Document Morgancountyga_doc_67017b016b

MORGAN COUNTY, GEORGIA COMPREHENSIVE ANNUAL FINANCIAL REPORT YEAR ENDED JUNE 30, 2011 Prepared by: Finance Department ---PAGE BREAK--- MORGAN COUNTY, GEORGIA ANNUAL FINANCIAL REPORT For The Fiscal Year Ended June 30,2011 TABLE OF CONTENTS Page INTRODUCTOR Y SECTION Letter of Transmittal j.jjj Certificate of Achievement for Excellence in Financial Reporting iv Officials of MORGAN COUNTY, GEORGIA v-vi Organizational Chart vii FINANCIAL SECTION Independent Auditors' Report viii-ix Management's Discussion and Analysis x-xix BASIC FINANCIAL STATEMENTS GOVERNMENT-WIDE FINANCIAL STATEMENTS Statement of Net Assets 1 Statement of Activities 2 FUND FINANCIAL STATEMENTS Balance Sheet - Governmental Funds 3 Reconciliation of the Governmental Funds Balance Sheet to the Statement of Net Assets 4 Statement of Revenues, Expenditures and Changes in Fund Balances - Governmental Funds 5 Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances of Governmental Funds to the Statement of Activities 6 Statement of Net Assets - Proprietary Funds 7 Statement of Revenues, Expenses and Changes in Fund Net Assets - Proprietary Funds 8 Statement of Cash Flows - Proprietary Funds 9 Statement of Net Assets - Fiduciary Funds 10 Statement of Changes in Net Assets - Fiduciary Funds 11 COMPONENT UNITS Combining Statement of Net Assets 12 Combining Statement of Activities 13 NOTES TO FINANCIAL STATEMENTS 14-44 REQUIRED SUPPLEMENTARY INFORMATION Schedule of Pension Funding Progress 45 Budgetary Comparison Schedule - General Fund 46 - 47 COMBINING STATEMENTS AND SCHEDULES NONMAJOR GOVERNMENTAL FUNDS Combining Balance Sheet 48 Combining Statement of Revenues, Expenditures and Changes in Fund Balances 49 Supplemental Budgetary Comparison Schedule -Emergency Telephone System Special Revenue Fund 50 ---PAGE BREAK--- -Special Revenue Special Revenue Fund -Hotel / Motel Tax Special Revenue Fund •Law Library Special Revenue Fund -Sheriffs Law Enforcement Special Revenue Fund 51 52 53 54 FIDUCIARY FUNDS Combining Statement of Assets and Liabilities - All Agency Funds Combining Statement of Changes in Assets and Liabilities • All Agency Funds 55 56 SUPPLEMENTAL INFORMATION Schedule of Projects Constructed with Special Purpose Local Option Sales Tax 57-59 STA TISTICAL SECTION FINANCIAL TRENDS Net Assets by Component Changes in Net Assets Fund Balances of Governmental Funds Changes in Fund Balances of Governmental Funds Five Year General Fund History General Governmental Tax Revenues by Source REVENUE CAPACITY Assessed Value and Estimated Actual Value of Taxable Property Property Tax Rates (Direct and Overlapping Governments) Principal Property Taxpayers Property Tax Levies and Collections DEBT CAPACITY Ratios of Outstanding Debt by Type Other Long-term Liabilities Direct and Overlapping Governmental Activities Debt Legal Debt Margin Information DEMOGRAPHIC AND ECONOMIC INFORMATION Demographic and Economic Statistics Principal Employers OPERATING INFORMATION Full-Time Equivalent County Government Employees by Function Operating Indicators by Function Capital Asset Statistics by Function COMPLIANCE AND INTERNAL CONTROL REPORTS Schedule of Expenditures of Federal Awards 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 Independent Auditors' Report on Compliance with Requirements that Could have a Direct and material Effect on Each Major Program and on Internal Control over Compliance in Accordance with OMB Circular A-133 TABLE 1 2 3 4 4A 5 6 7 8 9 10 I0A 12 13 15 16 17 18 19 60 61-63 64 65 66 67 68 69 70 71 72 73 74-75 76 77 78 79 80 81 82 83-84 85-86 Auditors' Schedule of Findings and Questioned Costs 87-89 ---PAGE BREAK--- INTRODUCTORY SECTION ---PAGE BREAK--- Morgan County, Georgia Comprehensive Annual Financial Report 2011 Introductory Section August 8, 2011 Chairman Members of the Board of Commissioners Morgan County, Georgia State law requires that all general-purpose local governments publish within six months of the close of each fiscal year a complete set of financial statements presented in conformity with generally accepted accounting principles (GAAP) and audited in accordance with generally accepted auditing standards by a firm of licensed certified public accountants. Pursuant to the requirements, we hereby issue the comprehensive annual financial report of Morgan County, Georgia for the fiscal year ended June 30,2011. This report demonstrates how the County receives, spends, and accounts for financial resources and illustrates the key indicators of its financial strength. Responsibility for the accuracy of the data and the completeness and fairness of the presentation rests with the County. We believe that the data as presented is accurate in all material aspects. Readers are encouraged to consider the presented information in conjunction with the information provided in management's discussion and analysis, the financial statements, and the notes to the financial statements. Profile ofthe Government Morgan County is located 58 miles southeast of the city limits of the City of Atlanta and encompasses 349.7 square miles. The 2011 population estimate from the U.S. Census Bureau is 17,961. The County was formed from sections of Baldwin County in 1807. Georgia's 32nd county is named for Revolutionary War General Daniel Morgan who defeated the British at Cowpens. It is the home of Hard Labor Creek State Park, Georgia's largest state park. The City of Madison has been the county seat since its incorporation in 1809. Madison has the largest designated historic district in Georgia, which encompasses most of the town. Morgan County is also home to the City of Rutledge, founded in 1845, the City of Bostwick, and the City of Buckhead, founded in 1891. Additional demographic information is provided in the Statistical Section of this report. The County operates under a Commission-Manager Form of Government. Under this system of local government, the Commissioners are policy makers who establish a vision for the County, and who hire the Manager to carry out policy. The Board of Commissioners consists of five members, who serve on a part-time basis and are elected to staggered terms of four years. The Manager is responsible for directing day-to-day operations and coordinating the work of department heads and other employees. Morgan County provides a full range of services, including law enforcement; corrections; the construction and maintenance of buildings, parks, streets and highways; parks and recreation activities; 911 emergency communications, voter registration and elections county systems tax assessment and collection building inspections planning and zoning solid waste collection and recycling and general administrative and support activities. Economic condition and outlook In these uncertain economic times, the County has not been immune to the economic realities but continues to maintain a strong financial position. Although many economic factors are largely outside of local government control, the Board of Commissioners, County Manager and departments have displayed impressive financial stewardship over the years. This philosophy entails reviewing the needs of the County relative to a standard that services and associated costs should not be appropriated unless they are justified as strategic goals of the organization that serve to accomplish our guiding principles. ---PAGE BREAK--- Morgan County, Georgia Comprehensive Annual Financial Report 2011 Introductory Section At the State level, revenue short falls are requiring significant budget reductions and negatively impact local government funding as the state reduces programs to live within its means. Challenges facing local government are expected to mount as the demands for services grow while revenue sources struggle to achieve last year's levels and costs continue to climb. Property values - Total taxable assessed property values decreased by 14.5 percent for the 2010 property tax year. Communities across Georgia and throughout the nation are experiencing declines in new home construction, increases in the number of filings for foreclosures and increased in commercial vacancy rates. The recession has changed the way governments operate at the local level. Short-term solutions of leaving vacant positions unfilled, deferring capital projects, and implement targeted cuts in expenditures will not resolve the issue entirely. These steps implemented during the recession now represent a new way of doing business that will continue beyond this fiscal crisis. Internal controls County management is responsible for establishing and maintaining an internal accounting control system. This system is designed to ensure that County assets are protected from loss, theft, or misuse, and to ensure that adequate accounting data are compiled to allow for the preparation of financial statements in conformity with generally accepted accounting principles. Internal accounting controls are designed to provide reasonable, but not absolute, assurance that these objectives are met. The concept of reasonable assurance recognizes that: 1) the cost of an accounting control should not exceed the benefits likely to be derived, and 2) the evaluation of costs and benefits requires estimates and judgment by management. Budget controls The annual budget serves as the foundation for the County's financial plan and assists in control of the financial stability and health of the government. As required by the statues of the State of Georgia, the County adopts annually a balanced budget. The legal level of control (i.e. the spending level at which expenditures may not legal exceed appropriations) is at the department level within a given fund. Reallocation of appropriations between line-items is acceptable within a given department. Additional details regarding budgetary controls may be found in Note 3 of the notes to the financial statements. Cash management The County's funds are deposited into interest-bearing accounts. The County's investment program is managed in accordance with all applicable laws. Investment objectives include the safeguarding of public funds through minimization of market and security risk and maximizing utilization of funds with respect to liquidity and earnings. Independent audit The financial statements included in this report are prepared in compliance with governmental financial reporting standards issued by the Governmental Accounting Standards Board; guidelines issued by the Government Finance Officers Association of the United States and Canada, and generally accepted accounting principles applicable to governmental entities. State of Georgia statutes require an annual audit by an independent Certified Public Accountant. The accounting firm of Bates Carter & Co., LLP report on the County's basic financial statements is included in the financial section of this CAFR. Awards The Government Finance Officers Association of the United States and Canada ("GFOA") awarded a Certificate of Achievement for Excellence in Financial Reporting to the County for its CAFR for the fiscal year ended June 30, 2010. This was the first year the County received this prestigious award. This program recognizes those governments that go beyond the minimum requirements of generally accepted accounting principles to prepare CAFR's that represent the spirit of transparency and full disclosure. This award is valid for a period of one year only. ---PAGE BREAK--- Morgan County, Georgia Comprehensive Annual Financial Report 2011 Introductory Section CAFR's that represent the spirit of transparency and full disclosure. This award is valid for a period of one year only. Acknowledgements The preparation and production of this document would not be possible without the cooperation of all County departments. Their willingness to work together has enabled the County to exceed expectations in financial reporting by producing a quality report that is readable, informative, and beneficial to citizens. We also extend our appreciation and gratitude to our independent auditors, Bates Carter & Co., LLP, for the professional guidance and assistance in producing a technically sound document. Finally, we thank the Board of Commissioners for their support and direction in conducting the financial affairs of the County in a responsible manner. Respectfully submitted, Michael Lamar, County Manager in ---PAGE BREAK--- Certificate of Achievement for Excellence in Financial Reporting Presented to Morgan County Georgia For its Comprehensive Annual Financial Report for the Fiscal Year Ended June 30,2010 A Certificate of Achievement for Excellence in Financial Reporting is presented by the Govemmenl Finance Officers Association of the United States and Canada to government units and public employee retirement systems whose comprehensive annual financial reports (CAFRs) achieve the highest standards in government accounting and financial reporting. Executive Director iv ---PAGE BREAK--- Morgan County, Georgia Comprehensive Annual Financial Report 2011 Introductory Section Board of Commissioners Commissioner District 1 Donald B. Harris Commissioner District 2 Andy Ainslie. Commissioner District 3 Mack B. Bohlen. Sr.. Chairman Commissioner District 4 Ellen Warren Commissioner District 5 Samuel Cathey. Vice Chairman Count Manager Michael Lamar County Clerk Jane Laseter ---PAGE BREAK--- Morgan County, Georgia Comprehensive Annual Financial Report 2011 Introductory Section Elected Officials Chief Magistrate Judge Connie Holt District Attorney Fred D. Bright Clerk of Superior Court Jody M. Moss Probate Court Judge Michael F. Bracewell Superior Court Judges William A. Prior, Jr., Chief Judge John Lee Parrott Hulane E. George Hugh V. Wingfield, III James L. Cline, Jr. Coroner Adam Carter Sheriff Robert S. Markley Tax Commissioner Becky Astin Department Directors Animal Control Donna Prior, Director Emergency Management Gwyn Ruark, Director Fire Department Vacant Planning & Development Chuck Jarrell, Director Senior Center and Transit Benita Watkins, Director Elections Bobby Howington E911 Bill Crew, Director IT Drew Neighbors, Director Public Buildings Alan Cagle, Director Tax Assessor Chuck Anglin, Chief Appraiser Extension Services Bobby Smith, Agent Finance Department Lori Sayer, Director Parks and Recreation Bill Wood, Director Roads and Bridges Gregg Pennington, Director VI ---PAGE BREAK--- Morgan County, Georgia Comprehensive Annual Financial Report 2011 Introductory Section Morgan County Organizational Chart Morgan County Gtizens Judicial System Magistrate Jjdge Probate JUdge Superior Court Clerk Board of Board of Oommissi oners County Attorney . j County Manager Planningand Development Public Buildings Animal Control as _L Finance Recreation County Clerk/ HR Roadsand Bridges Sanitation Senior Center/ Transit Special Projects Fire Department E911 BWA Other Bected Officials Sheriff Board of Sections Coroner Tax Commissioner vii ---PAGE BREAK--- Financial Section ---PAGE BREAK--- Business Advisors and CPAs in. 77or.:i29i3i • ■ 77O53G5223 PO Drawivi 23EJ6 GAINESMU.E. GEOHa~l 30SO3 Exceeding expe< Uttions. A!v\iiys. ■.w.vMArtso.-.Rir INDEPENDENT AUDITORS' REPORT August 8, 2012 Board of Commissioners MORGAN COUNTY, GEORGIA Madison, Georgia We have audited the accompanying financial statements of the governmental activities, the business-type activities, the aggregate discretely presented component units, each major fund, and the aggregate remaining fund information of MORGAN COUNTY, GEORGIA, as of, and for the year ended June 30, 2011, which collectively comprise the County's basic financial statements as listed in the table of contents. These financial statements are the responsibility of the Board of Commissioners of MORGAN COUNTY. GEORGIA. Our responsibility is to express opinions on these financial statements based on our audit. We did not audit the financial statements of the Morgan County Health Department and Morgan County Hospital Authority, component units of the County, as of and for the year then ended June 30, 2011, which statements reflect total assets of $424,397 and $6,744,000, as of June 30, 2011, and total revenues of $546,749 and $14,023,000, respectively, for the year then ended. Those financial statements were audited by other auditors whose report has been furnished to us and our opinion on the basic financial statements, insofar as it relates to the amounts included for the Morgan County Health Department and Morgan County Hospital Authority, is based on the report of the other auditors. We conducted our audit in accordance with auditing standards generally accepted in the United Stales 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 financial statements arc free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit and the report of other auditors provide a reasonable basis for our opinions. In our opinion, based on our audit and the report of other auditors, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business-type activities, the aggregate discretely presented component units, each major fund, and the aggregate remaining fund information of MORGAN COUNTY, GEORGIA, as of June 30, 2011, and the respective changes in financial position, and where applicable, cash flows, thereof, for the year then ended in conformity with accounting principles generally accepted in the United States of America. As described in Note 1 to the financial statements, the County adopted the provisions of GASB Statement No. 54, Fund Balance Reporting and Governmental Fund Type Definitions in 2011. viii ---PAGE BREAK--- In accordance with Government Auditing Standards, we have also issued a report dated August 8, 2012, on our consideration of MORGAN COUNTY, GEORGIA'S internal control over financial reporting and our tests of its compliance with certain provisions of laws, regulation, contracts, grants, 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 should be considered in assessing the results of our audit. Accounting principles generally accepted in the United States of America require that the Management's Discussion and Analysis, Schedule of Pension Funding Progress, Budgetary Comparison Schedule-General Fund be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management's responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Our audit was conducted for the purpose of forming opinions on the financial statements that collectively compromise MORGAN COUNTY, GEORGIA'S financial statements as a whole. The introductory section, combining and individual nonmajor fund financial statements, and statistical section, are presented for purposes of additional analysis and are not a required part of the financial statements. The accompanying schedule of expenditures of federal awards is presented for purposes of additional analysis as required by U.S. Office of Management and Budget Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations, and is also not a required part of the financial statements. The accompanying schedule of projects constructed with Special Sales Tax Proceeds is presented for purposes of additional analysis as required by Official Code of Georgia 48-8-12. The combining and individual nonmajor fund financial statements, supplemental budgetary comparison schedules, the schedule of expenditures of federal awards, and schedule of projects constructed with Special Sales Tax Proceeds are the responsibility of management and were derived from and relate directly to the underlying accounting and other records used to prepare the financial statements. The information has been subjected to the auditing procedures applied in the audit of the financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the financial statements or to the financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the information is fairly stated in all material respects in relation to the financial statements as a whole. The introductory and statistical sections have not been subjected to the auditing procedures applied in the audit of the basic financial statements and, accordingly, we do not express an opinion or provide any assurance on them. IX ---PAGE BREAK--- MANAGEMENT'S DISCUSSION AND ANALYSIS The discussion and analysis of Morgan County's financial performance provides an overview of the County's financial activities for the fiscal year ended June 30, 2011. Please read i-iii in conjunction with the County's financial statements, which begin on page 1. As a result of the enactment of GASB 34, the County is required to present a discussion and analysis of its financial condition and performance for the year ended June 30,2011. FINANCIAL HIGHLIGHTS The County's assets exceeded its liabilities