ESCAMBIA COUNTY, FLORIDA COMPREHENSIVE ANNUAL FINANCIAL REPORT

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2 COMPREHENSIVE ANNUAL FINANCIAL REPORT For the Fiscal Year Ended September 30, 2013 Prepared by: Pam Childers, CPA and the Finance Staff Office of the Clerk of the Circuit Court and Comptroller

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4 Government Finance Officers Association Certificate of Achievement for Excellence in Financial Reporting Presented to Escambia County Florida For its Comprehensive Annual Financial Report for the Fiscal Year Ended September 30, 2012 Executive Director/CEO i

5 COUNTY OFFICIALS BOARD OF COUNTY COMMISSIONERS Gene M. Valentino... Chairman District 2 Lumon J. May...Vice Chair District 3 Wilson B. Robertson...Commissioner District 1 Grover C. Robinson...Commissioner District 4 Steven L. Barry...Commissioner District 5 ELECTED COUNTY OFFICERS Pam Childers...Clerk of the Circuit Court and Comptroller Chris Jones... Property Appraiser David Morgan...Sheriff David Stafford...Supervisor of Elections Janet Holley...Tax Collector OTHER OFFICIALS George Touart*... Interim County Administrator Alison Rogers... County Attorney *Mr. George Touart passed away January 24, 2014 ii

6 COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED SEPTEMBER 30, 2013 TABLE OF CONTENTS INTRODUCTORY SECTION Certificate of Achievement for Excellence in Financial Reporting... i County Officials... ii Table of Contents... iii Letter of Transmittal... vii Organization Chart... xiv FINANCIAL SECTION Independent Auditors Report... 1 Management s Discussion and Analysis...4 Basic Financial Statements: Government-wide Financial Statements: Statement of Net Position...22 Statement of Activities...23 Fund Financial Statements: Balance Sheet Governmental Funds...25 Reconciliation of the Balance Sheet of Governmental Funds to the Statement of Net Position...27 Statement of Revenues, Expenditures, and Changes in Fund Balances Governmental Funds...28 Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances of Governmental Funds to the Statement of Activities...30 Statement of Revenues, Expenditures, and Changes in Fund Balances Budget and Actual - General Fund County Wide...32 Statement of Revenues, Expenditures, and Changes in Fund Balances Budget and Actual Disaster Recovery Fund...33 Budget and Actual Community Redevelopment Agency Fund...34 Statement of Net Position Proprietary Funds...35 Statement of Revenues, Expenses, and Changes in Net Position Proprietary Funds...37 Statement of Cash Flows Proprietary Funds...38 Statement of Fiduciary Net Position Agency Funds...40 Statement of Net Position Component Units...41 Statement of Activities Component Units...42 Notes to the Financial Statements...45 iii

7 Required Supplementary Information: Other Postemployment Benefits Schedule of Funding Progress...81 Other Supplementary Information: Major Governmental Funds: Budgetary Comparison Schedule - Local Option Sales Tax Fund...83 General Fund: Combining Balance Sheet General Fund by Category...85 Combining Schedule of Revenues, Expenditures, and Changes in Fund Balance General Fund by Category...87 Combining Schedule of Revenues, Expenditures, and Changes in Fund Balance Budget and Actual - General Fund...89 Non-Major Governmental Funds: Combining Balance Sheet All Nonmajor Governmental Funds...99 Combining Statement of Revenues, Expenditures, and Changes in Fund Balances All Nonmajor Governmental Funds Combining Balance Sheet Nonmajor Governmental Funds Special Revenue Funds Combining Statement of Revenues, Expenditures, and Changes in Fund Balances Nonmajor Governmental Funds - Special Revenue Funds Budgetary Comparison Schedules - Special Revenue Funds: Escambia County Restricted Fund Industrial Parks Fund Code Enforcement Fund Mass Transit Fund M & A State Revenue Fund Tourist Promotion Fund Other Grant Projects Fund Misdemeanor Probation Fund Article V Fund Development Review Fund Perdido Key Beach Mouse Fund State Housing Initiative Partnership (SHIP) Fund Law Enforcement Trust Fund Escambia Affordable Housing Fund CDBG HUD Entitlement Fund Handicapped Parking Fines Fund Family Mediation Fund Fire Protection Fund Emergency 911 Operations Fund HUD-CDBG Housing Rehabilitation Fund HUD Home Fund Southwest Sector Road Project Fund Bob Sikes Toll Facilities Fund Transportation Trust Fund MSBU Assessment Program Fund Master Drainage Basin Fund Clerk Programs Fund Sheriff Programs Fund Supervisor of Election Programs Fund iv

8 Budgetary Comparison Schedules Debt Service Fund Combining Balance Sheet Nonmajor Governmental Funds - Capital Projects Funds Combining Statement of Revenues, Expenditures, and Changes in Fund Balances Nonmajor Governmental Funds Capital Projects Funds Budgetary Comparison Schedules Capital Projects Funds: Federal Transit Administration New Road Construction Nonmajor Proprietary and Internal Service Funds: Combining Statement of Net Position Nonmajor Proprietary Funds Combining Statement of Revenues, Expenses, and Changes in Net Position Nonmajor Proprietary Funds Combining Statement of Cash Flows Nonmajor Proprietary Funds Combining Statement of Net Position Internal Service Funds Combining Statement of Revenues, Expenses, and Changes in Net Position Internal Service Funds Combining Statement of Cash Flows Internal Service Funds Fiduciary Funds Agency Funds: Combining Statement of Fiduciary Net Position Agency Funds Statement of Changes in Assets and Liabilities Agency Funds STATISTICAL SECTION Schedule 1 Net Position by Component Last Ten Fiscal Years Schedule 2 Changes in Net Position Last Ten Fiscal Years Schedule 3 Fund Balances of Governmental Funds Last Ten Fiscal Years Schedule 4 Changes in Fund Balances of Governmental Funds Last Ten Fiscal Years Schedule 5 Assessed Value and Estimated Actual Value of Taxable Property Last Ten Fiscal Years Schedule 6 Direct and Overlapping Property Tax Rates Last Ten Fiscal Years Schedule 7 Principal Property Tax Payers Current and Nine Years Ago Schedule 8 Property Tax Levies and Collections Last Ten Fiscal Years Schedule 9 Ratios of General Bonded Debt Outstanding Last Ten Fiscal Years Schedule 10 Direct and Overlapping Governmental Activities Debt and Computation of Legal Debt Margin Schedule 11 Pledged Revenue Coverage Last Ten Fiscal Years Schedule 12 Demographic and Economic Statistics Last Ten Fiscal Years Schedule 13 Schedule 14 Principal Employers Current and Nine Years Ago Escambia County Government Employees by Function/Program Last Ten Fiscal Years v

9 Schedule 15 Operating Indicators by Function/Program Last Ten Fiscal Years Schedule 16 Capital Asset Statistics by Function/Program Last Ten Fiscal Years COMPLIANCE SECTION Independent Auditors Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards Management Letter Management s Response to Management Letter Independent Auditors Report on Compliance for Each Major Federal Program and State Project and on Internal Control Over Compliance Required by OMB Circular A-133; and Chapter , Rules of the Auditor General Schedule of Expenditures of Federal Awards and State Financial Assistance Notes to the Schedule of Expenditures of Federal Awards and State Financial Assistance Schedule of Findings and Questioned Costs SUPPORTING FINANCIAL STATEMENTS Special-Purpose Fund Financial Statements and Required Supplementary Information... Escambia County Clerk of the Circuit Court and Comptroller Escambia County Property Appraiser Escambia County Sheriff Escambia County Supervisor of Elections Escambia County Tax Collector vi

10 Pam Childers Clerk of the Circuit Court and Comptroller, Escambia Clerk of Courts County Comptroller Clerk of the Board of County Commissioners Recorder Auditor February 14, 2014 To the Honorable Members of the Board of County Commissioners and Citizens of Escambia County, Florida Florida Statutes require that all general-purpose local governments publish a complete set of financial statements presented in conformity with generally accepted accounting principles (GAAP), and audited in accordance with generally accepted auditing standards by a firm of licensed certified public accountants. Pursuant to that requirement, we hereby submit the Comprehensive Annual Financial Report (CAFR) of the County of Escambia (County), Florida for the fiscal year ended September 30, 2013 which fulfills this requirement. This report consists of management s representations concerning the finances of the County. Consequently, management assumes full responsibility for the completeness and reliability of the information contained in this report. To provide a reasonable basis for making these representations, the County has established a comprehensive framework of internal control designed both to protect the government s assets from unauthorized use or disposition, loss or theft, and to compile sufficient reliable information for the preparation of the County s financial statements in conformity with GAAP. Because the cost of internal control should not exceed anticipated benefits, the objective is to provide reasonable, rather than absolute, assurance that the financial statements are free of any material misstatements. As management, we assert that, to the best of our knowledge and belief, this financial report is complete and reliable in all material respects. The County s financial statements have been audited by an independent firm of certified public accountants, Warren Averett CPAs and Advisors. The goal of the independent audit was to provide reasonable assurance that the financial statements of the County for the fiscal year ended September 30, 2013, are free of material misstatements. The independent audit involves examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements; assessing the accounting principles used and significant estimates made by management; and evaluating the overall financial statement presentation. Finance 221 Palafox Place Suite 140 Pensacola, FL Telephone Finance@EscambiaClerk.com vii

11 The independent audit firm of Warren Averett CPAs and Advisors have issued an unmodified ( clean ) opinion on the Escambia County, Florida financial statements for the year ended September 30, The independent auditor s report is located at the front of the financial section of this report. The independent audit of the financial statements of the County was also designed to meet the requirements of the Federal Single Audit Act and the Office of Management and Budget (OMB) Circular A-133. The standards governing single audit engagements require the independent auditor to report on the government s internal controls and compliance with legal requirements with special emphasis on the administration of federal awards and state financial assistance. These reports are in the compliance section of this report. GAAP requires that management provide a narrative introduction, overview and analysis to accompany the basic financial statements in the form of the Management s Discussion and Analysis (MD&A). The MD&A complements this Letter of Transmittal and the two should be read in conjunction with each other. Escambia County s MD&A can be found immediately following the Independent Auditors Report. Profile of the County of Escambia, Florida Escambia County, located in the northwestern part of the state, was established July 21, 1821 as a non-charter government when the Provisional Governor Andrew Jackson signed an ordinance making the County one of the first two counties in Florida, the other being St. Johns County. Escambia County encompasses approximately 661 square miles with 64,000 acres of water area and serves a population of approximately 302,715. There are two municipalities within the County, the City of Pensacola, the County seat, and the Town of Century which is located 38 miles from the County seat. Escambia County is a political subdivision of the State of Florida. As such, it is governed by and derives its operating authority from the constitution and laws of the State of Florida. The County operates under a commission/administrator form of government, with a governing board consisting of five elected County Commissioners who are elected by district to staggered four-year terms. The Chairman presides over the Board and the chair is rotated annually in sequential order by district. In addition to the Board of County Commissioners, there are five elected constitutional officers performing specifically designated governmental functions: The Clerk of the Circuit Court and Comptroller (Clerk), Property Appraiser, Sheriff, Supervisor of Elections and Tax Collector. The Clerk serves the function of Clerk to the Board for County Commissioners. The Clerk also performs the duties of auditor, accountant, recorder and custodian of County funds. Such duties are set fourth in the Florida Constitution. The financial reporting entity (the County) includes all the funds of the primary government (Escambia County Board of County Commissioners) as well as its viii

12 component units. Component units are legally separate entities for which the primary government is financially accountable. The County provides a full range of services including fire protection, emergency medical services, county jail, planning and zoning, solid waste disposal, construction and maintenance of highways, streets, and other infrastructure, mass transportation services, conservation and resource management, cultural and recreational programs, tourism and economic development. Although legally separate entities, the general funds of the Clerk, Property Appraiser, Sheriff, Supervisor of Elections, and Tax Collector are included as a General Fund component of the County. The Santa Rosa Island Authority (SRIA) and the Law Library are reported separately as discrete component units within Escambia County s financial statements. SRIA operations include management services and leasing activities for County owned property on Santa Rosa Island. For additional information on Escambia County s Component Units, please refer to the Notes Section of this report. Factors Affecting Financial Condition The information presented in the financial statements is perhaps best understood when it is considered from the broader perspective of the specific environment within which the County operates. Local Economy Escambia County is located in Florida s Panhandle, along the emerald shores of the Gulf Coast wherein the tourism sector represents approximately 10.3% of the area workforce, employing approximately 22,800 in the leisure and hospitality industry. There are four major hospitals located in Escambia County, all of which have surgical centers; Baptist Hospital, West Florida Regional Medical Center, Navy Hospital and Sacred Heart. There are approximately 20,000 employed in the health and other health related services. The military is another large factor in the area s economy. Navy and Air Force expenditures, including construction have historically accounted for nearly half the total payroll in the Pensacola metro area. Navy installations include Pensacola Naval Air Station, Saufley Field and Corry Station. Whiting Field is located in Milton Florida, about 30 miles northeast of Pensacola. In neighboring Okaloosa County, Eglin Air Force Base and Hurlburt Field have an impact on the local economy as well as serving as magnets for high tech businesses. Escambia County has several commercial/industrial parks. The County s commerce parks consist of Central and Heritage Oaks as well as the newest downtown Technology Park. The Heritage Oaks Commerce Park, home to Navy Federal Credit Union, continues to stimulate growth in the local economy by increasing job creation and expanding operations in the area. The properties in the Central Commerce Park ix

13 and the downtown Technology Park are now being marketed in partnership with the Greater Pensacola Chamber of Commerce. This will allow the County to reach a wider audience for promoting economic development and attracting new businesses to the area. Escambia County s unemployment rate has fallen for the third straight year. The unemployment rate of 6.5% locally reflects a decrease of 1.6% from the previous year s rate of 8.1%. Long-term Financial Planning and Major Initiatives Unrestricted fund balance (the total of the committed, assigned, and unassigned components of fund balance) in the general fund at year end exceeded 2 months of operating expenditures and transfers out. This amount is favorable based on the policy guidelines set by the County for budgetary and planning purposes. The adopted budget was developed around the framework set by the County s strategic planning initiative. The primary themes of the strategic initiative are to improve customer service, restore public trust and confidence, economic development, maintenance of infrastructure, and fiscal responsibility. Process improvement is key to improving customer service. The county is continuing its implementation of the Public Works work order and customer care software systems which generates records in electronic format and makes them available to the citizens via the customer care link on the county s webpage The Board of County Commissioner s meetings are available for viewing live on the County webpage and meetings are also archived for later viewing, as well as broadcast by local television. A long term goal of the County is to foster economic growth and development. The County uses Tax Increment Financing (TIF) Districts to fund a variety of Community Redevelopment Areas (CRA) in the County. These funds are used to pay for infrastructure improvements in these districts. With tourism as a major part of the economy, additional funding expected from grant revenues, bed tax collections and the defeased bond issue, will provide an increased future revenue source for funding tourism related activities, marketing and advertising. Adding to the economic development initiative, the County continues to move forward with the new Technology Park located in the downtown Pensacola area. The park was partially funded with Local Option Sales Tax revenue. Based on the Economic Development Incentive Ordinance adopted by the County, targeted companies that create a minimum of 10 new jobs with an average salary requirement may receive rebates/grants of local taxes. x

14 In November 2013 the County issued a Capital Improvement Revenue Note, in the amount of $12 million. The purpose of this Note is to finance the cost of expansion and construction of a new research and development facility, including landscaping, parking improvements and related architectural and construction costs for the Florida Institute for Human and Machine Cognition (IHMC). This project serves a public purpose by advancing technical research, improving employment, and economic conditions in the geographical boundaries of the County. IHMC is responsible party for the repayment of debt service on this note. Between 2008 and 2018 the County will have invested more than $378 million in infrastructure with current allocations of the One Cent Local Option Sales Tax (LOST). Proceeds of this tax are scheduled to fund road reconstruction, dirt road paving, drainage improvements and vehicle replacements for Emergency Medical Service, the Fire Department and Sheriff s Office, as well as new construction of library structures. The County is currently in discussion regarding a 10 year extension of the LOST and defining projects to propose for a public referendum. Infrastructure improvements for energy projects of approximately $2.6 million funded by federal assistance have created substantial energy savings for the County. These green projects consist of energy saving upgrades to the M.C. Blanchard and the old County Courthouse buildings. The Landfill to Gas energy project converts methane gas into energy, generating revenue for the County. A four cent gas tax has been levied effective January 2014, for direct benefit of the County s mass transit system, eliminating approximately $3.7 million in General Fund subsidies. As of October 1, 2013 the County assumed consolidated the City and County shared Library System under the County. The fiscal year 2014 consolidated Library budget is $4.8 million; the new county-wide millage levy of.359 mills for the Library MSTU will be offset by a reduction in county-wide ad valorem tax. The Library consolidation increased staffing levels by approximately 76. Staffing levels county-wide increased approximately 4% for fiscal year The fiscal year 2014 adopted budget increased by $8.4 million over the prior year to $364 million. While the total millage rate for property tax remained unchanged at mills, property values increased an average of 1% over the prior year for both the County-wide and unincorporated areas of Escambia County. Discussions are on-going with regard to gaining efficiencies through consolidation efforts and promoting cost effectiveness on a range of issues including employee benefits, financial systems, and geographic information systems. xi

15 Relevant Financial Policies The County has established a fund balance policy in accordance with GASB Statement No. 54 Fund Balance Reporting and Governmental Fund Type Definitions. The adopted policy outlining the County s goal to maintain an unrestricted general fund balance of at least 2 months of regular operating expenditures and transfers out to mitigate risks of either natural or man-made disasters and to provide for revenue shortfalls. For the fiscal year ended September 30, 2013, GASB Statement No. 65 Items Previously Reported as Assets and Liabilities was early implemented in conjunction with GASB Statement No. 63 Financial Reporting of Deferred Outflows of Resources, Deferred inflows of Resources and Net Position. The County provides pension benefits for all employees through a statewide plan managed by the Florida Department of Management Services, Division of Retirement. The statewide plan is a contributory plan. The County currently has no obligation in connection with employee pension benefits offered through this plan beyond its monthly payments to the Division of Retirement. However, effective for fiscal years beginning after June 2014, the County will be required by GASB Statement No 68 Accounting and Financial Reporting for Pensions to recognize its unfunded portion of the statewide plan as a liability. Awards and Acknowledgements The Government Finance Officers Association of the United States and Canada (GFOA) awarded a Certificate of Achievement for Excellence in Financial Reporting to Escambia County for its Comprehensive Annual Financial Report (CAFR) for the fiscal year ended September 30, This is the 17 th consecutive year that Escambia County has received this prestigious award. In order to be awarded a Certificate of Achievement, Escambia County must publish an easily readable and efficiently organized CAFR that satisfies both generally accepted accounting principles and applicable program requirements. A Certificate of Achievement for Excellence in Financial Reporting is valid for a period of one year only. However, we believe that our current CAFR continues to meet the Certificate of Achievement for Excellence in Financial Reporting Program s requirements, and we are submitting it to the GFOA to determine its eligibility for another Certificate. Escambia County also received the GFOA s Distinguished Budget Presentation Award for its Annual Budget Document for fiscal year beginning October 1, This is the 18 th, consecutive year that Escambia County has received this award. In order to qualify for the Distinguished Budget Presentation Award, the government s budget document had to be judged proficient as a policy document, a financial plan, an operations guide, and a communication device. xii

16 The preparation of this CAFR would not have been possible without the skill, effort, and dedication of the entire financial staff of the Clerk of the Circuit Court and Comptroller. I would like to express my appreciation to Financial Reporting and Grants Department: Sharon Harrell, Manager; Elizabeth Parker, Harold Coats, Belinda Justin, and Arlene Curb. I also wish to thank all government departments for their assistance in providing the data necessary to prepare this report. Credit is due to the Board of County Commissioners for their unfailing support for maintaining the highest standards of professionalism in the management of Escambia County. Respectfully submitted, Pam Childers Pam Childers Honorable Pam Childers Clerk of the Circuit Court & Comptroller xiii

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19 REPORT OF INDEPENDENT AUDITORS The Honorable Board of County Commissioners Escambia County, Florida Report on the Financial Statements We have audited the accompanying financial statements of the governmental activities, the business-type activities, the aggregate discretely presented component units, each major fund, and the aggregate remaining fund information of Escambia County, Florida, (hereinafter referred to as County ) as of and for the year ended September 30, 2013, and the related notes to the financial statements, which collectively comprise the County s basic financial statements as listed in the table of contents. We did not audit the financial statements of the Santa Rosa Island Authority, a business type activities-discrete component unit, as of and for the year ended September 30, 2013, which statements reflect total assets of $20,358,791 and total revenues of $8,294,528. Management s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Auditors Responsibility Our responsibility is to express opinions on these financial statements based on our audit. We did not audit the financial statements of the Santa Rosa Island Authority, which are included in the basic financial statements as a discretely presented component unit. Those statements were audited by another auditor whose report has been furnished to us, and our opinion, insofar as it relates to the amounts included for the Santa Rosa Island Authority, is based solely on the report of the other auditor. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the County s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the County s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of 1

20 significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. Opinions In our opinion, based on our audit and the report of the other auditor, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business-type activities, the aggregate discretely presented component units, each major fund, and the aggregate remaining fund information of the County, as of September 30, 2013, and the respective changes in financial position, and, where applicable, cash flows thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America. Other Matters Required Supplementary Information Accounting principles generally accepted in the United States of America require that the management s discussion and analysis and schedule of funding progress on pages 4-21 and 81, respectively, be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Other Supplementary Information Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the County s basic financial statements. The introductory section, combining financial statements, individual fund budgetary comparison schedules, and statistical section are presented for purposes of additional analysis and are not a required part of the basic financial statements. The combining financial statements and individual fund budgetary comparison schedules are the responsibility of management and were derived from and relate directly to the underlying accounting and other records used to prepare the basic financial statements. The information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of 2

21 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 subjected to the auditing procedures applied in the audit of the basic financial statements, and, accordingly, we do not express an opinion or provide any assurance on them. Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated February 14, 2014 on our consideration of the County s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the County s internal control over financial reporting and compliance. February 14, 2014 Pensacola, Florida 3

22 MANAGEMENT S DISCUSSION AND ANALYSIS September 30, 2013 This Management s Discussion and Analysis ( MD&A ) presents the readers of the financial statements a narrative overview of the financial activities of Escambia County, Florida (the County ) for the fiscal year ended September 30, We encourage readers to consider the information presented here in conjunction with additional information that has been furnished in the Letter of Transmittal, which can be found in the introductory section of this report. Financial Highlights The assets and deferred outflows of resources of the County exceeded its liabilities and deferred inflows at the close of fiscal year 2013 by $639,297,922 (net position). Of this amount, $31,351,050 (unrestricted net position) may be used to meet the government s ongoing obligations to citizens and creditors. The County s total net position decreased by $1,063,082; governmental activities decreased by $4,774,800 and business-type activities increased by $3,711,718. At September 30, 2013, the County s governmental funds reported combined ending fund balances of $144,515,721, an increase of $11,501,373 in comparison with the prior year. At September 30, 2013, unassigned fund balance available for spending at the government s discretion for the General Fund was $19,361,289 or 12.5% of total general fund expenditures and transfers out. At the end of the current fiscal year, unrestricted fund balance (the total of the committed, assigned, and unassigned components of fund balance) for the General Fund was $27,762,795, or approximately 17.9% of total general fund expenditures and transfers out. Governmental funds revenues decreased $24,886,698 or 8.6% from the prior fiscal year primarily due to decreases in property tax revenues and funding from grants (the prior year included approval and collection of a long-awaited reimbursement from FEMA of approximately $12 million for disaster related expenditures of several years ago). Overview of the Financial Statements This discussion and analysis is intended to serve as an introduction to the County s basic financial statements. The County s basic financial statements consist of three components: 1) government-wide financial statements, 2) fund financial statements, and 3) notes to the financial statements. This report also contains supplementary information intended to furnish additional detail to support the basic financial statements themselves. 4

23 MANAGEMENT S DISCUSSION AND ANALYSIS, Continued September 30, 2013 Organization and Flow of Financial Section Information Independent Auditors' Report Provides the opinion of the Independent Auditors on the fair presentation of the basic financial statements. Management's Discussion and Analysis This supplementary information is required for state and local government financial statements, and is intended to provide a narrative introduction, overview, and analysis. Government wide Financial Statements Provides information on governmental and businesstype activities of the primary government. Fund Financial Statements Provides information on the financial position of specific funds of the primary government. Notes to Financial Statements Provides a summary of significant accounting policies and related disclosures. Government-wide financial statements The government-wide financial statements, which consist of the following two statements, are designed to provide readers with a broad overview of the County s finances, in a manner similar to a private-sector business. The statement of net position presents financial information on all of the County s assets, liabilities and deferred inflows/outflows of resources, with the difference reported as net position. Over time, increases or decreases in net position may serve as a useful indicator of whether the financial position of the County is improving or deteriorating. Additionally, nonfinancial factors, such as a change in the County s property tax base or the condition of County facilities and infrastructure, should be considered to assess the overall health of the County. The statement of activities presents information showing how the government s net position changed during the most recent fiscal year. All changes in net position are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of related cash flows. Thus, revenues and expenses are reported in this statement for some items that will only result in cash flows in future fiscal periods (e.g., uncollected taxes and earned but unused vacation leave). Both of these government-wide financial statements distinguish functions of the County that are principally supported by taxes and intergovernmental revenues (governmental activities) from other functions that are intended to recover all or a significant portion of their costs through user fees and charges (business-type activities). The governmental activities of the County include general government, public safety, physical environment, transportation, economic environment, human services, culture/recreation, and court related activities. The business-type activities of the County include solid waste disposal/landfill operations, emergency medical/ambulance services, building inspections, and the Pensacola Bay Center (Bay Center). 5

24 MANAGEMENT S DISCUSSION AND ANALYSIS, Continued September 30, 2013 The government-wide financial statements include not only the County itself (known as the primary government) but also legally separate entities (the Santa Rosa Island Authority (SRIA) and the Escambia County Law Library) for which the County is financially accountable. These entities are known as component units. Financial information for these component units is reported separately from the financial information presented for the primary government itself. The County s component units will not be addressed in this MD&A. Fund financial statements A fund is a grouping of related accounts that is used to maintain control over resources that have been segregated for specific activities or objectives. The County uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. All of the funds of the County can be divided into three categories: governmental funds, proprietary funds, and fiduciary funds. Governmental funds are used to account for essentially the same functions reported as governmental activities in the government-wide financial statements. However, unlike the government-wide financial statements, governmental fund financial statements focus on near-term inflows and outflows of spendable resources, as well as on balances of spendable resources available at the end of the fiscal year. Such information may be useful in evaluating a government s near-term financing requirements. Because the focus of governmental funds is narrower than that of the government-wide financial statements, it is useful to compare the information presented for governmental funds with similar information presented for governmental activities in the government-wide financial statements. By doing so, readers may better understand the long-term impact of the government s near-term financing decisions. Both the governmental fund balance sheet and the governmental fund statement of revenues, expenditures, and changes in fund balances provide a reconciliation to facilitate this comparison between governmental funds and governmental activities. The County maintains dozens of individual governmental funds. Information is presented separately in the governmental fund balance sheet and in the governmental fund statement of revenues, expenditures, and changes in fund balances for the General Fund, Disaster Recovery Fund, Community Redevelopment Agency (CRA) Fund, and Local Option Sales Tax (LOST) Capital Projects Fund, which are considered to be major funds. Data from the other governmental funds are combined into a single aggregated presentation. Individual fund data for each of these non-major governmental funds is provided in the form of combining statements in the other supplemental information section of this report. The County adopts an annual appropriated budget for its general, special revenue, and debt service and capital projects funds. Budgetary comparison statements have been provided for the General Fund and CRA Fund to demonstrate budgetary compliance. Due to the nature of the Disaster Recovery Fund, the original budget is generally adopted with an appropriation of zero. The County maintains two different types 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 the fiscal activities relating to solid waste disposal/landfill operations, emergency medical/ambulance services, building Inspections, and the Bay Center. Internal service funds are an accounting device used to accumulate and allocate costs internally among the County s various functions. The County uses the internal service fund to account for fleet and fuel activities, insurance activities and for certain costs related to the Sheriff s and Clerk of Circuit Court and Comptroller s compensated absences policy. Because these services predominantly benefit governmental rather than business-type functions, they have been included within governmental activities in the government-wide financial statements. Proprietary funds provide the same type of information as the government-wide financial statements, only in more detail. The proprietary fund financial statements provide separate information for the Solid Waste and Emergency Medical Service (EMS) funds, which are considered to be major funds of the County. Non-major funds include the Inspection and Bay Center funds, which are combined into a single, aggregated 6

25 MANAGEMENT S DISCUSSION AND ANALYSIS, Continued September 30, 2013 presentation in the proprietary fund financial statements. Individual fund data for each of these non-major enterprise funds are provided in the form of combining statements in the other supplementary information section of this report. Internal service funds are combined into a single, aggregated presentation in the proprietary fund financial statements. Individual fund data for internal service funds are also provided in the form of combining statements in the other supplementary information section of this report. Fiduciary funds are used to account for resources held for the benefit of parties outside the government. Fiduciary funds are not reflected in the government-wide financial statements because the resources of those funds are not available to support the County s own programs. The accounting used for fiduciary funds is similar to proprietary funds. The County only has 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. Other information In addition to the basic financial statements and accompanying notes, required supplementary information is presented concerning the County s progress in funding its obligation to provide other post employment benefits (OPEB) to its employees. The other supplementary information section contains the combining statements referred to earlier in connection with nonmajor governmental funds, proprietary and internal service funds, and fiduciary funds, along with budgetary comparison schedules for the County s major capital project fund (LOST) and for all nonmajor governmental funds. Government-wide Financial Analysis Net position over time may serve as a useful indicator of a government s financial position. For the County, assets and deferred outflows of resources exceeded liabilities and deferred inflows by $639,297,922 at the close of the most recent fiscal year. At the end of fiscal year 2013, the County is able to report positive balances in all reported categories of net position, both for the government as a whole, as well as for its separate governmental and business-type activities. The same situation held true for the prior fiscal year. The County s restricted net position represents 16% of resources that are subject to external restrictions on how they may be used. The County s restricted net position is primarily for capital projects and other special revenue purposes. The largest portion of the County s net position (79%) reflects its investment in capital assets (e.g., land, buildings, and equipment); less any related outstanding debt used to acquire those assets. The County uses these capital assets to provide services to citizens; consequently, these assets are not available for future spending. Although the County s investment in its capital assets is reported net of related debt, it should be noted that the resources needed to repay this debt must be provided from other sources, since the capital assets themselves cannot be used to liquidate these liabilities. The remaining balance of $31,531,050 is unrestricted and may be used to meet the government s ongoing obligations to its citizens and creditors. 7

26 MANAGEMENT S DISCUSSION AND ANALYSIS, Continued September 30, 2013 Escambia County, Florida Net Position Governmental Activities Business-type Activities Total restated restated Current and other assets $ 193,531,606 $ 196,177,308 $ 33,804,063 $ 34,501,295 $ 227,335,669 $ 230,678,603 Capital Assets (Net) 551,141, ,612,170 52,501,511 49,929, ,643, ,541,959 Total Assets 744,673, ,789,478 86,305,574 84,431, ,978, ,220,562 Total deferred outflow of resources 2,780,810 2,532, ,780,810 2,532,565 Current and other liabilities 29,087,441 47,512,571 1,958,833 4,505,631 31,046,274 52,018,202 Long-term Liabilities 145,888, ,441,354 15,852,890 15,143, ,741, ,584,674 Total Liabilities 174,976, ,953,925 17,811,723 19,648, ,787, ,602,876 Total deferred inflow of resources 1,673,915 1,799, ,673,915 1,799,247 Net Position: Net Investment in Capital Assets 452,717, ,088,481 52,501,511 49,929, ,218, ,018,270 Restricted 102,727,877 86,651, ,727,877 86,651,435 Unrestricted 15,358,710 30,838,955 15,992,340 14,852,344 31,351,050 45,691,299 Total Net Position $ 570,804,071 $ 575,578,871 $ 68,493,851 $ 64,782,133 $ 639,297,922 $ 640,361,004 Overall, the County s net position decreased $1,063,082 from the prior year. Key reasons for the overall decrease are presented in the following pages for governmental and business-type activities. 8

27 MANAGEMENT S DISCUSSION AND ANALYSIS, Continued September 30, 2013 Escambia County, Florida Changes in Net Position Governmental Activities Business-type Activities Total REVENUES Program Revenues: Charges for Services $ 49,216,402 $ 51,082,730 $ 29,448,294 $ 26,765,796 $ 78,664,696 $ 77,848,526 Operating Grants and Contributions 19,238,799 45,949,882 2, ,604 19,240,918 46,185,486 Capital Grants and Contributions 4,813,025 10,682,867 1,555,709 92,304 6,368,734 10,775,171 General Revenues: Property Taxes 93,789,284 99,682, ,789,284 99,682,582 Other Taxes 84,802,053 82,672, ,802,053 82,672,228 Other 11,663,083 10,482, , ,662 11,820,116 11,134,668 Total Revenues 263,522, ,552,295 31,163,155 27,746, ,685, ,298,661 EXPENSES General Government 74,163,409 67,918, ,163,409 67,918,132 Public Safety 107,598, ,191, ,598, ,191,701 Physical Environment 2,057,260 2,419, ,057,260 2,419,918 Transportation 52,130,129 49,083, ,130,129 49,083,628 Economic Environment 11,274,372 13,225, ,274,372 13,225,481 Human Services 2,493,071 2,780, ,493,071 2,780,986 Culture/Recreation 4,463,775 7,023, ,463,775 7,023,774 Court-Related 10,151,928 7,921, ,151,928 7,921,746 Interest on Long-term Debt 3,058,222 4,388, ,058,222 4,388,341 Solid Waste - - 9,987,571 10,254,556 9,987,571 10,254,556 Ambulance - - 9,912,218 9,723,090 9,912,218 9,723,090 Inspection Fund - - 1,876,077 2,284,676 1,876,077 2,284,676 Bay Center - - 6,582,557 5,876,089 6,582,557 5,876,089 Total Expenses 267,390, ,953,707 28,358,423 28,138, ,748, ,092,118 Excess (Deficiency) Before Transfers (3,867,814) 22,598,588 2,804,732 (392,045) (1,063,082) 22,206,543 Transfers (906,986) (1,104,128) 906,986 1,104, Change in Net Position (4,774,800) 21,494,460 3,711, ,083 (1,063,082) 22,206,543 Beginning Net Position 575,578, ,084,411 64,782,133 64,070, ,361, ,154,461 Ending Net Position $ 570,804,071 $ 575,578,871 $ 68,493,851 $ 64,782,133 $ 639,297,922 $ 640,361,004 Governmental Activities Governmental activities decreased the County s net position by $4,774,800 from the prior fiscal year for an ending balance of $570,804,071. By contrast, the prior year s increase in net position of $21.5 million was unusual and primarily attributable to the final closeout and settlement of old FEMA claims that had not been recognized in prior years (due to uncertainty of collection) and also due to much greater funding from capital and operating grants. Although millage rates remained the same, property tax revenue decreased due to the continued trend of recent years of lower taxable assessed values. The increases in general government 9

28 MANAGEMENT S DISCUSSION AND ANALYSIS, Continued September 30, 2013 expenses were mostly offset by reductions of expenses in other functional categories. Public safety expenses decreased due to fewer LOST and grant funded projects being initiated during the year. Transportation expenses, however, increased due to various LOST funded transportation and drainage projects. Expenses and Program Revenues Governmental Functions/Programs Expenses % of Total Program Revenues % of Total Net (Expense) Revenue General Government $ 74,163, % $ 5,152, % $ (69,010,550) Public Safety 107,598, % 21,302, % (86,295,993) Physical Environment 2,057, % 15,203, % 13,145,914 Transportation 52,130, % 13,175, % (38,954,813) Economic Environment 11,274, % 4,055, % (7,219,309) Human Services 2,493, % 263, % (2,229,797) Culture/Recreation 4,463, % 487, % (3,975,839) Court-Related 10,151, % 13,628, % 3,476,375 Interest on Long-term Debt 3,058, % - - (3,058,222) $ 267,390, % $ 73,268, % $ (194,122,234) 130,000,000 Expenses and Program Revenues - Governmental Activities 110,000,000 90,000,000 70,000,000 Expenses Program Revenues 50,000,000 30,000,000 10,000,000 (10,000,000) General Government Public Safety Physical Environment Transportation Economic Environment Human Services Culture/Recreation Court Related Interest on Long term Debt 10

29 MANAGEMENT S DISCUSSION AND ANALYSIS, Continued September 30, 2013 Revenue by Source Governmental Activities Description Revenues % of Total Charges for Services $ 49,216, % Operating Grants & Contributions 19,238, % Captial Grants & Contributions 4,813, % Property Tax 93,789, % Sales Tax 56,515, % Public Service Tax 1,413, % Communication Service Tax 3,060, % Gas Tax 12,620, % State Revenue Sharing 6,952, % Tourist Development Tax 7,801, % Other Taxes 3,390, % Intergovernmental Revenues 70, % Investment Income 389, % Miscellaneous 4,249, % $ 263,522, % Property Tax, 35.6% Revenues by Source - Governmental Activities Other, 17.0% Sales Tax, 21.4% Capital Grants and Contributions, 1.8% Public Service Tax, 0.5% Communication Service Tax, 1.2% Gas Tax, 4.8% State Revenue Sharing, 2.6% Operating Grants and Contributions, 7.3% Charges for Services, 18.7% Tourism Tax, 3.0% Other Taxes, 1.3% Intergovernmental, 0.03% Investment Income, 0.15% Miscellaneous, 1.6% 11

30 MANAGEMENT S DISCUSSION AND ANALYSIS, Continued September 30, 2013 Business-type Activities Business-type activities increased the County s net position by $3,711,718, a 5.4% growth from the prior fiscal year, for an ending balance of $68,493,851. Charges for services contributed 94.5% of the total program revenues for the County s business-type activities. The Solid Waste and EMS funds were primarily responsible for the overall increase in net position. The net position increase for the Solid Waste Fund was primarily due to increased rates charged for franchise and commercial dumping. The increase in the EMS Fund s net position was primarily due to capital contributions of $1.5 million for ambulances and equipment (purchased by the LOST Fund), along with reduced third party contractual adjustments and increases in charges for services. The Bay Center continues to struggle financially with expenses exceeding revenues by $2.6 million and operations were subsidized by a transfer from the General Fund of $1.4 million. While the Bay Center s operating revenues increased during the current fiscal year, the increase was not sufficient to cover higher operating costs and required maintenance. 12

31 MANAGEMENT S DISCUSSION AND ANALYSIS, Continued September 30, 2013 Expenses and Program Revenues Business-type Activities Functions/Programs Expenses % of Total Program Revenues % of Total Net (Expense) Revenue Solid Waste 9,987, % 11,998, % $ 2,010,637 Emergency Medical Service 9,912, % 12,973, % 3,061,571 Inspection Fund 1,876, % 2,099, % 223,700 Bay Center 6,582, % 3,934, % (2,648,209) $ 28,358, % $ 31,006, % $ 2,647,699 % Revenue over Expenses Solid Waste 20.1% Emergency Medical Service 30.9% Inspection Fund 11.9% Bay Center -40.2% 14,000,000 12,000,000 10,000,000 Expenses and Revenues - Business-Type Activities Expenses Program Revenues 8,000,000 6,000,000 4,000,000 2,000,000 Solid Waste Emergency Medical Service Inspection Fund Bay Center 13

32 MANAGEMENT S DISCUSSION AND ANALYSIS, Continued September 30, 2013 Revenues by Source Business-type Activities Description Revenues % of Total Charges for Services $ 29,448, % Operating Grants and Contributions 2, % Capital Grants and Contributions 1,555, % Investment Income 53, % Miscellaneous 103, % $ 31,163, % 94.5% Revenues by Source - Business-Type Activities Charges for Services Operating Grants and Contributions Capital Grants and Contributions 0.0% Investment Income 5.0% Miscellaneous 0.2% 0.3% Financial Analysis of the County s Funds As noted earlier, the County uses fund accounting to ensure and demonstrate compliance with financerelated legal requirements. Governmental funds The focus of the County s governmental funds is to provide information on near-term inflows, outflows, and balances of spendable resources. Such information is useful in assessing the County s financing requirements. In particular, unassigned fund balance may serve as a useful measure of a government s net resources available for discretionary use as they represent the portion of fund balance which has not been limited to use for a particular purpose by either an external party, the County itself, or a group or individual that has been delegated authority to assign resources for use for particular purposes by the County s Board of County Commissioners. At of the end of fiscal year 2013, the County s governmental funds reported combined fund balances of $144,515,721, an increase of $11,501,373 in comparison with the prior year. Approximately 11% of this amount ($15,381,130) constitutes unassigned fund balance, which is available for spending at the County s 14

33 MANAGEMENT S DISCUSSION AND ANALYSIS, Continued September 30, 2013 discretion. The remainder of the fund balance is either nonspendable, restricted, committed or assigned. Restricted fund balances of $99,816,133 represent amounts that can only be spent for specific purposes as stipulated by external resource providers either constitutionally or through enabling legislation such as Florida Statutes, laws and regulations or grantors. Committed fund balances of $13,545,364 represent amounts committed by County ordinance, whereas assigned fund balances of $8,401,506 consists of funds budgeted in the subsequent year to balance the 2014 budget. Nonspendable fund balances are not available for spending because they are not in spendable form, or are legally required to be maintained intact. The ending nonspendable fund balances consists of $1,073,238 for inventories and $6,298,350 for long term other assets. 25,000,000 20,000,000 General Fund Components of Fund Balance ,000,000 10,000,000 5,000,000 Unasssigned Assigned Committed Restricted Nonspendable The General Fund is the chief operating fund of the County. At the end of the current fiscal year unassigned fund balance of the General Fund was $19,361,289, while total fund balance increased to $32,620,115. As a measure of the General Fund s liquidity, it may be useful to compare both unassigned fund balance and total fund balance to total fund expenditures. Unassigned fund balance represents 13.3% of the total general fund expenditures, while total fund balance represents 22.7% of that same amount. 120,000, ,000,000 Other Governmental Funds Components of Fund Balance 80,000,000 60,000, ,000,000 20,000,000 (20,000,000) Unasssigned Assigned Committed Restricted Nonspendable 15

34 MANAGEMENT S DISCUSSION AND ANALYSIS, Continued September 30, 2013 The increase in fund balance of the County s General Fund was $5,785,291 during the current fiscal year, however, the change from prior year increased by $8,424,572. Key factors in this are as follows: An increase in revenues and transfers over fiscal year 2013, are primarily from transfers in and intergovernmental revenue. Transfers in increased due to the closure of the Sheriff Internal service fund, and local half cent sales tax and state revenue sharing increased intergovernmental revenue. Payments in lieu of taxes also increased during the current fiscal year. Expenditures and transfers out increases are mainly attributable to increased general government and public safety expenditures, which are primarily public safety improvements, equipment, vehicles and ambulances, and increased expenditures for grant in aid. The following graph displays the General Fund s current expenditures by function for FY13 and FY12 (it does not include debt service or other financing uses). General Fund Current Expenditures by Function 100% Court Related Culture/Recreation 80% Human Services 60% 40% 20% Economic Environment Transportation Physical Environment Public Safety 0% FY13 FY12 General Government The Disaster Recovery Fund was established to account for the costs and related funding assistance from state and federal sources for hurricane or other major disaster events. The negative fund balance of $3,980,159 represents expenditures of the fund in prior years that the County believes will ultimately be reimbursed by federal or state sources. An advance from the LOST Fund provided the initial resources to pay for these costs and the advance will be paid off as these outstanding reimbursement claims are resolved. Should the County be denied reimbursement for these claims, the County will have to use resources from other funds to pay off the LOST advance. In 2012 and 2013, the County collected approximately $12 million and $1.8 million, respectively, from federal and state sources on these claims. Because of the protracted nature of the claims resolution process, and uncertainty in ultimate resolution of such matters, the County wrote off the related claims receivable several years ago in order to conservatively state the financial position of this fund. The CRA Fund was established to account for the operations of the community redevelopment initiative. There are five established redevelopment districts which are funded by tax increment financing (TIF) portions of property taxes for each respective district. At the end of fiscal year 2013 restricted fund balance was $3,677,454 and this represents 215% of the fund s total expenditures and transfers out. The fund balance decreased $890,396 from the prior year, primarily due to decreased property tax revenues associated with the decline in assessed property values. 16

35 MANAGEMENT S DISCUSSION AND ANALYSIS, Continued September 30, 2013 The Local Option Sales Fund s primary revenue is a 1% local option sales tax imposed by Escambia County, which was restricted by voter referendum primarily for capital projects and public safety expenditures. At the end of the current fiscal year, restricted fund balance was $65,195,362 or 193% of the fund s total expenditures and transfers out. Nonspendable fund balance was $2,136,959 for long term other assets. Fund balance increased $4,838,646, as a result of a 4.5% increase in the sales tax revenue, driven by improvements in the local economy and also due to a decrease in capital expenditures of 32.3%. Even though the revenue source is stable and predictable, the planning, budgeting, and execution of large projects results in variances from year to year in the amount of actual expenditure for projects. Proprietary funds The County s proprietary funds provide the same type of information found in the government-wide financial statements, but in more detail. The Solid Waste and the Emergency Medical Service enterprise Fund s are reported as major funds. The Inspection and Bay Center Fund s enterprise Fund s are reported as non-major funds. As previously discussed, the internal service fund is combined with governmental funds to arrive at governmental activities. Unrestricted net position of proprietary funds at the end of the year amounted to: Unrestricted Net Position Fund Solid Waste $ (1,865,975) $ (1,497,693) Emergency Medical Service 15,592,170 13,559,556 Inspection 1,984,876 1,755,904 Bay Center 281,269 1,034,577 Total $ 15,992,340 $ 14,852,344 Unrestricted net position for proprietary funds increased $1,140,016, which is a 7.7% increase from the prior fiscal year. The total change in net position for proprietary funds for the Solid Waste, Emergency Medical Services, Inspection and Bay Center funds was $1,775,481, $2,916,327, $233,558, and ($1,213,648) respectively. As noted earlier in the discussion of business-type activities, the increases are primarily due to revenue generated from rate increases for charges for services, as well as a $1.5 million capital contribution of ambulances and equipment provided by the local option sales tax for the Emergency Medical Service Fund. General Fund Budgetary Highlights The General Fund s original budget was decreased by $165,203, to arrive at the final amended budget for expenditures and transfers out. During the year there was no need for any significant amendment to increase the original budget appropriations. However, there was a need to make an amendment to reallocate appropriations among departments when the prior year fund balances were finalized and purchase commitments were approved for re-budgeting. Generally the movement between departments was not significant. The largest changes were to general government, public safety, and transfers out for law enforcement. The changes within functions are summarized in the following table. 17

36 MANAGEMENT S DISCUSSION AND ANALYSIS, Continued September 30, 2013 Original Budget Final Budget Change General Government $ 76,055,271 $ 79,447,601 $ 3,392,330 Public Safety 79,860,993 80,547, ,236 Physical Environment 1,149,386 1,238,754 89,368 Transportation Economic Environment Human Services 2,588,377 1,991,145 (597,232) Culture/Recreation 1,259,737 1,264,437 4,700 Court-Related 6,796,994 6,869,934 72,940 Transfers Out 16,282,266 12,468,721 (3,813,545) $ 183,993,024 $ 183,827,821 $ (165,203) The General Fund under spent the final budget by $28,570,385 or 15.5% for expenditures and transfers out. The variance within functions is summarized in the table below: Actual Expenditures Final Budget Variance General Government $ 54,570,653 $ 79,447,601 $ 24,876, % Public Safety 78,457,432 80,547,229 2,089, % Physical Environment 1,134,164 1,238, , % Transportation Economic Environment Human Services 1,952,088 1,991,145 39, % Culture/Recreation 1,238,426 1,264,437 26, % Court-Related 6,615,540 6,869, , % Transfers Out 11,289,133 12,468,721 1,179, % $ 155,257,436 $ 183,827,821 $ 28,570, % General fund actual expenditures were less than anticipated expenditures by $28,570,385; of this amount $8.4 million for purchase commitments was re-budgeted and assigned to the subsequent year budget. A review of actual expenditures compared to appropriations in the final budget yields no significant variances with the exception of an overall reduction of $2.8 million in salary and operating. Transfers out are offset by the elimination of budgeted General Fund transfers in, so they are not an actual budgeted expenditure. Cost and fuel allocation in the amount of $1.8 million in general government are budgeted, but eliminated expenditures. The remainder of unspent budget is primarily due to unspent budgeted contingency and reserves. 18

37 MANAGEMENT S DISCUSSION AND ANALYSIS, Continued September 30, 2013 $100,000,000 General Fund Actual vs Budgets $80,000,000 $60,000,000 Actual Expenditures Final Budget Original Budget $40,000,000 $20,000,000 $ General Government Public Safety Physical Environment Transportation Economic Environment Human Services Culture/Recreation Court Related Transfers Out Capital Asset and Debt Administration Capital assets The County s investment in capital assets for its governmental and business-type activities as of September 30, 2013 amounts to $603,643,185 (net of accumulated depreciation and amortization). This investment in capital assets includes land, buildings, improvements other than buildings (including leasehold improvements), equipment, software, infrastructure, and construction in progress. The total decrease in the County s investment in capital assets for the current fiscal year was 1%. Major capital asset events during the current fiscal year included the following: Completion of projects such as the Molino School renovations, Wedgewood Community Center reconstruction, and the Perdido Key Fire Station and Community Center reconstruction. Net increase of $20,401,157 mainly due to improvements to transportation infrastructure consisting of more than seventy five large projects for roads, paving, drainage, and bridge renovations. Net increase of $2,801,657 largely due to the purchase of 33.8 acres of land for the Lillian Highway boat ramp. 19

38 MANAGEMENT S DISCUSSION AND ANALYSIS, Continued September 30, 2013 Escambia County, Florida Capital Assets (Net) Governmental Activities Business-type Activities Total Land $ 38,479,778 $ 35,678,121 $ 5,793,269 $ 5,792,969 $ 44,273,047 $ 41,471,090 Construction in Progress 24,054,678 26,058, ,054,678 26,058,190 Equipment 122,664, ,229,377 21,023,836 18,938, ,687, ,168,071 Buildings and Improvements 233,723, ,380,312 37,539,483 37,539, ,262, ,919,795 Software 5,101,263 4,619, , ,255 5,292,518 4,805,725 Infrastructure 725,501, ,100,031 44,101,922 40,633, ,603, ,733,979 1,149,523,990 1,120,065, ,649, ,091,349 1,258,173,755 1,223,156,850 Less: Accumulated Depreciation (598,382,316) (560,453,331) (56,148,254) (53,161,560) (654,530,570) (613,614,891) Capital Assets, net $ 551,141,674 $ 559,612,170 $ 52,501,511 $ 49,929,789 $ 603,643,185 $ 609,541,959 Additional information on the County s capital assets, including major construction commitments, can be found in Note 3 of this report. Long-term debt At the end of the current fiscal year, the County had total notes and bonded debt outstanding of $101,205,000. Of this amount, $18,010,000 consists of debt backed Non-Ad valorem tax revenue. The remainder of the debt, $83,195,000 represents bonds and notes secured solely by specified revenue sources (i.e., sales tax and tourist development taxes). Escambia County, Florida Outstanding Notes and Bonded Debt Governmental Activities Revenue Bonds $ 47,545,000 $ 56,680,000 Revenue Notes 53,660,000 48,040,000 $ 101,205,000 $ 104,720,000 The County s outstanding debt had a net decrease of $3,515,000 or 3.36% during fiscal year Decreases were attributable to normal debt service principal reductions for revenue notes and revenue bonds. In addition, the Tourist Development Revenue Bond, Series 2002 was refunded and allowed the County to reduce the interest rate from 3.5-5% to 1.599%. Additional information on the County s debt, including any major changes to the County s credit ratings, can be found in Note 6 of this report. There is no outstanding debt for Business-type activities. 20

39 MANAGEMENT S DISCUSSION AND ANALYSIS, Continued September 30, 2013 Economic Factors and Next Year s Budgets and Rates The following economic factors currently affect Escambia County and were considered in developing the fiscal year budget. The annual average unemployment rate for the County for 2013 was 6.5%. The average adjusted rate for 2012 was 8.1%. This represents a decrease of 1.6% from the prior year unemployment rate. The taxable assessed value decreased 1.2% in the 2013 fiscal year. Population remained constant from the prior fiscal year to 302,715 at September 30, During the current fiscal year, unassigned fund balance in the General Fund increased to $19,361,289. The County has budgeted $170,566,658 for spending in the 2014 fiscal year budget, and assigned $8,401,506 of the ending 2013 fund balance to the subsequent year s budget. The ad valorem tax rate remained the same at 7.661% for the 2014 fiscal year budget. In an effort to help stimulate job creation and the economy the County continues to work with the Greater Pensacola Chamber of Commerce and the City of Pensacola to recruit new industry to the area and stimulate job growth. In December 2013, Escambia County purchased approximately 601 acres in neighboring Santa Rosa County with Local Option Sales Tax dollars, at a cost of approximately $1.8 million. The land will be used as part of an economic development project led by Escambia County. As anticipated by the Local Option Sales Tax statute, the Santa Rosa County Board of County Commissioners authorized the expenditure of Escambia County LOST monies in Santa Rosa County by Resolution. Requests for information This financial report is designed to present users with a general overview of the County s finances and to demonstrate the County s accountability. If you have questions concerning any of the information provided in this report or need additional financial information, contact the Escambia County Clerk of the Circuit Court and Comptroller, Finance Department, 221 Palafox Place Suite 130 Pensacola Florida 32502; This report is also available at the following web address: 21

40 STATEMENT OF NET POSITION September 30, 2013 Governmental Activities Business-type Activities Total Component ASSETS Cash and Cash Equivalents $ 72,666,455 $ 11,734,063 $ 84,400,518 $ 6,557,547 Investments 95,934,438 19,057, ,991,795 1,535,048 Accounts Receivable, Net 3,315,584 5,109,839 8,425, ,383 Accrued Interest Receivable 303, ,918 - Due from Other Governments 10,889,670-10,889,670 58,265 Internal Balances 2,344,286 (2,344,286) - - Inventories 1,469, ,588 1,711,931 - Prepaid Items 243,235 4, ,737 78,778 Other Assets 6,364,677-6,364,677 - Capital Assets Not Being Depreciated 62,534,456 5,793,269 68,327,725 - Capital Assets Net of Accumulated Depreciation 488,607,218 46,708, ,315,460 11,762,352 Total Assets 744,673,280 86,305, ,978,854 20,440,373 DEFERRED OUTFLOWS OF RESOURCES Deferred charge on refunding 2,780,810-2,780,810 - Total deferred outflow of resources 2,780,810-2,780,810 - LIABILITIES Accounts Payable 10,096, ,665 10,956, ,030 Contracts Payable 985,915 47,474 1,033,389 - Accrued Liabilities 5,786, ,995 6,169, ,661 Compensated Absences Payable - 125, ,148 - Due to Other Governments 5,731,920 23,385 5,755, ,000 Deposits 213,720 24, ,544 - Unearned Revenue 1,746,921-1,746, ,026 Other Current Liabilities 4,526, ,342 5,020,666 - Noncurrent Liabilities: Due Within One Year 9,283, ,313 9,930,647 39,128 Due in More Than One Year 136,605,329 15,205, ,810,906 1,087,626 Total Liabilities 174,976,104 17,811, ,787,827 2,209,471 DEFERRED INFLOWS OF RESOURCES Unavailable Revenue - Capital Lease 1,673,915-1,673,915 - Total deferred inflow of resources 1,673,915-1,673,915 - NET POSITION Net Investment in Capital Assets 452,717,484 52,501, ,218,995 11,550,232 Restricted for: Debt Service 1,903,446-1,903,446 - Capital 67,676,968-67,676,968 2,609,963 Law Enforcement 5,122,267-5,122,267 - Fire and Rescue 5,251,168-5,251,168 - Economic & Community 7,042,955-7,042,955 - Transportation 3,559,218-3,559,218 - Other Purposes 12,171,855-12,171,855 - Unrestricted 15,358,710 15,992,340 31,351,050 4,070,707 Total Net Position $ 570,804,071 $ 68,493,851 $ 639,297,922 $ 18,230,902 Units The notes to the financial statements are an integral part of the financial statements. 22

41 FUNCTIONS/PROGRAMS Primary Government: ESCAMBIA COUNTY, FLORIDA STATEMENT OF ACTIVITIES For the Year Ended September 30, 2013 Expenses Charges for Services Program Revenues Operating Grants and Contributions Capital Grants and Contributions Governmental Activities: General Government $ 74,163,409 $ 4,285,062 $ 76,768 $ 791,029 Public Safety 107,598,294 17,724,847 3,557,454 20,000 Physical Environment 2,057,260 13,582, ,540 1,350,447 Transportation 52,130,129 6,249,486 5,651,797 1,274,033 Economic Environment 11,274, ,533 2,357,014 1,377,516 Human Services 2,493, ,274 - Culture/Recreation 4,463, , ,476 - Court-Related 10,151,928 6,673,827 6,954,476 - Interest on Long-Term Debt 3,058, Total Governmental Activities 267,390,460 49,216,402 19,238,799 4,813,025 Business-type Activities: Solid Waste 9,987,571 11,998, Emergency Medical Services 9,912,218 11,454,286 2,019 1,517,484 Inspection Fund 1,876,077 2,091,232-8,545 Bay Center 6,582,557 3,904,668-29,680 Total Business-type Activities 28,358,423 29,448,294 2,119 1,555,709 Total Primary Government $ 295,748,883 $ 78,664,696 $ 19,240,918 $ 6,368,734 Component Units: Escambia County Law Library $ 85,448 $ 83,383 $ - $ - Santa Rosa Island Authority 9,746,474 7,759, ,494 Total Component Units $ 9,831,922 $ 7,842,846 $ - $ 413,494 General Revenues: Property Tax Sales Tax Public Service Tax Communication Service Tax Gas Tax Unrestricted State Revenue Sharing Tourist Development Tax Other Taxes Unrestricted Intergovernmental Revenues Investment Income Miscellaneous Transfers In (Out) Total General Revenues and Transfers Change in Net Position Beginning Net Position Ending Net Position The notes to the financial statements are an integral part of the financial statements. 23

42 Net (Expense) Revenue and Changes in Net Position Governmental Business-type Component Activities Activities Total Units $ (69,010,550) $ - $ (69,010,550) (86,295,993) - (86,295,993) 13,145,914-13,145,914 (38,954,813) - (38,954,813) (7,219,309) - (7,219,309) (2,229,797) - (2,229,797) (3,975,839) - (3,975,839) 3,476,375-3,476,375 (3,058,222) - (3,058,222) (194,122,234) - (194,122,234) - 2,010,637 2,010,637-3,061,571 3,061, , ,700 - (2,648,209) (2,648,209) - 2,647,699 2,647,699 (194,122,234) 2,647,699 (191,474,535) $ (2,065) (1,573,517) (1,575,582) 93,789,284-93,789,284-56,515,037-56,515,037-1,413,963-1,413,963-3,060,056-3,060,056-12,620,662-12,620,662-6,952,715-6,952,715-7,801,497-7,801,497-3,390,838-3,390,838-70,934-70, ,767 53, ,988 33,611 4,249, ,812 4,353,479 88,353 (906,986) 906, ,347,434 1,064, ,411, ,964 (4,774,800) 3,711,718 (1,063,082) (1,453,618) 575,578,871 64,782, ,361,004 19,684,520 $ 570,804,071 $ 68,493,851 $ 639,297,922 $ 18,230,902 24

