HomeMy WebLinkAboutCOM 0548.000 2010-2012Colleen Schrandt
Lrgrslanve 1uditor
7criling Address:
11(1i1,ai'i County Building
25 : l upuni .Street
Milo, Hawaii 96720
Date:
To:
From:
O nunf r of
OFFICE OF THE LEGISLATIVE AUDITOR
Telephone: (M8) 961 -8386 Facsimile: (808) 961 -8905
January 12, 2012
Dominic Yagong, Chairman
And Members of the County Council
Colleen Schrandt
Legislative Auditor
RE: Post -Audit Reports for Fiscal Year Ended June 30, 2011
Business . I ddress.
1266 tiamc-hamoho . l venue
Iromrorks Building. Room _I -1
Hilo. Ilouoi'i 96-20
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This letter transmits for your review, deliberation, and acceptance. the Comprehensive Annual
Financial Report For the Fiscal Year July 1, 2010 to June 30,2011, as prepared by the County
Department of Finance, together with the Internal Control and Business Issues Report June 30,
2011 and Single Audit of Federal Financial Assistance Programs June 30, 2011, as prepared by
external auditors Accuity LLP. Pursuant to Hawaii County Charter section 10 -13. Puss- uudil,
an independent audit of the accounts and financial transactions of the County is conducted at
least once annually by a certified public accountant or firm of certified public accountants.
designated by the Council, who have no personal interest, direct or indirect, in the fiscal affairs
of the County.
Accuity LLP will be present at the Council meeting on February 1, 2012, to answer an ■
questions you may have. Appropriate department head(s) or their representative(s) will is 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: Cindy Yee, Accuity LLP
Department of Finance
CS /lhs
(Note: The above reports ( ) are on file in the
Office of the County Clerk.)
Serving the interests o/ the People o/ Oar Island
Hawai'1 County is 017 Equal Opportunity Provider and l'.nrplorer
Comm. No.
Reef. To:
*of. Dote IAAI i 3 2(112
549
DOMINIC YAGONG
Chairperson
K. ANGEL PILAGO
Vice Chair
January 12, 2012
HAWAI`I COUNTY COUNCIL
County of Hawai i
Hawai 'i County Building
25 Aupuni Street
Hilo, Hawai`i 96720
Dominic Yagong, Chairperson
Hawai`i County Council
25 Aupuni Street
Hilo, Hawai`i 96720
RE: Communication 548
2011
FRED BLAS
BRENDA FORD
PETE HOFFMANN
DONALD IKEDA
DENNIS "FRESH" ONISHI
BRITTANY SMART
J YOSHIMOTO
: Post -Audit Reports for Fiscal Year Ended June 30,
Pursuant to Section 2(g) of Rule 4 of the Rules of Procedure of the Council of the County of
Hawai`i, this written request is submitted with my approval that the above - referenced matter be
waived from the Committee on Finance to the full Council for immediate action. In reviewing
this matter, timely approval is crucial. It is therefore advantageous that approval is granted and
the matter be placed onto the next Council agenda for review. However, in the event this request
is denied, for whatever reason, I understand the matter shall be referred to the Committee on
Finance for placement on its future agenda.
Sincerely,
0-Brenda J. Ford, Chairperson, Finance Committee
Appr'ed /Date /Waive to Council: Disapproved/Date /Refer to FC:
u Dominic Yagong, Chai
Hawai`i County Council
BJF /dkr
Dominic Yagong, Chairperson
Hawai`i County Council
Serving the Interests of the People of Our Island
Hawai`i County is an Equal Opportunity Provider and Employer
County of Hawaii
State of Hawaii
Photo by Patricia Faisca
Comprehensive Annual Financial Report
For the Fiscal Year
July 1, 2010 to June 30, 2011
COMPREHENSIVE
ANNUAL FINANCIAL REPORT
Fiscal Year Ended June 30, 2011
COUNTY OF HAWAII
Hilo, Hawaii
William P. Kenoi
Mayor
William Takaba
Managing Director
Prepared by
The Department of Finance
Nancy E. Crawford
Director of Finance
COUNTY OF HAWAII
Comprehensive Annual Financial Report
For the Fiscal Year Ended June 30, 2011
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
Report of Independent Auditors 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 87
FINANCIAL SECTION
(Continued)
Page
Combining and Individual Nonmajor Fund Statements and Schedules:
Combining Balance Sheet - Nonmajor Governmental Funds 90
Combining Statement of Revenues, Expenditures, and Changes in Fund
Balances - Nonmajor Governmental Funds 94
Schedules of Revenues, Expenditures, and Changes in Fund Balances -
Budget and Actual (Budgetary Basis):
Highway Fund 97
Sewer Fund 98
Solid Waste Fund 99
Cemetery Fund 100
Parking Meter Fund 101
Vehicle Disposal Fund 102
Bikeway Fund 103
Workforce Investment Act Fund 104
Golf Course Fund 105
Geothermal Relocation and Community Benefits Fund 106
Beautification Fund 107
Hawaii County Housing Agency 108
Park Dedication Fund 109
Combining Statement of Agency Funds Net Assets - Agency Funds 110
Combining Statement of Changes in Assets and Liabilities - Agency Funds 112
Combining Statement of Private Purpose Trust Net Assets - Private Purpose Trusts 117
Combining Statement of Changes in Net Assets - Private Purpose Trusts 118
STATISTICAL SECTION
Table 1 - Net Assets by Component 119
Table 2 - Changes in Net Assets 120
Table 3 - Fund Balances, Governmental Funds 122
Table 4 - Changes in Fund Balance, Governmental Funds 123
Table 5 - Real Property Assessed Values by Classification and Tax Rates 124
Table 6 - Principal Taxpayers 128
Table 7 - Property Tax Levies and Collections 129
Table 8 - Ratios of Outstanding Debt by Type 130
Table 9 - Ratios of General Bonded Debt Outstanding 131
Table 10 - Legal Debt Margin Information 132
Table 11 - Demographic and Economic Statistics 133
Table 12 - Principal Employers, County of Hawaii 134
Table 13 - Full -Time Equivalent County Government Employees by Function 135
Table 14 - Operating Indicators by Function 136
Table 15 - Capital Asset Statistics by Functions 137
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4
INTRODUCTORY SECTION
William P. Kenoi
Mayor
December 27, 2011
County of Hawaii
Finance Department
25 Aupuni Street, Room 2103 • Hilo, Hawaii 96720
(808) 961 -8234 • Fax (808) 961 -8569
The Honorable Mayor and Members of the Council
County of Hawai`i
25 Aupuni Street
Hilo, Hawai`i 96720
Nancy E. Crawford
Director
Deanna S. Sako
Deputy Director
We transmit herewith the Comprehensive Annual Financial Report for the County of
Hawai`i, State of Hawai`i (the County), for the fiscal year July 1, 2010 to June 30, 2011.
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 financial position and results of operations of the various funds of the County. All
disclosures necessary to convey the maximum understanding of the County's financial
activities have been included. Management's discussion and analysis is also included to
aid users of the financial statements.
This report presents the financial position of the County of Hawai`i at June 30, 2011 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 Hawai`i, including its component unit, the
Department of Water Supply, established by the County Charter as a semi - autonomous
Hawari County is an equal opportunity provider and employer.
body of 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, 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. Although 2009 proved to be a
challenge for most of the major sectors of the island's economy, the end of fiscal year
2010 and beginning of fiscal year 2011 showed the early signs of an impending economic
recovery and the remainder of fiscal year 2011 continued to show signs of the same
restrained recovery.
The County's labor force numbered 83,367 at June 2011, which is a slight increase from
a year ago. A sign that the economy is on the road to improving instead of the dramatic
downturn that confronted the County several years ago is the fact that the County's
unemployment rate for the current fiscal year 2011 (9.5 %) was slightly lower than the
prior fiscal year 2010 (10.0 %), which serves as a positive indicator for the second year in
a row. Despite the higher level of unemployment facing the State in recent years, the
State continued to remain below the national rate as it did prior to the onset of the
recession.
1Wg
2
Tourism — Tourism has always been 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 Hawai`i 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. Another indication of the
County's slowly rebounding industry, is the fact that there was a 7% increase in the
number of visitors to the island from the prior fiscal year. For the state overall, visitor
arrivals have shown an amazing increase after the dismal performance in 2009, with
visitor spending proving to be even more impressive.
Construction — The County's second significant industry is construction, which appears
to be a weakness for the island economy as seen in the negative growth of construction
completed, lower building permits and losses in the industry's job total.
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. Astronomy continues to be a major factor in the success of the County's
economy with an estimated nearly 500 new jobs opening up through 2023 to meet the
needs of the current observatories and the creation of new jobs with the development of
the Thirty Meter Telescope (TMT) by the TMT Observatory Corporation. 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) and the permit application was approved by the Board of Land and Natural
Resources in February 2011. 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 Hawai`i Volcanoes
National Park and the Natural Energy Laboratory of Hawai`i Authority at Keahole, Kona
are also major contributors to international research and the local economy.
Major Initiatives
For the Year
During the year, the County focused on construction projects relating to housing,
sanitation and public safety, and other issues affecting the quality of life in the County.
Public Safety — During the fiscal year, construction was completed on the building that
houses the Pahoa Police Station and an office for the Vehicle Registration & Licensing
Division of the Department of Finance and the adjoining Pahoa Fire Station.
In August 2010, the Fire Department's new replacement rescue chopper was blessed and
less than a year later, in May 2011, groundbreaking occurred for the new Makalei Fire
Station in North Kona.
3
Public Works — Construction continued on the Waikoloa Housing project and on another
large housing project, by the name of the Kaloko Housing Project, and its related
Wastewater Treatment Plant, with an additional $3.9 million and almost $9.0 million
being expended during the fiscal year. Construction also continued on the 85,000- square-
foot West Hawaii Civic Center that began in 2008, and was substantially complete as of
January 2011. Total project expenditures reached $50.5 million at the end of the year.
Environmental Management — The Department completed construction related to the
Pahoa Solid Waste Recycling & Transfer Station with a total cost to the County of $4.5
million. Construction also continued on the Honokaa and Queen Lili`uokalani Village
Large Capacity Cesspool projects, with both projects reaching a total combined price tag
of $18.6 million.
For the Future
Public Safety — The South Kona Police Station is still in the final design phase. This
facility will be a major boost to the South Kona District once funding can be secured.
The Police Department is currently in the final phase of self assessment of obtaining law
enforcement accreditation through the Commission on Accreditation for Law
Enforcement Agencies (CALEA). The Department will shortly be in a position to
request for an on -site assessment from CALEA. In accordance with the CALEA
accreditation, the department is expecting to initiate its on -line computerized training
module which will allow for not only more timely training, but will also allow for
computerized recording of training undertaken by personnel.
Public Works — The Ane Keohokalole Highway or Mid -Level Road is scheduled for
completion in May 2012. The $35 million project is being built with American
Reinvestment and Recovery Act (Stimulus funds). The project will provide construction
jobs and enhance further development in the immediate areas.
Planning — Global warming and the rise in Coastal Waters are of great concern to
Hawaii, which has lead to continued participation in the State's Oceanic Resource
Management Program (ORMP) policy groups, working groups, seminars, and other
training to address this phenomenon. Regulating development within the Special
Management Area is on -going as part of the County's administration of Coastal Zone
Management. Since it impacts how we plan our future communities, a major focus of the
Planning Department is the refining and completing of the Community Development
Plans and subsequent updating of the General Plan.
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
4
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
included in the various fund balance categories based on whether the resources are
restricted, committed or assigned 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, certificates of deposit, repurchase agreements, and agency notes. The
average yield on deposits and investments was .37 %.
The County's policy is to minimize credit and market risks while maintaining a
competitive yield on its portfolio. Accordingly, with the exception of $222,326 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.
5
Other Information
Independent Audit
The County Charter requires an annual audit by independent certified public accountants.
Accuity LLP was selected in accordance with the County Charter and the procurement
provisions of the Hawaii Revised Statutes (HRS) and Hawaii Administrative Rules
(HAR) to perform the audit.
Employee Union Contracts
County employees are members of eight different bargaining units. Six bargaining units
have contracts that will expire on June 30, 2013 and the remaining two bargaining units'
contracts have already expired and negotiations are underway.
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 Hawai`i for its Comprehensive Annual Financial Report for the fiscal year
ended June 30, 2010. This was the twenty -third 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 Hawai`i.
Ift4,7 Gi4,4)
NANCY E. CRAWFORD
Director of Finance
6
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Certificate of
Achievement
for Excellence
in Financial
Reporting
Presented to
County of Hawaii
Hawaii
For its Comprehensive Annual
Financial Report
for the Fiscal Year Ended
June 30, 2010
A Certificate of Achievement for Excellence in Financial
Reporting is presented by the Government Finance Officers
Association of the United States and Canada to
government units and public employee retirement
systems whose comprehensive annual financial
reports (CAFRs) achieve the highest
standards in government accounting
and financial reporting.
President
Executive Director
7
ICounty Council
County
Clerk
County of Hawaii
Organization Chart
County Electorate
Legislative
Auditor
IMayor
IProsecuting Attorney
Office of Management:
Managing Director
Departments and agencies
under direct supervision
of the Mayor and/or
Managing Director:
Corporation Counsel
Finance
Planning
Environmental Management
Research & Development
Public Works
Parks & Recreation
Data Systems
Agencies under
administrative supervision
of the Mayor:
Civil Defense
Office of Aging
Mass Transportation
Housing & Community
Development
8
Departments under
commissions and
administrative supervision
of the Mayor:
Civil Service
Police
Liquor Control
Fire
Water Supply
(semi - autonomous)
PVit
IT*
County of Hawaii
Elected Officials
June 30, 2011
Administrative Officers (Term: 2008 -2012)
William P. Kenoi Mayor
Charlene Iboshi (effective 4/1/11) Prosecuting Attorney
County Council (Term: 2010 -2012)
Dominic Yagong Chair
K. Angel Pilago Vice Chair
Fred Blas Member
Brenda Ford Member
Pete Hoffmann Member
Donald Ikeda Member
Dennis "Fresh" Onishi Member
Brittany Smart Member
J Yoshimoto Member
9
Principal Officials
June 30, 2011
County Clerk
Legislative Auditor
Managing Director
Deputy Managing Director
Corporation Counsel
Director of Finance
Planning Director
Director of Personnel
Director of Research and Development
Chief of Police
Fire Chief
Director of Public Works
Director of Environmental Management
Director of Parks and Recreation
Manager, Department of Water Supply
Civil Defense Administrator
Director of Liquor Control
Transit Operations Administrator
Executive on Aging
Administrator, Office of Housing and
Community Development
Director of Data Systems
- 10 -
Jamae Kawauchi
Colleen Schrandt
William Takaba
Walter Lau
Lincoln Ashida
Nancy E. Crawford
Bobby Jean Leithead -Todd
Ronald Takahashi
Randy Kurohara
Harry S. Kubojiri
Darryl Oliveira
Warren Lee
Frank Demarco
Robert Fitzgerald
Milton Pavao
Quince Mento
Gerald Takase
Thomas Brown
Alan Parker
Stephen Arnett
Burt Tsuchiya
„4.
FINANCIAL SECTION
•
LUItYLLP
CERTIFIED PUBLIC ACCOUNTANTS
Report of Independent Auditors
To the Chair and Members of the County Council
County of Hawaii
We have audited the accompanying financial statements of the governmental activities, the business -type
activities, the discretely presented component unit, each major fund, and the aggregate remaining fund
information of the County of Hawaii, State of Hawaii (the "County ") as of and for the year ended June 30,
2011, which collectively comprise the County's basic financial statements as listed in the table of
contents. These financial statements are the responsibility of 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 examining, on a test basis, evidence supporting the amounts
and disclosures in the financial statements. An audit also includes assessing the accounting principles
used and the 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, 2011, and the respective changes in financial position and, where applicable, cash flows
thereof and the budgetary comparison for the general fund for the year then ended in conformity with
accounting principles generally accepted in the United States of America.
In accordance with Government Auditing Standards, we have also issued our report dated December 27,
2011, 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 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.
The accompanying management's discussion and analysis on pages 13 through 23 and schedule of
funding progress for the EUTF on page 87 are not a required part of the basic financial statements but
are supplementary information required by the Governmental Accounting Standards Board. We have
applied certain limited procedures, which consisted principally of inquiries of management regarding the
methods of measurement and presentation of the required supplementary information. However, we did
not audit the information and express no opinion on it.
999 BISHOP STREET, SUITE 1900
HONOLULU, HAWAII 96813
TELEPHONE: 808 531 3400 E csIMILE: 808 5313433
-11-
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, combining and individual
nonmajor fund financial statements, and statistical section are presented for purposes of additional
analysis and are not a required part of the basic financial statements. The combining and individual
nonmajor fund financial statements 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 and statistical sections 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.
Acr-w�L�f
0
Honolulu, Hawaii
December 27, 2011
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, 2011. 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 $607.4 million
(net assets). This amount includes $40.7 million in unrestricted net assets, an increase of $2.6
million from the prior year.
• The County's total net assets increased by $55.6 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 $158.9 million, a decrease of $13.3 million from the prior year.
Approximately 47 percent of this total amount, $74.1 million, is available for spending at the
County's discretion (unrestricted fund balance).
• At the end of the current fiscal year, unrestricted fund balance for the general fund was $37.5
million, or 16 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,
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, capital projects
fund and bond redemption fund, which are considered to be major funds. Data from the
remaining governmental funds are combined into a single, aggregated presentation.
Individual fund data for each of the non -major governmental funds is provided in the form of
combining statements elsewhere in this report.
The County adopts an annual appropriated budget for its general fund and special revenue
funds. A budgetary 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 schedules 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 budgetary comparison schedules for the nonmajor special
revenue funds. This supplementary information is presented immediately following the notes to
the basic financial statements.
Assets:
Current and other assets
Capital assets, net
Total assets
GOVERNMENT -WIDE FINANCIAL ANALYSIS
Condensed Schedule of Net Assets
June 30, 2011 and 2010
Primary Government
Governmental Activities Business -type Activities Total
2011 2010 2011 2010 2011
2010
$ 220,271,120 $ 220,363,931 $ 1,057,768 $ 1,067,909 $ 221,328,888 $ 221,431,840
836,674,103 757,580,639 1,193,198 1,219,361 837,867,301 758,800,000
1,056,945,223 977,944,570 2,250,966 2,287,270 1,059,196,189 980,231,840
Liabilities:
Long -term liabilities
outstanding 421,449,861 398,064,998 884,232 916,117 422,334,093 398,981,115
Other liabilities 29,058,381 29,061,094 423,100 385,529 29,481,481 29,446,623
Total liabilities 450,508,242 427,126,092 1,307,332 1,301,646 451,815,574 428,427,738
Net assets:
Invested in capital assets, net
of related debt 514,309,238 469,235,881 308,966 303,244 514,618,204 469,539,125
Restricted 51,840,697 43,958,660 185,087 184,914 52,025,784 44,143,574
Unrestricted 40,287,046 37,623,937 449,581 497,466 40,736,627 38,121,403
Total net assets $ 606,436,981 $ 550,818,478 $ 943,634 $ 985,624 $607,380,615 $551,804,102
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 $607.4 million at the close of
the most recent fiscal year.
By far the largest portion of the County's net assets (85 percent) reflects its investment in capital
assets (e.g., land, buildings, infrastructure, and equipment) less any related debt used to acquire
those assets that is still outstanding. The County uses these capital assets to provide services to
citizens; consequently, these assets are not available for future spending. Although the County's
investment in its capital assets is reported net of related debt, it should be noted that the resources
needed to repay this debt must be provided from other sources, since the capital assets themselves
cannot be used to liquidate these liabilities.
An additional portion of the County's net assets (9 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 $55.6 million during the current fiscal year, which was
$30.4 million more than the increase during last fiscal year. Real property tax revenue increased
by approximately $7.0 million, but this was offset by a corresponding increase in expenses of
approximately by $6.8 million. Capital grants and contributions also increased by approximately
$25.3 million relating mostly to highways and streets.
The County's net capital assets increased by $79.1 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 $23.4 million (6 percent) due
primarily to drawdowns of the State Revolving Fund loans and issuance of bonds, which were
offset by the County's required principal payments on debt from the prior year. See further
discussion of the increase in long -term debt outstanding on page 22.
1
1
Condensed Statement of Activities
For the Fiscal Years Ended June 30, 2011 and 2010
Revenues:
Program revenues:
Charges for services
Operating grants and contributions
Capital grants and contributions
General revenues:
Property taxes
Other taxes
Grants and contributions, unrestricted
Investment earnings
Other
Total revenues
Expenses:
General govemment
Public safety
Highways and streets
Health, education and welfare
Culture and recreation
Sanitation
Interest on Tong -term debt
Total expenses
Increase (decrease) in net assets
Net assets at beginning of year
Net assets at end of year
Primary Government
Governmental Activities Business -type Activities
Total
2011 2010 2011 2010
$ 34,044,547 $ 35,373,972 $ 372,599 $ 337,982
50, 820,951 49,571,173 133,215 136,802
38,810,806 13,532,669 - -
225,055,099
26,315,977
19,533,165
609,617
5,973,275
218,037,567
26,016,092
17,500,038
2,187,266
1,779,223
2,997
401,163,437 363,998,000 508,811
53,439,428 65,552,278
154,008,027 148,115,428
34,812,165 38,075,835
30,336,420 30,528,977
22,167,818 14,739,755
35,604,394 27,527,841
15,176,682 14,120,398
345,544,934 338,660,512
55,618,503 25,337,488
550,818,478 525,480,990
1,403
476,187
550,801 590,131
550,801 590,131
2011
$ 34,417,146 $
50,954,166
38,810,806
225,055,099
26,315,977
19,533,165
612,614
5,973,275
401,672,248
2010
35,711,954
49,707,975
13,532,669
218,037,567
26,016,092
17,500,038
2,188,669
1,779,223
364,474,187
53,439,428 65,552,278
154,008,027 148,115,428
34,812,165 38,075,835
30,887,221 31,119,108
22,167,818 14,739,755
35,604,394 27,527,841
15,176,682 14,120,398
346,095,735 339,250,643
(41,990) (113,944) 55,576,513 25,223,544
985,624 1,099,568 551,804,102 526,580,558
$ 606,436,981 $ 550,818,478 $ 943,634 $ 985,624 $ 607,380,615 $ 551,804,102
Analysis of Changes in Net Assets
Governmental activities. Governmental activities increased the County's net assets by
$55.6 million or basically all of the total growth in net assets of the County.
Total revenues increased by $37.2 million (10 percent). The County's property taxes increased
by $7.0 million (3 percent) during the year. The increase is attributable to the increase in real
property tax rates and more specifically the rates for apartments, which was offset by another year
of declining assessed values. Capital grants and contributions also increased by approximately
$25.3 million relating mostly to highways and streets projects.
Total expenses increased by $6.9 million (2 percent). The increase was due to the rising cost of
health care, which increased expenses relating to current and future health benefits by
approximately $9.4 million.
Expenses and Program Revenues — Governmental Activities
Year Ended June 30, 2011
$180,000,000
$160,000,000
$140,000,000
$120,000,000
$100,000,000
$80,000,000
$60,000,000
$40,000,000
$20,000,000
$0
Expenses
• Program revenues
cavooJ Q J� a��a�a o�a0a a�a�e` �a�` o��O e` • to r4 7) ce
C1e �,�� hoc JJ yN.
\tere �, Ne,
NZ$'
Revenue by Source — Governmental Activities
Year Ended June 30, 2011
Grants and Investment
contributions not earnings,
restricted to $609,617
specific programs,
$19,533,165
Other taxes,
$26,315,977
Other, $5,973,275 Charges for
services,
$ 34,044,547
Ope rating grants
and contributions,
$50,820,951
Property taxes,
$225,055,099
Capital grants and
contributions,
$38,810,806
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 (45 percent),
followed by general government (15 percent) and sanitation (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 (56 percent), followed by operating grants
and contributions (13 percent) and capital grants and contributions (10 percent).
Business -type activities. Business -type activities decreased the County's net assets by $41,990.
Expenses for health, education and welfare account for all of the $550,801 of expenses. Charges
for services were $372,599, operating grants and contributions were $133,215 and investment
earnings were $2,997. Revenues increased by $32,624 due to a $32,858 increase in rental
receipts, which was offset slightly by a $3,587 decrease in the rental subsidy from the federal
government. Expenses decreased $39,330 (7 percent) due primarily to a decrease in general and
administration expenses of $36,437.
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, unrestricted 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 $158.9 million, a decrease of $13.3 million in comparison with prior
year. Approximately 47 percent of this total amount ($74.1 million) constitutes unrestricted fund
balance. The unrestricted portion of the fund balance is comprised of (1) $48.9 million in
committed fund balance, (2) $18.0 million in assigned fund balance and (3) $7.2 million in
unassigned fund balance. The remainder of the fund balance is divided between $2.8 million in
nonspendable fund balance for inventory and $82.0 million in restricted fund balance.
Approximately 78% of the restricted fund balance is due to restrictions relating to highways,
streets and abandoned vehicles ($37.2 million) and debt service ($26.6 million).
The general fund is the chief operating fund of the County. At the end of the current fiscal year,
unrestricted fund balance of the general fund was $37.5 million, while total fund balance
increased to $44.6 million. As a measure of the general fund's liquidity, it may be useful to
compare both unrestricted fund balance and total fund balance to total fund expenditures.
Unrestricted fund balance represents 16 percent of total general fund expenditures, while total
fund balance represents 19 percent of that same amount.
The fund balance of the County's general fund increased by $5.1 million during the current fiscal
year as opposed to a $20.1 million decrease in the prior year. Key factors in this increase are as
follows:
• An increase of $6.6 million (13 percent) in intergovernmental revenues. The most significant
cause of the increase was due to an additional $4.9 million in grant revenues relating to
health, education and welfare.
• A decrease in revenue from investment earnings of $1.6 million (72 percent) due to the
continuation of low interest rates on investments.
• A decrease of $6.3 million (16 percent) in general government expenditures due primarily to
a decrease in salaries and wages ($3.0 million) as a result of furloughs and pay reductions that
occurred during the fiscal year for two of the four unions.
• A decrease of $3.0 million (3 percent) in public safety expenditures due primarily to a
decrease in salaries and wages ($492,000) resulting from furloughs and pay reductions and
the fact that the prior year's expenditure amounts included the purchase of a rescue helicopter
for the Fire Department ($1.4 million) and a contract to improve and update the Police
Department's mapping data ($1.0 million).
• A decrease of $2.4 million (30 percent) in highways and streets expenditures due primarily to
decreases in expenditures in two of Mass Transit's federal grants ($1.6 million), which is
primarily due to the fact that last year's expenditures included the purchase of additional
buses for the County's fleet.
• An increase of $3.2 million (9 percent) in the cost of employees' current and future health
insurance expenditures due to the rising cost of healthcare insurance premiums.
• A decrease of $3.9 million (32 percent) in capital outlay expenditures, which was the net
result of an additional $4.7 million in expenditures under a federal grant relating to health,
education and welfare and a reduction in expenditures relating to the purchase of land using
the public access and open space money of $7.4 million.
The fund balance of the County's capital projects fund decreased by $19.0 million during the
current fiscal year. The decrease is primarily due to the combined total of the fund's main
revenue sources of long -term debt financing ($56.3 million), which consists of proceeds from the
issuance of bonds ($45.0 million), the related premiums on the sale of those bonds ($2.1 million)
and state revolving fund loan proceeds ($9.3 million), intergovernmental revenue ($15.0 million),
other revenue ($4.5 million) and transfers in ($3.7 million) being less than capital and debt
service expenditures ($98.4 million) for the current fiscal year.
Although the fund balance of the capital projects fund was $50.0 million at the end of the current
fiscal year and the total unrestricted portion was $13.9 million, the unassigned portion of the
unrestricted fund balance was a negative $3.6 million. This was due to a change in the prior year
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 consist of the Bond Redemption Fund and the Interest Fund. These funds
have combined total fund balances of $26.6 million, all of which is restricted for the payment of
debt service. The net increase in the combined fund balances during the current year in the debt
service funds was $1.2 million (5 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 $593,634, and the unrestricted net deficit of the Ouli Ekahi Affordable Housing
Project (Ouli Ekahi) amounted to $144,053. The net assets for Kulaimano decreased by $46,939
and the net assets for Ouli Ekahi increased by $4,949. Other factors concerning the finances of
•
I.'
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 $9.6 million increase in appropriations, most of which (93 %) 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 $3.2 million less
revenues than expected and $23.3 million less expenditures than appropriated. This is primarily
due to the following factors:
• $2.2 million negative variance in intergovernmental revenue, which was made up almost
entirely of the decrease in federal grants.
• $16.9 million is due primarily to a decrease in salaries and wages as a result of furloughs and
pay reductions that occurred during the fiscal year for two of the four unions and continued
efforts by each department to control costs during the budget year due to the tough economic
conditions facing the County. Amount consists primarily of variances in the following
functions: general government ($4.5 million), public safety ($9.8 million), health, education
and welfare ($1.1 million) and culture and recreation ($1.5 million).
