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HomeMy WebLinkAboutComprehensive Annual Financial Report 2015COMPREHENSIVE ANNUAL FINANCIAL REPORT Fiscal Year Ended June 30, 2015 COUNTY OF HAWAII Hilo, Hawaii William P. Kenoi Mayor Walter Lau Managing Director Prepared by The Department of Finance Deanna Sako Director of Finance COUNTY OF HAWAII Comprehensive Annual Financial Report For the Fiscal Year Ended June 30, 2015 Table of Contents Page INTRODUCTORY SECTION Letter of Transmittal 1 GFOA Certificate of Achievement 7 Organization Chart 8 List of Elected Officials 9 List of Principal Officials 10 FINANCIAL SECTION Report of Independent Auditors 11 Management's Discussion and Analysis 14 Basic Financial Statements: Government -wide Financial Statements: Statement of Net Position 26 Statement of Activities 28 Fund Financial Statements: Balance Sheet - Governmental Funds 30 Reconciliation of the Governmental Funds Balance Sheet to the Statement of Net Position 31 Statement of Revenues, Expenditures, and Changes in Fund Balances - Governmental Funds 32 Reconciliation of the Change in Fund Balances of Governmental Funds to the Statement of Activities 34 Statement of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual (Budgetary Basis) - General Fund 36 Statement of Net Position - Proprietary Funds 40 Statement of Revenues, Expenses, and Changes in Fund Net Position - Proprietary Funds 41 Statement of Cash Flows - Proprietary Funds 42 Statement of Fiduciary Net Position - Fiduciary Funds 43 Statement of Changes in Fiduciary Net Position - Fiduciary Funds 44 Notes to the Basic Financial Statements 45 Required Supplementary Information 94 FINANCIAL SECTION (Continued) Page Combining and Individual Nonmajor Fund Statements and Schedules: Combining Balance Sheet - Nonmajor Governmental Funds 98 Combining Statement of Revenues, Expenditures, and Changes in Fund Balances - Nonmajor Governmental Funds 102 Schedules of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual (Budgetary Basis): Highway Fund 105 Sewer Fund 106 Solid Waste Fund 107 Cemetery Fund 108 Parking Meter Fund 109 Vehicle Disposal Fund 110 Bikeway Fund 111 Workforce Investment Act Fund 112 Golf Course Fund 113 Geothermal Relocation and Community Benefits Fund 114 Beautification Fund 115 Hawaii County Housing Agency 116 Park Dedication Fund 117 Combining Statement of Agency Funds Net Position - Agency Funds 118 Combining Statement of Changes in Assets and Liabilities - Agency Funds 120 Combining Statement of Private Purpose Trust Net Position - Private Purpose Trusts 124 Combining Statement of Changes in Net Position - Private Purpose Trusts 125 STATISTICAL SECTION Table 1 - Net Position by Component 127 Table 2 - Changes in Net Position 128 Table 3 - Fund Balances, Governmental Funds 130 Table 4 - Changes in Fund Balance, Governmental Funds 131 Table 5 - Real Property Assessed Values by Classification and Tax Rates 132 Table 6 - Principal Taxpayers 136 Table 7 - Property Tax Levies and Collections 137 Table 8 - Ratios of Outstanding Debt by Type 138 Table 9 - Ratios of General Bonded Debt Outstanding 139 Table 10 - Legal Debt Margin Infonnation 140 Table 11 - Demographic and Economic Statistics 141 Table 12 - Principal Employers, County of Hawaii 142 Table 13 - Full -Time Equivalent County Government Employees by Function 143 Table 14 - Operating Indicators by Function 144 Table 15 - Capital Asset Statistics by Functions 145 INTRODUCTORY SECTION William P. Kenoi Mayor December 28, 2015 County of Hawaii Finance Department 25 Aupuni Street, Room 2103 • Hilo, Hawaii 96720 (808)961-8234 • Fax (808) 961-8569 The Honorable Mayor and Members of the Council County of Hawai`i 25 Aupuni Street Hilo, Hawai`i 96720 Deanna S. Sako Director Lisa K. Miura Deputy Director We transmit herewith the Comprehensive Annual Financial Report for the County of Hawai`i, State of Hawai`i (the County), for the fiscal year July 1, 2014 to June 30, 2015. This report was prepared by the County's Department of Finance. The accuracy of the financial statements and the completeness and fairness of their presentation are the responsibility of the County government. We believe the enclosed data are complete and accurate in all material respects and are reported in a manner designed to present fairly the financial position and results of operations of the various funds of the County. All disclosures necessary to convey the maximum understanding of the County's financial activities have been included. Management's discussion and analysis is also included to aid users of the financial statements. This report presents the financial position of the County of Hawai`i at June 30, 2015 and results of operations for the fiscal year then ended. The report is divided into three sections: • The Introductory Section includes this transmittal letter, a Certificate of Achievement for Excellence in Financial Reporting, the County of Hawai`i's organization chart and lists of elected and principal officials. • The Financial Section contains management's discussion and analysis, the basic financial statements, related notes, the combining and individual fund budgetary financial statements, and the independent auditors' report. • The Statistical Section includes selected financial and demographic information, generally presented on a multi-year basis. Mawai'i County is an equal opportunity provider and employer. -1- This report includes all funds of the County of Hawai`i, including its component unit, the Department of Water Supply, established by the County Charter as a semi -autonomous body of the County government. This component unit is included in the County's reporting entity because of its financial relationship with the County. The County provides a full range of municipal services. These include police and fire protection; emergency medical care; public prosecutor; culture and recreation; sanitation; social services; water; planning and zoning; construction and maintenance of highways, streets and infrastructure; real property assessment and tax collection; and general administrative services. However, the County does not provide such other traditional services as public education, hospitals and courts. These services are provided by the State government. The County consists of the island of Hawaii, 4,028 square miles in size. It is twice as large as the combined area of all the other inhabited islands in the Hawaiian Archipelago. Since there is no other local or municipal government within the County, there are no overlapping taxes and no overlapping debt. The County has an elected mayor and a nine - member council. Economic Condition and Outlook The island of Hawai`i, commonly known as the Big Island, is located 214 miles from Honolulu, the state capital; 2,200 miles from the west coast of the continental United States; and 4,000 miles from Japan. The city of Hilo on the east side of the island serves as the county seat as well as the transportation and financial center for the Big Island. Hilo's infrastructure includes Hilo Harbor, a deep -water port, and Hilo International Airport, which is capable of handling fully -loaded wide-bodied aircraft. Kailua-Kona and South Kohala, major tourist destination areas on the west side of the Big Island, are served by flights from the United States mainland, and Canada through the Kona International Airport. Scheduled freight services are available between the islands by air and sea transport. Communities on the island are linked by a network of State and County maintained streets and highways. The Big Island is the most diversified of the neighbor island economies. As a result it is buffered to some extent when any one industry lags. Although 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 unemployment rate for the County for the current fiscal year is at approximately 5%, which represents a percentage point decline from last year's rate for the same period of 6% and an even larger decline from the high of 11% in 2011. Tourism — Tourism has always been one of the major industries on the island. In addition to the mild climate and natural beauty it shares with other areas in the state, the County features the Hawai`i Volcanoes National Park. A popular attraction, the park is the most visited site in the state, with over 1.7 million visitors each year. The number of domestic and international visitors to the County for the current fiscal year was 2 approximately 1.45 million, with an approximately 2.1 percent increase from the previous year's count of 1.42 million. For the most part, the County is less dependent on tourism than the other islands in the State, but the Kona airport terminal modernization project is budgeted at $60-70 million and the State plans on completing the design phase shortly and beginning construction by the summer. Construction — The outlook for the construction industry based on building permits seems to be improving despite conflicting information being provided by the continual decline in recorded construction jobs. Total number of building permits authorized in June 2015 was up by 56.0 percent compared to the same month a year ago and total value of building permit authorized was up by 11.0 percent for the same period. According to the Economic Forecast by First Hawaiian Bank, private building permits are up from less than $30 million per month in 2010 to more than $60 million per month in 2015. Several large construction projects and exciting changes are in store for the citizens on each side of the island. In addition to the Kona airport construction scheduled to begin by summer, the east side of the island is anxiously awaiting the changes being brought on by the new management of the Naniloa property by Hilton, through its Doubletree brand. A new airport fire station of about $20 million is slated for Hilo, in addition to the construction project already in the design phase for the Kona airport. There is also much single-family residential construction activity planned for the Hilo side including the 56 lots of Hilo Hillside Estates, 37 lots of Punahou Mauka Estates, 19 lots of Lake View Estates and a 49 lot subdivision being developed on land below the Hilo Municipal Golf Course. Major Initiatives For the Year During the year, the County focused on construction projects relating to housing, sanitation and public safety, and other issues affecting the quality of life in the County. Public Safety — One of the top priorities for the Police Department remains the securing of funding for the South Kona Police Station along with planning for a new station in the Puna District. In the continuation of efforts to better serve the community, the Department has also selected a vendor to provide a modernized and fully integrated Computer Aided Dispatch (CAD) and Records Management System (RMS), and collaborated with other county departments on modernizing the County's radio system. The Fire Department instituted home inspections to identify fall hazards in the homes of the elderly and installation of smoke detectors, with the goal of improving the safety of the home for our elderly population. Planning — The Department was busy preparing for the move of the County's Building Permit process to become their responsibility from the Department of Public Works. The Department was also busy with the acquisition of approximately $1.2 million in properties by the Geothermal Relocation and Community Benefits Fund. 3 Public Works - The Department of Public Works faced the challenge of dealing with the threat to the County and its citizens from lava flow and numerous hurricane/tropical storm threats. The Department implemented the first emergency protective pleasures response for the year when Tropical Storm Iselle hit the island on August 7, 2014 and required its involvement with all aspects related to infrastructure repair, recovery, and clean-up. The Department was then tasked with constructing alternate emergency roads for the communities that would have been isolated should the June 27, 2014 Lava Flow on the Northeast Flank of the Pu'u O`o have crossed the State Highway 130. Other projects that were initiated included the opening of La`aloa Avenue Extension, the beginning of construction for the southern section of Ali`i Drive, Manono Street, Kapi`olani Street Extension, Hamakua Road Resurfacing, Ka`iminani Drive Roadway Improvements, Kamehameha Avenue Reconstruction, Ponohawai Street Resurfacing, green stripes for bike lanes (by the UH -Hilo and Kuakini), and the continuation of LED Streetlight conversion installations. Public Works awarded ten construction contracts for its projects and 24 construction contracts for other county departments, with a total dollar value of $76.7 million. For the Future Public Safety — The Accreditation Section assisted in raising the bar on professionalism within the Police Department and at the end of the 2015 fiscal year, the Department submitted its documents to the Commission on Accreditation of Law Enforcement Agencies (CALEA ®) and hopes to receive reaccreditation in fiscal year 2016. In August 2015, the department will once again be under review by independent assessors to retain accreditation, which the department earned in November 2012. The Fire Department looks forward to the opening of the new Haihai Fire Station in Hilo in 2017. The Department's Emergency Medical Services Bureau will be expanding into the concept of community based paramedicine, which will put paramedics into the community to provide health and safety education and assistance, thereby reducing the burden on the 911 emergency ambulance service. Other Financial Information Internal Control The management of the County is responsible for establishing and maintaining an internal control structure designed to ensure that the assets of the County are protected from loss, theft or misuse and to ensure that adequate accounting data are compiled to allow for preparation of financial statements in conformity with generally accepted accounting principles. The internal control structure is designed to provide reasonable, but not absolute, assurance that these objectives are met. The concept of reasonable assurance recognizes that (1) the cost of a control should not exceed the benefits likely to be derived; and (2) the valuation of costs and benefits requires estimates and judgments by management. 4 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 is employed as a management control device for the general fund, special revenue funds, and the capital projects fund. Budgetary control for the debt service fund is achieved through general obligation bond indenture provisions. The basis of accounting used for the budgets of the general and special revenue funds differs from generally accepted accounting principles. Intergovernmental revenues are recognized when awarded by the granting agency, encumbrances and unexpended allotments are treated as expenditures for purposes of determining legal compliance with the annual budget, all leases are treated as operating leases, and accounts payable are not accrued. The County also maintains an encumbrance accounting system as one technique of accomplishing budgetary control. Encumbrances outstanding at fiscal year end are included in the various fund balance categories based on whether the resources are restricted, committed or assigned and do not constitute expenditures or liabilities because they will be honored during the following year. As demonstrated by the statements and schedules included in the financial section of this report, the County continues to meet its responsibility for sound financial management. Financial Highlights As a result of slightly higher value of net taxable real property, the County experienced an increase of $12.7 million in property tax revenues from the prior year. This was however offset by substantial increases in employment costs due to negotiated bargaining unit pay raises and increases in associated fringe benefits, including increased contributions for postemployment benefits other than pension and pension benefits. The County's net position decreased by $334.3 million from the prior year, due to a current year increase in net position of $5.1 million being negated by a negative prior period adjustment of $339.0 million. The prior period adjustment was a result of the County's implementation of GASB Statement No. 68, Accounting and Financial Reporting for Pensions — an amendment of GASB Statement No. 27 and GASB Statement No. 71, Pension Transition for Contributions Made Subsequent to the Measurement Date — an amendment of GASB Statement No. 68, in the current fiscal year. Under these two new accounting standards, the County's financials at the government -wide level now include their proportionate share of the net pension liability, expense, deferred inflows and outflows of the retirement plan that covers its employees. 5 Other Information Independent Audit The County Charter requires an annual audit by independent certified public accountants. N&K CPAs Inc. was selected in accordance with the County Charter and the procurement provisions of the Hawaii Revised Statutes (HRS) and Hawaii Administrative Rules (HAR) to perform the audit. Employee Union Contracts County employees are members of eight different bargaining units, all of which expire on June 30, 2017. Certificate of Achievement The Government Finance Officers Association of the United States and Canada (GFOA) awarded a Certificate of Achievement for Excellence in Financial Reporting to the County of Hawai`i for its Comprehensive Annual Financial Report for the fiscal year ended June 30, 2014. This was the twenty-seventh consecutive year that the government has received this prestigious award. In order to be awarded a Certificate of Achievement, a government must publish an easily readable and efficiently organized comprehensive annual financial report. This report must satisfy both generally accepted accounting principles and applicable legal requirements. A Certificate of Achievement is valid for a period of one year only. We believe our current Comprehensive Annual Financial Report continues to meet the Certificate of Achievement Program's requirements, and we are submitting it to the GFOA to determine its eligibility for another certificate. Acknowledgments The preparation of this report was made possible by the efficient and dedicated services of the entire staff of the Department of Finance and fiscal personnel in other departments. I am grateful for their help in preparing this report. I also thank the Mayor and the members of the County Council for their interest and support in assuring the continuing sound financial condition of the County of Hawai`i. DEANNA S. SAKO Director of Finance 6 Government Finance Officers Association Certificate of Achievement for N;xcellence in Financial Reporting Presented to County of Hawaii Hawaii For its Comprehensive Annual Financial Report for the Fiscal Year Ended June 30, 2014 Executive Director/CEO 7 County Council County of Hawaii Organization Chart County Electorate County Clerk Legislative Auditor Mayor Prosecuting Attorney Office of Management: Managing Director Departments under direct supervision of the Managing Director: Corporation Counsel Finance Planning Environmental Management Research & Development Public Works Parks & Recreation Information Technology Agencies under direct supervision of the Managing Director: Civil Defense Office of Aging Mass Transit Office of Housing & Connn niity Development 8 Departments under commissions and administrative supervision of the Mayor: Human Resources Police Liquor Control Fire Water Supply (semi -autonomous) County of Hawaii Elected Officials June 30, 2015 Administrative Officers (Term: 2012-2016) William P. Kenoi Mayor Mitchell Roth Prosecuting Attorney County Council (Term: 2014-2016) Dru Mamo Kanuha Chair Valerie Poindexter Vice Chair Aaron S.Y. Chung Member Maile "Medeiros" David Member Karen Eoff Member Greggor Ilagan Member Dennis "Fresh" Onishi Member Danny Paleka Member Margaret Wille Member 9 Principal Officials June 30, 2015 County Clerk Legislative Auditor Managing Director Deputy Managing Director Corporation Counsel Director of Finance Planning Director Director of Personnel Director of Research and Development Chief of Police Fire Chief Director of Public Works Director of Environmental Management Parks and Recreation Director Manager -Chief Engineer, Department of Water Civil Defense Administrator Director of Liquor Control Mass Transit Administrator Executive on Aging Administrator, Office of Housing and Community Development Director of Information Technology - 10 - Stewart Maeda Bonnie Nims Walter Lau Randy Kurohara Molly Stebbins Deanna S. Sako Duane Kanuha Sharon Kamahele-Toriano Rebecca Inaba Harry S. Kubojiri Darren Rosario Warren Lee Bobby Jean Leithead-Todd Clayton Honma Supply Quirino Antonio, Jr. Darryl Oliveira Gerald Takase Tiffany Kai Christian Alameda Susan Akiyama Donald F. Jacobs, Jr. FINANCIAL SECTION N&K CPAs, Inc. ACCOUNTANTS 1 CONSULTANTS INDEPENDENT AUDITOR'S REPORT To the Chair and Members of the County Council County of Hawaii Report on the Financial Statements AMERICAN SAVINGS BANK TOWER 1001 BISHOP STREET, SUITE 1700 HONOLULU, HAWAII 96813-3696 T (808) 524-2255 F (808) 523-2090 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 Hawai'i, State of Hawaii (County), as of and for the fiscal year ended June 30, 2015, and the related notes to the financial statements, which collectively comprise the County's basic financial statements as listed in the table of contents. Management's Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Auditor's Responsibility Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall financial statement presentation of the financial statements. - 11 - N&K CPAs, Inc. ACCOUNTANTS 1 CONSULTANTS We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. Opinions In our opinion, the financial statements referred to above present fairly, in all material reopecta, 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 of Hawai'i, State of Hawai'i, as of June 30, 2015, and the respective changes in financial position and, where applicable, cash flows thereof and the budgetary comparison for the general fund for the fiscal year then ended in accordance with accounting principles generaily accepted in the United States ofAmerica. Emphasis of Matter Change in Accounting Principle As discussed in Note 1 (page 57) to the financial statements, the County adopted the provisions of Government Accounting Standards Board (GASB) Statement No. 68. Accounting and Financial Reporting for Pensions - An Amendment of GASB Statement No. 27 and GASB Statement No. 71, Pension Transition for Contributions Made Subsequent to the Measurement Date - An Amendment of GASB Statemont No. 68 that estabtishes standards for the accounting and financial reporting for pensions that are provided to employees of state and local governments. Our opinions are not modified with respect to this matter. Other Matters Required Supplementary Information Accounting principles generally accepted in the United States of America require that the management's discussion and analysis (pages 14 through 24), schedule of funding progress for the Hawaii Employer Union Health Benefit Trust Fund (page 94) the schedule of the County's proportionate share of the net pension liability (page 95), and the schedule of the employer pension contributions (page SO), 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 Board who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate Ope[otiOOa|, eonnorD|c, 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 Anne[icn. 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 iOqUi[i8G, the basic financial state[DeDtn, and other knowledge 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. -}2- N&K CPAs, Inc. ACCOUNTANTS! CONSULTANTS Other Information Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the County's basic financial statements. The introductory section, combining and individual nonmajor fund financial statements and budgetary comparison 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 budgetary comparison schedules are the responsibility of management and were derived from and relate directly to the underlying accounting and other records used to prepare the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the combining and individual nonmajor fund financial statements and budgetary comparison schedules are fairly stated, in all material respects, in relation to the basic 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, we do not express an opinion or provide any assurance on them. Other Reporting Required by Government Auditing Standards In accordance with Govemment Auditing Standards, we have also issued our report dated December 28, 2015, on our consideration of the County's internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the County's internal control over financial reporting and compliance. eMr, Honolulu, Hawaii December 28, 2015 - 13 - MANAGEMENT'S DISCUSSION AND ANALYSIS This section of the County of Hawai`i's (the County) Comprehensive Annual Financial Report presents a narrative overview and analysis of the financial activities of the County for the fiscal year ended June 30, 2015. We encourage readers to consider the information presented here in conjunction with additional information that we have furnished in our letter of transmittal. FINANCIAL HIGHLIGHTS • The assets of the County exceeded its liabilities at the end of the fiscal year by $473.7 million (net position). This amount includes a negative balance of $350.3 million in unrestricted net position, a decrease of $333.4 million from the prior year, which is explained in the sections below. • As of the close of the current fiscal year, the County's governmental funds reported combined ending fund balances of $160.6 million, a decrease of $45.4 million from the prior year. Approximately 44 percent of this total amount, $70.2 million, is available for spending at the County's discretion (unrestricted fund balance). • At the end of the current fiscal year, unrestricted fund balance for the general fund was $44.0 million, or 17 percent of total general fund expenditures. OVERVIEW OF THE FINANCIAL STATEMENTS This discussion and analysis is intended to serve as an introduction to the County's basic financial statements. The County's basic financial statements comprise three components: (1) Government -wide financial statements, (2) Fund financial statements, and (3) Notes to the basic financial statements. This report also contains 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 position presents information on all of the County's assets and liabilities, with the difference between the two reported as net position. Over time, increases or decreases in net position may serve as a useful indicator of whether or not the financial position of the County is improving or deteriorating. The statement of activities presents information showing how the County's net position changed during the most recent fiscal year. All changes in net position are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of related cash flows. Thus, revenues and expenses are reported in this statement for some items that will only result in cash flows in future fiscal periods, such as revenues pertaining to uncollected taxes and expenses pertaining to earned but unused vacation and sick leave. Both of the government -wide financial statements distinguish functions of the County that are principally supported by taxes and intergovernmental revenues (governmental activities) from other functions that are intended to recover all or a significant portion of their costs through user fees and charges (business -type activities). The governmental activities of the County include public safety, highways and streets, health, education and welfare, culture and recreation, sanitation and general government. The business -type activities of the County include rental housing for senior citizens and families. - 14- The government -wide financial statements include not only the County itself (known as the primary government), but also the Department of Water Supply, a legally separate entity that the County is financially accountable for. Financial information for this component unit is reported separately from the financial information presented for the primary government itself. Fund Financial Statements The fund financial statements are designed to report information about groupings of related accounts which are used to maintain control over resources that have been segregated for specific activities or objectives. The County, like other state and local governments, uses fund accounting to ensure and demonstrate compliance with finance -related legal requirements. All of the funds of the County can be divided into the following three categories: governmental funds, proprietary funds, and fiduciary funds. Governmental funds. Governmental funds are used to account for essentially the same functions reported as governmental activities in the government -wide financial statements — i.e., most of the County's basic services are reported in governmental funds. These statements, however, focus on (1) how cash and other financial assets can readily be converted to available resources and (2) the balances left at year-end that are available for spending. Such information may be useful in determining what financial resources are available in the near future to finance the County's programs. Because the focus of governmental funds is narrower than that of the government -wide financial statements, it is useful to compare the information presented for governmental funds with similar information presented for governmental activities in the government -wide financial statements. By doing so, readers may better understand the long-term impact of the government's near-term financing decisions. Both the governmental funds balance sheet and the governmental funds statement of revenues, expenditures, and changes in fund balances provide a reconciliation to facilitate this comparison between governmental funds and governmental activities. The County maintains several individual governmental funds organized according to their type (general, special revenue, debt service, and capital projects). Information is presented separately in the governmental funds balance sheet and in the governmental funds statement of revenues, expenditures, and changes in fund balances for the general fund and capital projects fund, which are considered to be major funds. Data from the remaining governmental funds are combined into a single, aggregated presentation. Individual fund data for each of the non -major governmental funds is provided in the form of combining statements elsewhere in this report. The County adopts an annual appropriated budget for its general fund and special revenue funds. A budgetary comparison statement has been provided for these funds to demonstrate compliance with this budget. The budgetary comparison statement for the general fund is located in the basic financial statements, whereas the budgetary comparison schedules for the nonmajor special revenue funds are presented elsewhere in this report. Proprietary funds. Proprietary funds are generally used to account for services for which the County charges outside customers. Proprietary funds provide the same type of information as shown in the government -wide financial statements, only in more detail. The County maintains only one type of proprietary funds, enterprise funds. Enterprise funds are used to report the same functions presented as business -type activities in the government - wide financial statements. The County uses enterprise funds to account for the operations of the Kulaimano Elderly Housing Project and the Ouli Ekahi Affordable Housing Project. - 15 - Fiduciary funds. Fiduciary funds are used to account for resources held for the benefit of parties outside the County. The private -purpose trusts and the agency funds are reported under the fiduciary funds. Since the resources of these funds are not available to support the County's own programs, they are not reflected in the government -wide financial statements. The accounting used for fiduciary funds is much like that used for proprietary funds. Notes to the Basic Financial Statements The notes to the basic financial statements provide additional information that is essential to a full understanding of the data provided in the government -wide and fund financial statements. Other Supplementary Information In addition to the basic financial statements and accompanying notes, this report also presents 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 nonmajor governmental funds and budgetary comparison schedules for the nonmajor special revenue funds are presented immediately following the required supplementary information. Assets: Current and other assets Capital assets, net Total assets GOVERNMENT -WIDE FINANCIAL ANALYSIS Condensed