NESHOBA COUNTY Notes to Financial Statements For the Year Ended September 30, 1997 19 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. N. 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. O. 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 $47,207 for accumulated unpaid personal leave up to a maximum of 20 days per employee is reported in the General Long-term Debt Account Group of the accompanying combined balance sheet. P. 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. NESHOBA COUNTY Notes to Financial Statements For the Year Ended September 30, 1997 20 (2) 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 Capital General Revenue Service Projects Budget (Cash Basis) $ 221,376 244,456 (30,791) (95,364) Increase (Decrease) Net adjustment for revenue accruals 58,549 (153,467) 10,199 (5,486) Net adjustment for expenditure accruals 31,123 (2,520) 26,800 Other reconciling item: Residual equity transfer (6,738) 6,738 GAAP Basis $ 304,310 88,469 (20,592) (67,312) (3) Deposits. The carrying amount of the county's total deposits with financial institutions at September 30, 1997, was $4,736,055 and the bank balance was $4,522,334. 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 or collateralized with securities held by the county or its agent in the county's name. $ 300,000 Amount collateralized with securities held by the pledging financial institution's trust department or agent in the county's name. 4,222,334 Total Bank Balance $ 4,522,334 (4) 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 General Fund Solid waste $ 18,625 Countywide road General Fund 35,128 County fire department General Fund 2,790 NESHOBA COUNTY Notes to Financial Statements For the Year Ended September 30, 1997 21 Receivable Fund Payable Fund Amount Countywide bridge General Fund 12,212 Nursing home I & S General Fund 3,562 Industrial park I & S General Fund 1,018 Nemanco bond I & S General Fund 1,527 Vo-tech center I & S General Fund 1,913 Neshoba County School I & S General Fund 3,416 District 4 road bond I & S General Fund 829 Multi-purpose building bond I & S General Fund 8,141 East Central Community College maintenance General Fund 4,578 East Central Community College building General Fund 1,832 East Central Community College dormitory renovation General Fund 509 Pearl River Basin Development District General Fund 509 Total $ 96,589 Advances to/from Other Funds: Receivable Fund Payable Fund Amount General Fund Solid waste disposal $ 46,631 (5) Fixed Assets. Changes in the General Fixed Assets Account Group at September 30, 1997, are as follows: Balance Balance Oct. 1, 1996 Additions Deletions Adjustments Sept. 30, 1997 Governmental Funds: Land $ 316,373 316,373 Buildings 3, 747,184 3,747,184 Construction in progress 55,050 213,313 268,363 Mobile equipment 2,427,571 184,102 127,954 2,483,719 Other furniture and equipment 718,232 23,740 64,482 677,490 Leased property under capital leases 1,773,386 104,400 144,734 1,733,052 Total $ 9,037,796 525,555 337,170 0 9,226,181 NESHOBA COUNTY Notes to Financial Statements For the Year Ended September 30, 1997 22 Balance Sept. 30, 1997 Enterprise Fund: Mobile equipment $ 154,148 Leased property under capital leases 241,430 Total 395,578 Less: Accumulated Depreciation 238,677 Total (Net of Accumulated Depreciation) $ 156,901 (6) Commitments. As of September 30, 1997, the county had the following commitments with respect to unfinished capital projects: Remaining Description of Financial Expected Date Commitment Commitment of Completion Multi-purpose coliseum $ 2,800,000 January 1999 (7) Claims and Judgments. Risk Financing. The county finances its exposure to risk of loss related to workers' compensation for injuries to its employees through the Mississippi Public Entity Workers' Compensation Trust, a public entity risk pool. The county pays premiums to the pool for its workers' compensation insurance coverage and the participation agreement provides that the pool will be self-sustaining through member premiums. The retention for the pool is $350,000 for each accident and completely covers all statutory limits set by the Workers' Compensation Commission. Risk of loss is remote for claims exceeding the pool's retention liability. However, the pool also has catastrophic reinsurance coverage of $1,000,000 per accident, provided by Employers' Reinsurance Corporation, effective from January 1, 1997 to January 1, 1998. The pool may make an overall