HomeMy WebLinkAboutCOM 0278.000 2018-2020 •
Aaron S.Y.Chung Niv of N.., Bonnie S.Nims,CGAP
Council Chair "o�• '••4'�,; Legislative Auditor
Hawai`i County Council - ' L4
•.� - Business Address
s1,:4"'"°'•°� 120 Pauahi St.
'4.
Suite 309
!� 4 „a�G�• Hilo,Hawai`i 96720
OFFICE OF THE LEGISLATIVE AUDITOR
25 Aupuni Street Hilo,Hawai`i 96720, * (808)961-8386 * Fax(808)961-8905
website:http:/hawaiicounty.gov e-mail:publiclao,(hawaiicounty.gov
April 25, 2019
•
. TO: Aaron S. Y. Chung, Council Chair VIc
and Members of the Hawai`i County Council
j-
r"r•
FROM: Bonnie S.Nims, CGAP :0-
Legislative Auditory
RE: Post-Audit Reports for Fiscal Year Ending June 30, 2018
This letter transmits for your review, deliberation, and acceptance,the Comprehensive Annual
Financial Report for the Fiscal Year Ended June 30, 2018, as prepared by the County of Hawai`i
Department of Finance and the Single Audit of Federal Financial Assistance Program for the
Fiscal Year Ended June 30, 2018, as prepared by external auditor,N&K CPAs Inc.
Pursuant to the 2018 Hawaii County Charter, Section 10-13,Post-audit, which requires the
county council to provide at least once every year for an independent audit of the,accounts and
other evidences of financial transactions of the county and of every county agency and executive
agency and performed by a certified public accountant or firm of certified public accountants
who have no personal interest, direct or indirect, in the fiscal affairs of the county or of any of its
agencies or executive agencies.
N&K CPAs Inc. will be present at the Hawaii County Council Finance Committee meeting on
May 20, 2019 for a short presentation and to answer any questions you may have. Appropriate
department head(s) or their representative(s)will also be asked to attend the meeting.
In the meantime,please feel free to contact me at 961-8490 should you require further information.
Enclosures
cc w/o enclosures: N&K CPAs Inc.
Department of Finance
BSN/mp
Comm. No. 1-�
Ref. To:
Ref. Dote MAY 02 2019
Hawai`i County is an Equal Opportunity Provider and Employer
COMPREHENSIVE
ANNUAL FINANCIAL REPORT
Fiscal Year Ended June 30, 2018
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COUNTY OF HAWAII
Hilo, Hawaii
Harry Kim
Mayor
Wilfred Okabe
.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 30,2018
Table of Contents
Page
INTRODUCTORY SECTION
Letter of Transmittal 1
GFOA Certificate of Achievement 8
Organization Chart 9
List of Elected Officials 10
List of Principal Officials 11
FINANCIAL SECTION
Report of Independent Auditors 13
Management's Discussion and Analysis 16
Basic Financial Statements:
Government-wide Financial Statements:
Statement of Net Position 28
Statement of Activities 30
Fund Financial Statements:
• Balance Sheet- Governmental Funds 32
Reconciliation of the Governmental Funds Balance Sheet to the
Statement of Net Position 33
Statement of Revenues,Expenditures,and Changes in Fund Balances-
Governmental Funds 34
Reconciliation of the Change in Fund Balances of Governmental
Funds to the Statement of Activities 36
Statement of Revenues,Expenditures,and Changes in Fund Balance-
Budget and Actual(Budgetary Basis)- General Fund 38
Statement of Net Position-Proprietary Funds 42
Statement of Revenues,Expenses, and Changes in Fund Net Position-
Proprietary Funds - 43
Statement of Cash Flows -Proprietary Funds 44
Statement of Fiduciary Net Position-Fiduciary Funds 45
Statement of Changes in Fiduciary Net Position-Fiduciary Funds 46
Notes to the Basic Financial Statements 47 -
Required Supplementary Information 106
FINANCIAL SECTION (Continued)
Page
Combining and Individual Nonmajor Fund Statements and Schedules:
Combining Balance Sheet-Nonmajor Governmental Funds 114
Combining Statement of Revenues,Expenditures,and Changes in Fund
Balances-Nonmajor Governmental Funds 118
Schedules of Revenues,Expenditures,and Changes in Fund Balances
Budget and Actual(Budgetary Basis):
Highway Fund 121
Sewer Fund 122
Solid Waste Fund 123
Cemetery Fund 124
Parking Meter Fund 125
Vehicle Disposal Fund 126
Bikeway Fund 127
Workforce Investment Act Fund •
128
Golf Course Fund 129
Geothermal Relocation and Community Benefits Fund 130
Beautification Fund 131
Hawaii County Housing Agency 132
Park Dedication Fund 133
Combining Statement of Agency Funds Net Position-Agency Funds 134
Combining Statement of Changes in Assets and Liabilities-Agency Funds 136
Combining Statement of Private Purpose Trust Net Position-Private Purpose Trusts 140
Combining Statement of Changes in Net Position-Private Purpose Trusts 141
STATISTICAL SECTION
Table 1 -Net Position by Component 143
Table 2-Changes in Net Position 144
Table 3 -Fund Balances,Governmental Funds 146
Table 4- Changes in Fund Balance,Governmental Funds 147
Table 5 -Real Property Assessed Values by Classification and Tax Rates 148
Table 6-Principal Taxpayers 152
Table 7-Property Tax Levies and Collections 153
Table 8 -Ratios of Outstanding Debt by Type 154
Table 9-Ratios of General Bonded Debt Outstanding 155
Table 10-Legal Debt Margin Information 156
Table 11 -Demographic and Economic Statistics - 157
Table 12-Principal Employers, County of Hawaii 158
• Table 13 -Full-Time Equivalent County Government Employees by Function 159
Table 14- Operating Indicators by Function 160
Table 15 - Capital Asset Statistics by Functions 161
1 '
INTRODUCTORY SECTION
Harty Kim =4°••L • »'�• Deanna S. Sako
Mayor •�ri '���,
h / Director
r1tr,�F,Mrjy►
County of Hawaii
Finance Department
25 Aupuni Street,Suite 2103•Hilo,Hawai'i 96720
(808) 961-8234•Fax(808)961-8569
December 28, 2018
The Honorable Mayor and Members of the Council
County of Hawaii
25 Aupuni Street
Hilo,Hawai'i 96720
We transmit herewith the Comprehensive Annual Financial Report for the County of Hawaii,
State of Hawai'i (the County), for the fiscal year July 1,2017 to June 30, 2018.
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,.2018 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 HawaiTs 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.
This report includes all funds of the County of Hawaii,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.
Hawaii County is an equal opportunity provider and employer.
- 1 -
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 Hawai'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, Canada
and now Japan 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 3%,which
has not changed from last year's rate for the same period.
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. In 2018, the County suffered from two natural disasters, Hurricane
Lane and a volcanic eruption,which took a toll on the island's visitor industry. Even with the
halting of volcanic activity in recent months, the outlook for the remainder of fiscal year 2019
remains optimistic.
In October 2018, the Hawai'i Supreme Court by majority decision affirmed the Board of Land
and Natural Resources' decision to issue a Conservation District Use Permit (CDUP) for
construction of the Thirty Meter Telescope (TMT) on Mauna Kea. Estimated at approximately
$1.4 billion, the project has been stagnant for the past several years as opponents challenged
whether or not the project had satisfied all procedural requirements when it obtained its original
CDUP. -
2
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Major Initiatives
For the Year
Public Safety— With the volcanic eruption in the lower Puna region endangering both lives and
property, the Hawai'i County Civil Defense Agency (Agency), along with many of the
departments throughout the County, faced many challenges but worked tirelessly to keep the
community safe.
The Police Department won wide spread praise for its initial handling of the volcanic eruption in
populated areas in lower Puna in the tail end of fiscal year 2018. Officers in the Puna and South
Hilo Districts were put on 12 hour shifts to maintain normal law enforcement operations while
also manning roadblocks and security details within the evacuated and other affected areas.
During the fiscal year, the Department fully transitioned to a new service weapon for all sworn
personnel replacing the issued Smith&Wesson 9mm handguns that were discontinued by the
manufacturer.
The Fire Department hosted the world renowned Resuscitation Academy here on the Big Island,
for the first time in the State, featuring the ongoing efforts in the County through the Fire
Department to improve cardiac arrest survival rates in the county. The Department also
implemented an in-house Confined Space Rescue training program that includes all of the
personnel who work as part of the hazmat or rescue teams. The Department also completed the
final phase of the Emergency Dispatch Center upgrades which included installation of ergonomic
and adjustable dispatch consoles.
Public Works— Over the past fiscal year the Department of Public Works (DPW) completed
major projects in our community including:
• Work on the Hakalau Stream Bridge foundation completed just after fiscal year end with a
contract amount of$1.6 million that was 80% funded by the Federal Highway
Administration (FHWA). The bridge was ordered closed in January 2016 by the FHWA due
to severe scour damage to its foundation by prolonged exposure to strong erosive stream flow
during its 88 years of active use.
• The Mass Transit Baseyard and Maintenance Facility has been substantially completed and
- occupied since February 2018. The new facility consists of a five acre parcel and has
sufficient space to house the fleet of transit buses and staff.
Culture and Recreation— Parks and Recreation opened several new and improved facilities
during fiscal year 2018 for use by the community. One such project included the bunkhouses
that was a part of the approximately$10.5 million Mauna Kea Recreation Area Improvement
project that the Department opened up for rentals. In addition to the bunkhouses, this multi-
million dollar project included construction of new potable and nonpotable water tanks, new site
utilities,new fencing,gates and other park amenities.
3 _
Another large construction projectthat was completed during the past fiscal year, included the
Pana'ewa Drag Strip at a cost of approximately $5.0 million, which involved renovation of
restrooms to be ADA compliant, new launch pad and guardrail systems and new concession
buildings. There was also the Kukuihaele Park Improvements project at a cost of approximately
$5.4 million, which involved the construction of a new basketball court, new baseball field with
chain link fencing, dugout buildings and bleachers. •
For the Future •
Public Safety—A high priority for the Police Department is to seek funding to implement a body
worn camera system to assist officers in the field. The funding needed would be for acquiring
necessary equipment as well as additional personnel to manage the program. Additionally, in
conjunction with the Fire Department, the Department hopes that a long-envisioned combined
Fire and Police Dispatch Center will be realized.
Planning The County Council adopted the Ka'a Community Development Plan in October
2017 and the nine year process demonstrated the passion and resilience of the community to
provide an inspired vision for Ka'5. The Windward Planning Commission completed its review
of the Hamakua Community Development Plan in May 2018 and forwarded it on to the County
Council for final adoption. The multi-year comprehensive review of the Hawaii County
General Plan is more than half way complete and is expected to be adopted in fiscal year 2020.
Public Works -DPW is currently working on the following County and Statewide .
Transportation Improvement Program (STIP)projects:
• The Kalaniana'ole Avenue Reconstruction project(Kamehameha/Railroad Avenue to
Ka'uhane Avenue) is valued at$17 million and started in fiscal year 2018. The project
includes the widening of Kalaniana'ole Avenue to add a new sidewalk,bicycle and left turn
• lanes, construction of a new waterline and appurtenances; drainage improvements;
reconstructing and re-paving the roadway and installation of pavement markings and signs.
The projected completion date is the middle of fiscal year 2020.
• The Ali'i Drive Culvert Replacementproject, estimated at$12 million, is currently being bid
upon by contractors. This project includes the demolition and reconstruction of a concrete
culvert bridge. Completion is slated for the middle of fiscal year 2021.
• The construction of the West Hawaii Office of the Prosecuting Attorney building is valued
at$14 million and will be the office complex for the prosecuting attorneys, clerical,
administrative and program staff of the county. Completion of the project is currently slated
for the middle of 2019.
4
• The,Mamalahoa Highway (Route 19) Widening (Mud Lane to Mana Road) project is valued
at$19.6 million and started in fiscal year 2017. The project will construct turning lanes at
side intersections. The work will include grading,paving,retaining walls and installing
pavement markings and signs. Completion of the project is currently slated for the end of
fiscal year 2020.
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.
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. Asdemonstrated by the statements and schedules included in the financial
section of this report, the County continues to meet its responsibility for sound financial
management.
5
SignificantAccounting Policies
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. For further discussion on other significant accounting
policies, refer to the notes to the basic financial statements.
Financial Highlights
Total revenues increased by $59.1 million from the prior year, which was mostly due to property
taxes increasing by approximately $35.4 million, most notably in the homeowners class, which
increased by 8.0 percent from the prior year. Second, there was a$16.7 million increase in
capital grants and contributions related to increases in highways and streets. With a 13.5 percent
($59.2 million) increase in revenues that was offset by a 3.7 percent($18.3 million) increase in
expenses,the County experienced a decrease in net position of,$20.2 million, which represented
a 66.9% decrease over the prior year's decrease in net position. These results are prior to the
impact of the prior year's cumulative effect of an accounting change related to the reporting of
the County's liability related to Other Postemployment Benefits (OPEB).
The County's investment in capital assets increased by $4.4 million from the prior year, which
represented a 1 percent increase.New and continued construction projects in the areas of
highways and streets and sanitation accounted for the majority of the increase.
Other Information
Independent Audit
The County Charter requires an annual audit by independent certified public accountants. N&K
CPAs Inc. was selected in accordance with the County Charter and the procurement provisions
of the Hawaii Revised Statutes (HRS)and Hawaii Administrative Rules (HAR)to perform the
audit.
-Employee Union Contracts
County employees are members of eight different bargaining units, of which six have contracts
that expire on June 30, 2019 and two will expire on June 30, 2021.
Certificate of Achievement
The Government Finance Officers Association of the United States and Canada(G-FOA)
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, 2017.
This was the thirtieth 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
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_ g - I
readable and efficientlyorganized 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 Sako
Director of Finance
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, 2017
afte414,... 2ctivuotW
Executive Director/CEO
8
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
County of Hawaii
Elected Officials
June 30, 2018
Administrative Officers (Term: 2016-2020)
Harry Kim Mayor
Mitchell Roth Prosecuting Attorney
County Council (Term: 2016-2018)
Valerie Poindexter Chair
Karen Eoff Vice Chair
Aaron S.Y. Chung Member
Maile "Medeiros" David Member
Dru Mamo Kanuha Member
Susan L. K. Leeloy Member
Eileen O'Hara Member
Herbert M.Richards,III Member
Jennifer Ruggles Member
, Principal.Officials
June 30, 2018
County Clerk Stewart Maeda
Legislative Auditor Bonnie Nims
Managing Director Wilfred Okabe
Deputy Managing Director Barbara Kos sow
Corporation Counsel Joseph Kainelamela
Director of Finance Deanna Sako
Planning Director Michael Yee
Director of Personnel William Brilhante Jr.
Director of Research and Development Diane Ley
Chief of Police Paul Ferreira
Fire Chief Darren Rosario
Director of Public Works Allan Simeon
Director of Environmental Management William Kucharski
Parks and Recreation Director Roxcie Waltj en
Manager-Chief Engineer,Department of Water Supply Keith Okamoto
Civil Defense Administrator Talmadge Magno
Director of Liquor Control Gerald Takase
Mass Transit Administrator Maria Aranguiz Rojas
Executive on Aging Christian Alameda
Administrator, Office of Housing and
Community Development Neil Gyotoku
Director of Information Technology Julie Ung
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FINANCIAL SECTION
Eff AMERICAN SAVINGS BANK TOWER
1001 BISHOP STREET,SUITE 1700
N&K CPAs, Inc. HONOLULU, HAWAII 96813-3696
ACCOUNTANTS I CONSULTANTS T(808) 524-2255 F(808) 523-2090
INDEPENDENT AUDITORS 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, 2018, and the related notes to the financial statements,
which collectively comprise the CountyI basic financial statements as listed in the table of
contents.
ManagementCS 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.
Auditorat 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 auditorI
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 entityS 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 entityl 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. ,. -
I •
N&K CPAs, Inc.
ACCOUNTANTS I 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 Hawaii, State of Hawaii, as of June 30, 2018, 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
Adoption of New Accounting Principle
As discussed in Note 1 to the financial statements, the County adopted new accounting guidance,
GASB Statement No. 75, Accounting and Financial Reporting for Postemployment Benefits Other
Than Pensions. Our opinion is not modified with respect to this matter.
Other Matters
Required Supplementary Information
Accounting principles generally accepted in the United States of America require that the
management I discussion and analysis (pages 16 through 26), schedule of changes in the net
OPEB liability and related ratios (page 106), schedule of contributions (OPEB) (pages 107
through 108), schedule of the CountyI and DepartmentI proportionate share of the net pension
liability (ERS) (page 109), schedule of the employer pension contributions (ERS) (pages 110
through 111), and schedule of changes in total pension liability (page 112), 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.
Other Information
Our audit was conducted for the purpose of forming opinions on the financial statements that
collectively comprise the CountyS basic financial statements. The introductory section, combining
and individual nonmajor fund financial statements and budgetary comparison schedules, and
N&K CPAs, Inc.
ACCOUNTANTS I CONSULTANTS
statistical section are presented for purposes of additional analysis and are not a required part of
the basic financial statements.
The combining and individual n'onmajor 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, 2018, on our consideration of the CountyI 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 solely 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 the effectiveness of the County1 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 CountyI internal control over financial
reporting and compliance.
At". CY1193" faA/C.
•
Honolulu, Hawaii
December 28, 2018
MANAGEMENT'S DISCUSSION AND ANALYSIS
This section of the County of Hawai i s (the County) Comprehensive Annual Financial Report
presents a narrative overview and analysis of the financial activities of the County for the fiscal
year ended June 30,2018.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$141.7 million
(net position).This amount includes a negative balance of$790.4 million in unrestricted net
position, a decrease of$319.7 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$213.2 million,an increase of$51.7 million from the prior year.
Approximately 38 percent of this total amount, $81.4 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 $37.5
million, or 12 percent of total general fund expenditures.
OVERVIEW OF THE FINANCIAL STATEMENTS
This discussion and analysis is intended to serve as an introduction to the County's basic financial
statements. The County's basic financial statements comprise three components: (1)
Government-wide financial statements, (2) Fund financial statements, and (3) Notes to the basic
financial statements.This report also contains both required and other supplementary
information in addition to the basic financial statements themselves.
Government-wide Financial Statements
The government-wide financial statements are designed to provide readers with a broad overview
of the County's finances,in a manner similar to a private-sector business.
The statement of net position presents information on all of the County's assets and liabilities,
with the difference between the two reported as net position. Over time,increases or decreases in
net position may serve as a useful indicator of whether or not the financial position of the County
is improving or deteriorating.
The statement of activities presents information showing how the County's net position changed
during the most recent fiscal year.All changes in net position are reported as soon as the
underlying event giving rise to the change occurs,regardless of the timing of related cash flows. • -
Thus,revenues and expenses are reported in this statement for some items that will only result in
cash flows in future fiscal periods, such as revenues pertaining to uncollected taxes and expenses
pertaining to earned but unused vacation and sick leave.
Both of the government-wide financial statements distinguish functions of the County that are
principally supported by taxes and intergovernmental revenues (governmental activities) from
other functions that are intended to recover all or a significant portion of their costs through user
fees and charges (business-type activities). The governmental activities of the County include
public safety,highways and streets,health, education and welfare, culture and recreation,
sanitation and general government.The business-type activities of the County include rental
housing for senior citizens and families.
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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 primacy 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 fund balances for the general fund and capital
projects fund,which are considered to be major funds.Data from the remaining
fundsmin intosingle,governmental are combined ed a s g e, aggregated presentation.Individual fund
data for each of the non-major governmental funds is provided in the form of combining
statements elsewhere in this report.
The County adopts an annual appropriated budget for its general fund and special revenue
funds.A budgetary comparison statement has been provided for these funds to demonstrate
-- compliance with this budget.The budgetary comparison statement for the general fund is
located in the basic financial statements,whereas the budgetary comparison schedules for
the nonmajor special revenue funds are presented elsewhere in this report.
Proprietary funds. Proprietary funds are generally used to account for services for which
the County charges outside customers.Proprietary funds provide the same type of
information as' shown in the government-wide financial statements, only in more detail.The
County maintains only one type of proprietary funds,enterprise funds. Enterprise funds
are used to report the same functions presented as business-type activities in the government-
wide financial statements.The County uses enterprise funds to account for the operations of
-- the Kulaimano-Elderly Housing Project and the Gull Ekahi Affordable Housing-Project.
-17-
Fiduciary funds. Fiduciary funds are used to account for resources held for the benefit of
parties outside the County.The private-purpose trusts and the agency funds are reported
under the fiduciary funds. Since the resources of these funds are not available to support the
County's own programs,they are not reflected in the government-wide financial statements.
The accounting used for fiduciary funds is much like that used for proprietary funds.
Notes to the Basic Financial Statements
The notes to the basic financial statements provide additional information that is essential to a full
understanding of the data provided in the government-wide and fund financial statements.
Other Supplementary Information
In addition to the basic financial statements and accompanying notes,this report also presents
certain required supplementary information,which is presented immediately following the notes
to the basic financial statements.The combining statements referred to earlier in connection with
nonmajor governmental funds and budgetary comparison schedules for the nonmajor special
revenue funds are presented immediately following the required supplementary information.
GOVERNMENT-WIDE FINANCIAL ANALYSIS
Condensed Statement of Net Position
June 30, 2018 and 2017
Primary Government
Governmental Activities Business-tune Activities Total
2018 2017 2018 2017 2018 2017
Assets:
Current and other assets $298,905,875 $234,095,834 $ 1,182,749 $ 1,109,367 $ 300,088,624 $ 235,205,201
Capital assets,net 1,313,094,090 1,301,647,095 1,402,543 1,448,941 1,314,496,633 1;303,096,036
Total assets 1,611,999,965 1,535,742.929 2,585.292 2,558,308 1,614,585.257 1,538,301,237
Deferred Outflows
Of Resources: 225,708,726* 252,872,831 225,708,726 252,872,831
Total Assets and Deferred
Outflows of Resources 1,837,708,691 1.788,615,760 2,585,292 2,558,308 1,840,293,983 1,791,174,068
Liabilities:
Long-term liabilities
outstanding 1,621,452,640* 1,291,082,705 807,005 924,649 1,622,259,645 - 1,292,007,354
Other liabilities 58,373,270 48,825,301 64,257 86,844 58,437,527 48,912,145
Total liabilities 1,679,825,910 1,339,908,006 871,262 1,011,493 1,680,697,172 1,340,919,499
Deferred Inflows
Of Resources: 17,863,765 14,250,500 17,863,765 14,250,500
Total Liabilities and
Deferred Inflows
Of Resources 1,697,689,675 1,354,158,506 871,262 1,011,493 1,698,560,937 1,355,169,999
Net position:
Net investment in
capital assets 840,099,433 835,787,961 595,538 524,292 840,694,971 836,312,253
Restricted 91,458,455 70,439,580 91,458,455 70,439,580
Unrestricted (791,538,872)* (471,770,287) 1,118,492 1,022,523 (790,420,380) (470,747,764)
Total net position $ 140,019,016 $434,457,254 $1,714,030 $1,546,815 $141,733,046 $436,004,069
*See explanation on page 20.
-18-
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$141.7 million at the
close of the most recent fiscal year.
By far the largest portion of the County's net position reflects its investment in capital assets
(e.g.,land,buildings,infrastructure, and equipment) less any related debt used to acquire those
assets that is still outstanding.The County uses these capital assets to provide services to
citizens;consequently, these assets are not available for future spending.Although the County's
investment in its capital assets is reported net of related debt,it should be noted that the resources
needed to repay this debt must be provided from other sources, since the capital assets themselves
cannot be used to liquidate these liabilities.
An additional portion of the County's net position represents resources that are subject to external
restrictions on how they may be used.
At the end of the current fiscal year,the County is able to report positive balances in two of its
three categories of net position,both for the government as a whole, as well as for its separate
governmental activities.All three categories of net position are positive for its business-type
activities.
The County's net position decreased by$294.3 million from the prior year,which'was an
increase of$233.2 million (382%) from the decrease that was experienced last fiscal year.The
main reasons for the large decrease in the current year over last year's decrease was due to a
prior period adjustment of$274.0 million,which was the result of the County's implementation
of GASB Statement 75,Accounting and Financial Reporting for Postemployment Benefits Other _
Than Pensions. Under this new accounting standard the County's financials at the government-
wide level now reflect their net liability, expense,deferred inflows and outflows relating to Other
Postemployment benefits.
The County's net capital assets increased by$1 1.4 million (1 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 23.
The County's long-term liabilities outstanding increased by$330.3 million (26 percent) due
primarily to the issuance of$5.2 million State Revolving Fund (SRF) loans and$138.8 million in
bonds,which were offset by$131.8 in retirements of bonds,Bond Anticipation Notes and SRF
loans;a$3.7 million increase in the liability related to claims and judgments against the County;
a$280.6 million increase in the County's liability relating to the pre-funding of its
postemployment benefits other than pensions;and a$8.2 million decrease in the County's net
pension liability. See further discussion of the increase in long-term debt outstanding on page 25.
Condensed Statements of Activities
For the Fiscal Years Ended June 30,2018 and 2017
Primary Government
Governmental Activities Business-type Activities Total
2018 2017 2018 2017 2018 2017
Revenues:
Program revenues:
Charges for services $ 50,576,723 $ 49,289,344 $ 503,597 $ 469,082 $ 51,080,320 $ 49,758.426
Operating grants and contributions 57,600,066 52,897,945 224,921 132,435 57,600,066 53,030,380
Capital grants and contributions 31,530,719 14,784,692 - 31,530,719 14,784,692
General revenues:
Property taxes - 304,294,883 268,869,322 304,294,883 268,869,322
Other taxes 29,285,662 24,662,766 29,285,662 24,662,766
Grants and contributions,unrestricted 19,678,289 19,810,090 - 19,678,289 19,810,090
Investment earnings 1,841,356 661,184 5,561 1,243 1,846,917 662,427
Other 2,339,248 7,092,071 - 2,339,248 7,092,071
Total revenues 497,146,946 438,067,414 734,079 602,760 497,881,025 438,670,174
Expenses:
General government 75,740,262 72,836,020 75,740,262 72,836,020
Public safety 245,139,168 229,507,091 245,139,168 229,507,091
Highways and streets 54,728,332 51,368,841 - 54,728,332 51,368,841
Health,education and welfare 35,597,718 40,299,077 566,864 573,854 36,164,582 40,872,931
Culture and recreation 35,834,512 35,213,973 - 35,834,512 35,213,973
Sanitation 55,025,011 56,605,864 55,025,011 56,605,864
Interest on long-term debt 15,493,678 13,385,794 15,493,678 13,385,794
Total expenses 517,558,681 499,216,660 566,864 573,854 518,125,545 499,790,514
Increase(Decrease)in net position (20,411,735) (61,149,246) 167,215 28,906 (20,244,520) (61,120,340)
Net position at beginning of year 434,457,254 495,606,500 1,546,815 1,517,909 436,004,069 497,124,409
Prior period adjustment (274,026,503) - - (274,026,503)
Net position at beginning of year,
as restated 160,430,751* 495,606,500 1,546,815 1,517,909 161,977,566 497,124,409
Net position at end of year $140,019,016 $434,457,254 $ 1,714,030 $ 1,546,815 $141,733,046 $436,004,069
*Due to the implementation of GASB 75, a prior period adjustment to governmental
activities of$274,026,503 is reflected in June 2018.The restated beginning balance for
fiscal year 2018 is $160,430,751 for governmental activities. See Note I for details.
Analysis of Changes in Net Position
Governmental activities. Governmental activities,including the impact of the prior period
restatement for GASB 75,decreased the County's net position by$294.4 million or basically all
of the total decrease in net position of the County.
The primary reasons for the $59.1 million (13.5 percent) increase in total revenues was due to
property taxes increasing by approximately$35.4 million,which was due to increases in the value
of net taxable real property, of which the most notable was a$521.5 million increase in the
homeowners class that represented an 8 percent increase from the prior year, and then followed
by a $494.9 million increase in the residential classes (6 percent increase). Capital grants and
contributions also increased by approximately$16.7 million,which related to increases in
highways and streets projects ($18.7 million).
Total expenses increased by$18.3 million,which represented a 4 percent change from the prior
year.There were the typical increases in salaries and wages and related employment benefit costs
across all functions in the current fiscal year.
- 20-
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 (47 percent),
followed by general government(15 percent) and sanitation(11 percent). General revenues such
as property and other taxes are not shown by program,but are effectively used to support
program activities countywide. For governmental activities overall,without regard to programs,
property taxes are the largest single source of funds(61 percent), followed by operating grants
and contributions (12 percent)and charges for services(10 percent).
Expenses and Program Revenues—Governmental Activities
Year Ended June 30, 2018
$300,000,000
$250,000,000
Expenses■Program revenues
$200,000,000
$150,000,000
$100,000,000
$50,000,000
$0 -
interest
st4z
Revenue by Source—Governmental Activities
Year Ended June 30, 2018
Other,$2,339,248
68Z'g9 Investment earnings, Charges for services,
ollloads o1$ swR/604d $1,841,356 $50,576,723
lou l Paloulsa�
Pus suo.Unquluoo
sruevo
r
Operating grants and
$ ; contributions,
• $57,600,066
ley
a' S
8Y
Capital grants and
contributions,
$31,530,719
• �`^ i "c$a,.sigz x. ;�yr`'`� a"� -�frv�`�y.. t ti �.� r
Property taxes, tiN ,
$304,294,883
-
.fyY Z�-a4 y 4 k �."-. A -K ,COY=,"•;?
- 21
Business-type activities. Business-type activities increased the County's net position by
$167,215 versus an increase of$28,906 in the prior year. Expenses for health, education and
welfare account for all of the$566,864 of expenses which represents a 1 percent decrease from
the prior year. Charges for services were $503,597 and investment earnings were $5,561,which
were comparable to the prior year. Operating grants and contributions increased by$92,486 (70
percent) to $224,921 as a result of the County executing a new rent subsidy contract with the US
Depai sent of Housing and Urban Development.
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$213.2 million,an increase of$51.7 million (32 percent) in comparison
with prior year.Approximately 38 percent of this total amount ($81.4 million) constitutes
unrestricted fund balance.The unrestricted portion of the fund balance is comprised of(1) $55.4
million in committed fund balance, (2) $22.9 million in assigned fund balance,and(3) $3.1
million in unassigned fund balance.The remainder of the fund balance is divided between$6.7
million in nonspendable fund balance for inventory and$125.1 million in restricted fund balance.
Approximately 55 percent of the total restricted fund balance is due to restrictions relating to
highways, streets and abandoned vehicles ($35.2 million) and debt service ($33.4 million).
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 $37.5 million,while total fund balance
increased to $61.0 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 12 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 increased by$13.3 million during the current -
fiscal year as compared to a decrease of$6.1 million in the prior year. Key factors in this
increase ($19.4 million) over last year's decrease are as follows: • -
• A positive increase of$35.2 million (13 percent) in real property tax revenues and$4.3
million (8 percent) in 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$15.0 million (5
percent) in expenditures and of$6.1 million in transfers out to other governmental funds.
$5.3 million of the total increase in expenditures is due to increases in salaries and wages
from the prior year and$9.5 million in associated employee benefits.
The fund balance of the County's capital projects fund increased by$26.8 million (58 percent)
during the current fiscal year.The decrease is primarily due to the fact that the $35.5 million of
-22-
expenditures for various construction projects were only partially offset by the issuance of$5.2
million in SRF loans and $47.3 million in new bonds.
The debt service funds consist of the Bond Redemption Fund and the Interest Fund. These funds
have combined total fund balances of$33.4 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 $6.6 million (25 percent).
Proprietary funds.The County's proprietary funds provide the same type of information found
in the government-wide financial statements, but in more detail.
Unrestricted net position of the Kulaimano Elderly Housing Project(Kulaimano)at the end of the
year amounted to $597,130, and $521,362 for the Ouli Ekahi Affordable Housing Project(Ouli
Ekahi). Thetotal net position for Kulaimano increased by$49,420 and the net position for Ouli
Ekahi increased by$117,795. Other factors concerning the finances of these two funds have
already been addressed in the discussion of the County's business-type activities.
GENERAL FUND BUDGETARY HIGHLIGHTS
Differences between the original budget and the final amended budget were primarily the result
of a$9.5 million increase in appropriations, the most significant reasons were due to increases in
the appropriations for public safety ($4.0 million)and capital outlays ($6.4 million).
Differences between the final budget and the actual (budgetary basis) resulted in approximately
$4.5 million less revenues than expected and $30.8 million less expenditures than appropriated.
This is primarily due to the following factors:
• The negative variance of$4.5 million in revenues is comprised mostly of$4.0 million from
real property and public service company taxes. Public service company taxes was lower
than budget by$2.7 million due to the decline in the cost of fuel that was passed on to the
consumers.
• $5.5 million of the unspent appropriations is related to salaries and wages and the various
countywide expenditure accounts relating to salaries and wages. The variance is due
primarily to unfilled vacancies and continued efforts by each department to control payroll
costs during the budget year due to the tough economic conditions facing the County. The
following functions are responsible for the majority of the variance: public safety($2.5
million) and general government ($1.7 million).
• $3.1 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.
• $2.4 million is due to the fact that the increase in health premiums for employees'was lower
than originally anticipated.
CAPITAL ASSET AND DEBT ADMINISTRATION
Capital assets. The County's investment in capital assets for its governmental and business-type
activities as of June 30, 2018 amounts to $1.3 billion (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 1
percent.
-23 -
Major capital asset events during the current fiscal year included the following:
• Construction continued on the Mass Transit agency baseyard and maintenance facility;
construction in progress as of the end of the current fiscal year had reached$1 1.4 million
with$1.6 million coining from the current fiscal year; project was transferred to Buildings.
• Construction continued on the Haihai Fire Station; construction in progress as of the end of
the current fiscal year had reached$10.6 million with$1.4 million coining from the current
fiscal year;project was transferred to Buildings.
• Construction continued on the Pana'ewa Drag Strip; construction in progress as of the end of
the current fiscal year had reached$5.0 million;project was transferred to Buildings.