• $2.3 million is due to lower than anticipated payments needing to be made in pension related
payments. With each department increasing efforts to control costs, overtime was also
closely monitored and the corresponding pension expenditures were not incurred.
• $1.9 million is due to the fact that the increase in health premiums for employees' was lower
than originally anticipated.
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, 2011 amounts to $837.9 million (net of accumulated depreciation). This
investment in capital assets includes land and improvements, buildings and improvements,
equipment, easements, 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 10
percent.
Major capital asset events during the current fiscal year included the following:
• Construction continued on the Ane Keohokalole Highway; construction in progress as of the
end of the current fiscal year increased by $13.6 million to reach a total of $15.6 million.
• Construction continued on the Kaloko Housing Project and related wastewater treatment
plant; construction in progress as of the end of the current fiscal year for both projects
increased by $9.0 million to reach a total of $9.4 million.
• Construction continued on the Honokaa and the Queen Liliuokalani large capacity cesspool
projects, construction in progress as of the end of the current fiscal year for both projects
increased by a combined $4.8 million to reach a total of $18.6 million.
• Construction continued on Phase II of the Hawaii County Building Improvements Project;
construction in progress as of the end of the current fiscal year had increased by $1.2 million
to reach a total of $22.2 million.
• Construction continued on the Waikoloa Housing Project; construction in progress as of the
end of the current fiscal year had increased by $3.9 million to reach a total of $35.7 million.
• Construction continued on the Pahoa Recycling and Transfer Station; construction in progress
as of the end of the current fiscal year had increased by $4.0 million to reach a total of $4.5
million.
• Construction continued on the West Hawaii Civic Center; construction in progress as of the
end of the current fiscal year had increased by $16.2 million to reach a total of $50.5 million.
• Construction began on the North Kona Effluent Reuse Upgrade project; construction in
progress as of the end of the current fiscal year had reached $3.4 million.
• $12.1 million of dedicated roads were received by the County in the current fiscal year.
Land and improvements
Infrastructure assets
Ground and site improvements
Buildings and improvements
Easements
Equipment
Construction work in progress
Total
Capital Assets
(net of depreciation)
As of June 30, 2011 and 2010
Primary Government
Governmental Activities
2011 2010
$ 107,682,068
204,755,865
387,259,565
1,649,304
52,130,844
83,196,457
$ 836,674,103
$ 35,517,270
223,637,430
259,595,193
54,046,284
184,784,462
$ 757,580,639
Business -type Activities
2011 2010
$ 753,877 $ 753,877
71,334 75,089
354,345 378,960
13,642 11,435
$ 1,193,198 $ 1,219,361
Total
2011 2010
$ 108,435,945 $ 36,271,147
204,755,865 223,637,430
71,334 75,089
387,613,910 259,974,153
1,649,304 -
52,144,486 54,057,719
83,196,457 184,784,462
$ 837,867,301 $ 758,800,000
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 $301.5 million, State Revolving Fund
loans of $36.6 million and general obligation bond anticipation notes of $10.0 million. At the end
of the current fiscal year, the County had total bonded debt outstanding of $301.5 million. This
entire amount was comprised of general obligation bonds which are backed by the full faith and
credit of the County.
The County's total bonded debt increased by $26.4 million (10 percent) during the current fiscal
year due to the issuance of bonds which was offset by regularly scheduled principal payments.
At the end of the fiscal year, the County maintained its "AA-" rating from Standard & Poor's and
Fitch and "Aa2" rating from Moody's for general obligation debt.
State statutes limit the amount of general obligation debt the County may issue to 15 percent of
the total assessed value of all county real property as established for tax purposes on the last tax
assessment rolls. The current debt limitation for the County is $3.8 billion, which is in excess of
the County's outstanding general obligation debt. Currently the County's outstanding debt
represents 8 percent of our debt limitation.
- 22 -
SIP
APO
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40.
cwt
At the end of the current fiscal year, the County also had notes payable to the U.S. Department of
Agriculture, Farmers Home Administration amounting to $0.9 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 for the current fiscal year is at 9.5 percent, which
represents a slight decline from last year's rate for the same period of 10.0 percent. The
statewide unemployment rate is well below the national number.
• The number of visitors to the County for the current fiscal year was 1,322,289, which
represents a 7 percent increase from the previous year's count of 1,234,507.
• Astronomy continues to be a major factor in the success of the County's economy with
an estimated nearly 500 new jobs opening up through 2023 to meet the needs of the
current observatories and the creation of new jobs with the development of the Thirty
Meter Telescope (TMT) by the TMT Observatory Corporation. The development of the
TMT atop Mauna Kea is progressing as the permit application was approved in February
2011 by the Board of Land and Natural Resources. It is projected that construction will
span over nine years resulting in 300 construction jobs and 140 full -time permanent jobs
with an annual estimated budget of $26 million.
• The construction industry continues to lag in its growth which is evident in the negative
growth regarding construction completed, lower building permits and losses in the
industry's job total.
• The County's agriculture section offers some growth to the island's economy as cattle
prices have rebounded from 2010 lows and the Kona coffee crop is expected to be
significantly larger.
These factors were considered in preparing the County's budget for the 2012 fiscal year.
At the end of the current fiscal year, unrestricted fund balance in the general fund was $37.5
million. The County has appropriated $13.9 million of this amount for spending in the 2012
fiscal year budget and it is included in the assigned portion of the fund balance.
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.
This page intentionally left blank.
BASIC FINANCIAL STATEMENTS
COUNTY OF HAWAII
Statement of Net Assets
June 30, 2011
Primary Government
Governmental Business -type Component
Activities Activities Total Unit
A,.
Assets
Current assets:
Cash and cash equivalents (notes 3 and 14) $ 57,396,161 $ 222,476 $ 57,618,637 $ 18,804,723
Restricted cash and cash equivalents (note 3) 34,751,533 34,519 34,786,052 w;
Investments (notes 3 and 14) 3,400,000 3,400,000
Restricted investments (note 3) 39,952,759 39,952,759
Receivables, net (note 4) 49,574,996 1,530 49,576,526 6,149,716
Receivable from improvement district
(notes 4 and 10) 58,449 58,449
Internal balances (note 5) 2,653 (2,653) - em
Inventories 2,835,361 - 2,835,361 1,139,349 M"
Prepaid expenses 1,600 1,600 152,498
Other 1,216,095 1,216,095
Total current assets 189,188,007 257,472 189,445,479 26,246,286 ,0,
Investments (note 3) 6,350,117 600,332 6,950,449
Restricted investments (notes 3 and 14) 21,659,752 - 21,659,752 15,904,088
Restricted cash and cash equivalents (note 3) 199,964 199,964
Receivable from improvement district, excluding
current portion (notes 4 and 10) 3,073,244 3,073,244 ktdP
Deferred charges - 3,685,785
Capital assets (notes 6, 8 and 14):
Utility plant in service, net 201,536,911
Infrastructure assets, net 204,755,865 204,755,865
Ground and site improvements, net - 71,334 71,334
Buildings and improvements, net 387,259,565 354,345 387,613,910
Equipment, net 52,130,844 13,642 52,144,486
Easements, net 1,649,304 1,649,304
Construction work in progress 83,196,457 83,196,457 64,700,194
Land and improvements 107,682,068 753,877 108,435,945 1,783,726
Total capital assets, net 836,674,103 1,193,198 837,867,301 268,020,831
Total noncurrent assets 867,757,216 1,993,494 869,750,710 287,610,704
Total assets 1,056,945,223 2,250,966 1,059,196,189 313,856,990
(Continued)
- 26 -
COUNTY OF HAWAII
Statement of Net Assets
June 30, 2011
Liabilities
Current liabilities:
Accounts payable and accrued liabilities
Deferred revenue (note 7)
Interest due on long -term debt
Bonds and loans payable, current portion net
(notes 10 and 14)
Compensated absences, current portion (note 10)
Claims and judgments, current portion
(notes 10, 12 and 14)
Capital leases, current portion (notes 8 and 10)
Landfill costs payable, current portion
(notes 9 and 10)
Customers' deposits
Other
Total current liabilities
Noncurrent liabilities:
Bonds and loans payable, net
(notes 10 and 14)
Compensated absences (note 10)
Claims and judgments (notes 10, 12 and 14)
Capital leases (notes 8 and 10)
Landfill costs payable (notes 9 and 10)
Deferred revenue
Customers' deposits
Total noncurrent liabilities
Total liabilities
Net Assets
Invested in capital assets, net of related debt
Restricted for:
Capital projects
Debt service (note 10)
Highways, streets and abandoned vehicles
Public access open space
Other
Unrestricted
Total net assets
See accompanying notes to the basic financial statements.
Primary Government
Governmental Business -type
Activities Activities
$ 16,975,068 $
2,435,058
6,415,301
40,435,016
8,504,320
2,405,503
1,436,943
219,540
3,232,954
82,059,703
312,199,754
25,347,552
8,491,634
1,620,139
20,789,460
368,448,539
450,508,242
514,309,238
5,956,816
26,614,682
14,972,836
3,520,138
776,225
40,287,046
$ 606,436,981
Total
(Concluded)
Component
Unit
418,491 $ 17,393,559 $ 3,267,437
4,609 2,439,667
- 6,415,301 1,079,541
33,063 40,468,079 7,105,000
- 8,504,320 1,481,751
- 2,405,503 54,135
1,436,943 -
- 219,540
- 607,615
3,232,954 -
456,163 82,515,866 13,595,479
851,169 313,050,923 56,273,412
25,347,552 1,244,337
8,491,634 187,865
1,620,139 -
- 20,789,460
851,169
1,307,332
308,966
369,299,708
451,815,574
1,583,953
15,517,031
74,806,598
88,402,077
514,618,204 220,546,507
5,956,816
185,087 26,799,769
14,972,836
3,520,138
776,225
449,581 40,736,627 4,908,406
$ 943,634 $ 607,380,615
$ 225,454,913
COUNTY OF HAWAII
Statement of Activities
For the Fiscal Year Ended June 30, 2011
Functions/Programs
Primary government:
Governmental activities:
General government
Public safety
Highways and streets
Health, education and welfare
Culture and recreation
Sanitation
Interest on long -term debt
Total governmental activities
Business -type activities:
Health, education and welfare
Total primary government
Component unit:
Water (note 14)
Expenses
$ 53,439,428
154,008,027
34,812,165
30,336,420
22,167,818
35,604,394
15,176,682
345,544,934
550,801
Program Revenues
Operating Capital
Charges for Grants and Grants and
Services Contributions Contributions
$ 1,856,795
4,447,120
9,800,983
424,107
1,626,178
15,889,364
34,044,547
372,599
$ 2,609,491
22,119,106
3,808,816
21,007,636
289,110
986,792
$ 3,985,868
1,772,940
25,501,168
4,864,752
556,792
2,129,286
50, 820, 951 38,810,806
133,215
$ 346,095,735 $ 34,417,146 $ 50,954,166 $ 38,810,806
$ 49,526,578 $ 38,211,205
$ 11,582,090
General revenues:
Taxes:
Property taxes, levied for general purposes
Public service company taxes
Public utility franchise taxes
Fuel taxes
Grants and contributions not restricted to specific programs
Investment earnings
Other
Total general revenues
Change in net assets
Net assets, beginning of year
Net assets, end of year
See accompanying notes to the basic financial statements.
e
Rief
Net (Expense) Revenue and Changes in Net Assets
Primary Government
Governmental Business -type Component
Activities Activities Total Unit
$ (44,987,274) $ - $ (44,987,274) $
(125,668,861) (125,668,861)
4,298,802 - 4,298,802
(4,039,925) (4,039,925)
(19,695,738) - (19,695,738)
(16,598,952) (16,598,952)
(15,176,682) - (15,176,682)
(221,868,630) (221,868,630)
(221,868,630)
(44,987) (44,987)
(44,987) (221,913,617)
- 266,717
225,055,099 225,055,099
9,296,852 9,296,852
9,415,624 9,415,624
7,603,501 7,603,501
19,533,165 19,533,165
609,617 2,997 612,614 188,026
5,973,275 5,973,275
277,487,133 2,997 277,490,130
55,618,503 (41,990) 55,576,513
550,818,478 985,624 551,804,102
606,436,981 $ 943,634 $607,380,615
188,026
454,743
225,000,170
225,454,913
Assets
Cash and cash equivalents (note 3)
Investments (note 3)
Receivables, net (note 4)
Due from other governmental funds (note 5)
Due from other nongovernmental funds (note 5)
Receivables from other governments (note 4)
Inventories
Other
Total assets
Liabilities and Fund Balances
Liabilities:
Accounts payable
Due to other governmental funds (note 5)
Deferred revenue (note 7)
Bond anticipation note payable (note 10)
Other
Total liabilities
Fund balances:
Nonspendable: Inventory
Restricted for:
Debt service (note 10)
General and public safety facilities
Highways, streets and abandoned vehicles
Parks and recreational facilities
Public access open space
Other
Committed to:
Budget stabilization
Disaster and emergencies
Lower Puna area
Rental assistance and subsidy
Sanitation
Self insurance
Highways, streets and abandoned vehicles
Parks and recreational facilities
Zoning change impact mitigation (fair share)
Other
Assigned to:
Subsequent year's budget
Other
Unassigned
Total fund balances
Total liabilities and fund balances
See accompanying notes to the basic financial statements.
COUNTY OF HAWAII
Governmental Funds
Balance Sheet
June 30, 2011
General
Capital
Projects
Bond Other
Redemption Governmental
Fund Funds
$ 26,267,179 $ 28,598,646 $ 40,036
6,350,117 36,669,752 24,942,759
22,855,874 4,101,545
847,030 236,474
1,303
14,808,341 3,627,744
2,835,361
249,019
$ 74,44,224 $ 73,2 A . $24,982,795 $46,728,598
Total
Governmental
Funds
$ 37,241,833 $ 92,147,694
3,400,000 71,362,628
2,556,475 29,513,894
1,057,615 2,141,119
1,350 2,653
1,625,017 20,061,102
2,835,361
846,308 1,095,327
219.159.778
$ 2,361,956 $ 10,982,851 $
638,767 796,855
23,889,601 1,389,333
- 10,000,000
2,665,750 48,820
29,556,074 23,217,859
2,835,361
3,520,138
776,225
2,104, 893
5,041,324
1,081,410
528,799
13,936,000
4,024,596
10,809,404
44,658,150
74.214.224
-30-
$ 3,630,261
705,497
2,594,379
240,000 278,384
240,000 7,208,521
- 24,742,795 1,871,887
7,054,047
22,209,912 14,972,836
1,614,730 -
5,273,421
2,553,536
6,337,583
4,259,215
4,323,190
3,277,820
4,826,134
12,462,532
1,724,703
86,722
297,443
$ 16,975,068
2,141,119
27,873,313
10,000,000
3,232,954
60,222,454
2,835,361
26,614,682
7,054,047
37,182,748
1,614,730
3,520,138
6,049,646
2,104, 893
5,041,324
3,277,820
4,826,134
12,462,532
1,081,410
4,278,239
6,424,305
4,259,215
5,149,432
13,936,000
4,024,596
(3,609,332) 7,200,072
50,016,302 24,742,795 39,520,077 158,937,324
1/12,11161. $24.982.795 $ 4728598 219.159.778
COUNTY OF HAWAII
Reconciliation of the Governmental Funds Balance Sheet to the Statement of Net Assets
June 30, 2011
Total fund balances - governmental funds $ 158,937,324
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 and improvements 107,682,068
Infrastructure assets, net 204,755,865
Buildings and improvements, net 387,259,565
Equipment, net 52,130,844
Easements, net 1,649,304
Construction work in progress 83,196,457
Total capital assets
836,674,103
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) 25,438,255
Excess contributions over Other Postemployment Benefit Obligation (OPEB) 120,768
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 (339,503,077)
Interest on long -term debt (6,415,301)
Capital leases (3,057,082)
Compensated absences (33,851,872)
Claims and judgments (10,897,137)
Landfill costs payable (21,009,000)
Total long -term liabilities
(414,733,469)
Net assets of governmental activities $ 606,436,981
See accompanying notes to the basic financial statements.
COUNTY OF HAWAII
Governmental Funds
Statement of Revenues, Expenditures, and Changes in Fund Balances
For the Fiscal Year Ended June 30, 2011
Revenues
Property taxes
Public service company taxes
Fuel taxes
Public utility franchise taxes
Licenses and permits
Intergovernmental
Charges for services
Investment earnings (loss)
Other
Total revenues
Expenditures
Current:
General government
Public safety
Highways and streets
Health, education and welfare
Culture and recreation
Sanitation
Pension and retirement
contributions (note 13)
Employees' health insurance
Other postemployment benefits
Other
Debt service:
Principal
Interest
Capital outlay
Total expenditures
Excess (deficiency) of revenues
over (under) expenditures
General
Capital
Projects
$216,511,276 $
9,296,852
5,720,878
57, 824,085
2,474,342
624,266
2,194,429
294,646,128
34,251,415
99,426,650
5,745,546
6,647,084
15,023,489
791,600
23,590,977
23,238,407
17,307,000
3,501,908
98,747
11,833
8,397,843 79,384,537
238,032,499
14,958,812
(126,444)
4,464,160
19,296,528
Bond
Redemption
Fund
Other Total
Governmental Governmental
Funds Funds
7,603,501
9,415,624
9,375,978
20,965,144
13,942,150
1 1,788
1,215,490
62,529,675
5,490,286
11,368,631
20,199,944
977,213
27,632,029
3,692,938
1,973,322
1,256,485
19,000,000 21,690,638 1,443,573
56,613,629
14,829,402
98,384,537 21,690,638 88,863,823
(79,088,009) (21,690,638) (26,334,148)
$216,511,276
9,296,852
7,603,501
9,415,624
15,096,856
93,748,041
16,416,492
509,610
7,874,079
376,472,331
34,251,415
104,916,936
17,1 14,177
26,847,028
16,000,702
28,423,629
27,283,915
25,211,729
17,307,000
4,758,393
42,232,958
14,841,235
87,782,380
446,971,497
(70,499,166)
(Continued)
COUNTY OF HAWAII
Governmental Funds
Statement of Revenues, Expenditures, and Changes in Fund Balances
For the Fiscal Year Ended June 30, 2011
Other Financing Sources (Uses)
Sale of assets
Increase in capital leases (notes 8 and 10)
State Revolving Fund loans (note 10)
Sale of bonds (note 10)
Premium on bonds (note 10)
Transfers in (note 5)
Transfers out (note 5)
Total other financing sources (uses)
Net change in fund balances
Fund balances at beginning of year
Increase in reserve for inventories
Fund balances at end of year
General
Capital .
Projects
Bond
Redemption
Fund
(Concluded)
Other Total
Governmental Governmental
Funds Funds
$ 5,767 $
47,112
(52,355,319)
(52,302,440)
4,311,189
39,518,917
828,044
$ 44,658,150
See accompanying notes to the basic financial statements.
9,256,967
45,000,000
2,078,415
3,743,965
60,079,347
(19,008,662)
69,024,964
$
$
22,885,741 29,469,578
- (3,743,965)
22, 885,741 25,725,613
1,195,103 (608,535)
23,547,692 40,128,612
$ 50,016,302 $24,742,795 $39,520,077
$ 5,767
47,112
9,256,967
45,000,000
2,078,415
56,099,284
(56,099,284)
56,388,261
(14,110,905)
172,220,185
828,044
$158,937,324
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, 2011
Net change in fund balances - total governmental funds $ (14,110,905)
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 87,634,551
Dedicated and contributed property 15,516,152
Depreciation expense and loss on disposals (24,057,239)
Excess of capital outlay over depreciation expense
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 (45,000,000)
Premium on bonds (2,078,415)
State Revolving Fund loans (9,256,967)
Capital leases (47,112)
Total debt proceeds
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 18,519,168
Bond anticipation note principal retirement 19,000,000
State Revolving Fund loan repayments 3,171,470
Capital lease payments 1,542,320
Total long -term debt repayment
79,093,464
(56,382,494)
42,232,958
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. 7,518,674
(Continued)
- 34 -
mrt
IWO
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, 2011
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 inventories $ 828,044
Decrease in Other Postemployment Benefit Obligation (OPEB) (3,810,613)
Increase in compensated absences (3,383,732)
Decrease in claims and judgments 4,473,554
Increase in landfill closure /postclosure care costs (505,000)
Amortization of premium from bond issuance 332,210
Amortization of deferred amount on refunding of bonds (248,721)
Net increase in accrued interest (418,936)
Net additional expenses
Change in net assets of governmental activities
See accompanying notes to the basic financial statements.
(Concluded)
(2,733,194)
$ 55,618,503
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, 2011
Revenues:
Taxes and assessments:
Property taxes
Public service company taxes
Total taxes and assessments
Licenses and permits:
Nonbusiness licenses and permits
Business licenses
Street use
Total licenses and permits
Intergovernmental:
Federal:
Programs for the aged
Community development block grants
HOME program grant
Law enforcement
Other
Total federal
State:
State General Fund - Act 185,
SLH 1990
Emergency medical services
Other
Total State
Total intergovernmental revenue
Charges for services:
General government
Culture and recreation
Highways and streets
Public safety
Total charges for services
Fines and forfeitures
Rents
Original
Budget
$ 217,006,691
8,730,000
225,736,691
3,406,089
1,438,384
1,466,000
6,310,473
2,512,692
2,090,800
4,276,835
8,880,327
Final
Budget
$ 217,006,691
8,730,000
225,736,691
3,406,089
1,438,384
1,466,000
6,310,473
Actual
(Budgetary
Basis)
ARP
Variance
Positive
(Negative)
$ 216,511,276 $ (495,415)
9,296,852 566,852
225,808,128
3,117,299
1,083,750
1,519,829
5,720,878
71,437 11'
(288,790)
(354,634)
53,829
(589,595) "°
2,538,188 1,800,219 (737,969)
2,983,865 2,561,170 (422,695)
996,793 1,040,555 43,762
2,618,493 1,666,773 (951,720)
8,686,023 8,531,111 (154,912)
17,823,362 15,599,828 (2,223,534)
18,323,000 18, 323,000
14,358,592 14,358,592
4,493,791 4,503,791
37,175,383 37,185,383
46,055,710 55,008,745
4,006,626 4,006,626
1,021,255 1,021,255
293,000 293,000
159,878 159,878
5,480,759 5,480,759
1,796,100 1,796,100
120,907 120,907
- 36 -
19,153,617
14,358,592
3,710,494
37,222,703
52,822,531
5,465,729
889,295
349,704
88,374
6,793,102
759,568
116,482
830,617
(793,297)
37,320
(2,186,214)
1,459,103
(131,960)
56,704
(71,504)
1,312,343
(1,036,532)
(4,425)
(Continued)
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, 2011
Revenues (continued):
Interest and penalties
Miscellaneous
Total revenues
Actual Variance
Original Final (Budgetary Positive
Budget Budget Basis) (Negative)
$ 1,250,000 $ 1,250,000 $ 623,125 $ (626,875)
4,647,404 5,317,433 5,207,722 (109,711)
291,398,044 301,021,108 297,851,536 (3,169,572)
Expenditures:
Current:
General government:
Finance 10,693,045 10,693,045 9,134,243 1,558,802
General government building 5,023,211 4,853,211 4,228,020 625,191
Legislative 2,993,271 2,993,271 2,761,054 232,217
Automotive equipment 4,339,317 4,439,317 4,352,558 86,759
Law 2,651,059 2,651,059 2,284,432 366,627
Research and development 2,969,525 2,977,024 2,825,252 151,772
Planning and zoning 2,878,548 2,878,548 2,619,532 259,016
Mayor's office 1,429,563 1,432,524 1,257,064 175,460
Engineering 1,503,209 1,473,209 1,324,321 148,888
Information Technology 1,319,383 1,319,383 1,171,689 147,694
Human Resources 1,757,889 1,757,889 1,653,594 104,295
Public works administration 1,448,440 1,525,925 1,387,110 138,815
Elections 1,097,695 1,097,695 753,169 344,526
Legislative Auditor 723,757 723,757 581,976 141,781
Total general government 40,827,912 40,815,857 36,334,014 4,481,843
Public safety:
Police department 52,968,752 53,384,219 47,851,792 5,532,427
Fire department 37,049,032 37,183,220 35,367,701 1,815,519
Prosecuting attorney 7,916,022 8,051,524 6,292,604 1,758,920
Protective inspection 2,025,087 2,055,087 1,803,999 251,088
Liquor control 1,381,184 1,399,184 1,325,316 73,868
Flood control 537,440 537,440 469,900 67,540
Civil defense agency 1,598,437 1,598,437 1,347,662 250,775
Animal control 1,860,000 1,860,000 1,860,000
Total public safety 105,335,954 106,069,111 96,318,974 9,750,137
Highways and streets:
Mass transit 5,753,999 5,753,999 5,719,075 34,924
(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, 2011
Expenditures (continued):
Current (continued):
Health, education and welfare:
Elderly activities
Office of Aging
Education
Social programs
Cemeteries
Physical examination
Total health, education and welfare
Culture and recreation:
Community music
Organized recreation:
Maintenance
Recreation
Aquatics
Hoolulu Park complex
Administration
Children's zoo
Summer/Intersession
Culture and arts
Elderly activities administration
Total culture and recreation
Sanitation:
Environmental management
Pension and retirement contributions
Employees' health insurance
Other postemployment benefits
Other
Total current
Original
Budget
$ 3,425,258
2,440,940
58,500
1,500,000
283,021
133,825
7,841,544
Final
Budget
$ 3,441,258
2,466,436
58,500
1,500,000
283,021
133,825
7,883,040
Actual
(Budgetary
Basis)
$ 3,042,988
1,797,383
56,435
1,500,000
273,645
123,465
6,793,916
276,798 269,298 232,537
6,635,773 6,635,773 6,386,159
2,295,147 2,295,147 2,176,245
2,240,118 2,242,118 2,057,357
930,904 946,904 874,825
2,174,685 2,148,985 1,713,121
656,497 666,197 632,400
525,017 525,017 324,918
206,839 208,339 193,087
576,805 580,805 454,960
16,518,583 16,518,583 15,045,609
908,012
25,639,502
25,177,125
17,307,000
4,396,423
908,012 791,599
25,639,502 23,352,397
25,177,125 23,238,407
17,307,000 17,307,000
4,369,977 2,689,367
Variance
Positive
(Negative)
$ 398,270
669,053
2,065
9,376
10,360
1,089,124
36,761
249,614
118,902 „n
184,761
72,079
435,864
33,797
200,099
15,252
125,845
1,472,974
116,413
2,287,105
1,938,718
nm,
1'
1,680,610
249,706,054 250,442,206 227,590,358 22,851,848
- 38 -
(Continued)
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, 2011
Expenditures (continued):
Capital Outlay:
Community Development Block
grants (HUD)
HOME Program
Other
Total capital outlay
Total expenditures
Excess of revenues over expenditures
Other financing uses:
Transfers out:
Housing Fund
Solid Waste Fund
Golf Course Fund
Sewer Connection Loan Fund
Sewer Loan Fund
Disaster/Emergency Fund
Debt Service Fund
Total transfers out
Total other financing uses
Excess (deficiency) of revenues and other
sources over (under) expenditures and other uses
Fund balance at beginning of year
Fund balance at end of year
See accompanying notes to the basic financial statements.
Original
Budget
249,706,054
41,691,990
(1,161,187)
(13,453,532)
(361,379)
(50,000)
(50,000)
(100,000)
(40,829,829)
(56,005,927)
(56,005,927)
(14,313,937)
39,518,917
$ 25,204,980
Final
Budget
Actual
(Budgetary
Basis)
(Concluded)
Variance
Positive
(Negative)
$ 3,200,151 $ 2,748,573 $ 451,578
996,793 957,810 38,983
4,275,000 4,275,000
8,471,944 7,981,383 490,561
258,914,150
42,106,958
(1,161,187)
(13,453,532)
(361,379)
(50,000)
(50,000)
(100,000)
(41,262,797)
(56,438,895)
(56,438,895)
(14,331,937)
39,518,917
235,571,741 23,342,409
62,279,795 20,172,837
(1,161,187)
(13,453,532)
(361,379)
(50,000)
(50,000)
(100,000)
(41,262,797)
(56,438,895)
(56,438,895)
5,840,900 20,172,837
39,518,917
25,186,980 $ 45,359,817 $20,172,837
COUNTY OF HAWAII
Proprietary Funds
Statement of Net Assets
June 30, 2011
Assets
Current assets:
Cash and cash equivalents (note 3)
Restricted cash and cash equivalents (note 3)
Imprest fund (note 3)
Receivables, net (note 4)
Prepaid expenses
Total current assets
Noncurrent assets:
Restricted cash and cash equivalents (note 3)
Investments (note 3)
Capital assets (note 6):
Land and site improvements
Buildings and equipment
Less accumulated depreciation
Total capital assets
Total noncurrent assets
Total assets
Liabilities
Current liabilities:
Accounts payable
Internal balances (note 5)
Due to developer
Security deposits payable from restricted assets
Deferred revenue (note 7)
Notes payable, current portion (note 10)
Total current liabilities
Noncurrent liabilities:
Notes payable (note 10)
Total liabilities
Net Assets
Invested in capital assets, net of related debt
Restricted for debt service
Unrestricted
Total net assets
See accompanying notes to the basic financial statements.