43 General Fund - County Wide Disaster Recovery Fund Community Redevelopment Agency Fund ASSETS Cash and Cash Equivalents $ 21,977,928 $ 335,684 $ 1,396,599 Investments 19,729, ,822 2,329,113 Accounts Receivable 1,089, Accrued Interest Receivable 303, Due from Other Funds 1,157, Advances Receivable from Other Funds Due from Other Governments 3,674, Inventories 643, Other Assets 4,227, Total Assets $ 52,804,435 $ 895,506 $ 3,725,890 LIABILITIES Accounts Payable $ 1,939,209 $ - $ 27,399 Contracts Payable 43, Accrued Liabilities 4,829,649-20,800 Due to Other Funds 269, Advances Payable to Other Funds - 4,632,832 - Due to Other Governments 4,003, , Deposits 151, Unearned Revenue 284, Other Current Liabilities 4,513, Total Liabilities 16,034,900 4,875,665 48,436 DEFERRED INFLOWS OF RESOURCES Unavailable Revenue - Capital Lease 4,149, Total deferred inflow of resources 4,149, FUND BALANCES (deficits) Nonspendable Inventories 643, Long Term Other Assets 4,161, Restricted for: Court Related Functions 52, Community Service Debt Service Economic & Community Development - 3,677,454 Fire & Rescue Health Services Inmate Welfare Law Enforcement Mass Transit System Public Safety Records Modernization Tech Resource Conservation Road Acqusition & Construction Housing Assistance Tourism Transportation & Drainage Improvement Transportation Maintenance Committed to: Community Service Infrastructure Maintenance Transportation Maintenance Assigned to: Subsequent Year's Budget 8,401, Unassigned 19,361,289 (3,980,159) - Total Fund Balances 32,620,115 (3,980,159) 3,677,454 Total liabilities, deferred inflows of resources, and Fund Balance (deficit) ESCAMBIA COUNTY, FLORIDA BALANCE SHEET - GOVERNMENTAL FUNDS For the Year Ended September 30, 2013 $ 52,804,435 $ 895,506 $ 3,725,890 The notes to the financial statements are an integral part of the financial statements. 25

44 Local Option Sales Tax Fund Nonmajor Governmental Funds Total Governmental Funds $ 23,314,843 $ 21,161,066 $ 68,186,120 38,882,261 28,198,784 89,699, ,826 1,782, ,918-2,050 1,160,001 5,342,345-5,342,345 4,184,920 2,919,766 10,779, ,744 1,073,238 2,136,959-6,364,677 $ 73,861,328 $ 53,404,236 $ 184,691,395 $ 2,054,793 $ 3,927,581 $ 7,948, , , ,553 42, ,746 5,755, ,165 1,022,261 1,402,970 2,439, ,513 7,781, ,484,979 5,731,920 1,525 1, ,615 1,046, ,019 1,746,921-13,301 4,526,324 6,529,007 8,538,246 36,026, ,149, ,149, ,744 1,073,238 2,136,959-6,298,350-4,086,386 4,138, , ,514-1,903,446 1,903,446 10,099,848-13,777,302-5,251,168 5,251,168-21,762 21,762-1,020,854 1,020, , , , ,980-3,211,389 3,211,389-2,162,599 2,162, , ,720-29,688 29,688-3,079,055 3,079,055-5,754,388 5,754,388 55,095,514 2,676,677 57,772, , ,708-1,388,590 1,388,590-10,461,365 10,461,365-1,695,409 1,695, ,401, ,381,130 67,332,321 44,865, ,515,721 $ 73,861,328 $ 53,404,236 $ 184,691,395 26

45 RECONCILIATION OF THE BALANCE SHEET OF GOVERNMENTAL FUNDS TO THE STATEMENT OF NET POSITION as of September 30, 2013 Total fund balances of governmental funds $ 144,515,721 Amounts reported for governmental activities in the statement of net position are different because: Capital assets used in governmental activities are not financial resources and, therefore, are not reported in governmental funds. The cost of the assets is $1,147,919,153 and the accumulated depreciation and amortization is $597,675,445. The difference does not include the net capital assets of the internal service funds $897,967 which are included below. 550,243,707 The internal service fund is used by management to charge the costs of risk management services to individual funds. The assets and liabilities of the internal service fund are included in governmental activities in the Statement of Net Position. 9,064,815 At the governmental fund level, certain other long term assets are not available to pay for current period expenditures and, therefore, are reported as unavailable revenue in the funds 2,475,505 Long-term liabilities are not due and payable in the current period and accordingly are not reported as fund liabilities. Interest on long-term debt is not accrued in governmental funds, but rather is recognized as an expenditure when due. All liabilities--both current and long-term--are reported in the Statement of Net Position. The difference does not include the internal service funds which are included above. Long-term liabilities at year-end consist of: Bonds payable $ 47,545,000 Notes payable 53,660,000 Less: Deferred charge on refunding (to be amortized as interest expense) (2,780,810) Pollution Remediation 1,100,000 Compensated absences 27,841,505 Other post employment benefits 8,129,982 (135,495,677) Total net position of governmental activities $ 570,804,071 The notes to the financial statements are an integral part of the financial statements. 27

46 STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES GOVERNMENTAL FUNDS September 30, 2013 General Fund - County Wide Disaster Recovery Community Redevelopment Agency Fund REVENUES Taxes $ 96,666,801 $ - $ 628,461 Permits and Fees Franchise Fees 11,707, Special Assessments 800, Intergovernmental Revenues 34,100,849 1,836,434 - Charges for Services 6,379, Judgments and Fines 1,313, Investment Income 189,029 1,855 9,606 Miscellaneous Revenues 4,930, Total Revenues 156,089,187 1,838, ,251 EXPENDITURES Current: General Government 54,570,653-1,713,647 Public Safety 78,457, Physical Environment 1,134, Transportation Economic Environment Human Services 1,952, Culture/Recreation 1,238, Court-Related 6,615, Debt Service: Principal Retirement Interest and Fiscal Charges Capital Outlay Total Expenditures 143,968,303-1,713,647 Excess (Deficiency) of Revenues Over (Under) Expenditures 12,120,884 1,838,289 (1,075,396) OTHER FINANCING SOURCES (USES) Transfers In 4,953, ,000 Transfers (Out) (11,289,133) - - Issuance Refunding Bonds Payable Payment to Refunded Bonds Escrow Agent Total Other Financing Sources and (Uses) (6,335,593) - 185,000 Net Change in Fund Balances 5,785,291 1,838,289 (890,396) Fund Balances - Beginning 26,834,824 (5,818,448) 4,567,850 Fund Balances - Ending $ 32,620,115 $ (3,980,159) $ 3,677,454 The notes to the financial statements are an integral part of the financial statements. 28

47 Local Option Sales Tax Fund Nonmajor Governmental Funds Total Governmental Funds $ 35,867,309 $ 16,102,652 $ 149,265, , ,366-1,600,428 13,307,967-12,525,761 13,326, ,969 20,977,361 57,769, ,678 11,517,898 18,111, ,753 2,262, ,535 98, ,584 1,563,236 2,497,773 8,992,133 38,617,727 66,488, ,672,005 69,039 2,625,239 58,978,578-25,006, ,463,563-1,145,067 2,279, ,922 25,973,659 26,811,581-10,419,399 10,419, ,521 2,078, ,064 64,205 2,270,695-2,516,948 9,132,488-3,526,000 3,526,000 5,228 3,142,960 3,148,188 31,898, ,269 32,279,097 33,779,081 74,926, ,387,429 4,838,646 (8,437,847) 9,284,576-13,117,506 18,256,046 - (4,794,175) (16,083,308) - 8,406,000 8,406,000 - (8,361,941) (8,361,941) - 8,367,390 2,216,797 4,838,646 (70,457) 11,501,373 62,493,675 44,936, ,014,348 $ 67,332,321 $ 44,865,990 $ 144,515,721 29

48 RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS TO THE STATEMENT OF ACTIVITIES For the Year Ended September 30, 2013 Amounts reported for governmental activities in the statement of activities are different because: Net change in fund balances - total governmental funds $ 11,501,373 Governmental funds report capital purchases as expenditures. However, in the statement of activities, the cost of those assets is depreciated over their estimated useful lives and reported as depreciation expense. This is the amount by which capital additions ($37,810,919) does not exceed depreciation ($45,968,324) in the current period. Total capital additions consist of capital expenditures of $37,401,052 and non-cash contributions of $407,921 plus $1,946 included in the Internal Service Fund. (8,157,405) Collections of principal on long-term sales type lease receivable provides current financial (57,060) resources to governmental funds. The issuance of bonds and similar long-term debt provides current financial resources to governmental funds and thus contribute to the change in fund balance. In the statement of net position, however, issuing debt increases long-term liabilities and does not affect the statement of activities. Similarly, repayment of principal is an expenditure in the governmental funds, but reduces the liability in the statement of net position. Also, governmental funds report the effect of premiums, discounts, and similar items when debt is first issued, whereas these amounts are deferred and amortized in the statement of activities. The amounts of the items that make up these differences in the treatment of long-term debt and related items are: Debt issued or incurred: Issuance of refunding notes/bonds $ (8,406,000) Principal repayments 3,526,000 Amortization of deferred discount and deferred charge on refunding 89,966 Reduction of bond issuance costs (325,535) Payment to escrow agent for refunding 8,361,941 $ 3,246,372 Continued 30

49 RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS TO THE STATEMENT OF ACTIVITIES - Continued For the Year Ended September 30, 2013 Under the modified accrual basis of accounting used in governmental funds, expenditures are not recognized for transactions that are not normally paid with expendable available financial resources. In the statement of activities, however, which is presented on the accrual basis, expenses and liabilities are reported regardless of when financial resources are available. In addition, interest on long-term debt is not recognized under the modified accrual basis of accounting until due, rather than as it accrues. These adjustments are as follows: Changes in compensated absences (18,996,624) Changes in other post employment benefits (1,233,620) Changes in pollution remediation 575,000 (19,655,244) In the statement of activities, only the loss on the sale/disposal of capital assets is reported. However, in the governmental funds, the proceeds from the sale increase financial resources. Thus, the change in net position differs from the change in fund balance by the net book value of the capital assets sold/disposed. (237,131) The internal service fund is used by management to charge the costs of risk management and other services to other funds. The net income of the internal service fund is reported with governmental activities. 8,584,295 Change in net position of governmental activities $ (4,774,800) The notes to the financial statements are an integral part of the financial statements. 31

50 STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES BUDGET AND ACTUAL GENERAL FUND - COUNTY WIDE For the Year Ended September 30, 2013 Budgeted Amounts Variance with Actual Final Budget - Original Final Amounts Over (Under) REVENUES Taxes $ 98,613,244 $ 98,613,244 $ 96,666,801 $ (1,946,443) Franchise Fees 10,953,807 10,953,807 11,707, ,732 Special Assessments 864, , ,835 (63,665) Intergovernmental Revenues 31,572,118 30,150,847 34,100,849 3,950,002 Charges for Services 6,010,889 6,010,889 6,379, ,880 Judgments and Fines 12,825 1,631,224 1,313,425 (317,799) Investment Income 2,900 27, , ,129 Miscellaneous Revenues 1,638,143 4,166,796 4,930, ,145 Total Revenues 149,668, ,419, ,089,187 3,669,981 EXPENDITURES Current: General Government 76,055,271 79,447,601 54,570,653 24,876,948 Public Safety 79,860,993 80,547,229 78,457,432 2,089,797 Physical Environment 1,149,386 1,238,754 1,134, ,590 Human Services 2,588,377 1,991,145 1,952,088 39,057 Culture/Recreation 1,259,737 1,264,437 1,238,426 26,011 Court-Related 6,796,994 6,869,934 6,615, ,394 Total Expenditures 167,710, ,359, ,968,303 27,390,797 Excess (Deficiency) of Revenues Over (Under) Expenditures (18,042,332) (18,939,894) 12,120,884 31,060,778 OTHER FINANCING SOURCES (USES) Transfers In 1,884,712 2,876,597 4,953,540 2,076,943 Transfers (Out) (16,282,266) (12,468,721) (11,289,133) 1,179,588 Total Other Financing Sources and (Uses) (14,397,554) (9,592,124) (6,335,593) 3,256,531 Net Change in Fund Balance (32,439,886) (28,532,018) 5,785,291 34,317,309 Fund Balance - Beginning 32,439,886 28,532,018 26,834,824 (1,697,194) Fund Balance - Ending $ - $ - $ 32,620,115 $ 32,620,115 The notes to the financial statements are an integral part of the financial statements. 32

51 STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES BUDGET AND ACTUAL DISASTER RECOVERY FUND For the Year Ended September 30, 2013 Budgeted Amounts Variance with Actual Final Budget - Original Final Amounts Over (Under) REVENUES Intergovernmental Revenues $ - $ - $ 1,836,434 $ 1,836,434 Investment Income - - 1,855 1,855 Total Revenues - - 1,838,289 1,838,289 EXPENDITURES Current: Public Safety Total Expenditures Excess (Deficiency) of Revenues Over (Under) Expenditures - - 1,838,289 1,838,289 Net Change in Fund Balance - - 1,838,289 1,838,289 Fund Balance - Beginning - - (5,818,448) (5,818,448) Fund Balance - Ending $ - $ - $ (3,980,159) $ (3,980,159) The notes to the financial statements are an integral part of the financial statements. 33

52 STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES BUDGET AND ACTUAL COMMUNITY REDEVELOPMENT AGENCY FUND For the Year Ended September 30, 2013 Budgeted Amounts Actual Variance with Final Budget - Original Final Amounts Over (Under) REVENUES Taxes $ - $ - $ 628,461 $ 628,461 Investment Income - - 9,606 9,606 Miscellaneous Revenues Total Revenues , ,251 EXPENDITURES Current: General Government 5,329,877 5,329,877 1,713,647 3,616,230 Total Expenditures 5,329,877 5,329,877 1,713,647 3,616,230 Excess (Deficiency) of Revenues Over (Under) Expenditures (5,329,877) (5,329,877) (1,075,396) 4,254,481 OTHER FINANCING SOURCES (USES) Transfers In 813, , ,000 (628,461) Total Other Financing Sources and (Uses) 813, , ,000 (628,461) Net Change in Fund Balance (4,516,416) (4,516,416) (890,396) 3,626,020 Fund Balance - Beginning 4,516,416 4,516,416 4,567,850 51,434 Fund Balance - Ending $ - $ - $ 3,677,454 $ 3,677,454 The notes to the financial statements are an integral part of the financial statements. 34

53 STATEMENT OF NET POSITION PROPRIETARY FUNDS September 30, 2013 Business-type Activities - Enterprise Funds Governmental Emergency Nonnajor Activities - Solid Waste Medical Enterprise Internal Service Fund Services Fund Funds Totals Funds ASSETS Current Assets: Cash and Cash Equivalents $ 11,625 $ 3,282,905 $ 1,417,532 $ 4,712,062 $ 4,480,335 Restricted Assets Available for Current Liabilities 414, , ,313 - Investments 7,178,828 9,632,780 2,245,749 19,057,357 6,235,240 Accounts Receivable,Net of Allowance - for Uncollectable Accounts 1,374,127 3,582, ,997 5,109,839 1,532,838 Due from Other Funds ,918 Due from Other Governments ,518 Inventories - 195,236 47, , ,105 Prepaid Items - - 4,502 4, ,235 Total Current Assets 8,978,977 16,693,636 4,101,048 29,773,661 13,242,189 Noncurrent Assets: Restricted Assets: Escrow Deposits - restricted 97, , ,012 - Saufley C&D - restricted 212, ,023 - Landfill Escrow 6,479, ,479,966 - Less: Portion Classified as Current (414,397) - (232,916) (647,313) - Total restricted assets 6,374, ,374,688 - Advances Due from Other Funds ,783,928 Capital Assets: Land 5,786,826 6,443-5,793,269 - Buildings 10,695,899 1,100,349 25,743,235 37,539, ,564 Improvements Other than Buildings 41,104,396 12,777 2,984,749 44,101, ,373 Machinery, Equipment and Vehicles 11,335,240 7,173,066 2,515,530 21,023, ,901 Intangibles 15, , ,255 - Less: Accumulated Depreciation (27,056,622) (5,513,390) (23,578,242) (56,148,254) (706,871) Total Capital Assets (Net) 41,880,739 2,955,500 7,665,272 52,501, ,967 Total Noncurrent Assets 48,255,427 2,955,500 7,665,272 58,876,199 5,681,895 Total Assets 57,234,404 19,649,136 11,766,320 88,649,860 18,924,084 Continued 35

54 STATEMENT OF NET POSITION - Continued PROPRIETARY FUNDS September 30, 2013 Business-type Activities - Enterprise Funds Governmental Emergency Nonmajor Activities - Solid Waste Medical Enterprise Internal Service Fund Services Fund Funds Totals Funds LIABILITIES Current Liabilities: Accounts Payable 224,752 48, , ,665 $ 2,147,026 Contracts Payable 28,771-18,703 47,474 9,362 Accrued Liabilities 76, ,279 59, ,995 30,651 Compensated Absences Payable 49,356 44,895 30, , ,383 Estimated Claims Payable ,922,800 Due to Other Funds Due to Other Governments ,932 23,385 - Deposits 2,022-22,802 24,824 59,105 Other Current Liabilities , ,342 - Current Liabilities Payable from Restricted Assets: Landfill Closure Costs Payable 317, ,301 - Escrow Deposits - restricted 97, , ,012 - Total Current Liabilities 795, ,626 1,469,681 2,606,146 4,349,276 Noncurrent Liabilities: Compensated Absences Payable 444, , ,047 1,126, ,493 Other Post Employment Benefits 118, ,781 87, ,557 86,407 Estimated Claims Payable ,624,093 Advances To Other Funds 2,344, ,344,286 - Landfill Closure Costs Payable 13,516, ,516,686 - Total Noncurrent Liabilities 16,423, , ,222 17,549,863 5,509,993 Total Liabilities 17,219,640 1,101,466 1,834,903 20,156,009 9,859,269 NET POSITION Net Investment in Capital Assets 41,880,739 2,955,500 7,665,272 52,501, ,967 Unrestricted (deficit) (1,865,975) 15,592,170 2,266,145 15,992,340 8,166,848 Total Net Position $ 40,014,764 $ 18,547,670 $ 9,931,417 $ 68,493,851 $ 9,064,815 The notes to the financial statements are an integral part of the financial statements. 36

55 STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET POSITION PROPRIETARY FUNDS For the Year Ended September 30, 2013 Business-type Activities - Enterprise Funds Solid Waste Fund Emergency Medical Services Fund Nonmajor Enterprise Funds Total Governmental Activities - Internal Service Funds Operating Revenues: Charges for Services $ 11,998,108 $ 11,454,286 $ 5,995,900 $ 29,448,294 $ 38,207,073 Miscellaneous Revenues 49,809 13,416 40, ,812 - Total Operating Revenues 12,047,917 11,467,702 6,036,487 29,552,106 38,207,073 Operating Expenses: Personal Services 2,284,955 7,021,598 1,551,790 10,858,343 16,711,407 Contracted Services 1,235, ,197 5,481,958 6,879,521 - Claims Incurred and change in estimate ,010,909 Supplies and Materials 669, ,716 79,846 1,747,192 - Repairs and Maintenance 583, ,732 93,421 1,207, ,587 Other Services and Charges 1,310, , ,043 1,845,083 4,973,439 Depreciation 2,805, , ,075 4,560,000 78,854 Provision for Closure and Long Term Care 941, ,407 - Premiums/Claims Expense 212,041 95,245 66, ,787 18,674,453 Total Operating Expenses 10,043,019 9,910,701 8,458,634 28,412,354 45,188,649 Operating Income 2,004,898 1,557,001 (2,422,147) 1,139,752 (6,981,576) Nonoperating Revenues (Expenses): Grants 100 2,019-2, Investment Income 27,078 22,311 3,832 53,221 29,243 Interest and Fiscal Charges Expense (5,142) - - (5,142) - Gain (Loss) on Disposal of Capital Assets 60,590 (1,517) - 59,073 (2,051) Total Nonoperating Revenues (Expenses) 82,626 22,813 3, ,271 27,347 Income Before Transfers and Contributions 2,087,524 1,579,814 (2,418,315) 1,249,023 (6,954,229) Transfer In - - 1,400,000 1,400,000 - Transfer (Out) (312,043) (180,971) - (493,014) (3,079,724) Capital Contributions - 1,517,484 38,225 1,555,709 1,946 Closure of Internal Service Fund ,616,302 Change in Net Position 1,775,481 2,916,327 (980,090) 3,711,718 8,584,295 Net Position - Beginning 38,239,283 15,631,343 10,911,507 64,782, ,520 Net Position - Ending $ 40,014,764 $ 18,547,670 $ 9,931,417 $ 68,493,851 $ 9,064,815 The notes to the financial statements are an integral part of the financial statement 37

56 STATEMENT OF CASH FLOWS PROPRIETARY FUNDS For the Year Ended September 30, 2013 Business-type Activities - Enterprise Funds Solid Waste Fund Emergency Medical Services Fund Nonmajor Enterprise Funds Total Governmental Activities - Internal Service Funds Cash Flows from Operating Activities Receipts from customers and users $ 12,350,033 $ 11,376,285 $ 5,914,706 $ 29,641,024 $ 29,661,819 Payments to suppliers (6,240,761) (2,026,698) (5,972,481) (14,239,940) (27,612,656) Payments to employees (2,325,777) (7,107,584) (1,717,445) (11,150,806) (7,079,809) Net Cash Provided (Used) by Operating Activities 3,783,495 2,242,003 (1,775,220) 4,250,278 (5,030,646) Cash Flows from Noncapital Financing Activities Transfers to other funds (312,043) (180,971) - (493,014) (3,079,724) Transfers from other funds - - 1,400,000 1,400,000 - Advances due to/from other funds (786,570) - - (786,570) 1,240,757 Subsidy from federal/state grants 100 2,019-2, Net Cash Provided (Used) by Noncapital Financing Activities (1,098,513) (178,952) 1,400, ,535 (1,838,812) Cash Flows from Capital and Related Financing Activities Acquisition/construction of capital assets (4,888,275) (238,569) (390,096) (5,516,940) (2,999) Landfill closure costs paid (167,477) - - (167,477) - Net Cash (Used) by Capital and Related Financing Activities (5,055,752) (238,569) (390,096) (5,684,417) (2,999) Cash Flows from Investing Activities Sale (purchase) of investments (7,178,828) (9,632,780) (2,245,749) (19,057,357) (6,235,240) Interest received 27,078 22,311 3,832 53,221 29,243 Net Cash Provided (Used) by Investing Activities (7,151,750) (9,610,469) (2,241,917) (19,004,136) (6,205,997) Net Increase (Decrease) in Cash and Cash Equivalents (9,522,520) (7,785,987) (3,007,233) (20,315,740) (13,078,454) Cash and cash equivalents at beginning of year 16,323,230 11,068,892 4,657,681 32,049,803 17,558,789 Cash and cash equivalents at end of year $ 6,800,710 $ 3,282,905 $ 1,650,448 $ 11,734,063 $ 4,480,335 Cash and Cash Equivalents Classified As Current assets $ 11,625 $ 3,282,905 $ 1,417,532 $ 4,712,062 $ 4,480,335 Current restricted assets 414, , ,313 - Noncurrent restricted assets 6,374, ,374,688 - Total Cash and Cash Equivalents $ 6,800,710 $ 3,282,905 $ 1,650,448 $ 11,734,063 $ 4,480,335 Continued 38

57 STATEMENT OF CASH FLOWS - Continued PROPRIETARY FUNDS For the Year Ended September 30, 2013 Business-type Activities - Enterprise Funds Solid Waste Fund Emergency Medical Services Fund Nonmajor Enterprise Funds Total Governmental Activities - Internal Service Funds Reconciliation of Operating Income (Loss) to Net Cash Provided (Used) by Operating Activities Operating Income $ 2,004,898 $ 1,557,001 $ (2,422,147) $ 1,139,752 $ (6,981,576) Depreciation 2,805, , ,075 4,560,000 78,854 Provision for closure and postclosure 941, ,407 - Change in Assets and Liabilities: Accounts receivable 354,672 (91,417) (87,235) 176,020 1,849,018 Inventories - (15,880) 6,118 (9,762) 60,927 Prepaids ,028 54, ,023 Accounts payable (2,018,241) 10,482 (51,262) (2,059,021) 2,147,026 Contracts payable (210,042) - 18,703 (191,339) 9,362 Accrued liabilities 4,672 14,056 (41,967) (23,239) (3,070) Due to other governments (923) (3,020) 22,701 18,758 - Customer deposits (52,556) - (16,012) (68,568) 23,952 Other current liabilities - - (18,534) (18,534) - Compensated absences 12,923 18,856 (59,487) (27,708) (813,780) Post employment benefits (58,417) (118,898) (64,201) (241,516) 30,224 Claims payable (1,806,606) Total Adjustments 1,778, , ,927 3,110,526 1,950,930 Net Cash Provided (Used) by Operating Activities $ 3,783,495 $ 2,242,003 $ (1,775,220) $ 4,250,278 $ (5,030,646) Schedule of non-cash capital activities: Contributions of Capital Assets $ - $ 1,517,484 $ 38,225 $ 1,555,709 $ 1,946 The notes to the financial statements are an integral part of the financial statements. 39

58 STATEMENT OF FIDUCIARY NET POSITION AGENCY FUNDS September 30, 2013 ASSETS Cash and Cash Equivalents $ 9,301,544 Accounts Receivable 326,023 Total Assets $ 9,627,567 LIABILITIES Due to Other Governments $ 3,759,924 Due to Individuals 2,220,300 Other Current Liabilities 3,647,343 Total Liabilities $ 9,627,567 The notes to the financial statements are an integral part of the financial statements 40

59 STATEMENT OF NET POSITION COMPONENT UNITS September 30, 2013 Governmental Activities Escambia County Law Library Board Business-Type Activities Santa Rosa Island Authority Total Component Units ASSETS Cash and Cash Equivalents $ 52,042 $ 3,390,143 $ 3,442,185 Investments - 1,509,056 1,509,056 Accounts Receivable , ,383 Due from Other Governments 15,127 43,138 58,265 Prepaid Items - 78,778 78,778 Total Current Assets 67,594 5,469,073 5,536,667 Noncurrent Assets: Restricted Assets: Cash and Cash Equivalents - 3,115,362 3,115,362 Investments - 25,992 25,992 Capital Assets, Net of Depreciation 13,988 11,748,364 11,762,352 Total Noncurrent Assets 13,988 14,889,718 14,903,706 Total Assets 81,582 20,358,791 20,440,373 LIABILITIES Accounts Payable - 256, ,030 Accrued Liabilities 6,424 97, ,661 Due to Other Governments - 100, ,000 Unearned Revenue - 623, ,026 Obligations Under Capital Leases - 39,128 39,128 Total Current Liabilities 6,424 1,115,421 1,121,845 Noncurrent Liabilities: Compensated Absences - 242, ,190 Other Post Employment Benefits - 153, ,500 Obligations Under Capital Leases - 72,984 72,984 Other Noncurrent Liabilities - 618, ,952 Total Noncurrent Liabilities - 1,087,626 1,087,626 Total Liabilities 6,424 2,203,047 2,209,471 NET POSITION Invested in Capital Assets 13,988 11,536,244 11,550,232 Restricted for Capital Improvements - 2,609,963 2,609,963 Unrestricted 61,170 4,009,537 4,070,707 Total Net Position $ 75,158 $ 18,155,744 $ 18,230,902 The notes to the financial statements are an integral part of the financial statements. 41

60 STATEMENT OF ACTIVITIES - COMPONENT UNITS For the Year Ended September 30, 2013 Governmental Activities Escambia County Law Library Board Business-Type Activities Santa Rosa Island Authority Total Component Units EXPENSES Governmental Activites: Court Related $ 85,448 $ - $ 85,448 Business Type Activities: Operating Expenses - 9,746,474 9,746,474 Total Program Expenses 85,448 9,746,474 9,831,922 PROGRAM REVENUES Charges for Services 83,383 7,759,463 7,842,846 Capital Grants and Contributions - 413, ,494 Net Program (Revenue) Expenses 2,065 1,573,517 1,575,582 GENERAL REVENUES Investment Income - 33,611 33,611 Sale of Assets - 31,265 31,265 Miscellaneous ,695 57,088 Total General Revenues , ,964 Increase (Decrease) in Net Position (1,672) (1,451,946) (1,453,618) Net Position - Beginning, Restated 76,830-76,830 Net Position - Beginning - 19,607,690 19,607,690 Net Position - Ending $ 75,158 $ 18,155,744 $ 18,230,902 The notes to the financial statements are an integral part of the financial statements. 42

61 NOTES TO FINANCIAL STATEMENTS September 30, 2013 INDEX TO NOTES PAGE NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Description of Government-Wide Financial Statements...45 Financial Reporting Entity...45 Basis of Presentation Government-Wide and Fund Financial Statements...47 Measurement Focus and Basis of Accounting...49 Budgetary Information...50 Property Taxes...50 Cash and Cash Equivalents...51 Investments...51 Inventories and Prepaid Items...51 Restricted Assets...51 Accounts Receivable...51 Interfund Transactions...52 Interfund Payables and Receivables...52 Capital Assets...52 Unearned Revenues...52 Deferred Outflows/Inflows of Resources...53 Self Insurance Claims...53 Landfill Closure and Postclosure Care Payable...53 Long Term Obligations...53 Compensated Absences...54 Other Post-Employment Benefits (OPEB)...54 Fund Balance Reporting and Governmental Fund-Type Definitions...54 Net Position...55 NOTE 2 DEPOSITS AND INVESTMENTS Cash and Cash Equivalents...55 Investment Portfolio...56 Interest Rate Risk...57 Credit Risk...58 Custodial Credit Risk...58 Concentration of Credit Risk...59 NOTE 3 CAPITAL ASSETS Changes in Capital Assets...60 Summaries of Capital Assets...62 Construction Commitments and Other Contractual Commitments...62 Discretely Presented Component Units...63 NOTE 4 INTERFUND RECEIVABLES, PAYABLES, ADVANCES AND TRANSFERS NOTE 5 OTHER ASSETS Line of Credit Receivable...65 Capital Lease Receivable...65 Leasing Arrangements...66 NOTE 6 LONG-TERM LIABILITIES Schedule of Changes in Long-Term Liabilities and Deferred Inflow of Resources...66 Bonds and Notes Payable...67 Pledged Revenues...68 Compensated Absences...69 Other Post Employment Benefits (OPEB)...69 Debt Service Requirements...70 Long-Term Debt Bonds and Notes...70 Current Year Defeased Debt...71 Outstanding Defeased Debt...71 Capital Leases...72 Conduit Debt Obligations...72 Landfill Closure and Postclosure Care Liability...72 Pollution Remediation Obligation

62 NOTES TO FINANCIAL STATEMENTS September 30, 2013 INDEX TO NOTES (CONTINUED) PAGE NOTE 7 RISK MANAGEMENT PROGRAM NOTE 8 RETIREMENT SYSTEM NOTE 9 POST EMPLOYMENT BENEFITS OTHER THAN PENSIONS NOTE 10 NET POSITION RESTRICTED FOR OTHER PURPOSES NOTE 11 COMMITMENTS AND CONTINGENCIES Litigation...78 Grants...79 Deficit Fund Equity...79 Operating Leases...79 NOTE 12 SUBSEQUENT EVENTS Capital Improvement Revenue Note

63 NOTES TO FINANCIAL STATEMENTS September 30, 2013 NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES A. Description of Government-wide Financial Statements The financial statements of Escambia County, Florida (the County ) have been prepared in conformity with generally accepted accounting principles (GAAP) as applied to government units. The Governmental Accounting Standards Board (GASB) is the accepted standard-setting body for establishing governmental accounting and financial reporting principles. The government-wide financial statements (i.e., the statement of net position and the statement of activities) report information on all nonfiduciary activities of the primary government and its component units. All fiduciary activities are reported only in the fund financial statements. Governmental activities, which normally are supported by taxes, intergovernmental revenues, and other nonexchange transactions, are reported separately from business-type activities, which rely to a significant extent on fees and charges to external customers for support. Likewise the primary government is reported separately from certain legally separate component units for which the primary government is financially accountable. Significant County accounting policies are described below. B. Financial Reporting Entity Escambia County, Florida (the County) is a political subdivision of the State of Florida created pursuant to Chapter 7 of the Florida Statutes. The County is governed by a five member Board of County Commissioners (the Board), elected from single-member districts. The Board has no powers other than those expressly vested in it by State Statute. In addition to the Board, there are five elected Constitutional Officers: pursuant to Article 8, Section 1(d), of the Constitution of the State of Florida; the Clerk of the Circuit Court and Comptroller, Property Appraiser, Sheriff, Supervisor of Elections, and Tax Collector. The Constitutional Officers maintain separate accounting records and budgets. The Board funds a portion or, in certain instances, all of the operating budgets of the County s Constitutional Officers. The combining financial statements include the operations of the Board of County Commissioners, Clerk of the Circuit Court and Comptroller, Sheriff, Tax Collector, Property Appraiser, Supervisor of Elections and those separately administered organizations for which the government is considered to be financially accountable. Blended component units are, in substance, part of the primary government s operations, even though they are legally separate entities. Thus, blended component units are appropriately presented as funds of the primary government. Discretely presented component units are reported in a separate column in the government-wide financial statements to emphasize that they are legally separate from the government. Blended Component Units Community Redevelopment Agency (CRA) Pursuant to Florida Statutes section 163 Part III, the Community Redevelopment Act of 1969 authorized governments to use tax increment financing as a means for community redevelopment. The primary purpose of this act is to provide local governments with a source of funds to revitalize the deteriorated portions of their communities. In 1995, the Board of County Commissioners adopted Ordinance No which established the Community Redevelopment Agency (CRA) of Escambia County. The Board serves as the CRA Board and has all rights, powers, duties, privileges and immunities authorized by the Act. The CRA is reported as a major special revenue fund. Five redevelopment areas are included under the CRA jurisdiction. Discretely Presented Component Units Governmental Fund Type: Escambia County Law Library Board The Escambia County Law Library Board (Law Library), created under Special Act, Chapter , Laws of Florida, provides for the maintenance of a central law library for the use of citizens, county officials, judges and officers of the courts of Escambia County. The County establishes the fees charged and collected on court actions in support of the Law Library, therefore the County is financially accountable. The Law Library is located in the 45

64 NOTES TO FINANCIAL STATEMENTS September 30, 2013 MC Blanchard Judicial Building. The Law Library is composed of two (2) circuit judges, two (2) county judges and one (1) lawyer appointed by the local Bar Association. The operations of the Law Library are reported in the Escambia County Law Library Board, a special revenue fund, as a discretely presented component unit. Financial statements for the Escambia County Law Library Board can be obtained from the Library staff at 190 West Government Street, Pensacola, Florida Proprietary Fund Type: Santa Rosa Island Authority (SRIA) The Santa Rosa Island Authority (SRIA) was established by the provisions of Chapter , Laws of Florida, Special Acts of 1947, as amended. The County appoints five (5) members of the Authority s six (6) member Board, and one (1) member is elected by the eligible voters who are full time residents of the Island. The County approves the SRIA s budget and issuance of debt. The County has veto power over decisions of the SRIA. The SRIA serves as the County s leasing agent for property on Santa Rosa Island owned by the County. The operations of SRIA are reported in the SRIA Fund, a discrete component unit in this report. Financial statements for the SRIA can be obtained at 1 Via Deluna, Pensacola Beach, Florida Joint Ventures As defined in Governmental Accounting Standards Board (GASB) Statement No. 14, a joint venture is a separate legal entity or other organization that results from a contractual arrangement (or interlocal agreement) and that is owned, operated or governed by two or more participants as a separate and specific activity subject to joint control in which the participants retain (a) an on-going financial interest or (b) an on-going financial responsibility. The County participates and provides financial support to the following nonequity joint ventures: Human Relations Commission (HRC) The Commission was created by an Interlocal Agreement between Escambia County and the City of Pensacola in 1978, pursuant to Florida Statutes, Chapter , for the purpose of being responsible for the promotion of fair treatment and equal opportunity to all citizens of the local community. The Commission is composed of nine (9) members; four (4) selected by the County and four (4) selected by the City of Pensacola, with one (1) additional member jointly selected by the preceding eight. The County does not control budgeting or financing for the Commission. Separate financial statements are available from the Commission at 2257 Baylen Street, Pensacola, Florida Pensacola Escambia County Promotion and Development Commission (PEDC) This Commission was created in 1967 by Chapter , Laws of Florida, amended in 1980 by Chapter , to promote and develop tourism and industry in Escambia County and in the City of Pensacola. The nine (9) member Commission consists of two (2) members of the Pensacola City Council, two (2) members of the Escambia County Commission, one (1) member of the Century City Council, the President of the Chamber of Commerce (1), one (1) representative of the Committee of 100 or the Tourist Advisory Council, one (1) at-large member appointed by the Pensacola City Council and one (1) at-large member appointed by the Escambia County Commission. The County and the City of Pensacola each contribute funds annually for the operation of the Commission, but neither has control of the budget or finances of the Commission. Separate financial statements are available from the Pensacola Escambia County Promotion and Development Commission at 117 West Garden Street, Pensacola, Florida

65 NOTES TO FINANCIAL STATEMENTS September 30, 2013 Summary financial statements as of September 30, 2013 for the joint ventures are as follows: STATEMENTS OF NET POSITION SEPTEMBER 30, 2013 HRC PEDC Assets $ 21,848 $ 6,512,273 Liabilities 7,808 2,164,069 Net Position Net investment in capital assets Restricted: - 61,198 Unrestricted: Committed - 52,309 Unassigned 13,737 4,234,697 Total net position $ 14,040 $ 4,348,204 STATEMENTS OF ACTIVITIES FISCAL YEAR ENDED SEPTEMBER 30, 2013 HRC PEDC Revenues $ 166,406 $ 270,601 Expenses (166,580) (303,527) Forgiveness of debt - 4,069,512 Change in net position (174) 4,036,586 Net position - beginning 14, ,618 Net position - ending $ 14,040 $ 4,348,204 C. Basis of Presentation Government-Wide and Fund Financial Statements The basic financial statements consist of the government-wide (based on the County as a whole, including its component units) and fund financial statements. Both sets of statements categorize primary activities as either governmental or business-type activities. The government-wide financial statements include a statement of net position and a statement of activities which report on the government as a whole and provide a consolidated financial picture of the government. As a general rule, the effect of interfund activity has been eliminated from the governmentwide financial statements. Interfund activities are eliminated to avoid distorted financial results. The amounts reported as internal balances represent the residual amounts due between governmental and business-type activities. Fiduciary Funds of the government are also eliminated from this presentation since these resources are not available for general government funding purposes. The statement of activities reports functional categories of programs provided by the County, and demonstrate how and to what degree those programs are supported by specific revenue. Governmental activities, which normally are supported by taxes and intergovernmental revenues, are reported separately from business-type activities, which rely to a significant extent on external fees and charges for support. Likewise, the primary government is reported separately from certain legally separate component units for which the primary government is financially accountable. 47

66 NOTES TO FINANCIAL STATEMENTS September 30, 2013 The statement of activities demonstrates the degree to which the direct expenses of a given program are supported by specific revenues. Direct expenses are those that are clearly identifiable with a specific program. Program revenues include 1) charges to customers or applicants who purchase, use, or directly benefit from goods, services, or privileges provided by a given function or segment and 2) grants and contributions that are restricted to meeting the operational or capital requirements of a particular function or segment. General revenues consist of all taxes and other items collected that help support all functions of Escambia County government. The County s blended component unit; the Community Redevelopment Agency (CRA) Fund is presented as a major fund and is presented in a separate column in the fund financial statements. Individual fund financial statements are provided for governmental funds, proprietary funds and fiduciary funds, even though the latter are excluded from the government-wide financial statements. Major individual governmental funds and major individual enterprise funds are reported as separate columns in the fund financial statements. The County reports the following major governmental funds: The General Fund is the government s primary operating fund. It accounts for all financial resources of the general government, except those required to be accounted for in another fund. The general fund includes the Board of County Commissioners, Clerk of Circuit Court and Comptroller, Property Appraiser, Sheriff, Supervisor of Elections and Tax Collector. The Disaster Recovery Fund accounts for financing provided from various grants, or reimbursements to aid the County s recovery from either natural or man-made disasters. Due to the nature of this major fund, the County generally adopts an appropriated budget of zero. The Community Redevelopment Agency Fund (CRA) accounts for the revenues and expenditures of the redevelopment areas established within the County. The CRA is a blended component unit of Escambia County. Pursuant to Florida Statutes Section 163 Part III, the Community Redevelopment Act of 1969 authorizes governments to use tax increment financing as a means for community redevelopment. The Local Option Sales Tax Fund (LOST) accounts for monies collected pursuant to Florida Statutes , which authorizes the County to impose a one percent (1%) local option infrastructure sales surtax upon taxable transactions occurring within Escambia County, to provide for road and drainage projects and improvements, recreation projects, public safety, expansion of jail and court facilities, and community redevelopment projects. This tax was approved by referendum on March 10, 1992 and will expire December 31, 2017 unless extended by referendum. The County reports the following major proprietary funds: The Solid Waste Fund accounts for solid waste disposal (landfill) operations, primarily financed through franchise fees and user charges. The Emergency Medical Service Fund accounts for the cost of emergency medical services provided in Escambia County. All activities necessary to provide such services are accounted for in this fund. Additionally, the government reports the following fund types: The Internal Service Fund accounts for risk management activities and garage and fuel services provided to other County departments, as well as the administration of employee benefits. Additionally, it is used to account for balances and activity related to compensated absences policies of the Clerk of the Circuit Court for court related activities. 48

67 NOTES TO FINANCIAL STATEMENTS September 30, 2013 Agency Funds are custodial in nature, and are therefore, excluded from the governmental-wide financial statements. These funds are used to account for assets held by the County as an agent for individuals, private organizations and governments. Agency funds are utilized by the Clerk of the Circuit Court, the Tax Collector and the Sheriff. Resources include fines, forfeitures and filing fees collected for other governmental agencies, child support payments, jury and witness services, posted bonds collected for individuals, prisoner s funds, confiscated monies held as evidence, property taxes and fees for licenses. D. Measurement Focus and Basis of Accounting The government-wide financial statements and the proprietary fund and fiduciary fund financial statements are reported using the economic resources measurement focus and the accrual basis of accounting. Revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. Property taxes are recognized as revenues in the year for which they are levied. Grants and similar items are recognized as revenue as soon as all eligibility requirements imposed by the provider have been met. Governmental fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Revenues are recognized as soon as they are both measurable and available. Revenues are considered to be available when they are collectible within the current period or soon enough thereafter to pay liabilities of the current period. For this purpose, the County considers revenues to be available if they are collected within 60 days of the end of the current fiscal period. State shared revenues, sales taxes, franchise taxes, and interest associated with the current fiscal period are all considered to be susceptible to accrual and have been recognized as revenues of the current fiscal period. Expenditures generally are recorded when a liability is incurred, except debt service expenditures and expenditures related to compensated absences and claims and judgments, which are recorded only when payment is due. Capital asset acquisitions are recorded as expenditures in governmental funds. Monies received from issuing long-term debt and acquisitions under capital leases are reported as other financing sources. Expenditure-driven grants are recognized as revenue when the qualifying expenditures have been incurred and all other eligibility requirements have been met, and the amount is received during the period or within the availability period for this revenue source (within 60 days of year end). Escambia County allocates indirect costs comprised of administrative overhead costs to functional activities using various allocation charge methods. Therefore, expenses reported for functional activities include these allocated indirect costs. Elimination of these charges would distort the direct costs of the functions concerned. As a general rule, the effect of interfund activity has been eliminated from the government-wide financial statements, with the exception of administrative overhead components as discussed above. Amounts reported as program revenue include 1) charges to customers for goods, services, or privileges provided; 2) operating grants and contributions; and 3) capital grants and contributions, including special assessments. Internally dedicated resources are reported as general revenues rather than program revenues. Likewise, general revenues include all taxes. Proprietary fund financial statements are reported using economic resource measurement focus and the accrual basis of accounting, distinguishing operating revenues and expenses from non-operating items. Operating revenues and expenses generally result from providing services and producing and delivering goods in connection with a proprietary fund s principal ongoing operations. The principal operating revenues of the County s enterprise funds are charges to customers for sales and services. Operating expenses for enterprise funds and the internal service fund include the cost of sales and services, administrative expenses, and depreciation on capital assets. All revenues and expenses not meeting this definition are reported as non-operating revenues and expenses. 49

68 NOTES TO FINANCIAL STATEMENTS September 30, 2013 E. Budgetary Information Annual budgets are adopted on a basis consistent with generally accepted accounting principles as required by Florida Statute 129 for all governmental funds. The Disaster Recovery Fund which was not expected to have activity in fiscal year 2013, was adopted with a budget appropriation of zero. On or before May 1 of each year, Clerk of the Circuit Court and Comptroller, Property Appraiser, Supervisor of Elections, Sheriff and Tax Collector each submit to the Board of County Commissioners a tentative budget for the ensuing fiscal year. Within fifteen days after certification of the ad valorem tax roll by the Property Appraiser, the County Budget Department submits to the Board of County Commissioners a proposed budget for the fiscal year commencing the following October 1 st. Pursuant to the provisions of Section , Florida Statutes, the proposed budgets as submitted contain balanced statements of estimated revenue and proposed appropriations for each fund required to be presented by law or sound financial practice, including the general, special revenue, debt service, and capital projects funds. The Board holds public hearings and a final budget must be prepared and adopted no later than September 30. The County s budget is legally enacted through passage of a resolution. The appropriated budget is prepared by fund, function and department. The Office of Management and Budget is authorized to transfer budgeted amounts within departments of a fund and between departments of a fund; however, the Board of County Commissioners must approve any revisions that alter the total expenditures of any fund. The legal level of budgetary control (i.e., the level at which expenditures may not legally exceed appropriations) is the fund level. The Board of County Commissioners approved supplemental budget amendments during the year that increased the original budget. All appropriations lapse at the end of each fiscal year, although the county expects to honor purchase orders and contracts in process, subject to authority provided in the subsequent year s budget. F. Property Taxes Under Florida law, the assessments of all properties and the collections of all county, municipal, and school board property taxes are consolidated in the offices of the County Property Appraiser and the County Tax Collector. The laws of the state regulating tax assessments are also designed to assure a consistent property valuation method statewide. Pursuant to the State Constitution, Florida Statutes permit counties to levy ad valorem taxes on real and tangible personal property taxes at a rate not to exceed 10 mills for countywide purposes, exclusive of taxes levied for the payments of bonds and taxes levied for periods of not longer than 2 years and approved by a vote of the electors. All property is assessed at 100% of just value. For fiscal year 2013, the County-wide operating millage rate was mills. The tax levy of the County is established by the Board of County Commissioners prior to October 1 of each year and the Tax Collector incorporates the millage into the total tax levy, which includes the municipalities, special districts, and the County School Board tax requirements and produces the tax bill. All property is reassessed by the Property Appraiser, according to its fair market value on January 1 of each year. The certified assessment roll is delivered by the Property Appraiser to the Tax Collector. All property taxes are billed in arrears and become due and payable on November 1 of each year. All unpaid taxes become delinquent on April 1 following the year which they are assessed. The legal lien date is January 1 of each year. Discounts are allowed for early payment at the rate of 4% in the month of November, 3% in the month of December, 2% in the month of January, and 1% in the month of February. Taxes paid in March are without discount. Tax certificates are sold for all delinquent taxes on real 50

69 NOTES TO FINANCIAL STATEMENTS September 30, 2013 property. Virtually all unpaid taxes are collected via the sale of tax certificates prior to year end. The county does not accrue its portion of the County-held tax sale certificates or personal property tax warrants because such amounts are not considered to be material. G. Cash and Cash Equivalents The County defines cash and cash equivalents as cash held at a depository and cash on hand for operating purposes and those investments which are short term and highly liquid. Generally, those investments have original maturities of three (3) months or less from the date of acquisition. The County maintains an equity in pooled cash fund. All monies which are not legally restricted to separate administration are pooled together for investment and are maintained on a daily transaction basis. Investment earnings are distributed in accordance with the participating funds relative equity. The County s cash deposits are held by banks that qualify as public depositories under the Florida Security for Public Deposits Act as required by Chapter 280, Florida Statutes. The County s cash deposits are fully insured by the Public Deposits Trust Fund. H. Investments Investments for the County are reported at fair value (generally based on quoted market prices) except for the Florida Prime Investment Pool which is reported at amortized cost. Investments are pooled together for investment purposes while each individual funds and/or accounts are maintained on a daily transaction basis. Investment earnings are distributed in accordance with the participating funds relative equity. Such investments consist of Certificates of deposit, U.S. Treasury Securities, Federal Instruments, Commercial Paper, Corporate Notes and State and/or Local Government Debt. I. Inventories and Prepaid Items Inventories are valued at cost, using the first-in/first-out method. Annual inventory expenditures reflect supplies consumed. The cost of such inventories is recorded as expenditures/expenses when consumed rather than when purchased. Certain payments to vendors reflect costs applicable to future accounting periods and are recorded as prepaid items in both the government-wide and fund financial statements. These payments are recorded as expenditures/expenses when consumed rather than when purchased. J. Restricted Assets The use of certain assets of both governmental and business-type activities are restricted by resolution or ordinance. Assets are designated as restricted since their use is limited. Restricted assets reported on the face of the statements represent escrow deposits for customers, Saufley Construction and Demolition (C&D) for the project associated with the Saufley Landfill closure, and the Landfill Escrow for the restricted portion of the landfill closure and post closure liability. K. Accounts Receivable Accounts Receivable are shown net of an allowance for uncollectible accounts. The Solid Waste Fund records an allowance for receivables older than 90 days, while the Internal Service Fund provides an allowance for receivables without collections during the past year. All other County funds record an allowance on accounts older than 120 days. Accounts in the General Fund consist primarily of franchise fees receivable. The receivables at the end of the fiscal year include an estimated total allowance for uncollectable accounts in the amount of $4.56 million. This allowance is comprised of $3.506 million for ambulance receivables in the Emergency Medical Services Fund; $915,400 for the Internal Service Funds related to 51

70 NOTES TO FINANCIAL STATEMENTS September 30, 2013 the self insurance third party receivables; $90,700 for the Local Option Sales Tax Fund; $38,700 for HUD- CDBG Housing Rehabilitation Fund and $7,700 for the Pensacola Bay Center Fund (Bay Center). L. Interfund Transactions Reimbursements to a fund for expenditures/expenses initially made from it, which are applicable to another fund are recorded as expenditures/expenses in the reimbursing fund, and reductions of expenditures/expenses in the fund that is reimbursed. All other interfund transactions are reported as transfers. M. Interfund Payables and Receivables Unpaid amounts of interfund transactions at year end are reflected as due from other funds or due to other funds in the related fund financial statements. Noncurrent portions of interfund payables and receivables are reported as advances. In governmental funds, advances are offset equally by nonspendable fund balance unless the funds are restricted or committed. Any residual balances outstanding between the governmental activities and business-type activities are reported in the government-wide financial statements as internal balances. N. Capital Assets Capital Assets which include property, plant, equipment, intangibles, and infrastructure assets (e.g., roads, bridges, sidewalks, and similar items), are reported in the applicable governmental or businesstype activities columns in the government-wide financial statements. Purchased or constructed assets are recorded at historical costs or estimated costs. Donated capital assets are recorded at estimated fair market value at the date of donation. The County capitalizes items costing $1,000 and having an estimated useful life in excess of one year. Buildings, public domain, and system infrastructure assets which represent major expenditures for such items as roads, water and sewer lines, landfill improvements, and parks and drainage systems are capitalized at historical cost. Major outlays for capital assets and improvements are capitalized as projects are constructed. The costs of normal maintenance and repairs that do not add to the value of the asset or materially extend assets lives are not capitalized. Capital Assets are depreciated over their estimated useful lives unless they are inexhaustible or are intangible assets with indefinite useful lives. The term depreciation (and related forms of the term) includes amortization of intangible assets. Depreciation has been provided using the straight-line method. The estimated useful lives of the various classes of depreciable capital assets are as follows: Buildings Improvements Infrastructure Equipment Intangibles years years years 3 10 years 3 5 years O. Unearned Revenues Unearned revenues include amounts collected before revenue recognition criteria are met. Expendituredriven grants and excess revenue for exchange type transactions are reported as unearned at the end of the fiscal year. 52

71 NOTES TO FINANCIAL STATEMENTS September 30, 2013 P. Deferred Outflows/Inflows of Resources In addition to assets, the statement of financial position will sometimes report a separate section for deferred outflows of resources. This separate financial statements element, deferred outflows of resources, represents a consumption of net position that applies to a future period(s) and will not be recognized as an outflow of resources (expense/expenditure) until then. The County has only one item that qualifies for reporting in this category. It is the deferred charge on refunding reported in the government-wide statement of net position. A deferred charge on refunding results from the difference in the carrying value of refunded debt and its reacquisition price. This amount is deferred and amortized over the shorter of the life of the refunded or refunding debt. In addition to liabilities, the statement of financial position will sometimes report a separate section for deferred inflows of resources. This separate financial statement element, deferred inflows of resources, represents an acquisition of net position that applies to a future period(s) and will not be recognized as an inflow of resources (revenue) until that time. The County has only one item, which arises only under a modified accrual basis of accounting that qualifies for reporting in this category. Accordingly, the unavailable revenue capital lease, is reported only in the governmental funds balance sheet. These amounts are deferred and recognized as in inflow of resources in the period that the amounts become available. Q. Self Insurance Claims Liabilities for reported claims and incurred but not reported claims are estimated based on an actuarial review of claims pending and historical experience. R. Landfill Closure and Postclosure Care Payable The County recognizes municipal solid waste landfill closure and post closure care costs under the State of Florida s Solid Waste Management Act of 1988, regulations of the Federal Environmental Protection agency and the GASB Statement No. 18, Accounting for Municipal Solid Waste Landfill Closure and Post closure Care Costs. The County is required to place a final cover on closed landfills and to provide longterm care for up to thirty years after final cover. These obligations for closure and postclosure are recognized in the Solid Waste Fund over the active life of the landfill, based on landfill capacity used to date. S. Long Term Obligations Long term liabilities which are expected to be financed from governmental funds are accounted for as debt service expenditures. For proprietary fund types, long term debt and other obligations are reported as liabilities in the fund financing the obligation. In the government-wide and the proprietary fund financial statements are reported as liabilities in the statement of net position. Debt issuance cost, except for prepaid insurance, are expensed in the period incurred. Prepaid insurance cost are reported as an asset and amortized in a systematic and rational manner over the duration of the related debt. Legal debt margin for bond payments are governed by Florida Statutes None of the provisions of this chapter limit or restrict the rate or amount of ad valorem taxes levied for the payment of the principal and the interest on any debt service secured by revenue certificates or by bonds for which the full faith and credit of any taxing district may be pledged. The County reports pollution remediation obligations, in accordance with GASB Statement No. 49, Accounting and Financial Reporting for Pollution Remediation Obligations. The circumstances under which the County will have to estimate, record, and disclose its expected outlays for pollution remediation include: the pollution is an imminent danger to public health or welfare; the government is in violation of a 53

72 NOTES TO FINANCIAL STATEMENTS September 30, 2013 pollution prevention-related permit or license; the government has been named as a responsible party under Superfund or similar state laws; the government is named in a lawsuit that would require participation in remediation activities; or the government legally commits itself to conduct remediation activities. T. Compensated Absences The County s reporting of accumulated compensated absences complies with GASB Statement No. 16. The County s policy permits eligible employees to accumulate a limited amount of earned but unused leave based on years of employment. While employees are encouraged to use their annual leave in the year that it is earned, unused leave time is paid upon separation of service. Compensated absences are recorded as a liability when the benefits are earned in the government-wide and proprietary fund financial statements. The governmental funds recognize an expenditure at the time payments are made to employees. U. Other Post-Employment Benefits (OPEB) Under the provisions of GASB Statement No. 45, Accounting and Financial Reporting by Employers for Postemployment Benefits (OPEB) the government-wide and proprietary fund financial statements report the annual OPEB expense and related OPEB liabilities (assets), of postemployment benefits other than pensions. The government-wide financial statements include the liability of all plan participants for the Board of County Commissioners, the Constitutional Officers as well as the Santa Rosa Island Authority V. Fund Balance Reporting and Governmental Fund-Type Definitions GASB Statement No. 54 Fund Balance Reporting and Governmental Fund Type Definitions clarifies governmental fund balance classifications and fund-type definitions. The Board of County Commissioners is the County s highest level of decision-making authority. Governmental fund balances are classified either as nonspendable or spendable. Spendable fund balances (restricted, committed, assigned, or unassigned) are further classified below in a hierarchy based on the extent to which there are external and internal constraints on spending of these fund balances. These classifications are described as follows: Nonspendable fund balances - include amounts that cannot be spent because they are not in spendable form or are legally or contractually required to be maintained intact. Nonspendable types consist of inventories, prepaid amounts, long-term amounts of other assets, loans, notes, and advances receivable, and may include property acquired for resale. Restricted fund balance include amounts that can be spent only for specific purposes stipulated by (a) external resource providers such as creditors (by debt covenants), grantors, contributors, or laws or regulations of other governments; or (b) imposed by law through constitutional provisions or enabling legislation. Committed fund balance Amounts that can be used only for the specific purposes determined by a formal action of an ordinance of the Board of County Commissioners, the highest level of decision making authority. Commitments may be changed or lifted only by the Board of County Commissioners taking the same formal action of an ordinance that imposed the constraint originally. Assigned fund balance comprises amounts intended to be used by the government for specific purposes. The Board of County Commissioners or management designee (via action by the Board of County Commissioners) has the authority as the official authorized to assign fund balance to a specific purpose. In governmental funds other than the general fund, assigned fund balance represents the amount that is not restricted or committed. This indicates that the resources in other governmental funds are, at a minimum intended to be used for the purpose of that fund. 54

