County of Chester, Pennsylvania

Transcription

1 Comprehensive Annual Financial Report FOR THE YEAR ENDED DECEMBER 31, 2000 CONTROLLER CHESTER PENNSYLVANIA COUNTY, County of Chester, Pennsylvania PREPARED BY THE OFFICE OF THE CONTROLLER Carol Aichele, Controller

2 Comprehensive Annual Financial Report FOR THE YEAR ENDED DECEMBER 31, 2000 CONTROLLER CHESTER PENNSYLVANIA COUNTY, County of Chester, Pennsylvania PREPARED BY THE OFFICE OF THE CONTROLLER Carol Aichele, Controller

3 Introductory Section

4 Table of Contents December 31, 2000 A. INTRODUCTORY SECTION Page Table of Contents... i Message from the County Controller...vii Responsibilities for Financial Reporting... ix Letter of Transmittal From Director of Administrative Services... xi County of Chester Government Organization Chart...xxiii County of Chester Elected Officials...xxiv Certificate of Achievement for Excellence in Financial Reporting...xxv B. FINANCIAL SECTION Independent Auditors' Report...1 Combined Statements - Overview (General Purpose Financial Statements):...3 Combined Balance Sheet - All Fund Types, Account Groups and Discretely Presented Component Units...4 Combined Statement of Revenues, Expenditures and Changes in Fund Balances - All Governmental Fund Types, Expendable Trust Funds and Similar Discretely Presented Component Units...6 Combined Statement of Revenues, Expenditures and Changes in Fund Balances - Budget (GAAP Basis) and Actual - General Fund, Certain Special Revenue Funds, Debt Service Fund and Capital Projects Funds...8 Combined Statement of Revenues, Expenses and Changes in Retained Earnings (Deficit)/Fund Balances - Proprietary Fund Types, Nonexpendable Trust Fund and Similar Discretely Presented Component Units...10 Statement of Changes in Plan Net Assets - Retirement Trust Fund...11 Combined Statement of Cash Flows - Proprietary Fund Types, Nonexpendable Trust Fund and Similar Discretely Presented Component Units...12 Notes to General Purpose Financial Statements...15 Required Supplemental Information Employee Retirement Plan Schedule of Employer Contributions...56 Supplementary Information - Combining, Individual Fund and Account Group Statements and Schedules: General Fund - Description of Fund...57 Schedule of Expenditures - Budget (GAAP Basis) and Actual...59 Special Revenue Funds: Description of Funds...67 Combining Balance Sheet...68 Combining Statement of Revenues, Expenditures and Changes in Fund Balances...70 i

5 Table of Contents December 31, 2000, Continued B. FINANCIAL SECTION, Continued Page Supplementary Information - Combining and Individual Fund and Account Group Statements and Schedules, Continued: Special Revenue Funds, Continued: Domestic Relations Fund: Statement of Revenues, Expenditures and Changes in Fund Balance - Budget (GAAP Basis) and Actual...72 Liquid Fuels Fund: Statement of Revenues, Expenditures and Changes in Fund Balance - Budget (GAAP Basis) and Actual...73 Parks and Recreation Fund: Statement of Revenues, Expenditures and Changes in Fund Balance - Budget (GAAP Basis) and Actual...74 Public Safety Communication Fund: Statement of Revenues, Expenditures and Changes in Fund Balance - Budget (GAAP Basis) and Actual...75 Library Fund: Statement of Revenues, Expenditures and Changes in Fund Balance - Budget (GAAP Basis) and Actual...76 Economic Development Fund: Statement of Revenues, Expenditures and Changes in Fund Balance - Budget (GAAP Basis) and Actual...77 Housing and Community Development Fund: Statement of Revenues, Expenditures and Changes in Fund Balance - Budget (GAAP Basis) and Actual...78 Managed Behavioral Health Care Fund: Statement of Revenues, Expenditures and Changes in Fund Balance - Budget (GAAP Basis) and Actual...79 Human Services Fund: Statement of Revenues, Expenditures and Changes in Fund Balance - Budget (GAAP Basis) and Actual...80 Mental Health/Mental Retardation Fund: Statement of Revenues, Expenditures and Changes in Fund Balance - Budget (GAAP Basis) and Actual...81 Office of Aging Fund: Statement of Revenues, Expenditures and Changes in Fund Balance - Budget (GAAP Basis) and Actual...82 Drug and Alcohol Fund: Statement of Revenues, Expenditures and Changes in Fund Balance - Budget (GAAP Basis) and Actual...83 ii

6 Table of Contents December 31, 2000, Continued B. FINANCIAL SECTION, Continued Page Supplementary Information - Combining and Individual Fund and Account Group Statements and Schedules, Continued: Special Revenue Funds, Continued: Children, Youth and Families Fund: Statement of Revenues, Expenditures and Changes in Fund Balance - Budget (GAAP Basis) and Actual...84 Capital Projects Funds: Description of Funds...85 Combining Balance Sheet...86 Combining Statement of Revenues, Expenditures and Changes in Fund Balances...88 Capital Reserve Fund: Statement of Revenues, Expenditures and Changes in Fund Balance - Budget (GAAP Basis) and Actual Bond Fund: Statement of Revenues, Expenditures and Changes in Fund Balance - Budget (GAAP Basis) and Actual Note Fund: Statement of Revenues, Expenditures and Changes in Fund Balance - Budget (GAAP Basis) and Actual Note Fund: Statement of Revenues, Expenditures and Changes in Fund Balance - Budget (GAAP Basis) and Actual Bond Fund: Statement of Revenues, Expenditures and Changes in Fund Balance - Budget (GAAP Basis) and Actual Note Fund: Statement of Revenues, Expenditures and Changes in Fund Balance - Budget (GAAP Basis) and Actual Bond Fund: Statement of Revenues, Expenditures and Changes in Fund Balance - Budget (GAAP Basis) and Actual Note Fund: Statement of Revenues, Expenditures and Changes in Fund Balance - Budget (GAAP Basis) and Actual Note Fund: Statement of Revenues, Expenditures and Changes in Fund Balance - Budget (GAAP Basis) and Actual...98 Internal Service Funds: Description of Funds...99 Combining Balance Sheet iii