- 40 -
Business -type Activities -
Enterprise Funds
Kulaimano Ouli Ekahi
Elderly Affordable
Housing Housing
Project Project
Total
$ 222,326 $ 222,326
11,862 22,657 34,519
50 100 150
1,455 75 1,530
1,600 1,600
14,967 245,158 260,125
185,087
600,332
511,000
1,236,856
(1,058,535)
689,321
1,474,740
1,489,707
3,835
2,653
11,862
3,315
33,063
54,728
851,169
905,897
14,877 199,964
600,332
503,877 1,014,877
1,236,856
(1,058,535)
1,193,198
503,877
518,754
763,912
1,993,494
2,253,619
373,795 377,630
- 2,653
7,729 7,729
21,270 33,132
1,294 4,609
33,063
404,088 458,816
851,169
404,088 1,309,985
(194,911) 503,877
185,087 -
593,634 (144,053)
308,966
185,087
449,581
583,810 $ 359,824 $ 943,634
Mkt
COUNTY OF HAWAII
Proprietary Funds
Statement of Revenues, Expenses, and Changes in Fund Net Assets
For the Fiscal Year Ended June 30, 2011
Business -type Activities -
Enterprise Funds
Kulaimano Ouli Ekahi
Elderly Affordable
Housing Housing
Project Project
Total
Operating revenues:
Rental receipts from tenants $ 109,668 $ 255,432 $ 365,100
Rental subsidy from federal government - HUD 133,215 - 133,215
Laundry receipts 2,720 2,720
Other - 4,779 4,779
Total operating revenues 245,603 260,211 505,814
Operating expenses:
Utilities 39,932 29,830 69,762
General and administration 109,056 117,184 226,240
Maintenance and repairs 50,384 61,146 111,530
Lease expense 47,119 47,119
Depreciation (note 6) 34,123 - 34,123
Total operating expenses 233,495 255,279 488,774
Operating income 12,108 4,932 17,040
Nonoperating revenues (expenses):
Investment income
Interest expense
Total nonoperating revenues (expenses)
Change in net assets
Net assets, beginning of year
Net assets, end of year
See accompanying notes to the basic financial statements.
2,980 17 2,997
(62,027) (62,027)
(59,047) 17 (59,030)
(46,939) 4,949 (41,990)
630,749 354,875 985,624
583,810 $ 359,824 $ 943,634
COUNTY OF HAWAII
Proprietary Funds
Statement of Cash Flows
For the Fiscal Year Ended June 30, 2011
Business -type Activities -
Enterprise Funds
Kulaimano Ouli Ekahi
Elderly Affordable
Housing Housing
Project Project
Total
Cash Flows from Operating Activities
Receipts from tenants $ 112,299 $ 269,669 $ 381,968
Receipts from federal government - HUD 133,215 - 133,215
Payments to suppliers for goods and services (187,674) (221,951) (409,625)
Net cash provided by operating activities 57,840 47,718 105,558
Cash Flows from Capital and Related Financing Activities
Principal paid on notes payable (31,885) (31,885)
Interest paid on notes payable (62,027) (62,027)
Purchase of capital assets (7,960) (7,960)
Net cash used in capital and related fmancing activities (101,872) (101,872)
Cash Flows from Investing Activities
Purchase of investments (600,000) (600,000)
Proceeds from maturities of investments 600,000 600,000
Interest on investments 2,696 22 2,718
Net cash provided by investing activities 2,696 22 2,718
Net increase (decrease) in cash and cash equivalents (41,336) 47,740 6,404
Cash and cash equivalents at beginning of year (including
restricted cash and cash equivalents) 238,335 212,220 450,555
Cash and cash equivalents at end of year (including
restricted cash and cash equivalents) $ 196,999 $ 259,960 $ 456,959
Reconciliation of Operating Income to Net Cash
Provided by Operating Activities
Operating income $ 12,108 $ 4,932 $ 17,040
Adjustments to reconcile operating income to net cash
provided by operating activities:
Depreciation expense 34,123 34,123
Change in assets and liabilities:
Receivables, net 6,728 8,821 15,549
Prepaid expenses (28) - (28)
Accounts and other payables 4,932 34,700 39,632
Deferred revenue (23) (735) (758)
Net cash provided by operating activities $ 57,840 $ 47,718 $ 105,558
Supplemental disclosure of cash flow information - Interest paid $ 62,027 $ - $ 62,027
Noncash investing, capital and financing activities:
Net increase in fair value of investments $ 332 $ - $ 332
See accompanying notes to the basic financial statements.
- 42 -
COUNTY OF HAWAII
Fiduciary Funds
Statement of Fiduciary Net Assets
June 30, 2011
Assets
Cash and cash equivalents (note 3)
Investments (note 3)
Receivables:
Private -
Purpose Agency
Trusts Funds
$ 3,728,377 $ 4,270,967
1,038,870 1,586,399
Due from other agency funds 2,116
Other receivables 65,521
Total receivables 67,637
Total assets 4,767,247 $ 5,925,003
Liabilities
Due to other agency funds
Accrued liabilities
Advances payable
Assets held for the benefit of improvement districts
Total liabilities
Net Assets
Held in trust for other parties
Total net assets
See accompanying notes to the basic financial statements.
4,767,247
$ 4,767,247
2,116
3,211,822
571,051
2,140,014
$ 5,925,003
COUNTY OF HAWAII
Fiduciary Funds
Statement of Changes in Fiduciary Net Assets
For the Fiscal Year Ended June 30, 2011
Private -
Purpose
Trusts
Additions
Contributions:
Puna Geothermal Venture $ 50,000
Investment earnings:
Net increase in fair value of investments 268,785
Dividends 54,491
Interest 18,885
Total additions 392,161
Deductions
Grant payments 273,546
Total deductions 273,546
Change in net assets 118,615
Net assets, beginning of year 4,648,632
Net assets, end of year $ 4,767,247
See accompanying notes to the basic financial statements.
4
COUNTY OF HAWAII
Notes to the Basic Financial Statements
June 30, 2011
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) and Statement No. 39,
Determining Whether Certain Organizations Are Component Units (GASB Statement No.
39). All organizations, activities or functions that meet the criteria in GASB Statement No.
14 and No. 39 for inclusion in the reporting entity are included in 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.
COUNTY OF HAWAII
Notes to the Basic Financial Statements
June 30, 2011
As required by GAAP as set forth in GASB Statement No. 14 and No. 39, these basic
financial statements present the County of Hawai`i (the primary government) and its
component unit, 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
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, Hawaii 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.
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.
COUNTY OF HAWAII
Notes to the Basic Financial Statements
June 30, 2011
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 be 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
COUNTY OF HAWAII
Notes to the Basic Financial Statements
June 30, 2011
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
costs.
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.
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.
COUNTY OF HAWAII
Notes to the Basic Financial Statements
June 30, 2011
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`i.
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
Subsequent Events
On October 31, 2011, the Improvement District No. 17 Fund was officially closed, with the
last refund paid on August 2, 2011.
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.
COUNTY OF HAWAII
Notes to the Basic Financial Statements
June 30, 2011
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 (one
year for intergovernmental revenues) 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. Real property taxes and State Revolving
Fund loan proceeds are considered available when collected.
In applying the susceptible to accrual concept to intergovernmental revenues, the legal and
contractual requirements of the numerous individual programs are used as guidance. There
are essentially two types of these revenues. In one, monies must be expended on the specific
purpose or project before any amounts will be paid to the County; therefore, revenues are
recognized based upon the expenditures recorded. Most construction grants and many
operating grants fall into this category. In the other, monies are virtually unrestricted as to
purpose of expenditure and are usually revocable only for failure to comply with prescribed
compliance requirements. These resources are reflected as revenues at the time of receipt or
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.
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COUNTY OF HAWAII
Notes to the Basic Financial Statements
June 30, 2011
Encumbrances
The general, special revenue, and capital projects funds follow encumbrance accounting
under which purchase orders, contracts and other commitments are recorded as an obligation
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
included in the respective fund balance categories as appropriate and do not constitute
expenditures or liabilities because the commitments will be honored during the subsequent
year.
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 fair value (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 prior to the application of
exemptions or preferential assessments.
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.
COUNTY OF HAWAII
Notes to the Basic Financial Statements
June 30, 2011
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, 2011 of $776,225 are reflected as a restriction of general fund balance.
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 County 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 and enterprise fund 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
Ground and site improvements 20 to 50 years
Equipment 5 to 40 years
Long -term Obligations
The County reports long -term debt of governmental funds at face value on the government -
wide statement of net assets. Certain other governmental fund obligations not expected to be
financed with current available resources are also reported on the government -wide statement
of net assets. Long -term debt and other obligations financed by the proprietary funds are
reported as liabilities in those funds.
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COUNTY OF HAWAII
Notes to the Basic Financial Statements
June 30, 2011
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.
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, 2011 totaled $71,500,000 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 Hawaii
includes the normal cost plus the level annual payment required to amortize the unfunded
actuarial accrued liability. The County's policy is to fund its required contribution annually
(see Note 13).
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
COUNTY OF HAWAII
Notes to the Basic Financial Statements
June 30, 2011
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.
New Accounting Pronouncements
In March 2009, the GASB issued Statement No. 54, Fund Balance Reporting and
Governmental Fund Type Definitions. This Statement establishes fund balance classifications
that comprise a hierarchy based primarily on the extent to which a government is bound to
observe constraints imposed upon the use of the resources reported in governmental funds.
The requirements in this Statement will improve financial reporting by providing fund
balance categories and classifications that will be more easily understood. The County
implemented this Statement in the fiscal year ended June 30, 2011.
When both restricted and unrestricted fund balances are available for use, it is the County's
policy to use restricted fund balance first, then unrestricted fund balance. Furthermore,
committed fund balances are reduced first, followed by assigned amounts, and then
unassigned amounts when expenditures are incurred for purposes for which amounts in any of
those unrestricted fund balance classifications can be used.
The County reports the following classifications:
Nonspendable Fund Balance — Nonspendable fund balances are amounts that cannot be
spent because they are either not in spendable form, or, for legal or contractual reasons,
must be kept intact. The County has inventory included in their nonspendable fund
balance.
Restricted Fund Balance — Constraints placed on the use of these resources are either
externally imposed by creditors (such as through debt covenants), grantors, contributors
or other governments or are imposed by law (under the Hawaii Revised Statutes or
County of Hawaii Charter).
COUNTY OF HAWAII
Notes to the Basic Financial Statements
June 30, 2011
Committed Fund Balance — Committed Fund Balances are amounts that can only be used
for specific purposes as a result of constraints imposed by the County Council via
ordinances and the County Code. The committed fund balance of the General Fund
includes the portion of fund balance committed to budget stabilization. The budget
stabilization portion is authorized under County Code §2 -19 to §2 -223 and additions are
made via the County budget or subsequent budget amendments. The fund balance may
only be used when there is a reduction in budgeted revenue and the director of finances
determines that such use is necessary to prevent a reduction in the level of public
services.
Assigned Fund Balance — Assigned fund balances are amounts that are constrained by
the County's intent but are neither restricted nor committed. The County's only assigned
fund balances are in the General Fund and the majority consists of the portion of fund
balance that is intended to balance the subsequent year's budget.
Unassigned Fund Balance — This is the residual classification of the General Fund and
the Capital Projects Fund. Only the General Fund reports a positive unassigned fund
balance.
In December 2009, the GASB issued Statement No. 57, OPEB Measurements by Agent
Employers and Agent Multiple- Employer Plans, which clarifies that when actuarially
determined other postemployment benefits ( "OPEB ") measures are reported by an agent
multiple - employer OPEB plan and its participating employers, those measures should be
determined as of a common date and at a minimum frequency to satisfy the agent multiple -
employer OPEB plan's financial reporting requirements. These provisions are effective for
years beginning after June 15, 2011. The County has not yet determined the effect this
Statement will have on its financial statements.
In December 2010, GASB issued Statement No. 61, The Financial Reporting Entity:
Omnibus, an amendment of GASB Statements No. 14 and 34 amending the requirements of
Statement No. 14, The Financial Reporting Entity, and Statement No. 34, Basic Financial
Statements - and Management's Discussion and Analysis — for State and Local Governments.
This Statement improves the financial reporting for governmental entities, which is comprised
of the primary government and related entities (component units). The Statement amends the
criteria for blending which helps ensure that the primary government includes only those
component units that are so intertwined with the primary government. The provisions of this
statement are effective for the County for periods beginning after June 15, 2012. The County
has not yet determined the effect this Statement will have on its financial statements.
In December 2010, GASB issued Statement No. 62, Codification of Accounting and Financial
Reporting Guidance Contained in Pre - November 30, 1989 FASB and AICPA
Pronouncements. This Statement will make it easier for preparers of state and local
government financial statements to find relevant authoritative guidance from one single
COUNTY OF HAWAII
Notes to the Basic Financial Statements
June 30, 2011
source. The provisions for this Statement are effective for the County for periods beginning
after December 15, 2011. The County has not yet determined the effect this Statement will
have on its financial statements.
In June 2011, GASB issued Statement No. 63, Financial Reporting of Deferred Outflows of
Resources, Deferred Inflows of Resources, and Net Position. This Statement provides
financial reporting guidance for deferred outflows of resources and deferred inflows of
resources. The provisions for this Statement are effective for the County for periods
beginning after December 15, 2011. The County has not yet determined the effect this
Statement will have on its financial statements.
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.
• 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
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 2010 -2011 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 $9.6 million in the general fund and $4.5
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
COUNTY OF HAWAII
Notes to the Basic Financial Statements
June 30, 2011
Fund, Geothermal Relocation and Community Benefits Fund, Beautification Fund,
Hawaii County Housing Agency Fund 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.
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, 2011:
Ending fund balance — GAAP basis $44,658,150
Encumbrance adjustments:
Beginning encumbrances and unexpended allotments 4,970,096
Ending encumbrances and unexpended allotments (4,024,596)
Other adjustments (243,833)
Ending fund balance — Non -GAAP budgetary basis $45,359,817
COUNTY OF HAWAII
Notes to the Basic Financial Statements
June 30, 2011
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 a number of 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
and money market accounts. Cash and short-term investments also include repurchase
agreements, certificates of deposit, and government sponsored securities with original
maturities of three months or less.
The carrying amount of the County's deposits (cash, time certificates of deposit, and money
market accounts) as of June 30, 2011 was $146,075,461 for the primary government and
$9,585,743 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 $168,785,567 at June 30, 2011. Of that amount, $168,563,241
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 $222,326
represent deposits held by a management agent and were uncollateralized. Accordingly, these
deposits were exposed to custodial credit risk. Custodial credit risk is the risk that in the
event of a bank failure, the County's deposits may not be returned to it. For checking
accounts, time certificates of deposit, and repurchase agreements, 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.
- 58 -
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COUNTY OF HAWAII
Notes to the Basic Financial Statements
June 30, 2011
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 (equivalent to the rating in U.S.
Treasuries), repurchase agreements and certificates of deposit, while the fiduciary fund also
holds equity securities.
The County's investments and maturities at June 30, 2011 are as follows:
Maturity (in years)
Fair Value Less than 1 1 — 5
Investments — Primary Government:
Certificates of deposit $ 14,446,977 $ 13,400,000 $ 1,046,977
Repurchase agreements 39,064,291 29,952,759 9,111,532
Government sponsored securities 18,451,692 -- 18,451,692
$ 71,962,960 $ 43,352,759 $28,610,201
Investments — Fiduciary Funds:
Certificates of deposit
Equity securities
$ 1,586,399 $ -- $ 1,586,399
$ 1,038,870
Interest Rate Risk: The County minimizes its exposure to interest rate risk by limiting the
maturities of investments to five years or less in compliance with state statute. The County's
policy is to hold investments until maturity and does not engage in trading for capital gains.
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, and money market funds. The investment policy also allows for investments in
other securities that are equivalent to the rating in U.S. Treasuries.
Custodial Risk: Custodial risk is the risk of loss from the failure of the counterparty, which is
defined as any entity that obtained an investment on behalf of the County. All of the
County's deposits including repurchase agreements are secured by collateral which is kept by
a third party custodian. Broker - dealers utilized by the County are members of the Securities
Investor Protection Corporation, and all investment securities are held in the County's name.
Concentration of Credit Risk: State law limits deposits to no more than 60% of the total in
any one depository. The County seeks to further diversify its portfolio by purchasing from
different issuers, by purchasing different types of investments and by purchasing investments
at different maturities. The County also purchases its investments from a number of banks
and broker - dealers both located locally and on the mainland.
COUNTY OF HAWAII
Notes to the Basic Financial Statements
June 30, 2011
Restricted Cash and Cash Equivalents and Investments
Cash and cash equivalents and investments classified as restricted assets for the primary
government at June 30, 2011 amounted to $96,598,527.
OPP
Construction related contributions restricted to various capital improvement projects and fuel
tax funds received are recorded as restricted assets in the Capital Projects Fund. Such funds
totaled $50,767,700 at June 30, 2011.
Cash and investments in the Bond Redemption and Interest Fund are restricted to debt service
related payments and amounted to $26,927,204.
Cash in the Highway Fund and Beautification Fund are restricted to costs incurred relating to
highways and streets and the beautification of such items and amounted to $14,372,777.
The restricted cash in the General Fund was comprised of cash restricted to costs incurred to
administer the liquor commission and cash restricted to the acquisition of lands or property
entitlements for public outdoor recreation and education. Such amounts totaled $776,225 and
$3,520,138, respectively.
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 $11,862 and $22,657, respectively, at June 30, 2011.
Restricted amounts set aside by the Kulaimano Elderly Housing Project under its loan
agreement with the Farmers Home Administration totaled $185,087 at June 30, 2011. 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 $14,877 at June 30, 2011.
- 60 -
COUNTY OF HAWAII
Notes to the Basic Financial Statements
June 30, 2011
4. RECEIVABLES
Receivables as of June 30, 2011, for the County's individual major funds and other funds in
the aggregate, including the applicable allowances for uncollectible accounts, are as follows:
Governmental activities:
Real property taxes
Accounts receivable:
Sewer
Solid waste
Capital projects
Intergovernmental
Gross receivables
Less: allowance for
uncollectibles
Net total receivables
General
Fund
$23,974,488
14,808,341
38,782,829
(1,118,614)
$37,664,215
Capital
Projects
Fund
Other
Governmental
Funds
1,988,273
2,912,008
4,101,545
3,627,744 1,625,017
7,729,289 6,525,298
(2,343,806)
$7,729,289 $4,181,492
Total
$23,974,488
1,988,273
2,912,008
4,101,545
20,061,102
53,037,416
(3,462,420)
$49,574,996
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, 2011, the outstanding balance
of $3,131,693 is reflected in the government -wide statement of net assets as a receivable (see
Note 10).
Business -type activities:
Accounts receivable:
Rent
Other
Gross receivables
Less: allowance for
uncollectibles
Net total receivables
Enterprise
Funds
$52,663
3,063
55,726
54,196
$ 1,530
COUNTY OF HAWAII
Notes to the Basic Financial Statements
June 30, 2011
5. INTERFUND RECEIVABLES AND PAYABLES
Interfund receivables and payables consist of the following at June 30, 2011:
Receivable Fund Payable Fund Amount
General fund Capital projects fund $ 402,910
Other governmental funds 444,120
847,030
Capital projects fund Other governmental funds 236,474
Other governmental funds General fund 638,767
Capital projects fund 393,945
Other governmental funds 24,903
1,057,615
Total $2,141,119
General fund Enterprise funds $ 1,303
Other governmental funds Enterprise funds 1,350
Total $ 2,653
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, 2011 consisted of the following:
Transfers out:
Other
General Governmental
Fund Funds
Transfers in:
Total
Capital projects fund $ $3,743,965 $ 3,743,965
Bond redemption fund 22,885,741 -- 22,885,741
Other governmental funds 29,469,578 -- 29,469,578
$52,355,319 $3,743,965 $56,099,284
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 other governmental funds have made transfers to the capital
projects fund for the construction of various projects.
COUNTY OF HAWAII
Notes to the Basic Financial Statements
June 30, 2011
6. CAPITAL ASSETS
Capital asset activity for the year ended June 30, 2011 for the County was as follows:
Balance
July 1,
2010
Governmental activities:
Capital assets not being depreciated:
Land and
improvements
Easements
Construction work in
progress
Total capital assets not
being depreciated
$ 35,517,270
184,784,462
220,301,732
Capital assets being depreciated:
Buildings and
improvements
Equipment
Easements
Infrastructure
Total capital assets
being depreciated
319,938,221
113,920,197
379,063,999
812,922,417
Less accumulated depreciation for:
Buildings and
improvements
Equipment
Easements
Infrastructure
Total accumulated
depreciation
Total capital assets
being depreciated,
net
Governmental
activities capital
assets, net
(60,343,028)
(59,873,913)
(155,426,569)
(275,643,510)
537,278,907
$757,580,639
Additions
$ 3,571,590
1,283,221
78,940,490
83,795,301
146,339,235
5,742,563
439,300
47,362,799
199,883,897
(5,182,872)
(7,478,458)
(73,217)
(11,143,147)
(23,877,694)
176,006,203
Retirements/
Transfers
$ 68,593,208
(180,528,495)
(111,935,287)
Balance
June 30,
2011
$ 107,682,068
1,283,221
83,196,457
192,161,746
(13,491,991) 452,785,465
(1,033,350) 118,629,410
-- 439,300
(55,101,217) 371,325,581
(69,626,558)
943,179,756
-- (65,525,900)
853,805 (66,498,566)
(73,217)
-- (166,569,716)
853,805 (298,667,399)
(68,772,753) 644,512,357
$259,801,504 ($180,708,040) $836,674,103
COUNTY OF HAWAII
Notes to the Basic Financial Statements
June 30, 2011
Balance Balance
July 1, Retirements/ June 30,
2010 Additions Transfers 2011
Business -type activities:
Capital assets not being depreciated:
Land
$ 753,877 $ $ $ 753,877
Capital assets being depreciated:
Buildings and
improvements
Ground and site
improvements
Equipment
Total capital assets
being depreciated
1,136,008
261,000
98,634
1,495,642
Less accumulated depreciation for:
1,136,008
261,000
7,960 (5,746) 100,848
7.960 (5,746) 1,497,856
Buildings and
improvements (757,048) (24,615) (781,663)
Ground and site
improvements (185,911) (3,755) (189,666)
Equipment (87,199) (5,753) 5,746 (87,206)
Total accumulated
depreciation (1,030,158) (34,123) 5.746 (1,058,535)
Total capital assets
being depreciated,
net 465,484 (26,163) 439,321
Business -type
activities capital
assets, net
$1,219,361 ($26,163) $ $1,193,198
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COUNTY OF HAWAII
Notes to the Basic Financial Statements
June 30, 2011
Depreciation expense was charged to functions /programs of the primary government as
follows:
Governmental activities:
General government
Public safety
Highways and streets
Sanitation
Health, education and welfare
Culture and recreation
Total depreciation expense — governmental activities
Business -type activities:
Kulaimano Elderly Housing Project
7. DEFERRED REVENUE:
Deferred revenue consists of the following at June 30, 2011:
Governmental activities:
Real property taxes
Liquor control revenue
Sewer revenue
Housing revenue
Solid waste revenue
Intergovernmental
Total presented in
fund financial
statements
Less adjustments for
accrual of revenues
Total government -
wide financial
statements
Business -type activities:
Unearned rental income
General
Fund
$ 23,244,569 $
170,170
Capital
Projects
Fund
474,862 1,389,333
23,889,601 1,389,333
(22,855,874)
$ 2,602,948
2,712,562
12,407,325
4,098,778
408,011
1,648,070
$23,877,694
Other
Governmental
Funds
$ 1,033,727 $1,389,333 $
Enterprise
Funds
$4,609
1,056,941
25,906
1,511,532
$34,123
Total
Governmental
Funds
$ 23,244,569
170,170
1,056,941
25,906
1,511,532
1,864,195
2,594,379 27,873,313
(2,582,381) (25,438,255)
11,998 $ 2,435,058
COUNTY OF HAWAII
Notes to the Basic Financial Statements
June 30, 2011
8. LEASES
The County leases machinery and equipment under noncancellable leases expiring at various
dates through June 2016. 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 $15,410,372 and $7,337,209, respectively,
and the related present value of the remaining obligations under the capital leases amounting
to $3,057,082 at June 30, 2011 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 July 2029. Expenditures for such operating leases were
$2,508,223 for the fiscal year ended June 30, 2011.
The future minimum payments under capital and operating leases at June 30, 2011 are as
follows:
Year Ending June 30:
2012
2013
2014
2015
2016
2017 — 2021
2022 - 2026
2027 - 2030
Total minimum lease payments
Less amount representing
interest
Obligations under capital leases
Capital
Leases
$1,503,069
833,974
535,812
297,662
5,234
3,175,751
(118,669)
$3,057,082
Operating
Leases
$1,713,143
1,276,640
781,468
757,176
708,176
1,451,275
73,190
46,731
$6,807,799
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
operating period. The liability for these costs is included in the government -wide statement
IS
46,
OP
I
COUNTY OF HAWAII
Notes to the Basic Financial Statements
June 30, 2011
of net assets. The amount recognized each year is based on the landfill capacity used as of
the statement of net assets date. At June 30, 2011, the County recognized a liability of
$12,733,000, based on the use of 87% of the estimated capacity of the landfill. During the
fiscal year ended June 30, 2011, there were no expenditures incurred for the closure of the
landfill. The remaining $1,997,000 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 2011. Actual costs at that time may be
higher due to inflation, changes in technology, or changes in regulations.
Landfill capacity estimates are based on volumes going into the landfill subsequent to the last
available engineer's calculation. The volumes going into the landfill do not account for
decomposition, settlement, and corrosion, therefore the estimates are revised when new
engineering calculations, based on aerial photos and surveys, are available.
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 $15,850,000, based on what it
would cost to perform the required closure and postclosure care in 2011. Actual costs may be
higher due to inflation, changes in technology, or changes in regulations. Through
June 30, 2011, $7,574,000 was spent on closure and postclosure care of the landfill. The
remaining estimated liability of $8,276,000 is included in the government -wide statement of
net assets. During the year ended June 30, 2011, $146,000 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 Hawai`i. 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.
COUNTY OF HAWAII
Notes to the Basic Financial Statements
June 30, 2011
Financial Assurance For fiscal year 2011, 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
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,
2011:
Bonds Issue Bond Balance Bond Balance Due Within
Authorized Amount July 1, 2010 Issues Retirements June 30, 2011 One Year
1993 Ref & PI $86,770,000 $ 16,905,000 $ ($ 5,330,000) $ 11,575,000 $ 5,630,000
2001 Series A 23,000,000 704,348 (704,348) — --
2003 Series A 36,310,000 30,345,000 (1,610,000) 28,735,000 1,665,000
2004 Series A 30,000,000 26,505,000 (1,235,000) 25,270,000 1,280,000
2004 Ref Series B 19,545,000 12,735,000 (1,890,000) 10,845,000 1,975,000
2004 Ref Series C 5,050,140 2,707,244 (507,320) 2,199,924 521,156
2004 PI Series A 2,776,400 2,319,837 (41,317) 2,278,520 43,279
2004 PI Series B 920,000 867,707 (14,534) 853,173 15,170
2004 PI Series C 191,093 40,511 (40,511) -- --
2006 Series A 25,000,000 22,607,500 (882,500) 21,725,000 927,500
2007 Series A 85,000,000 79,525,000 (2,905,000) 76,620,000 3,050,000
2007 Series B 20,820,000 19,115,000 (1,790,000) 17,325,000 1,855,000
2007 Series C 10,787,388 10,787,388 -- 10,787,388 795,684
2008 Series A 50,000,000 50,000,000 -- (1,665,000) 48,335,000 1,735,000
2010 Series A 26,493,750 -- 26,493,750 26,493,750 --
2010 Series B 18,506,250 18.506.250 18,506,250
441,170,021 275,164,535 45,000,000 (18,615,530) 301,549,005 19,492,789
Add unamortized
premium 7,683,432 4,217,931 2,078,415 (332,210) 5,964,136 384,171
Less deferred amount
on refunding (2,828,759) (1,682,356) 248,721 (1,433,635) ( 248,7211
$446,024,694 $277,700,110 S 47,078,415 ($18,699,019) $106,079,506 $19,628,239
The 2010 Series B bonds were issued as bonds designated as "Recovery Zone Economic
Development Bonds" under the American Recovery and Reinvestment Act of 2009. The
AW.
AAR
COUNTY OF HAWAII
Notes to the Basic Financial Statements
June 30, 2011
County will receive a cash subsidy payment from the United States Treasury equal to 45% of
the interest payable on the Series B bonds.
