HomeMy WebLinkAboutCOM 0520.000 2008-2010Colleen M. Schrand[
Legislu(ive Audi[or
Mailing Address:
(Former County Building)
l5 Aupuni Street
Hilo, Hawaii 96720
September 1, 2009
TO: Council Members of the Finance Committee
FROM: Colleen Schrandt C$~Ls
Legislative Auditor
Business Address:
333 Kr[auea Avenue, Second Flow
Ben Franklin Building
Hiln, Hawaii 96720
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RE: Financial Audit Report for Fiscal Year Ending June 30, 2008
For your review, deliberation, and acceptance, I am submitting the post-audit Financial
Audit Report of the County of Hawai `i for the Fiscal Year Ended June 3Q 2008, and
Management Letter dated May 27, 2009, as prepared by KPMG LLP. The Report and
Management Letter satisfy the requirement of Section 10-13, Hawaii County Charter,
which requires that an annual independent audit of the accounts and other evidences of
tnancial transactions of the County and of every county agency be conducted.
KPMG LLP has issued an unqualified opinion, indicating that the financial statements
present fairly in all material respects, the financial position of Hawaii County for Fiscal
Year Ending June 30, 2008, in conformance with U.S. generally accepted accounting
principles.
This year's Management Letter contains findings and recommendations related to:
Collection of Receivables
Access to Programs and Data
The auditors will be present at the Finance Committee meeting on September 15, 2009, to
answer any questions you may have. Appropriate department head(s) or their
representative(s) will also be asked to attend the meeting.
Enclosures
Comm. Iqo. `~ a.(~.
cc w/o enclosures: Nancy Rose, KPMG LLP ~
Department of Finance Ref. To: ___.___~._~
Department of Environmental Management Ref. Uafie _,SEP D 2 2049
Department of Data Systems
(Note: Due to its size, the attached report is not made a part of the duplicate
copies, but is made available for viewing in the.'Office of the County Clerk.)
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OFFICE OF THE LEGISLATIVE AUDITOR
Telephone: (808) 961-8386 Facsimile: (808) 96/-8905
Serving [he /n(erests of the People of Our Lsland
L-lawai `i Coemty is an Equal Opporh~nity Provider and 6~mployer
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COUNTY OF HAWAII
Financial Audit Report
Fiscal year ended
June 30, 2008
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Colleen M. Schrandt
Legislafive Aadi[or
Mailing Address:
a (Former County Building)
25 Aupuni Street
Hilo, Hawaii 96720
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Business Address:
333 K7/auea Avenue, Second Floor
Ben Franklin Building
Hilo, Hawaii 96720
OFFICE OF THE LEGISLATIVE AUDITOR
Telephone: (808) 961-8386 Facsimi/e: (808) 96]-8905
a Foreword
a This financial audit report is the result of the audit of the basic financial statements of
the County of Hawaii, State of Hawaii (County), for the fiscal year ended
June 30, 2008. The audit was conducted by KPMG LLP, certified public accountants.
a The audit was performed in accordance with auditing standards generally accepted in
the United States of America as set forth by the American Institute of Certified Public
Accountants and the standards for financial audits set forth in the U.S. General
Accountability Office's Government Auditing Standards. In addition, the audit was
governed by the "Specifications" as set forth in Request For Proposal No. 2194 and the
a "Scope of Work" as set forth in Contract No. 0756, as issued by our office for the
County ofHawai`i.
a This report is divided into two sections. Section I, "Management Letter" includes the
auditors' findings and recommendations based upon their consideration of the County's
internal control and recently issued government accounting pronouncements in
connection with their audit of the County's financial statements for the fiscal year
ended June 30, 2008. This section also includes specific agencies' responses to the
auditors' findings and recommendations that indicates what action has been or will be
a taken.
Section II, "Comprehensive Annual Financial Report" for the fiscal year ended
a June 30, 2008, displays the basic financial statements and schedules of the County, the
auditors' report as to the fairness of presentation of the basic financial statements and
also includes statistical information.
a We wish to express our sincere appreciation for the cooperation and assistance
extended by the management and staff of the various departments during the audit.
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a Colleen Schrandt
Legislative Auditor
a County of Hawaii
Serving the Fnterests of fhe People of Our Island
Hawai `i County is an Equal Opportunity Provider and Employer
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COUNTY OF HAWAII
Financial Audit Report
Fiscal year ended June 30, 2008
Table of Contents
Page
SECTION I -MANAGEMENT LETTER
Management Letter 1
Current Year Findings and Recommendations 2
Recently Issued Governmental Accounting Pronouncements 6
Comments by the Affected Agencies 7
SECTION II -COMPREHENSIVE ANNUAL FINANCIAL REPORT
Introductory Section 1
Financial Section 11
Statistical Sections 115
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SECTION I
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MANAGEMENT LETTER
COUNTY OF HAWAII
Management Letter
Fiscal year ended June 30, 2008
Table of Contents
Page
Management Letter 1
CURRENT YEAR FINDINGS AND RECOMMENDATIONS 2
Collection of Receivables 2
' Access to Programs and Data 4
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I RECENTLY ISSUED GOVERNMENTAL ACCOUNTING PRONOUNCEMENTS 6
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KPMG LLP
PO Box 4150
Honolulu, HI 96812-4150
May 27, 2009
County Council of Hawaii
County of Hawaii
Hilo, Hawaii:
Ladies and Gentlemen:
We have audited the basic financial statements of the County of Hawaii, State of Hawaii (the County),
for the year ended June 30, 2008, and have issued our report thereon dated May 27, 2009. We have also
audited the County's compliance with requirements applicable to the County's federal financial assistance
programs and have issued our report thereon dated May 27, 2009, except for the Schedule of Expenditures
of Federal Awards, which is as of May 27, 2009. In planning and performing our audit of the basic
financial statements of the County, in accordance with auditing standards generally accepted in the United
States of America, we considered the County's internal control over financial reporting (internal control) as
a basis for designing our auditing procedures for the purpose of expressing our opinion on the basic
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.
During our audit, we noted certain matters involving internal control and other operational matters that are
presented for your consideration. These comments and recommendations, all of which have been discussed
with the appropriate members of management, are intended to improve internal control or result in other
operating efficiencies. We have also provided a brief summary of the recently issued governmental
accounting pronouncements for your consideration.
Our audit procedures are designed primarily to enable us to form an opinion on the basic financial
statements and, therefore, may not bring to light all weaknesses in policies or procedures that may exist.
We aim, however, to use our knowledge of the County's organization gained during our work to make
comments and suggestions that we hope will be useful to you.
We would be pleased to discuss these comments and recommendations with you at any time.
This communication is intended solely for the information and use of the County Council and the County
Administration and is not intended to be and should not be used by anyone other than these specified
parties.
Very truly yours,
~l'~G LLB
KPMG LLP, a US. limitetl liability partnership, is the LLS.
member firm of KPMG International, a Swiss cooperative.
a
COUNTY OF HAWAII
STATE OF HAWAII
a Current Year Findings and Recommendations
Fiscal year ended June 30, 2008
a
COLLECTION OF RECEIVABLES
a As discussed in the previous year's management letter, the timely collection of solid waste (landfill) and
wastewater (sewer) receivables continues to be a problem for the Department of Environmental Management. To
address deficiencies in landfill receivables, the County has continued in its efforts to improve collections of
landitll fees and to reduce the amounts outstanding over 90 days. Despite these efforts, the amounts outstanding
over 90 days as a percentage of total receivables increased from 36% at June 30, 2007 to 42% at June 30, 2008.
For sewer receivables, efforts made in previous years, including the passing of a bill to facilitate the County's
collection of past-due sewer charges and an increase in the interest charge on past-due balances, have resulted in
the County maintaining a steady balance in their overdue category as indicated by the amounts outstanding over
90 days as a percentage of total receivables of 55% at both June 30, 2008 and 2007.
Despite the progress and improvements being made, landfill and sewer receivables outstanding more than
90 days still account for a significant portion of the respective balance as follows:
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2008
2007
Amount Percentage of Amount
outstanding total outstanding
Landfill
Current $ 921,216 24% $ 758,296
31 - 60 days 720,049 19 690,282
61 - 90 days 564, 118 15 245,951
90+ days 1,609,116 42 970,535
$ 3,814,499 100% $ 2,665,064
90+ days
42%
61 - 90 days
15%
Curzen[
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31- 60 days
19%
90+ days
36%
61 - 96 ....~.,
9%
Percentage of
total
29%
26
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36
100%
irtent
9%
60 days
26%
2 (Continued)
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COUNTY OE HAWAII
STATE OF HAWAII
Current Year Findings and Recommendations
Fiscal year ended June 30, 2008
Sewer
Current
31- 60 days
61 - 90 days
90+ days
90+ days
55%
Recommendation
~urrent
39%
60 days
3%
61 -90 days
3%
90+ days
55%
34%
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urtent
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- 60 days
7%
61 - 90 days
4%
We recommend that the Department of Environmental Management continue to work with the Department of
Finance to improve collection efforts on delinquent accounts. The Department of Environmental Management
plans to fill a new Credit and Collections Clerk position during 2009, which will focus on the collection of
past-due landfill and wastewater receivables. The addition of this dedicated position should assist in providing
improved collection efforts and address the backlog in the 90 days overdue category for both landfill and
wastewater receivables.
3
2008
Amount Percentage of Amount
outstanding total outstanding
$ 604,083 39% $ 556,009
46,203 3 106,410
48,338 3 68,816
846,018 55 880,883
$ 1,544,642 100% $ 1,6]2,118
2007
Percentage of
total
(Continued)
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COUNTY OF HAWAII
STATE OF HAWAII
a Current Year Findings and Recommendations
Fiscal year ended June 30, 2008
a
ACCESS TO PROGRAMS AND DATA
a We noted the following issues related to information technology (IT) general controls regarding access to
programs and data:
• Information Security Policy - A County-wide information security policy has not been documented,
approved by management, and communicated throughout the organization. As a result, IT procedures
may be performed inconsistently and users will be less likely to adhere to appropriate IT practices.
C • Passwords -Network password parameters for the IAS application do not require complexity. Ineffective
password settings increase the risk of unauthorized access to the system and could ultimately compromise
the integrity of the data, affecting the financial reporting and business decisions based on this data.
• User Access -Functional users of key IT applications were noted as also having administrator access.
Functional users that have the ability to perform security administration functions, such as provisioning of
user access, may be able to override segregation of duty controls within the application.
• Review of User Access - A periodic review of active users and user access rights to identify and remove
inappropriate system access for key IT applications is not performed. Further, a periodic review of
G functional roles within the County to identify process changes and potential segregation of duty conflicts
is not performed. User reviews should be performed periodically by the Department of Data Systems to
help ensure that all users in the system are appropriate and that job transfers and employee terminations
D have been appropriately updated in the system.
• Physical Access -Physical access to the server room hosting the IAS application is not restricted at all
times. The physical access control mechanisms currently in place do not enable the appropriate County
employees to monitor access to the server room.
Recommendation
We recommend that the Department of Data Systems take the following steps in addressing the issues noted
above, as follows:
a • Information Security Policy -Management should document, approve, and communicate a formal
information security policy. 'The policy should be reviewed by management on an annual basis and
evidenced via sign-off of the reviewer(s).
a • Passwords -The following password parameters should be implemented for the IAS application:
- Minimum password length of at least six chazacters
- Increased complexity of passwords, including the use ofalpha-numeric and special characters
- Mandatory password changes every 60 to 90 days
- Auto lock-out after three failed log-in attempts (system administrator intervention should be required
to unlock the account)
4 (Continued)
a
COUNTY OF HAWAII
STATE OF HAWAII
Current Year Findings and Recommendations
Fiscal year ended June 30, 2008
• User Access -Segregation of duty controls should be implemented so that functional users also do not
D have administrator access.
• Review of User Access -Management should conduct periodic reviews of user profiles and templates, as
D well as user access to key IT applications.
• Physical Access -The server room hosting the IAS application should remain locked at all times and only
be unlocked when access to the server room is necessary. Also, management may consider implementing
a physical access mechanism that requires alog-on to enhance monitoring and detective controls.
We did not identify a material impact to the financial reporting process as a result of these issues; however, the
LJ County and the Department of Data Systems can take steps towards enhancing and improving their IT general
~J controls by incorporating the recommendations listed above.
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COUNTY OF HAWAII
STATE OF HAWAII
Recently Issued Govemmental Accounting Pronouncements
For the Fiscal Year ended June 30, 2008
The following are recently issued governmental accounting pronouncements that should be evaluated for their
D impact to the County upon adoption:
• Governmental Accounting Fund Balance Reporting and Governmental Fund Type Definitions
Q Standards Board Statement
No. 54: The objective of this statement is to enhance the usefulness of the
fund balance information by providing clearer fund balance
classifications that can be more consistently applied and by clarifying
the existing governmental fund type definitions. This statement
establishes fund balance classifications that comprise a hierarchy
n based primarily on the extent to which a government is bound to
1 1 observe constraints imposed upon the use of the resources reported in
governmental funds
The initial distinction that is made in reporting fund balance
information is identifying amounts that are considered nonspendable,
such as fund balance associated with inventories. This statement also
a provides for additional classification as restricted, committed,
assigned, and unassigned based on the relative strength of the
constraints that control how specific amounts can be spent.
a The requirements of this statement are effective for financial
statements for periods beginning after June 15, 2010.
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D William P. Kenoi
Mayor
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DEPARTMENT OF ENVIRONMENTAL MANAGEMENT
25 Aupuni Street Hilo, Hawaii 96720
(808) 961.8083 Fax (808) 961-8086
htto://co.hawaii.hi.us/directorv/dir envnm~
Lono A. Tyson
Director
Ivan M. Torigoe
Deputy Director
MEMORANDUM
Ind DATE July 17, 2009
U TO Colleen Schrandt, Legislative Auditor
FROM Lono Tyson, Director
SUBJECT: Fiscal Year 2008 Preliminary Draft Management Letter
We have reviewed the fiscal year 2008 draft Management Letter concerning the Collection of
Receivables and concur with the audit recommendations.
We are continuing to work with the Department of Finance and the Office of the Corporation
Counsel to improve collection efforts.
a To further increase our collection efforts, a new Credit and Collection Clerk position has been
created and is expected to be filled in August 2009. This new position will focus on the
collection of past due solid waste and sewer accounts. Having one position dedicated to
collections will provide more timely and consistent collection efforts and allow us to put more
focus on the larger accounts.
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County of Hawaii is an Equal Oppommity Provider and Employer.
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IL1{ Mayor
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MEMORANDUM
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County of Hawaii
Finance Department
25 Aupuni Street, Room 118 Hilo, Hawaii 96720
(808) 961-8234 Faz (SOS) 961.8248
DATE: August 12, 2009
TO: Colleen Schrandt, Legislative Auditor
FROM: Deanna Sako, Deputy Director '&'
SUBJECT: Fiscal Year 2008 Preliminary Draft Management Letter
Nancy E. Crawford
Director
Deanna S. Sako
Deputy Director
I have reviewed the fiscal year 2008 draft Management Letter comment concerning
"Access to Programs and Data" with Burt Tsuchiya, Director of Data Systems. Since
some of the systems referred to in the comment are related to the Department of Finance,
this is a joint response.
• Information Security Policy - An Information Security Policy Committee has been
created to look at and develop guidelines and ultimately will be preparing a policy for
the County.
• Passwords -The IAS application does not have a feature that would allow us to be
this specific with our password requirements. We will continue to work with our
vendor to determine if it is possible to add this functionality to the software.
• User Access -Due to the limited number of personnel, there are a few applications
that have very carefully selected users with this access.
• Review of User Access -This is currently being done, however, we will work on
implementing this on a more County-wide and annual basis.
• Physical Access -Subsequent to the completion of the audit, the server was moved
and is now locked in the server room.
If you have any questions, please feel free to call me at 961-8092 or Burt Tsuchiya at
981-8300.
Hawaii County is an equal opportunity provider and employer.
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SECTION II
COMPREHENSIVE ANNUAL FINANCIAL REPORT
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COMPREHENSIVE
ANNUAL FINANCIAL REPORT
Fiscal Year Ended June 30, 2008
COUNTY OF HAWAII
Hilo, Hawaii
Harry Kim
Mayor
Dixie Kaetsu
Managing Director
Prepared by
The Department of Finance
William Takaba
Director of Finance
Q
COUNTY OF HAWAII
Comprehensive Annual Financial Report
For the Fiscal Year Ended June 30, 2008
Table of Contents
Page
INTRODUCTORY SECTION
Letter of Transmittal 1
GFOA Certificate of Achievement ~
Organization Chart 8
List of Elected Officials 9
List of Principal Officials 10
FINANCIAL SECTION
Independent Auditors' Report 11
Management's Discussion and Analysis 13
Basic Financial Statements:
Government-wide Financial Statements:
Statement of Net Assets 26
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,` Statement of Activities 28
ll Fund Financial Statements:
Balance Sheet -Governmental Funds 30
Q Reconciliation of the Governmental Funds Balance Sheet to the
Statement of Net Assets 31
Statement of Revenues, Expenditures, and Changes in Fund Balances -
Governmental Funds 32
Reconciliation of the Change in Fund Balances of Governmental .
Funds to the Statement of Activities 34
Statement of Revenues, Expenditures and Changes in Fund Balance -
Budget and Actual (Budgetary Basis) -General Fund 36
Statement of Revenues, Expenditures and Changes in Fund Balance -
Budget and Actual (Budgetary Basis) -Solid Waste Fund 40
Statement of Net Assets -Proprietary Funds 41
~,1 Statement of Revenues, Expenditures, and Changes in Fund Net Assets -
U Proprietary Funds 42
Statement of Cash Flows -Proprietary Funds 43
(~ Statement of Fiduciary Net Assets -Fiduciary Funds 44
~[ Statement of Changes in Fiduciary Net Assets -Fiduciary Funds 45
Notes to the Basic Financial Statements 46
Q
FINANCIAL SECTION
Combining and Individual Nonmajor Fund Statements and Schedules:
Combining Balance Sheet -Nonmajor Governmental Funds
Combining Statement of Revenues, Expenditures, and Changes in Fund
Balances -Nonmajor Governmental Funds
Schedules of Revenues, Expenditures, and Changes in Fund Balances -
Budget and Actual (Budgetary Basis):
Highway Fund
Sewer Fund
Cemetery Fund
Parking Meter Fund
Vehicle Disposal Fund
Bikeway Fund
Workforce Investment Act Fund
Golf Course Fund
Geothermal Relocation Revolving Fund
Beautification Fund
Hawaii County Housing Agency
Park Dedication Fund
Combining Balance Sheet -Agency Funds
Combining Statement of Changes in Assets and Liabilities -Agency Funds
Combining Statement of Net Assets -Private Purpose Trusts
Combining Statement of Changes in Net Assets -Private Purpose Trusts
STATISTICAL SECTION
Table 1 -Net Assets by Component
Table 2 -Changes in Net Assets
Table 3 -Fund Balances, Govemmental Funds
Table 4 -Changes in Fund Balance, Governmental Funds
Table 5 -Real Property Assessed Values by Classification and Tax Rates
Table 6 -Principal Taxpayers
Table 7 -Property Tax Levies and Collections
Table 8 -Ratios of Outstanding Debt by Type
Table 9 -Ratios of General Bonded Debt Outstanding
Table 10 -Legal Debt Margin Information
Table 11 -Demographic and Economic Statistics
Table 12 -Principal Employers, County of Hawaii
Table 13 -Full-Time Equivalent County Government Employees by Function
Table 14 -Operating Indicators by Function
Table I S -Capital Asset Statistics by Functions
(Continued)
Pace
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INTRODUCTORY SECTION
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William P. Kenoi
Mayor
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County of Hawaii
Finance Department
25 Aupuui Street, Room 118 • Hilo, Hawaii 96720
(808)961-8234 Pax (808)961-8248
May 27, 2009
The Honorable Mayor and Members of the Council
County of Hawaii
25 Aupuni Street
Hilo, Hawaii 96720
Nancy E. Crawford
Director
Deanna S. Sako
Deputy Director
We transmit herewith the Comprehensive Annual Financial Report for the County of Hawaii,
State of Hawaii (the County), for the fiscal year July 1, 2007 to June 30, 2008.
This report was prepared by the County's Department of Finance. The accuracy of the financial
statements and the completeness and fairness of their presentation aze the responsibility of the
County government. We believe the enclosed data aze complete and accurate in all material
a respects and are reported in a manner designed to present fairly the financial position and results
of operations of the various funds of the County. All disclosures necessary to convey the
maximum understanding of the County's financial activities have been included. Management's
discussion and analysis is also included To aid users of the financial statements.
This report presents the financial position of the County of Hawaii at June 30, 2008 and results
of operations for the fiscal year then ended. The report is divided into three sections:
The Introductory Section includes this transmittal letter, a Certificate of Achievement for
Excellence in Financial Reporting, the County of Hawai`i's organization chart and lists of
elected and principal officials.
The Financial Section contains management's discussion and analysis, the basic financial
statements, related notes, the combining and individual fund budgetary financial statements,
and the independent auditors' report.
Q The Statistical Section includes selected financial and demographic information, generally
presented on a multi-year basis.
This report includes all funds of the County of Hawaii, including its component unit, the
Department of Water Supply, established by the County Charter as asemi-autonomous body of
-1-
the County government. This component unit is included in the County's reporting entity
because of its financial relationship with the County.
The County provides the full range of municipal services. These include police and fire
protection; emergency medical care; public prosecutor; culture and recreation; sanitation; social
services; water; planning and zoning; construction and maintenance of highways, streets and
infrastructure; real property assessment and tax collection; and general administrative services.
However, the County does not provide such other traditional services as public education,
hospitals and courts. These services are provided by the State government.
The County consists of the island of Hawaii, 4,028 square miles in size. It is twice as large as
the combined area of all the other inhabited islands in the Hawaiian Archipelago. Since there is
no other local or municipal government within the County, there are no overlapping taxes and no
overlapping debt. The County has an elected mayor and anine-member council.
Economic Condition and Outlook
The island of Hawaii, commonly known as the Big Island, is located 214 miles from Honolulu,
the state capital; 2,200 miles from the west coast of the continental United States; and 4,000
miles from Japan. The city of Hilo on the east side of the island serves as the county seat as well
as the transportation and financial center for the Big Island. Hilo's infrastructure includes Hilo
Harbor, adeep-water port, and Hilo International Airport, which is capable of handling fully-
loaded wide-bodied aircraft. Kailua-Kona and South Kohala, major tourist destination areas on
the west side of the Big Island, are served by flights from the United States mainland, Japan and
Canada through the Kona International Airport. Scheduled freight services are available
between the islands by air and sea transport. Communities on the island are linked by a network
of State and County maintained streets and highways.
The Big Island is the most diversified of the neighbor island economies. As a result it is buffered
when any one industry lags. However, while the majority of 2008 proved to be a positive
economic situation, the Big Island currently faces a weakened economic outlook with downturns
in the tourism, construction and retailing sectors across the island.
Continued increasing population has contributed to a growing labor force that numbered 88,683
in 2008. However, the troubled economic situation facing the County is evident in the increasing
unemployment rate, which increased to 3.4 percent at the end of 2007 and almost doubled from
2.8 percent in 2006 to 5.5% at the end of 2008.
Tourism -Tourism is the major industry on the island. In addition to the mild climate and
natural beauty it shares with other areas in the state, the County features the Hawaii Volcanoes
National Park. A popular attraction, the park is the most visited site in the state, handling over 2
million visitors annually, which became even more popular with the increased activity of Kilauea
Volcano. Total visitors to Hawaii decreased from 1,597,056 arrivals in 2006 to 1,324,302
arrivals in 2008. Although the cruise ship industry was a developing source for bringing tourists
to the island of Hawaii in 2007 with 488,515 arrivals, the industry began to shows signs of
decline with the number of cruise ship visitors decreasing by almost half in 2008 to 255,908.
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Scientific Research and Development -Due largely to its unique geographic characteristics
which has attracted scientists in fields of astronomy, meteorology, volcanology, and
agriculture/aquaculture, the County has benefited economically by the significant investments
made in scientific research. The total astronomy related capital investment on Mauna Kea
exceeds $600 million and combined annual budgets are about $60 million, while direct
employment is approximately 475. The industry anxiously awaits the decision concerning the
location of the Thirty Meter Telescope as the choices have been narrowed down to Mauna Kea
and Chile. The Hawaiian Volcano Observatory in Hawaii Volcanoes National Park and the
Natural Energy Laboratory of Hawaii Authority at Keahole, Kona are also major contributors to
n international research and the local economy.
u Agriculture -Forestry, nut and fruit orchards, and floral and vegetable farms have successfully
replaced lands where sugaz once grew. Agriculture makes a substantial contribution to the
County's economy and produces a variety of goods for export as well as for local consumption.
Although the demand for Kona coffee remains good, there is a concern that a slower national
economy could lead to lower sales and prices. Macadamia nut prices have decreased due to an
L1 oversupply in the world market and the increased intensity of the vog has begun to take a toll on
L! the crops of island farmers and gardeners with protea being hit the hardest.
Major Initiatives
For the Year
During the year, the County focused on public works, planning, and other issues affecting the
quality of life in the County. ~.
Public Works -Construction work continued on several West Hawaii road projects including
the completion of a third connector road, Puapua`anui. Safety improvements have begun to open
the northern portion of the Mamalahoa bypass, which is intended to give motorists an alternate
route between North and South Kona. In addition, the County is continuing to investigate using
n Community Facility Districts to help speed up construction of roadways by developers in West
u Hawaii.
Planning -The Puna Community Development Plan (CDP) has been completed and approved
by the Council. The Kona and North Kohala CDPs are pending approval by the Council after
having been reviewed by the Planning Commission. The South Kohala CDP is also completed
but still pending review by the Planning Commission.
Fire -The Ocean Safety Bureau, including its Water Safety Officers, transferred from the
Department of Parks & Recreation to the Fire Department. This Bureau is the principal resource
and consultant on all matters relating to ocean safety on the island of Hawaii.
Environmental Management -The slopes of the South Hilo Sanitary Landfill were changed to
utilize additional air space which extended the life of the landfill unti12012. Due to efforts to
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increase recycling in the County, including green waste and scrap metal, landfill diversion
increased from 22.7 percent to 29.2 percent.
For the Future
Public Safety -Expansion and upgrade of Fire and Police facilities around the island are being
planned and site selection is in process.
Public Works -The County will begin construction on a West Hawaii Civic Center, which is
intended to improve access to government for the Kona residents. The Center is scheduled to be
completed in December 2010. Additionally, the County is working on several major road
projects to enhance traffic in West Hawaii.
Planning -The Department will be conducting a public outreach program for the proposed
Community Development Plan for the Ka`u district.
Other Financial Information
Internal Control
The management of the County is responsible for establishing and maintaining an internal
control structure designed to ensure that the assets of the County are protected from loss, theft or
misuse and to ensure that adequate accounting data are compiled to allow for preparation of
financial statements in conformity with generally accepted accounting principles. The internal
control structure is designed to provide reasonable, but not absolute, assurance that these
objectives are met. The concept of reasonable assurance recognizes that (1) the cost of a control
should not exceed the benefits likely to be derived; and (2) the valuation of costs and benefits
requires estimates and judgments by management.
Budgetary Control
The County maintains budgetary controls to ensure that legal provisions of the annual budget are
complied with and that expenditures do not exceed budgeted amounts.
Activities of the general fund and special revenue funds are included in the annual appropriated
operating budget. Project-length financial plans are adopted for the capital projects fund.
Budgetary control is established at the department level.
Formal budgetary integration is employed as a management control device for the general fund,
special revenue funds, and the capital projects fund. Budgetary control for the debt service fund
is achieved through general obligation bond indenture provisions.
