7 JEFFERSON COUNTY Exhibit B Combined Statement of Revenues, Expenditures and Changes in Fund Balances - All Governmental Fund Types For the Year Ended September 30, 1997 Totals Governmental Memorandum Fund Types Only Special Debt Capital Primary General Revenue Service Projects Government Revenues Property taxes $ 1,406,827 540,184 159,941 2,106,952 Licenses, commissions and other revenue 47,949 72,554 120,503 Fines and forfeitures 281,255 281,255 Intergovernmental revenues: Federal sources 61,885 107,549 169,434 State and local sources 178,387 683,717 862,104 Charges for services 120,224 740,903 861,127 Use of money and property 21,372 87,335 1,009 109,716 Miscellaneous revenues 4,200 6,198 10,398 Total Revenues 2,122,099 2,238,440 160,950 0 4,521,489 Expenditures Current: General government 1,341,427 145,497 52 1,486,976 Public safety 559,558 1,117,980 1,677,538 Public works 934,706 934,706 Health & welfare 56,577 27,645 84,222 Culture & recreation 885 52,311 53,196 Conservation of natural resources 31,095 31,095 Capital projects 1,819,272 1,819,272 Debt service: Principal retirement 36,754 143,773 65,000 245,527 Interest and fiscal charges 72,457 473,878 107,933 654,268 Total Expenditures 2,098,753 2,895,790 172,985 1,819,272 6,986,800 Excess of Revenues over (under) Expenditures 23,346 (657,350) (12,035) (1,819,272) (2,465,311) Other Financing Sources (Uses) Proceeds of other debt 51,538 215,562 267,100 Insurance recoveries 7,147 7,147 Operating transfers in 5,955 93,912 15,562 115,429 Operating transfers out (99,675) (15,750) (4) (115,429) Total Other Financing Sources (Uses) (35,035) 293,724 15,558 0 274,247 Excess of Revenues and Other Sources over (under) Expenditures and Other Uses (11,689) (363,626) 3,523 (1,819,272) (2,191,064) Fund Balances Beginning of year (567,226) 464,771 69,170 2,908,019 2,874,734 Residual equity transfers 1,039,805 1,842 (1,041,647) End of year $ (578,915) 1,140,950 74,535 47,100 683,670 The notes to the financial statements are an integral part of this statement. 8 JEFFERSON COUNTY Combined Statement of Revenues, Expenditures and Changes in Fund Balances - Budget (Non-GAAP Budgetary Basis) and Actual - All Governmental Fund Types For the Year Ended September 30, l997 General Special Fund Revenue Funds Variance Variance Favorable Favorable Budget Actual (Unfavorable) Budget Actual (Unfavorable) Revenues Property taxes $ 1,376,206 1,375,900 (306) 528,962 528,962 Licenses, commissions and other revenue 43,390 47,202 3,812 124,325 124,325 Fines and forfeitures 281,255 281,255 Intergovernmental revenues: Federal sources 5,500 5,500 83,659 111,345 27,686 State and local sources 356,450 308,901 (47,549) 1,477,211 748,661 (728,550) Charges for services 79,746 118,339 38,593 28,269 731,325 703,056 Use of money and property 18,533 18,533 5,359 5,359 Miscellaneous revenues 83,203 83,203 12,169 9,977 (2,192) Total Revenues 2,238,783 2,238,833 50 2,259,954 2,259,954 0 Expenditures General government 1,485,038 1,490,702 (5,664) 85,405 85,405 Public safety 518,819 519,391 (572) 1,081,153 1,079,858 1,295 Public works 1,019,067 1,027,721 (8,654) Health and welfare 44,370 44,370 111,320 111,473 (153) Culture and recreation 32,370 32,370 Education 38,271 38,271 Conservation of natural resources 30,911 30,911 Capital projects 24,359 24,359 Debt service 202,385 202,385 141,869 117,138 24,731 Total Expenditures 2,319,794 2,326,030 (6,236) 2,495,543 2,478,324 17,219 Excess of Revenues over (under) Expenditures (81,011) (87,197) (6,186) (235,589) (218,370) 17,219 Other Financing Sources (Uses) 1,221 8,381 7,160 238,607 221,388 (17,219) Excess of Revenues and Other Sources over (under) Expenditures and Other Uses (79,790) (78,816) 974 3,018 3,018 0 Fund Balances Beginning of year 110,216 104,500 89,036 96,309 End of year $ 30,426 25,684 92,054 99,327 The notes to the financial statements are an integral part of this statement. 9 Exhibit C Debt Capital Service Funds Projects Funds Variance Variance Favorable Favorable Budget Actual (Unfavorable) Budget Actual (Unfavorable) 154,994 154,994 1,009 1,009 156,003 156,003 0 0 0 0 175,035 175,035 175,035 175,035 0 0 0 0 (19,032) (19,032) 0 0 0 0 17,608 17,608 0 0 0 0 (1,424) (1,424) 0 0 0 0 26,336 26,336 9,899 9,899 24,912 24,912 9,899 9,899 JEFFERSON COUNTY Notes to Financial Statements For the Year Ended September 30, 1997 10 (1) Significant Accounting Policies. A. Financial Reporting Entity. Jefferson County is a political subdivision of the State of Mississippi. The county is governed by an elected five-member Board of Supervisors. Generally accepted accounting principles require Jefferson County to present these financial statements on the primary government and its component units which have significant operational or financial relationships with the county. Management has chosen to omit from these financial statements the following component units which have significant operational or financial relationships with the county. Accordingly, the financial statements do not include the data of all of the county's component units necessary for reporting in conformity with generally accepted accounting principles. $ Jefferson County Hospital $ Jefferson County Nursing Home $ Union Church Fire Protection District State law pertaining to county government provides for the independent election of county officials. The following officials are all part of the county legal entity and therefore are reported as part of the primary government financial statements. $ Board of Supervisors $ Chancery Clerk $ Circuit Clerk $ Justice Court Clerk $ Purchase Clerk $ Tax Assessor-Collector $ Sheriff