Audited Financial Statements June 30, 2017 Elko County, Nevada

Audited Financial Statements June 30, 2017 Elko County, Nevada

Table of Contents June 30, 2017 Financial Section Independent Auditor s Report...1 Management s Discussion and Analysis...5 Basic Financial Statements Government-Wide Financial Statements Statement of Net Position...15 Statement of Activities...16 Fund Financial Statements Balance Sheet Governmental Funds...17 Reconciliation of the Balance Sheet of Governmental Funds to the Statement of Net Position...18 Statement of Revenues, Expenditures, and Changes in Fund Balances Governmental Funds...19 Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances Governmental Funds to the Statement of Activities...20 Statement of Net Position Proprietary Funds...21 Statement of Revenues, Expenses, and Changes in Fund Net Position Proprietary Funds...23 Statement of Cash Flows Proprietary Funds...24 Statement of Fiduciary Net Position Fiduciary Funds...26 Statement of Changes in Fiduciary Net Position Fiduciary Funds...27 Notes to Financial Statements...28 Required Supplementary Information Schedule of Funding Progress Other Post-Employment Benefits...61 Schedule of County s Share of Net Pension Liability...62 Schedule of County s Contributions...63 Schedule of Revenues, Expenditures and Changes in Fund Balances Budget (Budgetary Basis) and Actual General Fund...64 Reconciliation of the General Fund (Budgetary Basis) to the Statement of Revenues, Expenditures and Changes in Fund Balances General Fund (GAAP Basis)...71 Schedule of Revenues, Expenditures and Changes in Fund Balances Budget and Actual Major Special Revenue Funds Regional Street and Highway Fund...72 Road Construction Fund...73 Schedule of Revenues, Expenditures and Changes in Fund Balances Budget (Budgetary Basis) and Actual Town of Jackpot General Fund...74 Reconciliation of the Town of Jackpot General Fund (Budgetary Basis) to the Statement of Revenues, Expenditures, and Changes in Fund Balances Town of Jackpot General Fund (GAAP Basis)...77 Notes to Required Supplementary Information...78 Supplementary Information Combining Individual Non-Major Fund Statements and Schedules Combining Balance Sheet Reconciliation of the General Fund (Budgetary Basis) to the General Fund (GAAP Basis)...79

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Combining Balance Sheet Reconciliation of the Town of Jackpot General Fund (Budgetary Basis) to the Town of Jackpot General Fund (GAAP Basis)...80 Governmental Funds Major Governmental Funds Schedule of Revenues, Expenditures, and Changes in Fund Balances Budget and Actual General County Capital Projects Fund...81 Schedule of Revenues, Expenditures, and Changes in Fund Balances Budget and Actual General County Infrastructure Tax Fund...82 Nonmajor Governmental Funds Combining Balance Sheet...83 Combining Statement of Revenues, Expenditures, and Changes in Fund Balances...84 Nonmajor Special Revenue Funds Combining Balance Sheet...85 Combining Statement of Revenues, Expenditures, and Changes in Fund Balances...88 Schedule of Revenues, Expenditures, and Changes in Fund Balances Budget and Actual General County Road Fund...91 Indigent Fund...92 Agriculture Extension Fund...93 Library Fund...94 Juvenile Probation Fund...95 Recreation Fund...97 Library Special Federal Fund...98 Senior Citizens Services Fund...99 County Jail Special Revenue Fund...100 Library Service Fund...101 Medical Assistance to Indigent Persons Fund...102 Forensic Services Fund...103 Seizure Forfeiture Fund...104 Abused Children Fund...105 Local Emergency Planning Commission Fund...106 Administrative Assessment Building Fund...107 Inmate Commissary Fund...108 Child Support Incentive Grant Fund...109 Recorder s Technology Fund...110 District Court II Rural Drug Court Grant Fund...111 Assessor s Technology Fund...112 Secure Rural Schools Title III...113 Enhanced 911...114 Town of Jackpot Recreation Fund...115 Town of Montello General Fund...117 Town of Mountain City General Fund...118 Nonmajor Debt Service Fund Schedule of Revenues, Expenditures, and Changes in Fund Balances Budget and Actual Debt Service Fund...119

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Nonmajor Capital Projects Funds Combining Balance Sheet...120 Combining Statement of Revenues, Expenditures, and Changes in Fund Balances...121 Schedule of Revenues, Expenditures, and Changes in Fund Balances Budget and Actual General County County Ad Valorem Capital Projects Fund...122 Town of Jackpot Capital Projects Fund...123 Public Safety Capital Projects Fund...124 Ad Valorem Capital Projects Fund...125 Town of Montello Ad Valorem Capital Projects Fund...126 Town of Mountain City Ad Valorem Capital Projects Fund...127 Internally Reported (Budgetary Basis) Funds Reported as part of the General County General Fund and Town of Jackpot General Fund for External Reporting Purposes Schedule of Revenues, Expenditures, and Changes in Fund Balances Budget and Actual General County In Lieu of Taxes Fund...128 Northeastern Nevada Regional Railport Fund...129 Interpretive Center Fund...130 Unemployment Insurance Liability Reserve Fund...131 Post-Employment Benefit Fund...132 Vacation Benefits Fund...133 Bond Income Fund...134 Town of Jackpot Unemployment Insurance Liability Reserve Fund...135 Enterprise Funds Major Enterprise Funds Schedule of Revenues, Expenses, and Changes in Net Position Budget and Actual Town of Jackpot Sewer Fund...136 Water Fund...137 General County Elko Area Transportation System...138 Elko Ambulance Fund...139 Nonmajor Enterprise Funds Combining Statement of Net Position...140 Combining Statement of Revenues, Expenses, and Changes in Net Position...141 Combining Statement of Cash Flows...142 Schedule of Revenues, Expenses, and Changes in Net Position Budget and Actual General County Tuscarora Water Enterprise Fund...144 Jarbidge Water Enterprise Fund...145 Solid Waste Fund...146 Town of Jackpot Waste Disposal Fund...147 Town of Montello Water Fund...148 Sewer Fund...149

