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AUDIT: 2011 AUDIT REPORT 1 1 JEFFERSON COUNTY, MONTANA Fiscal Year Ended June 30, 2011 t AUDIT REPORT 1 1 1 ' JEFFERSON COUNTY CLERK & RECORDER Box H Boulder, Montana 59632 ' NEQE0WF Denning, CERTIFIED PUBLIC ACCOUNTANTS JEFFERSON COUNTY, MONTANA ' Fiscal Year Ended June 30, 2011 TABLE OF CONTENTS Organization I Management Discussion and Analysis 2-7 ' Independent Auditor's Report 8-9 Financial Statements Government-wide Financial Statements Statement of Net Assets 10 Statement of Activities I I Fund Financial Statements Balance Sheet— Governmental Funds 12 Reconciliation of the Governmental Funds Balance Sheet to the Statement of Net Assets 13 t Statement of Revenues, Expenditures and Changes in Fund Balance—Governmental Funds 14 Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances of Governmental Funds to the Statement of Activities 15 Balance Sheet—Proprietary Funds 16 Statement of Revenues, Expenses, and Changes in Net Assets—Proprietary Funds 17 ' Statement of Cash Flows —Proprietary Fund Types 18 Fiduciary Funds — Statement of Fiduciary Net Assets 19 Fiduciary Funds—Statement of Changes in Fiduciary Net Assets 20 ' Notes to Financial Statements 21-41 1 Required Supplemental Information Budgetary Comparison Schedule 42-44 Budgetary Comparison Schedule— Budget-to-GAAP Reconciliation 45 ' Schedule of Funding Progress—Other Post Employment Benefits Other Than Pensions 46 Single Audit Section ' Schedule of Expenditures of Federal Awards 47 Notes to the Schedule of Expenditures of Federal Awards 48 ' Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with ' Government Auditing Standards 49-50 t 1 JEFFERSON COUNTY, MONTANA TABLE OF CONTENTS— Continued ' Independent Auditor's Report on Compliance with Requirements that could have a ' Direct and Material Effect on Each Major Program and on Internal Control Over Compliance in Accordance with OMB Circular A-133 51-52 Schedule of Findings and Questioned Costs 53-54 , Report on Prior Audit Recommendations 55 1 1 u , JEFFERSON COUNTY, MONTANA ORGANIZATION Fiscal Year Ended June 30, 2011 BOARD OF COUNTY COMMISSIONERS Leonard Wortman Chairperson David Kirsch Commissioner Tom Lythgoe Commissioner ' Matt Johnson COUNTY OFFICIALS County Attorney Patty O'Neill Treasurer ' Bonnie Ramey Clerk and Recorder Marilyn Craft Clerk of District Clerk Dennis Giulio Justice of the Peace ' Garry Pace School Superintendent 1 1 ' -1- ' Jefferson County ' Management's Discussion and Analysis Fiscal Year Ended June 30, 2011 ' The financial management of Jefferson County Montana offer this discussion and analysis of the financial statements as a narrative to provide an easy to read and understand over view of the Jefferson County financial documents, which are also included. The public is encouraged to read this analysis, and the corresponding financial reports. The Financial Statements ' The financial statements presented herein include all of the activities of Jefferson County Montana using the integrated approach as prescribed by GASB Statement No. 34. The ' calculation of annual required contributions for post employee benefits as required by GASB 45 is on file at the Jefferson County Clerk&Recorders office. The Government-wide Financial Statements present the financial picture of the County from the economic resources measurement focus using the accrual basis of accounting. They present ' governmental activities and business-type activities separately. These statements include all assets of the County as well as all liabilities (including long term debt). Additionally, certain eliminations have occurred as prescribed by the statement in regards to inter-fund activity, payables and receivables. The Fund Financial Statement include statements for each of the three categories of activities; ' governmental, business-type and fiduciary. The governmental activities are prepared using the current financial resources measurement focus and modified accrual basis of accounting. The business-type activities are prepared using the economic resources measurement focus and the ' accrual basis of accounting. The fiduciary activities are agency funds, which only report a balance sheet and do not have a measurement focus. Reconciliation of the Fund Financial Statements to the Government-Wide Financial Statements are provided to explain the differences ' created by the integrated approach. In abbreviated terms the Government-wide Financial Statements deal with Mill Levy funded ' activities, such as the General Fund. The Business Type Activity Funds deal with enterprise funds, such as Solid Waste. The Fiduciary Balance Sheet is the Medical Flex Account. ' Financial Highlights • The Governmental Activities net assets of Jefferson County exceed its liabilities at the ' close of the most recent fiscal year by $11,678,503. • The Business-type Activities net assets of Jefferson County exceed its liabilities at the close of the most recent fiscal year by $ 941,026. ' -2- • Governmental Activities unrestricted net assets in the amount of$2,211,361, , and Business-type Activities unrestricted net assets in the amount of$616,756 may be used to meet the government's ongoing obligations to citizens and creditors in accordance with the county's fund designations and fiscal policies. , • The county's Governmental Activities net assets decreased by $727,872 . • The county's Business-type Activities net assets increased by $12,078. • Cash reserves remained at the same level as in 2009 and 2010. ' Analysis of Financial Highlights Jefferson County's financial position remains solid. The cash on hand has decreased in the ' amount of$1,507,132. A contributing factor was the county's expenditure of$653,587 in PILT ' funds for operating expenses in FY 2010-2011, and $655,000 in a loan to Jefferson Local Development Corp. (JLDC) from the Hard Rock Mine Fund for the Sunlight Business Park. The unrestricted net assets of$2,211,361 for Government Activities and $616,756 for Business- ' type Activities may be used to meet the government's ongoing obligations to citizens and creditors in accordance with the county's fund designations. , Jefferson County has continued in offering competitive salaries to our employees and quality services to our residents while bettering our cash for the year. The governing body will need to ' closely watch the budget as the financial condition of the country continues to oscillate. Jefferson County will continue to work towards bettering our cash position while safe guarding the services provided to county residents. ' Analysis of Significant Changes Federal PILT money was received by Jefferson County in the amount of$1,020,848. ' The north end voters of Jefferson County voted to create the North Jefferson County Library , District. Jefferson County has created several RSIDs. The purpose of the RSIDs is to improve existing ' roads with an asphalt surface. The RSIDs have allowed Jefferson County to add services to residents that are willing to partner with the county. These improvements also help Jefferson County improve its cash position. , Jefferson County has created two Tax Increment Financing (TIF) Districts. One is located in the northern end of the county and the other in the southern end. The districts are a proactive ' measure to help diversify the Jefferson County economy away from the over dependence on natural resources. The purpose of the TIF is to get public infrastructure developed in an area currently without infrastructure to set the stage for future value added industrial development. ' This is a good tool for local governments with limited resources to bring infrastructure using the tax increment from new development. TIF is for 15-years or could be longer if a bond is sold to finance the infrastructure. ' ' Analysis of Significant General Fund Variations There were no major variations in the General Fund budget. ' Analysis of Significant Capital Assets and Long Term Debt Jefferson County continues to pursue the creation of new RSIDs. These RSIDs cause long term debt, but allow Jefferson County to improve infrastructure with payment from residents who are ' benefitted by the improvements. This local partnership strategy has been very well received and will be an on-going program for Jefferson County. The Intercap Loan assumed by the county financed the completion of the following projects: the ' Justice Center storage addition and new roof; carpeting of the hall in the Annex Building; and replacement of the compressor in the 911 Center. ' The debt assumed by Jefferson County this fiscal year decreased by $25,702, and $76,826 for RSID #2517. A total of$150,000 was paid on RSID #2503, $30,000 was paid on RSID #2505, ' $3,979 was paid on RSID #2507, $15,557 was paid on RSID #2511, and $26,547 was paid on the Qwest 911 Lease, leaving $1,807,029 owed. Account RSID bonds Debt Paid Owed payable/Intercap Loan 07/01/2010 06/30/2011 ' 231400 RSID #2503 700,000 150,000 555,000 ' 231401 RSID #2505 405,000 30,000 375,000 235301 RSID # 2507 70,324 3,979 66,345 235302 RSID #2511 226,346 15,557 225,540 235306 RSID # 2517 172,375 13,678 249,201 ' 235305 Qwest911 Lease 100,675 26,546 74,129 235000 General Fund 1000 158,010 17,827 261,814 ' Infrastructure assets ' None applicable. ' Future Projects ' Mining operations have fluctuated in Jefferson County causing the net and gross proceeds to go down for fiscal year 2010-2011, thus affecting the taxable valuation. However,Jefferson County has many future projects which will provide better service to our residents, and county ' departments: -4- Jefferson County continues to provide information to county residents about how to ' create new RSIDs. This provides a vehicle for county residents to partner with the county to improve roads which residents use to access their homes and businesses. The resources the county has for improving roads and staying within the budget are limited, and the ' RSID process will allow us to continue to expand our capabilities. Jefferson County is now in the process of trying to establish a Water/Sewer District in the ' northern end of Jefferson County located in Clancy. It is a process similar to the establishment of an RSID. The rapid growth in the northern end has the potential to create water quality issues for people and their water supply wells. ' Jefferson County has received Treasure State Endowment Program (TSEP) funds to replace the Cottonwood Canyon Bridge over Cottonwood Creek. Jefferson County has , received Resource Advisory Committee (RAC) funds from the National Forest Service to improve the Basin Creek Bridge. Previous projects have been successfully completed bringing integrity to a structurally sound Jefferson County bridge system county wide. ' Jefferson County continues the process of negotiating with the National Forest Service and Bureau of Land Management for vacated land and buildings located in Boulder. The ' buildings would help the county address office space needs. The land may enable us to move forward with plans to develop an animal shelter, dealing with the ever growing problem of animal control. Jefferson County is looking at including several mills for ' animal control with the Sheriff s mill levy election in November 2012, The Community Transportation Enhancement Program (CTEP) provides money allocated , through the Montana Department of Transportation (MDT) for the purpose of improving communities. The Town of Whitehall will be allocated funds for building new sidewalks. Jefferson County's yearly allocation is approximately $46,000.00 in CTEP Funds. ' Jefferson County received a $50,000 grant from the RAC for weed control in the Elkhorn Mountains. ' Jefferson County is planning to reconstruct a portion of the Elkhorn Road. -5- , Jefferson County, Montana MD & A Comparisons ' June 30, 2011 ' Table 1 - Net Assets Governmental Business-type ' Activities Activities Change Change FYII FY10 Inc Dec FYII FY10 Inc Dec Current and other assets 10,006,294 10,775,188 (768,894) 672,205 673,982 (1,777) ' Capital assets 4,466,522 4,143,629 322,893 324,270 290,900 33,370 Total assets 14,472,816 14,918,817 (446,001) 996,475 964,882 31,593 ' Long-term debt outstanding 2,260,627 2,512,442 (251,815) 23,010 35,934 (12,924) ' Other liabilities 533,686 - 533,686 32,439 - 32,439 Total liabilities 2,794,313 2,512,442 281,871 55,449 35,934 19,515 ' Invested in capital assets, net of debt of debt 3,589,493 3,884,943 (295,450) 324,270 290,900 33.370 Restricted 5,877,649 8,288,990 (2,411,341) - 69,988 (69,988) Unrestricted(deficit) 2,211,361 232,442 