COUNTY OF CASS, MICHIGAN

Transcription

1 COUNTY OF CASS, MICHIGAN COMPREHENSIVE ANNUAL FINANCIAL REPORT Year Ended September 30, 2012

2 COUNTY OF CASS, MICHIGAN Comprehensive Annual Financial Report Year Ended September 30, 2012 Prepared by: Rebecca L. Moore, CPA Director of Accounting Services

3 Comprehensive Annual Financial Report Year Ended September 30, 2012 TABLE OF CONTENTS INTRODUCTORY SECTION Letter of Transmittal GFOA Certificate of Achievement List of County Officials Organizational Chart PAGE i-iii iv v vi FINANCIAL SECTION INDEPENDENT AUDITOR'S REPORT MANAGEMENT S DISCUSSION AND ANALYSIS vii-viii ix-xviii BASIC FINANCIAL STATEMENTS Government-wide Financial Statements Statement of Net Assets 1 Statement of Activities 2 Fund Financial Statements Balance Sheet - Governmental Funds 3 Reconciliation of the Governmental Funds Balance Sheet to the Statement of Net Assets 4 Statement of Revenues, Expenditures, and Changes in Fund Balances - Governmental Funds 5 Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances of Governmental Funds to the Statement of Activities 6 Statement of Net Assets - Proprietary Funds 7-8 Statement of Revenues, Expenses, and Changes in Fund Net Assets - Proprietary Funds 9-10 Statement of Cash Flows - Proprietary Funds Statement of Net Assets - Fiduciary Funds 15 Statement of Changes in Fiduciary Net Assets 16 Combining Statement of Net Assets - Component Units Combining Statement of Activities - Component Units 19 Notes to Financial Statements Note A: Summary of Significant Accounting Policies Note B: Detailed Notes on all Funds Note C: Other Information REQUIRED SUPPLEMENTARY INFORMATION GENERAL FUND Budgetary Comparison Schedule - Revenues and Other Financing Sources Budgetary Comparison Schedule - Expenditures and Other Financing Uses SCHEDULES OF FUNDING PROGRESS Retired Employees Healthcare Plans 55 Employee Retirement Systems and Plans 56 Notes to Required Supplementary Information 57

4 Comprehensive Annual Financial Report Year Ended September 30, 2012 TABLE OF CONTENTS - CONTINUED FINANCIAL SECTION - CONCLUDED PAGE OTHER SUPPLEMENTARY INFORMATION Combining Balance Sheet - Nonmajor Governmental Funds Combining Statement of Revenues, Expenditures, and Changes in Fund Balances - Nonmajor Governmental Funds Schedule of Revenues, Expenditures, and Changes in Fund Balances by Fund - Budget and Actual - Nonmajor Special Revenue Funds Combining Statement of Net Assets - Internal Service Funds Combining Statement of Revenues, Expenses, and Changes in Fund Net Assets - Internal Service Funds Combining Statement of Cash Flows - Internal Service Funds Combining Statement of Fiduciary Assets and Liabilities - Agency Funds Statement of Changes in Assets and Liabilities - Agency Funds COMPONENT UNIT FUNDS DRAIN COMMISSION Governmental Funds Balance Sheet and Statement of Net Assets Reconciliation of the Combining Balance Sheet to the Statement of Net Assets 98 Statement of Revenues, Expenditures, and Changes in Fund Balances and Statement of Activities Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances of Governmental Funds to the Statement of Activities 101 BOARD OF PUBLIC WORKS Combining Balance Sheet and Statement of Net Assets Reconciliation of the Combining Balance Sheet to the Statement of Net Assets 106 Combining Statement of Revenues, Expenditures, and Changes in Fund Balances and Statement of Activities Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances of Governmental Funds to the Statement of Activities 111 ECONOMIC DEVELOPMENT CORPORATION Balance Sheet 112 Statement of Revenues, Expenditures, and Changes in Fund Balance 113 LAND BANK AUTHORITY Statement of Fund Net Assets 114 Statement of Revenues, Expenses, and Changes in Fund Net Assets 115 Statement of Cash Flows 116

5 Comprehensive Annual Financial Report Year Ended September 30, 2012 TABLE OF CONTENTS - CONCLUDED STATISTICAL SECTION (UNAUDITED) PAGE MULTI-YEAR AND OTHER FINANCIAL AND DEMOGRAPHIC INFORMATION Statistical Section 117 Net Assets by Component 118 Changes in Net Assets Fund Balances - Governmental Funds 121 Changes in Fund Balances - Governmental Funds 122 Assessed Value and Estimated Actual Value of Taxable Property 123 Property Tax Rates - Direct and Overlapping Governments 124 Principal Taxpayers 125 Property Taxes Levied and Collected 126 Ratios of Outstanding Debt by Type 127 Ratios of General Bonded Debt Outstanding 128 Computation of Direct and Overlapping Bonded Debt 129 Computation of Legal Debt Margin 130 Demographic and Economic Statistics 131 Principal Employers 132 Full-time Equivalent County Government Employees by Function/Program 133 Operating Indicators by Function/Program 134 Capital Asset Statistics by Function/Program

