PRENTISS COUNTY Notes to Financial Statements For the Year Ended September 30, 1997 19 (2) Stewardship, Compliance and Accountability. Individual Fund Deficits. The following funds had deficit fund balances at September 30, 1997: Deficit Styling Amount Capital Projects Funds: Ag Center construction fund $ 23,795 Quartet Manufacturing site development 9,538 (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 Capital General Revenue Service Projects Budget (Cash Basis) $ (193,229) (137,266) 16,416 (65,432) Increase (Decrease) Net adjustment for revenue accruals 3,923 20,774 3,587 (308,573) Net adjustment for expenditure accruals 26,675 (51,739) 196,104 GAAP Basis $ (162,631) (168,231) 20,003 (177,901) PRENTISS COUNTY Notes to Financial Statements For the Year Ended September 30, 1997 20 (4) Deposits. The carrying amount of the county's total deposits with financial institutions at September 30, 1997, was $2,257,560 and the bank balance was $2,318,778. 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. $ 200,000 Amount collateralized with securities held by the pledging financial institution's agent in the county's name. 2,118,778 Total Bank Balance $ 2,318,778 (5) Interfund Receivables and Payables. The composition of interfund balances at September 30, 1997, consists of the following: Receivable Fund Payable Fund Amount General Fund Solid waste $ 22,257 In lieu of state tax General Fund 1,417 District 1 rural fire General Fund 153 District 2 rural fire General Fund 153 District 3 rural fire General Fund 152 District 4 rural fire General Fund 152 District 5 rural fire General Fund 152 District 1 road work General Fund 4,660 District 2 road work General Fund 4,660 District 3 road work General Fund 4,660 District 4 road work General Fund 4,660 District 5 road work General Fund 4,660 Disaster loan repayment General Fund 8 District 1 bridge & culvert General Fund 850 District 2 bridge & culvert General Fund 850 District 3 bridge & culvert General Fund 850 District 4 bridge & culvert General Fund 850 District 5 bridge & culvert General Fund 850 District 1 road bond I & S General Fund 2,570 District 2 road bond I & S General Fund 2,901 District 3 road bond I & S General Fund 1,650 District 4 road bond I & S General Fund 3,031 District 5 road bond I & S General Fund 1,399 Industrial park I & S General Fund 568 General obligation I & S General Fund 8,202 Northeast Mississippi Community College maintenance General Fund 4,817 Northeast Mississippi Community College improvement General Fund 3,117 Total $ 80,249 PRENTISS COUNTY Notes to Financial Statements For the Year Ended September 30, 1997 21 (6) Loans Receivable. Loans receivable at September 30, 1997, consists of the following: Date of Interest Maturity Balance Styling Loan Rate Date Payable Economic development - B. D. & G., Inc. 1-13-92 7.0 3-2004 $ 147,660 (7) Fixed Assets. Changes in the General Fixed Assets Account Group at September 30, 1997, are as follows: Balance Balance Oct. 1, 1996 Additions Deletions Sept. 30, 1997 Governmental Funds: Land $ 535,654 535,654 Buildings 2,362,673 2,362,673 Construction in progress 464,305 464,305 Mobile equipment 707,616 707,616 Other furniture and equipment 409,749 409,749 Total $ 4,479,997 0 0 4,479,997 Note: No attempt was made by the county to show additions and deletions for the 1996-1997 fiscal year. The Proprietary Funds fixed asset balances at September 30, 1997, are as follows: Buildings $ 259,269 Mobile equipment 183,541 Other furniture and equipment 2,750 Leased property under capital leases 195,263 Total 640,823 Less: Accumulated depreciation 225,102 Net Book Value $ 415,721 PRENTISS COUNTY Notes to Financial Statements For the Year Ended September 30, 1997 22 (8) 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. (9) 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 facilities $ 5,000,000 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 $ 524,470 1999 521,095 2000 516,595 2001 510,970 2002 507,700 Later years 4,079,615 Total Minimum Lease Receivables 6,660,445 Less: Amount representing interest 2,110,445 Present Value of Net Minimum Lease Receivables $ 4,550,000 PRENTISS COUNTY Notes to Financial Statements For the Year Ended September 30, 1997 23 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 $ 195,263 302,104 Other furniture and equipment 251,723 Total 195,263 