Document otsegocountymi_gov_doc_946b8352d5

COUNTY OF OTSEGO, MICHIGAN SINGLE AUDIT FOR THE YEAR ENDED DECEMBER 31, 2024 ---PAGE BREAK--- OTSEGO COUNTY, MICHIGAN ORGANIZATION MEMBERS OF THE COUNTY COMMISSION CHAIR PERSON BRETT MCVANNEL VICE CHAIR PERSON DANA WINGO COMMISSIONER TERRA DEMING COMMISSIONER HENRY MASON COMMISSIONER JONATHAN TURNBULL COMMISSIONER JASON CLEMENT COMMISSIONER CHRISTI SORTOR COMMISSIONER NEIL DRZEWIECKI COMMISSIONER ROB WEAVER APPOINTED/ELECTED OFFICIALS COUNTY ADMINISTRATOR FRED VENTRESCO FINANCE DIRECTOR MORGAN KWAPIS COUNTY TREASURER PAULA WRIGHT COUNTY CLERK SUSAN I. DEFEYTER ---PAGE BREAK--- TABLE OF CONTENTS Independent Auditors' Report 1 – 3 Management’s Discussion and Analysis 5 – 11 Basic Financial Statements: Government-wide Financial Statements Statement of Net Position 12 Statement of Activities 13 Fund Financial Statements Balance Sheet - Governmental Funds 14 Reconciliation of Fund Balances of Governmental Funds to Net Position of Governmental Activities 15 Statement of Revenues, Expenditures and Changes in Fund Balances – Governmental Funds 16 Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances of Governmental Funds to the Statement of Activities 17 Statement of Net Position – Proprietary Funds 18 Statement of Revenues, Expenses and Changes in Fund Net Position – Proprietary Funds 19 Statement of Cash Flows – Proprietary Funds 20 – 21 Statement of Fiduciary Net Position – Fiduciary Funds 22 Statement of Changes in Fiduciary Net Position – Fiduciary Funds 23 Statement of Net Position – Component Units 24 Statement of Activities – Component Units 25 – 26 Notes to Basic Financial Statements 28 – 73 Required Supplementary Information: Employee Retirement and Benefit Systems: Schedule of Changes in Pension Liability 75 Schedule of Employer Contributions 76 Schedule of Changes in OPEB Liability and Related Ratios 77 Budgetary Comparison Schedules – Major Funds: General Fund 78 – 79 Housing Commission 80 Library 81 American Rescue Plan Act (ARPA) 82 Animal Control Fund 83 Supplementary Information Combining Fund Financial Statements General Fund: Combining Balance Sheet 85 Combining Statement of Revenues, Expenditures and Changes in Fund Balance 86 Nonmajor Governmental Funds: Combining Balance Sheet 87 – 91 Combining Statement of Revenues, Expenditures and Changes in Fund Balance 92 – 96 Internal Service Funds: Combining Statement of Net 97 Combining Statement of Revenues, Expenses and Changes in Net Position 98 Combining Statement of Cash Flows 99 Nonmajor Enterprise Funds: Combining Statement of Net 100 Combining Statement of Revenues, Expenses and Changes in Net Position 101 Combining Statement of Cash Flows 102 ---PAGE BREAK--- Additional Information: Schedule of Expenditures of Federal Awards 103 Notes to the Schedule of Expenditures of Federal Awards 104 Independent Auditors’ 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 105 – 106 Independent Auditors’ Report on Compliance for each Major Federal Program and Report on Internal Control Over Compliance Required by the Uniform Guidance 107 – 109 Schedule of Findings and Questioned Costs 110 – 111 Schedule of Prior Audit Findings 112 Corrective Action Plan 113 ---PAGE BREAK--- INDEPENDENT AUDITORS’ REPORT To the Members of the Board of Commissioners County of Otsego, Michigan 225 W. Main St. Gaylord, MI 49735 Report on the Audit of the Financial Statements Opinions We have audited the 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 the County of Otsego, Michigan (“the County”), as of and for the year ended December 31, 2024, and the related notes to the financial statements, which collectively comprise the County’s basic financial statements as listed in the table of contents. In our opinion, based on our audit and the reports of the other auditors, the accompanying 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 the County as of December 31, 2024, and the respective changes in financial position and, where applicable, cash flows thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America. We did not audit the financial statements of the following entities, which represents the indicated percentages of total business-type activities or aggregate discretely presented component units, as applicable: Percent of Assets and Defered Percent of Percent of Outflows Revenues Net Position Otsego County Road Commission 88.1% 66.5% 93.2% Otsego County Commission on Aging - 9/30/2024 5.4% 10.6% 2.1% Otesgo County Bus System - 9/30/2024 37.5% 44.5% 36.4% Those statements were audited by other auditors whose report thereon has been furnished to us, and our opinions, insofar as they relate to the amounts included for the above entities, are based solely on the reports of the other auditors. Basis for Opinions We conducted our audit in accordance with auditing standards generally accepted in the United States of America (GAAS) and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States (Government Auditing Standards). Our responsibilities under those standards are further described in the Auditors’ Responsibilities for the Audit of the Financial Statements section of our report. We are required to be independent of the County, and to meet our other ethical responsibilities, in accordance with the relevant ethical requirements relating to our audit. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. ---PAGE BREAK--- Responsibilities of Management for the Financial Statements Management is responsible for the preparation and fair presentation of the financial statements in accordance with accounting principles generally accepted in the United States of America, and for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, management is required to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the County’s ability to continue as a going concern for twelve months beyond the financial statement date, including any currently known information that may raise substantial doubt shortly thereafter. Auditors’ Responsibilities for the Audit of the Financial Statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors’ report that includes our opinions. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with GAAS and Government Auditing Standards will always detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Misstatements are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the financial statements. In performing an audit in accordance with GAAS and Government Auditing Standards we:  Exercise professional judgment and maintain professional skepticism throughout the audit.  Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.  Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the County’s internal control. Accordingly, no such opinion is expressed.  Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the financial statements.  Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about the County’s ability to continue as a going concern for a reasonable period of time. We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit, significant audit findings, and certain internal control-related matters that we identified during the audit. 2 ---PAGE BREAK--- Required Supplementary Information Accounting principles generally accepted in the United States of America require that the management’s discussion and analysis and the schedules for the employee retirement and benefits systems, and budgetary comparison schedules, as listed in the table of contents, be presented to supplement the basic financial statements. Such information is the responsibility of management and, 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 and other auditors have applied certain limited procedures to the required supplementary information in accordance with GAAS, 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. Supplementary Information Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the County’s basic financial statements. The combining fund financial statements and the schedule of expenditures of federal awards, as required by Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, are presented for purposes of additional analysis and are not a required part of the basic financial statements. Such information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the basic financial statements. The information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with GAAS. In our opinion, the schedule of expenditures of federal awards is fairly stated, in all material respects, in relation to the basic financial statements as a whole. Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated March 6, 2026, on our consideration of the County’s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is solely 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 effectiveness of the County’s internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the County’s internal control over financial reporting and compliance. Clark, Schaefer, Hackett & Co. East Lansing, Michigan March 6, 2026 3 ---PAGE BREAK--- MANAGEMENT’S DISCUSSION AND ANALYSIS 4 ---PAGE BREAK--- COUNTY OF OTSEGO, MICHIGAN Management’s Discussion and Analysis Fiscal Year Ended December 31, 2024 As managers of the County of Otsego, Michigan, we offer readers of the County’s financial statements this narrative overview and analysis of the financial activities of the County for the fiscal year ended December 31, 2024. We encourage readers to consider the information presented here, in conjunction with additional information that is furnished in the financial statements and notes to the financial statements. Financial Highlights  The County reported a net position of $47,130,390 in 2024 compared to $42,652,169 in 2023, an increase of 10.50%. For 2024, net position for our business-type activities was $13,829,460 or 29.3% of total net position, while net position in our governmental activities was $33,300,930 or 70.7% of total net position.  At December 31, 2024, Otsego County’s governmental funds report a combined fund balance of $26,241,321 compared to $21,577,813 in 2023.  At December 31, 2024, the fund balance for the general fund was $13,378,523 with $226,670 nonspendable for prepaid and inventory items. Overview of the Financial Statements This discussion and analysis is intended to serve as an introduction to the County’s basic financial statements. The County’s basic financial statements are comprised of five components: 1) government- wide financial statements,2) fund financial statements, 3) notes to the financial statements, 4) required supplementary information and 5) supplementary information. Government-wide financial statements. The government-wide financial statements are designed to provide readers with a broad overview of the County’s finances, in a manner similar to a private-sector business. The statement of net position presents information on all of the County’s assets, deferred outflows and inflows of resources and liabilities, with the difference between them reported as net position. Over time, increases or decreases in net position may serve as a useful indicator of whether the financial position of the County is improving or deteriorating. The statement of activities presents information showing how the government’s net position changed during the most recent fiscal year. All changes in net position are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of related cash flows. Both of the government-wide financial statements distinguish functions of the County that are principally supported by taxes and intergovernmental revenues (governmental activities) from other functions that are intended to recover all or a significant portion of their costs through user fees and charges (business-type activities). The governmental activities of the County include Judicial, General Government, Public Safety, Public Works, Health and Welfare, Community & Economic Development and Culture and Recreation. The business-type activities of the County include the Otsego County Bus System, Delinquent Tax Revolving, and Airport. 5 ---PAGE BREAK--- COUNTY OF OTSEGO, MICHIGAN Management’s Discussion and Analysis Fiscal Year Ended December 31, 2024 The government-wide financial statements include not only the County itself (known as the primary government), but also legally separate component units for which the County is financially accountable. Component Units include the Otsego County Road Commission, Otsego County Ambulance Corporation, Otsego County Commission on Aging, and the Otsego County Financial information for component units is reported separately from the financial information presented for the primary government itself. Fund financial statements. A fund is a grouping of related accounts that is used to maintain control over resources that have been segregated for specific activities or objectives. The 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. 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 financial 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 government’s near-term financing decisions. Both the governmental fund balance sheet and the governmental fund statement on revenues, expenditures, and changes in fund balance provide a reconciliation to facilitate this comparison between governmental funds and governmental activities. The County maintains many individual funds. Information is presented separately in the governmental fund balance sheet and in the governmental fund statement of revenues, expenditures, and changes in fund balance for the General, Housing Commission, Library, ARPA, and Animal Control, each 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 Nonmajor governmental funds is provided in the form of combining statements elsewhere in this report. The County adopts an annual appropriated budget for its general and special revenue funds. Proprietary funds. Proprietary funds are used to report the same functions presented as business-type activities in the government-wide financial statements. Services for which the County charges customers a fee are generally reported in proprietary funds. The Otsego County Bus System, Delinquent Tax Revolving, and Airport are reported as major proprietary funds. 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. Notes to the financial statements. The notes provide additional information that is essential to fully understanding the data provided in the government-wide and fund financial statements. 6 ---PAGE BREAK--- COUNTY OF OTSEGO, MICHIGAN Management’s Discussion and Analysis Fiscal Year Ended December 31, 2024 Required supplementary information. Required supplementary information related to the County’s pension and OPEB and budgetary comparison information related to the County’s major governmental funds. Supplementary information. In addition to the basic financial statements and accompanying notes, this report also presents certain supplementary information. This includes the combining major and nonmajor fund financial statements and the schedule of expenditures of federal awards. Government-wide Financial Analysis As noted earlier, net position may serve over time as a useful indicator of a government’s financial position. In the case of Otsego County, assets and deferred outflows of resources exceeded liabilities and deferred inflows by $47,130,390 as of December 31, 2024. 2024 2023 2024 2023 2024 2023 Assets Current assets 31,064,774 $ 29,323,653 $ 10,540,042 $ 9,949,289 $ 41,604,816 $ 39,272,942 $ Capital assets 13,242,768 13,161,931 3,576,454 4,124,616 16,819,222 17,286,547 Total assets 44,307,542 42,485,584 14,116,496 14,073,905 58,424,038 56,559,489 Deferred Outflows of Resources 2,459,566 3,453,144 255,783 278,004 2,715,349 3,731,148 Liabilities Current liabilities 1,170,952 4,062,895 184,889 330,682 1,355,841 4,393,577 Noncurrent liabilities 9,943,951 10,612,444 259,101 189,682 10,203,052 10,802,126 Total liabilities 11,114,903 14,675,339 443,990 520,364 11,558,893 15,195,703 Deferred Inflows of Resources 2,351,275 2,225,148 98,829 217,617 2,450,104 2,442,765 Net Position Net investment in capital assets 13,235,484 13,155,063 3,576,454 4,124,616 16,811,938 17,279,679 Restricted 9,176,976 9,193,714 - - 9,176,976 9,193,714 Unrestricted 10,888,470 6,689,464 10,253,006 9,489,312 21,141,476 16,178,776 Total net position 33,300,930 $ 29,038,241 $ 13,829,460 $ 13,613,928 $ 47,130,390 $ 42,652,169 $ Governmental Activities Business-type Activities Total Net Position A large portion of the County’s net position reflects its investment in capital assets land, buildings, equipment and construction in progress); less any related debt used to acquire those assets that is still outstanding. The County uses these capital assets to provide services to citizens; consequently, these assets are not available for future spending. Although the County’s investment in its capital assets is reported net of related debt, it should be noted that the resources needed to repay the debt must be provided from other sources, since the capital assets themselves cannot be used to liquidate these liabilities. In addition to the net position invested in capital assets, certain other restrictions on use of net position apply due primarily to legal guidelines. The restricted net position total was $9,176,976. The 7 ---PAGE BREAK--- COUNTY OF OTSEGO, MICHIGAN Management’s Discussion and Analysis Fiscal Year Ended December 31, 2024 remaining balance of unrestricted net position of $21,141,476 may be used to meet the government’s ongoing obligations to citizens and creditors. 2024 2023 2024 2023 2024 2023 Revenues Program revenues: Charges for services 4,710,535 $ 4,479,262 $ 2,482,461 $ 2,517,540 $ 7,192,996 $ 6,996,802 $ Operating grants and contributions 2,979,361 3,232,950 746,239 1,053,980 3,725,600 4,286,930 Capital grants and contributions 3,106,470 1,685,000 262,325 595,275 3,368,795 2,280,275 General revenues: Property taxes 8,835,778 8,246,247 784,661 872,295 9,620,439 9,118,542 State revenue sharing 605,714 563,503 - - 605,714 563,503 Investment earnings 581,018 492,483 (92,862) 472,066 488,156 964,549 Other revenue - - 153,907 97,624 153,907 97,624 Total program revenues 20,818,876 18,699,445 4,336,731 5,608,780 25,155,607 24,308,225 Expenses Judicial 3,444,494 3,145,496 - - 3,444,494 3,145,496 General government 2,526,063 2,735,610 - - 2,526,063 2,735,610 Public safety 5,774,987 5,759,502 - - 5,774,987 5,759,502 Public works 390,474 409,326 - - 390,474 409,326 Health and welfare 1,001,618 1,153,614 - - 1,001,618 1,153,614 Recreation and cultural 2,246,104 1,951,754 - - 2,246,104 1,951,754 Community development 232,244 298,008 - - 232,244 298,008 Delinquent tax collection - - 197,922 209,404 197,922 209,404 Bus system - - 1,709,589 1,719,141 1,709,589 1,719,141 Airport - - 1,988,736 2,143,847 1,988,736 2,143,847 Other expenses 929,203 613,475 235,952 254,122 1,165,155 867,597 Total expenses 16,545,187 16,066,785 4,132,199 4,326,514 20,677,386 20,393,299 Change in net position, before transfers 4,273,689 2,632,660 204,532 1,282,266 4,478,221 3,914,926 Transfers (11,000) 9,000 11,000 (9,000) - - Change in net position 4,262,689 2,641,660 215,532 1,273,266 4,478,221 3,914,926 Net position, beginning of year 29,038,241 26,396,581 13,613,928 12,340,662 42,652,169 38,737,243 Net position, end of year 33,300,930 $ 29,038,241 $ 13,829,460 $ 13,613,928 $ 47,130,390 $ 42,652,169 $ Governmental Activities Business-type Activities Total Changes in Net Position 8 ---PAGE BREAK--- COUNTY OF OTSEGO, MICHIGAN Management’s Discussion and Analysis Fiscal Year Ended December 31, 2024 Governmental Activities. Governmental activities net position increased by $4,262,689. Key changes are as follows: There is an increase in capital grants and contributions in the amount of $1,421,470 compared to the prior year. This increase was due to the spending of more ARPA funds in the current year and recognizing the revenue. There was also an increase in property taxes revenue in the amount of $589,531 compared to prior year. This increase is in line with the projected increase of Overall expenses increased $478,402 due to the result of general inflationary increases for personnel and operating costs. Business-type Activities. Business-type activities increased the County’s net position by $214,532. Key changes are as follows: There is a decrease in expenses in the amount of $194,315 compared to prior year. This decrease is mainly due to the airport fund having less depreciation and material and supplies expense in the current year. Financial Analysis of the Government Funds As noted earlier, Otsego 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, outflows, and balances of spendable resources. Such information is useful in assessing the County’s financing requirements. In particular, unassigned fund balance may serve as a useful measure of a government’s net resources available for spending at the end of the fiscal year. The County’s general fund is the chief operating fund of the County. At the end of the current year, unassigned fund balance of the general fund was $12,087,234, while total fund balance reached $13,378,523. As a measure of the general fund’s liquidity, it may be useful to compare both unassigned fund balance and total fund balance to total fund expenditures and transfers out. Unassigned fund balance represents 128.4% of total general fund expenditures and transfers our, while total fund balance represents 142.2% of that same amount. Overall, the net change in fund balance of the general fund was $4,163,832. This was mainly due to the increase in transfers in during the year from the American rescue plan act fund. The housing commission fund is used to account for the improvements of housing within the County. The fund balance decreased by $6,838 due to expenditures exceeding revenues. The library fund balance increased $380,151 due to an increase in revenues in the current year from increased property taxes and a contribution from the Otsego Community Foundation. The American rescue plan act recognized $3,106,470 of federal source revenue in the current year an increase of $1,421,470 compared to prior year due to the spending of the funds. The animal control fund balance decreased by $28,557 due to a decrease in revenues of $187,616 compared to prior year. 9 ---PAGE BREAK--- COUNTY OF OTSEGO, MICHIGAN Management’s Discussion and Analysis Fiscal Year Ended December 31, 2024 Proprietary Funds. The County’s proprietary funds provide the same type of information found in the government-wide financial statements, but in more detail. Unrestricted net position of the delinquent tax revolving, airport, and bus system funds were $4,426,386, $314,351, and $3,773,999 respectively. The net position for the delinquent tax revolving fund increased $181,421 primarily from the interest on the delinquencies. Additionally, the airport fund net position decreased $544,029 primarily due from the decrease in revenue in the current year from the decrease in fuel sales. Lastly, the bus system expenses decreased approximately $9,552 from $1,719,141 in 2023 to $1,709,589 in 2024. This change is primarily caused by the MERS adjustment for fiscal year 2024. MERS investments did not perform as well as previous years and was reflected in the change to the net pension liability. General Fund Budgetary Highlights The general fund realized $126,337 more in revenues than anticipated for the fiscal year. The general fund operations also expended $868,351 less than appropriated and resulted in a net positive budget variance of $994,688. All of the general fund services departments expended less than the budgeted amount for departmental operations in 2024. Elected Officials and Department Heads continue to exhibit diligence across the board of keeping within budget parameters or identifying problems before they occur. Over the course of the year the County Board amended the general fund budget to reflect adjustments in revenues and expenditures that developed in the year. Capital Assets and Debt Administration Capital Assets: At December 31, 2024 the County had $16,819,222 invested in a range of assets. This includes a net decrease of $467,325 from last year as depreciation and deletions exceed additions. 2024 2023 2024 2023 2024 2023 Land 3,012,939 $ 2,986,892 $ 99,998 $ 99,998 $ 3,112,937 $ 3,086,890 $ Construction in progress 305,178 17,705 18,022 - 323,200 17,705 Building 7,677,793 8,181,448 797,542 772,267 8,475,335 8,953,715 Equipment 1,810,939 1,529,857 4,817 9,727 1,815,756 1,539,584 Vehicles 416,829 424,783 994,277 1,079,990 1,411,106 1,504,773 Infrastructure 19,090 21,246 1,661,798 2,162,634 1,680,888 2,183,880 Total capital assets, net 13,242,768 $ 13,161,931 $ 3,576,454 $ 4,124,616 $ 16,819,222 $ 17,286,547 $ Business-type Activities Total Capital Assets at Year-End (Net of Depreciation) Governmental Activities Additional information on the County’s capital assets can be found in Note 5 of this report. 10 ---PAGE BREAK--- COUNTY OF OTSEGO, MICHIGAN Management’s Discussion and Analysis Fiscal Year Ended December 31, 2024 Debt Administration At the end of fiscal year 2024, the County had paid off its outstanding bond debt. All notes are backed by the County’s full faith and credit of the government. The remainder of the County’s debt is comprised of notes payable, vested employee benefits, and net pension/retiree health care liabilities. 2024 2023 2024 2023 2024 2023 Note payable - vehicle lease 15,008 $ 21,877 $ - $ - $ 15,008 $ 21,877 $ Compensated absences 562,933 266,031 - - 562,933 266,031 Totals 577,941 $ 287,908 $ - $ - $ 577,941 $ 287,908 $ Business-type Activities Total Debt Administration Governmental Activities Additional information on the County’s long-term debt can be found in Note 8 of this report. Economic Factors and Next Year’s Budgets and Rates The following factors were considered in preparing the County’s 2025 Budget:  Property tax revenues are projected to increase approximately Highlight of the 2025 budget is as follows:  The cost of employee benefits continues to rise and will be monitored throughout the year. Requests for Information This financial report is designed to provide a general overview of the County’s finances for all those with an interest in the government’s finances. Questions concerning any of the information provided in this report or requests for additional financial information should be addressed to: Otsego County, 225 W Main, Gaylord, Michigan, 49735. 