at June 30, 2011 by $65,876,641 (Net Assets). Of this amount, $7,352,081 is considered unrestricted and can be used to meet the County's ongoing obligations. • The County's total net assets decreased by $612,540 (Change in Net Assets). This is discussed in further detail in the Government-Wide Financial Analysis. OVERVIEW OF THE FINANCIAL STATEMENTS This discussion and analysis is intended to serve as an introduction to Morgan County's basic financial statements. Morgan County's basic financial statements are comprised of three components: 1) government-wide financial statements, 2) fund financial statements, and 3) notes to the financial statements. This report also contains other supplementary information in addition to the basic financial statements themselves. Government-wide Financial Statements. The government-wide financial statements, presented on pages 1 and 2, provide a broad overview of Morgan County's finances in a manner similar to that of private-sector businesses. The statements include the following: The Statement of Net Assets presents the County's assets and liabilities, with the difference between the two reported as net assets. Over time, the change in net assets is an indicator of the improvement (an increase) or deterioration (a decrease) in the County's financial condition. • The Statement of Activities presents the revenues and expenses of the County. The difference between these is the change in net assets for the year. Both of the government-wide financial statements identify the various functions of Morgan County that are principally supported by taxes and intergovernmental revenues from other functions that are intended to recover all or a significant portion of their costs through user fees and charges. The governmental activities of Morgan County, Georgia include general government, public safety, court systems, health and welfare, recreation and culture, public works, and housing and development. The business-type activity of Morgan County, Georgia is the Solid Waste operation. ---PAGE BREAK--- The government-wide financial statements include not only Morgan County, Georgia itself (known as the primary government), but also a legally separate Health Department and Hospital Authority for which Morgan County, Georgia is financially accountable. Financial information for these component units is reported separately from financial information presented for the primary government itself. Fund fmancial 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 County, like other state and local governments, uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. All of the funds of the County can be divided into three categories: governmental funds, proprietary funds, and fiduciary funds. Governmental funds are used to account for essentially the same functions reported as governmental activities in the government-wide financial statements. However, unlike the government-wide statements, governmental fund financial statements focus on near-term inflows and outflows of spendable resources, as well as on balances of spendable resources available at the end of the fiscal year. Such information may be useful in evaluating a government's near-term financing requirements. Because the focus of governmental funds is narrower than that of the government-wide financial statements, it is useful to compare the information presented for governmental funds with similar information presented for governmental activities in the government-wide financial statements. By doing so, readers may better understand the long-term impact of the County's near term financing decisions. Both the governmental funds balance sheet and the governmental funds statement of revenues, expenditures, and changes in fund balances provide a reconciliation to facilitate this comparison between governmental funds and governmental activities. Information is presented separately in the governmental fund balance sheet and in the governmental fund statement of revenues, expenditures, and changes in fund balances for the General Fund, Capital Projects Fund (which was closed during the year), and SPLOST, all of which are considered to be major funds. Data from the other governmental funds are combined into a single, aggregated presentation. Individual fund data for each of these non-major governmental funds is provided in the form of combining statements on pages 48 and 49 of this report. The County adopts an annual appropriated budget for its General Fund and Special Revenue Funds. Project length budgets are adopted for the Capital Projects Funds. A Budgetary Comparison Schedule has been provided for the General Fund and Special Revenue Funds to demonstrate compliance with this budget. The basic governmental funds financial statements can be found on pages 3 and 5 of this report. Proprietary funds. The County maintains one proprietary fund. Enterprise (proprietary) funds are used to report the same functions presented as business-type activities in the government- wide financial statements. The County uses an enterprise fund to account for the Solid Waste operation. XI ---PAGE BREAK--- Proprietary fund statements provide the same type of information as the government-wide financial statements, only in more detail. The basic proprietary fund financial statements can be found on pages 7-9 of this report. Fiduciary funds. Fiduciary funds are used to account for resources held for the benefit of parties outside the government. Fiduciary funds are not reflected in the government-wide financial statements because the resources of those funds are not available to support the County's own programs. The accounting used for fiduciary funds is much like that used for proprietary funds. The basic fiduciary fund financial statements can be found on pages 10 and 11 of this report. Notes to the financial statements. The notes provide additional information that is essential to a full understanding of the data provided in the government-wide and fund financial statements. The notes to the financial statements can be found on pages 14-44 of this report. Other information. In addition to the basic financial statements and accompanying notes, this report also presents certain required supplementary information concerning the County's pension plans on pages 45 and a schedule of budgetary comparisons for the general fund on pages 46 and 47. Combining and individual fund statements and schedules can be found on pages 48-56 of this report, and Schedules of Projects Constructed with Special Purpose Local Option Sales Tax can be found on page 57-59. GOVERNMENT-WIDE FINANCIAL ANALYSIS During FY 2011, Morgan County, on an entity-wide basis, had a decrease in net assets of $612,540 which is the result of adding the $582,944 decrease in governmental activities and the decrease in net assets for business type activities of $29,596. The change in governmental activities is discussed below, and the change in business type activities is discussed under the heading Proprietary Funds. The County had total Net Assets of $65,876,641, of which $56,535,600, net of debt and accumulated depreciation, was invested in capital assets. The table below shows the split of net assets between governmental and business-type activities. Morgan County, Georgia's Net Assets June 30 Capital assets (net of depreciation) Current and other assets Total Assets Long-term liabilities Other liabilities Total liabilities Net assets: Invested in capital assets, net of related debt Restricted Unrestricted Total net assets S Governmental Activities 2011 2010 72.498.517 $ 74.931,772 $ 11.573.292 10.324.370 84,071,80< 17,642.456 685.770 18,328,226 56.112,122 1.988.960 7,642,501 ^65^43^583 85.256.142 18.671,620 257.995 18.929.615 56.528,239 1,034,074 8.764.214 ^46^26^527 xii Business-type Activities 2011 2010 423,478 $ 435.751 139.913 112.330 563.391 563,391 (133.058) 430.333 423,478 (290.420) 133.058 S 548.081 342,187 43.240 385.427 435,751 (273.097) Total Primary Government 2011 2010 $ 72.921,995 $ 75.367,523 11.713.205 10.436.700 84.635.200 18,205,847 552.712 18.758,559 56.535,600 1.988,960 7.352.081 85.804.223 19.013.807 301.235 19.315.042 56,963,990 1.034.074 8.491.117 ^^489^ ---PAGE BREAK--- Total government-wide revenue for Fiscal Year 2011 was $19,385,493. Of this amount, $19,057,887 was in governmental activities and $327,606 in business-type activities. The chart below shows the distribution of total primary government revenues. Morgan County, Georgia's Changes in Net Assets Year Ended June 30 REVENUES Program revenues Charges for Services Operating Grants and Contributions Capital Grants and Contributions Subtotal for Program Revenues General revenues Property Taxes Sales Taxes Other Taxes Unrestricted Investment Earnings Grants and Contributions not restricted to a specific program Gain on sale of capital assets Subtotal for General Revenues Total Revenues EXPENSES Program expenses Genera] Government Judicial Public Safety Public Works Health & Welfare Recreation & Culture Housing and Development Interest and Paying Agent Fees Solid Waste Total expenses Change in Net Assets before Transfers Transfers Change in Net Assets Net Assets, beginning of year Governmental 2011 $ 2,704,654 $ 1,498,111 182.113 4.384.878 7,609,634 6,059,666 742,145 28,191 228,308 5.065 14.673.009 19.057.887 3,387,849 1,189,888 6,433,955 4.010,735 1,655,525 1,000,265 568,418 764,021 19.010.656 47,231 (630.1751 (582.9441 66.326.527 ! Activities 2010 2,731,734 $ 1.021,163 320.317 4.073.214 8,312,443 5,963.470 769,287 92,485 . 45.037 15.182.722 19.255.936 3,351,744 1,184,957 5,307,303 4,855,857 1,659,014 1,219,227 661.589 830,572 19.070.263 185,673 (425.000) (239.327) 66.565.854 Business-type Activities 2011 327,258 S 327.258 348 348 327.606 - - - • - - 987.377 987.377 (659,771) 630.175 (29.596) [PHONE REDACTED] 287,163 287.163 453 453 287.616 - - - - 954.279 954.279 (666,663) 425.000 (241.663) 404.317 Total Primary Government 2011 S 3,031,912 1,498,111 182.113 4.712.136 7,609.634 6.059,666 742.145 28,539 228,308 5.065 14.673.357 19.385.493 3.387,849 1,189.888 6,433.955 4,010.735 1,655,525 1,000,265 568,418 764,021 987.377 19.998.033 (612,540) (612.540) 66.[PHONE REDACTED] 3,018,897 1,021,163 320.317 4.360.377 8,312,443 5.963,470 769,287 92,938 45.037 15.183.175 19.543.552 3,351,744 1,184.957 5,307,303 4,855.857 1,659,014 1,219,227 661.589 830,572 954.279 20.024.542 (480,990) (480.990) 66.970.171 Net Assets, end of year S 65.743.583 $ 66.326.527 $ 133.058 $ 66.489.181 General Revenues such as Property Taxes and Local Option Sales Tax supplement the Governmental Activities. General Government required $2,610,318, Judicial required $331,807, Public Safety required $4,930,099, Public Works required $3,488,475, Health and Welfare required $1,332,716, Recreation required $727,402, Housing and Development $440,940 of General Revenues. XIII ---PAGE BREAK--- 32% Revenues by Source Covorraneni-Wide Activities Other 4% ' Other. Investment Capital Grants 1% 8% Operating Grants 16% Charges for Services 40% Properly Tan *Duc to rounding, charts may not always equal 100% Government-wide expenses were 519,998,033 for 2011, of which $19,010,656 were lor governmental activities and $987,377 for business-type activities. The chart below shows further detail of total primary government expenses. Expenses by Function Activities Solid Waste 567. 9% General Government 3% Public Safety 18% Court System 5% Health S Welfare 3% Recreation 2% Public Works 2% Housing & Development 3% Interest XIV ---PAGE BREAK--- FINANCIAL ANALYSIS OF THE GOVERNMENT'S FUNDS As noted earlier, the County uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. Governmental Funds. The focus of the County's governmental funds is to provide information on near-term inflows and outflows of spendable resources. Such information is useful in evaluating a government's near-term financing requirements. The primary governmental funds are the General Fund, the Capital Projects Fund, and SPLOST. As the county completed the year, its governmental funds (as presented in the balance sheet on page 3) reported a combined fund balance of $8,761,898, which is $1,247,488 more than last year's total. The increase in the SPLOST fund balance was $1,071,497, which is the collection of sales tax for future debt service payments. The fund balance in the General Fund increased $303,862. Local Option Sales taxes collected were about $35,237 above projected budget and Property tax collections exceeded budgeted amount by $318,774. In 2011, Governmental revenues were up $134,370 from fiscal year 2010. Property taxes were down $(373,597) due to slight increase in the digest. Intergovernmental revenue was up $501,694 due to two additional substantial grants for Public Safety. Investment income was down $61,786 due to lower interest rates and cash balances. The total amount of sales tax revenue for fiscal year 2011 was $6,059,666 which is a 1.6% increase from FY 2010 due to the slight economic recovery. Morgan County currently shares two different taxes on all sales within the county. The Local Option Sales Tax (LOST) is a direct offset to the property taxes and is renewed every ten years by agreement with the City of Madison, the City of Bostwick, the City of Buckhead and the City of Rutledge. The latest agreement renewed in FY 2003 distributes the funds 73% to the County, 22% to the City of Madison, 4% to the City of Rutledge, .60% to the City of Bostwick, and .40% to the City of Buckhead. A SPLOST referendum passed in a November 2006 election was effective April 1, 2007 with an expiration date of March 31, 2013 or at the end of the quarter where the raising of $26,000,000 is reached, whichever occurs first. Distribution of SPLOST V funds are based on a percentage distribution as agreed upon by the following municipalities: City of Madison receives 6.94%, City of Rutledge receives .61%, City of Bostwick receives .23% and the City of Buckhead .14%. The County's SPLOST V projects include a new public safety/detention center, road and bridge improvements, library facility improvements, water system equipment and improvements, purchase of sanitation equipment and improvement of solid waste facility and the purchase of the a county administrative building. The City of Madison has designated projects for road and bridge improvements, a public works building, renovation to City Hall and park improvements. The City of Rutledge has designated funds for water and sewer improvements. The City of Bostwick will improve roads and bridges, city hall improvements and water system improvements and equipment. The City of Buckhead will improve the fire station and roads and bridges. XV ---PAGE BREAK--- Revenues by Source Fines S Charges for Services Intergovernmental 7% License & Permits 1%—^J 1 tuna Lc Forfeitures 4% 9% fl - Govemmental 1% Olher / 78% Taxes Expenditures in the governmental funds were $17,060,135, down S(l L895.005) from FY 2010. Expenditures for the General Fund of $13,540,412 were up $444,630. The General fund transferred $630,175 and $176,174 to Solid Waste and E911 funds, respectively, to subsidize operations this year. The County expenditures in SPLOST funds of $2,435,437 were $(12,524,199) less than prior year due to the timing of expenditures. Of the SPLOST expenditures, $65,943 of this was for capital outlay on planned projects and $1,846,563 was for debt service payments on the jail bonds. The remaining S522.931 is spread over multiple departments, primarily for the purpose of infrastructure repaving which is expensed. In FY 2011. Morgan County's Fund balance of all governmental funds was 47% of revenues. At year end, the Fund Balance in the General Fund was 47% of general fund revenues. Proprietary funds. The County's proprietary funds provide the same type of information found in the government-wide financial statements, but in more detail. Beginning in FY 2003. Morgan County has reported the Solid Waste fund as a proprietary fund. This change has allowed users of the financial statements to analyze the County's Solid Waste Deparlmenl as a business-like activity and focus attention on the cost of providing services. In FY 2011, Morgan County's Solid Waste Facility reported a loss of $29,596. Operating revenues increased by S40.095 from FY 2010. Of the total increase in operating revenue, recycling and transfer fees increased $40,123. The Solid Waste Fund on its own doesn't generate sufficient revenues to fund operations; it relies on a subsidy from the General Fund. In fiscal year 2010 transfers between funds were made with a more conservative approach by just meeting the needed cash How of the Solid Waste Fund. In order to not deplete all of fund balance in the Solid Waste Fund, the General Fund had to increase the transfer in from $425,000 in 2010 lo $630,175 in 2011. xvi ---PAGE BREAK--- Expenses increased $33,098 from fiscal year 2010, which was due to an increase in landfill closure/postclosure cost of $80,476 CAPITAL ASSET AND DEBT ADMINISTRATION Capital assets. Morgan County's Government-wide investment in capital assets at June 30, 2011 was $56,535,600, net of accumulated depreciation and related debt. This investment, which includes land, buildings, roads, bridges, machinery and equipment, park facilities, and vehicles, is discussed in Note 6. Government-wide additions in FY 2011 were $0.46 million. Major capital asset activities in FY 2011 were: In Governmental Activities: • Donated roads and right of way were accepted by the County with a value of $519,754. Additional right of way was purchased for bridge projects in the amount of $17,102. • Upgrades to equipment at E911 with a cost of $230,693. • Various other machinery and equipment - accounting software $38,008, dental equipment for the detention center $8,060, a compressor for public buildings $15,284, and various other equipment for fire administration $37,198. Long-term debt. At June 30, 2011, Morgan County governmental activities had outstanding debt of $17,550,908. Of this amount $354,940 is from various capital leases, $16,926,032 is from contracts payable, and $269,936 is from compensated absences payable. See note 7, for more details. Payments of $110,688 were made on capital leases. Payments of $1,108,614 were made on contracts payable. GENERAL FUND BUDGETARY HIGHLIGHTS Differences between the original budget, the final budget and actual results for the General Fund are shown on pages 46 and 47. The reasons for major changes to the original budget are as follows: Each year, Morgan County adopts the General Fund budget in June based on a preliminary digest. The millage rate is set in September when the digest is finalized by the Georgia Department of Revenue. The final, amended budget was up $323,926. The budget increase is a result of the County being awarded the Assistance to Firefighters Grant which was for the purchase of equipment and administered by the U.S. Department of Homeland Security. The grant award was made September 2010 after the fiscal year 2011 budget was adopted. These funds are provided through the American Recovery and Reinvestment Act of 2009 (ARRA). The total grant award was $313,144. The budget increase of $271,196 resulting from the grant did not impact fund balance as there is an offsetting increase in intergovernmental revenues. XVII ---PAGE BREAK--- Fines and forfeitures were increased by 20% due to forfeited cash bonds from drug related Superior Court cases. These monies are not considered reoccurring revenues and as such are not budgeted annually. Charges for services revenues increased This increase is a result of the County receiving reimbursement for prior years and current year expenditures through an agreement with the Morgan County Board of Education for school resource officers. Contingency funds were budgeted in the Financial Administration Department. These funds were used to cover additional expenditures in other departments as needed. ECONOMIC FACTORS AND THE 2012 BUDGET The County continues to face challenges during these economic times with declining revenues and controlling costs to meet the expectations for and use of services provided to citizens. Steps were taken to reduce expenditures which allowed the County to end fiscal year 2011 with a moderate fund balance. The economic outlook for 2012 is stable considering the County maintained a careful and conservative approach to the preparation of the 2012 budget. The fiscal year 2012 annual budget for the general fund is $13,893,819; this is a decrease of 2.8% from the adopted 2011 budget. Most of the County's revenue sources for fiscal year 2012 are expected to struggle to achieve last year's levels. The 2012 budget was adopted assuming a millage rate of 8.99. Although this rate is up .49 mills from the 2011 millage rate of 8.4 most taxpayers aren't expected see an increase in their property tax bills due to the declining trend in assessed property values. The County actively searches for funding sources and has been successful in obtaining various grants in the area of public safety and energy efficiency and conservation. Through the energy efficiency and conservation block grant the County anticipates reducing future energy costs. With this grant being shared with the City of Madison and the Board of Education, benefits are expected to reach county wide. In order to reduce fiscal year 2012 expenditures, short term solutions of deferring capital projects, reducing the retirement contribution, and reducing travel and training cost were implemented. Other reductions in expenditures came from changes in personnel where vacant positions were eliminated, overtime was reduced through revised scheduling, and work hours and salary reductions were implemented. XV111 ---PAGE BREAK--- REQUESTS FOR INFORMATION This financial report is designed to provide a general overview of Morgan County's finances for all those interested. Questions concerning any of the information provided in this report or requests for additional information should be addressed to the Morgan County Commissioners Office, PO Box 168, Madison, Georgia 30650. XIX ---PAGE BREAK--- MORGAN COUNTY, GEORGIA STATEMENT OF NET ASSETS June 30,2011 PRIMARY GOVERNMENT ASSETS Cash Receivables (net of allowance for uncollectiblcs) Internal balances Inventories Prepaid items Investment in joint venture Restricted assets: Cash Non-current assets: Receivables Deferred charges Capital assets: Capital assets not being depreciated Capital assets being depreciated Less: accumulated depreciation Capital assets, net of depreciation TOTAL ASSETS LIABILITIES Accounts payable Other accrued items Due to other governments Noncurrent liabilities: Due within one year Compensated absences payable Accrued landfill closure / postclosure Notes payable Capital leases payable Revenue bonds payable Contracts payable Due in more than one year Compensated absences payable Net pension obligation Accrued landfill closure / postclosure Notes payable Capita) leases payable Revenue bonds payable Contracts payable TOTAL LIABILITIES NET ASSETS Invested in capital assets, net of related debt Restricted for: Debt service Capital outlay projects Judicial programs Public safely programs Health and welfare programs Unrestricted TOTAL NET ASSETS GOVERNMENTAL ACTIVITIES S 7,899,775 1,955,494 78,531 67.947 83,224 1,302,834 189 18S.298 9,734,113 97,902,838 (35.138.434) 72.498,517 84.071.809 437,295 167,681 80,794 188,955 135.381 1.245,799 80.981 91,548 - 219,559 - 15,680,233 18.328.226 56.112,122 . 