The basis of accounting used for the budgets of the general and special revenue funds differs
from generally accepted accounting principles. Intergovernmental revenues are recognized when
awarded by the granting agency, encumbrances and unexpended allotments are treated as
expenditures for purposes of determining legal compliance with the annual budget, all leases are
treated as operating leases, and accounts payable are not accrued.
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The County also maintains an encumbrance accounting system as one technique of
accomplishing budgetary control. Encumbrances outstanding at fiscal year end are reported as
reservations of fund balances and do not constitute expenditures or liabilities because they will
be honored during the following year. As demonstrated by the statements and schedules
included in the financial section of this report, the County continues to meet its responsibility for
sound financial management.
Pension Plan
All full-time employees of the County participate in the Employees' Retirement System of the
State of Hawaii, acost-sharing, multiple-employer defined benefit public employee retirement
system.
Cash Management
Cash temporarily idle during the year was invested in demand deposits, certificates of deposit
and repurchase agreements. The average yield on investment was 4.14%.
The County's policy is to minimize credit and market risks while maintaining a competitive yield
on its portfolio. Accordingly, with the exception of $201,236 held by a rental management
agent, deposits were either insured by federal depository insurance, collateralized, or secured by
irrevocable letters of credit. All collateral on deposit was held for safe keeping with aCounty-
designated agent in the County's name.
Risk Management
The County maintains insurance coverage for privately owned police vehicles as well as for
other purposes. The County is substantially self-insured for its vehicles as well as for all other
perils including workers' compensation and general liability.
Other Information
Independent Andit
The County Charter requires an annual audit by independent certified public accountants.
KPMG LLP was selected by the County Council to perform the audit.
Employee (Inion Contracts
County employees are members of eight different bargaining units. All of the bargaining units
have contracts that run through at least June 30, 2009.
Certificate of Achievement
The Government Finance Officers Association of the United States and Canada (GFOA)
awarded a Certificate of Achievement for Excellence in Financial Reporting to the County of
Hawaii for its Comprehensive Annual Financial Report for the fiscal year ended June 30, 2007.
This was the twentieth consecutive year that the government has achieved this prestigious award.
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In order to be awarded a Certificate of Achievement, a government must publish an easily
readable and efficiently organized comprehensive annual financial report. This report must
satisfy both generally accepted accounting principles and applicable legal requirements.
A Certificate of Achievement is valid for a period of one year only. We believe our current
Comprehensive Annual Financial Report continues to meet the Certificate of Achievement
Program's requirements, and we are submitting it to the GFOA to determine its eligibility for
another certificate.
Acknowledgments
The preparation of this report was made possible by the efficient and dedicated services of the
entire staff of the Department of Finance and fiscal personnel in other departments. I am grateful
for their help in preparing this report. I also thank the Mayor and the members of the County
Council for their interest and support in assuring the continuing sound financial condition of the
County of Hawaii.
NANCY E. CRAWFORD
Deputy Director of Finance
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Certificate of
Achievement
for Excellence
in Financial
Reporting
Presented to
County of Hawaii
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For its Comprehensive Annual
Financial Report
for the Fiscal Year Ended
June 30, 2007
A Certificate of Achievement for Excellence in Financial
Reporting is presented by the Government Finance Officers
Association of the United States and Canada to
govemment units and public employee retirement
systems whose comprehensive annual financial
reports (CAFIts) achieve the highest
standards in govemment accounting
and financial reporting.
President
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Executive Director
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County of Hawaii
Organization Chart
County Electorate
CountyCouncil~
County Clerk
Mayor h-~ Prosecuting Attorney
Office of Mana ee ment:
Managing Director
Departments and agencies
under direct supervision
of the Mayor and/or
Managing Director:
Agencies under
administrative supervision
of the Mayor:
Departments under
commissions and
administrative supervision
of the Mayor:
Corporation Counsel
Finance
Planning
Environmental Management
Research & Development
Public Works
Parks & Recreation
Dala Sys[ems
Civil Defense
Office of Aging
Mass Transportation
Housing & Community
Development
Civil Service
Police
Liquor Control
Fire
Water Supply
(semi-autonomous)
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County of Hawaii
Elected Officials
Administrative Officers (Term: 2004-2008)
Harry Kim
Jay T. Kimura
County Council (Term: 2006-2008)
Pete Hoffmann
K. Angel Pilago
Brenda Ford
Stacy K. Higa
Donald Ikeda
Bob Jacobson
Emily I. Naeole
Dominic Yag'ong
J Yoshimoto
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Mayor
Prosecuting Attorney
Chair
Vice Chair
Member
Member
Member
Member
Member
Member
Member
Principal Officials
June 30, 2008
County Clerk Casey Jarman
Legislative Auditor Colleen Schrandt
Managing Director Dixie Kaetsu
Deputy Managing Director Barbara J. Kossow
Corporation Counsel Lincoln Ashida
Director of Finance William Takaba
Planning Director Christopher Yuen
Director of Personnel Michael R. Ben
Director of Research and Development Jane Testa
Chief of Police Lawrence K. Mahuna
Fire Chief Darryl Oliveira
Director of Public Works Bruce McClure
Director of Environmental Management Bobby Jean Leithead-Todd
Director of Parks and Recreation Patricia Engelhard
Manager, Department of Water Supply Milton Pavao
Civil Defense Administrator Quince Mento
Director of Liquor Control Janice A. Pakele
Transit Operations Administrator Thomas Brown
Executive on Aging Alan Parker
Administrator, Office of Housing and
Community Development Edwin S. Taira
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FINANCIAL SECTION
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KPM, .G
KPMG LLP
PO Box 4150
Honolulu, HI 968124150
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Independent Auditors' Report
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The Chair and Members
County Council
County of Hawaii
State of Hawaii:
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We have audited the accompanying financial statements of the governmental activities, the business-type
activities, the discretely presented component unit, each major fund, and the aggregate remaining fund
information of the County of Hawaii, State of Hawaii (the County), as of and for the year ended June 30,
2008, which collectively comprise the County's basic financial statements as listed in the table of contents.
These financial statements are the responsibility of the County's management. Our responsibility is to
express opinions on these financial statements based on our audit.
We conducted our audit in accordance with auditing standards generally accepted in the United States of
America and the standards applicable to financial audits contained in Government Auditing Standards,
issued by the Comptroller General of the United States. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes consideration of internal control over financial reporting as a basis for
designing 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 over financial reporting. Accordingly, we
express no such opinion. An audit also includes examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements, assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our opinions.
In our opinion, the financial statements referred to above present fairly, in all material respects, the
respective financial position of the governmental activities, the business-type activities, the discretely
presented component unit, each major fund, and the aggregate remaining fund information of the County
as of June 30, 2008, and the respective changes in financial position, and where applicable, cash flows
thereof, and the respective budgetary comparisons for the general fund and the solid waste fund for the
year then ended in conformity with U.S. generally accepted accounting principles.
In accordance with Government Auditing Standards, we have also issued out report dated May 27, 2009 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 to describe the scope of our testing of internal control over financial reporting
and compliance and the results of that testing, and not to provide an opinion on the internal control over
financial reporting or on compliance. That report is an integral part of an audit performed in accordance
with Government Auditing Standards and should be considered in assessing the results of our audit.
KPMG LLP, a U.S. limitetl liability partnersbip, is fie U.S.
member tirm o~ KPMG In Wrnational, a Swiss cooperative.
The management's discussion and analysis on pages 13 through 23 is not a required part of the basic
financial statements but is supplementary information required by U.S. generally accepted accounting
principles. We have applied certain limited procedures, which consisted principally of inquiries of
management regarding the methods of measurement and presentation of the required supplementary
information. However, we did not audit the information and express no opinion on it.
Our audit was conducted for the purpose of forming opinions on the financial statements that collectively
comprise the County's basic financial statements. The introductory section, the combining and individual
nonmajor fund financial statements and schedules, and the statistical section are presented for purposes of
additional analysis and are not a required part of the basic financial statements. The combining and
individual nonmajor fund financial statements and schedules have been subjected to the auditing
procedures applied in the audit of the basic financial statements and, in our opinion, are fairly stated in all
material respects in relation to the basic financial statements taken as a whole. The introductory section and
the statistical section have not been subjected to the auditing procedures applied in the audit of the basic
financial statements, and accordingly, we express no opinion on them.
K~w(G LLB
May 27, 2009
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MANAGEMENT'S DISCUSSION AND ANALYSIS
o This section of the County of Hawai`i's (the County) Comprehensive Annual Financial Report
presents a narrative overview and analysis of the financial activities of the County for the fiscal
year ended June 30, 2008. We encourage readers to consider the information presented here in
a conjunction with additional information that we have furnished in our letter of transmittal.
FINANCIAL HIGHLIGHTS
• The assets of the County exceeded its liabilities at the end of the fiscal yeaz by $514.6 million
(net assets). This amount includes $27.9 million in unrestricted net assets, an increase of $5.9
million from the prior year.
• The County's total net assets increased by $42.5 million during the fiscal year.
• As of the close of the current fiscal year, the County's govemmental funds reported combined
ending fund balances of $254.5 million, a decrease of $32.7 million from the prior year.
Approximately 37 percent of this total amount, $95.1 million, is available for spending at the
County's discretion (unreserved fund balance).
• At the end of the current fiscal yeaz, unreserved fund balance for the general fund was $31.4
million, or 13.4 percent of total general fund expenditures.
a • The County's total current and other assets decreased by $29.5 million (9.0 percent) during
the current fiscal year. The key factors in this decrease were the net decreases in cash and
investments ($33.3 million) offset by the increase in receivables ($4.3 million).
a 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 comprise three components: (1)
Government-wide financial statements,'(2) Fund financial statements, and (3) Notes to the basic
financial statements. This report also contains other supplementary information in addition to
the basic financial statements themselves.
Government-wide Financial Statements
a The government-wide financial statements are designed to provide readers with a broad overview
of the County's finances, in a manner similar to aprivate-sector business.
The statement of net assets presents information on all of the County's assets and liabilities,
with the difference between the two reported as net assets. Over time, increases or decreases in
net assets may serve as a useful indicator of whether or not the financial position of the County is
a improving or deteriorating.
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s net assets changed
The statement of activities presents information showing how the County
during the most recent fiscal year. All changes in net assets are reported as soon as the
a underlying event giving rise to the change occurs, regardless of the timing of related cash flows.
Thus, revenues and expenses are reported in this statement for some items that will only result in
cash flows in future fiscal periods, such as revenues pertaining to uncollected taxes and expenses
a pertaining to earned but unused vacation and sick leave.
Both of the government-wide financial statements distinguish functions of the County that are
principally supported by taxes and intergovernmental revenues (governmental activities) from
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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
public safety, highways and streets, health, education and welfaze, culture and recreation,
sanitation and general government. The business-type activities of the County include rental
housing for senior citizens and families.
The government-wide financial statements include not only the County itself (known as the
primary government), but also the Department of Water Supply, a legally separate entity that the
County is financially accountable for. Financial information for this component unit is reported
separately from the financial information presented for the primary government itself.
Fuud Financial Statements
The fund financial statements are designed to report information about groupings of related
accounts which are used to maintain control over resources that have been segregated for specific
activities or objectives. The County, like other state and local governmehts, uses fund accounting
to ensure and demonstrate compliance with finance-related legal requirements. All of the funds
of the County can be divided into the following three categories: governmental funds,
proprietary funds, and fiduciary funds.
Governmeutal funds. Governmental funds are used to account for essentially the same
functions reported as governmental activities in the government-wide financial statements -
i.e., most of the County's basic services are reported in governmental fuhds. These
statements, however, focus on (1) how cash and other financial assets can readily be
converted to available resources and (2) the balances left at year-end that are available for
spending. Such information may be useful in determining what financial resources are
available in the neaz future to finance the County's programs.
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 funds balance sheet
and the governmental funds statement of revenues, expenditures, and changes in fund
balances provide a reconciliation to facilitate this comparison between governmental funds
and governmental activities.
The County maintains several individual governmental funds organized according to their
type (general, special revenue, debt service, and capital projects). Information is presented
separately in the governmental funds balance sheet and in the governmental funds statement
of revenues, expenditures, and changes in fund balances for the general fund and capital
projects fund, which are considered to be major funds. Data from the remaining
governmental funds are combined into a single, aggregated presentation. Individual fund
data for each of the non-major governmental funds is provided in the form of combining
statements elsewhere in this report.
The County adopts an annual appropriated budget for its general fund and special revenue
funds. A budgetary compazison statement has been provided for these funds to demonstrate
compliance with this budget. The budgetary compazison statement for the general fund is
located in the basic financial statements, whereas the budgetary comparison statements for
the nonmajor special revenue funds are presented elsewhere in this report.
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Proprietary funds. Proprietary funds are generally used to account for services for which
the County charges outside customers. Proprietary funds provide the same type of
information as shown in the government-wide financial statements, only in more detail. The
County maintains only one type of proprietary funds, enterprise funds. Enterprise funds
are used to report the same functions presented as business-type activities in the government-
wide financial statements. The County uses enterprise funds to account for the operations of
the Kulaimano Elderly Housing Project and the Ouli Ekahi Affordable Housing Project.
Fiduciary foods. Fiduciary funds are used to account for resources held for the benefit of
parties outside the County. The private-purpose trusts and the agency funds aze reported
under the fiduciary funds. Since the resources of these funds are not available to support the
County's own programs, they are not reflected in the government-wide financial statements.
The accounting used for fiduciary funds is much like that used for proprietary funds.
Notes to the Basic Financial Statements
The notes to the basic financial statements provide additional information that is essential to a full
understanding of the data provided in the government-wide and fund financial statements.
Other Supplementary Information
In addition to the basic financial statements and accompanying notes, this report also presents
supplementary information, including the combining statements referred to earlier in connection
with nonmajor governmental funds and budget comparison statements for the nonmajor special
revenue funds. This supplementazy information is presented immediately following the notes to
the basic financial statements.
GOVERNMENT-WIDE FINANCIAL ANALYSIS
Condensed Schedule of Net Assets
June 30, 2008 and 2007
Primary Goveroment
Governmental Activities Business-type Activities '1'o[al
2008 2007 2008 2007 2008 2007
Assets:
Curtent and other assets $ 295,415,507 S 324,854,922 $ 1,202,438 $ 1,272,461 $ 296,617,945 $ 326,127,383
Capital assets, net 608,669,449 545,921,770 1,278,316 1,306,263 609,947,765 547,228,033
Total assets $ 904,084,956 $ 870,776,692 $ 2,48Q,754 $ 2,578,724 $ 906,565,710 $ 873,355,416
Liabilities:
Long-term liabilities
outstanding 361,199,734 371,342,710 970,892 995,854 362,170,626 372,338,564
Other liabilities 29,403,624 28 437,233 409 891 451,873 29,813,515 28 889 106
'roml liabilities $ 390,603 358 $ 399,779,943 $ 1,380,783 $ 1,447,727 $ 391,984,141 $ 401 227 670
Net assets:
Invested in capital assets, net
of related debt 419,174,559 394,789,635 307,424 3]0,409 419,481,983 395,1OQ,044
Restricted 66,977,935 54,857,023 184,352 183,832 67,162,287 55,040,855
Unrestricted 27,329,104 21,350091 608,195 636756 27,937,299 21,986,847
Total net assets $ 513,481,598 $ 470,996,749 $ 1,099,971 $ 1,130,997 $ 514,581,569 $ 472,127,746
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Analysis of Net Assets
As noted earlier, net assets may serve over time as a useful indicator of a government's financial
position. In the case of the County, assets exceeded liabilities by $514.6 million at the close of
the most recent fiscal year.
By far the largest portion of the County's net assets (82 percent) reflects its investment in capital
assets (e.g, land, buildings, infrastructure, and equipment), 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 this debt must be provided from other sources, since the capital assets themselves
cannot be used to liquidate these liabilities.
An additional portion of the County's net assets (13 percent) represents resources that are subject
to external restrictions on how they may be used.
At the end of the current fiscal year, the County is able to report positive balances in all three
categories of net assets, both for the government as a whole, as well as for its separate
governmental and business-type activities.
The County's net assets increased by $42.5 million during the current fiscal year. Approximately
$26.6 million of the increase is due to increases in real property tax valuations. There was an
increase in miscellaneous revenues of approximately $4.7 million, which is mostly due to the sale
of real property. Operating grants and contributions also increased by approximately $8.0
million.
The County's current and other assets decreased by $29.5 million during the current fiscal year.
Approximately $33.3 million of the decrease is due to a decrease in cash and investments, which
is offset by a $4.3 million increase in receivables. The decrease in cash and investments is
primarily due to the spending of proceeds from previously issued bonds.
The County's net capital assets increased by $62.7 million due to the large amount of capital
improvement projects done by the County during the current fiscal year. See further discussion
of the increase in capital assets on page 21.
The County's long-term liabilities outstanding decreased by $10.2 million due to normal principal
reduction on the bonds and loans, offset by loan increases and increases in other long-term
liabilities. See further discussion of the increase in long-term debt outstanding on page 22.
The County's other liabilities increased by $0.9 million primarily due to increases in accounts
payable and accrued liabilities ($2.0 million) and other liabilities ($1.1 million) offset by a
decrease in unearned revenue ($2.3 million).
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a Condensed Schedule of Changes in Net Assets
For the Fiscal Years Ended June 30, 2008 and 2007
a Primary Government
Governmental Activities Business-type Activities Total
2008 2~ 2008 2007 2008 2007
Revenues:
a Program revenues:
Charges for services $ 42,557,486 $ 40,532,366 $ 365,655 $ 345,802 $ 42,923,14] $ 40,878,168
Operating grants and contributions 46,1]7,399 38,068,138 125,795 134,211 46,243,!94 38,202,349
Capital grents and contributions 9,327,408 7,805,986 - - 9,327,408 7,805,986
General revenues:
Property taxes 210,217,690 183,611,050 - - 210,217,690 183,611,050
Other taxes 25,296,206 24,387,670 - 25,296,206 24,387,670
a Grants and contribmions, unrestrict ed 19,395,089 18,999,596 = 19,395,089 18,999,596
Investment earnings 11,454,850 9,727,911 33,828 35,55] 1!,488,678 9,763,462
Miscellaneous 7,801,194 3,063,413 - - 7,801,194 3,063,413
Total revenues 372,167,322 326,196,130 525,278 515,564 372,692,600 326,711,694
Expenses:
General government 68,794,961 46,349,904 - 68,794,961 46,349,904
Public safety 137,500,608 118,010,316 - - 137,500,608 118,010,316
Highways and streets 33,577,707 28,185,968 33,577,707 28,185,968
Health, eduoation end welfare 14,986,972 23,203,874 556,304 698,329 15,543,276 23,902,203
Culture and recreation
Sanitation 20,450,172
4!,254,728 26,948,501
42,682,281 = - 20,450,172
41,254,728 26,948,801
42,682,281
Interest on long-term debt 13,117,325 10,303,332 13,117,325 10,303,332
Total expenses 329,682,473 295,684,176 556,304 698,329 330,238,777 296,382,505
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Increase (decrease) in net assets 42,484,849 30,511,954 (31,026) (182,765) 42,453,823 30,329,
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Net assets a[beginning ofyear 470,996,749 440,484,795 1,130,997 1,313,762 472,127,746 441,798,557
a Net assets at end ofyear $ 513,481,598 $ 470,996,749 $ 1,099,971 $ 1,130,997 $ 514,581,569 $ 472,127,746
Analysis of Changes in Net Assets
Governmental activities. Governmental activities increased the County's net assets by $42.5
million or substantially all of the total growth in net assets of the County.
a Total revenues increased by $46.0 million (14 percent). The County's property taxes increased
by $26.6 million (14 percent) during the yeaz. Most of this increase is attributable to the increase
in assessed values. Miscellaneous Revenues increased by $4.7 million (155 percent) mostly due
to the sale of real property. Investment eaznings and operating grants and contributions increased
by $1.7 million Q 8 percent) and $8.0 million (21 percent), respectively.
Total expenses increased by $34.0 million (11 percent). The majority of the expense categories
increased and this was partly due to negotiated pay raises and related benefits. Much of the
increase in all areas is due to the increased cost of employee benefits, particularly employee
retirement and health insurance costs and the implementation of Governmental Accounting
Standards Board Statement No. 45, Accounting and Financial Reporting 6y Employers for
Postemployment Benefits Other than Pensions (GASB Statement No. 45). Increases are also due
to an increase in capital project expenditures for this fiscal year. For the most part, other
fluctuations in expenses closely paralleled inflation and growth in demand for services.
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Expenses and Program Revenues -Governmental Activities
Year Ended June 30, 2008
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1ac,ooo,ooo
120,000,000
^Expenses
^Program revenues
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100,000,000
80
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Generel Public safety Highways and Health, Culture and Sanitation Interest on
government streets education and recreation long-term debt
welfare
Revenues by Source -Governmental Activities
Year Ended June 30, 2008
Miscellaneous
Grants and con
restricted t<
progr[
5%
Other taxes
7%
vices
oerating grants and
contributions
12%
Capital grants and
contributions
3%
Property taxes
57%
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The charts above illustrate the County's governmental expenses and revenues by function, and its
revenues by source. As shown, public safety is the lazgest function in expense (42 percent),
followed by general government (21 percent) and sanitation (13 percent). General revenues such
as property and other taxes are not shown by program, but are effectively used to support
program activities countywide. For governmental activities overall, without regard to programs,
property taxes are the largest single source of funds (57 percent), followed by operating grants
and contributions (12 percent) and charges for services (1 ]percent).
Business-type activities. Business-Type activities decreased the County's net assets by $31,026.
Expenses for health, education and welfare account for all of the $556,304 of expenses. Charges
for services were $365,655, operating grants and contributions were $125,795 and investment
earnings were $33,828. Expenses decreased $142,025 (20 percent) due primarily to decreases in
repairs and maintenance ($68,197) and lease expenses ($66,361).
FINANCIAL ANALYSIS OF THE COUNTY'S FUNDS
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As noted earlier, the County uses fund accounting to ensure and demonstrate compliance with
finance-related legal requirements.
Governmental funds. The focus of the County's governmental funds is to provide information
on near-term inflows, outflows, and balances of spendable resources. Such information is useful
in assessing the County's financing requirements. In particular, unreserved fund balance may
serve as a useful measure of a government's net resources available for spending at the end of the
fiscal year.
As of the end of the current fiscal year, the Counry's governmental funds reported combined
ending fund balances of $254.5 million, a decrease of $32.7 million in compazison with prior
year. Approximately 37 percent of this total amount ($95.1 million) constitutes unreserved fund
balance, which is available for spending at the County's discretion. The remainder of the fund
balance is reserved to indicate that it is not available for new spending because it has already been
committed 1) to liquidate contracts and purchase orders'for last fiscal year ($102.4 million), 2) to
pay debt service ($22.1 million), or 3) for a variety of other restricted purposes ($34.9 million).
The general fund is the chief operating fund of the County. At the end of the current fiscal year,
unreserved fund balance of the general fund was $31.4 million, while total fund balance reached
$48.9 million. As a measure of the general fund's liquidity, it may be useful to compare both
unreserved fund balance and total fund balance to total fund expenditures. Unreserved fund
balance represents 13 percent of total general fund expenditures, while total fund balance
represents 21 percent of that same amount.
The fund balance of the County's general fund increased by $4.3 million during the current fiscal
year. Key factors in this increase are as follows:
• An increase of $26.9 million (15 percent) in property tax revenue due to increasing property
values.
• An increase of $3.5 million (693 percent) in the revenues generated from the sale of assets
due to the sale of real property.
• An increase of $5.3 million (14 percent) in general government expenditures due primazily to
increases in expenditures for finance ($2.2 million), planning ($1.0 million) and building
maintenance ($1.1 million). The increase of $2.2 million in finance is due to the transfer of
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the vehicle registration and licensing division from police to finance. Increases were noted in
community development plans as well as in salaries and wages due to negotiated pay
increases and an increase in the number of positions.
• An increase of $10.2 million (12 percent) in public safety expenditures due primarily to
increases in expenditures for police ($3.2 million), fire ($2.4 million), civil defense ($3.0
million) and prosecuting attorney ($1.3 million). Increases were noted in many of the grant-
funded programs as well as in salaries and wages due to negotiated pay increases.
• An increase of $13.6 million in other post employment benefit expenditures as a result of the
County's implementation of GASB Statement No.45, which requires the County to recognize
and report the cost of an employee's other post employment benefits over the period that the
employee renders service.
The fund balance of the County's capital projects fund decreased by $42.1 million during the
current fiscal year. The decrease is primarily due to the combined total of the fund's main
revenue sources of intergovernmental revenue ($3.7 million), transfers in ($14.0 million) and
state revolving fund loan proceeds ($1.9 million) being less than capital expenditures ($64.1
million) for the current fiscal year.
The debt service funds, included in other governmental funds, have combined total fund balances
of $22.2 million, all of which is reserved for the payment of debt service. The net increase in the
combined fund balances during the current year in the debt service funds was $3.4 million (18
percent).
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 assets of the Kulaimano Elderly Housing Project (Kulaimano) at the end of the
year amounted to $712,275, and the unrestricted net deficit of the Ouli Ekahi Affordable Housing
Project (Ouli Ekahi) amounted to $104,080. The net assets for Kulaimano decreased by $54,173
and the net assets for Ouli Ekahi increased by $23,147. Other factors concerning the finances of
these two funds have already been addressed in the discussion of the County's business-type
activities.
GENERAL FUND BUDGETARY HIGHLIGHTS
Differences between the original budget and the final amended budget were primarily the result
of an $7.6 million increase in appropriations and an $2.5 million increase in transfers out and can
be briefly summarized as follows:
$7.5 million in increases due to the appropriations for capital and operating grants and
contributions.
$2.4 million in increases due to the appropriation of the sale of real property to be used in the
year's operations.
$1.9 million increase in transfer out to the capital projects fund is mostly due to transfers of
appropriations from other operational accounts and only $250,000 is a new appropriation
relating to help cover costs relating to Road Improvements.
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Differences between the final budget and the actual (budgetary basis) resulted in $2.6 million
more revenues than expected and $14.6 million less expenditures than appropriated. This is
primarily due to the following factors:
• $3.1 million negative variance in taxes and assessments revenue resulting from collections
being less than expected.
• $7.5 million positive variance in interest and penalties revenue resulting from higher earnings
on cash and investments than expected.
• $2.8 million negative variance in intergovernmental revenue, including $1.5 million in
federal grants and $1.3 million in state grants.
• $6.3 million positive variance in general government expenditures caused by an overall effort
by each department to hold the line on expenditures.
• $4.1 million positive variance in public safety expenditures primarily due to increased efforts
to control costs during the budget year.
CAPITAL ASSET AND DEBT ADMINISTRATION
Capital assets. The County's investment in capital assets for its governmental and business-type
activities as of June 30, 2008 amounts to $609.9 million (net of accumulated depreciation). This
investment in capital assets includes land, buildings and improvements, equipment, and
infrastructure assets, which consists of primarily roads and bridges. The total increase in the
County's investment in capital assets for the current fiscal year was 12 percent.
Major capital asset events during the current fiscal year included the following:
• Construction continued on the Waikoloa Housing Project; construction in progress as of the
end of the current fiscal year had reached $7.1 million.
• Construction continued on the East Hawaii Regional Sort Station; construction in progress as
of the end of the current fiscal year had reached $4.0 million.
• Construction began on the Pahoa Fire Station; construction in progress as of the end of the
current fiscal year had reached $3.3 million.
• Construction began on the Laiopua Connector Road; construction in progress as of the end of
the current fiscal year had reached $7.5 million.