7 Table of Contents December 31, 2000, Continued B. FINANCIAL SECTION, Continued Page Supplementary Information - Combining and Individual Fund and Account Group Statements and Schedules, Continued: Internal Service Funds, Continued: Combining Statement of Revenues, Expenses and Changes in Retained Earnings (Deficit) Combining Statement of Cash Flows Fiduciary Funds: Description of Funds Combining Balance Sheet Expendable Trust Funds - Combining Statement of Revenues, Expenditures and Changes in Fund Balances Agency Funds - Combining Statement of Changes in Assets and Liabilities General Fixed Assets Account Group: Description of Account Group Schedule of General Fixed Assets by Source Schedule of General Fixed Assets by Function and Activity Component Units: Description of Component Units Combining Balance Sheet Combining Statement of Revenues, Expenditures and Changes in Fund Balances Combining Statement of Revenues, Expenses and Changes in Retained Earnings (Deficit) Combining Statement of Cash Flows C. STATISTICAL SECTION Table General Governmental Expenditures by Function General Revenues by Source Property Tax Levies and Collections Assessed Values By Land Use Assessed and Estimated Actual Value of Taxable Property Real Property Tax Rates - Direct and Overlapping Governments (Mills per $1,000 of Assessed Value) Computation of Nonelectoral Borrowing Capacity Ratio of Net General Bonded Debt to Assessed Value of Real Property and Net Bonded Debt Per Capita Ratio of Annual Debt Service Expenditures for General Bonded Debt to Total General Governmental Expenditures Computation of Direct and Overlapping Debt Revenue Bond Coverage - Solid Waste Authority - Component Unit Demographic Statistics Property Value, Construction, and Bank Deposits iv

8 Table of Contents December 31, 2000, Continued C. STATISTICAL SECTION, Continued Table Page Principal Taxpayers Employees' Retirement Fund - Selected Data Salaries and Surety Bonds of Elected Officials For the year ended December 31, Miscellaneous Statistics v

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10 June 08, 2001 To the citizens of the County of Chester, Pennsylvania: The Comprehensive Annual Financial Report (CAFR) of the County of Chester, Pennsylvania, (the County), for the fiscal year ended December 31, 2000, is hereby submitted. Responsibility for both the completeness and fairness of the data and its presentation, including all disclosures, rests with the County s management. To the best of my knowledge and belief, the enclosed data is accurate in all material respects and is reported in a manner designed to present fairly the financial position and results of operations of the various funds and account groups of the County in accordance with generally accepted accounting principles. All disclosures necessary to enable the reader to gain an understanding of the County s financial activities have been included. The Comprehensive Annual Financial Report is presented in three sections: introductory, financial, and statistical. The introductory section includes the transmittal letter, the Certificate of Achievement for Excellence in Financial Reporting for the fiscal year ended December 31, 1999, the County s organizational chart and a list of the County s elected officials. The financial section includes the independent auditors report, the general purpose financial statements and the combining and individual fund and account group financial statements and schedules for the year ended December 31, The statistical section includes selected financial and demographic information, generally presented on a multiyear basis. The County of Chester, one of Pennsylvania s original three counties, was named by William Penn in It is located in southeastern Pennsylvania, approximately 30 miles west of Philadelphia. The Borough of West Chester is the County Seat. The County has 73 political subdivisions, consisting of one third class city (Coatesville), 15 boroughs and 57 townships. The County has a population of approximately 433,000 and covers 782 square miles, including some of the most productive agricultural land in Pennsylvania. Population and employment have boomed during the past thirty years as suburban development spread westward and as high technology businesses grew along the Route 202 corridor. The median income of the County s households is one of the highest in the Commonwealth of Pennsylvania. vii

11 Citizens of Chester County Page 2 June 08, 2001 A three member Board of County Commissioners performs all of the County s legislative and executive functions, and is responsible for the management and administration of the County s fiscal affairs. The Controller is the elected financial officer of the County and, as such, supervises the County s fiscal affairs including the accounts, transactions, and official acts relating thereto of all officers and persons entrusted with the public moneys of the County. The Treasurer is elected to receive and receipt all monies due or accruing to the County. The Court of Common Pleas is part of the Unified Judicial System provided for by the Pennsylvania Constitution. Court related row offices include the Coroner, Clerk of Courts, District Attorney, Jury Commissioners (two), Prothonotary, Recorder of Deeds, Register of Wills and Sheriff. This report is designed to make the financial position of the County of Chester readily available to taxpayers, bond rating firms, underwriters, budget planners, government officials, investors, creditors, and the general public. The County s financial statements have been audited by the certified public accounting firm of KPMG, LLP, to ensure that the financial reporting is of the highest quality and based on national standards. The information contained in this report provides a comprehensive picture of the financial position of the County of Chester. Furthermore, this report reflects the commitment of Chester County leadership, in all areas and on all levels, to cost effective government and the responsible management and administration of the financial operations of the County now and in the future. We appreciate the cooperation extended to us by County elected officials, the staff of the Finance Department, and all County departments and agencies addressed in this audit. I also wish to express my personal appreciation and respect for the professional staff of the Chester County Controller s Office for their contribution to this report and their dedication to the mission of this office. Each of us continues to be committed to maintaining the highest professional standards and practices, and to monitoring the financial performance of the County in the best interest of the citizens of Chester County. Sincerely, Carol Aichele Controller, County of Chester viii