1,978,919 616,756 568,060 48,696 ' Total net assets 11,678,503 12,406,375 (727,872) 941,026 928,948 12,078 ' Table 2 - Changes in Net Assets ' Governmental Business-type Activities Activities Change Change FYII FY10 Inc Dec FYII FY10 Inc Dec Revenues Program revenues(by major ' source). Charges for services 678,790 841,775 (162,985) 760,947 21,499 739,448 Operating grants&contributions 1,207,620 1,743,727 (536,107) 1,500 - 1,500 Capital grants and contributions 30,150 (30,150) - - ' General revenues (by major source): ' Property taxes for general purposes 4,235,256 4,725,671 (490,415) 7,622 776,740 (769,118) Miscellaneous 126,937 128,513 (1,576) - 79,935 (79,935) Interest/investment earnings 147,863 94,225 53,638 211 20 191 PILT 1,020,848 886,716 134,132 - - - ' State entitlement 709,950 654,606 55,344 - - - ' Grants and entitlements not restricted to specific programs 68,125 544 67,581 - - - Local Option Tax 450,683 442,219 8,464 - - - , Licenses and Permits 10,190 136,283 (126,093) - - - ' Contributions& donations 58,840 206,136 (147,296) - - - Total revenues 8,715102 9,890565 (1,175,463) 770,280 878,194 (107,914) Program expenses General government 3,302,048 3,056,626 245,422 Public safety 2,316,604 2,332,824 (16,220) , Public works 2,296,569 2,401,146 (104,577) , Public health 583,413 519,586 63,827 Social and economic services 175,407 154,877 20,530 ' Culture and recreation 406,347 468,238 (61,891) Housing and community ' development 205,432 250,880 (45,448) Conservation of natural resources 55,656 148,723 (93,067) , Debt service -interest 72,121 66,672 5,449 Solid Waste 759,806 700,125 59,681 ' Total expenses 9,413,597 9,399,572 14,025 759,806 700,125 59,681 Excess(deficiency)before special , items and transfers (698,495) 490,993 (1,189,488) 10,474 178,069 (167,595) Gain(loss)on sale of capital assets 15,668 2,400 13,268 1,604 - 1,604 , Transfers- net - (20,000) 20,000 - 20,000 (20,000) Increase(decrease) in net assets (682,827) 473,393 (1,156,220) 12,078 198,069 (185,991) t Denning, Downey & Associates, P.C. CERTIFIED PUBLIC ACCOUNTANTS ' 1740 U.S. Hwy 93 South, P.O. Box 1957, Kalispell, MT 59903-1957 INDEPENDENT AUDITOR'S REPORT ' Board of County Commissioners ' Jefferson County Boulder, Montana ' We have audited the accompanying financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of Jefferson County, Montana, as of and for the year ended June 30, 2011, which collectively ' comprise the County's basic financial statements as listed in the table of contents. These financial statements are the responsibility of Jefferson County management. 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 of material misstatement. An audit includes examining, on a test ' basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that ' our audit provides a reasonable basis for our 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, each major fund, and the aggregate remaining fund information of the Jefferson County, Montana, as of June 30, 201 t, and the respective changes in financial position, and where applicable, cash ' flows thereof for the year then ended in conformity with accounting principles generally accepted in the United States of America. ' As described in Note 1, the County has implemented the Fund Balance Reporting and Governmental Fund Type Definitions as required by the provisions of GASB Statement No. 54, as of June 30, 2011. ' In accordance with Government Auditing Standards, we have also issued our report dated March 30, 2012, on our consideration of the Jefferson County's internal control over financial reporting ' and our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing and not to provide an opinion on the internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be considered in assessing the results of our audit. 1 -8- Robert K. Denning, CPA Kim M. Downey, CPA Accounting principles generally accepted in the United States of America require that the ' management's discussion and analysis, budgetary comparison information, and schedule of funding for other post employment benefits other than pensions on pages 2 through 7, 42 through 45, and 46 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 Americas, 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. Our audit was conducted for the purpose of forming opinions on the financial statements that ' collectively comprise the County's basic financial statements. The accompanying schedule of expenditures of federal awards is presented for purposes of additional analysis as required by ' U.S. Office of Management and Budget Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations, and is not a required part of the basic financial statements of Jefferson County, Jefferson County, Montana. The schedule of expenditures of federal awards is , the responsibility of management and was derived from and relate directly to the underlying accounting and other records used to prepare the financial statements. The information has be subjected to the auditing procedures applied in the audit of the financial statements and certain ' additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the financial statements or to the financial statements themselves, and other additional procedures in accordance with auditing ' standards generally accepted in the United States of America. In our opinion, the information is fairly stated in all material respects in relation to the financial statements as a whole. 6A", " lunk"tm , CPR 5, 06. ' March 30, 2012 Jefferson County,Montana ' Statement of Net Assets June 30,2011 Governmental Business-type Activities Activities Total ASSETS ' Current assets: Cash and investments $ 6,851,063 $ 548,182 $ 7,399,245 Taxes and assessments receivable,net 1,099,914 124,023 1,223,937 Special assessments receivable deferred 925,000 925,000 Notes and loans receivable 780,935 780,935 Due from other governments 174,353 174,353 Total current assets $ 9,831,265 $ 672,205 $ 10,503,470 ' Noncurrent assets Restricted cash and investments $ 175,029 $ - $ 175,029 ' Capital assets-land 114,230 59,399 173,629 Capital assets-depreciable,net 4,352,292 264,871 4,617,163 Total noncurrent assets $ 4,641,551 $ 324,270 $ 4,965,821 Total assets $ 14,472,816 $ 996,475 S 15,469,291 ' LIABILITIES Current liabilities ' Accounts payable $ 18,000 $ - $ 18,000 Accrued payroll 73,724 5,823 79,547 Current portion of long-term liabilities 35,000 35,000 Current portion of long-term capital liabilities 91,454 - 91,454 ' Current portion of compensated absences payable 319,671 17,070 336,741 Total current liabilities $ 537,849 S 22,893 $ 560,742 Noncurrent liabilities ' Noncurrent portion of long-term liabilities $ 895,000 $ - $ 895,000 Noncurrent portion of long-term capital liabilities 785,575 785,575 Noncurrent portion of compensated absences 133,927 5,940 139,867 ' OPEB Liability 441,962 26,616 468,578 Total noncurrent liabilities $ 2,256,464 $ 32,556 $ 2,289,020 Total liabilities $ 2,794,313 $ 55,449 $ 2,849,762 ' NET ASSETS Invested in capital assets,net of related debt $ 3,589,493 $ 324,270 $ 3,913,763 Restricted for capital projects 72,651 - 72,651 Restricted for debt service 95,308 - 95,308 ' Restricted for special projects 5,709,690 - 5,709,690 Unrestricted 2,211,361 616,756 2,828,117 Total net assets $ 11,678,503 $ 941,026 $ 12,619,529 Total liabilities and net assets $ 14,472,816 S 996,475 $ 15,469,291 See accompanying Notes to the Financial Statements ' -10- Jefferson County,Montana Statement of Activities For the Placid Year Ended June 30,2011 Net(Expenses)Revenues and Changes in Net Assets Program Revenues _ Primary Government Operating Business- Charges for Grunts and Governmental type Functions/Pruemms Expenses Services Contributions Activities Activitin Total Primary government: GovemmenW activities: General government S 3,302,048 $ 353,920 S 114,870 $ (2,833,258) S - S (2,833,258) Public safety 2,316,604 221,877 375,910 1,718,817 ( ) - (1,718,817) Public works 2-796,569 69,869 607,767 (1,618,933) - (1,6)8,933) Public health 583,413 24,004 107,841 (451,568) - (451,568) Social and economic services 175,407 - Culture and recreation 406,347 9,120 1 (175,407) - (175,407) -7 32 (395.995) - (395,995) Housing and community development 205,432 - - (205,432) - Conservation of natural resources 55,656 ( 55,656)-interest 72,121 - (55,656) (72,121) (72,121) (7_,1_1) TOW governmental activities $ 9,413,597 $ M-,7-90 $ 1-707,620 $ (7,527,187) S - S (7,527,197) Business-type activities: Solid Waste S 759,806 $ 760,947 $ 1,500 $ - S 2,641 S 2,641 Total bustruu-type activities $ 759,806 $ 760,947 $ 1,500 $ - $ 2,641 S 2,641 Total primary government $ 10,173,403 $ 1,439,737 S 1?09,120 $ (7,527,187) S 2,641 S (7,524,546) i General Revenues: Property faces for general purposes $ 4,235,256 S 7,622 S 4,242,878 Miscellaneous 126,937 - 126,937 lntemsUinvestment earnings 147,863 211 148,074 PB.T 1,020,848 - 1,020,848 Sate entitlement 709,950 - 709,950 Grants and entitlements not restricted to specific programs 68,125 - 68,125 Local Option Tax 450,683 - 450,683 Licenses and Permits 10,190 - 10,190 Contributions&donations 58,840 - 58,840 Gain(loss)on sale of capital assets 15,668 1,604 17,272 Total general revenues,special items and tnmsfers S 6,844,360 $ 9,437 $ 6,853,797 Change in net assets S (682,827) S 12,078 $ (670,749) Net assets-beginning S 12,406,375 S 928,948 $ 13,335,323 Restatements (45,045) (45,045) Net assets-beginning-restated $ 12,36t,330 $ 928948 S 13,M,278 Net assets-end $ 11,678,503 S 941,026 S 12,619,529 See accompanying Notes to the Financial Statements; �9,m.ls�mmi•m q+•InrL IImL9�Avm»� ZZ/W�GI IS S6/119 B_Z— S S660Z f 61S6H�C S 899'555 f 980'2 t S ZS 001'6(6 S ZSCKS S L06[OZ'Z S >+alq Mg p�+•!pl!9nI R9y 1 R-9 168 S IYL[roZ S 8L/L S WS❑ S L9L[ f 980 HS7F S 06/96 ! 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The assets and liabilities of the internal service funds are included in governmental activities , in the government-wide statement of net assets 249,148 Long-term liabilities are not due and payable in the current period and therefore are not reported as , liabilities in the funds.(Does not include$20,501 of long-term debt relating to the Internal Service Fund) (2,240,576) The OPEB liability is reported on the Government wide financials and not in the funds. (441,962) Total net assets-governmental activities S 11,678,503 See accompanying Notes to the Financial Statements ' -13- ' Suleanl 9f R6Wex9,Fw•pmJiOUa.ad Clul88 ie Fred°"•- GanmsW Fwde Fx(Fe Pigl Yw fad"Jr.%,2011 OdR Tom H1N RxR Mix SWORMwtw NorW Red TIF G99evo4xal GaxlvomW GuerYFW R.1d FeMi4W. TM AUwx SmY RSIO MID Oiurin Fa Fe aevenu3s T4xm alaavnv,e f 1.172.05 f 165,111 1 1)91,010 1 - f - S - S 31,718 S 116(4,688 1 4,617,612 Ixeun ed F9m„0 2,3% - 450 - - - IO,fi25 13,465 L9c8^�x(e,xd 1,321,191 W,011 136,424 41,712 - - 841,930 3,991,928 111,193 I'm 215,975 - - 119,701 546,342 F 129,785 - - - - - - 21,511 116,301 28,]1) 159 19,534 - 78,691 36,691 - ".7m 212,355 1^°del°ewVd I 8,531 215 110 8,7% 411 % 1586 33638 21732.112 S 913.966 S 5967.191 S 50.40 1 79.123 S l6)tB $ IUIt S 3130,311 f 8.361351 FJ(YaNOITURCS G�4189�x9mrel f ;251,912 $ N S - S Mm 1 - f - f - S 119,108. S Pub88 x(YY 76.1a - 1.955.983 - - 1 7I,OT) 2.30,138 Y1✓J1C h4M - 1,09;170 - ;358 - - 3]6,556 mm 2,206,917 55,4]8 - - 527,151 SB;629 Ifi5,016 1]5,101 )Wowed 4m - 195,367 3%.367 � Oe4 107.950 - (4,182 205,432 C.9(vWJlxa„s 55,656 55,6% 17.831 _ - ISOp00 10.000 - 59,)65 237,5" C 1w-O 1.312 30.68] 17,875 19,217 7;121 CpiW°'°V1 43"8 1030% 336165 - 84186 5",1% TaJ opediF.x f 3.511.162 S 1195.360 $ 2.293118 f 301.085 S 180.687 S 47875 S 17 6556 f 2.611788 S 9,585.%I 5v4ms (d-fi °)9G464^xlow ymdimx S 215.020 5 (N13%) S 025255) f (2$513) $ (1015621 S (U."ll 1 0"358) 5 55.5b S 0 031]08) OTR811 FI29ARCTiVG WURC"(MS ) Ymw0)afene(Y b181mmdrtl S 89,9n S _ S - $ - f - S S - S 98,019 S 187,997 PnnA46®de 8972 afemaY upW 4sw dspmimo - 3.000 7.119 s,550 Is,66B T(eefmm M7,ON ISS,NI 495,181 - - - - 319,538 2,081,331 (1633,"3) W 6111 (445,729) (2131$13) T"odte E9,4oaR e9mrm lue) f _ (656.])1) $ 459W S 50;2% S (NMO 1 S S - S (9;622) S 156,806 M Ch o Fed Rd4909 S (421,751) S 177]4] $ IRON f (3011%1 1 101.5611 S MAI) S (3",839) f (1).099) S (867,102) Fd b.l .6� f 469,966 5 21 2,400 1 339,616 $ 3,560,602 1 105.321 f 31,58] $ - f 1,016,611 ! 2758,g1.%1191 - - 2,610 86101 fl.%5.'1911 Fd Wye-bvemry,ne.l.d $ 2.435,757 f 213.300 f 339,446 f _ 1.563.242 S 105.326 S 24,50 S (;6101 1 2.080.