• Construction was completed on the Kinoole Senior Residence Project; construction in
progress of $6.6 million was transferred to Buildings & Improvements.
• Construction was completed on the Hualalai Elderly Housing Phase III; construction in
progress of $4.7 million was transferred to Buildings & Improvements.
_21 _
Capital Assets
(net of depreciation)
As of June 30, 2008 and 2007
Governmental Activities Business-type Activities Total
2008 2007 2008 2007 2008 2007
Land $ 28,187,574 $ 22,999,168 $ 753,877 $ 753,877 5 28,941,451 $ 23,753,045
Infrastructure assets 162,915,082 157,241,475 - - 162,915,082 157,241,475
Ground and site improvements - - 82,598 86,352 82,598 86,352
Buildings and improvements 247,018,221 219,677,063 428,189 452,804 247,446,410 220,129,867
Equipment 45,506,721 36,237,623 13,652 !3,230 45,520,373 36,250,853
Construction work io progress 125,041,851 109,766,441 125 041 851 109,766,441
Total $ 608,669,449 $ 545,921,770 $ 1,278,316 $ 1,306,263 $ 609,947,765 $ 547,228,033
Additional information on the County's capital assets can be found in note 6 to the basic financial
statements.
Long-term debt. Long-term debt is comprised of bonds of $257.1 million and State Revolving
Fund loans of $29.4 million. At the end of the current fiscal year, the County had total bonded
debt outstanding of $257.1 million. This entire amount was comprised of general obligation
bonds which are backed by the full faith and credit of the County.
The County's total bonded debt decreased by $12.2 million (5 percent) during the current fiscal
year due to normal principal reduction.
The County maintained an "A+" rating from Standard & Poor's, which was upgraded to "AA--"
on November 9, 2008, an "Al"rating from Moody's and an "A+" rating from Fitch for general
obligation debt.
State statutes limit the amount of general obligation debt the County may issue to 15 percent of
the total assessed value of all county real property as established for tax purposes on the last tax
assessment rolls. The current debt limitation for the County is $3.9 billion, which is in excess of
the County's outstanding general obligation debt. Currently the County's outstanding debt
represents seven percent of our debt limitation.
At the end of the current fiscal year, the County also had loans outstanding from the State Water
Pollution Control Revolving Fund amounting to $29.4 million and notes payable to the U.S.
Department of Agriculture, Fanners Home Administration amounting to $1.0 million.
Additional information on the County's long-term debt can be found in note 10 to the basic
financial statements.
ECONOMIC FACTORS AND NEXT YEAR'S BUDGETS AND RATES
• The unemployment rate for the County is 3.3 percent, which is up from the prior year rate of
2.8 percent.
• The number of visitors to the County for the most recent calendar year was 1,598,831, up less
than one percent from the previous year's count of 1,597,056.
Both of these factors were considered in preparing the County's budget for the 2009 fiscal year.
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At the end of the current fiscal year, unreserved fund balance in the general fund was $31.4
million. The County has appropriated $16.1 million of this amount for spending in the 2009
fiscal year budget.
REQUESTS FOR INFORMATION
I I This financial report is designed to provide a general overview of the County's finances for all
tttJJJ those with an interest in the government's finances. Questions concerning any of the information
provided in this report or requests for additional information should be addressed to the Director
n of Finance, County of Hawaii, 25 Aupuni Street, Room 118, Hilo, Hawaii 96720.
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BASIC FINANCIAL STATEMENTS
_ 25 _
COUNTY OF HAWAII
Statement of Net Assets
June 30, 2008
Assets
Current assets:
Cash and cash equivalents (notes 3 and 14)
Restricted cash and cash equivalents (note 3)
Investments (notes 3 and 14)
Receivables, net (note 4)
Receivable from improvement district
(notes 4 and 10)
Internal balances (note 5)
Inventories
Prepaid expenses
Other
Total current assets
Restricted cash and cash equivalents (note 3)
Restricted investments (note 14)
Loans receivable, excluding current portion
Receivable from improvement district, excluding
current portion (notes 4 and ] 0)
Deferred charges
Capital assets (notes 6, 8 and 14):
Utility plant in service, net
Infrastructure assets, net
Ground and site improvements, net
Buildings and improvements, net
Equipment, net
Construction work in progress
Land
Total capital assets, net
Total noncurrent assets
Total assets
Primary Government
Governmental Business-type Component
Activities Activities Total Unit
$124,869,817 $ 214,047 $125,083,864 $ 3,855,521
70,642 33,018 103,660 -
132,264,389 700,000 132,964,389 42,226,609
30,402,811 57,458 30,460,269 5,098,837
89,181 - 89,181 -
2,700 (2,700) - -
1,883,804 - 1,883,804 1,290,752
- 1,474 1,474 213,535
2,202,209 - 2,202,209 -
291,785,553 1,003,297 292,788,850 52,685,254
199,141 199,141 -
- - 19,739,823
- - 278,028
3,629,954 - 3,629,954
- - 7,035,638
149,664,692
162,915,082 - 162,915,082 -
- 82,598 82,598 -
247,018,221 428,189 247,446,410 -
45,506,721 13,652 45,520,373 -
125,041,851 - 125,041,851 54,199,264
28,187,574 753,877 28,941,451 1,116,933
608,669,449 1,278,316 609,947,765 204,980,889
612,299,403 1,477,457 613,776,860 232,034,378
904,084,956 2,480,754 906,565,710 284,719,632
(Continued)
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COUNTY OF HAWAII
Statement of Net Assets
Liabilities
Current liabilities:
Accounts payable and accrued liabilities
n Unearned revenue (note 7)
U Interest due on long-term debt
Bonds and loans payable, current portion net
(notes 10 and 14)
Compensated absences, current portion (note ]0)
Postretirement Liability
o Claims and judgments, current portion
(notes 10, 12 and ] 4)
Capital leases, current portion (notes 8 and 10)
Landfill costs payable, current portion
(notes 9 and 10)
Customers' deposits for service connections
Other
Total current liabilities
Noncurrent liabilities:
Bonds and loans payable, net
(notes 10 and 14)
D Compensated absences (note 10)
Claims and judgments (notes ]Q, 12 and 14)
Capital leases (notes 8 and ]0)
Landfill costs payable (notes 9 and 10)
Customers' deposits payable from
restricted assets
Total noncurrent liabilities
~ Total liabilities
Net Assets
Invested in capital assets, net of
related debt
Restricted for:
Capital projects
Debt service (note 10)
Unrestricted
Total net assets
I'~ ~ See accompanying notes to the basic financial statements.
June 3Q 2008
(Concluded)
Primary Government
Governmental Business-type Component
Activities Activities Total Unit
$ 10,291,330 $ 403,061 $ 10,694,391 $ 3,159,012
8,862,526 6,830 8,869,356 -
5,295,619 - 5,295,619 1,157,436
18,407,529 26,798 18,434,327 2,236,000
7,375,050 - 7,375,050 ],447,119
- - - 948,077
3,671,816 - 3,671,816 25,949
1,380,474 - 1,380,474 -
178,202 - 178,202 -
- - - 632,885
4,954,149 - 4,954,149 -
60,416,695 436,689 60,853,384 9,606,478
270,477,206 944,094 271,421,300 39,011,094
20,595,011 - 20,595,011 1,146,476
]5,816;595 - 15,816,595 90,051
3,226,053 - 3,226,053 -
20,071,798 - 20,071,798 -
- - - 19,739,823
330,186,663 944,094 331,130,757 59,987,444
390,603,358 ],380,783 391,984,141 69,593,922
419,174,559 307,424 419,481,983 186,215,025
44,818,889 - 44,818,889 -
22,159,046 184,352 22,343,398 -
27,329,104 608,195 27,937,299 28,910,685
$513,481,598 $ ],099,971 $514,581,569 $ 215,125,710
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COUNTY OF HAWAII
Statement of Activities
For the Fiscal Year Ended June 30, 2008
Functions/Proerams
Primary government:
Governmental activities:
General government
Public safety
Highways and streets
Health, education and welfare
Culture and recreation
Sanitation
Interest on long-term debt
Program Revenues
Operating Capital
Charges for Grants and Grants and
Expenses Services Contributions Contributions
$ 68,794,961
137,500,608
33,577,707
14,986,972
20,450,172
41,254,728
13,117,325
$ 6,017,81.9 $
5,843,733
9,701,815
754,758
1,595,409
18,643,952
4,946,657 $ 3,677,503
20,235,953 165,261
522,500 5,023,928
19,051,719 -
263,830 48,302
1,096,740 412,414
Total governmental activities 329,682,473 42,557,486 46,117,399 9,327,408
Business-type activities:
Health, education and welfare 556,304 365,655 125,795 -
Total primary government $ 330,238,777 $ 42,923,141 $ 46,243,194 $ 9,327,408
Component unit:
Water (note 14)
See accompanying notes to the basic fmancial statements.
$ 45,100,592 $ 38,341,485 $ - $ 5,673,845
General revenues:
Taxes:
Property taxes, levied for general purposes
Public service company taxes
Franchise taxes
Fuel taxes
Grants and contributions not restricted to specific programs
Investment earnings
Miscellaneous
Total general revenues
Change in net assets
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Net (Expense) Revenue and Changes in Net Assets
~f Primary Government
u Governmental Business-type Component
Activities Activities Total Unit
a
$ (54,152,982) $ - $ (54,]52,982) $ -
(111,255,661) - (111,255,661)
(18,329,464) - (18,329,464) -
4,819,505 4,819,505
(18,542,631) - (18,542,631) -
(21,101,622) - (21,101,622) -
(13,117,325) (13,117,325)
~ (231,680,180) - (231,680,180) -
- (64,854) (64,854) -
(231,680,180) (64,854) (231,745,034)
D - - - (1,085,262,
D
210,217,690
8,381,367 - 210,217,690
8,381,367 -
9,026,841 - 9,026,841 -
n 7,887,998 = 7,887,998 =
u 19,395,089 19,395,089
11,454,850 33,828 11,488,678 2,539,130
7,801,194 - 7,801,194 66,437
274,165,029 33,828 274,198,857 2,605,567
42,484,849
470,996,749 (31,026)
1,130,997 42,453,823
472,127,746 1,520,305
213,605,405
$ 513,481,598 $ 1,099,971 $514,581,569 $215,125,710
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COUNTY OF HAWAII
Governmental Funds
Balance Sheet
June 30, 2008
Other Total
Solid Waste Capital Governmental Governmental
General Fund Projects Funds Funds
Assets
Cash and cash equivalents (note 3) $26,556,547 $ 6,722,373 $ 41,554,822 $ 50,036,075 $124,869,817
Investments (note 3) 2],737,535 - 107,227,664 3,299,190 132,264,389
Receivables, net (note 4) 9,536,438 2,510,647 855,019 1,029,112 13
931
216
Due from other governmental ,
,
funds (note 5) 466,579 - 511,459 60,597 1,038,635
Due from other nongovernmental
funds (note 5) - - - 2,700 2,700
Receivables from other
governments (note 4) 8,076,217 741,299 6,271,541 1,382,538 16,471,595
Restricted cash with escrow (note 3) 70,642 - - - 70,642
Inventories 1,883,804 - - - 1,883,804
Other 275,544 858,398 - 1,068,267 2,202,209
Total assets $ 68,603,306 $10,832,717 $ 156.420,505 $ 56,878,479 $ 292.735,007
Liabilities and Fund Balances R
Liabilities: lul
Accounts payable $ 2,710,877 $ 1,522,241 $ 5,169,538 $ 888,674 $ 10,291,330
Due to other governmental
funds (note 5) 268,996 18,410 - 751,229 1,038,635
Deferred revenue (note 7) 12,32],305 2,522,645 6,065,660 1,029,112 21,938,722
Other 4,431,777 1,981 - 520,393 4,954,151
Total liabilities 19,732,955 4,065,277 11,235.]98 3,189,408 38,222,838
Fund balances:
Reserved for: a
Encumbrances 14,465,089 3,543,281 74,171,831 10,200,798 102,380,999
Inventories 1,883,804 - - - 1,883,804
Taxicab investigations 56,223 - - - 56,223
Liquor control 1,063,490 - - - ],063,490
Unexpended allotments - - 31,897,111 - 31,897,111 (~
Debt service (note 10) - - - 22,159,046 22,159,046 ~J
Unreserved, reported in:
General fund 31,401,745 - - - 31,401,745 D
Special revenue funds - 3,224,159 - 21,329,227 24,553,386 U
Capital projects funds
Total fund balances -
48,870,351 -
6,767,440 39,116,365
145,185,307 -
53,689,071 39,116,365
254.512,169
Total liabilities and fund balances $ 68,603.306 $10,832.717 $ 156,420,505 $ 56,878,479 $ 292,735,007
See accompanying notes to the basic financial statements.
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COUNTY OF HAWAII
Reconciliation of the Governmental Funds Balance Sheet to the Statement of Net Assets
June 30, 2008
Total fund balances -governmental funds $ 254,512,169
Amounts reported for governmental activities in the statement of
net assets are different because:
Capital assets used in governmental activities are not financial
resources and therefore are not reported in the funds. These assets
consist of:
Land 28,187,574
Infrastructure assets, net 162,915,082
a Buildings and improvements, net 247,018,221
Equipment, net 45,506,721
Construction work in progress 125,041,851
Total capital assets
a Some of the County's revenues will be collected after year-end but are
not available soon enough to pay for the current period's expenditures
and therefore are deferred (unearned) in the funds. (note 7)
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Some liabilities are not due and payable in the current per
therefore are not reported in the funds. Those liabilities consist of:
Q v
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Bonds and loans payable, net of recei
from improvement district (285,165,598)
Accrued interest on bonds (5,295,619)
Capital leases (4,606,527)
Compensated absences
Claims and judgments (27,970,061)
(19,488,4] 1)
Landfill closure/postclosure costs (20,250,000)
Total long-term liabilities
Net assets of governmental activities
See accompanying notes to the basic financial statements.
a
608,669,449
13,076,196
(362,776,216)
$ 513,481,598
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COUNTY OF HAWAII
Governmental Funds
Statement of Revenues, Expenditures, and Changes in Fund Balances
For the Fiscal Year Ended June 30, 2008
Revenues
Property tax
Public service company tax
Fuel tax
Public utility franchise tax
Licenses and permits
Intergovernmental
Charges for services
Investment earnings
Miscellaneous
Total revenues
Expenditures
Current:
Genera] government
Public safety
Highways and streets
Sanitation
Health, education and welfare
Culture and recreation
Pension and retirement
contributions (note 13)
Employees' health insurance
Other post employment benefits
Miscellaneous
Debt service:
Principal
Interest
Capital outlay
Total expenditures
Excess (deficiency) of revenues
over expenditures
Solid Waste Capital
General Fund Projects
Other Total
Governmental Governmental
Funds Funds
$208,312,512 $ - $ - $ - $208,312,512
8,381,367 - - - 8,381,367
- - - 7,887,998 7,887,998
- - - 9,026,841 9,026,841
6,661,522 - - 9,256,851 15,918,373
50,938,534 1,095,570 3,682,333 16,884,772 72,601,209
5,846,222 9,214,024 - 7,093,242 22,153,488
11,873,878 - - 270,360 12,144,238
2,999,289 33,317 2,378,502 1,739,912 7,151,020
295,013,324 10,342,911 6,060,835 52,159,976 363,577,046
42,991,456 - - - 42,991,456
98,503,333 - - 5,114,080 103,617,413
6,173,539 - - 13,355,369 19,528,908
1,511,958 24,879,104 - 7,013,417 33,404,479
6,875,072 - - 17,733,898 24,608,970
]7,285,846 - - 893,215 18,179,061
20,623,684 945,336 - 2,726,522 24,295,542
16,685,393 394,024 - 1,009,689 18,089,106
13,628,777 13,628,777
4,246,245 135,865 - 961,945 5,344,055
379,409 1,274,527 - 14,894,455 16,548,391
33,468 154,633 - 12,927,949 13,116,050
6,094,391 - 64,061,348 - 70,155,739
235,032,571 27,783,489 64,061,348 76,630,539 403,507,947
59,980,753 (17,440,578) (58,000,513) (24,470,563) (39,930,901)
(Continued)
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COUNTY OF HAWAII
Governmental Funds
Statement of Revenues, Expenditures, and Changes in Fund Balances
For the Fiscal Year Ended June 30, 2008
(Concluded)
Other Total
Solid Waste Capital Governmental Governmental
General Fund Projects Funds Funds
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Other Financing Sources (Uses), including transfers
Sale of assets $ 3,469,848 $ - $ - $ - $ 3,469,848
Increase in capital leases (note 8 and 10) 228,120 1,959,382 - - 2,187,502
State Revolving Fund loans (note 10) - - 1,916,040 - 1,916,040
Transfers in (note 5) - 17,352,726 13,979,919 33,596,734 64,929,379
Transfers out (note 5) (59,058,541) - - (5,870,838) (64,929,379)
Total other fmancing sources (uses) (55,360,573) 19,312,108 15,895,959 27,725,896 7,573,390
Net change in fund balances 4,620,180 1,871,530 (42,104,554) 3,255,333 (32,357,511)
Fund balance at beginning of year 44,610,351 4,895,910 187,289,861 50,433,738 287,229,860
Decrease in reserve for inventories (360,180) - - - (360,180)
Fund balance at end of year $ 48,870,351 $ 6,767,440 $145,185,307 $53,689,071 $254,512,169
See accompanying notes to the basic financial statements.
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COUNTY OF HAWAII
Reconciliation of the Change in Fund Balances of Governmental Funds
to the Statement of Activities
For the Fisca( Year Ended June 30, 2008
Net change in fund balances -total governmental funds
Amounts reported for governmental activities in the statement of activities are
different because:
Capital outlays are reported as expenditures in governmental funds.
However, in the statement of activities, the cost of capital assets is
allocated over their estimated useful lives as depreciation expense. In
the current period, these amounts are:
$ (32,357,511)
Capital outlay and dedicated property 84,425,791
Depreciation expense and loss on disposals (21,678,112)
Excess of capital outlay over depreciation expense 62,747,679
Borrowings provide current financial resources to governmental funds;
however, issuing debt increases long-term liabilities in the statement
of net assets. In the current period, proceeds were received from:
General obligation bonds, net of refunding -
Premium on bond issuance -
Deferred amount on refunding of bonds -
SRF loan obligations . (1,916,040)
Capital lease obligations (2,187,502)
Tota( debt proceeds (4 103,542)
Repayment of long-term debt is reported as an expenditure in governmental
funds, but the repayment reduces long-term liabilities in the statement of
net assets. In the current year, these amounts consist of:
Bond principal retirement, net of refunding 12,096,138
SRF loan repayment 2,786,605
Capital lease payments 1,666,711
Total long-term debt repayment 16,549,454
Because some revenues will not be collected for several months after the
County's fiscal year end, they are not considered "available" revenues and
are "deferred" in the governmental funds. Unearned revenues increased by
this amount this year. 2,422,309
(Continued)
-34-
COUNTY OF HAWAII
Reconciliation of the Change in Fund Balances of Governmental Funds
to the Statement of Activities
For the Fiscal Year Ended June 30, 2008
~~ ~j (Concluded)
LL11 Some items reported in the statement of activities do not involve current
financial resources and therefore are not reported as expenditures in
governmental funds. These activities are:
I ~}
~ Decrease in inventory $ (360,180)
lug Increase in compensated absences (2,221,903)
Increase in claims and judgments (1,180,119)
n Decrease in landfill closure/postclosure care costs 991,000
u Amortization of premium from bond issuance 271,008
Amortization of deferred amount on refunding of bonds (248,722)
I ~ Net increase in accrued interest (24,624)
Net additional expenditures (2,773,540)
Q Change in net assets of governmental activities $ 42,484,849
See accompanying notes to the basic fmancial statements.
~~
~ LJ
iQ
-35-
COUNTY OF HAWAII Ill
General Fund `-'
Revenues:
Taxes and assessments:
Statement of Revenues, Expenditures and Changes in Fund Balance -
Budget and Actua] (Budgetary Basis)
For the Fiscal Year Ended June 30, 2008
Actual Variance
Original Final (Budgetary Positive
Budget Budget Basis) (Negative)
Real property taxes
Public service company taxes
Total taxes and assessments
Licenses and permits:
Nonbusiness licenses and permits
Business licenses
Street use
Total licenses and permits
Intergovernmental:
Federal:
Programs for the aged
Community development block grants
HOME program grant
Law enforcement
Other
Total federal
State:
State General Fund -Act 185,
SLH 1990
Emergency medical services
Other
Child support enforcement
Total State
Total intergovernmental revenue
Charges for current services:
General government
Culture and recreation
Highways and streets
Public safety
Total charges for current services
Fines and forfeitures
Rents
$ 211,455,000 $ 211,455,000 $ 208,312,512 $ (3,142,488 )
7,050,000 7,050,000 8,381,367 1,331,367
218,505,000 218,505,000 216,693,879 (1,811,121 )
4,483,105 4,483,105 3,695,364 (787,741)
1,580,000 1,580,000 1,384,748 (195,252)
1,673,000 1,673,000 1,581,410 (91,590) a
7,736,105 7,736,105 6,661,522 (1,074,583)
2,622,247 2,622,247 2,052,800 (569,447 )
- 2,386,152 2,386,152 -
- 989,346 989,346 -
1,352,629 2,922,012 2,098,023 (823,989)
2,827,582 4,136,560 3,973,327 (163,233 )
6,802,458 13,056,317 11,499,648 (1,556,669)
20,310,000
12,277,306 20,310,000
12,383,744 19,099,355
13,551,762 (1,210,645)
1,168,018
4,186,215 5,328,831 4,948,412 (380,419)
1,092,596 1,092,596 250,941 (841,655)
37,866,117 39,115,171 37,850,470 Q,264,701) ~
44,668,575 52,17],488 49,350,118 (2,821,370)
4,]35,149 4,]35,149 4,610,292 475,143
872,070 872,070 849,117 (22,953)
243,500 243,500 287,668 44,168
124,105 124,105 99,145 (24,960)
5,374,824 5,374,824 5,846,222 471,398
1,590,900 1,590,900 1,486,382 (]04,518 )
1]9,431 119,431 91,238 (28,193)
(Continued)
-36-
a
u
COUNTY OF HAWAII
General Fund
Statement of Revenues, Expenditures and Changes in Fund Balance -
Budget and Actual (Budgetary Basis)
For the Fiscal Year Ended June 30, 2008
Actual Variance
Original Final (Budgetary Positive
Budget Budget Basis) (Negative)
Revenues (continued):
Interest and penalties $ 4,000,000 $ 4,000,000 $ 11,519,300 $ 7,519,300
Miscellaneous 5,280,730 7,905,367 8,346,070 440,703
Total revenues 287,275,565 297,403,115 299,994,731 2,59],616
Expenditures:
Current:
General government:
Finance 10,264,645 10,468,449 8,962,427 1,506,022
General government building 6,599,335 7,383,601 6,033,853 1,349,748
Legislative 7,697,890 4,621,805 3,984,241 637,564
Automotive equipment 4,750,889 4,745,389 4,178,827 566,562
Law 3,813;836 3,813,836 2,952,695 861,141
Research and development 3,671,464 4,138,475 3,979,936 158,539
Planning and zoning 3,232,158 3,354,902 3,103,879 251,023
Mayor's office 1,734,772 1,884,095 1,777,795 106,300
Engineering 4,023,528 4,056,037 3,807,722 248,315
Data systems 1,453;812 1,453,812 1,383,085 70,727
Personnel services 1,945,661 1,953,273 1,808,567 144,646
Public works administration 1,360,836 1,556,177 1,429,916 126,261
Elections 1,189,325 1,189,325 880,673 308,652
Total general government 51,738,151 50,619,116 44,283,616 6,335,500
Public safety:
Police department 45,459,709 49,711,673 48,389,502 1,322,171
Fire department 32,854,361 35,915,587 35,462,590 452,997
Prosecutingattomey 8,1]6,608 8,793,]56 7,560,495 1,232,661
Protective inspection 2,217,840 2,233,312 1,947,998 285,314
Liquor control 1,528,ll2 1,558,112 1,132,224 425,888
Flood control 1,177,502 1,259,017 1,258,827 190
Civil defense agency 1,067,661 2,070,539 1,671,776 398,763
Animal control 1,209,292 1,929,779 1,929,779 -
Totalpublicsafety 93,631,085 103,471,175 99,353,191 4,1]7,984
Highways and streets:
Mass transit 5,129,651 5,375,651 5,059,597 316,054
(Continued)
-37-
COUNTY OF HAWAII
General Fund
Statement of Revenues, Expenditures and Changes in Fund Balance -
Budget and Actual (Budgetary Basis)
For the Fiscal Year Ended June 30, 2008
Actual Variance
Original Final (Budgetary Positive (~
Budget Budget Basis) (Negative) I ~
Expenditures (continued):
Current (continued):
Sanitation:
Environmental management
Health, education and welfare:
Elderly activities
Office of Aging
Education
Social programs
Cemeteries
Physical examination
Total health, education and welfare
Culture and recreation:
Community music
Organized recreation:
Maintenance
Recreation
Aquatics
Hoolulu Park complex
Administration
Children's zoo
Summer/Intersession
Culture and arts
Elderly activities administration
Total culture and recreation
$ 1,579,832 $ 1,881,491 $ 1,591,582 $ 289,909
a
3,423,477 3,473,794 3,034,271 439,523
2,730,129
65,000 2,712,257
65,000 2,100,834
42,913 6] 1,423
22,087
1,500,000 1,500,000 1,477,500 22,500
330,506 379,111 366,329 12,782
102,942 120,958 120,957 1
8,152,054 8,251,120 7,142,804 1,108,316
0
433,204 423,304 239,440 183,864
6,955,304 6,855,175 6,636,359 218,816
2,422,566 2,651,785 2,552,492 99,293
2,204,196 2,199,795 2,024,670 175,125
951,280 1,009,180 999,192 9,988
2,247,209 2,275,509 2,155,718 119,791
617,311 608,511 589,228 19,283
478,365 478,365 314,517 ]63,848
153,906 202,086 183,352 ]8,734
684,014 706,557 661,931 44,626
] 7,147,355 17,410,267 16,356,899 1,053,368
Pension and retirement contributions 21,038,693 20,403,693 20,445,006 (41,313)
Health fund 29,523,500 30,358,500 30,314,170 44,330
Miscellaneous 10,320,000 4,660,461 3,315,005 1,345,456
Total current 238,260,321 242,431,474 227,861,870 14,569,604
(Continued)
38 -
Q Expenditures (continued):
Capital Outlay:
Community Development Block
grants (HUD)
HOME Program
Other
(Concluded)
Actual Variance
Original Final (Budgetary Positive
Budget Budget Basis) (Negative)
$ - $ 2,446,152 $ 2,446,152 $
- 1,014,346 1,014,346
Total capital outlay - 3,460,498 .3,460,498 -
Total expenditures 238,260,321 245,891,972 231,322,368 14,569,604
Excess of revenues over expenditures 49,015,244 51,511,143 68,672,363 17,161,220
Q Other financing uses:
Transfers out:
Sewer Fund
a Capital Projects Fund
Housing Fund
Solid Waste Fund
Golf Course Fund
Highway Fund
Q Self Insurance Fund
Disaster/Emergency Fund
Public Access, Open Space, and Natural
Resources Preservation Fund
Budget Stabilization Fund
Debt Service Fund
Total transfers out
COUNTY OF HAWAII
General Fund
Statement of Revenues, Expenditures and Changes in Fund Balance -
Budget and Actual (Budgetary Basis)
Total other financing uses
Excess (deficiency) of revenues and other
sources over expenditures and other uses
Fund balance at beginning of year
-- (20,000) (20,000) -
(6,229,975) (8,109,081) (8,109,081) -
(1,251,612) (1,397,612) (1,397,612) -
(17,302,726) (17,352,726) (17,352,726) -
(350,000) (415,792) (415,792) -
(210,000) (545,000) (545,000) -
(1,000,000) (1,000,000) (1,000,000) -
(1,600,000) (1,600,000) (1,600,000) -
(4,314,000) (4,314,000) (4,165,208) 148,792
(35,736,486) (35,736,486) (34,672,883) 1,063,603
(67,994,799) (70,490,697) (69,278,302) 1,212,395
(67,994,799) (70,490,697) (69,278,302) 1,212,395
(18,979,555) (18,979,554) (605,939) 18,373,615
44,610,351 44,610,351 44,610,351 -
a Fund balance at end of year $ 25,630,796 $ 25,630,797 $ 44,004,412 $ 18,373,615
See accompanying notes to the basic financial statements.