6 INTRODUCTORY SECTION

7 March 11, 2013 To the Honorable Chairperson, Members of the Board of Commissioners, and Citizens of the County of Cass, Michigan: State law requires that every general-purpose local government publish within six months of the close of each fiscal year a complete set of audited financial statements. This report is published to fulfill that requirement for the fiscal year ended September 30, Management assumes full responsibility for the completeness and reliability of the information contained in this report, based upon a comprehensive framework of internal control that it has established for this purpose. 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. Abraham & Gaffney, P.C. has issued an unqualified ( clean ) opinion on the County of Cass s 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. Management discussion and analysis (MD&A) immediately follows the independent auditor s report and provides a narrative introduction, overview, and analysis of the basic financial statements. MD&A complements this letter of transmittal and should be read in conjunction with it. Profile of the Government The County of Cass, Michigan, incorporated in 1829, is located in the southwestern part of the State. It occupies 492 square miles and serves an estimated population of 52,000. The County of Cass is empowered to levy a property tax on both real and personal property located within its boundaries. An elected Board of Commissioners governs the County of Cass. Policy-making and legislative authority are vested in the Board consisting of 15 members, all elected on a partisan basis. The Board appoints the County Administrator/Controller. Board members serve two-year terms with all members elected every two years. The Chairperson serves for a one-year term. All Board members are elected by district. - i -

8 Transmittal Letter March 11, 2013 Page 2 The County provides a diverse range of services, including law enforcement, justice administration, human services, public and mental health services, document administration, maintenance of roads, parks and drains, residential nursing home and other services. The Board is required to adopt a budget no later than the beginning of the fiscal year. This annual budget serves as the foundation of Cass County s financial planning and control. The government maintains extensive budgetary controls. The objective of these controls is to ensure compliance with legal provisions embodied in the annual appropriated budget approved by the Board of Commissioners. The level of budgetary control (i.e., the level at which expenditures cannot legally exceed the appropriated amount) is the activity level within the general fund and functional level in the special revenue and debt service funds. Reporting Entity The County financial statements present the government and its component units, entities for which the county is financially accountable. Those entities include: The Cass County Building Authority, Cass County Water Resource Commissioner, Cass County Board of Public Works, Cass County Economic Development Corporation, Cass County Land Bank Authority, Cass County Road Commission, and Woodlands Behavioral Healthcare Network. Local Economy When considering Cass County from an economic point of view it must always be understood that we border major population and industrial centers where the majority of our population work; just outside the County borders. The County has a varied tax base consisting of primarily agriculture, residential, and lake residential second homes; that when mixed with a smaller commercial and industrial base offers a stable economic environment. As a result, the recent economic downturn did not impact the County to the extent as seen in other areas. Conversely, with the economy improving we will not see the large improvements that can be expected in those other areas. The County has had some notable successes in the area of economic development. The Pokagon Band of Potawatomi Indians has commenced work on a regional casino located near the City of Dowagiac. Also, a new 30,000 square foot community health center has been announced for the Village of Cassopolis. Southwestern Michigan College, located in Dowagiac, continues to expand and offer educational opportunities for our residents providing an educated and trained workforce. These, joined with the raising value and diversity of the County s agricultural products and land values, continue to brighten the economic landscape. - ii -

9 Transmittal Letter March 11, 2013 Page 3 Long-term financial planning Unreserved fund balance in the general fund is partially designated by policy, adopted by the Board of Commissioners, for cash flow purposes to offset the timing of cash receipts and cash expenditures throughout the year caused by the shift in tax collection. This reserve of cash, along with the management and policies of the County s delinquent tax revolving funds, has allowed the County to maintain a AA bond rating throughout this time of economic instability. This has precipitated the refunding of several bond issues, including direct and indirect debt, of the County providing for decreased future debt requirements. With the State of Michigan struggling with its finances, Cass County is presently taking a cautious approach and monitoring the situation closely. No significant large projects are planned at this time. Awards and Acknowledgements The Government Finance Officers Association (GFOA) awarded a Certificate of Achievement for Excellence in Financial Reporting to Cass County for its comprehensive annual financial report (CAFR) for the fiscal year ended September 30, This was the sixteenth consecutive year that the government has received this award. In order to be awarded a Certificate of Achievement, the government has to publish an easily readable and efficiently organized CAFR that satisfied both generally accepted accounting principles and applicable legal requirements. A Certificate of Achievement is valid for a period of one year. We believe that our current CAFR continues to meet the Certificate of Achievement Program s requirements and we are submitting it to the GFOA to determine its eligibility for another certificate. The preparation of this report would not have been possible without the dedicated service of the staff of the Administrator/Controller s office and the Treasurer s office. We wish to express our appreciation to those who assisted and contributed to the preparation of this report. Credit must also be given to the Board of Commissioners for their support for maintaining the highest standards of professionalism in the management of the County of Cass. Respectfully submitted, Louis R Csokasy County Administrator/Controller Rebecca L Moore CPA - iii -