12 RESPONSIBILITIES FOR FINANCIAL REPORTING The Office of the Controller has prepared and is responsible for the County's general purpose financial statements and related notes. They have been prepared in accordance with generally accepted accounting principles and necessarily include amounts based on judgments and estimates by management. All financial information in this annual report is consistent with the financial statements. The Office of the Controller maintains an internal accounting control structure and related policies and procedures designed to provide reasonable assurance that assets are safeguarded, that transactions are executed in accordance with appropriate authorization and properly recorded, and that accounting records may be relied upon for the preparation of financial statements and other financial information. The design, monitoring, and revision of internal accounting control structure involve, among other things, the County's judgment with respect to the relative cost and expected benefits of specific control measures. The County's general purpose financial statements have been audited by KPMG, LLP, independent certified public accountants, who are responsible for conducting their audit in accordance with generally accepted auditing standards, including tests of accounting records. The report on their audit appears herein. ix

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14 June 8, 2001 Honorable Chairman and Members of The Chester County Board of Commissioners It is my privilege to submit to you the Comprehensive Annual Financial Report of the County of Chester, Pennsylvania, for the year ended December 31, Responsibility for the accuracy and the completeness of the presentation, including all disclosures, rests with management. The report was prepared with an emphasis on full disclosure to enable the reader to gain an understanding of the County s operations and financial position. REPORT FORMAT The report contains several informative sections including: The Introductory Section. This section is intended to familiarize readers with the organizational structure, activities and services of the County. The Financial Section. This section includes the Independent Auditors Report and the General Purpose Financial Statements, followed by Supplemental Information which includes Combining, Individual Fund and Account Group statements and schedules, which help to explain and clarify the financial data. The Statistical Section. This section includes tables that provide a historical summary of financial operations, as well as demographic data about the County. REPORTING ENTITY The following component units are reported in a separate column according to their fund classification to emphasize that they are legally separate from the County: Chester County Area Airport Authority Chester County Solid Waste Authority Chester County Water Resources Authority Chester County Library Board and County Supported Libraries ECONOMIC CONDITION AND OUTLOOK The County of Chester continues to benefit from the combination of a diversified, vibrant economy and an excellent quality of life. According to the 2000 census, there were 433,501 people living in the county. This represents an increase of 15.2% from This ranks Chester County among the top 10% of the fastest growing counties in the United States. xi

15 Honorable Chairman and members of the Chester County Board of Commissioners June 8, 2001 ECONOMIC CONDITION AND OUTLOOK (continued) Population Trends Chester County 210, , , , ,501 Pennsylvania 11,319,366 11,800,766 11,864,662 11,881,643 12,281,054 United States 179,323, ,211, ,757, ,757, ,421,906 Source: Bureau of Census Real property values and the real estate tax base also continue to increase. The Planning Commission reported that plans for 6,425 new lots/units were reviewed during 2000, representing a 6.7% increase in the number of units proposed from The County s $29.3 billion tax base has grown at an average rate of 5.9% since Real Estate Assessment County-wide Year Assessed Value Percent Change 1998 $ 26,820,369,074 n/a 1999 $ 27,387,422, % 2000 $ 29,258,890, % Source: Tax Assessment Department The number of jobs in Chester County continues to grow. Both new and existing companies continue to locate or expand within the county. The Vanguard Group, one of the largest providers of mutual fund and financial services in the country and Chester County s largest employer, has announced plans to expand its employee base by more than 6,000 employees over a five to seven year period. Well over 12 million square feet of new commercial space has been approved and will link the historic communities of Phoenixville, Malvern, West Chester, and Downingtown. As of the end of 2000, the County had a civilian labor force of 235,467 with an unemployment rate of 2.6%, demonstrating the stability of its workforce. A five year history that compares Chester County to the state and the nation since 1996 is presented on the next page. xii

16 Honorable Chairman and Members of the Chester County Board of Commissioners June 8, 2001 ECONOMIC CONDITION AND OUTLOOK (continued) Annual Average Civilian Labor Force and Unemployment Statistics United States Total Labor Force 136,272, ,286, ,642, ,421, ,888,500 Unemployment Rate 5.4% 4.9% 4.5% 4.2% 4.0% Pennsylvania Total Labor Force 6,009,000 5,906,000 5,962,250 5,974,267 5,988,017 Unemployment Rate 5.3% 5.1% 4.5% 4.3% 4.0% Chester County Total Labor Force 216, , , , ,467 Unemployment Rate 3.3% 3.2% 2.7% 2.6% 2.6% While the County continues to experience expansion in various business sectors, it is also maintaining its position as a major agricultural community. As of 1999, Chester County remains number one in the Commonwealth of Pennsylvania in receipts from the sale of agricultural crops ($358 million). The chart below shows the diversification of business sectors within the county. Distribution of Covered Employment 2 nd Quarter 2000 Employment Sector Chester County Pennsylvania Services 33.2% 30.8% Retail Trade 17.1% 17.8% Manufacturing 15.1% 16.6% Finance, Insurance & Real Estate 6.0% 5.8% Wholesale Trade 5.8% 5.0% Construction 5.1% 4.5% Transportation & Public Utilities 5.1% 5.2% Agricultural, Forest & Fishing 3.5% 1.0% Mining 0.1% 0.4% Government Federal 1.1% 2.2% State 1.2% 2.4% Local 6.8% 8.3% Total 100.0% 100.0% Source: Pennsylvania Department of Labor & Industry xiii

