GASTON COUNTY, NORTH CAROLINA NOTES TO BASIC FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2008 In the governmental fund financial statements, reservations or restrictions of fund balance represent amounts that are not appropriable or are legally segregated for a specific purpose. Designations of fund balance represent tentative management plans that are subject to change. State law [G.S. 159-l3(b)(16)] restricts the appropriation of fund balance to an amount not to exceed the sum of cash and investments minus the sum of liabilities, encumbrances and deferred revenues arising from cash receipts as those amounts stand at the close of the fiscal year proceeding the budget year. The governmental fund types classify fund balances as follows: Reserved Reserved for inventories and prepaids - represents the portion of fund balance not available for appropriation because it represents the year-end balance of inventories and prepaid items, which are not expendable, available resources. Reserved for encumbrances - represents the portion of fund balance available to pay for any commitments related to purchase orders and contracts which remain unperformed at year-end. Reserved by State statute - represents the portion of fund balance, in addition to reserves for encumbrances and reserves for inventories, which is not available for appropriation under State law [G.S. 159-8(a)]. This amount is usually comprised of accounts receivable and interfund receivables, which are not offset by deferred revenues. Reserved for Medicaid maximization - represents unexpended funds at fiscal year-end for the Gaston County Health Department that are required to be utilized in the area in which they were earned. Reserved for Gaston County Schools capital projects - represents net unexpended half-cent sales tax revenue, which is required to be expended on school capital outlays. Reserved for Gaston County Schools bonds - represents unexpended proceeds of general obligation school bonds. Reserved for Gaston County Schools deficit reduction - represents unexpended County funds approved for School Capital expenditures. Reserved for Volunteer Fire Districts - represents property tax assessed on and collected from residents of various fire districts in the County. Reserved for Police asset forfeitures - represents the unexpended portion of funds obtained via judicial confiscation of assets of persons convicted of federal drug offenses which are restricted to nonoperating expenditures of the County Police Department. 34 This is trial version www.adultpdf.com GASTON COUNTY, NORTH CAROLINA NOTES TO BASIC FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2008 Reserved for Sheriff civil processing fees - represents unexpended balances and unappropriated revenues that are reserved for the enhancement of civil processing services provided by the Sheriff’s Office. Reserved for Department of Tourism - includes the portion of the local hotel/motel occupancy tax which has been collected, but not expended, and which is restricted by statute solely for use in promoting tourism efforts within the County. Reserved for Gaston County Schools Installment purchase contract - represents unexpended proceeds of an installment contract for the construction of a new school. Reserved for Visitors’ Center - represents unexpended hotel/motel tax revenues dedicated to the construction of a new Visitors’ Center. Reserved for Register of Deeds automation funds - represents the unexpended portion of the Register of Deeds’ revenues that are restricted by State statute to meet the department’s automation needs. Unreserved Designated for future healthcare benefits - represents the unexpended portion of fund balance designated for payment of future healthcare benefits. Designated for insurance reserves - represents the unexpended portion of fund balance designated for payment of self-insured claims and future catastrophic events. Designated for subsequent year’s expenditures - represents the portion of total fund balance available for appropriation which has been designated for the adopted 2008-2009 budget ordinance. Designated for Gaston County Library - represents unexpended donations and contributions from various library patrons designated for specific projects. Undesignated - represents the portion of total fund balance available for appropriation which is uncommitted at year-end. 35 This is trial version www.adultpdf.com GASTON COUNTY, NORTH CAROLINA NOTES TO BASIC FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2008 F. Management Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenditures/expenses during the reporting period. Actual results could differ from those estimates. G. Other Resources The General Fund provides the basis of local resources for other governmental funds. These transactions are recorded as “transfers out” in the General Fund and “transfers in” in the receiving fund. 2. Detail Notes on all Funds