General obligation bonds payable reported on the government -wide statement of net assets at
June 30, 2011 are comprised of the following individual issues:
Public improvement (PI) and/or refunding bonds:
1993 Refunding and PI at 5.6 %, due through 2013
2003 Series A at 2.5% to 5.125 %, due through 2023
2004 Series A at 3.25% to 5.25 %, due through 2024
2004 Refunding Series B at 3.5% to 5.0 %, due through 2015
2004 Refunding Series C at 3.25% to 3.7 %, due through 2014
2004 PI Series A at 4.75 %, due through 2037
2004 PI Series B at 4.375 %, due through 2039
2006 Series A at 4.0% to 5.0 %, due through 2026
2007 Series A at 4.0% to 5.0 %, due through 2027
2007 Series B at 3.75% to 5.0 %, due through 2018
2007 Series C at 4.0% to 5.0 %, due through 2021
2008 Series A at 4.0% to 6.0 %, due through 2028
2010 Series A at 1.7% to 5.0 %, due through 2030
2010 Series B at 3.335% to 6.1 %, due through 2030
$ 11,575,000
28,735,000
25,270,000
10,845,000
2,199,924
2,278,520
853,173
21,725,000
76,620,000
17,325,000
10,787,388
48,335,000
26,493,750
18,506,250
Total general obligation bonds payable $301,549,005
Annual debt service requirements to maturity for the above general obligation bonds are as
follows:
Fiscal year ending June 30:
2012
2013
2014
2015
2016
2017 — 2021
2022 — 2026
2027 — 2031
2032 — 2036
2037 — 2040
Total
Governmental Activities
Principal
$ 19,492,789
20,401,566
15,115,470
17,773,630
18,014,007
84,678,180
83,853,048
40,952,168
796,892
471,255
$301,549,005
Interest
$ 14,144,536
13,163,874
12,176,281
11,457,512
10,608,543
41,003,713
20,700,558
3,895,232
204,572
30,499
$127,385320
COUNTY OF HAWAII
Notes to the Basic Financial Statements
June 30, 2011
Bond Premiums
At June 30, 2011, total unamortized bond premiums were $5,964,136, which are being
amortized over the remaining life of the respective bond issues.
Bonds Authorized and Unissued
The County Council has authorized the issuance of $265.1 million in general obligation bonds
to finance specified capital improvement projects. At June 30, 2011, $130.1 million was not
yet issued.
General Obligation Bond Anticipation Notes
In March 2011, the County issued a general obligation bond anticipation note (BAN) in the
total amount of $10,000,000. These notes were issued to provide funds for the acquisition
and construction of major capital facilities and bear interest at 1.22% and had an original
maturity date of September 2, 2011. The note was then renewed and an additional
$15,000,000 was issued with a maturity date of March 2, 2012. Since the renewed BAN has a
maturity date within 12 months of fiscal year end, the $10,000,000 of debt is reflected as
current liabilities.
The following is a summary of general obligation bond anticipation note transactions reported
in the government -wide statement of net assets for the County for the fiscal year ended June
30, 2011:
Issue Balance Balance
Authorized Amount July 1, 2010 Issues Retirements June 30, 2011
2010 Series A $ 5,000,000 $ 5,000,000 $ $ 5,000,000 $
2010 Series A 10,000,000 10,000,000 10,000,000
2010 Series A 4,000,000 4,000,000 4,000,000 --
2011 Series B 10 000.000 -- 10,000,000 -- 10.000.000
$29,000 000 $19,000,000 510,000,000 $19,000,000 $10,000,000
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 twenty projects
approved for funding with these loans.
ORS'
fi
COUNTY OF HAWAII
Notes to the Basic Financial Statements
June 30, 2011
The schedule below shows the County's SRF transactions for the fiscal year ended June 30,
2011:
Loans
Authorized
Hilo WWTP
Waiakea Mill
Waiakea
Houselots
Waiakea
Houselots II
Ainako A &B
Kalanianaole
Kalanianaole RH
Alii Drive A &B
Alii Drive C &D
Alii Drive E &F
Waiaha Bay
Kealakehe
Holualoa Bay
Paukaa CCS
Cesspool
Conversion
Pahoehoe
Komohana Hts
LCC - ARRA
Honokaa LCC -
ARRA
Queen
Liliuokalani
LCC -ARRA
Queen
Liliuokalani
Approved Loan Balance
Amount July 1, 2010
$12,724,311 $ 2,359,160
1,300,000 316,207
459,321 85,508
5,024,266 2,707,583
2,239,174 595,024
1,499,944 520,969
1,615,980 1,270,044
3,210,243 812,290
3,780,000 1,223,292
2,112,654 819,530
3,697,893 1,252,512
1,300,071 315,632
3,080,000 1,246,503
2,143,448 1,128,752
Loan Balance Due Within
Additions Retirements June 30, 2011 One Year
$ ($ 767,051) $1,592,109 $ 786,227
(76,148) 240,059 78,052
8,363,773 7,235,884
2,817,760 1,769,889
1,085,800 997,091 88,709
5,332,346 2,133,074 2,932,655
1,019,929 1,019,929
10.186,277 2,660,894 6.235.603
$72,993,190 $30,469,767 $ 9,256,967
(27,802) 57,706 28,497
(270,761) 2,436,822 277,881
(127,484) 467,540 130,124
(88,710) 432,259 91,408
(74,351) 1,195,693 76,126
(194,254) 618,036 199,691
(212,507) 1,010,785 216,908
(126,259) 693,271 130,100
(213,742) 1,038,770 219,725
(76,010) 239,622 77,910
(176,286) 1,070,217 181,651
(113,843) 1,014,909 116,525
(421,789) 6,814,095 423,829
(140,844) 1,629,045 144,548
1,085,800 1,085,800
5,065,729 5,065,729
1,019,929 1,019,929
(63.629) 8,832,868 456,117
($3,171,470) $36,555,264 $10,806 777
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 2030. Those loans with the "ARRA" designation are
interest free with principal forgiveness upon the County's fulfillment of certain conditions.
COUNTY OF HAWAII
Notes to the Basic Financial Statements
June 30, 2011
Debt service to maturity for disbursements to date on these projects are as follows:
Governmental Activities
Fiscal year ending June 30: Principal Interest
2012 $ 10,806,777 $ 708,870
2013 3,699,247 631,917
2014 2,922,625 472,524
2015 2,524,278 375,611
2016 2,207,206 286,792
2017 — 2021 7,293,317 632,353
2022 — 2026 4,956,874 199,535
2027 — 2030 2,144,940 33,115
Total $36,555,264 $3,340,717
Subsequent Events
On August 22, 2011, the State of Hawaii forgave portions of the principal amounts for the
Komohana Heights Large Capacity Cesspool Replacement and Queen Liliuokalani Large
Capacity Cesspool Replacement loans that related to the American Recovery and
Reinvestment Act (ARRA) because the County had complied with all of the requirements.
These amounts totaled $1,085,800 and $1,019,929, respectively.
Other General Long -Term Obligations
The following is a summary of other general long -term obligations transactions for the fiscal
year ended June 30, 2011:
Balance Balance Due Within
July 1, 2010 Additions* Payments June 30, 2011 One Year
Governmental activities:
Compensated absences $30,468,140 $12,653,429 ($9,269,697) $33,851,872 $8,504,320
Claims and judgments
(see Note 12) 15,370,691 (444,165) (4,029,389) 10,897,137 2,405,503
Capital leases
(see Note 8) 4,552,290 47,112 (1,542,320) 3,057,082 1,436,943
Landfill costs payable
(see Note 9) 20,504,000 651,448 (146,448) 21,009,000 219,540
Total $70,895,121 $12,907,824 ($14,987,854) $0.815-091 $12,566,306
* Net of new claims liability and existing claims resolved at less than previous estimate.
COUNTY OF HAWAII
Notes to the Basic Financial Statements
June 30, 2011
Fund Balances - Debt Service Funds
The fund balance in the debt service funds at June 30, 2011 includes $24,742,795, which is
available for principal payments on general obligation bonds and $1,871,887, 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
$884,232 at June 30, 2011. The notes, which mature in September 2029, are repayable in
monthly installments of $7,826 including interest and are collateralized by substantially all of
the Project's property and equipment. Although the stated annual rate of interest on the notes
is 9 %, such rate is reduced to 7% for as long as the Project has a U.S. Department of Housing
and Urban Development Section 8 Housing Assistance Payment contract in effect for all or
part of the units within the Project.
The following is a summary of enterprise fund notes payable transactions for the fiscal year
ended June 30, 2011:
Balance at July 1, 2010
Deductions
Balance at June 30, 2011
Less current portion
Note payable, net of
current portion
The following is a summary of the
Fiscal year ending June 30:
2012
2013
2014
2015
2016
2017 — 2021
2022 — 2026
2027 — 2030
Total
$916,117
(31,885)
884,232
(33,063)
$ 851,169
annual maturities for the enterprise fund notes payable:
Business -type Activities
Principal
$ 33,063
35,453
38,016
40,764
43,711
270,778
383,862
38,585
Interest
$ 60,849
58,459
55,896
53,148
50,201
198,782
85,698
677
$884,232 $563,710
COUNTY OF HAWAII
�,a
Notes to the Basic Financial Statements
June 30, 2011
Special Assessment Bonds
In 2011 the County retired its 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 matured
annually through 2011 and bore interest at 7.375 %. The remaining balance of $1,715,000
was paid during the current fiscal year.
These were not general obligation bonds and the County was not obligated in any manner for
the repayment of these bonds. The bonds were secured by a first lien on the land benefited by
the improvements, and were to be repaid from the annual assessments levied against the
owners of the land. The County acted as an agent for the property owners within the
improvement districts to collect assessments receivable, forward payments to bond - paying
agents at appropriate dates and, if required, administer foreclosure proceedings. Accordingly,
these bonds were not reflected on the County's government -wide statement of net assets.
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
4.375% to 4.75 %. Total general obligation bonds payable included in the government -wide
statement of net assets were $3,131,693 at June 30, 2011.
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, 2011:
Balance at July 1, 2010 $3,228,055
Deductions (96.362)
Balance at June 30, 2011 $3,131,693
COUNTY OF HAWAII
Notes to the Basic Financial Statements
June 30, 2011
The following is a summary of the annual maturities for the improvement district general
obligation bonds:
Fiscal year ending June 30: Principal Interest
2012 $ 58,449 $ 144,196
2013 61,168 141,413
2014 64,014 138,502
2015 66,993 135,454
2016 70,111 132,263
2017 — 2021 402,643 608,009
2022 — 2026 505,500 502,758
2027 — 2031 634,668 370,577
2032 — 2036 796,892 204,572
2037 — 2040 471,255 30,499
Total $3,131,693 $2,408,243
11. COMMITMENTS AND CONTINGENCIES
Contractual commitments — Contractual commitments for capital projects, expenses, and
supplies at June 30, 2011, except in the enterprise funds, are reflected in the balance sheets as
a part of the respective fund balance categories and are as follows:
General fund $ 4,024,596
Capital projects fund 29,143,442
Nonmajor funds 7,634,005
$40,802,043
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.
COUNTY OF HAWAII
Notes to the Basic Financial Statements
June 30, 2011
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,
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.
The County will be seeking closure of this matter with the federal district court by the end of
March 2012. 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 initial (1997 -2000) estimated cost of the facilities
repairs was $15.1 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. 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
- 76 -
COUNTY OF HAWAII
Notes to the Basic Financial Statements
June 30, 2011
and scheduling of the different stages of work for each project, the parties have been 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. The County had spent $42.0 million for the
construction and design fees to complete 50 park facilities (some having multiple ADA work
being completed). There are four park facilities where construction has progressed; 30 park
facilities that must be completed; and the Parks estimated costs for completion is $15.1
million. The Court and parties are working on establishing a reasonable four year timeline to
complete the remaining ADA work. In addition, the County's 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 and are available on The County's ADA web page.
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, aviation liability for helicopter operations, liability coverage on transit buses and
privately owned police vehicles, and property damage coverage on County Police fleet
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. The liability for claims and judgements is reported on the government -
wide statement of net assets and the majority will be liquidated from the County's general
fund.
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
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, 2011, the amount of
this liability was $10,897, 137. This is the County's best estimate based on available
information. Changes in the reported liability since June 30, 2009 are given below.
COUNTY OF HAWAII
Notes to the Basic Financial Statements
June 30, 2011
Balance at July 1, 2009
Incurred claims (including IBNR)*
Claim payments
Balance at June 30, 2010
Incurred claims (including IBNR)*
Claim payments
Balance at June 30, 2011
General Workers'
Liability Compensation
$ 6,446,770 $ 11,230,939
(1,015,017) 2,652,784
(1,292,001) (2,652,784)
$ 4,139,752 $ 11,230,939
(993,836) 549,671
(1,477,017) (2,552,372)
$ 1,668,899 $ 9,228,238
Total
Liability
$17,677,709
1,637,767
(3,944,785)
$15,370,691
(444,165)
(4,029,389)
$10,897,137
*Net of new claims liability and existing claims resolved at less than previous estimate.
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
COUNTY OF HAWAII
Notes to the Basic Financial Statements
June 30, 2011
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:
Contributory Plan General employees in the contributory plan are required to contribute
7.8% of their salary and are fully vested for benefits upon receiving 5 years of credited
service. The County may also make contributions for these members. Under the
contributory plan, employees may retire with full benefits at age 55 and 5 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
COUNTY OF HAWAII
Notes to the Basic Financial Statements
June 30, 2011
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, 2011, 2010,
and 2009 were $21,435,798, $22,127,289, and $22,334,894, respectively, which equal the
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 Hawai` i, 201 Merchant Street, Suite 1400,
Honolulu, Hawaii 96813.
Post - Retirement Benefits
In addition to providing pension benefits, the County is required by state statute (HRS
Chapter 87A) to contribute to the 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. The
current (pay -as- you -go) premium costs are paid by the respective funds but the net other
postemployment benefit obligation is paid by the General Fund.
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'
■s
r�r
COUNTY OF HAWAII
Notes to the Basic Financial Statements
June 30, 2011
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.
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 27.5% of annual covered payroll.
The following section shows the County's Annual OPEB cost for the year ended June 30,
2011, the amount actually contributed to the plan, and changes in the net OPEB asset:
Annual required contribution $34,969,000
Interest on net OPEB obligation (276,000)
Adjustment to annual required contribution 220,000
Annual OPEB Cost 34,913,000
Contributions made 31,102,387
Decrease in net OPEB asset 3,810,613
Net OPEB asset - beginning of year (3,931,381)
Net OPEB asset -end of year $120,768)
COUNTY OF HAWAII
Notes to the Basic Financial Statements
June 30, 2011
The annual OPEB cost, the percentage of annual OPEB cost contributed to the plan, and the
net OPEB asset for the year ended June 30, 2011 and the preceding years were as follows:
Fiscal Year
Ended
June 30, 2009
June 30, 2010
June 30, 2011
Annual OPEB Cost
$23,426,000
$25,823,000
$34,913,000
Percentage of Annual
OPEB Cost
Contributed
102.9%
109.1%
89.1%
Net OPEB
Asset
($1,572,116)
($3,931,381)
($120,768)
The schedule of funding progress based on the actuarial valuation date of July 1, 2009, is as
follows:
Actuarial accrued liability
Actuarial value of plan assets
Unfunded actuarial accrued liability (UAAL)
Funded ratio
Covered payroll (active plan members)
UAAL as a percentage of covered payroll
$439,225,000
28,814,000
$410,411,000
7%
$133,555,000
307%
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, 2009 actuarial valuation, the entry age normal cost actuarial cost method was
used. The actuarial assumptions included a 7.0% discount rate, which is based on the
County's anticipated funding level, and an annual healthcare cost trend rate of 10.5% initially,
reduced by decrements to an ultimate rate of 5.0% after nine years. The assumptions also
include a 3.5% increase in payroll and a 3.0% inflation rate. The UAAL is being amortized
as a level percentage of projected payroll on an open basis. The remaining amortization
period at July 1, 2009 for the UAAL balance varies depending on the date each portion was
established but is set to not exceed 30 years.
OPP
COUNTY OF HAWAII
Notes to the Basic Financial Statements
June 30, 2011
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
Hawaii, adopted pursuant to Internal Revenue Code (IRC) section 457. The plan permits
eligible employees to defer a portion of their salary until future years by contributing to a
fund managed by a plan administrator. The deferred compensation amounts are not available
to employees until termination, retirement, death, or unforeseeable emergency.
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, the deferred compensation plan assets are not reported
in the accompanying basic financial statements.
14. COMPONENT UNIT DISCLOSURES
Deposits and Investments
At June 30, 2011, cash, time certificates of deposit and money market funds of $34,708,811,
with bank balances of $35,389,258 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
restricted as to use and are recorded as a restricted asset. Such funds amounted to
$15,904,088 at June 30, 2011. At June 30, 2011, the Department's investment portfolio
consists of certificates of deposit.
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
COUNTY OF HAWAII
Notes to the Basic Financial Statements
June 30, 2011
direct and indirect costs. Construction period interest is capitalized on utility plan constructed
with tax- exempt debt.
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
Machinery and equipment
Water systems
40 to 50 years
5 to 20 years
10 to 40 years
The capital assets of the Department at June 30, 2011 were as follows:
Utility plant in service $366,730,898
Less: accumulated depreciation (165,193,987)
201,536,911
Land and rights 1,783,726
Construction work in progress 64,700,194
Net capital assets $268,020,831
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 $45,366,098
at June 30, 2011.
General obligation bonds payable issued on behalf of the Department and other long -term
debt at June 30, 2011 are comprised of the following:
Public improvement bonds:
1993 Series A at 2.5% to 5.6 %, due through 2013 $ 1,625,000
2004 Series D at 4.5 %, due through 2039 240,775
2006 Series A at 4.0% to 5.0 %, due through 2026 21,725,000
2008 Series A at 4.125 %, due through 2043 144,830
2010 Series A at 3.33% to 6.1 %, due through 2030 9,585,706
2010 Series B at 3.33% to 6.1 %, due through 2030 6,107,099
Total public improvement bonds 39,428,410
Public improvement refunding bonds:
2004 Series at 2.0% to 5.25 %, due through 2015 185,076
2007 Series at 4.0% to 5.0 %, due through 2021 5,752,612
Total public improvement refunding bonds 5,937,688
COUNTY OF HAWAII
Notes to the Basic Financial Statements
June 30, 2011
Revolving fund loans:
State revolving fund loan, interest up to 1.37 %,
due through 2030 14,064,339
American Recovery and Reinvestment Act State revolving
fund loan, interest free, with total principal forgiveness
upon fulfillment of conditions 3,947,975
Total revolving fund loans 18,012,314
Total $63,378,412
At June 30, 2011, future principal payments for long -term debt are scheduled as follows:
Fiscal year ending June 30:
2012 $ 7,105,000
2013 3,274,000
2014 2,515,000
2015 3,247,000
2016 3,307,000
2017 — 2021 18,265,000
2022 — 2026 16,647,000
2027 — 2031 8,832,000
2032 — 2036 83,000
2037 — 2041 87,000
2042 — 2043 16,412
Total $63,378,412
Contributions in Aid of Construction
The Department recognized $11,582,090 of contributions in aid of construction as
nonoperating revenues for the fiscal year ended June 30, 2011.
Commitments and Contingent Liabilities
Claims and judgments — The Department maintains property, auto liability, and general
liability insurance policies. The Department remains self - insured for workers' compensation
and other perils. The liability at June 30, 2011 for workers' compensation claims of
$242,000 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 $21,758,000 at
June 30, 2011.
COUNTY OF HAWAII
Notes to the Basic Financial Statements
June 30, 2011
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
benefits. The Department's annual required contribution for its postemployment benefit
obligation for the year ended June 30, 2011 was $2,319,000 with interest and adjustments of
($18,000) and $14,000, respectively. The Department made contributions of $2,069,000
during the year ended June 30, 2011 and recorded a postemployment benefit asset of $4,000
at June 30, 2011.
- 86 -
!11
1p
1P*
1P4
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COUNTY OF HAWAII
Required Supplementary Information
June 30, 2011
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)
July 1, 2007 $275,828 $275,828 $127,420 216.5%
July 1, 2009 $28,814 $439,225 $410,411 6.6% $133,555 307.3%
This page intentionally left blank.
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 sewer 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 AND COMMUNITY BENEFITS 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 and to benefit the lower Puna area.
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 FUND
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.
This page intentionally left blank.
COUNTY OF HAWAII
Nonmajor Governmental Funds
Combining Balance Sheet
June 30, 2011
Assets
Cash and cash equivalents
Investments
Imprest fund
Receivables:
Due from other governments
Due from other governmental funds
Due from other nongovernmental funds
Trade, net of allowance for doubtful accounts
Other
Total assets
Liabilities and Fund Balances
Liabilities:
Accounts payable
Due to other governmental funds
Deferred revenue
Other
Total liabilities
Fund balances:
Restricted for:
Debt service
Highways, streets and abandoned vehicles
Committed to:
Sanitation
Highways, streets and abandoned vehicles
Rental assistance and subsidy
Cemetery
Golf course
Lower Puna area
Parks and recreational facilities
Total fund balances
Total liabilities and fund balances
Highway
Fund
Sewer
Fund
Special Revenue Funds
Solid
Waste Cemetery
Fund Fund
Parking
Meter
Fund
$13,248,630 $ 5,548,541 $ 8,363,666 $ 84,659 $173,679
80,278
971,155
81
1,051,514
$14,300,144
400
4,254
8,993
1,350
1,056,941
1,071,538
$ 6,620,479
725,251 $ 289,786
277,547 10,883
1,056,941
69,529
1,002,798 1,427,139
13,297,346
5,193,340
250
618,798
11,346
1,499,534
494,347
2,624,025
$10,987,941
$ 2,176,942
30,046
1,511,532
229
3,718,749
7,269,192
$ 84,659
$ $
$173,679
84,659
173,679
13,297,346 5,193,340 7,269,192 84,659 173,679
$14,300,144 $ 6,620,479 $10,987,941 $ 84,659 $173,679
1!M
Special Revenue Funds
Vehicle Workforce Golf Geothermal Reloc. Beauti- Park
Disposal Bikeway Investment Course & Community fication Housing Dedication
Fund Fund Act Fund Fund Benefits Fund Fund Agency Fund
$1,973,370 $ 553,873 $
$ 216,622 $ 3,097,692 $ 1,124,147 $ 822,973 $ 86,722
- - - 3,400,000
2,000 200
344,271 577,416
66,121
38,994 84 180,128 132,674
- 383,265 84 180,128 - 776,211
$1,973,370 $ 553,873 $ 383,265 $ 218,706 $ 3,277,820 $ 1,124,147 $ 4,999,384 $ 86,722
$ 422,346 $ $ $ 2,166 $
383,265 3,756
422,346
383,265 5,922
$ 2,530 $ 11,240 $
- 25,906
136,104
2,530 173,250
- 553,873 - 1,121,617
1,551,024 -
212,784 -
4,826,134
- 3,277,820 -
- 86,722
1,551,024 553,873 212,784 3,277,820 1,121,617 4,826,134 86,722
$1,973,370 $ 553,873 $ 383,265 $ 218,706 $ 3,277,820 $ 1,124,147 $ 4,999,384 $ 86,722
(Continued)
COUNTY OF HAWAII
Nonmajor Governmental Funds
Combining Balance Sheet
June 30, 2011
(Concluded)
Debt Service Fund Total
Nonmajor
Interest Governmental
Fund Funds
Assets
Cash and cash equivalents $1,944,409 $ 37,238,983
Investments 3,400,000
Imprest fund - 2,850
Receivables:
Due from other governments 1,625,017
Due from other governmental funds 1,057,615
Due from other nongovernmental funds 1,350
Trade, net of allowance for doubtful accounts 2,556,475
Other 846,308
6,086,765
Total assets $1,944,409 $ 46,728,598
Liabilities and Fund Balances
Liabilities:
Accounts payable $ $ 3,630,261
Due to other governmental funds 705,497
Deferred revenue 2,594,379
Other 72,522 278,384
Total liabilities 72,522 7,208,521
Fund balances:
Restricted for:
Debt service 1,871,887 1,871,887
Highways, streets and abandoned vehicles - 14,972,836
Committed to:
Sanitation 12,462,532
Highways, streets and abandoned vehicles - 1,724,703
Rental assistance and subsidy 4,826,134
Cemetery 84,659
Golf course 212,784
Lower Puna area 3,277,820
Parks and recreational facilities - 86,722
Total fund balances 1,871,887 39,520,077
Total liabilities and fund balances $1,944,409 $ 46,728,598
See accompanying independent auditors' report.
This page intentionally left blank.
COUNTY OF HAWAII
Nonmajor Governmental Funds
Combining Statement of Revenues, Expenditures, and Changes in Fund Balances
For the Fiscal Year Ended June 30, 2011
Highway
Fund
Sewer
Fund
Revenues
Fuel taxes $ 7,603,501 $
Public utility franchise taxes 9,415,624
Licenses and permits 7,053,887
Intergovernmental 1,164,3 61 5,214
Charges for services 6,570,979
Investment earnings
Other 597,598
Total revenues 25,834,971 6,576,193
Expenditures
Current:
Public safety 5,490,286
Highways and streets 11,309,031
Health, education and welfare
Culture and recreation
Sanitation
Pension and retirement contributions 1,537,727
Employees' health insurance 854,608
Other 339,426
Debt service:
Principal
Interest
Total expenditures
Excess (deficiency) of revenues
over (under) expenditures 6,303,893
Other Financing Sources (Uses)
Transfers in
Transfers out
Total other financing sources (uses)
Net change in fund balances
Fund balances at beginning of year
Fund balances at end of year
5,978,853
562,505
256,907
530,044
19,531,078 7,328,309
(3,559,000)
(3,559,000)
Special Revenue Funds
Solid
Waste
Fund
Cemetery
Fund
981,578
6,617,430
4,032
7,603,040
19,101,847
971,857
556,722
349,814
1,443,085
104,382
22,527,707
8,000
8,000
Parking
Meter
Fund
16,646
16,646
(752,116) (14,924,667) 8,000 16,646
2,744,893 (752,116)
10,552,453 5,945,456
13,453,532
13,453,532
(1,471,135)
8,740,327
$ 13,297,346 $ 5,193,340 $ 7,269,192
8,000
76,659
$ 84,659
16,646
157,033
$173,679
OFF
ROO
�K;
Special Revenue Funds
Vehicle
Disposal
Fund
Bikeway
Fund
Workforce
Investment
Act Fund
$ $ - $
2,058,772 91,730
275
2,535,329
Golf
Course
Fund
$
736,820
20
2,059,047 91,730 2,535,329 736,840
2,551,329
20,200
16,056
266
2,535,329
824,638
143,387
80,578
4,196
2,587,585 266 2,535,329 1,052,799
(528,538) 91,464
(528,538) 91,464
2,079,562 462,409
Geothermal Reloc.
& Community
Benefits Fund
Beauti-
fication
Fund
568,193
171,589
568,193 171,589
59,334
124,000 28,575
124,000 87,909
(315,959) 444,193 83,680
361,379
(184,965)
361,379 (184,965)
45,420 259,228 83,680
167,364 3,018,592 1,037,937
$1,551,024 $ 553,873 $ $ 212,784 $ 3,277,820 $1,121,617
Housing
Agency
$
16,016,720
1 1,745
37,647
16,066,112
17,664,615
457,262
208,451
33,005
488
4
18,363,825
(2,297,713)
1,161,187
1,161,187
(1,136,526)
5,962,660
$ 4,826,134
Park
Dedication
Fund
$
43
43
43
43
86,679
$ 86,722
(Continued)
COUNTY OF HAWAII
Nonmajor Governmental Funds
Combining Statement of Revenues, Expenditures, and Changes in Fund Balances
For the Fiscal Year Ended June 30, 2011
Revenues
Fuel taxes
Public utility franchise taxes
Licenses and permits
Intergovernmental
Charges for services
Investment earnings
Other
Total revenues
Expenditures
Current:
Public safety
Highways and streets
Health, education and welfare
Culture and recreation
Sanitation
Pension and retirement contributions
Employees' health insurance
Other
Debt service:
Principal
Interest
Total expenditures
Excess (deficiency) of revenues
over (under) expenditures
Other Financing Sources (Uses)
Transfers in
Transfers out
Total other financing sources (uses)
Net change in fund balances
Fund balances at beginning of year
Fund balances at end of year
See accompanying independent auditors' report.
