HomeMy WebLinkAbout2014-COH - Comprehensive Annual Financial ReportDru Mamo Kanuha
Bonnie S. Nims, CGAP
Chair & Presiding Officer oo��g ��'a
Legislative Auditor
Council District 7
Business Address
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1266 Kamehameha Avenue
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Suite A-8
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Hilo, Hmvai'i 96720
OFFICE OF THE LEGISLATIVE AUDITOR
25 Aupuni Street Hilo, Hawaii 96720 * (808) 961-8386 * Fax (808) 961-8905
website: http://hawaiicountv.Qov e-mail: publiclaoaco.hawaii.hi.us
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March 25, 2015 C n
TO: Dru Kanuha, Chairman
And Members of the County Council rn
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FROM: Bonnie S. Nims
Legislative Auditor
RE: Post -Audit Reports for Fiscal Year Ending June 30, 2014
This letter transmits for your review, deliberation, and acceptance, the Comprehensive Annual
Financial Report for the Fiscal Year Ended June 30, 2014, as prepared by the County of Hawai `i
Department of Finance and Single Audit of Federal Financial Assistance Program for the Fiscal
Year Ended June 30, 2014, as prepared by external auditor, N&K CPAs Inc.
Pursuant to the 2012 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
April 14, 2015 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/lhs Comm. No. 3
Ref. To:
Hawaii County is an Equal Opportunity Provider and Employer Ref. Date MAR 2 5 2015
;A:
N&K CPAs, Inc.
ACCOUNTANTS; CCNSUi CANTS
To the Chair and Members of the County Council
County of Hawai'i
AMERICAN SAVINGS BANK TOWER
1001 BISHOP STREET, SUITE 1700
HONOLULU, HAWAII 96813-3696
T (808) 524-2255 F (808) 523-2090
We have audited the 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, 2014. Professional standards require that we provide you with information about our
responsibilities under generally accepted auditing standards, Government Auditing Standards and
OMB Circular A-133, as well as certain information related to the planned scope and timing of our
audit. We have communicated such information in our letter to you dated August 25, 2014.
Professional standards also require that we communicate to you the following information related to
our audit.
Significant Audit Findings
Qualitative Aspects of Accountinq Practices
Management is responsible for the selection and use of appropriate accounting policies. The
significant accounting policies used by the County are described in Note 1 to the financial statements.
The County adopted the provisions of Government Accounting Standards Board (GASB) Statement
No. 65 Items Previously Reported as Assets and Liabilities. We noted no transactions entered into
by the governmental unit during the year for which there is a lack of authoritative guidance or
consensus. All significant transactions have been recognized in the financial statements in the
proper period.
Accounting estimates are an integral part of the financial statements prepared by management and
are based on management's knowledge and experience about past and current events and
assumptions about future events. Certain accounting estimates are particularly sensitive because of
their significance to the financial statements and because of the possibility that future events
affecting them may differ significantly from those expected. The most sensitive estimates affecting
the County's financial statements were:
• Estimate of the useful lives of the County's capital assets used to compute depreciation
expense
• Estimate of the liability for postretirement benefits other than pensions
• Estimate of the loss reserves for workers' compensation
• Estimate of the landfill closure and postclosure cost liability
Management's estimate of the depreciation recorded on capital assets is based in part on the
estimated useful lives of those capital assets. We evaluated the key factors and assumptions used to
develop the estimated useful lives used to depreciate the County's capital assets in determining that
it is reasonable in relation to the financial statements taken as a whole.
Management's estimate of the liability for postretirement benefits other than pensions was
determined using an actuarial valuation study performed by a third -party specialist. We evaluated the
N&K CPAs, Inc.
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key factors and assumptions used to compute the liability for postretirement benefits other than
pensions in determining that it is reasonable in relation to the financial statements taken as a whole.
Management's estimate of the loss reserve for workers' compensation was determined by senior
adjusters and adjusted as necessary based on historical costs for similar incidents. We evaluated
the key factors and assumptions used to compute the loss reserve in determining that it is
reasonable in relation to the financial statements taken as a whole.
Management's estimate of the landfill closure and postclosure cost liability was determined by the
County's engineers and the third party contractor. We evaluated the key factors and assumptions
used to develop the liability in determining that it is reasonable in relation to the financial statements
taken as a whole.
The financial statement disclosures are neutral, consistent, and clear.
Difficulties Encountered in Performing the Audit
We encountered no significant difficulties in dealing with management in performing and completing
our audit.
Corrected and Uncorrected Misstatements
Professional standards require us to accumulate all known and likely misstatements identified during
the audit, other than those that are trivial, and communicate them to the appropriate level of
management. Management has corrected all such misstatements. In addition, none of the
misstatements detected as a result of audit procedures and corrected by management were material,
either individually or in the aggregate, to each opinion unit's financial statements taken as a whole.
Disagreements with Management
For purposes of this letter, professional standards define a disagreement with management as a
financial accounting, reporting, or auditing matter, whether or not resolved to our satisfaction, that
could be significant to the financial statements or the auditors' report. We are pleased to report that
no such disagreements arose during the course of our audit.
Management Representations
We have requested certain representations from management that are included in the management
representation letter dated January 12, 2015.
Management Consultations with Other Independent Accountants
In some cases, management may decide to consult with other accountants about auditing and
accounting matters, similar to obtaining a "second opinion" on certain situations. If a consultation
involves application of an accounting principle to the governmental unit's financial statements or a
determination of the type of auditors' opinion that may be expressed on those statements, our
professional standards require the consulting accountant to check with us to determine that the
consultant has all the relevant facts. To our knowledge, there were no such consultations with other
accountants.
Other Audit Findings or Issues
We generally discuss a variety of matters, including the application of accounting principles and
auditing standards, with management each year prior to retention as the governmental unit's
auditors. However, these discussions occurred in the normal course of our professional relationship
and our responses were not a condition to our retention.
N&K CPAs, Inc.
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Other Matters
We applied certain limited procedures to Management's Discussion and Analysis (MD&A) and the
Schedule of Funding Progress for the EUTF Health Plan, which are required supplementary
information (RSI) that supplements the basic financial statements. Our procedures consisted of
inquiries of management regarding the methods of preparing the information and comparing the
information for consistency with management's responses to our inquiries, the basic financial
statements, and other knowledge we obtained during our audit of the basic financial statements. We
did not audit the RSI and do not express an opinion or provide any assurance on the RSI.
We were engaged to report on Combining and Individual Nonmajor Fund Financial Statements and
Fund Schedules as well as Schedules of Revenues, Expenditures, and Changes in Fund Balance —
Budget and Actual, which accompany the financial statements but are not RSI. With respect to this
supplementary information, we made certain inquiries of management and evaluated the form,
content, and methods of preparing the information to determine that the information complies with
accounting principles generally accepted in the United States of America, the method of preparing it
has not changed from the prior period, and the information is appropriate and complete in relation to
our audit of the financial statements. We compared and reconciled the supplementary information to
the underlying accounting records used to prepare the financial statements or to the financial
statements themselves.
We were not engaged to report on the Statistics, which accompany the financial statements but are
not RSI. We did not audit or perform other procedures on this other information and we do not
express an opinion or provide any assurance on it.
Restriction on Use
This information is intended solely for the use of the Chair and Members of the County Council and
management of the County of Hawaii and is not intended to be and should not be used by anyone
other than these specified parties.
l�(✓K CGAs, TNc.
Honolulu, Hawaii
January 12, 2015
COMPREHENSIVE
ANNUAL FINANCIAL REPORT
Fiscal Year Ended June 30, 2014
COUNTY OF HAWAII
Hilo, Hawaii
William P. Kenoi
Mayor
Walter Lau
Managing Director
Prepared by
The Department of Finance
Nancy Crawford
Director of Finance
COUNTY OF HAWAII
Comprehensive Annual Financial Report
For the Fiscal Year Ended June 30, 2014
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
88
FINANCIAL SECTION (Continued)
119
Table 2 - Changes in Net Position
Page
Combining and Individual Nonmajor Fund Statements and Schedules:
122
Combining Balance Sheet - Nonmajor Governmental Funds
90
Combining Statement of Revenues, Expenditures, and Changes in Fund
124
Balances - Nonmajor Governmental Funds
94
Schedules of Revenues, Expenditures, and Changes in Fund Balances -
129
Budget and Actual (Budgetary Basis):
130
Highway Fund
97
Sewer Fund
98
Solid Waste Fund
99
Cemetery Fund
100
Parking Meter Fund
101
Vehicle Disposal Fund
102
Bikeway Fund
103
Workforce Investment Act Fund
104
Golf Course Fund
105
Geothermal Relocation and Community Benefits Fund
106
Beautification Fund
107
Hawaii County Housing Agency
108
Park Dedication Fund
109
Combining Statement of Agency Funds Net Position - Agency Funds
110
Combining Statement of Changes in Assets and Liabilities - Agency Funds
112
Combining Statement of Private Purpose Trust Net Position - Private Purpose Trusts
116
Combining Statement of Changes in Net Position - Private Purpose Trusts
117
STATISTICAL SECTION
Table 1 - Net Position by Component
119
Table 2 - Changes in Net Position
120
Table 3 - Fund Balances, Governmental Funds
122
Table 4 - Changes in Fund Balance, Governmental Funds
123
Table 5 - ReaI Property Assessed Values by Classification and Tax Rates
124
Table 6 - Principal Taxpayers
128
Table 7 - Property Tax Levies and Collections
129
Table 8 - Ratios of Outstanding Debt by Type
130
Table 9 - Ratios of General Bonded Debt Outstanding
131
Table 10 - Legal Debt Margin Information
132
Table 11 - Demographic and Economic Statistics
133
Table 12 - Principal Employers, County of Hawaii
134
Table 13 - Full -Time Equivalent County Government Employees by Function
135
Table 14 - Operating Indicators by Function
136
Table 15 - Capital Asset Statistics by Functions
137
INTRODUCTORY SECTION
William P. Kenoi
Mayor
January 12, 2015
County of Hawaii
Finance Department
25 Aupuni Street, Room 2103 • Hilo, Hawaii 96720
(808)961-8234 . Fax(809)961-8569
The Honorable Mayor and Members of the Council
County of Hawaii
25 Aupuni Street
Hilo, Hawaii 96720
Deanna S. Sako
Director
We transmit herewith the Comprehensive Annual Financial Report for the County of
Hawaii, State of Hawaii (the County), for the fiscal year July 1, 2013 to June 30, 2014.
Lisa K. Miura
Deputy Director
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, 2014 and
results of operations for the fiscal year then ended. The report is divided into three
sections:
• The Introductory Section includes this transmittal letter, a Certificate of Achievement
for Excellence in Financial Reporting, the County of Hawai`i's organization chart and
lists of elected and principal officials.
• The Financial Section contains management's discussion and analysis, the basic
financial statements, related notes, the combining and individual fund budgetary
financial statements, and the independent auditors' report.
The Statistical Section includes selected financial and demographic information,
generally presented on a multi-year basis.
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
Hawaii County is an equal opportunity provider and employer.
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body of the County government. This component unit is included in the County's
reporting entity because of its financial relationship with the County.
The County provides a full range of municipal services. These include police and fire
protection; emergency medical care; public prosecutor; culture and recreation; sanitation;
social services; water; planning and zoning; construction and maintenance of highways,
streets and infrastructure; real property assessment and tax collection; and general
administrative services. However, the County does not provide such other traditional
services as public education, hospitals and courts. These services are provided by the
State government.
The County consists of the island of Hawaii, 4,028 square miles in size. It is twice as
large as the combined area of all the other inhabited islands in the Hawaiian Archipelago.
Since there is no other local or municipal government within the County, there are no
overlapping taxes and no overlapping debt. The County has an elected mayor and a nine -
member council.
Economic Condition and Outlook
The island of Hawaii, commonly known as the Big Island, is located 214 miles from
Honolulu, the state capital; 2,200 miles from the west coast of the continental United
States; and 4,000 miles from Japan. The city of Hilo on the east side of the island serves
as the county seat as well as the transportation and financial center for the Big Island.
Hilo's infrastructure includes Hilo Harbor, a deep -water port, and Hilo International
Airport, which is capable of handling fully -loaded wide-bodied aircraft. Kailua-Kona
and South Kohala, major tourist destination areas on the west side of the Big Island, are
served by flights from the United States mainland, and Canada through the Kona
International Airport. Scheduled freight services are available between the islands by air
and sea transport. Communities on the island are linked by a network of State and
County maintained streets and highways.
The Big Island is the most diversified of the neighbor island economies. As a result it is
buffered to some extent when any one industry lags. Although the past few years proved
challenging to the island's economy, it appears that the County will continue on its steady
but slow road to improved financial health. This favorable outlook is supported by
positive trends in the following key areas of the island's economy.
The unemployment rate for the County for the current fiscal year is at approximately 6%,
which represents over a two percent decline from last year's rate for the same period of
8.3% and an even larger decline from the high of I I% in 2011.
Tourism — Tourism has always been one of the major industries on the island. In
addition to the mild climate and natural beauty it shares with other areas in the state, the
County features the Hawaii Volcanoes National Park. A popular attraction, the park is
the most visited site in the state, with almost 3.7 million visitors each fiscal year for the
past two fiscal years. However, the County is less dependent on this industry than the
other islands in the State, which is fortunate considering that the overall number of
tourists to the island declined slightly (4%) in the current year.
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Construction — The outlook for the construction industry based on building permits
seems to be improving despite a few challenges that remain in the areas of the rising cost
of materials and the workforce availability. According to the Economic Forecast by First
Hawaiian Bank, private building permits are up to about $60 million per month and
single-family quarterly building permits have increased from $10413 million per month
in 2011 to $20 million per month earlier this year.
Several large construction projects are on the horizon for each side of the island. The
west side of the island is experiencing increased activity in residential construction with
several projects moving forward due to the resolution of issues surrounding the
infrastructure at Hokulia. Construction also continued with the Hawaii Community
College's Palama Nui campus and several substantial highway projects, which include
includes the Hawaii Community College and the widening of the Queen Kaahumanu
Highway ($75 million) and completion of Phase III of the Saddle Road ($32 million). A
large portion of the east side construction activity focuses on the Hilo harbor where
construction has begun on the new inter -island cargo facility and another $47 million is
anticipated to be spent on Phase II and III, which does not include the $5 million to be
spent on demolition of part of the Pier I to allow larger ships access to the port.
Scientific Research and Development — Due largely to its unique geographic
characteristics which has attracted scientists in fields of astronomy, meteorology,
volcanology, and agriculture/aquaculture, the County has benefited economically by the
significant investments made in scientific research. Astronomy continues to be a major
factor in the success of the County's economy with an estimated nearly 500 new jobs
opening up through 2023 to meet the needs of the current observatories and the creation
of new jobs with the development of the Thirty Meter Telescope (TMT) by the TMT
Observatory Corporation. On October 7, 2014, the dedication and groundbreaking
ceremony for the TMT was held. It is anticipated that the construction and equipment
costs will approximate $1,2 billion and once it becomes operational in 2021, the TMT
will have an annual operational budget of $27 million
Major Initiatives
For the Year
During the year, the County focused on construction projects relating to housing,
sanitation and public safety, and other issues affecting the quality of life in the County.
Puhlic Safety — The Police Department conducted various recruitments, resulting in the
hiring of 30 police recruits, eight police radio dispatchers, five inter -governmental
movements, three school crossing guards, one custodian, one clerk and one secretary.
Internally, there were 33 temporary promotions to police officer III, five promotions to
police sergeant, four promotions to detective, and four promotions to police lieutenant.
The Accreditation Section assisted in raising the bar on professionalism within the Police
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Department. In August 2015, the department will once again be under review by
independent assessors to retain accreditation, which the department earned in November
2012.
Housing — Construction on Na Kahua Hale O Ulu Wini ("Ulu Wini", formerly known as
Kaloko Housing Program) located in North Kona continued through fiscal year 2014.
Completing construction of final 20 units for a total of 96 units for this project. Ulu Wini
provides transitional (short-term, less than two years) and permanent rental housing for
families with children earning below 50% of the County's adjusted median income, with
preference for those impacted by homelessness. Entire build -out of the site will include
96 two-bedroom units, a community center complete with meeting room administrative
offices, a laundry facility and kitchen, an employment training facility, a playground and
a wastewater treatment plant. families engaged at. Ulu Wini will be provided either
transitional or rental housing, case management, mail and computer access, and an array
of on-site support services including employment and life skills training, mental health
services, counseling and childcare.
Kamakoa Nui is a master planned community in Waikoloa that is intended to serve the
local work force population with affordable homes for purchase near the largest employer
on the Big Island, the Kohala Coast hotels. The first sales were recognized in this current
fiscal year with twelve homes sold.
For the Future
Public Safety — Securing funding for the South Kona Police Station continues to remain a
goal of the Hawaii Police Department along with planning for a new station in the Puna
District to replace the soon to be retired Kea'au Police Station.
The Police Department has completed extensive research into the process of procuring a
modernized and fully integrated Computer Aided Dispatch (CAD) and records
Management System (RMS) to better serve the community and that system has been put
out for bid with the award expected to be announced in early 2015. Additionally, the
Police department is one of several County Departments that collaborated on
modernizing the County's Radio System which will be getting under way in late 2014.
Public Works — The Department of Public Works began reconstructing the four -lane
roadway and Pauahi Street/Kamehameha Avenue intersection, on March 3, 2014.
Estimated completion is mid -2015. The Federal Highway Administration is paying
eighty (80) percent of the $13 million estimated cost and the County the remaining
twenty (20) percent.
The following projects are in the design phase:
• Kawailani/lwalani Intersection Improvement Project (STIP),
• Manono Street Improvements Project (STIP),
• Kapi'olani Street Extension Project,
• Alii Drive Shoulder Improvements Project,
• Komohana Street Reconstruction Project
• Henry Street Reconstruction Project.
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The following projects are in the planning phase:
• Ali'i Drive Culvert Replacement Project (STIP)
• Kuakini Phase II Project (STIP),
• Upper Waianuenue Ave Improvement Project (STIP),
• Mamalahoa Highway (Waimea) Widening Project (STIP),
• Kamehameha Avenue Reconstruction Phase II Project,
* Mamalahoa Highway (Waimea) Improvements Project,
• Nani Kailua Extension,
• Lako Street Extension Project.
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. As demonstrated by the statements and
ME
schedules included in the financial section of this report, the County continues to meet its
responsibility for sound financial management.
Cash Management
Cash temporarily idle during the year was invested in savings accounts, money market
mutual funds, certificates of deposit, repurchase agreements, and agency notes. The
average yield on deposits and investments was .26%.
The County's policy is to minimize credit and market risks while maintaining a
competitive yield on its portfolio. Accordingly, with the exception of $295,104 held by a
rental management agent, deposits were either insured by federal depository insurance,
collateralized, or secured by irrevocable letters of credit. All collateral on deposit was
held for safe keeping with a County -designated agent in the County's name.
Financial Highlights
As a result of both a slightly higher value of net taxable real property and building tax
rates, the County experienced an increase of $20.5 million in property tax revenues from
the prior year. This was however offset by substantial increases in employment costs due
to negotiated bargaining unit pay raises, the end of furloughs and increases in associated
fringe benefits.
After temporarily forgoing its employer contributions relating to the pre -funding of its
postemployment benefits other than pension for the past two years, the County made a
contribution of $3.17 million.
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 seven different bargaining units. Three bargaining
units have contracts that will expire on June 30, 2015. Four bargaining units have
contracts that will expire on June 30, 2017.
Certificate of Achievement
The Government Finance Officers Association of the United States and Canada (GFOA)
awarded a Certificate of Achievement for Excellence in Financial Reporting to the
County of Hawaii for its Comprehensive Annual Financial Report for the fiscal year
ended June 30, 2013. This was the twenty-sixth consecutive year that the government
has received this prestigious award. In order to be awarded a Certificate of Achievement,
a government must publish an easily readable and efficiently organized comprehensive
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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 Hawaii.
441"?0/94
DEANNASAKO
Director of Finance
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11J
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, 2013
Executive Director/CEO
-8-
County of Hawaii
Organization Chart
County Electorate
County Council I Mayor Prosecuting Attorney
County Legislative Office of Mana czg hent:
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, 2014
Administrative Officers (Term: 2012-2016)
William P. Kenoi Mayor
Mitchell Roth Prosecuting Attorney
County Council (Term: 2012-2014)
J Yoshimoto
Chair
Karen Eoff
Vice Chair
Brenda Ford
Member
Greggor Ilagan
Member
Dru Mamo Kanuha
Member
Zendo Kern
Member
Dennis "Fresh" Onishi
Member
Valerie Poindexter
Member
Margaret Wille
Member
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Principal Officials
June 30, 2014
County Clerk
Stewart Maeda
Legislative Auditor
Bonnie Nims
Managing Director
Walter Lau
Deputy Managing Director
Randy Kurohara
Corporation Counsel
Molly Stebbins
Director of Finance
Nancy E. Crawford
Planning Director
Duane Kanuha
Director of Personnel
Sharon Kamahele-Toriano
Director of Research and Development
Laverne Omori
Chief of Police
Harry S. Kubojiri
Fire Chief
Darren Rosario
Director of Public Works
Warren Lee
Director of Environmental Management
Bobby Jean Leithead-Todd
Parks and Recreation Director
Clayton Honma
Manager -Chief Engineer, Department of Water
Supply Quirino Antonio, Jr.
Civil Defense Administrator
Darryl Oliveira
Director of Liquor Control
Gerald Takase
Mass Transit Administrator
Tiffany Kai
Executive on Aging
Alan Parker
Administrator, Office of Housing and
Community Development
Stephen Arnett
Director of Information Technology
Donald F. Jacobs, Jr.
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FINANCIAL SECTION
Ni
ilk N&K CPAs, Inc.
ACCOUNTANTS I CONSULTANTS
INDEPENDENT AUDITOR'S REPORT
To the Chair and Members of the County Council
County of Hawaii
Report on the Financial Statements
AMERICAN SAVINGS BANK TOWER
1001 BISHOP STREET, SUITE 1700
HONOLULU, HAWAII 96813-3696
T (808) 524-2255 F (808) 523-2090
We have audited the accompanying financial statements of the governmental activities, the
business -type activities, the discretely presented component unit, each major fund, and the
aggregate remaining fund information of the County of Hawaii, State of Hawai'i (County), as of
and for the fiscal year ended June 30, 2014, and the related notes to the financial statements,
which collectively comprise the County's basic financial statements as listed in the table of
contents. We also have audited each fiduciary fund type of the County as of and for the fiscal
year ended June 30, 2014, as displayed in the County's basic financial statements.
Management's Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial
statements in accordance with accounting principles generally accepted in the United States of
America; this includes the design, implementation, and maintenance of internal control relevant
to the preparation and fair presentation of financial statements that are free from material
misstatement, whether due to fraud or error.
Auditor's Responsibility
Our responsibility is to express opinions on these financial statements based on our audit. We
conducted our audit in accordance with auditing standards generally accepted in the United States
of America and the standards applicable to financial audits contained in Government Auditing
Standards, issued by the Comptroller General of the United States. Those standards require
that we plan and perform the audit to obtain reasonable assurance about whether the financial
statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and
disclosures in the financial statements. The procedures selected depend on the auditor's
judgment, including the assessment of the risks of material misstatement of the financial
statements, whether due to fraud or error. In making those risk assessments, the auditor
considers internal control relevant to the entity's preparation and fair presentation of the
financial statements in order to design audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the effectiveness of the
entity's internal control. Accordingly, we express no such opinion. An audit also includes
evaluating the appropriateness of accounting policies used and the reasonableness of
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N&K CPAs, Inc.
ACCOUNTANTS I CONSULTANTS
significant accounting estimates made by management, as well as evaluating the overall
financial statement presentation of the financial statements.
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 as well as each fiduciary fund type of the County of Hawal'I, State of Hawaii as of
June 30, 2014, 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.
Other Matters
Required Supplementary Information
Accounting principles generally accepted in the United States of America require that the
management's discussion and analysis (pages 16 through 26) and schedule of funding progress
for the Hawaii Employer Union Health Benefit Trust Fund (page 88) 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 management's 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 County's basic financial statements. The introductory section,
combining and individual nonmajor fund financial statements, fund schedules, and statistical
section are presented for purposes of additional analysis and are not a required part of the basic
financial statements.
The combining and individual nonmajor fund financial statements and fund 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
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N&K CPAs, Inc.
ACCOUNTANTS I CONSULTANTS
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
fund 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.
Adjustment to Prior Period Financial Statements
As discussed in Note 1 (page 58) to the financial statements, the County has adjusted its 2013
financial statements to retroactively apply the change in accounting for deferred bond costs,
unamortized loss on advanced refunding of bonds, and deferred inflows of resources as
required by the provisions of Government Accounting Standards Board Statement No. 65, Items
Previously Reported as Assets and liabilities. Our opinion is not modified with respect to this
matter.
Other Reporting Required by Government Auditing Standards
In accordance with Government Auditing Standards, we have also issued our report dated
January 12, 2015, on our consideration of the County's internal control over financial reporting
and on our tests of its compliance with certain provisions of laws, regulations, contracts and
grant agreements and other matters at a future date. The purpose of that report is to describe
the scope of our testing of internal control over financial reporting and compliance and the
results of that testing, and not to provide an opinion on internal control over financial reporting or
on compliance. That report is an integral part of an audit performed in accordance with
Government Auditing Standards in considering the County's internal control over financial
reporting and compliance.