A. Deposits All of the County’s deposits are either insured or collateralized by using one of two options. Under the Dedicated Method, all deposits over the federal depository insurance coverage are collateralized with securities held by the County’s agent in the County’s name. Under the Pooling Method, all uninsured deposits are collateralized with securities held by the State Treasurer’s agent in the name of the State Treasurer. Since the State Treasurer is acting in a fiduciary capacity for the County, these deposits are considered to be held by the County’s agent in the County’s name. The amount of collateral is based on an approved averaging method for noninterest- bearing deposits and the actual current balance for interest-bearing deposits. Depositories using the Pooling Method report to the State Treasurer the adequacy of their pooled collateral covering uninsured deposits. The State Treasurer does not confirm this information with the County or the escrow agent. Because of the inability to measure the exact amount of collateral provided for the County under the Pooling Method, the potential exists for under- collateralization, and this risk may increase in periods of high cash flows. However, the State Treasurer of North Carolina enforces strict standards of financial stability for each depository that collateralizes public deposits under the Pooling Method. The State Treasurer enforces standards of minimum capitalization for all pooling method financial institutions. The County relies on the State Treasurer to monitor those financial institutions. The County analyzes the financial soundness of any other financial institution used by the County. The County complies with the provisions of G.S. 159-31 when designating official depositories and verifying that deposits are properly secured. At June 30, 2008, the carrying amount of the County’s deposits was $12,769,006 and the related bank balance was $13,575,225. Of the bank balance, $300,000 was covered by federal depository insurance and $13,275,225 in deposits was covered by collateral held under the Pooling Method. The County had $10,315 cash on hand. 36 This is trial version www.adultpdf.com GASTON COUNTY, NORTH CAROLINA NOTES TO BASIC FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2008 B. Investments At June 30, 2008, the County had the following investments and maturities: Within 1-3 Over Investment Type Fair Value 12 Months Years 3 Years US Government Agencies 10,985,050$ 10,985,050$ -$ -$ North Carolina State Agencies 4,200,000 4,200,000 - - Commercial Paper 19,929,120 19,929,120 - - Bankers Acceptances 8,957,860 8,957,860 - - Total 44,072,030 44,072,030 - - NC Capital Management Trust - Cash Portfolio 124,236,702 124,236,702 - - Total 168,308,732$ 168,308,732$ -$ -$ Interest Rate Risk: The County does not have a formal investment policy that limits investment maturities as a means of managing its exposure to fair value losses arising from increasing interest rates. Credit Risk: State law limits investments in commercial paper to the top rating issued by nationally recognized statistical rating organizations (NRSROs); however, the County had no formal policy on managing credit risk. As of June 30, 2008, the County’s investments in commercial paper were rated A+ by Standard & Poor’s, E1 by Fitch Ratings, and A1 by Moody’s Investor Service. The County’s investments in the NC Capital Management Trust Cash Portfolio carried a credit rating of AAAm by Standard & Poor’s as of June 30, 2008. The County’s investments in US Agencies (Federal Home Loan Bank and Federal Farm Credit Bank) are rated AAA by Standard & Poor’s and Aaa by Moody’s Investors Service. The County’s investments in North Carolina State Agencies (North Carolina State Education Assistance Authority) are rated AAA by Fitch Ratings and by Moody’s Investor Service. Concentration of Credit Risk: The County does not have a policy that places a limit on the amount that the County may invest in any one issuer. More than five percent of the County’s investments are in Discount Federal Home Loan Bank, Interest-bearing Federal Home Loan Bank, General Electric Capital Corporation Commercial Paper, UBS Finance Commercial Paper, American General Finance Commercial Paper, American Express Commercial Paper, Wachovia Banker’s Acceptances, NC State Education, Assistance Authority Bonds, and a Certificate of Deposit/Money Market account with BB&T. These investments are 16.89%, 6.41%, 6.33%, 6.33%, 10.59%, 10.62%, 19.01%, 8.97%, and 6.41%, respectively, of the County’s total investments. 