• Construction continued on the Hawaii County Radio System Upgrade project;construction in
progress as of the current fiscal year had reached$10.7 million with$1.4 million coining
from the current fiscal year.
• Construction continued on the Kukuihaele Park Improvements; construction in progress as of
the current fiscal year had reached$5.4 million with$1.5 million coining from the current
fiscal year;project was transferred to Buildings.
• Construction continued on the Mauna Kea Recreation Area Improvements;construction in
progress as of the current fiscal year had reached.$10.5 million;project was transferred to
Buildings.
• Construction continued on the Kawailani Street Improvements ('lwalani to Pohakulani);
construction in progress as of the end of the current fiscal year had reached$10.2 million
with$7.0 million coming from the current fiscal year.
• Construction continued on the Hakalau Stream Bridge North Abutment Foundation Repair;
construction in progress as of the end of the current fiscal year had reached$1.7 million with
$1.5 million coming from the current fiscal year.
• Construction began on the Kealakehe Metal Salvage Facility Remediation and Closure
project with current year expenditures reaching$2.2 million.
• Construction began on the Kealakehe Wastewater Treatment Plant R-1 Upgrade project;
construction in progress as of the current fiscal year had reached$1.8 million.
• $15.9 million of dedicated roads were received by the County in the current fiscal year.
Capital Assets
(net of depreciation)
June 30, 2018 and 2017
Primary Government
Governmental Activities Business-type Activities Total
2018 2017 2018 2017 2018 L 2017
Land and improvements $256,390,951 $239,187,891 $ 753,877 $ 753,877 $257,144,828 $239,941,768
Infrastructure assets 309,295,827 328,917,985 309,295,827 328,917,985
Ground and site improvements 53,546 57,893 53,546 57,893
Buildings and improvements 631,727,813 597,987,986 574,454 610,498 632,302,267 598,598,484
Easements 6.169,006 4,244,255 6,169,006 4,244,255
Equipment 58,918,798 60,190,776 20,666 26,673 58,939,464 60,217,449
Construction work in progress 50,591,695 71,118,202 50,591,695 71,118,202
Total $1,313,094,090 $1,301,647,095 $1,402,543 $1,448,941 $1,314,496,633 $1,303,096,036
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$407.4 million and State
Revolving Fund loans of$35.6 million. At the end of the current fiscal year, the County had total
bonded debt outstanding of$407.4 million. This entire amount was comprised of general
obligation bonds which are backed by the full faith and credit of the County.
The County's total bonded debt increased by$68.9 million (20 percent)during the current fiscal
year due to the issuance of$138.8 million in bonds which were offset by the retirement of$69.9
of bonds.
At the end of the fiscal year, the County held an "AA+" rating from Fitch and an "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 $4.6 billion, which is in excess
of the County's outstanding general obligation debt. Currently the County's outstanding debt
represents 9 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 3.0
percent,which is the same percentage as the end of the prior fiscal year, and a 1.0 percent
decline from two years 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 1.83 million, with an approximately II percent increase from the
previous year's count of 1.65 million.
These factors were considered in preparing the County's budget for the 2019 fiscal year.
At the end of the current fiscal year, unrestricted fund balance in the general fund was$37.5
million. The County has appropriated $15.3 million of this amount for spending in the 2019
fiscal year budget and the majority is included in the assigned portion of the fund balance.
REQUESTS FOR INFORMATION
II
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, Hawai'i 96720.
BASIC FINANCIAL STATEMENTS
COUNTY OF HAWAII
Statement of Net Position
June 30,2018
Primary Government
Governmental Business-type Component
Activities Activities Total Unit
Assets
Current assets:
Cash and cash equivalents(notes 3 and 14) $ 86,709,229 $ 1,063,423 $ 87,772,652 $ 28,285,759
Restricted cash and cash equivalents(note 3) 62,223,556 42,197 62,265,753 -
Investments(note 3) 6,404,796 6,404,796 5,000,000
Restricted investments(note 3) 38,500,000 38,500,000.
Receivables,net(note 4) 66,725,468 5,302 66,730,770 8,018,309
Receivable from improvement district
(notes 4 and 10) 103,379 103,379
Internal balances(note 5) 2,700 (2,700) -
Inventories 6,714,871 6,714,871 1,498,341
Prepaid expenses 160,017 1,868 161,885 78,692
Other 1,778,188 - 1,778,188
Total current assets 269,322,204 1,110,090 270,432,294 42,881,101
Investments(note 3) 11,194,244 , 11,194,244 - 20,000,000
Restricted investments(note 3) 16,394,560 - 16,394,560
Restricted cash and cash equivalents(note 3 and 14) - 72,659 72,659 888,225
Receivable from improvement district,excluding •
current portion(notes 4 and 10) 1,994,867 1,994,867 -
Capital assets(notes 6,8 and 14):
Utility plant in service,net 256,128,991
Infrastructure assets,net 309,295,827 309,295,827
Ground and site improvements,net 53,546 53,546
Buildings and improvements,net 631,727,813 574,454 632,302,267
Equipment,net 58,918,798 20,666 58,939,464
Easements,net 6,169,006 6,169,006
Preliminary survey and investigation charges 5,840,355
Land and improvements 256,390,951 753,877 257,144,828 5,194,398
Construction work ill progress 50,591,695 50,591,695 35,899,247
Total capital assets,net- 1,313.094.090 1,402,543 1.314.496.633 303,062,991
Total noncurrent assets 1.342.677.761 1,475,202 1 344152 963 323,951,216
Total assets 1.611.999.965 2,585,292 1.614.585.257 366,832,317
Deferred Outflows of Resources
Deferred loss on refunding 6,792,484 6,792,484
Deferred outflow related to pensions and other
post employment benefits(notes 13 and 14) 218,916,242 218,916,242 10,143,200
Total deferred outflows of resources 225,708,726 225,708,726 10,143,200
Total.Assets and Deferred Outflows of Resources 1.837.708.691 2,585,292 1.840.293.983 376,975,517
(Continued)
-28-
COUNTY OF HAWAII
Statement of Net Position
June 30,2018
(Concluded)
Primary Government
Governmental Business-type Component
Activities Activities Total Unit
Liabilities
Current liabilities:
Accounts payable and accrued liabilities $ 21,989,589 $ 52,837 $ 22,042,426 $ 3.224,460
Accrued payroll 11,076,958 11,076,958 1,458,734
Advance collections-intergovernmental 4.424,115 1,417 4,425,532
Interest due on long-term debt 6,448,707 10,003 6,458,710 652,468
Bonds and loans payable,current portion net
(notes 10 and 14) 32,638,132 91,895 32,730.027 5,140.705
Compensated absences,current portion(note I0) 10,153,091 10,153,091 557,915
Claims and judgments,current portion
(notes 10, 12 and 14) - 3,561,859 3,561,859 153,011
Capital leases,current portion(notes 8 and 10) 2,463,618 2,463,618
Landfill costs payable,current portion
(notes 9 and 10) 432,012 432,012
Customers'deposits 185,800
Other 19,733,901 19,733,901
Total current liabilities 112,921,982 156,152 113,078,134 11,373,093
Noncurrent liabilities:
Bonds and loans payable,net
(notes 10 and 14) 474,752,825 715,110 475,467,935 69,382,818
Compensated absences(note 10) 30,983,888 30,983,888 1,132,737
. Claims and judgments(notes 10,12 and 14) 14,573,550 • 14,573,550 - 530,989
Capital leases(notes 8 and 10) 5,648,959 5,648,959
Landfill costs payable(notes 9 and 10) 29,574,988 29,574,988
Unearned revenue,noncurrent 1,583,953
Customers'deposits 17,388,172
Net pension liability(notes 13 and 14) 610,992,171 610,992,171 28,365,453
Net OPEB liability(notes 13 and 14) 391,454,300 391,454,300 17,265,728
Other 8,923,247 8,923,247
Total noncurrent liabilities 1,566,903,928 715,110 1.567.619.038 135,649,850
Total liabilities 1.679.825.910 871,262 1,680.697.172 147.022,943
Deferred Inflows of Resources
Deferred inflows related to pensions and other
post employment benefits(notes 13 and 14) 14,532,816 14,532,816 2,070,443
Deferred inflows-other 3,330,949 3,330,949 90,868
Total Deterred Inflows of Resources 17.863,765 17,863,765 2,161,311
Total Liabilities and Deferred
Inflows of Resources 1.697.689.675 871,262 1.698.560.937 149,184,254
•
Net Position
Net investment in capital assets 840,099,433 595,538 840,694,971 229,427,693
Restricted for:
Capital projects 28,425.316 28,425,316
Debtservice(note 10) 33,396,481 33,396,481
Highways,streets and abandoned vehicles .11,614,647 11,614,647
Public access open space 16,331,445 16,331,445
Other 1,690,566 - 1,690,566
Unrestricted (791,538,872) 1,118,492 (790.420.3801 (1,636,430)
Total net position $140,019,016 $ 1,714,030 $141.733.046 $227,791,263
See accompanying notes to the basic financial statements.
-29-
COUNTY OF HAWAII
Statement of Activities
For the Fiscal Year Ended June 30,2018
Program Revenues
Operating Capital
Charges for Grants and Grants and
Functions/Programs Expenses Services Contributions Contributions
Primary government:
Governmental activities:
General government $ 75,740,262 $ 2,334,119 $ 1,737,845 $ 4,227,452
Public safety 245,139,168 6,114,204 27,772,575 303,928
Highways and streets 54,728,332 17.295,316 3,812,932 24,531,210
Health,education and welfare 35,597,718 923,654 23,977,299
Culture and recreation 35,834,512 1,999,177 71,813 2,468,129
Sanitation 55,025,011 21,910,253 227,602
Interest on long-term debt 15,493,678
Total governmental activities 517,558,681 50,576,723 57,600,066 31,530,719
Business-type activities:
Health,education and welfare 566,864 503,597 224,921
Total primary government -- $518,125,545 $51,080,320 $ 57,824,987 $ 31.530.719
Component unit:
Water(note 14) 59844,010 $45.705.966 $ $ 8.122.713
General revenues:
Taxes:
Property taxes,levied for general purposes
Public service company taxes -
Public utility franchise taxes
Fuel taxes
Grants and contributions not restricted to specific programs
Investment earnings
Other
Total general revenues
Change-in net position •
Net position,beginning of year,as previously stated
Prior period adjustment
Net position,beginning of year,as restated
Net position,end of year
•
Sec accompanying notes to the basic financial statements. -
Net(Expense)Revenue and Changes in Net Position
Primary Government
Governmental Business-type Component
Activities Activities Total Unit
$ (67,440,846) $ $(67,440,846) $
(210,948,461) (210,948,461)
(9,088,874) (9,088,874)
(10,696,765) (10,696,765)
(31,295,393) (31,295,393)
(32,887.156) (32.887,156)
(15,493,678) (15.493,678)
(377,851,173) (377,851,173)
161,654 161,654
(377,851,173) 161,654 (377.689.519)
(6,015.331)
304,294,883 304,294,883
7,611,856 7,611,856
8,331,390 8,331,390
13,342,416 13,342,416
19,678,289 19,678,289
1,841,356 5,561 1,846,917 611,109
2,339,248 2,339,248
357,439,438 5,561 357,4111,999 611,109
(20,411,735) 167,215 (20,244,520) (5,404,222)
434,457,254 1,546,815 436,004,069 248,898,228
(274,026,503) (274,026503) (15,702,743)
160,430,751 1,546,815 161,977,566 233,195,485
140,019.016 $ 1.714,030 $141,733,046 $ 227,791,263
31
COUNTY OF HAWAII
Governmental Funds
Balance Sheet
June 30,2018
Bond Other Total
Capital Redemption Governmental Governmental
General Projects Fund Funds Funds
Assets
Cash and cash equivalents(note 3) $40,721,256 $54,940,124 $ 120,158 $ 53,151,247 $148,932,785
Investments(note 3) 17,539,075 27,394,561 27,500,000 59,964 72,493,600
Receivables,net(note 4) 25,412,958 2,943,320 28,356,278
Due from other governmental funds(note 5) 2,088,197 694,290 3,204,372 725,322 6,712,181
Due from other nongovernmental funds(note 5) 2,700 2,700
Receivables from other governments(note 4) 26,668,385 7,954,660 3,746,145 38,369,190
Inventories 6,714,871 6,714,871
Other - 877,894 790,666 - 269,645 1,938,205
Total assets 0 # $30,824,530 60 898 34343
Liabilities,Deferred Inflows and Fund Balances
Liabilities:
Accounts payable $ 5,895,620 $ 10,776,333 $ $ 5,317,636 $ 21,989,589
Accrued payroll 9,667,517 1,409,441 11,076,958
Due to other governmental funds(note 5) 658,032 3,606,420 2,447,729 6,712,181
Advance collections-intergovernmental 470,069 3,773,627 - 180,419 4,424,115
Other13,547,368 327,483 185,000 374,050 14,433,901
Total liabilities 30,238.606 18.483,863 185.000 9.729.275 58.636.744
Deferred Inflows of Resources:
Unavailable revenue(note 7) 28.743,906 2,968.375 31,712,281
Fund balances:
Nonspendable: Inventory 6,714,871 6,714,871
Restricted for:
Debt service(note 10) - 30,639,530 2,756,951 33,396,481
Highways,streets and abandoned vehicles 23,558,687 11,614,647 35,173,334
Public access open space 16,331,445 _ 16,331,445--
Other 469,264 38,484,776 1,221,302 40,175,342
Committed to:
Budget stabilization 6,535,007 6,535,007
Disaster and emergencies 6,039,632 6,039,632
Lower Puna area 4,272,183 4,272,183
Rental assistance and subsidy 1,135,446 1,135,446
Sanitation - 17,113,714 17,113,714.
Self insurance 1,314,948 - 1,314,948
Highways,streets and abandoned vehicles - 1,091,766 9,891,854 10,983,620
Parks and recreational projects 1,922,760 88,542 2,011,302
Zoning change impact mitigation(fair share) - 3,992,164 - 3,992,164
Other 643,919 1,200,966 141,909 1,986,794
Assigned to:
Subsequent years budget _ 15,330,000 - 15,330,000
Other 4,546,560 3,039,319 7,585,879
Unassigned 3,114,478 - (35,855) 3,078,623
Total fund balances 61.040,124 73.290,438 30,639,530 48,200.693 213,170.785
Total liabilities,deferred inflows, and fund balances $120,02,636 I # # im $303,51 I
See accompanying notes to the basic financial statements.
COUNTY OF HAWAII
Reconciliation of the Governmental Funds Balance Sheet to the Statement of Net Position
June 30,2018
Total fund balances-governmental funds $213,170,785
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 256,390,951
Infrastructure assets,net 309,295,827
Buildings and improvements,net 631,727,813
Equipment,net 58,918,798
Easements,net 6,169,006
Construction work in progress 50.591.695
Total capital assets,net 1,313,094,090
Deferred amounts on refunding and pension are reported as deferred
outflows of resources in the government-wide financial statements but are not
are not reported in the governmental fund statements 225,708,726
Some of the County's revenues will be collected after year-end but are
not available soon enough to pay for the current period's expenditures
and therefore are deferred(unearned)in the funds.(note 7) 28,381,332
Some liabilities are not due and payable in the current period and
therefore are not reported in the funds.Those liabilities consist of:
Bonds and loans payable,net of receivable
from improvement district (505,292,711)
Interest due on long-term debt (6,448,707)
Capital leases (8,112,577)
Compensated absences (41,136,979)
Claims and judgments (18,135,409) •
Landfill costs payable (30,007,000)
Pollution remediation (13,144,259)
Other Postemployment Benefit Obligation(OPEB) (391,454,300)
Net pension obligation (610.992,171)
Total long-term liabilities (1,624,724,113)
Unamortized gain on.refunding (1,078,988)
Deferred amounts related to pension are reported as deferred
inflows of resources in the government-wide financial statements but are not
are not reported in the governmental fund statements (14,532,816)
Net position of governmental activities $ 140,019,016
See accompanying notes to the basic financial statements.
COUNTY OF HAWAII
Governmental Funds
Statement of Revenues, Expenditures,and Changes in Fund Balances
For the Fiscal Year Ended June 30,2018
Bond Other Total
Capital Redemption Governmental Governmental
General Projects Fund Funds Funds
Revenues
Property taxes $ 301,699,073 $ $ $ $ 301,699,073
Public service company taxes 7,611,856 7,611,856
Fuel taxes 13,342,416 13,342,416
Public utility franchise taxes 8,331,390 8,331,390
Licenses and permits 9,092,824 - 14,973,014 24,065,838
Intergovernmental 57,588,179 9,069,719 23,366,837 90,024,735
Charges for services 3,994,394 - 19,559,157 23,553,551
Investment earnings 1,948,643 (360,015) 2,977 1,591,605
Other 2,324,765 741,212 1,765,833 4,831,810
Total revenues 384,259,734 9,450,916 81,341,624 475,052,274
Expenditures
Current:
General government 41,159,034 411,351 41,570,385
Public safety 129,035,320 8,682,804 137,718,124
Highways and streets 3,633,816 17,766,817 21,400,633
Health,education and welfare 9,004,192 20,872,175 29,876,367
Culture and recreation 20,181,802 1,142,159 21,323,961
Sanitation • 1,117,456 38,234,826 39,352,282
Pension and retirement --
contributions(note 13) 43,571,004 5,922,960 49,493,964
Employees'health insurance 31,325,437 2,476,692 33,802,129
Other postemployment benefits 14,831,000 - 14,831,000
Other 2,541,841 _ 2,080,379 4,622,220
Debt service:
Principal 1,463,487 59,800,000 24,843,933 798,763 86,906,183
Interest 79,762 17,659,128 17,738,890
Capital outlay 6,438,193 35,485,554 41,923,747
Total expenditures 304,382,344 95,285,554 24,843,933 116.048.054 540,559,885
Excess(deficiency)of revenues
over(under)expenditures 79,877,390 (85,834,638) (24,843,933) (34,706,430) (65,507.611)
(Continued)
•
COUNTY OF HAWAII
Governmental Funds
Statement of Revenues,Expenditures;and Changes in Fund Balances
For the Fiscal Year Ended June 30,2018
(Concluded)
Bond Other Total
Capital Redemption Governmental Governmental
General Projects Fund Funds Funds
Other Financing Sources(Uses)
Sale of assets $ 22,609 $ $ $ - $ 22,609
Increase in capital leases(notes 8 and 10) 1,207,210 - 2,602,039 3,809,249
State Revolving Fund loans(note 10) 5,153,664 5,153,664
Issuance of bonds(note 10) 107,115,889 107,115,889
Premium on bonds(note 10) 5,998,387 - 5,998,387
Refunding bonds(note 10) 48,783,779 48,783,779
Payment to refunded bond escrow
agent(note 10) (54,536,62]) (54,536,621)
Bond issuance costs (245,545) (30,812) - (276,357)
Transfers in(note 5) 3,579,433 31,277,760 40,853,366 75,710,559
Transfers out(note 5) (68,967,481) (3,204,372) - (3,538,706) (75,710,559)
Total other financing sources(uses) (67,737,662) 112,613,802 31,277,760 39,916,699 116,070,599
Net change in fund balances 12,139,728 26,779,164 6,433,827 5,210,269 50,562,988
Fund balances at beginning of year 47,746,958 46,511,274 24,205,703 42,990,424 161,454,359
Increase in reserve for inventories 1,153,438 - - 1,153,438
Fund balances at end of year . 61.040.124 73 290.438 $ 30,639,530 S48.200.693 213.170/85
•
. See accompanying notes to the basic financial statements.
•
•
-35-
COUNTY OF HAWAII
•
Reconciliation of the Change in Fund Balances of Governmental Funds
- to the Statement of Activities
For the Fiscal Year Ended June 30,2018
Net change in fund balances-total governmental funds $ 50,562,988
Amounts reported for governmental activities in the statement of activities are
different because:
Capital outlays are reported as expenditures in governmental funds.
However,in the statement of activities,the cost of capital assets is
allocated over their estimated useful lives as depreciation expense.In
the current period,these amounts are:
Capital outlay 40,102,867
Dedicated and contributed property 19,118,455
Depreciation expense and loss on disposals (47,774,327)
Excess of capital outlay over depreciation expense 11,446,995
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:
General obligation bonds,net of refunding (83,967,691)
Premium on bond issuance (23,548,501)
Gain on issuance of debt refunding (1,130,368)
Deferred amount on refunding of bonds 850,901
State Revolving Fund loans (5,153,664) •
Capital leases (3,809.249)
Total debt proceeds (116,758,572)
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 22,712,859
Bond anticipation notes 59,800,000
State Revolving Fund loan repayments/forgiveness 2,131,072
Capital lease payments 2.262.252
Total long-term debt repayment 86,906,183
Because some revenues will not be collected for several months after the
County's fiscal year end,they are not considered"available"revenue and
are"deferred"in the governmental funds.Unearned revenues increased by
this amount this year. 2,826,227
(Continued)
COUNTY OF HAWAII
Reconciliation of the Change in Fund Balances of Governmental Funds
to the Statement of Activities
For the Fiscal Year Ended June 30,2018
(Concluded)
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:
Increase in inventories $ 1,153,438
Increase in compensated absences _ (1,651,077)
Increase in,claims and judgments (3,699,716)
Increase in landfill closure/postclosure care costs (484,000)
Decrease in pollution remediation costs 2,398,380
Amortization of premium from bond issuance 4,541,980
Amortization of deferred loss on refunding (1,503,269)
Amortization of gain on refunding 51,380
Net increase in accrued interest (844,879)
Net increase to expenses related to Other Postemployment
Benefit Obligation (4,491,561)
Net increase to expenses related to pension and salaries and wages _ (50,866,232)
Net additional expenses (55395,556)
Change in net position of governmental activities (20,411.735)
See accompanying notes to the basic financial statements.
COUNTY OF HAWAII
General Fund
Statemenbf Revenues,Expenditures,and Changes in Fund Balance-
Budget and Actual(Budgetary Basis)
For the Fiscal Year Ended June 30,2018 ---
Actual Variance
Original Final (Budgetary Positive
. Budget Budget Basis) (Negative)
Revenues:
Taxes and assessments: '
Property taxes $ 302,909,761 $ 302,932,261 $301,699,073 $(1,233,188)
Public service company taxes 10,340,000 10,340,000 7,611,856 (2,728,144)
Total taxes and assessments 313,249,761 313,272,261 309,310,929 (3,961,332)
Licenses and permits:
Nonbusiness licenses and permits 3,762,795 3,762,795 3,873,376 110,581
Business licenses 2,138,898 2,138,898 2,036,903 (101,995)
Street use 3,035,000 3,035,000 3,182,545 147,545
Total licenses and permits 8,936,693 8,936,693 9,092,824 156,131
Intergovernmental:
Federal:
Programs for the aged 2,311,681 2,336,681 1,574,612 (762,069)
Community development block grants 2,452,417 2,452,417
Law enforcement 3,380,300 3,752,330 1,437,952 (2,314,378)
Other 2,731,636 7,114,493 8,689,814 1,575,321
Total federal 8,423,617 15,655,921 14,154,795 (1,501,126)
State:
State General Fund-Act 185,
SLR 1990 17,298,000 17,298,000 19,158,000 1,860,000
Emergency medical services 16,536,274 17,099,710 17,099,710 --
Other 5,879,039 6,708,893 7,715,363 1,006,470
Total State 39,713,313 41,106,603 43,973,073 2,866.470
Total intergovernmental revenue 48,136,930 56,762,524 58,127,868 1,365,344
Charges for services:
General government 4,972,229 4,972,229 4,287,124 ' (685,105)
Culture and recreation 1,749,400 1,749,400 1,346,267 (403,133)
Highways and streets 1,263,000 1,263,000 1,117,241 (145,759)
Public safety 111,368 111,368 129,259 17,891 I
Total charges for services -- 8,095,997 8,095,997 6,879,891 (1,216,106)
Fines and forfeitures 1,804,500 2,329,500 1,183,991 (1,145,509)
Rents 207,500 207,500 219,042 11,542
(Continued)
COUNTY OF HAWAII
General Fund
Statement of Revenues,Expenditures,and Changes in Fund Balance- __
Budget and Actual(Budgetary Basis)
For the Fiscal Year Ended June 30,2018
Actual Variance
Original Final (Budgetary Positive
Budget Budget Basis) (Negative)
Revenues(continued): •
Interest and penalties 608,000 $ ' 608,000 $ 1,556,446 948,446
Miscellaneous 5,081,433 5,248,425 4,624,642 (623,783)
Total revenues 386,120,814 395,460,900 390,995,633 (4,465,267)
. Expenditures: -
Current
General government
Finance 12,214,259 12,757,823 11,165,113 1,592,710
General government building 5,433,935 5,772,435 5,395,195 377,240
Legislative 4,159,15L 3,490,101 3,302,628 187,473
Automotive equipment ' 4,783,107 4,426,607 4,266,883 159,724
Law 2,782,278 2,793,008 2,596,848 196,160
Research and development 2,870,836 3,111,222 ' 3,020,655 90,567
Planning and zoning 4,027,964' 4,121,349 3,926,726 194,623
Mayor's office 1,518,450 1,622,522 P 129,546
Engineering 1,694,288 1,686,288 1,285,261 401,027
Information technology 2,860,838 2,861,838 2,828,603 33,235
Human resources .2,033,455 2,033,455 1,897,185 136,270
Public works administration 1,937,793 1,946,793 1,925,644 - 21,149
Elections 1,038,211 1,038,211 654,169 , 384,042
Legislative auditor 758,502 758,502 604,104 154,398
Total general government 48,113,067 48,420,154 44,361,990 4,058,164
Public safety:
Police department 65,529,060 67,278,690 64,784,785 2,493,905 ' -
Fire department 47,185,584 48,740,661 47,756,099 984,562
Prosecuting attorney 9,146,416 9,635,813 7,648,031. 1,987,782
Protective inspection 3,381,482 3,398,482 3,102,525 295,957
Liquor control 2,135,398 2,224,891 2,011,333 213,558
Flood control 330,000 330,000 330,000 -
Civil defense agency; 1,849,784 1,977,182 1,376,595 600,587
Animal control 2,081,625 2,081,625 2,081,625
Total public safety 131,639,349 135,667,344 129,090,993 6,576,351
Highways and streets:
•
Mass transit 6,831,908 7,259,725 4,728,377 2,531,348
(Continued)
•
•
-39- .. .,
•
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 30,2018
Actual Variance
Original Final - (Budgetary Positive
Budget Budget Basis) (Negative)
Expenditures(continued):
Current(continued):
Health,education and welfare: 1
Elderly activities 3,878,835 $ 3,916,985 $ 3,550,999 365,986
Office of aging 3,664,719 3,672,719 2,982,161 690,558 '
Education • 58,500 58,500 38,703 19,797
Social programs 1,500,003 1,500,003 1,483,250- 16,753
Cemeteries 406,599 463,799 437,967 25,832
1
Physical examination 133,826 133,826 133,825 1
Total health,education and welfare 9,642,482 9,745,832 8,626,905 1,118,927
Culture and recreation:
Community music 273,689 273,689 219,162 54,527
Organized recreation:
Maintenance 10,121,925 10,019,150 9,408,238 610,912
Recreation 3,123,959 3,160,931 2,909,516 251,415
Aquatics 2,504,747 2,506,647 2,101,057 405,590
Hoolulu park complex 1,009,264 1,009,264 975,278 33,986
Administration 1,946,916 2,087,020 1,939,331 147,689
Children's zoo 799,760 823,960 807,660 16,300
Summer/Intersession 506,348 512,348 374,773 137,575
Culture and arts 317,173 324,384 258,555 65,829
Elderly activities administration 672,445 708,837 657,316 51,521
Total culture and recreation 21,276,226 21,426,230 19,650,886 ' 1,775,344
. Sanitation:
Environmental management 1,101,770 1,141,770 1,115,149 26,621
Pension and retirement contributions 45,988,658 45,988,658 41,772,542 4,216,116
Employees'health insurance 33,700,859 33,700,859 31,307,205 2,393,654
Other postemployment benefits 14,867,200_ _ __ 14,867,200 14,845,491 21,709
Other 12,287,500 10,145,661 2,396,649 7,749,012
Total current 325,449,019 328,363,433 297,896,187 30,467,246
(Continued)
COUNTY OF HAWAII
General Fund
•
Statement of Revenues,Expenditures,and Changes in Fund Balance-
Budget and Actual(Budgetary Basis)
For the Fiscal Year Ended June 30,2018
(Concluded)
Actual . Variance
Original Final (Budgetary Positive
Budget Budget Basis) (Negative)
Expenditures(continued):
Capital Outlay:
Community Development Block
grants(HUD) 100,000 $ 2,652,417 $ 2,652,417 $ -
HOME Program 50,000 2,475,000 2,104,668 370,332
Other 1,425,000 1,425,000 -
Total capital outlay 150,000 6,552,417 6,182,085 370,332
Total expenditures 325,599,019 334,915,850 304,078,272 30,837,578
Excess of revenues over expenditures 60,521,795 60,545,050 86,917,361 26,372,311
Other financing sources(uses):
Transfers out:
Housing Fund (2,143,350) (2,094,578) (1,173,675) 920,903
Solid Waste Fund (19,483,277) (19,483,277) (19,483,277) -
Sewer Fund (2,268,837) (2,268,837) (2,268,837)
Golf Course Fund (542,954) (542,954) (542,954) -
Capital Project Fund (40,727) (40,727) -
Highway Fund (8,800) (8,800)
Disaster/Emergency Fund (250,000) (250,000) (250,000)
Public Access,Open Space,and Natural
. Resources Preservation Fund (6,054,195) (6,074,195) (6,033,981) 40,214
Public Access,Open Space,and Natural •
Resources Preservation Maintenance Fund (756,774) (759,274) (754,248) 5,026
Budget Stabilization Fund (250,000) (250,000) (250,000)
Debt Service Fund (49,129,513) (49,129,513) (49,129,513)
Total transfers out (80,878,900) (80,902,155) (79,936,012) 966,143
Total other financing uses (80,878,900) (80,902,155) (79,936,012) 966,143
Excess(deficiency)of revenues and other
sources over(under)expenditures and other uses (20,357,105) (20,357,105) 6,981,349 27,338,454
Fund balance at beginning of year 47,746,958 47,746,958 47,746,958 _
Fund balance at end of year $ 27,389,853 $ 27 389 853 $ 54,728,307 $27,338,454
See accompanying notes to the basic financial statements.
•
•
•
•
41
1
COUNTY OF HAWAII
Proprietary Funds
Statement of Net Position
June 30,2018
Business-type Activities-
Enterprise Funds
Kulaimano Ouli Ekahi
Elderly Affordable
Housing Housing
Project Project Total
Assets
Current assets:
Cash and cash equivalents(note 3) $ 613,594 $ 449,679 $ 1,063,273
Restricted cash and cash equivalents (note 3) 12,704 29,493 42,197
I mprest fund(note 3) 50 100 150
Receivables,net(note 4) 264 5,038 5,302
Prepaid expenses 1,868 1,868
Total current assets 628,480 484,310 1,112,790
Noncurrent assets:
Restricted cash and cash equivalents(note 3) _ 72,659 72,659
Capital assets(note 6):
Land and site improvements 511,000 515,727 1,026,727
Buildings and equipment 1,241,542 488,522 1,730,064
Less accumulated depreciation (1,261,972) (92,276) (1,354,248)
Total capital assets 490,570 911,973 1,402,543
Total noncurrent assets 490,570 984,632 1,475,202
Total assets 1,119,050 1,468,942 2,587,992
Liabilities
Current liabilities:
Accounts payable 5,644 6,439 12,083. -
Internal Balances (note 5) 2,700 2,700
Security deposits payable from restricted assets 12,704 28,050 40,754
Deferred revenue 299 1,118 1,417
Interest payable 10,003 - 10,003
Notes payable,current portion(note 10) 62,622 29,273 91,895
Total current liabilities 93,972 64,880 158,852
Noncurrent liabilities: _
Notes payable(note 10) 529,874 185,236 715,110
Total liabilities 623,846 250,116 873,962
Net Position
Net investment in capital assets - (101,926) 697,464 595;538
Unrestricted - _ 597,130 521,362 1,118,492
Total net position $ 495,204 $ 1,218,826 $ 1,714,030
See accompanying notes to the basic financial statements.
COUNTY OF HAWAII
Proprietary Funds
Statement of Revenues,Expenses,and Changes in Fund Net Position
For the Fiscal Year Ended June 30,2018
Business-type Activities-
Enterprise Funds
Kulaimano Ouli Ekahi
Elderly Affordable
Housing Housing
Project Project Total
Operating revenues:
Rental receipts from tenants 129,046 $ 331,839 $ 460,885
Rental subsidy from federal government-HUD 224,921 - 224,921
Laundry receipts 2,734 2,734
Other 621 39,357 39,978
Total operating revenues 357,322 371,196 728,518
Operating expenses:
Utilities 36,620 45,865 82,485
•
General and administration 161,385 76,825 238,210
Maintenance and repairs 48,382 114,361 162,743
Depreciation(note 6) 34,850 16,371 51,221-
Total operating expenses 281,237 253,422 534,659
Operating income 76,085 117,774 193,859
Nonoperating revenues(expenses):
Investment income 5,540 21 5,561
Interest expense (31,875) (31,875)
(Loss)on disposal'of assets (330) - (330)
Total nonoperating revenues(expenses) (26,665) 21 (26,644)
Change in net position 49,420 117,795 167,215
Net position,beginning of year 445,784 1,101,031 1,546,815
Net position,end of year 495,204 1,218,826 $ 1.714,030
See accompanying notes to the basic financial statements.
