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Home My WebLink AboutCOM 0939.000 2008-2010 OJNSV 7111\* r. OF N ' y, • Colleen M. Schrandt e‘W Legislative Auditor • ,,, sTgr OF NP P``• Mailing Address: Business Address: Hawai i County Building 1266 Kamehameha Avenue 25 Aupuni Street Cr. fxffv Of Painai 1. Ironworks Building, Room A -I Hilo, Hawaii 96720 Hilo, Hawaii 96720 OFFICE OF THE LEGISLATIVE AUDITOR Telephone: (808) 961 -8386 Facsimile: (808) 961 -8905 } r September 7, 2010 4 TO: J Yoshimoto, Chairman And Members of the County Council FROM: Colleen Schrandt Legislative Auditor RE: Financial Audit Report for Fiscal Year Ending June 30, 2009 This letter transmits for your review, deliberation, and acceptance, the Financial Audit Report of the County of Hawai `i for the Fiscal Year Ended June 30, 2009, and Management Letter dated February 11, 2010, as prepared by KPMG LLP. The Report and Management Letter satisfies the requirements of Section 3 -18, Hawai`i County Charter, requiring the Legislative Auditor to conduct or cause to be conducted the annual financial audit of the County and Section 10 -13, Hawai `i County Charter, relating to the responsibility of the County Council to conduct an annual independent audit of the accounts and other evidences of financial transactions of the County and of every County agency. KPMG LLP has issued an unqualified opinion, indicating that the financial statements present fairly in all material respects, the financial position of Hawai`i County for Fiscal Year Ending June 30, 2009, in conformance with U.S. generally accepted accounting principles (GAAP). This year's Management Letter contains findings and recommendations related to: • Collection of Receivables KPMG LLP will be present at the Finance Committee meeting on September 20, 2010, to answer any questions you may have. Appropriate department head(s) or their representative(s) will also be asked to attend the meeting. In the meantime, please feel free to contact me should you require further information. Enclosures cc w/o enclosures: Nancy Rose, KPMG LLP Department of Finance Coma, No. e l 3 et Department of Environmental Management Ref. To : — ��-- •- -._.�, Ref. Date SEP 0 8 701D Serving the Interests of the People of Our Island Hawaii County is an Equal Opportunity Provider and Employer COUNTY OF HAWAI :4 ►. ... ..„../?, / QII/ . Jir 1417 01,\-....,.... 1...f....:•4 - ,,,i . ... • -- cam .:s c .� . 1......• ..... .......• .... .-.... .... 0 i ... ....� • , .r.r....v Financial Audit Report 4 Fiscal year ended June 30, 2009 COUNTY OF HAWAII Financial Audit Report Fiscal year ended June 30, 2009 Table of Contents Page SECTION I — MANAGEMENT LETTER Management Letter 1 Current Year Findings and Recommendations 2 ti Status of Prior Year Findings and Recommendations 4 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 tug - 4 - 00 SECTION I MANAGEMENT LETTER -41 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 STATUS OF PRIOR YEAR FINDINGS AND RECOMMENDATIONS 4 Access to Programs and Data 4 RECENTLY ISSUED GOVERNMENTAL ACCOUNTING PRONOUNCEMENTS 6 KPMG KPMG LLP PO Box 4150 Honolulu, HI 96812 -4150 February 11, 2010 County Council of Hawai` i County of Hawai`i Hilo, Hawaii: Ladies and Gentlemen: We have audited the basic financial statements of the County of Hawai`i, State of Hawai`i (the County), for the year ended June 30, 2009, and have issued our report thereon dated February 11, 2010. 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 March 30, 2010, except for the Schedule of Expenditures of Federal Awards, which is as of February 11, 2010. hi 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, KPMG LLP is a Delaware limited liability partnership, the U.S. member firm of KPMG International Cooperative 1 "KPMG International "l, a Swiss entity. COUNTY OF HAWAII STATE OF HAWAII Current Year Findings and Recommendations Fiscal year ended June 30, 2009 COLLECTION OF RECEIVABLES 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 landfill fees and to reduce the amounts outstanding over 90 days. Improvement was made during the current year as decreases in the amounts outstanding were made in each of the aging categories, specifically in the over -90 days' category. 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 57% and 55% for the years ended June 30, 2009 and 2008, respectively. 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: 2009 2008 Amount Percentage Amount Percentage outstanding of total outstanding of total Landfall Current $ 642,452 29% $ 921,216 24% 31 — 60 days 372,723 17 720,049 19 61 — 90 days 70,197 3 564,118 15 90 +days 1,108,085 51 1,609,116 42 $ 2,193,457 100% $ 3,814,499 100% Current Current 0 /° 90 +days 24% 42% 90+ days 51% 31 — 60 days 19% 31 -60 days 17% 61 -90 days 61 -90 days 3% 15 /° 2 COUNTY OF HAWAII STATE OF HAWAII Current Year Findings and Recommendations Fiscal year ended June 30, 2009 2009 2008 Amount Percentage Amount Percentage outstanding of total outstanding of total Sewer Current $ 644,154 38% $ 604,083 39% 31 — 60 days 58,437 4 46,203 3 61 — 90 days 20,817 1 48,338 3 90+ days 960,825 57 846,018 55 $ 1,684,233 100% $ 1,544,642 100% Current 38% Curr ent 39 90 +days 90+ days 55% 57% 111 -60 days 31 -60 days 4/0 3% 61 -90 days 61 -90 days 1% 3% Recommendation 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 hired a new Credit and Collections Clerk during August 2009, who 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 COUNTY OF HAWAII STATE OF HAWAII Status of Prior Year Findings and Recommendations Fiscal year ended June 30, 2009 ACCESS TO PROGRAMS AND DATA 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. • 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 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 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: • 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). 4 (Continued) COUNTY OF HAWAII STATE OF HAWAII Status of Prior Year Findings and Recommendations Fiscal year ended June 30, 2009 • Passwords — The following password parameters should be implemented for the IAS application: _ Minimum password length of at least six characters Increased complexity of passwords, including the use of alphanumeric 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) • User Access — Segregation of duty controls should be implemented so that functional users also do not have administrator access. • Review of User Access — Management should conduct periodic reviews of user profiles and templates, as 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 a log -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 County and the Department of Data Systems can take steps toward enhancing and improving their IT general controls by incorporating the recommendations listed above. Status In response to the issues noted above, the Department of Data Systems has responded as follows: • Information Security Policy — An Information Security Policy Committee has been created to develop guidelines that will ultimately be used for preparing an information security policy for the County. • Passwords — The IAS application does not currently have a feature that would make the recommended changes to the password requirements. The Department of Data Systems will continue to work with their vendor to determine if it would be possible to add this functionality to their software. • User Access — Access is inherently limited due to the small number of personnel. However, access will be monitored to ensure that proper segregation of duties is maintained. • Review of User Access — Management is currently conducting periodic reviews of user profiles and templates on a limited basis. The Department of Data Systems will work on implementing these reviews on a wider scale. • Physical Access — The server was moved and is now locked in a server room. 5 COUNTY OF HAWAII STATE OF HAWAII Recently Issued Governmental Accounting Pronouncements Fiscal Year ended June 30, 2009 The following are recently issued governmental accounting pronouncements that should be evaluated for their impact to the County upon adoption: • Governmental Accounting The Hierarchy of Generally Accepted Accounting Principles for State Standards Board Statement and Local Governments No. 55: The objective of this statement is to incorporate the hierarchy of generally accepted accounting principles (GAAP) for state and local governments into the GASB's authoritative literature. It is intended to make it easier for preparers of state and local government financial statements to identify and apply the "GAAP hierarchy," which consists of sources of accounting principles used in the preparation of financial statements so that they are presented in conformity with GAAP and the framework for selecting those principles. The requirements of this statement are effective immediately. • Governmental Accounting Codification of Accounting and Financial Reporting Guidance Standards Board Statement Contained in the AICPA Statements on Auditing Standards No. 56: The objective of this statement is to incorporate into the GASB's authoritative literature certain accounting and financial reporting guidance presented in the American Institute of Certified Public Accountants' Statements on Auditing Standards. This statement addresses three issue not included in the authoritative literature that established accounting principles — related party transactions, going concern considerations, and subsequent events. The requirements of this statement are effective immediately. 6 (Continued) COUNTY OF HAWAII STATE OF HAWAII Recently Issued Governmental Accounting Pronouncements Fiscal Year ended June 30, 2009 • Governmental Accounting OPEB Measurements by Agent Employers and Agent Multiple - Standards Board Statement Employer Plans No. 57: The objective of this statement is to address issues related to the use of the alternative method and the frequency and timing of measurements by employers that participate in agent multiple - employer other postemployment benefit (OPEB) plans. This statement amends Statement No. 45, Accounting and Financial Reporting by Employers for Postemployment Benefits Other Than Pensions, to permit an agent employer that has an individual - employer OPEB plan with fewer than 100 total plan members to use an alternative measurement method, at its option, regardless of the number of total plan members in the agent - multiple employer OPEB plan in which it participates. Consistent with this change to the employer- reporting requirements, this statement also amends a Statement No. 43, Financial Reporting for Postemployment Benefit Plans Other Than Pension Plans, requirement that a defined benefit OPEB plan obtain an actuarial valuation. The amendment permits the requirement to be satisfied for an agent multiple - employer OPEB plan by reporting an aggregation of results of actuarial valuations of the individual - employer OPEB plans or measurements resulting from the use of the alternative measurement method for individual - employer OPEB plans that are eligible. The requirements of this statement related to the use and reporting of the alternative measurement method are effective immediately. The requirements related to the frequency and timing of measurements are effective for actuarial valuations first used to report funded status information in OPEB plan financial statements for periods beginning after June 15, 2011. • Governmental Accounting Accounting and Financial Reporting for Chapter 9 Bankruptcies Standards Board Statement No. 58: The objective of this statement is to provide accounting and financial reporting guidance for governments that have petitioned for protection from creditors by filing for bankruptcy under Chapter 9 of the United States Bankruptcy Code. It requires governments to remeasure liabilities that are adjusted in bankruptcy when the bankruptcy court confirms a new payment plan. The requirements of this statement are effective for financial statements for periods beginning after June 15, 2009. 7 William P. Kenos Mayor t a" • . • = • Ivan M. Torigoe William T. Takaba •� - Managing Director • 4 °*_ A 0 Deputy Director (gaunt of L DEPARTMENT OF ENVIRONMENTAL MANAGEMENT 25 Aupuni Street • Hilo, Hawai'i 96720 (808) 961 -8083 Fax (808) 961 -8086 http://co.hawaii.hi.us/directorvidir cnvmng.htm MEMORANDUM DATE . August 19, 2010 TO : Colleen Schrandt, Legislative Auditor FROM : Ivan Torigoe, Deputy Directo . SUBJECT : Fiscal Year 2009 Preliminary Draft Management Letter We have reviewed the fiscal year 2009 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. To further increase our collection efforts, a new Credit and Collection Clerk position has been created and filled. This new position is focusing 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. County of 1•lawai`i is an Equal Opportunity Provider and Employer. SECTION II COMPREHENSIVE ANNUAL FINANCIAL REPORT IOW COMPREHENSIVE ANNUAL FINANCIAL REPORT Fiscal Year Ended June 30 2009 ( \11/ • vV VV A14 111, ,. •. NA N► ..OF N r COUNTY OF HAWAII Hilo, Hawaii William P. Kenoi Mayor William Takaba Managing Director Prepared by The Department of Finance gif Nancy E. Crawford Director of Finance 44 COUNTY OF HAWAII Comprehensive Annual Financial Report For the Fiscal Year Ended June 30, 2009 Table of Contents Page INTRODUCTORY SECTION Letter of Transmittal 1 GFOA Certificate of Achievement 7 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 Statement of Activities 28 Fund Financial Statements: Balance Sheet - Governmental Funds 30 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 Net Assets - Proprietary Funds 40 Statement of Revenues, Expenses, and Changes in Fund Net Assets - Proprietary Funds 41 Statement of Cash Flows - Proprietary Funds 42 Statement of Fiduciary Net Assets - Fiduciary Funds 43 Statement of Changes in Fiduciary Net Assets - Fiduciary Funds 44 Notes to the Basic Financial Statements 45 Required Supplementary Information 84 FINANCIAL SECTION (Continued) Page Combining and Individual Nonmajor Fund Statements and Schedules: Combining Balance Sheet - Nonmajor Governmental Funds 86 Combining Statement of Revenues, Expenditures, and Changes in Fund Balances - Nonmajor Governmental Funds 90 Schedules of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual (Budgetary Basis): Highway Fund 93 Sewer Fund 94 Solid Waste Fund 95 Cemetery Fund 96 Parking Meter Fund 97 Vehicle Disposal Fund 98 Bikeway Fund 99 Workforce Investment Act Fund 100 Golf Course Fund 101 Geothermal Relocation and Community Benefits Fund 102 Beautification Fund 103 Hawaii County Housing Agency 104 Park Dedication Fund 105 Combining Balance Sheet - Agency Funds 106 Combining Statement of Changes in Assets and Liabilities - Agency Funds 108 Combining Statement of Net Assets - Private Purpose Trusts 113 Combining Statement of Changes in Net Assets - Private Purpose Trusts 114 STATISTICAL SECTION Table 1 - Net Assets by Component 115 Table 2 - Changes in Net Assets 116 Table 3 - Fund Balances, Governmental Funds 117 Table 4 - Changes in Fund Balance, Governmental Funds 118 Table 5 - Real Property Assessed Values by Classification and Tax Rates 119 Table 6 - Principal Taxpayers 123 Table 7 - Property Tax Levies and Collections 124 Table 8 - Ratios of Outstanding Debt by Type 125 Table 9 - Ratios of General Bonded Debt Outstanding 126 Table 10 - Legal Debt Margin Information 127 Table 11 - Demographic and Economic Statistics 128 Table 12 - Principal Employers, County of Hawaii 129 Table 13 - Full -Time Equivalent County Government Employees by Function 130 Table 14 - Operating Indicators by Function 131 Table 15 - Capital Asset Statistics by Functions 132 - . �� - _ __- INTRODUCTORY SECTION = William P. Kenoi -44 ` , ;. Nancy E. Crawford Mayor :; Director ue_ Deanna S. Sako - , « ,,Jr Deputy Director County of Hawaii Finance Department 25 Aupuni Street, Room 2103 • Hilo, Hawaii 96720 (808) 961 -8234 • Fax (808) 961 -8569 February 11, 2010 The Honorable Mayor and Members of the Council County of Hawai`i 25 Aupuni Street Hilo, Hawaii 96720 We transmit herewith the Comprehensive Annual Financial Report for the County of Hawaii, State of Hawai`i (the County), for the fiscal year July 1, 2008 to June 30, 2009. 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 are the responsibility of the County government. We believe.the enclosed data are complete and accurate in all material respects and are reported in a manner designed to present fairly the fmancial 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 Hawai`i at June 30, 2009 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. • 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 a semi - 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 a 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 Hawai`i, 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 a nine- member council. Economic Condition and Outlook The island of Hawai`i, 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, a deep -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 to some extent when any one industry lags. However, it seemed that 2009 proved to be a challenge for most of the major sectors of the island's economy. Ongoing construction projects of the County, State and the University served to mitigate some of the decline in the construction PP industry. The County's labor force numbered 86,325 at June 2009. The troubled economic situation facing the County is evident in the increasing unemployment rate, which doubled from the end of Fiscal Year 2008 (4.5 %) to the end of Fiscal Year 2009 (9.9 %). As in previous sluggish economic periods, the sectors of tourism and construction suffered the primary job losses. — Despite substantial decreases in the recent year, tourism remains 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 by almost 19% from 1,517,455 arrivals in Fiscal Year 2008 to 1,229,268 arrivals in Fiscal Year 2009. -2 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 $72 million, while direct employment has increased slightly from approximately 475 to approximately 525. On July 21, 2009, the TMT Observatory Corporation announced that its board of directors had selected Mauna Kea over Chile as the preferred site for the Thirty Meter Telescope (TMT). It is projected that the TMT project will pour an estimated $1.2 billion into the economy over nine years, resulting in 300 construction jobs and 140 full -time permanent jobs. 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 international research and the local economy. Agriculture — Forestry, nut and fruit orchards, and floral and vegetable farms have successfully replaced lands where sugar 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 but this sector of the economy did face its own obstacles this past year. Prices for coffee began to fall toward the end of last season but are expected to rise as the season continues. 