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Home My WebLink About2013-000COMPREHENSIVE ANNUAL FINANCIAL REPORT For the Fiscal Year October 1, 2011 through September 30, 2012 Indian River County Florida Indian River County's public transportation system is administered through a public-private partnership with the Senior Resource Association. In 2009, The Federal Transit Administration awarded Indian River County an American Recovery and Reinvestment Act (ARRA) grant in the amount of 82.2 million for the construction of a new transit administration and bus parking facility on 43' Avenue in Vero Beach. Construction of the Indian River County Transit Facility was completed in 2012, and the facility has since been certified as the County's first "green" building. To achieve "green" certification, the facility was designed to comply with the energy efficiency and sustainability standards as set forth by the Florida Green Building Coalition. In addition to using energy efficient systems for heating, cooling, and lighting, the facility was constructed of mostly recycled and recyclable materials. Other materials used in the construction were made in the United States, as per the Buy America and Buy American Acts which were also requirements of the grant. INDIAN RIVER COUNTY, FLORIDA COMPREHENSIVE AIS UAL FII ANCIAL REPORT FOR THE FISCAL YEAR OCTOBER 1, 2011 THROUGH SEPTEMBER 30, 2012 Jeffrey R. Smith, CPA, CGFO Clerk of the Circuit Court and Comptroller Prepared By: Clerk of the Circuit Court Finance Department Diane Bernardo, CPA Finance Director Indian River County, Florida COMPREHENSIVE ANNUAL FINANCIAL REPORT Fiscal Year Ended September 30, 2012 Board of County Commissioners as of September 30, 2012 Gary C. Wheeler Wesley S. Davis Chairman Joseph E. Flescher Peter D. O'Bryan Bob Solari Vice -Chairman Current Board of County Commissioners (as of November 20, 2012) Joseph E. Flescher Peter D. O'Bryan Chairman Bob Solari Wesley S. Davis Tim Zorc Vice -Chairman Constitutional Officers as of September 30, 2012 Jeffrey R. Smith David C. Nolte Clerk of the Circuit Court and Comptroller Property Appraiser Leslie R. Swan Supervisor of Elections Deryl Loar Carole Jean Jordan Sheriff Tax Collector County Management Joseph A. Baird Alan S. Polackwich Sr. County Administrator County Attorney Michael Zito Assistant County Administrator Jason Brown Budget Director Chris Mora Director of Public Works Robert M. Keating John W. King Director of Community Development Director of Emergency Services Vincent Burke Director of Utilities Indian River County, Florida COMPREHENSIVE ANNUAL FINANCIAL REPORT TABLE OF CONTENTS Fiscal Year Ended September 30, 2012 INTRODUCTORY SECTION Page Number LETTER OF TRANSMITTAL ORGANIZATION CHART vii CERTIFICATE OF ACHIEVEMENT FOR EXCELLENCE IN FINANCIAL REPORTING viii FINANCIAL SECTION INDEPENDENT AUDITORS' REPORT 1 MANAGEMENT'S DISCUSSION AND ANALYSIS 3 BASIC FINANCIAL STATEMENTS: Government -wide Financial Statements: Statement of Net Position 17 Statement of Activities 18 Fund Financial Statements: Balance Sheet - Governmental Funds 20 Reconciliation of Total Governmental Fund Balances to Net Position of Governmental Activities 22 Statement of Revenues, Expenditures, and Changes in Fund Balances - Governmental Funds 24 Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances of Governmental Funds to the Statement of Activities 26 Statement of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual - General Fund 27 Statement of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual - Impact Fees Fund 28 Statement of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual - Secondary Roads Construction Fund 29 Statement of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual -Transportation Fund 30 Statement of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual - Emergency Services District Fund 31 Statement of Net Position - Proprietary Funds 33 Indian River County, Florida COMPREHENSIVE ANNUAL FINANCIAL REPORT TABLE OF CONTENTS - CONTINUED Fiscal Year Ended September 30, 2012 Page Number Statement of Revenues, Expenses, and Changes in Fund Net Position - Proprietary Funds 34 Statement of Cash Flows - Proprietary Funds 36 Statement of Fiduciary Net Position - Fiduciary Funds 40 Statement of Changes in Fiduciary Net Position - Other Postemployment Benefits Trust Fund 41 Notes to the Financial Statements 43 REQUIRED SUPPLEMENTARY INFORMATION: Schedule of Funding Progress - Other Postemployment Benefits Plan 99 Schedule of Employer Contributions - Other Postemployment Benefits Plan 99 COMBINING AND INDIVIDUAL FUND STATEMENTS AND SCHEDULES: Combining Balance Sheet - Nonmajor Governmental Funds 106 Combining Statement of Revenues, Expenditures and Changes in Fund Balances - Nonmajor Governmental Funds 114 Budgetary Comparison Schedules 122 Combining Statement of Net Position - Internal Service Funds 154 Combining Statement of Revenues, Expenses, and Changes in Fund Net Position - Internal Service Funds 155 Combining Statement of Cash Flows - Internal Service Funds 156 Combining Statement of Changes in Assets and Liabilities - Agency Fund 160 Indian River County, Florida COMPREHENSIVE ANNUAL FINANCIAL REPORT TABLE OF CONTENTS- CONTINUED Fiscal Year Ended September 30, 2012 STATISTICAL SECTION Page Number SCHEDULE 1 Net Position by Component - Last Ten Fiscal Years 162 SCHEDULE 2 Changes in Net Position - Last Ten Fiscal Years 164 SCHEDULE 3 Fund Balances, Governmental Funds - Last Ten Fiscal Years 168 SCHEDULE 4 Changes in Fund Balances, Governmental Funds - Last Ten Fiscal Years 170 SCHEDULE 5 Tax Revenues by Source, Governmental Funds - Last Ten Fiscal Years 172 SCHEDULE 6 Assessed Value and Actual Values of Taxable Property - Last Ten Fiscal Years 173 SCHEDULE 7 Property Tax Rates - Direct and Overlapping Tax Rates - Last Ten Fiscal Years 174 Principal Property Taxpayers - Year 2012 and Year 2003 176 Property Tax Levies and Collections - Last Ten Fiscal Years 177 Ratios of Outstanding Debt by Type - Last Ten Fiscal Years 178 Ratio of Net General Bonded Debt Outstanding to Taxable Value and Net Bonded Debt Per Capita - Last Ten Fiscal Years 180 Computation of Legal Debt Margin 181 Direct and Overlapping Governmental Activities Debt 182 Pledged Revenue Coverage - Water and Sewer Revenue Bonds - Last Ten Fiscal Years 184 SCHEDULE 8 SCHEDULE 9 SCHEDULE 10 SCHEDULE 11 SCHEDULE 12 SCHEDULE 13 SCHEDULE 14 Indian River County, Florida COMPREHENSIVE ANNUAL FINANCIAL REPORT TABLE OF CONTENTS- CONTINUED Fiscal Year Ended September 30, 2012 Page Number SCHEDULE 15 Pledged Revenue Coverage - Recreational Revenue Refunding Bonds - Series 2003 - Last Ten Fiscal Years 186 SCHEDULE 16 Demographic and Economic Statistics - Last Ten Years 187 SCHEDULE 17 Principal Employers - Year 2012 and Nine Years Ago 188 SCHEDULE 18 Building Permits - Last Ten Fiscal Years 190 SCHEDULE 19 Operating Indicators by Function/Program - Last Ten Fiscal Years 192 SCHEDULE 20 Full Time Equivalent County Government Employees by FunctionlProgram - Last Ten Fiscal Years 196 SCHEDULE 21 Capital Asset Statistics by Function/Program - Last Ten Fiscal Years 198 SCHEDULE 22 Department of Utility Services - Historical Rate Structure - Last Ten Fiscal Years 202 SCHEDULE 23 Water and Wastewater Customers - Last Ten Fiscal Years 203 SCHEDULE 24 Top 10 High Volume Customers of Utility Services 204 SCHEDULE 25 Capacity Charges - Utilities Department - Last Ten Fiscal Years 205 SCHEDULE 26 Pledged Revenues for Recreational Revenue Refunding Bonds, Series 2003 - Last Ten Fiscal Years 206 SCHEDULE 27 Pledged Revenues for Spring Training Facility Revenue Bonds, Series 2001 - Last Ten Fiscal Years 207 Indian River County, Florida COMPREHENSIVE ANNUAL FINANCIAL REPORT TABLE OF CONTENTS- CONTINUED Fiscal Year Ended September 30, 2012 COMPLIANCE SECTION Page Number Independent Auditors' 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 209 County Management Letter 211 Federal and State Grants: Independent Auditors' Report on Compliance with Requirements that Could Have A Direct and Material Effect on Each Major Federal Program and Major State Project and on Internal Control over Compliance in Accordance with OMB Circular A-133 and Chapter 10.550, Rules of the Auditor General 213 Independent Auditors' Report on the Schedule of Federal Awards and State Projects 215 Schedule of Expenditures of Federal Awards and State Projects 217 Notes to Schedule of Expenditures of Federal Awards and State Projects 222 Schedule of Findings and Questioned Costs 223 Impact Fee Affidavit 225 Indian River County, Florida COMPREHENSIVE ANNUAL FINANCIAL REPORT TABLE OF CONTENTS- CONTINUED Fiscal Year Ended September 30, 2012 AUDITOR GENERAL REPORTS SECTION Page Number BOARD OF COUNTY COMMISSIONERS Independent Auditors' Report 229 Fund Financial Statements 230 Independent Auditors' 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 291 Management Letter 293 CLERK OF THE CIRCUIT COURT AND COMPTROLLER Independent Auditors' Report 296 Fund Financial Statements 297 Independent Auditors' 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 307 Management Letter 309 PROPERTY APPRAISER Independent Auditors' Report 312 Fund Financial Statements 313 Independent Auditors' 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 319 Management Letter 321 Indian River County, Florida COMPREHENSIVE ANNUAL FINANCIAL REPORT TABLE OF CONTENTS -CONTINUED Fiscal Year Ended September 30, 2012 Page Number SHERIFF Independent Auditors' Report 324 Fund Financial Statements 325 Independent Auditors' 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 335 Management Letter 337 SUPERVISOR OF ELECTIONS Independent Auditors' Report 340 Fund Financial Statements 341 Independent Auditors' 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 350 Management Letter 352 TAX COLLECTOR Independent Auditors' Report 356 Fund Financial Statements 357 Independent Auditors' 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 Standardsds 368 Management Letter 370 JEFFREY R. SMITH Clerk of Circuit Court and Comptroller 1801 27th Street Vero Beach, Florida 32960-3388 Telephone (772) 226-1945 March 15, 2013 To the Citizens of Indian River County: The Comprehensive Annual Financial Report of Indian River County, Florida for the fiscal year ended September 30, 2012, is respectfully submitted. State law requires that every general-purpose government publish a complete set of audited financial statements within six months of the close of each fiscal year. This report was prepared by the Finance Department under the supervision of the Clerk of the Circuit Court and Comptroller. Responsibility for both the accuracy of the presented data and the completeness and fairness of the presentation, including all disclosures, rests with the Finance Department and is contingent upon the internal control established for this purpose. The County has established a comprehensive internal control framework designed to ensure that the assets of the County are protected from loss, theft or misuse and to certify that the financial records and data used for preparing the financial statements are in conformity with accepted accounting principles (GAAP) as applicable to governmental entities. The internal control system is designed to provide reasonable, rather than absolute, assurance that these objectives are met. The idea of reasonable assurance recognizes two aspects: 1) the cost of internal control should not exceed the anticipated benefits; and 2) the valuation of the costs and benefits require estimates and judgment by management. All internal control evaluations take place within this framework. We believe the County's internal controls adequately safeguard its assets and provide reasonable assurance of properly recorded financial transactions. Section 11.45, Florida Statutes, requires an annual audit of all County agencies. The unqualified opinion of the auditors, Rehmann Robson, Certified Public Accountants, of the County's financial statements for the year ended September 30, 2012 has been included in this report. The independent auditors' report is located at the front of the financial section of this report. The audit was also designed to meet the requirements of Government Auditing Standards, the Florida Single Audit Act, the Federal Single Audit Act of 1984, the Federal Single Audit Act Amendments of 1996, and revised OMB Circular A-133. Readers of this report are encouraged to read Management's Discussion and Analysis (MD&A), which provides basic financial information about the County and an overview of the County's activities. The MD&A immediately follows the independent auditors' report. i Profile of Indian River County Indian River County, established on June 29, 1925 by an act of the Florida Legislature, is on the central Atlantic coast of Florida, approximately 100 miles southeast of Orlando and 135 miles north of Miami. The County is bordered by Brevard County to the north, St. Lucie County to the south, and Osceola and Okeechobee Counties on the west. There are approximately 100 miles of waterfront land in the County, including 23 miles of Atlantic beaches. The City of Vero Beach is the seat of County government. Indian River County is a non -charter county established under the Constitution and the Laws of the State of Florida. It is governed by a five member Board of County Commissioners (Board) elected at large from the five districts within the County. A County Administrator is appointed by the Board and is responsible for implementing the policies set forth by the Board. The Administrator is charged with the fiscal control of the resources of the County as well. In addition to the Board, there are five elected Constitutional Officers serving specific governmental functions: Clerk of the Circuit Court and Comptroller, Property Appraiser, Sheriff, Supervisor of Elections and Tax Collector. Although the funding for all Constitutional Offices is part of the County's General Fund, the Board does not have direct responsibility for their operations. Each office is run separately within each of its respective legal guidelines. Indian River County provides a full range of services including, but not limited to: construction and maintenance of roadways, sidewalks and other infrastructure, fire rescue/emergency services, law enforcement, library services, traffic operations and control, parks and recreational services, human services, building inspections, licenses and permits, water/sewer utility services, and refuse collection and disposal. The Clerk of the Circuit Court and Comptroller (Clerk), Sheriff, and Supervisor of Elections submit proposed operating budgets to the Board prior to May 1. The Florida Department of Revenue receives budgets from the Property Appraiser prior to June 1 and from the Tax Collector prior to August 1. Once these budgets are approved, they are forwarded to the Board. The court -related function of the Clerk submits a budget to the Florida Clerks of Court Operations Corporation (CCOC) prior to October 1. These operating budgets include proposed expenditures and the sources to finance them as set forth in Chapters 129 and 28.36 of the Florida Statutes. Constitutional Officers, all departments controlled by the Board of County Commissioners, and outside State and local agencies submit their proposed budgets to the Office of Management and Budget for assistance, review and compilation. The County Administrator then reviews all the budgets of the County departments, state agencies and nonprofit organizations, and makes his budget recommendations to the Board of County Commissioners on or before July 15 of each year. During September, public hearings are held pursuant to Section 200.065, Florida Statutes, in order for the Board to receive public input on the tentative budget. At the end of the last public hearing, the Board enacts ordinances to legally adopt (at the fund level) the budgets for all governmental fund types. The budgets legally adopted by the Board set forth the anticipated revenues by source and the appropriations by function. Budgets for Enterprise and Internal Service funds are adopted on a basis consistent with generally accepted accounting principles. Management is authorized to transfer budgeted amounts between objects and departments in any fund as long as the total appropriations of a fund are not exceeded. Board approval to amend the budget is required when unanticipated revenues are received that management wishes to have appropriated, thereby increasing the total appropriations of a fund. Appropriations for the County lapse at the close of the fiscal year. ii This Comprehensive Annual Financial Report (CAFR) includes the funds of the primary government (the Board of County Commissioners, the Clerk of the Circuit Court and Comptroller, the Property Appraiser, the Sheriff, the Supervisor of Elections and the Tax Collector), and the blended component units consisting of the Emergency Services District and the Solid Waste Disposal District. These component units were included because generally accepted accounting principles require that organizations which are fiscally dependent on the County and that financially benefit from the relationship with the County be reported with the primary government (the County) as the reporting entity. This CAFR does not include the Indian River County School District, the Indian River County Mosquito Control District or the Indian River Medical Center. Local Economy According to the 2010 Census, Indian River County had a population of 138,028, which is a 53% increase over the 1990 population of 90,208. While the population of the County has been steadily increasing, so has the median age of residents living here. Nationally, average ages have risen due to the increasing age of the baby boomer generation as well as the increase in life expectancy for all Americans. In addition, Florida continues to be a popular destination for retirees. Based on the Bureau of Economic Research, University of Florida, persons ages 15-44 make up the largest percentage of residents in the County, followed by ages 45-64 and 65+ respectively with persons ages 14 and under comprising the smallest portion of the population. Indian River County's economy is made up of agriculture (citrus and cattle), tourism, light manufacturing, wholesale and retail trade. Piper Aircraft, Inc., whose headquarters for aircraft research, development and manufacturing operations are located in Vero Beach, is the largest manufacturing employer in the area. CVS Pharmacy operates a distribution center which provides the distribution of products to all CVS locations in the southern half of Florida. In 2012, INEOS New Planet BioEnergy opened a state of the art center in Indian River County. The facility converts low-cost organic materials such as household and vegetative waste into bioethanol for use as a renewable road transport fuel (ethanol) while generating renewable power for export to the local electricity grid. This new technology will reduce greenhouse gas emissions from cars and energy generation in addition to reducing the amount of waste going into our landfills. The Atlantic beaches and the Indian River, along with the comfortable climate provide the basis for a year-round tourism industry. Residents can enjoy these resources at any of the forty-one County parks, the Sebastian Inlet State Park or the Pelican Island Wildlife Refuge. The effects of the decline in the national economy continued to affect Indian River County in 2012. Property tax values decreased from $14.1 billion in 2011 to $13.2 billion in 2012. Construction activity had a slight increase over 2011, which is the third consecutive year of positive growth since the peak activity in 2005. Please see Statistical Schedule 19 for more information. The unemployment rate decreased from 13.7% in 2011 to 11.3 % in 2012. Although Indian River County is a major producer of citrus with approximately 32,820 acres dedicated to citrus production, over the last ten years production has decreased dramatically from 19.1 million boxes in 2002 to 9.4 million in 2012. iii Long Term Financial Planning and Major Initiatives Chapter 163 Florida Statutes and Florida Administrative Code Rule 9J-5 requires each local government to have a Comprehensive Land Use Plan. An important part of this plan is the Capital Improvements Program (CIP) which evaluates the need for public facilities in support of the Future Land Use Element, to estimate the costs of improvements for which local government has fiscal responsibility, to analyze the fiscal capacity of the local government to finance and construct improvements, and to adopt financial policies to guide the funding and construction of the improvements. The CIP is updated annually and encompasses a period of five years. Listed below are five major capital projects included in the current CIP along with the source of funding and capital costs: ➢ Fire/EMS Station 13 — Construction of an additional station is planned to serve the expanding south county population. The Emergency Services District reserves will provide $426,000 with the remaining $1.7 million being funded by impact fees. The operating expense will be approximately $2.1 million beginning in fiscal year 2014. ➢ South County Park — Phase III Improvements - The expansion of this park is necessary to provide recreation facilities and programs to the growing population in the southern part of the County. A multi-purpose intergenerational facility will be constructed at a cost of $5.5 million with impact fees and one cent sales tax providing the funding. Ad valorem tax proceeds and user fees as well as partnering agency contributions will fund increased operating costs which are estimated to be about $118,000 per year. • 66th Avenue Widening — This roadway is scheduled for widening from State Road 60 in Vero Beach to 49th Street. Currently, this is one of the few main arterials connecting the north and south county areas and traffic has increased substantially on this road. Estimated construction costs are over $19.8 million. Funding will be from traffic impact fees, gas taxes and grants. In the future, the County plans to expand 66th Avenue from 49th Street to the Sebastian City limits. ➢ Oslo Road from 43"11 Avenue to 58th Avenue — This phase of Oslo Road widening will increase the road from two to four lanes at a cost of approximately $5.5 million. Funding will be from traffic impact fees and gas taxes. ➢ Crime Scene Unit Building — This is a renovation and expansion of an existing structure next to the Sheriff's Office for additional evidence storage. Funding in the amount of $2.4 million will be provided by both optional sales tax and impact fees. Effective October 2008, the Board of County Commissioners decided that Indian River County shall become a "green" county under the auspices of the Florida Green Building Coalition, Inc. with a goal of becoming a sustainable community and county. Since there is an important public interest in promoting the construction of energy-efficient and sustainable buildings, it is the County's policy to promote these standards and demonstrate commitment to energy conservation, saving taxpayer money and raising public awareness of environmental concerns. Indian River County has been certified as a "Gold" Status Florida Green County since 2009. The Indian River County Transit Facility, whose construction was completed in 2012, has been certified as the County's first "green" building. The facility was designed and constructed in compliance with the Florida Green Building Coalition Standards for commercial buildings. Some operational standards include controls that enhance indoor air quality and insure proper ventilation for employees, design specifications for energy reduction of 25% below normal, recycling of at least 75% of the construction waste, drought tolerant landscape materials, and furnishings made with 25% recycled content. iv Relevant Financial Policies In accordance with Section 218.415, Florida Statutes, the County adopted an investment policy, which guides the investment of County surplus funds. This policy establishes investment objectives, maturity and liquidity requirements, portfolio composition, risk and diversification requirements, and authorized investments. The primary objectives of investment activities are to preserve capital and maintain sufficient liquidity to meet anticipated cash flow needs. The secondary objective is to obtain competitive returns on the investment of County surplus funds. During fiscal year 2012, County investments had yields ranging from 0.025% to 2.500%. The overall annual yield of the portfolio as of September 30, 2012 was 0.49%. The County continues to earn high financial strength bond ratings awarded by two major rating agencies due to these strong, conservative policies. On September 23, 2008, the County established the OPEB (Other Post -Employment Benefits) Trust. An OPEB investment policy was approved by the Board of County Commissioners on February 3, 2009 and revised on April 6, 2010. The objective was to establish an advisory committee and to provide short- term and long-term investment guidelines. This policy also outlines the same criteria as noted in the County's investment policy, as well as including performance measures. The change in net position for the OPEB Trust for the fiscal year was $2.4 million. In addition, interest, dividend and mark -to -market adjustments resulted in net investment income of $929,639. Yields ranged from 0.00% to 31.82% throughout the year. The County's goal is to maintain an overall fund balance equal to 30% of the annual budget in all of its taxing funds, which provides a three month cushion for operating expenses. The three month reserve is necessary due to the timing of property tax levies in the State of Florida. Although the fiscal year begins in October, property tax monies are not typically received until mid to late December, which would require the County to operate in a deficit position for the first two months of the fiscal year without this reserve. Reserve funds are needed in order to allow the County to respond to events without facing serious financial burdens. County policy is to maintain fund balance levels and prohibit the use of fund balance to fund recurring expenses. On September 21, 2010 the Board adopted a revised fund balance and reserve policy due to the implementation of GASB Statement No. 54, Fund