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HomeMy WebLinkAbout2012-COH - Comprehensive Annual Financial ReportCOMPREHENSIVE ANNUAL FINANCIAL REPORT Fiscal Year Ended June 30, 2012 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 F HAWAII Comprehensive Annual Financial Report For the Fiscal Year Ended ,dune 30, 2012 Table of Contents FINANCIAL SECTION Report of Independent Auditor's 1 Management's Discussion and Analysis 15 Basic Financial Statements: G vemment-vide Financial Statements: Statement of Net Assets 2 Statement of Activities 30 Fund Financial Statements; PaRe INTRODUCTORY DUCTORY S TION 32 Letter of Transmittal I GFA. Certificate of Achievement 33 Organization Chart List of Elected Officials 10 List of Principal Officials 11 FINANCIAL SECTION Report of Independent Auditor's 1 Management's Discussion and Analysis 15 Basic Financial Statements: G vemment-vide Financial Statements: Statement of Net Assets 2 Statement of Activities 30 Fund Financial Statements; Balance Sheet - Governmental Funds 32 Reconciliation ofthe Governmental Funds Balance Sheet to the Statement of Net Assets 33 Statement of Revenues, Expenditures, and Changes in Fund Balances - Govemmental Funds 3 Reconciliation of the Change in Fund Balances of Governmental Funds to the Statement of Activities 3 Statement ofF Revenues,, Expenditures, and Changes in Fund Balance - Budget and Actual (Budgetary Basis) - General Fund 3 Statement of Net Assets - Proprietary Funds 42 Statement of Revenues, Expenses, and Changes in Fund Net Assets - Proprietary Funds 43 Statement ofCash Flows - Proprietary Funds 44 Statement of Fiduciary Net Assets - Fiduciary Funds 45 Statement of Charges in Fiduciary Net Assets - Fiduciary Funds 46 Dotes to the Basic Financial Statements 47 Required Supplementary Information 87 FINANCIAL SECTION (Continued) 11 Table 2 - Changes in Net Assets 120 Combining and Individual Nomnaj r Fund Statements and Schedules: 122 Combining Balance Sheet - N nmaj r Governmental Funds 9 Combining Statement of Revenues, Expenditures, and Changes In Fund 124 Balances - Nonrnajr Governmental Funds 9 Schedules of revenues, Expenditures, and Changes in Fund Balances -- 129 Budget and Actual (Budgetary Basis): 130 Highway Fund 9 Sever Fund 98 Solid Waste Fund 99 Cemetery Fund 100 Parking Meter Fund 101 Vehicle Disposal Fuad 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 11 Combining Statement of Changes in Assets and Liabilities - Agency Funds 112 Combining Statement of Private Purpose Trust Net Assets - Private Purpose Trusts 11 Combining Statement ofChanges in Net Assets - Private Purpose Trusts 118 STATISTICAL SECTION Table 1 - Net Assets by Component 11 Table 2 - Changes in Net Assets 120 Table 3 -- Fund Balances, Governmental Funds 122 Table 4 - Changes in Fuad 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 1 - Legal Debt Margin Information 132 Table 11 - Demographic and Economic Statistics 133 Table 12 - Principal Employers, County of Hawaii 134 Table 1 - Full -Time Equivalent County Government Employees by Function 135 Table 1 - Operating Indicators by Function 136 Table 1 - Capital Asset Statistics by Functions 137 INTRODUCTORY SECTION William P. Inoi Mayor December 27, 2012 County of Hawaii Finance Department 25 Aupuni Street, Room 2103 9 Filo, Hawaii 96720 (848) 961-8234 . Fax (808) 961-8569 The Honorable Mayor and Members of the Council Counter of Iwi`i 25 Aupuni Street Hilo, Hawaii 96720 Nancy E. Crawford Director Deanna S. Sako Deputy Director We transmit herewith the Comprehensive Annual Financial Report for the County of Ia ai `i, State of Hawai' i (the County), for the fiscal year July 1, 2011 to June 3 0, 2 012. This report was prepared by the County's Department ofFinance. 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 Counter's financial activities have been included. Management's discussion and analysis is also included t aid users of the financial statements. This report presents the financial position of the County of awai `i at June 30, 2012 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 Ha vai`i's organization chart and lists ofelected and principal officials. The Financial Section contains management's discussion and analysis, the basic financial statements, related notes, the combiningand 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 ofHawai`i, including its component unit, the Department of Water Supply, established by the County Charter as a semi -autonomous awai `i County is an equal opportunity provider and employer. body of the County gove=ent. 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 ofthe island of Ha vai`i, 4,028 square miles in size. It is twice as large as the combined area ofall the other inhabited islands in the Hawaiian Archipelago. Since there is no other local or municipal government within the County, there are n overlapping taxes and no overlapping debt. The County has an elected mayor and a nine- member ine- mem er council. Economic Condition and Outlook The island of Haw i` 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. Rib'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 K ha.la, 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 Iona 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 Mate and County maintained streets and highways, The Big Island 'is the most diversified ofthe neighbor island economies. As a result it i buffered to some extent when any one industry lags. Although the past few years proved challenging to the island's economy, it appears that the County will continue on its steady but slow road to improved financial health. This favorable outlook is supported by positive trends in the following key areas of the island's economy. The County's labor force numbered 83,617 at June 2012, which is a slight increase from a year ago. A sign that the economy is continuing on the road to a brighter position than that which faced the County several years ago is the fact that the County's unemployment rate for the current fiscal year 2012 .2% was slightly lower than the prior fiscal year 2011 (9.5%), which serves as a positive indicator for the third year in a roar. Tourism — Tourism has arrays 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 Ha vai`i volcanoes National Park. A. popular attraction, the parr is the most visited site in the stag, handling over 2 million visitors annually, which became even more popular with the increased activity of Kilauea volcano. Another indication of the _2_ County's slowly rebounding industry, is the fact that there was a % increase in the number of visitors to the island from the prior fiscal year. More importantly, spending growth for this sector has been even stronger than the actual arrivals. Construction uct — The construction industry continues to serve as the lagging sector of the economy but there are recent signs that this may change soon. Although, construction jobs remain below that of peak tines, private building permits which serve as a better indicator of the future shows encouraging results. 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 gelated capital investment on Mauna Kea exceeds $600 million and combined annual budgets are about $75 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 Deter Telescope TMT by the TMT Observatory Corporation.. The Hawaiian Volcano Observatory in ai`i volcanoes National Park and the Natural Energy Laboratory of Hawaii Authority at Kehl, Kona are also ma*r contributors t international research and the local economy. Major r Initiatives .dor the Year During the year, the County focused on construction projects relating to housing, sanitation and public safety, and other issues affecting the duality of life in the County. Public Safety — Construction continued the Makal i Fire Station reaching a total cost of approximately $6.1 million at the end of the year and is expected to be placed into service in the next fiscal year. The Fire Department nt installed two new lifeguard towers valued at $87,000 for Hapuna Beach Park and Punaluu Beach Park and purchased a new 2,000 gallon. Fire Apparatus Tanker for Kau for $221,000 that was funded by a Community Development Block Grant. Public Works — The Ane Keohokalole Highway In Kona was opened to the public in June 2012 at a cost to the County of $28.9 million. The 2.9 mile highway serves as the largest expenditure of American Recovery & Reinvestment Act money for transportation infrastructure in the State and is also the first major road to be built by the County in Kona since statehood. Environmental Management — The processing capacity ofthe H n 1 aa. Wastewater Treatment dant was upgraded from 56,400 to 200,000 gallons per day to service the schools and business community within the Honokaa Town area at a cost of approximately $5.0 million. -3- For the Future Public Safety — The Hawai"i Police Department held the Ori -Site Assessment by the Commission on Accreditation for Law Enforcement Agencies CA .,A , on August 5-8, 2012. On Saturday, November 17, 2012, the � Iawai` i Police Department marked an historical event when it was awarded a full three-year accreditation by CALEA. This process, which began in early 2004, is a tribute to all of our employees, both civilian and sworn, who collectively are bound to adhere to over 400 plus required standards. What accreditation means for the Hawaii Police Department is that the public can now be assured, based on an independent review, we are indeed a department that adheres t standards that are sensible, professional and ethical, and in keeping with a 2 1 st cent law enforcement agency. The Hawaii Fire Department is working to obtain two new Fire Pumper Apparatus with County funded leases. A. new Fire Tanker Apparatus also will be secured primarily with Co=unity Development Bloch Grant fand s. These replacements are important to the continuing effort to provide apparatus that meets current National Fire Protection Association safety guidelines. The Kawilani Fire Station relocation planning and design will be initiated. In this period of economic recovery the Fire Department is striving to continue to provide needed services to the Hawaii County residents and visitors. Public Works — Two connector road projects in Kona will be underway in mid -2013. At an estimated construction cost of $14 million, the Laalca Avenue Extension Ph 1 in Forth Kona will connect Laaloa Avenue with Kuaini Highway. The Federal Highway Administration is helping to fund the following two road projects on the island. The first is the Kaimin.ani Drive Roadway Improvements In North Kona at an estimated cost of 10 million and the second is the Kamehameha Avenue Reconstruction project in South Hilo at an estimated construction cost of $13 million. Planning — The National Historic Preservation Act has charged the Hawaii State Department of Band and Natural Resources with the monitoring of Hawaii's natural and cultural resources. The Planning Department has begun the process of staffing the Hawaii County Cultural Resource Commission as -well -as assisting the mayor's office In seating commissioners. This commission will review, continent and may include granting permits on all County projects, taping into consideration the cultural and historical significance of island wide sites and surroundings. The County of Hawaii will be hosting the Hawaii Congress of Planning Officials in September 2013. This conference is for all planning commissions, planning directors and planners for all counties within the Mate of Hawaii in addition to most ofthe industry including architects, surveyors, major land owners and developers. Other Financial Information Internal Control The management of the County is responsible for establishing and maintaining an internal control structure designed to ensure that t.e assets of the County are protected from loss, theft or misuse and to ensure that adequate accounting data are compiled to allow for preparation of financial statements in conformity with generally accepted accounting principles. The internal control structure is designed to provide reasonable, but not absolute, assurance that these objectives are met. The concept of reasonable assurance recognizes that 1 the cost of a control should not exceed the benefits likely t 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 those 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 'i's employed as a management control device for the general fund, special revenue funds, and the capital projects f md. 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 rates. The average yield on deposits and investments vas .1'7%. The County's policy is to minimize credit and market et risks while maintaining a competitive yield on its portfolio. Accordingly, with the exception of $236,177 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. Financial Hit As a result of another year of declining property values which negatively impacted real property tax revenues, the County was again faced with the dilemma of balancing its budget. To avoid negatively impacting the local economy, the County worked diligently to lover its operating costs while continuing to service the community and it people rather than raise real property taxes. The County continued the furloughs and pay reductions for both its HGEA and UPW union employees but reduced the number of dans from twi 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 AchievementProgram'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 ofFinance and fiscal personnel in other departments. I ani, grateful for their help in preparing this report. l 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 I w i`i. i NANCY E. CRA. FORD Director of Finance Certificate of Achievement for Excellence 40 in Financial Reporting Presented t County of Hawaii Hawaii For its Comprehensive Annual Financial Report for the Fiscal Year Ended June 3o, 2011 Certificate of Achievement for Excellence in Financial Reporting is presented by the Government Finance officers Association of the United States and Canada t government units and public employee retirement systems whose comprehensive annual uncial reports (CAFRs) achieve the highest standards in g venunent accounting and financial reporting. AO t4- - President dg* wpm Executive Director County of Hawaii Organization Chart County Electorate County Council I I Mayor I----{ Prosecuting Attorney County Legislative Office of Mangy a nt: Clerk Auditor Managing Director Departments ent under Agencies under Departments under direct supervision of the direct supervision of thecommissions and Managing Director: Managing Director: administrative supervision of the Mayor: Corporation Counsel Civil Defense Human Resources Finance, ff ice ofAging Police .Manning Mass Transit .Liquor Control Environmental Management Office Housing & Fire Research & Development Community Development mater Supply Public Works (semi --autonomous Warks & Recreation Information Technology E County of Hawaii Elected Officials June 30, 2012 Administrative Officers Terrn: 200 8-2012) William P. Knoi Mayor Charlene lbo i (effective 4/1 A 1) Prosecuting Attorney do nt Council. 2010-2012 Dominic Yagong Chair K. Angel Pilago Vice Chair Fred Blas Member Brenda Ford Member Pete Hoffmann Member Donald Ikeda Member Dennis "Fresh" nishi Member Brittany Smart Member J Yo himoto Member Principal Officials June 30, 2012 County Clerk Janaae Kawauchi Legislative Auditor Colleen Sehrandt Managing Director William Takaba Deputy Managing Director Walter Lau Corporation Counsel Lincoln Ashida Director of Finance fancy E. Crawford Planning Director Bobby Jean Leithead-Todd Director ofPersonnel Ronald T l ashi Director of Research and Development Ranch Kurohara Chief of Police Harry S. Ku of it i Fire Chief Darren Rosario Director of Public Worts Warren Lee Director of Environmental Management, Acting Dora Beck Director of Parks and Recreation Robert Fitzgerald Manager, Department ofWater Supply Quirino Antonio, Jr. Civil Defense Administrator Quince Mento Director of Liquor Control Gerald Tal ase Transit Operations Administrator Vacant Executive on Aging Alan Parker Administrator, Office of Housing and Community Development Stephen] Arnett Director of Information Technology Mark Ow This page intentionally let blank. -12- FINANCIAL SECTION A ccult LLP CERTIFIED rUBLIC ACCOUNTANTS Report of Independent Auditors To tete chair and Members of the county Council County of Havwrai`i We have audited the accompanying financial statements of the governmental activities, the business -type activities, the discretely presented component unit, each major fund, and the aggregate remaining fund information of the county of HavwraVi, State of Hawai'l (the "iCounty") as of and for the gear ended June 3 g, 2012, which collectively comprise the County's basic financial statements as listed in the table of contents. These financial statements are the responsibility of the County's management. Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Govern ment Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perforin 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, 2012, 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 Goverrrrr ant Auditing Standards, vire have also issued our report dated December 27, 2012, on our consideration of the County's internal control over financial reporting and on ouir tests of its compliance with certain provisions of lags, 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 perf=ormed in accordance with Govemment Auditing Standards and should be considered in assessing the results of our audit. Accounting principles generally accepted in the United States of America require that management' discussion and analysis and schedule of funding progress for the EUTF information on pages 15 through 25 and 87 be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Burd, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. we have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management's responses to our 999 BISHOP STRKETSurriz, 1900 TE'LEI'H( NE". 