HomeMy WebLinkAboutCOM 0882.001 2014-2016 , AMERICAN SAVINGS BANK TOWER
1001 BISHOP STREET,SUITE 1700
N&K CPAs, Inc. HONOLULU,HAWAII 96813-3696
ACCOUNTANTS CONSUL TANTS T(808) 524-2255 F (808) 523-2090
COUNTY CLERK
COUNTY OF HAWAII
To the Members of the County Council ,I, RECEIVED ,�-
County of Hawaii Date 1 5 G 11 b
We have audited the financial statements of the governmental activities, the business-type activities,
the discreetly presented component unit, each major fund, the aggregate remaining fund information,
and the budgetary comparison statement of the general fund, of the County of Hawaii, State of Hawaii
(County), as of and for the fiscal year ended June 30, 2015. Professional standards require that we
provide you with information about our responsibilities under generally accepted auditing standards,
Government Auditing Standards and OMB Circular A-133, as well as certain information related to the
planned scope and timing of our audit. We have communicated such information in our letter to you
dated June 29, 2015. Professional standards also require that we communicate to you the following
information related to our audit.
Significant Audit Findings
Qualitative Aspects of Accounting Practices
Management is responsible for the selection and use of appropriate accounting policies. The
significant accounting policies used by the County are described in Note 1 to the financial statements.
As described in Note 1 to the financial statements, the County changed accounting policies related to
the accounting and financial reporting for pensions by adopting 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
Statement No. 68, for the fiscal year ended June 30, 2015. Accordingly, the cumulative effect of the
accounting change as of the beginning of the fiscal year is reported in the Statement of Activities. We
noted no transactions entered into by the County during the year for which there is a lack of
authoritative guidance or consensus. All significant transactions have been recognized in the financial
statements in the proper period.
Accounting estimates are an integral part of the financial statements prepared by management and
are based on management's knowledge and experience about past and current events and
assumptions about future events. Certain accounting estimates are particularly sensitive because of
their significance to the financial statements and because of the possibility that future events affecting
them may differ significantly from those expected. The most sensitive estimates affecting the County's
financial statements were:
• Estimate of the useful lives of the County's capital assets used to compute depreciation expense
• Estimate of the liability for postretirement benefits other than pensions
• Estimate of the net pension liability
• Estimate of the loss reserves for workers' compensation
• Estimate of the landfill closure and postclosure cost liability
Management's estimate of the depreciation recorded on capital assets is based in part on the
estimated useful lives of those capital assets. We evaluated the key factors and assumptions used to
develop the estimated useful lives used to depreciate the County's capital assets in determining that it
is reasonable in relation to the financial statements taken as a whole.
Management's estimate of the liability for postretirement benefits other than pensions was determined
using an actuarial valuation study performed by a third-party specialist. We evaluated the key factors
Comm. No. OOoZa.
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N&K CPAs, Inc.
ACCOUNTANTS I CONSULTANTS
and assumptions used to compute the liability for postretirement benefits other than pensions in
determining that it is reasonable in relation to the financial statements taken as a whole.
The collective net pension liability, deferred inflows of resources, and deferred outflows of resources of
the cost-sharing multiple employer defined pension plan administered by the State of Hawaii's
Employee Retirement System was determined by an actuarial valuation. The County's proportionate
share of the collective net pension liability, deferred inflows of resources, deferred outflow of resources
was based on the County's contributions to the pension plan relative to the contributions of all
participating employers during the measurement period. We evaluated the key factors and
assumptions used to compute the County's proportionate share of the collective net pension liability,
deferred inflows of resources, deferred outflow of resources in determining that it is reasonable in
relation to the financial statements taken as a whole.
Management's estimate of the loss reserve for workers' compensation was determined by senior
adjusters and adjusted as necessary based on historical costs for similar incidents. We evaluated the
key factors and assumptions used to compute the loss reserve in determining that it is reasonable in
relation to the financial statements taken as a whole.
Management's estimate of the landfill closure and postclosure cost liability was determined by the
County's engineers based on analysis performed by a third party contractor. We evaluated the key
factors and assumptions used to develop the liability in determining that it is reasonable in relation to
the financial statements taken as a whole.
The financial statement disclosures are neutral, consistent, and clear.
Difficulties Encountered in Performing the Audit
We encountered no significant difficulties in dealing with management in performing and completing
our audit.
Corrected and Uncorrected Misstatements
Professional standards require us to accumulate all known and likely misstatements identified during
the audit, other than those that are trivial, and communicate them to the appropriate level of
management. Management has corrected all such misstatements. In addition, none of the
misstatements detected as a result of audit procedures and corrected by management were material,
either individually or in the aggregate, to each opinion unit's financial statements taken as a whole.
Disagreements with Management
For purposes of this letter, professional standards define a disagreement with management as a
financial accounting, reporting, or auditing matter, whether or not resolved to our satisfaction, that
could be significant to the financial statements or the auditors' report. We are pleased to report that no
such disagreements arose during the course of our audit.
Management Representations
We have requested certain representations from management that are included in the management
representation letter dated December 28, 2015.
Management Consultations with Other Independent Accountants
In some cases, management may decide to consult with other accountants about auditing and
accounting matters, similar to obtaining a "second opinion" on certain situations. If a consultation
involves application of an accounting principle to the County's financial statements or a determination
of the type of auditor's opinion that may be expressed on those statements, our professional standards
require the consulting accountant to check with us to determine that the consultant has all the relevant
facts. To our knowledge, there were no such consultations with other accountants.
N&K CPAs, Inc.
ACCOUNTANTS CONSLLIAN IS
Other Audit Findings or Issues
We generally discuss a variety of matters, including the application of accounting principles and
auditing standards, with management each year prior to retention as the County's auditors. However,
these discussions occurred in the normal course of our professional relationship and our responses
were not a condition to our retention.
Other Matters
We applied certain limited procedures to 1) management's discussion and analysis, 2) schedule of
funding progress for the EUTF Health Plan, 3)schedule of the County's proportionate share of the net
pension liability, and 4) schedule of the employer pension contributions, which are required
supplementary information (RSI) that supplements the basic financial statements. Our procedures
consisted of inquiries of management regarding the methods of preparing the information and
comparing the information for consistency with management's responses to our inquiries, the basic
financial statements, and other knowledge we obtained during our audit of the basic financial
statements. We did not audit the RSI and do not express an opinion or provide any assurance on the
RSI.
We were engaged to report on the schedule of expenditures of federal awards and the combining and
individual nonmajor fund financial statements and budgetary comparison schedules, which accompany
the financial statements but are not RSI. With respect to this supplementary information, we made
certain inquiries of management and evaluated the form, content, and methods of preparing the
information to determine that the information complies with accounting principles generally accepted in
the United States of America, the method of preparing it has not changed from the prior period, and
the information is appropriate and complete in relation to our audit of the financial statements. We
compared and reconciled the supplementary information to the underlying accounting records used to
prepare the financial statements or to the financial statements themselves.
We were not engaged to report on the introductory section and statistical section, which accompany
the financial statements but are not RSI. We did not audit or perform other procedures on this other
information and we do not express an opinion or provide any assurance on it.
Restriction on Use
This information is intended solely for the use of the County Council and management of the County of
Hawaii, and is not intended to be and should not be used by anyone other than these specified parties.
AO K C'VAr, 77V(e.
Honolulu, Hawaii
December 28, 2015
COMPREHENSIVE
ANNUAL FINANCIAL REPORT
Fiscal Year Ended June 30, 2015
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...OF
COUNTY OF HAWAII
Hilo, Hawaii
William P. Keno'
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 I
GFOA Certificate of Achievement
Organization Chart 8
List of Elected Officials 9
List of Principal Officials 10
FINANCIAL SECTION
Report of Independent Auditors I I
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 Information 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
a L
1
INTRODUCTORY SECTION
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William P. Kenoi "�° � r Deanna S. Sake
dfYor •• �_tz 1„ Director
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Deputy DIrec.for
County of Hawaii
Finance Department
25 Aupuni Street, Room 2103 • Nilo,I Iawail 96720
(805)961-524 • I-ax(8081 961-8569
December 28, 2015
The Honorable Mayor and Members of the Council
County of Hawaii
25 Aupuni Street
Hilo, Hawaii 96720
We transmit herewith the Comprehensive Annual Financial Report for the County of
Hawai`i, State of Hawaii (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 Hawaii 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.
Hawaii County is an equal opportunity provider and employer.
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•
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 I lawai`i, 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 Hawaii, 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
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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 arc 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.
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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 measures
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.
•
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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.
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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
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Government Finance Officers Association
Certificate of
Achievement
for Excellence
in Financial
Reporting
Presented to
County of Hawaii
Hawaii
For its Comprehensive Annual
Financial Report
for the Fiscal Year Ended
June 30, 2014
te
Executive Director/CEO
7
County of Hawaii
Organization Chart
County Electorate
County Council Mayor Prosecuting Attorney
County Legislative Office of Management:
Clerk Auditor Managing Director
Departments under Agencies under Departments under
direct supervision of the direct supervision of the commissions and
Managing Director: Managing Director: administrative supervision
of the Mayor:
Corporation Counsel Civil Defense Human Resources
Finance Office of Aging Police
Planning Mass Transit Liquor Control
Environmental Management Office of Housing& Fire
Research& Development Community Development Water Supply
Public Works (semi-autonomous)
Parks &Recreation
Information Technology
•
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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 Mama 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
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Principal Officials
June 30, 2015
County Clerk Stewart Maeda
Legislative Auditor Bonnie Nims
Managing Director Walter Lau
Deputy Managing Director Randy Kurohara
Corporation Counsel Molly Stebbins
Director of Finance Deanna S. Sako
Planning Director Duane Kanuha
Director of Personnel Sharon Kamahele-Toriano
Director of Research and Development Rebecca Inaba
Chief of Police Harry S. Kubojiri
Fire Chief Darren Rosario
Director of Public Works Warren Lee
Director of Environmental Management Bobby Jean Leithead-Todd
Parks and Recreation Director Clayton Honma
Manager-Chief Engineer, Department of Water Supply Quirino Antonio,Jr.
Civil Defense Administrator Darryl Oliveira
Director of Liquor Control Gerald Takase
Mass Transit Administrator Tiffany Kai
Executive on Aging Christian Alameda
Administrator, Office of Housing and
Community Development Susan Akiyama
Director of Information Technology Donald F. Jacobs, Jr.
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FINANCIAL SECTION
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ACCOUNTANTS I CONSULTANTS T(808) 524-2255 F (808) 523-2090
INDEPENDENT AUDITOR'S REPORT
To the Chair and Members of the County Council
County of Hawaii
Report on the Financial Statements
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 Hawaii, 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.
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N&K CPAs, Inc.
ACCOUNTANTS 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 respects,
the respective financial position of the governmental activities, the business-type activities, the
discretely presented component unit, each major fund, and the aggregate remaining fund
information of the County of Hawai'i, State of Hawaii, 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 generally accepted in the United States of America.
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 Statement No. 68 that establishes 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
managements 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 96), 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 operational, economic, or
historical context. We have applied certain limited procedures to the required supplementary
information in accordance with auditing standards generally accepted in the United States of
America, which consisted of inquiries of management about the methods of preparing the
information and comparing the information for consistency with managements responses to our
inquiries, the basic financial statements, 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.
- 12 _
N&K CPAs, Inc.
ACCOUNTANTS I CONSULTAN-s
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 Government 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.
K CVAs, -1—.MC.
Honolulu, Hawai'i
December 28, 2015
- 13 -
MANAGEMENT 'S DISCUSSION AND ANALYSIS
This section of the County of Hawa i'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. l Itis 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.
'Ihe 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.
Roth 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 (I) 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 fiord 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 die 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 arc used to account for resources held for the benefit of
parties outside the County. The private-purpose trusts and the agency fluids 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.