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Internal Service Fund Schedule of Net Position Group Health Insurance Fund...150 Schedule of Revenues, Expenses, and Changes in Net Position Budget and Actual Group Health Insurance Fund...151 Fiduciary Funds Combining Statement of Changes in Assets and Liabilities Agency Funds...152 Schedule of Fees Imposed Subject to the Provisions of NRS 354.5989...154 Supplementary Data Schedule No. 1 Summary Schedule of Ending Cash and Investments...155 Compliance Section Independent Auditor's Report on Internal Control over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards...158 Independent Auditor's Report on Compliance for Each Major Program and Report on Internal Control over Compliance Required by Uniform Guidance...160 Schedule of Expenditures of Federal Awards...162 Schedule of Findings and Questioned Costs...165 Auditor s Comments...172 Secondary Disclosures for Municipal Bond Issues Total and Unfunded Accrued Liabilities...173 Summary Schedule of Revenues, Expenditures, and Changes in Fund Balances General Fund (Budgetary Basis)...174 Group Health Insurance Internal Service Fund...175 Secured Property Assessed Valuation...176 Secured Property Tax Levies, Collections, and Delinquencies...177 Ten Largest Property Owners...178 Statewide Average and Overlapping Tax Rates...179 Statutory Debt Limitation...180 Outstanding Bonded Indebtedness...181 Annual General Obligation and Revenue Bonds Debt Service Requirements...182

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Independent Auditor s Report To the Honorable Board of Commissioners Elko County, State of Nevada Report on the Financial Statements We have audited the accompanying financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of Elko County, State of Nevada, as of and for the year ended June 30, 2017, and the related notes to the financial statements. We were not engaged to audit the financial statements of the aggregate discretely presented component unit. These financial statements collectively comprise the County s basic financial statements as listed in the table of contents. Management s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Auditor s Responsibility Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. Because of the matter described in the Basis for Disclaimer of Opinion on the Aggregate Discretely Presented Component Unit paragraph, however, we were not able to obtain sufficient appropriate audit evidence to provide a basis for an audit opinion on the aggregate discretely presented component unit. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. 1

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We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. Basis for Disclaimer of Opinion on the Aggregate Discretely Presented Component Unit The financial statements of the Agricultural Association District No. 4 have not been audited, and we were not engaged to audit the Agricultural Association District No. 4 s financial statements as part of our audit of Elko County s basic financial statements. The Agricultural Association District No. 4 s financial activities are included in Elko County s basic financial statements as a discretely presented component unit and represent 100 percent of the assets, net position, and revenue, of the County s discretely presented component unit. Basis for Qualified Opinion on Governmental Activities and Business-type Activities Management did not obtain an updated actuarial valuation for the other post-employment benefit (OPEB) liability which is accounted for in the Statement of Net Position. Accordingly, the OPEB liability recorded on the Statement of Net Position has not been updated for current year assumptions or changes. Accounting principles generally accepted in the United States of America require a liability to be recorded based on an updated actuarial valuation. It also requires certain updated disclosures regarding the contribution rates, annual required contribution, the net OPEB obligation and expenses, and the unfunded actuarial accrued liability. The amount by which the departure would affect net position, liabilities, expenses and disclosures is not reasonably determinable. Disclaimer of Opinion Because of the significance of the matter described in the Basis for Disclaimer of Opinion on the Aggregate Discretely Presented Component Unit paragraph, we have not been able to obtain sufficient appropriate audit evidence to provide a basis for an audit opinion on the financial statements of the aggregate discretely presented component unit of Elko County, State of Nevada. Accordingly, we do not express an opinion on these financial statements. Qualified opinion In our opinion, except for the effects of the matter described in the Basis for Qualified Opinion on Governmental Activities and Business-type Activities paragraph, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities and the business-type activities of the County, as of June 30, 2017, and the respective changes in financial position thereof for the year then ended in accordance with accounting principles generally accepted in the Unites States of America. Unmodified Opinions In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the General Fund, the Regional Street and Highway Fund, the Road Construction Fund, the Town of Jackpot General Fund, the General County Capital Projects Fund, the Infrastructure Tax Fund, the Town of Jackpot Sewer Fund, the Town of Jackpot Water Fund, the Elko Area Transportation System Fund, and the aggregate remaining fund information of Elko County, State of Nevada, as of June 30, 2017, and the respective changes in financial position, and, where applicable, cash flows thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America. Adoption of New Accounting Standard As discussed in Notes 1 and 19 to the financial statements, the County has adopted the provisions of GASB Statement No. 82, Pension Issues An Amendment of GASB No. 67, No 68, and No.73, which has resulted in a restatement of the net position as of July 1, 2016. Our opinions are not modified with respect to this matter. 2