/%(9 K CPAr , ?Nc.
Honolulu, Hawaii
January 12, 2015
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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, 2014. 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 $808.0 million
(net position). This amount includes a negative balance of $16.9 million in unrestricted net
position, a decrease of $18.1 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 $206.0 million, an increase of $10.7 million from the prior year.
Approximately 43 percent of this total amount, $89.5 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 $46.3
million, or 19 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 primary government itself.
Fund Financial Statements
The fund financial statements are designed to report information about groupings of related
accounts which are used to maintain control over resources that have been segregated for specific
activities or objectives. The County, like other state and local governments, uses fund accounting
to ensure and demonstrate compliance with finance -related legal requirements. All of the funds
of the County can be divided into the following three categories: governmental funds,
proprietary funds, and fiduciary funds.
Governmental funds. Governmental funds are used to account for essentially the same
functions reported as governmental activities in the government -wide financial statements ---
i.e., most of the County's basic services are reported in governmental funds. These
statements, however, focus on (1) how cash and other financial assets can readily be
converted to available resources and (2) the balances left at year-end that are available for
spending. Such information may be useful in determining what financial resources are
available in the near future to finance the County's programs.
Because the focus of governmental funds is narrower than that of the government -wide
financial statements, it is useful to compare the information presented for governmental
funds with similar information presented for governmental activities in the government -wide
financial statements. By doing so, readers may better understand the long-term impact of the
government's near-term financing decisions. Both the governmental funds balance sheet
and the governmental funds statement of revenues, expenditures, and changes in fund
balances provide a reconciliation to facilitate this comparison between governmental funds
and governmental activities.
The County maintains several individual governmental funds organized according to their
type (general, special revenue, debt service, and capital projects). Information is presented
separately in the governmental funds balance sheet and in the governmental funds statement
of revenues, expenditures, and changes in fund balances for the general fund and capital
projects fund, which are considered to be major funds. Data from the remaining
governmental funds are combined into a single, aggregated presentation. Individual fund
data for each of the non -major governmental funds is provided in the form of combining
statements elsewhere in this report.
The County adopts an annual appropriated budget for its general fund and special revenue
funds. A budgetary comparison statement has been provided for these funds to demonstrate
compliance with this budget. The budgetary comparison statement for the general fund is
located in the basic financial statements, whereas the budgetary comparison schedules for
the nonmajor special revenue funds are presented elsewhere in this report.
Proprietary funds. Proprietary funds are generally used to account for services for which
the County charges outside customers. Proprietary funds provide the same type of
information as shown in the government -wide financial statements, only in more detail. The
County maintains only one type of proprietary funds, enterprise funds. Enterprise funds
are used to report the same functions presented as business -type activities in the government -
wide financial statements. The County uses enterprise funds to account for the operations of
the Kulaimano Elderly Housing Project and the Ouli Ekahi Affordable Housing Project.
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Fiduciary funds. Fiduciary funds are used to account for resources held for the benefit of
parties outside the County. The private -purpose trusts and the agency funds are reported
under the fiduciary funds. Since the resources of these funds are not available to support the
County's own programs, they are not reflected in the government -wide financial statements.
The accounting used for fiduciary funds is much like that used for proprietary funds.
Notes to the Basic Financial Statements
The notes to the basic financial statements provide additional information that is essential to a full
understanding of the data provided in the government -wide and fund financial statements.
Other Supplementary Information
In addition to the basic financial statements and accompanying notes, this report also presents
certain required supplementary information, which is presented immediately following the notes
to the basic financial statements. The combining statements referred to earlier in connection with
nonmajor governmental funds and budgetary comparison schedules for the nonmajor special
revenue funds are presented immediately following the required supplementary information.
Assets:
Current and other assets
Capital assets, net
Total assets
Deferred Outflows
Of Resources:
Total Assets and Deferred
GOVERNMENT -WIDE FINANCIAL ANALYSIS
Condensed Statement of Net Position
June 30, 2014 and 2013
Primary Government
Governmental Activities Business -type Activities Total
2013 as 2013 as
2014 restated 2014 2013 2014 restated
$ 260,511,277 $ 253,214,295 $ 1,153,595 $ 1,111,875 $ 261,664,872 $ 254,326,170
1,052,246,842 1,009,857,355 1,577,149 1,611,888 1,053,823,991 1,011,469,243
1,312,758,119 1,263,071,650 2,730,744 2,723,763 1,315,488,863 1,265,795,413
1,283,292 1,589,564
-- 1,283,292 1,589,564
Outflows of Resources 1,314,041,411 1,264,661,214 2,730,744 2,723,763 1,316,772,155 1,267,384,977
Liabilities:
Long-term liabilities
outstanding
474,116,332
465,209,668
1,208,300
1,296,633
475,324,632
466,506,301
Other liabilities
32,625,472
34,788,387
59,845
66,685
32,685,317
34,855,072
Total liabilities
506,741,804
499,998,055
1,268,145
1,363,318
508,009,949
501,361,373
Deferred Inflows
Of Resources:
797,272
718,241
--
797,272
718,241
Total Liabilities and
Deferred Inflows
Of Resources
507,539,076
500,716,296
1,268,145
1,363,318
508,807,221
502,079,614
Net position:
Net investment in
capital assets
734,889,023
699,326,156
368,849
315,255
735,257,872
699,641,411
Restricted
89,620,936
64,437,707
--
89,620,936
64,437,707
Unrestricted
(18,007,624)
181,055
1,093,750
1,045,190
(16,913,874)
1,226,245
Total net position
$ 806,502,335
$ 763,944,918
$ 1,462,599
$ 1,360,445
$807,964,934
$765,305,363
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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 $808.0 million at the
close of the most recent fiscal year.
By far the largest portion of the County's net position (91 percent) reflects its investment in
capital assets (c.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 (I I percent) 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 increased by $42.7 million during the current fiscal year, which was a
decrease of $41.3 million (49%) from the increase that was experienced last fiscal year. One of
the main reasons for the lower increase in net position is due to a $50.0 million decrease in capital
grants and contributions related to highways and streets as compared to the prior fiscal year. This
substantial decrease was partially offset by a $7.8 million increase from that of the prior fiscal
year in capital grants and contributions related to culture and recreation.
The County's net capital assets increased by $42.4 million 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 Iiabilities outstanding increased by $8.8 million (2 percent) due primarily
to the increases resulting from the County's decision to forgo the employer contributions relating
to the pre -funding of its postemployment benefits other than pensions and the liability for post
closure remediation costs relating to closure of the County's two metal salvage facilities. These
increases were offset by principal payments on the General Obligation Bonds and the State
Revolving Fund loans from the prior year. See further discussion of the increase in long-term
debt outstanding on page 24.
19-
Analysis of Changes in Net Position
Governmental activities. Governmental activities increased the County's net position by
$42.6 million or basically all of the total growth in net position of the County.
The primary reason for the $15.8 million (4 percent) decrease in total revenues was due to Capital
grants and contributions decreasing by approximately $45.2 million, which related mostly to
decreases in highways and streets projects. This substantial decrease was partially offset by
increases in the other revenue sources. The most significant increase of $20.5 million was in real
property taxes, which was due to a slight increase in the value of net taxable real property and
building tax rates as evidenced in the accompanying statistical tables. The second largest
increase in revenues was in Charges for services of $6.0 million from the prior year, with the
largest percentage relating to the area of highways and streets.
Total expenses increased by $24.8 million with 89 percent of the increase resulting from
increases in the areas of Public safety and Sanitation. There was an increase of $11.9 million in
Public safety expenditures of which $5.5 million was due to increases in salaries and wages and
$3.5 million was due to increases in related employee benefits including post employment
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Condensed Statements of Activities
For the Fiscal Years
Ended June
30, 2014 and 2013
Primary Government
Governmental Activities
Business -type Activities
Total
2014
2013 as
2014
2013
2014
2013 (as
restated)
restated
Revenues:
Program revenues:
Charges for services
$ 40,900,135
$ 34,930,495
$ 468,018
$ 432,057
$ 41,368,153
$ 35,362,552
Operating grants and contributions
42,957,370
44,410,353
127,119
123,800
43,084,489
44,534,153
Capital grants and contributions
62,370,497
107,584,670
-
-
62,370,497
107,584,670
General revenues:
Property taxes
221,260,681
200,775,779
-
221,260,681
200,775,779
Other taxes
28,546,783
28,206,334
-
28,546,783
28,206,334
Grants and contributions, unrestricted
17,705,917
17,750,132
-
-
17,705,917
17,750,132
Investment earnings (loss)
815,606
(81,020)
1,739
1,416
817,345
(79,604)
Other
5,574,147
2,320,838
-
342,275
5,574,147
2,663,113
Total revenues
420,131,136
435,897,581
596,876
899,548
420,728,012
436,797,129
Fxpenses:
General government
59,448,042
55,616,102
-
59,448,042
55,616,102
Public safety
163,889,113
151,975,049
163,889,113
151,975,049
Highways and streets
38,670,145
42,219,903
-
38,670,145
42,219,903
Health, education and welfare
28,343,056
28,001,020
494,722
496,017
28,837,778
28,497,037
Culture and recreation
25,590,117
22,121,336
-
-
25,590,117
22,121,336
Sanitation
48,721,810
38,505,086
-
-
48,721,810
38,505,086
Interest on long-term debt
12,911,436
14,301,921
-
12,911,436
14,301,921
Total expenses
377,573,719
352,740,417
494,722
496,017
378,068,441
353,236,434
Increase in net position
42,557,417
83,157,164
102,154
403,531
42,659,571
83,560,695
Net position at beginning of year,
as previously stated
763,944,918
682,085,644
1,360,445
956,914
765,305,363
683,042,558
Cumulative effect of accounting change
-
(1,297,890)
-
-
-
(1,297,890)
Net position at beginning of year,
as adjusted
763,944,918
680,787,754
1,360,445
956,914
765,305,363
681,744,668
Net position at end of year
$ 806,502,335
$ 763,944,918
$ 1,462,599
$ 1,360,445
$ 807,964,934
$ 765,305,363
Analysis of Changes in Net Position
Governmental activities. Governmental activities increased the County's net position by
$42.6 million or basically all of the total growth in net position of the County.
The primary reason for the $15.8 million (4 percent) decrease in total revenues was due to Capital
grants and contributions decreasing by approximately $45.2 million, which related mostly to
decreases in highways and streets projects. This substantial decrease was partially offset by
increases in the other revenue sources. The most significant increase of $20.5 million was in real
property taxes, which was due to a slight increase in the value of net taxable real property and
building tax rates as evidenced in the accompanying statistical tables. The second largest
increase in revenues was in Charges for services of $6.0 million from the prior year, with the
largest percentage relating to the area of highways and streets.
Total expenses increased by $24.8 million with 89 percent of the increase resulting from
increases in the areas of Public safety and Sanitation. There was an increase of $11.9 million in
Public safety expenditures of which $5.5 million was due to increases in salaries and wages and
$3.5 million was due to increases in related employee benefits including post employment
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benefits. The $10.2 million increase in Sanitation was mostly due to the liability resulting from
the closure of the County's two metal salvage facilities with remediation costs estimated at $8.8
million.
Expenses and Program Revenues -- Governmental Activities
Year Ended June 30, 2014
$180,000,000
$160,000,000
$140,000,004 Expenses-iFrogrs mrevenue
$120,000,000
i
$100,o00,0oo
$80,000,000
$60,000,000
$40,000,000
$20,000,000
$0
�aSe,a `�ewy e�`�{� ea4&1 L��oc a�oti
�ra�` oas� te°t yah �e�t°
�\o z�ca lord
�e
Revenue by Source — Governmental Activities
Year Ended June 30, 2014
-21-
The charts above illustrate the County's governmental expenses and revenues by function, and its
revenues by source. As shown, public safety is the largest function in expense (43 percent),
followed by general government (16 percent) and sanitation (13 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 (53 percent), followed by capital grants and
contributions (15 percent) and operating grants and contributions (10 percent).
Business -type activities. Business -type activities increased the County's net position by
$102,154 versus an increase of $403,53 1 in the prior year. Expenses for health, education and
welfare account for all of the $494,722 of expenses with very little change from the prior year.
Charges for services were $468,018, operating grants and contributions were $127,119 and
investment earnings were $1,739, which were all comparable to the prior year. However, other
income decreased by $342,275 from the prior year due to the one-time recognition of the
forgiveness of a lease payable.
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 $206.0 million, an increase of $10.7 million (5 percent) in comparison
with prior year. Approximately 43 percent of this total amount ($89.5 million) constitutes
unrestricted fund balance. The unrestricted portion of the fund balance is comprised of (1) $50.8
million in committed fund balance, (2) $36.9 million in assigned fund balance and (3) $1.8
million in unassigned fund balance. The remainder of the fund balance is divided between $3.8
million in nonspendable fund balance for inventory and $112.6 million in restricted fund balance.
Approximately 80 percent of the total restricted Rind balance is due to restrictions relating to
highways, streets and abandoned vehicles ($67.0 million) and debt service ($23.6 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 $46.3 million, while total fund balance
increased to $55.5 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 fluid balance represents 19 percent of total general fund expenditures, while total
fund balance represents 23 percent of that same amount.
The fund balance of the County's general fund increased by $1.6 million during the current fiscal
year as compared to an increase of $5.2 million in the prior year. Key factors in this decrease
($3.6 million) over last year's increase are as follows:
• A positive increase of $22.3 million (11 percent) in real property tax revenues and $1.6
million (3 percent) decrease in combined Federal and State intergovernmental revenues. As
explained previously, the increase in real property tax revenues is due to a slight increase in
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the value of net taxable real property and building tax rates as evidenced in the accompanying
statistical tables.
• The positive impact of the increase in revenues was offset by increases of $20.3 million (9
percent) in expenditures and $7.6 million (16 percent) in transfers out. $8.6 million of the
total increase in expenditures is due to increases in salaries and wages from the prior year and
$7.2 million in associated employee benefits.
The fund balance of the County's capital projects fund increased by $5.4 million (7 percent)
during the current fiscal year. The increase is primarily due to the combined total of the fund's
main revenue sources of long-term debt financing, which consists of state revolving fund loan
proceeds ($3.1 million); intergovernmental revenue ($8.8 million); private contributions ($21.2
million); real estate sales ($3.5 million) and transfers in ($5.9 million) being greater than capital
expenditures ($37.7 million) for the current fiscal year.
The debt service funds consist of the Bond Redemption Fund and the Interest Fund. These funds
have combined total fund balances of $23.6 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 $4.4 million (23 percent).
Proprietary funds. The County's proprietary finds 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 $759,878, and $333,872 for the Ouli Ekahi Affordable Housing Project (Ouli
Ekahi). The total net position for Kulaimano decreased by $5,886 and the net position for Ouli
Ekahi increased by $108,040. 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 $7.3 million increase in appropriations, the most significant single reason (46 percent) due to
an increase in the appropriations for capital outlays.
Differences between the final budget and the actual (budgetary basis) resulted in approximately
$536,000 less revenues than expected and $20.8 million less expenditures than appropriated.
This is primarily due to the following factors:
• The positive variances in real property and public service company taxes of $4.1 million was
negated by an almost equal negative variance in intergovernmental revenues for both the
federal and state grants of $3.0 million and in total charges for services of $1.2 million.
• $3.2 million of the unspent appropriations is related to salaries and wages. The variance is
due primarily to unfilled vacancies and continued efforts by each department to control
payroll costs during the budget year due to the tough economic conditions facing the County.
The following functions are responsible for the majority of the variance: public safety ($1.3
million) and general government ($1.3 million).
• $2.1 million is due to lower than anticipated payments needing to be made in pension related
payments. With each department increasing efforts to control costs, overtime was also
closely monitored and the corresponding pension expenditures were not incurred.
• $2.7 million is due to the fact that the increase in health premiums for employees' was Iower
than originally anticipated.
-23-
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, 2014 amounts to $1,054 million (net of accumulated depreciation). This
investment in capital assets includes land and improvements, buildings and improvements,
equipment, easements, and infrastructure assets, which consists of primarily roads and bridges.
The total increase in the County's investment in capital assets for the current fiscal year was 4
percent.
Major capital asset events during the current fiscal year included the following:
• Construction continued on Na Kahua Hale O Ulu Wini Housing Project (formerly known as
Kaloko Housing Program) and costs at the end of the current fiscal year for Phases 3 and 4
totaled $8.1 million of which $2.7 was from the current fiscal year; the portion relating to the
completed Phase 3 was transferred to Building and Improvements.
• Construction continued on the County's Corporation Counsel and Liquor Control Offices
Hazardous Abatement and Restoration project; construction in progress as of the end of the
current fiscal year increased by $2.6 million to reach a total of $5.0 million, which was
transferred to Buildings and Improvements.
• Construction continued on the Kalaniana`ole Sewer Interceptor Line Rehabilitation Phase 2;
construction in progress as of the end of the current fiscal year increased by $2.1 million to
reach a total of $7.5 million, which was transferred to Buildings and Improvements.
• Construction continued on the Reed Island Bridge Rehabilitation; construction in progress as
of the end of the current fiscal year increased by $5.8 million to reach a total of $8.0 million,
which was transferred to Infrastructure.
• Construction continued on the La`aloa Avenue Extension with work also beginning on Phase
2 of the project; construction in progress for both phases as of the end of the current fiscal
year increased by $4.8 million to reach a total of $6.1 million.
• Construction continued on the Kaiminani Drive Roadway Improvements Phase I;
construction in progress as of the end of the current fiscal year had reached $8.3 million with
$2.2 million coming from the current fiscal year.
• Construction continued on the Kamehameha Avenue Reconstruction (Wailoa Bridge to
Ponahawai) project; construction in progress as of the end of the current fiscal year had
reached $2.5 million with $2.1 million coming from the current fiscal year.
0 Construction began on two projects associated with the Honoka`a Rodeo Arena, which were
the accessibility improvements and the covered bleachers facility. Costs for both projects
reached a total of $2.8 million, which was transferred to Building and Improvements.
• $17.9 million of dedicated roads were received by the County in the current fiscal year.
• $6.6 million of various other equipment and real property were dedicated and donated to the
County in the current fiscal year.
-24-
Capital Assets
(net of depreciation)
June 30, 2014 and 2013
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 $297.1 million and State
Revolving Fund loans of $22.9 million. At the end of the current fiscal year, the County had total
bonded debt outstanding of $297.1 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 decreased by $16.2 million (5 percent) during the current fiscal
year due to regularly scheduled principal payments.
At the end of the fiscal year, the County maintained its "AA-" rating from Standard & Poor's and
Fitch and "Aa2" rating from Moody's for general obligation debt.
State statutes limit the amount of general obligation debt the County may issue up to 15 percent
of the total assessed value of all county real property as established for tax purposes on the last
tax assessment rolls. The current debt limitation for the County is $3.5 billion, which is in excess
of the County's outstanding general obligation debt. Currently the County's outstanding debt
represents 8 percent of our debt limitation.
Additional information on the County's long-term debt can be found in note 10 to the basic
financial statements.
ECONOMIC FACTORS AND NEXT YEAR'S BUDGETS AND RATES
• The unemployment rate for the County for the current fiscal year is at approximately 6.0
percent, which represents over a two percent decline from last year's rate for the same
period of 8.3 percent and an even larger decline from the high of 11.0 percent in 2011.
• The number of visitors to the County for the current fiscal year was approximately 1.42
million, with an approximately 4.0 percent decrease from the previous year's count of
1.47 million. However, for the most part, the County is less dependent on tourism than
the other islands in the State.
• Astronomy continues to be a major factor in the success of the County's economy with
an estimated nearly 500 new jobs opening up through 2023 to meet the needs of the
current observatories and the creation of new jobs with the development of the Thirty
Meter Telescope (TMT) by the TMT Observatory Corporation. On October 7, 2014, the
dedication and groundbreaking ceremony for the TMT was held. It is anticipated that the
-25-
Primary Government
Governmental Activities
Business -type Activities
Total
2014
2013
2014
2013
2014
2013
Land and improvements
$ 189,366,207
$ 163,565,168
$ 753,877
$ 753,877
$ 190,120,084
$ 164,319,045
Infrastructure assets
274,721,099
274,969,315
-
-
274,721,099
274,969,315
Ground and site improvements
-
-
70,934
75,280
70,934
75,280
Buildings and improvements
498,293,093
476,759,437
718,631
754,675
499,011,724
477,514,112
Easements
3,803,176
3,500,794
-
-
3,803,176
3,500,794
Equipment
48,353,349
48,585,309
33,707
28,056
48,387,056
48,613,365
Construction work in progress
37,709,918
42,477,332
-
-
37,709,918
42,477,332
Total
$1,052,246,842
$1,009,857,355
$ 1,577,149
7 1,611,888
$1,053,823,991
$1,011,469,243
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 $297.1 million and State
Revolving Fund loans of $22.9 million. At the end of the current fiscal year, the County had total
bonded debt outstanding of $297.1 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 decreased by $16.2 million (5 percent) during the current fiscal
year due to regularly scheduled principal payments.
At the end of the fiscal year, the County maintained its "AA-" rating from Standard & Poor's and
Fitch and "Aa2" rating from Moody's for general obligation debt.
State statutes limit the amount of general obligation debt the County may issue up to 15 percent
of the total assessed value of all county real property as established for tax purposes on the last
tax assessment rolls. The current debt limitation for the County is $3.5 billion, which is in excess
of the County's outstanding general obligation debt. Currently the County's outstanding debt
represents 8 percent of our debt limitation.
Additional information on the County's long-term debt can be found in note 10 to the basic
financial statements.
ECONOMIC FACTORS AND NEXT YEAR'S BUDGETS AND RATES
• The unemployment rate for the County for the current fiscal year is at approximately 6.0
percent, which represents over a two percent decline from last year's rate for the same
period of 8.3 percent and an even larger decline from the high of 11.0 percent in 2011.
• The number of visitors to the County for the current fiscal year was approximately 1.42
million, with an approximately 4.0 percent decrease from the previous year's count of
1.47 million. However, for the most part, the County is less dependent on tourism than
the other islands in the State.
• Astronomy continues to be a major factor in the success of the County's economy with
an estimated nearly 500 new jobs opening up through 2023 to meet the needs of the
current observatories and the creation of new jobs with the development of the Thirty
Meter Telescope (TMT) by the TMT Observatory Corporation. On October 7, 2014, the
dedication and groundbreaking ceremony for the TMT was held. It is anticipated that the
-25-
construction and equipment costs will approximate $1.2 billion and once it becomes
operational in 2021, the TMT will have an annual operational budget of $27 million.
The outlook for the construction industry based on building permits seems to be
improving despite a few challenges that remain in the areas of the rising cost of materials
and the workforce availability. According to the Economic Forecast by First Hawaiian
Bank, private building permits are up to about $60 million per month and single-family
quarterly building permits have increased from $10$13 million per month in 2011 to $20
million per month earlier this year.
Several large construction projects are on the horizon for each side of the island. The
west side of the island is experiencing increased activity in residential construction with
several projects moving forward due to the resolution of issues surrounding the
infrastructure at Hokulia. Construction also continued with the Hawaii Community
College's Palama Nui campus and several substantial highway projects, which include
includes the Hawaii Community College and the widening of the Queen Kaahumanu
Highway ($75 million) and completion of Phase III of the Saddle Road ($32 million). A
large portion of the east side construction activity focuses on the Hilo harbor where
construction has begun on the new inter -island cargo facility and another $47 million is
anticipated to be spent on Phase II and Ill, which does not include the $5 million to be
spent on demolition of part of the Pier I to allow larger ships access to the port.
These factors were considered in preparing the County's budget for the 2015 fiscal year.
At the end of the current fiscal year, unrestricted fund balance in the general fund was $46.3
million. The County has appropriated $25.5 million of this amount for spending in the 2015
fiscal year budget and it is included in the assigned portion of the fund balance.
REQUESTS FOR INFORMATION
This financial report is designed to provide a general overview of the County's finances for all
those with an interest in the government's finances. Questions concerning any of the information
provided in this report or requests for additional information should be addressed to the Director
of Finance, County of Hawaii, 25 Aupuni Street, Suite 2103, Hilo, Hawaii 96720.