553,827 Less: Accumulated depreciation 60,167 Leased Property Under Capital Leases $ 135,096 553,827 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 $ 33,798 102,753 1999 33,799 82,931 2000 33,798 83,229 2001 39,905 103,890 2002 28,565 Total Minimum Lease Payments 141,300 401,368 Less: Amount representing interest 15,661 49,565 Present Value of Net Minimum Lease Payments $ 125,639 351,803 PRENTISS COUNTY Notes to Financial Statements For the Year Ended September 30, 1997 24 (10) 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 Funds: A. General Obligation Bond: Solid waste $ 195,000 4.4/5.5 8/04 B. Capital Leases: Backhoe/loader $ 79,473 5.78 2/01 Backhoe/loader 46,166 5.9 9/01 Total Capital Leases $ 125,639 General Long-term Debt Account Group: A. General Obligation Bonds: District 1 road & bridge $ 50,000 10.0 12/03 District 2 road & bridge 17,500 10.0 12/03 District 5 road & bridge 50,000 10.0 12/03 District 1 road & bridge 75,000 7 10/01 General obligation 95,000 8.0 12/02 District 4 road & bridge 30,000 7.5 7/03 District 5 road & bridge 190,000 8.0 7/08 District 2 road & bridge 270,000 8.0 7/08 District 1 road & bridge 255,000 7.65/7.75 11/08 District 3 road & bridge 355,000 7.65/7.75 11/08 District 4 road & bridge 190,000 6.75/7.75 11/08 District 2 road & bridge 85,000 7 8/04 General obligation 195,000 6.5/9.25 5/05 District 1 road & bridge 65,000 7.0/7.375 9/05 District 4 road & bridge 65,000 7.0/7.375 9/05 District 1 road & bridge 270,000 6.2 5/07 District 4 road & bridge 230,000 5.0/6.75 5/07 General obligation 160,000 4.9/7.0 10/07 District 5 road & bridge 110,000 4.5 8/05 District 2 road & bridge 30,000 4.5 8/03 District 3 road & bridge 145,000 5.5/6.75 12/04 Industrial park 115,000 8.3/8.4 1/05 Jail improvement 2,175,000 4.9/6.75 6/15 District 1 road & bridge 285,000 4.2/5.9 7/11 District 4 road & bridge 265,000 4.2/5.9 7/11 G.O. industrial bonds - Caterpillar 4,550,000 5.4/7.5 6/10 G.O. building bonds - Ag Center 550,000 4.75/5.875 10/11 District 2 road & bridge 250,000 4.7 7/07 District 5 road & bridge 150,000 4.7 7/07 Total General Obligation Bonds $ 11,272,500 PRENTISS COUNTY Notes to Financial Statements For the Year Ended September 30, 1997 25 Final Amount Interest Maturity Description and Purpose Outstanding Rates Date B. Equipment Notes: District 2 - truck $ 11,131 5 2/99 District 5 - truck 11,005 5 2/99 District 3 - fire truck 14,000 5 8/02 Total Equipment Notes $ 36,136 C. Capital Leases: Voting equipment $ 6,342 10.0 3/98 1996 radio system - E-911 46,711 5 4/01 1996 John Deere motor grader 70,288 6.0 6/01 1992 Champion motor grader 43,883 5 4/01 AS 400 computer system 41,649 6.7 11/01 1996 Chevrolet truck 23,990 7 7/01 John Deere motor grader - District 4 67,223 6 10/01 1996 Mack truck - District 1 6,787 5 11/98 1983 Mack truck - District 2 5,697 5 11/98 1997 Chevy truck 25,339 7 9/25 1986 Mack tractor truck 13,894 6 2/02 Total Capital Leases $ 351,803 D. Other Loans: Chancery property $ 15,000 10/99 Rural fire 9,000 6 12/00 Economic development 71,000 5 1/04 Jail improvement 60,000 8 4/03 Total Other Loans $ 155,000 PRENTISS COUNTY Notes to Financial Statements For the Year Ended September 30, 1997 26 Annual debt service requirements to maturity for the following debt reported in the General Long-term Debt Account Group are as follows: Equipment Other Year Ending September 30 Bonds Notes Loans Total 1998 $ 1,344,135 15,427 30,812 1,390,374 1999 1,324,398 14,886 29,684 1,368,968 2000 1,322,667 3,277 35,756 1,361,700 2001 1,347,506 3,277 29,268 1,380,051 2002 1,335,374 3,278 25,530 1,364,182 Later years 9,878,087 36,980 9,915,067 Total 16,552,167 40,145 188,030 16,780,342 Less: Amounts representing interest 5,279,667 4,009 33,030 5,316,706 Total at Present Value $ 11,272,500 36,136 155,000 11,463,636 Annual debt service requirements to maturity for the following debt reported in the Enterprise Funds are as follows: Year Ending September 30 Bonds 1998 $ 35,235 1999 34,010 2000 32,735 2001 31,435 2002 35,135 Later years 70,500 Total 239,050 Less: Amounts representing interest 44,050 Total at Present Value $ 195,000 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 9.38% of the latest property assessments. PRENTISS COUNTY Notes to Financial Statements For the Year Ended September 30, 1997 27 The following changes occurred in liabilities reported