Document Augustaga_doc_9f21621a26

AUGUSTA, GEORGIA Annual Financial Statements For the Year Ended December 31, 2007 ---PAGE BREAK--- ---PAGE BREAK--- AUGUSTA, GEORGIA Annual Financial Report Year Ended December 31, 2007 Table of Contents FINANCIAL SECTION REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS 1 - 2 MANAGEMENT’S DISCUSSION AND ANALYSIS 4 - 14 BASIC FINANCIAL STATEMENTS Government-wide Financial Statements: Statement of Net Assets 19 Statement of Activities 20-21 Fund Financial Statements: Balance Sheet – Governmental Funds 24-25 Reconciliation of the Balance Sheet of the Governmental Funds to the Statement of Net Assets 27 Statement of Revenues, Expenditures and Changes in Fund Balances - Governmental Funds 28-29 Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances of Governmental Funds to the Statement of Activities 31 Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual - General Fund 32 Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual - Fire Protection Fund 33 Statement of Net Assets - Proprietary Funds 34 Statement of Revenues, Expenses and Changes in Fund Net Assets - Proprietary Funds 35 Statement of Cash Flows - Proprietary Funds 36-37 Statement of Fiduciary Net Assets - Fiduciary Funds 38 Statement of Changes in Fiduciary Net Assets - Fiduciary Funds 39 Notes to Financial Statements 43-82 REQUIRED SUPPLEMENTARY INFORMATION Pension Plans- Required Supplementary Information – Schedules of Funding Progress 84-85 Pension Plans - Required Supplementary Information - Schedules of Employer Contributions and Notes to Required Schedules 86-88 ---PAGE BREAK--- AUGUSTA, GEORGIA Annual Financial Report Year Ended December 31, 2007 Table of Contents (continued) Page COMBINING AND INDIVIDUAL FUND STATEMENTS NONMAJOR GOVERNMENTAL FUNDS Combining Balance Sheet - Nonmajor Governmental Funds 92 – 93 Combining Statement of Revenues, Expenditures, and Changes in Fund Balances – Nonmajor Governmental Funds 94 – 95 Combining Balance Sheet - Nonmajor Special Revenue Funds 96 – 99 Combining Statement of Revenues, Expenditures and Changes in Fund Balances – Nonmajor Special Revenue Funds 100 – 103 Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual – Nonmajor Special Revenue Funds Urban Services District Fund 104 Emergency Telephone System Fund 105 Capital Outlay Fund 106 Law Enforcement Fund 107 Occupation Tax Fund 108 Special Assessment Fund 109 Hotel/Motel and Promotion/Tourism Fund 110 Housing and Neighborhood Development Fund 111 Urban Development Action Grant Fund 112 Federal Drug Fund 113 State Drug Fund 114 5% Victim's Crime Assistance Fund 115 Supplemental Juvenile Service Fund 116 Building Inspection 117 Weed and Seed Federal Grant Fund 118 Wireless Phase Fund 119 Perpetual Care - I Fund 120 Landbank Authority Fund 121 Downtown Development 122 Canine Forfeitures Fund 123 NPDES Permit Fees Fund 124 Combining Balance Sheet - Nonmajor Debt Service Funds 125 Combining Statement of Revenues, Expenditures and Changes in Fund Balances - Nonmajor Debt Service Funds 126 Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual – Nonmajor Debt Service Funds Debt Service Fund 127 Urban Debt Service 128 2006 GO Sales Tax Bonds Debt Service Fund 129 ---PAGE BREAK--- AUGUSTA, GEORGIA Annual Financial Report Year Ended December 31, 2007 Table of Contents (continued) Page Combining Balance Sheet - Nonmajor Capital Project Funds 130 Statement of Revenues, Expenditures and Changes in Fund Balances – Nonmajor Capital Project Funds 131 NONMAJOR ENTERPRISE FUNDS Combining Statement of Net Assets - Nonmajor Enterprise Funds 134 – 135 Combining Statement of Revenues, Expenses, and Changes in Fund Net Assets – Nonmajor Enterprise Funds 136 – 137 Combining Statement of Cash Flows - Nonmajor Enterprise Funds 138 – 141 INTERNAL SERVICE FUNDS Combining Statement of Net Assets - Internal Service Funds 144 – 145 Combining Statement of Revenues, Expenses, and Changes in Fund Net Assets – Internal Service Funds 146 – 147 Combining Statement of Cash Flows - Internal Service Funds 148 – 151 FIDUCIARY FUNDS Combining Statement of Fiduciary Net Assets – Pension Trust Funds 156 Combining Statement of Changes in Fiduciary Net Assets – Pension Trust Funds 157 Combining Statement of Changes in Fiduciary Assets and Liabilities – Agency Funds 160 – 161 COMPLIANCE SECTION Report of Independent Certified Public Accountants on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards C-3 – C-4 Schedule of Expenditures of Federal Awards C-5 – C-7 Notes to Schedule of Expenditures of Federal Awards C-8 Summary Schedule of Prior Audit Findings C-9 – C-22 Report of Independent Certified Public Accountants on Compliance with Requirements Applicable to Each Major Program and Internal Control over Compliance in Accordance with OMB Circular A-133 C23 – C-24 Schedule of Findings and Questioned Costs C25 – C31 ---PAGE BREAK--- AUGUSTA, GEORGIA Annual Financial Report Year Ended December 31, 2007 Table of Contents (continued) Page SPECIAL ONE PERCENT SALES AND USE TAX SECTION Report of Independent Certified Public Accountants on the Schedule of Special One Percent Sales and Use Tax Performed in Accordance with Government Auditing Standards S-3 Schedule of Special One Percent Sales and Use Tax S-4 - S-10 Notes to Schedule of Special One Percent Sales and Use Tax S-11 ---PAGE BREAK--- FINANCIAL SECTION ---PAGE BREAK--- ---PAGE BREAK--- REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS Augusta-Richmond County Commissioners Augusta, Georgia We have audited the accompanying financial statements of the governmental activities, the business-type activities, Augusta Canal Authority, each major fund and the aggregate remaining fund information of Augusta, Georgia as of December 31, 2007 and for the year then ended, which collectively comprise Augusta, Georgia’s basic financial statements, as listed in the table of contents. These financial statements are the responsibility of the Augusta, Georgia management. Our responsibility is to express opinions on these basic financial statements based on our audit. We did not audit the financial statements of the Augusta-Richmond County Department of Health or Downtown Development Authority. Those financial statements were audited by other auditors whose reports thereon has been furnished to us, and our opinion, insofar as it relates to the amounts included for the Department of Health and Downtown Development Authority, is based solely on the reports of the other auditors. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in 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 basic financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the basic financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall basic financial statement presentation. We believe that our audit and the reports of other auditors provide a reasonable basis for our opinions. In our opinion, based upon our audit and the report of other auditors, the basic financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business-type activities, the Augusta Canal Authority, each major fund and the aggregate remaining fund information of Augusta, Georgia, as of December 31, 2007, and the respective changes in financial position and cash flows, where applicable, and the respective budgetary comparison for the general fund and fire protection fund for the year then ended in conformity with accounting principles generally accepted in the United States of America. As discussed in Note 15 to the financial statements, certain errors resulting in overstatement of capital assets and beginning net assets as of December 31, 2006 and interest income for the year ended December 31, 2006, were discovered by management of Augusta, GA during the current year. Accordingly, an adjustment has been made to beginning net assets as of December 31, 2007 to correct the error. In accordance with Government Auditing Standards, we have also issued our report dated June 30, 2008 on our consideration of Augusta, Georgia’s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards and is important in assessing the results of our audit. ---PAGE BREAK--- Management’s Discussion and Analysis and the schedules of funding progress and employer contributions are not a required part of the basic financial statements but are supplementary information required by the Governmental Accounting Standards Board. We have applied certain limited procedures, which consisted principally of inquiries of management regarding the methods of measurement and presentation of the required supplementary information. However, we did not audit this information and express no opinion on it. Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise Augusta, Georgia’s basic financial statements. The combining and individual fund statements and the accompanying schedule of expenditures of Federal awards as required by U.S. Office of Management and Budget Circular A-133, Audits of States, Local Governments and Non-Profit Organizations for the year ended December 31, 2007, are presented for purposes of additional analysis and are not a required part of the basic financial statements. The combining and individual fund statements and the accompanying schedule of expenditures of Federal awards have been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, are fairly stated in all material respects in relation to the basic financial statements taken as a whole. Augusta, Georgia June 30, 2008 2 ---PAGE BREAK--- MANAGEMENT’S DISCUSSION AND ANALYSIS 3 ---PAGE BREAK--- Management’s Discussion & Analysis (unaudited) The Management’s Discussion and Analysis of the Annual Financial Statements of Augusta, Georgia (the "Government") provides an overall narrative and analysis of the Government’s financial statements for the fiscal year ended December 31, 2007. This discussion and analysis is designed to look at the Government’s financial performance as a whole. Readers should also review the additional information provided in the transmittal letter, which can be found preceding this narrative, and the complete financial statements, with notes, which follow this narrative, to enhance their understanding of the Government’s financial performance. Financial Highlights Key financial highlights for the year ended December 31, 2007 are as follows: • The Government’s combined net assets totaled $742.6 million. • The Government’s total net assets increased by $60.7 million, primarily due to capital spending funded by the Special Purpose Local Option Sales Tax revenues, federal aviation grants, and other tax revenues. • As of the close of the current fiscal year, the Government’s governmental funds reported combined ending fund balances of $285.4 million, an increase of $20.6 million from the prior year. Approximately 77% of this total amount, or $219.8 million, is available for spending at the government’s discretion (unreserved fund balance). • At the end of the current fiscal year, unreserved fund balance for the General Fund was $31.9 million, or 28% of total General Fund expenditures for the fiscal year. Of this amount, $4.7 million has been designated for other purposes, leaving $27.2 million, or 85% of total General Fund fund balance, as undesignated. • Combined Revenue totaled $348.7 million, of which governmental activities totaled $223.8 million and business- type activities totaled $124.8 million. Current year revenues increased approximately 8% from those of the prior year. • Overall expenses totaled $287.9 million of which governmental activities totaled $176 million and business-type activities totaled $111.8 million. Current year expenses increased approximately 2% over those of the prior year. • Expenses of governmental activities exceeded program revenue by $129.9 million, resulting in the use of general revenues (mostly taxes). • Total Outstanding Long-Term Debt, excluding compensated absences, decreased approximately $12.1 million. 4 ---PAGE BREAK--- Overview of the Financial Statements This discussion and analysis is intended to serve as an introduction to the Government’s basic financial statements. The basic financial statements consist of three components: 1) government-wide financial statements, 2) fund financial statements, and 3) notes to the financial statements. The basic financial statements present two different views of the Government through the use of government-wide statements and fund financial statements. In addition to the basic financial statements, this report contains other supplemental information that will enhance the reader’s understanding of the financial condition of the Government. Required Components of Annual Financial Report Figure 1 Detail Summary Basic Financial Statements The first two statements in the basic financial statements are the Government-wide Financial Statements. They provide both short and long-term information about the Government’s financial status. The next statements are Fund Financial Statements. These statements focus on the activities of the individual parts of Augusta, Georgia’s government. These statements provide more detail than the government-wide statements. There are four parts to the Fund Financial Statements: 1) the governmental funds statements; 2) the budgetary comparison statements; 3) the proprietary fund statements; and 4) the fiduciary fund statements. The next section of the basic financial statements is the notes. The notes to the financial statements explain in detail some of the data contained in those statements. After the notes, supplemental information is provided to show details about the Government’s non-major governmental funds and internal service funds, all of which are added together in one column on the appropriate basic financial statements. Government-wide Financial Statements The Government-wide financial statements provide a broad view of the Government’s operations in a manner similar to a private-sector business. The statements provide both short-term and long-term information about the Government’s financial position, which assists in assessing the economic condition at the end of the fiscal year. These statements are prepared using the flow of economic resources measurement focus and the accrual basis of accounting. This means the statements take into account all revenues and expenses connected with the fiscal year even if cash involved has not been received or paid. The government-wide financial statements include the following two statements: The Statement of Net Assets presents information on all of the Government’s assets and liabilities, with the difference between the two reported as net assets. Over time, increases or decreases in net assets may serve as a useful indicator of whether the financial position of the Government is improving or deteriorating. The Statement of Activities presents information showing how the Government’s net assets changed during the most recent fiscal year. All changes in net assets 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 not result in cash flows until future fiscal periods (e.g. uncollected taxes and earned but unused vacation leave). Management’s Discussion and Analysis Basic Financial Statements Government- Wide Financial Statements Fund Financial Statements Notes to the Financial Statements 5 ---PAGE BREAK--- This statement also presents a comparison between direct expense and program revenues for each function of the Government. The government-wide statements are divided into three categories: 1) governmental activities, 2) business-type activities and 3) component units. The governmental activities include most of the Government’s basic services such as general administration, judicial services, public safety, public works, health and welfare, culture and recreation, and housing and development. Property taxes and state and federal grant funds finance most of these activities. The business-type activities are those services that the Government charges a fee to customers in order to provide. These include Water and Sewer, Augusta Regional Airport, Waste Management, Municipal Golf Course, Transit, Daniel Field Airport, Newman Tennis Center, Garbage Collection, and the Riverwalk. The final category is component units. The Augusta-Richmond County Board of Health is a public health department. Although legally separate from the Government, the Government appoints a voting majority of the board. Augusta Canal Authority and Downtown Development Authority are also component units for which the Government is fiscally responsible. Fund Financial Statements A Fund is a grouping of related accounts that is used to maintain control over resources that have been segregated for specific activities or objectives. The Government, like other state and local governments, uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. The fund financial statements focus on individual parts of the Government, reporting the Government’s operations in more detail than the government-wide statements. All of the funds of the Government can be divided into three categories: governmental funds, proprietary funds and fiduciary funds. These fund categories use different accounting approaches and should be interpreted differently. Governmental Funds Most of the basic services provided by the Government are financed through governmental funds. Governmental funds are used to account for essentially the same functions reported as government activities in the government-wide financial statements. However, unlike the government-wide statements, these funds focus on how assets can readily be converted into cash and the amount of funds left at year-end that will be available for spending in the next year. Governmental funds are reported using an accounting method called modified accrual accounting, which focuses on current financial resources. Such information may be useful in evaluating the government’s short-term financing requirements. These statements provide a detailed short-term view of the Government’s finances that assists in determining whether there will be adequate financial resources available to meet the Government’s current needs. The relationship between government activities in the government-wide financial statements and the governmental funds financial statements is described in a reconciliation that is a part of the fund financial statements. The Government has five governmental fund types: the General Fund, Special Revenue Funds, Debt Service Funds, the Capital Projects Funds, and the Permanent Fund. Only five individual funds are being considered major funds – the General Fund, Fire Protection, Special Purposes Local Option Sales Tax Fund (SPLOST) Phase III, Special Purposes Local Option Sales Tax Fund (SPLOST) Phase IV and Special Purposes Local Option Sales Tax Fund (SPLOST) Phase V . Proprietary Funds The Government has two types of proprietary funds used to account for activities that operate similar to commercial enterprises found in the private sector. Funds that charge fees for services provided to outside customers including other local governments are known as Enterprise Funds. These funds are used to report the same functions presented as business- type activities in the government-wide financial statements. Funds that charge fees for services provided to departments within the reporting government are known as Internal Service Funds. Proprietary funds use the accrual basis of accounting, thus there is no reconciliation needed between the government-wide financial statements for business-type activities and the proprietary fund financial statements, except for the allocation of internal service fund activity. The Government has seven enterprise funds: Water and Sewer, Augusta Regional Airport, Waste Management, Municipal Golf Course, Transit, Daniel Field Airport, and Garbage Collection. The Government has seven internal service funds: Risk Management, Fleet Operations, Workers Compensation, Employee Health Benefits, Unemployment, Long-Term Disability Insurance and GMA Leases. The Water and Sewerage Fund and Augusta Regional Airport are the only funds being considered major funds for presentation purposes. 6 ---PAGE BREAK--- Fiduciary Funds The Fiduciary Funds are used to account for assets held by the Government as an agent for individuals, private organizations, other governments and other departments. The Government is responsible for ensuring that the assets reported in these funds are used only for their intended purposes and only by those to whom the assets belong. These funds are not reflected in the government-wide financial statements because the resources are not available to support the Government’s operations or programs. Government-wide Financial Analysis Comparative data for the entity-wide governmental activities and the business-type activities is provided below. Business-type Governmental Business-type Governmental Activities Total Activities Activities Total Activities (As restated) (As restated) 2007 2007 2007 2006 2006 2006 Current and other assets $ 337,082,135 $ 301,886,466 $ 638,968,601 $ 316,588,395 $ 343,725,039 $ 660,313,434 Capital assets 247,213,678 485,052,108 732,265,786 229,164,702 419,297,536 648,462,238 Total assets 584,295,813 786,938,574 1,371,234,387 545,753,097 763,022,575 1,308,775,672 Long-term liabilities 45,530,123 504,604,579 550,134,702 55,617,736 508,933,469 564,551,205 Other liabilities 48,060,667 30,406,025 78,466,692 40,317,977 21,963,251 62,281,228 Total liabilites 93,590,790 535,010,604 628,601,394 95,935,713 530,896,720 626,832,433 Net assets: Invested in capital assets, net of related debt 238,765,702 143,717,492 382,483,194 224,230,109 129,302,537 353,532,646 Restricted 186,758,852 15,926,125 202,684,977 219,256,694 16,429,773 235,686,467 Unrestricted 65,180,469 92,284,353 157,464,822 6,330,581 86,393,545 92,724,126 Total net assets $ 490,705,023 $ 251,927,970 $ 742,632,993 $ 449,817,384 $ 232,125,855 $ 681,943,239 The Government's Net Assets December 31, 2007 and 2006 Figure 2 7 ---PAGE BREAK--- Net Assets Net assets may serve over time as one useful indicator of a government’s financial condition. The assets of the Government exceeded liabilities by $742.6 million as of December 31, 2007. The largest portion of the Government’s net assets, $382.5 million or 52%, reflects its investment in capital assets such as land, buildings, equipment and infrastructure (road, bridges, sidewalks, water lines and sewer lines) less any related debt used to acquire those assets that is still outstanding. The Government uses these capital assets to provide services to its citizens; therefore, these assets are not available for future spending. Although the Government’s investment in its capital assets is reported net of related debt, it should be noted that the resources needed to repay this debt must be provided from other sources, since the capital assets themselves cannot be used to liquidate these liabilities. An additional portion of the Government’s net assets, $202.7 million or 28%, represents resources that are subject to external restrictions on how they may be used. The remaining balance of unrestricted net assets, $157.5 million or 20%, may be used to meet the Government’s ongoing obligations to citizens and creditors. Several particular aspects of the Government’s financial operations positively influenced the total unrestricted governmental net assets: y Continued diligence in the collection of property taxes by maintaining a collection percentage of 99% for real and personal property. y Continued low cost of debt due to the County’s high bond rating. y Continued diligence in the maintenance of a 75 – 90 day unreserved fund balance in the General Fund. 8 ---PAGE BREAK--- The Government’s Changes in Net Assets For the Years Ended December 31, 2007 and 2006 Figure 3 Business-type Governmental Business-type Governmental Activities Total Activities Activities Total Activities (As restated) (As restated) 2007 2007 2007 2006 2006 2006 Revenues: Program revenues: Charges for services $ 35,142,343 $ 108,082,353 $ 143,224,696 $ 33,156,088 $ 98,384,056 $ 131,540,144 Operating grants and contributions 10,591,102 183,764 10,774,866 8,296,754 1,030,173 9,326,927 Capital grants and contributions 630,514 3,654,745 4,285,259 - 4,276,819 4,276,819 General revenues: Property taxes 48,820,848 - 48,820,848 47,510,238 - 47,510,238 Other taxes 111,459,091 - 111,459,091 99,296,470 - 99,296,470 Grants and contributions not restricted to specific programs 960,741 - 960,741 950,923 - 950,923 Unrestricted investment earnings 15,424,993 11,961,476 27,386,469 12,907,142 12,994,865 25,902,007 Miscellaneous 815,900 939,453 1,755,353 1,228,979 711,659 1,940,638 Total revenues 223,845,532 124,821,791 348,667,323 203,346,594 117,397,572 320,744,166 Expenses: General government 32,569,426 - 32,569,426 28,232,054 - 28,232,054 Judicial 15,871,604 - 15,871,604 14,766,171 - 14,766,171 Public safety 77,636,868 - 77,636,868 73,164,301 - 73,164,301 Public works 13,007,368 - 13,007,368 12,182,770 - 12,182,770 Health and welfare 2,227,609 - 2,227,609 2,027,300 - 2,027,300 Culture and recreation 24,555,210 - 24,555,210 32,131,742 - 32,131,742 Housing and development 8,844,236 - 8,844,236 9,469,828 - 9,469,828 Interest on long-term debt 1,517,141 - 1,517,141 769,618 - 769,618 Waste management - 6,196,161 6,196,161 - 5,859,827 5,859,827 Water and sewer - 70,720,901 70,720,901 - 68,152,898 68,152,898 Airports - 15,380,555 15,380,555 - 14,271,584 14,271,584 Municipal golf course - 546,477 546,477 - 688,293 688,293 Transit - 4,607,435 4,607,435 - 4,960,174 4,960,174 Newman Tennis Center - - - - 1,370 1,370 Garbage Collection - 14,296,461 14,296,461 - 12,998,308 12,998,308 Riverwalk - 117 117 - - - Total expenses 176,229,462 111,748,107 287,977,569 172,743,784 106,932,454 279,676,238 Increase in net assets before transfers 47,616,070 13,073,684 60,689,754 30,602,810 10,465,118 38,619,119 Transfers (6,728,431) 6,728,431 - (6,365,664) 6,365,664 - Increase in net assets 40,887,639 19,802,115 60,689,754 24,237,146 16,830,782 41,067,928 Net assets, January 1 449,817,384 232,125,855 681,943,239 425,580,238 215,744,650 641,324,888 Prior period adjustments - - - - (449,577) (449,577) Net assets, January 1, as restated 215,295,073 215,295,073 Net assets, December 31 $ 490,705,023 $ 251,927,970 $ 742,632,993 $ 449,817,384 $ 232,125,855 $ 681,943,239 The Government Changes in Net Assets Figure 3 9 ---PAGE BREAK--- Changes in Net Assets Governmental activities. Governmental activities increased the Government’s net assets by $40.9 million, and thereby accounting for 67% of the total growth in the net assets of the Government. Key elements of this increase are as follows: Governmental Revenues. Property tax and other taxes continue as the main source of revenue of the Government amounting to 71% in 2007, compared to 75% in 2006. Sales tax revenues contributed approximately $16.6 million to the increase in net assets. Governmental Functional Expenses: As reflected in the summary of changes in Net Assets, the Government expended 53% of the appropriations for judicial and public safety expenditures. The Government continues to commit substantial financial resources for the safety of its citizens. Other expenditures accounted for the remaining 47%. Business-type activities: Business-type activities increased the Government’s net assets by approximately $19.8 million accounting for 33% of the total growth in the government’s net assets. Key elements of this increase are as follows: • The Waste Management Fund reported an increase in net assets of $6.4 million. This increase was due to maintaining volumes similar to 2006 volumes. The increase in volumes was stemmed from a volume based discount issued in 2004. • The Water and Sewer Fund reported an increase in net assets of $6 million. This increase was largely due to an increase in user charges due to rate increases approved upon issuance of the most recent Water & Sewer Revenue Bonds in 2004. • The Augusta Regional Airport Fund reported an increase in net assets of $5.4 million. This increase was largely due additional cash generated from operations and intergovernmental revenue received for capital spending. • Garbage Collection net assets increase of $2 million. This increase was due to increase in user fees for services. Financial Analysis of the Government’s Individual Funds Augusta, Georgia uses fund accounting to demonstrate compliance with finance-related legal requirements. Governmental Funds The focus of the Government’s governmental funds is to provide information on near-term inflows, outflows and balances of usable resources. Such information is useful in assessing the Government’s financial requirements. In particular, the unreserved fund balance may serve as a useful measure of a government’s net resources available for spending at the end of the fiscal year. The combined fund balance of all the governmental funds is $285.4 million, of which $193.8 million, or 68%, is unreserved and undesignated. General Fund The General Fund is the primary operating fund of the Government. At the end of the current fiscal year, total fund balance of the General Fund was $32.9 million, of which $31.9 million, or 97%, was unreserved. A portion of the unreserved fund balance in the General Fund is designated for risk benefit, in the amount of $4.7 million. As a measure of the General Fund’s liquidity, it may be useful to compare both undesignated and designated fund balance to total fund expenditures. As of December 31, 2007, total unreserved fund balance, both undesignated and designated, represents 28% of total general fund expenditures. The fund balance of the General Fund increased $5.2 million Key factors to accomplishing this result includes the increase from property taxes due a .25 millage increase, increased revenue from investments, and a manpower management savings program which temporarily delays filling vacancies in non-critical positions. General Fund Budgetary Highlights During the year, the Government revised the budget on several occasions. Generally, budget amendments fall into one of five categories: 1) amendments to appropriate fund balance for encumbrances from the prior year; 2) amendments made to adjust the estimates that are used to prepare the original budget resolution once exact information is available; 3) amendments made to recognize new funding amounts from external sources, such as Federal and State grants; 4) increases in appropriations that become necessary to maintain services; and 5) amendments to transfer appropriations between departments. The fifth category has no effect on the final budget and, therefore, is not addressed in this narrative. 10 ---PAGE BREAK--- The actual operating revenues for the General Fund were more than the budgeted amount by $5.3 million, or The individual sources within the revenues fluctuated both positively and negatively. No individual source materially varied from the final budget. As a result of sound budget management by all departments of the Government, actual operating expenditures were less than the budgeted amount by $684 thousand. For the year, actual revenue and other financing sources were over actual expenditures and other financing uses by $5.2 million. Capital Projects Funds The Government uses Capital Projects Funds to account for the acquisition and construction of major capital facilities that are not financed by Proprietary Funds. Major funds included in the fund financial statements are the SPLOST Fund Phase III , SPLOST Fund Phase IV and SPLOST Fund Phase V. The proceeds of the special purpose 1% sales tax are accounted for in Capital Projects Funds until improvement projects are completed. The SPLOST Fund Phase III fund balance is $45.9 million, the SPLOST Fund Phase IV’s fund balance is $96.4 million and the SPLOST Fund Phase V’s fund balance is $80.7 million, all of which is held for specific construction and improvement projects and capital acquisitions. Proprietary Funds The activities of the Government that render services to the general public on a user charge basis, or that require periodic determination of revenues for public policy are accounted for as Enterprise Funds. The Government’s proprietary funds provide the same type of information found in the government-wide statements but in more detail. Unrestricted net assets at the end of the year were as follows: Water and Sewer System Fund, $60.4 million; Augusta Regional Airport, $14 million; Nonmajor Enterprise funds, $18.1 million. The total growth (reduction) in net assets for previously mentioned funds were $5.6 million, $5.4 million and $8.4 million, respectively. Other factors concerning the finances of these funds have already been addressed in the discussion of the Government’s business-type activities. 11 ---PAGE BREAK--- Capital Assets and Debt Administration Capital Assets The Government’s investment in capital assets for its governmental and business-type activities as of December 31, 2007 amounts to $732.3 million (net of accumulated depreciation). This investment in capital assets includes land, buildings, improvements, equipment, infrastructure and construction in progress. Infrastructure assets are items that are normally immovable and of value only to the Government, such as roads, bridges, streets and sidewalks, drainage systems and other similar items. Major capital asset transactions during the year included construction of infrastructure, buildings, acquisition of public safety vehicles, construction of water and sewerage systems, and construction of a new airport terminal and building. Additional information on the Government’s capital assets can be found in Note 3 of the notes to the financial statements of this report. The Government’s Capital Assets (net of depreciation) December 31, 2007 Figure 4 Activities Activities Total Land 20,408,148 $ 16,319,771 $ 36,727,919 $ Buildings 53,716,937 19,072,243 72,789,180 Improvements other than buildings 5,298,401 6,943,924 12,242,325 Water and sewerage systems - 260,798,171 260,798,171 Infrastructure 58,893,886 13,750,014 72,643,900 Vehicles, machinery and equipment 12,800,054 9,326,346 22,126,400 Richmond County Public Facilities 2,109,247 - 2,109,247 Construction in progress 93,987,005 158,841,639 252,828,644 Total 247,213,678 $ 485,052,108 $ 732,265,786 $ 12 ---PAGE BREAK--- Long-Term Debt As of December 31, 2007, the Government had a total of $577 million in outstanding long-term debt. Of this amount, $490.2 million consists of revenue bonds backed by the revenues of the water and sewer system. The Government’s Outstanding Debt General Obligation and Revenue Bonds December 31, 2007 Figure 5 The Government has maintained a bond rating of A+ from Standard & Poor’s Rating Group and an A1 rating from Moody’s Investor Service. These bond ratings are clear indications of the sound financial condition of the Government. These high ratings are a primary factor in keeping interest costs low on the Government’s outstanding debt. The State of Georgia limits the amount of general obligation debt that a unit of government can issue to 10 percent of the total assessed value of taxable property located within that government’s boundaries. The legal debt margin for the Government is $460 million based on the 2007 County-wide bond digest of $4,604 million. Additional information regarding the Government’s long-term debt can be found in Note 3 of the notes to the financial statements of this report. Governmental Business-type Activities Activities Total 2007 2006 2007 2006 2007 2006 General obligation bonds 36,468,229 $ 44,741,536 $ - $ - $ 36,468,229 $ 44,741,536 $ Revenue bonds 46,053 157,434 490,209,032 491,121,382 490,255,085 491,278,816 Other debt 26,941,843 27,688,084 23,267,894 25,528,616 50,209,737 53,216,700 Total debt 63,456,125 $ 72,587,054 $ 513,476,926 $ 516,649,998 $ 576,933,051 $ 589,237,052 $ $50 $100 $150 $200 $250 $300 $350 $400 $450 $500 Millions G.O. Bonds Revenue Bonds Other Debt 2007 2006 13 ---PAGE BREAK--- Economic Factors and Next Year’s Budget and Rates The following key economic indicators reflect the growth and prosperity of the Government. • The Government has an unemployment rate of 5.9%, higher than the state average of 4.4%. • The ad valorem tax rate is expected to increase in 2008 by 1.193 mills in the General Fund and .2 mills for Fire Protection in the 2008 adopted budget. This increase could be mitigated by the 2007 surplus and/or growth in the digest. • There is no budgeted use of existing fund balance in the 2008 adopted budget. • The 2008 tax digest increased by 4.79%, with 2.23% of this from normal growth and the remaining 2.56% from reassessments. • In 2007 the Local Option Sales Tax collections grew at a rate of 2.05% over 2006. Budget Highlights for the Fiscal Year Ending December 31, 2008 Governmental Activities: The Ad Valorem Taxes are projected to increase from the 2007 level. The 2008 tax digest has shown an increase of approximately 4.79%. Other taxes are expected to increase with an expected 2% increase in sales tax revenues. The FY 2008 budget for the general fund is expected to be above the 2007 level due to a mid year COLA increase of a $2,000 increase to the salaries of public safety employees, funding for the operating deficit of the transit department, and the continued rise in the cost of fuel and operating supplies. Funded in the judicial area is the new state court judge position, a public defender position for Juvenile Court, and a drug court. Various cultural and recreational programs were added and funding budgeted for demolition of condemned houses and an additional medical outreach program. The general economic climate for the city government of 2008 is expected to be stable. There is no appropriation of fund balance for budgeted expenditures. The undesignated fund balance should remain at 28% in reserve. Business – type Activities: Overall Water and Sewer revenue is projected to increase of more than 3% due to the increased rates. Requests for Information This report is designed to provide an overview of the Government’s finances for those with an interest in this area. Questions concerning any of the information found in this report or requests for additional information should be directed to the Finance Director, Augusta-Richmond County, Georgia, 501 Greene Street, Augusta, Georgia 30901. Questions concerning any of the information found in this report relating to the Richmond County Board of Health should be directed to the Department of Health at 950 Laney Walker Blvd., Augusta, Georgia 30901. Questions concerning any of the information found in this report relating to Augusta Canal Authority should be directed to Augusta Canal Authority, 1450 Greene Street, Suite 400, Augusta, Georgia 30903. Questions concerning any of the information found in this report relating to Downtown Development Authority should be directed to Downtown Development Authority, 111 Tenth Street, Augusta, Georgia 30901. 14 ---PAGE BREAK--- BASIC FINANCIAL STATEMENTS 15 ---PAGE BREAK--- 16 ---PAGE BREAK--- GOVERNMENT-WIDE FINANCIAL STATEMENTS 17 ---PAGE BREAK--- 18 ---PAGE BREAK--- Primary Government Component Units Business Primary Department Augusta Downtown Governmental Type Government of Canal Development Activities Activities Total Health Authority Authority Assets Cash and temporary investments 250,508,611 $ 87,501,670 $ 338,010,281 $ 1,556,220 $ 558,176 $ 523,410 $ Receivables (net of allowance for doubtful accounts) Taxes 3,855,683 - 3,855,683 - - - Accounts 16,084,982 14,727,267 30,812,249 1,121,307 249,755 - Interest 227,482 524,122 751,604 - - - Notes 3,701,447 - 3,701,447 - - - Intergovernmental 40,325 789,351 829,676 - - - Prepaid expenses 277,773 - 277,773 - 22,118 - Inventory 108,114 2,955,322 3,063,436 - 33,211 - Restricted cash and investments 58,525,888 175,244,654 233,770,542 - 2,391,766 - Internal balances 2,870,195 (2,870,195) - - - - Capital assets Land and construction in progress 114,395,153 175,161,411 289,556,564 1,647,997 520,651 - Other capital assets, net of accumulated depreciation 132,818,525 309,890,697 442,709,222 7,292,703 11,851,263 3,655,032 Other assets 881,635 23,014,275 23,895,910 - - 55,853 Total assets 584,295,813 786,938,574 1,371,234,387 11,618,227 15,626,940 4,234,295 Liabilities Accounts payable 9,358,656 15,156,650 24,515,306 1,524,584 58,957 190,387 Accrued interest 478,333 5,366,603 5,844,936 - - - Accrued salaries and vacation 4,621,046 763,327 5,384,373 171,720 41,355 - Other accrued liabilities 4,031,665 250,099 4,281,764 32,840 - 11,214 Unearned revenue 11,644,965 - 11,644,965 - - - Liabilities due in less than one year 17,926,002 8,869,346 26,795,348 33,035 - 585,000 Liabilities due in greater than one year 45,530,123 504,604,579 550,134,702 835,164 - 1,215,000 Total liabilities 93,590,790 535,010,604 628,601,394 2,597,343 100,312 2,001,601 Net assets Invested in capital assets net of related debt 238,765,702 143,717,492 382,483,194 8,473,180 12,371,914 1,855,032 Restricted for: Capital projects 186,420,227 5,516,766 191,936,993 - 2,391,766 - Debt service - 10,409,359 10,409,359 - - - Perpetual care 338,625 - 338,625 - - - Health and welfare - - - 857,867 - - Unrestricted 65,180,469 92,284,353 157,464,822 (310,163) 762,948 377,662 Total net assets 490,705,023 $ 251,927,970 $ 742,632,993 $ 9,020,884 $ 15,526,628 $ 2,232,694 $ The notes to the financial statements are an integral part of this statement. Augusta, Georgia Statement of Net Assets December 31, 2007 19 ---PAGE BREAK--- Program Revenues Operating Capital Functions/Programs Charges for Grants and Grants and Expenses Services Contributions Contributions Primary government: Governmental activities: General government 32,569,426 $ 15,238,133 $ 40,737 $ 84,130 $ Judicial 15,871,604 9,126,678 270,613 - Public safety 77,636,868 7,869,343 852,712 - Public works 13,007,368 1,531,163 - 546,384 Health and welfare 2,227,609 168,051 488,617 - Culture and recreation 24,555,210 1,194,238 4,110,768 - Housing and development 8,844,236 14,737 4,827,655 - Interest on long-term debt 1,517,141 - - - Total governmental activities 176,229,462 35,142,343 10,591,102 630,514 Business-type activities: Waste management 6,196,161 11,075,331 - - Water and sewer 70,720,901 66,852,805 - - Airports 15,380,555 15,656,864 105,161 3,654,745 Municipal golf course 546,477 469,225 - - Transit 4,607,435 682,767 78,603 - Garbage Collection 14,296,578 13,348,361 - - Total business-type activities 111,748,107 108,085,353 183,764 3,654,745 Total primary government 287,977,569 $ 143,227,696 $ 10,774,866 $ 4,285,259 $ Component units: Richmond County Department of Health 14,955,529 $ 2,249,424 $ 11,251,546 $ 41,019 $ Augusta Canal Authority 3,191,259 623,708 2,887,504 - Downtown Development Authority 815,967 2,546 315,055 729,550 Total component units 18,962,755 $ 2,875,678 $ 14,454,105 $ 770,569 $ General revenues: Property taxes Sales taxes Franchise taxes Other taxes Unrestricted governmental revenues Revenues from use of money and property Miscellaneous Transfers Total general revenues and transfers Change in net assets Net assets - beginning, Prior period adjustment Net assets - beginning, as restated Net assets - ending The notes to the financial statements are an integral part of this statement. Augusta, Georgia Statement of Activities Year Ended December 31, 2007 20 ---PAGE BREAK--- Net (Expense) Revenue and Changes in Net Assets Primary Government Component Units Department Augusta Downtown Governmental Business-type of Canal Development Activities Activities Total Health Authority Authority (17,206,426) $ - $ (17,206,426) $ - $ - $ - $ (6,474,313) - (6,474,313) - - - (68,914,813) - (68,914,813) - - - (10,929,821) - (10,929,821) - - - (1,570,941) - (1,570,941) - - - (19,250,204) - (19,250,204) - - - (4,001,844) - (4,001,844) - - - (1,517,141) - (1,517,141) - - - (129,865,503) - (129,865,503) - - - - 4,879,170 4,879,170 - - - - (3,868,096) (3,868,096) - - - - 4,036,215 4,036,215 - - - - (77,252) (77,252) - - - - (3,846,065) (3,846,065) - - - - (948,217) (948,217) - - - - 175,755 175,755 - - - (129,865,503) 175,755 (129,689,748) - - - - - - (1,413,540) - - - - - - 319,953 - - - - - - 231,184 - - - (1,413,540) 319,953 231,184 48,820,848 - 48,820,848 - - - 74,441,584 - 74,441,584 - - - 18,093,444 - 18,093,444 - - - 18,924,063 - 18,924,063 - - - 960,741 - 960,741 1,357,646 - 15,424,993 11,961,476 27,386,469 47,285 73,937 14,122 815,900 936,453 1,752,353 - 260,294 - (6,728,431) 6,728,431 - - - - 170,753,142 19,626,360 190,379,502 1,404,931 334,231 14,122 40,887,639 19,802,115 60,689,754 (8,609) 654,184 245,306 449,817,384 233,439,787 683,257,171 9,029,493 14,872,444 1,987,388 - (1,313,932) (1,313,932) - - - 449,817,384 232,125,855 681,943,239 9,029,493 14,872,444 1,987,388 490,705,023 $ 251,927,970 $ 742,632,993 $ 9,020,884 $ 15,526,628 $ 2,232,694 $ 21 ---PAGE BREAK--- 22 ---PAGE BREAK--- FUND FINANCIAL STATEMENTS 23 ---PAGE BREAK--- Fire Special Sales General Protection Tax Phase III Assets Cash and temporary investments 29,288,026 $ 16,886,418 $ 46,990,652 $ Receivables (net of allowance for doubtful accounts) Taxes 2,572,242 435,803 - Accounts 7,102,328 - 19,603 Interest - - 106,476 Note - - - Intergovernmental 40,325 - - Prepaid items 277,773 - - Inventory 108,114 - - Restricted assets Reserve account - - - Perpetual care - - - Due from other funds 3,425,933 - - Total assets 42,814,741 $ 17,322,221 $ 47,116,731 $ Liabilities and fund balances Liabilities: Accounts payable 2,469,547 $ 83,508 $ 1,253,332 $ Due to other funds - - - Accrued salaries and vacation 3,416,961 888,455 - Other accrued liabilities 1,402,353 - - Deferred revenue 2,652,673 10,930,494 - Total liabilities 9,941,534 11,902,457 1,253,332 Fund balances: Reserved for: Encumbrances 546,538 509,230 6,530,633 Project Maintenance - - - Inventory/prepaid items 385,887 - - GOB Projects - - - Unreserved - designated for: Risk benefit 4,705,061 250,000 - Unreserved - undesignated 27,235,721 4,660,534 39,332,766 Unreserved, reported in nonmajor: Special revenue - - - Debt service - - - Capital projects - - - Permanent - - - Total fund balances 32,873,207 5,419,764 45,863,399 Total liabilities and fund balances 42,814,741 $ 17,322,221 $ 47,116,731 $ The notes to the financial statements are an integral part of this statement. Augusta, Georgia Balance Sheet Governmental Funds December 31, 2007 24 ---PAGE BREAK--- Other Total Special Sales Special Sales Governmental Governmental Tax Phase IV Tax Phase V Funds Funds 99,424,032 $ 32,639,003 $ 23,888,154 $ 249,116,285 $ - - 847,638 3,855,683 21,275 2,839,707 1,837,635 11,820,548 - - 121,006 227,482 - - 3,701,447 3,701,447 - - - 40,325 - - - 277,773 - - - 108,114 - 45,979,350 - 45,979,350 - - 338,625 338,625 - - 179,433 3,605,366 99,445,307 $ 81,458,060 $ 30,913,938 $ 319,070,998 $ 2,948,503 $ 720,726 $ 1,267,872 $ 8,743,488 $ - - 720,607 720,607 72,627 - 198,007 4,576,050 - - 17,508 1,419,861 - - 4,596,080 18,179,247 3,021,130 720,726 6,800,074 33,639,253 9,070,844 1,647,516 1,420,820 19,725,581 - - 1,596,460 1,596,460 - - - 385,887 - 43,866,010 - 43,866,010 - - - 4,955,061 87,353,333 35,223,808 - 193,806,162 - - 15,406,935 15,406,935 - - 10,194 10,194 - - 5,139,392 5,139,392 - - 540,063 540,063 96,424,177 80,737,334 24,113,864 285,431,745 99,445,307 $ 81,458,060 $ 30,913,938 $ 319,070,998 $ 25 ---PAGE BREAK--- 26 ---PAGE BREAK--- Augusta, Georgia Reconciliation of the Balance Sheet of Governmental Funds to the Statement of Net Assets December 31, 2007 Amounts reported for governmental activities in the statement of net assets are different because: Ending fund balance - governmental funds 285,431,745 $ Historical cost of capital assets 351,814,268 Accumulated depreciation (104,600,590) 247,213,678 Adjustment of deferred revenue 6,534,282 Bond issue costs capitalized 479,315 Annual pension asset (liability) 402,320 7,415,917 Net assets of internal service funds 1,371,172 Less: cumulative amounts allocated to business-type activities 113,514 Less: capital assets included in adjustment for capital assets (464,095) 1,020,591 Revenue bonds payable (46,053) General obligation bonds payable (36,468,229) Compensated absences (4,050,544) Capital leases (1,743,688) Claims and judgements (4,978,257) Other post employement benefits liability (2,611,804) Accrued interest (478,333) (50,376,908) Net assets of governmental activities 490,705,023 $ The notes to the financial statements are an integral part of this statement Long-term liabilities, including bonds payable and accrued interest, are not due and payable in the current period and therefore are not reported in the funds. Other long-term assets are not available to pay for current-period expenditures and, therefore, are deferred in the funds. Internal service funds are used by management to charge the costs of risk management, fleet operations, employee benefits, and GMA lease activity to individual funds. The assets and liabilities of the internal service funds are included in governmental activities in the statement of net assets. Capital assets used in governmental activities are not financial resources and, therefore, are not reported in the funds. 