-26-
BASIC FINANCIAL STATEMENTS
-27-
COUNTY OF HAWAII
Statement of Net Position
Assets
Current assets:
Cash and cash equivalents (notes 3 and 14)
Restricted cash and cash equivalents (note 3 and 14)
Investments (note 3)
Restricted investments (note 3)
Receivables, net (note 4)
Receivable from improvement district
(notes 4 and 10)
Internal balances (note 5)
Inventories
Prepaid expenses
Real estate held for sale
Other
Total current assets
Investments (note 3)
Restricted investments (note 3)
Restricted cash and cash equivalents (note 3 and 14)
Receivable from improvement district, excluding
current portion (notes 4 and 10)
Preliminary survey and investigation charges
Capital assets (notes 6, 8 and 14):
Utility plant in service, net
Infrastructure assets, net
Ground and site improvements, net
Buildings and improvements, net
Equipment, net
Easements, net
Construction work in progress
Land and improvements
Total capital assets, net
Total noncurrent assets
Total assets
Deferred Outflows of Resources
Deferred loss on refunding
Total Assets and Deferred Outflows of Resources
June 30, 2014
Primary Government
Governmental Business -type Component
Activities Activities Total Unit
$ 49,657,131 $ 869,198 $ 50,526,329 $ 36,246,439
46,741,035
40,334
46,781,369
-
9,742,381
-
9,742,381
-
53,690,196
-
53,690,196
-
49,422,538
5,777
49,428,315
7,839,518
66,993
-
66,993
-
1,350
(1,350)
-
-
3,794,963
-
3,794,963
1,143,074
-
1,490
1,490
171,855
2,935,216
-
2,935,216
-
779,927
2,730,744
779,927
-
216,831,730
915,449
217,747,179
45,400,886
26,130,593
200,184
26,330,777
-
15,885,348
-
15,885,348
-
-
37,962
37,962
2,085,134
1,663,606 1,663,606 -
- - - 3,732,743
255,317,677
274,721,099
274,721,099
-
-
70,933
70,933
-
498,293,093
718,631
499,011,724
-
48,353,349
33,708
48,387,057
-
3,803,176
3,803,176
-
37,709,918
-
37,709,918
7,358,252
189,366,207
753,877
190,120,084
4,564,602
1,052,246, 842
1,577,149
1,053,823,991
267,240,531
1,095,926,389
1,815,295
1,097,741,684
273,058,408
1,312,758,119
2,730,744
1,315,488,863
318,459,294
1,283,292 - 1,283,292 -
1,314,041,411 2,730,744 1,316,772,155 318,459,294
(Continued)
-28-
COUNTY OF HAWAII
Statement of Net Position
Liabilities
Current liabilities:
Accounts payable and accrued liabilities
Accrued payroll
Advance collections - intergovernmental
Interest due on long-term debt
Bonds and loans payable, current portion net
(notes 10 and 14)
Compensated absences, current portion (note 10)
Claims and judgments, current portion
(notes 10, 12 and 14)
Capital leases, current portion (notes 8 and 10)
Landfill costs payable, current portion
(notes 9 and 10)
Customers' deposits
Other
Total current liabilities
Noncurrent liabilities:
Bonds and loans payable, net
(notes 10 and 14)
Compensated absences (note 10)
Claims and judgments (notes 10, 12 and 14)
Capital leases (notes 8 and 10)
Landfill costs payable (notes 9 and 10)
Unearned revenue, noncurrent
Customers' deposits
Other (note 13)
Total noncurrent liabilities
Total liabilities
Deferred Inflows of Resources
Deferred Inflows - Other
Total Liabilities and Deferred
Inflows of Resources
Net Position
Net investment in capital assets
Restricted for:
Capital projects
Debt service (note 10)
Highways, streets and abandoned vehicles
Public access open space
Other
Unrestricted
Total net position
June 30, 2014
(Concluded)
Primary Government
Governmental Business -type Component
Activities Activities Total Unit
$ 12,714,764
$ 44,985
$ 12,759,749
$ 2,486,389
8,462,522
-
8,462,522
1,376,106
3,314,289
711
3,315,000
-
5,657,950
14,149
5,672,099
984,682
22,278,027
84,412
22,362,439
3,374,743
8,342,581
-
8,342,581
441,666
2,915,021
-
2,915,021
68,675
1,066,531
-
1,066,53I
-
224,478
-
224,478
-
-
-
-
601,695
2,475,947
-
2,475,947
-
67,452,110
144,257
67,596,367
9,333,956
318,789,131
1,123,888
319,913,019
49,482,475
25,642,863
-
25,642,863
1,135,714
10,808,872
10,808,872
238,325
1,241,710
1,241,710
-
22,488,522
22,488,522
-
-
-
1,583,953
-
-
15,611,876
60,318,596
60,318,596
-
439,289,694
1,123,888
440,413,582
68,052,343
506,741,804
1,268,145
508,009,949
77,386,299
797,272 797,272 -
507,539,076 1,268,145 508,807,221 77,386,299
734,889,023 368,849 735,257,872 216,468,447
46,753,013
46,753,013 -
23,576,248 -
23,576,248 -
12,668,047
12,668,047 -
4,713,485
4,713,485 -
1,910,143 -
1,910,143 -
(18,007,624) 1,093,750
(16,913,874) 24,604,548
$ 806,502,335 $ 1,462,599
$ 807,964,934 $ 241,072,995
See accompanying notes to the basic financial statements.
-29-
COUNTY OF HAWAII
Statement of Activities
For the Fiscal Year Ended June 30, 2014
Functions/Programs
Primary government:
Governmental activities:
General government
Public safety
Highways and streets
Health, education and welfare
Culture and recreation
Sanitation
Interest on long-term debt
Program Revenues
Operating Capital
Charges for Grants and Grants and
Expenses Services Contributions Contributions
$ 59,448,042 $ 2,495,917 $ 2,070,680 $ 5,531,849
163,889,113
5,562,424
20,164,816
4,685
38,670,145
13,901,679
1,728,448
48,338,507
28,343,056
559,381
18,219,695
15,367
25,590,117
1,954,213
68,627
8,453,770
48,72I,810
16,426,521
705,104
26,319
12,911,436
-
-
-
Total governmental activities 377,573,719 40,900,135 42,957,370 62,370,497
Business -type activities:
Health, education and welfare 494,722 468,018 127,119 -
Total primary government $ 378,068,44I $ 41,368,153 $ 43,084,489 $ 62,370,497
Component unit:
Water (note 14)
$ 54,306,190 $ 48,310,623 $ - $ 10,299,452
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 (loss)
Other
Total general revenues
Change in net position
Net position, beginning of year, as previously stated
Cumulative effect of accounting change
Net position, beginning of year, as adjusted
Net position, end of year
See accompanying notes to the basic financial statements.
-30-
Net (Expense) Revenue and Changes in Net Position
Primary Government
Governmental Business -type Component
Activities Activities Total Unit
$ (49,349,596) $
- $ (49,349,596) $ -
(138,157,188)
- (138,157,188) -
25,298,489
- 25,298,489 -
(9,548,613)
- (9,548,613) -
(15, 113,507)
- (15,113,507) -
(31,563,866)
- (31,563,866) -
(12,911,436)
- (12,911,436) -
(231,345,717) - (231,345,717) -
100,415 100,415 -
(231,345,717) 100,415 (231,245,302) -
4,303,885
221,260,681
-
221,260,681
-
10,380,341
-
10,380,341
-
10,792,967
-
I0,792,967
-
7,373,475
-
7,373,475
-
17,705,917
-
17,705,917
-
815,606
1,739
817,345
226,696
5,574,147
-
5,574,147
-
273,903,134
1,739
273,904,873
226,696
42,557,417
102,154
42,659,571
4,530,581
765,659,726
1,360,445
767,020,171
236,542,414
(1,714,808)
-
(1,714,808)
-
763,944,918
I,360,445
765,305,363
236,542,414
$ 806,502,335 $
1,462,599
$807,964,934 $
241,072,995
-31-
COUNTY OF HAWAII
Governmental Funds
Balance Sheet
June 30, 2014
Assets
Cash and cash equivalents (note 3)
Investments (note 3)
Receivables, net (note 4)
Due from other governmental funds (note 5)
Due from other nongovernmental funds (note 5)
Receivables from other governments (note 4)
Inventories
Real estate held for sale
Other
Total assets
Liabilities, Deferred Inflows and Fund Balances
Liabilities:
Accounts payable
Accrued payroll
Due to other governmental funds (note 5)
Due to other nongovernmental funds (note 5)
Advance collections -intergovernmental (note 7)
Other
Total liabilities
Deferred Inflows of Resources:
Unavailable revenue
Fund balances:
Nonspendable: Inventory
Restricted for:
Debt service (note 10)
Highways, streets and abandoned vehicles
Public access open space
Other
Committed to:
Budget stabilization
Disaster and emergencies
Lower Puna area
Rental assistance and subsidy
Sanitation
Self insurance
Highways, streets and abandoned vehicles
Parks and recreational projects
Zoning change impact mitigation (fair share)
Other
Assigned to:
Subsequent year's budget
Other
Unassigned
Total fund balances
Total liabilities and fund balances
See accompanying notes to the basic financial statements.
Other Total
Capital Governmental Governmental
General Projects Funds Funds
$ 8,101,976 $ 41,444,758 S 46,851,432 $ 96,398,166
39,743,842
45,977,282
19,727,394
105,448,518
22,045,275
1,160,441
2,683,028
25,888,744
705,593
1,874,282
69,530
2,649,405
-
-
1,350
1,350
19,773,218
3,173,661
586,915
23,533,794
3,794,963
-
-
3,794,963
-
2,935,216
-
2,935,216
468,512
311,415
779,927
$ 94.633.379
96.565.640
$ 70.231.064
261.430.083
$ 3,440,806
$ 6,223,500
$ 3,050,458
$ 12,714,764
7,393,593
-
1,068,929
8,462,522
1,458,029
409,049
782,327
2,649,405
2,042,023
1,165,939
106,327
3,314,289
1,909,322
5,098
561,527
2,475,947
16,243,773
7,.,803,586
5,569,568
29,616,927
22,842,547
286,900
2,724,970
25,854,417
3,794,963 - 3,794,963
- 23,576,248 23,576,248
- 54,374,443 12,668,047 67,042,490
4,713,485 - 4,713,485
745,865 15,382,259 1,164,278 17,292,402
5,367,886 - 5,367,886
5,428,818 - 5,428,818
- 4,938,635 4,938,635
2,282,439 2,282,439
- - 12,194,717 12,194,717
1,283,680 - 1,283,680
- 827,600 4,557,474 5,385,074
3,079,495 86,517 3,166,012
- 5,398,416 - 5,398,416
714,398 4,195,960 468,I71 5,378,529
25,545,000 - - 25,545,000
6,128,075 5,216,981 - 11,345,056
I,824,889 - - 1,824,889
55,547,059 88,475,154 61,936,526 205,958,739
$ 94.633.379 $ 96.565.640 $ 70.231.064 2 1
-32-
COUNTY OF HAWAII
Reconciliation of the Governmental Funds Balance Sheet to the Statement of Net Position
June 30, 2014
Total fund balances - governmental funds $ 205,958,739
Amounts reported for governmental activities in the statement of
net positron 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
189,366,207
Infrastructure assets, net
274,721,099
Buildings and improvements, net
498,293,093
Equipment, net
48,353,349
Basements, net
3,803,176
Construction work in progress
37,709,918
Total capital assets, net
(8,770,000)
Deferred amounts on refunding are reported as deferred outflows of
resources in the government -wide financial statements but are not
reported in the governmental fund statements
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)
Some Iiabilities 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
(339,336,559)
Interest on long-term debt
(5,657,950)
Capital leases
(2,3 08,241)
Compensated absences
(33,985,444)
Claims and judgments
(13,723,893)
Landfill costs payable
(22,713,000)
Pollution remediation
(8,770,000)
Other Postemployment Benefit Obligation (OPEB)
(51,548,596)
Total long-term liabilities
Net position of governmental activities
See accompanying notes to the basic financial statements.
-33-
1,052,246,842
1,283,292
25,057, I45
(478,043,683)
$ 806,502,335
COUNTY OF HAWAII
Governmental Funds
Statement of Revenues, Expenditures, and Changes in Fund Balances
For the Fiscal Year Ended June 30, 2014
Revenues
Property taxes
Public service company taxes
Fuel taxes
Public utility franchise taxes
Licenses and permits
Intergovernmental
Charges for services
Investment earnings (losses)
Other
Total revenues
Expenditures
Current:
General government
Public safety
Highways and streets
Health, education and welfare
Culture and recreation
Sanitation
Pension and retirement
contributions (note 13)
Employees' health insurance
Other postemployment benefits
Other
Debt service:
Principal
Interest
Capital outlay
Total expenditures
Excess (deficiency) of revenues
over (under) expenditures
299,221,588 34,194,720 64,665,872 398,082,180
36,659,186
- 19,550
Other
Total
- 6,229,784
Capital
Governmental
Governmental
General
Projects
Funds
Funds
17,415,015
- 918,875
18,333,890
1,027,084
$223,481,503
$ -
$ -
$223,481,503
10,380,341
-
-
10,380,341
-
-
7,373,475
7,373,475
-
-
10,792,967
10,792,967
7,932,958
-
11,684,894
19,617,852
48,830,066
8,844,696
17,581,906
75,256,668
3,728,783
-
15,663,717
19,392,500
1,051,850
645,839
5,389
1,703,078
3,816,087
24,704,185
1,563,524
30,083,796
299,221,588 34,194,720 64,665,872 398,082,180
36,659,186
- 19,550
36,678,736
104,991,128
- 6,229,784
111,220,912
2,525,821
- 17,744,534
20,270,355
7,030,I16
- 16,040,110
23,070,226
17,415,015
- 918,875
18,333,890
1,027,084
- 28,921,920
29,949,004
28,783,47I
- 4,248,684
33,032,155
24,866,245
- 1,920,081
26,786,326
3,170,000
-
3,170,000
1,712,964
- 1,524,818
3,237,782
55I,219
- 18,461,371
19,012,590
41,493
- 14,602,833
14,644,326
13,643,090
37,725,580 -
51,368,670
242,416,832
37,725,580 110,632,560
390,774,972
56,804,756 (3,530,860) (45,966,688) 7,307,208
-34-
(Continued)
COUNTY OF HAWAII
Governmental Funds
Statement of Revenues, Expenditures, and Changes in Fund Balances
For the Fiscal Year Ended June 30, 2014
(Concluded)
See accompanying notes to the basic financial statements.
-35-
Other
Total
Capital
Governmental
Governmental
General
Projects
Funds
Funds
Other Financing Sources (Uses)
Sale of assets
$ 10,264
$ -
$ -
$ I0,264
Increase in capital leases (notes 8 and 10)
13,817
-
-
13,817
State Revolving Fund loans (note 10)
-
3,072,577
-
3,072,577
Issuance of bonds (note 10)
-
-
-
-
Premium on bonds (note 10)
-
-
-
Refunding bonds (note 10)
-
-
-
-
Payment to refunded bond escrow
agent (note 10)
-
-
-
-
Retirement of refunded debt (note 10)
-
-
-
-
Transfers in (note 5)
-
5,863,047
55,374,541
61,237,588
Transfers out (note 5)
(55,532,884)
-
(5,704,704}
(61,237,588_)
Total other financing sources (uses)
(55,508,803)
8,935,624
49,669,837
3,096,658
Net change in fund balances
1,295,953
5,404,764
3,703,149
10,403,866
Fund balances at beginning of year
53,948,607
83,070,390
58,233,377
195,252,374
Increase in reserve for inventories
302,499
-
-
302,499
Fund balances at end of year
$ 55,547,059
$ 88,475,154
$61,936,526
$205,958,739
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, 2014
Net change in fund balances - total governmental funds $ 10,403,866
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 54,801,851
Dedicated and contributed property 24,540,091
Depreciation expense and loss on disposals (36,952,455)
Excess of capital outlay over depreciation expense 42,389,487
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, proceeds were received from:
State Revolving Fund loans (3,072,577)
Capital leases (13,817)
Total debt proceeds (3,086,394)
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 16,648,372
State Revolving Fund loan repayments 1,026,222
Capital lease payments 1,337,996
Total long-term debt repayment 19,012,590
Because some revenues will not be collected for several months after the
County's fiscal year end, they are not considered "available" revenues and
are "deferred" in the governmental funds. Unearned revenues decreased by
this amount this year. (2,171,662)
(Continued)
-36-
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, 2014
Some items reported in the statement of activities do not involve current
financial resources and therefore are not reported as expenditures in
govermnental funds. These activities are:
Increase in inventories
Increase in Other Postemployment Benefit Obligation (OPER)
Increase in compensated absences
Increase in claims and judgments
Increase in landfill closurelpostclosure care costs
Increase in pollution remediation costs
Amortization of premium from bond issuance
Amortization of deferred loss on refunding
Net decrease in accrued interest
Net additional expenses
Change in net position of governmental activities
See accompanying notes to the basic financial statements.
-37-
$ 302,499
(13,388,094)
(1,820,334)
(1,319,431)
(728,000)
(8,770,000)
1,577,653
(306,272)
461,509
(Concluded)
(23,990,470)
$ 42,557,417
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, 2014
Actual Variance
Original Final (Budgetary Positive
Budget Budget Basis) (Negative)
Revenues:
Taxes and assessments:
Property taxes $ 219,400,000 $ 219,600,000 $ 223,481,503 $ 3,881,503
Public service company taxes 10,145,000 10,145,000 10,380,341 235,341
Total taxes and assessments 229,545,000 229,745,000 233,861,844 4,116,844
Licenses and permits:
Nonbusiness licenses and permits
3,355,500
3,355,500
3,657,112
301,612
Business licenses
1,873,068
I,873,068
1,753,415
(119,653)
Street use
2,399,600
2,399,600
2,522,431
122,831
Total licenses and permits
7,628,168
7,628,168
7,932,958
304,790
Intergovernmental:
Federal:
Programs for the aged
21224,785
2,224,785
1,724,734
(500,051)
Community development block grants
-
2,805,552
2,805,552
-
HOME program grant
-
394,441
394,441
-
Law enforcement
2,314,967
2,659,858
1,758,216
(901,642)
Other
2,851,500
2,917,884
2,176,571
(741,313)
Total federal
7,391,252
11,002,520
8,859,514
(2,143,006)
State:
State General Fund - Act 185,
SLH 1990
17,298,000
17,298,000
17,298,000
-
Emergency medical services
14,358,592
14,358,592
14,358,592
-
Other
6,443,506
9,646,406
8,783,402
(863,004)
Total State
38,100,098
41,302,998
40,439,994
_(863,004)
Total intergovernmental revenue
45,491,350
52,305,518
49,299,508
(3,006,010)
Charges for services:
General government
5,780,561
5,780,561
5,052,098
(728,463)
Culture and recreation
1,341,900
1,364,500
1,124,714
(239,786)
Highways and streets
1,476,500
1,476,500
1,216,181
(260,319)
Public safety
112,123
112,123
115,272
3,149
Total charges for services
8,711,084
8,733,684
7,508,265
_(1,225,419)
Fines and forfeitures
1,373,500
1,373,500
585,417
(788,083)
Rents
218,040
218,040
199,938
(18,102)
(Continued)
-38-
COUNTY OF HAWAII
General Fund
Statement of Revenues, Expenditures, and Changes in Fund Balance -
Budget and Actual (Budgetary Basis)
Revenues (continued):
Interest and penalties
Miscellaneous
Total revenues
Expenditures:
Current:
General government:
Finance
General government building
Legislative
Automotive equipment
Law
Research and development
Planning and zoning
Mayor's office
Engineering
Information technology
Human resources
Public works administration
Elections
Legislative auditor
Total general government
Public safety:
Police department
Fire department
Prosecuting attorney
Protective inspection
Liquor control
Flood control
Civil defense agency
Animal control
Total public safety
Highways and streets:
Mass transit
For the Fiscal Year Ended June 30, 2014
Actual Variance
Original Final (Budgetary Positive
Budget Budget Basis) (Negative)
$ 200,000 $ 200,000 $ 496,056 $ 296,056
4,357,598 4,602,410 4,386,565 (215,845)
297,524,740 304,806,320 304,270,551 (535,769)
11,062,763
11,095,132
10,341,563
753,569
5,078,894
5,173,694
5,075,999
97,695
4,262,904
3,409,189
3,077,753
331,436
5,948,589
5,952,589
5,267,945
684,644
2,677,876
2,739,876
2,533,928
205,948
3,520,714
3,583,534
3,383,729
199,805
3,274,512
3,274,512
2,892,951
381,561
1,492,014
1,505,014
1,496,765
8,249
1,335,168
1,335,168
1,224,625
110,543
2,441,339
2,442,339
2,065,896
376,443
1,833,258
1,836,068
1,728,504
107,564
1,390,004
1,316,004
1,264,243
51,761
904,598
918,598
665,867
252,731
793,955
793,955
627,881
166,074
46,016,588
45,375,672
41,647,649
3,728,023
55,084,045
59,431,010
56,597,579
2,833,431
38,642,008
39,151,592
37,857,106
1,294,486
8,660,019
8,711,993
7,166,596
1,545,397
2,150,702
2,150,902
2,034,945
115,957
1,844,268
1,867,868
1,654,886
212,982
330,000
330,000
330,000
-
959,724
1,059,724
794,324
265,400
1,982,500
1,982,500
1,961,875
20,625
109,653,266
114,685,589
108,397,311
6,288,278
3,46I,171
3,466,194
2,646,435
819,759
(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, 2014
(Continued)
ow
Actual
Variance
Original
Final
(Budgetary
Positive
Budget
Budget
Basis)
(Negative)
Expenditures (continued):
Current (continued):
Health, education and welfare:
Elderly activities
$ 3,669,501
$ 3,788,501
$ 3,4I 1,073
$ 377,428
Office of aging
2,636,208
2,636,223
2,454,391
181,832
Education
58,500
58,500
42,638
15,862
Social programs
1,500,000
1,500,000
1,475,500
24,500
Cemeteries
360,498
391,498
342,081
49,417
Physical examination
133,825
133,825
133,568
257
Total health, education and welfare
8,358,532
8,508,547
7,859,251
649,296
Culture and recreation:
Community music
249,457
234,457
198,109
36,348
Organized recreation:
Maintenance
8,462,426
8,434,651
8,389,126
45,525
Recreation
2,686,605
2,821,422
2,600,993
220,429
Aquatics
2,375,686
2,291,086
2,194,080
97,006
Hoolulu park complex
1,020,214
1,025,814
972,314
53,500
Administration
1,753,489
1,947,555
1,811,776
135,779
Children's zoo
707,888
715,136
665,586
49,550
SummerlIntersession
544,085
548,085
351,135
196,950
Culture and arts
277,949
306,349
275,316
31,033
Elderly activities administration
580,789
612,389
563,272
49,117
Total culture and recreation
18,658,588
18,936,944
18,021,707
915,237
Sanitation:
Environmental management
1,069,283
1,069,283
994,678
74,605
Pension and retirement contributions
30,298,132
30,298,132
28,242,592
2,055,540
Employees' health insurance
27,500,000
27,500,000
24,842,599
2,657,401
Other postemployment benefits
3,180,000
3,180,000
3,180,000
-
Other
6,750,000
5,373,916
1,737,118
3,636,798
Total current
254,945,560
258,394,277
237,569,340
20,824,937
(Continued)
ow
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, 2014
Expenditures (continued):
Capital Outlay:
Community Development Block
grants (HUD)
HOME Program
Total capital outlay
Total expenditures
Excess of revenues over expenditures
Other financing sources (uses):
Transfers out:
Housing Fund
Solid Waste Fund
Sewer Fund
Golf Course Fund
Capital Project Fund
Highway Fund
Disaster/Emergency Fund
Public Access, Open Space, and Natural
Resources Preservation Fund
Public Access, Open Space, and Natural
Resources Preservation Maintenance Fund
Budget Stabilization Fund
Debt Service Fund
Total transfers out
Total other financing uses
Excess (deficiency) of revenues and other
sources over (under) expenditures and other uses
Fund balance at beginning of year
Fund balance at end of year
See accompanying notes to the basic financial statements.
(Concluded)
Actual Variance
Original Final (Budgetary Positive
Budget Budget Basis) (Negative)
$ - $ 2,980,363 $ 2,980,363 $ -
394,441 394,441 -
3,374,804 3,374,804 -
254,945,560 261,769,081 240,944,144 20,824,937
42,579,180 43,037,239 63,326,407 20,289,168
(1,402,916)
(1,402,916)
(1,402,916)
-
(15,515,377)
(15,520,377)
(15,520,377)
-
(1,739,548)
(1,739,548)
(1,739,548)
-
(330,000)
(361,000)
(361,000)
-
--
(158,343)
(158,343)
-
--
(63,715)
(63,715)
-
(250,000)
(250,000)
(250,000)
-
(4,388,000)
(4,563,000)
(4,469,630)
93,370
(548,500)
(573,500)
(558,703)
14,797
(250,000)
(250,000)
(250,000)
-
(39,898,751)
(39,898,751)
(39,638,084}
260,667
(64,323,092)
(64,781,150}
(64,412,316}
368,834
(64,323,092)
(64,781,150)
(64,412,316)
368,834
(21,743,912)
(21,743,911)
(1,085,909)
20,658,002
53,948,607
53,948,607
53,948,607
-
$ 32,204,695
$ 32,204,696
$ 52,862,698
$ 20,658,002
-41-
COUNTY OF HAWAII
Proprietary Funds
Statement of Net Position
June 30, 2014
Assets
Current assets:
Cash and cash equivalents (note 3)
Restricted cash and cash equivalents (note 3)
Imprest fund (note 3)
Receivables, net (note 4)
Prepaid expenses
Total current assets
Noncurrent assets:
Restricted cash and cash equivalents (note 3)
Investments (note 3)
Capital assets (note 6):
Land and site improvements
Buildings and equipment
Less accumulated depreciation
Total capital assets
Total noncurrent assets
Total assets
Liabilities
Current liabilities:
Accounts payable
Internal Balances (note 5)
Security deposits payable from restricted assets
Deferred revenue (note 7)
Interest payable
Notes payable, current portion (note 10)
Total current liabilities
Noncurrent liabilities:
Notes payable (note 10)
Total liabilities
Net Position
Net investment in capital assets
Unrestricted
Total net position
See accompanying notes to the basic financial statements.