43
COUNTY OF HAWAII
Proprietary Funds'
Statement of Cash Flows
For the Fiscal Year Ended June 30,2018
Business-type Activities-
Enterprise Funds
Kulaimano OulEkahi
Elderly Affordable
Housing Housing
Project Project Total
Cash Flows from Operating Activities
Receipts from tenants $ 133,609 $ 370,917 $ 504,526
Receipts from federal government-HUD 224,921 - 224,921
Payments to suppliers for goods and services (245,368) - (260,332) (505,700)
Net cash provided by operating activities 113,162 110,585 223,747
Cash Flows from Capital and Related Financing Activities
Principal paid on notes payable (59,251) (58,393) (117,644)
Interest paid on notes payable (32,999) (32,999)
Purchase of capital assets (3,760) (1,393) (5,153)
Net cash used in capital and related financing activities (96,010) (59,786) (155,796)
Cash Flows from Investing Activities
Proceeds from maturities of investments 1,400,000 1,400,000
Purchase of investments (1,200,000) (1,200,000)
Interest on investments 5,402 21 5,423
Net cash provided by investing activities 205,402 21 205,423
Net increase(decrease)in cash and cash equivalents 222,554 50,820 273,374
Cash and cash equivalents at beginning of year(including
restricted cash and cash equivalents) 403,794 501,1 I I 904,905
Cash and cash equivalents at end of year(including
restricted cash and cash equivalents) 626,348 $ 551,931 $1,178,279
Reconciliation of Operating Income to Net Cash
Provided by Operating Activities
Operating income $ 76,085 $ 117,774 $ 193,859
Adjustments to reconcile operating income to net cash
provided by operating activities:
Depreciation expense 34,850 16,371 51,221
Change in assets and liabilities:
Receivables,net (4) (1,138) (1,142)
Prepaid expenses (77) (77)
Accounts and other payables 2,410 (23,281) (20,871)
Deferred revenue (102) 859 757
-Netcashprovided by operating activities $ 113,162 $ 110,585 $ 223,747
See accompanying notes to the basic financial statements.
COUNTY OF HAWAII
Fiduciary Funds
Statement of Fiduciary Net Position
June 30,2018
Private-
Purpose Agency
Trusts Funds
Assets
Cash and cash equivalents(note 3) $ 1,706,380 $ 4,637,561
Investments(note 3) 3,132,501 412,998
Receivables:
Due from other agency funds 7,270
Other receivables 2,294 27,009
Total receivables 2,294 34,279
Total assets 4,841,175 $ 5.084,838
Liabilities
Accounts payable 25,303
Due to other agency funds 7,270
Accrued liabilities 3,483,070
Advances payable 333,876
Assets held for the benefit of improvement districts 1,260,622
Total liabilities 25,303 $ 5,084,838
Net Position
Held in trust for other parties 4,815,872
- Total net position $ 4,815,872
See accompanying notes to the basic financial statements.
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COUNTY OF HAWAII
Fiduciary Funds
Statement of Changes in Fiduciary Net Position
For the Fiscal Year Ended June 30,2018
Private-
Purpose
Trusts
Additions
Contributions:
Puna Geothermal Venture 50,000
Investment earnings:
Net increase in fair value of investments 25,456
Dividends and interest 60,933
Total additions 136,389
Deductions
Claims Consultant 25,303
Grant payments 60,092
Investment Fees 13,458
Total deductions 98,853
Change in net position 37,536
Net position,beginning of year 4,778,336
Net position,end of year $4,815,872
See accompanying notes to the basic financial statements.
COUNTY OF HAWAII
Notes to the Basic Financial Statements
June 30,2018
The accounting policies of the County of Hawaii(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(CA FR),
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,
J
Primary Government The County operates under the Mayor-Council form of government
under a charter that became effective on January 2, 1969,and was amended in 1979, 1982,
1990 and 2000,The County's operations are organized by the following functions: general
government;public safety;highways and streets; sanitation;health, education and welfare;
culture and recreation;pension and retirement contributions;health fund;miscellaneous;
capital outlay; and debt service. The State of Hawai'i (the State) assumes full responsibility
for several major functions usually performed by local governments, including education,
welfare,health and judicial functions, There are no separate city,county or township
governments nor any school districts,special districts,authorities or public corporations with
overlapping authority,
GASB Statement No. 14, as amended,defines component units as legally separate
organizations-for which the elected officials of the primarygovernment 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 fmancial 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: (I)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
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COUNTY OF HAWAII
Notes to the Basic Financial Statements
June 30, 2018
finance the deficits of,or provide financial support to,the organization; or(3) The primary
government is obligated in some manner for the debt of the organization.
As required by GAAP as set forth in GASB Statement No, 14,No. 39 and No. 61,these basic
financial statements present the County of Hawai'i (the primary government)and its
component unit,the Department of Water Supply (the Department). This component unit is
included in the County's reporting entity because of its financial relationship with the County.
Discretely Presented Component Unit The component unit column in the basic financial
statements includes the financial data of the Department,a legally independent agency of the
County that is accounted for as an enterprise fund,It is reported in a separate column to
emphasize that it is legally separate from the County, The members of the Water Board,the
governing body of the Department, are appointed by the Mayor of the County and confirmed
by the County Council, The Department is granted corporate powers by state statute and the
County Charter. Although the County does not have the authority to approve or modify the
Department's operational and capital budgets,the County has issued bonds on the
Department's behalf that are general obligations of the County. Because the County is
obligated to repay these bonds in the event of default by the Department,the County is
financially accountable for the debts of the Department. See Note 14 for component unit
disclosures for the Department. Complete financial statements of the Department can be
obtained from the Department of Water Supply, 345 Kekuanao'a Street, Suite 20,Hilo,
Hawai'i 96720.
Basic Financial Statements
The basic financial statements include both government-wide (based on the County as a
whole) and fund financial statements. Both the government-wide and fund fmancial
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,
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COUNTY OF HAWAII
Notes to the Basic Financial Statements
June 30,2018
•
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,Norunajor funds (by category) are summarized into a single column,
- The governmental funds in the fund financial statements are presented using the current
financial resource focus and modified accrual basis of accounting. This is the manner in
which these funds are normally budgeted.This presentation is deemed most appropriate to (a)
demonstrate legal and covenant compliance, (b) demonstrate the source and use of liquid
resources, and (c) demonstrate how the County's actual experience conforms to the budget
fiscal plan,Since the governmental fund statements are presented using a different
measurement focus and basis of accounting than the government-wide statements'.
governmental activities column,a reconciliation is presented on the page following each
statement,which briefly explains the adjustments necessary to transform the fund based
financial statements into the governmental activities column of the government-wide
presentation,
The County's fiduciary funds are presented in the fund financial statements by type (private
purpose and agency). Since by definition these assets are being held for the benefit of a third
party(private parties, state government,etc.) and cannot be used to address activities or
obligations of the government,these funds are not incorporated into the government-wide
statements. - ,
Government-wide and fundfinancial 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 but interfund services provided and used have not been
eliminated in the process of consolidation, 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 dearly
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,
COUNTY OF HAWAT I
Notes to the Basic Financial Statements
June 30,2018
Separate financial statements are provided for governmental funds,proprietary funds,and
fiduciary funds,even though the latter are excluded from the government-wide financial
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 fmancial 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,
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.
The County reports the following major proprietary funds:
Kula mann Elderly Housing Project- Used to account for the operation of a rental
housing project for low-income senior citizens located north of Hilo.
Ouli Ekahi Affordable Housing Project- Used to account for the operation of a 33-unit
single-family affordable rental housing project located in Waimea.
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COUNTY OF HAWAII
Notes to the Basic Financial Statements
•
June 30,2018
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, ,
Agency Funds— Used to account for assets held by the County for other governmental
units and individuals. The agency funds are custodial in nature and do not involve
measurement of results of operations, The County has the following agency funds:
• State Weight Tax Fund
• Improvement District No, 18 Fund
• Improvement District No. 19 Fund
• Improvement District Revolving Fund
• Performance and Refundable Deposits Fund
• Payroll Clearance Fund
• Flexible Spending Account
• Lapsed Warrants Fund
• Non-Profit License Plates Fund
• Organ and Tissue Education Fund
• Business Improvement District 1-Kailua
Basis of Accounting
Basis of accounting refers to the period in which revenues and expenditures (or expenses)are
recognized in the accounts and reported in the basic financial statements. Basis of accounting
relates to the timing of the measurements made,regardless of the measurement focus applied.
The government-wide fmancial statements and the proprietary,fiduciary and component unit
fund financial statements are presented on an accrual basis of accounting, The j 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. -
COUNTY OF HAWAII
_ Notes to the Basic Financial Statements
June 30,2018
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
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 FASB (Financial Accounting Standards Board) and AICPA
(American Institute ofCertifred 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.
COUNTY OF HAWAII
Notes to the Basic Financial Statements
June 30, 2018
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
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. Investments also consist of equity securities in the fiduciary fund financial
statements, These investments are stated at fair value based on closing quoted prices.
Real Property Taxes
The County's real property taxes are levied on July 1 each year on assessed valuation as of
January 1, The taxes become a lien on the property assessed as of the levy date, Taxes are
due and payable in two equal annual installments on August 20 and February 20.Accordingly,
real property taxes receivable as of June 30 are delinquent. Each delinquent installment bears
interest at 1% per month and penalties of up to 10%of the amount due. Assessments are
based on 100%of estimated fair market values prior to the application of exemptions or
preferential assessments.
The County provides real property tax abatement under five programs—Enterprise Zone,
Historic Residential Dedication, Low and Moderate Income Housing, Agricultural Use
Programs, and Solar Water Heater Credit:
Enterprise Zone Exemption-Section 19-89.3 of the Hawai'i County Code provides buildings
or other like structures which are built as a result of new construction by a qualified business
within an enterprise zone to be exempt except for the minimum tax from real property taxes
fora period of three years. The purpose of this program is to stimulate business and industrial
growth.A qualified business in an enterprise zone must satisfy the requirements of Chapter 31
of the Hawai'i County Code and section 208E, Hawaii Revised Statutes.
Historic Residential Dedication Exemption—Section 19-89.1 of the Hawai'i County Code
and Rule 36 of the Rules and Regulations of the Director of Finance provides an exemption to
encourage the preservation of residential structures that have been placed on the Hawaii
Register of Historic Places after January 1, 1977. The property owner must provide visual
access on a year-round basis or open the property to the public for twelve days per year, The
owner certifies the current level of taxation is a material factor which threatens the continued
existence of the historic status. This dedication is for a minimum period of ten years,
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COUNTY OF HAWAII
Notes to the Basic Financial Statements
June 30,2018
automatically renewable indefinitely. Cancellation of the dedication by either the owner or
the Director of Finance may only be made upon five years'written advance notice and no
earlier than the end of the fifth tax year.Any person who becomes an owner of the dedicated
real property shall be subject to the restrictions and retroactive tax assessment provisions. If
the dedication is approved, the exemption based upon the dedication shall be effective July 1
of the tax year following the approval of the dedication.The dedicated exempt property or
portion of the property approved shall be subject to the minimum tax provisions of Section 19-
90(e) of the Hawai'i County Code,If there is a breach in the agreement,the property would be
subject to roll back taxes,including penalty and interest,
Low and Moderate-Income Housing Exemption— Section 19-87 of the Hawai'i County Code
and Rule 37 of the Rules and Regulations of the Director of Finance provides an exemption
for a housing project which is owned and operated by a nonprofit or limited distribution
mortgagor or by a qualified entity from taxation.Must participate in long-term housing
project that have regulatory agreements mandating rent levels,occupancy of the project is
limited to the elderly,handicapped,low or moderate income families.Applicants must submit
an application form along with a copy of the recorded regulatory agreement,The exemption
is equal to 100% of the assessed value for the portion of the real property that is dedicated as
low- and moderate-income rentals.If the entire property is dedicated, then the net taxable is
zero but the property is still subject to the minimum tax per Section 19-90(e) of the Hawaii
County Code.The exemption shall continue so long as the rental housing project is owned
and operated by a nonprofit or limited mortgagor,If the rental units do not comply with the
regulatory conditions,the property would be subject to roll back taxes,including penalty and
interest,
Non Dedicated Agricultural Use Assessment— Section 19-57 of the Hawai'i County Code
and Rule 34 of the Rules and Regulations of the Director of Finance reduces assessments to
encourage local agricultural production as well as the preservation of agricultural lands that
could otherwise be further developed,by valuing these lands at two times the dedicated
agricultural use value as opposed to the market value. Unlike the Dedicated Agricultural Use
program, the zoning for this program must be agricultural.An application form must be filed
along with a plot plan and provide details as to what agricultural activities is conducted on the
property. Upon review and approval, the application is effective as of January 1 for the
following tax year,Renewal of the application shall be in such form and at such time as
requested by the director.Valuation consideration is given to the type of agricultural activity.
Any breach to the terms of would result in an immediate rollback calculation of current plus
two yeas taxes plus penalties and interest.
Commercial Agricultural Use Dedication— Section 19-60 of the Hawaii County Code and
Rule 31 of the Rules and Regulations of the Director of Finance provides reduced assessments
to encourage local agricultural production as well as the preservation of agricultural lands that
could otherwise be further developed,by valuing the dedicated lands at the agricultural use
value as opposed to the market value,An application form must be filed along with a plot
plan and provide details as to what agricultural activities is conducted on the property,Upon
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COUNTY OF HAWAII
Notes to the Basic Financial Statements
June 30,2018
review and approval,the owner is required to record the dedication at the Bureau of
Conveyances,There is currently Only one available dedication length which is a 10 year
period,however,previously there was a 20 year dedication,This dedication does not
automatically renew,Valuationconsideration is given to the type of agricultural activity,
Any breach to the terms of the recorded dedication would result in the cancellation of the
dedication, or portion thereof, and the immediate rollback calculation of taxes plus penalties
and interest.
Solar Water Heater Credit- Section 19-104 of the Hawai'i County Code provides a one time
tax credit per tax map key for up to $300 for the owner of real property who installs a solar
water heater on the owner's property on or after January 1,2008,This program was created
with the purpose of providing an incentive to support renewable energy,The owner must _._.
apply for the credit.
Information relevant to the disclosure of these programs for the fiscal year ended June 30,
2018 is as follows:
Tax Abatement Program Amount of Taxes Abated-as defined by GASB 77
Enterprise Zone $9,979.25
Historic Residential Dedication $251,465.60
Low and Moderate Income Housing $533,616.30
Agricultural Use Programs $29,138,884.00
• Solar Water Heater Credit $19,200,00
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 30,2018 of$499,264 are reflected as a restriction of general fund balance.
COUNTY OF HAWAII
Notes to the Basic Financial Statements
June 30, 2018
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 defiled 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 acquisition value if available
or if not,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,
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 three items that qualifies for reporting in this category,The County
reports the deferred loss on refunding and deferred outflow related to both pensions and other
postemployment benefits (OPEB) 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 both pensions and other
postemployment benefits(OPEB).
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COUNTY OF HAWAII
Notes to the Basic Financial Statements
June 30,2018
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
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 Hawaii.Accumulated sick leave at
June 30,2018 totaled$77,952,000 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.
Pensions
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
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COUNTY OF HAWAII
Notes to the Basic Financial Statements
June 30, 2018
additions to and deductions from ERS's fiduciary net position have been determined on the
same basis as they are reported by ERS. For this purpose,benefit payments (including
refunds of employee contributions) are recognized when due and payable in accordance with
the benefit terms. Investments are reported at fair value.
Other Postemployment Benefits (OPEB)
For the purposes of measuring the net OPEB liability,deferred outflows or resources and
deferred inflows of resources related to OPEB, and OPEB expense,information about the
fiduciary net position of the Hawaii Employer-Union Health Benefits Trust Fund("EUTF")
and additions to/deductions from EUTF's fiduciary net position have been determined on the
same basis as they are reported for EUTF. For this purpose,EUTF recognizes benefit
payments when due and payable in accordance with the benefit terms. Investments are
reported at fair value,except for investments in commingled and money market funds,which
are reported at net asset value (NAV). The NAV is based on the fair value of the underlying
assets held by the respective fund less its liabilities,
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
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 accordance 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
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COUNTY OF HAWAII
Notes to the Basic Financial Statements
June 30, 2018
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.
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. The
General Fund is the only fund that could potentially report a positive unassigned fund
balance.
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.
COUNTY OF HAWAII
Notes to the Basic Financial Statements
June 30, 2018
New Accounting Pronouncements
In June 2015, GASB issued Statement No. 75,Accounting and Financial Reporting for
Postemployment Benefits Other Than Pensions. The primary objective of this Statement is to
improve accounting and financial reporting by state and local governments for
postemployment benefits other than pensions(other postemployment benefits or OPEB) . The
requirements of this Statement are effective for the County for periods beginning after June
15,2017, The County implemented these requirements as of and for the fiscal year ended
June 30,2018.
In November 2016, GASB issued Statement No. 83, Certain Asset Retirement Obligations,
The objective of this Statement is-to provide financial statement users with information about
• asset retirement obligations (AROs) , The requirements of this Statement are effective for
reporting periods beginning after June 15, 2018 and did not have an impact on the County's
financials for the year ending June 30,2018.
In January 2017, GASB issued Statement No, 84, Fiduciary Activities. The principal
objective of this Statement is to enhance the consistency and comparability fiduciary activity
reporting by state and local governments. The requirements of this Statement are effective for
reporting periods beginning after December 15,2018,The County has not yet determined the
effect this Statement will have on its fmancial statements.
In March 2017, GASB issued Statement No, 85, Omnibus 2017, The objective of this
Statement is to improve consistency in accounting and financial reporting by addressing
practice issues that have been identified during implementation and application of certain
GASB Statements. The requirements of this Statement are effective for reporting periods
beginning after June 15,2017. The County implemented these requirements as of and for the
fiscal year ended June 30,2018.
In May 2017, GASB issued Statement No. 86, Certain Debt Extinguishment Issues. The
objective of this Statement is to improve consistency in accounting and fmancial reporting for
certain debt extinguishments and to enhance the decision-usefulness of that information, The
requirements of this Statement are effective for reporting periods beginning after June 15,
2017 and did not have an impact on the County's financials for the year ending June 30, 2018,
In June 2017, GASB issued Statement No, 87, Leases. The objective of this Statement is to
better meet the information needs of fmancial statement users by improving accounting and
financial reporting for leases by governments. The requirements of this Statement are
effective for reporting periods beginning after December 15,2019. The County has not yet
determined the effect this Statement will have on its fmancial statements.
In March 2018, GASB issued Statement No. 88, Certain Disclosures Related to Debt,
including Direct Borrowings and Direct Placements, The objective of this Statement is to
improve the information that is disclosed in notes to government financial statements,related
- - -60-
COUNTY OF HAWAII
Notes to the Basic Financial Statements
June 30, 2018
to debt, including direct borrowings and direct placements. The requirements of this
Statement are effective for reporting periods beginning after June 15,2018.
In June 2018, GASB issued Statement No, 89, Accounting for Interest Cost Incurred Before
the End of a Construction Period, The objectives of this Statement are (1)to enhance the
relevance and comparability of information about capital assets and the cost of borrowing for
a reporting period and (2)to simplify accounting for interest cost incurred before the end of a
construction period. The requirements of this Statement are effective for reporting periods
beginning after December 15, 2019.
Adoption of New Accounting Principle
The County and Department implemented GASB Statement No. 75, Accounting and
Financial Reporting for Postemploytnent Benefits Other Than Pensions. This Statement
replaces GASB Statement No, 45,Accounting and Financial Reporting by Employers.for
Postemployment Benefits Other Than Pensions, and No. 57, OPEB Measurements by Agent
Employers and Agent Multiple-employer Plans, The primary objective of this Statement is to
improve accounting and financial reporting by state and local governments for
postemployment benefits other than pensions (other postemployment benefits or OPEB),As a
result,the County and Department's net position as of June 30, 2017 was restated and
decreased by$274,026,503 and $15,702,743, respectively,
Governmental
Activities Component Unit
Net Position at June 30, 2017, as previously stated $434,457,254 $ 248,898,228
Cumulative effect of applying GASB 75:
Reverse net OPEB (asset)liability at
June 30,2017, as previously stated 82,247,822 (385)
Net OPEB liability at June 30, 2017 (384,824,31'2) (17,570,146)
Deferred outflows of resources—employer
contributions made subsequent to the
measurement date of the beginning net
position liability but prior to June 30, 2017 28,549,987 1,867,788
Net Position at June 30, 2017, as restated $160,430,751. $ 233,195.485
Management of the County and Department concluded that it was not practical to determine
the beginning amounts of all OPEB-related deferred inflows of resources and deferred
outflows of resources,Accordingly, as permitted under the provisions of GASB No. 75, the ,
County and Department have only reported the beginning deferred outflow of resources
resulting from employer OPEB contributions made subsequent to the measurement date of the
beginning net OPEB liability but prior to June 30, 2017.
_. I
COUNTY OF HAWAII
Notes to the Basic Financial Statements
June 30, 2018
2. STEWARDSHIP, COMPLIANCE AND ACCOUNTABILITY
Annual Budget.
The County follows these procedures in establishing its operating and capital budgets:
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 2016-2017 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$7.7 million in the general fund and$3,3
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,
- 62-
COUNTY OF HAWAII
Notes to the Basic Financial Statements
June 30, 2018
• 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
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 fmancial
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 30,2018:
Ending fund balance—GAAP basis $61,040,124
Encumbrance adjustments:
allotments Beginning encumbrances and unexpended a otme is 1,203,398
Ending encumbrances and unexpended allotments (1,915,855)
Other adjustments (5,599,360)
Ending fund balance—Non-GAAP budgetary basis s.a728,307
3. CASH AND INVESTMENTS
The Director of Finance is responsible for the safekeeping of all monies paid to the County,
The Director of Finance invests any monies of the County which in the Director's judgment
are in excess of the amounts necessary for meeting the day-to-day operating needs of the
County.Under Section 46-50 of the Hawai'i Revised Statutes,legally authorized investments
include obligations of or guaranteed by the U.S. government,obligations of the State,
federally insured savings and checking accounts,time certificates of deposit, and repurchase
agreements with federally insured financial institutions.
Cash
The County maintains a number of checking and savings accounts for various funds and with
various financial institutions. Bank deposits are under the custody of the Director of Finance,
For financial statement reporting purposes,cash and short-term investments consist-of cash
and money market accounts. Cash and short-term investments also include repurchase
agreements,certificates of deposit, and government sponsored securities with original
maturities of three months or less,
- 63 -
COUNTY OF HAWAII
Notes to the Basic Financial Statements
June 30,2018
The carrying amount of the County's deposits (cash,time certificates of deposit,and money
market accounts) as of June 30,2018 was $199,787,954 for the primary government and
$6,590,869 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 $212,619,665 at June 30, 2018,Of that amount,$211,528,390
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$1,091,275
represent deposits held by a management agent and were uncollateralized,Accordingly, these
deposits were exposed to custodial credit risk,Custodial credit risk is the risk that in the event
of a bank failure,the County's deposits may not be returned to it. For checking and savings
accounts,time certificates of deposit, and repurchase agreements,the County requires,in
accordance with State statutes,that the depository banks pledge collateral based on the
available bank balances for the protection of the funds deposited.All securities pledged as
collateral are held by the County's fiscal agents in the name of the County,The County also
requires that no more than 60% of the County's total funds available for deposit may be
deposited in any one financial institution,in accordance with State statutes,
Investments
The County holds investments both for its own benefit and on behalf of some of the fiduciary
funds.The County's investments of funds not required for immediate payments are
predominately comprised of government sponsored securities (equivalent to the rating in U,S.
Treasuries),repurchase agreements and certificates of deposit,while the fiduciary funds also
hold equity securities.
The framework for measuring fair value provides a fair value hierarchy that prioritizes the
inputs to valuation techniques used to measure fair value.The hierarchy gives the highest
priority to unadjusted quoted prices in active markets for identical assets or liabilities (level 1)
and,the lowest priority to unobservable inputs (level 3),The three levels of the fair value
hierarchy are described as follows:
Level 1 —Inputs are quoted prices (unadjusted) in active markets for identical assets or
liabilities that a government can access at the measurement date.An active market is a
market in which transactions for the asset or liability take place with sufficient frequency
and volume to provide pricing information on an ongoing basis,
Level 2—Inputs other than quoted prices included within level 1 that are observable for
an asset or liability, either directly or indirectly,If the asset or liability has a specified
(contractual) term,a level 2 input must be observable for most of the full term of the asset
or liability.Level 2 inputs include:
• Quoted prices for similar assets or liabilities in active markets,
-64-
COUNTY OF HAWAII
Notes to the Basic Financial Statements
June 30, 2018
• Quoted prices for identical assets or liabilities in markets that are not active,
• Inputs other than quoted prices that are observable for the asset or liability,
• Inputs that are derived principally from or corroborated by observable market
data by correlation or other means,
Level 3—Inputs are unobservable for an asset or liability,
Following is a description of the valuation techniques used by the County to measure fair
value:
Government sponsored securities of$24,461,861 and certificates of deposits of
$49,970,582:Valued using quoted prices for identical or similar assets in markets that are
not active (Level 2).
Equity securities of$1,606,656: Valued using quoted prices in active markets for
identical assets or liabilities that a government can access at the measurement date (Level
1).
The County's investments and maturities at June 30, 2018 are as follows:
Maturity (in vears1
Fair Value Less than 1 1—5
Investments—Primary Government:
Certificates of deposit $ 49,723,654 $42,926,755 $ 6,796,899
Government sponsored securities 22,769,946 1,978,040 20,791,906
$ 72.493 600 $443904,795 $27J88.805
Investments—Private-Purpose Trusts:
Govemment sponsored securities $ $ 1 525,845
Equity securities $ 1,606 656
Investments—Agency Funds: •
Certificates of deposit $ 246,928 $ $ 246,928
Government sponsored securities 166,070 166,070
412928 $ 412.998
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
-65-
COUNTY OF HAWAII
Notes to the Basic Financial Statements
June 30,2018
and repurchase agreements,These investments are either insured by the FL)IC, secured by
collateral or carry a credit rating equivalent to U,S.Treasuries.
Custodial Risk: Custodial risk is the risk of loss from the failure of the counterparty,which is
defined as any entity that obtained an investment on behalf of the County.All of the County's
deposits including repurchase agreements are secured by collateral which is kept by a third
party custodian,Broker-dealers utilized by the County are members of the Securities Investor
Protection Corporation, and all investment securities are held in the County's name.
Concentration of Credit Risk: State law limits deposits to no more than 60% of the total in
any one depository.The County seeks to further diversify its portfolio by purchasing from
different issuers,by purchasing different types of investments and by purchasing investments
at different maturities.The County also purchases its investments from a number of banks
and broker-dealers both located locally and on the mainland,As of June 30,2018,
investments were distributed as follows: FTN Financial,4,4%;Multi Bank Securities, 15.3%;
First Hawaiian Bank, 17,9%;Raymond James,4,4%; Stifel Nicolaus &Company,4,8%;Bank
of Hawaii,43,9%;Territorial Savings 9.3%.
Restricted Cash and Cash Equivalents and Investments
Cash and cash equivalents and investments classified as restricted assets for the primary
government at June 30,2018 amounted to $1 17,232,972.
Construction related contributions restricted to various capital improvement projects and fuel
tax funds received are recorded as restricted assets in the Capital Projects Fund. Such funds
totaled$55,536,495 at June 30,2018.
Cash and investments in the Bond Redemption Fund and the Interest Fund are restricted to
debt service related payments and amounted to$30,440,308,
Cash in the Highway Fund,Bikeway Fund and Beautification Fund are restricted to costs
incurred relating to highways and streets and the beautification of such items and amounted to
$10,339,816.
Cash in the Hawaii County Housing Agency classified as restricted to provide public housing
assistance amounted to $1,432,621,
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$469,264 and$18,899,612,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 $12,704 and$29,493,respectively,at June 30,2018.
66 -
COUNTY OF HAWAII
Notes to the Basic Financial Statements
June 30,2018
An operating reserve fund was established by the Ouli Ekahi Affordable Housing Project
pursuant to an agreement with the Hawai'i i Housing Finance and Development Corporation,
who are the holders of the project's note. This restricted reserve amounted to $72,659 at June
30,2018,
4. RECEIVABLES
Receivables as of June 30, 2018,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 $28,266,778 $28,266,778
Accounts receivable:
Sewer -- 1,941,995 1,941,995
Solid waste -- 1,747,238 1,747,238
Intergovernmental 26.668,385 7,954,660 3,746,145 38.369.190
Gross receivables 54,935,163 ( . 7,954,660 7,435,378 70,325,201
Less: allowance for
uncollectibles 12,853_8201 (745,913) (3,599.733)
Net total receivables I $ 7,954,660
During fiscal year 2005,the County issued$3,887,493 in general obligation bonds on behalf
of Improvement District No. 18,an agency fund, On February 12,2013 bonds were issued to
refund the outstanding principal balance of$1,345,945 for the Improvement District. During
fiscal year 2014 and 2015,the County also issued$448,669 and$720,331,respectively,in
general obligation bonds on behalf of Improvement District No. 19, an agency fund.At June
30,2018,the outstanding balance for both Improvement Districts of$2,098,246 is reflected in
the government-wide statement of net position as a receivable(see Note 10).
Business-type activities:
Enterprise
Funds
Accounts receivable:
Rent $12,299
Other 938
Gross receivables 13,237
Less: allowance for
uncollectibles (7.935)
Net total receivables $ 5,302
COUNTY OF HAWAII
Notes to the Basic Financial Statements
June 30,2018
5. INTERFUND RECEIVABLES AND PAYABLES
Interfund receivables and payables consist of the following at June 30,2018:
Receivable Fund Payable Fund Amount
General fund Capital projects fund $ 402,048
Other governmental funds 1,686,149
2,088,197
Capital projects fund General fund 38,999
Other governmental funds 655291
694,290
Bond redemption fund Capital projects fund 3,204,372
Other governmental funds General fund 619,033
Other governmental funds 106.289
725.322
Total $6712,181
Other governmental funds Enterprise funds $2,700
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 30,2018 consisted of the following:
Transfers out:
Capital Other
General Projects Governmental
Fund Fund Funds Total
Transfers in:
Capital Projects Fund $ 40,727 $3,538,706 $ 3,579,433
Bond redemption fund 28,073,388 3,204,372 31,277,760
Other governmental funds 40,853,366 40,853,366
$68.967,481 $3,538,706
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,
COUNTY OF HAWAII
Notes to the Basic Financial Statements
June 30,2018
6. CAPITAL ASSETS
Capital asset activity for the year ended June 30,2018 for the County was as follows:
Balance Balance ,
July 1, Retirements/ June 30,
2017 Additions Transfers 2018
Governmental activities:
Capital assets not being depreciated:
Land and
improvements . $ 239,187,891 $ 17,203,060 $ $ 256,390,951
Easements 4,227,058 1,924,751 6,151,809
Construction work in
progress 71,118,202 27,623,974 £48,150.4811 50,591,695
Total capital assets not
being depreciated 314,533,151 46,751,785 (48,150,4811 313,134,455
Capital assets being,depreciated:
Buildings and
improvements 714,044,030 46,864,274 (1,039,584) 759,868,720
Equipment 155,609,772 8,687,699 (4,368,165) 159,929,306
Easements 456,497 456,497
Infrastructure 619,836,216 5,068,045 624,904,261
Total capital assets
being depreciated 1,489,946,515 60,620,018 (5,407,749) 1.545,158,784
Less accumulated depreciation for:
Buildings and
improvements (116,056,044) (12,175,546) 90,683 (128,140,907)
Equipment (95,418,996) (9,527,020) 3,935,508 (101,010,508)
Easements (439,300) _ (439,300)
Infrastructure £290,918,231) (24,690,203) £315,608,4341
Total accumulated
depreciation (502,832,5711 (46,392,769) 4,026,191 1545,199.149).
Total capital assets
being depreciated,
net 987,113,944 14,227,249 (1,381,558) 999,959,635
Governmental
activities capital
assets,net $1,301,647 095 $ p ($49,532,(D3
COUNTY OF HAWAII
Notes to the Basic Financial Statements
June 30,2018
Balance Balance
July 1, Retirements/ June 30,
2017 Additions Transfers 2018
Business-type activities:
Capital assets not being depreciated:
Land 753.877 753.877
Capital assets being depreciated:
Buildings and
improvements 1,593,187 1,593,187
Ground and site
improvements 272,850 272,850
Equipment 137,950 5,153 (6.226) 136,877
Total capital assets
being depreciated 2,003,987 5,153 (6,226) 2,002,914
Less accumulated depreciation for:
Buildings and
improvements (982,689) •(36,044) (1,018,733) •
Ground and site
improvements (214,957) (4,347) (219,304)
Equipment (111,277) (10,830) 5,896 (116,211)
Total accumulated
Depreciation (1,308.923 (51,221) 5,896 Cl_354248>
Total capital assets
being depreciated,
net 695,064 (46,068) (330) 648,666
Business-type •
activities capital
assets,net 51.448,941 -S(46,068). $ ,(330.