37 This is trial version www.adultpdf.com GASTON COUNTY, NORTH CAROLINA NOTES TO BASIC FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2008 C. Property Tax Use-Value Assessment on Certain Lands In accordance with the general statutes, agriculture, horticulture, and forestland may be taxed by the County at the present use-value as opposed to market value. When the property loses its eligibility for use-value taxation, the property tax is recomputed at market value for the current year and the three preceding fiscal years, along with the accrued interest from the original due date. This tax is immediately due and payable. The following are property taxes that could become due if present use-value eligibility is lost: Year Levied Tax Interest Total 2004 1,224,094$ 290,722$ 1,514,816$ 2005 1,107,573 163,367 1,270,940 2006 1,031,579 59,316 1,090,895 2007 1,448,506 83,289 1,531,795 Total 4,811,752$ 596,694$ 5,408,446$ D. Accounts Receivable Accounts receivable at the government-wide level at June 30, 2008 were as follows: Governmental Business-Type Activities Activities Emergency management (GEMS), net 1,831,971$ -$ Landfill fees, net - 652,800 Health department fees, net 452,709 - Accrued sales tax distribution 11,154,035 - Due from other governments, Public Assistance 2,736,746 - Due from other governments, Capital Improvement 579,655 - Due from other governments, other 121,589 - Sales tax paid 860,449 - Interest income 278,979 - Other 1,818,282 - Accounts receivable 19,834,415$ 652,800$ 38 This is trial version www.adultpdf.com GASTON COUNTY, NORTH CAROLINA NOTES TO BASIC FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2008 E. Capital Assets Capital asset activity for the year ended June 30, 2008, was as follows: Balance Balance July 1, 2007 Increases Decreases Transfers June 30, 2008 Governmental Activities: Capital Assets Not Being Depreciated: Land 19,713,831$ -$ -$ -$ 19,713,831$ Construction in progress 144,975 1,818,238 - (1,423,119) 540,094 Total capital assets not being depreciated 19,858,806 1,818,238 - (1,423,119) 20,253,925 Capital Assets Being Depreciated: Buildings and improvements 115,768,773 220,623 - 1,423,119 117,412,515 Equipment 15,435,261 287,686 - - 15,722,947 Vehicles and motorized equipment 11,839,337 2,273,775 (1,037,357) - 13,075,755 Total capital assets being depreciated 143,043,371 2,782,084 (1,037,357) 1,423,119 146,211,217 Less Accumulated Depreciation For: Buildings and improvements 28,118,920 3,410,225 - - 31,529,145 Equipment 11,131,829 1,314,371 - - 12,446,200 Vehicles and motorized equipment 9,526,640 1,062,211 (1,032,575) - 9,556,276 Total accumulated depreciation 48,777,389 5,786,807 (1,032,575) - 53,531,621 Total capital assets being depreciated, net 94,265,982 92,679,596 Governmental activities capital assets, net 114,124,788$ 112,933,521$ Depreciation expense was charged to functions/programs of the primary government as follows: General government 1,714,859$ Public safety 2,563,793 Economic and physical development 274,498 Human services 881,575 Cultural and recreational 352,082 Total depreciation expense 5,786,807$ 39 This is trial version www.adultpdf.com GASTON COUNTY, NORTH CAROLINA NOTES TO BASIC FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2008 Balance Balance July 1, 2007 Increases Decreases June 30, 2008 Business-Type Activities: Capital Assets Not Being Depreciated: Land 1,135,881$ -$ -$ 1,135,881$ Construction in progress - 1,322,834 - 1,322,834 Total capital assets not being depreciated 1,135,881 1,322,834 - 2,458,715 Capital Assets Being Depreciated: Buildings and improvements 9,475,555 - - 9,475,555 Equipment 357,143 32,245 - 389,388 Vehicles and motorized equipment 2,464,684 507,591 - 2,972,275 Total capital assets being depreciated 12,297,382 539,836 - 12,837,218 Less Accumulated Depreciation For: Buildings and improvements 3,468,284 459,575 - 3,927,859 Equipment 169,224 37,281 - 206,505 Vehicles and motorized equipment 2,258,485 108,265 - 2,366,750 Total accumulated depreciation 5,895,993 605,121 - 6,501,114 Total capital assets being depreciated, net 6,401,389 6,336,104 Business-type activities capital assets, net 7,537,270$ 8,794,819$ 40 This is trial version www.adultpdf.com GASTON COUNTY, NORTH CAROLINA NOTES TO BASIC FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2008 Construction Commitments A summary of the remaining commitments on the County’s open construction projects is as follows: Remaining Project Commitment Administration Building Renovation 93,556$ Visitor's Center Construction 7,380 Health Department Renovation 2006 8,088 Health Department Renovation 2007 247,053 Health Department Renovation 2008 5,000,000 Senior Center 83,523 York-Chester Square Renovation Phase II 9,166 Animal Shelter Constuction 67,802 Landfill FY07 Cell Expansion 1,913 Landfill FY08 Cell Expansion 1,293,983 Total 6,812,464$ F. Payables Payables at the government-wide level at June 30, 2008, were as follows: Accrued Vendors Expenses Total Governmental Activities: General 3,371,192$ 5,008,130$ 8,379,322$ Accrued interest - 250,000 250,000 Public assistance 1,845,063 639,683 2,484,746 Capital improvement 4,232,355 - 4,232,355 Nonmajor special revenue 8,471 17,035 25,506 Total governmental activities 9,457,081$ 5,914,848$ 15,371,929$ Business-Type Activities: Landfill 1,146,584$ 36,742$ 1,183,326$ 41 