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Emphasis of Matters As described in Note 19 of the financial statements, prior period adjustments were made to correct misstatements in prior year financial statements. Our opinion is not modified with respect to these matters. Other Matters Required Supplementary Information Accounting principles generally accepted in the United States of America require that the Management s Discussion and Analysis on pages 5 through 14, the Schedule of Funding Progress Other Postemployment Benefits on page 61, the Schedule of County s Share of Net Pension Liability Public Employee s Retirement System of Nevada on page 62, the Schedule of County s Contributions Public Employee s Retirement System of Nevada on page 63, and the schedules of budgetary comparison and reconciliation information and related notes on pages 64 through 78 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 Management s Discussion and Analysis, the Schedule of Funding Progress Other Postemployment Benefits, the Schedule of County s Share of Net Pension Liability Public Employee s Retirement System of Nevada, the Schedule of County s Contributions Public Employee s Retirement System of Nevada, and the schedules of budgetary comparison and reconciliation information and the related notes in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Other Information Our audit was conducted for the purpose of forming an opinion on the basic financial statements as a whole. The combining and individual nonmajor fund financial statements and schedules, Supplementary Data (Schedule No. 1), Schedule of Fees Imposed Subject to the Provisions of NRS 354.5989, and Secondary Disclosures for Municipal Bond Issues are presented for purposes of additional analysis and are not a required part of the basic financial statements. The Schedule of Expenditures of Federal Awards is presented for purposes of additional analysis as required by Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, and is also not a required part of the basic financial statements. Because of the significance of the matter described above relating to the basis of a disclaimer of opinion on the Aggregate Discretely Presented Component Unit (Agricultural Association District No. 4) it is inappropriate to and we do not express an opinion on the supplementary information referred to above. Prior-Year Comparative Information The financial statements of Elko County, Nevada as of and for the year ended June 30, 2016, were audited by Eide Bailly LLP, whose report dated January 13, 2017, expressed unmodified audit opinions on the respective financial statements of the governmental activities, the business-type activities, each major fund, the aggregate remaining fund information, and a disclaimer of opinion on the Agricultural Association District No. 4. 3

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Certain supplementary information and required supplementary information related to the 2016 financial statements are presented for purposes of additional analysis and were derived from and relate directly to the underlying accounting and other records used to prepare the 2016 financial statements. The information has been subjected to the auditing procedures applied in the audit of the 2016 basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare those financial statements or to those financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. The individual fund schedules are consistent in relation to the basic financial statements from which they have been derived. Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated March 5, 2018, on our consideration of Elko County s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering Elko County s internal control over financial reporting and compliance. Elko, Nevada March 5, 2018 4

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Management s Discussion and Analysis June 30, 2017 The County of Elko s (the County ) discussion and analysis is designed to (a) assist the reader in focusing on significant financial issues, (b) provide an overview of the County s financial activity, (c) identify changes in the County s financial position (its ability to address the next and subsequent year challenges), (d) identify any material deviations from the financial plan (the approved budget), and (e) identify individual fund issues or concerns. The Management s Discussion and Analysis ( MD&A ) is required as an element of the annual financial report by the Governmental Accounting Standards Board (GASB) and is designed to focus on the current year s activities, resulting changes and currently known facts. Please read it and the County s financial statements (beginning on page 15). FINANCIAL HIGHLIGHTS The assets and deferred outflows of resources of Elko County exceeded its liabilities and deferred inflows of resources at the close of the most recent fiscal year by $64.1 million (net position). The auditor s report offers a modified opinion on the financial statements due to the effects of the discretely presented component unit the Agricultural Association District No. 4, and the qualification for the other post-employment benefits. The County s net position decreased by $808 thousand. The governmental net position decreased by $738 thousand primarily related to the recording of the net pension liability, deferred inflows and outflows related to pensions, and the business-type net position decreased by $69,000. This is the third year of the adoption of GASB Statement No 68, Accounting and Financial Reporting for Pensions and GASB No. 71, Pension Transition for Contributions Made Subsequent to the Measurement Date. As of the close of the current fiscal year, Elko County s governmental funds reported the combined ending fund balances of $26.9 million, a increase of $2.5 million in comparison with the prior year. Approximately 28% of the total amount is available for spending at the government s discretion. At the end of the current fiscal year unassigned fund balance for the general fund was $7,907,667, or 25% of total general fund expenditures. OVERVIEW OF THE FINANCIAL STATEMENTS The discussion and analysis are intended to serve as an introduction to Elko County s basic financial statements. Elko County s basic financial statements are comprised of 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 be corporate-like in that all governmental and business-type activities are consolidated into columns which add to a total for the Primary Government. The focus of the Statement of Net Position (the Unrestricted Net position ) is designed to be similar to bottom line results for the County and its governmental and business-type activities. This statement, combines and consolidates governmental fund s current financial resources (short-term spendable resources) with capital assets (including infrastructure) and long term obligations. 5