808 5313400 FAcSI ILE: 808 5313433 1 inquiries, the basic financial statements, a rid other know] a we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the County's basic financial statements as a whole. The introductory section, combining and individual nonmajor fund financial statements, fund schedules, 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 and fund schedules are the responsibility of management and were derived from and relate directly to the underlying accounting and other records used to prepare the financial statements. The information has been subjected to the auditing procedures applied in the audit of the financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the financial statements or to the financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the comb1n1ng and individual nonmajor fund financial statements and fund schedules are fairly stated in all material respects in relation to the financial statements as a whole. The introductory and statistical sections have not been subjected to the auditing procedures applied in the audit of the basic financial statements and, accordingly, vire do not express an opinion or provide any assurance on them. Actw�yL�P Honolulu, Hawaii December 27, 201 1 MANAGEMENT'S DISCUSSION AND ANALYSIS This section of the County of awai`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, 2012. w 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 $653.0 million (net assets). This amount includes $39.8 million in unrestricted net assets, a decrease of $0. million from the prior year. • The County's total net assets increased by $75,7 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 $146.4 million, a decrease of $12.6 million from the prior year. Approximately 47 percent of this total amount, $68.3 million, is available for spending at the County's discretion (unrestricted fund balance). • At the end of the currcnt fiscal year, unrestricted fund balance for the general fund was $41.7 million, or 19 percent of total general fund expenditures. OVERVIEW OF THE FINA CLL 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 -Vide financial statements, 2 Fund financial statements, and Notes to the basic financial statements. This report also contains both required and 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 serge 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, .1 - 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 ofWater 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. Fuad 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 Counter, 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. Govemmental. funds are used to account for essentially the same functions reported as g ver mental activities in the government -wide financial statements — i.., most of the County's basic services are reported in governmental funds. These statements, however, focus 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 -vide 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 Ting 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 f revenues, expenditures, and changes in fund balances for the general fund and capital projects fund, which are considered to be major funds. Data from the remaining governmental funds are combined into a single, aggregated presentation. Individual fund data for each of the noir-major govemmental 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 nonrnajr 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 MGM are used to report the same functions presented as business -type activities in the go emment- wide financial statements. The County uses enterprise funds to account for the operations of the Kulaimano Elderly Mousing 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 ofthese 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 certain required supplementary information, which is presented immediately following the notes to the basic financial statements. The combining statements referred to earlier in connection with n nr aj r governmental funds and budgetary comparison schedules for the nonmaj r special revenue funds are presented immediately following the required supplementary information. GOVERN ENT -WADE FINANCIAL ANALYSIS Condensed Statement of Net Assets June 3, 2012 and 2011 1 Primary Government Governmental Activities Business -type Activities Total 2012 2011 2012 2011 2012 2011 �r Assets: Current and other assets 252,075,426 220,271,120 S 1,0 6P7 $1,057,768 $ 253,111,513 221,328,558 Capital assets, net 917,249,344 536,674,103 1,167,154 1,193,198 918,416,498 837,867,301 Total assets 1,169,324,770 1,056,945,223 2,203,241 2,250,966 1,171,525,011 1,059,196,189 Liabilities: Long -tern liabilities outstanding 438,814,811 421,449,861 851,306 884,232 439,666,117 422,334,093 Other liabilities 48,424,315 29,058,381 395,021 423,100 45,819,336 29,481,481 Total liabilities 487,239,126 450,508,242 1,246,327 1,307,332 485,485,453 451,815,574 Net assets: Invested in capital assets, net f related debt 594,384,524 514,309,238 3 1 5,548 308,966 594,700,372 514,618,204 Restricted 48,360,223 51,840,697 185P148 185,087 45,545,371 52,025,784 Unrestricted 39,340,897 40,287,046 455,918 449,581 39,796,815 40,736,627 Total net assets 682,085,644 $ 606,436,951 $956,914 $943,634 $683,042,558 $607,380,615 1 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 ease of the County, assets exceeded liabilities by $683.0 million at the close of the most recent fiscal year. By far the largest portion of the County's net assets 7 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 Mill 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 aleft 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 7 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 $75.7 million during the current fiscal year, which was $20.1 million more than the increase during last fiscal year. Capital grants and contributions increased by approximately $47.9 million relating mostly to highways and streets and sanitation. The increase was offset and reduced by a decrease in real property taxes of approximately 1 .2 million. The County's net capital assets increased by $80.5 million due to the lame amount of capital improvement projects done by the County during the current fiscal year and infrastructure related assets that were contributed. See further discussion of the increase in capital assets on page 23. The County's long-term liabilities outstanding increased by $17.3 million percent) due primarily to the increases resulting from the County's decision to forgo the employer contributions relating to the pre -funding ofits postemployment benefits other than pensions and the issuance of new Bond Anticipation Notes. These increases were offset by principal payments on the General Obligation Bands and the State Revolving Fund loans from the prior year. See further discussion of the increase in long-term debt outstanding on page 24. _1_ Increase (decrease) in net assets 75,648,663 55,618,503 13,280 (41,990) 75,661,943 55,576,513 Net assets at beginning ofyear 606,436,981 550,818,47E 943,634 985,624 607,380,615 551,804,102 Net assets at end of year 682,x$5,644 606,436,981 956,914 943,634 683,042,558 S 607,380,615 Analysis of Changes in Net Assets Governmental activities. Governmental activities increased the County's net assets by $75.6 million or basically all of the total growth in net assets of the County. Total revenues increased b $26.5 million percent). The combined total revenues for both the Operating and Capital grants and contributions also increased by approximately $42.9 million, which related mostly to sanitation and highways and streets projects. This increase in grants and contributions revenue was offset by decreases in the other revenue sources. The most significant decrease of $15.2 million was in real property taxes, which was due to a slight decline in the value ofnt taxable real property as evidenced in the accompanying statistical tables. Total expenses increased by $6.4 million 2 percent), The major reason for the increase was due to the rising cost of labor. The cost of employees' health care increased specifically relating to future health benefits for employees by approximately $1.3 million and overall salaries and gages increased b 2.6 million as a result of a reduction in the number of furlough days that employees in several bargaining grits were required to take each month. �1 . Condensed Statement of Activities For the Fiscal Years Ended June 30, 2012 and 2011 Primary Government Governmental Activities Business-type Activities Total 2012 2011 2012 2011 2012 2011 Revenues: Program revenues: Charges for services $ 34,875,798 $ 34,044,547 393,464 372,599 $ 35,269,262 S 34,417,146 Operating grants and contributions 45,767,655 50,820,951 1312227 133,215 45,898,882 50,954,166 Capital grants and contributions 86,754,033 38,810,806 - - 86,754,033 38,8 l OP806 General revenues: Property taxes 209,894,427 225,055,099 - - 209,894,427 225,055,099 Other tars 29,255,027 265315,977 - - 29,255,027 26,315,977 Grants and contributions, unrestricted 19,074,105 19,533,165 - - 19,074,105 19,533P165 Investment earnings 230,804 609,617 5,641 2,997 236,445 612,614 Other 1,773,258 5,973,275 - - 1,773,258 5,973,275 Total revenues 427,625,107 401,163,437 530,332 508,811 428,155,439 4017672,248 Expenses: General government 56,115,599 53,439,428 - - 56, 115,599 53,439,428 Public safety 152,288,979 154,008,027 - - 152,288,979 154,008,027 Highways and streets 42,462,299 34,812,1 5 - - 4274627299 34PS 122165 Health, education and welfare 28,127,691 30,336,420 517,052 550P801 28,644,743 30,887,221 Culture and recreation 237412,948 222167,818 - - 23,412,948 22,167,8 18 Sanitation 35,049,546 3504,394 - - 35,049,546 35,604,394 Interest on long-term debt 14,519,382 15,176,6 2 - 147519,382 15,176,682 Total expenses 351,976,44 345,544,934 517,052 550,801 352,493,496 346,095,735 Increase (decrease) in net assets 75,648,663 55,618,503 13,280 (41,990) 75,661,943 55,576,513 Net assets at beginning ofyear 606,436,981 550,818,47E 943,634 985,624 607,380,615 551,804,102 Net assets at end of year 682,x$5,644 606,436,981 956,914 943,634 683,042,558 S 607,380,615 Analysis of Changes in Net Assets Governmental activities. Governmental activities increased the County's net assets by $75.6 million or basically all of the total growth in net assets of the County. Total revenues increased b $26.5 million percent). The combined total revenues for both the Operating and Capital grants and contributions also increased by approximately $42.9 million, which related mostly to sanitation and highways and streets projects. This increase in grants and contributions revenue was offset by decreases in the other revenue sources. The most significant decrease of $15.2 million was in real property taxes, which was due to a slight decline in the value ofnt taxable real property as evidenced in the accompanying statistical tables. Total expenses increased by $6.4 million 2 percent), The major reason for the increase was due to the rising cost of labor. The cost of employees' health care increased specifically relating to future health benefits for employees by approximately $1.3 million and overall salaries and gages increased b 2.6 million as a result of a reduction in the number of furlough days that employees in several bargaining grits were required to take each month. �1 . Expenses and Program Revenues -- Governmental Activities Year Ended June 30,2012 $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 Revenue by Source — Governmental Activities Year Ended June 3 0, 2012 Grants and Investment earnings, contributions not $230,.04 restricted to specifi , bt her tax e s, programs . 1 Q7'4 105 9,55,7 t Propertytaxes, $2098941427. Other, $1,773,258 Chargesfor services, $34,875,798 Opratinggrants and contributions, $45,767,655 Capital grants and contributions, $86,754,033 '. 0 ISR� ; N Revenue by Source — Governmental Activities Year Ended June 3 0, 2012 Grants and Investment earnings, contributions not $230,.04 restricted to specifi , bt her tax e s, programs . 1 Q7'4 105 9,55,7 t Propertytaxes, $2098941427. Other, $1,773,258 Chargesfor services, $34,875,798 Opratinggrants and contributions, $45,767,655 Capital grants and contributions, $86,754,033 The charts above illustrate the Counter's governmental expenses and revenues by function, and its revenues by source. As shown, public safety is the largest function in expense (43 percent), followed by general government (16 percent) and highways and streets 12 percent). General revenues such as property and other taxes are not shorn by program, but are effectively used to support program activities countywide. For governmental activities overall, without regard t programs, property taxes are the largest single source of funds 49 percent), followed by capital grants and contributions (20 percent) and operating grants and contributions 11 percent). Business -type activities. Business -type activities increased the County's net assets by $13,280 versus a decrease of $41,990 in the prior year. Expenses for health, education and welfare account for all of the $517,,052 of expenses. Charges for services were $393,464, operating grants and contributions were $13 1,227 and investment earnings were $5,641. Revenues increased by $21,521 due t $21,525 increase in rental receipts. Expenses decreased $33,749 percent) due to decreases in general and administration expenses of $29,739 and in lease expense of $18,364, which were offset by an increase in utilities expense of $19,275. 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. Governmentalfunds. 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 government's net resources available for spending at the end of the fiscal year. As of the end ofthe current fiscal year, the County's governmental funds reported combined ending fund balances of $146.4 million, a decrease of $12.6 million in comparison with prior year. Approximately 47 percent of this total amount $.3 million) constitutes unrestricted fund balance. The unrestricted portion of the fund balance is comprised of 1 $48.6 million in c m itted fund balance, 2 $21.8 million in assigned fund balance and negative $2.1 million in unassigned fund balance. The remainder of the fund balance is divided between $3.3 million in nonspendable fund balance for inventory and $74.7 million in restricted fund balance. Approximately 79% of the restricted fund balance is due to restrictions relating to highways, streets and abandoned vehicles ($32.9 million) and debt service ($26.2 million). The general fund is the chief operating fund of the County. At the end of the current fiscal year, unrestricted fund balance ofthe general find was $41.7 million, while total fund balance increased t $48.7 million. As a measure ofthe 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 19 percent of total general fund expenditures, while total fund balance represents 22 percent ofthat same amount. The fund balance of the County's general fund increased by $4.1 million during the current fiscal year as compared to an increase of $.1 million in the prior year. Key factors in this decrease from last year's amount are as follows: •A decrease of $8.3 million 4 percent) in real property taxes, which was mostly due to lower collections resulting from the slight decline in the value of net taxable real property as evidenced in the accompanying statistical tables. -21- decrease in intergovernmental revenue of $6.2 million 11 percent). The most significant causes of the decrease were due to declines in public safety operating grants $3.1 million) and in health, education and welfare capital grants ($3.0 million). A net decrease of $15.7 million percent) in total expenditures for the general fund which is primarily the result of the County's decision to forge the employer contributions relating t the pre -funding of its post rnpl anent benefits other than pensions that it had made for the previous four fiscal years. The fund balance of the County's capital projects fund decreased by $20.5 million during the current fiscal year. The decrease is primarily due to the combined total of the fund's main revenue source oflong-terra debt financing, which consists of state revolving fund loan proceeds ($4.6 million), intergovernmental revenue ($30.0 million), and transfers in $3.7 million being less than capital and debt service expenditures ($59.3 million) for the current fiscal year. Although the fund balance ofthe capital projects fund was $29.5 minion at the end of the current fiscal year and the total unrestricted portion was $2.2 million, the unassigned portion of the unrestricted fund balance was a negative $10.2 million. This was due to a change in the County's procedures regarding the issuance of bonds, in that the County defers the issuance of bonds until the funds are actually needed even though the project will be allotted so that work may begin and Zvi11 instead issue Bond Anticipation Notes. As of June 30, 2012, these notes are reflected as a current liability in the fund because the legal steps regarding the issuance of the bonds to pay off these notes have not been completed at the time the audited financial statements are being issued. The debt service funds consist of the Bond Redemption Fuad and the Interest Fund. These funds have combined total fund balances of $26.2 million, all of which is restricted for the payment of debt service. The net decrease in the combined fund balances during the current year in the debt service funds was $0.5 million 2 percent). Proprielaryfunds. 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 $564,659, and the unrestricted net deficit of the Ouli Ekahi Affordable Housing Project uli El ahi amounted to $108,741. The net assets for I ulaimano decreased by $22,032 and the net assets for Ouli Ekahi increased by $35,312. Other factors concerning the finances of these two funds have already been addressed in the discussion ofthe County's business -type activities. GENERAL FUND BUDGETARY 1UGHLIGHTS Differences between the original budget and the final amended budget were primarily the result of a $11.0 million increase in appropriations, most of which (94%) 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 $.9 million less revenues than expected and $26.3 million less expenditures than appropriated. This is primarily due to the following factors: $5.3 million negative variance in intergovernmental revenue, which was made up almost entirely of the decrease in federal grants. -22- 0 $.5 million of the unspent appropriations is related to salaries and wages. The variance is due primarily to unfilled vacancies and continued efforts by each department to control payroll costs during the budget year due to the tough economic conditions facing the County. The following functions are responsible for the majority of the variance: public safety($3.9 million), general government $1.8 million) and culture and recreation ($0.7 million). • $2.3 million was unspent by Mass Transit regarding the purchase of new buses because the federal grant that they received was lower than originally anticipated. 0 $1.9 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. • $2.5 million is due to the fact that the increase in health premiums for employees' was lower than originally anticipated. CA ITAL ASSET AND DEBT A MMISTR TI 1 Capital assets. The County" s investment in capital assets for its governmental and business -type activities as of ,dune 30, 2012 amounts to $918.4 million (net of accumulated depreciation). This investment in capital assets includes land and improvements, buildings and improvements, equipment, casements, 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 1 percent. Major capital asset events during the current fiscal year included the following: • Construction continued on the Ane Keohol alole Highway; construction in progress as of the end of the current fiscal year increased by $13.3 million to reach a total of $28.9 million, which was transferred to Infrastructure. • 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 $5.0 million to reach a total of$14.0 million, of which the portions relating t the completed phases were transferred to Building and Improvements. 0 Construction continued on the Honokaa large capacity cesspool project, construction i progress as of the end of the current fiscal year increased b $3.9 million to reach a total of $.9 million. 9 Construction continued on the Mal alei Fire Station; construction in progress as ofthe end of the current fiscal year had increased by $5.4 million to reach a total of $6.1 million. 0 Construction continued on the Panaewa Park New Covered Play Courts; construction in progress as of the end of the current fiscal year had reached $2.4 million, which was transferred to Buildings and Improvements. 0 Construction began on the Hawaiian Ocean view Estates RON. . water Facilities Project; construction in progress as of the end of the current fiscal year had reached $6.0 million, which was transferred to Buildings and Improvements. 0 $31.8 million of dedicated roads were received by the County in the current fiscal year. 0 $.3 million of sever systems were dedicated to the County in the current fiscal year. -23- Land and improvements Infrastructure assets Ground and site improvements Buildings and improvements Easements Equipment Construction work in progress Total Capital Assets (net of depreciation) June 3 , 2012 and 2011 Governmental Activities 2012 2011 129,569,750 $ 107,682,068 246,938,042 204,755,865 455,481,924 387,259,565 3,232,428 1,649$04 50,089,791 52,130,844 31,937,409 83,196,457 17,249,344 836,67471 3 Primary Government Business -type Activities 2012 2011 753,877 753,877 67,580 711334 329,730 354,345 15,967 13,642 12167,04 12193,1 Total 2012 2011 130,323,627 108,435,945 246,938,042 204,755,865 67,580 717334 455,811,654 387,613,910 37232,428 1,649,304 50,105,758 52,144,486 31,937,409 83,196,457 918,416,498 $ 837,867,301 Additional information on the Counter's capital assets can be found in note 6 to the basic financial statements. Long-term debt. Dong -term debt is primarily comprised of bonds of $281.8 million, State Devolving Fund loans of $29.1 million and general obligation bond anticipation rotes . million. At the end of the current fiscal year, the County had total bended debt outstanding of $281.8 million. This entire amount was comprised of general obligation bonds which are backed by the full faith and credit of the County. The County's total bonded debt decreased by $19.8 million 6.6 percent) during the current fiscal year due to 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 M dy's for general obligation debt. State statutes limit the amount of general obligation debt the County may issue up 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 $3.7 billion, which is in excess f the County's outstanding general obligation debt. Currently the County's outstanding debt represents 8 percent of our debt limitation. 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. C N AHC FACTORS AND NEXT YEAR'S BUDGETS AND RATES The unemployment yment rate for the County for the current fiscal year is at 9.2 percent, which represents a slight decline from last year's rate for the same period of 9.5 percent. The number of visitors to the County for the current fiscal year was 1,371,073, which represents a 4 percent increase from the previous year's count of 1,3 22,2 89. More importantly, spending growth for this sector has been even stronger than the actual arrivals. Astronomy continues to be a major factor in the success of the County's economy with ars 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 ofthe TMT atop Mauna Kea is progressing as it is in its final stages of approval. 