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 Safety — Construction continued on the new Pahoa Fire Station with total costs exceeding $4.3 million by the end of the year to help meet the growing public safety needs in the Puna - Pahoa area. Public Works — The County spent over $20 million in combined Federal and County funds on the construction of housing for the community, which consisted of the Ainakea Senior Residences and the Waikoloa Housing projects. Work began on the $50 million, 85,000- square- foot West Hawaii Civic Center on Kealakehe Parkway in 2008, and is scheduled for completion in 2011. The center will consolidate under one roof, 28 County departments, currently at different locations in West Hawaii, and one State agency. Planning — The Puna District, Kona District, North Kohala District and South Kohala District Community Development Plan's (CDP) were adopted. In addition, the Action Committees for each of these CDPs are being formed to implement the plans. In December 2008, the American Institute of Architects (MA) selected Downtown Hilo as a recipient for the 2009 Sustainable Design Assessment Team (SDAT) Program. The SDAT program is a community assistance program that focuses on assisting communities with implementing principles of sustainability. -3- M Environmental Management — The Department commissioned the West Hawaii Resource Recovery facilities including a new scrap metal facility, organics collection and processing area and vehicle impound lot. The design plans for the construction of two (2) new onsite and offsite sewer collection systems were completed. For the Future Public Safety — Expansion and upgrade of Fire and Police facilities around the island are in progress. The Pahoa Police sub - station is nearing completion with an expected completion date of May 2010. This facility will provide better service to the Pahoa community as police staffing including the District Commander and his administrative staff will be available at this facility on a part time basis and as it will house the Department of Finance, Vehicle Registration and Licensing Division for the district. The South Kona Police Station is nearing completion of its design phase. This facility will improve police service to the South Kona community as personnel assigned to this facility will be assigned to the district of South Kona as opposed to the current situation in which both districts of North and South Kona are treated as one area of command and personnel stationed in North Kona. The County has begun the process of hiring a project manager to upgrade the County's current radio system to meet Federal Communications Commission (FCC) efficiency requirements. Also, private and public grant applications are currently in process to provide an island -wide broadband communication system. Public Works — The Ane Keohokalole Highway or Mid -Level Road will commence construction in the second quarter of 2010. The $30 million dollar project is being built with American Reinvestment and Recovery Act (Stimulus Funds). The Ane Keohokalole Highway will connect Kailua -Kona from Henry Street and Palani Road to the Kealakehe Parkway. The FP project will provide construction jobs and enhance further development in the immediate areas. The Highway is expected to be in service by early 2012. Additionally, the County is working on several major road projects to enhance traffic flow in West Hawai`i. Planning — The Department will be continuing its public outreach program for the proposed Community Development Plan for the districts of Kau and Hamakua. 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. 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. Cash Management Cash temporarily idle during the year was invested in savings accounts, money market mutual funds, certificate of deposits, repurchase agreements, and agency notes. The average yield on deposits and investments was 2.55 %. The County's policy is to minimize credit and market risks while maintaining a competitive yield on its portfolio. Accordingly, with the exception of $200,467 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 a County - designated agent in the County's name. Other Information Independent Audit The County Charter requires an annual audit by independent certified public accountants. KPMG LLP was selected by the County Council to perform the audit. -5- • Employee Union Contracts County employees are members of eight different bargaining units. Seven of the bargaining units have contracts that run through June 30, 2011 and negotiations are still in progress with the eighth bargaining unit. 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, 2008. This was the twenty -first consecutive year that the government has achieved this prestigious award. 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. NANC E. CRAWF u RD Director of Finance -6- Certificate of Achievement for Excellence in Financial Reporting Presented to County of Hawaii For its Comprehensive Annual Financial Report for the Fiscal Year Ended June 30, 2008 A Certificate of Achievement for Excellence in Financial Reporting is presented by the Government Finance Officers Association of the United States and Canada to governnent units and public employee retirement systems whose comprehensive annual financial reports (CAFRs) achieve the highest standards in government accounting and financial reporting. ''')..r#1*,641N444‘ IL ( ' ,..: ) 0-0! President * A Executive Director -7- County of Hawaii Organization Chart County Electorate I County Council I Mayor I Prosecuting Attorney I County Legislative Office of Management: Clerk Auditor Managing Director 1 Departments and agencies Agencies under Departments under under direct supervision administrative supervision commissions and of the Mayor and/or of the Mayor: administrative supervision Managing Director: of the Mayor: Corporation Counsel Civil Defense Civil Service Finance Office of Aging Police Planning Mass Transportation Liquor Control Environmental Management Housing & Community Fire Research & Development Development Water Supply Public Works (semi- autonomous) Parks & Recreation Data Systems o -8 -. County of Hawaii Elected Officials Administrative Officers (Term: 2008 -2012) William P. Kenoi Mayor Jay T. Kimura Prosecuting Attorney County Council (Term: 2008 -2010) J Yoshimoto Chair Emily I. Naeole- Beason Vice Chair Guy Enriques Member Brenda Ford Member Kelly Greenwell Member Pete Hoffman Member Donald Ikeda Member Dennis "Fresh" Onishi Member Dominic Yagong Member -9- Principal Officials June 30, 2009 County Clerk Kenneth Goodenow Legislative Auditor Colleen Schrandt Managing Director William Takaba Deputy Managing Director Walter Lau Corporation Counsel Lincoln Ashida Director of Finance Nancy E. Crawford Planning Director Bobby Jean Leithead -Todd Director of Personnel Michael R. Ben Director of Research and Development Randy Kurohara Chief of Police Harry S. Kubojiri Fire Chief Darryl Oliveira Director of Public Works Warren Lee Director of Environmental Management Lono Tyson Director of Parks and Recreation Robert Fitzgerald 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 Stephen Arnett Director of Data Systems Burt Tsuchiya -10- FINANCIAL SECTION KPMG KPMG LLP PO Box 4150 Honolulu, HI 96812 -4150 Independent Auditors' Report The Chair and Members County Council County of Hawaii State of Hawai`i: 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 Hawai`i (the County), as of and for the year ended June 30, 2009, 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, 2009, and the respective changes in financial position, and where applicable, cash flows thereof, and the respective budgetary comparisons for the general 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 our report dated February 11, 2010 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. — 11 — KPMG LLP, a U.S. limited liability partnership, is the U.S. member firm of KPMG International, 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 LLB February 11, 2010 4. —12— MANAGEMENT'S DISCUSSION AND ANALYSIS 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, 2009. We encourage readers to consider the information presented here in 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 year by $526.6 million (net assets). This amount includes $43.1 million in unrestricted net assets, an increase of $15.1 million from the prior year. • The County's total net assets increased by $12 million during the fiscal year. • As of the close of the current fiscal year, the County's governmental funds reported combined ending fund balances of $243.6 million, a decrease of $11.0 million from the prior year. Approximately 21 percent of this total amount, $50.6 million, is available for spending at the County's discretion (unreserved fund balance). • At the end of the current fiscal year, unreserved fund balance for the general fund was $44.6 million, or 18.3 percent of total general fund expenditures. 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 The government -wide financial statements are designed to provide readers with a broad overview of the County's finances, in a manner similar to a private- sector business. The statement of net 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 improving or deteriorating. The statement of activities presents information showing how the County's net assets changed during the most recent fiscal year. All changes in net assets are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of related cash flows. Thus, revenues and expenses are reported in this statement for some items that will only result in cash flows in future fiscal periods, such as revenues pertaining to uncollected taxes and expenses 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 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 welfare, culture and recreation, - 13 - 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. Fund 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 governments, uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. All of the funds of the County can be divided into the following three categories: governmental funds, proprietary funds, and fiduciary funds. Governmental funds. Governmental funds are used to account for essentially the same functions reported as governmental activities in the government -wide financial statements — i.e., most of the County's basic services are reported in governmental funds. 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 near 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. 4 The County adopts an annual appropriated budget for its general fund and special revenue funds. A budgetary comparison statement has been provided for these funds to demonstrate compliance with this budget. The budgetary comparison 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. 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 -14- 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 funds. 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 are 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 supplementary information is presented immediately following the notes to the basic financial statements. GOVERNMENT -WIDE FINANCIAL ANALYSIS Condensed Schedule of Net Assets June 30, 2009 and 2008 Primary Government Governmental Activities Business -type Activities Total 2009 2008 2009 2008 2009 2008 Assets: Current and other assets $ 287,338,601 $ 295,415,507 $ 1,189,499 $ 1,202,438 $ 288,528,100 $ 296,617,945 Capital assets, net 661,265,646 608,669,449 1,249,251 1,278,316 662,514,897 609,947,765 Total assets $ 948,604,247 $ 904,084,956 $ 2,438,750 $ 2,480,754 $ 951,042,997 $ 906,565,710 Liabilities: Long -term liabilities outstanding 393,196,221 361,199,734 944,124 970,892 394,140,345 362,170,626 Other liabilities 29,927,036 29,403,624 395,058 409,891 30,322,094 29,813,515 Total liabilities $ 423,123,257 $ 390,603,358 $ 1,339,182 $ 1,380,783 $ 424,462,439 $ 391,984,141 Net assets: Invested in capital assets, net of related debt 419,615,479 419,174,559 305,127 307,424 419,920,606 419,481,983 Restricted 63,408,379 66,977,935 184,643 184,352 63,593,022 67,162,287 Unrestricted 42,457,132 27,329,104 609,798 608,195 43,066,930 27,937,299 Total net assets $ 525,480,990 $ 513,481,598 $ 1,099,568 $ 1,099,971 $ 526,580,558 $ 514,581,569 - 15 - 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 $526.6 million at the close of the most recent fiscal year. By far the largest portion of the County's net assets (80 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 E 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 (12 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 $12 million during the current fiscal year. Although real property tax valuations increased approximately $19 million, the offsetting decrease represents the degree to which increases in ongoing expenses have outstripped similar increases in ongoing revenues. The County's current and other assets decreased by $8.1 million during the current fiscal year. Approximately $13.6 million of the decrease is due to a decrease in cash and investments, which is offset by a $3.9 million increase in receivables. The decrease in cash and investments is primarily due to the spending of proceeds from previously issued bonds. The majority of the increase in receivables is due to an increase in the amount of real property taxes uncollected at fiscal year end. 0 The County's net capital assets increased by $52.6 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 increased by $32 million due to the new general obligation bonds issued during the current year offset by principal payments. See further discussion of the increase in long -term debt outstanding on page 22. The County's other liabilities increased by $0.5 million primarily due to increases in accounts payable and accrued liabilities ($1.6 million) offset by decreases in other liabilities ($.9 million) and unearned revenue ($.2 million). -16- Condensed Schedule of Changes in Net Assets For the Fiscal Years Ended June 30, 2009 and 2008 Primary Government Governmental Activities Business -type Activities Total 2009 2008 2009 2008 2009 2008 Revenues: Program revenues: Charges for services $ 38,432,997 $ 42,557,486 $ 371,511 $ 365,655 $ 38,804,508 $ 42,923,141 Operating grants and contributions 42,273,795 46,117,399 135,674 125,795 42,359,469 46,243,194 Capital grants and contributions 15,728,186 9,327,408 - - 15,728,186 9,327,408 General revenues: Property taxes 229,262,980 210,217,690 - - 229,262,980 210,217,690 Other taxes 29,009,085 25,296,206 - - 29,009,085 25,296,206 Grants and contributions, unrestricted 17,888,019 19,395,089 - - 17,888,019 19,395,089 Investment earnings 8,369,221 11,454,850 17,861 33,828 8,387,082 11,488,678 Miscellaneous 2,749,335 7,801,194 - - 2,749,335 7,801,194 Total revenues 383,713,618 372,167,322 525,046 525,278 384,188,664 372,692,600 Expenses: General government 69,968,534 68,794,961 - - 69,968,534 68,794,961 Public safety 144,755,837 137,500,608 - - 144,755,837 137,500,608 Highways and streets 36,466,541 33,577,707 - - 36,466,541 33,577,707 Health, education and welfare 33,783,223 14,986,972 525,449 556,304 34,258,672 15,543,276 Culture and recreation 32,633,418 20,450,172 - - 32,633,418 20,450,172 Sanitation 40,191,704 41,254,728 - - 40,191,704 41,254,728 Interest on long -term debt 13,914,969 13,117,325 - - 13,914,969 13,117,325 Total expenses 371,714,226 329,682,473 525,449 556,304 372,189,675 330,238,777 Increase (decrease) in net assets 11,999,392 42,484,849 (403) (31,026) 11,998,989 42,453,823 Net assets at beginning of year 513,481,598 470,996,749 1,099,971 1,130,997 514,581,569 472,127,746 Net assets at end of year $ 525,480,990 $ 513,481,598 $ 1,099,568 $ 1,099,971 $ 526,580,558 $ 514,581,569 Analysis of Changes in Net Assets Governmental activities. Governmental activities increased the County's net assets by $12 million or basically all of the total growth in net assets of the County. Total revenues increased by $11.5 million (3 percent). The County's property taxes increased by $19 million (9 percent) during the year. Most of this increase is attributable to the increase in assessed values. Miscellaneous revenues decreased by $5 million (65 percent) mostly due to the lack of real property sales in the current year. Investment earnings and operating grants and contributions decreased by $3.1 million (27 percent) and $3.9 million (8 percent), respectively. The decrease in investment earnings was a result of lower interest rates Total expenses increased by $42 million (13 percent). The majority of the expense categories increased and this was partly due to negotiated pay raises and related employee benefits. Increases are also due to an increase in capital expenditures for this fiscal year. For the most part, .. other fluctuations in expenses closely paralleled inflation and growth in demand for services. - 17 - Expenses and Program Revenues - Governmental Activities Year Ended June 30, 2009 160, 000, 000 140,000,000 �; x f v ■ EXpenses t a OProgram revenues 120,000,000 100,000,000 P K 80, 000, 000 60,000,000 "" 40,000,000 r gr{ w 20,000,000 General Public safety Highways and Health, Culture and Sanitation Interest on govemment streets education and recreation long -term debt welfare Revenues by Source - Governmental Activities Year Ended June 30, 2009 Miscellaneous Investment eamings 1% 2% Grants and contributions not restricted to specific programs ow 0 Other taxes Operating grants and 7 % contributions 11% tow Capital grants and contributions 4 %_ Property taxes ry- 60% -18- The charts above illustrate the County's governmental expenses and revenues by function, and its revenues by source. As shown, public safety is the largest function in expense (39 percent), followed by general government (19 percent) and highways and streets (10 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 (60 percent), followed by operating grants and contributions (11 percent) and charges for services (10 percent). Business -type activities. Business -type activities decreased the County's net assets by $403. Expenses for health, education and welfare account for all of the $525,449 of expenses. Charges for services were $371,511, operating grants and contributions were $135,674 and investment earnings were $17,861. Expenses decreased $30,855 (6 percent) due primarily to a decrease in repairs and maintenance ($29,402). FINANCIAL ANALYSIS OF THE COUNTY'S FUNDS As noted earlier, the County uses fund accounting to ensure and demonstrate compliance with finance- related legal requirements. Governmental funds. The focus of the County's governmental funds is to provide information on near -term inflows, 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 County's governmental funds reported combined ending fund balances of $243.6 million, a decrease of $10.9 million in comparison with prior year. Approximately 21 percent of this total amount ($50.6 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 ($124.3 million), 2) to pay debt service ($22.8 million), or 3) for a variety of other restricted purposes ($45.8 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 $44.6 million, while total fund balance reached $59.6 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 18 percent of total general fund expenditures, while total fund balance represents 24 percent of that same amount. The fund balance of the County's general fund increased by $10.7 million during the current fiscal year. Key factors in this increase are as follows: • An increase of $17.5 million (8 percent) in property tax revenue due to increasing property values. • An increase of $2.9 million (7 percent) in general government expenditures due primarily to increases in expenditures for finance ($2.2 million). The increase of $2.2 million in finance is primarily due to the transfer of the County's real property leases to the Property Management division in finance from all the other County departments. - 19 - • An increase of $2.8 million (3 percent) in public safety expenditures due primarily to increases in expenditures for police ($.6 million), fire ($.8 million) and civil defense ($1.6 million). Increases were noted in many of the grant - funded programs as well as in salaries and wages due to negotiated pay increases. The fund balance of the County's capital projects fund decreased by $24.7 million during the current fiscal year. The decrease is primarily due to the combined total of the fund's main revenue sources of bond proceeds ($50.2 million), intergovernmental revenue ($6.8 million), transfers in ($4.0 million) and state revolving fund loan proceeds ($.3 million) being less than • expenditures ($86.0 million) for the current fiscal year. Although the fund balance of the capital projects fund was $120.5 million at the end of the current fiscal year, the unreserved portion of the fund balance was a negative $20.1 million. This was due to a change in the County's procedures regarding the issuance of bonds, in that the County defers the issuance of bonds until the funds are actually needed even though the project will be allotted so that work may begin. The debt service funds, included in other governmental funds, have combined total fund balances of $22.8 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 $.7 million (3 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 $700,676, and the unrestricted net deficit of the Ouli Ekahi Affordable Housing Project (Ouli Ekahi) amounted to $90,878. The net assets for Kulaimano decreased by $13,605 and the net assets for Ouli Ekahi increased by $13,202. 