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Management s Discussion and Analysis June 30, 2017 Component Units, which are other governmental units over which the County can exercise influence and/or may be obligated to provide financial subsidy, are presented as a separate column in the government-wide statements. The focus of the statements are clearly on the Primary Government and the presentation allows the user to address the relative relationship with the Component Units. The Statement of Activities is focused on both the gross and net cost of various functions (including governmental, business-type and component unit) which are supported by the government s general tax and other revenues. This is intended to summarize and simplify the user s analysis of cost of various governmental services and or subsidy to various business-type activities and/or component unit. The Governmental Activities reflects the County s basic services, on a functional basis. Departments included within those functions are identified in the General Fund Statement. Ad valorem, consolidated taxes and other identified general revenues support the majority of these services. The Business-type Activities reflect private sector type operations (Water, Wastewater, Ambulance, Transit Services and Solid Waste Management), where the fee for service typically covers all or most of the cost of operation, including depreciation. Fund Financial Statements Traditional users of governmental financial statements will find the Fund Financial Statements presentation more familiar. The focus is on Major Funds, rather than fund types. The Governmental Major Fund presentation is presented on a sources and uses of liquid resources basis. This is the manner in which the financial plan (the budget) is typically developed. The flow and availability of liquid resources is a clear and appropriate focus of any analysis of a government. Funds are established for various purposes and the Fund Financial Statements allow the demonstration of sources and uses and/or budgeting compliance associated therewith. The Fund Financial Statements also allow the government to address its Fiduciary (or Trust) Funds summarized by type. While these Funds represent trust responsibilities of the government, these assets are restricted in purpose and do not represent discretionary assets of the government. Therefore, these assets are not presented as part of the Government-Wide Financial Statements. While the Total column on the Business-type Fund Financial Statements may be the same as the Business-type column at the Government-Wide Financial Statement, the Governmental Major Funds Total column requires a reconciliation because of the different measurement focus (current financial resources versus total economic resources) which is reflected on the page following each statement. The flow of current financial resources will reflect bond proceeds and inter-fund transfers as other financing sources, as well as capital purchases and bond principal payments as expenditures. The reconciliation will eliminate these transactions and incorporate the capital assets and long-term obligation into the Governmental Activities column (in the Government-wide statements). 6

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Management s Discussion and Analysis June 30, 2017 The following table reflects a summary of net position compared to prior year: Governmental Activities Business-Type Activities Total Primary Government 2016 2016 2016 2017 (as restated) 2017 (as restated) 2017 (as restated) Current and other assets $ 34,902,953 $ 32,510,245 $ 4,390,139 $ 3,831,650 $ 39,293,092 $ 36,341,895 Capital assets 72,442,433 74,777,313 8,848,380 9,476,238 81,290,813 84,253,551 Total assets 107,345,386 107,287,558 13,238,519 13,307,888 120,583,905 120,595,446 Deferred outflows related to pensions 9,865,089 5,520,397 313,562 135,160 10,178,651 5,655,557 Current and other liabilities 4,584,844 4,424,559 246,772 232,545 4,831,616 4,657,104 Long-term liabilities 55,115,652 47,871,464 3,468,945 3,245,146 58,584,597 51,116,610 Total liabilities 59,700,496 52,296,023 3,715,717 3,477,691 63,416,213 55,773,714 Deferred inflows related to pensions & insurance premiums 3,090,194 5,353,506 106,779 166,728 3,196,973 5,520,234 Net position: Invested in capital assets net of related debt 71,469,572 73,669,430 7,275,620 7,872,594 78,745,192 81,542,024 Restricted 16,630,934 12,589,180 42,829 30,293 16,673,763 12,619,473 Unrestricted (33,680,721) (31,100,184) 2,411,136 1,895,742 (31,269,585) (29,204,442) Total net position $ 54,419,785 $ 55,158,426 $ 9,729,585 $ 9,798,629 $ 64,149,370 $ 64,957,055 For more detailed information see the Statement of Net Position. Normal Impacts There are six basic (normal) transactions that will affect the comparability of the net position summary presentation. Net Results of Activities which will impact (increase/decrease) current assets and unrestricted net position. Borrowing for Capital which will increase current assets and long-term debt. Spending Borrowed Proceeds on New Capital which will reduce current assets and increase capital assets. There is a second impact, an increase in capital assets and an increase in related net debt which will not change the net investment in capital assets investment. Principal Payment on Debt which will (a) reduce current assets and reduce long-term debt and (b) reduce unrestricted net position and increase net investment in capital assets. Reduction of Capital Assets through Depreciation which will reduce capital assets and invested in capital assets, net of debt. 7

