STATE OF MISSISSIPPI OFFICE OF THE STATE AUDITOR PHIL BRYANT_part3 pptx

PERRY COUNTY Notes to Financial Statements For the Year Ended September 30, 1997 17 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. However, the county did not invest in any governmental securities during the fiscal year. H. Receivables. Receivables are reported net of allowances for uncollectible accounts, where applicable. I. 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." J. 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. Fixed assets acquired or constructed for Proprietary Fund operations are capitalized at cost in the respective funds in which they are utilized. No interest is capitalized on self-constructed assets because non-capitalization of interest does not have a material effect on the county's financial statements. Donated fixed assets are recorded at their fair market value at time of donation. Enterprise fixed assets are depreciated using the straight-line method over their estimated useful lives as follows: Mobile equipment 5 years Other furniture and equipment 7 years PERRY COUNTY Notes to Financial Statements For the Year Ended September 30, 1997 18 K. Fund Equity. Unreserved fund balance represents the amount available for budgeting future operations. Unreserved retained earnings represents the net assets available for future operations or distribution. Reservations of fund balance represent amounts that are not appropriable or are legally segregated for a specific purpose. Contributed capital represents equity acquired through capital grants, contributions from other funds, or fixed assets transferred from the General Fixed Assets Account Group. L. 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. 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. M. 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. PERRY COUNTY Notes to Financial Statements For the Year Ended September 30, 1997 19 N. 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 $23,956 for accumulated unpaid personal leave up to a maximum of 30 days per employee is reported in the General Long-term Debt Account Group of the accompanying combined balance sheet. O. 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) 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) $ 880,013 160,520 18,847 Increase (Decrease) Net adjustment for revenue accruals 6,835 62,373 1,152 Net adjustment for expenditure accruals 6,907 (107,393) GAAP Basis $ 893,755 115,500 19,999 (3) Deposits. The county's cash and other deposits with financial institutions as of September 30, 1997, were entirely covered by federal depository insurance or by collateral held by the county or its agent in the county's name. PERRY COUNTY Notes to Financial Statements For the Year Ended September 30, 1997 20 (4) 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 $ 2,967 Library maintenance General Fund 1,171 Rural fire fund General Fund 187 District 1 road General Fund 2,973 District 2 road General Fund 2,973 District 3 road General Fund 2,973 District 4 road General Fund 2,973 District 5 road General Fund 2,974 County hospital General Fund 2,745 Perry County hospital General Fund 329 Reappraisal General Fund 1,143 General obligation building bond payment General Fund 1,514 General obligation bond payment General Fund 985 Hospital bond General Fund 6 Solid waste General Fund 3,648 Jr. college maintenance General Fund 1,983 Jr. college capital outlay General Fund 886 Pat Harrison Waterway General Fund 1,144 Total $ 33,574 (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 Sept. 30, 1997 Land $ 360,183 360,183 Buildings 3,974,548 1,378,125 5,352,673 Improvements other than buildings 30,773 16,492 47,265 Construction in progress 1,265,475 112,650 1,378,125 Mobile equipment 1,717,174 744,690 291,049 2,170,815 Other furniture and equipment 415,171 98,230 44,592 468,809 Leased property under capital leases 573,337 40,709 382,178 231,868 Total $ 8,336,661 2,390,896 2,095,944 8,631,613 PERRY COUNTY Notes to Financial Statements For the Year Ended September 30, 1997 21 Proprietary Fund fixed assets at September 30, 1997, are as follows: Balance Sept. 30, 1997 Land $ 4,500 Mobile equipment 102,508 Other furniture and equipment 5,535 Leased property under capital leases 147,992 Total 260,535 Less: Accumulated depreciation 118,886 Total $ 141,649 (6) 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. (7) Capital Leases. 