(Concluded)
Debt Service Fund Total
Nonmajor
Interest Governmental
Fund Funds
261,942
261,942
14,725,016
14,725,016
(14,463,074)
14,493,480
14,493,480
30,406
1,841,481
$ 1,871,887
- 96 -
$ 7,603,501
9,415,624
9,375,978
20,965,144
13,942,150
11,788
1,215,490
62,529,675
5,490,286
11,368,631
20,199,944
977,213
27,632,029
3,692,938
1,973,322
1,256,485
1,443,573
14,829,402
88,863,823
(26,334,148)
29,469,578
(3,743,965)
25,725,613
(608,535)
40,128,612
$ 39,520,077
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, 2011
Revenues:
Taxes:
Fuel taxes
Public utility franchise taxes
Total taxes
Licenses and permits - motor vehicle weight taxes
Intergovernmental
Charges for services
Other
Total revenues
Expenditures:
Public safety - traffic engineering
Highways and streets
Highways and streets - mass transit
Pension and retirement contributions
Employees' health insurance
Other
Total expenditures
Excess of revenues over expenditures
Other financing uses:
Transfers out - Capital Projects Fund
Excess (deficiency) of revenues over (under)
expenditures and other uses
Fund balance at beginning of year
Fund balance at end of year
See accompanying independent auditors' report.
Original
Budget
$ 7,547,000
9,000,000
16,547,000
6,308,000
531,426
356,000
122,392
23,864,818
5,628,954
11,623,871
943,892
2,125,534
816,000
1,214,888
22,353,139
1,511,679
Final
Budget
$ 7,547,000
9,000,000
16,547,000
6,308,000
551,776
356,000
122,392
23,885,168
5,999,304
11,623,871
943,892
2,125,534
856,000
824,888
22,373,489
1,511,679
(3,559,000) (3,559,000)
Actual
(Budgetary
Basis)
$ 7,603,501
9,415,624
17,019,125
7,053,887
1,164,361
540,686
56,912
25,834,971
Variance
Positive
(Negative)
$ 56,501
415,624
472,125
745,887
612,585
184,686
(65,480)
1,949,803
5,514,796 484,508
9,561,819 2,062,052
943,892
1,537,727 587,807
854,608 1,392
346,314 478,574
18,759,156 3,614,333
7,075,815 5,564,136
(3,559,000)
(2,047,321) (2,047,321) 3,516,815
10,552,453 10,552,453 10,552,453
$ 8,505,132 $ 8,505,132 $ 14,069,268
5,564,136
$ 5,564,136
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, 2011
Revenues:
Intergovernmental
Charges for services - sewer fees
Total revenues
Expenditures:
Sanitation
Pension and retirement contributions
Employees' health insurance
Other
Total expenditures
Deficiency of revenues under expenditures
Fund balance at beginning of year
Fund balance at end of year
See accompanying independent auditors' report.
Original
Budget
$
6,586,919
6,586,919
7,047,302
637,155
274,380
1,502,000
9,460,837
Final
Budget
$
6,586,919
6,586,919
7,047,302
637,155
274,380
1,502,000
9,460,837
(2,873,918) (2,873,918)
5,945,456 5,945,456
$ 3,071,538 $ 3,071,538
Actual
(Budgetary
Basis)
$ 5,214
6,570,979
6,576,193
5,900,626
562,505
256,907
566,881
7,286,919
(710,726)
5,945,456
$ 5,234,730
Variance
Positive
(Negative)
$ 5,214
(15, 940)
(10,726)
1,146,676
74,650
17,473
935,119
2,173,918
2,163,192
$ 2,163,192
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, 2011
Revenues:
Intergovernmental
Charges for services - tipping fees
Other
Total revenues
Expenditures:
Sanitation
Pension and retirement contributions
Employees' health insurance
Other
Total expenditures
Deficiency of revenues under expenditures
Other financing sources:
Transfers in - General Fund
Deficiency of revenues and other
sources under expenditures
Fund balance at beginning of year
Fund balance at end of year
See accompanying independent auditors' report
Original
Budget
$1,053,333
8,13 5,700
9,189,033
24,795,427
1,095,000
630,000
222,172
26,742,599
(17,553,566)
13,453,532
(4,100,034)
8,740,327
$4,640,293
Final
Budget
$ 1,053,333
8,13 5,700
Actual
(Budgetary
Basis)
$ 916,671
6,617,430
4,032
Variance
Positive
(Negative)
$ (136,662)
(1,518,270)
4,032
9,189,033 7,538,133 (1,650,900)
24,611,427
1,095,000
630,000
406,172
26,742,599
(17,553,566)
13,453,532
20,989,781
971,857
556,722
351,223
22,869,583
(15,331,450)
13,453,532
3,621,646
123,143
73,278
54,949
3,873,016
2,222,116
(4,100,034) (1,877,918) 2,222,116
8,740,327 8,740,327
$ 4,640,293 $ 6,862,409 $ 2,222,116
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, 2011
Actual Variance
Original Final (Budgetary Positive
Budget Budget Basis) (Negative)
Revenues - other - sale of cemetery plots $ 10,000 $ 10,000 $ 8,000 $ (2,000)
Expenditures - health, education and welfare 10,000 10,000 10,000
Excess of revenues over expenditures 8,000 8,000
Fund balance at beginning of year 76,659 76,659 76,659
Fund balance at end of year $ 76,659 $ 76,659 $ 84,659 $ 8,000
See accompanying independent auditors' report.
- 100 -
Nit
IMO
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, 2011
Actual Variance
Original Final (Budgetary Positive
Budget Budget Basis) (Negative)
Revenues - Charges for services - highways and streets $ $ $ 16,646 $ 16,646
Excess of revenues over expenditures 16,646 16,646
Fund balance at beginning of year 157,033 157,033 157,033
Fund balance at end of year $ 157,033 $157,033 $ 173,679 $ 16,646
See accompanying independent auditors' report.
- 101 -
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, 2011
Revenues:
Licenses and permits - vehicle disposal fee
Charges for services - towing charges
Total revenues
Expenditures:
Sanitation
Pension and retirement contributions
Employees' health insurance
Other
Total expenditures
Deficiency of revenues under expenditures
Fund balance at beginning of year
Fund balance at end of year
See accompanying independent auditors' report.
Original Final
Budget Budget
$2,027,328 $2,027,328
2,027,328
2,928,163
22,000
16,000
2,000
2,968,163
(940,835)
2,079,562
2,027,328
2,928,163
21,943
16,057
2,000
2,968,163
(940,835)
2,079,562
$1,138,727 $ 1,138,727
- 102 -
Actual
(Budgetary
Basis)
$ 2,058,772
275
2,059,047
2,414,314
20,200
16,056
2,450,570
(391,523)
2,079,562
$ 1,688,039 $ 549,312
Variance
Positive
(Negative)
$ 31,444
275
31,719
513,849
1,743
1
2,000
517,593
549,312
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, 2011
Original Actual Variance
and Final (Budgetary Positive
Budget Basis) (Negative)
Revenues - licenses and permits - bicycle tax $ 20,000 $ 91,730 $ 71,730
Expenditures - highways and streets 171,000 (3,041) 174,041
Excess (deficiency) of revenues over (under)
expenditures (151,000) 94,771 245,771
Fund balance at beginning of year 462,409 462,409
Fund balance at end of year $311,409 $557, 180 $245,771
See accompanying independent auditors' report.
- 103 -
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, 2011
Original
Budget
Revenues - intergovernmental - federal grants $
Expenditures - health, education and welfare
Excess of revenues over expenditures
Fund balance at beginning of year
Fund balance at end of year $ - $
Final
Budget
Actual
(Budgetary
Basis)
$ 1,995,580 $ 1,928,901
1,995,580 1,928,901
See accompanying independent auditors' report.
- 104 -
$
Variance
Positive
(Negative)
$ (66,679)
66,679
$
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, 2011
Actual Variance
Original Final (Budgetary Positive
Budget Budget Basis) (Negative)
Revenues:
Charges for services $ 768,103 $ 768,103 $ 736,820 $ (31,283)
Other - - 20 20
Total revenues 768,103 768,103 736,840 (31,263)
Expenditures:
Culture and recreation 878,716 878,116 858,031 20,085
Pension and retirement contributions 157,743 157,743 143,387 14,356
Employees' health insurance 80,000 80,600 80,578 22
Other 13,023 13,023 4,437 8,586
Total expenditures 1,129,482 1,129,482 1,086,433 43,049
Deficiency of revenues under expenditures (361,379) (361,379) (349,593) 11,786
Other financing sources:
Transfers in - General Fund 361,379 361,379 361,379
Excess of revenues and other sources
over expenditures - 11,786 11,786
Fund balance at beginning of year 167,364 167,364 167,364
Fund balance at end of year $ 167,364 $ 167,364 $ 179,150 $ 11,786
See accompanying independent auditors' report.
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, 2011
Actual Variance
Original Final (Budgetary Positive
Budget Budget Basis) (Negative)
Revenues - other - geothermal royalties $ 550,000 $ 550,000 $ 568,193 $ 18,193
Expenditures:
General government - planning 550,000 241,035 241,035
Culture and recreation 124,000 124,000
Total expenditures 550,000 365,035 124,000 241,035
Excess of revenues over expenditures - 184,965 444,193 259,228
Other financing uses:
Transfers out - Capital Projects Fund - (184,965) (184,965)
Excess of revenues over expenditures
and other uses 259,228 259,228
Fund balance at beginning of year 3,018,592 3,018,592 3,018,592
Fund balance at end of year $ 3,018,592 $ 3,018,592 $ 3,277,820 $ 259,228
See accompanying independent auditors' report.
- 106 -
4
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, 2011
Actual Variance
Original Final (Budgetary Positive
Budget Budget Basis) (Negative)
Revenues - licenses and permits - highway
beautification $ 160,000 $ 160,000 $ 171,589 $ 11,589
Expenditures:
Highways and streets 120,000 120,000 36,307 83,693
Culture and recreation 120,000 120,000 28,575 91,425
Total expenditures 240,000 240,000 64,882 175,118
Excess (deficiency) of revenues over (under)
expenditures (80,000) (80,000) 106,707 186,707
Fund balance at beginning of year 1,037,937 1,037,937 1,037,937 -
Fund balance at end of year $ 957,937 $ 957,937 $1,144,644 $186,707
See accompanying independent auditors' report.
COUNTY OF HAWAII
Hawaii County Housing Agency
Schedule of Revenues, Expenditures, and Changes in Fund Balance -
Budget and Actual (Budgetary Basis)
For the Fiscal Year Ended June 30, 2011
Revenues:
Intergovernmental -
Federal - HUD - Voucher program
Other
Investment earnings
Resale of property
Other
Total revenues
Expenditures:
Health, education and welfare
Pension and retirement contributions
Employees' health insurance
Total expenditures
Deficiency of revenues under expenditures
Other financing sources:
Transfers in - General Fund
Deficiency of revenues and other
sources under expenditures
Fund balance at beginning of year
Fund balance at end of year
See accompanying independent auditors' report.
Original
Budget
Final
Budget
$14,663,400 $17,163,400
49,104 49,104
60,000 60,000
Actual
(Budgetary
Basis)
$15,997,404
19,316
11,745
37,550
97
14,772,504 17,272,504 16,066,112
15,208,291 17,708,291
515,400 515,400
210,000 210,000
16,986,001
457,262
208,451
15,933,691 18,433,691 17,651,714
(1,585,602)
(1,161,187) (1,161,187)
1,161,187 1,161,187
1,161,187
(424,415)
5,962,660 5,962,660 5,962,660
$ 5,962,660 $ 5,962,660 $ 5,538,245
- 108 -
Variance
Positive
(Negative)
$ (1,165,996)
(29,788)
(48,255)
37,550
97
(1,206,392)
722,290
58,138
1,549
781,977
(424,415)
(424,415)
$ (424,415)
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, 2011
Actual Variance
Original Final (Budgetary Positive
Budget Budget Basis) (Negative)
Revenues - investment earnings $ $ $ 43 $ 43
Excess of revenues over expenditures - 43 43
Fund balance at beginning of year 86,679 86,679 86,679
Fund balance at end of year $ 86,679 $ 86,679 $ 86,722 $ 43
See accompanying independent auditors' report.
- 109 -
Assets
Cash and cash equivalents
Investments
Due from other agency funds
Other receivables
Total assets
Liabilities
Due to other agency funds
Accrued liabilities
Advances payable
Assets held for the benefit of
improvement districts
Total liabilities
COUNTY OF HAWAII
Agency Funds
Combining Statement of Agency Funds Net Assets
June 30, 2011
State
Weight
Tax
Fund
Improvement
District
No. 17
Fund
Improvement
District
No. 18
Fund
Improvement
District
Revolving
Fund
Performance
and
Refundable
Deposits
Fund
$ 893,557 $ 83,314 $ 68,307 $ 401,220 $ 548,549
1,586,399
12,014 11,600
$ 893,557 $ 83,314 $ 1,666,720 $ 401,220 $ 560,149
$ - $
893,557
14,873
11,702
83,314 1,640,145 401,220
$ 800
559,349
$ 893,557 $ 83,314 $ 1,666,720 $ 401,220 $ 560,149
See accompanying independent auditors' report.
- 110 -
ROA
tar
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
$ 1,699,774 $ 366,905 $ 202,302 $ 1,175 $ 577 $ 5,287 $ 4,270,967
- 1,586,399
- 2,116 2,116
8,674 17,898 - 15,335 65,521
$ 1,708,448 $ 366,905 $ 222,316 $ 1,175 $ 577 $ 20,622 $ 5,925,003
$ 1,316 $ - $ - $ $ - $ $ 2,116
1,707,132 366,905 222,316 1,175 577 5,287 3,211,822
- 571,051
- 15,335 2,140,014
$ 1,708,448 $ 366,905 $ 222,316
1,175 $ 577 $ 20,622 $ 5,925,003
COUNTY OF HAWAII
Agency Funds
Combining Statement of Changes in Assets and Liabilities
For the Fiscal Year Ended June 30, 2011
State Weight Tax Fund
Assets
Cash and cash equivalents
Liabilities
Balance Balance
July 1, June 30,
2010 Additions Deductions 2011
$ 841,021 $ 10,760,224 $ 10,707,688 $ 893,557
Vouchers payable $ $ 10,707,353 $ 10,707,353 $ -
Due to other agency funds 7 306 313
Accrued liabilities - due to State of Hawaii 841,014 10,686,618 10,634,075 893,557
Total liabilities $ 841,021 $ 21,394,277 $ 21,341,741 $ 893,557
Improvement District No. 17 Fund
Assets
Cash and cash equivalents $ 869,708 $ 1,027,768 $ 1,814,162 $ 83,314
Restricted cash and cash equivalents 637,000 637,000 -
Other receivables 71,839 318,801 390,640
Total assets $ 1,578,547 $ 1,346,569 $ 2,841,802 $ 83,314
Liabilities
Accrued liabilities $ 77,213 $ 320,750 $ 397,963 $
Advances payable 647 - 647
Assets held for the benefit
of improvement districts 1,500,687 390,767 1,808,140 83,314
Total liabilities $1,578,547 $ 711,517 $ 2,206,750 $ 83,314
- 112 -
COUNTY OF HAWAII
Agency Funds
Combining Statement of Changes in Assets and Liabilities
For the Fiscal Year Ended June 30, 2011
Balance Balance
July 1, June 30,
2010 Additions Deductions 2011
Improvement District No. 18 Fund
Assets
Cash and cash equivalents $ 268,538 $ 81,676 $ 281,907 $ 68,307
Investments 1,323,233 263,166 1,586,399
Other receivables 4,799 346,847 339,632 12,014
Total assets $ 1,596,570 $ 691,689 $ 621,539 $ 1,666,720
Liabilities
Vouchers payable $ $ 50,931 $ 50,931 $
Accrued liabilities 7,370 313,312 305,809 14,873
Advances payable 7,507 12,350 8,155 11,702
Assets held for the benefit
of improvement districts 1,581,693 315,955 257,503 1,640,145
Total liabilities $ 1,596,570 $ 692,548 $ 622,398 $1,666,720
Improvement District Revolving Fund
Assets
Cash and cash equivalents $ 401,000 $
Other receivables 20
Total assets $ 401,020 $
Liabilities
Assets held for the benefit
of improvement districts
Performance and Refundable
Deposits Fund
220 $ $ 401,220
- 20 -
220 $ 20 $ 401,220
$ 401,020 $
220 $ 20 $ 401,220
Assets
Cash and cash equivalents $ 236,937 $ 697,098 $ 385,486 $ 548,549
Due from other non - agency funds - 11,650 50 11,600
Total assets $ 236,937 $ 708,748 $ 385,536 $ 560,149
Liabilities
Vouchers payable $ $ 379,137 $ 379,137 $
Due to other agency funds 1,790 800 1,790 800
Accrued liabilities 665 - 665
Advances payable 234,482 710,198 385,331 559,349
Total liabilities $ 236,937 $ 1,090,135 $ 766,923 $ 560,149
- 113 -
COUNTY OF HAWAII
Agency Funds
Combining Statement of Changes in Assets and Liabilities
For the Fiscal Year Ended June 30, 2011
Payroll Clearance Fund
Assets
Cash and cash equivalents
Due from other non - agency funds
Other receivables
Total assets
Liabilities
Vouchers payable
Due to other agency funds
Accrued liabilities
Total liabilities
Flexible Spending Account
Assets
Cash and cash equivalents
Liabilities
Accrued liabilities
Lapsed Warrants Fund
Assets
Cash and cash equivalents
Due from other agency funds
Other receivables
Total assets
Liabilities
Vouchers payable
Accrued liabilities
Total liabilities
Balance
July 1,
2010 Additions
$1,813,102
2,911
$1,816,013
158
1,815,855
$ 1,816,013
$ 221,213,775
223,455,527
5,766
$ 444,675,068
$ 99,249,544
1,316
347,286,568
$ 446,537,428
$ 356,863 $
$ 356,863 $
Balance
June 30,
Deductions 2011
$ 221,327,103
223,455,527
3
$ 1,699,774
8,674
$ 444,782,633 $ 1,708,448
$ 99,249,544
158
347,395,291
$ 446,644,993
1,316
1,707,132
$ 1,708,448
330,621 $ 320,579 $ 366,905
330,621 $ 320,579 $ 366,905
$ 168,872 $ 34,102 $ 672
1,955 2,116 1,955
32,147 17,898 32,147
$ 202,974 $ 54,116 $ 34,774
$ - $
202,974
$ 202,974 $
- 114 -
622 $
36,418
37,040 $
$ 202,302
2,116
17,898
$ 222,316
622 $ -
17,076 222,316
17,698 $ 222,316
*O„
,q
1NF
COUNTY OF HAWAII
Agency Funds
Combining Statement of Changes in Assets and Liabilities
For the Fiscal Year Ended June 30, 2011
Balance Balance
July 1, June 30,
2010 Additions Deductions 2011
Non - Profit License Plates Fund
Assets
Cash and cash equivalents $ 1,100 $ 5,450 $ 5,375 $ 1,175
Liabilities
Vouchers payable $ $ 5,415 $ 5,415 $
Accrued liabilities:
Due to non - profit agency 1,100 5,020 4,945 1,175
Total liabilities $ 1,100 $ 10,435 $ 10,360 $ 1,175
Organ and Tissue Education Fund
Assets
Cash and cash equivalents $ 364 $ 2,425 $ 2,212 $ 577
Liabilities
Vouchers payable $ $ 2,548 $ 2,548 $
Accrued liabilities - due to State of Hawaii 364 2,260 2,047 577
Total liabilities $ 364 $ 4,808 $ 4,595 $ 577
Business Improvement District 1- Kailua
Assets
Cash and cash equivalents $ 1,088 $ 890,428 $ 886,229 $ 5,287
Other receivables - BID 1- Kailua Assessment 11,347 945,775 941,787 15,335
Other receivables - 3,976 3,976
Total assets $ 12,435 $ 1,840,179 $ 1,831,992 $ 20,622
Liabilities
Vouchers payable $ $ 827,956 $ 827,956 $
Accrued liabilities - due to KVBID 1,088 5,287 1,088 5,287
Assets held for the benefit
of improvement districts 11,347 833,709 829,721 15,335
Total liabilities $ 12,435 $ 1,666,952 $ 1,658,765 $ 20,622
- 115 -
COUNTY OF HAWAII
Agency Funds
Combining Statement of Changes in Assets and Liabilities
For the Fiscal Year Ended June 30, 2011
Total - All Agency Funds
Assets
Cash and cash equivalents
Investments
Due from other agency funds
Due from other non - agency funds
Other receivables - BID 1- Kailua Assessment
Other receivables
Restricted cash and cash equivalents
Total assets
Liabilities
Vouchers payable
Due to other agency funds
Accrued liabilities
Accrued liabilities - due to non - profit agency
Accrued liabilities - due to State of Hawaii
Accrued liabilities - due to KVBID
Advances payable
Assets held for the benefit
of improvement districts
Total liabilities
See accompanying independent auditors' report.
Balance
July 1,
2010
$ 4,958,593
1,323,233
1,955
11,347
111,716
637,000
$ 7,043,844
$
1,955
2,460,940
1,100
841,378
1,088
242,636
3,494,747
Additions
$ 235,043,787
263,166
2,116
223,467,177
945,775
693,288
$ 460,415,309
$ 111,223,506
2,422
348,287,669
5,020
10,688,878
5,287
722,548
1,540 651
Balance
June 30,
Deductions 2011
$ 235,731,413
1,955
223,455,577
941,787
766,418
637,000
$ 461,534,150
$ 111,223,506
2,261
348,437,383
4,945
10,636,122
1,088
394,133
$ 4,270,967
1,586,399
2,116
11,600
15,335
38,586
$ 5,925,003
2,116
2,311,226
1,175
894,134
5,287
571,051
2 895 384 2 140 014
$ 7,043,844 $ 472,475,981 $ 473,594,822 $ 5,925,003
- 116 -
I
INF
OPA
COUNTY OF HAWAII
Private Purpose Trusts
Combining Statement of Private Purpose Trust Net Assets
June 30, 2011
Shippers' Total
Geothermal Wharf Private
Asset Trust Purpose
Assets Fund Fund Trusts
Cash and cash equivalents $ 2,106,800 $ 1,621,577 $ 3,728,377
Investments 1,038,870 1,038,870
Total assets $ 2,106,800 $ 2,660,447 $ 4,767,247
Net Assets
Held in trust for other parties
Total net assets
See accompanying independent auditors' report.
$ 2,106,800 $ 2,660,447 $ 4,767,247
$ 2,106,800 $ 2,660,447 $ 4,767,247
COUNTY OF HAWAII
Private Purpose Trusts
Combining Statement of Changes in Private Purpose Trust Net Assets
For the Fiscal Year Ended June 30, 2011
Shippers' Total
Geothermal Wharf Private
Asset Trust Purpose
Fund Fund Trusts
Additions
Contributions:
Puna Geothermal Venture $ 50,000 $ - $ 50,000
Investment earnings:
Net increase in fair value of investments 268,785 268,785
Dividends 54,491 54,491
Interest 974 17,911 18,885
Total additions 50,974 341,187 392,161
Deductions
Grant payments - 273,546 273,546
Total deductions 273,546 273,546
Change in net assets 50,974 67,641 118,615
Net assets, beginning of year 2,055,826 2,592,806 4,648,632
Net assets, end of year $ 2,106,800 $ 2,660,447 $ 4,767,247
See accompanying independent auditors' report.
- 118 -
IOW
c
L
C
C
be
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. 119
Revenue Capacity — These schedules contain information to help the reader assess the County's
most significant local revenue source, the property tax. 124
Debt Capacity — These schedules present information to help the reader assess the affordability of
the County's current levels of outstanding debt and the County's ability to issue additional debt in
the future.
Demographic and Economic Information — These schedules offer demographic and economic
indicators to help the reader understand the environment within which the County's financial
acitivities take place.
Operating Information — These schedules contain service and infrastructure data to help the
reader understand how the information in the County's financial report relates to the services
provided and the activities performed by the County.
130
133
135
COUNTY OF HAWAII
Net Assets by Component
Last Ten Fiscal Years
Fiscal Year
Table 1
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Governmental activities
Invested in capital assets, net of related debt $316,909,229 $333,571,558 $336,435,768 $364,662,377 $386,861,296 $394,789,635 $419,174,559 $419,615,479 $469,235,881 $514,309,238
Restricted 22,122,090 27,577,754 37,333,730 41,950,262 44,737,588 54,857,023 66,977,935 63,408,379 43,958,660 51,840,697
Unrestricted (19,830,952) (13,132,955) (10,384,644) (11,741,743) 8,885,911 21,350,091 27,329,104 42,457,132 37,623,937 40,287,046
Total governmental activities net assets $319,200,367 $348,016,357 $363,384,854 $394,870,896 $440,484,795 $470,996,749 $513,481,598 $525,480,990 $550,818,478 $606,436,981
Business -type activities
Invested in capital assets, net of related debt $ 347,480 $ 333,860 $ 324,942 $ 325,800 $ 317,534 $ 310,409 $ 307,424 $ 305,127 $ 303,244 $ 308,966
Restricted 179,028 180,782 180,782 182,167 182,797 183,832 184,352 184,643 184,914 185,087
Unrestricted 849,832 876,107 873,704 850,962 813,431 636,756 608,195 609,798 497,466 449,581
Total business -type activities net assets $ 1,376,340 $ 1,390,749 $ 1,379,428 $ 1,358,929 $ 1,313,762 $ 1,130,997 $ 1,099,971 $ 1,099,568 $ 985,624 $ 943,634
Primary government
Invested in capital assets, net of related debt $317,256,709 $333,905,418 $336,760,710 $364,988,177 $387,178,830 $395,100,044 $419,481,983 $419,920,606 $469,539,125 $514,618,204
Restricted 22,301,118 27,758,536 37,514,512 42,132,429 44,920,385 55,040,855 67,162,287 63,593,022 44,143,574 52,025,784
Unrestricted (18,981,120) (12,256,848) (9,510,940) (10,890,781) 9,699,342 21,986,847 27,937,299 43,066,930 38,121,403 40,736,627
Total primary government net assets $320,576,707 $349,407,106 $364,764,282 $396,229,825 $441,798,557 $472,127,746 $514,581,569 $526,580,558 $551,804,102 $607,380,615
Unaudited - see accompanying independent auditors' report.
Program Revenues
Governmental activities:
Charges for services:
General government
Public safety
Highways and streets
Health, education and welfare
Culture and recreation
Sanitation
Operating grants and contributions
Capital grants and contributions
Total governmental activites program revenues
Business -type activities:
Charges for services:
Health, education and welfare
Operating grants and contributions
Total business -type activities program revenues
Total primary grovernment program revenues
Expenses
Governmental activities:
General government
Public safety
Highways and streets
Health, education and welfare
Culture and recreation
Sanitation
Interest on long -term debt
Total governmental activities expenses
Business -type activities:
Health, education and welfare
Total business -type activities expenses
Total primary government expenses
Net Expense
Governmental activities
Business -type activities
Total primary government net expense
Continued next page.