73 NOTES TO FINANCIAL STATEMENTS September 30, 2013 Unassigned fund balance is the residual classification for the general fund. This classification represents fund balance that has not been assigned to other funds and that has not been restricted, committed, or assigned to specific purposes within the general fund. Unassigned amounts are technically available for any purpose. Unassigned fund balance may also include negative balances for any governmental fund if expenditures exceed amounts restricted, committed, or assigned for those specific purposes. The County has adopted a formal fund balance policy. It is the County s goal to maintain a targeted minimum unrestricted fund balance (the sum of the Committed, Assigned and Unassigned fund balance) equal to 2 months of the current fiscal year s operating expenditures and transfers out budgeted for the fund. This unrestricted fund balance is needed to cover short-term cash flow variations, economic downturns or unanticipated events that would adversely affect the financial condition of the County and jeopardize the continuation of necessary public services. Compliance with the provisions of the fund balance policy is reviewed as part of the annual budget adoption process and revisions to the levels of fund balance can be determined during this process. Budgeting of amounts of unassigned fund balance for the purpose of balancing the budget requires the Board of County Commissioners approval. When multiple categories of fund balance are available for expenditures, the County will start with the most restricted category, unless there are legal documents/contracts that prohibit this order, such as grant agreements requiring dollar for dollar spending. Unassigned fund balance is used when expenditures are incurred for purposes which amounts in any classification could be used. W. Net Position The net positions of proprietary funds, governmental activities and business-type activities are made up of three components. Net Investment in Capital Assets which represents net capital assets less related longterm liabilities; unspent debt proceeds will increase this amount. The Restricted component of net position consists of restricted assets reduced by liabilities and deferred inflows of resources related to those assets. The restricted component represents assets that are legally restricted. They include reserve funds, special revenues restricted by statute or ordinance, bond proceeds and other sources restricted for capital or improvements. The unrestricted component of net position is the balance not included in the determination of net investment in capital assets or the restricted component of net position. NOTE 2 - DEPOSITS AND INVESTMENTS A. Cash and Cash Equivalents At September 30, 2013 the County s carrying value of cash and cash equivalents totaled $93,702,062, which is presented as $84,400,518 in the statement of net position and $9,301,544 in the statement of fiduciary net position. Additionally, funds are placed with the State Board of Administration for participation in the Florida Prime Investment Pool, created by Section , Florida Statutes. This investment pool operates under investment guidelines established by Section , Florida Statutes. The County s investment in the Florida Prime Investment Pool, a Security and Exchange Commission (SEC) Rule 2a7-like external investment pool is reported at amortized cost, there are no material differences from fair value. Rule 2a-7 is the rule that permits money market funds to use amortized cost to maintain a constant NAV of $1.00 per share, provided that such funds meet certain conditions. The Florida Prime Investment Pool has a dollar weighted average days to maturity WAM of 44 days as of September 30, Next interest rate reset dates for floating rate securities are used in the calculation of the WAM. The Florida Prime Investment Pool is rated by Standard and Poors. The current rating is AAAm. 55

74 NOTES TO FINANCIAL STATEMENTS September 30, 2013 The County s cash deposits are held by banks that qualify as a public depository under the Florida Security for Public Deposits Act as required by Chapter 280, Florida Statutes. At September 30, 2013 the carrying amount of the County s Cash deposits totaled $43,334,805, cash in a money market fund totaled $30,227,270, and the County s investment in the Florida Prime Investment Pool totaled $20,139,987. B. Investment Portfolio The Escambia County Board of County Commissioners and Escambia County Clerk of the Circuit Court and Comptroller (Clerk) formally adopted the comprehensive investment policy on January 21, The policy was created pursuant to Section , Florida Statutes and established permitted investments, asset allocation limits, issuer limits, credit ratings requirements, and maturity limits to protect the County s cash and investment assets. The County maintains a common cash and investment pool for the use of all funds. Section , Florida Statutes, limits the types of investments that a government can invest in unless specifically authorized in the County s investment policy. The Board adopted a list of permitted investments by ordinance, and updated their investment policy on June 10, The policy allows for the following investments: US Government Securities, US Government Agencies, Federal Instruments, Interest Bearing Time Deposit or Savings Accounts, Repurchase Agreements, Commercial Paper, Corporate Notes, Bankers Acceptances, State and/or Local Government Taxable and/or Tax Exempt Debt, Registered Investment Companies (Money Market Mutual Funds), and Intergovernmental Investment Pools that contain no derivatives. Derivatives and reverse repurchase agreements are not permitted by the County s investment policy. The County s investment policy provides asset allocation, issuer, and maturity limits to protect the County s cash and investments. The policy allows for a short-term strategy (maturities of 12 months or less) to provide for operating funds and a longer-term strategy (maturities not exceeding 5 years) for the core portion of the portfolio. As defined by GASB Statement 31, Accounting and Financial Reporting for Certain Investments and for External Investment Pools, money market investments are reported at amortized costs rather than fair value. The Constitutional Officers electing not to adopt a written investment policy are limited to investing funds pursuant to Section , Florida Statutes, and subsection (17). Those investments include the Local Government Surplus Trust Fund, or any authorized intergovernmental investment pool, SEC registered money market funds with the highest credit quality rating from a nationally recognized rating agency, Interest-bearing time deposits or savings accounts in qualified public depositories, and direct obligations of the U.S. Treasury. The County s investment portfolio consists of $114,991,795 in direct obligations of the United States Treasury Securities, Federal Instruments, Commercial Paper, Corporate Notes and State and/or Local Government debt which are reported at fair value in accordance with GASB Statement No. 31 Accounting and Financial Reporting for Certain Investments and for External Investment Pools. As of September 30, 2013, interest receivable on the County s investment portfolio amounted to $303,

75 NOTES TO FINANCIAL STATEMENTS September 30, 2013 The County had the following investment types by issuer and effective duration presented in terms of years: Weighted Average Credit Percentage Security Type Fair Value Duration (Years) Rating of Portfolio Short Term Investments: United States Treasury Securities $ 4,999, AA+ 4.35% Federal Instruments 4,999, AA+ 4.35% Total short term investments 9,999, % Long Term Investments: United States Treasury Securities 26,665, AA % Federal Instruments 46,586, AA % Commercial Paper 3,048, A % Corporate Notes 20,429, A % State and/or Local Government Debt 8,262, AA 7.19% Total long term investments 104,992, % Total Fair Value $ 114,991, % Portfolio Weighted Average Duration 2.11 C. Interest Rate Risk The County s investment policy sets limits for investment maturities to match known cash needs and anticipated cash flow requirements. Investments of current operating funds have maturities no longer than twelve (12) months. For core funds, investments of reserves, project funds, debt proceeds, and other non-operating funds have a term appropriate for the needs of the funds in accordance with debt covenants, with a maximum term of five (5) years, and the average duration of the funds as a whole may not exceed three (3) years. The County utilizes weighted average duration as a measurement of interest rate risk and as of September 30, 2013, the investments had a weighted average duration of 2.11 years. The County had $5,829,352 of securities with embedded options consisting of the option at the discretion of the issuer to call their obligation or pay a stated increase in the interest rate as follows: Maurity Market Call Call CUSIP Description Date Value Schedule Date 3134G42V9 Freddie Mac (Callable) Global Notes 4/29/2015 $ 909,951 Quarterly 10/29/ G0NP4 Fannie Mae (Callable) Global Notes 8/20/2015 2,901,441 Quarterly 11/20/ HCC1 Bank of New York Mellon (Callable) Notes 2/20/2015 2,017,960 Continuous 1/20/2015 $ 5,829,352 The County has no Federal Instrumentalities Mortgage pass-through securities. 57

76 NOTES TO FINANCIAL STATEMENTS September 30, 2013 D. Credit Risk The County s investment policy permits the following investments, which are limited to credit quality ratings from nationally recognized rating agencies as described below: U.S. Government Treasury Securities, U.S. Government Agency, and Federal Instruments. Commercial paper of any United States company that is rated, at the time or purchase, Prime-1 by Moody s and A-1 by Standard & Poor s (prime commercial paper). Corporate notes issued by corporations organized and operating within the United States or by depository institutions licensed by the United States that have a long-term debt rating, at the time or purchase, at a minimum A by Moody s and a minimum long-term debt rating of A by Standard & Poor s. Bankers acceptances issued by a domestic bank or a federally chartered domestic office of a foreign bank, which are eligible for purchase by the Federal Reserve System, if at the time or purchase, the short-term paper is rated, at a minimum P-1 by Moody s Investors Services and A-1 by Standard & Poor s. State and/or local government taxable and/or tax-exempt debt, general obligation and/or revenue bonds, rated at least Aa by Moody s and AA by Standard & Poor s for long-term debt, or rated at least MIG-2 by Moody s and SP-2 by Standard & Poor s for short-term debt. Registered Investment Companies (Money Market Mutual Funds) rated AAAm by Standard & Poor s or the equivalent by another rating agency. The Intergovernmental Investment Pool are rated AAAm by Standard & Poor s or the equivalent by another rating agency. As of September 30, 2013 the majority of the County s investment securities in the amount of $114,991,795 were all individually rated AA+, A+ or A-1 by Standard & Poors Rating Services. The County s $20,139,987 investment in the Florida State Board of Administration s Local Government Surplus Funds Trust Fund (Florida Prime Investment Pool) was rated by Standard and Poors. The current rating as of September 30, 2013 was AAAm. Additional information for the Florida Prime Investment Pool can be found at The County s cash deposit balances, of $73,562,075 were deposited in qualified public depositories, as required by Chapter 280, Florida Statutes. E. Custodial Credit Risk The County s investment policy requires securities, with the exception of certificates of deposits, to be held with a third party custodian; and all securities purchased by, and all collateral obtained by the County to be properly designated as an asset of the County. The securities must be held in an account separate and apart from the assets of the financial institution. Certificates of deposits are placed in the provider s safekeeping department for the term of the deposit. As of September 30, 2013, the County s securities portfolio was held with a third-party custodian as required by the County s investment policy. 58

77 NOTES TO FINANCIAL STATEMENTS September 30, 2013 F. Concentration of Credit Risk The County s investment policy establishes asset allocation and issuer limits on the following investments to reduce concentration of credit risk of the County s investment portfolio: Asset Allocation Maximum Individual Issuer Limit United States Government Securities (1) 100% N/A United States Government Agencies 50% 10% Federal Instruments 100% 25% Interest Bearing Time Deposit or Saving Account 20% 10% Repurchase Agreements 20% 10% Commercial Paper 25% 5% Corporate Notes 20% 5% Bankers' Acceptances 25% 5% State and/or Local Government Taxable and/or Tax-Exempt Debt 25% 10% Registered Investment Companies (Money Market Mutual Funds) 50% 25% Intergovernmental Investment Pool (2) 25% N/A (1) Treasury Strips are limited to 10% of available funds (2) Fund may not contain derivatives 59

78 NOTES TO FINANCIAL STATEMENTS September 30, 2013 NOTE 3 CAPITAL ASSETS A. Changes in Capital Assets The following show the changes in capital assets of governmental activities: Primary Government Beginning Ending Balance Balance Governmental Activities 10/1/2012 Increases Decreases 9/30/2013 Capital Assets, Not Being Depreciated: Land $ 35,678,121 $ 2,801,657 $ - $ 38,479,778 Construction In Progress 26,058,190 1,754,908 (3,758,420) 24,054,678 Total Capital Assets, Not Being Depreciated 61,736,311 4,556,565 (3,758,420) 62,534,456 Capital Assets, Being Depreciated and Amortized: Buildings and Improvements 224,380,312 9,342, ,723,023 Equipment 124,229,377 6,794,350 (8,359,667) 122,664,060 Intangible Computer Software 4,619, ,793-5,101,263 Infrastructure 705,100,031 20,401, ,501,188 Total Capital Assets Being Depreciated 1,058,329,190 37,020,011 (8,359,667) 1,086,989,534 Less Accumulated Depreciation For: Buildings and Improvements (86,942,768) (5,816,687) - (92,759,455) Equipment (93,569,970) (10,935,158) 8,120,485 (96,384,643) Intangible Computer Software (2,591,810) (1,051,857) - (3,643,667) Infrastructure (377,348,783) (28,245,768) - (405,594,551) Total Accumulated Depreciation (560,453,331) (46,049,470) 8,120,485 (598,382,316) Total Capital Assets, Being Depreciated, Net 497,875,859 (9,029,459) (239,182) 488,607,218 Governmental Activities Capital Assets, Net $ 559,612,170 $ (4,472,894) $ (3,997,602) $ 551,141,674 The following is a summary of governmental activities depreciation and amortization expense by function. As used in this section, the term depreciation includes amortization of intangible assets: Depreciation Governmental Activities: General Government $ 4,519,750 Public Safety 10,551,940 Physical Environment 962,503 Transportation 25,305,573 Economic Environment 1,004,939 Human Services 161,901 Culture/Recreation 2,079,519 Court Related 1,384,491 Capital Assets held by the government's Internal Service Fund and charged to individual functions based on usage 78,854 Total Depreciation Expense - Governmental Activities $ 46,049,470 60

79 NOTES TO FINANCIAL STATEMENTS September 30, 2013 The Following shows the changes in capital assets of business type activities: Primary Government Beginning Ending Balance Balance Business-type Activities 10/1/2012 Increases Decreases 9/30/2013 Capital Assets, Not Being Depreciated: Land $ 5,792,969 $ 300 $ - $ 5,793,269 Total Capital Assets, Not Being Depreciated 5,792, ,793,269 Capital Assets, Being Depreciated: Buildings and Improvement 37,539, ,539,483 Equipment 18,938,694 3,800,587 (1,715,445) 21,023,836 Intangible Computer Software 186,255 5, ,255 Infrastructure 40,633,948 3,467,974-44,101,922 Total Capital Assets Being Depreciated 97,298,380 7,273,561 (1,715,445) 102,856,496 Less Accumulated Depreciation For: Buildings and Improvements (23,346,607) (1,083,604) - (24,430,211) Equipment (13,681,859) (1,744,716) 1,573,306 (13,853,269) Intangible Computer Software (23,845) (43,757) - (67,602) Infrastructure (16,109,249) (1,687,923) - (17,797,172) Total Accumulated Depreciation (53,161,560) (4,560,000) 1,573,306 (56,148,254) Total Capital Assets, Being Depreciated, Net 44,136,820 2,713,561 (142,139) 46,708,242 Total Business-Type Activities Capital Assets, Net $ 49,929,789 $ 2,713,861 $ (142,139) $ 52,501,511 The following is a summary of business-type activities depreciation expense by program: Depreciation Business-type activities: Solid Waste Fund $ 2,805,102 Inspections Fund 9,539 Emergency Medical Service Fund 870,823 Bay Center Fund 874,536 Total Depreciation Expense - Business-type Activities $ 4,560,000 61

80 NOTES TO FINANCIAL STATEMENTS September 30, 2013 B. Summaries of Capital Assets The following summarizes capital assets found on the statement of bet position for governmental activities and business-type activities: Primary Government Governmental Business-Type Activities Activities Total Capital Assets, Not Being Depreciated: Land $ 38,479,778 $ 5,793,269 $ 44,273,047 Construction In Progress 24,054,678-24,054,678 Total Capital Assets, Not Being Depreciated: 62,534,456 5,793,269 68,327,725 Capital Assets, Being Depreciated and Amortized, Net: Buildings 233,723,023 37,539, ,262,506 Equipment 122,664,060 21,023, ,687,896 Intangible Computer Software 5,101, ,255 5,292,518 Infrastructure 725,501,188 44,101, ,603,110 Capital Assets, Being Depreciated: 1,086,989, ,856,496 1,189,846,030 Less: Accumulated Depreciation (598,382,316) (56,148,254) (654,530,570) Total Capital Assets, Being Depreciated, Net: 488,607,218 46,708, ,315,460 Total Capital Assets, Net $ 551,141,674 $ 52,501,511 $ 603,643,185 C. Construction and Other Contractual Commitments The following is a summary of major construction and other contractual commitments outstanding as of September 30, 2013: Remaining Projects Spent-to-Date Commitment Governmental Activities: Building Construction $ 5,286,872 $ 2,528,516 Transit 34,395 15,083 Environmental Projects 197,735 30,865 NRDA Projects 122,071 19,663 Parks Projects 1,405,125 1,061,754 Road & Bridge Projects 24,154,548 19,390,712 Tower Site Project - 95,038 Total $ 31,200,746 $ 23,141,631 Business Type Activities Solid Waste Landfill projects $ 561,137 $ 538,261 Total $ 561,137 $ 538,261 62

81 NOTES TO FINANCIAL STATEMENTS September 30, 2013 D. Discretely Presented Component Units Capital assets activity for the Santa Rosa Island Authority a discretely presented component unit, for the year ended September 30, 2013, was as follows: Component Unit Beginning Ending Balance Balance Santa Rosa Island Authority 10/1/2012 Increases Decreases 9/30/2013 Capital Assets, Not Being Depreciated: Construction in Progress $ 327,333 $ 37,584 $ (364,917) $ - Repurchased Leases 562,381 - (562,381) - Total Capital Assets Not Being Depreciated: 889,714 37,584 (927,298) - Capital Assets, Being Depreciated: Buildings 3,680,141 - (642) 3,679,499 Improvements other than Buildings 15,711, ,917 (6,782) 16,069,449 Equipment 1,804, ,780 (188,131) 1,804,024 Total Capital Assets Being Depreciated 21,195, ,697 (195,555) 21,552,972 Less Accumulated Depreciation For: Capital Assets (8,914,765) (1,084,373) 194,530 (9,804,608) Capital Assets, Net $ 13,170,779 $ (494,092) $ (928,323) $ 11,748,364 The following is a summary of the component unit business-type activities depreciation expense by program: Depreciation component unit: Santa Rosa Island Authority $ 1,084,373 Total Depreciation Expense - Component Unit $ 1,084,373 63

82 NOTES TO FINANCIAL STATEMENTS September 30, 2013 NOTE 4 INTERFUND RECEIVABLES, PAYABLES, ADVANCES, AND TRANSFERS The composition of interfund balances as of September 30, 2013 is as follows: Receivable From Other Funds Payable to Other Funds Major Funds: General Fund $ 1,157,951 $ 269,544 Major Capital Project Fund: Local Option Sales Tax Fund (LOST) - 111,165 Non-major Funds: Special Revenue Funds 2,050 1,022,261 Internal Service Fund 243, $ 1,403,919 $ 1,403,919 Advances Receivable from Other Funds Advances Payable to Other Funds Major Funds: Major Special Revenue Funds: Disaster Recovery Fund $ - $ 4,632,832 Major Capital Project Fund: Local Option Sales Tax Fund (LOST) 5,342,345 2,439,642 Major Enterprise Funds: Solid Waste Fund - 2,344,286 Non-major Funds: Special Revenue Funds - 709,513 Internal Service Fund 4,783,928 - $ 10,126,273 $ 10,126,273 Interfund receivables and payables resulted primarily from revenues accrued in certain funds that are transferred to other funds. Advances consist primarily of transactions between funds to finance operations, provide services, construction of assets and to service debt. 64

83 NOTES TO FINANCIAL STATEMENTS September 30, 2013 Transfers In Transfers Out Major Funds: General Fund $ 4,953,540 $ 11,289,133 Major Special Revenue Funds: Community Redevelopment Agency Fund 185,000 - Major Enterprise Fund: Solid Waste Fund - 312,043 Emergency Medical Service Fund - 180,971 Non-major Funds: Special Revenue Funds 7,656,292 4,794,175 Debt Service Funds 5,461,214 - Enterprise Funds 1,400,000 - Internal Service Fund - 3,079,724 $ 19,656,046 $ 19,656,046 Transfers to or from other funds are based on budgetary requirements. Transfers are also used to move pledged revenue for debt service from the funds collecting the revenue to the debt service fund as required for bond coverage. NOTE 5 OTHER ASSETS A. Line of Credit Receivable The County entered into an interlocal agreement, as amended, with the Pensacola Economic Development Commission (PEDC) to provide a line of credit to fund the development of the Downtown Technology Park Infrastructure. The majority of the funding source for the line of credit is from Local Option Sales Tax. There is no time limitation on the repayment; however net proceeds from the sale of each Downtown Technology Park lot will be applied to the line of credit balance. At September 30, 2013 the outstanding line of credit balance in the amount of $2,148,930 is recorded as follows: General Fund $ 11,971 Local Option Sales Tax 2,136,959 $ 2,148,930 B. Capital Lease Receivable The County entered into a capital lease agreement with the Pensacola Developmental Center (PDC) for the purpose of leasing property and buildings to be used as an intermediate care facility for the developmentally disabled. The property consists of 7.08 acres of land and buildings for the facility. The capital lease agreement provides for the PDC to acquire ownership of the buildings and property at the conclusion of the lease. Terms of the lease include monthly payments of principal and interest at 5% per annum. The lease expires June 30, The remaining lease payments are a deferred inflow of resources of the General Fund. As of September 30, 2013 this consists of principal in the amount of $2,475,505, and interest in the amount of $1,673,915. In the government-wide financial statements, the interest is reported as a deferred inflow. 65

84 NOTES TO FINANCIAL STATEMENTS September 30, 2013 The future capital lease receivable and minimum lease obligations and the net present value of these minimum lease payments as of September 30, 2013, were as follows: Capital Lease Receivable Balance 10/01/2012 $ 2,532,565 Additions - Principal reductions (57,060) Balance 09/30/2013 $ 2,475,505 Future Lease Payments 2014 $ 182, , , , , ,237,460 Total minimum lease payment 4,149,420 less: amount representing interest (1,673,915) Present value of minimum lease payments $ 2,475,505 C. Leasing Arrangements Substantially all the Santa Rosa Island Authority s revenue is derived from leasing activities. The Authority leases the land on County-owned Santa Rosa Island to residents and businesses under residential and commercial leases that typically run for a period of 99 years. Many of the 99-year leases have options to renew for another 99-year term. Many leases, particularly those for restaurants and concessions, are generally for a shorter period. Lease revenues in future years are estimated to average approximately $3.7 million per year. NOTE 6 - LONG TERM LIABILITIES A. Schedule of Changes in Long Term Liabilities and Deferred Outflow of Resources The County s outstanding long-term debt includes bonds payable, revenue notes payable, claims payable, compensated absences, other post employment benefits, claims and judgments, accrued landfill closure costs, and remediation costs. The following is a schedule of changes in the County s long term liabilities and deferred outflows of resources for the fiscal year ended September 30, 2013: 66

85 NOTES TO FINANCIAL STATEMENTS September 30, 2013 Balance Balance Due Within 10/1/12 Additions Reductions 9/30/13 One Year Governmental Activities: Revenue Bonds Payable $ 56,680,000 $ - $ (9,135,000) $ 47,545,000 $ 765,000 Revenue Notes Payable 48,040,000 8,406,000 (2,786,000) 53,660,000 2,952,000 Less Deferred Amounts: Bond Issuance Premiums 93,622 - (93,622) - - Deferred Charge Debt Refunding (2,964,398) 33, ,529 (2,780,810) - Total Bonds/Notes Payable 101,849,224 8,439,059 (11,864,093) 98,424,190 3,717,000 Claims Payable 7,085,360 4,010,909 (4,549,376) 6,546,893 1,922,800 Compensated Absences 29,253,840 19,521,854 (19,955,313) 28,820,381 2,963,534 Other Post Empl Benefits 7,235,840 1,287,774 (307,225) 8,216,389 - Pollution Remediation Costs 1,675,000 - (575,000) 1,100, ,000 Governmental Activity Long-term Liabilities $ 147,099,264 $ 33,259,596 $ (37,251,007) $ 143,107,853 $ 9,283,334 Business-type Activities: Compensated Absences 1,279, ,436 (730,144) 1,251, ,148 Other Post Empl Benefits 804,073 - (241,516) 562,557 - Landfill Closure Costs 13,060, ,930-13,833, ,301 Business-type Activity Long-term Liabilities $ 15,143,320 $ 1,476,366 $ (971,660) $ 15,648,026 $ 442,449 Compensated absences and other post employment benefits will be liquidated in future periods primarily by the General Fund. B. Bonds and Notes Payable The County has revenue bonds and revenue notes payable outstanding at year end. As of September 30, 2013 there are no business type activity notes or bonds payable. The following is a schedule of bonds and notes outstanding at September 30, 2013: 67

86 NOTES TO FINANCIAL STATEMENTS September 30, 2013 Purpose Amount Amount Interest Final of Issue Issued Outstanding Rates Maturity Governmental Activities: Revenue Bonds: Capital Improvement Refunding Revenue Bond Refunding 19,345,000 18,010, % 10/1/2031 Series 2011 Sales Tax Refunding Revenue Bond Refunding 29,535,000 29,535, % 10/1/2031 Series 2011 Total Revenue Bonds 47,545,000 Revenue Notes: Sales Tax Refunding Revenue Note Refunding 48,040,000 46,315, % 10/1/2032 Series 2012 Tourist Development Refunding Revenue Note Refunding 8,406,000 7,345, % 10/1/2019 Series ,660,000 Total Bonds & Notes Payable - Governmental Activities $ 101,205,000 C. Pledged Revenues Escambia County has pledged certain revenues, to repay certain bonds and notes outstanding at September 30, The following table reports the revenues, sometimes net of related operating expenses, pledged for each debt issue, the amount of such revenues received in the current year, the current year principal and interest paid on the debt, the approximate percentage of each revenue which is pledged to meet the debt obligation, the date through which the revenue is pledged under the debt agreement, and the total pledged future revenues for each debt, which is the amount of the remaining principal and interest on the bonds and notes at September 30, 2013: Current Pledged Estimated Year Outstanding Revenue Principal Maturity Revenue Total Principal Percentage & Interest Calandar Governmental Activities Pledged Revenue & Interest Pledged Paid Year Revenue Bonds and Notes: Capital Improvement Refunding Revenue Bond Non-Advalorem revenues $ 1,447,388 $ 23,789, % $ 1,322, Sales Tax Refunding Revenue Bond Half Cent Sales tax 20,617,921 39,274, % 903, Sales Tax Refunding Revenue Note Half Cent Sales tax 20,617,921 61,208, % 3,098, Tourist Development Refunding Revenue Note Tourist Development tax 6,601,334 7,761, % 1,177, Total Revenue Bonds and Notes - Governmental Activities $ 49,284,564 $ 132,034,313 $ 6,502,775 68

87 NOTES TO FINANCIAL STATEMENTS September 30, 2013 D. Compensated Absences Compensated absences are accrued in proprietary funds at year end. The County does not accrue compensated absences in governmental funds. However compensated absences paid in governmental funds are charged to the fund and function in which the employee was related and are reported as a liability on the government-wide statement for government activities. The following is a summary schedule of compensated absences as of September 30, 2013: Balance Balance 10/1/12 Additions (Reductions) 9/30/13 Governmental Activities: Board of County Commissioners $ 7,454,588 $ 3,647,059 $ (3,615,093) $ 7,486,554 Clerk 804,171 82,994 (400,359) 486,806 Property Appraiser 506, ,629 (371,493) 443,473 Supervisor of Elections 192,224 48,678 (101,534) 139,368 Sheriff 18,282,221 14,576,295 (14,242,214) 18,616,302 Tax Collector 691, ,721 (427,452) 669,002 Internal Service Fund - BCC 268, ,515 (126,658) 297,495 Internal Service Fund - Clerk 1,053, ,963 (670,510) 681,381 $ 29,253,840 $ 19,521,854 $ (19,955,313) $ 28,820,381 Business-type Activities: Solid Waste Fund $ 480,661 $ 186,476 $ (173,550) $ 493,587 Ambulance Fund 430, ,876 (185,020) 448,954 Inspection Fund 368, ,084 (371,574) 308,941 $ 1,279,190 $ 702,436 $ (730,144) $ 1,251,482 E. Other Post Employment Benefits (OPEB) Other Post Employment Benefits (OPEB) are accrued in proprietary funds at year end. The County does not accrue OPEB in governmental funds. However these benefits in governmental funds are charged to the fund and function in which the employee was related and are reported as a liability on the government-wide statement of net position. The following is a summary schedule of OPEB as of September 30, 2013: Balance Balance 10/1/12 Additions (Reductions) 9/30/13 Governmental Activities: Governmental Activities - OPEB $ 7,235,840 $ 1,287,774 $ (307,225) $ 8,216,389 $ 7,235,840 $ 1,287,774 $ (307,225) $ 8,216,389 Business-type Activities: Solid Waste Fund - OPEB $ 177,018 $ 31,504 $ (89,921) $ 118,601 Inspections Fund - OPEB 151,376 26,941 (91,142) 87,175 Emergency Medical Fund - OPEB 475,679 84,657 (203,555) 356,781 $ 804,073 $ 143,102 $ (384,618) $ 562,557 69

88 NOTES TO FINANCIAL STATEMENTS September 30, 2013 F. Debt Service Requirements The following schedule shows debt service requirements to maturity for the County s bonds payable and notes payable: Governmental Activities: Fiscal Year Revenue Bonds Payable Revenue Notes Payable Total Principal Interest Principal Interest 2014 $ 765,000 $ 1,463,882 $ 2,952,000 $ 2,441,670 $ 7,622, ,960,000 1,440,091 3,031,000 1,372,099 7,803, ,210,000 1,379,722 3,093,000 1,303,918 7,986, ,275,000 1,311,691 3,175,000 1,227,424 7,989, ,350,000 1,241,659 3,239,000 1,152,209 7,982, ,865,000 5,079,007 12,110,000 4,695,630 34,749, ,980,000 2,972,486 12,465,000 3,035,888 33,453, ,140, ,760 13,595,000 1,081,174 25,446,934 Total $ 47,545,000 $ 15,519,298 $ 53,660,000 $ 16,310,012 $ 133,034,310 The following schedule shows the minimum and maximum future principal installments. The initial principal installment for the Sales Tax Revenue Refunding Bond, Series 2011 is due 10/1/2015. Governmental Activities: Annual Principal Installment Amounts Revenue Bonds: Capital Improvement Refunding Revenue Bond, Series ,000 to 2,205,000 Sales Tax Refunding Revenue Bond, Series ,175,000 to 1,280,000 Revenue Notes: Sales Tax Refunding Revenue Note, Series ,775,000 to 5,225,000 Tourist Development Refunding Revenue Note, Series ,177,000 to 1,270,000 G. Long-Term Debt Bonds and Notes The Sales Tax Refunding Revenue Bond, Series 2011 in the aggregate amount of $29,535,000 was issued on October 21, The bonds have a fixed interest rate of 3.060% and a maturity date of October 1, The proceeds of this bond were used to refund a portion of the Sales Tax Revenue Refunding Bonds Series The Bond is secured by certain pledged revenues consisting primarily of amounts received by the County as proceeds of the Local Government Half-Cent Sales Tax. The Capital Improvement Refunding Revenue Bond, Series 2011 in the aggregate amount of $19,345,000 was issued on December 9, The Bonds have a fixed interest rate of 3.110% and a maturity date of October 1, The proceeds of the 2011 Bond were used to refund the Capital Improvement Revenue Bonds Series The Bond is secured by a covenant to budget and appropriate from available Non-Advalorem revenues. The 2012 Sales Tax Refunding Revenue Note, Series 2012 in the aggregate amount of $48,040,000 was issued on August 1, The Note has a fixed interest rate of 2.820% and a maturity date of October 1, The proceeds of this bond refunded the balance of the Sales Tax Revenue Refunding Bonds Series The Bond is secured by certain pledged revenues consisting primarily of amounts received by the County as proceeds of the local Government Half-Cent Sales Tax. 70

89 NOTES TO FINANCIAL STATEMENTS September 30, 2013 The Tourist Development Refunding Revenue Note Series 2012 in the aggregate amount of $8,406,000 was issued on November 19, The note has a fixed interest rate of 1.599% and a maturity date of October 1, The proceeds of this bond refunded the Tourist Development Revenue Refunding Bond, Series The Bond is secured by certain pledged revenues consisting of amounts received by the County as proceeds of the local Tourist Development Tax. H. Current Year Defeased Debt During the current year, the County issued $8,406,000 of Series 2012 Tourist Development Tax Refunding Revenue Notes with an interest rate of 1.59% to advance refund $8,395,000 of outstanding Series 2002 Tourist Development Bonds with a variable interest rate ranging between 3.5% and 5.0%. The net proceeds of $8,362,000 (after payment of $44,058 in bond counsel fees and issuance costs) plus an additional $119,127, were deposited in an irrevocable trust with an escrow agent to provide for all future debt service payments on the 2002 Series Bonds. As a result, the 2002 Series Bonds are considered to be defeased and the liability for those bonds has been removed from the government-wide statement of net position. The advance refunding resulted in a difference between the reacquisition price and the net carrying amount of the old debt of $86,069. This difference, reported in the accompanying financial statements as a deferred outflow of resources, is being charged to operations through the year 2019 using the effectiveinterest method. The County completed the advance refunding to reduce its total debt service payments over the next six years by $928,050 and to obtain an economic gain (difference between the present values of the old and new debt service payments) of $871,205. I. Outstanding Defeased Debt The County defeases debt through advance refunding. This is done primarily to reduce debt service requirements. In prior years this permitted the Board to defease certain special obligation and other revenue bonds by placing the proceeds of new bonds in irrevocable trusts to provide for all future debt service payments on the old bonds. Accordingly, the trust account asset and liabilities are not included in the County s financial statements. On September 30, 2013, the following bond issues are outstanding: Sales Tax Revenue Refunding Bonds Series 2002: During fiscal year 2012, the County issued the Sales Tax Refunding Revenue Bond, Series 2011 and the Sales Tax Refunding Revenue Notes, Series 2012 to refund the entire outstanding balance. The purpose of this issue was to finance capital improvements contained within the administrative plan of the county; such projects consisted of but were not limited to renovations/expansions to the Sheriff administrative building, jail infirmary, jail annex, road prison, juvenile justice addition, and the MC Blanchard Building. Other construction consisted of the Perdido Key Library, permitting building, and parking garage. These bonds are secured by an irrevocable trust to be used for satisfying the debt service requirements until the final redemption date of October 1, As of September 30, 2013 the scheduled outstanding principal held in the trust account is $72,835,000 Capital Improvement Revenue Bonds Series 2002: During fiscal year 2012 the County issued the Capital Improvement Refunding Revenue Bond, Series 2011 to refund the entire outstanding balance. The purpose of this issue was to finance capital improvements on Santa Rosa Island; such projects consisted of but were not limited to road improvements, water reclamation and reuse system, stormwater management system and burying existing above ground utilities. This bond is secured by an irrevocable trust to be used for satisfying the debt service requirements until the final redemption date of October 1, As of September 30, 2013 the scheduled outstanding principal held in the trust account is $18,095,

90 NOTES TO FINANCIAL STATEMENTS September 30, 2013 Tourist Development Revenue Refunding Bonds Series 2002: During fiscal year 2013 the County issued the Tourist Development Revenue Refunding Note, Series 2012 to refund the entire outstanding balance. The purpose of this issue was to finance Santa Rosa Island beach nourishment and capital improvements to the Pensacola Bay Center. This bond, which was defeased in the current fiscal year, is secured by an irrevocable trust to be used for satisfying the debt service requirements until the final redemption date of October 1, As of September 30, 2013 the scheduled outstanding principal held in the trust account is $7,330,000. J. Capital Leases The Santa Rosa Island Authority has entered into several capital leases for office equipment with terms of thirty-six to forty-eight months. The acquired assets have been recorded at book value in the amount of $249,388. Amortization on equipment under capital lease is included in depreciation expense in the amount of $107,859. The future minimum lease obligations and the net present value of these minimum lease payments as of September 30, 2013, were as follows: Santa Rosa Island Authority Capital Lease Balance 10/01/2012 $ 180,502 Additions - Principal reductions (64,207) Balance 09/30/2013 $ 116,295 Future Lease Payments , ,250 Total minimum lease payment 116,295 less: amount representing interest (4,183) Present value of minimum lease payments $ 112,112 K. Conduit Debt Obligations Conduit Debt Obligations have been established in the County s name by private-sector entities for the acquisition and construction of industrial and commercial facilities deemed to be in the public interest. The bonds are secured by the property financed and are payable solely from payments received on the underlying mortgage loans and leases. Neither the County, nor the State, nor any political subdivision thereof, is obligated in any manner for repayment of the bonds. Accordingly, the bonds are not reported as liabilities in the accompanying financial statements. As of September 30, 2013, the outstanding conduit debt of Escambia County is $3,374,056,154. L. Landfill Closure and Postclosure Care Liability State and federal laws and regulations require the County to place a final cover on its landfill when closed and to perform certain maintenance and monitoring functions at the landfill site for thirty years after closure. The cost of closure and postclosure care is allocated based on landfill capacity used to date and the type of waste being collected. The Beulah, Klondike, Mobile Highway, and Camp Five landfills are closed. Perdido Landfill is the only currently open landfill. As of September 30, 2013, Perdido Landfill s 72

91 NOTES TO FINANCIAL STATEMENTS September 30, 2013 Class I capacity is at 80%, and the Class III capacity is at 76%, leaving an estimated life of six (6) years remaining. The accrued cost for closure care and postclosure care as of September 30, 2013 is $13,833,987. The remaining closure and postclosure costs to be recognized, based upon the current engineering estimates are $2,827,412, and will be recognized as the remaining estimated capacity is used. All amounts recognized are based on an estimate by the County s engineers of the cost to perform all closure and postclosure care as of September 30, Actual costs may be different due to inflation, deflation, changes in technology, or changes in laws and regulations. The County is required by state and federal laws and regulations to establish escrow accounts for closure and post closure costs of the landfill. The County has complied with these requirements by depositing required amounts into a landfill management escrow account. Any balance in the account is reported as a restricted asset on the statement of net position of the Solid Waste Enterprise Fund. The restricted escrow balance as of September 30, 2013 is $6,479,966. Closure and Postclosure Care Liability: Current $ 317,301 $ 462,765 Long-term 13,516,686 12,597,292 Total Liability $ 13,833,987 $ 13,060,057 M. Pollution Remediation Obligation The County has identified potential pollution sites within the County which may require remediation. The county tracks, but does not report a liability for sites which are part of the State of Florida Department of Environmental Protection (FDEP) cleanup program funded by the State. Information on these locations and on scoring of projects is located on the FDEP website at The former Escambia County Mosquito Control Facility pollution remediation expenditures were approximately $176,000 during fiscal year Revised estimates for projected costs through 2014 are $450,000. The County assumed ownership of the Saufley Construction and Demolition (C&D) Debris Facility, and intends to convert the facility to a beneficial use. In 2010 the County entered into an agreement with the FDEP to develop and construct a closure system for the site as well as address the post-closure care requirements. Remediation consists of annual monitoring at approximately $30,000 per year for the next 5 years for a projected cost of $150,000. Another pollution remediation project within the County consists of soil remediation for an estimated cost of $500,000. Pollution remediation obligations are an estimate and subject to changes resulting from price increases or reductions, technology or changes in applicable laws or regulations. The government does not expect to recover any amounts for remediation cost from any other party. The total pollution remediation obligation reported at September 30, 2013 in the governmental activities statement of net position is estimated to be approximately $1,100,000. NOTE 7 - RISK MANAGEMENT PROGRAM The County maintains a risk management program whereby the County is responsible for specific workers compensation, general property and casualty, and auto liability claims. The Santa Rosa Island Authority and Escambia County Law Library Board are also covered through the County s risk management program. The following are the types of risks and coverage: 73

92 NOTES TO FINANCIAL STATEMENTS September 30, 2013 Workers Compensation The County is covered for workers compensation claims through a policy with the Florida Municipal Insurance Trust. Coverage limits under the policy include statutory limits, as well as $1,000,000 bodily injury for each accident and $1,000,000 bodily injury by disease for each employee with an aggregate $1,000,000 policy limit. Casualty and Property Casualty limits are self-insured for $200,000 per claim with a $300,000 aggregate limit. Property limits are $50,000 - $250,000 self insured retentions per occurrence with excess limits of $45 million including wind. The County currently reports all of its risk management activities, including claims liabilities, in the Internal Service Fund. Liabilities are reported when it is probable that a loss has occurred and the amount of the loss can be reasonably estimated. Liabilities on claims prior to June 9, 2008 include an amount for claims that have been incurred but not reported (IBNR). The claims liabilities totaling $6,546,893 reported in the Internal Service Fund at September 30, 2013 are actuarially determined based on historical and current information regarding the Fund. There were no settlements in excess of the insurance coverage in any of the three prior fiscal years. Changes in the estimated liability for self-insured losses for the past two years are as follows: Unpaid claims, beginning $ 7,085,360 $ 8,468,837 Claims incurred and changes in estimates 4,010,909 2,415,321 Less: claims paid (4,549,376) (3,798,798) Unpaid claims, ending $ 6,546,893 $ 7,085,360 Estimated claims due within one year (1,922,800) (3,178,711) Estimated claims due longer than one year $ 4,624,093 $ 3,906,649 NOTE 8 - RETIREMENT SYSTEM The Florida Retirement System (FRS) is a multiple employer, cost sharing, contributory retirement system administered by the State of Florida (State). The FRS was established in 1970 by Chapter 121, Florida Statutes. Rules governing the operation and administration of the system may be found in Chapter 60S of the Florida Administrative Code. In 2002 the FRS became one system with two primary plans, a defined benefit plan (FRS Pension Plan) and a defined contribution plan alternative to the defined benefit plan known as the Public Employee Optional Retirement Program (FRS Investment Plan). The effective date of the FRS Investment Plan was July 1, The FRS provides retirement, disability and death benefits to members. The state issues a publicly available financial report that included financial statements and required supplementary information for FRS. That report may be obtained by writing to: State of Florida Division of Retirement Department of Management Services P.O. Box 9000 Tallahassee, Fl or by contacting Research and Education by at rep@dms.myflorida.com or by phone at Employer contributions include 1.11% for a post retirement health insurance subsidy,.03% administrative and educational fee and any applicable unfunded actuarial liability UAL rates. 74

93 NOTES TO FINANCIAL STATEMENTS September 30, 2013 The FRS Pension Plan provides retirement and disability benefits, death benefits and survivor s benefits. Benefits are established by State Statutes. Employees hired before July 1, 2011 are vested after six (6) years of creditable service. For those hired on or after July 1, 2011, vesting of benefits occurs after the completion of eight (8) years of creditable service. Members are eligible for normal retirement when they have met the minimum requirements listed below. Early retirement may be taken any time after vesting with a 5% reduction of benefits for each year prior to the normal retirement age. Retirement benefits are based upon age, average compensation and years-of-service credit. Average compensation is computed as the average of an individual s five highest years of earnings for employees hired before July 1, 2011 or eight (8) highest years of earnings for employees hired on or after July 1, Members are also eligible for in-line-of-duty or regular disability benefits if permanently disabled and unable to work. Normal Retirement Requirements Six years of service and age 62, or the age after 62 when the member becomes vested, or thirty years of service. Regular, Senior Management and Elected Officer's Class Eight years of service for members first enrolled after July 1, 2011 and age 65, or the age after 65 when the member becomes vested, or thirty years of service. Special Risk Class Six years of special risk service and age 55, or the age after 55 when the member becomes vested, or twenty five years of service. Eight years of special risk service for members first enrolled after July 1, 2011, age 60, or the age after 60 when the member becomes vested, or thirty years of service. Special Risk Administrative Support Class Special risk requirements apply to service in this class if member has six years (eight years for members first enrolled after July 1, 2011) actual special risk service; otherwise regular member requirements apply. Funding Policy The FRS has six classes of membership applicable to the County. The County is required to contribute at an actuarially determined rate. These rates are a percent of annual covered payroll. Descriptions and contribution rates in effect during the period ended September 30, 2013 and two preceding years are as follows: Regular Class - Members not qualifying for other classes: 6.95% 5.18% 4.91% Senior Management: 18.31% 6.30% 6.29% Elected Officials Class: 33.03% 10.23% 11.14% Deferred Retirement Option Program (DROP): 12.84% 5.44% 4.42% Special Risk Class - Members employed as law 19.06% 14.90% 14.10% enformement officers, firefighters, or correctional officers meet the criteria to qualify for this class Special Risk Administrative Support: 35.96% 5.91% 9.04% 75

94 NOTES TO FINANCIAL STATEMENTS September 30, 2013 For the years ending September 30, 2013, 2012, 2011, total contributions were $10,191,571, $8,688,555, $13,684,080 and respectively, equal to 100% of the required contributions for each year. Effective July 1, 2011 members are required to contribute 3% of their salary as retirement contributions. Members participating in DROP are not required to make 3% contributions. The Florida Legislature has the authority for establishing or amending retirement legislation and related bills of significance to members of the Florida Retirement System (FRS). Passed bills are presented to the Governor and approved before they may be enacted into law. NOTE 9 - POST EMPLOYMENT BENEFITS OTHER THAN PENSIONS (OPEB) Other post employment benefits are provided by the County in the form of life and health insurance for pre-medicare eligible retirees at the same rate as active participants. In health insurance plans where a government s retirees and current employees are insured together as a group, the premiums paid by the retirees may be lower than they would have been if the retirees were insured separately. This is called an implicit rate subsidy. Under this single-employer plan, benefit provisions are essentially the same for the Board of County Commissioners and all of the other Constitutional Officers, except for the Sheriff, who maintains a separate health insurance contract and therefore has different costs associated with the premium payments on behalf of the Sheriff s employees. The County may amend the OPEB plan at its discretion. A stand-alone financial report is not prepared for the OPEB plan, The County engaged an actuarial firm to determine the estimated obligation associated with the plan. As of the valuation date of October 1, 2011, there were no significant changes in the benefits of the plan. A roll forward calculation was prepared using a payroll growth factor of 3%. At October 1, 2011, the date of the latest actuarial valuation, plan participation consisted of: OPEB plan participants 2,195 Retirees receiving benefits 306 The County has the authority to establish and amend the OPEB funding policy, and is not required by law or other contractual agreement to provide funding for the implicit rate subsidy other than the pay-as-yougo amount necessary to provide current benefits for participants in its health insurance plan. During 2013, the County made $868,195 in contributions toward the implicit rate subsidy. The County s annual OPEB cost (expense) is calculated based on the Annual Required Contribution (ARC) of the employer, an amount actuarially determined in accordance with GASB Statement No. 45. The ARC represents a level of funding that, if paid on an ongoing basis, is projected to cover normal cost each year and to amortize any unfunded actuarial liabilities (or funding excess) over a period not to exceed thirty years. The following table shows the components of the County s OPEB cost for the year, the amount actually contributed to the plan, and changes in the County s net OPEB obligation: 76

95 NOTES TO FINANCIAL STATEMENTS September 30, 2013 FY13 Valuation as of 10/01/11 Normal Cost (service cost for one year) $ 938,782 Amortization of Unfunded Actuarial Accrued Liability (UAAL) 654,074 Interest on Normal Cost and Amortization - Annual Required Contribution (ARC) 1,592,856 Annual Required Contribution (ARC) 1,592,856 Interest on Net OPEB Obligation 321,597 Adjustment to ARC (307,225) Annual OPEB Cost (Expense) 1,607,228 Employer Contributions Made 868,195 Increase (Decrease) in Net OPEB Obligation 739,033 Net OPEB Obligation at beginning of year 8,039,913 Net OPEB Obligation at end of Year $ 8,778,946 The County s annual OPEB cost, the percentage of annual expected employer contributions toward OPEB cost and the net OPEB obligation for 2013 with two applicable preceding years was as follows: Fiscal Year Ending Annual OPEB Cost Employer Contribution Percentage of Annual OPEB Cost Contributed Net OPEB Obligation 9/30/2011 $ 1,630,612 $ 530, % $ 7,032,115 9/30/2012 $ 1,546,462 $ 538, % $ 8,039,913 9/30/2013 $ 1,607,228 $ 868, % $ 8,778,946 Funding Policy and Status - As of October 1, 2011, the roll forward valuation date, the plan was 0% funded. The actuarial accrued liability (AAL) for benefits was $16,618,209 and the actuarial value of assets was $0, resulting in an unfunded actuarial accrued liability (UAAL) of $16,618,209. The covered payroll (annual payroll of active employees covered by the OPEB Plan) was approximately $122 million, and the ratio of the UAAL to the covered payroll was 13.42%. Actuarial Methods and Assumptions: Actuarial valuations of an ongoing plan involve estimates of the value of reported amounts and assumptions about the probability of occurrence of events far into the future. Examples include assumptions about future employment, mortality, and the healthcare cost trend. Amounts determined regarding the funded status of the plan and the annual required contributions of the employer are subject to continual revision as actual results are compared with past expectations and new estimates are made about the future. The schedule of funding progress, presented as required supplementary information following the notes to the financial statements, presents multiyear trend information about whether the actuarial value of plan assets is increasing or decreasing over time relative to the actuarial accrued liabilities for benefits. Calculations for financial reporting purposes are based on the plan as understood by the employer and the plan members and include the types of benefits provided at the time of each valuation and the historical pattern of sharing of benefit costs between the employer and plan members to that point. The actuarial methods and assumptions used include techniques that are designed to reduce the effects of short-term volatility in actuarial accrued liabilities and the actuarial value of assets, consistent with the 77

96 NOTES TO FINANCIAL STATEMENTS September 30, 2013 long-term perspective of the calculations. The OPEB-specific actuarial assumptions used in the actuarial valuation described below are consistent with those used by the Florida Retirement System actuary and adopted by the Florida Retirement System. The actuarial methods and assumptions are: Actuarial cost method Amortization method Amortization period (closed) Remaining amortization period Projected Unit Credit Cost Level percent of pay, open 30 years 25 years Asset valuation method Unfunded - Market value if any assets Actuarial assumptions: Investment rate of return* 4% compounded annually Projected salary increases* 3.0% Payroll growth assumptions 3.0% Medical cost trend rate* Pre-Medicare 9.5% Ultimate trend rate* Pre-Medicare 5.0% Year of ultimate trend rate 2017 *Includes general inflation at 3.0% NOTE 10 NET POSITION RESTRICTED FOR OTHER PURPOSES Net position restricted for other purposes in the governmental activities at September 30, 2013 are as follows: Court-Related $ 4,086,386 Tourism 5,754,388 Health 21,762 Resource Conservation 146,720 Records Modernization $ 2,162,599 12,171,855 NOTE 11 COMMITMENTS AND CONTINGENCY A. Litigation The County is contingently liable with respect to lawsuits and other claims incidental to the ordinary course of operations. Claims covered by the risk management self insurance program are reviewed and losses are accrued as required in the judgment of management. The County is a defendant in various lawsuits. In the opinion of management, based on the advice of legal counsel, the ultimate disposition of lawsuits and claims will not have a material adverse effect on the financial position of the County. Property taxes have been assessed on certain improvements made on Pensacola Beach for tax years and on land value and improvements for tax years 2011 and The tax assessment is being contested in various lawsuits as such, the county has recorded a liability of approximately $4.46 million for ad valorem tax revenue received and subject to this litigation. Additionally litigation of improvement assessments is estimated at $4.24 million. 78

97 NOTES TO FINANCIAL STATEMENTS September 30, 2013 Pending the outcome of the court decision on the taxability of the land value and improvements, the County s approximate total share of net ad valorem tax to be refunded would be $8.7 million. B. Grants Amounts received or receivable from grantor agencies are subject to audit and adjustment by grantor agencies. If expenditures are disallowed as a result of these audits, the claim for reimbursement to the grantor agency would become a liability of the County. In the opinion of Management, any such adjustments would not be significant, and therefore not have a material adverse effect on the financial position of the County. C. Deficit Fund Equity At September 30, 2013 the, the Disaster Recovery Special Revenue Fund, a major fund, has a deficit fund balance of $3,980,159. The deficit is due to expenditures due to natural disaster, and delayed grant funding. D. Operating Leases Operating leases for the Tax Collector consist of a lease for office space with noncancellable terms in excess of one year. Rent expense for the year ended September 30, 2013 was approximately $389,143. Future minimum payments, as of September 30, 2013 for the Tax Collector, are as follows: Tax Collector Year Amount , , , , ,500 Thereafter 658,125 $ 1,918,340 NOTE 12 SUBSQUENT EVENTS The County has evaluated events and transactions that occurred between September 30, 2013 and February 14, 2014, which is the date that the financial statements were available to be issued, for possible recognition or disclosure in the financial statements. The following is disclosed as a subsequent event: A. Capital Improvement Revenue Note The County issued on November 7, 2013, a Capital Improvement Revenue Note in the amount of $12 million. The 2013 Note is being sold and registered in the name of STI Institutional & Government Inc at the price of par, for the purpose of financing the acquisition and construction of certain transportation and drainage related capital improvements of the County, in accordance with plans and specifications on file or other capital projects that may be approved by the County. 79

98 REQUIRED SUPPLEMENTARY INFORMATION Other Post Employment Benefits: Schedule of Funding Progress 80

99 REQUIRED SUPPLEMENTARY INFORMATION SCHEDULE OF FUNDING PROGRESS FOR OTHER POSTEMPLOYMENT BENEFITS Actuarial Valuation Date 10/1/ /1/ /1/2011 Accrued Actuarial Value of Assets Liability (AAL) Projected Unit Credit Unfunded AAL (UAAL) Funded Ratio Covered payroll UAAL as a Percentage of Covered Payroll (a) (b) (b-a) (a/b) (c) ([b-a]/c) $0 $ 17,190,292 $ 17,190, % 122,240, % $0 $ 17,185,044 $ 17,185, % 125,232, % $0 $ 16,618,209 $ 16,618, % 121,892, % 81

100 OTHER SUPPLEMENTARY INFORMATION Budgetary Comparison Schedule: Local Option Sales Tax Fund (LOST) Capital Projects Fund General Fund: Combining Balance Sheet and Combining Schedules for General Fund Non- Major Governmental Funds: Combining Financial Statements for All Nonmajor Governmental Funds and Individual Budgetary Comparison Schedules for all Budgeted Nonmajor Governmental Funds Non- Major Proprietary Funds: Combining Statements and Combining Schedules for All Nonmajor Proprietary Funds - Enterprise Funds Combining Statements and Combining Schedules for All Business-Type Funds - Internal Service Funds 82

101 BUDGETARY COMPARISON SCHEDULE LOCAL OPTION SALES TAX FUND For the Year Ended September 30, 2013 Variance with Final Budget Actual Amounts Final Budget - Over (Under) REVENUES Taxes $ 32,272,383 $ 35,867,309 $ 3,594,926 Intergovernmental Revenues 6,024, ,969 (5,169,652) Charges for Services 142, ,678 71,178 Investment Income - 118, ,535 Miscellaneous Revenues 1,718,293 1,563,236 (155,057) Total Revenues 40,157,796 38,617,727 (1,540,069) EXPENDITURES Current: General Government 4,527,320 69,039 4,458,281 Transportation 894, ,922 56,385 Culture/Recreation 1,229, , ,179 Debt Service Interest and Fiscal Charges 748,659 5, ,431 Capital Outlay 96,484,362 31,898,828 64,585,534 Total Expenditures 103,883,891 33,779,081 70,104,810 Excess (Deficiency) of Revenues Over (Under) Expenditures (63,726,095) 4,838,646 68,564,741 Net Change in Fund Balance (63,726,095) 4,838,646 68,564,741 Fund Balance - Beginning 63,726,095 62,493,675 (1,232,420) Fund Balance - Ending $ - $ 67,332,321 $ 67,332,321 83

102 GOVERNMENTAL FUNDS GENERAL FUND The General Fund is the government s primary operating fund. It is used to account for and report all financial resources not accounted for and reported in another fund. The General Fund includes the Board of County Commissioners, Clerk of Circuit Court and Comptroller, Property Appraiser, Sheriff, Supervisor of Elections, and Tax Collector: Board of County Commissioners This fund is the primary operating fund of Escambia County. It is used to account for all financial resources of the general government except those required to be accounted for in other funds. Clerk of the Circuit Court and Comptroller This fund reflects the activities of the Office of the Clerk of Circuit Court. Services provided are in accordance with provisions of the Florida Statutes related primarily to the county and circuit court systems, recording operations, and various other services. Property Appraiser This fund reflects the operations of the Office of the Property Appraiser who provides independent appraisals of tangible and personal property for all taxing authorities within the County. Sheriff This fund reflects the operations of the Office of the Sheriff. Services provided are for all the law enforcement activities within the County. Supervisor of Elections This fund reflects the operations of the Office of the Supervisor of Elections in the performance of its duties in accordance with Florida Statutes. Tax Collector This fund reflects the operations of the Office of the Tax Collector who collects and remits ad valorem taxes, licenses, and other revenues, to the related taxing authorities. 84

103 Board Of County Commissioners Clerk of the Circuit Court and Comptroller Property Appraiser ASSETS Cash and Cash Equivalents $ 11,836,139 $ 2,296,130 $ 200,054 Investments 19,729, Accounts Receivable 1,081,207 1,335 - Accrued Interest Receivable 303, Due from Other Funds 5,171,320 1,265 - Due from Other Governments 3,573,817 5,283 - Inventories 246, Other Assets 4,161,391-66,327 Total Assets $ 46,103,028 $ 2,304,013 $ 266,381 LIABILITIES Accounts Payable $ 1,297,604 $ 49,568 $ 18,002 Contracts Payable 4,127 39,382 - Accrued Liabilities 1,037, , ,034 Due to Other Funds 23, , ,345 Due to Other Governments 2,604,321 1,392,278 - Deposits 151, Unearned Revenue 201,746 2,003 - Other Current Liabilities 4,463,110 49,913 - Total Liabilities 9,783,404 2,251, ,381 DEFERRED INFLOWS OF RESOURCES Unavailable Revenue - Capital Lease 4,149, Total deferred inflow of resources 4,149, FUND BALANCES Nonspendable: Inventories 246, Long Term Other Assets 4,161, Restricted for: Court Related Functions - 52,435 - Assigned to: Subsequent Year's Budget 8,401, Unassigned 19,361, Total Fund Balances 32,170,204 52,435 - Total liabilities, deferred inflow of resources, and fund balances ESCAMBIA COUNTY, FLORIDA COMBINING BALANCE SHEET GENERAL FUND BY CATEGORY September 30, 2013 $ 46,103,028 $ 2,304,013 $ 266,381 85

104 Sheriff Supervisor of Elections Tax Collector Eliminations Total General Funds $ 6,978,244 $ - $ 667,361 $ - $ 21,977, ,729, ,078-1,089, , , (4,171,319) 1,157,951 42,662 52, ,674, , , ,227,718 $ 7,575,367 $ 52,526 $ 674,439 $ (4,171,319) $ 52,804,435 $ 409,830 $ 32,255 $ 131,950 $ - $ 1,939, ,509 3,337,721 19, ,818-4,829,649 3,423, ,494 (4,171,319) 269,544 6, ,003, , , , ,513,023 7,177,891 52, ,439 (4,171,319) 16,034, ,149, ,149, , , ,161, , ,401, ,361, , ,620,115 $ 7,575,367 $ 52,526 $ 674,439 $ (4,171,319) $ 52,804,435 86

105 COMBINING SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - GENERAL FUND BY CATEGORY For the Year Ended September 30, 2013 Board Of County Commissioners Clerk of The Circuit Court Property Appraiser REVENUES Taxes $ 96,666,801 $ - $ - Franchise Fees 11,707, Special Assessments 800, Intergovernmental Revenues 28,812,367 5,288,482 - Charges for Services 1,737,692 1,806,527 14,532 Judgments and Fines 16,754 1,296,671 - Investment Income 158,465 30,564 - Miscellaneous Revenues 6,590,286 58,854 2,148 Total Revenues 146,490,739 8,481,098 16,680 EXPENDITURES Current: General Government 38,789,304 3,575,892 5,095,726 Public Safety 3,702, Physical Environment 1,134, Human Services 1,952, Culture/Recreation 1,238, Court-Related - 6,615,540 - Total Expenditures 46,816,516 10,191,432 5,095,726 Excess (Deficiency) of Revenues Over (Under) Expenditures 99,674,223 (1,710,334) (5,079,046) OTHER FINANCING SOURCES (USES) Transfers In 7,535,959 2,634,334 5,213,068 Transfers (Out) (101,420,746) (908,735) (134,022) Total Other Financing Sources and (Uses) (93,884,787) 1,725,599 5,079,046 Net Change in Fund Balances 5,789,436 15,265 - Fund Balances - Beginning 26,380,768 37,170 - Fund Balances - Ending $ 32,170,204 $ 52,435 $ - 87