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 current annual operating cost of the observatories that sit atop Mauna Idea is approximately $75.3 million, which includes the employment of over 500 county based workers. ers. The construction industry continues to serve as the lagging sector of the economy but there are recent signs that this may change soon. Although, construction jobs remain below that of peals times, private building permits which serve as a better indicator of the future shows encouraging results. • Several industries in the County will reap the benefits from BJH-Hil 's June groundbreaking ing for Phase I of the University Village Student Housing Project, At an estimated 2 million, the project will house just over 300 students and sit on a 3 3 acre parcel fronting the University main entrance. The County's agriculture sector generally offers a positive economic view this year, which is most evident in the macadamia and coffee production. In west Hawaii, the forecasted nut production is expected to increase by about 15% with levels in East Hawaii remaining the same as last year. Prices overall are anticipated to remain consistently strong at levels comparable to last year or possibly even higher. Coffee production on the island overall is expected to increase by 10% and prices are expected to remain stable. These factors were considered in preparing the County's budget for the 2013 fiscal year. At the end of the current fiscal year, unrestricted fund balance in the general fund was $41.7 million. The County has appropriated $18.0 million of this amount for spending in the 2013 fiscal year budget and it is included in the assigncd 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 ofthe information provided in this report or requests for additional information should be addressed to the Director f Finance, County of Hawai` i, 25 Aupuni Street, Shite 2103, Hilo, ai` i 96720. This page intentionally left blank. 26 BASIC FINANCIAL STATEMENTS -27- COUNTY Y Off' HAWAII[ Statement of Net Assets Assets Current assets; Cash and cash equivalents (notes 3 and 14 Restricted cash and cash equivalents (note 3 Investments (notes 3 and 1 Restricted investments (note 3 Receivables, net; (note 4 Receivable from improvement district (notes 4 and 10 Internal balanus (note 5 Inventories Prepaid expenses Other Total current assets Investments (note 3 Restricted investments (notes 3 and 14 Restricted cash and cash equivalents (note 3 Receivable from improvement district, excluding current portion (notes 4 and 1 0 Deferred charges Capital assets (notes 6, 5 and 14: [utility plant in service, net Infrastructure assets, net Ground and site improvements, net Buildings and improvements,, net Equipment, net Easements, net Construction work in progress Land and improvements Total capital assets, net Total noncurrent assets Total assets June 30, 2012 Primary Government Governmental Business -type Component A 4.ti e. r, 1l r. ■;rte*■r. r, art ..1 T Ira4 10,442,124 S 391,951 80,134,775 18,845,331 501693,240 37,914 50,731,154 - 9,160,002 401,08 0 9,561,012 5,93 5,775 23,325,561 - 23,325,561 -- 49,326,271 4,156 49,3311,127 7,420,277 61,161 - 611,168 - 15350 (12,350) - - 3,304,51 - 3,3041,551 151035258 - 1,621 12,621 155,049 7623868 - 7625865 - 217,077,85 836,072 217,9135907 333459,690 6,452,722 - 6,452,722 - 25,8 15,511 - 25,815,511 5,3493930 - 200,015 200,0 15 -- 2,729,358 - 2,729,358 - - _ - 3,125,475 219,014,522 246,931,042 - 246,93 8,042 - - 67,5 80 67,510 - 455,41 1,924 3291,730 455,811,654 - 50,0,'71 15,967 50,1 05,758 - 3,232,428 - 3,232,428 - 31,9"7,409 - 315937,409 46,237,024 1295569,750 753,877 130,3239627 35570,659 917,249,344 1,167,154 918,4161498 268,8223205 9529246,935 1,367,169 953,614,1 04 277,297,610 1,169,324,'7"70 23203,241 1,171,525,011 3 1 0,757,300 -28- (Continued) COUNTY OF HAWAII Statement of Net Assets Liabilities Current liabilities: Accounts payable and accrued liabilities Accrued payroll Deferred revenue (note 7 Interest due on long -torn debt Bonds and loans payable, current portion net motes 10 and 14 Compensated absences, current portion (note 10 Claims and judgments, current portion motes 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 Other mote 13 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. June 3, 2012 (Concluded) Primary Goveniment Governmental Business -type Component Activities Activities Total Unit 159423,389 3913571 15,8143960 $ 3,832;912 7,678,607 - 7,678,607 13050,040 2,503,918 3,450 25507,368 - 6,03 8,265 6,03 8,265 1,079,222 57,381,678 35,443 57:0417J21 7,757,218 7,835,700 - 7,835,700 426,626 2,317,306 - 2,317,306 34,897 1,349,916 - 1,349,91 - 200757 - 200,757 - .. _ - 577,870 16,780,13 6 - 16,780,13 -- 117,509,672 430,464 117,9403,136 14,758,785 2905837,497 81 5,863 291,653,360 533219,576 245744,879 - 24,744879 1,153,470 8,129,801 - 8,129,80 1 121,1 3 2,453,702 - 2,4535702 - 21,223,243 - 21,223,243 -- - - - 11583,953 - - 15,596,808 2253405332 - 22,340,332 - 369,729,454 815,863 370,545,317 71,744,910 487,239,126 152465327 488,485,453 865503,695 594,384,524 3155848 594,700,372 213,125,341 1,04,694 - 15004,694 - 26,152,9 185,148 263338,057 - 16:597,972 16,597,972 - 2, 18,242 - 2,5185242 - 2,06,406 - 217086,406 - 3,340,8"7 4555918 39,796,815 11,128,264 $ 682,085,644 $ 9569914 $ 68350429558 $ 224,253,605 -29- COUNTY Y Off" HAWAII Statement of Activities For the Fiscal Year Ended June 3, 2012 Functions/Pro am 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: 'mater (note 1 Program Revenues Operating Capital Charges for Grants and Grants and Fnses Services Contributions Contributions 56,115,599 $ 2,306,855 152,288,979 5,1365278 4294621,299 10,544,711 28,127,691 454,913 235412,948 101,195 35,049;546 14, 831,846 14,5 19,3 2 - 1,976,444 34,875:798 3,6691,761 $ 7,6925048 19,05602 3,840,122 2,193,469 56,283,086 19,769,528 1,840,873 107,539 2,182,876 970,756 14,91 5,028 45,767,655 86,7545033 517,052 393,464 131,227 $ 3525493,496 $ 35,2695262 45,898,882 $ 86,7549033 525105,064 $ 47,5 14,463 $ - $ 3,1621508 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 It assets, end of year See accompanying notes to the basic financial statements. -30- Net (Expense) Revenue and Changes in Net Assets Primary G veru ent ve=enta1 Business -type Component Activities Activities Total Unit (425446,935) (42,446,935) - 124,255,977 - (1245255,977) - 26,55 3967 - 2635583967 - 6, 62,377 - (6,062,377) - 19,521,33 - (19,521,338) - 4,331,16 - (4,331,916) - 14, 19,3 2) (143 19,3 2 - (184,578,958) - (184,578958) - 7,639 75639 - 184, 5 78,95 7,639 184,571,319 ,. 124289093) 209,894,427 - 209,8945427 - 9, 96,715 - 9,896,715 - 11,65,112 - 11,065,112 - 8,293,2 - 8,293;200 - 195074,105 19,074,105 - 23P4 5,641 236,445 226,785 1,773,25 - 1,773,25 8- 2605227,621 55641 260,2335262 2261J785 75,648,663 13,280 75,661,943 (11,2013308) 606,436,981 9435634 60753803615 2255454,913 6829085,644 956,914 $683,042,558 2245253,605 _1_ COUNTY OF HAWAII Governmental Funds Balance Sheet June 30, 2012 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 (roe 4 Inventories Other Total assets Liabilities and Fund Balances Liabilities: Accounts payable Accrued payroll Due to other governmental funds (note 5 Deferred revenue (note 7 Bond anticipation note payable (note 10) Other Total liabilities Fund balances: No n s p endab l e: Inventory Restricted for: Debt service (note 10 Highways, streets and abandoned vehicles 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 Parrs and recreational projects Zoning change impact mitigation (fair share) Other Assigned to: Subsequent }rear's budget Other [unassigned Total fund balances Total liabilities and fund balances See accompanying noes to the basic financial statements. Other Total Capital Governmental Governmental ieneral Projects Funds Fund 35,865,540 $ 26,265,902 69,004,622 $ 131,1365064 12,212,724 49,141,072 3,400,000 64,753,796 24,792,447 1,025,077 25652,678 28,470,202 1,065,980 - 210,918 1,276,898 - - 1,350 1,350 9,837,366 10,042,009 976,694 20,856,069 3,304,551 - 1 9V P7CP7 - zCr% 7 1 7 3,304,551 r7cel Oe o 2,311,882 $ 9,655,769 3,4551,738 15,4231,389 6,667,776 - 11,010,831 736785607 62,859 6993554 5143485 1,276,898 26,343X9 940,558 2,749,932 30,034,299 33, - 33,000,000 3,069,085 12,629,409 130813642 1637805136 38,455,411 56,925,290 82812,628 1042193,329 353045551 3,304,551 - - 26,152,909 26,152,909 16,282,701 161597,972 32,880,673 2,518,242 -- 2,5 18,242 1,175,716 11,089,440 910,690 13,175,846 4,883,803 - - 4,883,803 41,9441,925 -- 4,944,925 3,448,283 35448,283 - - 453325253 4,332,253 - - 13,555,472 1355553472 152825117 - - 1,282,117 - 2,873,725 2,722,286 5,596,0 11 - 3,923,963 86,785 4,1,748 - 2,995,486 - 2,9955486 600,030 2,641,772 286,095 3,527,897 18,3,150 - ,837,693 - 8,1'76,'72'7 10,258,317) 48,726,954 292548,770 87,182365 S A2 06 3 -32- 181,003.1150 - 3,83703 - (250815590) 6&092745 745 _146,368,469 6.905.373 250,561,798 COUNTY OF HAWAH Reconciliation of the Governmental Funds Balance Sheet to the Statement of1Net Assets June 30, 2012 Total fund balances - governmental funds 14633685469 Amounts reported for govenunmental 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 129,569,750 Infrastructure assets, net 246,93 8,042 Buildings and improvements, net 455,48 1,924 Equipment, net 50,089,791 Easements, net 3,2323428 Construction work in progress 3139371409 Total capital assets (22,340,332) 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, (vete 7 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 parable, net of receivable from improvement district (312,428,649) Interest on long -teen debt (6,038,265) Capital leases (3,803,1 18 Compensated absences (32,5805579) Claims and judgments (10,447,1 7 Landfill costs parable (21,424,010) Other Postemployment Benefit Obligation PEB (22,340,332) Total long-term liabilities Net assets of governmental activities See accompanying rotes to the basic financial statements. 917;249,344 27,530,381 (409,062,550) 682,085,644 COUNTY F HAWAII Governmental Funds Statement of Revenues, Expenditures, and Changes in Fund Balances For the Fiscal Year Ended June 30, 2012 Revenues Property taxes Public service company taxes Fuel taxes Public utility franchise taxes Licenses and permits Intergovernmental Charges for services e Investment earnings Other Total revenues Expenditures Current: General government Public safety Highways and streets Health, education and welfare Culture and recreation Sanitation Pension and retirement contributions mote 13 Employees' health insurance Other Debt service: Principal Interest Capital outlay Total expenditures Excess (deficiency) of revenues over (under) expenditures Capital General Pro j eet s Other Total Governmental Governmental Funds Funds $20852301,486 - - $208,2305486 958961,715 - - 9,896,715 - - 8,2935200 8,293,200 - - 11 ,065,112 11,065,112 6,329,639 - 9,459,964 15,7893603 51,582,697 29,968,100 191316,545 1001,867,342 2,950,352 -- 135934,994 16,885,346 242,352 155,445 7,962 405,759 1,912,465 473,198 15815,815 4,201,478 2811,144,706 30,596,743 63893,592 375,6355041 349820,684 2675094 35,087,778 98,5845723 5,938,867 104:5231590 2,7975464 - 14, 540,212 17:0337;676 6,7551,112 - 16993,666 23,748,778 15,906,268 - 856,367 16,762,635 9705292 - 28,540,492 2995105784 23,843,236 - 3,929,449 27,772,685 23,"7"72,419 - 2,129,549 25,9013968 3,040,601 - 1,142,732 4,183,333 225,817 - 24,6083315 24,834,132 295325 85,005 14,9175538 15,0313868 1155725257 59,211,493 4365576 715220,326 22233182198 59,296,498 11433002857 395,915,553 58,8265508 ^(28,699,755) (50,4073265) X20,280,512) -34- (Continued) COUNTY OF HAWAII Governmental Funds Statement of Revenues, Expenditures, and Changes in Fund Balances For the Fiscal Year Ended June 3, 2012 Other Financing Sources (Uses) Sale of assets Increase in capital leases (notes 8 and 10 State Revolving Fund loans (note 10 Transfers in (note 5 Transfers out (note Total other financing sources (uses) Net change in fund balances Fuad balances at beginning of year Increase in reserve for inventories Fuad balances at end of year (Concluded) Other Total Capital governmental Governmental General Projects Funds Funds 152,702 $ $ - $ 152,0 9275591 - 1,593,41 2,521,009 - 4:0568:0756 - 4,568,756 3,663,467 56,3075187 59,970,654 X56,307,187) - 356633467 (59,970,654) (55,226,894 83232,223 5452375138 7,242,467 3,5991614 (20,467,532) 3,829,873 (13,038,045) 44,658,150 50,016,302 64,262,872 158,937,324 469,190 - 469,190 48,7262954 $ 293548,770 $ 68,092,745 14653685469 See accompanying notes to the basic financial statements. 35 COUNTY OF HAWAII Reconciliation of the Change in Fund Balances of Governmental Funds to the Statement of Activities For the Fiscal Year Ended .lune 30, 2012 Net change in fund balances - total governmental funds Amounts reported for governmental activities in the statement of activities are different because: Capital outlays are reported as expenditures in governmental funds. However, in the statement of activities, the cost of capital assets is allocated over their estimated useful lives as depreciation expense. In the current period, these amounts are: Capital outlay 70,373,656 Dedicated and contributed property 42,045,951 Depreciation expense and loss on disposals (31,844,366) 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 f net assets. In the current period, proceeds were received from: State Revolving Fuad loans (4,568,756) Capital leases (2,521,009) Total debt proceeds Repayment of long-term debt is reported as ars expenditure in governmental funds, but the repayment reduces long -terra liabilities in the statement of net assets. In the current year, these amounts consist f: Bond principal retirement 19,434,340 State Revolving Fund loan repayments/forgiveness 12,073,3 9 Capital lease payments 1,774,473 Total long-term debt repayment Because some revenues will not be collected for several months after the County's fiscal year end, they are not considered "available" avenues and are "deferred" in the governmental funds. Unearned revenues increased by this amount this year. -36- 13,03 8,045) 80,575,241 (7,0895765) , 33,282,207 2,092,126 (Continued) COUNTY OF I AWAH Reconciliation of the Change in Fund Balances of Governmental Funds to the Statement of Activities For the Fiscal Year Ended June 30, 201 Some items reported in the statement of activities do not involve current financial resources and therefore are not reported as expenditures in gov mment l funds. These activities are: Increase in inventories Increase in Other P st mpl yment Benefit Obligation PE Decrease in compensated absences Decrease in claims and judgments Increase in landfill closure/post losure care costs Amortization of premium from bond issuance Amortization of deferred amount on refunding of bonds Net decrease in accrued interest Net additional expenses Change in net assets of governmental activities See accompanying notes to the basic financial statements. -37- 469,190 (22,461,100) 1,271,293 450,030 (415,000) 384,1"71 (248,721) 377,036 (Concluded) 75,648,663 COUN'T'Y OF HAWAH General Fund Statement of Revenues, Expenditures, and Charges in Fund Balance - Bulget and Actual (Budgetary Basis) For the Fiscal Year Ended June 3 0, 2012 (Continued) -38- Actual Variance Original Final (Budgetary Positive Budget Budget Basis)....(Negative) Revenues; Taxes and assessments: Property taxes 207,300,000 207,400,000 208,230,486 8301,486 Public service company takes 9,100,000 99 100,000 9,896,715 796571 Total taxes and assessments 216,400,000 2169500,000 218,127,201 136275201 Licenses and permits Nonbusiness licenses and permits 35018,689 3,018,689 3,224,716 206,027 Business licenses I,516,743 13516,743 1,598,196 81,453 Street use 1 X410,000 1,480,000 1,5065 727 262727 Total licenses and permits 650153432 6,015,432 6,329,639 314207 Intergovernmental: Federal: Programs for the aged 2,313,614 2,343,614 1,647,440 (696,174) Community development block grants - 23520,236 2,520,236 - HOME program grant -- 2,925,000 2,925,000 - Law enforcement 1,596,500 3,982,438 3,430,234 (552,204) Other 4,2825452 6,436,9 17 3,35 8,239 (3,078,678 Total federal 811929566 18,208,205 13,1181,149 _ (493275056) State: State General Fund - Act 185, SLID 1990 17,298,000 17,2911000 18,686,406 1,388,406 Emergency medical services 14,3583592 14,374,308 14,3743308 Other 6,701,357 7,047,601 45651,076 (2,396,525} Total State 3853575949 38,7199909 37,711,790 (1,008,119) Total intergovernmental revenue 46,550,515 56,928,114 51,592,939 _J55335,175) Charges for services: General government 4,948,025 4,9485025 5,689,615 741,590 Culture and recreation 1,061,400 1,061,400 869,145 192,255) Highways and streets 91%050 919,050 774,680 (144,370) Public safety 94,000 945000 111,201 17,201 Total charges for services 79022,475 7,022,475 754443641 4225166 Fines and forfeitures 153881,500 153889500 872,118 _(516,382' Rents 190,545 1905545 1503887 (39,658) (Continued) -38- COUNTY OF HAWAII General Fund Statement of Revenues, Expenditures, and Changes m Fund Balance - Budget and Actual (Budgetary Basis) For the Fiscal Year Ended June 30, 2012 Public safety: Police department 52,140,405 53,897,623 Actual variance Fire department Original Final (Budgetary Positive Prosecuting attorney Budget Budget Basis) (Negative) Revenues (continued): 1,919,13 8 13915,531 1,7515891 163,647 Interest and penalties 517,820 517,820 $ 2263833 (290,987) Miscellaneous 5,1 045818 5,3965200 5,262,878 133,322) Total revenues 2839190,105 29319592086 29050073136 3595155 Expenditures: 1,982,500 1,9825500 159825500 - Current: 10236823499 1 05,3 85,221 96,355,360 9,295861 `rural government: Finance M122,771 10,379,124 8,687,482 1,691,642 General government building 5, 35,294 5,028,994 4,2522,670 776,324 Legislative 2,920,450 39270,450 3,141,691 128,759 Automotive equipment 5,630,649 5,628,549 41,8165928 8115621 Lav 2,5 87,45 8 2,5 87,458 202655566 321,892 Research and development 3,2291731 3,271,594 35079,864 191,730 Planning and zoning 2,7395337 2,754,750 2,481,912 272,838 Mayor's office 1102749491 1,413,115 1,134,728 2785387 Engineering 1,185,333 1,187,433 1,108,919 785514 Information technology 1,476,741 1,476,741 1,222,804 253,937 Human resources 1,722,935 1,732,877 1,551,755 181,122 Public works administration 1,2533203 1,263,103 1,196,045 67,058 Elections 7'75,638 775,638 619,280 156,358 Legislative auditor 841, 102 766,1 2 602,385 163,717 Total general government 405795,133 41,5355928 36,162,029 5,373,899 Public safety: Police department 52,140,405 53,897,623 49,2562,137 4,641,486 Fire department 35,792,795 365058,013 33,889,836 2,168,177 Prosecuting attorney 7,305,990 7,9545876 6,704,376 1,250,500 Protective inspection 1,919,13 8 13915,531 1,7515891 163,647 Liquor control 1,469,143 1,504,143 1,185,892 3185251 Flood control 437,440 437,440 421,945 15,495 Civil defense agency 1,635,088 1,635,088 1,162,783 472,305 Animal control 1,982,500 1,9825500 159825500 - Ttal public safety 10236823499 1 05,3 85,221 96,355,360 9,295861 Highways and streets: Klass transit 3,9331565 5,7192878 350085677 2,7115201 (Continued) -39- COUNTY OF HAWAII General Fuad Statement of Revenues, Expenditures, and Changes in Fund Balance - udget and Actual (Budgetary Basis) For the Fiscal Year Ended Juno 3 0, 2012 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 Inters scion 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 Actual Variance Original Final (Budgetary Positive Budget BudSot Basis) (Negative) 354231,535 $ 3,473,535 3,053,173 4203362 2,826,076 25904,320 2,220,474 6833846 58,500 58,500 50,417 8,083 1,500,000 1,500,000 14500,000 - 365,297 360,617 324,233 36,384 128,249 1285249 123,285 4,964 8,301,657 8,4253221 7,2715582 131539639 263,726 260,726 197,723 63,003 6,790,279 6,955,799 6,702,039 253,760 2,2545537 21254,537 2,205,633 48,904 2,297,694 2,298,783 2,093,437 205,346 1,01 1,393 1,039,893 9595526 803367 23148523 1,92'7,'738 1,708,279 219,459 6375682 648,842 609,276 39,566 520,528 520,528 339,685 180,843 222,001 225,001 203,733 21,268 536,321 536,321 445,157 915164 165682,399 16,668, 168 15,464,488 1,203,680 9655358 965,358 935,012 30,346 24,517J27 2435175127 2235983082 1,919,045 25,871,043 2558719043 2333475082 235235961 30,000 30,000 305000 4,696,022 456685085 233419641 22326444 2289474,803 23357863029 20734835953 26,302,076 -40- (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, 2012 Expenditures (continued): Capital Outlay: Community Development Block grants ]) HOME Program Total capital outlay Total expenditures Excess of revenues over expenditures Other financing sources (uses): Transfers in: Disaster/Emergency Fund Transfers out. - Housing ut:Housin Fund Solid waste Fund Golf Course Fuad Severer Connection Doan Fund Sewer Loan Fuad Self Insurance Fund Disaster/Emergency Fund Public Access, Open Space, and Natural Resources Preservation Fund Budget Stabilization Fuad Debt Service Fuad Total transfers out Total other financing uses Excess (deficiency) of revenues and other sources over (under) expenditures and other uses Fuad balance at beginning of year Fund balance at end of year See accompanying notes to the basic financial statements. (Concluded) Actual Variance Original Final (Budgetary Positive Budget Budget w ------Basis) -((Negative) - 2,595,236 2,595,236 - 2,992,519 25992,519 -- 535875755 5,587,755 - 22,474,803 239,3735784 213,0715708 26,302,076 54,7159302 5435859302 76,935,428 22,350,126 200,000 2001000 - (838,384) 83 8,3 84) - 18,158,708) 18,158,708) 1 8,15 8,708) .. (315,666) (315,666) (315,666) - (5,000) (50,000) (50,000) - 50500 (50,000) 50po) .. (I p03000) I , op) I p01000) (10%000) 10%00) (1005000) - (4,146,000) (41,2463000) 4,1 64,610) 811,390 (2,777,397) (2,777,397) (2,777,397) - - (4132153147 (41,215,147) --.....