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 a $16.4 million increase in appropriations, of which $16.3 million is due to increases in the appropriations for capital and operating grants and contributions. Differences between the final budget and the actual (budgetary basis) resulted in $10.7 million less revenues than expected and $23.9 million less expenditures than appropriated. This is primarily due to the following factors: • $4.5 million negative variance in taxes and assessments revenue resulting from collections being less than expected. • $6.9 million negative variance in intergovernmental revenue, including $2.3 million in federal grants and $4.6 million in state grants. • $20.6 million is due to the increased efforts by each department to control costs during the budget year due to the tough financial situation facing the County. Amount consists primarily of variances in the following functions: general government ($7.9 million), public -20- safety ($8.0 million), health, education and welfare ($1.7 million) and culture and education ($2.0 million). • $3.0 million is due to lower than anticipated payments needing to be made in cash in lieu of vacation payments, unemployment, workers compensation and pension related payments. 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, 2009 amounts to $662.5 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 nine percent. Major capital asset events during the current fiscal year included the following: • Construction continued on both phases of the Hawaii County Building Improvements Project; construction in progress as of the end of the current fiscal year had reached $17.3 million. • Construction continued on the Waikoloa Housing Project; construction in progress as of the end of the current fiscal year had reached $24.8 million. • Construction continued on the East Hawaii Regional Sort Station; construction in progress as of the end of the current fiscal year had reached $6.5 million. • Construction continued on the Pahoa Fire Station; construction in progress as of the end of the current fiscal year had reached $4.4 million. • Construction began on the West Hawaii Civic Center; construction in progress as of the end of the current fiscal year had reached $10.9 million. • Construction was completed on the Aupuni Center Parking Improvements Project; construction in progress of $3.9 million was transferred to Infrastructure. • Construction was completed on the Hoolulu Park Accessibility Improvements Project; construction in progress of $5.2 million was transferred to Buildings & Improvements. • Construction was completed on the Isaac Hale Park Expansion Improvements; construction in progress of $4.6 million was transferred to Buildings & Improvements. • Construction was completed on the Keaukaha Gymnasium Complex Project; construction in progress of $4.3 million was transferred to Buildings & Improvements. • Construction was completed on the Laiopua Connector Road Project; construction in progress of $10.4 million was transferred to Infrastructure. • Construction was completed on the One Pauahi Place Project; construction in progress of $9.5 million was transferred to Buildings & Improvements. • Construction was completed on the Puainako Street Extension Project; construction in progress of $35.7 million was transferred to Infrastructure. - 21 - Capital Assets (net of depreciation) As of June 30, 2009 and 2008 Primary Government Governmental Activities Business -type Activities Total 2009 2008 2009 2008 2009 2008 Land $ 28,644,734 $ 28,187,574 $ 753,877 $ 753,877 $ 29,398,611 $ 28,941,451 Infrastructure assets 226,557,289 162,915,082 - - 226,557,289 162,915,082 Ground and site improvements - - 78,843 82,598 78,843 82,598 Buildings and improvements 256,229,424 247,018,221 403,575 428,189 256,632,999 247,446,410 Equipment 49,486,543 45,506,721 12,956 13,652 49,499,499 45,520,373 Construction work in progress 100,347,656 125,041,851 - - 100,347,656 125,041,851 Total $ 661,265,646 $ 608,669,449 $ 1,249,251 $ 1,278,316 $ 662,514,897 $ 609,947,765 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 $291.4 million and State Revolving Fund loans of $26.7 million. At the end of the current fiscal year, the County had total bonded debt outstanding of $291.4 million. This entire amount was comprised of general obligation ice' bonds which are backed by the full faith and credit of the County. The County's total bonded debt increased by $34.3 million (13 percent) during the current fiscal year due to the issuance of $50 million in bonds which was offset by normal principal reduction. The County maintained an "AA -" rating from Standard & Poor's, an "A 1" 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 $4.4 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 $26.7 million and notes payable to the U.S. Department of Agriculture, Farmers Home Administration amounting to $.9 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 at the end of the current fiscal year is at 11.5 percent, which is up from last year's rate at the same time of 6.0 percent. • The number of visitors to the County for the current fiscal year was 1,229,268, down by almost 19.0 percent from the previous year's count of 1,517,455. Both of these factors were considered in preparing the County's budget for the 2010 fiscal year. -22 -. At the end of the current fiscal year, unreserved fund balance in the general fund was $44.6 million. The County has appropriated $16.1 million of this amount for spending in the 2010 fiscal year budget. REQUESTS FOR INFORMATION This financial report is designed to provide a general overview of the County's finances for all those with an interest in the government's finances. Questions concerning any of the information provided in this report or requests for additional information should be addressed to the Director of Finance, County of Hawai`i, 25 Aupuni Street, Suite 2103, Hilo, Hawai`i 96720. - 23 - This page intentionally left blank. -24- BASIC FINANCIAL STATEMENTS - 25 - COUNTY OF HAWAII Statement of Net Assets June 30, 2009 , Primary Government Governmental Business -type Component "° Activities Activities Total Unit Assets Current assets: Cash and cash equivalents (notes 3 and 14) $ 127,051,551 $ 197,145 $ 127,248,696 $ 34,143,524 Restricted cash and cash equivalents (note 3) - 33,844 33,844 - Investments (notes 3 and 14) 79,776,164 700,000 80,476,164 2,363,441 Receivables, net (note 4) 34,656,701 58,823 34,715,524 4,990,830 Receivable from improvement district (notes 4 and 10) 92,699 - 92,699 - Internal balances (note 5) 1,350 (1,350) - - Inventories 2,825,603 - 2,825,603 1,326,061 Prepaid expenses - 1,550 1,550 195,319 Other 2,872,419 - 2,872,419 - Total current assets 247,276,487 990,012 248,266,499 43,019,175 Investments (note 3) 36,834,059 - 36,834,059 - Restricted cash and cash equivalents (note 3) - 199,487 199,487 - Restricted investments (note 14) - - - 14,132,135 Loans receivable, excluding current portion - - - 249,006 Receivable from improvement district, excluding current portion (notes 4 and 10) 3,228,055 - 3,228,055 - o , Deferred charges - - - 7,656,168 Capital assets (notes 6, 8 and 14): Utility plant in service, net - - - 184,331,786 , Infrastructure assets, net 226,557,289 - 226,557,289 - Ground and site improvements, net - 78,843 78,843 - Buildings and improvements, net 256,229,424 403,575 256,632,999 - Equipment, net 49,486,543 12,956 49,499,499 - Construction work in progress 100,347,656 - 100,347,656 32,940,806 Land 28,644,734 753,877 29,398,611 1,714,727 ."' ` Total capital assets, net 661,265,646 1,249,251 662,514,897 218,987,319 Total noncurrent assets 701,327,760 1,448,738 702,776,498 241,024,628 , Total assets 948,604,247 2,438,750 951,042,997 284,043,803 (Continued) c -26- COUNTY OF HAWAII Statement of Net Assets June 30, 2009 (Concluded) Primary Government Governmental Business -type Component Activities Activities Total Unit Liabilities Current liabilities: Accounts payable and accrued liabilities $ 10,781,229 $ 390,927 $ 11,172,156 $ 2,713,754 Unearned revenue (note 7) 8,646,261 4,131 8,650,392 - Interest due on long -term debt 6,446,974 - 6,446,974 1,268,576 Bonds and loans payable, current portion net (notes 10 and 14) 19,268,720 28,734 19,297,454 2,518,000 Compensated absences, current portion (note 10) 8,278,701 - 8,278,701 1,503,598 Claims and judgments, current portion (notes 10, 12 and 14) 3,611,994 - 3,611,994 54,807 Capital leases, current portion (notes 8 and 10) 1,427,134 - 1,427,134 - Landfill costs payable, current portion (notes 9 and 10) 183,380 - 183,380 - Customers' deposits for service connections - - - 629,890 Other 4,052,572 - 4,052,572 - Total current liabilities 62,696,965 423,792 63,120,757 8,688,625 Noncurrent liabilities: Bonds and loans payable, net (notes 10 and 14) 301,358,890 915,390 302,274,280 39,591,178 Compensated absences (note 10) 21,928,396 - 21,928,396 1,203,389 Claims and judgments (notes 10, 12 and 14) 14,065,715 - 14,065,715 190,193 Capital leases (notes 8 and 10) 2,752,671 - 2,752,671 - Landfill costs payable (notes 9 and 10) 20,320,620 - 20,320,620 - Customers' deposits payable from restricted assets - - - 14,132,135 Total noncurrent liabilities 360,426,292 915,390 361,341,682 55,116,895 Total liabilities 423,123,257 1,339,182 424,462,439 63,805,520 Net Assets Invested in capital assets, net of related debt 419,615,479 305,127 419,920,606 195,151,646 Restricted for: Capital projects 40,589,436 - 40,589,436 - Debt service (note 10) 22,818,943 184,643 23,003,586 - Unrestricted 42,457,132 609,798 43,066,930 25,086,637 Total net assets $ 525,480,990 $ 1,099,568 $ 526,580,558 $ 220,238,283 See accompanying notes to the basic financial statements. - 27 - COUNTY OF HAWAII Statement of Activities For the Fiscal Year Ended June 30, 2009 Program Revenues Operating Capital Charges for Grants and Grants and Functions/Programs Expenses Services Contributions Contributions Primary government: Governmental activities: General government $ 69,968,534 $ 5,442,950 $ 1,978,368 $ 4,453,624 Public safety 144,755,837 4,846,834 20,314,296 50,831 Highways and streets 36,466,541 9,636,799 635,709 10,954,010. Health, education and welfare 33,783,223 532,832 18,365,635 34,563 Culture and recreation 32,633,418 1,557,597 56,870 118,118 Sanitation 40,191,704 16,415,985 922,917 117,040 .. Interest on long -term debt 13,914,969 - - - Total governmental activities 371,714,226 38,432,997 42,273,795 15,728,186 Business -type activities: Health, education and welfare 525,449 371,511 135,674 Total primary government $ 372,239,675 $ 38,804,508 $ 42,409,469 $ 15,728,186 Component unit: Water (note 14) $ 46,956,962 $ 39,890,495 $ - $ 11,246,419 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 See accompanying notes to the basic financial statements. -28 - Net (Expense) Revenue and Changes in Net Assets Primary Government Governmental Business -type Component Activities Activities Total Unit $ (58,093,592) $ - $ (58,093,592) $ - (119,543,876) - (119,543,876) - (15,240,023) - (15,240,023) - (14,850,193) - (14,850,193) - (30,900,833) - (30,900,833) - (22,735,762) - (22,735,762) - (13,914,969) - (13,914,969) - (275,279,248) - (275,279,248) - - (18,264) (18,264) - (275,279,248) (18,264) (275,297,512) - - - - 4,179,952 229,262,980 - 229,262,980 - 10,228,607 - 10,228,607 - 11,118,365 - 11,118,365 - 7,662,113 - 7,662,113 - 17,888,019 - 17,888,019 - 8,369,221 17,861 8,387,082 932,621 2,749,335 - 2,749,335 - 287,278,640 17,861 287,296,501 932,621 11,999,392 (403) 11,998,989 5,112,573 513,481,598 1,099,971 514,581,569 215,125,710 $ 525,480,990 $ 1,099,568 $526,580,558 $220,238,283 - 29 - COUNTY OF HAWAII Governmental Funds Balance Sheet June 30, 2009 Other Total Capital Governmental Governmental General Projects Funds Funds Assets Cash and cash equivalents (note 3) $17,210,630 $ 60,263,601 $ 49,577,320 $127,051,551 Investments (note 3) 38,684,453 60,627,701 17,298,069 116,610,223 Receivables, net (note 4) 12,941,034 723,958 2,463,887 16,128,879 -,, Due from other governmental funds (note 5) 743,332 302,647 642,361 1,688,340 Due from other nongovernmental ,... funds (note 5) - - 1,350 1,350 Receivables from other governments (note 4) 8,251,229 9,091,346 1,185,247 18,527,822 — Inventories 2,825,603 - - 2,825,603 Other 667,135 - 633,168 1,300,303 Total assets $81,323,416 $ 131,009,253 $ 71,801,402 $284,134,071 Liabilities and Fund Balances Liabilities: Accounts payable $ 2,484,492 $ 4,694,169 $ 3,602,568 $ 10,781,229 Due to other governmental funds (note 5) 41,831 259,552 1,386,957 1,688,340 Deferred revenue (note 7) 15,784,236 5,536,903 2,730,044 24,051,183 Other 3,434,610 - 617,962 4,052,572 Total liabilities 21,745,169 10,490,624 8,337,531 40,573,324 Fund balances: Reserved for: Encumbrances 10,831,607 98,957,648 14,556,243 124,345,498 Inventories 2,825,603 - - 2,825,603 Taxicab investigations 56,992 - - 56,992 Liquor control 1,260,070 - - 1,260,070 Unexpended allotments - 41,662,350 - 41,662,350 Debt service (note 10) - - 22,818,943 22,818,943 Unreserved, reported in: General fund 44,603,975 - - 44,603,975 Special revenue funds - - 26,088,685 26,088,685 Capital projects funds - (20,101,369) - (20,101,369) Total fund balances 59,578,247 120,518,629 63,463,871 243,560,747 - Total liabilities and fund balances $81,323,416 $ 131,009,253 $ 71,801,402 $284,134,071 See accompanying notes to the basic financial statements. , -30- COUNTY OF HAWAII Reconciliation of the Governmental Funds Balance Sheet to the Statement of Net Assets June 30, 2009 Total fund balances - governmental funds $ 243,560,747 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 28,644,734 Infrastructure assets, net 226,557,289 Buildings and improvements, net 256,229,424 Equipment, net 49,486,543 Construction work in progress 100,347,656 Total capital assets 661,265,646 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) 15,404,923 Excess contributions over Other Postemployment Obligation (OPEB) 1,572,116 Some liabilities are not due and payable in the current period and therefore are not reported in the funds. Those liabilities consist of: Bonds and loans payable, net of receivable from improvement district (317,306,857) Accrued interest on bonds (6,446,974) Capital leases (4,179,805) Compensated absences (30,207,097) Claims and judgments (17,677,709) Landfill closure /postclosure costs (20,504,000) Total long -term liabilities (396,322,442) Net assets of governmental activities $ 525,480,990 See accompanying notes to the basic financial statements. - 31 - 0 COUNTY OF HAWAII 0. Governmental Funds ... Statement of Revenues, Expenditures, and Changes in Fund Balances 0. For the Fiscal Year Ended June 30, 2009 Other Total Capital Governmental Governmental General Projects Funds Funds .. Revenues Property tax $ 225,858,382 $ - $ - $225,858,382 Public service company tax 10,228,607 - - 10,228,607 Fuel tax - - 7,662,113 7,662,113 Public utility franchise tax - - 11,118,365 11,118,365 Licenses and permits 5,897,305 - 9,074,404 14,971,709 0 Intergovernmental 46,502,485 6,832,460 17,534,214 70,869,159 Charges for services 5,191,673 - 16,211,993 21,403,666 Investment earnings 8,833,653 - 80,302 8,913,955 Miscellaneous 3,511,776 80,684 2,097,601 5,690,061 Total revenues 306,023,881 6,913,144 63,778,992 376,716,017 Expenditures Current: General goverrunent 45,872,984 - 9,096 45,882,080 Public safety 101,343,315 - 6,196,238 107,539,553 Highways and streets 4,036,242 - 13,122,848 17,159,090 Sanitation 966,392 - 34,058,635 35,025,027 Health, education and welfare 7,086,707 - 17,508,830 24,595,537 Culture and recreation 17,827,992 - 1,025,514 18,853,506 Pension and retirement . contributions (note 13) 24,770,545 - 4,099,125 28,869,670 0. Employees' health insurance 17,540,502 - 1,578,724 19,119,226 Other post employment benefits 14,950,000 - - 14,950,000 Miscellaneous 5,518,545 - 738,496 6,257,041 Debt service: Principal 239,899 - 19,509,234 19,749,133 rt Interest 18,330 - 12,772,189 12,790,519 Capital outlay 3,341,887 86,025,796 - 89,367,683 Total expenditures 243,513,340 86,025,796 110,618,929 440,158,065 Excess (deficiency) of revenues over expenditures 62,510,541 (79,112,652) (46,839,937) (63,442,048) 0. (Continued) -32- COUNTY OF HAWAII Governmental Funds Statement of Revenues, Expenditures, and Changes in Fund Balances For the Fiscal Year Ended June 30, 2009 (Concluded) Other Total Capital Governmental Governmental General Projects Funds Funds Other Financing Sources (Uses), including transfers Sale of assets $ 58,253 $ - $ - $ 58,253 Increase in capital leases (notes 8 and 10) 32,086 - 994,080 1,026,166 State Revolving Fund loans (note 10) - 279,545 - 279,545 Sale of bonds (note 10) - 50,184,863 - 50,184,863 Transfers in (note 5) - 3,981,566 52,714,976 56,696,542 Transfers out (note 5) (52,834,783) - (3,861,759) (56,696,542) Total other financing sources (uses) (52,744,444) 54,445,974 49,847,297 51,548,827 Net change in fund balances 9,766,097 (24,666,678) 3,007,360 (11,893,221) Fund balance at beginning of year 48,870,351 145,185,307 60,456,511 254,512,169 Increase in reserve for inventories 941,799 - - 941,799 Fund balance at end of year $ 59,578,247 $ 120,518,629 $ 63,463,871 $ 243,560,747 See accompanying notes to the basic financial statements. - 33 - 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, 2009 Net change in fund balances - total governmental funds $ (11,893,221) 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: Capital outlay and dedicated property 79,222,942 Depreciation expense and loss on disposals p p p (26,626,745) Excess of capital outlay over depreciation expense 52,596,197 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 (50,000,000) Premium on bond issuance (184,863) Deferred amount on refunding of bonds - SRF loan obligations (279,545) Capital lease obligations (1,026,166) Total debt proceeds (51,490,574) 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 15,337,800 SRF loan repayment 2,958,443 Capital lease payments 1,452,888 Total long -term debt repayment 19,749,131 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. 2,328,726 (Continued) -34- PP 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, 2009 (Concluded) 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: Increase in inventory $ 941,799 Increase in Other Postemployment Obligation (OPEB) 1,572,116 Increase in compensated absences (2,237,036) Decrease in claims and judgments 1,810,702 Increase in landfill closure /postclosure care costs (254,000) Amortization of premium from bond issuance 275,628 Amortization of deferred amount on refunding of bonds (248,721) Net increase in accrued interest (1,151,355) Net additional expenditures 709,133 Change in net assets of governmental activities $ 11,999,392 See accompanying notes to the basic financial statements. - 35 - N. 