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 $ 147,992 231,868 Less: Accumulated depreciation 23,405 Leased Property Under Capital Leases $ 124,587 231,868 PERRY COUNTY Notes to Financial Statements For the Year Ended September 30, 1997 22 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 $ 41,303 57,391 1999 41,303 40,437 2000 41,302 28,238 2001 5,324 21,685 2002 401 Total Minimum Lease Payments 129,232 148,152 Less: Amount representing interest 10,773 12,850 Present Value of Net Minimum Lease Payments $ 118,459 135,302 (8) Long-term Debt. Debt outstanding as of September 30, 1997, consisted of the following: Amount Interest Final Maturity Description and Purpose Outstanding Rates Date Enterprise Funds: Capital Leases: 1997 Ford F-150 truck $ 12,219 5.5 4-01 1997 International w/Pac Mor body 53,120 5.5 10-2000 1997 International w/Pac Mor body 53,120 5.5 10-2000 Total Enterprise Funds $ 118,459 General Long-term Debt Account Group: A. General Obligation Bonds: Road & bridge bonds $ 125,000 6.8 to 9.7 2-99 Partial refunding bonds 1,175,000 3.1 to 5.4 5-10 Jail building bonds 1,110,000 5 to 7.125 2-14 G.O. building bonds, Series 1995 390,000 4.6 to 6.5 10-10 Total General Obligation Bonds $ 2,800,000 PERRY COUNTY Notes to Financial Statements For the Year Ended September 30, 1997 23 Amount Interest Final Maturity Description and Purpose Outstanding Rates Date B. Capital Leases: District 1 wheel loader $ 26,128 6 12-98 1995 Crown Victoria 9,613 5.72 11-99 1996 F-150 pickup 9,125 5.49 3-2000 International dump truck cab & body 26,187 5.75 7-01 District 3 tractor & mower 26,945 5.75 6-01 1997 Crown Victoria 17,532 5.75 11-01 1997 Ford truck 19,772 5.5 8-01 Total Capital Leases $ 135,302 Annual debt service requirements to maturity for the following debt reported in the General Long-term Debt Account Group are as follows: Year Ending September 30 Bonds 1998 $ 293,679 1999 294,670 2000 282,332 2001 279,470 2002 277,185 Later years 2,576,028 Total 4,003,364 Less: Amounts representing interest 1,203,364 Total at Present Value $ 2,800,000 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 4.6% of the latest property assessments. Prior Year Defeasance of Debt - In prior years, the county defeased certain general obligation bonds by placing the proceeds of new bonds in an irrevocable trust to provide for all future debt service payments on the old bonds. Accordingly, the trust account assets and the liability for the defeased bonds are not included in the county's financial statements. On September 30, 1997, $1.06 million of bonds outstanding were considered defeased. PERRY COUNTY Notes to Financial Statements For the Year Ended September 30, 1997 24 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 $ 27,885 3,929 23,956 General obligation bonds 2,940,000 140,000 2,800,000 Capital leases 243,090 40,709 148,497 135,302 Total $ 3,210,975 40,709 292,426 0 2,959,258 Proprietary Funds: Capital leases $ 147,992 29,533 118,459 Total $ 0 147,992 29,533 0 118,459 (9) 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. Hospital Revenue Bond Contingencies - The county issues revenue bonds to provide funds for constructing and improving capital facilities of the Perry County Community Hospital. Revenue bonds are reported as a liability of the hospital because such debt is payable primarily from the hospital's pledged revenues. However, the county remains contingently liable for the retirement of these bonds because the full faith, credit and taxing power of the county is secondarily pledged in case of default by the hospital. The principal amount of hospital revenue bonds outstanding at September 30, 1997 is $2,815,000. (10) 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 $ 571,608,000 PERRY COUNTY Notes to Financial Statements For the Year Ended September 30, 1997 25 (11) Joint Ventures. The county participates in the following joint ventures: Perry County is a participant with Covington, Greene, Lamar and Stone Counties in a joint venture, authorized by Section 39-3-11, Miss. Code Ann. (1972), to operate the Pine Forest Regional Library. The regional library was created to provide free library service to all the people in the respective counties. The regional library is governed by a board of trustees consisting of five members, with each county appointing one member. The regional library is funded by each county on a previously agreed proportional basis. Complete financial statements can be obtained from the Perry County Chancery Clerk=s Office. Perry County is a participant with Covington County and the Cities of Laurel, Hattiesburg and Petal in a joint venture, authorized by Section 17-17-307, Miss. Code Ann. (1972), to