(40 f &]5&9% Fwlb.lxu"°d^F 1 3014,006 f 389.W S 516.4% S 3,2586% S _ 1,762 S 13500 5 (347,478) $ 3.013,741 1 38916(4 5¢rcmV4^W,8 Na(n n Ow FWIOrW 5memero Jefferson County,Montana Reconciliation of the Statement of Revenues,Expenditures ' and Changes in Fund Balances of Governmental Funds to the Statement of Activities For the Fiscal Year Ended June 30,2011 Amounts reported for governmental activities in the statement of activities are different because: Net change in fund balances-total governmental funds S (867,302) , Governmental funds report capital outlays as expenditures while governmental activities report ' depreciation expense to allocate those expenditures over the life of the assets: -Capital assets purchased 569,195 -Depreciation expense (258,705) Revenues in the Statement of Activities that do not provide current financial resources are not reported as ' revenues in the funds: -Donated capital assets 17,578 -Long-tern receivables(deferred revenue) 18,987 ' The change in compensated absences is shown as an expense in the Statement of Activities 8,514 ' Repayment of debt principal is an expenditures in the governmental funds,but the repayment reduces long. term debt in the Statement of Net Assets: ' -Long-term debt principal payments 257,588 Long term debt proceeds provide current financial resources to the governmental funds,but issuing debt increases long-term liabilities in the Statement of Net Assets: -Proceeds from the sale of long-term debt (187,997) Termination benefits are shown as an expense in the Statement of Activities and not reported on the , Statement of Revenues,Expenditures and Changes in Fund Balance: -Post-employment benefits other than retirement liability (220,981) Internal service funds are used by management to chore the costs of certain activities,to individual funds. ' The net revenue of the internal service funds is reported with the governmental activities of the Government-Wide Statement of Activities net of the amounts allocated to business-type activities and depreciation expense. (19,704) ' Change in act assets-Statement of Activities S (682,827) See accompanying Notes to the Financial Statements ' -15- ' Jefferson County, Montana ' Balance Sheet Proprietary Funds June 30,2011 ' Business-Type Activities- Governmental Enterprise Funds Activities ' Internal Service Solid Waste Fund ASSETS ' Current assets: Cash and investments $ 548,182 $ Taxes and assessments receivable,net 124,023 ' Total current assets $ 672,205 $ - Noncurrent assets: ' Capital assets- land $ 59,399 $ - Capital assets-depreciable, net 264,871 271,197 Total noncurrent assets $ 324,270 $ 271,197 Total assets $ 996,475 $ 271,197 LIABILITIES Current liabilities: Accrued payables $ - $ 1,998 Accrued payroll 5,823 Current portion of compensated absences payable 17,070 13,808 ' Total current liabilities $ 22,893 $ 15,806 Noncurrent liabilities: ' Noncurrent portion of compensated absences $ 5,940 $ 6,243 OPEB Liability 26,616 Total noncurrent liabilities $ 32,556 S 6,243 Total liabilities $ 55,449 $ 22,049 NET ASSETS Invested in capital assets,net of related debt $ 324,270 $ 271,197 Unrestricted 616,756 (22,049) Total net assets $ 941,026 $ 249,148 Total liabilities and net assets $ 996,475 $ 271,197 ' See accompanying Notes to the Financial Statements 1 -16- Jefferson County,Montana Statement of Revenues, Expenses,and Changes in Net Assets , Proprietary Funds For the Fiscal Year Ended June 30,2011 Business-Type , Activities-Enterprise Governmental Funds Activities Internal Service ' Solid Waste Fund OPERATING REVENUES Charges for services $ 20,090 $ 95,028 , Miscellaneous revenues - 21,656 Special assessments 740,857 - Totaloperatingrevenues $ 760,947 $ 116,684 t OPERATING EXPENSES Personal services $ 369,700 $ 134,260 Supplies 67,301 19,034 ' Purchased services 259,295 15,142 Fixed charges 23,750 7,292 Loss/bad debt expense 130 Depreciation 39,630 7,519 Total operating expenses $ 759,806 $ 183,247 Operating income(loss) $ 1,141 $ (66,563) ' NON-OPERATING REVENUES(EXPENSES) Taxes/assessments revenue $ 7,622 $ Intergovernmental revenue 1,500 - Interest revenue 211 Total non-operating revenues(expenses) $ 9,333 $ - Income(loss)before contributions and transfers $ 10,474 $ (66,563) ' Transfers in - 46,859 SPECIAL AND EXTRAORDINARY ITEMS ' Gain(loss)on sale of capital assets $ 1,604 $ - Change in net assets $ 12,078 $ (19,704) Net Assets - Beginning of the year $ 928,948 $ 268,852 ' Net Assets-End of the year $ 941,026 $ 249,148 See accompanying Notes to the Financial Statements t ' Jefferson County Statement of Cash Flows ' Proprietary Funds June 30,2011 Business-Type Activities ' Solid Waste Internal Service Fund Cash flows from operating activities: ' Cash received from providing services $ 774,275 $ 95,028 Cash received from miscellaneous sources 21,656 Cash payments to suppliers (350,346) (41,468) Cash payments to employees (363,493) (128,880) ' Net cash provided(used)by operating activities $ 60,436 $ (53,664) Cash flows from capital and related financing activities: ' Acquisition and construction of capital assets (73,000) (3,500) Gain on sale of asset 1,604 Net cash provided(used)by capital and related financing activities $ (71,396) $ (3,500) ' Cash flows from non-capital financing activities: Tax levies and contributions from the County 3,241 Transfers between funds - 46,859 ' Cash received from other sources 1,500 - Net cash provided(used)from non-capital financing activities $ 4,741 $ 46,859 Cash flows from investing activities: ' Interest on investments 211 Net cash provided(used)by investing activities $ 211 $ _ ' Net increase(decrease)in cash and cash equivalents $ (6,008) $ (10,305) Cash and cash equivalents at beginning 554,190 10,305 Restatements-includes beginning restricted cash Cash and cash equivalents at end $ 548,182 $ Reconciliation of operating income(loss)to net cash provided ' (used)by operating activities: Operating income(loss) $ 1,141 $ (66,563) Adjustments to reconcile operating income to net cash provided(used)by operating activities: ' Depreciation 39,630 7,519 Other post-employment benefits 13,308 Changes in assets and liabilities: ' Accounts Receivable 150 Compensated Absences 384 3,382 Accrued Wages Payable 5,823 1,998 Net cash provided(used)by operating activities $ 60,436 $ (53,664) See accompanying notes to the financial statements 1 1 -18- 1 Jefferson County,Montana Statement of Fiduciary Net Assets , Fiduciary Funds June 30,2011 Pension Investment Private Purpose Agency , Trust Funds Trust Funds Trust Funds Funds ASSETS Cash and short-term investments $ 50 $ 5,084,073 $ 23,680 $ 3,587,297 Taxes receivable - - 2,134,436 , Total assets $ 50 $ 5,084,073 $ 23,680 $ 5,721,733 LIABILITIES Warrants payable $ - $ - $ - $ 420,615 Accounts payable 50 Due to others - - 22,180 5,301,118 Total liabilities $ 50 $ - $ 22,180 $ 5,721,733 NET ASSETS ' Assets held in trust $ - S 5,084,073 S 1,500 See accompanying Notes to the Financial Statements , 19 ' Jefferson County, Montana ' Statement of Changes in Fiduciary Net Assets Fiduciary Funds For the Fiscal Year Ended June 30,2011 ' Investment Trust Private Purpose Funds Trust Funds ' ADDITIONS Contributions: Contributions to Investment Trust Fund $ 5,925,674 $ 20,256 Total contributions $ 5,925,674 $ 20,256 ' Investment earnings: - - Interest and change in fair value of investments $ 17,521 $ Total investment earnings $ 17,521 $ ' Total additions $ 5,943,195 $ 20,256 DEDUCTIONS ' Distributions from investment trust fund $ 6,081,260 $ 22,390 Total deductions $ 6,081,260 $ 22,390 Change in net assets $ (138,065) $ (2,134) Net Assets-Beginning of the year S 5,222,138 $ 3,634 ' Net Assets- End of the year $ 5,084,073 $ 1,500 See accompanying Notes to the Financial Statements 1 ' -20- JEFFERSON COUNTY, MONTANA ' NOTES TO THE FINANCIAL STATEMENTS June 30, 2011 NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The County complies with generally accepted accounting principles (GAAP). GAAP ' includes all relevant Governmental Accounting Standards Board (GASB) pronouncements. In the government-wide financial statements and the fund financial statements for the proprietary funds, Financial Accounting Standards Board (FASB) pronouncements and Accounting Principles Board (APB) opinions issued on or before November 30, 1989, have been applied unless those pronouncements conflict with or contradict GASB pronouncements, in which case GASB prevails. For enterprise funds ' GASB statement Nos. 20 and 34 provide the County the option of electing to apply FASB pronouncements issued after November 30, 1989. The County has elected not to apply those pronouncements. The County adopted the provisions of Governmental Accounting Standards Board statement No. 54 Fund Balance, Reporting and Governmental Fund Type Definitions for ' fiscal year ended June 30, 2011. The County included the PILT Fund as part of the General Funds. In prior years, the PILT Fund was reported as a special revenue fund. ' Financial Reporting Entity In determining the financial reporting entity, the County complies with the provisions of ' GASB statement No, 14, The Financial Reporting Entity, and includes all component units of which the County appointed a voting majority of the units' board; the County is either able to impose its will on the unit or a financial benefit or burden relationship exists. Primary Government ' Jefferson County is a political subdivision of the State of Montana governed by an elected, three-member Board of County Commissioners. The County is considered a primary government because it is a general purpose local government. Further, it meets the following criteria: (a) It has a separately elected governing body (b) It is legally separate and (c) It is fiscally independent from the State and other local governments. ' Basis of Presentation,Measurement Focus and Basis of Accounting. ' Government-wide Financial Statements: Basis of Presentation ' The Government-wide Financial Statements (the Statement of Net Assets and the Statement of Activities) display information about the reporting government as a whole ' and its component units. They include all funds of the reporting County except fiduciary funds. The statements distinguish between governmental and business-type activities. Governmental activities generally are financed through takes, intergovernmental ' revenues, and other non-exchange revenues. Business-type activities are financed in whole or in part by fees charged to external parties for goods or services. Eliminations have been made to minimize the double-counting of business type activities, ' -21- JEFFERSON COUNTY, MONTANA NOTES TO THE FINANCIAL STATEMENTS t June 30, 2011 The Statement of Activities presents a comparison between direct expenses and program ' revenues for each function of the County's governmental activities. Direct expenses are those that are specifically associated with a program or function. The County does not ' charge indirect expenses to programs or functions. The types of transactions reported as program revenues include 1) charges to customers or applicants who purchase, use, or directly benefit from goods, services, or privileges provided by a given function or ' activity and 2) operating grants and contributions, and 3) capital grants and contributions. Revenues that are not classified as program revenues, including all property taxes, are presented as general revenues. , Certain eliminations have been made as prescribed by GASB 34 in regards to inter-fund activities, payables and receivables. All internal balances in the Statement of Net Assets ' have been eliminated except those representing balances between the governmental activities and the business-type activities, which are presented as internal balances and eliminated in the total primary government column. In the Statement of Activities, ' internal service fund transactions have been eliminated; however, those transactions between governmental and business-type activities have not been eliminated. Measurement Focus and Basis of Accounting On the government-wide Statement of Net Assets and the Statement of Activities, both governmental and business-type activities are presented using the economic resources , measurement focus and the accrual basis of accounting. Under the accrual basis of accounting, revenues are recognized when earned and expenses are recorded when the liability is incurred regardless of the timing of the cash flows. Property taxes are , recognized as revenues in the year for which they are levied. Grants and similar items are recognized as revenue as soon as all eligibility requirements imposed by the provider have been met. The County generally applies restricted resources to