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, 2009 Actual Variance Original Final (Budgetary Positive Budget Budget Basis) (Negative) Revenues: Taxes and assessments: Real property taxes $ 232,244,000 $ 232,244,000 $ 225,858,382 $ (6,385,618) Public service company taxes 8,305,000 8,305,000 10,228,607 1,923,607 '' Total taxes and assessments 240,549,000 240,549,000 236,086,989 (4,462,011) . Licenses and permits: . Nonbusiness licenses and permits 4,055,797 4,055,797 2,923,510 (1,132,287) Business licenses 1,711,576 1,711,576 1,483,723 (227,853) '*" Street use 1,635,000 1,635,000 1,490,072 (144,928).. Total licenses and permits 7,402,373 7,402,373 5,897,305 (1,505,068) Intergovernmental: Federal: Programs for the aged 2,374,410 2,613,683 1,442,623 (1,171,060) ..... Community development block grants - 3,047,364 3,047,364 - HOME program grant - 989,346 989,346 - Law enforcement 1,913,307 4,774,682 3,755,442 (1,019,240) Other 2,956,449 10,383,703 10,295,105 (88,598) ,., Total federal 7,244,166 21,808,778 19,529,880 (2,278,898) 0. State: State General Fund - Act 185, SLH 1990 20,110,000 20,110,000 17,388,813 (2,721,187) , Emergency medical services 13,565,711 13,565,711 12,892,433 (673,278) Other 4,584,851 6,273,655 5,055,502 (1,218,153) '` Total State 38,260,562 39,949,366 35,336,748 (4,612,618) . Total intergovernmental revenue 45,504,728 61,758,144 54,866,628 (6,891,516) .: Charges for current services: General government 4,299,995 4,299,995 3,965,584 (334,411) Culture and recreation 873,070 873,070 821,017 (52,053) ~" Highways and streets 242,500 242,500 308,582 66,082 Public safety 153,878 153,878 96,490 (57,388) Total charges for current services 5,569,443 5,569,443 5,191,673 (377,770) ` Fines and forfeitures 1,732,500 1,732,500 2,022,557 290,057 Rents 70,500 70,500 92,280 21,780 (Continued) -36- 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, 2009 Actual Variance Original Final (Budgetary Positive Budget Budget Basis) (Negative) Revenues (continued): Interest and penalties $ 6,650,000 $ 6,650,000 $ 8,405,247 $ 1,755,247 Miscellaneous 4,353,375 4,514,375 5,010,129 495,754 Total revenues 311,831,919 328,246,335 317,572,808 (10,673,527) Expenditures: Current: General government: Finance 13,610,016 13,613,118 11,195,484 2,417,634 General government building 6,241,167 6,295,776 4,725,814 1,569,962 Legislative 5,890,539 5,037,040 4,334,824 702,216 Automotive equipment 4,847,184 4,497,184 3,974,520 522,664 Law 3,093,616 3,093,616 2,833,941 259,675 Research and development 3,147,217 3,452,143 3,174,987 277,156 Planning and zoning 3,888,723 3,980,311 3,282,398 697,913 Mayor's office 1,888,537 2,069,037 1,945,433 123,604 Engineering 2,800,987 3,056,987 2,733,185 323,802 Data systems 1,578,029 1,578,029 1,382,435 195,594 Personnel services 2,1 16,180 2,123,956 1,910,184 213,772 Public works administration 1,308,145 1,310,905 1,163,362 147,543 Elections 1,348,672 1,348,672 902,189 446,483 Total general government 51,759,012 51,456,774 43,558,756 7,898,018 Public safety: Police department 50,798,492 52,323,657 49,002,870 3,320,787 Fire department 37,187,821 37,786,952 36,295,091 1,491,861 Prosecuting attorney 9,053,649 9,308,799 7,374,534 1,934,265 Protective inspection 2,489,170 2,437,441 2,114,199 323,242 Liquor control 1,663,076 1,707,576 1,283,145 424,431 Flood control 1,017,502 1,367,502 1,311,206 56,296 Civil defense agency 721,483 3,782,700 3,319,546 463,154 Animal control 2,051,119 2,070,119 2,070,119 - Total public safety 104,982,312 110,784,746 102,770,710 8,014,036 Highways and streets: Mass transit 4,983,244 5,971,056 5,854,975 116,081 (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, 2009 Actual Variance Original Final (Budgetary Positive Budget Budget Basis) (Negative) Expenditures (continued): Current (continued): Sanitation: Environmental management $ 1,676,793 $ 1,676,793 $ 890,516 $ 786,277 Health, education and welfare: Elderly activities 3,513,699 3,672,128 3,284,256 387,872 ' Office of Aging 2,692,827 2,814,413 1,490,057 1,324,356 Education 65,000 65,000 62,112 2,888 Social programs 1,500,000 1,500,000 1,500,000 - Cemeteries 354,134 378,109 362,656 15,453 Physical examination 133,825 133,825 133,825 - A,.. Total health, education and welfare 8,259,485 8,563,475 6,832,906 1,730,569 Culture and recreation: Community music 468,294 410,294 248,084 162,210 Organized recreation: ,._ Maintenance 7,702,799 7,720,065 7,240,271 479,794 Recreation 2,598,909 2,648,304 2,601,774 46,530 Aquatics 2,395,151 2,400,151 2,258,594 141,557 Hoolulu Park complex 987,848 990,048 955,546 34,502 Administration 3,250,052 3,232,751 2,484,442 748,309 Children's zoo 673,327 700,327 676,530 23,797 "" Summer/Intersession 498,365 507,415 300,947 206,468 Culture and arts 161,979 225,179 208,072 17,107 0. Elderly activities administration 725,798 737, 123 592, 169 144,954 Total culture and recreation 19,462,522 19,571,657 17,566,429 2,005,228 Pension and retirement contributions 25,637,204 25,637,204 24,562,221 1,074,983 w• Health fund 33,750,000 32,776,000 32,490,502 285,498 Miscellaneous 5,236,000 6,072,066 4,117,033 1,955,033 Total current 255,746,572 262,509,771 238,644,048 23,865,723 P. (Continued) 4 " -38- 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, 2009 (Concluded) Actual Variance Original Final (Budgetary Positive Budget Budget Basis) (Negative) Expenditures (continued): Capital Outlay: Community Development Block grants (HUD) $ - $ 3,107,364 $ 3,107,364 $ - HOME Program - 1,014,346 989,484 24,862 Other - 5,374,200 5,374,200 - Total capital outlay - 9,495,910 9,471,048 24,862 Total expenditures 255,746,572 272,005,681 248,115,096 23,890,585 Excess of revenues over expenditures 56,085,347 56,240,654 69,457,712 13,217,058 Other financing uses: Transfers out: Sewer Fund - - - - Capital Projects Fund - (119,807) (119,807) - Housing Fund (1,501,860) (1,516,860) (1,516,860) - Solid Waste Fund (19,147,721) (19,150,221) (19,150,221) - Golf Course Fund (433,418) (433,418) (433,418) - Highway Fund - (18,000) (18,000) - Self Insurance Fund (1,000,000) (1,000,000) (1,000,000) - Disaster/Emergency Fund (1,000,000) (1,000,000) (1,000,000) - Public Access, Open Space, and Natural Resources Preservation Fund (4,738,000) (4,738,000) (4,517,173) 220,827 Budget Stabilization Fund (1,000,000) (1,000,000) (1,000,000) - Debt Service Fund (43,379,348) (43,379,348) (35,151,414) 8,227,934 Total transfers out (72,200,347) (72,355,654) (63,906,893) 8,448,761 Total other financing uses (72,200,347) (72,355,654) (63,906,893) 8,448,761 Excess (deficiency) of revenues and other sources over (under) expenditures and other uses (16,115,000) (16,115,000) 5,550,819 21,665,819 Fund balance at beginning of year 48,870,351 48,870,351 48,870,351 - Fund balance at end of year $ 32,755,351 $ 32,755,351 $ 54,421,170 $ 21,665,819 See accompanying notes to the basic financial statements. -39- COUNTY OF HAWAII Proprietary Funds Statement of Net Assets June 30, 2009 Business -type Activities - Enterprise Funds Kulaimano Ouli Ekahi Elderly Affordable Housing Housing Project Project Total Assets Current assets: Cash and cash equivalents (note 3) $ - $ 196,995 $ 196,995 Restricted cash and cash equivalents (note 3) 11,703 22,141 33,844 Investments (note 3) 700,000 - 700,000 Imprest fund (note 3) 50 100 150 Receivables (note 4) 7,536 51,287 58,823 .. Prepaid expenses 1,550 - 1,550 ,. Total current assets 720,839 270,523 991,362 Noncurrent assets: Restricted cash and cash equivalents (note 3) 184,643 14,844 199,487 Capital assets (note 6): Land and site improvements 511,000 503,877 1,014,877 Buildings and equipment 1,233,943 - 1,233,943 Less accumulated depreciation (999,569) - (999,569) Total capital assets 745,374 503,877 1,249,251 Total noncurrent assets 930,017 518,721 1,448,738 Total assets 1,650,856 789,244 2,440,100 ` Liabilities 0. Current liabilities: Bank overdraft 3,402 - 3,402 Accounts payable 1,115 346,208 347,323 Internal balances (note 5) 1,350 - 1,350 Due to developer - 7,729 7,729 Security deposits payable from restricted assets 11,703 20,770 32,473 Deferred revenue (note 7) 2,593 1,538 4,131 Notes payable, current portion (note 10) 28,734 - 28,734 Total current liabilities 48,897 376,245 425,142 Noncurrent liabilities: Notes payable (note 10) 915,390 - 915,390 Total liabilities 964,287 376,245 1,340,532 Net Assets Invested in capital assets, net of related debt (198,750) 503,877 305,127 Restricted for debt service 184,643 - 184,643 Unrestricted 700,676 (90,878) 609,798 Total net assets $ 686,569 $ 412,999 $ 1,099,568 See accompanying notes to the basic financial statements. -40- co COUNTY OF HAWAII Proprietary Funds Statement of Revenues, Expenses, and Changes in Fund Net Assets For the Fiscal Year Ended June 30, 2009 Business -type Activities - Enterprise Funds Kulaimano Ouli Ekahi Elderly Affordable Housing Housing Project Project Total Operating revenues: Rental receipts from tenants $ 110,408 $ 254,060 $ 364,468 Rental subsidy from federal government - HUD 135,674 - 135,674 Laundry receipts 2,778 - 2,778 Miscellaneous - 4,265 4,265 Total operating revenues 248,860 258,325 507,185 Operating expenses: Utilities 34,799 32,836 67,635 General and administration 87,122 116,540 203,662 Maintenance and repairs 57,046 53,535 110,581 Lease expense - 42,225 42,225 Depreciation (note 6) 34,055 - 34,055 Total operating expenses 213,022 245,136 458,158 Operating income 35,838 13,189 49,027 Nonoperating revenues (expenses): Investment income 17,848 13 17,861 Interest expense (67,144) - (67,144) Loss on disposal of fixed assets (147) - (147) Total nonoperating revenue (expenses) (49,443) 13 (49,430) Change in net assets (13,605) 13,202 (403) Net assets, beginning of year 700,174 399,797 1,099,971 Net assets, end of year $ 686,569 $ 412,999 $ 1,099,568 See accompanying notes to the basic financial statements. - 41 - COUNTY OF HAWAII Proprietary Funds Statement of Cash Flows For the Fiscal Year Ended June 30, 2009 Business -type Activities - Enterprise Funds Kulaimano Ouli Ekahi iw Elderly Affordable Housing Housing Project Project Total Cash Flows from Operating Activities Receipts from tenants $ 110,558 $ 257,678 $ 368,236 Receipts from federal government - HUD 135,674 - 135,674 ,. Payments to suppliers for goods and services (184,376) (257,528) (441,904) Net cash provided by (used in) operating activities 61,856 150 62,006 Cash Flows from Capital and Related Financing Activities Principal paid on notes payable (26,768) - (26,768) Interest paid on notes payable (67,144) - (67,144) w Purchase of capital assets (5, 137) - (5,137) Net cash used in capital and related financing activities (99,049) - (99,049) OW Cash Flows from Investing Activities Purchase of investments (1,400,000) - (1,400,000) Proceeds from maturities of investments 1,400,000 - 1,400,000 Interest on investments 17,894 17 17,911 Net cash provided by investing activities 17,894 17 17,911 Net increase (decrease) in cash and cash equivalents (19,299) 167 (19,132) Cash and cash equivalents at beginning of year 212,293 233,913 446,206 w. Cash and cash equivalents at end of year $ 192,994 $ 234,080 $ 427,074 Reconciliation of Operating (Loss) Income to Net Cash ,, Provided by (Used in) Operating Activities Operating (loss) income $ 35,838 $ 13,189 $ 49,027 Adjustments to reconcile operating loss to net cash provided by (used in) operating activities: w Depreciation expense 34,055 - 34,055 Change in assets and liabilities: Receivables 144 (1,559) (1,415) Prepaid expenses (76) - (76) Accounts and other payables (5,486) (11,400) (16,886) Unearned income (2,619) (80) (2,699) w. Net cash provided by (used in) operating activities $ 61,856 $ 150 $ 62,006 Supplemental disclosure of cash flow information - Interest paid $ 67,144 $ - $ 67,144 See accompanying notes to the basic financial statements. -42- COUNTY OF HAWAII Fiduciary Funds Statement of Fiduciary Net Assets June 30, 2009 Private - Purpose Agency Trusts Funds Assets Cash and cash equivalents (note 3) $ 3,864,164 $ 4,761,222 Investments (note 3) 815,560 1,421,046 Receivables: Due from other agency funds - 1,082 Other receivables 649 263,327 Total receivables 649 264,409 Restricted cash and cash equivalents (note 3) - 637,000 Total assets 4,680,373 $ 7,083,677 Liabilities Due to other agency funds - 1,082 Accrued liabilities - 3,520,224 Advances payable - 325,634 Assets held for benefit of improvement districts - 3,236,737 Total liabilities - $ 7,083,677 Net Assets Held in trust for other parties 4,680,373 Total net assets $ 4,680,373 See accompanying notes to the basic fmancial statements. - 43 - COUNTY OF HAWAII Fiduciary Funds Statement of Changes in Fiduciary Net Assets For the Fiscal Year Ended June 30, 2009 Private - Purpose Trusts a= Additions Contributions: Puna Geothermal Venture $ 50,000 Investment earnings: Net decrease in fair value of investments (156,886) Dividends 49,705 Interest 75,889 Total additions 18,708 Deductions Appraisal fees 90,604 Total deductions 90,604 Change in net assets (71,896) Net assets, beginning of year 4,752,269 Net assets, end of year $ 4,680,373 See accompanying notes to the basic financial statements. 1 -44- COUNTY OF HAWAII Notes to the Basic Financial Statements June 30, 2009 The accounting policies of the County of Hawai`i (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; culture and recreation; pension and retirement contributions; health fund; miscellaneous; capital outlay; and debt service. The State of Hawai`i (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 primary 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 Hawai`i (the primary government) and its component unit, - 45 - COUNTY OF HAWAII Notes to the Basic Financial Statements June 30, 2009 the Department of Water Supply (the Department). This component unit is included in the County's reporting entity because of its financial relationship with the County. Discretely Presented Component Unit The component unit column in the basic financial statements includes the financial data of 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 PO 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 14 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, Hawai`i 96720. 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. iwk 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. -46- COUNTY OF HAWAII Notes to the Basic Financial Statements June 30, 2009 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 government, 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 financial 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 - 47 - COUNTY OF HAWAII Notes to the Basic Financial Statements June 30, 2009 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. The County reports the following major governmental funds: 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. 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 financed by proprietary funds and trust funds) when separate project centers are needed to control lot 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: 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 Hawai` -48- COUNTY OF HAWAII Notes to the Basic Financial Statements June 30, 2009 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 generally not measurable until actually received. State Revolving Fund loan proceeds are considered available when collected. - 49 - COUNTY OF HAWAII Notes to the Basic Financial Statements June 30, 2009 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 earlier 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, the County applies all applicable GASB pronouncements as well as the following pronouncements issued on or before November 30, 1989, unless those pronouncements 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 Accounting Procedures. Encumbrances The general, special revenue, and capital projects funds follow encumbrance accounting under which purchase orders, contracts and other commitments are 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. -50- COUNTY OF HAWAII Notes to the Basic Financial Statements June 30, 2009 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 financial institutions and bank repurchase agreements with original maturities exceeding three months. Included are participating investment contracts (U.S. government sponsored agency issues and negotiable certificates of deposit) as well as nonparticipating 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 based on closing quoted prices. Real Property Taxes The County's real property taxes are levied on 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 are stated at average cost. Liquor Control Section 281 of the Hawai`i 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, 2009 of $1,260,070 are reflected as a reserve of general fund balance. - 51 - COUNTY OF HAWAII Notes to the Basic Financial Statements June 30, 2009 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 and improvements 50 years 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. -52- Oro COUNTY OF HAWAII Notes to the Basic Financial Statements June 30, 2009 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 of one - 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 years, 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 Hawai` i. Accumulated sick leave at June 30, 2009 totaled $62,073,088 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 as long -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 Hawai`i 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). - 53 - COUNTY OF HAWAII Notes to the Basic Financial Statements June 30, 2009 Operating Revenues and Expenses Revenues and expenses are 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 the proprietary funds are fees charged to residents for rent and rental subsidies received from the federal government. 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 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. 2. STEWARDSHIP, COMPLIANCE AND ACCOUNTABILITY Annual Budget 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 year 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. A project - length budget is submitted to the County Council for the capital projects fund. • The Mayor submits to the County Council amendments to the proposed operating and 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. •u • 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 department or agency without County ` ' -54- COUNTY OF HAWAII Notes to the Basic Financial Statements June 30, 2009 Council approval. During the year, 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 2008 -2009 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 $16.4 million in the general fund and $7.4 million in the special revenue funds. Legally adopted budgets include the General Fund, Highway Fund, Sewer Fund, Solid Waste Fund, Cemetery Fund, Parking 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. - 55 - COUNTY OF HAWAII Notes to the Basic Financial Statements June 30, 2009 Budget to GAAP Reconciliation The following is a summary of the adjustments necessary to convert fund balances of the County's general fund from a GAAP basis to a budgetary basis at June 30, 2009: General Fund Ending fund balance — GAAP basis $59,578,247 Encumbrance adjustments: Beginning encumbrances and unexpended allotments 14,465,089 Ending encumbrances and unexpended allotments (10,831,607) Other adjustments (8,790,559) Ending fund balance — Non -GAAP budgetary basis $54,421,170 3. CASH AND INVESTMENTS The Director of Finance is responsible for the safekeeping of all monies paid to the County. 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 certificates of deposit, and repurchase agreements with federally insured financial institutions. Cash The County maintains 27 checking and savings accounts for various funds and with various financial institutions. 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 government sponsored securities with original maturities of three months or less. The carrying amount of the County's unrestricted and restricted deposits (cash, time certificates of deposit, and money market accounts) as of June 30, 2009 was $127,248,696 and $233,331, respectively, for the primary government and $8,625,386 and $637,000, respectively, for the fiduciary funds. 