Okaloosa County BOCC — May 20, 2014 — reading text

for spending at the County’s discretion. Overview of the Financial Statements This discussion and analysis is intended to serve as an introduction to the Okaloosa County’s basic financial statements. The County basic financial statements are comprised of three components: 1) government-wide financial statements, 2) fund financial statements, and 3) notes to the financial statements, as illustrated on the following page. This report also contains other supplementary information in addition to the basic financial statements themselves. 3 Packet Pg. 46 Okaloosa County, Florida Management’s Discussion and Analysis Management?s discussion and analysis Government wide financial statements Fund financial statements ________________________________________________________ Notes to the financial statements Supplementary information Government-wide financial statements The government-wide financial statements are designed to provide readers with a broad overview of Okaloosa County’s finances, in a manner similar to a private-sector business. The statement of net position presents information on all of the County’s assets and liabilities, with the difference between the two reported as net position. Over time, increases or decreases in net position may serve as a useful indicator of whether the financial position of the County is improving or deteriorating. The statement of activities presents information showing how the government’s net position changed during the most recent fiscal year. All changes in net position are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of related cash flows. Thus, revenues and expenses are reported in this statement for some items that will result in cash flows in future fiscal periods. Both of the government-wide financial statements distinguish functions of the County that are principally supported by taxes and intergovernmental revenues (governmental activities) from other functions that are intended to recover all or a significant portion of their costs through user fees and charges (business-type activities). The governmental activities of the County include general government, public safety, physical environment, transportation, economic environment, human services, culture/recreation and court-related activity. The business-type activities of the County include water/sewer services, airport services, solid waste collection/disposal, building inspection services, emergency medical service and conference center activities. The government-wide financial statements can be found on Exhibit I, II-A and II-B of this report. Fund Financial Statements The accounts of the County are organized on the basis of funds, each of which is considered a separate accounting entity. The operations of each fund are accounted for with a separate set of 4 Packet Pg. 47 Okaloosa County, Florida Management’s Discussion and Analysis self-balancing accounts that comprise its assets, liabilities, net position, revenues, and expenditures or expenses, as appropriate. Government resources are allocated to and accounted for in individual funds based upon the purpose for which they are to be spent and the means by which spending activities are controlled. The County’s funds are presented in separate fund financial statements. These funds are presented on governmental fund financial statements, proprietary fund financial statements and a fiduciary fund financial statement. The County’s major funds are presented in separate columns on the fund financial statements. The definition of a major fund is one that meets certain criteria set-forth in GASB 34. The funds that do not meet the criteria of a major fund are considered non-major funds and are combined into a single column on the fund financial statements. Governmental Fund Financial Statements Governmental fund financial statements are prepared on the modified accrual basis using current financial resources measurement focus. Under the modified accrual basis, revenues are recognized when they become measurable and available as net current assets. Although the activity of the internal service funds is reported with the governmental activities on the government-wide financial statements they are not combined on the government fund financial statements. Four of the County’s governmental funds, the General Fund, County Transportation Trust Fund, Tourist Development Trust Fund and Capital Outlay Construction Trust Fund, are classified as major funds. The County Transportation Trust and Capital Outlay Construction funds have been presented as major funds at management’s discretion. All other governmental funds are combined into a single column on the governmental fund financial statements. Individual fund data for the non-major funds is found in combining statements presented as supplemental financial data. The County adopts an annual budget for all governmental funds. A budgetary comparison has been presented for all the governmental funds, which compares not only actual results to budget but also the original adopted budget to final budget. These budgetary comparisons for the major governmental funds are presented as part of the basic financial statements. Non- major governmental fund budget comparisons are presented as supplemental financial data. Proprietary Fund Financial Statements Proprietary fund financial statements, like