Statement of Net Position June 30, 2015 and 2014 Primary Government Governmental Activities Business -type Activities Total 2015 2014 2015 2014 2015 2014 $ 259,051.873 $ 260,511,277 $ 1,108,940 $ 1,153,595 5 260,160,813 $ 261,664,872 1,090,847,071 1,052,246, 842 1,540,209 1,577,149 1,092,387,280 1,053,823,991 1,349,898,944 1,312.758,119 2,649,149 2,730,744 1,352,548,093 1,315,488,863 Deferred Outflows Of Resources: 46,999,950 1,283,292 46,999,950 1,283,292 Total Assets and Deferred Outflows of Resources 1,396.898,894 1.314,041,411 2,649,149 2,730,744 1,399,548,043 1,316.772,155 Liabilities: Long-term liabilities outstanding 828,038,814 474,116,332 1,111,394 1,208,300 829,150,208 475,324,632 Other liabilities 41,428,479 32,625,472 68,724 59,845 41,497,203 32,685,317 Total liabilities 869,467,293 506,741,804 1,180,118 1,268,145 870,647,411 508,009,949 Deferred Inflows Of Resources: 55,249,689 797,272 -- 55,249,689 797,272 Total Liabilities and Deferred Inflows Of Resources 924,716,982 507,539,076 1,180,118 1,268,145 925,897,100 508,807,221 Net position: Net investment in capital assets 748,754,727 734,889,023 428,815 368,849 749,183,542 735,257,872 Restricted 74,813,856 89,620,936 74,813,856 89,620,936 Unrestricted (351,386,671) (18,007,624) 1,040,216 1,093,750 (350,346,455) (16,913,874) Total net position $ 472,181,912 $ 806,502,335 $ 1,469,031 $ 1,462,599 $473,650,943 $807,964,934 - 16 - Analysis of Net Position As noted earlier, net position may serve over time as a useful indicator of a government's financial position. In the case of the County, assets exceeded liabilities by $473.7 million at the close of the most recent fiscal year. By far the largest portion of the County's net position reflects its investment in capital assets (e.g., land, buildings, infrastructure, and equipment) less any related debt used to acquire those assets that is still outstanding. The County uses these capital assets to provide services to citizens; consequently, these assets are not available for future spending. Although the County's investment in its capital assets is reported net of related debt, it should be noted that the resources needed to repay this debt must be provided from other sources, since the capital assets themselves cannot be used to liquidate these liabilities. An additional portion of the County's net position 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 two of its three categories of net position, both for the government as a whole, as well as for its separate governmental activities. All three categories of net position are positive for its business -type activities. The County's net position decreased by $334.3 million from the prior year as previously reported, due to a current year increase in net position of $5.1 million being negated by a negative prior period adjustment of $339.0 million. The prior period adjustment was a result of the County's implementation of GASB Statement No. 68, Accounting and Financial Reporting for Pensions — an amendment of GASB Statement No. 27 and GASB Statement No. 71, Pension Transition for Contributions Made Subsequent to the Measurement Date — an amendment of GASB Statement No. 68, in the current fiscal year. Under these two new accounting standards, the County's financials at the government -wide level now include their proportionate share of the net pension liability, expense, deferred inflows and outflows of the retirement plan that covers its employees. The County's net capital assets increased by $38.6 million (4 percent) due to the large 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 24. The County's long-term liabilities outstanding increased by $353.9 million (75 percent) due primarily to the implementation of GASB Statement No. 68 and 71 as explained above, that resulted in the recognition of a pension liability in the amount of $322.6 million for its proportionate share of the net pension liability of the retirement plan that covers its employees. Other significant reasons for the increase included: the issuance of $35 million in Bond Anticipation Notes (BANs); a $14.2 million increase in the County's liability relating to the pre - funding of its postemployment benefits other than pensions; and a $1.8 million increase in the liability for post closure remediation costs relating to a prior year closure of one of the County's metal salvage facilities. These increases were offset by principal payments on the General Obligation Bonds and the State Revolving Fund loans from the prior year. See further discussion of the increase in long-term debt outstanding on page 25. - 17- Condensed Statements of Activities For the Fiscal Years Ended June 30, 2015 and 2014 Primary Government Governmental Activities Business -type Activities Total 2015 2014 2015 2014 2015 2014 Revenues: Program revenues: Charges for services 5 44,731,966 5 40,900,135 $ 453,304 5 468,018 5 45,185,270 $ 41,368,153 Operating grants and contributions 47,406,704 42,957,370 113,642 127,119 47,520,346 43,084,489 Capital grants and contributions 29,621,907 62,370,497 29,621,907 62,370,497 General revenues: Property taxes 237,217,225 221,260,681 - 237,217,225 221,260,681 Other saxes 28,842,905 28,546,783 28,842,905 28,546,783 Grants and contributions, unrestricted 19,506,423 17,705,917 - 19,506,423 17,705,917 Investment earnings 671,363 815,606 1,299 1,739 672,662 817,345 Other 8,364,894 5,574,147 - - 8,364,894 5,574,147 Total revenues 416,363,387 420,131,136 568,245 596,876 416,931,632 420,728,012 Expenses: General government 69,859,089 59,448,042 - 69,859,089 59,448,042 Public safety 175,104,223 163,889,113 175,104,223 163,889,113 Highways and streets 45,989,038 38,670,145 - 45,989,038 38,670,145 Health, education and welfare 34,304,166 28,343,056 561,813 494,722 34,865,979 28,837,778 Culture and recreation 32,225,574 25,590,117 - - 32,225,574 25,590,117 Sanitation 41,467,081 48,72I,810 41,467,081 48,721,810 Interest on long -terns debt 12,362,411 12,911,436 - 12,362,411 12,911,436 Total expenses 411,31 1,582 377,573,719 561,813 494,722 411,873,395 378,068,441 Increase in net position Net position at beginning of year Cumulative effect of accounting change Net position at beginning of year, as adjusted Net position at end of year 5,051,805 42,557,417 6,432 102,154 5,058,237 42,659,571 806,502,335 763,944,918 1,462,599 1,360,445 807,964,934 765,305,363 (339,372,228) - (339,372,228) 467,130,107 763,944,918 1,462,599 1,360,445 468,592,706 765,305,363 $ 472,181,912 $ 806,502,335 $ 1,469,031 $ 1,462,599 $ 473,650,943 $ 807,964,934 Analysis of Changes in Net Position Governmental activities. Governmental activities, including the impact of the prior period adjustment for GASB 68 as explained previously, decreased the County's net position by $334.3 million or basically all of the total decrease in net position of the County. The primary reason for the $3.8 million (1 percent) decrease in total revenues was due to Capital grants and contributions decreasing by approximately $32.7 million, which related mostly to decreases in highways and streets projects. This substantial decrease was partially offset by increases in the other revenue sources. The most significant increase of $16.0 million was in real property taxes, which was due to a slight increase in the value of net taxable real property in the residential, homeowners and apartment classes. The second largest increase in revenues was in Charges for services of $3.8 million from the prior year, with the largest percentage relating to the area of highways and streets. Total expenses increased by $33.7 million with 64 percent of the increase resulting from increases in the areas of public safety and general government. There was an increase of $11.2 - 18 - million in public safety expenses of which $8.1 million was due to increases in salaries and wages and $0.4 million was due to increases in related employee benefits including post employment benefits and the impact of the implementation of GASB 68. The $11.4 million increase in general government was mostly due to a $1.7 million increase in salaries and wages and $4.7 million increase in expenditures relating to the capital outlay grants that were awarded by the County. The charts below illustrate the County's governmental expenses and revenues by function, and its revenues by source. As shown, public safety is the largest function in expense (43 percent), followed by general government (17 percent) and highways and streets (11 percent). General revenues such as property and other taxes are not shown by program, but are effectively used to support program activities countywide. For governmental activities overall, without regard to programs, property taxes are the largest single source of funds (57 percent), followed by operating grants and contributions (11 percent) and charges for services (1 1 percent). Expenses and Program Revenues — Governmental Activities Year Ended June 30, 2015 $200,000,000 $180,000,000 $160,000,000 $140,000,000 $120,000,000 $100,000,000 $80,000,000 $60,000,000 $40,000,000 $20,000,000 50 Expenses • Program revenues 5 ¢ -��, Q Jo qac aha aie ¢<a aaa °c ar \O 6¢r r Jia ¢a C �¢a - 19 - Revenue by Source — Governmental Activities Year Ended June 30, 2015 Investment earnings, $671,363 Grants and contributions not restricted to specific programs, $19,506,423 Other taxes, $28,842,905 Other, $8,364,894 Charges for 9ces, $44,731,966 Operating grants and contributions, $47,406,704 Property taxes, $237,217,225 Capital grants and contributions, 529,621,907 Business -type activities. Business -type activities increased the County's net position by $6,432 versus an increase of $102,154 in the prior year. Expenses for health, education and welfare account for all of the $561,813 of expenses which represents a 14 percent increase from the prior year. Charges for services were $453,304, operating grants and contributions were $113,642 and investment earnings were $1,299, which were all comparable to the prior year. FINANCIAL ANALYSIS OF THE COUNTY'S FUNDS As noted earlier, the County uses fund accounting to ensure and demonstrate compliance with finance -related legal requirements. Governmental funds. The focus of the County's governmental funds is to provide information on near-term inflows, outflows, and balances of spendable resources. Such information is useful in assessing the County's financing requirements. In particular, unrestricted fund balance may serve as a useful measure of a government's net resources available for spending at the end of the fiscal year. As of the end of the current fiscal year, the County's governmental funds reported combined ending fund balances of $160.6 million, a decrease of $44.4 million (22 percent) in comparison with prior year. Approximately 44 percent of this total amount ($70.2 million) constitutes unrestricted fund balance. The unrestricted portion of the fund balance is comprised of (1) $54.1 million in committed fund balance, (2) $30.9 million in assigned fund balance and (3) negative ($14.8) million in unassigned fund balance. The remainder of the fund balance is divided between $3.6 million in nonspendable fund balance for inventory and $86.8 million in restricted fund balance. Approximately 91 percent of the total restricted fund balance is due to restrictions relating to highways, streets and abandoned vehicles ($54.9 million) and debt service ($24.0 million). -20- The general fund is the chief operating fund of the County. At the end of the current fiscal year, unrestricted fund balance of the general fund was $44.0 million, while total fund balance decreased to $52.2 million. As a measure of the general fund's liquidity, it may be useful to compare both unrestricted fund balance and total fund balance to total fund expenditures. Unrestricted fund balance represents 17 percent of total general fund expenditures, while total fund balance represents 20 percent of that same amount. The fund balance of the County's general fund decreased by $3.4 million during the current fiscal year as compared to an increase of $1.6 million in the prior year. Key factors in this decrease ($5.0 million) over last year's increase are as follows: • A positive increase of $12.7 million (6 percent) in real property tax revenues and $1.4 million (3 percent) increase in combined Federal and State intergovernmental revenues. As explained previously, the increase in real property tax revenues is due to a slight increase in the value of net taxable real property as evidenced in the accompanying statistical tables. • The positive impact of the increase in revenues was offset by increases of $18.6 million (8 percent) in expenditures. $1 1.3 million of the total increase in expenditures is due to increases in salaries and wages from the prior year and $5.6 million in associated employee benefits. The fund balance of the County's capital projects fund decreased by $46.6 million (53 percent) during the current fiscal year. The decrease is primarily due to the recognition of $35.0 million in bond anticipation notes (BANs) that were issued in the current year to fund expenditures incurred during the fiscal year as a current liability instead of another financing source 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 $24.0 million, all of which is restricted for the payment of debt service. The net increase in the combined fund balances during the current year in the debt service funds was $0.4 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 position of the Kulaimano Elderly Housing Project (Kulaimano) at the end of the year amounted to $674,507, and $365,709 for the Ouli Ekahi Affordable Housing Project (Ouli Ekahi). The total net position for Kulaimano decreased by $57,728 and the net position for Ouli Ekahi increased by $64,160. Other factors concerning the finances of these two funds have already been addressed in the discussion of the County's business -type activities. GENERAL FUND BUDGETARY HIGHLIGHTS Differences between the original budget and the final amended budget were primarily the result of an $8.6 million increase in appropriations, the most significant single reason (65 percent) due to an increase in the appropriations for capital outlays. Differences between the final budget and the actual (budgetary basis) resulted in approximately $2.9 million less revenues than expected and $26.4 million less expenditures than appropriated. -21 - This is primarily due to the following factors: • The positive variances in real property and public service company taxes of $2.0 million was negated by a larger negative variance in intergovernmental revenues for both the federal and state grants of $3.3 million and in total charges for services of $0.9 million. • $4.7 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 ($2.3 million) and general government ($1.8 million). • $2.3 million is due to lower than anticipated payments needing to be made in retirement related payments. With each department increasing efforts to control costs, overtime was also closely monitored and the corresponding pension expenditures were not incurred. • $2.7 million is due to the fact that the increase in health premiums for employees' was lower than originally anticipated. CAPITAL ASSET AND DEBT ADMINISTRATION Capital assets. The County's investment in capital assets for its governmental and business -type activities as of June 30, 2015 amounts to $1,092 million (net of accumulated depreciation). This investment in capital assets includes land and improvements, buildings and improvements, equipment, easements, and infrastructure assets, which consists of primarily roads and bridges. The total increase in the County's investment in capital assets for the current fiscal year was 4 percent. Major capital asset events during the current fiscal year included the following: • Construction continued on Na Kahua Hale 0 Ulu Wini Housing Project (formerly known as Kaloko Housing Program) and costs at the end of the current fiscal year for Phase 4 totaled $2.9 million of which $0.3 million was from the current fiscal year; the project was transferred to Building and Improvements. • Construction continued on the La'aloa Avenue Extension Phase I and II; construction in progress for both phases as of the end of the current fiscal year increased by $5.0 million to reach a total of $11.2 million, which was transferred to Infrastructure. • Construction continued on the Kaiminani Drive Roadway Improvements Phase I and II; construction in progress as of the end of the current fiscal year had reached a combined total of $12.5 million of which almost all of the increase from the prior year was related to Phase II ($3.7 million); Phase 1 in the amount of $8.3 million was transferred to Infrastructure. • Construction continued on the Kamehameha Avenue Reconstruction (Wailoa Bridge to Ponahawai) project; construction in progress as of the end of the current fiscal year had reached $10.0 million with $7.5 million coming from the current fiscal year. • Construction continued on the Kealakehe Wastewater Treatment facility; construction in progress as of the end of the current fiscal year had increased by $3.2 million to reach $4.3 million at the end of the fiscal year. • Construction continued on the Hokulia Bypass; construction in progress as of the end of the current fiscal year had reached $5.7 million with $5.3 million corning from the current fiscal year. • Construction began on Railroad Avenue Improvements and reached a total of $1.6 million in the current fiscal year, which was transferred to Infrastructure. - 22 - • $9.1 million of dedicated roads were received by the County in the current fiscal year. • $1.2 million of various other equipment and real property were dedicated and donated to the County in the current fiscal year. Land and improvements Infrastructure assets Ground and site improvements Buildings and improvcmenLs Easements Equipment Constniction work in progress Total Capital Assets (net of depreciation) June 30, 2015 and 2014 Primary Government Governmental Activities 2015 2014 $ 201,363,687 $ 189,366,207 278,990,393 274,721,099 495,445,600 3,830,410 50,250,220 60,966,761 $1,090,847,071 498,293,093 3,803,176 48,353,349 37,709,918 $1,052,246,842 Business -type Activities 2015 2014 $ 753,877 $ 753,877 Total 2015 $ 202,1 17,564 278,990,393 66,585 70,934 66,585 682,586 718,631 496,128,186 3,830,410 37,161 33,707 50,287,381 60,966,761 $ 1,540,209 $ 1,577,149 $1,092,387,280 2014 $ 190,120,084 274,721,099 70,934 499,011,724 3,803,176 48,387,056 37,709,918 $1,053,823,991 Additional information on the County's capital assets can be found in note 6 to the basic financial statements. Long-term debt. Long-term debt is primarily comprised of bonds of $313.4 million and State Revolving Fund loans of $21.6 million. At the end of the current fiscal year, the County had total bonded debt outstanding of $313.4 million. This entire amount was comprised of general obligation bonds and bond anticipation notes which are backed by the full faith and credit of the County. The County's total bonded debt increased by $37.9 million (13 percent) during the current fiscal year due to the issuance of $35.0 in bond anticipation notes. At the end of the fiscal year, the County maintained its "AA-" rating from Standard & Poor's and Fitch and "Aa2" rating from Moody's for general obligation debt. State statutes limit the amount of general obligation debt the County may issue 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 $3.8 billion, which is in excess of the County's outstanding general obligation debt, Currently the County's outstanding debt represents 8 percent of our debt limitation. Additional information on the County's long-term debt can be found in note 10 to the basic financial statements. ECONOMIC FACTORS AND NEXT YEAR'S BUDGETS AND RATES • The unemployment rate for the County for the current fiscal year is at approximately 5.0 percent, which represents a percentage point decline from last year's rate for the same period of 6.0 percent, a two percent decline from two year ago and an even larger decline from the high of 11.0 percent in 2011. • The number of domestic and international visitors to the County for the current fiscal year was approximately 1.45 million, with an approximately 2.1 percent increase from the previous year's count of 1.42 million. For the most part, the County is less dependent on tourism than the other islands in the State, but the Kona airport terminal - 23 - modernization project is budgeted at $60-70 million and the State plans on completing the design phase shortly and beginning construction by the summer. • The outlook for the construction industry based on building permits seems to be improving despite conflicting information being provided by the continual decline in recorded construction jobs. Total number of building permits authorized in June 2015 was up by 56.0 percent compared to the same month a year ago and total value of building permit authorized was up by 11.0 percent for the same period. According to the Economic Forecast by First Hawaiian Bank, private building permits are up from less than $30 million per month in 2010 to more than $60 million per month in 2015. • Several large construction projects and exciting changes are in store for the citizens on each side of the island. In addition to the Kona airport construction scheduled to begin by summer, the east side of the island is anxiously awaiting the changes being brought on by the new management of the Naniloa property by Hilton, through its Doubletree brand. A new airport fire station of about $20 million is slated for Hilo, in addition to the construction project already in the design phase for the Kona airport. There is also much single-family residential construction activity planned for the Hilo side including the 56 lots of Hilo Hillside Estates, 37 Tots of Punahou Mauka Estates, 19 lots of Lake View Estates and a 49 lot subdivision being developed on land below the Hilo Municipal Golf Course. These factors were considered in preparing the County's budget for the 2016 fiscal year. At the end of the current fiscal year, unrestricted fund balance in the general fund was $44.0 million. The County has appropriated $25.9 million of this amount for spending in the 2016 fiscal year budget and it is included in the assigned portion of the fund balance. REQUESTS FOR INFORMATION This financial report is designed to provide a general overview of the County's finances for all those with an interest in the government's finances. Questions concerning any of the information provided in this report or requests for additional information should be addressed to the Director of Finance, County of Hawai`i, 25 Aupuni Street, Suite 2103, Hilo, Hawaii 96720. - 24 - BASIC FINANCIAL STATEMEN -25- TS COUNTY OF HAWAII Statement of Net Position June 30, 2015 Assets Current assets: Cash and cash equivalents (notes 3 and 14) Restricted cash and cash equivalents (note 3) Investments (note 3) Restricted investments (note 3) Receivables, net (note 4) Receivable from improvement district (notes 4 and 10) Internal balances (note 5) Inventories Prepaid expenses Real estate held for sale Other Total current assets Investments (note 3) Restricted investments (note 3) Restricted cash and cash equivalents (note 3 and 14) Receivable from improvement district, excluding current portion (notes 4 and 10) Capital assets (notes 6, 8 and 14): Utility plant in service, net Infrastructure assets, net Ground and site improvements, net Buildings and improvements, net Equipment, net Easements, net Preliminary survey and investigation charges Construction work in progress Land and improvements Total capital assets, net Total noncurrent assets Total assets Deferred Outflows of Resources Deferred loss on refunding Deferred outflow related to pensions (notes 13 and 14) Total deferred outflows of resources Total Assets and Deferred Outflows of Resources Primary Government Governmental Business -type Activities Activities Total $ 46,406,676 55,986,559 13,503,423 27,735,840 61,967,356 Component Unit $ 614,371 $ 47,021,047 $ 34,752,680 40,668 56,027,227 200,018 13,703,441 27,735,840 3,936 61,971,292 8,739,048 91,329 91,329 1,350 (1,350) 3,573,745 3,573,745 1,343,868 1,534 1,534 165,761 4,715,266 - 4,715,266 861,996 861,996 214,843,540 859,177 215,702,717 45.001,357 22,039,736 200,242 19,875,989 49,521 2,292,608 - 278,990,393 66,585 495,445,600 682,586 50,250,220 37,161 3,830,410 - 60,966,761 - 201,363,687 753,877 1,090,847,071 1,540,209 1,135,055,404 1,789,972 1,349,898,944 2,649,149 22,239,978 19,875,989 49,521 1,544,208 2,292,608 257,828,011 278,990,393 66,585 496,128,186 50,287,381 3,830,410 4,428,754 60,966,761 12,185,812 202,117,564 4,706,302 1,092,387,280 279,148,879 1,136,845,376 280,693,087 1,352,548,093 325,694,444 1,041,719 - 1,041,719 45,958,231 - 45,958,231 5,579,208 46,999,950 46,999,950 5,579,208 1,396,898,894 2,649,149 1,399,548,043 331,273,652 (Continued) - 26 - COUNTY OF HAWAII Statement of Net Position June 30, 2015 Liabilities Current liabilities: Accounts payable and accrued liabilities Accrued payroll Advance collections - intergovernmental Interest due on long-term debt Bonds and loans payable, current portion net (notes 10 and 14) Compensated absences, current portion (note 10) Claims and judgments, current portion (notes 10, 12 and 14) Capital leases, current portion (notes 8 and 10) Landfill costs payable, current portion (notes 9 and 10) Customers' deposits Other Total current liabilities Noncurrent liabilities: Bonds and loans payable, net (notes 10 and 14) Compensated absences (note 10) Claims and judgments (notes 10, 12 and 14) Capital leases (notes 8 and 10) Landfill costs payable (notes 9 and 10) Unearned revenue, noncurrent Customers' deposits Net pension liability (notes 13 and 14) Other (note 13) Total noncurrent liabilities Total liabilities Deferred Inflows of Resources Deferred inflows related to pensions (notes 13 and 14) Deferred inflows - other Total Deferred Inflows of Resources Total Liabilities and Deferred Inflows of Resources Net Position Net investment in capital assets Restricted for: Capital projects Debt service (note 10) Highways, streets and abandoned vehicles Public access open space Other Unrestricted Total net position See accompanying notes to the basic financial statements. Primary Government Governmental Business -type Activities Activities Total $ 19,803,740 $ 9,034,023 3,483,178 5,412,443 57,524,988 8,861,648 2,534,968 1,101,673 231,199 3,695,095 (Concluded) Component Unit 54,406 $ 19,858,146 $ 2,716,085 9,034,023 1,174,172 1,121 3,484,299 - 13,197 5,425,640 922,633 85,357 57,610,345 3,438,282 8,861,648 507,958 2,534.968 62,636 1,101,673 - 231,199 - 607,136 3,695,095 - 111,682,955 154,081 111,837,036 9,428,902 296,984,476 26,763,627 10,751,939 1,880,036 22,432,801 322,626,262 76,345,197 1,026,037 298,010,513 46,056,284 26,763,627 1,079,412 10,751,939 217,364 1,880,036 - 22,432,801 - 1,583,953 16,201,017 322,626,262 20,526,993 76,345,197 - 757,784,338 1,026,037 758,810,375 85,665,023 869,467,293 1,180,118 870,647,411 95,093,925 54,470,799 54,470,799 2,382,270 778,890 778,890 - 55,249,689 55,249,689 2,382,270 924,716,982 1,180,118 925,897,100 97,476,195 748,754,727 428,815 749, I83,542 231,198,521 32,170,999 24,016,116 13,084,350 4,554,871 987,520 (351,386,671) 1,040,216 $ 472,181,912 $ 1,469,031 -27- 32,170,999 - 24,016,116 13,084,350 - 4,554,871 987,520 (350,346,455) 2,598,936 $ 473,650,943 $ 233,797,457 COUNTY OF HAWAII Statement of Activities For the Fiscal Year Ended June 30, 2015 Functions/Programs Primary government: Governmental activities: General government Public safety Highways and streets Health, education and welfare Culture and recreation Sanitation Interest on long-term debt Total governmental activities Business -type activities: Health, education and welfare Total primary government Component unit: Water (note 14) Expenses $ 69,859,089 175,104,223 45,989,038 34,304,166 32,225,574 41,467,081 12,362,411 Program Revenues Charges for Services Operating Grants and Contributions Capital Grants and Contributions $ 2,246,106 $ 4,837,949 $ 7,139,596 5,926,316 20,534,172 4,685 16,043,045 1,941,583 21,396,590 548,781 19,083,656 2,150,900 293,265 992,237 17,816,818 716,079 88,799 411,311,582 44,731,966 47,406,704 561,813 453,304 113,642 $ 411,873,395 $ 45,185,270 $ 47,520,346 $ 54,324,151 $ 49,302,017 29,621,907 29,621,907 $ 13,964,639 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 position Net position, beginning ofyear, as previously stated Cumulative effect of accounting change Net position, beginning ofyear, as adjusted Net position, end of year See accompanying notes to the basic financial statements. - 28 - Net (Expense) Revenue and Changes in Net Position Primary Government Governmental Business -type Component Activities Activities Total Unit $ (55,635,438) $ - $ (55,635,438) $ (148,639,050) - (148,639,050) (6,607,820) (6,607,820) (14,671,729) (14,671,729) (28,789,172) - (28,789,172) (22,845,385) - (22,845,385) (12,362,411) (12,362,411) (289,551,005) (289,551,005) 5,133 5,133 (289,551,005) 5,133 (289,545,872) 8,942,505 237,217,225 237,217,225 10,385,654 10,385,654 10,824,278 10,824,278 - 7,632,973 7,632,973 19,506,423 19,506,423 - 671,363 1,299 672,662 223,681 8,364,894 - 8,364,894 - 294,602,810 1,299 294,604,109 223,681 5,051,805 6,432 5,058,237 9,166,186 806,502,335 1,462,599 807,964,934 241,072,995 (339,372,228) - (339,372,228) (16,441,724) 467,130,107 1,462,599 468,592,706 $ 472,181,912 $ 1,469,031 $473,650,943 -29- 224,631,271 $ 233,797,457 COUNTY OF HAWAII Governmental Funds Balance Sheet June 30, 2015 General Other Total Capital Governmental Governmental Projects Funds Funds Assets Cash and cash equivalents (note 3) $ 5,212,287 $ 47,442,286 $ 49,738,662 $ 102,393,235 Investments (note 3) 39,981,753 24,211,829 18,961,406 83,154,988 Receivables, net (note 4) 21,615,836 2,122,265 2,500,725 26,238,826 Due from other governmental funds (note 5) 761,594 1,265,750 383,367 2,410,711 Due from other nongovernmental funds (note 5) - 1,350 1,350 Receivables from other governments (note 4) 23,169,628 10,909,093 1,649,809 35,728,530 Inventories 3,573,745 3,573,745 Real estate held for sale 5,277,340 496,197 5,773,537 Other 152,598 - 709,398 861,996 Total assets 94.467.441 $ 912,28,563 $ 74,44!1914 $_2,6,Q,136,918 Liabilities, Deferred Inflows and Fund Balances Liabilities: Accounts payable $ 5,499,209 $ 11,199,088 $ 3,105,443 $ 19,803,740 Accrued payroll 7,877,237 1,156,786 9,034,023 Due to other governmental funds (note 5) 1,500,236 362,466 548,009 2,410,711 Advance collections -intergovernmental (note 7) 1,982,694 1,379,647 120,837 3,483,178 Bond anticipation note payable (note 10) 35,000,000 - 35,000,000 Other 3,061,947 146,947 486,201 3,695,095 Total liabilities 19.921.323 48,088.148 5.417.276 73,426.747 Deferred Inflows of Resources: Unavailable revenue 22.394.726 1.225.600 2.538.672 26,158,998 Fund balances: Nonspendable: Inventory 3,573,745 3,573,745 Restricted for: Debt service (note 10) - - 24,016,116 24,016,116 Highways, streets and abandoned vehicles 41,788,028 13,084,350 54,872,378 Public access open space 4,554,871 - 4,554,871 Other 2,356,144 987,520 3,343,664 Committed to: Budget stabilization 5,657,294 5,657,294 Disaster and emergencies 5,255,896 - 5,255,896 Lower Puna area 4,740,394 4,740,394 Rental assistance and subsidy 2,355,251 2,355,251 Sanitation 14,255,880 14,255,880 Self insurance 1,293,511 - 1,293,511 Highways, streets and abandoned vehicles 711,886 6,459,750 7,171,636 Parks and recreational projects 3,502,778 87,182 3,589,960 Zoning change impact mitigation (fair share) 5,530,646 5,530,646 Other 718,878 2,983,378 498,523 4,200,779 Assigned to: Subsequent year's budget 25,945,000 25,945,000 Other 4,988,049 4,988,049 Unassigned 164,148 (14,958,045) (14,793,897) Total fund balances 52.151,392 41 914.815 66.484.966 160,551.173 Total liabilities and fund balances $ 94.467.441 S:91„2)3,561 $ 74,449,9J4 $260,13,6918 See accompanying notes to the basic financial statements. - 30 - COUNTY OF HAWAII Reconciliation of the Governmental Funds Balance Sheet to the Statement of Net Position June 30, 2015 Total fund balances - governmental funds $ 160,551,173 Amounts reported for governmental activities in the statement of net position 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 201,363,687 Infrastructure assets, net 278,990,393 Buildings and improvements, net 495,445,600 Equipment, net 50,250,220 Easements, net 3,830,410 Construction work in progress 60,966,761 Total capital assets, net 1,090,847,071 Deferred amounts on refunding and pension are reported as deferred outflows of resources in the government -wide financial statements but are not are not reported in the governmental fund statements 46,999,950 Some of the County's revenues will be collected after year-end but are not available soon enough to pay for the current period's expenditures and therefore are deferred (unearned) in the funds. (note 7) 25,380,108 Decrease in real estate held for sale due to recognition of additional (1,058,271) sales