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11 Comprehensive Annual Financial Report Year Ended September 30, 2012 LIST OF COUNTY OFFICIALS BOARD OF COMMISSIONERS Minnie Warren Chairperson Ed Goodman Vice-Chairperson Ronald Francis Board Member Gordon Bickel, Sr. Board Member Charlie Arnold Board Member Carl D. Higley, Sr. Board Member Annie File Board Member E. Clark Cobb Board Member Robert Wagel Board Member Johnie A. Rodebush Board Member Robert Ziliak Board Member Cathy Goodenough Board Member Skip Dyes Board Member Roseann Marchetti Board Member Dale Lowe Board Member TRIAL COURT JUDGES Michael E. Dodge Stacey A. Rentfrow Susan L. Dobrich OTHER ELECTED OFFICIALS Barbara K. Runyon Bruce Campbell Linda Irwin Victor Fitz Joseph M. Underwood County Clerk/ Register Water Resource Commissioner County Treasurer Prosecuting Attorney County Sheriff COUNTY ADMINISTRATOR Louis R. Csokasy DIRECTOR OF ACCOUNTING SERVICES Rebecca L. Moore, CPA - v -

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13 FINANCIAL SECTION

14 Principals Dale J. Abraham, CPA Michael T. Gaffney, CPA Steven R. Kirinovic, CPA Aaron M. Stevens, CPA Eric J. Glashouwer, CPA Alan D. Panter, CPA William I. Tucker IV, CPA ABRAHAM & GAFFNEY, P.C. Certified Public Accountants 3511 Coolidge Road Suite 100 East Lansing, MI (517) FAX: (517) INDEPENDENT AUDITOR S REPORT Board of Commissioners County of Cass, Michigan 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 the County of Cass, Michigan, as of and for the year ended September 30, 2012, which collectively comprise the County s basic financial statements as listed in the table of contents. These financial statements are the responsibility of the County of Cass, Michigan s management. Our responsibility is to express opinions on these financial statements based on our audit. We did not audit the financial statements of the Cass County Road Commission, which represents 50% and 35%, respectively of the total assets and revenues of the discretely presented component units, the Woodlands Behavioral Healthcare Network, which represents 3% and 53%, respectively of the total assets and revenues of the discretely presented component units and the Medical Care Facility which represents 36% and 85%, respectively of the total assets and revenues of the business-type activities. Those financial statements were audited by other auditors whose reports thereon have been furnished to us, and our opinions, insofar as they relate to the amounts included for the Road Commission, Woodlands Behavioral Healthcare Network and Medical Care Facility, are 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 the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinions. In our opinion, based on our audit and the reports of other auditors, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the businesstype activities, the aggregate discretely presented component units, each major fund, and the aggregate remaining fund information of the County of Cass, Michigan, as of September 30, 2012, and the respective changes in financial position and, where applicable, cash flows, thereof for the year then ended in conformity with accounting principles generally accepted in the United States of America. In accordance with Government Auditing Standards, we have also issued our report dated March 11, 2013, on our consideration of the County of Cass, Michigan 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 and should be considered in assessing the results of our audit. East Lansing Auburn Hills St. Johns - vii -

15 Accounting principles generally accepted in the United States of America require that the management s discussion and analysis, budgetary comparison information, and employee benefit disclosures, as identified in the table of contents, be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted principally 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. Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the County of Cass, Michigan s basic financial statements as a whole. The introductory section, combining and individual nonmajor fund financial statements and schedules, and statistical tables listed in the table of contents are presented for purposes of additional analysis and are not a required part of the basic financial statements of the County of Cass, Michigan. The combining and individual nonmajor fund financial statements and schedules are the responsibility of management and were derived from and relate directly to the underlying accounting and other records used to prepare the financial statements. The information has been subjected to the auditing procedures applied in the audit of the financial statements and certain 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 information is fairly stated in all material respects in relation to the 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 basic financial statements and, accordingly, we do not express an opinion or provide any assurance on them. ABRAHAM & GAFFNEY, P.C. Certified Public Accountants March 11, viii -