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
Assets:
Current and other assets $ 59,051.873 % 260,311277 $ 1,108.910 S 1,153.595 $ 260.160,813 $ 261.664.872
Capital assets.nut 1 090,847.071 1R52,246,842 1.540,209 1.577149 1.092.387.280 1.058823 991
'total assets 1.319.898.944 1312758.119 2,649,149 2.730.744 1.352.548093 1315,488,863
Deferred Outflows
Of Resources: 46.999,950 1283.292 _ — 46999,950 1283292
Total Assets and Deferred
Outflows of Resources 1,196 D8,894 1314.041411 2.649,149 2.730.744 099,518,043 1316.772155
Liabilities:
Long-term liabilities
outstanding 828,038,814 474.116332 1,111,394 1208300 829,150,208 475324.632
Other liabilities 41,428,479 32,625.472 68,724 59,845 41,497,203 32685.317
Total liabilities 869,467,293 506.741 801 1.180,118 1268,145 870,647,411 508,009,949
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 1268,145 925,897.100 508.807 221
Net position:
Net Investment in
capital assets 74/.753,727 734,889,023 428.815 368,849 749.183.542 735.257,872
Restricted 74,813,856 89,630.936 -- — 74,813.856 89,620,936
Unrestricted (351.386.671) (18007,624) 1,040.216 1,093,750 1350,346,455) (16.913,274)
Total net position S 472,181,912 $ 806,502,335 $1,469 031 $ 1,462,599 5473,650,943 $807964,934
6
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.
'Hie 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
(:oxrrn rental Activities Business-type Activities Total
2015 2014 2015 2014 2015 2014
Revenues: -
Program revenues'.
Charges 6r services $ 44,731966 $ 40900,135 S 453,304 5 468,018 $ 45,185,270 $ 41,368.153
Operating grants and contributions 47,406,704 42,957,370 113,642 127,119 47.520346 43,084,489
Capital grants and contributions 29,621,907 02370.497 - - 29,621907 62370/97
Genera]revenues:
Property taxes 237.217,225 221]60,681 - - 237,217,225 221260,681
Other taxes 22842.905 28,546,783 - - 28,842905 28546783
Grants and contributions,unrestricted 19,506,123 17,705.917 - - 19,506,423 17,705.917
Investment earnings 671.363 S15,606 1.299 1,739 672.662 817,315
Other 8.364.894 5,574,147 - - 8361894 c574,147
Total revenues 416,363,387 420,131.136 568.245 596,876 416.931,632 420,7283012
Expenses:
General government 69,859.089 59.448,042 - - 69.859,089 59,44N 1)42
Public safety 175,104.223 163,889,113 - - 175,104,223 163289,113
Highways and streets 45989238 38.670145 - 45989,038 32670,145
Health.education and welfare 34.304.166 28343,056 561,813 494,722 34.865,979 28,837,778
Culture and recreation 32225.574 25.590,117 - - 32,225,574 25,590,117
Sanitation 41467081 48,721810 - - 41467,081 48.721,810
Interest on long-tam debt 12,362,411 12,911,436 ( - 12,362,411 12,91 436
Total expenses 411,311,582 377,573,719 561,813 494,722 411,873,395 378.068,441
Increase in net position 5,051805 42.557.417 6,432 102,154 5.058237 42,659571
Net position at beginning of year 806,502.335 763,944918 1,462.599 1,360,445 807,964934 765301363
Cumulative ellen of accounting change (339372,228) - - - (339,372,228) -
Net position at beginning of year.
as adjusted 467,130.107 763,944,918 1,462,599 1.360,445 46tl 5992,706 765,305,363
Net position at end of year $4721 81.912 S 806.502.335 S 1,469.031 $ 1462,599 $473650,943 $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 (I 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 SI 1,2
- 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(I I 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(II percent)and charges for services(I1 percent).
Expenses and Program Revenues—Governmental Activities
Year Ended June 30,2015
520000a000
$160000AC0
$160,000,000 r _-. -- r,=:.. ve ue,
$140,000,000
5120,000,000
5100,000,000
$so,0N,000
S60:000,000
540.000,000 - — -
520020000 -- All
--- -- — '"
ex5 aS Se
57
\xo'` a'O\ 8y a` 9° s` c``
9°
Ca' foo
- 19 -
Revenue by Source—Governmental Activities
Year Ended June 30,2015
Other, $8,364.894
Invest ages for services.
Grants and contributions$671` - ,in Es, [r363 544,731,966
not restricted to specific Oat"i
programs, $19506,423
•
•
•
Other taxes. 525,842.905 Operating grants and
*y-
c$47$474 ut Dos,
,406,700
xke"i Capital grants and
contributions,
529,621,907
pmpertY taxes,
$237,217,225
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(I) $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).
- 2p -
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 S1.6 million in the prior year. Key factors in this decrease
(S5.0 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. $11.3 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).
ProprietaryJunds. 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 I lousing Project(Kulaimano) at the end of the
year amounted to $674,507, and $365,709 for the Ouli Ekahi Affordable I lousing 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 die 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.
• 54.7 million of the unspent appropriations is related to salaries and wages. 'lite 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 lune 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 un i Ilion 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 I 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 coming 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.
2
• 59.1 million of dedicated roads were received by the County in the current fiscal year.
• $12 million of various other equipment and real property were dedicated and donated to the
County in the current fiscal year.
Capital Assets
(net of depreciation)
June 30, 2015 and 2014
Primary Government
Governmental Activities Business- pe Activities Total
20152014 2015 2011 2015 2014
Land and improvements 5201,363,687 S 189366.207 $ 753,877 $ 753.877 S 202,117,564 $19E120984
Infrastructure assets 278.990.393 274.721,099 - - 278,99l},393 274.721,099
Ground and site improvements - - 66.585 70,934 66,585 70,934
Buildings and improvements 495445.600 195293,093 682,586 718,631 496,128.186 499.011724
Easements 3,830.410 3,803,176 - - 3,83(1,410 3,803.176
Equipment 50,250220 48353,349 37,161 33,707 50.287381 48387.056
Conlin:Uion work in progress 60.966,761 37709,918 - - 60966,761 37,709918
Total $1,090.847071 51,05 246,842 51,540.209 $1.577,149 $1,092.387,280 5053,823991
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 521.6 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 bused 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 I Iawaiian 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 cast 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 Milo, 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.
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 Hawaii, 25 Aupuni Street, Suite 2103, Hilo, Hawaii 96720.
24
BASIC FINANCIAL STATEMENTS
- 25 -
COUNTY OF IIAAV All
Statement of Net Position
June 30,2015
Primary Government
Governmental Business-type Component
Activities Activities I'otal Unit
Assets
Current assets.
Cash and cash equivalents(notes 3 and 14) $ 46.406.676 S 614,371 S 47.021.047 S 34,752.680
Restricted cash and cash equivalents(note 3) 55.986.559 40,668 56.027.227 -
Investments(note 3) 13.503.423 200,018 13.703.141 -
Restricted investments(note 3) 27.735,840 - 27.735.840 -
Receivables,net(note 4) 61,967,356 3,936 61.971,292 8.739-048
Receivable from improvement district
(notes 4 and 10) 91,329 - 91,329
-
Internal balances(note 5) 1,350 (1,350) - -
Inventories 3.573_745 - 3,573,745 1343,868
Prepaid expenses - 1,534 1,534 165.761
Real estate held for sale 4.715-266 - 4,715.266
-
Other 861,996 - _ 861.996 -
1 otal current assets 214,843,540 859,177 215.702,717 45.001.357
Inves0nents(note 3) 22039,736 200.242 22,239.978 -
Restricted investments(note 3) 19.875,989 - 19,875,989 -
Restricted cash and cash equivalents(note 3 and 14) - 49.521 49.521 1,544,208
Receivable from improvement district,excluding
current portion(notes 4 and 10) 2.392608 - 2.293,608
-
Capital assets(notes 6,8 and 14):
Utility plant in service,net - - - 257,828.011
Infrastructure assets, net 278,990,393 - 278,990,393 -
Ground and site improvements,net - 66.585 66-585 -
Buildings and improvements,net 495.445.600 682,586 496,128.186 -
Equipment,net 50.250-220 37.161 50,287.381 -
Easements,net 3,830,410 - 3.830,4to -
Preliminary survey and investigation charges - - - 4,428 754
Construction work in progress 60,966,761 - 60,966.761 12,185 812
Land and improvements 201,363,687 753.877 202,117.564 4,706,302
Total capital assets,net 1.090.847,071 1,540,209 1,092.387,280 272148.879
Total noncurrent assets 1,135,055,404 1.789.972 1,136,845,376 280,693,087
Total assets 1,349,898,944 2,649,149 1.352.548,093 325,694,444
Deferred Outflows of Resources
Deferred loss on refunding 4.041.719 - 1,041,719 -
Deferred outflow related to pensions(notes 13 and 14) 45,958,231 45,958,231 _ 5,579,208
Total deferred outflows of resources 46.999,950 - 46,999,950 5,579,208
Total Assets and Deferred Outflows of Resources 1.396,898,894 2,649,149 1.399.548,043 331,273,652
(Continued)
a
6
(MINTY OF I JAW All
Statement of Net Position
June 30.2015
(Concluded)
Primary Government
Governmental Business-type Component
Activities Activities Total Unit
Liabilities
Current liabilities:
Accounts payable and accrued liabilities S 19,807740 $ 54.406 $ 19.858,146 $ 2,718085
Accrued payroll 9,034,023 - 9,034,023 1,174,172
Advance collections- intergovernmental 3,483,178 1.121 3,484,299 -
Interest due on long-term debt 5,412.443 13.197 5,425,640 922,633
Ponds and loans payable,current portion net
(notes 10 and 14) 57,524.988 85,357 57,610,345 3,43tl 282
Compensated absences,current portion(note 10) 8,861.648 - 8.861,648 507,958
Claims and judgments,current portion
(notes 10, 12 and 14) 2,534,968 - 2,534,968 62.636
Capital leases,current portion(notes 8 and 10) 1,101.673 - 1,101,67 -
Landfill costs payable. current portion
(notes 9 and 10) 231.199 - 231,199 -
Customers'deposits - - . 607,136
Other 3.695,095 _ - 3,695,095 -
Total current liabilities 111.682.955 04.081 111.837.036 9,428,902
Noncurrent liabilities:
Bonds and loans payable,net
(notes 10 and 14) 296,984,476 1,026,037 298.010.513 46,056,284
Compensated absences(note 10) 26.763,627 - 26,763,627 1,079412
Claims and judgments(notes 10, 12 and 14) 10,751.939 - 10,751,939 217,364
Capital leases(notes 8 and 10) 1.880,036 - 4880:036
-
Landfill costs payable(notes 9 and 10) 22,432,801 - 22 432,801 -
Unearned revenue, noncurrent - - - 1,583,953
Customers'deposits - - - 16,201,017
Net pension liability(notes 13 and 14) 322626,262 - 322,626,262 20.526.993
Other(note 13) 76,345,197 - 76,345,197 -
Total noncurrent liabilities 757,784.338 1,026,037 758,810.375 85,665,023
Total liabilities 869.467,293 1,180,118 870.647.411 95,093,925
Deterred Inflows of Resources
Deferred inflows related t0 pensions(notes 13 and 14) 54,470,799 - 54.470,799 2,382.270
Deferred inflows-other 778,890 - 778.890 -
Total Deferred Inflows or Resources 55.249.689 -
55,249,689 2382,270
Total Liabilities and Deferred
Inflows of Resources 924.716.982 1.180.118 925.897400 97,476,195
Net Position
Net investment in capital assets 748,754,727 428,815 749,183_542 231,198,521
Restricted for
Capital projects 32,170.999 - 32,170,999
-
Debt service(note 10) 24,016,116 - 24,016,116 -
Ilighways, streets and abandoned vehicles 13.084.350 - 13 (184,350 -
Publicaccessopenspace 4,551,871 - 4,554,871
-
Other 987.520 - 987,520
-
Unrestricted (351,386,6711 1,040,216 (350.346,455) 2.598.936
Total net position $ 472.181.912 S 1,469,031 $473,650,943 $233.797,457
Sec accompanying notes to the basic financial statements.