expenses incurred , before using unrestricted resources when both restricted and unrestricted net assets are available. Fund Financial Statements: ' Basis of Presentation , Fund financial statements of the reporting County are organized into funds, each of which is considered to be separate accounting entities. Each fund is accounted for by providing a separate set of self-balancing accounts. Fund accounting segregates funds according to ' their intended purpose and is used to aid management in demonstrating compliance with finance-related legal and contractual provisions. The minimum number of funds is , maintained consistent with legal and managerial requirements. Funds are organized into three categories: governmental, proprietary, and fiduciary. An emphasis is placed on major funds within the governmental and proprietary categories. Each major fund is ' displayed in a separate column in the governmental funds statements. All of the remaining funds are aggregated and reported in a single column as non-major funds. A fund is considered major if it is the primary operating fund of the County or meets the ' following criteria: 22 ' JEFFERSON COUNTY, MONTANA ' NOTES TO THE FINANCIAL STATEMENTS June 30, 2011 ' a. Total assets, liabilities, revenues, or expenditures/expenses of that individual governmental or enterprise fund are at least 10 percent of the corresponding ' total for all funds of that category or type; and b. Total assets, liabilities, revenues, or expenditures/expenses of that individual governmental or enterprise funds are at least 5 percent of the corresponding ' total for all governmental and enterprise funds combined. Measurement Focus and Basis of Accounting ' Governmental Funds All governmental funds are accounted for using the modified accrual basis of accounting. ' Under the modified accrual basis of accounting, revenues are recorded when susceptible to accrual; i.e., both measurable and available. "Measurable" means the amount of the transaction can be determined. "Available" means collectible within the current period or ' soon enough thereafter to be used to pay liabilities of the current period. The County defined the length of time used for "available" for purposes of revenue ' recognition in the governmental fund financial statements to be upon receipt. Expenditures are recorded when the related fund liability is incurred, except for unmatured interest on general long-term debt which is recognized when due, and certain ' compensated absences and claims and judgments which are recognized when the obligations are expected to be liquidated with expendable available financial resources. General capital asset acquisitions are reported as expenditures in governmental funds and ' proceeds of general long-term debt and acquisitions under capital leases are reported as other financing sources. ' Property taxes, franchise fees, licenses, and interest associated with the current fiscal period are all considered to be susceptible to accrual and so have been recognized as revenues of the current fiscal period. Only the portion of special assessments receivable ' due within the current fiscal period is considered to be susceptible to accrual as revenue of the current period. Expenditure-driven grants are recognized as revenue when the qualifying expenditures have been incurred and all other grant requirements have been ' met. Entitlements and shared revenues are recorded at the time of receipt or earlier if the susceptible to accrual criteria are met. All other revenue items are considered to be measurable and available only when cash is received by the government. Major Funds: The County reports the following major governmental funds: 1 General Fund— This is the County's primary operating fund and it accounts for all financial resources of the County except those required to be accounted for in ' other funds. Road Fund—A special revenue fund which its' purpose is maintenance and repair ' of county roads. ' -23- JEFFERSON COUNTY, MONTANA NOTES TO THE FINANCIAL STATEMENTS , June 30, 2011 Public Safety — A special revenue fund created to provide safety for the residents ' of Jefferson County. Hard Rock Mines Trust — A special revenue fund that accounts for taxes on t mining for Hard Rock in Jefferson County. South Hills RSID— A debt service fund used to service the debt payments on the South Hills construction. Saddle Mountain RSID — A debt service fund used to service the debt payments t on the Saddle Mountain construction. North End TIF District— A special revenue fund that accounts for taxes received to finance urban renewal projects. Proprietary Funds All proprietary funds are accounted for using the accrual basis of accounting. These funds account for operations that are primarily financed by user charges. The economic , resource focus concerns determining costs as a means of maintaining the capital investment and management control. Revenues are recognized when earned and expenses are recognized when incurred. Allocations of costs, such as depreciation, are ' recorded in proprietary funds. Proprietary funds distinguish operating revenues and expenses from non-operating items. ' Operating revenues and expenses generally result from providing services and producing and delivering goods in connections with a proprietary fund's principal ongoing operations. The principal operating revenues for enterprise funds are charges to ' customers for sales and services. Operating expenses for enterprise funds include the cost of sales and services, administrative expenses, and depreciation on capital assets. All revenues and expenses not meeting this definition are reported as non-operating , revenues and expenses. When both restricted and unrestricted resources are available for use, it is the County's policy to use restricted resources first, then unrestricted resources as they are needed. , Major Funds: The County reports the following major proprietary funds: ' Solid Waste Fund — An enterprise fund that accounts for the activities of the Jefferson County's garbage collection operations. ' Fiduciary Funds , Fiduciary funds account for assets held by the government in a trustee capacity or as an agent on behalf of others. Trust funds account for assets held by the County under the terms of a formal trust agreement. ' 24 ' JEFFERSON COUNTY, MONTANA ' NOTES TO THE FINANCIAL STATEMENTS June 30, 2011 ' The investment trust fund is accounted for in essentially the same manner as the proprietary funds, using the same measurement focus and basis of accounting. The ' investment trust fund is used to account for the external portion of the investment pool held by the sponsoring government. ' The agency fund is custodial in nature and does not present results of operations of have a measurement focus. Agency funds are accounted for using the modified accrual basis of accounting. This fund is used to account for assets that the County holds for others in an ' agency capacity. NOTE 2. CASH, CASH EQUIVALENTS, AND INVESTMENTS ' Cash Composition Composition of cash, deposits and investments at fair value on June 30, 2011, are as ' follows: Primary Government ' Cash on hand and Deposits: Petty Cash $ 5,240 Cash in Banks: ' Demand Deposits 338,016 Savings Deposits 177,556 Time Deposits 1,806,574 ' Investments: State Short-Term Investment Pool (STIP) 12,786,168 Repurchase Agreements 1,035,566 ' Federal Home Loan Mortgage 10,018 Federal National Mortgage Association 69,631 Federal Home Loans 40,605 ' Total $ 26 ' Repurchase Agreements An agreement in which a governmental entity (buyer-lender) transfer cash to a broker dealer or financial institution (seller-borrower); the broker-lender or financial institution ' transfers securities to the entity and promises to repay cash plus interest in exchange for the same securities. Credit Risk Section 7-6-202, MCA, limits investments of public money of a local government in the following eligible securities: ' (a) United States government treasury bills, notes and bonds and in the United States treasury obligations, such as state and local government series (SLGLS), separate trading of registered interest and principal of securities (STRIPS), or similar United States treasury obligations; ' -25- JEFFERSON COUNTY, MONTANA NOTES TO THE FINANCIAL STATEMENTS , June 30, 2011 (b) United States treasury receipts in a form evidencing the holder's ownership of ' future interest or principal payments on specific United States treasury obligations that, in the absence of payment default by the United States, are held in a special custody account by an independent trust company in a certificate or book entry form with the federal , reserve bank of New York; or (c) Obligations of the following agencies of the United States, subject to the limitations in subsection 2 (not included): , (i) federal home loan bank; (ii) federal national mortgage association; (iii) federal home mortgage corporation; and ' (iv) federal farm credit bank. With the exception of the assets of a local government group self-insurance program, , investments may not have a maturity date exceeding 5 years except when the investment is used in an escrow account to refund an outstanding bond issue in advance. Section 7-6-205 and Section 7-6-206, MCA, state that demand deposits may be placed , only in banks and Public money not necessary for immediate use by a county, city, or town that is not invested as authorize in Section 7-6-202 may be place in time or savings , deposits with a bank, savings and loan association, or credit union in the state or place in repurchase agreements as authorized in Section 7-6-213. Section 7-6-202, MCA, as amended, now limits authorized investments in certain t securities that previously were permissible investments. The amendment does not apply to and does not require the sale of securities that were legal investments before the ' effective date of this act. However, the investments reported as collateralized mortgage obligations above are not authorized investments at the current time. The government has no investment policy that would further limit its investment choices. ' Short Term Investment Pool (STIP) Credit Quality ratings by the NRSRO as of June 30, ' 2011: Weighted Credit Average ' Amortized Ouali Maturi Security Investment Type Cost Rating in Days Asset Backed Commercial Paper $ 326,176,221 Al 18 ' Corporate Commercial Paper 289,334,734 At 58 Corporate Fixed Rate 7,173,761 Ai 15 ' Corporate Variable Rate 522,126,148 A2 34 Certificates of Deposit Fixed 28,012,037 A3 235 Certificates of Deposit Variable Rate 359,994,307 A2 36 Other Assets Backed 24,591,903 BBB N/A U.S. Government Agency Fixed Rate 100,013,159 A1+ 155 U.S. Government Agency Variable Rate 474,851,769 A1+ 20 t Money Market Funds (Unrated) 140,598,914 NR J Money Market Funds (Rated) 111,000,0000 AI+ I -26- ' JEFFERSON COUNTY, MONTANA ' NOTES TO THE FINANCIAL STATEMENTS June 30, 2011 ' Structured Investment Vehicles(SIV) 46,317.465 NR 5 Total Investments $ 2.430.190.418 Al 35 ' Securities Lending Collateral Investment Pool $ 32,271,105 NR * As of June 30, 2011, the Securities Lending Quality Trust liquidity pool had an ' average duration of 34 days and an average weighted final maturity of 105 days for U.S. dollar collateral. The duration pool had an average duration of 32 days and an average weighted final maturity of 952 days for U.S. dollar collateral. ' Audited financial statements for the State of Montana's Board of Investments are available at 555 Fuller Avenue in Helena, Montana. ' Custodial Credit Risk Custodial credit risk is the risk that, in the event of a bank failure, the government's ' deposits may not be returned to it. The government does not have a deposit policy for custodial credit risk. All deposits are carried at cost plus accrued interest. As of June 30, 2011 the government's bank balance was exposed to custodial credit risk as follows: Depository Account Balance ' Insured $ 1,027,831 Collateralized - Collateral held by the pledging bank's trust 1,153,151 department in the County's name. Total Deposits and Investments $ 2.180.982 Deposit Security Section 7-6-207, MCA, states (1) The local governing body may require security only for that portion of the deposits which is not guaranteed or insured according to law and, as to such unguaranteed or uninsured portion, to the extent of: (a) 50% of such deposits if the institution in which the deposit is made has a net worth of total assets ratio of 6%or more; or ' (b) 100% if the institution in which the deposit is made has a net worth of total assets