16 MANAGEMENT S DISCUSSION AND ANALYSIS As management of Cass County we offer readers of the County s financial statements this narrative overview and analysis of the financial activities of the County for the fiscal year ended September 30, We encourage readers to consider the information presented here in conjunction with additional information that we have furnished in our letter of transmittal, which can be found on pages i-iii of this report. FINANCIAL HIGHLIGHTS The assets of Cass County exceeded its liabilities at the close of the most recent fiscal year by $37,140,486 (net assets). Of this amount, $23,170,593 (unrestricted net assets) may be used to meet the County s ongoing obligations to citizens and creditors. Governmental activities contain $10,624,144 of the unrestricted net assets. The Medical Care Facility and the Delinquent Tax Revolving Fund contain most of the business-type unrestricted net assets. At September 30, 2012, Cass County s governmental funds reported combined ending fund balances of $12,020,890. Of this total $4,638,909 or 39% is unassigned and is available for spending at the County s discretion. $3,597,234 or 30% has been assigned by the governing body to be used for specific purposes; and the remaining $3,784,747 or 31% has been determined to be committed, restricted or non-spendable. At the end of the fiscal year, unassigned fund balance for the General Fund was $4,638,909 or 34% of total General Fund expenditures. An additional $3,370,000 of General Fund balance has been assigned, by Board policy, for cash flow purposes. OVERVIEW OF THE FINANCIAL STATEMENTS This discussion and analysis is intended to serve as an introduction to Cass County s basic financial statements. The basic financial statements contain three components: 1) government-wide financial statements, 2) fund financial statements and 3) notes to the financial statements. This report also contains other supplementary information in addition to the basic financial statements themselves. Government-Wide Financial Statements. The government-wide financial statements are designed to provide readers with a broad overview of the County s finances, in a manner similar to a private-sector business. The Statement of Net Assets presents information on all of the County s assets and liabilities. The difference between assets and liabilities is reported as net assets. Over time, increases or decreases in net assets may serve as a useful indicator of whether the financial position of the County is improving or deteriorating. The Statement of Activities presents information showing how the County s net assets changed during the most recent fiscal year. All changes in net assets 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). - ix -

17 Both of the government-wide financial statements distinguish functions of Cass 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, judicial, public works, health, welfare, education, economic development, and culture and recreation. The business-type activities of Cass County include a Medical Care Facility that provides long-term skilled nursing care and the Delinquent Tax Revolving Fund. The government-wide financial statements include, not only the County itself (known as the primary government), but also the following legally separate entities: Road Commission, Drain Commission, Community Mental Health Authority, Land Bank and an Economic Development Corporation for which Cass County is financially accountable. Financial information for these component units is reported separately from the financial information presented for the primary government itself. The Cass County Building Authority and Medical Care Facility, although also legally separate, function for all practical purposes as departments of Cass County, and therefore have been included as integral parts of the primary government. The government-wide financial statements can be found on pages 1-2 of this report. 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. Cass County, like other state and local governments, uses fund accounting to ensure and demonstrate compliance with financerelated legal requirements. All of the funds of Cass County can be divided into three categories: governmental funds, proprietary funds and fiduciary funds. Governmental Funds. Governmental funds are used to account for essentially the same functions reported as governmental activities in 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 governmental-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 funds Balance Sheet and the governmental funds Statement of Revenues, Expenditures, and Changes in Fund Balances provide a reconciliation to facilitate this comparison between governmental funds and governmental activities. Cass County maintains numerous individual governmental funds. Information is presented separately in the governmental funds Balance Sheet and in the governmental funds Statement of Revenues, Expenditures, and Changes in Fund Balances. 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 elsewhere in this report. - x -

18 Cass County adopts an annual appropriated budget for its General Fund and Special Revenue Funds. A budgetary comparison statement has been provided for the major governmental funds to demonstrate compliance with this budget. The basic governmental fund financial statements can be found on pages 3-6 of this report. Proprietary Funds. Cass 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. Cass County uses enterprise funds to account for its business-type activities. Internal service funds are an accounting device used to accumulate and allocate costs internally among Cass County s various functions. Cass County uses internal service funds to account for its equipment. 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 Medical Care Facility and the Delinquent Tax Revolving Fund, which are considered to be major funds of Cass County. Detailed financial information for each of the non-major enterprise funds is provided in the form of combining statements elsewhere in this report. Conversely, all internal service funds are combined into a single, aggregated presentation in the proprietary fund financial statements. Individual fund data for the internal service funds is provided in the form of combining statements elsewhere in this report. The basic proprietary fund financial statements can be found on pages 7-14 of this report. Fiduciary funds. Fiduciary funds are used to account for resources held for the benefit of parties outside the government. Fiduciary funds are not reflected in the government-wide financial statement because the resources of those funds are not available to support Cass County s own programs. The accounting used for fiduciary funds is much like that used for proprietary funds. The County is responsible for ensuring that the assets reported in these funds are used for their intended purposes. The basic fiduciary fund financial statement can be found on pages of this report. Notes to the Financial Statements. The notes provide additional information that is essential to a full understanding of the data provided in the government-wide and fund financial statements. The notes to the financial statements can be found on pages of this report. Other Information. In addition to the basic financial statements and accompanying notes, this report also presents certain required supplementary information concerning Cass County s progress in funding its obligation to provide pension benefits to its employees. The combining statements referred to earlier in connection with non-major governmental funds, nonmajor enterprise funds and internal service funds are presented immediately following the required supplementary information. Combining and individual fund statements and schedules can be found on pages of this report. - xi -