For the Fiscal Year Ended June 30, 2008
-39-
0
COUNTY OF HAWAII
Solid Waste Fund
Schedule of Revenues, Expenditures and Changes in Fund Balance -
Budget and Actual (Budgetary Basis)
For the Fiscal Year Ended June 30, 2008
Actual Variance
Original Final (Budgetary Positive
Budget Budget Basis) (Negative)
Revenues:
Intergovernmental
Charges for services -tipping fees
Miscellaneous
Total revenues
Expenditures:
Sanitation
Pension and retirement contributions
Health fund
Miscellaneous
Total expenditures
Deficiency of revenues over expenditures
Other financing sources:
Transfers in -General Fund
Excess of revenues and other sources
over expenditures
Fund balance at beginning of year
Fund balance at end of year
$ 1,173,309 $ 1,173,309 $ 1,003,682 $ (169,627)
12,013,000 12,013,000 9,214,024 (2,798,976)
- - 33,317 33,317
13,186,309 ]3,186,309 10,251,023 (2,935,286)
28,578,835 28,628,835 25,949,496 2,679,339
1,059,800 1,059,800 945,336 114,464
630,400 630,400 394,024 236,376
220,000 220,000 ]37,277 82,723
30,489,035 30,539,035 27,426,133 3,112,902
(17,302,726) (17,352,726) (17,175,110) 177,616
17,302,726 17,352,726 17,352,726 -
- - 177,616 177,616
4,895,910 4,895,910 4,895,910 -
$ 4,895,910 $ 4,895,910 $ 5,073,526 $ 177,616
See accompanying notes to the basic fmancial statements.
-40-
0
a
a
Q
COUNTY OF HAWAII
Proprietary Funds
Statement of Net Assets
June 30, 2008
Assets
Current assets:
Cash and cash equivalents (note 3)
Restricted cash and cash equivalents (note 3)
Investments (note 3)
Imprest fund (note 3)
Receivables (note 4)
Prepaid expenses
Total current assets
Noncurrent assets:
Restricted cash and cash equivalents (note 3)
Capital assets (note 6):
Land and site improvements
Buildings and equipment
Less accumulated depreciation
Total capital assets
Total noncurrent assets
Total assets
Business-type Activities-
Enterprise Funds
Kulaimano Ouli Ekahi
Elderly Affordable
Housing Housing
Project Project Total
$ 16,060 $ 197,837 $ 213,897
11,856 21,162 33,018
700,000 - 700,000
50 100 150
7,726 49,732 57,458
1,474 - 1,474
737,166 268,831 ],005,997
184,327 14, 814 199,141
511,000 503,877 1,014,877
],232,049 - 1,232,049
(968,610) - (968,6]0)
774,439 503,877 1,278,316
958,766 518,691 1,477,457
1,695,932 787,522 2,483,454
~ ~ Liabilities
Current liabilities:
Accounts payable 5,098 358,600 363,698
n Internal balances (note 5) 2,700 - 2,700
ILIt Due to developer 7,729 7,729
Security deposits payable from restricted assets 11,856 19,778 31,634
n
~ Deferred revenue (note 7) 5,212 1,618 6,830
IL11 Notes payable, current portion (note 10) 26,798 26,798
Total current liabilities 51,664 387,725 439,389
Noncurrent liabilities:
Notes payable (note 10) 944,094 944,094
Total liabilities 995,758 387,725 1,383,483
Net Assets
Invested in capital assets, net of related debt (196,453) 503,877 307,424
Restricted for debt service 184,352 - 184,352
Unrestricted 712,275 (104,080) 608,195
Total net assets $ 700,174 $ 399,797 $ 1,099,971
~( See accompanying notes to the basic financial statements.
I -41-
COUNTY OF HAWAII
Proprietary Funds
Statement of Revenues, Expenses, and Changes in Fund Net Assets
For the Fiscal Year Ended June 30, 2008
Operating revenues:
Rental receipts from tenants
Rental subsidy from federal government -HUD
Laundry receipts
Miscellaneous
Total operating revenues
Operating expenses:
Utilities
General and administration
Maintenance and repairs
Lease expense
Depreciation (note 6)
Total operating expenses
Operating (loss) income
Nonoperating revenues (expenses):
Investment income
Interest expense
Totalnonoperating revenue (expenses)
Change in net assets
Net assets, beginning of year
Net assets, end of year
See accompanying notes to the basic financial statements.
Business-type Activities-
Enterprise Funds
Kulaimano Ouli Ekahi
Elderly Affordable
Housing Housing
Project Project Total
$ 110,288 $ 249,747 $ 360,035
125,795 - 125,795
2,400 - 2,400
- 3,220 3,220
238,483 252,967 491,450
38,634 25,408 64,042
82,716 117,934 200,650
102,332 37,651 139,983
- 48,893 48,893
33,786 - 33,786
257,468 229,886 487,354
(18,985) 23,081 4,096
33,762 66 33,828
(68,950) - (68,950)
(35,188) 66 (35,122)
(54,173) 23,147 (31,026)
754,347 376,650 1,130,997
$ 700,174 $ 399,797 $ 1,099,971
-42-
Q
a
COUNTY OF HAWAII
Proprietary Funds
Statement of Cash Flows
Q
U
u
ID
For the Fiscal Year Ended June 30, 2008
Cash Flows from Operating Activities
Receipts from tenants
Receipts from federal government -HUD
Payments to suppliers for goods and services
Net cash provided by (used in) operating activities
Cash Flows from Capital and Related Financing Activities
Principal paid on notes payable
Interest paid on notes payable
Purchase of capital assets
Net cash used in capital and related financing activities
Cash Flows from Investing Activities
Purchase of investments
Proceeds from maturities of investments
Interest on investments
Net cash provided by investing activities
Net increase (decrease)in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year
Reconciliation of Operating (Loss) Income to Net Cash
Provided by (Used in) Operating Activities
Operating (loss) income
Adjustments to reconcile operating loss to net cash
provided by (used in) operating activities:
Depreciation expense
Change in assets and liabilities:
Receivables
Prepaid expenses
Accounts and other payables
Unearned income
Net cash provided by (used in) operating activities
See accompanying notes to the basic financial statements.
Supplemental disclosure of cash flow information -Interest paid
Business-type Activities -
Enterprise Funds
Kulaimano Ouli Ekahi
Elderly Affordable
Housing Housing
Project Project Total
$ 118,266 $ 254,474 $ 372,740
125,795 - 125,795
(272,636) (227,410) (500,046)
(28,576) 27,064 (1,512)
(24,962) - (24,962)
(68,950) - (68,950)
(5,838) - (5,838)
(99,750) - (99,750)
(1,400,000) - (1,400,000)
1,400,000 - 1,400,000
33,835 80 33,9L5
33,835 80 33,915
(94,491) 27,144 (67,347)
306,783 206,769 513,552
$ 212,293 $ 233,913 $ 446,206
$ (18,985) $ 23,081 $ 4,096
33,786 - 33,786
479 2,214 2,693
(105) - (105)
(47,618) 1,664 (45,954)
3,867 105 3,972
$ (28,576) $ 27,064 $ (1,512)
$ 68,950 $ - $ 68,950
-43-
COUNTY OF HAWAII
Fiduciary Funds
Statement of Fiduciary Net Assets
June 30, 2008
Assets
Cash and cash equivalents (note 3)
Investments (note 3)
Receivables:
Due from other agency funds
Other receivables
Total receivables
Restricted cash and cash equivalents (note 3)
Total assets
Liabilities
Due to other agency funds
Accrued liabilities
Advances payable
Assets held for benefit of improvement districts
Total liabilities
Private-
Purpose
Trusts
$ 1,880,747
2,868,795
2,727
2,727
4,752,269
Net Assets
Held in trust for other parties 4,752,269
Total net assets $ 4,752,269
See accompanying notes to the basic financial statements.
Agency
Funds
$ 3;655,354
1,630,130
2,409
83,781
86,190
637,000
$ 6,008,674
2,409
2,300,082
229,786
3,476,397
$ 6,008,674
-44-
D
Q
0
D
0
~0
I,Q
III
'D
~~
D
D
III
III
D
D
.d
COUNTY OF HAWAII
Fiduciary Funds
Statement of Changes in Fiduciary Net Assets
For the Fiscal Year Ended June 30, 2008
Additions
Contributions:
Puna Geothermal Venture
Investment earnings:
Net decrease in fair value of investments
Dividends
Interest
Total additions
Deductions
Appraisal fees
Total deductions
Change in net assets
Net assets, beginning of year
Net assets, end of year
See accompanying notes to the basic financial statements.
-45-
Private-
Purpose
$ 50,000
(132,2]2)
48,203
131,570
97,561
97,640
97,640
(79)
4,752,348
$ 4,752,269
COUNTY OF HAWAII
Notes to the Basic Financial Statements
June 30, 2008
The accounting policies of the County of Hawaii (the County) conform to U.S. generally accepted
accounting principles (GAAP) as applicable to local governmental units. The following notes to
the basic financial statements are an integral part of the County's Comprehensive Annual Financial
Report.
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The Financial Reporting Entity
The County has implemented Governmental Accounting Standards Board Statement No. 14,
The Financial Reporting Entity (GASB Statement No. 14). All organizations, activities or
functions that meet the criteria in GASB Statement No. 14 for inclusion in the reporting entity
are included from the County's basic financial statements.
Primary Government The County operates under the Mayor-Council form of government
under a charter that became effective on January 2, 1969, and was amended in 1979, 1982,
1990 and 2000. The County's operations are organized by the following functions: general
government; public safety; highways and streets; sanitation; health, education and welfare;
cultwe and recreation; pension and retirement contributions; health fund; miscellaneous;
capital outlay; and debt service. The State of Hawaii (the State) assumes full responsibility
for several major functions usually performed by local governments, including education,
welfare, health and judicial functions. There are no separate city, county or township
governments nor, any school districts, special districts, authorities or public corporations with
overlapping authority.
GASB Statement No. 14 defines component units as legally separate organizations for which
The elected officials of the primary government are financially accountable. "Financial
accountability" is the level of accountability that exists if a primary government appoints a
voting majority of an organization's governing board and is either able to impose its will on
that organization or there is a potential for the organization to provide specific financial
benefits to, or impose specific financial burdens on, the primary government. A primazy
government has the ability to impose its will on an organization if it can significantly
influence the programs, projects, activities or level of services performed or provided by the
organization. An organization has a financial benefit or burden relationship with the primary
government if any one of three conditions exist: (1) The primary government is legally
entitled to or can otherwise access the organization's resources; (2) The primary government
is legally obligated or has otherwise assumed the obligation to finance the deficits of, or
provide financial support to, the organization; or (3) The primary government is obligated in
some manner for the debt of the organization.
As required by GAAP as set forth in GASB Statement No. 14, these basic financial
statements present the County of Hawaii (the primary government) and its component unit,
-46-
COUNTY OF HAWAII
Notes to the Basic Financial Statements
June 30, 2008
'
s reporting
the Department of Water Supply. This component unit is included in the County
entity because of its financial relationship with the County.
i
l
a
Discretely Presented Component Unit The component unit column in the basic financ
statements includes the financial data of the Department of Water Supply (the Department), a
legally independent agency of the County that is accounted for as an enterprise fund. It is
reported in a separate column to emphasize that it is legally separate from the County. The
members of the Water Commission, the governing body of the Department, are appointed by
the Mayor of the County and confirmed by the County Council. The Department is granted
corporate powers by state statute and the County Charter. Although the County does not have
the authority to approve or modify the Department's operational and capital budgets, the
County has issued bonds on the Department's behalf that are general obligations of the
County. Because the County is obligated to repay these bonds in the event of default by the
Department, the County is financially accountable for the debts of the Department. See Note
a ] 4 for component unit disclosures for the Department. Complete financial statements of the
Department can be obtained from the Department of Water Supply, 345 Kekuanaoa Street,
Suite 20, Hilo, Hawaii 96720.
a Basic Financial Statements
The basic financial statements include both government-wide (based on the County as a
whole) and fund financial statements. Both the government-wide and fund financial
statements (within the basic financial statements) categorize primary activities as either
governmental or business-Type. In the government-wide statement of net assets, both the
governmental and business-Type activities columns (a) are presented on a consolidated basis
by column, (b) and are reflected, on a full accrual, economic resource basis, which
incorporates long-term assets and receivables as well as long-term debt and obligations.
a
a
The government-wide statement of activities reflects both the gross and net costs per
functional category (general government, public safety, highways and streets, etc.) which are
otherwise being supported by general government revenues (property taxes, certain
intergovernmental revenues, etc.). The statement of activities reduces gross expenses
(including depreciation) by related program revenues, operating and capital grants. The
program revenues must be directly associated with the function (general government, public
safety, highways and streets, etc.) or a business-type activity. The operating grants include
operating-specific and discretionary (either operating or capital) grants while the capital
grants column reflects capital-specific grants. The net cost (by function or business-type
activity) is normally covered by general revenues.
The government-wide focus is more on the sustainabiliTy of the County as an entity and the
change in aggregate financial position resulting from the activities of the fiscal period.
47 -
0
COUNTY OF HAWAII
Notes to the Basic Financial Statements a
June 30, 2008 a
The fund financial statements' emphasis is on the major funds in either the governmental or
business-type categories. Nonmajor funds (by category) are summarized into a single
column.
The governmental funds in the fund financial statements are presented on a current financial
resource and modified accrual basis of accounting. This is the manner in which these funds
are normally budgeted.' This presentation is deemed most appropriate to (a) demonstrate legal
and covenant compliance, (b) demonstrate the source and use of liquid resources, and (c)
demonstrate how the County's actual experience conforms to the budget fiscal plan. Since
the governmental fund statements are presented on a different measurement focus and basis of
accounting than the government-wide statements' governmental column, a reconciliation is
presented on the page following each statement, which briefly explains the adjustments
necessary to transform the fund based financial statements into the governmental column of
the government-wide presentation.
The County's fiduciary funds are presented in the fund financial statements by type (private
purpose and agency). Since by definition these assets are being held for the benefit of a third
party (private parties, state govemment, etc.) and cannot by used to address activities or
obligations of the government, these funds are not incorporated into the government-wide
statements.
Government-wide and fund financia[statements -The government-wide financial
statements (i.e., the statement of net assets and the statement of changes in net assets) report
information on all of the nonfiduciary activities of the primary government and its component
unit. The effect of interfund activity has been removed from these statements. Governmental
activities, which normally are supported by taxes and intergovernmental revenues, are
reported separately from business-type activities, which rely to a significant extent on fees
and charges for support. Likewise, the primary government is reported separately from
certain legally separate component units for which the primary government is financially
accountable.
The statement of activities demonstrates the degree to which the direct expenses of a given
function or segment are offset by program revenues. Direct expenses are those that are
clearly identifiable with a specific function or segment. Program revenues include (a) charges
to customers or applicants who purchase, use, or directly benefit from goods, services, or
privileges provided by a given function or segment and (b) grants and contributions that are
restricted to meeting the operational or capital requirements of a particular function or
segment. Taxes and other items not included among program revenues are reported instead as
general revenues.
Separate financial statements are provided for governmental funds, proprietary funds, and
fiduciary funds, even though the latter are excluded from the government-wide financial
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COUNTY OF HAWAII
Notes to the Basic Financial Statements
June 30, 2008
statements. Major individual governmental funds and major individual enterprise funds are
reported as separate columns in the fund financial statements.
Activities in funds -The financial transactions of the County are recorded in individual
funds. Each fund is accounted for by providing a separate set of self-balancing accounts that
comprises its assets, liabilities, reserves, fund equity, revenues and expenditures/expenses.
The various funds are reported by generic classification within the financial statements.
GASB Statement No. 34, Basic Financial Statements -and Management's Discussion and
Analysis -for State and Local Governments, sets forth minimum criteria (percentage of the
assets, liabilities, revenues or expenditures/expenses of either fund category or the
governmental and enterprise combined) for the determination of major funds. The nonmajor
funds are combined in a column in the fund financial statements and detailed in the
combining section.
a The County reports the following major governmental funds:
a General Fund -The general fund is the general operating fund of the County. It is used
to account for all activities of the general government, except those required to be
accounted for in other funds.
So[id Waste Fund -Used to accumulate moneys for the operation, maintenance and
administration of the County's solid waste management, collection and disposal systems.
Financing is provided by tipping fees at the landfills and by disposal permit fees.
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Capital Projects Fund -Used to account for the costs of constructing County capital
improvements financed with general obligation bond proceeds, federal and state grants,
and general and special revenue fund revenues. The capital projects fund is used to
account for financial resources to be used for the acquisition or construction of major
general government capital facilities and infrastructure (other than those ftnanced by
proprietary funds and trust funds) when separate project centers are needed to control
costs.
The County reports the following major proprietary funds:
Kulaimano Elderly Housing Project -Used to account for the operation of a rental
housing project for low-income senior citizens located north of Hilo.
Ouli Ekahi Affordable Housing Project -Used to account for the operation of a 33-unit
single-family affordable rental housing project located in Waimea.
The County reports the following fiduciary funds:
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COUNTY OF HAWAII
Notes to the Basic Financial Statements
June 30, 2008
Private-Purpose Trust Funds -Used to account for funds received from geothermal
developers to mitigate the effects of geothermal energy development. Also used to
account for investment income on funds received from import businesses at the port of
Hilo and the related expenditures to promote health and safety on the Island of Hawaii.
Agency Funds-Used to account for assets held by the County for other governmental
units and individuals. The agency funds are custodial in nature and do not involve
measurement of results of operations. The County has the following agency funds:
• State Weight Tax Fund
• Improvement District No. 17 Fund
• Improvement District No. 18 Fund
• Improvement District Revolving Fund
• Performance and Refundable Deposits Fund
• Payroll Clearance Fund
• Flexible Spending Account
• Lapsed Warrants Fund
• Non-Profit License Plates Fund
• Organ and Tissue Education Fund
• Business Improvement District 1-Kailua
Basis of Accounting
Basis of accounting refers to the period in which revenues and expenditures (or expenses) are
recognized in the accounts and reported in the basic financial statements. Basis of accounting
relates to the timing of the measurements made, regardless of the measurement focus applied.
The government-wide financial statements and the proprietary, fiduciary and component unit
fund financial statements are presented on an accrual basis of accounting. The governmental
funds in the fund financial statements are presented on a modified accrual basis.
Accrual Basis -Revenues are recognized when earned and expenses are recognized when the
related obligation is incurred.
Modified Accrual Basis -Revenues are recorded when susceptible to accrual (that is, both
measurable and available). "Measurable" means the amounts are determinable. "Available"
means the amounts are collectible within the current period or soon enough thereafter (within
60 days) to be used to pay liabilities of the current period.
Licenses and permits, charges for current services, fines and forfeitures, penalties and
miscellaneous revenues are recorded as revenues when received in cash because they are
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Notes to the Basic Financial Statements
June 30, 2008
generally not measurable until actually received. State Revolving Fund loan proceeds are
considered available when collected.
In applying the susceptible to accrual concept to intergovernmental revenues, the legal and
contractual requirements of the numerous individual programs are used as guidance. There
are essentially two types of these revenues. In one, monies must be expended on the specific
purpose or project before any amounts will be paid to the County; therefore, revenues are
recognized based upon the expenditures recorded. Most construction grants and many
operating grants fall into this category. In the other, monies are virtually unrestricted as to
purpose of expenditure and are usually revocable only for failure to comply with prescribed
compliance requirements. These resources are reflected as revenues at the time of receipt or
eazlier if the susceptible to accrual criteria are met.
The County reports unearned revenue in its fund financial statements (see Note 7). Unearned
revenues arise when potential revenue does not meet both the "measurable" and "available"
criteria for recognition in the current period. In subsequent periods, when both revenue
recognition criteria are met, the liability for unearned revenue is removed from the combined
balance sheet and revenue is recognized.
Expenditures are recognized under the modified accrual basis of accounting in the accounting
period in which the fund liability is incurred. Exceptions to this general rule include:
(a) accumulated compensated absences and claims and judgments which are recognized as
expenditures when paid; (b) liabilities related to municipal solid waste landfill closure and
postclosure care costs; and (c) principal and interest on general long-term debt which are
recognized as expenditures when due.
In accordance with GASB Statement No. 20, Accounting and Financial Reporting for
Proprietary Funds and Other Governmental Entities That Use Proprietary Fund Accounting,
a the County applies all applicable GASB pronouncements as well as the following
pronouncements issued on or before November 30, 1989, unless those pronouncements
a conflict with or contradict GASB pronouncements; Financial Accounting Standards Board
statements and interpretations, Accounting Principles Board opinions, and Accounting
Research Bulletins of the Committee on Accounfing Procedures.
a Encumbrances
The general, special revenue, and capital projects funds follow encumbrance accounting
under which purchase orders, contracts and other commitments aze recorded as a reserve of
fund balance and provide authority for the carryover of appropriations to the subsequent year
in order to complete these transactions. Encumbrances outstanding at year-end are reported
as reservations of fund balances and do not constitute expenditures or liabilities because the
commitments will be honored during the subsequent year.
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COUNTY OF HAWAII
Notes to the Basic Financial Statements a
June 3Q, 2008
Unexpended Allotments
Allotment accounting is employed in the general and capital projects funds to reserve
appropriations to complete capital projects that were funded during a given fiscal period.
Unexpended allotments represent reserves of capital projects appropriations that are available
to complete such projects in future fiscal periods.
Cash and Investments
Cash and cash equivalents include cash on hand, amounts in demand deposits and short-term
investments with a maturity date of three months or less from the date acquired by the
County.
Investments consist of time certificates of deposit at fmancial institutions and bank repurchase
agreements with original maturities exceeding three months. Included are participating
interest-earning investment contracts (repurchase agreements) that have remaining maturities
at the time of purchase of one year or less, as well as nonparticipating interest-earning
investment contracts (time certificates of deposit and repurchase agreements). Both
categories of investments are stated at amortized cost (see Note 3). Investments also consist
of equity securities in the fiduciary fund financial statements. These investments are stated at
fair value.
Real Property Taxes
The County's real property taxes are on levied July 1 each year on assessed valuation as of
January 1. The taxes become a lien on the property assessed as of the levy date. Taxes are
due and payable in two equal annual installments on August 20 and February 20.
Accordingly, real property taxes receivable as of June 30 are delinquent. Each delinquent
installment bears interest at 1 % per month and penalties of up to 10% of the amount due.
Assessments are based on 100% of estimated fair market values.
Inventories
Inventories consist of materials and supplies and are reported as expenditures at the time of
purchase (purchase method). Police and fire department inventories are stated using the first
in, first out (FIFO) method. Other inventories aze stated at average cost.
Liquor Control
Section 281 of the Hawaii Revised Statutes requires that liquor license revenues collected be
used only for costs and expenses directly relating to operational and administrative costs
actually incurred by the liquor commission collecting such fees. The unexpended fees at
June 30, 2008 of $1,063,490 are reflected as a reserve of general fund balance.
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Notes to the Basic Financial Statements
June 30, 2008
Capital Assets
Capital assets, which include property, plant, equipment, and infrastructure assets (e.g., roads,
bridges, curbs and gutters, streets and sidewalks, drainage systems, lighting systems, and
similar items), are reported in the applicable governmental or business-type activities columns
in the government-wide financial statements. Capital assets are defined by the government as
assets with an initial, individual cost of more than $1,000 and an estimated useful life in
excess of one year. 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.
The costs of normal maintenance and repairs that do not add to the value of the asset or
materially extend the life of the asset are not capitalized.
Major outlays for capital assets and improvements are capitalized as projects are constructed.
Interest incurred during the construction phase of capital assets of business-type activities is
included as part of the capitalized value of the assets constructed.
Capital assets of the primary government are depreciated using the straight-line method over
the following estimated useful lives of the assets: .
Assets Years ,
Infrastructure 20 to 100 years
Buildings and improvements 50 to 100 years
Equipment 5 to 40 years
Depreciation is recorded in one enterprise fund, the Kulaimano Elderly Housing Project. It is
computed using the straight-line method over the following estimated useful lives of the
assets:
Buildings 50 years
Furnishings and equipment 5 to 10 years
Ground and site improvements 20 to 50 years
Long-term Obligations
The County reports long-term debt of governmental funds at face value on the government-
wide statement of net assets. Certain other governmental fund obligations not expected to be
financed with current available resources are also reported on the government-wide statement
of net assets. Long-term debt and other obligations financed by the proprietary funds are
reported as liabilities in those funds.
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COUNTY OF HAWAII
Notes to the Basic Financial Statements
June 30, 2008
Compensated -Absences
Employees earn vacation credit at the rate of one and three-quarter working days for each
month of service. Up to ninety days of vacation leave credits can be accumulated per
employee. In addition, employees who work overtime can elect to take compensatory time off
instead of overtime pay. The time off is earned at the rate ofone-and-a-half hours for each
hour of overtime worked. There is no statutory limit to the amount of compensatory time off
an employee can accumulate. Both compensatory time off and vacation credits are converted
to pay upon termination of employment.
A liability for these amounts is reported in the Governmental Funds only if they have
matured, for example, as a result of employee resignations and retirements. All vacation and
compensatory time off pay is accrued in the government-wide statement of net assets along
with the estimated liability for social security and Medicare taxes and employers' retirement
contributions on those amounts. In prior yeazs, the following funds have been used to
liquidate this liability for compensated absences: General Fund, Highway Fund, Sewer Fund,
Solid Waste Fund, Vehicle Disposal Fund, Golf Course Fund and the Housing Agency.
Sick leave accumulates without limit. Sick leave can be taken only in the event of illness and
is not convertible to pay upon termination of employment; therefore there is no related
liability. However, a County employee who retires or leaves government service in good
standing with 60 days or more of unused sick leave is entitled to additional service credit in
the Employees' Retirement System of the State of Hawaii. Accumulated sick leave at
June 30, 2008 totaled $61,174,828 for the primary government.
Leases
Leases transferring substantially all of the risks and benefits of ownership are recorded as
capital leases; other leases are operating leases (see Note 8). Capital leases are recorded as
capital asset additions at their estimated fair market value at the inception of the lease and the
related present value of the future minimum lease obligations is recorded aslong-term debt.
Operating lease expenditures and expenses are recognized when the lease obligation is paid.
Retirement Plan Contributions
The County's contribution to the Employees' Retirement System of the State of Hawaii
includes the normal cost plus the level annual payment required to amortize the unfunded
actuarial accrued liability. The County's policy is to fund its required contribution annually
(see Note 13).