COUNTY OF HAWAII
Notes to the Basic Financial Statements
June 30, 2018
Depreciation expense was charged to functions/programs of the primary government as
follows:
Governmental activities:
General government $2,903,326
Public safety 4,679,371 -
Highways and streets 26,445,224
Sanitation 6,735,445
Health, education and welfare 2,150,098
Culture and recreation 3,392,892
Total depreciation expense—governmental activities 0
Business-type activities:
Kula'imano Elderly Housing Project $34,850
Ouli Ekahi Affordable Housing Project 16,371
Total depreciation expense—business-type activities
7. DEFERRED INFLOW OF RESOURCES
Deferred inflow of resources consists of the following at June 30, 2018:
Governmental activities:
Capital Bond Other Total
General Projects Redemption Governmental Governmental
Fund Fund Fund Funds Funds
Real property taxes $28,551,426 $ $ $28,551,426
Liquor control revenue 192,480 192,480
Sewer revenue 1,283,202 1,283,202
Housing revenue -- 25,055 25,055
Solid waste revenue 1.660.118 1,660,118
Total presented in
fund financial
statements 28,743,906 2,968,375 31,712,281
Add deferred inflows
of resources related
to pensions &OPEB 14,532,816 14,532,816
Less adjustments for
accrual of revenues (25.412,957) (2,968,375) (28,381,332),
Total government-
wide financial
statements 0 $ 17,863,765
COUNTY OF HAWAII
Notes to the Basic Financial Statements
June 30,2018
8. LEASES
The County leases machinery and equipment under noncancellable leases expiring at various
dates through May 2023. 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$12,928,097 and$2,246,204,respectively,
and the related present value of the remaining obligations under the capital leases amounting
to$8,112,577 at June 30,2018 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
$1,989,708 for the fiscal year ended June 30, 2018,
The future minimum payments under capital and operating leases at June 30,2018 are as
follows:
Capital Operating
Leases Leases
Year Ending June 30: _
2019 $2,642,236 $ 869,639
2020 2,333,136 721,514
2021 1,963,872 598,626
2022 1,054,398 490,031
2023 527,904 454,007
2024 -2028 354,856
2029-2033 17,324
2034-2038 900
2039-2043 900
2044-2048 390
Total minimum lease payments 8,521,546 $3,508,187
Less amount representing
interest (408,969)
Obligations under capital leases 1
COUNTY OF HAWAII
Notes to the Basic Financial Statements
June 30,2018
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
net position.The amount recognized each year is based on the landfill capacity used as of the
statement of net position date.At June 30,2018,the County recognized a liability of
$21,782,000,based on the use of 98%of the estimated capacity of the landfill,During the
fiscal year ended June 30,2018, there was $387,000 in expenditures incurred for the closure
of the landfill.The remaining$346,000 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 postdosure care in 2018.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 dosed 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 dosure date,However, the County anticipates monitoring and maintaining the
site for thirty years because there is presently a subterranean fire which requires active
management.The estimated cost of closure and postclosure is$17,059,000,based on what it
would cost to perform the required closure and postclosure care in 2018,Actual costs may be
higher due to inflation,changes in technology, or changes in regulations,Through
June 30,2018,$8,833,000 was spent on closure and postdosure care of the landfill,
- 73 -
COUNTY OF HAWAII
Notes to the Basic Financial Statements
June 30,2018
The remaining estimated liability of$8,225,000 is included in the government-wide statement
of net position. During the year ended June 30,2018, $174,000 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 postclosure care.Accordingly,no liability for this landfill is included
in the County's financial statements,
Financial Assurance For fiscal year 2018,the County has provided for financial resources
that will be available to provide for closure,postclosure care and remediation or containment
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 anneal 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,State law requires the County to perform necessary closure
activities,including,but not limited to, the removal of all remaining solid waste and
performing appropriate site assessments and remedial activities,The estimated liability
($13,144,000) for the remediation costs associated with these closures is included in the •
County's financial statements and is based on closure plans prepared by a science and
engineering consultant contracted by the County, and the current value of costs expected to be
incurred,The liability could change over time due to inflation or deflation,changes in
technology, or changes in laws and regulations governing the remediation effort.
COUNTY OF HAWAII
Notes to the Basic Financial Statements '
June 30,2018
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 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,
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 30,2018:
Bonds Issue Bond Balance Bond Balance Due Within
Authorized Amount July 1.2017 Issues Retirements June 30,2018 One Year
2007 Series A $ 85,000,000 $ 4,055,000 $ ($4,055,000) $ -- $ --
2007 Series B 20,820,000 4,950,000 (4,950,000) --
2007 Series C 10,787,388 5,504,568 (3,159,909) 2,344,659 --
2008 Series A 50,000,000 4,675,000 (2,280,000) 2,395,000 2,395,000
2010 Series A 26,493,750 4,177,500 (1,335,000) 2,842,500 1,387,500
2010 Series B 18,506,250 16,020,000 (896,250) 15,123,750 933,750
2013 Series A 58,509,892 51,088,253 (44,500.749) 6,587,504 2212,378
2013 Series B 21,010,000 15,655,000 (1,950,000) 13,705,000 2,050,000
2013 Series C 18,470,000 15,365,000 (1,655,000) 13,710,000 1,730,000
2013 PI Series A 1,169,000 1,125,981 (22,400) 1,103,581 23,017
2016 Series A - 99,620,000 99,620,000 99,620,000 --
2016 Series B 13,497,500 13,497,500 (1,100,000) 12,397,500 1.140,000
• 2016 Series C 44,835,000 44,835,000 44,835,000 3,545,000
2016 Series D 28,860,000 28,860,000 28,860,000 --
2016 Series 0 19,061,250 19,061,250 -- 19,061,250 --
2016 Series F 10,040,000 10,040,000 -- (3,305,000) 6,735,000 3,345,000
2017 Series A 90,000,000 -- 90,000,000 -- 90,000,000 2,685,000
2017 Series B 2,540,000 2,540,000 2,540,000 2,540,000
2017 Series C 2,083,779 2,083,779 2,083,779 1,017,432
2017 Series D 43,475,000 43,475,000 -- 43,475,000 --
2017 Series 0 685,000 685.000 (685,000) --
665,463.809 338,530,052 138,783,779 (69,894,308) 407,419,523 25,004,077
Add unamortized
premium 89,141.407 53.050.872 23,548,501 (12,275.808) 64,323.565 5.267,284
II $391.580.924 162332,280 L$82.170,116) 0 $30,271,361
COUNTY OF HAWAII
Notes to the Basic Financial Statements
June 30,2018
General obligation bonds payable reported in the governmental activities section on the
government-wide statement of net position at June 30,2018 are comprised of the following
individual issues:
Public improvement(PI) and/or refunding bonds:
2007 Series C at 4,0%to 5,0%, due through 2021 $ 2,344,659
2008 Series A at 4.0%to 6,0%, due through 2018 2,395,000
2010 Series A at 4,0%to 5,0%,due through 2020 2,842,500
2010 Series B at 3.335%to 6,1%,due through 2030 15,123,750
2013 Series A at 2.0%to 5.0%,due through 2032 6,587,504
2013 Series B at 3.0%to 5.0%, due through 2023 13,705,000
2013 Series C at 4.0%to 5.0%, due through 2024 13,710,000 ,
2013 P1 Series A at 2.75%, due through 2048 1,103,581
2016 Series A at 3,0%to 5,0%, due through 2035 99,620,000
2016 Refunding Series B at 3.0% to 5,0%, due through 2026 12,397,500
2016 Refunding Series C at 5.0%, due through 2027 44,835,000
2016 Refunding Series D at 5,0%, due through 2028 28,860,000
2016 Refunding Series Eat 2.0%to 5.0%, due through 2029 19,061,250
2016 Taxable Series F at 1.2%to 1.55%,due through 2019 6,735,000
2017 Series A at 5.0%,due through 2037 90,000,000
2017 Refunding Series B at 3.0%, due through 2018 2,540,000
2017 Refunding Series C at 4,0% to 5.0%, due through 2019 2,083,779
2017 Refunding Series D at 3,0%to 5.0%, due through 2032 43,475,000
Total general obligation bonds payable $
Annual debt service requirements to maturity for the above general obligation bonds are as
follows:
Governmental Activities
Fiscal year ending June 30: Principal Interest
2019 $ 25,004,077 $ 18,512,986
2020 23,200,061 17,482,809
2021 24,992,709 16,351,526
2022 26,406,084 15,111,597
2023 26,457,516 13,836,161
2024—2028 133,005,087 49,979,849
2029—2033 91,195,732 23,073,171
2034—2038 56,657,650 5,615,237
2039—2043 209,184 54,764
2044—2048 239,573 23,957
2049 51.850 714
Total 5407,4
- 76-
COUNTY OF HAWAII
Notes to the Basic Financial Statements
June 30, 2018
Refunded Bonds
2017 Series B In fiscal year 2018,the County issued$2,540,000 in refunding bonds as the
2017 Series B general obligation bond issue. The refunding bonds have a true interest cost of
1,118% and were issued to advance refund$2,535,000 of the total callable bonds outstanding
of the 2007 Series B general obligation bond issue,
The bonds refunded bore interest at a rate of 4,000%, The par amount of$2,540,000 plus a
premium of$61,290,minus$11,104 in underwriting fees,insurance and other issuance costs
resulted in net proceeds of$2,590,186. The net proceeds were used to purchase U.S.
government securities,which were deposited in an irrevocable trust administered by an escrow ,
agent and provided full payment on the outstanding 2007 Series B refunded bonds on August
7,2017. The bonds were considered defeased and are not included in the government-wide
statement of net position.
The County's total debt service requirements over the next year will decrease by$59,258 as a
result of the refunding, and the net economic gain(difference between the present values on
the old and new debt) after taking into account all allocable costs of issuance of the bonds was
$66,537,
2017 Series C Also,in fiscal year 2017,the County issued$2,083,779 in refunding bonds as
the 2017 Series C general obligation bond issue,The refunding bonds have a true interest cost
of 1,142%and were issued to advance refund$2,152,260 of the total callable bonds
outstanding of the 2007 Series C general obligation bond issue,
The bonds refunded bore interest at rates ranging from 4.000%to 4,250%. The par amount of
$2,083,779 plus a premium of$192,944,minus $13,748 in underwriting fees,insurance and
other issuance costs resulted in net proceeds of$2,262,975. The net proceeds were used to
purchase U.S. government securities,which were deposited in an irrevocable trust
administered by an escrow agent and provided full payment on the outstanding 2007 Series C
refunded bonds on August 7, 2017,The bonds were considered defeased and are not included
in the government-wide statement of net position.
The County's total debt service requirements over the next two years will decrease by $86,305
as a result of the refunding, and the net economic gain(difference between the present values
on the-old and new debt) after taking into account all allocable costs of issuance of the bonds
was $90,811,
COUNTY OF HAWAII
Notes to the Basic Financial Statements •
June 30,2018
2017 Series D& E Also,in fiscal year 2018, the County issued$44,160,000 in refunding
bonds as the 2017 Series D and E general obligation bond issue.The refunding bonds have a
true interest cost of 2,515%and were issued to advance refund the$42,395,000 of the total
callable bonds outstanding of the 2013 Series A general obligation bond issue.
The bonds refunded bore interest rates of 5,000%,The par amount of$44,160,000 plus a
premium of$5,743,063,minus$219,603 in underwriting fees,insurance and other issuance
costs resulted in net proceeds of$49,683,460.The net proceeds were used to purchase U.S,
government securities,which were deposited in an irrevocable trust administered by an escrow
agent and will provide full payment on the outstanding 2013 Series A refunded bonds on
September 1,2022.The bonds were considered defeased and are not included in the
government-wide statement of net position.
The County's total debt service requirements over the next fifteen years will decrease by
$3,166,915 as a result of the refunding,and the net economic gain (difference between the
present values on the old and new debt) after taking into account all allocable costs of issuance
of the bonds was$2,724,338.
Bond Premiums
At June 30,2018,total unamortized bond premiums were$64,323,565,which are being
amortized over the remaining life of the respective bond issues.
Bonds Authorized and Unissued
The County Council has authorized the issuance of$543,1 million in general obligation bonds
to finance both specified and unspecified capital improvement projects.At June 30,2018,
$198,4 million was not yet issued,
Subsequent Events On September 4,2018,the County Council authorized the issuance
of$3,699,000 in general obligation bonds for the County to finance specified capital
improvement projects.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,
COUNTY OF HAWAII
Notes to the Basic Financial Statements
June 30,2018
General Obligation Bond Anticipation Notes
The following is a summary of general obligation bond anticipation note transactions reported
in the government-wide statement of net position for the County for the fiscal year ended June
30,2018:
' Issue , Balance Balance
Note No, Amount July 1,2017 _Issues Retirements June 30,2018
Series D,Note R-5 $ 5,000,000 $ 5,000,000 $ $(5,000,000) S
Series D,R 5,000,000 5,000,000 (5,000,000)
Series D,Note R-7 1,000,000 1,000,000 (1,000,000)
Series D,Note R-8 , 1,000,000 1,000,000 -- (1,000,000)
Series D,Note R-9 1,000,000 1,000,000 — (1,000,000)
Series D,Note R-I 0 1,000,000 1,000,000 -- (1,000,000)
Series D,Note R-11 500,000 500,000 (500,000)
Series D,Note R-12 500,000 500,000 -- (500,000)
Series D,Note R-15 15,000,000 15,000,000 (15,000,000)
Series D,Note R-16 8,000,000 8,000,000 -- (8,000,000)
Series D,Note R-17 2,000,000 2,000,000 (2,000,000)
Series D,Note R-18 5,000,000 5,000,000 (5,000,000) --
Series D, Note R-19 10,000,000 10,000,000 -- (10,000,000)
Series D,Note R-20 4,800,000 4 800,000 (4,800,000)
S 59.800.000 $59.800.000 $ (59,800,0001
State Revolving Fund Loans
The County has obtained loans to assist in fmancing 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 eleven projects approved
for funding with these loans.
The schedule below shows the County's SRF transactions for the fiscal year ended June 30,
2018:
Loans Approved Loan Balance Loan Balance Due Within
Authorized Amount July I.2017 Additions Retirements June 30 2018 One Year
Cesspool c
Conversion $8,363,773 $4,238,650 $ $ (436,794) $3,801,856 $ 438,981
Honoka'a LCC 4,513,158 2,689,276 (179,283) 2,509,993 180,181
Queen ,
Lili'uokalani _ 9,421,732 6,508,120 (485,832) 6,022,288 488,265
Kalaniana'ole 7,847,045 5,296,111 519,371 (318,718) 5,496,764 354,255
Kealakehe
WWfPAU 21,162,934 12,619,826 3,084,980 (710,445) 14,994.362 865,587
North Kona 3,454,500 ' 923,908 " 731,696 1,655,604 39,502
Kealakehe
Effluent Reuse 6,158,687 349,386 369,525 718.911
SH Landfill
Closure 678,370 448,092 448.092
-- $61.600,199- p $5.153,664 $(2,131.072) $35,647,870 ¢
COUNTY OF HAWAII
Notes to the Basic Financial Statements
June 30,2018
The remaining loans bear interest at 0,25% to 1,0%exclusive of a 0,25%to 0.75%loan fee,
and require payments through fiscal year 2040.
Debt service to maturity for disbursements to date on these projects are as follows:
Governmental Activities
Fiscal year ending June 30: Principal Interest
2019 $ 2,366,771 $ :264,504
2020 2,448,115 248,008
2021 2,479,667 229,313
2022 2,490,296 210,643
2023 2,501,061 191,806
2024—2028 11,980,434 706,356
2029—2033 8,761,256 248,543
2034—2038 2,562,389. 29,990
2039—2040 57,881 478
Total $35,647, 870 $22129 641 -
Other General Long-Term Obligations
The following is a summary of other general long-term obligations transactions for the fiscal
year ended June 30, 2018:
**Balance _. Balance Due Within
July 1.2017 Additions* Payments Tune 30,2018 One Year
Governmental activities:
Compensated absences $39,485,902 $15,163,120 $(13,512,043) $41,136,979 $10,153,091
Claims and judgments
(see Note 12) 14,435,693 7,550,257 (3,850,541) 18,135,409 3,561,859
Capital leases
(see Note 8) 6,565,580 3,809,249 (2,262,252) 8,112,577 2,463,618
Landfill costs payable
(see Note 9) 29,523,000 1,045,197 (561,197) 30,007,000 432,012
Pollution remediation
(see Note 9) 15,542,639 790,084 (3,188,464) 13,144,259 5,300,000
Other post employment
benefit obligation
(see Note 13) 384,824,312 6,629,988 391.454,300
Total $490,377,126 $(23,374,497) $501,990,524 -
*Net of new claims liability and existing claims resolved at less than previous estimate,
**As restated,for impact of GASB 75.
COUNTY OF HAWAII
Notes to the Basic Financial Statements
June 30,2018
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 30,2018 includes$30,639,530,which is
-reserved for principal payments on general obligation bonds and$2,756,951,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.
The following is a summary of the Project's bond payable transactions for the fiscal year
ended June 30,2018:
Balance at July 1,2017 $ 651,747
Deductions 459.251)
Balance at June 30,2018 592,496
Less current portion (62,622)
Note payable,net of
current portion _ 529.874
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
2019 -- $ 62,622 $ 29,533
2020 66,186 25,869
2021 69,952 21,997
2022 73,932 17,905
2023 78,139 13,580
2024- 2026 241,665 13,476
Total $592.496 $122,360
COUNTY OF HAWAII
Notes to the Basic Financial Statements
June 30, 2018
On October 29, 2012,the County assumed the loan of its lessee Ouli Ekahi Partnership with
the Hawaii 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 30,2018:
Balance at July 1,2017 $272,902
Deductions (58.393)
Balance at June 30,2018 214,509
Less current portion (29.273)
Loan payable,net of
current portion $ 185,236
The following is a summary of the annual maturities for the enterprise fund loan payable:
Business-type Activities
Fiscal year ending June 30: Principal
2019 $ 29,273
2020 16,500
2021 16,500
2022 16,500
2023 16,500
2024—2028 82,500
2029—2031 36,736
Total $214,509
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 $994,665 at June 30,2018.
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
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COUNTY OF HAWAII
Notes to the Basic Financial Statements
June 30,2018
obligations of the County. The improvement district's share of the refunded bonds matures
annually through 2048 and bear interest at the previous rates of 2.75%. Total general
obligation bonds payable included in the government-wide statement of net position were
$1,103;581 at June 30,2018,
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,
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 30,2018:
Balance at July 1, 2017 $2,197,435
Deductions (99,189)
Balance at June 30,2018 $2,098 246
The following is a summary of the annual maturities for the improvement district general
obligation bonds:
Fiscal year ending June 30: Princibal Interest
2019 $ 103,379 $ 74,470
2020 107,752 70,001
2021 .112,317 65,336
2022 117,083 60,466
2023 122,057 55,382
2024—2028 692,918 192,456
2029—2033 159,482 105,150
2034—2038 182,650 81,663
2039—2043 209,185 54,764
2044.—2048 239,573 23,957
2049 51,850 713
Total $2,098,246
COUNTY OF HAWAII
Notes to the Basic Financial Statements
June 30,2018
11. COMMITMENTS AND CONTINGENCIES
Contractual commitments— Contractual commitments for capital projects, expenses, and
supplies at June 30,2018,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 $ 4,546,560
Capital projects fund 76,949,066
Bond redemption fund --
Nonmajor funds 6,913,235
$88.408.86
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.
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 effect 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,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
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COUNTY OF HAWAII •
Notes to the Basic Financial Statements
June 30,2018
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,At this
time, a new target completion date is being discussed, 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, 15 have
been completed, 3 are in construction though substantially completed, 7 are in design, and 10 ..
are either pending consultant selection or finalization of contract,A project that was
previously deferred was placed back into the plan in the pending consultant selection
category. The County has currently encumbered or spent more than$17,6M 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)prior to the development of the
modified four year plan, 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 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 obtains insurance for property (including coverage on a high deductible basis for
natural disasters of hurricane,flood and earthquake). It also purchases insurance for flood on
selected structures,medical malpractice for emergency medical services, aviation liability for
helicopter operations,retired senior volunteers liability coverage, auto liability for mass transit
buses and privately owned police vehicles, and auto physical damage coverage on County
Police fleet vehicles and the Kohala Ranch fire truck,The County also obtains property
coverage on several County housing projects (Kula'imano, Ouli Ekahi and Ulu Wini). 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 general
liability,the majority of its vehicles as well as for all other exposure including workers'
compensation,As such,emphasis is placed on claims management and safety/risk control to
mitigate loss costs, 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,
COUNTY OF HAWAII
Notes to the Basic Financial Statements
June 30,2018
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 30,2018, the amount
of this liability was $18,135,409,This is the County's best estimate based on available
information. Changes in the reported liability since July 1,2016 are given below,
General Workers' Total
Liability Compensation Liability
Balance at July 1,2016 $ 2,490,086 $ 11,369,410 $ 13,859,496
Incurred claims (including IBNR)* 199,478 4,278,619 4,478,097
Claim payments (395,362) (3,506,538) (3,901.900)
Balance at June 30,2017 $2.294.202 $ 12.141_49J $ 14,435.693
Incurred claims (including IBNR)* (177,100) 7,727,357 7,550,257
Claim payments (219379) (3,631,162) (3,850,541)-
Balance at June 30,2018 & 1.897.723 $ 16237,686 $ 18,135409
*Net of new claims liability and existing claims resolved at less than previous estimate.
13.EMPLOYEE BENEFIT PLANS
Pensions—Employees'Retirement System of the State of Hawaii
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 Employees' Retirement System of the State of Hawai'i (ERS).Benefit terms,
eligibility,and contribution requirements are established by FIRS Chapter 88 and can be
amended through legislation.The ERS issues a publicly available financial report that can be
obtained at ERS's website:http://ers.ehawaii.gov/.
Benefits Provided-The ERS provides retirement,disability,and death benefits that are
covered by the provisions of the noncontributory, contributory, and hybrid retirement plans.
The three plans provide a monthly retirement allowance equal to the benefit multiplier
(generally 1.25%or 2%) multiplied by the average final compensation multiplied by years of
credited service.The benefit multiplier decreased by 0.25%for new hybrid and contributory
plan members hired after June 30,2012.Average final compensation is based on the five
highest paid years of service excluding the payment of salary in lieu of vacation for members
hired after June 30,2012. For those hired between January 1, 1971 and June 30,2012,AFC is
based on the three highest paid years of service excluding the payment of salary in lieu of
vacation. If the employee was hired prior to January 1, 1971,the AFC is the average salary
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COUNTY OF HAWAII
Notes to the Basic Financial Statements
June 30,2018
earned during the five highest paid years of service,including the payment of salary in lieu of
vacation, or three highest paid years of service, excluding the payment of salary in lieu of
vacation,
For members hired before July 1,2012,the original retirement allowance is increased by 2.5%
each July 1 following the calendar year of retirement.This cumulative benefit is not
compounded and increases each year by 2.5% of the original retirement allowance without a
ceiling(2,5%of the original retirement allowance the first year, 5.0% the second year, 7.5%
the third year, etc.),For members hired after June 30,2012 the post-retirement annuity
increase was decreased to 1,5%per year.
Retirement benefits for certain groups, such as police officers,firefighters, some investigators,
sewer workers,judges,and elected officials,vary from general employees,
Noncontributory Plan
Retirement Benefits- General employees'retirement benefits are determined as 1,25%of
average final'compensation multiplied by the years of credited service,Employees with
10 years of credited service are eligible to retire at age 62. Employees with 30 years of
credited service are eligible to retire at age 55,
Disability Benefits -Members are eligible for service-related disability benefits
regardless of length of service and receive a lifetime pension of 35%of their average
final compensation.Ten years of credited service is required for ordinary disability.
Ordinary disability benefits are determined in the same manner as retirement benefits but
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,
COUNTY OF HAWAII
Notes to the Basic Financial Statements
June 30,2018
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 2,5%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 as 1.75%of average final compensation
multiplied by the years of credit services and are payable immediately,without an
actuarial reduction, and at a minimum of 30%of average final compensation.
Death Benefits -For service-connected deaths,the surviving spouse/reciprocal
beneficiary receives a lump sum payment of the member's contributions and accrued
interest plus a monthly benefit of 50%of the average final compensation until remarriage
or re-entry into a new reciprocal beneficiary relationship,If there is no surviving
spouse/reciprocal beneficiary, surviving children(up to age 18)or dependent parents are
eligible for the monthly benefit. If there is no spouse/reciprocal beneficiary or dependent
children/parents,the ordinary death benefit is payable to the designated beneficiary,
Ordinary death benefits are available to employees who were active at time of death with
at least 1 year of service. Ordinary death benefits consist of a lump sum payment of the
member's contributions and accrued interest plus a percentage of the salary earned in the
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,
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COUNTY OF HAWAII
Notes to the Basic Financial Statements
June 30,2018
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
1,75%of average final compensation for each year of service 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.
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.
COUNTY OF HAWAII
Notes to the Basic Financial Statements
June 30,2018
Hybrid Plan for Employees Hired After June 30,2012
Retirement Benefits- General employees'retirement benefits are determined as 1.75%of
average fmal compensation multiplied by the years of credited service. General
employees with 10 years of credited service are eligible to retire at age 65,Employees
with 30 years of credited service are eligible to retire at age 60, Sewer workers,water
safety officers,and EMTs may retire with 25 years of credited service at age 55,
Disability and Death Benefits -Provisions for disability and death benefits generally
remain the same except for ordinary death benefits. Ordinary death benefits are available
to employees who were active at time of death with at least 10 years of service, Ordinary
death benefits consist of a lump sum payment of the member's contributions and accrued
interest multiplied by 120%,or 50%Joint and Survivor lifetime pension if the member
was not eligible for retirement at the time of death and designated one beneficiary,or
100%Joint and Survivor lifetime,pension if the,member was eligible for retirement at the
time of death and designated one beneficiary,
Contributions- Contributions are established by HRS Chapter 88 and may be amended
through legislation. The employer rate is set by statute based on the recommendations of the
ERS actuary resulting from an experience study conducted every five years, Since July 1,
2005,the employer contribution rate is a fixed percentage of compensation,including the
normal cost plus amounts required to pay for the unfunded actuarial accrued liabilities. The
contribution rates for fiscal year 2018 were 28.00%for police and firefighters and 18,0%for
all other employees,Contributions to the pension plan from the County for the year ended
June 30,2018,2017,and 2016 were $41,562,933,$36,157,981, and$34,013,001,
respectively,
The employer is required to make all contributions for members in the noncontributory plan.
For contributory plan employees hired prior to July 1,2012,general employees are required to
contribute 7.8%of their salary and police and firefighters are required to contribute 12.2%of
their salary,For contributory plan employees hired after June 30, 2012,general employees are
required to contribute 9,8%of their salary and police and firefighters are required to contribute
14.2%of their salary. Hybrid plan members hired prior July 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 30,2018,the County reported a liability of
$609,904,199 for its proportionate share of the net pension liability. The net pension liability
was measured as of June 30, 2017, 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 30,2017,the
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COUNTY OF HAWAII
Notes to the Basic Financial Statements
June 30,2018
County's proportion was 4,71%,which was an increase of.09% from its proportion measured
as of June 30,2016,
For the year ended June 30,2018,the County recognized pension expense of$92,511,891,At
June 30, 2018,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 $ 25,210,950 $ 4,633,386
Net difference between projected and actual investment
earnings on pension plan investments 2,012,081
Changes in assumptions 100,395,484
Changes in proportion and differences between employer
contributions and proportionate share of contributions 18,917,862 5,696,826
County contributions subsequent to the measurement date 41,562,933
Total 0
$41,562,933 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 30,2019,
Other amounts reported as deferred outflows of resources and deferred inflows of resources
related to pensions will be recognized in pension expense as follows:
Net Deferred
Outflows (Inflows
Fiscal Year Ending June 30, of Resources
2019 $ 32,463,241
2020 45,010,605
2021 37,910,320
2022 15,213,292
2023 1,584,545
$ 1 32,1 82 003
Actuarial assumptions—The total pension liability in the June 30,2017 actuarial valuation
was determined using the following actuarial assumptions,applied to all periods included in
the measurement:
Inflation 2.50%
Payroll growth rate 3.50%per annum
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COUNTY OF HAWAII
Notes to the Basic Financial Statements
June 30,2018
Salary increases 3,50%- 7.00%,including inflation
Investment rate of return 7.00%per annum,including inflation
Cost of living adjustments 2,50%/ 1.50%
Mortality rates used in the actuarial valuation as of June 30,2017 were based on the
following:
Active members—Multiples of the RP 2014 mortality table for active employees based
on the occupation of the member.
Healthy retirees—The 2016 Public Retirees of Hawai'i mortality table,generational
projection using the BB projection table from the year 2016 and with multipliers based on
plan and group experience.
Disabled retirees—Base Table for healthy retiree's occupation, set forward 5 years,
generational projection using the BB projection table from the year 2016,Minimum
mortality rate of 3,5%for males and 2.5% for females.
The actuarial assumptions used in the June 30,2017 valuation were based on the results of an
actuarial experience study for the five-year period ending June 30,2015.The major changes
to assumptions resulting from the 2015 actuarial experience study were (1) a decrease in the
investment return assumption from 7.65%to 7.00% and (2) the mortality assumptions were
modified to assume longer life expectancies as well as to reflect continuous mortality
improvement. ERS updates their experience studies 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,
The target allocation and best estimates of geometric rates of return for each major asset class .
are summarized in the following table:
Long-Term Long-Term
Strategic Allocation Target Expected Rate of Expected Real
(Risk-Based Classes) Allocation Return* Rate of Return
Broad growth 63.00% 8.05% 5.80%
Crisis risk offset 20,00% 5.35% 3,10%
Real return 10,00% 5.80% 3.55%
Principal protection 7.00% 2.45% 0,20%
100.00%
*Uses an expected inflation rate of 2.25%
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COUNTY OF HAWAII
Notes to the Basic Financial Statements
June 30,2018
Discount rate—The discount rate used to measure the total pension liability was 7,00%,which
was the same rate used at the prior measurement date, 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.
Sensitivity ofthe Coun 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 7.00%, 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(6.00%)or 1-percentage-point higher(8,00%)than the
current rate:
1%Decrease Current Discount I%Increase
(6,00%) Rate (7.00%) (8.00%)
County's proportionate share of
the net pension liability 800,723,468 1_609,904,199 $ 452,563,954
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 30,2018,the annual amount payable to the ERS
totaled$5,481,792,which represents the employer contribution for the second half of the
month of June 2018,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 30,2018.
Other Pension Plans - County of Hawaii Bandsmen Pension System
The County also sponsors a nonqualified,governmental single employer defined benefit
pension plan for members of the County Band(County of Hawai'i Bandsmen Pension
System)who are or were ineligible for benefits under ERS and whose employment began -
before June I, 1990, Under HRS Chapter 88,the County Pension provides retirement benefits
that are computed based on the average annual salary during the last 10 years of employment
with a minimum pension amount of$50 per month. There are no assets accumulated in a trust
for the payment of benefits.
•
As of the valuation date of June 30, 2017,there were 23 inactive employees or beneficiaries
receiving benefits;9 inactive employees not yet receiving benefit payments; and 8 active
members,
- 93 -
COUNTY OF HAWAII
Notes to the Basic Financial Statements
June 30,2018
Pension liabilities,pension expense, and deferred outflows of resources and deferred
inflows of resources related to pensions— At June 30,2018,the County reported a liability of
$1,087,972.The total pension liability was measured as of June 30,2018 based on an
actuarial valuation as of June 30,2017,
For the year ended June 30,2018,the County recognized pension payments of$58,808 and a
deferred inflow of resources of$49,924,
Actuarial assumptions—The total pension liability in the June 30,2017 actuarial valuation
was determined using the following actuarial assumptions,applied to all periods included in
the measurement:
Inflation 2,50%
Payroll growth rate 3.50%per annum
Salary increases 3,50%,including inflation
Cost of living adjustments 2.50%
Except for the salary increase and retirement rate assumptions,all other demographic
assumptions are the same as those used to measure the total pension liability under the ERS
plan,
The discount rate used to measure the County's total pension liability was 3.56%based on the
daily municipal bond rate closest to but not later than the measurement date of the Fidelity
"20-Year Municipal GO AA Index".
The following presents the County's total pension liability calculated using the discount rate
of 3,56%, as well as what the County's total pension liability would be if it were calculated
using a discount rate that is I-percentage-point lower (2,56%) or 1-percentage-point higher
(4,56%) than the current rate:
I%Decrease Current Discount 1%Increase
(2.56%) Rate (3.56%) (4,56%) _
County's total pension liability $ 1 331.977 $ 1 146780 $_997366
•
Schedule of Changes in Total Pension Liability
Measurement year ending June 30, 2018,
Total Pension Liability
Benefit Payments $ 58.808
Net Change in Total Pension Liability (58,808) ,
Total Pension Liability—Beginning - 1,146.780
Total Pension Liability—Ending $ 1,087,972
•
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COUNTY OF HAWAII
'C
Notes to the Basic Financial Statements
June 30,2018
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.
Benefits Provided— Chapter 87A of the HRS grants the authority to establish and amend the
benefit terms to the,board of trustees of the EUTF.The EUTF currently provides medical,
prescription drug,dental,vision,chiropractic,supplemental medical-and prescription drug,
and group life insurance benefits for retirees and their dependents,The following table
provides a summary of the number of employees covered by the benefit terms as of July 1,
2017.
Inactrve employees or beneficiaries currently receiving benefits 1,595
Inactive employees entitled but not yet receiving benefit payments 218
Active employees 2,394
4,207
Contributions—The County's contribution levels are established by Chapter 87A of the HRS.
For the fiscal year ended June 30,2018,the County was required to contribute a minimum
amount equal to at least 80% of the annual required contribution (ARC), as determined by an
actuary retained by the board of trustees of the EUTF,The county will be required to
contribute 100% of the ARC starting in fiscal year 2019,The ARC represents a level of
funding that is sufficient to cover, 1) the normal cost,which is the cost of the other
postemployment benefits attributable to the current year of service;and 2) an amortization
payment,which is a catch-up payment for past service costs to fund the unfunded actuarial
accrued liability over the next thirty years,For the fiscal year ended June 30,2018,
contributions to the OPEB Plan form the County totaled$32,829,013 which resulted in an
average contribution rate of approximately 18.8%of covered-employee payroll,
For employees hired prior to July 1, 1996,the County pays the entire monthly healthcare
premium for employees retiring with 10 or more years of credited service,and 50%of the
monthly premium for employees retiring with fewer than 10 years of credited service.The
current (pay-as-you-go) premium costs are paid by the respective funds but the net other
postemployment benefit obligation is paid by the General Fund.
For employees hired after June 30, 1996, and who retire with fewer than 10 years of service,
the County makes no contributions,For those retiring with at least 10 years but fewer than 15
years of service,the County pays 50%of the retired employees'monthly Medicare or non-
Medicare premium. For employees hired after June 30, 1996,and who retire with at least 15
' years but fewer than 25 years of service,the County pays 75%of the retired employees'
COUNTY OF HAWAII
Notes to the Basic Financial Statements
June 30,2018
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.