-27 -
COUNTY OF HAWAII
Statement of Activities
For the Fiscal Year Ended June 30.2015
Program Res enua
Operating Capital
Charges for Grants and Grants and
Eunction s/P rovram s RNepses Services Contributions Contributions
Primary government:
Governmental activities:
General government S 69.859,089 $ 2246.106 $ 4,837 949 $ 7,139,596
Public safety 171104223 5.926.316 20.534,172 4,685
Highways and streets 45.989.038 16.043,045 1,941,583 21,396,590
Health,education and welfare 34,304,166 548,781 19,083,656 -
Culture and recreation 32.225.574 2,150,900 293,265 992,237
Sanitation 41.467,081 17.816,818 716,079 88,799
Interest on long-term debt 12,362.411 - -
Total governmental activities 411.311.582 44731,966 47,406,704 29.621907
Business-type activities:
Health,education and welfare 561,813 453,304 113.642
Total primary government $ 411,873,395 $ 45,185,270 $ 47.520.346 $ 29,621,907
Component unit:
Water(note 14) $ 54.324,151 $ 49,302,017 S - S 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
Fatal general revenues
Change in net position
Net position,beginning of year,as previously stated
Cumulative effect of accounting change
Net position,beginning of year,as adjusted
Net position,end of year
See accump:vrying notes to the basic financial statements.
8
Nel(Expense)Revenue and Changes in Net Inc' ition
Primary Government
Governmental Ilusiness-t pc Component
Activities Activities Total Unit
S (55,635.438) S - S(55.63555438) S -
(148.639,050) - (I48,639,0501 -
(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) _-
(289.551005) - (289,551005) -
5,133 5.133 -
(289.551005) 5,133 (289,545,872)
- - - 8,942.505
237.217,225 - 237,217225 -
10,385 654 - 10,385,654 -
10,824278 - 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 1299 294,604109 223,681
5.051.805 6,432 5,058_37 9,166,186
806,502.335 1,462,599 807364934 2-11.072,995
(339.372,228) - (339,372.228) (16.441,724)
467,130.107 1,462,599 468,592,706 224,631.271
$ 472,181,912 S 1469,031 5473.650.943 S 233,797,457
-29-
COONN IY OF HAWAII
Governmental Funds
Balance Sheet
lune 3(1,2015
Other local
Capital Governmental Goverm uontal
General Projects Funds Funds
Assets
Cash and cash equivalents(note 3) S 5.212.287 $47,442.286 $ 49.738.662 $102,393.235
Investments(note 3) 39,981753 24211.829 18,961,406 83.154.988
Receivables,net(note 4) 21,615836 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
Reeeivable_..from other governments(note 1) 23.169,628 10.909,093 1,649.809 31.728,530
Inventories 3.573,745 - - 3573.715
Real estate held for sale - 5277,340 496,197 5,773,537
Other 152,598 - 709,398 861,996
Total assets S 94.467 441 $ 912X563 $il4440914 5260 9j$
Liabilities, Deferred Inflows and Fund Balances
Liabilities:
Accounts payable S 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 5417.276 73,426347
Deferred Inflows of Resources:
Unavailable revenue 22.394.726 1225.600 2.538 672 26.158,998
Fund balances:
Nanspendable. Inventory 3.573,745 - - 3,573,745
Restricted for:
Debt service(note 10) - - 21.016,116 24.016,116
highways,streets and abandoned vehicles - 41.788.028 13.084,350 54,872,378
Public access open space 4,554,871 - - 4.554871
Other - 2.356,144 987.520 1343,664
Committed to:
Budget stabilization 5657,294 - - 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
Ilighways,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 (14958.045) - (13.793,897)
Total fund balances 52,151,392 41914815 66484.966 160,551,173
Total liabilities and fund balances $.,21i $ 91.278 561 S_74.44091k 5260 146yj$
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 30.20]5
Total fund balances-governmental funds S 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 20],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
Deterred amounts on refunding and pension arc reported as deferred
outflows of resources in the government-wide financial statements but are not
are not reported in the goecrnmental fund statements 46,999,950
Some of the County's revenues will he collected atter year-end but are
not available soon enough to pay for the current periods 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 (1058.271)
sales transactions that are considered deferred(unearned)in the funds.
Some Iiabdities are not due and payable in the current period and
therefore are not repelled 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(OPER) (65,755,197)
Net pension obligation 1322,626,262)
Total long-term liabilities (796.067,320)
Deferred amounts related to pension arc reported as deferred
inflows of resources in the government-wide financial statements but are not
are not reported in the governmental fund statements (54,470,799)
Net position of governmental activities $ 472.181.912
Sec accompanying notes to the basic financial statements.
-31 -
COM TV 01'HAWAII
Governmental Funds
Statement of Revenues. Expenditures. and Changes in Fund Balances
For the Fiscal Year Ended lune 30,2015
Other Total
Capital Governmental Governmental
General Projects Funds Funds
Revenues
Property taxes 5236,189,824 $ - $ - .8'236.189.821
Public service company taxes 10,385,654 - - 10,385,654
Fuel taxes - - 7,632,973 7.632.973
Public utility franchise taxes - - 10.824.278 10,824278
Licenses and permits 8514.920 - 13.531,279 22,046.199
Intergovernmental 50,267.365 16.633.134 19371,596 86,272,095
Charges for services 4,134372 - 16.222,978 20.357.350
Investment earnings(losses) 768.833 (56.886) 3,525 715,472
Other 2,004,111 6.240,975 1,523,921 9,769,007
Total revenues 312.265 079 22.817,223 69,110,550 404,192852
Expenditures
Current:
General government 39,992,577 - 812.820 40,805,397
Public safety 115,092.872 - 7.725,576 122.818,448
Highways and streets 3.589,211 - 17.395,123 20.984.334
Health,education and welfare 7,245.249 - 17.291,349 24,539,598
Culture and recreation 19,104,426 - 951,438 20.055,864
Sanitation 958,069 - 30,506,206 31,464,275
Pension and retirement
contributions(note 13) 33,765.096 - 4,719,999 38.485,095
Employees'health insurance 25,555364 - 2,175.364 27.731,128
Other postemplo)rnent benefits 4,532,000 - 4,532,000
Other 3,592034 - 1.094,016 4,686,050
Debt service:
Principal 697,304 - 21306,184 22,003,488
Interest 51.524 135,704 13.684,269 13,871,497
Capital outlay 6,819,764 72,547,849 _ 79,397,613
Total expenditures 261.025,890 72.683,553 117.665.344 451,374,787
Excess(deficiency)of revenues
over(under)expenditures 51,239,189 (49,866.330) (48.554,794) (47,181.935)
(Continued)
COUNTY OF HAWAII
Governmental Funds
Staminent of Pee enues.Expendit Ores,and Changes in Fund Balances
For the Fiscal Year Ended lune 30,2015
(Concluded)
Other Total
Capital Governmental Governmental
General Projects Funds Funds
Other Financing Sources(Uses)
Sale of assets $ 24,513 $ - S - $ 24.513
Increase in capital leases(notes 8 and 10) 1,741.909 - 229,165 1,971 074
State Revolving Fund loans(note 10) - - - -
Issuanceofbonds(note 10) - - - -
Premium on bonds(note 10) - -Refunding bonds(note 10) - - - -
Payment to refunded bond escrow
agent(note 10) - - - -
Retircmentofrefundeddebt(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) (59394,060)
Total other financing sources(uses) (54,413,638) 3.305,99133.103.3=34 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 S 52,151,392 $41,914.815 $66484,966 $160,551,173
See accompanyme notes to the basic financial statements
-33 -
( OL N FY 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 S (45,186,3481
Amounts reported for governmental activities in the statement of activities are
different because:
Capital outlays are reported us expenditures in governmental funds.
Ilowever. in the statement of activities,the cost of capital assets is
allocated over their estimated useful lives as depreciation espesc. In
the current period,these amounts are:
Capital outlay 66,476,678
Dedicated and contributed property 10,255,218
Depreciation expense and loss on disposals (38,131,669)
Excess of capital outlay over depreciation expense 38.600327
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:
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 19,329.457
State Revolving Fund loan repayments 1376,425
Capital lease payments 1297.606
Total long-term debt repayment 22.003.488
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. 322,963
(Continued)
;4
COUNTY OF HAWAII
Reconciliation of the Change in Fund Balances of Governmental Funds
to the Statement of Activities
Pur the Fiscal Year Ended lune 30.2015
(Concluded)
Decrease in real estate held for sale due to recognition of additional
sales transactions that are considered deferred(unearned)in the fonds. (1.058.271)
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 PostemplomentBenefit Obligation(OPE13) (14,206,601)
Increase in compensated absences (1,639,831)
Decrease in claims and judgments 436,986
Decrease in landfill closure/postclosurc care costs 49,000
Increase in pollution remediation costs (1.820,000)
Amortization of premium from bond issuance 1.505,152
Amortization of deferred loss 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 (7,659.180)
Change in net position of governmental activities $ 5-051,805
See accompanying notes to the basic financial statements.
•
-35-
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
Actual Variance
Original Final (Budgetary Positive
Budget Budget Basis) (Negative)
Revenues:
Taxes and assessments:
Property taxes 5234,100-000 $ 234,212500 $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 244,440,000 214.552500 246,575,478 2,022.978
Licenses and permits:
Nonhusiness licenses and permits 3.673,300 3,673,300 3,804,823 131,523
Business licenses 1,947,044 1947,044 1,821,162 (125,882)
Street use 2,734.000 2,734,000 2,888,935 154,935
'fatal 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 _(L090,832)
Total federal 7,676,508 14,695,356 11.505,76.9 (3,189,587)
State:
State General Fund-Act 185,
SLH 1990 19,158,000 19,158,000 19,158,000 -
Emcrgcncymedicalservices 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 50,662586 (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 1212,,000 1,212,000 1.303.526 91.526
Public safety 111.368 111,368 122,870 11,502
Total charges fur services 8.393.002 8,393,002 7,498,722 (894,280)
Fines and forfeitures 1399,500 1,599.500 834,823 (764,677)
Rents 177,860 177,860 213.169 35.309
(Continued)
6_
COUNTY OF HAWAII
General Fund
Statement of Revenues, l pend itures, 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(continued):
Interest and penalties S 400.000 S 400.000 $ 586,564 S 186.564
Miscellaneous 4.990,342 5,331_95 4,983,674 (347,621)
Total revenues 314.221.785 322,808,066 319,869,936 (2,938,1301
Expenditures:
Current:
General government:
Finance 11,650,878 11.883,658 9,856,956 1026,702
General government building 4,929,426 4,876,426 4-532.249 344,177
Leeislatiue 4345,753 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 2463,945 190,428
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
I Iuman resources 1.915 916 1,915.916 1.802624 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 48409.537 42,982,209 5,427_328
Public safety:
Police department 57812093 58,292,834 54,437,630 3,855,204
Fire department 39,069.008 44,014,577 42.952222 1062,355
Prosecuting attorney 9,226,706 9.491,282 7.737.085 1754,197
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 330,000 330,000 214,855 115.115
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 113,929,279 120,093,448 112,345.700 7,247.748
I Iighways and streets:
Mass transit 4.395.978 4422,788 2,996,715 1,426.073
(Continued)
-37-
COUNTY OF I IA W All
General Fund
Statement of Revenues,Expenditures,and Changes in Fund Balance-
Budget and Actual(Budgetary Basis)
For the Fiscal Year Ended lune 30.2015
Actual Variance
Original Final (liudgetary Positive
Budget Budget Basis) INReaiveJ
Expenditures(continued):
Current(continued):
Health,education and welfare:
Elderly activities $ 3,846,470 $ 3,84047(1 $ 3284,086 S 562.384
Office of aging 2566.353 2,587,353 1.830,690 756,663
Education 58,500 58,500 55,198 3,302
Social programs 1,500,000 1,500,000 1,484,950 15.050
Cemeteries 374,313 387.413 376,733 10,680
Physical examination 133,825 133.825 133.825 -
Total health,education and welfare 8.479,461 _ 8.513,561 7,165.482 1,348.079
Culture and recreation:
Community music 256,142 216.387 205.618 10.769
Organised recreation:
Maintenance 8.946,489 9,218,809 9,089.900 128,909
Recreation 2,945,518 3,004,988 2,639,134 365.854
Aquatics 2.465,732 2,465,732 2,245,793 219.939
Hoalulu park complex 1,053,717 1,003,717 980,612 23.105
Administration 2,261,826 2,601,136 2.335,916 265,220
Children's zoo 742.856 755,456 709,553 45.903
Summer/Intersession 542,185 542,185 377.149 165.036
Culture and arts 289.570 298.570 266,584 31.986 •
Elderly activities administration 573.337 585,737 523.977 61.760
Total culture and recreation 20.077,3.72 20,692,717 19,374,236 1,318,181
Sanitation:
Environmental management 1,043,062 1,043,062 954,445 88,617
Pension and retirement contributions 34,082,132 34.082.132 31.855.618 2226.514
Employees'health insurance 28,200.000 28.200.000 25,515.817 2.684,183
Other postemployment benefits 6,090,000 6.090.000 4,532,000 1,558,000
Other 9,560,000 5.040,096 2,089.578 2.950,518 '
Total current 273,889329 276,587,341 250,311,800 26,275,541
(Continued)
8_ ..