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COUNTY OF HAWAII
Notes to the Basic Financial Statements
June 30, 2008
a Operating Revenues and Expenses
Revenues and expenses aze distinguished between operating and nonoperating items for the
proprietary funds. Operating revenues generally result from providing services in connection
with the proprietary funds' principal ongoing operations. The principal operating revenues of
a the proprietary funds are fees charged to residents for rent and rental subsidies received from
the federal government.
a Operating expenses include the costs associated with providing housing for tenants, such as
utilities, lease rent, and maintenance and repairs; administrative expenses; and depreciation
on capital assets. All revenues and expenses not meeting these definitions are reported as
a nonoperating revenues and expenses.
Use of Estimates
The preparation of the basic financial statements in conformity with GAAP requires
management to make estimates and assumptions that affect the reported amounts of assets and
liabilities, as well as disclosure of contingent assets and liabilities at the date of the financial
statements, and the reported amounts of revenues, expenditures, and other financing sources
and uses during the reporting period. Actual results could differ from those estimates.
a 2. STEWARDSHIP, COMPLIANCE AND ACCOUNTABILITY
Annual Budget
a
The County follows these procedures in establishing its operating and capital budgets:
• On or before March 1, the Mayor submits to the County Council proposed operating and
capital projects budgets for the fiscal yeaz commencing the following July 1. The
operating budget includes proposed expenditures for the general fund and special
revenue funds, and the means of financing them. Aproject-length budget is submitted to
a the County Council for the capital projects fund.
• The Mayor submits to the County Council amendments to the proposed operating and
a capital budgets within ten working days after the close of the state legislature, but not
later than May 5.
• The County Council conducts public hearings on the proposed operating and capital
budgets after March 1 but prior to the first reading on the budget bills, which must be
after May 5.
• On or before June 30, the County Council adopts the budgets. The legal level of
budgetary control is the department level because the Mayor can transfer funds from any
unencumbered appropriation to another within a deparhnent or agency without County
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COUNTY OF HAWAII
Notes to the Basic Financial Statements
June 30, 2008
Council approval. During the yeaz, the budget may be amended by action of the County
Council, except for appropriations required by law and appropriations for debt service,
which may not be decreased or deleted. Supplemental appropriations were made during
the 2007-2008 fiscal year to recognize revenue from sources not anticipated at the time
of the original budget and to establish the authorization for such funds to be expended.
Such supplemental appropriations totaled $ ] 0.1 million in the general fund and $7.6
million in the special revenue funds. Legally adopted budgets include the General Fund,
Highway Fund, Sewer Fund, Solid Waste Fund, Cemetery Fund, Pazking Meter Fund,
Vehicle Disposal Fund, Bikeway Fund, Workforce Investment Act Fund, Golf Course
Fund, Geothermal Relocation Revolving Fund, Beautification Fund, Housing Agency
and Park Dedication Fund.
Appropriations for the operating budget lapse at the end of the fiscal year to the extent
that they have not been expended or encumbered. Appropriations for capital
expenditures that are not encumbered lapse at the end of two fiscal years following the
fiscal year that the appropriation was made.
Formal budgetary integration is employed as a.management control device during the
year for the general fund, special revenue funds, and capital projects fund. Formal
budgetary integration is not employed for debt service funds because effective budgetary
control is alternatively achieved through general obligation bond indenture provisions.
The accompanying statement of revenues, expenditures and changes in fund balances -
budget and actual (budgetary basis) for the general fund presents a comparison of the
legally adopted budget with actual data on a budgetary basis. Accounting principles
applied for purposes of developing data on a budgetary basis differ significantly from
those used to present financial statements in conformity with GAAP. On the budgetary
basis, intergovernmental revenues are recognized when awarded by the granting agency,
encumbrances and unexpended allotments are treated as expenditures, accounts payable
are not accrued, and all leases are treated as operating leases. In preparing the financial
statements on a GAAP basis, accounts payable are accrued and treated as a reduction of
encumbrances for balance sheet presentation.
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COUNTY OF HAWAII
Notes to the Basic Financial Statements
a June 30, 2008
a
Budget to GAAP Reconciliation
The following is a summary of the adjustments necessary to convert fund balances of the
County's general fund and solid waste fund from a GAAP basis to a budgetary basis at _
June 30, 2008:
Solid Waste
General Fund Fund
Ending fund balance -GAAP basis $48,870,351 $6,767,440
Encumbrance adjustments:
Beginning encumbrances and unexpended allotments 12,518,470 1,849,367
Ending encumbrances and unexpended allotments (14,465,089) (3,543,281)
a Other adjustments (2.919.320) --
Ending fund balance -Non-GAAP budgetary basis $44.004.412 ~ 07 6
a 3. CASH AND INVESTMENTS
The Director of Finance is responsible for the safekeeping of all monies paid to the County.
a The Director of Finance invests any monies of the County which in the Director's judgment
are in excess of the amounts necessary for meeting the day-to-day operating needs of the
County. Legally authorized investments include obligations of or guaranteed by the U.S.
government, obligations of the State, federally insured savings and checking accounts, time
a certificates of deposit, and repurchase agreements with federally insured financial institutions.
a Cash
The County maintains approximately 18 bank accounts for various purposes at locations
o throughout the state. Bank deposits are under the custody of the Director of Finance. For
financial statement reporting purposes, cash and short-term investments consist of cash, time
certificate of deposit, and money market accounts. Cash and short-term investments also
include repurchase agreements and U.S. government securities with original maturities of
a three months or less.
The carrying amount of the County's unrestricted and restricted deposits (cash, time
a certificates of deposit, and money market accounts) as of June 30, 2008 was $125,083,864
and $302,801, respectively, for the primary government and $5,536,101 and $637,000,
respectively, for the fiduciary funds.
a
Information relating to bank balance, insurance and collateral of cash deposits is determined
on a county-wide basis. Total bank balances of deposits for the primary government and
fiduciary funds amounted to $217,499,441 at June 30, 2008. Of that amount, $217,298,205
a represents bank balances covered by federal deposit insurance or by collateral held by the
County's fiscal agents in the name of the County. The remaining bank balances of $201,236
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COUNTY OF HAWAII
Notes to the Basic Financial Statements a
June 30, 2008
represent deposits held by a management agent and were uncollateralized. Accordingly, these
deposits were exposed to custodial credit risk. Custodial credit risk is the risk that in the
event of a bank failure, the County's deposits may not be returned to it. For demand or
checking accounts and time certificates of deposit, the County requires, in accordance with
State statutes, that the depository banks pledge collateral based on the available bank balances
to limit its exposure to custodial credit risk. All securities pledged as collateral are held by
the County's fiscal agents in the name of the County. The County also requires that no more
than 60% of the County's total funds available for deposit may be deposited in any one
financial institution, in accordance with State statutes.
Investments
The County holds investments both for its own benefit and on behalf of some of the Fiduciary
Funds. The County's investments of funds not required for immediate payments are
predominately comprised of U.S. government securities (all rated AAA), while equity
securities are held by the fiduciary fund.
The County's investments and maturities at June 30, 2008 are as follows:
Investments -Primary Government:
Certificates of deposit
U.S. government securities
Investments -Fiduciary Funds:
Certificates of deposit
U.S. government securities
Equity securities
Maturity (in vearsl
Fair Value Less than 1 1 - 5
$ 69,329,225 $ 69,329,225 $ --
63,635,164 63,635,164
132.964.389 X132.964.389 S --
$ 2,285,235 $ 2,285,235 $ --
$ 1,241,244 $ 1,241,244 $
3.526.479 3.526.479 $ --
$ 972.446
Interest Rate Risk: As a means of limiting its exposure to fair value losses arising from rising
interest rates, the County's investment policy generally limits maturities on investments to not
more than five years from the date of investment.
Credit Risk: The County's investment policy limits investments in state and U.S. Treasury
securities, time certificates of deposit, U. S. government or agency obligations, repurchase
agreements, commercial paper, bankers' acceptances, and money market funds, or other
securities maintaining aTriple-A rating.
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COUNTY OF HAWAII
Notes to the Basic Financial Statements
June 30, 2008
Custodial Risk: For an investment, custodial risk is the risk that, in the event of failure of the
counterparty, the County will not be able to recover the value of its investments or collateral
securities that are in the possession of an outside party. The County's investments are held by
its fiscal agent and the securities held by the fiduciary fund are held by the County. In
addition, the County requires the institutions to set aside in safekeeping, certain types of
securities to collateralize repurchase agreements.
Concentration of Credit Rlsk: The County's investment policy contains no limitations on the
amount that can be invested in any one issuer beyond that stipulated by the Hawaii Revised
Statutes.
Restricted Cash and Cash Equivalents and Investments
Cash and cash equivalents and investments classified as restricted assets amounted to
$939,801 at June 30, 2008 and consist of the following:
Primary government $302,801
Fiduciary funds - 637.000
39801
The County entered into a capital lease to purchase a new financial accounting computer
system. Upon execution of the lease documents, the leasing company deposited into an
escrow account in the County's name the full lease proceeds. As progress billings are
received for the new system, the County will authorize withdrawals from this escrow
account to pay the bills. The balance in this account at June 30, 2008 was $70,642.
Tenant security deposits received by the County for the Kulaimano Elderly Housing
Project and the Ouli Ekahi Affordable Housing Project are recorded as restricted assets.
Such funds amounted to $11,856 and $21,162, respectively, at June 30, 2008.
Restricted amounts set aside by the Kulaimano Elderly Housing Project under its loan
agreement with the Farmers Home Administration totaled $184,327 at June 30, 2008. This
amount is restricted for debt service, or for other purposes with prior approval from the
Farmers Home Administration. An operating reserve fund was established by the Ouli
a Ekahi Affordable Housing Project pursuant to an agreement with the developer of the
project. This restricted reserve amounted to $14,814 at June 30, 2008.
The Improvement District No. 17 Fund has restricted $637,000 as a bond reserve at
June 30, 2008 to comply with the requirements of its Kaloko Subdivision bond issuance.
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COUNTY OF HAWAII
Notes to the Basic Financial Statements a
June 30, 2008 a
4. RECEIVABLES
Receivables as of June 30, 2008, for the County's individual major funds and nonmajor funds
in the aggregate, including the applicable allowances for uncollectible accounts, are as
follows:
Governmental activities: LJ
Solid Capital Nonmajor
General Waste Projects Governmental
Fund Fund Fund Funds Total
Receivables:
Real property taxes $ 9,536,438 $ -- $ -- $ -- $ 9,536,438
Accounts receivable:
Sewer -- -- -- 1,823,392 1,823,392
Solid waste -- 3,791,366 -- -- 3,791,366
Capital projects -- -- 855,019 -- 855,019
Intergovernmental 8.076,217 741.299 6,271,541 1,382,538 16,471,595
Gross receivables 17,612,655 4,532,665 7,126,560 3,205,930 32,477,810
Less: allowance for
uncollectibles -- 1 280 719) -- 79( 4,280) (2,074,999)
Net total receivables 17.612.655 ~ 1 4 $7.126.560 $2 q]~ $30-402.811
During fiscal year 2005, the County issued $3,887,493 in general obligation bonds on behalf
of Improvement District No. 18, an agency fund. At June 30, 2008, the outstanding balance
of $3,719,135 is reflected in the government-wide statement of net assets as a receivable (see
Note 10).
Business-type activities:
Enterprise
Funds
Receivables:
Accounts receivable:
Rent $55,010
Other 2,448
Gross receivables 57,458
Less: allowance for
uncollectibles
Net total receivables 57 458
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Notes to the Basic Financial Statements
O June 30, 2008
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5. INTERFUND RECEIVABLES AND PAYABLES
a Interfund receivables and payables consist of the following at June 30, 2008:
Receivable Fund Payable Fund Amount
a General fund Solid waste fund $ 18,410
Other governmental funds 448,169
466,579
Capital projects fund General fund 227,268
Other governmental funds 284,191
511,459
a Other governmental funds General fund 41,728
Other governmental funds 18,869
60.597
a Total 1 5
Other governmental funds Enterprise funds 2 7
The above Interfund balances result from the time lag between the dates that Interfund goods
and services are provided or reimbursable expenditures occur, transactions are recorded, and
payment between funds are made.
Transfers for the fiscal year ended June 30, 2008 consisted of the following
o Transfers out:
Nonmajor
General Governmental
Fund Funds Total
Transfers in:
Solid waste fund $ 17,352,726 $ -- $ 17,352,726
Capital projects fund 8,109,081 5,870,838 13,979,9]9
Nonmajor governmental funds 33,596,734 -- 33,596,734
59.058.541 5 870 838 $64.929.379
a
The Interfund transfers noted above include transfers from the general fund to provide
support for various County programs and to provide resources for the payment of debt
services. In addition, some of the nonmajor governmental funds have made transfers to the
capital projects fund for the construction of various projects.
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COUNTY OF HAWAII
Notes to the Basic Financial Statements
June 30, 2008
6. CAPITAL ASSETS
Capital asset activity for the year ended June 30, 2008 f or the County w as as follows:
Balance Balance
June 30, Retirements/ June 30,
2007 Additions Transfers 2008
Governmental activities:
Capital assets not being depreciated:
Land $ 22,999,]68 $ 5,188,406 $ -- $ 28,187,574
Construction work in
progress 109.766,441 34.639.863 (19.364.4531 125.041,851
Total capital assets not
being depreciated 132,765,609 39,828,269 (19,364,4531 153,229,425
Capital assets being dep reciated:
Buildings and
improvements 268,415,009 30,839,538 -- 299,254,547
Equipment 84,513,840 15,441,236 (2,858,039) 97,097,037
Infrastructure 271.186.361 17.681,201 288,867,562
Total capital assets
being depreciated 624,115,210 63.961,975 (2,858,039) 685,219,146
_
Less accumulated depreciation for:
Buildings and
improvements (48,737,946) (3,498,380) -- (52,236,326)
Equipment (48,276,217) (5,923,793) 2,609,694 (51,590,316)
Infrastructure (113,944,8861 (12,007,594) (125,952,4801
Total accumulated
depreciation (210,959,049) (21,429,7671 2,609,694 (229,779,122)
Total capital assets,
being depreciated,
net 413.156.]61 42.532,208 (248.345) 455.440,024
Govemmental
activities capital
assets, net 545.921.770 82.360.477 ($19.612.7981 608.669.449
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Notes to the Basic Financial Statements
June 30, 2008
Balance
June 30,
2007
Busiuess-type activities:
Capital assets not being depreciated:
Land $ 753,877
Capital assets being deprec iated:
Buildings and
improvements 1,136,008
Ground and site
improvements 261,000
Equipment 94,496
Total capita] assets
being depreciated ],491,504
Less accumulated deprecia tion for:
Buildings and
improvements (683,204)
Ground and site
improvements (174,648)
Equipment 8( 1,266)
Total accumulated
depreciation 93( 9,118)
Tota] capital assets,
being depreciated,
net 552,386
Business-type
activities capital
assets, net $1.306.263
Balance
Retirements/ June 30,
Additions Transfers 2008
$ -- $ -- $ 753,877
-- -- 1,136,008
-- -- 261,000
5 839 4 294 96,041
5.839 4 294 1,493,049
(24,615) -- (707,819)
,(3,754) -- (178,402)
5 417 4.294 (82.3891
33 786 4 294 (968,6101
27 947 -- 524,439
2 4 $ -- 1278 1
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a
COUNTY OF HAWAII n
Notes to the Basic Financial Statements U
June 30, 2008
Depreciation expense was charged to functions/programs of the primary government as ~
follows:
Governmental activities: a
General government $ 1,617,260
Public safety 2,068,658
Highways and streets
13,229,748 a
Sanitation 3,174,713
Health, education and welfare 221,186 r-y
Culture and recreation 1,118,202 I LJI
Total depreciation expense -governmental activities $21.429.767
Business-type activities:
Kulaimano Elderly Housing Project 33 786
Total depreciation expense -business-type activities ~7
7. DEFERRED REVENUE a
Deferred revenue consists of the following at June 30, 2008
Solid Capital Other Tota]
General Waste Projects Governmental Governmental
Fund Fund Fund Funds Funds
Real property taxes $ 9,875,581 $ -- $ -- $ -- $ 9,875,581
Liquor control revenue 117,050 -- -- -- 117,050
Sewer revenue -- --
-- 1,029,112
1,029,112 a
Solid waste revenue -- 2,522,645 -- -- 2,522,645
Intergovernmental 2,328,674 6,065,660 8,394,334
Total presented in
fund financial
statements 12,321,305 2,522,645 6,065,660 1,029,112 21,938,722
Less adjustments for
accrual of revenues (9,536,437) (2,510.647) (1,029,112) (13,076,196)
Total government-
wide financial
statements 2.784.868 $ 06 6 $ -- $ 8.862.526
Enterprise
Funds
Unearned rental income $3Q
a
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COUNTY OF HAWAII
Notes to the Basic Financial Statements
O June 30, 2008
a
8. LEASES
The County leases machinery and equipment under noncancellable leases expiring at various
dates through April 2013 which meet the criteria for capitalization. These capital leases are
financed from general fund resources.
a i
l
ta
The estimated value of the leased machinery and equipment at the inception of the cap
leases and accumulated depreciation, amounting to $12,938,291 and $4,860,948, respectively,
and the related present value of the remaining obligations under the capital leases amounting
to $4,606,527 at June 30, 2008 are included in capital assets and long-term debt, respectively.
The County also leases land, office facilities and other equipment under noncancellable
operating leases expiring through May 2022. Expenditures for such operating leases were
$2,164,542 for the fiscal year ended June 30, 2008.
a The future minimum obligations under capital and operating leases at June 3Q 2008 are as
follows:
a Governmental
Activities -
Capital Operating
Leases Leases
Year Ending June 30:
2009 $1,536,906 $2,395,865
2010 1,335,064 2,023,7]7
2011 1,022,443 1,866,096
2012 860,754 1,036,573
2013 191,659 865,974
2014 - 2018 859,069
2019 - 2022 754
Total minimum lease payments 4,946,826 4 04
Less amount representing
interest (340,299)
O Obligations under capital leases $4.606.527
9. SOLID WASTE LANDFILL CLOSURE AND POSTCLOSURE CARE COSTS
Hilo Landfill The County owns and operates a landfill located in the city of Hilo. State and
federal laws require the County to place covers on certain landfill sites and to monitor and
maintain the sites for thirty yeazs after the facility is closed. Although the closure and
postclosure care costs will be paid near and after the date that the landfill stops accepting
waste, the County recognizes a portion of the closure and postclosure care costs in each
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COUNTY OF HAWAII
Notes to the Basic Financial Statements
June 30, 2008
operating period. The liability for these costs is included in the government-wide statement
of net assets. The amount recognized each year is based on the landfill capacity used as of
the balance sheet date. At June 30, 2008, the County recognized a liability of $11,956,000,
based on the use of 88% of the estimated capacity of the landfill. During the fiscal year
ended June 30, 2008, $69,696 was spent on closure of the landfill. The remaining $1,851,775
in estimated cost of closure and postclosure care will be recognized as the remaining
estimated capacity is used. The estimated remaining useful life of the landfill is
approximately four years. These amounts are based on what it would cost to perform the
required closure and postclosure care in 2008. Actual costs at that time may be higher due to
inflation, changes in technology, or changes in regulations.
The percentage of estimated capacity used as of June 30, 2008 reflects revised estimates
regarding the landfills total capacity from previous years. Historically, landfill capacity
estimates were based on volumes going into the landfill which did not account for
decomposition, settlement and corrosion.
The County's permit to operate the landfill expired October 9, 1998. The County filed for an
extension which was approved by the state until permitted capacity is reached. In accordance
with state statute, the County is allowed to continue operations provided that the County acts
consistently with the permit previously granted and the extension application, plans,
specifications and all other information contained therein.
Kealakehe In October 1993, the County closed its Kealakehe landfill in Kona. Under state
and federal requirements, the County would have to monitor and maintain this site for ten
years from the closure date. However, the County anticipates monitoring and maintaining the
site for thirty years because there is presently a subterranean fire which requires active
management. The estimated cost of closure and postclosure is $15,250,000, based on what it
would cost to perform the required closure and postclosure care in 2008. Actual costs may be
higher due to inflation, changes in technology, or changes in regulations. Through
June 30, 2008, $6,956,347 was spent on closure and postclosure care of the landfill. The
remaining estimated liability of $8,294,000 is included in the government-wide statement of
net assets. During the year ended June 30, 2008, $92,375 was spent on closure of the landfill.
The County is providing financial assurance for postclosure care and remediation through self
insurance as explained below.
Pu'uaaahulu In May 1993, the County contracted with a private company to construct and
operate a new landfill on County land at Pu'uanahulu in West Hawaii. The present contract
calls for County employees to perform the daily operations of the landfill, and for the private
company to retain the overall management as well as perform all construction work on the
landfill cells. Under the terms of the contract, the County has no, responsibility for
remediation, closure or postclosure care. Accordingly, no liability for this landfill is included
in the County's financial statements.
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a
COUNTY OF HAWAII
Notes to the Basic Financial Statements
June 30, 2008
Financia[Assurance For fiscal year 2008, the County has provided for financial resources
that will be available to provide for closure, postclosure care and remediation or containment
O of environmental hazards at the above landfills, except Pu`uanahulu. The Environmental
Protection Agency's financial assurance rules include a local government financial test
consisting of a financial component, a public notice component, and a recordkeeping
component. Local governments are required to satisfy each of the three components to pass
the annual test. Management believes that the County has satisfied each of the components of
the local government financial assurance requirements.
l-1 10. LONG-TERM DEBT
General Obligation Bonds
The County issues general obligation bonds to provide funds for the acquisition and
construction of major capital facilities. These bonds have been issued by the County for the
primary government, component unit activities (see Note 14) and an improvement district.
The following is a summary of general obligation bond transactions reported in the
government-wide statement of net assets for the County for the fiscal year ended June 30,
a 2008:
Bonds Issue Bond Balance Bond Balance Due within
Retirements June 30 2008 one
Authorized Amount June 30.2007 Issues
-
1993 Ref & PI $86,770,000 $ 3I,27Q,000 $ ($ 4,530,000) $ 26,740,000 $ 4,790,000
1999 SeriesA 30,000,000 2,990,000 - (1,455,000) 1,535,000 1,535,000
~ (622,826) 2,025,000 645,652
2001 SeriesA 23,000,000 2,647,826
=
2003 SeriesA 36,310,000 34,870,000 (1,470,000) 33,400,000 1,505,000
a 2004 SeriesA 30,000,000 30,000,000 (1,130,000) 28,870,000 1,165,000
2004 Ref Series B 19,545,000 17,945,000 -- (1,665,000) 16,280,000 1,735,000
2004 Ref SeriesC 5,050,140 4,146,188 -- (465,812) 3,680,376 479,648
2004 PI SeriesA 2,776,400 2,742,083 -- (35,947) 2,706,136 37,655
2004 P[ Senes B 920,000 907,754 (12,782) 894,972 13,341
2004 PI SeriesC 19!,093 155,100 -- (37,073) 118,027 38,185
2006 SeriesA 25,000,000 25,000,000 -- (757,500) 24,242,500 797,500
2007 SeriesA 85,000,000 85,000,000 -- -- 85,000,000 2,685,000
2007 Series B 20,820,000 20,820,000 20,820,000
2007 SeriesC 10 787 388 10 787,388 - 10987 388
376,170,021 269,281,339 -- (12,181,940) 257,099,399 15,426,981
O Add unamortized
premium 5,420,154 4,859,956 (271,008) 4,588,948 271,008
Less deferred amount
on refunding (2 828 7591 12 428,5211 - 248.722 (2.179 7991 (248,7221
$378-761416 ~ 7171 774 $ ($122042261 5759 ~8 ~& $1540.9267
a
0
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COUNTY OF HAWAII
Notes to the Basic Financial Statements
June 30, 2008
General obligation bonds payable reported on the government-wide statement of net assets at
June 30, 2008 are comprised of the following individual issues:
Public improvement and/or refunding bonds
1993 Refunding & PIat5.5% to 5.6%, due through 2013 $ 26,740,000
1999 Series A at 5.75% to 6.0%, due through 2009 1,535,000
2001 Series A at 4.0% to 4.5%, due through 2010 2,025,000
2003 Series A at 2.0% to 5.125%, due through 2023 33,400,000
2004 Series A at 3.0% to 5.25%, due through 2024 28,870,000
2004 Refunding Series B at 3.5% to 5.0%, due through 2015 16,280,000
2004 Refunding Series C at 2.5% to 3.7%, due through 2014 3,680,376
2004 PI Series A at 4.75%, due through 2039 2,706,136
2004 PI Series B at 4.375%, due through 2039 894,972
2004 PI Series C at 3.0%, due through 2010 118,027
2006 Series A at 4.0% to 5.0%, due through 2026 24,242,500
2007 Series A at 4.0% to 5.0%, due through 2027 85,000,000
2007 Series B at 3.75% to 5.0%, due through 2018 20,820,000
2007 Series C at 4.0% to 5.0%, due through 2021 10.787,388
Total general obligation bonds payable $257.099.399
Annual debt service requirements to maturity for the above general obligation bonds are as
follows:
Fiscal year ending June 30:
2009
2010
2011
2012
2013
2014 - 2018
2019 - 2023
2024 - 2028
2029 - 2033
2034 - 2038
2039 - 2040
Total
Bond Premiums
Governmental Activities
Princioal Interest
$ 15,426,981 $ 11,765,031
16,198,683 11,008,188
16,950,530 10,264,615
17,757,789 9,476,301
18,591,566 8,630,305
65,714,435 32,185,141
60,310,418 17,423,539
44,173,666 4,710,526
695,157 382,110
872,865 200,261
407.309 19,168
257.099.399 $]06.065.185
At June 30, 2008, total unamortized bond premiums were $4,588,948, which is being
amortized over the remaining life of the respective bond issues.
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COUNTY OF HAWAII
Notes to the Basic Financial Statements
June 30, 2008
a
Bonds Authorized and Unissued
The County Council has authorized the issuance of $87 million in general obligation bonds to
D finance specified capital improvement projects. At June 30, 2008, $47 million was not yet
issued.
Subsequent Events On July 3, 2008, the County Council authorized the issuance of
$114,588,700 in general obligation bonds to finance specified capital improvement
projects. In addition, on October 27, 2008, the County Council authorized the issuance
of $8,000,000 in general obligation bonds to finance the Kaloko Housing Project.
On December 10, 2008, the County issued $50,000,000 in general obligation bonds
(2008 Series A). The interest rates on the 2008 Series A range from 4% to 6% and are
due through 2028. The bonds were authorized as noted above.