1,639.808 6.549 323.505 19,098 7,642,501 S 65.743.583 BUSINESS-TYPE ACTIVITIES $ 195.719 S 22.725 (78.531) - 284.864 1,049.433 (910.819) 423,478 563.391 46.523 10,423 30,145 4.467 338.775 430.333 423.478 (290.420) S 133.058 S TOTAL 8.095,494 1.978,219 67,947 83,224 1.302,834 189 185,298 10,018,977 98,952,271 (36,049,253) 72.921.995 84,635.200 483.818 167.681 80.794 199.378 30.145 135,381 1,245,799 85,448 91.548 338.775 219.559 15,680.233 18,758,559 56.535.60O 1.639.808 6.549 323.505 19.098 7,352,081 65.876.641 COMPONENT UNITS $ 795.630 2,075.866 346.000 78.000 536.000 97,000 38.000 990,000 7,775.253 (5,563,352) 3.201.901 7.168.397 589.117 585.000 7.868 116.000 327,000 80.000 33.671 306.000 1.294,000 555,000 3.893,656 977.901 250,000 121.000 148.000 1,777.840 S 3,274,741 The accompanying notes are an integral part of this statement. 1 ---PAGE BREAK--- MORGAN COUNTY, GEORGIA STATEMENT OF ACTIVITIES For the Year Ended June 30,2011 FUNCTIONS/PROGRAMS PRIMARY GOVERNMENT GOVERNMENTAL ACTIVITIES General government Judicial Public safety Public works Public health and welfare Recreation and culture [lousing and development Interest Total Governmental Activities BUSINESS-TYPE ACTIVITIES Solid waste/recycling Total Business-Type Activities TOTAL PRIMARY GOVERNMENT COMPONENT UNITS Health Department Hospital Authority TOTAL COMPONENT UNITS EXPENSES 19.010.656 987,377 987J77 $ 554,329 14.127.000 S 14.681.329 PROGRAM REVENUES... OPERATING CAPITAL CHARGES FOR GRANTS AND GRANTS AND GOVERNMENTAL BUSINESS-TYPE SERVICES CONTRIBUTIONS CONTRIBUTIONS ACTIVITIES ACTIVITIES .♦..NET (EXPENSE) AND CHANGES IN NET ASSETS.... , PRIMARY GOVERNMENT TOTAL COMPONENT UNITS 3,387,849 1.189,888 6.433,955 4.010,735 1.655,525 1.000,265 568,418 764.021 S 757,176 S 853,314 669.836 46,382 250.468 127.478 20,355 $ 4.767 654.413 519.754 276.427 22.395 ■ - - 179,607 2.506 - - S (2,610,318) S (331.807) (4,930,099) (3.488,475) (1,332.716) (727.402) (440.940) (764,021) S S s 2.704.654 327.258 327.258 3.031.912 166.920 13.031.000 13.197.920 GENERAL REVENUES Property taxes Sales taxes Insurance premium taxes Real estate recording taxes Other taxes Total taxes Unrestricted investment earnings Grants and contributions not restricted to a specific program Gain on sale of capital assets TRANSFERS TOTAL GENERAL REVENUES AND TRANSFERS CHANGES IN NET ASSETS NET ASSETS, Beginning NET ASSETS, Ending s s s 1.498.111 1.498.111 378.763 880.000 1.258.763 $ S S 182.113 182.113 98.000 98.000 (2,610.318) S (331.807) (4.930.099) (3,488,475) (1,332.716) (727.402) (440.940) (764.021) (14,625.778) - fl4.625.7781 - 7.609,634 6.059.666 504.631 99,292 138.222 14.411,445 28,191 228,308 5,065 (630.1751 14.042.834 (582,944) 66.326.527 i 65.743.583 S (660.119) (660.119) (660.119) • - 348 630.175 630,523 (29,596) 162.654 133.058 S (14.625,778) (660.1191 (660.119) (15.285.897) - 7,609.634 6.059,666 504.631 99,292 138.222 14,411.445 28,539 228,308 5.065 14.673,357 (612,540) 66.489.181 65.876.641 S (8.646) (118.000) (126.646) - 15.066 15.066 (111,580) 3.386.321 3.274.741 The accompanying notes are an integral part of this statement. 2 ---PAGE BREAK--- MORGAN COUNTY, GEORGIA BALANCE SHEET GOVERNMENTAL FUNDS June 30,2011 ASSETS Cash Receivables (net of allowance for uncollectibles) Interfund receivables Prepaid items Inventories Restricted assets: Cash TOTAL ASSETS LIABILITIES AND FUND BALANCES Liabilities Accounts payable Other accrued items Due to other governments Interfund payables Deferred revenue TOTAL LIABILITIES FUND BALANCES Nonspendable: Prepaid expenditure Inventories Restricted: Capital outlay projects Judicial programs Public safety programs Health and welfare programs Unassigncd: TOTAL FUND BALANCES TOTAL LIABILITIES AND FUND BALANCES $ $ S $ GENERAL 6,285,136 1,378,605 182,548 79,442 67,947 - 7,993,678 415,567 167,681 - - 637,493 1,220,741 79,442 67,947 - - - - 6,625,548 6,772,937 7,993,678 $ $ S $ SPLOST 1,380,535 415,607 - - 189 1,796,331 21,258 - 80,794 54,471 - 156,523 - 1,639,808 ■ • - - 1,639,808 1,796,331 OTHER NONMAJOR GOVERNMENTAL $ S S $ FUNDS 234,106 161,282 - 3,781 - 399,169 470 - - 49,546 - 50.016 3,781 - - 6,549 319,725 19,098 - 349.153 399,169 TOTAL GOVERNMENTAL $ $ $ $ FUNDS 7,899,777 1,955,494 182,548 83,223 67,947 189 10,189,178 437,295 167,681 80,794 104,017 637.493 1,427,280 83,223 67,947 1,639,808 6,549 319,725 19,098 6,625,548 8,761.898 10,189,178 The accompanying notes are an integral part of this statement. 3 ---PAGE BREAK--- MORGAN COUNTY, GEORGIA RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET TO THE STATEMENT OF NET ASSETS June 30,2011 Total Fund Balances for Governmental Funds (page 3) Total net assets reported for governmental activities in the statement of net assets is different because: Capital assets used in the governmental activities are not financial resources and therefore are not reported in the funds. Some assets are not available in the current period and therefore are not reported in the funds. Investment in joint venture Deferred charge for issuance cost 1,302,834 185.298 $ 8,761,898 72,498,517 1,488,132 Revenues in the statement of activities that do not provide current financial resources are reported as deferred revenues in the funds. Property Taxes Fines Some liabilities, including bonds payable, are not due and payable in the current period and therefore are not reported in the funds. Net pension obligation Compensated absences Capital leases Contracts payable Rounding Total net assets of governmental activities (page 1) 501,680 135,813 (91,548) (269,936) (354,940) (16,926,032) 637,493 (17,642,456) $ 65,743,583 The accompanying notes are an integral part of this statement. 4 ---PAGE BREAK--- MORGAN COUNTY, GEORGIA STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES GOVERNMENTAL FUNDS For the Year Ended June 30,2011 REVENUES Taxes Licenses and permits Intergovernmental Fines and forfeitures Charges for services Contributions and donations Investment income Miscellaneous TOTAL REVENUES EXPENDITURES Current Expenditures General government Judicial Public safety Public works Public health and wclfaic Recreation and culture Housing and development Intergovernmental Capital outlay Debt service Principal Interest TOTAL EXPENDITURES EXCESS (DEFICIENCY) OF REVENUES OVER(UNDER) EXPENDITURES OTHER FINANCING SOURCES (USES) Sale of county property Capital lease proceeds Transfers in Transfers out TOTAL OTHER FINANCING SOURCES (USES) NET CHANGE IN FUND BALANCES FUND BALANCES, Beginning of year FUND BALANCES. End of year GENERAL $ 11.101,086 S 113,417 1.204,622 601,126 1,305.732 50,608 27.198 147,639 14,551.428 2.961.023 1.116.449 4.706.529 1.434,579 1.602,250 931.105 504.503 - 90,491 162,593 30.890 13,540.412 1,011.016 5,065 - 94,130 (806^49) (707,154) 303,862 6.469.075 $ 6,772,937 S SPLOST 3.504.429 2.505 3.506.934 - - 245.667 277.264 65.943 1,045,000 801,563 2,435,437 1.071.497 - - 1,071,497 568,311 1.639.808 OTHER NONMAJOR TOTAL GOVERNMENTAL GOVERNMENTAL FUNDS S 36,570 S 117,734 205,680 300,973 13,308 996 675,261 36.295 709.698 817 22,440 299,911 11.710 3.415 1.084.286 (409.025) 199,110 176,174 (94.130) 281.154 (127,871) 477.024 S 349.153 $ FUNDS 14,642,085 113.417 1.322,356 806,806 1.606.705 63.916 30,699 147,639 18.733.623 2,961,023 1,152,744 5,416,227 1.680,246 1,603,067 931.105 526.943 277,264 456,345 1,219,303 835,868 17.060.135 1,673.488 5,065 199,110 270.304 (900.479) (426.000) 1,247.488 7.514.410 8,761,898 The accompanying notes are an integral part of this statement. 5 ---PAGE BREAK--- MORGAN COUNTY, GEORGIA RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS TO THE STATEMENT OF ACTIVITIES For the Year Ended June 30,2011 Net change in fund balances (page S) Amounts reported for governmental activities in the statement of activities are different because: Governmental funds report capital outlays as expenditures. However, in the statement of activities, the cost of those assets is allocated over Iheir estimated useful lives and reported as depreciation expense. This is the amount by which capital outlays exceeded depreciation in the current period. Capital outlays Depreciation expense Revenues in the statement of activities that do not provide current financial resources are not reported as revenues in the funds. Property taxes Donated assets Fines Investment in joint venture Revenues reported in the funds that relate to prior years are not reported as revenue in the statement of activities. Property taxes Investment in joint venture Fines Under the modified accrual basis of accounting used in the governmental funds, expenditures are not recognized for transactions that are not normally paid with expendable available financial resources. In the statement of activities, however, which is presented on the accrual basis, expenses and liabilities are reported regardless of when financial resources are available. In addition, interest on long-term debt is not recognized under the modified accrual basis of accounting until due, rather than as it accrues. Also, governmental funds report the effect of issuance costs, premiums, discounts, and similar items when debt is first issued, where as these amounts are deferred and amortized in the statement of activities. This adjustment combines the net change of two balances. Proceeds from borrowing including premiums and discounts Principal payments on long-term debt Amortization of bond premium, discounts and issuance cost Some expenses reported in the statement of activities do not require the use of current financial resources and, therefore, are not reported as expenditures in governmental funds. Compensated absences, current year Compensated absences, prior year Net pension obligation is not available during the current period and therefore is not reported in the funds. End of year Beginning of year Rounding Changes in net assets of governmental activities (page 2) 1.247,488 456,345 (3.409,354) SO),680 519,754 133,813 1.302.834 (732,320) (1.258.211) (150.350) (2.953,009) 2.460,081 (2,140,881) (199,110) 1,219,303 71.846 (269.936) 268,086 (91.548) (195,263) S 1,092,039 (1.850) (286,811) 1 (582,944) The accompanying notes are an integral part of this statement. 6 ---PAGE BREAK--- MORGAN COUNTY, GEORGIA STATEMENT OF NET ASSETS PROPRIETARY FUNDS June 30,2011 BUSINESS-TYPE ACTIVITIES ENTERPRISE FUNDS ASSETS Current Assets Cash Receivables (net of allowance for uncollectibles) TOTAL CURRENT ASSETS Noncurrenl Assets Capital assets Capital assets not being depreciated Capital assets being depreciated Less: accumulated depreciation TOTAL CAPITAL ASSETS (NET OF ACCUMULATED DEPRECIATION) TOTAL NONCURRENT ASSETS TOTAL ASSETS LIABILITIES Current Liabilities Accounts payable Interfund payables Compensated absences payable Accrued landfill closurc/postclosure TOTAL CURRENT LIABILITIES Noncurrent Liabilities Compensated absences payable Accrued landfill closure/postclosure TOTAL NONCURRENT LIABILITIES TOTAL LIABILITIES NET ASSETS Invested in capital assets Unrestricted TOTAL NET ASSETS SOLID WASTE DISPOSAL FACILITY 195,719 22,725 218,444 284,864 1,049,433 (910,819) 423,478 423,478 641,922 46,523 78,531 10,423 30,145 165.622 4,467 338,775 343,242 508,864 423,478 (290,420) 133,058 The accompanying notes are an integral part of this statement. 7 ---PAGE BREAK--- MORGAN COUNTY, GEORGIA STATEMENT OF REVENUES, EXPENSES AND CHANGES IN FUND NET ASSETS PROPRIETARY FUNDS For the Year Ended June 30, 2011 BUSINESS-TYPE ACTIVITIES ENTERPRISE FUNDS OPERATING REVENUES Recycling and transfer fees Charges for services-other Total Operating Revenues OPERATING EXPENSES Salaries and benefits Other services and charges Landfill closure/postclosure costs Depreciation Waste disposal fees Professional fees Repairs and maintenance Total Operating Expenses OPERATING INCOME (LOSS) NONOPERATING REVENUES (EXPENSES) Investment earnings Total Nonoperating Revenues (Expenses) SOLID WASTE DISPOSAL FACILITY 327,230 28_ 327.258 260,126 128,139 70,860 49,834 449,510 8,739 20,169 987,377 (660,119) 348 348 INCOME (LOSS) BEFORE CONTRIBUTIONS AND TRANSFERS Transfer in CHANGE IN NET ASSETS TOTAL NET ASSETS, Beginning of year TOTAL NET ASSETS, End of year (659,771) 630,175 (29,596) 162.654 133.058 The accompanying notes are an integral part of this statement. 8 ---PAGE BREAK--- MORGAN COUNTY, GEORGIA STATEMENT OF CASH FLOWS PROPRIETARY FUNDS For the Year Ended June 30,2011 CASH FLOWS FROM OPERATING ACTIVITIES Receipts from customer Payments to suppliers Payments to employees Net cash provided by (used in) operating activities CASH FLOWS FROM NON-CAPITAL FINANCING ACTIVITIES Transfers in Net Cash provided (used) by non-capital financing activities CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES Acquisition and construction of capital assets Net cash provided (used) by capital and related financing activities CASH FLOWS FROM INVESTING ACTIVITIES Investment earnings Net cash provided (used) by investing activities Net increase (decrease) in cash and cash equivalents CASH, Beginning of year CASH, End of year BUSINESS-TYPE ACTIVITIES ENTERPRISE FUNDS SOLID WASTE DISPOSAL FACILITY ! 337,129 (580,475) (258,196) (501,542) 630,175 630,175 (37,561) (37,561) 348 348 91,420 104,299 195,719 RECONCILIATION OF OPERATING INCOME (LOSS) TO NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES Operating income (loss) Adjustments to reconcile operating income (loss) to net cash provided (used) by operating activities Depreciation (Increase) decrease in: Accounts receivable Increase (decrease) in: Accounts payable Compensated absences Accrued landfill costs Inlerfund payables Net cash provided by (used in) operating activities (660,119) 49,834 9,871 3,283 1,930 39,693 53.966 (501,542) The accompanying notes are an integral part of this statement. 9 ---PAGE BREAK--- MORGAN COUNTY, GEORGIA STATEMENT OF NET ASSETS FIDUCIARY FUNDS June 30,2011 ASSETS Cash Investments: Common stocks Mutual funds, equities Mutual funds, debt securities TOTAL ASSETS LIABILITIES Accrued liabilities TOTAL LIABILITIES NET ASSETS Restricted for orphan care TOTAL NET ASSETS BRASWELL FUND PRIVATE PURPOSE TRUST FUND 5,001 48,793 209,025 39.650 302.469 254 254 302.215 302.215 The accompanying notes are an integral part of this statement. 10 ---PAGE BREAK--- MORGAN COUNTY, GEORGIA STATEMENT OF CHANGES IN NET ASSETS FIDUCIARY FUNDS For the Year Ended June 30,2011 ADDITIONS Investment earnings Interest earned Dividend income Net change in fair value of investments Total investment earnings Interest and investment expense Net investment earnings TOTAL ADDITIONS DEDUCTIONS Tuition Administrative expenses TOTAL DEDUCTIONS CHANGE IN NET ASSETS NET ASSETS, Beginning of year NET ASSETS, End of year BRASWELL FUND PRIVATE PURPOSE TRUST FUND II 7,437 59,098 66,546 (3,300) 63,246 63.246 10,000 8.210 18,210 45,036 257,179 302,215 The accompanying notes are an integral part of this statement. II ---PAGE BREAK--- MORGAN COUNTY, GEORGIA COMPONENT UNITS COMBINING STATEMENT OF NET ASSETS June 30, 2011 ASSETS Cash Receivables (net of allowance for uncollectibles) Inventories Prepaid items Restricted assets: Cash Non-current assets: Receivables Deferred charges Capital assets: Capital assets not being depreciated Capital assets being depreciated Less: accumulated depreciation Capital assets, net of depreciation TOTAL ASSETS LIABILITIES Accounts payable Other accrued items Noncurrent liabilities: Due within one year Compensated absences payable Notes payable Capital leases payable Revenue bonds payable Due in more than one year Compensated absences payable Notes payable Capita] leases payable Revenue bonds payable TOTAL LIABILITIES NET ASSETS Invested in capital assets, net of related debt Restricted for: Debt service Capital outlay projects Public health and welfare Unrestricted TOTAL NET ASSETS HEALTH DEPARTMENT $ 368,630 $ 48,866 - - - - 46,253 (39,352) 6,901 424,397 10,117 7,868 - - 33,671 ■ - - 51,656 6,901 - - 365,840 $ 372,741 $ HOSPITAL AUTHORITY 427,000 $ 2,027,000 346,000 78,000 536,000 97,000 38,000 990,000 7,729,000 (5,524.000) 3,195,000 6.744.000 579,000 585,000 116,000 327,000 80,000 306,000 1,294,000 555,000 3,842.000 971,000 250,000 121,000 148,000 1.412.000 2.902,000 $ TOTAL 795,630 2,075,866 346,000 78,000 536,000 97,000 38,000 990,000 7,775,253 (5.563,352) 3.201.901 7.168.397 589,117 585,000 7,868 116,000 327,000 80,000 33,671 306,000 1,294,000 555,000 3.893,656 977,901 250,000 121,000 148,000 1,777,840 3,274.741 The accompanying notes are an integral part of this statement. 12 ---PAGE BREAK--- MORGAN COUNTY, GEORGIA COMPONENT UNITS COMBINING STATEMENT OF ACTIVITIES For the Year Ended June 30,2011 PROGRAM REVENUES .NET (EXPENSE) AND CHANGES IN NET ASSETS.... FUNCTIONS/PROGRAMS EXPENSES COMPONENT UNITS GOVERNMENTAL ACTIVITIES Health Department $ 554,329 Hospital Authority 14.127.000 TOTAL COMPONENT UNITS $ 14.681.329 CHARGES FOR SERVICES 166,920 13.031.000 OPERATING GRANTS AND CONTRIBUTIONS 378,763 880.000 CAPITAL GRANTS AND CONTRIBUTIONS 98.000 HEALTH DEPARTMENT HOSPITAL AUTHORITY (8,646) $ (8.646^ a 18.00m (118.000) TOTAL $ (8,646) (118.0001 (126.6461 GENERAL REVENUES Unrestricted investment earnings TOTAL GENERAL REVENUES AND TRANSFERS CHANGES IN NET ASSETS NET ASSETS, Beginning NET ASSETS, Ending 1.066 1.066 (7,580) 380.321 14.000 14.000 (104,000) 3.006.000 15.066 15.066 (111,580) 3.386.321 372.741 $ 2.902.000 $ 3.274.741 The accompanying notes are an integral part of this statement. 