Balance Reporting and Governmental Fund Type Definitions, which changed the categories and terminology used to describe fund balance. The new categories change the focus from "financial resources available for appropriation" to "the extent to which the government is bound to honor constraints on the specific purposes for which the amounts in the fund can be spent". Please see County Note 19 for more information regarding fund balance. In summary, Indian River County completed the year financially strong and well positioned. In a time of a strained world-wide economy and low investment returns, the County stood committed to manage funds and services for its citizens. v Awards and Acknowledeements The Government Finance Officers Association of the United States and Canada (GFOA) awarded a Certificate of Achievement for Excellence in Financial Reporting to Indian River County for its comprehensive annual financial report (CAFR) for the fiscal year ended September 30, 2011. This was the 29th consecutive year that the County has received this prestigious award. In order to be awarded a Certificate of Achievement, a government must publish an easily readable and efficiently organized comprehensive annual financial report. This report must satisfy both generally accepted accounting principles and applicable legal requirements. A Certificate of Achievement is valid for a period of one year only. We believe that our current comprehensive annual financial report continues to meet the Certificate of Achievement Program's requirements and we are submitting it to the GFOA to determine its eligibility for another certificate. In addition, Indian River County also received the GFOA's Distinguished Budget Presentation Award for its annual budget document for the 2011-2012 fiscal year. This was the 21st consecutive year that the County has received this prestigious award. In order to qualify for the Distinguished Budget Presentation Award, the County's budget document had to be judged proficient as a policy document, financial plan, operations guide, and communications device. I would like to thank the entire staff of the Finance Department for their invaluable assistance in the preparation of this report. I would also like to thank the Board of County Commissioners and their staff, and the other Constitutional Officers for their personal interest and support in planning and conducting the financial operations of the County in a responsible and progressive manner. Finally, thanks to the citizens for the trust you continue to place in your County and those who work to serve you. Respectfully submitted, Jeffrey R. Smith, CPA, CGFO Clerk of the Circuit Court and Comptroller vi Indian River County BCC Departmental Organization Residents of Indian River County Supervisor of Elections Board of County Commissioners Assistant County Administrator/ General Services County Administrator Tax Collector Assistant to Administrator Commission Office Golf Course Parks and Recreation Veterans Services Shooting Range Public Works Engineering Stormwater Beach Preservation Utilities Services Emergency Services Emergency Management Fire / Rescue Community Development Human Resources Planning Division Office of Management & Budget Environmental Planning & Code Enforcement Customer Service Wastewater Collection Youth Guidance Solid Waste Disposal District Emergency Base Grant 911 Coordinator Metropolitan Planning Organization Certificate of Achievement for Excellence in Financial Reporting Presented to Indian River County Florida For its Comprehensive Annual Financial Report for the Fiscal Year Ended September 30, 2011 A Certificate of Achieiviernent for Excellence in Financial Reporting is presented by the Government Finance Officers Association of the United States and Canada to government units and public employee retirement systems whose comprehensive annual rinancia repons (CAFTits) achieve the highest standards in government aceounting and financial reporting. President Executive Director viii Fp- ehmann Independent Auditors' Report 5070 North Highway A1A Suite 250 Vero Beach, FL 32963 Ph: 772.234.8484 Fx: 772.234.8488 www.rehmann.com The Honorable Board of County Commissioners and Constitutional Officers Indian River County, Florida We have audited the accompanying financial statements of governmental activities, the business -type activities, each major fund, and the aggregate remaining fund information of Indian River County, Florida (the "County") as of and for the year ended September 30, 2012, which collectively comprise the County's basic financial statements as listed in the table of contents. These financial statements are the responsibility of the County's 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 the 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 Indian River County, Florida as of September 30, 2012, and the respective changes in financial position and cash flows, where applicable, thereof and the respective budgetary comparison for the General Fund and the Major Special Revenue Funds for the year then ended in conformity with accounting principles generally accepted in the United States of America. In accordance with Government Auditing Standards, we have also issued our report dated March 12, 2013 on our consideration of the County's internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing and not to provide an opinion on 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 read in conjunction with this report in considering the results of our audit. CPAs & Consultants Wealth Advisors Corporate Investigators 1 NEXIA INTHRNATIONAL Rehmann The Honorable Board of County Commissioners and Constitutional Officers Indian River County, Florida Page two Accounting principles generally accepted in the United States of America require that the management's discussion and analysis, as listed in the table of contents, be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquires 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 combining and individual fund financial statements and schedules, listed in the table of contents, are presented for purposes of additional analysis and are not a required part of the basic financial statements. Such information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the basic financial statements. The information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the information is fairly stated, in all material respects, in relation to the basic financial statements as a whole. The introductory section and statistical section are presented for purposes of additional analysis and are not a required part of the basic financial statements. Such information has not been subjected to the auditing procedures applied in the audit of the basic financial statements and accordingly, we do not express an opinion or provide any assurance on it. Vero Beach, Florida March 12, 2013 2 Indian River County, Florida Management's Discussion and Analysis For the Year Ended September 30, 2012 We offer readers of the County's financial statements this narrative overview and analysis of the financial activities of the County for the fiscal year ended September 30, 2012. We encourage readers to consider the information presented here, in conjunction with additional information that we have furnished in our letter of transmittal, which can be found on pages i -vi of this report. All amounts, unless otherwise indicated, are expressed in millions of dollars. FINANCIAL HIGHLIGHTS • The County's overall financial position improved over 2011. • The assets and deferred outflows of resources of the County exceeded its liabilities by $1,006.6 million (net position). Of this amount, $146.8 million (unrestricted net position) may be used to meet the government's ongoing obligations to citizens and creditors. • The government' s total net position increased by $1.5 million. Governmental activities accounted for $4.3 million of this increase, which was offset by a $2.8 million decrease in business -type activities net position. • Governmental activities expenses reflected a 0.3% increase ($147.0 million in 2011 to $147.4 million in 2012) and business -type activities expenses reflected a 0.1% increase ($48.3 million in 2011 to $48.9 million in 2012). • Unassigned fund balance for the general fund was $48.7 million, or a 44.5% increase from the prior year general fund unassigned balance. One of the factors for the increase in the unassigned amount was the change in the designation of $8.0 million in committed economic incentives fund balance to unassigned fund balance due to the company not meeting the required timelines in the agreement. The other factor was the change in the designation of over $10.0 million of emergency and budget stabilization reserves to unassigned fund balance due to clarification of the use of the committed fund balance category. OVERVIEW OF FINANCIAL STATEMENTS This discussion and analysis is intended to serve as an introduction to the County's basic financial statements. The County's basic financial statements are composed of three elements: 1) government - wide financial statements, 2) fund financial statements, and 3) notes to the financial statements. This report also contains other supplementary information in addition to the basic financial statements themselves. Government -wide fmancial statements The government -wide financial statements are designed to provide readers with a broad overview of the County's finances, in a manner similar to a private -sector business. The Statement of Net Position presents information on all of the County's assets, liabilities, and deferred inflows/outflows of resources, with the difference reported as net position. Over time, increases or decreases in net position may serve as a useful indicator of whether the financial position of the County is improving or deteriorating. 3 Indian River County, Florida Management's Discussion and Analysis For the Year Ended September 30, 2012 The Statement of Activities presents information showing how the government's net position changed during the most recent fiscal year. All changes in net position are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of related cash flows. Thus, revenues and expenses are reported in this statement for some items that will only result in cash flows in future fiscal periods (e.g., uncollected grant revenue and earned, but unused, vacation leave). Both of the government -wide financial statements distinguish functions of the County that are principally supported by taxes and intergovernmental revenues (governmental activities) from other functions that are intended to recover all or a significant portion of their costs through user fees and charges (business -type activities). The governmental activities of the County include general government, public safety, physical environment, transportation, economic environment, human services, culture and recreation, and court related functions. The major business -type activities include a water and sewer utility, a solid waste disposal district, a golf course, and a building department. The government -wide financial statements include not only the Board of County Commissioners, but also the Clerk of the Circuit Court and Comptroller, Property Appraiser, Sheriff, Supervisor of Elections and Tax Collector. The government -wide financial statements can be found on pages 17-19 of this report. Fund financial statements A fund is a grouping of related accounts that is used to maintain control over resources that have been segregated for specific activities or objectives. The County, like other state and local governments, uses fund accounting to ensure and demonstrate compliance with finance -related legal requirements. All of the funds of the County can be divided into three categories: governmental funds, proprietary funds, and fiduciary funds. Governmental funds. Governmental funds are used to account for essentially the same functions reported as governmental activities in the government -wide financial statements. However, unlike the government -wide financial statements, governmental fund financial statements focus on near-term inflows and outflows of spendable resources, as well as on balances of spendable resources available at the end of the fiscal year. Such information may be useful in evaluating a government's near-term financial requirements. Because the focus of governmental funds is narrower than that of the government -wide financial statements, it is useful to compare the information presented for governmental funds with similar information presented for governmental activities in the government -wide financial statements. By doing so, readers may better understand the long-term impact of the government's near-term financial decisions. Both the governmental fund Balance Sheet and the governmental fund Statement of Revenues, Expenditures, and Changes in Fund Balances provide a reconciliation to facilitate this comparison between governmental funds and governmental activities. The County maintains 35 individual governmental funds. Information is presented separately in the governmental fund Balance Sheet and in the governmental fund Statement of Revenues, Expenditures, and Changes in Fund Balances for the general fund, four special revenue funds, and one capital project fund. All are considered to be major funds. Data from the other 29 governmental funds are combined into a single, aggregated presentation. 4 Indian River County, Florida Management's Discussion and Analysis For the Year Ended September 30, 2012 Individual fund data for each of these nonmajor governmental funds is provided in the form of combining statements located behind the notes to the financial statements. The combining statements for the nonmajor governmental funds can be found on pages 101-151 of this report. The County adopts an annual appropriated budget for its general fund. A budgetary comparison statement has been provided for the general fund to demonstrate compliance with this budget. The basic governmental fund financial statements can be found on pages 20-31 of this report. Proprietary funds. The County maintains two different types of proprietary funds. Enterprise funds are used to report the same functions presented as business -type activities in the government -wide financial statements. The County uses enterprise funds to account for its water and sewer utility, solid waste disposal district, golf course, and building department. Internal service funds are an accounting device used to accumulate and allocate costs internally among the County's various functions. The County uses internal service funds to account for its fleet management, self insurance, and geographic information systems. Because these services predominantly benefit governmental rather than business -type functions, they have been included within governmental activities in the government -wide financial statements. Proprietary fund financial statements provide the same type of information as the government -wide financial statements, only in more detail. The proprietary fund financial statements provide separate information for the water and sewer utility, solid waste disposal district, golf course, and building department, which are considered to be major funds of the County. Conversely, internal service funds are combined into a single, aggregated presentation in the proprietary fund financial statements. Individual fund data for the internal service funds is provided in the form of combining statements behind the notes to the financial statements on pages 153-157 of this report. The basic proprietary fund financial statements can be found on pages 33-39 of this report. Fiduciary funds. Fiduciary funds are used to account for resources held for the benefit of parties outside the government. The Indian River County OPEB Trust holds the assets of the County's other postemployment benefits. Fiduciary funds are not reflected in the government -wide financial statements because the resources of those funds are not available to support the County's own programs. The accounting used for fiduciary funds is much like that used for proprietary funds. The basic fiduciary fund financial statement can be found on pages 40-41 of this report. Notes to the financial statements The notes provide additional information that is essential to a full understanding of the data provided in the government -wide and fund financial statements. The notes to the financial statements can be found on pages 43-98 of this report. Other Information In addition to the basic financial statements and accompanying notes, this report also contains required supplementary information concerning Indian River County's progress in funding its obligations to provide other postemployment benefits to its employees. Required supplementary information can be found on page 99 of this report. 5 Indian River County, Florida Management's Discussion and Analysis For the Year Ended September 30, 2012 Government -wide Financial Analysis As noted earlier, net position may serve over time as a useful indicator of a government's financial position. In the case of the County, assets and deferred outflows of resources exceeded liabilities by $1,006.6 million at the close of the fiscal year. By far, the largest portion of the County's net position (72%) reflects its investment in capital assets (e.g., land, buildings, infrastructure, intangibles, machinery, and equipment), less any related outstanding debt used to acquire those assets that is still outstanding. The County uses these capital assets to provide services to citizens; consequently, these assets are not available for future spending. Although the County's investment in its capital assets is reported as net of related debt, it should be noted that the resources needed to repay this debt must be provided from other sources, since the capital assets themselves cannot be used to liquidate these liabilities. Indian River County Net Position (In Millions) Current and other assets Capital assets Total assets Deferred outflows of resources Total deferred outflows Current liabilities Other liabilities Total liabilities Governmental Business -type Activities Activities Total 2012 2011 2012 2011 2012 2011 $ 228.7 $ 242.3 $ 108.7 $ 107.0 $ 337.4 $ 349.3 553.4 544.7 257.3 267.1 810.7 811.8 782.1 787.0 366.0 374.1 1,148.1 1,161.1 21.3 54.0 75.3 23.6 60.8 84.4 2.8 - 2.8 - 2.8 2.8 13.5 55.5 69.0 12.0 58.9 70.9 34.8 109.5 144.3 35.6 119.7 155.3 Net position: Net investment in capital assets 509.1 492.3 211.6 217.9 720.7 710.2 Restricted 121.2 125.4 17.9 24.3 139.1 149.7 Unrestricted 76.5 84.9 70.3 61.0 146.8 145.9 Total net position $ 706.8 $ 702.6 $ 299.8 $ 303.2 $ 1,006.6 $ 1,005.8 A portion of the County's net position (14%) represents resources that are subject to external restrictions on how they may be used. The remaining balance of the unrestricted net position ($146.8 million) may be used to meet the government's ongoing obligations to citizens and creditors. Overall, the County's net position increased less than 1%. In governmental activities, the decrease in unrestricted net position was due to the early payoff of bonds and the increase in net investment in capital assets was a result of right of way purchases and construction of roads and beach restoration projects. In business -type activities, the increase in unrestricted net position and decrease in net investment in capital assets, was a net result of decreasing book value of capital assets and the decreasing amount of debt outstanding. 6 Indian River County, Florida Management's Discussion and Analysis For the Year Ended September 30, 2012 Indian River County Changes in Net Position (In Millions) Governmental Business -type Activities Activities Total 2012 2011 2012 2011 2012 2011 Revenues: Program revenues: Charges for services $ 15.7 $ 16.2 $ 42.9 $ 41.8 $ 58.6 $ 58.0 Operating grants/contributions 8.2 7.9 8.2 7.9 Capital grants/contributions 7.1 1.9 2.5 2.0 9.6 3.9 General revenues: Property taxes 70.3 75.5 70.3 75.5 Sales taxes 20.1 19.3 20.1 19.3 Franchise fees 8.6 8.7 8.6 8.7 State shared revenues 18.0 17.3 18.0 17.3 Other 3.7 4.4 0.7 1.3 4.4 5.7 Total revenues 151.7 151.2 46.1 45.1 197.8 196.3 Expenses: General government 19.1 21.3 19.1 21.3 Public safety 66.5 67.4 66.5 67.4 Physical environment 2.4 1.3 2.4 1.3 Transportation 23.7 22.3 23.7 22.3 Economic environment 2.0 2.1 2.0 2.1 Human services 7.7 7.8 7.7 7.8 Culture/recreation 18.1 16.5 18.1 16.5 Court related 5.6 5.8 - - 5.6 5.8 Interest and fiscal charges 2.3 2.5 - - 2.3 2.5 Water and sewer - - 34.3 33.8 34.3 33.8 Solid waste - - 10.7 10.4 10.7 10.4 Golf course - - 2.4 2.5 2.4 2.5 Building - - 1.5 1.6 1.5 1.6 Total expenses 147.4 147.0 48.9 48.3 196.3 195.3 Increase (decrease) in net position before transfers Transfers Increase (decrease) in net position 4.3 4.2 (0.03) (0.6) 4.3 3.6 (2.8) (3.2) 0.03 0.6 (2.8) (2.6) 1.5 1.0 1.5 1.0 Net position - October 1, 2011 702.6 699.0 303.2 305.8 1,005.8 1,004.8 Adjustments - pollution remediation (0.1) - (0.03) (0.1) (0.03) Adjustments - deferred outflows/inflows (0.6) (0.6) Net position - September 30, 2012 $ 706.8 $ 702.6 $ 299.8 $ 303.2 $ 1,006.6 $ 1,005.8 7 Indian River County, Florida Management's Discussion and Analysis For the Year Ended September 30, 2012 Governmental Activities Governmental activities net position increased by $4.3 million. Key elements of this increase are as follows: • Overall program revenues increased $5.0 million. 1) Charges for services decreased by $0.5 million or 3%, due to a one time reimbursement of court fees from the federal government in fiscal year 2011. 2) Operating grant and contribution revenues in 2012 were $0.3 million higher, an increase of 4% from 2011. This was the net effect of a decrease in housing assistance grants and an increase in contributions for beach and park improvements. 3) Capital grants were $5.2 million higher in 2012 than in 2011, an overall increase of 273%. This was largely due to increased physical environment capital grants ($1.0 million higher) for an environmental land purchase and increased transportation capital grants ($4.1 million higher) for the completion of the County's transit administration building and a sidewalk project. • Overall general revenues decreased by $4.5 million mainly due to decreased property tax values. • The governmental activities expenses were $0.4 million higher in 2012 than in 2011. Increases of $1.4 million in transportation and $1.6 million in culture and recreation expenses were mainly due to impact fee refunds. Increases of $1.1 million in physical environment were due to an environmental land purchase. Budget reductions resulted in decreases of $2.2 million in general government expenses, $0.9 million in public safety expenses, and $0.6 million in the remaining expenses. Business -type Activities Business -type activities net position decreased by $2.8 million. Key elements of this decrease are as follows: • Overall program revenues increased $1.6 million. 1) Charges for services increased by $1.1 million or 3%. A gradual improvement in the local economy has attributed to the following increases over 2011 revenues: water and sewer charges increased by $0.5 million or 2%, solid waste revenues increased $0.4 million or 4%, the golf course revenues increased by $0.05 million or 2%, and the building revenues increased by $0.15 million or 9%. 2) Capital grants and contributions were $0.5 million higher in 2012 than in 2011, an overall increase of 25%. This was largely due to a $0.4 million increase in customer impact fee contributions from 2011 to 2012 in the water and sewer fund. • Interest earnings decreased by $0.1 million or 17% from the preceding year due to lower interest rates. 8 Indian River County, Florida Management's Discussion and Analysis For the Year Ended September 30, 2012 • Other miscellaneous general revenues decreased by $0.6 million from the preceding year. This was due to the sale of numerous solid waste capital assets in fiscal year 2011 upon privatization of the County's landfill. • Overall expenses were $0.6 million or 1% higher in 2012 than in 2011. The golf course had $0.1 million or 4% lower expenses in 2012 than in 2011 and the building department had $0.1 million or 6% lower expenses in 2012 than in 2011 due to staff and benefit cost reductions. The water and sewer utilities expenses were $0.5 million or 1% higher in 2012 than in 2011 due to the write off of bond issuance costs and the loss on the demolition of two water and sewer buildings. The solid waste expenses were $0.3 million or 3% higher in 2012 than in 2011 due to an increase in the recycling services contract. FINANCIAL ANALYSIS OF THE GOVERNMENT'S FUNDS As noted earlier, the County uses fund accounting to ensure and demonstrate compliance with finance related legal requirements. Governmental funds Unassigned fund balance may serve as a useful measure of the County's net resources available for spending at the end of the fiscal year. Approximately 26% of this total amount ($48.5 million) constitutes unassigned fund balance, which is available for spending at the County's discretion. The remainder of fund balance is presented in classifications that comprise a hierarchy based primarily on the extent to which the County is bound to honor constraints on the specific purposes for which amounts in those funds can be spent. The County had fund balance in 1) a nonspendable category for inventories, prepaid items, and advances to other funds ($0.9 million), 2) a restricted category for resources that are either restricted externally by creditors, grantors, contributors, or laws or regulations of other governments or imposed by law through constitutional provisions or enabling legislation ($117.5 million), 3) a committed category for constraints imposed by approval of ordinances and contracts by Board of County Commissioners ($3.8 million), and 4) an assigned category for constraints by the County's intent to use for specific purposes ($13.1 million). The two largest restricted amounts are in the Impact Fees Fund with a $23.1 million restricted fund balance and the Optional Sales Tax Fund with a $50.5 million restricted fund balance. The fund balance of the Secondary Roads Construction Fund ($12.7 million), sixty percent of the Impact Fees Fund ($13.8 million) and seventy-five percent of the Optional Sales Tax Fund is slated for major road expansions throughout the County. The County's governmental funds reported a combined fund balance of $183.8 million, which is a decrease of $13.2 million over the prior year of $197.0 million. Contributing factors to the $13.2 million decrease in fund balance are: • Fund balance in the General Fund decreased by $2.5 million. This decrease was mainly due to the early payoff of the general obligation bonds. 