-42-
Business -type Activities -
Enterprise Funds
Kulaimano Ouli Ekahi
Elderly Affordable
Housing Housing
Project Project Total
$ 579,485 $ 289,563 $ 869,048
10,864
29,470
40,334
50
100
150
740
5,037
5,777
1,490
-
1,490
592,629
324,170
916,799
- 37,962 37,962
200,184 - 200,184
511,000
515,727
1,026,727
I,244,354
479,014
1,723,368
(1,147,660)
(25,286)
(1,172,946)
607,694
969,455
1,577,149
807,878
1,007,417
1,815,295
1,400,507
1,331,587
2,732,094
6,071
-
6,071
1,350
-
I,350
10,864
28,050
38,914
501
210
711
14,149
-
14,149
50,187
34,225
84,412
83,122
62,485
145,607
760,850
363,038
1,123,888
843,972
425,523
I,269,495
(203,343)
572,192
368,849
759,878
333,872
1,093,750
$ 556,535
$ 906,064
$ 1,462,599
COUNTY OF HAWAII
Proprietary Funds
Statement of Revenues, Expenses, and Changes in Fund Net Position
For the Fiscal Year Ended June 30, 2014
Operating revenues:
Rental receipts from tenants
Rental subsidy from federal government - HUD
Laundry receipts
Other
Total operating revenues
Operating expenses:
Utilities
General and administration
Maintenance and repairs
Depreciation (note 6)
Total operating expenses
Operating income
Nonoperating revenues (expenses):
Investment income
Interest expense
Other income
Total nonoperating revenues (expenses)
Change in net position
Net position, beginning of year
Net position, end of year
See accompanying notes to the basic financial statements.
-43-
Business -type Activities -
Enterprise Funds
Kulaimano Ouli Ekahi
Elderly Affordable
Housing Housing
Project Project Total
$ 124,995 $ 326,595 $ 451,590
127,119
-
127,119
3,269
-
3,269
-
13,159
13,159
255,383
339,754
595,137
38,271
58,801
97,072
96,470
101,493
197,963
49,489
56,128
105,617
35,313
15,304
50,617
219,543
231,726
451,269
35,840
108,028
143,868
1,727
12
1,739
(43,453)
-
(43,453)
{41,726)
12
41,714
(5,886)
108,040
102,154
562,421
798,024
1,360,445
$ 556,535 $ 906,064 $ 1,462,599
COUNTY OF HAWAII
Proprietary Funds
Statement of Cash Flows
For the Fiscal Year Ended June 30, 2014
Cash Flows from Operating Activities
Receipts from tenants
Receipts from federal government - HUD
Payments to suppliers for goods and services
Net cash provided by operating activities
Cash Flows from Capital and Related Financing Activities
Principal paid on notes payable
Interest paid on notes payable
Purchase of capital assets
Other receipts
Net cash used in capital and related financing activities
Cash Flows from Investing Activities
Interest on investments
Net cash provided by investing activities
Net increase in cash and cash equivalents
Cash and cash equivalents at beginning of year (including
restricted cash and cash equivalents)
Cash and cash equivalents at end of year (including
restricted cash and cash equivalents)
Reconciliation of Operating Income to Net Cash
Provided by Operating Activities
Operating income
Adjustments to reconcile operating income to net cash
provided by operating activities:
Depreciation expense
Change in assets and liabilities:
Receivables, net
Prepaid expenses
Accounts and other payables
Deferred revenue
Net cash provided by operating activities
Supplemental disclosure of cash flow information - Interest paid
Noncash investing, capital and financing activities:
Net increase in fair value of investments
See accompanying notes to the basic financial statements.
-44-
Business -type Activities -
Enterprise Funds
Kulaimano Ouli Ekahi
Elderly Affordable
Housing Housing
Project Project Total
$ 124,852 $ 338,182 $ 463,034
127,119 - 127,119
(I80,89D (220,750) (401,653)
71,078 117,422 188,500
(24,071)
(64,262)
(88,333)
(45,095)
-
(45,095)
(6,499)
(9,379)
(15,878)
31,304
-
31,304
(44,361)
(73,641)
118,002
973
12
985
973
12
985
27,690 43,793 71,483
562,709 313,302 876,011
$ 590,399 $ 357,095 $ 947,494
$ 35,840 $ 108,028 $ 143,868
35,313 15,304 50,617
(430) (368) (798)
11 11
1,075 (5,379) (4,304)
(731) (163) 894
$ 71,078 $ 117,422 $ 188,500
$ 45,095 $ - $ 45,095
$ 184 $ - $ 184
COUNTY OF HAWAII
Fiduciary Funds
Statement of Fiduciary Net Position
June 30, 2014
Private -
Purpose
Trusts
Assets
Cash and cash equivalents (note 3)
Investments (note 3)
Receivables:
Due from other agency funds
Other receivables
Total receivables
Total assets
Liabilities
Due to other agency funds
Accrued liabilities
Advances payable
Assets held for the benefit of improvement districts
Total liabilities
Net Position
Held in trust for other parties
Total net position
See accompanying notes to the basic financial statements.
-45-
Agency
Funds
$ 1,575,569 $ 3,770,681
3,048,195 193,238
- 2,444
463 104,579
463 107,023
4,624,227 $ 4,070,942
4,624,227
$ 4,624,227
2,444
2,985,915
244,252
838,331
$ 4,070,942
COUNTY OF HAWAII
Fiduciary Funds
Statement of Changes in Fiduciary Net Position
For the Fiscal Year Ended June 30, 2014
Deductions
Claims Consultant 34,745
Grant payments 248,297
Total deductions 283,042
Change in net position (148,251)
Net position, beginning of year 4,772,478
Net position, end of year $ 4,624,227
See accompanying notes to the basic financial statements.
Private -
Purpose
Trusts
Additions
Contributions:
Puna Geothermal Venture
$ 50,000
Investment earnings:
Net increase in fair value of investments
17,434
Dividends
56,995
Interest
10,362
Total additions
134,791,
Deductions
Claims Consultant 34,745
Grant payments 248,297
Total deductions 283,042
Change in net position (148,251)
Net position, beginning of year 4,772,478
Net position, end of year $ 4,624,227
See accompanying notes to the basic financial statements.
COUNTY OF HAWAII
Notes to the Basic Financial Statements
June 30, 2014
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 (CAFR).
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The Financial Reporting Entity
The County has implemented Governmental Accounting Standards Board Statement No. 14,
The Financial Reporting Entity (GASB Statement No. 14), Statement No. 39, Determining
Whether Certain Organizations Are Component Units (GASB Statement No. 39) and
Statement No. 61, The Financial Reporting Entity.- Omnibus an amendment of GASB
Statements No. 14 and 34 (GASB Statement No. 61). All organizations, activities or functions
that meet the criteria in GASB Statement No. 14, No. 39 and No. 61 for inclusion in the
reporting entity are included in the County's basic financial statements.
Primary Government The County operates under the Mayor -Council form of government
under a charter that became effective on January 2, 1969, and was amended in 1979, 1982,
1990 and 2000. The County's operations are organized by the following functions: general
government; public safety; highways and streets; sanitation; health, education and welfare;
culture and recreation; pension and retirement contributions; health fund; miscellaneous;
capital outlay; and debt service. The State of Hawaii (the State) assumes full responsibility
for several major functions usually performed by local governments, including education,
welfare, health and judicial functions. There are no separate city, county or township
governments nor any school districts, special districts, authorities or public corporations with
overlapping authority.
GASB Statement No. 14, as amended, defines component units as Iegally separate
organizations for which the elected officials of the primary government are financially
accountable or for which the primary government may determine, through exercise of
management's professional judgment, that the inclusion of an organization that does not meet
the financial accountability criteria is necessary in order to prevent the reporting entity's
financial statements from being misleading. "Financial accountability" is the level of
accountability that exists if a primary government appoints a voting majority of an
organization's governing board or if the organization is fiscally dependent on the primary
government and is either able to impose its will on that organization or there is a potential for
the organization to provide specific financial benefits to, or impose specific financial burdens
on, the primary government. A primary government has the ability to impose its will on an
organization if it can significantly influence the programs, projects, activities or level of
services performed or provided by the organization. An organization has a financial benefit or
burden relationship with the primary government if any one of three conditions exist: (1) The
primary government is legally entitled to or can otherwise access the organization's resources;
(2) The primary government is legally obligated or has otherwise assumed the obligation to
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COUNTY OF HAWAII
Notes to the Basic Financial Statements
June 30, 2014
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 Hawaii (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 Iegally 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,
Hawaii 96720.
Basic Financial Statements
The basic financial statements include both government -wide (based on the County as a
whole) and fund financial statements. Both the government -wide and fund financial
statements (within the basic financial statements) categorize primary activities as either
governmental or business -type. In the government -wide statement of net position, both the
governmental and business -type activities columns (a) are presented on a consolidated basis
by column, (b) and are reflected, on a full accrual, economic resource basis, which
incorporates long-term assets and receivables as well as long-term debt and obligations.
The government -wide statement of activities reflects both the gross and net costs per
functional category (general government, public safety, highways and streets, etc.) which are
otherwise being supported by general government revenues (property taxes, certain
intergovernmental revenues, etc.). The statement of activities reduces gross expenses
(including depreciation) by related program revenues, operating and capital grants. The
program revenues must be directly associated with the function (general government, public
safety, highways and streets, etc.) or a business -type activity. The operating grants include
operating -specific and discretionary (either operating or capital) grants while the capital grants
column reflects capital -specific grants. The net cost (by function or business -type activity) is
normally covered by general revenues.
IWO111 10 IMM a of FORM M
Notes to the Basic Financial Statements
June 30, 2014
The government -wide focus is more on the sustainability of the County as an entity and the
change in aggregate financial position resulting from the activities of the fiscal period.
The fund financial statements' emphasis is on the major funds in either the governmental or
business -type categories. Nonmajor funds (by category) are summarized into a single column.
The governmental funds in the fund financial statements are presented using the current
financial resource focus and modified accrual basis of accounting. This is the manner in
which these funds are normally budgeted. This presentation is deemed most appropriate to (a)
demonstrate legal and covenant compliance, (b) demonstrate the source and use of liquid
resources, and (c) demonstrate how the County's actual experience conforms to the budget
fiscal plan. Since the governmental fund statements are presented using a different
measurement focus and basis of accounting than the government -wide statements'
governmental activities column, a reconciliation is presented on the page following each
statement, which briefly explains the adjustments necessary to transform the fund based
financial statements into the governmental activities column of the government -wide
presentation.
The County's fiduciary funds are presented in the fund financial statements by type (private
purpose and agency). Since by definition these assets are being held for the benefit of a third
party (private parties, state government, etc.) and cannot be used to address activities or
obligations of the government, these funds are not incorporated into the government -wide
statements.
Government -wide and fund financial statements — The government -wide financial
statements (i.e., the statement of net position and the statement of activities) report
information on all of the nonfiduciary activities of the primary government and its component
unit. The effect of interfund activity have been removed from these statements.
Governmental activities, which normally are supported by taxes and intergovernmental
revenues, are reported separately from business -type activities, which rely to a significant
extent on fees and charges for support. Likewise, the primary government is reported
separately from certain legally separate component units for which the primary government is
financially accountable.
The statement of activities demonstrates the degree to which the direct expenses of a given
function or segment are offset by program revenues. Direct expenses are those that are clearly
identifiable with a specific function or segment. Program revenues include (a) charges to
customers or applicants who purchase, use, or directly benefit from goods, services, or
privileges provided by a given function or segment and (b) grants and contributions that are
restricted to meeting the operational or capital requirements of a particular function or
segment. Taxes and other items not included among program revenues are reported instead as
general revenues.
Separate financial statements are provided for governmental funds, proprietary funds, and
fiduciary funds, even though the latter are excluded from the government -wide financial
COUNTY OF HAWAII
Notes to the Basic Financial Statements
June 30, 2014
statements. Major individual governmental funds and major individual enterprise funds are
reported as separate columns in the fund financial statements.
Activities in funds — The financial transactions of the County are recorded in individual funds.
Each fund is accounted for by providing a separate set of self -balancing accounts that
comprises its assets, deferred outflows of resources, liabilities, deferred inflows of resources,
reserves, fund equity, revenues and expenditures/expenses. The various funds are reported by
generic classification within the financial statements.
GASB Statement No. 34, Basic Financial Statements — and Management's Discussion and
Analysis —for State and Local Governments, sets forth minimum criteria (percentage of the
assets, deferred outflows of resources, liabilities, deferred inflows of resources, revenues or
expenditures/expenses of either fund category or the governmental and enterprise combined)
for the determination of major funds. The nonmajor funds are combined in a column in the
fund financial statements and detailed in the combining section.
The County reports the following major governmental funds:
General Fund — The general fund is the general operating fund of the County. It is used
to account for all activities of the general government, except those required to be
accounted for in other funds.
Capital Projects Fund — Used to account for the costs of constructing County capital
improvements financed with general obligation bond proceeds, federal and state grants,
and general and special revenue fund revenues. The capital projects fund is used to
account for financial resources to be used for the acquisition or construction of major
general government capital facilities and infrastructure (other than those financed by
proprietary funds and trust funds) when separate project centers are needed to control
costs.
The County reports the following major proprietary funds:
Kula `imano Elderly Housing Project — Used to account for the operation of a rental
housing project for low-income senior citizens located north of Hilo.
Ouli Ekahi Affordable Housing Project — Used to account for the operation of a 33 -unit
single-family affordable rental housing project located in Waimea.
The County reports the following fiduciary funds:
Private -Purpose Trust Funds -- Used to account for funds received from geothermal
developers to mitigate the effects of geothermal energy development. Also used to
account for investment income on funds received from import businesses at the port of
Hilo and the related expenditures to promote health and safety on the Island of Hawaii.
-50-
COUNTY OF HAWAII
Notes to the Basic Financial Statements
June 30, 2014
Agency Funds — Used to account for assets held by the County for other governmental
units and individuals. The agency funds are custodial in nature and do not involve
measurement of results of operations. The County has the following agency funds:
• State Weight Tax Fund
• Improvement District No. 18 Fund
• Improvement District No. 19 Fund
• Improvement District Revolving Fund
• Performance and Refundable Deposits Fund
• Payroll Clearance Fund
• Flexible Spending Account
• Lapsed Warrants Fund
• Non -Profit License Plates Fund
• Organ and Tissue Education Fund
• Business Improvement District 1-Kailua
Basis of Accounting
Basis of accounting refers to the period in which revenues and expenditures (or expenses) are
recognized in the accounts and reported in the basic financial statements. Basis of accounting
relates to the timing of the measurements made, regardless of the measurement focus applied.
The government -wide financial statements and the proprietary, fiduciary and component unit
fund financial statements are presented on an accrual basis of accounting. The governmental
funds in the fund financial statements are presented on a modified accrual basis.
Accrual Basis - Revenues are recognized when earned and expenses are recognized when the
related obligation is incurred.
Modified Accrual Basis - Revenues are recorded when susceptible to accrual (that is, both
measurable and available). "Measurable" means the amounts are determinable. "Available"
means the amounts are collectible within the current period or soon enough thereafter (one
year for intergovernmental revenues) to be used to pay liabilities of the current period.
Licenses and permits, charges for current services, fines and forfeitures, penalties and
miscellaneous revenues are recorded as revenues when received in cash because they are
generally not measurable until actually received. Real property taxes and State Revolving
Fund loan proceeds are considered available when collected.
In applying the susceptible to accrual concept to intergovernmental revenues, the legal and
contractual requirements of the numerous individual programs are used as guidance. There
are essentially two types of these revenues. In one, monies must be expended on the specific
purpose or project before any amounts will be paid to the County; therefore, revenues are
-SI-
COUNTY OF HAWAII
Notes to the Basic Financial Statements
June 30, 2014
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 combined balance sheet 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 of Certified Public Accountants) Pronouncements.
Encumbrances
The general, special revenue, and capital projects funds follow encumbrance accounting under
which purchase orders, contracts and other commitments are recorded as an obligation of fund
balance and provide authority for the carryover of appropriations to the subsequent year in
order to complete these transactions. Encumbrances outstanding at year-end are included in
the respective fund balance categories as appropriate and do not constitute expenditures or
liabilities because the commitments will be honored during the subsequent year.
Cash and Investments
Cash and cash equivalents include cash on hand, amounts in demand deposits and savings
accounts, and short-term investments with a maturity date of three months or less from the
date acquired by the County.
Investments consist of certificates of deposit, repurchase agreements, and securities with
original maturities exceeding three months. These include participating investment contracts
(U.S. government sponsored agency issues and negotiable certificates of deposit) as well as
nonparticipating investment contracts (time certificates of deposit and repurchase agreements).
Both categories of investments are stated at fair value (see Note 3). Valuations of investments
-52-
CK�l/ "Or•L6l :Is\+►i/SM
Notes to the Basic Financial Statements
June 30, 2014
in government sponsored enterprises such as Federal National Mortgage Association (Fannie
Mae) and Federal Home Loan Mortgage Corporation (Freddie Mac) are based on quoted
market rates. Valuations of certificates of deposits are based on cost, which approximate fair
value, as they almost invariably are held to maturity. Investments also consist of equity
securities in the fiduciary fund financial statements. These investments are stated at fair value
based on closing quoted prices.
Real Property Taxes
The County's real property taxes are levied on July 1 each year on assessed valuation as of
January 1. The taxes become a lien on the property assessed as of the levy date. Taxes are
due and payable in two equal annual installments on August 20 and February 20. Accordingly,
real property taxes receivable as of June 30 are delinquent. Each delinquent installment bears
interest at I% .per month and penalties of up to 10% of the amount due. Assessments are
based on 100% of estimated fair market values prior to the application of exemptions or
preferential assessments.
Inventories
Inventories consist of materials and supplies and are reported as expenditures at the time of
purchase (purchase method). Police and fire department inventories are stated using the first
in, first out (FIFO) method. Other inventories are stated at average cost.
Liquor Control
Section 281 of the Hawai` i Revised Statutes requires that liquor license revenues collected be
used only for costs and expenses directly relating to operational and administrative costs
actually incurred by the liquor commission collecting such fees. The unexpended fees at
June 30, 2014 of $745,865 are reflected as a restriction of general fund balance.
Capital Assets
Capital assets, which include property, plant, equipment, and infrastructure assets (e.g., roads,
bridges, curbs and gutters, streets and sidewalks, drainage systems, lighting systems, and
similar items), are reported in the applicable governmental or business -type activities columns
in the government -wide financial statements. Capital assets are defined by the County as
assets with an initial, individual cost of more than $1,000 and an estimated useful life in
excess of one year. Such assets are recorded at historical cost or estimated historical cost if
purchased or constructed. Donated capital assets are recorded at estimated fair market value at
the date of donation.
The costs of normal maintenance and repairs that do not add to the value of the asset or
materially extend the life of the asset are not capitalized.
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COUNTY OF HAWAII
Notes to the Basic Financial Statements
June 30, 2014
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
Infrastructure
Buildings and improvements
Ground and site improvements
Equipment
Easements
Years
20 to 100 years
50 to 100 years
20 to 50 years
5 to 40 years
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 one item that qualifies for reporting in this category. The County
reports the deferred loss on refunding 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.
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
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COUNTY OF HAWAII
Notes to the Basic Financial Statements
June 30, 2014
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 Ieave 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, 2014 totaled $69,787,000 for the primary government.
Leases
Leases transferring substantially all of the risks and benefits of ownership are recorded as
capital leases; other leases are operating leases (see Note 8). Capital leases are recorded as
capital asset additions at their estimated fair value at the inception of the lease and the related
present value of the future minimum lease obligations is recorded as long-term debt.
Operating lease expenditures and expenses are recognized when the lease obligation is paid.
Retirement Plan Contributions
The County's contribution to the Employees' Retirement System of the ,State of Hawaii
includes the normal cost plus the level annual payment required to amortize the unfunded
actuarial accrued liability. The County's policy is to fund its required contribution annually
(see Note 13).
Operating Revenues and Expenses
Revenues and expenses are distinguished between operating and nonoperating items for the
proprietary funds. Operating revenues generally result from providing services in connection
with the proprietary funds' principal ongoing operations. The principal operating revenues of
the proprietary funds are fees charged to residents for rent and rental subsidies received from
the federal government.
Operating expenses include the costs associated with providing housing for tenants, such as
utilities, lease rent, and maintenance and repairs; administrative expenses; and depreciation on
capital assets. All revenues and expenses not meeting these definitions are reported as
nonoperating revenues and expenses.
-55-
COUNTY OF HAWAII
Notes to the Basic Financial Statements
June 30, 2014
Use of Estimates
The preparation of the basic financial statements in conformity with GAAP requires
management to make estimates and assumptions that affect the reported amounts of assets,
deferred outflows of resources, liabilities, and deferred inflows of resources, as well as
disclosure of contingent assets and liabilities at the date of the financial statements, and the
reported amounts of revenues, expenditures, and other financing sources and uses during the
reporting period. Actual results could differ from those estimates.
Fund Balances
When both restricted and unrestricted fund balances are available for use, it is the County's
policy to use restricted fund balance first, then unrestricted fund balance. Furthermore,
committed fund balances are reduced first, followed by assigned amounts, and then
unassigned amounts when expenditures are incurred for purposes for which amounts in any of
those unrestricted fund balance classifications can be used.
The County reports the following classifications:
Nonspendable Fund Balance — Nonspendable fund balances are amounts that cannot be
spent because they are either not in spendable form, or, for legal or contractual reasons,
must be kept intact. The County has inventory included in their nonspendable fund
balance.
Restricted Fund Balance — Constraints placed on the use of these resources are either
externally imposed by creditors (such as through debt covenants), grantors, contributors
or other governments or are imposed by law (under the Hawaii 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
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COUNTY OF HAWAT'l
Notes to the Basic Financial Statements
June 30, 2014
allotment requests and his approval of the current year's fund balance amount to be
included in the submittal for next year's annual budget ordinance.
Unassigned Fund Balance — This is the residual classification of the General Fund,
Net Position
When both restricted and unrestricted net position are available for use, it is the County's
policy to use restricted net position first, and then unrestricted net position.
New Accounting Pronouncements
In March 2012, GASB issued Statement No. 65, Items Previously Reported as Assets and
Liabilities. The objective of this Statement is to clarify the appropriate reporting of deferred
outflows and deferred inflows of resources to ensure consistency in financial reporting. The
provisions for this Statement are effective for the County for periods beginning after
December 15, 2012. The County implemented this Statement in the fiscal year ended June 30,
2014.
In March 2012, GASB issued Statement No. 66, Technical Corrections 2012- An
Amendment of GASB Statements No. 10 and No. 62. The objective of this Statement is to
enhance usefulness of financial reports by resolving conflicting accounting and financial
reporting guidance that could diminish the consistency of financial reporting. The provisions
for this Statement are effective for the County for periods beginning after December 15, 2012
and did not have an impact on the County's financials for the fiscal year ended June 30, 2014.
In June 2012, GASB issued Statement No. 68, Accounting and Financial Reporting for
Pensions — An Amendment of GASB Statement No. 27. The Statement revises and establishes
new financial reporting requirements for most governments that provide their employees with
pension benefits. The requirements for this Statement are effective for the County for periods
beginning after June 15, 2014. The County has not yet determined the effect this Statement
will have on its financial statements.
In January 2013, GASB issued Statement No. 69, Government Combinations and Disposals of
Government Operations. The objective of this Statement is to improve financial reporting by
addressing accounting and financial reporting for government combinations and disposals of
government operations. The requirements for this Statement are effective for the County for
periods beginning after December 15, 2013. The County has not yet determined the effect this
Statement will have on its financial statements.
In April 2013, GASB issued Statement No. 70, Accounting and Financial Reporting for
Nonexchange Financial Guarantees. The requirements of this Statement will enhance
comparability of financial statements among governments by requiring consistent reporting by
those governments that extend nonexchange financial guarantees and by those governments
57-
COUNTY OF HAWAII
Notes to the Basic Financial Statements
June 30, 2014
that receive nonexchange financial guarantees. The requirements for this Statement are
effective for the County for periods beginning after June 15, 2013 and did not have an impact
on the County's financials for the year ending June 30, 2014.
In November 2013, GASB issued Statement No. 71, Pension Transition for Contributions
Made Subsequent to the Measurement Date — An Amendment of GASB Statement No. 68. The
objective of this Statement is to improve accounting and financial reporting by addressing an
issue in Statement No. 68, Accounting and Financial Reporting for Pensions, concerning
transition provisions related to certain pension contributions made to defined benefit pension
plans prior to implementation of that Statement by employers and nonemployer contributing
entities. The requirements for this Statement are effective for the County for periods
beginning after June 15, 2014. The County has not yet determined the effect this Statement
will have on its financial statements.