106 Sheriff Supervisor of Elections Tax Collector Eliminations Total General Fund $ - $ - $ - $ - $ 96,666, ,707, , ,100, ,820,586-6,379, ,313, , ,823 (1,803,171) 4,930, ,903,409 (1,803,171) 156,089,187-2,011,332 6,901,570 (1,803,171) 54,570,653 74,754, ,457, ,134, ,952, ,238, ,615,540 74,754,898 2,011,332 6,901,570 (1,803,171) 143,968,303 (74,754,898) (2,010,900) (3,998,161) - 12,120,884 78,000,607 2,010,900 4,280,153 (94,721,481) 4,953,540 (3,265,119) - (281,992) 94,721,481 (11,289,133) 74,735,488 2,010,900 3,998,161 - (6,335,593) (19,410) ,785, , ,834,824 $ 397,476 $ - $ - $ - $ 32,620,115 88

107 COMBINING SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL GENERAL FUND For the Year Ended September 30, 2013 Board Of County Commissioners Original Budget Final Budget Actual Amounts REVENUES Taxes $ 98,613,244 $ 98,613,244 $ 96,666,801 Franchise Fees 10,953,807 10,953,807 11,707,539 Special Assessments 864, , ,835 Intergovernmental Revenues 24,690,124 24,895,957 28,812,367 Charges for Services 1,656,800 1,656,800 1,737,692 Judgments and Fines 12,825 12,825 16,754 Investment Income ,465 Miscellaneous Revenues 3,359,514 5,831,522 6,590,286 Total Revenues 140,150, ,828, ,490,739 EXPENDITURES Current: General Government 60,214,183 62,757,918 38,789,304 Public Safety 4,021,472 4,046,622 3,702,534 Physical Environment 1,149,386 1,238,754 1,134,164 Human Services 2,588,377 1,991,145 1,952,088 Culture/Recreation 1,259,737 1,264,437 1,238,426 Court-Related Total Expenditures 69,233,155 71,298,876 46,816,516 Excess (Deficiency) of Revenues Over (Under) Expenditures 70,917,659 71,529,779 99,674,223 OTHER FINANCING SOURCES (USES) Transfers In 1,884,712 2,951,833 7,535,959 Transfers (Out) (105,242,257) (103,013,629) (101,420,746) Total Other Financing Sources and (Uses) (103,357,545) (100,061,796) (93,884,787) Net Change in Fund Balances (32,439,886) (28,532,018) 5,789,436 Fund Balances - Beginning 32,439,886 28,532,018 26,380,768 Fund Balances - Ending $ - $ - $ 32,170,204 89

108 Clerk of The Circuit Court Property Appraiser Original Actual Original Actual Budget Final Budget Amounts Budget Final Budget Amounts $ - $ - $ - $ - $ - $ ,881,994 5,254,890 5,288, ,368,078 1,368,078 1,806,527 12,556 12,556 14,532-1,618,399 1,296, ,900 27,900 30, ,645 58, ,148 8,252,972 8,325,912 8,481,098 12,556 12,556 16,680 3,582,863 4,090,312 3,575,892 5,225,499 5,225,624 5,095, ,796,994 6,869,934 6,615, ,379,857 10,960,246 10,191,432 5,225,499 5,225,624 5,095,726 (2,126,885) (2,634,334) (1,710,334) (5,212,943) (5,213,068) (5,079,046) 2,126,885 2,634,334 2,634,334 5,212,943 5,213,068 5,213, (908,735) - - (134,022) 2,126,885 2,634,334 1,725,599 5,212,943 5,213,068 5,079, , , $ - $ - $ 52,435 $ - $ - $ - 90

109 COMBINING SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL -Continued GENERAL FUND For the Year Ended September 30, 2013 Sheriff Original Budget Final Budget Actual Amounts REVENUES Taxes $ - $ - $ - Franchise Fees Special Assessments Intergovernmental Revenues Charges for Services Judgments and Fines Investment Income Miscellaneous Revenues Total Revenues EXPENDITURES Current: General Government Public Safety 75,839,521 76,500,607 74,754,898 Physical Environment - - Human Services - - Culture/Recreation - - Court-Related - - Total Expenditures 75,839,521 76,500,607 74,754,898 Excess (Deficiency) of Revenues Over (Under) Expenditures (75,839,521) (76,500,607) (74,754,898) OTHER FINANCING SOURCES (USES) Transfers In 75,839,521 76,500,607 78,000,607 Transfers (Out) - - (3,265,119) Total Other Financing Sources and (Uses) 75,839,521 76,500,607 74,735,488 Net Change in Fund Balances - - (19,410) Fund Balances - Beginning ,886 Fund Balances - Ending $ - $ - $ 397,476 91

110 Supervisor of Elections Tax Collector Original Final Actual Original Actual Budget Budget Amounts Budget Final Budget Amounts $ - $ - $ - $ - $ - $ ,973,455 2,973,455 2,820, ,800 81,800 82, ,055,255 3,055,255 2,903,409 1,924,496 2,156,274 2,011,332 6,911,401 7,020,644 6,901, ,924,496 2,156,274 2,011,332 6,911,401 7,020,644 6,901,570 (1,924,496) (2,156,274) (2,010,900) (3,856,146) (3,965,389) (3,998,161) 1,924,496 2,156,274 2,010,900 4,280,153 4,280,153 4,280, (424,007) (314,764) (281,992) 1,924,496 2,156,274 2,010,900 3,856,146 3,965,389 3,998, $ - $ - $ - $ - $ - $ - 92

111 COMBINING SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL - Continued GENERAL FUND For the Year Ended September 30, 2013 Eliminations Original Budget Final Budget Actual Amounts REVENUES Taxes $ - $ - $ - Franchise Fees Special Assessments Intergovernmental Revenues Charges for Services Judgments and Fines Investment Income Miscellaneous Revenues (1,803,171) (1,803,171) (1,803,171) Total Revenues (1,803,171) (1,803,171) (1,803,171) EXPENDITURES Current: General Government (1,803,171) (1,803,171) (1,803,171) Public Safety Physical Environment Human Services Culture/Recreation Court-Related Total Expenditures (1,803,171) (1,803,171) (1,803,171) Excess (Deficiency) of Revenues Over (Under) Expenditures OTHER FINANCING SOURCES (USES) Transfers In (89,383,998) (90,859,672) (94,721,481) Transfers (Out) 89,383,998 90,859,672 94,721,481 Total Other Financing Sources and (Uses) Net Change in Fund Balances Fund Balances - Beginning Fund Balances - Ending $ - $ - $ - 93

112 TOTAL Variance with Actual Final Budget - Original Budget Final Budget Amounts Over (Under) $ 98,613,244 $ 98,613,244 $ 96,666,801 $ (1,946,443) 10,953,807 10,953,807 11,707, , , , ,835 (63,665) 31,572,118 30,150,847 34,100,849 3,950,002 6,010,889 6,010,889 6,379, ,880 12,825 1,631,224 1,313,425 (317,799) 2,900 27, , ,129 1,638,143 4,166,796 4,930, , ,668, ,419, ,089,187 3,669,981 76,055,271 79,447,601 54,570,653 24,876,948 79,860,993 80,547,229 78,457,432 2,089,797 1,149,386 1,238,754 1,134, ,590 2,588,377 1,991,145 1,952,088 39,057 1,259,737 1,264,437 1,238,426 26,011 6,796,994 6,869,934 6,615, , ,710, ,359, ,968,303 27,390,797 (18,042,332) (18,939,894) 12,120,884 31,060,778 1,884,712 2,876,597 4,953,540 2,076,943 (16,282,266) (12,468,721) (11,289,133) 1,179,588 (14,397,554) (9,592,124) (6,335,593) 3,256,531 (32,439,886) (28,532,018) 5,785,291 34,317,309 32,439,886 28,532,018 26,834,824 (1,697,194) $ - $ - $ 32,620,115 $ 32,620,115 94

113 NONMAJOR GOVERNMENTAL FUNDS SPECIAL REVENUE FUNDS Special Revenue Funds are used to account for and report the proceeds of specific revenue sources that are restricted or committed to expenditures for specified purposes other than debt service or capital projects. The County has the following Special Revenue Funds: Escambia County Restricted Fund Created to account for monies donated to the County for a specific purpose. Industrial Parks Fund Created to account for the development and operation of the industrial parks of Escambia County. Code Enforcement Fund Created to account for the enforcement of ordinances and statutes to enhance the quality of life for and protect citizens from environmentally unsafe conditions. Mass Transit Fund Created to account for the operation and maintenance of the Escambia County Transit System. Financing is provided from user fees, reimbursement from the City of Pensacola and an Urban Mass Transit Administration operating grant. M and A State Revenue Fund Created to account for the cost of mosquito and other arthropod control. Financing is provided by State matching funds on a dollar for dollar basis. Tourist Promotion Fund Created to account for revenues restricted for promotion, development and advertisement of Escambia County tourism. Financing is provided by a tourist development tax levied under Chapter Florida Statutes. Other Grant Projects Fund Created to account for financing provided from various State and Federal grants. Misdemeanor Probation Fund Created to account for the cost of supervision of the misdemeanor program. Financing is provided by a fee charged to a person on parole pursuant to Section , Florida Statutes. Article V Fund Created to account for revenues and costs for court related fees, charges, costs, fines and other monetary penalties. Development Review Fund Created to account for fees generated by the review of all development plans within the County and support of the Development Review Committee, the Planning Board, the Board of Adjustments, the Rezoning Hearing Examiner and the Board of County Commissioners. Perdido Key Beach Mouse Fund Created to account for the Perdido Key Beach Mouse Special Assessment revenue established by Ordinance and and by interlocal agreement with the US Fish and Wildlife Service and the Florida Fish and Wildlife Commission. This revenue will be utilized for the midication process for impacts to the Perdido Key Beach Mouse habitat. State Housing Initiative Partnership Fund (SHIP) Created to account for the revenues and expenditures of the SHIP program. State revenue sharing proceeds received by the County for the SHIP program are used to create partnerships that produce and preserve affordable homeownership and multifamily housing. 95

114 NONMAJOR GOVERNMENTAL FUNDS SPECIAL REVENUE FUNDS - Continued Law Enforcement Trust Fund Created pursuant to the provisions of Section , Florida Statutes, to account for the net proceeds from the sale or conversion of forfeited properties. Expenditures payable from this fund are legally restricted to nonrecurring obligations of the Sheriff s office, including equipment purchases. Although legally entitled as a trust fund, this fund is more properly accounted for as a special revenue fund due to the nature of the transactions recorded therein. Escambia County Affordable Housing Fund Created to account for funding to assist with delivery of affordable housing assistance and support for low income families in Escambia County and the City of Pensacola, primarily in conjunction with the Escambia Consortium Home Program. The fund also provides a source for payment of up front costs while awaiting reimbursement from the HOME program letter of credit. CDBG HUD Entitlement Fund Created to account for Federal HUD Block Grant revenues and the expenditures. The HUD funded Community Block Grant program provides financial support primarily for low and moderate-income families in the County. Handicapped Parking Fines Fund Created to account for monies collected under Chapter 316, Florida Statutes, also known as the State Uniform Traffic Control, which authorizes counties to regulate the parking of vehicles and to enforce regulations relating to disabled persons parking. Family Mediation Fund Created to account for monies provided through a private grant and authorized under Chapters and , Florida Statutes. These funds were used to assure each minor child frequent and continuing contact with both parents after separation or dissolved marriages and to encourage parents to share the rights and responsibilities of child rearing. Fire Protection Fund Created to account for monies assessed by the Board of County Commissioners to property owners in unincorporated areas of Escambia County to provide for fire protection. Emergency 911 Operations Fund Created in accordance with the provisions of the Florida Emergency Telephone Act (Sections and , Florida Statutes) to account for the Enhanced 911 (E911) fees imposed and collected from local telephone exchange customers and subscribers of wireless telephone services. 911 service directs 911 calls to the appropriate public safety answering point and provides for automatic number and location identification. The E911 Board may adjust the allocation percentages or adjust the amount of the fee, or both, if necessary, to ensure full cost recovery or prevent over recovery of costs incurred in the provision of E911. Expenditures are restricted to the establishment and maintenance of an enhanced emergency telephone number 911 system or enhanced 911 service. HUD-CDBG Housing Rehabilitation Loan Fund Created to account for funding to provide assistance for low/moderate income families within the unincorporated county through the rehabilitation of several substandard homes. HUD Home Fund Created to account for the HUD Housing Assistance revenues and expenditures. This grant provides for the rehabilitation of severely substandard homes. 96

115 NONMAJOR GOVERNMENTAL FUNDS SPECIAL REVENUE FUNDS - Continued Southwest Sector Road Project Fund Created to account for revenues and expenditures associated with the planning and development of the County s Southwest Corridor road project. Bob Sikes Toll Facilities Fund Established by County Ordinance No which authorizes the collection of bridge tolls for uses of the Bob Sikes Toll Bridge by passage seekers. The Board of County Commissioners establish toll rates for the Bob Sikes Bridge in order to pay for the proper maintenance, administration, debt service of the bridge, and other expenses for parks and recreation on Santa Rosa Island as approved by the Board of County Commissioners. In addition to cash tolls, annual permits (transponder sales) may be purchased for access to the Bridge. Transportation Trust Fund Created pursuant to the provisions of Section Florida Statutes, to account for transportation related revenues and expenditures. The primary revenue source is fuel taxes which are the Seventh-cent/1 cent County, Ninth-cent, Local Option gas tax, and Constitutional Gas Tax. Gas tax revenues are used to fund transportation expenditures allowable pursuant to Sections 206 and Section 366, Florida Statutes. MSBU Assessment Program Fund Created to account for monies collected for Municipal Service Benefit Units (MSBU) pursuant to County Ordinance No and Chapter 125, Florida Statutes. Master Drainage Basin Fund Created to account for monies to provide drainage within specific districts. Clerk Program s This fund reflects the activities of the Office of the Clerk of the Circuit Court and Comptroller Trust Funds. Services provide are in accordance with provisions of the Florida Statutes Chapter for Records Modernization. Sheriff Program s This fund reflects the activities of the Escambia County Sheriff s Office; primarily to account for the collection and expenditures of US Treasury and US Justice forfeiture sharing programs, and for revenues and disbursements of various Federal and State Grants. Supervisor Program s This fund reflects the activities of the Escambia Supervisor of Elections Office; primarily to account for the for revenues and disbursements of various Federal and State Grants. DEBT SERVICE FUND Debt Service Funds are used to account for and report financial resources that are restricted, committed, or assigned to expenditure for principal and interest. Debt Service funds are also report resources if legally mandated and financial resources that are being accumulated for principal and interest maturing in future. The County has the following Debt Service Fund: Debt Service Fund Created to account for the resources accumulated and payments made for principal and interest on long-term debt of governmental funds. 97

116 NONMAJOR GOVERNMENTAL FUNDS CAPITAL PROJECTS FUNDS Capital Projects Funds are used to account for and report financial resources that are restricted, committed, or assigned to expenditure for capital outlays, including the acquisition or construction of capital facilities and other capital outlay. Capital Project funds exclude capital-related outflows financed by proprietary fund or for assets held in trust for individuals, private organizations, or other governments. The County has the following Capital Projects Funds: Federal Transit Administration Fund Created to account for the cost of machinery, equipment, and office furniture for the Mass Transit activity for the County. Financing was provided by an Urban Mass Transportation Administration Grant (80%), State matching funds (10%), and Escambia County matching funds (10%). New Road Construction Fund Created account for the disbursements from the Local Option Gas Tax used for acquisition and construction of new roads.. 98

117 COMBINING BALANCE SHEET ALL NONMAJOR GOVERNMENTAL FUNDS September 30, 2013 Total Nonmajor Total Total Nonmajor Total Nonmajor Special Revenue Funds Nonmajor Debt Service Fund Capital Projects Funds Governmental Funds ASSETS Cash and Cash Equivalents $ 20,333,417 $ 713,515 $ 114,134 $ 21,161,066 Investments 26,818,508 1,189, ,345 28,198,784 Accounts Receivable 692, ,826 Due from Other Funds 2, ,050 Due from Other Governments 2,809, ,422 2,919,766 Inventories 429, ,744 Prepaid Items Total Assets $ 51,085,889 $ 1,903,446 $ 414,901 $ 53,404,236 LIABILITIES Accounts Payable $ 3,857,327 $ - $ 70,254 $ 3,927,581 Contracts Payable 101, ,649 Accrued Liabilities 862, ,746 Due to Other Funds 1,022, ,022,261 Advances Payable to Other Funds 709, ,513 Due to Other Governments 1,484, ,484,979 Deposits 1, ,197 Unearned Revenue 415, ,019 Other Current Liabilities 13,301 13,301 Total Liabilities 8,467,992-70,254 8,538,246 FUND BALANCES (deficits) Nonspendable Inventories 429, ,744 Restricted for Court Related Functions 4,086, ,086,386 Community Services 280, ,514 Debt Service - 1,903,446-1,903,446 Fire & Rescue 5,251, ,251,168 Health Services 21, ,762 Inmate Welfare 1,020, ,020,854 Law Enforcement 492, ,548 Mass Transit System 253, , ,980 Parks & Recreation Public Safety 3,211, ,211,389 Records Modernization Tech 2,162, ,162,599 Resource Conservation 146, ,720 Road Acquisition & Construction ,688 29,688 Housing Assistance 3,079, ,079,055 Tourism 5,754, ,754,388 Transportation & Drainage Improvements 2,676, ,676,677 Transportation Maintenance 205, ,708 Committed to: Community Services 1,388, ,388,590 Infrastructure Maintenance 10,461, ,461,365 Transportation Maintenance 1,695, ,695,409 Total Fund Balances 42,617,897 1,903, ,647 44,865,990 Total liabilities, deferred inflow of resources, and fund balances $ 51,085,889 $ 1,903,446 $ 414,901 $ 53,404,236 99

118 COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES ALL NONMAJOR GOVERNMENTAL FUNDS For the Year Ended September 30, 2013 Total Nonmajor Special Revenue Funds Total Nonmajor Debt Service Fund Total Nonmajor Capital Projects Funds Total Nonmajor Governmental Funds REVENUES Taxes $ 16,102,652 $ - $ - $ 16,102,652 Permits and Fees 219, ,366 Franchise Fees 1,600, ,600,428 Special Assessments 12,525, ,525,761 Intergovernmental Revenues 20,076, , ,188 20,977,361 Charges for Services 11,517, ,517,898 Judgments and Fines 948, ,753 Investment Income 86,466 11, ,559 Miscellaneous Revenues 2,497, ,497,773 Total Revenues 65,575, , ,766 66,488,551 EXPENDITURES Current: General Government 2,581,906 43,333-2,625,239 Public Safety 25,006, ,006,131 Physical Environment 1,145, ,145,067 Transportation 25,896,739-76,920 25,973,659 Economic Environment 10,419, ,419,399 Human Services 126, ,521 Culture/Recreation 64, ,205 Court-Related 2,516, ,516,948 Debt Service: Principal Retirement - 3,526,000-3,526,000 Interest and Fiscal Charges 632 3,142,328-3,142,960 Capital Outlay , ,269 Total Expenditures 67,757,548 6,711, ,189 74,926,398 Excess (Deficiency) of Revenues Over (Under) Expenditures (2,181,612) (6,256,812) 577 (8,437,847) OTHER FINANCING SOURCES (USES) Transfers In 7,656,292 5,461,214-13,117,506 Transfers (Out) (4,794,175) - - (4,794,175) Issuance Refunding Bonds Payable - 8,406,000-8,406,000 Payment to Refunded Bonds Escrow Agent - (8,361,941) - (8,361,941) Total Other Financing Sources and (Uses) 2,862,117 5,505,273-8,367,390 Net Change in Fund Balances 680,505 (751,539) 577 (70,457) Fund Balances - Beginning 41,937,392 2,654, ,070 44,936,447 Fund Balances - Ending $ 42,617,897 $ 1,903,446 $ 344,647 $ 44,865,

119 COMBINING BALANCE SHEET NONMAJOR GOVERNMENTAL FUNDS - SPECIAL REVENUE FUNDS September 30, 2013 Escambia County Restricted Fund Industrial Parks Fund Code Enforcement Fund Mass Transit Fund M&A State Revenue Fund ASSETS Cash and Cash Equivalents $ 525,608 $ 1,248,990 $ 467,703 $ 660,886 $ 21,762 Investments 876,561 2,082, ,992 1,102,161 - Accounts Receivable 2, ,819 96,043 - Due from Other Funds Due from Other Governments 20, ,000 10, ,849 - Inventories 5, ,915 - Total Assets $ 1,431,367 $ 3,431,936 $ 1,407,062 $ 2,145,854 $ 21,762 LIABILITIES Accounts Payable $ 13,024 $ 83,886 $ 24,795 $ 709,447 $ - Contracts Payable Accrued Liabilities 3,552-48, Due to Other Funds ,000,000 - Advances Payable to Other Funds Due to Other Governments 20, ,471 - Deposits Unearned Revenue Other Current Liabilities Total Liabilities 36,845 83,886 73,026 1,710,918 - FUND BALANCES Nonspendable: Inventories 5, ,915 - Restricted for: Court Related Functions Community Services Fire & Rescue Health Services ,762 Inmate Welfare Law Enforcement Mass Transit System ,021 - Public Safety - - 1,334, Records Modernization Tech Resource Conservation Housing Assistance Tourism Transportation & Drainage Improvements Transportation Maintenance Committed to: Community Services 1,388, Infrastructure Maintenance - 3,348, Transportation Maintenance Total Fund Balances 1,394,522 3,348,050 1,334, ,936 21,762 Total liabilities, deferred inflow of resources, and fund balances $ 1,431,367 $ 3,431,936 $ 1,407,062 $ 2,145,854 $ 21,762 Continued 101

120 Tourist Promotion Fund Other Grant Projects Fund Misdemeanor Probation Fund Article V Fund Development Review Fund Perdido Key Beach Mouse Fund State Housing Initiative Partnership (SHIP) Fund $ 2,793,780 $ 400,531 $ 379,716 $ 1,708,085 $ 98,947 $ 54,999 $ 1,125,946 4,659, , ,252 2,848, ,014 91, , , , , $ 7,453,140 $ 1,514,828 $ 1,012,968 $ 4,772,833 $ 263,961 $ 146,720 $ 1,139,099 $ 1,695,287 $ 92,305 $ 31,946 $ 49,441 $ 3,115 $ - $ 7,729-34, ,465 5,336 57,703 9,991 10, ,644 4,650 1,250, , ,698, ,776 94,302 1,309,923 13,427-7, ,499-3,462, , , , , , ,131,370 5,754, , ,754,388 1,256, ,666 3,462, , ,720 1,131,370 $ 7,453,140 $ 1,514,828 $ 1,012,968 $ 4,772,833 $ 263,961 $ 146,720 $ 1,139,

121 COMBINING BALANCE SHEET NONMAJOR GOVERNMENTAL FUNDS - SPECIAL REVENUE FUNDS September 30, 2013 Law Enforcement Trust Fund Escambia County Affordable Housing Fund CDBG - HUD Entitlement Fund Handicapped Parking Fines Fund ASSETS Cash and Cash Equivalents $ 192,119 $ 507,530 $ 199,630 $ 99,208 Investments 320, , , ,449 Accounts Receivable - 300, Due from Other Funds 2, Due from Other Governments ,321 2,623 Inventories Total Assets $ 514,565 $ 1,653,941 $ 543,875 $ 267,280 LIABILITIES Accounts Payable $ - $ 30,124 $ 120,379 $ 474 Contracts Payable ,377 - Accrued Liabilities Due to Other Funds 22, Advances Payable to Other Funds Due to Other Governments Deposits Unearned Revenue ,460 - Other Current Liabilities Total Liabilities 22,017 30, , FUND BALANCES Nonspendable: Inventories Restricted for: Court Related Functions Community Services ,800 Fire & Rescue Health Services Inmate Welfare Law Enforcement 492, Mass Transit System Public Safety Records Modernization Tech Resource Conservation Housing Assistance - 1,623, ,501 - Tourism Transportation & Drainage Improvements Transportation Maintenance Committed to: Community Services Infrastructure Maintenance Transportation Maintenance Total Fund Balances 492,548 1,623, , ,800 Total liabilities, deferred inflow of resources, and fund balances $ 514,565 $ 1,653,941 $ 543,875 $ 267,280 Continued 103

122 Family Mediation Fund Fire Protection Fund Emergency 911 Operations Fund HUD-CDBG Housing Rehabilitation Loan Fund HUD Home Fund Southwest Sector Road Project Fund Bob Sikes Toll Facilities Fund $ 42,350 $ 1,513,499 $ 422,797 $ 9,446 $ 19,390 $ 705,917 $ 2,777,207 70,627 2,524, ,099 15,752 32,337 1,177,261 4,629,892-3,000-23,256 14, , , ,785-3, $ 112,977 $ 4,082,344 $ 1,559,206 $ 48,454 $ 208,963 $ 1,883,178 $ 7,410,982 $ - $ 136,901 $ 2,923 $ - $ 84,133 $ - $ 230, , , , ,592 24,189-86,904-6, ,270 27, , , , ,719,074 1,532, ,454 37, ,883, ,113, ,977 3,719,074 1,532,094 48,454 37,913 1,883,178 7,113,315 $ 112,977 $ 4,082,344 $ 1,559,206 $ 48,454 $ 208,963 $ 1,883,178 $ 7,410,

123 COMBINING BALANCE SHEET NONMAJOR GOVERNMENTAL FUNDS - SPECIAL REVENUE FUNDS September 30, 2013 Transportation Trust Fund MSBU Assessment Program Fund Master Drainage Basin Fund Clerk Programs ASSETS Cash and Cash Equivalents $ 603,442 $ 356,064 $ 294,321 $ 2,087,959 Investments 1,006, , ,847 - Accounts Receivable 7, Due from Other Funds Due from Other Governments 1,062,739 1, ,310 Inventories 241, Total Assets $ 2,921,878 $ 951,235 $ 785,168 $ 2,201,373 LIABILITIES Accounts Payable $ 491,126 $ 35,760 $ 6,855 $ 7,164 Contracts Payable Accrued Liabilities 478, ,005 Due to Other Funds Advances Payable to Other Funds - 709, Due to Other Governments 13, ,500 1,304 Deposits 1, Unearned Revenue Other Current Liabilities ,301 Total Liabilities 984, ,527 15,355 38,774 FUND BALANCES Nonspendable: Inventories 241, Restricted for: Court Related Functions Community Services Fire & Rescue Health Services Inmate Welfare Law Enforcement Mass Transit System Public Safety Records Modernization Tech ,162,599 Resource Conservation Housing Assistance Tourism Transportation & Drainage Improvements ,813 - Transportation Maintenance 205, Committed to: Community Services Infrastructure Maintenance Transportation Maintenance 1,695, Total Fund Balances 1,937, , ,813 2,162,599 Total liabilities, deferred inflow of resources, and fund balances $ 2,921,878 $ 951,235 $ 785,168 $ 2,201,373 Continued 105

124 Sheriff Programs Supervisor of Elections Programs Total Nonmajor Special Revenue Funds $ 1,015,585 $ - $ 20,333, ,818,508 49, , ,050 95,576 38,724 2,809, ,744 $ 1,160,216 $ 38,724 $ 51,085,889 $ - $ - 3,857, , , ,022, ,513 42,663-1,484, ,197 96,699 38, , , ,362 38,724 8,467, , ,086, , ,251, ,762 1,020,854-1,020, , , ,211, ,162, , ,079, ,754, ,676, , ,388, ,461, ,695,409 1,020,854-42,617,897 $ 1,160,216 $ 38,724 $ 51,085,

125 COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES NONMAJOR GOVERNMENTAL FUNDS - SPECIAL REVENUE FUNDS For the Year Ended September 30, 2013 Escambia County Restricted Fund Industrial Parks Fund Code Enforcement Fund Mass Transit Fund M&A State Revenue Fund REVENUES Taxes $ - $ - $ - $ - $ - Permits and Fees Franchise Fees - - 1,600, Special Assessments Intergovernmental Revenues 175, ,728,204 18,500 Charges for Services 190, ,361,732 - Judgments and Fines , Investment Income 2,833 7,897 2,398 1,281 - Miscellaneous Revenues 103,348-3,678 32,277 - Total Revenues 471,855 7,897 1,807,126 7,123,494 18,500 EXPENDITURES Current: General Government 14, Public Safety 56,927-2,168, Physical Environment 193, Transportation ,245,441 - Economic Environment - 774, Human Services 14, ,346 Culture and Recreation 43, Court-Related Debt Service: Interest and Fiscal Charges Total Expenditures 322, ,888 2,168,353 9,245,441 12,346 Excess (Deficiency) of Revenues Over (Under) Expenditures 149,259 (766,991) (361,227) (2,121,947) 6,154 OTHER FINANCING SOURCES (USES) Transfers In - 297, ,749 2,658,089 - Transfers (Out) (32,943) Total Other Financing Sources and (Uses) (32,943) 297, ,749 2,658,089 - Net Change in Fund Balances 116,316 (469,991) 25, ,142 6,154 Fund Balances - Beginning 1,278,206 3,818,041 1,308,514 (101,206) 15,608 Fund Balances - Ending $ 1,394,522 $ 3,348,050 $ 1,334,036 $ 434,936 $ 21,762 Continued 107

126 Tourist Promotion Fund Other Grant Projects Fund Misdemeanor Probation Fund Article V Fund Development Review Fund Perdido Key Beach Mouse Fund State Housing Initiative Partnership (SHIP) Fund $ 7,801,497 $ - $ - $ - $ - $ - $ , , ,515, , ,233-32,627 2,369,373 1,826, , , ,718 1,216 1,380 8, ,581 29, ,154 7,809,597 2,607,878 2,418,755 2,585, ,609 7, , , ,744 2,361,109 56, , , , , ,959, , ,125-92, , ,765-1,805, ,113,450 2,509,664 2,361,109 1,862, , ,125 1,696,147 98,214 57, , ,887 7, , , (1,400,000) - - (855,000) (1,400,000) - - (522,104) ,147 98,214 57, , ,887 7, ,276 5,458,241 1,157, ,020 3,262, , , ,094 $ 5,754,388 $ 1,256,052 $ 918,666 $ 3,462,910 $ 250,534 $ 146,720 $ 1,131,

127 COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES NONMAJOR GOVERNMENTAL FUNDS - SPECIAL REVENUE FUNDS For the Year Ended September 30, 2013 Law Enforcement Trust Fund Escambia County Affordable Housing Fund CDBG - HUD Entitlement Fund Handicapped Parking Fines Fund Family Mediation Fund REVENUES Taxes $ - $ - $ - $ - $ - Permits and Fees Franchise Fees Special Assessments Intergovernmental Revenues - - 1,693, Charges for Services ,204 - Judgments and Fines 371, Investment Income 1,157 11, Miscellaneous Revenues 150,393 93, Total Revenues 523, ,652 1,694,513 40, EXPENDITURES Current: General Government Public Safety 494,600 1,044-6,735 - Physical Environment Transportation Economic Environment - 140,064 1,600, Human Services ,843 - Culture and Recreation Court-Related ,292 Debt Service: Interest and Fiscal Charges Total Expenditures 494, ,108 1,600,187 14,578 1,292 Excess (Deficiency) of Revenues Over (Under) Expenditures 28,458 (35,456) 94,326 26,132 (1,057) OTHER FINANCING SOURCES (USES) Transfers In Transfers (Out) - - (185,000) - - Total Other Financing Sources and (Uses) - - (185,000) - - Net Change in Fund Balances 28,458 (35,456) (90,674) 26,132 (1,057) Fund Balances - Beginning 464,090 1,659, , , ,034 Fund Balances - Ending $ 492,548 $ 1,623,817 $ 237,501 $ 266,800 $ 112,977 Continued 109

128 Fire Protection Fund Emergency 911 Operations Fund HUD-CDBG Housing Rehabilitation Loan Fund HUD Home Fund Southwest Sector Road Project Fund Bob Sikes Toll Facilities Fund $ - $ - $ - $ - $ - $ - 55, ,591, ,893 1,413,963-1,377, , ,310, ,133 2, ,178 12, ,279-11,696 47, ,097 12,152,892 1,416,378 12,635 1,426,095 4,178 3,845, ,542,595 10,834, , , ,453, ,834, ,033-1,453, ,533 1,542,595 1,318, ,345 12,635 (27,392) (322,355) 2,302, (190,519) (658,222) (1,472,491) (190,519) (658,222) (1,472,491) 1,128,165 (43,877) 12,635 (27,392) (322,355) 830,207 2,590,909 1,575,971 35,819 65,305 2,205,533 6,283,108 $ 3,719,074 $ 1,532,094 $ 48,454 $ 37,913 $ 1,883,178 $ 7,113,

129 COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES NONMAJOR GOVERNMENTAL FUNDS - SPECIAL REVENUE FUNDS For the Year Ended September 30, 2013 Transportation Trust Fund MSBU Assessment Program Fund Master Drainage Basin Fund Clerk Programs Sheriff Programs REVENUES Taxes $ 8,301,155 $ - $ - $ - $ - Permits and Fees Franchise Fees Special Assessments 831,844 94, Intergovernmental Revenues 4,319, , ,409 Charges for Services 278, , ,136 Judgments and Fines ,110 83,921 Investment Income 3,779 2,226 1, Miscellaneous Revenues 1,048, ,511 Total Revenues 13,951, ,070 96,342 1,604,676 1,636,977 EXPENDITURES Current: General Government ,994 - Public Safety 5,758, ,548,648 Physical Environment Transportation 14,696,384 1,186, , Economic Environment Human Services Culture and Recreation Court-Related ,036 - Debt Service: Interest and Fiscal Charges Total Expenditures 20,455,233 1,186, ,361 1,005,030 1,548,648 Excess (Deficiency) of Revenues Over (Under) Expenditures (6,503,537) (352,618) (101,019) 599,646 88,329 OTHER FINANCING SOURCES (USES) Transfers In 3,924, ,839 - Transfers (Out) Total Other Financing Sources and (Uses) 3,924, ,839 - Net Change in Fund Balances (2,578,740) (352,618) (101,019) 643,485 88,329 Fund Balances - Beginning 4,516, , ,832 1,519, ,525 Fund Balances - Ending $ 1,937,306 $ 205,708 $ 769,813 $ 2,162,599 $ 1,020,854 Continued 111

130 Supervisor of Elections Programs Total Nonmajor Special Revenue Funds $ - $ 16,102, ,366-1,600,428-12,525,761 76,615 20,076,839-11,517, ,753-86,466-2,497,773 76,615 65,575,936 89,537 2,581,906-25,006,131-1,145,067-25,896,739-10,419, ,521-64,205-2,516, ,537 67,757,548 (12,922) (2,181,612) 12,922 7,656,292 - (4,794,175) 12,922 2,862, ,505-41,937,392 $ - $ 42,617,

131 BUDGETARY COMPARISON SCHEDULE ESCAMBIA COUNTY RESTRICTED FUND For the Year Ended September 30, 2013 Variance with Budget - Budget Actual Amounts Over (Under) REVENUES Intergovernmental Revenues $ 97,488 $ 175,303 $ 77,815 Charges for Services 190, ,371 (104) Investment Income - 2,833 2,833 Miscellaneous Revenues 42, ,348 60,709 Total Revenues 330, , ,253 EXPENDITURES Current: General Government 146,975 14, ,414 Public Safety 688,371 56, ,444 Physical Environment 607, , ,018 Transportation 5,337-5,337 Human Services 14,978 14, Culture and Recreation 146,946 43, ,845 Total Expenditures 1,610, ,596 1,287,781 Excess (Deficiency) of Revenues Over (Under) Expenditures (1,279,775) 149,259 1,429,034 OTHER FINANCING SOURCES (USES) Transfers In 84,071 - (84,071) Transfers (Out) (38,685) (32,943) 5,742 Total Other Financing Sources and (Uses) 45,386 (32,943) (78,329) Net Change in Fund Balance (1,234,389) 116,316 1,350,705 Fund Balance - Beginning 1,234,389 1,278,206 43,817 Fund Balance - Ending $ - $ 1,394,522 $ 1,394,

132 BUDGETARY COMPARISON SCHEDULE INDUSTRIAL PARKS FUND For the Year Ended September 30, 2013 Variance with Budget - Budget Actual Amounts Over (Under) REVENUES Investment Income $ - $ 7,897 $ 7,897 Total Revenues - 7,897 7,897 EXPENDITURES Current: Economic Environment 4,074, ,888 (3,300,106) Total Expenditures 4,074, ,888 (3,300,106) Excess (Deficiency) of Revenues Over (Under) Expenditures (4,074,994) (766,991) (3,292,209) OTHER FINANCING SOURCES (USES) Transfers In 297, ,000 - Total Other Financing Sources and (Uses) 297, ,000 - Net Change in Fund Balance (3,777,994) (469,991) (3,292,209) Fund Balance - Beginning 3,777,994 3,818,041 40,047 Fund Balance - Ending $ - $ 3,348,050 $ (3,252,162) 114

133 BUDGETARY COMPARISON SCHEDULE CODE ENFORCEMENT FUND For the Year Ended September 30, 2013 Variance with Budget - Budget Actual Amounts Over (Under) REVENUES Franchise Fees $ 1,235,000 $ 1,600,428 $ 365,428 Charges for Services Judgments and Fines 175, ,114 24,364 Investment Income - 2,398 2,398 Miscellaneous Revenues 2,375 3,678 1,303 Total Revenues 1,413,125 1,807, ,001 EXPENDITURES Current: Public Safety 3,095,042 2,168, ,689 Total Expenditures 3,095,042 2,168, ,689 Excess (Deficiency) of Revenues Over (Under) Expenditures (1,681,917) (361,227) 1,320,690 OTHER FINANCING SOURCES (USES) Transfers In 386, ,749 - Total Other Financing Sources and (Uses) 386, ,749 - Net Change in Fund Balance (1,295,168) 25,522 1,320,690 Fund Balance - Beginning 1,295,168 1,308,514 13,346 Fund Balance - Ending $ - $ 1,334,036 $ 1,334,

134 BUDGETARY COMPARISON SCHEDULE MASS TRANSIT FUND For the Year Ended September 30, 2013 Variance with Budget - Budget Actual Amounts Over (Under) REVENUES Intergovernmental $ 7,598,848 $ 5,728,204 $ (1,870,644) Charges for Service 1,544,078 1,361,732 (182,346) Investment Income 475 1, Miscellaneous Revenues 4 32,277 32,273 Total Revenues 9,143,405 7,123,494 (2,019,911) EXPENDITURES Current: Transportation 12,079,244 9,245,441 2,833,803 Total Expenditures 12,079,244 9,245,441 2,833,803 Excess (Deficiency) of Revenues Over (Under) Expenditures (2,935,839) (2,121,947) 813,892 OTHER FINANCING SOURCES (USES) Transfers In 2,658,089 2,658,089 - Total Other Financing Sources and (Uses) 2,658,089 2,658,089 - Net Change in Fund Balance (277,750) 536, ,892 Fund Balance - Beginning 277,750 (101,206) (378,956) Fund Balance - Ending $ - $ 434,936 $ 434,

135 BUDGETARY COMPARISON SCHEDULE M & A STATE REVENUE FUND For the Year Ended September 30, 2013 Variance with Budget - Budget Actual Amounts Over (Under) REVENUES Intergovernmental $ 18,500 $ 18,500 $ - Total Revenues 18,500 18,500 - EXPENDITURES Current: Human Services 34,045 12,346 21,699 Total Expenditures 34,045 12,346 21,699 Excess (Deficiency) of Revenues Over (Under) Expenditures (15,545) 6,154 21,699 Net Change in Fund Balance (15,545) 6,154 21,699 Fund Balance - Beginning 15,545 15, Fund Balance - Ending $ - $ 21,762 $ 21,

136 BUDGETARY COMPARISON SCHEDULE TOURIST PROMOTION FUND For the Year Ended September 30, 2013 Variance with Budget - Budget Actual Amounts Over (Under) REVENUES Taxes $ 6,141,621 $ 7,801,497 $ 1,659,876 Permits and Fees Intergovernmental Revenues 69,745 - (69,745) Investment Income - 7,718 7,718 Miscellaneous Revenues Total Revenues 6,211,366 7,809,597 1,598,231 EXPENDITURES Current: Physical Environment 205, ,440 50,591 Economic Environment 7,719,002 5,959,010 1,759,992 Total Expenditures 7,924,033 6,113,450 1,810,583 Excess (Deficiency) of Revenues Over (Under) Expenditures (1,712,667) 1,696,147 3,408,814 OTHER FINANCING SOURCES (USES) Transfers (Out) (1,400,000) (1,400,000) - Total Other Financing Sources and (Uses) (1,400,000) (1,400,000) - Net Change in Fund Balance (3,112,667) 296,147 3,408,814 Fund Balance - Beginning 3,112,667 5,458,241 2,345,574 Fund Balance - Ending $ - $ 5,754,388 $ 5,754,

137 BUDGETARY COMPARISON SCHEDULE OTHER GRANT PROJECTS FUND For the Year Ended September 30, 2013 Variance with Budget - Budget Actual Amounts Over (Under) REVENUES Intergovernmental Revenues $ 5,791,877 $ 2,515,954 $ (3,275,923) Charges for Services - 32,627 32,627 Judgments and Fines Investment Income - 1,216 1,216 Miscellaneous Revenues 53,647 57,581 3,934 Total Revenues 5,845,524 2,607,878 (3,237,646) EXPENDITURES Current: General Government 531, ,249 Public Safety 2,308, ,744 1,392,009 Physical Environment 966, , ,458 Transportation 1,078, , ,760 Economic Environment 227, ,638 72,854 Human Services 111,543 92,077 19,466 Culture and Recreation 286,522 21, ,418 Court-Related 1,573, ,765 1,232,613 Total Expenditures 7,083,491 2,509,664 4,573,827 Excess (Deficiency) of Revenues Over (Under) Expenditures (1,237,967) 98,214 1,336,181 OTHER FINANCING SOURCES (USES) Transfers In 12,922 - (12,922) Total Other Financing Sources and (Uses) 12,922 - (12,922) Net Change in Fund Balance (1,225,045) 98,214 1,323,259 Fund Balance - Beginning 1,225,045 1,157,838 (67,207) Fund Balance - Ending $ - $ 1,256,052 $ 1,256,

138 BUDGETARY COMPARISON SCHEDULE MISDEMEANOR PROBATION FUND For the Year Ended September 30, 2013 Variance with Budget - Budget Actual Amounts Over (Under) REVENUES Charges for Services $ 2,233,905 $ 2,369,373 $ 135,468 Judgements and Fines 15,200 18,600 3,400 Investment Income 43,514 1,380 (42,134) Miscellaneous Revenue - 29,402 29,402 Total Revenues 2,292,619 2,418, ,136 EXPENDITURES Current: Public Safety 3,142,857 2,361, ,748 Total Expenditures 3,142,857 2,361, ,748 Excess (Deficiency) of Revenues Over (Under) Expenditures (850,238) 57, ,884 Net Change in Fund Balance (850,238) 57, ,884 Fund Balance - Beginning 850, ,020 10,782 Fund Balance - Ending $ - $ 918,666 $ 918,

139 BUDGETARY COMPARISON SCHEDULE ARTICLE V FUND For the Year Ended September 30, 2013 Variance with Budget - Budget Actual Amounts Over (Under) REVENUES Intergovernmental $ 584,250 $ 749,576 $ 165,326 Charges for Services 1,643,500 1,826, ,927 Investment Income - 8,343 8,343 Miscellaneous Revenues Total Revenues 2,227,750 2,585, ,366 EXPENDITURES Current: Public Safety 623,719 56, ,838 Court-Related 5,315,823 1,805,855 3,509,968 Total Expenditures 5,939,542 1,862,736 4,076,806 Excess (Deficiency) of Revenues Over (Under) Expenditures (3,711,792) 722,380 4,434,172 OTHER FINANCING SOURCES (USES) Transfers In 332, ,896 - Transfers (Out) (855,000) (855,000) - Total Other Financing Sources and (Uses) (522,104) (522,104) - Net Change in Fund Balance (4,233,896) 200,276 4,434,172 Fund Balance - Beginning 4,233,896 3,262,634 (971,262) Fund Balance - Ending $ - $ 3,462,910 $ 3,462,

140 BUDGETARY COMPARISON SCHEDULE DEVELOPMENT REVIEW FUND For the Year Ended September 30, 2013 Variance with Budget - Budget Actual Amounts Over (Under) REVENUES Permits and Fees $ 114,000 $ 162,764 $ 48,764 Charges for Services 239, ,726 82,326 Investment Income Miscellaneous Revenues 13,571 - (13,571) Total Revenues 366, , ,639 EXPENDITURES Current: General Government 309, ,219 10,443 Transportation 178,540 57, ,037 Total Expenditures 488, , ,480 Excess (Deficiency) of Revenues Over (Under) Expenditures (121,232) 127, ,119 Net Change in Fund Balance (121,232) 127, ,119 Fund Balance - Beginning 121, ,647 1,416 Fund Balance - Ending $ - $ 250,534 $ 250,

141 BUDGETARY COMPARISON SCHEDULE PERDIDO KEY BEACH MOUSE FUND For the Year Ended September 30, 2013 Variance with Budget - Budget Actual Amounts Over (Under) REVENUES Special Assessments $ - $ 7,400 $ 7,400 Investment Income Total Revenues - 7,693 7,693 EXPENDITURES Current: Physical Environment 137, ,524 Total Expenditures 137, ,524 Excess (Deficiency) of Revenues Over (Under) Expenditures (137,524) 7, ,217 Net Change in Fund Balance (137,524) 7, ,217 Fund Balance - Beginning 137, ,027 1,503 Fund Balance - Ending $ - $ 146,720 $ 146,

142 BUDGETARY COMPARISON SCHEDULE STATE HOUSING INITIATIVE PARTNERSHIP FUND (SHIP) For the Year Ended September 30, 2013 Variance with Budget - Budget Actual Amounts Over (Under) REVENUES Intergovernmental Revenues $ 801,233 $ 644,233 $ (157,000) Investment Income 1, (986) Miscellaneous Revenues 318, ,154 (151,448) Total Revenues 1,120, ,401 (309,434) EXPENDITURES Current: Economic Environment 1,120, , ,710 Total Expenditures 1,120, , ,710 Excess (Deficiency) of Revenues Over (Under) Expenditures - 474, ,276 Net Change in Fund Balance - 474, ,276 Fund Balance - Beginning - 657, ,094 Fund Balance - Ending $ - $ 1,131,370 $ 1,131,

143 BUDGETARY COMPARISON SCHEDULE LAW ENFORCEMENT TRUST FUND For the Year Ended September 30, 2013 Variance with Budget - Budget Actual Amounts Over (Under) REVENUES Judgments and Fines $ 267,010 $ 371,508 $ 104,498 Investment Income 138,413 1,157 (137,256) Miscellaneous Revenues - 150, ,393 Total Revenues 405, , ,635 EXPENDITURES Current: Public Safety 861, , ,643 Total Expenditures 861, , ,643 Excess (Deficiency) of Revenues Over (Under) Expenditures (455,820) 28, ,278 Net Change in Fund Balance (455,820) 28, ,278 Fund Balance - Beginning 455, ,090 8,270 Fund Balance - Ending $ - $ 492,548 $ 492,

144 BUDGETARY COMPARISON SCHEDULE ESCAMBIA COUNTY AFFORDABLE HOUSING FUND For the Year Ended September 30, 2013 Variance with Budget - Budget Actual Amounts Over (Under) REVENUES Intergovernmental $ 1,044 $ - $ (1,044) Investment Income 10,000 11,675 1,675 Miscellaneous Revenues 39,158 93,977 54,819 Total Revenues 50, ,652 55,450 EXPENDITURES Current: Public Safety 1,044 1,044 - Economic Environment 1,674, ,064 1,534,094 Total Expenditures 1,675, ,108 1,534,094 Excess (Deficiency) of Revenues Over (Under) Expenditures (1,625,000) (35,456) 1,589,544 Net Change in Fund Balance (1,625,000) (35,456) 1,589,544 Fund Balance - Beginning 1,625,000 1,659,273 34,273 Fund Balance - Ending $ - $ 1,623,817 $ 1,623,

145 BUDGETARY COMPARISON SCHEDULE CDBG - HUD ENTITLEMENT FUND For the Year Ended September 30, 2013 Variance with Budget - Budget Actual Amounts Over (Under) REVENUES Intergovernmental Revenues $ 4,456,576 $ 1,693,881 $ (2,762,695) Investment Income 5, (4,368) Miscellaneous Revenues 270,460 - (270,460) Total Revenues 4,732,036 1,694,513 (3,037,523) EXPENDITURES Current: Economic Environment 4,547,036 1,600,187 2,946,849 Total Expenditures 4,547,036 1,600,187 2,946,849 Excess (Deficiency) of Revenues Over (Under) Expenditures 185,000 94,326 (90,674) OTHER FINANCING SOURCES (USES) Transfers (Out) (185,000) (185,000) - Total Other Financing Sources and (Uses) (185,000) (185,000) - Net Change in Fund Balance - (90,674) (90,674) Fund Balance - Beginning - 328, ,175 Fund Balance - Ending $ - $ 237,501 $ 237,

146 BUDGETARY COMPARISON SCHEDULE HANDICAPPED PARKING FINES FUND For the Year Ended September 30, 2013 Variance with Budget - Budget Actual Amounts Over (Under) REVENUES Charges for Services $ 35,625 $ 40,204 $ 4,579 Investment Income Total Revenues 35,625 40,710 5,085 EXPENDITURES Current: Public Safety 91,304 6,735 84,569 Human Services 182,429 7, ,586 Total Expenditures 273,733 14, ,155 Excess (Deficiency) of Revenues Over (Under) Expenditures (238,108) 26, ,240 Net Change in Fund Balance (238,108) 26, ,240 Fund Balance - Beginning 238, ,668 2,560 Fund Balance - Ending $ - $ 266,800 $ 266,

147 BUDGETARY COMPARISON SCHEDULE FAMILY MEDIATION FUND For the Year Ended September 30, 2013 Variance with Budget - Budget Actual Amounts Over (Under) REVENUES Investment Income $ - $ 235 $ 235 Total Revenues EXPENDITURES Current: Court-Related 112,801 1, ,509 Total Expenditures 112,801 1, ,509 Excess (Deficiency) of Revenues Over (Under) Expenditures (112,801) (1,057) 111,744 Net Change in Fund Balance (112,801) (1,057) 111,744 Fund Balance - Beginning 112, ,034 1,233 Fund Balance - Ending $ - $ 112,977 $ 112,

148 BUDGETARY COMPARISON SCHEDULE FIRE PROTECTION FUND For the Year Ended September 30, 2013 Variance with Budget - Budget Actual Amounts Over (Under) REVENUES Permits and Fees $ 47,500 $ 55,677 $ 8,177 Special Assessments 10,473,750 11,591,910 1,118,160 Intergovernmental Revenues 156, ,893 (38,258) Charges for Services 190, ,000 10,000 Investment Income 20,900 10,133 (10,767) Miscellaneous Revenues - 177, ,279 Total Revenues 10,888,301 12,152,892 1,264,591 EXPENDITURES Current: Public Safety 13,258,333 10,834,208 2,424,125 Total Expenditures 13,258,333 10,834,208 2,424,125 Excess (Deficiency) of Revenues Over (Under) Expenditures (2,370,032) 1,318,684 3,688,716 OTHER FINANCING SOURCES (USES) Transfers (Out) (190,519) (190,519) - Total Other Financing Sources and (Uses) (190,519) (190,519) - Net Change in Fund Balance (2,560,551) 1,128,165 3,688,716 Fund Balance - Beginning 2,560,551 2,590,909 30,358 Fund Balance - Ending $ - $ 3,719,074 $ 3,719,

149 BUDGETARY COMPARISON SCHEDULE EMERGENCY 911 OPERATIONS FUND For the Year Ended September 30, 2013 Variance with Budget - Budget Actual Amounts Over (Under) REVENUES Intergovernmental Revenues $ 1,330,000 $ 1,413,963 $ 83,963 Investment Income - 2,415 2,415 Total Revenues 1,330,000 1,416,378 86,378 EXPENDITURES Current: Public Safety 2,233, ,033 1,431,850 Total Expenditures 2,233, ,033 1,431,850 Excess (Deficiency) of Revenues Over (Under) Expenditures (903,883) 614,345 1,518,228 OTHER FINANCING SOURCES (USES) Transfers (Out) (658,222) (658,222) - Total Other Financing Sources and (Uses) (658,222) (658,222) - Net Change in Fund Balance (1,562,105) (43,877) 1,518,228 Fund Balance - Beginning 1,562,105 1,575,971 13,866 Fund Balance - Ending $ - $ 1,532,094 $ 1,532,

150 BUDGETARY COMPARISON SCHEDULE HUD-CDGB HOUSING REHABILITATION LOAN FUND For the Year Ended September 30, 2013 Variance with Budget - Budget Actual Amounts Over (Under) REVENUES Intergovernmental Revenues $ 48,000 $ - $ (48,000) Investment Income 2, (1,061) Miscellaneous Revenues - 11,696 11,696 Total Revenues 50,000 12,635 (37,365) EXPENDITURES Current: Economic Environment 85,611-85,611 Total Expenditures 85,611-85,611 Excess (Deficiency) of Revenues Over (Under) Expenditures (35,611) 12,635 48,246 Net Change in Fund Balance (35,611) 12,635 48,246 Fund Balance - Beginning 35,611 35, Fund Balance - Ending $ - $ 48,454 $ 48,

151 BUDGETARY COMPARISON SCHEDULE HUD HOME FUND For the Year Ended September 30, 2013 Variance with Budget - Budget Actual Amounts Over (Under) REVENUES Intergovernmental Revenues $ 3,879,087 $ 1,377,516 $ (2,501,571) Investment Income Miscellaneous Revenues 96,000 47,705 (48,295) Total Revenues 3,975,087 1,426,095 (2,548,992) EXPENDITURES Current: Economic Environment 3,975,087 1,453,487 2,521,600 Total Expenditures 3,975,087 1,453,487 2,521,600 Excess (Deficiency) of Revenues Over (Under) Expenditures - (27,392) (27,392) Net Change in Fund Balance - (27,392) (27,392) Fund Balance - Beginning - 65,305 65,305 Fund Balance - Ending $ - $ 37,913 $ 37,

152 BUDGETARY COMPARISON SCHEDULE SOUTHWEST SECTOR ROAD PROJECT FUND For the Year Ended September 30, 2013 Variance with Budget - Budget Actual Amounts Over (Under) REVENUES Investment Income $ - $ 4,178 $ 4,178 Total Revenues - 4,178 4,178 EXPENDITURES Current: Transportation 3,802, ,533 3,475,954 Total Expenditures 3,802, ,533 3,475,954 Excess (Deficiency) of Revenues Over (Under) Expenditures (3,802,487) (322,355) 3,480,132 Net Change in Fund Balance (3,802,487) (322,355) 3,480,132 Fund Balance - Beginning 3,802,487 2,205,533 (1,596,954) Fund Balance - Ending $ - $ 1,883,178 $ 1,883,

153 BUDGETARY COMPARISON SCHEDULE BOB SIKES TOLL FACILITIES FUND For the Year Ended September 30, 2013 Budget Actual Amounts Variance with Budget - Over (Under) REVENUES Charges for Services $ 2,897,500 $ 3,310,752 $ 413,252 Investment Income - 12,444 12,444 Miscellaneous Revenues 500, ,097 22,097 Total Revenues 3,397,500 3,845, ,793 EXPENDITURES Current: General Government 3,088,653 1,542,595 1,546,058 Total Expenditures 3,088,653 1,542,595 1,546,058 Excess (Deficiency) of Revenues Over (Under) Expenditures 308,847 2,302,698 1,993,851 OTHER FINANCING SOURCES Transfers (Out) (1,602,088) (1,472,491) 129,597 Total Other Financing Sources (1,602,088) (1,472,491) 129,597 Net Change in Fund Balance (1,293,241) 830,207 2,123,448 Fund Balance - Beginning 1,293,241 6,283,108 4,989,867 Fund Balance - Ending $ - $ 7,113,315 $ 7,113,

154 BUDGETARY COMPARISON SCHEDULE TRANSPORTATION TRUST FUND For the Year Ended September 30, 2013 REVENUES Budget Actual Amounts Variance with Budget - Over (Under) Taxes $ 8,027,500 $ 8,301,155 $ 273,655 Permits and Fees Intergovernmental Revenues 4,140,100 4,319, ,407 Charges for Services 255, ,137 22,875 Investment Income - 3,779 3,779 Miscellaneous Revenues 291,745 1,048, ,473 Total Revenues 12,714,607 13,951,696 1,237,089 EXPENDITURES Current: Public Safety 5,708,008 5,758,849 (50,841) Transportation 15,140,892 14,696, ,508 Total Expenditures 20,848,900 20,455, ,667 Excess (Deficiency) of Revenues Over (Under) Expenditures (8,134,293) (6,503,537) 1,630,756 OTHER FINANCING SOURCES Transfers In 3,924,797 3,924,797 - Total Other Financing Sources 3,924,797 3,924,797 - Net Change in Fund Balance (4,209,496) (2,578,740) 1,630,756 Fund Balance - Beginning 4,209,496 4,516, ,550 Fund Balance - Ending $ - $ 1,937,306 $ 1,937,

155 BUDGETARY COMPARISON SCHEDULE MSBU ASSESSMENT PROGRAM FUND For the Year Ended September 30, 2013 Variance with Budget - Budget Actual Amounts Over (Under) REVENUES Special Assessments $ 734,323 $ 831,844 $ 97,521 Investment Income - 2,226 2,226 Total Revenues 734, ,070 99,747 EXPENDITURES Current: Transportation 1,747,478 1,186, ,422 Debt Service Principal Retirement 32,613-32,613 Interest and Fiscal Charges 4, ,044 Total Expenditures 1,784,767 1,186, ,079 Excess (Deficiency) of Revenues Over (Under) Expenditures (1,050,444) (352,618) 697,826 OTHER FINANCING SOURCES (USES) Issuance of Notes/Bonds Payable 501,488 - (501,488) Total Other Financing Sources and (Uses) 501,488 - (501,488) Net Change in Fund Balance (548,956) (352,618) 196,338 Fund Balance - Beginning 548, ,326 9,370 Fund Balance - Ending $ - $ 205,708 $ 205,

156 BUDGETARY COMPARISON SCHEDULE MASTER DRAINAGE BASIN FUND For the Year Ended September 30, 2013 Variance with Budget - Over Budget Actual Amounts (Under) REVENUES Special Assessments $ 54,358 $ 94,607 $ 40,249 Investment Income - 1,735 1,735 Total Revenues 54,358 96,342 41,984 EXPENDITURES Current: Transportation 915, , ,018 Total Expenditures 915, , ,018 Excess (Deficiency) of Revenues Over (Under) Expenditures (861,021) (101,019) 760,002 Net Change in Fund Balance (861,021) (101,019) 760,002 Fund Balance - Beginning 861, ,832 9,811 Fund Balance - Ending $ - $ 769,813 $ 769,

157 BUDGETARY COMPARISON SCHEDULE CLERK PROGRAMS For the Year Ended September 30, 2013 Variance with Budget - Over Budget Actual Amounts (Under) REVENUES Intergovernmental Revenues $ 634,953 $ 597,285 $ (37,668) Charges for Services 611, , ,537 Judgments and Fines 259, ,110 15,110 Investment Income 5, (4,954) Miscellaneous Revenues Total Revenues 1,510,321 1,604,676 94,355 EXPENDITURES Current: General Government 829, , ,919 Court-Related 724, , ,211 Total Expenditures 1,554,160 1,005, ,130 Excess (Deficiency) of Revenues Over (Under) Expenditures (43,839) 599, ,485 OTHER FINANCING SOURCES (USES) Transfers In 43,839 43,839 - Total Other Financing Sources and (Uses) 43,839 43,839 - Net Change in Fund Balance - 643, ,485 Fund Balance - Beginning - 1,519,114 1,519,114 Fund Balance - Ending $ - $ 2,162,599 $ 2,162,