19 County-Wide Financial Analysis As noted earlier, net assets may serve over time as a useful indicator of a government s financial position. The following schedule is a summary presentation of Cass County s assets, liabilities, and net assets at September 30, The schedule shows the County s assets exceeded liabilities by $37,140,486. Cass County's Net Assets Governmental Activities Business-type Activities Total Assets Current and other assets $ 15,598,778 $ 15,786,866 $ 13,895,980 $ 13,194,846 $ 29,494,758 $ 28,981,712 Capital assets, net 12,396,023 12,572,320 1,220,458 1,303,639 13,616,481 13,875,959 Total assets 27,994,801 28,359,186 15,116,438 14,498,485 43,111,239 42,857,671 Liabilities Long-term liabilities 3,666,029 3,885, ,666,029 3,885,000 Other liabilities 1,659,973 1,231, , ,574 2,304,724 2,008,387 Total liabilities 5,326,002 5,116, , ,574 5,970,753 5,893,387 Net assets Invested in capital assets, net of related debt 8,499,880 8,482,320 1,220,458 1,303,639 9,720,338 9,785,959 Restricted 3,544,775 3,586, , ,462 4,249,555 4,158,165 Unrestricted 10,624,144 11,173,350 12,546,449 11,846,810 23,170,593 23,020,160 Total net assets $ 22,668,799 $ 23,242,373 $ 14,471,687 $ 13,721,911 $ 37,140,486 $ 36,964,284 Cass County has a net investment of $9,720,338 in capital assets. This represents 26% of total net assets. Our investment in capital assets (e.g. land, buildings, machinery, and equipment) is shown less any related debt used to acquire those assets that is still outstanding. Cass County uses these capital assets to provide services to citizens; consequently, these assets are not available for future spending. Although Cass 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. Significant increases to Cass County capital assets in 2012 included construction of an addition to the animal control building funded by a bequest, and the construction of a parks multi-use building and a major overhaul of the county building elevator funded through operations. An additional portion of Cass County s net assets, $4,249,555 or 11% represents resources that are subject to external restrictions on how they may be used. Cass County s unrestricted net assets, $23,170,593, may be used to meet the County s ongoing obligations to citizens and creditors. At the end of the 2012 fiscal year, Cass County is able to report positive balances in all three net asset categories (invested in capital assets-net of related debt, restricted and unrestricted). - xii -

20 Cass County's Changes in Net Assets Governmental Activities Business-type Activities Total Revenues Program revenues: Charges for services $ 3,130,065 $ 3,126,305 $ 8,841,971 $ 8,954,723 $ 11,972,036 $ 12,081,028 Operating grants and contributions 2,874,863 3,365,747 42,163 41,683 2,917,026 3,407,430 General revenues: Property taxes 11,283,435 11,292, ,283,435 11,292,308 Intergovernmental 778, , , ,118 Unrestricted investment earnings 20,967 28, , , , ,266 Other Total revenues 18,087,593 18,103,142 9,441,007 9,489,008 27,528,600 27,592,150 Expenses General government 7,858,507 7,387, ,858,507 7,387,214 Public safety 7,973,040 7,790, ,973,040 7,790,432 Public works 2,438 2, ,438 2,779 Health and welfare 3,347,502 3,149, ,347,502 3,149,796 Recreation and cultural 193, , , ,583 Interest on long-term debt 125, , , ,328 Medical Care Facility - - 7,432,846 7,493,642 7,432,846 7,493,642 Delinquent tax collections/forfeitures , , , ,841 Jail Commissary , , , ,994 Public works projects Total expenses 19,500,078 18,710,132 7,738,963 7,714,477 27,239,041 26,424,609 Change in net assets before transfers (1,412,485) (606,990) 1,702,044 1,774, ,559 1,167,541 Transfers 838, ,163 (838,911) (620,163) - - Change in net assets (573,574) 13, ,133 1,154, ,559 1,167,541 Restated net assets, beginning of year 23,242,373 23,229,200 13,608,554 12,567,543 36,850,927 35,796,743 Net assets, end of year $ 22,668,799 $ 23,242,373 $ 14,471,687 $ 13,721,911 $ 37,140,486 $ 36,964,284 Governmental Activities. Governmental activities decreased net assets by $573,574. Revenues declined in specific grant funding such as drug courts and homeland security. Revenues increased for corrections and the Counties Community Development Block Grant. Additionally, animal control had received a bequest exceeding $200,000 contributing to revenue in the prior year. Combined these changes resulted in a 15% decline in operating grants and contributions for the current year. State revenue sharing contributed $778,263 compared to $290,118 in the prior year. Expenditures increased overall by 4%. The most significant increases were in general government and health and welfare. The increases can primarily be attributed to increases in wages and benefits of employees. Additionally, the investments in capital assets discussed on page xii contributed to the overall reduction in net assets. Business-Type Activities. Business-type activities increased Cass County s net assets by $863,133. Before transfers, business-type activities increased net assets by $1,702,044. Including its unrestricted investment earnings, the Delinquent Tax Revolving Fund contributed $1,034,810 to net assets before transfers. Annual transfers out of the Delinquent Tax Revolving Fund are made to subsidize the debt retirement and operating costs of the Law and Courts Building. The Medical Care Facility contributed $607,300 to net assets. - xiii -