transactions that are considered deferred (unearned) in the funds. Some liabilities are not due and payable in the current period and therefore are not reported in the funds. Those liabilities consist of: Bonds and loans payable, net of receivable from improvement district (317,125,527) Interest due on long-term debt (5,412,443) Capital leases (2,981,709) Compensated absences (35,625,275) Claims and judgments (13,286,907) Landfill costs payable (22,664,000) Pollution remediation (10,590,000) Other Postemployment Benefit Obligation (OPEB) (65,755,197) Net pension obligation (322,626,262) Total long-term liabilities Deferred amounts related to pension are reported as deferred inflows of resources in the government -wide financial statements but are not are not reported in the governmental fund statements Net position of governmental activities See accompanying notes to the basic financial statements. -31- (796,067,320) (54,470,799) 472,181,912 COUNTY OF HAWAII Governmental Funds Statement of Revenues. Expenditures, and Changes in Fund Balances For the Fiscal Year Ended June 30, 2015 Revenues Property taxes Public service company taxes Fuel taxes Public utility franchise taxes Licenses and permits Intergovernmental Charges for services Investment earnings (losses) Other Total revenues Expenditures Current: General government Public safety Highways and streets Health, education and welfare Culture and recreation Sanitation Pension and retirement contributions (note 13) Employees' health insurance Other postemployment benefits Other Debt service: Principal Interest Capital outlay Total expenditures Excess (deficiency) of revenues over (under) expenditures General Capital Projects Other Total Governmental Governmental Funds Funds $236,189,824 $ $ - $236,189,824 10,385,654 10,385,654 7,632,973 7,632,973 10,824,278 10,824,278 8,514,920 13,531,279 22,046,199 50,267,365 16,633,134 19,371,596 86,272,095 4,134,372 16,222,978 20,357,350 768,833 (56,886) 3,525 715,472 2,004,111 6,240,975 1,523,921 9,769,007 312,265,079 22,817,223 69,110,550 404,192,852 39,992,577 115,092,872 3,589,211 7,245,249 19,104,426 958,069 33,765,096 25,555,764 4,532,000 3,592,034 697,304 51,524 6,849,764 261,025,890 812,820 40,805,397 7,725,576 122,818,448 17,395,123 20,984,334 17,294,349 24,539,598 951,438 20,055,864 30,506,206 31,464,275 4,719,999 38,485,095 2,175,364 27,731,128 4,532,000 1,094,016 4,686,050 21,306,184 22,003,488 135,704 13,684,269 13,871,497 72,547,849 79,397,613 72,683,553 117,665,344 451,374,787 51,239,189 (49,866,330) (48,554,794) (47,181,935) -32- (Continued) COUNTY OF HAWAII Governmental Funds Statement of Revenues, Expenditures, and Changes in Fund Balances For the Fiscal Year Ended June 30, 2015 General (Concluded) Other Total Capital Governmental Governmental Projects Funds Funds Other Financing Sources (Uses) Sale of assets $ 24,513 $ - $ - $ 24,513 Increase in capital leases (notes 8 and 10) 1,741,909 229,165 1,971,074 State Revolving Fund loans (note 10) - Issuance of bonds (note 10) Premium on bonds (note 10) - - Refunding bonds (note 10) Payment to refunded bond escrow agent (note 10) - - Retirement of refunded debt (note 10) - Transfers in (note 5) 3,305,991 56,088,069 59,394,060 Transfers out (note 5) (56,180,060) (3,214,000) (59,394,060) Total other financing sources (uses) (54,413,638) 3,305,991 53,103,234 1,995,587 Net change in fund balances (3,174,449) (46,560,339) 4,548,440 (45,186,348) Fund balances at beginning of year 55,547,059 88,475,154 61,936,526 205,958,739 Increase in reserve for inventories (221,218) - - (221,218) Fund balances at end of year $ 52,151,392 $ 41,914,815 $66,484,966 $160,551,173 See accompanying notes to the basic financial statements. - 33 - COUNTY OF HAWAII Reconciliation of the Change in Fund Balances of Governmental Funds to the Statement of Activities For the Fiscal Year Ended June 30, 2015 Net change in fund balances - total governmental funds $ (45,186,348) 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 Dedicated and contributed property Depreciation expense and loss on disposals Excess of capital outlay over depreciation expense Borrowings provide current financial resources to governmental funds; however, issuing debt increases long-term liabilities in the statement of net position. In the current period, assets financed through: 66,476,678 10,255,218 (38,131,669) 38,600,227 Capital leases (1,971,074) Repayment of long-term debt is reported as an expenditure in governmental funds, but the repayment reduces long-term liabilities in the statement of net position. In the current year, these amounts consist of: Bond principal retirement State Revolving Fund loan repayments Capital lease payments Total long-term debt repayment 19,329,457 1,376,425 1,297,606 Because some revenues will not be collected for several months after the County's fiscal year end, they are not considered "available" revenues and are "deferred" in the governmental funds. Unearned revenues decreased by this amount this year. -34- 22,003,488 322,963 (Continued) COUNTY OF HAWAII Reconciliation of the Change in Fund Balances of Governmental Funds to the Statement of Activities For the Fiscal Year Ended June 30, 2015 Decrease in real estate held for sale due to recognition of additional sales transactions that are considered deferred (unearned) in the funds. Some items reported in the statement of activities do not involve current financial resources and therefore are not reported as expenditures in governmental funds. These activities are: Decrease in inventories $ (221,218) Increase in Other Postemployment Benefit Obligation (OPEB) (14,206,601) Increase in compensated absences (1,639,831) Decrease in claims and. judgments 436,986 Decrease in landfill closure/postclosure care costs 49,000 Increase in pollution remediation costs (1,820,000) Amortization of premium from bond issuance 1,505,152 Amortization of deferred Toss on refunding (241,573) Net decrease in accrued interest 245,507 Decrease to expenses related to pension and salaries and wages 8,233,398 Net additional expenses Change in net position of governmental activities See accompanying notes to the basic financial statements, -35- (Concluded) (1,058,271) (7,659,180) 5,051,805 COUNTY OF HAWAII General Fund Statement of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual (Budgetary Basis) For the Fiscal Year Ended .tune 30, 2015 Actual Variance Original Final (Budgetary Positive Budget Budget Basis) (Negative) Revenues: Taxes and assessments: Property taxes $ 234,100,000 $ 234,212,500 $ 236,189,824 $ 1,977,324 Public service company taxes 10,340,000 10.340,000 10,385,654 45,654 Total taxes and assessments 244,440,000 244,552,500 246,575,478 2,022,978 Licenses and permits: Nonbusiness licenses and permits 3,673,300 3,673,300 3,804,823 131,523 Business licenses 1,947,044 1,947,044 1,821,162 (125,882) Street use 2,734,000 2,734,000 2,888,935 154,935 Total licenses and permits 8,354,344 8,354,344 8,514,920 160,576 Intergovernmental: Federal: Programs for the aged 2,205,269 2,205,269 1,307,097 (898,172) Community development block grants 2,465,271 2,465,271 HOME program grant 2,852,059 2,852,059 Law enforcement 2,571,739 3,170,096 1,969,513 (1,200,583) Other 2,899,500 4,002,661 2,911,829 (1,090,832) Total federal 7,676,508 14,695,356 11,505,769 (3,189,587) State: State General Fund - Act 185, SLH 1990 19,158,000 19,158,000 19,158,000 - Emergency medical services 14,358,592 14,358,592 15,257,110 898,518 Other 4,873,637 5,787,617 4,741,707 (1,045,910) Total State 38,390,229 39,304,209 39,156,817 (147,392) Total intergovernmental revenue 46,066,737 53,999,565 50,662,586 (3,336,979) Charges for services: General government 5,599,634 5,599,634 4,747,367 (852,267) Culture and recreation 1,470,000 1,470,000 1,324,959 (145,041) Highways and streets 1,212,000 1.212,000 1,303,526 91,526 Public safety 111,368 111,368 122,870 11,502 Total charges for services 8,393,002 8,393,002 7,498,722 (894,280) Fines and forfeitures Rents 1,399,500 1,599,500 834,823 (764,677) 177,860 177,860 213,169 35,309 - 36 - (Continued) COUNTY OF HAWAII General Fund Statement of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual (Budgetary Basis) Revenues (continued): Interest and penalties Miscellaneous Total revenues For the Fiscal Year Ended June 30, 2015 Actual Variance Original Final (Budgetary Positive Budget Budget Basis) (Negative) $ 400,000 $ 400,000 $ 586,564 $ 186,564 4,990,342 5,331,295 4,983,674 (347,621) 314,221,785 322,808,066 319,869,936 (2,938,130) Expenditures: Current: General government: Finance 11,650,878 11,883,658 9,856,956 2,026,702 General government building 4,929,426 4,876,426 4,532,249 344,177 Legislative 4,245,753 3,520,457 3,163,070 357,387 Automotive equipment 5,694,196 5,694,196 4,538,565 1.155,631 Law 2,654,373 2,654,373 2,463,945 190,428 Research and development 3,916,213 4,679,874 4,641,923 37,951 Planning and zoning 3,900,081 3,900,081 3,690,384 209,697 Mayor's office 1,609,383 1,682,230 1,585,334 96,896 Engineering 1,416,376 1,484,376 1,359,462 124.914 Information technology 2,811,003 2,999,503 2,629,748 369,755 Human resources 1,915,916 1,915,916 1,802,624 113,292 Public works administration 1,674,724 1,504,724 1,324,166 180,558 Elections 860,405 860,405 807,850 52,555 Legislative auditor 753,318 753,318 585,933 167,385 Total general government 48,032,045 48,409,537 42,982,209 5,427,328 Public safety: Police department 57,817,093 58,292,834 54,437,630 3,855,204 Fire department 39,069,008 44,014,577 42,952,222 1,062,355 Prosecuting attorney 9,226,706 9,491,282 7,737,085 1,754,197 Protective inspection 2,454,880 2,639,880 2,426,233 213,647 Liquor control 1,947,044 1,974,794 1,751,019 223,775 Flood control 330,000 330,000 214,855 115,145 Civil defense agency 1,102,048 1,361,681 1,344,156 17,525 Animal control 1,982,500 1,988,400 1,982,500 5,900 Total public safety 113,929,279 120,093,448 112,845,700 7,247,748 Highways and streets: Mass transit 4,395,978 4,422,788 2,996,715 1,426,073 -37- (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, 2015 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 1-loolulu park complex Administration Children's zoo Summer/Intersession Culture and arts Elderly activities administration Total culture and recreation Sanitation: Environmental management Pension and retirement contributions Employees' health insurance Other postemployment benefits Other Original Budget 3,846,470 2,566,353 58,500 1,500,000 374,313 133,825 Final Budget 3,846,470 2,587,353 58,500 1,500,000 387,413 133,825 Actual (Budgetary Basis) $ 3,284,086 1,830,690 55,198 1,484,950 376,733 133,825 Variance Positive (Negative) 562,384 756,663 3,302 15,050 10,680 8,479.461 8,513,561 7,165,482 1,348,079 256,142 216,387 205,618 10,769 8,946,489 9,218,809 9,089,900 128,909 2,945,518 3,004,988 2,639,134 365,854 2,465,732 2,465,732 2,245,793 219,939 1,053,717 1,003,717 980,612 23,105 2,261,826 2,601,136 2,335,916 265,220 742,856 755,456 709,553 45,903 542,185 542,185 377,149 165,036 289,570 298,570 266,584 31,986 573,337 585,737 523,977 61,760 20,077,372 20,692,717 19,374,236 1,318,481 1,043,062 1,043,062 954,445 88,6I7 34,082,132 34,082,132 31,855,618 2,226,514 28,200,000 28,200,000 25,515,817 2,684,183 6,090,000 6,090,000 4,532,000 1,558,000 9,560,000 5,040,096 2,089,578 2,950,518 Total current 273,889,329 276,587,341 250,311,800 26,275,541 - 38 - (Continued) COUNTY OF HAWAII General Fund Statement of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual (Budgetary Basis) Expenditures (continued): Capital Outlay: Community Development Block grants (HUD) HOME Program For the Fiscal Year Ended June 30, 2015 Original Budget Final Budget $ 2,681,197 2,922,000 Total capital outlay 5,603,197 Total expenditures 273,889,329 282,190,538 Excess of revenues over expenditures 40,332,456 40,617,528 Other financing sources (uses): Transfers out: Housing Fund Solid Waste Fund Sewer Fund Golf Course Fund Capital Project Fund Highway Fund Disaster/Emergency Fund Public Access, Open Space, and Natural Resources Preservation Fund Public Access, Open Space, and Natural Resources Preservation Maintenance Fund Budget Stabilization Fund Debt Service Fund Total transfers out Total other financing uses Excess (deficiency) of revenues and other sources over (under) expenditures and other uses Fund balance at beginning of year Fund balance at end of year See accompanying notes to the basic financial statements. (1,553,091) (1,558,091) (17,979,621) (18,025,79]) (1,722,936) (1,728,936) (348,264) (367,675) (91,991) (4,000) (250,000) (250,000) (4,682,000) (4,782,000) (585,250) (597,750) (250,000) (250,000) (38,630,206) (38,630,206) (66,001,368) (66,286,440) (66,001,368) (66,286,440) Actual (Budgetary Basis) (Concluded) Variance Positive (Negative) $ 2,621,813 $ 59,384 2,897,000 25,000 5,518,813 84,384 255,830,613 26,359,925 64,039,323 23,421,795 (1,558,091) (18,025,791) (1,728,936) (367,675) (91,991) (4,000) (250,000) (4,723,981) 58,019 7,252 223,589 (590,498) (250,000) (38,406,617) (65,997,580) 288,860 (65,997,580) 288,860 (25,668,912) (25,668,912) (1,958,257) 23,710,655 55,547,059 55,547,059 55,547,059 $ 29,878,147 $ 29,878,147 $ 53,588,802 $23,710,655 -39- COUNTY OF HAWAII Proprietary Funds Statement of Net Position June 30, 2015 Business -type Activities - Enterprise Funds Kulaimano Ouli Ekahi Elderly Affordable Housing Housing Project Project Total Assets Current assets: Cash and cash equivalents (note 3) $ 301,497 $ 312,724 $ 614,221 Restricted cash and cash equivalents (note 3) 12,042 28,626 40,668 Investments (note 3) 200,018 - 200,018 Imprest fund (note 3) 50 100 150 Receivables, net (note 4) 174 3,762 3,936 Prepaid expenses 1,534 - 1,534 Total current assets 515,315 345,212 860,527 Noncurrent assets: Restricted cash and cash equivalents (note 3) - 49,521 49,521 Investments (note 3) 200,242 - 200,242 Capital assets (note 6): Land and site improvements 511,000 515,727 1,026,727 Buildings and equipment 1,242,522 481,079 1,723,601 Less accumulated depreciation (1,168,371) (41,748) (1,210,119) Total capital assets 585,151 955,058 1,540,209 Total noncurrent assets Total assets 785,393 1,004,579 1,789,972 1,300,708 1,349,791 2,650,499 Liabilities Current liabilities: Accounts payable 13,606 1,558 15,164 Internal Balances (note 5) 1,350 - 1,350 Security deposits payable from restricted assets 12,042 27,200 39,242 Deferred revenue (note 7) 855 266 1,121 Interest payable 13,197 13,197 Notes payable, current portion (note 10) 53,043 32,314 85,357 Total current liabilities 94,093 61,338 155,431 Noncurrent liabilities: Notes payable (note 10) 707,808 318,229 1,026,037 Total liabilities 801,901 379,567 1,181,468 Net Position Net investment in capital assets Unrestricted Total net position $ 498,807 $ 970,224 $ 1,469,031 See accompanying notes to the basic financial statements. (175,700) 604,515 428,815 674,507 365,709 1,040,216 - 40 - COUNTY OF HAWAII Proprietary Funds Statement of Revenues, Expenses, and Changes in Fund Net Position For the Fiscal Year Ended June 30, 2015 Business -type Activities - Enterprise Funds Kulaimano Ouli Ekahi Elderly Affordable Housing Housing Project Project Total Operating revenues: Rental receipts from tenants $ 110,861 $ 333,851 $ 444,712 Rental subsidy from federal government - HUD 113,642 113,642 Laundry receipts 3,182 3,182 Other 5,410 5,410 Total operating revenues 227,685 339,261 566,946 Operating expenses: Utilities 38,412 58,765 97,177 General and administration 108,614 99,903 208,517 Maintenance and repairs 62,790 99,486 162,276 Depreciation (note 6) 35,468 16,820 52,288 Total operating expenses 245,284 274,974 520,258 Operating income (loss) (17,599) 64,287 46,688 Nonoperating revenues (expenses): Investment income 1,284 15 1,299 Interest expense (41,365) - (41,365) Loss on disposal of fixed assets (48) (142) (190) Total nonoperating revenues (expenses) (40,129) (127) (40,256) Change in net position (57,728) 64,160 6,432 Net position, beginning of year 556,535 906,064 1,462,599 Net position, end of year $ 498,807 5 970,224 $ 1,469,031 See accompanying notes to the basic financial statements. -41 - COUNTY OF HAWAII Proprietary Funds Statement of Cash Flows For the Fiscal Year Ended June 30, 2015 Business -type Activities - Enterprise Funds Kulaimano Ouli Ekahi Elderly Affordable Housing Housing Project Project Total Cash Flows from Operating Activities Receipts from tenants $ 112,411 $ 339,143 $ 451,554 Receipts from federal government - HUD 113,642 - 113,642 Payments to suppliers for goods and services (198,594) (255,997) (454,591) Net cash provided by operating activities 27,459 83,146 110,605 Cash Flows from Capital and Related Financing Activities Principal paid on notes payable (50,187) (46,720) (96,907) Interest paid on notes payable (42,317) (42,317) Purchase of capital assets (12,973) (2,565) (15,538) Net cash used in capital and related financing activities (105,477) (49,285) (154,762) Cash Flows from Investing Activities Purchase of investments (400,000) (400,000) Proceeds from maturities of investments 200,000 - 200,000 Interest on investments 1,208 15 1,223 Net cash provided by investing activities (198,792) 15 (198,777) Net increase in cash and cash equivalents (276,810) 33,876 (242,934) Cash and cash equivalents at beginning of year (including restricted cash and cash equivalents) Cash and cash equivalents at end of year (including restricted cash and cash equivalents) $ 313,589 $ 390,971 $ 704,560 590,399 357,095 947,494 Reconciliation of Operating Income to Net Cash Provided by Operating Activities Operating income (loss) Adjustments to reconcile operating income to net cash provided by operating activities: Depreciation expense Change in assets and liabilities: $ (17,599) $ 64,287 $ 46,688 35,468 16,820 52,288 Receivables, net 566 1,275 1,841 Prepaid expenses (44) - (44) Accounts and other payables 8,714 708 9,422 Deferred revenue 354 56 410 Net cash provided by operating activities $ 27,459 $ 83,146 $ 110,605 Supplemental disclosure of cash flow information - Interest paid $ 42,317 $ - $ 42,317 Noncash investing, capital and financing activities: Net increase in fair value of investments $ 76 $ $ 76 See accompanying notes to the basic financial statements. -42- COUNTY OF HAWAII Fiduciary Funds Statement of Fiduciary Net Position June 30, 2015 Private - Purpose Agency Trusts Funds Assets Cash and cash equivalents (note 3) $ 1,729,445 $ 4,037,290 Investments (note 3) 2,837,432 170,064 Receivables: Due from other agency funds - 3,507 Other receivables 486 58,706 Total receivables 486 62,213 Total assets 4,567363 $ 4,269,567 Liabilities Due to other agency funds 3,507 Accrued liabilities 3,088,773 Advances payable 230,908 Assets held for the benefit of improvement districts - 946,379 Total liabilities - $ 4,269,567 Net Position Held in trust for other parties Total net position 4,567,363 $ 4,567,363 See accompanying notes to the basic financial statements. -43- COUNTY OF HAWAII Fiduciary Funds Statement of Changes in Fiduciary Net Position For the Fiscal Year Ended June 30, 2015 Additions Contributions: Puna Geothermal Venture Investment earnings: Net increase in fair value of investments Dividends and interest Total additions Deductions Claims Consultant Grant payments Total deductions Change in net position Net position, beginning of year Net position, end of year See accompanying notes to the basic financial statements. -44- Private- Purpose Trusts $ 50,000 20,253 58,228 128,481 104,135 81,210 185,345 (56,864) 4,624,227 4,567,363 COUNTY OF HAWAII Notes to the Basic Financial Statements June 30, 2015 The accounting policies of the County of Hawai` i (the County) conform to U.S. generally accepted accounting principles (GAAP) as applicable to local governmental units. The following notes to the basic financial statements are an integral part of the County's Comprehensive Annual Financial Report (CAFR). 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), Statement No. 39, Determining Whether Certain Organizations Are Component Units (GASB Statement No. 39) and Statement No. 61, The Financial Reporting Entity: Omnibus an amendment of GASB Statements No. 14 and 34 (GASB Statement No. 61). All organizations, activities or functions that meet the criteria in GASB Statement No. 14, No. 39 and No. 61 for inclusion in the reporting entity are included in the County's basic financial statements. Primary Government The County operates under the Mayor -Council form of government under a charter that became effective on January 2, 1969, and was amended in 1979, 1982, 1990 and 2000. The County's operations are organized by the following functions: general government; public safety; highways and streets; sanitation; health, education and welfare; culture and recreation; pension and retirement contributions; health fund; miscellaneous; capital outlay; and debt service. The State of Hawai`i (the State) assumes full responsibility for several major functions usually performed by local governments, including education, welfare, health and judicial functions. There are no separate city, county or township governments nor any school districts, special districts, authorities or public corporations with overlapping authority. GASB Statement No. 14, as amended, defines component units as legally separate organizations for which the elected officials of the primary government are financially accountable or for which the primary government may determine, through exercise of management's professional judgment, that the inclusion of an organization that does not meet the financial accountability criteria is necessary in order to prevent the reporting entity's financial statements from being misleading. "Financial accountability" is the level of accountability that exists if a primary government appoints a voting majority of an organization's governing board or if the organization is fiscally dependent on the primary government and is either able to impose its will on that organization or there is a potential for the organization to provide specific financial benefits to, or impose specific financial burdens on, the primary government. A primary government has the ability to impose its will on an organization if it can significantly influence the programs, projects, activities or level of services performed or provided by the organization. An organization has a financial benefit or burden relationship with the primary government if any one of three conditions exist: (1) The primary government is legally entitled to or can otherwise access the organization's resources; (2) The primary government is legally obligated or has otherwise assumed the obligation to - 45 - COUNTY OF HAWAII Notes to the Basic Financial Statements June 30, 2015 finance the deficits of, or provide financial support to, the organization; or (3) The primary government is obligated in some manner for the debt of the organization. As required by GAAP as set forth in GASB Statement No. 14, No. 39 and No. 61, these basic financial statements present the County of Hawai`i (the primary government) and its component unit, the Department of Water Supply (the Department). This component unit is included in the County's reporting entity because of its financial relationship with the County. Discretely Presented Component Unit The component unit column in the basic financial statements includes the financial data of the Department, a legally independent agency of the County that is accounted for as an enterprise fund. It is reported in a separate column to emphasize that it is legally separate from the County. The members of the Water Board, the governing body of the Department, are appointed by the Mayor of the County and confirmed by the County Council. The Department is granted corporate powers by state statute and the County Charter. Although the County does not have the authority to approve or modify the Department's operational and capital budgets, the County has issued bonds on the Department's behalf that are general obligations of the County. Because the County is obligated to repay these bonds in the event of default by the Department, the County is financially accountable for the debts of the Department. See Note 14 for component unit disclosures for the Department. Complete financial statements of the Department can be obtained from the Department of Water Supply, 345 Kekuanao`a Street, Suite 20, Hilo, Hawai`i 96720. Basic Financial Statements The basic financial statements include both government -wide (based on the County as a whole) and fund financial statements. Both the government -wide and fund financial statements (within the basic financial statements) categorize primary activities as either governmental or business -type. In the government -wide statement of net position, 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 Tong -tern 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. - 46 - COUNTY OF HAWAI`I Notes to the Basic Financial Statements June 30, 2015 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. The fund financial statements' emphasis is on the major funds in either the governmental or business -type categories. Nonmajor funds (by category) are summarized into a single column. The governmental funds in the fund financial statements are presented using the current financial resource focus 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 using 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 party (private parties, state government, etc.) and cannot be used to address activities or obligations of the government, these funds are not incorporated into the government -wide statements. Government -wide and fund financial statements — The government -wide financial statements (i.e., the statement of net position and the statement of activities) 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 during the process of incorporating fund data. Governmental activities, which normally are supported by taxes and intergovernmental revenues, are reported separately from business -type activities, which rely to a significant extent on fees and charges for support. Likewise, the primary government is reported separately from certain legally separate component units for which the primary government is financially accountable. The statement of activities demonstrates the degree to which the direct expenses of a given function or segment are offset by program revenues. Direct expenses are those that are clearly identifiable with a specific function or segment. Program revenues include (a) charges to customers or applicants who purchase, use, or directly benefit from goods, services, or privileges provided by a given function or segment and (b) grants and contributions that are restricted to meeting the operational or capital requirements of a particular function or segment. Taxes and other items not included among program revenues are reported instead as general revenues. Separate financial statements are provided for governmental funds, proprietary funds, and fiduciary funds, even though the latter are excluded from the government -wide financial - 47 - COUNTY OF HAWAII Notes to the Basic Financial Statements June 30, 2015 statements. Major individual governmental funds and major individual enterprise funds are reported as separate columns in the fund financial statements. Activities in funds — The financial transactions of the County are recorded in individual funds. Each fund is accounted for by providing a separate set of self -balancing accounts that comprises its assets, deferred outflows of resources, liabilities, deferred inflows of resources, reserves, fund equity, revenues and expenditures/expenses. The various funds are reported by generic classification within the financial statements. GASB Statement No. 34, Basic Financial Statements — and Management's Discussion and Analysis — for State and Local Governments, sets forth minimum criteria (percentage of the assets, deferred outflows of resources, liabilities, deferred inflows of resources, revenues or expenditures/expenses of either fund category or the governmental and enterprise combined) for the determination of major funds. The nonmajor funds are combined in a column in the fund financial statements and detailed in the combining section. The County reports the following major governmental funds: General Fund — The general fund is the general operating fund of the County. It is used to account for all activities of the general government, except those required to be accounted for in other funds. Capital Projects Fund — Used to account for the costs of constructing County capital improvements financed with general obligation bond proceeds, federal and state grants, and general and special revenue fund revenues. The capital projects fund is used to account for financial resources to be used for the acquisition or construction of major general government capital facilities and infrastructure (other than those financed by proprietary funds and trust funds) when separate project centers are needed to control costs. The County reports the following major proprietary funds: Kula `imano Elderly Housing Project — Used to account for the operation of a rental housing project for low-income senior citizens located north of Hilo. Ouli Ekahi Affordable Housing Project — Used to account for the operation of a 33 -unit single-family affordable rental housing project located in Waimea. The County reports the following fiduciary funds: Private -Purpose Trust Funds — Used to account for funds received from geothermal developers to mitigate the effects of geothermal energy development. Also used to account for investment income on funds received from import businesses at the port of Hilo and the related expenditures to promote health and safety on the Island of Hawai`i. - 48 - COUNTY OF HAWAII Notes to the Basic Financial Statements June 30, 2015 Agency Funds — Used to account for assets held by the County for other governmental units and individuals. The agency funds are custodial in nature and do not involve measurement of results of operations. The County has the following agency funds: • State Weight Tax Fund • Improvement District No. 18 Fund • Improvement District No. 19 Fund • Improvement District Revolving Fund • Performance and Refundable Deposits Fund • Payroll Clearance Fund • Flexible Spending Account • Lapsed Warrants Fund • Non -Profit License Plates Fund • Organ and Tissue Education Fund • Business Improvement District 1-Kailua Basis of Accounting Basis of accounting refers to the period in which revenues and expenditures (or expenses) are recognized in the accounts and reported in the basic financial statements. Basis of accounting relates to the timing of the measurements made, regardless of the measurement focus applied. The government -wide financial statements and the proprietary, fiduciary and component unit fund financial statements are presented on an accrual basis of accounting. The governmental funds in the fund financial statements are presented on a modified accrual basis. Accrual Basis - Revenues are recognized when earned and expenses are recognized when the related obligation is incurred. Modified Accrual Basis - Revenues are recorded when susceptible to accrual (that is, both measurable and available). "Measurable" means the amounts are determinable. "Available" means the amounts are collectible within the current period or soon enough thereafter (one year for intergovernmental revenues) to be used to pay liabilities of the current period. Licenses and permits, charges for current services, fines and forfeitures, penalties and miscellaneous revenues are recorded as revenues when received in cash because they are generally not measurable until actually received. Real property taxes and State Revolving Fund loan proceeds are considered available when collected. In applying the susceptible to accrual concept to intergovernmental revenues, the legal and contractual requirements of the numerous individual programs are used as guidance. There are essentially two types of these revenues. In one, monies must be expended on the specific purpose or project before any amounts will be paid to the County; therefore, revenues are - 49 - COUNTY OF HAWAII Notes to the Basic Financial Statements June 30, 2015 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 deferred inflow of resources in its fund financial statements (see Note 7). Deferred inflows of resources 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 deferred inflow is removed from the fund financial statements and revenue is recognized. Expenditures are recognized under the modified accrual basis of accounting in the accounting period in which the fund liability is incurred. Exceptions to this general rule include: (a) accumulated compensated absences and claims and judgments which are recognized as expenditures when paid; (b) liabilities related to municipal solid waste landfill closure and postclosure care costs; (c) principal and interest on general long -tern debt which are recognized as expenditures when due; and (d) liabilities relating to pollution remediation The County applies all applicable GASB pronouncements, including the adoption of GASB Statement No. 62, Codification of Accounting and Financial Reporting Guidance Contained in Pre -November 30, 1989 FASB (Financial Accounting Standards Board) and AICPA (American Institute of Certified Public Accountants) Pronouncements. 