158 BUDGETARY COMPARISON SCHEDULE SHERIFF PROGRAMS For the Year Ended September 30, 2013 Variance with Budget - Budget Actual Amounts Over (Under) REVENUES Intergovernmental $ 482,235 $ 648,409 $ 166,174 Charges for Services 1,783, ,136 (930,021) Judgments and Fines - 83,921 83,921 Miscellaneous Revenue 54,014 51,511 (2,503) Total Revenues 2,319,406 1,636,977 (682,429) EXPENDITURES Current: Public Safety 2,319,406 1,548, ,758 Total Expenditures 2,319,406 1,548, ,758 Excess (Deficiency) of Revenues Over (Under) Expenditures - 88,329 88,329 Net Change in Fund Balance - 88,329 88,329 Fund Balance - Beginning - 932, ,525 Fund Balance - Ending $ - $ 1,020,854 $ 1,020,

159 BUDGETARY COMPARISON SCHEDULE SUPERVISOR OF ELECTIONS PROGRAMS For the Year Ended September 30, 2013 Variance with Budget - Budget Actual Amounts Over (Under) REVENUES Intergovernmental $ 94,521 $ 76,615 $ (17,906) Total Revenues 94,521 76,615 (17,906) EXPENDITURES Current: General Government 94,521 89,537 4,984 Total Expenditures 94,521 89,537 4,984 Excess (Deficiency) of Revenues Over (Under) Expenditures - (12,922) (12,922) OTHER FINANCING SOURCES (USES) Transfers In - 12,922 12,922 Transfers (Out) Total Other Financing Sources and (Uses) - 12,922 12,922 Net Change in Fund Balance Fund Balance - Beginning Fund Balance - Ending $ - $ - $ - 141

160 BUDGETARY COMPARISON SCHEDULE DEBT SERVICE FUND For the Year Ended September 30, 2013 Actual Amounts Variance with Budget - Over (Under) Budget REVENUES Intergovernmental $ 383, ,334 60,000 Investment Income 8,475 11,515 3,040 Total Revenues 391, ,849 63,040 EXPENDITURES Current: General Government 43,334 43,333 1 Debt Service Principal Retirement 2,815,000 3,526,000 (711,000) Interest and Fiscal Charges 4,448,334 3,142,328 1,306,006 Total Expenditures 7,306,668 6,711, ,007 Excess (Deficiency) of Revenues Over (Under) Expenditures (6,914,859) (6,256,812) 658,047 OTHER FINANCING SOURCES (USES) Transfers In 6,409,859 5,461,214 (948,645) Reserve for Debt Service (195,000) - 195,000 Issuance of Refunding Bonds Payable - 8,406,000 8,406,000 Payment to Refunded Bonds Escrow Agent - (8,361,941) (8,361,941) Total Other Financing Sources and (Uses) 6,214,859 5,505,273 (709,586) Net Change in Fund Balance (700,000) (751,539) (51,539) Fund Balance - Beginning 700,000 2,654,985 1,954,985 Fund Balance - Ending $ - $ 1,903,446 $ 1,903,

161 COMBINING BALANCE SHEET NONMAJOR GOVERNMENTAL FUNDS - CAPITAL PROJECTS FUNDS September 30, 2013 Federal Transit Administration Fund New Road Construction Fund Total Nonmajor Capital Projects Funds ASSETS Cash and Cash Equivalents $ 103,006 $ 11,128 $ 114,134 Investments 171,785 18, ,345 Due from Other Governments 110, ,422 Total Assets 385,213 29, ,901 LIABILITIES Accounts Payable 70,254-70,254 Total Liabilities 70,254-70,254 FUND BALANCES Restricted for: Mass Transit Capital 314, ,959 Road Construction - 29,688 29,688 Total Fund Balances 314,959 29, ,647 Total Liabilities, deferred inflow of resources, and fund balances $ 385,213 $ 29,688 $ 414,

162 COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES NONMAJOR GOVERNMENTAL FUNDS - CAPITAL PROJECTS FUNDS For the Year Ended September 30, 2013 Federal Transit Administration Fund New Road Construction Fund Total Nonmajor Capital Projects Funds REVENUES Intergovernmental Revenues $ 457,188 $ - $ 457,188 Investment Income Total Revenues 457, ,766 EXPENDITURES Current: Transportation 76,920-76,920 Capital Outlay 380, ,269 Total Expenditures 457, ,189 Excess (Deficiency) of Revenues Over (Under) Expenditures Net Change in Fund Balances Fund Balances - Beginning 314,443 29, ,070 Fund Balances - Ending $ 314,959 $ 29,688 $ 344,

163 BUDGETARY COMPARISON SCHEDULE FEDERAL TRANSIT ADMINISTRATION FUND For the Year Ended September 30, 2013 Variance with Budget Actual Amounts Budget - Over (Under) REVENUES Intergovernmental Revenues $ 6,321,060 $ 457,188 $ (5,863,872) Investment Income Total Revenues 6,321, ,705 (5,863,355) EXPENDITURES Current: Transportation 3,243,397 76,920 3,166,477 Capital Outlay 3,077, ,269 2,697,394 Total Expenditures 6,321, ,189 5,863,871 Excess (Deficiency) of Revenues Over (Under) Expenditures Net Change in Fund Balance Fund Balance - Beginning - 314, ,443 Fund Balance - Ending $ - $ 314,959 $ 314,

164 BUDGETARY COMPARISON SCHEDULE NEW ROAD CONSTRUCTION FUND For the Year Ended September 30, 2013 Variance with Budget Actual Amounts Budget - Over (Under) REVENUES Investment Income $ - $ 61 $ 61 Total Revenues EXPENDITURES Current: Capital Outlay 29,290-29,290 Total Expenditures 29,290-29,290 Excess (Deficiency) of Revenues Over (Under) Expenditures (29,290) 61 29,351 Net Change in Fund Balance (29,290) 61 29,351 Fund Balance - Beginning 29,290 29, Fund Balance - Ending $ - $ 29,688 $ 29,

165 NONMAJOR PROPRIETARY FUNDS ENTERPRISE FUNDS Proprietary funds are used to account for Business-Type activities. The focus is on the determination of operating income, changes in net position (or cost recovery), financial position and cash flows. Inspection Fund Used to account for building inspection services provided to the residents of Escambia County. Bay Center Fund Used to account for the operation, maintenance and improvements of the Pensacola Bay Center. 147

166 COMBINING STATEMENT OF NET POSITION NONMAJOR PROPRIETARY FUNDS September 30, 2013 Business-type Activities - Enterprise Funds Inspection Fund Bay Center Fund Totals ASSETS Current Assets: Cash and Cash Equivalents $ 785,284 $ 632,248 $ 1,417,532 Restricted Assets Available for Current Liabilities 232, ,916 Investments 1,696, ,861 2,245,749 Accounts Receivable,Net of Allowance for Uncollectable Accounts , ,997 Inventories - 47,352 47,352 Prepaid Items - 4,502 4,502 Total Current Assets 2,715,579 1,385,469 4,101,048 Noncurrent Assets: Restricted Assets: Escrow Deposits - restricted 232, ,916 Less: Portion Classified as Current (232,916) - (232,916) Total Restricted Assets Capital Assets: Buildings - 25,743,235 25,743,235 Improvements Other than Buildings - 2,984,749 2,984,749 Machinery, Equipment and Vehicles 427,963 2,087,567 2,515,530 Less: Accumulated Depreciation (409,603) (23,168,639) (23,578,242) Total Capital Assets (Net) 18,360 7,646,912 7,665,272 Total Noncurrent Assets 18,360 7,646,912 7,665,272 Total Assets 2,733,939 9,032,381 11,766,320 Continued 148

167 STATEMENT OF NET POSITION - Continued NONMAJOR PROPRIETARY FUNDS September 30, 2013 Business-type Activities - Enterprise Funds Inspection Fund Bay Center Fund Totals LIABILITIES Current Liabilities: Accounts Payable 13, , ,698 Contracts Payable - 18,703 18,703 Accrued Liabilities 59,391-59,391 Compensated Absences Payable 30,897-30,897 Due to Other Governments 6,150 16,782 22,932 Deposits 22,802-22,802 Other Current liabilities - 494, ,342 Current Liabilities Payable from Restricted Assets: Escrow Deposits - restricted 232, ,916 Total Current Liabilities 365,481 1,104,200 1,469,681 Noncurrent Liabilities: Compensated Absences Payable 278, ,047 Other Post Employment Benefits 87,175-87,175 Total Noncurrent Liabilities 365, ,222 Total Liabilities 730,703 1,104,200 1,834,903 NET POSITION Net Investment in Capital Assets 18,360 7,646,912 7,665,272 Unrestricted 1,984, ,269 2,266,145 Total Net Position $ 2,003,236 $ 7,928,181 $ 9,931,

168 COMBINING STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET ASSETS NONMAJOR PROPRIETARY FUNDS For the Year Ended September 30, 2013 Business-type Activities - Enterprise Funds Inspection Fund Bay Center Fund Total Operating Revenues: Charges for Services $ 2,091,232 $ 3,904,668 $ 5,995,900 Miscellaneous Revenues 7,638 32,949 40,587 Total Operating Revenues 2,098,870 3,937,617 6,036,487 Operating Expenses: Personal Services 1,551,790-1,551,790 Contracted Services - 5,481,958 5,481,958 Supplies and Materials 58,727 21,119 79,846 Repairs and Maintenance 90,982 2,439 93,421 Other Services and Charges 159, , ,043 Depreciation 9, , ,075 Premiums/Claims Expense 5,871 60,630 66,501 Total Operating Expenses 1,876,077 6,582,557 8,458,634 Operating Income 222,793 (2,644,940) (2,422,147) Nonoperating Revenues (Expenses): Investment Income 2,220 1,612 3,832 Total Nonoperating Revenues (Expenses) 2,220 1,612 3,832 Income Before Transfers and Contributions 225,013 (2,643,328) (2,418,315) Transfer In - 1,400,000 1,400,000 Capital Contributions 8,545 29,680 38,225 Change in Net Position 233,558 (1,213,648) (980,090) Net Position - Beginning 1,769,678 9,141,829 10,911,507 Net Position - Ending $ 2,003,236 $ 7,928,181 $ 9,931,

169 COMBINING SCHEDULE OF CASH FLOWS NONMAJOR PROPRIETARY FUNDS For the Year Ended September 30, 2013 Business-type Activities - Enterprise Funds Inspection Fund Bay Center Fund Total Cash Flows from Operating Activities Receipts from customers and users $ 2,082,367 $ 3,832,339 $ 5,914,706 Payments to suppliers (300,107) (5,672,374) (5,972,481) Payments to employees (1,685,265) (32,180) (1,717,445) Net Cash Provided (Used) by Operating Activities 96,995 (1,872,215) (1,775,220) Cash Flows from Noncapital Financing Activities Transfers from other funds - 1,400,000 1,400,000 Net Cash Provided (Used) by Noncapital Financing Activities - 1,400,000 1,400,000 Cash Flows from Capital and Related Financing Activities Acquisition/construction of capital assets (5,580) (384,516) (390,096) Net Cash (Used) by Capital and Related Financing Activities (5,580) (384,516) (390,096) Cash Flows from Investing Activities Sale (purchase) of investments (1,696,888) (548,861) (2,245,749) Interest received 2,220 1,612 3,832 Net Cash Provided (Used) by Investing Activities (1,694,668) (547,249) (2,241,917) Net Increase (Decrease) in Cash and Cash Equivalents (1,603,253) (1,403,980) (3,007,233) Cash and cash equivalents at beginning of year 2,621,453 2,036,228 4,657,681 Cash and cash equivalents at end of year $ 1,018,200 $ 632,248 $ 1,650,448 Cash and Cash Equivalents Classified As Current assets $ 785,284 $ 632,248 $ 1,417,532 Current restricted assets 232, ,916 Total Cash and Cash Equivalents $ 1,018,200 $ 632,248 $ 1,650,448 Continued 151

170 COMBINING STATEMENT OF CASH FLOWS - Continued NONMAJOR PROPRIETARY FUNDS For the Year Ended September 30, 2013 Business-type Activities - Enterprise Funds Inspection Fund Bay Center Fund Total Reconciliation of Operating Income (Loss) to Net Cash Provided (Used) by Operating Activities Operating income (loss) $ 222,793 $ (2,644,940) $ (2,422,147) Depreciation 9, , ,075 Change in Assets and Liabilities: Accounts receivable (491) (86,744) (87,235) Inventories - 6,118 6,118 Prepaids - 54,028 54,028 Accounts payable 8,722 (59,984) (51,262) Contracts payable - 18,703 18,703 Accrued liabilities (9,787) (32,180) (41,967) Due to other governments 5,919 16,782 22,701 Customer deposits (16,012) - (16,012) Other current liabilities - (18,534) (18,534) Compensated absences (59,487) - (59,487) Post employment benefits (64,201) - (64,201) Total Adjustments (125,798) 772, ,927 Net Cash Provided (Used) by Operating Activities $ 96,995 $ (1,872,215) $ (1,775,220) Schedule of non-cash capital activities: Contributions of Capital Assets $ 8,545 $ 29,680 $ 38,

171 BUSINESS -TYPE FUNDS INTERNAL SERVICE FUNDS Internal service funds are used to report any activity that provides goods or servi ces to other funds, departments, or agencies of the primary government and its component unit, or to other governments, on a cost-reimbursement basis. Board of County Commissioners - ISF Used to account for risk management services, garage and fuel services provided to County departments, and for the administration of employee benefits. Clerk of Circuit Court and Comptroller- ISF Used to account for annual costs related to compensated absence policy and activities for the Court Related employees of the Clerk of the Circuit Court and Comptroller s Office. Sheriff - ISF Used to account for annual costs related to compensated absence policy and activities of employees of the Escambia County Sheriff s Office, and the closure of this internal service fund as of September 30,

172 COMBINING STATEMENT OF NET POSITION INTERNAL SERVICE FUNDS September 30, 2013 Governmental Activities- Internal Service funds BCC Internal Clerk Internal Sheriff Internal Service Fund Service Fund Service Fund Totals ASSETS Current Assets: Cash and Cash Equivalents $ 3,798,954 $ 681,381 $ - $ 4,480,335 Investments 6,235, ,235,240 Accounts Receivable,Net of Allowance for Uncollectable Accounts 1,532, ,532,838 Due from Other Funds 243, ,918 Due from Other Governments 110, ,518 Inventories 396, ,105 Prepaid Items 243, ,235 Total Current Assets 12,560, ,381-13,242,189 Advances Due from Other Funds 4,783, ,783,928 Capital Assets: Buildings 399, ,564 Improvements Other than Buildings 937, ,373 Machinery, Equipment and Vehicles 267, ,901 Less: Accumulated Depreciation (706,871) - - (706,871) Total Capital Assets (Net) 897, ,967 Total Noncurrent Assets 5,681, ,681,895 Total Assets 18,242, ,381-18,924,084 Continued 154

173 COMBINING STATEMENT OF NET POSITION INTERNAL SERVICE FUNDS September 30, 2013 Governmental Activities- Internal Service funds BCC Internal Clerk Internal Sheriff Internal Service Fund Service Fund Service Fund Totals LIABILITIES Current Liabilities: Accounts Payable 2,147, ,147,026 Contracts Payable 9, ,362 Accrued Liabilities 30, ,651 Compensated Absences Payable 29, , ,383 Estimated Claims Payable 1,922, ,922,800 Due to Other Funds Deposits 59, ,105 Total Current Liabilities 4,199, ,634-4,349,276 Noncurrent Liabilities: Compensated Absences Payable 267, , ,493 Other Post Employment Benefits 86, ,407 Estimated Claims Payable 4,624, ,624,093 Total Noncurrent Liabilities 4,978, ,747-5,509,993 Total Liabilities 9,177, ,381-9,859,269 NET POSITION Net Investment in Capital Assets 897, ,967 Unrestricted 8,166, ,166,848 $ 9,064,815 $ - $ - $ 9,064,

174 COMBINING STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET POSITION INTERNAL SERVICE FUNDS For the Year Ended September 30, 2013 Governmental Activities- Internal Service funds BCC Internal Service Fund Clerk Internal Service Fund Sheriff Internal Service Fund Operating Revenues: Charges for Services $ 27,788,849 $ 1,194,517 $ 9,223,707 $ 38,207,073 Total Operating Revenues 27,788,849 1,194,517 9,223,707 38,207,073 Operating Expenses: Personal Services 1,491, ,229 14,576,295 16,711,407 Contracted Services - Storm Damage 4,010, ,010,909 Repairs and Maintenance 739, ,587 Other Services and Charges 4,973, ,973,439 Depreciation 78, ,854 Premiums/Claims Expense 18,674, ,674,453 Total Operating Expenses 29,969, ,229 14,576,295 45,188,649 Operating Income (2,180,276) 551,288 (5,352,588) (6,981,576) Nonoperating Revenues (Expenses): Grants Investment Income 29, ,243 Gain (Loss) on Disposal of Capital Assets (2,051) - - (2,051) Total Nonoperating Revenues (Expenses) 27, ,347 Income Before Transfers and Contributions (2,152,929) 551,288 (5,352,588) (6,954,229) Transfer (Out) (1,028,436) (551,288) (1,500,000) (3,079,724) Capital Contributions 1, ,946 Closure of Internal Service fund ,616,302 18,616,302 Change in Net Position (3,179,419) - 11,763,714 8,584,295 Net Position - Beginning 12,244,234 - (11,763,714) 480,520 Net Position - Ending $ 9,064,815 $ - $ - $ 9,064,815 Total 156

175 COMBINIING STATEMENT OF CASH FLOWS INTERNAL SERVICE FUNDS For the Year Ended September 30, 2013 Governmental Activities- Internal Service funds BCC Internal Service Fund Clerk Internal Service Fund Sheriff Internal Service Fund Cash Flows from Operating Activities Receipts from Customers and Users $ 29,661,819 $ - $ - $ 29,661,819 Payments to Suppliers (27,612,656) - - (27,612,656) Payments to Employees (1,435,872) (625,430) (5,018,507) (7,079,809) Net Cash Provided (Used) by Operating Activities 613,291 (625,430) (5,018,507) (5,030,646) Cash Flows from Noncapital Financing Activities Transfers to Other Funds (1,028,436) (551,288) (1,500,000) (3,079,724) Advances due to/from Other Funds 1,240, ,240,757 Subsidy from Federal/State Grants Net Cash Provided (Used) by Noncapital Financing Activities 212,476 (551,288) (1,500,000) (1,838,812) Cash Flows from Capital and Related Financing Activities Acquisition/Construction of Capital Assets (2,999) - - (2,999) Net Cash (Used) by Capital and Related Financing Activities (2,999) - - (2,999) Cash Flows from Investing Activities Sale (Purchase) of Investments (6,235,240) - - (6,235,240) Interest Received 29, ,243 Net Cash Provided (Used) by Investing Activities (6,205,997) - - (6,205,997) Net Increase (Decrease) in Cash and Cash Equivalents (5,383,229) (1,176,718) (6,518,507) (13,078,454) Cash and Cash Equivalents at Beginning of Year 9,182,183 1,858,099 6,518,507 17,558,789 Cash and Cash Equivalents at End of Year $ 3,798,954 $ 681,381 $ - $ 4,480,335 Cash and Cash Equivalents Classified As: Current Assets $ 3,798,954 $ 681,381 $ - $ 4,480,335 Total Cash and Cash Equivalents $ 3,798,954 $ 681,381 $ - $ 4,480,335 Continued Total 157

176 COMBINING STATEMENT OF CASH FLOWS - Continued INTERNAL SERVICE FUNDS For the Year Ended September 30, 2013 Governnmental Activities - Internal Service Funds BCC Internal Service Fund Clerk Internal Service Fund Sheriff Internal Service Fund Total Reconciliation of Operating Income to Net Cash Provided (Used) by Operating Activities Operating Income $ (2,180,276) $ 551,288 $ (5,352,588) $ (6,981,576) Depreciation 78, ,854 Change in Assets and Liabilities: (Increase) Decrease in Accounts Receivable 1,849, ,849,018 (Increase) Decrease in Inventories 60, ,927 (Increase) Decrease in Prepaids 375, ,023 Increase (Decrease) in Accounts Payable 2,147, ,147,026 Increase (Decrease) in Contracts Payable 9, ,362 Increase (Decrease) in Accrued Liabilities (3,070) - - (3,070) Increase (Decrease) in Customer Deposits 23, ,952 Increase (Decrease) in Compensated Absences 28,857 (1,176,718) 334,081 (813,780) Increase (Decrease) in Post Employment Benefits 30, ,224 Increase (Decrease) in Claims Payable (1,806,606) - - (1,806,606) Total Adjustments 2,793,567 (1,176,718) 334,081 1,950,930 Net Cash Provided (Used for) Operating Activities $ 613,291 $ (625,430) $ (5,018,507) $ (5,030,646) Schedule of non-cash capital activities: Contributions of Capital Assets $ 1,946 $ - $ - $ 1,

177 FIDUCIARY FUNDS AGENCY FUNDS Agency funds are used to account for assets held by the County as an agent for individuals, private organizations, and other governments. Clerk of the Circuit Court and Comptroller Used to account for resources received and held by the Clerk in a fiduciary capacity. These resources represent fines, forfeitures and filing fees collected for other governmental agencies and support payments, jury and witness services and posted bonds collected for individuals. Sheriff Used to account for the assets held by the Sheriff for individuals such as prisoner s funds, confiscated monies held as evidence, and prepayments of the Sheriff s fees for serving papers. Tax Collector Used to account for property taxes and fees for licenses. 159

178 COMBINING STATEMENT OF FIDUCIARY NET POSITION AGENCY FUNDS September 30, 2013 Clerk General Agency Sheriff General Agency Tax Collector General Totals ASSETS Cash and Cash Equivalents $ 4,271,536 $ 1,153,462 $ 3,876,546 $ 9,301,544 Accounts Receivable 19,061 6, , ,023 Total Assets $ 4,290,597 $ 1,160,010 $ 4,176,960 $ 9,627,567 LIABILITIES Due to Other Governments $ 39,120 $ 96,494 $ 3,624,310 $ 3,759,924 Due to Individuals 669, , ,650 2,220,300 Other Current Liabilities 3,581,559 65,784-3,647,343 Total Liabilities $ 4,290,597 $ 1,160,010 $ 4,176,960 $ 9,627,

179 CLERK GENERAL AGENCY FUNDS ESCAMBIA COUNTY, FLORIDA STATEMENTS OF CHANGES IN ASSETS AND LIABILITIES AGENCY FUNDS For the Year Ended September 30, 2013 Balance 10/01/12 Additions Deductions Balance 09/30/13 ASSETS Cash and Cash Equivalents $ 2,974,254 $ 32,475,342 $ 31,178,060 $ 4,271,536 Accounts Receivable 24,447 57,997 63,383 19,061 Total Assets $ 2,998,701 $ 32,533,339 $ 31,241,443 $ 4,290,597 LIABILITIES Accounts Payable $ - $ 100,325 $ 100,325 $ - Due to Other Governments 49, , ,407 39,120 Due to Individuals 462,250 8,749,984 8,542, ,918 Other Current Liabilities 2,486,880 23,435,686 22,341,007 3,581,559 Total Liabilities $ 2,998,701 $ 32,648,951 $ 31,357,055 $ 4,290,597 SHERIFF GENERAL AGENCY FUNDS Balance 10/01/12 Additions Deductions Balance 09/30/13 ASSETS Cash and Cash Equivalents $ 1,605,447 $ 4,473,861 $ 4,925,846 $ 1,153,462 Accounts Receivable 22,295 6,548 22,295 6,548 Total Assets $ 1,627,742 $ 4,480,409 $ 4,948,141 $ 1,160,010 LIABILITIES Due to Other Governments $ 36,738 $ 405,530 $ 345,774 $ 96,494 Due to Individuals 1,547,534 4,651,644 5,201, ,732 Other Current Liabilities 43, ,857 79,543 65,784 Total Liabilities $ 1,627,742 $ 5,159,031 $ 5,626,763 $ 1,160,010 TAX COLLECTOR GENERAL AGENCY FUNDS Balance 10/01/12 Additions Deductions Balance 09/30/13 ASSETS Cash and Cash Equivalents $ 4,399,257 $ 1,531,158,190 $ 1,531,680,901 $ 3,876,546 Accounts Receivable 250,281 39,518,745 39,468, ,414 Total Assets $ 4,649,538 $ 1,570,676,935 $ 1,571,149,513 $ 4,176,960 LIABILITIES Due to Other Governments $ 3,668,492 $ 1,256,718,892 $ 1,256,763,074 $ 3,624,310 Due to Individuals 981,046 47,080,740 47,509, ,650 Total Liabilities $ 4,649,538 $ 1,303,799,632 $ 1,304,272,210 $ 4,176,960 Continued 161

180 AGENCY COMBINED TOTALS ESCAMBIA COUNTY, FLORIDA STATEMENTS OF CHANGES IN ASSETS AND LIABILITIES - Continued AGENCY FUNDS For the Year Ended September 30, 2013 Balance 10/01/12 Additions Deductions Balance 09/30/13 ASSETS Cash and Cash Equivalents $ 8,978,958 $ 1,568,107,393 $ 1,567,784,807 $ 9,301,544 Accounts Receivable 297,023 39,583,290 39,554, ,023 Total Assets $ 9,275,981 $ 1,607,690,683 $ 1,607,339,097 $ 9,627,567 LIABILITIES Accounts Payable $ - $ 100,325 $ 100,325 $ - Due to Other Governments 3,754,801 1,257,487,378 1,257,482,255 3,759,924 Due to Individuals 2,990,830 60,482,368 61,252,898 2,220,300 Other Current Liabilities 2,530,350 23,537,543 22,420,550 3,647,343 Total Liabilities $ 9,275,981 $ 1,341,607,614 $ 1,341,256,028 $ 9,627,

181

182 Schedule 1 Escambia County, Florida NET POSITION BY COMPONENT Last Ten Fiscal Years (accrual basis of accounting) (Amounts Expressed in Thousands) Fiscal Year Governmental activities Net investment in capital assets $ 452,717 $ 458,089 $ 458,331 $ 445,075 $ 421,039 Restricted 102,728 86,651 85,670 91,990 9,422 Unrestricted 15,359 30,839 10,083 10, ,805 Total governmental activities net assets $ 570,804 $ 575,579 $ 554,084 $ 547,377 $ 531,266 Business-type activities Net investment in capital assets 52,502 49,930 49,870 48,811 47,589 Unrestricted 15,992 14,852 14,200 10, Total business-type activities net assets $ 68,494 $ 64,782 $ 64,070 $ 59,518 $ 48,469 Primary government Net investment in capital assets 505, , , , ,628 Restricted 102,728 86,651 85,670 91,990 9,422 Unrestricted 31,351 45,691 24,283 21, ,685 Total primary government net position $ 639,298 $ 640,361 $ 618,154 $ 606,896 $ 579,735 Continued next page 163

183 $ 411,670 $ 406,635 $ 356,455 $ 304,720 $ 279, ,090 97,646 39,815 88,968 80,027 85,589 (2,879) 33,042 $ 501,404 $ 487,409 $ 449,134 $ 399,487 $ 352,643 43,157 41,604 43,338 43,196 44,690 2,422 4,318 11,872 10,134 6,001 $ 45,579 $ 45,922 $ 55,210 $ 53,330 $ 50, , , , , , ,090 97,646 39,815 91,390 84,345 97,461 7,255 39,043 $ 546,983 $ 533,331 $ 504,344 $ 452,817 $ 403,

184 Schedule 2 Escambia County, Florida CHANGES IN NET POSITION Last Ten Fiscal Years (accrual basis of accounting) (Amounts Expressed in Thousands) Fiscal Year Expenses Governmental Activities: General government $ 74,163 $ 67,918 $ 66,068 $ 58,525 $ 68,563 Public Safety 107, , , , ,799 Physical environment 2,057 4,694 6,892 4,418 4,348 Transportation 52,130 49,084 47,726 44,860 43,887 Economic environment 11,274 13,225 13,361 19,468 11,326 Human services 2,493 2,781 2,790 3,318 3,386 Culture and recreation 4,464 7,024 6,073 5,647 5,851 Court related 10,152 7,922 8,405 8,446 8,607 Interest 3,058 4,388 5,165 5,397 6,471 Total Governmental Activities 267, , , , ,238 Business-type Activities: Solid waste $ 9,988 $ 10,254 $ 11,941 $ 11,822 $ 7,861 Emergency medical services 9,912 9,723 9,387 9,563 14,195 Inspection fund 1,876 2,285 2,580 2,874 3,141 Bay Center 6,583 5,876 5,743 6,509 5,523 Industrial park N/A N/A N/A N/A N/A Total Business-type Activities 28,359 28,138 29,651 30,769 30,720 Total Expenses $ 295,748 $ 306,092 $ 303,788 $ 301,193 $ 301,958 Program Revenues Governmental Activities: Charges for services General Government 4,285 25,380 25,142 25,084 26,578 Public Safety 17,725 18,629 17,679 17,469 14,589 Physical Environment 13,582 2,625 2,364 2,566 2,452 Transportation 6,249 1,254 1,444 1,241 1,023 Economic Environment Human Services Culture/Recreation Court Related 6,674 2,791 3,070 3,007 9,930 Other Activities Operating grants and contributions 19,239 45,950 32,687 31,039 15,183 Capital grants and contributions 4,813 10,683 11,704 27,450 33,056 Total Governmental Activities 73, ,716 94, , ,096 Business-type Activities: Charges for services Solid Waste 11,998 11,674 12,489 11,681 9,830 Emergency medical services 11,454 9,386 11,548 13,924 14,074 Inspection fund 2,091 1,970 1,904 1,829 1,997 Bay Center 3,905 3,735 3,490 3,974 3,473 Industrial Park N/A N/A N/A N/A N/A Operating grants and contributions Capital grants and contributions 1, , Total Business-type Activities 31,006 27,093 30,163 33,138 30,352 Total Program Revenues $ 104,274 $ 134,809 $ 124,595 $ 141,310 $ 133,448 Net (Expense)/Revenue Governmental Activities $ (194,121) $ (170,237) $ (179,705) $ (162,252) $ (168,142) Business-type Activities 2,647 (1,046) 512 2,369 (369) Total Net Expense $ (191,474) $ (171,283) $ (179,193) $ (159,883) $ (168,511) Continued on next page 165

185 $ 74,196 $ 21,405 $ 12,561 $ 30,260 $ 18, , , , , ,148 7,351 13,576 4,159 2,307 1,081 45,859 80,398 66,373 46,601 48,511 16,955 22,639 22,081 9,115 12,050 4,654 5,299 4,966 4,663 4,707 5,312 11,311 8,610 5,497 4,179 8,911 10,086 14,029 9,141 11,850 5,909 7,245 8,066 7,850 7, , , , , ,034 $ 10,330 $ 9,164 $ 8,336 $ 13,932 $ 8,411 15,036 14,760 13,868 13,011 11,761 3,448 3,871 3,487 3,354 3,306 6,197 6,415 5,876 5,713 5,245 N/A N/A ,011 34,210 32,112 36,619 29,504 $ 330,286 $ 348,793 $ 318,490 $ 471,095 $ 267,538 24,133 25,538 26,501 24,222 25,157 16,180 17,023 18,207 17,179 16,465 3,156 3,132 1, ,306 1,534 1,551 2,470 1, ,717 10,369 10,687 10,539 4, ,769 20,137 46, ,135 22,271 22,750 42,096 23,983 6,715 9,307 88, , , ,032 79,810 12,008 8,963 11,159 13,583 9,233 13,828 13,395 12,268 12,393 11,691 2,542 3,507 4,479 7,216 3,829 3,629 4,307 3,846 4,146 3,385 N/A N/A , ,980 33,736 30,825 31,818 37,717 31,118 $ 122,274 $ 151,107 $ 160,987 $ 311,749 $ 110,928 $ (206,737) $ (194,301) $ (157,209) $ (160,444) $ (158,224) (1,275) (3,385) (294) 1,098 1,614 $ (208,012) $ (197,686) $ (157,503) $ (159,346) $ (156,610) Continued on next page 166

186 Schedule 2 Escambia County, Florida CHANGES IN NET POSITION (Continued) Last Ten Fiscal Years (accrual basis of accounting) (Amounts Expressed in Thousands) Fiscal Year General Revenues Governmental Activities: Taxes Property taxes $ 93,789 $ 99,683 $ 105,428 $ 103,386 $ 107,317 Sales tax 56,515 54,113 53,164 49,382 49,756 Gasoline taxes 12,621 13,069 13,315 13,388 13,441 Tourist development tax 7,801 7,156 6,462 5,051 5,333 Other taxes and payments in lieu of taxes 7, Intergovernmental-unrestricted 7,024 8,333 8,189 8,227 8,151 Investment income 390 3,617 1,509 1,163 3,364 Rents and Royalties Gain (loss) on sale of capital assets - 5, Miscellaneous 4,249 1,619 1,698 2,180 13,472 Gain (loss) on sale of capital assets Transfers - internal activities (907) (1,104) (3,456) (8,044) (2,830) Total general revenues and transfers 189, , , , ,005 Business-type Activities: Investment income Gain (loss) on sale of capital assets Miscellaneous Capital Conributions Transfers - internal activities 907 1,104 3,456 8,044 2,830 Total business-type activities 1,064 1,757 4,039 8,680 3,259 Total primary government $ 190,411 $ 193,489 $ 190,452 $ 183,546 $ 201,264 Change in Net Position Governmental Activities $ (4,774) $ 21,495 $ 6,708 $ 12,614 $ 29,863 Business-type Activities 3, ,551 11,049 2,890 Total change in net position $ (1,063) $ 22,206 $ 11,259 $ 23,663 $ 32,753 Continued on next page 167

187 $ 130,009 $ 125,233 $ 98,875 $ 98,902 $ 85,558 54,403 57,121 60,802 60,769 49,975 13,750 14,631 13,837 14,327 13,510 5,533 5,260 4,870 4,136 4, ,058 8,729 8,888 13,774 7,860 6,042 11,665 11,159 6,056 2, ,861 2,716 4,075 6,329 5, ,875 2,366 5,683 (214) 259 (88) (216) 1, , , , , , ,202 1, (299) (259) (1,310) ,174 1, $ 221,664 $ 226,672 $ 209,030 $ 208,829 $ 177,847 $ 13,995 $ 31,679 $ 49,647 $ 46,844 $ 19,487 (343) (2,693) 1,880 2,639 1,750 $ 13,652 $ 28,986 $ 51,527 $ 49,483 $ 21,

188 Schedule 3 Escambia County, Florida FUND BALANCES OF GOVERNMENTAL FUNDS Last Ten Fiscal Years (Modified Accrual Basis of Accounting) (Amounts Expressed in Thousands) Fiscal Year General Fund: Reserved $ 1,458 $ 1,529 Unreserved 31,274 31,636 Total General Fund 32,732 33,165 All Other Governmental Funds: Reserved 52,433 56,106 Unreserved, reported in: Special revenue funds 17,321 14,431 Debt service fund - - Capital projects funds 39,352 38,056 Total all other governmental funds 109, ,593 Total all governmental funds $ 141,838 $ 141, General Fund: Nonspendable $ 4,805 $ 5,021 $ 579 Restricted Committed Assigned 8,402 4, Unassigned 19,361 16,868 27,954 Total General Fund 32,620 26,798 29,437 All Other Governmental Funds: Nonspendable 2,567 7,776 18,896 Restricted 99,764 86,651 85,670 Committed 13,545 9,100 8,418 Assigned - 8,777 7,655 Unassigned (3,980) (6,088) (18,135) Total all other governmental funds 111, , ,504 Total all governmental funds $ 144,516 $ 133,014 $ 131,941 Note: Prior to 2010, amounts have not been restated for the implementation of GASB Statement No. 54. Continued on next page 169

189 $ 1,941 $ 815 $ 1,561 $ 928 $ 1,183 46,959 32,965 36,564 40,697 19,067 48,900 33,780 38,125 41,625 20,250 43,306 40,543 61,043 96,718 38,632 8,769 30,189 8,712 (8,173) 23, ,670 23,909 33,513 17,513 47,828 85,745 94, , , ,423 $ 134,645 $ 128,421 $ 141,393 $ 147,683 $ 130,

190 Schedule 4 Escambia County, Florida CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS Last Ten Fiscal Years (Modified Accrual Basis of Accounting) (Amounts Expressed in Thousands) Fiscal Year REVENUES Taxes $ 149,265 $ 153,137 $ 157,787 $ 152,344 $ 158,587 Permits, fees and special assesements 13,546 12,893 12,074 12,180 11,365 Franchise fees 13,308 13,372 13,811 14,109 13,809 Intergovernmental revenue 57,770 81,844 68,947 85,534 59,002 Charges for services 18,111 17,627 17,218 16,885 18,612 Fines and forfeits 2,262 1,145 1, ,757 Investment income 418 3,415 1,395 1,042 3,126 Miscellaneous 8,992 5,180 10,453 6,987 16,401 Total Revenues 263, , , , ,659 EXPENDITURES Current: General government 58,979 59,147 61,209 51,716 59,419 Public safety 103, , , , ,003 Physical environment 2,279 5,251 6,432 5,490 4,831 Transportation 26,812 26,183 26,172 23,898 24,615 Economic environment 10,419 12,517 13,428 18,973 11,731 Human services 2,079 2,254 2,323 2,786 2,872 Culture and recreation 2,271 1,556 2,186 1,409 1,645 Court-Related 9,132 9,308 9,576 9,603 9,533 Debt service: Principal 3,526 3,670 3,998 13,052 6,168 Interest 3,148 4,388 5,165 5,397 6,471 Refunding bond issurance costs Capital outlay 32,279 50,446 42,539 46,438 37,920 Total expenditures 254, , , , ,208 Excess (Deficiency) of Revenues over Expenditures 9,284 1,622 (2,296) 3,125 6,453 OTHER FINANCING SOURCES (USES) Refunding Bonds issued 8,406 48, Refunding Notes issued - 48, Notes issued ,227 Payments made to Bond Escrow Agents (8,362) (96,700) Insurance recoveries ,312 Transfers in 18,256 36,443 26,941 35,798 40,548 Transfers out (16,083) (38,057) (34,843) (38,842) (43,378) Total Other Financing Sources (Uses) 2,217 (645) (7,601) (2,736) 709 Net change in fund balances $ 11,501 $ 976 $ (9,897) $ 389 $ 7,162 Debt service as a percentage of noncapital expenditures 3.08% 3.54% 4.06% 8.10% 5.46% Continued on next page 171

191 $ 181,972 $ 179,404 $ 152,980 $ 152,986 $ 131,933 12,039 12,714 12,860 12,778 12,160 13,246 13,114 10,792 9,949 9,262 64,356 84,636 95, ,299 63,410 20,192 22,514 22,514 24,260 18,211 4,381 4,294 5, ,418 5,355 10,722 10,477 5,631 2,302 4,742 9,859 12,047 7,853 13, , , , , ,065 66,939 77,273 59,054 51,422 47, , , , , ,624 8,228 12,637 4,030 2,276 1,010 28,870 38,916 31,542 25,027 24,007 16,701 21,627 21,395 8,991 11,257 4,166 4,759 4,530 4,334 4,149 2,126 2,985 3,670 3,113 2,349 10,507 8,819 8,941 8,490 11,017 4,866 14,718 18,815 13,529 10,655 5,909 7,361 8,195 7,943 7, ,807 53,786 47,387 28,907 31, , , , , ,816 5,993 (19,423) (17,787) 13,251 (751) , ,778 11,617 3,975-35,065 40,141 43,882 53,782 32,448 (35,280) (40,332) (43,970) (53,998) (30,437) 229 7,587 11,529 3,759 5,011 $ 6,222 $ (11,836) $ (6,258) $ 17,010 $ 4, % 7.29% 9.23% 5.15% 8.54% 172

192 Schedule 5 Escambia County, Florida ASSESSED VALUE AND ESTIMATED ACTUAL VALUE OF TAXABLE PROPERTY Last Ten Fiscal Years (Amounts Expressed in Thousands) Net Assessed Value of Real Property (1) Commercial Total Fiscal Residential and Industrial Other Personal Direct Year Property Property Property Property (2) Total Tax Rate 2004 $ 5,930,350 $ 1,790,240 $ 249,302 $ 1,751,946 $ 9,721, ,810,435 2,041, ,172 1,814,841 11,562, ,443,443 2,087, ,937 1,802,253 11,634, ,837,506 2,770, ,741 1,938,757 14,899, ,751,338 2,840, ,121 2,014,988 15,951, ,654,407 2,917, ,944 1,939,783 14,857, ,186,381 2,766, ,699 1,939,980 14,239, ,839,770 2,656, ,662 1,790,615 13,609, ,950,022 2,721, ,921 1,708,852 13,748, ,838,568 2,620, ,736 1,802,882 13,639, Source: Escambia County Property Appraiser (1) Taxable value of property subject to direct tax rate. (2) Personal property includes centrally assessed property, furniture, fixtures, tools, machinery, equipment, etc. and is taxed at various rates 173

193 Schedule 6 Escambia County, Florida DIRECT AND OVERLAPPING PROPERTY TAX RATES Last Ten Years (rates per $1,000 of assessed value) Millage rates levied for the fiscal year ending September 30 Fiscal Year Direct: Escambia County Escambia County Law Enforcement Service Taxing Unit Total direct rate Overlapping: Escambia County School Board City of Pensacola City of Pensacola Downtown Improvement Board Northwest Florida Water Management Town of Century Total overlapping rates Source: Escambia County Property Appraiser Continued on next page 174

194

195 Schedule 7 Escambia County, Florida PRINICIPAL PROPERTY TAX PAYERS Current and Nine Years Ago (Amounts Expressed in Thousands) Fiscal Year 2013 Percentage of Total County Assessed Assessed Taxpayer Value Rank Value Gulf Power Company $ 560, % International Paper Corp* 348, % Solutia, Inc. / Ascend Perf. Mat. 124, % West Florida Regional Medical Center 90, % BellSouth Telecommunication 60, % Wal Mart Stores 58, % Simon Debartolo Group / Simon Property 45, % Navy Federal Credit Union 74, % City of Pensacola 55, % CoxCom, Inc. (formerly Cox Cable) 37, % Armstrong World Industries Cordova Community Total $ 1,456, % Total Estimated Assessed Value Countywide $ 13,639,869 Sources: Escambia County Tax Roll compiled by the Escambia County Property Appraiser Tangible personal property records on file in the Escambia County Tax Collector's office. *Formerly known as Champion International Corporation Continued on next page 176

196 Fiscal Year 2004 Percentage of Total County Assessed Assessed Taxpayer Value Rank Value Gulf Power Company $ 396, % International Paper Corp* 248, % Solutia, Inc. / Ascend Perf. Mat. 169, % West Florida Regional Medical Center 88, % BellSouth Telecommunication 101, % Wal Mart Stores 38, % Simon Debartolo Group / Simon Property 49, % Navy Federal Credit Union City of Pensacola CoxCom, Inc. (formerly Cox Cable) 45, % Armstrong World Industries 33, % Cordova Community 48, % Total $ 1,220, % Total Estimated Assessed Value Countywide $ 9,721,

197 Schedule 8 Escambia County, Florida PROPERTY TAX LEVIES AND COLLECTIONS Last Ten Fiscal Years Fiscal Year Taxes Levied Collected within the Fiscal Year of the Levy Collections Total Collections to Date Ended for the Percentage of in Subsequent Percentage of September 30 Fiscal Year Amount Original Levy Years Amount Levy 2004 $ 89,493,802 $ 84,886, % $ 671,247 $ 85,558, % ,175,289 97,192, % 1,709,201 98,901, % ,080,907 98,772, % 101,782 98,874, % ,425, ,999, % 233, ,233, % ,791, ,091, % 1,035, ,126, % ,259, ,074, % 214, ,289, % ,040, ,137, % 3,248, ,385, % ,512,715 93,343, % 12,084,191 (1) 105,427, % ,330,134 99,249, % 432,641 99,682, % ,092,915 94,930, % 188,794 95,118, % Note: Property Tax data includes County wide and Municipal Services Taxing Unit only. Data does not include the School Board. (1) 2011 Collections in Subsquent Years includes $10,606,316 for collections held in reserve pending the outcome of court litigation. 178

198 Schedule 9 Escambia County, Florida RATIOS OF GENERAL BONDED DEBT OUTSTANDING Last Ten Fiscal Years Governmental Activities Business Activities Total Fiscal Capital Outstanding Year Bonds Leases Notes Bonds Notes Debt 2004 $ 132,640,000 $ 8,286,825 $ 37,768,834 $ - $ 789,575 $ 179,485, ,740,000 6,631,668 29,794, , ,560, ,485,000 3,410,861 21,455, ,351, ,390,000 2,737,266 10,505, ,633, ,210,000 1,799,730 10,030, ,040, ,930,000 1,164,512 9,005, ,099, ,540, , ,047, ,050, ,050, ,680,000-48,040, ,720, ,545,000-53,660, ,205,000 Note: Details regarding the county's outstanding debt can be found in the notes to the financial statements (1) See Schedule 13 for more Demographic and Economic Statistics. (2) This is the amount restricted for debt service principal payments (3) Population data can be found in the Schedule of Demographic and Economic Statistics on Schedule 13 Continued on next page 179

199 Less: Amounts Percentage Percentage Available in of Debt of Debt Service Personal Per Per Fund (2) Total Income (1) Population (1) Capita (1) Capita (3) $ 8,518,034 $ 170,967, % 298, % 8,763, ,797, % 298, % 7,089, ,261, % 300, % 747, ,885, % 297, % 765, ,274, % 296, % 9,422, ,677, % 297, % 5,392, ,654, % 297, % 3,743, ,306, % 299, % 2,654, ,065, % 302, % 1,903,446 99,301, % 302, % 180

200 Schedule 10 Escambia County, Florida Direct and Overlapping Governmental Activities Debt and Computation of Legal Debt Margin As of September 30, 2013 Computation of Direct and Overlapping Debt (1) Percentage Bonded Debt Applicable to This Governmental Unit Outstanding Governmental Unit Direct: Escambia County $ 47,545, % Overlapping: County Governments are encouraged, but not required to present inforrmation about Direct or Overlapping Debt. Overlapping debt is not presented. Computation of Legal Debt Margin (2) The Constitution of the State of Florida, Florida Statute and Escambia County set no legal debt limit. Note: Escambia County has no general obligation debt as of September 30, (1) Source: Escambia County Government (2) Source: Florida Statutes 181

201 Schedule 11 Escambia County, Florida PLEDGED REVENUE COVERAGE Last Ten Fiscal Years Sales Tax Bond/Note Capital Improvement Bond Half-Cent Covenant Fiscal Sales Tax Debt Service Requirements to Debt Service Requirements Year Revenues Principal Interest Coverage Budget Principal Interest Coverage ,478,506 N/A 4,065, ,854, ,000 1,031, ,097,935 1,680,000 4,065, ,681, ,000 1,020, ,889,330 1,715,000 4,031, ,860, ,000 1,008, ,143,626 1,755,000 3,993, ,337, , , ,076,803 1,800,000 3,947, ,091, , , ,213,848 1,865,000 3,880, ,952, , , ,089,862 1,925,000 3,824, ,136, , , ,531,628 1,985,000 3,761, ,770, , , ,793,471 2,050,000 3,695, ,423, , , ,617,921 2,120,000 3,625, ,447, , , Note: The capital improvement bond is secued by a covenant to budget and appropriate from available Non- Advalorem revenues. (1) Operating Expenses are defined pursuant to the ordinance 89-7, as amended, providing authority to pledge Tourism tax revenues. Continued on next page 182

202 Tourist Development Tax Bond/Note Tourist Development Less Net Available Tax Operating for Debt Service Requirements Revenues Expense (1) Debt Service Principal Interest Coverage 4,767,594 (575,936) 4,191, , , ,135,345 (575,936) 3,559, , , ,481,411 (590,086) 3,891, , , ,260,038 (1,578,011) 3,682, , , ,532,834 (1,929,311) 3,603, , , ,332,852 (3,371,913) 1,960, , , ,051,422 (1,700,000) 3,351, , , ,461,694 (1,974,810) 4,486, , , ,156,095 (1,400,000) 5,756,095 1,025, , ,801,334 (1,200,000) 6,601,334 1,650, ,

203 Schedule 12 Escambia County, Florida DEMOGRAPHIC AND ECONOMIC STATISTICS Last Ten Fiscal Years Personal Per Capita Income Median Personal (thousands School Unemployment Year Population (1) Age (2) Income (1) of dollars (3 ) Enrollment (4) Rate (1) , ,461 8,786,007 43, % , ,720 9,164,974 43, % , ,052 9,928,656 42, % , ,676 10,312,400 42, % , ,239 10,460,838 41, % , ,713 10,310,282 40, % , ,412 10,539,284 40, % , ,868 11,027,735 39, % , ,682 11,406,907 39, % , ,856 11,459,579 40, % Sources: (1) Florida Research and Economic Information Database (FRIEDA) Population was not available at the time of the report, and is based on 2012 data 2013 per Capita Personal Income is based on an estimated 2nd quarter 2013 Unemployment Rate is monthly adjusted as of September (2) University of West Florida HAAS Center (3) Personal income is a calculated amount based on population and per capita personal income. (4) Escambia County School District - School Board Budget Department 184

204 Schedule 13 Escambia County, Florida PRINCIPAL EMPLOYERS Current and Nine Years Ago 2013 (1) 2004 (1) Percentage Percentage Employer Number of of Total County Number of of Total County Employees Rank Employment Employees Rank Employment Local government 15, % 15, % Federal government 6, % 7, % State of Florida 6, % 5, % Baptist Health Care 4, % 3, % Sacred Heart Health System 3, % 3, % Navy Federal Credit Union 3, % Pensacola State College 1, % Gulf Power Company 1, % 1, % West Florida Healthcare* 1, % 1, % University of West Florida 1, % 2, % Pensacola Christian College 1, % Ascend Performance Materials** % 1, % Lakeview Center 0.00% 1, % Total Employees 14,181 11,667 Source: (1) Pensacola Bay Area Chamber of Commerce. The figures include both Escambia and Santa Rosa Counties (Pensacola MSA). *Formerly West Florida Hospital **Formerly known as Solutia, Inc. 185

205 Schedule 14 Escambia County, Florida ESCAMBIA COUNTY GOVERNMENT EMPLOYEES BY FUNCTION/PROGRAM Last Ten Fiscal Years Number of Full Time Equivalent Employees as of September 30 Function/Program General government Public Safety 1,452 1,481 1,473 1,501 1,422 Physical environment Transportation Economic environment Human services Culture and recreation Court related Total 2,381 2,380 2,374 2,423 2,315 Source: Escambia County Government Continued on next page 186

206 ,428 1,489 1,464 1,430 1, ,441 2,591 2,500 2,435 2,

207 Schedule 15 Escambia County, Florida OPERATING INDICATORS BY FUNCTION/PROGRAM Last Ten Fiscal Years Fiscal Year Function/Program General Government County residents per employee (1) Public Safety Total fire responses 15,946 15,392 15,736 15,493 Total permits issued 17,440 15,176 15,741 15,330 Total inspections performed 31,798 27,205 25,288 25,581 Code Enforcement complaints 8,292 6,400 6,354 7,418 Emergency calls (ambulance) 37,872 38,668 36,516 35,557 Non-emergency calls (ambulance) 2, ,068 Total ambulance transports 33,136 31,542 37,313 36, Calls - City 57,416 59,583 55,093 52,780 Arrests - City 3,773 3,316 3,405 3,375 Traffic Violations - City 8,179 5,894 5,879 5, Calls - County 46,246 48,467 45,071 45,710 Arrests - County 16,944 17,850 16,986 18,776 Traffic Violations - County 9,114 14,314 7,833 11,201 Physical environment Solid waste managed at Perdido Landfill (tons) 258, , , ,689 Waste disposed of in the Class I Landfill (tons) 244, , , ,192 Tons of yard trash recycled 5,015 6,315 14,977 17,628 Tons of various recycled materials 6,726 9,316 20,531 24,343 Hazardous material disposed of (tons) Transportation Passenger trips - Fixed route services 1,561,371 1,359,002 1,145,539 1,164,519 Passenger trips - Paratransit/Demand services 43,774 49,639 49,138 46,383 Bob Sikes toll receipts $3,310,752 $3,316,180 $3,249,907 $2,902,503 Culture and recreation Civic Center operating revenues $3,937,617 $3,750,220 $3,514,818 $4,016,368 Parks & Recreation park uses Equestrian Center events Lake Stone rentals Naval Air Museum visitors 765, , , ,688 Students enrolled - University of West Florida 12,823 11,982 11,599 11,184 Students enrolled - Pensacola State College 9,297 9,509 9,335 9,276 N/A: Information not available Sources: Various county departments, Pensacola Police Department, University of West Florida, Pensacola State College, and the Pensacola Naval Air Museum. (1) General Government - County residents per employee is derived from total county population on Schedule 12 and total county government employees on Schedule 14 Continued on next page 188

208 ,602 13,061 15,000 16,505 15,842 16,025 15,222 19,258 28,007 35,079 55,954 30,119 38,612 48,318 69,414 83,903 77,571 61,535 5,659 9,483 11,825 9,087 10,489 6,339 33,836 33,440 33,557 31,444 32,344 29,303 3,144 5,760 6,916 6,726 6,746 7,386 34,030 30,782 31,530 29,361 29,949 29,721 51,104 93,019 8,111 6,852 7,152 7,262 3,852 3,958 4,059 3,950 4,092 3,557 8,458 9,890 10,617 11,036 11,752 14,173 76,257 71,175 70,814 N/A 71,726 15,921 18,847 14,295 14,957 15,630 15,849 15,060 8,711 5,193 7,021 7,568 7,394 9, , , , , , , , , , , , ,079 26,834 30,804 31,851 34,790 25,031 31,516 34,669 58,601 66,056 61,628 48,135 54, N/A N/A N/A 1,054,638 1,017,408 1,046,453 1,182,089 1,215,957 1,596,038 49,591 51,475 58,002 57,354 56,797 59,047 $2,962,819 $2,845,803 $3,124,881 $3,840,358 $1,915,646 $3,225,958 $3,479,910 $3,632,266 $4,314,095 $3,971,999 $4,168,563 $3,389, , , , , , ,000 11,000 10,380 9,905 9,655 9,611 9,508 20,944 20,593 26,508 26,783 26,611 29,

209 Schedule 16 Escambia County, Florida CAPITAL ASSET STATISTICS BY FUNCTION/PROGRAM Last Ten Fiscal Years Fiscal Year Function/Program General government Facilities Number Square footage 2,497,854 2,329,716 2,437,151 2,294,305 2,295,847 Public Safety Road Prison capacity Work Release facility capacity Fire Stations Rescue Vehicles (Fire Trucks, etc) Ambulances Mass Transit Bus/Trolley Sheriffs vehicles Sheriff substations Physical environment Landfills in operation (accepting waste) Beaches (miles) Pensacola (1) * Perdido Key (2) * Transportation Centerline miles of county roads Paved mileage 1, , , , , Unpaved mileage Traffic signals Bridges Culture and recreation Athletic Parks Campgrounds Community Centers Equestrian Center Neighborhood Parks Undeveloped Parks Beach Access/Boat Ramps Libraries (locations) N/A: Information not available Sources: Individual County departments (1) Source: Santa Rosa Island Authority and Community & Environment Bureau (2) Source: Community & Environment Bureau * The number of miles were obtained according to a GIS based measurement and 2006 aerial photographs. This measurement is just an approximation and is subject to significant error. Barring disaster or land acquisition/creation, the miles of beach within the County should not change significantly from year-to-year. Continued on next page 190

210 ,818,147 2,337,104 2,208,439 2,139,374 2,009, N/A N/A N/A 5 8 N/A N/A N/A , , , , , N/A N/A N/A N/A N/A 191

211

212 The reports provided in the following pages, contain additional reporting elements prepared in accordance with Governmental Auditing Standards, issued by the Comptroller General of the United States; the provisions of the Office of Management and Budget (OMB) Circular A-133; and the rules of the Auditor General of the State of Florida. 192

213 INDEPENDENT AUDITORS REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS The Honorable Board of County Commissioners Escambia County, Florida We have audited, 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, the financial statements of the governmental activities, the business-type activities, the aggregate discretely presented component units, each major fund, and the aggregate remaining fund information, (hereinafter referred to as County ), as of and for the year ended September 30, 2013, and the related notes to the financial statements, which collectively comprise the County s basic financial statements and have issued our report thereon dated February 14, Our report includes a reference to another auditor who audited the financial statements of the Santa Rosa Island Authority, as described in our report on the County s basic financial statements. This report does not include the results of the other auditors testing of internal control over financial reporting or compliance and other matters that are reported on separately by the other auditor. Internal Control Over Financial Reporting In planning and performing our audit of the financial statements, we considered the County s internal control over financial reporting (internal control) to determine the audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the County s internal control. Accordingly, we do not express an opinion on the effectiveness of the County s internal control. A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the entity s financial statements will not be prevented, or detected and corrected on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance. Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified. 193

214 Compliance and Other Matters As part of obtaining reasonable assurance about whether the County s financial statements are free of material misstatement, we performed tests of compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards. As required by the provisions of Chapter , Rules of the Auditor General, we have issued a separate management letter dated February 14, 2014, which should be considered in assessing the results of our audit. Purpose of this Report The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the entity s internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the entity s internal control and compliance. Accordingly, this report is not suitable for any other purpose. February 14, 2014 Pensacola, Florida 194

215 MANAGEMENT LETTER The Honorable Board of County Commissioners Escambia County, Florida We have audited the financial statements of the governmental activities, the business-type activities, the aggregate discretely presented component units, each major fund, and the aggregate remaining fund information of Escambia County, Florida ( the County ), as of and for the year ended September 30, 2013, and the notes to the financial statements, and have issued our report thereon dated February 14, We did not audit the financial statements of the Santa Rosa Island Authority, which were audited by another auditor and are included in the basic financial statements as a discretely presented component unit. 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, and OMB Circular A- 133, Audits of States, Local Governments, and Non-Profit Organizations. We have issued our Independent Auditors Report on Internal Control over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards, Independent Auditors Report on Compliance with Requirements Applicable to each Major Program and State Project and on Internal Control Over Compliance in Accordance with OMB Circular A-133 and Chapter , Rules of the Auditor General. Disclosures in those reports which are dated February 14, 2014, should be considered in conjunction with this management letter. Additionally, our audit was conducted in accordance with Chapter , Rules of the Auditor General, which governs the conduct of local governmental entity audits performed in the State of Florida. This letter includes the following information, which is not included in the aforementioned auditor s reports. The Rules of the Auditor General (Section (1) (i) 1.) require that we determine whether or not corrective actions have been taken to address findings and recommendations made in the preceding annual financial audit report. The finding reported in Attachment A was included in the preceding two annual financial audit reports and has not been resolved for the current year. Tabulation of Uncorrected Audit Findings Current Year Finding # FY Finding # FY Finding # Finding , from the Independent Auditors Report on Internal Control over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards, of the Board of County Commissioners related to the ambulance receivables was addressed. 195