13 ---PAGE BREAK--- MORGAN COUNTY, GEORGIA NOTES TO FINANCIAL STATEMENTS June 30,2011 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The financial statements of MORGAN COUNTY, GEORGIA have been prepared in conformity with generally accepted accounting principles (GAAP) as applied to government units. The Governmental Accounting Standards Board (GASB) is the accepted standard-setting body for establishing governmental accounting and financial reporting principles. The more significant of the government's accounting policies are described below. REPORTING ENTITY The government is a political subdivision of the State of Georgia governed by an elected five- member commission. In addition, there are four Constitutional Officers; the Tax Commissioner, Probate Court Judge, Sheriff, and Clerk of Superior Court. The Constitutional Officers are elected county wide. The Board of County Commissioners budgets and approves all funding used by the separate Constitutional Officers. As required by generally accepted accounting principles, these financial statements present the government and its component units, entities for which the government is considered to be financially accountable. Each discretely presented component unit is reported in a separate column in the combined financial statements to emphasize it is legally separate from the government. Each discretely presented component unit has a June 30 year-end. Brief descriptions of discretely presented component units follow: MORGAN COUNTY HOSPITAL AUTHORITY: The hospital authority owns and operates a twenty bed acute care facility and a twenty-one bed hospital-based skilled nursing unit. The County appoints all the members of the seven-member board that governs the hospital authority. The hospital authority is fiscally dependent on the County since the County provides a subsidy which allows the Authority to remain solvent and the County guarantees the Authority's debt. During 2011, the County transferred $880,000 to the hospital authority. The hospital authority is presented as a proprietary fund type. MORGAN COUNTY HEALTH DEPARTMENT: The health department is charged with determining the health needs and resources of its jurisdiction, developing programs, activities, and facilities responsive to those needs, and enforcing all laws related to health matters unless they fall under the jurisdiction of other agencies. The health department is governed by the Morgan County Board of Health (Board). The Board includes seven members representing government, health professions, and the needy. The County appoints the voting majority of the board. Additionally, the health department is fiscally dependent on the County since it must have its budget approved by the County. During 2011, the County transferred $180,339 to the health department. The health department is presented as a governmental fund type. 14 ---PAGE BREAK--- MORGAN COUNTY, GEORGIA NOTES TO FINANCIAL STATEMENTS June 30,2011 Complete financial statements for each of the individual component units may be obtained at the entity's administrative offices. Morgan County Health Department Morgan County Hospital Authority 259 North Second Street 1077 South Main Street Madison, Georgia 30650-1317 Madison, Georgia 30650-2073 GOVERNMENT-WIDE AND FUND FINANCIAL STATEMENTS The government-wide financial statements the statement of net assets and the statement of changes in net assets) report information on all of the nonfiduciary activities of the primary government and its component units. For the most part, the effect of interfund activity has been removed from these statements. Governmental activities, which normally are supported by taxes and intergovernmental revenues, are reported separately from business-type activities, which rely to a significant extent on fees and charges for support. 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 demonstrates the degree to which the direct expenses of a given function or segment are offset by program revenues. Direct expenses are those that are clearly identifiable with a specific function or segment. Program revenues include 1) charges to customers or applicants who purchase, use, or directly benefit from goods, services, or privileges provided by a given function or segment and 2) grants and contributions that are restricted to meeting the operational or capital requirements of a particular function or segment. Taxes and other items not properly included among program revenues are reported instead 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 are reported as separate columns in the fund financial statements. MEASUREMENT FOCUS, BASIS OF ACCOUNTING, AND FINANCIAL STATEMENT PRESENTATION Measurement focus refers to what is being measured; basis of accounting refers to when revenues and expenditures are recognized in the accounts and reported in the financial statements. Basis of accounting relates to the timing of the measurement made, regardless of the measurement focus applied. 15 ---PAGE BREAK--- MORGAN COUNTY, GEORGIA NOTES TO FINANCIAL STATEMENTS June 30,2011 The government-wide financial statements are reported using the economic resources measurement focus and the accrual basis of accounting, as are the proprietary fund and fiduciary fund financial statement (fiduciary funds use the economic resources measurement focus to indicate that agency funds have no measurement focus.) Revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of timing of related cash flows. Property taxes are recognized as revenues in the year for which they are levied. Grants and similar items are recognized as revenue as soon as all eligibility requirements imposed by the provider have been met. Governmental fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Revenues are recognized as soon as they are both measurable and available. Revenues are considered to be available when they are collectible within the current period or soon enough thereafter to pay liabilities of the current period. For this purpose, the government considers property taxes as available if they are collected by the end of the current fiscal year. Fines are considered available if they are collected within 60 days of the end of the current fiscal period for which they are levied. Other revenues susceptible to accrual are considered available if they are collected within 90 days of the end of the current fiscal period for which they are imposed. Expenditures generally are recorded when a liability is incurred, as under accrual accounting. However, debt service expenditures, as well as expenditures related to compensated absences and claims and judgments, are recorded only when payment is due. Property taxes, sales tax, franchise taxes, fines, charges for services, and interest associated with the current fiscal period are all considered to be susceptible to accrual and so have been recognized as revenues of the current fiscal period. All other revenue items are considered to be measurable and available only when cash is received by the government. The government reports the following major governmental funds: The General Fund is the government's primary operating fund. It accounts for all financial resources of the general government, except those required to be accounted for in another fund. The SPLOST Capital Projects Fund accounts for funds received from a local 1 % sales tax reserved for construction of various capital projects. The government reports the following major proprietary funds: The Solid Waste Enterprise Fund accounts for the activities of the County's solid waste disposal and recycling programs. Additionally, the government reports the following fund types: Fiduciary funds account for assets held by the government in a trustee capacity or as an agent on behalf of others. 16 ---PAGE BREAK--- MORGAN COUNTY, GEORGIA NOTES TO FINANCIAL STATEMENTS June 30,2011 Private-purpose trust funds account for assets held by the government under the terms of a formal trust agreement and are accounted for on the flow of economic resources measurement focus and use the accrual basis of accounting. The Braswell Fund, a testamentary trust fund, is the private-purpose trust fund. The fund is restricted to the use of educating orphaned children who reside in the County. Agency funds are custodial in nature and do not represent results of operations or have a measurement focus. Agency funds are accounted for using the accrual basis of accounting. These funds are used to account for assets that the Tax Commissioner, Clerk of Court, Probate Court, Magistrate Court, and Sheriff holds for others in an agency capacity. Private-sector standards of accounting and financial reporting issued prior to December 1, 1989, generally are followed in both the government-wide and proprietary fund financial statements to the extent that those standards do not conflict with or contradict guidance of the Governmental Accounting Standards Board. Governments also have the option of following subsequent private- sector guidance for their business-type activities and enterprise funds, subject to the same limitation. The government has elected not to follow subsequent private-sector guidance. As a general rule, the effect of interfund activity has been eliminated from the government-wide financial statements. Exceptions to this general rule are interfund services provided and used are not eliminated in the process of consolidation. Elimination of these charges would distort the direct costs and program revenues for the various functions concerned. 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. 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 for the Solid Waste enterprise fund are charges to customers for sales and services. Operating expenses for the Solid Waste enterprise fund include the cost of services, administrative expenses, and depreciation on capital assets. All revenues and expenses not meeting this definition are reported as nonoperating revenues and expenses. When both restricted and unrestricted resources are available for use, it is the government's policy to use restricted resources first, then unrestricted resources as they are needed. 17 ---PAGE BREAK--- MORGAN COUNTY, GEORGIA NOTES TO FINANCIAL STATEMENTS June 30,2011 ASSETS, LIABILITIES AND NET ASSETS OR EQUITY 1. Deposits and Investments The government's cash and cash equivalents are considered to be cash on hand, demand deposits and short-term investments with original maturities of three months or less from the date of acquisition. Investments are recorded as fair value based on quoted market prices as of the balance sheet date. Increases or decreases in fair value during the year are recognized as part of investment income. 2. Receivables and Payables Activity between funds that are representative of lending/borrowing arrangements outstanding at the end of the fiscal year are referred to as either "interfund receivables/payables" the current portion of interfund loans) or "advances to/from other funds" the non-current portion of interfund loans). All other outstanding balances between funds are reported as "due to/from other funds." Any residual balances outstanding between the governmental activities and business-type activities are reported in the government-wide financial statements as "internal balances." Advances between funds, as reported in the fund financial statements, are offset by a fund balance reserve account in applicable governmental funds to indicate that they are not available for appropriation and are not expendable, available financial resources. All trade and property tax receivables are shown net of an allowance of uncollectibles. Property taxes attach as an enforceable lien on property as of January 1. The 2010 taxes were levied October 20, 2010, and were due 60 days after issuance. Interest and penalties are assessed on taxes not paid by this date. The taxes are subject to lien after March 20, 2011. The County's property taxes were levied on the assessed values of all real and personal property including mobile homes and motor vehicles located in the County. 3. Inventories and Prepaid Items Inventories, consisting of expendable supplies, not held for resale are valued at cost using the first-in/first-out (FIFO) method. The costs of governmental fund-type inventories are recorded as expenditures when consumed rather than when purchased. Certain payments to vendors reflect costs applicable to future accounting periods and are recorded as prepaid items in both government-wide and fund financial statements. 18 ---PAGE BREAK--- MORGAN COUNTY, GEORGIA NOTES TO FINANCIAL STATEMENTS June 30,2011 4. Capital Assets Capital assets, which include property, plant, equipment, and infrastructure assets (i.e. roads, bridges, sidewalks, culverts, and similar items), are reported in the applicable governmental activities column in the government-wide financial statements. Capital assets are defined by the County as assets with an initial, individual cost of $5,000 and an estimated useful life in excess of three years. Roads, bridges and culverts are defined by the County as projects with an individual cost of $5,000 or more. Such assets are recorded at historical cost or estimated historical cost if purchased or constructed. Donated capital assets are recorded at estimated fair market value at the date of donation. Roads, bridges and culverts acquired prior to July 1, 1980 have been reported. 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. Property, plant and equipment are depreciated using the straight-line method over the following estimated useful lives: Assets Years Buildings 40 Building improvements 10-25 Machinery and Equipment 5-10 Vehicles 5 Infrastructure 10-50 Land improvements 10-20 5. Compensated Absences It is the government's policy to permit employees to accumulate earned but unused vacation and sick pay benefits. In accordance with the provisions of Statement of Governmental Accounting Standards No. 16, "Accounting for Compensated Absences," no liability is reported for unpaid accumulated sick leave because the benefits are paid only upon illness of an employee, and the amount of such payments cannot be reasonably estimated. All vacation pay is accrued when incurred in the government-wide and proprietary financial statements. Vacation pay that is expected to be liquidated with expendable available financial resources is reported as expenditure and a fund liability of the governmental fund that will pay it. Upon retirement, unused vacation and sick leave will be included in years of service for benefit calculation purposes. At the end of each calendar year unused vacation time above 240 hours and unused sick time above 480 hours is rolled over to credit the years of service for retirement purposes. 6. Long-term Obligations In the government-wide financial statements and proprietary fund types in the fund financial statements, long-term debt and other long-term obligations are reported as liabilities in the applicable governmental activities, or proprietary fund type statement of net assets. 19 ---PAGE BREAK--- MORGAN COUNTY, GEORGIA NOTES TO FINANCIAL STATEMENTS June 30,2011 7. Fund Equity/Net Assets Fund equity at the governmental fund financial reporting level is classified as "fund balance." Fund equity for all other reporting is classified as "net assets." Fund balance - Generally, fund balance represents the difference between the current assets and current liabilities. In the fund financial statements, governmental funds report fund balance classifications that comprise a hierarchy based primarily on the extent to which the County is bound to honor constraints on the specific purposes for which amounts in those funds can be spent. Fund balances are classified as follows: • Nonspendable - Fund balances are reported as nonspendable when the amounts cannot be spent because they are either not in spendable form items that are not expected to be converted to cash like inventories and prepaid items) or legally or contractually required to be maintained intact. • Restricted - Fund balances are reported as restricted when there are limitations imposed on their use either through the enabling legislation adopted by the County or through external restrictions imposed by creditors, grantors, or laws or regulations of other governments. • Committed - Fund balances are reported as committed when they can be used only for specific purposes pursuant to constraints imposed by formal action of the Board of Commissioners through the adoption of a resolution prior to the end of the fiscal year. In order to modify or rescind the commitment, the Board of Commissioners must adopt another resolution. • Assigned - Fund balances are reported as assigned when amounts are constrained by the County's intent to be used for specific purposes, but are neither restricted nor committed. Through resolution, the Board of Commissioners has authorized the County's finance director to assign fund balances. • Unassigned - Fund balances are reported as unassigned as the residual amount when the balances do not meet any of the above criterion. The County reports positive unassigned fund balance only in the general fund. Negative unassigned fund balances may be reported in all other governmental funds. Net Assets - Net assets represent the difference between assets and liabilities. Net assets invested in capital assets, net of related debt, consists of capital assets, net of accumulated depreciation, reduced by the outstanding balances of any debt used for the acquisition, construction, or improvement of those assets. In determining the outstanding balance of any borrowing, proceeds of that debt which has not been spent is deducted. Accounts payable for costs related to acquisition, construction, or improvement of those capital assets is considered debt for this calculation. Net assets are reported as restricted as described in the fund balance section above. All other net assets are reported as unrestricted. 20 ---PAGE BREAK--- MORGAN COUNTY, GEORGIA NOTES TO FINANCIAL STATEMENTS June 30,2011 When both restricted and unrestricted resources are available for use, it is the government's policy to use restricted resources first, then committed, assigned, and unassigned (or unrestricted) resources as they are needed. 8. Invested in Capital Assets, Net ofRelated Debt The "invested in capital assets, net of related debt" reported on the government-wide statement of net assets as of June 30,2011 are as follows: Governmental Business-type Invested in capital assets, net of related debt: Activities Activities Cost of capital assets Less accumulated depreciation Book value Less capital related debt Invested in capital assets, net of related debt $ $ 107,636,951 (35,138,434) 72,498,517 (16,386,395) 56,112,122 $ $ 1,334,297 (910,819) 423,478 423,478 9. Management Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. NOTE 2 - FUND BALANCE/NET ASSETS The government-wide statement of net assets reports $1,988,960 of restricted net assets, of which is restricted by enabling legislation. Additional details related to fund balances at the governmental fund level are presented below: Restricted: SPLOST Fund Capital outlay projects - For funds received from the imposition of the Special $ 1,639,808 Purpose Local Option Sales Tax (SPLOST) restricted by the voter approved referendum Nonmajor Special Revenue Funds Judicial Programs - Law Library - Used to account for surcharges on fines and forfeitures which 6,549 are for the operation of the County Law Library and other expenditures as restricted by the OCGA-36-15 21 ---PAGE BREAK--- MORGAN COUNTY, GEORGIA NOTES TO FINANCIAL STATEMENTS June 30,2011 Public Safety Programs - Emergency E911 Telephone Services Fund - For fund to operate the E911 143,447 center as restricted by the OCGA-46-5 Special Revenue Fund - To account for funds received from surcharges on 89,492 fines and forfeitures restricted for operation of the county jail, and drug abuse, treatment and education programs Sheriffs Law Enforcement - to account for funds from seizures to be used for 86,786 law enforcement activities Health and Welfare Programs - Special Revenue Fund - To account for funds received from surcharges on 19,098 fines and forfeitures restricted for youth enrichment activities Total Restricted Fund Balance $ 1,985,180 NOTE 3 - STEWARDSHIP. COMPLIANCE AND ACCOUNTABILITY BUDGETARY INFORMATION Annual appropriated budgets are adopted on a basis consistent with generally accepted accounting principles. Annual appropriated budgets are adopted for the general fund and all special revenue funds. Project-length budgets are adopted for capital projects funds. All annual appropriations lapse at fiscal year end. All agencies of the government submit requests for appropriation to the County's manager so that a budget may be prepared. The budget is prepared by fund, function and activity and line item, and includes information on the past year, current year estimates and requested appropriations for the next fiscal year. The proposed budget is presented to the government's Board of Commissioners for review. The government's Board of Commissioners holds public hearings and may add to, subtract from, or change appropriations, but may not change the form of the budget. Any changes in the budget must be within the revenues and reserves estimated as available by the County's manager or the revenue estimates must be changed by an affirmative vote of a majority of the government's Board of Commissioners. The County manager may amend the line item budget within a department's appropriation. However, expenditures may not legally exceed budgeted appropriations at the department level. The legal level of budgetary control is at the department level within individual funds. During the year, the Board of Commissioners authorized amendments to include appropriations for some activities that were not originally budgeted and to reclassify certain character and functional expenditures. 