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 savings accounts, and short-term investments with a maturity date of three months or less from the date acquired by the County. Investments consist of certificates of deposit, repurchase agreements, and securities with original maturities exceeding three months. These include participating investment contracts (U.S. government sponsored agency issues and negotiable certificates of deposit) as well as nonparticipating investment contracts (time certificates of deposit and repurchase agreements). Both categories of investments are stated at fair value (see Note 3). Valuations of investments - 50 - COUNTY OF HAWAI`I Notes to the Basic Financial Statements June 30, 2015 in government sponsored enterprises such as Federal National Mortgage Association (Fannie Mae) and Federal Home Loan Mortgage Corporation (Freddie Mac) are based on quoted market rates. Valuations of certificates of deposits are based on cost, which approximate fair 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 of June 30 are delinquent. Each delinquent installment bears interest at 1% per month and penalties of up to 10% of the amount due. Assessments are based on 100% of estimated fair market values prior to the application of exemptions or preferential assessments. Inventories Inventories consist of materials and supplies and are reported as expenditures at the time of purchase (purchase method). Police and fire department inventories are stated using the first in, first out (FIFO) method. Other inventories are stated at average cost. Liquor Control Section 281 of the Hawai`i Revised Statutes requires that liquor license revenues collected be used only for costs and expenses directly relating to operational and administrative costs actually incurred by the liquor commission collecting such fees. The unexpended fees at June 30, 2015 was insufficient to cover the related payable which resulted in a negative restricted fund balance so it was reclassed to unassigned general fund balance. Capital Assets Capital assets, which include property, plant, equipment, and infrastructure assets (e.g., roads, bridges, curbs and gutters, streets and sidewalks, drainage systems, lighting systems, and similar items), are reported in the applicable governmental or business -type activities columns in the government -wide financial statements. Capital assets are defined by the County as assets with an initial, individual cost of more than $1,000 and an estimated useful life in excess of one year. Such assets are recorded at historical cost or estimated historical cost if purchased or constructed. Donated capital assets are recorded at estimated fair market value at the date of donation. The costs of normal maintenance and repairs that do not add to the value of the asset or materially extend the life of the asset are not capitalized. - 51 - COUNTY OF HAWAI'I Notes to the Basic Financial Statements June 30, 2015 Major outlays for capital assets and improvements are capitalized as projects are constructed. Interest incurred during the construction phase of capital assets of business -type activities is included as part of the capitalized value of the assets constructed. Capital assets of the primary government and enterprise fund are depreciated using the straight-line method over the following estimated useful lives of the assets: Assets Years Infrastructure 20 to 100 years Buildings and improvements 50 to 100 years Ground and site improvements 20 to 50 years Equipment 5 to 40 years Easements Dependent on terms of easement agreement Deferred Outflows of Resources and Deferred Inflows of Resources Deferred outflows of resources represent a consumption of net position that applies to a future period and will not be recognized as an outflow of resources (expense or expenditure) until that time. The County has two items that qualifies for reporting in this category. The County reports the deferred Toss on refunding and deferred outflow related to pensions as a deferred outflow of resources in its statement of net position. Deferred inflows of resources represent an acquisition of net position that applies to a future period and will not be recognized as an inflow of resources (revenue) until that time. Property taxes, fees and other non-exchange transactions received in the current fiscal year for the ensuing fiscal year are reported as deferred inflows of resources. These amounts are deferred and recognized as an inflow of resources in the period that the amounts become available. The County also reports deferred inflows of resources related to pensions. Long-term Obligations The County reports Tong -term debt of governmental funds at face value on the government - wide statement of net position. Certain other governmental fund obligations not expected to be financed with current available resources are also reported on the government -wide statement of net position. Long-term debt and other obligations financed by 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 of service. Up to ninety days of vacation leave credits can be accumulated per employee. In addition, employees who work overtime can elect to take compensatory time off instead of overtime pay. The time off is earned at the rate of one -and -a -half hours for each hour of overtime worked. There is no statutory limit to the amount of compensatory time off -52- COUNTY OF HAWAII Notes to the Basic Financial Statements June 30, 2015 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 position along with the estimated liability for social security and Medicare taxes and employers' retirement contributions on those amounts. Sick leave accumulates without limit. Sick leave can be taken only in the event of illness and is not convertible to pay upon termination of employment; therefore there is no related liability. However, a County employee who retires or leaves government service in good standing with 60 days or more of unused sick leave is entitled to additional service credit in the Employees' Retirement System of the State of Hawai`i. Accumulated sick leave at June 30, 2015 totaled $71,605,000 for the primary government. Leases Leases transferring substantially all of the risks and benefits of ownership are recorded as capital leases; other leases are operating leases (see Note 8). Capital leases are recorded as capital asset additions at their estimated fair value at the inception of the lease and the related present value of the future minimum lease obligations is recorded as long-term debt. Operating lease expenditures and expenses are recognized when the lease obligation is paid. Retirement Plan Contributions For purposes of measuring the net pension liability, deferred outflows of resources and deferred inflows of resources related to pensions, and pension expense, information about the fiduciary net position of the Employees' Retirement System of the State of Hawai`i (ERS) and additions to and deductions from ERS's fiduciary net position have been determined on the same basis as they are reported by ERS. The County's contribution to the ERS includes the normal cost plus the level annual payment required to amortize the unfunded actuarial accrued liability. The County's policy is to fund its required contribution annually (see Note 13). Operating Revenues and Expenses Revenues and expenses are distinguished between operating and nonoperating items for the proprietary funds. Operating revenues generally result from providing services in connection with the proprietary funds' principal ongoing operations. The principal operating revenues of the proprietary funds are fees charged to residents for rent and rental subsidies received from the federal government. Operating expenses include the costs associated with providing housing for tenants, such as utilities, lease rent, and maintenance and repairs; administrative expenses; and depreciation on - 53 - COUNTY OF HAWAII Notes to the Basic Financial Statements June 30, 2015 capital assets. All revenues and expenses not meeting these definitions are reported as nonoperating revenues and expenses. Use of Estimates The preparation of the basic financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, deferred outflows of resources, liabilities, and deferred inflows of resources, 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. Fund Balances When both restricted and unrestricted fund balances are available for use, it is the County's policy to use restricted fund balance first, then unrestricted fund balance. Furthermore, committed fund balances are reduced first, followed by assigned amounts, and then unassigned amounts when expenditures are incurred for purposes for which amounts in any of those unrestricted fund balance classifications can be used. The County reports the following classifications: Nonspendable Fund Balance — Nonspendable fund balances are amounts that cannot be spent because they are either not in spendable form, or, for legal or contractual reasons, must be kept intact. The County has inventory included in their nonspendable fund balance. Restricted Fund Balance — Constraints placed on the use of these resources are either externally imposed by creditors (such as through debt covenants), grantors, contributors or other governments or are imposed by law (under the Hawai`i Revised Statutes or County of Hawai`i Charter). Committed Fund Balance — Committed Fund Balances are amounts that can only be used for specific purposes as a result of constraints imposed by the County Council via ordinances and the County Code and can only be undone via the same manner. The committed fund balance of the General Fund includes the portion of fund balance committed to budget stabilization. The budget stabilization portion is authorized under County Code §2-219 to §2-223 and additions are made via the County budget or subsequent budget amendments. The fund balance may only be used when there is a reduction in budgeted revenue and the director of finance determines that such use is necessary to prevent a reduction in the level of public services. Assigned Fund Balance — Assigned fund balances are amounts that are constrained by the County's intent as determined by the Mayor but are neither restricted nor committed. - 54 - COUNTY OF HAWAII Notes to the Basic Financial Statements June 30, 2015 The County's only assigned fund balances are in the General Fund and Capital Projects Fund and the majority consists of the portion of fund balance that is intended to balance the subsequent year's budget, which is conveyed by the Mayor via his approval of allotment requests and his approval of the current year's fund balance amount to be included in the submittal for next year's annual budget ordinance. Unassigned Fund Balance — This is the residual classification of the General Fund. Net Position When both restricted and unrestricted net position are available for use, it is the County's policy to use restricted net position first, and then unrestricted net position. New Accounting Pronouncements In June 2012, GASB issued Statement No. 68, Accounting and Financial Reporting for Pensions — An Amendment of GASB Statement No. 27. 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 15, 2014. The County implemented this Statement as of and for the fiscal year ended June 30, 2015. In January 2013, GASB issued Statement No. 69, Government Combinations and Disposals of Government Operations. The objective of this Statement is to improve financial reporting by addressing accounting and financial reporting for government combinations and disposals of government operations. The requirements for this Statement are effective for the County for periods beginning after December 15, 2013 and did not have an impact on the County's financials for the year ending June 30, 2015. In April 2013, GASB issued Statement No. 70, Accounting and Financial Reporting for Nonexchange Financial Guarantees. The requirements of this Statement will enhance comparability of financial statements among governments by requiring consistent reporting by those governments that extend nonexchange financial guarantees and by those governments that receive nonexchange financial guarantees. The requirements for this Statement are effective for the County for periods beginning after June 15, 2013 and did not have an impact on the County's financials for the year ending June 30, 2015. In November 2013, GASB issued Statement No. 71, Pension Transition for Contributions Made Subsequent to the Measurement Date — An Amendment of GASB Statement No. 68. The objective of this Statement is to improve accounting and financial reporting by addressing an issue in Statement No. 68, Accounting and Financial Reporting for Pensions, concerning transition provisions related to certain pension contributions made to defined benefit pension plans prior to implementation of that Statement by employers and nonemployer contributing entities. The requirements for this Statement are effective for the County for periods - 55 - COUNTY OF HAWAII Notes to the Basic Financial Statements June 30, 2015 beginning after June 15, 2014. The County implemented this Statement as of and for the fiscal year ended June 30, 2015. In February 2015, GASB issued Statement No. 72, Fair Value Measurement and Application. The objective of this Statement is to improve financial reporting by clarifying the definition of fair value for financial reporting purposes, establishing general principles for measuring fair value, providing additional fair value application guidance, and enhancing disclosures about fair value measurements. The requirements of this Statement are effective for the County for periods beginning after June 15, 2015. The County has not yet determined the effect this Statement will have on its financial statements. In June 2015, GASB issued Statement No. 73, Accounting and Financial Reporting for Pensions and Related Assets That Are Not within the Scope of GASB Statement 68, and Amendments to Certain Provisions of GASB Statements 67 and 68. The objectives of this Statement include improving the usefulness of information for decisions made by the various users of the general purpose external financial reports of governments whose employees — both active and inactive employees — are provided with pensions that are not within the scope of Statement No. 68, Accounting and Financial Reporting for Pensions, as amended and clarifying the application of certain provisions of Statement No. 67, Financial Reporting for Pension Plans, and Statement No. 68. The requirements of this Statement are effective, at the earliest, for the County for periods beginning after June 15, 2015. The County has not yet determined the effect this Statement will have on its financial statements. In June 2015, GASB issued Statement No. 74, Financial Reporting for Postemployment Benefit Plans Other Than Pension Plans. The objective of this Statement is to improve the usefulness of information about postemployment benefits other than pensions (other postemployment benefits or OPEB) included in the general purpose external financial reports of state and local governmental OPEB plans for making decisions and assessing accountability. The requirements of this Statement are effective for the County for periods beginning after June 15, 2016. The County has not yet determined the effect this Statement will have on its financial statements. In June 2015, GASB issued Statement No. 75, Accounting and Financial Reporting for Postemployment Benefits Other Than Pensions. The primary objective of this Statement is to improve accounting and financial reporting by state and local governments for postemployment benefits other than pensions (other postemployment benefits or OPEB). The requirements of this Statement are effective for the County for periods beginning after June 15, 2017. The County has not yet determined the effect this Statement will have on its financial statements. In June 2015, GASB issued Statement No. 76, The Hierarchy of Generally Accepted Accounting Principles for Stale and Local Governments. The objective of this Statement is to identify the sources of accounting principles used to prepare financial statements of state and local governmental entities in conformity with generally accepted accounting principles - 56 - COUNTY OF HAWAII Notes to the Basic Financial Statements June 30, 2015 (GAAP) and the framework for selecting those principles. The requirements of this Statement are effective for the County for periods beginning after June 15, 2015. The County has not yet determined the effect this Statement will have on its financial statements. Accounting Change The County and Department implemented GASB Statement No. 68, Accounting and Financial Reporting for Pensions — an amendment of GASB Statement No. 27, as amended by GASB Statement No. 71, Pension Transition for Contributions Made Subsequent to the Measurement Date — an amendment of GASB Statement No. 68. GASB 68, as amended, establishes standards for accounting and financial reporting for pensions that are provided to the employees of state and local governmental employers through pension plans that are administered through trusts or equivalent arrangements. As a result, the County and Department's net position as of June 30, 2014 was restated and decreased by $339,372,228 and $16,441,724, respectively. The effect on this change on the Statement of Activities was to decrease the expenses related to pension and salaries and wages of the County and Department by $8,233,398 and $888,331, respectively. Governmental Activities Component Unit Net Position at June 30, 2014, as previously stated $ 806,502,335 $ 241,072,995 Cumulative effect of applying GASB 68, as amended: Net pension liability at June 30, 2014 (377,065,856) (18,469,400) Deferred outflows of resources — employer contributions made subsequent to the measurement date of the beginning net position liability but prior to June 30, 2014 37,693,628 2,027,676 Net Position at June 30, 2014, as restated $ 467.130.107 $ 224.631 271 Management of the County and Department concluded that it was not practical to determine the beginning amounts of all pension -related deferred inflows of resources and deferred outflows of resources. Accordingly, as permitted under the provisions of GASB No. 68, as amended, the County and Department have only reported the beginning deferred outflow of resources resulting from employer pension contributions made subsequent to the measurement date of the beginning net pension liability but prior to June 30, 2014. 2. STEWARDSHIP, COMPLIANCE AND ACCOUNTABILITY Annual Budget The County follows these procedures in establishing its operating and capital budgets: -57- COUNTY OF HAWAII Notes to the Basic Financial Statements June 30, 2015 • On or before March 1, the Mayor submits to the County Council proposed operating and capital projects budgets for the fiscal year commencing the following July 1. The operating budget includes proposed expenditures for the general fund and special revenue funds, and the means of financing them. A project -length budget is submitted to the County Council for the capital projects fund. • The Mayor submits to the County Council amendments to the proposed operating and capital budgets within ten working days after the close of the state legislature, but not later than May 5. • The County Council conducts public hearings on the proposed operating and capital budgets after March 1 but prior to the first reading on the budget bills, which must be after May 5. • On or before June 30, the County Council adopts the budgets. The legal level of budgetary control is the department level because the Mayor can transfer funds from any unencumbered appropriation to another within a department or agency without County Council approval. During the year, the budget may be amended by action of the County Council, except for appropriations required by law and appropriations for debt service, which may not be decreased or deleted. Supplemental appropriations were made during the 2013-2014 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 $7.3 million in the general fund and $4.7 million in the special revenue funds. Legally adopted budgets include the General Fund, Highway Fund, Sewer Fund, Solid Waste Fund, Cemetery Fund, Parking Meter Fund, Vehicle Disposal Fund, Bikeway Fund, Workforce Investment Act Find, Golf Course Fund, Geothermal Relocation and Community Benefits Fund, Beautification Fund, Hawai`i 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 - 58 - COUNTY OF HAWAII Notes to the Basic Financial Statements June 30, 2015 basis, intergovernmental revenues are recognized when awarded by the granting agency, encumbrances and unexpended allotments are treated as expenditures, accounts payable are not accrued, and all leases are treated as operating leases. In preparing the financial statements on a GAAP basis, accounts payable are accrued and treated as a reduction of encumbrances for balance sheet presentation. Budget to GAAP Reconciliation The following is a summary of the adjustments necessary to convert fund balances of the County's General Fund from a GAAP basis to a budgetary basis at June 30, 2015: Ending fund balance — GAAP basis $52,151,392 Encumbrance adjustments: Beginning encumbrances and unexpended allotments 5,954,985 Ending encumbrances and unexpended allotments (3,429,363) Other adjustments (1,088,212) Ending fund balance — Non -GAAP budgetary basis $5.588,802 3. CASH AND INVESTMENTS The Director of Finance is responsible for the safekeeping of all monies paid to the County. The Director of Finance invests any monies of the County which in the Director's judgment are in excess of the amounts necessary for meeting the day-to-day operating needs of the County. Under Section 46-50 of the Hawai`i Revised Statutes, legally authorized investments include obligations of or guaranteed by the U.S. government, obligations of the State, federally insured savings and checking accounts, time certificates of deposit, and repurchase agreements with federally insured financial institutions. Cash The County maintains a number of checking and savings accounts for various funds and with various financial institutions. Bank deposits are under the custody of the Director of Finance. For financial statement reporting purposes, cash and short-term investments consist of cash and money market accounts. Cash and short-term investments also include repurchase agreements, certificates of deposit, and government sponsored securities with original maturities of three months or less. The carrying amount of the County's deposits (cash, time certificates of deposit, and money market accounts) as of June 30, 2015 was $148,347,949 for the primary government and $5,766,735 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 $166,748,827 at June 30, 2015. Of that amount, $166,426,044 - 59 - COUNTY OF HAWAII Notes to the Basic Financial Statements June 30, 2015 represents bank balances covered by federal deposit insurance or by collateral held by the County's fiscal agents in the name of the County. The remaining bank balances of $322,783 represent deposits held by a management agent and were uncollateralized. Accordingly, these deposits were exposed to custodial credit risk. Custodial credit risk is the risk that in the event of a bank failure, the County's deposits may not be returned to it. For checking and savings accounts, time certificates of deposit, and repurchase agreements, the County requires, in accordance with State statutes, that the depository banks pledge collateral based on the available bank balances for the protection of the funds deposited. All securities pledged as collateral are held by the County's fiscal agents in the name of the County. The County also requires that no more than 60% of the County's total funds available for deposit may be deposited in any one financial institution, in accordance with State statutes. Investments The County holds investments both for its own benefit and on behalf of some of the fiduciary funds. The County's investments of funds not required for immediate payments are predominately comprised of government sponsored securities (equivalent to the rating in U.S. Treasuries), repurchase agreements and certificates of deposit, while the fiduciary funds also hold equity securities. The County's investments and maturities at June 30, 2015 are as follows: Investments — Primary Government: Certificates of deposit Government sponsored securities Investments — Private -Purpose Trusts: Government sponsored securities Equity securities Investments — Agency Funds: Government sponsored securities Maturity (in years) Fair Value Less than 1 1 — 5 $ 45,250,154 $ 40,438,361 $ 4,811,793 38,305,094 1,000.920 37,304.174 $ 83,555,248 $ 41 439,281 $42 115.967 $ 1 562.541 $ -- $ 1.562.541 $ 1,274 891 $ 170.064 $ $ 170.064 Interest Rate Risk: The County minimizes its exposure to interest rate risk by limiting the maturities of investments to five years or less in compliance with state statute. The County's policy is to hold investments until maturity and does not engage in trading for capital gains. Credit Risk: The County's investment portfolio primarily consists of U.S. government or agency obligations, bonds of government sponsored enterprises, time certificates of deposit - 60 - COUNTY OF HAWAII Notes to the Basic Financial Statements June 30, 2015 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 of Credit Risk: State law limits deposits to no more than 60% of the total in any one depository. The County seeks to further diversify its portfolio by purchasing from different issuers, by purchasing different types of investments and by purchasing investments at different maturities. The County also purchases its investments from a number of banks and broker-dealers both located locally and on the mainland. As of June 30, 2015, investments were distributed as follows: Central Pacific Bank, 23.4%; FTN Financial, 16.0%; Multi Bank Securities, 23.1%; Stifel Nicolaus, 13.3%; First Hawaiian Bank, 11.8%; Raymond James, 7.1%; Hawai`i National Bank, 5.3%. Restricted Cash and Cash Equivalents and Investments Cash and cash equivalents and investments classified as restricted assets for the primary government at June 30, 2015 amounted to $103,688,577. 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 $58,739,595 at June 30, 2015. Cash and investments in the Bond Redemption Fund and the Interest Fund are restricted to debt service related payments and amounted to $24,308,046. 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 $13,661,119. The restricted cash and investments in the General Fund was comprised of cash restricted to costs incurred to administer the liquor commission and cash restricted to the acquisition and maintenance of lands or property entitlements for public outdoor recreation and education. Such amounts totaled $778,047 and $6,111,581, respectively. Tenant security deposits received by the County for the Kula`imano Elderly Housing Project and the Ouli Ekahi Affordable Housing Project are recorded as restricted assets. Such funds amounted to $12,042 and $28,626, respectively, at June 30, 2015. -61 - COUNTY OF HAWAI`I Notes to the Basic Financial Statements June 30, 2015 An operating reserve fund was established by the Ouli Ekahi Affordable Housing Project pursuant to an agreement with the Hawai`i Housing Finance and Development Corporation, who are the holders of the project's note. This restricted reserve amounted to $49,521 at June 30, 2015. 4. RECEIVABLES Receivables as of June 30, 2015, 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: General Fund Real property taxes $24,020,244 Accounts receivable: Sewer -- Solid waste -- Capital projects -- 2,122,265 Intergovernmental 23,169,628 10,909.093 Gross receivables 47,189,872 13,031,358 Less: allowance for uncollectibles (2.404,408) -- Net total receivables $44.785,464 $13 031,358 Capital Projects Fund Other Governmental Funds $ 2,197,387 1,558,353 1,649,809 5,405,549 (1.255,015) $4 150,534 Total $24,020,244 2,197,387 1,558,353 2,122,265 35,728,530 65,626,779 (3,659.423) $61.967.316 During fiscal year 2005, the County issued $3,887,493 in general obligation bonds on behalf of Improvement District No. 18, an agency fund. On February 12, 2013 bonds were issued to refund the outstanding principal balance of $1,345,945 for the Improvement District. During fiscal year 2014 and 2015, the County also issued $448,669 and $720,331, respectively, in general obligation bonds on behalf of Improvement District No. 19, an agency fund. At June 30, 2015, the outstanding balance for both Improvement Districts of $2,383,937 is reflected in the government -wide statement of net position as a receivable (see Note 10). Business -type activities: Enterprise Funds Accounts receivable: Rent $11,787 Other 649 Gross receivables 12,436 Less: allowance for uncollectibles (8,500) Net total receivables $ 3.936 - 62 - COUNTY OF HAWAII Notes to the Basic Financial Statements June 30, 2015 5. INTERFUND RECEIVABLES AND PAYABLES Interfund receivables and payables consist of the following at June 30, 2015: Receivable Fund General fund Capital projects fund Other governmental funds Total Other governmental funds Payable Fund Amount Capital projects fund $ 359,562 Other governmental funds 402,032 761,594 General fund 1,122,277 Other governmental funds 143,473 1,265,750 General fund 377,959 Capital projects fund 2,904 Other governmental funds 2,504 383,367 $2,410,711 Enterprise funds $1,350 The above interfund balances result from the time lag between the dates that interfund goods and services are provided or reimbursable expenditures occur, transactions are recorded, and payment between funds are made. Transfers for the fiscal year ended June 30, 2015 consisted of the following: Transfers in: Capital Projects Fund Other governmental funds Transfers out: Other General Governmental Fund Funds Total $ 91,991 $3,214,000 $ 3,305,991 56.088,069 -- 56,088,069 $56,180,060 $3 214,000 $59 394 060 The interfund transfers noted above include transfers from the General Fund to provide support for various County programs and to provide resources for the payment of debt services. In addition, some of the other governmental funds have made transfers to the capital projects fund for the construction of various projects. - 63 - COUNTY OF HAWAII Notes to the Basic Financial Statements June 30, 2015 6. CAPITAL ASSETS Capital asset activity for the year ended June 30, 201 for the County was as follows: Balance July 1, 2014 Governmental activities: Capital assets not being depreciated: Land and improvements Easements Construction work in progress Total capital assets not being depreciated $ 189,366,207 3,803,176 37,709,918 230,879,301 Capital assets being depreciated: Buildings and improvements Equipment Easements Infrastructure Total capital assets being depreciated 586,852,616 131,098,059 439,300 496,742.088 1.215,132.063 Less accumulated depreciation for: Buildings and improvements Equipment Easements infrastructure Total accumulated depreciation Total capital assets being depreciated, net Governmental activities capital assets, net (88,559,523) (82,744,710) (439,300) (222,020.989) Additions Retirements( Transfers Balance June 30, 2015 $ 11,997,480 $ -- $ 201,363,687 27,234 -- 3,830,410 51,413.797 (28,156,954) 60.966,761 63,438,511 (28,156,954) 266.160.858 5,789,643 10,341,331 25,319,365 (11,535) (3,450,972) 592,630,724 137,988,418 439,300 522.061.453 41.450.339 (3,462.507) 1.253,1 19.895 (8,632,767) (8,045,579) (21,050,071) (393,764.522) (37,728,417) 821,367.541 3,721,922 7,166 3,052,091 (97,185,124) (87,73 8,198) (439,300) (243,071.060) 3,059,257 (428,433,682) (403,250) 824,686,213 $1.052,246.842 $ 67.160.433 ($28,560 204) $1,090.847.071 - 64 - COUNTY OF HAWAII Notes to the Basic Financial Statements June 30, 2015 Balance Retirements/ Balance July I, June 30, 2014 Additions Transfers 2015 Business -type activities: Capital assets not being depreciated: Land $ 753,877 $ -- $ $ 753.877 Capital assets being depreciated: Buildings and improvements Ground and site improvements Equipment Total capital assets being depreciated 1,593,187 272,850 130,181 15,538 (15,305) 1.996.218 15.538 Less accumulated depreciation for: 1,593,187 272,850 130,414 (15,305) 1,996,451 Buildings and improvements (874,556) (36,045) -- (910,601) Ground and site improvements (201,917) (4,348) (206,265) Equipment (96.473) (11,895) 15.115 (93.253) Total accumulated depreciation (1,172.946) (52.288) 15,115 (1.210,119) Total capital assets being depreciated, net 823.272 (36,750) (190) 786,332 Business -type activities capital assets, net $1,577 149 $(36.750) $ (190) $1,540.209 In fiscal year 2013, the County