27 ---PAGE BREAK--- Fire Special Sales General Protection Tax Phase III Revenues Taxes - property 36,747,206 $ 5,464,228 $ - $ Taxes - other than property 49,841,876 10,227,510 - Licenses and permits 1,601,287 - - Use of money and property 3,464,322 473,874 2,357,166 Charges for current services 16,947,571 113,971 - Fines and forfeitures 6,034,855 - - Intergovernmental 2,763,323 245,417 147,146 Contributions and donations 34,693 - - Other 51,373 11,291 - Total revenues 117,486,506 16,536,291 2,504,312 Expenditures Current: General government 25,025,439 - 53,124 Judicial 14,189,686 - - Public safety 51,785,481 20,075,393 - Public works 5,441,076 - 1,292,115 Health and welfare 2,143,037 - - Culture and recreation 13,069,396 - 472,104 Housing and development 2,047,398 - - Capital outlay - 143,476 1,938,131 Debt service 117,278 11,314 - Total expenditures 113,818,791 20,230,183 3,755,474 Excess (deficiency) of revenues over (under) expenditures 3,667,715 (3,693,892) (1,251,162) Other financing sources (uses) Transfers in 2,545,843 6,340,085 - Transfers (out) (2,994,833) - - Capital lease proceeds 1,967,750 - - Total other financing sources (uses) 1,518,760 6,340,085 - Net change in fund balances 5,186,475 2,646,193 (1,251,162) Fund balance - beginning 27,686,732 2,773,571 47,114,561 Fund balance - ending 32,873,207 $ 5,419,764 $ 45,863,399 $ The notes to the financial statements are an integral part of this statement. Augusta, Georgia Statement of Revenues, Expenditures and Changes in Fund Balances Governmental Funds Year Ended December 31, 2007 28 ---PAGE BREAK--- Other Total Special Sales Special Sales Governmental Governmental Tax Phase IV Tax Phase V Funds Funds - $ - $ 11,167,266 $ 53,378,700 $ - 37,584,639 13,805,066 111,459,091 - - 3,288,900 4,890,187 4,732,002 3,247,522 1,177,728 15,452,614 - - 5,854,388 22,915,930 - - 1,274,329 7,309,184 3,907,573 - 5,144,651 12,208,110 - - - 34,693 - - 415,911 478,575 8,639,575 40,832,161 42,128,239 228,127,084 477,515 - 2,925,029 28,481,107 - - 392,497 14,582,183 114,913 - 4,626,887 76,602,674 3,220,332 484,141 4,055,419 14,493,083 518,838 1,824,098 - 4,485,973 2,284,356 5,080,255 4,494,502 25,400,613 - - 6,781,376 8,828,774 10,410,166 934,691 2,785,095 16,211,559 - 57,000 13,926,946 14,112,538 17,026,120 8,380,185 39,987,751 203,198,504 (8,386,545) 32,451,976 2,140,488 24,928,580 3,477,345 - 11,013,631 23,376,904 - (9,727,390) (16,924,202) (29,646,425) - - - 1,967,750 3,477,345 (9,727,390) (5,910,571) (4,301,771) (4,909,200) 22,724,586 (3,770,083) 20,626,809 101,333,377 58,012,748 27,883,947 264,804,936 96,424,177 $ 80,737,334 $ 24,113,864 $ 285,431,745 $ 29 ---PAGE BREAK--- 30 ---PAGE BREAK--- Augusta, Georgia Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances of Governmental Funds to the Statement of Activities Year Ended December 31, 2007 Amounts reported for governmental activities in the statement of activities are different because: Net change in fund balances - total governmental funds 20,626,809 $ Capital outlay Depreciation expense 17,970,529 (4,435,697) 95,072 (2,611,804) General obligation bonds payable 8,273,307 Revenue bonds payable 111,381 Notes payable 2,500,000 Compensated absences 54,202 Capital leases (223,169) Claims and judgements (1,554,982) Bond issue costs capitalized (119,826) Accrued interest 147,268 9,188,181 54,549 Change in net assets of governmental activities 40,887,639 $ The notes to the financial statements are an integral part of this statement. 28,364,246 (10,393,717) The change in the net pension obligation or asset does not affect current financial resources and are not reported as a revenue or expense in the funds. Governmental funds report capital outlays as expenditures. However, in the statement of activities the cost of those assets is allocated over their estimated useful lives and reported as depreciation expense. This is the amount by which capital outlay exceeded depreciation in the current period. The net revenue of certain activities of the internal service fund is reported with governmental activities. Governmental funds recognize revenues when current resources are provided; the Statement of Activities recognizes revenue when earned, resulting in a timing difference of current period revenues relating to converting from modified-accrual basis to full accrual basis. The issuance of long-term debt (e.g. bonds, leases) provides current financial resources to governmental funds, while the repayment of the principal of long-term debt consumes the current financial resources of governmental funds. Neither transaction, however has any effect on net assets. Also, governmental funds report the effect of issuance costs, premiums, discounts, and similar items when debt is first issued, whereas these amounts are deferred and amortized in the statement of activities. This amount is the net effect of these differences in the treatment of long-term debt and related accounts. The change in the net other post employment benefit obligation or asset does not affect current financial resources and are not reported as a revenue or expense in the funds. 31 ---PAGE BREAK--- Variance with Final Budget - Positive 2006 Revenues Original Final (Negative) Actual Taxes - property 34,011,403 $ 34,780,646 $ 36,747,206 $ 1,966,560 $ 31,488,520 $ Taxes - other than property 48,232,710 48,232,710 49,841,876 1,609,166 48,080,964 Licenses and permits 1,542,500 1,542,500 1,601,287 58,787 1,354,747 Use of money and property 1,979,400 1,979,400 3,464,322 1,484,922 3,649,704 Charges for current services 16,269,140 16,423,790 16,947,571 523,781 15,965,526 Fines and forfeitures 5,731,800 5,821,800 6,034,855 213,055 6,054,609 Intergovernmental 2,172,333 3,354,576 2,763,323 (591,253) 2,575,023 Contributions and donations 3,840 4,860 34,693 29,833 100,537 Other 40,000 40,000 51,373 11,373 108,011 Total revenues 109,983,126 112,180,282 117,486,506 5,306,224 109,377,641 Expenditures Current: General government 26,085,250 21,400,036 25,025,439 (3,625,403) 24,855,810 Judicial 10,067,447 14,242,205 14,189,686 52,519 13,076,206 Public safety 51,434,026 53,793,015 51,785,481 2,007,534 46,918,835 Public works 6,837,566 6,604,525 5,441,076 1,163,449 5,896,084 Health and welfare 2,070,080 2,184,765 2,143,037 41,728 1,948,608 Culture and recreation 13,320,465 14,034,616 13,069,396 965,220 13,574,079 Housing and development 1,763,022 2,126,300 2,047,398 78,902 1,827,947 Capital outlay 101,250 - - - - Debt service 117,300 117,300 117,278 22 117,278 Total expenditures 111,796,406 114,502,762 113,818,791 683,971 108,214,847 Excess (deficiency) of revenues over (under) expenditures (1,813,280) (2,322,480) 3,667,715 5,990,195 1,162,794 Other financing sources (uses) Transfers in 2,813,400 4,876,900 2,545,843 (2,331,057) 5,290,776 Transfers (out) (1,000,120) (2,554,420) (2,994,833) (440,413) (2,985,260) Capital lease proceeds - - 1,967,750 1,967,750 71,495 Total other financing sources (uses) 1,813,280 2,322,480 1,518,760 (803,720) 2,377,011 Net change in fund balances - $ - $ 5,186,475 5,186,475 $ 3,539,805 Fund balance - beginning 27,686,732 24,146,927 Fund balance - ending 32,873,207 $ 27,686,732 $ The notes to the financial statements are an integral part of this statement. Actual Amounts Augusta, Georgia Budgeted Amounts Year Ended December 31, 2007 Statement of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual General Fund With comparative amounts for December 31, 2006 32 ---PAGE BREAK--- Variance with Final Budget - Actual Positive 2006 Revenues Original Final Amounts (Negative) Actual Taxes - property 4,130,670 $ 5,236,618 $ 5,464,228 $ 227,610 $ 4,921,327 $ Taxes - other than property 9,775,390 10,227,510 10,227,510 - 9,775,390 Licenses and permits - - - - 2,613 Use of money and property 60,700 60,700 473,874 413,174 517,060 Charges for current services 45,700 45,700 113,971 68,271 87,462 Intergovernmental - 164,394 245,417 81,023 486,484 Contributions and donations - - - - 3,250 Other - - 11,291 11,291 31,850 Total revenues 14,012,460 15,734,922 16,536,291 801,369 15,825,436 Expenditures Current: General government - - - - 969,097 Public safety 19,438,610 21,067,613 20,075,393 992,220 18,368,600 Capital outlay 523,240 616,699 143,476 473,223 407,679 Debt service 10,610 10,610 11,314 (704) 11,511 Total expenditures 19,972,460 21,694,922 20,230,183 1,464,739 19,756,887 Excess (deficiency) of revenues over (under) expenditures (5,960,000) (5,960,000) (3,693,892) 2,266,108 (3,931,451) Other financing sources (uses) Transfers in 5,960,000 5,960,000 6,340,085 380,085 4,241,820 Total other financing sources (uses) 5,960,000 5,960,000 6,340,085 380,085 4,241,820 Net change in fund balances - $ - $ 2,646,193 2,646,193 $ 310,369 Fund balance - beginning 2,773,571 2,463,202 Fund balance - ending 5,419,764 $ 2,773,571 $ The notes to the financial statements are an integral part of this statement. Budgeted Amounts Augusta, Georgia Fire Protection Statement of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual Year Ended December 31, 2007 With comparative amounts for December 31, 2006 33 ---PAGE BREAK--- Augusta, Georgia Statement of Net Assets Proprietary Funds December 31, 2007 Water Augusta Other Internal and Sewer Regional Enterprise Service System Airport Funds Total Funds Assets Current assets Cash and temporary investments 47,299,031 $ 11,041,977 $ 29,160,662 $ 87,501,670 $ 1,392,326 $ Accounts 10,132,382 868,391 3,726,494 14,727,267 4,264,434 Interest 516,098 - 8,024 524,122 - Intergovernmental - 789,351 - 789,351 - Inventory 2,386,799 357,691 210,832 2,955,322 - Total current assets 60,334,310 13,057,410 33,106,012 106,497,732 5,656,760 Noncurrent assets Restricted cash and investments 152,683,994 17,698,136 4,862,524 175,244,654 12,207,913 Deferred bond issuance costs 6,046,680 997,708 299,153 7,343,541 - Prepaid bond interest 15,670,734 - - 15,670,734 - Capital assets, net 414,725,126 51,936,716 18,390,266 485,052,108 464,095 Total noncurrent assets 589,126,534 70,632,560 23,551,943 683,311,037 12,672,008 Total assets 649,460,844 83,689,970 56,657,955 789,808,769 18,328,768 Liabilities Current liabilities Accounts payable 11,238,497 1,988,220 1,929,933 15,156,650 615,168 Accrued interest 5,366,603 - - 5,366,603 - Due to other funds 572,386 2,182,298 1,997 2,756,681 128,078 Accrued salaries and vacation 903,034 320,830 310,393 1,534,257 44,996 Other accrued liabilities - - 250,099 250,099 - Current portion of notes payable 502,961 - - 502,961 - Current portion of leases payable 23,793 - 726,662 750,455 - Current portion of revenue bonds payable 5,260,000 - 1,585,000 6,845,000 - Total current liabilities 23,867,274 4,491,348 4,804,084 33,162,706 788,242 Noncurrent liabilities Closure/postclosure accrual - - 12,771,074 12,771,074 - Revenue bonds payable 458,183,274 19,605,000 5,575,757 483,364,031 16,169,354 Notes payable 6,599,200 - - 6,599,200 - Capital leases - - 1,870,274 1,870,274 - Total noncurrent liabilities 464,782,474 19,605,000 20,217,105 504,604,579 16,169,354 Total liabilities 488,649,748 24,096,348 25,021,189 537,767,285 16,957,596 Net assets Invested in capital assets, net of related debt 85,709,309 44,515,250 13,492,933 143,717,492 464,095 Restricted 10,409,359 5,514,602 2,164 15,926,125 - Unrestricted 64,692,428 9,563,770 18,141,669 92,397,867 907,077 Total net assets 160,811,096 $ 59,593,622 $ 31,636,766 $ 252,041,484 $ 1,371,172 $ Some amounts reported for business-type activities in the statement of net assets are different because of the following: Certain internal fund assets and liabilities are included with business-type activities. (195,477) $ Certain internal fund expenses are allocated to business-type activities. 81,963 Total net assets for business-type activities 251,927,970 $ The notes to the financial statements are an integral part of this statement. Enterprise Funds 34 ---PAGE BREAK--- Water Augusta Other Internal and Sewer Regional Enterprise Service System Airport Funds Total Funds Operating revenues Charges and fees 66,859,327 $ 14,981,099 $ 25,657,069 $ 107,497,495 $ 30,279,999 $ Total operating revenues 66,859,327 14,981,099 25,657,069 107,497,495 30,279,999 Operating expenses Personal services and employee benefits 11,465,121 3,573,476 4,291,891 19,330,488 464,303 Purchased/contracted services 8,516,411 1,096,561 14,159,852 23,772,824 453,636 Supplies 5,443,961 8,061,353 1,232,291 14,737,605 197,538 Repairs and maintenance 3,935,676 352,348 1,004,770 5,292,794 4,377,555 Interfund/interdepartmental charges 1,873,690 219,512 1,103,145 3,196,347 - Other costs - - 87,996 87,996 282,080 Depreciation 13,086,218 1,523,817 2,301,430 16,911,465 46,540 Closure/postclosure accrual - - 1,246,810 1,246,810 - Lease expense - - - - 2,504,942 Risk benefit charges - - - - 981,472 Insurance - - - - 20,419,941 Total operating expenses 44,321,077 14,827,067 25,428,185 84,576,329 29,728,007 Operating income (loss) 22,538,250 154,032 228,884 22,921,166 551,992 Nonoperating revenue (expense) Interest revenue 9,864,651 552,743 1,503,584 11,920,978 652,635 Sale of property 18,264 30,540 40,800 89,604 2,405 Other revenue 866,667 1,192,603 231,776 2,291,046 241,526 Intergovernmental - 3,739,406 98,603 3,838,009 - Interest expense (23,957,459) - (430,382) (24,387,841) (853,136) Loss on early termination of swap agreement (3,367,879) - - (3,367,879) - Loss on disposal of capital assets - (313,362) - (313,362) - Total nonoperating revenue (expense) (16,575,756) 5,201,930 1,444,381 (9,929,445) 43,430 Income (loss) before transfers 5,962,494 5,355,962 1,673,265 12,991,721 595,422 Transfers in - - 6,728,431 6,728,431 139,272 Transfers out - - - - (598,182) Change in net assets 5,962,494 5,355,962 8,401,696 19,720,152 136,512 Total net assets - beginning 154,848,602 55,551,592 23,235,070 1,234,660 Prior period adjustment - (1,313,932) - - Total net assets - beginning, as restated 154,848,602 54,237,660 23,235,070 1,234,660 Total net assets - ending 160,811,096 $ 59,593,622 $ 31,636,766 $ 1,371,172 $ Some amounts reported for business-type activities in the statement of net assets are different because of the following: Certain internal fund expenses are allocated to business-type activities. 81,963 Total change in net assets for business-type activities 19,802,115 $ The notes to the financial statements are an integral part of this statement. Enterprise Funds Augusta, Georgia Year Ended December 31, 2007 Proprietary Funds Statement of Revenues, Expenses, and Changes in Fund Net Assets 35 ---PAGE BREAK--- Enterprise Funds Water Augusta Other Internal & Sewer Regional Enterprise Service System Airport Funds Total Funds Operating activities Cash received from customers 65,443,578 $ 14,838,205 $ 25,181,532 $ 105,463,315 $ - $ Cash received from contributions - - - - 30,312,208 Repayment of interfund advances (13,825,481) - (28,400) (13,853,881) - Cash paid to suppliers (7,767,982) - (17,157,115) (24,925,097) (28,888,070) Cash paid to employees (11,421,022) (12,380,209) (4,279,131) (28,080,362) (468,013) Cash paid for interfund services used - (1,218,986) (1,218,986) - Cash paid to General Fund - - - - (2,189,272) Net cash provided by (used in) operating activities 32,429,093 2,457,996 2,497,900 37,384,989 (1,233,147) Noncapital financing activities Transfers in - - 6,728,431 6,728,431 140,181 Transfers out - - - - (599,091) Operating grants - - 78,603 78,603 - Interest expense on operating capital - - (160,888) (160,888) (94,968) Other revenue - - - - 180,808 Other expense - (52,830) - (52,830) - Net cash provided by noncapital financing activities - (52,830) 6,646,146 6,593,316 (373,070) Capital and related financing activities Proceeds from grants - 4,156,193 20,000 4,176,193 - Proceeds from sale of property 18,264 30,540 408,211 457,015 2,403 Interest on bond funds 7,738,460 - - 7,738,460 - Other miscellaneous income - 1,293,371 35,091 1,328,462 60,718 Proceeds from bond refunding 188,613,024 - - 188,613,024 - Purchase of capital assets (72,287,857) (9,252,744) (1,609,524) (83,150,125) (124,979) Bond issuance costs paid (2,182,686) 35,632 - (2,147,054) - Payments on bonds issued - - (1,540,000) (1,540,000) - Interest paid on capital debt (29,885,082) - (283,472) (30,168,554) (712,936) Payments on capital leases (712,091) - (1,112,830) (1,824,921) (15,108) Collection of receivable 500,000 - - 500,000 - Principal paid on revenue bonds (184,020,000) - - (184,020,000) - Net cash provided (used) by capital and related financing activities (92,217,968) (3,737,008) (4,082,524) (100,037,500) (789,902) Investing activities Interest received 2,599,744 504,805 1,503,147 4,607,696 652,318 Proceeds from insurance settlement 866,667 - - 866,667 - Proceeds on termination of swap agreement 1,234,264 - - 1,234,264 Payments on termination of swap agreement (6,750,000) - - (6,750,000) - Net cash provided by investing activities (2,049,325) 504,805 1,503,147 (41,373) 652,318 Net increase in cash and cash equivalents/investments (61,838,200) (827,037) 6,564,669 (56,100,568) (1,743,801) Cash and cash equivalents/investments Beginning of year 261,821,225 29,567,150 27,458,517 318,846,892 15,344,040 End of year 199,983,025 $ 28,740,113 $ 34,023,186 $ 262,746,324 $ 13,600,239 $ The notes to the financial statements are an integral part of this statement. Augusta, Georgia Statement of Cash Flows Proprietary Funds Year Ended December 31, 2007 36 ---PAGE BREAK--- Enterprise Funds Water Augusta Other Internal & Sewer Regional Enterprise Service System Airport Funds Total Funds Reconciliation of operating income (loss) to net cash provided by (used in) operating activities Operating income (loss) 22,538,250 $ 154,032 $ 228,884 $ 22,921,166 $ 551,992 $ Adjustments to reconcile operating income (loss) to net cash provided by (used in) operating activities: Depreciation and amortization 13,086,218 1,523,817 2,301,430 16,911,465 46,540 Closure/post closure costs - - 1,246,810 1,246,810 - Change in assets and liabilities Accounts receivable (1,417,826) (145,484) (475,537) (2,038,847) 398,465 Inventory (282,966) (32,696) 573 (315,089) - Accounts payable 8,288,101 958,327 1,032,363 10,278,791 (1,570,218) Accrued salaries and vacation 44,099 - 12,760 56,859 (3,710) Other accrued liabilites - - 4,849 4,849 - Due to other funds (9,828,859) - (144,241) (9,973,100) (656,216) Unearned revenue 2,076 - - 2,076 - Decrease in closure liability - - (1,709,991) (1,709,991) - Total adjustments 9,890,843 2,303,964 2,269,016 14,463,823 (1,785,139) Net cash provided by (used in) operating activities 32,429,093 $ 2,457,996 $ 2,497,900 $ 37,384,989 $ (1,233,147) $ Reconciliation of cash and cash equivalents to the balance sheets Cash and cash equivalents in current assets 47,299,031 $ 11,041,977 $ 29,160,662 $ 87,501,670 $ 1,392,326 $ Restricted cash and cash equivalents included in noncurrent cash and investments 152,683,994 17,698,136 4,862,524 175,244,654 12,207,913 Net cash and cash equivalents 199,983,025 $ 28,740,113 $ 34,023,186 $ 262,746,324 $ 13,600,239 $ The notes to the financial statements are an integral part of this statement. Augusta, Georgia Statement of Cash Flows Proprietary Funds Year Ended December 31, 2007 37 ---PAGE BREAK--- Augusta, Georgia Statement of Fiduciary Net Assets Fiduciary Funds December 31, 2007 Private-purpose Pension Trust Fund Agency Trust Funds Joseph R. Lamar Funds Assets Cash and cash equivalents 31,259,822 $ 714 $ 8,576,796 $ Investments U.S. Government securities 20,424,764 - - Corporate bonds 9,985,444 - - Equity securities 48,318,153 - - Receivables (net of allowance for doubtful accounts) Taxes - - 21,448,784 Accounts 572,482 - - Interest 474,959 - - Restricted assets Perpetual care - 5,000 - Total assets 111,035,624 5,714 30,025,580 $ Liabilities Due to others - - 8,576,796 Uncollected taxes - - 21,448,784 Total liabilities - - 30,025,580 $ Net assets Held in trust for pension benefits and other purposes 111,035,624 $ 5,714 $ (See Schedules of Funding Progress) The notes to the financial statements are an integral part of this statement. 38 ---PAGE BREAK--- Private-purpose Pension Trust Fund Trust Funds Joseph R. Lamar Additions Contributions - employer 2,418,674 $ - $ Contributions - plan member 1,492,559 - Net investment income 9,136,575 306 Total additions 13,047,808 306 Deductions Other - 175 Administration 504,905 - Benefit payments 7,005,602 - Refunds 234,956 - Total deductions 7,745,463 175 Net increase in plan net assets 5,302,345 131 Total net assets - beginning 105,733,279 5,583 Total net assets - ending 111,035,624 $ 5,714 $ The notes to the financial statements are an integral part of this statement. Augusta, Georgia Statement of Changes in Fiduciary Net Assets Fiduciary Funds Year Ended December 31, 2007 39 ---PAGE BREAK--- 40 ---PAGE BREAK--- Notes to Financial Statements 41 ---PAGE BREAK--- 42 ---PAGE BREAK--- AUGUSTA, GEORGIA Notes to Financial Statements Year Ended December 31, 2007 Note 1 - Summary of significant accounting policies Augusta, Georgia (“the Government”) accounts for its financial position and results of operations in accordance with accounting principles generally accepted in the United States of America (GAAP) applicable to governmental units. The Government’s reporting entity applies all relevant Government Accounting Standards Board (GASB) pronouncements. In the government-wide financial statements and in the proprietary fund financial statements, the Government applies Financial Accounting Standards Board (FASB) pronouncements and Accounting Principles Board (APB) opinions issued on or before November 30, 1989, unless those pronouncements conflict with or contradict GASB pronouncements, in which case, GASB prevails. Accordingly, the Government has adopted accounting policies, as described below. A. Reporting entity Augusta is located in the east central section of the state on the south bank of the Savannah River, which serves as the boundary between Georgia and South Carolina. Augusta is on the fall line and has a landscape dotted with foothills which descend to the coastal plain. Augusta is the head of the navigation on the Savannah River and is 135 miles east of Atlanta, 127 miles northwest of the port of Savannah, and 72 miles southwest of Columbia, South Carolina. Augusta is the trade center for 13 counties in Georgia and five in South Carolina, a section known as the Central Savannah River Area. The Government was created by legislative act in the State of Georgia in 1995 from the unification of the two governments, the City of Augusta, Georgia and Richmond County, Georgia. On June 20, 1995, the citizens of Richmond County and the City of Augusta voted to consolidate into one government named Augusta, Georgia. The officials for the new government were elected and, based on the charter, took office on January 1, 1996. The unified government combined all functions and began financial operations January 1, 1996. The Government is governed by a full-time Mayor, with a term of four years, and a ten member Commission, who serve on a part-time basis and are elected to staggered terms of four years. The Mayor and Commission appoint an Administrator who serves as a full-time administrative officer and is responsible for the daily operations of the Government. The Government’s financial statements include the accounts of all Augusta and Richmond County operations. The criteria for including organizations as component units within Augusta’s reporting entity, as set forth in Section 2100 of GASB’s Codification of Governmental Accounting and Financial Reporting Standards, include whether: • the organization is legally separate (can sue and be sued in their own name) • the Government holds the corporate powers of the organization • the Government appoints a voting majority of the organization’s board • the Government is able to impose its will on the organization • the organization has the potential to impose a financial benefit/burden on the Government • there is fiscal dependency by the organization on the Government Utilizing the above criteria, the following agencies and commissions were included using the blending method in the financial statements: Augusta Port Authority, due to degree of fiscal dependency on the Government, and Richmond County Public Facilities, Inc. (see Note 4D). Complete financial statements for the individual component units may be obtained at the following address: Augusta, Georgia, Finance Department, 501 Greene Street, Augusta, Georgia 30901 The Government’s other component units, the Department of Health, Augusta Canal Authority, and Downtown Development Authority are included in separate columns in the accompanying government-wide financial statements. These units are reported in separate columns to emphasize that they are legally separate from the Government. Separate financial statements may be obtained from the Richmond County Department of Health at 950 Laney Walker Blvd., Augusta, Georgia 30901. Separate financial statements for the Downtown Development Authority may be obtained from the Downtown Development Authority at 111 Tenth Street, Augusta, Georgia, 30901. Separate financial statements for the Augusta Canal Authority may be obtained from the Augusta Canal Authority at 1450 Greene Street, Suite 400, Augusta, Georgia, 30903. 43 ---PAGE BREAK--- AUGUSTA, GEORGIA Notes to Financial Statements - Continued Year Ended December 31, 2007 Note 1 - Summary of significant accounting policies (Continued) Information for the Department of Health is presented for the year ended June 30, 2007, which were the latest financial statements available. The Department of Health operates with the June 30 fiscal year end, which is different from the governments fiscal year end. Augusta Canal Authority – A voting majority of the board is appointed by the Government. Richmond County Department of Health - A voting majority of the board is appointed by the Government. Downtown Development Authority – A voting majority of the board is appointed by the Government. B. Basis of Presentation Government-wide statements: The statement of net assets and the statement of activities display information about the primary government. These statements include the financial activities of the overall government. Eliminations have been made to minimize the double counting of internal activities. These statements distinguish between the governmental and business-type activities of the Government. Governmental activities generally are financed through taxes, intergovernmental revenues, and other non-exchange transactions. Business-type activities are financed in whole or in part by fees charged to external parties. Likewise, the primary government is reported separately from certain legally separate component units for which the primary government is financially accountable. The statement of activities presents a comparison between direct expenses and program revenues for the different business-type activities of the Government and for each function of the Government’s governmental activities. Direct expenses are those that are specifically associated with a program or function and, therefore, are clearly identifiable to a particular function. Program revenues include fees and charges paid by the recipients of goods or services offered by the programs and grants and contributions that are restricted to meeting the operational or capital requirements of a particular program. Revenues that are not classified as program revenues, including all taxes, are presented as general revenues. Separate financial statements are provided for governmental funds, proprietary funds, and fiduciary funds, even though the latter are excluded from the government-wide financial statements. Major individual governmental funds and major individual enterprise funds are reported as separate columns in the fund financial statements. Fund financial statements: The fund financial statements provide information about the Government’s funds. Separate statements for each fund category – governmental, proprietary and fiduciary – are presented. The emphasis of fund financial statements is on major governmental and enterprise funds, each displayed in a separate column. All remaining governmental and enterprise funds are aggregated and reported as nonmajor funds. Proprietary fund operation revenues, such as charges for services, result from exchange transactions associated with the principal activity of the fund. Exchange transactions are those in which each party receives and gives up essentially equal values. Nonoperating revenues, such as subsidies and investment earnings, result from non-exchange transactions or ancillary activities. The Government reports the following major governmental funds: General Fund – The General Fund is the general operating fund of the Government. The General Fund accounts for all financial resources except those that are required to be accounted for in another fund. The primary revenue sources are ad valorem taxes, state grants, and various other taxes and licenses. The primary expenditures are for public safety, recreation, street maintenance and improvements, and sanitation services. Fire Protection Fund – The Fire Protection Fund is a special revenue fund that accounts for the receipts and disbursements of tax revenues restricted for fire protection services in the unincorporated area only. The primary revenue source is ad valorem taxes, and the primary expenditures are for public safety. 44 ---PAGE BREAK--- AUGUSTA, GEORGIA Notes to Financial Statements - Continued Year Ended December 31, 2007 Note 1 - Summary of significant accounting policies (Continued) Special Sales Tax Phase III Fund – The Special Sales Tax Phase III Fund is a capital projects fund that accounts for the receipts and disbursements of one percent sales tax currently collected from 1996 through 2000. The primary revenue sources are sales taxes, and the primary expenditures are capital outlay projects, primarily for public works, recreation and outside agency projects. Special Sales Tax Phase IV Fund – This fund was established for expenditures specifically budgeted from revenues from the one cent sales tax (Phase IV) collected from the years 2001 – 2006 to be used primarily for public works, recreation and outside agency projects. Special Sales Tax Phase V Fund – This fund is a capital projects fund that accounts for receipts and disbursements of one percent sales tax collected beginning March 2006 and expiring after five years or the quarter after a total of $160 million has been collected, whichever occurs first. The revenue sources are sales tax and earned interest, and expenditures will be for capital outlay projects, primarily for public works, recreation, and outside agency projects. The funds will also be used to repay $44 million bonds issued for the expansion on the Webster Detention Center and $8 million bonds issued for the Canal Authority. The Government reports the following nonmajor governmental funds: Special Revenue Funds Urban Services District Fund - This fund accounts for revenue primarily from ad valorem taxes from areas within the former city limits and expenditures related to governmental services such as “Main Street”, “Urban Street Lights”, and “Sanitation”. Emergency Telephone System Fund - This fund accounts for the receipt and disbursement of revenues of the emergency telephone response system. Capital Outlay Fund - This fund accounts for the disbursement of revenues for all capital expenditures in General Fund departments. Capital expenditures are defined as any non-disposable item over $500 which includes vehicles, office and computer equipment, communications equipment, building renovations and office furniture. Law Enforcement Fund - This fund accounts for revenue and expenditures of the Sheriff’s Department and Jail. Occupational Tax Fund - This fund accounts for the receipt and disbursement of tax revenues restricted for fire protection services in the unincorporated area only. Special Assessment Fund - This fund accounts for the receipt and disbursement of street light assessment taxes for the installation of street lights in the Government. Hotel/Motel tax and Promotion/Tourism Fund - This fund accounts for the receipt and disbursement of hotel/motel and beer/wine tax revenues to the Augusta-Richmond County Convention & Visitors Bureau and the Augusta-Richmond County Coliseum Authority. Housing and Neighborhood Development Fund - This fund accounts for the financing and construction of various community development projects from grants received from the U.S. Department of Housing and Urban Development. Urban Development Action Grant (UDAG) Fund - This fund accounts for loan transactions in relation to urban development action grants. Repayments of initial grant revenue loaned to qualified recipients are restricted to additional financing to qualified applicants. Federal Drug Fund - This fund accounts for activities associated with drug education and enforcement. State Drug Fund - This fund accounts for activities associated with drug education and enforcement. 45 ---PAGE BREAK--- AUGUSTA, GEORGIA Notes to Financial Statements - Continued Year Ended December 31, 2007 Note 1 - Summary of significant accounting policies (Continued) Law Library – This fund accounts for receipt and disbursement of the Library. 5% Crime Victim’s Assistance Fund - This fund accounts for the 5% surcharge on certain fines with the proceeds used for a victim’s assistance program. Supplemental Juvenile Service Fund - This fund accounts for supervisory fees collected on juvenile cases. Building Inspection Fund – This fund accounts for building inspection licensing and fees revenue and related expenditures. Weed and Seed Federal Grant Fund - This fund accounts for a grant designed to target high risk areas for teens and weed out the bad influences and sow the seed for a better life. Wireless Phase Fund – This fund accounts for activities associated with 911 charges for wireless service. Perpetual Care I Fund - This fund accounts for monies collected from sale of perpetual care contracts at Government-owned cemeteries after October 1, 1970, as well as receipt of investment earnings on all perpetual care investments and payment of cemetery maintenance expenditures. Landbank Authority - This fund accounts for property owned by the County for the future progress of Augusta, GA. Downtown Development Fund – This fund accounts for excise taxes collected on rental motor vehicles, and debt payments made and appropriations given to the Downtown Development Authority. Canine Forfeitures - This fund accounts for proceeds recovered from drug arrests, which are allocated to the canine unit in return for their assistance. NPDES Permit Fees - This fund accounts for a per acre environmental fee charged to all contractors who disturb more than one acre of land at a building site. Debt Service Funds Debt Service Fund - This fund accounts for general obligation bonds and notes payable and any other debts not recorded in the Enterprise Funds. Urban Debt Service Fund - This fund accounts for general obligation bonds related to the former City of Augusta. 2006 GO Bonds Debt Service Fund – This fund accounts for the general obligation bonds related to the General Obligation Sales Tax Bonds, Series 2006. The bonds are to be repaid with funds from SPLOST Phase V. Capital Projects Funds Community Development Fund - This fund accounts for the financing and construction of various community development projects. Financing is provided by grants received from the U.S. Department of Housing and Urban Development. Special Sales Tax Phase I Fund - This fund accounts for financing and construction of various road improvement projects. Financing is provided by receipts from a 1987 special one percent local option sales tax referendum. Special Sales Tax Phase II Fund - This fund accounts for financing and construction of various construction and road improvements, drainage, jail improvements, and museums. Financing is to be provided by receipts from a 1991 special one percent local option sales tax referendum. 46 ---PAGE BREAK--- AUGUSTA, GEORGIA Notes to Financial Statements - Continued Year Ended December 31, 2007 Note 1 - Summary of significant accounting policies (Continued) Permanent Fund Perpetual Care II Fund - This fund accounts for the principal originally donated for the sale of perpetual care contracts at government-owned cemeteries after October 1, 1970. The principal must be maintained intact and invested. The Government reports the following major enterprise funds: Water and Sewer System Fund – This fund is used to account for the activity of providing water and sewer services to the residents of the County. All activities necessary to provide such services are accounted for in this fund, including, but not limited to, operations, maintenance, financing and related debt service, and billing and collection. Augusta Regional Airport at Bush Field Fund - This fund accounts for the operations of Augusta Regional Airport at Bush Field, the only airport within the County from which service from the major airlines is available. The Government reports the following nonmajor enterprise funds: Waste Management Fund - This fund accounts for the provision of landfill services to residents and industries of the County. All activities necessary to provide such services are accounted for in this fund including, but not limited to, administration, operations, billing and collection. Municipal Golf Course Fund - This fund accounts for the operation of the Municipal Golf Course, an 18-hole golf course located within the city limits. Transit Fund - This fund accounts for the operations of the Augusta Public Transit which provides scheduled bus service within Richmond and Columbia counties. Daniel Field Airport Fund - This fund accounts for revenue and expenses related to Daniel Field Airport. Garbage Collection Fund - This fund accounts for receipt and expenses related to the Government’s garbage collection contract. The Government also reports the following internal service funds: Risk Management Fund – This fund accounts for the receipt and disbursement of settlement exposure and damage expense claims, commercial insurance premiums and bond on certain employees and elected officials. Fleet Operations Fund – This fund accounts for the operation and maintenance of County vehicles. The Fund bills other County funds at amounts that will approximately recover all the cost of the services provided. Workers’ Compensation Fund – This fund accounts for the receipt and disbursement of self-insured workers’ compensation claims. Employee Health Benefits Fund – This fund accounts for the receipt and disbursement of self-insured employee group health insurance claims. Unemployment Fund – This fund accounts for the receipt and disbursement of unemployment benefits. Long-term Disability Insurance Fund – This fund accounts for the receipt and disbursement of long-term disability claims. GMA Leases Fund – This fund accounts for the receipt and disbursement of the lease pool agreement with the Georgia Municipal Association. 47 ---PAGE BREAK--- AUGUSTA, GEORGIA Notes to Financial Statements - Continued Year Ended December 31, 2007 Note 1 - Summary of significant accounting policies (Continued) Additionally, the Government reports the following fund types: Pension Trust Fund – The Government has pension trust funds that account for the Government’s employees’ pension plans. The Government maintains the following pension trust funds: 1945 Pension Trust Fund, 1977 Pension Trust Fund, and the General Retirement Fund. Private Purpose Trust Fund – The Government has a private-purpose trust fund that accounts for resources legally held in trust to finance awards for children attending Joseph R. Lamar School. The principal amount of the gift is to be maintained intact and invested. Investment earnings are used for the awards. The Government maintains the following private-purpose trust fund: Joseph R. Lamar Fund. Agency Funds – Agency funds are custodial in nature and do not involve the measurement of operating results. Agency funds are used to account for assets the Government holds on behalf of others. The Government maintains the following agency funds: Tax Commissioner, which accounts for tax billings, collections and remittances made by the Tax Commissioner on behalf of the County and other governmental agencies; Probate judge, which accounts for the receipt and disbursement of licenses and other fees collected by the Probate Judge; .Sheriff’s Department, which accounts for the receipt and disbursement of funds collected by the department from individuals posting bond; Civil Court, which accounts for the receipt and disbursement of court-ordered fines, fees and garnishments made on behalf of third parties; and Clerk of Court, which accounts for the receipt and disbursement of court-ordered fines and fees made on behalf of third parties and traffic violation fines. C. Measurement Focus and Basis of Accounting Government-wide, Proprietary and Fiduciary Fund Financial Statements – The government-wide, proprietary fund and fiduciary financial statements are reported using the economic resources measurement focus, except for agency funds which have no measurement focus. The government-wide, proprietary fund and fiduciary financial statements are reported using the accrual basis of accounting. Revenues are recorded when earned and expenses are recorded at the time liabilities are incurred, regardless of when the related cash flows take place. Nonexchange transactions, in which the Government gives (or receives) value without directly receiving (or giving) equal value in exchange, include property taxes, grants, and donations. On an accrual basis, revenue from property taxes is recognized in the fiscal year for which the taxes are levied. Revenue from grants and donations is recognized in the fiscal year in which all eligibility requirements have been satisfied. Amounts reported as program revenues include 1) charges to customers or applicants for goods, services, or privileges provided, 2) operating grants and contributions, and 3) capital grants and contributions, including special assessments. Internally dedicated resources are reported as general revenues rather than as program revenues. Likewise, general revenues include all taxes. Proprietary funds distinguish operating revenues and expenses from nonoperating items. Operating revenues and expenses generally result from providing services and producing and delivering goods in connection with a proprietary fund’s principal ongoing operations. The principal operating revenues of the Government enterprise funds are charges to customers for sales and services. The Government also recognizes as operating revenue the portion of tap fees intended to recover the cost of connecting new customers to the system. Operating expenses for enterprise funds include the cost of sales and services, administrative expenses, and depreciation on capital assets. All revenues and expenses not meeting this definition are reported as nonoperating revenues and expenses. Governmental Fund Financial Statements – Governmental funds are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Under this method, revenues are recognized when measurable and available. “Measurable” means the amount of the transaction can be determined and “available” means collectible within the current period. The Government considers all revenues available if they are collected within 60 days after year-end. Expenditures are recorded when the related fund liability is incurred, expect for principal and interest on general long-term debt, claims and judgments, and compensated absences, which are recognized as expenditures to the extent they have matured. General capital asset acquisitions are reported as expenditures in governmental funds. Proceeds of general long-term debt and acquisitions under capital leases are reported as other financing sources. 