216 As required by the Rules of the Auditor General (Section (1) (i) 2.), we determined that the County is in compliance with Section , Florida Statutes, regarding the investment of public funds. The Rules of the Auditor General (Section (1) (i) 3.) require that we address in the management letter any recommendations to improve financial management. In connection with our audit, we did not have any such recommendations. The Rules of Auditor General (Section (1)(i)4.) require that we address noncompliance with provisions of contracts or grant agreements, or abuse, that have occurred, or are likely to have occurred, that have an effect on the financial statements that is less than material but which warrants the attention of those charged with governance. In connection with our audit, we did not have any such findings. The Rules of the Auditor General (Section (1) (i) 6a.) requires that we address whether or not the County has met one or more of the conditions described in Section (1), Florida Statutes. In connection with our audit, we determined that the County did not meet any of the conditions described in Section (1), Florida Statutes. As required by the Rules of the Auditor General (Section (1) (i) 6. b.), we determined that the financial information for the County included in the financial report filed with the Florida Department of Financial Services pursuant to Section (1)(a), Florida Statutes, is in agreement with the County s audited financial statements. As required by the Rules of the Auditor General (Sections (1) (i) 6. c. and (7)) we applied financial condition assessment procedures. It is management s responsibility to monitor the County s financial condition, and our financial condition assessment was based in part on representations made by management and the review of financial information provided by same. The County s response to the finding identified in this management letter is described in the accompanying management s response to management letter. We did not audit the response and accordingly, we express no opinion on it. Our management letter is intended solely for the information and us of the Legislative Auditing Committee, members of the Florida Senate and Florida House of Representatives, the Florida Auditor General, Federal and other granting agencies, and applicable management and is not intended to be and should not be used by anyone other than these specified parties. February 14, 2014 Pensacola, Florida 196

217 MANAGEMENT LETTER ATTACHMENT A STATUS OF PRIOR YEAR FINDING , , and Article V Expenditures Annually the County must submit a report to the Florida Department of Financial Services certifying it s compliance with Sections and , Florida Statutes as related to county funded court-related functions. These statutes have a general requirement that certain expenditures shall be maintained at the prior year s amounts. As reported in 2011 and 2012, the Board did not comply with the minimum expenditure requirements for certain expenditure categories, and this continued for the year ended September 30, We recommend the County monitor its compliance with this requirement during the next fiscal year. 197

218 MANAGEMENT'S RESPONSE TO MANAGEMENT LETTER September 30, , , and Article V Expenditures The State of Florida has mandated a 1.5% linear cost increase for every individual element contained in Florida Statute These costs are not linear. For example in one category, Arbitration, the County did not spend the requisite 1.5% increase in costs simply because the number of hearings in 2013 was less than in In another example the cost for utilities in buildings occupied by the State court system have declined. This was caused by moderate temperatures and energy performance improvements that the County aggressively pursues. There has been no reduction in service to the courts. It would be highly imprudent for the taxpayers to be required to fund additional costs for these mandates. It is the County s opinion this statute should be reviewed at the appropriate legislative level and considerations be given to modifying its requirements so that it does not encourage over expenditures of resources when such actions are contrary to good fiscal practices. 198

219 INDEPENDENT AUDITORS REPORT ON COMPLIANCE FOR EACH MAJOR FEDERAL PROGRAM AND STATE PROJECT AND ON INTERNAL CONTROL OVER COMPLIANCE REQUIRED BY OMB CIRCULAR A-133 AND CHAPTER , RULES OF THE AUDITOR GENERAL Honorable Board of County Commissioners Escambia County, Florida Report on Compliance for Each Major Federal Program and State Project We have audited the compliance of Escambia County, Florida (hereinafter referred to as County ), with the types of compliance requirements described in the U. S. Office of Management and Budget (OMB) Circular A-133 Compliance Supplement, and the requirements described in the State of Florida Department of Financial Services State Projects Compliance Supplement, that could have a direct and material effect on each of the County s major federal programs and state projects for the year ended September 30, The County s major federal programs and state projects are identified in the summary of auditors results section of the accompanying schedule of findings and questioned costs. Management s Responsibility Management is responsible for compliance with the requirements of laws, regulations, contracts and grants applicable to its federal programs and state projects. Auditors Responsibility Our responsibility is to express an opinion on compliance for each of the County s major federal programs and state projects based on our audit of the types of compliance requirements referred to above. We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; OMB Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations; and Chapter , Rules of the Auditor General. Those standards, OMB Circular A-133, and Chapter , Rules of the Auditor General, require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types of compliance requirements referred to above that could have a direct and material effect on a major federal program or state project occurred. An audit includes examining, on a test basis, evidence about the County s compliance with those requirements and performing such other procedures as we considered necessary in the circumstances. 199

220 We believe that our audit provides a reasonable basis for our opinion on compliance for each major federal program and state project. However, our audit does not provide a legal determination of the County s compliance with those requirements. Opinion on Each Major Federal Program and State Project In our opinion, the County complied, in all material respects, with the types of compliance requirements referred to above that could have a direct and material effect on each of its major federal programs and state projects for the year ended September 30, Report on Internal Control over Compliance Management of the County is responsible for establishing and maintaining effective internal control over compliance with the types of compliance requirements referred to above. In planning and performing our audit of compliance, we considered the County s internal control over compliance with requirements that could have a direct and material effect on each major federal program or state project to determine the auditing procedures that are appropriate in the circumstances for the purpose of expressing our opinion on compliance for each major federal program and state project and to test and report on internal control over compliance in accordance with OMB Circular A-133 and the Florida Department of Financial Services State Projects Compliance Supplement, but not for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, we do not express an opinion on the effectiveness of the County s internal control over compliance. A deficiency in internal control over compliance exists when the design or operation of a control over compliance does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, noncompliance with a type of compliance requirement of a federal program or state project on a timely basis. A material weakness in internal control over compliance is a deficiency, or combination of deficiencies, in internal control over compliance, such that there is a reasonable possibility that material noncompliance with a type of compliance requirement of a federal program or state project will not be prevented, or detected and corrected, on a timely basis. A significant deficiency in internal control over compliance is a deficiency, or a combination of deficiencies, in internal control over compliance with a type of compliance requirement of a federal program or state project that is less severe than a material weakness in internal control over compliance, yet important enough to merit attention by those charged with governance. Our consideration of the internal control over compliance was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control over compliance that might be material weaknesses or significant deficiencies. We did not identify any deficiencies in internal control over compliance that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified. Report on Schedule of Expenditures of Federal Awards and State Financial Assistance Required by OMB Circular A-133 and Chapter , Rules of the Auditor General We have audited the financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of Escambia County, Florida, as of and for the year ended September 30, 2013, and the notes to the financial statements, which collectively comprise the County s basic financial statements. We issued our report thereon dated February 14, 2014, which contained unmodified opinions on those financial statements. Our audit was performed for the purpose of forming opinions on the financial 200

221 statements that collectively comprise the basic financial statements. The accompanying Schedule of Expenditures of Federal Awards and State Financial Assistance is presented for the 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 Chapter , Rules of the Auditor General, and is not a required part of the basic financial statements. Such information is the responsibility of management and was derived from and relates 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 additional 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 Schedule of Expenditures of Federal Awards and State Financial Assistance is fairly stated in all material respects in relation to the financial statements as a whole. Purpose of this Report The purpose of this report on internal control over compliance is solely to describe the scope of our testing of internal control over compliance and the results of that testing based on the requirements of OMB Circular A-133 and Chapter , Rules of the Auditor General. Accordingly, this report is not suitable for any other purpose. February 14, 2014 Pensacola, Florida 201

222 SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS AND STATE FINANCIAL ASSISTANCE YEAR ENDED SEPTEMBER 30, 2013 CFDA / Federal and State Grantor/Pass-Through CSFA Contract / Grantor/Program Title Number Grant Number Expenditures Election Assistance Commission Passed Through Florida Department of State: Help America Vote Act Requirements Payments N/A 89,537 U.S. Department of Agriculture Passed Through Workforce ESCAROSA, Inc.: Supplemental Nutrition Assistance Program SNAP ,711 U.S. Department of Health and Human Services Passed Through Florida Department of Revenue: Child Support Enforcement CSP17 49,949 Child Support Enforcement Title IV Services CD , ,038 Voting Access for Individuals with Disabilities-Polling Place Accessibility N/A 44,100 U.S. Department of Homeland Security Passed Through Florida Department of Economic Opportunity: Homeland Security Grant Program-Domestic Security DS-9Z ,093 Homeland Security Grant Program-Domestic Security DS ,817 Homeland Security Grant Program-Citizen Corps CC ,500 Homeland Security Grant Program-Citizen Corps CC ,850 Homeland Security Grant Program-Citizen Corps CC-A ,615 Homeland Security Grant-Community Emergency Response Team CI ,500 Homeland Security Grant-Community Emergency Response Team CI ,850 Homeland Security Grant-Community Emergency Response Team CI-A ,615 Homeland Security Grant-Haz Mat Light Technical Rescue Training DS-9Z , ,454 Emergency Management Performance Grant FG ,281 Emergency Management Performance Grant FG-1M ,442 94,723 Direct Programs - Federal Emergency Management Agency: Staffing for Adequate Fire & Emergency Response EMW-2008-FF ,222 U.S. Department of Housing and Urban Development Direct Programs: HUD - 12 CDBG Entitlement B-12-UC ,406 HUD - 11 CDBG Entitlement B-11-UC ,917 HUD - 10 CDBG Entitlement B-10-UC ,211 HUD - 09 CDBG Entitlement B-09-UC ,662 HUD - 08 CDBG Entitlement B-08-UC ,077 HUD - 07 CDBG Entitlement B-07-UC ,890 HUD - 02 CDBG Entitlement B-02-UC ,629 CDBG Entitlement-Neighborhood Stabilization Program B-08-UN ,006 CDBG Entitlement-Neighborhood Stabilization Program B-11-UN ,389 1,785,187 See accompanying notes to the schedule of expenditures of federal awards and state financial assistance. 202

223 SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS AND STATE FINANCIAL ASSISTANCE -- (Continued) YEAR ENDED SEPTEMBER 30, 2013 CFDA / Federal and State Grantor/Pass-Through CSFA Contract / Grantor/Program Title Number Grant Number Expenditures U.S. Department of Housing and Urban Development-Continued Passed Through from the Florida Department of Economic Opportunity: CDBG Disaster Recovery DB-P K41 1,044 CDBG Disaster Recovery DB-D K08 18,901 19,945 Direct Programs: HUD - 11 Emergency Shelter S-11-UC ,488 HUD - Emergency Solutions E-11-UY , ,639 HUD - 12 Home Investment Partnership M-12-DC ,560 HUD - 11 Home Investment Partnership M-11-DC ,305 HUD - 10 Home Investment Partnership M-10-DC ,802 HUD - 09 Home Investment Partnership M-09-DC ,826 HUD - 08 Home Investment Partnership M-08-DC ,288 1,405,781 U.S. Department of Justice Direct Program: Bullet Proof Vest Grant BOBX ,203 ARRA-Public Safety Partnership and Community Policing Grant RJ-WX ,473 Direct Program: Edward Byrne Memorial Justice Assistance Grant DJ-BX ,241 Edward Byrne Memorial Justice Assistance Grant DJ-BX ,055 Edward Byrne Memorial Justice Assistance Grant DJ-BX ,400 Edward Byrne Memorial Justice Assistance Grant DJ-BX ,492 Passed Through Florida Department of Law Enforcement: Edward Byrne Memorial - Drug Court Treatment Grant JAGC-ESCA-2-C ,101 Edward Byrne Memorial - PSC Video Surveillance JAGC-ESCA-1-D ,371 Edward Byrne Memorial - General Education County Inmates JAGC-ESCA-2-D ,000 Passed Through Office of State Court Administrator: ARRA-Edward Byrne Memorial - Adult Drug Court Expansion ARRC-STATE-3-W ,061 Edward Byrne Memorial Drug Court Expansion Operations CS 8,824 ARRA-Edward Byrne Memorial - Escambia County Joint Agency SB-B ,864 Subtotal for JAG Program Cluster 628,409 U.S. Department of Transportation Passed Through Florida Department of Transportation: Highway Planning and Construction-Nine Mile Road / Pine Forest Road ,510 Highway Planning and Construction-Safe Routes To School-Bellview Ave & ,950 Highway Planning and Construction-Crabtree Church Road ,858 Highway Planning and Construction-Jacks Branch Road & , ,256 See accompanying notes to the schedule of expenditures of federal awards and state financial assistance. 203

224 SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS AND STATE FINANCIAL ASSISTANCE -- (Continued) YEAR ENDED SEPTEMBER 30, 2013 CFDA / Federal and State Grantor/Pass-Through CSFA Contract / Grantor/Program Title Number Grant Number Expenditures U.S. Department of Transportation-Continued Direct Programs - Federal Transit Administration: Federal Transit Formula Grants-2013 Capital Projects FL-90-X ,931 Federal Transit Formula Grants-2013 Capital Projects FL-90-X ,666 Federal Transit Formula Grants-2012 Capital Projects FL-90-X ,552,793 Federal Transit Formula Grants-2011 Capital Projects FL-90-X ,069 Federal Transit Formula Grants-2010 Capital Projects FL-90-X ,389 Federal Transit Formula Grants-2009 Capital Projects FL-90-X ,490 Federal Transit Formula Grants-2008 Capital Projects FL-90-X ,469 Federal Transit Formula Grants-Transit Improvements FL-95-X005 5,173 Federal Transit Formula Grants-Transit Improvements FL-95-X ,000 Passed Through Florida/ Alabama Transportation Planning Organization: New Freedom Program FL-57-X ,345 Subtotal Federal Transit Cluster 3,854,325 Passed Through Florida Department of Transportation: Non-Urbanized Transportation ,788 Passed Through Florida/ Alabama Transportation Planning Organization: Job Access and Reverse Commute FL-37-X ,750 U.S. Environmental Protection Agency Passed Through Florida Department of Environmental Protection: Nonpoint Source Implementation Grants-Jones Creek East Stream G ,893 Nonpoint Source Implementation Grants-Glynnn Key Stormwater G0063 2, ,177 Brownfields Redevelopment Project BF ,898 TOTAL FEDERAL AWARDS $ 10,466,616 See accompanying notes to the schedule of expenditures of federal awards and state financial assistance. 204

225 SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS AND STATE FINANCIAL ASSISTANCE -- (Continued) YEAR ENDED SEPTEMBER 30, 2013 CFDA / Federal and State Grantor/Pass-Through CSFA Contract / Grantor/Program Title Number Grant Number Expenditures Executive Office of the Governor Space Florida-Density Reduction - Area "A" & APZ DIG ,045 Emergency Management Preparedness & Assistance BG ,667 Florida Department of Agriculture & Consumer Services Mosquito Control/Waste Tire Abatement N/A 12,346 Florida Department of Children & Families Adult Community Mental Health- Community Support Services AH102 46,366 Florida Department of Economic Opportunity Emergency Management Programs-Civil Defense BG ,028 Florida Department of Environmental Protection Statewide Surface Water Restoration and Wastewater Projects- NACO East Jones Creek Stream N/A 40,000 Florida Department of Health EMS County Award C ,678 Florida Department of Transportation Public Transit Block Grant Program ,797 Public Transit Service Development Program-Davis Highway Corridor ,000 Public Transit Service Development Program-Express Service , ,033 State Highway Project Reimbursement-Olive Road Transfer ,987 Transportation Region Incentive Program- Sorrento Road/Theo Baars/Blue Angel Study ,377 Florida Fish and Wildlife Commission Ex-Oriskany PCB Artificial Reef Monitoring ,250 Florida Housing Finance Corporation State Housing Initiatives Partnership N/A 1,786 State Housing Initiatives Partnership N/A 3,250 State Housing Initiatives Partnership N/A 213,422 State Housing Initiatives Partnership N/A 118, ,125 TOTAL STATE AWARDS 2,902,699 TOTAL FEDERAL AND STATE AWARDS $ 13,369,315 See accompanying notes to the schedule of expenditures of federal awards and state financial assistance. 205

226 Escambia County, Florida NOTES TO THE SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS AND STATE FINANCIAL ASSISTANCE For the year ended September 30, 2013 NOTE A - BASIS OF PRESENTATION The accompanying schedule of expenditures of federal awards and state financial assistance includes the federal and state grant activity of Escambia County, Florida and is presented on the modified accrual basis of accounting. The information in this schedule is presented in accordance with the requirements of OMB Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations, and Chapter , Rules of the Auditor General. Therefore, some amounts presented in this schedule may differ from amounts presented in, or used in the preparation of, the basic financial statements. NOTE B - SUBRECIPIENTS Of the expenditures presented in the schedule, Escambia County, Florida provided federal and state awards to subrecipients as follows: Federal CFDA / State CSFA Amount Provided to Program Title Number Subrecipients Community Development Block Grant - Entitlement Grants $ 57,237 Emergency Shelter Grant $ 146,484 NOTE C - MATCH The County match on Federal Transit Administration grants is received from the State of Florida as a non-cash award via Florida Toll Road Credits. 206

227 Escambia County, Florida SCHEDULE OF FINDINGS AND QUESTIONED COSTS For the year ended September 30, 2013 A. SUMMARY OF AUDITOR RESULTS FINANCIAL STATEMENTS Type of auditor s report issued: Unmodified Opinion Internal control over financial reporting: Material weakness(es) identified? yes X no Significant deficiency (ies) identified that are not considered to be material weakness(es)? yes X none reported Noncompliance material to financial statements noted? yes X no FEDERAL AWARDS AND STATE FINANCIAL ASSISTANCE Internal control over major programs: Material weakness(es) identified? Significant deficiency(ies) identified that are not considered to be material weakness(es)? reported yes X no yes X none Type of auditor s report issued on compliance for major programs: Unmodified Opinion Any audit findings disclosed that are required to be reported in accordance with section 510(a) of Circular A-133? yes X no IDENTIFICATION OF MAJOR PROGRAMS Federal Program CFDA No Community Development Block Grants/Entitlement Grants CFDA No /16.803/ JAG Program Grant Cluster CFDA No Nonpoint Source Implementation Grants Dollar threshold used to distinguish between type A and type B programs: $ 313,999 Auditee qualified as low-risk auditee? X yes no 207

228 Escambia County, Florida SCHEDULE OF FINDINGS AND QUESTIONED COSTS For the year ended September 30, 2013 A. SUMMARY OF AUDITOR RESULTS (CONTINUED) State Projects CSFA No State Housing Initiatives Partnership Program CSFA No Public Transit Block Grant Program CSFA No State Highway Project Reimbursement Program Dollar threshold used to distinguish between type A and type B programs: $ 300,000 B. FINANCIAL STATEMENT FINDINGS There were no findings which were required to be reported in accordance with government auditing standards generally accepted in the United States of America. C. FINDINGS AND QUESTIONED COSTS - MAJOR FEDERAL PROGRAMS There were no findings which were required to be reported in accordance with government auditing standards generally accepted in the United States of America. D. FINDINGS AND QUESTIONED COSTS - MAJOR STATE FINANCIAL ASSISTANCE There were no findings which were required to be reported in accordance with government auditing standards generally accepted in the United States of America. 208

229

230 SPECIAL PURPOSE FINANCIAL STATEMENTS AND REQUIRED SUPPLEMENTARY INFORMATION ESCAMBIA COUNTY, FLORIDA CLERK OF THE CIRCUIT COURT AND COMPTROLLER SEPTEMBER 30, 2013 WITH INDEPENDENT AUDITORS REPORT

231 SPECIAL PURPOSE FINANCIAL STATEMENTS AND REQUIRED SUPPLEMENTARY INFORMATION ESCAMBIA COUNTY, FLORIDA CLERK OF THE CIRCUIT COURT AND COMPTROLLER SEPTEMBER 30, 2013 WITH INDEPENDENT AUDITORS REPORT CONTENTS Independent Auditors Report...1 Special Purpose Financial Statements Balance Sheet Governmental Funds...4 Statement of Revenues, Expenditures, and Changes in Fund Balance Governmental Funds...5 Internal Service Fund Statement of Net Position...6 Statement of Revenues, Expenses, and Changes in Net Position...7 Statement of Cash Flows...8 Statement of Fiduciary Assets and Liabilities Agency Funds...9 Notes to Special Purpose Financial Statements...10 Required Supplementary Information Schedules of Revenues, Expenditures, and Changes in Fund Balance Budget (GAAP Basis) and Actual - General Fund...17 Schedules of Revenues, Expenditures, and Changes in Fund Balance Budget (GAAP Basis) and Actual - Public Records Modernization Fund...18 Notes to Required Supplementary Information...19 Other Supplementary Information Combining and Individual Fund Financial Statements and Schedules: Combining Balance Sheet - General Fund by Category...20 Combining Schedule of Revenues, Expenditures, and Changes in Fund Balance General Fund by Category...21 Combining Schedule of Revenues, Expenditures, and Changes in Fund Balance Budget and Actual General Fund by Category...22 Combining Statement of Assets and Liabilities All Agency Funds...24 Combining Statement of Changes in Assets and Liabilities All Agency Funds...25 Independent Auditors Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards...28 Management Letter...30 Schedule of Findings and Responses...32

232 INDEPENDENT AUDITORS REPORT Honorable Ernie Lee Magaha Clerk of the Circuit Court Through January 7, 2013 Honorable Pam Childers Clerk of the Circuit Court Effective January 8, 2013 Escambia County, Florida Report on the Financial Statements We have audited the accompanying special-purpose financial statements of each major fund and the aggregate remaining fund information of the Office of the Clerk of the Circuit Court and Comptroller of Escambia County, Florida (hereinafter referred to as Clerk ) as of and for the year ended September 30, 2013, as listed in the table of contents, and the related notes to the financial statements. Management s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Auditors Responsibility Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Clerk s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Clerk s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness 1

233 of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. Opinions In our opinion, the special-purpose financial statements referred to above present fairly, in all material respects, the financial position of each major fund and the aggregate remaining fund information of the Clerk, as of September 30, 2013, and the respective changes in financial position and cash flows, where applicable, thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America. Emphasis of Matter As discussed in Note 1 to the special-purpose financial statements, the financial statements referred to above have been prepared for the purpose of complying with Chapter , Rules of the Auditor General, State of Florida, and are not intended to be a complete presentation of the financial position and changes in financial position of the Clerk. Additionally, the special purpose financial statements present only the Clerk and are not intended to present the financial position and changes in financial position of Escambia County, Florida, taken as a whole. Our opinion is not modified with respect to this matter Other Matters Required Supplementary Information Accounting principles generally accepted in the United States of America require that the budgetary comparison schedules on pages be presented to supplement the basic financial statements. Such information, although not a part of the special-purpose 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 special-purpose financial statements, and other knowledge we obtained during our audit of the special-purpose financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Other Supplementary Information Our audit was conducted for the purpose of forming opinions on the special-purpose financial statements. The accompanying combining and individual nonmajor fund financial statements and schedules are presented for purposes of additional analysis and are not a required part of these special-purpose financial statements. Such information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the special purpose financial statements. The information has been subjected to the auditing procedures applied in the audit of the special-purpose financial statements and certain additional procedures, including comparing and reconciling such 2

234 information directly to the underlying accounting and other records used to prepare the specialpurpose 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 special-purpose financial statements taken as a whole. Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated February 14, 2014 on our consideration of the Clerk s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the Clerk s internal control over financial reporting and compliance. Restriction on Use This report is intended solely for the information and use of the Clerk, the Escambia County Board of County Commissioners, and the State of Florida Office of Auditor General and is not intended to be and should not be used by anyone other than these specified parties. February 14, 2014 Pensacola, Florida 3

235 Special Purpose Financial Statements

236 CLERK OF THE CIRCUIT COURT AND COMPTROLLER BALANCE SHEET GOVERNMENTAL FUNDS SEPTEMBER 30, 2013 Assets Public Records Modernization Fund Cash and cash equivalents $ 2,296,130 $ 2,087,959 $ 4,384,089 Accounts receivable, net 1, ,439 Due from other governmental units 6, , ,858 Liabilities General Fund Major Funds Total Governmental Funds Total assets $ 2,304,013 $ 2,201,373 $ 4,505,386 Accounts payable $ 49,568 $ 7,164 $ 56,732 Contracts payable 39,382-39,382 Accrued liabilities 218,492 17, ,497 Due to other governmental units 1,892,220 1,304 1,893,524 Unearned revenue 2,003-2,003 Other current liabilities 49,913 13,301 63,214 Total liabilities 2,251,578 38,774 2,290,352 Fund Balances Restricted for: Records modernization technology - 2,162,599 2,162,599 State court operations 52,435-52,435 Total fund balance 52,435 2,162,599 2,215,034 Total liabilities and fund balance $ 2,304,013 $ 2,201,373 $ 4,505,386 See accompanying notes to financial statements. 4

237 CLERK OF THE CIRCUIT COURT AND COMPTROLLER STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - GOVERNMENTAL FUNDS YEAR ENDED SEPTEMBER 30, 2013 Major Funds Public Records General Modernization Fund Fund Total Governmental Funds Revenues: Intergovernmental $ 5,288,482 $ 597,285 $ 5,885,767 Charges for services 1,806, ,905 2,539,432 Judgments, fines and forfeitures 1,296, ,110 1,570,781 Investment income 30, ,610 Miscellaneous revenue 58, ,184 Total Revenues 8,481,098 1,604,676 10,085,774 Expenditures: Current: General government: Salaries and benefits 3,093, ,118 3,499,268 Operating expenditures 431, , ,196 Capital outlay 51,422-51,422 Court related: Salaries and benefits 5,416, ,737 5,743,113 Operating expenditures 1,195,638 42,299 1,237,937 Payments to State 3,526-3,526 Total Expenditures 10,191,432 1,005,030 11,196,462 Excess (Deficiency) of Revenues Over (Under) Expenditures (1,710,334) 599,646 (1,110,688) Other Financing Sources and Uses: Transfers in 2,634,334 43,839 2,678,173 Transfers out (908,735) - (908,735) Total Other Financing Sources and Uses 1,725,599 43,839 1,769,438 Net Change in Fund Balance 15, , ,750 Fund Balance, October 1, ,170 1,519,114 1,556,284 Fund Balance, September 30, 2013 $ 52,435 $ 2,162,599 $ 2,215,034 See accompanying notes to financial statements. 5

238 ASSETS Current assets: ESCAMBIA COUNTY, FLORIDA CLERK OF THE CIRCUIT COURT AND COMPTROLLER INTERNAL SERVICE FUND STATEMENT OF NET POSITION FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2013 Cash and cash equivalents $ 681,381 Total current assets 681,381 LIABILITIES Current liabilities: Compensated absences payable 149,634 Total current liabilities 149,634 Noncurrent Liabilities: Compensated absences payable 531,747 Total noncurrent liabilities 531,747 Total liabilities 681,381 NET POSITION Unrestricted - Total net position $ 681,381 See accompanying notes to financial statements. 6

239 Operating revenues: ESCAMBIA COUNTY, FLORIDA CLERK OF THE CIRCUIT COURT AND COMPTROLLER INTERNAL SERVICE FUND STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN NET POSITION SEPTEMBER 30, 2013 Charges for services $ 1,194,517 Total operating revenue 1,194,517 Operating expenses: Personnel services 643,229 Operating income (loss) 551,288 Nonoperating: Other financing sources (uses) Transfers out (551,288) Net other financing sources (uses) (551,288) Changes in net position - Net position-beginning - Net position-ending $ - See accompanying notes to financial statements. 7

240 CLERK OF THE CIRCUIT COURT AND COMPTROLLER INTERNAL SERVICE FUND STATEMENT OF CASH FLOWS FOR THE YEAR ENDED SEPTEMBER 30, 2013 CASH FLOWS FROM OPERATING ACTIVITIES Payments for personal services $ (625,430) CASH FLOWS FROM NON-CAPITAL FINANCING ACTIVITIES Transfers to other funds (551,288) Net increase (decrease) in cash and cash equivalents (1,176,718) Cash and cash equivalents, beginning of year 1,858,099 Cash and cash equivalents, end of year $ 681,381 Reconciliation of operating income (loss) to net cash provided by (used for) operating activities: Operating income (loss) $ 551,288 Increase (decrease) in compensated absences payable (1,176,718) Net cash provided by (used for) operating activities $ (625,430) See accompanying notes to financial statements. 8

241 CLERK OF THE CIRCUIT COURT AND COMPTROLLER STATEMENT OF FIDUCIARY ASSETS AND LIABILITIES - AGENCY FUNDS SEPTEMBER 30, 2013 Assets Cash and cash equivalents $ 4,271,536 Accounts receivable 19,061 Total Assets $ 4,290,597 Liabilities Cash bonds payable $ 326,602 Court registry rayable 3,246,106 General trust payable 8,851 Due to other governments 39,120 Due to individuals 669,918 Total Liabilities $ 4,290,597 See accompanying notes to financial statements. 9

242 CLERK OF THE CIRCUIT COURT AND COMPTROLLER NOTES TO SPECIAL PURPOSE FINANCIAL STATEMENTS (Continued) 1. Summary of Significant Accounting Policies The following is a summary of the significant principles and policies used in the preparation of these special purpose financial statements. A. Reporting entity The Escambia County, Florida, Clerk of the Circuit Court and Comptroller (the Clerk ) is an elected constitutional officer as provided by Article VIII, Section 1 (d) of the Constitution of the State of Florida. For financial reporting purposes, the Clerk is deemed to be a part of the primary government of Escambia County, Florida (the County), and therefore, is included as such in the Escambia County, Florida, Comprehensive Annual Financial Report. B. Basis of presentation fund financial statements These special-purpose financial statements have been prepared for the purpose of complying with the Rules of the Auditor General, State of Florida, which require presentation of fund level only financial statements and permit omission of entity-wide full accrual financial statements and management s discussion and analysis. Therefore, these financial statements are intended to present only the financial position and changes in financial position of that portion of Escambia County, Florida that relate to transactions of the Clerk and are not intended to present the financial position and changes in financial position of Escambia County, Florida, taken as a whole. The Clerk s financial records and accounts are maintained in accordance with the principles of fund accounting, whereby resources are classified for accounting and reporting purposes into funds to insure compliance with any special restrictions or limitations on the use of such resources. The Clerk s major funds are defined as follows: The General Fund a governmental fund, is used to account for and report all financial resources of the Clerk not accounted for and reported in other funds. The Public Records Modernization Fund - a special revenue fund, accounts for monies collected according to Chapter 28.24, Florida Statutes to be used exclusively for the purchase and maintenance of equipment, personal training, and technical assistance in modernizing the official records system and for funding court-related technology needs of the Clerk as defined in Chapter , Florida Statutes. Section 28.37(2), Florida Statutes specifies 10% of all court-related fines are to be deposited into this fund to be used exclusively for additional court-related operational needs and program enhancements. Also included in the Special Revenue Fund are activities related to Title IV-D child support cases. Title IV-D funding provides assistance to the plaintiff and enforcement of collections through the Office of Child Support Enforcement. Additionally, the Clerk reports the following fund types: Agency Funds - are used to account for assets received and held by the Clerk as an agent for individuals, private organizations and other governments. Agency funds are custodial in nature and do not involve measurement of changes in financial position. The Clerk has numerous agency funds for varying purposes. 10

243 CLERK OF THE CIRCUIT COURT AND COMPTROLLER NOTES TO SPECIAL PURPOSE FINANCIAL STATEMENTS (Continued) 1. Summary of Significant Accounting Policies (Continued) B. Basis of presentation fund financial statements (Continued) Internal Service Fund, a proprietary fund accounts for the balances and activity related to the courtrelated personnel compensated absences policies. Prior to fiscal year 2013, all Clerk employees compensated absence balances were recorded in the Internal Service Fund. In July 2013, the Board of County Commissioners voted to rescind any prior authorization allowing the use of Internal Service Funds by Constitutional Officers and all balances held for non-court related personnel were returned to the Board. C. Fund balance and flow assumptions Fund balance at September 30, 2013, consists of the following: Nonspendable fund balance - includes amounts that cannot be spent because they are not in spendable form or are legally or contractually required to be maintained intact. Nonspendable in governmental fund types typically are for inventories and prepaid items. Restricted fund balance includes amounts that can be spent only for specific purposes which are externally imposed by creditors, grantors, contributors, or laws or regulations or are imposed by law through constitutional provisions or enabling legislation. An example would include grants. Committed fund balance includes amounts that can only be used for the specific purpose determined by a formal action of the Clerk s highest level of decision-making authority. Commitments may be changed or lifted only by the Clerk taking the same formal action that imposed the constraint originally. Assigned fund balance includes amounts intended to be used by the Clerk for specific purposes, but which do not meet any of the criterion to be considered either restricted or committed. Unassigned fund balance is the residual classification of the general fund only and includes all amounts not contained in other classifications. Unassigned amounts are technically available for any purpose. Periodically, the Clerk may have a choice to fund outlays for a particular purpose from both restricted and unrestricted resources (the total of committed, assigned, and unassigned fund balance). In order to calculate the amounts to report as restricted, committed, assigned, and unassigned fund balance in the governmental fund financial statements a flow assumption must be made about the order in which the resources are considered to be applied. It is the Clerk s policy to consider restricted fund balance to have been depleted before using any of the components of unrestricted fund balance. Further, when the components of unrestricted fund balance can be used for the same purpose, committed fund balance is depleted first, followed by assigned fund balance. Unassigned fund balance is applied last. D. Measurement focus and basis of accounting Basis of accounting refers to when revenues and expenditures are recognized in the accounts and reported in the special purpose financial statements, and also refers to the timing of the measurements made, regardless of the measurement focus applied. 11

244 CLERK OF THE CIRCUIT COURT AND COMPTROLLER NOTES TO SPECIAL PURPOSE FINANCIAL STATEMENTS (Continued) 1. Summary of Significant Accounting Policies (Continued) D. Measurement focus and basis of accounting (Continued) All governmental funds are accounted for using the modified accrual basis of accounting. Under the modified accrual basis of accounting, revenues are recognized when received in cash or when they become both measurable and available to finance expenditures of the current period. The Clerk considers receivables collected within 60 days after year end to be available and recognizes them as revenues of the current year. Expenditures are recorded when the liability is incurred, except for compensated absences for non-court related activities, which are not recorded until paid by the General Fund. Court-related compensated absences are accrued when earned in the internal service fund. The internal service fund uses the accrual basis of accounting. The principal operating revenues of the internal service fund are charges related to the Clerk s court-related compensated absences activity. The accounting and financial reporting treatment applied to the capital assets and long-term liabilities associated with a fund are determined by its measurement focus. All governmental funds are accounted for on a spending or financial flow" measurement focus. This means that generally, only current assets, deferred outflows, current liabilities, and deferred inflows are included in the balance sheet. Governmental fund operating statements present increases (revenues, deferred outflows and other financing sources) and decreases (expenditures, deferred inflows and other financing uses) in fund balance. Accordingly, they present a summary of sources and uses of available spendable resources during a period. Proprietary funds (the internal service fund) are reported using the economic resources measurement focus and the accrual basis of accounting. Proprietary funds distinguish operating revenues and expenses from non-operating items. Agency fund financial statements have no measurement focus but report assets and liabilities using the accrual basis of accounting. Grants and similar items are recognized as revenue as soon as all eligibility requirements imposed by the provider have been met. Capital asset acquisitions are recorded as expenditures in governmental funds. The preparation of special purpose financial statements in conformity with GAAP requires management to make use of estimates that affect the reported amounts in the financial statements and note disclosures. Actual results could differ from estimates. E. Funding Provided by the State of Florida and Board of County Commissioners The Clerk and Comptroller functions are funded by two primary sources, the State of Florida and the Board of County Commissioners. The State provides operating funds for court-side activities of the Clerk through a State of Florida Clerk of Court Trust Fund. The funding mechanism changed with legislation passed in 2013 which established the Trust Fund. Clerks are no longer required to send collected revenues back to the State for re-appropriation of their budget but instead retain their revenues up to the budget amount appropriated from the Trust Fund. Also, any shortage of revenues up to the approved budget is 12

245 CLERK OF THE CIRCUIT COURT AND COMPTROLLER NOTES TO SPECIAL PURPOSE FINANCIAL STATEMENTS (Continued) 1. Summary of Significant Accounting Policies (Continued) E. Funding Provided by the State of Florida and Board of County Commissioners (Continued) funded by the Trust Fund. Excess revenues above the appropriation are returned to the State. The legislative changes of 2013 also changed the Clerk s fiscal year from a State fiscal year end of June 30, to a county year end of September 30th. In 2013 the State provided a transition budget for the three month period from July through September, excess revenues over expenditures are to be returned to the Trust Fund by January 2015 Reference Senate Bill The Board of County Commissioners funds operating activities for the comptroller functions as well as other capital expenditures. The Clerk submits a proposed budget to the Board for approval for each fiscal year. Funding by the Board is recorded as a transfer out in the financial statements of the County, and as a transfer in on the special purpose financial statements of the Clerk. Florida Statutes require that the excess of the Board s appropriations (and other revenues) over expenditures be returned to the Board at the end of the fiscal year. F. Deferred outflows/inflows of resources In addition to assets, deferred outflows of resources represent a consumption of fund balance that applies to a future period(s) and will not be recognized as an outflow of resources (expenditure) until then. In addition to liabilities, deferred inflows of resources represent an acquisition of fund balance that applies to a future period(s) and will not be recognized as an inflow of resources (revenue) until that time. No such items were applicable to the Clerk as of September 30, Deposits and investments Cash and cash equivalents are highly liquid investments with original maturities of three months or less when purchased. Investments are recorded at fair value. The investment of surplus funds is governed by the provisions of Florida Statute as to the type of investments that can be made. Deposits may be exposed to custodial credit risk, which is the risk of loss in the event of a bank failure. The Clerk manages custodial credit risk by maintaining its deposits in financial institutions designated as Qualified Public Depositories by the State Treasurer. The Clerk's cash deposits are held by a bank that qualifies as a public depository under the Florida Security for Public Deposits Act as required by Chapter 280, Florida Statutes. All of the Clerk s deposits are fully insured by the Public Deposit Trust Fund. At September 30, 2013, the reported amount of the Clerk s deposits was approximately $9.3 million, and the bank balance was approximately $9.7 million, consisting entirely of cash and deposit accounts. 3. Receivables The Clerk records an allowance for accounts receivable for returned checks that may become uncollectible. At September 30, 2013, the allowance for returned checks in the General Fund was $6,

246 CLERK OF THE CIRCUIT COURT AND COMPTROLLER NOTES TO SPECIAL PURPOSE FINANCIAL STATEMENTS (Continued) 3. Receivables (Continued) No other allowances for uncollectible accounts are maintained since other receivables are considered collectible. 4. Interfund receivables, payables and transfers Interfund receivables and payables consist of amounts due to or from funds during the normal course of business. At September 30, 2013 there were no interfund receivables or payables within the Clerk s funds. Transfers consist of $2,126,885 of transfers in from the Board of County Commissioners and transfers out of excess budget and fees totaling $484,962. Other transfer activity relates to the general fund s discontinuance of participation in the internal service fund. 5. Due from/to other governments At September 30, 2013, Due from other Governments contains approximately $1,300 of receivables from the Board of County Commissioners (comprised mainly of expenditures paid on their behalf), and approximately $113,000 due from the State for Title IV-D services. The Due to other Governments includes approximately $713,500 payable to the Board of County Commissioners of which $484,962 was excess budget and fees. 6. Capital assets Capital assets (vehicles, equipment and other property costing at least $1,000 with a useful life of more than one year) are recorded as expenditures at the time of purchase. These assets are capitalized at cost and depreciated in Escambia County s government-wide financial statements. The Clerk maintains custodial responsibility for the capital assets used by the Clerk. 7. Retirement plan Plan Description The Clerk participates in the Florida Retirement System (FRS), a cost sharing multiple-employer defined benefit pension plan, administered by the State of Florida. Beginning in 2002, the FRS became one system with two primary plans, a defined benefit plan (FRS Pension Plan) and a defined contribution plan alternative to the defined benefit plan known as the Public Employee Option Retirement Program (FRS Investment Plan). The effective date of the FRS Investment Plan was July 1, On July 1, 2011 the FRS became a contributory plan. The FRS provides retirement, disability and death benefits to members. The State of Florida issues a publicly available report that includes financial statements and required supplementary information for FRS. The report may be obtained at or may be obtained by writing to the State of Florida Division of Retirement, Department of Management Services, P.O. Box 9000, Tallahassee, Florida For members hired before July 1, 2011 the FRS Pension Plan provides for the vesting of benefits after six years of creditable service and age 62, or thirty years of service regardless of age, whichever comes first. For members first enrolled after July 1, 2011, vesting occurs after eight years of credible service and age 65, or thirty-three years of service regardless of the age before 65. Early retirement may be taken any time after vesting; however, there is a 5% benefit reduction for each year prior to normal retirement age. Members are also eligible for in-line-of-duty or regular disability benefits if permanently disabled and unable to work. Benefits are computed on the basis of age, average final compensation and service credit. 14

247 CLERK OF THE CIRCUIT COURT AND COMPTROLLER NOTES TO SPECIAL PURPOSE FINANCIAL STATEMENTS (Continued) 7. Retirement plan (Continued) Funding Policy - The FRS has six classes of membership. Only four of these classes are applicable to the Clerk s eligible employees. The Clerk is required to contribute at an actuarial determined rate. These rates are a percent of covered payroll. The four applicable classes, with descriptions and contribution rates in effect during the period ended September 30, 2013, 2012 and 2011 are as follows: Regular Class: 6.95% 5.18% 4.91% Members not qualifying for other classes. Senior Management Class: 18.31% 6.30% 6.29% Members of senior management who do not elect the optional annuity retirement program. Elected Officials Class: 33.03% 10.23% 11.14% Certain elected county officials. Deferred Retirement Option Program (DROP): 12.84% 5.44% 4.42% Members are enrolled in DROP from FRS The contribution requirements of the Clerk and members are established and may be amended by FRS. The plan is contributory for employees requiring a 3% employee contribution. This is in addition to the contributions that are the obligation of the employer. The Clerk's contributions to FRS for the years ended September 30, 2013, 2012 and 2011 were $420,240, $373,778, and $682,426 respectively, and were equal to the required contributions for each year. 8. Other post employment benefits (OPEB), other than pensions The Board offers post-retirement health care benefits to all retired employees of the Clerk and their dependents. Participating retirees are required to reimburse the Board for 100% of the premium cost, which is netted against the premium payment, so that no net expense is initially recorded in the Board s financial statements. However, these retirees are receiving an implicit subsidy because the premium is a group rate which includes active, lower cost employees. This implicit subsidy has a cost which is required to be disclosed in these financial statements. However, this annual cost, the accrued obligation, and other required disclosures have been calculated for the County as a whole, and not separately for the Clerk. Accordingly, these calculations and disclosures can be found in the County-wide comprehensive annual financial report. 9. Risk management The County has a risk management program to insure claims against the BOCC, Constitutional Officers, and Santa Rosa Island Authority for the following types of risks: Workers Compensation The County is covered for workers compensation claims through a policy with the Florida Municipal Insurance Trust. Coverage limits under the policy include statutory limits, as well as $1,000,000 bodily injury for each accident and $1,000,000 bodily injury by disease for each employee with an aggregate $1,000,000 policy limit. Casualty and Property Casualty limits are self-insured for $200,000 per claim with a $300,000 aggregate limit. Property limits are $50,000 - $250,000 self insured retentions per occurrence with excess limits of $45 million including wind. 15

248 CLERK OF THE CIRCUIT COURT AND COMPTROLLER NOTES TO SPECIAL PURPOSE FINANCIAL STATEMENTS (Continued) 9. Risk management (Continued) The Clerk participated in the County s insurance program during fiscal year 2013 at a cost of $22,056. There also were no significant reductions in insurance coverage from the prior year and there have been no settlements which exceeded the Clerk s insurance coverage in any of the past three fiscal years. 10. Accumulated compensated absences Employees may accumulate, subject to limitations, amounts of earned but unused sick leave, annual leave, and compensatory time, which will be paid upon separation from service. The amount of vested accumulated compensated absences payable (related to governmental fund activities) based upon the Clerk s paid-time-off (PTO) policy is reported as a liability in the statement of net position in the County s government-wide financial statements. That liability includes earned but unused vacation and sick time as well as FICA taxes and retirement contributions related thereto. The change in accumulated compensated absences during the year was as follows: Balance, September 30, 2012 $ 1,858,099 Additions 643,229 Reductions (1,333,141) Balance, September 30, 2013 $ 1,168,187 The Internal Service Fund (ISF), established in 2004, was designed to record the annual costs related to the Clerk s compensated absences policies. In July 2013, the Board voted to rescind any prior authorization allowing the use of ISFs by Constitutional Officers and all cash held in the ISF applicable to Board funded activities was returned to the Board. Beginning in fiscal year 2013, only court-related compensated absence balances are recorded in the ISF. 11. Litigation From time to time, the office of the Clerk may be involved as a defendant in certain litigation and claims arising from the ordinary course of operations. In the opinion of legal counsel, there are no lawsuits or claims outstanding which will have a material adverse effect on the financial position of the Clerk. 12. Subsequent Events The Clerk has evaluated events and transactions for potential recognition or disclosure in the financial statements through February 14, 2014, the date the financial statements were available to be issued. No subsequent events have been recognized or disclosed. 16

249 Required Supplementary Information

250 CLERK OF THE CIRCUIT COURT AND COMPTROLLER GENERAL FUND SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL YEAR ENDED SEPTEMBER 30, 2013 General Fund Budgeted Amounts Original Final Actual Variance with Final Budget Revenues: Intergovernmental $ 6,881,994 $ 5,254,890 $ 5,288,482 $ 33,592 Charges for services 1,368,078 1,368,078 1,806, ,449 Judgments, fines and forfeitures - 1,618,399 1,296,671 (321,728) Investment income 2,900 27,900 30,564 2,664 Miscellaneous - 56,645 58,854 2,209 Total Revenues 8,252,972 8,325,912 8,481, ,186 Expenditures: Current: General government: Salaries and benefits 3,147,169 3,543,985 3,093, ,835 Operating expenditures 435, , ,320 62,107 Capital outlay - 52,900 51,422 1,478 Court related: Salaries and benefits 6,058,312 6,066,715 5,416, ,339 Operating expenditures 738, ,919 1,195,638 (394,719) Payments to State - - 3,526 (3,526) Capital outlay - 2,300-2,300 Total Expenditures 10,379,857 10,960,246 10,191, ,814 Excess (Deficiency) of Revenues Over (Under) Expenditures (2,126,885) (2,634,334) (1,710,334) 924,000 Other Financing Sources and Uses: Transfers in 2,126,885 2,634,334 2,634,334 - Transfers out - - (908,735) (908,735) Total Other Financing Sources (Uses) 2,126,885 2,634,334 1,725,599 (908,735) Net Change in Fund Balance ,265 15,265 Fund Balance, October 1, ,170 37,170 Fund Balance, September 30, 2013 $ - $ - $ 52,435 $ 52,435 17

251 CLERK OF THE CIRCUIT COURT AND COMPTROLLER PUBLIC RECORDS MODERNIZATION FUND SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL YEAR ENDED SEPTEMBER 30, 2013 Public Records Modernization Fund Budgeted Amounts Original Final Actual Variance with Final Budget Revenues: Intergovernmental $ 634,953 $ 634,953 $ 597,285 $ (37,668) Charges for services 611, , , ,537 Judgments, fines and forfeitures 259, , ,110 15,110 Investment income 5,000 5, (4,954) Miscellaneous revenue Total Revenues 1,510,321 1,510,321 1,604,676 94,355 Expenditures: Current: General government: Salaries and benefits 344, , , Operating expenditures 451, , , ,963 Capital outlay 30,000 30,000-30,000 Court related: Salaries and benefits 635, , , ,730 Operating expenditures 54,780 54,780 42,299 12,481 Capital outlay Total Expenditures 1,515,476 1,554,160 1,005, ,130 Excess (Deficiency) of Revenues Over (Under) Expenditures (5,155) (43,839) 599, ,485 Other Financing Sources and Uses: Transfers in - 43,839 43,839 - Transfers out Total Other Financing Sources (Uses) - 43,839 43,839 - Net Change in Fund Balance (5,155) - 643, ,485 Fund Balance, October 1, 2012 (5,155) - 1,519,114 1,519,114 Fund Balance, September 30, 2013 $ (10,310) $ - $ 2,162,599 $ 2,162,599 18

252 Notes to Required Supplementary Information The Clerk s Office operates under budget procedures pursuant to Florida Statutes. Annual budgets are legally adopted for the general fund and the public records modernization fund and are on a basis consistent with accounting principles generally accepted in the United States of America. The legal level of budgetary control (i.e., the level at which expenditures may not legally exceed appropriations) is at the fund level. Budgetary changes within the funds are made at the discretion of the Clerk. On or before June 1 of each year beginning in 2014, the proposed budget shall be prepared, summarized, and submitted by the clerk in each county to the Florida Clerks of Court Operations Corporation.. The proposed budget must provide detailed information on the anticipated revenues available and expenditures necessary for the performance of the courtrelated functions listed in s (3)(a) of the clerk s office for the county fiscal year beginning October 1. 19

253 Other Supplementary Information

254 CLERK OF THE CIRCUIT COURT AND COMPTROLLER COMBINING BALANCE SHEET - GENERAL FUND BY CATEGORY SEPTEMBER 30, 2013 Assets Cash and cash equivalents $ 1,130,704 $ 1,165,426 $ 2,296,130 Accounts receivable - 1,335 1,335 Due from other governmental units 6, ,548 Liabilities General Fund General Fund Court Services Total General Fund Total assets $ 1,137,096 $ 1,166,917 $ 2,304,013 Accounts payable $ 25,283 $ 24,285 $ 49,568 Contracts payable 34,251 5,131 39,382 Accrued liabilities 57, , ,492 Due to other governmental units 1,018, ,532 1,892,220 Unearned revenue 1, ,003 Other current liabilities - 49,913 49,913 Total liabilities 1,137,096 1,114,482 2,251,578 Fund Balances (Deficits) Restricted for: State court operations - 52,435 52,435 Total fund balance - 52,435 52,435 Total liabilities and fund balance $ 1,137,096 $ 1,166,917 $ 2,304,013 20

255 CLERK OF THE CIRCUIT COURT AND COMPTROLLER COMBINING SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - GENERAL FUND BY CATEGORY YEAR ENDED SEPTEMBER 30, 2013 General General Fund Court Services Total General Fund Fund Revenues: Intergovernmental $ 43,742 $ 5,244,740 $ 5,288,482 Charges for services 1,806,527-1,806,527 Judgments, fines and forfeitures - 1,296,671 1,296,671 Investment income 24 30,540 30,564 Miscellaneous revenue - 58,854 58,854 Total Revenues 1,850,293 6,630,805 8,481,098 Expenditures: Current: General government: Salaries and benefits 3,093,150-3,093,150 Operating expenditures 431, ,320 Capital outlay 51,422-51,422 Court related: Salaries and benefits - 5,416,376 5,416,376 Operating expenditures - 1,195,638 1,195,638 Payments to State - 3,526 3,526 Total Expenditures 3,575,892 6,615,540 10,191,432 Excess (Deficiency) of Revenues Over (Under) Expenditures (1,725,599) 15,265 (1,710,334) Other Financing Sources and Uses: Transfers in 2,634,334-2,634,334 Transfers out (908,735) - (908,735) Total Other Financing Sources and Uses 1,725,599-1,725,599 Net Change in Fund Balance - 15,265 15,265 Fund Balance, October 1, ,170 37,170 Fund Balance, September 30, 2013 $ - $ 52,435 $ 52,435 21

256 CLERK OF THE CIRCUIT COURT AND COMPTROLLER GENERAL FUND COMBINING SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL YEAR ENDED SEPTEMBER 30, 2013 General Fund Budgeted Amounts Original Final Actual Revenues: Intergovernmental $ 85,000 $ 85,000 $ 43,742 Charges for services 1,368,078 1,368,078 1,806,527 Judgments, fines and forfeitures Investment income 2,900 2, Miscellaneous revenue Total Revenues 1,455,978 1,455,978 1,850,293 Expenditures: Current: General government: Salaries and benefits 3,147,169 3,543,985 3,093,150 Operating expenditures 435, , ,320 Capital outlay - 52,900 51,422 Court related: Salaries and benefits Operating expenditures Payments to State Capital outlay Total Expenditures 3,582,863 4,090,312 3,575,892 Excess (Deficiency) of Revenues Over (Under) Expenditures (2,126,885) (2,634,334) (1,725,599) Other Financing Sources and Uses: Transfers in 2,126,885 2,634,334 2,634,334 Transfers out - - (908,735) Total Other Financing Sources (Uses) 2,126,885 2,634,334 1,725,599 Net Change in Fund Balance Fund Balance, October 1, Fund Balance, September 30, 2013 $ - $ - $ - 22

257 CLERK OF THE CIRCUIT COURT AND COMPTROLLER GENERAL FUND COMBINING SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL YEAR ENDED SEPTEMBER 30, 2013 General Fund - Court Services Budgeted Amounts Original Final Actual Total General Fund Budget Amounts Original Final Actual with Final Budget Positive (Negative) $ 6,796,994 $ 5,169,890 $ 5,244,740 $ 6,881,994 $ 5,254,890 $ 5,288,482 $ 33, ,368,078 1,368,078 1,806, ,449-1,618,399 1,296,671-1,618,399 1,296,671 (321,728) - 25,000 30,540 2,900 27,900 30,564 2,664-56,645 58,854-56,645 58,854 2,209 6,796,994 6,869,934 6,630,805 8,252,972 8,325,912 8,481, , ,147,169 3,543,985 3,093, , , , ,320 62, ,900 51,422 1,478 6,058,312 6,066,715 5,416,376 6,058,312 6,066,715 5,416, , , ,919 1,195, , ,919 1,195,638 (394,719) - - 3, ,526 (3,526) - 2, ,300-2,300 6,796,994 6,869,934 6,615,540 10,379,857 10,960,246 10,191, , ,265 (2,126,885) (2,634,334) (1,710,334) 924, ,126,885 2,634,334 2,634, (908,735) (908,735) ,126,885 2,634,334 1,725,599 (908,735) , ,265 15, , ,170 37,170 $ - $ - $ 52,435 $ - $ - $ 52,435 $ 52,435 23

258 CLERK OF THE CIRCUIT COURT AND COMPTROLLER COMBINING STATEMENT OF ASSETS AND LIABILITIES - ALL AGENCY FUNDS SEPTEMBER 30, 2013 Agency Funds Assets Court Registry Juror and Witness Restitution Domestic Relations General Trust TOTAL Cash and cash equivalents $ 3,740,664 $ 37,327 $ 113,857 $ 44,235 $ 335,453 $ 4,271,536 Accounts receivable ,061-19,061 Total Assets $ 3,740,664 $ 37,327 $ 113,857 $ 63,296 $ 335,453 $ 4,290,597 Liabilities Accounts payable $ - $ - $ 113,857 $ - $ - $ 113, Cash Bonds Payable , ,602 Court Registry Payable 3,246, ,246,106 General Trust Payable ,851 8,851 Due to other governments - 37,327-1,793-39,120 Due to individuals 494, , ,061 Total Liabilities $ 3,740,664 $ 37,327 $ 113,857 $ 63,296 $ 335,453 $ 4,290,597 24

259 CLERK OF THE CIRCUIT COURT AND COMPTROLLER COMBINING STATEMENT OF CHANGES IN ASSETS AND LIABILITIES - ALL AGENCY FUNDS YEAR ENDED SEPTEMBER 30, 2013 COURT REGISTRY ASSETS Balance Balance September 30, September 30, 2012 Additions Deductions 2013 Cash and cash equivalents $ 2,412,654 $ 24,222,914 $ 22,894,904 $ 3,740,664 LIABILITIES Court Registry Payable $ 2,127,165 $ 22,279,224 $ 21,160,283 $ 3,246,106 Due to individuals 285,489 1,962,617 1,753, ,558 Total Liabilities $ 2,412,654 $ 24,241,841 $ 22,913,831 $ 3,740,664 JUROR AND WITNESS ASSETS Cash and cash equivalents $ 49,571 $ 91,762 $ 104,006 $ 37,327 LIABILITIES Accounts payable $ - $ 100,325 $ 100,325 $ - Due to other governments 49, , ,791 37,327 Total Liabilities $ 49,571 $ 207,872 $ 220,116 $ 37,327 25

260 CLERK OF THE CIRCUIT COURT AND COMPTROLLER COMBINING STATEMENT OF CHANGES IN ASSETS AND LIABILITIES - ALL AGENCY FUNDS YEAR ENDED SEPTEMBER 30, 2013 (Continued) Balance Balance September 30, September 30, 2012 Additions Deductions 2013 RESTITUTION ASSETS Cash and cash equivalents $ 126,989 $ 266,632 $ 279,764 $ 113,857 LIABILITIES Due to Individuals $ 126,989 $ 266,632 $ 279,764 $ 113,857 DOMESTIC RELATIONS ASSETS Cash and cash equivalents $ 25,325 $ 6,738,715 $ 6,719,805 $ 44,235 Accounts receivable 24,447 57,997 63,383 19,061 Total Assets $ 49,772 $ 6,796,712 $ 6,783,188 $ 63,296 LIABILITIES Due to other funds $ - $ 112,859 $ 112,859 $ - Due to other governmental units - 142, ,757 1,793 Due to individuals 49,772 6,520,735 6,509,004 61,503 Total Liabilities $ 49,772 $ 6,776,144 $ 6,762,620 $ 63,296 26

261 CLERK OF THE CIRCUIT COURT AND COMPTROLLER COMBINING STATEMENT OF CHANGES IN ASSETS AND LIABILITIES - ALL AGENCY FUNDS YEAR ENDED SEPTEMBER 30, 2013 (Concluded) Balance Balance September 30, September 30, 2012 Additions Deductions 2013 GENERAL TRUST ASSETS Cash and cash equivalents $ 359,715 $ 1,155,319 $ 1,179,581 $ 335,453 LIABILITIES Cash bonds payable $ 348,936 $ 733,327 $ 755,661 $ 326,602 General trust payable 10, , ,063 8,851 Total Liabilities $ 359,715 $ 1,156,462 $ 1,180,724 $ 335,453 TOTALS - ALL AGENCY FUNDS ASSETS Cash and cash equivalents $ 2,974,254 $ 32,475,342 $ 31,178,060 $ 4,271,536 Accounts receivable 24,447 57,997 63,383 19,061 Total Assets $ 2,998,701 $ 32,533,339 $ 31,241,443 $ 4,290,597 LIABILITIES Accounts payable $ - $ 100,325 $ 100,325 $ - Cash bonds payable 348, , , ,602 Court registry payable 2,127,165 22,279,224 21,160,283 3,246,106 General trust payable 10, , ,063 8,851 Due to other funds - 112, ,859 - Due to other governments 49, , ,548 39,120 Due to individuals 462,250 8,749,984 8,542, ,918 Total Liabilities $ 2,998,701 $ 32,648,951 $ 31,357,055 $ 4,290,597 27