received $12.5 million as a partial settlement from a developer that did not complete the required infrastructure for their development. The funds are to be used by the County to construct the roadway that was initially required of the developer. As of June 30, 2015, approximately $4.2 million was expended and capitalized. - 65 - COUNTY OF HAWAII Notes to the Basic Financial Statements June 30, 2015 Depreciation expense was charged to functions/programs of the primary government as follows: Governmental activities: General government Public safety Highways and streets Sanitation Health, education and welfare Culture and recreation Total depreciation expense — governmental activities Business -type activities: Kula`imano Elderly Housing Project Ouli Ekahi Affordable Housing Project Total depreciation expense — business -type activities $ 2,799,982 3,516,487 22,569,294 4,925,043 1,991,439 1,926,172 $37.728,417 $3 5,468 16,820 $52 288 7. DEFERRED INFLOW OF RESOURCES: Deferred inflow of resources consists of the following at June 30, 2015: Governmental activities: Real property taxes Liquor control revenue Sewer revenue Housing revenue Solid waste revenue Sale of real estate Total presented in fund financial statements Add deferred inflows of resources related to pensions Less adjustments for accrual of revenues Total government - wide financial statements Capital General Projects Fund Fund $ 22,198,352 $ 196,374 1,225,600 22,394,726 1,225,600 54,470,799 Other Governmental Funds 1,351,710 37,947 1,149,015 2,538,672 Total Governmental Funds $ 22,198,352 196,374 1,351,710 37,947 1,149,015 1,225,600 26,158,998 54,470,799 (21.615,836) (1,225.600) (2,538,672) (25,380,108) $ 55.249,689 $ -- $ -- $ 55.249.689 - 66 - COUNTY OF HAWAII Notes to the Basic Financial Statements June 30, 2015 8. LEASES The County leases machinery and equipment under noncancellable leases expiring at various dates through November 2019. These capital leases are financed from the resources of various funds. The estimated value of the leased machinery and equipment at the inception of the capital leases and accumulated depreciation, amounting to $5,379,853 and $1,678,638, respectively, and the related present value of the remaining obligations under the capital leases amounting to $2,981,709 at June 30, 2015 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 August 2045. Expenditures for such operating leases were $1,632,644 for the fiscal year ended June 30, 2015. The future minimum payments under capital and operating leases at June 30, 2015 are as follows: Capital Operating Leases Leases Year Ending June 30: 2016 $1,162,739 $1,743,959 2017 848,698 1,315,536 2018 578,774 1,233,489 2019 401,235 602,366 2020 118,718 484,568 2021 - 2025 1,356,643 2026 - 2030 96,193 2031 —2035 901 2036 - 2040 900 2041 - 2045 900 2046 30 Total minimum lease payments 3,110,164 $6.835,485 Less amount representing interest (128.455) Obligations under capital leases $2,981 709 9. SOLID WASTE LANDFILL CLOSURE AND POSTCLOSURE CARE COSTS Hilo Landfill The County owns and operates a landfill located in the city of Hilo. State and federal laws require the County to place covers on certain landfill sites and to monitor and maintain the sites for thirty years after the facility is closed. Although the closure and postclosure care costs will be paid near and after the date that the landfill stops accepting waste, the County recognizes a portion of the closure and postclosure care costs in each operating period. The liability for these costs is included in the government -wide statement of -67- COUNTY OF HAWAI`I Notes to the Basic Financial Statements June 30, 2015 net position. The amount recognized each year is based on the landfill capacity used as of the statement of net position date. At June 30, 2015, the County recognized a liability of $14,431,000, based on the use of 94% of the estimated capacity of the landfill. During the fiscal year ended June 30, 2015, there were no expenditures incurred for the closure of the landfill. The remaining $299,000 in estimated cost of closure and postclosure care will be recognized as the remaining estimated capacity is used. The estimated remaining useful life of the landfill is approximately one year. These amounts are based on what it would cost to perform the required closure and postclosure care in 2015. Actual costs at that time may be higher due to inflation, changes in technology, or changes in regulations. Landfill capacity estimates are based on volumes going into the landfill subsequent to the last available engineer's calculation. The volumes going into the landfill do not account for decomposition, settlement, and corrosion; therefore the estimates are revised when new engineering calculations, based on aerial photos and surveys, are available. The County's permit to operate the landfill expired October 9, 1998. The County filed for an extension which was approved by the State until permitted capacity is reached. In accordance with state statute, the County is allowed to continue operations provided that the County acts consistently with the permit previously granted and the extension application, plans, specifications and all other information contained therein. Kealakehe In October 1993, the County closed its Kealakehe landfill in Kona. Under state and federal requirements, the County would have to monitor and maintain this site for ten years from the closure date. However, the County anticipates monitoring and maintaining the site for thirty years because there is presently a subterranean fire which requires active management. The estimated cost of closure and postclosure is $16,650,000, based on what it would cost to perform the required closure and postclosure care in 2015. Actual costs may be higher due to inflation, changes in technology, or changes in regulations. Through June 30, 2015, $8,417,000 was spent on closure and postclosure care of the landfill. The remaining estimated liability of $8,233,000 is included in the government -wide statement of net position. During the year ended June 30, 2015, $148,000 was spent on closure of the landfill. The County is providing financial assurance for postclosure care and remediation through self insurance as explained below. Pu'uanalrrdu In May 1993, the County contracted with a private company to construct and operate a new landfill on County land at Pu'uanahulu in West Hawai`i. The present contract calls for County employees to perform the daily operations of the landfill, and for the private company to retain the overall management as well as perform all construction work on the landfill cells. Under the terms of the contract, the County has no responsibility for remediation, closure or postclosure care. Accordingly, no liability for this landfill is included in the County's financial statements. Financial Assurance For fiscal year 2015, the County has provided for financial resources that will be available to provide for closure, postclosure care and remediation or containment - 68 - COUNTY OF HAWAII Notes to the Basic Financial Statements June 30, 2015 of environmental hazards at the above landfills, except Pu`uanahulu. The Environmental Protection Agency's financial assurance rules include a local government financial test consisting of a financial component, a public notice component, and a recordkeeping component. Local governments are required to satisfy each of the three components to pass the annual test. Management believes that the County has satisfied each of the components of the local government financial assurance requirements. In fiscal year 2013, the County closed its two metal salvage facilities located near the Hilo and Kealakehe Transfer Stations. The anticipated liability ($10,590,000) for the remediation costs associated with these closures is included in the County's financial statements. 10. LONG-TERM DEBT General Obligation Bonds The County issues general obligation bonds to provide funds for the acquisition and construction of major capital facilities. These bonds have been issued by the County for the primary government, component unit activities (see Note 14) and an improvement district. The following is a summary of general obligation bond transactions reported in the governmental activities section of the government -wide statement of net position for the County for the fiscal year ended June 30, 2015: Bonds Issue Bond Balance Authorized Amount Julv 1.2014 2004 Series A $ 30,000,000 $ 1,480,000 $ 2004 Ref Series B 19,545,000 4,655,000 2004 Ref Series C 5,050,140 581,112 2006 Series A 25,000,000 18,802,500 2007 Series A 85,000,000 67,010,000 2007 Series B 20,820,000 11,545,000 2007 Series C 10,787,388 8,302,506 2008 Series A 50,000,000 42,905,000 2010 Series A 26,493,750 26,493,750 2010 Series B 18,506,250 18,506,250 2013 Series A 58,509,892 56,848,963 2013 Series B 21,010,000 21,010,000 2013 Series C 18,470,000 18,470,000 2013 PI Series A 1,169.000 448.669 390,361,420 297,058,750 Add unamortized premium 26.691.724 21 079.770 Issues 720.331 720,331 Bond Balance Due Within Retirements June 30. 2015 One Year ($ 1,480,000) $-- (2,270,000) 2,385,000 2,385,000 (581,112) (1,072,500) 17,730,000 1,125,000 (3,505,000) 63,505,000 3,680,000 (2,105,000) 9,440,000 2,190,000 (896,775) 7,405,731 932,646 (1,970,000) 40,935,000 2,060,000 (1,162,500) 25,331,250 1,222,500 (798,750) 17,707,500 828,750 (1,839,813) 55,009,150 1.916,958 (1,715,000) 19,295,000 1,780,000 18,470,000 1,520,000 1,169.000 21,218 (19,396,450) 278,382,631 19,662,072 (1,505.152) 19.574.618 1.456.450 $417.053,144 5318.138.520 $ 720 331 ($20 901 6021 8297 957 249 $21.118.-M The 2010 Series B bonds were issued as bonds designated as "Recovery Zone Economic Development Bonds" under the American Recovery and Reinvestment Act of 2009. The County will receive a cash subsidy payment from the United States Treasury equal to 45% of the interest payable on the Series B bonds. - 69 - COUNTY OF HAWAII Notes to the Basic Financial Statements June 30, 2015 General obligation bonds payable reported in the governmental activities section on the government -wide statement of net position at June 30, 2015 are comprised of the following individual issues: Public improvement (PI) and/or refunding bonds: 2004 Refunding Series B at 3.5% to 5.0%, due through 2015 2006 Series A at 4.0% to 5.0%, due through 2026 2007 Series A at 4.0% to 5.0%, due through 2027 2007 Series B at 3.75% to 5.0%, due through 2018 2007 Series C at 4.0% to 5.0%, due through 2021 2008 Series A at 4.0% to 6,0%, due through 2028 2010 Series A at 4.0% to 5.0%, due through 2030 2010 Series B at 3.335% to 6.1%, due through 2030 2013 Series A at 2.0% to 5.0%, due through 2032 2013 Series B at 3.0% to 5.0%, due through 2023 2013 Series C at 4.0% to 5.0%, due through 2024 2013 P1 Series A at 2.75%, due through 2048 Total general obligation bonds payable Annual debt service requirements to maturity for the above general obligation bonds are as follows: 2,385,000 17,730,000 63,505,000 9,440,000 7,405,731 40,935,000 25,331,250 17,707,500 55,009,150 19,295,000 18,470,000 1,169,000 5278 382.631 Fiscal year ending June 30: 2016 2017 2018 2019 2020 2021 — 2025 2026 — 2030 2031 — 2035 2036 — 2040 2041 — 2045 2046 — 2049 Total Bond Premiums At June 30, 2015, total unamortized bond premiums were $19,574,618, which are being amortized over the remaining life of the respective bond issues. Governmental Activities Principal $ 19,662,072 18,074,257 18,959,549 19,880,709 18,119,410 97,332,384 72,482,722 13,258,373 192,833 220,848 199.474 $278.382.631 Interest $ 12,707,913 11,842,892 10,949,085 10,067,562 9,227,794 33,087,187 11,676,256 1,099,885 71,338 42,941 11,153 $100,784,006 - 70 - COUNTY OF HAWAII Notes to the Basic Financial Statements June 30, 2015 Bonds Authorized and Unissued The County Council has authorized the issuance of $477.3 million in general obligation bonds to finance specified capital improvement projects. At June 30, 2015, $332.3 million was not yet issued. Subsequent Events On July 8, July 9, November 13 and November 25, 2015, the County issued general obligation bond anticipation notes (BANs) in the total amount of $10,000,000, $15,000,000, $10,000,000 and $10,000,000. These notes were issued to provide funds for the acquisition and construction of major capital facilities and bear interest ranging from .98% to 1.16% and have an original maturity date of either March 3 or March 31, 2016. General Obligation Bond Anticipation Notes In October 2014, February 2015, and April 2015, the County issued general obligation bond anticipation notes (BANs) in the total amounts of $10,000,000, $10,000,000, and $15,000,000, respectively. These notes were issued to provide funds for the acquisition and construction of major capital facilities and bear interest at 1.02% to 1.06% and had original maturity dates of July 8, 2015, November 13, 2015 and January 21, 2016. The notes that matured in July 2015 and November 2015 were then renewed with a new maturity date of March 31 and March 3, 2016, respectively. Since the renewed and original BANs have maturity dates within 12 months of fiscal year end, the $35,000,000 of debt is reflected as current liabilities. The following is a summary of general obligation bond anticipation note transactions reported in the government -wide statement of net assets for the County for the fiscal year ended June 30, 2015: Note No. Series C, Note R-1 Series C, Note R-2 Series C, Note R-3 Series C, Note R-4 Series C, Note R-5 Series C, Note R-6 Series C, Note R-7 Series C, Note R-8 Series C, Note R-9 Series C, Note R-10 Series C, Note R-11 Series C, Note R-12 Issue Amount Balance July 1.2014 $ 10,000,000 5 10,000,000 5,000,000 3,000,000 3,000,000 1,000,000 1,000,000 1,000,000 250,000 250,000 250,000 250.000 $5...0.1000 Issues Retirements $ 10,000,000 $ 10,000,000 5,000,000 3,000,000 3,000,000 1,000,000 1,000,000 1,000,000 250,000 250,000 250,000 250.000 -71 - Balance June 30. 2015 $ 10,000,000 10,000,000 5,000,000 3,000,000 3,000,000 1,000,000 1,000,000 1,000,000 250,000 250,000 250,000 250.000 535.000.000 $ 535 000 000 COUNTY OF HAWAI`I Notes to the Basic Financial Statements June 30, 2015 State Revolving Fund Loans The County has obtained loans to assist in financing mandated wastewater projects from the State Water Pollution Control Revolving Fund (SRF). The purpose of this revolving fund is to provide low-interest, long-term loans and other financial assistance to the four counties in the state to finance construction of wastewater projects. The County has eight projects approved for funding with these loans. The schedule below shows the County's SRF transactions for the fiscal year ended June 30, 2015: Loans Approved Loan Balance Loan Balance Due Within Authorized Amount July 1.2014 Additions Retirements June 30. 2015 One Year Cesspool Conversion 8,363,773 5,536,018 (430,299) 5,105,719 432,400 Honoka'a LCC 4,513,158 3,221,787 (176,618) 3,045,169 177,504 Queen Lili`uokalani 9,421,732 7,951,143 -- (478,608) 7,472,535 481,008 Kalaniana`ole 8,621.409 6.219.690 -- (290.900) 5.928.790 315.554 $30 920 OP $27 928 618 $ (51.376.4253 52,1 557 213 5 1 406.466 The remaining loans bear interest at 0.50% exclusive of a 0.25% loan fee, and require payments through fiscal year 2033. Debt service to maturity for disbursements to date on these projects are as follows: Governmental Activities Fiscal year ending June 30: Principal Interest 2016 $ 1,406,466 $ 159,046 2017 1,413,590 148,402 2018 1,420,628 137,824 2019 1,427,740 127,156 2020 1,434,860 116,462 2021 —2025 7,282,927 419,451 2026 —2030 5,852,710 161,348 2031 — 2033 1,313,292 15,643 Total $21.552 213 $1 285,332 - 72 - COUNTY OF HAWAII Notes to the Basic Financial Statements June 30, 2015 Other General Long -Term Obligations The following is a summary of other general long-term obligations transactions for the fiscal year ended June 30, 2015: Governmental activities: Compensated absences Claims and judgments (see Note 12) Capital leases (see Note 8) Landfill costs payable (see Note 9) Pollution remediation (see Note 9) Other post employment benefit obligation (see Note 13) Total Balance July 1. 2014 Additions* $33,985,444 13,723,893 2,308,241 22,713,000 8,770,000 51 548,596 $133 049 174 $13,669,265 3,067,854 1,971,074 99,317 1,820,000 Payments ($12,029,434) (3,504,840) (1,297,606) (148,317) Balance Due Within June 30. 2015 One Year $35,625,275 13,286,907 2,981,709 22,664,000 10,590,000 32.864,000 (18,657.399) 65,755,197 $8,861,648 2,534,968 1,101,673 231,199 $53,491.5.10 ($35.637 596) $150 903 088 $12.729.488 * Net of new claims liability and existing claims resolved at less than previous estimate. Historically, the County's general fund has been used to liquidate the majority of other long- term liabilities, including the other post employment benefit obligation and the compensated absences since most employees are paid by the general fund. Fund Balances - Debt Service Funds The fund balance in the debt service funds at June 30, 2015 includes $21,570,655, which is reserved for principal payments on general obligation bonds and $2,445,461, which is reserved for the payment of interest on the bonds. Enterprise Fund Notes, Bond and Loan Payable On February 12, 2013, the County issued general obligation bonds on behalf of Kula`imano Elderly Housing Project (Project) to pay off its two notes payable to the U.S. Department of Agriculture, Farmers Home Administration with principal and interest balances aggregating $835,108. The Project is responsible for the debt service payment related to their portion of the bonds, which is also secured with the County's general obligation pledge. Because the Project is responsible for only a portion of the total bonds issued, it was decided that the Project would continue to make bond payments equivalent to its previous monthly installment payments of $7,826 on the old notes at 5.547% interest. Under this payment schedule, the Project will make contributions through 2025 of the bonds 2032 maturity date. - 73 - COUNTY OF HAWAII Notes to the Basic Financial Statements June 30, 2015 The following is a summary of the Project's bond payable transactions for the fiscal year ended June 30, 2015: Balance at July 1, 2014 $811,038 Deductions (50.187) Balance at June 30, 2015 760,851 Less current portion (53,043) Note payable, net of current portion $ 707,88 The following is a summary of the annual maturities for the enterprise fund bond payable: Business -type Activities Fiscal year ending June 30: Principal Interest 2016 $ 53,043 $ 39,381 2017 56,061 36,278 2018 59,251 32,999 2019 62,622 29,533 2020 66,186 25,869 2021 — 2025 391,894 66,670 2026 71,794 288 Total $26_0351 $_2_:� 1_,418 On October 29, 2012, the County assumed the loan of its lessee Ouli Ekahi Partnership with the Hawai`i Housing Finance and Development Corporation in the amount of $478,430. The loan is non-interest bearing 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. The following is a summary of enterprise fund loan payable transactions for the fiscal year ended June 30, 2015: Balance at July 1, 2014 $397,263 Deductions (46,720) Balance at June 30, 2015 350,543 Less current portion (32,314) Loan payable, net of current portion $ 318.229 - 74 - COUNTY OF HAWAII Notes to the Basic Financial Statements June 30, 2015 The following is a summary of the annual maturities for the enterprise fund loan payable: Business -type Activities Fiscal year ending June 30: Principal 2016 $ 32,314 2017 16,500 2018 16,500 2019 16,500 2020 16,500 2021 — 2025 82,500 2026 — 2030 82,500 2031 — 2035 82,500 2036 — 2037 4329 Total $350 543 Special Assessment Bonds The County has issued general obligation bonds on behalf of Improvement District No. 18 for water improvements (see Note 4). These bonds were then refunded by a portion of the 2013 Series A Bonds that were issued. The Improvement District is responsible for the payment of the debt service on these bonds, but the County remains liable because they are general obligations of the County. The improvement district's share of the refunded bonds matures annually through 2027 and bear interest at the previous rates of 4.375% to 4.75%. Total general obligation bonds payable included in the government -wide statement of net position were $1,214,937 at June 30, 2015. The County has also issued general obligation bonds on behalf of Improvement District No. 19 for water improvements (see Note 4). The Improvement District is responsible for the payment of the debt service on these bonds, but the County remains liable because they are general obligations of the County. The improvement district's share of the refunded bonds matures annually through 2048 and bear interest at the previous rates of 2.75%. Total general obligation bonds payable included in the government -wide statement of net position were $1,169,000 at June 30, 2015. The bonds are secured by a first lien on the Land benefited by the improvements, and are to be repaid from the annual assessments levied against the owners of the land. The County acts as an agent for the property owners within the improvement districts to collect assessments receivable, forward payments to bond -paying agents at appropriate dates and, if required, administer foreclosure proceedings. - 75 - COUNTY OF HAWAII Notes to the Basic Financial Statements June 30, 2015 The following is a summary of bond transactions for Improvement District No. 18, Coastview/Wonderview Water Improvements, and No. 19, Kona Ocean View Properties Subdivision for the fiscal year ended June 30, 2015: Balance at July 1, 2014 $1,730,599 Additions 720,331 Deductions (66.993) Balance at June 30, 2015 $2,383 937 The following is a summary of the annual maturities for the improvement district general obligation bonds: Fiscal year ending June 30: Principal Interest 2016 $ 91,329 $ 86,400 2017 95,174 82,854 2018 99,189 78,752 2019 103,379 74,470 2020 107,752 70,002 2021 — 2025 611,381 275,789 2026 — 2030 494,205 142,531 2031 —2035 168,373 96,135 2036 — 2040 192,833 71,338 2041 — 2045 220,848 42,941 2046 — 2049 199,474 11,153 Total $2383,937 $.1,D32,165 65 11. COMMITMENTS AND CONTINGENCIES Contractual commitments — Contractual commitments for capital projects, expenses, and supplies at June 30, 2015, 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 Capital projects fund Nonmajor funds $ 3,429,363 156,332,167 10.006,272 $169,767,802 Contractual commitments for the enterprise funds were immaterial. Intergovernmental revenues — The County has received federal and state grants for specific purposes that are subject to review and audit by grantor agencies. Such audits could lead to requests for reimbursement to the grantor agency for expenditures disallowed under terms of the grants. In the opinion of management of the County, disallowed costs, if any, would not be material. - 76 - COUNTY OF HAWAII Notes to the Basic Financial Statements June 30, 2015 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 position (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 a stipulated agreement, filed on June 4, 1998, which relates to the Department of Parks and Recreation (Parks). The agreement required Parks to establish practices, policies and procedures regarding its programs, and prepare a transition plan by the middle of the year 2000. The self-evaluation and transition plan for programs, practices and procedures has been completed and approved by the County Council. The cost impact of implementation is not material because the necessary modifications are primarily procedural. The second part of this stipulated agreement is the reevaluation of all County facilities, which was completed and accepted by the County Council on June 30, 2000. Approximately 240 County facilities were surveyed as part of this effort. The tentative completion date of all necessary repairs and renovations was 12 years from the date the County Council accepted the self-evaluation. The initial (1997-2000) estimated cost of the facilities repairs was $15.1 million, which would have been spent over the 12 -year period. Funding allocated initially for facilities repairs was $17.5 million, with another $4 million of federal funding anticipated through community development block grants over the next 2 years. Since 2000, Parks has consistently requested $2 to $5 million a year for the different park facilities' ADA projects via the County's CIP Budget and received amounts ranging from $437K to $1.6M a year from federal Community Development Block Grant funding. The Department of Public Works has requested an additional $2 million a year for the other County ADA facilities' project. Because of severe disparities that surfaced between the original ADA projects' scoping and construction estimates and actual scopes and costs, as well as time/delivery issues that came into play because of necessary permits and reviews, and design professionals' costs that weren't factored into the effort, the County sought relief from the Court in the form of both a time extension and reprioritization of sites. As a result, the County obtained approval of a modified 4 -year plan wherein accessibility improvements would be required to be completed by December 31, 2016 at 35 remaining park sites. The balance of the inaccessible sites would be deferred indefinitely pending improvement/enhancement projects that would inherently trigger accessibility improvements due to the nature of scoping and applicable ADA requirements. Of the 35 remaining parks requiring accessibility improvements, 9 have been completed, 7 are in construction, 1 is out to bid, 7 are in design, 7 are in contract negotiation state, 2 are pending award to an engineering firm and 1 has been deferred. The County has currently spent $16.3M on these projects. 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). In addition, the County's ADA coordinator (Equal Opportunity Officer) has access to an identifiable account of at least $50,000 to handle requests for reasonable accommodations for County departments; and the procedures for these requests have been finalized and are available on the Human Resources Department's Equal Opportunity and the ADA web page. Also, Parks has a Recreation - 77 - COUNTY OF HAWAII Notes to the Basic Financial Statements June 30, 2015 Specialist who reviews and investigates requests for reasonable accommodations, and recommends specific actions on those requests. 12. RISK MANAGEMENT The County is exposed to various risks of losses related to torts; theft of, damage to, and destruction of assets; errors and omissions; injuries to employees; and natural disasters. The County maintains fire and commercial multiple peril insurance on County facilities, flood insurance on selected structures, medical malpractice insurance for emergency medical technicians, aviation liability for helicopter operations, liability coverage on transit buses and privately owned police vehicles, and property damage coverage on County Police fleet vehicles. The County maintains fire and property coverage on several County housing projects (Kula`imano, Ouli Ekahi, and three model homes at Kamakoa Nui). There was no reduction in insurance coverage during the year from coverage in the prior year. During the past three fiscal years, the amount of settlements in cases covered by insurance has not exceeded the insurance coverage. The County is substantially self-insured for the majority of its vehicles as well as for all other perils including workers' compensation and general liability. The liability for claims and judgments is reported on the government -wide statement of net position and the majority will be liquidated from the County's general fund. Liabilities are reported when it is probable that a loss has occurred and the amount of that loss can be reasonably estimated. These losses include an estimate of claims that have been incurred but not reported (IBNR). Claim liabilities, including IBNR, are based on the estimated ultimate cost of settling the claims, and include incremental costs for the hiring of special counsel and expert witnesses. Claims liabilities are estimated by a case-by-case review of all claims and the application of historical experience to outstanding claims. Estimates of IBNR are based on historical experience. The liability for claims and judgments is reported on the government -wide statement of net position. At June 30, 2015, the amount of this liability was $13,286,907. This is the County's best estimate based on available information. Changes in the reported liability since July 1, 2013 are given below. Balance at July 1, 2013 Incurred claims (including IBNR)* Claim payments Balance at June 30, 2014 Incurred claims (including IBNR)* Claim payments Balance at June 30, 2015 General Workers' Total Liability Compensation Liability $ 2,413,819 $ 9,990,643 $ 12,404,462 1,227,372 3,650,129 4,877,501 (1,007,472) (2,550,598) (3,558.070) $ 2,633,719 $ 11,090,174 $ 13,723,893 1,288,406 1,779,448 3,067,854 (1,288,406) (2,216,434) (3,504,840) $ 2,633,719 $ 10.653,188 $ 13,286.907 *Net of new claims liability and existing claims resolved at Tess than previous estimate. - 78 - COUNTY OF HAWAII Notes to the Basic Financial Statements June 30, 2015 13. EMPLOYEE BENEFIT PLANS Pensions Pension Plan Description - All eligible employees of the State and counties are provided with pensions through a cost-sharing multiple -employer defined benefit pension plan administered by the Employee Retirement System (ERS). Benefit terms, eligibility, and contribution requirements are established by HRS Chapter 88 and can be amended through legislation. The ERS issues a publicly available financial report that can be obtained at ERS's website: http://ers.ehawaii.gov/. Benefits Provided - The ERS provides retirement, disability, and death benefits that are covered by the provisions of the noncontributory, contributory, and hybrid retirement plans. The three plans provide a monthly retirement allowance equal to the benefit multiplier (generally 1.25% or 2%) multiplied by the average final compensation multiplied by years of credited service. The benefit multiplier decreased by 0.25% for new hybrid and contributory plan members hired after June 30, 2012. Average final compensation is an average of the highest salaries during any 3 years of credited service, excluding any salary paid in lieu of vacation for employees hired January 1, 1971 or later and the average of the highest salaries during any five years of credited service including any salary paid in lieu of vacation for employees hired prior to January 1, 1971. For members hired before July 1, 2012, the original retirement allowance is increased by 2.5% 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.). For members hired after June 30, 2012 the post-retirement annuity increase was decreased to 1.5% per year. Retirement benefits for certain groups, such as police officers, firefighters, some investigators, sewer workers, judges, and elected officials, vary from general employees. Noncontributory Plan Retirement Benefits - General employees' retirement benefits are determined as 1.25% of average final compensation multiplied by the years of credited service. Employees with 10 years of credited service are eligible to retire at age 62. Employees with 30 years of credited service are eligible to retire at age 55. Disability Benefits - Members are eligible for service -related disability benefits regardless of length of service and receive a lifetime pension of 35% of their average final compensation. Ten years of credited service is required for ordinary disability. Ordinary disability benefits are determined in the same manner as retirement benefits but - 79 - COUNTY OF HAWAII Notes to the Basic Financial Statements June 30, 2015 are payable immediately, without an actuarial reduction, and at a minimum of 12.5% of average final compensation. Death Benefits - For service -connected deaths, the surviving spouse/reciprocal beneficiary receives a monthly benefit of 30% of the average final compensation until remarriage or re-entry into a new reciprocal beneficiary relationship. Additional benefits are payable to surviving dependent children up to age 18. If there is no spouse/reciprocal beneficiary or dependent children, no benefit is payable. Ten years of credited service is required for ordinary death benefits. For ordinary death benefits, the surviving spouse/reciprocal beneficiary (until remarriage/reentry into a new reciprocal beneficiary relationship) and dependent children (up to age 18) receive a benefit equal to a percentage of member's accrued maximum allowance unreduced for age or, if the member was eligible for retirement at the time of death, the surviving spouse/reciprocal beneficiary receives 100% joint and survivor lifetime pension. Contributory Plan for Employees Hired Prior to July 1.2012 Retirement Benefits - General employees' retirement benefits are determined as 2% of average final compensation multiplied by the years of credited service. General employees with 5 years of credited service are eligible to retire at age 55. Police and