11 ---PAGE BREAK--- COUNTY OF OTSEGO, MICHIGAN Statement of Net Position Governmental Business-type Component Activities Activities Total Units Assets Cash, cash equivalents and investments 25,832,988 $ 9,451,270 $ 35,284,258 $ 15,061,607 $ Receivables Taxes 2,377,559 653,743 3,031,302 1,702,399 Accounts 188,741 150,085 338,826 3,931,403 Interest - 80,651 80,651 - Loans 1,220,248 - 1,220,248 - Leases-Due in less than one year 1,940 4,451 6,391 - Leases-Due in more than one year 133,097 93,221 226,318 - Due from governmental units 1,052,466 77,245 1,129,711 - Inventories 5,287 29,216 34,503 948,066 Prepaid Items 252,448 160 252,608 131,224 Capital assets not depreciated 3,318,117 118,020 3,436,137 13,523,841 Capital assets (net accumulated depreciation) 9,924,651 3,458,434 13,383,085 37,215,822 Total assets 44,307,542 14,116,496 58,424,038 72,514,362 Deferred Outflows of Resources Pension related items 2,459,566 255,783 2,715,349 690,925 OPEB related items - - - 32,845 Total deferred outflows 2,459,566 255,783 2,715,349 723,770 Liabilities Accounts payable 405,939 153,352 559,291 353,400 Accrued liabilities 478,935 31,537 510,472 254,947 Due from governmental units 478 - 478 - Advance from governmental units - - - 483,983 Unearned revenue 278,316 - 278,316 9,910 Advance from primary government - - - 5,703 Vested employee benefits - due within one year 562,933 - 562,933 226,465 Net OPEB liability - due in more than one year 585,074 - 585,074 455,970 Net pension liability - due in more than one year 8,788,220 259,101 9,047,321 3,616,855 Note payable - due within one year 7,284 - 7,284 147,333 Note payable - due in more than one year 7,724 - 7,724 2,529,840 Total liabilities 11,114,903 443,990 11,558,893 8,084,406 Deferred Inflow of Resources Leases 135,037 97,672 232,709 - Pension related items 231,236 1,157 232,393 40,193 Taxes levied for a subsequent period 1,985,002 - 1,985,002 3,135,385 Total deferred inflows 2,351,275 98,829 2,450,104 3,175,578 Net Position Net investment in capital assets 13,235,484 3,576,454 16,811,938 48,140,447 Restricted 9,176,976 - 9,176,976 13,837,701 Unrestricted 10,888,470 10,253,006 21,141,476 - Total net position 33,300,930 $ 13,829,460 $ 47,130,390 $ 61,978,148 $ See accompanying notes to the basic financial statements. December 31, 2024 Primary Government 12 ---PAGE BREAK--- COUNTY OF OTSEGO, MICHIGAN Statement of Activities Operating Capital Charges for Grants and Grants and Governmental Business-type Component Expenses Services Contributions Contributions Activities Activities Totals Units Functions/Programs Primary government: Governmental activities: Judicial 3,444,494 $ 594,387 $ 1,801,733 $ - $ (1,048,374) $ - $ (1,048,374) $ - $ General government 2,526,063 636,671 16,390 - (1,873,002) - (1,873,002) - Public safety 5,774,987 1,735,984 176,536 - (3,862,467) - (3,862,467) - Public works 390,474 350 - - (390,124) - (390,124) - Health and welfare 1,001,618 346,960 886,376 3,106,470 3,338,188 - 3,338,188 - Community/economic development 232,244 104,113 61,943 - (66,188) - (66,188) - Recreation and culture 2,246,104 1,292,070 36,383 - (917,651) - (917,651) - Other 929,203 - - - (929,203) - (929,203) - Total governmental activities 16,545,187 4,710,535 2,979,361 3,106,470 (5,748,821) - (5,748,821) - Business-type activities: Delinquent tax revolving 197,922 288,745 - - - 90,823 90,823 - Airport 1,988,736 1,414,211 - - - (574,525) (574,525) - Public transit 1,709,589 197,927 746,239 262,325 - (503,098) (503,098) - Nonmajor enterprise funds 235,952 581,578 - - - 345,626 345,626 - Total business-type activities 4,132,199 2,482,461 746,239 262,325 - (641,174) (641,174) - Total primary government 20,677,386 $ 7,192,996 $ 3,725,600 $ 3,368,795 $ (5,748,821) $ (641,174) $ (6,389,995) $ - $ Component Units: Road commission 9,388,139 $ 2,414,222 $ 7,845,611 $ 2,946,314 $ 3,818,008 $ Ambulance 3,653,301 2,380,023 32,648 - (1,240,630) Commission on aging 9/30/2024 2,324,182 86,200 536,489 - (1,701,493) 1,163,103 740,097 - - (423,006) Total component units 16,528,725 5,620,542 8,414,748 2,946,314 452,879 Total 37,206,111 $ 12,813,538 $ 12,140,348 $ 6,315,109 $ General revenues and transfers: Taxes 8,835,778 $ 784,661 $ 9,620,439 $ 3,149,861 $ State revenue sharing 605,714 - 605,714 - Investment earnings 581,018 (92,862) 488,156 653,423 Transfers (11,000) 11,000 - - Other - 153,907 153,907 190,394 Total general revenues and transfers 10,011,510 856,706 10,868,216 3,993,678 Changes in net position 4,262,689 215,532 4,478,221 4,446,557 Net position - beginning of year, as previously stated 29,038,241 13,613,928 42,652,169 57,307,634 Correction of an error - - - 223,957 Net position - beginning of year, as restated 29,038,241 13,613,928 42,652,169 57,531,591 Net position - end of year 33,300,930 $ 13,829,460 $ 47,130,390 $ 61,978,148 $ See accompanying notes to the basic financial statements. Program Revenues Year Ended December 31, 2024 13 ---PAGE BREAK--- COUNTY OF OTSEGO, MICHIGAN Balance Sheet Governmental Funds American Total Housing Rescue Plan Animal Nonmajor Governmental General Commission Library Act Control Governmental Funds Assets Cash and investments 12,738,876 $ 103,704 $ 1,527,221 $ 198,844 $ 429,292 $ 10,454,456 $ 25,452,393 $ Receivables: Taxes 392,557 - 657,696 - 493,189 834,117 2,377,559 Accounts - - - - 8,208 176,347 184,555 Loans - 1,220,248 - - - - 1,220,248 Due from other funds - - - - - 255,000 255,000 Due from governmental units 473,220 - - - - 579,044 1,052,264 Inventories 5,287 - - - - - 5,287 Prepaid items 221,383 - - - - 19,013 240,396 Total assets 13,831,323 $ 1,323,952 $ 2,184,917 $ 198,844 $ 930,689 $ 12,317,977 $ 30,787,702 $ Liabilities Accounts payable 150,837 $ 575 $ 6,531 $ - $ 9,192 $ 196,243 $ 363,378 $ Due to other funds - - - - - 255,000 255,000 Accrued liabilities 291,148 478 55,763 - 21,014 76,034 444,437 Unearned revenue 10,815 - - - - 267,501 278,316 Total liabilities 452,800 1,053 62,294 - 30,206 794,778 1,341,131 Deferred Inflows of Resources Unavailable resources - 1,220,248 - - - - 1,220,248 Taxes levied for subsequent period - - 657,696 - 493,189 834,117 1,985,002 Total deferred inflows of resources - 1,220,248 657,696 - 493,189 834,117 3,205,250 Fund Balances Nonspendable 226,670 - - - - 19,013 245,683 Restricted - 102,651 1,464,927 198,844 407,294 7,003,260 9,176,976 Committed - - - - - 3,686,834 3,686,834 Assigned 1,064,619 - - - - - 1,064,619 Unassigned (deficit) 12,087,234 - - - - (20,025) 12,067,209 Total fund balances 13,378,523 102,651 1,464,927 198,844 407,294 10,689,082 26,241,321 Total liabilities, deferred inflows of resources and fund balances 13,831,323 $ 1,323,952 $ 2,184,917 $ 198,844 $ 930,689 $ 12,317,977 $ 30,787,702 $ See accompanying notes to the basic financial statements. December 31, 2024 14 ---PAGE BREAK--- Total governmental fund balances 26,241,321 $ Amounts reported for governmental activities in the statement of net position are different because: Capital assets used in governmental activities are not financial resources and therefore are not reported in the funds. 13,242,768 Long-term liabilities are not due and payable in the current period and therefore are not reported in the funds. Note payable for governmental activities (15,008) Vested employee benefits (562,933) The focus of governmental funds is on short-term financing. Accordingly, some assets will not be available to pay for current-period expenditures. Those assets (such as certain receivables) are offset by deferred inflows of resources in the governmental funds, and thus are not included in fund balance. Deferred inflows from long-term receivables 1,220,248 Certain pension and other postemployment benefit-related amounts are not due and payable in the current period or do not represent current financial resources and therefore are not reported in the funds Pension liability and deferred items (6,559,890) OPEB liability and deferred items (585,074) Internal service funds are used by management to charge the costs of certain activities, such as insurance and other centralized costs, to individual funds. The assets and liabilities of certain internal service funds are included in governmental activities in the statement of net position Net position of governmental activities accounted for in internal service funds 319,498 Net position of governmental activities 33,300,930 $ COUNTY OF OTSEGO, MICHIGAN Reconciliation of Total Governmental Fund Balances to December 31, 2024 Net Position of Governmental Activities 15 ---PAGE BREAK--- COUNTY OF OTSEGO, MICHIGAN Statement of Revenues, Expenditures and Changes in Fund Balances Governmental Funds (Formerly major) (Formerly non- Library American major) Construction Nonmajor Total Housing Rescue Plan Animal Millage Capital Governmental Governmental General Commission Library Act Control Project Fund Funds Funds Revenues Taxes 6,968,944 $ - $ 618,160 $ - $ 467,149 $ - $ 781,521 $ 8,835,774 $ Licenses and permits 73,515 - - - - - - 73,515 Federal sources 66,055 83,150 - 3,106,470 - - 394,706 3,650,381 State sources 1,569,145 - 36,383 - - - 1,378,622 2,984,150 Local sources 86,717 837 - - - - - 87,554 Charges for services 1,091,898 - - - 48,473 - 1,528,102 2,668,473 Fines and forfeits 9,294 - 153,429 - 63 - 4 162,790 Interest and rentals 256,948 32 25,672 107,969 12,344 - 171,759 574,724 Other revenue 198,263 3,436 437,940 - 39,834 - 1,143,074 1,822,547 Total revenues 10,320,779 87,455 1,271,584 3,214,439 567,863 - 5,397,788 20,859,908 Expenditures Current: Judicial 2,181,496 - - - - - 1,170,056 3,351,552 General government 2,223,867 - - - - - 102,708 2,326,575 Public safety 3,154,519 - - - 580,801 - 1,576,488 5,311,808 Public works 5,894 - - - - - 384,580 390,474 Health and welfare 745,884 - - - - - 242,508 988,392 Recreation and culture - - 891,433 - - - 941,481 1,832,914 Capital outlay - - - - 15,619 - 1,479,029 1,494,648 Community/economic development 137,507 93,838 - - - - - 231,345 Other expenditures 267,692 - - - - - - 267,692 Total expenditures 8,716,859 93,838 891,433 - 596,420 - 5,896,850 16,195,400 Excess of Revenues over (under) Expenditures before other financing sources (uses) 1,603,920 (6,383) 380,151 3,214,439 (28,557) - (499,062) 4,664,508 Other Financing Sources (Uses) Transfers in 3,254,569 94,705 - - - - 794,989 4,144,263 Transfers out (694,657) (94,705) - (3,124,470) - - (231,431) (4,145,263) Total other financing sources (uses) 2,559,912 - - (3,124,470) - - 563,558 (1,000) Net change in fund balances 4,163,832 (6,383) 380,151 89,969 (28,557) - 64,496 4,663,508 Fund balance, beginning of year, as previously reported 9,214,691 109,034 1,084,776 108,875 - 27,768 11,032,669 21,577,813 Adjustment - change in reporting entity - - - - 435,851 (27,768) (408,083) - Fund balance, beginning of year, as adjusted 9,214,691 109,034 1,084,776 108,875 435,851 - 10,624,586 21,577,813 Fund balance, end of year 13,378,523 $ 102,651 $ 1,464,927 $ 198,844 $ 407,294 $ - $ 10,689,082 $ 26,241,321 $ See accompanying notes to the basic financial statements. Year Ended December 31, 2024 16 ---PAGE BREAK--- Net changes in fund balances - total governmental funds 4,663,508 $ The change in net position reported for governmental activities in the statement of activities is different because: Governmental funds reported capital outlays as expenditures. However, in the statement of activities the cost of those assets is capitalized and the costs of those assets is allocated over their estimated useful lives and reported as depreciation expense. This is the amount by which depreciation, ($1,016,264) reduced by capital outlay, $1,097,101 80,837 Repayment of principal is an expenditure in the governmental funds but reduces the liability in the statement of net position. Principal repayments: Note payable 6,869 Revenues in the statement of activities that do not provide current financial resources are not reported as revenues in the funds, but rather are deferred until the following year. Change in unavailable revenue (47,326) Under the modified accrual basis of accounting used in governmental funds, expenditures are not recognized for transactions that are not normally paid with expendable available financial resources. In the 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. This adjustment combines the following net changes: Vested employee benefits (296,920) OPEB liability & related deferred items 47,725 Pension liability & related deferred items (63,062) Other expenses recognized on full accrual basis (104,575) Internal service fund activity (24,367) Changes in net position of governmental activities 4,262,689 $ See accompanying notes to the basic financial statements. COUNTY OF OTSEGO, MICHIGAN Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances of Governmental Funds to the Statement of Activities Year Ended December 31, 2024 17 ---PAGE BREAK--- COUNTY OF OTSEGO, MICHIGAN Statement of Net Position Proprietary Funds Governmental Activities Delinquent Bus Nonmajor Total Internal Tax System Enterprise Enterprise Service Fund Airport 9/30/2024 Funds Fund Funds Assets Current assets: Cash, equivalents, and investments 3,710,667 $ 222,845 $ 3,775,537 $ 1,742,221 $ 9,451,270 $ 380,595 $ Taxes receivable 626,074 - 23,935 3,734 653,743 - Interest receivable 80,651 - - - 80,651 - Accounts receivable 16,031 128,059 3,480 2,515 150,085 4,388 Leases receivable - due in less than one year - 4,451 - - 4,451 1,940 Leases receivable - due in more than one year - 93,221 - - 93,221 133,097 Due from governmental units - - 77,245 - 77,245 - Prepaid items 80 - - 80 160 12,052 Inventory - 29,216 - - 29,216 - Total current assets 4,433,503 477,792 3,880,197 1,748,550 10,540,042 532,072 Noncurrent assets: Capital assets (not depreciated) - 18,022 99,998 - 118,020 - Capital assets (net of accumulated depreciation) - 2,302,790 1,155,374 270 3,458,434 - Total noncurrent assets - 2,320,812 1,255,372 270 3,576,454 - Total assets 4,433,503 2,798,604 5,135,569 1,748,820 14,116,496 532,072 Deferred Outflows of Resources Pension related items - - 255,783 - 255,783 - Liabilities Current liabilities: Accounts payable 4,000 42,682 101,723 4,947 153,352 42,561 Accrued liabilities 3,117 23,087 - 5,333 31,537 34,976 Total current liabilities 7,117 65,769 101,723 10,280 184,889 77,537 Noncurrent liabilities: Net pension liability - - 259,101 - 259,101 - Total liabilities 7,117 65,769 360,824 10,280 443,990 77,537 Deferred Inflows of Resources Leases - 97,672 - - 97,672 135,037 Pension related items - - 1,157 - 1,157 - Total deferred inflows of resources - 97,672 1,157 - 98,829 135,037 Net Position Net investment in capital assets - 2,320,812 1,255,372 270 3,576,454 - Unrestricted 4,426,386 314,351 3,773,999 1,738,270 10,253,006 319,498 Total net position 4,426,386 $ 2,635,163 $ 5,029,371 $ 1,738,540 $ 13,829,460 $ 319,498 $ See accompanying notes to the basic financial statements. December 31, 2024 Business-Type Activities - Enterprise Funds Major 18 ---PAGE BREAK--- COUNTY OF OTSEGO, MICHIGAN Statement of Revenues, Expenses and Change in Net Position Proprietary Funds Governmental Activities (Formerly major) Tax Bus Nonmajor Total Internal Delinquent Foreclosure Systems Enterprise Enterprise Service Tax Fund Fund Airport 9/30/2024 Funds Funds Funds Operating Revenues Charges for services 99,674 $ - $ 1,256,640 $ 197,927 $ 198,236 $ 1,752,477 $ 2,744,237 $ Interest on delinquent taxes 183,579 - - - - 183,579 - Other revenues 5,492 - 157,571 - 383,342 546,405 - Total operating revenues 288,745 - 1,414,211 197,927 581,578 2,482,461 2,744,237 Operating Expenses - Salaries, wages, and fringe benefits 102,548 - 310,427 988,319 98,143 1,499,437 2,319,486 Contractual services 85,608 - 54,037 - 89,169 228,814 143,959 Materials and supplies 2,769 - 864,821 - 44,301 911,891 36,178 Equipment repair and maintenance - - 66,876 - 2,797 69,673 19,779 Utilities - - 54,646 - - 54,646 197,003 Depreciation - - 571,475 295,136 - 866,611 - Other expenses 6,997 - 66,454 426,134 1,542 501,127 45,737 Total operating expenses 197,922 - 1,988,736 1,709,589 235,952 4,132,199 2,762,142 Operating income (loss) 90,823 - (574,525) (1,511,662) 345,626 (1,649,738) (17,905) Nonoperating Revenues (Expenses) State grants - - - 440,418 - 440,418 - Federal grants - - - 305,821 - 305,821 - Interest earned on investments 90,598 - 1,054 - (184,514) (92,862) 3,538 Property taxes levied - - - 784,661 - 784,661 - Other - - 29,442 124,465 - 153,907 - Total nonoperating revenues (expenses) 90,598 - 30,496 1,655,365 (184,514) 1,591,945 3,538 Income (loss) before transfers and capital contributions 181,421 - (544,029) 143,703 161,112 (57,793) (14,367) Capital contributions and transfers Capital contributions - - - 262,325 - 262,325 - Transfers in - - - - 11,000 11,000 - Transfers out - - - - - - (10,000) Change in net position 181,421 - (544,029) 406,028 172,112 215,532 (24,367) Net position-beginning of year, as previously reported 4,244,965 1,307,099 3,179,192 4,623,343 259,329 13,613,928 343,865 Change in reporting entity - (1,307,099) - - 1,307,099 - - Net position-beginning of year, as restated 4,244,965 - 3,179,192 4,623,343 1,566,428 13,613,928 343,865 Net position-end of year 4,426,386 $ - $ 2,635,163 $ 5,029,371 $ 1,738,540 $ 13,829,460 $ 319,498 $ See accompanying notes to the basic financial statements. Year Ended December 31, 2024 Business-Type Activities - Enterprise Funds 19 ---PAGE BREAK--- COUNTY OF OTSEGO, MICHIGAN Statement of Cash Flows Proprietary Funds Governmental Activities Bus Nonmajor Total Internal Delinquent System Enterprise Enterprise Service Tax Fund Airport 9/30/2024 Funds Funds Funds Cash Flows from Operating Activities Receipts from customers 255,656 $ 1,399,479 $ 194,471 $ 585,752 $ 2,435,358 $ 2,848,154 $ Payments to suppliers (91,474) (1,072,108) (426,134) (157,046) (1,746,762) (422,894) Payments to employees for services and benefits (103,546) (294,218) (1,184,439) (98,143) (1,680,346) (2,293,287) Net cash flows from operating activities 60,636 33,153 (1,416,102) 330,563 (991,750) 131,973 Cash Flows From Noncapital and Related Financing Activities State grants - - 555,283 - 555,283 - Federal grants - - 519,808 - 519,808 - Property tax - - 785,032 - 785,032 - Other - 29,442 124,465 - 153,907 - Transfers in - - - 11,000 11,000 - Transfers out - - - - - (10,000) Net cash flows from noncapital and related financing activities - 29,442 1,984,588 11,000 2,025,030 (10,000) Cash Flows From Capital and Related Financing Activities: Acquisition of capital assets - (41,909) (276,540) - (318,449) - Federal capital grants - - 262,325 - 262,325 - Net cash flows from capital and related financing activities - (41,909) (14,215) - (56,124) - Cash Flows from Investing Activities Interest earnings 90,598 1,054 - (184,514) (92,862) 3,538 Net cash flows from investing activities 90,598 1,054 - (184,514) (92,862) 3,538 Net Increase (Decrease) in Cash and Equivalents 151,234 21,740 554,271 157,049 884,294 125,511 Cash and pooled investments, beginning of year 3,559,433 201,105 3,221,266 1,585,172 8,566,976 255,084 Cash and pooled investments, end of year 3,710,667 $ 222,845 $ 3,775,537 $ 1,742,221 $ 9,451,270 $ 380,595 $ continued… Year Ended December 31, 2024 Business-Type Activities - Enterprise Funds Major 20 ---PAGE BREAK--- COUNTY OF OTSEGO, MICHIGAN Statement of Cash Flows Proprietary Funds Governmental Activities Bus Nonmajor Total Internal Delinquent System Enterprise Enterprise Service Tax Fund Airport 9/30/2024 Funds Funds Funds Reconciliation of operating income (loss) to net cash flows provided (used) by operating activities: Operating income (loss) 90,823 $ (574,525) $ (1,511,662) $ 345,626 $ (1,649,738) $ (17,905) $ Adjustments to reconcile operating income (loss) to net cash from operating activities: Depreciation expense - 571,475 295,136 - 866,611 - Changes in assets and liabilities: Taxes receivable (25,756) - - (3,734) (29,490) - Interest receivable 5,050 - - - 5,050 - Accounts receivable (12,356) (14,732) (3,456) 7,855 (22,689) 7,896 Prepaid items (27) - - 53 26 96,021 Inventory - 7,112 - - 7,112 - Accounts payable 3,900 34,614 (170,390) (23,904) (155,780) 19,762 Accrued liabilities (998) 16,209 - 4,667 19,878 26,199 Changes in pension liability and deferred amounts - (7,000) (25,730) - (32,730) - Net cash flows from operating activities 60,636 $ 33,153 $ (1,416,102) $ 330,563 $ (991,750) $ 131,973 $ concluded See accompanying notes to the basic financial statements. Major Fiscal Year Ended December 31, 2024 Business-Type Activities - Enterprise Funds 21 ---PAGE BREAK--- COUNTY OF OTSEGO, MICHIGAN Statement of Fiduciary Net Position Fiduciary Funds Michigan General Library Municipal Risk Agency Panel Management Fund Fines Authority Total Assets Cash and equivalents 1,213,911 $ 113,875 $ 154,031 $ 1,481,817 $ Taxes for other governments 1,646,019 - - 1,646,019 Total assets 2,859,930 113,875 154,031 3,127,836 Liabilities Undistributed tax collections 2,243,189 - - 2,243,189 Due to other governments 403,907 113,875 - 517,782 Bonds, restitutions and payables to others 212,834 - - 212,834 Total liabilities 2,859,930 113,875 - 2,973,805 Net Position Restricted - $ - $ 154,031 $ 154,031 $ See accompanying notes to the basic financial statements. December 31, 2024 22 ---PAGE BREAK--- COUNTY OF OTSEGO, MICHIGAN Statement of Changes in Fiduciary Net Position Fiduciary Funds Michigan General Library Municipal Risk Agency Penal Management Funds Fines Authority Total Additions Contributions: Members - $ - $ 25,000 $ 25,000 $ Interest - - 5,321 5,321 Net asset distribution transfer - - 76,430 76,430 Taxes collected for other governments 26,543,266 - - 26,543,266 Fees and fines collected on behalf of other governments 1,976,301 139,818 - 2,116,119 Fees and fines collected on behalf of other agencies 2,697,481 - - 2,697,481 Collections from or on behalf of inmates 352,679 - - 352,679 Gifts and bequests 1,788 - - 1,788 Total additions 31,571,515 139,818 106,751 31,818,084 Deductions Payments of taxes to other governments 26,543,266 - - 26,543,266 Fees and fines remitted to other units of government 1,976,301 - - 1,976,301 Fees and fines remitted to other agencies 2,697,481 139,818 - 2,837,299 Payments on behalf of inmates 352,679 - - 352,679 Bonds, restitutions and payables to others - - 90,417 90,417 Beneficiary payments to individuals 1,788 - - 1,788 Total deductions 31,571,515 139,818 90,417 31,801,750 Change in net position - - 16,334 16,334 Net position beginning of year - - 137,697 137,697 Net position end of year - $ - $ 154,031 $ 154,031 $ See accompanying notes to the basic financial statements. Year Ended December 31, 2024 23 ---PAGE BREAK--- COUNTY OF OTSEGO, MICHIGAN Statement of Net Position Component Units Commission Road Ambulance on Aging Commission Corporation 9/30/2024 Total Assets Cash and investments 12,386,486 $ 1,175,198 $ 1,219,572 $ 280,351 $ 15,061,607 $ Receivables Taxes - 1,291,464 - 410,935 1,702,399 Accounts 3,526,666 319,000 64,053 21,684 3,931,403 Inventories 950,974 - 3,105 (6,013) 948,066 Prepaid items 131,224 - - - 131,224 Capital assets (net depreciation) 13,523,841 - - - 13,523,841 Capital assets (net accumulated depreciation) 33,312,222 1,264,851 2,638,749 - 37,215,822 Total assets 63,831,413 4,050,513 3,925,479 706,957 72,514,362 Deferred outflows of resources Pension related items 690,925 - - - 690,925 OPEB related items 32,845 - - - 32,845 Total deferred outflows 723,770 - - - 723,770 Liabilities Accounts payable 332,346 2,665 4,560 13,829 353,400 Accrued liabilities 219,884 5,138 28,564 1,361 254,947 Advance from governmental units 483,983 - - - 483,983 Unearned revenue - - - 9,910 9,910 Installment notes payable: Due within one year - 77,957 69,376 - 147,333 Due in more than one year - - 2,529,840 - 2,529,840 Advance from primary government - 5,703 - - 5,703 Net pension liabilities - due in more than one year 3,616,855 - - - 3,616,855 (OPEB) liabilities - due in more than one year 455,970 - - - 455,970 Vested employee benefits - due in more than one year 226,465 - - - 226,465 Total liabilities 5,335,503 91,463 2,632,340 25,100 8,084,406 Deferred inflows of Resources Pension related items 40,193 - - - 40,193 Taxes levied for a subsequent period 1,432,986 1,291,464 - 410,935 3,135,385 Total deferred inflows of resources 1,473,179 1,291,464 - 410,935 3,175,578 Net Position Net investment in capital assets 46,836,063 1,264,851 39,533 - 48,140,447 Restricted for ambulance and emergency services - 1,402,735 - - 1,402,735 Restricted for - - - 270,922 270,922 Restricted for commission on aging - - 1,253,606 - 1,253,606 Restricted for road commission 10,910,438 - - - 10,910,438 Total net position 57,746,501 $ 2,667,586 $ 1,293,139 $ 270,922 $ 61,978,148 $ See accompanying notes to the basic financial statements. December 31, 2024 24 ---PAGE BREAK--- COUNTY OF OTSEGO, MICHIGAN Statement of Activities Component Units Operating Capital Charges for Grants and Grants and Net (Expenses) Expenses Services Contributions Contributions Revenue Road commission Public works 9,388,139 $ 2,414,222 $ 7,845,611 $ 2,946,314 $ 3,818,008 $ Ambulance corporation Health and welfare 3,653,301 2,380,023 32,648 - (1,240,630) Commission on aging 9/30/2024 Health and welfare 2,324,182 86,200 536,489 - (1,701,493) Recreation and culture 1,163,103 740,097 - - (423,006) Total component units 16,528,725 $ 5,620,542 $ 8,414,748 $ 2,946,314 $ 452,879 $ continued… See accompanying notes to the basic financial statements. Year Ended December 31, 2024 Program Revenues Functions/Programs 25 ---PAGE BREAK--- COUNTY OF OTSEGO, MICHIGAN Statement of Activities Component Units Commission Road Ambulance on Aging Commission Corporation 9/30/2024 Total Road commission Public works 3,818,008 $ - $ - $ - $ 3,818,008 $ Ambulance corporation Health and welfare - (1,240,630) - - (1,240,630) Commission on aging 9/30/2024 Health and welfare - - (1,701,493) - (1,701,493) Recreation and culture - - - (423,006) (423,006) Total component units 3,818,008 $ (1,240,630) $ (1,701,493) $ (423,006) $ 452,879 $ General Revenues: Property tax - $ 1,209,921 $ 1,553,621 $ 386,319 $ 3,149,861 $ Investment earnings 581,621 33,262 31,394 7,146 653,423 Other 157,962 9,625 19,805 3,002 190,394 Total general revenues 739,583 1,252,808 1,604,820 396,467 3,993,678 Change in net position 4,557,591 12,178 (96,673) (26,539) 4,446,557 Net position - beginning of year as previously stated 52,964,953 2,655,408 1,389,812 297,461 57,307,634 Correction of an error 223,957 - - - 223,957 Net position - beginning of year as restated 53,188,910 2,655,408 1,389,812 297,461 57,531,591 Net position - end of year 57,746,501 $ 2,667,586 $ 1,293,139 $ 270,922 $ 61,978,148 $ concluded See accompanying notes to the basic financial statements. Year Ended December 31, 2024 Functions/Programs Changes in Net Position Net (Expense) Revenue and 26 ---PAGE BREAK--- NOTES TO FINANCIAL STATEMENTS 27 ---PAGE BREAK--- COUNTY OF OTSEGO, MICHIGAN Notes to the Financial Statements Year Ended December 31, 2024 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Otsego County (the "County" or the "Government") was organized in 1840 and covers an area of approximately 527 square miles divided into nine Townships, one village, and one city. The County seat is located in the City of Gaylord. The County operates under an elected board of commissioners (nine members) with an appointed County Administrator who assists with day-to-day operations. The County provides services to its more than 24,000 residents in many areas including law enforcement, administration of justice, community enrichment, economic development, and human services. The financial statements of the County have been prepared