COUNTY OF HAWAII
General Fund
Statement of Revenues.I spendi tures,and Changes in Fund Balance-
Budget and Actual(Budgetary Basis)
For the Fiscal Year Ended lune 30.2015
(Concluded)
Actual Variance
Original Final (Budgetary Positive
Budget Budget Basis) (NeCL. tive)
Expenditures(continued):
Capital Outlay
Community Development Block
grants HUD) $ - $ 2,681,197 $ 2,621,813 $ 59,384
II0ME Program - 2,922,000 2,897,000 25,000
•
Total capital outlay - 5,603,197 5,518,813 84,384
Total expenditures 273,889,329 282,190538 255,830,613 26.359925
Excess of revenues over expenditures 40,332,456 40,617.528 64,039,323 23,421,795
Other financing sources(uses):
Transfers out:
!lousing Fund (1.553,091) (1,558,091) (1,558,091) -
Solid Waste Fund (17,979,621) (18,025.791) (18,025,791 -
SeAerFund (1,722,936) (1.728.936) (1.728,936) -
GolfCourseFund (348264) (367.675) (367,675) -
Capital Project Fund -- (91,991) (91,991) -
Ilighaay Fund — (4.000) (4,000) -
Disaster/Emergency Fund (250,000) (250,000) (250,000) -
Public Access.Open Space,and Natural
Resources Preservation Fund (4,682,000) (4.782.00) (4.723.981) 58,019
Public Access.Open Space,and Natural
Resources Preservation Maintenance Fund (585.250) (597.750) (590,498( 7,252
Budget Stabilization Fund (250,000) (250,000) (250.000) -
Debt Service Fund _ (38,630,206) (38.630,206) (38.406,617) 223,589
Total transfers out (66.001.368) (66.286,440) (65,997,580) 288.860
Total other financing uses (66-001368) (66286,140) (65,997,580) 288860
Excess(deficiency)of revenues and other
sources over(under)expenditures and other uses (25.668,912) (25,668,912) (1,958,257) 23,710.655
Fund balance at beginning of year 55,547,059 55,547,059 55,547.059 -
Fund balance at end of year $ 29.878.147 $ 29,878,147 $ 53,588,802 $23,710,655
See accompanying notes to the basic financial statemutts_
-39-
COUNTY OF HAWAII
Proprietary Funds
Statement of Net Position
June 30.2015
Business-type Activitics-
Enterprisc Funds
Kulalmano Ouli Ekahi
Elderly Affordable
Housing !lousing
Project Project Total
Assets
Current assets:
Cash and cash equivalents(note 3) S 301,497 S 312,724 S 614,221
Restricted cash and cash equivalents(note 3) 12,042 28,626 40,668
Investments(note 3) 200,018 - 200,018
Impress 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
Las accumulated depreciation (1,168,371) (41,748) (1,210,119)
Total capital assets 585,151 955,058 1,540,209
Total noncurrent assets 785,393 1,004,579 1.789,972
Total assets 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 1026,037
Total liabilities 801,901 379,567 _ 1.181.468
Net Position
Net investment in capital assets (175,700) 604,515 428,815
Unrestricted 674,507 365,709 1,040 216
Total net position $ 498,807 S 970,224 $ 1,469,031
See accompanying notes to the basic financial statements_
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
[Hedy Affordable
(lousing [lousing
Project Project Total
Operating revenues.
Rental receipts from tenants S 110,861 S 333,851 $ 444.712
Rental subsidy from federal government-MUD 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 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 $ 970,224 $ 1,469.031
See aceumpan)ing notes to the basic financial statements.
41 -
COUNTY OF HAWAII
P ropri eta ry Funds
Statement of Cash Flows
For the Fiscal Year Ended June 30.2015
Business-type Activities-
Enterprise Funds
Kulaimano Ouli Ckahi
Elderly Affordable
I lousing 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 (p8.792) 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) 590.399 _ 357,095 947,494
Cash and cash equivalents at end of year(including
restricted cash and cash equivalents) $ 313.589 $ 390,971 $ 704,560
Reconciliation of Operating Income to Net Cash
Provided by Operating Activities
Operating income(loss) S (17.599) $ 64_287 $ 46,688
Adjustments to reconcile operating income to net cash
provided by operating activities:
Depreciation expense 35.468 16,820 52,288
Change in assets and liabilities:
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 S 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) S 1.129,445 $ 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 4.567.363 $ 4269,567
Liabilities
Due to other agency funds - 3,507
Accrued liabilities - 3.1)88.773
Advances payable - 230,908
Assets held for the benefit of improvement districts - 946.379
Total liabilities - $ 4.269567
Net Position
leld in trust for other parties 4,567.363
Total net position $ 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
Private-
Purpose
Trusts
Additions
Contributions.
Puna Geothermal Venture $ 50,000
Investment earnings:
Net increase in fair'aloe of investments 20,253
Dividends and interest 58 228
Total additions 128.481
Deductions
Claims Consultant 104.135
Grant payments 81,210
Total deductions 185,345
Change in net position (56,864)
Net position.beginning of year 4,624.227
Net position.end of year $ 4.567,363
See accompanying notes to the basic financial statements.
-4a-
COUNTY OF HAAUAI`I
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 Hawaii (the State)assumes full responsibility
for several major functions usually performed by local governments, including education,
welfare,health and judicial functions. There are no separate city, county or township
governments nor any school districts,special districts, authorities or public corporations with
overlapping authority.
GASB Statement No. 14, 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 HAWAI`t
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
Departments 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 fur 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 Kekmanao`a Street, Suite 20, Hilo,
Hawaii 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 long-term assets and receivables as well as long-term debt and obligations.
The government-wide statement of activities reflects both the gross and net costs per
functional category(general government, public safety, highways and streets, etc.)which are
otherwise being supported by general government revenues(property taxes, certain
intergovernmental revenues, etc.). The statement of activities reduces gross expenses
(including depreciation) by related program revenues,operating and capital grants. The
program revenues must be directly associated with the function (general government, public
safety, highways and streets, etc.)or a business-type activity. The operating grants include
operating-specific and discretionary(either operating or capital) grants while the capital grants
column reflects capital-specific grants. The net cost(by function or business-type activity) is
normally covered by general revenues.
- 46 -
COUNTY OF HAWAII
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)arc 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(e) 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 Flilo.
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 l-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 I IAWAI`I
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-term 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 EASE (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 HAWAII
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 I 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.
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COUNTY OF HA WAN
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 loss 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 long-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
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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 Hawaii 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.
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COUNTY OF HAWAI`I
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
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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—arc 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 tins 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 Postemploymeni
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
Postemploymeni Benefits Other Than Pensions. The primary objective of tins 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 State 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 S 467 110 107 $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:
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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 Fund, Golf Course
Fund, Geothermal Relocation and Community Benefits Fund, Beautification Fund,
Hawaii County Housing Agency Fund and Park Dedication Fund.
• Appropriations for the operating budget lapse at the end of the fiscal year to the extent
that they have not been expended or encumbered. Appropriations for capital
expenditures that are not encumbered lapse at the end of two fiscal years following the
fiscal year that the appropriation was made.
• Formal budgetary integration is employed as a management control device during the
year for the General Fund, special revenue funds, and Capital Projects Fund. Formal
budgetary integration is not employed for debt service funds because effective budgetary
control is alternatively achieved through general obligation bond indenture provisions.
• The accompanying statement of revenues, expenditures and changes in fund balances—
budget and actual (budgetary basis)for the General Fund presents a comparison of the
legally adopted budget with actual data on a budgetary basis. Accounting principles
applied for purposes of developing data on a budgetary basis differ significantly from
those used to present financial statements in conformity with GAAP. On the budgetary
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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 $a588,802
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 Hawaii 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
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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 fiords available for deposit maybe
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:
Maturity(in years)
Fair Value Less than 1 1 —5
Investments—Primary Government:
Certificates of deposit $ 45,250,154 $ 40,438,361 $ 4,811,793
Government sponsored securities 38,305,094 1 000 920 37.304 174
$ 848 _$41433,2$1 $42,115.261
Investments—Private-Purpose Trusts:
Government sponsored securities $11,562441 $
Equity securities $ 1 274,8911
Investments—Agency Funds:
Government sponsored securities $ 170 Q544 $ _ _ = $ 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
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COUNTY OF HAWAI`I
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 my 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%; FIN Financial, 16.0%;
Multi Bank Securities,23.1%; Stifel Nicolaus, 13.3%; First Hawaiian Bank, 11.8%; Raymond
James, 7.1%; Hawaii 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 arc 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 arc restricted to
debt service related payments and amounted to $24,308,046.
Cash in the I tighway 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.
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COUNTY OF HAWAII
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 Hawaii I lousing Finance and Development Corporation,
who arc 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:
Capital Other
General Projects Governmental
Fund Fund Funds Total
Real property taxes $24,020,244 $ -- $ -- $24,020,244
Accounts receivable:
Sewer -- -- 2,197,387 2,197,387
Solid waste — -- 1,558,353 1,558,353
Capital projects -- 2,122,265 -- 2,122,265
Intergovernmental 23,169,628 10,909,093 1,649,809 35328,530
Gross receivables 47,189,872 13,031,358 5,405,549 65,626,779
Less: allowance for
uncollectibles (2,404,408) -- (1,255.015) (3,659,423)
Net total receivables $44785464S.L3n3L358 $4.150.534 $61967,356
During fiscal year 2005, the County issued 53,887,493 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
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COUNTY OF IIAW.AI'I
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 Payable Fund Amount
General fund Capital projects fund $ 359,562
Other governmental funds 402,032
761,594
Capital projects fund General fund 1,122,277
Other governmental funds 143,473
1,265,750
Other governmental funds General fund 377,959
Capital projects fund 2,904
Other governmental funds 2,504
383 367
Total MZ1,
Other governmental funds Enterprise funds $1,354
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 out:
Other
General Governmental
Fund Funds Total
Transfers in:
Capital Projects Fund $ 91,991 $3,214,000 $ 3,305,991
Other governmental funds 56,088,069 -- 56,088,069
$56 I RO 060 $$ .2 $59,39,4,06_0
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.