17 Honorable Chairman and Members of the Chester County Board of Commissioners June 8, 2001 MAJOR INITIATIVES IN 2000 Working Capital Reserve. The County Commissioners approved a working capital reserve policy. The designation of fund balance is intended to eliminate the need for tax anticipation borrowings and to reinforce the County s high grade investment rating. Annually, 10% of the General Fund expenditure budget will be so designated. By the end of 2000, the policy target was met with $10.4 million set aside for working capital purposes. Program Budgeting. The County began the process of developing its operating budget using a program/services format. The initiative to enhance the traditional line item budgeting approach was spurred by a report from the budget task force appointed by the Commissioners. The task force comprised of community representatives, recommended a linkage between program/service outcomes and the cost to county taxpayers. Early Retirement Program. The County pension plan is governed by Pennsylvania Act 96. The statute permits counties to offer an early retirement incentive option every five years. In 2000, 115 County employees took advantage of the program. Landscapes. The County Planning Commission released its first Landscapes progress report. Landscapes is the County Comprehensive Policy Plan, which provides the framework for protecting and enhancing the quality of life by concentrating growth in appropriate areas. The report presented eighteen indicators measuring the progress in meeting the goals and objectives of Landscapes. Particular improvement was noted in the area of land and resource preservation and municipality initiatives within Chester County. Agricultural Land Preservation. To preserve the County s important agricultural sector, the Board of Commissioners supports a conservation easement program. As an incentive, the Commonwealth made $ 4.28 million in easement purchases in exchange for the County s commitment of $ 3 million. This has led to the preservation of four dairy businesses, eight farms that support dairy operations, six grain-crop farms and one farm that helps to sustain a swine and beef cattle production unit ISSUES AND INITIATIVES GASB 34. In June 1999, the Governmental Accounting Standards Board (GASB) issued Statement 34, Basic Financial Statements- and Management s Discussion and Analysis- for State and Local Governments. It establishes a new financial reporting model that will significantly alter the presentation of annual financial reports. Using the results of a readiness assessment tool, a team of County accounting, finance and information technology staff will undertake the implementation of GASB 34, which will be effective beginning with the County s financial statements and reports for the year ending December 31, Urban Revitalization. As part of Landscapes, the County will be instituting a program to revitalize the urban center municipalities. Grants will be available to the fifteen boroughs as well as to the City of Coatesville. Funding will be available for streetscape improvements and sewer, water and storm water infrastructure. Technology. Chester County government will continue to be one of Pennsylvania s leaders in the use of technology. Its Geographic Information System (GIS) will facilitate implementation of the comprehensive xiv

18 Honorable Chairman and Members of the Chester County Board of Commissioners June 8, ISSUES AND INTITIATIVES (continued) land use plan and assist various County departments, such as Emergency Services, Parks and Recreation, and the Planning Commission in achieving program outcomes. Also, the GIS land records data will be available to individual municipalities within the county by means of intergovernmental agreements. A records management plan will be developed to identify and prioritize areas where records management can be improved through the use of technology and process redesign. Projects will be funded that provide a positive return on investment. The District Attorney s Office in conjunction with the Chester County Detectives Office is facilitating a multi-year program to develop an integrated criminal justice information system within the County. While Chester County already has the lowest crime rate in southeastern Pennsylvania, coordinated technology efforts among municipalities provide another tool for maintaining public safety. Compensation Study. The County Commissioners will undertake a study in order to update the employee compensation system. The objective is to ensure that salaries are fair within County government and competitive with other surrounding counties and area employers. Library System Expansion. Construction of a branch of the Chester County Library in the northern part of the county will begin. The initiative is the result of a survey showing a gap in library services in the northern reaches of the county. Capital Building Program. The county will continue in its efforts to provide more space for the judiciary and administrative services departments located in the Borough of West Chester. The current phase of the project includes acquisition of property and submission of an appropriate land development plan for Borough approval. Solid Waste Plan. Pennsylvania law requires counties to have a Solid Waste Management Plan. The County will embark on the process of updating its current plan. The process will include the solicitation of input from various stakeholders in the management of solid waste in the County. FINANCIAL INFORMATION Chester County has established an internal control structure to safeguard its assets and to ensure the reliability of its financial statements. A system of checks and balances for personnel positions, revenues and expenditures/expenses is in place. As a recipient of significant amounts of state and federal intergovernmental revenues, the County is also responsible for providing an adequate control structure to maintain compliance with applicable rules and regulations. Budgets are adopted for all funds. Budget performance results are provided to the public on a quarterly basis. Monthly, the Finance department prepares budget variance analysis for management. The Board of Commissioners must approve budget amendments that increase or decrease a department s appropriation and requests to use unappropriated funds. xv