(41,215,147 - 68565153 (68575 1,302) (68,669,912} 815390 (68,651,302) (6855519302} (68,469,912) 815390 I3,936,00 (133966,000) 81465,516 22,431,516 44,65 8,150 44,65 8,150 4456585150 - 3097229150 30,692,150 53,123,666 22,431,516 -41- COUNTY Y F 14AW II Proprietary Funds Statement of Net Assets June 30, 2012 Assets Current assets: Cash and cash equivalents (note 3 Restricted cash and cash equivalents (note 3 Investments (note - Irnpret fund (note 3). Receivables, net (note Prepaid expenses Total current assets Noncurrent assets: Restricted cash and cash equivalents (note Capital assets (note 6; Lard 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: Motes 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. -42- Business -typo Activities - Enterprise Funds Kulaimano Ouli El ahi Elderly Affordable Housing Housing Fro ' e t Pro j ecc t Total 1671,168 2241,633 S 391,801 12,120 25,794 37,914 401,080 - 4015080 50 100 150 977 3,879 4,856 1,621 -- 1,621 583,016 254,406 837,422 1851,148 143867 200,0 15 511,000 5033877 1 0 14,877 1,23 9,032 - 1;239,032 (1,086,755) - 1 086,755 6635277 5035877 1,167,154 848,425 5185744 1,367,169 1,431441 7732150 252045591 3,431 343,191 347,322 1,350 - 1,350 - 71,729 73729 12120 24,400 36,520 1,456 15994 35450 355443 - 3 5,443 53,800 378,014 431,814 8155863 - 815,863 86903 378,014 1,247,677 (188,029) 503,877 315,848 185,148 - 185,148 5645659 108,741 4555918 561,778 3955136 956,914 COUNTY OF HAWAII Proprietary Funds Statement of Revenues, Expenses, and Changes in Fund Net Assets For the Fiscal Year Ended .dune 30, 2012 Operating revenues: Rental receipts from tenants Rental subsidy from federal government - HUD Laundry receipts Other Total operating revenues Operating expenses: Utilities General and administration Maintenance and repairs Lease expense Depreciation (note 6 Total operating expenses Operating income Nonoperting revenues (expenses): Investment income (loss) Interest expense Total n noperating expenses Change in net assets Net assets, beginning of year Net assets, end of year See accompanying notes to the basic financial statements. -43- Business -type Activities - Enterprise Funds Kulaim no Ouli E1 ahi Elderly Affordable Dousing Mousing Pro j eet Project Total 116,263 270#362 $ 386,625 131,22"7 - 1313227 3,195 - 3,195 - 3,644 3,644 2501,685 274,006 524,691 405941 489096 89,037 91,015 105,486 196,501 52,512 56,354 10806 - 28,755 28,755 321,907 - 32,907 217,375 2383691 4565066 33 3 10 35,315 683625 5,644 3 5,641 (60,986) - (60,986 (559342) - - 3 (55,345) (22,032) 35,312 139280 583,810 3593824 943,634 $ 561,778 3953136 9569914 COUNTY OF HAWAII Proprietary Funds Statement of Cash Flows For the Fiscal Year Ended June 30, 2012 Business -type Activities - Enterprise Funds Iulaimano Oull Eahi Elderly Affordable Housing Housing Project Project 'Total Cash Flows from Operating Activities Receipts from tenants 118,335 273,437 391,772 Receipts from federal government - HUD 131,227 - 131,227 Payments to suppliers for goods and services 186, 1 96 (268,000) (454,196) Net cash provided by operating activities 639366 51437 68,803 Cash Flows from Capital and Related Financing Activities Principal paid on notes payable (32,926) - (323926) Interest paid on notes payable (605986) (60,986) Purchase of capital assets (6,863) - 6,863 Net cash used in capital and related financing activities (1 009775) - 100,775) Cash Flows from Investing Activities Proceeds from maturities of investments 200,000 - 200,000 Interest on investments 45896 3 4,893 Net cash provided by {used Ln) investing activities 204,896 2045893 Net increase in cash and cash equivalents 167,487 5,434 172,921 Cash and cash equivalents at beginning of year including restricted cash and cash equivalents) 196,999 259,960 456,959 Cash and cash equivalents at end of year (including restricted cash and cash equivalents) $ 3645486 265,394 $ 629,880 Reconciliation of Operating Income to Net Cash Provided by Operating Activities Operating income $ 331,310 351315 $ 68,625 Adjustments to reconcile operating income to net cash provided by operating activities: Depreciation expense 32,907 - 32,907 Change in assets and liabilities: Receivables, net 478 (3,804) (3,326) Prepaid expenses 21 - 21 Accounts and other payables (1,449) (26,774) (28,223) Deferred revenue (1,559) 700 (1,159) Net cash provided by operating activities $ 635366 $ 5,437 $ 68,803 Supplemental disclosure of cash flow information - Interest paid $ 602986 - $ 60,986 Noncash investing, capital and financing activities: Net increase in fair value of investments I,080 - 15080 See accompanying Dotes to the basic financial statements. eats. fl 4 - COUNTY OF HAWAII Fiduciary Funds Statement of Fiduciary Net Assets June 30,, 2012 Assets Cash and cash equivalents (note 3 Investments (note 3 Receivables: Due from other agency funds Other receivables Total receivables Total assets Private - Purpose Agency 3,716,617 39496,791 1,208,'703 15458,449 - 2,246 34,293 -- 36,539 4,92:),32U 4,991,77 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 4,925,320 4,925,320 See accompanying notes to the basic financial statements. -45- 2,246 2,694,125 534,805 1,760,603 4,991,779 COUNTY OF HAWAII Fiduciary Funds Statement of Changes in Fiduciary Net Assets For the Fiscal Year Ended June 30, 2012 Private - Purpose Trusts Additions Contributions: Puna Geothermal venture 505000 Investment earnings: Net increase in fair value of investments 169,833 Dividends 55,919 Interest 2,930 Total additions 278.682 eduetlons Grant payments 120,609 Total deductions 120,609 Change in net assets 1582,073 Net assets, beginning of year 437675247 Net assets, end of year 43925,20 See accompanying notes to the basic financial statements. COUNTY OF HAWAII Dotes to the Basic Financial Statements June 3, 2012 The accounting policies of the County of H w i ` i (the County) conform to U.S. generally accepted accounting principles (GAAP) as applicable to local governmental units. The following notes t the basic financial statements are an integral part of the County's Comprehensive Annual Financial Report CAF. 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 efgovernment 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 Hawaii (the State) assumes full responsibility for several major functions usually performed by local governments, including education, welfare, health and judicial functions. There are no separate city, county or township governments nor any school districts, special districts, authorities or public corporations with overlapping authority. GASB Statement No. 14 defines component units as legally separate organizations for which the elected officials ofth 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 g veining 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; 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. MAYM COUNTY of HAWAII Dotes to the Basic Financial Statements .dune 30, 2012 As required by GAAP as set forth in GASB Statement No. 14 and No. 39, these basic financial statements present the County of Hawaii (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 ofthe 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 ofthe Department. See Dote 14 for component unit disclosures for the Department. Complete financial statements of the Department can be obtained from the Department of water Supply, 345 Ieuanaoa Street, Suite 2, Hilo, Haai` i 96720. Basic Financial Statements The basic financial statements include both government -vide (based on the County as a whole) and fund financial statements. Both the government -wide arra 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. -48- COUNTY OF HAWAH Motes to the Basic Financial Statements June 30, 2012 The fund financial statements' emphasis is on the major funds in either the governmental or business -type categories. l onmajor funds y 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 activities 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 activities 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 paw' (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 andfundfinancial 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 givers function or segment are offset by program revenues. Direct expenses are those that are clearly identifiable with a specific function or segment. Program revenues include charges to customers or applicants who purchase, use, or directly benefit from goods, services, or privileges provided by a given function or segment and 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 X9181 IM 40Jk&JLJII Dotes to the Base Mnancial Statements June 30',, 2012 statements. Major individual governmental funds and major individual enterprise funds are reported as separate columns in the fund financial statements. Activities i f nds — 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 expend itures/expenses. The various funds are reported by generic classification within the financial statements. GASB Statement No. 3 4. Basic Financial ' terms — and Management "s Discussion and Analysis —for State and Local Governments, sets fort] m1I]IIYIum criteria (percentage f 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 un — 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. The County reports the following major proprietary funds: Kulaimano Elderly .mousing Project — Used to account for the operation of a rental housing project for low-income senior citizens located north of Hilo. Ouli Ekah i1f� ordar Housing Project —[used to account for the operation of a 3 3 -unit single-family affordable rental housing project located in Waimea. The County reports the following fiduciary funds: Private -.Purpose Trust Funds — Used to account for funds received from geothermal developers to mitigate the effects of geothermal energy development. Also used to account for investment income on funds received from import businesses at the port of Hilo and the related expenditures to promote health and safety on the Island of I-awai` i. -50- COUNTY OF HAWAII Notes to the Basic Financial Statements June 30, 2012 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: • Mate weight Tax Fund • Improvement District No. 17 Fund (officially closed on October 31, 2011) Improvement District leo. 18 Fund • Improvement District Devolving Fund • Performance and Refundable Deposits Fund • Payroll Clearance Fund • Flexible Spending Account • Lapsed warrants Fund • Non -Profit License Plates Fund • Organ and Tissue Education Fund • Business Improvement District 1--Kailua Basis of Accounting Basis of accounting refers to the period in which revenues and expenditures or expenses are recognized in the accounts and reported in the basic financial statements. Basis of accounting relates to the timing of the measurements made, regardless of the measurement focus applied. The government -wide financial statements and the proprietary, fiduciary and component unit fund financial statements are presented on an accrual basis of accounting. The governmental funds in the fund financial statements are presented on a modified accrual basis. Accrual ua Basis - Revenues are recognized when earned and expenses are recognized when the related obligation is incurred. Modified A rar 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 eolleetible 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. Deal property taxes and Mate 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 COUNTY OF HAWA11 Dotes to the Basic Financial Statements June 30, 2012 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 Dote . 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 postelosure care costs; and c principal and interest on general long --terra debt which are recognized as expenditures when due. In accordance with GASB Statement No. 20, Accounting and Financial Reportingfor Proprietary Funds and Other Governmental Entities That Use Proprietary Fund Accounting, the County applies all applicable GASB pronouncements as well as the following pronouncements issued on or before November 30, 1989, unless those pronouncements conflict with or contradict GASB pronouncements; Financial Accounting Standards Board statements and interpretations, Accounting Principles Board opinions, and Accounting Research Bulletins of the Committee on Accounting Procedures. Encumbrances The general, special revenue, and capital projects funds follow encumbrance accounting under which purchase orders, contracts and other commitments are recorded as 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. -52- Motes to the Basic Financial Statements June 3, 2012 Investments consist of time eertificates of deposit at financial institutions and bank repurchase agreements with original maturities exceeding three months. Included are participating investment contracts J.S. government sponsored agency issues and negotiable certificates o 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. Valuations of investments in government sponsored enterprises such as Federal National Mortgage Association F nnieMae and Federal Home Loan Mortgage Corporation (Freddie Mac) are based on quoted market et rates. valuations of certificates of deposits are based on cost, which approximate fair market value, as they almost invariably are held to maturity. 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 ofJune 30 are delinquent. Each delinquent installment bears interest at I% 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 (F"IF"O) method. other inventories are stated at average cost. Liquor- Control Section 281 of the Hawai ` i Revised Statutes requires that liquor license revenues collected b 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, 2012 of $1,175,716 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 -53- COUNTY TY F HAWAII All Notes to the Basic Financial Statements .dune 30, 2012 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 Infrastructure Buildings and improvements Ground and site improvement Equipment Easements Long -tern Obligations Years 20 to 100 years to 100 years 20 to 50 years to 40 years Dependent on terms ofeasement agreement The County reports long -terra 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 f net assets. Long-term debt and other obligations financed d bar the proprietary funds are reported as liabilities in those funds. Compensated Absences Employees earn vacation credit at the rate of one and three-quarter working days for each month ofservice. Up to ninety days of vacation leave credits can be accumulated per employee. In addition, employees who work overtire can elect to take compensatory time off instead of overtime pay. The time off is earned at the rate ofone-and-a--halfhours for each hour of overtime worked. ed. There is no statutory limit to the amount ofcompensatory 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. -54- COUNTY TY F HAWAII Dotes to the Basle Financial Statements June 30, 2012 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 theEmployees' Retirement System of the State of awai ` i. Accumulated sick leave at June 30, 2012 totaled $66,800,000 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 . 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 pard. Retirement Plan Contributions The County's contribution to the Employees' Retirement System of the State of Hawai `i includes the normal cost plus the level annual payment required to amortize the unfunded actuarial accrued liability. The County's policy is to fund its required contribution annually (see Mote 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 the proprietary funds are fees charged to residents for rent and rental subsidies received from the federal g ernm nt. Operating expenses include the costs associated with providing housing for tenants, such a 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 f 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. -55- COUNTY OF HAWAII Notes to the Basic Financial Statements June 30, 2012 New Accounting Pronouncements In December 2010, GASB issued Statement leo. 6 1, The Financial Reporting Entity. - Omnibus, an amendment of GASB 't r m s No. 14 andamending the requirements o Statement No, 14, The Financial Reporting Entity, and Statement No. 34, Basic Financial 'ta err en ts -- and Management's Disu sion 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 20 10, GASB issued Statement No. 62, Codification ofl4ccounting and 'i ncia Reporting Guidance Contained in Pre -November 3 0, 1989 FASB and AICPA Pronouncements. This Statement will male it easier for preparers of state and local government financial statements to find r elev nt authoritative guidance from one single 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 December 2010, GASB issued Statement No. 62, Codification ofAccounting and Financial Reporting Guidance Contained in Pre -November .301 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 source. The provisions for this Statement are effective for the County for periods beginning after December r 1 , 2011. The County has not yet determined the effect this Statement will have on its financial statements. In Jule 2011, GASB issued Statement No. 63, Financial Reporting Deferred e flows of Resources, es, efe red Inflows ofResources, and Net Position. This Statement provides financial reporting guidance for deferred outflows of resources, deferred inflows of resources, and net position. The provisions for this Statement are effective for the County for periods beginning after December mber 1 , 2011. The County has not yet determined the effect this Statement will have on its financial statements. In March 2012, GASB issued Statement No. 65, Items Previously Reported as Assets and .liabilities. The objective of this Statement is to clarify the appropriate reporting of deferred outflows and deferred inflows of resources to ensure consistency in financial reporting. The provisions for this Statement are effective for the County for periods beginning after December 15, 2012. The County has not yet determined the effect this Statement will have on its financial statements. COUNTY OF HAWAII Notes to the Basic Financial Statements June 30, 2012 In March 2012, GASB issued Statement No. 66, Technical Corrections — 2012. The objective f this Statement is to enhance usefulness of financial reports by resolving conflicting accounting and financial reporting guidance that could diminish the consistency of financial reporting. The provisions for this Statement are effective for the County for periods beginning after December 15, 2012. The County has not yet determined the effect this Statement will have on its financial statements. 1n June 2012 , GASB issued Statement 1. 6 8,Accounting• and Financial .deporting for Pensions. The Statement revises and establishes new financial reporting requirements for most governments that provide their employees with pension benefits. The requirements for this Statement are effective for the County for periods beginning after June 1, 2014. The County has not yet determined the effect this Statement will have on its financial statements. 2. STEWARDSIUF, COMEPLIANCE 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 thein. 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 Myr 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 ofthe 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 2011-2012 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 $11.0 million in the general fund and $2.2 million in the special revenue funds. Legally adopted budgets include the General Fund, Highway Fund, Sewer Fuad, Solid 'waste Fund, Cemetery Fund, Parking ing Meter Fund, -57- COUNTY OF HAWAIII Notes to the Basic Financial Statements June 30, 2012 Vehicle Disposal Fuad, Bikeway Fund, workforce Investment Act Fund, Golf Course Fund, Geothen-nal 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. Bridget 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, 2012: Ending fund balance — GAAP basis ,26, Encumbrance adjustments: Beginning encumbrances and unexpended allotments 4,024,596 Ending encumbrances and unexpended allotments (3,837,693) Other adjustments 4,209,809 Ending fund balance — ]'on -GAAP budgetary basis $5391232,666 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 mceting the day -today operating needs of the County. Legally authorized investments include obligations of or guaranteed by the J.S. -58- COUNTY OF HAWAII Notes to the Basic Financial Statements ,lune 30, 2012 government, obligations of the State, federally insured savings and checking accounts, time certificates ofdeposit, 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 ofthree months or less. The carrying amount of the County's deposits (cash, time certificates of deposit, and money market accounts) as of June 30, 2012 was $164,547,074 for the primary government and $8,671,857 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 $186,056,299 at June 30, 2012. Of that amount, $185,820,122 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 o $236,177 represent deposits held by a management agent and were uncoIlateral i ed. 