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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 Balance
July 1, Retirements/ June 30,
2014 Additions Transfers 2015
Governmental activities:
Capital assets not being depreciated:
Land and
improvements $ 189,366,207 $ 11,997,480 $ -- $ 201,363,687
Easements 3,803,176 27,234 -- 3,830,410
Construction work in
progress 37,709,918 51,413,797 (28A 56,954) 60,966361
Total capital assets not
being depreciated 230.879.301 63.438,511 (28 156,954) 266,160,858
Capital assets being depreciated:
Buildings and
improvements 586,852,616 5,789,643 (11,535) 592,630,724
Equipment 131,098,059 10,341,331 (3,450,972) 137,988,418
Easements 439,300 -- — 439,300
Infrastructure 496,742,088 25319,365 -- 522,061,453
Total capital assets
being depreciated 1215132063 41,450,339 (3,462,507) 1,253,119,895
Less accumulated depreciation for
Buildings and
improvements (88,559,523) (8,632,767) 7,166 (97,185,124)
Equipment (82,744,710) (8,045,579) 3,052,091 (87,738,198)
Easements (439,300) -- — (439,300)
Infrastructure (222 020 989) (21,050,071) -- (243,071,060)
Total accumulated
depreciation (393,764,522) (37,728,417) 3 059 257 (428,433,682)
Total capital assets
being depreciated,
net 821.367,541 3,721,922 (403,250) 824 686,213
Governmental
activities capital
assets,net SI 052 24n,$42 L41.140.413 (4'28 560 2041 11.090.847 071
64
COUNTY OF HAWAII
Notes to the Basic Financial Statements
June 30, 2015
Balance Retirements/ Balance
July 1, June 30,
2014 Additions Transfers 2015
Business-type activities:
Capital assets not being depreciated:
Land 5 753,877 S — S — S 753,877
Capital assets being depreciated:
Buildings and
improvements 1,593,187 — — 1,593,187
Ground and site
improvements 272,850 -- -- 272,850
Equipment 130,181 15,538 (15.305) 130.414
Total capital assets
being depreciated 1,996,218 15,538 (15,3051 1,996,451
Less accumulated depreciation for:
Buildings and
improvements (874,556) (36.045) — (910,601)
Ground and site
improvements (201,917) (4,348) — (206,265)
Equipment (96 4 (11,8951 15.115 (93,253)
Total accumulated
depreciation .ft,1 72,946) (52,288) 15 115 (1,210,119)
Total capital assets
being depreciated,
net 823,272 (36,7501 (190) 786 332
Business-type
activities capital
assets, net S(3fi 7501 $—(120) $1540209
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 $ 2,799,982
Public safety 3,516,487
Highways and streets 22,569,294
Sanitation 4,925,043
Health, education and welfare 1,991,439
Culture and recreation 1,926,172
Total depreciation expense—governmental activities $8_7,7Z8,4,17
8-417
Business-type activities:
Kula`imano Elderly Housing Project $35,468
Ouli Ekahi Affordable Housing Project 16,820
Total depreciation expense—business-type activities $52 288
7. DEFERRED INFLOW OF RESOURCES:
Deferred inflow of resources consists of the following at June 30,2015:
Governmental activities:
Capital Other Total
General Projects Governmental Governmental
Fund Fund Funds Funds
Real property taxes $22,198,352 $ -- $ — $ 22,198,352
Liquor control revenue 196,374 -- -- 196,374
Sewer revenue — -- 1,351,710 1,351,710
Housing revenue — -- 37,947 37,947
Solid waste revenue -- -- 1,149,015 1,149,015
Sale of real estate -- 1,225,600 -- 1,225,600
Total presented in
fund financial
statements 22,394,726 1,225,600 2,538,672 26,158,998
Add deferred inflows
of resources related
to pensions 54,470,799 -- -- 54,470,799
Less adjustments for
accrual of revenues (21,615,836) (1,225,600) (2,538,672) (25,380,108)
Total government-
wide financial
statements $ 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 56,895 4
Less amount representing
interest (128,455)
Obligations under capital leases $2281,702
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 postelosure 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'uanahulu In May 1993,the County contracted with a private company to construct and
operate a new landfill on County land at Pu'uanahulu in West Hawai`i. The present contract
calls for County employees to perform the daily operations of the landfill, and for the private
company to retain the overall management as well as perform all construction work on the
landfill cells. Under the terms of the contract, the County has no responsibility for
remediation,closure or postelosure care. Accordingly, no liability for this landfill is included
in the County's financial statements.
Financial Assurance For fiscal year 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 HAWAI`I
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 Bond Balance Due Within
Authorized Amount July 1 2014 Issues Retirements June 30 2015 One Year
2004 Series A $ 30,000,000 $ 1,480,000 $ -- (S 1,480,000) $ — 8 —
2004 Ref Series B 19,545,000 4,655,000 -- (2,270,000) 2,385,000 2,385,000
2004 Ref Series C 5,050,140 581,112 — (581,112) — --
2006 Series A 25,000,000 18,802,500 -- (1,072,500) 17,730,000 1,125,000
2007 Series A 85,000,000 67,010,000 -- (3,505,000) 63,505,000 3,680,000
2007 Series B 20,820,000 11,545000 -- (2,105.000) 9,440000 2,190,000
2007 Series C 10,787,388 8,302,506 -- (896,775) 7,405,731 932,646
2008 Series A 50,000,000 42,905,000 -- (1,970,000) 40,935,000 2,060,000
2010 Series A 26,493.750 26,493,750 — (1,162,500) 25,331,250 1.222,500
2010 Series B 18,506,250 18,506,250 -- (798,750) 17,707,500 828,750
2013 Series A 58,509,892 56,848,963 -- (1,839,813) 55,009,150 1,916,958
2013 Series B 21,010,000 21,010,000 -- (1,715,000) 19,295,000 1,780,000
2013 Series C 18,470,000 18,470,000 -- -- 18,470,000 1,520,000
2013 PI Series A 1169000 448 669 720,331 — _1169.944 21218
390,361,420 297,058,750 720,331 (19,396,450) 278,382,631 19,662,072
Add unamomzed
premium 26 691 724 21,079 770 -- (1.5051]52) 19574618 1 456 450
$417,4j] 144 $318138529 701 ($20901,5(125 $2i�57,249 $71 llL512
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 2,385,000
2006 Series A at 4.0%to 5.0%,due through 2026 17,730,000
2007 Series A at 4.0% to 5.0%,due through 2027 63,505,000
2007 Series B at 3.75% to 5.0%,due through 2018 9,440,000
2007 Series C at 4.0%to 5.0%, due through 2021 7,405,731
2008 Series A at 4.0% to 6.0%,due through 2028 40,935,000
2010 Series A at 4.0%to 5.0%,due through 2030 25,331,250
2010 Series B at 3.335%to 6.1%, due through 2030 17,707,500
2013 Series A at 2.0%to 5.0%,due through 2032 55,009,150
2013 Series B at 3.0%to 5.0%, due through 2023 19,295,000
2013 Series C at 4.0%to 5.0%, due through 2024 18,470,000
2013 PT Series A at 2.75%, due through 2048 1,169,000
•
'total general obligation bonds payable $2782.82401
Annual debt service requirements to maturity for the above general obligation bonds are as
follows:
Governmental Activities
Fiscal year ending June 30: Principal Interest
2016 $ 19,662,072 $ 12,707,913
2017 18,074,257 11,842,892
2018 18,959,549 10,949,085
2019 19,880,709 10,067,562
2020 18,119,410 9,227,794
2021 -2025 97,332,384 33,087,187
2026-2030 72,482,722 11,676,256
2031 —2035 13,258,373 1,099,885
2036-2040 192,833 71,338
2041 -2045 220,848 42,941
2046—2049 199,474 11,153
Total $278,381631 $100,784 006
•
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.
•
70
COUNTY OF I]AWAI`I
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:
Issue Balance Balance
Note No. Amount July l 2014 Issues Retirements June 30 2015
Series C,Note R-I $ 10,000,000 $ -- 5 10,000,000 $ -- S 10,000,000
series C,Note R-2 10,000,000 - 10,000,000 - 10,000,000
Series C.Note R-3 5.000,000 - 5,000,000 - 5,000000
Series C,Note R-4 3,000,000 -- 3,000,000 - 3,000,000
Series C,Note R-5 3,000,000 -- 3,000,000 - 3.000,000
Series C,Note R-6 1,000,000 -. 1,000,000 -- 1,000,000
Series C,Note R-7 1,000,000 - 1.000,000 - 1,000,000
Series C,Note R-8 1000,000 -- 1,000,000 - 1,000,000
Series C,Note R-9 250,000 -- 250,000 -- 250,000
Series C.Note R-I0 250,000 -- 250,000 -- 250,000
Series C,Note R-I 1 250,000 -- 250,000 -- 250.000
Series C,Note R-12 250,000 - 250,000 -- 250 000
i31 000 000 $
- 71 -
COUNTY OF HAWAII
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
Aute Amount July l 2014 Additions Retirements June 342015 One Year
Cesspool
Conversion 8,363,773 5,536,018 -- (430,299) 5,105,719 432,400
Ilonoka'a LCC 4.513,158 3,221,787 -- (176,618) 3,045,169 177.504
Queen
Llli'uokalani 9,421,732 7,951,143 — (478,608) 7,472,535 481,008
Kalaniana'ole 8 621 409 6 219 690 — (290 9001 5 928 790 315 554
$30,920.072 %22.92&51& 8 (11.375.4253 S2L 552111 S 14ornr.6
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 1313,292 15.643
Total $21.552.213 $1285332
- 72 -
COUNTY OF HAWAI`I
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:
Balance Balance Due Within
July 1,2014 Additions* Payments June 30,2015 One Year
Governmental activities:
Compensated absences $33,985,444 $13,669,265 (512,029,434) $35,625,275 $8,861,648
Claims and judgments
(see Note 12) 13,723,893 3,067,854 (3,504,840) 13,286,907 2,534,968
Capital leases
(see Note 8) 2,308,241 1,971,074 (1,297,606) 2,981,709 1,101,673
Landfill costs payable
(see Note 9) 22,713,000 99,317 (148,317) 22,664,000 231,199
Pollution remediation
(see Note 9) 8,770,000 1,820,000 -- 10,590,000
Other post employment
benefit obligation
(see Note 13) 51,548,596 32 864,000 (18,657,399) 65,755,197
Total m1,449,174 $150903488 $12729488
* 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 3 707 pp
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 $760 851 $28
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 $397,263
Deductions (46,720)
Balance at June 30, 2015 350,543
Less current portion (32.314)
Loan payable, net of
current portion _$_ 318229
74 p
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 S 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 4 729
Total 43
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
51,169,000 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 HAWAPI
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 $2,283,937
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 $2 283 937 $ 1,032,365_
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 $ 3,429,363
Capital projects fund 156,332,167
Nonmajor funds 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 I 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
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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 ill the reported liability since July I, 2013 are given below.
General Workers' Total
Liability Compensation Liability
Balance at July 1,2013 $ 2,413,819 $ 9,990,643 $ 12,404,462
Incurred claims (including IBNR)* 1,227,372 3,650,129 4,877,501
Claim payments (1,007,472) (2,550.598) (3,558,070)
Balance at June 30, 2014 $ 2,633,719 $ 11,090,174 $ 13,723,893
Incurred claims (including IBNR)* 1,288,406 1,779,448 3,067,854
Claim payments (1,288,406) (2,216,434) (3,504,840)
Balance at June 30, 2015 $_1„63_39 71 10.653-188 $ 132$6,907
*Net of new claims liability and existing claims resolved at less 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.ehawai i.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 I, 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 I 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
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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 I 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.
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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 arc 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 r
the required contributions for each year plus County-paid employee contributions that are also
classified as employer contributions pursuant to IRC section 4 14(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 I, 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 1,2012 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 of June 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 of June 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 $(4,949,210)
Net difference between projected and actual investment
earnings on pension plan investments -- (45,879,408)
Changes in proportion and differences between employer
contributions and proportionate share of contributions 179,381 (3,642,181)
County contributions subsequent to the measurement date 43,889.431 --
Total A$„2,5_8,231 (54 470 7991
$43,889,431 reported as deferred outflows of resources related to the County's contributions
to the pension plan subsequent to the measurement date will be recognized as a reduction of
the net pension liability in the fiscal year ended June 30,2016.