48 ---PAGE BREAK--- AUGUSTA, GEORGIA Notes to Financial Statements - Continued Year Ended December 31, 2007 Note 1 - Summary of significant accounting policies (Continued) Those revenues susceptible to accrual are property taxes, licenses, interest revenues and charges for services. State- shared revenues collected and held by the state at year-end on behalf of the Government also are recognized as revenue. Fines, fees and permits are not susceptible to accrual because generally they are not measurable until received in cash. Grant revenues which are unearned at year-end are recorded as unearned revenues. Under the terms of grant agreements, the Government funds certain programs by a combination of specific cost-reimbursement grants, categorical block grants, and general revenues. Thus, when program expenses are incurred, there are both restricted and unrestricted net assets available to finance the program. It is the Government’s policy to first apply cost-reimbursement grant resources to such programs, followed by categorical block grants, and then by general revenues. D. Budgets and budgetary accounting The Government generally follows these procedures in establishing the budgetary data reflected in the financial statements: 1. Budgetary hearings are held in August to discuss departmental budgets. 2. The Administrator presents the tentative budget to the Commission in October. 3. The permanent budget is legally adopted by the Commission prior to the start of the next fiscal year. 4. All budget revisions or changes must be approved as required by Georgia law and administrative policy. Transfer of budgeted amounts within operating categories within departments can be requested by department directors. Transfer of budget amounts involving capital outlay or salaries require approval of the Augusta-Richmond County Commission. The Augusta-Richmond County Commission must approve revisions that alter the total expenditures of any department or fund. Budgets for capital items may be reappropriated in the ensuing year’s budget. Departments may request for other budget items to be reappropriated in the form of a budget adjustment, contingent of the Commission’s approval. 5. Formal budgetary integration is employed as a management control device during the year for the General, Special Revenue, Debt Service and Capital Projects Funds. 6. Budgets for these funds are adopted on a basis consistent with accounting principles generally accepted in the United States of America (GAAP). Budget information for expenditures represents the operating budget (as amended) as approved by the Augusta- Richmond County Commission. E. Encumbrances Encumbrance accounting, under which purchase orders, contracts, and other commitments for the expenditure of monies are recorded in order to reserve that portion of the applicable appropriation, is employed as an extension of formal budgetary integration for the General Fund, Special Revenue Funds, Debt Service and Capital Projects Funds. Encumbrances are recorded when purchase orders are issued but are not considered expenditures until liabilities for payments are incurred. Encumbrances for outstanding purchase orders do not lapse at year end. Therefore, they are reported as reservations of fund balance. F. Cash and cash equivalents The Government maintains a cash and investment pool in which the General Fund and all funds share. Each fund’s portion of the pool is displayed on its respective balance sheet as cash and cash equivalents and includes non-pooled cash and investments separately held. Funds which have an excess of outstanding checks over bank balance have had these balances reclassified as a due to the General Fund for purposes of financial statement presentation. Interest income is allocated to each fund based on its average balance. For the purposes of financial statement presentation, the Government considers all highly liquid investments with an original maturity of three months or less, or with insignificant early withdrawal penalties, to be cash equivalents. Exceptions include the Government’s pension plans which classify only cash as cash equivalents in order to appropriately report investment activity. Cash equivalents include amounts in certificates of deposit, repurchase agreements, and U.S. Treasury bills, and are stated at cost which approximates market. All deposits are stated at cost plus accrued interest, which reasonably estimates fair value. 49 ---PAGE BREAK--- AUGUSTA, GEORGIA Notes to Financial Statements - Continued Year Ended December 31, 2007 Note 1 - Summary of significant accounting policies (Continued) The State statutes authorize the Government to invest in obligations of the United States government and agencies thereof, general obligations of the State of Georgia or any of its political subdivisions, or banks and savings and loan associations to the extent that they are secured by the Federal Deposit Insurance Corporation. G. Investments Investments are reported at fair value. Fair value is determined as follows: short-term investments are reported at cost, which approximates fair value; securities traded on national exchanges are valued at current prices or current prices of similar securities; securities for which an established market does not exist are reported at estimated fair value using selling prices for similar investments for which there is an active market; fair value of real estate is based on appraised values. H. Inventories and prepaid expenses Inventories in the governmental funds are valued at cost using the first-in, first-out method. Inventories in the proprietary funds are valued at the lower of cost (first-in, first-out) or market. The costs of governmental fund-type inventories and prepaid expenses are recorded as expenditures when consumed rather than when purchased. Reported inventories and prepaid expenses are equally offset by a fund balance reserve which indicates that they do not constitute “available spendable resources”. I. Interfund receivables/payable and Internal Balances During the course of operations, numerous transactions occur between individual funds for goods provided or services rendered. These receivables and payables are classified as “due from other funds” or “due to other funds” on the balance sheet of the fund financial statements and as “internal balances” on the statement of net assets in the government-wide financial statements. J. Bond discounts and issuance costs Bond discounts and issuance costs for proprietary funds are deferred and amortized over the term of the bonds using the effective-interest method. Bond discounts are presented as a reduction of the face amount of bonds payable, whereas issuance costs are recorded as deferred charges. K. Restricted assets Certain assets of the Debt Service Fund and Enterprise Funds are classified as restricted assets on the balance sheet because their use is limited by applicable debt covenants. L. Capital assets Capital assets are defined by the government as assets with an initial, individual cost of more than a certain cost and an estimated useful life in excess of one year. Minimum capitalization costs are $5,000 for all categories of capital assets. Purchased or constructed capital assets are reported at cost or estimated historical cost. Donated capital assets are recorded at their estimated fair value at the date of donation. General infrastructure assets acquired prior to January 1, 2001, consist of the streets network that were acquired or that received substantial improvements subsequent to January 1, 1980. The streets network is reported at estimated historical cost using deflated replacement cost. The cost of normal maintenance and repairs that do not add to the value of the asset or materially extend assets’ lives are not capitalized. Depreciation is computed using the straight-line method. A summary of the estimated useful lives is as follows: Vehicles 5 years Furniture and fixtures 7 years Machinery and equipment 10 years Buildings and improvements 30 years Water and Sewer systems 30 years Infrastructure 30 years 50 ---PAGE BREAK--- AUGUSTA, GEORGIA Notes to Financial Statements - Continued Year Ended December 31, 2007 Note 1 - Summary of significant accounting policies (Continued) M. Compensated absences The vacation policy of the Government provides for the accumulation of up to thirty days earned vacation leave with such leave being fully vested when earned. For the Government’s government-wide financial statements and proprietary fund financial statements, an expense and a liability for compensated absences and the salary-related payments are recorded as leave is earned. The Government has assumed a first-in, first-out method of using accumulated compensated time. The portion of that time that is estimated to be used in the next fiscal year has been designated as a current liability in the government-wide financial statements. No accrual has been established for accumulated sick leave of employees since it is the Government’s policy to record the cost of sick leave only when it is used. N. Use of estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the reported amount of revenues and expenditures/expenses during the reporting period. Actual results could differ from those estimates. Note 2 - Stewardship, compliance and accountability A. Excess of expenditures over appropriations Expenditures Variance Budget Actual Positive (Negative) General Fund General government $ 21,187,036 $ 24,697,059 $ (3,510,023) Fire Protection Fund Debt service 10,610 11,314 (704) Nonmajor Governmental Funds Housing and Neighborhood Development Fund General government 160,210 373,414 (213,204) Housing and development 4,875,500 5,554,087 (678,587) Debt service - 2,500,000 (2,500,000) Supplemental Juvenile Service Fund General government 1,090 1,500 (410) Landbank Authority Fund Housing and development - 132,142 (132,142) Capital Outlay Fund Debt service 1,574,115 1,671,957 (97,842) Special Assessment Fund General government 8,710 44,143 (35,433) Urban Development Action Grant Fund General government 4,910 7,704 (2,794) Downtown Development Fund General government 632,290 632,988 (698) Debt service 10,000 27,050 (17,050) Wireless Phase Fund General government 1,280 1,692 (412) Federal Drug Fund Public safety 687,040 703,349 (16,309) Capital outlay 40,940 60,673 (19,733) 2006 GO Sales Tax Bonds Debt Service Fund Debt service 9,727,390 9,727,939 (549) 51 ---PAGE BREAK--- AUGUSTA, GEORGIA Notes to Financial Statements - Continued Year Ended December 31, 2007 Note 2 - Stewardship, compliance and accountability (Continued) B. Fund Balance or Net Assets Following is a detail of funds with deficit fund balances or net assets. The Government plans to fund the deficits through the general operations of the Government. Nonmajor Governmental Funds Downtown Development $ (122,662) Internal Service Funds Fleet Operations (126,655) GMA Leases (31,799) Note 3 – Detailed notes on all funds A. Deposits and investments Primary government Deposits: Custodial Credit Risk for deposits is the risk that, in the event of bank failure, a government’s deposits may not be returned to it. At December 31, 2007 approximately $48,775,000 of the Government’s approximate $445,824,000 bank balance was exposed to custodial credit risk as uninsured and uncollateralized. Investments: Primary Government (Other than Pension Trust Funds) The investment policy of the Government is consistent with the State of Georgia’s policy, which is to maximize the protection of State funds on deposit while accruing an advantageous yield on those funds in excess of those required for current operating expenses (Official Code of Georgia Annotated [OCGA] 50-17-51). Authorized pool investments are limited to the following in accordance with State statutes: 1) Obligations of the State of Georgia or of other states; 2) Obligations issued by the United States government; 3) Obligations fully insured or guaranteed by the United States government or a United States government agency; 4) Obligations of any corporation of the United States government; 5) Prime banker’s acceptances; 6) Repurchase Agreements; 7) Obligations of other political subdivisions of the State; and 8) Commercial paper issued by domestic corporations. Authorized investments are subject to certain restrictions. Pooled cash and cash equivalents and investments are grouped into portfolios for investment purposes according to the operating needs of the State of Georgia and other pool contributors. Pension Trust Funds In accordance with Official Code of Georgia Annotated Public Retirement System Investment Authority Law, Public Retirement Systems may invest in the following: 1) United States or Canadian corporations or their obligations with limits as to the corporations’ size and credit rating. 2) Repurchase and reverse repurchase agreements for direct obligations of the United States government and for obligations unconditionally guaranteed by agencies. 3) FDIC insured cash assets or deposits. 4) Bonds, notes, warrants, loans or other debt issued or guaranteed by the United States government. 52 ---PAGE BREAK--- AUGUSTA, GEORGIA Notes to Financial Statements - Continued Year Ended December 31, 2007 Note 3 - Detailed notes on all funds (Continued) 5) Taxable bonds, notes warrants or other securities issued and guaranteed by any state, the District of Columbia, Canada or any province in Canada. 6) Bonds, debentures or other securities issued or insured or guaranteed by an agency, authority, unit, or corporate body created by the government of the United States of America. 7) Investment grade collateralized mortgage obligations. 8) Obligations issued, assumed or guaranteed by the International Bank for Reconstruction and Development or the International Financial Corporation. 9) Bonds, debentures, notes and other evidence of indebtedness issued, assumed, or guaranteed by any solvent institution existing under the laws of the United States of America or of Canada, or any state or province thereof, which are not in default and are secured to a certain level. 10) Secured and unsecured obligations issued by any solvent institution existing under the laws of the United States of America or of Canada, or any state or province thereof, bearing interest at a fixed rate, with mandatory principal and interest due at a specified time with additional limits. 11) Equipment trust obligations or interests in transportation equipment, wholly or in part within the United States of America, and the right to receive determinated portions or related income. 12) Loans that are secured by pledge or securities eligible for investment. 13) Purchase money mortgages or like securities received upon the sale or exchange of real property acquired. 14) Secured mortgages or mortgage participation, pass-through, conventional pass-through, trust certificate, or other similar securities with restrictions. 15) Land and buildings on such land used or acquired for use as a fund’s office for the convenient transaction of its own business with restrictions. 16) Real property and equipment acquired under various circumstances. In addition, large retirement systems have restrictions as to the concentration of investments in corporations and equities and additional stipulations exist related to decreases in a fund’s asset value. As of December 31, 2007 the investments of the Government were: Maturities in Years Type of Investment Fair Value 4-12 Months 1 – 5 Years 6 – 10 Years U.S. Government securities $ 30,196,758 $ 12,126,128 $ 13,746,343 $ 4,324,286 Corporate securities 9,985,444 1,803,733 3,421,348 4,760,364 $ 13,929,861 $ 17,167,691 $ 9,084,650 Equity securities 48,318,153 Georgia Fund 1 152,523,917 Georgia Extended Asset Pool 11,845,377 Total investments $ 252,869,649 The exposure of the Government’s debt securities to credit quality risk is indicated below (as rated by Standard & Poor’s): Type of investment Fair Value AAA AA AA- A+ A U.S. Government securities $ 30,196,758 $ - $ - $ - $ - $ - Corporate securities 9,985,444 1,538,923 1,939,132 3,394,513 1,525,165 1,587,711 $ 40,182,202 $ 1,538,923 $ 1,939,132 $ 3,394,513 $ 1,525,165 $ 1,587,711 The local government investment pool “Georgia Fund created by O.C.G.A. §36-83-8, is a stable net asset value investment pool. Georgia Fund 1 operates in a manner consistent with Rule 2a-7 of the Investment Company Act of 1940 and is considered to be a 2a-7 like pool. The pool is not registered with the SEC as an investment company; the regulatory oversight of the pool is assigned to the State of Georgia’s Office of Treasury and Fiscal Services. The pool’s primary objectives are safety of capital, investment income, liquidity and diversification while maintaining principal ($1.00 per share value). Net asset value is calculated weekly to ensure stability. The pool distributes earnings (net of management fees) on a basis and determines participant’s shares sold and redeemed based on $1.00 per share. As a public fund, Georgia Fund 1 is exempt from any disclosure of custodial credit risk. 53 ---PAGE BREAK--- AUGUSTA, GEORGIA Notes to Financial Statements - Continued Year Ended December 31, 2007 Note 3- Detailed notes on all funds (Continued) The Georgia Extended Asset Pool (GEAP) is offered by the State of Georgia to counties, municipalities, public colleges and universities, board of education, special districts, state agencies, and other authorized entities as an alternative to Georgia Fund I. A primary objective of GEAP is the prudent management of public funds on behalf of state and local governments. GEAP was designed for those investors seeking taxable income higher than money market rates and willing to accept price fluctuations. Deposit and investment transactions are subject to a variety of risks. The Government’s adopted investment policies seek to promote the safety of principal, provide adequate liquidity for operation needs, earn market rates of return on investments consistent with liquidity needs and investment quality, and conform with legal requirements. Interest rate risk is the risk that changes in interest rates will adversely affect the value of an investment. The Government’s investment policy states that the Government will structure its portfolio to meet cash requirements for ongoing operations, thereby avoiding the need to sell securities prior to their maturity. The policy also emphasizes the purchase of shorter term or more liquid investment. The policy does not place formal limits on investment maturities. The Georgia Fund 1 has an interest rate risk of 24 day weighted average maturity. Credit Risk is the risk that an issuer or counterparty to an investment will not fulfill its obligations. The Government’s investment policy seeks to minimize credit risk through diversification of investments within the choices allowed under state statutes. Investments in all corporate securities are limited to investment grade or higher as rated by a nationally recognized rating agency. All of the Government’s investments in U.S. Government securities carry the explicit guarantee of the U.S. government. U.S. Agency securities underlie the repurchase agreements. Concentration of credit risk is the risk of loss attributed to the magnitude of an investment in a single issuer. Disclosures are required for any issuer that represents 5% or more of total investments, exclusive of mutual funds, external investment pools and investments issued or guaranteed by the U.S. government. No single issuer represented more than 5% of the total portfolio. The Government does not have a formally adopted policy for managing concentration of credit risk. There are no limits on fixed income securities issued directly by the U.S. government or any agency thereof. Deposits and investments are reconciled between the financial statements and note disclosure as follows: Basic financial statements: Cash and temporary investments $ 338,010,281 Restricted cash and investments 233,770,542 Pension and agency funds 118,565,693 Total $ 690,346,516 Notes to the financial statements: Cash on hand $ 27,530 Deposits 437,449,337 Investments 252,869,649 Total $ 690,346,516 Department of Health At June 30, 2007, all of the Department of Health’s deposits were either secured by Federal Depository Insurance Corporation (FDIC) or by collateral held by the agent in the Government’s name. Augusta Canal Authority As of December 31, 2007, the bank balance totaled $2,958,077. Of the total bank balance, $200,000 was insured through the Federal Depository Insurance Corporation (FDIC). $299,369 was collateralized with pooled securities held by the financial institutions’ trust departments. These securities are held in the name of the financial institution and not that of the Authority. The remaining $2,458,708 was uncollateralized. 54 ---PAGE BREAK--- AUGUSTA, GEORGIA Notes to Financial Statements - Continued Year Ended December 31, 2007 Note 3 - Detailed notes on all funds (Continued) As of December 31, 2007, the Authority had no investments. B. Receivables Property taxes are administered on a calendar year basis subject to the following dates: Lien date January 1 Levy date July 26 Collection period August 31 - November 15 Due date November 15 Receivables at December 31, 2007, including the applicable allowances for uncollectible accounts, consist of the following: Special Special Special Fire Sales Tax Sales Tax Sales Tax General Protection Phase III Phase IV Phase V Receivables: Taxes $ 3,049,219 $ 456,894 $ - $ - $ - Accounts 7,400,047 - 19,603 21,275 2,839,707 Interest - - 106,476 - - Note - - - - - Intergovernmental 40,325 - - - - Gross receivables 10,489,591 456,894 126,079 21,275 2,839,707 Less: allowance for uncollectibles (774,696) (21,091) - - - Net total receivables $ 9,714,895 $ 435,803 $ 126,079 $ 21,275 $ 2,839,707 Nonmajor Nonmajor Water and Bush Governmental Enterprise Adjustments to Statement of Sewer Field Funds Funds Total Full Accrual Net Assets Receivables (Cont.): Taxes $ - $ - $ 938,809 $ - $ 4,444,922 $ - $ 4,444,922 Accounts 10,402,882 968,391 1,858,077 4,578,238 28,088,220 4,264,434 32,352,654 Interest 516,098 - 121,006 8,024 751,604 - 751,604 Note - - 3,785,609 - 3,785,609 - 3,785,609 Intergovernmental - 789,351 - - 829,676 - 829,676 Gross receivables 10,918,980 1,757,742 6,703,501 4,586,262 37,900,031 4,264,434 42,164,465 Less: allowance for uncollectibles (270,500) (100,000) (195,775) (851,744) (2,213,806) - (2,213,806) Net total receivables $ 10,648,480 $ 1,657,742 $ 6,507,726 $ 3,734,518 $ 35,686,225 $ 4,264,434 $ 39,950,659 Adjustments to full accrual relate to internal service funds. Internal service funds predominately serve the governmental funds. Accordingly, the internal service funds receivables balances are included in governmental activities on the accompanying government-wide financial statement. For the above-mentioned long-term notes receivable, the bank maintains records that are not recorded in the governmental fund financial statements. These loans represent funds received through HUD’s Housing Rehabilitation Program. The Housing Rehabilitation Program is designed to fund improvements to homes owned and occupied by persons in low to moderate-income ranges. In 1993, loans were also made to owners of rental units under a deferred loan arrangement as part of the Housing Rehabilitation Program. Loans made for these projects vary as to amounts and interest rates based on the level of income of the owner/occupiers. In the governmental fund financial statements, repayments of these loans are recorded as other revenue in the Housing and Neighborhood Development Fund, a nonmajor special revenue fund. Finally, the Fiduciary fund financial statements include $21,448,784 in taxes receivable recorded in agency funds. This amount is excluded from the foregoing schedule and represents the amount of receivables billed on behalf of other governments in an agency relationship. Also, included in the Fiduciary fund financial statements and excluded from the foregoing schedule are interest receivable totaling $474,959 and accounts receivable totaling $572,482 in the pension trust fund. 55 ---PAGE BREAK--- AUGUSTA, GEORGIA Notes to Financial Statements - Continued Year Ended December 31, 2007 Note 3 - Detailed notes on all funds (Continued) In a prior year, the former City of Augusta entered into an agreement with the Georgia Housing and Finance Authority (GHFA) to aid in the administration of Federal funds granted through the State for HUD’s Rental Rehabilitation Program. The Government acts only in an administrative capacity and does not directly receive or disburse any funds related to this project. Therefore, the receipts, disbursements and related notes receivable for the GRFA program have not been included in the financial statements. C. Capital assets A summary of changes in capital assets is as follows: Governmental Activities December 31, 2006 Additions Disposals December 31, 2007 Capital assets, not being depreciated Land $ 20,378,818 $ 29,330 $ - $ 20,408,148 Construction in process 69,998,727 24,556,194 (567,916) 93,987,005 Total capital assets not being depreciated 90,377,545 24,585,524 (567,916) 114,395,153 Other capital assets: Land and Site Improvements 7,892,546 679,203 (127,925) 8,443,824 Buildings 78,760,613 - - 78,760,613 Building improvements 7,625,446 275,712 - 7,901,158 Vehicles 31,795,822 2,359,829 (658,061) 33,497,590 Machinery and equipment 10,466,666 920,511 (14,423) 11,372,754 I T – hardware 3,619,974 70,731 - 3,690,705 IT – software 2,822,776 87,455 - 2,910,231 Furniture and fixtures 1,419,738 122,425 - 1,542,163 Infrastructure 76,547,295 97,299 - 76,644,594 Richmond County Public Facilities 12,655,483 - - 12,655,483 Total other capital assets 233,606,359 4,613,165 (800,409) 237,419,115 Less accumulated depreciation for: Land and site improvements (2,792,980) (354,474) 2,031 (3,145,423) Buildings (27,245,390) (2,399,857) - (29,645,247) Building improvements (2,928,157) (371,430) - (3,299,587) Vehicles (23,257,141) (3,083,348) 644,447 (25,696,042) Machinery and equipment (6,430,144) (767,416) 12,392 (7,185,168) IT – hardware (2,957,218) (555,704) - (3,512,922) IT – software (2,238,272) (365,717) - (2,603,989) Furniture and fixtures (1,162,966) (52,302) - (1,215,268) Infrastructure (15,260,698) (2,490,010) - (17,750,708) Richmond County Public Facilities (10,546,236) - - (10,546,236) Total accumulated depreciation (94,819,202) (10,440,258) 658,870 (104,600,590) Other capital assets, net 138,787,157 (5,827,093) (141,539) 132,818,525 Governmental activities capital assets, net $ 229,164,702 $ 18,758,431 $ (709,455) $ 247,213,678 56 ---PAGE BREAK--- AUGUSTA, GEORGIA Notes to Financial Statements - Continued Year Ended December 31, 2007 Note 3 - Detailed notes on all funds (Continued) Depreciation expense was charged to functions as follows: Governmental activities General government $ 1,038,675 Judicial 1,319,111 Public safety 3,449,771 Public works 3,176,514 Health and welfare 84,572 Culture and Recreation 1,312,903 Housing and development 15,750 Risk 1,722 Fleet 41,240 $ 10,440,258 Balance Balance December 31, December 31, 2006 Additions Disposals 2007 Water and Sewer Capital assets, not being depreciated: Land $ 7,881,054 $ 111,306 $ - $ 7,992,360 Construction in progress 104,610,664 25,490,389 - 130,101,053 Total capital assets not being depreciated 112,491,718 25,601,695 - 138,093,413 Other capital assets: Buildings 39,047,673 37,327 - 39,085,000 Vehicles 5,800,848 187,763 (50,467) 5,938,144 Machinery and equipment 6,576,376 206,487 (10,883) 6,771,980 Furniture and fixtures 440,474 - - 440,474 Other capital 5,149,070 93,402 - 5,242,472 Water and sewerage systems 329,145,201 46,161,183 - 375,306,384 Contributed water and sewerage systems 10,563,423 - - 10,563,423 Total capital assets being depreciated 396,723,065 46,686,162 (61,350) 443,347,877 Less accumulated depreciation for: Buildings (24,309,077) (1,190,083) - (25,499,160) Vehicles (5,069,506) (340,252) 50,467 (5,359,291) Machinery and equipment (5,902,829) (301,756) 10,883 (6,193,702) Furniture and fixtures (439,943) (531) - (440,474) Other capital (3,119,271) (1,032,630) - (4,151,901) Water and sewerage systems (107,969,390) (9,989,592) - (117,958,982) Contributed water and sewerage systems (6,881,280) (231,374) - (7,112,654) Total accumulated depreciation (153,691,296) (13,086,218) 61,350 (166,716,164) Other capital assets being depreciated, net 243,031,769 33,599,944 - 276,631,713 Water and sewer capital assets, net $ 355,523,487 $ 59,201,639 $ - $ 414,725,126 57 ---PAGE BREAK--- AUGUSTA, GEORGIA Notes to Financial Statements - Continued Year Ended December 31, 2007 Note 3 - Detailed notes on all funds (Continued) (As restated) Balance Balance December 31, December 31, 2006 Additions Disposals 2007 Augusta Regional Airport Capital assets not being depreciated: Land $ 4,684,256 $ 948,286 $ - $ 5,632,542 Construction in progress 18,972,398 8,258,389 - 27,230,787 Total capital assets not being depreciated 23,656,654 9,206,675 - 32,863,329 Other capital assets: Site improvements 2,771,735 23,220 - 2,794,955 Building improvements 1,890,477 15,600 (202,753) 1,703,324 Buildings 9,487,642 - (1,791,053) 7,696,589 Vehicles 2,449,538 - (346,678) 2,102,860 Machinery and equipment 2,552,957 7,249 (56,935) 2,503,271 Furniture and fixtures 327,108 - (5,887) 321,221 Other capital 166,144 - - 166,144 Information tech – hardware 74,411 - - 74,411 Information tech – software 35,832 - - 35,832 Infrastructure 25,570,701 - - 25,570,701 Total capital assets being depreciated 45,326,545 46,069 (2,403,306) 42,969,308 Less accumulated depreciation for: Site improvements (865,743) (196,469) - (1,062,212) Building improvements (1,177,483) (61,769) 118,198 (1,121,054) Buildings (6,982,078) (164,965) 1,562,553 (5,584,490) Vehicles (1,935,891) (110,853) 346,678 (1,700,066) Machinery and equipment (1,161,971) (255,621) 56,935 (1,360,657) Furniture and fixtures (279,558) (15,582) 5,580 (289,560) Other capital (166,144) - - (166,144) Information tech – hardware (68,468) - - (68,468) Information tech – software (26,651) (641) - (27,292) Infrastructure (11,798,061) (717,917) - (12,515,978) Total accumulated depreciation (24,462,048) (1,523,817) 2,089,944 (23,895,921) Other capital assets being depreciated, net 20,864,497 (1,477,748) (313,362) 19,073,387 Augusta Regional Airport capital assets, net $ 44,521,151 $ 7,728,927 $ (313,362) $ 51,936,716 58 ---PAGE BREAK--- AUGUSTA, GEORGIA Notes to Financial Statements - Continued Year Ended December 31, 2007 Note 3 – Detailed notes on all funds (Continued) Balance Balance December 31, December 31, 2006 Additions Disposals 2007 Nonmajor enterprise funds Capital assets, not being depreciated Land $ 2,628,862 $ 66,007 $ - $ 2,694,869 Construction in process - 1,509,799 - 1,509,799 Total capital assets not being depreciated 2,628,862 1,575,806 - 4,204,668 Other capital assets: Site and building improvements 2,568,583 12,636 - 2,581,219 Landfill Cell IIC 9,399,876 - - 9,399,876 Landfill Cell IIIC 5,616,841 - - 5,616,841 Buildings 3,164,904 - - 3,164,904 Vehicles 6,581,015 399,637 (238,273) 6,742,379 Machinery and equipment 5,593,596 7,800 (868,850) 4,732,546 Infrastructure 1,485,833 - - 1,485,833 IT – hardware 75,338 - - 75,338 IT - software 469,742 13,281 - 483,023 Total capital assets being depreciated 34,955,728 433,354 (1,107,123) 34,281,959 Less accumulated depreciation for: Site and building improvements (1,330,553) (122,089) - (1,452,642) Landfill Cell IIC (9,399,876) - - (9,399,876) Landfill Cell IIIC (31,205) (374,455) - (405,660) Buildings (1,400,489) (100,958) - (1,501,447) Vehicles (3,524,199) (854,237) 228,589 (4,149,847) Machinery and equipment (1,390,431) (784,811) 308,172 (1,867,070) Infrastructure (741,014) (49,528) - (790,542) IT – hardware (68,147) (2,696) - (70,843) IT – software (445,778) (12,656) - (458,434) Total accumulated depreciation (18,331,692) (2,301,430) 536,761 (20,096,361) Other capital assets, net 16,624,036 (1,868,076) (570,362) 14,185,598 Nonmajor enterprise funds, net 19,252,898 (292,270) (570,362) 18,390,266 Business-type activities capital assets, net $ 420,611,468 $ 67,410,938 $ (883,727) $ 487,138,679 Depreciation expense was charged to non-major enterprise funds as follows: Waste management and garbage collection $ 1,457,865 Transit 715,842 Daniel Field Airport 92,555 Municipal golf course 35,168 $ 2,301,430 Construction costs include, among other things, capitalized interest costs and engineering fees. Capitalized net interest costs were approximately $264,000 for the year ended December 31, 2007. 59 ---PAGE BREAK--- AUGUSTA, GEORGIA Notes to Financial Statements – Continued Year Ended December 31, 2007 Note 3 – Detailed notes on all funds (Continued) Department of Health Capital asset activity for the Department of Health for the year ended June 30, 2007 was as follows: June 30, 2006 Additions Disposals June 30, 2007 Capital assets, not being depreciated Land $ 1,647,997 $ - $ - $ 1,647,997 Other capital assets: Buildings 7,855,047 41,019 - 7,896,066 Improvements 556,193 - - 556,193 Equipment 365,511 - - 365,511 Vehicles 152,393 - - 152,393 8,929,144 41,019 - 8,970,163 Less accumulated depreciation for: Buildings (899,258) (201,479) - (1,100,737) Improvements (326,764) (27,810) - (354,574) Equipment (114,551) (31,388) - (145,939) Vehicles (63,421) (12,789) - (76,210) Total accumulated depreciation (1,403,994) (273,466) - (1,677,460) Other capital assets, net 7,525,150 (232,447) - 7,292,703 Governmental activities capital assets, net $ 9,173,147 $ (232,447) $ - $ 8,940,700 Augusta Canal Authority Capital asset activity for the Augusta Canal Authority for the year ended December 31, 2007 was as follows: December 31, December 31, 2006 Additions Deletions 2007 Capital assets not being depreciated: Land $ 467,000 $ - $ - $ 467,000 Construction in process 34,949 18,702 - 53,651 Total capital assets not being depreciated 501,949 18,702 - 520,651 Capital assets being depreciated: Leasehold improvements 3,869,106 - - 3,869,106 Boats 697,071 - - 697,071 Vehicles 19,621 5,000 - 24,621 Machinery and equipment 16,433 648 - 17,081 Computer equipment 15,761 2,215 - 17,976 Office equipment 4,602 - - 4,602 Furniture and fixtures 22,424 1,500 - 23,924 Infrastructure 9,900,983 168,002 - 10,068,985 Total capital assets being depreciated 14,546,001 177,365 - 14,723,366 Less accumulated depreciation for: Leasehold improvements (539,436) (143,760) - (683,196) Boats (84,810) (27,883) - (112,693) Vehicles (11,119) (2,545) - (13,664) Machinery and equipment (8,955) (1,740) - (10,695) Computer equipment (14,503) (1,238) - (15,741) Office equipment (3,661) (426) - (4,087) Furniture and fixtures (17,697) (2,065) - (19,762) Infrastructure (79,226) (1,933,039) - (2,012,265) Total accumulated depreciation (759,407) (2,112,696) - (2,872,103) Total capital assets being depreciated - net 13,786,594 (1,935,331) - 11,851,263 Governmental activities capital assets, net $ 14,288,543 $ (1,916,629) $ - $ 12,371,914 60 ---PAGE BREAK--- AUGUSTA, GEORGIA Notes to Financial Statements - Continued Year Ended December 31, 2007 Note 3 – Detailed notes on all funds (Continued) Downtown Development Authority Capital asset activity for the year ended December 31, 2007 was as follows: December 31, December 31, 2006 Additions Deletions 2007 Capital assets: Port Royal parking deck $ 2,600,000 $ - $ - $ 2,600,000 Riverfront parking deck 3,816,000 - - 3,816,000 Clock 41,393 - - 41,393 Furniture and equipment 7,920 - - 7,920 Total capital assets 6,465,313 - - 6,465,313 Less accumulated depreciation for: Port Royal parking deck (1,105,000) (65,000) - (1,170,000) Riverfront parking deck (1,526,400) (95,400) - (1,621,800) Clock (11,571) (4,139) - (15,710) Furniture and equipment (1,378) (1,393) - (2,771) Total accumulated depreciation (2,644,349) (165,932) - (2,810,281) Capital assets, net 3,820,964 (165,932) - 3,655,032 Related debt (2,375,000) - 575,000 (1,800,000) Capital assets, net of related debt $ 1,445,964 $ (165,932) $ 575,000 $ 1,855,032 Depreciation expense for the year ended December 31, 2007 was $165,932. D. Accounts payable and accrued liabilities Payables for the Government at December 31, 2007 were as follows: Governmental Enterprise Adjustments Statement of Funds Funds Total To Full Accrual Net Assets Payables: Accounts payable $ 8,743,488 $ 15,156,650 $ 23,900,138 $ 615,168 $ 24,515,306 Accrued interest - 5,366,603 5,366,603 478,333 5,844,936 Accrued salaries and vacation 4,576,050 1,534,257 6,110,307 (725,934) 5,384,373 Other accrued liabilities 1,419,861 250,099 1,669,960 2,611,804 4,281,764 Total accounts payable and accrued liabilities $ 14,739,399 $ 22,307,609 $ 37,047,008 $ 2,979,371 $ 40,026,379 Adjustments to full-accrual basis include $478,333 related to accrued interest on governmental long-term debt, $2,611,804 related to the current year unfunded health insurance contribution for retirees, $770,930 relating to the reclassification of accrued vacation from accrued liabilities to liabilities due within one year, and account payable and accrued salaries and vacation of $615,168 and $44,996, respectively, related to internal service funds. Internal service funds predominately serve the governmental funds. Accordingly, the accounts payable and accrued liability balances for the internal service funds are included in the governmental activities on the accompanying government-wide financial statement. 61 ---PAGE BREAK--- AUGUSTA, GEORGIA Notes to Financial Statements - Continued Year Ended December 31, 2007 Note 3 - Detailed notes on all funds (Continued) E. Deferred/Unearned Revenues The balance of deferred revenues in the fund financial statements (includes both the deferred and unearned amounts disclosed below) and unearned revenues in the government-wide financial statements at year-end is composed of the following elements: Deferred Unearned Revenue Revenue Taxes receivable net of allowance – General Fund $ 1,849,349 $ - Taxes receivable net of allowance – Fire Protection Fund 262,063 - Taxes receivable net of allowance – Nonmajor governmental funds 782,957 - Grant income received in advance of being earned – General Fund - 278,509 Business license income received in advance of being earned – General Fund - 524,815 Housing and Development long-term notes receivable – Nonmajor governmental funds 3,544,386 - Accounts receivable – Nonmajor governmental funds 95,527 - Insurance premium income received in advance of being earned – Fire Protection Fund to match to related expenses in future year - 10,668,431 Intergovernmental revenue received in advance of being earned – Nonmajor governmental funds - 173,210 $ 6,534,282 $ 11,644,965 F. Landfill closure and postclosure costs State and Federal laws and regulations require the Government to place a final cover on its landfill when closed and perform certain maintenance and monitoring functions at the landfill site for thirty years after closure. In addition to operating expenses related to current activities of the landfill, an expense provision and related liability are being recognized based on the future closure and postclosure care costs that will be incurred near or after the date the landfill no longer accepts waste. The recognition of these landfill closure and postclosure care costs is based on the amount of the landfill used during the year. The estimated liability for landfill closure and postclosure care costs has a balance of $12,771,074 as of December 31, 2007, which is based on 99.10% usage (filled) of Cell II C and 10.68% usage (filled) of Cell III stage 1, which are operating currently, and 100% usage (filled) of Cells II A and II B. This liability is recorded in the Waste Management Enterprise Fund. It is estimated that an additional $14,182,535 be recognized as closure and postclosure care expenses between the date of the statement of net assets and the date the landfills are expected to be filled to capacity, which is in 2008 and 2027, respectively. The estimated total current cost of the landfill closure and postclosure care, $27,381,002, is based on the amount that would be paid if all equipment, facilities, and services required to close, monitor, and maintain the landfill were acquired as of December 31, 2007. However, the actual cost of closure and postclosure care may be higher due to inflation, changes in technology, or changes in landfill laws and regulations. The Government expects to finance the costs for the estimated landfill closure and postclosure care costs as they become due during the coming thirty years through the regular operations of the Government. G. Long-term debt Primary government 1. Governmental activities In a prior year, a portion of the Certificates of Participation (Series 1993) was defeased by the creation of an irrevocable trust fund. Original proceeds remaining from the issue were used to purchase U.S. Government securities that were placed in a trust fund. The investments and fixed earnings from the investment are sufficient to fully service the defeased debt until the debt matures. For financial reporting purposes, the debt is considered defeased and, therefore, not included as a liability in the government-wide financial statements Funds. As of December 31, 2007 the amount of defeased debt outstanding but removed from the governmental debt is $885,000. 62 ---PAGE BREAK--- AUGUSTA, GEORGIA Notes to Financial Statements - Continued Year Ended December 31, 2007 Note 3 - Detailed notes on all funds and account groups (Continued) In 2007, the Housing and Neighborhood Development Section 108 loan was defeased by the creation of an irrevocable trust fund. Funds received from repayment of a loan to a local hotel were used to purchase U.S. Government securities that were placed in a trust fund. The investments and fixed earnings from the investment are sufficient to fully service the defeased debt until the debt matures. For financial reporting purposes, the debt is considered defeased and, therefore, not included as a liability in the government-wide financial statements Funds. As of December 31, 2007, the amount of defeased debt outstanding but removed from the governmental debt is $2,500,000. Revenue bonds Augusta Port Authority: $1,200,000 1993 Augusta Port Authority Bonds – due in principal and interest installments of $9,773 through April 2008, bearing interest at 5.45%. $ 46,053 General obligation bonds $44,000,000 2006 sales tax bonds – due in annual installments of $8,125,000 to $9,505,000, plus interest at 4% through December 2011. $ 35,875,000 Add: Bond issue premiums 593,229 $ 36,468,229 Certificates of Participation GMA Leases Fund: $16,888,000 Certificates of Participation – principal due in a lump sum payment on June 1, 2028. Interest only payments are due annually at a rate of 4.75%, through June 1, 2028. Original issue amount $ 16,888,000 Original issue discount (718,644) Total $ 16,169,356 Revenue Bonds General Obligation Bonds Year ending December 31 Principal Interest Principal Interest 2008 $ 46,053 $ 659 $ 8,450,000 $ 1,266,000 2009 - - 8,785,000 921,300 2010 - - 9,135,000 562,900 2011 - - 9,505,000 190,100 2012 - - - - 2013 – 2017 - - - - 2018 – 2022 - - - - 2023 – 2027 - - - - 2028 - 2032 - - - - $ 46,053 $ 659 $ 35,875,000 $ 2,940,300 63 ---PAGE BREAK--- AUGUSTA, GEORGIA Notes to Financial Statements - Continued Year Ended December 31, 2007 Note 3 - Detailed notes on all funds (Continued) Continued Certificates of Participation Total Year ending December 31 Principal Interest Principal Interest 2008 $ - $ 802,180 $ 8,496,053 $ 2,068,839 2009 - 802,180 8,785,000 1,723,480 2010 - 802,180 9,135,000 1,365,080 2011 - 802,180 9,505,000 992,280 2012 - 802,180 - 802,180 2013 – 2017 - 4,010,900 - 4,010,900 2018 – 2022 - 4,010,900 - 4,010,900 2023 – 2027 - 4,010,900 - 4,010,900 2028 - 2032 16,888,000 334,242 16,888,000 334,242 $ 16,888,000 $ 16,377,842 $ 52,809,053 $ 19,318,801 Certificates of Participation In June 1998, the Government entered into a lease pool agreement with the Georgia Municipal Association (the “Association”). The funding of the lease pool was provided by the issuance of $150,126,000 Certificates of Participation by the Association. The Association passed the net proceeds of $15,989,693 through to the participating municipalities with the Government’s participation totaling $16,888,000, net of original issue discount of $898,307. The lease pool agreement with the Association provides that the Government owns their portion of the assets invested by the pool and is responsible for the payment of their portion of the principal and interest of the Certificates of Participation. The principal of $16,888,000 is due in a lump sum payment on June 1, 2028. Interest is payable at a rate of 4.75% each year. The Government draws from the investment to lease equipment from the Association. The lease pool agreement requires the Government to make lease payments back into its investment account to fund the principal and interest requirements of the 1998 GMA Certificates of Participation. Equipment in the amount of $1,967,750 was leased during 2007. 