B. Basis of Presentation. The accompanying financial statements of the primary government have been prepared in conformity with generally accepted accounting principles as prescribed by the Governmental Accounting Standards Board. However, the primary government financial statements, because they do not include the financial data of all of the county's component units, do not present fairly, in all material respects, the financial position and results of operations for the entire reporting entity. C. Account Classifications. The account classifications used in the financial statements conform to the broad classifications recommended in Governmental Accounting, Auditing and Financial Reporting as issued in 1994 by the Government Finance Officers Association and the Mississippi County Financial Accounting Manual as revised in 1993 by the Office of the State Auditor. JEFFERSON COUNTY Notes to Financial Statements For the Year Ended September 30, 1997 11 D. Fund Accounting. The financial activities of the county are recorded in individual funds and account groups used to report financial position and results of operations. Fund accounting is used to demonstrate legal compliance and to aid financial management by segregating transactions relating to certain government functions or activities. A fund is a separate accounting entity with a self-balancing set of accounts, segregated for the purpose of carrying on specific activities or attaining certain objectives in accordance with specific regulations, restrictions or limitations. An account group is a financial reporting device designated to provide accountability for certain assets and liabilities that are not recorded in funds because they do not directly affect net expendable available financial resources. The following fund categories, which are further subdivided into separate "fund types", are utilized by the county: GOVERNMENTAL FUND TYPES General Fund - This fund is used to account for all activities of the general government for which a separate fund has not been established. Special Revenue Funds - These funds are used to account for the proceeds of specific revenue sources (other than for major capital projects) that are legally restricted to expenditures for specified purposes. Special Revenue Funds account for, among others, certain federal grant programs, taxes levied with statutorily defined distributions and other resources restricted as to purpose. Debt Service Funds - These funds are used to account for the accumulation of resources for, and the payment of, general long-term debt principal, interest and related costs. Capital Projects - These funds are used to account for financial resources to be used for the acquisition or construction of major capital facilities. Such resources are derived principally from proceeds of general obligation bond issues and federal grants. FIDUCIARY FUND TYPE Agency Funds - These funds account for various taxes, deposits and other monies collected or held by the county, acting in the capacity of an agent, for distribution to other governmental units or designated beneficiaries. ACCOUNT GROUPS - The General Fixed Assets Account Group is used to account for general fixed assets. The General Long-term Debt Account Group is used to account for general long-term debt and certain other liabilities. E. Basis of Accounting/Measurement Focus. Governmental Fund Types and Agency Funds - All Governmental Funds are accounted for using a current financial resources measurement focus. With this measurement focus, only current assets and current liabilities are generally included on the balance sheet. Operating statements of these funds present increases (i.e., revenues and other financing sources) and decreases (i.e., expenditures and other financing uses) in net current assets. JEFFERSON COUNTY Notes to Financial Statements For the Year Ended September 30, 1997 12 The modified accrual basis of accounting is used by all Governmental Fund Types and Agency Funds. Under this method, revenues are recognized in the accounting period in which they become both available and measurable to finance operations during the year or to liquidate liabilities existing at the end of the year. Available means collected in the current year or soon enough after year end to liquidate liabilities existing at the end of the year. Expenditures are recognized in the accounting period in which the fund liability is incurred. Modifications to the accrual basis of accounting include: $ Licenses, fees, fines and forfeits and other miscellaneous revenues are recognized when received since they normally are only measurable at that time. $ Property taxes are recognized as revenue when received because the remaining delinquent property taxes not collected before the close of the fiscal year are considered immaterial. See Note 1K for further explanation. $ Principal and interest on general long-term debt are recognized when due. $ Obligations for accumulated unpaid employee benefits are recognized when paid. F. Budgetary Process and Accounting. Process: Statutory requirements dictate how and when the county's budget is to be prepared. Generally, in the month of August, prior to the ensuing fiscal year beginning each October 1, the Board of Supervisors of the county, using historical and anticipated fiscal data and proposed budgets submitted by the Sheriff and the Tax Assessor-Collector for his or her respective department, prepares an original budget for each of the Governmental Funds for said fiscal year. The completed budget for the fiscal year includes for each fund every source of revenue, each