This is trial version www.adultpdf.com GASTON COUNTY, NORTH CAROLINA NOTES TO BASIC FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2008 G. Closure and Postclosure Costs In October 1991, the U.S. Environmental Protection Agency issued its rule entitled “Solid Waste Disposal Facility Criteria” (the “EPA rule”). The effect of the EPA rule is to obligate all municipal solid waste landfill owners and operators to perform certain closing functions and certain postclosure monitoring and maintenance functions as a condition for the right to continue operating existing landfill sites. Beginning in April 1995, owners and operators were also required to provide assurance that financial resources would be available to provide for the closure and postclosure care costs. The County is continuing to develop and modify closure plans and assess postclosure monitoring methods and strategies. Engineering cost estimates continue to be refined consistent with current regulatory requirements and anticipated rule changes. Such costs, which are to include the cost of all equipment and facilities, the cost of providing final cover and the cost of monitoring and maintaining the landfill area during the 30-year postclosure period, are likely to be significant. State and federal laws and regulations required the County to close by December 31, 1997 the last remaining unlined landfill cell in which the County was burying solid waste. Just prior to January 1, 1998, as required by law, the County opened its first landfill cell containing a synthetic liner to capture any leach ate from the solid waste. The County obtained approval for an operating permit for only the one cell in which the liner was installed. Much of the 300 acres of the original tract purchased for landfill purposes will remain unpermitted until the need for additional cells arises. Consequently, the County considers only the cell currently in use to calculate its estimate of landfill closure and postclosure care costs for this landfill. The County’s current landfill cell and the one closed in December 1997 are subject to the new regulations. Although closure and postclosure care costs will be paid only near or after the date that the individual landfill cells stop accepting waste, a portion of these closure and postclosure care costs are reported as a liability within the Proprietary Fund based on landfill capaCounty used as of each balance sheet date. The closure and postclosure care costs accrued at June 30, 2008 amount to $4,563,767. This estimated amount is based on what it would cost to perform all closure and postclosure care in 2008. Actual costs may differ due to inflation, changes in technology, or changes in regulations. The County will recognize the remaining estimated costs of closure and postclosure care of each new cell as it is permitted and begins to accept waste. The County is currently using two lined cells, which were opened in January 1998 and March 2003, and expects to close both of those concurrently in approximately four years once another cell has been permitted. The County has three additional landfills, which have not received solid waste since October 9, 1991 and are, therefore, not subject to the most recent EPA requirements. The Biggerstaff Landfill was closed during the 1992 fiscal year. The Cramerton and Auten Road Landfills were closed during the 1995 fiscal year. These landfills are subject to the 1986 EPA rule requiring certain closure functions and postclosure monitoring for five years. The five-year period for monitoring the landfills closed under the 1986 EPA rule has expired; therefore, the County has accrued no costs for those landfills at June 30, 2008. 42 This is trial version www.adultpdf.com GASTON COUNTY, NORTH CAROLINA NOTES TO BASIC FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2008 H. Deferred / Unearned Revenues The balance in deferred and unearned revenues composed on the fund and government-wide statements at year-end is composed of the following elements: Deferred Unearned Revenue Revenue Prepaid taxes not yet earned (General Fund) 338,023$ 338,023$ Prepaid rent not yet earned (General Fund) 2,258,472 2,258,472 Taxes receivable, net (General Fund) 5,264,302 - Taxes receivable, net (Special Revenue Fund) 260,607 - Other (General Fund) 855,002 - Total 8,976,406$ 2,596,495$ I. Long-Term Obligations Capital Leases The County has entered into agreements to lease certain equipment. The lease agreements qualify as capital leases for accounting purposes and, therefore, have been recorded at the present value of the future minimum lease payments as of the date of their inception. At June 30, 2008, the County leased vehicles and equipment as follows: Governmental Activities: Accumulated Net Book Classes of Property Cost Depreciation Value Equipment 3,307,321$ 1,216,860$ 2,090,461$ Vehicles 2,315,874 525,719 1,790,155 Total 5,623,195$ 1,742,579$ 3,880,616$ Business-Type Activities: Accumulated Net Book Classes of Property Cost Depreciation Value Equipment 471,736$ 47,174$ 424,562$ Vehicles 22,426 11,213 11,213 494,162$ 58,387$ 435,775$ 43 This is trial version www.adultpdf.com [...]