2. Business-type activities Revenue bonds Water and Sewer: $160,000,000 2004 Water and Sewer Bonds – due in interest only payments of $8,400,000 through October 2032. Principal due in annual installments beginning October 2033 through October 2039. From $19,500,000 to $26,510,000, plus interest of 5.25%. $ 160,000,000 $149,400,000 2002 Water and Sewer Bonds – due in annual installments of $235,000 to $20,610,000 starting October 2002 through October 2032, plus interest varying from 2.50% to 5.75% on $57,840,000 serial bonds, with interest of 5.0% on $91,560,000 term bonds. 107,385,000 $97,080,000 2000 Water and Sewer Bonds – due in annual installments of $355,000 to $11,105,000, plus interest at 4.4% to 5.25% through October 2030. 11,065,000 $177,010,000 2007 Water and Sewer Bonds – due in annual installments of $2,060,000 to $12,260,000 plus interest at 4.0% to 5.0% through October 2030 (this liability is reflected in the Water and Sewer Fund net of deferred refunding amount of $7,536,107). 177,010,000 Total 455,460,000 Less: Deferred refunding amounts (7,536,107) Less: Bond issue discounts (962,064) Add: Bond issue premiums 16,481,446 Total revenue bonds – Water and sewer 463,443,275 64 ---PAGE BREAK--- AUGUSTA, GEORGIA Notes to Financial Statements - Continued Year Ended December 31, 2007 Note 3 - Detailed notes on all funds (Continued) Augusta Regional Airport at Bush Field $8,990,000 2005A Airport Passenger Facility Charge and General Revenue Bonds – due in annual interest only payments of $462,985 through January 2030. Principal due in annual installments beginning January 2031 ranging from $540,000 to $2,275,000 plus interest of 5.15% through January 2035. $ 8,990,000 $4,415,000 2005B Airport Passenger Facility Charge and General Revenue Bonds – due in annual interest only payments of $236,203 through January 2024. Principal due in annual installments beginning January 2025 ranging from $1,355,000 to $1,505,000 through January 2027 plus interest of 5.35% and final payment of $130,000 plus interest of 5.35% due January 2028. 4,415,000 $6,200,000 2005C Airport Passenger Facility Charge and General Revenue Bonds – due in annual interest only payments of $337,900 through January 2027. Principal due in annual installments beginning January 2028 through January 2031 ranging from $1,455,000 to $1,760,000 plus interest of 5.45% through January 2030 and final payment of $1,315,000 plus interest of 5.45% due January 2031. 6,200,000 Total revenue bonds – Bush Field $ 19,605,000 Waste Management: $11,475,000 Solid Waste Management Authority of Augusta Revenue Bonds, Series 2004 – due in annual installments of $170,000 to $1,700,000, starting December 1, 2005 through December 1, 2019, plus interest of 3.0% to 4.0% payable semi-annually on June 1 and December 1, beginning December 1, 2004 $ 7,000,000 Add: Bond issue premium 160,757 Total revenue bonds – Waste Management 7,160,757 Total revenue bonds $ 490,209,032 Notes payable Water and Sewer Fund: $5,143,272 State revolving loan – due in quarterly principal and interest installments of $94,668, bearing interest at through May 2016. $ 2,717,221 $6,553,217 State revolving loan – principal and interest due in quarterly installments of $119,392, bearing interest at through July 2019. 4,384,940 Total $ 7,102,161 65 ---PAGE BREAK--- AUGUSTA, GEORGIA Notes to Financial Statements - Continued Year Ended December 31, 2007 Note 3 - Detailed notes on all funds (Continued) Business-type Activities Year ending Notes Payable Revenue Bonds Total December 31 Principal Interest Principal Interest Principal Interest 2008 $ 502,961 $ 233,887 $ 6,845,000 $ 23,766,043 $ 7,347,961 $ 23,999,930 2009 601,215 255,024 7,260,000 23,896,904 7,861,215 24,151,928 2010 625,627 230,612 8,155,000 23,601,138 8,780,627 23,831,750 2011 651,030 205,209 7,820,000 23,283,130 8,471,030 23,488,339 2012 677,464 178,775 7,760,000 22,960,448 8,437,464 23,139,223 2013-2017 3,240,571 472,623 44,700,000 108,919,865 47,940,571 109,392,488 2018-2022 803,293 32,452 56,190,000 96,756,878 56,993,293 96,789,330 2023-2027 - - 75,425,000 81,129,966 75,425,000 81,129,966 2028-2032 - - 101,415,000 59,541,319 101,415,000 59,541,319 2033-2037 - - 114,795,000 31,890,253 114,795,000 31,890,253 2038-2042 - - 51,700,000 4,106,025 51,700,000 4,106,025 $ 7,102,161 $ 1,608,582 $ 482,065,000 $ 499,851,969 $ 489,167,161 $ 501,460,551 Series 2007 Water and Sewerage Revenue Bonds During 2007, the Government issued $177,010,000 in Series 2007 Water and Sewerage Revenue Bonds. A portion of the proceeds from the sale of these bonds was used to refund all of the former Series 1996 and 1997 Water and Sewerage Revenue Bonds in the amount of $56,875,000. The remaining portion of the bond proceeds of $120,135,000 was used to advance refund a portion of the Series 2000 and 2002 Water and Sewerage Revenue Bonds. The current refunding resulted in a difference between the reacquisition price and the net carrying amount of the old debt of approximately $4,300,000. This difference, reported in the accompanying financial statements as a deduction from bonds payable, is being charged to operations through the year 2030 using the effective-interest method. The refunding decreased the total debt service payments over the next 21 years by approximately $5,600,000 and produced an economic gain of approximately $3,700,000. The advance refunding resulted in a difference between the reacquisition price and the net carrying amount of the old debt of approximately $3,200,000. This difference, reported in the accompanying financial statements as a deduction from bonds payable, is being charged to operations through the year 2030 using the effective-interest method. The refunding decreased the total debt service payments over the next 23 years by approximately $7,200,000 and produced an economic gain of approximately $4,600,000. Proceeds of approximately $126,793,000 from the defeased issues were used to purchase U.S. Government Securities. Those securities were deposited in an irrevocable trust fund with an escrow agency to provide for all future debt service payments on the above mentioned bonds. As of December 31, 2007, the amount of these defeased debts outstanding but removed from the Water and Sewer Fund is $121,265,000. Series 2004 Water and Sewerage Bonds During 2004, the Government issued $160,000,000 in Series 2004 Water and Sewerage Revenue Bonds for the purpose of financing the costs of making additions, extensions and improvement to the Utilities’ water and sewer system. Series 2004 Solid Waste Management Authority of Augusta Revenue Bonds During 2004, the Government issued $11,475,000 in Series 2004 Solid Waste Management Authority of Augusta Revenue Bonds for the purpose of paying all or a portion of the costs of improving and equipping the Government’s municipal solid waste landfill. Series 2002 Water and Sewerage Revenue Bonds During 2002, the Government issued $149,400,000 in Series 2002 Water and Sewerage Revenue Bonds. A portion of the proceeds from the sale of these bonds was used to pay the outstanding balance of the Georgia Environmental Facilities Authority revolving loan in the amount of $8,815,000 with an interest rate of 5.5%. The remaining portion of the bond proceeds of $140,585,000 was issued for the purpose of financing the costs of making additions, extensions and improvements to the Utilities’ water and sewer system. A portion of the net proceeds of $8,692,368 (after payment of $153,574 of underwriting fees and other issuance costs) was used to repay the Georgia Environmental Facilities Authority revolving loan. The remaining portion of the proceeds of $125,691,320 (after payment of $2,748,066 of underwriting fees and other issuance costs) plus an additional $11,753,672 of funds from a capitalized interest fund is to 66 ---PAGE BREAK--- AUGUSTA, GEORGIA Notes to Financial Statements - Continued Year Ended December 31, 2007 Note 3 - Detailed notes on all funds (Continued) be used for improvements to the Utilities’ water and sewer system. No difference resulted in the current refunding between the reacquisition price and the net carrying amount of the old debt. The Government completed the refunding to obtain an economic gain (difference between present values of the old and new debt service payments) of approximately $792,000. Series 2000 Water and Sewerage Revenue Bonds During 2000, the Government issued $97,080,000 in Series 2000 Water and Sewerage Revenue Bonds for the purpose of financing the costs of making additions, extensions and improvements to the Utilities’ water and sewer system. Series 1996 Water and Sewerage Revenue Bonds During 1996, the Government issued $66,600,000 in Series 1996 Water and Sewerage Revenue Bonds. A portion of the proceeds from the sale of these bonds was used to advance refund all of the former City of Augusta’s Series 1972 and 1991 Water and Sewerage Revenue Bonds and the former Richmond County’s Series 1987 and 1991 Water and Sewer Revenue Bonds. Proceeds of $19,400,000 plus an additional $4,900,000 of sinking fund monies from the defeased issues were used to purchase U.S. government securities. Those securities were deposited in an irrevocable trust fund with an escrow agent to provide for all future debt service payments on the above-mentioned bonds. As a result, the bonds are considered to be defeased and the liabilities for those bonds have been removed from the Water and Sewer Fund. The advance refunding during 1996 resulted in a difference between the reacquisition price and the net carrying amount of the old debt of approximately $2,500,000. This difference, reported in the accompanying financial statements as a deduction from bonds payable, is being charged to operations through the year 2028 using the effective- interest method. The refunding increased the total debt service payments over the next 30 years by approximately $8,600,000 and produced an economic gain of approximately $260,000. Series 1997 Water and Sewerage Revenue Bonds In 1997, the Government issued $5,900,000 in Series 1997 Water and Sewerage Revenue Bonds. A portion of the proceeds from the sale of these bonds was used to advance refund all of the former Richmond County’s Series 1986 Water and Sewerage Revenue Bond. Proceeds of approximately $5,600,000 plus an additional $900,000 of sinking fund monies from the defeased issues were used to purchase U.S. government securities. Those securities were deposited in an irrevocable trust fund with an escrow agent to provide for all future debt service payments on the above- mentioned bonds. As a result, the bonds are considered defeased and the liability for those bonds have been removed from the Water and Sewer Fund. The advance refunding during 1997 resulted in a difference between the reacquisition price and the net carrying amount of the old debt of approximately $540,000. This difference, reported in the accompanying financial statements as a deduction from bonds payable, is being charged to operations through the year 2021 using the effective-interest method. The refunding will increase total debt service payments over the next 24 years by approximately $2,100,000 and will produce an economic gain of approximately $110,000. As of December 31, 2007, the amount of these defeased debts outstanding but removed from the Water and Sewer Fund is $1,400,000. Department of Health The Department of Health’s long-term liabilities represent compensated absences and an obligation under capital lease. The debt for compensated absences was $400,679 and the debt for the obligation under capital lease was $434,485 at June 30, 2007. Augusta Canal Authority Notes payable $1,800,000 note payable to a bank due in five annual installments of $360,000, beginning June 2003. The note bears interest at a variable rate equal to 75% of the lender’s Prime Rate, which was 6.19% at December 31, 2006, and is paid semi-annually. The note is collateralized by all equipment, furniture, fixtures, and other personal property owned by the Authority and is used or to be used in connection with the Visitors and Interpretive Center; property leased to Standard Textile Augusta, Inc. is not included in the collateral. The principal and interest balance of the note was paid during the year ended December 31, 2007. 67 ---PAGE BREAK--- AUGUSTA, GEORGIA Notes to Financial Statements – Continued Year Ended December 31, 2007 Note 3 – Detailed notes on all funds (Continued) Downtown Development Authority Development Authority Refunding Revenue Bonds, Series 2003: In May of 2003, the Development Authority of the City of Augusta issued $4,035,000 Development Authority Revenue Bonds, Series 2003. The proceeds of these bonds were used to redeem two previous issuances of revenue bonds, Development Authority Parking revenue Bonds, Series 1989 and 1991. The original bond issuances were used to fund the construction of two parking decks in downtown Augusta, Georgia. The Series 2003 Bonds are limited, special obligations of the Authority and are secured from payments received under an intergovernmental lease between the City of Augusta and the development Authority for use of the two parking decks. Interest on the Series 2003 development Authority Bonds is paid semi-annually. The interest rate is 2.56%. Principal is due on January 1 of each year as follows: Principal Interest Year Payments Payments 2008 $ 585,000 $ 38,592 2009 600,000 23,424 2010 615,000 7,872 $ 1,800,000 $ 69,888 H. Leases The Government has entered into several long-term lease agreements for various vehicles and machinery and equipment. Although the leases contain clauses which provide that the leases are cancelable if funds are not appropriated for the periodic payments for any future fiscal periods, the leases meet the criteria of a capital lease as defined by Statement of Financial Accounting Standards No. 13 Accounting for Leases and the National Council on Governmental Accounting Statement No. 5 Accounting and Financial Reporting Principles for Lease Agreements of State and Local Governments. The Government’s lease agreements are through the Georgia Municipal Association and are accounted for in an internal service fund. They also have lease agreements other the Georgia Municipal Association agreements that are accounted for within the business-type activities and for governmental activities within the general long-term debt account group. Future minimum lease payments under the leases and the net present value of the minimum lease payments as of December 31, 2007 are as follows: Governmental Business-type Activities Activities 2008 $ 1,062,807 $ 750,454 2009 682,684 705,353 2010 - 583,961 2011 - 479,977 Total minimum lease payment 1,745,491 2,519,745 Less: Amount representing interest (1,803) - Present value of lease payments $ 1,743,688 $ 2,519,745 Interest amounts are not material to the financial statements. 68 ---PAGE BREAK--- AUGUSTA, GEORGIA Notes to Financial Statements – Continued Year Ended December 31, 2007 Note 3 – Detailed notes on all funds (Continued) The Government is lessor of terminal space, land and buildings at Augusta Regional Airport at Bush Field and Daniel Field under various operating leases. Revenues and related expenses for Augusta Regional Airport at Bush Field are recorded in the Augusta Regional Airport at Bush Field Fund while the revenue and related expenses for Daniel Field are recorded in the Daniel Field Airport Fund. Some of the leases provide for additional payments based on usage activity in addition to non-cancelable amounts of fixed rates. During 2007, rental income totaled approximately $2,300,000 and $80,650 in the Augusta Regional Airport at Bush Field and Daniel Field Airport Funds, respectively. The assets acquired through capital leases as of December 31, 2007 are as follows: Governmental Business-type Activities Activities Vehicles $ 3,010,252 $ 926,501 Machinery and equipment 396,414 3,006,841 3,406,666 3,933,342 Less: accumulated depreciation (1,064,716) (989,647) Carrying value $ 2,341,950 $ 2,943,695 69 ---PAGE BREAK--- AUGUSTA, GEORGIA Notes to Financial Statements – Continued Year Ended December 31, 2007 Note 3 – Detailed notes on all funds (Continued) I. Changes in long-term liabilities Primary government The following is a summary of long-term debt transactions of the year ended December 31, 2007: Beginning Ending Current Balances Additions Reductions Balances Portion Governmental activities: Bonds and notes payable: Notes payable $ 2,500,000 $ - $ 2,500,000 $ - $ - General obligation bonds payable 44,000,000 - 8,125,000 35,875,000 8,450,000 Add: Bond issue premiums 741,536 - 148,307 593,229 148,307 Revenue bonds payable 157,434 - 111,381 46,053 46,053 Total bonds and notes payable 47,398,970 - 10,884,688 36,514,282 8,644,360 Certificates of participation 16,888,000 - - 16,888,000 - Less: original issue discount (763,560) - (44,914) (718,646) (44,916) Total certificates of participation 16,124,440 - (44,914) 16,169,354 (44,916) Other liabilities: Compensated absences 4,104,746 4,078,441 4,132,643 4,050,544 4,050,544 Capital leases 1,535,623 1,967,750 1,759,685 1,743,688 1,061,017 Claims and judgments 3,423,275 3,046,991 1,492,009 4,978,257 4,214,997 Total other liabilities 9,063,644 9,093,182 7,384,337 10,772,489 9,326,558 Governmental activities long-term liabilities $ 72,587,054 $ 9,093,182 $ 18,224,111 $ 63,456,125 $ 17,926,002 Business-type activities: Revenue debt: Revenue bonds payable $ 490,615,000 $ 177,010,000 $ 185,560,000 $ 482,065,000 $ 6,845,000 Less: deferred refunding amounts (2,033,974) (7,591,115) (2,088,982) (7,536,107) (330,744) Less: bond issue discounts (4,218,146) - (3,256,082) (962,064) (74,404) Add: bond issue premiums 6,758,502 10,172,424 288,723 16,642,203 443,212 Total revenue debt 491,121,382 179,591,309 180,503,659 490,209,032 6,883,064 Other liabilities: Compensated absences 746,550 852,389 828,009 770,930 770,930 Notes payable 7,732,168 - 630,007 7,102,161 502,961 Capital leases 3,815,643 - 1,191,914 2,623,729 750,455 Closure/postclosure accrual 13,234,255 1,246,810 1,709,991 12,771,074 - Total other liabilities 25,528,616 2,099,199 4,359,921 23,267,894 2,024,346 Business-type activities long-term liabilities $ 516,649,998 $ 181,690,508 $ 184,863,580 $ 513,476,926 $ 8,907,410 Typically, the General Fund has been used to liquidate claims and judgments. Compensated absences are liquidated by the fund which recorded the related salary costs, primarily the General Fund, Fire Protection Fund, and the Water and Sewer System Fund. Capital leases are liquidated by the fund which received the benefit of the related asset. 70 ---PAGE BREAK--- AUGUSTA, GEORGIA Notes to Financial Statements – Continued Year Ended December 31, 2007 Note 3 – Detailed notes on all funds (Continued) Augusta Canal Authority The following is a summary of long-term debt transactions for Augusta Canal Authority of the year ended December 31, 2007: Beginning Ending Current Balances Additions Reductions Balances Portion Governmental activities: Notes payable: Notes payable $ 360,000 $ - $ 360,000 $ - $ - Total notes payable 360,000 - 360,000 - - Other liabilities: Compensated absences 19,408 14,901 8,153 26,156 26,156 Total other liabilities 19,408 14,901 8,153 26,156 26,156 Governmental activities long-term liabilities $ 379,408 $ 14,901 $ 368,153 $ 26,156 $ 26,156 Downtown Development Authority Long-term debt activity for the year ended December 31, 2007 was as follows: General Long-term Debt Development Authority Bonds, Series 2003 Debt outstanding at December 31, 2006 $ 2,375,000 Principal payments (575,000) Debt outstanding at December 31, 2007 $ 1,800,000 Current portion $ 585,000 J. Due From/To Other Funds The composition of interfund balances as of December 31, 2007 are as follows: Due to Other Funds Due from other Funds Water and Sewer Fund Bush Field Nonmajor Governmental Nonmajor Enterprise Internal Service Funds Total General Fund $ 572,386 $ 2,182,298 $ 541,174 $ 1,997 $ 128,078 $ 3,425,933 Nonmajor Governmental - - 179,433 - - 179,433 Total interfund Balances $ 572,386 $ 2,182,298 $ 720,607 $ 1,997 $ 128,078 $ 3,605,366 Amounts were due to other funds primarily for timing of payments from agency funds. 71 ---PAGE BREAK--- AUGUSTA, GEORGIA Notes to Financial Statements – Continued Year Ended December 31, 2007 Note 3 – Detailed notes on all funds (Continued) Transfers To/From Other Funds Transfers in (out) for the year ended December 31, 2007 are summarized below: Fire Special Nonmajor General Protection Sales Tax Govern- Nonmajor Internal Transfers out Fund Fund Phase IV mental Enterprise Service Total General Fund $ - $ - $ - $ 746,241 $ 2,109,320 $ 139,272 $ 2,994,833 Internal Service 58,182 - - 540,000 - - 598,182 Nonmajor governmental 2,487,661 6,340,085 3,477,345 - 4,619,111 - 16,924,202 Special Sales Tax Phase V - - - 9,727,390 - - 9,727,390 Total transfers $ 2,545,843 $ 6,340,085 $ 3,477,345 $ 11,013,631 $ 6,728,431 $ 139,272 $ 30,244,607 Transfers are used to move unrestricted revenues in the general fund and nonmajor governmental funds to finance various programs that the Government must account for in other funds in accordance with budgetary authorizations, including amounts provided as subsidies for nonmajor governmental funds, nonmajor enterprise funds and internal service funds. Note 4 – Other information A. Risk management The Government is exposed to various risks of loss related to torts; theft of, damage to and destruction of assets; errors and omissions; and natural disasters for which the Government is self-insured. The Risk Management Funds (an internal service fund) are utilized by the Government to account for and finance its self-insured risks of loss. The Risk Management Funds are maintained to provide general liability insurance, workers’ compensation coverage, and unemployment coverage. The Government is self-insured for workers’ compensation coverage through a self- insurance program that is administered under contracts with a third party administrator. Future claims can be paid from designated funds established in 1987 from previously unrestricted-unreserved funds. Balances as of December 31, 2007, include the following: General Fund $ 4,705,061 Fire Protection Fund 250,000 Internal Service Fund 200,000 Total reserve $ 5,155,061 Related liabilities are reported when it is probable that a loss has occurred and the amount of the loss can be reasonably estimated. Liabilities include an amount for claims that have been incurred but not reported (IBNRs). Claim liabilities are calculated considering the effects of inflation, recent claim settlement trends including frequency and amount of payouts and other economic and social factors. The following represents the changes in the balance of claim liabilities for the Government from January 1, 2006 to December 31, 2007: Unpaid claims, January 1, 2006 $ 4,044,857 Incurred claims (including IBNRs) 430,491 Claim payments (1,052,073) Unpaid claims, December 31, 2006 3,423,275 Incurred claims (including IBNRs) 2,283,731 Claim payments (1,492,009) Unpaid claims, December 31, 2007 $ 4,214,997 72 ---PAGE BREAK--- AUGUSTA, GEORGIA Notes to Financial Statements – Continued Year Ended December 31, 2007 Note 4 – Other information (Continued) B. Contingent liabilities Litigation The Government is party to various legal proceedings which normally occur in governmental operations. The Government follows the practice of recording liabilities resulting from claims and legal actions only when they become probable and measurable. The Government has accrued a liability in the Risk Management Fund (an internal service fund) for all claims for which a loss is probable and measurable. Possible unasserted claims The Government participates in a number of Federal and state assisted grant programs, which are subject to program compliance audits under the Single Audit Act Amendments of 1996. An audit of these programs has been performed for the year ended December 31, 2007, in compliance with the Single Audit Act Amendments of 1996 and OMB Circular A-133. However, the audit is pending final acceptance by the various grantor agencies. The amount, if any, of expenditures, which may be disallowed by the granting agencies, is expected to be immaterial. C. Contracts and commitments Augusta-Richmond County Coliseum Authority The Government has committed to provide funds to service the Augusta-Richmond County Coliseum Authority’s debt to the extent of the 50% Hotel-Motel Excise Tax and 30% of the Beer Tax collected. D. Richmond County Public Facilities, Inc. The Richmond County Public Facilities, Inc. is a nonprofit organization, tax exempt under Internal Revenue Code Section 501(c)(3)The purpose of this nonprofit organization is to construct and maintain buildings and equipment to be leased by the Government, the Department of Family and Children Services, and the Richmond County Board of Education. The Richmond County Public Facilities, Inc. is part of the reporting entity of Augusta, Georgia, due to the degree of control the Government has over the Board of Directors of Richmond County Public Facilities, Inc. Richmond County Public Facilities, Inc. issued Certificates of Participation to provide funds for the Government to refund the 1990 Certificates of Participation issue and for certain capital projects. The related assets are included in the financial statements of the Government in the governmental activities. The Certificates of Participation were retired during 2001. In addition, the Richmond County Public Facilities, Inc. issued Certificates of Participation of $13,240,000 for the Richmond County Board of Education in a prior year. These Certificates of Participation are the sole responsibility of the Richmond County Board of Education and the related assets and liabilities have not been included in the financial statements of the Government. Note 5 – Pension plans A. Plan descriptions, contribution information and funding policies The Government has seven single-employer pension plans and one agent multiple-employer pension plan currently in existence. These plans are defined benefit plans. The Government also has a single-employer, defined contribution plan. The following is a summary of funding policies, contribution methods, and benefit provisions for each plan. Single-employer pension plans 1945 Plan The 1945 Plan was available to all former Richmond County employees hired prior to October 1, 1975 that met the Plan’s age and length of service requirements. Participants in the Plan who retired at or after age 60 are entitled to a benefit equal to 2% of average earnings multiplied by years of service. Also, the benefit is not to exceed 60% of the average earnings. The Plan provides death and disability benefits. These benefit provisions and all other requirements including amendments are established by Government ordinance. The Plan also provides for reduced 73 ---PAGE BREAK--- AUGUSTA, GEORGIA Notes to Financial Statements – Continued Year Ended December 31, 2007 Note 5 – Pension plans (Continued) benefits if the participant elects to retire after attaining age 50 and completing 15 years of service. Employees are required to make contributions to the Plan equal to 5% of earnings. The Government is required to contribute the remaining amounts necessary to fund the Plan. If a participant terminates employment prior to completion of ten years of credited service, the participant receives a lump-sum amount equal to his total contributions to the Plan, with 5% interest computed from January 1, 1997. After completion of at least ten years of credited service, the participant receives a benefit deferred to his normal retirement date, equal to the benefit computed as for normal retirement multiplied by the percentage based on completed years of credited service, as follows: 50% after 10 years, increasing 10% each year to 100% after 15 years of credited service. This is a closed retirement plan (new employees may not participate in the Plan). The 1945 Plan does not issue a stand-alone financial statement report. The annual required contribution is determined as part of a January 1, 2006 actuarial valuation using the attained age aggregate method. The actuarial assumptions included an 8% investment rate of return, projected future salary adjustment of and a post retirement benefit increase of An inflation component of 5% is included. The actuarial value of plan assets is determined using market value. 1977 Plan The 1977 Plan was available to all former Richmond County full-time employees who were not participants in the 1945 Plan provided that they were not hired after reaching age 60. Normal retirement for the Plan is age 65 or the date when age 62 is attained and an employee completes 25 years of credited service. At that time, the employee is entitled to a benefit equal to 1% of average earnings multiplied by years of credited service. The Plan provides death and disability benefits. These benefit provisions and all other requirements including amendments are established by Government ordinance. The Plan also provides for reduced benefits if the participant elects to retire after attaining age 50 and completing 15 years of service. Employees are required to make contributions to the Plan equal to 4% of earnings. The Government is required to contribute the remaining amounts necessary to fund the Plan. If a participant terminates employment prior to completion of five years of credited service, the participant receives a lump-sum amount equal to his total contributions to the Plan, with interest. After completing at least five years of credited service, the participant receives a benefit deferred to his normal retirement date, equal to the benefit computed as for normal retirement. This is a closed retirement plan (new employees may not participate in the Plan). The 1977 Plan does not issue a stand-alone financial statement report. The annual required contribution is determined as part of a January 1, 2006 actuarial valuation using the attained age aggregate method. The actuarial assumptions included an 8% investment rate of return, projected future salary adjustment of 5.5%, and a post retirement benefit increase of An inflation component of 5% is included. The actuarial value of plan assets is determined using market value. The funding policies for the 1945 and 1977 Plans provide for actuarially determined periodic contributions at rates that, for individual employees, remain stable over time so that sufficient assets will be available to pay benefits when due. The attained age aggregate cost method has been used to compute the normal cost for the plan. Any unfunded plan costs are spread over the average future working lifetime of the participants as a level percentage of payroll. The significant actuarial assumptions used to compute pension contribution requirements are the same as those used to determine the standard measure of the pension obligation. General Pension Plan, Policemen’s Pension Plan, Firemen’s Pension Plan and the City Employees’ Pension Plan These Plans covered former City of Augusta employees. Policemen and firemen hired before 1945 are covered under the General Pension Plan. Policemen hired between 1945 and 1949 are covered under the Policemen’s Pension Plan. Firemen hired between 1945 and 1949 are covered under the Firemen’s Pension Plan. Other former City of Augusta employees hired between 1945 and 1949 are covered by the City Employees’ Pension Plan. Pension benefits are being paid under these Plans to retired employees and beneficiaries. These are closed retirement plans (new employees may not participate in the plans). These plans do not issue stand-alone financial statement reports. The annual required contributions for the General Pension Plan, Policemen’s Pension Plan, Firemen’s Pension Plan and the City Employee’s Pension Plan are determined as part of a December 31, 2006 actuarial valuations using the actuarial present value of total projected benefits. This actuarial method does not identify or separately amortize the unfunded actuarial liabilities. The actuarial assumptions included an 8% investment rate of return, no projected future salary adjustment, and no post retirement benefit increase. An adjustment for inflation is not included. 74 ---PAGE BREAK--- AUGUSTA, GEORGIA Notes to Financial Statements – Continued Year Ended December 31, 2007 Note 5 – Pension plans (Continued) General Retirement Plan Employees hired after March 1, 1949 and before March 1, 1987, whose age did not exceed thirty-five years at the time of their employment and are not participants of the 1977 Plan are covered under the General Retirement Plan. Pension benefits vest after an employee is 45 years of age and has 15 years of full-time employment. An employee may retire at age 60 with 25 years of service and receive annual pension benefits equal to 2% of the employee’s average salary earned during the last three years of employment, multiplied by the number of full-time years of employment. The Plan provides death and disability benefits. These benefit provisions and all other requirements including amendments are established by Government ordinance. All full-time employees hired before July 1, 1980, must contribute 8% of gross earnings to the Plan, with the Government contributing remaining amounts sufficient to provide future pensions. This is a closed retirement plan (new employees may not participate in the Plan). The General Retirement Plan does not issue a stand-alone financial statement report. Employer contributions are determined as part of the January 1, 2006 actuarial valuation using the frozen entry age cost method. The unfunded accrued liability is composed of pieces that are amortized over various periods to comply with Georgia law as a level percentage of payroll. When the actuarial value of assets exceeds 150% of the present value of accrued benefits, the Official Code of Georgia Annotated states that there is no minimum required contribution. The significant actuarial assumptions used to compute pension contribution requirements are the same as those used to determine the standard measure of the pension obligation. The actuarial assumptions included an 8% investment rate of return, projected future salary adjustment of 5.5%, and a post retirement benefit increase of An inflation component of 4% is included. The actuarial value of plan assets is determined with a smoothing method that uses the sum of the actuarial value of assets on the preceding valuation date, net contributions and disbursements during the preceding year, interest on the items calculated using the valuation investment return assumption, and 20% of the difference between the market value of assets on the current valuation date and the sum of the first three items. Agent multiple-employer pension plan Georgia Municipal Employees Benefit System (GMEBS) Employees hired after March 1, 1987 and before consolidation on December 31, 1996, and who were not participants in any other employer-sponsored retirement plan are covered under the Georgia Municipal Employees Benefit System. The Plan provides pension benefits, deferred allowances, and death and disability benefits. These benefit provisions and all other requirements including amendments are established by Government ordinance. A participant may retire after reaching the age of 65 if the participant is not classified as public safety personnel; participating public safety personnel may retire at age 65 or age 55 with 25 years of total credited service, whichever is earlier. Early retirement may be taken at age 55 with 10 years of credited service. Benefits vest after 10 years of service. Employees who retire at or after age 55 with 10 or more years of service are entitled to pension payments for the remainder of their lives equal to 1 ¼% of their final five-year average salary times the number of years of which they were employed as a participant in the GMEBS. The final five-year average salary is the average salary of the employee during the final five years of full-time employment. Pension provisions include deferred allowances, whereby an employee may terminate his or her employment with the Government after accumulating 10 years of service but before reaching the age of 55. If the employee does not withdraw his or her accumulated contributions, the employee is entitled to all pension benefits upon reaching the age of 55. Employees must contribute 3.5% of their gross earnings to the Plan. In addition, the Government must provide annual contributions sufficient to satisfy the actuarially determined contribution requirements as amended by GMEBS. The GMEBS Retirement Fund issues a publicly available financial report that includes financial statements and required supplementary information. That report may be obtained by writing to Georgia Municipal Employees Benefit System, 201 Pryor Street, SW, Atlanta, Georgia 30303. The employer contributions are determined as part of a March 1, 2007 actuarial valuation using the projected unit credit actuarial cost method. The actuarial value of plan assets are computed with a smoothing method that uses a roll forward of prior year’s actuarial value with contributions, disbursements, and expended return of investments, plus 10% of investment gains (losses) during 10 prior years. Normal cost is funded on a current basis. The Plan is subject to the minimum funding standards of the Public Retirement Systems Standards Law. Since the Government’s policy is to contribute the pension expense in each year, the funding strategy should provide sufficient resources to pay employee 75 ---PAGE BREAK--- AUGUSTA, GEORGIA Notes to Financial Statements – Continued Year Ended December 31, 2007 Note 5 – Pension plans (Continued) pension benefits on a timely basis. The significant actuarial assumptions used to compute pension contribution requirements are the same as those used to determine the standardized measure of the pension obligation. The plan’s unfunded actuarial accrued liability is being amortized over 30 years as a level dollar. The actuarial assumptions included an 8% investment rate of return, projected future salary adjustment of 5.5%, and no post retirement benefit increase. An adjustment for inflation is not included. Membership of the defined benefit plans are as follows: Terminated plan members Active Retirees and beneficiaries entitled to but not yet Plan receiving benefits receiving benefits members 1945 Plan 35 - 4 1977 Plan 100 96 466 General Pension Plan 1 - - Policemen’s Pension Plan 2 - - Firemen’s Pension Plan 7 - - City Employees’ Pension Plan 11 - - General Retirement Plan (City 1949) 144 9 135 GMEBS 79 5 201 Total 379 110 806 The costs of administering the plans are financed through investment earnings. Actuarial assumptions and other information used to determine the annual required contributions are located in the Supplementary Information section of this report. Defined contribution plan Augusta-Richmond County Board of Commissioners Retirement Savings Plan (the “1998 Plan”) All full-time employees with more than one month of service are eligible to participate in the Retirement Savings Plan. The Plan is a defined contribution plan under Section 401(a) of the Internal Revenue Code, and is administered by Nationwide Life Insurance, PPA support. The Plan was organized and may be amended by a majority vote of the full- body of the governing board, the Augusta-Richmond County Commission. Employees contribute four percent of their salary, and the Government contributes two percent of the employee’s salary. Contribution requirements may be amended by a majority vote of the full-body of the governing board, the Augusta-Richmond County Commission. At December 31, 2007, there were approximately 1,750 plan participants. Participants are considered fully vested in the Government’s contributions after completing five years of service. For the year ended December 31, 2007, the employees’ contributions were approximately $1,890,000, and the Government’s contributions were approximately $945,000. Richmond County Department of Health – General Retirement Plan All current full-time employees of the Department of Health participate in the Employees’ Retirement System of Georgia (ERS), which is a cost-sharing multi-employer, defined benefit, public employee retirement system. The Department contributes at a specified percentage of active members payroll determined by actuarial valuation. The contribution requirements of plan members and the Department are established and may be amended by the ERS Board of Trustees. Retirement contributions made on behalf of eligible participants for the year ended June 30, 2007 were $601,399 . Members become fully vested after ten years of service. Post-employment retirement benefits Plan description. Augusta-Richmond County sponsors a single-employer post-retirement plan provides medical and death benefits to eligible retirees and their spouses. 76 ---PAGE BREAK--- AUGUSTA, GEORGIA Notes to Financial Statements – Continued Year Ended December 31, 2007 Note 5 – Pension plans (Continued) Funding policy. The Government intends to continue to fund the OPEB on an actual pay-as-you-go expense. Annual OPEB cost and net OPEB obligation. The Government’s annual other post-retirement benefit (OPEB) cost (expense) is calculated based on the annual required contribution of the employer (ARC), an amount actuarially determined in accordance with the parameters of GASB Statement 45. The ARC represents a level of funding that, if paid on an ongoing basis, is projected to cover normal cost each year and amortize any unfunded actuarial liabilities (or funding excess) over a period not to exceed 30 years. The following table shows the components of the Government’s annual OPEB cost for the year, the amount actually contributed to the plan, and changes in the Government’s net OPEB obligation: Components of net OPEB obligation Annual required contribution $ 4,374,442 Interest on net OPEB obligation - Adjustment on annual required contribution - Annual OPEB cost (expense) 4,374,442 Contributions made or accrued (1,762,638) Increase in net obligation $ 2,611,804 Net OPEB obligation (beginning of year) $ - Net OPEB obligation (end of year) $ 2,611,804 The Government’s annual OPEB cost, the percentage of annual OPEB cost contributed to the plan, and the net OPEB obligation for 2007 is as follows: Fiscal Year Ended Annual OPEB Cost Percentage of OPEB Cost Net OPEB Obligation 12/31/2007 $ 4,374,442 40.3% $ 2,611,804 Funded status and funding progress. As of January 1, 2007, the most recent actuarial valuation date, the plan was 0% funded. The actuarial accrued liability for benefits was $62,353,000 and the actuarial value of assets was resulting in an unfunded actuarial accrued liability (UAAL) of $62,353,000. Actuarial valuations of an ongoing plan involve estimates of the value of reported amounts and assumptions about the probability of occurrence of events far into the future. Examples include assumptions about future employment, mortality, and the healthcare cost trend. Amounts determined regarding the funded status of the plan and the annual required contributions of the employer are subject to continual revision as actual results are compared with past expectations and new estimates are made about the future. The Schedule of funding progress, presented as required supplementary information following the notes to the financial statements, present multiyear trend information about whether the actuarial value of plan assets is increasing or decreasing over time relative to the actuarial accrued liabilities for benefits. Actuarial methods and assumptions. Projections of benefits for financial reporting purposes are based on substantive plan (the plan as understood by the employer and the plan members) and includes the type of benefits provided at the time of each valuation and the historical pattern of sharing the benefit costs between the employer and plan members to that point. The actuarial methods and assumptions used include techniques that are designed to reduce the effects of short-term volatility in actuarial accrued liabilities and the actuarial value of assets, consistent with the long-term perspective of the calculations. In the January 1, 2007 actuarial valuation, the projected unit credit actuarial cost method was used. The actuarial assumptions include a 5.5% investment rate of return (net of administrative expenses), based on the employer’s own investments and used to discount liabilities at the valuation date, and an annual healthcare cost trend rate of 8% initially, reduced by decrements to an ultimate rate of 5% after three years. The UAAL is being amortized as a level percentage of payroll on an open basis. The remaining amortization period at January 1, 2007 was 30 years. 