Accounting Change
The County implemented GASB Statement No. 65, Items Previously Reported as Assets and
Liabilities, and retroactively changed its method of accounting for debt issuance costs that
were previously capitalized and amortized over the life of the debt and are now recognized as
an expense in the period incurred. As a result, the County's net position as of June 30, 2013
was restated and decreased by $1,714,808. The effect on this change on the Statement of
Activities was to increase the annual amortization related to bond issuance premiums by
$124,533.
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.
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COUNTY OF HAWAII
Notes to the Basic Financial Statements
June 30, 2014
The County Council conducts public hearings on the proposed operating and capital
budgets after March 1 but prior to the first reading on the budget bills, which must be
after May 5.
On or before June 30, the County Council adopts the budgets. The legal level of
budgetary control is the department level because the Mayor can transfer funds from any
unencumbered appropriation to another within a department or agency without County
Council approval. During the year, the budget may be amended by action of the County
Council, except for appropriations required by law and appropriations for debt service,
which may not be decreased or deleted. Supplemental appropriations were made during
the 2013-2014 fiscal year to recognize revenue from sources not anticipated at the time of
the original budget and to establish the authorization for such funds to be expended.
Such supplemental appropriations totaled $7.3 million in the general fund and $4.7
million in the special revenue funds. Legally adopted budgets include the General Fund,
Highway Fund, Sewer Fund, Solid Waste Fund, Cemetery Fund, Parking Meter Fund,
Vehicle Disposal Fund, Bikeway Fund, Workforce Investment Act Fund, Golf Course
Fund, Geothermal Relocation and Community Benefits Fund, Beautification Fund,
Hawaii County Housing Agency Fund and Park Dedication Fund.
Appropriations for the operating budget lapse at the end of the fiscal year to the extent
that they have not been expended or encumbered. Appropriations for capital
expenditures that are not encumbered lapse at the end of two fiscal years following the
fiscal year that the appropriation was made.
Formal budgetary integration is employed as a management control device during the
year for the General Fund, special revenue funds, and Capital Projects Fund. Formal
budgetary integration is not employed for debt service funds because effective budgetary
control is alternatively achieved through general obligation bond indenture provisions.
The accompanying statement of revenues, expenditures and changes in fund balances —
budget and actual (budgetary basis) for the General Fund presents a comparison of the
legally adopted budget with actual data on a budgetary basis. Accounting principles
applied for purposes of developing data on a budgetary basis differ significantly from
those used to present financial statements in conformity with GAAP. On the budgetary
basis, intergovernmental revenues are recognized when awarded by the granting agency,
encumbrances and unexpended allotments are treated as expenditures, accounts payable
are not accrued, and all leases are treated as operating leases. In preparing the financial
statements on a GAAP basis, accounts payable are accrued and treated as a reduction of
encumbrances for balance sheet presentation.
-59-
COUNTY OF HAWAPI
Notes to the Basic Financial Statements
June 30, 2014
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, 2014:
Ending fund balance — GAAP basis $55,547,059
Encumbrance adjustments:
Beginning encumbrances and unexpended allotments 3,182,390
Ending encumbrances and unexpended allotments (5,954,985)
Other adjustments 88,234
Ending fund balance — Non -GAAP budgetary basis x,862,648
CASH AND INVESTMENTS
The Director of Finance is responsible for the safekeeping of all monies paid to the County.
The Director of Finance invests any monies of the County which in the Director's judgment
are in excess of the amounts necessary for meeting the day-to-day operating needs of the
County. Under Section 46-50 of the Hawaii Revised Statutes, legally authorized investments
include obligations of or guaranteed by the U.S. government, obligations of the State,
federally insured savings and checking accounts, time certificates of deposit, and repurchase
agreements with federally insured financial institutions.
Cash
The County maintains a number of checking and savings accounts for various funds and with
various financial institutions. Bank deposits are under the custody of the Director of Finance.
For financial statement reporting purposes, cash and short-term investments consist of cash
and money market accounts. Cash and short-term investments also include repurchase
agreements, certificates of deposit, and government sponsored securities with original
maturities of three months or less.
The carrying amount of the County's deposits (cash, time certificates of deposit, and money
market accounts) as of June 30, 2014 was $163,581,324 for the primary government and
$5,346,250 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 $175,980,325 at June 30, 2014. Of that amount, $175,685,221
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 $295,104
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
lsill1
COUNTY OF HAWAII
Notes to the Basic Financial Statements
June 30, 2014
accordance with State statutes, that the depository banks pledge collateral based on the
available bank balances to limit its exposure to custodial credit risk. All securities pledged as
collateral are held by the County's fiscal agents in the name of the County. The County also
requires that no more than 60% of the County's total funds available for deposit may be
deposited in any one financial institution, in accordance with State statutes.
Investments
The County holds investments both for its own benefit and on behalf of some of the fiduciary
funds. The County's investments of funds not required for immediate payments are
predominately comprised of government sponsored securities (equivalent to the rating in U.S.
Treasuries), repurchase agreements and certificates of deposit, while the fiduciary funds also
hold equity securities.
The County's investments and maturities at June 30, 2014 are as follows:
Maturity (in years)
Fair Value Less than 1 1 —5
Investments — Primary Government:
Certificates of deposit $ 66,282,958 $ 63,632,761 $ 2,650,197
Government sponsored securities 39,365,744 -- 39,365,744
$ 105,x,70263.632.761 $42,015,941
Investments — Private -Purpose Trusts:
Government sponsored securities 1.775.463 $ -- 1.775.463
Equity securities 1.272.7
Investments — Agency Funds:
Government sponsored securities $ 193.238 $ $ 193,238
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
and repurchase agreements. These investments are either insured by the FDIC, secured by
collateral or carry a credit rating equivalent to U.S. Treasuries.
Custodial Risk: Custodial risk is the risk of loss from the failure of the counterparty, which is
defined as any entity that obtained an investment on behalf of the County. All of the County's
deposits including repurchase agreements are secured by collateral which is kept by a third
-61-
COUNTY OF HAWAII
Notes to the Basic Financial Statements
June 30, 2014
parry 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, 2014,
investments were distributed as follows: Central Pacific Bank, 19.1%; FTN Financial, 16.2%;
Multi Bank Securities, 17.0%; Stifel Nicolaus, 9.5%; First Hawaiian Bank, 25.6%; Raymond
James, 4.2%; Hawai`i National Bank, 4.2%; Territorial Savings Bank, 4.2%.
Restricted Cash and Cash Equivalents and Investments
Cash and cash equivalents and investments classified as restricted assets for the primary
government at June 30, 2014 amounted to $116,394,875.
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 $72,260,275 at June 30, 2014.
Cash and investments in the Bond Redemption Fund and the Interest Fund are restricted to
debt service related payments and amounted to $23,868,178.
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
$14,563,839,
The restricted cash 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 $745,865 and $4,878,422, 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 $10,864 and $29,470, respectively, at June 30, 2014.
An operating reserve fund was established by the Ouli Ekahi Affordable Housing Project
pursuant to an agreement with the Hawaii Housing Finance and Development Corporation,
who are the holders of the project's note. This restricted reserve amounted to $37,962 at June
30, 2014.
S6M
COUNTY OF HAWAII
Notes to the Basic Financial Statements
June 30, 2014
4. RECEIVABLES
Receivables as of June 30, 2014, 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:
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, the County also issued $448,669 in general obligation bonds on behalf of
Improvement District No. 19, an agency fund. At June 30, 2014, the outstanding balance for
both Improvement Districts of $1,730,599 is reflected in the government -wide statement of
net position as a receivable (see Note 10).
Business -type activities:
Capital
Other
Funds
General
Projects
Governmental
$9,624
Other
Fund
Fund
Funds
Total
Real property taxes
$22,992,843
$ --
$ --
$22,992,843
Accounts receivable:
Sewer
--
--
2,126,220
2,126,220
Solid waste
-
--
1,768,764
1,768,764
Capital projects
--
1,160,441
--
1,160,441
Intergovernmental
1973,218
3,173,661
586,915
23,533,794
Gross receivables
42,766,061
4,334,102
4,481,899
51,582,062
Less: allowance for
uncollectibles
(947,568)
-(1,211,956)
(2,159,524)
Net total receivables
41.818.493
4 334 10
2 4
S4%422.538
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, the County also issued $448,669 in general obligation bonds on behalf of
Improvement District No. 19, an agency fund. At June 30, 2014, the outstanding balance for
both Improvement Districts of $1,730,599 is reflected in the government -wide statement of
net position as a receivable (see Note 10).
Business -type activities:
Enterprise
Funds
Accounts receivable:
Rent
$9,624
Other
325
Gross receivables
9,949
Less: allowance for
uncollectibles
(4,172)
Net total receivables
$
-63 -
COUNTY OF HAWAII
Notes to the Basic Financial Statements
June 30, 2014
5. INTERFUND RECEIVABLES AND PAYABLES
Interfund receivables and payables consist of the following at June 30, 2014:
Receivable Fund
General fund
Capital projects fund
Other governmental funds
Total
Other governmental funds
Payable Fund
Amount
Capital projects fund
$ 408,593
Other governmental funds
297,000
705,593
General fund
1,388,999
Other governmental funds
485,283
1,874,282
General fund
69,030
Capital projects fund
456
Other governmental funds
44
69,530
2 649 4Q5
Enterprise funds 1 350
The above interfund balances result from the time lag between the dates that interfund goods
and services are provided or reimbursable expenditures occur, transactions are recorded, and
payment between funds are made.
Transfers for the fiscal year ended June 30, 2014 consisted of the following:
Transfers out:
Other
General Governmental
Fund Funds Total
Transfers in:
Capital Projects Fund $ 158,343 . $5,704,704 $ 5,863,047
Other governmental funds 55,374,541 -- 55,374,541
55.532.884$5,704,704 b 1.237.588
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.
MA
COUNTY OF HAWAII
Notes to the Basic Financial Statements
June 30, 2014
6. CAPITAL ASSETS
Capital asset activity for the year ended June 30, 2014 for the County was as follows:
Balance Balance
July 1, Retirements/ June 30,
2013 Additions Transfers 2014
Governmental activities:
Capital assets not being depreciated:
Land and
(88,559,523)
improvements
$ 163,565,168
Easements
3,427,578
Construction work in
(439,300)
progress
42,477,332
Total capital assets not
being depreciated
209,470,078
Capital assets being depreciated:
Buildings and
improvements
556,961,770
Equipment
125,084,893
Easements
43 9, 300
Infrastructure
476,037
Total capital assets
being depreciated
1,159,482,000
Less accumulated depreciation for:
Buildings and
improvements
(80,202,333)
Equipment
(76,499,584)
Easements
(366,084)
Infrastructure
(202,026,722)
Total accumulated
depreciation
(359,094,723)
Total capital assets
being depreciated,
net
800,387,277
$ 25,801,039 $ --
375,598 --
33,30I,625 (38,069,039)
59,478,262 (38,069,039)
$ 189,366,207
3,803,176
37,709,918
230,879,301
30,192,664 (301,818) 586,852,616
7,994,004 (1,980,838) 131,098,059
-- -- 439,300
19.746,051 -- 496.742.088
57,932,719 (2,282,656) 1,215,132,063
(8,386,395)
29,205
(88,559,523)
(8,094,697)
1,849,57I
(82,744,710)
(73,216)
--
(439,300)
(19,994,267)
-
(222,020,989)
(36,548,575)1,878,776
(393,764,522)
21,384,144
(403,880)
821,367,541
Governmental
activities capital
assets, net 5 80.862.406 ($38.472.919) 1.052246.842
-65-
COUNTY OF HAWAII
Notes to the Basic Financial Statements
June 30, 2014
July 1, Retirements/ June 30,
2013 Additions Transfers 2014
Business -type activities:
Capital assets not being depreciated:
Land 753,87 $ - $`- 753,877
Capital assets being depreciated:
Buildings and
improvements 1,593,187 -- -- 1,593,187
Ground and site
improvements 272,850 -- -- 272,850
Equipment 117,781 15,878 (3,478) 130,181
Total capital assets
being depreciated 1,983,818 15,878 (3,478) 1.996,218
Less accumulated depreciation for:
Buildings and
improvements (838,512) (36,044) (874,556)
Ground and site
improvements (197,570) (4,347) -- (20I,917)
Equipment (89,725) (10,226) _ 3,478 (96,473)
Total accumulated
depreciation (1,125,807) (50,617) 3,478 (1,172,946)
Total capital assets
being depreciated,
net 858,011 (34,739) -- 823,272
Business -type
activities capital
assets, net 1 611 88 (34.739) $ I.577.149
In fiscal year 2013, the County received $12.5 million as a partial settlement from a developer
that did not complete the required infrastructure for their development. The funds are to be
used by the County to construct the roadway that was initially required of the developer. As
of June 30, 2014, approximately $1.4 million was expended and capitalized.
The County is currently managing and assessing the effects of the lava flow from Kilauea
Volcano commonly referred to as the "June 27" lava flow. It is probable that subsequent to
fiscal year end, the path of the lava flow will cross the County road (Pahoa Village Road).
Estimates of any potential impairment to the value of Pahoa Village Road and any impact to
the basic financial statements cannot be made at this time. The County has made
COUNTY OF HAWAII
Notes to the Basic Financial Statements
June 30, 2014
arrangements and taken necessary steps to provide alternate travel routes for the citizens
impacted by the potential closure of the road.
Depreciation expense was charged to functionslprograms of the primary government as
follows:
Governmental activities:
Capital
General government
$ 2,790,708
Public safety
3,630,090
Highways and streets
21,452,599
Sanitation
4,963,296
Health, education and welfare
1,883,519
Culture and recreation
1,828.363
Total depreciation expense — governmental activities
36.548.575
Business -type activities:
--
Kula`imano Elderly Housing Project
$35,313
Ouli Ekahi Affordable Housing Project
15,304
Total depreciation expense — business -type activities
50 61
7. DEFERRED INFLOW OF RESOURCES:
.Deferred inflow of resources consists of the following at June 30, 2014:
Governmental activities:
Real property taxes
Liquor control revenue
Sewer revenue
Housing revenue
Solid waste revenue
Sale of real estate
Total presented in
fund financial
statements
Less adjustments for
accrual of revenues
Total government -
wide financial
statements
(22,045,275) (86,900) (2,724.970) (25,057,145)
797.272 $ -- $ -- $ 797,272
liJFJ2
Capital
Other
Total
General
Projects
Governmental
Governmental
Fund
Fund
Funds
Funds
$ 22,655,517
$ --
$ --
$ 22,655,517
187,030
--
--
187,030
--
--
1,306,659
1,306,659
--
--
41,942
41,942
--
--
1,376,369
1,376,369
--
286,,9.00
--
286,900
22,842,547
286,900
2,724,970
25,854,417
(22,045,275) (86,900) (2,724.970) (25,057,145)
797.272 $ -- $ -- $ 797,272
liJFJ2
Notes to the Basic Financial Statements
June 30, 2014
S. LEASES
The County leases machinery and equipment under noncancellable leases expiring at various
dates through August 2018. These capital leases are financed from the resources of various
funds.
The estimated value of the leased machinery and equipment at the inception of the capital
leases and accumulated depreciation, amounting to $5,868,794 and $2,106,939, respectively,
and the related present value of the remaining obligations under the capital leases amounting
to $2,308,241 at June 30, 2014 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 April 2032. Expenditures for such operating leases were
$1,767,009 for the fiscal year ended June 30, 2014.
The future minimum payments under capital and operating leases at June 30, 2014 are as
follows:
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, 2014, the County recognized a liability of
$14,431,000, based on the use of 98% of the estimated capacity of the landfill. During the
-68-
Capital
Operating
Leases
Leases
Year Ending June 30:
2015
$1,108,953
$1,498,220
2016
722,519
1,302,110
2017
408,484
971,741
.2018
138,560
906,956
2019
521
306,751
2020-2024
--
1,070,047
2025-2029
--
116,423
2030-2032
1,266
Total minimum lease payments
2,379,037
14
Less amount representing
interest
(70,796)
Obligations under capital leases
2 308
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, 2014, the County recognized a liability of
$14,431,000, based on the use of 98% of the estimated capacity of the landfill. During the
-68-
Notes to the Basic Financial Statements
June 30, 2014
fiscal year ended June 30, 2014, there were no expenditures incurred for the closure of the
landfill. The remaining $299,000 in estimated cost of closure and postclosure care will be
recognized as the remaining estimated capacity is used. The estimated remaining useful life
of the landfill is approximately one year. These amounts are based on what it would cost to
perform the required closure and postclosure care in 2014. 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.
Nealakehe In October 1993, the County closed its Kealakehe landfill in Kona. Under state
and federal requirements, the County would have to monitor and maintain this site for ten
years from the closure date. However, the County anticipates monitoring and maintaining the
site for thirty years because there is presently a subterranean fire which requires active
management. The estimated cost of closure and postclosure is $16,550,000, based on what it
would cost to perform the required closure and postclosure care in 2014. Actual costs may be
higher due to inflation, changes in technology, or changes in regulations. Through
June 30, 2014, $8,268,000 was spent on closure and postclosure care of the landfill. The
remaining estimated liability of $8,282,000 is included in the government -wide statement of
net position. During the year ended June 30, 2014, $242,000 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 Hawaii. 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 2014, 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
COUNTY OF HAWAII
Notes to the Basic Financial Statements
June 30, 2014
component. Local governments are required to satisfy each of the three components to pass
the annual test. Management believes that the County has satisfied each of the components of
the local government financial assurance requirements.
In fiscal year 2013, the County closed its two metal salvage facilities located near the Hilo and
Kealakehe Transfer Stations. The anticipated liability ($8,770,000) for the remediation costs
associated with these closures is included in the County's financial statements.
10. LONG-TERM DEBT
General Obligation Bonds
The County issues general obligation bonds to provide funds for the acquisition and
construction of major capital facilities. These bonds have been issued by the County for the
primary government, component unit activities (see Note 14) and an improvement district.
The following is a summary of general obligation bond transactions reported in the
governmental activities section of the government -wide statement of net position for the
County for the fiscal year ended June 30, 2014:
Bonds
Issue
Bond Balance
Bond Balance
Due Within
Authorized
Amount
July 1, 2013 Issues
Retirements
June 30,201
One Year
2003 Series A
$ 36,310,000
$ 1,795,000 $
($ 1,795,000)
S
$
2004 Series A
30,000,000
2,890,000
(1,410,000)
1,480,000
1,480,000
2004 Ref Series B
19,545,000
6,815,000 --
(2,160,000)
4,655,000
2,270,000
2004 Ref Series C
5,050,140
1,139,164
(558,052)
581,112
581,112
2006 Series A
25,000,000
19,825,000 --
(1,022,500)
18,802,500
1,072,500
2007 Series A
85,000,000
70,370,000
(3,360,000)
67,010,000
3,505,000
2007 Series B
20,820,000
13,545,000 -
(2,000,000)
11,545,000
2,105,000
2007 Series C
10,787,388
9,163,410
(860,904)
8,302,506
896,775
2008 Series A
50,000,000
44,790,000
(1,885,000)
42,905,000
1,970,000
2010 Series A
26,493,750
26,493,750
26,493,750
1,162,500
2010 Series B
18,506,250
18,506,250
18,506,250
798,750
2013 Series A
58,509,892
58,509,892
(1,660,929)
56,848,963
1,839,813
2013 Series B
21,010,000
21,010,000
21,010,000
1,715,000
2013 Series C
18,470,000
18,470,000
-
18,470,000
2013 PI Series A
448.669
448,669
448,669
425,951,089
313,322,466 448,669
(16,712,385)
297,058,750
19,396,450
Add unamortized
premium
27.643,628
20,942,617 1,714,80615(
77.653)
21,079.770
1,505,152
,$453,594,717
$334,265,0$3 $ 1163,475
($18290.0381
318.138.520
2 O1
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.
-70-
COUNTY OF HAWAII
Notes to the Basic Financial Statements
June 30, 2014
General obligation bonds payable reported in the governmental activities section on the
government -wide statement of net position at June 30, 2014 are comprised of the following
individual issues:
Public improvement (PI) and/or refunding bonds:
Governmental Activities
2004 Series A at 3.0% to 5.25%, due through 2014
$ 1,480,000
2004 Refunding Series B at 3.5°% to 5.0%, due through 2015
4,655,000
2004 Refunding Series C at 2.0% to 3.7%, due through 2014
581,112
2006 Series A at 4.0% to 5.0%, due through 2026
18,802,500
2007 Series A at 4.0% to 5.0%, due through 2027
67,010,000
2007 Series B at 3.75% to 5.0%, due through 2018
11,545,000
2007 Series C at 4.0% to 5.0%, due through 2021
8,302,506
2008 Series A at 4.0% to 6.0%, due through 2028
42,905,000
2010 Series A at 4.0% to 5.0%, due through 2030
26,493,750
2010 Series B at 3.335% to 6.1%, due through 2030
18,506,250
2013 Series A at 2.0% to 5.0%, due through 2033
56,848,963
2013 Series B at 3.0% to 5.0%, due through 2024
21,010,000
2013 Series C at 4.0% to 5.0%, due through 2025
18,470,000
2013 PI Series A at 2.75%, due through 2048
448,669
Total general obligation bonds payable
Annual debt service requirements to maturity for the above general obligation bonds are as
follows:
-71 -
Governmental Activities
Fiscal year ending June 30:
Principal
Interest
2015
$ 19,396,450
$ 13,571,316
2016
19,649,001
12,688,668
2017
18,060,827
11,823,626
2018
18,945,749
10,930,196
2019
19,866,529
10,049,055
2020 —2024
96,638,779
37,422,695
2025 —2029
83,209,607
15,416,306
2030 —2034
21,042,917
2,011,286
2035 —2039
72,059
29,376
2040 —2044
82,527
18,764
2045 —2049
X305,
6,613
Total
$297,058,750
SIL106Z901.
-71 -
COUNTY OF HAWAII
Notes to the Basic Financial Statements
June 30, 2014
Bond Premiums
At June 30, 2014, total unamortized bond premiums were $21,079,772, 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 $357.6 million in general obligation bonds
to finance specified capital improvement projects. At June 30, 2014, $213.7 million was not
yet issued.
Subsequent Events On October 16, 2014, the County issued a general obligation bond
anticipation note (BAN) in the total amount of $10,000,000. These notes were issued to
provide funds for the acquisition and construction of major capital facilities and bear
interest at 1.03% and had an original maturity date of July 8, 2015.
State Revolving Fund Loans
The County has obtained loans to assist in financing mandated wastewater projects from the
State Water Pollution Control Revolving Fund (SRF). The purpose of this revolving fund is to
provide low-interest, long-term loans and other financial assistance to the four counties in the
state to finance construction of wastewater projects. The County has ten projects approved for
funding with these loans.
The schedule below shows the County's SRF transactions for the fiscal year ended June 30,
2014:
Loans
Approved
Loan Balance
Loan Balance
Due Within
Authorized
Amount
July 1, 2013
Additions
Retirements
June 30, 2014
One Year
Waiakea Mill
$ 1,300,000
$ 82,003
$
{$ 82,003)
$
$
Kealakehe
1,300,071
81,854
(81,854)
Cesspool
Conversion
8,363,773
5,964,174
--
(428,156)
5,536,018
430,299
Honoka`aLCC
4,153,158
3,243,528
66,246
(87,987)
3,221,787
176,618
Queen
Lili`uokalani
9,421,732
8,189,382
(238,239)
7,951,143
478,608
Kalaniana`ole
8.621,409
3,321,342
3.006.331
(107.983)
6219.690
290.900
$33,160,143
2 882 2
$ 3.072.577
!$1_D26.2221
$22.928.638
1.376.425
The remaining loans bear interest at 0.50% exclusive of a 0.25% loan fee, and require
payments through fiscal year 2033.
-72-
COUNTY OF HAWAII
Notes to the Basic Financial Statements
June 30, 2014
Debt service to maturity for disbursements to date on these projects are as follows:
Other General Long -Term Obligations
The following is a summary of other general long-term obligations transactions for the fiscal
year ended June 30, 2014:
Governmental activities:
Compensated absences
Claims and judgments
(see Note 12)
Capital Ieases
(see Note 8)
Landfill costs payable
(see Note 9)
Pollution remediation
(see Note 9)
Other post employment
benefit obligation
(see Note 13)
Total
Balance
Governmental Activities
Fiscal year ending June 30:
Principal
Interest
2015
$ 1,376,425
$ 166,499
2016
1,406,466
159,046
2017
1,413,590
148,402
2018
1,420,628
137,824
2019
1,427,740
127,156
2020 —2024
7,246,617
473,900
2025 —2029
6,280,220
207,652
2030-2033
2,356,952
31,353
Total
%22,928,638
1.451.83
Other General Long -Term Obligations
The following is a summary of other general long-term obligations transactions for the fiscal
year ended June 30, 2014:
Governmental activities:
Compensated absences
Claims and judgments
(see Note 12)
Capital Ieases
(see Note 8)
Landfill costs payable
(see Note 9)
Pollution remediation
(see Note 9)
Other post employment
benefit obligation
(see Note 13)
Total
Balance
July 1, 2013
Additions*
Payments
$32,165,110
$13,033,788
($11,213,454)
12,404,462
4,877,501
(3,558,070)
3,632,420
13,817
(1,337,996)
21,985,000
970,302
(242,302)
8,770,000
Balance Due Within
June 30, 2014 One Year
$33,985,444 $8,342,581
13,723,893 2,915,021
2,308,241 1,066,531
22,713,000 224,478
8,770,000 --
38160,562 30,841,000 (17,452,906) 51,548,596 -
1 UJ47.494 $133,049,174 $12-54S,611
* Net of new claims liability and existing claims resolved at less than previous estimate.