supplemental assessment or declare a refund depending on the loss experience of all the entities it insures. NESHOBA COUNTY Notes to Financial Statements For the Year Ended September 30, 1997 23 (8) Capital Leases. As Lessor: The county leases the following property with varying terms and options as of September 30, 1997: Classes of Property Amount Industrial building $ 2,500,000 The future minimum lease receivables and the present value of the net minimum lease receivables as of September 30, 1997, are as follows: Amount Year Ending September 30: 1998 $ 221,950 1999 216,860 2000 218,940 Total Minimum Lease Receivables 657,750 Less: Amount representing interest 87,750 Present Value of Net Minimum Lease Receivables $ 570,000 As Lessee: The county is obligated for the following assets acquired through capital leases as of September 30, 1997: General Enterprise Fixed Assets Classes of Property Funds Group Mobile equipment $ 241,430 1,639,551 Other furniture and equipment 93,501 Total 241,430 1,733,052 Less: Accumulated depreciation 121,153 Leased Property Under Capital Leases $ 120,277 1,733,052 NESHOBA COUNTY Notes to Financial Statements For the Year Ended September 30, 1997 24 The future minimum lease payments together with the present value of the net minimum lease payables as of September 30, 1997, are as follows: General Enterprise Long-term Funds Debt Group Year Ending September 30: 1998 $ 50,672 333,682 1999 46,401 307,815 2000 44,026 553,061 2001 45,156 Total Minimum Lease Payments 141,099 1,239,714 Less: Amount representing interest 10,458 117,219 Present Value of Net Minimum Lease Payments $ 130,641 1,122,495 (9) Long-term Debt. Debt outstanding as of September 30, 1997, consisted of the following: Final Amount Interest Maturity Description and Purpose Outstanding Rates Date Enterprise Fund: Refuse trailer $ 15,606 4.75 4-99 Aluminum floor trailer 27,117 5.46 4-00 Mack truck 36,813 5.46 5-00 Caterpillar excavator (1/2 allocation) 51,105 6 10-99 Total Enterprise Fund $ 130,641 General Long-term Debt Account Group: A. General Obligation Bonds: Neshoba County School District $ 125,000 5.04 4-98 Neshoba County vo-tech building 5,000 10 5-98 District 4 road 135,000 9.1 to 10 3-04 Nursing home 730,000 6.6 to 7 11-04 Industrial park 575,000 8.8 to 10.75 1-05 Nemanco sewer 315,000 6.1 to 8.6 9-06 Multi-purpose building 2,820,000 4.9 to 7 8-16 Marshall Durbin enterprise bonds 570,000 6.8 12-99 Total General Obligation Bonds $ 5,275,000 B. Limited Obligation Bonds: Jail construction $ 1,355,000 5.4 to 6.1 6-04 NESHOBA COUNTY Notes to Financial Statements For the Year Ended September 30, 1997 25 Final Amount Interest Maturity Description and Purpose Outstanding Rates Date C. Other Loan: Department of Economic and Community Development loan $ 134,251 3 1-05 D. Capital Leases: Asphalt roller $ 8,511 4.75 5-98 Road sweeper 3,335 4.75 4-98 Caterpillar compactor 24,779 4.75 7-99 Caterpillar excavator (1/2 allocation) 51,132 6 10-99 E-911 communication equipment 74,377 5.75 11-99 6 Caterpillar motorgraders 544,771 5.79 5-00 2 Ricoh copiers 11,754 5.79 4-00 1975 fire truck 5,123 5.36 6-98 4 Mack dump trucks 150,131 5.46 5-00 1969 fire truck 4,433 5.61 9-98 Radio tower w/transmitter & multicoupler 51,678 5.24 10-01 2 John Deere tractors w/side mowers 43,016 5.09 5-01 IBM AS400 computer system 53,368 5.34 3-01 2 ambulances 96,087 5.19 4-01 Total Capital Leases $ 1,122,495 Annual debt service requirements to maturity for the following debt reported in the General Long-term Debt Account Group are as follows: General Limited Obligation Obligation Year Ending September 30 Bonds Bonds Loans Total 1998 $ 902,165 244,435 19,125 1,165,725 1999 756,910 240,525 19,125 1,016,560 2000 754,121 241,005 19,125 1,014,251 2001 543,438 240,655 19,125 803,218 2002 544,787 244,445 19,125 808,357 Later years 4,379,403 486,175 57,375 4,922,953 Total 7,880,824 1,697,240 153,000 9,731,064 Less: Amounts representing interest 2,605,824 342,240 18,749 2,966,813 Total at Present Value $ 5,275,000 1,355,000 134,251 6,764,251 NESHOBA COUNTY Notes to Financial Statements For the Year Ended September 30, 1997 26 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, 1997, the amount of outstanding general obligation bonded debt was equal to 6.7% of the latest property assessments. The following changes occurred in liabilities reported at year end: Balance Balance Styling Oct. 1, 1996 Additions Reductions Adjustments Sept. 30, 1997 