firefighters' retirement benefits are determined as 2.25% of average final compensation for each year of service up to a maximum of 80%. Police and firefighters with 10 years of credited service are eligible to retire at age 55. Disability Benefits - Members are eligible for service -related disability benefits regardless of length of service and receive a lifetime pension of 50% of their average final compensation. Ten years of credited service is required for ordinary disability. Ordinary disability benefits are determined in the same manner as retirement benefits but are payable immediately, without an actuarial reduction, and at a minimum of 30% of average final compensation. Death Benefits - For service -connected deaths, the surviving spouse/reciprocal beneficiary receives a lump sum payment of the member's contributions and accrued interest plus a monthly benefit of 50% of the average final compensation until remarriage or re-entry into a new reciprocal beneficiary relationship. If there is no surviving spouse/reciprocal beneficiary, surviving children (up to age 18) or dependent parents are eligible for the monthly benefit. If there is no spouse/reciprocal beneficiary or dependent children/parents, the ordinary death benefit is payable to the designated beneficiary. Ordinary death benefits are available to employees who were active at time of death with at least 1 year of service. Ordinary death benefits consist of a lump sum payment of the member's contributions and accrued interest plus a percentage of the salary earned in the - 80 - COUNTY OF HAWAII Notes to the Basic Financial Statements June 30, 2015 12 months preceding death, or 50% Joint and Survivor lifetime pension if the member was not eligible for retirement at the time of death but was credited with at least 10 years of service and designated one beneficiary, or 100% Joint and Survivor lifetime pension if the member was eligible for retirement at the time of death and designated one beneficiary. Contributory Plan for Employees Hired After June 30, 2012 Retirement Benefits — General employees' retirement benefits are determined as 1.75% of average final compensation multiplied by the years of credited service. General employees with 10 years of credited service are eligible to retire at age 60. Police and firefighters' retirement benefits are determined as 2.25% of average final compensation for each year of service up to a maximum of 80%. Police and firefighters with 10 years of credited service are eligible to retire at age 60. Disability and Death Benefits - Members are eligible for service -related disability benefits regardless of length of service and receive a lifetime pension of 50% of their average final compensation plus refund of contributions and accrued interest. Ten years of credited service is required for ordinary disability. Ordinary disability benefits are 3.0% of average final compensation for each year of service for judges and elected officers and 1.75% of average final compensation for each year of services for police and firefighters and are payable immediately, without an actuarial reduction, at a minimum of 30% of average final compensation. Death benefits for contributory plan members hired after June 30, 2012 are generally the same as those for contributory plan members hired June 30, 2012 and prior. Hybrid Plan for Employees Hired Prior to July 1, 2012 Retirement Benefits - General employees' retirement benefits are determined as 2% of average final compensation multiplied by the years of credited service. General employees with 5 years of credited service are eligible to retire at age 62. General employees with 30 years of credited service are eligible to retire at age 55. Disability Benefits - Members are eligible for service -related disability benefits regardless of length of service and receive a lifetime pension of 35% of their average final compensation plus refund of their contributions and accrued interest. Ten years of credited service is required for ordinary disability. Ordinary disability benefits are determined in the same manner as retirement benefits but are payable immediately, without an actuarial reduction, and at a minimum of 25% of average final compensation. -81 - COUNTY OF HAWAII Notes to the Basic Financial Statements June 30, 2015 Death Benefits - For service -connected deaths, the surviving spouse/reciprocal beneficiary receives a lump sum payment of the member's contributions and accrued interest plus a monthly benefit of 50% of the average final compensation until remarriage or re-entry into a new reciprocal beneficiary relationship. If there is no surviving spouse/reciprocal beneficiary, surviving children (up to age 18) or dependent parents are eligible for the monthly benefit. If there is no spouse/reciprocal beneficiary or dependent children/parents, the ordinary death benefit is payable to the designated beneficiary. Ordinary death benefits are available to employees who were active at time of death with at least 5 years of service. Ordinary death benefits consist of a lump sum payment of the member's contributions and accrued interest multiplied by 150%, or 50% Joint and Survivor lifetime pension if the member was not eligible for retirement at the time of death but was credited with at least 10 years of service and designated one beneficiary, or 100% Joint and Survivor lifetime pension if the member was eligible for retirement at the time of death and designated one beneficiary. Hybrid Plan for Employees Hired After June 30, 2012 Retirement Benefits - General employees' retirement benefits are determined as 1.75% of average final compensation multiplied by the years of credited service. General employees with 10 years of credited service are eligible to retire at age 65. Employees with 30 years of credited service are eligible to retire at age 60. Sewer workers, water safety officers, and EMTs may retire with 25 years of credited service at age 55. Disability and Death Benefits - Provisions for disability and death benefits generally remain the same except for ordinary death benefits. Ordinary death benefits are available to employees who were active at time of death with at least 10 years of service. Ordinary death benefits consist of a lump sum payment of the member's contributions and accrued interest multiplied by 120%, or 50% Joint and Survivor lifetime pension if the member was not eligible for retirement at the time of death and designated one beneficiary, or 100% Joint and Survivor lifetime pension if the member was eligible for retirement at the time of death and designated one beneficiary. Contributions - Contributions are established by HRS Chapter 88 and may be amended through legislation. The employer rate is set by statute based on the recommendations of the ERS actuary resulting from an experience study conducted every five years. Since July 1, 2005, the employer contribution rate is a fixed percentage of compensation, including the normal cost plus amounts required to pay for the unfunded actuarial accrued liabilities. The contribution rates for fiscal year 2015 were 24.00% for police and firefighters and 16.5% for all other employees. Contributions to the pension plan from the County for June 30, 2015, 2014, and 2013 were $43,889,431, $37,693,618, and $34,025,108, respectively, which equal the required contributions for each year plus County -paid employee contributions that are also classified as employer contributions pursuant to IRC section 414(h)(2). - 82 - COUNTY OF HAWAII Notes to the Basic Financial Statements June 30, 2015 The employer is required to make all contributions for members in the noncontributory plan. For contributory plan employees hired prior to July 1, 2012, general employees are required to contribute 7.8% of their salary and police and firefighters are required to contribute 12.2% of their salary. For contributory plan employees hired after June 30, 2012, general employees are required to contribute 9.8% of their salary and police and firefighters are required to contribute 14.2% of their salary. Hybrid plan members hired prior July I, 2012 are required to contribute 6.0% of their salary. Hybrid plan members hired after June 30, 2012 are required to contribute 8.0% of their salary. Pension: liabilities, pension expense, and deferred outflows of resources and deferred inflows of resources related to pensions — At June 30, 2015, the County reported a liability of $322,626,262 for its proportionate share of the net pension liability. The net pension liability was measured as ofJune 30, 2014, and the total pension liability used to calculate the net pension liability was determined by an actuarial valuation as of that date. The County's proportion of the net pension liability was based on the actual employer contributions to the pension plan relative to the contributions of all participating employers. At June 30, 2014, the County's proportion was 4.02%, which was a decrease of .20% from its proportion measured as ofJune 30, 2013. For the year ended June 30, 2015, the County recognized pension expense of $35,656,033. At June 30, 2015, the County reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources: Deferred Deferred Outflows Inflows of of Resources Resources Differences between expected and actual experience $ 1,889,419 $(4,949,210) Net difference between projected and actual investment earnings on pension plan investments -- (45,879,408) Changes in proportion and differences between employer contributions and proportionate share of contributions 179,381 (3,642,181) County contributions subsequent to the measurement date 43,889,431 -- Total 45.958.231 (54.470.799) $43,889,431 reported as deferred outflows of resources related to the County's contributions to the pension plan subsequent to the measurement date will be recognized as a reduction of the net pension liability in the fiscal year ended June 30, 2016. - 83 - COUNTY OF HAWAII Notes to the Basic Financial Statements June 30, 2015 Other amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions will be recognized in pension expense as follows: Fiscal Year Ended June 30, 2016 2017 2018 2019 2020 Thereafter Amount ($ 12,838,390) (12,838,390) (12,838,390) (12,838,390) (1,048,439) ($ 52.401 999) Actuarial assumptions — The total pension liability in the June 30, 2014 actuarial valuation was determined using the following actuarial assumptions, applied to all periods included in the measurement: Inflation Payroll growth rate Salary increases Investment rate of return Cost of living adjustments 3.00% 3.50% per annum 4.00% - 19.00%, including inflation 7.75% per annum, including inflation 2.50% / 1.50% Post-retirement mortality rates were based on either the Client Specific Tables, for general employees, or the 1994 US Group Annuity Mortality Static Table, for police and firefighters. Pre -retirement mortality rates were based on the RP -2000 Mortality Tables. The actuarial assumptions used in the June 30, 2014 valuation were based on the results of an actuarial experience study for the five-year period ending June 30, 2010. ERS updates the experience study every five years. The long-term expected rate of return on pension plan investments was determined using a building-block method in which best -estimate ranges of expected future real rates of return (expected returns, net of pension plan investment expense and inflation) are developed for each major asset class. These ranges are combined to produce the long-term expected rate of return by weighting the expected future real rates of return by the target asset allocation percentage and by adding expected inflation. - 84 - COUNTY OF HAWAII Notes to the Basic Financial Statements June 30, 2015 The target allocation and best estimates of arithmetic real rates of return for each major asset class are summarized in the following table: Asset Class Target Allocation Long -Term Expected Real Rate of Return Domestic equity International equity Total fixed income Real estate Private equity Real return Covered calls 30.00% 26.00% 20.00% 7.00%* 7.00%* 5.00%* 5.00% 100.00% 8.50% 9.00% 3.10% 8.46% 1 L75% 6.10% 7.65% *The real estate, private equity, and real return targets will be the percentage actually invested up to 7%, 7%, and 5%, respectively of the total fund. Changes in the real estate, private equity, and real return targets will be offset by an equal percentage change in the large cap domestic equity target. Discount rate — The discount rate used to measure the net pension liability was 7.75%. The projection of cash flows used to determine the discount rate assumed that employee contributions will be made at the current contribution rate and that contributions from the County will be made at statutorily required rates, actuarially determined. Based on those assumptions, the pension plan's fiduciary net position was projected to be available to make all projected future benefit payments of current active and inactive employees. Therefore, the long-term expected rate of return on pension plan investments was applied to all periods of projected benefit payments to determine the total pension liability. There has been no change in the discount rate since the prior measurement date. Sensitivity of the County's proportionate share of the net pension liability to changes in the discount rate — The following presents the County's proportionate share of the net pension liability calculated using the discount rate of 7.75%, as well as what the County's proportionate share of the net pension liability would be if it were calculated using a discount rate that is 1 -percentage -point lower (6.75%) or 1 -percentage -point higher (8.75%) than the current rate: 1% Decrease (6.75%) County's proportionate share of the net pension liability S 420.731 725 Current Discount 1% Increase Rate (7.75%) (8.75%) $ 322,626.262 $ 224.520,800 Pension plan fiduciary net position — Detailed information about the pension plan's fiduciary net position is available in the separately issued ERS Comprehensive Annual Financial Report that includes financial statements and required supplementary information. -85- COUNTY OF HAWAII Notes to the Basic Financial Statements June 30, 2015 Payables to the pension plan — At June 30, 2015, the annual amount payable to the ERS totaled $3,751,517, which represents the employer contribution for the second half of the month of June 2015, as required by HRS, and the excess pension cost under Act 153/SLH 2- 12 REFER HRS Section 88-100 for fiscal year ended June 30, 2015. Post -Retirement Benefits In addition to providing pension benefits, the County is required by state statute (HRS Chapter 87A) to contribute to the Hawai`i Employer -Union Health Benefits Trust Fund (the EUTF). The EUTF is an agent, multiple -employer defined benefit plan providing certain healthcare and life insurance benefits to all qualified retirees, active employees, their dependents and their beneficiaries. The EUTF was established on July 1, 2003 to design, provide, and administer medical, prescription drug, dental, vision, chiropractic, dual -coverage medical and prescription drug, and group life benefits. For employees hired prior to July 1, 1996, the County pays the entire monthly healthcare premium for employees retiring with 10 or more years of credited service, and 50% of the monthly premium for employees retiring with fewer than 10 years of credited service. The current (pay-as-you-go) premium costs are paid by the respective funds but the net other postemployment benefit obligation is paid by the General Fund. For employees hired after June 30, 1996, and who retire with fewer than 10 years of service, the County makes no contributions. For those retiring with at least 10 years but fewer than 15 years of service, the County pays 50% of the retired employees' monthly Medicare or non - Medicare premium. For employees hired after June 30, 1996, and who retire with at least 15 years but fewer than 25 years of service, the County pays 75% of the retired employees' monthly Medicare or non -Medicare premium. For those retiring with over 25 years of service, the County pays the entire healthcare premium. For employees hired after June 30, 2001, and who retire with fewer than 10 years of service, the County makes no contributions. For those retiring with at least 10 years but fewer than 15 years of service, the County pays 50% of the retired employees' monthly Medicare or non - Medicare premium based on the self -plan. For employees hired after June 30, 2001, and who retire with at least 15 years but fewer than 25 years of service, the County pays 75% of the retired employees' monthly Medicare or non -Medicare premium; for those retiring with over 25 years of service, the County pays the entire healthcare premium. For active employees, the employee's contributions are based upon negotiated collective bargaining agreements. Employer contributions for employees not covered by collective bargaining agreements and for retirees are prescribed by the HRS. The County's annual other postemployment benefit (OPEB) cost is calculated based on the annual required contribution (ARC) of the employer, which is an amount actuarially determined in accordance with the parameters of Governmental Accounting Standards Board - 86 - COUNTY OF HAWAII Notes to the Basic Financial Statements June 30, 2015 Statement No. 45, Accounting and Financial Reporting by Employers for Postemployment Benefits Other than Pensions (GASB Statement No. 45). GASB Statement No. 45 addresses the failure of previous financial reporting practices to measure and recognize the cost of OPEB during the periods when employees render the services or to provide relevant information about OPEB obligations and the extent to which progress is being made in funding those obligations. The ARC represents a level of funding that, if paid on an ongoing basis, is projected to cover normal cost each year and amortize any unfunded actuarial liabilities (or funding excess) over a period not to exceed thirty (30) years. The current ARC rate is 22.8% of annual covered payroll. The following section shows the County's Annual OPEB cost for the year ended June 30, 2015, the amount actually contributed to the plan, and changes in the net OPEB liability: Annual required contribution $32,478,000 Interest on net OPEB obligation 3,608,000 Adjustment to annual required contribution (3,222,000) Annual OPEB Cost 32,864,000 Contributions made 18,657,399 Increase in net OPEB liability 14,206,601 Net OPEB liability -beginning of year 51,548,596 Net OPEB liability -end of year $65,755,197 The above net OPEB liability at the end of the year is included in the Statement of Net Position in the noncurrent other liability amount of $65,755,197. The annual OPEB cost, the percentage of annual OPEB cost contributed to the plan, and the net OPEB (asset) liability for the year ended June 30, 2015 and the preceding two years were as follows: Percentage of Annual Fiscal Year OPEB Cost Net OPEB Ended Annual OPEB Cost Contributed Obligation June 30, 2013 $29,712,000 46.8% $38,160,502 June 30, 2014 $30,841,000 56.6% $51,548,596 June 30, 2015 $32,864,000 56.8% $65,755,197 The schedule of funding progress based on the actuarial valuation date of July 1, 2013, is as follows: Actuarial accrued liability $410,182,000 Actuarial value of plan assets 66,077,000 Unfunded actuarial accrued liability (UAAL) $344,105,000 Funded ratio 16% Covered payroll (active plan members) $137,810,000 UAAL as a percentage of covered payroll 250% - 87 - COUNTY OF HAWAII Notes to the Basic Financial Statements June 30, 2015 Actuarial valuations of an ongoing plan involve estimates of the value of reported amounts and assumptions about the probability of occurrence of events far into the future. Examples include assumptions about future employment, mortality, and the healthcare cost trend. Amounts determined regarding the funded status of the plan and the annual required contributions of the employer are subject to continual revision as actual results are compared with past expectations and new estimates are made about the future. The schedule of funding progress, presented as required supplementary information following the notes to the financial statements, presents multiyear trend information that shows whether the actuarial value of plan assets is increasing or decreasing over time relative to the actuarial accrued liabilities for benefits. Projections of benefits for financial reporting purposes are based on the substantive plan (the plan as understood by the employer and plan members) and include the types of benefits provided at the time of each valuation and the historical pattern of sharing of benefit costs between the employer and plan members to that point. The actuarial methods and assumptions used include techniques that are designed to reduce short-term volatility in actuarial accrued liabilities and the actuarial value of assets, consistent with the long-term perspective of the calculations. In the July 1, 2013 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 7.5-9.0% initially, reduced by decrements to an ultimate rate of 5.0% after ten years. The assumptions also include a 3.5% increase in payroll and a 3.0% inflation rate. The UAAL is being amortized as a level percentage of projected payroll on a closed basis. The remaining amortization period at July 1, 2013 for the UAAL balance varies depending on the date each portion was established but is set to not exceed 30 years. The equivalent single amortization period is 23.5. The EUTF issues a publicly available financial report that includes financial statements and required supplementary information, which is available on-line at their web -site www.eutf.hawaii.gov or by contacting them at P.O. Box 2121, Honolulu, HI 96805-2121. Deferred Compensation Plan County employees are permitted to participate in a deferred compensation plan of the State of Hawai`i, adopted pursuant to Internal Revenue Code (IRC) section 457. The plan permits eligible employees to defer a portion of their salary until future years by contributing to a fund managed by a plan administrator. The deferred compensation amounts are not available to employees until termination, retirement, death, or unforeseeable emergency. - 88 - COUNTY OF HAWAII Notes to the Basic Financial Statements June 30, 2015 All plan assets are held in a trust fund to protect them from claims of general creditors and from diversion to any uses other than paying benefits to participants and beneficiaries. The County has no responsibility for Toss due to the investment or failure of investment of funds and assets in the plans, but does have the duty of due care that would be required of an ordinary prudent investor. Therefore, the deferred compensation plan assets are not reported in the accompanying basic financial statements. 14. COMPONENT UNIT DISCLOSURES Deposits and Investments At June 30, 2015, the carrying amount of cash, time certificates of deposit and money market funds of $36,296,888, with bank balances of $37,414,497 were held by the County on behalf of the Department. These balances were fully insured or collateralized with securities held by the County's agent in the County's name. The deposits and investments include cash received by the Department that is restricted as to use and is recorded as a restricted asset. Such funds amounted to $1,544,208 at June 30, 2015. At June 30, 2015, the Department had no investments. Capital Assets The Department began operations as of January 1, 1950. At that date, the utility plant in service was transferred to the Department from the County at the cost of the utility plant assets acquired by the County for its water system from January 1, 1924 to December 31, 1949, Tess accumulated depreciation. Acquisitions prior to 1924 and acquisitions by gift or grant prior to 1950 are not included in utility plant. Additions to utility plant since January 1, 1950 are stated at original cost and include contributions by governmental agencies, private subdividers and customers at their cost or estimated cost. Construction costs include amounts for contract work, engineering supervision and other direct and indirect costs. Construction period interest is capitalized on utility plan constructed with tax-exempt debt. Depreciation on the Department's utility plant assets in service is computed using the straight-line method over the estimated useful lives of the assets as follows: Structures and improvements Machinery and equipment Water systems 40 to 50 years 5 to 25 years 10 to 40 years - 89 - COUNTY OF HAWAII Notes to the Basic Financial Statements June 30, 2015 The capital assets of the Department at June 30, 2015 were as follows: Utility plant in service $469,346,953 Less: accumulated depreciation (21E518,942) 257,828,011 Land and rights 4,706,302 Preliminary survey and investigation charges 4,428,754 Construction work in progress 12,185,812 Net capital assets $279,148.879 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 $49,494,566 at June 30, 2015. General obligation bonds payable issued on behalf of the Department and other long -tern debt at June 30, 2015 are comprised of the following: Public improvement bonds: 2004 Series D at 4.5%, due through 2039 2006 Series A at 4.0% to 5.0%, due through 2026 2008 Series A at 4.125%, due through 2043 2010 Series A at 3.33% to 6.1%, due through 2030 2010 Series B at 3.33% to 6.1%, due through 2030 Total public improvement bonds Public improvement refunding bonds: 2007 Series at 4.0% to 5.0%, due through 2021 Revolving fund loans: State revolving fund loans, interest up to 1.37%, due through 2032 Total long-term debt Add: Unarnortized premium Total - 90 - $ 222,818 17,730,000 135,216 8,443,750 5,902,500 32,434,284 3,949,269 12,591,409 48,974,962 519,604 $49 494.566 COUNTY OF HAWAII Notes to the Basic Financial Statements June 30, 2015 At June 30, 2015, future principal and interest payments for long-term debt are scheduled as follows: Fiscal year ending June 30: 2016 2017 2018 2019 2020 2021 — 2025 2026 — 2030 2031 — 2035 2036 —2040 2041 — 2043 Total Contributions in Aid of Construction The Department recognized $11,492,082 of contributions in aid of construction for the fiscal year ended June 30, 2015. Commitments and Contingent Liabilities Principal $ 3,438,382 3,547,543 3,668,323 3,793,239 3,916,380 17,852,089 12,108,751 529,375 98,172 22,708 $48 974 962 Interest $ 1,715,588 1,602,091 1,483,352 1,368,874 1,238,621 4,170,117 1,223,046 40,777 16,440 1.895 $12.860 801 Total $ 5,153,970 5,149,634 5,151,675 5,162,1 13 5,155,001 22,022,206 13,331,797 570,152 114,612 24,603 $61 835.763 Claims and judgments — The Department maintains property, auto liability, and general liability insurance policies. The Department remains self-insured for workers' compensation and other perils. The liability at June 30, 2015 for workers' compensation claims of $280,000 was estimated based on a combination of case-by-case review and the application of historical experience to outstanding claims. Construction contracts — The Department is obligated under construction contracts for the utility plant and other projects. Such commitments approximated $23,995,000 at June 30, 2015. Pension Plan Pension liabilities, pension expense, and deferred outflows of resources and deferred inflows of resources related to pensions — At June 30, 2015, the Department reported a liability of $20,526,993 for its proportionate share of the net pension liability. The net pension liability was measured as ofJune 30, 2014, and the total pension liability used to calculate the net pension liability was determined by an actuarial valuation as of that date. The Department's proportion of the net pension liability was based on the actual employer contributions to the pension plan relative to the contributions of all participating employers. At June 30, 2014, the Department's proportion was .26%, which was an increase of .05% from its proportion measured as ofJune 30, 2013. -91 - COUNTY OF HAWAII Notes to the Basic Financial Statements June 30, 2015 For the year ended June 30, 2015, the Department recognized pension expense of $2,823,637. At June 30, 2015, the Department reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources: Differences between expected and actual experience Net difference between projected and actual investment Earnings on pension plan investments Changes in proportion and differences between employer contributions and proportionate share of contributions Department contributions subsequent to the measurement date Total Deferred Deferred Outflows inflows of of Resources Resources $ 261,030 $ -- (2,382,270) 3,3 82,872 1.935,306 5 579,208 (2.382.270) The $1,935,306 reported as deferred outflows of resources related to the Department's contributions to the pension plan subsequent to the measurement date will be recognized as a reduction of the net pension liability in the fiscal year ended June 30, 2016. Other amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions will be recognized in pension expense as follows: Fiscal Year Ended June 30, 2016 2017 2018 2019 2020 Thereafter Amount $ 168,978 168,978 168,978 168,978 585,720 $ 1261 632 Sensitivity of the Department's proportionate share of the net pension liability to changes in the discount rate — The following presents the County's proportionate share of the net pension liability calculated using the discount rate of 7.75%, as well as what the County's proportionate share of the net pension liability would be if it were calculated using a discount rate that is 1 -percentage -point lower (6.75%) or 1 -percentage -point higher (8.75%) than the current rate: 1% Decrease (6.75%) Current Discount Rate (7.75%) Department's proportionate share of the net pension liability $ 26 017 563 $ 20,526 993 - 92 - 1% Increase (8.75%) $_1,5_.036.423 COUNTY OF HAWAI` I Notes to the Basic Financial Statements June 30, 2015 Pension plan fiduciary net position — Detailed information about the pension plan's fiduciary net position is available in the separately issued ERS Comprehensive Annual Financial Report that includes financial statements and required supplementary information. Payables to the pension plan — At June 30, 2015, the annual amount payable to the ERS totaled $125,036, which represents the employer contribution for the month of June 2015, as required by HRS. Post -Retirement Benefits Effective July ], 2007, the Department adopted the provisions of GASB Statement No, 45. This statement addresses how state and local governments should account for and report their costs and obligations related to postemployment benefits, healthcare, and other nonpension benefits. The Department's annual required contribution for its postemployment benefit obligation for the year ended June 30, 2015 was $1,850,000. The Department made contributions of $1,846,343 during the year ended June 30, 2015 and recorded a postemployment benefit asset of $1,101 at June 30, 2015. - 93 - COUNTY OF HAWAII Required Supplementary Information June 30, 2015 Schedule of Funding Progress for the EUTF (In thousands) Actuarial Accrued UAAL as a Actuarial Liability Unfunded Percentage Actuarial Value of (AAL) — AAL Funded Covered of Covered Valuation Assets Entry Age (UAAL) Ratio Payroll Payroll Date (a) (b) (b -a) (a/b) (c) ((b-a)/c) July 1, 2009 $28,814 $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% July 1, 2013 $66,077 $410,182 $344,105 16.1% $137,810 249.7% - 94 - COUNTY OF HAWAII Required Supplementary Information June 30, 2015 Measurement Period Ended Schedule of the County's Proportionate Share ofthe Net Pension Liability Last lOFiscal Years County's Proportion of the Net Pension Liability (%) County's Proportionate Share ufthe Net Pension Liability ($) County's Covered Payroll Proportionate Share mfthe Net Pension Liability as a %ageof Covered Payroll Plan Fiduciary Net Position as a %oocofthe Total Pension Liability June 30, 2014 June 30, 2013 4.0% 4.2% $322,626,262 $377,065,856 $ 139,779,309 $ 130,725.988 288.4% 63.9% 58.0% * This schedule is intended to present information for 10 years, as of the measurement date of the collective net pension Iiability for each respective fiscal year. Additional yearwill be built prospectively as inforrnation becomes available. - 95 - COUNTY OF HAWAII Required Supplementary Information June 30, 2015 Fiscal Year Ended June 30, 2015 June 30, 2014 June 30, 2013 June 30, 2012 June 30, 2011 June 30, 2010 June 30, 2009 June 30, 2008 June 30, 2007 June 30, 2006 Schedule of the Employer Pension Contributions Last Ten Fiscal Years Statutorily Required Contribution $ 43,889,431 $ 37,693,618 $ 34,025,108 $ 31,826,341 $ 31,289,458 $ 31,991,136 $ 32,183,067 $ 27,552,179 $ 24,578,419 $ 21,610,601 Actual County Contributions Recognized by the Plan $ 43,889,431 $ 37,693,618 $ 34,025,108 $ 31,826,341 $ 31,289,458 $ 31,991,136 $ 32,183,067 $ 27,552,179 $ 24,578,419 $ 21,610,601 Contribution Deficiency (Excess) $ $ County's Covered Payroll $ 152,685,842 $ 139,779,309 $ 130,725,988 $ 127,901,579 $ 127,859,606 $ 133,554,827 $ 135,107,940 $ 127,396,531 $ 114,684,034 $ 105,421,637 Contributions as a %age of Covered Payroll 28.7% 27.0% 26.0% 24.9% 24.5% 24.0% 23.8% 21.6% 21.4% 20.5% Note — Employer Contributions Employer contributions include County -paid employee contributions that are classified as employer contributions pursuant to IRC section 414(h)(2). -96- NONMAJOR GOVERNMENTAL FUNDS SPECIAL REVENUE FUNDS HIGHWAY FUND - Used to account for the costs of maintaining the County's highways and streets. Financing is provided primarily by fuel, motor vehicle weight and public utility franchise taxes. SEWER FUND - Used to accounfor costs ofoperating the Courity's various sewer systems. Financing is provided by charges to users for sewer services. SOLID WASTE FUND — Used to accumulate moneys for the operation, maintenance, and administration of the County's solid waste management, collection and disposl systems. Financing is provided by tipping fees at the landfills and by disposal permit fees. CEMETERYFUND - Used to accuniulate moneys to guarantee the future maintenance ofCounty cemetery sites. Financing is provided from the sale of burial lots in County cemeteries. PARKING METER FUND - Used to account for the costs oYmaintaining County on -street and off-street parking areas. Financing is provided by the proceeds from parking meters. VEHICLE DISPOSAL FUND - Used to accumulate moneys for the towing, removal, disposal and recycling ofabandoned or discarded automobiles and automobile parts. Financing is provided by annual fees collected with motor vehicle registrations. BIKEWAY FUND 'Used to accumulate moneys for the construction of bikeways within the County. Financing is provided by bicycle license fees. WORKFORCE INVESTMENT ACT FUND - Used to account for employment and training services provided to economically disadvantaged adults, dislocated workers and youth. Financing is provided by federal grants. GOLF COURSE FUND - Used to account for the cost of operating the Hilo Municipal Golf Course. Funding is provided from green fees and payments from restauranand pro shop concessionaires. GEOTHERMAL RELOCATION AND CQMMUNITY BENEFITS FUND - Used to account for the County's share of geothermal resource royalties received from the operator of a geothermal power plant located in the County. The funds are earmarked for a geothermal relocation program and to benefit the lower Puna area. BEAUTJF/CATION FUND - Used to accumulate moneys for the beautification ofhighwaysand disposaof abandoned vehicles within the County. Financing is provided by assessments on vehicle registrations. HA WAII COUNTY 1-IOUSING AGENCY - Used to account for Federal and County moneysused to provide public housing assistance within the County. PARK DEDICATION FUND - Used to account for moneydeposited with the County by subdividers to provide land for parks and playgrounds in subdivisions. DEBT SERVICE FUND INTEREST FUND- Used to accumulate moneys for payment of interest on general obligation bonds. Moneys required to service interest maturities are transferred annually from the General Fund. 