Net OPEB liability—The County's net OPEB liability was measured as of July I,2017,and
the total OPEB liability used to calculate the net OPEB liability was determined by an
actuarial valuation as of that date,There were no changes between the measurement date,July
1,2017, and the reporting date,June 30,2018,that are expected to have a significant effect on
the net OPEB liability,
Actuarial assumptions—The total OPEB liability in the July 1,2017 actuarial valuation was
determined using the following actuarial assumptions,applied to all periods included in the
measurement,unless otherwise specified:
Inflation 2.50%
Salary increases 3,50%- 7,00%,including inflation
Investment rate of return 7,00% -
Healthcare cost trend rates
PPO Initial rates of 6,60%,6.60%and 9,00%; declining to a
rate of 4,86%after 14 years
HMO Initial rate of 9,00%; declining to a rate of 4,86%after
14 years
Part B &base monthly Initial rates of 2,00%and 5.00%;declining to a rate of
contribution 4.70%after 14 years
Dental 3,50%
Vision 2.50%
Life insurance 0.00%
Mortality rates used in the actuarial valuation as of July 1,2017 were based on the following
Active members—Multiples of the RP 2014 mortality table for active employees based
on the occupation of the member,
-96-
COUNTY OF HAWAII
Notes to the Basic Financial Statements
June 30,2018
Healthy retirees—The 2016 Public Retirees of Hawaii mortality table,generational
projection using the BB projection table from the year 2016 and with multipliers based on
plan and group experience.
Disabled retirees—Base Table for healthy retiree's occupation, set forward 5 years,
generational projection using the BB projection table from the year 2016.Minimum
mortality rate of 3.5%for males and 2.5%for females,
The actuarial assumptions used in the July 1,2017 valuation were based"on the results of an
actuarial experience study for the five-year period ending June 30,2015,
The long-term expected rate of return on OPEB 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.
The target allocation and best estimates of arithmetic rates of return for each major asset class
are summarized in the following table:
Long-Term
Strategic Allocation Target Expected Real
(Risk-Based Classes) Allocation Rate of Return
U.S. Equity 19,00% 5.50%
International Equity 19.00% 7.00%
U.S,Microcap 7,00% 7.00%
Private Equity 10.00% 9,25%
REITs 6.00% 5,85%
Core Real Estate 10.00% 3,80%
Global Options 7,00% 5.50%
Core Bonds 3,00% ,55%
Long Treasuries 7.00% 1.90%
Trend Following 7,00% 1,75%
TIPS 5.00% 0.50%
100.00%
Discount rate—The discount rate used to measure the total OPEB liability was 7.00%.The
-projection of cash flows used to determine the discount rate assumed that the County will fund
the recommended actuarially determined contribution,which is based on layered, closed
amortization periods,Based on those assumptions,the OPEB plan's fiduciary net position is
projected to be available to make all projected future benefit payments of current plan
members.Therefore,the long-term expected rate of return on OPEB plan investments was
applied to all periods of projected benefit payments to determine the total OPEB liability.
- 97 -
COUNTY OF HAWAII
Notes to the Basic Financial Statements
June 30, 2018
Changes in the Net OPEB Liability:
The following schedule presents the changes in the net OPEB liability for the fiscal year
ending June 30,2018:
Increase (Decrease)
Total OPEB Plan Fiduciary Net OPEB
Liability Net Position Liability
(a) (b) (a)-(b)
Balance at June 30,2017 $ 489,025,992 $ 104,201,680 $ 384,824,312
Changes for the fiscal year:
Service cost 11,757,502 11,757,502
Interest on the total OPEB liability 34,046,407 34,046,407
Employer contributions 28,549,987 (28,549,987)
Net investment income 10,380,705 (10,380,705)
Benefit payments (17,054,987) (17,054,987)
___- Administrative expense (23,228) 23,228
Other 266,457 266,457)
Net changes $ 28,748,922 $ 22,118,934 $ 6,629,988
Balance at June 30,2018 $ 517,74 914 $391,454,300
Sensitivity of the net OFEB liability to changes in the discount rate— The following presents
the net OPEB liability of the County,as well as what the County's net OPEB liability would
be if it were calculated using a discount rate that is 1-percentage-point lower (6,00%) or 1-
percentage-point higher (8.00%) than the current discount rate:
1%Decrease Current Discount 1%Increase
(6,00%) Rate (7.00%) (8,00%)
County's net OPEB liability 16 476.7 8..728 $ 391.454.300 322 982 081
Sensitivity of the net OFEB liability to changes in the healthcare cost trend rates— The
following presents the net OPEB liability of the County,as well as what the County's net
OPEB liability would be if it were calculated using a healthcare cost trend rate that is 1-
percentage-point lower(6.00%) or 1-percentage-point higher(8.00%) than the current
discount rate:
Current
Healthcare Cost
1%Decrease Trend Rate 1°/0 Increase
County's net OPEB liability 31 9204428 __391,454,300 $ 483,074,420
COUNTY OF HAWAII
Notes to the Basic Financial Statements
June 30, 2018
For the year ended June 30,2018,the County recognized OPEB expense of$37,320,574,At
June 30,2018,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
Net difference between projected and actual earnings on
OPEB plan investments $ 2,140,599
County contributions subsequent to the measurement date 32,829,013
Total 32,829,013 $ 2,140,599
$32,829,013 reported as deferred outflows of resources related to the County's contributions
to the OPEB plan subsequent to the measurement date will be recognized as a reduction of the
net OPEB liability in the fiscal year ended June 30, 2019,
- 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 Ending June 30, Amount
2019 $ (535,150)
2020 (535,150)
2021 (535,150)
2022 (535,149)
$ (2.140,599)
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.
COUNTY OF HAWAII
Notes to the Basic Financial Statements
June 30,2018
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 30,2018,the carrying amount of cash, time certificates of deposit and money market
funds of$54,173,984,with bank balances of$55,178,034 were held by the County on behalf
of the Department,These balances were fullyinsured 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$888,225 at June 30,2018,
At June,30,2018,the Department had$25,000,000 in investments,
Capital Assets
- The Department began operations as of January 1, 1950,At that date,the utility plant in
service was transferred to the Department from the County at the cost of the utility plant assets
acquired by the County for its water system from January 1, 1924 to December 31, 1949,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 1, 1950 are
stated at original cost and include contributions by governmental agencies,private subdividers
and customers at their cost or estimated cost. Construction costs include amounts for contract
work,engineering supervision and other direct and indirect costs. Construction period interest
is capitalized on utility plan constructed with tax-exempt debt.
Depreciation on the Department's utility plant assets in service is computed using the
straight-line method over the estimated useful lives of the assets as follows:
Structures and improvements 40 to 50 years
Machinery and equipment 5 to 25 years
Water systems 10 to 40 years
- 100 -
COUNTY OF HAWAII
Notes to the Basic Financial Statements
June 30,2018
The capital assets of the Department at June 30,2018 were as follows:
Utility plant in service $504,994,061
Less: accumulated depreciation 1248,865,070)
256,128,991
Preliminary survey and investigation charges 5,840,355
Construction work in progress 35,899,247
Land and rights 5,194,398
Net capital assets $303,062,991
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$27,435,593 at June
30,2018,
General obligation bonds payable issued on behalf of the Department and-other long-term debt
at June 30, 2018 are comprised of the following:
Public improvement bonds:
2004 Series D at 4.5%,due through 2039 $ 207,117
2008 Series A at 4,125%,due through 2043 126,914
2010 Series A at 4.0%to 5.0%,due through 2020 947,500
2010 Series B at 3.33%to 6.1%,due through 2030 5.041.250
Total public improvement bonds 6,322,781
Public improvement refunding bonds:
2007 Series C at 4.0%to 5.0%,due through 2021 1,250,341
2016 Series B at 3.0%to 5.0%,due through 2026 12,397,500
2016 Series E at 2,0%to 5.0%,due through 2029 6,353,750
2017 Series C at 4,0%to 5,0%, due through 2019 1,111,221
Revolving fund loans:
State revolving fund loans,interest up to 1.37%,
due through 2038 45,359.733
Total long-term debt - - 72,795,326
Add: Unamortized premium 1 728 197
Total $14,523,523
- 101 - -
COUNTY OF HAWAII
Notes to the Basic Financial Statements
June 30,2018
At June 30,2018, future principal and interest payment s for long-term debt are scheduled as
follows:
Fiscal year ending June 30: Principal Interest Total
2019 $ 5,140,705 $ 1,984,477 $ 7,125,182
2020 5,542,854 1,809,817 7,352,671
2021 5,673,535 1,608,870 7,282,405
2022 5,795,041 1,402,349 7,197,390
2023 4,779;663 1,212,379 5,992,042
2024—2028 24,141,307 3,657,246 27,798,553
2029—2033 13,908,854 1,071,267 14,980,121
2034—2038 7,588,097 244,614 7,832,711
2039 - 2043 225.270 6,694 231,964
Total X $$5,793,039
•
Contributions in Aid of Construction
The Department recognized$8,122,713 of contributions in aid of construction for the fiscal
year ended June 30, 2018.
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, 2018 for workers' compensation claims of$684,000
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$14,525,161 at
June 30,2018,
Pension Plan
Fension liabilities,pension expense, and deferred outflows of resources and deferred
inflows of resources related to pensions— At June 30,2018,the Department reported a
liability of$28,365,453 for its proportionate share of the net pension liability.The net pension
liability was measured as of June 30,2017, 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 a projection of the employer
contributions to the pension plan relative to projected contributions of all participating
employers.
- 102 -
COUNTY OF HAWAII
Notes to the Basic Financial Statements
June 30,2018
At June 30,2017,the Department's proportion was .22%,which didn't change from its
proportion measured as of June 30,2016.
For the year ended June 30,2017,the Department recognized pension expense of$4,033,140,
At June 30,2018,the Department reported deferred outflows of resources and deferred
inflows of resources related toensions from the followingsources:
p
Deferred Deferred
Outflows Inflows of
of Resources Resources
Differences between expected and actual experience $ 454,580 $ 303,978
Net difference between projected and actual investment
earnings on pension plan investments 83,986
Changes in assumptions 4,331,298
Changes in proportion and differences between employer
contributions and proportionate share of contributions 1,663,313 1,443,617
Department contributions subsequent to the measurement date 1,757,461
Total 8.206_I 1 581
The $1,757;461 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 30,2019,
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 Ending June 30, Net Deferred
Outflows
(Inflows)of
Resources
2019 $ 1,282,575
2020 1,633,094
2021 1,114,202
2022 575,205
2023 12,534
S4,617,610
Sensitivity of the Department's proportionate share of the net pension liability to changes in
the discount rate— The following presents the Department's proportionate share of the net
pension liability calculated using the discount rate of 7.00%,as well as what its proportionate
- 103 -
COUNTY OF HAWAII
Notes to the Basic Financial Statements
June 30,2018
share of the net pension liability would be if it were calculated using a discount rate that is 1-
percentage-point lower(6.00%)or 1-percentage-point higher(8,00%)than the current rate:
1%Decrease Current Discount I%Increase
(6,00%) Rate (7.00%) (8,00%)
Department's proportionate
share of the net pension liability 36.758 783 28.365.453 $ 21,444,724
Fension 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.
Fayables to the pension plan— At June 30,2018,the annual amount payable to the ERS
totaled$146,403,which represents the employer contribution for the month of June 2018, as
required by HRS.
Post-Retirement Benefits Other than Pensions (OPEB)
Net OFEB liability, OFEB expense, and deferred outflows of resources and deferred inflows
of resources related to OFEB— At June 30,2018,the Department reported a net OPEB
liability of$17,265,728. The net OPEB liability was measured as of July I,2017,and the
total OPEB liability used to calculate the net OPEB liability was determined by an actuarial
valuation as of that date. For the year ended June 30,2018,the Department recognized OPEB
expense of$1,802,232,
At June 30,2018,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
Net difference between projected and actual earnings on OPEB
plan investments $ 238,862
Department contributions subsequent to the measurement date $ 1,9106448
Total $ 238,862
$1,936,548 reported as deferred outflows of resources related to the County's contributions to
the OPEB plan subsequent to the measurement date will be recognized as a reduction of the
net OPEB liability in the fiscal year ended June 30,2019,
-104- .
COUNTY OF HAWAII
Notes to the Basic Financial Statements
June 30,2018
Other amounts reported as deferred outflows of resources and deferred inflows of resources
related to pensions will be recognized in pension expense as follows:
Net deferred
outflows (inflows)
Fiscal Year Ending June 30, of resources
2019 $ (59,715)
2020 (59,715)
2021 (59,715)
2022 (59,717)
$ (238,862)
Sensitivity of the net OFEB liability to changes in the discount rate—The following presents
the net OPEB liability of the Department, as well as what the Department's net OPEB liability
would be if it were calculated using a discount rate that is 1-percentage-point lower (6.00%) or
1-percentage-point higher (8.00%) than the current discount rater
1%Decrease Current Discount 1%Increase
(6.00%) Rate (7.00%) (8,00%)
Department's net OPEB liability $ 22.400.212 $ 17.265,728 $_13,078,475
Sensitivity of the net OFEB liability to changes in the healthcare cost trend rates— The
following presents the net OPEB liability of the Department, as well as what the Department's
net OPEB liability would be if it were calculated using a healthcare cost trend rate that is 1-
percentage-point lower(6.00%) or 1-percentage-point higher(8.00%) than the current
discount rate:
Current
Healthcare Cost
1%Decrease Trend Rate 1%Increase
Department's net OPEB liability S_2783340 17,265 728 $ 22 896,636
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.0,Box 2121,Honolulu,HI 96805-2121,
- 105 -
COUNTY OF HAWAII
Required Supplementary Information
June 30,2018
Schedule of Changes in the Net OPEB Liability and Related Ratios
Last 10 Fiscal Years*
2018
County Department
Total OPEB Liability
Service Cost $ 11,757,502 $ 687,414 -
Interest on the total OPEB liability 34,046,407 2,135,490
Benefit payments (17,054,987) (953,288)
Net change in total OPEB liability 28,748,922 1,869,616
Total OPEB liability-Beginning 489,025,992 30,639,939
Total OPEB liability-Ending - $ 517,774,914 $ 32,509,555
Plan fiduciary net position
Contributions-employer $ 28,549,987 $1,867,788
Net investment income 10,380,705 1,245,946
Benefit payments (17,054,987) •(953,288)
Administrative expense (23,228) (2,782)
Other 266,457 16,370
Net change in plan fiduciary net position 22,118,934 2,174,034
Plan fiduciary net position-Beginning 104,201,680 13,069,793
Plan fiduciary net position-Ending $ 126,320,614 $ 15,243,827
Net OPEB liability $ 391,454,300 $ 17,265,728
Plan fiduciary net position as a percentage of
the total OPEB liability 24.4% 46.9%
Covered-employee payroll - $ 168,570,640 $ 9,791,132
Net OPEB liability as a percentage of
Covered-employee payroll 232.22% 176.34%
*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.
See accompanying notes to required supplementary information
- 106 - _-
COUNTY OF HAWAII
Required Supplementary Information
June 30,2018
Schedule of Contributions (OPEB) Last 10 Fiscal Years
County: '
Contributions Contributions
in Relation to as a%age
Actuarially the Actuarially Contribution Covered- of Covered-
Fiscal Year Determined Determined Deficiency Employee Employee
Ended Contribution Contribution (Excess). Payroll Payroll
June 30,2018 $ 37,748,000 $ 32,829,013 $ 4,918,987 $ 74,190,644 18.8%
June 30,2017 $ 36,472,000 $ 28,549,987 $ 7,922,013 $ 168,570,640 16.9%
June 30,2016 $ 33,614,006 $ 22,747,340 $ 10,866,660 $ 159,744,324 14.2%
June 30,2015 $ 32,478,000 $ 18,657,000 $ 13,821,000 $ 152,490,296 12.2%
June 30,2014 $ 30,526,000 $ 17,453,000 $ 13,073,000 $ 139,423,481 12.5%
June 30,2013 $ 29,494,000 $ 13,892,000 $ 15,602,000 $ 130,803,306 10.6%
June 30,2012' $ 36,193,000 $ 13,730,000 $22,463,000 $ 124,452,126 11.0%
June 30,2011 $ 34,969,000 $ 31,104,000 $ 3,865,000 $ 127,859,606 24.3%
June 30,2010 $ 25,046,000 $ 28,182,000 ($ 3,136,000) $ 133,555,000 21.1%
June 30,2009 $ 24,216,000 $ 24,926,000 ($ 710,000) $ 127,420,000 19.6%
Department: -
Contributions Contributions
in Relation to as a%age
Actuarially the Actuarially Contribution Covered- of Covered-
Fiscal Year Determined Determined Deficiency Employee Employee
Ended Contribution Contribution (Excess) Payroll Payroll
June 30,2018 $ 1,933,000 $ 1,936,548 ($ 3,548) $ 10,212,595 19.0%
June 30,2017 $ 1,867,000 $ 1,867,788 ($ 788) $9,791,132 19.1%
June 30,2016 $ 1,914,000 $ 1,913,204 $ 796 $9,464,649 20.2%
June 30,2015 $ 1,850,000 $ 1,848,389 $-. 1,611 $9,426,509 19.6%
June 30,2014 $ 1,899,000 $ 1,900,758 ($ 1,758) $ 8,635,402 22.0%
June 30,2013 $ 1,834,000 $ 1,833,733 $ 267 $ 7,966,529 23.0%
Tune 30,2012 $ 2,400,000 $ 2,401,487 ($ 1,487) $ 8,182,968 29.4%
June 30,2011 $ 2,319,000 $ 2,067,678 $ 251,322 $ 8,056,398 25.7%
June 30,2010 $ 1,607,000 $ 1,963,719 ($ 356,719) $ 9,459,759 20.8%
June 30,2009 $ 1,544,000 $ 1,438,469 $ 105,531 $9,255,810 15.5%
•
See accompanying notes to required supplementary information
- 107 -
COUNTY OF HAWAII
Required Supplementary Information
June 30,2018
Note—Significant Methods and Assumptions
An actuarial valuation of the County's and Department's liability associated with other
postemployment benefits other than pension provided through the EUTF is performed as of July 1
of each odd-numbered year (e.g. July 1,2015).This actuarial valuation serves as the basis for
developing the annual required contributions (ARC) for the two fiscal years which begin one year
after the actuarial valuation date. For example,the ARC for the fiscal years ended June 30,2018
and 2017 were developed from the actuarial valuation as of July I,2015. Beginning July 1,2017,
the EUTF will be completing an actuarial valuation on an annual basis.
The following summarizes the significant methods and assumptions used to determine the
actuarially determined contribution for the fiscal year ended June 30, 2018:
Actuarial valuation date July 1,2015
Actuarial cost method Entry Age Normal
Amortization method Level percent, closed
Equivalent single amortization period 19.9
Asset valuation method Market
Inflation rate 3.00%
Investment rate of return 7.00%
Payroll growth 3.50%
Healthcare cost trend rates
PPO Initial rate of 9%, declining to a rate of 5% after
8 years
HMO Initial rate of 7%, declining to a rate of 5% after
_ 8 years
Part B Initial rate of 3% for the first two years,
5%thereafter
Dental 4.00%
Vision 3.00%
Life Insurance 0.00%
The actuarial valuation as of July 1,2009,which was used to develop the ARC for the fiscal years
2011 and 2012,included a reduction to the discount rate used from the prior valuation.The
discount rate changed from a blended discount rate of 7% - 8%to 7%.This resulted in an overall
increase to the actuarially determined OPEB liability and the ARC.
There were no other factors that significantly affected trends in the amounts reported in the
schedule of changes in the net OPEB liability and related ratios or the schedule of contributions
(OPEB).
- 108 - -.
COUNTY OF HAWAII
Required Supplementary Information
June 30,2018
Schedule of the County's and Department's Proportionate Share
of the Net Pension Liability(ERS)
Last 10 Fiscal Years
County:
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 30,2017 4.7% $609,904,199 $163 626
,447 372.7% 54.8%
June 30,2016 4.6% $618,129,088 $156,556,514 394.8% 51.2%
June 30,2015 4.4% $382,070,813 $149,760,317 255.1% 62.4%
June 30,2014 4.0% $322,626,262 $137,669,418 234.3% 63.9%
June 30,2013 4.2% $377,065,856 $129,153,763 292.0% 58.0%
Department:
Proportionate
Share of the Plan
Department's Department's Net Pension Fiduciary Net
Proportion of Proportionate Liability as a Position as a
the Net Share of the Department's %age of %age of the
Measurement Pension Net Pension Covered Covered Total Pension
Period Ended Liability(%) Liability ($) Payroll Payroll Liability
June 30,2017 0.2% $ 28,365,453 $ 9,358,187 303.1% 54.8%
June 30,2016 0.2% $ 29,247,607 $ 9,046,930 323.3% 51.2%
June 30,2015 0.2% $ 18,940,065 $ 9,012,196 210.2% 62.4%
June 30,2014 0.3% $ 20,526,993 $ 8,272,307 248.1% 63.9%
June 30,2013 0.2% $ 18,469,400 $ 7,640,477 241.7% 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.
See accompanying notes to required supplementary information
- 109 -
•
COUNTY OF HAWAII
Required Supplementary Information
June 30,2018
Schedule of the Employer Pension Contributions (ERS)
Last Ten Fiscal Years
County:
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 30,2018 $ 41,562,933 $ 41,562,933 $ 168,484,880 24.7%
June 30,2017 $ 36,157,981 $ 36,157,981 $ 163,626,447 22.1%
June 30,2016 $ 34,013,001 $ 34,013,001 $ 156,556,514 21.7%
June 30,2015 $ 31,456,148 $ 31,456,148 $ 149,760,317 21.0%
June 30,2014 $ 26,503,830 $ 26,503,830 • $ 137,669,418 19.3%
June 30,2013 $ 23,763,101 $ 23,763,101 $ 129,153,763 18.4%
June 30,2012 $ 20,884,021 $ 20,884,021 $ 123,218,017 16.9%
June 30,2011 $ 21,424,642 $ 21,424,642 $ 126,714,584 16.9%
June 30,2010 $ 22,120,137 $ 22,120,137 $ 132,253,481 16.7%
June 30,2009 $ 22,310,600 $ 22,310,600 $- 133,934,674 16.7%
Department: •
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 30,2018 $ 1,757,461 $ 1,757,461 $ 9,742,400 18.0%
June 30,2017 $ 1,603,278 $ 1,603,278 $ 9,358,187 17.1%
June 30,2016 $ 1,553,128 $ 1,553,128 $ $ 9,046,930 17.2%
June 30,2015 $ 1,520,994 $ 1,520,994 $ 9,012,196 16.9%
June 30,2014 $ 1,664,580 $ 1,664,580 $ 8,272,307 20.1%
June 30,2013 1 214 933 $ 1 214 9337,640,477 1 %
$ $ 5 9
June 30,2012 $ 1,210,106 $ 1,210,106 $ 7,849,473 15.4%
June 30,2011 $ 1,197,031 $ 1,197,031 $ 7,726,278 15.5%
June 30,2010 $ 1,417,853 $ 1,417,853 $ 9,076,143 15.6%
June 30,2009 $ 1,383,338 $ 1,383,338 $ 8,878,193 15.6%
See accompanying notes to required supplementary information
- 110-
•
COUNTY OF HAWAII
Required Supplementary Information
June 30,2018
Note—Changes'of Assumptions
There were no changes of assumptions or other inputs that significantly affected the measurement
of the total pension liability since the measurement period ended June 30,2016.
Amounts reported in the schedule of the proportionate share of the net pension liability as of the
measurement period ended June 30,2Q16 (fiscal year ended June 30,2017) were significantly
impacted by the following changes of actuarial assumptions:
The investment return assumption decreased from 7.65%to 7.00%.
Mortality assumptions were modified to assume longer life expectancies as well as to reflect
continuous mortality improvement.
' Prior to the measurement period ended June 30, 2016 (fiscal year ended June 30,2017),there were
no other factors,including the use of different assumptions that significantly affect trends reported
in these schedules.
•
COUNTY OF HAWAII
Required Supplementary Information
June 30,2018
Schedule of Changes in Total Pension Liability(Bandsmen Pension)
Last Ten Fiscal Years*
Measurement year ending 2018 2017
June 30,
Total Pension Liability
Service Cost $ 16,416
Interest on the Total
Pension Liability 36,289
Assumption Changes (113,807)
Benefit Payments (58,808) (53.347)
Net Change in Total _
Pension Liability (58,808) (114,449)
Total Pension Liability
Beginning 1,146,780 1.261,229
Total Pension Liability
Ending I $
Covered Employee
Payroll $49,505 $49,505
Total Pension Liability as
a Percentage of Covered
Employee Payroll 2,197.7% 2,316.5%
*This schedule is intended to present information for 10 years,as of the measurement date of the
total pension liability for each respective fiscal year.Additional years will be built prospectively
as information becomes available.
See accompanying notes to required supplementaiy information
- 112-
1
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.
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,
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COUNTY OF HAWAII
- Nonmajor Governmental Funds
Combining Balance Sheet
i
June 30,2018
Special Revenue Funds
Solid Parking
Highway Sewer Waste Cemetery Meter
Fund Fund Fund Fund Fund
Assets
Cash and cash equivalents $ 9,023,638 $ 9,079,508 $13,871,358 $ 141,909 $278,765
Investments
lmprest fund 400 250
Receivables:
Due from other governments 3,078,762 17,439 342,417 -
Due from other governmental funds 563,780 45,476 42,457
Due from other nongovernmental funds 2,700
Trade,net of allowance for doubtful accounts 1,283,202 1,660,118
Real estate held for sale
Other 45,854
3,642,542 1,394,671 2,044,992
Total assets $ 12,666,180 _$10,474,579_ $15,916,600 $ 141,909 $278,765
Liabilities,Deferred Inflows and Fund Balances
Liabilities: -
Accounts payable $ 738,281 $ 440,478 $ 3,884,256 $
Accrued payroll 612,527 170,226 408,415
Due to other governmental funds 860,537 444,010 807,829
Advance Collections-Intergovernmental 73,228 107,191
Other 295 71,604 136
Total liabilities 2,284,868 1,126,318 5,207,827
Deferred Inflows of Resources
Unavailable Revenue 1,283,202 1,660,118
Fund balances: •
Restricted for:
Debt service
Highways,streets and abandoned vehicles 10,381,312
Rental assistance and subsidy
Committed to:
Sanitation - - 8,065,059 9,048,655
Highways,streets and abandoned vehicles 278,765
Rental assistance and subsidy
Cemetery 141,909
Lower Puna area
Parks and recreational projects
Unassigned
Total fund balances 10,381,312 8,065,059 9,048,655 141,909 278,765
Total liabilities,deferred inflows
and fund balances $ 12,666,180 $10,474,579 $15,916,600 $ 141,909 $278,765
- 114-
Special Revenue Funds
Vehicle Workforce Golf Geothermal Reim:. Beauti- Hawaii County Park
Disposal Bikeway Imonnor& Course &Community fication Housing Dedication
Fund Fund Opport.Act Fund Fund Benefits Fund Fund Agency Fund
$9,830,357 $665,153 $ $ 12,892 $ 4,116,449 $ 651,025 $ 2,628,015 $ 28,578
59,964
2,000 800 -
115,333 192,194
73,609
38,994 2,780 155,734 26,283
154,327 2,780 155,734 292,086
$9.830.357 $665.153 $ 154,327 17,672 $ 4.272,183 $ 651,025 $ 2,920,901 88,542
$ 127,612 $ 13,903 $ $ 1,377 $ $ 2,153 $ 109,576 $
4,382 51,297 .-1.62,594
85,262 154,327 853 66,786 28,125
12 1 238,803
217,268 13,903 154,327 53,527 68,940 539,098
25,055
651,250 582,085 -
1,221,302
9,613,089 •
1,135,446
4,272,183
88,542
(35,855)
9,613,089 651,250 (35,855) 4,272,183 582,085 2,356,748 88,542
$9,830,357 $665.153 $ 154.327 $ 17,672 $ 4,272,183 651,025 $2,920,901 $ 88,542
(Continued)
-115-
COUNTY OF HAWAII
Nonmajor Governmental Funds
Combining Balance Sheet
June 30,2018
(Concluded) ;
Debt Service Fund Total
Nonmajor
Interest Governmental
Fund Funds
Assets
Cash and cash equivalents $2,820,150 $ 53,147,797
Investments 59,964
Imprest fund 3,450
Receivables:
Due from other governments 3,746,145
Due from other governmental funds 725,322
Due from other nongovernmental funds 2,700
Trade,net of allowance for doubtful accounts 2,943,320
Real estate held for sale " -
Other 269,645
.7,687,132
Total assets $2,820,150 $ 60.898343
Liabilities,Deferred Inflows and Fund Balances
Liabilities:
Accounts payable $ 5,317,636
Accrued payroll 1,409,441
Due to other governmental funds 2,447,729
Advance Collections-Intergovernmental 180,419
Other 63,199 374,050
Total liabilities 63,199 9,729,275
Deferred Inflows of Resources
Unavailable Revenue `- 2,968,375
Fund balances:
Restricted for:
Debt service 2,756,951 2,756,951
Highways,streets and abandoned vehicles 11,614,647
Rental assistance and subsidy 1,221,302 ..
Committed to:
Sanitation 17,113,714
Highways,streets and abandoned vehicles 9,891,854
Rental assistance and subsidy 1,135,446
Cemetery 141,909
Lower Puna area 4,272,183
Parks and recreational projects 88,542
Unassigned (35,855)
Total fund balances 2,756,951 48,200,693
Total liabilities,deferred inflows
and fund balances $2,820,150 $ 60.898,343
See accompanying independent auditors'report
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I c
1
•
•
COUNTY OF HAWAII
Nonmajor Governmental Funds
Combining Statement of Revenues,Expenditures,and Changes in Fund Balances
For the Fiscal Year Ended June 30,2018
Special Revenue Funds
Solid Parking
Highway Sewer , Waste Cemetery Meter
Fund Fund Fund Fund Fund
Revenues
Fuel taxes _ $ 13,342,416 $ $ $ $
Public utility franchise taxes 8,331,390
Licenses and permits 12,330,433
Intergovernmental 2,932,094 8,540 219,062
Charges for services 7,451,791 11,433,824 17,131
Investment earnings (loss)
Other 387,636 2,097 225,986 11,250
Total revenues 37,323,969 7,462,428 11,878,872 11,250 17,131
Expenditures
Current:
General Government
Public safety 8,682,804
Highways and streets 17,538,063
Health,education and welfare
Culture and recreation
Sanitation 8,163,787 28,839,159
Pension and retirement contributions 2,436,472 793,103 1,746,214
Employees'health insurance 1,086,358 259,554 709,611
Other • 1,194,464 335,579 549,483
Debt service:
Principal 211,087 2,644 575,762
Interest 15,240 432 50,304
Total expenditures 31,164,488 9,555,099 32,470,533
Excess (deficiency) of revenues
over(under)expenditures 6,159,481 (2,092,671) (20,591,661) 11,250 17,131
Other Financing Sources (Uses)
Transfers in 8,800 2,268,837 19,483,277
Increases in capital leases 937,113 42,457 1,528,576
Transfers out (3,538,706)
Total other financing sources (uses) (2,592,793) 2,311,294 21,011,853
Net change in fund balances 3,566,688 218,623 420,192 11,250 17,131
Fund balances at beginning of year 6,814,624 7,846,436 8,628,463 130,659 261,634
Fund balances at end of year $ 10,381,312 $ 8,065,059 $ 9,048,655 $ 141,909 $278,765
- 118-
•
•
Special Revenue Funds
Vehicle Workforce Golf Geothermal Reloc. Beauti- Hawaii County Park
Disposal Bikeway Innovation& Course &community fication Housing Dedication
Fund Fund opport.Act Fund Fund Benefits Fund Fund Aeencv Fund
2,382,252 61,839 198,490
1,059,690 18,773,811
3,617 652,794 -
2,861 116
36,885 596,237 505,742
2,422,754 61,839 1,059,690 , 652,794 596,237 198,490 19,282,414 116
411,351
32,478 196,276
• 1,058,445 19,8 3,730
1,079,311 62,848
1,231,880
21,925 1,245 213,814 710,187
15,830 104,539 300,800
853
1,698 7,572
654
1,269,635 32,478 1,059,690 1.400.215 411,351 259,124 20 832,943
1,153,119 29,361 • (747,421) 184,886 (60,634) (1,550,529) 116
542,954 1,173,675
93,893
636,847 1,173,675
1,153,119 29,361 (110,574) 184,886 (60,634) (376,854) 116
8,459,970 621,889 74,719 4,087,297 642,719 2,733,602 88,426
1_9,613,089 $ 651,250 $ f35_855).-_--1 4.272,183 $ 582,085 2,356,748 88 542
(Continued)
COUNTY OF HAWAII
Nonmajor Governmental Funds
Combining Statement of Revenues, Expenditures, and Changes in Fund Balances
For the Fiscal Year Ended June 30,2018
(Concluded)
Debt Service Fund Total
Nonmajor
Interest Governmental
Fund Funds
Revenues
Fuel taxes $ $ 13,342,416
Public utility franchise taxes 8,331,390
Licenses and permits 14,973,014
Intergovernmental 373,640 23,366,837
Charges for services _ 19,559,157
Investment earnings(loss) 2,977
Other 1,765,833
Total revenues 373,640 81,341,624
Expenditures
Current:
General Government 411,351
Public safety 8,682,804
Highways and streets 17,766,817
Health,education and welfare 20,872,175
Culture and recreation 1,142,159
Sanitation 38,234,826
Pension and retirement contributions 5,922,960
Employees'health insurance 2,476,692
Other 2,080,379
Debt service:
Principal 798,763
Interest 17,592,498 17,659,128
Total expenditures 17,592,498 116.048.054
Excess(deficiency)of revenues
over(under)expenditures (17.218.858) -(34.706.430)
Other Financing Sources(Uses)
Transfers in 17,375,823 40,853,366
Increases in capital leases 2,602,039
Transfers out (3,538,706)
Total other financing sources(uses) 17,375,823 39,916,699
Net change in fund balances 156,965 5,210,269
Fund balances at beginning of year 2,599,986 42,990,424
Fund balances at end of year -•$2,756,951 $48.200.693
See accompanying independent auditors'report.