9 Indian River County, Florida Management's Discussion and Analysis For the Year Ended September 30, 2012 • Fund balance in the Emergency Services District Fund decreased by $1.9 million, largely the result of decreased revenue from property tax values. • In the Impact Fees Fund, fund balance decreased $9.4 million. This was largely due to the $2.9 million in refunds issued to County residents for impact fees paid but remained unspent after six years and the $9.0 million in transportation spending due to major road construction and right-of- way purchases. • Fund balance in the Optional Sales Tax Fund increased by $6.2 million due to budgeted projects not yet completed. Proprietary funds Unrestricted net position at the end of the year amounted to $16.0 million in the Solid Waste Disposal District Fund, ($0.01) million in the Golf Course Fund, $4.1 million in the County Building Fund, and $50.2 million in the County Utilities Fund. Other factors concerning the finances of these funds have already been addressed in the discussion of the County's business -type activities. GENERAL FUND BUDGETARY HIGHLIGHTS During the year there was a $7 million increase in appropriations between the original and final amended budget. The main components are as follows: • $3,536,293 grants appropriations and prior year rollovers for the Senior Resource Association to provide County -wide public transportation. • $3,050,000 to call the remaining Land Acquisition G.O. Bonds, Series 2001. • $123,000 Local Jobs Grants • $111,500 Homeland Security Grants Actual revenues exceeded final budget by $3.6 million for the following reasons: • $1,000,000 Windsor donation reclassified from escrow fund to general fund • $556,845 Ad Valorem actual at 96.4% - budgeted at 95% • $437,000 Reimbursement for lower than anticipated insurance claims Actual expenditures were $3.3 million lower than anticipated for the following reasons: • $1,100,000 Senior Resource Association grants budgeted but not expended in FY 11/12 • $233,470 Medicaid invoices backlogged 2 months The General Fund Statement of Revenues, Expenditures, and Changes in Fund Balances — Budget and Actual is shown on page 27. 10 Indian River County, Florida Management's Discussion and Analysis For the Year Ended September 30, 2012 CAPITAL ASSETS AND DEBT ADMINISTRATION Capital Assets The County's investment in capital assets for its governmental and business -type activities as of September 30, 2012, amounts to $810.7 million (net of accumulated depreciation). This investment in capital assets includes land, right-of-way, buildings and improvements, intangibles, equipment, infrastructure and construction in progress. The overall decrease in the County's investment in capital assets for the current fiscal year was less than 1%. Governmental activities had the following major increases during the fiscal year: • An increase in infrastructure primarily due to the capitalization of the Sector 3 Beach Restoration Project ($12.9 million), the 53rd Street road expansion project from Kings Highway to US 1 ($9.0 million), the 82nd Avenue bridge over the Lateral "D" Canal ($1.3 million), and a bridge ($2.2 million) and sidewalk ($1.2 million) along Old Dixie Highway. • An increase in buildings and improvements primarily due to the completion of the Quadrangle Softball Fields at Vero Beach Sports Village ($2.4 million), and the Senior Resource Association transit facility ($2.3 million). • An increase in land due to the purchase of the Pressley Ranch property ($1.0 million). Business -type activities had the following major increases and decreases during the fiscal year: • An increase in buildings and improvements was due to the capitalization of the North County Reverse Osmosis Plant Wells 4-9 Project ($4.0 million), the North County Wastewater Treatment Plant Storage/Repump Facility ($2.1 million), and the North County reverse osmosis plant brine line ($0.9 million). • An increase in land due to the purchase of 13 acres for the South County brine project ($0.7 million). 11 Land $ Right-of-way Buildings and improvements Equipment Intangibles Infrastructure Construction in progress Total Indian River County, Florida Management's Discussion and Analysis For the Year Ended September 30, 2012 Indian River County Capital Assets (Net of Depreciation, In Millions) Governmental Business -type Activities Activities Total 2012 2011 2012 2011 2012 2011 139.6 $ 138.4 54.7 53.7 149.0 148.1 26.3 26.2 1.7 1.3 153.9 133.0 28.2 44.0 $ 21.3 $ 20.5 $ 160.9 $ 158.9 54.7 53.7 226.1 232.5 375.1 380.6 1.6 1.9 27.9 28.1 1.8 1.9 3.5 3.2 - - 153.9 133.0 6.5 10.3 34.7 54.3 $ 553.4 $ 544.7 $ 257.3 $ 267.1 $ 810.7 $ 811.8 Additional information on the County's capital assets can be found in Note 6 on pages 66-68 of this report. Debt Administration - Long-term debt At the end of the current fiscal year, the County had total bonded debt outstanding of $92.8 million. Of this amount, $33.2 million is debt backed by the full faith and credit of the government. The revenue bonds represent bonds secured solely by specified revenue sources. Indian River County's Outstanding Debt General Obligation and Revenue Bonds (In Millions) Governmental Activities General Obligation Debt: 2012 2011 General Obligation, Series 2001 $ - $ 4.4 $ Limited General Oblig., Series 2006 33.2 36.3 Revenue Bonds: Spring Training Facility, Series 2001 11.1 11.7 Recreational Revenue Ref., Series 2003 - Water and Sewer Ref. Rev., Series 2005 - Water and Sewer Ref. Rev., Series 2009 Total $ 44.3 $ 52.4 12 Business -type Activities Total 2012 2011 2012 2011 -$ $ -$ 4.4 33.2 36.3 - - 11.1 11.7 2.1 2.6 2.1 2.6 19.6 21.2 19.6 21.2 26.8 28.7 26.8 28.7 $ 48.5 $ 52.5 $ 92.8 $ 104.9 Indian River County, Florida Management's Discussion and Analysis For the Year Ended September 30, 2012 The County received an increase in all of their bond ratings with the recalibration of the bond rating system. The County's General Obligation underlying rating from Standard & Poors is "AAA" and "A-" on the Revenue Bonds. Standard & Poor's rating is required on all issues. A second rating from Fitch or Moody's is also recommended. Additional information on the County's long-term debt can be found in Note 13 on pages 74-83 of this report. ECONOMIC FACTORS AND NEXT YEAR'S BUDGETS AND RATES In order to address an expected decrease in property values and other County revenues, Board departments, Constitutional Officers, and outside agencies were asked to trim their budgets by 3% from the previous year. Many cost saving measures have been taken to adjust for declining revenues. For example, mid -year privatization of County Beach Park's Maintenance and related operations resulted in the elimination of four (4) full-time positions and an annual savings of $163,613. In summary, staff has undertaken a critical review of all functions to streamline operations as much as possible without impacting service levels. The total proposed budget is $252,135,490, a decrease of $54,879,451 or 17.9% from the current year. This represents a drop of 46.6% from the approved FY 2006/07 amount of $472,420,328. The single greatest individual expense in the budget is personnel services. In order to balance the budget with the reduced revenues, seven (7) full-time (FT) positions were eliminated in mid -year of FY 11/12. Additional decreases of nine (9) full-time (FT) positions have been proposed for next fiscal year. Indian River County, like the nation overall, has been experiencing a continuation of the economic slowdown this year. Some revenues have leveled off and are even showing signs of a slight increase. Therefore, our revenue projections for next year are mixed. For example, Half -Cent Sales Tax is increasing $202,234 or 2.8%, while interest earnings are expected to drop $58,000 or 4.3%. State shared revenues are expected to increase by $61,952 or 2.4%. The tax roll is decreasing by 3.6% compared to a decrease of 6.6% last year. Building permit revenues are expected to increase $50,000 or 5.0%. Franchise fees are decreasing by $132,500 or 1.5%. Advanced life support charges are expected to increase by $360,000 next year. Many of the revenue increases are following five years of substantial decline. During the current fiscal year, the County approved paying off the remaining bonds early at the July 1, 2012 call date. This will provide a savings of about $250,000 in interest payments over the next four years. Additionally, this allows for the elimination of the millage needed to service these bonds, allowing for an additional decrease of $949,364 in taxes levied. Total debt service expenses are budgeted at $4,754,745, an increase of $6,304, or 0.1%. The millage rate is 0.3799, an increase of 0.0152, or 4.2%. This millage needs to be increased to generate the same revenues as last year in order to fund the debt service amount. Solid waste disposal district assessment rates remain unchanged, along with the street lighting and M.S.B.U. districts. 13 Indian River County, Florida Management's Discussion and Analysis For the Year Ended September 30, 2012 REQUESTS FOR INFORMATION This financial report is designed to provide a general overview of the County's finances for all those with an interest in the government's finances. Questions concerning any of the information provided in this report or requests for additional financial information should be addressed to: Clerk of the Circuit Court and Comptroller Attention: Finance Department 1801 27th Street Vero Beach, FL 32960 14 BASIC FINANCIAL STATEMENTS 15 16 Indian River County, Florida Statement of Net Position September 30, 2012 Primary Government Governmental Businesstype Activities Activities Total ASSETS Current assets: Cash and cash equivalents $ 200,153,652 $ 57,642,357 $ 257,796,009 Investments 691,980 691,980 Accounts receivable - net 2,243,219 2,977,799 5,221,018 Internal balances 399,255 (399,255) - Due fiom other governments 16,950,318 15,431 16,965,749 Interest receivable 233,730 538,139 771,869 Inventories 266,242 950,479 1,216,721 Other assets held for resale 658,000 658,000 Prepaid expenses 1,554,345 211,858 1,766,203 Current restricted assets: Cash and cash equivalents 4,940,591 42,192,730 47,133,321 Total current assets 228,091,332 104,129,538 332,220,870 Non-current assets: Net other postemployment benefits asset 321,681 - 321,681 Capital assets -non-depreciable 226,629,449 29,252,222 255,881,671 Capital assets - depreciable 556,857,658 435,586,230 992,443,888 Capital assets - accumulated depreciation (230,134,470) (207,517,593) (437,652,063) Non-current restricted assets: Special assessments receivable 310,506 1,007,420 1,317,926 Impact fees receivable 744,116 744,116 Liens receivable 2,819,565 2,819,565 Total non-current assets 553,984,824 261,891,960 815,876,784 Total assets 782,076,156 366,021,498 1,148,097,654 DEFERRED OUTFLOWS OF RESOURCES Deferred amounts on refundings Total deferred outflows of resources 2,875,239 2,875,239 2,875,239 2,875,239 LIABILITIES Current liabilities (payable from current assets): Accounts payable 6,435,150 2,793,188 9,228,338 Retainage payable 438 242,016 242,454 Claims payable 2,197,855 2,197,855 Due to other governments 578,215 2,856,263 3,434,478 Other deposits held in escrow 323,847 1,000 324,847 Unearned revenues 189,294 29,652 218,946 Accrued compensated absences 6,532,620 644,945 7,177,565 Pollution remediation costs payable 137,003 2,510 139,513 Current liabilities (payable from current restricted assets): Accounts payable 59,013 59,013 Retainage payable 792,526 35,364 827,890 Accrued interest payable 373,065 180,344 553,409 Customer deposits - 2,895,754 2,895,754 Bonds payable 3,775,000 3,760,000 7,535,000 Total current liabilities 21,335,013 13,500,049 34,835,062 Non-current liabilities: Accrued compensated absences 4,466,032 212,192 4,678,224 Pollution remediation costs payable 2,475,997 6,290 2,482,287 Claims payable 5,876,145 - 5,876,145 Due to other governments 632,347 - 632,347 Closure and maintenance costs payable - 10,513,736 10,513,736 Bonds payable, net of premium and discount 40,500,714 44,804,569 85,305,283 Total non-current liabilities 53,951,235 55,536,787 109,488,022 Total liabilities 75,286,248 69,036,836 144,323,084 NET POSITION Net investment in capital assets 509,076,923 211,631,529 720,708,452 Restricted for: Transportation/road projects 27,006,817 27,006,817 Public safety 17,781,161 17,781,161 Court related costs 3,612,381 3,612,381 Housing assistance 1,737,207 - 1,737,207 Capital projects 50,757,842 17,941,773 68,699,615 Beach renourishment 6,093,395 - 6,093,395 Culture/recreation 7,946,240 7,946,240 Debt service 2,387,548 2,387,548 Environmental conservation/preservation 258,095 258,095 Special assessment projects 1,738,510 1,738,510 Other purposes 1,870,032 - 1,870,032 Unrestricted 76,523,757 70,286,599 146,810,356 Total net position $ 706,789,908 $ 299,859,901 $ 1,006,649,809 The accompanying notes are an integral part of the financial statements. 17 Indian River County, Florida Statement of Activities For the Year Ended September 30, 2012 Expenses Program Revenues Operating Capital Charges for Grants and Grants and Services Contributions Contributions Functions/Programs Primary Government: Governmental activities: General government $ 19,069,181 $ 5,304,385 $ 454,253 $ 3,370 Public safety 66,456,674 5,852,093 459,292 985,197 Physical environment 2,424,109 20,923 - 1,022,876 Transportation 23,629,799 2,345,186 2,790,719 5,033,657 Economic environment 1,986,091 - 358,879 - Human services 7,749,253 358,279 2,825,859 - Culture/recreation 18,089, 432 1,397,660 1,297,718 8,394 Court related 5,635,245 414,356 43,691 - Interest and fiscal charges 2,350,241 - - - Total governmental activities 147,390,025 15,692,882 8,230,411 7,053,494 Business -type activities: Water and sewer 34,246,967 28,361,246 Solid waste 10,659,004 9,582,955 Golf course 2,451,603 3,216,471 Building 1,487, 515 1,735,713 Total business -type activities 48,845,089 42,896,385 Total primary government 2,545,759 2,545,759 $ 196,235,114 $ 58,589,267 $ 8,230,411 $ 9,599,253 General Revenues: Property taxes, levied for general purposes Property taxes, levied for debt service Sales and use taxes Franchise fees, levied on gross receipts State shared tax revenues Interest earnings Miscellaneous Total general revenues Transfers Total general revenues and transfers Change in net position Net position - beginning, as restated (Note 21 C) Net position - ending The accompanying notes are an integral part of the financial statements. 18 Net (Expense) Revenue and Changes in Net Position Primary Government Governmental Business -type Activities Activities Total $ (13,307,173) $ - $ (13,307,173) (59,160,092) - (59,160,092) (1,380,310) - (1,380,310) (13,460,237) - (13,460,237) (1,627,212) - (1,627,212) (4,565,115) - (4,565,115) (15,385,660) - (15,385,660) (5,177,198) - (5,177,198) (2,350,241) - (2,350,241) (116,413,238) - (116,413,238) (116,41 3,238) (3,339,962) (1,076,049) 764,868 248,198 (3,339,962) (1,076,049) 764,868 248,198 (3,402,945) (3,402,945) (3,402,945) (119,816,183) 64,753,566 - 64,753,566 5,574,183 - 5,574,183 20,144,820 - 20,144,820 8,620,401 - 8,620,401 17,908,806 - 17,908,806 668,012 600,116 1,268,128 3,079,701 8,400 3,088,101 120,749,489 (32,957) 120,716,532 4,303,294 702,486,614 608,516 32,957 121,358, 005 641,473 121,358,005 (2,761,472) 302,621,373 1,541,822 1,005,107, 987 706,789,908 $ 299,859,901 $ 1,006,649,809 19 ASSETS Cash and cash equivalents Investments Accounts receivable - net Special assessments receivable Due from other funds Due from other governments Inventories Prepaid items Other assets held for resale Advance to other funds Total assets LIABILITIES Accounts payable Retainage payable Due to other funds Due to other governments Unearned revenues Other deposits Total liabilities DEFERRED INFLOWS OF RESOURCES Unavailable revenue - special assessments Total deferred inflows of resources Indian River County, Florida Balance Sheet Governmental Funds September 30, 2012 General Secondary Impact Roads Fees Construction 53,924,172 $ 25,056,533 $ 12,569,189 691,980 - 662,278 498,704 - 2,223,819 62,718 288,980 48,046 - 74,779 188,416 255,000 58,312,194 $ 25,119,251 $ 13,113,169 2,720,121 $ 1,569,517 $ 409,289 438 398,820 30,634 415,573 - 397,300 22,828 173,532 - 268,183 3,975,147 1,991,165 439,923 FUND BALANCES Nonspendable: Inventories 48,046 Prepaid items 74,779 Advances to other funds 188,416 255,000 Restricted for: Transportation/road improvements 13,817,620 12,418,246 Court -related costs and improvements 120,087 - Housing assistance - - Law enforcement/public safety 1,325,474 Fire/emergency services 1,618,259 Tourism -related activites - Beach renourishment Boating related projects Library services 345,201 Land acquisition - Stormwater, street lighting, and other special assessments Debt service Capital projects Sports Village repairs/improvements - Solid waste projects 25,802 Parks/recreational projects 1,000,000 4,437,723 Other purposes 1,558,007 Committed to: Economic incentives 2,343,213 Environmental conservation/preservation Law enforcement/public safety 4,244 Court operations - Other purposes 27,333 Assigned to: Subsequent year's budget appropriation of fund balance 1,808,000 Transportation/road improvements - Unassigned 48,722,929 Total fund balances 54,337,047 23,128,086 12,673,246 Total liabilities, deferred inflows and fund balances $ 58,312,194 $ 25,119,251 $ 13,113,169 The accompanying notes are an integral part of the financial statements. 20 Transportation Emergency Optional Other Total Services Sales Governmental Governmental District Tax Funds Funds $ 8,738,192 $ 11,846,281 $ 38,776,874 $ 22,215,507 $ 173,126,748 - - - 691,980 12,606 674,884 310,506 - - 310,506 239,268 - 77,940 815,912 232,096 12,190 12,65 6,159 124,851 15,600,813 - - 48,046 302,128 376,907 658,000 658,000 - 443,416 $ 9,280,794 $ 12,097,739 $ $ 226,686 $ 171,827 $ 6,620 226,686 178,447 51,433,033 $ 23,391,032 $ 192,747,212 614,954 $ 519,864 $ 6,232,258 335,285 27,787 792,964 219,500 635,073 420,128 9,142 189,294 55,664 323,847 950,239 831,957 8,593,564 310,506 310,506 310,506 310,506 8,743,602 8,743,602 302,128 48,046 376,907 443,416 26,235,866 3,449,680 3,569,767 1,597,356 1,597,356 2,912,503 4,237,977 9,374,292 - 10,992,551 381,152 381,152 6,093,395 6,093,395 1,084,470 1,084,470 144,490 489,691 258,095 258,095 1,738,510 1,738,510 2,477,447 2,477,447 50,482,794 - 50,482,794 553,204 553,204 25,802 5,437,723 286,223 1,844,230 2,545,000 11,919,292 50,482,794 2,343,213 1,058,569 1,058,569 391,568 395,812 33,256 33,256 27,333 (202,971) 4,353,000 8,743,602 48,519,958 22,559,075 183,843,142 $ 9,280,794 $ 12,097,739 $ 51,433,033 $ 23,391,032 $ 192,747,212 21 Indian River County, Florida Reconciliation of Total Governmental Fund Balances to Net Position of Governmental Activities September 30, 2012 Total governmental fund balances: $ 183,843,142 Amounts reported for governmental activities in the statement of net position are different because Capital assets used in governmental activities are not financial resources and, therefore, are not reported 553,000,546 in the fund. Long -team liabilities, including bonds payable ($44,275,714), accrued compensated absences ($10,953,682) medicaid settlement funds payable ($790,434) and pollution remediation costs ($2,613,000) are not due and payable in the current period and, therefore, are not reported in the fund (58,632,830) Accrued general long-term debt interest expenses are not financial uses and, therefore, are not reported in (373,065) the fund. Special assessment receivables are not available to pay for current period expenditures and, therefore, ars reported as unavailable revenue in the funds. 310,506 Accrued interest on special assessments is not recognized in the current period because the resources an not available and, therefore, not reported in the fund, 133,794 Internal service funds are used by management to charge the costs of certain activities, such as insurance fleet, and geographic information system services, to individual funds. The assets and liabilities of the internal service funds are included in governmental activities in the statement of net position 26,879,571 Grant revenues are not recognized in the current period because the resources are not available and therefore, are not reported in the fund, 1,222,541 The OPEB asset resulting from contributions in excess of the annual required contribution is not a financia resource and, therefore, is not reported in the funds 321,681 Interest revenues are not recognized in the current period because the resources are not available and, therefore, are not reported in the fund. 84,022 Net position of governmental activitie. $ 706,789,908 The accompanying notes are an integral part of the financial statements. 22 23 Indian River County, Florida Statement of Revenues, Expenditures, and Changes in Fund Balances Governmental Funds For the Year Ended September 30, 2012 REVENUES Taxes Permits, fees and special assessments Intergovemm ental Charges for services Judgments, fines and forfeits Interest Miscellaneous Total revenues General Secondary Impact Roads Fees Construction 48,402,789 $ - $ 3,329,183 8,771,351 2,267,920 44,705 16, 528,034 43,731 991,722 8,347,171 6,340 324,186 - 224,265 72,788 39,860 2,425,574 484,908 23,916 85,023,370 EXPENDITURES Current: General government 17,197,033 Public safety 39,937,404 Physical environment 257,820 Transportation 3,305,565 Economic environment 362,868 Human services 3,154,028 Culture/recreation 8,054,600 Court related 5,227,709 Debt service: Principal Interest and fiscal charges Capital projects Total expenditures 77,497,027 Excess of revenues over (under) expenditures 7,526,343 OTHER FINANCING SOURCES (USES) Transfers in Transfers out Total other financing sources (uses) 700,562 (10, 699,149) 2,869,347 4,435,726 272,699 472,131 9,068,091 2,326,872 4,955,169 12,139,793 4,955,169 (9,270,446) (519,443) (100, 000) (9,998,587) (100,000) Net change in fund balances (2,472,244) (9,370,446) (519,443) Fund balances at beginning of year 56,809,291 32,498,532 13,192,689 Fund balances at end of year $ 54,337,047 $ 23,128,086 $ 12,673,246 The accompanying notes are an integral part of the financial statements. 24 Transportation Emergency Optional Other Total Services Sales Governmental Governmental District Tax Funds Funds $ 17,848,785 $ 13,708,911 $ 7,182,901 $ 90,472,569 106,427 22,353 273,479 11,486,235 2,723, 247 95,560 261,342 9,116,196 29,759, 832 118,731 4,779,183 - 1,508, 700 14,760,125 7,000 - 408,089 739,275 35,865 55,920 111,762 72,563 613,023 1,151,450 140,939 223,465 787,174 5,23 7,426 4,135,720 273,897 395,508 11,520,797 12,190, 202 (8,054,482) 7,499,582 22,927,387 14,327,833 24,473,608 8,108, 370 24,473, 608 8,108,370 (1,546, 221) 6,219,463 19,349,102 153,068,485 2,734,269 20,477,898 2,878,842 67,761,985 1,098,295 1,751,623 208,688 29,058,310 1,658,316 2,021,184 3,734,855 6,888,883 3,426,831 13,808,303 633,216 5,860,925 8,060,000 8,060,000 2,426, 083 2,426,083 8,108,370 26,859,395 166,223,564 (7,510,293) (13,155,079) 3,394,934 11,595,078 (379,401) (444,434) (11,622,984) 7,499, 582 (379,401) 2,950, 500 (27,906) (554,900) 9,298,502 (1,925,622) 6,219,463 13,844,914 44,263,331 (4,559,793) (13,182,985) 27,118,868 197,026,127 $ 8,743,602 $ 11,919,292 $ 50,482,794 $ 22,559,075 $ 183,843,142 25 Indian River County, Florida Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances of Governmental Funds to the Statement of Activities For the Year Ended September 30, 2012 Net change in fund balances - total governmental funds $ (13,182,985) Amounts reported for governmental activities in the statement of activities are different because: Governmental funds report capital outlay as expenditures. However, in the statement of activities, the cost of those assets is allocated over their estimated useful lives as depreciation expense. Expenditures for capital assets Less current year loss on assets Less current year depreciation 27,751,553 (948,213) (20,004,763) 6,798,577 Governmental funds do not report capital assets contributed from outside the entity. However, those assets are recognized in the statement of net position and the capital contribution is recognized in the statement of activities. 1,918,753 Assets transferred from governmental funds to proprietary funds must be recognized as a transfer out on the statement of activities. (40,489) Payments of bond principal, pollution remediation, and medicaid settlement costs are expenditures in the governmental funds, but the payment reduces long-term liabilities in the statement of net position. Bond principal payment Bond premium payment Medicaid settlement Pollution remediation costs Changes in accrued compensated absences do not require the use of current financial resources and, therefore, are not reported as expenditures in governmental funds. 8,060,000 93,225 (790,434) 83,300 7,446,091 (228,998) Governmental funds report interest and OPEB expenditures based on when they are paid. The statement of activities reports these expenses as they are incurred. This is the net number of the prior year and current year accrual. Accrued bond interest expense 75,842 Accrued OPEB expense 132,097 207,939 Some revenues reported in the governmental funds have been recognized as revenues in the prior fiscal year in the statement of activities. 236,710 Internal service funds are used by management to charge the costs of insurance, fleet and geographic information systems services to individual funds. The net costs of the internal service funds are reported in governmental activities. Governmental funds report non-exchange transactions when the applicable eligibility requirements have been met and resources are available. However, in the statement of activities, non-exchange transactions are recognized when the eligibility requirements are met. This is the net number of the prior year and current year accrual. Some interest revenues reported in the statement of activities do not provide current financial resources, therefore, are not reported as revenues in governmental funds. This is the net number of the prior year and current year accrual. Change in net position of governmental activities The accompanying notes are an integral part of the financial statements. 