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 $240,843,002 at June 30, 2009. Of that amount, $240,642,535 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 $200,467 represent deposits held by a management agent and were uncollateralized. Accordingly, these -56- tP COUNTY OF HAWAII Notes to the Basic Financial Statements June 30, 2009 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 government sponsored securities (all rated AAA) and certificates of deposit, while equity securities and certificates of deposit are held by the fiduciary fund. The County's investments and maturities at June 30, 2009 are as follows: Maturity (in years) Fair Value Less than 1 1 — 5 Investments — Primary Government: Certificates of deposit $ 92,310,326 $ 55,476,267 $36,834,059 Government sponsored securities 24,999,897 24,999,897 -- $117,310,223 $ 80,476,164 $36,834,059 Investments — Fiduciary Funds: Certificates of deposit $ 1,421,046 $ 198,003 $1,223,043 Government sponsored securities -- -- -- $ 1,421,046 $ 198,003 $1,223,043 Equity securities $ 815. 6600 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 a Triple -A rating. 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 - 57 - COUNTY OF HAWAII Notes to the Basic Financial Statements June 30, 2009 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 Risk: 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 $870,331 at June 30, 2009 and consist of the following: Primary government $233,331 Fiduciary funds 637,000 $870,331 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 $11,703 and $22,141, respectively, at June 30, 2009. Restricted amounts set aside by the Kulaimano Elderly Housing Project under its loan agreement with the Farmers Home Administration totaled $184,643 at June 30, 2009. 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 Ekahi Affordable Housing Project pursuant to an agreement with the developer of the project. This restricted reserve amounted to $14,844 at June 30, 2009. The Improvement District No. 17 Fund has restricted $637,000 as a bond reserve at June 30, 2009 to comply with the requirements of its Kaloko Subdivision bond issuance. 0. -58 - COUNTY OF HAWAII Notes to the Basic Financial Statements June 30, 2009 4. RECEIVABLES Receivables as of June 30, 2009, 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: Capital Nonmajor General Projects Governmental Fund Fund Funds Total Receivables: Real property taxes $12,941,034 $ -- $ -- $12,941,034 Accounts receivable: Sewer -- -- 2,045,682 2,045,682 Solid waste -- -- 2,172,295 2,172,295 Capital projects -- 723,958 -- 723,958 Intergovernmental 8,251,229 9,091,346 1,185,247 18,527,822 Gross receivables 21,192,263 9,815,304 5,403,224 36,410,791 Less: allowance for uncollectibles -- -- (1,754,090) (1,754,090) Net total receivables $21,192,263 $9,815,304 $3,649,134 $34,656,701 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, 2009, the outstanding balance of $3,320,754 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 $56,342 Other 2,481 Gross receivables 58,823 Less: allowance for uncollectibles -- Net total receivables $58,823 - 59 - COUNTY OF HAWAII Notes to the Basic Financial Statements June 30, 2009 5. INTERFUND RECEIVABLES AND PAYABLES Interfund receivables and payables consist of the following at June 30, 2009: Receivable Fund Payable Fund Amount General fund Capital projects fund $ 223,908 Other governmental funds 519,424 743,332 Capital projects Fund Other governmental funds 302,647 Other governmental funds General fund 41,831 Capital projects fund 35,644 Other governmental funds 564,886 642,361 Total $1,688,340 Other governmental funds Enterprise funds $ 1,350 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, 2009 consisted of the following: Transfers out: Nonmajor General Governmental Fund Funds Total Transfers in: Capital projects fund $ 119,807 $3,861,759 $ 3,981,566 Nonmajor governmental funds 52,714,976 -- 52,714,976 $52,834,783 $3,861,759 $56,696,542 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. -60- V. COUNTY OF HAWAII Notes to the Basic Financial Statements June 30, 2009 6. CAPITAL ASSETS Capital asset activity for the year ended June 30, 2009 for the County was as follows: Balance Balance June 30, Retirements/ June 30, 2008 Additions Transfers 2009 Governmental activities: Capital assets not being depreciated: Land $ 28,187,574 $ 458,861 $ (1,701) $ 28,644,734 Construction work in progress 125,041,851 62,743,166 (87,437,361) 100,347,656 Total capital assets not being depreciated 153,229,425 63,202,027 (87,439,062) 128,992,390 Capital assets being depreciated: Buildings and improvements 299,254,547 13,329,303 -- 312,583,850 Equipment 97,097,037 10,941,241 (4,439,719) 103,598,559 Infrastructure 288,867,562 79,187,732 -- 368,055,294 Total capital assets being depreciated 685,219,146 103,458,276 (4,439,719) 784,237,703 Less accumulated depreciation for: Buildings and improvements (52,236,326) (4,118,100) -- (56,354,426) Equipment (51,590,316) (6,651,898) 4,130,198 (54,112,016) Infrastructure (125,952,480) (15,545,525) -- (141,498,005) Total accumulated depreciation (229,779,122) (26,315,523) 4,130,198 (251,964,447) Total capital assets, being depreciated, net 455,440,024 77,142,753 (309,521) 532,273,256 Governmental activities capital assets, net $608,669,449 $140,344,780 ($87,748,583) $661,265,646 - 61 - COUNTY OF HAWAII Notes to the Basic Financial Statements June 30, 2009 Balance Balance June 30, Retirements/ June 30, 2008 Additions Transfers 2009 Business -type activities: Capital assets not being depreciated: Land $ 753,877 $ -- $ -- $ 753,877 Capital assets being depreciated: Buildings and improvements 1,136,008 -- -- 1,136,008 Ground and site improvements 261,000 -- -- 261,000 Equipment 96,041 5,138 (3,244) 97,935 Total capital assets being depreciated 1,493,049 5,138 (3,244) 1,494,943 Less accumulated depreciation for: Buildings and improvements (707,819) (24,614) -- (732,433) Ground and site improvements (178,402) (3,755) -- (182,157) Equipment (82,389) (5,686) 3,096 (84,979) Total accumulated depreciation (968,610) (34,055) 3,096 (999,569) Total capital assets, being depreciated, net 524,439 (28,917) (148) 495,374 Business -type activities capital assets, net $1,278,316 ($28,917) ($148) $1,249,251 -62- COUNTY OF HAWAII Notes to the Basic Financial Statements June 30, 2009 Depreciation expense was charged to functions /programs of the primary government as follows: Governmental activities: General government $ 1,994,736 Public safety 2,319,813 Highways and streets 17,090,062 Sanitation 3,345,552 Health, education and welfare 352,523 Culture and recreation 1,212,837 Total depreciation expense — governmental activities $26,315,523 Business -type activities: Kulaimano Elderly Housing Project $34,055 Total depreciation expense — business -type activities $34,055 7. DEFERRED REVENUE Deferred revenue consists of the following at June 30, 2009 Capital Other Total General Projects Governmental Governmental Fund Fund Funds Funds Real property taxes $ 13,282,484 $ -- $ -- $ 13,282,484 Liquor control revenue 183,700 -- -- 183,700 Sewer revenue -- -- 1,164,768 1,164,768 Housing revenue -- -- 254,159 254,159 Solid waste revenue -- -- 1,311,117 1,311,117 Intergovernmental 2,318,052 5,536,903 -- 7,854,955 Total presented in fund financial statements 15,784,236 5,536,903 2,730,044 24,051,183 Less adjustments for accrual of revenues (12,941,035) -- (2,463,887) (15,404,922) Total government - wide financial statements $ 2,843,201 $5,536,903 $ 266,157 $ 8,646,261 Enterprise Funds Unearned rental income 4 1 - 63 - COUNTY OF HAWAII Notes to the Basic Financial Statements June 30, 2009 8. LEASES The County leases machinery and equipment under noncancellable leases expiring at various dates through November 2014 which meet the criteria for capitalization. These capital leases are financed from the resources of various funds. The estimated value of the leased machinery and equipment at the inception of the capital leases and accumulated depreciation, amounting to $13,495,247 and $5,424,834, respectively, and the related present value of the remaining obligations under the capital leases amounting to $4,179,805 at June 30, 2009 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 $3,067,342 for the fiscal year ended June 30, 2009. The future minimum obligations under capital and operating leases at June 30, 2009 are as follows: Governmental Activities - Capital Operating a: Leases Leases Year Ending June 30: 2010 $1,544,296 $2,936,527 2011 1,234,927 2,755,452 2012 1,074,222 1,647,020 2013 405,127 1,451,303 2014 139,240 909,894 2015 — 2019 2,398 2,987,916 2020 - 2022 -- 393 Total minimum lease payments 4,400,210 $12,688,505 Less amount representing interest (220,405) Obligations under capital leases $4,179,805 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 years 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 -64- COUNTY OF HAWAII Notes to the Basic Financial Statements June 30, 2009 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, 2009, the County recognized a liability of $12,349,000, based on the use of 90% of the estimated capacity of the landfill. During the fiscal year ended June 30, 2009, $37,614 was spent on closure of the landfill. The remaining $1,421,161 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 2009. 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, 2009 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 2009. Actual costs may be higher due to inflation, changes in technology, or changes in regulations. Through June 30, 2009, $7,094,605 was spent on closure and postclosure care of the landfill. The remaining estimated liability of $8,155,000 is included in the government -wide statement of net assets. During the year ended June 30, 2009, $138,258 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'uanahulu 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. - 65 - COUNTY OF HAWAII Notes to the Basic Financial Statements June 30, 2009 Financial Assurance For fiscal year 2009, the County has provided for financial resources that will be available to provide for closure, postclosure care and remediation or containment 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 a the annual test. Management believes that the County has satisfied each of the components of the local government financial assurance requirements. 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, 2009: Bonds Issue Bond Balance Bond Balance Due Within Authorized Amount June 30, 2008 Issues Retirements June 30, 2009 One Year 1993 Ref & PI $86,770,000 $ 26,740,000 $ -- ($ 4,790,000) $ 21,950,000 $ 5,045,000 1999 Series A 30,000,000 1,535,000 -- (1,535,000) -- -- 2001 Series A 23,000,000 2,025,000 -- (645,652) 1,379,348 675,000 2003 Series A 36,310,000 33,400,000 -- (1,505,000) 31,895,000 1,550,000 2004 Series A 30,000,000 28,870,000 -- (1,165,000) 27,705,000 1,200,000 2004 Ref Series B 19,545,000 16,280,000 -- (1,735,000) 14,545,000 1,810,000 2004 Ref Series C 5,050,140 3,680,376 -- (479,648) 3,200,728 493,484 2004 PI Series A 2,776,400 2,706,136 -- (346,855) 2,359,281 39,443 2004 PI Series B 920,000 894,972 -- (13,341) 881,631 13,925 n 2004 PI Series C 191,093 118,027 -- (38,185) 79,842 39,331 2006 Series A 25,000,000 24,242,500 -- (797,500) 23,445,000 837,500 2007 Series A 85,000,000 85,000,000 -- (2,685,000) 82,315,000 2,790,000 2007 Series B 20,820,000 20,820,000 -- -- 20,820,000 1,705,000 2007 Series C 10,787,388 10,787,388 -- -- 10,787,388 -- 2008 Series A 50,000,000 -- 50,000,000 -- 50,000,000 -- 426,170,021 257,099,399 50,000,000 (15,736,181) 291,363,218 16,198,683 Add unamortized premium 5,605,017 4,588,948 184,863 (275,630) 4,498,181 280,251 Less deferred amount on refunding (2,828,759) (2,179,799) -- 248.722 (1,931,077) ( 248,722) U28,946,279 $259,508,548 $50,184,863 ($15,763,089) $293,930,322 $16,230,212 ro - 66 - , COUNTY OF HAWAII Notes to the Basic Financial Statements June 30, 2009 General obligation bonds payable reported on the government -wide statement of net assets at June 30, 2009 are comprised of the following individual issues: Public improvement and /or refunding bonds: 1993 Refunding & PI at 5.5% to 5.6 %, due through 2013 $ 21,950,000 2001 Series A at 4.0% to 4.5 %, due through 2010 1,379,348 2003 Series A at 2.0% to 5.125 %, due through 2023 31,895,000 2004 Series A at 3.0% to 5.25 %, due through 2024 27,705,000 2004 Refunding Series B at 3.5% to 5.0 %, due through 2015 14,545,000 2004 Refunding Series C at 2.5% to 3.7 %, due through 2014 3,200,728 2004 PI Series A at 4.75 %, due through 2039 2,359,281 2004 PI Series B at 4.375 %, due through 2039 881,631 2004 PI Series C at 3.0 %, due through 2010 79,842 2006 Series A at 4.0% to 5.0 %, due through 2026 23,445,000 2007 Series A at 4.0% to 5.0 %, due through 2027 82,315,000 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 2008 Series A at 4.0% to 5.75 %, due through 2028 50,000,000 Total general obligation bonds payable $291,363,218 Annual debt service requirements to maturity for the above general obligation bonds are as follows: Governmental Activities Fiscal year ending June 30: Principal Interest 2010 $ 16,198,683 $ 13,766,607 2011 18,615,530 12,744,016 2012 19,492,789 11,887,703 2013 20,401,566 10,968,543 2014 15,115,470 9,980,949 2015 — 2019 76,648,392 38,923,628 2020 — 2024 73,216,883 21,492,182 2025 — 2029 50,134,446 5,564,823 2030 — 2034 727,535 275,543 2035 — 2039 762,022 88,812 2040 49,902 1,094 Total $291,363,218 $125,693,900 Bond Premiums At June 30, 2009, total unamortized bond premiums were $4,498,181, which are being amortized over the remaining life of the respective bond issues. - 67 - COUNTY OF HAWAII Notes to the Basic Financial Statements June 30, 2009 Bonds Authorized and Unissued The County Council has authorized the issuance of $209.6 million in general obligation bonds to finance specified capital improvement projects. At June 30, 2009, $119.6 million was not yet issued. „, Subsequent Events On October 9, 2009, the County issued a $5,000,000 general obligation bond anticipation note (Series A, Note R -1). The note carries a fixed rate of 1.25% and matures on February 25, 2010. In addition, on December 3, 2009, the County Council authorized the issuance of $31,000,000 in general obligation bonds for the Department to finance specified capital improvement projects. . 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 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 transactions for the fiscal year ended June 30, 2009: Loans Approved Loan Balance Loan Balance Due Within Authorized Amount June 30, 2008 Additions Retirements June 30, 2009 One Year Hilo WWTP $12,724,311 $ 3,837,591 $ -- ($ 730,089) $ 3,107,502 $ 748,342 Waiakea Mill 1,300,000 462,978 -- (72,479) 390,499 74,291 Waiakea Houselots 459,321 139,094 -- (26,462) 112,632 27,124 p. Waiakea Houselots II 5,024,266 3,228,475 -- (257,062) 2,971,413 263,830 Ainako A &B 2,239,174 842,286 -- (122,364) 719,922 124,898 Kalanianaole 1,499,944 690,606 -- (83,548) 607,058 86,090 ,., Kalanianaole RH 5,000,000 1,407,216 6,834 (71,387) 1,342,663 72,619 Alii Drive A &B 3,210,243 1,185,072 -- (183,819) 1,001,253 188,964 Alii Drive C &D 3,780,000 1,635,462 -- (203,973) 1,431,489 208,196 Alii Drive E &F 2,112,654 1,060,971 -- (118,911) 942,060 122,530 ror Waiaha Bay 3,697,893 1,662,691 -- (202,258) 1,460,433 207,921 Kealakehe 1,300,071 462,134 -- (72,346) 389,788 74,156 Holualoa Bay 3,080,000 1,583,614 -- (166,029) 1,417,585 171,081 PaukaaCCS 2,143,448 1,348,577 -- (108,643) 1,239,934 111,182 Cesspool Conversion 8,908,035 7,788,575 272,711 (405,356) 7,655,930 420,046 Pahoehoe 2,817,760 2,040,844 -- (133,717) 1,907,127 137,238 559,297,120 $29,376,186 $ 279,545 (52,958,443) $26,697,288 $3,038,508 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: -68- to COUNTY OF HAWAII Notes to the Basic Financial Statements June 30, 2009 Governmental Activities Fiscal year ending June 30: Principal Interest 2010 $ 3,038,508 $ 810,019 2011 3,107,840 733,752 2012 3,179,202 655,298 2013 3,252,674 569,926 2014 2,473,811 413,893 2015 — 2019 7,388,369 886,514 2020 — 2024 3,070,684 159,184 2025 — 2027 1,186,200 13,651 Total $26,697,288 $4,242,237 Other General Long -Term Obligations The following is a summary of other general long -term obligations transactions for the fiscal year ended June 30, 2009: Balance Deductions Balance Due Within June 30, 2008 Additions and Payments June 30, 2009 One Year Governmental activities: Compensated absences $27,970,061 $13,681,933 ($11,444,897) $30,207,097 $8,278,701 Claims and judgments (see Note 12) 19,488,411 3,928,102 (5,738,804) 17,677,709 3,611,994 Capital leases (see Note 8) 4,606,527 1,026,166 (1,452,888) 4,179,805 1,427,134 Landfill costs payable (see Note 9) 20,250,000 254,000 -- 20,504,000 183,380 Total $72,314,999 $18,890,201 ($18,636,589) $72,568,611 $13,501,209 Fund Balances - Debt Service Funds The fund balance in the debt service funds at June 30, 2009 includes $21,202,480, which is available for principal payments on general obligation bonds and $1,616,463, 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 $944,124 at June 30, 2009. 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 - 69 - COUNTY OF HAWAII Notes to the Basic Financial Statements June 30, 2009 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, 2009: Balance at June 30, 2008 $970,892 Deductions (26,768) Balance at June 30, 2009 944,124 Less current portion (28,734) Note payable, net of current portion $ 915,390 The following is a summary of the annual maturities for the enterprise fund notes payable: Business -type Activities Fiscal year ending June 30: Principal Interest 2010 $ 28,734 $ 65,178 2011 30,811 63,101 2012 33,038 60,874 2013 35,426 58,486 2014 37,987 55,925 2015 — 2019 235,320 234,240 2020 — 2024 333,596 135,964 2025 — 2027 209,212 18,895 Total $944,124 $692,663 Special Assessment Bonds 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 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 $2,485,000 at June 30, 2009. These are not 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, 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 -70 - COUNTY OF HAWAII Notes to the Basic Financial Statements June 30, 2009 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, 2009: Balance at June 30, 2008 $3,200,000 Deductions (715,000) Balance at June 30, 2009 $2,485,000 The following is a summary of the annual maturities for the special assessment bonds: Year ending June 30: Principal Interest 2010 $ 770,000 $154,875 2011 825,000 96,059 2012 890,000 32,819 Total $2,485,000 $283,753 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 $3,320,754 at June 30, 2009. 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, 2009: Balance at June 30, 2008 $3,719,135 Additions -- Deductions (398,381) Balance at June 30, 2009 $3,320,754 -71 - COUNTY OF HAWAII Notes to the Basic Financial Statements June 30, 2009 The following is a summary of the annual maturities for the improvement district general obligation bonds: Year ending June 30: Principal Interest 2010 $ 92,699 $ 151,201 2011 96,361 147,463 2012 58,449 144,196 2013 61,168 141,414 2014 64,015 138,501 2015 — 2019 367,628 643,843 2020 — 2024 461,527 547,755 2025 — 2029 579,446 427,087 2030 — 2034 727,537 275,544 2035 — 2039 762,021 88,812 2040 49,903 1,092 Total $3,320,754 $2,706,908 11. COMMITMENTS AND CONTINGENCIES Contractual commitments — Contractual commitments for capital projects, expenses, and supplies at June 30, 2009, 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 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. In the opinion of management of the County, disallowed costs, if any, would not 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, the resolution of such matters will not have a material adverse affect on the financial condition of the County. 