State Revolving Fund Loans
The County has obtained loans to assist in financing mandated wastewater projects from the
State Water Pollution Control Revolving Fund (SRF). The purpose of this revolving fund is
a to provide low-interest, long-term loans and other financial assistance to the four counties in
the state to finance construction of wastewater projects. The County has fifteen projects
approved for funding with these loans. The schedule below shows the County's SRF
O transactions for the fiscal year ended June 30, 2008:
Loans Approved Loan Balance Loan Balance Due within
Authorized Amount June 30 2007 Additions Retirements June 30 2008 one
Hilo WWTP $12,724,311 $4,549,874 $ -- ($ 712,283) $3,837,591 $730,090
Waiakea Mill 1,300,000 533,689 (70,711) 462,978 72,479
Waiakea
Houselots 459,321 164,911 -- (25,817) 139,094 26,462
Waiakea
Houselots ^ 5,024,266 3,478,98] (25Q,506) 3,228,475 257,062
--
Ainako A&B 2,239, L74 962,168 (I 19,882) 842,286 122,364
Kalanianaole 1,499,944 771,686 -- (8],080) 690,606 83,548
Kalanianaole RH 5,000,000 1,392,359 79,900 (65,043) 1,407,216 71,205
Alii Drive A&B 3,21Q,243 1,363,885 (178,813) 1,]85,072 183,818
Alii Drive C&D 3,780,000 1,835,297 (199,835) 1,635,462 203,973
Alii Drive E&F 2,112,654 1,176,371 -- (115,400) 1,060,971 !78,912
Waiaha Bay 3,697,893 1,859,444 -- (196,753) 1,662,691 202,259
Kealakehe 1,300,071 532,717 -_ (70,583) 462,134 72,347
Holualoa Bay 3,060,000 1,744,740 (161,126) 1,583,614 166,029
Paukaa CCS 2,143,448 1,454,555 -- (105,978) 1,348,577 108,643
Cesspool
Conversion 8,908,035 6,254,922 1,836,140 (302,487) 7,785,575 405,355
Pahoehoe 2.817 760 2.171.152 (130,3081 2.040.844 133.716
$59 297 120 0 46 751 1.916.040 ($2J86.6051 $29 3761 R6 $124$ 2St~
O
-69-
COUNTY OF HAWAII
Notes to the Basic Financial Statements
June 30, 2008
The loans bear interest at 0.50% to 3.02%, exclusive of a 1.00% loan fee for all loans except
for the Hawaii County Cesspool Conversion Project which is subject to a 0.25% loan fee, and
require payments through fiscal year 2027. Debt service to maturity for disbursements to date
on these projects are as follows:
Fiscal year ending June 30
2009
2010
2011
2012
2013
2014 - 2018
2019 - 2023
2024 - 2027
Total
Other General Long-Term Obligations
Governmental Activities
Principal Interest
$ 2,958,262 $ 879,670
3,023,040 808,140
3,092,648 731,637
3,163,930 653,303
3,237,315 568,059
8,612,614 1,214,815
3,610,954 217,697
1.677.423 28.026
29.376.186 5 101 4
The following is a summary of other general long-term obligations transactions for the fiscal
year ended June 30, 2008:
Balance Deductions Balance Due within
June 30, 2007 Additions & Payments June 30 2008 one year
Governmental activities:
Compensated absences $25,748,158 $]3,109,420 ($10,887,517) $27,970,061 $ 7,375,050
Claims and judgments
(see Note l2) ]8,308,292 5,267,442 (4,087,323) 19,488,411 3,671,816
Capital leases
(see Note 8) 4,085,735 2,187,502 (1,666,710) 4,606,527 1,380,474
Landfill costs payable
(see Note 9) 21.241,000 -- (991.000) 20,250.000 178.202
Total $69383.185 20.564.364 ($17.632.5501 $72314.999 $12.605.542
Fund Balances -Debt Service Funds
The fund balance in the debt service funds at June 30, 2008 includes $20,375,906, which is
available for principal payments on general obligation bonds and $1,783,140, which is
reserved for the payment of interest on the bonds.
Enterprise Fund Notes Payable
The Kulaimano Elderly Housing Project (Project) is indebted to the U.S. Department of
Agriculture, Farmers Home Administration on two notes payable with balances aggregating
-70-
COUNTY OF HAWAII
a Notes to the Basic Financial Statements
June 30, 2008
D
D
LJ
$970,892 at June 30, 2008. The notes, which mature in September 2029, are repayable in
monthly installments of $7,826 including interest and are collateralized by substantially all of
the Project's property and equipment. Although the stated annual rate of interest on the notes
is 9%, such rate is reduced to 7% for as long as the Project has a U.S. Department of Housing
and Urban Development Section 8 Housing Assistance Payment contract in effect for all or
part of the units within the Project.
The following is a summary of enterprise fund notes payable transactions for the fiscal year
ended June 30, 2008:
Balance at June 30, 2007 $995,854
Deductions (24,962)
Balance at June 30, 2008 970,892
Less current portion (26,798)
Note payable, net of
current portion 944 094
The following is a summary of the annual maturities for the enterprise fund notes payable:
Fiscal year ending June 30:
2009
2010
2011
2012
2013
2014 - 2018
2019 - 2023
2024 - 2027
Business-tune Activities
Principal Interest
$ 26,798 $ 67,114
28,736 65,176
30,813 63,099
33,041 60,871
35,429 58,483
219,472 250,088
311,129 158,431
285,474 36,443
D Total 9 8 2 $ZS 0
Special Assessment Bonds
O The County has outstanding special assessment bonds for one improvement district. In 1991,
the County issued $14 million of special assessment bonds for Improvement District No. 17,
Kaloko Subdivision, to finance a roadway and water system. In 2001, the County refunded
a the remaining bonds outstanding of $6,370,000. The bonds mature annually through 2011
and bear interest at 7.375%.
Total special assessment bonds payable were $3,200,000 at June 30, 2008. These are not
general obligation bonds and the County is not obligated in any manner for the repayment of
these bonds. The bonds are secured by a first lien on the land benefited by the improvements,
a
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COUNTY OF HAWAII
Notes to the Basic Financial Statements
June 30, 2008
and are to be repaid from the annual assessments levied against the owners of the land. The
County acts as an agent for the property owners within the improvement districts to collect
assessments receivable, forward payments to bond-paying agents at appropriate dates and, if
required, administer foreclosure proceedings. Accordingly, these bonds are not reflected on
the County's government-wide statement of net assets.
The following is a summary of special assessment bond transactions for Improvement District
No. 17, Kaloko Subdivision, for the fiscal year ended June 30, 2008:
Balance at June 30, 2007 $3,870,000
Deductions (670.000
Balance at June 30, 2008 3.200.000
The following is a summary of the annual maturities for the special assessment bonds:
Year ending June 30: Principal Interest
2009 $ 715,000 $209,634
2010 770,000 154,875
2011 825,000 96,059
2012 890.000 32,820
Total 200 000 4 8
The County has issued general obligation bonds on behalf of Improvement District No. 18 for
water improvements (see Note 4). The Improvement District is responsible for the payment of
the debt service on these bonds, but the County remains liable because they are general
obligations of the County. The bonds mature annually through 2039 and bear interest at 3.0%
to 4.75%. Total general obligation bonds payable included in the government-wide statement
of net assets were $3,719,135 at June 30, 2008.
The bonds are secured by a first lien on the land benefited by the improvements, and are to be
repaid from the annual assessments levied against the owners of the land. The County acts as
an agent for the property owners within the improvement districts to collect assessments
receivable, forward payments to bond-paying agents at appropriate dates and, if required,
administer foreclosure proceedings.
The following is a summary of bond transactions for Improvement District No. 18,
Coastview/Wonderview Water Improvements, for the fiscal year ended June 30, 2008:
Balance at June 30, 2007
Additions
Deductions
Balance at June 30, 2008
$3,804,937
(85,8021
.719.1
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a
COUNTY OF HAWAII
Q Notes to the Basic Financial Statements
D June 30, 2008
The following is a summary of the annual maturities for the improvement district general
a obligation bonds:
Year ending June 30: Principal Interest
2009 $ 89,181 $ 169,479
2010 92,699 165,889
2011 96,362 162,149
2012 58,449 158,883
2013 61,168 156,101
2014 - 2018 351,280 734,006
2019 - 2023 440,999 642,195
2024 - 2028 553,666 526,902
2029-2033 695,157 382,110
2034 - 2038 872,865 200,261
2039 - 2040 407,309 19,169
Total 3.719.135 144
Q
11. COMMITMENTS AND CONTINGENCIES
a Contractual commitments - Contractual commitments for capital projects, expenses, and
supplies at June 30, 2008, except in the enterprise funds, are reflected in the balance sheets as
fund balance reserved for encumbrances. Contractual commitments for the enterprise funds
were immaterial.
Intergovernmental revenues - The County has received federal and state grants for specific
Q purposes that are subject to review and audit by grantor agencies. Such audits could lead to
requests for reimbursement to the grantor agency for expenditures disallowed under terms of
the grants. -n the opinion of management of the County, disallowed costs, if any, would not
a be material.
Claims - Numerous claims and lawsuits have been filed against the County in the normal
course of its operations. A liability for probable losses is included on the government-wide
statement of net assets (see Note 12). Although the outcome of the various claims and
lawsuits is not presently determinable, in the opinion of the County's Corporation Counsel,
a the resolution of such matters will not have a material adverse affect on the financial
f the Count
diti
y.
con
on o
ADA compliance -The County has entered into two stipulated agreements (or Consent
Decrees) approved by the federal district court judges to implement provisions of the
Americans with Disabilities~Act ("ADA"): With respect to the first stipulated agreement
Q
-73-
COUNTY OF HAWAII
Notes to the Basic Financial Statements
June 30, 2008 O
relating to curb cuts, the County, with the help of a consultant, surveyed 669 intersections,
then ranked them in order of priority. A transition plan, along with a funding commitment,
was approved by the County Council. The total cost of all curb cuts was estimated to be $6.2
million. The cost of the first phase of the plan was $3 million, to be used in high priority
areas such as government facilities, schools, and hospitals. The remaining cost will cover
curb cuts at parks and in low-density single family residential areas. All corrective action
was to be completed by July 2005, with an estimated 682 ramps to be completed. Funding
allocated so far for this effort is $10.6 million. Since the proposed timetable proved to be too
ambitious, the parties amended the agreement to require contracting by July 2005, rather than
completion by that date. Pursuant to the April 2005 Stipulation of the Parties and Order of
the Court, all curb ramps for 2005 and most curb ramps for 2004 were deferred. In the first
phase, construction of curb ramps commenced in 2000 and ended in 2004, whereby 229 curb
ramps were completed. In the second phase, 153 proposed curb ramps were deferred and 161
curb ramps were to be constructed. As of May 21, 2008, there were approximately 204 curb
ramps (which included at least 151 of the 161 curb ramps that were required by the amended
transition plan) installed in Hilo, Waikoloa and Kona at a total cost of close to $4.8 million.
We will be seeking closure of this matter with the federal district court. In addition, the
Department of Public Works has developed and advertised Procedures for Requesting New
Curb Ramps or Modifications to Existing Curb Ramps within the County Streets.
The second stipulated agreement relates to the Department of Parks and Recreation (the Parks
Department). The agreement required the Parks Department to establish practices, policies
and procedures regarding its programs, and prepare a transition plan by the middle of the year
2000. The self-evaluation and transition plan for programs, practices and procedures has
been completed and approved by the County Council. The cost impact of implementation is
not material because the necessary modifications are primarily procedural. This is an
ongoing effort. The second part of this stipulated agreement is the reevaluation of all County
facilities, which was completed and accepted by the County Council on June 30, 2000.
Approximately 240 County facilities were surveyed as part of this effort. The tentative
completion date of all necessary repairs and renovations is 12 years from the date the County
Council accepted the self-evaluation. The original estimated cost of the facilities repairs was
$14.8 million, which would have been spent over the 12-year period. Funding allocated
initially for facilities repairs was $17.5 million, with another $4 million of federal funding
anticipated through community development block grants over the next 2 years. Since 2000,
the Department of Parks and Recreation has requested $2 to $3 million a year for the different
park facilities' ADA projects, and recently, the Department of Public Works has requested an
additional $2 million a year for the other County ADA facilities' project. Because of the
substantial hardships predominantly incurred in the funding and cost aspects of the
implementation of the Original Transition Plan, the learning curve process, and the timing
and scheduling of the different stages of work for each project, the parties are currently
working on a plan to ensure implementation of a Transition Plan with the assistance of a
federal district court Monitor and an ADA Specialist, to obtain extensions on the initial
deadlines for completion that were set in the Original Transition Plan and to establish a
-74-
a
COUNTY OF HAWAII
Notes to the Basic Financial Statements
U June 30, 2008
'
s
Revised Transition Plan to satisfy the requirements of the ADA. In addition, the County
ADA coordinator (Equal Opportunity Officer) has access to an identifiable account of at least
$50,000 to handle requests for reasonable accommodations for County departments; and once
the procedures for these requests are fmalized, they will be publicized in the newspaper and
other media formats (including Internet access).
R
~J 12. RISK MANAGEMENT
(} The County is exposed to various risks of losses related to torts, thefr of, damage to, and
u destruction of assets; errors and omissions; injuries to employees; and natural disasters. The
County maintains fire and commercial multiple peril insurance on County facilities, flood
insurance on selected structures, medical malpractice insurance for emergency medical
technicians, general liability insurance for water safety officers, aviation liability for
helicopter operations, automobile coverage on transit buses and County Police fleet vehicles,
and no-fault insurance coverage for privately owned police vehicles. There was no reduction
in insurance coverage during the year from coverage in the prior year. During the past three
fiscal years, the amount of settlements in cases covered by insurance has not exceeded the
insurance coverage. The County is substantially self-insured for its vehicles as well as for all
Q other perils including workers' compensation and general liability.
Liabilities are reported when it is probable that a loss has occurred and the amount of that loss
D can be reasonably estimated. These losses include an estimate of claims that have been
incurred but not reported (IBNR). Claim liabilities, including IBNR, aze based on the
estimated ultimate cost of settling the claims, and include incremental costs for the hiring of
special counsel and expert witnesses. Claims liabilities are estimated by a case-by-case
review of all claims and the application of historical experience to outstanding claims.
Estimates of IBNR are based on historical experience. The liability for claims and judgments
is reported on the government-wide statement of net assets. At June 30, 2008, the amount of
this liability was $19,488,411. This is the County's best estimate based on available
information. Changes in the reported liability since June 30, 2006 are given below.
a General Workers' Total
Liabili Compensation Liabili
Balance at June 30, 2006 $7,693,376 $13,647,017 $21,340,393
Incurred claims (including IBNR)* 403,514 1,092,369 1,495,883
Claim payments (2,093,882) (2,434,102) (4,527,984)
Balance at June 30, 2007 $6,003,008 $12,305,284 $18,308,292
Incurred claims (including IBNR)* 3,736,161 1,531,281 5,267,442
Claim payments (1,481,6971 (2,605.626) (4,087.3231
Balance at June 30, 2008 25 4 2 11.230.939 $19.488.411
D *
Net of new claims liability and old claims resolved at less than previous estimate.
LJ
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0
COUNTY OF HAWAII
Notes to the Basic Financial Statements
June 30, 2008
13. EMPLOYEE BENEFIT PLANS
Pension Plan
Plan description All eligible employees of the County are required by Chapter 88 of the
Hawaii Revised Statutes (HRS) to become members of the Employees' Retirement System of
the State of Hawaii (the ERS), acost-sharing multiple-employer defined benefit pension
plan. The ERS provides retirement, survivor, and disability benefits with multiple benefit
structures known as the contributory, hybrid, and noncontributory plans. All contributions,
benefits, and eligibility requirements are established by Chapter 88, HRS, and can be
amended by legislative action.
The ERS regards the County, including its component unit, as one employer. Therefore,
separate information for the primary government and its component unit is not available. All
information given below on the pension plan is for the reporting entity as a whole, including
both the primary government and its component unit.
Employees covered by Social Security on June 30, 1984 were given the option of joining the
noncontributory plan or remaining in the contributory plan. All new employees hired after
June 30, 1984 and before July 1, 2006, who are covered by Social Security, were generally
required to join the noncontributory plan. Qualified employees in the contributory and
noncontributory plan were given the option of joining the hybrid plan effective July 1, 2006,
or remaining in their existing plan. Starting July 1, 2006, all new employees covered by
Social Security are required to join the hybrid plan.
The three plans provide a monthly retirement allowance equal to the benefit multiplier
percentage (1.25% or 2.00%) multiplied by the average final compensation (AFC) multiplied
by years of credited service. The AFC is the average salary earned during the five highest
paid years of service, including the payment of salary in lieu of vacation, or three highest paid
years of service, excluding the payment of salary in lieu of vacation, if the employee became
a member prior to January 1, 1971. The AFC for members hired on or after this date is based
on the three highest paid years of service, excluding the payment of salary in lieu of vacation.
For postretirement increases, every retiree's original retirement allowance is increased by
2.5% on each July 1 following the calendar year of retirement. This cumulative benefit is not
compounded and increases each year by 2.5% of the original retirement allowance without a
ceiling (2.5% of the original retirement allowance the first year, 5.0% the second year, 7.5%
the third year, etc.).
The following summarizes the three plan provisions relevant to the general employees of the
respective plan:
-76-
COUNTY OF HAWAII
D Notes to the Basic Financial Statements
June 30, 2008
Contributory Plan General employees in the contributory plan are required to contribute
7.8% of their salary and are fully vested for benefits upon receiving 5 years of credited
service. The County may also make contributions for these members. Under the
contributory plan, employees may retire with full benefits at age 55 and 5 yeazs of
credited service, or may retire early at any age with at least 25 years of credited service
D and reduced benefits. The benefit multiplier is 2.0% for employees covered by Social
Security.
n Police officers, fire fighters and certain other members that are not covered by Social
u Security contribute 12.2% of their salary and receive a retirement benefit using the
benefit multiplier of 2-1/2% for qualified service, up to a maximum of 80% of AFC.
These members may retire at age 55 with 10 years of credited service or at any age with
25 years of credited service, provided the last 5 years of credited service is in any of the
qualified occupations.
Hybrid Plan General employees in the hybrid plan are required to contribute 6.0% of
uuu their salary and are fully vested for benefits upon receiving 5 years of credited service.
The County may also make contributions for these members. Employees may retire with
a full benefits at age 62 and 5 years of credited service or at age 55 and 30 years of
credited service, or may retire at age 55 and 20 years of credited service with reduced
benefits. The benefit multiplier used to calculate retirement benefits is 2.0%.
Noncontributory Plan General employees in the noncontributory plan are fully vested
upon receiving 10 yeazs of credited service. The County is required to make all
(1 contributions for these members. Employees may retire with full benefits at age 62 and
(~ 10 years of credited service or age 55 and 30 years of credited service or age 55 and 20
years of credited service with reduced benefits. The benefit multiplier used to calculate
retirement benefits is 1.25%.
The ERS funding policy provides for periodic employer contributions at actuarially
determined rates, expressed as a percentage of annual covered payroll, such that the employer
contributions, along with employee contributions and an actuarially determined rate of
investment return, are adequate to accumulate sufficient assets to pay benefits when due. The
^ funding method used to calculate the total employer contribution required is the entry age
l
( normal actuazial cost method. Effective July 1, 2005, employer contribution rates aze a fixed
u percentage of compensation, including the normal cost plus amounts required to pay for the
unfunded actuarial accrued liability. Employers contribute 15.75% for police officers and fire
(~ fighters, and 13.75% for all other employees. These rates increase, as of July 1, 2008, to
U 19.70% for police officers and fire fighters, and 15.00% for all other employees. Employer
rates are set by statute based on the recommendation of the ERS actuary resulting from an
experience study conducted every five years.
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a
COUNTY OF HAWAII
Notes to the Basic Financial Statements a
June 30, 2008
The required pension contributions by the County for the years ended June 30, 2008, 2007,
and 2006 were $18,222,311, $16,337,218 and $15,452,562, respectively, which equal the
required contributions for each yeaz. Measurement of assets and actuarial valuations are
made for the ERS as a whole and are not separately computed for individual participating
employers such as the County.
The ERS issues a Comprehensive Annual Financial Report (CAFR) that includes financial
statements and required supplementary information, which may be obtained by writing to the
Employees' Retirement System of the State of Hawaii, 201 Merchant Street, Suite 1400,
Honolulu, Hawaii 96813.
Post-Retirement Benefits
In addition to providing pension benefits, the County is required by state statute (HRS
Chapter 87A) to contribute to the Hawaii Employer-Union Health Benefits Trust Fund (the
EUTF). The EUTF is an agent, multiple-employer defined benefit plan providing certain
healthcare and life insurance benefits to all qualified retirees, active employees, their
dependents and their beneficiaries. The EUTF was established on July 1, 2003 to design,
provide, and administer medical, prescription drug, dental, vision, chiropractic, dual-coverage
medical and prescription drug, and group life benefits.
For employees hired prior to July 1, 1996, the County pays the entire monthly healthcaze
premium for employees retiring with 10 or more years of credited service, and 50% of the
monthly premium for employees retiring with fewer than 10 years of credited service.
For employees hired after June 30, 1996, and who retire with fewer than 10 years of service,
the County makes no contributions. For those retiring with at least 10 years but fewer than 15
years of service, the County pays 50% of the retired employees' monthly Medicare or non-
Medicare premium. For employees hired afrer June 30, 1996, and who retire with at least I S
years but fewer than 25 years of service, the County pays 75% of the retired employees'
monthly Medicare or non-Medicare premium. For those retiring with over 25 years of
service, the County pays the entire healthcare premium.
For employees hired afrer June 30, 2001, and who retire with fewer than 10 years of service,
the County makes no contributions. For those retiring with at least 10 years but fewer than 15
years of service, the County pays 50% of the retired employees' monthly Medicare or non-
Medicare premium based on the self-plan. For employees hired after June 30, 2001, and who
retire with at least 15 years but fewer than 25 years of service, the County pays 75% of the
retired employees' monthly Medicare or non-Medicare premium; for those retiring with over
25 years of service, the County pays the entire healthcare premium.
_78_
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COUNTY OF HAWAII
Notes to the Basic Financial Statements
June 30, 2008
For active employees, the employee's contributions aze based upon negotiated collective
bargaining agreements. Employer contributions for employees notbovered by collective
bargaining agreements and for retirees are prescribed by the HRS.
The County's annual other postemployment benefit (OPEB) cost is calculated based on the
R annual required contribution (ARC) of the employer, which is an amount actuarially
U determined in accordance with the pazameters of Governmental Accounting Standards Board
Statement No. 45, Accounting and Financial Reporting by Employers for Postemployment
Benefits Other than Pensions (GASB Statement No. 45). GASB Statement No. 45 addresses
the failure of previous financial reporting practices to measure and recognize the cost of
OPEB during the periods when employees render the services or to provide relevant
information about OPEB obligations and the extent to which progress is being made in
Q funding those obligations. The ARC represents a level of funding that, if paid on an ongoing
basis, is projected to cover normal cost each year and amortize any unfunded actuarial
liabilities (or funding excess) over a period not to exceed thirty (30) years. The current ARC
4% of annual covered payroll
rate is 18
.
.
The following section shows the Counry's Annual OPEB cost for the year ended June 30,
2008, the amount actually contributed to the plan, and changes in the net OPEB obligation:
Annual required contribution $23,426,000
Interest on net OPEB obligation -
Adjustment to annual required contribution
Annual OPEB Cost 23,426,000
~~ Contributions made (23,504,313)
Net OPEB obligation (asset) (78,313)
The annual OPEB cost, the percentage of annual OPEB cost contributed to the plan, and the
net OPEB obligation for the year ended June 30, 2008 were as follows:
n Percentage of Annual Net OPEB
Iu' Fiscal Year OPEB Cost Obligation
Ended Annual OPEB Cost Contributed (Asset)
6/30/08 $23,426,000 100% ($78,313)
-79-
COUNTY OF HAWAII
Notes to the Basic Financial Statements
June 30, 2008
The schedule of funding progress based on the actuarial valuation date of July 1, 2007, is as
follows:
Actuarial accrued liability $275,828,000
Actuarial value of plan assets -
Unfunded actuarial accrued liability (UAAL) $275,828,000
Funded Ratio
Covered payroll (active plan members) $127,420,000
UAAL as a percentage of covered payroll 216%
Actuarial valuations of an ongoing plan involve estimates of the value of reported amounts
and assumptions about the probability of occurrence of events far into the future. Examples
include assumptions about future employment, mortality, and the healthcare cost trend.
Amounts determined regarding the funded status of the plan and the annual required
contributions of the employer are subject to continual revision as actual results are compared
with past expectations and new estimates are made about the future.
Projections of benefits for financial reporting purposes are based on the substantive plan (the
plan as understood by the employer and plan members) and include the types of benefits
provided at the time of each valuation and the historical pattern of sharing of benefit costs
between the employer and plan members to that point. The actuarial methods and
assumptions used include techniques that are designed to reduce short-term volatility in
actuarial accrued liabilities and the actuarial value of assets, consistent with the long-term
perspective of the calculations.
In the July 1, 2007 actuarial valuation, the entry cost actuarial cost method was used. The
actuarial assumptions included an 8.0% discount rate, which is based on the County's
anticipated funding level, and an annual healthcare cost trend rate of 9.5% initially, reduced
by decrements to an ultimate rate of 5.0% afrer six years. The assumptions also include a
3.5% increase in payroll. The UAAL is being amortized as a level percentage of projected
payroll on an open basis. The remaining amortization period at July 1, 2007 was 30 years.
The EUTF issues a publicly available financial report that includes financial statements and
required supplementary information, which is available on-line at their web-site
www.eutf.hawaii.eov or by contacting them at P.O. Box 2121, Honolulu, HI 96805-2121.
Deferred Compensation Plan
County employees are permitted to participate in a deferred compensation plan of the State of
Hawaii, adopted pursuant to Internal Revenue Code (IRC) section 457. The plan permits
eligible employees to defer a portion of their salary until future years by contributing to a
fund managed by a plan administrator. The deferred compensation amounts are not available
to employees until termination, retirement, death, or unforeseeable emergency.
-80-
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n COUNTY OF HAWAII
U Notes to the Basic Financial Statements
June 30, 2008
All plan assets are held in a trust fund to protect them from claims of general creditors and
from diversion to any uses other than paying benefits to participants and beneficiazies. The
County has no responsibility for loss due to the investment or failure of investment of funds
and assets in the plans, but does have the duty of due care that would be required of an
ordinary prudent investor. Therefore, in accordance with GASB Statement No. 32,
D Accounting and Financial Reporting for Internal Revenue Code Section 457 Deferred
Compensation Plans, deferred compensation plan assets are not reported in the accompanying
basic financial statements.
I
LOSURES
14. COMPONENT UNIT D
SC
Q Deposits and Investments
At June 30, 2008, cash, time certificates of deposit, money market funds, and repurchase
agreements of $65,821,953, with bank balances of $66,713,626were held by the County on
behalf of the Department. These balances were fully insured or collateralized with securities
held by the County's agent in the County's name.
a The deposits and investments include investments received by the Department that are
refundable or restricted as to use, and is recorded as a restricted asset. Such funds amounted
to $19,739,823 at June 30, 2008.
At June 30, 2008, the Department's investment portfolio consists primarily of repurchase
agreements, certificates of deposit, and a discounted note held by the County on behalf of the
(~}
(~ Department.
Capital Assets
~j The Department began operations as of January 1, 1950. At that date, the utility plant in
service was transferred to the Department from the County at the cost of the utility plant
n assets acquired by the County for its water system from January 1, 1924 to
lu4 December 31, 1949, less accumulated depreciation. Acquisitions prior to 1924 and
acquisitions by gift or grant prior to 1950 are not included in utility plant. Additions to utility
plant since January 1, 1950 are stated at original cost and include contributions by
governmental agencies, private subdividers and customers at their cost or estimated cost.
Construction costs include amounts for contract work, engineering supervision and other
direct and indirect costs. Construction period interest is capitalized on utility plan constructed
with tax-exempt debt.
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a -81-
COUNTY OF HAWAII
Notes to the Basic Financial Statements
June 30, 2008
Depreciation on the Department's utility plant assets in service is computed using the
straight-line method over the estimated useful lives of the assets as follows:
Structures and improvements 40 to 50 years
Machinery and equipment 5 to 20 years
Water systems 10 to 40 years
The capital assets of the Department at June 30, 2008 were as follows:
Utility plant in service $298,638,467
Less: accumulated depreciation (148,973,775
149,664,692
Land and rights 1,116,933
Construction in progress 54,199,264
Net capital assets $204.980.889
Long-Term Debt
The County has issued general obligation bonds on behalf of the Department. The
Department is responsible for the payment of the debt service on these bonds, but the County
remains liable because they are general obligations of the County. The Department has
recorded a liability for these general obligation bonds, which amounted to $35,823,543
at June 30, 2008.