21 Program Revenues and Expenses - Governmental Activities 9,000,000 8,000,000 7,000,000 6,000,000 Program Revenues Expenses 5,000,000 4,000,000 3,000,000 2,000,000 1,000,000 - General government Public safety Public works Health and welfare Recreation and cultural Interest on long-term debt Revenues by Source - Government Activities Unrestricted investment earnings 0% Other 0% Charges for services 18% Property taxes 65% Operating grants and contributions 17% - xiv -

22 Financial Analysis of the Government s Funds As noted earlier, Cass County uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. Governmental Funds. The focus of Cass County s governmental funds is to provide information on near-term inflows, and balances of spendable resources. Such information is useful in assessing Cass County s financing requirements. In particular, unassigned fund balance may serve as a useful measure of a government s net resources available for spending at the end of the fiscal year. As of the end of the fiscal year, Cass County s governmental funds reported combined ending fund balances of $12,020,890, an increase of $70,618 in comparison with the prior year. $4,638,909 of this is unassigned fund balance, which is available for spending at the government s discretion. An additional $3,597,234 is assigned by the governing body to be used for specific purposes. The remainder of fund balance is invested in capital assets, capital projects, and special revenue grants, and is not available for new spending. The General Fund is the chief operating fund of Cass County. At the end of the fiscal year, the unassigned fund balance of the General Fund was $4,638,909, while total fund balance amounted to $8,974,197. 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 and other financing uses. Unassigned fund balance represents 34% of total General Fund expenditures, while total fund balance represents 65% of that same amount. The fund balance of Cass County s General Fund increased 3% during the fiscal year. While general County operations remained stable, a few key factors contributed to this increase: State revenue sharing increased $488,145 over the prior year, as the County is now completely transitioned back into the State revenue sharing pool. The County received a transfer in from the Delinquent Tax Revolving Fund of $237,058 for tax sale monies in fiscal In 2011 there had been no excess transfer. Transfers of $179,250 were made from the General Fund to the Public Improvement Fund in fiscal Primarily these were to fund County bridge improvements and a contribution toward the animal control building addition. Proprietary Funds. Cass County s proprietary funds provide the same type of information found in the government-wide financial statements, but in more detail. At the end of the fiscal year, the Delinquent Tax Revolving Fund had unrestricted net assets of $8,886,975. $7,500,000 of that balance has been designated by Board policy; $4,500,000 set aside to fund the annual purchase of delinquent property taxes, and $3,000,000 set aside for maintenance of the County s credit rating. The Medical Care Facility s unrestricted net assets were $3, General Fund Budgetary Highlights: Differences between the original budget and the final amended budget were as follows: Reimbursement property/liability insurance - $158,900 positive adjustment for equity returns from state liability insurance pool. - xv -

23 Jail rental income - $82,000 positive adjustment as more prisoners qualified for increased State funding. Transfers in - reduction in original budget of $332,740. The two primary factors were that a transfer in from the Budget Stabilization Fund was not necessary and a transfer had been budgeted from the Revenue Sharing Reserve Fund, however monies were depleted at the conclusion of the previous year. Clerk/Register income - $53,900 positive adjustment as the County has continued to experience increases in Register of Deeds services. District Court expenses - $140,567 increase in budgeted expenditures due to the receipt of a grant and also to correct an error in the original budget for omitted employee health costs. County Infrastructure - $100,000 decrease from original budget. This line item was to transfer funds from the County to the County Road Commission for bridge repairs and the money was not used in fiscal 12. Other Expenditures - $51,841 increase to original budget. During the year the County, jointly with the CAUA and the City of Dowagiac, reached an agreement by which $51,441 of money that was being collected and held by the County would be transferred to the City of Dowagiac for future maintenance of the Vandalia Water System. Purchasing - $71,000 positive adjustment as departments kept their spending on supplies below projected amounts. Differences between the final amended budget and actual results are briefly summarized as follows: Revenues: Real and personal property taxes - $79,420 adjustment due to the fact that the budget was adjusted before the final deferral of property tax for collections received greater than 60 days after the close of the fiscal year. Expenditures: Jail Operation, Sheriff s Department, Maintenance and Circuit Court experienced the greatest difference between actual results and amended budgets. These differences are realized once the accumulation of final spending is compiled between days after year end. There were no significant variations that contributed to these or other department final results. - xvi -