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 relating to curb cuts, the County, with the help of a consultant, surveyed 669 intersections, -72 - COUNTY OF HAWAII Notes to the Basic Financial Statements June 30, 2009 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 Revised Transition Plan to satisfy the requirements of the ADA. In addition, the County's - 73 - COUNTY OF HAWAII Notes to the Basic Financial Statements June 30, 2009 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 the procedures for these requests have been finalized, but they have not been publicized in the newspaper and other media formats (including internet access). 12. RISK MANAGEMENT The County is exposed to various risks of losses related to torts; theft of, damage to, and 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 the majority of its vehicles as well as for all 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 can be reasonably estimated. These losses include an estimate of claims that have been s incurred but not reported (IBNR). Claim liabilities, including IBNR, are 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, 2009, the amount of this liability was $17,677,709. This is the County's best estimate based on available information. Changes in the reported liability since June 30, 2007 are given below. General Workers' Total Liability Compensation Liability 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 (1,481,697) (2,605,626) (4,087,323) Balance at June 30, 2008 $8,257,472 $11,230,939 $19,488,411 Incurred claims (including IBNR)* 1,346,633 2,581,469 3,928,102 Claim payments (3,157,335) (2,581,469) (5,738,804) Balance at June 30, 2009 $6,446,770 $11,230,939 $17,677,709 *Net of new claims liability and old claims resolved at less than previous estimate. -74- COUNTY OF HAWAII Notes to the Basic Financial Statements June 30, 2009 13. EMPLOYEE BENEFIT PLANS Pension Plan Plan description All eligible employees of the County are required by Chapter 88 of the Hawai` i Revised Statutes (HRS) to become members of the Employees' Retirement System of the State of Hawai`i (the ERS), a cost - 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: - 75 - COUNTY OF HAWAII Notes to the Basic Financial Statements June 30, 2009 ContributoryPlan 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 years of credited service, or may retire early at any age with at least 25 years of credited service and reduced benefits. The benefit multiplier is 2.0% for employees covered by Social Security. Police officers, fire fighters and certain other members that are not covered by Social Security contribute 12.2% of their salary and receive a retirement benefit using the benefit multiplier of 2.5% 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 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 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 years of credited service. The County is required to make all 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 normal actuarial cost method. Effective July 1, 2005, employer contribution rates are a fixed percentage of compensation, including the normal cost plus amounts required to pay for the unfunded actuarial accrued liability. Employers contribute 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. The required pension contributions by the County for the years ended June 30, 2009, 2008, and 2007 were $22,334,894, $18,222,311 and $16,337,218, respectively, which equal the -76- COUNTY OF HAWAII Notes to the Basic Financial Statements June 30, 2009 required contributions for each year. 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, Hawai`i 96813. Post - Retirement Benefits In addition to providing pension benefits, the County is required by state statute (HRS Chapter 87A) to contribute to the Hawai` i 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 healthcare 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 after June 30, 1996, 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. For employees hired after 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. For active employees, the employee's contributions are based upon negotiated collective bargaining agreements. Employer contributions for employees not covered by collective bargaining agreements and for retirees are prescribed by the HRS. - 77 - COUNTY OF HAWAII Notes to the Basic Financial Statements June 30, 2009 The County's annual other postemployment benefit (OPEB) cost is calculated based on the annual required contribution (ARC) of the employer, which is an amount actuarially determined in accordance with the parameters 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 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 rate is 18.4% of annual covered payroll. The following section shows the County's Annual OPEB cost for the year ended June 30, 2009, 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 (24,919,803) Increase in net OPEB obligation (asset) (1,493,803) Net OPEB obligation (asset)- beginning of year (78,313) Net OPEB obligation (asset) -end of year (1,572,116) 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, 2009 and the preceding year were as .>., follows: Percentage of Annual Net OPEB Fiscal Year OPEB Cost Obligation Ended Annual OPEB Cost Contributed (Asset) 6/30/08 $23,426,000 100% ($78,313) 6/30/09 $23,426,000 100% ($1,572,116) -78- COUNTY OF HAWAII Notes to the Basic Financial Statements June 30, 2009 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% after 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.gov 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 Hawai`i, 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. - 79 - COUNTY OF HAWAII Notes to the Basic Financial Statements June 30, 2009 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 beneficiaries. 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, 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. 14. COMPONENT UNIT DISCLOSURES Deposits and Investments At June 30, 2009, cash, time certificates of deposit, money market funds, and repurchase E» agreements of $50,639,100, with bank balances of $51,240,952 were 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. The deposits and investments include investments received by the Department that are refundable or restricted as to use, and are recorded as a restricted asset. Such funds amounted — to $14,132,135 at June 30, 2009. At June 30, 2009, 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 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 assets acquired by the County for its water system from January 1, 1924 to 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. -80- OM' COUNTY OF HAWAII Notes to the Basic Financial Statements June 30, 2009 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, 2009 were as follows: Utility plant in service $341,412,867 Less: accumulated depreciation (157,081,081) 184,331,786 Land and rights 1,714,727 Construction in progress 32,940,806 Net capital assets $218,987,319 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 $33,954,671 at June 30, 2009. General obligation bonds payable issued on behalf of the Department and other long -term debt at June 30, 2009 are comprised of the following: Public improvement bonds: 1993 Series A at 5.05% to 5.6 %, due through 2013 $ 3,085,000 1998 Series A at 4.5 %, due through 2033 271,500 2001 Series A at 4.0% to 5.5 %, due through 2010 735,652 2004 Series D at 4.5 %, due through 2039 248,635 2006 Series A at 4.0% to 5.0 %, due through 2026 23,445,000 2008 Series A at 4.125 %, due through 2043 147,000 Total public improvement bonds 27,932,787 Public improvement refunding bonds: 2004 Series at 5.0 %, due through 2015 269,272 2007 Series at 4.0% to 5.0 %, due through 2021 5,752,612 Total public improvement refunding bonds 6,021,884 State revolving fund loan, interest at 0.41% to 1.37 %, due through 2027 8,154,507 Total $42,109,178 - 81 - COUNTY OF HAWAII Notes to the Basic Financial Statements June 30, 2009 At June 30, 2009, future principal payments for long -term debt are scheduled as follows: Fiscal year ending June 30: 2010 $ 2,518,000 2011 2,625,000 2012 2,766,000 2013 2,881,000 2014 2,121,000 2015 — 2019 11,613,000 2020 — 2024 11,381,000 2025 — 2029 5,922,000 2030 — 2034 143,000 2035 — 2039 94,000 2040 — 2043 45,178 Total $42,109,178 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 $11,246,419 of contributions in aid of construction as nonoperating revenues for — the fiscal year ended June 30, 2009. Commitments and Contingent Liabilities Claims and judgments — The Department is self - insured for workers' compensation and other perils. The liability at June 30, 2009 for workers' compensation claims of $245,000 was estimated based on a combination of case -by -case review and the application of historical experience to outstanding claims. Construction contracts — The Department is obligated under construction contracts for the utility plant and other projects. Such commitments approximated $33,664,000 at June 30, 2009. Post - Retirement Benefits Effective July 1, 2007, the Department 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 other nonpension -82- COUNTY OF HAWAII Notes to the Basic Financial Statements June 30, 2009 benefits. The Department's annual required contribution for its postemployment benefit obligation for the year ended June 30, 2009 was $1,493,000. The Department made contributions of $2,441,077 during the year ended June 30, 2009 and recorded a postemployment benefit liability of $0 at June 30, 2009. - 83 - COUNTY OF HAWAII Required Supplementary Information June 30, 2009 Schedule of Funding Progress for the EUTF (In thousands) Actuarial Accrued UAAL as a Actuarial Liability Unfunded Percentage Actuarial Value of (AAL) — AAL Funded Covered of Covered Valuation Assets Entry Age (UAAL) Ratio Payroll Payroll Date (a) (b) (b -a) (a /b) (c) ((b-a)/c) 7/01/07 - $275,828 $275,828 - $127,420 216.5% 4 -84- NONMAJOR GOVERNMENTAL FUNDS SPECIAL REVENUE FUNDS HIGHWAY FUND - Used to 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. SOLID 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. CEMETERY FUND - Used to accumulate moneys to guarantee 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 areas. Financing is provided by the proceeds from parking meters. VEHICLE 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. BIKEWAY FUND - 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. BEAUTIFICATION 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. HAWAII COUNTY HOUSING 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 parks 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 are transferred annually from the General Fund. BOND REDEMPTION FUND - Used to accumulate moneys for the payment of general obligation bonds. Moneys required to retire the bonds are transferred from the General Fund one year in advance of maturity. P COUNTY OF HAWAII Nonmajor Governmental Funds Combining Balance Sheet June 30, 2009 Special Revenue Funds ow Solid Parking Highway Sewer Waste Cemetery Meter Fund Fund Fund Fund Fund Assets Cash and cash equivalents $10,882,557 $ 7,274,211 $10,921,668 $ 68,409 $142,030 Investments - - - - - Imprest fund - 400 - - - Receivables: Due from other governments 46,652 - 769,284 - - Due from other governmental funds 71,237 47,617 - - - Due from other nongovernmental funds - 1,350 - - - Trade, net of allowance for doubtful accounts - 1,164,768 1,299,119 - - Other 495 - 99,987 - - 118,384 1,213,735 2,168,390 - - Total assets $11,000,941 $ 8,488,346 $13,090,058 $ 68,409 $142,030 w Liabilities and Fund Balances Liabilities: Accounts payable $ 256,617 $ 133,600 $ 1,942,064 $ - $ - '"` Due to other governmental funds 387,050 5,117 489,427 4. Unearned revenue - 1,164,768 1,311,117 - - Accrued liabilities 1,231 92,531 1,028 - - "" Total liabilities 644,898 1,396,016 3,743,636 - - Fund balances: Reserved for: i s Encumbrances 3,857,701 1,810,009 5,246,138 - - Debt service - - - - - Unreserved: 6,498,342 5,282,321 4,100,284 68,409 142,030 Total fund balances 10,356,043 7,092,330 9,346,422 68,409 142,030 Total liabilities and fund balances $11,000,941 $ 8,488,346 $13,090,058 $ 68,409 $142,030 4. -86- SP Special Revenue Funds Vehicle Workforce Golf Geothermal Reloo. Beauti- Park Disposal Bikeway Investment Course & Community fication Housing Dedication Fund Fund Act Fund Fund Benefits Fund Fund Agency Fund $3,472,606 $ 507,171 $ - $ 82,304 $ 4,269,503 $ 959,935 $ 1,870,344 $ 86,587 - - - - - 3,204,000 - - - 2,000 - - 200 - - 369,311 - - - - - 470,666 - - - - - 52,841 - 2,762 38,994 3,212 153,601 - 334,103 14 470,666 2,762 408,305 3,212 153,601 - 386,944 14 $3,943,272 $ 509,933 $ 408,305 $ 87,516 $ 4,423,104 $ 959,935 $ 5,461,488 $ 86,601 $1,154,145 $ 38,520 $ - $ 1,149 $ 3,135 $ 413 $ 72,925 $ - - - 408,305 4,264 92,794 - - - - - - - - 254,159 - - - _ - - - 210,651 - 1,154,145 38,520 408,305 5,413 95,929 413 537,735 - (44,659) 114,511 - 2,535 384,317 18,651 3,167,040 - 2,833,786 356,902 - 79,568 3,942,858 940,871 1,756,713 86,601 2,789,127 471,413 - 82,103 4,327,175 959,522 4,923,753 86,601 $3,943,272 $ 509,933 $ 408,305 $ 87,516 $ 4,423,104 $ 959,935 $ 5,461,488 $ 86,601 (Continued) - 87 - COUNTY OF HAWAII Nonmajor Governmental Funds Combining Balance Sheet June 30, 2009 (Concluded) Debt Service Funds Total Bond Nonmajor Interest Redemption Governmental Fund Fund Funds Assets ps. Cash and cash equivalents $1,688,984 $ 7,348,411 $ 49,574,720 Investments - 14,094,069 17,298,069 Jr Imprest fund - - 2,600 Receivables: Due from other governments - - 1,185,247 op Due from other governmental funds - - 642,361 Due from other nongovernmental funds - - 1,350 Trade, net of allowance for doubtful accounts - - 2,463,887 pp Other - - 633,168 - - 4,926,013 Total assets $1,688,984 $ 21,442,480 $ 71,801,402 Liabilities and Fund Balances Liabilities: Accounts payable $ - $ - $ 3,602,568 Due to other governmental funds - - 1,386,957 Deferred revenue - - 2,730,044 Accrued liabilities 72,521 240,000 617,962"' Total liabilities 72,521 240,000 8,337,531 . Fund balances: Reserved for: " Encumbrances - - 14,556,243 Debt service 1,616,463 21,202,480 22,818,943 Unreserved: - - 26,088,685 Total fund balances 1,616,463 21,202,480 63,463,871 Total liabilities and fund balances $1,688,984 $ 21,442,480 $ 71,801,402 See accompanying independent auditors' report. W 4 -88- RA COUNTY OF HAWAII Nonmajor Governmental Funds Combining Statement of Revenues, Expenditures, and Changes in Fund Balances For the Fiscal Year Ended June 30, 2009 Special Revenue Funds Solid Parking Highway Sewer Waste Cemetery Meter go Fund Fund Fund Fund Fund Revenues Fuel tax $ 7,662,113 $ - $ - $ - $ - Public utility franchise tax 11,118,365 - - - - Licenses and permits 6,800,905 - - - - Intergovernmental 635,709 - 922,917 - - w , Charges for services - 6,012,734 9,449,283 - 14,831 Investment earnings - - - - - Miscellaneous 777,354 - 116,381 7,750 - , Total revenues 26,994,446 6,012,734 10,488,581 7,750 14,831 w.. Expenditures Current: w General government - - - - - Public safety 6,183,324 - - - - w Highways and streets 12,956,007 - - - - Sanitation - 6,090,135 24,995,097 - - Health, education and welfare - - - - - Culture and recreation - - - - - Pension and retirement contributions 1,887,902 494,660 1,032,309 - - Employees' health insurance 698,439 186,748 466,771 - - Miscellaneous 330,149 185,911 216,848 - - Debt service: rr " Principal - - 1,211,189 - - Interest - - 131,686 - - Total expenditures 22,055,821 6,957,454 28,053,900 - - Excess (deficiency) of revenues "" over (under) expenditures 4,938,625 (944,720) (17,565,319) 7,750 14,831 Other Financing Sources (Uses) Transfers in 18,000 - 19,150,221 - - . Increase in capital leases - - 994,080 - - Transfers out (3,861,759) - - - - Total other financing sources (uses) (3,843,759) - 20,144,301 - - ,.. Net change in fund balances 1,094,866 (944,720) 2,578,982 7,750 14,831 Fund balances at beginning of year 9,261,177 8,037,050 6,767,440 60,659 127,199 Fund balances at end of year $ 10,356,043 $ 7,092,330 $ 9,346,422 $ 68,409 $142,030 w -90- Special Revenue Funds Vehicle Workforce Golf GeothennalRetoc. Beauti- Park Disposal Bikeway Investment Course & Community fication Housing Dedication Fund Fund Act Fund Fund Benefits Fund Fund Agency Fund $ - $ - $ - $ - $ - $ - $ - $ - 2,028,444 76,017 - - - 169,038 - - - 1,026,198 - - - 14,949,390 - 1,130 - - 734,015 - - - - - - - - - - 77,757 2,545 204,794 - - 20 941,246 - 50,056 - 2,234,368 76,017 1,026,198 734,035 941,246 169,038 15,077,203 2,545 - - - - 9,096 - - - - - - - 12,914 - - - - 43,551 - - 80,552 42,738 - - 2,973,403 - - - - - - - - - 1,918,904 - - - 15,589,926 - - - - 928,855 49,258 47,401 - - 30,011 - - 160,427 - - 493,816 - 18,376 - - 62,738 - - 145,652 - - - - 5,588 - - - - - - - - - - 1,800 - - - - - - - 168 - 3,021,790 43,551 1,918,904 1,157,608 151,820 90,139 16,231,362 - (787,422) 32,466 (892,706) (423,573) 789,426 78,899 (1,154,159) 2,545 - - - 433,418 - - 1,516,860 - 433,418 - - 1,516,860 - (787,422) 32,466 (892,706) 9,845 789,426 78,899 362,701 2,545 3,576,549 438,947 892,706 72,258 3,537,749 880,623 4,561,052 84,056 $2,789,127 $ 471,413 $ - $ 82,103 $ 4,327,175 $ 959,522 $ 4,923,753 $ 86,601 (Continued) - 91 - COUNTY OF HAWAII Nonmajor Governmental Funds Combining Statement of Revenues, Expenditures, and Changes in Fund Balances 0. For the Fiscal Year Ended June 30, 2009 (Concluded) Debt Service Funds Total Bond Nonmajor Interest Redemption Governmental Fund Fund Funds Revenues Fuel tax $ - $ - $ 7,662,113 Public utility franchise tax - - 11,118,365 Licenses and permits - - 9,074,404 Intergovernmental - - 17,534,214 00 Charges for services - - 16,211,993 Investment earnings - - 80,302 x. Miscellaneous - - 2,097,601 Total revenues - - 63,778,992 . Expenditures 0. Current: General government - - 9,096 Public safety - - 6,196,238 ,„ Highways and streets - - 13,122,848 Sanitation - - 34,058,635 Health, education and welfare - - 17,508,830 Culture and recreation - - 1,025,514 Pension and retirement contributions - - 4,099,125 Employees' health insurance - - 1,578,724 ,. Miscellaneous - - 738,496 Debt service: Principal - 18,296,245 19,509,234 Interest 12,640,335 - 12,772,189 Total expenditures 12,640,335 18,296,245 110,618,929 Excess (deficiency) of revenues over (under) expenditures (12,640,335) (18,296,245) (46,839,937) Other Financing Sources (Uses) Transfers in 12,473,658 19,122,819 52,714,976 Increase in capital leases - - 994,080 Transfers out - - (3,861,759) 0. Total other financing sources (uses) 12,473,658 19,122,819 49,847,297 . Net change in fund balances (166,677) 826,574 3,007,360 Fund balances at beginning of year 1,783,140 20,375,906 60,456,511 Fund a ances at end of year $ 1,616,463 $ 21,202,480 $ 63,463,871 See accompanying independent auditors' report. ""` - 92 - 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, 2009 Actual Variance Original Final (Budgetary Positive Budget Budget Basis) (Negative) Revenues: Taxes: Fuel tax $ 8,793,000 $8,793,000 $ 7,662,113 $ (1,130,887) Public utility franchise tax 9,121,000 9,121,000 11,118,365 1,997,365 Total taxes 17,914,000 17,914,000 18,780,478 866,478 Licenses and permits - motor vehicle weight taxes 7,034,636 7,034,636 6,800,905 (233,731) Intergovernmental 320,774 320,774 635,709 314,935 Charges for current services 200,000 200,000 632,632 432,632 Miscellaneous 120,837 120,837 144,722 23,885 Total revenues 25,590,247 25,590,247 26,994,446 1,404,199 Expenditures: Public safety - traffic engineering 6,595,867 6,935,867 6,291,448 644,419 Highways and streets 11,165,669 11,586,364 10,704,339 882,025 Highways and streets - mass transit 1,177,480 2,002,179 1,942,972 59,207 Pension and retirement contributions 