19 Honorable Chairman and Members of the Chester County Board of Commissioners June 8, 2001 FINANCIAL INFORMATION (continued) The County maintains an encumbrance system as an added means of budgetary control. Fund encumbrances are liquidated at year s end with the exception of the Liquid Fuels Fund where state statutes mandate they be reported. General Governmental Revenues. The table below presents a summary of revenues for the governmental fund types excluding capital project funds and including the Water Resources and Library component units for the year ended December 31, GENERAL GOVERNMENTAL REVENUES Increase (Decrease) From 1999 Percent Change From 1999 Revenue Category Amount Percent of Total Taxes $ 88,777, % $ 20,882, % License & Permits 1,351, % 15, % Court Costs & Fines 3,224, % 155, % Interest & Rent 4,685, % 1,957, % General Grants 15,514, % 2,236, % Health & Welfare Grants 102,043, % 6,616, % Departmental Earnings 14,900, % 8, % Other Revenues 4,590, % 2,262, % Total Revenues $ 235,087, % $ 34,134, % The increase in tax revenue is primarily due to an increase in the real estate property tax from mills to mills in Real estate property taxes are dedicated for four funds- the General Fund, the Parks and Recreation Fund, the Library Fund and the Debt Service Fund. Revenues derived from issuing licenses and permits remained flat. The greatest part of revenues in this category is derived from licenses to restaurants and solid waste haulers and permits for wells and sewage systems. Court costs and fines collections increased 5.1%, reflecting continued growth in caseloads in the Common Pleas and Minor Judiciary courts. Investment earnings are primarily responsible for the increase in interest and rent. Excluding the Water Resources Authority and the Library component units, the County s improved liquidity position combined with a higher yield on investments generated $1,957,196 more in investment earnings in Investment earnings of the component units were down slightly. General Grants increased $2,236,143 or 16.8%. Although some program grants decreased slightly, the Planning Commission accelerated federal reimbursements by $ 107,708; Adult Probation programs benefited from $ 79,889 in additional funding, while Juvenile Probation received $ 105,863 in new and continued funding for its programs. The state judicial reimbursement increased by $70,000. Also, $438,018 more was received in support of bridge projects, $ 690,986 additional for Housing and Community Development programs and $840,008 for the Chester County Library Board and County Supported Libraries component unit. xvi

20 Honorable Chairman and Members of the Chester County Board of Commissioners June 8, 2001 FINANCIAL INFORMATION (continued) Health and Welfare grants rose 6.9 %, or $6,616,752. Funding in both the Children, Youth and Families and the Mental Health/Mental Retardation special revenue funds increased by 10%, close to $6.1 million dollars. The balance of the increased funding was for other human services and public health programs. Departmental earnings increased only.1%. Within that area there were, however, a number of significant changes from Planning Commission fees from zoning and subdivision reviews and other services increased $197,840. The District Justice minor judiciary system collected $117,843 more in fines and costs. Domestic Relations collected $192,951 in additional fees. However, fees from the Recorder of Deeds Office were down $341,843 and the 911 fees were down $157,311. Other revenues reflect a significant increase due to slightly more than $1.1 million in program funding increases and Hibernia Dam Project reimbursements for the Water Authority component unit as well as increases in miscellaneous revenues for the other general governmental funds and Library component unit. Other revenues also include the reclassification of personnel reimbursements formerly treated as a reduction of expenditures. The chart below shows the composition of general governmental revenues by major category. GENERAL GOVERNMENTAL REVENUES Court Costs & Fines 1% Taxes 38% Grants 50% Interest, Rent & Other Revenues 4% Departmental Earnings, Licenses & Permits 7% xvii

21 Honorable Chairman and Members of the Chester County Board of Commissioners June 8, 2001 FINANCIAL INFORMATION (continued) GENERAL GOVERNMENTAL EXPENDITURES Increase (Decrease) from 1999 Percent Change from 1999 Expenditure Category Amount Percent Of Total General Government $ 18,192, % $2,421, % Judicial 20,841, % 264, % Public Safety 31,119, % 1,240, % Human Services 120,025, % 5,093, % Culture & Recreation 11,840, % 1,980, % Conservation & Development 78, % (44,699) 36.3 % Debt Service Principal 17,256, % 13,381, % Debt Service Interest 9,184, % 1,141, % Bridges 1,377, % 387, % Miscellaneous 2,993, % 189, % Capital Outlay 3,108, % 1,124, % Total Expenditures $ 236,019, % 27,178, % General Governmental Expenditures. The table above presents a summary of expenditures for the governmental fund types excluding capital project funds and including the Water Resources and Library component units for the year ended December 31, General Government expenditures are comprised of General Fund administrative and support departments. Costs increased 15.4% to $18,192,699, primarily due to presidential election year expenses, new programs in the Planning Department and continued cost increases for technology contract labor and software systems maintenance. Judicial costs increased only 1.3% to $20,841,124. Public Safety expenditures increased 4.2%. Expenditures for the Prison, Adult and Juvenile Probation and Emergency Services/Emergency Medical Services programs increased, while Public Safety Communications expenditures decreased slightly. Human Services programs represent 50.9% of general governmental expenditures and rose $5,093,044 to $120,025,065. Increased state funding and the growing demand for services to citizens, especially children, seniors and the disabled, drive these costs. Culture and Recreation expenditures for libraries and parks increased 20.1 % primarily due to personnel and operating costs. Conservation and Development costs for Soil Conservation programs decreased slightly, due to decreased personnel costs. Debt Service payments include $10,725,000 in principal prepaid on the 1997 Delaware Valley Regional Finance Authority General Obligation Note. Also, in 2000 the County issued a $10,000,000 tax anticipation note that resulted in $405,307 in interest costs. With the establishment of a working capital policy, the County anticipates that the need for borrowing in anticipation of tax receipts will be eliminated. xviii