22 ---PAGE BREAK--- MORGAN COUNTY, GEORGIA NOTES TO FINANCIAL STATEMENTS June 30,2011 NOTE 4 - DEPOSITS AND INVESTMENTS The County's investments are held in a private purpose trust fund known as the Braswell Fiduciary Fund and held as cash equivalents in the SPLOST fund. Investments are carried at fair value. Unrealized gain is recognized as income. Primary Government Custodial credit risk - deposits. Custodial credit risk for deposits is the risk that, that in the event of a bank failure, the government's deposits may not be returned. The County's policies permit it to exceed the FDIC insured limit in making deposits in commercial banks and savings and loans institutions if the funds are otherwise adequately secured. As of June 30, 2011, all deposits of the County were insured or collateralized. State statutes require collateral pledged in the amount of 110% of deposits. Depositories may secure deposits of public funds using the dedicated method or the pooled method as described below. • Under the dedicated method, a depository shall secure the deposits of each of its public depositors separately. • Under the pooled method, a depository shall secure deposits of public bodies which have deposits with it through a pool of collateral established by the depository with a custodian for the benefit of public bodies having deposits with such depository as set forth in code Section 45-8- 13.1. The County utilized both methods to secure its deposits of public funds. Custodial credit risk - investments. For an investment, this is the risk that, in the event of the failure of the counterparty, the government will not be able to recover the value of its investments or collateral securities that are in the possession of an outside party. Interest rate risk. Interest rate risk is the risk that changes in interest rates may adversely affect an investment's fair value. Since the price of a bond fluctuates with market interest rates, the risk that an investor faces is that the price of a bond held in a portfolio will decline if market interest rates rise. Morgan County does not have a formal investment policy that limits investment maturities as a means of managing its exposure to fair value losses arising from increasing interest rates. 23 ---PAGE BREAK--- MORGAN COUNTY, GEORGIA NOTES TO FINANCIAL STATEMENTS June 30,2011 Credit Risk. State statutes authorize the government to invest in obligations of the U.S. Treasury and of its agencies and instrumentalities; bonds or certificates of indebtedness of this state or of other states and of its agencies and instrumentalities; certificates of deposits of banks insured by FDIC; the State of Georgia Local Government Investment Pool; repurchase agreements; bonds, debentures, notes or other evidence of indebtedness of any solvent corporation of the United States government. Morgan County does not have an investment policy that would further limit these investment choices. Concentration ofcredit risk. Morgan County places no limit on the amount it may invest in any one issuer. Fiduciary Fund Custodial credit risk - investments. For an investment, this is the risk that, in the event of the failure of the counterparty, the government will not be able to recover the value of its investments or collateral securities that are in the possession of an outside party. Interest rate risk. The Braswell Fiduciary Fund does not have a formal investment policy that limits investment maturities as a means of managing its exposure to fair value losses arising from increasing interest rates. Credit Risk. The Braswell fund is authorized to invest in securities in accordance with the will that established the fund. The Braswell Fiduciary Fund has no investment policy that would further limit its investment choices. At June 30, 2011, the ratings of its investments are shown above. Concentration ofcredit risk. The Braswell Fiduciary Fund places no limit on the amount it may invest in any one issuer. As of June 30, 2011, the Braswell Fiduciary Fund held 6% of the total investments in common stocks of both the Atlanta Gas Company and the Southern Company. As of June 30,2011, the Braswell Fiduciary Fund had the following investments: Fair Value $ 48,793 209.025 257,818 39.650 Rating n/a n/a BB Rating Agency n/a n/a Morningstar Weighted Average Maturity (Years) n/a n/a 10.30 Investment Type Common Stocks Mutual Funds Subtotal Equity Securities Mutual Fund Debt Securities Total Investments The goal of the Braswell Fiduciary Fund in investing is to obtain a reasonable return on investments with a minimum exposure to potential loss of capital due to market fluctuations. 24 ---PAGE BREAK--- MORGAN COUNTY, GEORGIA NOTES TO FINANCIAL STATEMENTS June 30,2011 NOTE 5 - RECEIVABLES Receivables as of year-end for the County's individual major funds, nonmajor governmental funds in the aggregate, and enterprise fund including the applicable allowances for uncollectible accounts, are as follows: Receivables: Property Taxes Fines Accounts Intergovernmental Total Gross Receivables Less: Allowance for Uncollectibles Total Net Receivables General Fund $ 501,680 2,901,441 76,731 645.887 4,125,739 r2.747.1341> S 1.378.605 SPLOST 415.607 415,607 Nonmajor Governmental Enterprise Fund Funds 45,876 115.406 161,282 S 161.282 Solid Waste 22,725 22,725 Governmental funds report deferred revenue in connection with receivables for revenues that are not considered to be available to liquidate liabilities of the current period. Governmental funds also defer revenue recognition in connection with resources that have been received, but not yet earned. At the end of the current fiscal year, the various components of deferred revenue and unearned revenue reported in the governmental funds were as follows: Delinquent property taxes receivable (General Fund) Probation Fines (General Fund) UNAVAILABLE UNEARNED TOTAL $ 501,680 $ - S 501,680 135,813 - 135,813 Total deferred/unearned revenue for governmental funds $ 637,493 S $ 637,493 25 ---PAGE BREAK--- MORGAN COUNTY, GEORGIA NOTES TO FINANCIAL STATEMENTS June 30,2011 Property taxes receivable at June 30,2011, consist of the following: DIGEST GENERAL YEAR FUND 2011O> $ 7,681 2010 293,043 2009 47,366 2008 22,428 2007 15,293 2006 44,484 2005 37,798 2004 2,318 2003 8,220 2002 5,223 2001 1,819 2000 1,404 1999 2,933 1998 523 1997 8,920 1996 285 1995 1,918 1994 4 1993 8 1992 12 Total 2011 only consists of taxes due on mobile homes. Taxes on real and personal property are not levied until after fiscal year end. Therefore, they are not included. Receivables as of year-end for the County's component units, including the applicable allowances for uncollectible accounts, are as follows: Receivables: Accounts Intergovernmental Total Gross Receivables Less: Allowance for Uncollectibles Total Net Receivables Health Department $ 32,822 16.044 48,866 $ 48.866 $ $ Hospital Authority 2,887,000 238.000 3,125,000 (1.098.000^ 2.027.000 26 ---PAGE BREAK--- MORGAN COUNTY, GEORGIA NOTES TO FINANCIAL STATEMENTS June 30,2011 NOTE 6 - CAPITAL ASSETS Capital asset activity for the year ended June 30,2011 was as follows: Governmental Activities: Non-Depreciable Assets: Land and improvements Construction in progress Total non-depreciable capital assets Depreciable Assets: Land improvements Buildings and improvements Machinery and equipment Vehicles Infrastructure Total depreciable capital assets Less Accumulated Depreciation Tor: Land improvements Buildings and improvements Machinery and equipment Vehicles Infrastructure Total accumulated depreciation Total depreciable capital assets, net Governmental activities capital assets, net Beginning Balance $ 9,634,390 154.931 9.789.321 515,820 33.943.376 3,422,551 5.017.276 53.992.552 96.891.575 251,701 4,191.686 2,200.990 3,550,710 21.554.037 31.749.124 65.142.451 $ 74.931.772 Additions $ 99,723 91.760 191.483 334.583 12,900 437.133 784.617 24,777 860.627 313,030 298,641 1.912.279 3.409.354 Retirements (20,044) (20.044) (20.044) (20.044) Transfers (246.6911 (246.691) 246.691 246.691 246.691 Ending Balance $ 9,734,113 9.734.113 515.820 34,190,067 3,757,134 5,010,132 S4.429.685 97.902.838 276,478 5,052,313 2.514,020 3,829,307 23.466.316 35.138.434 62.764.404 S 72.498.517 Additions to governmental activities capital assets for fiscal year ending June 30, 2011 consist of the following: Capital Outlay Donated assets Total Non-depreciable capital assets additions Depreciable capital assets additions Rounding Total $ $ $ $ 456,345 519,754 976,099 191,483 784,617 976,099 27 ---PAGE BREAK--- MORGAN COUNTY, GEORGIA NOTES TO FINANCIAL STATEMENTS June 30,2011 Beginning Ending Balance Additions Retirements Transfers Balance Business-type Activities: Non-Depreciable Assets: Land and improvements Depreciable Assets: Land improvements Buildings and improvements Machinery and equipment Vehicles Total depreciable capital assets Less Accumulated Depreciation for: Land improvements Buildings Equipment Vehicles Total accumulated depreciation Total depreciable capital assets, net $ 284,864 55,473 119,724 494,441 342.234 1.011.872 30,898 76,323 447,867 305.897 860.985 150.887 $ $ - 12,500 25,061 37.561 4,024 2,993 19,587 23.230 49.834 H 2.273^ $ •il1I • $ 284,864 67,973 119,724 519,502 342.234 1.049.433 34,922 79,316 467,454 329.127 910.819 138.614 Business-type activities capital assets, net SE Depreciation expense was charged to functions/programs of the primary government as follows: Governmental Activities: General Government Public Safety Public Works Public Health and Welfare Recreation and Culture Housing and Development Total depreciation expense-governmental activities Business-type Activities: Solid Waste $ $ S 370,935 889,498 2,018,994 37,906 56,022 35.999 3.409.354 49.834 28 ---PAGE BREAK--- MORGAN COUNTY, GEORGIA NOTES TO FINANCIAL STATEMENTS June 30,2011 Health Department Discretely Presented Component Unit Activity for the Health Department for the year ended June 30,2011, was as follows: Governmental Activities: Depreciable Assets: Machinery and equipment Less Accumulated Depreciation Capital Assets, net S Beginning Balance Additions 43,773 $ (37.071) 6.702 $ $ $ Retirements 2,480 (2.28 H 199 $ $ Ending Balance 46,253 (39.352) 6.901 Hospital Authority Discretely Presented Component Unit Activity for the Hospital Authority for the year ended June 30,2011, was as follows: Governmental Activities: Non-Depreciable Assets: Land Construction in progress Total Non-Depreciable Assets Depreciable Assets: Land improvements Buildings and improvements Equipment Total Depreciable assets Less Accumulated Depreciation for: Land improvements Buildings and improvements Equipment Total accumulated depreciation Total depreciable capital assets, net Capital Assets, net Beginning Balance Additions Retirements Ending Balance $ 105,000 $ 594.000 699.000 61,000 3,555,000 3.785.000 7.401.000 (61,000) (2,533,000) (2.491.000) (5.085.000} 2.316.000 S 3.015.000 S 416.000 416.000 - (102,000) (337.000) (439.000) (439.000) (23.000) S_ $ (125.000) (125.000) 328.000 328.000 - 328.000 203.000 S 105,000 885.000 990.000 61,000 3,555,000 4.113.000 7.729.000 (61,000) (2,635,000) (2.828.000) (5.524.000) 2.205.000 3.195.000 29 ---PAGE BREAK--- MORGAN COUNTY, GEORGIA NOTES TO FINANCIAL STATEMENTS June 30,2011 NOTE 7 - LONG TERM DEBT Long-term liability activity for the year ended June 30,2011 was as follows: Governmental Activities: Capital leases Contracts payable Plus: Original issue Premiums Subtotal Contracts Payable Net pension obligation Compensated absences Governmental activities long-term liabilities Business-type Activities: Compensated absences Landfill closure/postclosure Business-type activities long-term liabilities Beginning Balance Additions Reductions Ending Due Within One Year Due After One Year S 266,518 $ 199,110 $ (110,688) $ 354,940 $ 135,381 S 219,559 17,413,191 723.824 18.137.015 (195,263) 268.086 12,960 $ 329.227 620,706 250.977 8,451 $ (9.616) (1,108,614) 16,304,577 (102.369) 621.455 (1.210.983) 16.926.032 (333,895) (249.127) (6,521) $ 49.309 91,548 269.936 14,890 $ 368.920 1.148.785 97.014 1.245.799 188.955 10.423 $ 30.145 15,155.792 524.441 15.680.233 91,548 80.981 4,467 338.775 Capital Leases The County leases certain land and facilities under non-cancelable capital leases. The leases relate to the DFACS/Health Department building and E911 equipment. Ownership of the related assets will be transferred to the County at the end of the lease terms. The assets acquired through capital leases are as follows: Governmental Activities Buildings and improvements Machinery and equipment Less: Accumulated Depreciation Total $ 885,714 199,110 (310.000) The County entered into a capital lease agreement in 1997 with Wachovia Bank to finance the construction of a DFACS building. The lease term is one year with fourteen one-year renewable lease terms. The County entered into a capital lease agreement in 2011 with AT&T to finance the acquisition of Vesta equipment for the E911 center. The lease term is 60 months. 30 ---PAGE BREAK--- MORGAN COUNTY, GEORGIA NOTES TO FINANCIAL STATEMENTS June 30,2011 The future minimum lease obligations and the net present value of these minimum lease payments as of June 30,2011, were as follows: Year Ending June 30, 2012 2013 2014 2015 2016 Total minimum lease payments Less: amount representing interest (6.45%) Present value of minimum lease payments Contracts payable Governmental Activities $ 152,382 115,463 45,375 45,376 30.250 388,846 $ 354.940 During 2000, the County entered into an intergovernmental contract with the Development Authority of Walton County to acquire land for an industrial park and issue the "Development Authority of Walton County (Georgia) Industrial Park Revenue Bond Anticipation Note, Series 1998" in order to finance the acquisition of land for the Industrial Park Project. The total amount of this issue is $7,500,000. Morgan County's share of the debt was 15%, or $1,125,000. During 2001, this revenue bond anticipation note was replaced by a revenue bond issued by the Joint Development Authority of Jasper County, Morgan County, Newton County, and Walton County in the amount of $9,000,000. Morgan County's share of the debt is 15%. The outstanding balance of this debt at June 30, 2011 is $5,600,000 with Morgan County's share being $840,000. The bonds are variable rate demand bonds. A common feature of such bonds is that bondholders have the right to tender their bonds back for purchase each week for any reason. Should the Remarketing Agent be unable to find new buyers for any tendered bonds, a bank is obligated to purchase the bonds under a Liquidity Facility. Should that happen, the bonds become "Bank Bonds" with an interest rate equal to the greater of prime rate or Federal Funds rate plus 0.50% per annum. In addition, the fees for providing the Liquidity Facility would increase from 0.195% per annum to 0.440% per annum; also, the repayment of principal would be accelerated on a five year schedule commencing with the next principal payment. Just after June 30, 2008, the rating for the bond issuer for the Joint Development Authority of Jasper County, Morgan County, Newton County, and Walton County, (JDA) Series 2001 bonds was downgraded from a triple-A rating. As a result, the Remarketing Agent was unable to find new investors and the Bank purchased the bonds under the Liquidity Facility. This bank bond rate was 5.0% at June 30, 2008. On September 23, 2008 the interest rate was 6.0% with a total rate of 6.44% per annum. In an effort to reduce the interest rate back to the terms in effect at June 30, 2008, the JDA obtained a letter of credit from a bank in the amount of $6,474,667 ($6,400,000 principal and 31 ---PAGE BREAK--- MORGAN COUNTY, GEORGIA NOTES TO FINANCIAL STATEMENTS June 30,2011 $74,667 interest component). This letter of credit has a stated expiration date of September 15, 2011. The variable interest rate as of June 30, 2011 is 0.35%. The annual requirements to amortize the JDA bond using terms in effect as of June 30, 2011, are as follows: Year ending, June 30, 2012 2013 2014 2015 2016 2017-2021 2022 Principal $ 60,000 75,000 75,000 75,000 75,000 480,000 - Interest S 1,680 1,560 1,410 1,260 1,110 2,970 - Total S 61,680 76,560 76,410 76,260 76,110 482,970 - Total S 840.000 £ 9.990 $ 849.990 During 2008, the County acquired a GEFA loan of $67,311 for the extension of water and wastewater to the Joint Industrial Development Authority Industrial Park property. Morgan County is required to pay 13.8% of the total loan. The total debt outstanding at June 30, 2011 is $54,577. The annual requirements to amortize the GEFA loan using terms in effect as of June 30, 2011, are as follows: Year ending June 30, Principal Interest Total 2012 $ 3,785 S 2,472 $ 6,257 2013 3,965 2,293 6,258 2014 4,152 2,106 6,258 2015 4,349 1,909 6,258 2016 4,554 1,704 6,258 2017-2021 26,216 5,073 31,289 2021-2025 7.556 267 7.823 Total 32 ---PAGE BREAK--- MORGAN COUNTY, GEORGIA NOTES TO FINANCIAL STATEMENTS June 30,2011 During 2008, the County entered into an intergovernmental contract with the Morgan County Building Authority for $19,000,000 to acquire the land and make renovations to the Jail building and build an aquatic center. The County is to make annual payments. Interest rates vary from 4% to The outstanding balance of this debt at June 30,2011 is $15,410,000. The annual requirements to amortize Jail Bonds using terms in effect as of June 30, 2011, are as follows: Year Ending June 30, 2012 2013 2014 2015 2016 2017-2021 2022-2026 Total $ $ Principal 1,085,000 1,140,000 1,195,000 1,255,000 1,320,000 7,650,000 1.765.000 15.410.000 $ S Interest 757,263 703,012 646,013 586,262 523,513 1,559,812 75.013 4.850.888 $ Total 1,842,263 1,843,012 1,841,013 1,841,262 1,843,513 9,209,812 1.840.013 20.260.888 Compensated Absences Typically, the general fund has been used to liquidate compensated absences except for items related to the solid waste enterprise fund. Health Department Discretely Presented Component Unit Long-term debt activity for the Health Department for the year ended June 30, 2011, was as follows: Beginning Ending Due Within Due After Governmental Activities Balance Additions Reductions Balance One Year One Year Compensated absences $ 41.747 $ 41.539 $ (4I.747> $ 41.539 $ 7.868 $ 33.671 Difference SB ZERO (7,868) (33,671) Hospital Authority Discretely Presented Component Unit Long-term debt activity for the Hospital Authority for the year ended June 30, 2011 , was as follows: Business-type Activities Bonds Notes payable Capital leases Total long-term liabilities Beginning Balance $ 710,000 472,000 483.000 $1.665.000 Additions $ - 547.000 $ 547.000 Reductions $ (75,000) (50,000) 591.000 Ending Balance 635,000 422,000 1.621.000 Due Within One Year $ 80,000 116,000 327.000 S Due After One Year $ 555,000 306,000 1.294.000 $ 2.155.000 33 ---PAGE BREAK--- MORGAN COUNTY, GEORGIA NOTES TO FINANCIAL STATEMENTS June 30,2011 The terms and due dates of the Hospital Authority's long-term debt, including capital lease obligations, at June 30,2011, are as follows: • 1997 Series Revenue Certificates, at varying rates of interest from 3.85% to 5.35%, principal maturing in varying annual amounts, due July 2017, secured by County commitment to provide revenues, through tax levy, sufficient to meet obligations under the bond contract and to pay all reasonable operating expenses of the Authority. The original proceeds of $1,385,000 were used to build a 21 bed skilled nursing unit. • 2001 Series Revenue Anticipation certificate No.l, at 7.75% interest rate, due August 2011, payable in installments of $3,000, collateralized by real estate and guaranteed by Morgan County Board of Commissioners. • 2001 Series Revenue Anticipation certificate No.2, at 5.00% interest rate, due August 2011, payable in installments of $32,000, collateralized by real estate and guaranteed by Morgan County Board of Commissioners. • Note payable for line-of-credit refinance at 3.229% interest rate, due July 5, 2012, payable in seven interest only installments then four installments of $15,000 with the remaining balance due at maturity, collateralized by real property. • Capital lease obligation, at varying rates of inputed interest from 3.48% to 5.37%, collateralized by leased equipment. The annual requirements to amortize long-term debt as of June 30,2011 are as follows: Year Ending Bonds and notes payable Capital Leases June 30, Principal Interest Total Principal Interest Total 2012 $ 196,000 $ 42,000 $ 238,000 $ 327,000 $ 59,000 $ 386,000 2013 386,000 28,000 414,000 415,000 43,000 458,000 2014 85,000 23,000 108,000 432,000 26,000 458,000 2015 90,000 18,000 108,000 365,000 9,000 374,000 2016 95,000 13,000 108,000 82,000 1,000 83,000 2017-2021 205.000 11.000 216.000 Total $ 1.057.000 Short-Term Borrowings On November 3, 2009, the Hospital Authority and the Morgan County Board of Commissioners jointly entered into a $1,000,000 line-of-credit agreement with a local financial institution. The line-of-credit is being used to fund project development costs associated with the replacement facility. The line-of-credit bears interest at 3.229%, is collateralized by real property, and has a maturity date of June 30, 2011. On June 30, 2011, the Authority and County refinanced the balance of the line-of-credit with a note exceeding one year in maturity. 