26 927,862 262,891 (43,057) $ 4,303,294 Indian River County, Florida Statement of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual General Fund For the Year Ended September 30, 2012 Variance with Final Budget Budgeted Amounts Actual Positive Original Final Amounts (Negative) REVENUES Taxes $ 47,634,737 $ 47,634,736 $ 48,402,789 $ Permits, fees and special assessments 8,530,525 8,530,525 8,771,351 Intergovernmental 13,225,51 6 16,127,139 16,528,034 Charges for services 9,835,794 7,926,505 8,347,171 Judgments, fines and forfeits 303,525 303,525 324,186 Interest 268,875 268,875 224,265 Miscellaneous 449,113 634,045 2,425,574 Total revenues 80,248,085 81,425,350 85,023,370 EXPENDITURES Current: General government Public safety Physical environment Transportation Economic environment Human services Culture/recreation Court related Total expenditures 17,731,501 41,133,399 255,043 845,286 349,264 3,178,533 8,177,728 5,223,336 76,894,090 Excess of revenues over (under) expenditures 3,353,995 OTHER FINANCING SOURCES (USES) Transfers in Transfers out Total other financing sources (uses) Net change in fund balances Fund balances at beginning of year Fund balances at end of year 768,053 240,826 400,895 420,666 20,661 (44,610) 1,791,529 3,598,020 18,144,543 17,197,033 947,510 40,085,775 39,937,404 148,371 266,143 257,820 8,323 4,467,615 3,305,565 1,162,050 444,074 362,868 81,206 3,572,249 3,154,028 418,221 8,485,377 8,054,600 430,777 5,378,385 5,227,709 150,676 80,844,161 77,497,027 3,347,134 581,189 7,526,343 6,945,154 193,141 946,166 700,562 (245,604) (7,649,218) (10,699,218) (10,699,149) 69 (7,456,077) (4,102, 082) 4,102,082 (9,753,052) (9,998,587) (245,535) (9,171,863) (2,472,244) $ 6,699,619 9,171,863 56,809,291 - $ - $ 54,337,047 The accompanying notes are an integral part of the financial statements. 27 Indian River County, Florida Statement of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual Impact Fees Fund For the Year Ended September 30, 2012 Variance with Final Budget Budgeted Amounts Actual Positive Original Final Amounts (Negative) REVENUES Permits, fees and special assessments $ 1,363,250 $ 1,363,250 $ 2,267,920 $ 904,670 Intergovernmental - 43,731 43,731 Interest 114,000 114,000 72,788 (41,212) Miscellaneous - 484,908 484,908 Total revenues 1,477,250 1,477,250 2,869,347 1,392,097 EXPENDITURES Current: General government 277,891 480,142 272,699 207,443 Public safety 90,000 3,218,460 472,131 2,746,329 Physical environment 25,000 25,000 - 25,000 Transportation 7,435,837 17,419,285 9,068,091 8,351,194 Culture/recreation 2,050,000 8,052,554 2,326,872 5,725,682 Total expenditures 9,878,728 29,195,441 12,139,793 17,055,648 Excess of revenues over (under) expenditures (8,401,478) (27,718,191) (9,270,446) 18,447,745 OTHER FINANCING USES Transfers out - (100,000) (100,000) Total other financing uses - (100,000) (100,000) Net change in fund balances (8,401,478) (27,818,191) (9,370,446) $ 18,447,745 Fund balances at beginning of year 8,401,478 27,818,191 32,498,532 Fund balances at end of year $ - $ - $ 23,128,086 The accompanying notes are an integral part of the financial statements. 28 Indian River County, Florida Statement of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual Secondary Roads Construction Fund For the Year Ended September 30, 2012 Variance with Final Budget Budgeted Amounts Actual Positive Original Final Amounts (Negative) REVENUES Taxes $ 3,220,500 $ 3,220,500 $ 3,329,183 $ 108,683 Permits, fees and special assessments - - 44,705 44,705 Intergovernmental - 3,697,186 991,722 (2,705,464) Charges for services - - 6,340 6,340 Interest 52,250 52,250 39,860 (12,390) Miscellaneous 23,750 23,750 23,916 166 Total revenues 3,296,500 6,993,686 4,435,726 (2,557,960) EXPENDITURES Current: Transportation Total expenditures Net change in fund balances Fund balances at beginning of year Fund balances at end of year 11,026, 726 16,806,158 11,026, 726 16,806,158 (7,730,226) 7,730,226 4,955,169 11,850,989 4,955,169 11,850,989 (9,812,472) (519,443) $ 9,293,029 9,812,472 13,192, 689 $ - $ 12,673,246 The accompanying notes are an integral part of the financial statements 29 Indian River County, Florida Statement of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual Transportation Fund For the Year Ended September 30, 2012 REVENUES Permits, fees and special assessments Intergovernmental Charges for services Interest Miscellaneous Total revenues EXPENDITURES Current: General government Physical environment Transportation Total expenditures Excess of revenues over (under) expenditures OTHER FINANCING SOURCES Transfers in Total other financing sources Net change in fund balances Budgeted Amounts Original Final Actual Amounts Variance with Final Budget Positive (Negative) $ 118,750 $ 118,750 $ 106,427 $ (12,323) 2,492,800 2,500,263 2,723,247 222,984 87,875 87,875 118,731 30,856 49,400 49,400 35,865 (13,535) 792,750 793,793 1,151,450 357,657 3,541,575 3,550,081 4,135,720 585,639 285,958 286,656 544,058 647,434 11,461,141 12, 459,867 12,291,157 13, 393,957 (8,749,582) (9,843,876) 7,499,582 7,499,582 7,499,582 7,499,582 (1,250,000) (2,344,294) 273,897 395,508 11,520,797 12,190, 202 12,759 251,926 939,070 1,203,755 (8,054,482) 1,789,394 7,499,582 7,499,582 (554,900) $ 1,789,394 Fund balances at beginning of year 1,250,000 2,344,294 Fund balances at end of year $ - $ 9,298,502 - $ 8,743,602 The accompanying notes are an integral part of the financial statements. 30 Indian River County, Florida Statement of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual Emergency Services District Fund For the Year Ended September 30, 2012 Variance with Final Budget Budgeted Amounts Actual Positive Original Final Amounts (Negative) REVENUES Taxes $ 17,580,683 $ 17,580,683 $ 17,848,785 $ 268,102 Intergovernmental 33,250 105,627 95,560 (10,067) Charges for services 4,186,175 4,186,175 4,779,183 593,008 Judgments, fines and forfeits 1,900 1,900 7,000 5,100 Interest 90,250 90,250 55,920 (34,330) Miscellaneous 14,527 14,527 140,939 1 26,41 2 Total revenues 21,906,785 21,979,162 22,927,387 948,225 EXPENDITURES Current: Public safety 24,659,507 25,896,332 24,473,608 1,422,724 Total expenditures 24,659,507 25,896,332 24,473,608 1,422,724 Excess of revenues over (under) expenditures (2,752,722) (3,917,170) (1,546,221) 2,370,949 OTHER FINANCING USES Transfers out (451,068) (451,068) (379,401) 71,667 Total other financing uses (451,068) (451,068) (379,401) 71,667 Net change in fund balances (3,203,790) (4,368,238) (1,925,622) $ 2,442,616 Fund balances at beginning of year 3,203,790 4,368,238 13,844,914 Fund balances at end of year $ $ $ 11,919,292 The accompanying notes are an integral part of the financial statements. 31 32 Indian River County, Florida Statement of Net Position Proprietary Funds September 30, 2012 Business -type Activities - Enterprise Funds Solid Waste Disposal Golf County County District Course Utilities Building Total Governmental Activities Internal Service Funds ASSETS Current assets: Cash and cash equivalents $ 14,760,597 $ 183,390 $ 38,463,042 $ 4,235,328 $ 57,642,357 $ 31,967,495 Accounts receivable - net 113,820 2,863,979 2,977,799 1,568335 Due from other funds 98,365 - - 98365 - Due from other governments - 11,100 4331 - 15,431 126,964 Interest receivable 9,608 438 525,988 2,105 538,139 15,914 Inventories 56,673 893,806 950,479 218,196 Prepaid items 211,858 211,858 1,177,438 Current restricted assets: Cash and cash equivalents 13,869,807 470,681 27,852,242 42,192,730 Total currentassets 28,852,197 722,282 70,815,246 4,237,433 104,627,158 35,074,342 Non-current assets: Capital assets - non -depreciable 18,755,620 786,611 9,709,991 - 29,252,222 - Capital assets - depreciable 21,836,756 8314,248 404,979,117 456,109 435,586,230 1,119,934 Capital assets - accumulated depreciation (8,710,425) (1,811,236) (196,570,779) (425,153) (207,517,593) (767,843) Non-current restricted assets: Special assessments receivable 1,007,420 1,007,420 Impact fees receivable 744,116 744,116 Liens receivable 2,819,565 2,819,565 Total non-current assets 31,881,951 7,289,623 222,689,430 30,956 261,891,960 352,091 Total assets 60,734,148 8,011,905 293,504,676 4,268,389 366,519,118 35,426,433 DEFERRED OUTFLOWS OF RESOURCES Deferred amounts on refundings 107,215 2,768,024 2,875,239 Total deferred outflows of resources 107,215 2,768,024 2,875,239 LIABILITIES Current liabilities (payable from current assets): Accounts payable 1,973,276 139,328 660,621 19,963 2,793,188 202,892 Retainage payable 216,211 4,987 20,818 - 242,016 - Due to other funds 54,204 54,204 225,000 Claims payable - - 2,197,855 Due to other governments 7,771 2,833,946 14,546 2,856,263 Other deposits 1,000 1,000 Unearned revenues 29,652 29,652 Pollution remediation payable - - 2,510 - 2,510 - Accrued compensated absences 36,275 36,579 492,621 79,470 644,945 33,005 Total current liabilities (payable from current assets) 2,225,762 273,521 4,010,516 113,979 6,623,778 2,658,752 Current liabilities (payable from restricted assets): Accounts payable 59,013 59,013 Retainage payable 35,364 35,364 Accrued interest payable 6,931 173,413 180,344 Bonds payable 555,000 3,205,000 3,760,000 Customer deposits 126,626 - 2,769,128 2,895,754 Total currentliabilities (payable from restricted assets) 126,626 561,931 6,241,918 6,930,475 Total currentliabilities 2,352,388 835,452 10,252,434 113,979 13,554,253 2,658,752 Non-current liabilities: Accrued compensated absences 5,998 6,456 180,217 19,521 212,192 11,965 Advance from other funds 443,416 443,416 Claims payable 5,876,145 Pollution remediation payable 6,290 6,290 Closure and maintenance costs payable 10,513,736 - 10,513,736 Bonds payable - net ofunamortized discount/premium - 1,546,871 43,257,698 44,804,569 Total non-current liabilities 10,519,734 1,996,743 43,444,205 19,521 55,980,203 5,888,110 Total liabilities 12,872,122 2,832,195 53,696,639 133,500 69,534,456 8,546,862 NET POSITION Net investment in capital assets 31,881,951 5,294,967 174,423,655 30,956 211,631,529 352,091 Restricted for: Capital projects - - 17,941,773 - 17,941,773 - Unrestricted 15,980,075 (8,042) 50,210,633 4,103,933 70,286,599 26,527,480 Total net position $ 47,862,026 $ 5,286,925 $ 242,576,061 $ 4,134,889 $ 299,859,901 $ 26,879,571 The accompanying notes are an integral part of the financial statements. 33 Indian River County, Florida Statement of Revenues, Expenses, and Changes in Fund Net Position Proprietary Funds For the Year Ended September 30, 2012 Business -type Activities - Solid Waste Disposal Golf District Course OPERATING REVENUES Charges for services $ 9,582,955 $ Charges for services pledged as security for revenue bonds - 3,216,471 Total operating revenues 9,582,955 3,216,471 OPERATING EXPENSES Personal services 533,291 537,390 Material, supplies, services and other operating 9,283,395 1,643,574 Depreciation 842,318 129,906 Total operating expenses 10,659,004 2,310,870 Operating income (loss) (1,076,049) 905,601 NONOPERATING REVENUES (EXPENSES) Interest income 268,633 Interest income pledged as security for revenue bonds - 4,088 Gain on disposal of equipment - 625 Interest expense - (109,301) Bond amortization expense - (31,432) Loss on disposal of equipment - - Total nonoperating revenues (expenses) 268,633 (136,020) Income (loss) before transfers and capital contributions Capital contributions Capital grants Transfers in (807,416) 769,581 Transfers out - (7,532) Change in net position (807,416) 762,049 Total net position - beginning, as restated (Note 21C) 48,669,442 4,524,876 Total net position - ending $ 47,862,026 $ 5,286,925 The accompanying notes are an integral part of the financial statements. 34 Enterprise Funds County County Utilities Building Total Governmental Activities Internal Service Funds $ - $ 1,735,713 $ 11,318,668 $ 21,563,550 28,361,246 31,577,717 28,361,246 1,735,713 42,896,385 21,563,550 7,315,133 1,038,946 9,424,760 2,471,801 10,059,161 445,023 21,431,153 18,143,414 14,414,302 3,546 15,390,072 155,207 31,788,596 1,487,515 (3,427,350) 248,198 315,377 7,775 (2,184,076) (25,828) (248,467) 46,245,985 20,770,422 (3,349, 600) 793,128 12,018 280,651 98,046 319,465 8,400 (2,293,377) (57,260) (248,467) 1,250 (2,135,219) 12,018 (1,990,588) 99,296 (5,562,569) 2,513,774 72,474 (2,976,321) 260,216 (5,340,188) 2,513,774 72,474 (7,532) 892,424 35,438 260,216 (2,761, 472) 927,862 245,552,382 3,874,673 302,621,373 25,951,709 $ 242,576,061 $ 4,134,889 $ 299,859,901 $ 26,879,571 Indian River County, Florida Statement of Cash Flows Proprietary Funds For the Year Ended September 30, 2012 CASH FLOWS FROM OPERATING ACTIVITIES Cash received from customers Cash paid to suppliers for goods and services Cash paid to employees for services Net cash provided by (used in) operating activities CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES Transfers Proceeds from advances from other funds Payments for advances from other funds Net cash provided by (used in) noncapital financing activities Business -type Solid Waste Disposal Golf District Course 9,575,399 $ (7,804,212) (530,952) 3,217,549 (1,566,655) (559,077) 1,240,235 1,091,817 (7,532) (307,604) (315,136) CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES Principal payments - bonds/notes - (535,000) Interest paid on long-term debt - (111,081) Proceeds from sales of capital assets 501 625 Purchase of capital assets (2,648,473) (84,625) Bond paying agent fees Capital contributed by others Net cash provided by (used in) capital and related financing activities (2,647,972) (730,081) CASH FLOWS FROM INVESTING ACTIVITIES Interest and dividends on investments 274,658 4,224 Net cash provided by investing activities 27 4, 658 4,224 Net increase (decrease) in cash and cash equivalents Cash and cash equivalents at beginning of year (1,133,079) 29,763,483 50,824 603,247 Cash and cash equivalents at end of year $ 28,630,404 $ 654,071 Classified as: Current assets $ 14,760,597 $ 183,390 Restricted assets 13,869,807 470,681 Totals $ 28,630,404 $ 654,071 The accompanying notes are an integral part of the financial statements. 36 Activities - Enterprise Funds County County Utilities Building Total Governmental Activities Internal Service Funds 28,212,318 $ 1,736,088 $ 42,741,354 $ 21,545,354 (9,469,003) (428,657) (19,268,527) (18,109,270) (7,263,059) (1,035,613) (9,388,701) (2,470,632) 11,480,256 271,818 (3,090,000) (2,193,450) 7,775 (2,773,381) (1,620) 1,626,811 14, 084,126 965,452 (7,532) (307,604) 35,438 35,000 (315,136) 70,438 - (3,625,000) - - (2,304,531) - - 8,901 1,250 (29,465) (5,535,944) (101 ,763) - (1,620) - - 1,626,811 - (6,423,865) (29,465) (9,831,383) (100,513) 325,697 12,925 617,504 105,524 325,697 12,925 617,504 105,524 5,382,088 60,933,196 255,278 4,555,111 1,040,901 3,980,050 95,279,976 30,926,594 $ 66,315,284 $ 4,235,328 $ 99,835,087 $ 31,967,495 $ 38,463,042 $ 4,235,328 $ 57,642,357 $ 31,967,495 27,852,242 - 42,192,730 - $ 66,315,284 $ 4,235,328 $ 99,835,087 $ 31,967,495 Continued 37 Indian River County, Florida Statement of Cash Flows Proprietary Funds For the Year Ended September 30, 2012 Business -type Activities - Solid Waste Disposal Golf District Course RECONCILIATION OF OPERATING INCOME (LOSS) TO NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES Operating income (loss) $ (1,076,049) $ 905,601 Adjustments to reconcile operating income to net cash provided by (used in) operating activities: Work in progress reclassified as expense - Depreciation 842,318 129,906 (Increase) Decrease in assets: Accounts receivable (5,526) Due from other funds (1,515) Due from other governments - (300) Inventories - (2,211) Liens receivable - Impact fees receivable - Special assessments receivable - Prepaid expenses - Increase (Decrease) in liabilities: Accounts payable 981,683 79,104 Due to other governments - 26 Retainage payable - Customer deposits (515) Closure and maintenance costs payable 497,500 Pollution remediation costs payable - Unearned revenues - 1,378 Claims payable - Accrued compensated absences 2,339 (21,687) Total adjustments 2,316,284 186,216 Net cash provided by (used in) operating activities $ 1,240,235 $ 1,091,817 NONCASH CAPITAL AND RELATED FINANCING ACTIVITIES Change in fair value of investments $ (8,175) $ Contributed property, infrastructure and equipment $ - $ Capital assets purchased through accounts payable $ 773,815 $ The accompanying notes are an integral part of the financial statements. 38 (37 3) Enterprise Funds County County Utilities Building Total Governmental Activities Internal Service Funds $ (3,427,350) $ 248,198 $ (3,349,600) $ 793,128 458,343 - 458,343 - 14,414,302 3,546 15,390,072 155,207 (37,426) 375 (42,577) (3,759) - - (1,515) - (4,280) - (4,580) (14,437) (17,547) - (19,758) (8,529) (686,120) - (686,120) - 31,919 - 31,919 - 249,216 - 249,216 - (30,694) - (30,694) (141,7 68) 239,702 13,136 1,313,625 (12,559) 6,422 3,230 9,678 - (3,446) - (3,446) - 291,341 - 290,826 - - 497,500 - (56,200) - (56,200) - - - 1,378 - - - 197,000 52,074 3,333 36,059 1,169 14,907,606 23,620 17,433,726 172,324 $ 11,480,256 $ 271,818 $ 14,084,126 $ 965,452 $ (25,536) $ (1,791) $ (35,875) $ $ 926,147 $ - $ 926,147 $ $ 231,834 $ - $ 1,005,649 $ (13,539) Indian River County, Florida Statement of Fiduciary Net Position Fiduciary Funds September 30, 2012 Agency ASSETS Cash and cash equivalents $ 11,550,559 $ Investments, at fair value: Surplus Funds Trust Fund - Fund B 79,993 - Index funds 4,748,954 U.S. government securities funds - 5,379,116 Prime money market fund 705,586 Other Postemployment Benefits Trust Total assets $ 11,630,552 10,833,656 LIABILITIES Accounts payable $ 637,964 Benefits payable Due to other governments 5,114,411 Other deposits held in escrow 5,878,177 Total liabilities $ 11,630,552 1,459,609 1,459,609 NET POSITION Net position held in trust for other postemployment benefits 9,374,047 Total net position $ 9,374,047 The accompanying notes are an integral part of the financial statements. 40 Indian River County, Florida Statement of Changes in Fiduciary Net Position Other Postemployment Benefits Trust Fund For the Year Ended September 30, 2012 ADDITIONS Employer contributions $ 2,948,661 Investment income 930,584 Investment expense (945) Total additions 3,878,300 DEDUCTIONS Benefits paid to participants Total deductions 1,459,609 1,459,609 Change in net position 2,418,691 Net position - beginning 6,955,356 Net position - ending $ 9,374,047 The accompanying notes are an integral part of the financial statements. 41 42 Indian River County, Florida Notes To Financial Statements Year Ended September 30, 2012 Note Page 1. Summary of Significant Accounting Policies 44 Reporting Entity 44 Measurement Focus and Basis of Accounting 45 Basis of Presentation 48 Assets, Liabilities, Deferred Outflows Or Inflows of Resources, and Net Position or Fund Balances 50 Cash and Cash Equivalents 50 Investments 50 Allowance for Doubtful Accounts 50 Receivables and Payables 51 Inventories 51 Prepaid Items 51 Other Assets Held For Resale 51 Restricted Net Position 51 Capital Assets 52 Capitalization of Interest 53 Deferred Inflows/Outflows 53 Unearned Revenues 53 Accrued Compensated Absences53 Obligation for Bond Arbitrage Rebate 54 Landfill Closure Costs 54 Unamortized Bond Discounts and Premiums 54 Capital Contributions 54 New Accounting Pronouncements54 2. Reconciliation of Government -wide and Fund Financial Statements 55 3. Stewardship, Compliance and Accountability 59 Budget and Budgetary Accounting59 4. Cash and Cash Equivalents 60 Deposits 60 Accrued Interest 60 Investments 60 OPEB Trust Investments 64 5. Property Tax Revenues 65 6. Capital Assets 66 43 Note Page 7. Restricted Cash and Cash Equivalents and Investments 69 8. Payable from Restricted Assets 69 9. Interfund Balances 70 10. Interfund Transfers 71 11. Due from Other Governments 72 12. Accounts Payable 72 13. Long-term Liabilities 74 Changes in Long-term Liabilities 74 Governmental Activities 75 Annual Debt Service Payments — Governmental Activities 75 Limited General Obligation Bonds 76 General Obligation Bonds 77 Spring Training Facility Revenue Bonds 77 Business -type Activities 80 Annual Debt Service Payments — Business -type Activities 80 Recreational Revenue Refunding Bonds, Series 2003 80 Water and Sewer Revenue Refunding Bonds, Series 2005 81 Water and Sewer Revenue Refunding Bonds, Series 2009 82 Compensated Absences .83 14. Provision for Closure Costs 84 15. Pollution Remediation 85 16. Pension Plans - Florida Retirement System 86 17. Other Postemployment Benefits Plan88 18. Operating Leases 91 19. Fund Balance 93 20. Fund Balance Deficit 95 21. Net Position 95 22. Risk Management 96 23. Commitments and Contingencies 97 Litigation 97 Contracts and Other Commitments 97 Grants 98 Indian River County, Florida Notes To Financial Statements Year Ended September 30, 2012 NOTE 1— SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Indian River County, Florida, (the "County") is a political subdivision of the State pursuant to Article VIII, Section 1(a) of the Constitution of the State of Florida. Created on June 29, 1925 by an act of Legislature, separating it from St. Lucie County, the County encompasses approximately 497 square miles of land with an estimated population of 138,694. The County is governed by the Board of County Commissioners and five elected constitutional officers (Clerk of the Circuit Court and Comptroller, Property Appraiser, Sheriff, Supervisor of Elections, and Tax Collector) in accordance with state statutes and regulations. The constitutional officers maintain separate accounting records and budgets from the Board of County Commissioners. The Constitution of the State of Florida, Article VIII, Section 1(d) created the constitutional officers and Article VIII, Section 1(e), created the Board of County Commissioners. The financial statements of the County have been prepared in accordance with generally accepted accounting principles (GAAP) as applied to governmental units. The Governmental Accounting Standards Board (GASB) is the standard-setting body for governmental accounting and financial reporting. The County applies all GASB Pronouncements in the preparation of the financial statements of the enterprise funds as well as all FASB and AICPA Pronouncements. The GASB periodically updates its codification of the existing Governmental Accounting and Financial Reporting Standards which, along with subsequent GASB pronouncements (Statements and Interpretations), constitutes GAAP for governmental units. A. Reporting Entity The concept underlying the definition of the reporting entity is that elected officials are accountable to their constituents for their actions. The reporting entity's financial statements should allow users to distinguish between the primary government (the County) and its component units. However, some component units, because of the closeness of their relationships with the County, should be blended as though they are part of the County. Otherwise, most component units should be discretely presented. As required by generally accepted accounting principles, the financial reporting entity consists of: (1) the primary government (the County), (2) organizations for which the County is financially accountable, and (3) other organizations for which the nature and significance of their relationship with the County are such that exclusion would cause the reporting entity's financial statements to be misleading or incomplete. The County is financially accountable if it appoints a voting majority of the organization's governing body and (a) it is able to impose its will on that organization or (b) there is a potential for the organization to provide specific financial benefits to, or impose specific financial burdens on, the County. The County may be financially accountable if an organization is fiscally dependent on the County regardless of whether the organization has (a) a separately elected governing board, (b) a governing board appointed by a higher level of government, or (c) a jointly appointed board. Based on these criteria, County management examined all organizations, which are legally separate, in order to determine which organizations, if any, should be included in the County's financial statements. Management determined that the Solid Waste Disposal District and the Emergency Services District were the only organizations that should be included in the County's financial statements as blended component units. 44 Indian River County, Florida Notes To Financial Statements Year Ended September 30, 2012 NOTE 1— SUMMARY OF SIGNIFCANT ACCOUNTING POLICIES — Continued A. Reporting Entity — Continued Blended Component Units Solid Waste Disposal District (SWDD) Created pursuant to County Ordinance 87-67, the Board of County Commissioners serves as the Board for the SWDD and sets the non ad valorem assessment fees for the SWDD. Although legally separate, the SWDD is appropriately blended as a proprietary fund type (enterprise) component unit into the primary government. Emergency Services District (EMS) Created pursuant to County Ordinance 90-25, the Board of County Commissioners serves as the Board for the EMS and sets the millage rate for the EMS. Although legally separate, the EMS is appropriately blended as a governmental fund type (special revenue) component unit into the primary government. B. Measurement Focus and Basis of Accounting The basic financial statements of the County are composed of the following: • Government -wide financial statements • Fund financial statements • Notes to the financial statements 1. Government -wide Financial Statements Government -wide financial statements display information about the reporting government as a whole, except for its fiduciary activities. These statements include separate columns for the governmental and business -type activities of the primary government (including its blended component units). Governmental activities, which normally are supported by taxes and intergovernmental revenues, are reported separately from business -type activities, which rely, to a significant extent, on fees and charges for support. Government -wide financial statements are reported using the economic resources measurement focus and the accrual basis of accounting, as are the proprietary fund financial statements. Under the accrual basis of accounting, revenues, expenses, gains, losses, assets, deferred outflows/inflows of resources, and liabilities resulting from exchange and exchange -like transactions are recognized when the exchange takes place. Revenues, expenses, gains, losses, assets, and liabilities resulting from nonexchange transactions are recognized in accordance with the requirements of GASB Statement 33 Accounting and Financial Reporting for Nonexchange Transactions. Program revenues include charges for services, special assessments, and payments made by parties outside of the reporting government's citizenry if that money is restricted to a particular program. Program revenues are netted with program expenses in the statement of activities to present the net expense of each program. 