General obligation bonds payable issued on behalf of the Department and other long-term debt
at June 30, 2008 are comprised of the following:
Public improvement bonds
1993 Series A at 5.05% to 5.6%, due through 2013 $ 3,755,000
1998 Series A at 4.5%, due through 2033 381,495
2001 Series A at 4.0% to 5.5%, due through 2010 1,080,000
2004 Series D at 4.5%, due through 2039 252,312
2006 Series A at 4.0% to 5.0%, due through 2026 24,242,500
2008 Series A at 4.125%, due through 2043 50,000
Total public improvement bonds 29,761,307
Public improvement refunding bonds:
2004 Series at 5.0%, due through 2015 309,624
2007 Series at 4.0% to 5.0%, due through 2021 5,752,612
Total public improvement refunding bonds 6,062,236
State revolving fund loan, interest at 0.41 % to 1.37%,
due through 2027 5,423,551
Total 41.247.094
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L~
COUNTY OF HAWAII
Notes to the Basic Financial Statements
June 30, 2008
r' At June 30, 2008, future principal payments for long-term debt are scheduled as follows:.
t~ Fiscal year ending June 30:
2009 $ 2,236,000
2010 2,337,000
2011 2,446,000
2012 2,586,000
2013 2,701,000
2014 - 2018 10,332,000
2019 - 2023 11.,164,000
Q 2024 - 2028
2029 - 2033 7,225,000
131,000
2034 - 2038 60,000
2039 - 2043 29,094
X41247
094
Total .
Q Contributions in Aid of Construction
Effective July 1, 2000, the Department adopted GASB Statement No. 33, Accounting and
Financial Reporting for Nonexchange Transactions, which requires the Department to
recognize contributions in aid of construction as nonoperating revenues. Contributions in aid
of construction were previously recognized as contributed capital. The Department
recognized $5,673,845 of contributions in aid of construction as nonoperating revenues for
the fiscal year ended June 30, 2008.
Commitments and Contingent Liabilities
Claims and judgments -The Department is self-insured for workers' compensation and
other perils. The liability at June 30, 2008 for workers' compensation claims of $116,000
was estimated based on a combination of case-by-case review and the application of historical
experience to outstanding claims.
Q Construction contracts -The Department is obligated under construction contracts for the
utility plant and other projects. Such commitments approximated $24,071,000 at
June 30, 2008.
Post-Retirement Benefits
Effective July 1, 2007, the Department of Water Supply adopted the provisions of GASB
Statement No. 45. This statement addresses how state and local governments should account
for and report their costs and obligations related to postemployment benefits, healthcare, and
Q
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COUNTY OF HAWAII n
Notes to the Basic Financial Statements L
June 30, 2008 a
other nonpension benefits. The Department's annual required contribution for its
postemployment benefit obligation for the year ended June 30, 2008 was $1,493,000. The
Department made contributions of $544,923 during the year ended June 30, 2008 and
recorded a postemployment benefit liability of $948,077 at June 3Q, 2008, which was paid in
July 2008.
a
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NONMAJOR GOVERNMENTAL FUNDS
SPECIAL REVENUE FUNDS
HIGHWAY FUND -Used [o account for the costs of maintaining the County's highways and streets.
Financing is provided primarily by fuel, motor vehicle weight and public utility franchise taxes.
SEWER FUND -Used to account for costs of operating the County's various sewerage systems. Financing
is provided by charges to users for sewer services.
CEMETERY FUND - Used to accumulate moneys to guazantee the future maintenance of County cemetery
sites. Financing is provided from the sale of burial lots in County cemeteries.
PARKING METER FUND -Used to account for the costs of maintaining County on-street and off-street
parking azeas. Financing is provided by the proceeds from parking meters.
VEH/CLE DISPOSAL FUND -Used to accumulate moneys for the towing, removal, disposal and recycling
of abandoned or discarded automobiles and automobile parts. Financing is provided by annual Fees
collected with motor vehicle registrations.
B/KEWAYFUND -Used to accumulate moneys for the construction of bikeways within the County.
Financing is provided by bicycle license fees.
WORKFORCE INVESTMENT ACT FUND -Used to account for employment and training services
provided to economically disadvantaged adults, dislocated workers and youth. Financing is provided by
federal grants.
GOLF COURSE FUND - Used to account for the cost of operating the Hilo Municipal Golf Course.
Funding is provided from green fees and payments from restaurant and pro shop concessionaires.
GEOTHERMAL RELOCATION REVOLVING FUND -Used to account for the County's share of
geothermal resource royalties received from the operator of a geothermal power plant located in the County.
The funds are earmarked for a geothermal relocation program.
BEAUT/FICATION FUND -Used to accumulate moneys for the beautification of highways and disposal of
abandoned vehicles within the County. Financing is provided by assessments on vehicle registrations.
HAWAO COUNTY HOUS/NG AGENCY- Used to account for Federal and County moneys used to provide
public housing assistance within the County.
PARK DEDICATION FUND -Used to account for moneys deposited with the County by subdividers to
provide land for pazks and playgrounds in subdivisions.
DEBT SERVICE FUNDS
INTEREST FUND -Used to accumulate moneys for payment of interest on general obligation bonds.
Moneys required to service interest maturities aze transferred annually from the General Fund.
BOND REDEMPTION FUND -Used [o accumulate moneys for the payment of general obligation bonds.
Moneys required to refue the bonds are transferred from the General Fund one year in advance of maturity.
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_gs_
COUNTY OF HAWAII
Nonmajor Governmental Funds
Combining Balance Sheet
June 30, 2008
Revenue Funds
Assets
Cash and cash equivalents
Investments
Imprest fund
Receivables:
Due from other governments
Due from other governmental funds
Due from other nongovernmental funds
Trade, net of allowance for doubtful accounts
Other
Total assets
Liabilities and Fund Balances
Liabilities:
Accounts payable
Due to other governmental funds
Unearned revenue
Accrued liabilities
Total liabilities
Fund balances:
Reserved for:
Encumbrances
Debt service
Unreserved:
Total fund balances
Total liabilities and fund balances
raining vcmcie
Highway Sewer Cemetery Meter Disposal
Fund Fund Fund Fund Fund
$ 9,137,665 $ 8,614,498 $60,659 $127,199 $3,618,378
- 200 - - -
46,652 1,285 - - -
- 14,690 - - -
- 2,700 - - -
- 1,029,112 - - -
659,628 - - - -
706,280 1,047,787 - - -
$ 9,843,945 $ 9,662,485 $ 60,659 $ 127,199 $3,618,378
$ 256,985 $ 568,338 $ - $ - $ 41,829
325,659 1,841 - - -
- 1,029,112 - - -
124 26,144 - - -
582,768 1,625,435 - - 41,829
4,069,640 1,637,896 - - 264,469
5,191,537 6,399,]54 60,659 127,199 3,312,080
9,261,177 8,037,050 60,659 127,199 3,576,549
$ 9,843,945 $ 9,662,485 $60,659 $127,199 $3,618,378
-86-
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Special Revenue Funds
Workforce Golf ceocnem,aiRei«. Beauti- Park
Bikeway Investment Course & Community fication Housing Dedication
Fund Act Fund Fund ee~escs Fund Fund Agency Fund
$ 438,947 $ - $ 71,531 $ 3,254,974 $ 880,623 $ 1,357,634 $ -
- - - - - 3,215,134 84,056
2,000 200
_ 1,272,837 - - - 61,764 -
45,907
- 38,995 3,746 282,775 - 83,123 -
- 1,311,832 3,746 282,775 - 190,794 -
$ 438,947 $ 1,311,832 $ 77,277 $ 3,537;749 $ 880,623 $ 4,763,762 $ 84,056
$ - $ - $ 416 $ - $ - $ 21,106 $ -
- 419,126 4,603 - - - -
- - - - - ]81,604 -
- 419,126 5,019 - - 202,710 -
~j
U
3,307 892,706 37,455 30,893 3,264,432 -
435,640 - 34,803 3,537,749 849,730 1,296,620 84,056
438,947 892,706 72,258 3,537,749 880,623 4,561,052 84,056
Q $ 438,947 $ 1,311,832 $ 77,277 $ 3,537,749 $ 880,623 $ 4,763,762 $ 84,056
(Continued)
-87-
COUNTY OF HAWAII
Nonmajor Governmental Funds
Combining Balance Sheet
June 30, 2008
(Concluded)
Assets
Cash and cash equivalents
Investments
[mprest fund
Receivables:
Due from other governments
Due from other governmental funds
Due from other nongovernmental funds
Trade, net of allowance for doubtful accounts
Other
Total assets
Liabilities and Fund Balances
Liabilities:
Accounts payable
Due to other governmental funds
Deferred revenue
Accrued liabilities
Total liabilities
Fund balances:
Reserved for:
Encumbrances
Debt service
Unreserved:
Total fund balances
Total liabilities and fund balances
See accompanying independent auditors' report.
Debt Service Funds Total
Bond Nonmajor
Interest Redemption Governmental
Fund Fund Funds
$ 1,855,661 $ 20,615,906 $ 50,033,675
- - 3,299,190
- - 2,400
- - 1,382,538
- - 60,597
- - 2,700
- - 1,029,112
- - 1,068,267
- - 3,543,214
$ 1,855,661 $ 20,615,906 $ 56,878,479
$ - $ - $ 888,674
- - 751,229
- - 1,029,112
72,521 240,000 520,393
72,521 240,000 3,189,408
10,200,798
1,783,140 20,375,906 22,159,046
- - 21,329,227
1,783,140 20,375,906 53,689,071
$ 1,855,661 $ 20,615,906 $ 56,878,479
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COUNTY OF HAWAII
Noumajor Governmental Funds
Combining Statement of Revenues, Expenditures, and Changes in Fund Balances
For the Fiscal Year Ended June 30, 2008
Special Revenue Funds
Parking Vehicle
Highway Sewer Cemetery Meter Disposal
Fund Fund Fund Fund Fund
Revenues
Fuel tax $ 7,887,998 $ - $ - $ - $ -
Publicutility franchise tax 9,026,841 - - - -
Licensesand permits 6,970,181 - - - 2,061,984
Intergovernmental 522,500 1,170 - - -
Charges for services - 6,335,318 - 14,482 248
Investment earnings - - _ _ _
Miscellaneous 623,388 6,160 10,250 - 890
Total revenues 25,030,908 6,342,648 10,250 14,482 2,063,122
Expenditures
Current:
Public safety 5,114,080 - - - -
Highways and streets 13,259,580 - - - -
Sanitation - 5,985,778 - - 1,027,639
Health, education and welfare - - - - -
Culture and recreation - - - - -
Pension and retirement contributions 1,695,143 399,213 - - 27,228
Employees' health insurance 636,276 157,441 - - 16,784
Miscellaneous 397,645 558,418 - - -
Debt service:
Principal - _ _ _ _
Interest - _ _ _ _
Total expenditures 21,102,724 7,100,850 - - 1,071,651
Excess (deficiency) of revenues
over expenditures 3,928,184 (758,202) 10,250 14,482 991,471
Other Financing Sources (Uses)
Transfers in 545,000 20,000 - - -
Increase in capital leases - - - - -
Transfers out (5,870,838) - - - -
Total other financing sources (uses) (5,325,838) 20,000 - - -
Net change in fund balances (1,397,654) (738,202) 10,250 14,482 991,471
Fund balances at beginning of year 10,658,831 8,775,252 50,409 ] 12,717 2,585,078
Fund balances at end of year $ 9,261,177 $ 8,037,050 $ 60,659 $127,199 $ 3,576,549
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I Special Revenue Funds
uuu Workforce Golf ceo~n~aiaeio~. Beauti- Park
Bikeway Investment Course ~ Common~ry fication Housing Dedication
Q Fund Act Fund Fund Be~esu Puna Fund Agency Fund
52,853 - - - 171,833 - -
- 3,198,908 - - - 13,162,194 -
743,194
- - - - - 267,262 3,098
- - - 949,138 - 150,086 -
52,853 3,198,908 743,194 949,138 171,833 13,579,542 3,098
Q
823 - - - 94,966 - -
- 2,306,202 - - - 15,427,696 -
- - 893,215 - - - -
- - 142,496 - - 462,442 -
_ - 63,733
5
882 - - 135,455 -
,
1,712 -
- - - - - 256
823 2,306,202 1,105,326 - 94,966 16,027,561 -
52,030 892,706 (362,132 949,138 76,867 (2,448,019) 3,098
2 1
612
397
- - 415,79 - - ,
, -
- - ~ 415,792 - - 1,397,612 -
52,030 892,706 53,660 949,138 76,867 (],050,407) 3,098
386,917 18,598 2,588,61 ] 803,756 5,611,459 80,958
$ 438,947 $ 892,706 $ 72,258 $ 3,537,749 $ 880,623 $4,561,052 $ 84,056
(Continued)
-91-
COUNTY OF HAWAII
Nonmajor Governmental Funds
Combining Statement of Revenues, Expenditures, and Changes in Fund Balances
For the Fiscal Year Ended June 30, 2008
(Concluded)
Revenues
Fuel tax
Public utility franchise tax
Licenses and permits
Intergovernmental
Charges for services
Investment earnings
Miscellaneous
Total revenues
Expenditures
Current:
Public safety
Highways and streets
Sanitation
Health, education and welfare
Culture and recreation
Pension and retirement contributions
Employees' health insurance
Miscellaneous
Debt service:
Principal
Interest
Total expenditures
Excess (deficiency) of revenues
over expenditures
Other Financing Sources (Uses)
Transfers in
Increase in capital leases
Transfers out
Total other financing sources (uses)
Net change in fund balances
Fund balances at beginning of year
Fund balances at end of year
See accompanying independent auditors' report.
Debt Service Funds
Bond
Interest Redemption
$ - $
Total
Nonmajor
Governmental
Funds
$ 7,887,998
9,026,841
9,256,851
16,884,772
7,093,242
270,360
1,739,912
52,159,976
- - 5,114,080
- - 13,355,369
- - 7,013,417
- - 17,733,898
- - 893,215
- - 2,726,522
- - 1,009,689
- - 961,945
12,927,693
12,927,693
14,892,743
14,894,455
12,927,949
76,630,539
(12,927,693) (14,892,743) (24,470,563)
12,940,306 18,278,024 33,596,734
- - (5,870,838)
12,940,306 18,278,024 27,725,896
12,613 3,385,281 3,255,333
1,770,527 16,990,625 50,433,738
$ 1,783,140 $ 20,375,906 $53,689,071
-92-
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COUNTY OF HAWAII
Highway Fund
Schedule of Revenues, Expenditures and Changes in Fund Balance -
Budget and Actual (Budgetary Basis)
For the Fiscal Year Ended June 30, 2008
Revenues:
Taxes:
Fuel tax
Public utility franchise tax
Total taxes
Licenses and permits -motor vehicle weight taxes
Intergovernmental
Charges for current services
Miscellaneous
Total revenues
Expenditures:
Public safety -traffic engineering
Highways and streets
Highways and streets -mass transit
Pension and retirement contributions
Health fund
Miscellaneous
Total expenditures
Excess (deficiency) of revenues over expenditures
Other financing uses -transfers in (out) -
General Fund
Capita] Projects Fund
Total other Snancing uses
Deficiency of revenues over expenditures
and other uses
Fund balance at beginning of year
Fund balance at end of year
See accompanying independent auditors' report.
Actual Variance
Original Final (Budgetary Positive
Budget Budget Basis) (Negative)
$ 8,185,000 $ 8,185,000 $ 7,887,998 $ (297,002)
8,595,000 8,595,000 9,026,841 431,841
16,780,000 16,780,000 16,914,839 134, 839
6,768,904 6,768,904 6,970,181 201,277
320,774 320,774 522,500 201,726
200,000 200,000 372,767 172,767
120,837 120,837 250,621 129,784
24,190,515 24,190,515 25,030,908 840,393
6,529,867 6,553,867 5,840,778 713,089
10;753,089 11,800,685 11,181,743 618,942
1,122,907. 1,912,544 1,087,844 824,700
1,645,896 1,725,896 1,695,143 30,753
817,596 817,596 636,276 181,320
1,519,265 1,939,265 847,154 1,092,111
22,388,620 24,749,853 21,288,938 3,460,915
1,801,895 (559,338) 3,741,970 4,30],308
210,000 335,000 545,000 210,000
(5,428,000) (5,998,000) (5,870,838) 127,]62
(5,218,000) (5,663,000) (5,325,838) 337,162
(3,416,105) (6,222,338) (1,583,868) 4,638,470
10,658,831 10,658,831 10,658,831 -
$ 7,242,726 $ 4,436,493 $ 9,074,963 $ 4,638,470
-93-
COUNTY OF HAWAII
Sewer Fund
Schedule of Revenues, Expenditures and Changes in Fund Balance -
Budget and Actual (Budgetary Basis)
For the Fiscal Year Ended June 30, 2008 a
Actual Variance
Original Final (Budgetary Positive a
Budget Budget Basis) (Negative)
Revenues:
Charges for current services -sewer fees
Intergovernmental
Miscellaneous
Total revenues
Expenditures:
Sanitation
Pension and retirement contributions
Health fund
Miscellaneous
Total expenditures
Excess (deficiency) of revenues over expenditures
Other financing sources:
Transfers in -General Fund
Excess (deficiency) of revenues and other
sources over expenditures
Fund balance at beginning of year
Fund balance at end of year
See accompanying independent auditors' report.
$ 6,588,560 $ 6,588,560 $ 6,335,318 $ (253,242)
- - 1,170 1,170
200 200 6,160 5,960
6,588,760 6,588,760 6,342,648 (246,112)
6,625,257 6,645,257 5,920,086 725,171
507,073 507,073 399,213 107,860
239,198 239,198 157,441 81,757
2,674,912 2,674,912 1,199,877 1,475,035
10;046,440 10,066,440 7,676,617 2,389,823
(3,457,680) (3,477,680) (1,333,969) 2,143,711
- 20,000 20,000 -
(3,457,680) (3,457,680) (1,313,969) 2,143,7]1
8,775,252 8,775,252 8,775,252 -
$ 5,317,572 $ 5,317,572 $ 7,461,283 $ 2,143,711
-94-
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COUNTY OF HAWAII
Cemetery Fund
Schedule of Revenues, Expenditures and Changes in Fund Balance -
Budget and Actual (Budgetary Basis)
For the Fiscal Year Ended June 30, 2008
Revenues -miscellaneous -sale of cemetery plots
Expenditures -health, education and welfare
Excess of revenues over expenditures
Fund balance at beginning of year
Fund balance at end of year
See accompanying independent auditors' report.
Actual Variance
Original Final (Budgetary Positive
Budget Budget Basis) (Negative)
$ 10,000 $ 10,000 $ 10,250 $ 250
10,000 10,000 - 10,000
- - 10,250 10,250
50,409 50,409 50,409 -
$ 50,409 $ 50,409 $ 60,659 $ 10,250
-95-
COUNTY OF HAWAII
Parking Meter Fund
Schedule of Revenues, Expenditures and Changes in Fund Balance -
Budget and Actual (Budgetary Basis)
For the Fiscal Year Ended June 30, 2008
Revenues-
Charges for current services -highways and streets
Expenditures -
Highways and streets
Excess of revenues over expenditures
Fund balance at beginning of year
Fund balance at end of year
See accompanying independent auditors' report.
Actual Variance
Original Final (Budgetary Positive
Budget Budget Basis (Negative)
$ - $ - $ 14,482 $ 14,482
- - 14,482 14,482
112,717 112,7]7 112,717 -
$ 112,717 $ 112,717 $ 127,199 $ 14,482
-96-
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COUNTY OF HAWAII
a
Vehicle Disposal Fund
Schedule of Revenues, Expenditures and Changes in Fund Balance -
a Budget and Actual (Budgetary Basis)
a For the Fiscal Year Ended June 30, 2008
Actual Variance
Original Final (Budgetary Positive
Budget Budget Basis) (Negative)
a Revenues:
Licenses and permits -vehicle disposal fee $ 2,052,000 $ 2,052,000 $ 2,061,984 $ 9,984
Charges for services -towing charges - - 248 248
Miscellaneous 890 890
Total revenues 2,052,000 2,052,000 2,063,122 11,]22
a
Expenditures:
Sanitation 2,703,203 2,703,203 1,049,937 1,653,266
a Pension and retirement contributions 35,300 35,300 27,228 8,072
Health fund 20,700 20,700 16,784 3,916
Total expenditures 2,759,203 2,759,203 1,093,949 1,665,254
a
Excess (deficiency) of revenues over expenditu res (707,203) (707,203) 969, ] 73 1,676,376
a Fund balance at beginning of year 2,585,078 2,585,078 2,585,078 -
Fund balance at end of year $ 1,877,875 $ 1,877,875 $ 3,554,251 $ 1,676,376
a '
report.
See accompanying independent auditors
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-97-
COUNTY OF HAWAII
Bikeway Fund
Schedule of Revenues, Expenditures and Changes in Fund Balance -
Budget and Actual (Budgetary Basis)
For the Fiscal Year Ended June 3Q 2008
Revenues -licenses and permits -
bicycle tax
Expenditures -highways and streets
Excess (deficiency) of revenues over expenditures
Fund balance at beginning of year
Fund balance at end of year
See accompanying independent auditors' report.
Original Actual Variance
and Final (Budgetary Positive
Budget Basis Ne ative
$ 20,000 $ 52,853 $ 32,853
171,000 898 170,102
(151,000) 51,955 202,955
386,917 386,917 -
$235,917 $438,872 $202,955
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Workforce Investment Act Fund
Schedule of Revenues, Expenditures and Changes in Fund Balance -
Budget and Actual (Budgetary Basis)
For the Fiscal Year Ended June 30, 2008
Actual Variance
Original Final (Budgetary Positive
Budget Budget Basis) (Negative)
Revenues -intergovernmental -federal grants $ - $ 1,009,137 $ 929,648 $ (79,489)
Expenditures -health, education and welfare - 1,009,137 929,648 79,489
Excess of revenues over expenditures - - - -
Fund balance at beginning of year - - - -
Fund balance at end of year $ - $ - $ - $ -
See accompanying independent auditors' report.
_99_
COUNTY OF HAWAII
Golf Course Fund
Schedule of Revenues, Expenditures and Changes in Fund Balance -
Budget and Actual (Budgetary Basis)
For the Fiscal Year Ended June 30, 2008
Revenues:
Charges for services
Miscellaneous
Total revenues
Expenditures:
Culture and recreation
Pension and retirement contributions
Health fund
Miscellaneous
Total expenditures
Deficiency of revenues over expenditures
Other financing sources:
Transfers in -General Fund
Excess of revenues and other sources
over expenditures
Fund balance at beginning of year
Fund balance at end of year
See accompanying independent auditors' report.
Actual Variance
Original Final (Budgetary Positive
Budget Budget Basis) (Negative)
$ 764,103 $ 764,103 $ 743,194 $ (20,909)
764,103 764,103 743,194 (20,909)
877,802 895,722 876,200 19,522
140,301 150,301 142,496 7,805
80,000 80,000 63,733 16,267
16,000 16,000 5,883 10,117
1,114,103 1,142,023 1,088,312 53,711
(350,000) (377,920) (345,118) 32,802
350,000 377,920 415,792 37,872
- - 70,674 70,674
18,598 18,598 18,598 -
$ 18,598 $ ] 8,598 $ 89,272 $ 70,674
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COUNTY OF HAWAII
Geothermal Relocation and Community Benefits Fund
Schedule of Revenues, Expenditures and Changes in Fund Balance -
Budget and Actual (Budgetary Basis)
For the Fiscal Year Ended June 30, 2008
Revenues -miscellaneous -geothermal royalties
Expenditures -general government
Excess of revenues over expenditures
Fund balance at beginning of year
Fund balance at end of year
See accompanying independent auditors' report.
Original Actual Vaziance
and Final (Budgetary Positive
Budget Basis) (Negative)
$ 300,000 $ 949,138 $ 649,138
300,000 -- (300,000)
- 949,138 949,138
2,588,611 2,588,611 -
$ 2,588,611 $ 3,537,749 $ 949,138
_101_
COUNTY OF HAWAII
Beautification Fund
Schedule of Revenues, Expenditures and Changes in Fund Balance -
Budget and Actual (Budgetary Basis)
For the Fiscal Year Ended June 30, 2008
Revenues -licenses and permits -highway
beautification
Expenditures -highways and streets
Excess (deficiency) of revenues over expenditures
Fund balance at beginning of year
Fund balance at end of year
See accompanying independent auditors' report.
Actual Variance
Original Final (Budgetary Positive
Budget Budget Basis) (Negative)
$160,000 $160,000 $ 171,833 $ 1 ],833
225,000 225,000 126,545 98,455
(65,000) (65,000) 45,288 110,288
803,756 803,756 803,756 -
$738,756 $738,756 $ 849,044 $ 110,288
-102-
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COUNTY OF HAWAII
Hawaii County Housing Agency
Schedule of Revenues, Expenditures and Changes in Fund Balance -
Budget and Actual (Budgetary Basis)
For the Fiscal Year Ended June 30, 2008
Revenues:
Intergovernmental -
Federal -HUD -Voucher program
State - Hmis Transitional &
Homeownership Program
Other
Interest earned
Resale of property
Other
Total revenues
Expenditures:
Health, education and welfare
Pension and retirement contributions
o Health Fund
Miscellaneous
Total expenditures
Deficiency of revenues over expenditures
a Other financing sources:
Transfers in -General Fund
Excess (deficiency) of revenues and other
sources over expenditures
Fund balance at beginning of year
a Fund balance at end of year
a See accompanying independent auditors' report.
a
a
Actual Variance
Original Final (Budgetary Positive
Budget Budget Basis) (Negative)
$ 11,268,000 $ 13,768,000 $ 12,699,340 $ (1,068,660)
- 450,000 450,000 -
53,141 53,141 12,854 (40,287)
2,330 2,330 267,262 264,932
- - 150,000 150,000
- - 86 86
11,323,471 14,273,471 13,579,542 (693,929)
11,943,253 16,726,239 15,735,554 990,685
486,400 486,400 462,442 23,958
143,300 143,300 135,455 7,845
2,130 2,130 - 2,130
12,575,083 17,35 8,069 16,333,45 l 1,024,618
(1,251,612) (3,084,598) (2,753,909) 330,689
1,251,612 1,397,612 1,397,612 -
- (1,686,986) (1,356,297) 330,689
5,611,459 5,6] 1,459 5,611,459 -
$ 5,611,459 $ 3,924,473 $ 4,255,162 $ 330,689
-103-
COUNTY OF HAWAII
Park Dedication Fund
Schedule of Revenues, Expenditures and Changes in Fund Balance -
Budget and Actual (Budgetary Basis)
Actual Variance
Original Final (Budgetary Positive
Budget Budget Basis (Negative)
Revenues -interest $ - $ - $ 3,098 $ 3,098
Expenditures -culture and recreation - - - _
Excess of revenues over expenditures - - 3,098 3,098
Fund balance at beginning of year 80,958 80,958 80,958 -
Fund balance at end of year $80,958 $80,958 $84,056 $3,098
See accompanying independent auditors' report.
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_l05_
COUNTY OF HAWAII
Agency Funds
Combining Balance Sheet
June 30, 2008
Performance
State Improvement Improvement Improvement and
Weight District District District Refundable
Tax No. l7 No. 18 Revolving Deposits
Assets
Cash and cash equivalents $ (189) $ 840,004 $ 368,444 $ - $ 229,702
Investments - - 1,241,244 388,886 -
Due from other agency funds - - - - _
Other receivables 189 33,775 10,199 - 2,029
Restricted assets -
cash and cash equivalents - 637,000 - - -
Total assets $ - $ 1,510,779 $ 1,619,887 $ 388,886 $ 231,731
Liabilities
Due to other agency funds $ - $ - $ - $ - $ 1,945
Accrued liabilities - 38,254 13,701 - -
Customer advances and deposits - - - - 229,786
Assets held for the benefit of
improvement districts - 1,472,525 1,606,186 388,886 -
Totalliabilities $ - $ 1,510,779 $ 1,619,887 $ 388,886 $ 231,731
See accompanying independent auditors' report.