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 ofmaturity. This page intentionally left blur - 97 - COUNTY OF HAWAII Nonmajor Governmental Funds Combining Balance Sheet June 30, 2015 Special Revenue Funds Solid Parking Highway Sewer Waste Cemetery Meter Fund Fund Fund Fund Fund Assets Cash and cash equivalents $I 1,596,798 $ 6,421,946 $ 9,482,412 $111,659 $234,894 Investments Imprest fund - 400 250 Receivables: Due from other governments 841,470 11,033 461,614 Due from other governmental funds 248,302 23,101 59,356 Due from other nongovernmental funds - 1,350 - Trade, net of allowance for doubtful accounts - 1,351,710 1,149,015 Real estate held for sale - Other - 546,054 1,089,772 1,387,194 2,2!6,039 Total assets $12,686,570 $ 7,809,540 511,698,701 $1 11,659 5234,894 Liabilities, Deferred Inflows and Fund Balances Liabilities: Accounts payable $ 873,797 $ 422,563 $ 1,655,911 $ $ Accrued payroll 498,663 146,433 333,549 Due to other governmental funds 205,361 7,755 53,615 Advance Collections -Intergovernmental 70,747 50,090 - Other 455 81,720 Total liabilities 1,649,023 658,471 2,093,165 Deferred Inflows of Resources Unavailable Revenue - 1,351,710 1,149,015 Fund balances: Restricted for: Debt service - - - Highways, streets and abandoned vehicles 11,037,547 - - - Rental assistance and subsidy - - - Committed to: Sanitation - 5,799,359 8,456,521 Highways, streets and abandoned vehicles - - - 234,894 Rental assistance and subsidy Cemetery Golf course Lower Puna area Parks and recreational projects Total fund balances Total liabilities, deferred inflows and fund balances $12,686,570 $ 7,809,540 $11,698,701 $111,659 $234,894 11,037,547 111,659 5,799,359 8,456,521 111,659 234,894 -98- Special Revenue Funds Vehicle workforce Golf Geothermal Reloc Beauti- Hawaii County Park Disposal Bikeway innovouon& Course &Community fication Housing Dedication Fund Fund Gpport Art Fund Fund Benefits Fund Fund Agency Fund $6,231,815 $ 841,145 $ 237,410 $ 437,015 $ 4,162,878 $ 1,223,176 $ 3,558,252 $ 25,776 2,000 200 98,282 52,608 - 496,197 115 - 38,994 521 81,491 42,223 115 276,404 521 577,688 $6,231,930 $ 841,145 $ 276,404 $ 439,536 $ 4,740,566 $ 1,223,176 2,769 $ 13,903 4,282 23 $ 2,652 45,046 276,404 4,874 193,113 61,406 751,565 $ 87,182 172 $ 3,615 $ 130,061 128,813 100 111,973 7,074 13,903 276,404 52,672 172 3,615 370,847 6,224,856 827,242 6,224,856 827,242 386,864 4,740,394 1,219,561 37,947 987,520 2,355,251 87,182 386,864 4,740,394 1,219,561 3,342,771 87,182 $6,231,930 $ 841,145 $ 276,404 $ 439,536 $ 4,740,566 $ 1,223,176 $ 3,751,565 $ 87,182 - 99 - (Continued) COUNTY OF HAWAII Nonmajor Governmental Funds Combining Balance Sheet June 30, 2015 (Concluded) Debt Service Fund Total Bond Nonmajor Interest Redemption Governmental Fund Fund Funds Assets Cash and cash equivalents $ 517,391 $ 4,890,655 Investments 2,000,000 16,900,000 Imprest fund Receivables: Due from other governments Due from other governmental funds Due from other nongovernmental funds Trade, net of allowance for doubtful accounts Real estate held for sale Other Total assets Liabilities and Fund Balances Liabilities: Accounts payable Accrued payroll Due to other governmental funds Advance Collections -Intergovernmental Other Total liabilities Deferred Inflows of Resources Unavailable Revenue 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, deferred inflows and fund balances See accompanying independent auditors' report. $ 49,735,812 18,961,406 2,850 1,649,809 383,367 1,350 2,500,725 496,197 709,398 5,740, 846 2,517,391 $21,790,655 $ 74,440,914 $ - $ 3,105,443 - - 1,156,786 548,009 120,837 71,930 220,000 486,201 71,930 220,000 5,417,276 2,445,461 21,570,655 2,445,461 2,538,672 24,016,116 13,084,350 987,520 14,255,880 6,459,750 2,355,251 111,659 386,864 4,740,394 87,182 21,570,655 66,484,966 $2,517,391 $21,790,655 $ 74,440,914 - 100 - This page intentionally !eft blank.,, - 101 - COUNTY OF HAWAII Nonmajor Governmental Funds Combining Statement of Revenues, Expenditures, and Changes in Fund Balances For the Fiscal Year Ended June 30, 2015 Revenues Fuel taxes Public utility franchise taxes Licenses and permits Intergovernmental Charges for services Investment earnings (loss) Other Total revenues Expenditures Current: General Government Public safety Highways and streets Health, education and welfare Culture and recreation Sanitation Pension and retirement contributions Employees' health insurance Other Debt service: Principal Interest Total expenditures Excess (deficiency) of revenues over (under) expenditures Other Financing Sources (Uses) Transfers in Increases 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 Special Revenue Funds Highway Fund $ 7,632,973 10, 824,278 11,099,238 1,948,296 479,145 31,983,930 79,042 7,725,576 17,228,957 2,033,513 977,210 364,603 28,408,901 3,575,029 4,000 (3,214,000) (3,210,000) 365,029 10,672,518 $ 11,037,547 - 102 - Sewer Fund Solid Waste Fund. 22,067 694,012 7,334,461 8,047,736 4,688 392,528 Cemetery Fund 7,750 Parking Meter Fund 14,632 7,361,216 9,134,276 7,750 14,632 6,897,635 625,168 224,282 192,712 23,346,884 1,326,101 667,656 531,551 591,032 15,200 7,939,797 26,478,424 (578,581) (17,344,148) 7,750 14,632 1,728,936 18,025,791 229,165 1,728,936 18,254,956 1,150,355 4,649,004 910,808 7,750 14,632 7,545,713 103,909 220,262 5,799,359 $ 8,456,521 $ 111,659 $234,894 Vehicle Disposal Fund 2,174,472 873 1,304 Workforce Bikeway Innovation & Fund opport. Act Fund 76,361 1,420,602 Golf Course Fund 825,276 Secial Revenue Funds Geothermal Rcio, Beauti- Hawaii County Park &Community fication Housing Dedication Benefits Fund Fund Agency Fund 535,709 181,208 14,875,997 2,860 102,797 665 2,176,649 76,361 1,420,602 825,276 535,709 181,208 14,981,654 665 27,446 1,420,602 911,137 261,687 - 14,095 - - 169,129 13,223 84,933 5,150 733,778 138,720 172 40,129 15,873,747 551,993 208,060 9,270 621 289,005 27,446 1,420,602 1,170,349 733,950 178,849 16,643,691 1,887,644 48,915 1,887,644 48,915 4,337,212 778,327 $ 6,224,856 $ 827,242 (345,073) (198,241) 2,359 (1,662,037) 665 367,675 367,675 1,558,091 1,558,091 22,602 (198,241) 2,359 (103,946) 665 364,262 4,938,635 1,217,202 3,446,717 86,517 386,864 $ 4,740,394 $ 1,219,561 $ 3,342,771 $ 87,182 - 103 - (Continued) COUNTY OF HAWAII Nonmajor Governmental Funds Combining Statement of Revenues, Expenditures, and Changes in Fund Balances For the Fiscal Year Ended June 30, 2015 Revenues Fuel taxes Public utility franchise taxes Licenses and permits Intergovernmental Charges for services Investment earnings (loss) Other Total revenues Expenditures Current: General Government Public safety Highways and streets Health, education and welfare Culture and recreation Sanitation Pension and retirement contributions Employees' health insurance Other Debt service: Principal Interest Total expenditures Excess (deficiency) of revenues over (under) expenditures Other Financing Sources (Uses) Transfers in Increases in capital leases Transfers out Total other financing sources (uses) Net change in fund balances Fund balances at beginning of year Fund balances at end of year See accompanying independent auditors' report. Debt Service Fund Interest Fund 410,622 410,622 13,668,448 Bond Redemption Fund 20,705,882 13,668,448 20,705,882 (13,257,826) (20,705,882) 13,247,879 21,155,697 13,247,879 21,155,697 (9,947) 449,815 2,455,408 21,120,840 2,445,461 $ 21,570,655 -104- (Concluded) Total Nonmajor Governmental Funds $ 7,632,973 10,824,278 13,531,279 19,371,596 16,222,978 3,525 1,523,921 69,1 10,550 812,820 7,725,576 17,395,123 17,294,349 951,438 30,506,206 4,719,999 2,175,364 1,094,016 21,306,184 13,684,269 117,665,344 (48,554,794) 56,088,069 229,165 (3,214,000) 53,103,234 4,548,440 61,936,526 $ 66,484,966 COUNTY OF HAWAII Highway Fund Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual (Budgetary Basis) For the Fiscal Year Ended June 30, 2015 Actual Variance Original Final (Budgetary Positive Budget Budget Basis) (Negative) Revenues: Taxes: Fuel taxes $ 7,330,000 $ 7,330,000 $ 7,632,973 $ 302,973 Public utility franchise taxes 11,046,628 11,046,628 10,824,278 (222,350) Total taxes 18,376,628 18,376,628 18,457,251 80,623 Licenses and permits - motor vehicle weight taxes 10,660,864 10,660,864 11,099,238 438,374 Intergovernmental 623,797 671,797 2,075,660 1,403,863 Charges for services 500,000 500,000 256,769 (243,231) Other 69,479 69,479 222,376 152,897 Total revenues 30,230,768 30,278,768 32,111,294 1,832,526 Expenditures: General government 40,000 40,000 39,484 516 Public safety - traffic engineering 7,398,743 7,450,743 7,131,135 319,608 Highways and streets 13,144,451 13,144,451 12,128,198 1,016,253 Highways and streets - mass transit 7,449,005 7,449,005 6,392,270 1,056,735 Pension and retirement contributions 2,008,000 2,061,000 2,023,443 37,557 Employees' health insurance 1,246,000 1,193,000 970,674 222,326 Other 848,000 848,000 353,401 494,599 Total expenditures 32,134,199 32,186,199 29,038,605 3,147,594 Excess (deficiency) of revenues over (under) expenditures (1,903,431) (1,907,431) 3,072,689 4,980,120 Other financing uses - transfers in (out) - Transfers in - General Fund 4,000 4,000 Transfers out - Capital Projects Fund (3,460,000) (3,514,000) (3,214,000) 300,000 Deficiency of revenues and other sources under expenditures and other uses (5,363,431) (5,417,431) (137,311) 5,280,120 Fund balance at beginning of year 10,672,518 10,672,518 10,672,518 Fund balance at end of year $ 5,309,087 $ 5,255,087 $ 10,535,207 $ 5,280,120 See accompanying independent auditors' report. - 105 - COUNTY OF HAWAII Sewer Fund Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual (Budgetary Basis) For the Fiscal Year Ended June 30, 2015 Actual Variance Original Final (Budgetary Positive Budget Budget Basis) (Negative) Revenues: Intergovernmental $ - $ - $ 22,067 $ 22,067 Charges for services - sewer fees 7,000,500 7,000,500 7,334,461 (333,961) Other - 4,688 4,688 Total revenues 7,000,500 7,000,500 7,361,216 (307,206) Expenditures: Sanitation 8,835,340 8,841,340 7,287,603 1,553,737 Pension and retirement contributions 774,491 774,491 624,745 149,746 Employees' health insurance 412,138 412,138 223,892 188,246 Other 721,233 721,233 684,675 36,558 Total expenditures 10,743,202 10,749,202 8,820,915 1,928,287 Deficiency of revenues under expenditures (3,742,702) (3,748,702) (1,459,699) 1,621,081 Other financing sources: Transfers in - General Fund 1,722,936 1,728,936 1,728,936 - Excess (deficiency) of revenues and other sources over (under) expenditures (2,019,766) (2,019,766) 269,237 1,621,081 Fund balance at beginning of year 4,649,004 4,649,004 4,649,004 Fund balance at end of year $ 2,629,238 $ 2,629,238 $ 4,918,241 $ 1,621,081 See accompanying independent auditors' report. - 106 - COUNTY OF HAWAII Solid Waste Fund Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual (Budgetary Basis) For the Fiscal Year Ended June 30, 2015 Actual Variance Original Final (Budgetary Positive Budget Budget Basis) (Negative) Revenues: Intergovernmental $ 557,959 $ 662,959 $ 728,645 $ 65,686 Charges for services - tipping fees 6,525,500 6,525,500 8,047,736 1,522,236 Other 392,527 392,527 Total revenues 7,083,459 7,188,459 9,168,908 1,980,449 Expenditures: Sanitation 24,090,156 24,271,326 22,976,286 1,295,040 Pension and retirement contributions 1,403,937 1,353,937 1,321,235 32,702 Employees' health insurance 819,253 669,253 664,766 4,487 Other 455,000 625,000 527,894 97,106 Total expenditures 26,768,346 26,919,516 25,490,181 1,429,335 Deficiency of revenues under expenditures (19,684,887) (19,731,057) (16,321,273) 3,409,784 Other financing sources: Transfers in - General Fund 17,979,621 18,025,791 18,025,791 Excess (deficiency) of revenues and other sources over (under) expenditures (1,705,266) (1,705,266) 1,704,518 3,409,784 Fund balance at beginning of year 7,545,713 7,545,713 7,545,713 Fund balance at end of year $ 5,840,447 $ 5,840,447 $ 9,250,231 $ 3,409,784 See accompanying independent auditors' report - 107 - COUNTY OF HAWAII Cemetery Fund Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual (Budgetary Basis) For the Fiscal Year Ended June 30, 2015 Actual Variance Original Final (Budgetary Positive Budget Budget Basis) (Negative) Revenues - other - sale of cemetery plots $ 10,000 $ 10,000 $ 7,750 $ (2,250) Expenditures - health, education and welfare 10,000 10,000 - 10,000 Excess of revenues over expenditures - - 7,750 7,750 Fund balance at beginning of year 103,909 103,909 103,909 Fund balance at end of year $ 103,909 $ 103,909 $ 1 1 1,659 $ 7,750 See accompanying independent auditors' report, - 108 - COUNTY OF HAWAII Parking Meter Fund Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual (Budgetary Basis) For the Fiscal Year Ended June 30, 2015 Actual Variance Original Final (Budgetary Positive Budget Budget Basis) (Negative Revenues - Charges for services - highways and streets $ - $ $ 14,632 $ 14,632 Excess of revenues over expenditures - - 14,632 14,632 Fund balance at beginning of year 220,262 220,262 220,262 - Fund balance at end of year $ 220,262 $ 220,262 $ 234,894 $ 14,632 See accompanying independent auditors' report. - 109 - COUNTY OF HAWAII Vehicle Disposal Fund Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual (Budgetary Basis) For the Fiscal Year Ended June 30, 2015 Actual Variance Original Final (Budgetary Positive Budget Budget Basis) (Negative) Revenues: Licenses and permits - vehicle disposal fee $ 2,076,000 $ 2,076,000 $ 2,174,472 $ 98,472 Charges for services - towing charges - - 873 873 Miscellaneous - 1,304 1,304 Total revenues 2,076,000 2,076,000 2,176,649 100,649 Expenditures: Sanitation 3,590,815 3,590,815 582,606 3,008,209 Pension and retirement contributions 33,600 33,600 14,181 19,419 Employees' health insurance 28,585 28,585 13,077 15,508 Other 2,000 2,000 2,000 Total expenditures Excess (deficiency) of revenues over (under) expenditures Fund balance at beginning of year Fund balance at end of year See accompanying independent auditors' report. 3,655,000 3,655,000 609,864 3,045,136 (1,579,000) (1,579,000) 1,566,785 (2,944,487) 4,337,212 4,337,212 4,337,212 - $ 2,758,212 $ 2,758,212 $ 5,903,997 $ (2,944,487) - 110- COUNTY OF HAWAII Bikeway Fund Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual (Budgetary Basis) For the Fiscal Year Ended June 30, 2015 Original Actual Variance and Final (Budgetary Positive Budget Basis) (Negative) Revenues - licenses and permits - bicycle tax $ 20,000 $ 76,361 $ 56,361 Expenditures - highways and streets 171,000 29,946 141,054 Excess (deficiency) of revenues over (under) expenditures (151,000) 46,415 197,415 Fund balance at beginning of year 778,327 778,327 - Fund balance at end of year $627,327 $824,742 $197,415 See accompanying independent auditors' report, -III- COUNTY OF HAWAII Workforce Innovation & Opportunity Act Fund Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual (Budgetary Basis) For the Fiscal Year Ended June 30, 2015 Original Budget Revenues - intergovernmental - federal grants $ Expenditures - health, education and welfare Excess of revenues over expenditures Fund balance at beginning of year Fund balance at end of year See accompanying independent auditors' report. - 112 - Final Budget Actual (Budgetary Basis) Variance Positive (Negative) $ 1,521,232 $ 1,145,315 $ (375,917) 1,521,232 1,145,315 375,917 COUNTY OF HAWAII Golf Course Fund Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual (Budgetary Basis) For the Fiscal Year Ended June 30, 2015 Revenues: Charges for services Actual Variance Original Final (Budgetary Positive Budget Budget Basis) (Negative) $ 884,400 $ 884,400 $ 825,276 $ (59,124) Expenditures: Culture and recreation 919,876 939,287 882,139 57,148 Pension and retirement contributions 183,881 183,881 168,175 15,706 Employees' health insurance 114,212 114,212 84,563 29,649 Other 14,695 14,695 5,150 9,545 Total expenditures 1,232,664 1,252,075 1,140,027 112,048 Deficiency of revenues under expenditures (348,264) (367,675) (314,751) (171,172) Other financing sources: Transfers in - General Fund 348,264 367,675 367,675 Excess of revenues and other sources over expenditures 52,924 (171,172) Fund balance at beginning of year 364,262 364,262 364,262 Fund balance at end of year $ 364,262 $ 364,262 $ 417,186 $ (171,172) See accompanying independent auditors' report. - 113 - COUNTY OF HAWAII Geothermal Relocation and Community Benefits Fund Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual (Budgetary Basis) For the Fiscal Year Ended June 30, 2015 Revenues - other - geothermal royalties Expenditures: General government: Planning and zoning Deficiency of revenues 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) $ 600,000 $ 600,000 $ 535,709 $ (64,291) 1,700,000 1,700,000 1,501,415 198,585 (1,100,000) (1,100,000) (965,706) (262,876) 4,938,635 4,938,635 4,938,635 $ 3,838,635 $ 3,838,635 $ 3,972,929 $ (262,876) - 114- COUNTY OF HAWAII Beautification Fund Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual (Budgetary Basis) For the Fiscal Year Ended June 30, 2015 Actual Variance Original Final (Budgetary Positive Budget Budget Basis) (Negative) Revenues - licenses and permits - highway beautification $ 175,000 $ 175,000 $ 181,208 $ 6,208 Expenditures: Highways and streets 390,512 390,512 352,478 38,034 Culture and recreation 61,300 61,300 37,035 24,265 Total expenditures 451,812 451,812 389,513 62,299 Deficiency of revenues under expenditures (276,812) (276,812) (208,305) 68,507 Fund balance at beginning of year 1,217,202 1,217,202 1,217,202 - Fund balance at end of year $ 940,390 $ 940,390 $ 1,008,897 $ 68,507 See accompanying independent auditors' report. - 115 - COUNTY OF HAWAII Hawaii County Housing Agency Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual (Budgetary Basis) For the Fiscal Year Ended June 30, 2015 Actual Variance Original Final (Budgetary Positive Budget Budget Basis) (Negative) Revenues: Intergovernmental - Federal - HUD - Voucher program $ 14,552,095 $ 15,052,095 $ 14,853,581 $ (198,514) Other - 22,416 22,416 Investment earnings 3,000 3,000 2,860 (140) Resale of property - - 87,500 87,500 Other 42,148 42,148 15,297 (26,851) Total revenues 14,597,243 15,097,243 14,981,654 (115,589) Expenditures: Health, education and welfare 15,549,316 16,1 16,316 16,009,838 106,478 Pension and retirement contributions 608,075 608,075 551,398 56,677 Employees' health insurance 254,859 254,859 207,780 47,079 Total expenditures 16,412,250 16,979,250 16,769,016 210,234 Deficiency of revenues under expenditures Other financing uses - transfers in (out) - Transfers in - General Fund Deficiency of revenues and other sources under expenditures Fund balance at beginning of year Fund balance at end of year See accompanying independent auditors' report. (1,815,007) (1,882,007) (1,787,362) 1,553,091 1,558,091 1,558,091 (261,916) (323,916) (229,271) 3,446,717 3,446,717 3,446,717 $ 3,184,801 $ 3,122,801 $ 3,217,446 - 116- 94,645 94,645 94,645 COUNTY OF HAWAII Park Dedication Fund Schedue of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actua (Budgetary Basis) For the Fiscal Year Ended June 30, 2015 Actual Variance Original Final (Budgetary Positive Budget Budget Basis) (Negative) Revenues - investment earnings $ (46) (46) Deficiency ofrevenues under expenditures (46) (46) Fund balance at beginning ofyear86.517 86,517 86'517 Fund balance at end of year $ 86'517 $ 86'517 $ 86.471 (46) See accompanying iridependent auditors' report. -117- COUNTY OF HAWAII Agency Funds Combining Statement ofAgency Funds Net Position June 30, 2015 Performance State Improvement Improvement Improvement and Weight District District District Refundable Tax No. 18 No|9 Revolving Deposits Fund Fund Fund Fund Fund Assets Cash and cash equivalents $1.935'232 $ 350,023 $ 424,287 $ 6,162 $ 213,387 Investments ' ' 170.064 ' Due from other agency funds - Other receivables 4,313 3,456 Total assets $1,935,232 $ 354,338 $ 427,743 176,226 $ 213,387 Liabilities Due to other agency funds $ - - 2,975 Accrued liabilities 1,995232 6,371 5,235 Advances payable - 14,617 5,870 210,412 Assets held for the benefit of improvement districts 3]]'348 416,629 176'226 Total liabilities $1,935,232 $ 354,336 $ 427,743 176,226 213,387 See accompanying independent auditors' report. - 118 - Non -Profit Organ and Business Payroll Flexible Lapsed License Tissue Improvement Clearance Spending Warrants Plates Education District Fund Account Fund Fund Fund 1 - Kailua Total 447,703 $ 358,861 $ 299,087 $ 950 $ 973 $ 625 $ 4,037,290 170,064 - - 3,507 - 3,507 16,868 13,893 20,176 58,706 464,571 $ 358,861 $ 316,487 $ 950 $ 973 $ 20,801 $ 4,269,567 532 $ - $ - $ $ $ $ 3,507 464,039 358,861 316,487 950 973 625 3,088,773 - - 230,908 20,176 946,379 464,571 $ 358,861 $ 316,487 $ 950 $ 973 $ 20,801 $ 4,269,567 -119- COUNTY OF HAWAII Agency Funds Combining Statement of Changes in Assets and Liabilities For the Fiscal Year Ended June 30, 2015 State Weight Tax Fund Assets Cash and cash equivalents Balance Balance July 1, June 30, 2014 Additions Deductions 2015 $ 1,849,041 $ 22,596,858 $ 22,510,667 $1,935,232 Liabilities Vouchers payable $ - $ 22,383,553 $ 22,383,553 $ Accrued liabilities Accrued liabilities - due to State of Hawaii 1,849,041 22,596,858 22,510,667 1,935,232 Total liabilities $ 1,849,041 $ 44,980,411 $ 44,894,220 $ 1,935,232 Improvement District No. 18 Fund Assets Cash and cash equivalents $ 254,036 $ 261,508 $ 165,521 $ 350,023 Other receivables 3,653 277,373 276,713 4,313 Total assets $ 257,689 $ 538,881 $ 442,234 $ 354,336 Liabilities Vouchers Payable $ $ 923 $ 923 $ Accrued liabilities 5,929 235,272 234,830 6,371 Advances payable 15, 1 11 14,617 15,111 14,617 Assets held for the benefit of improvement districts 236,649 232,460 135,761 333,348 Total liabilities $ 257,689 $ 483,272 $ 386,625 $ 354,336 Improvement District No. 19 Fund Assets Cash and cash equivalents $ 374,927 $ 65,593 $ 16,233 $ 424,287 Other receivables 63,096 59,640 3,456 Total assets $ 374,927 $ 128,689 $ 75,873 $ 427,743 Liabilities Vouchers Payable $ $ 62 $ 62 $ Accrued liabilities - 64,875 59,640 5,235 Advances payable 5,879 5,879 Assets held for the benefit of improvement districts 374,927 59,715 18,013 416,629 Total liabilities $ 374,927 $ 130,531 $ 77,715 $ 427,743 - 120- COUNTY OF HAWAII Agency Funds Combining Statement of Changes in Assets and Liabilities For the Fiscal Year Ended June 30, 2015 Improvement District Revolving Fund Assets Cash and cash equivalents Investments Total assets Liabilities Vouchers payable Assets held for the benefit of improvement districts Total liabilities Performance and Refundable Deposits Fund Assets Cash and cash equivalents Due from other non -agency funds Total assets Liabilities Vouchers payable Due to other agency funds Accrued liabilities Advances payable Total liabilities Payroll Clearance Fund Assets Cash and cash equivalents Due from other non -agency funds Other receivables Total assets Liabilities Vouchers payable Due to other agency funds Accrued liabilities Total liabilities Balance July 1, 2014 Additions $ 16,306 193,238 $ 209,544 Balance June 30, Deductions 2015 188 $ 10,332 $ 6,162 1,970 25,144 170,064 2,158 $ 35,476 $ 176,226 209,544 $ 209,544 35,153 49,362 35,153 82,680 176,226 84,515 $ 231,644 $ 394,062 200 117,833 $ 176,226 412,319 $ 213,387 200 $ 231,844 $ 394,062 412,519 $ 213,387 1,475 1,228 229,141 $ 231,844 409,534 2,975 387,562 409,534 1,475 1,228 406,291 800,071 818,528 $ 424,347 $ 246,173,472 235,001,390 25,446 2,056 $ 449,793 $ 481,176,918 2,975 210,412 $ 213,387 $ 246,150,1 16 $ 447,703 235,001,213 177 10,811 16,691 $ 481,162,140 $ 464,571 $ 119,578,737 869 532 448,924 261,822,700 $ 119,578,737 869 261,807,585 $ 532 464,039 $ 449,793 $ 381,401,969 - 121 - $ 381,387,191 $ 464,571 COUNTY OF HAWAII Agency Funds Combining Statement of Changes in Assets and Liabilities For the Fiscal Year Ended June 30, 2015 Flexible Spending Account Assets Cash and cash equivalents Liabilities Accrued liabilities Lapsed Warrants Fund Assets Balance Balance July 1, June 30, 2014 Additions Deductions 2015 $ 374,858 $ 374,858 311,898 $ 327,895 $ 358,861 311,898 $ 327,895 $ 358,861 Cash and cash equivalents $ 242,745 $ 60,513 $ 4,171 $ 299,087 Due from other agency funds 2,444 3,507 2,444 3,507 Other receivables 58,069 13,893 58,069 13,893 Total assets $ 303,258 $ 77,913 $ 64,684 $ 316,487 Liabilities Vouchers payable Accrued liabilities Total liabilities Non -Profit License Plates Fund $ - $ 4,171 $ 4,171 $ - 303,258 36,576 23,347 316,487 $ 303,258 $ 40,747 $ 27,518 $ 316,487 Assets Cash and cash equivalents $ 1,125 $ 4,445 $ 4,620 $ 950 Liabilities Vouchers payable $ $ 4,740 $ 4,740 $ - Due to other agency funds 100 - 100 Accrued liabilities: Due to non-profit agency 1,025 4,445 4,520 950 Total liabilities $ 1,125 $ 9,185 $ 9,360 $ 950 Organ and Tissue Education Fund Assets Cash and cash equivalents Liabilities Vouchers payable Accrued liabilities - due to State of Hawaii Total liabilities 948 $ 3,747 $ 3,722 $ 973 $ 3,747 $ 3,747 $ 948 3,747 3,722 973 $ 948 $ 7,494 $ 7,469 $ 973 - 122 - COUNTY OF HAWAII Agency Funds Combining Statement of Changes in Assets and Liabilities For the Fiscal Year Ended June 30, 2015 Business Improvement District 1-Kailua Assets Cash and cash equivalents Other receivables - BID I-Kailua Assessment Other receivables Total assets Liabilities Vouchers payable Accrued liabilities - due to KVBID Accrued liabilities Assets held for the benefit of improvement districts Total liabilities 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 Liabilities Vouchers payable Due to other agency funds Accrued liabilities Accrued liabilities - due to non-profit agency Accrued liabilities - due to State of Hawaii Accrued liabilities - due to KVBID Advances payable Assets held for the benefit of improvement districts Total liabilities See accompanying independent auditors' report. Balance July 1, 2014 704 $ 17,211 Balance June 30, Additions Deductions 2015 772,381 775,349 23 772,460 $ 625 772,384 20,176 23 - 17,915 $ 1,547,753 $ 1,544,867 $ 20,801 704 17,211 770,005 625 89 771,249 770,005 $ 704 625 89 768,284 20,176 17,915 $ 1,541,968 1,539,082 $ 20,801 $ 3,770,681 $ 270,644,665 $ 270,378,056 193,238 1,970 25,144 2,444 3,507 2,444 200 235,001,390 235,001,413 17,211 775,349 772,384 87,168 356,441 405,256 $ 4,037,290 170,064 3,507 177 20,176 38,353 $ 4,070,942 $ 506,783,322 $ 506,584,697 $ 4,269,567 2,444 1,134,197 1,025 1,849,989 704 244,252 $ 143,190,625 3,507 262,471,410 4,445 22,600,605 625 408,058 $ 143,190,625 $ 2,444 262,454,614 4,520 22,514,389 704 421,402 3,507 1,150,993 950 1,936,205 625 230,908 838,331 1,112,786 1,004,738 946,379 $4,070,942 $ 429,792,061 $ 429,593,436 $4,269,567 - 123 - COUNTY OF HAWAII Private Purpose Trusts Combining Statement of Private Purpose Trust Net Position June 30, 2015 Shippers' Total Geothermal Wharf Private Asset Trust Purpose Assets Fund Fund Trusts Cash and cash equivalents $ 617,017 $ 1,112,428 $ 1,729,445 Investments 1,562,541 1,274,891 2,837,432 Other Receivable 486 486 Total assets $ 2,179,558 $ 2,387,805 $ 4,567,363 Net Position Held in trust for other parties $ 2,179,558 $ 2,387,805 $ 4,567,363 Total net position $ 2,179,558 $ 2,387,805 $ 4,567,363 See accompanying independent auditors' report. - 124 - COUNTY OF HAWAII Private Purpose Trusts Combining Statement oyChanges in Private Purpose Trust Net Position For the Fiscal Year Ended June 30, 2015 Shippers' Total Geothermal Wharf Private Asset Trust Purpose Fund Fund Trusts Additions Contributions: Puna Geotherrnal Venture 50/00 $ $ 50,000 Investment eamings: Net increase (decrease) in fair value of investments 18,095 2,158 20,253 Dividends 58.953 58'953 Interest (1.161) 436 (725) Total additions 66.934 61,547 128/481 Deductions Claims Consultant 104,135 104.)]5 Grant payments 81210 81210 Total deductions 104.135 81,210 185,345 Change in netposition (37,201) (19/63) (56.864) Net position, beginning of year 2,216.759 2,407'468 4,624,227 Net position, end of year $ 2,179,558 $ 2,387,805 $ 4,567,363 See accompanying independenauditors' report. - 125 - This page intentionally left blank. - 126 - STATISTICAL SECTION (UNAUDITED) Contents Page Financial Trends — These schedules contain trend information to help help the reader understand how the County's finandal performance and weIl-being have changed over tirne. 127 Revenue Capacity — These schedules contain information to help the reader assess the County's most significant local reveriue source, the property tax. 132 Debt Capacity— These schedules present information to help the reader assess the affordability of the County's current levels of outstanding debt and the County's ability to issue additional debt in the future. Demographic andEcono,nic Information — These schedules offer demographic and economic indicators to help the reader understand the environment within which the County's financial acitivities take place. Operating Information — These schedules contain service and infrastructuredata to help the reader understand how the information in the County's financial report relates to the services provided and the activities performed by the County. 