- 120-
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 30,2018
Actual Variance
Original Final (Budgetary Positive
Budget Budget Basis) (Negative)
Revenues:
Taxes:
Fuel taxes $ 8,364,437 $ 12,364,437 S 13,696,868 $ 1,332,431
Public utility franchise taxes 7,800,000 7,800,000 8,331,390 531,390
Total taxes 16,164,437 20,164,437 22,028,258 1,863,821
Licenses and permits -motor vehicle weight taxes 11,600,000 11,600,000 12,330,433 730,433
Intergovernmental 1,603,567 2,003,567 2,767,052 763,485
Charges for services 500,000 500,000 248,221 .(251,779)
Other 105,000 105,000 139,415 34,415
Total revenues 29,973,004 34,373,004 37,513,379 3,140,375
Expenditures: •
Public safety-protective inspection 5,300 5,300 2,559 2,741
Public safety-traffic engineering 7,733,541 8,943,541 8,357,003 586,538
Highways and streets 11,552,326 12,951,126 10,065,161 2,885,965
Highways and streets-mass transit 7,200,000 8,200,000 7,520,612 679,388
Pension and retirement contributions 2,575,000 2,575,000 2,416,652 158,348
Employees'health insurance 1,400,000 1,400,000 1,082,575 317,425
Other 1,146,837 1,946,837 1,126,680 820,157
Total expenditures 31,613,004 36,021,804 30,571,242 5,450,562
Excess (deficiency) of revenues over(under)
expenditures (1,640,000) (1,648,800) 6,942,137 8,590,937
Other financing sources (uses) -transfers in (out) -
Transfers in-General Fund 8,800 8,800
Transfers out-Capital Projects Fund (3,500,000) (3,500,000) (3,500,000)
Deficiency of revenues and other sources
under expenditures and other uses (5,140,000) (5,140,000) 3,450,937 8,590,937
Fund balance at beginning of year 6,814,624 6,814,624 6,814,624
Fund balance at end of year $ 1,674,624 $ 1,674,624 L10,265,561 $ 8,590,937
See accompanying independent auditors'report.
- 121 -
COUNTY OF HAWAII
Sewer Fund
Schedule of Revenues,Expenditures,and Changes in Fund Balance-
Budget and Actual(Budgetary Basis)
For the Fiscal Year Ended June 30,2018
Actual Variance
Original Final (Budgetary Positive
Budget Budget Basis) (Negative)
Revenues:
Intergovernmental $ - $ $ 8,540 $ 8,540
Charges for services-sewer fees 7,386,127 7,386,127 7,451,791 65,664
Other - 2,097 2,097
Total revenues 7,386,127 7,386,127 7,462,428 76;301
Expenditures:
Sanitation 11,942,524 11,942,524 8,475,096 3,467,428
Pension and retirement contributions 892,333 892,333 794,292 98,041
Employees'health insurance 325,626 323,626 260,027 63,599
Other 750,000 752,000 517,226 234,774
Total expenditures 13,910,483 13,910,483 10,046,641 3,863,842
Deficiency of revenues under expenditures (6,524,356) (6,524,356) (2,584,213) 3,940,143
Other financing sources:
Transfers in-General Fund 2,268,837 2,268,837 2,268,837
Excess (deficiency) of revenues and other
sources over(under) expenditures (4,255,519) (4,255,519) (315,376) 3,940,143
Fund balance at beginning of year 7,846,436 7,846,436 7,846,436 -
Fund balance at end of year 3,590,917 3,590,917 $ 7,531,060 $ 3,940,143
See accompanying independent auditors'report. •
- 122-
COUNTY OF HAWAII
Solid Waste Fund
Schedule of Revenues,Expenditures,and Changes in Fund Balance-
Budget and Actual(Budgetary Basis)
For the Fiscal Year Ended June 30,2018
Actual Variance
Original Final (Budgetary Positive
Budget Budget Basis) (Negative)
Revenues:
Intergovernmental $ 512,984 $ 557,984 $ 387,787 $ (170,197)
Charges for services-tipping fees 9,019,200 9,019,200 I 433,824 2,414,624
Other 226,104 226,104 225,986 (118)
Total revenues 9,758,288 9,803,288 12,047,597 2,244,309
Expenditures:
Sanitation 29,319,631 29,412,631 28,087,126 1,325,505
Pension and retirement contributions 1,590,000 1,742,000 1,740,804 1,196
Employees'health insurance 770,000 710,000 709,871 129
Other 911,000 771,000 544,283 226,717
Total expenditures • 32,590,631 32,635,631 31,082,084 1,553,547
Deficiency of revenues under expenditures (22,832,343) (22,832,343) (19,034,487) 3,797,856
Other financing sources:
Transfers in-General Fund 19,483,277 19,483,277 19,483,277
Excess (deficiency) of revenues and other -
sources over(under) expenditures (3,349,066) (3,349,066) 448,790 3,797,856
Fund balance at beginning of year 8,628,463 8,628,463 8,628,463
Fund balance at end of year $5,279397 $5.279397 $ 9,077.253 $3,797,856
See accompanying independent auditors'report
- 123 -
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 30,2018
Actual Variance
Original Final (Budgetary Positive
Budget Budget Basis) (Negative)
Revenues-other-sale of cemetery plots $ 10,000 $ 10,000 $ 11,250 $ , 1,250
Expenditures-health,education and welfare 10,000 10,000- 10,000
Excess of revenues over expenditures 11,250 11,250
Fund balance at beginning of year 130,659 130,659 130,659
Fund balance at end of year $ 130,659 $ 130,659 $ 141,909 5 11,250
See accompanying independent auditors' report.
- 124-
COUNTY OF HAWAII I
Parking Meter Fund
Schedule of Revenues,Expenditures,and Changes in Fund Balance -
Budget and Actual(Budgetary Basis)
For the Fiscal Year Ended June 30,2018
Actual Variance
Original Final (Budgetary Positive
Budget Budget Basis) (Negative)
Revenues-Charges for services-highways and streets $ $ 17,131 $ 17,131
Excess of revenues over expenditures 17,131 17,131
Fund balance at beginning of year 261,634 261,634 261,634 -
Fund balance at end of year $261,634 $ 261,634 $278,765 17,131
See accompanying independent auditors'report.
- 125-
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 30,2018
Actual Variance
Original Final (Budgetary Positive
Budget Budget Basis) (Negative)
Revenues:
Licenses and permits-vehicle disposal fee $2,103,984 $ 2,103,984 $ 2,382,252 $ 278,268
Charges for services-towing charges 1,000 1,000 3,617 2,617
Miscellaneous 20,700 20,700 36,885 16,185
Total revenues 2,125,684 2,125,684 2,422,754 297,070
Expenditures:
Sanitation 3,145,228 3,145,228 1,188,056 1,957,172
Pension and retirement contributions 28,900 28,900 21,899 7,001
Employees'health insurance 28,000 28,000 16,167 11,833
Other 2,000 2,000 2,000
Total expenditures 3,204,128 3,204,128 1,226,122 1,978,006
Excess (deficiency) of revenues
over(under) expenditures (1,078,/111) (1,078,444) 1,196,632 2,275,076
Fund balance at beginning of year ' 8,459,970 8,459,970 8,459,970
Fund balance at end of year $7,381,526 $ 7,381,526 $ 9,656,602 2,275,076
. See accompanying independent auditors'report,
•
- 126-
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 30,2018
Actual Variance-
Original Final (Budgetary Positive
Budget Budget Basis) (Negative)
Revenues-licenses and permits-bicycle tax $ 71,000 $ 71,000 $ 61,839 $ (9,161)
Expenditures-highways and streets 71,000 71,000 33,735 37,265
Excess(deficiency)of revenues over(under)
expenditures 28,104 28,104
Fund balance at beginning of year 621,889 621,889 621,889
Fund balance at end of year $621,889 $621,889 $649,993 $28,104
See accompanying independent auditors'report.
- 127- -
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 30,2018
Actual Variance
Original Final (Budgetary Positive
Budget Budget Basis) (Negative)
Revenues -intergovernmental $2,836,232 $2,434,010 $ (402,222)
Expenditures:
Health,education and welfare 2,834,732 2,432,635 402,097
Pension and retirement contributions 1,500 1,375 125
Total expenditures 2,836,232 2,434,010 -
Excess of revenues over expenditures - -
Fund balance at beginning of year
Fund balance at end of year
See accompanying independent auditors'report.
- 128 -
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 30,2018
Actual Variance
Original Final (Budgetary Positive
Budget Budget Basis) (Negative)
Revenues:
Charges for services $ 734,600 $ 734,600 $ 652,794 $ (81,806)
Expenditures: -
Culture and recreation 1,017,417 1,040,417 984,663 55,754
Pension and retirement contributions 197,386 215,386 212,693 2,693
Employees'health insurance 118,000 118,000 104,528 13,472
Other 52,000 11,000 853 10,147
Total expenditures 1,384,803 1,384,803 1,302,737 82,066
Deficiency of revenues under expenditures (650,203) (650,203) (649,943) 260
Other financing sources:
Transfers in- General Fund 542,954 542,954 542,954
Excess of revenues and other sources
over expenditures (107,249) (107,249) (106,989) 260
Fund balance at beginning of year 74,719 74,719 74,719
Fund balance at end of year $ (32,530) $ (32,530) $ (32,270) $ 260
See accompanying independent auditors'report,
Note:"Fund balance at beginning of year"in the above schedule is on the modified accrual and not budgetary basis,which
is resulting in the negatvie fund balance shown above.
- 129-
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 30,2018
Actual Variance
Original Final (Budgetary Positive
Budget Budget Basis) (Negative),
Revenues
Miscellaneous:
Geothermal royalties $ 600,000 $ 600,000 596,237 $ (3,763)
Sale of real property 46,133 46,133
Total revenues 600,000 600,000 642,370 42,370
Expenditures:
General government:
Planning and zoning 1,000,000 1,000,000 9,369 990,631
Excess(deficiency)of revenues over
(under)expenditures (400,000) (400,000) 633,001 1,033,001
Fund balance at beginning of year 4,087,297 4,087,297 4,087,297
Fund balance at end of year $3,687.297 $3,687,297 $4.720.298 $ 1,033,001
See accompanying independent auditors'report.
- 130-
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 30,2018
Actual Variance
Original Final (Budgetary Positive
Budget Budget Basis) (Negative)
Revenues-licenses and permits-highway
beautification $ 189,000 $ 189,000 $ 198,490 $ 9,490
Expenditures:
Highways and streets 226,300 226,300 213,968 12,332
Culture and recreation 128,300 128,300 124,792 3,508
Total expenditures 354,600 354,600 338,760 15,840
Deficiency of revenues under expenditures (165,600) (165,600) (140,270) 25,330
Fund balance at beginning of year / 642,719 642,719 642,719
Fund balance at end of year $ 477,119 $ 477,119 $ 502,449 $ 25,330
See accompanying independent auditors'report.
- 131 -
/ .
COUNTY OF HAWAII
Hawaii County Housing Agency
Schedule of Revenues, Expenditures, and Changes in Fund Balance-
Budget and Actual (Budgetary Basis)
For the Fiscal Year Ended June 30, 2018
Actual Variance
Original Final (Budgetary Positive
Budget Budget Basis) (Negative
Revenues:
Intergovernmental -
Federal = HUD-Voucher program $ 16,992,045 $ 19,492,045 18,702,884 $ (789,161)
Investment earnings 1,600 1,600 2,861 1,261
Resale of property 38,500 38,500
Other 48,850 48,850 141,619 92,769 _
Total revenues 17,042,495 19,542,495 18,885,864 (656,631)
Expenditures:
Health, education and welfare 18,148,556 20,597,784 19,431,179 1,166,605
Pension and retirement contributions 775,649 775,649 708,013 67,636
Employees' health insurance 370,033 370,033 300,331 69,702
Total expenditures 19,294,238 21,743,466 . 20,439,523 1,303,943
Deficiency of revenues under expenditures (2,251,743) (2,200,971) (1,553,659) 647,312
Other financing sources-transfers in -
Transfers in - General Fund - 2,143,350 2,092,578 1,173,675 (918,903)
Excess (deficiency)of revenues and other sources
over(under)expenditures (108,393) , (108,393) (379,984). (271,591)
Fund balance at beginning of year 2,733,602 2,733,602 2,733,602
Fund balance at end of year $ 2,625,209 $ 2,625,209 2,353,618 $ (271,591)
See accompanying independent auditors'report.
- 132-
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 30,2018
Actual Variance
Original Final (Budgetary Positive
Budget Budget Basis) (Negative)
Revenues -investment earnings 787 $ 787
Excess of revenues over expenditures 787 787
Fund balance at beginning of year 88,426 88,426 88,426
Fund balance at end of year $ 88,426 $ 88,426 $ 89,213 $ 787
See accompanying independent auditors'report.
-133-
COUNTY OF HAWAII
Agency Funds
Combining Statement of Agency Funds Net Position
June 30,2018 •
Performance
State Improvement I mprovement I mprovement and
Weight District District District Refundable
Tax ,No, 18 No. 19 Revolving Deposits
Fund Fund Fund Fund Fund
Assets
Cash and cash equivalents $2,142,521 $ 541,229 $ 316,273 $ 7,857 $ 318,770
Investments 246,928 166,070
Due from other agency funds -
Other receivables 4,168 3,741 250
Total assets $2,142,521 $ 545,397 $ 566,942 174,177 318,770
Liabilities
Due to other agency funds 91 $ $ $ $ 5,625
Accrued liabilities 2,142,430 5,682 5,181 -
Advances payable 12,136 8,595 313,145
Assets held for the benefit of
improvement districts 527,579 553,166 174,177
Total liabilities $2,142,521 $ 545.397 $ 566,942 174,177 318,770
See accompanying independent auditors'report.
- 134-
Non-Profit Organ and Business
Payroll Flexible Lapsed License Tissue Improvement
Clearance Spending Warrants Plates Education District •
Fund Account Fund Fund Fund 1 -Kailua Total
$ 590,494 $370,548 $ 334,401 $ 13,775 $ 1,392 $ 301 $ 4,637,561
412,998
7,270 7,270
7,827 5,323 5,700 27,009
$ 598,321 $370,548 $ 346,994 $ 13,775 1,392 $ 6,001 $ 5,084,838
1,554 $ - $ - $ $ 7,270
596,767 370,548 346,994 13,775 1,392 301 3,483,070
333,876
5,700 1,260,622
$ 598,321 $370,548 $ 346,994 13,775 1,392 6,001 $ 5.084,838
•
- 135 -
COUNTY OF HAWAII
Agency Funds
Combining Statement of Changes in Assets and Liabilities
For the Fiscal Year Ended June 30,2018
Balance - Balance
July I, June 30,
2017 Additions Deductions 2018
•
State Weight Tax Fund
Assets
Cash and cash equivalents $ 1,980,809 $ 24,963,030 $ 24,801,318 $2,142,521
Liabilities
Vouchers payable $ 24,769,706 $ 24,769,706 $ -
Due to other agency funds 91 91
Accrued liabilities-due to State of Hawaii 1,980,809 • 24,962,979 24,801,358 2,142,430
Total liabilities $ 1,980,809 $ 49,732,776 _49,571,064 $2,142,521
Improvement District No. 18 Fund
Assets
Cash and cash equivalents $ 478,889 $ 230,653 $ 168,313 $ 541,229
Other receivables 4,252 244,191 244,275 4,168
Total assets $ 483,141 $ 474,844 $ 412,588 $ 545,397 •
Liabilities
Vouchers Payable $ $ 943 $ 943 $
Due to other non-agency funds - -•• 1,757`` 1,514 1,757 1,514
Accrued liabilities 4,252 191,801 191,885 4,168
Advances payable 13,737 12,136 13,737 12,136
Assets held for the benefit
of improvement districts 463,395 191,917 127,733 527,579
Total liabilities $ 483,141 $ 398,311 $ 336,055 $ 545,397
Improvement District No. 19 Fund
Assets -
Cash and cash equivalents $ 255,131 $ 132,189 $ 71,047 $ 316,273
Investments 252,935 6,007 - 246,928
Other receivables 1,556 120,105 117,920 3,741
Total assets $ 509,622 252,294 $ 194,974 $ 566,942
Liabilities
Vouchers Payable $ $ 2,338 2,338 $
Due to other non-agency funds 2,400 1,440 2,400 1,440
- - Accrued liabilities 1,556 120,105 117,920 3,741
Advances payable 13,069 8,595 13,069 8,595
Assets held for the benefit
of improvement districts 492,597 123,594 63,025 553,166
Total liabilities $ 509,622 256,072 198,752 $ 566,942
- 136
COUNTY OF HAWAII
Agency Funds
Combining Statement of Changes in Assets and Liabilities
For the Fiscal Year Ended June 30,2018
Balance Balance
July 1, June 30,
2017 Additions Deductions 2018
I mprovement District Revolving Fund
Assets
Cash and cash equivalents $ 5,627 $ 2,230 $ $ 7,857 -
Investments 167,995 1,925 166,070
Other receivables 250 250
Total assets $ 173,622 $ 2,480 $ 1,925 $ 174,177
Liabilities
Assets held for the benefit
of improvement districts $ 173.622 $ 2,416 $ 1,861 $ 174,177
Performance and Refundable
Deposits Fund
Assets
Cash and cash equivalents $ 357,693 $ 514,905 $ 553,828 $ 318,770
Due from other non-agency funds 105 105
Total assets $ 357,798 514,905 5 553,933 $ 318,770
Liabilities
Vouchers payable _ $ 520,155 $ 520,155
Due to other agency funds 2,925 5,625 2,925 5,625
Advances payable 354,873 509,575 551,303 313,145
Total liabilities $ 357,798 1,035,355 1,074,383 $ 318,770
Payroll Clearance Fund
Assets
Cash and cash equivalents $ 85,426 $286,348,088 $285,843,020 $ 590,494
Due from other non-agency funds 274,388,415 274,385,706 2,709
Other receivables 431,320 41 426,243 5,118
Total assets $ 516,746 $560.736.544 ..560,654,969 $ 598,321
Liabilities
Vouchers payable $ 140,017,490 $ 140,017,490 $
Due to other agency funds 698 1,554 698 1,554
Due to other non-agency funds 964 964
Accrued liabilities 516,048 325,118,374 325,038,619 595,803
Total liabilities $ 516,746 $465,138,382 $465,056,807 $ 598,321
- 137-
COUNTY OF HAWAII
Agency Funds
Combining Statement of Changes in Assets and Liabilities
For the Fiscal Year Ended June 30,2018
Balance Balance
July 1, June 30,
2017 Additions Deductions -2018
Flexible Spending Account
Assets
Cash and cash equivalents $ 354,875 $ 376,559 $ 360,886 $ 370,548
T.iabilities
Accrued liabilities $ 354,875 $ 376,559 $ ' 360,886 - $ 370,548
Lapsed Warrants Fund
Assets •
Cash and cash equivalents $ 323,234 $ 12,317 $ 1,150 $ 334,401
Due from other agency funds 3,623 7,270 3,623 7,270
Other receivables 8,571 5,323 8,571 5,323
Total assets $ 335.428 $ 24,910 $ 13,344 346.994
Liabilities
Vouchers payable 1,150 $ 1,150 $ -
Accrued liabilities 335,428 70,812 59,246 346,994
Total liabilities 335.428 71,962 $ 60,396 346.994
Non-Profit License Plates Fund
Assets
Cash and cash equivalents $ 1,025 $ 66,675 $ -53,925 $ 13,775
Liabilities
Vouchers payable $ 53,925 $ 53,925 $
Accrued liabilities:
Due to non-profit agency 1,025 66,675 53,925 13,775
Total liabilities 1,025 $ 120,600 107,850 $ 13,775
Organ and Tissue Education Fund
Assets
Cash and cash equivalents $ 1,160 4,895 $ 4,663 $ 1,392
Liabilities
Vouchers payable $ $ 4,661 $ 4,661 $ -
Accrued liabilities- due to State of Hawaii 1,160 4,895 4,663 1,392
Total liabilities $ 1,160 9,556 $ 9,324 1.392
-_138-
COUNTY OF HAWAII
Agency Funds
Combining Statement of Changes in Assets and Liabilities
For the Fiscal Year Ended June 30,2018
Balance Balance
July 1, June 30,
2017 Additions Deductions 2018
•
Business Improvement District 1-Kailua
Assets
Cash and cash equivalents 55 $ 800,970 $ 800,724 $ 301
Other receivables-BID I-Kailua Assessment 3,292 803,127 800,719 5,700
Due from other non-agency funds 278 278
Total assets $ 3,625 $ 1,604,097 $ 1,601,721 6,001
• Liabilities
Vouchers payable $ 800,725 $ 800,725 $
Accrued liabilities-due to KVBID 333 237 333 237
Accrued liabilities 64 64
Assets held for the benefit
of improvement districts 3,292 799,815 797,407 5,700
Total liabilities $ 3,625 1,600,841 $ 1,598,465 6,001
Total-All Agency Funds
Assets
Cash and cash equivalents $3,843,924 $313,452,511 $312,658,874 $4,637,561
Investments 420,930 7,932 412,998
Due from other agency funds 3,623 7,270 3,623 7,270
Due from other non-agency funds 383 274,388,415 274,386,089 2,709
Other receivables-BID I-Kailua Assessment 3,292 803,127 800,719 t• 5,700
Other receivables 445,699 369,910 797,009 18,600
Total assets $4,717,851 $ 589,021,233 $588,654,246 $5,084,838
Liabilities
Vouchers payable $ $ 166,171,093 $ 166,171,093 $ -
Due to other agency funds - 3,623 7,270 3,623 7,270
Due to other non-agency funds 4,157 3,918 4,157 3,918
Accrued liabilities 1,212,159 325,877,715 325,768,556 1,321,318
Accrued liabilities-due to non-profit agency 1,025 66,675 53,925 13,775
Accrued liabilities-due to State of Hawaii 1,981,969 24,967,874 24,806,021 2,143,822
Accrued liabilities-due to KVBID 333 237 333 237
Advances payable 381,679 530,306 578,109 333,876
Assets held for the benefit
of improvement districts 1,132,906 1,1 17,742 990,026 I,260,622
Total liabilities $4,717,851 $518.742.830 $518375,843 $5.084.838
See accompanying independent auditors'report. -
- 139 -
COUNTY OF HAWAII
Private Purpose Trusts
Combining Statement of Private Purpose Trust Net Position
June 30,2018
Shippers' Total
Geothermal Wharf Private
Asset Trust Purpose
Assets Fund Fund Trusts
Cash and cash equivalents $ 813,981 $ 892,399 $ 1,706,380
Investments 1,525,845 1,606,656 3,132,501
Interest receivable 2,294 2,294
Total assets X2,342,120 $ 2.499,055 $ 4,841,175
Liabilities
Accounts Payable $ - 25,303 25,303
Total liabilities $ 25,303 $ 25,303
Net Position -
Held in trust for other parties $ 2,316,817 2,499,055 $ 4,815,872
Total net position 5 2,316.817 $ 2,499,055 $ 4,815,872
See accompanying independent auditors' report.
- 140-
COUNTY OF HAWAII
Private Purpose Trusts
Combining Statement of Changes in Private Purpose Trust Net Position
For the Fiscal Year Ended June 30,2018
Shippers' Total
Geothermal Wharf Private
Asset Trust Purpose
Fund Fund Trusts
Additions
Contributions: -
Puna Geothermal Venture $ 50,000 $ $ 50,000
Investment earnings:
Net increase (decrease)in fair value of
investments (17,093) 42,549 25,456
Dividends - 37,134 37,134
Interest 22,341 1,458 23,799
Total additions 55,248 81,141 136,389
Deductions
Consultant 25,303 25,303
Grant payments 60,092 60,092
Investment Fees 13,458 13,458
Total deductions 25,303 73,550 98,853
Change in net position 29,945 7,591 37,536
Net position,beginning of year 2,286,872 2,491,464 4,778,336
Net position,end of year $ 2.316.817 $ 2.499.055 $4.815.872
See accompanying independent auditors'report,
- 141 -
J
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STATISTICAL SECTION
(UNAUDITED)
Contents Page
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. 143
Revenue Capacity—These schedules contain information to help the reader assess the County's
most significant local revenue source,the property tax. 148
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. 154
Demographic and Economic Information— These schedules offer demographic and economic
indicators to help the reader understand the environment within which the County's financial
acitivities take place. 157
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. 159
•
Table
COUNTY OF HAWAII
Net Position by Component
•
Last Ten Fiscal Years
2009 2010 2011 2012 2013,as 2014 2015 2016,as 2017,as 2018
restated restated restated
Governmental activities
Net investment in capital assets $419,615,479 $469,235,881 $514,309,238 $594,384,524 $699,326,156 $734,889,023 $748,754,727 $824,846,090 $835,787,961 $840,099,433
Restricted 63,408,379 43,958,660 51,840,697 48,360,223 64,437,707 89;620,936 74,813,856 74,694,901 70,439,580 91,458,455
Unrestricted1/2 _ 42,457,132 37,623,937 40.287,046 39,340,897 181,055 (18,007,624) (351,386,671) (403934,491) (745,796,790) (791,538.872)
Total governmental activities net position $525,480,990 $550,818,478 $606,436,981 $682,085,644 $763,944,918 $806,502,335 $472,181,912 $495,606,500 $160,430,751 $140,019,016
Business-type activities
Net investment in capital assets ' $ 305,127 $ 303244 $ 308,966 $ 315,848 $ 315,255 $ 368,849 $ 428,815 $ 481,039 $ 524,292 595,538
Restricted 184,643 184,914 185,087 185,148
Unrestricted 609,798 497,466 449,581 455,918 1,045,190 1,093,750 1,040,216 1,036,870 1,022,523 1,118,492
Total business-type activities net position $ 1,099,568 $ 985,624 $ 943,634 $ 956,914 $ 1,360,445 $ 1,462,599 $ 1,469,031 $ 1.517,909 $ 1,546,815 $ 1,714,030
Primary government
Net investment in capital assets $419,920,606 $469,539,125 $514,618,204 $594,700,372 $699,641,411 $735,257,872 $749,183,542 $825,327,129 $836,312,253 $840,694,971
Restricted 63,593,022 44,143,574 52,025,784 48,545,371 64,437,707 89,620,936 74,813,856 74,694,901 70,439,580 91,458,455
Unrestricted 43,066,930 38,121,403 40,736,627 39,796,815 1,226,245 (16,913,874) (350.346,455)) (402,897,621) (744,774,267) (790,420,380)
Total primary governmemtet position $526,580,558 $551,804,102 $607,380,615 $683,042,558 $765,305,363 $807,964,934 $473,650,943 $497,124,409 $161,977,566 $141,733,046
Unaudited-see accompanying independent auditors'report. -
Balances prior to FY 2015 have not been adjusted for the implementation of GASB Statement No.68 r 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
2 Balances prior to FY 2017 have not been adjusted for the'implementation of GASB Statement No.75 Accounting and Financial Reporting forPostemployment Benefits Other Than Pensions,
Table 2
COUNTY OF HAWAII
Changes in Net Position ,
_ Last Ten Fiscal Years
2009 2010 2011 2012 2013,as 2014 2015 2016,as 2017 2018 '
restated restated
Program Revenues
Governmental activities:
Charges for services:
General government $ 5,442,950 $ 4,315,849
$ 1,856,795 $ 2,306,855 $ 1,695,152 $ 2,495,917 $ 2,246,106 $ 2,659,984 $ 2,791,430 $ 2,334,119
' Publicsafety 4,846,834 4,449,519 4,447,120 5,136,278 5,117,102 5,562,424 5,926,316 5,594,344 5,739,064 6,114,204
Highways and streets 9,636,799 9,351,219 9,800,983 10,544,711 10,159,443 13,901,679 16,043,045 16,965,449 16,712,641 17,295,316
Health,education and welfare 532,832 713,774 424,107 454,913 570,312 559,381 548,781 523,824 1,305,662 923,654
Culture and recreation 1,557,597 1,609,041 1,626,178 1,601,195 1,794,553 1,954,213 2,150,900 1,951,553 1,844,380 1,999,177
Sanitation 16,415,985 14,934,570 15,889,364 14,831,846 15,593,933 16,426,521 17,816,818 19,011,328 20,896,167 21,910,253
Operating grants and contributions 42,273,795 49,571,173 50,820,951 45,767,655 44,410,353 42,957,370 47,406,704 47,234,458 52,897,945 57,600,066
Capital grants and contributions 15,728,186 13,532,669 38,810,806 86,754,033 107,584,670 62,370,497 29,621,907 60,230,846 14,784,692 31,530,719
Total governmental activates.program revenues 96,434,978 98,477,814 123,676,304 167,397,486 186,925,518 146,228,002 121,760,577 154,171,786 116,971,981 139,707,508
Business-type activities:
Charges for services:
Health,education and welfare 371,511 337,982 372,599 393,464 432,057 468,018 453,304 457,842 469,082 503,597
Operating grants and contributions 135,674 136,802 133,215 131,227 123,800 127,119 113,642 133,932 132,435 224,921
Total business-type activities program revenues 507,185 474,784 505,814 524,691 555,857 595,137 566,946 591,774 601,517 728,518
44 Total primary government program revenues $ 96,942,163 $ 98,952,598 $124,182,118 $ 167,922,177
$187,481,375 $ 146,823,139 $ 122,327,523 154,763,560 $ 117,573,498 $ 140.436,026
Expenses
Governmental activities:
General government $ 69,968,534 $ 65,552,278 $ 53,439,428 $ 56,115,599 $ 55,616,102 $ 59,448,042
$ 69,859,089 $ 65,064,440 $ 72,836,020 $ 75,740,262
Public safety 144,755,837 148,115,428 154,008,027 152,288,979 151,975,049 163,889,113 175,104,223 187,160,903 229,507,091 245,139,168
Highways and streets 36,466,541 38,075,835 34,812,165 42,462,299 42,219,903 38,670,145 45,989,038 45,255,305 51,368,841 54,728,332 .
Health,education and welfare 33,783,223 30,528,977 30,336,420 28,127,691 28,001,020 28,343,056 34,304,166 39,722,480 40,299,077 35,597,718
Culture and recreation 32,633,418 14,739,755 22,167,818 23,412,948 22,121,336 25,590,117 32,225,574 27,315,451 35,213,973 35,834,512
Sanitation 40,191,704 27,527,841 35,604,394 35,049,546 38,505,086 48,721,810 41,467,081 48,521,434 56,605,864 55,025,011
Interest on Ion 5-term debt 13,914,969 14,120,398 15,176,682 14,519,382 14,301,921 12,911,436 12,362,411 11,162,756 13,385,794 15,493,678
Total governmental activities expenses 371,714,226 338,660,512 345,544.934 351,976,444 352,740,417 377,573,719 411,311,582 424,202,769 499,216,660 517,558,681
Business-type activities:
Health,education and welfare 525,449 590,131 550,801 517,052 496,017 494,722 561,813 544,808 573,854 566,864
Total business-type activities expenses 525,449 590,131 550,801 517,052 496,017 494,722 561,813 544,808 573,854 566,864
Total primary government expenses $372,239,675 $339,250,643 $346,095,735 $352,493,496 $353,236,434 $378,068,441 $411,873,395 $424,747,577 $499,790,514 $518,125,545
Net Expense
Governmental activities $(275,279,248) $(240,182,698) $(221,868,630) $(184,578,958) $(165,814,899) $(231,345,717) $(289,551,005) $(270,030,983) $(382,244,679) $(377,851,173)
Business-type activities (18,264) (115,347) (44,987) 7,639 59,840 100.415 5,133 46,966 27,663 161,654
Total primary government net expense $(275,297,512) $(240,298,045) $(221,913,617) $(184,571,319) $(165,755,059) $(231,245,302) $(289,545,872) $(269,984,017) $(382,217,016) $(377,689,519)
Continued nextpage.
General Revenues and Other Changes in Net Position Table 2 Table 2
Governmental activities
General revenues:
Property taxes $229,262,980 $218,037,567 $225,055,099 $209,894,427 $'200,775,779 $221,260,681 $237,217,225 $248,353,113 $268,869,322 $304,294,883
Public service company taxes 10,228,607 . 9,647,055 9,296,852 9,896,715 10,766,021 10,380,341 10,385,654 9,800,948 8,423,340 7,611,856
Public utility franchise taxes , 11,118,365 8,963,041 9,415,624 11,065,112 11,087,369 10,792,967 10,824,278 9,004,330 7,950,750 8,331,390
Fuel taxes 7,662113 7,405,996 7,603,501 8,293,200 6,352,944 7,373,475 7,632,973 7,933,810 8,288,676 13,342,416
Grants and contributions not restricted to
specific programs 17,888,019 17,500,038 19,533,165 19,074,105 17,750,132 17,705,917 19,506,423 19,557,513 19,810,090 19,678,289 •
Investment earnings(loss) 8,369,221 2,187,266 609,617 230,804 (81,020) 815,606 671,363 316,593 661,184 1,841,356
Other 2,749,335 1,779,223 5,973,275 1,773,258 2,320,838 5,574,147 8,364,894 12,081,055 7,092,071 2,339,248
. Total governmental activities 287,278,640 265,520,186 277,487,133 260,227,621 248,972,063 273,903,134 294,602,810 307,047,362 321,095,433 357,439,438
Business-type activities:
General revenues: '
Investment earnings 17,861 1,403 2,997 5,641 1,416 1,739 1,299 1,912 1,243 5,561
Other 342,275
Total business-type activities 17,861 1,403 2,997 5,641 343,691 1,739 1,299 1,912 1,243 5,561 '
.Total primary government $287,296,501 $265,521,589 $277,490,130 $260,233,262 $249,315,754 $273 904,873 $294,604,109 $307,049,274 $321,096,676 $357,444,999
Changes In Net Position
Governmental activities $ 11,999,392 $ 25,337,488 $ 55,618,503 $ 75,648,663 $ 83,157,164 $ 42,557,417 $ 5,051,805 $ 37,016,379 $(61,149,246) $(20,411,735)
Business-type activities (403) (113,944) (41,990) 13,280 403,531 102,154 6,432 48,878 28,906 167,215
7btal primary Government changes in net position $ 11,998,989 $ 25,223,544 $ 55,576,513 $ 75,661,943 $ 83,560,695 $ 42,659,571 $ 5,058,237 $ 37.065,257 $(61,120,340) $(20,244,520)
Unaudited-see accompanying independent auditors'report.