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 cheeping accounts, time certificates of deposit, and repurchase agreements, the County requires, in accordance with State statutes, that the depository bans 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 0% of the County's total funds available for deposit may be deposited in any one financial institution, in accordance with State statutes. Investments The County holds investments both for its own benefit and on behalf of some of the fiduciary funds. The County's investments of funds not required for immediate payments are predominately comprised of government sponsored securities (equivalent to the rating in U.S. Treasuries), repurchase agreements and certificates of deposit, while the fiduciary fund also holds equity securities. -9- COUNTY OF HAWAII Motes to the Basle Financial Statements June 30, 2012 The County's investments and maturities at June 30, 2012 are as follows: Maturity in y ar Fair Value Less than 1 1 — Investments — Primary Government: Certificates of deposit 17,32I,00 1 5,85,009 1,41,791 Repurchase agreements 15,500.00 15,500.Xo Government sponsored securities 322333,076 324333,076 $_61154.876 1. ) o 33.'7 6 9. Investments — Fiduciary Funds: Certificates ofdeposit 1. 4033138 1.055,311 Equity securities 1 , 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.- k.- The County's investment portfolio consists of U.S. government or agency obligations, time certificates of deposit and repurchase agreements. These investments are either insured by the FDIC, secured by collateral or carry a credit rating equivalent to 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 ofCredit Risk.- State la.w limits deposits to no more than % of the total in any one depository. The County seeps 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 s and broker-dealers both located locally and on the mainland. More than % of the County's investments are in certificates of deposit and repurchase agreements with the following issuers: Bank of Hawaii (23%), First Hawaiian Bank (17%), Territorial Savings Bank (7%). COUNTY TY F HAWAII Motes to the Basic Financial Statements Jure 30, 2012 Restricted Cash and Cash Equivalents and Investments Cash and cash equivalents and investments classified as restricted assets for the primary government at June 30, 2012 amounted to $100,072,241. 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 $51,947,335 at .lune 30, 2012. Cash and investments in the Bond Redemption Fund and the Interest Fund are restricted to debt service related payments and amounted to $26,444,539. Cash in the Highway Fund, Bikeway Fund and Beautification Fund are restricted to costs incurred relating to highways and streets and the beautification of such items and amounted to $173765X9. 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 $1,175,716 and $2,500,563, respectively. Tenant security deposits received by the County for the I ulaimano Elderly Housing Project and the Ouli Ekahl Affordable Housing Project are recorded as restricted assets. Such funds amounted to $12,120 and $25,794, respectively, at June 30, 2012. Restricted amounts set aside by the Kulairnano Elderly Housing Project under its loan agreement with the Farmers Hone Administration totaled $155,145 at Jure 30, 2012. This amount is restricted for debt service or for other purposes with prior approval from the Farmers Horne 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 $14,567 at June 30, 2012. -61- COUNTY OF HAWAII Notes to the Basle Financial Statements June 30, 2012 4. RECEIVABLES Receivables as of June 30, 2012, 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 Capital Other General Projects Governmental Fuad Fund Funds Total $25,638A28 $ $ $25,638,428 -- ---- 211835482 251835482 -- --.. 253025878 253025878 -- 1,025,077 -- 1,025,077 _...9,8372366 104042,009 976,694 20,856,069 35,475,794 11,067,086 5,463,054- 52,005,934 (845,981) --(1833682L279#663) $34.629,813 .1.1.0.6.7.086 2 $49,326,271 During fiscal year 2005, the Counter issued $3,887,493 in general obligation bonds on behalf of Improvement I istrict No. 18, an agency fund. At June 30, 2012, the outstanding balance of $2,790,526 is reflected in the government -wide statement of net assets as a receivable (see Note 10. dill -type activities: 62 Enterprise Funds Accounts receivable: Rent $4,349 Other 507 Gross receivables 4,856 Less: allowance for uncollectibles Net total receivables 62 Notes to the Basle Financial Statements ,lune 30, 2012 . WT FUND RECEIUVABLES AND PAYABLES Interfund receivables and parables consist of the following at June 3 0, 2012: Receivable Fund Payable Fund General Fund Capital Projects Fund Other governmental funds Other governmental funds Total Other governmental funds General Fund Other governmental funds Enterprise funds 699,554 662 1 A5,980 62,59 14&059 21,91 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, 2012 consisted of the following: Transfers out; Other General Governmental Fund Funds Total Transfers in: Capital Projects Fund -- 37 33663,467 Other governmental funds 56,307,187 -- 56,307,1 7 $S63 07.187 $3v663,467 $59-910.654 The interfund transfers noted above include transfers from the General Fund to provide support for various Counter 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. Notes to the Basic Financial Statements June 30, 2012 . CAPITAL ASSETS Capital asset activity for the year ended Juno 3 0, 2012 for the County was as follows: Balance Balance July 1, Retirements/ June 30, 2011 Additions Transfers 2012 Governmental activities: Capital assets not being depreciated: ,and and improvements 107,6821068 Easements 1,283,221 Construction work in (219,650 progress 83,196,457 Total capital assets not 1 531 385 being depreciated 192 161 746 Capital assets being depreciated: Buildings and improvements 452785,465 Equipment 11 8,629,410 Easements 4392300 Infrastructure 371,325,581 Total capital assets being depreciated 943,179,756 Less accumulated depreciation for: Buildings and improvements 6 5 900 Equipment (665498,566 Easements (735217) Infrastructure -(166,569,710 Total accumulated depreciation (2982667,390 'Dotal capital assets being depreciated, net 644,512,357 9,072,382 12,815,300 129,569,750 1,729,557 -- 3,012,778 1,098,752 (102,357,800) 31,937,409 61,900,691 (89,542,500 164,519,9'2;' ,7 75,034,467 (6,795) 527,813,137 5,868,591 (4,192,609) 120,305,392 439;300 71,973,658 (12,815,3001 430,483,939 .152,876,716 (17,0.14,7941 1.079nO4.1 768 (6,8 11 ,474) 6,161 72, 3 31,213 (7,597,297) 3,8802262 (70,215,601) 146,43 (219,650 (16,976,181) __ (183,545,897 1 531 385 3,886,423 (326,312,361) - 1 13452331 (13,128,281 752,729,407 Governmental activities capital assets, net $836,6.74.1.03 $183,24U22 ($102o611781) 917,249.344 -64- COUNTY OF HAWAII Notes to the Basic Financial Statements June 30, 2012 Balance Retirements/ June 3 0, Additions Transfers 2012 __ __ 753,877 1,136,008 261,000 6,863 687 103,024 6,863, 617 1,500,032 (24,615) Balance (31754) July 1, (4,538) 2011 Business -type activities: 4,687 (1,086,755) Capital assets not being depreciated: Land 753,877 Capital assets being depreciated: Buildings and improvements 15136,008 Ground and site improvements 2613000 Equipment 100,848 Taal capital assets being depreciated 1,497, 856 Less accumulated depreciation for. Buildings and improvements (781,663) Ground and site improvement 189,666) Equipment (87,206) Taal accumulated depreciation (1,058,535) Total capital assets being depreciated, net 439,321 Business -type activities capital assets, net 10193 128 Balance Retirements/ June 3 0, Additions Transfers 2012 __ __ 753,877 1,136,008 261,000 6,863 687 103,024 6,863, 617 1,500,032 (24,615) __ (806,278) (31754) __ 193,420) (4,538) 4,687 87 X57 327 4,687 (1,086,755) 044 -- 413,277 l$26.04Q $.- -65- COUNTY OF HAWAII Notes to the Basic Financial Statements June 30, 2012 Depreciation expense was charged to functions/programs of the primary government follows: Other Governmental activities: General General government 3,240 Public safety 2,74,312 Highways and streets 1813881,134 Sanitation 456185173 Health, education and welfare 151313,582 Culture and recreation 1,584,504 Total depreciation expense — governmental activities 31.531.385 Business -type activities: -- Kulaimano Elderly Housing Project$32219 Q2 . DEFERRED REVENUE: Deferred revenue consists of the following at Jure 30, 2012: 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 1.5.51_.362 $__9 Enterprise Funds 3.450 11 2.503.91 Capital Other Total General Proj eets Governmental Governmental Fund Fund Funds Funds 25,167,3 70 __ $ -- $ 251167,370 184,280 184,280 -- -- 1,288,376 1,288,376 -- -- 85,256 85,256 -- --- 1,3762300 13,3763300 9921 - 940,558 1,932,717 263343,09 940,558 2,749,932 30,34,299 (24,792,447) - (2,737,934)(27,53 ,3 1 1.5.51_.362 $__9 Enterprise Funds 3.450 11 2.503.91 COUNTY OF HAWAII Notes to the Basic Financial Statements June 30, 2012 8. LEASES The County leases machinery and equipment under noncancellable leases expiring at various dates through June 2017. 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 t $7,509,730 and $1,368,064, respectively, and the related present value ofthe remaining obligations under the capital leases amounting to $3,803,618 at June 30, 2012 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 $1,836,075 for the fiscal year ended June 30, 2012. The future minimum payments under capital and operating leases at June 30, 2012 are as follows: Obligations under capital leases SOLD WASTE LANDFILL CLOSURE AND POSTCLOSURE CARE COSTS Hilo Landfill The County ovens and operates a landfill located in the city of Hilo. State and federal laves 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 postlsure care costs in each operating period. The liability for these costs is included in the government -vide statement of net assets. The amount recognized each year is based on the landfill capacity used as of Capital Operating Leases Lease Year Ending June 1 1,33,397 $11,6055942 2014 1,1355236 78808 2015 83 1,634 757,776 2016 445,200 708,1 6 2017 131,165 686,301 2018-2022 -- 779,267 2023-2027 745053 2028-2030 ---- 31,575 Total minimum lease payments 3,9765632 $5.431. Less amount representing interest (173 O 14) Obligations under capital leases SOLD WASTE LANDFILL CLOSURE AND POSTCLOSURE CARE COSTS Hilo Landfill The County ovens and operates a landfill located in the city of Hilo. State and federal laves 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 postlsure care costs in each operating period. The liability for these costs is included in the government -vide statement of net assets. The amount recognized each year is based on the landfill capacity used as of GUTTY OF HAWAII Nolen to the Basic Financial Statements June 30, 2012 the statement of net assets date. At June 30, 2012, the County recognized a liability of 13,172,000, based an the use of % of the estimated capacity of the landfill. During the fiscal year ended June 30, 2012, there were no expenditures incurred for the closure of the landfill. The remaining $1,558,000 in estimated cost of closure and p stcl sure care will be recognized as the remaining estimated capacity is used. The estimated remaining useful life f the landfill is still approximately four years. These amounts are based on what it would cost to perform the required closure and pstclsure care in 2012. 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 infonnation contained therein. Kealakehe In October 1993, the County closed its Kealal ehe landfill in Iona. 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 them is presently a subterranean fire which requires active management. The estimated cost ofclosure and postclosure is $15,950,000, based on what it would cost to perforin the required closure and postclsure care in 2012. Actual costs may be higher due to inflation, changes in technology, or changes in regulations. Through June 3 , 2012, $7,698,000 was spent on closure and postclosurc care ofthe landfill. The remaining estimated liability of $8,252,000 is included in the government -wide statement of net assets. During the year ended June 30, 2012, $124,000 was spent on closure of the landfill. The County is providing financial assurance for pstolsure 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. Linder the terms of the contract, the County has no responsibility for remediation, closure or postelosure care. Accordingly, no liability for this landfill is included in the County's financial statements. Financial Assurance For fiscal year 2012, the County has provided for financial resources that will be available to provide for closure, p stclosure care and remediation or containment COUNTY OF HAWAII Dotes to the Basle Financial Statements June 30, 2012 f 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 recrdlceping component. Local governments are required to satisfy each ofthe three components to pass the annul 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 1 and an improvement district. The following is a summary ofgeneral obligation bond transactions reported in the government -wide statement of net assets for the County for the fiscal year ended June 30, 2012: The 2 0 10 Series B bonds were issued as bonds designated a "Recovery Zone Economic Development Bonds" under the American Recovery and Reinvestment Act of 2009. The County will receive a cash subsidy payment from the United States Treasury equal to % of the interest payable on the Series B bonds. Bonds Issue Bond Balance Authorized Amount July 1, 2011 1993 Ief& PI $86,770,000 11,575,000 2003 Series A 36,3 10,000 28,735,000 2004 Series A 30,000,000 25,270,000 2004 Ref Series B 19,545,000 10,845,000 2004 Ref Series C 5,050,140 2,199,924 2004 PI series A 2,776,400 2,278,520 2004 PI Series B 920,000 553,173 2006 Series A 25,000,000 21,725,000 2007 Series A 85,0007000 76,620,000 2007 Series B 20,820,000 17,325,000 2007 Series C 10,787,388 10,787,388 2008 Series A 50,000,000 48,335,000 2010 Series A 26,493,750 26,493,750 2010 Series B 185506,250 1$,506.250 417,978,928 301,549,005 Add unamrtized premium 7,683,432 5,964,136 Less deferred amount on refunding X2.828,759). (1 A33.635) The 2 0 10 Series B bonds were issued as bonds designated a "Recovery Zone Economic Development Bonds" under the American Recovery and Reinvestment Act of 2009. The County will receive a cash subsidy payment from the United States Treasury equal to % of the interest payable on the Series B bonds. Bond Balance Due Within Issues Retirements June 30^, 2012 One Year $ -- $ 5,630,000) $ 5,945,000 $ 5,945,000 (1,665,000) 27,070,000 1,725,000 .., (1,280,000) 23,990,000 1,340,000 -- (1,975,000) 8,870,000 2,055,000 -- (521,156) 1,675,768 539,604 -- (325,997) 1,952,523 45,335 --(15,170) 838,003 15,833 -- (927,500) 20,797,500 972,500 i- (3,050,000) 737570,000 3,200,000 (1,855,000) 15,470,000 1,925,000 i� {795,184} 9,991,704 825,294 -- (1,735,000) 46,600,000 1,810,000 a� -- 26,493,750 -- __ -- 18,506,250 .... (19,775,507) 2111773,498 20,401,566 (384,171) 5,5797965 3547171 248,721 ... (1.184.914) 286,15,5 24.721) 20.537.016 The 2 0 10 Series B bonds were issued as bonds designated a "Recovery Zone Economic Development Bonds" under the American Recovery and Reinvestment Act of 2009. The County will receive a cash subsidy payment from the United States Treasury equal to % of the interest payable on the Series B bonds. COUNTY OF HAWAH Dotes to the Basic Financial Statements June 30, 2012 General obligation bonds payable reported on the government -vide statement of net assets at June 30, 2012 are comprised of the following individual issues: Public improvement PI and/or refunding bonds; 1993 Refunding and PI at 5.6%, due through 2013 5,945,000 2003 Series A at 2.5% to 5.125%, due through 2023 27,070,000 2004 Series A at 3.25% to 5.25%, due through 2024 23:,99%000 2004 Refunding Series B at 3.5% to 5.0%, due through 2015 $,870,000 2004 Refunding Series C at 3,25% to 3,7%, due through 2014 156785768 2004 PI Serres A at 4.75%, due through 2037 159523523 2004 PI Serres B at 4.375%, due through 2040 8385003 2006 Series A at 4.0% to 5.0%, due through 2026 20,797,500 2007 Series A at 4.0% to 5.0%, due through 2027 73,570,000 2007 Series B at 3.75% to 5.0%, due through 2418 15,470,000 2007 Series C at 4.0% to 5.0%, due through 2021 9,991,704 2008 Series A at 4.0% to 6.0%, due through 2028 460000 2010 Series A at 1. % to 5.0%, due through 2030 26,4931,750 2010 Series B at 3.3 3 5 % to 6.1 %, due through 203 0 18,5 050 Total general obligation bonds payable Annual debt service requirements to maturity for the above general obligation bonds are as follows: Bond Premiums At June 30, 2012, total unamorti ed bond premiums were $5,579,965, which are being amortized over the remaining life of the respective bond issues. Governmental Activities Fiscal year ending June 30: Principal Interest 2013 $ 20,401,566 13,153,332 2014 1 5,11 5,470 12J62,852 2015 17,773,630 11,444,082 2016 x8,014,007 10,595,113 2017 16,366,890 9,781,25 2018-2022 8630673203 36,947,764 2023 —2027 81,130,24 16,6445275 2028 —2032 26,0643225 220665732 2033 —2037 695,934 1025719 203 —2040 144,289 9,634 Total 281.7732498 $112.907,788 Bond Premiums At June 30, 2012, total unamorti ed bond premiums were $5,579,965, which are being amortized over the remaining life of the respective bond issues. COUNTY of HAWAR Notes to the Basic Financial Statements June 305 2012 Bonds Authorized and Unissued The County Council has authorized the issuance of$296.1 million in general obligation bond to finance specified capital improvement projects. At Juno 30, 2012, $161.1 million was not yet issued. Subsequent Events On November mber , 2012 and November 21, 2012, the County Council authorized the issuance of $30.4 million and $5.1 million, respectively, in general obligation bonds for the County to finance specified capital improvement projects. General Obligation Bond Anticipation Notes In March 2011 1� the County issued a general obligation bond anticipation note AN 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 slate of September 2, 2011. The note was thea rcnovcd on September 2, 2011 and again on March 1, 2012 with a new maturity date of August 3 0, 2 012. There was a new issuance of 15,000,000 rote on September 2, 2011, which -natured on March 1, 2012 and was thea renewed with a maturity date of August 3 0, 2012. {There was a new issuance of an $8,000,000 BAIL on June 27, 2012 with a maturity date of October 31, 2012. Since all three ofthe BANs have a maturity date within 12 months of fiscal year end, the $33,000,000 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 ,lune 30, 2012: Issue Balance Balance Authorized Amount July 1. 