-106-
0
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Flexible Lapsed
Payroll Spending Warrants
Clearance Account Fund
$ 1,718,871 $ 355,777 $ 128,431
- - 2,409
-- - 23,691
Non-Profit Organ and Business
License Tissue Improvement
Plates Education District
Fund Fund 1 - Kailua Total
$ 1,285 $ 447 $ 12,582 $ 3,655,354
- - - 1,630,130
- - - 2,409
- - 13,898 83,781
- - - - - - 637,000
$ 1,718,871 $ 355,777 $ 154,531 $ 1,285 $ 447 $ 26,480 $ 6,008,674
$ 444 $ - $ - $ 20 $ - $ - $ 2,409
1,718,427 355,777 154,531 1,265 447 17,680 2,300,082
_ _ _ _ _ 229,786
- - - - - 8,800 3,476,397
$1,718,871 $ 355,777 $ 154,531 $ 1,285 $ 447 $ 26,480 $ 6,008,674
- 107 -
COUNTY OF HAWAII
Agency Funds
Combining Statement of Changes in Assets and Liabilities
For the Fiscal Year Ended June 30, 2008
Balance
July 1,
2007
State Weight Tax Fund
Assets
Cash and cash equivalents
Misc. Receivables -due from State of Hawaii
Total assets
Liabilities
Vouchers payable
Accrued liabilities -due to State of Hawaii
Total liabilities
Improvement District No. 17
Assets
Cash and cash equivalents
Restricted assets -cash and cash equiv.
Other receivables
Total assets
Liabilities
Vouchers payable
Accrued liabilities
Assets held for the benefit
of improvement districts
Total liabilities
Additions Deductions
Balance
June 30,
2008
$ 870,041
$ - $
$ 10,395,738
189 $ 11,265,968 $ (189)
$ -- 189
$ 870,041 $ 10,395,927 $ 11,265,968 -
$ - $ 11,265,968 $ 11,265,968 $ -
870,041 10,395,927 11,265,968 -
$ 870,041 $ 21,661,895 $ 22,531,936 $ -
$ 844,758 $ 958,742 $ 963,496 $ 840,004
637,000 - - 637,000
34,846 924,984 926,055 33,775
$ 1,516,604 $ 1,883,726 $ 1,889,551 $ 1,510,779
$ - $ 1,350 $ 1,350 $ -
39,483 904,009 905,238 38,254
1,477,121 931,939 936,535 1,472,525
$ 1,516,604 $ 1,837,298 $ 1,843,123 $ 1,510,779
-108 - Q
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COUNTY OF HAWAII
Agency Funds
Combining Statement of Changes in Assets and Liabilities
For the Fiscal Year Ended June 30, 2008
Balance Balance
July 1, June 30,
2007 Additions Deductions 2008
a t Di
t
i
t N
18
I
r
c
o.
mprovemen
s
Assets
Cash and cash equivalents $ 356,547 $ 559,897 $ 548,000 $ 368,444
Investments 1,072,456 168,788 1,241,244
Other receivables 10,283 406,992 407,076 10,199
Total assets $ 1,439,286 $ 1,135,677 $ 955,076 $ 1,619,887
Liabilities
Vouchers payable $ - $ 47,023 $ 47,023 $ -
Accrued liabilities 13,549 410,494 410,342 13,701
a Assets held for the benefit
of improvement districts
1,425,737
559,872
379,423
1,606,186
Total liabilites $ 1,439,286 $ 1,017,389 $ 836,788 $ 1,619,887
Improvement District Revolving Fund
Assets
a Investments $ 374,553 $ 14,333 $ - $ 388,886
Liabilities
Assets held for the benefit
a of improvement districts $ 374,553 $ 14,333 $ $ 388,886
Performance and Refundable
De
osits Fund
p
Assets
0 Cash and cash equivalents $ 189,429 $ 467,950 $ 427,677 $ 229,702
Other receivables 4,151 2,029 4,151 2,029
Total assets $ 193,580 $ 469,979 $ 431,828 $ 231,731
Liabilities
Vouchers payable
Due to other agency funds $ -
1,680 $ 351,542
1,945 $ 351,542
1,680 $ -
1,945
Accrued liabilities - - - -
Customer advances and deposits 191,900 461,688 423,802 229,786
a Total liabilities $ 193,580 $ 815,175 $ 777,024 $ 231,731
a
_109_
COUNTY OF HAWAII
Agency Funds
Combining Statement of Changes in Assets and Liabilities
For the Fiscal Year Ended June 30, 2008
Balance Balance
July 1, June 30,
2007 Additions Deductions 2008
Payroll Clearance Fund
Assets
Cash and cash equivalents $ 1,601,902 $ 203,169,119 $ 203,052,150 $ 1,718,871
Due from other funds - 195,691,662 195,691,662 -
Other receivables _ _ _ _
Total assets $ 1,601,902 $ 398,860,781 $ 398,743,8]2 $ 1,718,871
Liabilities
Vouchers payable $ - $ 89,578,822 $ 89,578,822 $ -
Payrollrefunds payable - - _ _
Due to other agency funds 545 444 545 444
Accrued liabilities 1,601,357 222,075,309 221,958,239 1,718,427
Total liabilities $ 1,607,902 $ 311,654,575 $ 311,537,606 $ 1,718,871
Flexible Spending Account
Assets
Cash and cash equivalents $ 338,911 $ 412,225 $ 395,359 $ 355,777
Liabilities
Accrued liabilities $ 338,9] 1 $ 412,225 $ 395,359 $ 355,777
Lapsed Warrants Fund
Assets
Cash and cash equivalents $ 112,788 $ 16,804 $ 1,161 $ 128,431
Due from other agency funds 2,245 2,409 2,245 2,409
Other receivables 14,559 23,691 14,559 23,691
Tota] assets $ 129,592 $ 42,904 $ 17,965 $ 154,531
Liabilities
Vouchers payable $ - $ 1,162 $ 1,162 $ -
Acerued liabilities 129,592 33,327 8,388 154,531
Total liabilities $ 129,592 $ 34,489 $ 9,550 $ 154,531
110 -
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COUNTY OF HAWAII
Agency Funds
a Combining Statement of Changes in Assets and Liabilities
For the Fiscal Year Ended June 30, 2008
t License Plates Fund
N
P
f
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ro
i
Assets
o Cash and cash equivalents
Balance Balance
July 1, June 30,
2007 Additions Deductions 2008
$ 1,045 $ 5,170 $ 4,930 $ 1,285
Liabilities
Vouchers payable
Due to other agency funds
o Due to non-profit agency
Total liabilities
Organ and Tissue Education Fund
Assets
Cash and cash equivalents
Liabilities
Vouchers payable
a Accrued liabilities -due to State of Hawaii
Total liabilities
Business Improvement District 1-Kailua
Assets
Cash and cash equivalents
Misc. Receivables -BID 1-Kailua Assessment
Misc. Receivable -Due from KVBID
Other receivables
Total assets
Liabilities
Vouchers payable
Due to KVBID
Due to other agency funds
Assets held for the benefit
of improvement districts
Total liabilities
a
$ - $ 4,885 $ 4,885 $ -
20 20 20 20
1,025 5,150 4,910 1,265
$ 1,045 $ 10,055 $ 9,815 $ 1,285
$ 443 $ 2,057 $ 2,053 $ 447
$ - $ 2,053 $ 2,053 $ -
443 1,703 1,699 447
$ 443 $ 3,756 $ 3,752 $ 447
$ - $ 442,416 $ 429,834 $ 12,582
- 451,548 442,748 8,800
- 5,000 - 5,000
- 98 - 98
$ -- $ 899,062 $ 872,582 $ 26,480
$ - $ 426,990 $ 426,990 $ -
- 12,702 - 12,702
- 4,978 - 4,978
- 440,932 432,132 8,800
$ -- $ 885,602 $ 859,122 $ 26,480
111 -
COUNTY OF HAWAII
Agency Funds
Combining Statement of Changes in Assets and Liabilities
For the Fiscal Year Ended June 30, 2008
Total -All Agency Funds
Assets
Cash and cash equivalents
Investments
Due from other agency funds
Misc. Receivables -due from S[a[e of Hawaii
Misc. Receivables -BID 1-Kailua Assessment
Misc. Receivable -Due from KVBID
Other receivables
Restricted assets -cash and cash equiv.
Total assets
Liabilities
Vouchers payable
Payroll refunds payable
Due to other agency funds
Due to non-profit agency
Accrued liabilities
Accrued liabilities -due to State of Hawaii
Due to KVBID
Customer advances and deposits
Assets held for the benefit
of improvement districts
Total liabilities
See accompanying independent auditors' report.
Balance Balance
July 1, June 30,
2007 Additions Deductions 2008
$ 4,315,864 $ 216,430,118 $ 217,090,628 $ 3,655,354
1,447,009 183,121 - 1,630,130
2,245 2,409 2,245 2,409
- 189 - 189
- 451,548 442,748 8,800
- 5,000 - 5,000
63,839 1,357,794 1,35],841 69,792
637,000 - - 637,000
$ 6,465,957 $ 218,430,179 $ 218,887,462 $ 6,008,674
$ - $ 101,679,795 $ 101,679,795 $
2,245 7,387 2,245 7,387
1,025 5,150 4,910 1,265
2,122,892 223,835,364 223,677,566 2,280,690
870,484 10,397,630 11,267,667 447
- 12,702 - 12,702
191,900 461,688 423,802 229,786
3,277,411 1,947,076 1,748,090 3,476,397
$ 6,465,957 $ 338,346,792 $ 338,804,075 $ 6,008,674
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COUNTY OF HAWAII
Private Purpose Trusts
Combining Statement of Private Purpose Trust Net Assets
June 30, 2008
Assets
Cash and cash equivalents
Investments
Receivables
Total assets
Shippers'
Geothermal Wharf
Asset Trust
Fund Fund
$ - $ 1,880,747
1,896,349 972,446
- 2,727
1,896,349 2,855,920
Liabilities
Accrued liabilities
Total liabilities
Net Assets
Held in trust for other parties
Total net assets
See accompanying independent auditors' report.
Total
Private-
Purpose
a i,oov,i4i
2,868,795
2,727
4,752,269
1,896,349 2,855,920 4,752,269
$ 1,896,349 $ 2,855,920 $ 4,752,269
- 113 -
COUNTY OF HAWAII
Private Purpose Trusts
Combining Statement of Changes in Private Purpose Trust Net Assets
For the Fiscal Year Ended June 30, 2008
Shippers' Total
Geothermal Wharf Private-
Asset Trust Purpose
Fund Fund Trusts
Additions
Contributions:
Puna Geothermal Venture
Investment earnings:
Net decrease in fair value of investments
Dividends
Interest
Total additions
Deductions
Grant payments
Total deductions
Change in net assets
Net assets, beginning of year
Net assets, end of year
See accompanying independent auditors' report.
$ 50,000 $ - $ 50,000
- (132,212) (132,212)
- 48,203 48,203
67,426 64,144 131,570
117,426 (19,865) 97,561
- 97,640 97,640
- 97,640 97,640
117,426 (117,505) (79)
1,778,923 2,973,425 4,752,348
$ 1,896,349 $ 2,855,920 $ 4,752,269
- 114 -
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STATISTICAL SECTION
(UNAUDITED)
Contents
Financial Trends -These schedules contain trend information to help help the reader understand
how the County's financial performance and well-being have changed over time.
Revenue Capacity -These schedules contain information to help the reader assess the County's
most significant local revenue source, the property tax.
Debt Capacity -These schedules present information to help the reader assess the affordability of
the County's current levels of outstanding debt and the County's ability to issue additional debt in
the future.
Demographic and Economic Information -These schedules offer demographic and economic
indicators to help the reader understand the environment within which the County's financial
acitivities take place.
Operating Information -These schedules contain service and infrastructure data to help the
reader understand how the information in the County's financial report relates to the services
provided and the activities performed by the County.
Page
115
119
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128
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Table 2
Program Revenues
Govemmental activities:
Charges far services:
General government
Public safety
Highways and streets
Health, education and welfare
Culture and recreation
Sanitation
Operating grants and conVibutions
Capital grants and contributions ,
Total governmental activites program revenues
Business-type activities:
Charges for services:
Health, education and welfare
Operating grants and contributions
Total business-type activities program revenues
Total primary grovemment program revenues
Expenses
Govemmental activities:
General goverrunent
Public safety
Highways and streets
Health, education and welfare
Culture and recreation
Sanitation
Interest oolong-term debt
Total governmental activities expenses
Business-Type activities:
HealtFt education and welfare
Total business-type activities expenses
Total primary government expenses
Net Revenue (Expense)
Govemmental activities
Business-type activities
Total primary govermnent net expense
COUNTY OF HAWAI/
Changes in Net Assets
Last Six Fiscal Years
Fiscal Year
2003 2004 2005 2006 2007 2008
$ 1,911,070 $ 1,947,554 $ 3,227,420 $ 4,032,542 $ 4,460,016 $ 6,017,819
4,349,355 5,061,174 6,262,259 6,975,962 5,798,126 5,843,733
5,324,908 6,052,544 7,629,139 9,079,084 9,354,639 9,701,815
991,725 884,075 1,272,091 980,147 799,075 754,758
1,593,620 1,586,945 1 521,127 1,439,784 1,634,008 1,595,409
10,596,469 13,653,722 15 465,478 16,469,745 18,486,502 16,643,952
31,544,494 33,327,19! 36,370,993 38,252,889 38,068,138 46,117,399
19,064,821 9,668,9&1 26,221627 14,801,828 -7,805,986 9,327,408
75,376,462 72,184,186 97,970,134 92,031,981 - 86,406,490 98,002,293
$ 304,671 $ 303 047 $ 314,971 $ 338,141 $ 345 802 $ 365,655
147,997 143,769 135,829 141,019 134,211 125,795
452,668 446,816 450,800 479,160 480,013 491,450
$ 75,829,130 $ 72,631 002 $ 98,420,934 $ 92,511,141 $ 86,886,503 $ 96,493,743
$ 36,461,949 $ 40,085,357 $ 51,262,329 $ 38,264,132 $ 46,349,904 $ 68,794,961
77,131,374 90,434,696 94,422,057 106,067,466 118,010,316 137,500608
I5 512,957 17,563,608 20,857,341 24,783,476 26,!85,968 33,577,707
20,205,386 23,041,963 21,503,635 20,181,685 23,203,874 14,986,972
16,430,590 15,979,854 16,124,457 !9,464,962 26,948,501 20,450,172
!9,022,213 20,084,654 26,669,660 27,265,515 42,682,281 41,254,728
8,680,999 9,553,966 8,718,758 10,168,710 10,303,332 13,117,325
193,445,468 216,744,098 239,558,237 246,195,946 295,684,176 329,682,473
450,343 466,143 484,879 547,201 698,329 556,304
450,343 466,143 484,879 547,201 698,329 556,304
$ 193,895,811 $ 217,21Q241 S 240,043,116 $ 246,743,(47 $ 296,362,505 $ 330,238,777
$(116,069,006) $(144,559,912) $(141,58$103) $(154,163,965) $(209,277,686) $(231,680,180)
2,325 (19 327) (34,079) (68 041) (278,376) (64,854)
$(118,066,681) $(144,579239) $(141622,182) $(154,232,006) $(209,496,002) $(231,745,034)
General Revenues and Other Changes in Net Assets
Govemmental activities:
General revenues:
Properly taxes $ 709,151,524
Public service company taxes 5,063,897
Franchise taxes 4,816,565
Fuel faxes 7,343,088
Grants and contributions no[ restricted to
$ 119,864,237 $ 129,775,410 $ 152,182,806 $ 183,611,050 $ 210,217,690
5,332,476 6,351,273 6,811,483 7,396,084 8,381,367 ( -}
5,373,144 6,016,890 7,328,887 8,520,133 9,026,841 U
7,552,317 7,580,740 7,857,394 8,471,453 7,867,998
speciEc programs 13,931,403 15,251,443 16,734,850 18,510,262 18,999,596 19,395,089
Investment earnings 1936,635 1,729,531 2,957,188 4976,178 9,727,911 11,454,850
Miscellaneous 4,641,884 4,825,259 3,657,794 2,110,854 3,063,413 7,801,194
Total governmental activities 146,684,996 159,928,409 173,074 145 199,777,864 239,789,640 274,165,029
Business-type activities:
General revenues: a
Investment earnings 12,084 8,006 13,580 22,874 35,551 33,828
Total business-Type activities 12,064 8,006 13,580 22,874 35,551 33,828
Total primarygovemment $ 146,897,080 $ 159,936,415 $ 173087,725 $ 199,800738 $ 239,825,191 $ 274,198,857
Changes In Net Assets
Govemmental activities $ 28,815,990 $ 15,368,497 $ 31,486,042 $ 45,613,899 $ 30,511,954 $ 42,484,849
Business-type activities 14,409 (11,321) (20,499) (45,167) (182,765) (31,026)
Total primary government changes in net assets $ 28,830,399 $ 15,357,176 $ 31,465,543 $ 45,568,732 $ 30,329,189 $ 42,453 823
Unaudited -see accompanying independent auditors' report.
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Table 4
COUNTY OF HAW All
Changes in Fund Balances, Governmental Funds
(Modified accrual basis of accounting)
Last Ten Fiscal Years
(Amounts in thousands)
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
Revenues:
Property tax $ 84,792 $ 83,271 $ 84,240 $ 93,712 $109,991 $ 121,868 $ 131 087 $ 133,207 $ IBI 446 $208,313
Public service company [ax - - - 5,108 5,064 3,332 6,351 6,812 7,396 8,381
Fuel tax 5 900 6,103 6,450 6,422 7,343 7 552 7,581 7,857 H 471 7,888
Public utility Ranchise tax 3,953 3,950 4,777 4,993 4,B 17 5,373 6,OU 7,329 8,520 9,027
Licenses end permits 6,932 7,261 7,412 7,781 9,261 11,840 14,442 16,544 16,269 15,918
Intergovernmental 43 057 38,383 55,034 68,918 65,203 58,359 73,372 fi9,637 63,599 72,601
Charges for services 10,148 11,213 12,056 11689 13481 14,467 18,149 19,852 21,685 22,154
Invesment earnings 3,552 5,284 6,409 3,801 2,066 1,806 3,104 5,223 10,291 12,144
Miscellaneous 3,476 2,416 2,529 3,035 6,179 4,718 4,450 4,380 5,073 7,151
Total Revenues 163,830 157,883 178,907 203,459 223405 231515 264,553 290,841 322,750 363,577
Expenditures:
Cunene
General government 20,797 21,442 22,073 20,192 22,317 23,070 26,183 31,153 37,632 42,991
Public safety 56,035 38,395 59,391 61,870 64,667 fi9,117 76,404 83,591 93,241 103,617
Highways and streets 8,148 8,006 9,998 8,376 8,675 9,542 9,787 12,608 14,033 19,529
Sanitation 12,287 12,856 13,481 14,789 16,629 17,602 21,883 26,363 31,817 33,405
Health, education and welfare 5,310 5,079 8,344 16,726 18,867 19,047 19,8]0 19,050 2],470 24,609
Culture and recreation 12,321 11,526 12,088 12,127 13,086 13,169 13,982 74,731 V,118 18,179
Pension and retirement contributions 9,785 5,641 3,679 11,019 7,926 11,081 14,204 19,937 21,796 24,296
Employees health insurance 9,264 9,544 10,773 12,198 12 758 14,256 16,168 16,133 16,941 18,089
Other post employmnet benefits - - - - - - - - - 13,629
Miscellaneous 3,fi 17 4 224 4,040 5,330 5 629 7,128 6,133 6,780 5,108 5 344
Debt service:
Principal 7,974 8,662 9,399 10,025 11 800 12,826 13,150 14,060 16,076 16,548
Interest 7,508 7,759 8,416 8,467 8,469 9,283 9,534 9,914 9,894 13,716
Capital outlay 28,708 21,909 37,648 41,580 32,952 23,474 32,816 30,588 52,285 70,156
Total Expendiures 181 754 173,243 199,327 222,699 223,775 229,595 260,114 285,110 337,431 403508
Revenues over (under)Expendimres (17,924) (17,360) (20,420) (17,240) (370) 1,920 4,439 5,731 (14,681) (39,931)
Other Financing Sources (Uses):
Sale o£essets 54 28 16 IS 9 1,593 1,486 82 5 3470
Capital leases - 2,677 23 930 1353 1,474 1,369 404 2,403 2,187
Slate Revolving Fund loans 1,325 5 530 3,422 578 853 - 1,504 25 6,255 1,916
Sale of bonds - 29,878 - 15,175 37,262 1,723 30,000 25,000 85,000 -
Refundingbonds - 18,776 - - - - 24,595 - 31,60] -
Premiumonbonds - - - - - - 3,025 972 3,099 -
Refundingbondsissuancecosts - - - - - - (129) - (218) -
Paymenttorefundedbondescrowagen[ - (18,776) - - - - (25,885) - (3?699) -
Refund to lot owners (212) - - - - - - - ~ -
Tmnsfersin 30,385 25,647 28,625 29,529 29,943 39,440 42,119 45,691 59,139 64,929
Transfers out (30 385) (25 634 28,568 30,367 29,943) 39,440 (42,119 45,691 (59,139) (64,929)
To[el o[herfinancing sources 1,767 38,126 3518 15,860 39,477 4,792 35,965 26,483 95,452 7,573
Ne[change in fund balances $(16,757 $ 20,766 $ ]( 6,902) S (1,380) E 39,107 8 6,712 S 40,404 $ 32,214 E 80,771 $(32,358)
Debt service as a percentage of
noncapital expenditures ]0.1% 10.8% 110% 102% 10,6% 10.7°0 10.0% 9.4% 9.1°0 8.9%
Unaudited-see awompenying independent auditors report
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Principal Taxpayers
June 30, 2008 and 1999
Table 6
Fiscal Year 2008 Fiscal Year 1999
Percentage Percentage
2007 of Total 1998 of Total
Assessed Assessed Assessed Assessed
Valuation Rank Valuation Valuation Rank Valuation
$ 241,692,800 1 0.8% $ - -
225,835,700 2 0.7% - -
204,812,400 3 0.7% - -
162,254,700 4 0.5% - -
150,186,100 5 0.5% - -
110,729,300 6 0.4% 77,960,100 6 0.7%
95,440,700 7 0.3% - -
82,733,300 8 0.3% 45,528,800 9 0.4%
73,931,400 9 0.2% - -
64,923,900 10 0.2% - -
- - 153,200,100 1 1.3%
- - 122,500,000 2 I.0%
- - 102,123,700 3 0.9%
- - 96,063,200 4 0.8%
- - 83,292,500 5 0.7%
- - 65,543,100 7 0.5%
- - 54,628,600 8 0.4%
- - 41,618,600 10 0.3%
$1,412,540,300 1.4% $ 842,458,700 7.0%
Note: Gross valuation at January 1, 2007: $30,724,281,200
Gross valuation at January 1, 1998: $12,074,938,272
NOTES:
(a) Formerly know as BP Bishop Estate Trustees.
n Source: County of Hawaii, Department of Finance, Real Property Tax Division
U
Unaudited -see accompanying independent auditors' report.
-123-
COUNTY OF HAWAII
Taxoaver Business
Hualalai Investors LLC Developer/Hotel
Hilton Land Investment I LLC Hotel
Mauna Kea Development Corp. Developer/Hotel
WB-LCP Orchid Owner LLC Hotel
WB KD Acquisition LLC Developer
Mauna Lani Resort Inc. Developer/Hotel
1250 Oceanside Partners Developer
Kona Coast Resort Ltd. Condo/Time Share
BRE/WaikoloaLLC Hotel
Kona BB Property Hotel
Kaupulehu Makai Venture Developer/Hotel
Global Resort Partners Hotel
South Kohala Resort Corp. Developer
Mauna Kea Beach Hotel Corp. Hotel
Kamehameha Schools (a) Land trust
M. L. Hotel Investors LP Hotel
KM Kona Partners Developer
Mauna Lani Resort Inc. (Operations) Agriculture
~~
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-125-
O
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Table 9
COUNTY OF HAWAII
Ratios of General Bonded Debt Outstanding
Last Ten Fiscal Years
Fiscal
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
Debt
Applicable to
Legal Debt
Margin (a)
$ 129,633,204
162,716,490
156,636,220
161,310,657
187,316,839
176,693,195
195,198,142
205,219,940
281,836,503
265,431,280
Percent of
Net Taxable
Property
Value (b)
1.3%
1.6%
1.6%
1.5%
1.6%
1.4%
1.3%
1.2%
1.2%
I.0%
Per
Capita (c)
$ 910
1,094
],032
1,042
1,180
1,082
1,167
1,199
1,633
N/A
NOTES:
(a) See Table 10 for debt applicable to legal debt margin.
(b) See Table 5 for net taxable property values.
(c) See Table 11 for population data.
Details regarding the County's outstanding debt can be found in the
notes to the basic financial statements.
Unaudited -see accompanying independent auditors' report.
- 126 -
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5
Table 11
COUNTY OF HAWAII
Demographic and Economic Statistics
Last Ten Fiscal Years
Fiscal Personal Per
Year Resident Income Capita
Ended Population (thousands Personal School Unemployment
June 30; as of July 1 of dollars) Income Enrollment Rate
1998 145,833 $ 2,865,367 $ 19,648 30,715 8.7%
1999 146,970 2,987,074 20,324 30,926 7.8%
2000 148,677 3,195,347 21,435 30,193 4.7%
2001 150,806 3,371,216 22,347 29,792 5.0%
2002 153,040 3,563,723 23,268 29,826 4.6%
2003 156,127 3,721,683 23,808 29,635 4.6%
2004 159,865 4,056,218 25,331 29,827 3.9%
2005 164,462 4,439,841 26,946 30,262 3.3%
2006 169,061 4,749,753 28,036 30,539 2.9%
2007 172,547 N/A N/A 30,544 3.4%
Source: County of Hawaii, Department of Research and Development
Unaudited -see accompanying independent auditors' report.
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Table 12
I~ COUNTY OF HAWAII
u Principal Employers, County oFHawaii
June 30, 2008 and 1999
2008 1999
Percentage Percentage
n of Total County of Total County
u Employer Employees Rank Employment Employees Rank Employment
n State of Hawaii 8,009 1 9.6% 7,450 1 11.7%
u County of Hawaii 2,538 2 3.0% 2,250 2 3.5%
United States Government 1,279 3 1.5% 850 5 1.3%
~} Hilton Waikoloa Village 1,200 4 1.4% 1,200 4 1.9%
u Fairmont Orchid Hawaii 900 5 I.1% 554 7 0.9%
KTA Super Stores 800 6 1.0% 776 6 1.2%
Mauna Lani Bay Hotel & Bungalows 785 7 0.9% 800 8 1.2%
Hapuna Beach Prince Hotel 650 8 0.8% 579 9 0.9%
Four Seasons Resort Hualalai 587 9 0.7% - -
North Hawaii Community Hospital 438 10 0.5% - -
a Mauna Kea Beach Hotel
(closed for renovations in 2008) - - 543 10
C. Brewer & Co. - - 1,987 3
Total 17,186 20.5% 16,989
Total employee count 83,792
a
Source: County of Hawaii, Department of Reseazch and Development
a Unaudited -see accompanying independent auditors' report.
L~
a
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