34 ---PAGE BREAK--- MORGAN COUNTY, GEORGIA NOTES TO FINANCIAL STATEMENTS June 30,2011 A schedule of changes in the Authority's short-term debt for 2011 follows: Beginning Balance Additions Reductions Ending Balance Line-of-credit $ 399.000 $ 12.000 $ (411.000^ $ On August 1, 2011, the Authority issued $3,320,000 in Revenue Anticipation Certificates No. 1 and No. 2 to refinance outstanding accounts payable, lines of credit, capital leases, and a portion of long-term debt. These certificates are guaranteed by the Morgan County Board of Commissioners. Under the terms of the 1997 Series Revenue Certificates, the Authority is required to maintain certain deposits with a trustee.Such deposits are included in the statement of net assets as part of restricted cash. NOTE 8 - INTERFUND BALANCES AND ACTIVITY Balances due to/from other funds at June 30,2011, consist of the following: Due to the General Fund from SPLOST fund for expenses paid by General Fund Subtotal - due to Generalfundfrom SPLOSTfunds Due to the General Fund from E911 nonmajor fund for salary reimbursements Subtotal - due to other nonmajor governmentalfunds Due to General Fund from Solid Waste for operating expenses Subtotal - due to the proprietaryfunds Total due to other funds Summary of balances due from other funds reported in fund financial statements: Due from other funds, Balance Sheet - Governmental Funds Total due from other funds Interfund transfers for the year ended June 30, 2011, consist of the following: Transfers from General fund From General fund to Solid Waste Fund to supplement fiscal year 2011 operations From General fund to Emergency 911 nonmajor fund to supplement fiscal year 2011 operations Total transferred outfrom the General Fund Transfers from Other Nonmajor Governmental funds From Special Revenue fund to General fund for use of fiscal year 2011 jail fees for operating expenses From Special Revenue fund to General fund for use of fiscal year 2011 drug abuse fees for operating expenses From Hotel/Motel fund to General fund for activities during fiscal year 2011 Total transferred outfrom Other Nonmajor Governmentalfunds. Total Summary of Transfers out to other funds reported in fund financial statements: Transfers Out, Statement of Revenues, Expenditures and Changes in Fund Balances - Governmental $ 900,479 35 s $ $ $ 54,471 54,471 49,546 49,546 78,531 78,531 182,548 182,548 182,548 $ S 630,175 176,174 806,349 62,000 18,000 14,130 94,130 900,479 ---PAGE BREAK--- MORGAN COUNTY, GEORGIA NOTES TO FINANCIAL STATEMENTS June 30,2011 NOTE 9 - RETIREMENT PLANS Defined Benefit Pension Plan A. Plan Description The County contributes to the Association County Commissioners of Georgia Defined Benefit Plan (the Plan), an agent multiple-employer public employee retirement system that acts as a common investment and administrative agent for participating counties in Georgia. The Plan was effective January 1, 1998. The Plan provides retirement, disability, and death benefits to plan participants and beneficiaries. The Plan, through execution of an adoption agreement, is affiliated with the Association County Commissioners of Georgia Defined Benefit Plan (the ACCG Plan), an agent multiple-employer pension plan administered by Georgia Employees Benefits Corporation of Georgia. The ACCG, in its role as the Plan Sponsor, has the sole authority to amend the provisions of The ACCG Plan, as provided in Section 19.03 of the ACCG Plan document. The County has the authority to amend the adoption agreement, which defines the specific benefit provisions of the Plan, as provided in Section 19.02 of the ACCG Plan Document. The Plan issues a publicly available financial report that includes financial statements and required supplementary information for the Plan. That report may be obtained by writing to Morgan County Board of Commissioners, P.O. Box 168, Madison, Georgia 30650. All full-time County employees are eligible to participate in the Plan after completing three years of service. Benefits vest after five years of service. Participants become eligible to retire at 60 with 3 years of participation in the Plan. The County's covered payroll for employees participating in the Plan as of January 1, 2010 (the most recent actuarial valuation date) was $3,217,395 (based on covered earnings for the preceding year). Upon eligibility to retire, participants are entitled to an annual benefit in the amount of 2.0% of average annual compensation multiplied by the years of service. Compensation is averaged over a five-year period prior to retirement or termination. The Plan also provides benefits in the event of death or disability. These benefit provisions were established by an adoption agreement executed by the County Board of Commissioners. 36 ---PAGE BREAK--- MORGAN COUNTY, GEORGIA NOTES TO FINANCIAL STATEMENTS June 30,2011 B. Funding Policy The County is required to contribute at an actuarially determined rate. The contribution amount is determined using actuarial methods and assumptions approved by the ACCG Plan trustees and must satisfy the minimum contribution requirement contained in the State of Georgia Statutes. Section 47-20 of the Georgia Code sets forth the funding standards for state and local governmental pension plans. County employees are not required to contribute to the Plan. Contributions totaling $333,895 ($333,895 employer and $0 employee) were made in accordance with the contribution requirements determined by an actuarial valuation performed as of January 1, 2010. This was equal to the minimum required contribution of $333,895. C. Annual Pension Cost The cost of administering the plan is funded with earnings from investments. The Georgia Constitution enables the governing authority of the county, the Board of Commissioners, to establish and amend from time to time, the contribution rates for the employer and its plan members. The County's contributions to the Plan for the years ended June 30, 2011, 2010, and 2009 were $333,895, $578,600, and $502,002 respectively, and were equal to or greater than the required contribution for each year. Schedule I included in the required supplementary information presents multiyear trend information about whether the actuarial value of plan assets is increasing or decreasing over time relative to the actuarial accrued liability for benefits. The projection of benefits for financial reporting purposes does not explicitly incorporate the potential effects of legal or contractual funding limitations. The data for the most current year are as follows: Actuarial Date of January 1 2010 Actuarial Value of Assets $ 5,164,339 Actuarial Accrued Liability (AAL) - Projected Unit Credit $6,986,114 Unfunded AAL fUAAL) (b-a) $ 1,821,775 Funded Ratio (a/b) 73.9% Covered Payroll $ 3,217,395 UAAL as a Percent of Covered Payroll 56.6 % 37 ---PAGE BREAK--- MORGAN COUNTY, GEORGIA NOTES TO FINANCIAL STATEMENTS June 30,2011 The annual required contribution and percentage contributed for the current year and prior years are as follows: Fiscal Year June 30, Annual Pension Cost (APC) 2011 2010 2009 $ $ 620,706 552,903 484,612 Actual County Contribution $ 333,895 578,600 $ 502,002 Percentage of APC Contributed 53.8% $ 104.6 % 103.6 % $ Net Pension Obligation 91,548 (195,263) (169,566) The information was determined as part of the actuarial valuation as of January 1, 2010. Additional information as of the latest actuarial valuation follows: Valuation date Actuarial Cost method Asset Valuation method Amortization method Remaining amortization period (This represents the estimated amortization period for all unfunded liabilities combined into one amortization base.) Actuarial assumptions: Assumed rate of return on assets* Expected future salary increases* Cost of Living Adjustments* ♦Includes inflation at January 1,2010 Projected Unit Credit Market Value Level Percent of Pay (Closed) 10 years 8.0% per annum 6.0% per annum 0.0% per annum 3.0% The County's annual pension cost and net pension obligation for the pension plan for the current year were determined as follows: Annual required contribution Interest on net pension obligation Amortization of net pension obligation Annual pension cost Contribution made Increase (decrease) in Net Pension Obligation Net pension obligation, January 1,2010 Net pension obligation, January 1,2011 $ 619,647 (15,133) 16.192 620,706 (333.895) 286,811 (195.263) 91.54E Other Plans In addition to the above pension plans, the following pension plans cover County employees but the county is not legally responsible for contributions to the pension plans. Other governmental entities are legally responsible for these contributions as well as required disclosures: 38 ---PAGE BREAK--- MORGAN COUNTY, GEORGIA NOTES TO FINANCIAL STATEMENTS June 30,2011 PROBATE JUDGES' RETIREMENT FUND OF GEORGIA: The Probate Judge is covered under a pension plan which requires that certain sums from marriage licenses and fines or bond forfeitures be remitted to the pension plan before the payment of any costs or other claims. SUPERIOR COURT CLERKS' RETIREMENT FUND OF GEORGIA: The Clerk of Superior Court is covered under a pension plan which requires that certain sums from fees and fines or bond forfeitures be remitted to the pension plan before the payment of any costs or other claims. SHERIFF'S RETIREMENT FUND/PEACE OFFICER'S ANNUITY AND BENEFIT FUND: The Sheriff and Sheriffs Deputies are covered under separate pension plans which require that certain sums from fines or bond forfeitures be remitted by the Probate Judge or Clerk of Superior Court to the pension plans before the payment of any costs or other claims. GEORGIA STATE EMPLOYEES' RETIREMENT SYSTEM: The Health Department's eligible employees participate in the Georgia State Employees' Retirement System (ERS), a statewide multiple-employer public employee retirement system covering employees of local boards of health and various agencies and departments of the State of Georgia. ERS is funded through employer and employee contributions and the Health Department has no legal obligation for paying benefits. NOTE 10 - CONTINGENT LIABILITIES Amounts received or receivable for grantor agencies are subject to audit and adjustment by grantor agencies, principally the federal government. Any disallowed claims, including amounts already collected, may constitute a liability of the applicable funds. The amount, if any, of expenditures which may be disallowed by the grantor cannot be determined at this time although the government expects such amounts, if any, to be immaterial. The County is subject to possible legal actions in the nature of claims for damages to persons and property, civil rights isolation and other similar types of actions arising in the course of normal County operations. In the opinion of County management, after consultation with legal counsel, the ultimate outcome of these possible legal actions will not have a material impact on the financial position of the County. The County has an agreement with The Morgan County Hospital Authority to reimburse the Authority for all expenditures necessary for the maintenance, operation, and providing of adequate and necessary facilities for medical care and hospitalization of the indigent sick. The County shall also reimburse reasonable reserves for expansion and make payment of the cost of all facilities of Morgan Memorial Hospital. The County agrees to adequately and fully pay all sums due to the Authority under the agreement out of general funds of the County and/or by levying all required taxes up to a maximum of seven mils. 39 ---PAGE BREAK--- MORGAN COUNTY, GEORGIA NOTES TO FINANCIAL STATEMENTS June 30,2011 In March of 2001, the County accepted a Community Development Block Grant from the Department of Community Affairs in the amount of $500,000 for the construction of a new Senior Center. As a condition of the grant, the County must agree to use the facility for the approved purpose throughout the life of the facility. Should the facility be converted to an ineligible use, the Department of Community Affairs will require repayment of the grant. The repayment will be based on 20-year straight-line depreciation, except 100% repayment of the grant funds will be required to be repaid if the facility is converted during the first five years after the grant closeout date. The period for calculating the repayment amount began upon the closeout of the grant in 2003 and will continue until year 2023. NOTE 11 - RISK MANAGEMENT The County is exposed to various risks of losses related to torts, thefts of, damage to, and destruction of assets; errors and omissions; injuries to employees; and natural disasters. The following are ways the County handles these risks: WORKERS' COMPENSATION The County participates in the Association County Commissioners of Georgia (ACCG) Group Self Insurance Workers' Compensation Fund (GSIWCF), a self-insured pool cooperative arrangement among its members to finance workers' compensation coverage. The fund is owned by its members and is managed by a seven member Board of Trustees who are representatives from participating counties. The ACCG-GSIWCF operates under the authority of O.C.G.A. 34-9- 150 et seq. and the Georgia Insurance Commissioner's Office. The members of ACCG-Group Self Insurance Workers' Compensation Fund are assessable if the losses that ACCG must pay exceed the assets of the pool. At June 30, 2011, there was no need for such an assessment. Therefore, no liability has been recorded in these financial statements. OTHER The County participates in the Association County Commissioners of Georgia (ACCG) Interlocal Risk Management Agency (IRMA), a risk sharing arrangement among Georgia County Governments. The fund exists by authority of O.C.G.A. 36-85-1 et seq. Premium liabilities are based on the estimated ultimate cost of settling the claims, including effects of inflation and other society and economic factors. The IRMA Limits of Liability shall not be charged with the first $2,500 of any loss. IRMA pays losses up to $100,000 per individual claim or $5,000,000 for all claims. However, excess losses, if any, are covered by reinsurance and would be paid by the reinsurer. The members of IRMA are assessable if the losses that IRMA must pay exceed the assets of the pool. At June 30, 2011, there was no need for such an assessment. Therefore, no liability has been recorded in these financial statements. 40 ---PAGE BREAK--- MORGAN COUNTY, GEORGIA NOTES TO FINANCIAL STATEMENTS June 30,2011 As part of these risk pools (IRMA & GSIWCF), the County is obligated to pay all contributions and assessments to cooperate with the pools' agents and attorneys, to follow loss reduction procedures established by the funds, and to report as as possible, and in accordance with any coverage descriptions issued, all incidents that could require the funds to pay any type of loss. The County is also to allow all the pools' agents and attorneys to represent the County in investigations, settlement discussions, and all levels of litigation arising out of any claim made against the County. The funds are to defend and protect the members of the funds against liability or loss as prescribed in the member government contract and in accordance with the worker's compensation law of Georgia. The funds are to pay all cost taxed against members in any legal proceeding defended by the members, all interest accruing after entry of judgment, and all expenses incurred for investigation, negotiation or defense. The County also purchases combined automobile, crime, liability and property insurance coverage from the ACCG-IRMA. A $2,500 deductible applies to each claim. The County also purchases catastrophic coverage for inmate medical costs with a $20,000 deductible per inmate. The following is a summary of coverage at June 30,2011: Property Losses $ Comprehensive General and Law Enforcement Liability Automobile Liability Errors and Omissions Liability Crime Coverage Boiler and Machinery Inmate medical Inmate medical $ 5,000,000 5,000,000 5,000,000 5,000,000 10,000,000 150,000 50,000 100,000,000 250,000 750,000 aggregate per occurrence per occurrence per occurrence aggregate per occurrence per employee per occurrence Specific limit per inmate Aggregate limit The County has no outstanding claims in excess of coverage for which a liability should be recorded as of June 30, 2011. Settled claims in the past three years have not exceeded the coverage. 41 ---PAGE BREAK--- MORGAN COUNTY, GEORGIA NOTES TO FINANCIAL STATEMENTS June 30,2011 NOTE 12 -NORTHEAST GEORGIA REGIONAL COMMISSION Morgan County, in conjunction with cities and counties in the area are members of the Northeast Georgia Regional Commission (NEGRC). Membership in the NEGRC is automatic for each municipality and county in the state. The official Code of Georgia Section 50-8-34 (Georgia Planning Act of 1989) provides for the organizational structure of the regional commissions. Each county and municipality in the state is required by law to pay minimum annual dues to the NGRC. The county paid annual dues in the amount of $17,492 to the NEGRC for the year ended June 30,2011. The NEGRC Board membership includes the chief elected official of each county and the chief elected official of each municipality. The County board members and municipal board members from the same county elect one member of the Board who is a resident (but not an elected or appointed official or employee of the County or municipality) to serve as the nonpublic Board member from a County. The Georgia Planning Act of 1989 (O.C.G.A. 50-8-34) defines regional commissions as "public agencies and instrumentalities of their members." Georgia laws also provide that the member governments are liable for any debts or obligations of an regional commission beyond its resources. (O.C.G.A. 50-8-39.1) Separate financial statements for the NEGRC may be obtained from: Northeast Georgia Regional Commission, 305 Research Drive, Athens, Georgia 30605. NOTE 13 - LANDFILL CLOSURE AND POSTCLOSURE CARE COST State and federal laws and regulations required the County to place a final cover on its U.S. Highway 441 landfill site when it stopped accepting waste and to perform certain maintenance and monitoring functions at the site for thirty years after closure. Although closure and postclosure care costs will be paid only near or after the date that the landfill stops accepting waste, the County reports a portion of these closure and postclosure care costs as a current operating expenditure in each period based on landfill capacity used as of each balance sheet date. These amounts are based on what it would cost to perform all closure and postclosure care in 2011. Actual cost may be higher due to inflation, changes in technology, or changes in regulations. The County is also required to demonstrate financial assurance that the closure and postclosure care cost can be paid in the future. The County is in compliance at June 30, 2011, based on requirements issued by the EPA. 42 ---PAGE BREAK--- MORGAN COUNTY, GEORGIA NOTES TO FINANCIAL STATEMENTS June 30,2011 NOTE 14 - SIGNIFICANT ESTIMATES As discussed in NOTE 1, estimates are used in the preparation of these financial statements. Three of the estimates qualify as significant estimates in that it is reasonably possible that the estimates will change in the near term due to one or more future confirming events and this change will have a material effect on the financial statements. These estimates are as follows: • The liability for landfill closure and postclosure care cost is based on estimates provided by the County's engineering consultants and reduced each year by expenses related to the closure and postclosure of the landfill. These estimates are based on what it would cost to perform closure and postclosure care currently. Actual costs may change due to higher inflation, changes in technology, or changes in regulations. • The estimate for allowance for doubtful accounts related to fines. This estimate is calculated as 50% of the fines due to the County less amounts received in the first 60 days after year end. This estimate will be assessed in future periods and adjusted as necessary based on actual results. • The estimate for accumulated depreciation on capital assets. This estimate is based on the original or estimated cost of the assets, depreciated over the estimated useful lives using the straight line method and composite method. NOTE 15 - HOTEL/ MOTEL TAX During the year ended June 30, 2011, the County had receipts of $36,570 and spent $22,440 to promote tourism, conventions, and trade shows. Of this amount $13,020 was for state parks operated by the Department of Natural Resources. The total expenditures represent 100% of the tax receipts to be expended for these purposes under OCGA 48-13-51. The County has complied with the requirements of this law. NOTE 16 - RELATED PARTY TRANSACTIONS On October 6, 1998, Morgan County Commissioners voted to approve a resolution authorizing the release of Morgan County from the Joint Development Authority consisting of Athens- Clarke, Jackson, Madison, Morgan, Oconee, Oglethorpe and Walton counties. 