2011 Issues retirements June 30, 2012 2011 Series B -1 $ 1 ,0 0,0 G 10,000,000 -- 10,000,000 $ -- 2011 Series B -2 10,000,000 -- 10,000,000 100000 2011 Series B R-3 15,000,000 -- 1 5,000,000 15,000,000 2012 Series B -4 10,000,000 -- 10,000,000 -- 10,0 0,000 2012 Series B R-5 15,000,000 1 5,000,000 -- 15,000,000 2012 Series B R-6 8,1101.0110 -- 1--- 8,00 004 8.000.000 COUNTY OF HAWAII Notes to the Basle Mnaneial Statements June 30, 2012 State Revolving Fund Loans The County has obtained loans to assist in financing mandated wastewater projects from the State 'mater Pollution Control Revolving Fund (SRF). The purpose of this revolving fund i 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. The schedule below shows the County's SRF transactions for the fiscal year ended June 3, 2012: Loans Approved Doan Balance Retirements Loan Balance Due Within Authorized Amount July 1, 2011 Additions Forgiveness June 30,_2012 One Year Milo WWTP $127724,311 $1,592,109 -- $ 786,227) $ 805,882 $ 805,882 kaiak a Mill 1,300,000 240,059 -- (78,052) 162,007 800 Wiakea Houselots 459,321 57,706 -- (28,497) 29,209 29,209 Waiakea Houselots 11 5,024,266 2,436,822 -- (277,881) 2,158,941 285,162 Ainako ASB 2,239,174 467,540 -- (130,123) 337,417 132,818 1 aklanianaole 1,499,944 432,259 (91,408) 340,851 94,190 I alanianaole RH 1,615,980 12195,693 -- (76,126) 1,119,567 77,934 Alii Drive AB 3,210,243 618,036 (199,691) 418,345 205,281 Alii Drive CBD 3,780,000 1,010,785 -- (216,908) 793,877 221,399 Alii Drive EBF 21112,654 693,271 (130,100) 563,171 134,059 aiaha Bay 3,697,893 1,038,770 -- (219,725) 819,045 225,876 I eaIakehe 1,300,071 239,622 -- (77,91 161,712 79,858 Holualoa Bay 3,080,000 1,070 217 -- (181,651) 888,566 187,178 Paukaa CCS 271431448 1,014,909 -- (116,525) 898,384 119,400 Cesspool Conversion 8,363,773 6,814,095 -- (423,829) 6,390,266 426,092 Pahoelloe 2,817,760 1,6291045 -- (144,548) 12484,497 148,333 I omohana Hts LCC - ARRA 1,085,800 1,085,800 (1,085,800) -- _- Honokaa LCC w ARRA 5,332,346 5,065,729 266,617 (5,332,346) Honokaa LCC 4,811,709 -- 3,776,904 (1,000,000) 2,776,904 117,370 Queen Liliuokalani LCC -ARRA 1,019,929 1,019,929 -- (1,019,929) Queen Liliuokalani 10,186,277 77.804.899 8,832,868 525235 (456,118. ($12.073.394) 8,901.985 $29050.626 474.61 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 2032. Those loans with the "ARRA" designation are interest free with principal forgiveness upon the County's fulfillment of eertain e nditi ns. -72- COUNTY OF HAWAII Motes to the Basic Financial Statements June 30, 2012 Debt service to maturity for disbursements to date on these projects are as follows: Governmental Activities Fiscal year ending June 31: 1rinexal Interest 2013 3,844,662 $ 650 2014 3,087,580 4950 2015 200,059 397,737 2016 2X3,818 307,672 2017 1,60,420 214,350 2018-2022 7,459,286 576,640 2023 —2027 5,525,962 2002958 2028 —2032 2,2080 32,I Total _.62-6 $Z)8769871 Other General Dung -Terra obligations The following is a summary of other general long --term obligations transactions for the fiscal year ended June 30, 2012: Net of new claims liability and existing claims resolved at less than previous estimate. Fund Balances - Debt Service Funds The fund balance in the debt service funds at June 30, 2012 includes $24,014,149, which is reserved for principal payments on general obligation bonds and $2,138,760, which is reserved for the payment of interest on the bonds. -73- Balance Balance ]due Within July 1, 2011 Additions* Payments June 30, 2012 One Year Governmental activities: Compensated absences $33,151,872 X9,165,390 {$10143603} $32,580,579 $7,835,700 Claims and judgments (see Mote 12) 103897,137 31,150,000 3,6,3 1 0,4475107 2,317,306 Capital leases (see Mote 3,057,082 2,521009 (1,774,473) 3,803,618 13349,916 Landfill costs payable (see Note 9) 21,009,000 531,652 (1232652) 21 ,424po 2002757 Other post employment benefit obligation (see Note 13) (120,768) 36,193,000 -J13,731,900 22,340,332 Total $6836243.323, M 5685,05.1 ($29.666. $91521636 $_11 J03467 Net of new claims liability and existing claims resolved at less than previous estimate. Fund Balances - Debt Service Funds The fund balance in the debt service funds at June 30, 2012 includes $24,014,149, which is reserved for principal payments on general obligation bonds and $2,138,760, which is reserved for the payment of interest on the bonds. -73- Notes to the Basic Financial Statements June 30, 2012 Enterprise Fund lutes Payable The Kulaimano Elderly Housing Project (Project) is indebted to the U.S. Department of Agriculture, Farmers Hone Administration on two notes payable with balances aggregating $851,306 at June 30, 2012. 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 elopr ent Section 8 Dousing Assistance Payment contract in effect ect 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, 2012: Balance at July 1, 2011 $884,232 Deductions 32 926 Balance at June 30, 2012 8515306 Les current portion 443 Mote payable, net of 50,213 current portion 1 The following is a summary of the annual maturities for the enterprise fund notes payable: Fiscal year ending June 3: 2013 2014 2015 2016 2017 2018-2022 2023 —2027 Total Subsequent Events Business -til e Activities Principal Interest $ 355443 585469 385006 55,906 40,753 53,159 4309 50,213 46,858 47,054 290,272 1795288 356,275 59,E 1 On October 29, 2 12, the County assumed the loan of its lessee Ouli Ekahi Partnership with the Hawaii Housing Finance and Development Corporation in the amount of $478,430. The loan is non-interest hearing and matures on February 27, 2041. In exchange, the County assumed ownership of the Ouli Ekahi project which consists of a 33 single family affordable rental housing project. SHE COUNTY OF HAWAII Motes to the Basic Financial Statements June 3, 2012 Special Assessment Bonds 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 ofthe County. The bonds mature nnuall r through 2040 and bear interest at 4.375% to 4.75%. Total general obligation bonds payable included in the government -wide statement of net assets were $2,790,526 at June 30, 2012. The bands are secured by a first lien on the land benefited by the improvements, and are to b 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, Castviewwnerview water Improvements, for the fiscal year ended June 3 0, 2 12; Balance at July 1, 2 011 $3,131,693 Deductions 1,1X17% Balance at June 3, 2012 2 The following is a summary of the annual maturities for the improvement district general obligation bonds: Fiscal year ending June 30: Prinrpal Interest 2013 $ 61,168 130, 71 2014 64,5014 125,073 2015 66,993 122,024 2016 705111 11 8,833 2017 733373 115A94 2018-2022 42133 521,686 2023 —2027 5295034 4111530 2028 —2032 6643225 273,1 6 2033 — 203 7 6955934 102,719 203 —2040 144,289 9,634 Total $2,7212M -75- COUNTY OF HAWAII Motes to the Basic Financial Statements June 30, 2012 11. COMMITMENTS AND CONTINGENCIES Contractualmmitm n — Contractual commitments for capital projects, expenses, and supplies at June 3, 2012, 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 3,8372693 Capital projects fund 25,910,289 Nonmaj r funds 10,330,170 V R V r, 1 52 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 t requests for reimbursement to the grantor agency for expenditures disallowed under terns of the grants. In the opinion of management of the County, disallowed costs, if any, would not be material. Claims — Numerous claims and lawsuits have been filed against the County in the normal course of its operations. A liability for probable losses is included on the government -wide statement of net assets (see Note 12). Although the outcome of the various claims and lawsuits is not presently determinable, in the opinion of the County's Corporation Counsel, the resolution of such matters will not have a material adverse affect on the financial condition of the County. ADA compliance ---- The County entered into two stipulated agreements r 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, filed on October 2, 1997, relating to curb cuts, the County, with the help ofa 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 was intended to 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 i $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 ofthe Pasties 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 -76- COUNTY OF HAWAII Dotes to the Basic Financial Statements June 3, 2012 21, 2008, there were approximately 204 curb ramps (which included at least 15 1 of the 161 curb ramps that were required by the amended transition plan) installed in Hilo, waik l a and Kona at a total cost of close to $4.8 million. 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. On September 20, 2012, the close --out order ofthe e n er tree was filed ,, thus dismissing the curb ramp ease with preju Ice, and a copy of "County of Hawaii's Accessibility Design Guidelines and General Policies and Procedures, Curb Ramps within Public Rights -of -Way" (June 2 12) was attached as an exhibit to that order. The second stipulated agreement, filed on June 4, 1998, relates to the Department of Parks and Recreation (the Parks Department). The agreement required the Parks Department t 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. The second part of this stipulated agreement is the reevaluation of all Counter facilities, which was completed and accepted by the County Council on June 3, 2000. Approximately 240 County facilities were surveyed as part of this effort. The tentative completion date of all necessary repairs and renovations is 12 gears 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 -gear 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 t 3 million a year for the different park facilities' ADA projects. The Department ofPublic Works has requested an additional 2 million a year for the other County AICA facilities' project. Because of the substantial hardships predominantly incurred in the funding and cost aspects of the implementation of the Original Transition Plan, the learning curve process, and the timing and scheduling of the different stages ofwork for each project, the parties worked on a plan to implement the Transition Flan with the assistance of a federal district court Monitor acrd 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; 29 parr facilities that must be completed; and the Parks estimated costs for completion is $15.1 million. On March 23, 2012, the close-out of the consent decree was filed, whereby the Court and parties established a reasonable four year timeline to complete the remaining ADA work by December 31, 2016. In addition, the County's ADA coordinator (Equal Opportunity Officer) has access to an identifiable account of at bast $54,000 to handle requests for reasonable accommodations for County departments; and the procedures for these requests COUNTY OF HAWAII Notes to the Basic Financial Statements June 30, 2012 have been! finalized and are available on the Human resources Department's Equal Opportunity and the ADA web page. 12. RISK MANAGEMENT The County is exposed to various rids 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 eases cowered 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 includingworkers' compensation and general liability. The liability for claims and judgments 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 IR. 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 -ease review of all claims and the application ofhistorical experience to outstanding claims. Estimates of EBNR are based on historical experience. The liability for claims and judgments is reported on the government --wide statement of net assets. At June 30, 2012, the amount of this liability was 10,447,107. This is the County's best estimate based on available information. Changes in the reported liability since July 1, 20 10 are given below. General Liabilily Balance at July 1, 2010 $ 4,1391752 Incurred claims (including NR's (993,836) Claim payments (L477,017) 017 Balance at June 30, 2011 1,668,899 Incurred claims (including SNR)* 591,474 Claim payments (1,302,957) Balance at June 3, 2012 964.416 Workers' Total Compensation Liability $ 11,230,939 $15537001 5495671 (444,165) (2,552,372)(4,029J89) $ 9,221,238 $1,97,137 2,551,526 3,15 po (22297,073) (3,600020J -�o.i �691 .$1024479107 'CNet of new claims liability and existing claims resolved at less than previous estimate. w 7 GUTTY OF HAWAII Dotes to the Basic Financial Statements June 3, 2012 1. EMPLOYEE BENEFIT PLANS Pension Plan Plan description All eligible employees of the County are required by Chapter 88 of the Hawai' i Devised Statutes (HRS) to become members ofthe Employees' Retirement System of the State of awai` 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. Emp loyees covered by Social Security on .Tune 3 0, 1984 were given the option ofjoining the noncontributory plan or remaining in the contributory plan. All new employees hired after ,Tune 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 }rears of credited service. The AFC is the average salary earned during the five highest paid gears of service, including the payment of salary in lieu of vacation, or three highest pard years of service, excluding the payment of salary in lieu of vacation, if the employee became a member prig to January 1, 197 1. 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.). -79- COUNTY F HAWAII Dotes to the Basic Financial Statements .lune 30, 2012 The following summarizes the three plan provisions relevant to the general employees of the respective plan: Con rib ry Plan General employees in the contributory plan are required to contribute 7.8% oftheir salary and are fully crested for benefits upon receiving 5 years of credited service. The County may also finale contributions for these members. Under the contributory plan, employees may retire with Bull 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 u % of AFC. These members may retire at age 5 5 with 10 years of credited service or at any age with 2 years of credited service, provided the last 5 gears 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 reale 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%. Non rib r,y Flan 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 5 5 and 3 0 years of credited service or age 5 5 and 20 years of credited service with reduced benefits. The benefit multiplier used to calculate retirement benefits is 1.25%. The ERS funding policy provides for periodic employer contributions at actuarially determined rates, expressed as a percentage of annual covered payroll, such that the employer contributions, along with employee contributions and ars 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 contributed 19.70% for police officers and fire fighters, and 15.00% for all other employees. Employer rates are set by statute used on the recommendation of the ERS actuary resulting from an experience study conducted every Five years. -80- COUNTY of HAWAII Dotes to the Basic Financial Statements June 30, 2012 The required pension contributions by the County for the years ended June 30, 2012, 2011, and 2 0 10 were 21,8321179 , $21,435,798, and 2,127,289, 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 EFTS issues a CAFR that includes financial statements and required supplementary information, which may be obtained by writing to the Employees' Retirement System of the State of Ha Arai` i, 201 Merchant Street, Suite 1400, Honolulu, awai `i 96813. Post -Retirement Benefits In addition to providing pension benefits, the County is required by state statute (HRS Chapter to contribute to the Hawai` i Employer -Union Health Benefits Trust Fund (the UTF). The E TF 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 gears of credited service, and 5 0% 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 postcmployment benefit obligation is paid by the General Fund. For employees hired after June 30, 1996, and who retire with fewer than 10 gears of service, the County males no contributions. For those retiring with at least 10 years but fewer than 1 gears of service, the County pays % of the retired employees' monthly Medicare or non - Medicare premium. For employees hired after June 3, 1996, and who retire with at least 1 }rears but fewer than 25 years of service, the County pays % of the retired employees' monthly Medicare or non -Medicare premium. For those retiring with over 25 years of service, the County pays the entire healthcare premium. For employees hired after June 3 0, 20 0 1, and who retire with fewer than 10 years of service, the County males no contributions. For those retiring with at least 10 years but fewer than 1 years of service, the County pays % 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 gears but fewer than 25 years of service, the County pays % of the retired employees' monthly Medicare or noir-11 edieare premium; for those retiring with over 25 years of service, the County pays the entire healthcare premium. _1_ COUNTY OF HAWAII Notes to the Basic Financial Statements June 30, 2012 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 ing and Financial .deporting by Employers for Postemployment Benefits other than Pensions (GASB Statement No. 45). GASB Statement leo. 45 addresses the failure of previous financial reporting practices to measure and recognize the cost of OPBB 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 AIDC 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 3 years. The current ARC rate is 27.8% of annual covered payroll. The following section shows the Counter's Annual oPB cost for the year ended June 3, 2012, the amount actually contributed to the plan, and changes in the net OPEB liability: Annual required contribution $36,193MO Interest on net OPEB obligation (9,000) Adjustment to annual required contribution 7,000 Annual OPEB Cost 3,191,0 Contributions made 13,29,900 Increase in net oPBB liability 100 Net oPB asset -beginning of year 120,768) Net OPBB liability -end of year $22,340,332 The above net oPBB liability at the end of the year is included in the Statement of Net Assets in the noncurrent other liability amount of $22,340,332. 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, 2012 and the preceding two years were as follows: -82- Percentage of Annual Net oPBB Fiscal Year OPEB Cost obligation/ Ended Annual OPBB Cost Contributed Asset June 3 , 2010 $255823X0 109.1% ($3 ,931,3 81 June 3 , 2011 $34,913, 00 89.1% ($120J68) June A, 2012 $36PI9100 37.9% $22,340,332 -82- COUNTY OF HAWAII Motes to the Basic Financial Statements June 3, 2012 The schedule of funding progress based on the actuarial valuation date of July 1, 2011, is as follows: Actuarial accrued liability $394,633,000 Actuarial value ofplan assets 6 1,907,80 Unfunded actuarial accrued liability URAL $33257265000 Funded ratio 16% Covered payroll (active plan members) $1302170,000 UAAL as a percentage of covered payroll 256% 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 compare 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 -terra perspective ofthe calculations. In the July 1, 2011 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 8.0% 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 URAL is being amortized as a level percentage of projected payroll on an open basis. The remaining amortization period at July 1, 2011 for the UAAL balance varies depending on the date each portion was established but is set to not exceed 30 years. The EUTF issues a publicly available financial report that includes financial statements and required supplementary information, which is available on-line at theirweb-site www. eutf. hawaii. roy or by contacting thein at P. 0. Box 2121, Honolulu, HI 96 8 0 5 -212 1. 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 43# COUNTY OF HAWAII Motes to the Basic Financial Statements June 30, 2012 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 thein 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 fands and assets in the plans, but does have the duty ofdue care that would e required of an ordinary prudent investor. Therefore, the deferred compensation plan assets are not reported in the accompanying basic financial statements. 14, COMIPONENT UNIT DISCLOSURES Deposits and Investments At June 3 O, 2012, cash, time certificates of deposit and money market funds of $3 0,13 1,03 6, with bank balances of $32,585,E l 1 were held by the County on behalf of the Department. These balances were fully insured or collateralized with securities held by the County's went 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 $5,349,930 at .Tune o, 2012. At June 30, 2012, 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 ofthe utility plant assets acquired by the County for its water system from January 1, 1924 to December 3 1, 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 ,Tanury 1, 1950 are stated at original cost and include contributions by governmental agencies, private subdividers and customers at their cost or estimated cost. Construction costs include amounts for contract work, engineering supervision and other direct and indirect costs. Construction period interest is capitalized on utility plan constructed with tax-exempt debt. Depreciation on the Department's utility plant assets in service is computed using the straight -lure method over the estimated useful lives of the assets as follows: Structures and improvements 40 to 50 years Machinery and equipment 5 to 20 years 'Vater systems 10 to 40 gears sm COUNTY OF HAWAII Dotes to the Basic Financial Statements Jure 30, 2012 The capital assets of the Department at June 30, 2012 were as follows: Utility plant in service $394,804,290 Less: accumulated depreciation (175,'789,7681 21%014,522 Nand and rights 35570,659 Construction work in progress 46,237,024 Net capital assets 268.822.205 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 $43,173,981 at June 30, 2012. General obligation bonds payable issued on behalf of the Department and other long-term debt at June 30, 2012 are comprised of the following: Public improvement bonds: 1993 Series A at 2.5% to 5.6%, due through 2013 8352000 2004 Series D at 4.5%, due through 2039 23 6,578 2006 Series A at 4.0% to 5.0%, due through 2026 20,797,500 2008 Series A at 4.125%. due through 2043 142,570 2010 Series A at 3.33% to 6.1° , due through 2030 x,585,706 20 10 S ries B at 3.33% to 6,1 ° a, due through 203 6,107,099 Total public improvement bonds 3 7,704,453 Public improvement refunding bonds: 2004 Series at 2.0% to 5.25%, due through 2015 141,232 2007 Serres at 4.0% to 5.0%, due through 2021 53282296 Total public improvement refunding bonds 5,469,528 Revolving fund loans: State revolving fund loan, interest up to 1.37% due through 2030 13,406,406 American Recovery and Reinvestment Act State revolving fund loan, interest free, with total principal forgiveness upon fulfillment of conditions 4 466 47 Total revolving fund loans 17,872,813 Total 1_to4.6.794 - COUNTY of HAWAII Dotes to the Basic Financial Statements June 30, 2012 At June 30, 2012, future principal payments for long-term debt are scheduled as follows; Fiscal year ending June 30: 2013 7,77, 2014 2,5321000 2015 3,2641000 2016 3,3241,000 2017 3,432,000 2018-2022 1829073000 2023 —2027 1622725000 2028 —2032 523885000 2033 —2037 875000 2038 —2042 765000 2043 7,794 Total $6190462,794 Contributions in Aid of Construction The Department recognized $3,162,508 of contributions in aid of construction as nonoperating revenues for the fise l year ended June 30, 2012. Commitments and Contingent Liabilities Claims c and me — 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, 2012 for corers' compensation claims of $156,000 was estimated based on a combination ofcase--by-ease 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 $22,534,000 at June 30, 2012. Post -Retirement Benefits Effective July 1, 2007, the Department adopted the provisions ofGASB 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 posternployment benefit obligation for the year ended June 30, 2012 was $2,400,000. The Department made contributions of $2,399,000 during the year ended June 3 0, 2012 and recorded a postemploy ent benefit asset of $3,000 at June 30, 2012. -86- Required Supplementary Information June 30, 2012 Schedule of Funding Progress for the EUTF (Inthousands) Actuarial - $275,828 $275X8 Accrued 216.5% UAAL as a Actuarial Liability Unfunded Percentage Actuarial Value of (AAL) – AAL Funded Covered of Covered Valuation Assets Entry Age (URAL) Ratio Payroll Payroll Date W_ (b) (b -a) (Q�� . ,........,......