262 INDEPENDENT AUDITORS REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS Honorable Ernie Lee Magaha Clerk of the Circuit Court Through January 7, 2013 Honorable Pam Childers Clerk of the Circuit Court Effective January 8, 2013 Escambia County, Florida We have audited, 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, the special-purpose financial statements (hereinafter referred to as financial statements ) of each major fund and the aggregate remaining fund information of the Office of the Clerk of the Circuit Court and Comptroller of Escambia County, Florida (hereinafter referred to as Clerk ), as of and for the year ended September 30, 2013, and the related notes to the financial statements, which collectively comprise the Clerk s financial statements and have issued our report thereon dated February 14, Internal Control Over Financial Reporting In planning and performing our audit of the financial statements, we considered the Clerk s internal control over financial reporting (internal control) to determine the audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the Clerk s internal control. Accordingly, we do not express an opinion on the effectiveness of the Clerk s internal control. A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the entity s financial statements will not be prevented, or detected and corrected on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance. Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified. 28

263 Compliance and Other Matters As part of obtaining reasonable assurance about whether the Clerk s financial statements are free of material misstatement, we performed tests of compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards. As required by the provisions of Chapter , Rules of the Auditor General, we have issued a separate management letter dated February 14, 2014, which should be considered in assessing the results of our audit. Purpose of this Report The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the entity s internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the entity s internal control and compliance. Accordingly, this report is not suitable for any other purpose. February 14, 2014 Pensacola, Florida 29

264 MANAGEMENT LETTER Honorable Ernie Lee Magaha Clerk of the Circuit Court Through January 7, 2013 Honorable Pam Childers Clerk of the Circuit Court Effective January 8, 2013 Escambia County, Florida We have audited the financial statements of each major fund and the aggregate remaining fund information of the Office of the Clerk of the Circuit Court and Comptroller of Escambia County, Florida (hereinafter referred to as Clerk ), as of and for the year ended September 30, 2013, and the related notes to the financial statements, and have issued our report thereon dated February 14, 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, and Chapter , Rules of the Florida Auditor General. We have also issued our Independent Auditors Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards. Disclosures in that report, which is dated February 14, 2014, should be considered in conjunction with this management letter. Additionally, our audit was conducted in accordance with the provisions of Chapter , Rules of the Auditor General, which govern the conduct of local governmental entity audits performed in the State of Florida. This letter includes the following information, which is not included in the aforementioned auditors reports: Section (1)(i)1., Rules of the Auditor General, requires that we determine whether or not corrective actions have been taken to address findings and recommendations made in the preceding annual financial audit report. We have the following matter to discuss related to the prior year: Finding Schedule of Findings and Responses We reported a possible violation of compliance with Florida Statute Section , during Mr. Magaha s tenure as Clerk. Mrs. Childers initiated an investigation into this matter upon taking Office of the Clerk, and the independent accounting firm who conducted the investigation agreed that Mr. Magaha may have violated this statute. A recommendation was made in the other accountant s report to consider seeking a legal determination regarding this matter. Although a legal determination has not been sought, the Escambia County Board of County Commissioners filed a claim seeking reimbursement of funds up to the amount of coverage under Mr. Magaha s fidelity policy. The County was 30

265 successful in negotiating a settlement of $50,000 (the maximum coverage). No further action is contemplated to be taken by either the Clerk or the Board of County Commissioners regarding this matter. Section (1)(i)2., Rules of the Auditor General, requires our audit to include a review of the provisions of Section , Florida Statutes, regarding the investment of public funds. In connection with our audit, we determined that the Clerk complied with Section , Florida Statutes. Section (1)(i)3., Rules of the Auditor General, requires that we address in the management letter any recommendations to improve financial management. In connection with our audit, we did not have any such recommendations. Section (1)(i)4., Rules of the Auditor General, requires that we address noncompliance with provisions of contracts or grant agreements, or abuse, that have occurred, or are likely to have occurred, that have an effect on the financial statements that is less than material but which warrants the attention of those charged with governance. In connection with our audit, we did not have any such findings. Section (1)(i)7., Rules of the Auditor General, requires a statement as to whether or not the Clerk complied with the requirements of Sections and 28.36, Florida Statutes. In connection with our audit, we determined that the Clerk complied with such requirements. Our management letter is intended solely for the information and us of the Legislative Auditing Committee, members of the Florida Senate and Florida House of Representatives, the Florida Auditor General, the Clerk, and applicable management and is not intended to be and should not be used by anyone other than these specified parties. February 14, 2014 Pensacola, Florida 31

266 ANNUAL AUDIT REPORT CLERK OF THE COURT AND COMPTROLLER ESCAMBIA COUNTY, FLORIDA SCHEDULE OF FINDINGS & RESPONSES September 30, 2013 There were no comments which require management s written response. 32

267

268 SPECIAL PURPOSE FINANCIAL STATEMENTS AND REQUIRED SUPPLEMENTARY INFORMATION ESCAMBIA COUNTY, FLORIDA PROPERTY APPRAISER SEPTEMBER 30, 2013 WITH INDEPENDENT AUDITORS REPORT

269 SPECIAL PURPOSE FINANCIAL STATEMENTS AND INDEPENDENT AUDITORS REPORT ESCAMBIA COUNTY, FLORIDA PROPERTY APPRAISER SEPTEMBER 30, 2013 WITH INDEPENDENT AUDITORS REPORT CONTENTS Independent Auditors Report...1 Special Purpose Fund Financial Statements: Balance Sheet Governmental Fund...3 Statement of Revenues, Expenditures, and Changes In Fund Balance Governmental Fund...4 Notes to the Financial Statements...5 Required Supplementary Information Schedule of Revenues, Expenditures, and Changes in Fund Balance Budget (GAAP Basis) and Actual General Fund...10 Notes to Required Supplemental Information...11 Independent Auditors Report on Internal Control over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards...12 Management Letter...14 Schedule of Findings and Responses...15

270 INDEPENDENT AUDITORS REPORT Honorable Chris Jones Escambia County Property Appraiser Escambia County, Florida Report on the Financial Statements We have audited the accompanying special purpose financial statements of the general fund of the Escambia County, Florida Property Appraiser (the Property Appraiser), as of and for the year ended September 30, 2013, and the related notes to the financial statements. Management s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Auditors Responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion, the special purpose financial statements referred to above present fairly, in all material respects, the financial position of the general fund of the Property Appraiser as of September 30, 2013, and the change in financial position for the year then ended in accordance with accounting principles generally accepted in the United States of America. 1

271 Emphasis of Matter As discussed in Note 1 to the special purpose financial statements, the financial statements referred to above have been prepared for the purpose of complying with Chapter , Rules of the Auditor General, State of Florida, and are not intended to be a complete presentation of the financial position and changes in financial position of the Property Appraiser. Additionally, the special purpose financial statements present only the Property Appraiser and are not intended to present the financial position and changes in financial position of Escambia County, Florida, taken as a whole. Our opinion is not modified with respect to this matter. Other Matters Required Supplementary Information Accounting principles generally accepted in the United States of America require that the budgetary comparison schedule 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 special purpose financial statements, and other knowledge we obtained during our audit of the special purpose financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated January 21, 2014, on our consideration of the Property Appraiser s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering Property Appraiser s internal control over financial reporting and compliance. Restriction on Use This report is intended solely for the information and use of the Property Appraiser, management, the Board of County Commissioners, and the Florida Auditor General, and is not intended to be, and should not be, used by anyone other than these specified parties. January 21, 2014 Pensacola, Florida 2

272 Special Purpose Financial Statements

273 PROPERTY APPRAISER BALANCE SHEET GOVERNMENTAL FUND SEPTEMBER 30, 2013 Major Fund Assets General Fund Cash and cash equivalents $ 200,054 Other assets 66,327 Total assets $ 266,381 Liabilities Accounts payable $ 18,002 Accrued liabilities 114,034 Due to other governmental units 134,345 Total liabilities 266,381 Fund Balance Unassigned: - Total fund blance - Total liabilities and fund balance $ 266,381 See accompanying notes to financial statements. 3

274 PROPERTY APPRAISER STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - GOVERNMENTAL FUND YEAR ENDED SEPTEMBER 30, 2013 Major Fund General Fund Revenues: Charges for services $ 14,532 Miscellaneous revenue 2,148 Total Revenues 16,680 Expenditures: Current: General government: Salaries and benefits 4,412,641 Operating expenditures 676,105 Capital outlay 6,980 Total Expenditures 5,095,726 Excess (Deficiency) of Revenues (Under) Expenditures (5,079,046) Other Financing Sources and Uses: Transfers in 5,213,068 Transfers out (134,022) Total Other Financing Sources and Uses 5,079,046 Net Change in Fund Balance - Fund Balance, October 1, Fund Balance, September 30, 2013 $ - See accompanying notes to financial statements. 4

275 PROPERTY APPRAISER NOTES TO SPECIAL PURPOSE FINANCIAL STATEMENTS 1. Summary of Significant Accounting Policies The following is a summary of the significant principles and policies used in the preparation of these special purpose financial statements. A. Reporting entity The Escambia County, Florida Property Appraiser (Property Appraiser), is an elected constitutional officer as provided by Article VIII, Section 1 (d) of the Constitution of the State of Florida. The Property Appraiser s budget is submitted to the Escambia County Board of County Commissioners (the Board) for approval. The Board appropriates and distributes to the Property appraiser on a quarterly basis the funds necessary to operate the Property Appraiser s office. For financial reporting purposes, the Property Appraiser is deemed to be a part of the primary government of Escambia County, Florida (the County), and therefore, is included as such in the Escambia County, Florida, Comprehensive Annual Financial Report. B. Basis of presentation fund financial statements These special purpose financial statements have been prepared for the purpose of complying with Rules of the Auditor General, State of Florida, which require presentation of fund level only financial statements and permit omission of entity-wide full accrual financial statements and management s discussion and analysis. Therefore, these financial statements are intended to present only the financial position and changes in financial position of that portion of Escambia County, Florida, that relate to transactions of the Property Appraiser and are not intended to present the financial position and changes in financial position of Escambia County, Florida, taken as a whole. The Property Appraiser s financial records and accounts are maintained in accordance with the principles of fund accounting, whereby resources are classified for accounting and reporting purposes into funds to insure compliance with any special restrictions or limitations on the use of such resources. The Property Appraiser s general fund (a governmental fund type) is the sole operating fund of the Property Appraiser. No additional funds are required to be maintained. Fund Balance - Fund balances are classified either as non-spendable or as restricted, committed, assigned, and unassigned, based on the extent to which there are external and internal constraints on the spending. C. Measurement focus and basis of accounting The general fund is accounted for using the modified accrual basis of accounting. Revenues are recognized when they become susceptible to accrual that is when they are both measurable and available to finance expenditures of the current period. The Property Appraiser considers receivables collected within 60 days after year-end to be available and recognizes them as revenues of the current year. Expenditures generally are recognized under the modified accrual basis of accounting when the fund liability is incurred. However, expenditures for compensated absences are recognized when payments are made to employees. 5

276 PROPERTY APPRAISER NOTES TO SPECIAL PURPOSE FINANCIAL STATEMENTS 1. Summary of Significant Accounting Policies (Continued) D. Funding from the Board of County Commissioners Appropriations from the Board are recorded as transfers in on the Statement of Revenues, Expenditures and Changes in Fund Balance. In accordance with Florida Statutes, the General Fund s excess of revenues and transfers over expenditures is returned to the Board at year end and is reported as a transfer out on the Statement of Revenues, Expenditures and Changes in Fund Balance. 2. Cash deposits with financial institutions The investment of surplus funds is governed by the provisions of Florida Statute as to the type of investments that can be made. Deposits may be exposed to custodial credit risk, which is the risk of loss in the event of a bank failure. The Property Appraiser manages custodial credit risk by maintaining its deposits in financial institutions designated as Qualified Public Depositories by the State Treasurer. All deposits were fully insured through a combination of Federal depository insurance and participation of the financial institution in the multiple financial institution collateral pool as specified in Chapter 280, Florida Statutes. Accordingly, risk of loss due to bank failure is not significant. At September 30, 2013, the reported amount of the Property Appraiser s deposits was approximately $200,000, and the bank balance was approximately $250,000 consisting entirely of deposits in a checking account. 3. Transfers Transfers in consist of $5,213,068 from the Escambia County Board of County Commissioners, and transfers out represent excess appropriations and fees returned to the Board in the amount of $134, Due to/from other governments At September 30, 2013, the due to other governments totals $134,345, and consists mainly of excess appropriations and fees over expenditures payable to the Board. 5. Capital assets Capital assets (vehicles, equipment and other property costing at least $1,000 with a useful life of more than one year) are recorded as expenditures at the time of purchase. These assets are capitalized at cost and depreciated in Escambia County s government-wide financial statements. 6

277 PROPERTY APPRAISER NOTES TO SPECIAL PURPOSE FINANCIAL STATEMENTS 6. Retirement Plan Plan Description - The Property Appraiser participates in the Florida Retirement System (FRS), a cost sharing multiple-employer defined benefit pension plan, administered by the State of Florida. Beginning in 2002, the FRS became one system with two primary plans, a defined benefit plan (FRS Pension Plan) and a defined contribution plan alternative to the defined benefit plan known as the Public Employee Option Retirement Program (FRS Investment Plan). The effective date of the FRS Investment Plan was July 1, On July 1, 2011 the FRS became a contributory plan. The FRS provides retirement, disability and death benefits to members. The State of Florida issues a publicly available report that includes financial statements and required supplementary information for FRS. The report may be obtained at or may be obtained by writing to the State of Florida Division of Retirement, Department of Management Services, P. O. Box 9000, Tallahassee, Florida For members hired before July 1, 2011 the FRS Pension Plan provides for the vesting of benefits after six years of creditable service and age 62, or thirty years of service regardless of age, whichever comes first. For members first enrolled after July 1, 2011 vesting occurs after eight years of credible service and age 65, or thirty-three years of service regardless of the age before 65. Early retirement may be taken any time after vesting; however, there is a 5% benefit reduction for each year prior to normal retirement age. Members are also eligible for in-line-of-duty or regular disability benefits if permanently disabled and unable to work. Benefits are computed on the basis of age, average final compensation and service credit. Funding Policy - The FRS has six classes of membership. Only four of these classes are applicable to the Property Appraiser s eligible employees. The Property Appraiser is required to contribute at an actuarial determined rate. These rates are a percent of covered payroll. The four applicable classes, with descriptions and contribution rates in effect during the period ended September 30, 2013, 2012 and 2011 are as follows: Regular Class: 6.95% 5.18% 4.91% Members not qualifying for other classes. Senior Management Class: 18.31% 6.30% 6.29% Members of senior management who do not elect the optional annuity retirement program. Elected Officials Class: 33.03% 10.23% 11.14% Certain elected county officials. Deferred Retirement Option Program (DROP): 12.84% 5.44% 4.42% Members are enrolled in DROP from FRS The contribution requirements of the Property Appraiser and members are established and may be amended by FRS. The plan is contributory for employees requiring a 3% employee contribution. This is in addition to the contributions that are the obligation of the employer. The Property Appraiser s contributions to FRS for the years ended September 30, 2013, 2012 and 2011 were $222,843, $168,168, and $311,005 respectively, equal to the required contributions for each year. 7

278 PROPERTY APPRAISER NOTES TO SPECIAL PURPOSE FINANCIAL STATEMENTS 7. Other post-employment benefits (OPEB), other than pensions The Board offers post-employment health care benefits to all retired employees of the Property Appraiser s Office and their dependents. Participating retirees are required to reimburse the Board for 100% of the premium cost, which is netted against the premium payment, so that no net expense is initially recorded in the Board s financial statements. However, these retirees are receiving an implicit subsidy because the premium is a group rate which includes active, lower cost employees. This implicit subsidy has a cost which under GAAP is required to be disclosed in these financial statements. However, this annual cost, the accrued obligation, and other required disclosures have been calculated for the County as a whole, and not separately for the Property Appraiser s Office. Accordingly, these calculations and disclosures can be found in the County wide comprehensive annual financial report. 8. Risk management The County has a risk management program to insure claims against the Board, Constitutional Officers, and Santa Rosa Island Authority for the following types of risks: Workers Compensation The County is covered for workers compensation claims through a policy with the Florida Municipal Insurance Trust. Coverage limits under the policy include statutory limits, as well as $1,000,000 bodily injury for each accident and $1,000,000 bodily injury by disease for each employee with an aggregate $1,000,000 policy limit. Casualty and Property Casualty limits are self-insured for $200,000 per claim with a $300,000 aggregate limit. Property limits are $50,000 - $250,000 self insured retentions per occurrence with excess limits of $45 million including wind. The Property Appraiser participated in the County s insurance program during the year at a cost of $36,055. There also were no significant reductions in insurance coverage from the prior year and there have been no settlements which exceeded the Property Appraiser s insurance coverage in any of the past three fiscal years. 9. Accumulated Compensated Absences Employees may accumulate, subject to limitations, amounts of earned but unused sick leave, annual leave, and compensatory time, which will be paid upon separation from service. The amount of vested accumulated compensated absences payable (related to governmental fund activities) based upon the Property Appraisers paid-time-off (PTO) policy is reported as a liability in the statement of net position in the County s basic financial statements. That liability includes earned but unused vacation, sick and comp time as well as FICA taxes and retirement contributions related thereto. The change in accumulated compensated absences during the year is as follows: 2013 Compensated Absences Balance 10/01/2012 $506,337 Increase 308,629 Decrease (371,493) Balance 09/30/2013 $443,473 8

279 PROPERTY APPRAISER NOTES TO SPECIAL PURPOSE FINANCIAL STATEMENTS 10. Litigation The Property Appraiser is contingently liable with respect to lawsuits and other claims which might be filed incidental to the ordinary course of operations. In the opinion of management, based on the advice of legal counsel, there are no lawsuits or claims outstanding which will have a material adverse effect on the financial position of the Property Appraiser s Office. 11. Subsequent events Property Appraiser has evaluated events and transactions for potential recognition or disclosure in the financial statements through January 21, 2014, the date the financial statements were available to be issued. No subsequent events have been recognized or disclosed. 9

280 Required Supplementary Information

281 PROPERTY APPRAISER GENERAL FUND SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL YEAR ENDED SEPTEMBER 30, 2013 General Fund Budgeted Amounts Original Final Actual Variance with Final Budget Revenues: Charges for services $ 12,556 $ 12,556 $ 14,532 $ 1,976 Miscellaneous revenue - - 2,148 2,148 Total Revenues 12,556 12,556 16,680 4,124 Expenditures: Current: General government: Salaries and benefits 4,485,903 4,433,343 4,412,641 20,702 Operating expenditures 689, , ,105 59,196 Capital outlay - 6,980 6,980 - Reserved for contingencies 50,000 50,000-50,000 Total Expenditures 5,225,499 5,225,624 5,095, ,898 Excess (Deficiency) of Revenues Over (Under) Expenditures (5,212,943) (5,213,068) (5,079,046) 134,022 Other Financing Sources and Uses: Transfers in 5,212,943 5,213,068 5,213,068 - Transfers out - - (134,022) (134,022) Total Other Financing Sources (Uses) 5,212,943 5,213,068 5,079,046 (134,022) Net Change in Fund Balance Fund Balance, October 1, Fund Balance, September 30, 2013 $ - $ - $ - $ - See accompanying notes to required supplementary information. 10

282 PROPERTY APPRAISER NOTES TO REQUIRED SUPPLEMENTARY INFORMATION The Property Appraiser s Office operates under budget procedures pursuant to Florida Statutes. Annual budgets are legally adopted for the general fund on a basis consistent with accounting principles generally accepted in the United States of America. The legal level of budgetary control (i.e., the level at which expenditures may not legally exceed appropriations) is at the fund level. 11

283 INDEPENDENT AUDITORS REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS Honorable Chris Jones Escambia County Property Appraiser Escambia County, Florida We have audited, in accordance with the 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, the special purpose financial statements of the Escambia County, Florida Property Appraiser (the Property Appraiser) as of and for the year ended September 30, 2013, and the related notes to the financial statements, and have issued our report thereon dated January 21, Internal Control Over Financial Reporting In planning and performing our audit of the financial statements, we considered the Property Appraiser s internal control over financial reporting (internal control) to determine the audit procedures that are appropriate in the circumstances for the purpose of expressing our opinion on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the Property Appraiser s internal control. Accordingly, we do not express an opinion on the effectiveness of the Property Appraiser s internal control. A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the entity s financial statements will not be prevented, or detected and corrected on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance. Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or, significant deficiencies. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified. Compliance and Other Matters As part of obtaining reasonable assurance about whether the Property Appraiser s financial statements are free from material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards. As required by the provisions of Chapter , Rules of the Auditor General, we have issued a separate management letter dated January 21, 2014, which should be considered in assessing the results of our audit. 12

284 Purpose of this Report The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the Property Appraiser s internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the Property Appraiser s internal control and compliance. Accordingly, this report is not suitable for any other purpose. January 21, 2014 Pensacola, Florida 13

285 MANAGEMENT LETTER Honorable Chris Jones Escambia County Property Appraiser Escambia County, Florida We have audited the financial statements of the general fund of the Office of the Property Appraiser of Escambia County, Florida (hereinafter referred to as Property Appraiser ), as of and for the year ended September 30, 2013, and the related notes to the financial statements, and have issued our report thereon dated January 21, 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. We have also issued our Independent Auditors Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards. Disclosures in that report, which is dated January 21, 2014, should be considered in conjunction with this management letter. Additionally, our audit was conducted in accordance with the provisions of Chapter , Rules of the Auditor General, which govern the conduct of local government entity audits performed in the State of Florida. This letter includes the following information, which is not included in the aforementioned auditors reports. Section (1) (i) 1., Rules of the Auditor General, requires that we comment as to whether or not corrective actions have been taken to address findings and recommendations made in the preceding annual financial audit report. No recommendations were made in the preceding annual financial audit report. Section (1) (i) 2., Rules of the Auditor General, requires that we review the provisions of Section , Florida Statutes, regarding the investment of public funds. We determined that the Property Appraiser is in compliance with Section , Florida Statutes, regarding the investment of public funds. Section (1) (i) 3., Rules of the Auditor General, requires that we comment as to whether or not there were any recommendations made to improve the Property Appraiser's financial management. We did not have any such recommendations. Section (1) (e) 4., Rules of Auditor General, requires that we address noncompliance with provisions of contracts or grant agreements, or abuse, that have occurred, or are likely to have occurred, that have an effect on the financial statements that is less than material but which warrants the attention of those charged with governance. In connection with our audit, we did not have any such findings. Our management letter is intended solely for the information and use of the Legislative Auditing Committee, members of the Florida Senate and the Florida House of Representatives, the Florida Auditor General, the Property Appraiser, Escambia County Board of County Commissioners, and applicable management and is not intended to be and should not be used by anyone other than these specified parties. January 21, 2014 Pensacola, Florida 14

286 PROPERTY APPRAISER SCHEDULE OF FINDINGS AND RESPONSES September 30, 2013 There were no comments which require management s written response. 15

287

288 SPECIAL PURPOSE FINANCIAL STATEMENTS AND REQUIRED SUPPLEMENTARY INFORMATION ESCAMBIA COUNTY, FLORIDA SHERIFF SEPTEMBER 30, 2013 WITH INDEPENDENT AUDITORS REPORT

289 SPECIAL PURPOSE FINANCIAL STATEMENTS AND INDEPENDENT AUDITORS REPORT ESCAMBIA COUNTY, FLORIDA SHERIFF SEPTEMBER 30, 2013 WITH INDEPENDENT AUDITORS REPORT TABLE OF CONTENTS Independent Auditors Report...1 Special Purpose Financial Statements: Balance Sheet Governmental Funds...4 Statement of Revenues, Expenditures, and Changes In Fund Balance Governmental Funds...5 Internal Service Fund Statement of Net Position...6 Statement of Revenues, Expenses, and Changes in Net Position...7 Statement of Cash Flows...8 Statement of Fiduciary Assets and Liabilities Agency Funds...9 Notes to the Financial Statements...10 Required Supplementary Information: Schedules of Revenues, Expenditures, and Changes in Fund Balance Budget (GAAP Basis) and Actual Governmental Funds...20 Notes to Required Supplementary Information...23 Other Supplementary Information: Combining and Individual Fund Financial Statements and Schedules: Combining Balance Sheet Nonmajor Governmental Funds...24 Combining Statement of Revenues, Expenditures, and Changes In Fund Balances Nonmajor Governmental Funds...26 Schedules of Revenues, Expenditures, and Changes in Fund Balance (GAAP Basis) and Actual Nonmajor Governmental Funds...28 Combining Statement of Fiduciary Assets and Liabilities All Agency Funds...40 Combining Statement of Changes in Fiduciary Assets and Liabilities All Agency Funds...42 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...46 Management Letter...48 Schedule of Findings and Responses...49

290 INDEPENDENT AUDITORS REPORT Honorable David Morgan, Sheriff Escambia County, Florida Report on the Financial Statements We have audited the accompanying special-purpose financial statements of each major fund and the aggregate remaining fund information of the Office of the Sheriff of Escambia County, Florida ( Sheriff ) as of and for the year ended September 30, 2013, as listed in the table of contents, and the related notes to the financial statements. Management s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Auditors Responsibility Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Sheriff s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Sheriff s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. Opinions In our opinion, the special-purpose financial statements referred to above present fairly, in all material respects, the financial position of each major fund and the aggregate remaining fund information of the Sheriff, as of September 30, 2013, and the respective changes in financial position and cash flows, where applicable, thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America. 1

291 Emphasis of Matter As discussed in Note 1 to the special-purpose financial statements, the financial statements referred to above have been prepared for the purpose of complying with Chapter , Rules of the Auditor General, State of Florida, and are not intended to be a complete presentation of the financial position and changes in financial position of the Sheriff. Additionally, the special purpose financial statements present only the Sheriff and are not intended to present the financial position and changes in financial position of Escambia County, Florida, taken as a whole. Our opinion is not modified with respect to this matter. Other Matters Required Supplementary Information Accounting principles generally accepted in the United States of America require that the budgetary comparison schedules on pages be presented to supplement the basic financial statements. Such information, although not a part of the special-purpose 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 special-purpose financial statements, and other knowledge we obtained during our audit of the special-purpose financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Other Supplementary Information Our audit was conducted for the purpose of forming opinions on the special-purpose financial statements. The accompanying combining and individual nonmajor fund financial statements and schedules are presented for purposes of additional analysis and are not a required part of these special-purpose financial statements. Such information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the special purpose financial statements. The information has been subjected to the auditing procedures applied in the audit of the special-purpose financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the special-purpose 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 special-purpose financial statements taken as a whole. Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated January 22, 2014 on our consideration of the Sheriff s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the Sheriff s internal control over financial reporting and compliance. 2

292 Restriction on Use This report is intended solely for the information and use of the Sheriff, the Escambia County Board of County Commissioners, and the State of Florida Office of Auditor General and is not intended to be and should not be used by anyone other than these specified parties. January 22, 2014 Pensacola, Florida 3

293 Special Purpose Financial Statements

294 Assets ESCAMBIA COUNTY, FLORIDA SHERIFF BALANCE SHEET GOVERNMENTAL FUNDS SEPTEMBER 30, 2013 Other Nonmajor Governmental Funds Cash and cash equivalents $ 6,978,244 $ 918,886 $ 96,699 $ 7,993,829 Investments Accounts receivable ,055-49,355 Due from other funds 42,662 52,913-95,575 Due from Board of County Commissioners 156, ,685 Due from other governmental units - 42,663 42,663 Inventory 397, ,476 Total assets $ 7,575,367 $ 1,020,854 $ 139,362 $ 8,735,583 Liabilities General Fund Major Funds Commissary Fund Accounts payable $ 409,830 $ - $ - $ 409,830 Contracts payable Accrued liabilities 3,337, ,337,721 Due to other funds 6,548-42,663 49,211 Due to Board of County - Total Governmental Funds Commissioners 3,423, ,423,792 Due to other governmental units Unearned revenue ,699 96,699 Other current liabilities Total liabilities 7,177, ,362 7,317,253 Fund Balance Nonspendable: Inventory 397, ,476 Restricted for: Inmate welfare and recreation - 1,020,854-1,020,854 Total fund balance 397,476 1,020,854-1,418,330 Total liabilities and fund balance $ 7,575,367 $ 1,020,854 $ 139,362 $ 8,735,583 See accompanying notes to financial statements. 4

295 SHERIFF STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - GOVERNMENTAL FUNDS YEAR ENDED SEPTEMBER 30, 2013 Major Funds COPS Other Nonmajor Total General Commissary Hiring Governmental Governmental Fund Fund Fund Funds Funds Revenues: Grant revenue $ - $ - $ 266,473 $ 381,936 $ 648,409 Charges for services - 853, ,136 Judgments, fines and forfeitures ,921 83,921 Miscellaneous revenue - 51, ,511 Total Revenues - 904, , ,857 1,636,977 Expenditures: Current: Public safety Salaries and benefits 63,910, , ,993 64,538,655 Operating expenditures 10,767, ,600-78,731 11,429,134 Capital outlay 57, ,718-25, ,347 Total Expenditures 74,735, , , ,857 76,284,136 Excess (Deficiency) of Revenues Over (Under) Expenditures (74,735,488) 88, (74,647,159) Other Financing Sources and Uses: Inventory (19,410) (19,410) Transfers in 78,000, ,000,607 Transfers out (3,265,119) (3,265,119) Total Other Financing Sources and Uses 74,716, ,716,078 Net Change in Fund Balance (19,410) 88, ,919 Fund Balance, October 1, , , ,349,411 Fund Balance, September 30, 2013 $ 397,476 $ 1,020,854 $ - - $ 1,418,330 See accompanying notes to financial statements. 5

296 SHERIFF INTERNAL SERVICE FUND STATEMENT OF NET POSITION FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2013 ASSETS Current assets: Cash and cash equivalents $ - Accounts receivable - Due from other funds - Due from other governmental units - Total current assets - LIABILITIES Current Liabilities: Compensated absences payable - Total current liabilities - Noncurrent Liabilities: Compensated absences payable - Due to other funds - Total noncurrent liabilities - Total liabilities - NET POSITION $ - See accompanying notes to financial statements. 6

297 SHERIFF INTERNAL SERVICE FUND STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET POSITION SEPTEMBER 30, 2013 Operating revenues: Charges for services $ 9,223,707 Total operating Revenue 9,223,707 Operating expenses: Personnel services 14,576,295 Total operating expenses 14,576,295 Operating income (loss) (5,352,588) Nonoperating: Other financing sources (uses) Transfers out (1,500,000) Closure of internal service fund 18,616,302 Changes in net position 11,763,714 Net position-beginning (11,763,714) Net position-ending $ - See accompanying notes to financial statements. 7

298 SHERIFF INTERNAL SERVICE FUND STATEMENT OF CASH FLOWS FOR THE YEAR ENDED SEPTEMBER 30, 2013 CASH FLOWS FROM OPERATING ACTIVITIES Payments for personal services $ (5,018,507) Net cash provided by (used for) operating activities (5,018,507) CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES Transfer to general fund (1,500,000) NET DECREASE IN CASH (6,518,507) Cash and cash equivalents, beginning of year 6,518,507 Cash and cash equivalents, end of year $ - Reconciliation of operating income (loss) to net cash provided by (used for) operating activities: Changes in net position $ (5,352,588) Increase (decrease) in compensated absences payable 334,081 Net cash provided by (used for) operating activities $ (5,018,507) See accompanying notes to financial statements. 8

299 SHERIFF STATEMENT OF FIDUCIARY ASSETS AND LIABILITIES - AGENCY FUNDS SEPTEMBER 30, 2013 Assets Cash and cash equivalents $ 1,153,462 Due from other funds 6,548 Total Assets $ 1,160,010 Liabilities Deposits $ 997,732 Due to other funds 52,913 Due to other governmental units 43,581 Other current liabilities 65,784 Total Liabilities $ 1,160,010 See accompanying notes to financial statements. 9

300 SHERIFF NOTES TO SPECIAL PURPOSE FINANCIAL STATEMENTS 1. Summary of Significant Accounting Policies The following is a summary of the significant principles and policies used in the preparation of these special purpose financial statements. A. Reporting entity The Escambia County, Florida, Sheriff (the Sheriff ) is an elected constitutional officer as provided by Article VIII, Section 1 (d) of the Constitution of the State of Florida. The Sheriff s budget is submitted to the Escambia County Board of County Commissioners (the Board) for approval. The Board appropriates and distributes to the Sheriff on a monthly basis funds necessary to operate the Sheriff s office. For financial reporting purposes, the Sheriff is deemed to be a part of the primary government of Escambia County, Florida (the County), and therefore, is included as such in the Escambia County, Florida, Comprehensive Annual Financial Report. B. Basis of presentation fund financial statements These special purpose financial statements have been prepared for the purpose of complying with Rules of the Auditor General, State of Florida, which require presentation of fund level only financial statements and permit omission of entity-wide full accrual financial statements and management s discussion and analysis. Therefore, these financial statements are intended to present only the financial position and changes in financial position of that portion of Escambia County, Florida, that relate to transactions of the Sheriff and are not intended to present the financial position and changes in financial position of Escambia County, Florida, taken as a whole The Sheriff s financial records and accounts are maintained in accordance with the principles of fund accounting, whereby resources are classified for accounting and reporting purposes into funds to insure compliance with any special restrictions or limitations on the use of such resources. The Sheriff s major funds are defined as follows: The General Fund is the general operating fund of the Sheriff. It is used to account for all financial resources except those required to be accounted for in other funds. The Commissary Fund is used to account for revenues and expenditures of the commissary. Profits are restricted by statute for inmate welfare and recreational purposes. Effective, October 1, 2013 all assets and liabilities of the Commissary Fund were transferred to the Board in accordance with terms of the Memorandum of Understanding between the Board and Sheriff for transfer of operation and control of the jail and related detention facilities to the Board. The COPS Hiring Special Revenue Fund accounts for costs and revenues related to the COPS Hiring Recovery Program Grant. Additionally, the Sheriff reports the following fund types: Special Revenue Funds are used to account for grant and federal forfeiture activities. 10

301 SHERIFF NOTES TO SPECIAL PURPOSE FINANCIAL STATEMENTS 1. Summary of Significant Accounting Policies (Continued) Agency Funds are used to account for assets received and held by the Sheriff as an agent for individuals, private organizations and other governments. Agency funds are custodial in nature and do not involve measurement of changes in financial position. The Sheriff has numerous agency funds for varying purposes. Internal Service Fund is used to account for activity related to the Sheriff s compensated absences policies. Effective September 30, 2013 the Sheriff terminated the use of the Internal Service Fund. C. Fund balance and flow assumptions Fund balance at September 30, 2013, consists of the following: Non-spendable fund balances include amounts that cannot be spent because they are not in spendable form or are legally or contractually required to be maintained intact. Non-spendable fund balance at the Sheriff consists of $397,476 for inventory. Remaining fund balances are classified as following, depending upon the Sheriff s ability to control the spending of these balances: Restricted fund balances can only be used for specific purposes which are externally imposed by creditors, grantors, contributors, or laws or regulations or are imposed by law through constitutional provisions or enabling legislation. As of September 30, 2013, the Sheriff had restricted fund balance in the Commissary Fund totaling $1,024,854. Committed fund balances can only be used for specific purposes imposed internally by the Sheriff s formal action of highest level of decision making authority. As of September 30, 2013, the Sheriff had no committed fund balances. Assigned fund balances are fund balances intended to be used for specific purposes, but which do not meet the more formal criterion to be considered either restricted or committed. As of September 30, 2013, the Sheriff had no assigned fund balances. Unassigned fund balances represent the residual positive fund balance within the General Fund, which has not been assigned to other funds and has not been restricted, committed, or assigned. In funds other than the General Fund, unassigned fund balances are limited to negative residual balances. As of September 30, 2013, the Sheriff had no unassigned fund balances because all excess revenues within the General Fund are required to be remitted to the Board and there were no negative residual balances in the special revenue funds. Periodically, the Sheriff will fund outlays for a particular purpose from both restricted and unrestricted resources (the total of committed, assigned, and unassigned fund balance). In order to calculate the amounts to report as restricted, committed, assigned, and unassigned fund balance in the governmental fund financial statements a flow assumption must be made about the order in which the resources are considered to be applied. It is the Sheriff s policy to consider restricted fund balance to have been depleted before using any of the components of unrestricted fund balance. Further, when the components of unrestricted fund balance can be used for the same purpose, committed fund balance is depleted first, followed by assigned fund balance. Unassigned fund balance is applied last. 11

302 SHERIFF NOTES TO SPECIAL PURPOSE FINANCIAL STATEMENTS 1. Summary of Significant Accounting Policies (Continued) D. Measurement focus and basis of accounting Basis of accounting refers to when revenues and expenditures are recognized in the accounts and reported in the special purpose financial statements, and also refers to the timing of the measurements made, regardless of the measurement focus applied. All governmental funds are accounted for using the modified accrual basis of accounting. Under the modified accrual basis of accounting, revenues are recognized when received in cash or when they become both measurable and available to finance expenditures of the current period. The Sheriff considers receivables collected within 60 days after year end to be available and recognizes them as revenues of the current year. Grants and similar items are recognized as revenue as soon as all eligibility requirements imposed by the provider have been met. Expenditures are recorded when the liability is incurred. Subsequent to termination of the internal service fund, compensated absences will not be recorded until paid, and starting October 1, 2013, will be paid from the general fund. Capital asset acquisitions are recorded as expenditures in the governmental funds. Measurement Focus - The accounting and financial reporting treatment applied to the capital assets and long-term liabilities associated with a fund are determined by its measurement focus. All governmental funds are accounted for on a spending or financial flow" measurement focus. This means that generally, only current assets, deferred outflows and current liabilities, deferred inflows are included in the balance sheet. Governmental fund operating statements present increases (revenues, deferred outflows and other financing sources) and decreases (expenditures, deferred inflows and other financing uses) in fund balance. Accordingly, they present a summary of sources and uses of available spendable resources during a period. Proprietary funds (the internal service fund) are reported using economic resources measurement focus and the accrual basis of accounting Proprietary funds distinguish operating revenues and expenses from non-operating items. Operating expenses for the internal service fund include recognition of changes in the compensated absences liabilities. Fiduciary fund financial statements (agency funds) have no measurement focus but utilize the accrual basis of accounting for reporting assets and liabilities. E. Funding Provided by Board of County Commissioners The Board funds the majority of the operating budget of the Sheriff. Payment by the Board to fund the operations of the Sheriff is recorded as a transfer out in the basic financial statements of the County, and as an operating transfer in on the special purpose financial statements of the Sheriff. Florida Statutes requires that the excess of the Board s appropriations (and other revenues) over expenditures be returned to the Board at the end of the fiscal year. Repayments to the Board are recorded as a transfer out in the special purpose financial statements of the Sheriff and the amount of undistributed excess appropriations at the end of the fiscal year is reported as amounts due the Board of County Commissioners. 12

303 SHERIFF NOTES TO SPECIAL PURPOSE FINANCIAL STATEMENTS 1. Summary of Significant Accounting Policies (Continued) F. Deferred outflows/inflows of resources In addition to assets, deferred outflows of resources represent a consumption of fund balance that applies to a future period(s) and so will not be recognized as an outflow of resources (expenditure) until then. In addition to liabilities, deferred inflows of resources represent an acquisition of fund balance that applies to a future period(s) and so will not be recognized as an inflow of resources (revenue) until that time. No such items were applicable to the Sheriff as of September 30, Deposits and Investments Cash and cash equivalents are highly liquid investments with original maturities of three months or less when purchased. Investments are recorded at fair value in accordance with GASB Statement No. 31. The Sheriff has an investment policy governed by the provisions of Florida Statute as to the type of investments that can be made. Authorized investments include the Local Government Surplus Trust Fund or any intergovernmental investment pool authorized pursuant to the Florida Interlocal Cooperation Act of 1969, Security and Exchange registered money market funds with the highest credit quality rating from a recognized rating agency, savings accounts or certificates of deposit in state-certified depositories, notes, bonds, or treasury bills or other direct obligations of the United States Treasury, federal agencies and instruments, and repurchase agreements. The investment of surplus funds is governed by the provisions of Florida Statute as to the type of investments that can be made. Deposits may be exposed to custodial credit risk, which is the risk of loss in the event of a bank failure. The Sheriff manages custodial credit risk by maintaining its deposits in financial institutions designated as Qualified Public Depositories by the State Treasurer. The Sheriff s cash deposits are held by a bank that qualifies as a public depository under the Florida Security for Public Deposits Act as required by Chapter 280, Florida Statutes. All of the Sheriff s deposits are fully insured by the Public Deposit Trust Fund. At September 30, 2013, the reported amount of the Sheriff s deposits was approximately $9.1 million, and the bank balance was approximately $ 9.1 million consisting entirely of cash and deposit accounts. 3. Receivables Program grant funding revenues earned in excess of grant advances received are recorded by the Sheriff as receivables in the applicable governmental fund. 13

304 SHERIFF NOTES TO SPECIAL PURPOSE FINANCIAL STATEMENTS 4. Interfund receivables and payables Interfund receivables and payables consist of amounts due to or from funds during the normal course of business. At year end, there were interfund receivables and payables in the amount of $102,124 within the Sheriff s funds. Transfers consist of $76.5 million of transfers in from the Board, and transfers out of unspent appropriations in the amount of $1.8 million. The effect of termination of the internal service fund is also included as a transfer in by the General Fund and a transfer out by the General Fund to the Board for $1.5 million. The general fund receivable consists primarily of advances made to nonmajor special revenue funds, which will be paid back after reimbursement is received from grantors. The commissary fund receivable represents amounts owed from an agency fund for commissions earned on commissary products and services. 5. Due to / from other governments At September 30, 2013, Due from other governments contains $156,685 receivable from the Escambia County Board of County Commissioners which is comprised mainly of expenditures paid on their behalf. The Due to other governments contains $3.4 million payable to the Board of County Commissioners which is comprised of unspent appropriations and fees of approximately $1.9 million, and $1.5 million related to the termination of the internal service fund. 6. Inventory Inventory is valued at cost using the first-in/first out (FIFO) method and consists of expendable supplies. The costs of such inventory is recorded as an expenditure when purchased and also reported as an inventory asset based on a physical inventory of supplies on hand at year end. 7. Capital Assets Capital assets (vehicles, equipment and other property costing at least $1,000 with a useful life of more than one year) are recorded as expenditures at the time of purchase. These assets are capitalized at cost and depreciated in Escambia County s government-wide financial statements. It is not appropriate to report capital assets and the related depreciation in the governmental fund financial statements. However, the following information is reported as a component of the County s government-wide financial statements and is required to be disclosed by Chapter (3)(h) Rules of the Auditor General of the State of Florida. 14

305 7. Capital Assets (Continued) ESCAMBIA COUNTY, FLORIDA SHERIFF NOTES TO SPECIAL PURPOSE FINANCIAL STATEMENTS Governmental Activities: Balance Balance 10/01/12 Additions Deletions 09/30/13 Capital assets, being depreciated: Equipment $ 32,071,101 $ 2,527,854 $ (3,209,591) $ 31,389,364 Computer software 1,597, ,597,970 Total capital assets, being depreciated $ 33,669,071 $ 2,527,854 $ (3,209,591) $ 32,987,334 Less accumulated depreciation for: Equipment $ (22,867,770) $ (3,585,954) $ 3,148,423 $ (23,305,301) Computer software (956,004) (234,836) - (1,190,840) Total accumulated depreciation $ (23,823,774) $ (3,820,790) $ 3,148,423 $ (24,496,141) Governmental activities capital assets, net $ 9,845,297 $ (1,292,936) $ (61,168) $ 8,491,193 During 2013, the Board purchased approximately $2.3 million in capital assets on behalf of the Sheriff. These purchases were reported as expenditures of the Board and were transferred to the Sheriff during the year and are included in the Sheriff s current year capital asset additions. 8. Retirement plan Plan Description The Sheriff participates in the Florida Retirement System (FRS), a cost sharing multiple-employer defined benefit pension plan, administered by the State of Florida. Beginning in 2002, the FRS became one system with two primary plans, a defined benefit plan (FRS Pension Plan) and a defined contribution plan alternative to the defined benefit plan known as the Public Employee Option Retirement Program (FRS Investment Plan). On July 1, 2011 the FRS became a contributory plan. The FRS provides retirement, disability and death benefits to members. The State of Florida issues a publicly available report that includes financial statements and required supplementary information for FRS. The report may be obtained at or may be obtained by writing to the State of Florida Division of Retirement, Department of Management Services, P.O. Box 9000, Tallahassee, Florida For members hired before July 1, 2011 the FRS Pension Plan provides for the vesting of benefits after six years of creditable service and age 62, or thirty years of service regardless of age, whichever comes first. For members first enrolled after July 1, 2011, vesting occurs after eight years of credible service and age 65, or thirty-three years of service regardless of the age before 65. Early retirement may be taken any time after vesting; however, there is a 5% benefit reduction for each year prior to normal retirement age. Members are also eligible for in-line-of-duty or regular disability benefits if permanently disabled and unable to work. Benefits are computed on the basis of age, average final compensation and service credit. 15

306 8. Retirement plan (Continued) ESCAMBIA COUNTY, FLORIDA SHERIFF NOTES TO SPECIAL PURPOSE FINANCIAL STATEMENTS Funding Policy - The FRS has six classes of membership. Only five of these classes are applicable to the Sheriff s eligible employees. The Sheriff is required to contribute at an actuarial determined rate. These rates are a percent of covered payroll. The five applicable classes, with descriptions and contribution rates in effect during the period ended September 30, 2013, 2012 and 2011 are as follows: Regular Class: 6.95% 5.18% 4.91% Members not qualifying for other classes. Senior Management Class: 18.31% 6.30% 6.29% Members of senior management who do not elect the optional annuity retirement program. Elected Officials Class: 33.03% 10.23% 11.14% Certain elected county officials. Deferred Retirement Option Program (DROP): 12.84% 5.44% 4.42% Membes are enrolled in DROP from FRS Special Risk Class: Members employed as law enformement officers,firefighters, or correctional officers meet the criteria to ualify for this class 19.06% 14.90% 14.10% The contribution requirements of the Sheriff and members are established and may be amended by FRS. The plan is contributory for employees requiring a 3% employee contribution. This is in addition to the contributions that are the obligation of the employer. The Sheriff's contributions to FRS for the years ended September 30, 2013, 2012 and 2011 were $5.6 million, $4.8 million, and $7.2 million respectively, equal to the required contributions for each year. 9. Other postemployment benefit (OPEB) obligations, other than pensions The Sheriff offers post-retirement health care benefits to all retired employees and their dependents. Participating retirees are required to reimburse the Sheriff for 100% of the premium cost, which is netted against the premium payment, so that no net expenditure is initially recorded in the financial statements. However, these retirees are receiving an implicit subsidy because the premium is a group rate which includes active, lower cost employees. The Board engages an actuary to determine the estimated obligation associated with this postemployment benefit for the Board, Sheriff, and other Constitutional Officers in order to record the costs and related liability, along with certain other required disclosures in the County s government-wide financial statements. The liability and costs are not required to be presented in these special purpose financial statements. Accordingly, this information can be found in the countywide comprehensive annual financial report. 16

307 10. Risk Management ESCAMBIA COUNTY, FLORIDA SHERIFF NOTES TO SPECIAL PURPOSE FINANCIAL STATEMENTS The Sheriff participates in the Florida Sheriff s Worker s Compensation Self Insurance Fund with an annual premium cost for the year ended September 30, 2013 of approximately $1.5 million. Coverage limits under the policy include $1.0 million bodily injury for each accident and $1.0 million bodily injury by disease for each employee with a $1.0 million limit. The plan calls for an annual final premium calculation after fiscal year end using the actual premium basis, proper classifications, and experience modifications and rates that lawfully apply to the Sheriff. The premium adjustment decrease for 2013 totaled approximately $25,000 and was accrued as a receivable at year-end. During the fiscal year ended September 30, 2013, the Sheriff had no significant reductions in insurance coverage from the prior year. In addition, there have been no settlements which exceeded the Sheriff s insurance coverage in any of the three past fiscal years. 11. Accumulated compensated absences Employees may accumulate, subject to limitations, amounts of earned but unused sick leave, annual leave, and compensatory time, which will be paid upon separation from service. The amount of vested accumulated compensated absences payable, based upon the Sheriff s paid-time-off (PTO) policy, is reported as a liability in the statement of net position in the County s government wide financial statements. That liability also includes earned but unused sick leave, annual leave, and compensatory time, as well as FICA taxes and retirement contributions related thereto. The change in accumulated compensated absences during the year is as follows: COMPENSATED ABSENCES 2013 Balance, September 30, 2012 $ 18,282,221 Additions 14,576,295 Reductions (14,242,214) Balance, September 30, 2013 $ 18,616,302 The Internal Service Fund, established in 2004, was designed to record the annual costs related to the Sheriff s compensated absences policies. Effective September 30, the Internal Service Fund was terminated and its assets were transferred to the Sheriff s General Fund for return to the Board. 17

308 SHERIFF NOTES TO SPECIAL PURPOSE FINANCIAL STATEMENTS 12. Federal and State Financial Assistance During the year, the Sheriff received, or maintained assets to be used for, federal and state financial assistance under the following programs: United States Treasury Department Law Enforcement Trust United States Justice Department Law Enforcement Trust The following programs are presented in the schedules of expenditures of federal and state awards within the Escambia County financial report. COPS Hiring Grant JAG Federal Grants Federal Mental Health Grants Federal Overtime Stimulus Byrne Grant Computer Crimes Buffer Proof Vest Program Project ODCDETF 13. Fund Expenditure Details The following is a schedule of the General Fund s expenditures for the year ended September 30, 2013: Account Description Law Enforcement Detention Court Security Totals Salary & Benefits $ 37,087,465 $ 24,821,777 $ 2,000,947 $ 63,910,189 Other Operating 5,808,405 4,957,564 1,834 10,767,803 Capital Outlay 57, ,496 Totals $ 42,953,366 $ 29,779,341 $ 2,002,781 $ 74,735, Litigation The Sheriff is contingently liable with respect to lawsuits and other claims which might be filed incidental to the ordinary course of operations. In the opinion of management, based on the advice of legal counsel, there are no lawsuits or claims outstanding which will have a material adverse effect on the financial position of the Sheriff s Office. 15. Commitments and Contingencies The Sheriff receives significant financial assistance from federal and state agencies primarily in the form of operating grants. The disbursement of funds received under these programs generally requires compliance with terms and conditions specified in the grant agreements and are subject to audit by grantor agencies. Disallowed claims, if any, resulting from such audits, may become liabilities of the Sheriff. 18

309 SHERIFF NOTES TO SPECIAL PURPOSE FINANCIAL STATEMENTS 16. Subsequent events The Sheriff has evaluated events and transactions that occurred between September 30, 2013 and January 22, 2014, which is the date that the financial statements were available to be issued, for possible recognition or disclosure in the financial statements. Effective October 1, 2013, the operations related to the Escambia County Jail were transferred to the Board and will result in a significant decrease in the scope of operations and related funding from the Board. As a part of the transfer, assets and liabilities of the Commissary Fund and the Inmate Trust Account (an agency fund) were also conveyed to the Board. 19

310 Required Supplementary Information

311 SHERIFF GENERAL FUND SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL YEAR ENDED SEPTEMBER 30, 2013 Budgeted Amounts Original Final Actual Variance with Final Budget Revenues: Total Revenues $ - $ - $ - $ - Expenditures: Current: Public safety Salaries and benefits 65,358,539 65,011,539 63,910,189 1,101,350 Operating expenditures 10,420,982 11,429,068 10,767, ,265 Capital outlay 60,000 60,000 57,496 2,504 Reserve for contingencies Total Expenditures 75,839,521 76,500,607 74,735,488 1,765,119 Excess (Deficiency) of Revenues Over (Under) Expenditures (75,839,521) (76,500,607) (74,735,488) 1,765,119 Other Financing Sources and Uses: Inventory - - (19,410) (19,410) Transfers in 75,839,521 76,500,607 78,000,607 1,500,000 Transfers out - - (3,265,119) (3,265,119) Total Other Financing Sources (Uses) 75,839,521 76,500,607 74,716,078 (1,765,119) Net Change in Fund Balance - - (19,410) (19,410) Fund Balance, October 1, , ,886 Fund Balance, September 30, 2013 $ - $ - $ 397,476 $ 397,476 See accompanying notes to required supplementary information. 20

312 SHERIFF COMMISSARY FUND SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL YEAR ENDED SEPTEMBER 30, 2013 Budgeted Amounts Original Final Actual Variance with Final Budget Revenues: Charges for services $ - $ 1,783,157 $ 853,136 $ (930,021) Miscellaneous revenue - 54,014 51,511 (2,503) Total Revenues - 1,837, ,647 (932,524) Expenditures: Current: Public safety Salaries and benefits Operating expenditures - 1,595, ,600 1,012,833 Capital outlay - 241, ,718 8,020 Total Expenditures - 1,837, ,318 1,020,853 Excess (Deficiency) of Revenues Over (Under) Expenditures ,329 88,329 Other Financing Sources and Uses: Transfers in Transfers out Total Other Financing Net Change in Fund Balance ,329 88,329 Fund Balance, October 1, , ,525 Fund Balance, September 30, 2013 $ - $ - $ 1,020,854 $ 1,020,854 See accompanying notes to required supplementary information. 21

313 SHERIFF COPS HIRING FUND SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL YEAR ENDED SEPTEMBER 30, 2013 Budgeted Amounts Original Final Actual Variance with Final Budget Revenues: Grant revenue $ - $ 482,235 $ 266,473 $ (215,762) Total Revenues - 482, ,473 (215,762) Expenditures: Current: Public safety Salaries and benefits - 482, , ,762 Total Expenditures - 482, , ,762 Excess (Deficiency) of Revenues Over (Under) Expenditures Other Financing Sources and Uses: Transfers in Transfers out Total Other Financing Sources (Uses) Net Change in Fund Balance Fund Balance, October 1, Fund Balance, September 30, 2013 $ - $ - $ - $ - See accompanying notes to required supplementary information. 22

314 SHERIFF NOTES TO REQUIRED SUPPLEMENTARY INFORMATION The Sheriff s Office operates under budget procedures pursuant to Florida Statutes. The budget is adopted on a basis consistent with accounting principles generally accepted in the United States of America. The budget for the Sheriff s general fund is a legally adopted budget whereas budgets for the special revenue funds are prepared and used solely as an internal management tool and are not considered legally adopted. The legal level of budgetary control is at the fund level. 23

315 Other Supplementary Information

316 Assets ESCAMBIA COUNTY, FLORIDA SHERIFF COMBINING BALANCE SHEET NONMAJOR GOVERNMENTAL FUNDS Justice Department Law Enforcement Trust SEPTEMBER 30, 2013 JAG Federal 2010 JAG Federal Federal US Mental 2008 Byrne Marshal's Health Cash and cash equivalents $ 96,699 $ - $ - $ - $ - $ - Due from other governmental units ,223 - Total assets 96, ,223 - Liabilities Due to other funds $ - $ - $ - $ - $ 18,223 $ - Unearned revenue 96, Total liabilities 96, ,223 - Fund Balance Total fund balance Total Liabilities, deferred inflows, and fund balance $ 96,699 $ - $ - $ - $ 18,223 $ - Continued 24

317 SHERIFF COMBINING BALANCE SHEET NONMAJOR GOVERNMENTAL FUNDS SEPTEMBER 30, 2013 Disaster Recovery Bullet Proof Vest Program JAG JAG Federal Federal ATF Total Nonmajor Governmental Funds $ - $ - $ - $ - $ - $ 96, ,643 1,797 42, ,643 1, ,362 $ - $ - $ - $ 22,643 $ 1,797 $ 42, , ,643 1, , $ - $ - $ - 22,643 $ 1,797 $ 139,362 25

318 Revenues: ESCAMBIA COUNTY, FLORIDA SHERIFF COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES NONMAJOR GOVERNMENTAL FUNDS YEAR ENDED SEPTEMBER 30, 2013 Law JAG Enforcement Federal Trust 2010 Grant revenue $ - $ 9,055 $ 39,831 $ 9,241 $ 36,710 $ 59,552 Judgments, fines and forfeitures 83, Expenditures: Current: Total Revenues 83,921 9,055 39,831 9,241 36,710 59,552 Public safety Justice Department JAG Federal 2008 Federal Mental Health Salaries and benefits ,831 9,241 36,710 59,552 Operating expenditures 58,788 9, Capital outlay 25, Total Expenditures 83,921 9,055 39,831 9,241 36,710 59,552 Excess (Deficiency) of Revenues Over (Under) Expenditures Other Financing Sources and Uses: Transfers in Transfers out Total Other Financing Sources and Uses Net Change in Fund Balance Fund Balance, October 1, Fund Balance, September 30, 2013 $ - $ - $ - $ - $ - $ - Byrne US Marshal's 26

319 SHERIFF COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES NONMAJOR GOVERNMENTAL FUNDS YEAR ENDED SEPTEMBER 30, 2013 Disaster Recovery Bullet Proof Vest JAG Federal JAG Federal HURRICANE Program ISAAC ATF Total Nonmajor Governmental Funds 1,991 $ 3,203 $ 19,400 $ 144,492 $ 47,452 $ 11,009 $ 381, ,921 1,991 3,203 19, ,492 47,452 11, , , ,492 41,758 11, ,993 1,991 3, ,694-78, ,133 1,991 3,203 19, ,492 47,452 11, , $ - $ - $ - $ - $ - $ - 27

320 SHERIFF JUSTICE DEPARTMENT LAW ENFORCEMENT TRUST SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL YEAR ENDED SEPTEMBER 30, 2013 Final Budgeted Amounts Actual Variance with Final Budget Amounts Revenues: Grant revenue $ - $ - $ - State shared revenue Charges for services Judgments, fines and forfeitures 180,620 83,921 (96,699) Investment income Miscellaneous revenue Total Revenues 180,620 83,921 (96,699) Expenditures: Current: Public safety: Salaries and benefits Operating expenditures 129,826 58,788 71,038 Capital outlay 50,794 25,133 25,661 Total Expenditures 180,620 83,921 96,699 Excess (Deficiency) of Revenues Over (Under) Expenditures Other Financing Sources and Uses: Transfers in Transfers out Total Other Financing Sources and Uses Net Change in Fund Balance Fund Balance - Beginning Fund Balance - Ending $ - $ - $ - 28

321 SHERIFF JAG FEDERAL 2010 SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL YEAR ENDED SEPTEMBER 30, 2013 Final Budgeted Amounts Variance with Final Budget Amounts Revenues: Grant revenue $ 9,055 $ 9,055 $ - State shared revenue Charges for services Judgments, fines and forfeitures Investment income - - Miscellaneous revenue Total Revenues 9,055 9,055 - Expenditures: Current: Public safety: Salaries and benefits Operating expenditures 9,055 9,055 - Capital outlay Total Expenditures 9,055 9,055 - Excess (Deficiency) of Revenues Over (Under) Expenditures Other Financing Sources and Uses: Transfers in Transfers out Total Other Financing Sources and Uses Net Change in Fund Balance Fund Balance - Beginning Fund Balance - Ending $ - $ - $ - Actual 29

322 SHERIFF JAG FEDERAL 2008 SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL YEAR ENDED SEPTEMBER 30, 2013 Final Budgeted Amounts Actual Variance with Final Budget Amounts Revenues: Grant revenue $ 39,831 $ 39,831 $ - State shared revenue Charges for services Judgments, fines and forfeitures Investment income - - Miscellaneous revenue Total Revenues 39,831 39,831 - Expenditures: Current: Public safety: Salaries and benefits 39,831 39,831 - Operating expenditures Capital outlay Total Expenditures 39,831 39,831 - Excess (Deficiency) of Revenues Over (Under) Expenditures Other Financing Sources and Uses: Transfers in Transfers out Total Other Financing Sources and Uses Net Change in Fund Balance Fund Balance - Beginning Fund Balance - Ending $ - $ - $ - 30