Historically, the County's general fund has been used to liquidate the majority of other long-
term liabilities, including the other post employment benefit obligation and the compensated
absences since most employees are paid by the general fund.
-73-
COUNTY OF HAWAII
Notes to the Basic Financial Statements
June 30, 2014
Fund Balances - Debt Service Funds
The fund balance in the debt service funds at June 30, 2014 includes $21,120,840, which is
reserved for principal payments on general obligation bonds and $2,455,408, 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, 2014:
Balance at July 1, 2013
$835,108
Deductions
(24,071)
Balance at June 30, 2014
811,037
Less current portion
(50,187)
Note payable, net of
32,999
current portion
60
The following is a summary of the annual maturities for the enterprise fund bond payable:
Fiscal year ending June 30
2015
2016
2017
2018
2019
2020 —2024
2025 —2026
Business -type Activities
Pr neipal
Interest
$ 50,187
$ 42,317
53,043
39,381
56,061
36,278
59,251
32,999
62,622
29,533
370,795
88,362
159,078
4,465
Total $273,335
-74-
COUNTY OF HAWAII
Notes to the Basic Financial Statements
June 30, 2014
On October 29, 2012, the County assumed the loan of its lessee Oufi EIcahi 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, 2014:
Balance at July 1, 2013
$461,525
Deductions
(64,262)
Balance at June 30, 2014
397,263
Less current portion
(34,225)
Loan payable, net of
current portion
3 8
The following is a summary of the annual maturities for the enterprise fund loan payable:
Fiscal year ending June 30
2015
2016
2017
2018
2019
2020 —2024
2025 —2029
2030 —2034
2035 —2037
Total
Special Assessment Bonds
Business -type Activities
Principal
$ 34,225
16,500
16,500
16,500
16,500
82,500
82,500
82,500
49,538
$397,263
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 4375% to 4.75°/x. Total
general obligation bonds payable included in the government -wide statement of net position
were $1,281,930 at June 30, 2014.
-75-
COUNTY OF HAWAII
Notes to the Basic Financial Statements
June 30, 2014
The County has also issued general obligation bonds on behalf of Improvement District No. 19
for water improvements (see Note 4). The Improvement District is responsible for the payment
of the debt service on these bonds, but the County remains liable because they are general
obligations of the County. The improvement district's share of the refunded bonds matures
annually through 2048 and bear interest at the previous rates of 2,75%. Total general
obligation bonds payable included in the government -wide statement of net position were
$448,669 at June 30, 2014.
The bonds are secured by a first lien on the land benefited by the improvements, and are to be
repaid from the annual assessments Ievied 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,
CoastviewlWonderview Water Improvements, and No. 19, Kona Ocean View Properties
Subdivision for the fiscal year ended June 30, 2014:
Balance at July 1, 2013 $1,345,945
Additions 448,669
Deductions (64,015)
Balance at June 30, 2014 1 30
The following is a summary of the annual maturities for the improvement district general
obligation bonds:
Fiscal year ending June 30:
Principal
Interest
2015
$ 66,993
$ 70,457
2016
78,258
67,155
2017
81,744
63,589
2018
85,389
59,862
2019
89,199
55,964
2020 —2024
509,495
214,880
2025 —2029
507,713
90,100
2030 —2034
62,917
38,641
2035 —2039
72,059
29,376
2040 —2044
82,527
18,764
2045 —2049
94,305
6,613
Total $715,4
-76-
COUNTY OF HAWAII
Notes to the Basic Financial Statements
June 30, 2014
11. COMMITMENTS AND CONTINGENCIES
Contractual commitments — Contractual commitments for capital projects, expenses, and
supplies at June 30, 2014, 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 $ 5,954,985
Capital projects fund 73,778,294
Nonmajor funds 8,427,844
$88.161.123
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 affect on the financial condition
of the, County.
ADA compliance — The County entered into two stipulated agreements (or Consent Decrees)
approved by the federal district court judges to implement provisions of the Americans with
Disabilities Act ("ADA"). With respect to the first stipulated agreement, filed on October 2,
1997, relating to curb cuts, the County, with the help of a consultant, surveyed 669
intersections, then ranked them in order of priority. A transition plan, along with a funding
commitment, was approved by the County Council. The total cost of all curb cuts was
estimated to be $6.2 million. The cost of the first phase of the plan was $3 million, to be used
in high priority areas such as government facilities, schools, and hospitals. The remaining
cost was intended to cover curb cuts at parks and in low-density single family residential
areas. All corrective action was to be completed by July 2005, with an estimated 682 ramps
to be completed. Funding allocated for this effort is $10.6 million. Since the proposed
timetable proved to be too ambitious, the parties amended the agreement to require
contracting by July 2005, rather than completion by that date. Pursuant to the April 2005
Stipulation of the Parties and Order of the Court, all curb ramps for 2005 and most curb ramps
for 2004 were deferred. In the first phase, construction of curb ramps commenced in 2000
and ended in 2004, whereby 229 curb ramps were completed. In the second phase, 153
proposed curb ramps were deferred and 161 curb ramps were to be constructed. As of May
21, 2008, there were approximately 204 curb ramps (which included at Ieast 151 of the 161
curb ramps that were required by the amended transition plan) installed in Hilo, Waikoloa and
-77
COUNTY OF HAWAII
Notes to the Basic Financial Statements
June 30, 2014
Kona at a total cost of close to $4.8 million. In addition, the Department of Public Works has
developed and advertised Procedures for Requesting New Curb Ramps or Modifications to
Existing Curb Ramps ("Curb Ramp Request") within the County Streets, and the Curb Ramp
Request is available on the Department of Public Works web page. On September 20, 2012,
the close-out order of the consent decree was filed, thus dismissing the curb ramp case with
prejudice, and a copy of "County of Hawai`i's Accessibility Design Guidelines and General
Policies and Procedures, Curb Ramps within Public Rights -of -Way" (June 2012) was attached
as an exhibit to that order.
The second stipulated agreement, filed on June 4, 1998, relates to the Department of Parks and
Recreation (Parks). The agreement required Parks to establish practices, policies and
procedures regarding its programs, and prepare a transition plan by the middle of the year
2000. The self-evaluation and transition plan for programs, practices and procedures has been
completed and approved by the County Council. The cost impact of implementation is not
material because the necessary modifications are primarily procedural. The second part of
this stipulated agreement is the reevaluation of all County facilities, which was completed and
accepted by the County Council on June 30, 2000. Approximately 240 County facilities were
surveyed as part of this effort. The tentative completion date of all necessary repairs and
renovations was 12 years from the date the County Council accepted the self-evaluation. The
initial (1997-2000) estimated cost of the facilities repairs was $15.1 million, which would
have been spent over the 12 -year period. Funding allocated initially for facilities repairs was
$17.5 million, with another $4 million of federal funding anticipated through community
development block grants over the next 2 years. Since 2000, Parks has requested $2 to $3
million a year for the different park facilities' ADA projects. The Department of Public
Works has requested an additional $2 million a year for the other County ADA facilities'
project. Because of the substantial hardships predominantly incurred in the funding and cost
aspects of the implementation of the Original Transition Plan, the learning curve process, and
the timing and scheduling of the different stages of work for each project, the parties worked
on a plan to implement the Transition Plan with the assistance of a federal district court
Monitor and an ADA Specialist, to obtain extensions on the initial deadlines for completion
that were set in the Original Transition Plan and to establish a Revised Transition Plan to
satisfy the requirements of the ADA. 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). There are four park facilities where construction has progressed; 29 park
facilities that must be completed; and Parks estimated costs for completion is $15.1 million as
of June 30, 2013. On March 23, 2012, the close-out of the consent decree was filed, whereby
the Court and parties established a reasonable four year timeline to complete the remaining
ADA work by December 31, 2016; some of the projects within the four year plan have been
completed. In addition, the County's ADA coordinator (Equal Opportunity Officer) has
access to an identifiable account of at least $50,000 to handle requests for reasonable
accommodations for County departments; and the procedures for these requests have been
finalized and are available on the Human Resources Department's Equal Opportunity and the
ADA web page. Also, Parks has a Recreation Specialist who reviews and investigates
requests for reasonable accommodations, and recommends specific actions on those requests.
-78-
COUNTY OF HAWAII
Notes to the Basic Financial Statements
June 30, 2014
12. RISK MANAGEMENT
The County is exposed to various risks of losses related to torts; theft of, damage to, and
destruction of assets; errors and omissions; injuries to employees; and natural disasters. The
County maintains fire and commercial multiple peril insurance on County facilities, flood
insurance on selected structures, medical malpractice insurance for emergency medical
technicians, aviation liability for helicopter operations, liability coverage on transit buses and
privately owned police vehicles, and property damage coverage on County Police fleet
vehicles. The County maintains Fire and property coverage on several County Housing
projects (Kula` imano, Ouli Ekahi, and four model homes at Kamakoa Nui). There was no
reduction in insurance coverage during the year from coverage in the prior year. During the
past three fiscal years, the amount of settlements in cases covered by insurance has not
exceeded the insurance coverage. The County is substantially self-insured for the majority of
its vehicles as well as for all other perils including workers' compensation and general
liability. The liability for claims and judgments is reported on the government -wide statement
of net position and the majority will be liquidated from the County's general fund.
Liabilities are reported when it is probable that a loss has occurred and the amount of that loss
can be reasonably estimated. These losses include an estimate of claims that have been
incurred but not reported (IBNR). Claim liabilities, including IBNR, are based on the
estimated ultimate cost of settling the claims, and include incremental costs for the hiring of
special counsel and expert witnesses. Claims liabilities are estimated by a case-by-case
review of all claims and the application of historical experience to outstanding claims.
Estimates of IBNR are based on historical experience. The liability for claims and judgments
is reported on the government -wide statement of net position. At June 30, 2014, the amount
of this liability was $13,723,893. This is the County's best estimate based on available
information. Changes in the reported liability since July 1, 2012 are given below.
Balance at June 30, 2014
Workers'
General
Compensation
Liabili
Balance at July 1, 2012
$ 964,416
Incurred claims (including IBNR)*
1,625,532
Claim payments
_.176,129)
Balance at June 30, 2013
$ 2,413,819
Incurred claims (including IBNR)*
1,227,372
Claim payments
(1,007,472)
Balance at June 30, 2014
Workers'
Total
Compensation
Liabili
$ 9,482,691
$ 10,447,107
2,824,512
4,450,044
(2,316,560)
(2,492,689)
$ 9,990,643
$ 12,404,462
3,650,129
4,877,501
(2,550,598)
11,090-114
(3,558,070)
13.723.893
*Net of new claims liability and existing claims resolved at less than previous estimate.
-79-
COUNTY OF HAWAII
Notes to the Basic Financial Statements
June 30, 2014
13. EMPLOYEE BENEFIT PLANS
Pension Plan
Plan description All eligible employees of the County are required by Chapter 88 of the
Hawaii Revised Statutes (HRS) to become members of the Employees' Retirement System of
the State of Hawaii (the ERS), a cost-sharing multiple -employer defined benefit pension plan.
The ERS provides retirement, survivor, and disability benefits with multiple benefit structures
known as the contributory, hybrid, and noncontributory plans. All contributions, benefits, and
eligibility requirements are established by Chapter 88, HRS, and can be amended by
legislative action.
The ERS regards the County, including its component unit, as one employer. Therefore,
separate information for the primary government and its component unit is not available. All
information given below on the pension plan is for the reporting entity as a whole, including
both the primary government and its component unit.
Employees covered by Social Security on June 30, 1984 were given the option of joining the
noncontributory plan or remaining in the contributory plan. All new employees hired after
June 30, 1984 and before July 1, 2006, who are covered by Social Security, were generally
required to join the noncontributory plan. Qualified employees in the contributory and
noncontributory plan were given the option of joining the hybrid plan effective July 1, 2006,
or remaining in their existing plan. Starting July 1, 2006, all new employees covered by
Social Security are required to join the hybrid plan.
The three plans provide a monthly retirement allowance equal to the benefit multiplier
percentage (1.25% or 2.00%) multiplied by the average final compensation (AFC) multiplied
by years of credited service. The AFC is the average salary 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, if the employee became a
member prior to January 1, 1971. The AFC for members hired on or after this date is based on
the three highest paid years of service, excluding the payment of salary in lieu of vacation.
For postretirement increases, every retiree's original retirement allowance is increased by
2.5% on each July I following the calendar year of retirement. This cumulative benefit is not
compounded and increases each year by 2.5% of the original retirement allowance without a
ceiling (2.5% of the original retirement allowance the first year, 5.0% the second year, 7.5%
the third year, etc.).
The following summarizes the three plan provisions relevant to the general employees of the
respective plan:
Contributory Plan General employees in the contributory plan are required to contribute
7.8% of their salary and are fully vested for benefits upon receiving 5 years of credited
service. The County may also make contributions for these members. Under the
WDE
COUNTY OF HAWAII
Notes to the Basic Financial Statements
June 30, 2014
contributory plan, employees may retire with full benefits at age 55 and 5 years of
credited service, or may retire early at any age with at least 25 years of credited service
and reduced benefits. The benefit multiplier is 2.0% for employees covered by Social
Security.
Police officers, fire fighters and certain other members that are not covered by Social
Security contribute 12.2% of their salary and receive a retirement benefit using the
benefit multiplier of 2.5% for qualified service, up to a maximum of 80% of AFC. These
members may retire at age 55 with 10 years of credited service or at any age with 25
years of credited service, provided the last 5 years of credited service is in any of the
qualified occupations.
Hybrid Plan General employees in the hybrid plan are required to contribute 6.0% of
their salary and are fully vested for benefits upon receiving 5 years of credited service.
The County may also make contributions for these members. Employees may retire with
full benefits at age 62 and 5 years of credited service or at age 55 and 30 years of credited
service, or may retire at age 55 and 20 years of credited service with reduced benefits.
The benefit multiplier used to calculate retirement benefits is 2.0%.
Noncontributory Plan General employees in the noncontributory plan are fully vested
upon receiving 10 years of credited service. The County is required to make all
contributions for these members. Employees may retire with full benefits at age 62 and
10 years of credited service or age 55 and 30 years of credited service or age 55 and 20
years of credited service with reduced benefits. The benefit multiplier used to calculate
retirement benefits is 1.25%.
The ERS funding policy provides for periodic employer contributions at actuarially
determined rates, expressed as a percentage of annual covered payroll, such that the employer
contributions, along with employee contributions and an actuarially determined rate of
investment return, are adequate to accumulate sufficient assets to pay benefits when due. The
funding method used to calculate the total employer contribution required is the entry age
normal actuarial cost method. Effective July 1, 2005, employer contribution rates are a fixed
percentage of compensation, including the normal cost plus amounts required to pay for the
unfunded actuarial accrued liability. Employers contributed 23.00% for police officers and
fire fighters, and 16.00% for all other employees. Employer rates are set by statute based on
the recommendation of the ERS actuary resulting from an experience study conducted every
five years.
The required pension contributions by the County for the years ended June 30, 2014, 2013,
and 2012 were $26,525,388, $23,559,710, and $21,832,179, respectively, which equal the
required contributions for each year. Measurement of assets and actuarial valuations are made
for the ERS as a whole and are not separately computed for individual participating employers
such as the County.
-8t-
COUNTY OF HAWAII
Notes to the Basic Financial Statements
June 3 0, 2014
The ERS issues a CAFR that includes financial statements and required supplementary
information, which may be obtained by writing to the Employees' Retirement System of the
State of Hawaii, 201 Merchant Street, Suite 1400, Honolulu, Hawaii 96813.
Post -Retirement Benefits
In addition to providing pension benefits, the County is required by state statute (HRS Chapter
87A) to contribute to the Hawaii Employer -Union Health Benefits Trust Fund (the EUTF).
The EUTF is an agent, multiple -employer defined benefit plan providing certain healthcare
and life insurance benefits to all qualified retirees, active employees, their dependents and
their beneficiaries. The EUTF was established on July 1, 2003 to design, provide, and
administer medical, prescription drug, dental, vision, chiropractic, dual -coverage medical and
prescription drug, and group life benefits.
For employees hired prior to July 1, 1996, the County pays the entire monthly healthcare
premium for employees retiring with 10 or more years of credited service, and 50% of the
monthly premium for employees retiring with fewer than 10 years of credited service. The
current (pay-as-you-go) premium costs are paid by the respective funds but the net other
postemployment benefit obligation is paid by the General Fund.
For employees hired after June 30, 1996, and who retire with fewer than 10 years of service,
the County makes no contributions. For those retiring with at least 10 years but fewer than 15
years of service, the County pays 50% of the retired employees' monthly Medicare or non -
Medicare premium. For employees hired after June 30, 1996, and who retire with at least 15
years but fewer than 25 years of service, the County pays 75 % of the retired employees'
monthly Medicare or non -Medicare premium. For those retiring with over 25 years of service,
the County pays the entire healthcare premium.
For employees hired after June 30, 2001, and who retire with fewer than 10 years of service,
the County makes no contributions. For those retiring with at least 10 years but fewer than 15
years of service, the County pays 50% of the retired employees' monthly Medicare or non -
Medicare premium based on the self -plan. For employees hired after June 30, 2001, and who
retire with at least 15 years but fewer than 25 years of service, the County pays 75% of the
retired employees' monthly Medicare or non -Medicare premium; for those retiring with over
25 years of service, the County pays the entire healthcare premium.
For active employees, the employee's contributions are based upon negotiated collective
bargaining agreements. Employer contributions for employees not covered by collective
bargaining agreements and for retirees are prescribed by the HRS,
The County's annual other postemployment benefit (OPEB) cost is calculated based on the
annual required contribution (ARC) of the employer, which is an amount actuarially
determined in accordance with the parameters of Governmental Accounting Standards Board
Statement No. 45, Accounting and Financial Reporting by Employers for Postemployment
-82-
COUNTY OF HAWAII
Notes to the Basic Financial Statements
June 30, 2014
Benefits Other than Pensions (GASB Statement No. 45). GASB Statement No. 45 addresses
the failure of previous financial reporting practices to measure and recognize the cost of
OPEB during the periods when employees render the services or to provide relevant
information about OPEB obligations and the extent to which progress is being made in
funding those obligations. The ARC represents a level of funding that, if paid on an ongoing
basis, is projected to cover normal cost each year and amortize any unfunded actuarial
liabilities (or funding excess) over a period not to exceed thirty (30) years. The current ARC
rate is 22.8% of annual covered payroll.
The following section shows the County's Annual OPEB cost for the year ended June 30,
2014, the amount actually contributed to the plan, and changes in the net OPEB liability:
Annual required contribution
$30,526,000
Interest on net OPEB obligation
2,671,000
Adjustment to annual required contribution
(2,356,000)
Annual OPEB Cost
30,841,000
Contributions made
17,452,906
Increase in net OPEB liability
13,388,094
Net OPEB liability -beginning of year
38,160,502
Net OPEB liability -end of year
$51,548,596
The above net OPEB liability at the end of the year is included in the Statement of Net
Position in the noncurrent other liability amount of $51,548,596.
The annual OPEB cost, the percentage of annual OPEB cost contributed to the plan, and the
net OPEB (asset) liability for the year ended June 30, 2014 and the preceding two years were
as follows:
Fiscal Year
Obligation/
Ended
Annual OPEB Cost
June 30, 2012
$36,191,000
June 30, 2013
$29,712,000
June 30, 2014
$30,841,000
Percentage of Annual Net OPEB
OPEB Cost
Obligation/
Contributed
(Asset)
37.9%
$22,340,332
46.8%
$38,160,502
56.6%
$51,548,596
The schedule of funding progress based on the actuarial valuation date of July 1, 2013, is as
follows:
Actuarial accrued liability
$410,182,000
Actuarial value of plan assets
66,077,000
Unfunded actuarial accrued liability (UAAL)
$344,105,000
Funded ratio
16%
Covered payroll (active plan members)
$137,810,000
UAAL as a percentage of covered payroll
250%
- 83 -
COUNTY OF HAWAII
Notes to the Basic Financial Statements
June 30, 2014
Actuarial valuations of an ongoing plan involve estimates of the value of reported amounts
and assumptions about the probability of occurrence of events far into the future. Examples
include assumptions about future employment, mortality, and the healthcare cost trend.
Amounts determined regarding the funded status of the plan and the annual required
contributions of the employer are subject to continual revision as actual results are compared
with past expectations and new estimates are made about the fixture.
The schedule of funding progress, presented as required supplementary information following
the notes to the financial statements, presents multiyear trend information that shows whether
the actuarial value of plan assets is increasing or decreasing over time relative to the actuarial
accrued liabilities for benefits.
Projections of benefits for financial reporting purposes are based on the substantive plan (the
plan as understood by the employer and plan members) and include the types of benefits
provided at the time of each valuation and the historical pattern of sharing of benefit costs
between the employer and plan members to that point. The actuarial methods and
assumptions used include techniques that are designed to reduce short-term volatility in
actuarial accrued IiabiIities and the actuarial value of assets, consistent with the long-term
perspective of the calculations.
In the July 1, 2013 actuarial valuation, the entry age normal cost actuarial cost method was
used. The actuarial assumptions included a 7.0% discount rate, which is based on the
County's anticipated funding level, and an annual healthcare cost trend rate of 7.5-9.0%
initially, reduced by decrements to an ultimate rate of 5.0% after ten years. The assumptions
also include a 3.5% increase in payroll and a 3.0% inflation rate. The UAAL is being
amortized as a level percentage of projected payroll on a closed basis. The remaining
amortization period at July 1, 2013 for the UAAL, balance varies depending on the date each
portion was established but is set to not exceed 30 years. The equivalent single amortization
period is 23.5.
The EUTF issues a publicly available financial report that includes financial statements and
required supplementary information, which is available on-line at their web -site
www.cutf.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
Hawaii, 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.
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
WIE
COUNTY OF HAWAII
Notes to the Basic Financial Statements
June 30, 2014
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, 2014, the carrying amount of cash, time certificates of deposit and money market
funds of $38,331,573, with bank balances of $39,397,607 were held by the County on behalf
of the Department. These balances were fully insured or collateralized with securities held by
the County's agent in the County's name.
The deposits and investments include cash received by the Department that is restricted as to
use and is recorded as a restricted asset. Such funds amounted to $2,085,134 at June 30, 2014.
At June 30, 2014, the Department had no investments.
Capital Assets
The Department began operations as of January 1, 1950. At that date, the utility plant in
service was transferred to the Department from the County at the cost of the utility plant assets
acquired by the County for its water system from January 1, 1924 to December 31, 1949, less
accumulated depreciation. Acquisitions prior to I924 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 Iives 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
- 85 -
COUNTY OF HAWAT`T
Notes to the Basic Financial Statements
June 30, 2014
The capital assets of the Department at June 30, 2014 were as follows:
Utility plant in service $454,575,245
Less: accumulated depreciation (199,257,568
255,317,677
Land and rights 4,564,602
Construction work in progress 7,358,252
Net capital assets $267,2,531
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 $39,198,501 at June
30, 2014.
General obligation bonds payable issued on behalf of the Department and other long-term debt
at June 3 0, 2014 are comprised of the following:
Public improvement bonds:
2004 Series D at 4.5%, due through 2039
2006 Series A at 4.0% to 5.0%, due through 2026
2008 Series A at 4.125%, due through 2043
2010 Series A at 3.33% to 6.1%, due through 2030
2010 Series B at 3.33% to 6.1%, due through 2030
Total public improvement bonds
Public improvement refunding bonds:
2004 Series at 2.0% to 5.25%, due through 2015
2007 Series at 4.0% to 5.0%, due through 2021
Total public improvement refunding bonds
Revolving fund loans:
State revolving fund loans, interest up to 1.37%,
due through 2032
Total long-term debt
Add: Unainortized premium
Total
-86-
$ 227,608
18,802,500
137,767
8,831,250
6.168.750
34,167, 875
48,888
4,427,494
4,476,382
13,658,717
52,302,974
554,244
52.85 7.218
COUNTY OF HAWAII
Notes to the Basic Financial Statements
June 30, 2014
At June 30, 2014, future principal and interest payments for long-term debt are scheduled as
follows:
Fiscal year ending June 3 0:
Principal
Interest
Total
2015
$ 3,374,743
$ 1,827,190
$ 5,201,933
2016
3,435,920
1,715,140
5,151,060
2017
3,545,057
1,601,665
5,146,722
2018
3,665,812
1,482,950
5,148,762
2019
33790,703
1,368,495
5,159,198
2020-2024
183383,044
4,820,841
23,203,885
2025 —2029
13,775,671
1,722,900
15,498,571
2030 —2034
2,193,868
120,481
2,314,349
2035 —2039
94,283
20,625
114,908
2040 —2043
43, 873
3,439
47,312
Total
$52,302,974
14.683.726
$66,986,700
Contributions in Aid of Construction
The Department recognized $10,299,452 of contributions in aid of construction for the fiscal
year ended June 30, 2014.