... COUNTY, NORTH CAROLINA NOTES TO BASIC FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2008 For the County, the future minimum lease payments as of June 30, 2008, were as follows: Governmental Activities: Year Ending June 30 2009 2010 2011 Principal Interest $ 1,555,922 $ 76,979 922,945 24,185 186,908 3,473 Total $ 2,665,775 $ 104,637 Business-Type Activities: Year Ending June 30 2009 2010 2011 Principal... BASIC FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2008 General Obligation Indebtedness At June 30, 2008, there was $0 in bonds authorized, but unissued, and the County had a legal debt margin of $934,494,129 General obligation bonds are collateralized by the full faith, credit and taxing power of the County Principal and interest requirements will be provided by appropriation in the year in which they... TO BASIC FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2008 Long-Term Obligation Activity The following is a summary of changes in the County’s long-term obligations for the fiscal year ended June 30, 2008: Balance July 1, 2007 Governmental Activities: General obligation bonds Certificates of participation Capitalized leases of equipment Installment purchases payable Compensated absenses Other post-employment... Accordingly, the bonds are not reported as liabilities in the accompanying financial statements As of June 30, 2008, the YMCA– Series 1998 is outstanding, with an aggregate principal amount payable of $3,800,000 This is trial version www.adultpdf.com 49 GASTON COUNTY, NORTH CAROLINA NOTES TO BASIC FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2008 J Interfund Balances and Activity The composition... CAROLINA NOTES TO BASIC FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2008 Certificates of Participation $12,390,000 2005 Certificates of Participation: Principal due in annual installments through December 1, 2016 Installments range from $570,494 to $1,646,294 Interest payable semi-annually (June and December) is at 3.00% to 5.00% Total 12,135,000 $ 12,135,000 For the County, the annual debt service... Obligation The County of Gaston, North Carolina has issued recreational facilities lease revenue bonds (Series 1998) to provide financing to the Gaston County Family YMCA (YMCA) to construct new recreational facilities to be owned by the YMCA These bonds are secured by the property financed Neither the County, the State, nor any political subdivision thereof is obligated in any manner for the repayment of the. .. TO BASIC FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2008 Benefit Payments Issued by the State: The amounts listed below were paid directly to recipients by the State from federal and State monies on behalf of the County County personnel are involved with certain functions, primarily eligibility determinations that cause benefit payments to be issued by the State These amounts disclose this additional... vandalism or theft of vehicles typically included in comprehensive commercial coverage This self-insurance program is funded by annual appropriation There have been no significant reductions in insurance coverage from the previous years and settled claims from these risks have not exceeded commercial insurance coverage in any of the last three fiscal years The County carries flood insurance because the County... www.adultpdf.com 44 GASTON COUNTY, NORTH CAROLINA NOTES TO BASIC FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2008 Installment Purchase Obligations 5.09% note, payable in annual installments of $365, 430, including interest; final payment due in 2008; secured by Agriculture Center and a library branch $ 90,210 4.11% note, payable in annual installments ranging from $625,367 to $899,641, including... TO BASIC FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2008 $18,500,000 General Obligation School Bonds, Series 2004: Principal due in annual installments through March 1, 2022 Installments range from $600,000 to $2,300,000 Interest payable semi-annually (March and September) ranges from 3.5 to 5.0% 16,700,000 $33,880,000 General Obligation Refunding Bonds, Series 2004: Principal due in annual installments . BASIC FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2008 For the County, the future minimum lease payments as of June 30, 2008, were as follows: Governmental Activities: Year Ending June. NOTES TO BASIC FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2008 J. Interfund Balances and Activity The composition of Interfund transfers during the year ended June 30, 2008 is as follows:. monitoring for five years. The five -year period for monitoring the landfills closed under the 1986 EPA rule has expired; therefore, the County has accrued no costs for those landfills at June 30, 2008.