— �J ((b-a)/c) Jul} 1, 2007 - $275,828 $275X8 - $1273420 216.5% July 1, 2009 $28,81 $439,225 $410)411 6.6% $133,555 307.3% July 1, 2011 $61,907 $394,633 $332,726 15.7% $130,170 255.6% -87- This Waage intentionally l f -t blank. -88- NONMAJOR GOVERNMENTAL FUNDS SPECIAL REVENUE FUNDS HIGHWAY Y FUN - Used to account for the costs of maintaining the County's highways and streets. Financing is provided primarily by fael, motor vehicle weight and public utility franchise taxes. SEDER FUN - Used to account for costs ofoperating the Counter's various severer 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 unty"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 n --street and off-street parking areas. Financing is provided by the proceeds from parking meters. VEHICLE I ISP SA 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. BIKEWA Y FUND - Used to accumulate moneys for the construction of bikeways within the County. Financing is provided by bicycle license fees. WORXFORCE INVESTMENTACTF'UN - 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 Filo Municipal Golf Course. Funding is provided from green fees and payments from restaurant and pro shop concessionaires. GEOTHERMAL kEL OCA TION ANDCOMMUNITY BENEFITS FUN - 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. BEA UTIFICA TION 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. HA WA 1I CO U TY HOUSING AGENCY - Used to account for Federal and County moneys used to provide public housing assistance within the County. PARI{ 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 Fuad. 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. This page intentionally left blank. Im COUNTY OF HAWAII I onajor Governmental Funds Combining Balance Sheet June 30, 2012 Assets Cash and cash equivalents Investments Irest fund Receivables: Due from other governments Due from other governmental funds Due from other nongovernmental funds Trade, not of allowance for doubtful accounts Other Total assets Liabilities and Fund Balances Liabilities: Accounts payable Accrued payroll Due to other governmental funds Deferred revenue Other Total liabilities Fund balances: Restricted for: Debt service Highways, streets and abandoned vehicles Rental assistance and subsidy Committed to: Sanitation Highways, streets and abandoned vehicles Rental assistance and subsidy Cemetery Golf course Lower Puna area Parks and recreational projects Total fund balances Total liabilities and fund balances Special Revenue Funds Solid Parking Highway Sewer Waste Cemetery Meter Fund Fund Fund Fund Fund $ 15,920,849 4,700,157 $10,733,325 91,659 $116,796 400 250 - - 150,000 -- 575,09 - - 1,260 273 - - - 1,3 - - 1,288,376 1,364,302 - 152 - 291,682 - .. 1505152 11)2995,986 2,2315266 - - $ 16,0715001 6,001043 $12,964,841 91,659 $156,796 $ 860;218 $ 431,617 1,634,273 - $ - 419,004 147,023 287,374 - - 34# 133 3J53 183,368 - - 1,2885376 I,37633 - - 179 585871 57 - 1,313,34 1,929,040 35481,372 - - 1 4,757,467 - - - - 4972,03 9,483,469 - - - - 1562,796 - - 915659 - 145757,467 45072,003 99483,469 91,659 186,796 $ 16,071,001 $ 6,001,043 $123964,841 $ 91,659 $186,796 Special Revenue Funds Vehicle Workforce Gl Geothermal Reloc. Beauti- Hawaii County Park Disposal Bikeway Investment Course & Community €kation Housing Dedication Fund Fund Act Fund Fund Benefits Fund Fund Agency Fund $2,820,134 643,203 $ - $ 230561 $ 3,233,375 $ 1,20 1,80"7 2,707,325 $ 86,785 - - - -- - - 314005000 -- 2,000 200 - - 251,685 - - - 124,981 - - - - - 75,404 - - - 385993 ifiH 220,03 5 1065561 - 124,9 1 - 290,678 1,688 220,035 -- 181,965 - $2,94511 $ 643,203 $ 290,678 $ 2345306 $ 394535810 1,20 1,807 $ 6,289,490 86,785 4045702 $ 3,086 $ 52527 $ 4,505 111,810 - 4,923 - - 33,631 - - 11 8,876 - - 290678 31,153 - - - .. - - - - 85,256 - 730605 409,625 - 2905678 39,870 5,527 43505 1,046,547 -- - 643,203 - - 1,197,302 - - - as _ _ M 9M690 - 2535490 - - - - - _ in _ - 4,3323253 - 194A36 - -- - - 3,448,283 -- ,. - - 863785 29535,490 6435203 1941)436 3,448,283 1,197,302 51242,943 86,785 $2,945,115 $ 643,203 $ 290,678 $ 234,306 $ 3,453,810 $ 1,2011,807 $ 652899490 $ 865785 (Continued) COUNTY OF HAWAII l onrnajor Governmental Funds Combining Balance Sheet ,lune 3, 2012 Assets Cash and cash equivalents Investments Irnrest fund Receivables: Due frrn other governments Due from ether governmental funds Due from other nongovernmental funds Trade, net of allowance for doubtful accounts Other Total assets Liabilities and Fund Balances Liabilities Accounts payable Accrued payroll Due to other governmental funds Deferred revenue Other Total liabilities Fund balances: Restricted for: Debt service Highways, streets and abandoned vehicles Rental assistance and subsidy Committed to: Sanitation Highways, streets and abandoned vehicles Rental assistance and subsidy Cemetery Golf course Lover Puna area Parks s and recreational projects Total fund balances Total liabilities and fund balances See accompanying independent auditors' report. (Concluded) Debt Service Fund Total Bond Nonmajor Interest redemption Governmental 2,210,690 $24,234,149 $ 69,001,772 3,4,00 - - 2,850 - 9'76,694 - 210,918 - -- 1 3 50 , - 2,652,678 - 4,500,751 2,2105690 $24,234,149 $ 76,905,373 - - 3,455,738 1,010,831 - 14,485 - 2,749,932 71,930 2203000 1 ,08 1,642 71,930 220,000 8,812,628 2,13 8,760 24,O 14,149 26,1 52,9 9 -- - 163597,972 - - 910,690 - - 13,555,472 - - 2,722,286 - - 4,332,253 -- 9L659 - - 194,436 - 3,448,283 - 86,785 29138,760 24,014,149 685092,745 $ 2,210,690 $24,2345149 $ 76,905,373 -92- This page intentionally left blank. COUNTY OF HAWAII l onmajor Governmental Funds Combining Statement of Revenues, Expenditures, and Changes in Fund Balances For the Fiscal Year Ended June 30, 2012 -9 Special Revenue Funds Solid Parking Highway Sewer Waste Cemetery Meter Fuad Fund Fund Fund Fuad Revenues Fuel taxes $ 55293,200 $ - $ - - Public utility franchise taxes 11,065,112 - - - Licenses and permits 7,149,063 Intergovernmental 728,029 2805 942,061 - Charges for services - 6,533,752 6,656,158 - 13,117 Investment earnings - _ _ _ .. Other 840,903 361 4,816 700 - Total revenues 28,076,307 635625808 7,603,035 7,000 133117 Expenditures Current: General Government - - - - Public safety 5,902,867 - - - Highways and streets 141,4655703 - - - Health, education and welfare - - - - - Culture and recreation - - - - - Sanitation - 6,442,200 21,221,008 - - Pension and retirement contributions 156412656 581,5 3 1,067,490 - - Employees' health insurance 9421,590 271 X361 6145216 - - ther 449,573 388,731 2995574 -- - Deht service: Principal - - L538,811 - - Interest 75,858 - .. Capital outlay - - 280,250 Taal expenditures 2354025719 7,684,145 25,0975207 -- - Excess (deficiency) of revenues over (under) expenditures 45673,588 (15121533 7) 7,000 135117 Other Financing Sources (Uses) Transfers in - 1851158,708 - -- Increase in capital leases - - 1,549,741 - - Transfers out _(33213,3467) - - - - Total ether financing sources (uses) (35213,467) - 19,708,449 - Net change in fund balances 1,4602121 (13121,337) 2,214,277 7,000 13,117 Fuad balances at beginning of year 135297,346 551935340 7,269,192 843659 173,679 Fund balances at end of year $ 14,7579467 $ 4,0725003 $ 9,453,469 $ 91,659 $186,796 -9 - 11962,571 8773284 - - 1,99 - - 12,608 - - _ 156,326 - 1,066,214 - 9841466 89,330 8303143 144,706 86,598 4,554 267,094 365000 5,527 74,509 20,697 15,031,095 473,718 202,176 91,845 2,418 1,962,571 1,066,001 3089621 953206 15,719,252 - - 3343014 620,463 75,685 4653252 3 - - - 315,666 -- - 838,384 - - - 435677 - - (450,000) .. - - 3151,666 (450,000) - 88201 - 984,466 89,330 - 183348) 170,463 75,685 416,809 63 1,551,024 553,873 - 2121,784 352775820 1,121,61'7 4,826,134 863722 2,5353490 6439203 - 194,436 3,448,283 1,197,302 5,242,943 86,785 (Continued) -95- Special Revenue Funds Vehicle Workforce Golf Geothermal Reioc. auti- Hawaii County earl Disposal Bikeway Investment Course & Community fi ati n Housing Dedication tion Fund Fund Act Fund Fund Benefits Fund Fund Agency Fund 25050,680 893330 - - 1705891 0,891 _ _ - 1,962,571 - - 15,212,470 - - - - '731, 67 - -- - - _ - _ .. 7,899 63 - - 20 9295084 - 33,631 -- 2300,680 89,330 139625571 731,987 929,084 17001 1532543000 63 - 11962,571 8773284 - - 1,99 - - 12,608 - - _ 156,326 - 1,066,214 - 9841466 89,330 8303143 144,706 86,598 4,554 267,094 365000 5,527 74,509 20,697 15,031,095 473,718 202,176 91,845 2,418 1,962,571 1,066,001 3089621 953206 15,719,252 - - 3343014 620,463 75,685 4653252 3 - - - 315,666 -- - 838,384 - - - 435677 - - (450,000) .. - - 3151,666 (450,000) - 88201 - 984,466 89,330 - 183348) 170,463 75,685 416,809 63 1,551,024 553,873 - 2121,784 352775820 1,121,61'7 4,826,134 863722 2,5353490 6439203 - 194,436 3,448,283 1,197,302 5,242,943 86,785 (Continued) -95- COUNTY OF HAWAII Ionmajor Governmental Funds Combining Statement of Revenues, Expenditures, and Changes in Fund Balances For the Fiscal Year Ended June 30, 2012 Revenues Fuel tapes Public utility franchise takes Licenses and permits Intergovernmental Charges for services Investment earnings Other Total revenues Expenditures Current General Government 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 Capital outlay Total expenditures Excess (deficiency) of revenues over (under) expenditures Other Financing Sources Uses Transfers in Increase in capital leases Transfers out Total other financing sources (uses) Net change in fund balances Fund balances at beginning of year Fund balances at end of year See accornp n ing independent auditors' report. (Concluded) Debt Service Fund Total Bond Nomnajor Interest Redemption Governmental - - 83293,200 - 11,065,112 - - 9,459,964 4422719 - 19,316,545 - - 133934,994 7,962 -- - 19815,815 442,719 - 6328933592 - 267,094 - - 5,9383867 - - 14,540,212 - - 16,9935666 - _ $56,367 - 28,540,492 3,929,449 _ 2,129,549 1,142,732 Y 23,059,659 24,608,3 15 14,839,262 - 141,9171,538 1�F,QJ,�L1L.JL1JLlJ (14,396,543) (235059,659) 14,663A16 22,331,013 X -r 5 VV —r X V Le LM ✓ .J 1 9 V 1. a 266,873 (728,646) 1,871,887 24,742,795 231381760 24,014,149 -- 1 11-t5jVVg0J f (5054075265) 56,3 07,187 1,593,418 (356639467) J,a.,o rj 64,262,8 72 68,092,745 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 3, 2012 Revenues; Taxes: Fuel taxes Public utility franchise takes 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 (deficiency) of revenues over (under) 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. Actual Variance Original Final (Budgetary Positive Budget Budget Basis Iegativ $ 6,6905816 6,690,816 8,293,200 1,602,384 6,667,3 89 6,66733 89 719149,063 481,674 577:0210 727,21 728,029 819 400,000 4003000 570, 15 8 1703158 803618 803618 270,745 1903127 23,741,065 23013065 28,076,307 43185,242 558003716 6,137,716 5,620,162 517554 121,0705566 125070,566 10350%326 1,561,240 41,0445593 4,044,593 4,044,389 204 2,075,283 2,075,283 1,574,0 13 5015270 1,087,116 1,087,116 902A01 184,715 I popo 813,000 4435016 3693984 26,0783274 263228,274 235093,307 3,134,967 (21,3371,209) (2,337,209) 43983,000 75320209 (3,1891,216) (3,213,467) (3,213,467) -- (5,526,425) (5,550,676) 1,769,533 7,320,209 75770,921 73746,670 $ 15,0663879 7,320,209 -97- COUNTY F HAWAII Sewer Fund Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual (Budgetary Basis) For the Fiscal Year Ended June 3, 2012 Revenues.- Intergovernmental evenues.Inter o rnental Charges for services - sewer fees Other Total revenues Expenditures: Sanitation Pension and retirement contributions Employees' health insurance Other Total expenditures Deficiency of revenues under expenditures Fuad balance at beginning of year Fund balance at end ofyear See accompanying independent auditors' report. Actual variance Original Final (Budgetary Positive Budget Budget Basis Negative - - $ 28,695 $ 285695 619201,957 659201,957 6,533,752 (387,205) 6,920,957 6,920,957 6,562,808 61486,318 65616,918 6,2823844 334,074 661,303 557,803 5572443 360 302,797 260,297 260,216 81 13635,000 156501,400 485,272 1,165,128 9.1085:0418 9,085,4 18 7,585,775 1,499,643 (23164,461) (2,164,461) (1,022,967) 1,W 1,494 .98. COUNTY OF I AWAH Solid Waste Fund Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual (Budgetary Basis) For the Fiscal Year Ended June 30, 2012 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 Excess deficiency of revenues and other sources over (under) expenditures Fund balance at beginning of year Fund balance at end of year See accompanying independent auditors' report Actual Variance Original Final (Budgetary Positive Budget Budget Basis) (Negative) 915,000 $ 9305000 $ 9059461 $ (24,539) 6,875,3 06 65875,306 6,656,158 (2195148) - - 4,816 4816 7,790,306 7,805,306 7,566,435 (238,871 25,978,228 25,9935228 223832,853 3,160,375 1,169,928 1,169,928 1,020,259 14909 657,036 657,036 5885410 68,626 450#000 4509000 300,947 149,053 28,255,192 28,270,192 24,742,469 3,527,'723 {20)464,886) (209464,886) (17,176,034) 3,288,852 18;J58,708 18,158,708 18,158,'708 - (25306,178) (2,306,178) 982,674 3288,852 7,269,192 7,2691,192 7,269,192 - 4,963,014 $ 4,963,014 8,251,866 3,2883152 COUNTY OF HAWAII Cemetery Fund Schedule of Revenues, Expenditur s, and Changes in Fund Balance - Budgt and Actual (Budgetary Basis) For the Fiscal Year Ended June 30, 2012 Revenues - other - sale of cemetery plots Expenditures - health, education and welfare Excess of revenues over expenditures Fund balance at beginning of year Fund balance at end of year See accompanying independent auditors' report. Actual Variance Original Final (Budgetary Positive Budget Budget Basis} (Negative) $ 10,000 $ 1,000 7,001 $ (3,000) 7,000 7,000 $ 84,659 $ 84,659 91,659 7,000 -100- COUNTY OF HAWAH Parking Meter Fund Schedule of Revenues, Expenditures, and Charges in Fund Balance - Budget and Actual (Budgetary Basis) For the Fiscal Year Ended June 30, 2012 See accompanying independent auditors' report. -11- Actual variance Original Final (Budgetary Positive Budget Budget Basis (Negative) Revenues - Charges for services - highways and streets - $ - 13,117 13,117 Excess of revenues over expenditures - - 13,1 17 13,11'7 Fuad balance at beginning of year 1733679 173,679 173,679 - F'und balance at end of year 1731,679 $173.1679 186,796 $ 13,117 See accompanying independent auditors' report. -11- COUNTY OF HAWA Vehicle Disposal Fund Schedule of Revenues, Expenditures, and Charges in Fund Balance - Budget and Actual (Budgetary Basis) For the Fiscal Year Ended June 30, 2012 Revenues: Licenses and permits - vehicle disposal fee 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 aeeompany1n g independent auditors' report. Actual Variance Original Final {Budgetary Positive Budget Budget Basis (Negative 2,031,888 2,031,888 2,050,680 18,792 2,559,268 21,563 15,986 ., .1%.1% r% 2,598,81 (566,929) N f f -9 !%A J 2,559,268 21,563 15,986 Im, M .M.M 2)169,232 19,194 12,148 390,036 ,3 6 3,83 �...N r .t (566,929) (1495894) 417,035 4 P* w i h114 i _d a a -d hw J 984,095 984,095 1,4015130 4173035 102 COUNTY OF HAWAII Bikeway Fund Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budgt and Actual (Budgetary Basis) For the Fiscal Year Ended June 30, 2012 Revenues - licenses and permits - bicycle tai Expenditures - highways and streets Ekes (deficiency) of revenues over (under) expenditures Fund balance at beginning of year Fund balance at end of year See accompanying independent auditors' report. Original Actual Variance and Final (Budgetary Positive Budget Basis) (N(Negative) 20,000 19,330 $ 69,330 1713000 - 1'71, (15 1,000) 8%,330 2402330 553,173 553,173 $4022,873 $643,203 $240,330 -103- COUNTY OF HA AH Workforce Investment Act Fund Schedule of Revenues, Expenditures, and Changes in Fuad Balance - udget and Actual (Budgetary Basis) For the Fiscal Year Ended Jure 30, 2012 Actual Variance Original Final (Budgetary Positive Budget ^_ Budget Basi (Negative) Revenues - interg verrrnm ntal - federal grants - 1,521,232 $ 154221,662 (98,570) Expenditures - health, education and welfare - 1,521,232 15422,662 98,570 Excess of'revenues over expenditures - - - Fund balance at lae inning of year Fund balance at end of year - $ See ac companying independent auditors' report. 104 COUNTY OF HAWA Golf Course Fund Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual (Budgetary Basis) For the Fiscal Year Ended June 30,, 2012 Revenues Charges for services Other Total revenues Expenditures: Culture and recreation Pension and retirement contributions Employees' health insurance Other Total expenditures Deficiency of revenues under expenditures Other financing sources Transfers in - General Fund Excess of revenues and other sources over expenditures Fund balance at beginning of year Fund balance at enol of year See accompanying independent auditors' report. Actual Variance Original Final (Budgetary Positive Budget Budget Basis) (Negative 804,647 804,647 7311,967 (72,680) 849,592 849,592 783,521 66,071 151.,845 152,445 139,223 13,222 1055357 105,3 57 83,241 221,116 131,519 12,919 4,3 8 8,536 1,120,313 1,120,313 11,0103368 109,945 (3151,666) (315,666) (278,381) 371,285 315,666 315,666 315,666 - - 37,285 371,285 212,784 212,784 212,784 - 212,784 212,784 25,069 37,285 - 105- COUNTY FHAWAII ntbe anal 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 3, 2012 See accompanying independent auditors' report. -106- Actual Variance rrgmnal Final (Budgetary Positive Budget Budget Basi legative Revenues - other - g othennal royalties $ 575,000 $ 575,000 $ 929P4 354P4 Expenditures. General government. Legislative 24,890 245,890 24,890 - lanning and zoning 42% 110 429,110 242,204 1865906 Public safety - traffic 96,000 96,000 36,000 60,000 Culture and recreation -- parrs and recreation 25,000 25,000 - 25,000 Total expenditures 5755000 575;P00 33,4 271,906 Excess of revenues over expenditures - - 625,990 625,990 Other financing uses: Transfers out - Capital Projects Fund - (450,000) (450,000) - Excess (deficiency) of revenues over (under) expenditures and other uses - (450,000) 175,990 625,990 Fund balance at beginning year 3,277,820 3,2' 7,820 3,277,820 - Fund balance at end of year 332775820 $ 2,827,820 $ 33453,810 625,990 See accompanying independent auditors' report. -106- COUNTY OF HAWAR Beautification `und Schedule of1Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual (Budgetary Basis) For the Fiscal Year Ended June 30, 2012 Actual Variance Original Final (Budgetary Positive Budget Budget Basin (Negative) Revenues - licenses and permits - highway beautification 153,600 $ 153,600 170,891 17,291 Expenditures: Highways and streets 92,300 92,300 72,534 19,766 Culture and recreation 61,300 61,300 27,394 33,906 Total expenditures 153 fi00 153,600 991,928 53,672 Excess ofrevenues over expenditures - 70,963 70,963 Fuad balance at beginning of year 1,121,617 151215617 1,121,617 - Fund balance at end of year $1,121,617 1,121,617 1,192,5 80 70,963 See accompanying independent auditors' report. -107- COUNTY F 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, 2012 Revenues: Intergovernmental -- Federal - HU -- 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 Excess of revenues and other sources over expenditures Fund balance at beginning of year Fund balance at end of year See accompanying independent auditors' report. Actual Variance Original Final (Budgetary Positive Bud et Budget Basis) (Negative) 15,265,687 151265,687 15, 178,813 (861,874) 41,046 41,046 339657 (72389) 6,000 6,000 7,899 13899 - - 33,545 331,545 6 86 15,3122733 15331.,733 15,254000 (58,733) 15,404,388 15AO4388 14,7255884 678,504 521,478 5215478 4535774 67,704 225,251 2255251 193,586 311,665 16,151,117 16,151,117 15,373,244 777,873 838,384 7195140 719,140 4,8262,134 $ 4,8265134 $ 5,545,274 S 719,140 108 - COUNTY OF HAWAII Park Dedication Fund Schedule of Revenues, Expenditures, and Charges in Fund Balance - udget and Actual (Budgetary Basis) For the Fiscal Year Ended June 3, 2012 Revenues - investment earnings Excess of revenues over expenditures Fend balance at beginning of year Fund balance at end of year See accompanying independent auditors' report. Actual variance Original Final (Budgetary Positive Budget Budget Basis) (Negative - - 63 6 63 63 86,722 86,722 86,722 - 86,722 86,722 $ 86,785 63 109- Assets Cash and cash equivalents Investments Due from other agency funds Other receivables Total assets Liabilities COUNTY HAWAII Agency Funds Combining Statement of Agency Funds Net Assets June 30, 2012 Performance State improvement Improvement Improvement and Weight District District District Refundable Tax No. 17 No. 18 Revolving ing Deposits Yw Y Tl Y T Y 4A ■ Y� y $19755,546 - 17,532 $ 2861,569 $ 522,542 - - 1,45 8,449 - - n I A ! Due to other agency funds - $ - - - 13920 Accrued liabilities 1,755,546 Y 10,907 - - Advances parable - - 14, 1 - 520,622 Assets held for the benefit of improvement districts - - 15459,87 286,569 Total liabilities $15755,546 $ - $ 1,484,127 2865569 $ 522,542 See accompanying independent auditors' report. -110- Non -Profit Organ and Business Payroll Flexible Lapsed License 'Tissue Improvement Clearance Spending Warrants Plates Education District 323,344 $ 365,481 $ 221,496 1,175 $ 923 2A3 3,496,791 - - - -- - 1 X 8,449 - - 2,246 - -- - 2,246 - - 11,1 - - 14,997 34,293 $ 323,344 $ 365,481 $ 234,892 $ 1,175 923 17, 180 $ 4,991,779 $ 326 - $ -- $ 323,018 365,481 234,892 1,175 $ - $ 2,246 923 2,183 2,694,125 - 534,805 - - - - I t377 ! 