,178 6,946,811 6,295, ,201 Public safety 10,237,790 10,694,243 10,069, ,573 Transportation 851, , , ,163 Economic and physical development 773, , ,813 35,924 Human services 9,257,320 11,487,700 9,649,735 1,837,965 Cultural and recreational 2,001,062 2,049,941 2,021,075 28,866 Intergovernmental: Education 8,121,121 8,107,433 8,084,457 22,976 Total expenditures 38,090,442 41,040,948 37,720,280 3,320,668 Revenues over (under) expenditures 3,441,821 3,491,022 6,543,601 3,052,579 Other Financing Sources (Uses): Transfers in 270, , ,125 80,488 Transfers out (4,684,821) (4,748,849) (4,732,183) 16,666 Appropriated fund balance 972, ,190 - (987,190) Total other financing sources (uses) (3,441,821) (3,491,022) (4,381,058) (890,036) Net change in fund balance $ - $ - 2,162,543 $ 2,162,543 Fund Balance: Beginning of year - July 1 19,204,015 End of year - June 30 $ 21,366,558 The accompanying notes are an integral part of the financial statements. 18