ration of less than 6%. ' The amount of collateral held for County deposits at June 30, 2011, equaled or exceeded the amount required by State statutes. ' Interest Rate Risk The government does not have a formal investment policy that limits investment maturities as a means of managing its exposure to fair value losses arising from ' increasing interest rates. The following is a list of individual investments as of June 30, 2011 alone with their related interest rates and maturity dates. ' -27- JEFFERSON COUNTY, MONTANA NOTES TO THE FINANCIAL STATEMENTS , June 30, 2011 Interest Maturity ' Investment rate dates Amount Rocky Mt Bank Repurchase Agreement Varies N/A $ 485,631 Edward Jones FMNA Med Note 2.00% 11/30/2015 35,229 ' Edward Jones FHLB Con Bond 2.50% 02/16/1016 40,605 Edward Jones FNMA Med Note 2.45% 02/22/2016 35,512 Edward Jones FHLM Med Note 1.25% 09/15/2016 10,018 ' Wells Fargo Repurchase Agreement 1.30% 01/07/2014 550,086 Total $1,157,081 Concentration of Credit Risk The government places no limit on the amount the County may invest in any one issuer. The government's concentration of credit risk percentages follow for each investment ' issued that is not issued or explicitly guaranteed by the U.S. government and investments in mutual funds, external investment pools and other pooled investments: % of credit risk Repurchase Agreements 7.11% Cash and Investment Pool ' The government maintains a cash and investment pool that is available for use by all funds. Each fund type's portion of this pool is displayed on the combined balance sheet ' as "Cash and investments." In addition, investments are separately held by several of the government's funds. Investment in the Treasurer's Pools ' The County Treasurer invests on behalf of most funds of the County and external participants in accordance with the County's investment policy and Montana law. The ' County's pools are managed by the County Treasurer. The external portion of the County's investment pools are accounted for as investment trust funds. There are two types of investment trust funds reported by the County, pooled and individually directed , investment trust funds. The County has one pooled investment trust fund which is invested in STIP. The pooled ' funds invested in STIP are carried at fair value. The County invests funds for Cardwell School District and Jefferson High School. These ' investments are reported in an individually directed investment trust fund. The investments are non-negotiable certificates of deposit, cash and money market accounts carried at cost which approximates fair value. ' Non-pooled investments are also carried at fair value. The fair value of non-pooled ' investments is determined annually and is based on current market prices. The County has not provided nor obtained any legally binding guarantees during the ' fiscal year ended June 30, 2011 to support the value of the shares in the pool. 28 ' JEFFERSON COUNTY, MONTANA ' NOTES TO THE FINANCIAL STATEMENTS June 30, 2011 t As noted below State statutes limit the type of investments but provide no other regulatory oversight. ' Investment Income Income from pooled investments is allocated to the individual funds or external participants based on the fund or participant's month end cash balance in relation to total ' pooled investments. Condensed statements of investments pools ' The following represents a condensed statement of net assets and changes in net assets for the Treasurer's Pool as of June 30, 2011. ' Statement of Net Assets Net assets held in trust for all pool participants: Equity of internal pool participants S 8,318,681 ' Equity of external pool participants 5.084,073 Total equity $ 13.402.754 ' Condensed Statement of Changes in Net Assets External Internal Investment Earnings $ 17,521 $ 21,846 Contributions to Trust 5,925,674 11,196,851 Distributions Paid (6,081,260) (10,996,594) Net change in net assets S (138,065) $ 222,103 Net assets at beginning of year 5,222,138 8.096,577 ' Net assets at end of year $ 5.084,073 $ Cash equivalents ' For purposes of the statement of cash flows, the enterprise and internal services funds consider all funds (including restricted assets) held in the County's cash management pool to be cash equivalents. ' NOTE 3. RECEIVABLES ' An allowance for uncollectible accounts was not maintained for real and personal property taxes receivable. The direct write-off method is used for these accounts. Property tax levies are set on or before the second Monday in August, in connection with the budget process. Real property (and certain attached personal property) taxes are billed within ten days after the third Monday in October and are due in equal installments ' on November 30 and the following May 31. After those dates, they become delinquent (and a lien upon the property). After three years, the County may exercise the lien and take title to the property. Special assessments are either billed in one installment due ' November 30 or two equal installments due November 30 and the following May 31. Personal property taxes (other than those billed with real estate) are generally billed no later than the second Monday in July (normally in May or June), based on the prior November's levies. Personal property taxes, other than mobile homes, are due thirty days after billing. Mobile home taxes are billed in two halves, the first due thirty days after ' -29- JEFFERSON COUNTY, MONTANA NOTES TO THE FINANCIAL STATEMENTS ' June 30, 2011 billing; the second due September 30. The tax billings are considered past due after the ' respective due dates and are subject to penalty and interest charges. NOTE 4. INVENTORIES , The cost of inventories are recorded as an expenditure when purchased. NOTE 5. CAPITAL ASSETS 1 The County's assets are capitalized at historical cost or estimated historical cost. ' County policy has set the capitalization threshold for reporting capital assets at $15,000 and $5,000 for additions and betterments to existing capital assets. Gifts or contributions of capital assets are recorded at fair market value when received. The ' costs of normal maintenance and repairs are charged to operations as incurred. Improvements are capitalized and depreciated over the remaining useful lives of the related fixed assets, as applicable. Depreciation is recorded on a straight-line basis ' over the useful lives of the assets as follows: Buildings .................................... 50 years ' Building Improvements,,,,,,,,,,,,,,, 50 years Equipment other than Vehicles.,, 25 years Vehicles........................................ 7 years ' Public Domain Infrastructure,,.,,, 40 years System Infrastructure................... 25 years Office Equipment................... years ' Computer Equipment,,,,,,,,,,,,,,,,,,, 3 years In June 1999, the Governmental Accounting Standards Board (GASB) issued ' Statement No. 34 which requires the inclusion of infrastructure capital assets in local governments' basic financial statements. In accordance with Statement No. 34, the County has included the value of all infrastructure into the 2011 Basic Financial ' Statements. The government has elected not to retroactively report general infrastructure assets. A summary of changes in governmental capital assets was as follows: , Balance Additions/ Balance , July 1, 2010 Adiustments June 30.2011 Capital assets not being depreciated: $ 114,230 $ - $ 114,230 Other Capital Assets: Buildings $ 3,512,001 $ 44,128 $ 3,556,129 Improvements Other than Buildings 300,190 130.268 430,458 ' Machinery and Equipment 3,083.083 412,377 3.495 460 Total other Capital Assets at historical cost $ 6,895.274 $ 586,773 $ 7.482,047 Less Accumulated Depreciation $ (3,141,091) $(259,861) $ (3,400,952) Total -30- , JEFFERSON COUNTY, MONTANA ' NOTES TO THE FINANCIAL STATEMENTS June 30, 2011 The following is a summary of business-type capital assets were as follows: Balance Balance ' July 1, 2010 Additions June 30, 2011 Capital assets not being depreciated: Land $ 59,399 $ $ 59.399 ' Other Capital Assets: Improvements Other than Buildings $ 364,588 $ $ 364,588 Machinery and Equipment 383.301 73,000 456.301 Total other Capital Assets at historical cost $ 747,889 $ 73.000 $ 820.889 ' Less Accumulated Depreciation $(516,388) $ 3( 9,630) $(556,018) Total $ $ $ 24 7 ' A summary of changes in governmental internal service capital assets was as follows: Balance Balance July 1, 2010 Additions June 30, 2011 Capital assets being depreciated: Buildings $ 316,695 $ 3,500 $ 320,195 Machinery and Equipment 24.900 24.900 Total other Capital Assets at historical cost $ 341.595 $ 3,500 $ 345,095 Less Accumulated Depreciation $ (66,379) $ (7.519) $ (73J98 ' Total $171- $ _(4.0191 $_s'71.I97 Governmental activities capital assets depreciation expense was charged to functions as ' follows: Governmental Activities: ' General Government $ 43,843 Public Safety 113,446 Public Works 89,652 ' Public Health 784 Culture and Recreation 10,980 Total governmental activities depreciation expense $2�$ZQ ' NOTE 6. LONG TERM DEBT OBLIGATIONS ' In the governmental-wide and proprietary financial statements, outstanding debt is reported as liabilities. ' The governmental fund financial statements recognize the proceeds of debt and premiums as other financing sources of the current period. Issuance costs are reported as expenditures. ' Changes in Long-Term Debt Liabilities - During the year ended June 30, 2011, the following changes occurred in liabilities reported in long-term debt: ' -31- JEFFERSON COUNTY, MONTANA NOTES TO THE FINANCIAL STATEMENTS ' June 30, 2011 Governmental Activities: Balance Additions/ Balance Due July 1, 2010 Adjustments Deletions June 30 2011 within one year ' Special Assessment Bond $ 1,105,000 $ 5,000 $(180,000) $ 930,000 $ 35,000 Compensated Absences 458,730 - (5,132) 453,598 319,671 Intercap Loans 627,055 226,886 (51,041) 802,900 62,588 ' Capital Leases 100,676 - (26,547) 74,129 28,866 *Other Post Employment Benefits 220,981 220.981 441.962 - Total $ .512.44 $A5_2 $(262.720) $ 2.702.589 $44_6,125 *See Note 10 In prior years the general fund was used to liquidate compensated absences and claims ' and judgments. Business-type Activities: Balance Balance Due within July 1, 2010 Additions June 30, 2011 one year ' Compensated Absences $22,626 $ 384 $23,010 $ 17,070 *Other Post Employment Benefits 13.308 13,308 26,616 - Total $ 35;934 $ 2 $4,62_6 $1Q7_4 , *See Note 10 Special Assessment Debt - Special assessment bonds are payable from the collection of special assessments levied against benefited property owners within defined special ' improvement districts. The bonds are issued with specific maturity dates, but must be called and repaid earlier, at par plus accrued interest, if the related special assessments are collected. Rural special improvement districts bonds were issued with revolving fund ' backing. The County is obligated to levy and collect a general property tax on all taxable property in the County to provide additional funding for the debt service payments. The cash balance in the Revolving Fund must equal at least 5% of the ' principal amount of bonds outstanding. Special assessment bonds outstanding as of June 30, 2011 were as follows: Origination Interest Bond Maturity Bonds Annual Balance Purpose Date Rate Term Date Amount Payment June 30, 2011 Saddle Mountain RSID 11/15/2007 3-6% 20 yrs 07/01/2028 $ 537,000 varies $ 375,000 ' South Hills RSID 08/14/2007 3-6.5% 20 yrs 07/01/2027 783.000 varies 555,00 $1-300 $ 39444 -32- , JEFFERSON COUNTY, MONTANA ' NOTES TO THE FINANCIAL STATEMENTS June 30, 2011 ' Annual requirement to amortize debt: For Fiscal ' Year Ended Principal Interest 2012 $ 35,000 $ 47,163 2013 30,000 45,863 ' 2014 30,000 45,363 2015 40,000 44,463 2016 60,000 43,251 ' 2017 60,000 41,346 2018 65,000 39,421 2019 65,000 36,126 ' 2020 70,000 35,626 2021 75,000 31,846 2022 75,000 28,713 2023 80,000 25,413 2024 85,000 21,763 2025 75,000 17,775 2026 35,000 5,975 2027 40,000 4,400 2028 10,000 2.400 ' Total $ 930.00 Q $ L6 Intercap Loans Intercap loans have variable interest rates. Interest rates are subject to change annually. Interest rates to the borrower are adjusted on February 16`h of each year and are based on a spread over the interest paid on one-year term, tax-exempt bonds which are sold to fund the Ioans. Intercap loans outstanding as of June 30, 2011 were as follows: ' Origination Interest Maturity Principal Balance Purpose Date Rate Term Date Amount June 30. 