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COUNTY OF HAWAII
Notes to the Basic Financial Statements
June 30, 2015
Other amounts reported as deferred outflows of resources and deferred inflows of resources
related to pensions will be recognized in pension expense as follows:
Fiscal Year Ended June 30 Amount
2016 ($ 12,838,390)
2017 (12,838,390)
2018 (12,838,390)
2019 (12,838,390)
2020 (1,048,439)
Thereafter --
($ 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 3.00%
Payroll growth rate 3.50% per annum
Salary increases 4.00% - 19.00%, including inflation
Investment rate of return 7.75% per annum, including inflation
Cost of living adjustments 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:
Long-Term
Target Expected Real
Asset Class Allocation Rate of Return
Domestic equity 30.00% 8.50%
International equity 26.00% 9.00%
Total fixed income 20.00% 3.10%
Real estate 7.00%* 8.46%
Private equity 7.00%* 11.75%
Real return 5.00%* 6.10%
Covered calls 5.00% 7.65%
100.00%
*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 We 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:
I% Decrease Current Discount I% Increase
(6.75%) Rate(7.75%) (8.75%)
County's proportionate share of
the net pension liability $ 420,721.12.4 $ 3222626,262 $ 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 Hawaii 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 I,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 I, 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(OPER) 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 OPER 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 OPER 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 OPER
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 finding 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 I, 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 loss 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 I, 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 I, 1924 to December 31, 1949, less
accumulated depreciation. Acquisitions prior to 1924 and acquisitions by gift or grant prior to
1950 are not included in utility plant. Additions to utility plant since January I, 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 40 to 50 years
Machinery and equipment 5 to 25 years
Water systems 10 to 40 years
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COUNTY OF HAWAPI
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 (211 518.942)
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 $229,148$29
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-term debt
at June 30, 2015 are comprised of the following:
Public improvement bonds:
2004 Series Dat 4.5%, due through 2039 $ 222,818
2006 Series A at 4.0%to 5.0%,due through 2026 17,730,000
2008 Series A at 4.125%, due through 2043 135,216
2010 Series A at 3.33%to 6.1%, due through 2030 8,443,750
2010 Series B at 3.33%to 6.1%,due through 2030 5,902 500
Total public improvement bonds 32,434,284
Public improvement refunding bonds:
2007 Series at 4.0%to 5.0%, due through 2021 3,949,269
Revolving fund loans:
State revolving fund loans, interest up to 1.37%,
due through 2032 12,591,409
Total long-term debt 48,974,962
Add: Unamortized premium 519,604
Total $42.49a s66
90
COUNTY OF HAWAII
Notes to the Basic Financial Statements
June30, 2015
At June 30,2015, future principal and interest payments for long-term debt are scheduled as
follows:
Fiscal year ending June 30: Principal Interest Total
2016 $ 3,438,382 $ 1,715,588 $ 5,153,970
2017 3,547,543 1,602,091 5,149,634
2018 3,668,323 1,483,352 5,151,675
2019 3,793,239 1,368,874 5,162,113
2020 3,916,380 1,238,621 5,155,001
2021 -2025 17,852,089 4,170,117 22,022,206
2026—2030 12,108,751 1,223,046 13,331,797
2031 —2035 529,375 40,777 570,152
2036-2040 98,172 16,440 114,612
2041 —2043 22,708 1,895 24,603
Total $4&914962 $12,860,801 $61835763
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
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 of June 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 of June 30, 2013.
- 91 -
COUNTY OF IIAWAI`I
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:
Deferred Deferred
Outflows Inflows of
of Resources Resources
Differences between expected and actual experience $ 261,030 $ --
Net difference between projected and actual investment
Earnings on pension plan investments — (2,382,270)
Changes in proportion and differences between employer
contributions and proportionate share of contributions 3,382,872 --
Department contributions subsequent to the measurement date 1,935,306 --
Total . 5,519 208 (23822701
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 Amount
2016 $ 168,978
2017 168,978
2018 168,978
2019 168,978
2020 585,720
Thereafter --
$.. 1,261,632
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 I-percentage-point higher(8.75%)than the
current rate:
I% Decrease Current Discount I% Increase
(6.75%) Rate(7.75%) (8.75%)
Department's proportionate
share of the net pension liability $ 26 L)1±,_7 3 x_ 9.516393 $ 15 036423
92
COUNTY OF HAWAII
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 I, 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% $130,170 255.600%
July 1,2013 $66,077 $410,182 $344,105 16.1% $137,810 249.7%
- 94 -
COUNTY OF HAWAII
Required Supplementary Information
June 30,2015
Schedule of the County's Proportionate Share of the
Net Pension Liability
Last 10 Fiscal Years
Proportionate
Share of the Plan
County's County's Net Pension Fiduciary Net
Proportion of Proportionate Liability as a Position as a
the Net Share of the County's %age of %age of the
Measurement Pension Net Pension Covered Covered Total Pension
Period Ended Liability(%) Liability($) Payroll Payroll Liability
June 30, 2014 4.0% $322,626,262 $ 139,779,309 230.8% 63.9%
June 30, 2013 4.2% $377,065,856 $ 130,725,988 288.4% 58.0%
* This schedule is intended to present information for 10 years, as of the measurement date of the
collective net pension liability for each respective fiscal year. Additional years will be built
prospectively as information becomes available.
- 95 -
COUNTY OF HAWAII
Required Supplementary Information
June 30, 2015
Schedule of the Employer Pension Contributions
Last Ten Fiscal Years
Actual
County Contributions
Statutorily Contributions Contribution as a %age of
Fiscal Year Required Recognized Deficiency County's Covered
Ended Contribution by the Plan (Excess) Covered Payroll Payroll
June 30, 2015 $ 43,889,431 $ 43,889,431 $ -- $ 152,685,842 28.7%
June 30, 2014 $ 37,693,618 $ 37,693,618 $ -- $ 139,779,309 27.0%
June 30, 2013 5 34,025,108 $ 34,025,108 $ — $ 130,725,988 26.0%
June 30, 2012 S 31,826,341 $ 31,826,341 $ — $ 127,901,579 24.9%
June 30,2011 $ 31,289,458 $ 31,289,458 $ -- $ 127,859,606 24.5%
June 30,2010 $ 31,991,136 $ 31,991,136 $ -- $ 133,554,827 24.0%
June 30, 2009 $ 32,183,067 $ 32,183,067 $ -- $ 135,107,940 23.8%
June 30, 2008 $ 27,552,179 $ 27,552,179 $ -- $ 127,396,531 21.6%
June 30, 2007 $ 24,578,419 $ 24,578,419 $ — $ 114,684,034 21.4%
June 30,2006 $ 21,610,601 $ 21,610,601 $ -- $ 105,421,637 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).
•
•
•
r
- 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 account for costs of operating the County'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 disposal systems. Financing is provided by tipping
fees at the landfills and by disposal permit fees.
CEMETERY FUND-Used to accumulate moneys to guarantee the future maintenance of County cemetery
sites. Financing is provided from the sale of burial lots in County cemeteries.
PARKING METER FUND-Used to account for the costs of maintaining County 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
of abandoned 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 restaurant and pro shop concessionaires.
GEOTHERMAL RELOCATION AND COMMUNITY 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.
BEAUTIFICATION FUND-Used to accumulate moneys for the beautification of highways and disposal of
abandoned vehicles within the County. Financing is provided by assessments on vehicle registrations.
HAWAII COUNTY HOUSING AGENCY-Used to account for Federal and County moneys used to provide
public housing assistance within the County.
PARK DEDICATION FUND-Used to account for moneys deposited with the County by subdividers to
provide land for parks and playgrounds in subdivisions.
�j 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 of maturity.
I
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- 97 -
COUNTY OF I IAWAII
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 $11,596,798 $ 6,421,946 $ 9,482,412 $111,659 3234,894
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 2,216,039 - -
'lotalassets $12,686,570 $ 7,809,540 $11,698,701 SI 11,659 $234,894
Liabilities, Deferred Inflows and Fund Balances
Liabilities:
Accounts payable $ 873,797 $ 422,563 $ 1,655,911 $ - S -
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 - - - 111,659 -
Golf course - - - - -
Lower Puna area - - - - -
Parks and recreational projects - - - - -
Total fund balances 11,037,547 5,799,359 8,456,521 111,659 234,894
Total liabilities, deferred inflows
and fund balances $12,686,570 $ 7,809,540 $11,698,701 $111,659 $234,894
- 98- ii
Special Revenue Funds
Vehicle woato,a Golf Geothermal Rehm Beauti- Hawaii County Park
Disposal Bikeway mao.aoona• Course &comtnumn fication Housing Dedication
Fund Fund ouoon Act Fund Fund Rendus Fund Fund Agency Fund
56,231,815 $841,145 $ - $ 437,015 $4,162,878 $ 1,223,176 $ 3,558,252 S 25,776
- - 61,406
- - 2.000 - - 200 -
237,410 - - - 98,282 -
- - - - - - 52.608 -
496,197 - - -
115 - 38,994 521 81,491 - 42,223 -
115 - 276,404 521 577,688 - 193,113 -
56,231,930 $ 841,145 $ 276,404 $ 439,536 $4,740,566 $ 1,223,176 $3,751,565 $ 87,182
S 2,769 $ 13,903 $ - $ 2,652 $ 172 $ 3,615 $ 130,061 $ -
4,282 - - 45,046 - - 128,813 -
276,404 4,874 - - - -
23 - - 100 - - 111,973 -
7,074 13,903 276,404 52,672 172 3,615 370,847 -
- - - - - - 37,947 -
827,242 - - - 1,219,561 - -
- - - - - 987,520 -
6,224,856 - - - - - - -
- - - - - 2355,251 -
- - -
386,864 - - - -
- - - - 4,740,394 - - -
- - - - 87,182
6,224,856 827,242 - 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 S 87,182
(Continued)
-99-
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 S 517,391 S 4,890,655 S 49,735,812 •
Investments 2,000,000 16,900,000 18,961 406
Imprest fund - - 2,850
Receivables:
Due from other governments - - 1,649,809
Due from other governmental funds - - 383,367
Due from other nongovernmental funds - - 1,350
Trade, net of allowance for doubtful accounts - - 2,500,725
Real estate held for sale - - 496,197
Other - - 709,398
5,740,846
Total assets $2,517,391 $21,790,655 S 74,440,914
Liabilities and Fund Balances
Liabilities:
Accounts payable $ - $ - S 3,105,443
Accrued payroll - - 1,156,786
Due to other governmental funds - - 548,009
Advance Collections-Intergovernmental - - 120,837
Other 71,930 220,000 486,201
Total liabilities 71,930 220,000 5,417,276
Deferred Inflows of Resources
Unavailable Revenue - - 2,538,672
Fund balances:
Restricted for:
Debt service 2,445,461 21,570,655 24,016,116
Highways,streets and abandoned vehicles - - 13,084,350
Rental assistance and subsidy - - 987,520
Committed to:
Sanitation - - 14,255,880
Highways, streets and abandoned vehicles - - 6,459,750
Rental assistance and subsidy - - 2,355,251
Cemetery - - 111,659
Golf course - - 386,864
Lower Puna area - - 4,740,394
Parks and recreational projects - - 87,182
Total fund balances 2,445,461 21,570,655 66,484,966
Total liabilities, deferred inflows
and fund balances $2,517,391 $21,790,655 $ 74,440,914
Sec accompanying independent auditors'report.
- 100-
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- 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
Special Revenue Funds
Solid Parking
Highway Sewer Waste Cemetery Meter
Fund Fund Fund Fund Fund
Revenues
Fuel taxes $ 7,632,973 S - $ - $ - $ -
Public utility franchise taxes 10,824,278 - - - -
Licenses and permits 11,099,238 - - - -
Intergovernmental 1,948,296 22,067 694,012 - -
Charges for services - 7,334,461 8,047,736 - 14,632 .