Table 3
COUNTY OF HAWAII
Fund Balances,Govermunental Funds
(Modified accrual basis of accounting)
Last Ten Fiscal Years _
1
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
General Fund:
Reserved $14,974,272 $8,088,347 $ $ - $ $ $ $ - $
Unreserved 44,603,975 31,430,570 - - - -
Nonspendable 2,835,361 3,304,551 3,492A64 3,794,963 3,573,745 5,774,378 5,561,433 6,714,871
Restricted 4,296,363 ` 3,693,958 4,863,905 5,459,350 4,554,871 9,022,303 15,112,054 16,800,709
Committed 8,756,426 11,710,875 12,065,528 12,794,782 12,925,579 13,537,067 , 14,013,997 14,533,506
1-sks1 -17,960,596 21,840,843 24,832,390 31,673,075 30,933,049 25,518,510 13,059,474 19,876,560
Unassigned 10,809,404 - 8,176,727 8,694,320 1,824,889 164,148 - - 3,114,478
' Total general fund 59,578,247 39,518,917 44,658,150 48,726,954 53,948,607 55,547,059 52,151,392 53,852,258 47,746,958 61,040,124 '
All other Government Funds:
Reserved 177,995,184 106,555,618 - -
Unreserved,reported in:
Special revenue fund 26,088,685 29,436,463 - -
. Capital projects fund (20,101,369) (3,290,813) - - -
Restricted 77,739,628 71,033,712 104,886,880 107,165,275 82,232,158 92,746,678 70,397,886 108,275,893
Committed 40,148,878 36,866,120 29,502,567 38,029,424 41,125,668 41,258,644 39,299,995 40,851,304
Assigned' - - 6,914,320 5,216,981 - 3,968,524 4,009,520 3,039,319
Unassigned (3,609,332) (10,258,317) - - (14,958,045) _ - (35,8551
Total of other governmental funds 183,982,500 132,701.268 114,279,174 97,641,515 141,303,767 150,411,680 108,399,781 137,973,846 113,707,401 152,130,661
Total Fund Balances $243 560,747 $172`220 185 $158,937,324 $146,368,469 $195,252,374 $205,958,739 $160.551,173 $191,826,104 $161,454,359 $213,170,785
Unaudited-see accompanying independent auditors'report.
NOTE---GASB 54 was implemented in 2011.Except for the unassigned category,conversion of prior year data to new categories is not possible at this time.
'Amount for fiscal year 2014 has been changed for consistency.
Table 4
COUNTY OF HAWAII
Changes in Fund Balances,Governmental Funds '
(Modified accrual basis of accounting)
Last Ten Fiscal Years
(Amounts in thousands)
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Revenues: - .
Property tax $225,858 $215,548 $216,511 8208,231 I $223,482 $236,190 $249,054 $266,517 $301,699
Public service company tax 10,229 9,647 9,297 9,897 10,766 10,380 10,386 9,801 8,423 7,612
Fuel tax 7,662 7,406 7,603 8,293 6,353 7,373 7,633 7,934 8,289 13,342
Public utility franchise tax 11,118 8,963 9,416 11,065 11,087 10,793 10,824 9,004 7,951 8,331
Licenses and permits 14,972 14,725 15,097 15,790 15,991 19,618 22,046 22,432 22,932 24,066
Intergovernmental 70,869 77,614 93,748 100,867 79,912 75,257 86,272 85,173 79,220 90,025
Charges for services 21,404 18,909 16,416 16,885 17,055 19,392 20,357 21,672 21,708 23,553
Investment earnings(loss)' 8,914 2,253 510 406 (618) 1,704 716 614 632 1,592
Settlement contributions - -
-
12,500 - - -
Other 5,690 3,241 7,874 4,201 4,399 30,084 9,769 16,132 11,791 4,832
Total Revenues 376,716 358,306 376,472 375,635 358,646 398,083 404,193 421,816 427,463 475,052
•
Expenditures:
Current:
Generalgovemment 45,882 40,586 34,251 35,088 33,360 36,679 40,805 40,488 40,819 41,571
Public safety 107,540 108,798 104,917 104,523 106,885 111,221 122,819 127,451 136,163 137,718
Highways and streets 17,159 20,222 • 17,114 17,338 17,923 20,270 20,984 22,479 20,329 21,401
Sanitation 35,025 35,675 28,424 29,511 30,672 29,949 31,464 34,015 38,671 39,352
Health,education and welfare 24,596 25,519 26,847 23,749 24,199 23,070 24,540 25,380 30,535 29,876
Culture and recreation 18,853 17,266 16,001 16,763 16,337 18,334 20,056 21,561 21,196 21,324
Pension and retirement contributions 28,870 28,509 27,284 27,773 29,816 33,032 . 38,485 41,359 43,718 49,494
Employees'health insurance 19,119 23,573 25,212 25,902 26,011 26,786 27,731 30,112 32,147 33,802
Otherpostemploymentbenefits 14,950 15,700 17,307 - -• 3,170 4,532 7,180 11,495 14,831
Other 6,257 4,773 4,758 4,183 2,991 3,238 4,686 3,931 3,839 4,622
Debt service:
Principal 19,749 20,720 42,233 24,834 25,718 19,013 22,004 22,432 22,032 86,906
Interest 12,790 14,584 14,841 15,032 14,345 14,644 13,871 - 12,974 17,289 17,739
Capital outlay 89,368 100,653 87,782 71,220 48,565 51,369 79,398 144,288 111,109 41,924
TotalExpenditures 440,158 456,578 446,971 395,916 376,822 390,775 451,375 533,650 529,342 540,560
Revenues over(under)Expenditures (63,442) (98,272) (70,499) (20,281) (18,176) 7,308 (47,182) (111,834) (101,879) (65,508)
Other Financing Sources(Uses): •
Sale of assets 58 10 6 153 I 10 25 66 21 23
Capital leases 1,026 1,948 47 2,521 1,307 14 1,971 3,389 3,769 3,809
State Revolving Fund loans 280 6,811 9,257 4,569 4,991 3,072 7,317 8,130 5,154
Sale of bonds 50,000 - 45,000 50,480 130,136 - 107,116
Issuance of bond anticipation totes(BANs) 19,000 - - 59,800 -
Refunding bonds - 47,510 106,254 48,784
Premium on bonds 185 2,078 17,570 23,174 5,998
Refunding bonds/BANs issuance costs (19) (508) (276)
Payment to refunded bond escrow agent (45,352) (128,920) (54,537) _
Retirement of refunded debt - (9,635)
-
Transfers in 56,697 61,495 56,099 59,971 51,356 61,238( 59,394 57,412 66,864 75,711
Transfers out (56,697) (61,495) (56,099) (59,971) (51,356) (61,238) (59,394) (57,412) (66,864) (75,711)
Total other financing sources 51,549 27,750 56,388 7,243 66,872 3,096 1,996 140,908 71,720 116,1171
Net change itt fund balances $(11,893) $(70,522) $(14,111) $(13,038) $ 48,696 10,404 $(45,186) 29,074 $(30,159) 1 50,563
Debt service as a percentage of
noncapital expenditures 9.0% 10.4% 15.9% 12.3% 13.9% 10.0% 9,3% 9.1% 9.4% 22.1%
Unaudited-see accompanying independent auditors'report. _
Amount for fiscal year 2014 has been changed for consistency.
/
' Table 5
COUNTY OF HAWAI'I
Real Property Assessed Values by Classification and Tax Rates
Last Ten Fiscal Years
(Values in Thousands)
' Value of Building Value of Land Value of
Fiscal Class of Net Taxable Tax Rates Net Taxable Tax Rates Net Taxable
•
Year Property. Building Per$1000 Land Per$1000 Real Property
2009 Residential $2,385,714 $ 7.10 $4,287,515- $8.10 $6,673,229
Apartment 4,079,199 8,10 1,561,009 8.10 5,640,208
Hotel and Resort 1,542,712 9.00 1,271,240 9,00 2,813,952
Commercial — 742,561 9.00 905,079 9.00 1,647,640
Industrial 418,607 9,00 .561,220 9.00 979,827
Agricultural&Native Forest 2,245,161 6,35 4,325,743 8.35 6,570,904
Conservation 44,670 8,55 340,254 8,55 384,924
Homeowners 2,091,891 5.55 2,623,241 5.55 4,715,132
Affordable Rental Housing 41,793 5.55 38,026 ' 5.55 79,819
$13,592,308 $15,913,327 $29,505,635
Fiscal year 2009 total direct rate $7.68
2010 Residential $2,447,576 $7.10 $3,804,696 $8.10 $6,252,272
Apartment 3,602,514 8.10 1,546,866 8,10 5,149,380
Hotel and Resort 1,390,884 9.00 1,177,796 9.00 2,568,680
Commercial 733,260 9,00 928,999 9.00 1,662,259
Industrial 453,406 9.00 - 593,224 9.00 1,046,630
Agricultural&Native Forest 2,272,248 6.35 3,625,585 8.35 5,897,833
Conservation 46,321 8,55 337,860 8.55 384,181
Homeowners 2,388,048 5.55 2,686,692 5.55 5,074,740
Affordable Rental Housing 67,746 5.55 47,703 5.55 115,449
$13,402,003 $14,749,421 $28,151,424
• Fiscal year 2010 total direct rate$7.75
Continued next page, _,
Table 5
Value of Building Value of Land Value of
Fiscal Class of Net Taxable Tax Rates Net Taxable Tax Rates Net Taxable
Year Property Building Per$1000 Land Per$1000 Real Property
2011 Residential $3,040,977 $9.10 $3,787,185 - $9.10 $6,828,162
Apartment 2,660,600 9.85 1,144,873 9.85 3,805,473
Hotel and Resort 820,418 9.85 690,834 9.85 1,511,252
Commercial 713,161 9.10 908,741 9,10 1,621,902
Industrial 454,868 9.10 594,589 9.10 1,049,457
Agricultural&Native Forest 2,232,765 8,35 2,860,494 8.35 5,093,259
Conservation 48,766 9.85 341,496 9.85 390,262
Homeowners 2,479,437 5.55 2,573,527 5,55 5,052,964
Affordable Rental Housing 108,290 5.55 57,821 5.55 166,111
$12,559,282 $12,959,560 $25,518,842
Fiscal year 2011 total direct rate $8.39
2012 Residential $2,849,965 $9,10 $3,549,133 $9.10 $6,399,098
Apartment 2,772,190 9,85 1,147,288 9.85 3,919,478 -
Hotel and Resort 771,971 9,85 601,800 9.85 1,373,771
Commercial 676,465 9.10 837,094 9.10 1,513,559
Industrial 446,247 9.10 563,710 9.10 1,009,957
Agricultural&Native Forest 2,023,285 8.35 2,571,826 8.35 4,595,111
Conservation 44,874 9.85 323,210 9,85 368,084
Homeowners 2,480,038 5,55 2,524,611 5,55 5,004,649
Affordable Rental Housing 142,899 5.55 79,498 5.55 222,397
$12,207,934 $12,198,170 $24,406,104
Fiscal year 2012 total direct rate $8,52
2013 Residential $2,872,890 $9.10 $3,534,961 $9.10 $6,407,851
Apartment 2,403,216 9.85 1,069,999 9.85 3,473,215
Hotel and Resort 711,884 9.85 506,998 9.85 1,218,882
Commercial 661,323 9,10 806,131 9.10 1,467,454
Industrial 472,242 9.10 463,832 9.10 936,074
' Agricultural&Native Forest 2,067,097 8.35 2,425,798 8,35 4,492,895
Conservation 41,505 9.85 287,375 9.85 328,880
Homeowners 2,525,018 5.55 2,502,822 5.55 5,027,840
Affordable Rental Housing 110,208 5,55 64,270 5.55' 174,478
$ 11,865,383 $11,662,186 $23,527,569
Fiscal year 2013 total direct rate$8,37 _
Continued next page,
Table 5
Value of Building Value of Land Value of
Fiscal Class of Net Taxable Tax Rates Net Taxable Tax Rates Net Taxable
Year Property Building Per$1000 Land Per$1000 Real Property
2014 Residential $2,961,309 - $ 10.05 $3,470,148 $ 10.05 $6,431,457
Apartment 2,431,314 10.85 , 1,077,153 10.85 3,508,467
Hotel and Resort 669,850 • 10,85 477,981 10,85 1,147,831
Commercial 648,273 10.05 766,029 10.05 1,414,302
Industrial 470,992 10,05 443,702 10.05 914,694
Agricultural&Native Forest 2,105,481 9.25 2,365,245 9.25 4,470,726
Conservation 36,902 10,85 255,602 10.85 292,504
Homeowners 2,645,121 6,15 2,537,128 6.15 5,182,249
Affordable Rental Housing 115,384 6,15 64,662 6.15 180,046
$12,084,626 $11,457,650 $23,542,276
Fiscal year 2014 total direct rate $9,23
2015 Residential $3,234,567 $ 10.05 $3,741,337 $ 10.05 $6,975,904
Apartment 2,748,462 10,85 1,059,415 10,85 3,807,877
Hotel and Resort 715,560 10.85 591,128 10.85 1,306,688
Commercial 693,488 10.05 759,340 10,05 1,452,828
• Industrial 493,660 10,05 522,006 10,05 1,015,666
Agricultural&Native Forest 2,277,788 9.25 2,416,357 9,25 4,694,145
Conservation 41,991 10.85 238,545 10.85 280,536
Homeowners 2,885,636 6.15 2,607,830 6.15 5,493,466
Affordable Rental Housing 109,462 6,15 61,478 6,15 170,940
$13,200,614 $11,997,436 $25,198,050
Fiscal year 2015 total direct rate $9.26
2016 Residential $3,480,591 $ 10,05 $4,199,462 $ 10.05 $7,680,053
Apartment 2,944,454 10.85 1,102,944 10,85 4,047,398
Hotel and Resort 704,372 10.85 456,088 10.85 1,160,460
Commercial 691,810 10.05 718,840 10.05 1,410,650
Industrial 487,990 10.05 519,955 10.05 1,007,945
Agricultural&Native Forest 2,358,086 9,25 2,540,590 9.25 4,898,676
Conservation 45,651 10,85 242,363 10,85 288,014
Homeowners 2,965,718 6,15 2,727,912 6,15 5,693,630
Affordable Rental Housing 132,752 6,15 73,267 6.15 206,019
$13,811,424 $12,581,421 $26,392,845
Fiscal year 2016 total direct rate$9,25
Continued next page,
Table 5
Value of Building Value of Land Value of
Fiscal Class of Net Taxable Tax Rates Net Taxable Tax Rates Net Taxable
Year Property Building Per$1000 Land Per$1000 Real Property
2017 Residential $4,117,521 $ 10.05 $4,395,220 $ 10.05 $8,512,741
Apartment 3,287,877 10.85 1,077,230 10,85 4,365,107
Hotel and Resort 751,005 10.85 470,390 10,85 1,221,394
Commercial 741,099 10.05 736,639 10,05 1,477,738
Industrial 504,084 10.05 519,750 10.05 1,023,834
Agricultural&Native Forest 2,746,489 9.25 2,636,805 9.25 5,383,295
Conservation 52,668 10.85 249,458 10.85 302,126
Homeowners 3,323,185 6.15 2,842,257 6.,15 6,165,441
Affordable Rental Housing 147,676 6,15 74,531 6.15 222,207
$15,671,603 $13,002,281 $28,673,884
Fiscal year 2017 total direct rate $9.21
2018 Residential $4,468,601 $ 10.05. $4,539,015 $ 10.05 $9,007,616
Apartment3,593,358 10.85 1,080,647 10.85 4,674,005
Hotel and Resort 786,420 10,85 511,659 10,85 1,298,079
Commercial 799,591 10.05 749,661 10.05 1,549,252
' Industrial 526,130 10.05 , 550,670 10.05 1,076,800
• Agricultural&Native Forest 2,877,993 9.25 2,696,501 9.25 5,574,494
Conservation 53,807 10.85 275,149 10.85 328,956
Homeowners 3,706,817 6.15 2,980,148 6.15 6,686,965
Affordable Rental Housing 171,631 6.15 88,857 6,15 260,488
$16,984,348 $13,472,307 $30,456,655
Fiscal year 2017 total direct rate$9.93
source:County of Hawai'i,Department of Finance,Real Property Tax Division
NOTES:Assessed value is at 100%of market value,
Property is reassessed annually,
The County Council sets the tax rates annually.
There are no overlapping property tax rates in the County of Hawaii,
The improved residential and unimproved residential classes were combined into a single class beginning with the fiscal
years ending June 30,2009,
Unaudited-see accompanying independent auditors'report,
Table 6
COUNTY OF HAWAII
•
Principal Taxpayers
June 30,2018 and 2009
Fiscal Year 2018 Fiscal Year 2009
Percentage % Percentage
2017 of Total 2008 of Total
Assessed Assessed Assessed Assessed
Taxpayer Business Valuation Rank Valuation Valuation Rank Valuation
Kohanaiki Shores LLC Developer $ 404,680,8/00 1 1.3% $
Hilton Resorts Corp. Timeshare 284,427,000 2 0.9%
Mauna Kea/Hapuna Beach Corps. Developer/Hotel 178,923,600 3 0.6%
Hualalai Investors LLC Developer/Hotel 165,564,700 4 0.5% 240,434,900 1 0.7%
Hilton Land Investment I LLC Hotel 139,889,000 5 0.5% , 239,433,900 2 0,7%
MAPS Orchid Hotel LLC Hotel 125,067,600 6 0.4%
Mauna Lani Resort Inc. Developer/Hotel 98,591,400 7 0.3% 124,918,100 7 0.4%
Raptor Residence LLC Residential 74,249,700 8 0.2% 69,870,500 10 0.2%
Target Corporation Retailer 67,174,500 9 0.2%
SMG I Hotel Waikoloa LLC Hotel 63,459,700 10 0.2%
Mauna Kea Development Corp Hotels/Dev. 237,247,300 3 0.7%
WB KD Acquisition LLC Developer 197,382,400 4 0.6%
1250 Oceanside Partners Developer 196,188,400 5 0,6%
WB-LCP Orchid Owner LLC Hotel 172,546,300 6 0.5%
Kona Coast Resort Ltd Condo/Time Share 82,733,300 8 0.2%
BRFJWaikoloa LLC Hotel 80,030,300 9 0.2%
$1,602,028,000 5.1% $ 1.640.785.400 4.8%
Note:Gross valuation at January 1,2017: $30,456,654,447
Gross valuation at January 1,2008: $34,434;334,300
source:County of Hawai'i, Department of Finance, Real Property Tax Division -
Unaudited-see accompanying independent auditors'report.
- 152-
Table 7
COUNTY OF HAWAI'I
Property Tax Levies and Collections
Last Ten Fiscal Years
*Outstanding
*Total Delinquent
*Current *Current *Percent *Delinquent *Total Collections as *Outstanding 'faxes as
Fiscal Tax Tax of Levy Tax Tax Percent of Delinquent Percent of
Year Levy Collections Collected Collections Collections Current Levy 'faxes Current Levy
2009 226,638,993 219,437,531 97% 6,849,076 226,286,607 100% 352,386 0%
2010 215,262,172 207,501,307 96% 7,353,103 214,854,410 100% 407,762 0%
2011 215,729,273 208,106,918 96% 7,128,214 215,235,132 100% 494,141 0%
2012 204,868,717 198,274,186 97% 6,101,691 204,375,877 100% 492,840 0%
2013 197,043,064 191,154,491 97% 5,328,392 196,482,883 100% 560,181 0%
2014 217,269,825 211,711,407 97% -4,868,777 216,580,184 100% 689,641 0%
2015 233,255,919 227,211,277 97% 5,004,300 232,215,577 100% 1,040,342 0%
2016 244,067,211 237,882,513 97% 4,581,909 242,464,422 99% 1,602,788 1%
2017 266,398,351 259,074,405 97% 4,325,197 263,399,602 99% 2,998,749 1%
2018 302,488,275 292,626,959 97% - 292,626,959 97% 9,861,316 3%
*Amounts reflect subsequent adjustments
Source: County of Hawaii,Department of Finance,Real Property Tax Division
Unaudited-see accompanying independent auditors'report.
Table 8
' COUNTY OF.HAWAI'I
Ratios of Outstanding Debt by Type
- Last Ten Fiscal Years
Business-Type Component Total Primary Government
Governmental Activities Activities Unit Total Primary Government and Component Unit
General State Total General State Percentage Percentage
Fiscal Obligation Revolving Capital Bonds/Notes Primary Obligation Revolving of Personal Per of Personal Per
Year Bonds(c) Fund Loans Leases Payable Government(al - Bonds Fund Loans Income(b) Capita(b) Income(b) Capita(ill
2009 297,792,476 26,697,288 4,179,805 944,124 329,613,693 33,954,671 8,154,507 5,79% 1,853 6.53% 2,090
2010 277,700,110 30,469,767 4,552,290 916,117 313,638,284 31,730,311 11,984,221 5.49% 1,751 6,25% 1,995
'2011 306.079,506 36,555,264 3,057,082 884,232 346,576,084 44,673,293 18,012,314 5,67% 1,851 6,69% 2,186
2012 286,168,549 29,050,626 3,803,618 851,306 319,874,099 42,481,176 17,872,813 5,06% 1,691 6.02% 2,010
2013 , 332,675,519 20,882,283 3,632,420 1,296,633 358,486,855 40,179,834 12,911,310 5,48% 1,879 6.29% 2,157
2014 318,138,520 22,928,638 2,308,241 1,208,300 344,583,699 38,644,257 13,658,717 5,09% 1,774 5,86% 2,044
2015 297,957,249 21,552,213 2,981,709 1,111,392 323,602,563 36,383,553 12,591,409 4,58% 1,647 5,27% 1,897
2016 413,986,312 27,463,251 4,916,178 1,014,014 447,379,755 34,407,006 25,528,470 5.87% 2,254 6.66% 2,556
2017 391,580,924 32,625,277 6,565,580 924,649 431,696,430 29,861,558 33,756,825 5,36% 2,154 6.15% 2,472
2018 471,743,088 35,647,870 8,112,577 807,005 516,310,540 29,163,790 45,359,733 N/A N/A N/A N/A
NOTES:
(a)Includes governmental activities and business-type activities,
(b)See Table 11 for personal income and population data.
(c)Amounts have been changed for consistency,
Details,regarding the County's outstanding debt can be found in the notes to the basic financial statements,
Unaudited-see accompanying independent auditors'report,
5
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)
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% 1,592
2016 362,963,113 1.4% 1,829
2017 405,488,342 1.4% 2,024
2018 414,446,063 1.4% N/A
NOTES:
(a) See Table 10 for debt applicable to legal debt margin.
(b) See Table 5 for net taxable property values.
(c) See Table 11 for population data.
Details regarding the County's outstanding debt can be found in the
notes to the basic financial statements.
Unaudited-see accompanying independent auditors'report.
Table 10
COUNTY OF HAWAII
Legal Debt Margin Information
Last Ten Fiscal Years
(Amounts in thousands)
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Debt limit(a)- I $4,222,714 $3,827,826 $3,660,916 $3,529,135 $3,531,341 $3,779,708 $3,958,927 $ I $ 4,568.498
Debt applicable to limit 296,536 277,482 315,616 317,700 315,677 298,709 312,632 362,963 405,488 414,446
Legal debt margin(b) $4,129,309 $3,945,232 $3,512,210 $3,343,216 $3,213,458 $3,232,632 $3.467,076 $3,595,964 $ 3,895,595 $ 4.154,052
Debt applicable to the limit
as a percentage of debt limit 6.70% 6,57% 8,25% 8,68% 8,94% 8,46% 8,27% 9,17% 9,43% 9,07%
NOTES:
(a) State finance statutes limit the County's outstanding general debt to no more than 15 percent of the net assessed value of property,See Table 5 for net assessed value of property,
(b)The legal debt margin is the County's available borrowing authority under state finance statutes and is calculated by subtracting the net debt applicable to the legal debt
limit from the legal debt limit,
_Legal Debt Margin Calculation for Fiscal Year 2018
Net assessed value $30,456,655
Debt limit(15%of net assessed value) $ 4,568,498
Debt applicable to limit 414,446
Legal debt margin $ 4,154,052
Unaudited-see accompanying independent auditors'report.
•
Table II
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
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% I
2013 190,821 $ 6,544,583 $ 34,297 33,948 6,6%
2014 194,190 $ 6,771,329 $ 34,870 29,985 6.5%
2015 196,428 $ 7,067,347 $ 35,979 29,865 5.2%
2016 198,449 $ 7,618,924 $ 38,392 29,753 4.7%
2017 200,381 $ 8,053,011 $ 40,188 29,666 f 3.5%
*Amounts reflect subsequent adjustments
Source: County of Hawaii i,Department of Research and Development,Bureau of Economic Analysis,
State of Hawaii Depaituient of Labor,State of Hawaii DOE and University of Hawaii Hilo
Unaudited-see accompanying independent auditors'report.
- 157 -
Table 12
COUNTY OF HAWAII
Principal Employers,County of Hawaii .
June 30,2018 and 2009
J
2018 2009
' Percentage Percentage .
of Total County of Total County
Employer Employees Rank Employment Employees Rank Employment
State of Hawai I 14,600 1 20.5% 8,115 1 9,4%
County of Hawaii I 2,800 2 3.9% 2,745 2 . 3,2%
Four Seasons Resort Hualalai 1,300 3 1.8% 562 9 0,7% _
United States Government 1,200 4 1.7% 1,364 3 1,6%
Mauna Kea and Hapuna Prince Resorts .
and Mauna Kea Services 1,018 5 1.4%
Hilton Waikoloa Village 876 6 1.2% 984 4 1,1
KTA Super Stores 800 7 1.1%0 800 6 0.9%
The Fairmont Orchid,Hawaii I 715 8 1.0% 577 8 0.7%
Mauna Lath Resort(Operations),Inc. 515 9 0.7% 685 7 0.8%
North Hawaii Community Hospital 367 10 0.5%
Wal-Mart 2 852 5 1.0%
Hapuna Beach Prince Hotel F 487 10 0.6%
• Total 24,191 33.8% 17,171 19,9%
Total employee count 71,247 86,325
•
Source: County of Hawaii i,Department of Research and Development
Unaudited-see accompanying independent auditors'report.
•
- 158-
Table 13
COUNTY OF HAWAII
Full-Time Equivalent County Government Employees by Function
Last Ten Fiscal Years
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 ,
Function
General government: ,
County Council • 9,00 9,00, 9.00 9.00 9.00 9.00 9.00 9.00 9.00 8.00
County Clerk 55.48 56.08 53,00 54,00 52,50 46.40 53,16 54,56 54,16 51,16
Legislative Auditor 5.00 5.00 5,00 4.75 3,75 5.00 5,00 5,00 5.00 4,00
Mayor 22.49 19,00 21,99 18,50 16,00 18.75 19,47 17.48 16,99 16.99
Corporation Counsel 30,00 32,00 29.00 29.00 27.00 28,00 25,00 23.00 26,00 26.00
Finance 128,44 123,89 121.89 123,35 131.37 134,98 134.49 131,49 151,00 153.49
Human Resources 28,96 27.98 25,49 25,48 24,00 24,49 25.49 25,49 25,49 23,49
Planning 48,00 49,00 49,49 '48.00 50,00 51,00 50,00 53,00 56.00 53,00
Research&Development 15.00 14,00 14,00 12.00 12,00 11.49 14,49 16.00 14.49 12,00
Infonnation Technology 16.00 15,48 16.00 16,00 16.00 22.00 19.00 19.00 21.00 20,00
Public Works Admin&Building 170.44 162,99 158,84 155,48 155.50 162.49 164.28 167.49 172.49 167,75
Public Safety:
Police 553.37 558.32 565,99 541,25 548,98 567,23 564.50 564,75 572,00 550.50
Fire 412.05 411,53 414.08 391,28 418,57 429.57 436,57 433,07 434.58 425,57
Liquor Control 14,00 14,00 14,00 15,00 14,00 14.00 13,00 16.00 17.00 17,00
Civil Defense 7,00 7.00 7,00 7,00 7.00 7,00 7.00 7.00 7,00 7.00
Prosecuting Attorney 103.00 98,24 99.00 91,49 99.49 98.97 105.97 108.97 108,97 111,49
Highways and Streets:
' Mass Transit 6,00 7,00 7.00 7,00 8,00 11,00 11,00 12,00 10,00 12.00
Traffic and Highways 182,48 174,48 176.48 178,48 176,48 .173,48 • 175.48 175.48 177.48 187.48
Sanitation:
Administration 19.49 16.98 18,49 17.00 17.00 19.49 19,49 17.98 19,98 18.98
Sewer 41.47 44.98 47,49 47,49 46.00 44,49 47.49 46.49 45.49 48,49
Vehicle Disposal 2,00 2,00 2.00 2.00 4.00 1.00 2,00 2,00 2,00 3,00
Solid Waste 93.49 93,00 95.00 99.00 98.00 103.50 103,00 104.00 102.00 103,00
Health,Education and Welfare: _
Housing 44,95 47.44 47,48 43,48 41,00 43,00 46,00 46,00 47,00 48,00
Aging 12,00 11,00 12,00 13,00 11,00 12.00 9,00 13,00 15,00 . 16,00
Culture and Recreation 391.45 379,50 380,74 370,15 370,87 352.14 362.40 356,84 369.29 372,33
Total - 2,411.56 2,379,89 2,390.45 2,319,18 2,357,51 2,390.47 2,422.28 2,425.09 2,479,41 2,456.72
s.
' Source:County of Hawaii,Department of Finance
Unaudited-see accompanying independent auditors'report.
• Table 14
COUNTY OF HAWAII
Operating Indicators by Function
Last Ten Fiscal Years
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Function
Public Safety: '
Police:
DUI arrests 1,395 1,452 1,468 1,403 1,176 1,351 L035 1.113 1,083 1.170
Traffic citations issued 66,461 63,883 61.947 60.967 49,292 63,921 60,016 67,289 69,611 68,535
Fire:
Fire responses 751 889 731 684 654 671 700 700 731 811
Emergency medical/rescue responses 15,099 15,308 15,726 16,361 16,454 15,968 18.750 17.834 17,178 18,005
Inspections-Occupancy/Fire Protective Equipment 1,479 1,579 3,021 2,050 1.463 1,687 1,262 1,000 1,298 951
Sanitation:
Refuse disposed(tons per year) 172,431 154,914 166,455 152,949 153,581 166,890 179,033 188,758 195,162 224.196
I Highways and Streets:
0 In-house street resurfacing(miles) 27 23 18 20 20 17 6 21 24 13
Parks and Recreation:
Pavilion permits issued 2,310 2,340 4,667 2,805 2,775 2,708 2,482 2,552 2,513 2,417
Camping permits issued 3,998 4,290 4,019 4,450 5,175 4,261 6,207 6,688 7,345 8,394
Rounds of golf 80,229 80,407 83,358 72,162 71,352 71,568 65,093 57,325 58,874 58.504
Zoo attendance 182,286 172,737 172,677 213,537 245,715 220.323 214,249 251,436 264,415 - 269,453
• Transit:
Bus passengers -908,651 1,060,057 1.149,042 1,315,222 1,269,550 920,280 944,738 874,424 766,472 742,250
Public Works:
Building permits issued 3,929 3,234 3,039 3,258 4,754 4,797 5,494 4,833 3,214 3,672
Electrical permits issued 3,869 3,602 3,821 4,080 5,137 5,313 5,645 4,232 3,509 4,077
Plumbing permits issued 2,983 2,638 2,071 1,749 2,001 1,664 1,897 1,819 1,801 1,914 '
Sign permits issued 62 62 58 55 52 57 44 -47 39 45
Source: County of Hawaii,Individual Departments
Unaudited-see accompanying independent auditors'report.
Table 15
COUNTY OF HAWAII
Capital Asset Statistics by Functions
Last Ten Fiscal Years
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Function
Public Safety:
Police:
Stations 8 8 8 8 8 8 8 8 8 8
Substations 10 10 10 10 8 8 8 10 10 10 .
' Fire stations 20 20 20 20 20 21 21 21 21 21
Highways and Streets:
County streets(miles) 943 944 946 954 945 961 956 956 991 990
Streetlights 9,404 9,592 9,864 9,883 9,939 10,165 10,366 10,655 10,771 11,310
Parks and Recreation:
Parks 143 143 143 144 145 145 146 147 151 151
Gyms and recreation centers 61 61 61 62 62 62 62 62 65 65
Sanitation:
Sanitary sewers(miles) 100* 111* 111* 112* 112* 105' 105* 105' 105* 105*
'GIS database utilized beginning FY 2008
Source:County of Hawai i,Department of Research and Development
Unaudited-see accompanying independent auditors'report,
1
1
COUNTY OF HAWAII
STATE OF HAWAII
SINGLE AUDIT OF FEDERAL FINANCIAL ASSISTANCE PROGRAMS
Fiscal Year Ended June 30, 2018 •
•
wrA
N&K CPAs., Inc.
ACC.OUNTAN1SICONSUL ANTS
• AMERICAN SAVINGS BANK TOWER 1001 BISHOP STREET,SUITE 17001 HONOLULU, HAWAII 96813-3696
T(808) 524-2255 F-(808) 523-20901 nkcpa.com -
.11P;y1 AMERICAN SAVINGS BANK TOWER
1001 BISHOP STREET,SUITE 1700
N&K CPAs, Inc. HONOLULU, HAWAII 96813-3696
ACCOUNTANTS I CONSULTANTS T(808) 524-2255 F (808) 523-2090
March 28, 2019
To the Chair and Members of the County Council
County of Hawaii
We have completed our financial audit of the basic financial statements and other
supplementary information of the County of Hawaii, State of Hawaii (the County), as of and
for the fiscal year ended June 30, 2018. Our report containing our opinions on those basic
financial statements is included in the County's Comprehensive Annual Financial Report.