138 141 |43 Table 1 COUNTY OF HAWAI'l Net Position by Component Last Ten Fiscal Years 2006 2007 2008 2009 2010 2011 2012 2013, as 2014 2015 restated Governmental activities Net investment in capital assets 5386,861,296 5394,789,635 $419,174,559 5419,615,479 5469,235,881 5514,309,238 5594,384,524 5699,326,156 5734,889,023 5748,754,727 Restricted 44,737,588 54,857,023 66,977,935 63,408,379 43,958,660 51,840,697 48,360,223 64,437,707 89,620,936 74,813,856 Unrestricted' 8.885,911 21,350,091 27,329,104 42,457,132 37,623,937 40,287,046 39,340,897 181,055 (18,007,624) (351,386,671) Total governmental activities net position $440,484,795 5470,996,749 $513,481,598 5525.480,990 5550,818,478 $606,436,981 5682,085,644 5763,944,918 5806,502,335 5472,181,912 Business -type activities Net investment in capital assets 317,534 310,409 307,424 305,127 303,244 308,966 315,848 315,255 368,849 5 428,815 Restricted 182,797 183,832 184,352 184,643 184,914 185,087 185,148 - Unrestricted 813,431 636,756 608,195 609,798 497,466 449,581 455,918 1,045,190 1,093,750 1.040,216 Total business -type activities net position 5 1,313,762 $ 1,130,997 $ 1,099,971 5 1,099,568 985,624 5 943,634 $ 956,914 5 1,360,445 5 1,462,599 5 1,469,031 Primary government Net investment in capital assets 5387,178,830 5395,100,044 5419,481,983 5419,920,606 5469,539,125 5514,618,204 5594,700,372 $699,641,411 $735,257,872 5749,183,542 Restricted 44,920,385 55,040,855 67,162,287 63,593,022 44,143,574 52,025,784 48,545,371 64,437,707 89,620,936 74,813,856 Unrestricted 9,699,342 21,986,847 27,937,299 43,066.930 38,121,403 40,736.627 39,796,815 1,226,245 (16,913.874) (350,346,455) Total primary government net position 5441,798,557 $472,127,746 $514,581,569 5526,580,558 5551,804,102 $607,380,615 $683,042,558 5765,305,363 5807,964,934 5473,650,943 Unaudited - see accompanying independent auditors' report. Balances prior to FY 2015 have not been adjusted for the implementation of GASB Statement No. 68, Accounting and Financial Reporting for Pensions — an amendment ofGASB Statement No. 27 and GASB Statement No. 71, Pension Transition for Contributions Made Subsequent to the Measurement Date — an amendment of GASB Statement No. 68 Program Revenues Governmental activities: Charges for services: General government Public safety Highways and streets Health, education and welfare Culture and recreation Sanitation Operating grants and contributions Capital grants and contributions Total governmental activites prop -am revenues Business -type activities: Charges for services: Health, education and welfare Operating grants and contributions Total business -type activities program revenues Total primary government program revenues Expenses Govemmental activities: General government Public safety Highways and streets Health, education and welfare Culture and recreation Sanitation Interest on long-term debt Total governmental activities expenses Business -type activities: Health, education and welfare Total business -type activities expenses Total primary govemment expenses Net Expense Governmental activities Business -type activities Total primary government net expense Commued next page, Table 2 COUNTY OF HAWAI'l Changes in Net Position Last Ten Fiscal Years 2006 2007 2008 2009 2010 2011 2012 2013, as restated 2014 2015 $ 4,032,542 $ 4,460,016 $ 6,017,819 5 5,442,950 5 4,315,849 $ 1,856,795 $ 2,306,855 $ 1,695,152 $ 2,495,917 $ 2,246,106 6,975,962 5,798,126 5,843,733 4,846,834 4,449,519 4,447,120 5,136,278 5,117,102 5,562,424 5,926,316 9,079,084 9,354,639 9,701,815 9,636,799 9,351,219 9,800,983 10,544,711 10,159,443 13,901,679 16,043,045 980,147 799,075 754,758 532,832 713,774 424,107 454,913 570,312 559,381 548,781 1,439,784 1,634,008 1,595,409 1,557,597 1,609,041 1,626,178 1,601,195 1,794,553 1,954,213 2,150,900 16,469,745 18,486,502 18,643,952 16,415,985 14,934,570 15,889,364 14,831,846 15,593,933 16,426,521 17,816,818 38,252,889 38,068,138 46,117,399 42,273,795 49,571,173 50,820,951 45,767,655 44,410,353 42,957,370 47,406,704 14,801,828 7,805,986 9,327,408 15,728,186 13,532,669 38,810,806 86,754,033 107,584,670 62,370,497 29,621,907 92,031,981 86,406,490 98,002,293 96,434,978 98,477,814 123,676,304 167,397,486 186,925,518 146,228,002 121,760,577 338.141 141,019 479,160 5 92,511,141 345,802 365,655 134,211 125,795 480,013 491,450 $ 86,886,503 $ 98,493,743 371,511 337,982 135,674 136,802 507,185 474,784 $ 96,942,163 $ 98,952,598 372,599 133,215 505,814 $ 124,182,118 393,464 131,227 524,691 $ 167,922,177 432,057 123,800 555,857 $ 187,481,375 468,018 127,119 595,137 $ 146,823,139 453,304 113,642 566,946 $ 122,327,523 $ 38,264,132 5 46,349,904 $ 68,794,961 5 69,968,534 $ 65,552,278 $ 53,439,428 $ 56,115,599 $ 55,616,102 106,067,466 118,010,316 137,500,608 144,755,837 148,115,428 154,008,027 152,288,979 151,975,049 24,783,476 28,185,968 33,577,707 36,466,541 38,075,835 34,812,165 42,462,299 42,219,903 20,181,685 23,203,874 14,986,972 33,783,223 30,528,977 30,336,420 28,127,691 28,001,020 19,464,962 26,948,501 20,450,172 32,633,418 14,739,755 22,167,818 23,412,948 22,121,336 27,265,515 42,682,281 41,254,728 40,191,704 27,527,841 35,604,394 35,049,546 38,505,086 10,168,710 10,303,332 13,117,325 13,914,969 14,120,398 15,176,682 14,519,382 14,301,921 246,195,946 295,684,176 329,682,473 371,714,226 338,660,512 345,544,934 351,976,444 352,740,417 $ 59,448,042 163,889,113 38,670,145 28,343,056 25,590,117 48,721,810 12,911,436 377,573,719 $ 69,859,089 175,104,223 45,989,038 34,304,166 32,225,574 41,467,081 12,362,411 411,311,582 547,201 698,329 556,304 525,449 590,131 550,801 517,052 496,017 494,722 561,813 547,201 698,329 556,304 525,449 590,131 550,801 517,052 496,017 494,722 561,813 $ 246,743,147 5 296,382,505 5 330,238,777 $ 372,239,675 5 339,250,643 $ 346,095,735 $ 352,493,496 5 353,236,434 $ 378,068,441 4 , 73,395 5(154,163,965) $(209,277,686) $(231,680,180) $(275,279,248) $(240,182,698) 5(221,868,630) $(I84,578,958) $(165,814,899) $(231,345,717) 5(289,551,005) (68,041) (218,316) (64,854) (18,264) (115,347) (44,987) 7,639 59,840 100,415 5,133 5(154,232,006) 5(209,496,002) $(231,745,034) $(275,297,5(2) 5(240,298,045) 5(221,913,617) 5(184,571,319) 5(165,755,059) 5(231,245,302) $(289,545,872) General Revenues and Other Changes in Net Position Table 2 Governmental activities: General revenues: Property taxes $ 152,182,806 $ 183,611,050 $ 210,217,690 $ 229,262,980 $ 218,037,567 $ 225,055,099 $ 209,894,427 $ 200,775,779 $ 221,260,681 $ 237,217,225 Public service company taxes 6,811,483 7,396,084 8,381,367 10,228,607 9,647,055 9,296,852 9,896,715 10,766,021 10,380,341 10,385,654 Public utility franchise taxes 7,328,887 8,520,133 9,026,841 11,118,365 8,963,041 9,415,624 11,065,112 11,087,369 10,792,967 10,824,278 Fuel taxes 7,857,394 8,471,453 7,887,998 7,662,113 7,405,996 7,603,501 8,293,200 6,352,944 7,373,475 7,632,973 Grants and contributions not restricted to specific programs 18,510,262 18,999,596 19,395,089 17,888,019 17,500,038 19,533,165 19,074,105 17,750,132 17,705,917 19,506,423 Investment earnings (loss) 4,976,178 9,727,911 11,454,850 8,369,221 2,187,266 609,617 230,804 (81,020) 815,606 671,363 Other 2,110,854 3,063,413 7,801,194 2,749,335 1,779,223 5,973,275 1,773,258 2,320,838 5,574,147 8,364,894 Total governmental activities 199,777,864 239,789,640 274,165,029 287,278,640 265,520,186 277,487,133 260,227,621 248,972,063 273,903, I 34 294,602,810 Business -type activities: General revenues: Investment earnings 22,874 35,551 33,828 17,861 1,403 2,997 5,641 1,416 1,739 1,299 Other - - - - 342,275 Total business -type activities 22,874 35,551 33,828 17,861 1,403 2,997 5,641 343,691 1,739 1,299 Total primary government $ 199,800,738 $ 239,825,191 $ 274,198,857 $ 287,296,501 $ 265,521,589 $ 277,490,130 $ 260,233,262 $ 249,315,754 $ 273,904,873 $ 294,604,109 Changes In Net Position Governmental activities $ 45,613,899 $ 30,511,954 $ 42,484,849 $ 11,999,392 $ 25,337,488 $ 55,618,503 $ 75,648,663 $ 83,157,164 $ 42,557,417 $ 5,051,805 Business -type activities (45,167) (182,765) (31,026) (403) (113,944) (41,990) 13,280 403,531 102,154 6,432 Total primary government changes in net position $ 45,568,732 $ 30,329,189 $ 42,453,823 $ 11,998,989 $ 25,223,544 $ 55,576,513 $ 75,661,943 $ 83,560,695 $ 42,659,571 $ 5,058,237 Unaudited - see accompanying independent auditors' report. Table 3 COUNTY OF HAWAII Fund Balances, Governmental Funds (Modified accrual basis of accounting) Last Ten Fiscal Years 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 General Fund: Reserved $ 11,519,135 $ 15,659,683 $ 17,468,606 $ 14,974,272 5 8,088,347 $ - $ - $ Unreserved 23,446,072 28,950,668 31,401,745 44,603,975 31,430,570 - - - - Nonspendable - - - 2,835,361 3,304,551 3,492,464 3,794,963 3,573,745 Restricted - 4,296,363 3,693,958 4,863,905 5,459,350 4,554,871 Committed - - 8,756,426 11,710,875 12,065,528 12,794,782 12,925,579 0--. Assigned - 17,960,596 21,840,843 24,832,390 31,673,075 30,933,049 La Unassigned - 10,809,404 8,176.727 8,694,320 1,824,889 164,148 CD 1 Total general fund 34,965,207 44,610,351 48,870,351 59,578,247 39,518,917 44,658,150 48,726,954 53,948,607 55,547,059 52,151,392 All other Government Funds: Reserved 103,359,563 122,060,550 141,972,067 177,995,184 106,555,618 - - Unreserved, reported in: Special revenue fund 20,342,112 24,874,744 24,553,386 26,088,685 29,436,463 Capital projects fund 48,345,838 95,684,215 39,116,365 (20,101,369) (3,290,813) - - - Restricted - - 77,739,628 71,033,712 104,886,880 107,165,275 82,232,158 Committed - 40,148,878 36,866,120 29,502,567 38,029,424 41,125,668 Assigned - 6,914,320 5,216,981 - Unassigned - (3,609,332) (10,258,317) - (14,958,045) Total of other governmental funds 172,047,513 242,619,509 205,641,818 183,982,500 132,701,268 114,279,174 97,641,515 141,303,767 150,411,680 108,399,781 Total Fund Balances 5207,012,720 5287,229,860 5254,512,169 $243,560,747 $ 172,220,185 $ 158,937,324 $ 146,368,469 $ 195,252,374 5205,958,739 $ 160,551,173 Unaudited - see accompanying independent auditors' report_ NOTE—GASB 54 was implemented in 7011. Except for the unassigned category, conversion of prior year data to new categories is not possible at this time. ' Amount for fiscal year 2014 has been changed for consistency, COUNTY OF HAWAI'l Changes in Fund Bnlances, Governmental Funds (Modified accrual basis of accounting) Last Tcn Fiscal Years (Amounts in thousands) Table 4 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 ReVC1111eS: Property tax 5153,207 5181,446 5208,313 5225,858 52)5,548 5216,511 5208,23! 5201,201 5223,482 5 236,190 Public service company tax 6,812 7,396 8,381 10,229 9,647 9,297 9,897 10,766 10,380 10,386 Fuel tax 7,857 8,471 7,888 7,662 7,406 7,603 8,293 6,353 7,373 7,633 Public utility franchise tax 7,329 8,520 9,027 11,118 8,963 9,416 11,065 11,087 10,793 10,824 Licenses and permits 16,544 16,269 15,918 14,972 14,725 15,097 15,790 15,991 19,618 22,046 Intergovernmental 69,637 63,599 72,601 70,869 77,614 93,748 100,867 79,912 75,257 86,272 Charges for services 19,852 21,685 22,154 21,404 18,909 16,416 16,885 17,055 19,392 20,357 Investment earnings (loss)I 5,223 10,291 12,144 8,914 2,253 510 406 (618) 1,704 716 Settlement contributions - - • - - . 12,500 - - Other 4,380 5,073 7,151 5,690 3,241 7,874 4,201 4,399 30,084 9,769 Total Revenues 290,841 322,750 363,577 376,716 358,306 376,472 375,635 358,646 398.083 404,193 Expenditures: Current: General governinent 31,153 37,652 42,991 45,882 40,586 34,251 35,088 33,360 36,679 40,805 Public safety 83,591 93,241 103,617 107,540 108,798 104,917 104,523 106,885 111,221 122,819 Highways and streets 12,608 14,033 19,529 17,159 20,222 17,114 17,338 17,923 20,270 20,984 Sanitation 26,565 31,817 33,405 35,025 35,675 28,424 29,511 30,672 29,949 31,464 Health, education and welfare 19,050 21,470 24,609 24,596 25,519 26,847 23,749 24,199 23,070 24,540 Culture and recreation 14,731 17,118 18,179 18,853 17,266 16,001 16,763 16,337 18,334 20,056 Pension and retirement contributions 19,937 21,796 24,296 28,870 28,509 27,284 27,773 29,816 33,032 38,485 Employees' health insurance 16,133 16,941 18,089 19,119 23,573 25,212 25,902 26,011 26,786 27,731 Other postemployment benefits - - 13,629 14,950 15,700 17,307 -, - 3,170 4,532 Other 6,780 5,108 5,344 6,257 4,773 4,758 4,183 2,991 3,238 4,686 Debt service: Principal 14,060 16,076 16,548 19,749 20,720 42,233 24,834 25,718 19,013 22,004 Interest 9,914 9,894 13,116 12,790 14,584 14,841 15,032 14,345 14,644 13,871 Capital outlay 30,588 52,285 70,156 89,368 100,653 87,782 71,220 48,565 51,369 79,398 Total Expenditures 285,110 337,431 403,508 440,158 456,578 446,971 395,916 376,822 390,775 451,375 Revenues over (under) Expenditures 5,731 (14,681) (39,931) (63,442) (98,272) (70,499) (20,281) (18,176) 7,308 (47,182) Other Financing Sources (Uses): Sale of assets 82 5 3,470 58 10 6 153 1 10 25 Capital leases 404 2,403 2,187 1,026 1,948 47 2,521 1,307 14 1,971 State Revolving Fund loans 25 6,255 1,916 280 6.811 9,257 4,569 4,991 3,072 Sale of bonds 25,000 85,000 • 50,000 _ 45,000 - 50,480 Issuance of bond anticipation notes (BANs) - 19,000 . Refunding bonds 31,607 47,510 Premium on bonds 972 3,099 185 2,078 17,570 Refunding bonds/BANS issuance costs (218) ((9) - Payment to refunded bond escrow agent (32,699) (45,352) Retirement of refunded debt - - (9,635) Transfers in 45,691 59,139 64,929 56,697 61,495 56,099 59,971 51,356 61,238 59,394 Transfers out (45,691) (59,139) (64,929) (56,697) (61,495) (56,099) (59,97)) (51,356) (61,238) (59,394) Total other financing sources 26,483 95,452 7,573 51,549 27,750 56,388 7,243 66,872 3,096 1,996 Net change in fund balances $ 32,214 5 80,771 (32,358) 5 (11,893) 5 (70,522) $ (14,111) (13,038) 48,696 S 10,404 $ (45,186) Debt service as a percentage of noncapital expenditures 9.7% 9.0% 9.3% 9.0% 10.4% 15.9% 12.3% 13.9% 10.09'6. 9.3% Unaudited - see accompanying independent auditors' report ' Amount for fiscal year 2014 has been changed for consistency Table 5 COUNTY OF HAWAII. Real Property Assessed Values by Classification and Tax Rates Last Ten Fiscal Years (Values in Thousands) Fiscal Year 2006 Class of Property Improved Residential Unimproved Residential Apartment Hotel and Resort Commercial Industrial Agricultural Conservation Homeowners 2007 Improved Residential Unimproved Residential Apartment Hotel and Resort Commercial Industrial Agricultural Conservation Homeowners Continued next page. Value of Building Value of Net Taxable Tax Rates Net Taxable Building Per $1000 Land S1,082,244 $ 9.10 $1,935,085 29,762 9.85 470,738 2,340,515 9.85 907,150 981,538 9.85 942,988 538,389 9.85 502,433 255,292 9.85 280,950 970,198 9.85 2,082,838 21,488 9.85 340,573 1,191,435 5.55 1,604,418 $7,410,861 $9,067,173 Fiscal year 2006 total direct rate $8.98 $1,281,050 43,372 3,154,981 1,209,050 620,567 317,852 1,195,256 28,472 1,408,215 $9,258,815 $ 8.10 8.10 8.10 9.00 9.00 9.00 8.35 8.55 5.55 $2,938,402 762,664 1,347,158 1,050,628 662,801 397,211 3,985,647 356,316 1,947,983 $13,448,810 Fiscal year 2007 total direct rate $7.96 Land Tax Rates Per $1000 $ 9.10 9.85 9.85 9.85 9.85 9.85 9.85 9.85 5.55 Value of Net Taxable Real Property $3,017,329 500,500 3,247,665 1,924,526 1,040,822 536,242 3,053,036 362,061 2,795,853 $16,478,034 $ 8.10 $4,219,452 8.10 806,036 8.10 4,502,139 9.00 2,259,678 9.00 1,283,368 9.00 715,063 8.35 5,180,903 8.55 384,788 5.55 3,356,198 $22,707,625 Table 5 Value of Building Value of Land Value of Fiscal Class of Net Taxable Tax Rates Net Taxa|c Tax Rates Net Taxable Year Property Building Per $1000 Land Per $1000 Real Property 2008 Improved Residential $1,520,234 $ 8.10 $3,843,169 $ 8.10 $5,363,403 Unimproved Residential 40,056 8.10 430,757 8.10 470.813 Apartment 3,690,371 8.10 1,517,500 8.10 5.207.871 Hotel and Resort 1,377.492 9.80 1.194'879 9.00 2.572.371 Commercial 695,318 9.00 805'168 9.00 1,500.486 Industrial 370,718 9.00 474,100 9.00 844,218 Agricultural 1,353,403 8.35 4,529.187 8.35 5,882,590 Conservation 31,771 8.55 347,798 8.55 379,569 Homeowners 1,687.649 5.55 2.360.873 5.55 4.048.522 $10,766.412 $15,503,431 $26'269.843 Fiscal year 2008 total direct rate $7.9 2009 Residential $2,385,714 $ 7.10 $4,287,515 $ 8.10 $6,673220 Apartment 4.070.199 8.10 1,561,009 8.10 5.648208 Hotel and Resort 1.542.712 9.00 1,271,240 9.00 2,813.952 Commercial 742,561 9.00 905,079 9.00 1,647.640 Industrial 418,607 0.00 561,220 9.00 979,827 Agricultural & Native Forest 2.245,161 6.35 4.325,743 8.35 6.570.904 Conservation 44,670 8.55 340.254 8.55 384.924 Homeowners 2.091.891 5.55 2,623,241 5.55 4.715.132 Affordable Rental Housing 41,793 5.55 38,026 5.55 79.819 $13,592,308 $15,913,327 $29,505,635 Fiscal year 2O09total direct rate $7.68 2010 Residential $2,447,576 $ 7.10 $3.804/696 $ 8.10 $6,252,272 Apartment 3,602,514 8.10 1~546,866 8.10 5,149,380 Hotel and Resort 1,390,884 9.00 1.177,790 9.00 2,568,680 Commercial 733,260 9.00 928.999 9.00 1.662,259 Industrial 453.406 9.00 593,224 9.00 1.046.630 Agricultural & Native Forest 2,272,248 6.35 3,625,585 8.35 5.897,833 Conservation 46,321 8.55 337,860 8.55 384,181 Homeowners 2.388,048 5.55 2,686,692 5.55 5.074,740 Affordable Rental Housing 67,746 5.55 47,703 5.55 115.449 $13,402,003 $14,749,421 $28,151,424 Fiscal year 2010 total direct rate $7.75 Continued nexpage. Table 5 Fiscal Year 2011 Class of Pro-‘ey Value e Net Taxable Building Building Tax Rates Per $1000 Value of Net Taxable Land Land Tax Rates Per $1000 value of Net Taxable Real Pro'erty Residential Apartment Hotel and Resort Commercial industrial Agricultural & Native Forest Conservation Homeowners Affordable Rental ]-lousing 2012 Residential Apartment Hotel and Resort Commercial Industrial Agricultural & Native Forest Conservation Homeowners Affordable Rental Housing 2013 Residential Apartment Hotel and Resort Commercial Industrial Agricultural & Native Forest Conservation Homeowners 2,525,118 Affordable Rental Housing 110,208 $3,040,977 2,660,600 820,418 713,161 454,868 1231,765 48,766 2,479,437 108,290 '312,559,282 $ 9.10 9.85 9.85 9.10 9,10 8.3s 9.85 5.55 s_54 $3,787,185 1,144,873 690,834 908,741 594,589 7,860,494 341,496 25 {3 427 57,811 $12,959,560 Fiscal year 2011 total direct rate $8,3 2,849,965 2,771,190 771,971 676,465 446,247 2,023,285 44,874 2,480,038 142,899 207,934 $ 9.10 9.85 9.85 9.10 9.10 8.35 9.85 5.55 5,55 $3,549,133 1,147,288 601,800 817,094 563,710 2,571,826 313,110 2,524,61 1 79,498 $12,198,170 Fiscal year 2012 total direct rate $8.52 $2,872,890 2,40 +,216 711,884 661,323 472,242 1,067,097 41,505 $11,865,383 Fiscal year 2013 Continued next page. $ 9.10 $3,534,961 9.85 1,069,999 9.85 506,998 9.10 806,131 9.10 463,832 8.35 1,425,798 9.85 287,375 5.55 2,502,822 5.55 4,271 $11,662,186 ect rate $8.37 $ 9.10 9.85 Y,85 9.10 9.10 8.35 9,85 5.5s 5.55 $ 9.10 9.85 9.85 9.10 9.10 8.35 9.85 455 5.55 $ 10.05 10.85 10.85 10.05 10.05 9.25 10.85 6.15 6.15 $6,828,162 3,805,473 1,511,252 1=621,902 1,049,457 5,093,259 390,262 5,052,964 166,111 S25,518,841 $--6.399,0988 3,919,478 1,373,771 1,513,559 1,009,957 4,595,1 1 1 368,084 5,004,649 222,397 406,104 $6,407,851 3,473,215 1,21 8,882 1,467,454 936,074 4,492,895 328,880 5,027,840 174,478 1,569 Table 5 Value of Building Value of Land Value of Fiscal Class of Net Taxable Tax Rates Net Taxable Tax Rates Net Taxable Year Property Building Per $1000 Land Per $1000 Real Property 2014 Residential $2,961,309 $ 10.05 $3,470,148 $ 10.05 $6,431,457 Apartment 2,431,314 10.85 1,077,153 10.85 3,508,467 Hotel and Resort 669,850 10.85 477,981 10.85 1,147,831 Commercial 648,273 10.05 766,029 10.05 1,414,302 Industrial 470,992 10.05 443,702 10.05 914,694 Agricultural & Native Forest 2,105,481 9.25 2,365,245 9.25 4,470,726 Conservation 36,902 10.85 255,602 10.85 292,504 Homeowners 2,645,121 6.15 2,537,128 6.15 5,182,249 Affordable Rental Housing 115,384 6.15 64,662 6.15 180,046 $12,084,626 $11,457,650 $23,542,276 Fiscal year 2014 total direct rate $9.23 2015 Residential $3,234,567 $ 10.05 $3,741,337 $ 10.05 $6,975,904 Apartment 2,748,462 10.85 1,059,415 10.85 3,807,877 Hotel and Resort 715,560 10.85 591,128 10.85 1,306,688 Commercial 693,488 10.05 759,340 10.05 1,452,828 Industrial 493,660 10.05 522,006 10.05 1,015,666 Agricultural & Native Forest 2,277,788 9.25 2,416,357 9.25 4,694,145 Conservation 41,991 10.85 238,545 10.85 280,536 Homeowners 2,885,636 6.15 2,607,830 6.15 5,493,466 Affordable Rental Housing 109,462 6.15 61,478 6.15 170,940 $13,200,614 $11,997,436 $25,198,050 Fiscal year 2015 total direct rate $9.26 Source: County of Hawai`i, Department of Finance, Real Property Tax Division NOTES: Assessed value is at 100% of market value. Property is reassessed annually. The County Council sets the tax rates annually. There are no overlapping property tax rates in the County of Hawaii. The improved residential and unimproved residential classes were combined into a single class beginning with the fiscal years ending June 30, 2009. Unaudited - see accompanying independent auditors' report. Taxpayer Hilton Land Investment 1 LLC Kohanaiki Shores LLC Mauna Kea/Hapuna Beach Corps. Hualalai Investors LLC Hilton Resorts Corp. Orchid 09 LLC Mauna Lani Resort Inc. Target Corporation Raptor Residence LLC BP Bishop Estate Liliuokalani Trust Estate Mauna Kea Development Corp Global Resort Partners Kaupulehu Makai Venture WB Manini'owali LLC FHR (ML) Hotel Holdings LLC WB Kukio Resorts LLC BRE/Waikoloa LLC Business Hotel Developer Developer/Hotel Developer/Hotel Timeshare Hotel Developer/Hotel Retailer Residential Developer Land Trust Hotels/Dev. Hotel Developer Developer Hotel Developer Hotel COUNTY OF HAWAI`I Principal Taxpayers June 30, 2015 and 2006 Fiscal Year 2015 Fiscal Year 2006 Table 6 2014 Assessed Valuation Percentage of Total Assessed Rank Valuation $ 208,557,000 I 187,923,300 2 177,368,600 3 174,155,800 4 153,732,900 5 118,298,600 6 95,384,700 7 66,635,200 9 64,747,500 I 0 0.8% 0.7% 0.7% 0.7% 0,6% 0.5% 0.4% 0.3% 0.3% 2005 Assessed Valuation Percentage of Total Assessed Rank Valuation 99,337,000 9 0.5% 487,026,400 1 2.4% 238,300,600 2 1.2% 201,862,600 3 I.0% 171,043,600 4 0.8% 159,249,800 5 0.8% 128,253,000 6 0.6% 120,000,000 7 0.6% 113,874,600 8 0.6% 59,804,200 10 0,3% $1,246,803,600 5.0% $ 1,778,751,800 Note: Gross valuation at January I, 2014: $25,198,050,487 Gross valuation at January 1, 2005: $20,267,274,800 Source: County of Hawai`i, Department of Finance, Real Property Tax Division Unaudited - see accompanying independent auditors' report. - 136 - 8.8% *Current Fiscal Tax Year Lev 2006 $150,290,867 2007 181,538,547 2008 207,886,874 2009 226,634,315 2010 215,264,263 2011 215,728,121 2012 204,890,657 2013 197,068,370 2014 217,319,962 2015 233,255,919 *Current Tax Collections $ 147,712,630 177,326,418 202,702,858 219,437,531 207,501,307 208,106,918 198,274,186 191,154,491 211,711,407 227,211,277 * Amounts reflect subsequent adjustments COUNTY OF HAWAII Property Tax Levies and Collections Last Ten Fiscal Years *Percent *Delinquent *Total of Levy Tax Tax Collected Collections Collections 98% 2,435,807 $ 150,148,437 98% 3,921,992 181,248,410 98% 4,845,417 207,548,275 97% 6,707,952 226,145,483 96% 7,169,829 214,671,136 96% 6,735,664 214,842,582 97% 5,422,252 203,696,438 97% 4,108,371 195,262,862 97% 2,499,032 214,210,439 97% - 227,211,277 Source: County of Hawai`i, Department of Finance, Real Property Tax Division Unaudited - see accompanying independent auditors' report. *Total Collections as Percent of Current Levy 100% 100% 100% 100% 100% 100% 99% 99% 99% 97% Table 7 *Outstanding Delinquent *Outstanding Taxes as Delinquent Percent of Taxes Current Levy 142,430 0% 290,137 0% 338,599 0% 488,832 0% 593,127 0% 885,539 0% 1,194,219 1% 1,805,508 1% 3,109,523 1% 6,044,642 3% .-- La 2011 306,079,506 36,555,264 3,057,082 884,232 346,576,084 44,673,293 18,012,314 5.67% 1,851 6.69% 2,186 oo 2012 286,168,549 29,050,626 3,803,618 851,306 319,874,099 42,481,176 17,872,813 5.06% 1,691 6.02% 2,010 Table 8 COUNTY OF HAWAI'1 Ratios of Outstanding Debt by Type Last Ten Fiscal Years (Amounts in thousands, except per capita) Business -Type Component Total Primary Government Governmental Activities Activities Unit Total Primary Govemment and Component Unit General State Total General State Percentage Percentage Fiscal Obligation Revolving Capital Bonds/Notes Primary Obligation Revolving of Personal Per of Personal Per Year Bonds (c) Fund Loans Leases Payable Govemment (a) Bonds Fund Loans Income (b) Capita (b) Income (b) Capita (b) 2006 198,848,932 26,413,342 2,864,515 1,019,386 229,146,175 38,374,312 3,175,607 4.82% 1,339 5.70% 1,581 2007 271,712,774 30,246,751 4,085,735 995,854 307,041,114 36,708,368 5,599,767 5.99% 1,779 6.82% 2,025 2008 259,508,548 29,376,186 4,606,527 970,892 294,462,153 35,823,543 5,423,551 5.22% 1,675 5.95% 1,910 2009 297,792,476 26,697,288 4,179,805 944,124 329,613,693 33,954,671 8,154,507 5.79% 1,853 6.53% 2,090 2010 277,700,110 30,469,767 4,552,290 916,117 313,638,284 31,730,311 11,984,221 5.49% 1,751 6.25% 1,995 2013 332,675,519 20,882,283 3,632,420 1,296,633 358,486,855 40,179,834 12,911,310 5.48% 1,879 6.29% 2,157 2014 318,138,520 22,928,638 2,308,241 1,208,300 344,583,699 38,644,257 13,658,717 5.09% 1,774 5.86% 2,044 2015 297,957,249 21,552,213 2,981,709 1,111,392 323,602,563 36,383,553 12,591,409 N/A N/A N/A N/A NOTES: (a) Includes governmental activities and business -type activities. (b) See Table 11 for personal income and population data (c) Amounts have been changed for consistency. Details regarding the County's outstanding debt can be found in the notes to the basic financial statements. Unaudited - see accompanying independent auditors' report, Table 9 COUNTY OF HAWAI`l Ratios of General Bonded Debt Outstanding Last Ten Fiscal Years Debt Percent of Applicable to Net Taxable Fiscal Legal Debt Property Per Year Margin (a) Value (b) Capita (c) 2006 $ 205,219,940 1.2% 1,199 2007 281,836,503 1.2% 1,633 2008 265,431,280 1.0% 1,510 2009 296,535,925 1.0% 1,667 2010 277,481,633 1.0% 1,549 2011 305,615,691 1.2% 1,636 2012 317,699,844 1.3% 1,679 2013 315,676,941 L3% 1,654 2014 298,709,020 1.3% 1,538 2015 312,632,049 1.2% N/A NOTES: (a) See Table 10 for debt applicable to legal debt margin. (b) See Table 5 for net taxable property values. (c) See Table 11 for population data. Details regarding the County's outstanding debt can be found in the notes to the basic financial statements. Unaudited - see accompanying independent auditors' report. - 139 - COUNTY OF HAWAII Legal Debt Margin Information Last Ten Fiscal Years (Amounts in thousands) 2006 2007 2008 2009 2010 2011 2012 2013 2014 Table 10 Debt limit (a) $2,471,705 $3,406,144 $3,940,476 $4,425,845 $4,222,714 $3,827,826 $3,660,916 $3,529,135 $ 3,531,341 $ 3,779,708 Debt applicable to limit 205,220 281,837 265,431 296,536 277,482 315,616 317,700 315,677 298,709 312,632 Legal debt margin (b) $2,266,485 $3,124,307 $3,675,045 $4,129,309 $3,945,232 $3,512,210 $3,343,216 $3,213,458 $ 3,232,632 $ 3,467,076 Debt applicable to the limit as a percentage of debt limit 8.30% 8.27% 6.74% 6.70% 6.57% 8.25% 8.68% 8.94% 8.46% 8.27% NOTES: (a) State finance statutes limit the County's outstanding general debt to no more than 15 percent of the net assessed value of property. See Table 5 for net assessed value of property. (b) The legal debt margin is the County's available borrowing authority under state finance statutes and is calculated by subtracting the net debt applicable to the legal debt limit from the legal debt limit. Legal Debt Margin Calculation for Fiscal Year 2015 Net assessed value $25,198,050 Debt limit (15% of net assessed value) Debt applicable to limit Legal debt margin Unaudited - see accompanying independent auditors' report. $ 3,779,708 312,632 $ 3,467,076 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 2005 168,237 $ 4,638,838 $ 27,573 30,262 3.3% 2006 173,536 $ 5,064,624 $ 29,185 30,539 3.0% 2007 177,733 $ 5,509,169 $ 30,997 30,618 3.4% 2008 181,506 $ 5,899,236 $ 32,502 30,408 5.7% 2009 183,629 $ 5,517,497 $ 30,047 30,138 9.9% 2010 185,381 $ 5,717,885 $ 30,844 29,741 10.0% 2011 187,229 $ 6,1 14,237 $ 32,656 30,103 9.7% 2012 189,191 $ 6,318,657 $ 33,398 30,314 8.3% 2013 190,821 $ 6,544,583 $ 34,297 33,948 6.6% 2014 194,190 $ 6,771,329 $ 34,870 29,985 6.5% * Amounts reflect subsequent adjustments Source: County of Hawai`i, Department of Research and Development, Bureau of Economic Analysis, State of Hawaii Department of Labor, State of Hawaii DOE and University of Hawaii Hilo Unaudited - see accompanying independent auditors' report. - 141 - Employer State nf8owoi'i County ofBunoi'i United States Government Four Seasons Resort Hualalai Hilton Waikoloa Village KTA Super Stores The FairmonOmbkd,Buwui^i Walmart Mauna Lani Resort (Operations), Inc. Hapuna Beach Prince Hotel Mauna Lani Bay Hotel Mauna Kea Beach Hotel Total Total employee count COUNTY OF HAWAI'I Principal Employers, County of Hawaii June 30, 2015 and 2006 2015 Percentage ofTotal County Employees Rank Employment 8,300 ! 2,800 2 1,300 3 1,000 4 850 5 750 6 650 7 637 8 540 9 500 10 17,327 12.5% 4.2% 2.0% \jY6 1.3% \]Y6 \.0% 1.0% 0.8% 0.8% 26.2% 66,535 Source: County of Hawai i, Department of Research and Development Unaudited - see accompanying independent auditors report. 'l42' Table 12 2006 Percentage ofTotal County Employees Rank Employment 7,696 1 2,335 2 1,231 3 557 8 1,100 4 785 5 600 6 542 10 580 7 556 9 15,982 0.7% 0.8% 20.9% 76,200 COUNTY OF HAWAII Full -Time Equivalent County Government Employees by Function Last Ten Fiscal Years Table 13 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Function General government: County Council 9.00 9.00 9.00 9.00 9.00 9.00 9.00 9.00 9.00 9.00 County Clerk 54.50 54.00 68.00 55.48 56.08 53.00 54.00 52.50 46.40 53.16 Legislative Auditor - 5.00 5.00 5.00 4.75 3.75 5.00 5.00 Mayor 21.70 20,68 25.17 22.49 19.00 21.99 18.50 16.00 18.75 19.47 Corporation Counsel 39.00 39.98 33.00 30.00 32.00 29.00 29.00 27.00 28.00 25.00 Finance 91.00 94.49 102.89 128.44 123.89 121.89 123.35 131.37 134.98 134.49 Human Resources 24.50 27.46 28.98 28.96 27.98 25.49 25.48 24.00 24.49 25.49 Planning 35.00 36.00 47.00 48.00 49.00 49.49 48.00 50.00 51.00 50.00 Research & Development 13.20 14.48 15.00 15.00 14.00 14.00 12.00 12.00 11.49 14.49 Information Technology 17.00 17.00 17.00 16.00 15.48 16.00 16.00 16.00 22.00 19.00 Public Works Admin & Building 123.40 141.97 166.37 170.44 162.99 158.84 155.48 155.50 162.49 164.28 Public Safety: i-... L..) Police 536.20 535.23 572.51 553.37 558.32 565.99 541.25 548.98 567.23 564.50 Fire 340.20 363.71 424.07 412.05 411.53 414.08 391.28 418.57 429.57 436.57 Liquor Control 13.00 12.00 14.48 14.00 14.00 14.00 15.00 14.00 14.00 13.00 Civil Defense 6.00 5.00 5.00 7.00 7.00 7.00 7.00 7.00 7.00 7.00 Prosecuting Attorney 86.50 93.00 96.49 103.00 98.24 99.00 91.49 99.49 98.97 105.97 Highways and Streets: Mass Transit 6.00 5.00 7.00 6.00 7.00 7.00 7.00 8.00 11.00 11.00 Traffic and Highways 168.00 169.98 183.48 182.48 174,48 176.48 178.48 176.48 173.48 175.48 Sanitation: Administration 19.50 19.49 19.98 19.49 16.98 18.49 17.00 17.00 19.49 19.49 Sewer 38.00 32.97 37,49 41.47 44.98 47.49 47.49 46.00 44.49 47.49 Vehicle Disposal 1.00 3.00 3.00 2.00 2.00 2.00 2.00 4.00 1.00 2.00 Solid Waste 69.00 86.49 87.49 93.49 93.00 95.00 99.00 98.00 103.50 103.00 Health, Education and Welfare: Housing 39.50 43.97 46.95 44,95 47.44 47.48 43,48 41.00 43.00 46.00 Aging 12.50 13.00 12.00 12.00 11.00 12.00 13.00 11,00 12.00 9,00 Culture and Recreation 434.90 402.43 390.11 391.45 379.50 380.74 370.15 370.87 352.14 362.40 Total 2,198.60 2,240.33 2,412.46 2,411.56 2,379.89 2,390.45 2,319.18 2,357.51 2,390.47 2,422.28 Source: County of Hawaii, Department of Finance Unaudited - see accompanying independent auditorsreport. Table 14 COUNTY OF HAWAII Operating Indicators by Function Last Ten Fiscal Years 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Function Public Safety: Police: DUI arrests 1,163 1,354 1,397 1,395 1,452 1,468 1,403 1,176 1,351 1,035 Traffic citations issued 54,435 54,606 62,736 66,461 63,883 61,947 60,967 49,292 63,921 60,016 Fire: Fire responses 897 1,095 892 751 889 731 684 654 671 700 Emergency medical/rescue responses 14,945 15,502 16,098 15,099 15,308 15,726 16,361 16,454 15,968 18,750 Inspections - Occupancy/Fire Protective Equipment 2,131 1,958 1,858 1,479 1,579 3,021 2,050 1,463 1,687 1,262 Sanitation: Refuse disposed (tons per year) 222,945 223,144 210,199 172,431 154,914 166,455 152,949 153,581 166,890 179,033 Highways and Streets: In-house street resurfacing (miles) 15 33 26 27 23 18 20 20 17 6 ' Parks and Recreation: Pavilion permits issued 1,888 1,744 2,055 2,310 2,340 4,667 2,805 2,775 2,708 2,482 Camping permits issued 5,146 5,200 3,870 3,998 4,290 4,019 4,450 5,175 4,261 6,207 Rounds of golf 74,677 82,182 76,648 80,229 80,407 83,358 72,162 71,352 71,568 65,093 Zoo attendance 171,958 172,315 163,601 182,286 172,737 172,677 213,537 245,715 220,323 214,249 Transit: Bus passengers 711,608 727,677 821,359 908,651 1,060,057 1,149,042 1,315,222 1,269,550 920,280 944,738 Public Works: Building permits issued 5,883 5,165 4,507 3,929 3,234 3,039 3,258 4,754 4,797 5,494 Electrical permits issued 5,097 5,072 4,569 3,869 3,602 3,821 4,080 5,137 5,313 5,645 Plumbing permits issued 4,557 4,368 3,622 2,983 2,638 2,071 1,749 2,001 1,664 1,897 Sign permits issued 50 51 75 62 62 58 55 52 57 44 Source: County of Hawaii, Individual Departments Unaudited - see accompanying independent auditors' report ,—... .A Parks and Recreation: Parks 122 123 123 143 143 143 144 145 145 146 Gyms and recreation centers 38 38 38 61 61 61 62 62 62 62 Sanitation: Sanitary sewers (miles) 53 58 100* 100* 111* 111* 112* 112* 105* 105* 'GIS dzimb3se utilized beginning FY 2008 Table 15 COUNTY OF HAWAII Capital Assct Statistics by Functions Last Ten Fiscal Years 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Function Public Safety: Police: Stations 8 8 8 8 8 8 8 8 8 8 Substations 13 13 10 10 10 10 10 8 8 8 Fire stations 20 20 20 20 20 20 20 20 21 21 Highways and Streets: County streets (miles) 907 927 942 943 944 946 954 945 961 956 Streetlights 9,027 9,246 9,308 9,404 9,592 9,864 9,883 9,939 10,165 10,366 Source: County of Hawai`i, Department of Research and Development Unaudited - see accompanying independent auditorsreport