operate the Pine Belt Regional Solid Waste Authority. The joint venture was created to dispose of solid waste in each of the governmental entities. The Pine Belt Solid Waste Authority is composed of ten members appointed as follows: Covington County, one; Perry County, three; City of Laurel, two; City of Hattiesburg, three; and the City of Petal, one. The authority is funded by user fees from each of the governments based on the volume of solid waste from each of the governments. Complete financial statements can be obtained from the Pine Belt Regional Solid Waste Authority, P.O. Box 1898, Hattiesburg, MS 39403-1898. Perry County is a participant with the Town of Richton in a joint venture, authorized by Section 61-3-5, Miss. Code Ann. (1972), to operate the Richton-Perry County Airport. The Richton-Perry County Airport was created to provide an airport facility available for use by the general public. The Richton-Perry County Airport Board is composed of five members appointed as follows: Perry County, two; Town of Richton, two; the fifth member is jointly appointed by the Town of Richton and Perry County. The Richton-Perry County Airport Board is funded by appropriations from the Town of Richton and Perry County. (12) Jointly Governed Organizations. The county participates in the following jointly governed organizations: The Mississippi Regional Housing Authority, IV operates in the following counties: Harrison, Hancock, Jackson, Pearl River, Stone, George, Greene, Perry, Forrest, Lamar, Marion, Covington, Jones and Wayne. Each county appoints one of the 15 board members. The 15 th board member is appointed at large. The counties generally provide no financial support to the organization. Pearl River Valley Opportunity, Inc. operates in the following counties: Covington, Forrest, Jefferson Davis, Jones, Lamar, Marion, Pearl River and Perry. Each county appoints one of the 24 board members. Additionally, two board members are appointed from the private sector in each county. Each county provides a modest amount of financial support when matching funds are required for federal grants. Southeast Mississippi Air Ambulance District operates in the following counties: Forrest, Lamar, Covington, Jefferson Davis, Marion, Pearl River, Perry and Greene. Each county appoints one member. There is no financial responsibility for the district. Pine Belt Mental Health Care Resources operates in the following counties: Forrest, Lamar, Jones, Perry, Wayne, Greene, Covington, Jefferson Davis and Marion. Each county appoints one board member. There is only minimal financial responsibility. PERRY COUNTY Notes to Financial Statements For the Year Ended September 30, 1997 26 Southern Mississippi Planning and Development District operates in a district composed of the Counties of Jefferson Davis, Covington, Jones, Wayne, Marion, Lamar, Forrest, Perry, Greene, Pearl River, Stone, George, Hancock, Harrison and Jackson. The governing body is a 27 member board of directors, one appointed by each member county, one from each of six participating cities, and six appointed at large by minority members. The counties contribute only a small part of the entity=s total revenues. Jones County Community College operates in a district composed of the Counties of Clarke Covington, Greene, Jasper, Jones, Perry, Smith and Wayne. The college=s board of trustees is composed of 20 members. Each county appoints two of the members, except Jones County, which appoints six members. Perry County appropriated approximately $116,342 for maintenance and support of the college in fiscal year 1997. (13) Defined Benefit Pension Plan. Plan Description. Perry 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 $119,386, $108,292 and $101,904, respectively, equal to the required contributions for each year. (14) Subsequent Events. Subsequent to September 30, 1997, Perry County entered into the following capital lease obligations: Issue Interest Issue Type of Source of Date Rate Amount Financing Financing 1-98 5.15 $ 20,474 Lease purchase Ad valorem 1-98 5.15 20,474 Lease purchase Ad valorem . City of Laurel, two; City of Hattiesburg, three; and the City of Petal, one. The authority is funded by user fees from each of the governments based on the volume of solid waste from each of the. 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. . COUNTY Notes to Financial Statements For the Year Ended September 30, 1997 22 The future minimum lease payments together with the present value of the net minimum lease payables as of September 30, 1997,