BENTON COUNTY Notes to Financial Statements For the Year Ended September 30, 1995 The following is a schedule by years of future minimum lease payments payable under capital leases together with the present value of the net minimum lease payables as of September 30, 1995: General Long-term Debt Group Year Ending September 30: 1996 1997 1998 1999 2000 $ Total Minimum Lease Payments Less: Amount representing interest 293,828 29,107 Present Value of Net Minimum Lease Payments (11) 104,136 69,670 63,774 21,248 35,000 $ 264,721 Long-term Debt The following individual liabilities are reported on the combined balance sheet at September 30, 1995: Amount Outstanding Interest Rates Final Maturity Date $ 20,000 5.2 /5.3 10-1-96 $ 11,095 2,888 3,153 15,869 11,514 71,068 68,651 44,022 36,461 6.97/7.68 7.25 6.50 6.50 6.50 5.75 5.50 6.50 5.75 11-1-96 1-1-96 1-1-96 10-1-96 1-1-97 10-1-99 9-1-98 2-1-99 1-1-99 $ 264,721 $ 17,002 26,812 10,000 3.0 / 6.0 6.0 / 9.0 6.0 9-30-99 9-30-99 4-1-96 $ 53,814 Description and Purpose General Long-term Debt Account Group: A B General Obligation Bonds: Jail renovation Capital Leases: IBM computer and software District wheel loader District motor grader District wheel loader District motor grader District motor grader District (2) motor graders District loader District motor grader Total C Other Loans: Disaster loan - 1979 Disaster loan - 1981 County building Total 19 BENTON COUNTY Notes to Financial Statements For the Year Ended September 30, 1995 Annual requirements to amortize outstanding long-term debt reported in the General Long-term Debt Account Group are as follows: Year Ending September 30 1996 1997 1998 1999 2000 Bonds Total at Present Value 104,136 69,670 63,774 21,248 35,000 24,600 14,000 14,000 14,000 7,624 139,796 94,200 77,774 35,248 42,624 293,828 29,107 74,224 20,410 389,642 51,107 20,000 $ Total 21,590 1,590 Total Less: Amounts representing interest Loans 11,060 10,530 $ Leases 264,721 53,814 338,535 Legal Debt Margin - The amount of general obligation bonded debt that can be incurred by the county is limited by state statute Total outstanding general obligation bonded debt during a year can be no greater than 15% of assessed value of the taxable property within the county, according to the then last completed assessment for taxation However, the limitation is increased to 20% whenever a county issues bonds to repair or replace washed out or collapsed bridges on the public roads of the county As of September 30, 1995, the amount of outstanding general obligation bonded debt was equal to 32% of the latest property assessments The following changes occurred in liabilities reported at year end: Balance Oct 1, 1994 Styling Additions Reductions Balance Sept 30, 1995 30,000 270,659 74,535 139,561 10,000 145,499 20,721 20,000 264,721 53,814 375,194 139,561 176,220 338,535 General Long-term Debt Account Group: General obligation bonds Capital leases Other loans Total (12) $ $ Contingencies Federal Grants - The county has received federal grants for specific purposes that are subject to audit by the grantor agencies Entitlements to these resources are generally conditional upon compliance with the terms and conditions of grant agreements and applicable federal regulations, including the expenditure of resources for allowable purposes Any disallowance resulting from a grantor audit may become a liability of the county Litigation - The county is party to legal proceedings, many of which occur in the normal course of governmental operations It is not possible at the present time to estimate ultimate outcome or liability, if any, of the county with respect to the various proceedings However, the county's legal counsel believes that ultimate liability resulting from these lawsuits will not have a material adverse effect on the financial condition of the county 20 BENTON COUNTY Notes to Financial Statements For the Year Ended September 30, 1995 (13) No Commitment Debt (Not Included in Financial Statements) No commitment debt is repaid only by the entities for whom the debt was issued and includes debt that either bears the county's name or for which a moral responsibility may exist that is not an enforceable promise to pay No commitment debt explicitly states the absence of obligation by the county other than possibly an agreement to assist creditors in exercising their rights in the event of default Because a default may adversely affect the county's own ability to borrow, the principal amount of such debt outstanding at year end is disclosed as follows: Styling Industrial revenue notes (14) Balance at September 30, 1995 $ 104,386 Jointly Governed Organizations The county participates in the following jointly governed organizations: Northwest Mississippi Community College operates