45 Indian River County, Florida Notes To Financial Statements Year Ended September 30, 2012 NOTE 1— SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES — Continued B. Measurement Focus and Basis of Accounting - Continued 1. Government -wide Financial Statements - Continued Amounts paid to acquire capital assets are capitalized as assets in the government -wide financial statements, rather than reported as expenditures. Issuance of long-term debt is recorded as a liability in the government -wide financial statements, rather than as an other financing source. Amounts paid to reduce long-term indebtedness of the reporting government are reported as a reduction of the related liability, rather than as an expenditure. As a general rule, the effect of interfund activity has been eliminated from the government -wide financial statements. The County chooses to eliminate the indirect costs between governmental activities to avoid a "doubling up" effect. However, interfund services provided and used, such as the sale of gas and diesel from Fleet Management to the government, are not eliminated in the statement of activities. 2. Fund Financial Statements The underlying accounting system of the County is organized and operated on the basis of separate funds, each of which is considered to be a separate accounting entity. The operations of each fund are accounted for with a separate set of self -balancing accounts that comprise its assets, deferred outflows of resources, liabilities, deferred inflows of resources, fund balance, revenues and expenditures or expenses, as appropriate. Governmental resources are allocated to and accounted for in individual funds based upon the purposes for which they are to be spent and the means by which spending activities are controlled. Fund financial statements for the primary government's governmental, proprietary, and fiduciary funds are presented after the government -wide financial statements. These statements display information about major funds individually and nonmajor funds in the aggregate for governmental and enterprise funds. Governmental Funds Governmental fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Revenues are recognized as soon as they are both measurable and available. Revenues are considered to be available when they are collected within the current period or soon enough thereafter to pay liabilities of the current period. For this purpose, the County considers revenues to be available if they are collected within 51 days of the end of the current fiscal period. Expenditures generally are recorded when a liability is incurred, as under accrual accounting. Franchise fees, sales taxes, gas taxes, operating and capital grants, 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. All other revenue items are considered to be measurable only when the County receives cash. 46 Indian River County, Florida Notes To Financial Statements Year Ended September 30, 2012 NOTE 1— SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES — Continued B. Measurement Focus and Basis of Accounting - Continued 2. Fund Financial Statements - Continued Governmental Funds - Continued Under the current financial resources measurement focus, only current assets, deferred outflows of resources, and current liabilities and deferred inflows of resources are generally included on the balance sheet. The reported fund balance is considered to be a measure of "available spendable resources". Governmental funds operating statements present increases (revenues and other financing sources) and decreases (expenditures and other financing uses) in net fund balance. Accordingly, they are said to present a summary of sources and uses of "available spendable resources" during a period. Non-current portions of special assessments due to governmental funds are reported on their balance sheets in spite of their spending measurement focus. Non-current portions of notes receivable and advances to other funds are offset by fund balance reserve accounts. Because of their spending measurement focus, expenditure recognition for governmental fund types excludes amounts represented by noncurrent liabilities. Since they do not affect fund balances, such long-term amounts are not recognized as governmental fund type expenditures or fund liabilities. Amounts expended to acquire capital assets are recorded as expenditures in the year that resources were expended, rather than as fund assets. The issuance of long-term debt is recorded as an other financing source rather than as a fund liability. However, debt service expenditures, as well as expenditures related to compensated absences and claims and judgments, are recorded only when payment is due. Proprietary Funds The County's enterprise funds and internal service funds are proprietary funds. In the fund financial statements, proprietary funds are presented using the accrual basis of accounting. Revenues are recognized when they are earned and expenses are recognized when the related goods or services are delivered. In the fund financial statements, proprietary funds are presented using the economic resources measurement focus. This means that all assets, deferred outflows of resources, liabilities and deferred inflows of resources (whether current or noncurrent) associated with their activity are included on their balance sheets. Proprietary fund type operating statements present increases (revenues) and decreases (expenses) in total net position. The County applies all GASB Pronouncements in the preparation of the financial statements of the enterprise funds as well as all FASB and AICPA Pronouncements. Proprietary fund operating revenues result from exchange transactions associated with the principal activity of the fund. Exchange transactions are those in which each party receives and gives up essentially equal values. Non-operating revenues result from non-exchange transactions or ancillary activities. Operating expenses are costs incurred to provide services, whereas non-operating expenses are costs of debt financings, amortization of intangible assets and losses on the sale of assets. 47 Indian River County, Florida Notes To Financial Statements Year Ended September 30, 2012 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES — Continued B. Measurement Focus and Basis of Accounting - Continued Proprietary Funds - Continued Amounts paid to acquire capital assets are capitalized as assets in the fund financial statements, rather than reported as expenditures. Issuance of long-term debt is recorded as a liability in the fund financial statements, rather than as an other financing source. Amounts paid to reduce long-term indebtedness are reported as a reduction of the related liabilities, rather than as an expense. Fiduciary Funds The fiduciary funds financial statements include financial information for the agency fund and the other postemployment benefit trust fund. The agency fund of the County primarily represents assets held by the County in a custodial capacity for other individuals or governments. The other postemployment benefits trust fund (Trust) accounts for activities of the Trust, which accumulates resources for health insurance benefit payments for current retirees and for current employees upon their retirement. The agency and Trust fund statements are presented using the accrual basis of accounting. C. Basis of Presentation GASB Statement 34 sets forth minimum criteria (percentage of the assets, liabilities, deferred outflows/inflows of resources, revenues or expenditures/expenses of either fund category and the governmental and enterprise combined) for the determination of major funds. The County has used GASB 34 minimum criteria for major fund determination and has also electively disclosed funds that either had debt outstanding or specific community focus as major funds. The nonmajor funds are combined in a column in the fund financial statements and detailed in the combining section. 1. Governmental Major Funds General Fund — The General Fund is the general operating fund of the County. It is used to account for all financial resources, except those required to be accounted for in another fund. Impact Fees Fund — The Impact Fees Fund accounts for the receipt of various impact fees. Funds are used for the construction of roads and bridges, correctional, public safety, library, park, public building, and solid waste facilities. Funds are also used for administrative expenditures of monitoring the aforementioned activities. Secondary Roads Construction Fund — The Secondary Roads Construction Fund accounts for the expenditures of road and bridge construction, roadway, bridge and right of way maintenance and drainage, and related administrative costs. Financing is provided by collections of the local option gas tax. Transportation Fund — The Transportation Fund accounts for expenditures incurred for the maintenance and repair of County roads. Financing is provided by the 5th and 6th cent gas taxes, county gas tax and transfers from the General Fund. 48 Indian River County, Florida Notes To Financial Statements Year Ended September 30, 2012 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES — Continued C. Basis of Presentation - Continued 1. Governmental Major Funds - Continued Emergency Services District Fund — The Emergency Services District Fund accounts for the expenditures of providing fire protection and advanced life support to the County. Financing is provided by ad valorem taxes. Optional Sales Tax Fund — The Optional Sales Tax Fund accounts for revenues generated by the local option one -cent sales tax and some capital grants that use the local option one -cent sales tax as matching funds. Monies are used for various capital projects. 2. Proprietary Major Funds Solid Waste Disposal District Fund — The Solid Waste Disposal District Fund accounts for the revenues, expenses, assets and liabilities associated with the County landfill. Golf Course Fund — The Golf Course Fund accounts for the revenues, expenses, assets and liabilities associated with the Golf Course. County Utilities Fund — The County Utilities Fund accounts for the revenues, expenses, assets and liabilities associated with the County water and sewer system. County Building Fund The County Building Fund accounts for revenues, expenses, assets and liabilities associated with the County building permit and inspection program. 3. Other Fund Types: Internal Service Funds — Internal Service Funds account for Fleet Management, Self Insurance and Geographic Information Systems services provided to other departments of the County on a cost reimbursement basis. Agency Fund - The Agency Fund is used to account for assets held in a custodial capacity by the County for other governmental units, other funds, individuals and businesses. Examples include payroll deductions, self insurance premiums, and developer escrow funds. Other Postemployment Benefits Trust Fund — The Other Postemployment Benefits Trust Fund (Trust) accounts for activities of the Trust, which accumulates resources for health insurance benefit payments for current retirees and for current employees upon their retirement. Contributions are recorded when earned and benefit payments and refunds when incurred within each year. 49 Indian River County, Florida Notes To Financial Statements Year Ended September 30, 2012 NOTE 1— SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES — Continued C. Basis of Presentation — Continued 4. Non-current Governmental Assets/Liabilities: GASB Statement 34 requires non-current governmental assets, such as land and buildings, and non- current governmental liabilities, such as general obligation bonds and capital leases, be reported in the governmental activities column in the government -wide Statement of Net Position. D. Assets, Liabilities, Deferred Outflows/Inflows of Resources and Net Position or Fund Balances 1. Cash and Cash Equivalents Cash and cash equivalents include deposits and all highly liquid investments with maturities of ninety days or less when purchased. The County maintains a cash and investment pool that is available for use by all funds. Earnings from the pooled investments are allocated to the respective funds based on applicable cash participation by each fund. The investment pool is managed such that all participating funds have the ability to deposit and withdraw cash as if they were demand deposit accounts. Therefore, all balances representing participants' equity in the investment pools are classified as cash and cash equivalents for financial statement purposes. In addition, longer-term investments are held by several of the County's funds and are reported as restricted cash on these statements. Cash and cash equivalents of the constitutional officers are maintained in separate accounts, but have been combined with the Board's cash and cash equivalents for financial statement purposes. When restricted and unrestricted resources are available, expenses are paid first from restricted resources. 2. Investments Investments consist of U.S. Treasury Securities, U.S. Government Agency Securities, money market funds, Florida PRIME Fund (formerly known as the Local Government Surplus Funds Trust Fund Investment (SBA) Fund A), Fund B Surplus Funds Trust Fund, and the Florida Local Government Investment Trust Fund. Investments are reported at fair value based upon the average price obtained from three brokers/dealers. The SBA and Trust values are based upon the fair market value per share of the underlying portfolio. Refer to Note 4-C, Investments, for further information on individual investments. 3. Allowance for Doubtful Accounts The County provides an allowance for water and sewer accounts receivables that may become uncollectible. At September 30, 2012, this allowance was $424,493. No other allowances for doubtful accounts are maintained since other accounts receivable are considered collectible as reported at September 30, 2012. 50 Indian River County, Florida Notes To Financial Statements Year Ended September 30, 2012 NOTE 1— SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES — Continued D. Assets, Liabilities, Deferred Outflows/Inflows of Resources and Net Position or Fund Balances - Continued 4. Receivables and Payables Activities between funds that are representative of lending/borrowing arrangements outstanding at the end of the fiscal year are referred to as "due to/from other funds". Any residual balances outstanding between the governmental activities and business -type activities are reported in the government -wide financial statements as "internal balances". All receivables are shown net of allowance for doubtful accounts. Receivables in excess of 120 days comprise the trade accounts receivable allowance for doubtful accounts. 5. Inventories Inventories are valued at cost, which approximates market, using the "first -in, first -out" method of accounting, with the exception of the Shooting Range and Fleet Internal Service Fund's inventories which are valued using the average cost method of accounting. Inventories of all funds are recorded as expenditures (expenses) when consumed rather than when purchased. 6. Prepaid Items Prepaid items in the governmental funds represent prepayments for services that will be used in future periods. The County's policy is to record the expenditure for the services when they are used rather than when the cash is disbursed. 7. Other Assets Held For Resale This account represents assets the County has purchased with the intent to resell. In fiscal year 2009, the County was allocated $4.6 million from the U.S. Department of Housing and Urban Development's Neighborhood Stabilization Program under a Community Development Block Grant. This funding was to be used by local governments for acquiring, redeveloping, and reselling foreclosed properties that might otherwise become sources of abandonment within their communities. At September 30, 2012, seven homes remain unsold. The County intends to resell these homes in the next fiscal year. They are reported at the lower of cost or market value on the balance sheet of the County's governmental funds. 8. Restricted Net Position Certain resources of the County are classified as restricted net position on the statement of net position because their use is limited either by law through constitutional provisions or enabling legislation; or by restrictions imposed externally by creditors, grantors, contributors, or laws or regulations of other governments. In a fund with both restricted and unrestricted net position, qualified expenses are considered to be paid first from restricted net position and then from unrestricted net position. Further information on the restrictions can be found in Note 19. 51 Indian River County, Florida Notes To Financial Statements Year Ended September 30, 2012 NOTE 1— SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES — Continued D. Assets, Liabilities, Deferred Outflows/Inflows of Resources and Net Position or Fund Balances - Continued 9. Capital Assets Capital assets, which include property, plant, equipment, infrastructure (e.g., roads, bridges, right-of- ways, water and sewer distribution systems, beach restoration, stormwater systems and similar items), and intangible assets (e.g. software, easements, and rights), are reported in the applicable governmental or business -type activities column in the government -wide financial statements. The County defines capital assets as assets with an initial, individual cost of $1,000 or more and an estimated useful life in excess of one year. Except for roads and bridges constructed prior to October 1, 1981, assets are recorded at historical cost. Roads and bridges constructed prior to October 1, 1981 are reported at estimated historical cost. Donated capital assets are recorded at estimated fair market value at the date of donations. Transfers of capital assets within the County are recorded at their carrying value at the time of the transfer. The costs of normal maintenance and repairs that do not add to the value of the asset nor materially extend its useful life are not capitalized. Major outlays for capital assets and improvements are capitalized as projects are constructed. Interest incurred during the construction phase of capital assets of business -type activities is included as part of the capitalized value of the assets constructed. The Board holds legal title to the capital assets used in the operations of the Board, Clerk of the Circuit Court and Comptroller, Property Appraiser, Supervisor of Elections and Tax Collector, and is accountable for them under Florida Law. The Sheriff is accountable for and thus maintains capital asset records pertaining only to equipment used in his operations. These assets have been combined with the Board's governmental activities capital assets in the statement of net position. Property, plant, equipment, intangible, and infrastructure assets of the primary government, as well as the component units, are depreciated using the straight-line method over the following estimated useful lives: Assets Years Building and improvements 10 — 50 Machinery and equipment 3 — 10 Utility distribution system 25 — 50 Road and bridge infrastructure 20 50 Fiberoptics 20 Software 3-5 Beach preservation infrastructure 7 Stormwater infrastructure 30 52 Indian River County, Florida Notes To Financial Statements Year Ended September 30, 2012 NOTE 1— SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES — Continued D. Assets, Liabilities, Deferred Outflows/Inflows of Resources and Net Position or Fund Balances - Continued 10. Capitalization of Interest Interest costs related to bond issues are capitalized during the construction period. These costs are netted against applicable interest earnings on construction fund investments. During the current period, the County did not have any capitalized interest. 11. Deferred Outflows/Inflows of Resources In addition to assets, the statement of financial position will sometimes report a separate section for deferred outflows of resources. Deferred outflows of resources represent a consumption of net position that applies to a future period(s) and so will not be recognized as an outflow of resources (expense/expenditure) until then. The County reports the deferred charge on refundings in the amount of $2,875,239 in this category on the government -wide statement of net position. A deferred charge on refundings results from the difference in the carrying value of refunded debt and its reacquisition price. This amount is deferred and amortized over the shorter of the life of the refunded or refunding debt. In addition to liabilities, the statement of financial position may report a separate section for deferred inflows of resources. Deferred inflows of resources represent an acquisition of net position that applies to a future period(s) and so will not be recognized as an inflow of resources (revenue) until that time. The County only has one item, unavailable revenue, which arises under the modified accrual basis of accounting and is reported on the governmental funds balance sheet. The source of the unavailable revenue is a special assessment on road paving. This amount is deferred and recognized as an inflow of resources in the period that the amounts become available. 12. Unearned Revenues Unearned revenues represent revenues, which are available but unearned. At September 30, 2012, the total amount of unearned revenues reported on the statement of net position for the governmental activities is $189,294 and for the business -type activities is $29,652. 13. Accrued Compensated Absences The County accrues accumulated unpaid vacation and sick leave when earned by the employee. The current portion is the amount estimated to be used in the following year. The non-current portion is the amount estimated to be used in subsequent fiscal years. Both the current and non-current estimated accrued compensated absences amounts for governmental funds are maintained separately and represent a reconciling item between the fund and government -wide presentations. 53 Indian River County, Florida Notes To Financial Statements Year Ended September 30, 2012 NOTE 1— SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES — Continued D. Assets, Liabilities, Deferred Outflows/Inflows of Resources and Net Position or Fund Balances - Continued 14. Obligation for Bond Arbitrage Rebate Pursuant to Section 148(f) of the U. S. Internal Revenue Code, the County must rebate to the United States Government the excess of interest earned from the investment of certain debt proceeds and pledged revenues over the yield rate of the applicable debt. The County uses the "revenue reduction" approach in accounting for rebatable arbitrage. This approach treats excess earnings as a reduction of revenue. The County has no arbitrage liability outstanding as of September 30, 2012. 15. Landfill Closure Costs Under the terms of current state and federal regulations, the Solid Waste Disposal District (SWDD) is required to place a final cover on closed landfill areas, and to perform certain monitoring and maintenance functions for a period of up to thirty years after closure. The SWDD recognizes these costs of closure and post -closure maintenance over the active life of each landfill area, based on landfill capacity used during the period. Required obligations for closure and post -closure costs are recognized in the Solid Waste Disposal District Enterprise Fund. 16. Unamortized Bond Discounts and Premiums Bond discounts and premiums associated with the issuance of proprietary fund revenue bonds are amortized according to the straight-line method over the remaining life of the bonds. For financial reporting, unamortized bond discounts and premiums are netted against the applicable long-term debt. 17. Capital Contributions The capital contributions accounted for in the proprietary fund types represent contributions from other funds, developers, state and federal grant programs, and impact fees charged to new customers for their anticipated burden on the existing system. The contributions amount is reported after non-operating revenues and expenses on the Statement of Revenues, Expenses, and Changes in Fund Net Position in accordance with GASB Statement 33. Capital contributions for the governmental funds are reported on the Statement of Activities in accordance with GASB Statement 34 and represent contributions of capital assets from developers and state agencies. 18. New Accounting Pronouncements Effective October 1, 2011, the Board implemented the provisions of GASB Statement No. 63 Financial Reporting of Deferred Outflows of Resources, Deferred Inflows of Resources, and Net Position and GASB Statement No. 65 Items Previously Reported as Assets and Liabilities. 