Comprehensive Annual Financial Report 2017

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Financial Highlights Total revenues decreased by $23.1 million from the prior year, which was due to capital grants and contributions decreasing by approximately $45.4 million, mostly in the area of highways and streets projects, being partially offset by a $20.5 million increase in property taxes. With a 5.0 percent decrease in revenues and an 18 percent increase in expenses, the County experienced a decrease in net position of $61.1 million, which represented a 265% decrease over the prior year's increase in net position. These results are prior to the impact of the prior year's cumulative effect of an accounting change related to the reporting of the County's net pension liability. The County's investment in capital assets increased by $68.0 million from the prior year, which represented a 5 percent increase. New and continued construction projects in the areas of highways and streets and culture and recreation accounted for the majority of the increase. 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, of which five have contracts that expire on June 30, 2019 and one will expire on June 30, 2021. One of the remaining bargaining unit received an interest arbitration decision in November 2017, however, the cost items associated with that decision are currently subject to the approval of all legislative bodies. The County anticipates this cost approval process will conclude in January 2018. The final bargaining unit's interest arbitration is proceeding and will occur in January 2018. 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, 2016. This was the twenty-nineth 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. - 6 -