in conformity with generally accepted accounting principles (GAAP) as applied to governmental units. The Governmental Accounting Standards Board (GASB) is the accepted standard setting body for establishing governmental accounting and financial reporting principles. The County's significant accounting policies are described below. A. Reporting Entity As required by generally accepted accounting principles, these financial statements present the government and its component units, entities for which the County is financially accountable. Blended component units, although legally separate entities, are, in substance, part of the government’s operations and as such, data from these units are combined with data of the primary government. Discretely presented component units, on the other hand, are reported in a separate column in the combined financial statements to emphasize that they are legally separate from the government. Blended Component Unit Otsego County Building Authority (the "Building Authority") - The Building Authority is governed by a three-member board appointed by the County Board of Commissioners. Although it is legally separate from the County, the Building Authority is reported as if it were part of the primary government because its sole purpose is to finance and construct the County's public buildings. The financial statements of the Otsego County Building Authority are reported in the County's Debt Service Fund and Capital Projects Funds as presented in this report. Discretely Presented Component Units The component unit’s column in the government-wide financial statements include the financial data of the other component units of the County. The following is a summary of the component units: Otsego County Road Commission (the "Road Commission") - The Road Commission which is established pursuant to the County Road Law (MCL 224.1) is governed by a three-member Board of County Road Commissioners elected biannually to serve a six-year term. The Road Commission is responsible for the maintenance and construction of the County Road System. It may not issue debt without the County's approval and the tax levy is subject to the County Board of Commissioners' approval. If approval is granted, Road Commission taxes are levied under the taxing authority of the County, as approved by the County electors, and would be included as part of the County's total tax levy as well as reported in the County Road Fund. Otsego County Ambulance Corporation, Inc. (the "Ambulance Corporation") - The Ambulance Corporation, a nonprofit corporation which was established pursuant to the provisions of Public Act 327 of 1931, as amended, and Public Act 284 of 1972, has an agreement with Otsego County to provide ambulance service in and about Otsego County. A nine-member board governs the Ambulance 28 ---PAGE BREAK--- COUNTY OF OTSEGO, MICHIGAN Notes to the Financial Statements Year Ended December 31, 2024 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Corporation. The Ambulance Corporation may not issue debt without the County's approval and a tax levy is subject to the County Board of Commissioners' approval. If approval is granted, the Ambulance Corporation's taxes are levied under the taxing authority of the County, as approved by the County electors, and would be included as part of the County's total tax levy as well as in the Ambulance Corporation Fund. All assets are in the name of the County. Otsego County Commission on Aging (the "Commission") - The Commission is legally separable and administered by an advisory Board of Directors (the "Board") with twelve members. The Commission may not issue debt and the tax levy is subject to the County Board of Commissioners' approval. The Commission's taxes are levied under the taxing authority of the County, as approved by the County electors, and is included as part of the County's total tax levy as well as reported in the Commission on Aging Fund. Otsego County (the - The a nonprofit corporation that was established pursuant to the provisions of Public Act 162 of 1982, has an agreement with Otsego County to operate and maintain a recreational and sports complex for Otsego County. The agreement was amended on December 15, 2015 and expires on December 15, 2030. The sports complex was constructed during 1995 and opened in early 1996. The is operated by a Board of Directors, which consists of between seven and fifteen members. Members recommended by the Board of Directors and forwarded to the County Board of Commissioners for review and approval. The may not issue debt without the County's approval and the tax levy is subject to the County Board of Commissioners' approval. The taxes are levied under the taxing authority of the County, as approved by the County electors, and are included as part of the County's total tax levy recorded in the County's Fund. The County Board of Commissioners also approves the budget and fee charges. Although this is a nonprofit corporation, the activities fit the description of a governmental special revenue fund type and, accordingly, are reported as a component unit in this report. Complete financial statements of the individual component units can be obtained from their respective administrative offices as listed below or from the County Clerk's Office at 225 West Main Street, Gaylord, MI 49735. Administrative Offices Otsego County Otsego County Road Commission 1250 Gornick Avenue Industrial Park, PO Box 537 Gaylord, MI 49735 Gaylord, MI 49735 Otsego County Ambulance Corporation, Inc. Otsego County Commission on Aging 100 McLouth, PO Box 642 120 Grandview Boulevard Gaylord, MI 49735 Gaylord, MI 49735 29 ---PAGE BREAK--- COUNTY OF OTSEGO, MICHIGAN Notes to the Financial Statements Year Ended December 31, 2024 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Joint Ventures Health Department of Northwest Michigan - The Health Department of Northwest Michigan (formerly known as the Northwest Michigan Community Health Agency) (the Department) is a Michigan municipal body, created under Act 368 of the Public Acts of 1978. The Department is a component unit of the County of Charlevoix, Michigan which is funded through agreements with the State of Michigan, local appropriations and charges for services rendered. Otsego County's appropriation to the Health Agency recorded in the general fund in 2024 was $255,000. Financial information as of September 30, 2024 (the most recent audited financial statements) is as follows: Assets 18,276,736 $ Deferred outflows of resources 457,042 Liabilities 10,380,886 Net position 8,352,892 Change in net position 3,399,674 Participant payments Total participant payments 1,130,823 County of Otsego 255,000 County of Otsego percentage of total 23% Michigan Technical Education Center - Kirtland Community College, a community college district established pursuant to the provisions of Public Act 331 of 1996, obtained funding through the Michigan Economic Development Corporation ("MEDC") to construct and equip Michigan Technical Education Center ("M-TEC"), an educational facility in Otsego County. On December 7, 1999, the electors of the County authorized a tax levy not to exceed .6464 mills for a period of twenty years for the purpose of generating funds to operate the facility. The facility provides vocational, technical, job skills, or workforce development programs and services. Pursuant to the operating agreement, Kirtland established an advisory board (which includes representatives of the County) and is to report its preliminary, final, and amended M-TEC budgets to the County's board. Financial records for M-TEC are recorded and maintained by the Kirtland Community College and are audited separately. M-TEC is used in conjunction with and occupied by the University Center established and operated by the University Center of Gaylord, a non-profit corporation. North Country Community Mental Health Authority (the "CMH Authority") - The CMH Authority consists of the counties of Antrim, Charlevoix, Cheboygan, Emmet, Kalkaska, and Otsego. Financial records for the CMH Authority are recorded and maintained by the Authority and audited separately. The funding formula for the community mental health operations and services is in accordance with an agreement approved by each county. The current agreement provides that each county will pay at an agreed upon rate. The Otsego County 2024 local match, recorded in the general fund, was $94,003. 30 ---PAGE BREAK--- COUNTY OF OTSEGO, MICHIGAN Notes to the Financial Statements Year Ended December 31, 2024 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Otsego County University Center (the "Facility") - Effective January 1, 2017, management of the Facility transferred to Kirtland Community College (the "College"). The terms of the agreement between the County and the College are effective January 1, 2017, through December 31, 2020, which will automatically be extended unless otherwise modified. The Governance Advisory Board (the "GAB") serves as citizen input on the operations of the Facility under the College's management. Membership of the GAB will consist of 16 to 20 members, of which, 2 will be members from the Otsego County Board of Commissioners or the County Administrator and the remaining members shall represent a broad variety of interests in Otsego County to include but not limited to those banking and financial services, medical, manufacturing, independent business owners and education. Further information regarding the Facility's operation is presented in a separately issued College report. Component Unit and Enterprise Fund with Different Fiscal Year Ends The financial information presented in this report is for the year ended December 31, 2024, except for the following component unit and enterprise fund: Fund Fund Presentation Fiscal Year End Commission on Aging Component Unit September 30, 2024 Bus System Enterprise Fund September 30, 2024 B. Government-wide and Fund Financial Statements The government-wide financial statements the statement of net position and the statement of activities) 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, normally 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: charges to customers or applicants who purchase, use, or directly benefit from goods, services, or privileges provided by a given function or segment; and 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 revenue. Separate financial statements are provided for governmental funds, proprietary funds and fiduciary funds, even though the latter are excluded from the government-wide financial statements. Major individual governmental funds and major individual enterprise funds are reported as separate columns in the fund financial statements. 31 ---PAGE BREAK--- COUNTY OF OTSEGO, MICHIGAN Notes to the Financial Statements Year Ended December 31, 2024 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) C. Measurement Focus, Basis of Accounting, and Financial Statement Presentation 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 statements. Revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of the 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. Agency funds, a type of fiduciary fund, are unlike all other types of funds, reporting only assets and liabilities. Therefore, agency funds cannot be said to have a measurement focus. They do, however, use the accrual basis of accounting to recognize receivables and payables. 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. A 60-day availability period is used for revenue recognition for all governmental fund revenues, except for expenditure-driven grants, which must be collected within one year, and property taxes. Property taxes for the County, levied and payable within the current fiscal year, are fully recognized inasmuch as any uncollected taxes are settled with the Delinquent Tax Revolving fund not later than March 1 of the following fiscal year. While this schedule exceeds the normal availability period for property taxes of 60 days, management believes that fully recognizing property taxes in the year they are intended to finance better reflects the matching concept of generally accepted accounting principles. 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, intergovernmental revenue, licenses, and interest associated with the current fiscal period are all considered to be susceptible to accrual and as such 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. Under the terms of grant agreements, the County funds certain programs by a combination of specific cost- reimbursement grants, categorical block grants, and general revenues. Thus, when program expenses are incurred, there are both restricted and unrestricted net position available to finance the program. It is the County’s policy to first apply cost-reimbursement grant resources to such programs, followed by categorical block grants, and then by general revenues. The 2024 taxable valuation of the County of Otsego totaled $1,539,855,162, on which ad valorem taxes levied consisted of 4.0214 mills for General Operations, 0.2978 mills for Animal Control Operations, 0.9929 mills for Commission on Aging, 0.7800 mills for EMS Operations, 0.5957 mills for Transportation authority, 0.2500 mills for Park and Recreation Operations, 0.9929 mills for County Roads, 0.3971 mills for the Library Operations, 0.2500 mills for County Recycling Operations, 0.2482 mills for Operations, and 0.9730 mills for M- Tec/UC Center of Gaylord Operations. These amounts are recognized in the respective General, Special Revenue, Debt Service, Component Units and Enterprise Fund financial statements as tax revenue, with the exception of the M-Tec/UC Center of Gaylord levy as this is run through the agency funds. 32 ---PAGE BREAK--- COUNTY OF OTSEGO, MICHIGAN Notes to the Financial Statements Year Ended December 31, 2024 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) The County reports the following major governmental funds: General Fund This is the County’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 Housing Commission Fund This fund accounts for grant revenue and contributions restricted for the improvement of housing within the county. The Library Fund This fund accounts for grant revenue, taxes, charges for service, and contributions restricted for the maintenance and operations of library operations run by the County. The American Rescue Plan Act Fund This fund accounts for the receipt of the American Rescue Plan Act (ARPA) funds. The Animal Control Fund This fund accounts for taxes, charges for services, and interest and rentals restricted for the use of animal control. The county reports the following major proprietary funds: The Delinquent Tax Revolving Fund This fund accounts for the purchase of and subsequent collection of delinquent taxes. The Airport Fund This fund accounts for the financial activity of the Gaylord Regional Airport. The Bus System Fund This fund accounts for the operation of the public transit system. Additionally, the County reports the following fund types: Special Revenue Funds The special revenue funds account for revenue sources that are legally restricted to expenditures for specific purposes (not including major capital projects). Capital Project Fund The capital project fund is used to account for the acquisition or construction of major capital facilities (other than those financed by proprietary funds). Enterprise Funds These funds account for the County’s business-type operations that provide services to residents of the County for a fee. Internal Service Funds These funds account for operations that provide building and ground services, administration, and health insurance to other departments of the County on a cost-reimbursement basis. 33 ---PAGE BREAK--- COUNTY OF OTSEGO, MICHIGAN Notes to the Financial Statements Year Ended December 31, 2024 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Agency Funds Agency Funds are used to account for assets held by the County as an agent for individuals, private organizations, other governments, and/or other funds. Agency Funds are custodial in nature (assets equal liabilities) and do not involve measurement of results of operations. As a general rule, the effect of interfund activity has been eliminated from the government-wide financial statements. Exceptions to this general rule are charges between the government’s tax collection function and various other functions of the government. Elimination of these charges would distort the direct costs and program revenues reported for the various functions concerned. Amounts reported as program revenue include: charges to customers or applicants for goods, services or privileges provided; operating grants and contributions; and capital grants and contributions, including special assessments. Internally dedicated resources are reported as general revenue rather than as program revenue. Likewise, general revenue includes all taxes. Proprietary funds distinguish operating revenue and expenses from nonoperating items. Operating revenue and expenses generally result from providing services in connection with a proprietary fund’s principal ongoing operations. The principal operating revenue of our proprietary funds relate to charges to customers for tax collections. Operating expenses for proprietary funds include the cost of sales and services, and administrative expenses. All revenue and expenses not meeting this definition are reported as nonoperating revenue and expenses. D. Assets, Liabilities, Deferred Outflows/Inflows of Resources and Net Position/Fund Balance Bank Deposits and Investments – Deposits and investments are considered to be cash on hand, demand deposits, and short-term investments with a maturity of three months or less when acquired. Investments are stated at fair value. Pooled investment income from all funds is allocated to each fund based on the average cash balances. Deposits are recorded at cost. Receivables and Payables – In general, outstanding balances between funds are reported as “due to/from other funds.” Activity between funds that is representative of lending/borrowing arrangements outstanding at the end of the fiscal year is referred to as “advances to/from other funds. Any residual balances outstanding between the governmental activities and the business-type activities are reported in the government-wide financial statements as “internal balances.” All trade and property tax receivables are shown as net of allowance for uncollectible amounts. Property taxes are levied on each December 1st and July 1st on the taxable valuation of property as of the preceding December 31st. Taxes are considered delinquent on March 1st of the following year, at which time penalties and interest are assessed. The accounts receivable for the Ambulance Corporation component unit is presented net of allowance for doubtful accounts of $319,000. Inventories and Prepaid Items – All inventories, including the cost of supplies, are expensed when purchased. Certain payments to vendors reflect costs applicable to future fiscal years and are recorded as prepaid items in both government-wide and fund financial statements. Leases (Lessee) – The lease liability is measured at the present value of the payments expected to be made during the lease term and subsequent extensions, if they are reasonably certain to be exercised. The lease liability is subsequently reduced by the principal portion of the lease payments. 34 ---PAGE BREAK--- COUNTY OF OTSEGO, MICHIGAN Notes to the Financial Statements Year Ended December 31, 2024 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Lease assets are recorded at the amount of the initial measurement of the lease liabilities and modified by any prepayments made at or before the commencement of the lease, less any lease incentives received from the lessor. Lease assets are amortized using the straight-line method over the shorter of the useful life of the underlying asset or the lease term, unless the lease contains an option to purchase the underlying asset at the end of the term. The useful life will be used to amortize the lease if a purchase option is present, and it is reasonably certain the entity will exercise that option. Key estimates and judgments related to leases include the discount rate used to discount the expected lease payments to present value, the lease term, and lease payments. The County uses the interest rate charged by the lessor as the discount rate, when available. When this rate is not provided, the County generally uses the estimated incremental borrowing rate. The lease term is the non-cancellable period if the lease, which is the initial term of the lease and any options to extend if they are reasonably certain to be exercised. Payments included in the measurement of the lease liability are composed of fixed payments and purchase option prices that are reasonably certain to be exercised. The County monitors changes in circumstances that would require a remeasurement of its leases and will remeasure the lease asset and liability if changes occur that are anticipated to significantly affect the amount of the lease asset and liability. The County does not currently have any items that require reporting in this category. Leases (Lessor) – The County recognizes leases receivable and deferred inflows related to lease items in the financial statements. Variable payments based on the future performance of the lessee are not included in the measurement of the lease receivable. At the commencement of a lease, the lease receivable is measured at the present value of payments expected to be received during the lease term. Subsequently, the lease receivable is reduced by the principal portion of lease payments received. The deferred inflows of resources are measured as the initial amount of the lease receivable and is subsequently adjusted for lease payments received at or before the commencement of the lease. Deferred inflows of resources related to lease items are recognized as revenue over the lease term in a systematic and rational method. Key estimates and judgments related to lease receivables and deferred inflows include the discount rate used to discount the expected lease payments to present value and the lease term. The County uses its estimated incremental borrowing rate as the lease discount rate. The lease term is the non- cancellable period of the lease, which is the initial term of the lease and any options to extend if they are reasonably certain to be exercised. Payments included in the measurement of the lease receivable are composed of fixed payments expected to be received from the lessee. The County monitors changes in circumstances that would require a remeasurement of its leases and will remeasure the lease receivable if changes occur that are anticipated to significantly affect the amount of the lease receivable. The County does have items that qualify for reporting in this category. Capital Assets – Capital assets, which include property, plant and equipment, are reported in the applicable governmental or business-type activities column in the government-wide financial statements. Capital assets are defined by the government as assets with an initial individual cost of more than $5,000 and an estimated useful life in excess of two years. 35 ---PAGE BREAK--- COUNTY OF OTSEGO, MICHIGAN Notes to the Financial Statements Year Ended December 31, 2024 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) 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. Property, plant, and equipment are depreciated using the straight-line method over the following useful lives: Buildings 20-40 years Furniture and fixtures 3-10 years Vehicles 3-7 years Equipment 3-12 years Infrastructure 20 years Vested Employee Benefits Payable – County General Employees - It is the County's policy to permit employees to accumulate earned but unused sick pay for the library employees and vacation pay benefits for all of the employees with certain limitations which vary among employee classification. Vacation and sick pay are accrued when incurred in the government-wide and proprietary fund financial statements. A liability for compensated absences is recorded as incurred in the government- wide and enterprise fund financial statements of net position, using the first-in, first-out flow assumption, where the oldest accumulated leave is the leave first used. A liability for compensated absences is recorded in the governmental funds only if the liability has matured because of resignations or retirements. The liability for compensated absences includes salary-related benefits, where applicable. 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, business-type activities, or proprietary fund type statement of net position. Bond premiums and discounts, are deferred and amortized over the life of the bonds using the straight-line basis. Bonds payable are reported net of the applicable bond premium or discount. Bond issuance costs are reported as expense when incurred. In the fund financial statements, governmental fund types recognize bond premiums and discounts, as well as bond issuance costs, during the current period. The face amount of debt issued is reported as other financing sources. Premiums received on debt issuances are reported as other financing sources while discounts on debt issuances are reported as other financing uses. Issuance costs, whether or not withheld from the actual debt proceeds received, are reported as debt service expenditures. Deferred Outflows of Resources – In addition to assets, the statement of net position will sometimes report a separate section for deferred outflows of resources. This separate financial statement element, deferred outflows of resources, represents a consumption of net position that applies to future period(s) and so will not be recognized as an outflow of resources (expense/expenditure) until then. The government has pension items that qualify for reporting in this category. Deferred Inflows of Resources – In addition to liabilities, the statement of net position and governmental funds balance sheet will sometimes report a separate section for deferred inflows of resources. This separate financial statement element, deferred inflows of resources, represents an acquisition of net position that applies to a future period(s) and so will not be recognized as an inflow of resources (revenue) until that time. The government has lease, pension items and taxes levied for a subsequent period that qualify for reporting in this category. 