general item of expenditure and the unencumbered cash and investment balances. When during the fiscal year it appears to the Board of Supervisors that budgetary estimates will not be met, it may make revisions to the budget. Accounting: The county's budget is prepared principally on the cash basis of accounting. All appropriations lapse at year end and there are no encumbrances to budget because state law does not require that funds be available when goods or services are ordered, only when payment is made. G. Cash and Investments. State law authorizes the county to invest in interest bearing time certificates of deposit for periods of fourteen days to one year with depositories and in obligations of the U.S. Treasury, State of Mississippi, or any county, municipality or school district of this state. Further, the county may invest in certain repurchase agreements that have a term of less than fourteen days. Cash includes cash on hand, demand deposits, all certificates of deposit and cash equivalents, which are short- term highly liquid investments that are readily convertible to cash (generally three months or less). Investments in governmental securities are stated at cost or amortized cost. JEFFERSON COUNTY Notes to Financial Statements For the Year Ended September 30, 1997 13 H. Interfund Receivables/Payables. Transactions between funds that are representative of short-term lending/borrowing arrangements, and transactions that have not resulted in the actual transfer of cash at the end of the fiscal year are referred to as "interfund receivables/payables." Noncurrent portions of interfund receivables and payables are reported as "advances to/from other funds." Advances between funds are offset by a fund balance reserve account in applicable Governmental Funds to indicate that they are not available for appropriation and are not expendable available financial resources. I. Fixed Assets. Fixed assets are not capitalized in the funds used to acquire or construct them. Instead, capital acquisition and construction are reflected as expenditures in Governmental Funds and the related assets are reported in the General Fixed Assets Account Group. All purchased fixed assets are stated at cost where historical records are available and at an estimated historical cost where no historical records exist. Donated assets are valued at market value at the time of donation. The costs of normal maintenance and repairs that do not add to the value of assets or materially extend their respective lives are not capitalized; however, improvements are capitalized. Interest expenditures are not capitalized on general fixed assets. Public domain (infrastructure) fixed assets consisting of certain improvements other than buildings, such as roads, bridges, sidewalks, drainage systems, lighting systems and similar assets that are immovable and of value only to the county, are not capitalized. Depreciation is not provided on general fixed assets. J. Fund Equity. Unreserved fund balance represents the amount available for budgeting future operations. Reservations of fund balance represent amounts that are not appropriable or are legally segregated for a specific purpose. K. Property Tax Revenues. Numerous statutes exist under which the Board of Supervisors may levy property taxes. The selection of authorities is made based on the objectives and responsibilities of the county. Restrictions associated with property tax levies vary with the statutory authority. The amount of increase in certain property taxes is limited by state law. Generally, this restriction provides that these tax levies shall produce no more than 110% of the amount which resulted from the assessments of the previous year. The Board of Supervisors, each year at a meeting in September, levies property taxes for the ensuing fiscal year which begins on October 1. Real property taxes become a lien on January 1 of the current year and personal property taxes become a lien on March 1 of the current year. Taxes on both real and personal property, however, are due on or before February 1 of the next succeeding year. Taxes on motor vehicles and mobile homes become a lien and are due in the month that coincides with the month of original purchase. JEFFERSON COUNTY Notes to Financial Statements For the Year Ended September 30, 1997 14 Generally accepted accounting principles require property taxes to be recognized at the levy date if measurable and available. All property taxes are recognized as revenue when received. Real property taxes are recognized as revenue when received because most delinquent real property taxes are collected by selling real property for taxes, together with all fees, penalties and damages accruing until date of sale, before the close of the fiscal year. The remaining amount of real property not sold for taxes at the tax sale is considered immaterial; therefore, no end of year delinquent taxes receivable is recorded. The amount of delinquent personal property taxes unpaid at year end is also considered immaterial. Motor vehicle and mobile home taxes do not meet the measurability and collectibility criteria for property tax recognition because the lien and due date cannot be established until the date of original purchase occurs. L. Intergovernmental Revenues in Governmental Funds. Intergovernmental revenues, consisting of grants, entitlements and shared revenues, are usually recorded in Governmental Funds when measurable and available. However, the "available" criterion applies for certain federal grants and shared revenues when the expenditure is made because expenditure is the prime