government-wide financial statements, are prepared on the full accrual basis. Proprietary funds record both operating and non-operating revenues and expenses. Operating revenues are those that are obtained from the operations of the proprietary fund. The County reports the Water and Sewer, Airport, Solid Waste and Convention Center as major funds in the proprietary fund financial statements. The Solid Waste and Convention Center funds have been presented as major proprietary funds at management’s discretion. These enterprise funds are used to present the same functions that are presented in the government-wide financial statements. The other enterprise funds are grouped together and 5 Packet Pg. 48 Okaloosa County, Florida Management’s Discussion and Analysis reported in a separate column entitled, “Other Enterprise Funds”. The internal service funds are combined into a single column on the proprietary fund financial statements. Individual fund data is presented in combining statements as supplemental financial data. The internal service funds are used to account for risk management, health, including other post employment benefits for retirees, dental and liability insurance, fleet management services and funding of short-term compensated absence liability on a cost reimbursement basis. Fiduciary Fund Financial Statement Data shown on the fiduciary fund financial statement is not included in the government-wide financial statements because the resources of those funds are not available to support the County’s programs. The only type of fiduciary funds the County maintains, agency funds, are used to account for assets held by the County as an agent for individuals or other governments. Notes to the financial statements The notes to the financial statements provide additional information that is useful for a more complete understanding of the data provided in the government-wide and fund financial statements. Other information In addition to the basic financial statements and accompanying notes, this report also presents certain required supplementary information concerning Okaloosa County’s funding progress related to post employment benefits. This report also presents combining statements for the non-major governmental and proprietary funds and agency funds, as well as individual fund budget and actual comparison schedules for non-major governmental funds. Government-wide Financial Analysis Over time, net position may serve as the most useful indicator of a government’s financial position. At September 30, 2013, the County’s total net position or total assets less liabilities, was $434,618. A significant portion of the County’s net position, 80.4 percent, is identified as an investment in capital assets (such as land, buildings, equipment, infrastructure), less related debt outstanding that was used to acquire those assets. Since the County uses capital assets to provide services to its residents, the net position represented by “investment in capital assets, net of related debt” are not available for future spending. In fact, the payment of maintenance and debt service costs on those capital assets will themselves require governmental resources. The invested in capital assets, net of related debt balance of $349,249 decreased ($1,112) or (0.3) percent, in comparison to the prior year. Another portion of the County’s net position is restricted net assets which represent assets that are subject to constraints such as by debt covenants, grantors, laws or regulations. The 6 Packet Pg. 49 Okaloosa County, Florida Management’s Discussion and Analysis restricted net position balance of $59,718 (13.7 percent of total net position) increased $363 or 0.6 percent, in comparison to prior year, mainly due to decreased debt restrictions and increased Economic Environment and increased Culture/Recreation restrictions for Tourist Development and Convention Center activities. Unrestricted net position is net position that is available to meet the County’s ongoing obligations to residents, creditors, and enterprise fund customers. The unrestricted net position balance of $25,651 (5.9 percent of total net position) increased $1,504, or 6.2 percent, in comparison to prior year although governmental unrestricted balance decreased due to increased actuarial claim liabilities in the Self Insurance Internal Service Fund and more restrictions, business-type activities increased due to increased activity and reduced liabilities, especially related to debt. The deficit in unrestricted net position in the Self Insurance Fund will be reduced significantly by approximately $3.7 million of insurance refunds received in Fiscal Year 2014 as disclosed in Note 20 of the financial statements. As shown on the following chart, the County reported increased balances at September 30, 2013. The components of total Net Position increased mainly due to the significant improvement in economic activity in the business-type function related to Convention Center early repayment of debt and overall general improvement of all business-type activities. The following is a condensed summary of net position for the primary government for fiscal years 2013 and 2012. Governmental Business-type Total 2013 2012 2013 2012 2013 2012 Current and Other Assets $ 61,348 $ 64,911 $ 77,060 $ 78,336 $ 138,408 $ 143,247 Captial Assets 163,245 164,780 318,754 318,252 481,999 483,032 Total Assets 224,593