2015-COH - Comprehensive Annual Financial Report

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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