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Management s Discussion and Analysis June 30, 2017 The following table reflects a summary of the change in net position compared to the prior year: REVENUES Program Revenues: Governmental Activities Business-Type Activities Total Primary Government 2016 2016 2016 2017 (as restated) 2017 (as restated) 2017 (as restated) Charges for services $ 6,237,553 $ 6,448,009 $ 2,914,183 $ 3,666,768 $ 9,151,736 $ 10,114,777 Operating grants and contributions 2,087,828 2,140,176 1,014,616 818,760 3,102,444 2,958,936 Capital grants - and contributions 513,994 922,747 30,618 206,685 544,612 1,129,432 General Revenues: Ad valorem taxes 15,441,717 14,884,211 - - 15,441,717 14,884,211 Consolidated taxes 19,503,559 16,142,524 - - 19,503,559 16,142,524 Motor vehicle fuel taxes 5,262,143 5,222,896 - - 5,262,143 5,222,896 Other Taxes 3,918,280 4,222,843 - - 3,918,280 4,222,843 Investment income 20,809 241,721 18,517 18,324 39,326 260,045 Other general revenues 352,545 410,838 - - 352,545 410,838 Total Revenues 53,338,428 50,635,965 3,977,934 4,710,537 57,316,362 55,346,502 EXPENSES Program Activities Primary Government: General government 9,706,358 12,585,198 - - 9,706,358 12,585,198 Judicial 12,861,019 12,576,450 - - 12,861,019 12,576,450 Public safety 16,987,212 15,763,806 - - 16,987,212 15,763,806 Public works 8,068,586 8,469,800 - - 8,068,586 8,469,800 Health 995,236 931,300 - - 995,236 931,300 Welfare 2,752,499 2,635,058 - - 2,752,499 2,635,058 Culture and recreation 2,082,137 2,178,736 - - 2,082,137 2,178,736 Community support 463,067 448,817 - - 463,067 448,817 Interest 9,955 750 - - 9,955 750 Business-type Activities: Water - - 612,823 623,041 612,823 623,041 Sewer - - 275,012 286,776 275,012 286,776 Ambulance - - 2,009,392 2,150,099 2,009,392 2,150,099 Transit Services - - 1,007,498 898,983 1,007,498 898,983 Solid Waste - - 293,253 280,550 293,253 280,550 Total Expenses 53,926,069 55,589,915 4,197,978 4,239,449 58,124,047 59,829,364 Excess (Deficiency) of revenues over expenses before transfers (587,641) (4,953,950) (220,044) 471,088 (807,685) (4,482,862) Transfers (151,000) (60,000) 151,000 60,000 - - Change in Net Position (738,641) (5,013,950) (69,044) 531,088 (807,685) (4,482,862) Net Position - Beginning of Year 55,158,426 60,172,376 9,798,629 9,267,541 64,957,055 69,439,917 Net Position - End of Year $ 54,419,785 $ 55,158,426 $ 9,729,585 $ 9,798,629 $ 64,149,370 $ 64,957,055 8

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Management s Discussion and Analysis June 30, 2017 Total Revenues Total revenue increased from the prior year revenue by 3.6%. Total governmental activity revenue, excluding transfers, increased by 5% while total business-type activity revenues decreased by 15%. The decrease in businesstype revenues is due to operating and capital grants awards during the year. General revenues, mainly comprised of taxes and sales tax, represent 83% of total revenue. Program revenues are revenues directly related to service activities of a function and include charges for services, grants and contributions, and related investment earnings, when restricted for use in programs. Total General Revenues General revenues were similar compared to the prior fiscal year. Investment earnings decreased due to a decrease in the national economy which have a direct impact based upon decisions made by the Federal Reserve Board. Also, County investments are written up or down to a fair value in accordance with GASB 72, Fair Value Measurement and Application. This fair value will fluctuate with the changes in interest rates. Program revenues Total program revenues related to specific functions provided an average of 23% of the resources necessary to pay costs of providing program services. The remaining program costs were financed from general revenues. The graphs on this and the following page demonstrate governmental and business-type program revenue expense coverage on a functional and segment basis. $18,000,000 Governmental Activities Program Revenues and Expenses $16,000,000 $14,000,000 $12,000,000 Expenses Program revenue $10,000,000 $8,000,000 $6,000,000 $4,000,000 $2,000,000 $0 General government Judicial Public Safety Public works Health Welfare Culture and recreation Community support Interest and fiscal charges 9

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Management s Discussion and Analysis June 30, 2017 Business-type Activities Program Revenues and Expenses $2,500,000 $2,000,000 Expenses Program revenue $1,500,000 $1,000,000 $500,000 Water Sewer Ambulance Transit Solid Waste $0 Business-type activity charges for services provided 69% of the resources to finance the operations. The value of capital contributions from developers for water and sewer infrastructure assets is included in program revenues for the Water and Wastewater Funds. Total Revenue by Source Governmental Activities Governmental Activities: The two largest revenue sources for the County are ad valorem taxes and consolidated taxes, which comprise 63% of total revenues. Ad valorem taxes increased 3.6% from the prior year due to an increase in assessed value. 10