Investment earnings(loss) - - - - -
Other 479,145 4,688 392.528 7,750 -
Total revenues 31,983,930 7,361,216 9,134,276 7,750 14,632
Expenditures
Current:
General Government 79,042 - - - -
Public safety 7,725,576 - - - -
Highways and streets 17,228,957 - - - -
I Iealth,education and welfare - - - - -
Culture and recreation - - - - -
Sanitation - 6,897,635 23,346,884 - -
Pension and retirement contributions 2,033,513 625,168 1,326,101 - -
Employees'health insurance 977,210 224,282 667,656 - -
Other 364,603 192,712 531,551 - - ,
Debt service:
Principal - - 591,032 - -
Interest - - 15,200 - -
Total expenditures 28,408,901 7,939,797 26,478,424 - -
Excess(deficiency)ofrevenues
over(under)expenditures 3,575,029 (578,581) (17,344,148) 7,750 14,632
Other Financing Sources(Uses)
Transfers in 4,000 1,728,936 18,025,791 - -
Increases in capital leases - - 229,165 - -
Transfers out (3,214,000) - - - -
Fotal other financing sources(uses) (3,210,000) 1,728,936 18,254,956 - -
Net change in fund balances 365,029 1,150,355 910,808 7,750 14,632
Fund balances at beginning of year 10,672,518 4,649,004 7,545,713 103,909 220,262
Fund balances at end of year $ 11,037,547 $ 5,799,359 $ 8,456,521 $ 111,659 $234,894
- 102 - '
Special Revenue Funds
Vehicle womr,m: Golf Gwaci,n,i Robe Beauti- I lawaii County Park
Disposal Bikeway m.ov.tloos Course &Community 6cation Housing Dedication
Fund Fund oppm,.An Fund Fund Benefits Fund Fund Agency Fund
$ - $ - $ - $ - $ - $ - $ - $ -
2,174,472 76,361 - - - 181,208 - -
1,420,602 - - - 14,875,997 -
873 - - 825,276 - - - -
- - - - - 2,860 665
1,304 - - - 535,709 - 102,797 -
2,176,649 76,361 1,420,602 825,276 535,709 181,208 14,981,654 665
- - - - 733,778 - - -
27,446 - - - 138,720 - -
1,420,602 - - - 15,873,747 -
-
911,137 172 40,129 - -
261,687 - - - - - - -
14,095 - - 169,129 - - 551,993 -
13,223 - - 84,933 - - 208,060 -
-
5,150 - - - -
-
- --
- 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 - (345,073) (198,241) 2,359 (1,662,037) 665
-
-
367,675 - - 1,558,091 -
- 367,675 - - 1,558,091 -
1,887,644 48,915 - 22,602 (198,241) 2,359 (103,946) 665
4,337,212 778,327 -- - 364,262 4,938,635 1,217,202 3,446,717 86,517
$6,224,856 $ 827,242 $ - $ 386,864 $ 4,740 394 $ 1,219,561 $ 3,342,771 $ 87,182
(Continued)
- 103 -
COUNTY OF HAWAII
Nonmajor Governmental Funds
Combining Statement of Revenues. Expenditures,and Changes in Fund Balances
For the Fiscal Year Ended June 30,2015
(Concluded)
Debt Service Fund 'total
Bond Nonmajor
Interest Redemption Governmental
Fund Fund Funds
Revenues
Fuel taxes S - S - $ 7,632,973
Public utility franchise taxes - - 10,824,278
Licenses and permits - - 13,531,279
Intergovernmental 410,622 - 19,371,596
Charges for services - - 16,222,978
Investment earnings(loss) - - 3,525
Other - _ 1,523,921
Total revenues 410,622 - 69,110,550
Expenditures
Current:
General Government - - 812,820
Public safety - - 7,725,576
Highways and streets - - 17,395,123
Health,education and welfare - - 17,294,349
Culture and recreation - - 951,438
Sanitation - - 30,506,206
Pension and retirement contributions - - 4,719,999
Employees'health insurance - - 2,175,364
Other - - 1,094,016
Debt service:
Principal - 20,705,882 21,306,184
Interest 13,668,448 _ 13,684,269
Total expenditures 13,668,448 20,705,882 117,665,344
Excess(deficiency) of revenues
over(under)expenditures (13,257,826) (20,705,882) X48,554,794)
Other Financing Sources(Uses)
Transfers in 13,247,879 21,155,697 56,088,069
Increases in capital leases - - 229,165
Transfers out - _ - (3,214,000)
Total other financing sources(uses) 13,247,879 21,155,697 53,103,234
Net change in fund balances (9,947) 449,815 4,548,440
Fund balances at beginning of year 2,455,408 21,120,840 61,936,526
Fund balances at end of year $ 2,445,461 $21,570,655 $66,484,966
See accompanying independent auditors'report.
- 104 -
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 -
Fundbalanceatendofyear $ 5,309,087 $5,255,087 $ 10,535,207 S 5,280,120
See accompanying independent auditors'report.
- 105 -
COUNTY OF II AWAII
Sewer Fund
Schedule of Revenues, Expenditures,and Changes in t and 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 $ - S - $ 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 7387,603 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 10349,202 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 S 2,629,238 S 4,918,241 S 1,621,081
See accompanying independent auditors'report,
- 106-
COUNTY OF I IAWAll
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) (1305,266) 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 S 10,000 $ 10,000 S 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 S 103,909 $ 103,909 $ 111,659 S 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 S 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 tee $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 3,655,000 3,655,000 609,864 3,045,136
Excess(deficiency)of revenues
over(under)expenditures (1,579,000) (1,579,000) 1,566,785 (2,944,487)
Fund balance at beginning of year 4,337,212 4,337,212 4,337,212 -
Fundbalanceatendofyear $2,758,212 $ 2,758,212 $ 5,903,997 S (2,944,487)
Sec accompanying independent auditors'report.
- 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 S 20,000 S 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 -
Fundbalanceatendofsear $627,327 $824,742 5197,415
See accompanying independent auditors'report.
- 111 -
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
Actual Variance
Original Final (Budgetary Positive
Budget Budget - Basis) (Negative)
Revenues- intergovernmental - federal grants $ - $ 1,521,232 $ 1,145,315 $ (375,917)
Expenditures-health,education and welfare - 1,521,232 1,145,315 375,917
Excess of revenues over expenditures - - - -
Fund balance at beginning of year - - - -
Fund balance at end of year S - $ - $ _ $
See accompanying independent auditors'report.
- 112 -
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
Actual Variance
Original Final (Budgetary Positive
Budget Budget Basis) (Negative)
Revenues:
Charges for services $ 884,400 S 884,400 $ 825,276 S (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 -
Fundbalanceatendofyear $ 364,262 $ 364,262 S 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
Actual Variance
Original Final (Budgetary Positive
Budget Budget Basis) (Negative
Revenues - other-geothermal royalties S 600,000 $ 600,000 $ 535,709 S (64,291)
Expenditures:
General government:
Planning and zoning 1,700,000 1,700,000 1,501,415 198,585
Deficiency of revenues
under expenditures (1,100,000) (1,100,000) (965,706) (262,876)
Fund balance at beginning of year 4,938,635 4,938,635 4,938,635 -
Fundbalanceatendofyear 53,838,635 $3,838,635 $ 3,972,929 $ (262,876)
See accompanying independent auditors'report.
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 S 175,000 $ 175,000 $ 181,208 S 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 S 68,507
See accompanying independent auditors'report.
- 115 -
COUNI Y 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 S (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 16,116,316 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 (1,815,007) (1,882,007) (1,787,362) 94,645
Other financing uses-transfers in(out)-
Transfers in-General Fund 1,553,091 1,558,091 1,558,091 -
Deficiency of revenues and other sources
wider expenditures (261,916) (323,916) (229,271) 94,645
Fund balance at beginning of year 3,446,717 3,446,717 3,446,717 -
Fundbalanceatendofyear $ 3,184,801 $ 3,122,801 S 3,217,446 $ 94,645
See accompanying independent auditors'report.
•
- 116 -
COUNTY OF HAWAII
Park Dedication 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-investment earnings $ - $ - $ (46) $ (46)
Deficiency of revenues under expenditures - - (46) (46)
Fund balance at beginning of year 86,517 86,517 86,517 -
Fund balance at end of year $ 86,517 S 86,517 $ 86,471 $ (46)
See accompanying independent auditors'report.
- 117 -
COUNTY OF HAWAII
Agency Funds
Combining Statement of Agency Funds Net Position
lune 30,2015
Perfonnance
State Improvement Improvement Improvement and
Weight District District District Refundable
Tax No. IS No. 19 Revolving Deposits
Fund Fund Fund Fund Fund
Assets
Cash and cash equivalents 51,935,232 S 350,023 $ 424,287 $ 6,162 S 213,387
Investments - - - 170,064 -
Due from other agency funds - - - - -
Other receivables - 4,313 3,456 - -
Total assets $1,935,232 $ 354,336 $ 427,743 S 176,226 $ 213,387
Liabilities
Due to other agency funds $ - $ - $ - S - $ 2,975
Accrued liabilities 1,935,232 6,371 5,235 -Advances payable - 14,617 5,879 - 210,412
Assets held for the benefit of
improvement districts - 333,348 416,629 176,226 Total liabilities $1,935,232 S 354,336 S 427,743 S 176,226 S 213,387
Sec 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 I - Kailua Total
$ 447,703 $358,861 $ 299,087 S 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 $ - $ - $ - $ - $ - S 3,507
464,039 358,861 316,487 950 973 625 3,088,773
- - - - - - 230,908
- - - - - 20,176 946,379
$ 464,571 $358,861 S 316,487 $ 950 S 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
Balance Balance
July 1, June 30,
2014 Additions Deductions 2015
State Weight Tax Fund
Assets
Cash and cash equivalents $ 1,849,041 S 22,596,858 S 22,510,667 51,935,232
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 S 44,894,220 S1,935,232
Improvement District No. IS Fund
Assets
Cash and cash equivalents $ 254,036 S 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 S -
Accrued liabilities 5,929 235,272 234,830 6,371
Advances payable 15,111 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 S 65,593 S 16,233 $ 424,287
Other receivables - 63,096 59,640 3,456
Total assets $ 374,927 $ 128,689 $ 75,873 S 427,743
Liabilities
Vouchers Payable $ - $ 62 $ 62 S -
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 r
Total liabilities $ 374,927 $ 130,531 $ 77,715 $ 427,743 •
- 120-
COUNTY OF IIAWAN
Agency Funds
Combining Statement of Changes in Assets and Liabilities
For the Fiscal Year Ended June 30,2015
Balance Balance
July I. June 30,
2014 Additions Deductions 2015
Improvement District Revolving Fund
Assets
Cash and cash equivalents $ 16,306 S 188 $ 10,332 $ 6,162
Investments 193,238 1,970 25,144 170,064
Total assets $ 209,544 S 2,158 $ 35,476 $ 176,226
Liabilities
Vouchers payable $ - $ 35,153 $ 35,153 $ -
Assets held for the benefit
of improvement districts 209,544 49,362 82,680 176,226
Total liabilities $ 209,544 $ 84,515 $ 117,833 $ 176,226
Performance and Refundable
Deposits Fund
Assets
Cash and cash equivalents S 231,644 $ 394,062 $ 412,319 S 213,387
Due from other non-agency funds 200 - 200
Total assets $ 231,844 $ 394,062 $ 412,519 $ 213,387
Liabilities
Vouchers payable $ - $ 409,534 $ 409,534 $ -
Duetootheragencyfunds 1,475 2,975 1,475 2,975
Accrued liabilities 1,228 - 1,228
Advances payable 229,141 387,562 406,291 210,412
Total liabilities $ 231,844 S 800,071 $ 818,528 $ 213,387
Payroll Clearance Fund
Assets
Cash and cash equivalents $ 424,347 $246,173,472 $246,150,116 $ 447,703
Due from other non-agency funds - 235,001,390 235,001,213 177
Other receivables 25,446 2,056 10,811 16,691
Total assets S 449,793 $481,176,918 $481,162,140 $ 464,571
Liabilities
Vouchers payable $ - $ 119,578,737 $ 119,578,737 S -
Due to other agency funds 869 532 869 532
Accrued liabilities 448,924 261,822,700 261,807,585 464,039
Total liabilities $ 449,793 5381,401,969 $381,387,191 S 464,571
- 121 -
COUNTY OF HAWAII
Agency Funds
Combining Statement of Changes in Assets and Liabilities
For the Fiscal Year Ended lune 30,2015
Balance Balance
July 1, lune 30,
2014 Additions Deductions 2015
Flexible Spending Account
Assets
Cash and cash equivalents $ 374,858 $ 311,898 $ 327,895 $ 358,861
Liabilities
Accrued liabilities $ 374,858 $ 311,898 $ 327,895 5 358,861
Lapsed Warrants Fund
Assets
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 S 303,258 $ 77,913 S 64,684 $ 316,487 .