43 ---PAGE BREAK--- MORGAN COUNTY, GEORGIA NOTES TO FINANCIAL STATEMENTS June 30,2011 During 1998, the Joint Development Authority of Jasper County, Morgan County, Newton County, and Walton County, a joint venture, was formed for the purpose of purchasing and developing an industrial site. The land was purchased through the Walton County Development Authority with temporary financing from Walton County until such time as the Joint Authority could issue permanent bond financing for the project. The Joint Authority issued $9,000,000 in bonded debt in October 2000 for repayment of the Walton County Development Authority, to pay issuance costs of the bond, and to provide initial development costs. The stated percentages of ownership and debt assumption are as follows: Newton County 37.5%, Walton County 37.5%, Morgan County 15%, and Jasper County 10%. The debt will amortize from 2001 and continue through 2021. This debt is discussed more fully in Note 6. The County records the investment in the joint venture at a value of $1,302,834, using the equity interest method. The Authority entered into an agreement with Technology Park/Atlanta in 2000 that gave Technology Park/Atlanta the option to purchase land at the site at approximately 10% over the Authority's cost. The takedown schedule is summarized as follows: Revenue Generated (for Authority) Phase 1 - Within 3 years Phase 2 - Within 5 years Phase 3-2010 Phase 4-2011 Phase 5-2012 Phase 6-2012 Phase 7 - 2014 Phase 8-2015 Phase 9 - 2020 100 acres 100 acres 17 acres 22 acres 20 acres 19 acres 18 acres 379 acres Balance of property Taken down in 2003 225 acres taken down in 2005 17 acres taken down in 2010 22 acres taken down in 2011 $ 702,000 1,650,000 208,080 275,375 Should Technology Park/Atlanta fail to exercise an option, the balance of the property would be available for sale to other properties. Separate financial statements of the Joint Development Authority of Jasper County, Morgan County, Newton County, and Walton County can be obtained directly from: Joint Development Authority of Jasper County, Morgan County, Newton County, and Walton County, C/O Madison Chamber of Commerce, 115 East Jefferson Street, Madison, Georgia 30650. NOTE 17 - SUBSEQUENT EVENTS Changes in the fair value of the investments of the Braswell Fund between July 1, 2011 and August 6, 2012 were as follows: Debt Securities Equities Net unrealized gain / (loss) Unrealized Gain / (Loss) $ (268) $ 44 ---PAGE BREAK--- Required Supplementary Information ---PAGE BREAK--- MORGAN COUNTY, GEORGIA REQUIRED SUPPLEMENTARY INFORMATION SCHEDULE OF PENSION FUNDING PROGRESS For the Year Ended June 30,2011 "Unaudited" Actuarial Valuation Date (1/1) 2010 2009 2008 2007 2006 2005 • j.1 j _ it _ Actuarial Value of Assets $ 5,164,339 4,610,501 4,556,779 3,995,995 3,388,004 $ 2,915,941 Actuarial Accrued Liability (AAL) S 6,986,114 6,480,259 5,872,195 5,266,541 4,902,313 $ 4,286,640 Funded Ratio 73.9 % 71.1 % 77.6 % 75.9 % 69.1 % 68.0 % y* 1 Unfunded AAL (UAAL) S 1,821,775 1,869,758 1,315,416 1,270,546 1,514,309 S 1,370,699 Annual Covered Payroll (prior year) $ 3,217,395 2,842,259 2,672,957 2,706,560 2,573,219 $ 2,369,938 UAAL as a Percentage of Covered Payroll 56.6 % 65.8 % 49.2 % 46.9 % 58.8 % 57.8 % Analysis of the dollar amounts of actuarial value of assets available for benefits, actuarial accrued liability, and unfunded actuarial accrued liability in isolation can be misleading. Expressing the actuarial value of assets available for benefits as a percentage of the actuarial accrued liability provides one indication of funding status on a going concern basis. Analysis of this percentage over time indicates whether the system is becoming financial stronger or weaker. Generally, the greater this percentage, the stronger the Plan. Trends in unfunded actuarial accrued liability and annual covered payroll are both affected by inflation. Expressing the unfunded actuarial accrued liability as a percentage of annual covered payroll approximately adjusts for the effects of inflation and aids analysis of the Plan's progress in accumulating sufficient assets to pay benefits when due. Generally, the smaller this percentage, the stronger the Plan. 45 ---PAGE BREAK--- MORGAN COUNTY, GEORGIA BUDGETARY COMPARISON SCHEDULE GENERAL FUND For the Year Ended June 30,2011 (Required Supplementary Information) BUDGET AMOUNTS ORIGINAL FINAL ACTUAL VARIANCE WITH FINAL BUDGET POSITIVE (NEGATIVE) FUND BALANCE, Beginning of year 6.469.075 S 6.469.075 $ 6.469.075 $ RESOURCES (INFLOWS) Taxes Licenses and permits Intergovernmental Fines and forfeitures Charges for services Contributions and donations Investment income Miscellaneous Sale of county property Transfers in Total Resources (Inflows) AMOUNTS AVAILABLE FOR APPROPRIATION CHARGES TO APPROPRIATIONS (OUTFLOWS) Current Expenditures General Government Board of commissioners County manager County clerk Finance Law Management information Human resources Tax commissioner Tax assessor Risk management General government Records management General administration fees Board of equalization Board of registrars Total General Government Judicial Ocmulgee Circuit Clerk of superior court District attorney Magistrate court Probate court Juvenile court Public defender Total Judicial Public Safety Law enforcement administration Criminal investigation Uniform patrol Jail operation Court services Fire administration Ambulance Coronei/Medical Examiner E-911/Communications center Emergency Management Agency Animal control Total Public Safety Public Works Highways and streets Solid waste and recycling Maintenance and shop Total Public Works 10.787,100 82,400 742,963 453,000 969,035 44,200 73,000 10,000 15,000 464.986 13.643.684 20,112,759 61,458 309,130 63,428 591,379 107,750 349,490 47,165 217,668 438,671 201,000 667,641 21,145 51,959 168.392 3,296.276 20,613 433,119 52,927 274,569 239,998 28,145 51,018 1,100,389 357,269 260,359 861,933 1.481,758 131.395 490,797 309,005 23.076 417,257 55,222 215.651 4.603.722 1.228.498 630.175 112.526 1.971.199 10,787,100 82,400 1,014,159 455,000 1,021,535 44.430 73,000 10,000 15,000 464,986 13.967,610 20,436,685 62.269 309,130 63,428 395,878 115,610 362,452 54,769 225.272 431,067 201,000 712,912 548 21,620 51,959 168.392 3,176.306 25.510 428,222 68.293 275,344 239,998 33.798 51,018 1.122.183 451,974 274.057 896.794 1,608,226 117,554 793.785 312,414 23,849 176.174 56,207 215,651 4.926.685 1,324,406 630,175 112,526 2,067,107 11.101,086 113,417 1.204,622 601,126 1,305,732 50,608 27,198 147,639 5,065 94,130 14.650,623 21.119.698 62,269 303,666 60,615 309,019 115,609 362,452 46,274 225,272 417,913 195,832 712,912 548 21,620 20,361 159,955 3.014.317 25,510 425,646 67,588 275,344 237,542 33,798 51,018 1,116,446 451,974 274,057 896,794 1,608,226 117,554 793,785 312.414 23,849 176,174 56,207 208.867 4.919.901 1,324,406 629.969 110.379 2.064.754 313.986 31.017 190,463 146.126 284,197 6,178 (45,802) 137,639 (9,935) (370,856) 683.013 683.013 5.464 2,813 86,859 1 8,495 13,154 5,168 31,598 8.437 161.989 2,576 705 2,456 5,737 6,784 6.784 206 2.147 2.353 46 ---PAGE BREAK--- MORGAN COUNTY, GEORGIA BUDGETARY COMPARISON SCHEDULE GENERAL FUND For the Year Ended June 30,2011 (Required Supplementary Information) ORIGINAL CONTINUED Public Health and Welfare Senior citizens center Transportation services D.F.A.C.S. building DF.A.C.S Advantage behavioral Walton/Morgan unlimited Health care facilities Tout Public Health and Welfare Recreation and Culture Parks and recreation Library Total Recreation and Culture GETAMOI 244,146 220.431 105.757 22.000 22,200 21.002 1,180,339 JNTS FINAL 244.381 232.328 114,674 22.000 22.200 21.002 1,060,339 VARIANCE WITH FINAL BUDGET POSITIVE ACTUAL (NEGATIVE) 244.381 232,328 114,674 22,000 22.200 21,002 1,060,339 1.815,875 672,973 158,365 831.338 1,716.924 778,240 158.365 936.605 1.716.924 772,740 158.365 931.105 5,500 5,500 Housing and development Soil conservation Forestry services Building inspection Planning and zoning Code enforcement County agent Development authority Action. Inc. Total Housing and Development TOTAL CHARGES TO APPROPRIATIONS CHANGE IN FUND BALANCE FUND BALANCE, End of year 17,913 32.265 177,946 103,062 83.587 80.149 167,623 12,340 17,913 32,265 180.096 100.912 83,587 80.149 167,623 9,255 15,852 32,265 180,096 92,074 57,086 79.877 116.809 9,255 2.061 8.838 26,501 272 50.814 674.885 14.293,684 (650,000) 671.800 14,617.610 (650.000) 583.314 14,346,761 303.862 88.486 270,849 953.862 5.819,075 $ 5,819,075 $ 6,772,937 S 953.862 NOTES TO THE BUDGETARY COMPARISON SCHEDULE I. The budgetary basis of accounting used in this schedule is the same as GAAP. 47 ---PAGE BREAK--- NONMAJOR GOVERNMENTAL FUNDS SPECIAL REVENUE FUNDS Special Revenue Funds are used to account for the proceeds of specific revenue sources (other than major capital projects) that are legally restricted for specific purposes. The following special revenue funds are maintained by the County: Emergency Telephone Service - to account for the "911" charge to help fund the cost of providing the service as provided in title 46, Chapter 5 of the Official Code of Georgia Annotated. Special Revenue Fund - to account for funds, such as fines, confiscated monies and donations received by Elected Officials of Morgan County to be expended within legal guidelines of each program. Hotel/Motel Tax - to account for taxes charged on rental of hotel/motel rooms as provided in title 48, chapter 13 of the Official Code of Georgia Annotated. These funds are used for the promotion of tourism, conventions and trade shows in the County. Law Library - to account for funds collected from fines and forfeitures to be used to maintain the Law Library as provided in title 36, chapter 15 of the Official Code of Georgia Annotated. Sheriffs Law Enforcement - to account for funds from seizures to be used for law enforcement activities. ---PAGE BREAK--- MORGAN COUNTY, GEORGIA COMBINING BALANCE SHEET NONMAJOR GOVERNMENTAL FUNDS June 30,2011 SPECIAL REVENUE FUNDS ASSETS Cash Receivables (net of allowance for uncollecubles) Prepaid items TOTAL ASSETS LIABILITIES AND FUND BALANCES Liabilities Accounts payable Due to other funds TOTAL LIABILITIES FUND BALANCES Nonspendable: Prepaid expenditure Restricted: Judicial programs Public safety programs Health and welfare programs TOTAL FUND BALANCES TOTAL LIABILITIES AND FUND BALANCES EMERGENCY TELEPHONE SERVICES S 32,333 160,660 3,781 $ 196,774 S s SPECIAL REVENUE FUND 107,968 622 - 108,590 S s LAW LIBRARY 7.019 - 7,019 SHERIFFS LAW ENFORCEMENT S 86,786 - - S 86,786 TOTAL NONMAJOR GOVERNMENTAL S S FUNDS 234,106 161,282 3,781 399.169 S 49.546 49.546 S - s 470 470 $ - S 470 49.546 50,016 3,781 6,549 3,781 6,549 s 143,447 147,228 196.774 S 89,492 19.098 108.590 108.590 S 6,549 7.019 S 86,786 86.786 86,786 S 319,725 19.098 349.153 399,169 48 ---PAGE BREAK--- MORGAN COUNTY* GEORGIA COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES NONMAJOR GOVERNMENTAL FUNDS For the Year Ended June 30,2011 SPECIAL REVENUE FUNDS TOTAL EMERGENCY SPECIAL HOTEL/ SHERIFFS NONMAJOR TELEPHONE REVENUE MOTEL LAW LAW GOVERNMENTAL REVENUES Taxes Intergovernmental Fines and forfeitures Charges for services Contributions and donations Investment income TOTAL REVENUES EXPENDITURES Current Expenditures Judicial Public safely Public health and welfare Housing and development Capital outlay Debt service Principal Interest TOTAL EXPENDITURES EXCESS (DEFICIENCY) OF REVENUES OVER(UNDER) EXPENDITURES OTHER FINANCING SOURCES (USES) Capital lease proceeds Transfers in Transfers out TOTAL OTHER FINANCING SOURCES (USES) NET CHANGE IN FUND BALANCES FUND BALANCES, Beginning ofyear FUND BALANCES. End of year SERVICE $ 115,406 296,948 394 412,748 598,373 273,557 11,710 3.415 887,055 (474,307) 199,110 176.174 375.284 (99,023) 246.251 S 147,228 FUND $ 84,426 289 84,715 4,868 817 5,685 79,030 (80.000) (80.000) (970) 109.560 S 108.590 TAX $ 36,570 36,570 22.440 22,440 14,130 (14.130) (14.130) S - LIBRARY ENFORCEMENT $ • $ $ 2,328 31.583 39,671 4,025 13.308 313 31.583 36,295 36,295 (4.712) ■ (4.712) 11.261 S 6.549 $ 109.645 106.457 26,354 132.811 (23,166) - (23,166) 109,952 86.786 S FUNDS 36.570 117,734 205.680 300,973 13.308 996 675.261 36,295 709.698 817 22.440 299.911 11,710 3.415 1.084286 (409.025) 199.110 176.174 (94.130) 281.154 (127.871) 477,024 349.153 49 ---PAGE BREAK--- MORGAN COUNTY, GEORGIA EMERGENCY TELEPHONE SYSTEM SPECIAL REVENUE FUND SUPPLEMENTAL BUDGETARY COMPARISON SCHEDULE For the Year Ended June 30,2011 FUND BALANCE, Beginning of year RESOURCES (INFLOWS) Intergovernmental Charges for services Investment income Capital lease proceeds Transfer in Total Resources (Inflows) AMOUNTS AVAILABLE FOR APPROPRIATION S BUDGET AMOUNTS ORIGINAL FINAL 246,251 $ 246.251 $ (110.000) (240.000) (1.700) 176.174 (175.526) 70,725 (115,406) (296.948) (393) 199.111 176,174 (37.462) 208.789 ACTUAL 246,251 115,406 296.948 394 199,110 176.174 788,032 1,034,283 VARIANCE WITH FINAL BUDGET POSITIVE (NEGATIVE) $ 230,812 593.896 787 0) 825.494 825.494 CHARGES TO APPROPRIATIONS (OUTFLOWS) Current Expenditures Public safety TOTAL CHARGES TO APPROPRIATIONS CHANGE IN FUND BALANCE FUND BALANCE. End of year 527,874 887.111 887,055 56 527.874 887,111 887.055 56 (703.400) (924.573) (99,023) 825,550 (457,149) $ (678.322) $ 147,228 S 825,550 NOTES TO THE BUDGETARY COMPARISON SCHEDULE 1. The budgetary basis of accounting used in this schedule is the same as GAAP. 50 ---PAGE BREAK--- MORGAN COUNTY, GEORGIA SPECIAL REVENUE SPECIAL REVENUE FUND SUPPLEMENTAL BUDGETARY COMPARISON SCHEDULE For the Year Ended June 30,2011 FUND BALANCE, Beginning of year RESOURCES (INFLOWS) Fines and forfeitures Investment income Total Resources (Inflows) AMOUNTS AVAILABLE FOR APPROPRIATION CHARGES TO APPROPRIATIONS (OUTFLOWS) Current Expenditures Public safety Public health and welfare Transfers out TOTAL CHARGES TO APPROPRIATIONS CHANGE IN FUND BALANCE FUND BALANCE, End of year $ S BUDGET AMOUNTS ORIGINAL FINAL 109.560 $ 109.560 S 89,800 200 90.000 199.560 4,700 5.300 80.000 90.000 109,560 $ 89,800 400 90,200 199,760 4,900 5,300 80,000 90.200 109,560 $ ACTUAL 109.560 84.426 289 84.715 194.275 4,868 817 80.000 85.685 (970) 108.590 VARIANCE WITH FINAL BUDGET POSITIVE (NEGATIVE) S (5,374) (HI) (5.485) (5,485) 32 4.483 4.515 (970) S (970) NOTES TO THE BUDGETARY COMPARISON SCHEDULE I. The budgetary basis of accounting used in this schedule is the same as GAAP. 51 ---PAGE BREAK--- MORGAN COUNTY, GEORGIA HOTEL / MOTEL TAX SPECIAL REVENUE FUND SUPPLEMENTAL BUDGETARY COMPARISON SCHEDULE For the Year Ended June 30,2011 FUND BALANCE. Beginning of year RESOURCES (INFLOWS) Taxes Total Resources (Inflows) AMOUNTS AVAILABLE FOR APPROPRIATION CHARGES TO APPROPRIATIONS (OUTFLOWS) Current Expenditures Housing and development Transfers out TOTAL CHARGES TO APPROPRIATIONS CHANGE IN FUND BALANCE FUND BALANCE. End of year $ $ BUDGET AMOUNTS ORIGINAL FINAL S • $ 38.000 38.000 38.000 23,000 15.000 38.000 $ 38,000 38.000 38.000 21,500 16.500 38.000 $ ACTUAL 36.570 36.570 36.570 22.440 14.130 36,570 VARIANCE WITH FINAL BUDGET POSITIVE (NEGATIVE) s (1.430) (1.430) (1.430) (940) 2.370 1.430 S NOTES TO THE BUDGETARY COMPARISON SCHEDULE I The budgetary basis of accounting used in this schedule is the same as GAAP 52 ---PAGE BREAK--- MORGAN COUNTY, GEORGIA LAW LIBRARY SPECIAL REVENUE FUND SUPPLEMENTAL BUDGETARY COMPARISON SCHEDULE For the Year Ended June 30,2011 BUDGET AMOUNTS ORIGINAL FINAL ACTUAL VARIANCE WITH FINAL BUDGET POSITIVE (NEGATIVE) FUND BALANCE, Beginning of year RESOURCES (INFLOWS) Fines and forfeitures Total Resources (Inflows) AMOUNTS AVAILABLE FOR APPROPRIATION CHARGES TO APPROPRIATIONS (OUTFLOWS) Current Expenditures Judicial TOTAL CHARGES TO APPROPRIATIONS CHANGE IN FUND BALANCE FUND BALANCE, End of year NOTES TO THE BUDGETARY COMPARISON SCHEDULE I. The budgetary basis of accounting used in this schedule is the same as GAAP. s $ 11.261 S 50.750 50,750 62.011 50,750 50,750 11.261 $ 11.261 $ 50.750 50,750 62.011 50.750 50.750 11.261 S 11.261 S 31.583 31,583 42,844 36,295 36,295 (4,712) 6.549 $ - (19.167) (19.167) (19,167) 14.455 14,455 (4,712) (4.712) 53 ---PAGE BREAK--- MORGAN COUNTY, GEORGIA SHERIFF'S LAW ENFORCEMENT SPECIAL REVENUE FUND SUPPLEMENTAL BUDGETARY COMPARISON SCHEDULE For the Year Ended June 30,2011 FUND BALANCE, Beginning of year RESOURCES (INFLOWS) Intergovernmental Fines and forfeitures Charges for services Contributions and donations Investment income Total Resources (Inflows) AMOUNTS AVAILABLE FOR APPROPRIATION CHARGES TO APPROPRIATIONS (OUTFLOWS) Current Expenditures Public safety TOTAL CHARGES TO APPROPRIATIONS CHANGE IN FUND BALANCE FUND BALANCE. End of year $ s BUDGET AMOUNTS ORIGINAL FINAL 109.952 S 109,952 S 125,500 5.000 15,000 500 146,000 255,952 146.000 146.000 109.952 S 125.500 5,000 15,000 500 146.000 255,952 146.000 146.000 109,952 S ACTUAL 109.952 2,328 89,671 4,025 13,308 313 109,645 219,597 132.811 132.811 (23.166) 86.786 VARIANCE WITH FINAL BUDGET POSITIVE (NEGATIVE) $ 2.328 (35.829) (975) (1.692) (187) (36.355) (36.355) 13.189 13.189 (23,166) S (23,166) NOTES TO THE BUDGETARY COMPARISON SCHEDULE 1. The budgetary basis of accounting used in Ihis schedule is the same as GAAP. 54 ---PAGE BREAK--- FIDUCIARY FUNDS Agency funds are used to account for assets held by the government as an agent for individuals, private organizations, other governments and/or other funds. Agency funds maintained by the County are as follows: Tax Commissioner - to account for the collection of property taxes, motor vehicle tag and title fees and mobile home fees, etc. which are disbursed to various taxing units. Clerk of Superior Court - to account for the collection of various fines, forfeitures, jury fund receipts, real estate transfer taxes, recording of intangibles, fees, civil awards, etc. which are disbursed to other parties. Probate Court - to account for the collection of fees for a probate of wills, administration of estates, issuance of marriage licenses, and maintenance of other vital records which are disbursed to other parties. Magistrate Court - to account for the collection of fees in jurisdiction of small claims courts which are disbursed to other parties. Sheriff- to account for the collection of cash bonds, fines, forfeitures, fifas, etc. which are disbursed to other parties. ---PAGE BREAK--- MORGAN COUNTY, GEORGIA COMBINING STATEMENT OF ASSETS AND LIABILITIES ALL AGENCY FUNDS June 30,2011 ASSETS Cash TOTAL ASSETS LIABILITIES Amounts held in trust TOTAL LIABILITIES $ $ $ s TAX COMMISSIONER 36,218 36,218 36,218 36,218 S S s $ CLERK OF SUPERIOR COURT 135,308 135,308 135,308 135,308 $ $ S S PROBATE COURT 53,950 53,950 53,950 53.950 S s $ MAGISTRATE COURT 5,574 5,574 5,574 5,574^ $ $ S s