54 Indian River County, Florida Notes To Financial Statements Year Ended September 30, 2012 NOTE 2 - RECONCILIATION OF GOVERNMENT -WIDE AND FUND FINANCIAL STATEMENTS A. Explanation of Differences Between the Governmental Fund Balance Sheet and the Government -wide Statement of Net Position "Total fund balances" of the County's governmental funds, $183,843,142 differs from "net position" of governmental activities, $706,789,908, reported in the statement of net position. This difference primarily results from the long-term economic focus of the statement of net position versus the current financial resources focus of the governmental funds balance sheet. Capital related items When capital assets (property, plant, equipment, intangibles) that are to be used in governmental activities are purchased or constructed, the costs of those assets are reported as expenditures in governmental funds. However, the statement of net position included those capital assets among the assets of the County as a whole. Cost of capital assets Accumulated depreciation Net Total Long-term debt transactions $ 782,367,173 ( 229,366,627) $ 553,000,546 Long-term liabilities applicable to the County's governmental activities are not due and payable in the current period and accordingly are not reported as fund liabilities. All liabilities (both current and long- term) are reported in the statement of net position. Balances at September 30, 2012 were: Bonds payable: Limited General Obligation Bonds, Series 2006 $ (32,385,000) Spring Training Facility Bonds, Series 2001 (11,075,000) Bond premium payable: Limited General Obligation Bonds, Series 2006 (815,714) Medicaid settlement payable (790,434) Pollution remediation payable (2,613,000) Compensated absences (10,953,682) Total $ (58,632,830) Accrued interest Accrued liabilities in the statement of net position differs from the amount reported in governmental funds due to accrued interest on the Limited General Obligation Bonds, Series 2006. $ (373,065) 55 Indian River County, Florida Notes To Financial Statements Year Ended September 30, 2012 NOTE 2 - RECONCILIATION OF GOVERNMENT -WIDE AND FUND FINANCIAL STATEMENTS - Continued A. Explanation of Differences Between the Governmental Fund Balance Sheet and the Government -wide Statement of Net Position - Continued Deferred Inflow of Resources — Unavailable Revenue Deferred inflows of resources reported on the statement of net position differ from the amount reported in governmental funds due to special assessments. Governmental fund financial statements report revenues, which are measurable but not available as unavailable revenue, a deferred inflow of resources. However, unavailable revenues in governmental funds are susceptible to full accrual on government -wide financial statements. Unavailable revenues $ 310,506 Internal service funds Internal service funds are used by management to charge the costs of fleet management, insurance activities, and GIS services to individual funds. The assets and liabilities of the internal service funds are included in governmental activities in the statement of net position because they primarily serve governmental activities of the County. Internal service funds $ 26,879,571 Accrued grant revenues Some grant revenues are not recognized in the current period because the resources are not available; therefore, these revenues are not reported in the fund. Accrued grant revenues $ 1,222,541 Accrued interest revenues Some interest revenues are not recognized in the current period because the resources are not available; therefore, these revenues are not reported in the fund. Accrued interest revenues $ 217,816 Net OPEB Obligation The net OPEB obligation asset resulting from contributions in excess of the annual required contribution is not a financial resource; therefore, it is not reported in the fund. OPEB asset $ 321,681 Elimination of interfund receivables/payables Interfund receivables and payables in the amount of $860,073 between governmental funds must be eliminated for the statement of net position. 56 Indian River County, Florida Notes To Financial Statements Year Ended September 30, 2012 NOTE 2 - RECONCILIATION OF GOVERNMENT -WIDE AND FUND FINANCIAL STATEMENTS - Continued B. Explanation of Differences Between Governmental Fund Operating Statements and the Statement of Activities The "net change in fund balances" for governmental funds, ($13,182,985), differs from the "change in net position" for governmental activities, $4,303,294 reported in the statement of activities. The differences arise primarily from the long-term economic focus of the statement of activities versus the current financial resources focus of the governmental funds. The effect of the differences is illustrated below. Capital related items When capital assets that are to be used in governmental activities are purchased or constructed, the resources expended for those assets are reported as expenditures in governmental funds. However, in the statement of activities, the costs of those assets are allocated over their estimated useful lives and reported as depreciation expense. As a result, fund balances decrease by the amount of financial resources expended, whereas net position decreases by the amount of depreciation expense charged for the year. Capital outlay $ 27,751,553 Depreciation expense (20,004,763) Transfers to business -type activities (40,489) Capital contributions 1,918,753 Loss on assets (948,213) Difference $ 8,676,841 Long-term debt transactions Payments of bond principal, bond premium, and pollution remediation costs are reported as an expenditure in the governmental funds and, thus, have the effect of reducing fund balance because current financial resources have been used. However, the payments reduce the liabilities in the statement of net position and do not result in an expense in the statement of activities. Bond principal payments made $ 8,060,000 Bond premium payments made 93,225 Medicaid settlement costs (790,434) Pollution remediation costs 83,300 Total $ 7,446,091 Governmental funds report interest and OPEB expenditures based on when they are paid. The statement of activities reports interest expense as it is incurred. This is the net number of the previous year accrual and the current year accrual. Net accrued OPEB expense $ 132,097 Net accrued bond interest payable 75,842 Total $ 207,939 57 Indian River County, Florida Notes To Financial Statements Year Ended September 30, 2012 NOTE 2 - RECONCILIATION OF GOVERNMENT -WIDE AND FUND FINANCIAL STATEMENTS - Continued B. Explanation of Differences Between Govermnental Fund Operating Statements and the Statement of Activities - Continued Long-term debt transactions — Continued Some expenses reported in the statement of activities do not require the use of current financial resources; therefore, are not reported as expenditures in governmental funds. Net change in compensated absences $ (228,998) Special assessment revenues Revenues collected on special assessments are reported in the governmental funds. However, in the statement of activities, the assessment revenues are recognized when they are earned. Special assessment revenues $ 236,710 Internal service funds operating gain The assets and liabilities of the internal service funds are included in governmental activities in the statement of net position because they primarily serve governmental activities of the County. The net costs of the internal service funds are reported with governmental activities. Internal service funds operating gain $ 927,862 Accrued grant revenues Some grant revenues are not recognized in the current period because the resources are not available; therefore, these revenues are not reported in the fund. This number is a net number of prior year accrual and current year accrual. Net accrued grant revenues $ 262,891 Accrued interest revenues Some interest revenues are not recognized in the current period because the resources are not available; therefore, these revenues are not reported in the fund. This number is a net number of prior year accrual and current year accrual. Net accrued interest revenues $ (43,057) Reclassification and Eliminations The governmental funds recognize revenues in the amount of $3,562,046 for the general administrative charges to the general government, public safety, transportation, culture/recreation, and court related functions. These revenues and expenditures must be eliminated to avoid double counting. Transfers in and transfers out in the amount of $11,630,516 between governmental activities should be eliminated. Capital projects costs in the amount of $8,108,370 must be distributed to the related expenditure functions. 58 Indian River County, Florida Notes To Financial Statements Year Ended September 30, 2012 NOTE 3 - STEWARDSHIP, COMPLIANCE, AND ACCOUNTABILITY Budgets and Budgetary Accounting The County uses the following procedures in establishing the budgetary data reflected in the financial statements: (1) The constitutional officers submit, at various times, to the Board and to certain divisions within the Florida Department of Revenue and the Florida Clerks of Court Operations Corporation, a proposed operating budget for the following fiscal year. The operating budget includes proposed expenditures and the means of financing them, as set forth in Chapter 129 of the Florida Statutes. (2) The Department of Revenue, State of Florida, has the final authority on the operating budgets for the Tax Collector and the Property Appraiser included in the General Fund. (3) Constitutional officers, all departments controlled by the Board, and outside state and local agencies submit their proposed budgets to the Office of Management and Budget for assistance, review and compilation. The County Administrator then reviews all County departments, state agencies and nonprofit organization's budgets and makes his budget recommendation to the Board. (4) On or before July 15 of each year, the County Administrator and the Director of the Office of Management and Budget, as the Board's designated budget officer, submit to the Board a tentative budget for the ensuing fiscal year. The tentative budget includes proposed expenditures and the means of financing them. The Board then holds workshops to review the tentative budget by fund on a departmental level. (5) During September, public hearings are held pursuant to Section 200.065 of the Florida Statutes in order for the Board to receive public input on the tentative budget. At the end of the last public hearing, the Board enacts ordinances to legally adopt the budgets at the fund level for all but one nonmajor governmental fund, the Supervisor of Elections Special Revenue Fund. The budgets legally adopted by the Board set forth the anticipated revenues by source and the appropriations by function. (6) Formal budgetary integration on an object level is used as a management control device for the governmental and proprietary funds of the County. Management is authorized to transfer budgeted amounts between objects and departments in any fund as long as management does not exceed the total appropriations of a fund. Board approval to amend the budget is only required when unanticipated revenues are received that management wishes to have appropriated, thereby increasing the total appropriations of a fund. (7) Budgets for the governmental and proprietary fund types are adopted on a basis consistent with generally accepted accounting principles. (8) Appropriations for the County lapse at the close of the fiscal year. 59 Indian River County, Florida Notes To Financial Statements Year Ended September 30, 2012 NOTE 4 - CASH AND CASH EQUIVALENTS The County maintains a cash and investment pool that is available for use by all funds except those whose cash and investments must be segregated due to bond covenants or other legal restrictions. A. Deposits At September 30, 2012, the carrying amount of the primary government's deposits was $31,412,676 and the bank balance was $36,557,919. The County's policy requires all deposits with financial institutions to be 100% insured by federal depository insurance or by collateral provided by qualified public depositories to the State Treasurer, in accordance with Chapter 280, Florida Statutes also known as the Florida Security for Public Deposits Act. The Act established a Trust Fund, maintained by the State Treasurer, which is a multiple financial institution pool with the ability to assess its member financial institutions for collateral shortfalls if a member fails. Cash on hand at September 30, 2012 was $25,859. B. Accrued Interest Interest earnings on U.S. Treasury Notes and government agency bonds are recorded in the cash and investment pools and then allocated to each fund based on each fund's average monthly balance. As of September 30, 2012, accrued interest for the County's portfolio totaled $143,142. The remaining accrued interest is reflected in utilities and road paving assessments. C. Investments On August 12, 2008, the County, with the exception of the Tax Collector, updated their investment policy pursuant to Section 218.415, Florida Statutes, which established permitted investments, asset allocation limits, issuer limits, credit ratings requirements and maturity limits to protect the County's cash and investments. The Tax Collector adopted a formal investment policy in February 2005, and revised the policy in November 2009 and August 2011. The Clerk elected not to adopt a formal investment policy and selected the alternative investment guidelines as provided by Florida Statutes subsection 17, 218.415. 60 Indian River County, Florida Notes To Financial Statements Year Ended September 30, 2012 NOTE 4 - CASH AND CASH EQUIVALENTS - Continued C. Investments - Continued As of September 30, 2012, the County had the following investments: Investment Type Fixed Rate Debt Instruments: U.S. Treasuries U.S. Agencies:*** Federal Farm Credit Bureau Federal Home Loan Bank Federal Home Loan Mortgage Federal National Mortgage Assoc. Other Fixed Rate Investments: Florida PRIME (Formerly Fund A) Fund B Surplus Funds Trust Fund Florida Local Government Investment Trust Fund Other Market Rate Investments: Regions Bank Money Market Suntrust Bank NOW Account Florida Trust Day to Day Fund Certificate of Deposit Certificate of Deposit W&S Sinking Fund Reserve: U.S. Treasuries Fidelity Institutional Money Market Total Fair Value Fair Value $ 97,027,307 45,054,504 49,021,782 23,001,426 10,991,812 161,276 572,104 Weighted Average Maturity Portfolio InYears Percentage 0.80 1.24 0.88 0.59 0.55 0.08 4.08 10,442, 551 0.08 13,210,015 13,579,733 16,669,554 251,043 254,413 0.08 0.08 0.08 1.84 1.00 5,410,103 1.03 22,562 0.08 $ 285,670,185 Weighted Average Maturity of Investments 0.73 Credit Risks* 33.96 % N/A 15.77 AA+ 17.16 AA+ 8.05 AA+ 3.85 AA+ 0.06 AAAm 0.20 Not Rated AAAf and 3.66 S-1** 4.62 N/A 4.75 N/A 5.84 AAAm 0.09 N/A 0.09 N/A 1.89 N/A 0.01 AAAm 100.00 % * Ratings based upon Standard and Poor's * * AAAf credit quality, S-1 Market Volatility *** The weighted calculation considers the investments are carried until full maturity (i.e. call dates are not considered). 61 Indian River County, Florida Notes To Financial Statements Year Ended September 30, 2012 NOTE 4 - CASH AND CASH EQUIVALENTS - Continued C. Investments - Continued Florida PRIME (formerly known as the Local Government Surplus Funds Trust Investment (SBA) Fund A) is a money market fund classified as a "2a-7 like fund" using the SEC investment requirements for 2a-7 funds. The fund was established by Florida Statute 218.405 and is administered by the Florida State Board of Administration. At September 30, 2012, the County had $602,869 invested in Fund B Surplus Funds Trust Fund (Fund B), a fluctuating net asset value pool. The State Board of Administration (SBA) determined that Fund B did not meet the requirements of a SEC 2a7 -like fund; therefore, a fair value factor (total net asset value of Fund B divided by total participant balances) was provided for reporting the value of the County's participation in Fund B at fiscal year-end. This resulted in a negative adjustment of 5.1% of the portfolio balance, or $30,765. Consequently, the net investment in Fund B is reported at $572,104. The Florida Local Government Investment Trust Fund is a pool of various securities with maturities of less than five years. The fund was established by Florida Statute 163.01, is administered by the Florida Association of Court Clerks, and is marked to market daily. Interest Rate Risk The County's investment policy limits interest rate risk by attempting to match investment maturities with known cash needs and anticipated cash flow requirements. All investments must have stated maturities of ten (10) years or less and no more than 25% of the portfolio shall be invested in instruments with stated final maturities greater than five (5) years. The portfolio shall have securities with varying maturity and at least 10% of the portfolio shall be invested in readily available funds. All constitutional officers with the exception of the Tax Collector follow this policy. The Tax Collector's policy is to limit maturities to 24 months or less and maintain 95% of the portfolio in readily available funds. Credit Risks Florida Statutes Section 218.415 and the County's investment policy limit investments to the following: 1. Direct obligations of the United States Treasury; 2. Florida PRIME (formerly known as Fund A) and Fund B Surplus Funds Trust Fund (Fund B); 3. Florida Local Government Investment Trust Funds; 4. Interest-bearing time deposits or savings in qualified public depositories as defined in Section 280.02 Florida Statutes; 5. Federal agencies and instrumentalities; 6. Securities of, or other interests in, any open-end or closed-end management -type investment company or investment trust registered under the Investment Company Act of 1940, 15 U.S.C. ss. 80a-1 et seq., as amended from time to time, provided that the portfolio of such investment company or investment trust is limited to obligations of the United States Government or any agency or instrumentality thereof and to repurchase agreements fully collateralized by such United States Government obligations, and provided that such investment company or investment trust takes delivery of such collateral either directly or through an authorized custodian; 62 Indian River County, Florida Notes To Financial Statements Year Ended September 30, 2012 NOTE 4 - CASH AND CASH EQUIVALENTS - Continued C. Investments - Continued Credit Risks - Continued 7. Securities and Exchange Commission registered money market funds with the highest credit quality rating from a nationally recognized rating agency; 8. Repurchase agreements with a term of one year or less collateralized by direct obligations of the United States Government which have maturities of three (3) years or less and a market value 103% or more of the repurchase amount. Currently, Fund B participants are permitted to withdraw scheduled amounts as assets become liquid. Full realization of the principal value of Fund B assets is uncertain and dependent upon the collateralized securities underlying each holding and is contingent upon future market conditions. Concentration Risk The Indian River County Board of County Commissioners and the Tax Collector follow their own investment policies. Both policies have established asset allocation and issuer limits to reduce concentration of credit risk. Their investments are stated at fair value. The Board's investment policy does not allow for more than 20% of the entire portfolio to be invested in any one issuer, with the exception of United States Treasury Obligations and state authorized pools. No more than 10% of the portfolio may be placed in certificates of deposit (CD) and no more than $3 million of the portfolio may be placed in certificates of deposit with any one financial institution. No more than 5% of the portfolio may be placed in any one money market fund, mutual fund, or intergovernmental investment pool. The Tax Collector's cash and investment policy limits portfolio composition to the following maximum guidelines: Local Government Surplus Funds Trust Fund 95% Florida Trust Day to Day Fund 95% Direct Obligations of the U.S. Government 25% Money Market, CD's, and Savings Accounts 50% Securities & Exchange Commission Money Funds 25% Bank Super NOW Accounts 95% Bank Repo Agreements 50% United States Government Agencies 25% The Clerk's investment in the Florida Trust Day to Day Fund of $4.205 million, the Tax Collector's investment of $25,248, and the Board's investment of $12.439 million have a combined total of $16.670 million. 63 Indian River County, Florida Notes To Financial Statements Year Ended September 30, 2012 NOTE 4 - CASH AND CASH EQUIVALENTS - Continued C. Investments - Continued Custodial Credit Risk The Board's investment policy pursuant to Section 218.415 (18), Florida Statutes requires securities to be registered and shall be held with a third party custodian and all securities purchased by, and all collateral obtained by, the Board shall be held in the name of the Board. The securities must be held in an account separate and apart from the assets of the financial institution. As of September 30, 2012, the County's investment portfolio in U.S. Treasuries, U.S. Agencies, and money market funds, was held by The Bank of New York/Mellon. Additional investments include the following: the SunTrust NOW account, the Regions Bank Money Markets, CenterState Bank certificates of deposit, the Florida Local Government Investment Trust (held by the Bank of New York/Mellon) and the Florida Trust Day to Day Fund (held by UMB Bank). D. OPEB Trust Investments Funds are held in the name of the Indian River County OPEB Trust (OPEB Trust), an irrevocable trust, by a third party custodian, Bank of New York/Mellon. The investments are reported at fair value based upon market -close price on the last business day of each month. The County approved a separate investment policy for the OPEB Trust assets on February 3, 2009 (last amended on April 6, 2010). The County adopted a broadly diversified portfolio composition consisting of equity, debt, and cash and cash equivalents. Asset allocations are divided between short-term and long- term investments. Short-term asset allocations include cash and cash equivalents with maturities of 180 days or less. Long-term asset allocations range from 0-60% for equities, 0-60% for fixed income securities, and 0-100% for cash and cash equivalents. 64 Indian River County, Florida Notes To Financial Statements Year Ended September 30, 2012 NOTE 4 - CASH AND CASH EQUIVALENTS - Continued D. OPEB Trust Investments - Continued The contribution of $2.96 million for the year ended September 30, 2012 was invested in the various funds listed below. As of September 30, 2012, the OPEB Trust had the following investments: Investment Type Short -Term Portion: Weighted Average Maturity Portfolio Credit Fair Value InYears Percentage Risks* Fidelity Treasury Money Market $ 1,493,663 Long -Term Portion: 0.15 13.79 % AAAm Vanguard 500 Index 2,105,515 N/A 19.43 N/A Vanguard All World Ex -US 1,948,813 N/A 17.99 N/A Vanguard Mid Cap Index 466,038 N/A 4.30 N/A Vanguard Small Cap Index 228,588 N/A 2.11 N/A Vanguard Short -Term Treasury 2,179,647 2.20 20.12 AA+ Vanguard Intermediate Treasury 1,500,241 5.50 13.85 AA+ Vanguard Prime Money Market 705,586 0.16 6.51 A-1 Vanguard Federal Money Market 205,565 0.16 1.90 A-1 Total Fair Value $ 10,833,656 100.00 * Ratings based upon Standard and Poor's NOTE 5 - PROPERTY TAX REVENUES Taxable values for all property are established as of January 1, which is the date of lien, for the fiscal year starting October 1. Property tax revenues recognized for the 2011-2012 fiscal year were levied in October 2011. All taxes are due and payable on November 1 or as soon as the assessment roll is certified and delivered to the Tax Collector. Discounts are allowed for early payment at the rate of 4% in November, 3% in December, 2% in January, and 1% in February. Taxes paid in March are without discount. All unpaid taxes become delinquent as of April 1. Virtually all unpaid taxes are collected via the sale of tax certificates on or prior to June 1; therefore, there were no material taxes receivable at fiscal year end. 65 NOTE 6 - CAPITAL ASSETS A. Governmental Activities Primary Government Governmental activities: Capital assets, not being depreciated: Indian River County, Florida Notes To Financial Statements Year Ended September 30, 2012 Beginning Balance Additions Land $ 138,388,559 $ 1,295,487 $ Construction in progress 44,026,126 21,545,261 Right-of-way Intangibles Infrastructure Total capital assets, not being depreciated Capital assets, being depreciated: Buildings and improvements Equipment Intangibles Infrastructure Total capital assets, being depreciated Less accumulated depreciation for: Buildings and improvements Equipment Intangibles Infrastructure Total accumulated depreciation Total capital assets, being depreciated, net 53,740,521 2,045,707 554,456 22,877 3,575,067 240,284,729 24,909,332 187,177,188 59,098,399 2,883,863 268,262,989 517,422,439 (40,396,475) (31,616,904) (2,168, 062) (138,796,487) 7,485,489 4,717,316 669,256 31,884,041 44,756,102 (5,269,277) (3,708,795) (256,078) (11,056,407) (212,977,928) (20,290,557) 304,444,511 Governmental activities capital assets, net $ 544,729,240 $ 24,465,545 Deletions (50,796) $ (37, 446,190) (1,067,626) Ending Balance 139,633,250 28,125,197 54,718,602 577,333 3,575,067 (38,564,612) 226,629,449 (167,323) (5,051,209) (102,351) 194,495,354 58,764,506 3,450,768 300,147,030 (5,320,883) 556,857,658 150,224 2,881,440 102,351 (45,515,528) (32,444,259) (2,321,789) (149, 852, 894) 3,134,015 (230,134,470) (2,186,868) 326,723,188 49,374,877 $ (40,751,480) $ 553,352,637 The beginning balance reported for accumulated depreciation for the buildings and improvements was increased by $1,347,429 and the beginning balance for equipment was decreased by $1,347,429 to reflect the reclassification of a capital asset from equipment to improvement. 