Liabilities
Vouchers payable $ - $ 4,171 $ 4,171 $ - ,
Accrued liabilities 303,258 36,576 23,347 316,487
Total liabilities $ 303,258 $ 40,747 $ 27,518 $ 316,487
Non-Profit License Plates Fund
Assets
Cash and cash equivalents S 1,125 $ 4,445 5 4.620 $ 950
Liabilities
Vouchers payable $ - $ 4,740 S 4,740 S -
Due to other agency funds 100 - 100 -
Accrued liabilities:
Due to non-profit agency 1,025 4,445 4,520 950 r
Total liabilities $ 1,125 $ 9,185 $ 9,360 $ 950
i.
Organ and Tissue Education Fund
Assets
Cash and cash equivalents $ 948 5 3,747 $ 3,722 $ 973
Liabilities
Vouchers payable $ - $ 3,747 $ 3,747 $ - ,
Accrued liabilities-due to State of Hawaii 948 3,747 3,722 973
Total liabilities $ 948 $ 7,494 $ 7,469 $ 973
22
COUNTY OF HAWAII
Agency Funds
Combining Statement of Changes in Assets and Liabilities
For the Fiscal Year Ended June 30,2015
Balance Balance
July I, June 30,
2014 Additions Deductions 2015
Business Improvement District t-Kailua
Assets
Cash and cash equivalents $ 704 $ 772,381 $ 772,460 S 625
Other receivables-BID I-Kailua Assessment 17,211 775,349 772,384 20,176
Other receivables - 23 23
-
Total assets $ 17,915 $ 1,547,753 $ 1,544,867 $ 20,801
Liabilities
Vouchers payable $ - $ 770,005 $ 770,005 $ -
Accrued liabilities- due to KVBID 704 625 704 625
Accrued liabilities - 89 89 -
Assets held for the benefit
of improvement districts 17,211 771,249 768,284 20,176
Total liabilities $ 17,915 $ 1,541,968 $ 1,539,082 $ 20,801
Total-All Agency Funds
Assets
Cash and cash equivalents $3,770,681 $270,644,665 5 270,378,056 54,037,290
Investments 193,238 1,970 25,144 170,064
Due from other agency funds 2,444 3,507 2.444 3,507
Due from other non-agency funds 200 235,001,390 235,001,413 177
Other receivables-BID I-Kailua Assessment 17,211 775,349 772,384 20,176
Other receivables 87,168 356,441 405,256 38,353
Total assets $4,070,942 $ 506,783,322 $ 506,584,697 $4,269,567
Liabilities
Vouchers payable $ - $ 143,190,625 $ 143,190,625 $ -
Due to other agency funds 2,444 3,507 2,444 3,507
Accrued liabilities 1,134,197 262,471,410 262,454,614 1,150,993
Accrued liabilities-due to non-profit agency 1,025 4,445 4,520 950
Accrued liabilities -due to State of Hawaii 1,849,989 22,600,605 22,514,389 1,936,205
Accrued liabilities-due to KVBID 704 625 704 625
Advances payable 244,252 408,058 421,402 230,908
Assets held for the benefit
of improvement districts 838,331 1,112,786 1,004,738 946,379
Total liabilities $4,070,942 5429,792,061 S 429,593,436 $4,269,567
See accompanying independent auditors'report.
- 123 -
COUNTY OF HAWAII
Private Purpose Trusts
Combining Statement of Private Purpose Trust Not Position
June 30,2015
Shippers' Total
Geothermal Wharf Private
Asset Trust Purpose
Assets Fund Fund Trusts
Cash and cash equivalents $ 617,017 S 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 of Changes in Private Purpose Trust Net Position
For the Fiscal Year Ended lune 30,2015
Shippers' Total
Geothermal Wharf Private
Asset Trust Purpose
Fund Fund Trusts
Additions
Contributions:
Puna Geothennal Venture S 50,000 $ - $ 5Q000
Investment earnings:
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 - 104,135
Grant payments - 81,210 81,210
Total deductions 104,135 81,210 185,345
Change in net position (37,201) (19,663) (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 independent auditors'report.
- 125 -
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•
- 126 -
G
0
1
1
Q
STATISTICAL SECTION
® (UNAUDITED)
Contents Page
1 Financial Trends—These schedules contain trend information to help help the reader understand
how the County's financial performance and well-being have changed over time. 127
Revenue Capacity—These schedules contain information to help the reader assess the County's
most significant local revenue 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. 138
Demographic and Economic Information—These schedules offer demographic and economic
tor indicators to help the reader understand the environment within which the County's financial
acitivities take place. 141
Operating Information—These schedules contain service and infrastructure data 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. 143
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- 130 -
Table 1
COUNTY OF HAWAII
Changes in Fund Balances.mverntnental Funds
(Modified accrual basis of account mg)
Last Ten Etna!Years
(Amounts in thousands)
2006 2001 2008 2009 2010 2011 2012 2013 mw 20)5
Re m.
Property tan S153,207 5181,446 $200512 8225858 5215,548 8216511 5208,231 5201,201 5223432 S 236,190
Public service company Bax 6,812 7.396 8,381 10,229 9,647 9.297 9,897 10,706 10480 10,386
Fuel Bax 7,857 8,471 7888 7,662 7,406 7.601 8,293 6.353 7,373 7.633
Puhlrcutility franchise tax 7,329 8.520 9.027 11,118 8.963 9.416 11,065 11,087 10,793 10.824
Lmenses and permits 16.544 16,269 15,918 14,972 14,725 15.097 15,790 15,591 19.618 22.046
Intergovernmental 69,637 63,599 72,601 70,869 77614 91748 100,867 79,912 75,257 86,272
Charges for services 19,852 21,685 22,154 21,404 18,909 16416 16,885 17,055 19,192 20,357
Investment earnings(loss)' 5,223 10,291 12,144 8,914 2.253 510 406 (618) 1.704 716
Settlement contribution •s . 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 290,841 122,750 363,577 376,716 358,306 376,472 375,635 358,646 398,083 404.193
Bapendi]orer:
Cunient
Oetmml government 1,153 37,652 42,991 45,882 40,586 34.251 35,088 33,360 36.679 40.805
Pulite safety 3191 93,241 103,617 107.540 108,798 104,917 104,523 106,885 111.221 122.819
Highways and streets 2,608 14,033 19.529 17,159 20,222 17.114 17,338 17,923 20.270 20,984
Sanitation 6,565 31817 33,405 35,025 35,675 28.424 29.511 30,672 29949 31,464
Health,education and welfare 9,050 21,470 24,609 29,596 25,519 26,847 23.749 24,199 23,070 24540
Culture and recreation 4.731 17.118 18.179 10,853 17,266 16,001 16,763 16,317 18,334 20,056
Pension and retirement mmnbolions 9,937 21,790 24,296 28,870 28,509 27,284 27,773 29,816 33,032 38,485
Employees'health insurance 6,133 16,941 18,089 19119 23,573 25,212 25,902 26,011 26,786 27,731
Other pmlanploymentbenefits - 13,629 14,950 15,700 17,307 - 3,170 4,531
Other 6,780 5,108 5444 6,257 4.773 4,758 4,183 2,991 3,238 4,686
Debtservice:
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 Espendimres 285,110 337,431 403,508 440,158 456.578 446,971 395,916 370822 590,775 451]75
Revenues over(under)Expenditures 5,731 (14.681) (39931) (63,442) (98,272) (70,499) (20,281) (18.170) 7,308 (47,182)
Other Financing Sources)uses).
Saleofassets 82 5 3,470 58 10 6 153 1 10 25
Capital leases 401 2,403 2,187 1,026 1948 47 221 1307 14 1.971
Stale Revoking fund loans 25 6,255 1.916 280 6311 9,257 4.569 4.991 3,072
Sale of ponds 25,000 85.000 50000 - 45,000 50430
Issuance or bond anticipation notes(BANS) - - 19,000 - -
Refunding bonds - 31,607 - - - 47.510
Pe ndum on bonds 972 3,099 185 - 2,078 7,570
Refunding bonds,BANs issuance costs - (218) - (19) -
Paymentlorefundedbondesetowagent - Q2699) - - - (45,52)
Retirement of refunded debt - - (9,635)
Transfers in 45,691 59,139 64,929 56,697 01,495 56,099 59,971 51,356 01,238 59,394
Transfers out (45.691) (59,139) (64,919) (56,697) (61495) (56,099) (59,971) (51,356) (61238) (59,394)
Total other financing sources 26,483 95.452 7173 51,549 27,750 56,388 7,243 66,872 3,096 1,996
Nei change in find balances S 32,214 Si 80,771 S(32358) S(11,893) S(70.522) S(14,111) S(13,038) 8 48.690 S 104(14 S 145,186)
Debt service as a percentage of
noneapiml expenditures 97% 9.0% 93% 90% 10.4% 15 9% 123% 139% 100% 93°%
ll sadited-see accompanying independent auditors repo
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- I35 -
Table 6
COUNTY OF 1-1AWAI`I
Principal Taxpayers
June 30,2015 and 2006
Fiscal Year 2015 Fiscal Year 2006
Percentage Percentage
2014 of Total 2005 of Total
Assessed Assessed Assessed Assessed
Taxpayer Business Valuation Rank Valuation Valuation Rank Valuation
Hilton Land Investment 1 LLC Hotel $ 208,557,000 I 0.8% $ - -
Kohanaiki Shores LLC Developer 187,923,300 2 0.7% - -
Mauna Kea/Hapuna Beach Corps. Developer/Hotel 177,368,600 3 0.7% - -
HualalaiInvestorsLLC Developer/Hotel 174,155,800 4 0.7% - -
HiltonResortsCorp. Timeshare 153,732,900 5 0.6% - -
Orchid 09 LLC I lotel 118,298,600 6 0.5% - -
Mauna Lani Resort Inc Developer/Hotel 95,384,700 7 0.4% 99,337,000 9 0.5%
Target Corporation Retailer 66,635,200 9 0.3% - -
Raptor Residence LLC Residential 64,747,500 10 0.3% - -
BP Bishop Estate Developer - - 487,026,400 1 2.4%
Liliuokalani Trust Estate Land Trust - - 238,300,600 2 1.2%
Mauna Kea Development Corp Hotels/Dev. - - 201,862,600 3 1.0% •
Global Resort Partners Hotel - - 171,043,600 4 0.8%
Kaupulehu Makai Venture Developer - - 159,249,800 5 0.8%
WB Manini owali LLC Developer - - 128,253,000 6 0.6%
FI-1R (ML)Hotel Holdings LLC lintel - - 120,000,000 7 0.6%
WB Kukio Resorts LLC Developer - - 113,874,600 8 0.6%
BRE/Waikoloa LLC Hotel - - 59,804,200 10 0.3%
$1,246,803,600 5.0% $ 1,778,751,800 8.8%
Note: Gross valuation at anuary 1,2014: $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 -
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- 138 -
Table 9
COUNTY OF HAWAII
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 1.3% 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 call he found in the
notes to the basic financial statements.
Unaudited-sec accompanying independent auditors'report.
- 139 -
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- 140 -
Table I 1
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 $ 6,114,237 $ 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 -
I able 12
COIINi Y OF HAWAII
Principal Employers,County of Hawaii
June 30,2015 and 2006
2015 2006
Percentage Percentage
of Total County of Total County
Employer Employees Rank Employment Employees Rank Employment
State of Hawaii 8,300 I 12.5% 7,696 I 10.1%
County of Hawaii 2,800 2 4.2% 2,335 2 3.1%
United States Government 1,300 3 2.0% 1,2313 1.6%
Four Seasons Resort Hualalai 1,000 4 1.5% 557 8 0.7%
Hilton Waikoloa Village 850 5 1.3% 1,100 4 1.4%
KTA Super Stores 750 6 1.1% 785 5 1.0%
The Fairmont Orchid,Hawaii 650 7 1.0% 600 6 0.8%
Walmart 637 8 1.0% - - -
Mauna Lani Resort(Operations), Inc. 540 9 0.8% - - -
Hapuna Beach Prince Hotel 500 10 0.8% 542 10 0.7%
Mauna Lani Bay Hotel - - - 580 7 0.8%
Mauna Kea Reach hotel - - - 556 9 0.7%
Total 17,327 26.2% 15,982 20.9%
Total employee count 66,535 76,200
Source County of llawai'i,Department of Research and Development
Unaudited-sec accompanying independent auditors report.
t.
- 142 -
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