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, 2014 for workers' compensation claims of $307,000
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 $9,452,000 at
June 30, 2014.
Post -Retirement Benefits
Effective July 1, 2007, the Department adopted the provisions of GASB Statement No. 45.
This statement addresses how state and local governments should account for and report their
costs and obligations related to postemployment benefits, healthcare, and other nonpension
benefits. The Department's annual required contribution for its postemployment benefit
obligation for the year ended June 30, 2014 was $1,899,000. The Department made
contributions of $1,900,758 during the year ended June 30, 2014 and recorded a
postemployment benefit asset of $4,758 at June 30, 2014.
_87-
COUNTY OF HAWAII
Required Supplementary Information
June 30, 2014
Schedule of Funding Progress for the EUTF
$28,814
(In thousands)
$410,411
Actuarial
July 1, 2011
Accrued
UAAL as a
Actuarial Liability Unfunded
Percentage
Actuarial Value of (AAL) — AAL Funded
Covered of Covered
Valuation Assets Entry Age (UAAL) Ratio
Payroll Payroll
Date (a) b (b -a) (alb)
c) ((b-a)/c
July 1, 2009
$28,814
$439,225
$410,411
6.6% $133,555 307.3%
July 1, 2011
$61,907
$394,633
$332,726
15.7% $130,170 255.6%
July 1, 2013
$66,077
$410,182
$344,105
16.1% $137,810 249.7%
5:3.12
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.
CEMETERYFUND - 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.
BEAUTIFICATIONFUND - 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.
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.
This page intentionally left blank.
aME
COUNTY OF HAWAII
Nonmajor Governmental Funds
Combining Balance Sheet
June 30, 2014
Special Revenue Funds
Solid
Parking
Highway
Sewer
Waste
Cemetery Meter
Fund
Fund
Fund
Fund Fund
Assets
Cash and cash equivalents
$12,541,430
$ 5,089,238
$ 9,168,994
$103,909 $220,262
Investments
-
-
-
- -
Imprest fund
-
400
250
- -
Receivables:
Due from other governments
-
-
440,160
- -
Due from other governmental funds
2,094
3$,416
-
- -
Due from other nongovernmental funds
-
1,350
-
- -
Trade, net of allowance for doubtful accounts
-
1,306,659
1,376,369
- -
Other
-
-
148,504
- -
2,094
1,346,425
1,965,033
- -
Total assets
$12,543,524
$ 6,436,063
$11,134,277
$103,909 $220,262
Liabilities, Deferred Inflows and Fund Balances
Liabilities:
Accounts payable
$ 785,597
$ 257,475
$ 1,$53,901
$ - $ -
Accrued payroll
434,884
145,383
306,2I8
- -
Due to other governmental funds
545,896
7,072
40,075
- -
Advance Collections -Intergovernmental
94,329
-
11,998
- -
Other
10,300
70,470
3
-
Total liabilities
1,871,006
480,400
2,212,195
- -
Deferred Inflows of Resources
Unavailable Revenue
-
1,306,659
1,376,369
- -
Fund balances:
Restricted for:
Debt service
-
-
-
- -
Highways, streets and abandoned vehicles
10,672,518
-
-
- -
Rental assistance and subsidy
-
-
-
- -
Committed to:
Sanitation
-
4,649,004
7,545,713
- -
Highways, streets and abandoned vehicles
-
-
-
- 220,262
Rental assistance and subsidy
-
-
-
- -
Cemetery
-
-
-
103,909 -
Golf course
-
-
-
- -
Lower Puna area
-
-
-
- -
Parks and recreational projects
-
-
-
- -
Total fund balances
10,672,518
4,649,004
7,545,713
103,909 220,262
Total liabilities, deferred inflows
and fund balances
$12,543,524
$ 6,436,063
$11,134,277
$103,909 $220,262
$ 4,059 $ 13,903 $ - S 5,880 $
4,518 - - 40,291
- - 185,748 3,536
8,577 13,903 185,748 49,707
778,327
S 12,977 $ 116,666 $
- 137,635
- 188,824
12,977 443,125
- 41,942
1,217,202 - -
- 1,164,278 -
4,337,212 - - - - - - -
- - - - - - 2,282,439 -
364,262 - - - -
- - - 4,938,635 - - -
- - - - - - 86,517
4,337,212 778,327 - 364,262 4,938,635 1,217,202 3,446,717 86,517
$4,345,789 $ 792,230 $ 185,748 $ 413,969 $ 4,938,635 $ 1,230,179 $ 3,931,784 $ 86,517
(Continued)
-91-
Special Revenue Funds
Vehicle
Workforce
Golf
Geothermal Aeloe.
Beauti-
Hawaii County
Park
Disposal
Bikeway
Investment
Course
& Community
fication
Housing
Dedication
Fund
Fund
Act Fund
Fund
Benefits Fund
Fund
Agency
Fund
$4,345,789
$ 792,230
$ -
$ 411,599
$ 4,864,362
$ 1,230,179
$ 3,853,289
$ 16,743
-
-
-
-
-
-
-
69,774
-
-
-
2,000
-
-
200
-
-
-
146,755
-
-
-
-
-
-
-
-
-
-
-
29,020
-
-
-
38,993
370
74,273
-
49,275
-
-
-
185,748
370
74,273
-
78,295
-
$4,345,789
$ 792,230
$ 185,748
$ 413,969
$ 4,938,635
$ I,230,179
$ 3,931,784
$ 86,517
$ 4,059 $ 13,903 $ - S 5,880 $
4,518 - - 40,291
- - 185,748 3,536
8,577 13,903 185,748 49,707
778,327
S 12,977 $ 116,666 $
- 137,635
- 188,824
12,977 443,125
- 41,942
1,217,202 - -
- 1,164,278 -
4,337,212 - - - - - - -
- - - - - - 2,282,439 -
364,262 - - - -
- - - 4,938,635 - - -
- - - - - - 86,517
4,337,212 778,327 - 364,262 4,938,635 1,217,202 3,446,717 86,517
$4,345,789 $ 792,230 $ 185,748 $ 413,969 $ 4,938,635 $ 1,230,179 $ 3,931,784 $ 86,517
(Continued)
-91-
COUNTY OF HAWAII
Nonmajor Governmental Funds
Combining Balance Sheet
June 30, 2014
Assets
Cash and cash equivalents
Investments
Imprest fund
Receivables:
Due from other governments
Due from other governmental funds
Due from other nongovernmental funds
Trade, net of allowance for doubtful accounts
Other
Total assets
Liabilities and Fund Balances
Liabilities:
Accounts payable
Accrued payroll
Due to other governmental funds
Advance Collections -Intergovernmental
Other
Total liabilities
Deferred Inflows of Resources
Unavailable Revenue
Fund balances:
Restricted for:
Debt service
Highways, streets and abandoned vehicles
Rental assistance and subsidy
Committed to:
Sanitation
Highways, streets and abandoned vehicles
Rental assistance and subsidy
Cemetery
Golf course
Lower Puna area
Parks and recreational projects
Total fund balances
Total liabilities, deferred inflows
and fund balances
(Concluded)
Debt Service Fund
Total
Bond
Nonmajor
Interest
Redemption
Governmental
Fund
Fund
Funds
$ 365,000
$ 3,845,558
$ 46,848,582
2,162,338
17,495,282
19,727,394
-
-
2,850
- 586,915
- 69,530
- 1,350
- 2,683,028
- - 311,415
- 3,652,238
$2,527,338 $21,340,840 $ 70,231,064
$ - - $ 3,050,458
- - 1,068,929
782,327
106,327
71,930 220,000 561,527
71,930 220,000 5,569,568
2,724,970
2,455,408 21,120,840 23,576,248
- - 12,668,047
1,164,278
- 12,194,717
- - 4,557,474
- - 2,282,439
- - 103,909
- - 364,262
- - 4,938,635
- - 86,517
2,455,408 21,120,840 61,936,526
$2,527,338 $21,340,840 S 70,231,064
See accompanying independent auditors' report.
-92-
This }gage intentionally left blank.
-93-
COUNTY OF HAWAII
Nonmajor Governmental Funds
Combining Statement of Revenues, Expenditures, and Changes in Fund Balances
For the Fiscal Year Ended June 30, 2014
Revenues
Fuel taxes
Public utility franchise taxes
Licenses and permits
Intergovernmental
Charges for services
Investment earnings (loss)
Other
Total revenues
Expenditures
Current:
General Government
Public safety
Highways and streets
Health, education and welfare
Culture and recreation
Sanitation
Pension and retirement contributions
Employees' health insurance
Other
Debt service:
Principal
Interest
Total expenditures
Excess (deficiency) of revenues
over (under) expenditures
Other Financing Sources (Uses)
Transfers in
Transfers out
Total other financing sources (uses)
Net change in fund balances
Fund balances at beginning of year
Fund balances at end of year
1,393,731 (611,762) (16,475,178) 6,000 16,475
63,714
1,739,548
Special Revenue Funds
(3,704,704)
-
- -
Solid
1,739,548
Parking
Highway
Sewer
Waste
Cemetery
Meter
Fund
Fund
Fund
Fund
Fund
$ 7,373,475
$ -
$ -
$ -
$ -
10,792,967
-
-
-
-
9,274,608
-
-
-
-
686,835
-
705,104
-
-
-
7,231,125
7,587,487
-
16,475
606,043
185
66,169
6,000
-
28,733,928
7,231,310
8,358,760
6,000
16,475
15,000
-
-
-
-
6,229,784
-
-
-
-
17,592,901
-
-
-
-
6,936,190
21,725,963
-
-
1,789,768
603,576
1,163,767
-
-
852,712
204,096
573,294
-
-
860,032
99,210
561,484
-
-
-
-
777,959
-
-
-
-
31,471
-
-
27,340,197
7,843,072
24,833,938
-
-
1,393,731 (611,762) (16,475,178) 6,000 16,475
63,714
1,739,548
15,520,377 -
(3,704,704)
-
- -
(3,640,990)
1,739,548
15,520,377 -
(2,247,259)
1,127,786
(954,801) 6,000
12,919,777
3,52I,218
8,500,514 97,909
$ 10,672,5I8
$ 4,649,004
$ 7,545,713 $ I03,909
-94-
16,475
203,787
$220,262
4,550 - - -
- - - 15I,633 - -
1,242,465 - - - 14,797,645 -
- - - 881,431 - 37,444 - -
259,767 - - - - - -
23,447 - - 162,863 - - 505,263 -
18,272 - - 80,325 - - 191,382
- - - 4,092 - - -
8,819 -
- - - - - - 1,072 -
301,486 - 1,242,465 1,128,711 4,550 189,077 15,504,181 -
1,844,222 87,247 - 300,920 761,964 10,382 (842,433) 1,708
361,000 - - 1,402,916 -
- - - -(2,000,000)-
361,000 - - (597,084) -
1,844,222 87,247 - 60,080 761,964 (10,382) (1,439,517) 1,708
2,492,990 691,080 - 304,182 4,176,671 1,227,584 4,886,234 84,809
$ 4,337,212 $ 778,327 $ - $ 364,262 $ 4,938,635 $1,217,202 $ 3,446,717 $ 86,517
(Continued)
-95-
Special Revenue Funds
Vehicle
Workforce
Golf
Geothermal Retoc.
Beauti-
Hawaii County
Park
Disposal
Bikeway
Investment
Course
& Community
fication
Housing
Dedication
Fund
Fund
Act Fund
Fund
Benafits Fund
Fund
Agency
Fund
2,144,344
87,247
-
-
-
178,695
-
-
-
-
1,242,465
-
-
-
14,539,979
-
839
-
-
827,791
-
-
-
-
-
-
-
-
-
-
3,681
1,708
525
-
-
-
766,514
-
118,088
-
2,145,708
87,247
1,242,465
827,791
766,514
178,695
14,661,748
1,708
4,550 - - -
- - - 15I,633 - -
1,242,465 - - - 14,797,645 -
- - - 881,431 - 37,444 - -
259,767 - - - - - -
23,447 - - 162,863 - - 505,263 -
18,272 - - 80,325 - - 191,382
- - - 4,092 - - -
8,819 -
- - - - - - 1,072 -
301,486 - 1,242,465 1,128,711 4,550 189,077 15,504,181 -
1,844,222 87,247 - 300,920 761,964 10,382 (842,433) 1,708
361,000 - - 1,402,916 -
- - - -(2,000,000)-
361,000 - - (597,084) -
1,844,222 87,247 - 60,080 761,964 (10,382) (1,439,517) 1,708
2,492,990 691,080 - 304,182 4,176,671 1,227,584 4,886,234 84,809
$ 4,337,212 $ 778,327 $ - $ 364,262 $ 4,938,635 $1,217,202 $ 3,446,717 $ 86,517
(Continued)
-95-
COUNTY OF HAWAII
Nonmajor Governmental Funds
Combining Statement of Revenues, Expenditures, and Changes in Fund Balances
For the Fiscal Year Ended June 30, 2014
Revenues
Fuel taxes
Public utility franchise taxes
Licenses and permits
Intergovernmental
Charges for services
Investment earnings (loss)
Other
Total revenues
Expenditures
Current:
General Government
Public safety
Highways and streets
Health, education and welfare
Culture and recreation
Sanitation
Pension and retirement contributions
Employees' health insurance
Other
Debt service:
Principal
Interest
Total expenditures
Excess (deficiency) of revenues
over (under) expenditures
Other Financing Sources (Uses)
Transfers in
Transfers out
Total other financing sources (uses)
Net change in fund balances
Fund balances at beginning of year
Fund balances at end of year
See accompanying independent auditors' report.
Debt Service Fund
Total
Bond
Nonmajor
Interest Redemption
Governmental
Fund Fund
Funds
$ - $ - $ 7,373,475
- 10,792,967
- 11,684,894
407,523 - 17,581,906
- - 15,663,717
- 5,389
- - 1,563,524
407,523 - 64,665,872
- 19,550
- 6,229,784
- 17,744,534
- 16,040,110
- - 918,875
- - 28,921,920
- - 4,248,684
- - 1,920,081
- - 1,524,818
- 17,674,593 18,461,371
14,570,290 - 14,602,833
14,570,290 17,674,593 110,632,560
(14,162,767) (17,674,593) (45,966,688)
14,224,300
22,062,686
55,374,541
-
-
(5,704,704)
14,224,300
22,062,686
49,669,837
61,533
4,388,093
3,703,149
2,393,875
16,732,747
58,233,377
$ 2,455,408 $ 21,120,840 $ 61,936,526
-96-
(Concluded)
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, 2014
Revenues:
Taxes:
Fuel taxes
Public utility franchise taxes
Total taxes
Licenses and permits - motor vehicle weight taxes
Intergovernmental
Charges for services
Other
Total revenues
Expenditures:
General government
Public safety - traffic engineering
Highways and streets
Highways and streets - mass transit
Pension and retirement contributions
Employees' health insurance
Other
Total expenditures
Excess (deficiency) of revenues over (under)
expenditures
Other financing uses - transfers in (out) -
Transfers in - General Fund
Transfers out - Capital Projects Fund
Deficiency of revenues under
expenditures and other uses
Fund balance at beginning of year
Fund balance at end of year
See accompanying independent auditors' report.
Original Final
Budget Budget
Actual
Variance
(Budgetary
Positive
Basis)
(Negative)
$ 7,250,000
$ 7,250,000
$ 7,373,475
$ 123,475
11,567,200
11,567,200
10,792,967
(774,233)
18,817,200
I8,817,200
18,166,442
(650,758)
9,213,364
9,213,364
9,274,608
61,244
631,564
816,564
766,164
(50,400)
500,000
500,000
420,706
(79,294)
71,732
106,733
185,337
78,604
29,233,860
29,453,861
28,813,257
(640,604)
50,000
56,107
56,107
-
7,098,161
7,349,822
6,195,597
1,154,225
12,982,467
13,008,414
11,054,043
1,954,371
6,726,250
6,726,250
6,680,239
46,011
1,828,000
1,878,000
1,785,082
92,918
1,209,000
1,209,000
854,958
354,042
1,200,000
1,150,000
894,098
255,902
31,093,878
31,377,593
27,520,124
3,857,469
(1,860,018)
(1,923,732)
1,293,133
3,216,865
-
63,714
63,714
-
(3,430,000)
(3,704,704)
(3,704,704)
-
(5,290,018) (5,564,722) (2,347,857) 3,216,865
12,919,777 12,919,777 12,919,777 -
$ 7,629,759 $ 7,355,055 $ 10,571,920 $ 3,216,865
-97-
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, 2014
Actual Variance
Original Final (Budgetary Positive
Budget Budget Basis) (Negative_
Revenues:
Charges for services - sewer fees
$ 6,834,151
$ 6,834,151
$ 7,231,125
$ 396,974
Other
-
-
185
185
Total revenues
6,834,151
6,834,151
7,231,310
397,159
Expenditures:
Sanitation
7,441,659
7,441,659
6,916,435
525,224
Pension and retirement contributions
688,361
688,361
603,333
85,028
Employees' health insurance
374,671
374,671
205,752
168,919
Other
1,252,513
1,252,513
57,011
1,195,502
Total expenditures
9,757,204
9,757,204
7,782,531
1,974,673
Deficiency of revenues under expenditures
(2,923,053)
(2,923,053)
(551,221)
2,371,832
Other financing sources:
Transfers in - General Fund
1,739,548
1,739,548
1,739,548
-
Deficiency of revenues and other
sources under expenditures
(1,183,505)
(1,183,505)
1,188,327
2,371,832
Fund balance at beginning of year
3,521,218
3,521,218
3,521,218
-
Fund balance at end of year
$ 2,337,713
$ 2,337,713
$ 4,709,545
$ 2,371,832
See accompanying independent auditors' report.
-98-
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, 2014
Actual Variance
Original Final (Budgetary Positive
Budget Budget Basis) (Negative)
Revenues:
Intergovernmental $ 233,333 $ 717,266 $ 714,229 $ (3,037)
Charges for services - tipping fees 6,329,950 6,329,950 7,587,487 1,257,537
Other - - 66,169 66,169
Total revenues 6,563,283 7,047,216 8,367,885 I,320,669
Expenditures:
Sanitation
22,666,003
23,154,936
21,561,718
1,593,218
Pension and retirement contributions
1,236,733
1,236,733
1,161,933
74,800
Employees' health insurance
744,775
738,175
574,650
163,525
Other
720,000
726,600
481,584
245,016
Total expenditures
25,367,511
25,856,444
23,779,885
2,076,559
Deficiency of revenues under expenditures
(18,804,228)
(18,809,228)
(15,412,000)
3,397,228
Other financing sources:
Transfers in - General Fund
15,515,377
15,520,377
15,520,377
-
Deficiency of revenues and other
sources under expenditures
(3,288,851)
(3,288,851)
108,377
3,397,228
Fund balance at beginning of year
8,500,514
8,500,514
8,500,514
-
Fund balance at end of year
$ 5,211,663
$ 5,211,663
$ 8,608,891
$ 3,397,228
See accompanying independent auditors' report
",
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, 2014
Revenues - other - sale of cemetery plots
Expenditures - health, education and welfare
Excess of revenues over expenditures
Fund balance at beginning of year
Fund balance at end of year
See accompanying independent auditors' report.
- 100-
Actual
Variance
Original
Final
(Budgetary
Positive
Budget
Budget
Basis)
(Negative)
$ 10,000
$ 10,000
$ 6,000
$ (4,000)
10,000
10,000
-
10,000
-
-
6,000
6,000
97,909
97,909
97,909
-
$ 97,909
$ 97,909
$ 103,909
$ 6,000
- 100-
COUNTY OF HAWAII
Parking Meter Fund
Schedule of Revenues, Expenditures, and Changes in Fund Balance -
Budget and Actual (Budgetary Basis)
For the Fiscal Year Ended June 30, 2014
Revenues - Charges for services - highways and streets
Excess of revenues over expenditures
Fund balance at beginning of year
Fund balance at end of year
See accompanying independent auditors' report.
Actual Variance
Original Final (Budgetary Positive
Budget Budget Basis) (Negative)
$ - $ - $ 16,475 $ 16,475
16,475 16,475
203,787 203,787 203,787 -
$ 203,787 $ 203,787 $ 220,262 $ 16,475
-101-
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, 2014
Revenues:
Licenses and permits - vehicle disposal fee
Charges for services - towing charges
Miscellaneous
Total revenues
Expenditures:
Sanitation
Pension and retirement contributions
Employees' health insurance
Other
Total expenditures
Excess (deficiency) of revenues
over (under) expenditures
Fund balance at beginning of year
Fund balance at end of year
See accompanying independent auditors' report.
-102-
Actual
Variance
Original
Final
(Budgetary
Positive
Budget
Budget
Basis)
(Negative)
$2,058,000
$ 2,058,000
$ 2,144,344
$ 86,344
-
-
839
839
-
-
525
525
2,058,000
2,058,000
2,145,708
87,708
2,412,149
2,412,149
143,271
2,268,878
30,900
30,900
23,874
7,026
25,986
25,986
18,516
7,470
6,000
6,000
-
6,000
2,475,035
2,475,035
185,661
2,289,374
(417,035)
(417,035)
1,960,047
(2,201,666)
2,492,990
2,492,990
2,492,990
-
$2,075,955
$ 2,075,955
$ 4,453,037
$ (2,201,666)
-102-
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, 2014
See accompanying independent auditors' report.
- 103 -
Original
Actual
Variance
and Final
(Budgetary
Positive
Budget
Basis)
(Negative)
Revenues - licenses and permits - bicycle tax
$ 20,000
S 87,247
$ 67,247
Expenditures - highways and streets
I71,000
-
171,000
Excess (deficiency) of revenues over (under)
expenditures
(151,000)
87,247
238,247
Fund balance at beginning of year
691,080
691,080
-
Fund balance at end of year
$540,080
$778,327
$238,247
See accompanying independent auditors' report.
- 103 -
COUNTY OF HAWAII
Workforce Investment Act Fund
Schedule of Revenues, Expenditures, and Changes in Fund Balance -
Budget and Actual (Budgetary Basis)
For the Fiscal Year Ended June 30, 2014
Revenues - intergovernmental - federal grants
Expenditures - health, education and welfare
Excess of revenues over expenditures
Fund balance at beginning of year
Fund balance at end of year
See accompanying independent auditors' report.
Actual Variance
Original Final (Budgetary Positive
Budget Budget Basis) (Negative)
- 104 -
$ 1,621,232 $ 1,077,860 $ (543,372)
1,621,232 1,077,860 543,372
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, 2014
Actual Variance
Original Final (Budgetary Positive
Budget Budget Basis) (Negative)
Revenues:
Charges for services $ 876,445 $ 876,445 $ 827,791 $ (48,654)
Expenditures:
Culture and recreation
891,733
937,733
897,113
40,620
Pension and retirement contributions
166,402
166,402
161,862
4,540
Employees' health insurance
99,709
99,709
80,415
19,294
Other
48,601
33,601
4,093
29,508
Total expenditures
1,206,445
1,237,445
1,143,483
93,962
Deficiency of revenues under expenditures
(330,000)
(361,000)
(315,692)
(142,616)
Other financing sources:
Transfers in - General Fund
330,000
361,000
361,000
-
Excess of revenues and other sources
over expenditures
-
-
45,308
(142,616)
Fund balance at beginning of year
304,182
304,182
304,182
-
Fund balance at end of year
$ 304,182
$ 304,182
$ 349,490
$ (142,616)
See accompanying independent auditors' report.
- 105-
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, 2014
Actual Variance
Original Final (Budgetary Positive
Budget Budget Basis) (Negative)
Revenues - other - geothermal royalties
$ 600,000
$ 600,000
$ 766,514
$ 166,514
Expenditures:
General government:
Planning and zoning
1,700,000
1,700,000
4,550
I,695,450
Excess (deficiency) of revenues
over (under) expenditures
(1,100,000)
(1,100,000)
761,964
(1,528,936)
Fund balance at beginning of year
4,176,671
4,176,671
4,176,671
-
Fund balance at end of year
$ 3,076,671
$ 3,076,671
$ 4,938,635
$(1,528,936)
See accompanying independent auditors' report.
-106-
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, 2014
See accompanying independent auditors' report.
-107-
Actual
Variance
Original
Final
(Budgetary
Positive
Bum
Budget
Basis)
((Negative)
Revenues - licenses and permits - highway
beautification
$ I71,000
$ 171,000
$ 178,695
$ 7,695
Expenditures:
Highways and streets
121,370
121,370
118,567
2,803
Culture and recreation
61,300
61,300
25,842
35,458
Total expenditures
182,670
182,670
144,409
38,261
Deficiency of revenues under expenditures
(11,670)
(11,670)
34,286
45,956
Fund balance at beginning of year
1,227,584
1,227,584
1,227,584
-
Fund balance at end of year
$1,215,914
$1,215,914
$ 1,261,870
$ 45,956
See accompanying independent auditors' report.