66 Indian River County, Florida Notes To Financial Statements Year Ended September 30, 2012 NOTE 6 - CAPITAL ASSETS — Continued A. Governmental Activities - Continued Depreciation expense, which includes amortization expense on intangible assets, was charged to the functions/programs of the primary government's governmental activities as follows: General government $ 3,122,120 Public safety 2,390,586 Physical environment 592,849 Transportation 6,513,763 Economic environment 922 Human service 139,558 Culture/recreation 7,315,635 Court related 59,917 Capital assets held by the government's internal service funds are charged to the various functions based on their usage of the assets 155,207 Total depreciation expense governmental activities $ 20,290,557 67 NOTE 6 - CAPITAL ASSETS — B. Business -type Activities Primary Government Business -type activities: Capital assets, not being depreciated: Indian River County, Florida Notes To Financial Statements Year Ended September 30, 2012 Continued L and Intangibles Construction in progress Total capital assets, not being depreciated Capital assets, being depreciated: Buildings, distribution systems, & improvements Intangibles Equipment Total capital assets, being depreciated Less accumulated depreciation for: Buildings, distribution systems, & improvements Intangibles Equipment Total accumulated depreciation Total capital assets, being depreciated, net Beginning Balance Additions Deletions $ 20,530,432 $ 1,388,379 10,340,138 32,258,949 412,799,300 900,367 14,348,378 428,048,045 (180,309,133) (423,473) (12,438,956) (193,171,562) 755,578 $ 42,733 4,904,009 5,702,320 8,606,837 6,980 316,148 Ending Balance - $ 21,286,010 1,431,112 6,535,100 (8,709,047) (8,709,047) 29,252,222 (1,194,636) (197,144) 420, 211,501 907,347 14,467,382 8,929,965 (1,391,780) 435,586,230 (14,717,296) (69,298) (603,478) 870,445 173,596 (194,155,984) (492,771) (12, 868, 83 8) (15,390,072) 1,044,041 (207,517,593) 234,876,483 (6,460,107) (347,739) 228,068,637 Business -type activities capital assets, net $ 267,135,432 $ (757,787) $ (9,056,786) $ 257,320,859 Depreciation expense, which includes amortization expense on intangible assets, was charged to the functions/programs of the primary government's business -type activities as follows: Solid Waste Disposal District Golf Course County Utilities County Building $ 842,318 129,906 14,414,302 3,546 Total depreciation expense business -type activities $ 15,390,072 The beginning balance reported for accumulated depreciation for the intangibles was increased by $17,734 and the beginning balance for equipment was decreased by $17,734 to reflect the reclassification of capital assets from equipment to improvement. 68 Indian River County, Florida Notes To Financial Statements Year Ended September 30, 2012 NOTE 7 - RESTRICTED CASH AND CASH EQUIVALENTS AND INVESTMENTS Various bond covenants, resolutions, and state regulations require that the County restrict cash and cash equivalents and investments within the business -type activities. Restricted cash and cash equivalents and investments are as follows: Sinking funds Renewal and replacement Customer deposits Capital construction Closure and maintenance costs Primary Government $ Solid Waste Disposal District 3,229,445 126,626 10,513,736 Total $ 13,869,807 Golf Course $ 470,681 $ 470,681 County Utilities $ 6,176,994 3,485,928 2,769,128 15,420,192 Total $ 6,647,675 6,715,373 2,895,754 15,420,192 10,513,736 $ 27,852,242 $ 42,192,730 Cash totaling $4,940,591 is reported as restricted on the Statement of Net Position for governmental activities. These funds are restricted for current liabilities such as retainage payable, accrued interest payable, and the current year portion of bonds payable. NOTE 8 - PAYABLE FROM RESTRICTED ASSETS Liabilities payable from the County's business -type activities restricted assets are as follows: Accounts payable Retainage payable Accrued interest payable Customer deposits Bonds payable (current) Closure and maintenance costs payable Total Solid Waste Dispos al District 126,626 Golf Cours e County Utilities $ - $ 59,013 35,364 6,931 173,413 2,769,128 555,000 3,205,000 Total $ 59,013 35,364 180,344 2,895,754 3,760,000 10,513,736 10,513,736 $ 10,640,362 $ 561,931 $ 6,241,918 $ 17,444,211 69 Indian River County, Florida Notes To Financial Statements Year Ended September 30, 2012 NOTE 9 - INTERFUND BALANCES Interfund balances at September 30, 2012, consisted of the following: Receivable Fund General Fund General Fund General Fund Payable Fund Amount Nonmajor Governmental Funds Golf Course Enterprise Fund Fleet Internal Service Fund $ 219,500 54,204 225,000 $ 498,704 In October 2010, the General Fund loaned $ 333,050 to the Golf Course Fund to purchase new golf carts. The amount reported as due from the Golf Course Fund is the current portion of the scheduled payments due to the General Fund in fiscal year 2013. The remaining amount due from the Golf Course Fund is reported as an interfund advance. The amounts due from the Fleet Internal Service Fund and the Nonmajor Governmental Funds represent short-term cash loans that will be repaid within the next twelve months. Receivable Fund Major Governmental Fund: Emergency Services District Fund Major Enterprise Fund: Solid Waste Disposal District Fund Nonmajor Governmental Funds: Land Acquisition Bonds Fund Street Lighting Districts Fund Vero Lake Estates Fund East Gifford Stormwater Fund Total Nonmajor Governmental Funds Payable Fund General Fund General Fund General Fund General Fund General Fund General Fund Amount $ 239,268 $ 98,365 $ 74,417 2,317 1,193 13 $ 77,940 Total: $ 415,573 Amounts due from the General Fund represent excess fees and payments of the constitutional officers remitted to various funds subsequent to September 30, 2012. Interfund advances at September 30, 2012, consisted of the following: Receivable Fund Payable Fund Secondary Roads Construction Fund Golf Course Fund General Fund Golf Course Fund Amount $ 255,000 188,416 $ 443,416 These amounts are considered long-term advances between major funds expected to be paid over the course of several years. These amounts have been presented as nonspendable on the General and Secondary Roads Construction Funds balance sheets. 70 Indian River County, Florida Notes To Financial Statements Year Ended September 30, 2012 NOTE 10 - INTERFUND TRANSFERS Interfund transfers for the year ended September 30, 2012, consisted of the following: Transfers In: Nonmajor General Transportation Governmental Internal Service Fund Fund Funds Fund Transfers Out: Total General Fund $ $ 7,499,582 $ 3,164,129 $ 35,438 $ 10,699,149 Impact Fees Fund 100,000 100,000 Emergency Services District Fund 379,401 - - - 379,401 Nonmaj or Governmental Funds Golf Course Fund 313,629 130,805 - 444,434 7,532 - - - 7,532 Total $ 700,562 $ 7,499,582 $ 3,394,934 $ 35,438 $ 11,630,516 Transfers are used for the following purposes: 1) use unrestricted general fund revenues to finance transportation activities which must be accounted for in a special revenue fund, 2) use unrestricted general fund revenues for beach restoration activities which must be accounted for in another fund, 3) provide matching funds for grants, 4) move revenues from the fund that state law requires to collect them to the fund that state law requires to expend them, 5) use unrestricted general fund revenues to pay off a bond issue, 6) reimburse the general fund for a golf course server, and 7) use unrestricted general fund revenues to offset a portion of salaries and benefits expenses for an employee accounted for in the health insurance fund. 71 Indian River County, Florida Notes To Financial Statements Year Ended September 30, 2012 NOTE 11— DUE FROM OTHER GOVERNMENTS Governmental Funds On November 18, 2008, the Board entered into a locally funded agreement with the Florida Department of Transportation (FDOT) to advance the six-laning of State Road 60 from 82nd Avenue to I-95 (Segment Two). The agreement obligated the Board to pay $14,429,754 to the FDOT. Payment was made in November 2008 to the FDOT. Funding was from the Optional Sales Tax Fund. Reimbursement by the FDOT for Segment Two will be in ten quarterly installments over a three-year period which began in July 2011. Repayments to the Board will include principal and any accumulated interest earnings that have not been used for supplemental costs of the project. Segment Two Amount Advance Funded Less: Reimbursements received as of 9/30/2012 Balance Due from FDOT SR60 Agreement Additional Funds Due from other governments Total Due from other governments NOTE 12 — ACCOUNTS PAYABLE Payables Payables at September 30, 2012, were as follows: Governmental Activities: General Impact Fees Secondary Roads Construction Transportation Emergency Services Optional Sales Tax Other governmental Total Governmental Activities Business -Type Activities: Payable from current assets: Solid Waste Golf Course Utilities Building Payable from restricted assets: Utilities Total Business -Type Activities Vendors $ 1,518,079 1,569,237 408,482 204,782 109,067 614,954 708,587 $ 5,133,188 $ 1,971,588 137,825 637,379 16,588 59,013 $ 2,822,393 Optional Sales Tax Fund $ 14,429,754 (3,000,000) 11,429,754 1,226,405 $ 12,656,159 Salaries and Benefits $ 1,202,042 280 807 21,904 62,760 14,169 $ 1,301,962 $ 1,688 1,503 23,242 3,375 $ 29,808 72 Total Payables $ 2,720,121 1,569,517 409,289 226,686 171,827 614,954 722,756 $ 6,435,150 $ 1,973,276 139,328 660,621 19,963 59,013 $ 2,852,201 Indian River County, Florida Notes To Financial Statements Year Ended September 30, 2012 NOTE 12 — ACCOUNTS PAYABLE - Continued The County has not engaged in any short-term debt activity during fiscal year 2012 other than that listed in Note 9. Due To Other Governments — Governmental Activities On August 21, 2012, the County approved a 5 -year payment plan agreement with the State of Florida to pay back $790,434 in disputed Medicaid billings. Monthly payments began on October 5, 2012. The County recorded these payments as a liability, Due to Other Governments, in the government -wide Statement of Net Position at September 30, 2012. Due To Other Governments — Utilities Fund On August 25, 2010, the County received notification from the State Division of Emergency Management that a repayment of $2,827,524 may be due to the Federal Emergency Management Agency (FEMA) for disallowed costs related to a sewer project. The County has appealed FEMA's decision. As of September 30, 2012, the County recorded these costs as a liability, Due to Other Governments, in the Utilities proprietary fund while awaiting FEMA's response to the appeal. 73 Indian River County, Florida Notes To Financial Statements Year Ended September 30, 2012 NOTE 13 - LONG-TERM LIABILITIES A. Changes in Long -Term Liabilities Long-term liability activity for the year ended September 30, 2012, was as follows: Beginning Balance Governmental Activities: Due Ending Within Additions Retirements Balance One Year Bonds payable: Limited General Obligation Bonds - $ 35,385,000 $ - $ 3,000,000 $ 32,385,000 $ 3,120,000 Series 2006 General Obligation Bonds — Series 2001 4,430,000 4,430,000 Spring Training Facility Revenue Bonds - Series 2001 11,705,000 630,000 11,075,000 655,000 Subtotal 51,520,000 8,060,000 43,460,000 3,775,000 Add: Unamortized bonds premium 908,939 93,225 815,714 Total bonds payable 52,428,939 8,153,225 44,275,714 3,775,000 Other liabilities: Pollution remediation 2,569,200 43,800 2,613,000 137,003 Claims payable 7,877,000 13,967,831 13,770,831 8,074,000 2,197,855 Compensated absences 10,768,485 7,170,075 6,939,908 10,998,652 6,532,620 Total other liabilities 21,214,685 21,181,706 20,710,739 21,685,652 8,867,478 Governmental activities long-term liabilities $ 73,643,624 $ 21,181,706 $ 28,863,964 $ 65,961,366 $ 12,642,478 Business -type Activities: Bonds payable: Recreational Refunding Revenue Bonds - Series 2003 $ 2,655,000 $ - $ 535,000 $ 2,120,000 $ 555,000 Water & Sewer Refunding Revenue Bonds - Series 2005 20,490,000 1,480,000 19,010,000 1,530,000 Series 2009 26,370,000 1,610,000 24,760,000 1,675,000 Subtotal 49,515,000 3,625,000 45,890,000 3,760,000 Add: Unamortized bonds premium 2,929,603 236,905 2,692,698 Less: Unamortized bonds discount (22,757) (4,628) (18,129) Total bonds payable 52,421,846 3,857,277 48,564,569 3,760,000 Other liabilities: Landfill closure and maintenance costs 10,016,236 497,500 10,513,736 Pollution remediation Compensated absences Total other liabilities 65,000 821,078 10,902,314 56,200 712,995 676,936 1,210,495 733,136 8,800 857,137 2,510 644,945 11,379,673 647,455 Business -type activities long-term liabilities $ 63,324,160 $ 1,210,495 $ 4,590,413 $ 59,944,242 $ 4,407,455 74 Indian River County, Florida Notes To Financial Statements Year Ended September 30, 2012 NOTE 13 - LONG-TERM LIABILITIES - Continued B. Primary Government Governmental Activities Annual Debt Service Payments - Governmental Activities The annual debt service payments for bonds outstanding at September 30, 2012, are as follows: Fiscal Year Limited General Spring Training Facility Ending Obligation Bonds Revenue Bonds September 30 Series 2006 Series 2001 Principal Interest Principal Interest 2013 $ 3,120,000 $ 1,492,263 $ 655,000 $ 566,333 2014 3,255,000 1,367,463 685,000 537,513 2015 3,390,000 1,204,712 725,000 501,550 2016 3,545,000 1,035,212 760,000 463,487 2017 3,705,000 893,413 795,000 423,587 2018-2022 15,370,000 1,774,350 3,945,000 1,443,575 2023-2027 - - 1,780,000 708,250 2028-2031 - - 1,730,000 218,750 Total 32,385,000 7,767,413 11,075,000 4,863,045 Less: Current portion 3,120,000 655,000 Add: Unamortized bond premium 815,714 - - Total $ 30,080,714 $ 7,767,413 $ 10,420,000 $ 4,863,045 75 Indian River County, Florida Notes To Financial Statements Year Ended September 30, 2012 NOTE 13 - LONG-TERM LIABILITIES - Continued B. Primary Govermnent - Continued Limited General Obligation Bonds Purpose On July 6, 2006, the County issued $48,600,000 of Limited General Obligation Bonds, Series 2006. The issuance of the Series 2006 bonds was approved by a majority of votes cast in a bond referendum held on November 2, 2004, by the qualified electors of the County. The referendum authorized a total of $50,000,000 aggregate principal amount of limited general obligation bonds. The proceeds of this issue will provide funds to acquire interest in lands to protect water resources and/or drinking water sources, environmentally sensitive lands, historic sites, and/or agricultural lands together with the necessary preservation, restoration, remediation and reclamation activities to preserve, protect, or enhance such property. Pledge of revenues — The principal and interest on the bonds are payable from ad valorem taxes not exceeding 1/2 mil and having a maturity not exceeding fifteen years, which are levied by the County upon the taxable real and personal property of the County. Bonds Issued - At September 30, 2012, Limited General Obligation Bonds consisted of the following: Description Limited General Obligation Bonds, Series 2006 Interest Outstanding at Rates and September 30, Date Maturity Issue 2012 4.00%-5.00% 1/1 and 7/1 2021 $ 48,600,000 $ 32,385,000 Optional Redemption — The Limited General Obligation Bonds, Series 2006, maturing on or after July 1, 2017, are subject to redemption prior to maturity, at the option of the County on and after July 1, 2016, in whole or in part, at any time, on any date at a redemption price of 100% of the principal amount thereof, together with accrued interest thereon to the redemption date. 76 Indian River County, Florida Notes To Financial Statements Year Ended September 30, 2012 NOTE 13 - LONG-TERM LIABILITIES - Continued B. Primary Govermnent - Continued General Obligation Bonds (GOB) Purpose — On November 2, 1992, County voters approved a bond referendum authorizing a total of $26,000,000 aggregate principal amount of general obligation bonds, in one or more series, to acquire environmentally sensitive lands, together with the necessary restoration, remediation, and reclamation activities to preserve and enhance such property. On November 29, 2001, the County issued the second series of GOBs in the amount of $11,000,000. The remaining outstanding principal balance of $3,620,000 was called early on July 1, 2012. On July 1, 2003, the County issued $7,800,000 of General Obligation Refunding Bonds, Series 2003. The bonds were issued to provide funds, together with $600,000, to refund and redeem the entire outstanding principal amount of the County's $15,000,000 General Obligation Bonds, Series 1995. Proceeds of the bonds were used to pay the cost of issuance of the bonds, including the premiums for guaranty insurance. The last installment of these GOBs was paid on July 1, 2010. Spring Training Facility Revenue Bonds Purpose - On August 15, 2001, the County issued $16,810,000 of Spring Training Facility Revenue Bonds, Series 2001. The Series 2001 bonds are being issued by the County to provide funds, together with other available funds, to (1) finance a portion of the cost of acquisition and expansion of a spring training facility currently known as "Vero Beach Sports Village (formerly known as Dodgertown)"; (2) pay a premium for a municipal bond insurance policy and a debt service reserve account surety bond, and (3) pay certain costs and expenses incurred in connection with the issuance of the Series 2001 bonds. 77 Indian River County, Florida Notes To Financial Statements Year Ended September 30, 2012 NOTE 13 - LONG-TERM LIABILITIES - Continued B. Primary Govermnent - Continued Spring Training Facility Revenue Bonds - Continued Pledge of Revenues - The principal and interest on the Series 2001 bonds will be payable from and secured by a first lien upon and pledge of the following, together with any investment income realized on any funds held under the Resolution, except the Cost of Issuance Account and the Rebate Fund: (1) Payments received by the County from the State of Florida pursuant to Section 212.20, Florida Statutes; and (2) The Fourth Cent Tourist Development Tax levied by the County in Ordinance No. 2000-029, enacted pursuant to Section 125.0104(3)(1), Florida Statutes; and (3) Eighty-six percent (86%) of the Local Government Half -Cent Sales Tax distributed to the County, pursuant to Chapter 218, Part VI, Florida Statutes. The foregoing are collectively referred to herein as the "pledged revenues". These revenue streams are pledged for the remaining term of the bonds and are listed on Schedule 27 in the statistical section. The Fourth Cent Tourist Development Tax and the Local Government Half -Cent Sales Tax pledged to the payment of debt service on the Series 2001 bonds are automatically released as a pledged revenue for the Series 2001 bonds immediately following the April 1, 2021 principal payment on the Series 2001 bonds. The current principal and interest payments of $1,223,432 represent seventeen percent of total pledged revenues. All three revenue sources totaled $7,276,317 for the current fiscal year. The County applied 100% of the first two pledged revenue sources and five percent of the Half -Cent Sales Tax to the debt service payments. The total principal and interest remaining to be paid on the bonds is $15,938,045. Bonds Issued - At September 30, 2012, Spring Training Facility Revenue Bonds consisted of the following: Description Spring Training Facility Revenue Bonds, Series 2001 Interest Outstanding at Rates and September 30, Date Maturity Issue 2012 3.30%-5.25% 4/1 and 10/1 2031 $ 16,810,000 $ 11,075,000 Optional Redemption - The Series 2001 bonds maturing on or after April 1, 2012, were subject to redemption at the option of the County in whole or in part, on April 1, 2011, or on any date thereafter at par plus accrued interest and plus a premium ranging between 0% to 1% depending on the year of the redemption. 78 Indian River County, Florida Notes To Financial Statements Year Ended September 30, 2012 NOTE 13 - LONG-TERM LIABILITIES - Continued B. Primary Government - Continued Spring Training Facility Revenue Bonds - Continued Mandatory Redemption - The Series 2001 Term Bonds are subject to mandatory redemption prior to maturity, by lot, at par plus accrued interest, according to the following schedule: Term Bonds due April 1, 2015 Date Principal Amount April 1, 2014 $ 685,000 April 1, 2015 725,000 Term Bonds due April 1, 2017 Date Principal Amount April 1, 2016 $ 760,000 April 1, 2017 795,000 Term Bonds due April 1, 2021 Date Principal Amount April 1, 2018 $ 840,000 April 1, 2019 890,000 April 1, 2020 930,000 April 1, 2021 980,000 Term Bonds due April 1, 2027 Date Principal Amount April 1, 2022 $ 305,000 April 1, 2023 320,000 April 1, 2024 340,000 April 1, 2025 355,000 April 1, 2026 375,000 April 1, 2027 390,000 Term Bonds due April 1, 2031 Date Principal Amount April 1, 2028 $ 410,000 April 1, 2029 430,000 April 1, 2030 455,000 April 1, 2031 435,000 79 Indian River County, Florida Notes To Financial Statements Year Ended September 30, 2012 NOTE 13 - LONG-TERM LIABILITIES - Continued B. Primary Government - Continued Business -type Activities Annual Debt Service Payments Business -type Activities The annual debt service payments for bonds outstanding at September 30, 2012 are as follows: Fiscal Year Ending September 30 2013 2014 2015 2016 2017 2018-2022 2023-2024 Total Less: Current portion Unamortized bond discount Add: Unamortized bond premium Total Recreational Revenue Refunding Bonds Series 2003 Water and Sewer Revenue Refunding Bonds Series 2005 Principal Interest Principal Interest $ 555,000 $ 83,169 $ 1,530,000 $ 877,150 580,000 62,356 1,605,000 800,650 600,000 39,881 1,670,000 736,450 385,000 15,881 1,750,000 652,950 1,840,000 565,450 10,615,000 1,405,250 2,120,000 201,287 555,000 18,129 19,010,000 5,037,900 1,530,000 Water and Sewer Revenue Refunding Bonds Series 2009 Principal Interest $ 1,675,000 $ 1,203,800 1,745,000 1,136,800 1,815,000 1,067,000 1,905,000 976,250 2,000,000 881,000 11,600,000 2,801,250 4,020,000 268,000 24,760,000 8,334,100 1,675,000 610,413 - 2,082,285 $ 1,546,871 $ 201,287 $ 18,090,413 $ 5,037,900 $ 25,167,285 $8,334,100 Recreational (Golf Course) Revenue Refunding Bonds, Series 2003 Purpose - On October 15, 2003, the Series 2003 bonds were issued to redeem $6,735,000 of the County's outstanding Recreational Revenue Bonds, Series 1993. The Series 2003 bonds are being issued by the County to provide funds, together with $583,790, to retire all of the outstanding 1993 Series bonds and to pay for all bond issuance costs. The previous bonds were issued to build a County - owned golf course. The aggregate difference in debt service between the Series 1993 debt ($9,284,290) and Series 2003 debt ($8,060,911) is $1,223,379. The net economic gain was $348,450 and is amortized over the life of the bonds. The unamortized balance of the deferred amount on the refunding at September 30, 2012 is $107,215 and is reflected as a deferred outflow of resources on the Statement of Net Position. 80 Indian River County, Florida Notes To Financial Statements Year Ended September 30, 2012 NOTE 13 - LONG-TERM LIABILITIES - Continued B. Primary Govermnent - Continued Recreational (Golf Course) Revenue Refunding Bonds, Series 2003 - Continued Pledge of Revenues - The revenue bonds are secured by liens, for the remaining term of the bonds, in the following order: (1) the net revenues derived from the operations of the golf course, (2) one hundred percent of racetrack and Jai Alai Fronton funds, and (3) seven percent of the half -cent sales tax accruing annually to the County. Refer to Schedule 26 of the statistical section for historical data on the pledged revenues. The financial strength of our municipal bond insurer, AMBAC, was downgraded to Baal in November 2008. This downgrade required the County to fully cash fund the debt service reserve. The County elected to pledge the Racetrack and Jai Alai Fronton funds to meet this bond covenant. The total annual amount of the required debt service reserve, $417,500, was cash funded. The current principal and interest payments of $637,964 represent sixty-one percent of net revenues of $1,039,595 of the golf course. The total principal and interest remaining to be paid on the bonds is $2,321,287. All three pledged revenue sources totaled $2,004,997 for the current fiscal year. The County did not utilize the second and third revenue sources toward the current year principal and interest payments. Rate Covenant — Net revenues shall be sufficient to pay 100% of reserve and current year principal and interest requirements. Bonds Issued - At September 30, 2012, the revenue bonds consisted of the following: Description 2003 Recreational Revenue Refunding Bonds Outstanding at Interest Rates September 30, and Date Maturity Issue 2012 2.00 — 4.125% 9/1/16 $ 6,455,000 $ 2,120,000 3/1 and 9/1 Optional Redemption - The revenue bonds, maturing on or after September 1, 2014, are subject to redemption prior to maturity, at the option of the County on and after September 1, 2013, in whole or in part, at any time thereafter at the redemption price of par, plus interest accrued to the date of redemption. Water and Sewer Revenue Refunding Bonds, Series 2005 Purpose - The Series 2005 bonds were issued to defease $31,680,000 of the County's outstanding Water and Sewer Revenue Bonds, Series 1996. These bonds were issued by the County to provide funds, together with $5,000,000, to retire 95 percent of the 1996 Series and to pay for all bond issuance costs. The September 1, 2005 and 2006 principal installments were not subject to early call and consequently paid at their respective maturity dates. The 1996 bonds were issued to acquire an existing water and sewer facility, as well as for capital improvements to the existing system. 