36 ---PAGE BREAK--- COUNTY OF OTSEGO, MICHIGAN Notes to the Financial Statements Year Ended December 31, 2024 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Pensions and OPEB – For purposes of measuring the net pension liability, OPEB obligation, deferred outflows of resources and deferred inflows of resources, and expense information about the fiduciary net position of the Plans and additions to/deductions from the fiduciary net position have been determined on the same basis as they are reported. For this purpose, benefit payments (including refunds of employee contributions) are recognized when due and payable in accordance with the benefit terms. Investments are reported at fair value. Fund Balance Classification – The governmental fund financial statements present fund balances based on classifications that comprise a hierarchy that is based primarily on the extent to which the County is bound to honor constraints on the specific purposes for which amounts in the respective governmental funds can be spent. The classifications used in the governmental fund financial statements are as follows: Nonspendable: This classification includes amounts that cannot be spent because they are either not in spendable form or are legally or contractually required to be maintained intact. The County has classified Prepaid Items and Inventory as being Nonspendable as these items are not expected to be converted to cash within the next year. Restricted: This classification includes amounts for which constraints have been placed on the use of the resources either externally imposed by creditors (such as through a debt covenant), grantors, contributors, or laws or regulations of other governments, or imposed by law through constitutional provisions or enabling legislation. Committed: This classification includes amounts that can be used only for specific purposes pursuant to constraints imposed by formal action of the County. These amounts cannot be used for any other purpose unless the County removes or changes the specified use by taking the same type of action that was employed when the funds were initially committed. This classification also includes contractual obligations to the extent that existing resources have been specifically committed for use in satisfying those contractual requirements. Assigned: This classification includes amounts that are constrained by the County’s intent to be used for a specific purpose but are neither restricted nor committed. This intent can be expressed by the County through the budgetary process. This classification also includes the remaining positive fund balance for all governmental funds except for the general fund. Unassigned: This classification includes the residual fund balance for the general fund. The unassigned classification also includes negative residual fund balance of any other governmental fund that cannot be eliminated by offsetting of Assigned fund balance amounts. The County would typically use Restricted fund balances first, followed by Committed resources, and then Assigned resources, as appropriate opportunities arise, but reserves the right to selectively spend Unassigned resources first to defer the use of these other classified funds. Unearned Revenues – Unearned revenues are those where asset recognition criteria have been met, but for which revenue recognition criteria have not. 37 ---PAGE BREAK--- COUNTY OF OTSEGO, MICHIGAN Notes to the Financial Statements Year Ended December 31, 2024 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Interfund Transfers – During the course of normal operations, the County has numerous transactions between funds, including expenditures and transfers of resources to provide services, construct assets, and service debt. The accompanying financial statements generally reflect such transactions as operating transfers. The classification of amounts recorded as subsidies, advances, or equity contributions is determined by County management. Use of Estimates – The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets, outflows, liabilities and inflows and disclosure of contingent assets and liabilities at the date of the reporting period. Actual results could differ from those estimates. Significant estimates of the County include management's estimate of the useful lives of depreciable capital assets, management’s estimate of the accrued compensated absences, management’s estimate of the allowance for uncollectible receivable balances and the assumptions used in the actuarial valuations of the pension and other postemployment benefit plans. The County utilizes various investment instruments which are exposed to various risks, such as interest rate, credit and overall market volatility. Due to the level of risk associated with certain investment securities, it is reasonably possible that changes in the values of investment securities will occur in the near term and that such changes could materially affect the amounts reported in the financial statements. Grants and other Intergovernmental Revenues - Federal grants and assistance awards for all governmental type funds are recorded as federal sources in accordance with the terms of the representative grants. Budget Stabilization Arrangement - The Otsego County Board of Commissioners has established a Budget Stabilization arrangement for the following purposes: to preserve current levels of services provided by the County's general fund, to cover potential general fund deficits, to cover potential expenses arising due to a natural disaster, and to assist with the County's cash flow during the fiscal year, in accordance with Public Act 30 of 1978. The Board appropriates funds as available and as deemed necessary during the budget process. Assigned fund balance of the general fund includes $1,064,619 related to this stabilization arrangement. 2. STEWARSHIP, COMPLIANCE AND ACCOUNTABILITY Budgetary Information – Annual budgets are adopted on a basis consistent with U.S. generally accepted accounting principles. Budgets and Budgetary Control – The County follows these procedures in establishing the budgetary data reflected in the financial statements: a. Each December, after receiving input from the individual departments, Administration and the County Budget and Finance Committee prepare a proposed operating budget for the fiscal period commencing January 1st and lapses on December 31st. The operating budget includes proposed expenditures and the means of financing them. b. Public hearings are conducted to obtain taxpayer comments. c. Prior to January 1, the budget is legally enacted through a resolution passed by the Board of Commissioners. d. Budgetary control is exercised at the departmental level of the general fund and Special Revenue Funds. Any revisions that alter the total expenditures of any department or fund budget amendments) require approval by the Board of Commissioners. Such amendments are made in accordance with the procedures prescribed under Public Act 621 of 1978. 38 ---PAGE BREAK--- COUNTY OF OTSEGO, MICHIGAN Notes to the Financial Statements Year Ended December 31, 2024 2. STEWARSHIP, COMPLIANCE AND ACCOUNTABILITY (continued) e. The budget and approved appropriations lapse at the end of the fiscal year. f. The County does not record encumbrances in the accounting records during the year as normal practice and, therefore, no outstanding encumbrances exist at year end. Budgeted amounts are as originally adopted or amended by the Board of Commissioners during the year. Individual amendments were not material in relation to the original appropriations which were amended. The modified accrual basis of accounting is used for budgetary purposes. The general fund revenue budget was adopted on the basis of activities or programs financed by the general fund. Michigan Public Act 621 of 1978 (the Budgeting Act) requires that budgets be adopted for Governmental Funds. U.S. generally accepted accounting principles require that the financial statements present budgetary comparisons for the Governmental Fund Types for which budgets were legally adopted. The original budget adopted for the general fund was modified throughout the year through various budget amendments. The budget document presents information by fund, function, department and line items. The legal level of budgetary control adopted by the governing body is the department level. 3. DEPOSITS AND INVESTMENTS At year end, the County’s deposits and investments were reported in the basic financial statements in the following categories: Governmental Business-type Total Primary Fiduciary Component Activities Activities Government Funds Units Cash, equivalents, and investments 25,832,988 $ 9,451,270 $ 35,284,258 $ 1,481,817 $ 15,061,607 $ Total 25,832,988 $ 9,451,270 $ 35,284,258 $ 1,481,817 $ 15,061,607 $ The breakdown between deposits and investments is as follows: Primary Fiduciary Component Government Funds Units Bank Deposits (checking and savings accounts, and money markets) 16,747,959 $ 1,481,817 $ 11,490,648 $ Investments 18,486,809 - 3,570,059 Petty cash and cash on hand 49,490 - 900 Total 35,284,258 $ 1,481,817 $ 15,061,607 $ 39 ---PAGE BREAK--- COUNTY OF OTSEGO, MICHIGAN Notes to the Financial Statements Year Ended December 31, 2024 3. DEPOSITS AND INVESTMENTS (continued) More than Fair Value < 1 year 1 - 5 years 6 - 10 years 10 years Investments: Certificate of Deposit's (CD's) 4,088,939 $ 4,088,939 $ - $ - $ - $ Governmental Fixed Income 17,967,929 252,112 711,939 - 17,003,878 Total Investments 22,056,868 $ 4,341,051 $ 711,939 $ - $ 17,003,878 $ Maturities in Years Interest rate risk. The 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. Credit risk. State law limits investments in commercial paper, corporate bonds, and mutual bond funds to the top two ratings issued by nationally recognized statistical rating organizations. The County has no investment policy that would further limit its investment choices. The County had investments in the following funds at December 31, 2024: Ticker/CUSIP S&P Rating multiple AAA+ N/A N/A Fund Name CD's Governmental Fixed Income Custodial credit risk. Investment, custodial credit risk is the risk that in the event of the failure of the counterparty, the County will not be able to recover the value of its investments or securities that are in the possession of an outside party. Custodial deposit credit risk. Custodial deposit credit risk is the risk that in the event of a bank failure, the County’s deposits may not be returned. State law does not require and the County does not have a policy for deposit custodial credit risk. As of year-end, $15,834,011 of the County’s bank balance of $17,602,600 was exposed to credit risk because it was uninsured and uncollateralized. Money market accounts are not rated investments and are not subject to custodial credit risk. Fair value measurement. The County categorizes its fair value measurements within the fair value hierarchy established by generally accepted accounting principles. The hierarchy is based on the valuation inputs used to measure the fair value of the asset. Level 1 inputs are quoted prices in active markets for identical assets; Level 2 inputs are significant other observable inputs; Level 3 inputs are significant unobservable inputs. Investments that are measured at fair value using the net asset value per share (or equivalent) as a practical expedient are not classified in the fair value hierarchy below. In instances where inputs used to measure fair value fall into different levels in the above fair value hierarchy, fair value measurements in their entirety are categorized based on the lowest level input that is significant to the measurements required judgment and considers factors specific to each asset or liability. 40 ---PAGE BREAK--- COUNTY OF OTSEGO, MICHIGAN Notes to the Financial Statements Year Ended December 31, 2024 3. DEPOSITS AND INVESTMENTS (continued) The County has the following fair value measurements as of December 31, 2024: Total Level 1 Level 2 Level 3 Governmental Fixed Income 17,967,929 $ - $ 17,967,929 $ - $ Total 17,967,929 $ - $ 17,967,929 $ - $ *CD’s are exempt from classification in the fair value hierarchy. Statutory Authority: An act (PA 152) to amend 1943 PA 20, entitled “An act relative to the investment of funds of public corporations of the state; and to validate certain investments,” by amending section 1 (MCL 129.91), as amended by 2009 PA 21. Except as provided in section 5, the governing body by resolution may authorize its investment officer to invest the funds of that public corporation in one or more of the following: a. Bonds, securities, and other obligations of the United States or an agency or instrumentality of the United States. b. Certificates of deposit, savings accounts, or depository receipts of a financial institution, but only if the financial institution complies with subsection certificates of deposit obtained through a financial institution as provided in subsection or deposit accounts of a financial institution as provided in subsection c. Commercial paper rated at the time of purchase within the two highest classifications established by not less than two standard rating services and matures not more than 270 days after the date of purchase. d. Repurchase agreements consisting of instruments listed in subdivision e. Bankers’ acceptances of United States banks. f. Obligations of this state or any of its political subdivisions that at the time of purchase are rated as investment grade by not less than one standard rating service. g. Mutual funds registered under the investment company act of 1940, 15 USC 80a-1 to 80a-64, with authority to purchase only investment vehicles that are legal for direct investment by a public corporation. However, a mutual fund is not disqualified as a permissible investment solely by reason of any of the following: i) The purchase of securities on a when-issued or delayed delivery basis. ii) The ability to lend portfolio securities as long as the mutual fund receives collateral at all times equal to at least 100% of the value of the securities loaned. iii) The limited ability to borrow and pledge a like portion of the portfolio’s assets for temporary or emergency purposes. h. Obligations described in subdivisions through if purchased through an interlocal agreement under the urban cooperation act of 1967, 1967 (Ex Sess) PA 7, MCL 124.501 to 124.512. i. Investment pools organized under the surplus funds investment pool act, 1982 PA 367, MCL 129.111 to 129.118. j. The investment pools organized under the local government investment pool act, 1985 PA 121, MCL 129.141 to 129.150. The County’s deposits and investment policy are in accordance with statutory authority. These deposits are in various financial institutions in varying amounts. All accounts are in the name of the County and specific funds. They are recorded in County records at cost. Interest is recorded when the deposits mature or is credited to the applicable account. 41 ---PAGE BREAK--- COUNTY OF OTSEGO, MICHIGAN Notes to the Financial Statements Year Ended December 31, 2024 4. LEASE RECEIVABLE The County is the lessor of communications towers to multiple organizations. These lease agreements are non- cancelable operating leases with fixed minimum rentals and non-cancelable operating use and lease agreements. The initial lease receivable and deferred inflow of resources related to leases was calculated at $250,695 as of January 1, 2022. 01/01/24 Increases Decreases 12/31/24 Lease receivable 238,898 $ - $ (6,189) $ 232,709 $ The subsequent payments made to the County relating to the assets leased by other organizations are as follows: Year Principal Interest Total 2025 6,391 $ 7,534 $ 13,925 $ 2026 6,600 7,326 13,926 2027 6,816 7,110 13,926 2028 7,038 6,888 13,926 2029 7,268 6,658 13,926 2030-2034 40,056 29,571 69,627 2035-2039 47,037 22,591 69,628 2040-2044 30,210 15,376 45,586 2045-2049 19,831 11,669 31,500 2050-2054 23,325 8,175 31,500 2055-2059 27,434 4,065 31,499 2060-2061 10,703 322 11,025 Totals 232,709 $ 127,285 $ 359,994 $ 42 ---PAGE BREAK--- COUNTY OF OTSEGO, MICHIGAN Notes to the Financial Statements Year Ended December 31, 2024 5. CAPITAL ASSETS Capital asset activity for the primary government for the current year was as follows: Beginning Adjustments/ Ending Balance Additions Deductions Balance Governmental Activities Capital assets not being depreciated: Land 2,986,892 $ 26,047 $ - $ 3,012,939 $ Construction in progress 17,705 287,473 - 305,178 3,004,597 313,520 - 3,318,117 Capital assets being depreciated Buildings 22,682,727 88,705 - 22,771,432 Leasehold improvements 24,854 - - 24,854 Furniture and fixtures 895,452 - - 895,452 Equipment: Data handling 2,272,534 - - 2,272,534 Other equipment 2,936,240 494,658 - 3,430,898 Vehicles 2,715,182 200,218 - 2,915,400 Infrastructure 51,530 - - 51,530 31,578,519 783,581 - 32,362,100 Less accumulated depreciation Buildings (14,501,279) (592,360) - (15,093,639) Leasehold improvements (24,854) - - (24,854) Furniture and fixtures (895,452) - - (895,452) Equipment: Data handling (2,096,930) (66,559) - (2,163,489) Other equipment (1,581,987) (147,017) - (1,729,004) Vehicles (2,290,399) (208,172) - (2,498,571) Infrastructure (30,284) (2,156) - (32,440) (21,421,185) (1,016,264) - (22,437,449) Total capital assets being depreciated/amortized, net 10,157,334 (232,683) - 9,924,651 Governmental activities capital assets, net 13,161,931 $ 80,837 $ - $ 13,242,768 $ 43 ---PAGE BREAK--- COUNTY OF OTSEGO, MICHIGAN Notes to the Financial Statements Year Ended December 31, 2024 5. CAPITAL ASSETS (continued) Depreciation expense was charged to programs of the primary government as follows: Governmental activities: General government 339,095 $ Judicial 22,019 Public safety 325,277 Recreation and culture 329,873 Total governmental activities 1,016,264 $ Beginning Ending Balance Additions Disposals Balance Business-type activities Capital assets not being depreciated: Land 99,998 $ - $ - $ 99,998 $ Construction in progress - 18,022 - 18,022 99,998 18,022 - 118,020 Capital assets being depreciated: Buildings 2,746,134 102,002 - 2,848,136 Furniture and fixtures 6,000 - - 6,000 Vehicles 2,938,994 198,425 (432,073) 2,705,346 Equipment 392,219 - - 392,219 Infrastructure 12,779,602 - - 12,779,602 18,862,949 300,427 (432,073) 18,731,303 Less accumulated depreciation for: Buildings (1,973,867) (76,727) - (2,050,594) Furniture and fixtures (6,000) - - (6,000) Vehicles (1,859,004) (284,138) 432,073 (1,711,069) Equipment (382,492) (4,910) - (387,402) Infrastructure (10,616,968) (500,836) - (11,117,804) (14,838,331) (866,611) 432,073 (15,272,869) Net capital assets being depreciated 4,024,618 (566,184) - 3,458,434 Capital assets - net 4,124,616 $ (548,162) $ - $ 3,576,454 $ Depreciation expense was charged the business-type activities as follows: Business-type activities: Bus system 9/30/2024 295,136 $ Airport 571,475 Total business- type activities 866,611 $ 44 ---PAGE BREAK--- COUNTY OF OTSEGO, MICHIGAN Notes to the Financial Statements Year Ended December 31, 2024 5. CAPITAL ASSETS (continued) OTSEGO COUNTY AMBULANCE CORPORATION – COMPONENT UNIT Capital asset activity of the Otsego County Ambulance Corporation for the current year was as follows: Beginning Ending Balance Additions Disposals Balance Capital assets being depreciated: Buildings 1,600,544 $ - $ - $ 1,600,544 $ Other equipment 1,294,616 91,788 - 1,386,404 Vehicles 2,725,780 33,824 - 2,759,604 5,620,940 125,612 - 5,746,552 Less accumulated depreciation for: Buildings (1,005,176) (35,022) - (1,040,198) Other equipment (866,047) (116,925) - (982,972) Vehicles (2,343,624) (114,907) - (2,458,531) (4,214,847) (266,854) - (4,481,701) Net capital assets being depreciated 1,406,093 (141,242) - 1,264,851 Total net capital assets 1,406,093 $ (141,242) $ - $ 1,264,851 $ 45 ---PAGE BREAK--- COUNTY OF OTSEGO, MICHIGAN Notes to the Financial Statements Year Ended December 31, 2024 5. CAPITAL ASSETS (continued) OTSEGO COUNTY ROAD COMMISSION – COMPONENT UNIT Capital asset activity of the Otsego County Road Commission for the current year was as follows: Beginning Ending Balance Additions Disposals Balance Capital assets not being depreciated: Land 125,501 $ - $ - $ 125,501 $ Land improvements - infrastructure 13,398,340 - - 13,398,340 13,523,841 - - 13,523,841 Capital assets being depreciated: Buildings 4,305,731 - - 4,305,731 Road equipment 9,657,015 553,785 - 10,210,800 Shop equipment 97,486 - - 97,486 Office equipment 46,844 - - 46,844 Engineers' equipment 8,583 - - 8,583 Yard and storage equipment 1,800 - - 1,800 Traffic signals 49,557 - - 49,557 Infrastructure - bridges 1,446,834 - - 1,446,834 Infrastructure - roads 43,061,625 6,529,769 - 49,591,394 58,675,475 7,083,554 - 65,759,029 Less accumulated depreciation for: Buildings (2,445,321) (123,322) - (2,568,643) Road equipment (8,358,424) (501,061) - (8,859,485) Shop equipment (95,037) (644) - (95,681) Office equipment (46,388) (456) - (46,844) Engineers' equipment (8,583) - - (8,583) Yard and storage equipment (1,800) - - (1,800) Traffic signals (47,316) (293) - (47,609) Infrastructure - bridges (495,840) (36,237) - (532,077) Infrastructure - roads (18,417,709) (1,868,376) - (20,286,085) (29,916,418) (2,530,389) - (32,446,807) Net capital assets being depreciated 28,759,057 4,553,165 - 33,312,222 Capital assets - net 42,282,898 $ 4,553,165 $ - $ 46,836,063 $ 46 ---PAGE BREAK--- COUNTY OF OTSEGO, MICHIGAN Notes to the Financial Statements Year Ended December 31, 2024 5. CAPITAL ASSETS (continued) OTSEGO COUNTY COMMISSION ON AGING – COMPONENT UNIT- 9/30/2024 Capital asset activity of the Otsego County Commission on Aging for the current year was as follows: Beginning Ending Balance Additions Disposals Balance Capital assets being depreciated: Leasehold improvements* & equipment 2,784,303 $ 25,674 $ - $ 2,809,977 $ Less accumulated depreciation (93,247) (77,981) - (171,228) Net capital assets 2,691,056 $ (52,307) $ - $ 2,638,749 $ * This amount includes a long-term capital lease obligation 6. RECEIVABLES Governmental Business-type Component Activities Activities Units Taxes 2,377,559 $ 653,743 $ 1,702,399 $ Accounts 188,741 150,085 4,250,403 Less: Allowance for uncollectible accounts - - (319,000) Due from other governments 1,052,466 77,245 - Loans 1,220,248 - - Interest - 80,651 - 4,839,014 $ 961,724 $ 5,633,802 $ 7. INTERFUND RECEIVABLES, PAYABLES, & TRANSFERS The composition of interfund balances as of December 31, 2024, was as follows: These balances resulted from the time lag between the dates that interfund goods and services are provided or reimbursable expenditures occur, transactions are recorded in the accounting system, and payments between funds are made. 47 ---PAGE BREAK--- COUNTY OF OTSEGO, MICHIGAN Notes to the Financial Statements Year Ended December 31, 2024 7. INTERFUND RECEIVABLES, PAYABLES, & TRANSFERS (continued) Transfers In Transfers Out General fund 3,254,569 $ 694,657 $ Housing commission 94,705 94,705 ARPA - 3,124,470 Nonmajor governmental funds 794,989 231,431 Nonmajor enterprise funds 11,000 - Internal service funds - 10,000 4,155,263 $ 4,155,263 $ Transfers are used to: move revenues from the fund that is required to collect them to the fund that is required or allowed to expend them; move receipts restricted to or allowed for debt service from the funds collecting the receipts to the debt service fund as debt service payments become due; and use unrestricted revenues collected in the general fund to finance various programs accounted for in other funds in accordance with budgetary authorizations. The ARPA funds were transferred to the general fund to cover allowable payroll costs. The County reports interfund balances between many of its funds. Some of the balances are considered immaterial and are aggregated into a single column or row. The total of all balances agrees with the sum of interfund balances presented in the statements of net position/balance sheet for governmental funds, proprietary funds, and fiduciary funds. 8. LONG-TERM DEBT Long-term liability activity for the year ended December 31, 2024, was as follows: Due Interest Principal Beginning Ending Within Governmental Activities: Rate Matures Balance Increases Decreases Balance One Year Otsego County Installment Note 2022 GMC Acadia 2.0-6.05% 2027 21,877 $ - $ (6,869) $ 15,008 $ 7,284 $ Accrued Compensated Absences* 266,013 296,920 - 562,933 562,933 Total Governmental Activities Debt 287,890 $ 296,920 $ (6,869) $ 577,941 $ 570,217 $ * The change in compensated absences above is a net change for the year. Annual debt service requirements to maturity for the above obligations are as follows: Year End December, 31 Principal Interest 2025 7,284 $ 908 $ 2026 7,724 467 Total 15,008 1,375 Installments Payable 48 ---PAGE BREAK--- COUNTY OF OTSEGO, MICHIGAN Notes to the Financial Statements Year Ended December 31, 2024 8. LONG-TERM DEBT (continued) Vested Employee Benefits – Governmental Activities Substantially all County employees are entitled to certain vacation and sick pay benefits that accrue and vest under various parameters including individual labor contracts. Accrued benefits for all governmental fund types are reported as long-term debt. OTSEGO COUNTY ROAD COMMISSION – COMPONENT UNIT The long-term debt of the Road Commission is summarized as follows: Beginning Net Ending Due Within Balance Change Balance One Year Vested employee benefits* 253,995 $ (27,530) $ 226,465 $ - $ Total long-term debt 253,995 $ (27,530) $ 226,465 $ - $ * The change in compensated absences above is a net change for the year. 9. RISK MANAGEMENT Primary Government The County is exposed to risks of loss related to theft of, damage to, and destruction of assets; errors and omissions; injuries to employees; and natural disasters. The government manages its risk exposures and provides certain employee benefits through a combination of self-insurance programs, risk management pools and commercial insurance and excess coverage policies. The following is a summary of these self-insurance programs and risk management pool participation. The County participates in the Michigan Municipal Risk Management Authority (MMRMA) for general and automobile liability, motor vehicle physical damage, and property damage coverages. The MMRMA was established in January 1980, pursuant to laws of the State of Michigan, which authorize local units of government to jointly exercise any power, privilege or authority which each might exercise separately. The purpose of the Authority is to provide cooperative and comprehensive risk financing and risk control services. The MMRMA provides risk management, underwriting, reinsurance and claim review and processing services for all member governments pursuant to its charter. The County makes annual contributions to MMRMA based on actuarial studies using historical data and insurance industry statistics. These contributions are paid from the general fund using premiums paid into it by other funds of the government. Such contributions that are received by MMRMA are allocated between its general and member retention funds. Economic resources in the MMRMA's general fund are expended for reinsurance coverage, claim payments and certain general and administrative costs, whereas resources in the member retention funds are used for loss payments and defense costs up to the members' self-insurance retention limits along with certain other member-specific costs. Accordingly, because contributions to the member retention fund are essentially recognized as revenue by MMRMA to the extent of expenditures, the government records an asset and a related liability, equal to the loss reserves estimated by MMRMA, for its portion of the unexpended member retention fund in the Michigan Municipal Risk Agency Fund. At December 31, 2024, the balance of the County's member retention was $154,031. 