2011 ' Big Dipper Road 09/19/2008 1.95-4.25% 15 yrs 08/15/2023 $ 80,000 $ 66,345 Improvement Building Purchase/Office 05115/2009 1.95-3.25% 10 yrs 08/15/2019 300,000 261,814 ' Remodel Moonlight Ridge Road 12/24/2009 1.95-3.25% 15 yrs 02/15/2025 249,221 225,540 Improvement ' Martinez Gulch Road 11/20/2009 1.95-3.25% 14 yrs 08/15/2024 217.333 249.201 Improvement Total $$46,5_54 $8W,2Q0 Reported in the governmental activities. t -33- JEFFERSON COUNTY, MONTANA NOTES TO THE FINANCIAL STATEMENTS ' June 30, 2011 Annual requirement to amortize debt: t For Fiscal Year Ended Principal Interest 2012 $ 62,588 $ 15,636 2013 63,729 14,393 2014 64,932 13,106 , 2015 66,171 11,795 2016 67,447 10,458 2017 68,763 9,095 2018 70,390 7,706 2019 71,516 6,285 2020 75,399 4,840 2021 41,530 3,713 2022 42,153 2,903 2023 42,799 2,080 , 2024 39,245 1,521 2025 26,238 512 Total $02,900 $� Capital Leases The County has entered into a lease which meets the criteria of a capital lease as defined ' by Statement of Financial Accounting Standards No. 13, "Accounting for Leases," which defines a capital lease generally as one which transfers benefits and risks of ownership to the lessee when all terms of the lease agreements are met. Capital lease obligations outstanding as of June 30, 2011 were as follows: Origination Interest Maturity Principal Balance ' Purpose Date Rate Term Date Amount June 30,2010 Qwest Comm- 12/17/2008 8.406% 5yrs 12/17/2013 $29.L= $2129 911 Emergency ' Reported in the governmental activities. Annual requirement to amortize debt: For Fiscal ' Year Ended Principal Interest 2012 28,866 5,136 2013 31,388 2,614 2014 13,875 293 Total $74..1 $8 Compensated Absences t It is the County's policy and state law to permit employees to accumulate a limited amount of earned but unused vacation benefits, which will be paid to employees upon separation from County service. Employees are allowed to accumulate and carry over a -34- ' JEFFERSON COUNTY, MONTANA NOTES TO THE FINANCIAL STATEMENTS June 30, 2011 t maximum of two times their annual accumulation of vacation, but no more than 90 days into the new calendar year. There is no restriction on the amount of sick leave that may be accumulated. Upon separation, employees are paid 100 percent of accumulated ' vacation and 25 percent of accumulated sick leave. The liability associated with governmental fund-type employees is reported in the governmental activities, while the liability associated with proprietary fund-type employees is recorded in the business-type ' activities/respective fund. NOTE 7. DEFICIT FUND BALANCES/NET ASSETS ' Fund Name Amount Reason for Deficit How Deficit will be eliminated Emergency Disaster $ (326) Short term cash shortage future collections Extension Service $ (12,898) Short term cash shortage future collections t Economic Development $ (372) Short term cash shortage future collections Museum $ (792) Short term cash shortage future collections Jack Mtn. Estates RSID $ (2,387) Short term cash shortage future collections Forest Park Estates RSID $ (8,431) Short term cash shortage future collections Clancy W&S District $ (15,000) Short term cash shortage future collections North End TIF District $(347,478) Fund startup money future collections Tobacco Grant $ (322) Short term cash shortage future collections NOTE 8. INTERFUND RECEIVABLES AND PAYABLES The composition of interfund balances as of June 30, 2011, were as follows: Due to/from other funds: ' Receivable Fund Payable Fund Amount General/PILT— Emergency Disaster— Major Governmental Nonmajor Governmental $ 326 ' General/PILT— Extension Services — Major Governmental Nonmajor Governmental 16,458 General/PILT— Museum— ' Major Governmental Nonmajor Governmental 2,166 General/PILT— Jack Mtn Estates RSID— Major Governmental Nonmajor Governmental 2,387 ' General/PILT— Forest Park Estates RSID- Major Governmental Nonmajor Governmental 8,431 t Hard Rock Mine Trust— Clancy Water& Sewer Dist. — Major Governmental Nonmajor Governmental 15,000 Montana City Water & Sewer Hard Rock Mine Trust— Dist. — ' Major Governmental Nonmajor Governmental 69,791 Public Safety— Strat Prevention Incentive Grant— ' Major Governmental Nonmajor Governmental 16,621 Hard Rock Mine Trust— North End TIF District— Major Governmental Major Governmental 368,473 ' General/PILT— Tobacco Grant— Major Governmental Nonmajor Governmental 3,475 $503.128 ' -35- JEFFERSON COUNTY, MONTANA NOTES TO THE FINANCIAL STATEMENTS ' June 30, 2011 Interfund Transfers ' The following is an analysis of operating transfers in and out during fiscal year 2011: ' Major Major Receivable fund Fund Payable fund Fund Amount , HB 645 stimulus fund No General Yes $ 50,083 Internal Service No General Yes 9,285 Fair No General Yes 22,794 ' Capital Improvement Fund No Junk Vehicle No 7,233 Economic Development No Hard Rock Mine Trust Yes 22,772 Public Safety Yes Stat Prev. Incentive Grant No 5,830 ' Planning No Land Use Planning No 4,175 Economic Development No Hard Rock Mine Trust Yes 31,869 General Yes Employer Group Health Ins No 1 1,71 1 Planning No Economic Development No 51,355 ' Public Safety Yes General Yes 418,719 Internal Service No General Yes 37,574 General Yes General Yes 684,383 Road Yes General Yes 403,683 Health and Sanitation No General Yes 7,322 Mosquito Dist#I No Mosquito Dist#I Fee No 10,000 ' General Yes Permissive Medical No 11,780 General Yes Permissive Medical No 179,220 Road Yes Permissive Medical No 51,858 ' Bridge No Permissive Medical No 1,534 District Court No Permissive Medical No 13,859 Planning No Permissive Medical No 13,859 Extension Service No Permissive Medical No 9,806 ' Public Safety Yes Permissive Medical No 70,632 Economic Development No Permissive Medical No 2.877 $2JL4 NOTE 9. STATE-WIDE RETIREMENT PLANS All full-time County employees are covered under one of the following retirement plans: Montana Public Employees Retirement System (PERS) or Sheriffs Retirement System (SRS). The plans are established by State law and administered by the State ' of Montana. The plans are cost-sharing multiple-employer defined benefit plans that provide retirement, disability and death benefits to plan members and beneficiaries, with amounts determined by the State. t Contribution rates are required and determined by State law. The contribution rates, expressed as a percentage of covered payroll for the fiscal year ended June 30, 2011, ' were: -36- ' JEFFERSON COUNTY, MONTANA NOTES TO THE FINANCIAL STATEMENTS June 30, 2011 ' PERS SRS Employer 7.070% 10.115% Employee 6.900% 9.245% ' State 0.100% - The State contribution qualifies as an on-behalf payment. These amounts have not ' been recorded in the County's financial statements and were considered immaterial. Publicly available financial reports that include financial statements and required supplementary information may be obtained for the plans by writing or calling: Public Employees Retirement Division, P.O. Box 200131, Helena, Montana 59620-0131 Phone: 1-406-444-3154. ' The County's contributions for the years ended June 30, 2009, 2010, and 2011, as listed below, were equal to the required contributions for each year. PERS SRS 2009 $192,570 $68,576 2010 $21,0234 $81,226 2011 $211,538 $89,263 NOTE 10. POSTEMPLOYMENT HEALTHCARE PLAN Plan Description. The healthcare plan provides for, and Montana State Law (2-18-704) ' requires local governments to allow employees with at least 5 years of service and who are at least age 50 along with surviving spouses and dependents to stay on the government's health care plan as long as they pay the same premium. Since retirees are usually older than the average age of the plan participants they receive a benefit of lower insurance rates. This benefit is reported as the Other Post Employment Benefits (OPEB) liability. The government has less than 100 plan members and thus qualifies to use the ' "Alternative Measurement Method" for calculating the liability. The above described OPEB plan does not provide a stand-alone financial report. Funding Policy. The government pays OPEB liability costs on a pay-as-you-go basis. A trust fund for future liabilities has not been established. ' Funding Status and funding Progress. The funded status of the plan as of June 30, 2010, was as follows: Actuarial Accrued Liability (AAL) $1,342,567 ' Actuarial value of plan assets $ Unfunded Actuarial Accrued Liability (UAAL) $1,342,567 Funded ratio (actuarial value of plan assets/AAL) 0% ' Covered payroll (active plan members) $2,757,093 UAAL as a percentage of covered payroll 49% ' Annual OPEB Cost and Net OPEB Obligation. The government's annual other post employment benefit (OPEB) cost (expense) is calculated based on the annual required ' -37- JEFFERSON COUNTY, MONTANA NOTES TO THE FINANCIAL STATEMENTS , June 30, 2011 contribution of the employer (ARC), an amount determined in accordance with the ' parameter of GASB statement 45. 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 , following table shows the components of the government's annual OPEB cost for the year, the amount actually contributed to the plan, and changes in the government's net OPEB obligation. , Annual Required Contribution (ARC) $234,289 Interest on net OPEB obligation $ - ' Adjustment to ARC $ Annual OPEB cost (expense) $234,289 Contributions made $_ ' Increase in net OPEB obligation $234,289 Net OPEB obligation- beginning of year $234,289 Net OPEB obligation - end of year $468,578 Actuarial Methods and Assumptions. The following actuarial methods and assumptions were used: ' Unit Credit Actuarial cost method Cost Method ' Average age of retirement (based on historical data) 62 Discount rate (average anticipated rate) 0.34% Average salary increase 2.80% ' Health care cost rate trend (Federal Office of the Actuary) Year % Increase t 2012 5.50% 2013 6.10% 2014 6.60% , 2015 6.70% 2016 7.00% 2017 6.80% ' 2018 6.80% 2019 6.80% 2020 6.60% ' 2021 and after 6.60% NOTE 11. RESTRICTED CASH/INVESTMENTS ' The following restricted cash/investments were held by the County as of June 30, 2011 ' These amounts are reported within the cash/investment account on the Statement of Net Assets. -38- , 1 JEFFERSON COUNTY, MONTANA ' NOTES TO THE FINANCIAL STATEMENTS June 30, 2011 ' Fund Description Amount Road Gas Tax - Restricted for Road Improvements $61,229 Library Donations- Restricted for library improvements t08,538 ' Planning Donations - Restricted for subdivision improvements 1,500 South Hills RSID Restricted for Debt Service payments 3 762 $_L2�02 ' NOTE 12. FUND BALANCE CLASSIFICATION POLICIES AND PROCEDURES ' For committed fund balance the government's highest level of decision-making authority is by board action in the form of a resolution and the formal action that is required to be taken to establish, modify or rescind a fund balance commitment is by resolution. ' For assigned fund balance the body or official authorized to assign amounts to a specific purpose are the County Commissioners and the policy established by the governing body ' pursuant to which that authorization is given is by board minutes. The government considers restricted amounts to have been spent first when an ' expenditure is incurred for purposes for which both restricted and unrestricted fund balance is available. ' The government considers that committed amounts would be 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 ' could be used. Major Funds Hard South Saddle North Other Total General Public Rock Hillis Mtn End Governmental Governmental Fund R afety S Mine RSID RSID TIF Funds Funds Restricted for: General government $ - $ - $ - $ - $ - $ - $ - S 51.286 $ 51,286 ' Public safety - 516,490 - _ - - 284,982 801,472 Public works 389,547 312,867 702,414 Public health 419,491 419,491 Social and economic services = - - 3,258,086 - - - 3,258,086 Culture and recreation 347,946 347,946 Housing and community development - - - - - - - 186,181 186,181 ' Miscellaneous - - _ _ - 400,610 400,610 13500 Debt service 3,762 , 78,046 95,308 Capital improvements - 72651 71651 Total Restricted S 389J4 7 $516.490 2808 $3,762 13500 214060 $6.335.445 ' Unassigned $2,014.00 s S $ $. 