2,047,720 2,047,720 1,887,902 159,818 Health fund 814,227 814,227 698,439 115,788 Miscellaneous 1,323,545 1,323,545 318,782 1,004,763 Total expenditures 23,124,508 24,709,902 21,843,882 2,866,020 Excess of revenues over expenditures 2,465,739 880,345 5,150,564 4,270,219 Other financing uses - transfers in (out) - General Fund - 18,000 18,000 - Capital Projects Fund (4,349,067) (4,349,067) (3,861,759) 487,308 Total other financing uses (4,349,067) (4,331,067) (3,843,759) 487,308 Excess (deficiency) of revenues over (under) expenditures and other uses (1,883,328) (3,450,722) 1,306,805 4,757,527 Fund balance at beginning of year 9,261,177 9,261,177 9,261,177 - Fund balance at end of year $ 7,377,849 $ 5,810,455 $ 10,567,982 $ 4,757,527 See accompanying independent auditors' report. - 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, 2009 Actual Variance Original Final (Budgetary Positive Budget Budget Basis) (Negative) Revenues: Charges for current services - sewer fees $ 7,383,000 $ 7,383,000 $ 6,012,734 $ (1,370,266) Miscellaneous 200 200 -- (200) „,,, Total revenues 7,383,200 7,383,200 6,012,734 (1,370,466) Expenditures: Sanitation 7,812,844 7,710,644 6,330,975 1,379,669 Pension and retirement contributions 593,199 593,199 494,660 98,539 Health fund 235,708 235,708 186,748 48,960 Miscellaneous 2,996,691 3,098,891 117,383 2,981,508 Total expenditures 11,638,442 11,638,442 7,129,766 4,508,676 tot Deficiency of revenues under expenditures (4,255,242) (4,255,242) (1,117,032) 3,138,210 Fund balance at beginning of year 8,037,050 8,037,050 8,037,050 - Fund balance at end of year $ 3,781,808 $ 3,781,808 $ 6,920,018 $ 3,138,210 See accompanying independent auditors' report. -94- 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, 2009 Actual Variance Original Final (Budgetary Positive Budget Budget Basis) (Negative) Revenues: Intergovernmental $1,163,309 $ 2,272,500 $1,232,225 $(1,040,275) Charges for services - tipping fees 10,614,000 10,614,000 9,449,283 (1,164,717) Miscellaneous - 101,500 116,381 14,881 Total revenues 11,777,309 12,988,000 10,797,889 (2,190,111) Expenditures: Sanitation 31,715,337 32,928,528 27,360,608 5,567,920 Pension and retirement contributions 1,295,642 1,295,642 1,032,309 263,333 Health fund 640,344 640,344 466,771 173,573 Miscellaneous 320,000 320,000 212,297 107,703 Total expenditures 33,971,323 35,184,514 29,071,985 6,112,529 Deficiency of revenues under expenditures (22,194,014) (22,196,514) (18,274,096) 3,922,418 Other financing sources: Transfers in - General Fund 19,147,721 19,150,221 19,150,221 - Excess (deficiency) of revenues and other sources over (under) expenditures (3,046,293) (3,046,293) 876,125 3,922,418 Fund balance at beginning of year 6,767,440 6,767,440 6,767,440 - Fund balance at end of year $3,721,147 $ 3,721,147 $7,643,565 $ 3,922,418 See accompanying notes to the basic fmancial statements. - 95 - 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, 2009 Actual Variance Original Final (Budgetary Positive Budget Budget Basis) (Negative) Revenues - miscellaneous - sale of cemetery plots $ 10,000 $ 10,000 $ 7,750 $ (2,250) Expenditures - health, education and welfare 10,000 10,000 - 10,000 Excess of revenues over expenditures - - 7,750 7,750 Fund balance at beginning of year 60,659 60,659 60,659 - : Fund balance at end of year $ 60,659 $ 60,659 $ 68,409 $ 7,750 See accompanying independent auditors' report. -96- 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, 2009 Actual Variance Original Final (Budgetary Positive Budget Budget Basis) (Negative) Revenues - Charges for current services - highways and streets $ - $ - $ 14,831 $ 14,831 Expenditures - Highways and streets - - - - Excess of revenues over expenditures - - 14,831 14,831 Fund balance at beginning of year 127,199 127,199 127,199 - Fund balance at end of year $ 127,199 $127,199 $ 142,030 $ 14,831 See accompanying independent auditors' report. - 97 - COUNTY OF HAWAII Vehicle Disposal Fund Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual (Budgetary Basis) For the Fiscal Year Ended June 30, 2009 Actual Variance Original Final (Budgetary Positive Budget Budget Basis) (Negative) Revenues: Licenses and permits - vehicle disposal fee $ 2,124,000 $ 2,124,000 $ 2,028,444 $ (95,556) Charges for services - towing charges - - 1,130 1,130 - - 204,794 204,794 Total revenues 2,124,000 2,124,000 2,234,368 110,368 Expenditures: �a. Sanitation 3,478,429 3,478,429 2,664,275 814,154 Pension and retirement contributions 34,000 34,000 30,011 3,989 '" Health fund 20,700 20,700 18,376 2,324 Miscellaneous 10,000 10,000 -- 10,000 Total expenditures 3,543,129 3,543,129 2,712,662 830,467 Deficiency of revenues under expenditures (1,419,129) (1,419,129) (478,294) 940,835 Fund balance at beginning of year 3,576,549 3,576,549 3,576,549 - Fund balance at end of year $ 2,157,420 $ 2,157,420 $ 3,098,255 $ 940,835 See accompanying independent auditors' report. -98 - 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 30, 2009 Original Actual Variance and Final (Budgetary Positive Budget Basis) (Negative) Revenues - licenses and permits - bicycle tax $ 20,000 $ 76,017 $ 56,017 Expenditures - highways and streets 171,000 154,755 16,245 Deficiency of revenues under expenditures (151,000) (78,738) 72,262 Fund balance at beginning of year 438,947 438,947 - Fund balance at end of year $287,947 $360,209 $72,262 See accompanying independent auditors' report. - 99 - COUNTY OF HAWAII 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, 2009 Actual Variance Original Final (Budgetary Positive Budget Budget Basis) (Negative) Revenues - intergovernmental - federal grants $ - $ 3,308,557 $ 3,308,557 $ - Expenditures - health, education and welfare - 3,308,557 3,308,557 - Excess of revenues over expenditures - - - - Fund balance at beginning of year 892,706 892,706 892,706 - Fund balance at end of year $ 892,706 $ 892,706 $ 892,706 $ - See accompanying independent auditors' report. - 100 - z 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, 2009 Actual Variance Original Final (Budgetary Positive Budget Budget Basis) (Negative) Revenues: Charges for services $ 768,103 $ 768,103 $ 734,015 $ (34,088) Miscellaneous - - 20 20 Total revenues 768,103 768,103 734,035 (34,068) Expenditures: Culture and recreation 943,052 943,052 893,935 49,117 Pension and retirement contributions 162,369 162,369 160,427 1,942 Health fund 80,000 80,000 62,738 17,262 Miscellaneous 16,100 16,100 5,588 10,512 Total expenditures 1,201,521 1,201,521 1,122,688 78,833 Deficiency of revenues under expenditures (433,418) (433,418) (388,653) 44,765 Other financing sources: Transfers in - General Fund 433,418 433,418 433,418 - Excess of revenues and other sources over expenditures - - 44,765 44,765 Fund balance at beginning of year 72,258 72,258 72,258 - Fund balance at end of year $ 72,258 $ 72,258 $ 117,023 $ 44,765 See accompanying independent auditors' report. - 101 - 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, 2009 Actual Variance Original Final (Budgetary Positive Budget Budget Basis) (Negative) Revenues - miscellaneous - geothermal royalties $ 350,000 $ 350,000 $ 941,246 $ 591,246 Expenditures: General government - finance -- 13,413 13,413 - General government - planning 350,000 350,000 -- 350,000 Public safety - traffic engineering -- 24,000 12,914 11,086 Highways and streets - mass transit -- 496,250 460,552 35,698 Culture and recreation -- 83,014 49,258 33,756 Total expenditures 350,000 966,677 536,137 430,540 Excess (deficiency) of revenues over (under) expenditures - (616,677) 405,109 1,021,786 Fund balance at beginning of year 3,537,749 3,537,749 3,537,749 - Fund balance at end of year $ 3,537,749 $ 2,921,072 $ 3,942,858 $ 1,021,786 See accompanying independent auditors' report. r - 102 - 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, 2009 Actual Variance Original Final (Budgetary Positive Budget Budget Basis) (Negative) Revenues - licenses and permits - highway beautification $169,000 $169,000 $ 169,038 $ 38 Expenditures - highways and streets 225,000 225,000 77,897 147,103 Excess (deficiency) of revenues over (under) expenditures (56,000) (56,000) 91,141 147,141 Fund balance at beginning of year 880,623 880,623 880,623 - Fund balance at end of year $ 824,623 $ 824,623 $ 971,764 $ 147,141 See accompanying independent auditors' report. - 103 - COUNTY OF HAWAII Hawaii County Housing Agency Schedule of Revenues, Expenditures and Changes in Fund Balance - ow Budget and Actual (Budgetary Basis) For the Fiscal Year Ended June 30, 2009 Actual Variance Original Final (Budgetary Positive ,.A Budget Budget Basis) (Negative) Revenues: Intergovernmental - Federal - HUD - Voucher program $13,984,938 $14,684,938 $14,934,667 $ 249,729 pe Other 47,874 47,874 14,723 (33,151) Interest earned 60,000 60,000 77,757 17,757 Resale of property - - 50,000 50,000 aw Other - - 56 56 Total revenues 14,092,812 14,792,812 15,077,203 284,391 PP Expenditures: Health, education and welfare 15,236,727 15,951,727 15,494,502 457,225 Pension and retirement contributions 577,600 577,600 493,816 83,784 ,, Health Fund 158,300 158,300 145,652 12,648 Miscellaneous -- -- - -- Total expenditures 15,972,627 16,687,627 16,133,970 553,657 Deficiency of revenues over expenditures (1,879,815) (1,894,815) (1,056,767) 838,048 Other financing sources: Transfers in - General Fund 1,501,860 1,516,860 1,516,860 - Excess (deficiency) of revenues and other sources over (under) expenditures (377,955) (377,955) 460,093 838,048 Fund balance at beginning of year 4,561,052 4,561,052 4,561,052 - Fund balance at end of year $ 4,183,097 $ 4,183,097 $ 5,021,145 $ 838,048 r4z See accompanying independent auditors' report. ow - 104 - et COUNTY OF HAWAII Park Dedication Fund Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual (Budgetary Basis) For the Fiscal Year Ended June 30, 2009 Actual Variance Original Final (Budgetary Positive Budget Budget Basis) (Negative) Revenues - interest $ - $ - $ 2,545 $ 2,545 Expenditures - culture and recreation - - - - Excess of revenues over expenditures - - 2,545 2,545 Fund balance at beginning of year 84,056 84,056 84,056 - Fund balance at end of year $84,056 $84,056 $86,601 $2,545 See accompanying independent auditors' report. - 105 - COUNTY OF HAWAII Agency Funds Combining Balance Sheet 0. June 30, 2009 Performance State Improvement Improvement Improvement and NW Weight District District District Refundable Tax No. 17 No. 18 Revolving Deposits Fund Fund Fund Fund Fund Assets Cash and cash equivalents $ 893,742 $ 682,499 $ 88,601 $ 400,592 $ 320,330 Investments - - 1,421,046 - - Due from other agency funds - - - - - 00 Other receivables - 208,241 1,818 69 - Restricted assets - cash and cash equivalents - 637,000 - - - ~' Total assets $ 893,742 $ 1,527,740 $ 1,511,465 $ 400,661 $ 320,330 0. F Liabilities Due to other agency funds $ - $ - $ - $ - $ 860 0. Accrued liabilities 893,742 212,404 4,989 - 2,095 Customer advances and deposits - 1,605 6,654 - 317,375 Assets held for the benefit of 00 improvement districts - 1,313,731 1,499,822 400,661 - Total liabilities $ 893,742 $ 1,527,740 $ 1,511,465 $ 400,661 $ 320,330 See accompanying independent auditors' report. - 106 - Non - Profit Organ and Business Payroll Flexible Lapsed License Tissue Improvement Clearance Spending Warrants Plates Education District Fund Account Fund Fund Fund 1 - Kailua Total $ 1,844,870 $ 374,346 $ 154,225 $ 1,390 $ 398 $ 229 $ 4,761,222 - - - - - - 1,421,046 - - 1,082 - - - 1,082 13,929 - 13,863 - - 25,407 263,327 - - - - - - 637,000 $ 1,858,799 $ 374,346 $ 169,170 $ 1,390 $ 398 $ 25,636 $ 7,083,677 $ 122 $ - $ - $ 100 $ - $ - $ 1,082 1,858,677 374,346 169,170 1,290 398 3,113 3,520,224 - - - - - 325,634 - - - - - 22,523 3,236,737 $ 1,858,799 $ 374,346 $ 169,170 $ 1,390 $ 398 $ 25,636 $ 7,083,677 - 107 - COUNTY OF HAWAII Agency Funds Combining Statement of Changes in Assets and Liabilities «E For the Fiscal Year Ended June 30, 2009 Balance Balance July 1, June 30, 2008 Additions Deductions 2009 State Weight Tax Fund Assets Cash and cash equivalents q $ (189) $ 10,270,757 $ 9,376,826 $ 893,742 Misc. Receivables - due from State of Hawaii $ 189 $ - $ 189 - Total assets $ - $ 10,270,757 $ 9,377,015 $ 893,742 Liabilities Vouchers payable $ - $ 9,376,827 $ 9,376,827 $ Accrued liabilities - due to State of Hawaii - 10,270,757 9,377,015 893,742 Total liabilities $ - $ 19,647,584 $ 18,753,842 $ 893,742 Improvement District No. 17 Fund Assets Cash and cash equivalents $ 840,004 $ 782,257 $ 939,762 $ 682,499 g Restricted assets - cash and cash equiv. 637,000 - - 637,000 Other receivables 33,775 950,148 775,682 208,241 Total assets $ 1,510,779 $ 1,732,405 $ 1,715,444 $ 1,527,740 Liabilities Vouchers payable $ - $ 1,690 $ 1,690 $ - Accrued liabilities 38,254 945,398 771,248 212,404 Customer advances and deposits - 1,605 - 1,605 Assets held for the benefit of improvement districts 1,472,525 771,920 930,714 1,313,731 Total liabilities $ 1,510,779 $ 1,720,613 $ 1,703,652 $ 1,527,740 - 108 - COUNTY OF HAWAII Agency Funds Combining Statement of Changes in Assets and Liabilities For the Fiscal Year Ended June 30, 2009 Balance Balance July 1, June 30, 2008 Additions Deductions 2009 Improvement District No. 18 Fund Assets Cash and cash equivalents $ 368,444 $ 506,272 $ 786,115 $ 88,601 Investments 1,241,244 179,802 - 1,421,046 Other receivables 10,199 418,003 426,384 1,818 Total assets $ 1,619,887 $ 1,104,077 $ 1,212,499 $1,511,465 Liabilities Vouchers payable $ - $ 49,964 $ 49,964 $ - Accrued liabilities 13,701 842,349 851,061 4,989 Customer advances and deposits - 6,654 - 6,654 Assets held for the benefit of improvement districts 1,606,186 478,010 584,374 1,499,822 Total liabilities $ 1,619,887 $ 1,376,977 $ 1,485,399 $ 1,511,465 Improvement District Revolving Fund Assets Cash and cash equivalents $ - $ 400,592 $ - $ 400,592 Investments 388,886 - 388,886 - Other receivables - 69 - 69 Total assets $ 388,886 $ 400,661 $ 388,886 $ 400,661 Liabilities Assets held for the benefit of improvement districts $ 388,886 $ 11,775 $ - $ 400,661 Performance and Refundable Deposits Fund Assets Cash and cash equivalents $ 229,702 $ 482,233 $ 391,605 $ 320,330 Other receivables 2,029 50 2,079 - Total assets $ 231,731 $ 482,283 $ 393,684 $ 320,330 Liabilities Vouchers payable $ - $ 377,524 $ 377,524 $ - Due to other agency funds 1,945 860 1,945 860 Accrued liabilities - 2,095 - 2,095 Customer advances and deposits 229,786 705,285 617,696 317,375 Total liabilities $ 231,731 $ 1,085,764 $ 997,165 $ 320,330 - 109 - COUNTY OF HAWAII Agency Funds Combining Statement of Changes in Assets and Liabilities the Fiscal Year Ended June 30, 2009 Balance Balance July 1, June 30, 2008 Additions Deductions 2009 Payroll Clearance Fund Cash and cash equivalents $ 1,718,871 $ 218,634,233 $ 218,508,234 $ 1,844,870 Due from other funds - 213,132,799 213,132,799 - Other receivables - 13,929 - 13,929 , Total assets $ 1,718,871 $ 431,780,961 $ 431,641,033 $ 1,858,799 Liabilities Vouchers payable $ - $ 97,618,881 $ 97,618,881 $ - Payroll refunds payable - - - - Due to other agency funds 444 122 444 122 Accrued liabilities 1,718,427 260,144,170 260,003,920 1,858,677 Total liabilities $ 1,718,871 $ 357,763,173 $ 357,623,245 $ 1,858,799 Flexible Spending Account Assets Cash and cash equivalents $ 355,777 $ 408,935 $ 390,366 $ 374,346 Liabilities Accrued liabilities $ 355,777 $ 408,935 $ 390,366 $ 374,346 Lapsed Warrants Fund Assets Cash and cash equivalents $ 128,431 $ 26,100 $ 306 $ 154,225 Due from other agency funds 2,409 1,082 2,409 1,082 Other receivables 23,691 13,863 23,691 13,863 Total assets $ 154,531 $ 41,045 $ 26,406 $ 169,170 Liabilities Vouchers payable $ - $ 246 $ 246 $ - Accrued liabilities 154,531 42,693 28,054 169,170 Total liabilities $ 154,531 $ 42,939 $ 28,300 $ 169,170 - 110 - COUNTY OF HAWAII Agency Funds Combining Statement of Changes in Assets and Liabilities For the Fiscal Year Ended June 30, 2009 Balance Balance July 1, June 30, 2008 Additions Deductions 2009 Non - Profit License Plates Fund Assets Cash and cash equivalents $ 1,285 $ 5,000 $ 4,895 $ 1,390 Liabilities Vouchers payable $ - $ 4,875 $ 4,875 $ - Due to other agency funds 20 100 20 100 Accrued liabilities - 40 - 40 Due to non - profit agency 1,265 4,900 4,915 1,250 Total liabilities $ 1,285 $ 9,915 $ 9,810 $ 1,390 Organ and Tissue Education Fund Assets Cash and cash equivalents $ 447 $ 57,369 $ 57,418 $ 398 Liabilities Vouchers payable $ - $ 1,669 $ 1,669 $ - Accrued liabilities - due to State of Hawaii 447 57,369 57,418 398 Total liabilities $ 447 $ 59,038 $ 59,087 $ 398 Business Improvement District 1 Kailua Assets Cash and cash equivalents $ 12,582 $ 847,771 $ 860,124 $ 229 Misc. Receivables - BID 1 Kailua Assessment 8,800 869,457 855,735 22,522 Misc. Receivable - Due from KVBID 5,000 - 5,000 - Other receivables 98 8,654 5,867 2,885 Total assets $ 26,480 $ 1,725,882 $ 1,726,726 $ 25,636 Liabilities Vouchers payable $ - $ 859,376 $ 859,376 $ - Due to KVBID 12,702 3,113 12,702 3,113 Due to other agency funds 4,978 - 4,978 - Assets held for the benefit of improvement districts 8,800 858,478 844,755 22,523 Total liabilities $ 26,480 $ 1,720,967 $ 1,721,811 $ 25,636 - 111 - COUNTY OF HAWAII Agency Funds Combining Statement of Changes in Assets and Liabilities For the Fiscal Year Ended June 30, 2009 Balance Balance July 1, June 30, 2008 Additions Deductions 2009 Total - All Agency Funds Assets Cash and cash equivalents $ 3,655,354 $ 232,421,519 $ 231,315,651 $ 4,761,222 Investments 1,630,130 179,802 388,886 1,421,046 Due from other agency funds 2,409 1,082 2,409 1,082 Misc. Receivables - due from State of Hawaii 189 - 189 - Misc. Receivables - BID 1- Kailua Assessment 8,800 869,457 855,735 22,522 Misc. Receivable - Due from KVBID 5,000 - 5,000 - Other receivables 69,792 1,404,716 1,233,703 240,805 ?"" Restricted assets - cash and cash equiv. 637,000 - - 637,000 Total assets $ 6,008,674 $ 234,876,576 $ 233,801,573 $ 7,083,677 Liabilities Vouchers payable $ - $ 108,291,052 $ 108,291,052 $ - Payroll refunds payable - - - - OK, Due to other agency funds 7,387 1,082 7,387 1,082 Due to non - profit agency 1,265 4,900 4,915 1,250 Accrued liabilities 2,280,690 262,385,680 262,044,649 2,621,721 Accrued liabilities - due to State of Hawaii 447 10,328,126 9,434,433 894,140. Due to KVBID 12,702 3,113 12,702 3,113 Customer advances and deposits 229,786 713,544 617,696 325,634 Assets held for the benefit of improvement districts 3,476,397 2,120,183 2,359,843 3,236,737 Total liabilities $ 6,008,674 $ 383,847,680 $ 382,772,677 $ 7,083,677 See accompanying independent auditors' report. f - 112 - COUNTY OF HAWAII Private Purpose Trusts Combining Statement of Private Purpose Trust Net Assets June 30, 2009 Shippers' Total Geothermal Wharf Private Asset Trust Purpose Assets Fund Fund Trusts Cash and cash equivalents $ 2,003,659 $ 1,860,505 $ 3,864,164 Investments - 815,560 815,560 Receivables 342 307 649 Total assets 2,004,001 2,676,372 4,680,373 Liabilities Accrued liabilities - - - Total liabilities - - - Net Assets Held in trust for other parties 2,004,001 2,676,372 4,680,373 Total net assets $ 2,004,001 $ 2,676,372 $ 4,680,373 See accompanying independent auditors' report. - 113 - COUNTY OF HAWAII Private Purpose Trusts Combining Statement of Changes in Private Purpose Trust Net Assets For the Fiscal Year Ended June 30, 2009 Shippers' Total Geothermal Wharf Private Asset Trust Purpose Fund Fund Trusts Additions Contributions: Puna Geothermal Venture $ 50,000 $ - $ 50,000 Investment earnings: Net decrease in fair value of investments - (156,886) (156,886) Dividends - 49,705 49,705 Interest 57,652 18,237 75,889 Total additions 107,652 (88,944) 18,708 Deductions Grant payments - 90,604 90,604 Total deductions - 90,604 90,604 Change in net assets 107,652 (179,548) (71,896) Net assets, beginning of year 1,896,349 2,855,920 4,752,269 Net assets, end of year $ 2,004,001 $ 2,676,372 $ 4,680,373 See accompanying independent auditors' report. IP ito 4 - 114 - STATISTICAL SECTION (UNAUDITED) Contents Page 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. 