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Management s Discussion and Analysis June 30, 2017 Consolidated taxes increased 20% due to increased taxable sales related to the overall economic activity in Elko County. This economic activity is related to the mining industry located within the region. The increase is mainly due to the one quarter of one percent additional tax rate for the Infrastructure Fund. Investment income decreased due to County investments being written up or down to fair value. This fair value will fluctuate with the changes in interest rates. Elko County holds the majority of investments to maturity thereby reducing the market risk and receiving full interest earnings and investment value. Payment in Lieu of Taxes received from the Federal Government was reauthorized by Congress for fiscal year 2016-2017. Total Revenues by Source Business Type Activities Business Type Activities: Charges for services decreased by $752 thousand. These decreases are related to out sourcing of Ambulance collections and catching up on a backlog of billings. Capital contributions consist of contributions from customers in the form of hookup fees and grant funds related to water and sewer construction projects and matching funds for Transit Services. Expenses Salaries and wages comprise approximately 30% of total expenses. Elko County has seven employee associations which negotiate periodically for salary adjustments related to merit. Employee benefits average approximately 27% of salaries and wages. Health insurance costs increased for the year due to the rising cost of medical inflation and claims costs. There were no increases due to negotiated contractual agreements. Services and supplies comprise 43% of total expenses. Details regarding variances on a fund level are available in separate reports. 11

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Management s Discussion and Analysis June 30, 2017 Depreciation expense represents the cost of using capital assets over their estimated useful lives. This information is included in the various functions in order to more closely approximate the cost of providing services. More detail is provided in the footnotes to the financial statement. Interest/issuance cost expense includes interest and other fiscal charges paid on outstanding debt. Financial Analysis of Elko County Major Funds Elko County uses fund accounting and budgetary integration to ensure and demonstrate compliance with financerelated legal requirements. Governmental Funds: The focus of Elko County s governmental funds is to provide information on current inflows, outflows, and balances of spendable resources. Such information is useful in assessing the County s current funding requirements. In particular, unassigned fund balance may serve as a useful measure of net resources available for spending at the end of the fiscal year. As of the current fiscal year the County s governmental funds reported combined ending fund balances of $26.9 million, an increase of $2.5 million from the prior year. The General Fund is the primary operating fund of the County. At the end of the current fiscal year, fund balance of the General Fund was $10.6 million. As a measure of the General Fund s liquidity, it may be useful to compare fund balance to total fund expenditures. Fund balance represents 33% of total fund expenditures. The fund balance of the General Fund decreased by $1.4 million. The key factor in this change is related to transfers to other funds. Town of Jackpot, General Fund is the primary operating fund of the Town of Jackpot Nevada. At the end of the current fiscal year, fund balance of the General Fund was $881 thousand. As a measure of the Town General Fund s liquidity, it may be useful to compare fund balance to total fund expenditures. Fund balance represents 57% of total fund expenditures. General County Capital Projects Fund accounts for resources received from the General Fund and bond proceeds for the purpose of constructing capital projects as determined by the Board of County Commissioners. Elko County maintains a five year capital project plan (available upon request). All major projects started in prior years are completed. The Fund has a fund balance of $1.3 million. Regional Street and Highway Fund accounts for resources received from a locally assessed gas tax rate of 9 cents. The taxes collected are allocated to County, Cities and Towns within Elko County. The resources are utilized for road repair and construction. The Fund has a fund balance of $4.8 million. Infrastructure Fund accounts for the proceeds from the ¼ percent infrastructure tax portion of sales taxes. No projects were authorized during this fiscal year. General County Road Construction Fund accounts for resources received from the motor vehical fuel tax of 1.25 cents. The resources received are utilized for road repair and construction projects on County roadways. The Fund has a fund balance of $54 thousand at year end. Proprietary Funds: The proprietary fund statements provide the same type of information found in the governmentwide financial statements, but in more detail. The Town of Jackpot Sewer Fund was established for the purpose of accounting for the Town of Jackpot owned and operated sewer system. Unrestricted net position at the end of the year amounted to $439 thousand. 12

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Management s Discussion and Analysis June 30, 2017 The Town of Jackpot Water Fund was established for the purpose of accounting for the Town of Jackpot owned and operated water system. Unrestricted net position at the end of the year amounted to $1.1 thousand. The Elko Area Transportation System Fund was established for the purpose of accounting for an on demand public transportation system in the Elko area. It is funded with Federal Transportation grants and local funding. Unrestricted net position at the end of the year was $89 thousand. The Elko Ambulance Fund was established for the purpose of 911 operations of an emergency medical transport service in Elko County. Unrestricted net position at the end of the year was $9,800. Budgetary Highlights Functions represent the legal level of budgetary control. The final amended budget appropriations are greater than the original budget. The main factors of the increase in appropriations were related to receipt of State and Federal grant funds and additional net proceeds of mines tax. Capital Assets and Debt Administration Capital Assets: The County s investment in capital assets for its governmental and business-type activities as of June 30, 2017 amounts to $81.3 million (net of accumulated depreciation). This investment in capital assets includes land, buildings and improvements, machinery and equipment, construction in progress and infrastructure. The total decrease in the County s investment in capital assets for the current fiscal year was 3.6%. Table 4 Elko County Capital Assets (Net of Depreciation) Governmental Activities Business-type Activities Land $ 5,550,514 $ 540 $ 5,551,054 Construction in progress 602,972-602,972 Buildings / improvements 60,446,694 15,737,146 76,183,840 Machinery and equipment 23,729,389 2,879,498 26,608,887 Infrastructure 67,558,637 170,287 67,728,924 Accumulated depreciation (85,445,773) (9,939,091) (95,384,864) Total $ 72,442,433 $ 8,848,380 $ 81,290,813 Major additions for the current fiscal year for Elko County include the construction of paved roads, and other building and equipment additions. The major projects were related to infrastructure. Additional information on the County s capital assets can be found in Note 5. Table 5 Elko County Outstanding Debt General Obligation Bonds, Revenue Bonds, Leases and Notes Governmental Activities Business-type Activities Total General Obligation Revenue Backed $ - $ 1,572,760 $ 1,572,760 Commitment Payable 652,960-652,960 Notes Payable 319,901-319,901 $ 972,861 $ 1,572,760 $ 2,545,621 13