in a district composed of the Counties of Benton, Calhoun, DeSoto, Lafayette, Marshall, Panola, Quitman, Tallahatchie, Tate, Tunica and Yalobusha The Benton County Board of Supervisors appoints two of the 23 members of the college board of trustees The county appropriated approximately $99,202 for maintenance and support of the college in fiscal year 1995 The Northeast Mississippi Planning and Development District is a service district composed of Alcorn, Benton, Marshall, Prentiss, Tippah and Tishomingo Counties The Planning and Development District provides services to the member counties in planning, financial records and computer services The Benton County Board of Supervisors appoints four members of the 24 member board of directors The district receives less than $100,000 in financial support from the member counties The Northeast Mental Health/Mental Retardation Commission is composed of Benton, Chickasaw, Itawamba, Lee, Monroe, Pontotoc and Union Counties Each member county appoints one member of the board of commissioners In the aggregate, the counties provide approximately 8% of the organization's operating budget The Northeast Mississippi Regional Solid Waste Authority provides solid waste services to the following counties: Alcorn, Benton, Prentiss, Tippah and Tishomingo The authority also services the Cities of Ashland, Booneville, Corinth, Iuka and Ripley Currently, Benton County does not receive any direct services from the authority, but rather contracts with a private firm for the collection of solid waste The authority prepared a five year solid waste plan for the county Each member of the authority appoints one member of the ten member commission United Community Action Commission, Inc., was created as a non-profit organization pursuant to federal community action legislation in the mid 1960's The commission is governed by a 21 member board, seven of whom are appointed by the Benton County Board of Supervisors Most of the commissions operating revenues come from federal sources 21 BENTON COUNTY Notes to Financial Statements For the Year Ended September 30, 1995 (15) Defined Benefit Pension Plan Plan Description Benton County, Mississippi, contributes to the Public Employees' Retirement System of Mississippi (PERS), a cost-sharing, multiple-employer, defined benefit pension plan PERS provides retirement and disability benefits, annual cost-of-living adjustments and death benefits to plan members and beneficiaries Benefit provisions are established by state law and may be amended only by the State of Mississippi Legislature PERS issues a publicly available financial report that includes financial statements and required supplementary information That information may be obtained by writing to Public Employees Retirement System, PERS Building, 429 Mississippi Street, Jackson, MS 39201-1005 or by calling 1-800-444-PERS Funding Policy PERS members are required to contribute 7.25% of their annual covered salary and the county is required to contribute at an actuarially determined rate The current rate is 9.75% of annual covered payroll The contribution requirements of PERS members are established and may be amended only by the State of Mississippi Legislature The county's contributions to PERS for the years ending September 30, 1995, 1994 and 1993 were $72,475, $74,859, and $71,713, respectively, equal to the required contributions for each year (16) Subsequent Events On October 31, 1995, Benton County received a default judgement against ABC Manufacturing in the amount of $87,434 in damages plus interest at the legal rate, attorney's fees in the sum of $2,500 and all costs of the court The case involved a lease from the county for the building the ABC Company was using The company defaulted on the debt it owed and the county was forced to assume the payments On December 4, 1995, Benton County guaranteed a loan to Northeast Mississippi Solid Waste Management Authority for the county's pro rata share of the loan principal and interest The total contingency is as follows: Issue Date Interest Rate 12-95 5.5% Issue Amount $ 11,615 Type of Financing Source of Financing Other loan - contingent liability General Fund 22 BENTON COUNTY SUPPLEMENTAL INFORMATION 23 BENTON COUNTY (This page left blank intentionally) 24 BENTON COUNTY Schedule of Federal Financial Assistance For the Year Ended September 30, 1995 Federal Grantor/ Pass-through Grantor/ Program Title U S Department of Housing and Urban Development/Passedthrough the State of Mississippi Department of Economic & Community Development Community development block grant Community development block grant Catalog of Federal Domestic Assistance Number Pass-through Grantor's Number 14.219 3-113A-095-ED-IF01 14.219 4-095-PF-01 Program or Award Amount