24 Capital Assets and Debt Administration Capital Assets. Cass County s investment in capital assets for its governmental and business-type activities as of September 30, 2012 amounts to $13,875,959 (net of accumulated depreciation). This investment in capital assets includes land, construction in progress, buildings and equipment. Cass County s Capital Assets (Net of depreciation) Governmental Activities Business-type Activities Total Land Construction in progress Buildings Equipment $ 560,733-10,514,085 1,321,205 $ 59,866 57, , ,993 $ 620,599 57,520 11,462,164 1,476,198 $ 12,396,023 $ 1,220,458 $ 13,616,481 Additional information on Cass County s capital assets can be found in Note B on pages of this report. Long-Term Debt. At the end of the 2012 fiscal year, Cass County had net outstanding debt of $4,329,477. Cass County s Outstanding Debt Gross Debt Outstanding Paid by Benefited Entity Net Amount Outstanding Building Authority Bonds Public Works - Water & Sewer Debt Compensated Absences $ 3,945,000 36,569, ,477 $ - 36,569,500 - $ 3,945, ,477 $ 40,898,977 $ 36,569,500 $ 4,329,477 State statutes limit the amount of general obligation debt a governmental entity may issue to 10 percent of its total assessed valuation (i.e., State Equalized Value). The current legal debt limit for Cass County is $247,018,368, which is significantly in excess of the County s outstanding debt applicable to limitation, $40,898,977. Additional information on Cass County s long-term debt can be found in Note B on pages of this report. - xvii -

25 Economic Factors and Next Year s Budgets The following factors were considered in preparing the County s 2013 budget: The County will rely on state revenue sharing to support its General Fund expenditures for the first time in many years. State revenue sharing amounts in subsequent budget years will be determined by the state s funding ability. Inflation will continue to be low. Departments and Courts will continue to manage their spending within budget and will diligently need to collect revenue due them through fines, fees, services and grants. The State of Michigan will continue to have structural budgetary problems that will affect how County government is funded. It is anticipated that their financial direction will become clearer as we progress throughout the year. Property tax revenue is expected to remain steady with a very slight increase. Personal property tax revenue is expected to show a slight decrease. Funding of major capital improvement projects will continue to escalate. Requests for Information This financial report is designed to provide a general overview of Cass County s finances for all those with an interest in the government s finances. Questions concerning any information provided in this report or requests for additional financial information should be addressed to: Office of the County Administrator / Controller Cass County Building 120 N. Broadway, Suite 116 Cassopolis, Michigan xviii -

26 BASIC FINANCIAL STATEMENTS

27 STATEMENT OF NET ASSETS September 30, 2012 Primary Government Governmental Business-type Component Activities Activities Total Units ASSETS Current assets Cash and cash equivalents $ 11,038,791 $ 6,933,994 $ 17,972,785 $ 3,201,313 Investments 905,943 3,160,967 4,066, ,107 Receivables, net 2,284,976 3,476,365 5,761,341 1,494,228 Due from other governmental units 686, , ,114 55,562 Inventories 6,989-6, ,519 Prepaids 194,650 51, , ,920 Current portion of leases receivable ,018,511 Other - 63,499 63,499 - Total current assets 15,117,973 13,895,980 29,013,953 8,111,160 Noncurrent assets Restricted cash and cash equivalents 402, ,767 - Leases receivable, net of current portion ,366,378 Unamortized bond issuance costs 78,038-78, ,198 Capital assets not being depreciated 560,733 57, ,253 10,828,895 Capital assets being depreciated, net 11,835,290 1,162,938 12,998,228 27,923,547 Total noncurrent assets 12,876,828 1,220,458 14,097,286 73,238,018 TOTAL ASSETS 27,994,801 15,116,438 43,111,239 81,349,178 LIABILITIES Current liabilities Accounts payable and accrued expenses 930, ,296 1,499,130 2,215,755 Due to other governmental units 15,728 76,455 92, ,559 Unearned revenue ,093 Accrued interest payable 98,820-98,820 - Compensated absences 384, ,477 - Current portion of long-term debt 230, ,114 2,368,349 Total current liabilities 1,659, ,751 2,304,724 5,141,756 Noncurrent liabilities Other post-employment benefits, net ,515 Noncurrent portion of long-term debt 3,666,029-3,666,029 40,434,866 Total noncurrent liabilities 3,666,029-3,666,029 40,802,381 TOTAL LIABILITIES 5,326, ,751 5,970,753 45,944,137 NET ASSETS Invested in capital assets, net of related debt 8,499,880 1,220,458 9,720,338 32,473,698 Restricted for: Legal restrictions 309, ,599 - Drug enforcement team 961, ,210 - Central dispatch 1,094,050-1,094,050 - Self-insurance reserves 402, ,767 - Foreclosed properties - 704, ,780 - Other purposes 777, , ,879 Unrestricted 10,624,144 12,546,449 23,170,593 2,582,464 TOTAL NET ASSETS $ 22,668,799 $ 14,471,687 $ 37,140,486 $ 35,405,041 See accompanying notes to financial statements

