CAFR 2012 Final with Opinion (2)

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• A 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(7 percent)in total expenditures for the general fund which is primarily the result of the County's decision to forgo the employer contributions relating to the pre-funding of its postemployment 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 of long-term 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 of the capital projects fund was $29.5 million 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 will 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 Fund 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). Proprietary funds. The County's proprietary funds provide the same type of information found in the government-wide financial statements,but in more detail. Unrestricted net assets of the Kulaimano Elderly Housing Project(Kulaimano)at the end of the year amounted to $564,659, and the unrestricted net deficit of the Ouli Ekahi Affordable Housing Project(Ouli Ekahi) amounted to $108,741. The net assets for Kulaimano 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 of the County's business-type activities. GENERAL FUND BUDGETARY HIGHLIGHTS Differences between the original budget and the final amended budget were primarily the result of a$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$3.9 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 -