22 Honorable Chairman and Members of the Chester County Board of Commissioners June 8, 2001 FINANCIAL INFORMATION (continued) Bridge capital expenditures increased 39.1% to $1,377,880. These tend to vary from year to year due to the multi-year nature of bridge rehabilitation projects. Miscellaneous expenditures include professional services, non-departmental insurance costs and appropriations or subsidies to other organizations. Capital outlay increased due to capital expenditures made by the Water Resources and Library component units. The chart below shows the composition of general governmental expenditures: GENERAL GOVERNMENTAL EXPENDITURES Miscellaneous & Bridges 2% Debt Service 11% Culture & Conservation 5% Capital Outlay 1% General Government 8% Judicial 9% Public Safety 13% Human Services 51% General Fund Balance. Total fund balance increased from $4,544,747 to $13,152,410. Of this $ 1,144,199 is reserved for restricted purposes and prepaid expenses. As discussed previously, the Commissioners adopted a working capital policy and subsequently $10,400,000 has been designated as working capital reserve. $1,608,211 of fund equity is undesignated. Capital Projects Funds. $13,597,660 was spent for the five-year Capital Investment Program (CIP) during Of that amount, slightly more than $7.8 million was spent for open space and parks projects. Almost $3.3 million was spent for technology such as system upgrades, the voter registration system, Local Area Network (LAN) and WEB infrastructure improvements and Land Records. The balance was spent for facilities improvements, the County s share of SEPTA transportation projects and other miscellaneous capital purposes. Internal Service Funds. The Workers Compensation Internal Service Fund provides for the direct recovery of program costs. An equivalent premium is established based on projected expenses and claims history and charged to each department. Annually an actuarial review is performed. As of December 31, the fund had approximately $2.3 million in cash and cash equivalents for estimated claims of approximately $2.7 million. xix

23 Honorable Chairman and Members of the Chester County Board of Commissioners June 8, 2001 FINANCIAL INFORMATION (continued) The Computer Equipment Replacement Internal Service Fund provides for the direct recovery of personal computing software and hardware costs. As of the end of 2000, retained earnings were $2,389,590. The self-insured Flexible Benefits Internal Service Fund had $2,443,502 in retained earnings as of December 31. Claims costs including reserves came to $11,057,952 in Enterprise Funds, including Component Units. The county s geriatric long-term care facility, Pocopson Home, had an operating loss of $234,669 due to lower occupancy. The Chester County Area Airport Authority, a component unit, operates the G.O. Carlson Airport. Operations are funded by a lease agreement with a fixed base operator. The Authority reported a net loss of $430,703 after $568,428 of non-cash depreciation expense. Pension Trust Fund Operations. The market value of pension assets at the end of 2000 was $166,388,065. The net pension obligation was $0. The approximate rate of return for the year was.79%. Debt Administration. Total County general obligation debt outstanding as of December 31, 2000 was $189,656,000. Of this $ 1,294,000 is payable by Pocopson Home and carried on the books of that enterprise fund. The Chester County Solid Waste Authority had a loan agreement with Allfirst Bank in the amount of $6.4 million. Also, the Authority borrowed $ 9,500,000 from the County in Principal repayments commence December 1, 2001 and the debt to the County will be retired on December 1, Cash Management. Investments of the County s governmental funds were in certificates of deposit, the Pennsylvania Local Government Investment Trust (PLGIT), the Commonwealth Treasurer s INVEST local government pool and various governmental money market funds in accordance with the County Code and internal investment policy. Interest earned in the governmental fund types including capital project funds was approximately $7.1 million. Total interest earnings of all funds including the pension fund but excluding component units approximated $10.9 million. Risk Management. The County self-insures for workers compensation, long term disability as well as the medical, dental and prescription plans. As of the end of the reporting period, the estimated liability for incurred and incurred but not reported (IBNR) workers compensation claims was $2,690,682. Liabilities for health benefits and long-term liability claims in the Flexible Benefits Internal Service Fund were $2,172,522 as of December 31. OTHER INFORMATION Independent Audit. The accounting firm of KPMG, LLP was selected to perform an audit of the County s general purpose financial statements and meet the requirements of the federal Single Audit Act Amendments of 1996 and related OMB Circular A-133. The auditor s report on the general-purpose financial statements and combining and individual fund statements and schedules is included in the financial section of this report. Awards. The Government Finance Officer Association of the United States and Canada (GFOA) awarded a Certificate of Achievement for Excellence in Financial Reporting to Chester County for the Comprehensive Annual Financial Report (CAFR) for the fiscal year ended December 31, The Certificate of Achievement is a prestigious national award recognizing conformance with the highest standards of state and local government financial reports. xx