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Management s Discussion and Analysis June 30, 2017 State statute (NRS 244A.059) limits the amount of general obligation debt a government entity may issue to 10% of its total assessed valuation. The current limitation for Elko County is $210 million, which is significantly in excess of Elko County s outstanding general obligation debt. Additional information on Elko County s long- term debt can be found in Note 10 which is included in this report. Economic Factors The County s primary revenue sources are ad valorem property taxes and consolidated taxes. Property taxes were consistent in the last fiscal year due to the mining economy within our region. The 2017 assessed valuation is $2.1 billion and has increased over the last year. The County s current operating tax rate is below the statutorily allowed rate. Consolidated tax consists of six different tax sources, the largest being city/county sales taxes. Gross taxable sales have been relatively flat in prior years and are now starting to slightly decrease. Projections for FY2018 indicate a slight increase in this revenue source. The Northeastern Nevada Railport industrial area is currently operating and has assisted in diversifying the economic base of Elko County by expanding the tax base and job availability for this region. Due to the budgetary constraints of the State of Nevada the 2011 Legislature required Elko County to provide fiscal support to multiple state services. The fiscal impact for FY2018 is approximately $2.5 million. These and other factors were taken into consideration in the preparation of the 2018 fiscal year budget. Elko County passed a one quarter of one percent sales tax increase to take effect on July 1, 2016 to fund fire equipment and county roads. These funds are included in the Infrastructure Fund and projects are expected to be started in fiscal year 2017-2018. Elko County may suffer economic decline related to the rules and regulations passed by the Federal Government related to Sage Grouse. Mining activity is expanding with the construction of Long Canyon Mine and Phase II expansion plans and is located in the Pequop Mountain located in Elko County. Requests for Information This report is designed to provide a general overview of Elko County s finances for all interested parties. Questions concerning the information provided in this report or requests for additional financial information should be addressed to Cash A. Minor, Assistant County Manager / Chief Financial Officer, 540 Court Street, Elko, Nevada 89801. Questions concerning the information provided in this report or requests for additional financial information concerning the Agricultural Association District No. 4 component unit should be addressed to the District at P.O. Box 1167, Elko, Nevada 89803. 14

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Statement of Net Position June 30, 2017 Component Unit Agricultural Primary Government Association Governmental Business-Type District No. 4 Activities Activities Total (Unaudited) Assets Cash and investments $ 29,219,036 $ 2,562,493 $ 31,781,529 $ 72,689 Restricted cash - 51,748 51,748 - Interest receivable 29,627-29,627 - Accounts receivable 402,505 1,669,494 2,071,999 21,861 Taxes receivable, delinquent 95,303-95,303 30,309 Internal balances 50,000 (50,000) - - Due from other governments 5,106,482 124,097 5,230,579 98,104 Prepaid expenses - 32,307 32,307 18,881 Capital assets Land and construction in progress 6,153,486 540 6,154,026 - Other capital assets (net of accumulated depreciation) 66,288,947 8,847,840 75,136,787 480,004 Total assets 107,345,386 13,238,519 120,583,905 721,848 Deferred Outflows of Resources Related to pensions 9,865,089 313,562 10,178,651 35,115 Liabilities Accounts payable 2,010,395 186,101 2,196,496 9,568 Accrued interest - 7,851 7,851 - Accrued liabilities 1,233,763 38,662 1,272,425 7,720 Due to other governments 346,589-346,589 - Deposits - 8,997 8,997 - Unearned revenue 434,092 5,161 439,253 75,669 Funds held in trust 560,005-560,005 - Noncurrent liabilities Net OPEB obligation 6,554,924 315,494 6,870,418 - Net Pension Liability 46,217,915 1,524,751 47,742,666 206,884 Due within one year 905,345 43,847 949,192 10,515 Due in more than one year 1,437,468 1,584,853 3,022,321 44,467 Total liabilities 59,700,496 3,715,717 63,416,213 354,823 Deferred Inflows of Resources Related to pensions 3,090,194 106,779 3,196,973 19,074 Net Position Net investment in capital assets 71,469,572 7,275,620 78,745,192 425,022 Restricted for Towns 1,051,944-1,051,944 - Unemployment insurance reserve 310,762-310,762 - Indigent 136,884-136,884 - Road projects 5,502,558-5,502,558 - Self-insured group health insurance 3,175,801-3,175,801 - Assessor's Technology 582,758-582,758 - Public Safety 297,732-297,732 - Judicial 1,104,162-1,104,162 - Capital projects 4,369,169-4,369,169 - Other 99,164-99,164 - Debt service - 42,829 42,829 - Unrestricted (deficit) (33,680,721) 2,411,136 (31,269,585) (41,956) Total Net Position $ 54,419,785 $ 9,729,585 $ 64,149,370 $ 383,066 See Notes to Financial Statements 15