323 SHERIFF BYRNE SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL YEAR ENDED SEPTEMBER 30, 2013 Final Budgeted Amounts Variance with Final Budget Amounts Revenues: Grant revenue $ 9,241 $ 9,241 $ - State shared revenue Charges for services Judgments, fines and forfeitures Investment income - - Miscellaneous revenue Total Revenues 9,241 9,241 - Expenditures: Current: Public safety: Salaries and benefits 9,241 9,241 - Operating expenditures Capital outlay Total Expenditures 9,241 9,241 - Excess (Deficiency) of Revenues Over (Under) Expenditures Other Financing Sources and Uses: Transfers in Transfers out Total Other Financing Sources and Uses Net Change in Fund Balance Fund Balance - Beginning Fund Balance - Ending $ - $ - $ - Actual 31

324 SHERIFF US MARSHALL'S SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL YEAR ENDED SEPTEMBER 30, 2013 Final Budgeted Amounts Variance with Final Budget Amounts Revenues: Grant revenue $ 45,000 $ 36,710 $ (8,290) State shared revenue Charges for services Judgments, fines and forfeitures Investment income - - Miscellaneous revenue Total Revenues 45,000 36,710 (8,290) Expenditures: Current: Public safety: Salaries and benefits 45,000 36,710 8,290 Operating expenditures Capital outlay Total Expenditures 45,000 36,710 8,290 Excess (Deficiency) of Revenues Over (Under) Expenditures Other Financing Sources and Uses: Transfers in Transfers out Total Other Financing Sources and Uses Net Change in Fund Balance Fund Balance - Beginning Fund Balance - Ending $ - $ - $ - Actual 32

325 SHERIFF FEDERAL MENTAL HEALTH SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL YEAR ENDED SEPTEMBER 30, 2013 Final Budgeted Amounts Actual Variance with Final Budget Amounts Revenues: Grant revenue $ 59,552 $ 59,552 $ - State shared revenue Charges for services Judgments, fines and forfeitures Investment income - - Miscellaneous revenue Total Revenues 59,552 59,552 - Expenditures: Current: Public safety: Salaries and benefits 59,552 59,552 - Operating expenditures Capital outlay Total Expenditures 59,552 59,552 - Excess (Deficiency) of Revenues Over (Under) Expenditures Other Financing Sources and Uses: Transfers in Transfers out Total Other Financing Sources and Uses Net Change in Fund Balance Fund Balance - Beginning Fund Balance - Ending $ - $ - $ - 33

326 SHERIFF DISASTER RECOVERY SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL YEAR ENDED SEPTEMBER 30, 2013 Final Budgeted Amounts Actual Variance with Final Budget Amounts Revenues: Grant revenue $ - $ 1,991 $ 1,991 State shared revenue Charges for services Judgments, fines and forfeitures Investment income - - Miscellaneous revenue 1,991 - (1,991) Total Revenues 1,991 1,991 - Expenditures: Current: Public safety: Salaries and benefits Operating expenditures 1,991 1,991 - Capital outlay Total Expenditures 1,991 1,991 - Excess (Deficiency) of Revenues Over (Under) Expenditures Other Financing Sources and Uses: Transfers in Transfers out Total Other Financing Sources and Uses Net Change in Fund Balance Fund Balance - Beginning Fund Balance - Ending $ - $ - $ - 34

327 SHERIFF BULLET PROOF VEST PROGRAM SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL YEAR ENDED SEPTEMBER 30, 2013 Final Budgeted Amounts Variance with Final Budget Amounts Revenues: Grant revenue $ 3,203 $ 3,203 $ - State shared revenue Charges for services Judgments, fines and forfeitures Investment income - - Miscellaneous revenue Total Revenues 3,203 3,203 - Expenditures: Current: Public safety: Salaries and benefits Operating expenditures 3,203 3,203 - Capital outlay Total Expenditures 3,203 3,203 - Excess (Deficiency) of Revenues Over (Under) Expenditures Other Financing Sources and Uses: Transfers in Transfers out Total Other Financing Sources and Uses Net Change in Fund Balance Fund Balance - Beginning Fund Balance - Ending $ - $ - $ - Actual 35

328 SHERIFF JAG FEDERAL 2011 SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL YEAR ENDED SEPTEMBER 30, 2013 Final Budgeted Amounts Variance with Final Budget Amounts Revenues: Grant revenue $ 72,796 $ 19,400 $ (53,396) State shared revenue Charges for services Judgments, fines and forfeitures Investment income - - Miscellaneous revenue Total Revenues 72,796 19,400 (53,396) Expenditures: Current: Public safety: Salaries and benefits 43,125 19,400 23,725 Operating expenditures 29,671-29,671 Capital outlay Total Expenditures 72,796 19,400 53,396 Excess (Deficiency) of Revenues Over (Under) Expenditures Other Financing Sources and Uses: Transfers in Transfers out Total Other Financing Sources and Uses Net Change in Fund Balance Fund Balance - Beginning Fund Balance - Ending $ - $ - $ - Actual 36

329 SHERIFF JAG FEDERAL 2012 SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET TO ACTUAL YEAR ENDED SEPTEMBER 30, 2013 Variance Final with Budgeted Actual Final Amounts Amounts Budget Revenues: Grant revenue $ 144,492 $ 144,492 $ - State shared revenue Charges for services Judgments, fines and forfeitures Investment income - - Miscellaneous revenue Total Revenues 144, ,492 - Expenditures: Current: Public safety: Salaries and benefits 144, ,492 - Operating expenditures Capital outlay Total Expenditures 144, ,492 - Excess (Deficiency) of Revenues Over (Under) Expenditures Other Financing Sources and Uses: Transfers in Transfers out Total Other Financing Sources and Uses Net Change in Fund Balance Fund Balance - Beginning Fund Balance - Ending $ - $ - $ - 37

330 SHERIFF ATF SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL YEAR ENDED SEPTEMBER 30, 2013 Variance Final with Budgeted Actual Final Amounts Amounts Budget Revenues: Grant revenue $ 11,009 $ 11,009 $ - State shared revenue Charges for services Judgments, fines and forfeitures Investment income - - Miscellaneous revenue Total Revenues 11,009 11,009 - Expenditures: Current: Public safety: Salaries and benefits 11,009 11,009 - Operating expenditures Capital outlay Total Expenditures 11,009 11,009 - Excess (Deficiency) of Revenues Over (Under) Expenditures Other Financing Sources and Uses: Transfers in Transfers out Total Other Financing Sources and Uses Net Change in Fund Balance Fund Balance - Beginning Fund Balance - Ending $ - $ - $ - 38

331 SHERIFF HURRICANE ISAAC SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL YEAR ENDED SEPTEMBER 30, 2013 Variance Final with Budgeted Actual Final Amounts Amounts Budget Revenues: Grant revenue $ 47,452 $ 47,452 $ - State shared revenue Charges for services Judgments, fines and forfeitures Investment income - - Miscellaneous revenue Total Revenues 47,452 47,452 - Expenditures: Current: Public safety: Salaries and benefits 41,758 41,758 - Operating expenditures 5,694 5,694 - Capital outlay Total Expenditures 47,452 47,452 - Excess (Deficiency) of Revenues Over (Under) Expenditures Other Financing Sources and Uses: Transfers in Transfers out Total Other Financing Sources and Uses Net Change in Fund Balance Fund Balance - Beginning Fund Balance - Ending $ - $ - $ - 39

332 SHERIFF COMBINING STATEMENT OF ASSETS AND LIABILITIES ALL AGENCY FUNDS SEPTEMBER 30, 2013 Agency Funds Evidence Flex Trust Trust Auction Assets Benefits Fund Fund Fund Cash and cash equivalents $ 504,562 $ 392,611 $ 53,752 $ 1,156 Due from other funds 6, Total Assets $ 511,110 $ 392,611 $ 53,752 $ 1,156 Liabilities Deposits $ 511, ,611 26,293 1,156 Due to other funds Due to other governmental units ,350 - Other current liabilities Total Liabilities $ 511,110 $ 392,611 $ 53,752 $ 1,156 40

333 SHERIFF COMBINING STATEMENT OF ASSETS AND LIABILITIES ALL AGENCY FUNDS SEPTEMBER 30, 2013 Agency Funds Inmate General Trust Employee Explorers' Account Events Fund TOTAL $ 161,451 $ 31,816 $ 8,114 $ 1,153, ,548 $ 161,451 $ 31,816 $ 8,114 $ 1,160,010 26,834 $ 31,614 $ 8,114 $ 997,732 52, ,913 16, ,581 65, ,784 $ 161,451 $ 31,816 $ 8,114 $ 1,160,010 41

334 SHERIFF COMBINING STATEMENT OF CHANGES IN ASSETS AND LIABILITIES - ALL AGENCY FUNDS YEAR ENDED SEPTEMBER 30, 2013 Balance Balance September 30, September 30, 2012 Additions Deductions 2013 FLEX BENEFITS ASSETS Cash and cash equivalents $ 1,137,136 $ 1,478,326 $ 2,110,900 $ 504,562 Due from other funds 13,893 6,548 13,893 6,548 Total Assets $ 1,151,029 $ 1,484,874 $ 2,124,793 $ 511,110 LIABILITIES Deposits $ 1,151,029 $ 1,523,484 $ 2,163,403 $ 511,110 Total Liabilities $ 1,151,029 $ 1,523,484 $ 2,163,403 $ 511,110 EVIDENCE TRUST FUND ASSETS Cash and cash equivalents $ 311,929 $ 529,323 $ 448,641 $ 392,611 Total Assets $ 311,929 $ 529,323 $ 448,641 $ 392,611 LIABILITIES Deposits $ 311,929 $ 544,112 $ 463,430 $ 392,611 Total Liabilities $ 311,929 $ 544,112 $ 463,430 $ 392,611 42

335 SHERIFF COMBINING STATEMENT OF CHANGES IN ASSETS AND LIABILITIES - ALL AGENCY FUNDS YEAR ENDED SEPTEMBER 30, 2013 (Continued) Balance Balance September 30, September 30, 2012 Additions Deductions 2013 TRUST FUND ASSETS Cash and cash equivalents $ 27,238 $ 494,537 $ 468,023 $ 53,752 Total Assets $ 27,238 $ 494,537 $ 468,023 $ 53,752 LIABILITIES Deposits $ 27,238 $ 197,649 $ 198,594 $ 26,293 Due to other governmental units - 336, ,036 27,350 Other current liabilities - 4,175 4, Total Liabilities $ 27,238 $ 538,210 $ 511,696 $ 53,752 AUCTION FUND ASSETS Cash and cash equivalents $ 2,481 $ 1,309 $ 2,634 $ 1,156 Total Assets $ 2,481 $ 1,309 $ 2,634 $ 1,156 LIABILITIES Deposits $ 2,481 $ 1,309 $ 2,634 $ 1,156 Total Liabilities $ 2,481 $ 1,309 $ 2,634 $ 1,156 43

336 SHERIFF COMBINING STATEMENT OF CHANGES IN ASSETS AND LIABILITIES - ALL AGENCY FUNDS YEAR ENDED SEPTEMBER 30, 2013 INMATE TRUST ACCOUNT ASSETS (Continued) Balance Balance September 30, September 30, 2012 Additions Deductions 2013 Cash and cash equivalents $ 92,343 $ 1,927,352 $ 1,858,244 $ 161,451 Due from other funds 8,402-8,402 - Total Assets $ 100,745 $ 1,927,352 $ 1,866,646 $ 161,451 LIABILITIES Deposits $ 20,656 $ 2,340,970 $ 2,334,792 $ 26,834 Due to other funds 23,040 52,913 23,040 52,913 Due to other governmental units 13,698 16,231 13,698 16,231 Other current liabilities 43,351 65,473 43,351 65,473 Total Liabilities $ 100,745 $ 2,475,587 $ 2,414,881 $ 161,451 GENERAL EMPLOYEE EVENTS ASSETS Cash and cash equivalents $ 34,320 $ 32,666 $ 35,170 $ 31,816 Total Assets $ 34,320 $ 32,666 $ 35,170 $ 31,816 LIABILITIES Deposits $ 34,201 33,772 36,359 31,614 Other current liabilities ,209 32, Total Liabilities $ 34,320 $ 65,981 $ 68,485 $ 31,816 44

337 SHERIFF COMBINING STATEMENT OF CHANGES IN ASSETS AND LIABILITIES - ALL AGENCY FUNDS YEAR ENDED SEPTEMBER 30, 2013 (Concluded) Balance Balance September 30, September 30, 2012 Additions Deductions 2013 EXPLORERS' FUND ASSETS Cash and cash equivalents $ - $ 10,348 $ 2,234 $ 8,114 Total Assets $ - $ 10,348 $ 2,234 $ 8,114 LIABILITIES Deposits $ - $ 10,348 $ 2,234 $ 8,114 Total Liabilities $ - $ 10,348 $ 2,234 $ 8,114 TOTAL AGENCY FUNDS ASSETS Cash and cash equivalents $ 1,605,447 $ 4,473,861 $ 4,925,846 $ 1,153,462 Due from other funds 22,295 6,548 22,295 6,548 Total Assets $ 1,627,742 $ 4,480,409 $ 4,948,141 $ 1,160,010 LIABILITIES Deposits $ 1,547,534 $ 4,651,644 $ 5,201,446 $ 997,732 Due to other funds 23,040 52,913 23,040 52,913 Due to other governmental units 13, , ,734 43,581 Other current liabilities 43, ,857 79,543 65,784 Total Liabilities $ 1,627,742 $ 5,159,031 $ 5,626,763 $ 1,160,010 45

338 INDEPENDENT AUDITORS REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS Honorable David Morgan, Sheriff Escambia County, Florida We have audited, in accordance with the 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, the special-purpose financial statements (hereinafter referred to as financial statements ) of the general fund and aggregate remaining fund information of the Office of the Sheriff of Escambia County, Florida (hereinafter referred to as Sheriff ), as of and for the year ended September 30, 2013, and the related notes to the financial statements, which collectively comprise the Sheriff s financial statements, and have issued our report thereon dated January 22, Internal Control Over Financial Reporting In planning and performing our audit of the financial statements, we considered the Sheriff s internal control over financial reporting (internal control) to determine the audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the Sheriff s internal control. Accordingly, we do not express an opinion on the effectiveness of the Sheriff s internal control. A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the entity s financial statements will not be prevented, or detected and corrected on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance. Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or, significant deficiencies. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified. Compliance and Other Matters As part of obtaining reasonable assurance about whether the Sheriff s financial statements are free of material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards. 46

339 As required by the provisions of Chapter , Rules of the Auditor General, we have issued a separate management letter dated January 22, 2014 which should be considered in assessing the results of our audit. Purpose of this Report The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the entity s internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the entity s internal control and compliance. Accordingly, this report is not suitable for any other purpose. January 22, 2014 Pensacola, Florida 47

340 MANAGEMENT LETTER Honorable David Morgan, Sheriff Escambia County, Florida We have audited the special-purpose financial statements ( financial statements ) of each major fund and the aggregate remaining fund information of the Office of the Sheriff of Escambia County, Florida (hereinafter referred to as Sheriff ), as of and for the year ended September 30, 2013, and have issued our report thereon dated January 22, We conducted our audit in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and Chapter Rules of the Florida Auditor General. We have also issued our Independent Auditors Report on Internal Control Over Financial Reporting and Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards. Disclosures in that report, which is dated January 22, 2014, should be considered in conjunction with this management letter. Additionally, our audit was conducted in accordance with the provisions of Chapter , Rules of the Auditor General, which govern the conduct of local government entity audits performed in the State of Florida. This letter includes the following information, which is not included in the aforementioned auditors reports: Section (1)(i)1., Rules of the Auditor General, requires that we determine whether or not corrective actions have been taken to address findings and recommendations made in the preceding annual financial audit report. Corrective actions have been taken to address findings and recommendations made in the preceding annual financial audit report. Section (1)(i)2., requires our audit to include a review of the provisions of Section , Florida Statutes, regarding the investment of public funds. In connection with our audit, we determined that the Sheriff complied with Section , Florida Statutes. Section (1 )(i)3., Rules of the Auditor General, requires that we address in the management letter any recommendations to improve financial management. In connection with our audit, we did not have any such recommendations. Section (1)(i)4., Rules of Auditor General requires that we address noncompliance with of provisions of contracts or grant agreements, or abuse, that have occurred, or are likely to have occurred, but which warrants the attention of those charged with governance. In connection with our audit, we did not have any such findings. Our management letter is intended solely for the information and use of the Legislative Auditing Committee, members of the Florida Senate and the Florida House of Representatives, the Florida Auditor General, the Sheriff, and applicable management and is not intended to be and should not be used by anyone other than these specified parties. January 22, 2014 Pensacola, Florida 48

341 SHERIFF S RESPONSE TO MANAGEMENT LETTER There were no comments which require management s written response. 49

342

343 SPECIAL PURPOSE FINANCIAL STATEMENTS AND REQUIRED SUPPLEMENTARY INFORMATION ESCAMBIA COUNTY, FLORIDA SUPERVISOR OF ELECTIONS SEPTEMBER 30, 2013 WITH INDEPENDENT AUDITORS REPORT

344 SPECIAL PURPOSE FINANCIAL STATEMENTS AND INDEPENDENT AUDITORS REPORT ESCAMBIA COUNTY, FLORIDA SUPERVISOR OF ELECTIONS SEPTEMBER 30, 2013 WITH INDEPENDENT AUDITORS REPORT CONTENTS Independent Auditors Report... 1 Special Purpose Financial Statements Balance Sheet Governmental Funds... 3 Statement of Revenues, Expenditures, and Changes In Fund Balance Governmental Funds... 4 Notes to the Financial Statements... 5 Required Supplementary Information Schedule of Revenues, Expenditures, and Changes in Fund Balance Budget and Actual General Fund Schedule of Revenues, Expenditures, and Changes in Fund Balance Budget and Actual Grant Fund Notes to Required Supplementary Information Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards Management Letter Schedule of Findings and Responses... 17

345 INDEPENDENT AUDITORS REPORT Honorable David Stafford Escambia County Supervisor of Elections Escambia County, Florida Report on the Financial Statements We have audited the accompanying special purpose financial statements of the general fund and the grant fund of the Escambia County, Florida Supervisor of Elections as of and for the year ended September 30, 2013, and the related notes to the financial statements. Management s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Auditors Responsibility Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. Opinions In our opinion, the special purpose financial statements referred to above present fairly, in all material respects, the financial position of the general fund and the grant fund of the Supervisor of Elections as of September 30, 2013, and the respective changes in financial position for the year then ended in accordance with accounting principles generally accepted in the United States of America. 1

346 Emphasis of Matter As discussed in Note 1 to the special purpose financial statements, the financial statements referred to above have been prepared for the purpose of complying with Chapter , Rules of the Auditor General, State of Florida, and are not intended to be a complete presentation of the financial position and changes in financial position of the Supervisor of Elections. Additionally, the special purpose financial statements present only the Supervisor of Elections and are not intended to present the financial position and changes in financial position of Escambia County, Florida, taken as a whole. Our opinion is not modified with respect to this matter. Other Matters Required Supplementary Information Accounting principles generally accepted in the United States of America require that the budgetary comparison schedules be presented to supplement the special purpose financial statements. Such information, although not a part of the special purpose financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the special purpose 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 special purpose financial statements, and other knowledge we obtained during our audit of the special purpose financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated January 22, 2014, on our consideration of the Supervisor of Elections internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the Supervisor of Elections internal control over financial reporting and compliance. Restriction on Use This report is intended solely for the information and use of the Supervisor of Elections, management, the Board of County Commissioners, and the Florida Auditor General, and is not intended to be, and should not be, used by anyone other than these specified parties. January 22, 2014 Pensacola, Florida 2

347 Special Purpose Financial Statements

348 SUPERVISOR OF ELECTIONS BALANCE SHEET GOVERNMENTAL FUNDS SEPTEMBER 30, 2013 Major Funds Assets General Fund Grant Fund Due from other governmental units $ 52,526 $ 38,274 Total assets $ 52,526 $ 38,274 Liabilities Accounts payable $ 32,255 $ - Accrued liabilities 19,556 - Due to other governmental units Unearned revenue - 38,274 Total liabilities 52,526 38,274 Fund Balance Unassigned: - - Total fund blance - - Total liabilities and fund balance $ 52,526 $ 38,274 See accompanying notes to financial statements. 3

349 SUPERVISOR OF ELECTIONS STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - GOVERNMENTAL FUNDS YEAR ENDED SEPTEMBER 30, 2013 Major Funds General Fund Grant Fund Revenues: Grant revenue $ - $ 76,615 Charges for services Total Revenues ,615 Expenditures: Current: General government: Salaries and benefits 1,270,735 - Operating expenditures 696,515 - Operating expenditures-grants - 89,537 Capital outlay 44,082 - Total Expenditures 2,011,332 89,537 Excess (Deficiency) of Revenues Over (Under) Expenditures (2,010,900) (12,922) Other Financing Sources and Uses: Transfers in 2,010,900 12,922 Transfers out - - Total Other Financing Sources and Uses 2,010,900 12,922 Net Change in Fund Balance - - Fund Balance, October 1, Fund Balance, September 30, 2013 $ - $ - See accompanying notes to financial statements. 4

350 SUPERVISOR OF ELECTIONS NOTES TO SPECIAL PURPOSE FINANCIAL STATEMENTS 1. Summary of Significant Accounting Policies The following is a summary of the significant principles and policies used in the preparation of these special purpose financial statements. A. Reporting entity The Escambia County, Florida Supervisor of Elections is an elected constitutional officer as provided by Article VIII, Section 1 (d) of the Constitution of the State of Florida. The Supervisor of Elections budget is submitted to the Escambia County Board of County Commissioners (the Board) for approval. The Board appropriates and provides funding necessary to operate the Supervisor of Elections office. For financial reporting purposes, the Supervisor of Elections is deemed to be a part of the primary government of Escambia County, Florida (the County), and therefore, is included as such in the Escambia County, Florida, Comprehensive Annual Financial Report. B. Basis of presentation fund financial statements These special purpose financial statements have been prepared for the purpose of complying with Rules of the Auditor General, State of Florida, which require presentation of fund level only financial statements and permit omission of entity-wide full accrual financial statements and management s discussion and analysis. Therefore, these financial statements are intended to present only the financial position and changes in financial position of that portion of Escambia County, Florida, that relate to transactions of the Supervisor of Elections and are not intended to present the financial position and changes in financial position of Escambia County, Florida, taken as a whole. The Supervisor of Elections financial records and accounts are maintained in accordance with the principles of fund accounting, whereby resources are classified for accounting and reporting purposes into funds to insure compliance with any special restrictions or limitations on the use of such resources. The Supervisor of Elections maintains two governmental funds as follows: General Fund- Accounts for all financial resources except those required to be accounted for in other funds. Grant Fund Accounts for activities of various federal and state grants. Fund balances are classified either as non-spendable or as restricted, committed, assigned, and unassigned, based on the extent to which there are external and internal constraints on the spending. The general fund and grant fund are accounted for using the modified accrual basis of accounting. Revenues are recognized when they become susceptible to accrual that is when they are both measurable and available to finance expenditures of the current period. The Supervisor of Elections considers receivables collected within 60 days after year-end to be available and recognizes them as revenues of the current year. Expenditures generally are recognized under the modified accrual basis of accounting when the fund liability is incurred. However, expenditures for compensated absences are recognized when payments are made to employees. Unearned revenues reflect grant amounts collected before revenue recognition criteria are met. 5

351 SUPERVISOR OF ELECTIONS NOTES TO SPECIAL PURPOSE FINANCIAL STATEMENTS 1. Summary of Significant Accounting Policies (Continued) C. Funding from the Board of County Commissioners Appropriations from the Board are recorded as transfers in on the Statement of Revenues, Expenditures and Changes in Fund Balance.. In accordance with Florida Statutes, the general fund s excess of revenues and transfers over expenditures is returned to the Board at year end and is reported as a transfer out on the Statement of Revenues, Expenditures and Changes in Fund Balance 2. Cash deposits with financial institutions The Supervisor of Elections does not maintain a separate cash account. The Escambia County Clerk of the Circuit Court and Comptroller, serving as the accountant for the Supervisor of Elections, records all cash activity using a pooled cash account of the Board of County Commissioners. The due from reflected on the Supervisor of Elections balance sheet represents the amount of cash held by the Board on behalf of the Supervisor of Elections. The Board manages custodial credit risk by maintaining its deposits in financial institutions designated as Qualified Public Depositories by the State Treasurer. All deposits were fully insured through a combination of Federal depository insurance and participation of the financial institution in the multiple financial institution collateral pool as specified in Chapter 280, Florida Statutes. Accordingly, risk of loss due to bank failure is not significant. 3. Due to/from other governments At September 30, 2013, the amounts due to other governmental units totaled $715 and was payable to the Board. The due from other governmental units totaled $52,526 and was receivable from the Board. 4. Capital assets Capital assets (vehicles, equipment and other property costing at least $1,000 with a useful life of more than one year) are recorded as expenditures at the time of purchase. These assets are capitalized at cost and depreciated in Escambia County s government-wide financial statements. 5. Retirement plan Plan Description The Supervisor of Elections participates in the Florida Retirement System (FRS), a cost sharing multiple-employer defined benefit pension plan, administered by the State of Florida. Beginning in 2002, the FRS became one system with two primary plans, a defined benefit plan (FRS Pension Plan) and a defined contribution plan alternative to the defined benefit plan known as the Public Employee Option Retirement Program (FRS Investment Plan). The effective date of the FRS Investment Plan was July 1, On July 1, 2011 the FRS became a contributory plan. The FRS provides retirement, disability and death benefits to members. The State of Florida issues a publicly available report that includes financial statements and required supplementary information for FRS. The report may be obtained at or may be obtained by writing to the State of Florida Division of Retirement, Department of Management Services, P.O. Box 9000, Tallahassee, Florida

352 SUPERVISOR OF ELECTIONS NOTES TO SPECIAL PURPOSE FINANCIAL STATEMENTS 5. Retirement plan (Continued) For members hired before July 1, 2011 the FRS Pension Plan provides for the vesting of benefits after six years of creditable service and age 62, or thirty years of service regardless of age, whichever comes first. For members first enrolled after July 1, 2011 vesting occurs after eight years of credible service and age 65, or thirty-three years of service regardless of the age before 65. Early retirement may be taken any time after vesting; however, there is a 5% benefit reduction for each year prior to normal retirement age. Members are also eligible for in-line-of-duty or regular disability benefits if permanently disabled and unable to work. Benefits are computed on the basis of age, average final compensation and service credit. Funding Policy - The FRS has six classes of membership. Only four of these classes are applicable to the Supervisor of Elections eligible employees. The Supervisor of Elections is required to contribute at an actuarially determined rate. These rates are a percentage of covered payroll. The four applicable classes, with descriptions and contribution rates in effect during the period ended September 30, 2013, 2012 and 2011 were as follows: Regular Class: 6.95% 5.18% 4.91% Members not qualifying for other classes. Senior Management Class: 18.31% 6.30% 6.29% Members of senior management who do not elect the optional annuity retirement program. Elected Officials Class: 33.03% 10.23% 11.14% Certain elected county officials. Deferred Retirement Option Program (DROP): 12.84% 5.44% 4.42% Members are enrolled in DROP from FRS The contribution requirements of the Supervisor of Elections and members are established and may be amended by FRS. The plan is contributory for employees requiring a 3% employee contribution. This is in addition to the contributions that are the obligation of the employer. The Supervisor of Elections contributions for 2013, 2012 and 2011 were $54,495, $42,396 and $72,357 respectively, and equaled the required contributions for each year. 6. Other post employment benefits (OPEB), other than pensions The Board offers post-employment health care benefits to all retired employees of the Supervisor of Elections Office and their dependents. Participating retirees are required to reimburse the Board for 100% of the premium cost, which is netted against the premium payment, so that no net expense is initially recorded in the Board s financial statements. However, these retirees are receiving an implicit subsidy because the premium is a group rate which includes active, lower cost employees. This implicit subsidy has a cost which under GAAP is required to be disclosed in these financial statements. However, this annual cost, the accrued obligation, and other required disclosures have been calculated for the County as a whole, and not separately for the Supervisor of Elections Office. Accordingly, these calculations and disclosures can be found in the County-wide comprehensive annual financial report. 7

353 SUPERVISOR OF ELECTIONS NOTES TO SPECIAL PURPOSE FINANCIAL STATEMENTS 7. Risk management The County has a risk management program to insure claims against the Board, Constitutional Officers, and Santa Rosa Island Authority for the following types of risks: Workers Compensation The County is covered for workers compensation claims through a policy with the Florida Municipal Insurance Trust. Coverage limits under the policy include statutory limits, as well as $1,000,000 bodily injury for each accident and $1,000,000 bodily injury by disease for each employee with an aggregate $1,000,000 policy limit. Casualty and Property Casualty limits are self-insured for $200,000 per claim with a $300,000 aggregate limit. Property limits are $50,000 - $250,000 self insured retentions per occurrence with excess limits of $45 million including wind. The Supervisor of Elections participated in the County s insurance program during fiscal year 2013 at a cost of $2,356. There also were no significant reductions in insurance coverage from the prior year and there have been no settlements which exceeded the Supervisor of Elections insurance coverage in any of the past three fiscal years. 8. Accumulated compensated absences Employees may accumulate, subject to limitations, amounts of earned but unused paid time off, which will be paid upon separation from service. The amount of vested accumulated compensated absences payable based upon the Supervisor of Elections paid-time-off (PTO) policy is reported as a liability in the statement of net position in the County s basic financial statements. That liability includes earned but unused PTO as well as FICA taxes and retirement contributions related thereto. Compensated absences are paid from the General Fund. The change in accumulated compensated absences during the year was as follows: Balance 10/01/2012 $ 192,224 Increases 48,678 Decreases (101,534) Balance 09/30/2013 $ 139, Commitments and contingencies The Supervisor of Elections receives federal and state financial assistance primarily in the form of capital and operating grants. The expenditure of funds received under these programs generally requires compliance with terms and conditions specified in the grant agreements and are subject to audit by grantor agencies. Disallowed costs, if any, resulting from such audits, may become liabilities of the Supervisor of Elections. However, in the opinion of management, disallowed costs, if any, will not have a material effect on the financial statements. 10. Related party transactions During 2013, the Board of County Commissioners purchased capital assets totaling approximately $386,600 on behalf of the Supervisor of Elections.. 8

354 SUPERVISOR OF ELECTIONS NOTES TO SPECIAL PURPOSE FINANCIAL STATEMENTS 11. Subsequent events The Supervisor of Elections has evaluated events and transactions for potential recognition or disclosure in the financial statements through January 22, 2014, the date the financial statements were available to be issued. No subsequent events have been recognized or disclosed. 9

355 Required Supplementary Information

356 SUPERVISOR OF ELECTIONS GENERAL FUND SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL YEAR ENDED SEPTEMBER 30, 2013 General Fund Budgeted Amounts Original Final Actual Variance with Final Budget Revenues: Charges for services $ - $ - $ 432 $ 432 Total Revenues Expenditures: Current: General government: Salaries and benefits 1,141,483 1,273,483 1,270,735 2,748 Operating expenditures 762, , , ,426 Capital outlay 21,000 45,850 44,082 1,768 Total Expenditures 1,924,496 2,156,274 2,011, ,942 Excess (Deficiency) of Revenues Over (Under) Expenditures (1,924,496) (2,156,274) (2,010,900) 145,374 Other Financing Sources and Uses: Transfers in 1,924,496 2,156,274 2,010,900 (145,374) Total Other Financing Sources (Uses) 1,924,496 2,156,274 2,010,900 (145,374) Net Change in Fund Balance Fund Balance, October 1, Fund Balance, September 30, 2013 $ - $ - $ - $ - See accompanying notes to required supplementary information 10

357 SUPERVISOR OF ELECTIONS SPECIAL REVENUE FUND SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL YEAR ENDED SEPTEMBER 30, 2013 Grant Fund Budgeted Amounts Original Final Actual Variance with Final Budget Revenues: Grant revenue $ - $ 94,521 $ 76,615 $ (17,906) Total Revenues - 94,521 76,615 (17,906) Expenditures: Current: General government: Operating expenditures grants - 94,521 89,537 4,984 Total Expenditures - 94,521 89,537 4,984 Excess (Deficiency) of Revenues Over (Under) Expenditures - - (12,922) (12,922) Other Financing Sources and Uses: Transfers in ,922 12,922 Net Change in Fund Balance Fund Balance, October 1, Fund Balance, September 30, 2013 $ - $ - $ - $ - See accompanying notes to required supplementary information 11

358 SUPERVISOR OF ELECTIONS NOTES TO REQUIRED SUPPLEMENTARY INFORMATION The Supervisor of Elections operates under budget procedures pursuant to Florida Statutes. The budget is adopted on a basis consistent with accounting principles generally accepted in the United States of America. The legal level of budgetary control is at the fund level. 12

359 INDEPENDENT AUDITORS REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS Honorable David Stafford Supervisor of Elections Escambia County, Florida We have audited, in accordance with the 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, the special purpose financial statements of the Office of the Supervisor of Elections of Escambia County, Florida (hereinafter referred to as Supervisor of Elections ), as of and for the year ended September 30, 2013, and the related notes to the financial statements, and have issued our report thereon dated January 22, Internal Control Over Financial Reporting In planning and performing our audit of the financial statements, we considered the Supervisor of Elections internal control over financial reporting (internal control) to determine the audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the Supervisor of Elections internal control. Accordingly, we do not express an opinion on the effectiveness of the Supervisor of Elections internal control. A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the entity s financial statements will not be prevented, or detected and corrected on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance. Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified. 13

360 Compliance and Other Matters As part of obtaining reasonable assurance about whether the Supervisor of Elections financial statements are free from material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards. As required by the provisions of Chapter , Rules of the Auditor General, we have issued a separate management letter dated January 22, 2014, which should be considered in assessing the results of our audit. Purpose of this Report The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the entity s internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the entity s internal control and compliance. Accordingly, this report is not suitable for any other purpose. January 22, 2014 Pensacola, Florida 14

361 MANAGEMENT LETTER Honorable David Stafford Supervisor of Elections Escambia County, Florida We have audited the special purpose financial statements of the Office of the Supervisor of Elections of Escambia County, Florida (hereinafter referred to as Supervisor of Elections ), as of and for the year ended September 30, 2013, and the related notes to the financial statements, and have issued our report thereon dated January 22, 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. We have also issued our Independent Auditors Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards. Disclosures in that report, which is dated January 22, 2014, should be considered in conjunction with this management letter. Additionally, our audit was conducted in accordance with the provisions of Chapter , Rules of the Auditor General, which govern the conduct of local government entity audits performed in the State of Florida. This letter includes the following information, which is not included in the aforementioned auditors reports. Section (1) (i) 1., Rules of the Auditor General, requires that we comment as to whether or not corrective actions have been taken to address findings and recommendations made in the preceding annual financial audit report. No recommendations were made in the preceding annual financial audit report. Section (1) (i) 2., Rules of the Auditor General, requires that we review the provisions of Section , Florida Statutes, regarding the investment of public funds. We determined that the Supervisor of Elections is in compliance with Section , Florida Statutes, regarding the investment of public funds. Section (1) (i) 3., Rules of the Auditor General, requires that we comment as to whether or not there were any recommendations made to improve the Supervisor of Elections financial management. We did not have any such recommendations. Section (1) (e) 4., Rules of Auditor General, requires that we address noncompliance with provisions of contracts or grant agreements, or abuse, that have occurred, or are likely to have occurred, that have an effect on the financial statements that is less than material but which warrants the attention of those charged with governance. In connection with our audit, we did not have any such findings. 15

362 Our management letter is intended solely for the information and use of the Legislative Auditing Committee, members of the Florida Senate and the Florida House of Representatives, the Florida Auditor General, the Supervisor of Elections, Escambia County Board of County Commissioners, and applicable management and is not intended to be and should not be used by anyone other than these specified parties. January 22, 2014 Pensacola, Florida 16

363 ANNUAL AUDIT REPORT SUPERVISOR OF ELECTIONS ESCAMBIA COUNTY, FLORIDA SCHEDULE OF FINDINGS AND REPONSES September 30, 2013 There were no comments which require management's written response. 17

364

365 SPECIAL PURPOSE FINANCIAL STATEMENTS AND REQUIRED SUPPLEMENTARY INFORMATION ESCAMBIA COUNTY, FLORIDA TAX COLLECTOR SEPTEMBER 30, 2013 WITH INDEPENDENT AUDITORS REPORT

366 SPECIAL PURPOSE FINANCIAL STATEMENTS AND INDEPENDENT AUDITORS REPORT ESCAMBIA COUNTY, FLORIDA TAX COLLECTOR SEPTEMBER 30, 2013 WITH INDEPENDENT AUDITORS REPORT CONTENTS Independent Auditors Report... 1 Special Purpose Financial Statements: Balance Sheet Governmental Fund... 3 Statement of Revenues, Expenditures, and Changes In Fund Balance Governmental Fund... 4 Statement of Fiduciary Assets and Liabilities Agency Funds... 5 Notes to the Financial Statements... 6 Required Supplementary Information Schedule of Revenues, Expenditures, and Changes in Fund Balance Budget and Actual General Fund Notes to Required Supplementary Information Other Supplementary Information Combining Statement of Assets and Liabilities Agency Funds Combining Statement of Changes in Assets and Liabilities Agency Funds Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards Management Letter Schedule of Findings and Responses... 20

367 INDEPENDENT AUDITORS REPORT Honorable Janet Holley Tax Collector Escambia County, Florida Report on the Financial Statements We have audited the accompanying special purpose financial statements of the general fund and the aggregate remaining fund information of the Office of the Tax Collector of Escambia County, (hereinafter referred to as Tax Collector ), as of and for the year ended September 30, 2013, as listed in the table of contents, and the related notes to the financial statements. Management s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Auditors Responsibility Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. Opinions In our opinion, the special purpose financial statements referred to above present fairly, in all material respects, the financial position of the general fund and the aggregate remaining fund information of the Tax Collector as of September 30, 2013, and the respective changes in financial position, where applicable, thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America. Emphasis of Matter As discussed in Note 1 to the special purpose financial statements, the financial statements referred to above have been prepared for the purpose of complying with Chapter , Rules of the Auditor General, State of Florida, and are not intended to be a complete presentation of the financial position and changes in financial position of the Tax Collector. Additionally, the special purpose financial statements 1

368 present only the Tax Collector and are not intended to present the financial position and changes in financial position of Escambia County, Florida, taken as a whole. Our opinion is not modified with respect to this matter. Other Matters Required Supplementary Information Accounting principles generally accepted in the United States of America require that the budgetary comparison schedule be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Other Supplementary Information Our audit was conducted for the purpose of forming opinions on the special-purpose fund level financial statements. The accompanying supplementary information, i.e., the Combining Statement of Assets and Liabilities Agency Funds, is presented for purposes of additional analysis and is not a required part of these special-purpose financial statements. The Combining Statement of Assets and Liabilities Agency Funds is the responsibility of management and was derived from and relates 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 special-purpose financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting 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 special-purpose financial statements taken as a whole. Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated January 24, 2014, on our consideration of the Tax Collector s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the Tax Collector s internal control over financial reporting and compliance. Restriction on Use This report is intended solely for the information and use of the Tax Collector, management, the Board of County Commissioners, and the Florida Auditor General, and is not intended to be, and should not be, used by anyone other than these specified parties. January 24, 2014 Pensacola, Florida 2

369 Special Purpose Financial Statements

370 TAX COLLECTOR BALANCE SHEET GOVERNMENTAL FUND SEPTEMBER 30, 2013 Major Fund General Fund Assets Cash and cash equivalents $ 667,361 Accounts receivable 7,078 Total Assets $ 674,439 Liabilities Accounts payable $ 131,950 Accrued liabilities 102,818 Due to other governmental units 358,494 Unearned revenue 81,177 Total liabilities 674,439 Fund Balance Total liabilities and fund balance $ 674,439 - See accompanying notes to financial statements. 3

371 TAX COLLECTOR STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - GOVERNMENTAL FUND YEAR ENDED SEPTEMBER 30, 2013 Major Fund General Fund Revenues: Charges for services $ 2,820,586 Miscellaneous revenue 82,823 Total Revenues 2,903,409 Expenditures: Current: General government: Salaries and benefits 5,201,669 Operating expenditures 1,681,658 Capital outlay 18,243 Total Expenditures 6,901,570 Excess (Deficiency) of Revenues Over (Under) Expenditures (3,998,162) Other Financing Sources and Uses: Transfers in 4,280,153 Transfers out (281,992) Total Other Financing Sources and Uses 3,998,161 Net Change in Fund Balance - Fund Balance, October 1, Fund Balance, September 30, 2013 $ - See accompanying notes to financial statements 4

372 TAX COLLECTOR STATEMENT OF FIDUCIARY ASSETS AND LIABILITIES - AGENCY FUNDS SEPTEMBER 30, 2013 Assets Cash and cash equivalents $ 3,876,546 Accounts receivable 300,414 Total Assets $ 4,176,960 Liabilities Accounts payable $ 552,650 Due to other governmental units 3,624,310 Total Liabilities $ 4,176,960 See accompanying notes to financial statements. 5

373 TAX COLLECTOR NOTES TO SPECIAL PURPOSE FINANCIAL STATEMENTS 1. Summary of Significant Accounting Policies The following is a summary of the significant principles and policies used in the preparation of these special purpose financial statements. A. Reporting entity The Escambia County, Florida Tax Collector (Tax Collector), is an elected constitutional officer as provided by Article VIII, Section 1 (d) of the Constitution of the State of Florida. The Tax Collector s budget is approved by the Florida Department of Revenue and submitted to the Escambia County Board of County Commissioners (the Board) for approval. The Board pays a monthly fee to the Tax Collector for collection of property taxes based on a statutory formula. The remainder of the budget is funded by fees earned for providing services for other governmental agencies. For financial reporting purposes, the Tax Collector is deemed to be a part of the primary government of Escambia County, Florida (the County), and therefore, is included as such in the Escambia County, Florida, Comprehensive Annual Financial Report. B. Basis of presentation fund financial statements These special purpose financial statements have been prepared for the purpose of complying with Rules of the Auditor General, State of Florida, which require presentation of fund level only financial statements and permit omission of entity-wide full accrual financial statements and management s discussion and analysis. Therefore, these financial statements are intended to present only the financial position and changes in financial position of that portion of Escambia County, Florida, that relate to transactions of the Tax Collector and are not intended to present the financial position and changes in financial position of Escambia County, Florida, taken as a whole. The Tax Collector s financial records and accounts are maintained in accordance with the principles of fund accounting, whereby resources are classified for accounting and reporting purposes into funds to insure compliance with any special restrictions or limitations on the use of such resources. The Tax Collector s funds are defined as follows: Governmental Funds: The General Fund is the general operating fund of the Tax Collector. It is used to account for all financial resources except those required to be accounted for in other funds. The agency funds are used to account for assets held for individuals, private organizations, or other governments and consist primarily of taxes and fees collected but not distributed to other governments. Agency funds are custodial in nature (assets equal liabilities) and do not involve measurement of the results of operations. Fund balances are classified either as non-spendable or as restricted, committed, assigned, and unassigned, based on the extent to which there are external and internal constraints on the spending. 6

374 TAX COLLECTOR NOTES TO SPECIAL PURPOSE FINANCIAL STATEMENTS 1. Summary of Significant Accounting Policies (Continued) C. Measurement focus and basis of accounting The general fund is accounted for using the current resources measurement focus and the modified accrual basis of accounting. Revenues are recognized as soon as they become susceptible to accrual that is when they are both measurable and available to finance expenditures of the current period. The Tax Collector considers receivables collected within 60 days after year-end to be available and recognizes them as revenues of the current year. Expenditures generally are recorded when the related fund liability is incurred. However, expenditures for compensated absences are recognized when payments are made to employees. Fiduciary fund financial statements are reported using the accrual basis of accounting. D. Funding from Board of County Commissioners Commissions from the Board are recorded as transfers in on the Statement of Revenues, Expenditures and Changes in Fund Balance. In accordance with Florida Statutes, the General Fund s excess of revenues and transfers over expenditures is returned to the Board at year end and is reported as a transfer out on the Statement of Revenues, Expenditures and Changes in Fund Balance. 2. Deposits and Investments The investment of surplus funds is governed by the provisions of Florida Statute as to the type of investments that can be made. Deposits may be exposed to custodial credit risk, which is the risk of loss in the event of a bank failure. The Tax Collector manages custodial credit risk by maintaining its deposits in financial institutions designated as Qualified Public Depositories by the State Treasurer. All deposits were fully insured through a combination of Federal depository insurance and participation of the financial institutions in the multiple financial institution collateral pool as specified in Chapter 280, Florida Statutes. Accordingly, risk of loss due to bank failure is not significant. At September 30, 2013, the reported amount of the Tax Collector s deposits was approximately $4.5 million, and the bank balance was approximately $4.1 million, consisting entirely of deposits in checking and saving accounts. 3. Interfund receivables, payables and transfers Interfund receivables and payables consist of amounts due to or from funds during the normal course of business. At September 30, 2013, there were no interfund receivables or payables within the Tax Collector s funds. Transfers in consist of $4,280,153 from the Board of County Commissioners, and transfers out (excess budget and fees to the Board) totaled $281,992. 7

375 TAX COLLECTOR NOTES TO SPECIAL PURPOSE FINANCIAL STATEMENTS 4. Due to/from other governments At September 30, 2013, the due to other governmental units totals $358,494, and is payable to the Board and is comprised mainly of excess fees over expenditures and amounts for health insurance premiums. 5. Capital assets Capital assets (vehicles, equipment and other property costing at least $1,000 with a useful life of more than one year) are recorded as expenditures at the time of purchase. These assets are capitalized at cost and depreciated in Escambia County s government-wide financial statements. 6. Retirement Plan Plan Description The Tax Collector participates in the Florida Retirement System (FRS), a cost sharing multiple-employer defined benefit pension plan, administered by the State of Florida. Beginning in 2002, the FRS became one system with two primary plans, a defined benefit plan (FRS Pension Plan) and a defined contribution plan alternative to the defined benefit plan known as the Public Employee Option Retirement Program (FRS Investment Plan). The effective date of the FRS Investment Plan was July 1, On July 1, 2011 the FRS became a contributory plan. The FRS provides retirement, disability and death benefits to members. The State of Florida issues a publicly available report that includes financial statements and required supplementary information for FRS. The report may be obtained at or may be obtained by writing to the State of Florida Division of Retirement, Department of Management Services, P.O. Box 9000, Tallahassee, Florida For members hired before July 1, 2011 the FRS Pension Plan provides for the vesting of benefits after six years of creditable service and age 62, or thirty years of service regardless of age, whichever comes first. For members first enrolled after July 1, 2011 vesting occurs after eight years of credible service and age 65, or thirty-three years of service regardless of the age before 65. Early retirement may be taken any time after vesting; however, there is a 5% benefit reduction for each year prior to normal retirement age. Members are also eligible for in-line-of-duty or regular disability benefits if permanently disabled and unable to work. Benefits are computed on the basis of age, average final compensation and service credit. Funding Policy - The FRS has six classes of membership. Only four of these classes are applicable to the Tax Collector s eligible employees. The Tax Collector is required to contribute at an actuarial determined rate. These rates are a percent of covered payroll. The four applicable classes, with descriptions and contribution rates in effect during the period ended September 30, 2013, 2012 and 2011 are as follows: Regular Class: 6.95% 5.18% 4.91% Members not qualifying for other classes. Senior Management Class: 18.31% 6.30% 6.29% Members of senior management who do not elect the optional annuity retirement program. Elected Officials Class: 33.03% 10.23% 11.14% Certain elected county officials. Deferred Retirement Option Program (DROP): 12.84% 5.44% 4.42% Members are enrolled in DROP from FRS 8

376 TAX COLLECTOR NOTES TO SPECIAL PURPOSE FINANCIAL STATEMENTS 6. Retirement Plan (continued) The contribution requirements of the Tax Collector and members are established and may be amended by FRS. The plan is contributory for employees requiring a 3% employee contribution. This is in addition to the contributions that are the obligation of the employer. The Tax Collector s contributions to FRS for the years ended September 30, 2013, 2012 and 2011 were $267,213, $204,121, and $350,440 respectively, and were equal to the required contributions for each year. 7. Other post-employment benefits (OPEB), other than pensions The Board offers post-employment health care benefits to all retired employees of the Tax Collector s Office and their dependents. Participating retirees are required to reimburse the Board for 100% of the premium cost, which is netted against the premium payment, so that no net expense is initially recorded in the Board s financial statements. However, these retirees are receiving an implicit subsidy because the premium is a group rate which includes active, lower cost employees. This implicit subsidy has a cost which under GAAP is required to be disclosed in these financial statements. However, this annual cost, the accrued obligation, and other required disclosures have been calculated for the County as a whole, and not separately for the Tax Collector s Office. Accordingly, these calculations and disclosures can be found in the County-wide comprehensive annual financial report. 8. Risk management The County has a risk management program to insure claims against the Board, Constitutional Officers, and Santa Rosa Island Authority for the following types of risks: Workers Compensation The County is covered for workers compensation claims through a policy with the Florida Municipal Insurance Trust. Coverage limits under the policy include statutory limits, as well as $1,000,000 bodily injury for each accident and $1,000,000 bodily injury by disease for each employee with an aggregate $1,000,000 policy limit. Casualty and Property Casualty limits are self-insured for $200,000 per claim with a $300,000 aggregate limit. Property limits are $50,000 - $250,000 self-insured retentions per occurrence with excess limits of $45 million including wind. The Tax Collector participated in the County s insurance program during fiscal year 2013 at a cost of $10,739. There also were no significant reductions in insurance coverage from the prior year and there have been no settlements which exceeded the Tax Collector s insurance coverage in any of the past three fiscal years. 9

377 TAX COLLECTOR NOTES TO SPECIAL PURPOSE FINANCIAL STATEMENTS 9. Commitments and contingencies Operating leases The Tax Collector is committed to operating leases for office space with noncancellable terms in excess of one year. Future minimum lease payments are as follows: Year Amount 2014 $326, , , , ,500 Thereafter 658,125 $1,918,340 Rent expense for the year ended September 30, 2013 was $389, Accumulated Compensated Absences Employees may accumulate, subject to limitations, amounts of earned but unused paid time off, which will be paid upon separation from service. The amount of vested accumulated compensated absences payable is reported as a liability in the statement of net position in the County s basic financial statements. That liability includes earned but unused paid time off as well as FICA taxes and retirement contributions related thereto. The change in accumulated compensated absences during the year is as follows: 11. Litigation Balance, September 30, 2012 $ 691,733 Additions 404,721 Reductions (427,452) Balance, September 30, 2013 $ 669,002 The Tax Collector is contingently liable with respect to lawsuits and other claims which might be filed incidental to the ordinary course of operations. In the opinion of management, based on the advice of legal counsel, there are no lawsuits or claims outstanding which will have a material adverse effect on the financial position of the Tax Collector s Office. 12. Subsequent events The Tax Collector has evaluated events and transactions for potential recognition or disclosure in the financial statements through January 24, 2014, the date the financial statements were available to be issued. No subsequent events have been recognized or disclosed. 10

378 Required Supplementary Information

379 TAX COLLECTOR GENERAL FUND SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL YEAR ENDED SEPTEMBER 30, 2013 General Fund Budgeted Amounts Original Final Actual Variance with Final Budget Revenues: Charges for services $ 2,973,455 $ 2,973,455 $ 2,820,586 $ (152,869) Miscellaneous revenue 81,800 81,800 82,823 1,023 Total Revenues 3,055,255 3,055,255 2,903,409 (151,846) Expenditures: Current: General government: Salaries and benefits 5,346,095 5,231,095 5,201,669 29,426 Operating expenditures 1,565,306 1,771,306 1,681,658 89,648 Capital outlay - 18,243 18,243 - Total Expenditures 6,911,401 7,020,644 6,901, ,074 Excess (Deficiency) of Revenues Over (Under) Expenditures (3,856,146) (3,965,389) (3,998,162) (32,773) Other Financing Sources and Uses: Transfers in 4,280,153 4,280,153 4,280,153 - Transfers out (424,007) (314,764) (281,992) 32,772 Total Other Financing Sources (Uses) 3,856,146 3,965,389 3,998,161 32,772 Net Change in Fund Balance Fund Balance, October 1, Fund Balance, September 30, 2013 $ - $ - $ - $ - See accompanying notes to required supplementary information. 11

380 TAX COLLECTOR NOTES TO REQUIRED SUPPLEMENTARY INFORMATION The Tax Collector s Office operates under budget procedures pursuant to Florida Statutes. An annual budget is adopted for the general fund on a basis consistent with accounting principles generally accepted in the United States of America. The legal level of budgetary control (i.e., the level at which expenditures may not legally exceed appropriations) is at the fund level. 12

381 Other Supplementary Information

382 TAX COLLECTOR COMBINING STATEMENT OF ASSETS AND LIABILITIES AGENCY FUNDS SEPTEMBER 30, 2013 Agency Funds Assets Tax Fund Tag Fund TOTAL Cash and cash equivalents $ 3,087,644 $ 788,902 $ 3,876,546 Accounts receivable , ,414 Total Assets $ 3,087,895 $ 1,089,065 $ 4,176,960 Liabilities Accounts payable $ 408,862 $ 143,788 $ 552,650 Due to other governmental units 2,679, ,277 3,624,310 Total Liabilities $ 3,087,895 $ 1,089,065 $ 4,176,960 13

383 TAX COLLECTOR COMBINING STATEMENT OF CHANGES IN ASSETS AND LIABILITIES AGENCY FUNDS YEAR ENDED SEPTEMBER 30, 2013 Balance Balance September 30, September 30, 2012 Additions Deductions 2013 TAX FUND ASSETS Cash and cash equivalents $ 3,710,487 $ 392,682,585 $ 393,305,428 $ 3,087,644 Accounts Recievable Total Assets $ 3,710,738 $ 392,682,585 $ 393,305,428 $ 3,087,895 LIABILITIES Accounts payable $ 810,272 $ 19,227,968 $ 19,629,378 $ 408,862 Due to other governmental units 2,900, ,229, ,450,688 2,679,033 Total Liabilities $ 3,710,738 $ 550,457,223 $ 551,080,066 $ 3,087,895 TAG FUND ASSETS Cash and cash equivalents $ 688,770 $ 1,138,475,605 $ 1,138,375,473 $ 788,902 Accounts Recievable 250,030 39,518,745 39,468, ,163 Total Assets $ 938,800 $ 1,177,994,350 $ 1,177,844,085 $ 1,089,065 LIABILITIES Accounts payable $ 170,774 $ 27,852,772 $ 27,879,758 $ 143,788 Due to other governmental units 768, ,489, ,312, ,277 Total Liabilities $ 938,800 $ 753,342,409 $ 753,192,144 $ 1,089,065 14

384 TAX COLLECTOR COMBINING STATEMENT OF CHANGES IN ASSETS AND LIABILITIES AGENCY FUNDS YEAR ENDED SEPTEMBER 30, 2013 Balance Balance September 30, September 30, 2012 Additions Deductions 2013 Total Agency ASSETS Cash and cash equivalents $ 4,399,257 $ 1,531,158,190 $ 1,531,680,901 $ 3,876,546 Accounts Recievable 250,281 39,518,745 39,468, ,414 Total Assets $ 4,649,538 $ 1,570,676,935 $ 1,571,149,513 $ 4,176,960 LIABILITIES Accounts payable $ 981,046 $ 47,080,740 $ 47,509,136 $ 552,650 Due to other governmental units 3,668,492 1,256,718,892 1,256,763,074 3,624,310 Total Liabilities $ 4,649,538 $ 1,303,799,632 $ 1,304,272,210 $ 4,176,960 15

385 INDEPENDENT AUDITORS REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIALSTATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS Honorable Janet Holley Tax Collector Escambia County, Florida We have audited, in accordance with the 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, the special-purpose financial statements (hereinafter referred to as financial statements ) of the general fund and aggregate remaining fund information of the Tax Collector of Escambia County, Florida (hereinafter referred to as Tax Collector ), as of and for the year ended September 30, 2013, and the related notes to the financial statements, which collectively comprise the Tax Collector s special purpose financial statements, and have issued our report thereon dated January 24, Internal Control Over Financial Reporting In planning and performing our audit of the financial statements, we considered the Tax Collector s internal control over financial reporting (internal control) to determine the audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the Tax Collector s internal control. Accordingly, we do not express an opinion on the effectiveness of the Tax Collector s internal control. A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the entity s financial statements will not be prevented, or detected and corrected on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance. Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified. Compliance and Other Matters As part of obtaining reasonable assurance about whether the Tax Collector s financial statements are free from material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards. 16

386 As required by the provisions of Chapter , Rules of the Auditor General, we have issued a separate management letter dated January 24, 2014, which should be considered in assessing the results of our audit. Purpose of this Report The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the entity s internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the entity s internal control and compliance. Accordingly, this report is not suitable for any other purpose. January 24, 2014 Pensacola, Florida 17

387 MANAGEMENT LETTER Honorable Janet Holley Tax Collector Escambia County, Florida We have audited the special-purpose financial statements (hereinafter referred to as financial statements ) of the general fund and the aggregate remaining fund information of the Office of the Tax Collector of Escambia County, Florida (hereinafter referred to as Tax Collector ), as of and for the year ended September 30, 2013, and the related notes to the financial statements, and have issued our report thereon dated January 24, We conducted our audit in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and Chapter Rules of the Florida Auditor General. We have also issued our Independent Auditors Report on Internal Control Over Financial Reporting and Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards. Disclosures in that report, which is dated January 24, 2014, should be considered in conjunction with this management letter. Additionally, our audit was conducted in accordance with the provisions of Chapter , Rules of the Auditor General, which govern the conduct of local governmental entity audits performed in the State of Florida. This letter includes the following information, which is not included in the aforementioned auditors reports: Section (1) (i) 1., Rules of the Auditor General, requires that we determine whether or not corrective actions have been taken to address findings and recommendations made in the preceding annual financial audit. No recommendations were made in the preceding annual financial audit report. Section (1) (i) 2., Rules of the Auditor General, requires our audit to include a review of the provisions of Section , Florida Statutes, regarding the investment of public funds. In connection with our audit, we determined that the Tax Collector complied with Section , Florida Statutes. Section (1) (i) 3., Rules of the Auditor General, requires that we address in the management letter any recommendations to improve financial management. In connection with our audit, we did not have any such recommendations. Section (1) (i) 4., Rules of the Auditor General, requires that we address noncompliance with provisions of contracts or grant agreements, or abuse, that have occurred, or are likely to have occurred, that have an effect on the financial statements that is less than material but which warrants the attention of those charged with governance. In connection with our audit, we did not have any such findings. 18

388 Our management letter is intended solely for the information and use of the Legislative Auditing Committee, members of the Florida Senate and the Florida House of Representatives, the Florida Auditor General, the Tax Collector, Escambia County Board of County Commissioners, and applicable management and is not intended to be and should not be used by anyone other than these specified parties. January 24, 2014 Pensacola, Florida 19

389 TAX COLLECTOR SCHEDULE OF FINDINGS AND RESPONSES September 30, 2013 There were no comments which require management s written response. 20

390