1 � f vvV ovvj $ 323,344 $ 365,481 234,592 $ 1,175 $ 923 $ 1'7,180 $ 4,991,779 - ill - COUNTY 1 H WH Agency Fund Combining Statement of Changes in Assets and Liabilities For the Fiscal Year Ended June 30, 2012 State weight Tax Fund Assets Cash and cash equivalents Liabilities Vouchers payable Accrued liabilities Accrued liabilities - due to State of Hawaii Total liabilities Improvement District leo. 17 Fund Assets Cash and cash equivalents Liabilities Vouchers Payable Assets held for the benefit of improvement di tTiots Total liabilities Balance Balance July 1, June 30, 2011 Additions Deduction 2012 $ 8933557 18,285,128 $ 17,423,139 $1,755,546 $ - $ 1753 3 6,190 17,336,190 - - 893,557 18,256,295 175424,307 1,755,545 893,557 $ 35,6223486 34,7603497 1,755,546 $ 535314 7205725 S 804,042 $ - - 53,498 $ 53,498 - 83,314 230 835544 - 83,314 S 83,728 167,042 $ - -112- COUNTY OF HAWAII Agency Funds Combining Statement of Changes in Assets and Liabilities For the Fiscal Year Ended June 30, 2012 - 113 - Balance Balance July 1, June 30, 2011 Additions Deductions 2012 Improvement District No. 18 Fund Assets Cash and cash equivalents S 68,307 3435083 $ 393,858 $ 17,532 Investments 1,5863399 12,314 1401,264 1,458,449 Other receivables 12,014 310,969 3145837 5,146 Total assets 1,666,720 6665366 $ 5451,959 $134845127 Liabilities Vouchers payable $ - 2845,851 $ 284,851 $ - ccrued liabilities 14,873 266,5 10 270,476 10,907 Advances payable 115702 14,1 3 112,702 14,183 Assets held for the benefit f improvement districts 1,640,145 319,880 500,988 15459,037 Total liabilities $1,666,720 $ 885,424 1,0685017 1,484,127 Improvement District Revolving Fund Assets Cash and cash equivalents $ 4013220 290 1145941 $ 286,569 Liabilities Vouchers payable $ - $ 114,936 114,936 $ - Assets held for the benefit of improvement districts 4015220 290 114,941 216,569 Total liabilities $ 401,220 $ 1155226 229,577 $ 2861,569 Performance and Refundable Deposits Fund Assets Cash and cash equivalents $ 548,549 $ 374,996 401,003 $ 522,542 Due from other nonmagency funds 11,600 - 11,600 - Total assets $ 560,149 $ 374,996 412,603 $ 522,542 Liabilities Vouchers payable $ - 355,166 315,166 $ - ue to ether agency funds 800 15920 800 11920 Advances payable 559,349 361,251 399,978 5205622 Total liabilities $ 5601149 $ 748,337 $ 7853944 522,542 - 113 - COUNTY OF HAWAII Agency Fund Combining Statement of Changes in Assets and Liabilities For the Fiscal Year Ended June 3 , 2012 Balance Balance July 1, June 30, 2011 Additions Deductions 2012 Payroll Clearance Fund Assets Cash and cash equivalents $1,699,774 203,409,644 $ 204,786,074 $ 323,344 Due from ether non -agency funds - 204,8115333 204,811:0333 - ther receivables 85674 - 8,674 Total assets $1,705,448 $ 408,220,977 4095606,081 $ 3233344 Liabilities Vouchers payable $ $ 94,O 17,611 $ 94,0 17,611 - Due to other agency funds 1,316 326 1,316 326 Accrued liabilities 1,707,132 387,133,467 3881517,581 323,018 Total liabilities $1,708,448 $ 481,151,404 $ 4823536,508 $ 3235344 Flexible Spending Account Assets Cash and cash equivalents $ 366,905 $ 284,109 $ 2855533 $ 365,481 Liabilities Accrued liabilities $ 366,905 S 284,109 $ 285,533 $ 365,481 Lapsed Warrants Fund Assets Cash and cash equivalents 2021,302 $ 20,231 $ 1,037 $ 221,496 Due from other agency funds 2, 116 2,246 2,116 2,246 Other receivables 17,838 11,150 175898 11,150 Taal assets 2223316 $ 331,627 $ 21,051 $ 2345892 Liabilities Vouchers payable $ $ 1,038 11,038 $ - ccrued liabilities 2225,316 39,654 27,078 2342892 'Fetal liabilities $ 222,316 $ 40,692 282,116 $ 234,892 � 11 COUNTY 1 F HAWAII Agency Fund Combining Statement of Changes in Assets and Liabilities For the Fiscal Year Ended June 3, 2012 Business Improvement District I-Kailua Assets Cash and cash equivalents $ 53287 $ 784,080 7873184 $ 2,183 Other receivables -BID 1-I ailua Assessment 153335 783,779 784,117 14,997 Other receivables - 27,469 273469 - Total assets $ 203622 $ 1,595,328 $ 1,598,770 $ 17,180 Liabilities Vouchers payable Accrued liabilities - due to K BIT Assets held for the benefit of improvement districts Total liabilities $ - 785,265 $ 7851,265 $ - 5,27 2,183 5287 2,183 4D 1 �-dv-t,Juj 11Ju /;,0V ! 1 I � 1 oU _115- Balance Balance July 1, June 3 0, 2011 Additions Deductions 2012 Ion -Profit License Plates Fund Assets Cash and cash equivalents $ 15175 $ 4,537 $ 45537 $ 1,175 Liabilities Vouchers payable $ - $ 4,425 $ 45425 $ - Aeerued liabilities: Due to non-profit agency 13175 4,537 4,537 1,175 Total liabilities 11175 $ 8,962 83962 $ 1,175 Organ and Tissue Education Fund Assets Cash and cash equivalents $ 577 $ 3,634 $ 35288 923 Liabilities Vouchers payable $ - $ 3,237 $ 3,237 - Accrued liabilities -clue to State of Hawaii 577 33634 3,288 923 Total liabilities $ 577 $ 6,871 $ 6,525 923 Business Improvement District I-Kailua Assets Cash and cash equivalents $ 53287 $ 784,080 7873184 $ 2,183 Other receivables -BID 1-I ailua Assessment 153335 783,779 784,117 14,997 Other receivables - 27,469 273469 - Total assets $ 203622 $ 1,595,328 $ 1,598,770 $ 17,180 Liabilities Vouchers payable Accrued liabilities - due to K BIT Assets held for the benefit of improvement districts Total liabilities $ - 785,265 $ 7851,265 $ - 5,27 2,183 5287 2,183 4D 1 �-dv-t,Juj 11Ju /;,0V ! 1 I � 1 oU _115- COUNTY OF HAWAII Agency Funds Combining Statement of Changes in Assets and Liabilities For the Fiscal Year Ended June 30, 2012 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 Total assets Vouchers payable Due to other agency funds Accrued liabilities Accrued liabilities - due to non-profit agency Accrued liabilities - due to State ofHawaii Accrued liabilities - due to KV II Advances payable Assets held for the benefit of improvement districts Total liabilities See ac corn pany 1 ng independent auditors' report. Balance Balance July 1, June 30, 2011 Additions Deductions 2012 43270,967 $ 224523O,960 225,005,136 $ 3,496,791 1,586,399 12,314 140,264 1,458,449 2,116 2,246 2,116 2,246 1 f,600 204,811,333 204,822,933 - 1 52,33 783,779 784,117 145997 38,586 349,588 3685878 19,296 $ 5,925,003 $ 430,190,220 $ 4315123,444 $ 4,991,779 - 113,016,217 113,0162217 $ - 2,116 25246 2,116 2,246 2,3115226 3 87,723,741 389,100,668 9342,299 1,175 4,537 4,537 1,175 894,134 1 8,289929 17,427,595 1,756,468 5,287 2:1183 5,287 2,183 5715051 375,434 41 lfflO 534,805 2,140,0 14 1,097,317 1,476,"728 137605,603 $ 5,925,003 520,511,604 $ 521,444,828 $ 4,991,7'79 - 116- COUNTY OF HAWAII Private Purpose Trusts Combining Statement of Private Purpose Trust Net Assets Assets Gash and cash equivalents Investments Total assets It Assets Held in trust for other parties Total net assets See accompanying independent auditors' report. June 30, 2012 2,158,332 25766,988 43925,320 $ 251583332 2,766,988 $ 4,925,320 $ 2,1 8,332 21)766,988 $ 4,925,320 -11- Shippers' Total Geothermal Wharf Private Asset Trust Purpose Fund Fund 'gusts 2,1581,332 $ 1,558,285 $ 3,716,117 13208,703 11)208,703 2,158,332 25766,988 43925,320 $ 251583332 2,766,988 $ 4,925,320 $ 2,1 8,332 21)766,988 $ 4,925,320 -11- COUNTY OF HAWAII .'rite Purpose Trusts Combining Statement of Changes in Private Purpose Trust Net Assets For the Fiscal Year Ended June 30, 2012 Slippers' Total Geothermal Wharf Private Asset Trust Purpose ---- A -- - , 'T' ---- Additions Contributions: Puna Geothermal Venture Investment earnings: Net increase in fair value of investment Dividends Interest Total additions Deductions Grant payments Total deductions Change in net assets Net assets, beginning of year Net assets, end of year See accompanying independent auditors' report. 50,000 50,000 169,833 169,833 55,919 55,919 1,532 1,398 2,930 513532 227,150 278,682 120,609 120,609 51,532 1062,541 2,1065800 2,660,447 25158,332 2,766988 -118- i Lu,ouy 1 8,03 4,767,247 4,925,320 STATISTICAL SECTION (iJNAUDITED) Contents Page Financial Trends —These schedules contain trend information to help help the reader understand how the County's financial performance and well-bemng have changed over time. 11 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. 130 Demographicand 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. 133 Operating nfor coati r — These schedules contain service and infrastructure data to help the reader understand how the inf rinati n in the County's financial report relates to the services provided and the activities performed by the County. 135 Q,} t! d' en [- -ct co ao av I�t ov h h /� + nA in k oCh F r 1 Y i W F� V F W NIO in 44 60,Y 0% osi 01 ON Y �4 h A W�y V , /�L}f� W `0* C' C � I * C> W Cq /s - j� /� % �.,,,�rn ` �..�A yy�/s �.co` n�yj� %0 / �0 �t 00 l" 1 C> W% V /V� �~ 4 Y = tn V J t J 00 aN 1 {yh 001�5 V}.F 00F �.yyT4 F }�F W�F R R F A /may 4� 1 41 C'44 / ` c Y V y 0 � �y�y W W S V M - Nt / Wye a y m 1 Y � k F r4 rl00 C) CNh A R en R R /y/yIs ON � %D *Cjlx `x I # to in ras eq 1q < 00 ;{mom}4� / �/W� 'i I V 1 /Wy `�..� �� ' + ���y Vim /� ���y /� / V0 Vim/ /yam V \ ��y /� `� yYyy� `cl. 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COUNTY OF HAWAII Changes in Fund Balances, Governmental Funds {Modified accrual basis of accounting Last Tort Fiscal Years (Amounts in thousands) Total Revenues 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Revenues - Property tax $109,991 $121,868 $131,087 $153,207 $181,446 $ 248,313 $ 225,858 $215,548 16,511 $ 208,231 Public service company tax 5,064 5,332 6,351 6,812 7,396 5,351 10,229 9,647 9,297 9,837 Fuel tax 7,343 7,552 7,581 7,857 8,471 7,888 7,662 7,406 7,603 8,293 Public utility franchise tax 4,817 5,373 6,017 7,329 8,520 9,027 11,118 8,963 9,416 11,065 Licenses and permits 9,261 11,840 14,442 16,544 16,269 15,918 14,972 14,725 15,097 15,790 Intergovernmental 65,203 58,559 73,372 69,637 63,599 72,601 70,869 77,614 93,745 140,867 Charges for services 13,481 14,467 18,149 19,852 21,685 22,154 21,404 18,909 16,416 16,885 Investment earnings 2,066 1,806 3,104 5,223 14,291 12,144 8,914 2,253 510 406 Other 6,179 4,718 4,450 4,380 5,073 7,151 5,690 3,241 7,874 4,201 Total Revenues 223,405 231,515 264,553 290,841 322,750 363,577 376,716 358,306 376,472 375,635 Expenditures: Current: General government 22,317 23,070 26,183 31,153 37,652 42,931 45,582 40,586 34,251 35,088 Public safety 64,667 69,117 76,444 83,591 93,241 103,617 107,540 108,798 104,917 104,523 Highways and streets 8,675 9,542 9,787 12,605 14,033 19,529 17,159 20,222 17,114 17,338 Sanitation 16,629 17,602 21,883 26,565 31,817 33,445 35,025 35,675 28,424 29,511 Health, education and welfare 18,867 19,047 19,870 19,050 21,470 24,609 24,596 25,519 26,847 23,749 Culture and recreation 13,086 13,169 13,982 14,731 17,118 18,179 18.853 17,266 16,001 16,763 Pension and retirement contributions 7,926 11,081 14,204 19,937 21,796 24,296 28,870 28,509 27,284 27,773 Employees" health insurance 12,758 14,256 16,168 16,133 16,941 18,089 19,119 23,573 25,212 25,902 Other postemployment benefits - - - - 13,629 14,954 15,700 17,307 - Other 5,629 7,128 6,133 6,780 5,108 5,344 6,257 4,773 4,758 4,183 Debt service: Principal 11,800 12,826 13,150 14,060 16,076 16,548 19,749 20,720 42,233 24,834 Interest 8,469 9,283 9,534 9,914 9,894 13,116 12,790 14,584 14,841 15,432 Capital outlay 32,952 23,474 32,816 34,588 52,285 70,156 89,368 140,653 87,782 71,220 Total Expenditures 223,775 229,595 260,114 285,110 337,431 403,508 440,158 456,578 446,971 395,916 Revenues over (under) Expenditures (370) 1,920 4,439 5,731 (14,681) (39,931) (63,442) (98,272) (70,499) (20,281) Other Financing Sources (Uses): Sale of assets 9 1,593 1,456 82 5 3,470 58 14 6 153 Capital leases 1,353 1,474 1,369 404 2,443 2,187 1,026 1,945 47 2,571 State Devolving Fund loans 853 - 1,544 25 6,255 1,916 280 6,811 9,257 4,569 Sale of bonds 37,262 I,725 30,000 25,000 85,000 - 50,000 - 45,400 - Issuance of bond anticipation notes (BANS) - _ _ _ _ ,. 19,000 - - Refunding bonds i - 24,595 - 31,607 - - - - - Premium on bonds - - 3,025 972 3,099 - 185 1 2,078 Refunding bondsfBANs issuance costs - - (129) - (218) - (19) � - Payment to refunded band escrow agent - - (25,885) - (32,699) _ _ _ Transfers in 29,943 39,440 42,119 45,691 59,139 64,929 56,697 61,495 56,099 59,971 Transfers out (29,943) 39,440 42,119 X45,691} X59,139 (64,929 (56,697 (61,495 (56, 99} X59,971 Total other financing sources 39,477 4,792 35,965 26,483 95,452 7,573 51,549 27,750 56,388 7,243 Net change in fund balances $ 39,107 S 6,712 40,444 $ 32,214 $ 80,771 $ 32,358) $ (11,893 (70,52 $(14,1111 S(13,038) Debt service as a percentage of noncapital expenditures 10.7% 10.8% 10.3% 9.7% 9.0% 9.3% 9.0% 10.4% 15.9°fin 12.3% Unaudited - see accompanying independent auditors' report. -123- C ' qRT qqr � Ln 4- ft w m CEJ *� C +--+ " C +—' coSC +—+ C1] 00 4 m c`*'1 C- ,-4 C7% --� C 1 C *-r d' C ] en M ,'% R n fk 45 IN I% /k h at Ik I• 0% I% I% 4N R R R h 00 ,-4 a,% C N 00 C— C C ---4C- M C� kf`� C 0 *--+ C4 Cq C d' cq C [� C, Cq C3, M 00 m C %�D I�r M C31% C� M C7 t tet• 00 M C C -#• 00 M C%1 00 qt M m C- 00 N cl cq C ,-� Os Os r,n CD co C=> +--4 00 00 00 00 00 00 00 tn 00 00 00 00 00 00 00 Ln as Eo!�Cx C C C C; a; O kn C3� CJS C C C C GIN* C` kt i g 00 Ln � CN C W CJ\ tn CN re) C7 t C> N 00 m C 00 CJS i-- 00 to --I Cq �,0 C m [- Ln C) +--1 00 %10 (N Cq M C,] kn C C -4 C C) wl 00 to C�4 C-- LD IN #% R ,1 i4 it I5 RN ON H A •k I1 0% /% d% R R R h C C: C� +� to Ln Ln kn r. -C* C-1 ori 00 C% 'q` f--{ w --d '-d �,D CEJ C m C� [— kn +- C Cq � Cq kr) C *' 4 [*�+-� C t--00 �' C-1 Ln C'] [� 17 1-7 . 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CC 0 }" � 00 i • P Cd 0 C o, a 0, a' = , —127- 0 127— Table 6 COUNTY OF HAWAII Principal 'taxpayers June 31, 2012 and 2003 Dote: Gross valuation at January 1, 2011; $29,720,443,204 Gross valuation at January 1, 2442: $14,266,522,103 Source: County ofHawaii, Department of Finance, Real Property Tax Division Unaudited -- see accompanying independent auditors' report. - 12 Fiscal Year 2012 Fiscal Year 2003 Percentage Percentage 2011 of Total 2002 ofTotal Assessed Assessed Assessed Assessed Taxpayer Business Valuation Rank Valuation Valuation Rank Valuation Mauna Keafflapuna Beach Corps. Developer/Hotel 217,554, 100 1 0.7% S - _ Hilton Land Investment 1 LLC Hotel 206,052,400 2 0.7% - HuarlaI i Investors LLC Developer/Hotel 189,089,800 3 0.6% - - Orchid 09 LLC Hotel 116,619,400 4 0.4% - - 13 ISD Acquisition LLC Developer 10690035500 5 0.4% - - Mauna Lard Resort Inc.Developer/Hotel 8950069000 6 0.3% 102,923,900 7 0.7% Hilton Resorts Corp. Timeshare 88,977,201 7 0.3% - - Kohanaiki Shores LLC Developer 6553475900 8 0.2% - - Kona Coast Resort LTD Hotel 575409,200 9 0.2% - - BRE/Waikoloa LLC Hotel 55,610,900 10 0.2% - - BP Bishop Estate Developer - - 428fflO9800 1 3.0% Mauna Idea Development Corp Motels/Dev. - - 238,141,700 2 1.7% WB Kukio Resorts LLC Developer - - 190,7049200 3 1.3% Global Resort Partners Hotel - - 15657325600 4 1.1% Liliuol alani Trust Estate Land Trust - - 143,3135700 5 1.0% FHR ML Hotel Moldings LLC Hotel -- - 128fi78fflO 6 0.9% 1250 Oceanside Partners Developer - - 7895285600 8 0.6% I aupulehu Makal Venture Developer - 74,3962800 9 0.5% R H Inc. Hotel -- - 54,7239400 10 0.4% 1519156705400 4.0% 1,596,1749304 11.2% Dote: Gross valuation at January 1, 2011; $29,720,443,204 Gross valuation at January 1, 2442: $14,266,522,103 Source: County ofHawaii, Department of Finance, Real Property Tax Division Unaudited -- see accompanying independent auditors' report. - 12 V) c cu 4 Ow O 964 -129- im WO C, 00 to d- v- Cq c n 00 ItT d- r+ as 00 00 c c a r --q c q Ops No PZ NO%01 101�0 NO -01 O N 00 Ch 0 fly on -,t qrt 00 It cq 00 IT 00 cd vp) 00 cam- d- I L at r� #'. Rk A A I5 It cq It o c=>, 00 con Ln CD M X rN 00- c c 00 "0 c c c* c 1 c c q m It to V m o o c a o a o 0 0 0 A<7Noo � C%%C% co go a,%, 00 CN CN u 00 +—+C> 00 00 *- [-- 00 4-4 0 ' d 00 +' �, �' tin - m u c1q 00 00 ct CDUl, 69 m t,- 00 Cr ON 00 r %0 r� Lr) I� .y V 00 ,v--yy L `+1 --y l Y 00 � h k � C y r y FCNI 4- m cif 0 00 ) �� '� / V �+F * + 1 r� 1 + + �� 0 0 �� y � �'i � L q Y �� { -1 �I u YJ 7 y y �y �y �y �..� y \ `# \ Y i Y i Y l `# � `i l Y -129- im WO tn w N E «� 16.4O �4 C m Q to 114 0 tn 10 Ln t4n o c coo CNt 110 +--+ d- 00 �. c— c m r- 0 w 00 h h {a W} n iti R A R + r� �1 �1 V-1 rl �1 rrl Twq rW z kD W t— kn -:t W) in ern � ci, o ►� ao v1% N- r- r- � t- --A M Tt xnora.�.� 00 --w A 15 � R n h R h n Is Cq M cq M Ln Wn OQ +-1 00 • n.t C 00 cq 00 en r"� i--1 Chi ► y M t- 00 �- 4 .--4 ,--4 M M � �Eoq .{ 4 En En fad CD CL Ela 1 .- a CN m 00 000 C civr- m a cq o- o 'kO *--4 o It o 00 C> d- t�- O 1", N \ 4Kt clq rri C4 00 R. O C-4 Cq rel c'+'] c q M M cam, M ' c L) I'D " I'DcC4 00 W N --w M n n n n h n n n R awn a --F "o --�r rd C', y . 00 in CD C) 00 00 y SOCI IS cn 1 h CC r- ) l *4 #,�,ryfps �'�.) k'y+ 1( r. yam ,..# M CIS 7+�MI l j '� i aM' / 4 �r/Ha kFY VJ F+4 C • i it 1la� n r kCD •' f '0 4 % i h Ln +CDCD 'V �{ r- 'O00 t} Mcl ti Y rq m rq eq m m ChiV. , ID F O C] CD M y CD C ca � , ycq % � �1// i i - Twp /.yam �� w f4w -15 YS � 1� N C14 r4 3 fad CD CL Ela 1 Fiscal Year COUNTY OF HAWAH Ratios of General Bonded Debt Outstanding Last Ten Fiscal Years Debt Applicable to Legal Debt Margin (a) Table Percent of Net Taxable Property Per Value (b) Capita (c) 2003 187,316,839 1.6% 1")180 2004 17603,195 1.4% 1,082 2005 195,198,142 1.3% 13t16 2006 205,219,940 1.20 1 � 199 2007 281,836,503 1.2% 1,633 2008 265A312280 1.0% 15510 2009 296,53 5,925 1.0% 13667 2010 277,4815633 1.0% 1,549 2011 305,61501 1.2% 19636 2012 317,699,844 1.3% 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 rotes to the basic financial statements. Unaudited - see accompanying independent auditors' report. - 131 LD O r d" cq r cq qe ON 00 42 O en � ` fios CG INO *--I C) T -A 0 4� OLD G.} GO CU `�'� ci 0 '0 4� 4) OBD 0 le rq rq C-.- l— kn[ 4CI' 1 ccq cam# ftm too 00 rnO o ' CD Q) cq It its 3 cncc v V--4 en cr�o ,moi i4 O i Cd1 t 00 4 cry eq 4 aN CIS CN 1-4 a ," 00 Co CD CEJ kn m 'd' 00r1l tn ft ,--GD ca tw ,--i LO C- CIN er-enrq V-4 m 0;CG OJ LD fos os a..� Cc .� rz cl C 4-4 L � 1 2 — LD O r d" m en r cry 42 O � ` CG 0 0 4� OLD 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 2002 154,576 307A5 $ 23,920 295826 4.6% 20 158,442 4 3095362 Lr 24A21 2% 4.6% 2004 162,852 $ 45223,829 $ 25,937 292827 3.9% 2005 1682237 $ 4,138,838 27,573 3 OP262 3.3% 2006 173,536 $ 5, 64,624 295185 30,53/ 3.0% 2007 177,733 5,509,169 $ 3 O,997 3 0,618 3.4% 2008 1815506 $ 58999236 32,502 3 0A8 5.7% 2009 1833,629 $ 55517,497 $ 30M7 30,138 9.9% 2010 185,381 5971705 $ 30,844 29,741 10.0% 2011 1869738 N/A NIA 30,103 9.9% Amounts reflect subsequent adjustments Source: County of Hawaii, Department of Research and Development Unaudited - see accompanying independent auditors' report. ff F91 UI rupoyr State of Hawaii County of Hawaii United States Government Hilton Waikoloa Village KTA Super Stores Wlrt Four Seasons Resort Hualalai The Fairmont Orchid, Hawaii Fauna Kea Beach Hotel Mauna Lani Resort (Operations) Inc. Mauna Dani Bay Hotel Hapuna Beach Prince Hotel Total COUNTY OF HAWAI'l Principal Employers, County of Hawaii June 30, 2012 and 2003 2011 2004 a Table 1 Total employee count 783950 NOTES: a Data for Fiscal Year 2012 and the period of 2001 to 2003 are unavailable. Source: County of Hawaii, Department ent f Research and Development pment Unaudited - see accompanying independent auditors' report. -134- 76,200 Percentage Percentage of Total County of Total County Employees Rank Employment Employees Rank Employment 7,962 1 10.1% 73608 1 10.0% 2,630 2 3.3% 23291 2 3.0% 15429 3 1.8% 11,221 3 1.6% 35 4 1.2% 1,100 4 1.4% 750 5 0.9% 785 5 1..0% 741 6 0,9% - - 650 7 0.8% 557 8 0.7% 616 8 0.8% 600 6 0.8% 513 9 0.6% 556 9 0.7% 450 10 0.60 - - - - 580 7 0.8% - - 542 10 0.7% 163676 21.1% 153840 20.8% Total employee count 783950 NOTES: a Data for Fiscal Year 2012 and the period of 2001 to 2003 are unavailable. 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