Federal Expenditures 275,000 $ 186,096 186,096 314,000 105,040 105,040 291,136 $ Federal Revenue 291,136 2,480 2,480 293,616 293,616 Total U.S Department of Housing and Urban Development U.S Department of Transportation - Federal Highway Administration/ Passed-through the Mississippi Department of Transportation Bridge inspection program 20.205 N/A Total Federal Financial Assistance 2,480 $ 25 BENTON COUNTY (This page left blank intentionally) 26 BENTON COUNTY SPECIAL REPORTS 27 BENTON COUNTY (This page left blank intentionally) 28 OFFICE OF THE STATE AUDITOR STEVEN A PATTERSON AUDITOR INDEPENDENT AUDITOR'S REPORT ON THE INTERNAL CONTROL STRUCTURE BASED ON AN AUDIT OF THE PRIMARY GOVERNMENT FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS April 9, 1996 Members of the Board of Supervisors Benton County, Mississippi We have audited the primary government financial statements of Benton County, Mississippi, as of and for the year ended September 30, 1995, and have issued our report dated April 9, 1996 The Independent Auditor's Report on the primary government financial statements is qualified because the primary government financial statements not include the financial data of component units, which should be included in order to conform with generally accepted accounting principles We conducted our audit in accordance with generally accepted auditing standards and 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 primary government financial statements are free of material misstatement The management of Benton County, Mississippi, is responsible for establishing and maintaining an internal control structure In fulfilling this responsibility, estimates and judgments by management are required to assess the expected benefits and related costs of internal control structure policies and procedures The objectives of an internal control structure are to provide management with reasonable, but not absolute, assurance that assets are safeguarded against loss from unauthorized use or disposition and that transactions are executed in accordance with management's authorization and recorded properly to permit the preparation of primary government financial statements in accordance with generally accepted accounting principles Because of inherent limitations in any internal control structure, errors or irregularities may nevertheless occur and not be detected Also, projection of any evaluation of the structure to future periods is subject to the risk that procedures may become inadequate because of changes in conditions or that the effectiveness of the design and operation of policies and procedures may deteriorate In planning and performing our audit of the primary government financial statements of Benton County, Mississippi, for the year ended September 30, 1995, we obtained an understanding of the internal control structure With respect to the internal control structure, we obtained an understanding of the design of relevant policies and procedures and whether they have been placed in operation, and we assessed control risk in order to determine our auditing procedures for the purpose of expressing our opinion on the primary government financial statements and not to provide an opinion on the internal control structure Accordingly, we not express such an opinion We noted certain matters involving the internal control structure and its operation that we consider to be reportable conditions under standards established by the American Institute of Certified Public Accountants Reportable conditions involve matters coming to our attention relating to significant deficiencies in the design or operation of the internal control structure that, in our judgment, could adversely affect the county's ability to record, process, summarize and report financial data consistent with the assertions of management in the primary government financial statements The reportable conditions noted during our consideration of the internal control structure are described in the accompanying "Schedule of Auditor's Findings and Recommendations." 29 3750 I-55 NORTH FRONTAGE ROAD JACKSON, MISSISSIPPI 39211 (601) 364-2888 FAX (601) 364-2828 ... Federal Financial Assistance 2,480 $ 25 BENTON COUNTY (This page left blank intentionally) 26 BENTON COUNTY SPECIAL REPORTS 27 BENTON COUNTY (This page left blank intentionally) 28 OFFICE OF THE... contingent liability General Fund 22 BENTON COUNTY SUPPLEMENTAL INFORMATION 23 BENTON COUNTY (This page left blank intentionally) 24 BENTON COUNTY Schedule of Federal Financial Assistance For the Year... Yalobusha The Benton County Board of Supervisors appoints two of the 23 members of the college board of trustees The county appropriated approximately $99,202 for maintenance and support of the college