factor for determining eligibility. Similarly, if cost sharing or matching requirements exist, revenue recognition depends on compliance with these requirements. M. Compensated Absences. The county has adopted a policy of compensation for accumulated unpaid employee personal leave. No payment is authorized for accrued major medical leave. Generally accepted accounting principles require accrual of accumulated unpaid employee benefits in Governmental Funds to the extent that they are to be paid with current assets and the remainder of the liability to be reported in the General Long-term Debt Account Group, representing the county's commitment to fund such costs from future operations. Due to immateriality, the current portion of the liability was not estimated and reported in the Governmental Funds. Therefore, the county's full liability in the amount of $31,298 for accumulated unpaid personal leave up to a maximum of 31 days per employee is reported in the General Long-term Debt Account Group of the accompanying combined balance sheet. N. Total Column on Primary Government Financial Statements. The total column on the primary government financial statements is captioned "Memorandum Only" to indicate that it is presented only to facilitate financial analysis. Data in this column does not present financial position and results of operations in conformity with generally accepted accounting principles. Neither is such data comparable to a consolidation. Interfund eliminations have not been made in the aggregation of this data. (2) Stewardship, Compliance and Accountability. A. Legal Compliance - Financial Matters. State law requires the county to have its uninsured deposits fully collateralized (105%) by securities based upon market value, and the securities are to be held in the name of the county. During the audited fiscal year, a significant amount of the county's uninsured deposits were uncollateralized. State law does not provide for interfund loans. The county has many large outstanding interfund loans that are now over a year old. These outstanding loans constitute a diversion of monies and caused some funds to sustain end of year deficit fund balances. JEFFERSON COUNTY Notes to Financial Statements For the Year Ended September 30, 1997 15 B. Individual Fund Deficits. The following funds had deficit fund balances at September 30, 1997: Deficit Styling Amount General Fund $ 578,915 Special Revenue Funds: Solid waste 20,225 Daycare escrow 10,600 Debt Service Funds: Courthouse special 14,800 School bus note 8,212 C. Excess of Actual Expenditures Over Budget in Individual Funds. The following funds had an excess of actual expenditures over budget for the year ended September 30, 1997: Fund Excess General Fund $ 6,236 Special Revenue Funds: Solid waste 2,673 Countywide road 5,981 (3) Budgetary Basis vs. GAAP. The accompanying Combined Statement of Revenues, Expenditures and Changes in Fund Balances - Budget (Non-GAAP Budgetary Basis) and Actual - All Governmental Fund Types presents comparisons of the legally adopted budget with actual data on a budgetary basis. Since the budgetary and GAAP presentations of actual data differ, a reconciliation of the results of operations for the year follows: Excess of Revenues and Other Sources Over (Under) Expenditures and Other Uses Governmental Fund Types Special Debt General Revenue Service Budget (Cash Basis) $ (78,816) 3,018 (1,424) Increase (Decrease) Net adjustment for revenue accruals (278,820) (154,089) (52,104) Net adjustment for expenditure accruals 345,947 (212,555) 57,051 GAAP Basis $ (11,689) (363,626) 3,523 JEFFERSON COUNTY Notes to Financial Statements For the Year Ended September 30, 1997 16 (4) Deposits and Investments. Deposits: The carrying amount of the county's total deposits with financial institutions at September 30, 1997, was $516,982 and the bank balance was $624,110. The bank balance is categorized below to reflect the level of credit risk assumed by the county at year end. Bank Balance Amount federally insured. $ 294,500 Amount collateralized with securities held by the pledging financial institution's agent in the county's name. 254,242 Amount uncollateralized. 75,368 Total Bank Balance $ 624,110 Investments: The county's investments at year end are shown below. All of the county's investments are insured and are held by the county=s agent in the county=s name. Carrying Market Amount Value U.S. government securities $ 516,464 520,990 Deposit Guaranty National Bank reposessions 25,000 25,000 Total $ 541,464 545,990 (5) Interfund Receivables and Payables. The composition of interfund balances at September 30, 1997, consists of the following: Interfund Receivable/Payable: Receivable Fund Payable Fund Amount Mapping & reappraisal Countywide bridge $ 1,292 Data processing Correctional facility 2,150 Fire maintenance General Fund 1,380 Copiah-Jefferson Regional Library General Fund 1,168 Solid waste General Fund 3,249 Mapping & reappraisal General Fund 1,962 Data processing General Fund 3,478 . revised in 1993 by the Office of the State Auditor. JEFFERSON COUNTY Notes to Financial Statements For the Year Ended September 30, 1997 11 D. Fund Accounting. The financial activities of the county. election of county officials. The following officials are all part of the county legal entity and therefore are reported as part of the primary government financial statements. $ Board of Supervisors $. the State of Mississippi. The county is governed by an elected five-member Board of Supervisors. Generally accepted accounting principles require Jefferson County to present these financial statements