115 Revenue Capacity — These schedules contain information to help the reader assess the County's most significant local revenue source, the property tax. 119 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. 125 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. 128 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. 130 '~ 0, 01 N O N M 00 co 10 N O 00 en kr) y N N . a, N .+ k0 IN N 01 M CN E' 0 —1 oo l: O k oo • ON Co' M • • O O 00 O 00 O 01 N 00 O M O 01 " O in N O � M N" --• CN M • m • 4: 69 69 69 69 69 69 M N a1 0, v M 0 Cr, N -, 01 N 00 00 Cr, vO Ln Cr, Ls M —4 Cr, 0',„ N N t V t` 0 1 .-+ t---.." 7 • 00 0 , - 4 N IN —. oo 0 N N N 00 0 0000 0 O 00 00 ,.O ,--. O M 00 0 O^ M M ^ in N 01 N - — 0, N N ,--i 0 v) 0t 69 69 69 69 69 69 • M 01 0\ N k0 N 0- vl N 10 M N 0, ct' 0 M v) O\ 0- 0- 0. l0 0 0 N 00 N n Cr, 0 00 00 N N 0 00 0 I O� O 0 M • O M O 0. 0 00 0 N 0 N 00 M 01 M \O —i -- 0 0 — 0 01 — , O — v) v i N M `n N N M N d. U EA 6H 69 69 69 69 cat ., U ∎O 00 --+ 01 S. ^ - , N 0 VI N r • Q1 00 .-- 01 M 01 M M oo 0 v) N O1 S v) N l` 00 M M v) kO \Q m 00 00 00 • 00 , 0 00 0 • - N O N • 0 1 01 O 00 N 00 V M r. 00 M ,. ON \0 l- rz O 00 7 00 0 — 00 d' D , d' N ♦ 0 M 0- M 0. 0 Q 69 69 69 69 69 69 E N G r. C -- N N en '.0 0 n N D\ N a, - C.) 0 M N l� 00 00 •-• 01 T ^" V l" 00 O 7, ..7- N O O N • O • 00 00 N O 0 X 0 C N to N- 0 M a, ,M -. 0 N , 10 a ^ N 00 M H r.. V — N • O 1D C> V] N 10 —. 0 , 0 Cf ^" 01 y 4 M M M M 0 O 69 69 69 69 69 69 U a a z 00 O N N 0' 00 0_ N_ O N r- N� 0 C N oo 0 N N v'i 00 N • M 00 00 N oo N >0 • 00 d' O • M • 01 O- • O • V 0 M M o0 00 •--. —, k0 0 M M M M , --4 oo M h vl In N 0 , e.. N O M — 10 N 0.," M M ,- . ,0 M M ■0 M M M M 69 EA 69 69 69 69 0 Clo N it i.. O b O a) ad a) cat 0 t w ti O O N O cd cn y cn .� a) ... � N aa)) 0. • a) � :co '� c �, O eat 74 • U a) U ca$ v) it U N 5 . 4L; E - � > = a) -4 f 0 C7 • p4 H r-i Q i H a i-r Lei rte E- - 115 - Table 2 AO COUNTY OF HAWAII OW Changes in Net Assets Last Six Fiscal Years r. Fiscal Year ras, 2004 2005 2006 2007 2008 2009 Program Revenues Governmental activities: Charges for services: s „. , General government $ 1,947,554 $ 3,227,420 $ 4,032,542 $ 4,460,016 $ 6,017,819 $ 5,442,950 Public safety 5,061,174 6,262,259 6,975,962 5,798,126 5,843,733 4,846,834 Highways and streets 6,052,544 7,629,139 9,079,084 9,354,639 9,701,815 9,636,799 Health, education and welfare 884,075 1,272,091 980,147 799,075 754,758 532,832 Culture and recreation 1,588,945 1,521,127 1,439,784 1,634,008 1,595,409 1,557,597 4r,,,,, Sanitation 13,653,722 15,465,478 16,469,745 18,486,502 18,643,952 16,415,985 Operating grants and contributions 33,327,191 36,370,993 38,252,889 38,068,138 46,117,399 42,273,795 Capital grants and contributions 9,668,981 26,221,627 14,801,828 7,805,986 9,327,408 15,728,186 Total governmental activites program revenues 72,184,186 97,970,134 92,031,981 86,406,490 98,002,293 96,434,978 Business -type activities: ,, Charges for services: Health, education and welfare $ 303,047 $ 314,971 $ 338,141 $ 345,802 $ 365,655 $ 371,511, Operating grants and contributions 143,769 135,829 141,019 134,211 125,795 135,674 Total business -type activities program revenues 446,816 450,800 479,160 480,013 491,450 507,185 ,_ Total primary grovernment program revenues $ 72,631,002 $ 98,420,934 $ 92,511,141 $ 86,886,503 $ 98,493,743 $ 96,942,163 Expenses Governmental activities: General government $ 40,085,357 $ 51,262,329 $ 38,264,132 $ 46,349,904 $ 68,794,961 $ 69,968,534 Public safety 90,434,696 94,422,057 106,067,466 118,010,316 137,500,608 144,755,837 Highways and streets 17,563,608 20,857,341 24,783,476 28,185,968 33,577,707 36,466,541 r_, Health, education and welfare 23,041,963 21,503,635 20,181,685 23,203,874 14,986,972 33,783,223 Culture and recreation 15,979,854 16,124,457 19,464,962 26,948,501 20,450,172 32,633,418 AP,. Sanitation 20,084,654 26,669,660 27,265,515 42,682,281 41,254,728 40,191,704 Interest on long -term debt 9,553,966 8,718,758 10,168,710 10,303,332 13,117,325 13,914,969 A+" Total governmental activities expenses 216,744,098 239,558,237 246,195,946 295,684,176 329,682,473 371,714,226 Business -type activities: Health, education and welfare 466,143 484,879 547,201 698,329 556,304 525,449 Total business -type activities expenses 466,143 484,879 547,201 698,329 556,304 525,449 Total primary government expenses $ 217,210,241 $ 240,043,116 $ 246,743,147 $ 296,382,505 $ 330,238,777 $ 372,239,675 , Net Expense so Governmental activities $ (144,559,912) $ (141,588,103) $ (154,163,965) $ (209,277,686) $ (231,680,180) $ (275,279,248) Business - type activities (19,327) (34,079) (68,041) (218,316) (64,854) (18,264) Total primary government net expense $ (144,579,239) $ (141,622,182) $ (154,232,006) $ (209,496,002) $ (231,745,034) $ (275,297,512) General Revenues and Other Changes in Net Assets rw- Governmental activities: General revenues: Property taxes $ 119,864,237 $ 129,775,410 $ 152,182,806 $ 183,611,050 $ 210,217,690 $ 229,262,980 Public service company taxes 5,332,478 6,351,273 6,811,483 7,396,084 8,381,367 10,228,607 Franchise taxes 5,373,144 6,016,890 7,328,887 8,520,133 9,026,841 11,118,365 Fuel taxes 7,552,317 7,580,740 7,857,394 8,471,453 7,887,998 7,662,113 , Grants and contributions not restricted to specific programs 15,251,443 16,734,850 18,510,262 18,999,596 19,395,089 17,888,019 Investment earnings 1,729,531 2,957,188 4,976,178 9,727,911 11,454,850 8,369,221 Miscellaneous 4,825,259 3,657,794 2,110,854 3,063,413 7,801,194 2,749,335 Total govemmental activities 159,928,409 173,074,145 199,777,864 239,789,640 274,165,029 287,278,640 Business -type activities: General revenues: Investment earnings 8,006 13,580 22,874 35,551 33,828 17,861 Total business -type activities 8,006 13,580 22,874 35,551 33,828 17,861 Total primary government $ 159,936,415 $ 173,087,725 $ 199,800,738 $ 239,825,191 $ 274,198,857 $ 287,296,501 Changes In Net Assets r . Govemmental activities $ 15,368,497 $ 31,486,042 $ 45,613,899 $ 30,511,954 $ 42,484,849 $ 11,999,392 Business -type activities (11,321) (20,499) (45,167) (182,765) (31,026) (403) for Total primary government changes in net assets $ 15,357,176 $ 31,465,543 $ 45,568,732 $ 30,329,189 $ 42,453,823 $ 11,998,989 Unaudited - see accompanying independent auditors' report. -116 - M l— N 7 00 00 , 0 O 7 N 0\ N M v) Ni .17:1 '� O 0 r o t- o�, 00 00 0 00 , O D O O, 10 0 O -, Orn v PC •er 7 O, r ,0 O M M 7 i/1 - N N 00 N 6• 6• O 7 VD 0 ,0 00 '0 - 10 t-- ,, M O on, M oo 00 00 -- ,, O N m ,O ' N o i s ,-- oo 7 0, v 7 M 7 -. N M co N 69 69 en 00 '0 O � V --• Cr 0 , 0 0 0 M N N N 00 0, O O O 7 7 Cr, D; O u © • 00 N O 10 T , O O 00 ■0 , O N N V N C , 7 00 -. N N 69 69 V) N N M N 00 M O - r- O M -. CV O N v'. -• 00 h r 0 O, `O ve, 7 7 N H 77" O v1 0, M M M O O N •-- M V M O 00 N t .7 N M O N 7 N O 69 69 O N N '.O l- M '0 00 0 N O 00 N 7 O vt M 7 00 O kri ut N O 0 M 0 0 , di 0, me Nom N ,0 -' ,0 O � r ›. 69 69 4 2 , o C y 7 w o0 O 00 M 7 ao M _ W 0 M 00 Cl 0 4") I 0 0 1 + � . 0 0 7 N O M M , 0 01 d ot O 7 N N --• N 7 en -• W (4 r- Ni ON 0' N .7. 'o O M M > L 69 69 V L7. d 0 F. o r o © o °° o 0 u VD H d M N M ,D - , O 10 N M U a N CD 2 . "'� O O O -• t-- M O, O H ti N r 0, ,O 00 co' 0.4 00 . V1 M .-. . O N . . O � 6,,, 69 W © O 0 N 0, — N N -. 00 0, N N ,-- , 0 v1 O 10 10 lf, • M O N N O - M 7 O N N , 0 O 0 N 00 v1 N 10 .-. N v i M CSC' 7 N 00 o0 7 N N o0 49 69 .77 00 . M Cr. t N 7 , 0 oo v1 10 7 N ~ O O 0 7 N 0 v1 - M O v) M CO , O N 'O 7 N , 0 o0 7 O 7 ,0 ,-. 7 •--• ,- \O 00 69 69 7 v) 0, 0 , 0 00 7 M_ C -. Cr ff O , 0 N N 0 r 0 M O 7 N --' 7 00 N 0 V v) O , O Or-- M 0 N • 00 ,0 7 7 0 -. M 00 O -. N 7 N N 0, :$ 69 00 a 0 v K m P. 'G y y • 7 0 y N a '4 H ' ° ❑ a Pi) C1 c N 0 N c o a o 'c F° l''' -ti h ° °' d C7 .0 m H c . v u ° °A C ° c° c 0 ,s ° v ' C7 ,4 H Q � U -° F - 117 - Table 4 COUNTY OF HAWAII war:, Changes in Fund Balances, Governmental Funds (Modified accrual basis of accounting) Last Ten Fiscal Years (Amounts in thousands) '" Fiscal Year 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Revenues: for Property tax $ 83,271 $ 84,240 $ 93,712 $109,991 $121,868 $ 131,087 $ 153,207 $ 181,446 $ 208,313 $ 225,858 Public service company tax - - 5,108 5,064 5,332 6,351 6,812 7,396 8,381 10,229 Fuel tax 6,103 6,450 6,422 7,343 7,552 7,581 7,857 8,471 7,888 7,662 Public utility franchise tax 3,950 4,777 4,993 4,817 5,373 6,017 7,329 8,520 9,027 11,118 Licenses and permits 7,261 7,412 7,781 9,261 11,840 14,442 16,544 16,269 15,918 14,972 low Intergovernmental 38,383 55,034 68,918 65,203 58,559 73,372 69,637 63,599 72,601 70,869 Charges for services 11,215 12,056 11,689 13,481 14,467 18,149 19,852 21,685 22,154 21,404 ,. Investment earnings 5,284 6,409 3,801 2,066 1,806 3,104 5,223 10,291 12,144 8,914 Miscellaneous 2,416 2,529 3,035 6,179 4,718 4,450 4,380 5,073 7,151 5,690 _ Total Revenues 157,883 178,907 205,459 223,405 231,515 264,553 290,841 322,750 363,577 376,716 w. Expenditures: Current: General government 21,442 22,073 20,192 22,317 23,070 26,183 31,153 37,652 42,991 45,882 Public safety 58,395 59,391 61,870 64,667 69,117 76,404 83,591 93,241 103,617 107,540 Highways and streets 8,006 9,998 8,376 8,675 9,542 9,787 12,608 14,033 19,529 17,159 Sanitation 12,856 13,481 14,789 16,629 17,602 21,883 26,565 31,817 33,405 35,025 Health, education and welfare 5,079 8,344 16,726 18,867 19,047 19,870 19,050 21,470 24,609 24,596' Culture and recreation 11,526 12,085 12,127 13,086 13,169 13,982 14,731 17,118 18,179 18,853 Pension and retirement contributions 5,641 3,679 11,019 7,926 11,081 14,204 19,937 21,796 24,296 28,870 .r.» Employees' health insurance 9,544 10,773 12,198 12,758 14,256 16,168 16,133 16,941 18,089 19,119 - Other post employmnet benefits 13,629 14,950 * IP Miscellaneous 4,224 4,040 5,330 5,629 7,128 6,133 6,780 5,108 5,344 6,257 Debt service: Principal 8,862 9,399 10,025 11,800 12,826 13,150 14,060 16,076 16,548 19,749 Interest 7,759 8,416 8,467 8,469 9,283 9,534 9,914 9,894 13,116 12,790 Capital outlay 21,909 37,648 41,580 32,952 23,474 32,816 30,588 52,285 70,156 89,368 Pg.. Total Expenditures 175,243 199,327 222,699 223,775 229,595 260,114 285,110 337,431 403,508 440,158 Revenues over (under) Expenditures (17,360) (20,420) (17,240) (370) 1,920 4,439 5,731 (14,681) (39,931) (63,442) Other Financing Sources (Uses): *0 Sale of assets 28 16 15 9 1,593 1,486 82 5 3,470 58 Capital leases 2,677 23 930 1,353 1,474 1,369 404 2,403 2,187 1,026 State Revolving Fund loans 5,530 3,422 578 853 - 1,504 25 6,255 1,916 280 Sale of bonds 29,878 15,175 37,262 1,725 30,000 25,000 85,000 - 50,000 NW Refunding bonds 18,776 - 24,595 - - 31,607 - - Premium on bonds - - - - - 3,025 972 3,099 - 185 Refunding bonds issuance costs - - - - - (129) - (218) - - Payment to refunded bond escrow agent (18,776) - - - - (25,885) - (32,699) - - w Refund to lot owners - - - - _ - _ Transfers in 25,647 28,625 29,529 29,943 39,440 42,119 45,691 59,139 64,929 56,697 Transfers out (25,634) (28,568) (30,367) (29,943) (39,440) (42,119) (45,691) (59,139) (64,929 (56,697) 4 Total other financing sources 38,126 3,518 15,860 39,477 4,792 35,965 26,483 95,452 7,573 51,549 Or Net change in fund balances $ 20,766 $ 1(6,902) . 1 . 11 4 2EL $ 39,107 $ 6,712 $ 40,404 $ 32,214 $ 80,771 $ (32,358 ) = 1 . = . 9 . 3 . 1 w. Debt service as a percentage of noncapitalexpenditures 10.8% 11.0% 10.2% 10.6% 10.7% 10.0% 9.4% 9,1% 8.9% 9.3% ON Unaudited - see accompanying independent auditors' report. !!w' • IIW - 118 - v7 VD 47 00 00 d• M 0 N 0 ---+ 00 S In N CT N Ck co N d' 4? 0 VD 00 .--i 00 N M t M .-. N C 0 0 00 •-' It S 0 00 `. ' .D a) ^' M d• O d M kr, -' oo �-+ d < N N N - -� v7 O M H 0 k 0 N ^' M N • d' d' O N '-+ •-' •-' N O N d' O O M F' a) N a, N 00 d' 00 M 00 N 00 �O 00 0 47 M 0 0 C■ to 00 E.., • p„ �O N M O 00 M O N O 00 N d< '-' 00 d' --� N O O .- �--� ,-� N N 01 �--' ,--, .-+ N N O N 69 69 69 — z V) • 0 .� 0 0 0 0 0 0 0 0 0 t/'., 0 0 0 0 0 0 0 0 V7 0 0 0 0 0 0 0 d v7 0 0 0 0 0 0 0 d' a 6; 00 0 0 0 0 0 0 0 4 00 0 0 0 0 0 0 0 4 a C1 "0 69 69 F la. RI M 01 "0 0 N M 1 0 d' 01 01 d• h. 0 O, d' 00 O•■ O, 0 WI •ct d' 0 M t", 4-1 N 47 C 00 v7 0 O N d N N OCT N O d' N N N NN ell O d M N O u? 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N vl 00 --. .-, ^' N 00 v) 0 N 0 N t- N N 0 M N a M 0 t: V v) - ) Sr.; O M t-- — vi v) O M o0 M M O1 O [� N �0 O 00 '.0 N O '.0 N -t N M --• cr F" a 00 v) .-- ■ 00 Tr v) M M v) �t N N 01 v) M M 1D C\ 00 N M -- .1 (N v) c. T' -r •- 'D 601. .r N: 69 tt N - N 0 a Z 69 bq 69 yg p a) u el 0 +' 0 0 0 0 0 0 v) vt h 0 O 0 O 0 0 v' v V MI -T -T O O O M v) T.. T. O O O M Ln vt v) 1 p 69 00 00 00 01 O1 Q1 00 00 II M N 00 01 C1 C1 l0 00 v) vi '° a 69 ct 69 D 0 0 0 8a+° CS 00 01 0 U O O 4 a) O O >, - t . o N 00 00 M 01 N a .1 _ 00 0 ry' ai 7 ` a 0 et 0 N O M d M .-+ . r. 0 4. l�� cd 1 r. t-- Vim') 0 OHO 0 ' V "in 0 •... @ - O O O N vi O M— t": VO 0 vi CT,' N N 0o vi Tr -- — CC 0 0 f", , N .r C, t` 01 t` ken M 00 VD T . 00 N .r — V' ON .r Ch m + y 7,4 +. + v) ■D M )O M M 1D t` M O v^ t` N O V7 a) ., . + ,� y Z pa M -. — O of — N N M 4 i. CI PO 69 0 N + v C 4 •' iV a� O 0 � D O ' t7 �� A U.� CA (1) ; C o , 0 o Z 00 od CZ as 0 > > 0 5 N ' 0 > C N' 2: 0 1 O a 0 O 0 a 0 0 o o ' on 0 iuhh o o a) . - ,AdxU a'"dUx .o dUxd v 4: --�H 0 cn U ccl 00 R O �p U W CA "IC - , D O O H b 4., N CI p C) M , Z = Po - 122 - Table 6 COUNTY OF HAWAII Principal Taxpayers June 30, 2009 and 2000 Fiscal Year 2009 Fiscal Year 2000 Percentage Percentage 2008 of Total 2000 of Total Assessed Assessed Assessed Assessed Taxpayer Business Valuation Rank Valuation Valuation Rank Valuation Hualalai Investors LLC Developer/Hotel $ 240,434,900 1 0.7% $ - - Hilton Land Investment 1 LLC Hotel 239,433,900 2 0.7% - - Mauna Kea Development Corp. Developer/Hotel 237,247,300 3 0.7% - - WB KD Acquisition LLC Developer 197,382,400 4 0.6% - - 1250 Oceanside Partners Developer 196,188,400 5 0.6% - - WB-LCP Orchid Owner LLC Hotel 172,546,300 6 0.5% - - Mauna Lani Resort Inc. Developer/Hotel 124,918,100 7 0.4% 77,207,700 5 0.6% BRE /Waikoloa LLC Hotel 80,030,300 8 0.2% - - Kona Coast Resort Ltd. Condo /Time Share 82,733,300 9 0.2% 45,528,800 10 0.4% Raptor Residence LLC Private Dwelling 69,870,500 10 0.2% - - Kaupulehu Makai Venture Developer/Hotel - - 158,187,600 2 1.3% Global Resort Partners Hotel - - 186,149,600 1 1.5% South Kohala Resort Corp. Hotel - - 106,122,000 3 0.9% Mauna Kea Beach Hotel Corp. Hotel - - 96,063,200 4 0.8% Kamehameha Schools (a) Land trust - - 65,594,100 6 0.5% M. L. Hotel Investors LP Hotel - - 65,543,100 7 0.5% KM Kona Partners Developer - - 61,400,400 8 0.5% RWH Inc. Hotel - - 47,000,000 9 0.4% $1,640,785,400 4.8% $ 908,796,500 7.4% Note: Gross valuation at January 1, 2008: $ 34,434,334,300 Gross valuation at January 1, 1999: $ 12,101,003,382 NOTES: (a) Formerly known as BP Bishop Estate Trustees. Source: County of Hawaii, Department of Finance, Real Property Tax Division Unaudited - see accompanying independent auditors' report. - 123 - 0 0 s a) on y w E"+ a" o 0 0 0 0 0 0 0 O H OQ A, a. 6 O� N O k0 N O •-+ . ; ,d ti 00 .-∎ S r S m ■-, a r N m v'i \O O N l" N 00 N. S O, N dr O, N ^-• dl m CA O u • F- - -- N DD N P.A. N N A O 6 a , 2 ‘a. a o 0 0 0 0 0 0 0 0 ° Q N 0 0 0 0 0 0 001 0 001 Ma A U a 0 O 00 0 0 0 0 r"". 00 m ^. •-+ •-+ 4444 O •-+ kO N a1 71' O N 00 O N .-+ N G U n n vl VD O, tf N 0 .O VD 00 m V H 0 k k ■0 O vi N kO 10 - cr . , a): n H m .-- � N O, O m V7 0) 0 00 O 0— n N � 00 0 0" 0 M U N N . 73 CI O . 2 on F". L" V N 00 V Cr, O 000 a W • x O a\ ' N 0 O 1 ›.1 4) 0 Cr i� t. 00 N O _ O 0 N m H y I4 F" a: 0 N 0 k0 v O N ott A U N a1 00 k.0" 0 O �n 0 at 4. 0. L) v °°, o . °- o 0 0 0 o a o 0 0 u i. Pr O ° Q1 0■ Cr*, O, 01 Cr, Q 0 00 N v'i 00 N •--• k 4. O N M S S O 7 O O 0 a) • dt O O _ _ '. N '. b X o 00 <7, dl N m m 0 0 m O O U ° N O CT O N d- . 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O __, r M ., ,O 7 r 4 0 M ,O a� y 0 0 U N 7 N -• o h 00 ,O O , O ,,, E 0 M M M M N N N M N N a> 0 N • U w . 4 Q O C © © © O O 'n 00 Cr 0, 0 0 0 �'' 00 0 O O O O O 00 O M Cr O 0 C C. 0 © v , v, O M N O M M N 0 w 0 >, ,c3 — - , p N - f i O i l : 0 0 0 0 N C. M ~ L. C tt C.' , v, , 0 . , N 0 M U ��+�•+++• A . N C . u • O t` O o0 00 t` N ,O Q\ n --� y 0 ,0 cS O (7 .fl � M . . ,O v, 00 . 0 . 0 CV N V, N cr■ U .r 0A u O a) v, _ • F• c'� O N M et v, ,O © 00 O, V] U O 0 0 0 0 0 0 0 0 0 0 0 0 0 [� U y , 9 :� ti 0 0 0 0 0 0 0 H C. • � .. ›. N N N N N N N N N N O ""'� ^ C - 125 - Table 9 COUNTY OF HAWAII Ratios of General Bonded Debt Outstanding Last Ten Fiscal Years Debt Percent of Applicable to Net Taxable Fiscal Legal Debt Property Per Year Margin (a) Value (b) Capita (c) 2000 162,716,490 1.6% 1,094 2001 156,636,220 1.6% 1,032 2002 161,310,657 1.5% 1,042 2003 187,316,839 1.6% 1,180 2004 176,693,195 1.4% 1,082 2005 195,198,142 1.3% 1,167 205,219,940 1.2% 1,199 2007 281,836,503 1.2% 1,633 2008 265,431,280 1.0% 1,510 2009 296,535,925 1.0% N/A NOTES: (a) See Table 10 for debt applicable to legal debt margin. F (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. tV - 126 - ° •n ‘.0 rn va rn cr M O M `O 00 M O 00 Vl M N N N N O „ 7 N 7 N O 7 N 69 69 0 69 69 6A c y" o 00 et et .1- o w O O , n 'n N et' 36 0 a" ' b wo M M ka 0 6A 69 > 40 O0 0 a iO > N o a+ U te a) er M O 0 N O (0 .., N °O m \ e 4: U 0) N N 00 N -. N Q .5 bA 00 M M 4. 2 a) 9 69 w • 6 a w vi G, Y 0 0 O 0 p N 00 et a te ) A > � p ‘0 r N 7 ;If 'b " v N a) OA to N O N N OM a) .-1 N 1 R' 'O 0p a) o N N 69 69 • bq 4) 0)) ate) 0) o Z QQ 71- co a ss o 00 e 0 ,a o 0 0 0 0 _- rn 00 0 >, a Y O � 0 0 U w ti O CO _ O v yy 0) U Q y N w 7 M O M \ R U w a o M C U W en O a w o N , o N a a V. o ' r-i m Vl M N 0 F cu CI) w O O v M r CL C O A , Q N v') O , cc U bi o 69 69 g w, GO 1..) 00 I N _ F N 4:: M 00 c O F. ' 0 O ..0 - a q 7 6A 69 Z O ' C CD 0 00 0 a) G O , ' vi '0 a.) O h - M O NI n • D O . 6A 69 C y` y z O co O 0 > 7 ro 0 © . N . ` N ° m 6 a a N V1 M O L . _, Q 69 69 U 0 .4-; a) cu --S V 'b •-• , .. 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Q 5 0) ,-. p .0 o g ' C7 O cu cn w~ tu ro b CO n , W r) 71 , ....,H VD • H - 127 - INN IM 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 1999 146,970 $ 2,987,074 $ 20,324 30,926 7.8% a. 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% 0 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% 00 2007 172,547 5,124,976 29,702 30,618 3.4% 2008 175,784 N/A N/A 30,408 5.5% or Source: County of Hawaii, Department of Research and Development Unaudited - see accompanying independent auditors' report. ow m. ow V 8 • - 128 - ; Table 12 COUNTY OF HAWAI'I Principal Employers, County of Hawaii June 30, 2009 and 2000 2009 2000 Percentage Percentage of Total County of Total County Employer Employees Rank Employment Employees Rank Employment State of Hawaii 8,115 1 9.4% 7,450 1 10.6% County of Hawaii 2,745 2 3.2% 2,250 2 3.2% United States Government 1,364 3 1.6% 850 5 1.2% Hilton Waikoloa Village 984 4 1.1% 1,200 4 1.7% Wal -Mart 852 5 1.0% - - KTA Super Stores 800 6 0.9% 776 7 l .1 % Mauna Lani Resort (Operation), Inc. 685 7 0.8% 800 6 1.1% The Fairmont Orchid, Hawaii 577 8 0.7% - - Four Seasons Resort Hualalai 562 9 0.7% - - Hapuna Beach Prince Hotel 487 10 0.6% 579 9 0.8% C. Brewer & Co. - - 1,987 3 2.8% Mauna Lani Bay Hotel - - 650 8 0.9% Orchid at Mauna Lani - - 554 10 0.8% Total 17,171 20.0% 17,096 24.4% Total employee count 86,325 70,050 Source: County of Hawaii, Department of Research and Development Unaudited - see accompanying independent auditors' report. - 129 - A e0 M .. O 00 0 01 0 7 \D 0 0 0 7 N 01 0 0 0 0 00 0, N 0 O, v1 0 01 0 Q, O V o 7 0 7 0` 0 0 0 7 m 0 0 0 0 o .4- O, 7 7 O V 01 O V 1n "' O vl v1 N O N 00 00 vl ,O O M N V h M , O N N M 7 N v1 0 el N v.) N m ,D t --• .--. 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