24 Honorable Chairman and Members of the Chester County Board of Commissioners June 8, 2001 OTHER INFORMATION (continued) In order to be awarded a Certificate of Achievement, a government must publish an easily readable and efficiently organized CAFR, whose contents conform to program standards. Such CAFR must satisfy both generally accepted accounting principles and applicable legal requirements. A Certificate of Achievement is valid for a period of one year only. Chester County has received a Certificate of Achievement for the last 19 consecutive years. We believe that our current comprehensive annual financial report continues to meet the Certificate of Achievement Program s requirements and we are submitting it to the GFOA to determine its eligibility for another certificate. Chester County also received the GFOA Distinguished Budget Presentation award for its annual budget for the fiscal year beginning January 1, In order to receive this award, a governmental unit must publish a budget document that meets program criteria as a policy document, an operations guide, a financial plan and a communications device. The County has received this recognition since This award is valid for a period of one year. We believe our 2001 budget will conform to program requirements and have submitted it to GFOA to determine its eligibility for another award. Acknowledgments I would like to thank the finance and accounting professionals who work for the County who have prepared this report. In 2000, the County Commissioners received the Pennsylvania Chamber of Business and Industry Outstanding Pennsylvania Community Award. I would like to acknowledge all of the departments and agencies whose efforts throughout the year contributed to that achievement. As with that award, this report shows the County s commitment to achieving excellence in government administration and policy implementation. Sincerely, Mark J. Rupsis Director of Administrative Services xxi

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26 CITIZENS OF CHESTER COUNTY State Court Administrator COMMISSIONERS Director of Policy & Planning/Chief Clerk Director of Administrative Services Director of Government Services Elected President Judge Appointed Department Heads Authorities, Boards & Commissions Elected Officials (Row Offices) xxiii Elected Judges Appointed Court Related Adult Probation Bail Agency Court of Common Pleas Court Reporters District Justices Domestic Relations Juvenile Probation Law Library Aging Services Agricultural Development Archives & Records Services Assessment Children, Youth & Families Child Care Information Services Computing & Information Services Contracts & Purchasing Drug & Alcohol Services Emergency Services Employment & Training Engineering & Facilities Finance General Services Housing & Community Development Human Resources Human Services Juvenile Home Library Liquid Fuels Managed Behavioral Healthcare Mental Health/Mental Retardation Parks & Recreation Planning Pocopson Home Prison Public Defender Public Health Public Information Soil Conservation Solicitor Telecommunication Tourist Bureau Veterans' Affairs Voter Services Water Resources xxiii Aging Advisory Council Agricultural Development Council Agricultural Land Preservation Board Airport Authority Board of Assessment Citizens' Advisory Committee to Children & Youth Conservation District Drug & Alcohol Committee Board of Health Health & Education Facilities Authority Housing Authority Industrial Development Authority Library Board Mental Health/Mental Retardation Board Parks & Recreation Board Planning Commission Redevelopment Authority Solid Waste Authority Tourist Bureau Board Water Resources Authority Women's Commission Workforce Development Board COUNTY OF CHESTER, PENNSYLVANIA Clerk of Courts Controller Coroner District Attorney Jury Commissioners Prothonotary Recorder of Deeds Register of Wills Sheriff Treasurer

27 2000 County of Chester Elected Officials JUDICIARY The Honorable Howard F. Riley, Jr., President Judge The Honorable Alexander Endy, Senior Judge The Honorable M. Joseph Melody The Honorable Lawrence E. Wood The Honorable Robert J. Shenkin The Honorable Paula Francisco Ott The Honorable Thomas G. Gavin The Honorable James P. MacElree, II The Honorable Jacqueline C. Cody The Honorable Juan Sanchez The Honorable Katherine B. L. Platt The Honorable William J. Mahon BOARD OF COMMISSIONERS Karen L. Martynick, Chairman Colin A. Hanna, Vice Chairman DISTRICT ATTORNEY Anthony Sarcione, Esq. CONTROLLER Carol Aichele TREASURER Tracy Massey REGISTER OF WILLS Donald A. Mancini, Esq. SHERIFF Carolyn B. Welsh RECORDER OF DEEDS Terrence Farrell PROTHONOTARY Allison Bell Royer, Esq. CORONER R. F. Rothenberger, MD Andrew E. Dinniman CLERK OF COURTS DIVISION OF COMMON PLEAS Edward G. Schmid Sandra Moser JURY COMMISSIONERS Martha Smith xxiv

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30 Combined Statements - Overview

31 Independent Auditors Report County Commissioners County of Chester West Chester, Pennsylvania: We have audited the general-purpose financial statements of the County of Chester, Pennsylvania, as of and for the year ended December 31, 2000, as listed in the accompanying table of contents. These generalpurpose financial statements are the responsibility of the management of the County of Chester, Pennsylvania. Our responsibility is to express an opinion on these general-purpose financial statements based on our audit. We did not audit the following discretely presented component unit financial statements; Chester County Airport Authority, Chester County Water Resources Authority, and the Chester County Library, which represent 37% of total assets and 36% of total revenues of the discretely presented component units. The financial statements of the Chester County Airport Authority, Chester County Water Resources Authority, and the Chester County Library were audited by other auditors whose reports thereon have been furnished to us, and our opinion expressed herein, insofar as it relates to amounts included for the Chester County Airport Authority, Chester County Water Resources Authority, and the Chester County Library, is based solely on the reports of the other auditors. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the generalpurpose financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, based on our audit and the audits of the other auditors, the general-purpose financial statements referred to above present fairly, in all material respects, the financial position of the County of Chester, Pennsylvania, as of December 31, 2000, and the results of its operations and cash flows of its proprietary funds for the year then ended, in conformity with accounting principles generally accepted in the United States of America.