28 STATEMENT OF ACTIVITIES Year Ended September 30, 2012 Net (Expense) Revenue and Changes in Net Assets Program Revenues Primary Government Charges for Operating Grants Capital Grants Governmental Business-type Component Functions/Programs Expenses Services and Contributions and Contributions Activities Activities Total Units Primary government Governmental activities General government $ 7,858,507 $ 1,897,331 $ 1,604,160 $ - $ (4,357,016) $ - $ (4,357,016) $ - Public safety 7,973,040 1,014, ,512 - (6,076,686) - (6,076,686) - Public works 2,438 9, ,986-6,986 - Health and welfare 3,347, , ,191 - (2,753,136) - (2,753,136) - Recreation and cultural 193,555 3, (190,262) - (190,262) - Interest on long-term debt 125, (125,036) - (125,036) - Total governmental activities 19,500,078 3,130,065 2,874,863 - (13,495,150) - (13,495,150) - Business-type activities Medical Care Facility 7,432,846 7,997,983 42, , ,300 - Delinquent tax collections/forfeitures 181, , , ,946 - Jail Commissary 124, , ,925 59,925 - Total business-type activities 7,738,963 8,841,971 42, ,145,171 1,145,171 - Total primary government $ 27,239,041 $ 11,972,036 $ 2,917,026 $ - (13,495,150) 1,145,171 (12,349,979) - Component units Drain Commission $ 104,064 $ - $ 130,000 $ 179, ,185 Board of Public Works 2,154, ,290, ,018 Economic Development 25, (25,176) Road Commission 6,829,880 2,298,401 5,563, ,031,840 Woodlands 11,729, ,725 11,279, (153,411) Total component units $ 20,842,769 $ 2,595,126 $ 16,972,519 $ 2,469, ,194,456 General revenues Property taxes 11,283,435-11,283,435 - State revenue sharing 778, ,263 - Unrestricted investment earnings 20, , ,840 54,982 County appropriations ,000 Other ,666 Transfers - internal activities 838,911 (838,911) - - Total general revenues and transfers 12,921,576 (282,038) 12,639, ,648 Change in net assets (573,574) 863, ,559 1,449,104 Restated net assets, beginning of the year 23,242,373 13,608,554 36,850,927 33,955,937 Net assets, end of the year $ 22,668,799 $ 14,471,687 $ 37,140,486 $ 35,405,041 See accompanying notes to financial statements

29 Governmental Funds BALANCE SHEET September 30, 2012 Nonmajor Governmental General Funds Total ASSETS Cash and cash equivalents $ 6,794,461 $ 2,921,669 $ 9,716,130 Investments 832,829 73, ,943 Taxes receivable - current 2,168,506-2,168,506 Accounts receivable 87,801 2,019 89,820 Due from other governmental units 336, , ,271 Due from other funds 65,180-65,180 Inventories 6,989-6,989 Prepaids 81,646 4,750 86,396 TOTAL ASSETS $ 10,374,304 $ 3,350,931 $ 13,725,235 LIABILITIES AND FUND BALANCES LIABILITIES Accounts payable $ 184,135 $ 239,058 $ 423,193 Accrued wages 230, ,596 Due to other funds - 65,180 65,180 Deferred revenue 985, ,376 TOTAL LIABILITIES 1,400, ,238 1,704,345 FUND BALANCES Nonspendable 88,635 4,750 93,385 Restricted 309,599 2,847,549 3,157,148 Committed 534, ,214 Assigned 3,402, ,394 3,597,234 Unassigned 4,638,909-4,638,909 TOTAL FUND BALANCES 8,974,197 3,046,693 12,020,890 TOTAL LIABILITIES AND FUND BALANCES $ 10,374,304 $ 3,350,931 $ 13,725,235 See accompanying notes to financial statements