77 ---PAGE BREAK--- AUGUSTA, GEORGIA Notes to Financial Statements – Continued Year Ended December 31, 2007 Note 5 – Pension plans (Continued) B. Summary of significant accounting policies Pension trust funds are accounted for on the accrual basis. The accrual basis of accounting recognizes revenues when earned. Expenses are recorded when incurred. Plan member contributions are recognized in the period in which the contributions are due. Employer contributions are recognized when due and the Government has made a formal commitment to provide the contributions. Benefits and refunds are recognized when due and payable in accordance with the terms of the plan. For information relating to reported investment values, see Note 1 G. C. Concentrations and reserves There are no assets legally reserved for purposes other than the payment of plan member benefits for any plans. The plans held no individual investments whose market value exceeds five percent or more of net assets available for benefits. There are no long-term contracts for contributions. D. Annual pension cost and net pension obligation The Government’s annual pension cost is determined using the calculation methodology defined in GASB Statement No. 27. The annual pension cost equals the Government’s annual required contribution, plus any adjustments required to reflect defined minimum and maximum amortization periods and any prior period differences between the actual contribution paid into the plans and the annual pension cost. Trend information Fiscal Annual Actual Percentage of Net Pension Year Pension County APC (Asset) Beginning Cost Contribution Contributed Obligation 2004 1945 Plan 01/01/2004 $ 170,881 $ 170,890 100% $ - 1977 Plan 01/01/2004 913,601 955,819 105% (214,493) General Pension Plan 01/01/2004 25,092 25,092 100% - Policemen’s Pension Plan 01/01/2004 72,874 72,874 100% - Firemen’s Pension Plan 01/01/2004 188,896 188,896 100% - City Employees’ Pension Plan 01/01/2004 249,565 249,565 100% - General Retirement Plan (City 1949) 01/01/2004 - - 100% - GMEBS 01/01/2004 200,432 200,432 100% - 78 ---PAGE BREAK--- AUGUSTA, GEORGIA Notes to Financial Statements – Continued Year Ended December 31, 2007 Note 5 – Pension plans (Continued) Fiscal Annual Actual Percentage of Net Pension Year Pension County APC (Asset) Beginning Cost Contribution Contributed Obligation 2005 1945 Plan 01/01/2005 $ 361,352 $ 361,352 100% $ 1977 Plan 01/01/2005 1,036,647 1,087,175 105% (256,711) General Pension Plan 01/01/2005 24,752 24,752 100% - Policemen’s Pension Plan 01/01/2005 72,141 72,141 100% - Firemen’s Pension Plan 01/01/2005 186,522 186,522 100% - City Employees’ Pension Plan 01/01/2005 281,140 281,140 100% - General Retirement Plan (City 1949) 01/01/2005 - - 100% - GMEBS 01/01/2005 213,565 213,565 100% - Fiscal Annual Actual Percentage of Net Pension Year Pension County APC (Asset) Beginning Cost Contribution Contributed Obligation 2006 1945 Plan 01/01/2006 $ 331,330 $ 360,238 109% $ (28,917) 1977 Plan 01/01/2006 974,653 1,035,126 106% (307,239) General Pension Plan 01/01/2006 13,219 13,219 100% - Policemen’s Pension Plan 01/01/2006 50,480 50,480 100% - Firemen’s Pension Plan 01/01/2006 179,202 179,202 100% - City Employees’ Pension Plan 01/01/2006 297,368 297,368 100% - General Retirement Plan (City 1949) 01/01/2006 138,517 138,517 100% - GMEBS 01/01/2006 271,945 271,945 100% - Fiscal Annual Actual Percentage of Net Pension Year Pension County APC (Asset) Beginning Cost Contribution Contributed Obligation 2007 1945 Plan 01/01/2007 $ 214,686 $ 220,377 103% $ (34,608) 1977 Plan 01/01/2007 714,806 934,962 131% (367,712) General Pension Plan 01/01/2007 13,219 13,219 100% - Policemen’s Pension Plan 01/01/2007 50,480 50,480 100% - Firemen’s Pension Plan 01/01/2007 179,202 179,202 100% - City Employees’ Pension Plan 01/01/2007 297,368 297,368 100% - General Retirement Plan (City 1949) 01/01/2007 - - 100% - GMEBS 01/01/2007 271,945 271,945 100% - Note 6 – Joint venture and related organization Joint venture Under Georgia law, the Government, in conjunction with the sixteen counties and fifty-four cities in east Georgia known as the Central Savannah River Area (CSRA), is a member of the CSRA Regional Development Center (CSRA RDC). The CSRA RDC is a public organization that assists local governments in planning for common needs, cooperating for mutual benefit, and coordinating for sound regional development. The operations are mainly financed by membership dues and financial assistance provided by the State of Georgia. Membership in the CSRA RDC is required by the Official Code of Georgia Annotated (O.C.G.A.) §58-8-34 with annual dues based on a per capita amount. During the year ended 79 ---PAGE BREAK--- AUGUSTA, GEORGIA Notes to Financial Statements – Continued Year Ended December 31, 2007 Note 6 – Joint venture and related organization (Continued) December 31, 2007, the Government paid $170,350 in such dues, which was based on a per capita amount of $.55. The CSRA RDC Board membership is composed of one city official, one county official, and one private sector individual from each county. O.C.G.A. §58-8-39.1 provides that the Government is liable for any debts or obligations of the CSRA RDC. The Comprehensive Annual Financial Report of the CSRA RDC may be obtained from: CSRA Regional Development Center 3023 River Watch Pkwy Augusta, Georgia 30907 Related organization The Government officials are responsible for appointing the members of the boards of another organization, but the Government’s accountability for these organizations do not extend beyond making the appointments. The Government commission appoints the voting majority of the members of the Augusta-Richmond County Coliseum Authority and the Housing Authority of the City of Augusta, Georgia. Note 7 – Hotel/motel lodging tax The Government has levied a 6% lodging tax. A summary of the transactions for the year ended December 31, 2007 follows: Lodging tax receipts $ 3,631,812 Disbursements to the Augusta-Richmond County Coliseum Authority, Augusta Convention and Visitors Bureau, and the Augusta Museum for promotion of tourism (3,308,315) Balance of lodging tax funds on hand at end of year $ 323,497 The Government has received audit reports from the Augusta-Richmond County Coliseum Authority, Augusta Convention and Visitors Bureau, and the Augusta Museum covering the lodging tax monies. The subcontractor’s expenditures were for promotion of tourism as required by O.C.G.A. §48-13-51. Note 8 – Significant contingencies Federal and State assisted programs The Government has received proceeds from several federal and state grants. Periodic audits of these grants are required and certain costs may be questioned as not being appropriate expenditures under the grant agreements. Such audits could result in the refund of grant monies to the grantor agencies. Management believes that any required refunds will be immaterial. No provision has been made in the accompanying financial statements for the refund of grant monies. Arbitrage The City’s bond issues are subject to federal arbitrage regulations, and the Government has elected to review its potential arbitrage liability annually on the bond issue dates. The arbitrage rebate payments are payable on the fifth anniversary of the bond issue date and every fifth year subsequent to the date. As of December 31, 2007, the estimate arbitrage payable of $763,260 has been included in claims and judgments in the accompanying financial statements. Note 9 – Conduit debt obligations Conduit debt obligations are limited obligation revenue bonds, certificates of participation, or similar debt instruments issued for the purpose of providing capital financing for a specific third party that is not a part of the Government’s financial reporting entity. The Government has no obligation for the debt beyond the resources provided by a lease or loan with the third party on whose behalf the debt was issued. 80 ---PAGE BREAK--- AUGUSTA, GEORGIA Notes to Financial Statements – Continued Year Ended December 31, 2007 Note 9 – Conduit debt obligations (Continued) On December 14, 2000, the Government issued Special Facility Airport Revenue Bonds in the amount of $3,110,000 which qualifies as a conduit debt obligation. The bonds are payable solely from revenues pledged under a lease agreement. As of December 31, 2007, the amount outstanding on the Special Facility Airport Revenue Bonds is $3,110,000. A - Debt service requirements to maturity for bonds payable The following requirements to amortize debt outstanding as of December 31, 2007, including interest are as follows: Revenue Bonds Principal Interest 2008 $ - $ 152,390 2009 - 152,390 2010 3,110,000 152,390 $ 3,110,000 $ 457,170 Note 10 – Prior period adjustments – Department of Health For the component unit Department of Health, prior period adjustments were made to two beginning fund balances to correct variances in prior year accruals as required by Georgia DHR. The error resulted in an understatement of net assets of $869. During the year ended June 30, 2006, the error was corrected. Note 11 – Long-term obligation for Water and Sewer Swap agreement Utilities entered into an interest rate swap transaction in July 2006, which hedges an aggregate principal amount of $160 million, Series 2004 Water and Sewerage Revenue Bonds. The notional amount is $160 million, maturing over 33 years from the effective date of the interest rate swap agreement of June 1, 2006. The interest rate swap agreement requires Augusta, Georgia to pay to Deutsche Bank AG, the Bond Market Association municipal swap index (BMA) (tax exempt variable rate) and receive in return from Deutsche Bank 75.02% of USDA LIBOR rate. During June 2007, Utilities elected to terminate the swap agreement, which resulted in a termination payment of $1.2 million received by the Utilities during 2007 and netted against loss from early termination of swap agreement. Swaption agreement The Utilities entered into a swaption contract that provided the Utilities a nonrefundable premium of $2,121,000 payable in an up-front payment of $121,000 and annual option premium payments of $500,000 payable on October 1, 2004, 2005, 2006 and 2007. This nonrefundable premium has been deferred and is being amortized over the life of the agreement. As a refunding of its Series 1996A and 1997 bonds, this payment represents the risk-adjusted, present-value savings of a refunding as of October 1, 2007, without issuing refunding bonds at July 2004. The swaption gave the counterparty the option to make the Utilities enter into a floating-to-fixed interest rate swap. The swaption was entered into in July 2004. The $2,121,000 payment was based on a notional amount of $62,475,000. The counterparty exercised the agreement on October 1, 2006 – the Utilities’ Series 1996A and 1997 bonds’ first call date. The interest rate swap commenced on October 1, 2006, and effectively fixes the interest rate at 4.54% to the counterparty. In return the Utilities receive variable interest from the counterparty at a rate of 67% of the 1-month LIBOR. During December 2007, the Utilities elected to terminate the swap agreement, which resulted in a termination payment of $6.7 million paid by the Utilities during 2007 and recorded as a loss from early termination of swap agreement. Additionally, the remaining nonrefundable premium of $2.1 million was netted against the loss from early termination of swap agreement. 81 ---PAGE BREAK--- AUGUSTA, GEORGIA Notes to Financial Statements – Continued Year Ended December 31, 2007 Note 12 – New accounting pronouncements In August 2004, GASB issued GASB No. 45, Accounting and Financial Reporting by Employers for Postemployment Benefits Other Than Pensions, and establishes accounting and financial reporting standards for employer costs and obligations relating to postemployment healthcare and other nonpension benefits (“OPEB”). This statement generally requires that state and local governmental employers account for and report the annual cost of OPEB and the outstanding obligations and commitments related to OPEB in essentially the same manner as they currently do for pensions. Annual OPEB cost for most employers will be based on actuarially determined amounts that, if paid on an ongoing basis, generally would provide sufficient resources to pay benefits as they come due. The provisions of GASB No. 45 may be applied prospectively and do not require governments to fund their OPEB plans. An employer may establish its OPEB liability at zero as of the beginning of the initial year of implementation; however, the unfunded actuarial liability is required to be amortized over future periods. This statement also establishes disclosure requirements for information about the plans in which an employer participates, the funding policy followed, the actuarial valuation process and assumptions, and, for certain employers, the extent to which the plan has been funded over time. The earliest that GASB No. 45 provisions will be effective is for financial statement periods beginning after December 15, 2006. The Government has adopted GASB No. 45 for the year ended December 31, 2007. Note 13 – Subsequent events Subsequent to December 31, 2007, the City Commissioners voted to merge the eligibility requirements of three of the existing benefit plans – “GMEBS”, the “1977 plan”, and the “1998 plan” – into a new set of eligibility requirements and benefits offered to current and future employees of the Government. This change in eligibility requirements and benefits offered will be provided through changes to the existing GMEBS plan. Employees will be given the option to either transfer out of their existing benefit plan and into the revised GMEBS plan, or remain in their existing plan. The basic benefit terms of the new plan will be a defined benefit plan, with a 1.4% of salary benefit formula, beginning in 2008, with 4% employee contribution. Management estimates the unfunded actuarial liability at the effective date of the availability of the new plan to be approximately $14.4 million, which is an increase in the future financial obligation of the existing plans of approximately $3.4 million. Management estimates the estimated annual cost of the pension plan to be approximately $2.1 million, which approximates the annual cost of the currently offered benefit plans. Subsequent to December 31, 2007, the City Commissioners also voted to extend medical insurance coverage to retirees. Management is unable to determine the potential financial impact, as terms of coverage and availability have not yet been formalized. However, it is anticipated that the annual OPEB cost, unfunded OPEB obligation, and unfunded actuarial accrued liability will be significantly increased from the amounts disclosed in Note 5. Note 14 – Expenditure of federal grant funds The City does not have effective management oversight to insure that federal grant funds are expended in accordance with restrictive provisions. General deficiencies applicable to all federal grants have been identified, and specific deficiencies have been identified for grants from the U. S. Department of Housing and Urban Development, U. S. Department of Justice, and the U. S. Department of Transportation, all of which are more fully described in the City’s Single Audit report for the year ended December 31, 2007. These deficiencies may result in federal claims for refunds for these grants. The City has not estimated or recorded a liability for any potential claim. Note 15 – Prior period adjustment The Government’s financial statements for business type activities as of December 31, 2006 contained the following errors: overstatement of capital assets by $1,313,932, overstatement of interest income by $864,355, and overstatement of net assets by $1,313,932. Additionally, the Governments financial statements as of December 31, 2005 contained errors which resulted in overstatement of capital assets, interest income, and net assets by $449,577. Net assets as of January 1, 2007 has been reduced by $1,313,932 to correct the errors. Had the errors not been made, the change in net assets for the year ended December 31, 2006 and 2005 would have been decreased by $864,355 and $449,577, respectively. 82 ---PAGE BREAK--- PENSION PLAN REQUIRED SUPPLEMENTARY INFORMATION 83 ---PAGE BREAK--- AUGUSTA, GEORGIA Defined Benefit Pension Trusts – Required Supplementary Information (Unaudited) December 31, 2007 A. Schedules of funding progress Actuarial (Funded) (FAAL) Accrued Unfunded UAAL as Actuarial Actuarial Liability AAL A % of Valuation Value of AAL (FAAL) Funded Covered Covered Date Assets Entry Age UAAL Ratio Payroll Payroll 1945 Plan 01/01/94 $ 10,047,526 $ 8,927,649 $ (1,119,877) 113 % $ 606,450 (185) % 01/01/95 9,936,022 9,440,717 (495,305) 105 598,795 (83) 01/01/96 11,537,840 9,566,390 (1,971,450) 121 629,034 (313) 01/01/98 13,934,975 9,431,701 (4,503,274) 148 160,888 (2,799) 01/01/99 13,760,620 12,535,885 (1,224,735) 110 598,795 (205) 01/01/00 13,038,384 12,251,489 (786,895) 106 168,818 (466) 01/01/01 12,352,795 12,069,544 (283,251) 102 180,462 (157) 01/01/02 11,023,816 10,075,638 (948,178) 109 184,511 (514) 01/01/03 8,897,080 9,878,269 981,189 90 193,921 506 01/01/04 9,124,231 10,075,778 951,547 91 193,922 491 01/01/05 8,854,874 10,619,028 1,764,154 83 220,633 800 01/01/06 9,009,519 10,338,640 1,329,121 87 223,443 595 01/01/07 9,749,998 10,469,945 719,947 93 240,[PHONE REDACTED] Plan 01/01/94 $ 4,262,572 $ 2,813,432 $ (1,449,140) 152 % $ 5,180,438 (28) % 01/01/95 4,439,451 3,333,577 (1,105,874) 133 6,797,338 (16) 01/01/96 5,446,380 4,332,024 (1,114,356) 126 8,952,224 (12) 01/01/97 6,285,732 5,510,585 (775,147) 114 11,509,974 01/01/99 9,976,793 14,137,712 4,160,919 71 24,454,857 17 01/01/00 10,836,439 15,060,421 4,223,982 72 21,709,421 19 01/01/01 11,136,602 15,575,523 4,438,921 72 21,705,175 20 01/01/02 14,065,581 16,860,437 2,794,856 83 21,029,237 13 01/01/03 12,609,297 18,150,192 5,540,895 69 22,187,948 25 01/01/04 15,744,214 21,606,884 5,862,670 73 22,187,948 26 01/01/05 17,680,815 27,427,503 9,746,688 64 19,071,203 51 01/01/06 19,872,346 28,094,174 8,221,828 71 19,130,743 43 01/01/07 23,686,629 30,488,774 6,802,145 78 18,882,710 36 General Pension Plan 12/31/95 $ - $ 587,797 $ 587,797 - % $ - - % 12/31/96 - 564,008 564,008 - - - 12/31/97 - 637,605 637,605 - - - 12/31/98 - 533,575 533,575 - - - 12/31/99 - 511,305 511,305 - - - 12/31/00 - 524,410 524,410 - - - 12/31/01 - 525,089 525,089 - - - 12/31/02 - 114,862 114,862 - - - 12/31/03 - 98,789 98,789 - - - 12/31/04 - 81,433 81,433 - - - 12/31/05 - 125,270 125,270 - - - 12/31/06 - - - - - - 12/31/07 - 40,450 40,450 - - - Policemen’s Pension Plan 12/31/95 $ - $ 422,070 $ 422,070 - % $ - - % 12/31/96 - 417,725 417,725 - - - 12/31/97 - 391,153 391,153 - - - 12/31/98 - 389,072 389,072 - - - 12/31/99 - 246,783 246,783 - - - 12/31/00 - 246,217 246,217 - - - 12/31/01 - 355,840 355,840 - - - 12/31/02 - 380,143 380,143 - - - 12/31/03 - 337,186 337,186 - - - 12/31/04 - 290,791 290,791 - - - 12/31/05 - 332,653 332,653 - - - 12/31/06 - 251,635 251,635 - - - 12/31/07 - 201,920 201,920 - - - 84 ---PAGE BREAK--- AUGUSTA, GEORGIA Defined Benefit Pension Trusts - Required Supplementary Information - Continued (Unaudited) December 31, 2007 A. Schedules of funding progress (Continued) Actuarial (Funded) (FAAL) Accrued Unfunded UAAL as Actuarial Actuarial Liability AAL A % of Valuation Value of AAL (FAAL) Funded Covered Covered Date Assets Entry Age UAAL Ratio Payroll Payroll Firemen’s Pension Plan 12/31/95 $ - $ 1,296,843 $ 1,296,843 - % $ - - % 12/31/96 - 1,202,831 1,202,831 - - - 12/31/97 - 1,507,501 1,507,501 - - - 12/31/98 - 1,479,472 1,479,472 - - - 12/31/99 - 1,276,044 1,276,044 - - - 12/31/00 - 1,258,550 1,258,550 - - - 12/31/01 - 1,345,133 1,345,133 - - - 12/31/02 - 1,204,513 1,204,513 - - - 12/31/03 - 1,110,698 1,110,698 - - - 12/31/04 - 1,009,371 1,009,371 - - - 12/31/05 - 1,102,891 1,102,891 - - - 12/31/06 - 975,046 975,046 - - - 12/31/07 - 788,489 788,489 - - - City Employees’ Pension Plan 12/31/95 $ - $ 2,598,066 $ 2,598,066 - % $ - - % 12/31/96 - 2,584,786 2,584,786 - - - 12/31/97 - 2,418,723 2,418,723 - - - 12/31/98 - 2,266,704 2,266,704 - - - 12/31/99 - 2,060,501 2,060,501 - - - 12/31/00 - 1,911,904 1,911,904 - - - 12/31/01 - 1,914,347 1,914,347 - - - 12/31/02 - 2,063,450 2,063,450 - - - 12/31/03 - 1,931,942 1,931,942 - - - 12/31/04 - 1,789,910 1,789,910 - - - 12/31/05 - 1,999,996 1,999,996 - - - 12/31/06 - 1,710,832 1,710,832 - - - 12/31/07 - 1,412,498 1,412,498 - - - General Retirement Plan (City 1949) 01/01/94 $ 49,875,350 $ 36,456,408 $ (13,418,942) 137 % $ 7,243,580 (185) % 01/01/95 47,710,074 39,699,516 (8,010,558) 120 7,053,091 (114) 01/01/96 56,004,033 41,587,715 (14,416,318) 135 6,345,073 (227) 01/01/97 59,413,476 42,712,240 (16,701,236) 139 5,165,172 (323) 01/01/99 71,138,815 51,388,074 (19,750,741) 138 5,794,554 (341) 01/01/00 70,974,830 54,306,953 (16,667,877) 131 5,112,578 (326) 01/01/01 70,721,724 54,824,779 (15,896,945) 129 5,237,225 (304) 01/01/02 66,542,266 52,471,765 (14,070,501) 127 5,473,137 (257) 01/01/03 59,091,990 53,688,662 (5,403,328) 110 5,774,707 (94) 01/01/04 65,345,259 58,984,857 (6,360,402) 111 5,774,708 (110) 01/01/05 66,064,583 65,169,939 (894,644) 101 5,714,554 (16) 01/01/06 67,859,472 68,750,121 890,649 99 5,751,403 15 01/01/07 72,348,604 71,720,302 (628,302) 101 6,082,087 (10) GMEBS 03/01/95 $ 3,351,907 $ 3,315,936 $ (35,971) 101 % $ 10,657,439 % 03/01/96 3,731,118 3,568,982 (162,136) 105 9,369,684 (2.0) 03/01/97 4,144,704 5,312,277 1,167,573 78 8,082,062 14.0 03/01/98 4,609,848 5,756,304 1,146,456 80 8,913,934 13.0 03/01/00 5,559,655 6,422,501 862,846 86 7,719,739 11.2 03/01/02 6,308,424 6,887,424 579,000 91 6,913,560 8.4 03/01/03 6,477,885 7,146,314 668,429 90 6,988,509 9.6 03/01/04 6,913,410 7,553,911 640,501 91 6,637,655 9.6 03/01/05 7,372,466 8,036,105 663,639 92 6,641,379 10.0 03/01/06 8,023,690 9,161,600 1,137,910 88 6,985,599 16.3 03/01/07 8,566,194 9,877,759 1,311,565 87 6,858,000 19.1 85 ---PAGE BREAK--- AUGUSTA, GEORGIA Defined Benefit Pension Trusts - Required Supplementary Information - Continued (Unaudited) December 31, 2007 B. Schedules of employer contributions Fiscal Annual Required Percentage Year Contribution Contributed 1945 Plan 1998 $ - - % 1999 - - 2000 - - 2001 - - 2002 - - 2003 - - 2004 170,[PHONE REDACTED] 361,[PHONE REDACTED] 331,[PHONE REDACTED] 220,[PHONE REDACTED] Plan 1997 $ 600,260 100 % 1998 897,[PHONE REDACTED] 1,124,[PHONE REDACTED] 940,[PHONE REDACTED] 979,[PHONE REDACTED] 746,[PHONE REDACTED] 787,[PHONE REDACTED] 955,[PHONE REDACTED] 1,087,[PHONE REDACTED] 1,035,[PHONE REDACTED] 787,183 119 General Pension Plan 1997 $ 139,861 100 % 1998 107,[PHONE REDACTED] 113,[PHONE REDACTED] 102,[PHONE REDACTED] 89,[PHONE REDACTED] 23,[PHONE REDACTED] 24,[PHONE REDACTED] 25,[PHONE REDACTED] 24,[PHONE REDACTED] 13,[PHONE REDACTED] 13,219 100 Policemen’s Pension Plan 1997 $ 79,952 100 % 1998 63,[PHONE REDACTED] 53,[PHONE REDACTED] 44,[PHONE REDACTED] 64,[PHONE REDACTED] 66,[PHONE REDACTED] 70,[PHONE REDACTED] 72,[PHONE REDACTED] 72,[PHONE REDACTED] 50,[PHONE REDACTED] 50,480 100 Firemen’s Pension Plan 1997 $ 249,706 100 $ 1998 237,[PHONE REDACTED] 240,[PHONE REDACTED] 205,[PHONE REDACTED] 214,[PHONE REDACTED] 206,[PHONE REDACTED] 182,[PHONE REDACTED] 188,[PHONE REDACTED] 186,[PHONE REDACTED] 179,[PHONE REDACTED] 179,202 100 86 ---PAGE BREAK--- AUGUSTA, GEORGIA Defined Benefit Pension Trusts - Required Supplementary Information - Continued (Unaudited) December 31, 2007 B. Schedules of employer contributions (Continued) Fiscal Annual Required Percentage Year Contribution Contributed City Employees’ Pension Plan 1997 $ 409,881 100 % 1998 331,[PHONE REDACTED] 348,[PHONE REDACTED] 302,[PHONE REDACTED] 263,[PHONE REDACTED] 299,[PHONE REDACTED] 285,[PHONE REDACTED] 249,[PHONE REDACTED] 281,[PHONE REDACTED] 297,[PHONE REDACTED] 297,368 100 General Retirement Plan (City 1949) 1997 $ - - % 1998 - - 1999 - - 2000 - - 2001 - - 2002 - - 2003 - - 2004 - - 2005 - - 2006 138,[PHONE REDACTED] - - GMEBS 1996 $ 187,548 100 % 1997 197,[PHONE REDACTED] 214,[PHONE REDACTED] 191,[PHONE REDACTED] 204,[PHONE REDACTED] 192,[PHONE REDACTED] 168,[PHONE REDACTED] 181,[PHONE REDACTED] 200,[PHONE REDACTED] 213,[PHONE REDACTED] 271,[PHONE REDACTED] 271,945 100 C. Notes to required supplementary information 1945 Plan 1977 Plan Valuation date 1/1/07 1/1/07 Actuarial cost method Attained age aggregate Attained age aggregate Amortization method Level percentage of payroll Level of percentage of payroll Amortization period Average future working lifetime Average future working lifetime Actuarial asset valuation method Market value plus receivables Market value plus receivables Actuarial assumptions: Investment rate of return 8.0% 8.0% Projected salary increases 5.0% 5.5% Post retirement benefit increases 5.0% 5.0% Inflation 5.0% 5.0% 87 ---PAGE BREAK--- AUGUSTA, GEORGIA Defined Benefit Pension Trusts - Required Supplementary Information - Continued (Unaudited) December 31, 2007 C. Notes to required supplementary information (Continued) General Policemen’s Pension Plan Pension Plan Valuation date 12/31/07 12/31/07 Actuarial cost method Actuarial present value of total Actuarial present value of total Projected benefits Projected benefits Amortization method Level dollar / Open basis Level dollar / Open basis Amortization period 5 years 5 years Actuarial asset valuation method N/A N/A Actuarial assumptions: Investment rate of return 8.0% 8.0% Projected salary increases N/A N/A Post retirement benefit increases N/A N/A Inflation N/A N/A Firemen’s City Employees’ Pension Plan Pension Plan Valuation date 12/31/07 12/31/07 Actuarial cost method Actuarial present value of total Actuarial present value of total Projected benefits Projected benefits Amortization method Level dollar / Open basis Level dollar / Open basis Amortization period 7 years 8 years Actuarial asset valuation method N/A N/A Actuarial assumptions: Investment rate of return 8.0% 8.0% Projected salary increases N/A N/A Post retirement benefit increases N/A N/A Inflation N/A N/A General Retirement Pension Plan (City 1949) GMEBS Valuation date 01/01/07 03/01/2007 Actuarial cost method Aggregate cost method Projected unit credit Amortization method Level dollar / Closed basis Level dollar Amortization period Various periods to comply with state law Varies for the bases Actuarial asset valuation method Market value plus receivables Roll forward prior year’s actuarial value with contributions, disbursements, and expended return of investments, plus 10% of investment gains (losses) during 10 prior years. Actuarial assumptions: Investment rate of return 8.0% 8.0% Projected salary increases 5.5% 5.5% Post retirement benefit increases 4.0% None Inflation 4.0% None 88 ---PAGE BREAK--- COMBINING AND INDIVIDUAL FUND STATEMENTS 89 ---PAGE BREAK--- 90 ---PAGE BREAK--- NONMAJOR GOVERNMENTAL FUNDS 91 ---PAGE BREAK--- Special Debt Capital Revenue Service Project Funds Funds Funds Assets Cash and temporary investments 16,309,982 $ 10,194 $ 7,366,540 $ Receivables (net of allowance for doubtful accounts) Taxes 847,638 - - Accounts 1,837,635 - - Interest - - 121,006 Note 3,701,447 - - Restricted assets Perpetual care - - - Due from other funds 179,433 - - Total assets 22,876,135 $ 10,194 $ 7,487,546 $ Liabilities and fund balances Liabilities: Accounts payable 1,267,472 $ - $ 400 $ Due to other funds 720,607 - - Accrued salaries and vacation 198,007 - - Other accrued liabilities 17,508 - - Deferred revenue 4,596,080 - - Total liabilities 6,799,674 - 400 Fund balances : Reserved for: Encumbrances 669,526 - 751,294 Project maintenance - - 1,596,460 Unreserved - undesignated 15,406,935 10,194 5,139,392 Total fund balances 16,076,461 10,194 7,487,146 Total liabilities and fund balances 22,876,135 $ 10,194 $ 7,487,546 $ Augusta, Georgia Combining Balance Sheet Nonmajor Governmental Funds December 31, 2007 92 ---PAGE BREAK--- Permanent Total Nonmajor Fund Governmental Perpetual Care - II Funds 201,438 $ 23,888,154 $ - 847,638 - 1,837,635 - 121,006 - 3,701,447 338,625 338,625 - 179,433 540,063 $ 30,913,938 $ - $ 1,267,872 $ - 720,607 - 198,007 - 17,508 - 4,596,080 - 6,800,074 - 1,420,820 - 1,596,460 540,063 21,096,584 540,063 24,113,864 540,063 $ 30,913,938 $ 93 ---PAGE BREAK--- Special Debt Capital Revenue Service Project Funds Funds Funds Revenues Taxes - property 11,167,266 $ - $ - $ Taxes - other than property 13,805,066 - - Licenses and permits 3,288,900 - - Use of money and property 679,887 10,743 487,098 Charges for current services 5,854,088 - - Fines and forfeitures 1,274,329 - - Intergovernmental 5,141,165 - 3,486 Other 415,911 - - Total revenues 41,626,612 10,743 490,584 Expenditures Current: General government 2,894,302 - 14,557 Judicial 392,497 - - Public safety 4,617,755 - 9,132 Public works 3,977,851 - 77,568 Culture and recreation 4,494,502 - - Housing and development 6,781,376 - - Capital outlay 2,102,876 - 682,219 Debt service 4,199,007 9,727,939 - Total expenditures 29,460,166 9,727,939 783,476 Excess (deficiency) of revenues over (under) expenditures 12,166,446 (9,717,196) (292,892) Other financing sources (uses) Transfers in 1,286,241 9,727,390 - Transfers (out) (13,443,944) (2,913) (3,477,345) Transfers in (out) between nonmajor funds 1,473,438 (273,438) (1,200,000) Total other financing sources (uses) (10,684,265) 9,451,039 (4,677,345) Net change in fund balances 1,482,181 (266,157) (4,970,237) Fund balance - beginning 14,594,280 276,351 12,457,383 Fund balance - ending 16,076,461 $ 10,194 $ 7,487,146 $ Augusta, Georgia Combining Statement of Revenues, Expenditures and Changes in Fund Balances Nonmajor Governmental Funds Year Ended December 31, 2007 94 ---PAGE BREAK--- Permanent Total Nonmajor Fund Governmental Perpetual Care - II Funds - $ 11,167,266 $ - 13,805,066 - 3,288,900 - 1,177,728 300 5,854,388 - 1,274,329 - 5,144,651 - 415,911 300 42,128,239 16,170 2,925,029 - 392,497 - 4,626,887 - 4,055,419 - 4,494,502 - 6,781,376 - 2,785,095 - 13,926,946 16,170 39,987,751 (15,870) 2,140,488 - 11,013,631 - (16,924,202) - - - (5,910,571) (15,870) (3,770,083) 555,933 27,883,947 540,063 $ 24,113,864 $ 95 ---PAGE BREAK--- Emergency Urban Services Telephone Capital Law Occupational District System Outlay Enforcement Tax Assets Cash and temporary investments 2,106,162 $ 757,891 $ 7,364,962 $ 622,868 $ - $ Receivables (net of allowance for doubtful accounts) Taxes 587,385 - 260,253 - - Accounts 700,690 501,860 - 4,995 - Note - - - - - Due from other funds - - - - - Total assets 3,394,237 $ 1,259,751 $ 7,625,215 $ 627,863 $ - $ Liabilities and fund balances (deficits) Liabilities: Accounts payable 24,819 $ 33,378 $ 342,109 $ - $ - $ Due to other funds 179,433 - - - - Accrued salaries and vacation 6,108 102,790 - - - Other accrued liabilities 17,381 - - - - Deferred revenue 464,491 - 343,786 - - Total liabilities 692,232 136,168 685,895 - - Fund balances (deficits): Reserved for: Encumbrances 1,543 4,049 574,113 - - Unreserved - undesignated 2,700,462 1,119,534 6,365,207 627,863 - Total fund balances (deficits) 2,702,005 1,123,583 6,939,320 627,863 - Total liabilities and fund balances (deficits) 3,394,237 $ 1,259,751 $ 7,625,215 $ 627,863 $ - $ Nonmajor Special Revenue Funds December 31, 2007 Augusta, Georgia Combining Balance Sheet 96 ---PAGE BREAK--- Hotel/Motel Tax and Housing and Urban Federal State Special Promotion/ Neighborhood Development Drug Drug Assessment Tourism Development Action Grant Fund Fund 355,596 $ 318,558 $ 373,446 $ 17,932 $ 632,038 $ 1,108,825 $ - - - - - - 202,004 4,940 143,350 1,900 - 500 - - 3,544,387 157,060 - - - - 179,433 - - - 557,600 $ 323,498 $ 4,240,616 $ 176,892 $ 632,038 $ 1,109,325 $ 235,482 $ 323,497 $ 196,389 $ - $ 50,028 $ 27,489 $ - - 338,862 - - - 9,417 - 38,864 - - - - - - - - - 147,890 - 3,544,386 - - - 392,789 323,497 4,118,501 - 50,028 27,489 83 - 1,444 - 61,915 150 164,728 1 120,671 176,892 520,095 1,081,686 164,811 1 122,115 176,892 582,010 1,081,836 557,600 $ 323,498 $ 4,240,616 $ 176,892 $ 632,038 $ 1,109,325 $ 97 ---PAGE BREAK--- 5% Victim's Supplemental Weed and Law Crime Juvenille Building Seed Federal Library Assistance Services Inspection Grant Assets Cash and temporary investments - $ 219,776 $ 32,648 $ 1,070,889 $ 12,661 $ Receivables (net of allowance for doubtful accounts) Taxes - - - - - Accounts 35 56,792 345 410 - Note - - - - - Due from other funds - - - - - Total assets 35 $ 276,568 $ 32,993 $ 1,071,299 $ 12,661 $ Liabilities and fund balances (deficits) Liabilities: Accounts payable 16 $ 324 $ 300 $ 5,615 $ - $ Due to other funds 19 - - - - Accrued salaries and vacation - 9,908 - 30,920 - Other accrued liabilities - 127 - - - Deferred revenue - - - - - Total liabilities 35 10,359 300 36,535 - Fund balances (deficits): Reserved for: Encumbrances - 130 - 21,226 742 Unreserved - undesignated - 266,079 32,693 1,013,538 11,919 Total fund balances (deficits) - 266,209 32,693 1,034,764 12,661 Total liabilities and fund balances (deficits) 35 $ 276,568 $ 32,993 $ 1,071,299 $ 12,661 $ Nonmajor Special Revenue Funds - Continued December 31, 2007 Augusta, Georgia Combining Balance Sheet 98 ---PAGE BREAK--- Total Nonmajor Wireless Perpetual Land Bank Downtown Canine NPDES Special Revenue Phase Care - I Authority Development Forfeitures Permit Fees Funds 787,724 $ 399,120 $ 20,224 $ - $ 18,346 $ 90,316 $ 16,309,982 $ - - - - - - 847,638 - 5,172 38,260 175,344 - 1,038 1,837,635 - - - - - - 3,701,447 - - - - - - 179,433 787,724 $ 404,292 $ 58,484 $ 175,344 $ 18,346 $ 91,354 $ 22,876,135 $ 26,128 $ 1,712 $ - $ 186 $ - $ - $ 1,267,472 $ - - - 202,293 - - 720,607 - - - - - - 198,007 - - - - - - 17,508 - - - 95,527 - - 4,596,080 26,128 1,712 - 298,006 - - 6,799,674 - 4,131 - - - - 669,526 761,596 398,449 58,484 (122,662) 18,346 91,354 15,406,935 761,596 402,580 58,484 (122,662) 18,346 91,354 16,076,461 787,724 $ 404,292 $ 58,484 $ 175,344 $ 18,346 $ 91,354 $ 22,876,135 $ 99 ---PAGE BREAK--- Emergency Urban Services Telephone Capital Law Occupational District System Outlay Enforcement Tax Revenues Taxes - property 7,601,005 $ - $ 3,566,186 $ - $ - $ Taxes - other than property 8,905,059 - - - - Licenses and permits - - - - 2,305,262 Use of money and property 217,294 28,419 6,500 34,387 78,123 Charges for current services 320,515 3,039,669 - 580,934 - Fines and forfeitures - - - - - Intergovernmental - - 546,384 - - Other - - 15,182 - 1,788 Total revenues 17,043,873 3,068,088 4,134,252 615,321 2,385,173 Expenditures Current: General government 1,475,249 388 320,012 - 5,088 Judicial - - 112,344 - - Public safety - 3,250,805 - 299,961 - Public works 432,535 - 273,833 - - Culture and recreation 3,337 - 14,241 - - Housing and development - - - - - Capital outlay - 150,822 1,582,572 122,019 - Debt service - - 1,671,957 - - Total expenditures 1,911,121 3,402,015 3,974,959 421,980 5,088 Excess (deficiency) of revenues over (under) expenditures 15,132,752 (333,927) 159,293 193,341 2,380,085 Other financing sources (uses) Transfers in - 246,241 540,000 - - Transfers (out) (11,063,859) - - - (2,380,085) Transfers in (out) between nonmajor funds (2,744,075) 399,500 1,200,000 - - Total other financing sources (uses) (13,807,934) 645,741 1,740,000 - (2,380,085) Net change in fund balances (deficits) 1,324,818 311,814 1,899,293 193,341 - Fund balance (deficits) - beginning 1,377,187 811,769 5,040,027 434,522 - Fund balance (deficits) - ending 2,702,005 $ 1,123,583 $ 6,939,320 $ 627,863 $ - $ Augusta, Georgia Combining Statement of Revenues, Expenditures and Changes in Fund Balances Nonmajor Special Revenue Funds Year Ended December 31, 2007 100 ---PAGE BREAK--- Hotel/Motel Tax and Housing and Urban Federal State Special Promotion/ Neighborhood Development Drug Drug Assessment Tourism Development Action Grant Fund Fund - $ - $ - $ - $ - $ - $ - 4,420,564 - - - - - - - - - - - - - 11,182 36,191 52,446 1,308,561 - - - - - - - - - 793,106 149,566 - - 4,594,781 - - - - - 398,409 151 - - 1,308,561 4,420,564 4,993,190 11,333 829,297 202,012 44,143 - 373,414 7,704 - - - - - - - - - - - - 703,349 81,325 3,253,085 - - - - - - 4,420,563 - - - - - - 5,554,087 86,380 - - 97,299 - - - 60,673 47,559 - - 2,500,000 - - - 3,394,527 4,420,563 8,427,501 94,084 764,022 128,884 (2,085,966) 1 (3,434,311) (82,751) 65,275 73,128 500,000 - - - - - - - - - - - 1,641,000 - 1,029,433 - - - 2,141,000 - 1,029,433 - - - 55,034 1 (2,404,878) (82,751) 65,275 73,128 109,777 - 2,526,993 259,643 516,735 1,008,708 164,811 $ 1 $ 122,115 $ 176,892 $ 582,010 $ 1,081,836 $ 101 ---PAGE BREAK--- Augusta, Georgia Combining Statement of Revenues, Expenditures and Changes in Fund Balances - Continued Nonmajor Special Revenue Funds Year Ended December 31, 2007 5% Victim's Supplemental Weed and Law Crime Juvenille Building Seed Federal Library Assistance Services Inspection Grant Revenues Taxes - property - $ - $ - $ - $ - $ Taxes - other than property - - - - - Licenses and permits - - - 950,913 - Use of money and property - 10,281 2,124 50,961 - Charges for current services - - 17,750 - - Fines and forfeitures - 331,224 - - - Intergovernmental - - - - - Other - 381 - - - Total revenues - 341,886 19,874 1,001,874 - Expenditures Current: General government - 7,356 1,500 24,768 - Judicial - 274,010 6,143 - - Public safety - - - - - Public works - - - - - Culture and recreation - - - - - Housing and development - - - 853,977 - Capital outlay - - - 21,029 - Debt service - - - - - Total expenditures - 281,366 7,643 899,774 - Excess (deficiency) of revenues over (under) expenditures - 60,520 12,231 102,100 - Other financing sources (uses) Transfers in - - - - - Transfers (out) - - - - - Transfers in (out) between nonmajor funds - - - - - Total other financing sources (uses) - - - - - Net change in fund balances (deficits) - 60,520 12,231 102,100 - Fund balance (deficits) - beginning - 205,689 20,462 932,664 12,661 Fund balance (deficits) - ending - $ 266,209 $ 32,693 $ 1,034,764 $ 12,661 $ 102 ---PAGE BREAK--- Total Nonmajor Wireless Perpetual Landbank Downtown Canine NPDES Special Revenue Phase Care - I Authority Development Forefeitures Permit Fees Funds - $ - $ - $ 75 $ - $ - $ 11,167,266 - - - 479,443 - - 13,805,066 - - - - - 32,725 3,288,900 36,106 50,889 59,634 - 815 4,535 679,887 586,659 - - - - - 5,854,088 - - - - 433 - 1,274,329 - - - - - - 5,141,165 - - - - - - 415,911 622,765 50,889 59,634 479,518 1,248 37,260 41,626,612 1,692 - - 632,988 - - 2,894,302 - - - - - - 392,497 282,315 - - - - - 4,617,755 - - - - - 18,398 3,977,851 - 56,361 - - - - 4,494,502 - - 132,142 154,790 - - 6,781,376 - 20,903 - - - - 2,102,876 - - - 27,050 - - 4,199,007 284,007 77,264 132,142 814,828 - 18,398 29,460,166 338,758 (26,375) (72,508) (335,310) 1,248 18,862 12,166,446 - - - - - - 1,286,241 - - - - - - (13,443,944) (399,500) - - 347,080 - - 1,473,438 (399,500) - - 347,080 - - (10,684,265) (60,742) (26,375) (72,508) 11,770 1,248 18,862 1,482,181 822,338 428,955 130,992 (134,432) 17,098 72,492 14,594,280 761,596 $ 402,580 $ 58,484 $ (122,662) $ 18,346 $ 91,354 $ 16,076,461 $ 103 ---PAGE BREAK--- Variance with Final Budget - Amended Positive 2006 Budget Actual (Negative) Actual Revenues Taxes - property 6,964,743 $ 7,601,005 $ 636,262 $ 6,539,134 $ Taxes - other than property 8,586,690 8,905,059 318,369 8,716,106 Licenses and permits - - - 592 Use of money and property 77,940 217,294 139,354 34,063 Charges for current services 313,200 320,515 7,315 264,057 Total revenues 15,942,573 17,043,873 1,101,300 15,553,952 Expenditures Current: General government 1,489,900 1,475,249 14,651 1,665,740 Public works 453,930 432,535 21,395 438,934 Culture and recreation 3,400 3,337 63 - Housing and development - - - 27,000 Total expenditures 1,947,230 1,911,121 36,109 2,131,674 Excess (deficiency) of revenues over (under) expenditures 13,995,343 15,132,752 1,137,409 13,422,278 Other financing sources (uses) Transfers in 80,627 - (80,627) - Transfers (out) (11,449,410) (11,063,859) 385,551 (10,962,278) Transfers in (out) between nonmajor funds (2,626,560) (2,744,075) (117,515) (2,576,364) Total other financing sources (uses) (13,995,343) (13,807,934) 187,409 (13,538,642) Net change in fund balances - $ 1,324,818 1,324,818 $ (116,364) Fund balance - beginning 1,377,187 1,493,551 Fund balance - ending 2,702,005 $ 1,377,187 $ Year Ended December 31, 2007 With comparative amounts for December 31, 2006 Augusta, Georgia Urban Services District Fund Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual Nonmajor Special Revenue Funds 104 ---PAGE BREAK--- Variance with Final Budget - Amended Positive 2006 Budget Actual (Negative) Actual Revenues Use of money and property 1,000 $ 28,419 $ 27,419 $ 38,532 $ Charges for current services 2,877,270 3,039,669 162,399 2,959,077 Total revenues 2,878,270 3,068,088 189,818 3,000,309 Expenditures Current: General government 254,120 388 253,732 243,119 Public safety 3,567,309 3,250,805 316,504 3,005,922 Capital outlay 194,341 150,822 43,519 29,471 Total expenditures 4,015,770 3,402,015 613,755 3,278,512 Excess (deficiency) of revenues over (under) expenditures (1,137,500) (333,927) 803,573 (278,203) Other financing sources (uses) Transfers in 663,000 246,241 (416,759) - Transfers (out) (25,000) - 25,000 - Transfers in (out) between nonmajor funds 499,500 399,500 (100,000) 489,050 Total other financing sources (uses) 1,137,500 645,741 (491,759) 489,050 Net change in fund balances - $ 311,814 311,814 $ 210,847 Fund balance (deficit) - beginning 811,769 600,922 Fund balance (deficit) - ending 1,123,583 $ 811,769 $ Augusta, Georgia Emergency Telephone System Fund With comparative amounts for December 31, 2006 Schedule of Revenues, Expenditures and Changes in Fund Balance (Deficit) - Budget and Actual Nonmajor Special Revenue Funds Year Ended December 31, 2007 105 ---PAGE BREAK--- Variance with Final Budget - Amended Positive 2006 Budget Actual (Negative) Actual Revenues Taxes - property 3,387,664 $ 3,566,186 $ 178,522 $ 3,212,127 $ Use of money and property - 6,500 6,500 12,300 Charges for current services - - - 39 Intergovernmental 545,050 546,384 1,334 - Other - 15,182 15,182 - Total revenues 3,932,714 4,134,252 201,538 3,224,466 Expenditures Current: General government 1,984,538 320,012 1,664,526 352,612 Judicial 147,326 112,344 34,982 42,873 Public safety - - - - Public works 418,106 273,833 144,273 25,578 Culture and recreation 74,228 14,241 59,987 32,006 Capital outlay 3,749,568 1,582,572 2,166,996 596,523 Debt service 1,574,115 1,671,957 (97,842) 1,124,088 Total expenditures 7,947,881 3,974,959 3,972,922 2,173,680 Excess (deficiency) of revenues over (under) expenditures (4,015,167) 159,293 4,174,460 1,050,786 Other financing sources (uses) Transfers in 2,481,167 540,000 (1,941,167) - Transfers in (out) between nonmajor funds 1,534,000 1,200,000 (334,000) 333,996 Total other financing sources (uses) 4,015,167 1,740,000 (2,275,167) 333,996 Net change in fund balances - $ 1,899,293 1,899,293 $ 1,384,782 Fund balance - beginning 5,040,027 3,655,245 Fund balance - ending 6,939,320 $ 5,040,027 $ Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual With comparative amounts for December 31, 2006 Augusta, Georgia Capital Outlay Fund Nonmajor Special Revenue Funds Year Ended December 31, 2007 106 ---PAGE BREAK--- Variance with Final Budget - Amended Positive 2006 Budget Actual (Negative) Actual Revenues Use of money and property - $ 34,387 $ 34,387 $ 19,138 $ Charges for current services - 580,934 580,934 73,933 Total revenues - 615,321 615,321 93,071 Expenditures Current: Public safety 300,000 299,961 39 17,469 Capital outlay 125,000 122,019 2,981 24,859 Total expenditures 425,000 421,980 3,020 42,328 Excess (deficiency) of revenues over (under) expenditures (425,000) 193,341 618,341 50,743 Other financing sources (uses) Transfers in 425,000 - (425,000) - Total other financing sources (uses) 425,000 - (425,000) - Net change in fund balances - $ 193,341 193,341 $ 50,743 Fund balance - beginning 434,522 383,779 Fund balance - ending 627,863 $ 434,522 $ Law Enforcement Fund Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual Nonmajor Special Revenue Funds With comparative amounts for December 31, 2006 Year Ended December 31, 2007 Augusta, Georgia 107 ---PAGE BREAK--- Variance with Final Budget - Amended Positive 2006 Budget Actual (Negative) Actual Revenues Taxes - other than property - $ - $ - $ 1,007 $ Licenses and permits 2,000,000 2,305,262 305,262 2,052,714 Use of money and property 10,480 78,123 67,643 36,324 Other - 1,788 1,788 2,251 Total revenues 2,010,480 2,385,173 374,693 2,092,296 Expenditures Current: General government 10,480 5,088 5,392 10,476 Total expenditures 10,480 5,088 5,392 10,476 Excess (deficiency) of revenues over (under) expenditures 2,000,000 2,380,085 380,085 2,081,820 Other financing sources (uses) Transfers (out) (2,000,000) (2,380,085) (380,085) (2,081,820) Total other financing sources (uses) (2,000,000) (2,380,085) (380,085) (2,081,820) Net change in fund balances - $ - - $ - Fund balance - beginning - - Fund balance - ending - $ - $ Occupation Tax Fund Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual Nonmajor Special Revenue Funds Year Ended December 31, 2007 With comparative amounts for December 31, 2006 Augusta, Georgia 108 ---PAGE BREAK--- Variance with Final Budget - Amended Positive 2006 Budget Actual (Negative) Actual Revenues Charges for current services 1,395,000 $ 1,308,561 $ (86,439) $ 1,319,604 $ Total revenues 1,395,000 1,308,561 (86,439) 1,319,604 Expenditures Current: General government 8,710 44,143 (35,433) 10,610 Public works 3,427,290 3,253,085 174,205 3,497,643 Capital outlay 100,000 97,299 2,701 64,865 Total expenditures 3,536,000 3,394,527 141,473 3,573,118 Excess (deficiency) of revenues over (under) expenditures (2,141,000) (2,085,966) 55,034 (2,253,514) Other financing sources (uses) Transfers in 500,000 500,000 - 325,104 Transfers in (out) between nonmajor funds 1,641,000 1,641,000 - 1,641,492 Total other financing sources (uses) 2,141,000 2,141,000 - 1,966,596 Net change in fund balances - $ 55,034 55,034 $ (286,918) Fund balance - beginning 109,777 396,695 Fund balance (deficit) - ending 164,811 $ 109,777 $ Year Ended December 31, 2007 With comparative amounts for December 31, 2006 Schedule of Revenues, Expenditures and Changes in Fund Balance (Deficit) - Budget and Actual Nonmajor Special Revenue Funds Augusta, Georgia Special Assessment Fund 109 ---PAGE BREAK--- Variance with Final Budget - Amended Positive 2006 Budget Actual (Negative) Actual Revenues Taxes - other than property 4,423,000 $ 4,420,564 $ (2,436) $ 4,027,930 $ Total revenues 4,423,000 4,420,564 (2,436) 4,027,930 Expenditures Current: Culture and recreation 4,423,000 4,420,563 2,437 4,027,930 Total expenditures 4,423,000 4,420,563 2,437 4,027,930 Excess (deficiency) of revenues over (under) expenditures - 1 1 - Net change in fund balances - $ 1 1 $ - Fund balance - beginning - - Fund balance - ending 1 $ - $ Augusta, Georgia Hotel/Motel Tax and Promotion/Tourism Fund Nonmajor Special Revenue Funds Year Ended December 31, 2007 With comparative amounts for December 31, 2006 Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual 110 ---PAGE BREAK--- Variance with Final Budget - Amended Positive 2006 Budget Actual (Negative) Actual Revenues Use of money and property - $ - $ - $ 80 $ Intergovernmental 4,756,746 4,594,781 (161,965) 5,847,412 Other 74,484 398,409 323,925 3,058,063 Total revenues 4,831,230 4,993,190 161,960 8,905,555 Expenditures Current: General government 160,210 373,414 (213,204) 151,482 Housing and development 4,875,500 5,554,087 (678,587) 6,604,310 Debt service - 2,500,000 (2,500,000) 126,474 Total expenditures 5,035,710 8,427,501 (3,391,791) 6,882,266 Excess (deficiency) of revenues over (under) expenditures (204,480) (3,434,311) (3,229,831) 2,023,289 Other financing sources (uses) Transfers (out) - - - (15,700) Transfers in (out) between nonmajor funds 204,480 1,029,433 824,953 245,004 Total other financing sources (uses) 204,480 1,029,433 824,953 229,304 Net change in fund balances - $ (2,404,878) (2,404,878) $ 2,252,593 Fund balance - beginning 2,526,993 274,400 Fund balance - ending 122,115 $ 2,526,993 $ Augusta, Georgia Housing and Neighborhood Development Fund Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual Nonmajor Special Revenue Funds Year Ended December 31, 2007 With comparative amounts for December 31, 2006 111 ---PAGE BREAK--- Variance with Final Budget - Amended Positive 2006 Budget Actual (Negative) Actual Revenues Use of money and property 11,500 $ 11,182 $ (318) $ 13,146 $ Other - 151 151 - Total revenues 11,500 11,333 (167) 13,146 Expenditures Current: General government 4,910 7,704 (2,794) 4,908 Housing and development 105,000 86,380 18,620 20,199 Total expenditures 109,910 94,084 15,826 25,107 Excess (deficiency) of revenues over (under) expenditures (98,410) (82,751) 15,659 (11,961) Other financing sources (uses) Transfers in 98,410 - (98,410) - Transfers in (out) between nonmajor funds - - - 6,396 Total other financing sources (uses) 98,410 - (98,410) 6,396 Net change in fund balances - $ (82,751) (82,751) $ (5,565) Fund balance - beginning 259,643 265,208 Fund balance - ending 176,892 $ 259,643 $ Urban Development Action Grant Fund (UDAG) Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual Nonmajor Special Revenue Funds Year Ended December 31, 2007 Augusta, Georgia With comparative amounts for December 31, 2006 112 ---PAGE BREAK--- Variance with Final Budget - Amended Positive 2006 Budget Actual (Negative) Actual Revenues Use of money and property - $ 36,191 $ 36,191 $ 127,451 $ Fines and forfeitures 727,980 793,106 65,126 454,366 Total revenues 727,980 829,297 101,317 581,817 Expenditures Current: Public safety 687,040 703,349 (16,309) - Capital outlay 40,940 60,673 (19,733) 311,672 Total expenditures 727,980 764,022 (36,042) 311,672 Excess (deficiency) of revenues over (under) expenditures - 65,275 65,275 270,145 Net change in fund balances - $ 65,275 65,275 $ 270,145 Fund balance - beginning 516,735 246,590 Fund balance - ending 582,010 $ 516,735 $ Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual Nonmajor Special Revenue Funds With comparative amounts for December 31, 2006 Augusta, Georgia Federal Drug Fund Year Ended December 31, 2007 113 ---PAGE BREAK--- Variance with Final Budget - Amended Positive 2006 Budget Actual (Negative) Actual Revenues Use of money and property - $ 52,446 $ 52,446 $ 49,931 $ Fines and forfeitures 600,000 149,566 (450,434) 506,193 Intergovernmental - - - 50,373 Total revenues 600,000 202,012 (397,988) 606,497 Expenditures Current: Public safety 444,435 81,325 363,110 65,557 Capital outlay 155,565 47,559 108,006 370,227 Total expenditures 600,000 128,884 471,116 435,784 Excess (deficiency) of revenues over (under) expenditures - 73,128 73,128 170,713 Net change in fund balances - $ 73,128 73,128 $ 170,713 Fund balance - beginning 1,008,708 837,995 Fund balance - ending 1,081,836 $ 1,008,708 $ With comparative amounts for December 31, 2006 Augusta, Georgia State Drug Fund Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual Nonmajor Special Revenue Funds Year Ended December 31, 2007 114 ---PAGE BREAK--- Variance with Final Budget - Amended Positive 2006 Budget Actual (Negative) Actual Revenues Use of money and property 2,950 $ 10,281 $ 7,331 $ 8,061 $ Fines and forfeitures 333,000 331,224 (1,776) 256,818 Other - 381 381 - Total revenues 335,950 341,886 5,936 264,879 Expenditures Current: General government 10,850 7,356 3,494 10,848 Judicial 325,100 274,010 51,090 281,698 Total expenditures 335,950 281,366 54,584 292,546 Excess (deficiency) of revenues over (under) expenditures - 60,520 60,520 (27,667) Net change in fund balances - $ 60,520 60,520 $ (27,667) Fund balance - beginning 205,689 233,356 Fund balance - ending 266,209 $ 205,689 $ Year Ended December 31, 2007 With comparative amounts for December 31, 2006 Augusta, Georgia 5% Victim's Crime Assistance Fund Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual Nonmajor Special Revenue Funds 115 ---PAGE BREAK--- Variance with Final Budget - Amended Positive 2006 Budget Actual (Negative) Actual Revenues Use of money and property 500 $ 2,124 $ 1,624 $ 887 $ Charges for current services 10,500 17,750 7,250 7,000 Total revenues 11,000 19,874 8,874 7,887 Expenditures Current: General government 1,090 1,500 (410) 1,092 Judicial 20,000 6,143 13,857 6,157 Total expenditures 21,090 7,643 13,447 7,249 Excess (deficiency) of revenues over (under) expenditures (10,090) 12,231 22,321 638 Other financing sources (uses) Transfers in 10,090 - (10,090) - Total other financing sources (uses) 10,090 - (10,090) - Net change in fund balances - $ 12,231 12,231 $ 638 Fund balance - beginning 20,462 19,824 Fund balance - ending 32,693 $ 20,462 $ With comparative amounts for December 31, 2006 Augusta, Georgia Supplemental Juvenile Service Fund Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual Nonmajor Special Revenue Funds Year Ended December 31, 2007 116 ---PAGE BREAK--- Variance with Final Budget - Amended Positive 2006 Budget Actual (Negative) Actual Revenues Licenses and permits 1,083,220 $ 950,913 $ (132,307) $ 1,105,713 $ Use of money and property - 50,961 50,961 41,492 Charges for current services - - - 4,138 Total revenues 1,083,220 1,001,874 (81,346) 1,151,343 Expenditures Current: General government 30,740 24,768 5,972 30,744 Housing and development 885,480 853,977 31,503 801,473 Capital outlay 167,000 21,029 145,971 - Total expenditures 1,083,220 899,774 183,446 832,217 Excess (deficiency) of revenues over (under) expenditures - 102,100 102,100 319,126 Other financing sources (uses) Transfers (out) - - - (15,700) Total other financing sources (uses) - - - (15,700) Net change in fund balances - $ 102,100 102,100 $ 303,426 Fund balance - beginning 932,664 629,238 Fund balance - ending 1,034,764 $ 932,664 $ Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual Nonmajor Special Revenue Funds Year Ended December 31, 2007 With comparative amounts for December 31, 2006 Augusta, Georgia Building Inspection 117 ---PAGE BREAK--- Variance with Final Budget - Amended Positive 2006 Budget Actual (Negative) Actual Revenues Use of money and property - $ - $ - $ 1,594 $ Intergovernmental - - - 28,953 Other - - - 1,564 Total revenues - - - 32,111 Expenditures Current: General government (111,360) - (111,360) 9,504 Public safety 111,360 - 111,360 122,584 Total expenditures - - - 132,088 Excess (deficiency) of revenues over (under) expenditures - - - (99,977) Other financing sources (uses) Transfers in - - - 100,000 Total other financing sources (uses) - - - 100,000 Net change in fund balances - $ - - $ 23 Fund balance - beginning 12,661 12,638 Fund balance - ending 12,661 $ 12,661 $ Weed and Seed Federal Grant Fund Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual Year Ended December 31, 2007 With comparative amounts for December 31, 2006 Nonmajor Special Revenue Funds Augusta, Georgia 118 ---PAGE BREAK--- Variance with Final Budget - Amended Positive 2006 Budget Actual (Negative) Actual Revenues Licenses and permits - $ - $ - $ 891 $ Use of money and property 5,000 36,106 31,106 38,767 Charges for current services 446,280 586,659 140,379 678,174 Total revenues 451,280 622,765 171,485 717,832 Expenditures Current: General government 1,280 1,692 (412) 1,283 Public safety 450,000 282,315 167,685 321,533 Total expenditures 451,280 284,007 167,273 322,816 Excess (deficiency) of revenues over (under) expenditures - 338,758 338,758 395,016 Other financing sources (uses) Transfers in 399,500 - (399,500) - Transfers in (out) between nonmajor funds (399,500) (399,500) - (489,050) Total other financing sources (uses) - (399,500) (399,500) (489,050) Net change in fund balances - $ (60,742) (60,742) $ (94,034) Fund balance - beginning 822,338 916,372 Fund balance - ending 761,596 $ 822,338 $ Year Ended December 31, 2007 With comparative amounts for December 31, 2006 Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual Nonmajor Special Revenue Funds Augusta, Georgia Wireless Phase Fund 119 ---PAGE BREAK--- Variance with Final Budget - Amended Positive 2006 Budget Actual (Negative) Actual Revenues Use of money and property 25,000 $ 50,889 $ 25,889 $ 52,314 $ Total revenues 25,000 50,889 25,889 52,314 Expenditures Current: Culture and recreation 69,800 56,361 13,439 51,705 Capital outlay 26,000 20,903 5,097 - Total expenditures 95,800 77,264 18,536 51,705 Excess (deficiency) of revenues over (under) expenditures (70,800) (26,375) 44,425 609 Other financing sources (uses) Transfers in 70,800 - (70,800) - Transfers in (out) between nonmajor funds - - - (60,817) Total other financing sources (uses) 70,800 - (70,800) (60,817) Net change in fund balances - $ (26,375) (26,375) $ (60,208) Fund balance - beginning 428,955 489,163 Fund balance - ending 402,580 $ 428,955 $ Year Ended December 31, 2007 Augusta, Georgia Perpetual Care - I Fund Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual Nonmajor Special Revenue Funds With comparative amounts for December 31, 2006 120 ---PAGE BREAK--- Variance with Final Budget - Amended Positive 2006 Budget Actual (Negative) Actual Revenues Use of money and property - $ 59,634 $ 59,634 $ 6,301 $ Total revenues - 59,634 59,634 6,301 Expenditures Current: Culture and recreation 7,130 - 7,130 6,001 Housing and development - 132,142 (132,142) 777 Total expenditures 7,130 132,142 (125,012) 6,778 Excess (deficiency) of revenues over (under) expenditures (7,130) (72,508) (65,378) (477) Net change in fund balances - $ (72,508) (72,508) $ (477) Fund balance - beginning 130,992 131,469 Fund balance - ending 58,484 $ 130,992 $ Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual Nonmajor Special Revenue Funds Year Ended December 31, 2007 With comparative amounts for December 31, 2006 Augusta, Georgia Landbank Authority Fund 121 ---PAGE BREAK--- Variance with Final Budget - Amended Positive 2006 Budget Actual (Negative) Actual Revenues Taxes - property - $ 75 $ 75 $ - $ Taxes - other than property 450,000 $ 479,443 $ 29,443 $ 472,631 $ Total revenues 450,000 479,518 29,518 472,631 Expenditures Current: General government 632,290 632,988 (698) 621,691 Housing and development 154,790 154,790 - 154,791 Debt service 10,000 27,050 (17,050) 20,423 Total expenditures 797,080 814,828 (17,748) 796,905 Excess (deficiency) of revenues over (under) expenditures (347,080) (335,310) 11,770 (324,274) Other financing sources (uses) Transfers in (out) between nonmajor funds 347,080 347,080 - 349,476 Total other financing sources (uses) 347,080 347,080 - 349,476 Net change in fund balances (deficit) - $ 11,770 11,770 $ 25,202 Fund balance (deficit) - beginning (134,432) (159,634) Fund balance (deficit) - ending (122,662) $ (134,432) $ With comparative amounts for December 31, 2006 Year Ended December 31, 2007 Augusta, Georgia Downtown Development Fund Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual Nonmajor Special Revenue Funds 122 ---PAGE BREAK--- Variance with Final Budget - Amended Positive 2006 Budget Actual (Negative) Actual Revenues Use of money and property - $ 815 $ 815 $ 725 $ Fines and forfeitures 10,000 433 (9,567) 1,022 Total revenues 10,000 1,248 (8,752) 1,747 Expenditures Current: Public safety 10,000 - 10,000 - Total expenditures 10,000 - 10,000 - Excess (deficiency) of revenues over (under) expenditures - 1,248 1,248 1,747 Net change in fund balances - $ 1,248 1,248 $ 1,747 Fund balance - beginning 17,098 15,351 Fund balance - ending 18,346 $ 17,098 $ Augusta, Georgia Canine Forfeitures Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual Nonmajor Special Revenue Funds With comparative amounts for December 31, 2006 Year Ended December 31, 2007 123 ---PAGE BREAK--- Variance with Final Budget - Amended Positive 2006 Budget Actual (Negative) Actual Revenues Licenses and permits 35,000 $ 32,725 $ (2,275) $ 35,126 $ Use of money and property 1,400 4,535 3,135 3,663 Total revenues 36,400 37,260 860 38,789 Expenditures Current: Public works 36,400 18,398 18,002 27,026 Total expenditures 36,400 18,398 18,002 27,026 Excess (deficiency) of revenues over (under) expenditures - 18,862 18,862 11,763 Net change in fund balances - $ 18,862 18,862 $ 11,763 Fund balance - beginning 72,492 60,729 Fund balance - ending 91,354 $ 72,492 $ Augusta, Georgia NPDES Permit Fees Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual Nonmajor Special Revenue Funds Year Ended December 31, 2007 With comparative amounts for December 31, 2006 124 ---PAGE BREAK--- Augusta, Georgia Combining Balance Sheet Nonmajor Debt Service Funds December 31, 2007 GO Sales Tax Total Nonmajor Urban 2006 Bonds Debt Service Debt Service Debt Service Debt Service Funds Assets Cash and temporary investments - $ - $ 10,194 $ 10,194 $ Total assets - $ - $ 10,194 $ 10,194 $ Liabilities and fund balances Fund balances: Unreserved - undesignated - - 10,194 10,194 Total fund balances - - 10,194 10,194 Total liabilities and fund balances - $ - $ 10,194 $ 10,194 $ 125 ---PAGE BREAK--- Augusta, Georgia Nonmajor Debt Service Funds Year Ended December 31, 2007 2006 GO Sales Total Nonmajor Urban Tax Bonds Debt Service Debt Service Debt Service Debt Service Funds Revenues Use of money and property - $ - $ 10,743 $ 10,743 $ Total revenues - - 10,743 10,743 Expenditures Debt service - - 9,727,939 9,727,939 Total expenditures - - 9,727,939 9,727,939 Excess (deficiency) of revenues over (under) expenditures - - (9,717,196) (9,717,196) Other financing sources (uses) Transfers in - - 9,727,390 9,727,390 Transfers (out) (2,913) - - (2,913) Transfers in (out) between nonmajor funds - (273,438) - (273,438) Total other financing sources (uses) (2,913) (273,438) 9,727,390 9,451,039 Net change in fund balances (2,913) (273,438) 10,194 (266,157) Fund balance - beginning 2,913 273,438 - 276,351 Fund balance - ending - $ - $ 10,194 $ 10,194 $ Combining Statement of Revenues, Expenditures and Changes in Fund Balances 126 ---PAGE BREAK--- Variance with Final Budget - Positive 2006 Budget Actual (Negative) Actual Revenues Taxes - property - $ - $ - $ 2,902 $ Use of money and property - - - 17,774 Total revenues - - - 20,676 Excess (deficiency) of revenues over (under) expenditures - - - 20,676 Other financing sources (uses) Transfers (out) - (2,913) (2,913) (765,000) Total other financing sources (uses) - (2,913) (2,913) (765,000) Net change in fund balances - $ (2,913) (2,913) $ (744,324) Fund balance - beginning 2,913 747,237 Fund balance - ending - $ 2,913 $ Year Ended December 31, 2007 Augusta, Georgia Debt Service Fund Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual Nonmajor Debt Service Funds With comparative amounts for December 31, 2006 127 ---PAGE BREAK--- Variance with Final Budget - Positive 2006 Budget Actual (Negative) Actual Revenues Taxes - property - $ - $ - $ 3,302 $ Use of money and property - - - 11,193 Total revenues - - - 14,495 Excess (deficiency) of revenues over (under) expenditures - - - 14,495 Other financing sources (uses) Transfers in (out) between nonmajor funds - (273,438) (273,438) - Total other financing sources (uses) - (273,438) (273,438) - Net change in fund balances - $ (273,438) (273,438) $ 14,495 Fund balance - beginning 273,438 258,943 Fund balance - ending - $ 273,438 $ Year Ended December 31, 2007 Augusta, Georgia Urban Debt Service Fund With comparative amounts for December 31, 2006 Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual Nonmajor Debt Service Funds 128 ---PAGE BREAK--- Variance with Final Budget - Positive 2006 Budget Actual (Negative) Actual Revenues Use of money and property - $ 10,743 $ 10,743 $ - $ Total revenues - 10,743 10,743 - Expenditures Debt service 9,727,390 9,727,939 (549) - Total expenditures 9,727,390 9,727,939 (549) - Excess (deficiency) of revenues over (under) expenditures (9,727,390) (9,717,196) 10,194 - Other financing sources (uses) Transfers in 9,727,390 9,727,390 - - Total other financing sources (uses) 9,727,390 9,727,390 - - Net change in fund balances - $ 10,194 10,194 $ - Fund balance - beginning - - Fund balance - ending 10,194 $ - $ Year Ended December 31, 2007 With comparative amounts for December 31, 2006 Augusta, Georgia 2006 GO Sales Tax Bonds Debt Service Fund Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual Nonmajor Debt Service Funds 129 ---PAGE BREAK--- Total Nonmajor Community Special Sales Special Sales Capital Project Development Tax Phase I Tax Phase II Funds Assets Cash and temporary investments 137,697 $ - $ 7,228,843 $ 7,366,540 $ Receivables (net of allowance for doubtful accounts) Interest - - 121,006 121,006 Total assets 137,697 $ - $ 7,349,849 $ 7,487,546 $ Liabilities and fund balances Liabilities: Accounts payable - $ - $ 400 $ 400 $ Total liabilities - - 400 400 Fund balances: Encumbrances - - 751,294 751,294 Project maintenance - - 1,596,460 1,596,460 Unreserved - undesignated 137,697 - 5,001,695 5,139,392 Total fund balances 137,697 - 7,349,449 7,487,146 Total liabilities and fund balances 137,697 $ - $ 7,349,849 $ 7,487,546 $ Augusta, Georgia Combining Balance Sheet Nonmajor Capital Project Funds December 31, 2007 130 ---PAGE BREAK--- Total Nonmajor Community Special Sales Special Sales Capital Project Development Tax Phase I Tax Phase II Funds Revenues Use of money and property 2,120 $ 44,029 $ 440,949 $ 487,098 $ Intergovernmental - - 3,486 3,486 Total revenues 2,120 44,029 444,435 490,584 Expenditures Current: General government - 5,713 8,844 14,557 Public safety - - 9,132 9,132 Public works - - 77,568 77,568 Capital outlay - - 682,219 682,219 Total expenditures - 5,713 777,763 783,476 Excess (deficiency) of revenues over (under) expenditures 2,120 38,316 (333,328) (292,892) Other financing sources (uses) Transfers (out) - (1,477,345) (2,000,000) (3,477,345) Transfers in (out) between nonmajor funds - (1,200,000) - (1,200,000) Total other financing sources (uses) - (2,677,345) (2,000,000) (4,677,345) Net change in fund balances 2,120 (2,639,029) (2,333,328) (4,970,237) Fund balance - beginning 135,577 2,639,029 9,682,777 12,457,383 Fund balance - ending 137,697 $ - $ 7,349,449 $ 7,487,146 $ Augusta, Georgia Combining Statement of Revenues, Expenditures and Changes in Fund Balances Nonmajor Capital Project Funds Year Ended December 31, 2007 131 ---PAGE BREAK--- 132 ---PAGE BREAK--- NONMAJOR ENTERPRISE FUNDS 133 ---PAGE BREAK--- Municipal Waste Golf Management Course Transit Assets Current assets Cash and temporary investments 27,061,935 $ 63,143 $ 856,882 $ Receivables Accounts 2,181,739 3,952 402 Interest - - - Inventory - 9,167 201,665 Total current assets 29,243,674 76,262 1,058,949 Noncurrent assets Restricted cash and investments 4,862,524 - - Deferred bond issuance costs 299,153 - - Capital assets, net 10,518,967 1,409,214 3,365,449 Total noncurrent assets 15,680,644 1,409,214 3,365,449 Total assets 44,924,318 1,485,476 4,424,398 Liabilities Current liabilities Accounts payable 994,801 18,539 39,203 Due to other funds - - - Accrued salaries and vacation 72,753 21,894 193,591 Other accrued liabilities 236,599 - - Current portion of leases payable 246,685 - - Current portion of revenue bonds payable 1,585,000 - - Total current liabilities 3,135,838 40,433 232,794 Noncurrent liabilities Closure/postclosure accrual 12,771,074 - - Revenue bonds payable 5,575,757 - - Capital leases 430,344 - - Total noncurrent liabilities 18,777,175 - - Total liabilities 21,913,013 40,433 232,794 Net assets (deficit) Invested in capital assets, net of related debt 7,541,541 1,409,214 3,365,449 Restricted 2,164 - - Unrestricted 15,467,600 35,829 826,155 Total net assets (deficit) 23,011,305 $ 1,445,043 $ 4,191,604 $ Augusta, Georgia Combining Statement of Net Assets Nonmajor Enterprise Funds December 31, 2007 134 ---PAGE BREAK--- Daniel Total Nonmajor Field Garbage Enterprise Airport Collection Funds 581,726 $ 596,976 $ 29,160,662 $ - 1,540,401 3,726,494 8,024 - 8,024 - - 210,832 589,750 2,137,377 33,106,012 - - 4,862,524 - - 299,153 1,216,727 1,879,909 18,390,266 1,216,727 1,879,909 23,551,943 1,806,477 4,017,286 56,657,955 7,495 869,895 1,929,933 1,997 - 1,997 12,667 9,488 310,393 13,500 - 250,099 - 479,977 726,662 - - 1,585,000 35,659 1,359,360 4,804,084 - - 12,771,074 - - 5,575,757 - 1,439,930 1,870,274 - 1,439,930 20,217,105 35,659 2,799,290 25,021,189 1,216,727 (39,998) 13,492,933 - - 2,164 554,091 1,257,994 18,141,669 1,770,818 $ 1,217,996 $ 31,636,766 $ 135 ---PAGE BREAK--- Municipal Waste Golf Management Course Transit Operating revenues Charges and fees 11,075,331 $ 469,960 $ 682,767 $ Total operating revenues 11,075,331 469,960 682,767 Operating expenses Personal services and employee benefits 1,029,272 250,551 2,789,113 Purchased/contracted services 560,352 49,617 112,999 Supplies 582,418 139,904 486,829 Repairs and maintenance 643,763 27,344 310,067 Interfund/interdepartmental charges 803,137 45,624 206,856 Other costs 87,996 - - Depreciation 977,888 35,168 715,842 Closure/postclosure accrual 1,246,810 - - Total operating expenses 5,931,636 548,208 4,621,706 Operating income (loss) 5,143,695 (78,248) (3,938,939) Nonoperating revenue (expense) Interest revenue 1,471,562 1,168 - Sale of property 40,800 - - Other revenue - 5,317 196,689 Intergovernmental - - 78,603 Interest expense (269,494) - (3,853) Total nonoperating revenue (expense) 1,242,868 6,485 271,439 Income (loss) before transfers 6,386,563 (71,763) (3,667,500) Transfers in - 68,899 3,734,324 Change in net assets 6,386,563 (2,864) 66,824 Total net assets (deficit) - beginning 16,624,742 1,447,907 4,124,780 Total net assets (deficit) - ending 23,011,305 $ 1,445,043 $ 4,191,604 $ Augusta, Georgia Combining Statement of Revenues, Expenses, and Changes in Fund Net Assets Nonmajor Enterprise Funds Year Ended December 31, 2007 136 ---PAGE BREAK--- Daniel Field Garbage Airport Collection Total 80,650 $ 13,348,361 $ 25,657,069 $ 80,650 13,348,361 25,657,069 29,584 193,371 4,291,891 13,587 13,423,297 14,159,852 13,815 9,325 1,232,291 23,596 - 1,004,770 14,072 33,456 1,103,145 - - 87,996 92,555 479,977 2,301,430 - - 1,246,810 187,209 14,139,426 25,428,185 (106,559) (791,065) 228,884 30,854 - 1,503,584 - - 40,800 29,770 - 231,776 20,000 - 98,603 - (157,035) (430,382) 80,624 (157,035) 1,444,381 (25,935) (948,100) 1,673,265 - 2,925,208 6,728,431 (25,935) 1,977,108 8,401,696 1,796,753 (759,112) 23,235,070 1,770,818 $ 1,217,996 $ 31,636,766 $ 137 ---PAGE BREAK--- Municipal Waste Golf Management Course Transit Operating activities Cash received from customers 10,521,568 $ 466,008 $ 762,336 $ Repayment of interfund advances - - - Cash paid to suppliers (2,845,161) (220,044) (922,182) Cash paid to employees (1,018,718) (246,011) (2,791,070) Cash paid for interfund services used (803,137) (45,624) (322,697) Net cash provided by (used in) operating activities 5,854,552 (45,671) (3,273,613) Noncapital financing activities Transfers in - 68,899 3,734,324 Operating grants - - 78,603 Interest expense on operating capital - - (3,853) Net cash provided by noncapital financing activities - 68,899 3,809,074 Capital and related financing activities Proceeds from sale of property 408,211 - - Proceeds from grants - - - Payments on bonds issued (1,540,000) - - Payments on capital leases (632,853) - - Purchase of capital assets (1,552,190) - (20,918) Interest paid on capital debt (283,472) - - Other miscellaneous income - 5,317 4 Net cash provided (used) by capital and related financing activities (3,600,304) 5,317 (20,914) Investing activities Interest received 1,471,562 1,168 - Net cash provided by investing activities 1,471,562 1,168 - Net increase (decrease) in cash and cash equivalents/investments 3,725,810 29,713 514,547 Cash and cash equivalents/investments Beginning of year 28,198,649 33,430 342,335 End of year 31,924,459 $ 63,143 $ 856,882 $ Augusta, Georgia Combining Statement of Cash Flows Nonmajor Enterprise Funds Year Ended December 31, 2007 138 ---PAGE BREAK--- Total Nonmajor Daniel Field Garbage Enterprise Airport Collection Funds 80,650 $ 13,350,970 $ 25,181,532 $ (28,400) - (28,400) (30,440) (13,139,288) (17,157,115) (29,242) (194,090) (4,279,131) (14,072) (33,456) (1,218,986) (21,504) (15,864) 2,497,900 - 2,925,208 6,728,431 - - 78,603 - (157,035) (160,888) - 2,768,173 6,646,146 - - 408,211 20,000 - 20,000 - - (1,540,000) - (479,977) (1,112,830) (36,416) - (1,609,524) - - (283,472) 29,770 - 35,091 13,354 (479,977) (4,082,524) 30,417 - 1,503,147 30,417 - 1,503,147 22,267 2,272,332 6,564,669 559,459 (1,675,356) 27,458,517 581,726 $ 596,976 $ 34,023,186 $ 139 ---PAGE BREAK--- Municipal Waste Golf Management Course Transit Reconciliation of operating income (loss) to net cash provided by (used in) operating activities Operating income (loss) 5,143,695 $ (78,248) $ (3,938,939) $ Adjustments to reconcile operating income (loss) to net cash provided by (used in) operating activities: Depreciation and amortization 977,888 35,168 715,842 Closure/post closure costs 1,246,810 - - Change in assets and liabilities Accounts receivable (553,763) (3,952) 79,569 Inventory - 573 - Accounts payable 748,010 (3,752) (12,287) Accrued salaries and vacation 10,554 4,540 (1,957) Other accrued liabilites (8,651) - - Due to other funds - - (115,841) Decrease in closure liability (1,709,991) - - Total adjustments 710,857 32,577 665,326 Net cash provided by (used in) operating activities 5,854,552 $ (45,671) $ (3,273,613) $ Reconciliation of cash and cash equivalents to the balance sheets Cash and cash equivalents in current assets 27,061,935 $ 63,143 $ 856,882 $ Restricted cash and cash equivalents included in noncurrent cash and investments 4,862,524 - - Net cash and cash equivalents 31,924,459 $ 63,143 $ 856,882 $ Year Ended December 31, 2007 Augusta, Georgia Combining Statement of Cash Flows - Continued Nonmajor Enterprise Funds 140 ---PAGE BREAK--- Total Nonmajor Daniel Field Garbage Enterprise Airport Collection Funds (106,559) $ (791,065) $ 228,884 92,555 479,977 2,301,430 - - 1,246,810 - 2,609 (475,537) - - 573 7,058 293,334 1,032,363 342 (719) 12,760 13,500 - 4,849 (28,400) - (144,241) - (1,709,991) 85,055 775,201 2,269,016 (21,504) $ (15,864) $ 2,497,900 $ 581,726 $ 596,976 $ 29,160,662 $ - - 4,862,524 581,726 $ 596,976 $ 34,023,186 $ 141 ---PAGE BREAK--- 142 ---PAGE BREAK--- INTERNAL SERVICE FUNDS 143 ---PAGE BREAK--- Risk Fleet Workers Management Operations Compensation Assets Current assets Cash and temporary investments 1,092,996 $ 174,550 $ 67,806 $ Accounts receivable 14,409 32 - Total current assets 1,107,405 174,582 67,806 Noncurrent assets Restricted investments - - 192,272 Capital assets, net 317,885 146,210 - Total noncurrent assets 317,885 146,210 192,272 Total assets 1,425,290 320,792 260,078 Liabilities Current liabilities Accounts payable 41,725 434,686 97,440 Due to other funds - - - Accrued salaries and vacation 32,235 12,761 - Total current liabilities 73,960 447,447 97,440 Noncurrent liabilities Revenue bonds payable - - - Total noncurrent liabilities - - - Total liabilities 73,960 447,447 97,440 Net assets (deficit) Invested in capital assets, net of related debt 317,885 146,210 - Unrestricted 1,033,445 (272,865) 162,638 Total net assets (deficit) 1,351,330 $ (126,655) $ 162,638 $ Augusta, Georgia Combining Statement of Net Assets Internal Service Funds December 31, 2007 144 ---PAGE BREAK--- Long-term Employee Disability GMA Health Benefits Unemployment Insurance Leases Total - $ - $ 56,974 $ - $ 1,392,326 $ 42,227 - - 4,207,766 4,264,434 42,227 - 56,974 4,207,766 5,656,760 - - - 12,015,641 12,207,913 - - - - 464,095 - - - 12,015,641 12,672,008 42,227 - 56,974 16,223,407 18,328,768 - - 41,317 - 615,168 42,226 - - 85,852 128,078 - - - - 44,996 42,226 - 41,317 85,852 788,242 - - - 16,169,354 16,169,354 - - - 16,169,354 16,169,354 42,226 - 41,317 16,255,206 16,957,596 - - - - 464,095 1 - 15,657 (31,799) 907,077 1 $ - $ 15,657 $ (31,799) $ 1,371,172 $ 145 ---PAGE BREAK--- Risk Fleet Workers Management Operations Compensation Operating revenues Charges and fees 2,238,203 $ 4,965,916 $ 1,771,321 $ Total operating revenues 2,238,203 4,965,916 1,771,321 Operating expenses Personal services and employee benefits 340,711 123,592 - Purchased/contracted services 392,690 17,455 - Supplies 34,729 162,809 - Repairs and maintenance 495 4,377,060 - Other costs 166,230 115,850 - Depreciation 5,299 41,241 - Lease expense - - - Risk benefit charges 860,068 108,168 5,832 Insurance - - 1,765,487 Total operating expenses 1,800,222 4,946,175 1,771,319 Operating income (loss) 437,981 19,741 2 Nonoperating revenue (expense) Interest revenue 66,994 - - Sale of property - 2,405 - Other revenue 156,425 1,868 58,850 Interest expense - (8,903) (669) Total nonoperating revenue (expense) 223,419 (4,630) 58,181 Income (loss) before transfers 661,400 15,111 58,183 Transfers in - - - Transfers out (540,000) - (58,182) Transfers between Internal Service Funds - - - Change in net assets 121,400 15,111 1 Total net assets (deficit) - beginning 1,229,930 (141,766) 162,637 Total net assets (deficit) - ending 1,351,330 $ (126,655) $ 162,638 $ Augusta, Georgia Combining Statement of Revenues, Expenses, and Changes in Fund Net Assets Internal Service Funds Year Ended December 31, 2007 146 ---PAGE BREAK--- Long-term Employee Disability GMA Health Benefits Unemployment Insurance Leases Total 18,040,386 $ 134,954 $ 451,749 $ 2,677,470 $ 30,279,999 $ 18,040,386 134,954 451,749 2,677,470 30,279,999 - - - - 464,303 43,491 - - - 453,636 - - - - 197,538 - - - - 4,377,555 - - - - 282,080 - - - - 46,540 - - - 2,504,942 2,504,942 5,628 - 1,776 - 981,472 18,072,851 130,403 451,200 - 20,419,941 18,121,970 130,403 452,976 2,504,942 29,728,007 (81,584) 4,551 (1,227) 172,528 551,992 - - 317 585,324 652,635 - - - - 2,405 24,383 - - - 241,526 (81,162) (4,551) - (757,851) (853,136) (56,779) (4,551) 317 (172,527) 43,430 (138,363) - (910) 1 595,422 139,272 - - - 139,272 - - - - (598,182) (909) - 909 - - - - 1 136,512 1 - 15,658 (31,800) 1,234,660 1 $ - $ 15,657 $ (31,799) $ 1,371,172 $ 147 ---PAGE BREAK--- Risk Fleet Workers Management Operations Compensation Operating activities Cash received from contributions 2,247,207 $ 4,985,091 $ 1,771,321 $ Cash paid to suppliers (1,443,034) (4,761,198) (1,743,854) Cash paid to employees (344,208) (123,805) - Cash paid to General Fund - - - 459,965 100,088 27,467 Noncapital financing activities Transfers in - - - Transfers out (540,000) - (58,182) Interest expense on operating capital - (8,903) (669) Other miscellaneous income 156,425 - - (383,575) (8,903) (58,851) Capital and related financing activities Proceeds from sale of property - 2,403 - Other miscellaneous income - 1,868 58,850 Purchase of capital assets (124,979) - - Interest paid on capital debt - - - Payments on capital leases - (15,108) - (124,979) (10,837) 58,850 Investing activities Interest received 66,994 - - Net cash provided by investing activities 66,994 - - Net increase (decrease) in cash and cash equivalents 18,405 80,348 27,466 Cash and cash equivalents/investments Beginning of year 1,074,591 94,202 232,612 End of year 1,092,996 $ 174,550 $ 260,078 $ Net cash provided (used) by capital and related financing activities Net cash provided (used) by operating activities Net cash provided (used) by noncapital financing activities Augusta, Georgia Combining Statement of Cash Flows Internal Service Funds Year Ended December 31, 2007 148 ---PAGE BREAK--- Long-term Total Employee Disability GMA Internal Service Health Benefits Unemployment Insurance Leases Funds 18,040,386 $ 138,984 $ 451,749 $ 2,677,470 $ 30,312,208 $ (18,121,970) (134,433) (448,471) (2,235,110) (28,888,070) - - - - (468,013) - - - (2,189,272) (2,189,272) (81,584) 4,551 3,278 (1,746,912) (1,233,147) 139,272 - 909 - 140,181 (909) - - - (599,091) (81,162) (4,551) 317 - (94,968) 24,383 - - - 180,808 81,584 (4,551) 1,226 - (373,070) - - - - 2,403 - - - - 60,718 - - - - (124,979) - - - (712,936) (712,936) - - - - (15,108) - - - (712,936) (789,902) - - - 585,324 652,318 - - - 585,324 652,318 - - 4,504 (1,874,524) (1,743,801) - - 52,470 13,890,165 15,344,040 - $ - $ 56,974 $ 12,015,641 $ 13,600,239 $ 149 ---PAGE BREAK--- Risk Fleet Workers Management Operations Compensation Reconciliation of operating income (loss) to net cash provided by (used in) operating activities Operating income (loss) 437,981 $ 19,741 $ 2 $ Adjustments to reconcile operating income (loss) to net cash provided by (used in) operating activities: Depreciation and amortization 5,299 41,241 - Change in assets and liabilities: Accounts receivable 9,004 19,175 - Accounts payable 11,178 20,144 27,465 Accrued salaries and vacation (3,497) (213) - Due to other funds - - - Total adjustments 21,984 80,347 27,465 Net cash provided (used) by operating activities 459,965 $ 100,088 $ 27,467 $ Reconciliation of cash and cash equivalents to the balance sheets Cash and cash equivalents in current assets 1,092,996 $ 174,550 $ 67,806 $ Restricted cash and cash equivalents included in noncurrent cash and investments - - 192,272 Net cash and cash equivalents 1,092,996 $ 174,550 $ 260,078 $ Augusta, Georgia Combining Statement of Cash Flows - Continued Internal Service Funds Year Ended December 31, 2007 150 ---PAGE BREAK--- Long-term Total Employee Disability GMA Internal Service Health Benefits Unemployment Insurance Leases Funds (81,584) $ 4,551 $ (1,227) $ 172,528 $ 551,992 $ - - - - 46,540 (35,651) - - 405,937 398,465 (1,497,405) - 4,505 (136,105) (1,570,218) - - - - (3,710) 1,533,056 - - (2,189,272) (656,216) - - 4,505 (1,919,440) (1,785,139) (81,584) $ 4,551 $ 3,278 $ (1,746,912) $ (1,233,147) $ - $ - $ 56,974 $ - $ 1,392,326 $ - - - 12,015,641 12,207,913 - $ - $ 56,974 $ 12,015,641 $ 13,600,239 $ 151 ---PAGE BREAK--- 152 ---PAGE BREAK--- FIDUCIARY FUNDS 153 ---PAGE BREAK--- 154 ---PAGE BREAK--- PENSION TRUST FUNDS 155 ---PAGE BREAK--- Augusta, Georgia Combining Statement of Fiduciary Net Assets Pension Trust Funds December 31, 2007 1945 1977 General Plan Plan Retirement Total Assets Cash and cash equivalents 1,506,542 $ 25,932,400 $ 3,820,880 $ 31,259,822 $ Investments U.S. Government securities 1,639,961 - 18,784,803 20,424,764 Corporate bonds 2,094,006 - 7,891,438 9,985,444 Equity securities 4,898,750 - 43,419,403 48,318,153 Receivables (net of allowance for doubtful accounts) Accounts 331,330 102,635 138,517 572,482 Interest 61,842 - 413,117 474,959 Total assets 10,532,431 26,035,035 74,468,158 111,035,624 Net assets Reserved for employees' retirement benefits 10,532,431 $ 26,035,035 $ 74,468,158 $ 111,035,624 $ 156 ---PAGE BREAK--- Augusta, Georgia Combining Statement of Changes in Fiduciary Net Assets Pension Trust Funds Year Ended December 31, 2007 1945 1977 General Plan Plan Retirement Total Additions Contributions - employer 331,330 $ 641,507 $ 1,445,837 $ 2,418,674 $ Contributions - plan member 11,578 1,102,231 378,750 1,492,559 Net investment income 805,345 2,035,461 6,295,769 9,136,575 Total additions 1,148,253 3,779,199 8,120,356 13,047,808 Deductions Administration 43,311 105,505 356,089 504,905 Benefit payments 900,245 791,129 5,314,228 7,005,602 Refunds - 234,956 - 234,956 Total deductions 943,556 1,131,590 5,670,317 7,745,463 Net increase (decrease) in plan net assets 204,697 2,647,609 2,450,039 5,302,345 Total net assets - beginning 10,327,734 23,387,426 72,018,119 105,733,279 Total net assets - ending 10,532,431 $ 26,035,035 $ 74,468,158 $ 111,035,624 $ 157 ---PAGE BREAK--- 158 ---PAGE BREAK--- AGENCY FUNDS 159 ---PAGE BREAK--- Augusta, Georgia Combining Statement of Changes in Fiduciary Assets and Liabilities Agency Funds December 31, 2007 January 1, 2007 Additions Deductions December 31, 2007 Tax Commissioner Assets Cash and cash equivalents 1,997,357 $ 84,715,369 $ 84,441,372 $ 2,271,354 $ Receivables (net of allowance for doubtful accounts) Taxes 23,027,263 153,491,014 155,069,493 21,448,784 Total assets 25,024,620 $ 238,206,383 $ 239,510,865 $ 23,720,138 $ Liabilities Due to others 1,997,357 $ 84,715,369 $ 84,441,372 $ 2,271,354 $ Uncollected taxes 23,027,263 153,491,014 155,069,493 21,448,784 Total liabilities 25,024,620 $ 238,206,383 $ 239,510,865 $ 23,720,138 $ Probate Assets Cash and cash equivalents 8,561 $ 127,518 $ 126,931 $ 9,148 $ Total assets 8,561 $ 127,518 $ 126,931 $ 9,148 $ Liabilities Due to others 8,561 $ 127,518 $ 126,931 $ 9,148 $ Total liabilities 8,561 $ 127,518 $ 126,931 $ 9,148 $ Sheriff Assets Cash and cash equivalents 2,032,642 $ 3,732,563 $ 3,697,233 $ 2,067,972 $ Total assets 2,032,642 $ 3,732,563 $ 3,697,233 $ 2,067,972 $ Liabilities Due to others 2,032,642 $ 3,732,563 $ 3,697,233 $ 2,067,972 $ Total liabilities 2,032,642 $ 3,732,563 $ 3,697,233 $ 2,067,972 $ Civil Court Assets Cash and cash equivalents 458,173 $ 1,889,917 $ 1,914,619 $ 433,471 $ Total assets 458,173 $ 1,889,917 $ 1,914,619 $ 433,471 $ Liabilities Due to others 458,173 $ 1,889,917 $ 1,914,619 $ 433,471 $ Total liabilities 458,173 $ 1,889,917 $ 1,914,619 $ 433,471 $ 160 ---PAGE BREAK--- Augusta, Georgia Combining Statement of Changes in Fiduciary Assets and Liabilities - Continued Agency Funds December 31, 2007 January 1, 2007 Additions Deductions December 31, 2007 Clerk of Court Assets Cash and cash equivalents 4,359,707 $ 9,531,255 $ 10,096,111 $ 3,794,851 $ Total assets 4,359,707 $ 9,531,255 $ 10,096,111 $ 3,794,851 $ Liabilities Due to others 4,359,707 $ 9,531,255 $ 10,096,111 $ 3,794,851 $ Total liabilities 4,359,707 $ 9,531,255 $ 10,096,111 $ 3,794,851 $ TOTAL ALL AGENCY FUNDS: Assets Cash and cash equivalents 8,856,440 $ 99,996,622 $ 100,276,266 $ 8,576,796 $ Receivables (net of allowance for doubtful accounts) Taxes 23,027,263 153,491,014 155,069,493 21,448,784 Total assets 31,883,703 $ 253,487,636 $ 255,345,759 $ 30,025,580 $ Liabilities Due to others 8,856,440 $ 99,996,622 $ 100,276,266 $ 8,576,796 $ Uncollected taxes 23,027,263 153,491,014 155,069,493 21,448,784 Total liabilities 31,883,703 $ 253,487,636 $ 255,345,759 $ 30,025,580 $ 161 ---PAGE BREAK--- 162 ---PAGE BREAK--- SPECIAL ONE PERCENT SALES AND USE TAX SECTION S-1 ---PAGE BREAK--- S-2 ---PAGE BREAK--- Report of Independent Certified Public Accountants on the Schedule of Special One Percent Sales and Use Tax Performed in Accordance with Government Auditing Standards Augusta-Richmond County Commission Augusta, Georgia We have audited the accompanying financial statements of the governmental activities, the business-type activities, Augusta Canal Authority, each major fund and the aggregate remaining fund information of Augusta, Georgia as of December 31, 2007 and for the year then ended, which collectively comprise Augusta, Georgia’s basic financial statements, as listed in the table of contents. These financial statements are the responsibility of the Augusta, Georgia management. Our responsibility is to express opinions on these basic financial statements based on our audit. We did not audit the financial statements of the Augusta-Richmond County Department of Health or Downtown Development Authority. Those financial statements were audited by other auditors whose reports thereon has been furnished to us, and our opinion, insofar as it relates to the amounts included for the Department of Health and Downtown Development Authority, is based solely on the reports of the other auditors. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in 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 basic financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the basic financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall basic financial statement presentation. We believe that our audit and the reports of other auditors provide a reasonable basis for our opinions. As explained in Note 1, the accompanying Schedule of Special One Percent Sales and Use Tax of Augusta, Georgia, as of and for the year ended December 31, 2007, as listed in the table of contents, is not a presentation in conformity with accounting principles generally accepted in the Unites States of America. In our opinion, the accompanying Schedule of Special One Percent Sales and Use Tax is fairly stated, in all material respects, in relation to the portion of the basic financial statements from which it has been derived. This report is intended solely for the information and use of management and the Board of Commissioners of Augusta, Georgia, and is not required to be presented as part of the basic financial statements. This report is not intended to be and should not be used by anyone other than these specified parties. Augusta, Georgia June 30, 2008 S-3 ---PAGE BREAK--- AUGUSTA, GEORGIA SCHEDULE OF SPECIAL ONE PERCENT SALES AND USE TAX YEAR ENDED DECEMBER 31, 2007 Estimated Prior Current Percentage Original Cost Current Cost Years' Year Total of Projects Estimate Estimate Cost Cost Cost Completion Sand Hills Park $ 50,000 $ 48,286 $ 48,286 $ - $ 48,286 100% Reynolds Park renovation 63,000 48,000 47,243 - 47,243 98% Tanglewood Park renovation 30,000 30,000 25,849 - 25,849 86% Wood Park 45,000 45,002 45,002 - 45,002 100% Lake Olmstead Bike Trail 90,000 90,000 90,000 - 90,000 100% Radford Park renovation 34,868 32,679 32,679 - 32,679 100% Katherine Street 145,178 152,855 153,855 - 153,855 101% Georgia Regional 927 6,573 7 - 7 0% Augusta Canal - hand rail 50,000 50,133 50,133 - 50,133 100% Radio Control RR Switches - 100,000 100,000 - 100,000 100% Parham Rd Improvement - 7,334 7,361 - 7,361 100% Camp Angehele Road - 12,343 12,343 - 12,343 100% Corridor & Gateway Entrance - 25,000 - - - 0% Suburban Forces Capital Equipment II 1,411,000 1,428,897 1,384,466 7,209 1,391,675 97% Butts Memorial Bridge repair 245,000 245,931 184,899 - 184,899 75% Phinizy swamp drainage improvement I 273,884 1,443 1,443 - 1,443 100% Alexander Drive culvert repair 36,870 34,219 34,219 - 34,219 100% Alexander Drive Culvert Repair II 18,500 18,570 18,597 - 18,597 100% Raes Creek Channelization IV 13,325 13,194 13,194 - 13,194 100% Traffic engineering improvement Phase II 460,000 514,824 454,960 - 454,960 88% Paving various roads 1,026,875 518,021 518,021 - 518,021 100% Paving Various Roads - 834,706 540,637 21,662 562,299 67% Lovers Lane Land Acquisition - 6,475 - 6,475 6,475 100% Resurfacing Hephzibah McBean Road - 33,691 - 317,661 317,661 943% Canal Authority 500,000 501,801 501,801 - 501,801 100% Arts Council 100,000 100,000 97,618 - 97,618 98% Fore Augusta 100,000 100,000 100,000 - 100,000 100% Historic Augusta 100,000 100,000 100,000 - 100,000 100% Museum 200,000 200,000 200,000 - 200,000 100% New Hope Community Center 100,000 - - - - 0% Imperial Theater 150,000 150,000 150,000 - 150,000 100% Augusta Mini Theater 150,000 863,841 - 434,056 434,056 50% 4- H Club Road 41,000 65,418 60,413 2,479 62,892 96% Riverwalk Playground 40,000 41,353 40,412 - 40,412 98% Bob Baurle Boat Landing 150,000 103,292 76,954 446 77,400 75% May Park 120,000 129,904 114,209 7,127 121,336 93% Old Government House 120,000 123,124 89,922 1,158 91,080 74% Sand Hills Park 1,080,000 1,199,452 1,193,839 1,445 1,195,284 100% The Boathouse 90,000 105,079 79,754 - 79,754 76% Elliot Park 400,000 418,611 397,976 151 398,127 95% Savannah Place Park 455,000 859,168 814,014 - 814,014 95% Augusta Soccer Complex 120,000 131,858 130,610 - 130,610 99% Diamond Lakes Regional Park 5,800,000 1,684,092 1,618,222 24,626 1,642,848 98% McDuffie Woods Center 90,000 7,188 8,161 - 8,161 114% Augusta Aquatics Center 180,000 187,210 145,510 37,730 183,240 98% Augusta Golf Course 1,600,000 1,612,336 1,580,078 29,061 1,609,139 100% Belle Terrace Park 120,000 51,478 47,454 1,549 49,003 95% Recreation Center 120,000 124,148 110,413 - 110,413 89% Brookfield Park 1,200,000 1,254,024 1,233,002 - 1,233,002 98% Warren Road Center 120,000 147,098 124,293 3,394 127,687 87% McBean Community Center 1,020,000 1,119,434 1,039,219 - 1,039,219 93% Transit (purchase buses) 250,000 385,336 321,584 - 321,584 83% Additional funds required to build a new Shelter 1,000,000 1,256,184 1,256,183 - 1,256,183 100% Board of Health 2,000,000 2,000,000 2,000,000 - 2,000,000 100% Materials for new facilities 1,000,000 1,027,405 1,027,404 - 1,027,404 100% JLEC (Re-roofing at 401 Walton Way) 395,500 398,790 71,490 - 71,490 18% Phinizy Road Jail, JLEC and 911 282,500 202,034 196,410 - 196,410 97% Records Retention Building Roof 107,400 110,546 110,547 - 110,547 100% JLEC (Replace exterior finish) 565,000 972,552 574,906 21,539 596,445 61% Judicial/Courts Building 20,000,000 22,393,311 3,541,133 58,965 3,600,098 16% Tree replacement 398,000 387,581 385,462 - 385,462 99% Irrigation automation 102,000 123,894 3,540 5,420 8,960 7% Payoff existing leases 4,084,637 3,430,393 3,430,388 - 3,430,388 100% Area) 1,500,000 1,510,886 1,410,852 - 1,410,852 93% Broad Area) 1,521,000 1,635,180 1,633,737 - 1,633,737 100% Construction of Station # 19 1,479,000 1,489,679 1,425,037 - 1,425,037 96% Laney Walker Boulevard - 2,783,555 2,486,984 - 2,486,984 89% Adjusting Roadway Structure V - 72,369 72,369 - 72,369 100% SR 121 @ Wndsor Spring Traffic 85,800 28,399 28,399 - 28,399 100% ARC drainage improvements Phase I 116,750 118,024 94,260 - 94,260 80% S-4 ---PAGE BREAK--- AUGUSTA, GEORGIA SCHEDULE OF SPECIAL ONE PERCENT SALES AND USE TAX - Continued YEAR ENDED DECEMBER 31, 2007 Estimated Prior Current Percentage Original Cost Current Cost Years' Year Total of Projects Estimate Estimate Cost Cost Cost Completion ARC drainage improvements Phase II 53,100 84,427 50,729 - 50,729 60% SR 56 @ Goshen Road 88,000 362,718 362,718 - 362,718 100% Belair Road improvement 2,361,000 2,367,036 140,703 - 140,703 6% Berckman's Road 2,713,000 14,284 14,284 - 14,284 100% Courtney's Detention Pond Emer Rep 70,805 71,074 69,923 - 69,923 98% Travis/ Plantation Road 2,361,000 2,368,255 183,366 - 183,366 8% County Forces 3,672,500 4,310,686 3,202,289 318,812 3,521,101 82% Miscellaneous grading & drainage 4,650,000 2,904,306 878,590 310,453 1,189,043 41% Resurfacing County Forces 5,975,000 4,624,324 725,316 - 725,316 16% Resurfacing 8,500,000 7,438,208 1,526,889 - 1,526,889 21% Paving various dirt roads 7,000,000 4,450,668 3,388,928 3,427 3,392,355 76% Rail Road crossing improvement 750,000 825,258 101,238 - 101,238 12% (Broad Street Area) 2,656,200 2,722,887 444,593 373,625 818,218 30% (Telfair Street Area) 1,469,000 1,486,979 186,977 - 186,977 13% East Boundary improvements 1,318,700 4,601,966 591,326 2,042,567 2,633,893 57% Wheeler Road operational 433,600 416,574 52,674 - 52,674 13% Road Widening Phase I 3,143,700 3,182,139 426,989 - 426,989 13% Washington Road intersection 849,800 1,138,671 401,569 107,556 509,125 45% Hollywood S/D Area 2,640,800 2,662,163 325,160 - 325,160 12% Telephone system upgrade 527,082 535,811 535,812 - 535,812 100% GIS 474,400 482,274 475,060 - 475,060 99% Document imaging system 418,518 425,586 425,588 - 425,588 100% Springfield Village 200,000 200,000 81,284 - 81,284 41% Dyess Park 60,000 65,530 44,705 9,952 54,657 83% Newman Tennis Center 120,000 121,644 71,674 5,285 76,959 63% South Augusta Branch Library 1,625,000 5,926,028 5,713,005 10 5,713,015 96% Library - main branch 7,375,000 7,465,331 1,276,401 1,596,261 2,872,662 38% Greene Street Property Purchase - 1,084,585 - 1,084,585 1,084,585 100% Construction of Station #8 1,500,000 1,500,957 1,438,500 - 1,438,500 96% Station 15 Road) 1,500,000 1,699,791 1,690,789 - 1,690,789 99% Engines 3,484,000 3,454,544 3,454,540 - 3,454,540 100% Aerials 1,300,000 1,312,973 1,311,971 - 1,311,971 100% Construction of Station #12 (Heph Mcbean Area) 1,500,000 1,341,361 1,275,233 - 1,275,233 95% Paving various dirt roads 1,000,000 920,725 346,883 - 346,883 38% East Boundary Street & drainage improvements 1,318,700 151,497 1,497 - 1,497 1% Road improvements 1,500,000 1,514,969 14,968 - 14,968 1% Walton Way Extension / Davis Road 350,000 356,940 82,892 - 82,892 23% Windsor Spring Road Section IV 1,250,000 1,264,731 123,590 67,130 190,720 15% Windsor Spring Rd Section V(SR88 Hepzibah - 1,257,484 7,484 - 7,484 1% Washington Road Sidewalk 276,000 1,311 1,311 - 1,311 100% St. Sebastian Way/Greene St/ 15th Street 3,457,800 9,641,676 3,357,026 5,732,727 9,089,753 94% Traffic improvement 621,500 705,892 307,699 - 307,699 44% ANIC/Hopkins Street Improvements 2,000,000 1,172,188 72,188 430,029 502,217 43% Windsor Spring Road Section IV 678,000 736,126 614,463 49,261 663,724 90% Rifle Range Road @ Belair Road 62,200 5,981 5,981 - 5,981 100% Lake Olmstead Park 425,000 455,728 439,681 2,213 441,894 97% Bernie Ward - 106,059 61,961 31,804 93,765 88% Fleming Tennis - 100,195 100,195 - 100,195 100% Meadowbrook Park - 90,873 90,873 - 90,873 100% Hepzibah Community Ctr - 83,908 37,884 8,615 46,499 55% DDA - 853,418 605,991 76,107 682,098 80% St Sebastian Way/Greene St - 675,543 543 - 543 0% Belair Hills Est Imp(W&S) - 112,603 112,605 - 112,605 100% Pinnacle Place Drg Imp - 772,117 74,349 612,411 686,760 89% SR 4/15th @cr 2207(Central Ave) - 117,218 - 14,443 14,443 12% Richmond Hill Rd Sidewalks - 117,645 117,645 - 117,645 100% Alexander Dr Emergency Repair - 74,688 75,077 - 75,077 101% Powell Rd Culvert Replacement - 364,836 234,464 - 234,464 64% Point West Drainage - 608,276 187,798 45,186 232,984 38% Oates Creek Rehab Proj - 843,266 213,266 - 213,266 25% ARC Drainage - 1,494,422 1,185,200 - 1,185,200 79% Resurfacing PH VIII - 1,331,683 1,088,852 - 1,088,852 82% Lake Aumond Dam Improvements - 491,762 107,450 - 107,450 22% Belair Hills Estate - 5,562,558 440,064 117,244 557,308 10% Walton Way Extension/Davis Rd - 2,421,507 84,357 - 84,357 3% Windsor Spring Rd Section V(SR88 Hepzibah - 798,894 246,113 413,265 659,378 83% Apple Valley Park - 34,871 26,839 7,265 34,104 98% Pension Property Purchase 1,272,514 1,272,514 - 1,272,514 100% Replacement of Old Equipment - 574,317 368,829 102,983 471,812 82% Remodel Stations 3,4,11,13,14 & 17 - 656,585 324,729 - 324,729 49% Pineview Drive - 136,416 136,416 - 136,416 100% S-5 ---PAGE BREAK--- AUGUSTA, GEORGIA SCHEDULE OF SPECIAL ONE PERCENT SALES AND USE TAX - Continued YEAR ENDED DECEMBER 31, 2007 Estimated Prior Current Percentage Original Cost Current Cost Years' Year Total of Projects Estimate Estimate Cost Cost Cost Completion ARC Drainage Imp Phase I - - - - - 0% Walton Way Extension - 664,240 537,005 7,468 544,473 82% State Rd 121/US25 Windsor - 877,163 187,446 - 187,446 21% Wilkerson Garden - 363,964 72,784 - 72,784 20% Remodel Station #4 - 111,629 111,629 - 111,629 100% Remodel Station #6 - 1,404,685 71,946 1,268,521 1,340,467 95% Fire Training Center - 737,607 737,607 - 737,607 100% Traffic Signs Upgrade - 50,594 43,737 6,537 50,274 99% Flood Control Feasabiltiy Study - 20,796 20,796 - 20,796 100% Storm Pipe Replacement - 56,905 - 533 533 1% Warren Lake - Rock Creek - 13,248 13,243 - 13,243 100% Winchester Drainage Improvement - 412,740 5,524 91,990 97,514 24% Laney Stadium - 3,521,074 3,521,074 - 3,521,074 100% Augusta Museum of History - 1,113,175 11,887 494,431 506,318 45% 13th Street Streetscape - 100,125 3,625 - 3,625 4% Barrett Plaza Lighting - 103,283 95,470 - 95,470 92% Pension Property Cleanup - 1,614,474 - 1,614,210 1,614,210 100% Remodel Station #3 - 258,128 213,556 24,619 238,175 92% Willis Foreman Road Bridge Study - 99,756 - 91,276 91,276 91% Willis Foreman Road Bridge 17,724 - 16,571 16,571 93% Remodel Station #11 - 150,212 6,161 - 6,161 4% Construction Station #10 - Land 700,000 - - - 0% Training Tower and Burn Simulator - 1,700,000 - - - 0% Renovation of Administrative Center - 2,350,000 - - - 0% Albion Acres 142,534 142,534 142,534 - 142,534 100% 5th Street storm sewer improvements 154,250 70,584 70,584 - 70,584 100% 3rd Level Canal cleaning 700,000 709,313 471,389 18,661 490,050 69% Walton Way Reconstruction 600,000 600,000 600,000 - 600,000 100% 15th St Utility Relocation 350,000 350,000 - - - 0% 9th Street Parking renovation 50,000 1,736 1,736 - 1,736 100% Laney -Walker reconstruction 96,600 180,600 146,923 - 146,923 81% Rae's Creek 440,000 1,163,167 981,378 8,200 989,578 85% Small Projects 181,230 181,230 181,230 - 181,230 100% Adjusting roadway structure 100,289 82,700 82,700 - 82,700 100% Phinizy Swamp drainage 163,998 58,617 58,617 - 58,617 100% Stevens Creek /Clausen Road 358,584 361,888 299,329 - 299,329 83% Jackson Road widening 108,776 108,776 108,776 - 108,776 100% Berckmans Road 1,793,000 9,441 9,441 - 9,441 100% Belair Road Extension 666,005 741,074 741,074 - 741,074 100% Turpin Hill Rdwy. 1,102,076 1,020,879 1,020,879 - 1,020,879 100% Doug Bernard Parkway 2,170,763 1,874,524 1,874,524 - 1,874,524 100% Rocky Creek Tributary 130,832 132,038 63,706 - 63,706 48% Hyde Park Drg 94,945 94,945 94,945 - 94,945 100% Belair Hills Estate 33,700 33,700 33,700 - 33,700 100% Windsor Spring Road, Section I 2,780,104 2,780,104 2,780,104 - 2,780,104 100% Windsor Spring Road, Section II 1,708,213 1,707,397 1,707,396 - 1,707,396 100% Windsor Spring Road Off-site 69,793 69,793 69,793 - 69,793 100% Tobacco Raod - Phase II 1,591,127 1,511,764 1,511,764 - 1,511,764 100% Barton Chapel Road, Phase I 1,488,591 963,324 992,624 - 992,624 103% Peppreidge Drive 4,150 4,150 4,150 - 4,150 100% Boykin Rd Drainage 62,500 62,500 62,500 - 62,500 100% Hephzibah-McBean/Brothersville 329,440 364,875 364,874 - 364,874 100% Small projects 417,978 239,172 239,162 - 239,162 100% NPDES 504,705 515,992 515,378 - 515,378 100% JLEC 2,000,000 1,884,176 1,789,552 9,737 1,799,289 95% Bobby Jones Expressway 284,286 237,618 237,618 - 237,618 100% Bobby Jones @SR 56 187,000 187,000 171,457 - 171,457 92% Fury's Ferry Rd 126,500 126,500 - - - 0% Jackson Road widening 2,537,671 2,318,812 2,318,812 - 2,318,812 100% Perimeter Parkway Improvements 981,820 870,614 870,614 - 870,614 100% Road Operational 251,000 210,210 210,210 - 210,210 100% Belair Road 555,851 88,600 88,600 - 88,600 100% Wheeler Road widening 1,576,000 1,015,885 974,456 - 974,456 96% Cane Creek Channel Imp 1,421,720 1,105,881 1,105,881 - 1,105,881 100% Rae's Creek Channel Improvement 1,758,382 1,756,878 1,756,878 - 1,756,878 100% Olive Road realignment 134,796 134,796 7,996 - 7,996 6% North Leg Bridge Widening 22,000 - - - - 0% Wheeless Road 819,500 819,500 566,348 - 566,348 69% Lakeside Drainage 323,447 265,389 265,389 - 265,389 100% Hyde Park 1,716,000 1,048,444 1,048,444 - 1,048,444 100% Apple Valley drainage improvements 769,061 769,061 755,779 - 755,779 98% S-6 ---PAGE BREAK--- AUGUSTA, GEORGIA SCHEDULE OF SPECIAL ONE PERCENT SALES AND USE TAX - Continued YEAR ENDED DECEMBER 31, 2007 Estimated Prior Current Percentage Original Cost Current Cost Years' Year Total of Projects Estimate Estimate Cost Cost Cost Completion SR 4/US1 16,500 12,413 12,413 - 12,413 100% Windsor Spring Road 1,055,386 919,146 919,146 - 919,146 100% Tobacco Road 3,046,858 2,736,545 2,736,545 - 2,736,545 100% Lock & Dam Road 404,522 364,826 364,826 - 364,826 100% Barton Chapel Rd, Phase 1 29,300 29,300 29,300 - 29,300 100% Barton Chapel Road, Phase II 2,036,000 3,143,693 2,753,083 22,226 2,775,309 88% SR 10/US 223 Gordon Highway 84,500 74,893 74,893 - 74,893 100% Pepperidege Drive Intersection 172,177 156,358 156,358 - 156,358 100% SR 56 at Phinizy 399,425 342,695 342,695 - 342,695 100% Fall Line Freeway 77,000 - - - - 0% Paving Various Rd., Phase V 1,200,000 725,423 725,423 - 725,423 100% Boykin Road Drg. 1,466,809 1,367,118 1,367,118 - 1,367,118 100% SR 56 @Old Waynesboro Rd 416,000 461,687 461,686 - 461,686 100% Willis Foreman Road Dr. 350,100 440,304 440,302 - 440,302 100% Sand Ridge Storm 341,800 218,682 218,682 - 218,682 100% SR 56 Old Savannah Road 552,500 375,003 375,004 - 375,004 100% Kimberly Clark Industrial Park 2,215,000 2,215,633 350,210 - 350,210 16% Municipal Building 8,721,250 8,580,303 3,099,826 1,451,137 4,550,963 53% Library (South Richmond) 700,000 709,881 654,985 - 654,985 92% Board of Health 7,000,000 7,000,000 7,000,000 - 7,000,000 100% Augusta Mini Theater 850,000 856,245 364,438 452,155 816,593 95% Lucy Craft Laney Museum 800,000 762,246 749,964 864 750,828 99% Georgia Golf Hall of Fame 4,000,000 4,000,000 4,000,000 - 4,000,000 100% Bethlehem Community Ctr 27,194 61,320 61,320 - 61,320 100% Administration 182,795 181,816 181,816 - 181,816 100% Warren Rd Renovation 373,249 373,249 373,249 - 373,249 100% Bennie Ward 110,000 109,508 109,508 - 109,508 100% Riverfront Pavilion 655,648 655,561 655,561 - 655,561 100% May Park 525,000 522,779 522,779 - 522,779 100% West Augusta Soccer Field 1,000,000 999,739 999,739 - 999,739 100% WT Johnson renovation 306,500 305,831 305,831 - 305,831 100% Belair/Flager Road renovations 112,650 112,602 112,602 - 112,602 100% Dyess Park renovation 192,993 192,993 192,773 - 192,773 100% South Augusta Recreation Administrative Complex 7,550,000 7,552,419 7,552,419 - 7,552,419 100% Aquatic Natatorium 5,143,000 5,140,093 5,140,093 - 5,140,093 100% Golden Camp/Belle TERR 929,119 927,295 927,925 - 927,925 100% Belle Terrace Renovation 232,111 233,169 233,169 - 233,169 100% Elliott Park 100,000 100,089 99,911 - 99,911 100% Heath Pool 5,000 - - - - 0% Jones Pool 35,000 35,017 35,017 - 35,017 100% Doughty Park 50,000 50,479 50,479 - 50,479 100% Eastview Park 227,500 169,161 169,161 - 169,161 100% Hephizah/Carroll Park 175,358 175,185 175,185 - 175,185 100% Jamestown Park 112,566 112,566 112,566 - 112,566 100% McBean Park 140,000 140,949 139,735 - 139,735 99% Minnick Park 55,000 53,849 53,849 - 53,849 100% Savannah Place 245,000 248,769 244,942 - 244,942 98% Community Center 708,000 703,302 703,302 - 703,302 100% Chafee Park Gym renovation 124,889 14,374 14,374 - 14,374 100% Hillside Park renovation 50,000 47,400 45,894 - 45,894 97% Lock & Dam renovation 75,000 34,992 34,993 - 34,993 100% Julian Smith renovation 742,207 742,182 742,182 - 742,182 100% Fleming Building renovation 100,000 90,884 90,883 - 90,883 100% Gracewood Park renovation 152,076 152,218 142,671 3,924 146,595 96% Lake Olmstead Park 43,793 43,793 43,793 - 43,793 100% Fleming Athletic Complex 133,850 133,170 133,170 - 133,170 100% Chester Avenue renovation 151,500 151,500 147,926 - 147,926 98% Boykin Road Park 40,000 39,811 39,811 - 39,811 100% Eisenhower Park Gym 1,477,000 1,476,000 1,476,000 - 1,476,000 100% Discovery Center Ent 353,137 352,954 352,954 - 352,954 100% St. Sebastian Extension 1,368,969 1,633,799 1,610,578 20,282 1,630,860 100% 2nd Street Outfall 762,760 1,810,621 1,546,089 - 1,546,089 85% 6th Street handicap ramp 517,347 625,358 611,966 - 611,966 98% Turknett Springs Detention 228,161 337,300 306,132 - 306,132 91% Augusta Commons 1,825,291 3,609,599 3,652,638 - 3,652,638 101% Martin Luther King drainage 273,794 727 727 - 727 100% Inter City Arts - Imperial 300,000 300,000 225,000 - 225,000 75% CSO 10,500,000 10,546,852 9,629,637 - 9,629,637 91% Wetlands 10,500,000 10,508,941 9,591,726 - 9,591,726 91% Third Level Canal Cleaning 491,506 492,418 887 185 1,072 0% S-7 ---PAGE BREAK--- AUGUSTA, GEORGIA SCHEDULE OF SPECIAL ONE PERCENT SALES AND USE TAX - Continued YEAR ENDED DECEMBER 31, 2007 Estimated Prior Current Percentage Original Cost Current Cost Years' Year Total of Projects Estimate Estimate Cost Cost Cost Completion Walton Way reconstruction 1,273,638 1,275,936 1,277,021 - 1,277,021 100% Augusta Canal 950,000 1,955,937 1,885,044 - 1,885,044 96% Goodale Landing 124,030 101,706 101,706 - 101,706 100% Resurfacing various streets 3,406,729 1,214,524 158,648 55,577 214,225 18% Resurfacing various streets 1996 127,935 128,275 128,275 - 128,275 100% Resurfacing Various Roads 756,500 519,928 519,928 - 519,928 100% Street & drainage improvement 694,599 194,950 145,550 - 145,550 75% Administration 2,774,251 2,779,256 2,376,389 - 2,376,389 86% East Augusta drainage 35,450 - - 0% Jackson Road widening 200,000 200,000 200,000 - 200,000 100% Perimeter Parkway 25,000 9,458 9,458 - 9,458 100% Crane Creek 150,000 399 399 - 399 100% Belair Rd Ext 75,000 75,005 75,005 - 75,005 100% Rae's Creek Channel Phase II 257,000 683 683 - 683 100% Centennial Park Fountain 85,000 85,153 47,377 - 47,377 56% Paving various roads 50,000 50,090 133 - 133 0% Surburban Forces Widening 150,000 150,570 1,580 - 1,580 1% Suburban forces 4,143,317 1,899,690 1,860,990 82 1,861,072 98% Suburban Forces 5,000,000 928,539 160,398 531 160,929 17% Resurfacing various roads Phase V 633,250 602,707 603,587 - 603,587 100% General Easement 50,000 50,190 13,341 - 13,341 27% Administration 5,720,000 5,902,501 5,930,938 - 5,930,938 100% Administration 1,780,000 1,785,151 1,680,227 377 1,680,604 94% New Savannah Road 1,431,000 7,535 7,535 - 7,535 100% Sidewalk Contract Phase II 296,000 354,116 354,116 - 354,116 100% Fury's Ferry Road 22,000 116 116 - 116 100% Alexander Drive 2,022,795 2,628,662 374,591 240,758 615,349 23% Washington Road Sidewalk III 200,000 348 348 - 348 100% Old Savannah Road/ Twigg Street 2,060,000 2,065,628 126,183 - 126,183 6% Stevens Creek/Claussen Road 1,421,250 1,451,964 1,127,009 - 1,127,009 78% Forest Park Subdivision drainage 815,348 698,269 698,269 - 698,269 100% Bobby Jones Expressway 165,000 440,983 27,146 - 27,146 6% Road 1,984,000 2,028,834 717,738 107,791 825,529 41% Warren Road 1,211,000 3,211,985 2,535,761 68,031 2,603,792 81% Miscellaneous 155,425 752,946 157,013 - 157,013 21% Tanglewood & Kingston s/d drianage 797,500 695,996 695,996 - 695,996 100% Hillwood Crest/Whitehead Drive 358,856 247,177 247,177 - 247,177 100% Skinner Mill Road Extension 1,517,311 1,519,459 1,519,459 - 1,519,459 100% Cook Road & Glendale 2,811,281 1,713,330 1,713,330 - 1,713,330 100% Sibley Road Railroad Crossing 129,950 130,444 685 - 685 1% Road Railroad Crossing 129,950 130,444 685 - 685 1% Windsor Spring Road 2,133,000 2,172,238 512,657 52,695 565,352 26% Old Savannah Road 961,000 1,171,425 100,275 - 100,275 9% Richmond Hill Road 1,028,500 784,660 784,660 - 784,660 100% Bobby Jones Expressway 110,000 36,618 36,618 - 36,618 100% Dunham Court 127,000 97,178 97,178 - 97,178 100% Wheeles Road Bridge 13,200 13,250 13,231 - 13,231 100% Traffic engineering improvements 111,000 91,657 91,657 - 91,657 100% SR 4/US 1 55,000 55,209 290 - 290 1% Marvin Griffin Road 1,375,600 3,479,344 182,596 - 182,596 5% Antler Drive West drainage improvements 377,000 244,932 245,290 - 245,290 100% Morgan Road 1,571,000 3,911,226 335,447 - 335,447 9% Woodcrest /CSX Drainage 175,400 176,066 923 - 923 1% Deans Bridge @Tobacco 165,000 78,613 78,613 - 78,613 100% Fall Line Freeway Section II 55,000 55,209 290 - 290 1% Paving various roads Phase IV & V 269,209 270,627 270,627 - 270,627 100% Paving various roads Phase VI 950,000 176,130 176,130 - 176,130 100% Willis Foreman Road 147,751 138,533 138,533 - 138,533 100% Birdwell Road Wetlands Bank 11,000 58 58 - 58 100% McCombs Road Section I 790,884 712,838 712,838 - 712,838 100% McCombs Road Section II 961,665 722,511 722,511 - 722,511 100% Library 1,700,000 1,701,742 1,701,649 - 1,701,649 100% Animal Control renovation 1,220,946 979,527 979,528 - 979,528 100% New administrative offices 2,350,000 2,374,807 556,291 10,443 566,734 24% Shiloh Community Center 575,000 575,000 560,948 - 560,948 98% Springfield Baptist Church 1,300,000 1,300,000 1,275,732 - 1,275,732 98% New Hope Community Ctr 250,000 250,000 250,000 - 250,000 100% Beulah Grove 200,000 200,000 200,000 - 200,000 100% Hyde Park renovation 122,350 97,402 91,955 - 91,955 94% Central Park renovation 70,000 65,375 65,375 - 65,375 100% Bayvale Park renvoation 26,000 9,016 6,145 - 6,145 68% S-8 ---PAGE BREAK--- AUGUSTA, GEORGIA SCHEDULE OF SPECIAL ONE PERCENT SALES AND USE TAX - Continued YEAR ENDED DECEMBER 31, 2007 Estimated Prior Current Percentage Original Cost Current Cost Years' Year Total of Projects Estimate Estimate Cost Cost Cost Completion Heard Avenue Park renovation 6,000 3,883 3,883 - 3,883 100% Troup St Pk Renovation 10,000 - - - - 0% Hickman Park renovation 100,000 90,994 73,395 - 73,395 81% McDuffie Woods Park renovation 150,000 148,330 148,330 - 148,330 100% Meadowbrook Park renovation 45,000 47,554 47,216 - 47,216 99% Julian Smith BBQ renovation 187,000 186,558 186,558 - 186,558 100% Blount Park renovation 19,000 2,600 2,600 - 2,600 100% Augusta Canal Master 100,000 103,312 103,312 - 103,312 100% Big Oak Park renovation 65,000 65,230 47,118 - 47,118 72% Wood Street South Ball Field 47,000 47,230 41,000 3,359 44,359 94% Wood Lake Park renovation 100,000 100,776 79,664 6,909 86,573 86% Royal (Barrett) Park renovation 12,000 5,086 5,086 - 5,086 100% Garrett 500,000 500,000 500,000 - 500,000 100% West Vineland Park renovation 20,000 20,127 20,119 - 20,119 100% Bedford Heights 35,000 35,192 26,941 - 26,941 77% 4 - H Camp Park renovation 20,000 18,830 17,478 - 17,478 93% Adjusting Rd/Way Structure 200,000 62,498 62,498 - 62,498 100% International Boulevard Extension 340,000 289,800 289,800 - 289,800 100% Walton Way Extension 1,385,000 - - - - 0% Skinner Mill Road Culvert Extension 153,100 11,876 11,876 - 11,876 100% Rocky Creek Hazard Mitigatio 717,860 717,860 62,064 - 62,064 9% Resurfacing various roads Phase VI 1,350,000 1,123,739 1,123,739 - 1,123,739 100% Suburban Forces Capital Equipment 1,664,000 1,674,064 1,717,688 - 1,717,688 103% Railroad Street slope repair 289,500 290,600 33,459 - 33,459 12% Wheeler Road Signal Plan Analysis 10,000 7,799 7,799 - 7,799 100% Gordon Highway median barrier 185,000 185,703 1,256 - 1,256 1% Mason Road Bridge @ Claudia 275,000 197,329 197,329 - 197,329 100% Bungalow Road 776,000 3,962,785 290,017 559,155 849,172 21% Woodlake Subdivision 939,000 942,567 43,817 - 43,817 5% Pepperidge Point Retention Pond 50,000 32,667 32,677 - 32,677 100% Windsor Spring Rd Sec IV - 1,560,500 - - - 0% Windsor Spring Rd Sec V - 1,560,500 - - - 0% Flood control feasibility 1,637,649 2,229,458 1,920,872 308,586 2,229,458 100% Judicial Center - County Court House 40,016,200 40,016,200 - - - 0% Webster Detention Center 36,000,000 36,000,000 160,271 1,752,889 1,913,160 5% Exhibit Hall 20,000,000 20,000,000 161,225 71,209 232,434 1% Sheriff Administation Relocation 3,000,000 3,000,000 - - - 0% RCCI Renovations 750,000 750,000 - - - 0% Main Library 14,700,000 14,700,000 - - - 0% Augusta Canal Improvements 2,500,000 2,500,000 - 2,500,000 2,500,000 100% Augusta Canal Bond Repayment 8,200,555 8,200,555 8,200,555 - 8,200,555 100% Bond Debt Service 5,417,800 5,417,800 - - - 0% Information Technology 2,000,000 2,000,000 - - - 0% Flood Land Acquisition 500,000 500,000 - - - 0% Road Project 4,000,000 4,000,000 - - - 0% D'Antignac Street Flood Avoidance 1,000,000 1,000,000 - - - 0% Administration - Engineering 2,500,000 2,500,000 - 484,140 484,140 19% Marks Church Road Improvement 2,500,000 2,500,000 - - - 0% Fire Stations & Training Center 6,000,000 6,000,000 - - - 0% Lake Olmstead Stadium 360,000 400,000 100,000 298,827 398,827 100% Augusta Soccer Park 180,000 180,000 - 157,007 157,007 87% The Boat House 90,000 90,000 - - - 0% Apple Valley Park 315,000 315,000 876 214,996 215,872 69% WT Johnson Park 67,500 67,500 2,100 1,486 3,586 5% MM Scott Park 270,000 270,000 6,500 18,860 25,360 9% Diamond Lakes Park 720,000 720,000 - 38,545 38,545 5% Jamestown Park 135,000 148,860 500 38,346 38,846 26% Wood Park 270,000 270,000 - 15,283 15,283 6% Valley Park 22,500 22,500 - 160 160 1% Goshen/Brown Road Park 135,000 135,000 - - - 0% McDuffie Woods Park 90,000 90,000 2,700 12,326 15,026 17% McBean Park 180,000 180,000 - 16,686 16,686 9% Fleming Tennis Center 112,500 112,500 - 77,060 77,060 68% Lock and Dam Park 49,500 49,500 - - - 0% May Park 67,500 67,500 - 9,700 9,700 14% HH Brigham Park 117,000 117,000 - 104,068 104,068 89% Land Acquisition 180,000 166,140 - 10,827 10,827 7% Dyess Park 63,000 63,000 - 5,400 5,400 9% Brookfield Park 45,000 45,000 - - - 0% Lake Olmstead Park 207,000 207,000 - 15,128 15,128 7% Park 180,000 180,000 - 4,790 4,790 3% S-9 ---PAGE BREAK--- AUGUSTA, GEORGIA SCHEDULE OF SPECIAL ONE PERCENT SALES AND USE TAX - Continued YEAR ENDED DECEMBER 31, 2007 Estimated Prior Current Percentage Original Cost Current Cost Years' Year Total of Projects Estimate Estimate Cost Cost Cost Completion Newman Tennis Center 108,000 108,000 - 9,584 9,584 9% Meadowbrook Park 108,000 108,000 - 855 855 1% Administration - Recreation 500,000 460,000 - 141,227 141,227 31% Augusta Marina 67,500 67,500 - - - 0% Old Government House 45,000 45,000 - - - 0% Doughty Park 27,000 27,000 - - - 0% Fleming Park 67,500 67,500 - - - 0% Hickman Park 27,000 27,000 - - - 0% Aquatics Center 90,000 90,000 - - - 0% Boykin Road Park 27,000 27,000 - - - 0% Eisenhower Park 45,000 45,000 - - - 0% Warren Road Park 31,500 31,500 - - - 0% Imperial Theater 500,000 500,000 - 500,000 500,000 100% Augusta Mini Theater 500,000 500,000 - - - 0% Lucy Craft Laney Museum 200,000 200,000 - - - 0% The MACH Academy 100,000 100,000 13,001 87,000 100,001 100% Recreation, Historic, Cultural and Other Buildings 400,000 400,000 - - - 0% Augusta Museum 400,000 400,000 - 400,000 400,000 100% City of Hephzibah 3,104,000 3,104,000 1,034,666 1,034,666 2,069,332 67% City of 912,000 912,000 304,000 304,000 608,000 67% Immaculate Conception 250,000 253,281 253,281 - 253,281 100% Delta Cost Sharing 144,267 144,267 144,267 - 144,267 100% NSC Discovery Center 1,500,000 1,500,000 1,500,000 - 1,500,000 100% P and Z Handicap Access 26,250 26,250 26,250 - 26,250 100% East Augusta drainage - 1,147,379 1,147,379 - 1,147,379 100% Willow Creek 40,000 70 70 - 70 100% Council Drive 102,459 102,459 102,459 - 102,459 100% General Roadway 361,393 361,393 361,390 - 361,390 100% Trees and landscaping 96,000 55,477 55,476 - 55,476 100% Georgia Golf Hall of Fame 2,000,000 2,000,000 2,000,000 - 2,000,000 100% Laney Walker @ East B 15,000 34 34 - 34 100% TOTAL 497,393,629 $ 540,694,082 $ 247,511,318 $ 29,888,255 $ 277,399,573 $ S-10 ---PAGE BREAK--- AUGUSTA, GEORGIA SCHEDULE OF SPECIAL ONE PERCENT SALES AND USE TAX Notes to Schedule of Special One Percent Sales and Use Tax Year Ended December 31, 2007 Note 1 - Summary of significant accounting policies The accounting policies of Augusta’s Special One Percent Sales and Use Tax conform to accounting principles generally accepted in the United States of America as applicable to governments. These financial statements present only the activity of the Special One Percent Sales and Use Tax projects and are not intended to be a complete presentation of Augusta’s assets, liabilities, revenues, and expenses. Basis of accounting The Special One Percent Sales and Use Tax projects are accounted for using the modified accrual basis of accounting. Under the modified accrual basis of accounting, revenues are recognized when susceptible to accrual when they are “measurable and available”). “Measurable” means the amount of the transaction can be determined and “available” means collectible within the current period or soon enough thereafter to pay liabilities of the current period. Expenditures are recorded when the related fund liability is incurred. Estimates The preparation of this Schedule requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Actual results may differ from these estimates. S-11 ---PAGE BREAK--- S-12 ---PAGE BREAK--- COMPLIANCE SECTION C-1 ---PAGE BREAK--- C-2 ---PAGE BREAK--- REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS Augusta-Richmond County Commission Augusta, Georgia We have audited the accompanying financial statements of the governmental activities, the business-type activities, Augusta Canal Authority, each major fund and the aggregate remaining fund information of Augusta, Georgia as of December 31, 2007 and for the year then ended, which collectively comprise Augusta, Georgia’s basic financial statements, as listed in the table of contents. These financial statements are the responsibility of the Augusta, Georgia management. Our responsibility is to express opinions on these basic financial statements based on our audit. We did not audit the financial statements of the Augusta-Richmond County Department of Health or Downtown Development Authority. Those financial statements were audited by other auditors whose reports thereon has been furnished to us, and our opinion, insofar as it relates to the amounts included for the Department of Health and Downtown Development Authority, is based solely on the reports of the other auditors. Internal Control over Financial Reporting In planning and performing our audit, we considered Augusta, Georgia’s internal control over financial reporting as a basis for designing our auditing procedures for the purpose of expressing our opinion on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of Augusta, Georgia’s internal control over financial reporting. Accordingly, we do not express an opinion on the effectiveness of Augusta, Georgia’s internal control over financial reporting. Our consideration of internal control over financial reporting was for the limited purpose described in the preceding paragraph and would not necessarily identify all deficiencies in internal control over financial reporting that might be significant deficiencies or material weaknesses. However, as discussed below, we identified certain deficiencies in internal control over financial reporting that we consider to be significant deficiencies. A control deficiency exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent or detect misstatements on a timely basis. A significant deficiency is a control deficiency, or combination of control deficiencies, that adversely affects the entity’s ability to initiate, authorize, record, process, or report financial data reliably in accordance with generally accepted accounting principles such that there is more than a remote likelihood that a misstatement of the entity’s financial statements that is more then inconsequential will not be prevented or detected by the entity’s internal control. We consider the deficiencies described in the accompanying schedule of findings and questioned costs to be significant deficiencies in internal control over financial reporting, as described in 07-FS-01 and 07-FS-02. A material weakness is a significant deficiency, or combination of significant deficiencies, that results in more than a remote likelihood that a material misstatement of the financial statements will not be prevented or detected by the entity’s internal control. C-3 ---PAGE BREAK--- Our consideration of internal control over financial reporting was for the limited purpose described in the first paragraph of this section and would not necessarily identify all deficiencies in internal control that might be significant deficiencies and, accordingly, would not necessarily disclose all significant deficiencies that are also considered to be material weaknesses. However, of the significant deficiencies described above, we consider items 07-FS-01 and 07-FS-02 to be material weaknesses. Compliance and Other Matters As part of obtaining reasonable assurance about whether Augusta, Georgia’s financial statements are free of material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards. Augusta, Georgia’s responses to the findings identified in our audit are described in the accompanying schedule of findings and questioned costs. We did not audit Augusta, Georgia’s response and, accordingly, we express no opinion on it. This report is intended solely for the information and use of the audit committee, management, others within Augusta, Georgia, and federal awarding agencies and pass-through entities and is not intended to be and should not be used by anyone other than these specified parties. Augusta, Georgia June 30, 2008 C-4 ---PAGE BREAK--- AUGUSTA, GEORGIA Schedule of Expenditures of Federal Awards Year Ended December 31, 2007 Federal Grantor/ Pass-through Grantor/ Program Title Federal CFDA Number Federal Expenditures U.S. Department of Housing and Urban Development Community Development Block Grants 14.218 B-xx-MC-13-0003 $ 3,144,533 Emergency Shelter Grants Program 14.231 S-xx-MC-13-0004 72,906 Home Investment Partnerships Program 14.239 M-xx-MC-13-0206 1,542,856 Supporting Housing Program 14.235 GA-01B-x-0400x 80,817 Housing Opportunities for Persons with AIDS 14.241 GA-H0-x-F0-02 467,670 Total U.S. Department of Housing and Urban Development 5,308,782 U.S. National Park Service, Department of Interior Preserve America - Way Finding 15.OFA 13-06-PA-2008 25,003 U.S. Department of Justice Local Law Enforcement Block Grant Program 16.592 2005-DD-BX-1031 107,777 Juvenile Accountability Incentive Block Grants 16.523 05B-ST-0001 8,347 Edward Byrne Memorial Justice Assistance Grant Program 16.738 2006-DJ-BX-0390 73,836 16.575 C06-8-001 50,121 16.575 C05-8-185 30,559 Total CFDA# 16.575 80,680 Edward Byrne Memorial Formula Grant Program 16.579 B04-8-005 48,177 Just the Two of Us 16.OFA 04P-10-09-0006 9,754 Serious Violent Offender Reentry Progam 16.OFA 2002-RE-CX-0020 71,586 Total U.S. Department of Justice 400,157 Agency or Pass-through Number C-5 ---PAGE BREAK--- AUGUSTA, GEORGIA Schedule of Expenditures of Federal Awards (Continued) Year Ended December 31, 2007 Federal Grantor/ Pass-through Grantor/ Program Title Federal CFDA Number Federal Expenditures Agency or Pass-through Number U.S. Department of Transportation Airport Improvement Program Grant 20.106 3-13-0011-xx 3,634,745 Airport Improvement Program Grant 20.106 3-13-0012-11 20,000 Total CFDA# 20.106 3,654,745 Federal Transit Formula Grants 20.507 GA-90-xxxx 1,266 State and Community Highway Safety 20.600 GA-2008-000-00569 106,700 Total U.S. Department of Transportation 3,762,711 U.S. Environmental Protection Agency DNR 319H Grant 66.460 751-60065 9,477 Federal Emergency Management Agency Hazard Mitigation Grant 83.548 17PDMC03012245 49,100 U.S. Department of Health and Human Services Special Programs for the Aging: Disaster Prevention and Health Promotion Services 93.043 N/A 78,367 Grants for Supportive Services and Senior Centers 93.044 N/A 110,063 Nutrition Services 93.045 N/A 130,315 Nutrition Services Incentive Program 93.053 N/A 106,279 Total U.S.Health and Human Services 425,024 U.S. Department of Homeland Security Assistance to Firefighters Grant 97.044 EWW-2005-FG-05019 157,947 C-6 ---PAGE BREAK--- AUGUSTA, GEORGIA Schedule of Expenditures of Federal Awards (Continued) Year Ended December 31, 2007 Federal Grantor/ Pass-through Grantor/ Program Title Federal CFDA Number Federal Expenditures Agency or Pass-through Number Reimburseable Agreement Security Requirements after September 11, 2001 97.090 HSTS01-04-A-LEF003 94,054 Cooperative Agreement, beginning October 1, 2007 97.090 HSTS02-08-H-SLR007 21,396 Total CFDA# 97.090 115,450 Homeland Security Grant Program Homeland Security Grant Program 97.067 2006-GE-T6-0066-0853 216,297 97.067 2006-GE-T6-0066-0869 189,711 Total CFDA# 97.067 406,008 Buffer Zone Protection Program 97.078 GA-2006-000-00491 23,605 Total U.S. Department of Homeland Security 703,010 Total Federal Expenditures $ 10,683,264 C-7 ---PAGE BREAK--- AUGUSTA, GEORGIA Notes to the Schedule of Expenditures of Federal Awards Year Ended December 31, 2007 Note 1 - Basis of presentation The accompanying schedule of expenditures of federal awards includes the federal grant activity of Augusta, Georgia, (the “Government”), and is presented on the modified accrual basis of accounting. The information in this schedule is presented in accordance with the requirements of OMB Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations. Therefore, some amounts presented in this schedule may differ from amounts presented in, or used in the preparation of, the basic financial statements. Note 2 – Reporting entity The accompanying schedule of expenditures of federal awards includes the accounts of all Augusta and Richmond County operations. The Government uses the criteria for including organizations as component units within Augusta’s reporting entity, as set forth in Section 2100 of GASB’s Codification of Governmental Accounting and Financial Reporting Standards. Excluded from the accompanying schedule of federal awards is the Government’s discretely presented component unit, Richmond County Department of Health. Separate financial statements may be obtained from the Richmond County Department of Health at 950 Laney Walker Blvd., Augusta, Georgia 30901. Note 3 - Non-cash awards Augusta, Georgia did not receive any non-cash federal awards during the year ended December 31, 2007. C-8 ---PAGE BREAK--- AUGUSTA, GEORGIA Summary Schedule of Prior Year Audit Findings and Questioned Costs For the Year Ended December 31, 2007 Summary Listing of Prior Audit Findings Finding Control Number Auditee Response/Status Comments 04-01 Repeat finding in current year See p. C-9 06-FS-01 Repeat finding in current year See p. C-9 06-FS-02 Substantially resolved during the currrent year See p. C-10 04-02 Repeat finding - finding updated in current year See p. C-11 04-03 Resolved during the current year See p. C-12 05-01 Substantially resolved during the currrent year See p. C-12 05-04 Substantially resolved during the currrent year See p. C-14 05-06 Repeat finding - finding updated in current year See p. C-15 05-08 Resolved during the current year See p. C-16 05-13 Repeat finding - finding updated in current year See p. C-17 05-14 Resolved during the current year See p. C-18 06-01 Resolved during the current year See p. C-19 06-02 Resolved during the current year See p. C-20 C-9 ---PAGE BREAK--- AUGUSTA, GEORGIA Summary Schedule of Prior Audit Findings and Questioned Costs (Continued) Year Ended December 31, 2007 I. Findings in Relation to the Audit of the Financial Statements Finding 04-01 (repeat finding) Budgetary compliance CRITERI:A The State of Georgia local government budgets and audits code states that the legal level of control shall be, at a minimum, expenditures for each department for each fund for which a budget is prepared (Article 1 section 14). CONDITION: We noted that several departments across the government had expenditures above appropriations for the fiscal year. RECOMMENDATION: The Government should increase the budget level of control to the department level. MANAGEMENT’S RESPONSE AND CORRECTIVE ACTION PLAN: The Finance Department will continue to monitor FY 2007 budget and expenditures and ensure that the appropriate budget amendments are done in 2007 to avoid the expenditures exceeding the budget. It may be necessary to amend the budget after December 31, 2007 if there are Departments that have expenditures exceeding the budget since we continue to recognize accruals for expenditures after December 31, 2007. In some cases these expenditures are mandated, however, the proper budget amendment to increase reserve or revenues and appropriations as necessary would be done. CURRENT STATUS: There were departments with budget overages in 2007; repeat finding this fiscal year. Finding 06-FS-01 (repeat finding) CONDITION: The Government did not prepare its financial statements for the year ended December 31, 2006, nor its conversion entries related to converting the Fund Financial Statements to the Statement of Net Assets and Statement of Activities. The Government also did not reconcile certain balance sheet accounts during the year on a timely basis. During our audit procedures, significant adjustments were posted to the internal financial statements in order for the financial statements to be in accordance with Generally Accepted Accounting Principles (“GAAP”). Based upon the Government’s request, we prepared the conversion entries to convert the Fund Financial Statements to the Statement of Net Assets and Statement of Activities, and other year-end adjustments and reclassifications. Also, during our audit procedures as accounts were reconciled to supporting documentation, we proposed adjustments to correct balance sheet accounts to the supporting schedules. C-10 ---PAGE BREAK--- AUGUSTA, GEORGIA Summary Schedule of Prior Audit Findings and Questioned Costs (Continued) Year Ended December 31, 2007 I. Findings in Relation to the Audit of the Financial Statements (continued) CAUSE: The Government does not have sufficient resources with the financial statement expertise which would allow the Government to internally prepare its conversion entries for the Fund Financial Statements to the Government-wide financial statements, in accordance with GAAP. Historically, due to the cost-benefit analysis made by management of internal control over financial reporting, the Government has engaged its auditor to assist in the conversion to GAAP basis and financial statement preparation. The Government also has not had sufficient resources in the accounting and finance departments which would allow sufficient time to be spent on reconciling balance sheet accounts for all funds to the supporting documentation on a timely basis. RECOMMENDATION: We recommend that management consider the cost-benefit analysis of the preparation of its financial statements in accordance with GAAP. We also recommend that management continue the training and supervision of its finance and accounting staff in order to reconcile all balance sheet accounts to supporting documentation on a timely basis. MANAGEMENT’S RESPONSE AND CORRECTIVE ACTION PLAN: Management concurs with the finding and has already taken steps to implement the recommendations as practically possible within the Government’s resources. CURRENT STATUS: The Government did not prepare its financial statements for the year ended December 31, 2007, nor its conversion entries related to converting the Fund Financial Statements to the Statement of Net Assets and Statement of Activities; repeat finding this fiscal year. Finding number 06-FS-02 CONDITION: The Government did not have sufficient supporting documentation relating to the Human Resources function. During our audit procedures, the testing of controls for payroll transactions resulted in finding a lack of supporting documentation in several instances, including time cards and documented rates of pay included in personnel files. We also noted that variances noted upon reconciliation of the insurance coverage to the insurance statements were not resolved in a timely manner. CAUSE: The Government does not have appropriate policies and procedures that are enforced in order to ensure the proper documentation is retained within personnel files. The Government also does not have sufficient processes in place by which variances noted during the insurance reconciliation are resolved in a timely manner. RECOMMENDATION: We recommend that proper procedures be required and enforced in order to ensure proper supporting documentation is retained within the Human Resources department to support payroll disbursements. We also recommend that timely follow up be performed for variances noted during the reconciliation of insurance statements to insurance withholdings. C-11 ---PAGE BREAK--- AUGUSTA, GEORGIA Summary Schedule of Prior Audit Findings and Questioned Costs (Continued) Year Ended December 31, 2007 I. Findings in Relation to the Audit of the Financial Statements (continued) MANAGEMENT’S RESPONSE AND CORRECTIVE ACTION PLAN: Management concurs with the finding and has already taken steps to implement the recommendations as practically possible within the Government’s resources. CURRENT STATUS: During 2007 it was noted that retention of supporting documentation would be tested at the departmental level. Please see finding 07-FS-02 related to appropriate documentation retention for time worked. We noted the documentation related to changes in rate of pay was substantially corrected. II. Federal Awards Findings and Questioned Costs Finding 04-2 Federal Agency: U.S. Department of Housing and Urban Development Federal Program: CFDA # 14.239 HOME Investment Partnerships Program Compliance Requirement: Sub-recipient Monitoring CRITERIA: OMB A-133 (.400(d)) states that a pass-through entity shall monitor the activities of sub-recipients as necessary to ensure that Federal awards are used for authorized purposes in compliance with laws, regulations, and the provisions of contracts or grant agreements and that performance goals are achieved. CONDITION: Insufficient resources were dedicated to sub-recipient monitoring. RECOMMENDATION: We recommend that the HOME program of Augusta, Georgia implement the following controls: A. Review required sub-recipient reports and follow up on areas of concern. B. Perform site visits to sub-recipients to review financial and programmatic records and observe operations. C. Draft written policies which establish the following: - communication of Federal award requirements to sub-recipients; - responsibilities for monitoring sub-recipients; - process and procedures for monitoring; - methodology for resolving findings of sub-recipient noncompliance or weaknesses in internal control; - and requirements for and processing sub-recipient audits. D. All of these recommendations should be documented. CURRENT STATUS: Finding not sufficiently corrected in fiscal year 2007. See update of deficiency at finding 07-01. C-12 ---PAGE BREAK--- AUGUSTA, GEORGIA Summary Schedule of Prior Audit Findings and Questioned Costs (Continued) Year Ended December 31, 2007 II. Federal Awards Findings and Questioned Costs (continued) Finding 04-3 Federal Agency: U.S. Department of Housing and Urban Development Federal Program: CFDA # 14.246 Neighborhood Initiative Grant Compliance Requirement: Reporting CRITERIA: The grant agreement states in Article IV that each recipient shall submit a progress report every six months after the effective date of the grant agreement. Progress reports shall include reports on both performance and financial progress and shall conform with 24 CFR 85.40 and 85.41 or 24 CFR Sections 84.50 through 84.53, as applicable. CONDITION: No controls existed at year-end to meet the reporting requirements of the Neighborhood Initiative Grant; therefore, no reports were submitted to the awarding agency to track the progress of the grant. RECOMMENDATION: We recommend that the Neighborhood Initiative Program of Augusta, Georgia implement the following controls: A. Draft written policies that establish responsibility and provide the procedures for periodic monitoring, verification, and reporting of program progress and accomplishments. B. Setup a tracking system that reminds staff when reports are due. C. Setup supervisory review of reports performed to assure accuracy and completeness of data and information included in the reports. CURRENT STATUS: The Government did not receive funding through the Neighborhood Initiative Grant in fiscal year 2007. Finding is no longer applicable. Finding 05-01 Federal Agency: Federal Program: CFDA # All The Government’s Federal Grants Compliance Requirement: Grants Management CONDITION: The Government has several federal, state and local grants as well as many other revenue sources. The Government does not designate anyone to oversee the accounting and management of the grants and contracts. Each of the Government’s departments that receives federal grants is responsible for all aspects of the related grant administration. This includes the application, the requests for draws, the spending of the funds, the monitoring, the reporting, and the compliance with federal requirements. This results in a decentralized and inadequate grants management process. The Finance Department is unaware of all the federal grants that the Government receives. There is little, if any, communication between the departments receiving the grants and the Finance Department. There is no management oversight that the departments are in compliance with federal grant requirements. C-13 ---PAGE BREAK--- AUGUSTA, GEORGIA Summary Schedule of Prior Audit Findings and Questioned Costs (Continued) Year Ended December 31, 2007 II. Federal Awards Findings and