General Long-term Debt Account Group: Compensated absences $ 42,696 4,511 47,207 General obligation bonds 5,850,000 575,000 5,275,000 Limited obligation bonds 1,510,000 155,000 1,355,000 Capital leases 1,304,288 104,400 286,193 1,122,495 Other loans 148,909 14,658 134,251 Total $ 8,855,893 108,911 1,030,851 0 7,933,953 Enterprise Fund: Capital leases $ 188,820 0 58,179 0 130,641 (10) 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. (11) 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: Balance at Styling September 30, 1997 Industrial revenue bonds $ 1,000,000 NESHOBA COUNTY Notes to Financial Statements For the Year Ended September 30, 1997 27 (12) Jointly Governed Organizations. The county participates in the following jointly governed organizations: East Central Community College operates in a district composed of the Counties of Leake, Neshoba, Newton, Scott and Winston. The Neshoba County Board of Supervisors appoints six of the 30 members of the college board of trustees. The county levy collected approximately $269,700 for maintenance and support of the college in fiscal year 1997. Central Mississippi Emergency Medical Services District operates in a district composed of the Counties of Attala, Clarke, Copiah, Holmes, Leake, Madison, Neshoba, Rankin, Scott, Smith, Warren and Yazoo. The Neshoba County Board of Supervisors appoints two of the 26 board members. The county provided no financial support in fiscal year 1997. East Central Community Action Agency, Inc. operates in a district composed of the Counties of Leake, Neshoba, Rankin, Scott and Smith. The Neshoba County Board of Supervisors appoints two of the 30 board members. The county provided no financial support in fiscal year 1997. East Central Mississippi Planning and Development District operates in a district composed of the Counties of Clarke, Jasper, Kemper, Lauderdale, Leake, Neshoba, Newton, Scott and Smith. The Neshoba County Board of Supervisors appoints one of the 15 members of the board of directors. The county provided no financial appropriation in fiscal year 1997. Region Ten Mental Health-Mental Retardation Commission operates in a district composed of the Counties of Clarke, Jasper, Kemper, Lauderdale, Leake, Neshoba, Newton, Scott and Smith. The Neshoba County Board of Supervisors appoints one of the nine members of the board of commissioners. The county provided no financial support in fiscal year 1997. (13) Defined Benefit Pension Plan. Plan Description. Neshoba 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 (employer share only) to PERS for the years ending September 30, 1997, 1996 and 1995 were $195,108, $200,443 and $181,321, respectively, equal to the required contributions for each year. (14) Prior Period Adjustment. The county did not set an allowance for doubtful accounts in the solid waste Enterprise Fund until October 1996. The amount recorded as an allowance for doubtful accounts on October 1, 1996 was $159,994, which reduced retained earnings, accordingly. NESHOBA COUNTY Notes to Financial Statements For the Year Ended September 30, 1997 28 (15) Accounts Receivable for Enterprise Fund. The Board of Supervisors set $84 per year per household as the service charge for solid waste disposal. This amount was billed quarterly. The accounts receivable balance at September 30, 1997, is as follows: Total 0-30 Days 31-60 Days 61-90 Days 91-120 Days 121+ Days $196,186 $ 38,976 $ 168 $ 147 $ 26,854 $ 130,041 Management estimated an allowance for uncollectible accounts based on a percentage of billings deemed uncollectible. Accordingly, accounts receivable is reported on the balance sheet at the net realizable value amount of $101,749. Net realizable value is equal to the gross amount of receivables less an estimated allowance for uncollectible accounts. [...].. .NESHOBA COUNTY SPECIAL REPORTS 29 . to Financial Statements For the Year Ended September 30, 1997 20 (2) Budgetary Basis vs. GAAP. The accompanying Combined Statement of Revenues, Expenditures and Changes in Fund Balances - Budget (Non-GAAP. refund depending on the loss experience of all the entities it insures. NESHOBA COUNTY Notes to Financial Statements For the Year Ended September 30, 1997 23 (8) Capital Leases. As Lessor: The. 1,733,052 NESHOBA COUNTY Notes to Financial Statements For the Year Ended September 30, 1997 24 The future minimum lease payments together with the present value of the net minimum lease payables as of