Program Revenues Operating Capital Charges for Grants and Grants and Functions/Programs Expenses Services Contributions Contributions Primary government Governmental activities General government $ 9,706,358 $ 1,976,891 $ 10,500 $ 38,814 Judicial 12,861,019 812,820 1,228,098 - Public safety 16,987,212 3,081,947 616,127 265,439 Public works 8,068,586 145,792 32,509 209,741 Health 995,236 - - - Welfare 2,752,499-8,906 - Culture and recreation 2,082,137 220,103 101,512 - Community support 463,067-90,176 - Debt service Interest on long-term debt 9,955 - - - Total governmental activities 53,926,069 6,237,553 2,087,828 513,994 Business-type activities Water 612,823 476,669-30,618 Sewer 275,012 266,381 - - Ambulance 2,009,392 1,914,242 - - Transit services 1,007,498 44,143 1,014,616 - Solid waste 293,253 212,748 - - Total business-type activities 4,197,978 2,914,183 1,014,616 30,618 Total primary government $ 58,124,047 $ 9,151,736 $ 3,102,444 $ 544,612 Component Unit - Agricultural District No. 4 (Unaudited) $ 1,000,975 $ 665,061 $ - $ 52,898 General Revenues Taxes Ad valorem taxes Consolidated tax Motor vehicle fuel taxes Room tax Payments in lieu of taxes Gaming licenses Investment earnings Miscellaneous Transfers Total general revenues and transfers Change in net position Net Position, Beginning of Year, as Originally Reported Prior Period Adjustment Net Position, Beginning of Year, as Restated Net Position, End of Year See Notes to Financial Statements

Statement of Activities Year Ended June 30, 2017 Net (Expense) Revenue and Component Unit Changes in Net Position Agricultural Primary Government Association Governmental Business-Type District No. 4 Activities Activities Total (Unaudited) $ (7,680,153) $ - $ (7,680,153) $ - (10,820,101) - (10,820,101) - (13,023,699) - (13,023,699) - (7,680,544) - (7,680,544) - (995,236) - (995,236) - (2,743,593) - (2,743,593) - (1,760,522) - (1,760,522) - (372,891) - (372,891) - (9,955) - (9,955) - (45,086,694) - (45,086,694) - - (105,536) (105,536) - - (8,631) (8,631) - - (95,150) (95,150) - - 51,261 51,261 - - (80,505) (80,505) - - (238,561) (238,561) - (45,086,694) (238,561) (45,325,255) - (283,016) - (283,016) (283,016) 15,441,717-15,441,717 67,901 19,503,559-19,503,559-5,262,143-5,262,143-358,664-358,664 129,806 3,559,616-3,559,616-104,840-104,840 82,232 20,809 18,517 39,326 627 247,705-247,705 - (151,000) 151,000 - - 44,348,053 169,517 44,517,570 280,566 (738,641) (69,044) (807,685) (2,450) 58,399,154 9,955,354 68,354,508 397,868 (3,240,728) (156,725) (3,397,453) (12,352) 55,158,426 9,798,629 64,957,055 385,516 $ 54,419,785 $ 9,729,585 $ 64,149,370 $ 383,066 16

Regional Road Street and Construction General Highway Fund Fund Assets Cash and investments $ 9,608,757 $ 4,801,428 $ - Interest receivable 14,691 8,435 - Accounts receivable 231,875 - - Taxes receivable, delinquent 60,696 - - Due from other funds 502,945 - - Due from other governments 2,446,121 511,603 201,902 Capital Assets - Total assets $ 12,865,085 $ 5,321,466 $ 201,902 Liabilities, Deferred Inflows of Resources, and Fund Balances Liabilities Accounts payable $ 468,476 $ 365,390 $ 34 Accrued liabilities 1,056,770 - - Due to other funds - - 147,839 Due to other governments 35,757 149,816 - Unearned revenue - - - Funds held in trust 560,005 - - Total liabilities 2,121,008 515,206 147,873 Deferred Inflows of Resources Unavailable revenue - grants 129,597 - - Unavailable revenue - delinquent property taxes 60,696 - - Total deferred inflows of resources 190,293 - - Fund Balances Restricted Towns - - - Capital projects - - - Road projects - 4,806,260 54,029 Indigent - - - Public safety - - - Judicial - - - Culture and recreation - - - Community support - - - Recorder's technology - - - Assessor's technology - - - Unemployment insurance reserve 308,603 - - Committed Northeastern Nevada Regional Railport 301,739 - - Judicial - - - Culture and recreation - - - Assigned Subsequent year operations 646,494 - - Culture and recreation - - - Capital projects - - - Post employment benefits 1,229,351 - - Vacation benefits 159,930 - - Judicial - - - Unassigned 7,907,667 - - Total Fund Balances 10,553,784 4,806,260 54,029 Total Liabilities, Deferred Inflows of Resources and Fund Balances $ 12,865,085 $ 5,321,466 $ 201,902 See Notes to Financial Statements