49 ---PAGE BREAK--- COUNTY OF OTSEGO, MICHIGAN Notes to the Financial Statements Year Ended December 31, 2024 9. RISK MANAGEMENT (continued) 2024 2023 Estimated liability (assets), beginning of year 137,697 $ (102,394) $ Receipts 106,751 30,674 Claim payments (90,417) (157,181) Estimated liability (assets), end of year 154,031 $ (228,901) $ Fiscal Year Ended December 31, Liability 75,000 $ Vehicle Physical Damage $15,000 per vehicle $1,000 Member Deductible $30,000 per occurrence Property and crime $1,000 deductible per occurrence 10% of the next $100,000 Employee Benefits Commercial Insurance Provider Coverage Self-Insured Retention Workers' Compensation The County is a member of the Michigan Counties Workers' Compensation Fund. Full statutory coverage for workers' disability compensation and employers' liability is guaranteed by the fund for Michigan operations through authority granted by the State of Michigan under Chapter 6, Section 418.611, Paragraph of the Workers' Disability Compensation Act of 1969, as amended. At December 31, 2024 there were no claims that exceeded insurance coverage. The County had no significant reduction in insurance coverage from previous years. Component Unit - Road Commission The Road Commission is exposed to various risks of loss related to torts; theft of, damage to, and destruction of assets; errors and omissions; injuries to employees; and natural disasters. The Road Commission was unable to obtain general liability insurance at a cost it considered to be economically justifiable. The Road Commission joined together with other Road Commissions and created a public entity risk pool currently operating as a common risk management and insurance program. The Road Commission pays an annual premium to the pool for its general insurance coverage. The agreement provides that the pool will be self-sustaining through member premiums and will reinsure through commercial companies for claims in excess of $1,000 ($2,000 for errors and omissions) for each insured event. The maximum limit of liability for each occurrence is $10,500,000. The pooling agreement allows for the pool to make additional assessments to make the pool self- sustaining. The Road Commission is unable to provide an estimate of the amounts of additional assessments. The Road Commission from time to time is named as a defendant in accident claims and lawsuits requesting damages of various amounts, the majority of which do not state a specific maximum. Insurance coverage related to these claims and lawsuits, if any, is categorized under the general liability insurance program. It is the opinion of management and legal counsel that reasonable estimates of the Road Commission's current liability for these matters, if any, have been recorded. 50 ---PAGE BREAK--- COUNTY OF OTSEGO, MICHIGAN Notes to the Financial Statements Year Ended December 31, 2024 9. RISK MANAGEMENT (continued) There are non-accident liability and condemnation lawsuits sometimes pending against the Road Commission claiming amounts for damages and relief without stated limitations. It is the opinion of management and legal counsel that reasonable estimates of the Road Commission's current liability for these matters, if any, have been recorded. Component Unit - Ambulance Corporation The Ambulance Corporation is exposed to risks of loss related to theft of, damage to, and destruction of assets; errors and omissions; injuries to employees; and natural disasters. The Ambulance Corporation's general liability, property, and vehicle insurance is included in the County's plan. Additional vehicle insurance, health insurance, and workers' compensation is obtained through commercial insurance providers. At December 31, 2024, there were no claims that exceeded insurance coverage. The Ambulance Corporation did not have any significant reduction in insurance coverage from previous years. Component Unit - Commission on Aging The Commission on Aging has insurance coverage provided by independent insurance companies for property, general liability, fire, workers' compensation and employee bond coverage. The Commission on Aging liability is normally limited to the deductible. Component Unit - The is exposed to risks of loss related to theft of, damage to, and destruction of assets; errors and omissions; injuries to employees; and natural disasters. Health insurance and workers' compensation is obtained through commercial insurance providers. At December 31, 2024, there were no claims that exceeded insurance coverage. The did not have any significant reduction in insurance coverage from previous years. 10. TAX ABATEMENTS Industrial Facilities Exemption Municipalities within the County's boundaries entered into property tax abatement agreements with local businesses under the Plant Rehabilitation and Industrial Development Districts Act, known as the Industrial Facilities Exemption (IFT) PA 198 of 1974, as amended. The purpose of the exemption is to provide a tax incentive to manufacturers to enable renovation and expansion of aging facilities, assist in the building of new facilities, and to promote the establishment of high-tech facilities. IFT on such properties have resulted in an abatement of property taxes which reduced the property taxes collected by Otsego County and its component units as follows: City of Gaylord Tax Abatements: For the year ended December 31, 2024, Otsego County property taxes were reduced by $7,857 under this program. Bagley Township Tax Abatements: For the year ended December 31, 2024, Otsego County property taxes were reduced by $0 under this program. Corwith Township Tax Abatements: For the year ended December 31, 2024, Otsego County property taxes were reduced by $1,294 under this program. Livingston Township Tax Abatements: For the year ended December 31, 2024, Otsego County property taxes were reduced by $1,306 under this program. 51 ---PAGE BREAK--- COUNTY OF OTSEGO, MICHIGAN Notes to the Financial Statements Year Ended December 31, 2024 10. TAX ABATEMENTS (continued) Commercial Facilities Exemption Municipalities within the County's boundaries entered into property tax abatement agreements with local businesses under the Commercial Redevelopment Act, known as the Commercial Facilities Exemption (CFT) PA 255 of 1978, as amended. The purpose of the exemption is to provide a tax incentive to businesses to establish themselves in the designated commercial redevelopment district. CFT on such properties have resulted in an abatement of property taxes which reduced the property taxes collected by Otsego County and its component units as follows: City of Gaylord Tax Abatements: For the year ended December 31, 2024, Otsego County property taxes abated were an unavailable amount under this program. Brownfield Redevelopment Financing Municipalities within the County's boundaries entered into property tax abatement agreements with local businesses under the Brownfield Redevelopment Financing Act, PA 381 of 1996, as amended. The purpose of the exemption is to provide a tax incentive to businesses to establish themselves in a Brownfield Redevelopment Zone to promote the revitalization, redevelopment, and reuse of certain property that had been deemed obsolete due to blight, environmental matters, or being tax reverted. The cost to clean up the property to make it usable was initially paid for by the State of Michigan under the Brownfield provisions, creating a loan to be repaid over a 20-year period. Once the property sold, the owner's taxes were abated to be used toward loan repayment, which reduced the property taxes collected by Otsego County and its component units as follows: City of Gaylord Tax Abatements: For the year ended December 31, 2024, Otsego County property taxes that were abated were an unavailable amount under this program. 11. CONTINGENT LIABILITIES Amounts received or receivable from 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 County expects such amounts, if any, to be immaterial. 12. EMPLOYEE RETIREMENT AND BENEFIT SYSTEMS PRIMARY GOVERNMENT General Information about the Pension Plan Plan Description. The employer’s defined benefit pension plan provides certain retirement, disability and death benefits to plan members and beneficiaries. The employer participates in the Municipal Employees Retirement System (MERS) of Michigan. MERS is an agent multiple-employer, statewide public employee pension plan established by the Michigan Legislature under Public Act 135 of 1945 and administered by a nine-member Retirement Board. MERS issues a publicly available financial report that includes financial statements and required supplementary information. This report may be obtained accessing the MERS website at www.mersofmich.com. 52 ---PAGE BREAK--- COUNTY OF OTSEGO, MICHIGAN Notes to the Financial Statements Year Ended December 31, 2024 12. EMPLOYEE RETIREMENT AND BENEFIT SYSTEMS (continued) 2023 Valuation Benefit Multiplier: 2.25% Multiplier (80% max) Normal Retirement Age: 60 Vesting: 10 Years Early Retirement (Unreduced): - Early Retirement (Reduced): 50/25 55/15 Final Average Compensation: 5 years Employee Contributions: 2.00% DC Plan for New Hires: 1/1/2020 Act 88: No 2023 Valuation Benefit Multiplier: Frozen Benefit as of 3/1/2020 Normal Retirement Age: 60 Vesting: 10 Years Early Retirement (Unreduced): - Early Retirement (Reduced): 50/25 55/15 Final Average Compensation: 5 years Employee Contributions: 0.00% DC Plan for New Hires: 5/1/2020 Act 88: No 2023 Valuation Benefit Multiplier: Frozen Benefit as of 1/1/2020 Normal Retirement Age: 60 Vesting: 10 Years Early Retirement (Unreduced): - Early Retirement (Reduced): 50/25 55/15 Final Average Compensation: 5 years Employee Contributions: 0.00% DC Plan for New Hires: 1/1/2020 Act 88: No 01 - Gnrl Non Union: Closed to new hires 07 - All Library EEs: Closed to new hires 10 - Gnrl Local 214 Bus: Closed to new hires 53 ---PAGE BREAK--- COUNTY OF OTSEGO, MICHIGAN Notes to the Financial Statements Year Ended December 31, 2024 12. EMPLOYEE RETIREMENT AND BENEFIT SYSTEMS (continued) 2023 Valuation Benefit Multiplier: 2.25% Multiplier (80% max) Normal Retirement Age: 60 Vesting: 10 Years Early Retirement (Unreduced): - Early Retirement (Reduced): 50/25 55/15 Final Average Compensation: 5 years Employee Contributions: 2.00% DC Plan for New Hires: 3/1/2022 Act 88: No 2023 Valuation Benefit Multiplier: 2.50% Multiplier (80% max) Normal Retirement Age: 60 Vesting: 8 Years Early Retirement (Unreduced): 55/30 Early Retirement (Reduced): 50/25 55/15 Final Average Compensation: 5 years Employee Contributions: 2.00% DC Plan for New Hires: 1/1/2020 Act 88: No 2023 Valuation Benefit Multiplier: 2.50% Multiplier (80% max) Normal Retirement Age: 60 Vesting: 10 Years Early Retirement (Unreduced): - Early Retirement (Reduced): 50/25 55/15 Final Average Compensation: 5 years Employee Contributions: 2.00% DC Plan for New Hires: 1/1/2020 Act 88: No 11 - POAM: Closed to new hires, linked to Division HC 13 - Elected/Appt Spvs: Closed to new hires 14 - 46th Trial Court: Closed to new hires 54 ---PAGE BREAK--- COUNTY OF OTSEGO, MICHIGAN Notes to the Financial Statements Year Ended December 31, 2024 12. EMPLOYEE RETIREMENT AND BENEFIT SYSTEMS (continued) 2023 Valuation Benefit Multiplier: 2.50% Multiplier (80% max) Normal Retirement Age: 60 Vesting: 10 Years Early Retirement (Unreduced): 55/30 Early Retirement (Reduced): 50/25 55/15 Final Average Compensation: 5 years Employee Contributions: 2.00% DC Plan for New Hires: 1/1/2020 Act 88: No 2023 Valuation Benefit Multiplier: 2.50% Multiplier (80% max) Normal Retirement Age: 60 Vesting: 8 Years Early Retirement (Unreduced): 55/30 Early Retirement (Reduced): 50/25 55/15 Final Average Compensation: 5 years Employee Contributions: 0.00% DC Plan for New Hires: 1/1/2020 Act 88: No 2023 Valuation Benefit Multiplier: 2.50% Multiplier (80% max) Normal Retirement Age: 60 Vesting: 10 Years Early Retirement (Unreduced): 55/15 Early Retirement (Reduced): 50/25 Final Average Compensation: 5 years Employee Contributions: 0.00% Act 88: No 16 - Gnrl Local 214 Clerical: Closed to new hires 17 - 87-A Judge/FOC pre 9/1/14: Closed to new hires 20 - Sheriff Union: Closed to new hires, linked to Division HG 55 ---PAGE BREAK--- COUNTY OF OTSEGO, MICHIGAN Notes to the Financial Statements Year Ended December 31, 2024 12. EMPLOYEE RETIREMENT AND BENEFIT SYSTEMS (continued) 2023 Valuation Benefit Multiplier: 2.50% Multiplier (80% max) Normal Retirement Age: 60 Vesting: 10 Years Early Retirement (Unreduced): 55/15 Early Retirement (Reduced): 50/25 Final Average Compensation: 5 years Employee Contributions: 4.00% Act 88: No 2023 Valuation Benefit Multiplier: 1.25% Multiplier (no max) Normal Retirement Age: 60 Vesting: 6 Years Early Retirement (Unreduced): - Early Retirement (Reduced): - Final Average Compensation: 3 years Employee Contributions: 0.00% DC Plan for New Hires: 1/1/2020 Act 88: No 2023 Valuation Benefit Multiplier: 1.25% Multiplier (no max) Normal Retirement Age: 60 Vesting: 6 Years Early Retirement (Unreduced): - Early Retirement (Reduced): - Final Average Compensation: 3 years Employee Contributions: 0.00% DC Plan for New Hires: 1/1/2020 Act 88: No 21 - Sheriff Un New Hires after 6/1/10: Closed to new hires, Linked to Division HG HA - Elected Apptd Spvs after 1/1/09: Closed to new hires HB - General Non Union after 1/1/09: Closed to new hires 56 ---PAGE BREAK--- COUNTY OF OTSEGO, MICHIGAN Notes to the Financial Statements Year Ended December 31, 2024 12. EMPLOYEE RETIREMENT AND BENEFIT SYSTEMS (continued) 2023 Valuation Benefit Multiplier: 1.25% Multiplier (no max) Normal Retirement Age: 60 Vesting: 6 Years Early Retirement (Unreduced): - Early Retirement (Reduced): - Final Average Compensation: 3 years Employee Contributions: 0.00% DC Plan for New Hires: 3/1/2022 Act 88: No 2023 Valuation Benefit Multiplier: 1.25% Multiplier (no max) Normal Retirement Age: 60 Vesting: 6 Years Early Retirement (Unreduced): - Early Retirement (Reduced): - Final Average Compensation: 3 years Employee Contributions: 0.00% DC Plan for New Hires: 1/1/2020 Act 88: No 2023 Valuation Benefit Multiplier: 1.25% Multiplier (no max) Normal Retirement Age: 60 Vesting: 6 Years Early Retirement (Unreduced): - Early Retirement (Reduced): - Final Average Compensation: 3 years Employee Contributions: 0.00% DC Plan for New Hires: 1/1/2020 Act 88: No HC - POAM hired after 1/1/11: Open Division, linked to Division 11 HD - 46th Trial Ct hired after 6/1/11: Closed to new hires HE - Clerical Loc#214 after 1/1/2012: Closed to new hires 57 ---PAGE BREAK--- COUNTY OF OTSEGO, MICHIGAN Notes to the Financial Statements Year Ended December 31, 2024 12. EMPLOYEE RETIREMENT AND BENEFIT SYSTEMS (continued) 2023 Valuation Benefit Multiplier: Frozen Benefit as of 1/1/2020 Normal Retirement Age: 60 Vesting: 6 Years Early Retirement (Unreduced): - Early Retirement (Reduced): - Final Average Compensation: 3 years Employee Contributions: 0.00% DC Plan for New Hires: 1/1/2020 Act 88: No 2023 Valuation Benefit Multiplier: 1.50% Multiplier (no max) Normal Retirement Age: 60 Vesting: 6 Years Early Retirement (Unreduced): 55/25 Early Retirement (Reduced): - Final Average Compensation: 3 years Employee Contributions: 0.00% Act 88: No HG - All FT POLC on/after 1/1/16: Open Division, linked to Divisions 20, 21 HF - Bus hired after 1/1/2011: Closed to new hires Employees Covered by Benefit Terms At December 31, 2023, the following employees were covered by the benefit terms: Inactive employees or beneficiaries currently receiving benefits 124 Inactive employees entitled to but not yet receiving benefits 64 Active employees 66 254 58 ---PAGE BREAK--- COUNTY OF OTSEGO, MICHIGAN Notes to the Financial Statements Year Ended December 31, 2024 12. EMPLOYEE RETIREMENT AND BENEFIT SYSTEMS (continued) Funding Policy The obligation to contribute to and maintain the system for these employees was established by negotiation with the County’s competitive bargaining unit and personnel policy, which require employees to contribute to the plan. The County is required to contribute on a basis at an actuarially determined rate for each division follows: 01 9,839 $ 21 1,482 $ 07 163 $ 70 - $ 10 2,022 $ HA 5,856 $ 11 4,170 $ HB 949 $ 13 31,519 $ HC 962 $ 14 13,703 $ HD 1,329 $ 16 5,021 $ HE 1,464 $ 17 3,972 $ HF - $ 20 11,421 $ HG - $ Net Pension Liability The County’s net pension liability was measured as of December 31, 2023, and the total pension liability used to calculate the net pension liability was determined by an actuarial valuation as of that date. Actuarial Assumptions. The total pension liability in the December 31, 2023 actuarial valuation was determined using the following actuarial assumptions, applied to all periods included in the measurement: Inflation 2.50% Salary increases 3.00% in the long-term Investment rate of return 7.18%, net of investment and administrative expense including inflation Mortality rates used were based on the MP-2019 mortality tables applied fully generationally from the Pub-2010 base year of 2010. The actuarial assumptions used in valuation were based on the results of the most recent actuarial experience study completed in 2020 for the five-year period ended December 31, 2018. The long-term expected rate of return on pension plan investments was determined using a model method in which the best-estimate ranges of expected future real rates of return (expected returns, net of investment and administrative expenses and inflation) are developed for each major asset class. These ranges are combined to produce the long-term expected rate of return by weighting the expected future real rates of return by the target asset allocation percentage and by adding expected inflation. The target allocation and best estimates of arithmetic real rates of return for each major asset class are summarized in the following table: 59 ---PAGE BREAK--- COUNTY OF OTSEGO, MICHIGAN Notes to the Financial Statements Year Ended December 31, 2024 12. EMPLOYEE RETIREMENT AND BENEFIT SYSTEMS (continued) Long-term Expected Asset Class Target Allocation Real Rate of Return Global Equity 60.00% 2.70% Global Fixed Income 20.00% 0.40% Private Investment 20.00% 1.40% Discount Rate. The discount rate used to measure the total pension liability is 7.18%. The projection of cash flows used to determine the discount rate assumes that employer and employee contributions will be made at the rates agreed upon for employees and the actuarially determined rates for employers. Based on these assumptions, the pension plan’s fiduciary net position was projected to be available to pay all projected future benefit payments of current active and inactive employees. Therefore, the long-term expected rate of return on pension plan investments was applied to all periods of projected benefit payments to determine the total pension liability. Changes in the Net Pension Liability: Total Pension Plan Fiduciary Net Pension Liability Net Position Liability (Asset) - Balances at December 31, 2022 28,038,550 $ 18,150,263 $ 9,888,287 $ Service cost 253,394 - 253,394 Interest on total pension liability 1,964,108 - 1,964,108 Difference between expected and actual experience (89,451) - (89,451) Changes in assumptions 208,906 - 208,906 Employer contributions - 1,204,305 (1,204,305) Employee contributions - 33,089 (33,089) Net investment income - 2,041,983 (2,041,983) Benefit payments, including employee refunds (1,619,953) (1,619,953) - Other 59,048 - 59,048 Administrative expense - (42,406) 42,406 Net changes 776,052 1,617,018 (840,966) Balances at December 31, 2023 28,814,602 $ 19,767,281 $ 9,047,321 $ Increases (Decreases) Sensitivity of the net pension liability to changes in the discount rate. The following presents the net pension liability of the County, calculated using the discount rate of 7.18%, as well as what the County’s net pension liability would be if it were calculated using a discount rate that is 1- percentage-point lower (6.18%) or 1-percentage-point higher (8.18%) than the current rate: 60 ---PAGE BREAK--- COUNTY OF OTSEGO, MICHIGAN Notes to the Financial Statements Year Ended December 31, 2024 12. EMPLOYEE RETIREMENT AND BENEFIT SYSTEMS (continued) Current Rate 1% Decrease Discount Rate 1% Increase (6.18%) (7.18%) (8.18%) County's net pension liability 3,804,301 $ 9,047,321 $ (2,719,424) $ Pension plan fiduciary net position. Detailed information about the pension plan’s fiduciary net position is available in the separately issued MERS financial report. Pension Expense and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions For the year ended December 31, 2024, the County recognized pension expense of $2,005,366. At December 31,2024, the County reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources: Deferred outflows Deferred inflows of resources of resources Difference between expected and actual experience 20,041 $ 232,393 $ Changes in assumptions 382,283 - Net difference between projected and actual earnings on pension plan investments 1,095,384 - Contributions subsequent to the measurement date 1,217,641 - Total 2,715,349 $ 232,393 $ Amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions will be recorded in pension expense as follows: Year Ended December 31: 2025 297,281 2026 536,748 2027 582,894 2028 (151,608) OTSEGO COUNTY ROAD COMMISSION – COMPONENT UNIT Description of Plan and Plan Assets The Road Commission is in an agent multiple-employer defined benefit pension plan with the Municipal Employees’ Retirement System (MERS). The system provides the following provisions: normal retirement, deferred retirement and service retirement to plan members and their beneficiaries. The service requirement is computed using credited service at the time of termination of membership multiplied by the sum of 2.50% times the final compensation (FAC). The most recent period of which actuarial data was available was for year ended December 31, 2023. 61 ---PAGE BREAK--- COUNTY OF OTSEGO, MICHIGAN Notes to the Financial Statements Year Ended December 31, 2024 12. EMPLOYEE RETIREMENT AND BENEFIT SYSTEMS (continued) General Information about the Pension Plan Plan Description. The employer’s defined benefit pension plan provides certain retirement, disability and death benefits to plan members and beneficiaries. The employer participates in the Municipal Employees Retirement System (MERS) of Michigan. MERS is an agent multiple-employer, statewide public employee pension plan established by the Michigan Legislature under Public Act 135 of 1945 and administered by a nine-member Retirement Board. MERS issues a publicly available financial report that includes financial statements and required supplementary information. This report may be obtained accessing the MERS website at www.mersofmich.com. 2023 Valuation Benefit Multiplier: 2.5% Multiplier (80% max) Normal Retirement Age: 60 Vesting: 10 Years Early Retirement (Unreduced): 55/25 Early Retirement (Reduced): 50/25 55/15 Final Average Compensation: 5 years Employee Contributions: 4.00% Act 88: Yes (Adopted 11/23/1970) 2023 Valuation Benefit Multiplier: 2.00% Multiplier (no max) Normal Retirement Age: 60 Vesting: 10 Years Early Retirement (Unreduced): - Early Retirement (Reduced): 50/25 55/15 Final Average Compensation: 5 years Employee Contributions: 4.00% Act 88: Yes (Adopted 11/23/1970) 01 - General: Closed Division 02 - General: Open Division 62 ---PAGE BREAK--- COUNTY OF OTSEGO, MICHIGAN Notes to the Financial Statements Year Ended December 31, 2024 12. EMPLOYEE RETIREMENT AND BENEFIT SYSTEMS (continued) 2023 Valuation Benefit Multiplier: 2.50% Multiplier (no max) Normal Retirement Age: 60 Vesting: 10 Years Early Retirement (Unreduced): 55/25 Early Retirement (Reduced): 50/25 55/15 Final Average Compensation: 5 years Employee Contributions: 4.00% Act 88: Yes (Adopted 11/23/1970) NonUnion: Open Division Employees Covered by Benefit Terms At December 31, 2023, the following employees were covered by the benefit terms: Inactive employees or beneficiaries currently receiving benefits 54 Inactive employees entitled to but not yet receiving benefits 12 Active employees 25 91 Net Pension Liability The Road Commission’s net pension liability was measured as of December 31, 2023, and the total pension liability used to calculate the net pension liability was determined by an actuarial valuation as of that date. Actuarial Assumptions. The total pension liability in the December 31, 2023 actuarial valuation was determined using the following actuarial assumptions, applied to all periods included in the measurement: Inflation 2.50% Salary increases 3.00% in the long-term Investment rate of return 7.00%, net of investment and administrative expense including inflation Mortality rates used for non-disabled plan member were based on a weighted blend of MP-2019 mortality tables of a 50% Male and 50% Female blend. Mortality rates used for disabled plan member were based on a blend of MP-2019 disabled retiree mortality tables of a 50% Male and 50% Female blend of disabled retirees. The actuarial assumptions used in valuation were based on the results of the 2018 actuarial experience study, first used in December 31, 2020 valuations. The long-term expected rate of return on pension plan investments was determined using a model method in which the best-estimate ranges of expected future real rates of return (expected returns, net of investment and administrative expenses and inflation) are developed for each major asset class. 