at year end: Balance Balance Styling Oct. 1, 1996 Additions Reductions Sept. 30, 1997 General Long-term Debt Account Group: General obligation bonds $ 10,891,000 975,000 593,500 11,272,500 Equipment notes 33,204 14,000 11,068 36,136 Capital leases 385,945 46,850 80,992 351,803 Other loans 177,250 22,250 155,000 Total $ 11,487,399 1,035,850 707,810 11,815,439 Proprietary Fund: General obligation bonds $ 215,000 20,000 195,000 Capital leases 95,223 56,263 25,847 125,639 Total $ 310,223 56,263 45,847 320,639 (11) 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. No provision for any liability that may result has been recognized in the county's financial statements. 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. (12) 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 $ 9,250,000 Hospital revenue bonds 4,400,000 Total $ 13,650,000 PRENTISS COUNTY Notes to Financial Statements For the Year Ended September 30, 1997 28 (13) Joint Venture. The county participates in the following joint venture: Prentiss County is a participant with Alcorn, Tippah and Tishomingo Counties in a joint venture, authorized by Section 39-3-9, Miss. Code Ann. (1972), to operate Northeast Regional Library. The joint venture was created to supply a regional library for the area, and is governed by a four member board appointed by the four Boards of Supervisors. By contractual agreement, the county=s appropriation from the General Fund this year to the joint venture amounted to $93,634. Complete financial statements for the Northeast Regional Library can be obtained from Northeast Regional Library, 1023 North Fillmore Street, Corinth, MS 38834. (14) Jointly Governed Organizations. The county participates in the following jointly governed organizations: The Region IV Mental Health-Mental Retardation Commission operates in a district composed of the Counties of Alcorn, Prentiss, Tippah and Tishomingo. The board of commissioners is comprised of one appointee from each county Board of Supervisors. The county appropriated approximately $29,700 for maintenance and support of the commission in fiscal year 1997. The Northeast Mississippi Planning and Development District operates in a district composed of the Counties of Alcorn, Benton, Marshall, Prentiss, Tippah and Tishomingo. The governing body is a 24 member board of directors; four appointed by the Board of Supervisors of each member county. The county appropriated approximately $13,200 for maintenance and support of the district in fiscal year 1997. Northeast Mississippi Community College operates in a district composed of the Counties of Alcorn, Prentiss, Tippah, Tishomingo and Union. The Prentiss County Board of Supervisors appoints six of the 15 members of the college board of trustees. The county appropriated approximately $310,893 for maintenance and support of the college in fiscal year 1997. The Northeast Mississippi Regional Solid Waste Management Authority operates in a district composed of the Counties of Alcorn, Benton, Prentiss, Tippah and Tishomingo and the Cities of Ashland, Booneville, Corinth, Iuka and Ripley. Each of the ten members appoint one board member. The county did not appropriate any funds to the authority in fiscal year 1997. (15) Defined Benefit Pension Plan. Plan Description. Prentiss 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. [...].. .PRENTISS COUNTY Notes to Financial Statements For the Year Ended September 30, 1997 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... 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 $173,298, $147,045 and $134,340, respectively, equal to the required contributions for each year (16) Subsequent Events Subsequent to September 30, 1997, the Prentiss County issued the following debt obligations: Issue Date Interest . PRENTISS COUNTY Notes to Financial Statements For the Year Ended September 30, 1997 19 (2) Stewardship, Compliance and Accountability. Individual Fund Deficits. The following funds. 415,721 PRENTISS COUNTY Notes to Financial Statements For the Year Ended September 30, 1997 22 (8) Claims and Judgments. Risk Financing. The county finances its exposure to risk of loss related to. 60,000 8 4/03 Total Other Loans $ 155,000 PRENTISS COUNTY Notes to Financial Statements For the Year Ended September 30, 1997 26 Annual debt service requirements to maturity for the following