Questioned Costs (continued) The Government was unable to provide a summary of all grants received during 2005. There is no method of ensuring that all grants are properly reported on the Schedule of Expenditures of Federal Awards in the Government’s Single Audit Report. This schedule is used to report federal expenditures to the Federal Clearing House and is required to be tested to determine compliance with federal laws. The Government was unable to timely reconcile grant expenditures per the Schedule of Expenditures of Federal Awards or the various federal financial reports to the general ledger. The general ledger also cannot be reconciled to federal reporting systems such as the IDIS system maintained by HUD. In addition, the Housing and Economic Development Department (HED) of the Government maintains an inadequate filing system and documentation retention. The information contained in the project files is unorganized and incomplete. CRITERIA: According to the Office of Budget and Management Circular A-102, Uniform Administrative Requirements for Grants and Cooperative Agreements to State and Local Governments, the Government is required to maintain accurate and complete accounting records which identify the source of and application for federal funds. In addition, OMB A-102 states that the grantee must establish reasonable control procedures which ensure the accuracy of such records. All grant revenue sources need to be identified and properly reported on the Schedule of Expenditures of Federal Awards. EFFECTS: • Federal grants may not be properly reported on the Schedule of Federal Awards in the Single Audit report. • Departments may not be aware of or be in compliance with federal laws concerning the management, spending, and reporting of the grants. As a result, all federal grants may be in jeopardy for future funding. QUESTIONED COSTS: Undetermined CAUSE: The Government has a systematic problem in that it does not have a grants management position that could centralize the information and management of the grants received by the Government. RECOMMENDATIONS: To improve the management of the Government’s grants, we recommend the Government create a grants’ manager position that would be responsible for organizing and maintaining all grant information for the Government as a whole. This position should also be responsible for researching federal laws and regulations related to grant programs and ensuring compliance with these laws and regulations. This position should maintain a summary of all federal funds received, all pertinent information related to the grant program, such as CFDA number and codes of federal regulations. This position should also be responsible for ensuring a reconciliation is prepared between the federal financial reporting and the Government’s general ledger. MANAGEMENT’S RESPONSE AND CORRECTIVE ACTION PLAN: Management concurs with the finding and has already taken steps to implement the recommendations as practically possible within the Government’s resources. C-14 ---PAGE BREAK--- AUGUSTA, GEORGIA Summary Schedule of Prior Audit Findings and Questioned Costs (Continued) Year Ended December 31, 2007 II. Federal Awards Findings and Questioned Costs (continued) CURRENT STATUS: Though a grants manager was in place in 2007, the duties of the manager did not include ensuring compliance with laws and regulations, maintaining pertinent information related to the grant programs, or ensuring reconciliation between the Government’s general ledger and financial reports submitted to the awarding agencies. Grants were still decentralized with various Government departments managing all aspects of the grant, from application to close-out. A new grants manager was hired January 1, 2008, for which the job description is to include these appropriate duties. The finding was substantially resolved. Finding 05-04 Federal Agency: U.S. Department of Housing and Urban Development Federal Program: CFDA # 14.218 Community Development Block Grant; CFDA #14.239 HOME Investment Partnerships Program; CFDA #14.241 Housing Opportunities for Persons with AIDS Compliance Requirement: Allowable Costs CONDITION: CDBG, HOME, and HOPWA grant programs allow for administrative costs to be charged to the program. Salaries and Wages are charged to the grants based upon an allocation of employees’ time. Many are charged 100% to a program because they only work on that program. Others are charged 50/50, 60/40, etc. Personnel are required to keep a daily log of how their time is spent. These logs, however, are not used in the allocation of the personnel wages charged to the programs either on an actual daily basis or in supporting the percentages of salaries charged. CRITERIA: In accordance with OMB Circular A-87, effort reports of actual time spent on federal programs are required for employees engaged in two or more federal programs or activities and semi-annual reports are required for employees engaged in only one federal program or other project or activity that could affect the charges to federal programs. Where employees are expected to work solely on a single Federal award or cost objective, charges for their salaries and wages must be supported by periodic certifications that the employees worked solely on that program for the period covered by the certification. These certifications must be prepared at least semi-annually and must be signed by the employee or supervisory official having first hand knowledge of the work performed by the employee. Where employees work on multiple activities or cost objectives, a distribution of their salaries or wages must be supported by personnel activity reports or equivalent documentation that reflect an after-the-fact distribution of the actual activity of each employee. The documentation must account for the total activity for which each employee is compensated, must be prepared at least must coincide with one or more pay periods, and must be signed by the employee. Budget estimates or other distribution percentages determined before the services are performed do not qualify as support for charges to Federal awards but may be used for interim accounting purposes. EFFECTS: Administrative costs submitted for reimbursement is unsupported and may be inaccurately reported. Failure to document time or failure to use documented time in the allocation of administrative charges to grant programs could result in questioned costs. Though payroll charges are allowable grant expenditures, administrative charges may be overdrawn on some federal programs and under drawn on other federal programs. C-15 ---PAGE BREAK--- AUGUSTA, GEORGIA Summary Schedule of Prior Audit Findings and Questioned Costs (Continued) Year Ended December 31, 2007 II. Federal Awards Findings and Questioned Costs (continued) QUESTIONED COSTS: It was not practical to extend our auditing procedures to determine if any questioned costs resulted from this finding. CAUSE: Lack of procedures to certify payrolls or track payroll charges by federal program resulted in a systematic problem related to allowable costs charged to HUD programs. RECOMMENDATIONS: We recommend the Government use the time logs currently being completed in calculating the administrative charges to the various grant programs in accordance with OMB Circular A-87. MANAGEMENT’S RESPONSE AND CORRECTIVE ACTION PLAN: Management concurs with the finding and has already taken steps to implement the recommendations as practically possible within the Government’s resources. CURRENT STATUS: The Housing and Community Development Department of the Government modified its timecards whereby employees certify bi-weekly payroll costs charged to federal programs. The program director, however, did not begin certifying his payroll costs until fiscal year 2008. The finding was substantially corrected in fiscal year 2007. Finding 05-06 Federal Agency: U.S. Department of Housing and Urban Development Federal Program: CFDA # 14.218 Community Development Block Grant; CFDA #14.239 HOME Investment Partnerships Program; CFDA #14.241 Housing Opportunities for Persons with AIDS Compliance Requirement: Sub-recipient Monitoring CONDITION: In our sample of CDBG, HOME, and HOPWA projects, we selected one CDBG project, three HOME projects, and two HOPWA projects in which contracts were entered into with sub-recipients. We noted no on-site programmatic monitoring of any of these sub-recipients had been performed by the Government. Audited financial statements from the sub-recipients, as required by the sub-recipient contracts, had only been received from the sub-recipient under the CDBG program. CRITERIA: The Government is responsible for monitoring sub-recipients to provide reasonable assurance that they expend federal funds in compliance with Federal and contractual requirements. According to 24 CFR (HUD) 85.40(a) and 24 CFR (HUD) 92.504(a), Grantees are responsible for managing the day-to-day operations of grant and subgrant supported activities to assure compliance with applicable Federal requirements and that performance goals are being achieved. Appropriate action must be taken when performance problems arise. Grantee monitoring must cover each program, function or activity. The use of State recipients, subrecipients, or contractors does not relieve the participating jurisdiction of this responsibility. The performance of each contractor and subrecipient must be reviewed at least annually. C-16 ---PAGE BREAK--- AUGUSTA, GEORGIA Summary Schedule of Prior Audit Findings and Questioned Costs (Continued) Year Ended December 31, 2007 II. Federal Awards Findings and Questioned Costs (continued) EFFECTS: Failure to monitor the performance of sub-recipients is a material non-compliance with program requirements for Housing and Urban Development programs. Lack of monitoring could result in questioned costs spent by the sub-recipient that would have to be returned to the federal agency. Future funding could be in jeopardy. QUESTIONED COSTS: Undetermined CAUSE: Lack of oversight in the Housing and Economic Development Department to insure compliance requirements are communicated to the staff and are carried out resulted in a systematic problem related to compliance with sub-recipient monitoring. RECOMMENDATIONS: We recommend the Government establish policies and procedures for monitoring sub-recipients. These procedures should include identification of all contracts and sub-recipients, the preparation of annual monitoring schedules, check lists of federal compliance requirements and contract requirements that need to be monitored and tested on the sub-recipient level, guidance on written documentation that must be maintained to support the monitoring, and follow-up procedures for noted deficiencies or concerns. MANAGEMENT’S RESPONSE AND CORRECTIVE ACTION PLAN: Management concurs with the finding and has already taken steps to implement the recommendations as practically possible within the Government’s resources. CURRENT STATUS: We noted written evidence of on-site programmatic monitoring related to subrecipients of the Community Development Block Grant and the Housing Opportunities for Persons with AIDS programs. The HOME program, however, did not maintain documentation sufficient to determine if adequate monitoring is being performed. As such, this finding has only been partially corrected. See finding 07-01 where deficiency is re- written to reflect its current status. Finding 05-08 Federal Agency: U.S. Department of Housing and Urban Development Federal Program: CFDA # 14.218 Community Development Block Grant; CFDA #14.239 HOME Investment Partnerships Program Compliance Requirement: Cash Management and Program Income CONDITION: The Government was not in compliance with requirements relating to cash draws and the use of program income. Program income was not reported to HUD through the IDIS system throughout the year. In addition, program income was not consistently deducted from federal draws to ensure compliance with federal cash management requirements. This resulted in funds being drawn prior to using all available program income. Subsequent to year end, program income reported on the IDIS system was reconciled to the program income deposits recorded on the Government’s general ledger. All missing income on the IDIS system was subsequently reported. C-17 ---PAGE BREAK--- AUGUSTA, GEORGIA Summary Schedule of Prior Audit Findings and Questioned Costs (Continued) Year Ended December 31, 2007 II. Federal Awards Findings and Questioned Costs (continued) CRITERIA: According to CFR 24 Part 570.504 (CDBG), the receipt and expenditure of program income must be recorded as part of the financial transactions of the grant program. It also states that substantially all other program income shall be disbursed for eligible activities before additional cash withdrawals are made from the US Treasury. CFR 24 Part 92.508 requires that the jurisdiction maintain records identifying the source and application of program income, repayments, and recaptured funds. EFFECTS: Failure to properly account for program income results in draw downs in excess of cash needs for the CDBG and HOME programs. QUESTIONED COSTS: Undetermined CAUSE: The Housing and Economic Development Finance Officer’s position was vacant for approximately six months during the year. During this absence, the Government did not have a system in place to provide for the accurate recording and use of program income. RECOMMENDATIONS: We recommend the Government establish policies to properly record and apply program income. Program income reported in the Government’s general ledger should be reconciled to program income reported on the IDIS system. MANAGEMENT’S RESPONSE AND CORRECTIVE ACTION PLAN: Management concurs with the finding and has already taken steps to implement the recommendations as practically possible within the Government’s resources. CURRENT STATUS: The Government reported to HUD all program income it received during 2007. The Government is also taking steps to utilize program income to reduce federal draws on a consistent basis. Finding 05-13 Federal Agency: U.S. Department of Housing and Urban Development Federal Program: CFDA # 14.218 Community Development Block Grant Compliance Requirement: Procurement CONDITION: No documentation exists that procurement procedures were followed when using federal funds to purchase $25,772.86 in supplies for a Community Development Block Grant sponsored project. CRITERIA: 24 CFR 85.36 on Procurement states that grantees will use their own procurement procedures which reflect applicable State and local laws and regulations, provided that the procurements conform to applicable Federal law and the standards identified in this section. The Grantees must maintain records sufficient to detail the C-18 ---PAGE BREAK--- AUGUSTA, GEORGIA Summary Schedule of Prior Audit Findings and Questioned Costs (Continued) Year Ended December 31, 2007 II. Federal Awards Findings and Questioned Costs (continued) significant history of a procurement. These records will include, but are not necessarily limited to the following: rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. All required records must be retained for three years after grantees make final payments and all other pending matters are closed. EFFECTS: The Government is not in compliance with the procurement requirements of the federal award and could result in questioned costs. QUESTIONED COSTS: $25,772.86 computed as the invoice paid for which procurement records could not be found. CAUSE: Lack of internal controls to ensure procurement procedures are followed and procurement records are maintained for the required period. RECOMMENDATIONS: We recommend the Government maintain proper documentation of procurement procedures followed for the time period as required by federal guidelines. MANAGEMENT’S RESPONSE AND CORRECTIVE ACTION PLAN: Management concurs with the finding and has already taken steps to implement the recommendations as practically possible within the Government’s resources. CURRENT STATUS: Finding is included in the Government’s Findings in Relation to audit of the Financial Statements at 07-FS-01. Finding 05-14 Federal Agency: U.S. Department of Justice; U.S. Department of Transportation Federal Program: CFDA #16.592 Local Law Enforcement Block Grant; CFDA #20.106 Airport Improvements Program Compliance Requirement: Real Property and Equipment Maintenance CONDITION: The City of Augusta maintains a capital asset detail for all Government property. This listing does not maintain the source of the funds used to purchase the equipment on the asset schedule. Thus, there is no tracking of equipment purchased with federal funds. No periodic inventory is taken and reconciled to the capital asset detail. C-19 ---PAGE BREAK--- AUGUSTA, GEORGIA Summary Schedule of Prior Audit Findings and Questioned Costs (Continued) Year Ended December 31, 2007 II. Federal Awards Findings and Questioned Costs (continued) CRITERIA: Local governments shall follow the A-102 Common Rule for equipment acquired under Federal awards received directly from a Federal awarding agency. The A-102 Common Rule includes the requirement that: • Equipment records shall be maintained. These records shall include a description of the property, a serial number or other identification number, the source of property, who holds title, the acquisition date, and cost of the property, percentage of Federal participation in the cost of the property, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. • A physical inventory of equipment shall be taken at least once every two years and reconciled to the equipment records. • An appropriate control system shall be used to safeguard equipment. • Equipment shall be adequately maintained. • When equipment with a current per unit fair market value of $5,000 or more is no longer needed for a Federal program, it may be retained or sold with the Federal agency having a right to a proportionate (percent of Federal participation in the cost of the original project) amount of the current fair market value. EFFECTS: Lack of a physical inventory on equipment puts the Government at risk of misappropriation of assets and that the equipment will not be properly maintained. Lack of tracking the source used to purchase equipment puts the Government at risk that should equipment bought with Federal funds be sold, the federal agency will not be informed and have the right to a proportionate share of the funds. QUESTIONED COSTS: Undetermined CAUSE: The Government’s capital asset system is not maintained with appropriate information regarding the source of the funds used to purchase equipment. Inventories are not conducted and reconciled to the fixed asset system. RECOMMENDATIONS: We recommend inventory records be updated with the appropriate information, including the source of the funds. A physical inventory of equipment should be performed and reconciled to the property records at least every two years. MANAGEMENT’S RESPONSE AND CORRECTIVE ACTION PLAN: Management concurs with the finding and has already taken steps to implement the recommendations as practically possible within the Government’s resources. CURRENT STATUS: The Government has begun retaining the source funding in the detailed capital asset records. Finding corrected. C-20 ---PAGE BREAK--- AUGUSTA, GEORGIA Summary Schedule of Prior Audit Findings and Questioned Costs (Continued) Year Ended December 31, 2007 II. Federal Awards Findings and Questioned Costs (continued) Finding 06-01 Federal Agency: U.S. Department of Housing and Urban Development Federal Programs: CFDA # 14.218 Community Development Block Grant CFDA #14.239 HOME Investment Partnerships Compliance Requirement: Allowable Costs CONDITION: CDBG and HOME grant programs allow for administrative costs to be charged to the programs. Rent, utilities, and various office supplies are charged to these grants on a 50%/50% with no corresponding charges to programs that also benefit from the use of the Housing & Neighborhood Development facility and department personnel. CRITERIA: In accordance with OMB Circular A-87 and 2 CFR part 225 Appendix costs of central services should be allocable to all activities. A cost is allocable to a particular cost objective if the goods or services involved are chargeable or assignable to such cost objective in accordance with relative benefits received. All activities that benefit from the governmental unit's indirect cost, including unallowable activities and services donated to the governmental unit by third parties, will receive an appropriate allocation of indirect costs. EFFECTS: The CDBG and HOME programs are bearing more than their equitable share of these expenditures. QUESTIONED COSTS: Not determined. CAUSE: Various indirect costs were not allocated equitably among the federal programs receiving the benefits. RECOMMENDATIONS: We recommend that the Government allocate its rent, utilities, and other office expenses equitably to each activity in accordance with relative benefits received. MANAGEMENT’S RESPONSE AND CORRECTIVE ACTION PLAN: Management concurs with the finding and has already taken steps to implement the recommendations as practically possible within the Government’s resources. CURRENT STATUS: During fiscal year 2007, the Housing and Community Development Department maintained documentation and support for allocations of indirect costs. Finding corrected. Finding 06-02 Federal Agency: U.S. Department of Housing and Urban Development Federal Programs: CFDA # 14.218 Community Development Block Grant Compliance Requirement: Earmarking C-21 ---PAGE BREAK--- AUGUSTA, GEORGIA Summary Schedule of Prior Audit Findings and Questioned Costs (Continued) Year Ended December 31, 2007 II. Federal Awards Findings and Questioned Costs (continued) CONDITION: The Government may use up to 20% of its CDBG allocation plus any funds received as program income for administrative and planning costs in carrying out the CDBG program. The annual performance report for 2006 reported the Government spent 23.6% of its total annual allocation and program income on administrative and planning costs. In addition, the Government may use up to 15% of its CDBG allocation plus any funds received as program income in the preceding year for public services. The annual performance report for 2006 reported the Government spent 16.4% on public service activities. CRITERIA: Pursuant to 24 CFR sections 570.205 and 570.206, not more than 20 percent of the total grant, plus 20 percent of program income received during a program year, may be obligated during that year for activities that qualify as planning and administration. Furthermore, pursuant to 24 CFR section 570.201(e), the amount of CDBG funds obligated during the program year for public services must not exceed 15 percent of the grant amount received for that year plus 15 percent of the program income it received during the preceding program year. EFFECTS: The Government is not in compliance with the federal earmarking requirements. The Government could be liable for any disallowed costs associated with excess administrative and public service costs. QUESTIONED COSTS: $132,893 calculated as the difference between the 20% administrative costs allowed and the 23.6% administrative costs expended ($94,199) and the difference between the 15% public service costs allowed and the 16.4% public service costs expended ($38,694). CAUSE: The lack of procedures to review administrative cost and public service cost allowances allowed and those costs incurred resulted in the Government’s noncompliance with federal earmarking requirements. RECOMMENDATIONS: We recommend the Government develop procedures for reviewing administrative cost and public service cost caps allowed and compare these amounts to costs incurred to ensure these caps are not exceeded. MANAGEMENT’S RESPONSE AND CORRECTIVE ACTION PLAN: Management concurs with the finding and has already taken steps to implement the recommendations as practically possible within the Government’s resources. CURRENT STATUS: Earmarking requirements were met in fiscal year 2007. Finding corrected. C-22 ---PAGE BREAK--- REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS ON COMPLIANCE WITH REQUIREMENTS APPLICABLE TO EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE IN ACCORDANCE WITH OMB CIRCULAR A-133 Augusta-Richmond County Commission Augusta, Georgia Compliance We have audited the compliance of Augusta, Georgia with the types of compliance requirements described in the U.S. Office of Management and Budget (OMB) Circular A-133 Compliance Supplement that are applicable to each of its major federal programs for the year ended December 31, 2007. Augusta, Georgia’s major federal programs are identified in the summary of auditor’s results section of the accompanying schedule of findings and questioned costs. Compliance with the requirements of laws, regulations, contracts and grants applicable to each of its major federal programs is the responsibility of Augusta, Georgia’s management. Our responsibility is to express an opinion on Augusta, Georgia’s compliance based on our audit. We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and OMB Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations. Those standards and OMB Circular A-133 require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types of compliance requirements referred to above that could have a direct and material effect on a major federal program occurred. An audit includes examining, on a test basis, evidence about Augusta, Georgia’s compliance with those requirements and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Our audit does not provide a legal determination of Augusta, Georgia’s compliance with those requirements. In our opinion, Augusta, Georgia complied, in all material respects, with the requirements referred to above that are applicable to each of its major federal programs for the year ended December 31, 2007. However, the results of our auditing procedures disclosed instances of noncompliance with those requirements, which are required to be reported in accordance with OMB Circular A-133 and which are described in the accompanying schedule of findings and questioned costs as items 07-02, 07-03, and 07-04. Internal Control over Compliance The management of Augusta, Georgia is responsible for establishing and maintaining effective internal control over compliance with the requirements of laws, regulations, contracts and grants applicable to federal programs. In planning and performing our audit, we considered Augusta, Georgia’s internal control over compliance with requirements that could have a direct and material effect on a major federal program in order to determine our auditing procedures for the purpose of expressing our opinion on compliance, but not for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, we do not express an opinion on the effectiveness of Augusta, Georgia’s internal control over compliance. C-23 ---PAGE BREAK--- Our consideration of internal control over compliance was for the limited purpose described in the preceding paragraph and would not necessarily identify all deficiencies in the entity’s internal control that might be significant deficiencies or material weaknesses as defined below. However, as discussed below, we identified certain deficiencies in internal control over compliance that we consider to be significant deficiencies and another that we consider to be a material weakness. A control deficiency in an entity’s internal control over compliance exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent or detect noncompliance with a type of compliance requirement of a federal program on a timely basis. A significant deficiency is a control deficiency, or combination of control deficiencies, that adversely affects the entity’s ability to administer a federal program such that there is more than a remote likelihood that noncompliance with a type of compliance requirement of a federal program that is more than inconsequential will not be prevented or detected by the entity’s internal control. We consider the deficiencies in internal control over compliance described in the accompanying schedule of findings and questioned costs as item 07-01, 07-02, and 07-04 to be significant deficiencies. A material weakness is a significant deficiency, or combination of significant deficiencies, that results in more than a remote likelihood that material noncompliance with a type of compliance requirement of a federal program will not be prevented or detected by the entity’s internal control. Of the significant deficiencies in internal control over compliance described in the accompanying schedule of findings and questioned costs, we consider item 07- 01 to be a material weakness. Augusta, Georgia’s responses to the findings identified in our audit are described in the accompanying schedule of findings and questioned costs. We did not audit Augusta, Georgia’s response and, accordingly, we express no opinion on it. This report is intended solely for the information and use of the audit committee, management, others within Augusta, Georgia, and federal awarding agencies and pass-through entities and is not intended to be and should not be used by anyone other than these specified parties. Augusta, Georgia June 30, 2008 C-24 ---PAGE BREAK--- AUGUSTA, GEORGIA Schedule of Findings and Questioned Costs Year Ended December 31, 2007 I. Summary of the Auditor’s Results Financial Statements The auditor’s report expresses an unqualified opinion on the financial statements of the Augusta, Georgia as of and for the year ended December 31, 2007. Significant deficiencies in internal control over financial reporting which would be required to be reported in the Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards were disclosed during the audit and are listed as findings 07-FS-01 and 07-FS-02 below. No instances of noncompliance or other matters material to the financial statements of Augusta, Georgia, as required to be reported in accordance with Government Auditing Standards, were disclosed by the audit. Federal Awards The auditor’s report expresses an unqualified opinion on compliance for major programs of Augusta, Georgia as of and for the year ended December 31, 2007. Significant deficiencies in internal control over compliance applicable to major federal award programs which would be required to be reported in the Report on Compliance with Requirements Applicable to Each Major Program and on Internal Control Over Compliance in Accordance with OMB Circular A-133 were disclosed during the audit as Finding Number 07-01, 07-02, and 07-04. Identification of Major Programs CFDA Number Name of Federal Program U.S. Department of Housing and Urban Development 14.218 Community Development Block Grants/Entitlement Grants 14.239 HOME Investment Partnerships Program 14.241 Housing Opportunities for Persons with AIDS U.S. Department of Transportation 20.106 Airport Improvement Program U.S. Department of Homeland Security 97.067 Homeland Security Grant Program We used a threshold of $320,498 to distinguish between Type A and Type B programs. Augusta, Georgia did not qualify as a low-risk auditee. C-25 ---PAGE BREAK--- AUGUSTA, GEORGIA Schedule of Findings and Questioned Costs - Continued Year Ended December 31, 2007 II. Findings in Relation to the Audit of the Financial Statements Consideration of Internal Control over Financial Reporting – Material Weakness Finding 07-FS-01 (includes prior year Finding 05-13) CONDITION: During our testing of compliance with procurement policies, we noted instances of non-compliance with procurement policies. We noted instances of inconsistent knowledge of Government personnel regarding the policy for obtaining bids for procured items. We noted more than one instance of purchases made when a bid should have been obtained and was not at the department level. We noted instances of lack of documentation at the department level to support the bids obtained or sole sourced items. CAUSE: Their policies and procedures that were distributed to the employees are inconsistent with the “working” policy. The policies and procedures are inconsistent with the Augusta-Richmond County Code. There is no evidence that employees refer to the policies and procedures in order to consistently follow the procedures. The Government does not have sufficient resources devoted to monitoring compliance with the purchasing policy at the Procurement Department level. RECOMMENDATION: We recommend that the Procurement Department make corrections to the Policies and Procedures manual in accordance with the Code as well as make the document consistent in words and in numbers. We also suggest continuing to educate Department Heads on the importance of obtaining bids for all items in accordance with the Procurement Policy as well as the need to retain supporting documentation or indicate on the PO the bids obtained. Furthermore, we suggest reviewing purchase orders in more detail prior to approving and sending all incomplete purchase orders back to the department without approval when they are in non-compliance of policies and procedures. We recommend bid files are kept up to date and that all purchases made on current and prior year bid contracts are reviewed to ensure the documentation is present and purchases made are allowable and supporting documentation is available. MANAGEMENT’S RESPONSE AND CORRECTIVE ACTION PLAN: Management concurs with the finding and has already taken steps to implement the recommendations as practically possible within the Government’s resources. Finding 07-FS-02 (update of Finding 06-FS-02) CONDITION: During our testing of payroll transactions, we noted instances where there is not sufficient evidence that time paid is time actually worked. We noted time cards are not consistently signed by the employee and/or the employee’s supervisor. We noted the payroll department has access to make changes to pay rates. C-26 ---PAGE BREAK--- AUGUSTA, GEORGIA Schedule of Findings and Questioned Costs - Continued Year Ended December 31, 2007 III. Findings in Relation to the Audit of the Financial Statements (continued) CAUSE: Time cards are transferred to a time sheet to be entered into the payroll system. Although Departments are required to turn in the time cards to the Payroll Department and the time cards are required to be retained in the Human Resources Department, it was noted that the time cards are not reviewed for completeness by the Payroll Department or the HR Department. Access was given to the Payroll Department in order to make changes if there are errors when they are processing payroll. RECOMMENDATION: We recommend making Department Heads responsible for time worked when they sign-off on the time sheet which indicates exceptions only. We recommend the Payroll Department reconcile time sheets to the Payroll Edit Report (also exceptions only) for every payroll run. We recommend that Human Resources request, review and retain a change report from IT for changes to payroll data for each payroll run if it is necessary that the Payroll Department be given access to make changes to payroll data. MANAGEMENT’S RESPONSE AND CORRECTIVE ACTION PLAN: Management concurs with the finding and has already taken steps to implement the recommendations as practically possible within the Government’s resources. III. Federal Awards Findings and Questioned Costs Finding 07-01 (update of Finding 04-2 and 05-06) Federal Agency: U.S. Department of Housing and Urban Development Federal Programs: CFDA # 14.239 HOME Investment Partnerships Program Compliance Requirement: Subrecipient Monitoring Type of finding: Weakness in internal control (material weakness) CONDITION: The Government did not have adequate procedures to document and ensure that subrecipients are administering federal awards in compliance with federal requirements as they apply to: • Allowable costs and activities • Eligibility • Procurement • Special tests and provisions for rent reasonableness, housing quality standards, and project-based rental assistance. Although the HOME Program administrator conducted annual site visits for all subrecipients, sufficient documentation supporting the monitoring process was not maintained to provide adequate evidence that the subrecipients’ controls were adequate or that they addressed the appropriate compliance requirements. CRITERIA: OMB A-133 (.400(d)) states that a pass-through entity shall monitor the activities of sub-recipients as necessary to ensure that Federal awards are used for authorized purposes in compliance with laws, regulations, and the provisions of contracts or grant agreements and that performance goals are achieved. C-27 ---PAGE BREAK--- AUGUSTA, GEORGIA Schedule of Findings and Questioned Costs - Continued Year Ended December 31, 2007 III. Federal Awards Findings and Questioned Costs (continued) EFFECTS: The Government was not able to adequately support monitoring of subrecipients to ensure that funds were specifically used for authorized purposes within the program. Subrecipients may not be in compliance with OMB Circular A-133 compliance requirements. QUESTIONED COSTS: N/A CAUSE: The Government did not have proper procedures in place to document the monitoring performed of the subrecipients for all applicable OMB Circular A-133 compliance requirements. RECOMMENDATIONS: We recommend that the Government strengthen its monitoring procedures and the documentation thereof over subrecipients receiving funds for the HOME program that will include the following: • Documentation of the results of site visits and other monitoring procedures. This documentation should include a review of subrecipient internal control procedures and related testing to ensure that all applicable OMB Circular A-133 requirements for the program are in place. • Monitoring should include testing of the subrecipients’ compliance in relation to eligibility, procurement, and special tests and provisions for rent reasonableness, housing quality standards, and project-based rental assistance requirements. MANAGEMENT’S RESPONSE AND CORRECTIVE ACTION PLAN: Management concurs with the finding and has already taken steps to implement the recommendations as practically possible within the Government’s resources. Finding 07-02 Federal Agency: U.S. Department of Housing and Urban Development Federal Program: CFDA # 14.218 Community Development Block Grant; CFDA #14.239 HOME Investment Partnerships Program; CFDA #14.241 Housing Opportunities for Persons with AIDS Compliance Requirement: Reporting Type of finding: Weakness in internal control (significant deficiency) and compliance (non- material noncompliance) CONDITION: The Government inaccurately prepared the “HUD 60002, Section 3 Summary Report, Economic Opportunities for Low and Very Low-Income Persons” for the Community Development Block Grant (CDBG) Program, the HOME Investment Partnerships (HOME) Program, and the Housing Opportunities for Persons with AIDS (HOPWA) Program for the year ended December 31, 2007. The Government did not have procedures in place to ensure amounts reported on the Section 3 Summary Report were complete and accurate. C-28 ---PAGE BREAK--- AUGUSTA, GEORGIA Schedule of Findings and Questioned Costs - Continued Year Ended December 31, 2007 III. Federal Awards Findings and Questioned Costs (continued) CRITERIA: The Government is required to submit an annual Section 3 Summary Report to report the number and amount of Construction and Non-construction contracts awarded on CDBG, HOME, and HOPWA projects, the number and amount of these contracts that were awarded to Section 3 businesses, and information regarding employment and other economic opportunities provided to low and very low income persons under Section 3 that resulted from these contracts. EFFECTS: Inaccurate Section 3 Summary Reports were filed with the U.S. Housing and Urban Development Agency. QUESTIONED COSTS: None CAUSE: Staff is not trained on completing the Section 3 Summary Reports. There is also no effective internal control in place to ensure these performance reports are complete and accurate. RECOMMENDATIONS: We recommended the Government implement procedures to ensure information reported in the annual Section 3 Summary Report is complete and accurate. MANAGEMENT’S RESPONSE AND CORRECTIVE ACTION PLAN: Management concurs with the finding and has already taken steps to implement the recommendations as practically possible within the Government’s resources. Finding 07-03 Federal Agency: U.S. Department of Housing and Urban Development Federal Programs: CFDA # 14.239 HOME Investment Partnerships Program Compliance Requirement: Cash Management Type of finding: Compliance (non-material noncompliance) CONDITION: The Government drew down federal funds and disbursed these funds to a sub-recipient for the purchase of property to be used in the HOME Investment Partnerships Program. The sub-recipient did not remit support that they had disbursed their own funds to acquire the property, as is the policy before the Government reimburses a sub-recipient. Documentation from the sub-recipient indicated that the sub- recipient borrowed funds to purchase the property. The sub-recipient obligated to spend the funds through signed mortgage agreements, but at the time of reimbursement the mortgages had not been paid. C-29 ---PAGE BREAK--- AUGUSTA, GEORGIA Schedule of Findings and Questioned Costs - Continued Year Ended December 31, 2007 III. Federal Awards Findings and Questioned Costs (continued) CRITERIA: Cash Management compliance requirements state that when entities are funded on a reimbursement basis, program costs must be paid for by entity funds before reimbursement is requested from the Federal Government. Pass-through entities must monitor cash drawdowns by their sub-recipients to assure that sub-recipients conform substantially to the same standards of timing and amount as apply to the pass- through entity. EFFECTS: The Government is not in compliance with Cash Management requirements related to minimizing the time elapsing between the transfer of funds from the U.S. Treasury and disbursement of the funds. QUESTIONED COSTS: Unable to be determined. The questioned costs would be for the amount of interest earned on the funds before they are actually used. This amount should be refunded to the program in order to comply with reimbursement requirements. CAUSE: The Housing and Community Development Department originally denied the sub-recipient’s request for reimbursement due to the lack of supporting documents showing the funds had been disbursed by the sub- recipient. The sub-recipient presented their request to the Augusta-Richmond County Commission. The commission overrode the program manager’s assessment and recommendation and ordered the funds to be paid. RECOMMENDATIONS: We recommend the Government adhere to its policy of requiring documentation of disbursement of funds prior to drawing down federal funds. MANAGEMENT’S RESPONSE AND CORRECTIVE ACTION PLAN: Management concurs with the finding and has already taken steps to implement the recommendations as practically possible within the Government’s resources. Finding 07-04 Federal Agency: U.S. Department of Homeland Security Federal Programs: CFDA # 97.067 Homeland Security Grant Program Compliance Requirement: Real Property and Equipment Maintenance Type of finding: Weakness in internal control (significant deficiency) and compliance (non- material noncompliance) CONDITION: During the Equipment Management testing, we verified that equipment that was purchased with federal funds could not be located on the Government’s fixed asset system. This system is used to track assets. Items not included on the fixed asset system are not subject to periodic inventory counts to insure maintenance of the C-30 ---PAGE BREAK--- AUGUSTA, GEORGIA Schedule of Findings and Questioned Costs - Continued Year Ended December 31, 2007 III. Federal Awards Findings and Questioned Costs (continued) assets. For other equipment purchased with federal funds and included on the fixed asset system, we were unable to verify whether the equipment was designated as being purchased with Federal funds. If equipment purchased with federal funds is sold, then the Federal government must be reimbursed their share of the selling price. CRITERIA: 28CFR 66.32(d) states that the recipients’ property management standards for equipment acquired with Federal funds shall, at a minimum, meet the following requirements: ƒ a description of the equipment, ƒ a serial number or other identification number, ƒ the source of equipment, including the award number ƒ who holds title, ƒ the acquisition date and cost of the equipment, ƒ percentage of Federal participation in the cost of the equipment, ƒ the location, use and condition of the property, ƒ and any ultimate disposition data including the date of disposal and sale price of the property. A physical inventory of the property must be taken and the results reconciled with the property records at least once every two years. EFFECTS: Without proper inventory controls in place, it minimizes the assurance that the Government is adequately tracking and monitoring acquisitions and disposals of equipment acquired with Federal funds. QUESTIONED COSTS: Unable to be determined. CAUSE: The Government has inadequate controls over ensuring capital assets acquired with Federal funds are properly coded as capital expenditures and maintained in the capital asset system. RECOMMENDATIONS: We recommend the Government strengthen internal controls over fixed asset records to ensure acquisitions of equipment with Federal funds are properly safeguarded in accordance with Federal regulations. MANAGEMENT’S RESPONSE AND CORRECTIVE ACTION PLAN: Management concurs with the finding and has already taken steps to implement the recommendations as practically possible within the Government’s resources. C-31