COUNTY OF HAWAII
Changes in Net Assets
Last Ten Fiscal Years
Fiscal Year
Table 2
2002
2003
2004
2005
2006 2007
2008
2009
2010
2011
$ 2,173,770 $ 1,911,070 $ 1,947,554 $ 3,227,420 $ 4,032,542 $ 4,460,016 $ 6,017,819 $ 5,442,950 $ 4,315,849 $ 1,856,795
3,927,495 4,349,355 5,061,174 6,262,259 6,975,962 5,798,126 5,843,733 4,846,834 4,449,519 4,447,120
4,422,416 5,324,908 6,052,544 7,629,139 9,079,084 9,354,639 9,701,815 9,636,799 9,351,219 9,800,983
865,365 991,725 884,075 1,272,091 980,147 799,075 754,758 532,832 713,774 424,107
1,366,370 1,593,620 1,588,945 1,521,127 1,439,784 1,634,008 1,595,409 1,557,597 1,609,041 1,626,178
10,969,909 10,596,469 13,653,722 15,465,478 16,469,745 18,486,502 18,643,952 16,415,985 14,934,570 15, 889,364
27,198,314 31,544,494 33,327,191 36,370,993 38,252,889 38,068,138 46,117,399 42,273,795 49,571,173 50,820,951
27,871,495 19,064,821 9,668,981 26,221,627 14,801,828 7,805,986 9,327,408 15,728,186 13,532,669 38,810,806
78,795,134 75,376,462 72,184,186 97,970,134 92,031,981 86,406,490 98,002,293 96,434,978 98,477,814 123,676,304
279,369
147,582
426,951
$ 79,222,085
304,671
147,997
452,668
$ 75,829,130
303,047
143,769
446,816
$ 72,631,002
314,971
135,829
450,800
$ 98,420,934 $
338,141
141,019
479,160
92,511,141
345,802
134,211
480,013
$ 86,886,503
365,655
125,795
491,450
$ 98,493,743
371,511
135,674
507,185
$ 96,942,163
337,982
136,802
474,784
$ 98,952,598
372,599
133,215
505,814
$ 124,182,118
$ 37,796,311
75,709,394
22,627,472
17,854,112
14,903,986
18,641,654
8,769,167
196,302,096
$ 36,461,949
77,131,374
15,512,957
20,205,386
16,430,590
19,022,213
8,680,999
193,445,468
$ 40,085,357 $ 51,262,329 $ 38,264,132 $ 46,349,904 $ 68,794,961 $ 69,968,534 $ 65,552,278 $ 53,439,428
90,434,696 94,422,057 106,067,466 118,010,316 137,500,608 144,755,837 148,115,428 154,008,027
17,563,608 20,857,341 24,783,476 28,185,968 33,577,707 36,466,541 38,075,835 34,812,165
23,041,963 21,503,635 20,181,685 23,203,874 14,986,972 33,783,223 30,528,977 30,336,420
15,979,854 16,124,457 19,464,962 26,948,501 20,450,172 32,633,418 14,739,755 22,167,818
20,084,654 26,669,660 27,265,515 42,682,281 41,254,728 40,191,704 27,527,841 35,604,394
9,553,966 8,718,758 10,168,710 10,303,332 13,117,325 13,914,969 14,120,398 15,176,682
216,744,098 239,558,237 246,195,946 295,684,176 329,682,473 371,714,226 338,660,512 345,544,934
455,936 450,343 466,143
455,936 450,343 466,143
$ 196,758,032 $ 193,895,811 $ 217,210,241
484,879 547,201
484,879 547,201
$ 240,043,116 $ 246,743,147
698,329 556,304 525,449
698,329 556,304 525,449
$ 296,382,505 $ 330,238,777 $ 372,239,675
590,131 550,801
590,131 550,801
$ 339,250,643 $ 346,095,735
$(117,506,962) $(118,069,006) $(144,559,912) $(141,588,103) $(154,163,965) $(209,277,686) $(231,680,180) $(275,279,248) $(240,182,698) $(221,868,630)
(28,985) 2,325 (19,327) (34,079) (68,041) (218,316) (64,854) (18,264) (115,347) (44,987)
$(117,535,947) $(118,066,681) $(144,579,239) $(141,622,182) $(154,232,006) $(209,496,002) $(231,745,034) $(275,297,512) $(240,298,045) $(221,913,617)
General Revenues and Other Changes in Net Assets
Governmental activities:
General revenues:
Property taxes
Public service company taxes
Public utility franchise taxes
Fuel taxes
Grants and contributions not restricted to
specific programs
Investment earnings
Other
Transfers out
Total governmental activities
Business -type activities:
General revenues:
Investment earnings
Total business -type activities
Total primary government
$ 94,197,060
5,108,291
4,992,959
6,421,837
13,501,966
3,568,210
1,582,980
(838,445)
128,534,858
$ 109,151,524
5,063,897
4,816,565
7,343,088
$ 119,864,237
5,332,478
5,373,144
7,552,317
13,931,403 15,251,443
1,936,635 1,729,531
4,641,884 4,825,259
146, 8 84,996 15 9,928,409
$ 129,775,410
6,351,273
6,016,890
7,580,740
$ 152,182,806
6,811,483
7,328,887
7,857,394
$ 183,611,050
7,396,084
8,520,133
8,471,453
$ 210,217,690
8,381,367
9,026,841
7,887,998
$ 229,262,980
10,228,607
11,118,365
7,662,113
16,734,850 18,510,262 18,999,596 19,395,089 17,888,019
2,957,188 4,976,178 9,727,911 11,454,850 8,369,221
3,657,794 2,110,854 3,063,413 7,801,194 2,749,335
173,074,145 199,777,864 239,789,640 274,165,029 287,278,640
$ 218,037,567
9,647,055
8,963,041
7,405,996
Table 2
$ 225,055,099
9,296,852
9,415,624
7,603,501
17,500,038 19,533,165
2,187,266 609,617
1,779,223 5,973,275
277,487,133
265,520,186
19,064 12,084 8,006
19,064 12,084 8,006
$ 128,553,922 $ 146,897,080 $ 159,936,415
13,580 22,874 35,551
13,580 22,874 35,551
$ 173,087,725 $ 199,800,738 $ 239,825,191
33,828
33,828
$ 274,198,857
17,861
17,861
$ 287,296,501
1,403 2,997
1,403 2,997
$ 265,521,589 $ 277,490,130
Changes In Net Assets
Governmental activities $ 11,027,896
Business -type activities (9,921)
Total primary government changes in net assets $ 11,017,975
$ 28,815,990 $ 15,368,497
14,409 (11,321)
$ 28,830,399 $ 15,357,176
$ 31,486,042 $ 45,613,899
(20,499) (45,167)
$ 31,465,543 $ 45,568,732
$ 30,511,954 $ 42,484,849 $ 11,999,392 $ 25,337,488 $ 55,618,503
(182,765) (31,026) (403) (113,944) (41,990)
$ 30,329,189 $ 42,453,823 $ 11,998,989 $ 25,223,544 $ 55,576,513
Unaudited - see accompanying independent auditors' report.
COUNTY OF HAWAII
Fund Balances, Governmental Funds
(Modified accrual basis of accounting)
Last Ten Fiscal Years
Fiscal Year
Table 3
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
General Fund:
Reserved $ 5,717,010 $ 7,062,628 $ 7,452,338 $ 8,313,800 $ 11,519,135 $ 15,659,683 $ 17,468,606 $ 14,974,272 $ 8,088,347 $
Unreserved 3,831,680 9,093,877 12,270,870 15,664,272 23,446,072 28,950,668 31,401,745 44,603,975 31,430,570 -
Nonspendable - - - - - - - - - 2,835,361
Restricted 4,296,363
Committed 8,756,426
Assigned 17,960,596
Unassigned - 10,809,404
Total general fund 9,548,690 16,156,505 19,723,208 23,978,072 34,965,207 44,610,351 48,870,351 59,578,247 39,518,917 44,658,150
N All other Government Funds:
I Reserved 44,711,572 58,714,024 66,991,733 66,720,836 103,359,563 122,060,550 141,972,067 177,995,184 106,555,618
Unreserved, reported in:
Special revenue fund 12,670,179 14,336,385 15,151,534 18,525,727 20,342,112 24,874,744 24,553,386 26,088,685 29,436,463
Capital projects fund 21,179,311 38,966,652 32,293,518 64,915,483 48,345,838 95,684,215 39,116,365 (20,101,369) (3,290,813) -
Restricted - - - - - - - 77,739,628
Committed 40,148,878
Unassigned (3,609,332)
Total of other governmental funds 78,561,062 112,017,061 114,436,785 150,162,046 172,047,513 242,619,509 205,641,818 183,982,500 132,701,268 114,279,174
Total Fund Balances $ 88,109,752 $128,173,566 $134,159,993 $174,140,118 $207,012,720 $287,229,860 $254,512,169 $243,560,747 $172,220,185 $158,937,324
Unaudited - see accompanying independent auditors' report.
NOTE —GASB 54 was implemented in 2011. Except for the unassigned category, conversion of prior year data to new categories is not possible at this time.
COUNTY OF HAWAII
Changes in Fund Balances, Governmental Funds
(Modified accrual basis of accounting)
Last Ten Fiscal Years
(Amounts in thousands)
Fiscal Year
Table 4
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Revenues:
Property tax $ 93,712 $109,991 $121,868 $131,087 $153,207 $ 181,446 $ 208,313 $ 225,858 $ 215,548 $216,511
Public service company tax 5,108 5,064 5,332 6,351 6,812 7,396 8,381 10,229 9,647 9,297
Fuel tax 6,422 7,343 7,552 7,581 7,857 8,471 7,888 7,662 7,406 7,603
Public utility franchise tax 4,993 4,817 5,373 6,017 7,329 8,520 9,027 11,118 8,963 9,416
Licenses and permits 7,781 9,261 11,840 14,442 16,544 16,269 15,918 14,972 14,725 15,097
Intergovernmental 68,918 65,203 58,559 73,372 69,637 63,599 72,601 70,869 77,614 93,748
Charges for services 11,689 13,481 14,467 18,149 19,852 21,685 22,154 21,404 18,909 16,416
Investment earnings 3,801 2,066 1,806 3,104 5,223 10,291 12,144 8,914 2,253 510
Other 3,035 6,179 4,718 4,450 4,380 5,073 7,151 5,690 3,241 7,874
Total Revenues 205,459 223,405 231,515 264,553 290,841 322,750 363,577 376,716 358,306 376,472
Expenditures:
Current:
General government 20,192 22,317 23,070 26,183 31,153 37,652 42,991 45,882 40,586 34,251
Public safety 61,870 64,667 69,117 76,404 83,591 93,241 103,617 107,540 108,798 104,917
Highways and streets 8,376 8,675 9,542 9,787 12,608 14,033 19,529 17,159 20,222 17,114
Sanitation 14,789 16,629 17,602 21,883 26,565 31,817 33,405 35,025 35,675 28,424
Health, education and welfare 16,726 18,867 19,047 19,870 19,050 21,470 24,609 24,596 25,519 26,847
Culture and recreation 12,127 13,086 13,169 13,982 14,731 17,118 18,179 18,853 17,266 16,001
Pension and retirement contributions 11,019 7,926 11,081 14,204 19,937 21,796 24,296 28,870 28,509 27,284
Employees' health insurance 12,198 12,758 14,256 16,168 16,133 16,941 18,089 19,119 23,573 25,212
Other postemployment benefits - - - - - - 13,629 14,950 15,700 17,307
Other 5,330 5,629 7,128 6,133 6,780 5,108 5,344 6,257 4,773 4,758
Debt service:
Principal 10,025 11,800 12,826 13,150 14,060 16,076 16,548 19,749 20,720 42,233
Interest 8,467 8,469 9,283 9,534 9,914 9,894 13,116 12,790 14,584 14,841
Capital outlay 41,580 32,952 23,474 32,816 30,588 52,285 70,156 89,368 100,653 87,782
Total Expenditures 222,699 223,775 229,595 260,114 285,110 337,431 403,508 440,158 456,578 446,971
Revenues over (under) Expenditures (17,240) (370) 1,920 4,439 5,731 (14,681) (39,931) (63,442) (98,272) (70,499)
Other Financing Sources (Uses):
Sale of assets 15 9 1,593 1,486 82 5 3,470 58 10 6
Capital leases 930 1,353 1,474 1,369 404 2,403 2,187 1,026 1,948 47
State Revolving Fund loans 578 853 - 1,504 25 6,255 1,916 280 6,811 9,257
Sale of bonds 15,175 37,262 1,725 30,000 25,000 85,000 50,000 - 45,000
Issuance of bond anticipation notes (BAN) - - - 19,000
Refunding bonds 24,595 - 31,607
Premium on bonds 3,025 972 3,099 185 - 2,078
Refunding bonds/BANs issuance costs (129) (218) (19)
Payment to refunded bond escrow agent - (25,885) - (32,699) - -
Transfers in 29,529 29,943 39,440 42,119 45,691 59,139 64,929 56,697 61,495 56,099
Transfers out (30,367) (29,943) (39,440) (42,119) (45,691) (59,139) (64,929) (56,697)
(61,495) (56,099)
Total other financing sources 15,860 39,477 4,792 35,965 26,483 95,452 7,573 51,549 27,750 56,388
Net change in fund balances $ (1,380) $ 39,107 $ 6,712 $ 40,404 $ 32,214 $ 80,771 $ (32,358) $ (11,893) $ (70,522) $ (14,111)
Debt service as a percentage of
noncapital expenditures 10.0% 10.7% 10.8% 10.3% 9.7% 9.0% 9.3% 9.0% 10.4% 15.9%
Unaudited - see accompanying independent auditors' report.
- 123 -
Table 5
COUNTY OF HAWAII
Real Property Assessed Values by Classification and Tax Rates
Last Ten Fiscal Years
(Values in Thousands)
Fiscal
Year
2002
Class of
Property
Improved Residential
Unimproved Residential
Apartment
Hotel and Resort
Commercial
Industrial
Agricultural
Conservation
Homeowners
2003 Improved Residential
Unimproved Residential
Apartment
Hotel and Resort
Commercial
Industrial
Agricultural
Conservation
Homeowners
Continued next page.
Value of Building Value of
Net Taxable Tax Rates Net Taxable
Building Per $1000 Land
$702,795 $ 8.50 $929,082
34,430 8.50 266,680
1,108,163 8.50 607,368
679,994 8.50 674,698
434,810 8.50 404,682
175,926 8.50 219,603
721,915 8.50 1,565,525
13,052 8.50 281,050
1,131,340 4.45 1,120,213
$5,002,425 $6,068,901
Fiscal year 2002 total direct rate $8.28
$745,956
25,869
1,298,965
698,520
419,126
181,812
767,171
12,708
1,234,939
$5,385,066
$ 9.10 $982,098
9.85 299,285
9.85 692,299
9.85 742,371
9.85 410,289
9.85 217,552
9.85 1,511,217
9.85 265,025
5.55 1,185,169
$6,305,305
Fiscal year 2003 total direct rate $9.13
Land
Tax Rates
Per $1000
$ 8.50
10.00
10.00
10.00
10.00
10.00
10.00
10.00
4.45
Value of
Net Taxable
Real Property
$1,631,877
301,110
1,715,531
1,354,692
839,492
395,529
2,287,440
294,102
2,251,553
$11,071,326
$ 9.10 $1,728,054
9.85 325,154
9.85 1,991,264
9.85 1,440,891
9.85 829,415
9.85 399,364
9.85 2,278,388
9.85 277,733
5.55 2,420,108
$11,690,371
Table 5
Fiscal
Year
2004
Class of
Property
Improved Residential
Unimproved Residential
Apartment
Hotel and Resort
Commercial
Industrial
Agricultural
Conservation
Homeowners
2005 Improved Residential
Unimproved Residential
Apartment
Hotel and Resort
Commercial
Industrial
Agricultural
Conservation
Homeowners
2006 Improved Residential
Unimproved Residential
Apartment
Hotel and Resort
Commercial
Industrial
Agricultural
Conservation
Homeowners
Continued next page.
Value of
Net Taxable
Building
$826,773
28,212
1,506,172
780,725
473,665
207,676
842,650
17,250
1,453,595
$6,136,718
Building Value of
Tax Rates Net Taxable
Per $1000 Land
$ 9.10 $1,035,139
9.85 308,963
9.85 777,079
9.85 856,550
9.85 416,505
9.85 227,817
9.85 1,522,580
9.85 325,262
5.55 1,284,728
$6,754,623
Fiscal year 2004 total direct rate $9.09
$969,500
30,408
1,772,930
845,026
516,945
226,265
917,253
24,485
1,714,555
$7,017,367
$ 9.10 $1,264,100
9.85 366,885
9.85 745,530
9.85 897,268
9.85 455,664
9.85 239,022
9.85 1,697,117
9.85 346,186
5.55 1,504,821
$7,516,593
Fiscal year 2005 total direct rate $8.92
$1,082,244
29,762
2,340,515
981,538
538,389
255,292
970,198
21,488
1,191,435
$7,410,861
$ 9.10 $1,935,085
9.85 470,738
9.85 907,150
9.85 942,988
9.85 502,433
9.85 280,950
9.85 2,082,838
9.85 340,573
5.55 1,604,418
$9,067,173
Fiscal year 2006 total direct rate $8.98
Land
Tax Rates
Per $1000
$ 9.10
9.85
9.85
9.85
9.85
9.85
9.85
9.85
5.55
Value of
Net Taxable
Real Property
$1,861,912
337,175
2,283,251
1,637,275
890,170
435,493
2,365,230
342,512
2,73 8,323
$12,891,341
$ 9.10 $2,233,600
9.85 397,293
9.85 2,518,460
9.85 1,742,294
9.85 972,609
9.85 465,287
9.85 2,614,370
9.85 370,671
5.55 3,219,376
$14,533,960
$ 9.10 $3,017,329
9.85 500,500
9.85 3,247,665
9.85 1,924,526
9.85 1,040,822
9.85 536,242
9.85 3,053,036
9.85 362,061
5.55 2,795,853
$16,478,034
Table 5
Fiscal
Year
2007
Class of
Property
Improved Residential
Unimproved Residential
Apartment
Hotel and Resort
Commercial
Industrial
Agricultural
Conservation
Homeowners
2008 Improved Residential
Unimproved Residential
Apartment
Hotel and Resort
Commercial
Industrial
Agricultural
Conservation
Homeowners
2009 Residential
Apartment
Hotel and Resort
Commercial
Industrial
Agricultural & Native Forest
Conservation
Homeowners
Affordable Rental Housing
Continued next page.
Value of Building
Net Taxable Tax Rates
Building Per $1000
$1,281,050 $ 8.10
43,372 8.10
3,154,981 8.10
1,209,050 9.00
620,567 9.00
317,852 9.00
1,195,256 8.35
28,472 8.55
1,408,215 5.55
$9,258,815
Value of
Net Taxable
Land
$2,938,402
762,664
1,347,158
1,050,628
662,801
397,211
3,985,647
356,316
1,947,983
$13,448,810
Fiscal year 2007 total direct rate $7.96
$1,520,234
40,056
3,690,371
1,377,492
695,318
370,118
1,353,403
31,771
1,687,649
$10,766,412
$ 8.10
8.10
8.10
9.00
9.00
9.00
8.35
8.55
5.55
$3,843,169
430,757
1,517,500
1,194,879
805,168
474,100
4,529,187
347,798
2,360,873
$15,503,431
Fiscal year 2008 total direct rate $7.94
$2,385,714
4,079,199
1,542,712
742,561
418,607
2,245,161
44,670
2,091,891
41,793
$13,592,308
$ 7.10
8.10
9.00
9.00
9.00
6.35
8.55
5.55
5.55
$4,287,515
1,561,009
1,271,240
905,079
561,220
4,325,743
340,254
2,623,241
38,026
$15,913,327
Fiscal year 2009 total direct rate $7.68
Land
Tax Rates
Per $1000
$ 8.10
8.10
8.10
9.00
9.00
9.00
8.35
8.55
5.55
Value of
Net Taxable
Real Property
$4,219,452
806,036
4,502,139
2,259,678
1,283,368
715,063
5,180,903
384,788
3,356,198
$22,707,625
$ 8.10 $5,363,403
8.10 470,813
8.10 5,207,871
9.00 2,572,371
9.00 1,500,486
9.00 844,218
8.35 5,882,590
8.55 379,569
5.55 4,048,522
$26,269,843
$ 8.10 $6,673,229
8.10 5,640,208
9.00 2,813,952
9.00 1,647,640
9.00 979,827
8.35 6,570,904
8.55 384,924
5.55 4,715,132
5.55 79,819
$29,505,635
Table 5
Fiscal
Year
2010
Class of
Property
Residential
Apartment
Hotel and Resort
Commercial
Industrial
Agricultural & Native Forest
Conservation
Homeowners
Affordable Rental Housing
2011 Residential
Apartment
Hotel and Resort
Commercial
Industrial
Agricultural & Native Forest
Conservation
Homeowners
Affordable Rental Housing
Value of Building Value of
Net Taxable Tax Rates Net Taxable
Building Per $1000 Land
$2,447,576 $ 7.10 $3,804,696
3,602,514 8.10 1,546,866
1,390,884 9.00 1,177,796
733,260 9.00 928,999
453,406 9.00 593,224
2,272,248 6.35 3,625,585
46,321 8.55 337,860
2,388,048 5.55 2,686,692
67,746 5.55 47,703
$13,402,003 $14,749,421
Fiscal year 2010 total direct rate $7.75
$3,040,977
2,660,600
820,418
713,161
454,868
2,232,765
48,766
2,479,437
108,290
$12,559,282
$ 9.10
9.85
9.85
9.10
9.10
8.35
9.85
5.55
5.55
$3,787,185
1,144,873
690,834
908,741
594,589
2,860,494
341,496
2,573,527
57,821
$12,959,560
Fiscal year 2011 total direct rate $8.39
Source: County of Hawaii, Department of Finance, Real Property Tax Division
Land
Tax Rates
Per $1000
$ 8.10
8.10
9.00
9.00
9.00
8.35
8.55
5.55
5.55
Value of
Net Taxable
Real Property
$6,252,272
5,149,380
2,568,680
1,662,259
1,046,630
5,897,833
384,181
5,074,740
115,449
$28,151,424
$ 9.10 $6,828,162
9.85 3,805,473
9.85 1,511,252
9.10 1,621,902
9.10 1,049,457
8.35 5,093,259
9.85 390,262
5.55 5,052,964
5.55 166,111
$25,518,842
NOTES: Assessed value is at 100% of market value.
Property is reassessed annually.
The County Council sets the tax rates annually.
There are no overlapping property tax rates in the County of Hawaii.
The improved residential and unimproved residential classes were combined into a single class beginning with the fiscal
years ending June 30, 2009.
Unaudited - see accompanying independent auditors' report.
Taxpayer
Mauna Kea Development Corp.
Hilton Land Investment 1 LLC
Hualalai Investors LLC
Orchid 09 LLC
WB KD Acquisition LLC
Mauna Lani Resort Inc.
Hilton Resorts Corp.
Kohanaiki Shores LLC
Kona Village Investors LLC
BRE/Waikoloa LLC
WB Kukio Resorts LLC
BP Bishop Estate
Global Resort Partners
1250 Oceanside Partners
Liliuokalani Trust Estate
Kaupulehu Makai Venture
KM Kona Partners
RWH Inc.
Business
Developer/Hotel
Hotel
Developer/Hotel
Hotel
Developer
Developer/Hotel
Timeshare
Developer
Hotel
Hotel
Developer
Developer
Hotel
Developer
Land Trust
Developer
Commercial Dev
Hotel
COUNTY OF HAWAII
Principal Taxpayers
June 30, 2011 and 2002
Fiscal Year 2011
Percentage
of Total
Assessed
Rank Valuation
2010
Assessed
Valuation
$ 262,023,800
224,278,600
216,994,300
135,642,700
113,006,000
103,201,700
87,810,800
76,408,900
64,233,600
59,705,400
$1,343,305,800
Table 6
Fiscal Year 2002
Percentage
of Total
Assessed
Rank Valuation
2001
Assessed
Valuation
1 1.0% $ 192,854,000 2 1.4%
2 0.9%
3 0.9%
4 0.5%
5 0.4%
6 0.4% 65,627,000 8 0.5%
7 0.3%
8 0.3%
9 0.3%
10 0.2%
- 302,713,589 1 2.2%
164,923,816 3 1.2%
150,000,000 4 1.1%
141,464,700 5 1.0%
137,061,144 6 1.0%
102,243,720 7 0.8%
61,958,600 9 0.5%
51,698,300 10 0.4%
5.2% $ 1,370,544,869
Note: Gross valuation at January 1, 2010: $25,518,842,894
Gross valuation at January 1, 2001: $13,554,849,852
Source: County of Hawaii, Department of Finance, Real Property Tax Division
Unaudited - see accompanying independent auditors' report.
- 128 -
10.1%
COUNTY OF HAWAII
Property Tax Levies and Collections
Last Ten Fiscal Years
*Current *Current *Percent *Delinquent *Total
Fiscal Tax Tax of Levy Tax Tax
Year Levy Collections Collected Collections Collections
2002 $ 91,256,466 $ 88,306,322 97% $ 2,863,803 $ 91,170,125
2003 106,274,993 102,995,602 97% 3,154,594 106,150,196
2004 116,423,310 113,416,817 97% 2,885,595 116,302,412
2005 128,842,947 126,574,921 98% 2,127,000 128,701,921
2006 150,289,177 147,712,630 98% 2,3 80,973 150,093,603
2007 181,532,224 177,326,418 98% 3,707,807 181,034,225
2008 207,887,815 202,702,858 98% 3,998,100 206,700,958
2009 226,623,147 219,437,531 97% 4,710,247 224,147,778
2010 215,216,933 207,501,307 96% 3,277,489 210,778,796
2011 212,452,730 208,106,918 98% 208,106,918
* Amounts reflect subsequent adjustments
Source: County of Hawaii, Department of Finance, Real Property Tax Division
Unaudited - see accompanying independent auditors' report.
*Total
Collections as
Percent of
Current Levy
100%
100%
100%
100%
100%
100%
99%
99%
98%
98%
*Outstanding
Delinquent
Taxes
$ 86,341
124,797
120,898
141,026
195,574
497,999
1,186,857
2,475,369
4,43 8,13 7
4,345,812
Table 7
*Outstanding
Delinquent
Taxes as
Percent of
Current Levy
0%
0%
0%
0%
0%
0%
1%
1%
2%
2%
Business -Type
Governmental Activities Activities
General State
Fiscal Obligation Revolving Capital Notes
Year Bonds (c) Fund Loans Leases Payable
2002 $ 138,169,500 $32,999,781 $2,695,213 $ 1,101,772
2003 168,607,000 31,680,295 3,293,462 1,084,667
2004 157,908,300 29,497,373 3,547,085 1,065,417
2005 182,158,285 28,760,504 3,642,928 1,041,285
2006 196,652,008 26,413,342 2,864,515 1,019,386
2007 269,281,339 30,246,751 4,085,735 995,854
2008 257,099,399 29,376,186 4,606,527 970,892
2009 291,363,218 26,697,288 4,179,805 944,124
2010 294,164,535 30,469,767 4,552,290 916,117
2011 311,549,005 36,555,264 3,057,082 884,232
NOTES:
(a) Includes governmental activities and business -type activities.
(b) See Table 11 for personal income and population data.
(c) Includes Bond Anticipation Notes (BANs)
COUNTY OF HAWAII
Ratios of Outstanding Debt by Type
Last Ten Fiscal Years
(Amounts in thousands, except per capita)
Total
Primary
Government (a)
$ 174,966,266
204,665,424
192,018,175
215,603,002
226,949,251
304,609,679
292,053,004
323,184,435
330,102,709
352,045,583
Component
Unit Total Primary Government
General State Percentage Percentage
Obligation Revolving of Personal Per of Personal
Bonds Fund Loans Income (b) Capita (b) Income (b)
Table 8
Total Primary Government
and Component Unit
Details regarding the County's outstanding debt can be found in the notes to the basic financial statements.
Unaudited - see accompanying independent auditors' report.
Per
Capita (b)
$17,769,900 $ 718,384 4.91% $ 1,134 5.43% $ 1,253
16,794,600 2,842,108 5.50% 1,297 6.03% 1,421
15,737,700 3,054,549 4.68% 1,187 5.14% 1,303
14,657,708 2,905,354 4.87% 1,295 5.27% 1,401
38,374,312 3,175,607 4.78% 1,326 5.65% 1,568
36,708,368 5,599,767 5.94% 1,765 6.77% 2,011
35,823,543 5,423,551 5.18% 1,661 5.91% 1,896
33,954,671 8,154,507 5.68% 1,817 6.41% 2,054
31,730,311 11,984,221 N/A 1,843 N/A 2,087
44,673,293 18,012,314 N/A N/A N/A N/A
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)
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
2006 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% 1,667
2010 277,481,633 1.0% 1,549
2011 305,615,691 1.2% N/A
NOTES:
(a) See Table 10 for debt applicable to legal debt margin.
(b) See Table 5 for net taxable property values.
(c) See Table 11 for population data.
Details regarding the County's outstanding debt can be found in the
notes to the basic financial statements.
Unaudited - see accompanying independent auditors' report.
- 131 -
Table 10
COUNTY OF HAWAII
Legal Debt Margin Information
Last Ten Fiscal Years
(Amounts in thousands)
Fiscal Year
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Debt limit (a) $1,660,699 $1,753,556 $1,933,701 $2,180,094 $2,471,705 $3,406,144 $3,940,476 $4,425,845 $4,222,714 $ 3,827,826
Debt applicable to limit 161,311 187,317 176,396 195,198 205,220 281,837 265,431 296,536 277,482 305,616
Legal debt margin (b) $1,499,388 $1,566,239 $1,757,305 $1,984,896 $2,266,485 $3,124,307 $3,675,045 $4,129,309 $3,945,232 $ 3,522,210
Debt applicable to the limit
as a percentage of debt limit 9.71% 10.68% 9.12% 8.95% 8.30% 8.27% 6.74% 6.70% 6.57% 7.98%
NOTES:
(a) State finance statutes limit the County's outstanding general debt to no more than 15 percent of the net assessed value of property. See Table 5 for net assessed value of property.
(b) The legal debt margin is the County's available borrowing authority under state finance statutes and is calculated by subtracting the net debt applicable to the legal debt
limit from the legal debt limit.
Legal Debt Margin Calculation for Fiscal Year 2011
Net assessed value $25,518,842
Debt limit (15% of net assessed value) $ 3,827,826
Debt applicable to limit 305,616
Legal debt margin $ 3,522,210
Unaudited - see accompanying independent auditors' report.
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
2001 151,025 $ 3,478,755 $ 23,034 29,792 5.0%
2002 153,362 $ 3,697,485 $ 24,110 29,826 4.6%
2003 156,605 $ 3,869,362 $ 24,708 29,635 4.6%
2004 160,333 $ 4,223,829 $ 26,344 29,827 3.9%
2005 164,995 $ 4,638,838 $ 28,115 30,262 3.3%
2006 169,568 $ 5,064,624 $ 29,868 30,539 2.9%
2007 173,178 $ 5,509,169 $ 31,812 30,618 3.4%
2008 176,290 $ 5,732,566 $ 32,518 30,408 5.6%
2009 177,808 $ 5,694,731 $ 32,027 30,138 9.7%
2010 179,105 N/A N/A 29,741 10.0%
* Amounts reflect subsequent adjustments
Source: County of Hawaii, Department of Research and Development
Unaudited - see accompanying independent auditors' report.