-107-
COUNTY OF HAWAII
Hawaii County Housing Agency
Schedule of Revenues, Expenditures, and Changes in Fund Balance -
Budget and Actual (Budgetary Basis)
Revenues:
Intergovernmental -
Federal - HUD - Voucher program
Investment earnings
Resale of property
Other
Total revenues
Expenditures:
Health, education and welfare
Pension and retirement contributions
Employees' health insurance
Other
Total expenditures
Deficiency of revenues under expenditures
Other financing uses - transfers in (out) -
Transfers in - General Fund
Transfers out - Capital Projects Fund
Deficiency of revenues and other sources
under expenditures and other uses
Fund balance at beginning of year
Fund balance at end of year
See accompanying independent auditors' report.
For the Fiscal Year Ended June 30, 2014
Original Final
Budget Budget
Actual
Variance
(Budgetary
Positive
Basis)
(Negative)
$ 14,657,717
$ 14,657,717
$ 14,539,979
$ (117,738)
3,000
3,000
3,681
681
-
-
27,000
27,000
181,179.00
181,179
91,088
(90,091)
14,841,896
14,841,896
14,661,748
(180,148)
15,635,839
15,635,839
14,831,607
804,232
561,256
561,256
501,445
59,811
231,368
231,368
190,546
40,822
120,000
120,000
-
120,000
16,548,463
16,548,463
15,523,598
1,024,865
(1,706,567)
(1,706,567)
(861,850)
844,717
1,402,916
1,402,916 1,402,916
(2,000,000) (2,000,000)
(303,651) (2,303,651) (1,458,934) 844,717
4,886,234 4,886,234 4,886,234 -
$ 4,582,583 $ 2,582,583 $ 3,427,300 $ 844,717
- 108-
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, 2014
Revenues - investment earnings
Excess of revenues over expenditures
Fund balance at beginning of year
Fund balance at end of year
See accompanying independent auditors' report.
Actual Variance
Original Final (Budgetary Positive
Budget Budget Basis _ (Negative)
S - $ - $ 367 $ 367
367 367
84,809 84,809 84,809 -
$ 84,809 $ 84,809 $ 85,176 S 367
- 109-
Assets
Cash and cash equivalents
Investments
Due from other agency funds
Other receivables
Total assets
Liabilities
Due to other agency funds
Accrued liabilities
Advances payable
Assets held for the benefit of
COUNTY OF HAWAII
Agency Funds
Combining Statement of Agency Funds Net Position
June 30, 2014
Performance
State
Improvement
Improvement
Improvement
and
Weight
District
District
District
Refundable
Tax
No. 18
No. 19
Revolving
Deposits
Fund
Fund
Fund
Fund
Fund
$1,849,041 $ 254,036 $ 374,927 $ 16,306 $ 231,644
- - 193,238 -
3,653 - - 200
$1,849,041 $ 257,689 $ 374,927 $ 209,544 $ 231,844
1,849,041 5,929 -
- 15,111 -
$ - $ 1,475
1,228
229,141
improvement districts - 236,649 374,927 209,544
Total liabilities $1,849,041 $ 257,689 $ 374,927 $ 209,544 $ 231,844
See accompanying independent auditors' report.
- 110-
Non -Profit
Organ and
Business
Payroll Flexible Lapsed License
Tissue
Improvement
Clearance Spending Warrants Plates
Education
District
Fund Account Fund Fund
Fund
I - Kailua
$ 424,347 $ 374,858 $ 242,745 $ 1,125 $ 948 $ 704 $ 3,770,681
- - - - - - 193,238
- - 2,444 - - - 2,444
25,446 - 58,069 - - 17,211 104,579
$ 449,793 $ 374,858 $ 303,258 $ 1,125 $ 948 $ 17,915 $ 4,070,942
$ 869 $ - $ - $ 100 $ - $ - $ 2,444
448,924 374,858 303,258 1,025 948 704 2,985,915
- - - - - - 244,252
- - - - - 17,211 838,331
$ 449,793 $ 374,858 $ 303,258 $ 1,125 $ 948 $ 17,915 $ 4,070,942
COUNTY OF HAWAII
Agency Funds
Combining Statement of Changes in Assets and Liabilities
For the Fiscal Year Ended June 30, 2014
State Weight Tax Fund
Assets
Cash and cash equivalents
Liabilities
Vouchers payable
Accrued liabilities
Accrued liabilities - due to State of Hawaii
Total liabilities
Improvement District No. 18 Fund
Assets
Cash and cash equivalents
Other receivables
Total assets
Liabilities
Vouchers Payable
Accrued liabilities
Advances payable
Assets held for the benefit
of improvement districts
Total liabilities
Improvement District No. 19 Fund
Assets
Cash and cash equivalents
Liabilities
Vouchers Payable
Assets held for the benefit
of improvement districts
Total liabilities
Balance Balance
July 1, June 30,
2013 Additions Deductions 2014
$ 1,682,830 $ 23,738,703 $ 23,572,492 $1,849,041
$ - $ 23,566,191 $ 23,566,191 $ -
1,682,830 21,942,097 21,775,886 1,849,041
$1,682,830 $ 45,508,288 $ 45,342,077 $1,849,041
$ 183,262 $
379,867 $
309,093
$ 254,036
8,269
267,277
271,893
3,653
$ 191,531 $
647,144 $
580,986
$ 257,689
$ - $
527 $
527
$ -
10,687
230,838
235,596
5,929
11,911
15,111.
11,911
15,111
168,933 353,063 285,347 236,649
$ 191,531 $ 599,539 $ 533,381 $ 257,689
$ - $ 378,377 $ 3,450 $ 374,927
$ - $ 2,083 $ 2,083 $ -
378,377 3,450 374,927
$ - $ 380,460 $ 5,533 $ 374,927
- 112-
COUNTY OF HAWAII
Agency Funds
Combining Statement of Changes in Assets and Liabilities
For the Fiscal Year Ended June 30, 2014
Performance and Refundable
Deposits Fund
Assets
Cash and cash equivalents $ 229,483 $ 412,934 $ 410,773 $ 231,644
Due from other non -agency funds - 200 - 200
Total assets $ 229,483 $ 413,134 $ 410,773 S 231,844
Liabilities
Balance
Vouchers payable
Balance
-
$ 404,277
July 1,
$
-
Due to other agency funds
1,670
June 30,
1,670
2013
Accrued liabilities
Additions
-
Deductions
-
2014
Improvement District Revolving Fund
Advances payable
227,813
412,284
410,956
229,141
Total liabilities
Assets
229,483
$ 819,264
$ 816,903
$
231,844
Payroll Clearance Fund
Cash and cash equivalents
S
37,894
S
1,014
S
22,602
$
16,306
Investments
189,525
$
3,713
$ 227,296,301
-
$
193,238
Total assets
$
227,419
S
4,727
S
22,602
S
209,544
Liabilities
346,990
354,969
25,446
Total assets
$
375,092
$ 441,415,033
Vouchers payable
$
-
$
22,601
$
22,601
$
-
Assets held for the benefit
of improvement districts
227,419
159,724
177,599
209,544
Total liabilities
S
227,419
$
182,325
$
200,200
$
209,544
Performance and Refundable
Deposits Fund
Assets
Cash and cash equivalents $ 229,483 $ 412,934 $ 410,773 $ 231,644
Due from other non -agency funds - 200 - 200
Total assets $ 229,483 $ 413,134 $ 410,773 S 231,844
Liabilities
Vouchers payable
$
-
$ 404,277
S 404,277
$
-
Due to other agency funds
1,670
1,475
1,670
1,475
Accrued liabilities
-
1,228
-
1,228
Advances payable
227,813
412,284
410,956
229,141
Total liabilities
$
229,483
$ 819,264
$ 816,903
$
231,844
Payroll Clearance Fund
Assets
Cash and cash equivalents
$
341,667
$ 227,296,301
$ 227,213,621
$
424,347
Due from other non -agency funds
-
213,771,742
213,771,742
-
Other receivables
33,425
346,990
354,969
25,446
Total assets
$
375,092
$ 441,415,033
$ 441,340,332
$
449,793
Liabilities
Vouchers payable $ - $ 112,784,960 $ 112,784,960 $ -
Due to other agency funds 872 869 872 869
Accrued liabilities 374,220 236,79I,688 236,716,984 448,924
Total liabilities $ 375,092 $ 349,577,517 $ 349,502,816 $ 449,793
-1I3-
COUNTY OF HAWAII
Agency Funds
Combining Statement of Changes in Assets and Liabilities
For the Fiscal Year Ended June 30, 2014
Flexible Spending Account
Assets
Cash and cash equivalents
Liabilities
Accrued liabilities
Lapsed Warrants Fund
Assets
Cash and cash equivalents
Due from other agency funds
Other receivables
Total assets
Liabilities
Vouchers payable
Accrued liabilities
Total liabilities
Non -Profit License Plates Fund
Assets
Cash and cash equivalents
Liabilities
Vouchers payable
Due to other agency funds
Accrued liabilities:
Due to non-profit agency
Total liabilities
Organ and Tissue Education Fund
Assets
Cash and cash equivalents
Liabilities
Vouchers payable
Accrued liabilities - due to State of Hawaii
Total liabilities
Balance Balance
July 1, June 30,
2013 Additions Deductions 2014
$ 381,933 $ 325,224 $ 332,299 $ 374,858
$ 381,933 $ 325,224 $ 332,299 $ 374,858
$
234,640
$
12,608
$
4,503
$
242,745
2,542
2,444
2,542
2,444
10,065
58,070
10,066
58,069
$
247,247
$
73,122
$
17,111
$
303,258
$
-
$
4,502
$
4,502
$
-
247,247
91,872
35,861
303,258
$
247,247
$
96,374
$
40,363
$
303,258
$ 1,250 $ 5,042 $ 5,167 $ 1,125
$ - $ 5,130 $ 5,130 $ -
100 - 100
1,250 4,737 4,962 1,025
$ 1,250 $ 9,967 $ 10,092 $ 1,125
$ 954 $ 3,749 $ 3,755 $ 948
$ - $ 3,754 $ 3,754 $ -
954 3,576 3,582 948
$ 954 $ 7,330 $ 7,336 $ 948
- 114 -
COUNTY OF HAWAII
Agency Funds
Combining Statement of Changes in Assets and Liabilities
For the Fiscal Year Ended June 30, 2014
Business Improvement District 1-Kailua
Assets
Cash and cash equivalents
Other receivables - BID 1-Kailua Assessment
Other receivables
Total assets
Liabilities
Vouchers payable
Accrued liabilities - due to KVBID
Accrued liabilities
Assets held for the benefit
of improvement districts
Total liabilities
Total - All Agency Funds
Assets
Cash and cash equivalents
Investments
Due from other agency funds
Due from other non -agency funds
Other receivables - BID 1-Kailua Assessment
Other receivables
Total assets
Liabilities
Vouchers payable
Due to other agency funds
Accrued liabilities
Accrued liabilities - due to non-profit agency
Accrued liabilities - due to State of Hawaii
Accrued liabilities - due to KVBID
Advances payable
Assets held for the benefit
of improvement districts
Total liabilities
See accompanying independent auditors' report.
Balance Balance
July 1, June 30,
2013 Additions Deductions 2014
$ 184 $ 762,130 $ 761,610 $ 704
20,741 758,600 762,130 17,211
919 919 -
$ 20,925 $ 1,521,649 $ 1,524,659 $ 17,915
$ - $ 756,158 $ 756,158 $ -
121 704 121 704
62 5,389 5,451 -
20,742 746,708 750,239 17,211
$ 20,925 $ 1,508,959 $ 1,511,969 $ 17,915
$ 3,094,097 $ 253,315,949 $ 252,639,365 $ 3,770,681
189,525
3,713
-
193,238
2,542
2,444
2,542
2,444
-
213,771,942
213,771,742
200
20,741
758,600
762,130
I7,211
51,759
673,256
637,847
87,168
$ 3,358,664
$ 468,525,904
$ 467,813,626
$ 4,070,942
$ -
$ 137,550,183
$ 137,550,183
$ -
2,542
2,444
2,542
2,444
1,014,149
237,446,239
237,326,191
1,134,197
1,250
4,737
4,962
1,025
1,683,784
21,945,673
21,779,468
1,849,989
121
704
I21
704
239,724
427,395
422,867
244,252
417,094 1,637,872 1,216,635 838,331
$ 3,358,664 $ 399,015,247 $ 398,302,969 $ 4,070,942
- 115 -
COUNTY OF HAWAII
Private Purpose Trusts
Combining Statement of Private Purpose Trust Net Position
June 30, 2014
Assets
Cash and cash equivalents
Investments
Other Receivable
Total assets
Net Position
Held in trust for other parties
Total net position
See accompanying independent auditors' report.
- 116-
Shippers'
Total
Geothermal
Wharf
Private
Asset
Trust
Purpose
Fund
Fund
Trusts
$ 441,296
$
1,134,273
$
1,575,569
1,775,463
1,272,732
3,048,195
-
463
463
$ 2,216,759
$
2,407,468
$
4,624,227
$ 2,216,759
$
2,407,468
$
4,624,227
$ 2,216,759
$
2,407,468
$
4,624,227
- 116-
COUNTY OF HAWAII
Private Purpose Trusts
Combining Statement of Changes in Private Purpose Trust Net Position
For the Fiscal Year Ended June 30, 2014
Shippers' Total
Geothermal Wharf Private
Asset Trust Purpose
Fund Fund Trusts
Additions
Contributions:
Puna Geothermal Venture
Investment earnings:
Net increase (decrease) in fair value of
investments
Dividends
Interest
Total additions
Deductions
Claims Consultant
Grant payments
Total deductions
Change in net position
Net position, beginning of year
Net position, end of year
See accompanying independent auditors' report.
$ 50,000
$ -
$ 50,000
34,120
(16,686)
17,434
-
56,995
56,995
9,341
1,021
10,362
93,461
41,330
134,791
34,745
-
34,745
-
248,297
248,297
34,745
248,297
283,042
58,716
(206,967)
(148,251)
2,158,043
2,614,435
4,772,478
$ 2,216,759
$ 2,407,468
$ 4,624,227
-117-
This page intentionally left blank.
- 118-
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. 119
Revenue Capacity — These schedules contain information to help, the reader assess the County's
most significant local revenue source, the property tax. 124
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. 134
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. 133
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. 135
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Table 4
COUNTY OF HAWAII
Changes in Fund Balances, Governmental Funds
(Modified accrual basis ofaccounting)
Last Ten Fiscal Years
(Amounts in thousands)
Total Expenditures
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
Revenues:
4,439
5,731
(14,681)
(39,931)
(63,442)
(98,272)
(70,499)
(20,281)
(18,176)
7,303
Property tax
$131,087
$153,207
5181,446
$208,313
$225,858
$215,548
$216,511
5208,231
$201,201
$223,482
Public smice company tax
6,351
6,812
7,396
8,381
20,229
9,647
9,297
9,897
10,766
10,380
Fuel tax
7,581
7,857
8,471
7,888
7,662
7,406
7,603
8,293
6,353
7,373
Public utility franchise tax
6,017
7,329
8,520
9,027
€1, 118
8,963
9,416
11,065
11,087
10,793
Licenses and permits
14,442
16,544
16,269
15,918
14,972
14,725
15,097
15,790
15,991
19,618
Intergovermnental
73,372
69,637
63,599
72,601
70,869
77,614
93,748
100,867
79,912
75,257
Charges for services
18,149
I9,852
21,685
22,I54
21,404
18,909
16,416
16,885
17,055
19,392
Investment earnings (loss)
3,104
5,223
10,291
12,144
8,914
2,253
510
406
(618)
1,699
Settlement contributions
-
-
-
-
-
-
-
-
12,500
Other
4,450
4,380
5,073
7,151
5,690
3,241
7,874
4,201
4,399
30,084
Total Revenues
264,553
290,841
322,750
363,577
376,716
358,306
376,472
375,635
358,646
398,078
Expenditures:
42,119
45,691
59,139
64,929
56,697
61,495
56,099
59,971
51,356
61,238
Current:
(42,119)
(45,691)
(59,139)
(64,929) 56,697) 61,495
56,099)
(59,971)
51,356)
(61,238)
Total other financing sources
35,965
Generalgovarmnent
26,183
31,153
37,652
42,991
45,882
40,586
34,251
35,088
33,360
36,679
Public safety
76,404
83,591
93,241
103,617
107,540
108,798
104,917
104,523
106,885
111,221
Highways and streets
9,787
12,608
14,033
19,529
17,159
20,222
17,114
17,338
17,923
20,270
Sanitation
21,883
26,565
31,817
33,405
35,025
35,675
28,424
29,511
30,672
29,949
Health, education and welfare
19,870
19,050
21,470
24,609
24,596
25,519
26,847
23,749
24,199
23,070
Culture and recreation
13,982
?4,731
27,128
18,179
18,853
17,266
16,001
16,763
16,337
18,334
Pension and retirernentcontributions
14,204
19,937
21,796
24,296
28,870
28,509
27,284
27,773
29,816
33,032
Employees'healthinsurance
16,168
16,133
16,941
18,089
19,119
23,573
25,212
25,902
26,011
26,786
Other postemployment benefits
-
-
-
13,629
14,950
15,700
17,307
-
3,170
Other
6,133
6,780
5,108
5,344
6,257
4,773
4,758
4,183
2,991
3,238
Debt service:
Principal
13,150
(4,060
16,076
E6,549
19,749
20,720
42,233
24,834
25,718
19,013
Interest
9,534
9,914
9,894
13,226
12,790
14,584
J4,84J
15,032
14,345
14,644
Capital outlay
32,816
30,588
52,285
70,156
89,368
100,653
87,782
71,220
48,565
51,369
Total Expenditures
260,114
285,110
337,431
403,508
440,158
456,578
446,97E
395,916
376,822
390,775
Revenues over (under) Expenditures
4,439
5,731
(14,681)
(39,931)
(63,442)
(98,272)
(70,499)
(20,281)
(18,176)
7,303
Other Financing Sources (Uses):
Sale of assets
1,486
82
5
3,470
58
10
6
153
1
10
Capital leases
1,369
404
2,403
2,187
1,026
1,948
47
2,521
1,307
14
State Revolving Fund loans
1,504
25
6,255
1,916
280
6,811
9,257
4,569
4,991
3,072
Sale ofbonds
30,000
25,000
85,000
-
50,000
45,000
-
50,480
Issuance of bond anticipation notes (HANs)
-
-
-
-
-
19,000
-
-
-
-
Refunding bonds
24,595
-
31,607
-
-
-
-
47,510
-
Premium on bonds
3,025
972
3,099
185
2,078
17,570
Refunding bonds/BANs. issuance costs
(129)
-
(218)
-
([9)
Payment to refunded bond escrow agent
(25,885)
(32,699)
(45,352)
Retirement ofrefunded debt
-
-
(9,635)
Transfers in
42,119
45,691
59,139
64,929
56,697
61,495
56,099
59,971
51,356
61,238
Transfers out
(42,119)
(45,691)
(59,139)
(64,929) 56,697) 61,495
56,099)
(59,971)
51,356)
(61,238)
Total other financing sources
35,965
26,483
95,452
7,573
51,549
27,750
56,388
7,243
66,872
3,096
Net change in fund balances
$ 40,404
$ 32,214
S 80,771
S(32,358) $ (11,893) _L2$522)
4,111)
S (13,038)
$ 48,696
$ 10,399
Debt service as a percentage of
noncapitalcxpenditures
10,3%
9.7%
9.0%
9.3%
9.0%
10.4%
15.9%
12.3%
13.9%
10.0°/
Unaudited - see accompauying indepmdeut auditors' report,
- 123 -
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Table 6
COUNTY OF HAWAII
Principal Taxpayers
June 30, 2014 and 2005
Note: Gross valuation at January 1, 2013: $23,542,277,844
Gross valuation at January 1, 2004: $19,202,446,000
Source: County of Hawaii, Department of Finance, Real Property Tax Division
Unaudited - see accompanying independent auditors' report.
-128-
Fiscal Year 2014
Fiscal Year 2005
Percentage
Percentage
2013
of Total
2004
of Total
Assessed
Assessed
Assessed
Assessed
Taxpayer
Business
Valuation
Rank
Valuation
Valuation
Rank
Valuation
Mauna Kea/Hapuna Beach Corps,
Developer/Hotel
$ 172,664,900
3
0.7%
Hilton Land Investment I LLC
Hotel
201,844,300
1
0.9%
-
-
Hualalai Investors LLC
Developer/Hotel
185,883,000
2
0.8%
-
-
Orchid 09 LLC
Hotel
112,853,500
5
0.5%
-
-
WB KD Acquisition LLC
Developer
66,357,900
7
0.3%
-
-
Mauna Lani Resort Inc.
Developer/Hotel
93,320,500
6
0.4%
99,337,000
9
0.5%
Hilton Resorts Corp.
Timeshare
148,089,500
4
0.6%
-
-
Target Coporation
Retailer
64,456,100
9
0.3%
-
-
Kohanaiki Shores LLC
Developer
65,032,900
8
0.3%
-
-
Ho Retail Properties
Devoloper
59,844,900
10
0.3%
-
-
BP Bishop Estate
Developer
-
-
488,641,200
1
2.5%
Mauna Kea Development Corp
Hotels/Dev.
-
-
201,862,600
3
1.1%
WB Kukio Resorts LLC
Developer
-
-
113,874,600
8
0.6%
WB Manini'owali LLC
Developer
-
-
128,253,000
6
0.7%
Global Resort Partners
Hotel
-
-
171,043,600
4
0.9%
Liliuokalani Trust Estate
Land Trust
-
-
218,507,500
2
1.1%
FHR (ML) Hotel Holdings LLC
Hotel
-
-
120,000,000
7
0.6%
Kaupulehu Makai Venture
Developer
-
-
159,249,800
5
0.8%
RWH Inc.
Hotel
-
-
59,804,200
10
0.3%
$1,170,347,500
5.1%
$ 1,760,573,500
9.2%
Note: Gross valuation at January 1, 2013: $23,542,277,844
Gross valuation at January 1, 2004: $19,202,446,000
Source: County of Hawaii, Department of Finance, Real Property Tax Division
Unaudited - see accompanying independent auditors' report.
-128-
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6
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Table 9
COUNTY OF HAWAII
Ratios of General Bonded Debt Outstanding
Last Ten Fiscal Years
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.
- 131 -
Debt
Percent of
Applicable to
Net Taxable
Fiscal
Legal Debt
Property
Per
Year
Margin (a)
Value (b)
Capita (c)
2005
$ 195,198,142
1.3%
$ 1,167
2006
205,219,940
1.2%
1,199
2007
281,836,503
1.2%
1,633
2008
265,431,280
1.0%
1,510
2009
296,53 5,925
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%
NIA
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.
- 131 -
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Table 11
COUNTY OF HAWAII
Demographic and Economic Statistics
Last Ten Fiscal Years
Fiscal
*Personal
*Per
Year
*Resident
Income
Capita
Ended
Population
(thousands
Personal
School
Unemployment
June 30,
as of July 1
of dollars)
Income
Enrollment
Rate
2004
162,852
$
4,223,829
$
25,937
29,827
3.9%
2005
168,237
$
4,638,838
$
27,573
30,262
3.3%
2006
173,536
$
5,064,624
$
29,185
30,539
3.0%
2007
177,733
$
5,509,169
$
30,997
30,6.18
3.4%
2008
181,506
$
5,899,236
$
32,502
30,408
5.7%
2009
183,629
$
5,517,497
$
30,047
30,138
9.9%
2010
185,381
$
5,717,885
$
30,844
29,741
10.0%
2011
187,229
$
6,114,237
$
32,656
30,103
9.7%
2012
189,191
$
6,318,657
$
33,398
30,314
8.3%
2013
190,821
$
6,544,583
$
34,297
n/a
6.6%
* Amounts reflect subsequent adjustments
Source: County of Hawai` i, Department of Research and Development, Bureau of Economic Analysis
and State of Hawaii Department of Labor
Unaudited - see accompanying independent auditors' report.
-133-
Employer
State of Hawaii
County of Hawaii
United States Government
Hilton Waikoloa Village
KTA Super Stores
Walmart
Target Stores
Four Seasons Resort HuaIaIai
The Fairmont Orchid, Hawaii
Mauna Kea Beach Hotel
Mauna Lani Bay Hotel
Hapuna Beach Prince Hotel
Total
Total employee count
NOTES;
(a) Data for Fiscal Year 2005 is unavailable.
(b) Exact employee count is unavailable.
Table 12
COUNTY OF HAWAII
Principal Employers, County of Hawaii
June 30, 2014 and 2005
2014 2004(a)
Percentage Percentage
of Total County of Total County
Employees Rank Employment Employees Rank Employment
8,229
2,657
1,430
910
767
660
490
(b)
640
800
16,583
1
2
3
4
7
8
10
6
9
5
Source: County of Hawaii, Department of Research and Development and
Department of Finance
State of Hawaii Department of Labor and Industrial Relations and
Unaudited - see accompanying independent auditors' report.
- 134 -
10.2%
3.3%
1.8%
1.1%
1.0%
0.8%
0.6%
(b)
0.8%
1.0%
20.6%
80,700
7,608
2,291
1,221
1,100
785
557
600
556
580
542
15,840
1
2
3
4
5
8
6
9
7
10
10.0%
3.0%
1.6%
1.4%
1.0%
0.7%
0.8%
0.7%
0.8%
0.7%
20.7%
76,200
m
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