We submit herein our reports on the County's internal control over financial reporting and
compliance, the County's compliance with requirements that could have a direct and
material effect on each of its major federal programs and internal control over compliance,
and our report on the schedule of expenditures of federal awards.
OBJECTIVES OF THE AUDITS
The primary purpose of our audits was to form opinions on the fairness of the presentation
of the County's basic financial statements as of and for the fiscal year ended June 30, 2018,
and to comply with the requirements of Title 2 U.S. Code of Federal Regulations Part 200,
Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal
Awards (Uniform Guidance), which establishes audit requirements for state and local
governments that receive federal financial assistance. More specifically, the objectives of the
audits were as follows:
1. To provide a basis for an opinion,on the fairness of the presentation of the
County's basic financial statements.
- 2. To report on internal control over financial reporting and compliance with_
provisions of laws, regulations, contracts, and grant agreements,
noncompliance with which could have a direct and material effect on the
determination of financial statement amounts in accordance with Government
Auditing Standards.
3. To report on internal control over compliance related to each major federal
program and an opinion on compliance with federal statutes, regulations, and
the terms and conditions of federal awards that could have a direct and
material effect on each major federal program in accordance with the Single
Audit Act Amendments of 1996 and the Uniform Guidance.
2
a I
N&K CPAs, Inc.
ACCOUNTANTS I CONSULTANTS �
SCOPE OF THE AUDIT
Our audit was performed in accordance with auditing standards generally accepted in the
United States of America as prescribed by the American Institute of Certified Public
Accountants; Government Auditing Standards, issued by the Comptroller General of the
United States; and the audit requirements of the Uniform Guidance.The scope of our audits
included an examination of the transactions and accounting records of the County for the
fiscal year ended June 30, 2018.
ORGANIZATION OF THE REPORT
This report is presented in four parts as follows:
• Part I - Our report on internal control over_financial reporting and on
compliance and other matters.
• Part II - Our report on compliance for each major federal program; report
on internal control over compliance; and report on the schedule
of expenditures of federal awards required by -the Uniform
Guidance.
• Part III - The schedule of findings and questioned costs.
• Part IV - The summary schedule of prior audit findings.
We wish to express our sincere appreciation for the excellent cooperation and assistance
extended by the staff of the County.
Sincerely,
AtAliqe g �/iC.
N&K CPAs, INC.
3
•
COUNTY OF HAWAII, STATE OF HAWAII
TABLE OF CONTENTS
Page
PART I REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
AND ON COMPLIANCE AND OTHER MATTERS
Report on Internal Control over Financial Reporting and on Compliance
and Other Matters Based on an Audit of Financial Statements Performed
in Accordance with Government Auditing Standards 6 - 7
PART II REPORT ON COMPLIANCE FOR EACH MAJOR FEDERAL
PROGRAM; REPORT ON INTERNAL CONTROL OVER
COMPLIANCE; AND REPORT ON THE SCHEDULE OF
EXPENDITURES OF FEDERAL AWARDS REQUIRED BY THE
UNIFORM GUIDANCE
Report on Compliance for Each Major Federal Program; Report on
Internal Control over Compliance; and Report on the Schedule of
Expenditures of Federal Awards Required by the Uniform Guidance 9 - 11
Schedule of Expenditures of Federal Awards 12 - 22
Notes to Schedule of Expenditures of Federal Awards 23
PART III SCHEDULE OF FINDINGS AND QUESTIONED COSTS
Schedule of Findings and Questioned Costs 25
PART IV SUMMARY SCHEDULE OF PRIOR AUDIT FINDINGS
Status Report 27
4
PART I
REPORT ON INTERNAL CONTROL OVER FINANCIAL
REPORTING AND ON COMPLIANCE AND OTHER MATTERS
5
AMERICAN SAVINGS BANK TOWER
1001 BISHOP STREET,SUITE 1700
N&K CPAs, Inc. HONOLULU, HAWAII 96813-3696
ACCOUNTANTS I CONSULTANTS T(808) 524-2255 F (808) 523-2090
REPORT ON INTERNAL CONTROL OVER
FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS
BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN
ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS
INDEPENDENT AUDITOR'S REPORT
To the Chair and Members of the County Council
County of Hawaii
We have audited, in accordance with the 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,
the 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 (theCounty), as of and for the fiscal
year ended June 30, 2018, and the related notes to the financial statements, which
collectively comprise the County's basic financial statements, and have issued our report
thereon dated December 28, 2018.
Internal Control Over Financial Reporting
In planning and performing our audit of the financial statements, we considered the
County's internal control over financial reporting (internal control) to determine the audit
procedures that are appropriate in the circumstances for the purpose of expressing our
opinions on the financial statements, but not for the purpose of expressing an opinion on
the effectiveness of the County's internal control. Accordingly, we do not express an
opinion on the effectiveness of the County's internal control.
A deficiency in internal control exists(when the design or operation of a control does not
allow management or employees, in the normal course of performing their assigned
functions, to prevent, or detect and correct, misstatements on a timely basis. A material
weakness is a deficiency, or a combination of deficiencies, in internal control, such that
there is a reasonable possibility that a material misstatement of the entity's financial
statements will not be prevented, or detected and corrected on a timely basis. A significant
deficiency is a deficiency, or a combination of deficiencies, in internal control that is less
severe than a material weakness, yet important enough to merit attention by those
charged with governance.
6
N&K CPAs, Inc.
ACCOUNTANTS CONSULTANTS •
Our consideration of internal control was for the limited purpose described in the first
paragraph of this section and was not designed to identify all deficiencies in internal
control that might be material weaknesses or significant deficiencies. Given these
limitations, during our audit we did not identify any deficiencies in internal control that we
consider to be material weaknesses. However, material weaknesses may exist that have
not been identified.
Compliance and Other Matters
As part of obtaining. reasonable assurance about whether the County's financial
statements are free from material misstatement, we performed tests of its compliance
with certain --provisions of laws, regulations, contracts, and grant agreements,
noncompliance with which could have a direct and material effect on the determination of
financial statement amounts.-However, providing an opinion on compliance with those
provisions was not an objective of our audit, and accordingly, we do not express such an
opinion. The results of our tests disclosed no instances of noncompliance or other matters
that are required to be reported under Government Auditing Standards.
Purpose of this Report
The purpose of this report is solely to describe the scope of our testing of internal control
and compliance and the results of that testing, and not to provide an opinion on the
effectiveness of the entity's internal control or on compliance. This report is an integral
part of an audit performed in accordance with Government Auditing Standards in
considering the entity's internal control and compliance. Accordingly, this communication
is not suitable for any other purpose.
Neqe eMr, -rAt c.
Honolulu, Hawaii
December 28, 2018
7
� I
PART II
REPORT ON COMPLIANCE FOR EACH MAJOR FEDERAL PROGRAM;
REPORT ON INTERNAL CONTROL OVER COMPLIANCE; AND REPORT
ON THE SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
REQUIRED BY THE UNIFORM GUIDANCE
8
AMERICAN SAVINGS BANK TOWER
g Pr,
1001 BISHOP STREET,SUITE 1700
N&K CPAs, Inc. HONOLULU, HAWAII 96813-3696
ACCOUNTANTS 1 CONSULTANTS T(808) 524-2255 F (808) 523-2090
REPORT ON COMPLIANCE FOR EACH MAJOR FEDERAL PROGRAM;
REPORT ON-INTERNAL CONTROL OVER COMPLIANCE; AND REPORT
ON THE SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
REQUIRED BY THE UNIFORM GUIDANCE
INDEPENDENT AUDITOR'S REPORT
To the Chair and Members of the County Council
County of Hawaii
Report on Compliance for Each Major Federal Program
We have audited the County of Hawaii, State of Hawai`i's (the County) compliance with
the types of compliance requirements described in the OMB Compliance Supplement that
could have a direct and material effect on each of the County's major federal programs
for the fiscal year ended June 30, 2018. The County's major federal programs are
identified in thesummary of auditor's results section of the accompanying schedule of
findings and questioned costs.
Management's Responsibility
Management is responsible for compliance with federal statutes, regulations, and the
terms and conditions of its federal awards applicable to its federal programs.
Auditor's Responsibility
Our responsibility is to express an opinion on compliance for each of the County's major
federal programs based on our audit of the types of compliance requirements referred to
above. We conducted our audit of compliance in accordance with auditing standards
generally accepted in the United States of America; the standards applicable to financial
audits contained in Government Auditing Standards, issued by the Comptroller General
of the United States; and the audit -requirements of Title 2 U.S. Code of Federal
Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit
Requirements for Federal Awards (Uniform Guidance). Those standards and the Uniform
Guidance require that we -plan and perform the audit to obtain reasonable assurance
about whether noncompliance with the types of compliance requirements referred to
above that could have a direct and material effect on a major federal program occurred.
An audit includes examining, on a test basis, evidence about the County's compliance
with those requirements and performing such other procedures as we considered
necessary in the circumstances.
9
N&K CPAs, Inc.
ACCOUNTANTS I CONSULTANTS -
We believe that our audit provides a reasonable basis for our opinion on compliance for
each major federal program. However, our audit does not provide a legal determination
of the County's compliance.
Opinion on Each Major Federal Program
In our opinion, the County complied, in all material respects, with the types of compliance
requirements referred to above that'could have a direct and material effect on each of its
major federal programs for the fiscal year ended June 30, 2018.
Report on Internal Control Over Compliance
Management of the County is responsible for establishing and maintaining effective
internal control over compliance with the types of compliance requirements referred to
above. In planning and performing our audit of compliance, we considered the County's
internal control over compliance with the types of requirements that could have a direct
and material effect on each major federal program to determine the auditing procedures
that are appropriate in the circumstances for the purpose of expressing an opinion on
compliance for each major federal program and to test and report on internal control over
compliance in accordance with the Uniform Guidance, but not for the purpose of
expressing an opinion on the effectiveness, of internal control over compliance.
Accordingly, we do not express an opinion on the effectiveness of the County's)internal
control over compliance.
A deficiency in internal control over compliance exists when the design or operation of a
control over compliance does not allow management or employees, in the normal course
of performing their assigned functions, to prevent, or detect and correct, noncompliance
with a type of compliance requirement of a federal program on a timely basis. A material
weakness in internal control over compliance is a deficiency, or combination of
deficiencies, in internal control over compliance, such that there is a reasonable possibility
that material noncompliance with a type of compliance requirement of a federal program
will not be prevented, or detected and corrected, on a timely basis. A significant deficiency
in internal control over compliance is a deficiency, or a combination of deficiencies, in
internal control over compliance with a type of compliance requirement of a federal
program that is less severe than a material weakness in internal control over compliance,
yet important enough to merit attention by those charged with,governance.
Our consideration of internal control over compliance was for the limited purpose
described in the first paragraph of this section and was not designed to identify all
deficiencies in internal control over compliance that might be material weaknesses or
significant deficiencies. We did not identify any deficiencies in internal control over
compliance thaf we consider to be material weaknesses. However, material weaknesses
may exist that have not been identified.
10
N&K CPAs, Inc.
ACCOUNTANTS I CONSULTANTS
The purpose of this report on internal control over compliance is solely to describe the scope
of our testing of internal control over compliance and the results of that testing based on the
requirements of the Uniform Guidance. Accordingly, this report is not suitable for any other
purpose.
Report on Schedule of Expenditures of Federal Awards Required by the Uniform
Guidance
We have audited the 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 as of and for the fiscal year ended
June 30, 2018, and the related notes to the financial statements, which collectively
comprise the County's basic financial statements. We issued our report thereon dated
December 28, 2018, which contained unmodified opinions on those financial statements.
Our audit was conducted for the purpose of forming opinions on the financial statements
that collectively comprise the County's basic financial statements. The accompanying
schedule of expenditures of federal awards is presented for purposes of additional
analysis as required by the Uniform Guidance and is not a required part of the basic
financial statements. Such information is the responsibility of management and was
derived from and relates directly to the underlying accounting and other records used to
prepare the basic financial statements. The 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 otherrecords 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 schedule of expenditures of federal awards is fairly stated
in all material respects in relation to the basic financial statements as a whole.
ie emir, _vvc.
Honolulu, Hawaii
March 28, 2019
11
County of Hawaii, State of Hawaii
SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
Fiscal Year Ended June 30, 2018
Federal Pass-Through Federal Total Provided
CFDA Entity Identifying Program Federal Through to
Federal Grantor/Pass-Through Grantor/Program or Cluster Title Number Grant Number Number Award Amount Expenditures Subrecipients
DEPARTMENT OF AGRICULTURE
Food and Nutrition Service
Passed Through the State Department of Education:
Summer Food Service Program for Children 10.559 N/A 1707-8 $ 42,375 $ 42,375 $ --
Total Department of Agriculture 42,375 --
DEPARTMENT OF COMMERCE
National Oceanic and Atmospheric Administration
Passed Through the State Department of Business,Economic
Development and Tourism:
Coastal Zone Management Administration Awards 11.419 NA16NOS4190093 N/A 374,716 17,497 --
Hawaii Coastal Zone Management Program NA17N0S4190102 N/A 398,401 248,362 --
Subtotal CFDA 11.419 265,859 --
Total Department of Commerce 265,859
DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
Office of Housing
Section 8-Housing Assistance Payments Program 14.195
Kulaimano Elderly Housing HI 10 0002001 N/A 360,836 $ 224,921 $ --
The accompanying notes are an integral part of this schedule.
•
County of Hawaii, State of Hawaii
SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS (Continued)
Fiscal Year Ended June 30, 2018
Federal Pass-Through Federal Total Provided
CFDA Entity Identifying Program Federal Through to
Federal Grantor/Pass-Through Grantor/Program or Cluster Title Number , Grant Number Number Award Amount Expenditures Subrecipients
DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT(Continued)
Community Planning and Development
Community Development Block Grants/State's Program
and Non-Entitlement Grants in Hawaii 14.228 B-14-DH-15-0002 N/A $ 2,677,897 $ 378,796 $ 242,708
B-15-DH-15-0002 N/A 2,465,271 622,327 230,580
B-16-DH-15-0002 N/A 2,491,306 1,027,882 981,823
Program Income N/A 6,575 6,575
B-17-DH-15-0002 N/A 2,524,362 1,011,378 957,560
Program Income N/A 205,722 42,644
Subtotal CFDA 14.228 3,252,680 2,461,890
Passed Through the Hawaii Housing Finance and Development
Corporation:
Home Investment Partnerships Program 14.239 M-14-SG-15-0100 FIN 16-02 452,684 43,478 43,478
M-15-SG-15-0100 FIN 16-04 2,852,059 631,536 209,752
Program Income 46,146 —
Subtotal CFDA 14.239 721,160 253,230
Public and Indian Housing
Section 8 Housing Choice Vouchers 14.871 HI002AF 2017 N/A 1,949,059 1,777,650 —
HI002V0 2017 - N/A 17,658,595 9,193,051 —
HI002AF2018 N/A 1,794,095 237,807 —
H1002V0 2018 N/A 16,556,706 7,555,227 —
Program Income 1,470,448 --
Subtotal CFDA 14.871 $ 20,234,183 *$ --
The accompanying notes are an integral part of this schedule.
County of Hawai`i, State of Hawai`i
SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS (Continued)
Fiscal Year Ended June 30, 2018
Federal Pass-Through Federal' Total Provided
CFDA Entity Identifying Program Federal Through to
Federal Grantor/Pass-Through Grantor/Program or Cluster Title Number Grant Number Number Award Amount Expenditures Subrecipients
DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT(Continued)
Family Self-Sufficiency Program 14.896 HI002FSH180A014 2017 N/A $ 66,204 $ 29,826 $ —
HI002FSH180A014 2018 N/A 66,937 18,360 --
Subtotal CFDA 14.896 48,186 --
Total Department of Housing and Urban Development 24,481,130 2,715,120
DEPARTMENT OF THE INTERIOR
Office of the Secretary
Payments in Lieu of Taxes 15.226 N/A N/A 334,504 334,504 --
ill Fish and Wildlife Service
National Wildlife Refuge Fund 15.659 N/A N/A 68,393 68,393 --
Total Department of the Interior 402,897 —
DEPARTMENT OF JUSTICE
Office of Juvenile Justice and Delinquency Prevention
Passed through the State Department of Human Services:
Juvenile Justice and Delinquency Prevention-Allocation to States 16.540 2016-JF-FX-0022 DHS-17-0YS-702 400,000 202,556 202,556
Bureau of Justice Statistics
Passed through the State Department of the Attorney General: 16.554 2015-RU-BX-K010 N/A 15,000 4,231 —
National Criminal History Improvement Program 2013-MU-BX-K056 2013-MU-BX-K056 36,000 36,000 --
Subtotal CFDA 16.554 $ 40,231 $ —
The accompanying notes are an integral part of this schedule.
County of Hawai`i, State of Hawaii
SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS (Continued)
Fiscal Year Ended June 30, 2018
Federal Pass-Through Federal Total Provided
CFDA Entity Identifying Program Federal Through to
Federal Grantor/Pass-Through Grantor/Program or Cluster Title Number Grant Number Number Award Amount Expenditures Subrecipients
DEPARTMENT OF JUSTICE(Continued)
Office for Victims of Crime
Passed through the State Department of the Attorney General:
Crime Victim Assistance 16.575 2014-VA-GX-0035 14-VA-04 $ 355,093 $ 37,680 $ 24,324
2615-VA-GX-0035- 15-VA-04 1,649,397 810,451 166,302
2016-VA-GX-0063 16-VA-07 101,745 26,568 --
Subtotal CFDA 16.575 874,699 190,626
Violence Against Women Office
Passed through the State Department of Attorney General:
0 Violence Against Women Formula Grants 16.588
STOP Violence Against Women 2015-WF-AX-0024 15-WF-03 54,137 54,137 —
SAFE On Call Pay&SANE Coordinator 2014-WF-AX-0019 14-WF-07 53,586 49,698 --
Sexual Assault Kit(SAK)Testing - 2015-WF-AX-0024 15-WF-07 53,205 8,113 --
Subtotal CFDA 16.588 111,948 --
Office of Community Oriented Policing Services
Public Safety Partnership and Community Policing Grants
COPS 16.710 2014ULWX0037 N/A 250,000 $ 89,478 $ --
The accompanying notes are an integral part of this schedule.
County of Hawaii, State of Hawaii
SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS (Continued)
Fiscal Year Ended June 30, 2018
Federal Pass-Through Federal Total Provided
CFDA Entity Identifying Program Federal Through to
Federal Grantor/Pass-Through Grantor/Program or Cluster Title Number Grant Number Number Award Amount Expenditures Subrecipients
DEPARTMENT OF JUSTICE(Continued)
Bureau of Justice Assistance
Edward Byrne Memorial Justice Assistance Grant Program 16.738
Passed through the State Department of Attorney General:
Statewide Multi-Jurisdictional Drug Task Force(SMDTF) 2016-DJ-BX-0089 16-DJ-01 $ 45,334 $ 6,500 $
JAG Specialized Sex Assault Unit 2014-DJ-BX-0910 14-DJ-01 272,923 56,618 —2015-DJ-BX-0342 15-DJ-08 55,695 55,695 --
Hawaii Narcotics Task Force 2015-DJ-BX-0342 15-DJ-03 44,162 36,617 --
Subtotal CFDA 16.738 155,430 --
National Institute of Justice
Passed through the State Department of Attorney General:
Paul Coverdell Forensic Sciences Improvement Grant Program 16.742 2017-CD-BX-0014 17-CD-03 50,460 19,282 --
Criminal Division
Equitable Sharing Program 16.922
Asset Forfeitures HI001013A N/A 374 374 —
HI0010000 N/A 521 521 --
Subtotal CFDA 16.922 895
Total Department of Justice $ 1,494,519 $ 393,182
The accompanying notes are an integral part of this schedule.
County of Hawaii, State of Hawaii
• SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS (Continued)
Fiscal Year Ended June 30, 2018
Federal Pass-Through Federal Total Provided
CFDA Entity Identifying Program Federal Through to
Federal Grantor/Pass-Through Grantor/Program or Cluster Title Number Grant Number Number Award Amount Expenditures Subrecipients
DEPARTMENT OF LABOR
Employment and Training Administration
Passed through the State Department of Labor and Industrial Relations:
Senior Community Service Employment Program 17.235 AD-30402-17-55-A-15 PY16-SCSEP-H-HCOA $ 327,726 $ 24,877 $ --
AD-30402-17-55-A-16 PY16-SCSEP-H-HCOA 359,686 301,923 --
Subtotal CFDA 17.235 326,800 --
WIOA Cluster
WIOA Adult Program 17.258 AA-26775-15-55-A-15 WIOA-15-A&DWP-H 387,934 35,967 35,967
AA-26775-16-55-A-15 WIOA-16-A&DWP-H 422,171 321,750 251,922
AA-26775-17-55-A-15 WIOA-17-A&DWP-H 400,146 7,498 3,886
Subtotal CFDA 17.258 365,215 291,775
WIOA Youth Activities 17.259 AA-26775-16-55-A-15 WIOA-16-YP-H 289,333 178,242 174,112
M-26775-17-55-A-15 WI0A-17-YP-1-1 417,471 282,880 192,831
Subtotal CFDA 17.259 461,122 366,943
WIOA Dislocated Worker Formula Grants 17.278 M-26775-15-55-A-15 WIOA-15-A&DWP-H 353,926 19,002 19,002
AA-26775-16-55-A-15 WIOA-16-A&DWP-H 416,431 193,346 155,669
M-26775-17-55-A-15 WIOA-17-A&DWP-H 276,518 6,004 2,653
Subtotal CFDA 17.278 218,352 177,324 ,
Total WIOA Cluster 1,044,689 * 836,042
Total Department of Labor $ 1,371,489 $ 836,042
•
The accompanying notes are an integral part of this schedule.
County of Hawaii, State of Hawaii
SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS (Continued)
Fiscal Year Ended June 30, 2018
' Federal Pass-Through Federal Total Provided
CFDA Entity Identifying Program Federal Through to
Federal Grantor/Pass-Through Grantor/Program or Cluster Title Number Grant Number Number Award Amount Expenditures Subrecipients
DEPARTMENT OF TRANSPORTATION
'Federal Highway Administration
Passed through the State Department of Transportation:
Highway Planning and Construction: 20.205
Bridge Inspection/Appraisals BR-NBIS(55) 13003 $ 160,000 $ 25,345 $ --
Bridge Inspection/AppraisalsBR-NBIS(67) 16002 160,800 101,619 --
' Mamalahoa Hwy Widening,Mana Road NH-019-1(044) 12032 20,285,600 644,772
Alii Drive ROW RS-0187(1) 00014 3,127,200 85 --
RS-0187(4) 10010 6,564,594 85 --
Hakalau Bridge North Abutment STP-0100(073) 17025 1,588,104 423,464 --
Flo Alii Drive Culvert Replacement STP-0186(1) 97029 462,885 13,228 —
Kaiminani Drive Roadway Imp,Mamalahoa Hwy to Ahiahi St STP-0198(1) 11007 9,434,330 1,498 —
Kaiminani Drive Roadway Imp,Ahiahi St to Ane Keohokalole Hwy STP-0198(2) 13034 16,126,147 3,846 —
Kamehameha Avenue Resurfacing,Wailoa Bridge to Ponohawai St STP-1910(1) 05003 12,842,182 1,481 —
Puainako Street Extension,Komohana St to Country Club Rd STP-2000(4) 00030 26,886,000 564 —
Waianuenue Ave Imp,Rainbow Dr to Akolea Rd STP-2720(001) 13019 1,000,000 -7,140 —
Kawailani Street Improvements,Iwalani to Pohakulani Street STP-2760(2) 99021 21,469,625 6,352,354 —
Manono St Improv,Lanikaula to Kekuanaoa STP-2770(004) 11043 5,589,416 111,071 --
Subtotal CFDA 20.205 7,672,272 --
Federal Transit Administration
Passed through the State Department of Transportation:
Federal Transit Capital Investment Grants 20.500 HI-2016-004 N/A 1,119,817 $ 392,638 $ —
The accompanying notes are an integral part of this schedule.
County of Hawaii, State of Hawaii
SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS (Continued)
Fiscal Year Ended June 30, 2018
Federal Pass-Through Federal Total Provided
CFDA Entity Identifying Program Federal Through to
Federal Grantor/Pass-Through Grantor/Program or Cluster Title Number Grant Number Number Award Amount Expenditures Subrecipients
DEPARTMENT OF TRANSPORTATION(Continued) ,
National Highway Traffic Safety Administration
Passed through the State Department of Transportation:
Highway Safety Cluster
State and Community Highway Safety 20.600
Speed Enforcement 18X9204020 SC17-06(01-H-02) $ 103,068 $ 49,586 $ --
18X9204020 SC18-06(01-H-02) 171,036 • 111,296 —
Traffic Investigation Program 18X9204020 PT17-01(02-H-01) 53,250 10,004 --
69A37518300004020 PT18-01(02-H-01) 80,750 24,700 --
Distracted Driving 18X9204020 DD17-10(02-H-01) 57,430 15,435 --
18X9204020 DD18-10(02-H-01) 57,430 31,655 —
Subtotal CFDA 20.600 242,676 —
National Priority Safety Programs 20.616
18X920405DH117 AL18-02(03-S-01) 135,596 5,762 —
Data Grant 18X920405C TR17-03(04-H-01) 135,680 122,883 —
18X920405C TR18-03(04-H-01) _ 14,610 1,697 --
Seatbelt Enforcement 18X9204058 0P17-05(01-H-02) 78,843 20,179 —
69A3751830000405B OP18-05(01-H-02) 78,869 30,446 --
Roadblock Program 18X920405D AL17-02(01-H-02) 52,655 10,076 —
18X920405D AL18-02(01-H-02) 65,220 21,323 --
Subtotal CFDA 20.616 212,366 --
Total Highway Safety Cluster • $ 455,042 $ --
The accompanying notes are an integral part of this schedule.
' County of Hawaii, State of Hawai`i
SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS (Continued)
Fiscal Year Ended June 30, 2018
Federal Pass-Through Federal , Total Provided
CFDA Entity Identifying Program Federal Through to
Federal Grantor/Pass-Through Grantor/Program or Cluster Title Number Grant Number Number Award Amount Expenditures Subrecipients
DEPARTMENT OF TRANSPORTATION(Continued)
Alcohol Open Container Requirements 20.607
Roadblock Program 18X9205464 AL17-02(01-H-02) $ 153,305 $ 41,193 $ --
Minimum Penalties for Repeat Offenders for Driving While Intoxicated 20.608
Prosecutor's Training 69A37518300004020 AL18-02(01-H-02) 124,296 72,281 --
Total Department of Transportation 8,633,426 --
DEPARTMENT OF HEALTH AND HUMAN SERVICES
Administration for Community Living
Passed through the State Executive Office on Aging:
iv Special Special Programs for the Aging-Title,lll,Part D-Disease •
Prevention and Health Promotion Services 93.043 3D-4-2016 HA2016NO3 15,735 3,019 --
Aging Cluster .
_ Special Programs for the Aging-Title III,Part B-Grants
for Supportive Services and Senior Centers 93.044 3B-4-2016 HA2016NO3 492,169 55,281 --
3B-4-2017 HA2016NO3 457,773 398,672 —
Subtotal CFDA 93.044 453,953 —
Special Programs for the Aging-Title III,Part C-
Nutrition Services 93.045 3C1-4-2017 HA2016NO3 280,706 104,083 —
3C1-4-2018 HA2016NO3 364,862 193,130 --
3C2-4-2016 HA2016NO3 204,394 18,484 --
3C2-4-2017 HA2016NO3 122,733 64,497 —
3C2-4-2018 HA2016NO3 220,911 101,273 --
Subtotal CFDA 93.045 $ 481,467 $ --
The accompanying notes are an integral part of this schedule.
County of Hawaii, State of Hawaii
SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS (Continued)
Fiscal Year Ended June 30, 2018
Federal Pass-Through Federal Total Provided
CFDA Entity Identifying Program Federal Through to
Federal GrantorlPass-Through GrantorlProgram or Cluster Title Number Grant Number Number Award Amount Expenditures Subrecipients
DEPARTMENT OF HEALTH AND HUMAN SERVICES(Continued)
Nutrition Services Incentive Program 93.053 NIA NSIP17 $ 89,114 $ 89,114 $ --
Total Aging Cluster 1,024,534 --
National Family Caregiver Support,Title III,Part E 93.052 3E-4-2015 HA2015NO3 115,636 35,545
3E-4-2016 HA2016NO3 133,637 133,637
3E-4-2017 HA2016NO3 133,468 9,739 --
Subtotal CFDA 93.052 178,921
Substance Abuse and Mental Health Services Administration
Passed through the State Department of Health:
Substance Abuse and Mental Health Services Projects of Regional
and National Significance 93.243 SP020167 ASO LOG NO.16-162 110,000 25,409 —
SP020167 ASO LOG NO.16-162 125,000 72,325 --
Subtotal CFDA 93.243 97,734 --
Centers for Disease Control and Prevention
Passed through the State Department of Health:
State and Local Public Health Actions to Prevent Obesity,Diabetes,Heart 93.757 6NU58DP005502-02-02 N/A 24,500 20,401 —
Disease and Stroke(PPHF) NU58DP005502-04-00 • N/A 9,700 6,156 --
26,557 --
Subtotal CFDA 93.757
Total Department of Health and Human Services $ 1,330,765 $ --
The accompanying notes are an integral part of this schedule.
County of Hawaii, State of Hawai`i
SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS (Continued)
Fiscal Year Ended June 30, 2018
Federal Pass-Through Federal Total Provided
CFDA Entity Identifying Program Federal Through to
Federal Grantor/Pass-Through Grantor/Program or Cluster Title Number Grant Number Number Award Amount Expenditures Subrecipients
CORPORATION FOR NATIONAL AND COMMUNITY SERVICE
Retired and Senior Volunteer Program 94.002 16SRPHI002 N/A $ 208,262 $ 65,913 $ --
Total Corporation for National and Community Service 65,913 --
DEPARTMENT OF HOMELAND SECURITY
Federal Emergency Management Agency(FEMA)
Passed through the State Department of Defense: -
Disaster Grants-Public Assistance(Presidentially Declared Disasters) 97.036
Kiholo Earthquake FEMA-1664-DR-HI N/A 6,629,030 21,780 --
Assistance to Firefighters Grant 97.044 EMW-2015-F0-02101 N/A 1,369,493 120,137 --
N
N
Homeland Security Grant Program 97.067 EMW-2015-SS-00003 N/A 760,000 649,784 --
Total Department of Homeland Security 791,701 --
OFFICE OF NATIONAL DRUG CONTROL POLICY
Hawai'i Impact 07.000 G16HI0004A N/A 225,585 31,857 --
G17HI0004A N/A 252,527 152,417 --
G18HI0004A N/A 170,800 10,682 --
Subtotal CFDA 7.000 194,956 --
Total Office of National Drug Control Policy 194,956
TOTAL EXPENDITURES OF FEDERAL AWARDS $ 39,075,030 $ 3,944,344
*Audited as a major federal program for the fiscal year ended June 30, 2018.
•
The accompanying notes are an integral part of this schedule.
County of Hawaii, State of Hawai`i
NOTES TO SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
Fiscal Year Ended June 30, 2018
NOTE A - BASIS OF PRESENTATION
The accompanying schedule of expenditures of federal awards (the Schedule) includes the
federal award activities of the County of Hawaii and its discretely presented component unit,
the Department of Water Supply, under programs of the federal government for the fiscal year
ended June 30, 2018. The information in this Schedule is presented in accordance with the
requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative
Requirements, Cost Principles, and'Audit Requirements for Federal Awards (Uniform
Guidance). Because the Schedule presents only a selected portion of the operations of the
County of Hawaii , it is not intended to, and does not present the financial position, changes
in financial position, or cash flows of the County of Hawaii.
NOTE B -SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Expenditures reported on the Schedule are reported on the cash basis of accounting. Such
expenditures are recognized following, as applicable, either the cost principles in Office of
Management and Budget Circular A-87, Cost Principles for State, Local and Indian Tribal
Governments, or the cost principles contained in the Uniform Guidance, wherein certain types
of expenditures are not allowable or are limited as to reimbursement.
NOTE C - INDIRECT COST RATE
The County of Hawaii has elected not to use the 10-percent de minimis indirect cost rate
allowed under the Uniform Guidance.
23
PART III
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
24
County of Hawaii, State of Hawaii
SCHEDULE OF FINDINGS ANDQ UESTIONED COSTS
Fiscal Year Ended June 30, 2018
SECTION I -SUMMARY OF AUDITOR'S RESULTS
Financial Statements
Type of report the auditor issued on whether the
financial statements audited were prepared in
accordance with GAAP: Unmodified
Internal control over financial reporting:
Material weakness(es) identified? yes ✓ no
Significant deficiency(ies) identified? _ yes ✓ none reported
Noncompliance material to financial statements
noted? yes ✓ no
Federal Awards
Internal control over major federal programs:
Material weakness(es) identified? _ yes ✓ no
Significant deficiency(ies) identified? _ yes ✓ none reported
Type of auditor's report issued on compliance
for major federal programs: - Unmodified
Any audit findings disclosed that are required to
be reported in accordance with 2 CFR
200.516(a)? _ yes ✓ no
Identification of major federal programs:
CFDA Number Name of Federal Program or Cluster
14.871 Section 8 Housing Choice Vouchers
17.258/17.259/17.278 WIOA Cluster
Dollar threshold used to distinguish between Type A
and Type B programs: $1,172,251
Auditee qualified as a low-risk auditee? - ✓ -yes _ no
SECTION II - FINANCIAL STATEMENT FINDINGS
No matters were reported.
SECTION III -FEDERAL AWARD FINDINGS AND QUESTIONED COSTS
No matters were reported.
25
PART IV
SUMMARY SCHEDULE OF PRIOR AUDIT FINDINGS
(Provided by the County of Hawaii)
26
County of Hawaii, State of Hawaii
STATUS REPORT
Fiscal Year Ended June 30, 2018
No prior audit findings which apply under the current criteria of the Uniform Guidance were noted.
27