5 347478 V110.319 11,556.20 Total fund balances $2,014.00 6 $389.54 516 490 $3-258.08 $3362 I 500 S(347,478 S2,043,741 $7,891,65 ' NOTE 13. RESTATEMENTS During the current fiscal year, the following adjustments relating to prior years' ' transactions were made to fund balance and net assets. ' -39- JEFFERSON COUNTY, MONTANA NOTES TO THE FINANCIAL STATEMENTS ' June 30, 2011 Fund Amount Reason for Adjustment ' PILT $1,965,791 To comply with GASB 54 General (1,965,791) To comply with GASB 54 Hard Rock Mine (2,640) Reclassify prior year expense North End TIF District 2,640 Reclassify prior year expense PILT 40,407 Write off prior year loan between funds HB 645 - Stimulus Project (40,407) Write off prior year loan between funds ' PILT 4,388 Reclassify prior year expense Crime Victims Assistant (4,388) Reclassify prior year expense Governmental Activities 43,889 To properly classify Long Term Debt , Governmental Activities 1,156 To properly classify Capital Assets NOTE 14. SERVICES PROVIDED TO OTHER GOVERNMENTS Jefferson County provides various financial services to other governmental entities ' located within the County. The County serves as the billing agent, cashier and treasurer for tax and assessment collections for various taxing jurisdictions. The County also serves as a bank for such agencies as school districts, irrigation districts, rural fire , districts, and other special purpose districts. The funds collected and held by the County for other entities are accounted for in agency funds. Funds collected for incorporated cities and towns are periodically remitted to those entities by the County Treasurer. The ' County has not recorded any service charges for the services it provides other governmental entities. NOTE 15. RISK MANAGEMENT ' The County faces considerable number of risks of loss, including (a) damage to and loss , of property and contents, (b) employee torts, (c) professional liability, i.e., errors and omissions, (d) environmental damage, (e) workers' compensation, i.e., employee injuries, and (f) medical insurance costs of employees. Settled claims resulting from these risks ' have not exceeded commercial insurance coverage in any of the past three fiscal years. Insurance Polices: ' Commercial policies transferring all risks of loss, except for relatively small deductible amounts are purchased for property and content damage, employees torts, and professional liabilities. Employee medical insurance is provided for by a commercial ' carrier. And, given the lack of coverage available, the County has no coverage for potential losses from environmental damages. Insurance Pools: ' Jefferson County has joined with other Montana counties to form a self-insurance pool , offering workers' compensation coverage. This pool, named the Montana Association of Counties Workers' Compensation Trust, has entered into an agreement with a private management firm to provide claim administrative services. The Trust has also entered , into an agreement with the Montana Association of Counties to provide general -40- ' 1 JEFFERSON COUNTY, MONTANA 1 NOTES TO THE FINANCIAL STATEMENTS June 30, 2011 ' administrative services. The Counties do not exercise specific control over the budgeting and financing of the Trust's activities. ' Audited financial statements for fiscal year ended September 30, 2010, are available from the Montana Association of Counties Workers' Compensation Trust. ' The County's share of these assets, liabilities, and changes in net assets is not available. The County has joined with 28 other Montana Counties to form a self-insurance pool ' offering liability and general insurance coverage. This pool, named the Montana Association of Counties Joint Powers Insurance Authority Trust, provides for property, liability, public officials errors and omissions, and crime coverage in the amount of ' $50,000 each. The Trust also provides for additional coverage's for the above areas through excess insurance lines for varying amounts. The Trust has entered into an agreement with a private insurance agency to provide claim administrative services. The Trust has also entered into an agreement with the Montana Association of Counties to provide general administrative services. The counties do not exercise control over the budgeting and financing of the Trust's activities. The County's share of assets, liabilities, and changes in net assets is not available. ' Audited financial statements for the fiscal year ended September 30, 2010, are available from the Montana Association of Counties Join Powers Insurance Trust. ' NOTE 16. PENDING LITIGATION The following is a list of litigation pending against the County and the amount of ' damages claimed by the Plaintiff. The County Attorney has made no evaluation as to the outcome of each case. Damages Potential ' Case Requested of Loss Weikel v. Jefferson County S 50,000 Unknown Hustad v. Jefferson County 100,000 Unknown McCarty Creek Litigation—Smith v. Jefferson County 50,000 Unknown Gilmer v. Jefferson County 20,000 Unknown ' NOTE 17. SUBSEQUENT EVENTS Two large TSEP construction projects are underway for Basin Creek Bridge and tCottonwood Creek Bridge. Due to flooding in the County, flood damage repair will be done in the Clancy, Boulder, ' and Basin areas. Several construction projects are planned for the North End TIF District. ' -41- 1 ' REQUIRED SUPPLEMENTAL INFORMATION JdfaaOe County,Mo0ue4 Bed,,, Comp.v.S W.k For thr Far V. Eedd J..M.2011 Gruen)Fued Road ACTUAL ACTUAL AMOUNTS VARIANCE AMOUNTS VARIANCE BUDGETEDAMOUNTS (BUDGETARY WITH FLYAL BUDGETED AMOUNTS (BUDGETARY WITH FINAL RFSOUNCE5(INFLOWS): O t-INA FINw1 BASIS Ser NOmA BURG ORIGINAL FINAL BASISISre NOVA B DG T Tn4eardutuumm $ 1,211,783 S 1,20],]86 S 1,172,075 S (35711) S 390,132 S 383,250 $ M5,111 S (2;139) IrceraeM9meb4 ;MI 2,361 2,390 29 - - Imrgovrmnmal 388,000 381,263 206,943 (174,320) 550028 550023 515,011 (5,016) Chm loetwirm 162,729 16?729 In.993 15,161 2.175 2,175 3,130 995 F.eml fwf. 140,625 127,925 124,785 (3,140) - - - _ hh.AW 15,952 15,852 25,769 9,917 100 100 459 359 bmlmrmeurvlp 42.000 42'm 18.531 (23469) 215 215 Apvmmi avaihbk f9 aW.P m S 1,963.490 S 1,939,916 S 1]28.386 S (211$30) S 942.435 S 919.552 S 913,966 S (25.586) CUARGES TO APPROPRIATIONS(OVTF WS) Gerd 9. S 2,318,550 S 2,316.534 S 2.225,984 $ 9,550 S 2,500 S 2,500 S 99 S 2,406 PublK aak y ,8)29 110,020 36,148 33,8M 18,395 - - - Pubhr.mka 876 876 - 836 LIIL5 1,268,401 1092,1]0 176,231 pubLC SLAIN ",900 5;845 55,4]8 (2,633) - _ - Secal aM rramao armors 8,410 6.410 10,381 - HoudeBmdrarmmnitrdevrlopmo9 - P,9]I) - - - Commv4ueo9fwuWlmemcm 201,273 201,279 55,656 145,622 Orb write -P�mr+W 29,000 28.000 17.827 10,173 - DcM rwrire 'uumea 5,80 5,750 4,312 1,438 - CapWoedeY 104.719 101719 45,"8 59,271 _ 50,000 74500 103,096 (28,596) Tout r6r 8r8rr w op� t 28W]II $ 2,e26432 $ 2,491,234 $ 335,198 S 1,345,"1 S 1,345.401 S 1,195,360 S 150041 A 01 HER FINANCMG SOVkC (USES) N Roreedr of 8r^rN bBtmm dmt S - S IM,372 S 89,978 S (46,394) S $ - S - S - t PrecWr 6om lAr Wr ofgemJ rap"aua dirperi09e 136,372 - - - 3.000 3.000 90,698 98),094 (21,594) 459,"7 45964] 455,5" (4,106) iemWbr wl 87,069 (22795) (22795) Te oNU 6uup0,RNIM1L4le.m) $ ID14"1 $ 1.022.265 S 9 ,m S (63,988) S 459,647 S 459647 S 458.541 S (1.106) Nm rham{em6'°d 6aWn S 191 429 S 177,147 Fwd balrrue-brynmrB ofWr3w S 969,966 $ 212,400 Reewrnvda 4,388) _ Flod 6r6Ue-bsµirair,8 atahc Yynr-ruu3" S 465.578 $ 212.400 Fued babun-rut eftee yrar S 6S7,M7 $ 389547 Jdferou County,Moms. Bn pfN C9mpr.Sc6Wd F9r We Pouf Year E°dad Ju0e M,2011 PulE Safety Hard Rork hl" Trust Amu01 ACTUAL ACTUAL AMOUNTS VARIANCE AMOUNTS VARIANCE BUDGETED AMOUNTS (BUDGETARY WITH FINAL BUDGETEDAMOUNTS (BUDGETARY WITH FINAL (INFLOWS); ORIGINAL FINAL BASISISORIGINAL NaA BUDGET ORIGINAL FINAL BASIS)S,Nnm A MUPG NESOURGES(IN f Tus W uaeaamems S 1.495.374 S 1,475,660 S 1,394,040 S (81,620) S - S - S - 5 - I3renreaM9ernuls 450 450 450 - _ _ Iaa99.an°uval 514,263 514,261 336,424 (In,819) 29,3@ 29,302 41,n2 12,470 Cwu (a avaices 198,547 198,547 215,975 17,428 - - Firo W f9Akima - _ - - - sh.dk"'"- 20,739 Mnq 19,534 (1,205) - - _ 1uwWlmu ."w - 7m 77(1 43,975 43,975 8798 (351n) ABUUVSo"*I .woprina0 S ;219373 S 2,209659 I L%7.193 I (242466) S 73,277 S 73,277 S 50,570 S (2;707) CHARGES TO APPROPWATIONS(OUTFLOWS); Gvr"59w0mul S - s - S - s - s - S 190,m s iw.m s - Pubtic"It, 1,998202 1,999,796 (X5,983 43,813 Public w9rV _ - 994,254 994,254 2,358 991,896 Pub4c 6uW _ _ _ Soot a9d acnovuc 9v9icn - _ _ _ _ 1lwvryl W ..-Y 4^+1°P°u°I - - - - 791,121 754,121 107,950 W.171 Cwemalpn o(wwWrawvice _ _ _ Drb4 w9vs-Pnw pW 1>rb 4wYL.u0ven _ _ _ Capi"9uWY 600.000 b00,00D 336,465 261535 Io kv,.mapp9pryW9m s 2596,202 S 2,5997% S 2.29zM S 307348 $ 1]48,375 S 1939,152 $ 301BBS S 1,638,067 ? OTHER FINANCING SOURCES(USES) l.J Rocmdr 9f,m k ,8 d S - $ - S $ - S S - $ - S - I 6--ft s4k of8mvW u W du90. 4,000 7,594 7,118 (476) _ Traaden la 459,351 09,351 495,181 5,830 - Tu°faru°1 - - (31,8691 (3!869) (54,wt) (22,7321 Ta olbr 6n9ci9g s9urm(u.a) 5 493,351 S 496,945 S 502.299 S 5.354 $ (31869) $ (31,869) S 154641) S (22,772) Na duryle in find 6Waora S In.w S (305,156) Fuud 6WUCC-6uysming ofWeYry S 339446 S 3,560.602 zw0 Find bJvue-be8io9iSflk 3sv-reav9d S 33906 S 3,563,242 EuW balance-eW NWse Yur s 516,490 S 1,259.086 J.ff.C.1"M..u B.af.l+v C..wdw.tnw.R Pw 3Se FwY Ywr Ended Juoe>4,3011 N.n End TIP Bouid ACTUAL AMOUNTS VARIANCE BUDGETED AMOUNTS (BUDGETARY WILL MAL NESOUNCLS(UVFLOWS): ORIGINAL �� BASISI See NmeA BUDGET T.ued weewamu s - t 1,916 S 31,718 5 29,W0 sicwre w6paaNf _ _ _ IruvporaomwW _ _ Che fare Fi9w eod fodnwrw _ InreRnmte4ra6YD Amaaw evdleye for epproprwian s $ 1,918 s 31,718 S 29,800 CHANGES TO APPROPRIATIONS(OUTPLOWSk Gwcd far�aaml s - 3 - f - t PLBC Wary - _ _ - PublcW u - 376,556 376,556 PubOC Bwllb _ - - - Sooel rod aamrnc wvw _ - _ Na"ri'W eOd wamadry d4Mopaea _ Corwrerim af9Rwd rawvm _ - DeM Vniw-pno ip, Depeaviu-m. Cepuel aaRy T9W rb.rEwa yp9giuiwu t t 376,556 S 376,556 5 OTHER FINANCING SOURCES(USES) A Pray DfgwK4d10o83w " f - s - $ - s L. P.."fl ib.u4e of Eecd weld 4YR dupwin9a - - Tno a - - - - Traodm M T9 Ikw fiweriad raarwa law) i t t t Nn rAe°Ba'°fw6lWaec $ (344,838) Fum 6eleoce-p4�aday a(De Ywr s - (26W) Fud Wlur'c-beginauy 9f Ns yev-rwud S (26401 F9W SWwe-wd of rSe Ywr 5 (347.478) Jefferson County,Montana Budgetary Comparison Schedule Budget-to-GAAP Reconciliation Note A-Explanation of differences between budgetary inflows and outflows and GAAP Revenues and Expenditures Hard Rock Mine North End T[F General Fund Road Public Safety Trust Account District Sources/inflows of resources Actual amounts(budgetary basis)"available for appropriation"from the budgetary comparison schedule $ 1,728,386 $ 913,966 S 1,967,193 $ 50,570 $ 31,718 Adjustment for PiLT fund as required by GASB#54 1,023,796 Total revenues as reported on the statement of revenues, expenditures and changes in fund balances-governmental funds. $ 2,752,182 $ 913,966 $ 1,967,193 $ 50,570 $ 31,718 Actual amounts(Budgetary basis)"total charges to appropriations" from the budgetary comparison schedule $ 2,491,234 $ 1,195,360 $ 2,292,448 $ 301,085 $ 376,556 Y, Adjustment for PILT fund as required by GASB#54 25,928 Total expenditures as reported on the statement of revenues, expenditures,and changes in fund balances-governmental funds $ 2,517,162 $ 1,195,360 $ 2,292,448 $ 301,085 $ 376,556 Jefferson County,Montana REQUIRED SUPPLEMENTAL INFORMATION Schedule of Funding Progress For the Year Ended June 30,2011 Actuarial UAAL as a Accrued Unfunded Percentage Actuarial Liability(AAL) AAL Funded Covered of Covered Actuarial Value of Assets Unit Credit Cost Method (UAAL) Ratio Payroll Payroll Valuation Date (a) (b) (b-a) (a/b) (c) ((b-a)/(c) July 1,2009 $ - $ 1,342,567 $ 1,342,567 0% $ 2,757,093 49% A Q` ' SINGLE AUDIT SECTION Jefferson County,Montana ' SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS For Fiscal Year Ended June 30,2011 Federal Pass-Through Federal Federal Grantor/Pass-Through CFDA Entity Identifying Expenditures Grantor/Program Title Number Number June 30.1011 U.S.Department of Aadculmre Posted though Mnaramt Department afAdmini.atratron: ' School and Roads-Grants to Slates 10.665 NIA S 240,168 School and Roads-Grants to Slates 10.665 N/A 32,310 Passed though Montana Board ofCrime Control: Juvenile Accountability Incentive 16.523 09-AI4-90837 14.070 Crime Victim Assistance 16.575 10-VOI.90807 31,542 ' Total U.S.Department of Agriculture S 318,090 U.S.Department of Transportation Pawed through the Stale Department ofTmnsportatron: ' Highway Planning and Construction 20.205 STPE 22(36) $ 137,401 Total U.S.Department of Transportalion S 137,401 U.S.Department of Health and Human Services ' Passed ihmugh Monona Department ofHealrh&Human Services. Public Health Emergency Preparedness 93.069 11-07-6.11-026-0 S 39,147 Substance Abuse and Mental Health Services Projects of Regional and National Significance 93.243 08-332-74412 148,514 Immunization Grants 93.268 10-074.31-021-0 6,684 Preventive Health and Health Services Block Grant 93.991 09-07.01-004 9,395 ' Maternal and Child Health Services Block Grant to the States 93.994 11-07-5.014)22-0 12,166 Total U.S.Department of Health and Human Services S 215,906 U.S.Department of Homeland Security Passed through Monana Deporlmem nfMilaefry Afliurs: Emergency Management Performance Grants 97.042 FY 2010-2010-EP-EO-0015 S 16,772 Homeland Security Grant Program 97.067 09HPLNEOP 3,750 Homeland Security Grant Program 97.067 2010-ss-10-0089 78,000 Total U.S.Department of Homeland Security $ 98,522 ' Total Federal Financial Assistance S 769,919 NIA=Not Applicable or Not Available _47_ JEFFERSON COUNTY, MONTANA NOTES TO THE SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS Fiscal Year Ended June 30, 2011 , Basis of Presentation ' The accompanying Schedule of Expenditures of Federal Awards includes the federal grant activity of Jefferson County, Jefferson County, Montana, and is presented on the modified , accrual basis of accounting. The information in this schedule is presented in accordance with the requirements of OMB Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations. Therefore, some amounts presented in this schedule may differ from amounts , presented in, or used in preparation of, the basic financial statements. 