63 ---PAGE BREAK--- COUNTY OF OTSEGO, MICHIGAN Notes to the Financial Statements Year Ended December 31, 2024 12. EMPLOYEE RETIREMENT AND BENEFIT SYSTEMS (continued) These ranges are combined to produce the long-term expected rate of return by weighting the expected future real rates of return by the target asset allocation percentage and by adding expected inflation. The target allocation and best estimates of arithmetic real rates of return for each major asset class are summarized in the following table: Long-term Expected Asset Class Target Allocation Real Rate of Return Global Equity 60.00% 4.50% Global Fixed Income 20.00% 2.00% Private Investments 20.00% 7.00% Discount Rate. The discount rate used to measure the total pension liability is 7.18%. The projection of cash flows used to determine the discount rate assumes that employer and employee contributions will be made at the rates agreed upon for employees and the actuarially determined rates for employers. Based on these assumptions, the pension plan’s fiduciary net position was projected to be available to pay all projected future benefit payments of current active and inactive employees. Therefore, the long-term expected rate of return on pension plan investments was applied to all periods of projected benefit payments to determine the total pension liability. Changes in the Net Pension Liability: Total Pension Plan Fiduciary Net Pension Liability Net Position Liability (Asset) - Balances at December 31, 2022 14,953,508 $ 11,319,496 $ 3,634,012 $ Service cost 180,791 - 180,791 Interest on total pension liability 1,043,206 - 1,043,206 Changes in benefits 40,713 - 40,713 Difference between expected and actual experience 325,069 - 325,069 Changes in assumptions 109,112 - 109,112 Employer contributions - 777,420 (777,420) Employee contributions - 74,691 (74,691) Net investment income - 842,377 (842,377) Benefit payments, including employee refunds (1,029,144) (1,029,144) - Administrative expenses - (25,077) 25077 Other (46,637) - (46,637) Net changes 623,110 640,267 (17,157) Balances at December 31, 2023 15,576,618 $ 11,959,763 $ 3,616,855 $ Increases (Decreases) 64 ---PAGE BREAK--- COUNTY OF OTSEGO, MICHIGAN Notes to the Financial Statements Year Ended December 31, 2024 12. EMPLOYEE RETIREMENT AND BENEFIT SYSTEMS (continued) Sensitivity of the net pension liability to changes in the discount rate. The following presents the net pension liability of the Road Commission, calculated using the discount rate of 7.18%, as well as what the Road Commission’s net pension liability would be if it were calculated using a discount rate that is 1-percentage-point lower (6.18%) or 1-percentage-point higher (8.18%) than the current rate: Current Rate 1% Decrease Discount Rate 1% Increase (6.18%) (7.18%) (8.18%) Road Commission's net pension liability 5,327,275 $ 3,616,855 $ 2,175,752 $ Pension plan fiduciary net position. Detailed information about the pension plan’s fiduciary net position is available in the separately issued MERS financial report. Pension Expense and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions For the year ended December 31, 2024, the Road Commission recognized pension expense of $572,311. At December 31, 2024, the Road Commission reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources: Deferred outflows Deferred inflows of resources of resources Difference between expected and actual experience 216,713 $ 40,193 $ Change in assumptions 72,741 - Net difference between projected and actual earnings on pension plan investments 401,471 - Total 690,925 $ 40,193 $ Amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions will be recorded in pension expense as follows: Year Ended December 31: 2025 284,529 $ 2026 461,291 2027 (87,711) 2028 (7,377) 13. DEFERRED COMPENSATION PLANS Primary Government Otsego County offers its employees a deferred compensation plan created in accordance with IRC Section 457. Effective January 1, 1997, the assets of the plan were held in a trust, custodial account or annuity contract described in IRC Section 457(g) for the exclusive benefit for the participants (employees) and their beneficiaries. 65 ---PAGE BREAK--- COUNTY OF OTSEGO, MICHIGAN Notes to the Financial Statements Year Ended December 31, 2024 13. DEFERRED COMPENSATION PLANS (continued) The custodial account is held by the custodian for the exclusive benefit of the participants and beneficiaries of these Section 457 plans and the assets may not be diverted to any other use. The administrator (Nationwide Retirement Solutions) is an agent of the employer. The Administrator provides direction to the custodian, from time to time, regarding the investment of the funds held in the account, transfer of assets to or from the account and all other matters. GASB 32 does not require inclusion of the deferred compensation balances in a trust and agency fund. Commission on Aging – Component Unit – 9/30/2024 The Otsego County Commission on Aging offers its employees a deferred compensation plan created in accordance with IRC Section 457. The plan, available to all employees, permits them to defer a portion of their current earnings until the employee's termination, retirement, death, or unforeseeable emergency. The Commission's liability to each participant is equal to the participant's deferred compensation adjusted by an amount equal to the investment performance in a related assets account. Investments are managed by a trustee, and investment decisions are made by individual employees. The Commission, through Otsego County, provides the duty of due care that would be required of an ordinary prudent investor. – Component Unit The Otsego County offers its employees a Saving Incentive Match Plan for Employees (SIMPLE plan) Individual Retirement Account (IRA) in accordance with IRC Section 408(p). The plan, available to employees earning at least $5,000 in annual compensation, permits them to defer a portion of their current salary until future years. The deferred compensation is not available to the employees until termination, retirement, death, or unforeseeable emergency. The employer matches employee contributions up to 3% of the employee's elected salary contribution. 14. OTHER POST EMPLOYEMENT BENEFITS PLAN PRIMARY GOVERNMENT Plan Description. Otsego County administers a single-employer defined benefit healthcare plan (the “Plan”). The plan provides healthcare benefits for eligible employees upon retirement, through the County's group health insurance plan, which covers both active and retired members. The benefits are provided under the collective bargaining agreement for union employees and by personnel policies for nonunion employees. At December 31, 2024, the date of the last plan valuation, the County’s healthcare plan covered 11 members of which 1 were active plan members and 10 were retirees receiving benefits. Funding policy. Contribution requirements also are negotiated between the County and employees. The County contributes 80% of the cost of current-year premiums for eligible retired plan members. For fiscal year 2024, the County contributed $50,767 to the plan. 66 ---PAGE BREAK--- COUNTY OF OTSEGO, MICHIGAN Notes to the Financial Statements Year Ended December 31, 2024 14. OTHER POST EMPLOYEMENT BENEFITS PLAN (continued) Employees Covered by Benefit Terms As of December 31, 2024, the following employees were covered by the benefit terms: Inactive employees or beneficiaries currently receiving benefits 10 Active employees 1 11 Total OPEB Liability and Trust Assets - The County’s total OPEB liability of $585,074 was measured as of December 31, 2024, and was determined by an actuarial valuation as of that date. As of December 31, 2024, there was $0 in assets in the County’s OPEB trust as the County is treating this a pay-as-you-go plan. Actuarial assumptions and other inputs - The total OPEB liability was determined by an actuarial valuation as of December 31, 2024 and the following actuarial assumptions, applies to all periods included in the measurement: Inflation N/A Salary increases Not applicable (for purposes of allocating liability) Investment rate of return N/A; this is not a pre-funded plan 20-year Aa Municipal bond rate 4.28% Mortality Public General 2010 Employee and Healthy Retiree, Headcount weighted Improvement Scale IRS 2024 Adjusted Scale MP-2021 Discount Rate - The discount rate used to measure the total OPEB liability was 4.00%. Because the plan does not have a dedicated OPEB trust, there are not assets projected to be sufficient to make projected future benefit payments of current plan members. For projected benefits that are covered by projected assets, the long-term expected rate was used to discount the projected benefits. From the year that benefit payments were not projected to be covered by the projects assets (“the depletion date”), projected benefits were discounted at a discount rate that reflects a 20-year AA/Aa tax-exempt municipal bond yield. A single equivalent discount rate that yields the same present value of benefits is calculated. This discount rate is used to determine the Total OPEB Liability. The discount rate used as of December 31, 2023, was 4.28%. 67 ---PAGE BREAK--- COUNTY OF OTSEGO, MICHIGAN Notes to the Financial Statements Year Ended December 31, 2024 14. OTHER POST EMPLOYEMENT BENEFITS PLAN (continued) Total OPEB Plan Fiduciary Net OPEB Liability Net Position Liability - Balances at December 31, 2022 632,799 $ - $ 632,799 $ Interest 24,297 - 24,297 Difference between expected and - actual experience (6,024) - (6,024) Assumptions (15,231) - (15,231) Employer contributions - 50,767 (50,767) Benefit payments (50,767) (50,767) - Net changes (47,725) - (47,725) Balances at December 31, 2023 585,074 $ - $ 585,074 $ Increases (Decreases) Net OPEB Liability – Discount and Trend Rate Sensitivities – The following presents the net OPEB Liability (NOL), calculated using trend and discount rates 1% higher and lower than base assumptions: Discount Rate 1% Decrease Current Rate 1% Increase Net OPEB Liability 630,294 $ 585,074 $ 545,564 $ Trend Rate 1% Decrease Current Rate 1% Increase Net OPEB Liability 540,217 $ 585,074 $ 635,584 $ OPEB Expense - Components of County’s OPEB Expense for the fiscal year ending December 31, 2024 are as follows: 12/31/2024 Interest on total OPEB liability 24,297 $ Experience (gains)/losses (6,024) Change in assumptions (15,231) Total OPEB expense 3,042 $ 68 ---PAGE BREAK--- COUNTY OF OTSEGO, MICHIGAN Notes to the Financial Statements Year Ended December 31, 2024 14. OTHER POST EMPLOYEMENT BENEFITS PLAN (continued) Amounts reported as deferred outflows of resources and deferred inflows of resources related to OPEB will be recognized in OPEB expense as follows: Year Ended December 31: 2025 - $ 2026 - 2027 - 2028 - OTSEGO COUNTY ROAD COMMISSION – COMPONENT UNIT The Otsego County Road Commission provides hospitalization and medical coverage for eligible retirees and their spouses through the Road Commission’s group health insurance plan, which covers both active and retired members. The following are the Governmental Accounting Standards Board Statement 74 and 75 required disclosures which have been implemented prospectively by the Road Commission.  Employees hired prior to December 31, 2008, and retire with 20 years of employment and age 55 years, or greater, will receive health insurance comparable to that provided to the current employees until age 65 years and supplemental health insurance for the employee and spouse for their lifetimes. The plan does not issue a separate stand-alone financial statement. Employees Covered by Benefit Terms As of December 31, 2023, the following employees were covered by the benefit terms: Inactive employees or beneficiaries currently receiving benefit payments 32 Active employees 7 Total participants covered by OPEB plan 39 Actuarial assumptions and other inputs - The total OPEB liability was determined by an actuarial valuation as of December 31, 2024 and the following actuarial assumptions, applies to all periods included in the measurement: Inflation Included in investment rate of return Salary increases 3.25% (for purpose of allocating liability) Investment rate of return 6.93% (including inflation) 20-year Aa Municipal bond rate 4.28% Mortality Public General 2010 Employee and Healthy Retiree, Headcount weighted Improvement Scale MP-2021 69 ---PAGE BREAK--- COUNTY OF OTSEGO, MICHIGAN Notes to the Financial Statements Year Ended December 31, 2024 14. OTHER POST EMPLOYEMENT BENEFITS PLAN (continued) The long-term expected rate of return on OPEB plan investments was determined using a building- block method in which best-estimate ranges of expected future rates of return (expected returns, net of retirement plan investment expense and inflation) are developed for each major asset class. These ranges are combined to produce the long term expected rate of return by weighting the expected future rates of return by the target asset allocation percentage and by adding expected inflation. Best estimates of arithmetic rates of return for each major asset class included in the retirement plan’s target asset allocation are summarized in the following table: Long-term expected Asset Class Target allocation rate of return Global equity 60.00% 7.00% Global fixed income 20.00% 4.00% Real assets 20.00% 9.00% Discount Rate - The discount rate used to measure the total OPEB liability was 6.15%. The projection of cash flows used to determine the discount rate assumed that Employer would contribute general fund dollars to pay benefits until the plan is fully funded and then will use plan assets to pay benefits. Based on those assumptions, the retirement plan’s fiduciary net position was projected to be sufficient to make projected future benefit payments of current plan members. For projected benefits that are covered by projected assets, the long-term expected rate was used to discount the projected benefits. From the year that benefit payments were not projected to be covered by the projected assets, projected benefits were discounted at a discount rate reflecting the 20-year AA/Aa tax-exempt bond yield. A single equivalent discount rate that yields the same present value of benefits is calculated. The discount rate utilized for the 2024 valuation was 6.15%. Total OPEB Plan Fiduciary Net OPEB Liability Net Position Liability - Balances at December 31, 2022 3,314,477 $ 2,985,091 $ 329,386 $ Service cost 13,711 - 13,711 Interest 225,294 - 225,294 Experience (gains)/losses (64,898) - (64,898) Change in assumptions 169,757 - 169,757 Net investment income - 223,478 (223,478) Benefit payments, including refunds (219,397) (219,397) - Administrative expense - (6,198) 6,198 Net changes 124,467 (2,117) 126,584 Balances at December 31, 2023 3,438,944 $ 2,982,974 $ 455,970 $ 70 ---PAGE BREAK--- COUNTY OF OTSEGO, MICHIGAN Notes to the Financial Statements Year Ended December 31, 2024 14. OTHER POST EMPLOYEMENT BENEFITS PLAN (continued) Net OPEB Liability – Discount and Trend Rate Sensitivities – The following presents the net OPEB Liability (NOL) of the Road Commission, calculated using trend and discount rates 1% higher and lower than base assumptions: Discount Rate 1% Decrease Current Rate 1% Increase Net OPEB Liability 670,478 $ 455,970 $ 264,475 $ Trend Rate 1% Decrease Current Rate 1% Increase Net OPEB Liability 278,342 $ 455,970 $ 652,731 $ OPEB Expense – Components of Road Commission’s OPEB Expense for the fiscal year ending December 31, 2024 recognized expense of $158,708. Deferred Outflows and Inflows of Resources Related to OPEB Plan Deferred outflows Deferred inflows of resources of resources Investment earnings (gains)/losses 32,845 $ - $ Amounts reported as deferred outflows of resources and deferred inflows of resources related to OPEB will be recognized in OPEB expense as follows: Year Ended December 31: 2025 36,812 $ 2026 55,112 2027 (53,650) 2028 (5,429) Total 32,845 $ 15. FUND BALANCES – GOVERNMENTAL FUNDS Fund balance classifications that comprise a hierarchy based primarily on the extent to which a government is bound to observe constraints imposed upon the use of the resources reported in governmental funds. Detailed information on fund balance of governmental funds is as follows: 71 ---PAGE BREAK--- COUNTY OF OTSEGO, MICHIGAN Notes to the Financial Statements Year Ended December 31, 2024 Nonmajor Housing American Animal Governmental General Commission Library Rescue Plan Act Control Funds Total Nonspendable: Inventories 5,287 $ - $ - $ - $ - $ - $ 5,287 $ Prepaid items 221,383 - - - - 19,013 240,396 Total nonspendable 226,670 - - - - 19,013 245,683 Restricted Housing commission - 102,651 - - - - 102,651 Library - - 1,464,927 - - - 1,464,927 American rescue plan act - - - 198,844 - - 198,844 Animal control - - - - 407,294 - 407,294 Brownfield redevelopment authority - - - - - 352,579 352,579 Building department - - - - - 1,310,539 1,310,539 Register of deeds automation fund - - - - - 89,499 89,499 Emergency 911 funds - - - - - 125,025 125,025 Concealed pistol licensing - - - - - 43,581 43,581 Local officers training - - - - - 48,789 48,789 Law library - - - - - 21,586 21,586 Opioid - - - - - 559,161 559,161 Department of human services - - - - - 27,281 27,281 Iron belle trail maintenance - - - - - 9,058 9,058 Michigan indigent defense - - - - - 237,975 237,975 Bradford lake dam - - - - - 18,608 18,608 Marijuana fund - - - - - 898,058 898,058 Public improvement capital projects - - - - - 2,022,680 2,022,680 building maintenance - - - - - 448,935 448,935 University center capital projects fund - - - - - 703,283 703,283 Trail head capital project - - - - - 86,623 86,623 Total restricted - 102,651 1,464,927 198,844 407,294 7,003,260 9,176,976 Committed Work comp - - - - - 52,324 52,324 Groen nature preserve - - - - - 43,060 43,060 University center - - - - - 169,182 169,182 Friend of the court - - - - - 387,311 387,311 Animal control forfeited fund - - - - - 8,224 8,224 Recycling - - - - - 331,804 331,804 Spongy moth control - - - - - 94,380 94,380 Child care probate - - - - - 562,372 562,372 Equipment revolving - - - - - 120,806 120,806 Park & recreation - - - - - 741,373 741,373 Technology fund - - - - - 10,571 10,571 Library building - - - - - 20,319 20,319 Court restoration building - - - - - 131,727 131,727 Airport construction - - - - - 137,710 137,710 Groen capital projects II - - - - - 2,704 2,704 Library capital projects bond fund - - - - - 11,072 11,072 Capital projects - - - - - 530,657 530,657 EMS building capital project fund - - - - - 4,076 4,076 Capital project sinking fund - - - - - 295,425 295,425 Sheriff equipment - - - - - 3,627 3,627 Library construction millage capital project fund - - - - - 28,110 28,110 Total committed - - - - - 3,686,834 3,686,834 Assigned 1,064,619 - - - - - 1,064,619 Unassigned 12,087,234 - - - - (20,025) 12,067,209 Total fund balances, governmental funds 13,378,523 $ 102,651 $ 1,464,927 $ 198,844 $ 407,294 $ 10,689,082 $ 26,241,321 $ 72 ---PAGE BREAK--- COUNTY OF OTSEGO, MICHIGAN Notes to the Financial Statements Year Ended December 31, 2024 16. CHANGE IN ACCOUNTING PRINCIPLES GASB Statement No. 101, Compensated Absences was issued in June 2022. The objective of GASB Statement No. 101 was to better meet the needs of financial statement users by updating the recognition and measurement guidance for compensated absences. That objective is achieved by aligning the recognition and measurement guidance under a unified model and by amending certain previously required disclosures. The County has determined the impact of the standard on the prior year balances to be immaterial to the financial statements. GASB Statement No. 100, Accounting Changes and Error Corrections was issued in June 2022. The objective of GASB Statement No. 100 was to enhance accounting and financial reporting requirements for accounting changes and error corrections to provide more understandable, reliable, relevant, consistent, and comparable information for making decisions or assessing accountability. The implementation of GASB Statement No. 100 did not have an effect on the financial statements of the County. 17. DEFICIT UNRESTRICTED/UNASSIGNED NET POSITION/FUND BALANCE An unrestricted/unassigned net position/fund balance deficits existed in the following funds as indicated: Facilities planning fund (20,025) $ Building & grounds (89,163) 18. EXCESS EXPENDITURES OVER APPROPRIATIONS Public Act 621 of 1978, Section 18(1), as amended, provides that a local unit shall not incur expenditures in excess of the amount appropriated. In the body of the financial statements, the County’s actual expenditures were in excess of amounts appropriated as follows: Total Amount of Budget Appropriations Expenditures Variance General fund General government: Clerk and register of deeds 373,556 400,925 (27,369) Equalization 235,299 256,648 (21,349) Elections 74,400 81,916 (7,516) Public safety: School resource officer 66,664 73,383 (6,719) Secondary road patrol 112,934 147,946 (35,012) Health and welfare: Substance abuse 90,000 105,067 (15,067) Animal control Public safety 564,725 580,801 (16,076) 73 ---PAGE BREAK--- REQUIRED SUPPLEMENTARY INFORMATION 74 ---PAGE BREAK--- COUNTY OF OTSEGO, MICHIGAN Required Supplementary Information Employee Retirement and Benefit Systems Schedule of Changes in Pension Liability Year Ended December 31, 2024 2023 2022 2021 2020 2019 2018 2017 2016 2015 2014 Total pension liability Service cost 253,394 $ 267,984 $ 279,127 $ 313,918 $ 388,399 $ 370,158 $ 336,412 $ 349,718 $ 348,000 $ 338,932 $ Interest 1,964,108 2,014,669 1,956,993 1,819,682 1,749,783 1,767,809 1,719,681 1,696,843 1,543,901 1,479,439 Changes in benefits - - - (196,491) (386,275) 391 (91,145) (10,695) - - Difference between expected and actual experience (89,451) (130,817) (660,349) 378,255 (65,132) 11,745 (48,394) (503,144) 724,207 - Changes in assumptions 208,906 - 992,080 1,002,405 746,482 - - - 1,036,885 - Benefit payments, including refund of member contributions (1,619,953) (1,529,402) (1,490,722) (1,447,430) (1,384,939) (1,392,250) (1,271,380) (1,209,751) (1,104,777) (978,368) Other changes 59,048 166,835 (6,105) (12,291) 80,821 14,309 (54) - - - Net change in total pension liability 776,052 789,269 1,071,024 1,858,048 1,129,139 772,162 645,120 322,971 2,548,216 840,003 Total pension liability, beginning of year 28,038,550 27,249,281 26,367,990 24,509,942 23,380,803 22,608,641 21,963,521 21,640,550 19,092,334 18,252,331 Total pension liability, end of year 28,814,602 $ 28,038,550 $ 27,439,014 $ 26,367,990 $ 24,509,942 $ 23,380,803 $ 22,608,641 $ 21,963,521 $ 21,640,550 $ 19,092,334 $ Plan fiduciary net position Contributions - employer 1,204,305 $ 1,431,552 $ 1,336,715 $ 1,329,086 $ 1,062,073 $ 1,128,063 $ 1,096,794 $ 865,641 $ 693,476 $ 640,433 $ Contributions - employee 33,089 38,261 43,585 45,526 49,203 46,517 30,679 7,937 5,905 3,630 Net investment income 2,041,983 (2,115,394) 2,531,817 2,073,805 1,942,926 (598,116) 1,806,557 1,422,497 (195,083) 800,044 Benefit payments, including refunds of member contributions (1,619,953) (1,529,402) (1,490,722) (1,447,430) (1,384,939) (1,392,250) (1,271,380) (1,209,751) (1,104,777) (978,368) Administrative expense (42,406) (37,568) (28,998) (32,315) (33,464) (29,330) (28,580) (28,053) (28,591) (29,357) Other changes - - - - (12,290) (57) - - - Net change in plan fiduciary net position 1,617,018 (2,212,553) 2,392,397 1,968,672 1,635,799 (857,406) 1,634,013 1,058,271 (629,070) 436,382 Plan fiduciary net position, beginning of year 18,150,263 20,362,816 17,970,419 16,001,747 14,365,948 15,223,354 13,589,341 12,531,070 13,160,140 12,723,758 Plan fiduciary net position, end of year 19,767,281 $ 18,150,263 $ 20,362,816 $ 17,970,419 $ 16,001,747 $ 14,365,948 $ 15,223,354 $ 13,589,341 $ 12,531,070 $ 13,160,140 $ Net pension liability 9,047,321 $ 9,888,287 $ 7,076,198 $ 8,397,571 $ 8,508,195 $ 9,014,855 $ 7,385,287 $ 8,374,180 $ 9,109,480 $ 5,932,194 $ Plan fiduciary net position as a percentage of total pension liability 68.60% 64.73% 74.21% 68.15% 65.29% 61.44% 67.33% 61.87% 57.91% 68.93% Covered - employee payroll 3,646,436 3,757,770 5,284,388 5,146,779 5,065,928 4,741,881 4,575,021 4,547,735 4,390,047 4,188,926 County's net pension liability as a percentage of covered-employee payroll 248.11% 263.14% 133.91% 163.16% 167.95% 190.11% 161.43% 184.14% 207.50% 141.62% Note: Amounts presented on financial statements are determined as of December 31st of the preceding year. See notes to required supplementary information. For MERS Years Ending December 31, 75 ---PAGE BREAK--- COUNTY OF OTSEGO, MICHIGAN Required Supplementary Information Employee Retirement and Benefit Systems Schedule of Employer Contributions Year Ended December 31, 2024 2024 2023 2022 2021 2020 2019 2018 2017 2016 2015 Actuarially determined contribution 1,148,580 $ 1,078,284 $ 1,138,176 $ 1,190,722 $ 1,047,430 $ 959,573 $ 878,063 $ 934,199 $ 856,396 $ 715,641 $ Contributions in relation to the actuarially determined contribution (1,705,159) (1,619,953) (1,529,402) (1,490,722) (1,447,430) (1,062,073) (1,128,063) (1,184,199) (1,106,396) (865,641) Contribution deficiency (excess) (556,579) $ (541,669) $ (391,226) $ (300,000) $ (400,000) $ (102,500) $ (250,000) $ (250,000) $ (250,000) $ (150,000) $ Covered - employee payroll 3,083,099 $ 3,646,436 $ 3,757,770 $ 5,284,388 $ 5,146,779 $ 5,065,928 $ 4,741,881 $ 4,401,566 $ 4,575,021 $ 4,547,735 $ Contributions as a percentage of covered-employee payroll 55% 44% 41% 28% 28% 21% 24% 27% 24% 19% Actuarially determined contribution rates are calculated as of December 31st, two years prior to the end of the fiscal year in which contributions are reported. Significant changed from the previous actuarial valuation: Investment Rate of Return Changes from 7.00% to 6.93% Discount Rate Changes from 7.25% to 7.18% Entry age 15 years Table - Blended 50% Male / 50% Female 60 years 3.00% in the long term 6.93%, net of investment and administrative expense 2.50% Mortality Assumptions were based on the RP-2014 Group Annuity Mortality 10-years smoothed market Level percentage of payroll, closed Retirement age Asset valuation method Inflation Salary increases Investment rate of return Notes to Schedule Methods and assumptions used to determine contribution rates: Actuarial cost method Amortization method Remaining amortization period 76 ---PAGE BREAK--- COUNTY OF OTSEGO, MICHIGAN Required Supplementary Information Employee Retirement and Benefit Systems Schedule of Changes in OPEB Liability and Related Ratios Year Ended December 31, 2024 2024 2023 2022 2021 2020 2019 2018 Total OPEB liability - beginning of year 632,799 $ 810,295 $ 1,011,280 $ 1,339,595 $ 1,220,934 $ 1,930,701 $ 1,848,952 $ Service cost - 1,553 3,987 5,020 4,303 48,184 46,710 Interest 24,297 33,954 22,229 25,301 38,728 60,282 58,758 Change in plan term - - - - - (510,178) - Assumption changes and differences between actual and expected experience (21,255) (164,891) (172,555) (291,256) 150,130 (236,836) 48,727 Benefit payments (50,767) (48,112) (54,646) (67,380) (74,500) (71,219) (72,446) OPEB liability - end of year 585,074 632,799 810,295 1,011,280 1,339,595 1,220,934 1,930,701 Plan fiduciary net position Contributions - employer 50,767 $ 48,112 $ 54,646 $ 67,380 $ 74,500 $ 71,219 $ 72,446 $ Net investment income - - - - - - - Benefit payments, including refunds of member contributions (50,767) (48,112) (54,646) (67,380) (74,500) (71,219) (72,446) Administrative expense - - - - - - - Net change in plan fiduciary net position - - - - - - - Plan fiduciary net position, beginning of year - - - - - - - Plan fiduciary net position, end of year - $ - $ - $ - $ - $ - $ - $ Net OPEB liability 585,074 $ 632,799 $ 810,295 $ 1,011,280 $ 1,339,595 $ 1,220,934 $ 1,930,701 $ Plan fiduciary net position as a percentage of total OPEB liability 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% Covered payroll 12,962 13,198 61,095 81,566 59,734 1,259,742 4,401,556 Net OPEB liability as a percentage covered payroll 4513.76% 4794.66% 1326.29% 1239.83% 2242.60% 96.92% 43.86% Schedule of employer contributions Actuarially determined employer contribution 54,307 69,837 73,023 