SHERIFF 37,556 37,556 37,556 37,556 $ s s $ TOTAL 268.606 268,606 268.606 268.606 55 ---PAGE BREAK--- MORGAN COUNTY, GEORGIA COMBINING STATEMENT OF CHANGES IN ASSETS AND LIABILITIES ALL AGENCY FUNDS For the Year Ended June 30,2011 TAX COMMISSIONER CLERK OF SUPERIOR COURT PROBATE COURT MAGISTRATE COURT SHERIFF ASSETS Cash Balance. July 1.2010 Additions Deductions Balance, June 30,2011 TOTAL ASSETS LIABILITIES Due lo County Balance, July 1, 2010 Additions Deductions Balance, June 30,2011 Amounts held in bust Balance, July 1, 2010 Additions Deductions Balance, June 30.2011 Total Liabilities Balance, July 1,2010 Additions Deductions TOTAL LIABILITIES 22.422 S 23,923,096 (23.909.300) 36,218 36,218 S 166,373 S 847.991 (879.056) 70034 760.185 (776,469) 1,792 $ 394,775 (390,993) 135.308 53.950 5,574 135.308 $ 53.950 $ 5.574 $ 63,131 S 191.773 (217.348) 37.5S6 37,556 $ TOTAL 323.952 26,117.820 (26.173.166) 268,606 268.606 $ 8,575,219 (8.575.219) 22.422 15,347.877 (15.334.081) 36.218 22.422 23.923.096 (23.909.300) 36,218 S 400,486 (400,486) 166.373 447.505 (478,570) 135308 166.373 847,991 (879.056) 135.308 S 532.407 (532.407) 70,234 227,778 (244,062) 53.950 70,234 760,185 (776.469) 53,950 S 99.152 (99.152) - 1.792 295,623 (291.841) 5,574 1,792 394,775 (390,993) 5,574 S 36.127 (36,127) - 63.131 155.646 (181,221) 37,556 63,131 191,773 (217,348) 37.556 S 9,643.391 (9,643.391) - 323,952 16,474,429 (16.529.775) 268,606 323,952 26,117,820 (26,173,166) 268,606 56 ---PAGE BREAK--- Supplementary Information ---PAGE BREAK--- MORGAN COUNTY, GEORGIA SCHEDULE OF PROJECTS CONSTRUCTED WITH SPECIAL PURPOSE LOCAL OPTION SALES TAX For the Year Ended June 30,2011 PROJECT SPLOST (Commenced April 1,2002) Joint Morgan County and City of Madison water line capital outlay project Various roads and bridges projects Various public buildings capita] outlay projects Various solid waste capital outlay projects Various Fire Department capital outlay projects Various Recreation capital outlay projects City of Madison entitlement Total SPLOST #4 ORIGINAL ESTIMATED COSTS $ S 1,000,000 7,380,000 2,000,000 600,000 4,000,000 2,200,000 820,000 18,000,000 CURRENT ESTIMATED COSTS $ S 189,753 5,919,496 3,582,117 150,181 3,315,969 808,261 655,562 14,621,339 EXPENDITURES PRIOR YEARS $ s 189,753 5,919,496 3,582,117 150,181 3,315,969 733,021 655,562 14,546,099 CURRENT YEAR $ - - - - - - 57 ---PAGE BREAK--- MORGAN COUNTY, GEORGIA SCHEDULE OF PROJECTS CONSTRUCTED WITH SPECIAL PURPOSE LOCAL OPTION SALES TAX For the Year Ended June 30,2011 SPLOST «V . Commenced April 1,2007 Project LEVEL 1 COUNTY PROJECTS Public safety/Detention Center LEVEL 2 COUNTY PROJECTS Road and Bridge Improvements and Equipment Library Facility Improvements and Equipment Recreational Facility Improvements and Equipment Water System Improvements and Equipment Sanitation Improvements and Equipment Purchase of and Improvements to County Administration Building Interest expense on Bonds, less interest income Subtotal All County Projects MUNICIPAL PROJECTS City of Madison Road and Bridge Improvements and Equipment Public Works Building Construction/Improvements and Equipment Public Safety Building Construction/Improvements and Equipment City Hall Renovations Park Improvements and Equipment Subtotal CityofRutJedge Water and Sewer System Improvements and Equipment CityofBostwick Road and Bridge Improvements and Equipment City Hall Improvements and Equipment Water System Improvements and Equipment Subtotal CityofBuckhead Road and Bridge Improvements and Equipment Fire Station Improvements/Addition Subtotal Total All City Projects Total All Projects 1. The County remits trie lax collected to the Municipalities who are responsibl Original Estimated Cost S 10.500.000 10.500,000 900,000 750,000 233,391 59.000 1,000.000 - 23,942.391 600.000 400.000 350.000 250.000 204,400 1,804.400 158.600 30,000 13.435 15.000 58.435 21.174 15.000 36,174 2.057.609 $ 26.000.000 Current Estimated Cost $12,000,000 10,500.000 900.000 1,000,000 233.391 59,000 1.000.000 - 25.692,391 600.000 400.000 350.000 250.000 204.400 1.804.400 158.600 30,000 13,435 15,000 58.435 21,174 15.000 36.174 2.057.609 $27,750,000 YeaM 2007 $ - - - - - (346) (346) 21.779 14.520 12.705 9.075 7.419 65.498 5.757 1,089 488 544 2.121 769 544 1.313 74.689 $ 74.343 dance with OCG Year 2 2008 $4,403,358 293.469 22,800 157.094 28.252 4.904.973 87.558 58.372 51.075 36.482 29.828 263.315 23.040 4,407 1,974 2,203 8.584 3.093 2.191 5,284 300.223 $5,205,196 Amount Expended Year 3 2009 $7,419,912 1,351.017 - 950,948 1,456 - - - 9.723,333 77.334 51,556 45.111 32.222 26,345 232,568 20.357 3,946 1.767 1.973 7.686 2.778 1.968 4,746 265,357 $9,988,690 Year 4 2010 $12,182,166 898.810 300,000 - - 550 13,381,526 79,499 53.000 46,375 33,125 27,063 239,082 20.934 3.885 1.740 1.942 7.567 2,755 1.952 4.707 272.290 $13,653,816 Years 2011 $ 850.404 262.768 - - - - - - 1,113.172 80.874 53.916 47.177 33.698 27.551 243.216 21.296 4.044 1.811 2.022 7.877 2,854 2,022 4.876 277,265 $1,390,437 Total $24,855,840 2,806,064 300,000 973,748 1,456 550 157,094 27.906 29.122.658 347.044 231.364 202.443 144,602 118.226 1.043.679 91.384 17.371 7.780 8.684 33.835 12,249 8,677 20,926 1.189.824 $30,312,482 58 ---PAGE BREAK--- MORGAN COUNTY, GEORGIA Reconciliation of Expenditures for SPLOST For the Year Ended June 30,2011 Amounts may not add due to rounding Statement of Revenues, Expenditures and Changes in Fund Balance (page 5) Expenditures 2,435,437 Transfers out Subtotal 2,435,437 Less items not included as expenditures on SPLOST schedule below: Principal payments on debt (1,045,000) 1 Miscellaneous revenue used for expenditures first before SPLOST funds Revenue from State grants used for expenditures first before SPLOST funds Expenditures from debt proceeds - 1 Subtotal of adjustments (1,045,000) Expenditures reported on Splost schedule below 1,390,437 Schedule of Projects Constructed With Special Purpose Local Option Sales Tax (pages 57-58) Splost #4 Splost #5 1,390.437 1,390,437 Difference 1. In some cases, debt in the form of capital leases or general obligation debt was issued. The cost of projects paid for from debt proceeds were counted as SPLOST expenditures so that the costs would be allocated to the appropriate project category. Therefore the payment of principal was not counted as a SPLOST expenditure to avoid double counting expenditures. 59 ---PAGE BREAK--- STATISTICAL SECTION This part of the county's comprehensive annual financial report presents detailed information as a context for understanding what the information in the financial statements, note disclosures, and required supplementary information says about the government's overall financial health. Contents Table Financial Trends These schedules contain trend information to help the reader understand how the government'sfinancial performance and well-being have changed over time. Net Assets by Component 1 Changes in Net Assets 2 Fund Balances of Governmental Funds 3 Changes in Fund Balances of Governmental Funds 4 Five Year General Fund History 4A General Governmental Tax Revenues by Source 5 Revenue Capacity These schedules contain information to help the reader assess the government's most significant local revenue source, the property tax. Assessed Value and Estimated Actual Value of Taxable Property 6 Property Tax Rates (Direct and Overlapping Governments) 7 Principal Property Taxpayers 8 Property Tax Levies and Collections 9 Debt Capacity These schedules present information to help the reader assess the ajfordability ofthe government's current levels ofoutstanding debt and the government's ability to issue additional debt in thefuture. Ratios of Outstanding Debt by Type 10 Other Long-Term Liabilities 10A Reservedfor Future Use 11 Direct and Overlapping Governmental Activities Debt 12 Legal Debt Margin Information 13 Reservedfor Future Use 14 Demographic and Economic Information These schedules offer demographic and economic indicators to help the reader understand the environment within which the government'sfinancial activities take place. Demographic and Economic Statistics 15 Principal Employers 16 Operating Information These schedules contain service and infrastructure data to help the reader understand how the information in the government's financial report relates to the services the government provides and the activities it performs. Full-Time Equivalent County Government Employees by Function 17 Operating Indicators by Function 18 Capital Asset Statistics by Function 19 Sources: Unless otherwise noted, the information in these schedules is derived from the comprehensive annual financial reports for the relevant year. Note: Tables may not add due to rounding ---PAGE BREAK--- GOVERNMENTAL ACTIVITIES Invested in capital assets, net of related debt Restricted Unrestricted: Total governmental activities net assets BUSINESS-TYPE ACTIVITIES Invested in capital assets, net of related debt Unrestricted Total activities net assets PRIMARY GOVERNMENT Invested in capital assets, net of related debt Restricted Unrestricted Total primary government net assets MORGAN COUNTY, GEORGIA NET ASSETS BY COMPONENT Last Ten Fiscal Years (accrual basis of accounting) Fiscal Year 2003 2004 2005 ei Miions. -\lu.iw i'ii [PHONE REDACTED] • : 770 53C 5223 525 Canuler Street, NE po doaweh 2396 ajneSwilli . Georgia 30503 .v.w. BATESCAHTHC 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 August 8, 2012 Board of Commissioners Morgan County, Georgia Madison, Georgia We have audited the financial statements of the governmental activities, the business-lype activities, the aggregate discretely presented component units, each major fund, and the aggregate remaining fund information of MORGAN COUNTY, GEORGIA as of and for the year ended June 30, 2011, which collectively comprise the MORGAN COUNTY, GEORGIA'S basic financial statements and have issued our report thereon dated August 8, 2012. Our report was modified to include a reference to other auditors. We conducted our audit in accordance with auditing standards generally accepted in the United Stales of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Other auditors audited ihe financial statements of the Morgan County Health Department and Morgan County Hospital Authority, as described in our report on MORGAN COUNTY, GEORGIA'S basic financial statements. This report does not include the results of the other auditor's testing of internal control over financial reporling or compliance and other matters that are reported on separately by those auditors. Internal Control Over Financial Reporting In planning and performing our audit, we considered MORGAN COUNTY, GEORGIA'S internal control over financial reporting as a basis for designing our auditing procedures for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of MORGAN COUNTY, GEORGIA'S internal control over financial reporting. Accordingly, we do not express an opinion on the effectiveness of the MORGAN COUNTY, GEORGIA'S internal control over financial reporting. 83 ---PAGE BREAK--- Our consideration of internal control over financial reporting was for the limited purpose described in the preceding paragraph and was not designed to identify all deficiencies in internal control over financial reporting that might be significant deficiencies, or material weaknesses and therefore, there can be no assurance that all deficiencies, significant deficiencies, or material weaknesses have been identified. However, as described in the accompanying schedule of findings and questioned costs, we identified a certain deficiency in internal control over financial reporting that we considered to be a material weakness. A deficiency in internal control 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 and correct misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control such that there is a reasonable possibility that a material misstatement of the entity's financial statements will not be prevented, or detected and corrected on a timely basis. We considered the deficiency described in the accompanying schedule of findings and questioned costs to be a material weakness, finding 11- 02. Compliance and Other Matters As part of obtaining reasonable assurance about whether MORGAN COUNTY, 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 one instance of noncompliance or other matters that are required to be reported under Government Auditing Standards and which are described in the accompanying schedule of findings and questioned costs as finding 11-01. MORGAN COUNTY, GEORGIA'S response to the findings identified in our audit are described in the accompanying schedule of findings and questioned costs. We did not audit MORGAN COUNTY, GEORGIA'S response, and accordingly, we express no opinion on it. This report is intended solely for the information and use of management, the Board of Commissioners, others within the entity, 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. 84 ---PAGE BREAK--- Business Advisors snl> CPAs BatesCarter Exceeding c\pr( l.ilinns. pti [PHONE REDACTED] r. 77O53S5223 525 C.i-ii,.i n Sr-fEI. NE PO Drawer 2396 Gainesville. Geohob 30503 WWW.HATI r,i:awiE:Pic.i ,w INDEPENDENT AUDITOR'S REPORT ON COMPLIANCE WITH REQUIREMENTS THAT COULD HAVE A DIRECT AND MATERIAL EFFECT ON EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE IN ACCORDANCE WITH OMB CIRCULAR A-133 August 8,2012 Board of Commissioners MORGAN COUNTY, GEORGIA Madison, Georgia Compliance We have audited the compliance of MORGAN COUNTY, GEORGIA with the types of compliance requirements described in the U.S. Office of Management and Budget (OMB) Circular A-133 Supplement that could have a direct and material effect on each of its major federal programs for the year ended June 30, 2011. MORGAN COUNTY, 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 MORGAN COUNTY, GEORGIA'S management. Our responsibility is to express an opinion on MORGAN COUNTY, GEORGIA'S compliance based on our audit. MORGAN COUNTY, GEORGIA'S basic financial statements include the operations of a legally separate component units, Morgan County Health Department and Morgan County Hospital Authority. Any amounts of federal awards received by that component unit are not included in the accompanying schedule of expenditures of federal awards. Our audit, described below, did not include the operations of Morgan County Health Department and Morgan County Hospital Authority because those component units engaged other auditors lo perform any audit required in accordance with OMB Circular A-133. 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 MORGAN COUNTY, 85 ---PAGE BREAK--- 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 on MORGAN COUNTY, GEORGIA'S compliance with those requirements. In our opinion, MORGAN COUNTY, GEORGIA complied, in all material respects, with the requirements referred to above that could have a direct and material effect on each of its major federal programs for the year ended June 30, 2011. Internal Control Over Compliance Management of MORGAN COUNTY, GEORGIA is responsible for establishing and maintaining effective internal control over compliance with requirements of laws, regulations, contracts, and grants applicable to federal programs. In planning and performing our audit, we considered MORGAN COUNTY, GEORGIA'S internal control over compliance with the 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 and to test and report on internal control over compliance in accordance with OMB Circular A-133, 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 MORGAN COUNTY, GEORGIA'S internal control over compliance. A deficiency in internal control over compliance exists when the design or operation of a control over compliance does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, noncompliance with a type of compliance requirement of a federal program on a timely basis. A material weakness in internal control over compliance is a deficiency, or combination of deficiencies, in internal control over compliance, such that there is a reasonable possibility that material noncompliance with a type of compliance requirement of a federal program will not be prevented, or detected and corrected, on a timely basis. Our consideration of internal control over compliance was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control over compliance that might be deficiencies, significant deficiencies or material weaknesses. We did not identify any deficiencies in internal control over compliance that we consider to be material weaknesses, as defined above. This report is intended solely for the information and use of management, the Board of Commissioners, others within the entity, 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. 86 ---PAGE BREAK--- Business Advisors and CPAs BatesCarter Exceeding expectations. Always. 770.53591:11 ' ■ [PHONE REDACTED] 525 C.v.. ! SiHEl r, NE PO □•jawec 2396 G«mesvili_e, Georgia 30503 ESCARTER t QN< MORGAN COUNTY, GEORGIA AUDITORS' SCHEDULE OF FINDINGS AND QUESTIONED COSTS Year Ended June 30, 2011 SUMMARY OF AUDITORS' RESULTS: 1. Report issued on Financial Statements - Unqualified opinion. 2. Compliance (financial statements) - One instanee of noneompliance. 3. Internal Control (financial statements) - One material weakness. 4. Compliance (major programs) - Unqualified opinion, no instances of noneompliance. 5. Internal control (major programs) - No material weaknesses. 6. Audit findings required to be reported under A133 Section 510(a) i) Significant deficiencies in internal controls over major programs - None reported ii) Material noneompliance related to major programs - None reported iii) Known questioned costs greater than $10,000 for major programs - None reported iv) Known questioned costs greater than $10,000 for a program not audited as major - None reported v) Circumstances if report on compliance is other than unqualified - N/A vi) Known fraud - N/A vii) Misrepresentation in schedule of prior audit findings - None reported 7. Major programs for the year - ARRA-Assislance to Rural Law Enforcement, CFDA 16.810, Federal Emergency Management Agency, Assistance to Firefighters's Grant, CFDA 97.044. 8. Dollar threshold used to distinguish between Type A and Type B programs - $300,000. 9. Does the auditee qualify as a low risk auditee under A133 Section 530-No. 87 ---PAGE BREAK--- II AUDIT FINDINGS - GENERALLY ACCEPTED GOVERNMENTAL AUDITING STANDARDS Finding Number COMPLIANCE 11-01 Statement of Condition: The County's June 30, 2011 audited financial statements were not completed until August 2012. Criteria: The County is required to submit audited financial statements to the Department of Audits as required by state law six months following year end. To comply with bond covenant requirements, the audited financial statements must be submitted to the Electronic Municipal Market Access (EMMA) system to fullfill Municipal Secondary Market disclosure requirements six months following year end. In order to comply with OMB A-133, the single audit reporting package and data collection form should be submitted to the Federal Audit Clearinghouse nine months following year end. Effect of Condition: As a result, the County did not meet required deadlines. Cause of Condition: The previous finance director failed to prepare for the June 30, 2011 audit. The County hired a new Finance Director in May 2012, who was able to complete the necessary preparation.. Recommendation: We recommend that the County make every effort to meet audit and reporting deadlines in the future. Response: We concur with this recommendation and will meet all deadlines going forward. MATERIAL WEAKNESS 11-02 Statement of Condition: During the course of the audit, we noted that bank statements for the operating account had not been reconciled since April 2011. Criteria: Cash is the most liquid of assets and highest risk for theft, embezzlement, and ---PAGE BREAK--- misappropriation. To ensure cash is properly safeguarded, bank reconciliations should be performed on a timely basis at the end of each month. Effect ofconditions: As a result, an adjustment in the amount of $55,759 was necessary to properly reflect operating cash as of June 30,2011. Cause of Condition: Cause of condition is not known. Recommendation: We recommend that all bank accounts be reconciled to the general ledger and that all suspicious reconciling items be investigated and adjusted with adequate explanations. Response: We concur with this recommendation and all bank statements will be reconciled in a timely manner. Ill FEDERAL AWARDS FINDINGS AND QUESTIONED COSTS There were no findings or questioned costs relating to Federal awards reported for the year ended June 30,2011. 89