- 133 -
Employer
State of Hawaii
County of Hawaii
United States Government
Hilton Waikoloa Village
Wal -Mart
KTA Super Stores
The Fairmont Orchid, Hawaii
Four Seasons Resort Hualalai
Mauna Kea Beach Hotel
Mauna Lani Resort (Operations) Inc.
Mauna Lani Bay Hotel
Hapuna Beach Prince Hotel
Total
Total employee count
COUNTY OF HAWAI'I
Principal Employers, County of Hawaii
June 30, 2011 and 2002
2010 (a)
Percentage
of Total County
Employees Rank Employment
8,063 1
2,663 2
1,421 3
881 4
770 5
700 6
618 7
550 8
550 9
529 10
16,745
2004 (a)
Employees Rank
10.7% 7,608 1
3.5% 2,291 2
1.9% 1,221 3
1.2% 1,100 4
1.0%
0.9% 785 5
0.8% 600 6
0.7% 557 8
0.7% 556 9
0.7%
580 7
542 10
22.1% 15,840
75,150
NOTES:
(a) Data for Fiscal Year 2011 and the period of 2001 to 2003 are unavailable.
Source: County of Hawaii, Department of Research and Development
Unaudited - see accompanying independent auditors' report.
- 134 -
Table 12
Percentage
of Total County
Employment
10.0%
3.0%
1.6%
1.4%
1.0%
0.8%
0.7%
0.7%
0.8%
0.7%
20.7%
76,200
Table 13
COUNTY OF HAWAII
Full -Time Equivalent County Government Employees by Function
Last Ten Fiscal Years
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Function
General government:
County Council 9.00 9.00 9.00 9.00 9.00 9.00 9.00 9.00 9.00 9.00
County Clerk 44.00 41.00 42.50 38.00 54.50 54.00 68.00 55.48 56.08 53.00
Legislative Auditor - - - 5.00 5.00 5.00
Mayor 17.75 17.90 19.90 21.58 21.70 20.68 25.17 22.49 19.00 21.99
Corporation Counsel 37.00 37.00 38.00 41.00 39.00 39.98 33.00 30.00 32.00 29.00
Finance 79.00 85.00 90.00 88.00 91.00 94.49 102.89 128.44 123.89 121.89
Human Resources 22.00 24.00 24.00 26.00 24.50 27.46 28.98 28.96 27.98 25.49
Planning 29.00 29.00 31.00 31.50 35.00 36.00 47.00 48.00 49.00 49.49
Research & Development 9.00 13.00 12.00 13.00 13.20 14.48 15.00 15.00 14.00 14.00
Data Systems 15.00 16.00 15.00 14.00 17.00 17.00 17.00 16.00 15.48 16.00
' Public Works Admin & Building 115.00 115.00 121.00 121.00 123.40 141.97 166.37 170.44 162.99 158.84
w Public Safety:
LA Police 537.50 523.25 526.50 520.80 536.20 535.23 572.51 553.37 558.32 565.99
i
Fire 300.48 301.48 316.98 346.23 340.20 363.71 424.07 412.05 411.53 414.08
Liquor Control 12.00 11.00 11.00 11.00 13.00 12.00 14.48 14.00 14.00 14.00
Civil Defense 6.00 5.00 5.00 7.00 6.00 5.00 5.00 7.00 7.00 7.00
Prosecuting Attorney 81.50 84.00 86.00 83.00 86.50 93.00 96.49 103.00 98.24 99.00
Highways and Streets:
Mass Transit 5.00 5.00 5.00 7.00 6.00 5.00 7.00 6.00 7.00 7.00
Traffic and Highways 163.00 156.00 153.00 151.00 168.00 169.98 183.48 182.48 174.48 176.48
Sanitation:
Administration 4.00 5.00 18.00 19.50 19.49 19.98 19.49 16.98 18.49
Sewer 46.00 44.00 42.05 40.00 38.00 32.97 37.49 41.47 44.98 47.49
Vehicle Disposal 1.00 1.00 1.00 1.00 1.00 3.00 3.00 2.00 2.00 2.00
Solid Waste 56.75 52.75 56.75 57.80 69.00 86.49 87.49 93.49 93.00 95.00
Health, Education and Welfare:
Housing 38.48 39.48 42.48 43.48 39.50 43.97 46.95 44.95 47.44 47.48
Aging 10.00 10.75 10.00 10.00 12.50 13.00 12.00 12.00 11.00 12.00
Culture and Recreation 390.15 398.70 390.05 386.48 434.90 402.43 390.11 391.45 379.50 380.74
Total 2,024.61 2,023.31 2,053.21 2,085.87 2,198.60 2,240.33 2,412.46 2,411.56 2,379.89 2,390.45
Source: County of Hawaii, Department of Finance
Unaudited - see accompanying independent auditors' report.
Table 14
COUNTY OF HAWAII
Operating Indicators by Function
Last Ten Fiscal Years
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Function
Public Safety:
Police:
DUI arrests 841 1,004 900 964 1,163 1,354 1,397 1,395 1,452 1,468
Traffic citations issued 52,775 38,974 58,432 51,818 54,435 54,606 62,736 66,461 63,883 61,947
Fire:
Fire responses 623 1,751 1,207 888 897 1,095 892 751 889 731
Emergency medical/rescue responses 12,003 11,944 14,693 13,671 14,945 15,502 16,098 15,099 15,308 15,726
Inspections - Occupancy/Fire Protective Equipment 5,508 6,415 4,210 1,843 2,131 1,958 1,858 1,479 1,579 3,021
Sanitation:
Refuse disposed (tons per year) 166,625 179,284 201,011 225,051 222,945 223,144 210,199 172,431 154,914 166,455
w Highways and Streets:
CA In -house street resurfacing (miles) 8 40 12 42 15 33 26 27 23 18
Parks and Recreation
Pavilion permits issued 1,948 1,567 1,739 1,908 1,888 1,744 2,055 2,310 2,340 4,667
Camping permits issued 4,233 4,576 4,627 4,765 5,146 5,200 3,870 3,998 4,290 4,019
Rounds of golf 87,862 88,889 80,015 79,101 74,677 82,182 76,648 80,229 80,407 83,358
Zoo attendance 137,000 133,086 156,184 163,176 171,958 172,315 163,601 182,286 172,737 172,677
Transit
Bus passengers N/A N/A N/A N/A 711,608 727,677 821,359 908,651 1,060,057 1,149,042
Public Works:
Building permits issued 3,497 4,250 4,418 5,350 5,883 5,165 4,507 3,929 3,234 3,039
Electrical permits issued 3,349 3,999 3,896 4,750 5,097 5,072 4,569 3,869 3,602 3,821
Plumbing permits issued 2,696 2,954 1,907 3,888 4,557 4,368 3,622 2,983 2,638 2,071
Sign permits issued 60 59 46 63 50 51 75 62 62 58
Source: County of Hawaii, Individual Departments
Unaudited - see accompanying independent auditors' report.
Table 15
COUNTY OF HAWAII
Capital Asset Statistics by Functions
Last Ten Fiscal Years
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Function
Public Safety:
Police:
Stations 8 8 8 8 8 8 8 8 8 8
Substations 4 3 3 13 13 13 10 10 10 10
Fire stations 19 20 20 20 20 20 20 20 20 20
Highways and Streets:
County streets (miles) 902 903 903 903 907 927 942 943 944 946
1 Streetlights 8,719 8,823 8,949 9,017 9,027 9,246 9,308 9,404 9,592 9,864
vParks and Recreation:
i Parks 118 118 119 121 122 123 123 143 143 143
Gyms and recreation centers 38 38 38 38 38 38 38 61 61 61
Sanitation:
Sanitary sewers (miles) 53 53 53 53 53 58 100* 100* 111* 111*
•GIS database utilized beginning FY 2008
Source: County of Hawaii, Department of Research and Development
Unaudited - see accompanying independent auditors' report.
0eee ee•• •eeeee•e•0•••eee000000000oo0oee
ACcu ItLLP
CERTIFIED PUBLIC ACCOUNTANTS
County of Hawaii
State of Hawaii
Single Audit of Federal Financial Assistance Programs
June 30, 2011
Quality Integrity Insight
County of Hawaii
State of Hawaii
Index
June 30, 2011
Page(s)
Introduction
Audit Objectives 1
Scope of Audit 2
Organization of Report 2
Compliance and Internal Control over Financial Reporting
Report of Independent Auditors on Internal Control Over Financial Reporting
and on Compliance and Other Matters Based on an Audit of Financial Statements
Performed in Accordance with Government Auditing Standards
Compliance and Internal Control over Federal Awards
Report of Independent Auditors on Compliance with Requirements That Could
Have a Direct and Material Effect on Each Major Program and on Internal Control
Over Compliance in Accordance with OMB Circular A -133
Schedule of Expenditures of Federal Awards 7 -17
Notes to Schedule of Expenditures of Federal Awards 18 -19
Schedule of Findings and Questioned Costs 20 -27
Corrective Action Plan
SECTION 1
Introduction
••••••••••••••••••••••••••••••••••••••••••••
ACcu itylip
CERTIFIED PUBLIC ACCOUNTANTS
December 27, 2011
To the Chair and Members of the County Council
County of Hawaii
We have completed our audit of the basic financial statements of the County of Hawaii, State of Hawaii
(the "County "), as of and for the year ended June 30, 2011. Our report containing our opinion on those
basic financial statements is included in the County's Comprehensive Annual Financial Report. We
have also audited the County's compliance with requirements applicable to its major federal financial
assistance programs. We submit herein our reports on compliance and on internal control over financial
reporting and over federal awards, the County's schedule of expenditures of federal awards, and the
schedule of findings and questioned costs.
The audit objectives and scope of the audit were as follows:
Audit Objectives
1. To provide opinions on the fair presentation of the County's basic financial statements and the
schedule of expenditures of federal awards as of and for the year ended June 30, 2011 in accordance
with accounting principles generally accepted in the United States of America.
2. To consider the County's internal control over financial reporting in order to design our auditing
procedures for the purpose of expressing our opinions on the financial statements.
3. To perform tests of the County's compliance with certain provisions of laws, regulations, contracts,
and grant agreements that could have a direct and material effect on the determination of financial
statement amounts.
4. To consider the County's internal control over compliance with the requirements that could have a
direct and material effect on a major federal program in order to determine our auditing procedures
for the purpose of expressing our opinion on compliance and to test and report on internal control
over compliance in accordance with U.S. Office of Management and Budget ( "OMB ") Circular A -133,
Audits of States, Local Governments, and Non - Profit Organizations.
5. To provide an opinion on the County's compliance with the requirements of laws, regulations,
contracts, and grants that could have a direct and material effect on each major program.
6. To report on the status of prior year findings and questioned costs.
999 BISHOP STREET, SUITE 1900
HONOLULU, HAWAII 96813
TELEPHONE: 808 531 3400 FACSIMILE: 808 531 3433
To the Chair and Members
of the County Council
County of Hawaii
December 27, 2011
Page 2
Scope of Audit
We performed an audit of the County's basic financial statements and schedule of expenditures of federal
awards as of and for the year ended June 30, 2011, in accordance with auditing standards generally
accepted in the United States of America; the standards applicable to financial audits contained in
Government Auditing Standards, issued by the Comptroller General of the United States; and the
provisions of OMB Circular A -133.
Organization of Report
Our report is organized into three sections as follows:
1. Section I, entitled "Introduction," describes the objectives and scope of our audit and the organization
and contents of this report.
2. Section II, entitled "Compliance and Internal Control over Financial Reporting," contains our report
on the County's internal control over financial reporting and on compliance and other matters based
upon our audit of the County's basic financial statements.
3. Section III, entitled "Compliance and Internal Control over Federal Awards," contains our report on
the County's compliance with requirements that could have a direct and material effect on each major
program and on the internal control over compliance in accordance with OMB Circular A -133, the
County's schedule of expenditures of federal awards, and the schedule of findings and questioned
costs.
Our report on the basic financial statements of the County as of and for the year ended June 30, 2011 is
included under a separate cover. A separate management letter containing our observations regarding
the County's internal controls dated December 27, 2011 has also been issued to the County Council.
We would like to take this opportunity to express our appreciation to the personnel of the County of
Hawaii for the cooperation and assistance extended to us during our audit. We will be pleased to
discuss any questions that you or your associates may have regarding our recommendations.
Very truly yours,
likct.tirtal-cf)
SECTION 11
Compliance and Internal Control
Over Financial Reporting
•
•
•
•
•
•
ACcu ItyLLP
CERTIFIED PUBLIC ACCOUNTANTS
• Report of Independent Auditors on Internal Control
• Over Financial Reporting and on Compliance and
• Other Matters Based on an Audit of Financial Statements
• Performed in Accordance with Government Auditing Standards
•
• To the Chair and Members of the County Council
• County of Hawaii
• We have audited the financial statements of the governmental activities, the business -type activities, the
• discretely presented component unit, each major fund, and the aggregate remaining fund information of
• the County of Hawaii, State of Hawaii (the "County ") as of and for the year ended June 30, 2011, which
collectively comprise the County's basic financial statements, and have issued our report thereon dated
• December 27, 2011. 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.
•
c
Internal Control over Financial Reporting
• Management of the County is responsible for establishing and maintaining effective internal control over
financial reporting. In planning and performing our audit, we considered the County's internal control
over financial reporting as a basis for designing our auditing procedures for the purpose of expressing
our opinions on the financial statements, but not for the purpose of expressing an opinion on the
effectiveness of the County's internal control over financial reporting. Accordingly, we do not express
an opinion on the effectiveness of the County's internal control over financial reporting.
•
A deficiency in internal control exists when the design or operation of a control does not allow
(. management or employees, in the normal course of performing their assigned functions, to prevent, or
• detect and correct misstatements on a timely basis. A material weakness is a deficiency, or combination
of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement
• of the entity's financial statements will not be prevented, or detected and corrected on a timely basis.
• Our consideration of the internal control over financial reporting was for the limited purpose described in
• the first paragraph of this section and was not designed to identify all deficiencies in internal control over
r financial reporting that might be deficiencies, significant deficiencies, or material weaknesses. We did
not identify any deficiencies in internal control over financial reporting that we consider to be material
weaknesses, as defined above. However, we identified a deficiency in internal control over financial
• reporting, described in Finding No. 2011 -1 in the accompanying schedule of findings and questioned
costs that we consider to be a significant deficiency in internal control over financial reporting. A
• significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe
• than a material weakness, yet important enough to merit attention by those charged with governance.
•
•
•
• 999 BISHOP STREET, SUITE 1900
HONOLULU, HAWAII 96813
•
TELEPHONE: 808 531 3400 FACSIMILE: 808 5313433
•
•
Compliance and Other Matters
As part of obtaining reasonable assurance about whether the County's financial statements are free of
material misstatement, we performed tests of its compliance with certain provisions of laws, regulations,
contracts, and grant agreements, noncompliance with which could have a direct and material effect on the
determination of financial statement amounts. However, providing an opinion on compliance with those
provisions was not an objective of our audit and, accordingly, we do not express such an opinion. The
results of our tests disclosed no instances of noncompliance or other matters that are required to be
reported under Government Auditing Standards.
We noted certain matters that we reported to the County Council in a separate letter dated December 27,
2011.
The County's response to the finding identified in our audit is described in the accompanying corrective
action plan. We did not audit the County's response and, accordingly, we express no opinion on it.
This report is intended solely for the information and use of the County Council, Legislative Auditor,
management, others within the entity, federal awarding agencies and pass- through entities and is not
intended to be and should not be used by anyone other than these specified parties.
Honolulu, Hawaii
December 27, 2011
SECTION 111
Compliance and Internal Control
Over Federal Awards
9•••••••••••••••
ACcu ItyLIP
CERTIFIED PUBLIC ACCOUNTANTS
Report of Independent Auditors on Compliance with Requirements
That Could Have a Direct and Material Effect on Each Major Program and on
Internal Control Over Compliance in Accordance with OMB Circular A -133
To the Chair and Members of the County Council
County of Hawaii
Compliance
We have audited the compliance of the County of Hawaii, State of Hawaii (the "County "), with the types
of compliance requirements described in the U.S. Office of Management and Budget ( "OMB ") Circular
• A -133 Compliance Supplement that could have a direct and material effect on each of the County's major
• federal programs for the year ended June 30, 2011. The County's major federal programs are identified
in the summary of auditors' results section of the accompanying schedule of findings and questioned
• costs. Compliance with the requirements of laws, regulations, contracts, and grants applicable to each
of its major federal programs is the responsibility of the County's management. Our responsibility is to
express an opinion on the County's compliance based on our audit.
We conducted our audit of compliance in accordance with auditing standards generally accepted in the
United States of America; the standards applicable to financial audits contained in Government Auditing
Standards, issued by the Comptroller General of the United States; and OMB Circular A -133, Audits of
States, Local Governments, and Non - Profit Organizations. Those standards and OMB Circular A -133
require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance
• with the types of compliance requirements referred to above that could have a direct and material effect
on a major federal program occurred. An audit includes examining, on a test basis, evidence about the
• County's compliance with those requirements and performing such other procedures as we considered
• necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
Our audit does not provide a legal determination of the County's compliance with those requirements.
• In our opinion, the County complied, in all material respects, with the compliance requirements referred
to above that could have a direct and material effect on each of its major federal programs for the
• year ended June 30, 2011.
• Internal Control over Compliance
• Management of the County is responsible for establishing and maintaining effective internal control
over compliance with the requirements of laws, regulations, contracts, and grants applicable to federal
• programs. In planning and performing our audit, we considered the County's internal control over
compliance with the requirements that could have a direct and material effect on a major federal program
• to determine the auditing procedures for the purpose of expressing our opinion on compliance and to test
• and report on internal control over compliance in accordance with OMB Circular A -133, but not for the
purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly,
• we do not express an opinion on the effectiveness of the County's internal control over compliance.
•
ID
• 999 BISHOP STREET, SUITE 1900
HONOLULU, HAWAII 96813
•
TELEPHONE: 808 531 3400 FACSIMILE: 808 5313433
•
•
A deficiency in internal control over compliance exists when the design or operation of a control does not
allow management or employees, in the normal course of performing their assigned functions, to prevent,
or detect and correct, noncompliance with a type of compliance requirement of a federal program on a
timely basis. A material weakness in internal control over compliance is a deficiency, or combination of
deficiencies, in internal control over compliance, such that there is a reasonable possibility that material
noncompliance with a type of compliance requirement of a federal program will not be prevented, or
detected and corrected, on a timely basis.
Our consideration of internal control over compliance was for the limited purpose described in the first
paragraph of this section and was not designed to identify all deficiencies in internal control over
compliance that might be deficiencies, significant deficiencies, or material weaknesses. We did not
identify any deficiencies in internal control over compliance that we consider to be material weaknesses,
as defined above.
Schedule of Expenditures of Federal Awards
We have audited the 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 as of and for the year ended June 30, 2011, and have issued our report thereon dated
December 27, 2011. Our audit was performed for the purpose of forming our opinions on the financial
statements that collectively comprise the County's basic financial statements. The accompanying
schedule of expenditures of federal awards is presented for purposes of additional analysis as required
by OMB Circular A -133 and is not a required part of the basic financial statements. Such information has
been subjected to the auditing procedures applied in the audit of the basic financial statements and, in
our opinion, is fairly stated, in all material respects, in relation to the basic financial statements taken as
a whole.
This report is intended solely for the information and use of the County Council, Legislative Auditor,
management, others within the entity, federal awarding agencies and pass- through entities and is not
intended to be and should not be used by anyone other than these specified parties.
llctcilLLP
Honolulu, Hawaii
December 27, 2011
County of Hawaii
State of Hawaii
Schedule of Expenditures of Federal Awards
Year Ended June 30, 2011
Federal Grantor /Pass- through Grantor /Program Title
Office of National Drug Control Policy
Hawai'i Impact
Federal
Program
CFDA Award Federal
Number Grant Number Amount Expenditures
07.000 GO9H10004A $ 112,718 $ 2,224
G10H10004A 99,578 67,728
Total Office of National Drug Control Policy 69,952
U.S. Department of Agriculture
Food and Nutrition Service
Passed through the State Department of Education
Summer Food Service Program for Children 10.559 N/A 61,378 61,378
Forest Service
Passed through the State Department of Land and Natural Resources
Cooperative Forestry Assistance 10.664 08 -DG- 11052012 -180 84,187 27,550
09-DG-11052011-255
97,364
73,088
Subtotal CFDA 10.664 100,638
Natural Resources Conservation Service
Watershed Protection and Flood Prevention 10.904
Wailuku - Alenaio Watershed Kaumana Drive Flood Protection 65- 9251 -5 -707 310,000 105,300
Total U.S. Department of Agriculture 267,316
U.S. Department of Commerce
Economic Development Administration
Economic Adjustment Assistance — Disaster Recovery Coordinators 11.307 07 -79 -06009 160,250 12,016
National Oceanic and Atmospheric Administration
Passed through the State Department of Business, Economic
Development and Tourism
Coastal Zone Management Administration Awards 11.419
Hawai'i Coastal Zone Management Program NA09NOS4190120 25,000 15,000
NA1ONOS4190180 306,152 301,074
Subtotal CFDA 11.419 316,074
Passed through the State Department of Defense
Meteorologic and Hydrologic Modernization Development 11.467 NOAA- NWS -NWSOP -2008-
2001311 20,000 17,227
County of Hawaii
State of Hawaii
Schedule of Expenditures of Federal Awards
Year Ended June 30, 2011
Federal Grantor /Pass- through Grantor /Program Title
National Telecommunications and Information Administration
Passed through the State Department of Defense
Public Safety Interoperable Communications Grants Program
CFDA
Number
Grant Number
11.555 2007 -GS -H7 -0005
Federal
Program
Award Federal
Amount Expenditures
1,275,000 673,895
Total U.S. Department of Commerce 1,019,212
U.S. Department of Housing and Urban Development
Office of Housing
Section 8 — Housing Assistance Payments Program — Special Allocations
oo Kulaimano Elderly Housing
Office of Community Planning and Development
CDBG — State - Administered Small Cities Program Cluster
Community Development Block Grant/State's Program and
Non - Entitlement Grants in Hawaii
Passed through the Hawai'i Housing Finance and Development Corporation
Neighborhood Stabilization Program
ARRA — Community Development Block Grant/State's Program and
Non - Entitlement Grants in Hawai'i
Subtotal CDBG — State - Administered Small Cities Program Cluster
Passed through the Hawaii Housing Finance and Development Corporation
HOME Investment Partnerships Program
14.195
H 110- 0002001
250,800 133,215
14.228 B- 09 -DH -15 -0002 2,428,883 2,222,332
B- 10 -DH -15 -0002 2,998,922 137,354
Program Income 177,014
B- 08 -DN -15 -0001 5,374,200 4,867,652
14.255 B- 09 -HY -15 -0002 647,364 242,434
7,646,786
14.239 M08 -SG- 150102 989,346 10,000
M09 -SG- 150102 996,793 561,130
M10 -SG- 150102 999,573 18,583
Program income 42,519
Subtotal CFDA 14.239 632,232
Economic Development Initiative — Special Project, Neighborhood
Initiative and Miscellaneous Grant 14.251 B- 06 -SP -HI -0273 198,000 76,828
County of Hawaii
State of Hawaii
Schedule of Expenditures of Federal Awards
Year Ended June 30, 2011
Federal Grantor /Pass- through Grantor /Program Title
Office of Public and Indian Housing
Section 8 — Housing Choice Vouchers
Section 8 — Housing Choice Vouchers — Family Self Sufficiency Program
Subtotal CFDA 14.871
Passed through the State Department of Hawaiian Home Lands
co Native Hawaiian Housing Block Grants
Native American Housing and Self Determination Act
Subtotal CFDA 14.873
Total U.S. Department of Housing and Urban Development
U.S. Department of the Interior
Bureau of Land Management
National Fire Plan — Rural Fire Assistance
CFDA
Number
14.871
14.873
15.242
Grant Number
Federal
Program
Award Federal
Amount Expenditures
H1002V0 2010 15,143,758 8,719,817
H1002V0 2011 16,271,570 8,526,509
H1002 FSF005 32,775 29,473
HI002 FSF006 33,102 26,797
03NHGH1001
08HBGHI0001
H8140100025
H83000500001
65,000
125,000
15,600
18,000
17,302,596
15,000
8,705
23,705
25,815,362
15,600
18,000
Total Department of the Interior 33,600
U.S. Department of Justice
Drug Enforcement Administration
Drug Forfeitures 16.000 2011 122,182 122,182
Office of Juvenile Justice and Delinquency Prevention
Passed through the State Department of Human Services
Juvenile Accountability Incentive Block Grant 16.523 DHS- 06 -OYS -3112 SA 5 &6 58,032 31,240
Office for Victims of Crime
Passed through the State Department of the Attorney General
Crime Victim Assistance 16.575 07 -VA -4 331,447 173,374
08 -VA -4 309,717 156,806
Subtotal CFDA 16.575 330,180
County of Hawaii
State of Hawaii
Schedule of Expenditures of Federal Awards
Year Ended June 30, 2011
Federal Grantor /Pass- through Grantor /Program Title
Recovery Act - State Victim Assistance Formula Grant Program
ARRA - State Victim Assistance Formula Grant Program
Bureau of Justice Assistance
Passed through the Hawai'i County Economic Opportunity Council
Community Capacity Development Office - The Weed and Seed Program
Pahoa Weed and Seed
JAG Program Cluster
Edward Byrne Memorial Justice Assistance Grant Program
o Justice Assistance Grant
Elder Abuse and Exploitation Program
Passed through the State Department of the Attorney General
Hawaii Narcotics Task Force
Passed through the State Department of Attorney General
Recovery Act - Edward Byrne Memorial Justice Assistance Grant
Program /Grants to States and Territories
ARRA - Courthouse Booking Program
Recovery Act - Edward Byrne Memorial Justice Assistance Grant
Program /Grants to Units of Local Government
ARRA - Justice Assistance Grant
Subtotal JAG Program Cluster
Violence Against Women Office
Passed through the State Department of the Attorney General
Violence Against Women Formula Grants
Violence Against Women Formula Grants Recovery
Specialized Investigative Training
Sexual Assault Forensic Examiner Stand by Pay
Sexual Assault Forensic Examiners Training
CFDA
Number
16.801
16.595
16.738
16.803
16.804
16.588
Grant Number
09 -SG -04
N/A
2007 -DJ -BX -0275
2008 -DJ -BX -0509
2009 -DJ -BX -0614
09 -DJ -13
Federal
Program
Award Federal
Amount Expenditures
108,459 63,688
63,933 52,910
109,370 42,032
41,602 32,005
101,815 70,849
150,000 37,904
07 -DJ -13 42,500 17,774
09 -DJ -10 100,000 30,597
09 -SU -20 113,885 83,021
09 -SU -15 99,000 11,960
2009 -DB -B9 -2403
216,489 119,468
445,610
09 -EF -08 81,678 81,678
09 -EF -09 43,822 39,611
06 -W F -03 39,865 1,494
07 -W F -03 31,298 18,404
08 -WF -12 47,438 30,067
09 -EF -04 43,800 41,950
07 -WF -06 24,193 4,044
County of Hawaii
State of Hawaii
Schedule of Expenditures of Federal Awards
Year Ended June 30, 2011
Federal Grantor /Pass- through Grantor /Program Title
CFDA
Number
Grant Number
Federal
Program
Award Federal
Amount Expenditures
Domestic Violence /Sexual Assault 08 -W F -08 65,304 35,856
Cell Phone /PDA Violence Against Women 08 -WF -07 40,110 27,192
Enforcement of Protective Orders 08 -GP -01 42,610 13,875
Sexual Assault/DNA Analysis 09 -EF -05 125,000 96,944
Naauao Where Knowledge is Learned 09 -DJ -04 145,457 72,729
Subtotal CFDA 16.588 463,844
Office of Community Oriented Policing Services
Public Safety Partnership and Community Policing Grants 16.710
1 Methamphetamine Initiative Grant 2007 -CK -WX -0249 443,405 85,066
Total U.S. Department of Justice 1,594,720
U.S. Department of Labor
Employment and Training Administration
Passed through the State Department of Labor and Industrial Relations
Unemployment Insurance
Title IX Reed Act
17.225
Reed -08 -H
2,000,000 434,219
Senior Community Service Employment Program 17.235 AD- 18704- 09- 60 -A -15 367,981 77,041
AD- 19975- 10- 60 -A -15 386,765 351,628
Special - Senior Community Service Employment Program AD- 19975- 10- 60 -A -15 78,814 76,755
Subtotal CFDA 17.235 505,424
WIA Cluster
WIA Adult Program 17.258 AA- 18635 -09.55 470,993 217,825
AA- 20190 -10.55 527,605 306,867
WIA Youth Activities 17.259 AA- 18635 -09.55 479,857 81,076
AA- 20190 -10.55 496,124 405,533
WIA Dislocated Workers 17.260 AA- 18635 -09.55 361,297 186,935
AA- 20190 -10.55 607,025 480,201
ARRA - WIA Dislocated Workers AA- 17117 -08.55 378,105 70,082
Subtotal WIA Cluster 1,748,519
ARRA - Program of Competitive Grants for Worker Training and
Placement in High Growth and Emerging Industry Sectors 17.275 GJ- 19909- 10- 60 -A -15 543,726 105,294
Total U.S. Department of Labor 2,793,456
County of Hawaii
State of Hawaii
Schedule of Expenditures of Federal Awards
Year Ended June 30, 2011
Federal Grantor /Pass- through Grantor /Program Title
CFDA
Number
Grant Number
Federal
Program
Award Federal
Amount Expenditures