90,008 88,495 155,657 155,520 Employer contribution (50,767) (48,112) (54,646) (67,380) (74,500) (71,219) (72,446) Contribution deficiency(excess) 3,540 21,725 18,377 22,628 13,995 84,438 83,074 Covered payroll 12,962 13,198 61,095 81,566 59,734 1,259,742 4,401,556 ADC as a percentage of covered payroll 419.0% 529.1% 119.5% 110.3% 148.1% 12.4% 3.5% Notes to Schedule: Actuarially determined contribution rates are calculated as of December 31, 2024 Methods and assumptions used to determine contributions rates: Actuarial cost method Entry age normal Discount rate 4.28%, 20 year Aa Municipal Bond Rate Salary increases 3.0%, average Investment rate of return NA (pay-as-you-go plan) Healthcare cost trend rate 5.75% in 2020 graded down .25% per year to 4.5% Mortality rate Public General 2010 Employee and Healthy Retiree, Headcount weighted with MP-2021 improvement scale 77 ---PAGE BREAK--- COUNTY OF OTSEGO, MICHIGAN Detail Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual General Fund - By Activity Variance From Final Original Amended Actual Budget Revenues Taxes and penalties 6,750,069 $ 6,750,069 $ 6,968,944 $ 218,875 $ Licenses and permits 53,000 55,200 73,515 18,315 Federal sources 78,000 78,000 66,055 (11,945) State sources 1,626,280 1,658,280 1,569,145 (89,135) Local contributions 78,632 78,632 86,717 8,085 Charges for services 1,186,350 1,186,350 1,091,898 (94,452) Fines and forfeits 11,000 11,000 9,294 (1,706) Interest and rentals 104,000 104,000 256,948 152,948 Other revenues 272,911 272,911 198,263 (74,648) Total revenues 10,160,242 10,194,442 10,320,779 126,337 Expenditures Judicial: Circuit court 1,168,635 1,168,635 1,028,563 140,072 Lien fees 20,000 20,000 10,990 9,010 Drug court 163,340 163,340 142,531 20,809 RDSS transport 15,000 15,000 335 14,665 District court 18,500 18,500 17,835 665 Jury commission 40,000 40,000 32,636 7,364 Probate court 228,015 228,015 222,337 5,678 Probation/parole 1,300 1,300 1,225 75 Prosecuting attorney 790,804 790,804 725,044 65,760 Family counseling 3,500 3,500 - 3,500 Total judicial 2,449,094 2,449,094 2,181,496 267,598 General government: Board of commissioners 226,100 226,100 203,574 22,526 Administrative services 275,000 275,000 275,000 - Building and grounds 450,000 450,000 450,000 - Clerk and register of deeds 373,556 373,556 400,925 (27,369) Audit services 28,000 28,000 1,031 26,969 IT department 124,550 124,550 119,078 5,472 Equalization 235,299 235,299 256,648 (21,349) Treasurer 147,367 147,367 124,989 22,378 Cooperative extension 69,654 69,654 68,547 1,107 Elections 54,400 74,400 81,916 (7,516) Legal defense 70,000 110,000 75,842 34,158 Human resources 115,000 115,000 115,000 - Surveyor 40,974 41,174 40,957 217 Soil conservation 11,000 11,000 10,360 640 Total general government 2,220,900 2,281,100 2,223,867 57,233 continued… Year Ended December 31, 2024 Budgeted Amounts 78 ---PAGE BREAK--- COUNTY OF OTSEGO, MICHIGAN Detail Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual General Fund - By Activity Variance From Final Original Amended Actual Budget Expenditures (continued) Public safety Sheriff 1,397,473 1,425,702 1,281,515 144,187 Civil division 108,076 104,146 101,857 2,289 School resource officer 66,664 66,664 73,383 (6,719) Operation stonegarden 25,000 25,000 - 25,000 SANE 91,549 91,549 (3,427) 94,976 Justice training 3,000 3,000 - 3,000 Marine safety 9,500 9,500 2,829 6,671 safety education 70,000 70,000 67,741 2,259 Snowmobile 10,961 10,961 597 10,364 Secondary road patrol 112,934 112,934 147,946 (35,012) ORV 13,300 45,300 35,379 9,921 Jail 1,456,716 1,461,716 1,376,699 85,017 Emergency services 70,000 70,000 70,000 - Total public safety 3,435,173 3,496,472 3,154,519 341,953 Public works Drains 6,000 6,000 5,894 106 Health and welfare Communicable diseases 500 500 500 - Medical examiner 93,500 93,500 89,977 3,523 District health 255,000 255,000 255,000 - Mental health 94,003 94,003 94,003 - Soldiers and sailors relief 5,000 5,250 2,378 2,872 Veterans' burial 6,150 6,150 3,993 2,157 Veterans' affairs 211,204 211,204 194,966 16,238 Substance abuse 90,000 90,000 105,067 (15,067) Total health and welfare 755,357 755,607 745,884 9,723 Community and economic development Planning and zoning 142,673 144,873 137,507 7,366 Other expenditures: Appropriations 12,500 12,500 12,500 - Bonds and insurance 290,000 290,000 130,926 159,074 Retiree insurance 40,000 40,000 35,855 4,145 Additional pension contribution 60,000 60,000 60,000 - Other 49,564 49,564 28,411 21,153 Total other expenditures 452,064 452,064 267,692 184,372 Total expenditures 9,461,261 9,585,210 8,716,859 868,351 Excess of revenues over (under) expenditures before other financing sources (uses) 698,981 609,232 1,603,920 994,688 Other financing sources (uses) Transfers in 87,300 148,099 3,254,569 3,106,470 Transfers out (773,989) (794,657) (694,657) 100,000 Total other financing sources (uses) (686,689) (646,558) 2,559,912 3,206,470 Net change in fund balance 12,292 (37,326) 4,163,832 4,201,158 Fund balance, beginning of year 9,214,691 9,214,691 9,214,691 Fund balance, end of year 9,226,983 $ 9,177,365 $ 13,378,523 $ concluded Year Ended December 31, 2024 Budgeted Amounts 79 ---PAGE BREAK--- COUNTY OF OTSEGO, MICHIGAN Detail Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual Housing Commission Fund Year Ended December 31, 2024 Variance From Final Original Amended Actual Budget Revenues Federal Sources 68,800 $ 81,330 $ 83,150 $ 1,820 $ Local Sources - - 837 837 Interest and Rentals 80 80 32 (48) Other Revenues 5,557 5,557 3,436 (2,121) Total revenues 74,437 86,967 87,455 488 Expenditures Community and economic development 162,037 162,037 93,838 68,199 Excess of revenues over (under) expenditures before other financing sources (uses) (87,600) (75,070) (6,383) 68,687 Other financing sources (uses) Transfers in 85,822 85,822 94,705 8,883 Transfers out (85,822) (98,352) (94,705) 3,647 Total other financing sources (uses) - (12,530) - 12,530 Net change in fund balance (87,600) (87,600) (6,383) 81,217 Fund balance, beginning of year 109,034 109,034 109,034 Fund balance, end of year 21,434 $ 21,434 $ 102,651 $ Budgeted Amounts 80 ---PAGE BREAK--- COUNTY OF OTSEGO, MICHIGAN Detail Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual Library Fund Year Ended December 31, 2024 Variance From Final Original Amended Actual Budget Revenues Taxes and Penalties 629,550 $ 629,550 $ 618,160 $ (11,390) State Sources 29,040 29,040 36,383 7,343 Fines and Forfeits 141,000 141,000 153,429 12,429 Interest and Rentals 12,000 12,000 25,672 13,672 Other Revenues 21,000 21,000 437,940 416,940 Total revenues 832,590 832,590 1,271,584 22,054 Expenditures Recreation & culture 911,490 911,490 891,433 20,057 Net change in fund balance (78,900) (78,900) 380,151 1,997 Fund balance, beginning of year 1,084,776 1,084,776 1,084,776 Fund balance, end of year 1,005,876 $ 1,005,876 $ 1,464,927 $ Budgeted Amounts 81 ---PAGE BREAK--- COUNTY OF OTSEGO, MICHIGAN Detail Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual American Rescue Plan Act (ARPA) Fund Year Ended December 31, 2024 Variance From Final Original Amended Actual Budget Revenues Federal sources - $ - $ 3,106,470 $ 3,106,470 $ Interest and Rentals 10,000 10,000 107,969 97,969 Total revenues 10,000 10,000 3,214,439 3,204,439 Expenditures Health and welfare - - - - Excess of revenues over (under) expenditures before other financing sources (uses) 10,000 10,000 3,214,439 3,204,439 Other financing sources (uses) Transfers out - - (3,124,470) 3,124,470 Net change in fund balance 10,000 10,000 89,969 79,969 Fund balance, beginning of year 108,875 108,875 108,875 Fund balance, end of year 118,875 $ 118,875 $ 198,844 $ Budgeted Amounts 82 ---PAGE BREAK--- COUNTY OF OTSEGO, MICHIGAN Detail Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual Animal Control Fund Year Ended December 31, 2024 Variance From Final Original Amended Actual Budget Revenues Taxes 464,637 $ 464,637 $ 467,149 $ 2,512 $ Charges for services 40,500 40,500 48,473 7,973 Fines and forfeits - - 63 63 Interest and rentals 11,000 11,000 12,344 1,344 Other revenue 25,000 34,683 39,834 5,151 Total revenues 541,137 550,820 567,863 17,043 Expenditures Public safety 541,652 564,725 580,801 (16,076) Capital outlay 6,700 48,410 15,619 32,791 Total expenditures 548,352 613,135 596,420 16,715 Net change in fund balance (7,215) (62,315) (28,557) 328 Fund balance, beginning of year 435,851 435,851 435,851 Fund balance, end of year 428,636 $ 373,536 $ 407,294 $ Budgeted Amounts 83 ---PAGE BREAK--- SUPPLEMENTARY INFORMATION 84 ---PAGE BREAK--- COUNTY OF OTSEGO, MICHIGAN Combining Balance Sheet General Fund Budget Legal Soldiers and General Stabilization Defense Sailors Relief Total Assets Cash and investments 11,642,695 $ 1,064,619 $ 28,398 $ 3,164 $ 12,738,876 $ Receivables: Taxes 392,557 - - - 392,557 Due from other government units 473,220 - - - 473,220 Inventories 5,287 - - - 5,287 Prepaid items 221,383 - - - 221,383 Total assets 12,735,142 $ 1,064,619 $ 28,398 $ 3,164 $ 13,831,323 $ Liabilities Accounts payable 143,899 $ - $ 6,938 $ - $ 150,837 $ Accrued liabilities 291,148 - - - 291,148 Unearned revenue 10,815 - - - 10,815 Total liabilities 445,862 - 6,938 - 452,800 Fund Balances Nonspendable 226,670 - - - 226,670 Assigned - 1,064,619 - - 1,064,619 Unassigned 12,062,610 - 21,460 3,164 12,087,234 Total fund balances 12,289,280 1,064,619 21,460 3,164 13,378,523 Total liabilities and fund balances 12,735,142 $ 1,064,619 $ 28,398 $ 3,164 $ 13,831,323 $ December 31, 2024 85 ---PAGE BREAK--- COUNTY OF OTSEGO, MICHIGAN Combining Statement of Revenues, Expenditures and Changes in Fund Balances General Fund Year Ended December 31, 2024 Budget Legal Soldiers and General Stabilization Defense Sailors Relief Totals Revenues Taxes and penalties 6,968,944 $ - $ - $ - $ 6,968,944 $ Licenses and permits 73,515 - - - 73,515 Federal sources 66,055 - - - 66,055 State sources 1,569,145 - - - 1,569,145 Local sources 86,717 - - - 86,717 Charges for services 1,091,898 - - - 1,091,898 Fines and forfeitures 9,294 - - - 9,294 Interest and rentals 234,610 22,239 99 - 256,948 Other revenues 198,263 - - - 198,263 Total revenues 10,298,441 22,239 99 - 10,320,779 Expenditures Judicial 2,181,496 - - - 2,181,496 General government 2,148,025 - 75,842 - 2,223,867 Public safety 3,154,519 - - - 3,154,519 Public works 5,894 - - - 5,894 Health and welfare 743,506 - - 2,378 745,884 Community/economic development 137,507 - - - 137,507 Other expenditures 267,692 - - - 267,692 Total expenditures 8,638,639 - 75,842 2,378 8,716,859 Excess (deficiency) of revenues over (under) expenditures 1,659,802 22,239 (75,743) (2,378) 1,603,920 Other Financing Sources (Uses) Transfers in 3,139,569 - 110,000 5,000 3,254,569 Transfers out (694,657) - - - (694,657) Total other financing sources (uses) 2,444,912 - 110,000 5,000 2,559,912 Net change in fund balances 4,104,714 22,239 34,257 2,622 4,163,832 Fund balance-beginning of year 8,184,566 1,042,380 (12,797) 542 9,214,691 Fund balance-end of year 12,289,280 $ 1,064,619 $ 21,460 $ 3,164 $ 13,378,523 $ 86 ---PAGE BREAK--- COUNTY OF OTSEGO, MICHIGAN Combining Balance Sheet Nonmajor Governmental Funds Animal Groen Friend Control Work Nature University of the Forfeited Spongy Moth Comp Preserve Center Court Funds Recycling Control Assets Cash and investments 44,366 $ 318,915 $ 169,182 $ 324,467 $ 8,224 $ 357,885 $ 94,847 $ Taxes receivable - - 1,792 - - 416,391 - Accounts receivable 10,490 - - - - - - Due from other funds - - - - - - - Due from other governmental units - - - 98,918 - - - Prepaid items - - - 6,303 - - - Total assets 54,856 $ 318,915 $ 170,974 $ 429,688 $ 8,224 $ 774,276 $ 94,847 $ Liabilities Accounts payable 2,532 6,148 - 6,473 - 26,081 - Accrued liabilities - 11,707 - 29,601 - - 467 Due to other funds - - - - - - - Unearned revenue - 258,000 - - - - - Total liabilities 2,532 275,855 - 36,074 - 26,081 467 Deferred Inflows of Resources Taxes levied for a subsequent period - - 1,792 - - 416,391 - Total deferred inflows of resources - - 1,792 - - 416,391 - Fund Balances Nonspendable - - - 6,303 - - - Restricted - - - - - - - Committed 52,324 43,060 169,182 387,311 8,224 331,804 94,380 Unassigned (deficit) - - - - - - - Total fund balances 52,324 43,060 169,182 393,614 8,224 331,804 94,380 Total liabilities, inflows of resources and fund balances 54,856 $ 318,915 $ 170,974 $ 429,688 $ 8,224 $ 774,276 $ 94,847 $ December 31, 2024 Special Revenue Funds 87 ---PAGE BREAK--- COUNTY OF OTSEGO, MICHIGAN Combining Balance Sheet Nonmajor Governmental Funds Register Brownfield of Deeds Emergency Concealed Local Department Redevelopment Building Automation 911 Pistol Officers Law of Human Authority Department Fund Funds Licensing Training Library Opioid Services Assets Cash and investments 352,579 $ 1,354,854 $ 116,156 $ 241,181 $ 43,951 $ 48,636 $ 22,185 $ 559,161 $ 27,281 $ Taxes receivable - - - - - - - - - Accounts receivable - 202 555 147,799 26 153 - - - Due from other funds - - - - - - - - - Due from other governmental units - - - - - - - - - Prepaid items - - - 11,683 - - - - - Total assets 352,579 1,355,056 116,711 400,663 43,977 48,789 22,185 559,161 27,281 Liabilities Accounts payable - 28,792 27,212 8,955 - - 599 - - Accrued liabilities - 15,725 - - 396 - - - - Due to other funds - - - 255,000 - - - - - Unearned revenue - - - - - - - - - Total liabilities - 44,517 27,212 263,955 396 - 599 - - Deferred Inflows of Resources Taxes levied for a subsequent period - - - - - - - - - Total deferred inflows of resources - - - - - - - - - Fund Balances Nonspendable - - - 11,683 - - - - - Restricted 352,579 1,310,539 89,499 125,025 43,581 48,789 21,586 559,161 27,281 Committed - - - - - - - - - Unassigned (deficit) - - - - - - - - - Total fund balances 352,579 1,310,539 89,499 136,708 43,581 48,789 21,586 559,161 27,281 Total liabilities, inflows of resources and fund balances 352,579 $ 1,355,056 $ 116,711 $ 400,663 $ 43,977 $ 48,789 $ 22,185 $ 559,161 $ 27,281 $ December 31, 2024 Special Revenue Funds 88 ---PAGE BREAK--- COUNTY OF OTSEGO, MICHIGAN Combining Balance Sheet Nonmajor Governmental Funds Iron Belle Michigan Bradford Child Care Trail Indigent Equipment Lake Park & Technology Marijuana Probate Maintenance Defense Revolving Dam Recreation Funds Funds Assets Cash and investments 575,355 $ 9,058 $ 266,590 $ 123,277 $ 18,608 $ 771,046 $ 9,554 $ 177,229 $ Taxes receivable - - - - - 413,883 - - Accounts receivable - - 15,622 - - - - - Due from other funds - - - - - - - 255,000 Due from other governmental units 7,577 - - - - - 1,017 465,829 Prepaid items 1,027 - - - - - - - Total assets 583,959 9,058 282,212 123,277 18,608 1,184,929 10,571 898,058 Liabilities Accounts payable 8,035 - 44,237 2,471 - 14,559 - - Accrued liabilities 12,525 - - - - 5,613 - - Due to other funds - - - - - - - - Unearned revenue - - - - - 9,501 - - Total liabilities 20,560 - 44,237 2,471 - 29,673 - - Deferred Inflows of Resources Taxes levied for a subsequent period - - - - - 413,883 - - Total deferred inflows of resources - - - - - 413,883 - - Fund Balances Nonspendable 1,027 - - - - - - - Restricted - 9,058 237,975 - 18,608 - - 898,058 Committed 562,372 - - 120,806 - 741,373 10,571 - Unassigned (deficit) - - - - - - - - Total fund balances 563,399 9,058 237,975 120,806 18,608 741,373 10,571 898,058 Total liabilities, deferred inflows of and fund balances 583,959 $ 9,058 $ 282,212 $ 123,277 $ 18,608 $ 1,184,929 $ 10,571 $ 898,058 $ Special Revenue Funds December 31, 2024 89 ---PAGE BREAK--- COUNTY OF OTSEGO, MICHIGAN Combining Balance Sheet Nonmajor Governmental Funds Public Court Groen University Library Improvements Restoration Airport Capital Building Center Capital Building Capital Project Building Construction Projects II Maintenance Projects Funds Assets Cash and investments 20,319 $ 2,016,977 $ 130,227 $ 137,710 $ 2,704 $ 448,935 $ 703,283 $ Taxes receivable - - - - - 487 - Accounts receivable - - 1,500 - - - - Due from other funds - - - - - - - Due from other governmental units - 5,703 - - - - - Prepaid items - - - - - - - 20,319 2,022,680 131,727 137,710 2,704 449,422 703,283 Liabilities Accounts payable - - - - - - - Accrued liabilities - - - - - - - Due to other funds - - - - - - - Unearned revenue - - - - - - - Total liabilities - - - - - - - Deferred Inflows of Resources Taxes levied for a subsequent period - - - - - 487 - Total deferred inflows of resources - - - - - 487 - Fund Balances Nonspendable - - - - - - - Restricted - 2,022,680 - - - 448,935 703,283 Committed 20,319 - 131,727 137,710 2,704 - - Unassigned (deficit) - - - - - - - Total fund balances 20,319 2,022,680 131,727 137,710 2,704 448,935 703,283 Total liabilities, deferred inflows of and fund balances 20,319 $ 2,022,680 $ 131,727 $ 137,710 $ 2,704 $ 449,422 $ 703,283 $ Capital Project Funds December 31, 2024 90 ---PAGE BREAK--- COUNTY OF OTSEGO, MICHIGAN Combining Balance Sheet Nonmajor Governmental Funds EMS Building Library Library Capital Capital Capital Project Construction Projects Trail Head Capital Facilities Project Sinking Sheriff Milage Capital Bond Fund Capital Project Projects Planning Fund Fund Fund Equipment Project Fund Total Assets Cash and investments 11,072 $ 86,623 $ 540,681 $ (9,900) $ 4,076 $ 295,425 $ 3,627 $ 28,110 $ 10,454,456 $ Taxes receivable - - - - 18 - - 1,546 834,117 Accounts receivable - - - - - - - - 176,347 Due from other funds - - - - - - - - 255,000 Due from other governmental units - - - - - - - - 579,044 Prepaid items - - - - - - - - 19,013 11,072 86,623 540,681 (9,900) 4,094 295,425 3,627 29,656 12,317,977 Liabilities Accounts payable - - 10,024 10,125 - - - - 196,243 Accrued liabilities - - - - - - - - 76,034 Due to other funds - - - - - - - - 255,000 Unearned revenue - - - - - - - - 267,501 Total liabilities - - 10,024 10,125 - - - - 794,778 Deferred Inflows of Resources Taxes levied for a subsequent period - - - - 18 - - 1,546 834,117 Total deferred inflows of resources - - - - 18 - - 1,546 834,117 Fund Balances Nonspendable - - - - - - - - 19,013 Restricted - 86,623 - - - - - - 7,003,260 Committed 11,072 - 530,657 - 4,076 295,425 3,627 28,110 3,686,834 Unassigned (deficit) - - - (20,025) - - - - (20,025) Total fund balances 11,072 86,623 530,657 (20,025) 4,076 295,425 3,627 28,110 10,689,082 Total liabilities, deferred inflows of and fund balances 11,072 $ 86,623 $ 540,681 $ (9,900) $ 4,094 $ 295,425 $ 3,627 $ 29,656 $ 12,317,977 $ Capital Project Funds December 31, 2024 91 ---PAGE BREAK--- COUNTY OF OTSEGO, MICHIGAN Combining Statement of Revenues, Expenditures and Changes in Fund Balances Nonmajor Governmental Funds (Major this Animal Groen Friend year) Control Work Nature University of the Animal Forfeited Spongy Moth Comp Preserve Center Court Control Funds Recycling Control Revenues Taxes and penalties - $ - $ 28 $ - $ - $ - $ 392,163 $ - $ Federal sources - - - 394,706 - - - - State sources - - - 67,509 - - - - Charges for services 77,985 - - 35,259 - - - - Fines and forfeitures - - - - - - - - Interest and rentals - - - - - 3 11,465 511 Other revenues 775 404,280 - - - - - - Total revenues 78,760 404,280 28 497,474 - 3 403,628 511 Expenditures Judicial - - - 575,737 - - - - General government - - - - - - - - Public safety 170,188 - - - - - - - Public works - - - - - - 384,580 - Health and welfare - - - - - - - 4,128 Recreation and culture - 390,698 - - - - - - Capital outlay - 86,058 - - - - - - Total expenditures 170,188 476,756 - 575,737 - - 384,580 4,128 Excess (deficiency) of revenues over (under) expenditures (91,428) (72,476) 28 (78,263) - 3 19,048 (3,617) Other Financing Sources (Uses) Transfers in 106,500 - - 105,000 - - - - Transfers out - - - - - - - - Total other financing sources (uses) 106,500 - - 105,000 - - - - Net change in fund balances 15,072 (72,476) 28 26,737 - 3 19,048 (3,617) Fund balance-beginning of year as previously reported 37,252 115,536 169,154 366,877 435,851 8,221 312,756 97,997 Change in reporting entity - - - - (435,851) - - - Fund balance-beginning of year as restated 37,252 115,536 169,154 366,877 - 8,221 312,756 97,997 Fund balance-end of year 52,324 $ 43,060 $ 169,182 $ 393,614 $ - $ 8,224 $ 331,804 $ 94,380 $ Year Ended December 31, 2024 Special Revenue Funds 92 ---PAGE BREAK--- COUNTY OF OTSEGO, MICHIGAN Combining Statement of Revenues, Expenditures and Changes in Fund Balances Nonmajor Governmental Funds Register Brownfield of Deeds Emergency Concealed Local Department Redevelopment Building Automation 911 Pistol Officers Law of Human Authority Department Fund Funds Licensing Training Library Opioid Services Revenues Taxes and penalties - $ - $ - $ - $ - $ - $ - $ - $ - $ Federal sources - - - - - - - - - State sources - - - 148 - - - - - Charges for services - 643,374 33,115 370,522 20,210 7,644 - - - Fines and forfeitures - - - - - - - - - Interest and rentals 880 27,452 - 1,341 - - - - - Other revenues - - - 376,192 - - 3,500 320,771 - Total revenues 880 670,826 33,115 748,203 20,210 7,644 3,500 320,771 - Expenditures Judicial - - - - - - 2,696 - - General government - - 102,708 - - - - - - Public safety - 703,266 - 680,345 19,700 2,989 - - - Public works - - - - - - - - - Health and welfare - - - - - - - - 3,473 Recreation and culture - - - - - - - - - Capital outlay - 13,923 - 380,935 - - - - - Total expenditures - 717,189 102,708 1,061,280 19,700 2,989 2,696 - 3,473 Excess (deficiency) of revenues over (under) expenditures 880 (46,363) (69,593) (313,077) 510 4,655 804 320,771 (3,473) Other Financing Sources (Uses) Transfers in - - - - - - - - 10,072 Transfers out - - - (17,300) - - - - - Total other financing sources (uses) - - - (17,300) - - - - 10,072 Net change in fund balances 880 (46,363) (69,593) (330,377) 510 4,655 804 320,771 6,599 Fund balance-beginning of year as previously reported 351,699 1,356,902 159,092 467,085 43,071 44,134 20,782 238,390 20,682 Change in reporting entity - - - - - - - - - Fund balance-beginning of year as restated 351,699 1,356,902 159,092 467,085 43,071 44,134 20,782 238,390 20,682 Fund balance-end of year 352,579 $ 1,310,539 $ 89,499 $ 136,708 $ 43,581 $ 48,789 $ 21,586 $ 559,161 $ 27,281 $ Year Ended December 31, 2024 Special Revenue Funds 93 ---PAGE BREAK--- COUNTY OF OTSEGO, MICHIGAN Combining Statement of Revenues, Expenditures and Changes in Fund Balances Nonmajor Governmental Funds Iron Belle Michigan Bradford Child Care Trail Indigent Equipment Lake Park & Technology Marijuana Probate Maintenance Defense Revolving Dam Recreation Funds Funds Revenues Taxes and penalties - $ - $ - $ - $ - $ 389,137 $ - $ - $ Federal sources - - - - - - - - State sources 152,255 - 692,880 - - - - 465,830 Charges for services - - - - - 278,572 3,489 - Fines and forfeitures - - - - - - - - Interest and rentals - - 696 - 653 18,714 - - Other revenues 11,406 5,000 - 8,301 - 12,849 - - Total revenues 163,661 5,000 693,576 8,301 653 699,272 3,489 465,830 Expenditures Judicial - - 591,623 - - - - - General government - - - - - - - - Public safety - - - - - - - - Public works - - - - - - - - Health and welfare 234,907 - - - - - - - Recreation and culture - 4,647 - - - 546,136 - - Capital outlay - - - 216,871 - 103,605 - - Total expenditures 234,907 4,647 591,623 216,871 - 649,741 - - Excess (deficiency) of revenues over (under) expenditures (71,246) 353 101,953 (208,570) 653 49,531 3,489 465,830 Other Financing Sources (Uses) Transfers in 260,000 - 82,917 147,500 - 10,000 - - Transfers out - - - - - - - (165,799) Total other financing sources (uses) 260,000 - 82,917 147,500 - 10,000 - (165,799) Net change in fund balances 188,754 353 184,870 (61,070) 653 59,531 3,489 300,031 Fund balance-beginning of year as previously reported 374,645 8,705 53,105 181,876 17,955 681,842 7,082 598,027 Change in reporting entity - - - - - - - - Fund balance-beginning of year as restated 374,645 8,705 53,105 181,876 17,955 681,842 7,082 598,027 Fund balance-end of year 563,399 $ 9,058 $ 237,975 $ 120,806 $ 18,608 $ 741,373 $ 10,571 $ 898,058 $ Year Ended December 31, 2024 Special Revenue Funds 94 ---PAGE BREAK--- COUNTY OF OTSEGO, MICHIGAN Combining Statement of Revenues, Expenditures and Changes in Fund Balances Nonmajor Governmental Funds Groen Nature Public Court Groen Preserve University Library Improvements Restoration Airport Capital Capital Building Center Capital Building Capital Project Building Construction Projects II Projects Maintenance Projects Funds Revenues Taxes and penalties - $ - $ - $ - $ - $ - $ 4 $ - $ Federal sources - - - - - - - - State sources - - - - - - - - Charges for services - - 57,932 - - - - - Fines and forfeitures - - - - - - 4 - Interest and rentals 374 60,928 - - 140 - 13,018 16,834 Other revenues - - - - - - - - Total revenues 374 60,928 57,932 - 140 - 13,026 16,834 Expenditures Judicial - - - - - - - - General government - - - - - - - - Public safety - - - - - - - - Public works - - - - - - - - Health and welfare - - - - - - - - Recreation and culture - - - - - - - - Capital outlay - - 75,899 262,723 - - 56,055 161,867 Total expenditures - - 75,899 262,723 - - 56,055 161,867 Excess (deficiency) of revenues over (under) expenditures 374 60,928 (17,967) (262,723) 140 - (43,029) (145,033) Other Financing Sources (Uses) Transfers in - - - 50,000 - - - - Transfers out - - - - - - - - Total other financing sources (uses) - - - 50,000 - - - - Net change in fund balances 374 60,928 (17,967) (212,723) 140 - (43,029) (145,033) Fund balance-beginning of year as previously reported 19,945 1,961,752 149,694 350,433 2,135 429 491,964 848,316 Change in reporting entity - - - - 429 (429) - - Fund balance-beginning of year as restated 19,945 1,961,752 149,694 350,433 2,564 - 491,964 848,316 Fund balance-end of year 20,319 $ 2,022,680 $ 131,727 $ 137,710 $ 2,704 $ - $ 448,935 $ 703,283 $ Year Ended December 31, 2024 Capital Project Funds 95 ---PAGE BREAK--- COUNTY OF OTSEGO, MICHIGAN Combining Statement of Revenues, Expenditures and Changes in Fund Balances Nonmajor Governmental Funds (Formerly major) EMS Building Library Library Capital Capital Capital Project Construction Projects Trail Head Capital Facilities Project Sinking Sheriff Milage Capital Bond Fund Capital Project Projects Planning Fund Fund Fund Equipment Project Fund Total Revenues Taxes and penalties - $ - $ - $ - $ - $ - $ - $ 189 $ 781,521 $ Federal sources - - - - - - - - 394,706 State sources - - - - - - - - 1,378,622 Charges for services - - - - - - - - 1,528,102 Fines and forfeitures - - - - - - - - 4 Interest and rentals - 457 16,383 - 70 1,687 - 153 171,759 Other revenues - - - - - - - - 1,143,074 Total revenues - 457 16,383 - 70 1,687 - 342 5,397,788 Expenditures Judicial - - - - - - - - 1,170,056 General government - - - - - - - - 102,708 Public safety - - - - - - - - 1,576,488 Public works - - - - - - - - 384,580 Health and welfare - - - - - - - - 242,508 Recreation and culture - - - - - - - - 941,481 Capital outlay - - 84,058 37,035 - - - - 1,479,029 Total expenditures - - 84,058 37,035 - - - - 5,896,850 Excess (deficiency) of revenues over (under) expenditures - 457 (67,675) (37,035) 70 1,687 - 342 (499,062) Other Financing Sources (Uses) Transfers in - - 5,000 18,000 - - - - 794,989 Transfers out - - (24,166) - - (24,166) - - (231,431) Total other financing sources (uses) - - (19,166) 18,000 - (24,166) - - 563,558 Net change in fund balances - 457 (86,841) (19,035) 70 (22,479) - 342 64,496 Fund balance-beginning of year as previously reported 11,072 86,166 617,498 (990) 4,006 317,904 3,627 - 11,032,669 Change in reporting entity - - - - - - - 27,768 (408,083) Fund balance-beginning of year as restated 11,072 86,166 617,498 (990) 4,006 317,904 3,627 27,768 10,624,586 Fund balance-end of year 11,072 $ 86,623 $ 530,657 $ (20,025) $ 4,076 $ 295,425 $ 3,627 $ 28,110 $ 10,689,082 $ Year Ended December 31, 2024 Capital Project Funds 96 ---PAGE BREAK--- COUNTY OF OTSEGO, MICHIGAN Combining Statement of Net Position Internal Service Funds Building and Administrative Health Grounds Services Care Total Assets Cash, equivalents and investments (33,616) $ 128,290 $ 285,921 $ 380,595 $ Accounts receivable 525 152 3,711 4,388 Lease receivable Due in less than one year 1,940 - - 1,940 Due in more than one year 133,097 - - 133,097 Prepaid items - - 12,052 12,052 Total assets 101,946 $ 128,442 $ 301,684 $ 532,072 $ Liabilities Accounts payable 38,216 $ - $ 4,345 $ 42,561 $ Accrued liabilities 17,856 17,120 - 34,976 Total liabilities 56,072 17,120 4,345 77,537 Deferred Inflows of Resources Leases 135,037 - - 135,037 Net Position Unrestricted (89,163) 111,322 297,339 319,498 Total Net Position (89,163) 111,322 297,339 319,498 Total Liabilities and Net Position 101,946 $ 128,442 $ 301,684 $ 532,072 $ December 31, 2024 97 ---PAGE BREAK--- COUNTY OF OTSEGO, MICHIGAN Combining Statement of Revenues, Expenses and Change in Net Position Internal Service Funds Building and Administrative Health Grounds Services Care Total Operating Revenues: Charges for services 588,142 $ 752,194 $ 1,403,901 $ 2,744,237 $ Total operating revenues 588,142 752,194 1,403,901 2,744,237 Operating Expenses: Salaries, wages, and fringe benefits 207,212 674,180 1,438,094 2,319,486 Contractual services 136,923 7,036 - 143,959 Materials and supplies 31,980 4,198 - 36,178 Equipment repair and maintenance 19,779 - - 19,779 Utilities 197,003 - - 197,003 Other 16,925 28,680 132 45,737 Total operating expenses 609,822 714,094 1,438,226 2,762,142 Operating income (loss) (21,680) 38,100 (34,325) (17,905) Nonoperating Revenues (expenses): Investment earnings - - 3,538 3,538 Total nonoperating revenues - - 3,538 3,538 Income (loss) before transfers (21,680) 38,100 (30,787) (14,367) Operating transfers in (out) (10,000) - - (10,000) Change in net position (31,680) 38,100 (30,787) (24,367) Net position-beginning of year (57,483) 73,222 328,126 343,865 Net position-end of year (89,163) $ 111,322 $ 297,339 $ 319,498 $ Year Ended December 31, 2024 98 ---PAGE BREAK--- COUNTY OF OTSEGO, MICHIGAN Combining Statement of Cash Flows Internal Service Funds Building and Administrative Health Grounds Services Care Totals Cash Flows from Operating Activities Receipts from customers 595,696 $ 752,194 $ 1,500,264 $ 2,848,154 $ Payments to suppliers (386,922) (40,185) 4,213 (422,894) Payments to employees for services and benefits (194,650) (660,543) (1,438,094) (2,293,287) Net cash flows from operating activities 14,124 51,466 66,383 131,973 Cash Flows from Noncapital and related financing activities Operating transfers in (10,000) - - (10,000) Net cash flows from noncapital financing activities (10,000) - - (10,000) Cash Flows from Investing Activities Investment earnings - - 3,538 3,538 Net cash provided by investing activities - - 3,538 3,538 Net decrease in cash and equivalents 4,124 51,466 69,921 125,511 Cash and pooled investments beginning of year (37,740) 76,824 216,000 255,084 Cash and pooled investments end of year (33,616) $ 128,290 $ 285,921 $ 380,595 $ Reconciliation of operating loss to net cash provided (used) by Operating Activities: Operating income (loss) (21,680) $ 38,100 $ (34,325) $ (17,905) $ Adjustments to reconcile operating income (loss) to net cash provided (used) by operating activities: Changes in assets and liabilities: Accounts receivable 7,554 - 342 7,896 Prepaid expense - - 96,021 96,021 Accounts payable 15,688 (271) 4,345 19,762 Accrued liabilities 12,562 13,637 - 26,199 Net cash flows from operating activities 14,124 $ 51,466 $ 66,383 $ 131,973 $ Year Ended December 31, 2024 99 ---PAGE BREAK--- COUNTY OF OTSEGO, MICHIGAN Combining Statement of Net Position Nonmajor Enterprise Funds Global University (Formerly major) Positioning Center Airport Advertising Tax System Metropolitan Special I-75 Sign Jail Homestead Foreclosure Fund Area Network Events Fund Commissary Audit Fund Total Assets Current assets: Cash and equivalents 29,594 $ 120,016 $ 42,886 $ 719 $ 24,525 $ 52,349 $ 1,472,132 $ 1,742,221 $ Taxes receivable - - - - - - 3,734 3,734 Accounts receivable - 669 - - 1,846 - - 2,515 Prepaid items - - - - - - 80 80 Total current assets 29,594 120,685 42,886 719 26,371 52,349 1,475,946 1,748,550 Noncurrent assets: Capital assets (net accumulated depreciation) - 270 - - - - - 270 Total noncurrent assets - 270 - - - - - 270 Total assets 29,594 $ 120,955 $ 42,886 $ 719 $ 26,371 $ 52,349 $ 1,475,946 $ 1,748,820 $ Liabilities Accounts payable - 2,017 - - 1,760 - 1,170 4,947 Accrued liabilities - - - - - - 5,333 5,333 Total liabilities - 2,017 - - 1,760 - 6,503 10,280 Net Position Net investment in capital assets - 270 - - - - - 270 Unrestricted 29,594 118,668 42,886 719 24,611 52,349 1,469,443 1,738,270 Total net position 29,594 $ 118,938 $ 42,886 $ 719 $ 24,611 $ 52,349 $ 1,469,443 $ 1,738,540 $ See accompanying notes to the basic financial statements. December 31, 2024 100 ---PAGE BREAK--- COUNTY OF OTSEGO, MICHIGAN Combining Statement of Revenues, Expenses and Change in Fund Net Position Nonmajor Enterprise Funds Global University (Formerly major) Positioning Center Airport Advertising Tax Systems Metropolitan Special I-75 Sign Jail Homestead Foreclosure Fund Area Network Events Fund Commissary Audit Fund Total Operating Revenues: Charges for services 4,107 $ 53,031 $ - $ - $ 47,124 $ 23,598 $ 70,376 $ 198,236 $ Other revenues - - - - - - 383,342 383,342 Total operating revenues 4,107 53,031 - - 47,124 23,598 453,718 581,578 Operating Expenses: Salaries, wages, and fringe benefits - - - - - - 98,143 98,143 Contractual services 16,804 65,637 1,329 352 1,170 781 3,096 89,169 Materials and supplies - 16,813 - - 26,118 - 1,370 44,301 Equipment repair and maintenance - - - - - - 2,797 2,797 Other expenses - - - - - 88 1,454 1,542 Total operating expenses 16,804 82,450 1,329 352 27,288 869 106,860 235,952 Operating income (loss) (12,697) (29,419) (1,329) (352) 19,836 22,729 346,858 345,626 Nonoperating Revenues (Expenses): Investment earnings (loss) - - - - - - (184,514) (184,514) Income (loss) before transfers (12,697) (29,419) (1,329) (352) 19,836 22,729 162,344 161,112 Transfers in 11,000 - - - - - - 11,000 Change in net position (1,697) (29,419) (1,329) (352) 19,836 22,729 162,344 172,112 Net position-beginning of year as previously stated 31,291 148,357 44,215 1,071 4,775 29,620 - 259,329 Change in reporting entity - - - - - - 1,307,099 1,307,099 Net position-beginning of year, as adjusted 31,291 148,357 44,215 1,071 4,775 29,620 1,307,099 1,566,428 Net position-end of year 29,594 $ 118,938 $ 42,886 $ 719 $ 24,611 $ 52,349 $ 1,469,443 $ 1,738,540 $ Year Ended December 31, 2024 101 ---PAGE BREAK--- COUNTY OF OTSEGO, MICHIGAN Combining Statement of Cash Flows Nonmajor Enterprise Funds Global University Positioning Center Airport Advertising Tax Systems Metropolitan Special I-75 Sign Jail Homestead Foreclosure Fund Area Network Events Fund Commissary Audit Fund Total Cash Flows from Operating Activities Receipts from customers 4,107 $ 53,262 $ - $ - $ 54,828 $ 23,598 $ 449,957 $ 585,752 $ Payments to suppliers (28,804) (82,141) (1,461) (352) (40,078) (869) (3,341) (157,046) Payments to Employees for Services and Benefits - - - - - - (98,143) (98,143) Net cash provided (used) by operating activities (24,697) (28,879) (1,461) (352) 14,750 22,729 348,473 330,563 Cash Flows from Noncapital and Related Financing Activities Transfers in 11,000 - - - - - - 11,000 Net cash provided by noncapital and related financing activities 11,000 - - - - - - 11,000 Cash Flows from Investing Activities Interest earnings - - - - - - (184,514) (184,514) Net cash provided by investing activities - - - - - - (184,514) (184,514) Net increase (decrease) in cash and equivalents (13,697) (28,879) (1,461) (352) 14,750 22,729 163,959 157,049 Cash and investments beginning of year 43,291 148,895 44,347 1,071 9,775 29,620 1,308,173 1,585,172 Cash and investments end of year 29,594 $ 120,016 $ 42,886 $ 719 $ 24,525 $ 52,349 $ 1,472,132 $ 1,742,221 $ Reconciliation of operating income (loss) to net cash provided (used) by operating activities Operating income (loss) (12,697) $ (29,419) $ (1,329) $ (352) $ 19,836 $ 22,729 $ 346,858 $ 345,626 $ Adjustments to reconcile operating income (loss) to net cash provided (used) by operating activities: Taxes receivable - - - - - - (3,734) (3,734) Accounts receivable - 231 - - 7,704 - (80) 7,855 Prepaid items - - - - - - 53 53 Accrued liabilities - - - - - - 4,667 4,667 Accounts payable (12,000) 309 (132) - (12,790) - 709 (23,904) Net cash flows from operating activities (24,697) $ (28,879) $ (1,461) $ (352) $ 14,750 $ 22,729 $ 348,473 $ 330,563 $ Year Ended December 31, 2024 102 ---PAGE BREAK--- County of Otsego, Michigan Schedule of Expenditures of Federal Awards For the Year Ended December 31, 2024 Federal Agency/ Assistance Pass Through Pass Through Agency/ Listing Identifying Federal Program Title Number Number Expenditures U.S. Department of Housing and Urban Development Pass-through from the Michigan State Development Authority Community Development Block Grants/State's Program & Non-Entitlement Grants in Hawaii 14.228 PI 2023 82,393 $ U.S. Department of Transportation Pass-through from the Michigan Department of Transportation Formula Grants for Rural Areas and Tribal Transit Programs 20.509 N/A 305,821 Federal Transit Cluster Grants for Buses and Bus Facilities Program 20.526 N/A 262,325 Pass-through from the Michigan State Police Hazardous Materials Emergency Preparedness Grant 20.703 N/A 2,309 Total U.S. Department of Transportation 570,455 U.S. Department of Treasury COVID-19 - Coronavirus State and Local Fiscal Recovery Funds 21.027 N/A 3,106,470 U.S. Department of Health and Human Services Pass-through from the State of Michigan Child Support Enforcement 93.563 CSPA-17-69002 61,117 Child Support Enforcement 93.563 CSFOC17-69002 47,420 Child Support Enforcement 93.563 CSFOC17-69002 347,286 Total U.S. Department of Health and Human Services 455,823 U.S. Department of Homeland Security Pass-through from the Michigan Department of Natural Resources Boating Safety Financial Assistance 97.012 N/A 2,629 Pass-through from the Michigan State Police Emergency Management Performance Grants 97.042 N/A 6,150 Total U.S. Department of Homeland Security 8,779 Total Federal Expenditures 4,223,920 $ See accompanying notes to the Schedule of Expenditures of Federal Awards. 103 ---PAGE BREAK--- County of Otsego, Michigan Notes to Schedule of Expenditures of Federal Awards Year Ended December 31, 2024 NOTE A – BASIS OF PRESENTATION The accompanying schedule of expenditures of federal awards (the Schedule) included the federal award activity of the County of Otsego, Michigan under programs of the federal government for the year ended December 31, 2024. The information in this Schedule is presented in accordance with the requirements of Title 2 U.S. Code of Federal Regulations, Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Because the Schedule presents only a selected portion of the operations of the County of Otsego, Michigan, it is not intended to and does not present the financial position, changes in net position, or cash flows of the County of Otsego, Michigan. NOTE B – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Expenditures reported on the Schedule are reported on the accrual basis of accounting. Such expenditures are recognized following the cost principles contained in the Uniform Guidance, wherein certain types of expenditures are not allowable or are limited as to reimbursement. NOTE C – INDIRECT COST For purposes of charging indirect costs to federal awards, the County has not elected to use the de minimis cost rate as permitted by CFR Section 200.414 of the Uniform Guidance. NOTE D – MDOT ADMINISTRATION The Michigan Department of Transportation (MDOT) requires that all Road Commissions report all federal and state grants pertaining to their county. During the year ended December 31, 2024, the federal aid received and expended by the Otsego County Road Commission was $419,983 for contracted projects. Contracted projects are defined as projects performed by private contractors paid for and administrated by MDOT. The contracted federal projects are not subject to Single Audit. Negotiated projects are defined as projects performed by Road Commission employees or private contractors paid for and administered by the Road Commission. The amount subject to Single Audit Requirements is less than the $750,000 threshold and, therefore, no single audit was performed. NOTE E – SUBRECIPIENTS There were no awards passed through to subrecipients. 104 ---PAGE BREAK--- INDEPENDENT AUDITORS’ 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 To the County Commissioners County of Otsego, Michigan: We have audited, in accordance with the auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States (Government Auditing Standards), the financial statements of the governmental activities, the business-type activities, the aggregate discretely presented component unit, each major fund, and the aggregate remaining fund information of the County of Otsego, Michigan ("the County"), as of and for the year ended December 31, 2024, and the related notes to the financial statements, which collectively comprise the County’s basic financial statements, and have issued our report thereon dated March 6, 2026. Our report includes a reference to other auditors who audited the financial statements of the Otsego County Bus System, Otsego County Commission on Aging, and Otsego County Road Commission, as described in our report on the County’s financial statements. This report does not include the results of the other auditors’ testing of internal control over financial reporting or compliance and other matters that are reported on separately by those auditors. Report on Internal Control Over Financial Reporting In planning and performing our audit of the financial statements, we considered the County’s internal control over financial reporting (internal control) as a basis for designing audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the County’s internal control. Accordingly, we do not express an opinion on the effectiveness of the County’s internal control. 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. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance. Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses or significant deficiencies may exist that were not identified. ---PAGE BREAK--- Report on Compliance and Other Matters As part of obtaining reasonable assurance about whether the County’s financial statements are free from 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 financial statements. 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 instances of noncompliance or other matters that are required to be reported under Government Auditing Standards as items 2024-001 and 2024-002. County of Otsego, Michigan’s Response to Findings Government Auditing Standards requires the auditor to perform limited procedures on the County of Otsego, Michigan’s responses to the findings identified in our audit and described in the accompanying schedule of findings and questioned costs. The County of Otsego, Michigan’s responses were not subjected to the auditing procedures applied in the audit of the financial statements and, accordingly, we express no opinion on the responses. Purpose of this Report The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the County’s internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the County’s internal control and compliance. Accordingly, this communication is not suitable for any other purpose. Clark, Schaefer, Hackett & Co. East Lansing, Michigan March 6, 2026 106 ---PAGE BREAK--- INDEPENDENT AUDITORS’ REPORT ON COMPLIANCE FOR EACH MAJOR FEDERAL PROGRAM AND REPORT ON INTERNAL CONTROL OVER COMPLIANCE REQUIRED BY THE UNIFORM GUIDANCE To the County Commissioners County of Otsego, Michigan: Report on Compliance for Each Major Federal Program Opinion on Each Major Federal Program We have audited the County of Otsego, Michigan’s (the “County”) compliance with the types of compliance requirements identified as subject to audit in the OMB Compliance Supplement that could have a direct and material effect on each of the County’s major federal programs for the year ended December 31, 2024. The County’s major federal programs are identified in the summary of auditors’ results section of the accompanying schedule of findings and questioned costs. In our opinion, the County complied, in all material respects, with the compliance requirements referred to above that could have a direct and material effect on each of its major federal programs for the year ended December 31, 2024. Basis for Opinion on Each Major Federal Program We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America (GAAS); the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States (Government Auditing Standards); and the audit requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Our responsibilities under those standards and the Uniform Guidance are further described in the Auditors’ Responsibilities for the Audit of Compliance section of our report. We are required to be independent of the County and to meet our other ethical responsibilities, in accordance with relevant ethical requirements relating to our audit. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion on compliance for each major federal program. Our audit does not provide a legal determination of the County’s compliance with the compliance requirements referred to above. Other Matter – Federal Expenditures Not Included in the Compliance Audit The County’s basic financial statements include the operations of the Otsego County Road Commission and Otsego County Commission on Aging, discretely presented component units, which expended federal awards which is not included in the County’s schedule of expenditures of federal awards for the year ended December 31, 2024. Our compliance audit, described in the “Opinion on the Major Federal Program,” does not include the operations of the Otsego County Road Commission and Otsego County Commission on Aging, discretely presented component units because it engaged other auditors to perform their financial statement audit and did not meet the threshold for a single audit in accordance with the Uniform Guidance. ---PAGE BREAK--- Responsibilities of Management for Compliance Management is responsible for compliance with the requirements referred to above and for the design, implementation, and maintenance of effective internal control over compliance with the requirements of laws, statutes, regulations, rules, and provisions of contracts or grant agreements applicable to the County’s federal programs. Auditors’ Responsibilities for the Audit of Compliance Our objectives are to obtain reasonable assurance about whether material noncompliance with the compliance requirements referred to above occurred, whether due to fraud or error, and express an opinion on the County’s compliance based on our audit. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with GAAS, Government Auditing Standards, and the Uniform Guidance will always detect material noncompliance when it exists. The risk of not detecting material noncompliance resulting from fraud is higher than for that resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Noncompliance with the compliance requirements referred to above is considered material, if there is a substantial likelihood that, individually or in the aggregate, it would influence the judgment made by a reasonable user of the report on compliance about the County’s compliance with the requirements of each major federal program as a whole. In performing an audit in accordance with GAAS, Government Auditing Standards, and the Uniform Guidance, we:  Exercise professional judgment and maintain professional skepticism throughout the audit.  Identify and assess the risks of material noncompliance, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the County’s compliance with the compliance requirements referred to above and performing such other procedures as we considered necessary in the circumstances.  Obtain an understanding of the County’s internal control over compliance relevant to the audit in order to design audit procedures that are appropriate in the circumstances and to test and report on internal control over compliance in accordance with the Uniform Guidance, but not for the purpose of expressing an opinion on the effectiveness of the County’s internal control over compliance. Accordingly, no such opinion is expressed. We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and any significant deficiencies and material weaknesses in internal control over compliance that we identified during the audit. Report on 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 a 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. 108 ---PAGE BREAK--- A significant deficiency in internal control over compliance is a deficiency, or a combination of deficiencies, in internal control over compliance with a type of compliance requirement of a federal program that is less severe than a material weakness in internal control over compliance, yet important enough to merit attention by those charged with governance. Our consideration of internal control over compliance was for the limited purpose described in the Auditors’ Responsibilities for the Audit of Compliance section above and was not designed to identify all deficiencies in internal control over compliance that might be material weaknesses or significant deficiencies in internal control over compliance. Given these limitations, during our audit we did not identify any deficiencies in internal control over compliance that we consider to be material weaknesses, as defined above. However, material weaknesses or significant deficiencies in internal control over compliance may exist that were not identified. Our audit was not designed for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, no such opinion is expressed. The purpose of this report on internal control over compliance is solely to describe the scope of our testing of internal control over compliance and the results of that testing based on the requirements of the Uniform Guidance. Accordingly, this report is not suitable for any other purpose. Clark, Schaefer, Hackett & Co. East Lansing, Michigan March 6, 2026 109 ---PAGE BREAK--- County of Otsego, Michigan Schedule of Findings and Questioned Costs Year Ended December 31, 2024 Section I - Summary of Auditors’ Results Financial Statements Type of auditors' report issued: unmodified Internal control over financial reporting: Material weakness(es) identified? no Significant deficiency(ies) identified not considered to be material weaknesses? none reported Noncompliance material to financial statements noted? yes Federal Awards Internal Control over major program:  Material weakness(es) identified? no  Significant deficiency(ies) identified not considered to be material weaknesses? none reported Type of auditors’ report issued on compliance for major program: unmodified Any audit findings that are required to be reported in accordance with 2 CFR 200.516(a)? no Identification of major program: ALN 21.027 – Coronavirus State and Local Fiscal Recovery Funds Dollar threshold to distinguish between Type A and Type B Programs: $750,000 Auditee qualified as low-risk auditee? no 110 ---PAGE BREAK--- Section II - Financial Statement Findings Finding 2024-001 – Deficit Unrestricted/Unassigned Net Position/Fund Balance Condition: The County’s Building & Grounds and Facilities Planning funds have a deficit in unrestricted net position of $(89,163), and unassigned fund balance of $(20,025), respectively. The deficit in unrestricted net position and unassigned fund balance is contrary to the provisions of Public Act 140 of 1971. Recommendation: We recommend that the County develop a plan to eliminate the deficits as soon as possible. View of Responsible Officials: See corrective action plan. Finding 2024-002 – Expenditures in Excess of Appropriations – Budgetary Funds Condition: The expenditure of funds in excess of appropriations are contrary to the provisions of Section 16 of Public Act 2 of 1968, as amended. The County’s 2024 General Appropriations Act (budget) provided for expenditures of the general fund to be controlled to the activity level. As detailed, actual 2024 expenditures exceeded the board’s approved budget allocations for some general fund activities. During the fiscal year ended December 31, 2024, expenditures were incurred in excess of amounts appropriated in the amended budgets for the general fund and Animal Control Fund. Recommendation: We recommend that the County and personnel responsible for administering the activities of the various funds of the County, develop budgetary control procedures for the general fund and special revenue funds, which assure that expenditures do not exceed amounts authorized in the General Appropriations Act, or amendments thereof. View of Responsible Officials: See corrective action plan. Section III – Federal Award Findings and Questioned Costs None 111 ---PAGE BREAK--- Morgan Kwapis, Director of Finance 225 West Main Street, Ste. 203 Gaylord, Michigan 49735 Phone [PHONE REDACTED] Fax [PHONE REDACTED] March 6, 2026 SCHEDULE OF PRIOR AUDIT FINDINGS 2 CFR § 200.511(b) December 31, 2024 Finding Number Status Explanation 2023-001 Uncorrected Repeat finding as 2024-001 2023-002 Uncorrected Repeat finding as 2024-002 112 ---PAGE BREAK--- Morgan Kwapis, Director of Finance 225 West Main Street, Ste. 203 Gaylord, Michigan 49735 Phone [PHONE REDACTED] Fax [PHONE REDACTED] March 6, 2026 CORRECTIVE ACTION PLAN 2 CFR § 200.511 December 31, 2024 Finding Number Planned Corrective Action Anticipated Completion Date Responsible Contact Person 2024-001 The County plans to utilize the general fund to cover the costs and clear the deficit balances at the beginning of 2025. As soon as possible Morgan Kwapis, Finance Director 2024-002 Management has agreed to correct the problem by monitoring the budgets more closely and performing budget amendments on a timely basis. As soon as possible Morgan Kwapis, Finance Director 113