48 ' Denning, Downey & Associates, P.C. CERTIFIED PUBLIC ACCOUNTANTS , 1740 U.S. Hwy 93 South, P.O. Box 1957, Kalispell, MT 59903-1957 ' REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL ' STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENTAUDITING STANDARDS Board of County Commissioners ' Jefferson County Boulder, Montana We have audited the financial statements of the governmental activities, business-type activities, ' each major fund, and the aggregate remaining fund information of Jefferson County, Montana, as of and for the year ended June 30, 2011, which collectively comprise the Jefferson County's , basic financial statements and have issued our report thereon dated March 30, 2012. 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. Internal Control Over Financial Reporting , In planning and performing our audit, we considered the Jefferson County internal control over financial reporting as a basis for designing our auditing procedures for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the ' effectiveness of the Jefferson County's internal control over financial reporting. Accordingly, we do not express an opinion on the effectiveness of the Jefferson County's internal control over financial reporting. ' A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to , prevent, or detect and correct misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control such that there is a reasonable possibility that a material misstatement of the entity's financial statement will not be prevented, , or detected and corrected on a timely basis. Our consideration of internal control over financial reporting was for the limited purpose ' described in the first paragraph of this section and was not designed to identify all deficiencies in internal control over financial reporting that might be deficiencies, significant deficiencies, or material weaknesses. We did not identify any deficiencies in internal control over financial ' reporting that we consider to be material weaknesses, as defined above. Compliance and Other Matters ' As part of obtaining reasonable assurance about whether the Jefferson County's financial statements are free of material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts and grant agreements, noncompliance with which could , have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit and, accordingly, we do not express such an opinion. The results of our tests disclosed no instances of ' -49- Robert K. Denning, CPA Kim M. Downey, CPA ' noncompliance or other matters that are required to be reported under Government Auditing Standards. This report is intended solely for the information and use of management, the Board of County Commissioners, the Montana Department of Administration, and federal awarding agencies and pass-through entities and is not intended to be and should not be used by anyone other than these 1 specified parties. +t x", 4ew�.y, ".� ll Ge a eca�po CPAs PC. March 30, 2012 Q0 1 1 i 1 M 1 1 -50- Denning, Downey & Associates, P.C. CERTIFIED PUBLIC ACCOUNTANTS ' 1740 U.S. Hwy 93 South. P.O. Box 1957, Kalrspell, WT59903-1957 INDEPENDENT AUDITOR'S REPORT ON COMPLIANCE WITH REQUIREMENTS THAT COULD HAVE A DIRECT AND MATERIAL EFFECT ON EACH MAJOR , PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE IN ACCORDANCE WITH OMB CIRCULAR A-133 Board of County Commissioners Jefferson County Boulder, Montana ' Compliance , We have audited Jefferson County, Montana, compliance with the types of compliance requirements described in the U.S. Office of Management and Budget (OMB) Circular A-133 Compliance Supplement that could have a direct and material effect on each of Jefferson ' County's major federal programs for the year ended June 30, 2011. The County's major federal programs are identified in the summary of auditor's results section of the accompanying schedule of findings and questioned costs. Compliance with the requirements of laws, ' regulations, contracts, and grants applicable to each of its major federal programs is the responsibility of the County's management. Our responsibility is to express an opinion of the County's compliance based on our audit. ' We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in ' Government Auditing Standards, issued by the Comptroller General of the United States; and OMB Circular A-133, Audits of States, Local Governments and Non-Profit Organizations. Those standards and OMB Circular A-133 require that we plan and perform the audit to obtain ' reasonable assurance about whether noncompliance with the types of compliance requirements referred to above that could have a direct and material effect on a major federal program occurred. An audit includes examining, on a test basis, evidence about the County's compliance , with those requirements and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Our audit does not provide a legal determination on the County's compliance with those requirements. ' In our opinion, Jefferson County complied, in all material respects, with the compliance requirements referred to above that could have a direct and material effect on each of its major federal programs for the year ended June 30, 2011. Internal Control Over Compliance The management of the County is responsible for establishing and maintaining effective internal control over compliance with requirements of laws, regulations, contracts and grants applicable to federal programs. In planning and performing our audit, we considered the County's internal control over compliance with requirements that could have a direct and material effect on a major federal program in order to determine our auditing procedures for the purpose of ' -51- Robert K. Denning, CPA Kim M Downey, CPA ' ' expressing an opinion on compliance and report on internal control over compliance in accordance with OMB Circular A-133, but not for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, we do not express an opinion on the effectiveness of the County's internal control over compliance. A deficiency in internal control over compliance exists when the design or operation of a control ' over compliance does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, noncompliance with a type of ' compliance requirement of a federal program on a timely basis. A material weakness in internal control over compliance is a deficiency, or combination of deficiencies, in internal control over compliance, such that there is a reasonable possibility that material noncompliance with a type of ' compliance requirement of a federal program will not be prevented, or detected and corrected, on a timely basis. ' Our consideration of internal control over compliance was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control over compliance that might be deficiencies, significant deficiencies, or material ' weaknesses. We did not identify any deficiencies in internal control over compliance that we consider to be material weaknesses, as defined above. ' This report is intended for the information of management, the Board of County Commissioners, the Montana Department of Administration, and federal awarding agencies and pass-through entities and is not intended to be and should not be used by anyone other than these specified ' parties. a",t,7, AWK7 o , Q,ae.ae�at� , CPR 5, Pc. March 30, 2012 00 1 t ' -52- 1 JEFFERSON COUNTY, MONTANA SCHEDULE OF FINDINGS AND QUESTIONED COSTS Fiscal Year Ended June 30, 2011 ' Section I — Summary of Auditor's Results ' Financial Statements Type of auditor's report issued Unqualified ' Internal control over financial reporting: Material weakness(es) identified? No ' Significant deficiency(s) identified not considered to be material weaknesses None Reported Noncompliance material to financial statements ' noted? No Federal Awards Internal control over major programs: ' Material weakness(es) identified? No Significant deficiency(s) identified not considered to be material weaknesses None Reported ' Type of auditor's report issued on compliance for major programs: Unqualified ' Any audit findings disclosed that are required to be reported in accordance with ' Circular A-133, Section .510(a)? No Identification of major programs: ' CFDA Number Name of Federal Program or Cluster 10.665 School and Roads—Grants to States ' 20.205 Highway Planning and Construction Dollar threshold used to distinguish ' between Type A and Type B programs: $ 300,000 Auditee qualified as low-risk auditee? No ' -53- ' ' SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Section II—Financial Statement Findings There were no financial statement findings reported ' Section III — Federal Award Findings and Ouestioned Costs ' There were no federal award findings or questioned costs reported. ' -54- Denning, Downey & Associates, P.C. CERTIFIED PUBLICACCOUNTANTS , 1746 US Hwy 93 South, P.O. Box 1957, Kalispell, .AIT 5 9903-195 7 ' REPORT ON PRIOR AUDIT REPORT RECOMMENDATIONS ' Board of County Commissioners Jefferson County Boulder, Montana ' The prior audit report contained five recommendations. The action taken on each , recommendation is as follows: Recommendation Action Taken , Warrants Payable —School Districts Implemented Inadequate Pledged Securities Implemented Solid Waste Fund Internal Controls Implemented , Weed Department Internal Control Implemented Cash Management—Health Grants Implemented t March 30, 2012 0 1 1 -55- Robert K. Denning, CPA - Kim A4. Downey, CPA Denning, Downey & Associates, P.C. CERTIFIED PUBLICACCOUNTANTS 1740 US Hwy 93 South,P.O.Box 1957,Kalispell, MT 59903-1957 (406) 756-6879•FAX(406)257-7879-E-Mail ddaGiddaudit.com Kim M. Downey, CPA, CGFM, CFF, CITP Robert K. Denning, CPA, CGFM, CFF, CITP March 30, 2012 Jefferson County Attn: Bonnie Ramey, Clerk& Recorder P.O. Box H Boulder, MT 59632 Dear Ms. Ramey: Enclosed are five audit reports for the fiscal year ended June 30, 2011. The County is required to notify the Department of Administration in writing as to the actions they plan to take on any deficiencies or recommendations contained in this audit report. If the County has already done so, the response may be included in the audit report. If the response is not included in the audit report, the County's response or corrective action plan is required to be submitted to the Department of Administration within thirty days of receipt of this report. Three reports are for the County, one report is to be sent to the County Attorney, with the remaining report to be mailed to the official newspaper of the County along with the Audit Publication Introduction, a Summary of Significant Findings and Public Inspection Report notice. In accordance with the provisions of OMB Circular A-133, as of January 1, 2008, the Federal Audit Clearinghouse will no longer accept mailed submission of the audit report and Data Collection Form. A PDF formatted audit report, along with the Data Collection Form (SF_SAC) must be submitted by the auditee using the Federal Audit Clearinghouse's Internet Data Entry System. Directions are included to walk you through the process of submitting this information. If you have questions, or need assistance, please feel free to call our office at (406) 756-6879, or email dda @ddaudit.com. We have mailed four reports to the Department of Administration. We continue to appreciate the opportunity to provide audit services to Jefferson County. Sincerely, A , �ec.r.<.,, e-.,� Q.oa.e-naafso , CPR i, PC. RD/vc U O Enclosure