U.S. Department of Transportation
Federal Highway Administration
Passed through the State Department of Transportation
Highway Planning and Construction 20.205
Bridge Inspection /Appraisals BR- 0100(29) 80,000 37,054
Reeds Island Bridge on Kaiulani Street in Hilo BR- 0100(47) 474,400 14,157
Route 2760 - Kawailani Street at Waiakea Stream BR- 2760(3) 6,782,088 33,040
Bridge Inspection /Appraisals BR- NBIS(48) 80,000 75,679
Mamalahoa Highway Earthquake Repairs - MP4.4, MP8.9;
N Palani Road Pedestrian Overpass Repairs ER -15(9) 4,264,123 256,114
Earthquake Repairs for Mamalahoa Highway - MP110.4 and
Napoopoo Road MP9 ER- 15(11) 617,383 11,498
Alii Drive ROW RS- 0187(1) 3,127,200 95,219
Alii Drive Design /Archaeological RS- 0187(4) 6,441,250 110,613
Waimea Trails and Greenways STP- 0100(51) 313,644 20,500
Kuakini Highway Improvements - Palani to Hualalai STP- 0110(1) 11,914,263 2,833,264
Alii Drive Culvert Replacement STP- 0186(1) 252,000 9,158
Alii Drive Improvements - Hualalai to Walua STP- 0186(2) 240,000 11,570
Palani Road Safety Improvements STP- 0190(14) 6,359,754 551,156
Lindsey Road Bridge/Waikoloa Stream STP- 0191(43) 577,940 71,187
Kamehameha Avenue Resurfacing - Wailoa Bridge to Ponohawai Street STP- 1910(1) 40,000 3,678
Puainako Street Extension - Kilauea Avenue to Upper Kaumana Drive STP- 2000(3) 494,880 652
Puainako Street Extension - Komohana Street to Country Club Road STP- 2000(4) 28,730,980 14,915
Kawailani Street Improvements - Iwalani to Pohakulani Street STP- 2760(2) 1,517,320 27,420
ARRA - Waimea ADA Sidewalks and Ramps ARRA- 0191(42) 841,010 359,045
ARRA - Ane Keohokalole Highway ARRA- 1880(1) 37,364,492 10,543,421
Puna Makai Alternate Road TCSP- 0100(70) 188,084 2,254
Subtotal CFDA 20.205 15,081,594
Federal Transit Administration
Passed through the State Department of Transportation
Federal Transit - Capital Investment Grants 20.500
5309 Capital Grant HI -03 -0039 2,140,007 28,603
HI -04 -0002 901,200 719,200
HI -04 -0003 1,485,000 164,462
County of Hawaii
State of Hawaii
Schedule of Expenditures of Federal Awards
Year Ended June 30, 2011
Federal Grantor /Pass- through Grantor /Program Title
Job Access Reverse Commute
Subtotal CFDA 20.500
Formula Grants for Other Than Urbanized Areas
Federal
Program
CFDA Award Federal
Number Grant Number Amount Expenditures
HI -04 -0004 2,152,133 454,806
HI -37 -X003 312,716 312,716
1,679,787
20.509 RTAP 20,000 10,863
HI -18 -X025 465,131 87,709
H1-18 -X027 1,082,378 453,907
HI -18 -X020 25,154 21,306
HI -18 -028 565,534 433,836
Subtotal CFDA 20.509 1,007,621
National Highway Traffic Safety Administration
Passed through the State Department of Transportation
State and Community Highway Safety Program 20.600
Prosecutor's Training AL10- 02(03 -S -01) 80,000 44,921
N/A 66,287 11,473
Roadblock Program AL10- 02(01 -H -02) 95,340 20,739
AL11- 02(01 -H -02) 94,000 53,464
Seatbelt Enforcement OP10- 05(01 -H -02) 72,000 23,374
OP11- 05(01 -H -02) 72,000 43,412
Click It or Ticket OP10- 05(02 -H -01) 14,800 14,645
OP11- 05(02 -H -01) 15,400 9,024
Speed Enforcement SC10- 06(01 -H -02) 78,000 37,971
SC11- 06(01 -H -02) 78,168 54,253
Aggressive Driving Project SC10- 06(02 -H -01) 36,000 7,903
SC11- 06(02 -H -01) 36,112 10,841
Traffic Investigation Program PT10- 01(02 -H -01) 8,125 1,506
PT11- 01(02 -H -01) 13,510 4,974
Data Grant TR10- 03(05 -H -01) 78,000 1,393
TR11- 03(05 -H -01) 78,000 3,346
Distracted Driving DD1- 10(02 -H -02) 25,278 7,897
Subtotal CFDA 20.600 351,136
Total U.S. Department of Transportation 18,120,138
County of Hawaii
State of Hawaii
Schedule of Expenditures of Federal Awards
Year Ended June 30, 2011
Federal Grantor /Pass- through Grantor /Program Title
U.S. Environmental Protection Agency
Office of Water
Passed through the State Department of Health
Capitalization Grants for Clean Water State Revolving Funds
ARRA — Komohana Heights Large Capacity Cesspool Replacement
ARRA — Honokaa Large Capacity Cesspool Conversion
Subtotal CFDA 66.458
Capitalization Grants for Drinking Water State Revolving Funds
Honomu Production Well
Pahala Production Well
Kapulena Well Development Phase I
ARRA — Ahualoa Well Development
Subtotal CFDA 66.468
Surveys, Studies, Investigations, and Special Purpose Grants
South Kona Watershed Irrigation Program
Special Appropriation — Kau Cesspool Replacement Project
Water Infrastructure — Upgrade of Drinking Water System
Subtotal CFDA 66.606
CFDA
Number
66.458
66.468
66.606
Grant Number
Federal
Program
Award Federal
Amount Expenditures
C15006219 1,085,800 88,709
NPS007200 5,332,346 2,932,655
3,021,364
DW 105 -0001 3,263,438 274,549
DW 109 -0001 1,870,832 4,974
DW 133 -0002 799,516 761,165
DW130 -0005 4,742,200 2,242,136
3,282,824
X- 96956801 -0 347,200 121,029
XP- 96942401 -1 1,842,150 113,853
XP- 97951001 -1 970,000 620,554
855,436
Total U.S. Environmental Protection Agency 7,159,624
U.S. Department of Energy
Passed through the State Department of Business, Economic Development and Tourism
State Energy Program
Energy Conservation Program
Energy Efficiency and Conservation Block Grant Program
Total U.S. Department of Energy
81.041
DE-FG26-05R021608 70,920 67,756
81.128 DE- SC0002799 737,800 177,000
244,756
County of Hawaii
State of Hawaii
Schedule of Expenditures of Federal Awards
Year Ended June 30, 2011
Federal Grantor /Pass- through Grantor /Program Title
U.S. Department of Health and Human Services
Administration on Aging
Passed through the State Executive Office on Aging
Special Programs for the Aging - Title III, Part D -
Disease Prevention and Health Promotion Services
CFDA
Number
93.043
Grant Number
3D -4 -2008
3D -4 -2009
3D -4 -2010
Federal
Program
Award Federal
Amount Expenditures
16,800
16,800
16,800
3,260
4,073
1,814
Subtotal CFDA 93.043 9,147
Aging Cluster
Special Programs for the Aging - Title III, Part B -
Grants for Supportive Services and Senior Centers
Special Programs for the Aging - Title III, Part C - Nutrition Services
Nutrition Services Incentive Program
93.044 3B -4 -2009 403,185 9,313
3B -4 -2010 437,970 292,864
3B -4 -2011 437,970 71,646
93.045 3C1 -4 -2009 284,933 2,380
3C1-4-2010 304,332 101,367
3C1 -4 -2011 322,264 211,328
3C2 -4 -2009 126,903 22,468
3C2 -4 -2010 83,084 79,982
3C2 -4 -2011 196,190 42,195
93.053 N/A 103,740 17,929
N/A 103,267 64,363
Subtotal Aging Cluster
Special Programs for the Aging - Title IV and Title II - Discretionary Projects 93.048
Chronic Disease Self- Management Program
Community Living Program
Subtotal CFDA 93.048
National Family Caregiver Support, Title III, Part E 93.052
HI- EBI -08 -N -CDSMP
90CD1207
915,835
110,358 28,429
55,848 2,269
30,698
3E -4 -2010 126,578 45,860
3E -4 -2011 136,502 38,368
Subtotal CFDA 93.052 84,228
County of Hawai`i
State of Hawaii
Schedule of Expenditures of Federal Awards
Year Ended June 30, 2011
Federal Grantor /Pass- through Grantor /Program Title
Substance Abuse and Mental Health Services Administration
Passed through the State Department of Health
Substance Abuse and Mental Health Services —
Projects of Regional and National Significance
Hawaii Strategic Prevention Framework — State Incentive
Grant ( "HI -SPF") Non - Competitive Funding
CFDA
Number
93.243
Grant Number
5U79SP013944 -4
5U79SP013944 -5
Federal
Program
Award Federal
Amount Expenditures
313,950 140,166
2,103,140 436,192
Subtotal CFDA 93.243 576,358
Centers for Medicare and Medicaid Services
Passed through the State Executive Office on Aging
Centers for Medicare and Medicaid Services Research, Demonstrations,
and Evaluations 93.779
Hospital Discharge 1 L0CMS030434 92,735 15,970
Total U.S. Department of Health and Human Services 1,632,236
Corporation for National and Community Service
Retired and Senior Volunteer Program 94.002 10SRPHI002 85,318 85,318
U.S. Department of Homeland Security
Passed through the State Department of Defense
Disaster Grants — Public Assistance (Presidentially Declared Disasters) 97.036
Kiholo Earthquake FEMA- 1664 -DR -HI 4,187,848 479,685
Honshu (Tohoku), Japan Earthquake and Tsunami FEMA- 1967 -DR -HI 334,370 313,373
Subtotal CFDA 97.036 793,058
Emergency Management Performance Grants 97.042 2010 -EP -E0 -0042 139,000 139,000
Assistance to Firefighters Grants 97.044
Health and Wellness EMW- 2008 -FO -05181 424,963 101,263
Protective Clothing EMW- 2009 -FO -07593 303,738 282,073
Subtotal CFDA 97.044 383,336
County of Hawaii
State of Hawaii
Schedule of Expenditures of Federal Awards
Year Ended June 30, 2011
Federal
Program
CFDA Award Federal
Federal Grantor /Pass- through Grantor /Program Title Number Grant Number Amount Expenditures
Cooperating Technical Partners 97.045
North Kona Flood Study EMF- 2008 -GR -0810 250,000 2,590
Digital Flood Insurance Rate Map EMF- 2009 -GR -0916 71,300 49,692
Subtotal CFDA 97.045 52,282
Passed through the State Department of Defense
Pre - Disaster Mitigation 97.047
Multi Hazard Mitigation Plan Update EMF- 2008 -PC003 361,448 50,197
Homeland Security Grant Program 97.067
Law Enforcement Terrorism Prevention Program
Citizen Corps
State Homeland Security Program
Subtotal CFDA 97.067
Recovery Act — Assistance to Firefighters
ARRA -Fire Station Construction
Total U.S. Department of Homeland Security
Total Expenditures of Federal Awards
( *) Denotes major federal financial assistance program as defined by OMB Circular A -133.
97.115
2007 -GE -T7 -0013 400,310 52,610
2007 -GE -T7 -0013 10,000 3,696
2008 -GE -T8 -0022 18,281 4,917
2007 -GE -T7 -0013 663,868 190,879
2008 -GE -T8 -0022 1,077,180 296,573
2009- SS -ET9 -0006 931,487 86,983
EMW- 2009- FC- 02761R 4,113,686
635,658
525,723 *
2,579,254
$ 61,414,944
County of Hawaii
State of Hawaii
Notes to Schedule of Expenditures of Federal Awards
Year Ended June 30, 2011
1. Basis of Presentation
The accompanying schedule of expenditures of federal awards includes the federal grant activity
of the County of Hawaii, State of Hawaii (the "County ") and its discretely presented component
unit, the Department of Water Supply (the "Department ") and is presented on the accrual basis of
accounting. The information in this schedule is presented in accordance with the requirements
of OMB Circular A -133, Audits of States, Local Governments, and Non - Profit Organizations.
Therefore, some amounts presented in this schedule may differ from amounts presented in,
or used in the preparation of, the basic financial statements.
18
County of Hawaii
State of Hawaii
Notes to Schedule of Expenditures of Federal Awards
Year Ended June 30, 2011
2. Subrecipients
Of the federal expenditures presented in the schedule, the County provided federal awards to
subrecipients as follows:
Amount
CFDA Provided to
Program Title Number Subrecipients
U.S. Department of Housing and Urban Development
Community Development Block Grant/State's Program and
Non - Entitlement Grants in Hawaii 14.228 $ 1,150,007
ARRA — Community Development Block Grant/State's Program
and Non - Entitlement Grants in Hawaii 14.255 237,602
HOME Investment Partnerships Program 14.239 224,750
Total U.S. Department of Housing and
Urban Development 1,612,359
U.S. Department of Justice
Juvenile Accountability Incentive Block Grant 16.523 28,994
Crime Victim Assistance 16.575 117,853
ARRA — State Victim Assistance Formula Grant Program 16.801 53,128
Total U.S. Department of Justice 199,975
U.S. Department of Labor
Unemployment Insurance — Title IX Reed Act 17.225 385,863
WIA Adult Program 17.258 486,375
WIA Youth Activities 17.259 457,938
WIA Dislocated Workers 17.260 623,526
ARRA — WIA Dislocated Workers 17.260 33,576
ARRA — Program of Competitive Grants for Worker Training and
Placement in High Growth and Emerging Industry Sectors 17.275 64,293
Total U.S. Department of Labor 2,051,571
U.S. Department of Health and Human Services
Substance Abuse and Mental Health Services — Projects of
Regional and National Significance 93.243 331,007
Total U.S. Department of Health and
Human Services
Total Provided to Subrecipients
19
331,007
$ 4,194,912
County of Hawaii
State of Hawaii
Schedule of Findings and Questioned Costs
Year Ended June 30, 2011
Section I — Summary of Auditors' Results
Financial Statements
Type of auditors' report issued
Internal control over financial reporting
• Material weaknesses identified?
• Significant deficiencies identified?
Noncompliance material to financial statements noted?
Federal Awards
Internal control over major programs
• Material weaknesses identified?
• Significant deficiencies identified?
Type of auditors' report issued on compliance for major programs
Any audit findings disclosed that are required to be reported
in accordance with section 510(a) of Circular A -133?
Identification of major programs
CFDA
Numbers
14.871
20.205
66.458
66.468
97.115
Unqualified
yes X no
X yes none reported
yes X no
yes X no
yes X none reported
Unqualified
yes X no
Name of Federal Program or Cluster
Section 8 — Housing Choice Vouchers
Highway Planning and Construction
Capitalization Grants for Clean Water State Revolving Funds
Capitalization Grants for Drinking Water State Revolving Funds
Assistance to Firefighters
Dollar threshold used to distinguish between type A and
type B programs
Auditee qualified as low -risk auditee?
20
$1,842,000
X yes no
County of Hawaii
State of Hawaii
Schedule of Findings and Questioned Costs
Year Ended June 30, 2011
Section II — Financial Statement Findings
Finding No. 2011 -01: Information Technology (Significant Deficiency)
Condition
Information technology ( "IT") is a strategic element of the operations of the County of Hawaii (the
"County ") and the Department of Water Supply (the "Department "), a component unit of the County.
Because of the high volume of transactions at the County and the Department, the establishment of
internal controls over processes incorporating IT is critical to its operations. As part of our financial
statement audits for the year ended June 30, 2011, we performed IT general controls reviews of the
following systems operated by the County and the Department:
County
• Windows Domain
• Eden
• Integrated Assessment System
• Revenue Collection
Department
• Windows Domain
• Select Financial System
• Public Utility Billing System
• ARB N_Sight Mobile System
Our review resulted in several IT control deficiencies as follows:
Physical and logical security
• Lack of formal security administration policies and procedures addressing:
o New, transferred and terminated user account administration
o Maintenance of audit evidence to support approval of employee access to the system
o Identification of terminated employees who continue to have access to the system
o Identification of employees whose access to system resources are not commensurate
with their job responsibilities
o Minimum password security settings
o Network security reviews
o Minimum environmental security requirements
o Physical access to the servers
• Weak password security settings or the lack of system functionality to enforce strong password
policies.
• Sharing of user accounts.
• Terminated users continued to have access to certain systems.
• Lack of segregation of duties in the area of systems and applications administration.
• Lack of restricted access to certain systems.
Change management
• Lack of a formalized change management process for certain systems.
Backup and Recovery
• No formal backup, retention and restoration policy.
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County of Hawaii
State of Hawaii
Schedule of Findings and Questioned Costs
Year Ended June 30, 2011
Criteria
When IT is used to initiate, record, process and report on transactions included in the financial
statements, the systems and related processes should include internal controls to prevent or detect
potential misstatements.
Effect
Internal controls in the following areas address the following risks:
Physical and logical security
Unauthorized access to these systems could result in either the destruction or theft of data, unauthorized
or nonexistent transactions being made or transactions being inaccurately recorded.
Change management
Unauthorized or untested changes promoted to the production environment could cause the systems
to either process data differently than intended or unexpectedly compromise the integrity of the data
maintained.
Backup and Recovery
The loss of data as a result of backups not being performed.
Cause
The primary cause was due to the lack of IT policies and procedures which include internal controls to
address the IT risks discussed above.
Recommendation
We recommend that the County and the Department perform the following:
• Develop or update IT policies and procedures to include internal control procedures addressing the
IT risks above.
• Identify procedures to ensure that IT policies and procedures are consistently followed.
22
County of Hawaii
State of Hawaii
Schedule of Findings and Questioned Costs
Year Ended June 30, 2011
Section III — Federal Award Findings and Questioned Costs
None
County of Hawaii
State of Hawaii
Schedule of Findings and Questioned Costs
Year Ended June 30, 2011
Section IV — Status of Prior Year Findings and Questioned Costs
Financial Statement Findings
Finding No. 2010 -01: Information Technology (Significant Deficiency)
During our prior year audit, we performed an IT general controls review of the following systems operated
by the County and the Department:
County
• Windows Domain
• Eden
• Integrated Assessment System
• Revenue Collection
Department
• Windows Domain
• Select Financial System
• Public Utility Billing System
• ARB N_Sight Mobile System
Our review resulted in several IT control deficiencies over physical and logical security, change
management, and backup and recovery.
Status
Partially resolved. In fiscal year 2011, the County and the Department took the following actions to
address the control deficiencies listed above:
• The County enabled password complexity for the Windows Domain.
• The County performed a full restoration test for the Eden application.
• The Department migrated the Select Financial System to the Department's IT division to segregate
the duties of systems and application administration.
• The Department also adopted a formal backup and retention policy.
The remaining IT control deficiencies have not been resolved, however, the County and the Department
are in the process of developing policies and procedures to address them. As the unresolved
deficiencies are reported in current year Finding 2011 -01, this finding will not carry forward.
24
County of Hawaii
State of Hawaii
Schedule of Findings and Questioned Costs
Year Ended June 30, 2011
Finding No. 2010 -02: Accounting for Capital Assets Should Be Improved (Significant Deficiency)
During our prior year audit, we identified various issues related to the County's accounting for capital
assets including capital outlays that were improperly expensed, capital assets that were misclassified
or not capitalized, and depreciation expense taken on fully depreciated assets. Additionally, we noted a
lack of procedures to periodically reevaluate the estimated useful lives and to ensure that infrastructure
disposals are properly recorded.
Status
Resolved. During our current year audit, we noted that management has implemented proper accounting
practices to prevent material misstatements as noted above. The County has made progress on the
conversion of the manual infrastructure records to the accounting system and should continue to focus on
completing the conversion.
Finding No. 2010 -03: Restatement of Beginning Net Assets (Significant Deficiency)
During our prior year audit, we identified the following errors that required the restatement of the
Department's beginning net assets in the June 30, 2010 financial statements:
• Unbilled amounts earned as of year end were not accrued for.
• Invoices for services spanned two fiscal years but the expenses were not allocated between fiscal
years.
• The Department continued to record depreciation expense on fully depreciated assets.
• Consulting project costs were improperly capitalized as deferred charges and the construction costs
of an abandoned project were not written off from construction work in progress.
Status
Resolved. The County restated the Department's beginning net assets in its financial statements for
the year ended June 30, 2010 to correct the errors identified. We also noted that management of the
Department implemented proper accounting practices and policies to prevent material misstatements
as noted above.
25
County of Hawaii
State of Hawaii
Schedule of Findings and Questioned Costs
Year Ended June 30, 2011
Federal Award Findings and Questioned Costs
Finding No. 2010 -04: Suspension and Debarment (Significant Deficiency)
Federal Agency: U.S. Department of Transportation
U.S. Environmental Protection Agency
CFDA Number and Title:
20.205 — Highway Planning and Construction
20.509 — Formula Grants for Other Than Urbanized
Areas
66.458 — Capitalization Grants for Clean Water State
Revolving Funds
66.468 — Capitalization Grants for Drinking Water State
Revolving Funds
Questioned
Cost
During our prior year audit, for 7 out of 27 items we tested, either a suspension and debarment
certification was not obtained or the County did not perform a verification check.
Status
Resolved. No similar instances of noncompliance were noted during our current year audit. The County
formalized procedures that assigned responsibility at the department level for the performance of
suspension and debarment verification checks.
Finding No. 2010 -05: Subrecipient Central Contractor Registration
Federal Agency: U.S. Department of Housing and Urban Development
CFDA Number and Title:
14.255 — ARRA — Community Development Block
Grant/State's Program and Non - Entitlement Grants
in Hawaii
Questioned
Cost
During our prior year audit, we noted that the County did not monitor the subrecipients receiving
American Recovery and Reinvestment Act ( "ARRA ") funds to ensure that subrecipients were properly
registered on the Central Contractors Registration ( "CCR ").
Status
Resolved. No similar instances of noncompliance were noted during our current year audit. The Office
of Housing and Community Development formalized procedures to notify all potential subrecipient
applicants of the CCR registration requirement, to include an addendum to the subrecipient agreements
specifying the requirements, to require subrecipients to submit proof of current registration with any
application for funding, and to ensure prior to executing contracts that the subrecipients' CCR registration
are valid for the duration of the contract period.
26
County of Hawaii
State of Hawaii
Schedule of Findings and Questioned Costs
Year Ended June 30, 2011
Finding No. 2009 -01: Activities Allowed and Unallowed — Calculation of
Federal Expenditures
Federal Agency: U.S. Department of Homeland Security
CFDA Number and Title:
Award Number and Award
Year:
97.036 — Disaster Grants — Public Assistance
(Presidentially Declared Disasters): Kiholo
Earthquake
FEMA- 1664 -DR -HI 10/15/06 — 10/15/10
Questioned
Cost
$ 27,965
Per the prior auditor's testing of the activities allowed and unallowed compliance requirement, it
was noted that the County overstated the federal share of eligible costs related to the Ikuo Hisaoka
Gymnasium by $27,965. The amount the County reported was based on the actual expenditures,
however, as the Ikuo Hisaoka Gymnasium was insured at the time of loss, the expenditures should
have been based on the insurance deductible in accordance with Title 44 Code of Federal Regulations
(44 CFR) §206.250(c).
Status
Unresolved. We understand that the County has sought the assistance of the Hawaii State Civil Defense
in determining the correct portion eligible for federal aid and is currently awaiting a response.
27
Corrective Action Plan
CORRECTIVE ACTION PLAN
Financial Statement Findings:
Finding 2011 -01 Information Technology (Significant Deficiency)
Recommendation: We recommend that the County and the Department perform the following:
• Develop or update IT policies and procedures to include internal control procedures addressing
the IT risks above.
• Identify procedures to ensure that IT policies and procedures are consistently followed.
General Comment: Not all the comments applied to both entities which have separate IT
environments and staff. We have broken out the response into two pieces and have done our best to
respond fully to the comment. We acknowledge the importance of good internal controls especially
in the area of information technology.
Water Department's Comment: The Department has implemented several IT internal controls which
address the concerns raised by the auditors. Controls over user access and passwords have been
improved with the creation of unique logins and passwords for each user that are no longer shared.
Passwords must now be changed every 3 months and terminals are automatically locked after 3
minutes of inactivity. The number of users with administrative permissions has been reduced to 2
in the accounting application and 5, who are all supervisors, in the billing application.
The accounting application and operating system has been moved to a new server located in a locked
and air conditioned room under the control of IT. The Department is currently moving the billing
system to this new server as well. IT is responsible for backing up the server and storing backup
tapes off site, while Finance will continue to serve as administrator for logons, passwords, and access
permissions.
County's Comment: The County has worked to address the concerns raised by the auditor and
will continue to do so in the upcoming fiscal year. Internal controls regarding user access are being
improved as procedures requiring the Department of Human Resources to notify IT of all employee
terminations are being developed. IT has also implemented an Active Directory password policy
requiring that complex passwords must be changed every 90 days and the system disallows the reuse
of the last 5 passwords.
The County's mission- critical servers are housed in secure, environmentally monitored locations,
which are protected by cipher lock and/or badge access.
The Eden application change management is governed by the County's FRESH Oversight
Committee. The committee reviews upgrades to the Eden system, such as version changes and hot
fixes, from the vendor Tyler Technologies. The committee considers the feasibility of implementing
a system change, and if approved, authorizes the Eden test systems to be updated. The test systems
are then assessed until all modules are checked for accuracy, and perform as expected within the
context of County procedures in processing data. Once all Eden modules and functions are tested
and performing satisfactorily, the committee approves moving the tested version into production.
Mission critical data is continuously backed -up to disk and tape backups provide supplemental
archives and have proven capable of restoring folders, files and emails when necessary. Backup logs
provide monitoring, and indexes of stored data.
IT' s Disaster Recovery plan was reviewed and updated to conform to ongoing infrastructure,
personnel, and technology changes. IT has begun moving some of the County's mission - critical IT
equipment from locations that are prone to damage from natural disaster to secure, hardened
locations.
We acknowledge that there are some areas for improvement and we will work towards addressing
these. In many cases we need to formalize our procedures already in place which we will also work
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on. However, we are not aware of any situations or issues that arose due to our lack of written
policies and procedures.
Anticipated Completion Date: Some items have already been implemented, others will be
implemented by June 30, 2012 and for a few items this will be an ongoing effort as we strive to
improve our internal controls over information technology.
Contact People: Rick Sumada, Waterworks Controller
Department of Water Supply
Burt Tsuchiya, Director of Information Technology
County of Hawaii
Status of Prior Year Findings:
Finding 2010 -01 Information Technology (Significant Deficiency)
Recommendation: We recommend that the County and the Department perform the following:
• Develop or update IT policies and procedures to include internal control procedures addressing
the IT risks above.
• Identify procedures to ensure that IT policies and procedures are consistently followed.
• Work with vendor programmers to address any internal control deficiencies due to system
limitations.
County's Comment: Refer to County's comment to Current Year Finding 2011 -01 for status update.
Anticipated Completion Date: Some items have already been implemented, others will be
implemented by June 30, 2012 and for a few items this will be an ongoing effort as we strive
to improve our internal controls over information technology.
Contact People: Rick Sumada, Waterworks Controller
Department of Water Supply
Burt Tsuchiya, Director of Information Technology
County of Hawaii
Federal Award Findings:
U.S. Department of Homeland Security
Disaster Grants — Public Assistance (Presidentially Declared Disasters): Kiholo Earthquake
CFDA No. 97.036 Federal Award No.: FEMA- 1664 -DR -HI
Award Period: July 1, 2008 to June 30, 2009
Finding 2009 -01 Activities Allowed and Unallowed — Calculation of Federal Expenditures
Recommendation: We recommend that the County be more cognizant of deviations in the
calculation of the federal share to ensure that the expenditures are accurately reported, including
applying the applicable guidance.
County's Comment: The County continues to strive to be more diligent in meeting its activities
allowed and unallowed requirements, including the accurate reporting of the federal expenditures.
Repairs to the facility in question have now been completed and we have received our final insurance
proceeds — the amount of which impacts the allowed federal expenditures. We are now awaiting the
final review by the Hawaii State Civil Defense in determining the final eligible portion for federal
aid.
Anticipated Completion Date: June 30, 2012
Contact Person: Kay Oshiro, Controller
County of Hawaii
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