32 In accordance with Government Auditing Standards, we have also issued a report dated June 8, 2001, 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 grants. That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be read in conjunction with this report in considering the results of our audit. Our audit was made for the purpose of forming an opinion on the general-purpose financial statements taken as a whole. The combining, individual fund and account group financial statements and schedules listed in the accompanying table of contents are presented for purposes of additional analysis and are not a required part of the general-purpose financial statements of the County of Chester, Pennsylvania. Such information has been subjected to the auditing procedures applied in the audit of the general-purpose financial statements and, in our opinion, is fairly presented, in all material respects, in relation to the general-purpose financial statements taken as a whole. The schedule of required supplementary pension data on page 56 is not a required part of the basic financial statements but is supplementary information required by the Governmental Accounting Standards Board. We have applied limited procedures, which consisted principally of inquiries of management regarding the methods of measurement and presentation of the supplementary information. However, we did not audit the information and express no opinion on it. We did not audit the data included in the introductory and statistical sections of the report and, therefore, express no opinion thereon. June 8, 2001

33 Combined Statements - Overview (General Purpose Financial Statements) December 31, 2000 The following six combined financial statements, with the notes to the combined financial statements, comprise the general purpose financial statements and present an overview of the County of Chester, Pennsylvania's (the County) financial position as of December 31, 2000, and the results of its operations and cash flows for its proprietary fund types and nonexpendable trust fund for the year then ended. Individual funds utilized by the County are grouped on these statements into four principal categories: GOVERNMENTAL FUND TYPES AND EXPENDABLE TRUST FUNDS These funds (General, Special Revenue, Debt Service, Capital Projects, and Expendable Trust) are those through which most governmental functions are typically financed. The governmental fund measurement focus is on "current financial resources" - the accounting for sources and uses of available spendable resources, not on net income determination. PROPRIETARY FUND TYPES AND SIMILAR TRUST FUNDS These funds (Enterprise, Internal Service, Retirement Trust and Nonexpendable Trust) are used to account for the County's ongoing activities which are similar to those found in the private sector. The fund measurement focus is "economic resources" as in private industry, with an emphasis on net income determination. ACCOUNT GROUPS Account groups are used to establish accounting control for the County's general fixed assets and its general long-term obligations. Because these assets and liabilities are long-term, they are not spendable resources, nor do they require current appropriation. They are, therefore, accounted for separately from the above fund types. COMPONENT UNITS The component units' columns in the combined financial statements include the financial data of the County's four component units and are discretely presented. 3

34 Combined Balance Sheet All Fund Types, Account Groups and Discretely Presented Component Units December 31, 2000 Governmental Fund Types Proprietary Fund Types Special Debt Capital Internal General Revenue Service Projects Enterprise Service Assets and Other Debits: Cash and cash equivalents $ 11,962,980 $ 9,878,763 $ 1,968,709 $ 25,995,602 $ 77,888 $ 6,153,029 Investments ,284, Receivables (net where applicable, of allowances for uncollectible amounts): Taxes 5,227, , , Accounts ,995, ,584 Grants 1,227,080 7,953, Accrued interest and dividends 114,087 8,409-34, Other 553, , ,898 - Due from other funds 5,515, Advance to component unit ,500, Advances to subcontractors - 3,182, Prepaids 629, ,143 2,123,806 Other assets 7, , ,775 - Restricted assets: Cash and cash equivalents 302,800 4,092, ,935 - Investments Fixed assets (net of accumulated depreciation and depletion of $113,523,870) ,682,870 1,681,379 Intangible assets (net of accumulated amortization of $18,580,749) Agency tax/interest receivables Amount available in debt service fund Amount to be provided for retirement of long-term obligations Total Assets and Other Debits $ 25,540,077 $ 26,794,616 $ 2,605,833 $ 51,813,993 $ 6,980,512 $ 10,591,798 Liabilities, Fund Equity and Other Credits: Liabilities: Vouchers and accounts payable $ 4,255,958 $ 12,609,133 $ 84,043 $ 778,923 $ 433,600 $ 597,319 Accrued liabilities 1,640, ,633-5, , ,310 Funds held in escrow 617, Payable from restricted assets 302,800 4,092, ,935 - Due to other funds - 2,612,760-1,109, ,403 - Advance from primary government Due to other governments 88, Deferred revenues 5,298,506 3,204, , Other liabilities 183, Accrued vacation and sick pay ,365 - Estimated workers' compensation claims ,690,682 Estimated health and long-term disability claims ,172,522 General obligation debt ,292, ,434 Notes payable Estimated closure and postclosure care costs Due to taxing authorities Total Liabilities 12,387,667 23,409, ,962 1,893,688 3,760,282 6,189,267 Fund Equity and Other Credits: Investment in general fixed assets Contributed capital ,156,575 - Retained earning (deficit) ,655 4,402,531 Fund balance: Reserved: Fund principal Debt service - - 2,020, Employees' retirement system Agricultural easements 28, Landfill closure Property acquisition Encumbrances - 30, Advance to component unit ,500, Prepaids 629, Library Hazardous materials 50, Open space ,488, Probation supervision fees 154, Recorder records 11, County records 270, Unreserved: Designated: Various capital projects ,931, Working capital reserve 10,400, Undesignated 1,608,211 3,354, Total Equity and Other Credits 13,152,410 3,385,124 2,020,871 49,920,305 3,220,230 4,402,531 Total Liabilities, Fund Equity and Other Credits $ 25,540,077 $ 26,794,616 $ 2,605,833 $ 51,813,993 $ 6,980,512 $ 10,591,798 Comprehensive Annual Financial Report Prepared by the Office of the Controller 4