81 Indian River County, Florida Notes To Financial Statements Year Ended September 30, 2012 NOTE 13 - LONG-TERM LIABILITIES - Continued B. Primary Govermnent - Continued Water and Sewer Revenue Refunding Bonds, Series 2005 - Continued The aggregate difference in debt service between the Series 1996 ($40,585,193) and Series 2005 ($39,619,193) is $966,000. The net economic gain, which included shortening the term of the bonds by four years and lowering average annual debt service by $242,000, was $2,944,661 and is amortized over the life of the bonds. The unamortized balance of the deferred amount on the refunding at September 30, 2012 is $1,684,686 and is reflected as a deferred outflow of resources on the Statement of Net Position. Pledge of Revenues - The revenue bonds are collateralized, for the remaining term of the bonds, by a pledge of all net revenues derived from the operation of the system, certain surcharges, and special assessments. Annual principal and interest payments of $2,405,250 represent approximately eighteen percent of net revenues of $13,217,926 of the utility system. The total principal and interest remaining to be paid on the bonds is $24,047,900. Rate Covenant — Net revenues shall be sufficient to pay 100% of the reserve account requirement and 120% of the current year's principal and interest payment. Bonds Issued - At September 30, 2012, the revenue bonds consisted of the following: Description Water and Sewer Revenue Refunding Bonds, Series 2005 Interest Rates and Date 3-5% 3/1 and 9/1 Maturity Issue Outstanding at September 30, 2012 2022 $ 27,675,000 $ 19,010,000 Outstanding In -Substance Defeased Debt - The proceeds from the refunding have been invested in federal securities and were placed in an escrow account with J.P. Morgan. All of the defeased bonds ($31,680,000) were called on September 1, 2006 at 102% of the outstanding principal amount. Optional Redemption - The Series 2005 bonds maturing after September 1, 2015, are subject to redemption by the County on or after September 1, 2015, in whole or in part, at par, plus accrued interest to date of redemption. Water and Sewer Revenue Refunding Bonds, Series 2009 Purpose - The Series 2009 bonds were issued to refund and redeem on September 11, 2009, $28,270,000 of the County's outstanding Water and Sewer Revenue Bonds, Series 1993A. The refunding excluded debt service payments due September 1, 2010 and 2011, which were consequently paid at their respective maturity date. 82 Indian River County, Florida Notes To Financial Statements Year Ended September 30, 2012 NOTE 13 - LONG-TERM LIABILITIES - Continued B. Primary Government - Continued Water and Sewer Revenue Refunding Bonds, Series 2009 - Continued The aggregate difference in debt service between the Series 1993A ($80,434,415) and Series 2009 ($78,755,772) is $1,678,643. The net economic gain, which lowered average annual debt service by $126,000, was $1,368,427 and is amortized over the life of the bonds. The unamortized balance of the deferred amount on the refunding at September 30, 2012 is $1,083,338 and is reflected as a deferred outflow of resources on the Statement of Net Position. Pledge of Revenues — The revenue bonds are collateralized, for the remaining term of the bonds, by a pledge of all net revenues derived from the operation of the system, certain surcharges, and special assessments. The interest payments of $2,878,200 represent approximately twenty two percent of net revenues of $13,217,926 of the utility system. The total principal and interest remaining to be paid on the bonds is $33,094,100. Rate Covenant — Net revenues shall be sufficient to pay 100% of the reserve account requirement and 120% of the current year's principal and interest payment. Bonds Issued - At September 30, 2012, the revenue bonds consisted of the following: Outstanding at Interest Rates September 30, Description and Date Maturity Issue 2012 Water and Sewer 4-5% Revenue Refunding Bonds, 3/1 and 9/1 2024 $ 26,370,000 $ 24,760,000 Series 2009 Outstanding In -Substance Defeased Debt - The proceeds from the refunding were invested in federal securities and were placed in an escrow account with Bank of New York/Mellon. All of the defeased bonds ($28,270,000) were called on September 1, 2009 at 101% of the outstanding principal amount. Optional Redemption - The Series 2009 bonds maturing on or prior to September 1, 2019, are not subject to redemption prior to their respective dates of maturity. The Series 2009 bonds stated to mature after September 1, 2019, are subject to redemption at the option of the County in whole or, from time to time, in part on September 1, 2019, at the redemption price of the principal amount to be redeemed, plus accrued interest to the date of redemption. C. Compensated Absences For the governmental activities compensated absences liability, the general fund normally liquidates 71 percent, and the Transportation and Emergency Services District funds normally liquidate 6 percent and 9 percent, respectively. The remaining 14 percent is liquidated by the other governmental and internal service funds. 83 Indian River County, Florida Notes To Financial Statements Year Ended September 30, 2012 NOTE 14 - PROVISION FOR CLOSURE COSTS Current regulations of the U.S. Environmental Protection Agency (EPA) and the Florida Department of Environmental Protection (FDEP) require the Solid Waste Disposal District (SWDD) to place a final cover on closed landfill areas, and to maintain those areas for up to thirty years after closure. The SWDD annually obtains updated and revised estimates of total future closure and post -closure costs from its consulting engineers. The SWDD recognizes the expenses associated with the final closure and post -closure maintenance of the landfill areas over the active life of those areas. The provision for closure costs reported in the financial statements as operating expense represents the portion of these estimated future outlays which are allocable to the current year based on the amount of capacity used. The total unrecognized closure and post -closure costs are approximately $3.6 million. These costs will be recognized in future periods as the remaining capacity is filled. The County's policy is to fund 100% of the current year's allocation (based upon the consulting engineers' report) of both closure and post - closure care. Required closure and post -closure sub -accounts: Capacity Estimated Used Closing Amount Closure Costs Class I - Segments I and II 58% 2030 $ 6,801,947 Construction and Demolition - Cell I 89% 2017 1,118,866 Post -closure Costs Class I - Segments I and II N/A N/A 2,413,435 Construction and Demolition - Cell I N/A N/A 179,488 Total account balance at 9/30/12: $ 10,513,736 All amounts recognized are based on what it would cost to perform all closure and post -closure functions in current dollars. Actual costs may be different due to inflation, deflation, changes in technology, or changes in laws and regulations. The SWDD is required by FDEP to annually show proof of ability to finance closure and post -closure costs. The SWDD is making annual deposits to a closure and post -closure cost escrow account to provide for the financing of future closure -related expenses. At September 30, 2012, $10,442,551 was on deposit at the Florida Local Government Investment Trust and $71,185 was on deposit in the County's Operating account. A summary of changes in the landfill closure liability account is as follows: Balance Balance 10/01/11 Deposits Withdrawals 09/30/12 Closure and long-term care costs $ 10,016,236 $ 497,500 $ - $10,513,736 Of the $10,513,736 liability for closure and long-term care costs, management estimates that no funds will be due and payable within one year. 84 Indian River County, Florida Notes To Financial Statements Year Ended September 30, 2012 NOTE 15 — POLLUTION REMEDIATION In accordance with GASB Statement 49, Accounting and Financial Reporting for Pollution Remediation Obligations, a consultant evaluated five sites to assess pollution remediation liabilities. The consultant calculated for each site an expected value (EV) estimate for pollution remediation based on three plausible mitigation scenarios. An obligating event occurred at each of the following five sites requiring the County (using the consultant's services) to attempt to accrue a liability for pollution remediation. The liability totaled $2,621,800 at September 30, 2012 for all five sites. The pollution remediation obligation is an estimate and subject to changes resulting from price increases and reductions, technology, and changes in applicable laws or regulations. There are no estimated recoveries that would reduce the liability. Governmental Activities: 1) South Gifford Road closed landfill — The nature of the pollution remediation obligation is chlorinated solvent contamination. The consultant will conduct monitoring, bioremediation and reporting with the Florida Department of Environmental Protection (FDEP). The amount of the estimated year end liability is $2,425,000 and will be paid from the Optional Sales Tax Fund. 2) Old Administration Building The nature of the pollution remediation obligation is closed underground storage tank contamination. The consultant will conduct monitoring and reporting with the FDEP. The amount of the estimated year end liability is $32,000 and will be paid from the General Fund. 3) Cattle dip site The nature of the pollution remediation obligation is arsenic contamination. The consultant will conduct monitoring and assessment. The amount of the estimated year end liability is $73,200 and will be paid from the Impact Fees Fund. 4) Shadowbrook Estates — The nature of the pollution remediation obligation is arsenic and lead contamination in two areas of a former citrus grove. The consultant will conduct the additional assessment and natural attenuation monitoring. The amount of the estimated year end liability is $82,800 and will be paid from a nonmajor fund, the Land Acquisition Fund. Total Governmental Activities liability: $2,613,000 Business -type Activities: 5) North County Reverse Osmosis plant The nature of the pollution remediation obligation is groundwater inorganic contamination. The consultant will conduct monitoring and assessment. The amount of the estimated year end liability is $8,800 and will be paid from the County Utilities Fund. Total Business -type Activities liability: SA, 800 85 Indian River County, Florida Notes To Financial Statements Year Ended September 30, 2012 NOTE 15 — POLLUTION REMEDIATION - Continued Due to the addition of the Shadowbrook Estates site in fiscal year 2012, beginning net position for the governmental activities needed to be restated. The difference between the governmental activities restated beginning net position of $127,100 and the liability of $82,800 was expensed during the current year. Please see Note 21-C for more information regarding the restatement of beginning net position. NOTE 16 - PENSION PLANS Florida Retirement System Plan Description: The County's employees participate in the Florida Retirement System (FRS), a cost- sharing, multiple -employer public employee retirement system, administered by the Florida Department of Management Services. Effective July 1, 2011, the FRS became a contributory plan for all members, except DROP participants, whereby members contribute 3% and employers pay a rate based upon each member's employment class. Employer rates effective as of July 1, 2012 were as follows: regular class 5.18%, senior class 6.30%, special risk 14.90% and elected official class 10.23%. Employees elect participation in either the defined benefit plan (Pension Plan) or the defined contribution plan (Investment Plan). If the employee enrolled in the FRS prior to July 1, 2011, normal retirement is age 62 with 6 years of service or 30 years of service, regardless of age. If the employee enrolled in the FRS on or after July 1, 2011, normal retirement is age 65 with 8 years of service or 33 years of service, regardless of age. Under the Pension Plan, early retirement is available before reaching normal retirement age and will be subject to an early-retirement reduction of 5% for each year your age at retirement is under your normal retirement age. For those employees who elect participation in the Investment Plan rather than the Pension Plan, vesting occurs after one year of service. Participants have access to the full value of their vested account balance when they leave FRS employment, regardless of age. These participants receive a defined contribution for self-direction in an investment product with a third party administrator selected by the State Board of Administration. Retirement benefits are determined by age, years of service, the average of the highest 5 or 8 fiscal years of pay, membership class and the payment option selected at retirement. In addition to the above benefits, the FRS administers a Deferred Retirement Option Program (DROP). This program allows eligible employees to defer receipt of monthly retirement benefit payments while continuing employment with a FRS employer for a period not to exceed five years after electing to participate. Deferred monthly benefits are held in the FRS Trust Fund and accrue interest. Florida Statutes Chapter 121, as may be amended from time to time by the state legislature, determines contribution rates for the various membership classes of the FRS. The FRS issues a publicly available financial report that includes financial statements, ten-year historical trend information and other required supplementary information. That report may be obtained by writing to the Florida Department of Management Services, Division of Retirement, Attention: Research and Education Section, P.O. Box 9000, Tallahassee, Florida 32315-9000, or from the website at www.dms.myflorida.com. 86 Indian River County, Florida Notes To Financial Statements Year Ended September 30, 2012 NOTE 16 - PENSION PLANS - Continued Florida Retirement System - Continued Funding Policy: The FRS has six classes of membership with descriptions and contribution rates in effect during the period ended September 30, 2012, as follows (contribution rates are in agreement with the actuarially determined rates): Regular Class - Members not qualifying for other classes. 10/01/09 07/01/10 07/01/11 07/01/12 to 6/30/10 to 6/30/11 to 6/30/12 to 9/30/12 9.85% 10.77% 7.91% 8.18% Senior Management Service Class - Members of senior management who do not elect the optional annuity management program. 13.12% 14.57% 9.27% 9.30% Special Risk Class - Members employed as law enforcement officers, firefighters, or correctional officers and meet the criteria set to qualify for this class. 20.92% 23.25% 17.10% 17.90% Special Risk Administrative Support Class - Special risk members who are transferred or reassigned to non -special risk and meet the criteria. 12.55% 13.24% 9.04% 8.91% Elected County Officer's Class - Certain elected county officials. 16.53% 18.64% 14.14% 13.23% Deferred Retirement Option Program - Members who are eligible for normal retirement that have elected to participate in the deferred retirement option program. 10.91% 12.25% 4.42% 5.44% Contributions to the FRS for the fiscal years ended September 30, 2010, 2011, and 2012, were equal to 14.71%, 14.15%, and 8.64% of the annual covered payroll. Contributions to the FRS for the fiscal years ended September 30, 2010, 2011, and 2012 were $10,736,848, $9,810,332, and $5,845,997 respectively. Employee contributions for the fiscal years ended September 30, 2011 and 2012 were $455,378 and $1,789,315. Both employer and employee contributions were equal to 100% of the required contribution for each year. 87 Indian River County, Florida Notes To Financial Statements Year Ended September 30, 2012 NOTE 17 — OTHER POSTEMPLOYMENT BENEFITS PLAN (OPEB) A. Plan Description On September 23, 2008, the Board of County Commissioners approved resolution number 2008-163, establishing an irrevocable trust (OPEB Trust) to separately identify assets accumulated to pay OPEB benefits for eligible retirees. The OPEB Trust includes the Board of County Commissioners and the five constitutional officers (Clerk of the Circuit Court and Comptroller, Property Appraiser, Sheriff, Supervisor of Elections, and Tax Collector). The resolution also established the Board of County Commissioners as trustees of the OPEB Trust and the authority for the trustees to amend the benefit provisions. The OPEB Trust is a single -employer defined benefit plan (OPEB Plan). The OPEB plan subsidizes (see the chart below) the cost of health care for employees hired prior to February 1, 2006 and their eligible dependents according to the provisions of the substantive plan (the plan as understood by the employer and plan members). Employees hired on or after February 1, 2006, will not be eligible for any subsidy, regardless of the years of service or Medicare eligibility Active participants as well as retirees are subject to the same benefits and rules. Retired employees are permitted to remain covered under the Board's medical and life insurance plans as long as they pay a premium applicable to the coverage elected. This conforms to the minimum required of Florida governmental employers per Florida Statute 112.0801. The retiree has the option to continue with the Board group health plan or elect Medicare Advantage Plan. The implicit rate subsidy applies to health and life insurance coverage since the premiums charged are based upon a blending of younger active employees and older retired employees. Health insurance premiums, effective October 1, 2011 range from $198 for Medicare participants to $735 for family coverage. Life insurance is available to retirees at a flat rate of $.20 per $1000 of coverage (to a maximum of $20,000 until the age of 70). After 70, the maximum amount of life insurance is $10,000. The Board subsidizes the cost of the health premiums for each retiree based upon their years of service and employment date (as mentioned above); a 2% discount is given for each year of service based upon the following table: Retirement Date Years of Service Under Age 65 Medicare Eligible Before 01/01/04 N/A No subsidy 60% subsidy 01/01/04 - 10/01/04 Less than 15 years No subsidy 60% subsidy 01/01/04 - 10/01/04 15 or more years 2%/yr-max 40% 20% in addition to yrs of service - max 60% subsidy 10/01/04 - 01/31/09 Less than 15 years No subsidy 20% subsidy 10/01/04 - 01/31/09 15 or more years 2%/yr-max 40% 20% in addition to yrs of service - max 60% subsidy 02/01/09 and after Less than 15 years No subsidy No subsidy 02/01/09 and after 15 or more years 2%/yr-max 40% No subsidy 88 Indian River County, Florida Notes To Financial Statements Year Ended September 30, 2012 NOTE 17 — OTHER POSTEMPLOYMENT BENEFITS PLAN - Continued A. Plan Description - Continued The OPEB Trust financial statements are reported using the accrual basis of accounting and are included in the Indian River County Comprehensive Annual Financial Report (CAFR). Questions regarding the OPEB plan may be directed to the Finance Director. At October 1, 2011, the date of the latest actuarial valuation, plan participation consisted of: Active participants 1,428 Retired participants 371 Total participants 1,799 There are two classes of participants at October 1, 2011: Regular and senior management 1,127 Special risk 672 Total participants 1,799 The average employer's contribution was $1,981 per employee, approximately 4.5% of current payroll. Financial statements for the OPEB Trust are included in this report and can be found on pages 40-41. A separate, stand-alone financial report is not issued by the County. The OPEB Trust investments can be found in Note 4D. B. Funding Policy The Board of County Commissioners, in concert with the OPEB Board of Trustees, has the authority to establish and amend the funding policy of the OPEB Plan. The OPEB Trust is advance funded by the County. For the year ended September 30, 2012, the County contributed $2.96 million to the qualifying OPEB Trust. Plan members receiving benefits contributed $1.5 million, or approximately 51 percent of the total premiums. It is the County's policy to base future OPEB Trust contributions on the annual required contribution (ARC) in subsequent annual actuarial reports. Custodial and individual fund administrative fees are paid from the portfolio dividend and interest income. C. Annual OPEB Cost and Net OPEB Obligation The employer's contribution (i.e. annual cost or expense) to the County's OPEB Trust is based on the ARC calculation. The ARC is an amount actuarially determined in accordance with the parameters of GASB Statement No. 45. The ARC represents a level of funding that, if paid on an ongoing basis, is projected to cover the normal cost each year and amortize any unfunded actuarial liability over a period not to exceed 20 years. The following table shows the components of the County's annual cost for the current and two preceding years, the amount actually contributed, and the changes in the net obligation. 89 Indian River County, Florida Notes To Financial Statements Year Ended September 30, 2012 NOTE 17 - OTHER POSTEMPLOYMENT BENEFITS PLAN - Continued C. Annual OPEB Cost and Net OPEB Obligation - Continued Annual Required Contribution Interest on Net OPEB Obligation Adjustment to Annual Required Contribution Annual OPEB Cost (expense) Contributions Change in Net OPEB Obligation Net OPEB Obligation — beginning of year Net OPEB Obligation — end of year Percentage of Annual OPEB Cost Contributed D. Funded Status and Funding Progress FY 2011/2012 $ 2,828,452 (12,323) 14,075 FY 2010/2011 $ 2,948,682 (22,381) 23,385 FY 2009/2010 $ 2,814,435 (7,272) 7,779 2,830,204 2,949,686 2,814,942 (2,962,301) (2,819,540) (3,030,792) (132,097) 130,146 (215,850) (189,584) (319,730) (103,880) $ (321,681) $ (189,584) $ (319,730) 104.67% 95.59% 107.67% The Schedule of Funding Progress and Schedule of Employer Contributions, presented as required supplementary information immediately following the County Notes to the Financial Statements (on page 99), presents multi-year trend information regarding liabilities, funding, and payroll. The data also reflects whether the actuarial value of the plan assets is increasing or decreasing over time relative to the actuarial accrued liabilities for benefits. This information includes the current and past two actuarial valuations and five years of funding data. Actuarial valuations of an ongoing plan involve estimates of the value of reported amounts and assumptions about the probability of occurrence of events into the future. Examples include assumptions about future employment, mortality, and the healthcare cost trend. Amounts determined regarding the funded status of the plan and the annual required contributions of the employer are subject to continual revision as actual results are compared with past expectations and new estimates are made about the future. E. Actuarial Methods and Assumptions Projections of benefits for financial reporting purposes are based on the benefits provided under terms of the substantive plan (the plan as understood by the employer and the plan members) in effect at the time of each valuation and on the pattern of sharing of costs between the employer and plan members to that point. The projection of benefits for financial reporting purposes does not explicitly incorporate the potential effects of legal or contractual funding limitations on the pattern of cost sharing between the employer and plan members in the future. Actuarial calculations reflect a long-term perspective. Consistent with that perspective, actuarial methods and assumptions used include techniques that are designed to reduce the effects of short-term volatility in actuarial accrued liabilities and the actuarial value of assets. 90 Indian River County, Florida Notes To Financial Statements Year Ended September 30, 2012 NOTE 17 — OTHER POSTEMPLOYMENT BENEFITS PLAN - Continued E. Actuarial Methods and Assumptions - Continued The actuarial methods are: Actuarial cost method Amortization method Amortization period (closed) Asset valuation method The actuarial assumptions are: Investment rate of return Projected annual salaries increase Healthcare cost trend rate Inflation rate NOTE 18 - OPERATING LEASES Entry age normal cost method Level percent of payroll projected to grow 4% per year 16 years Market Value 6.5% 4.0%-9.47% 8.5% 3% (net administrative expenses) (dependent on years of service and age) (decreasing 1/2% each year & thereafter to the ultimate value of 5.32%) The County has entered into non -cancelable operating leases, both as lessor and lessee. Lease terms vary from 1 to 99 years. Lease revenues totaled $587,765 and lease expenditures totaled $281,415 for the year ended September 30, 2012. The County also leases other equipment and office facilities as both lessor and lessee on a month-to-month basis. A. Future Minimum Lease Receipts Year Amount 2013 2014 2015 2016 2017 2018-2022 2023-2027 2028-2032 2033-2037 2038 Total future minimum lease $ 492,658 458,600 471,411 456,234 443,383 2,121,034 1,298,906 721,056 132,600 27,900 receipts: $ 6,623,782 The property being leased is included in the statement of net position governmental activities and business -type activities columns and has a cost of $29,060,384 and a carrying value of $20,723,566. Current year depreciation on property being leased was $368,896. 91 Indian River County, Florida Notes To Financial Statements Year Ended September 30, 2012 NOTE 18 - OPERATING LEASES - Continued B. Future Minimum Lease Payments The following is a schedule of minimum future rentals to be paid by the County for various noncancelable operating leases of office space, park land, and office equipment as of September 30, 2012: Year Amount 2013 $ 261,565 2014 136,872 2015 86,670 2016 32,295 2017 28,162 2018-2022 54,840 2023-2027 7,500 2028-2032 7,500 2033-2037 6,900 2038-2042 4,500 2043-2047 4,500 2048-2052 3,300 2053-2057 3,000 2058-2062 2,400 2063-2067 1,500 2068-2072 1,500 2073-2077 1,500 Total future minimum lease payments: $ 644,504 92 Indian River County, Florida Notes To Financial Statements Year Ended September 30, 2012 NOTE 19 - FUND BALANCE GASB Statement 54, Fund Balance Reporting and Governmental Funds Type Definitions, requires the fund balance for governmental funds to be reported in classifications that comprise a hierarchy based primarily on the extent to which the government is bound to honor constraints on the specific purposes for which amounts in those funds can be spent. A. Categories There are five categories of fund balance for governmental funds under Statement 54: Nonspendable — Amounts that cannot be spent because they are not in spendable form or are legally or contractually required to remain intact. Restricted — Use of these resources is based on the constraints imposed externally by creditors, grantors, contributors, or laws and regulations of other governments; or imposed by law through constitutional provisions or enabling legislation. Committed — Amounts whose use is constrained by the approval of a County ordinance by the Board of County Commissioners. This category also includes existing resources on hand to satisfy the obligations that arise from contractual obligations entered into by the Board of County Commissioners. Assigned — The Board of County Commissioners is the governing body authorized to assign fund balance amounts to be used for specific purposes. Amounts appropriated to eliminate a budgetary deficit in a subsequent year are reported in this category as well. Unassigned — Residual amounts in the general fund that do not meet any of the other fund balance classifications. B. Fund Balance Policy On September 21, 2010, the County approved a Fund Balance and Reserve Policy that set forth the following reserves of fund balance in the General, Transportation, and Emergency Services District Funds: Emergency/Disaster Relief Reserve — A balance of no less than 5% of budgeted operating expenditures for the current fiscal year will be reserved only for the purpose of responding to natural and man-made disasters. Disasters include hurricanes, tropical storms, floods, wildfires, or terrorist activities. These funds can only be used to respond and provide relief after such a disaster. Funds will be replenished over a five-year period after the completion of the recovery from the disaster. 93 Indian River County, Florida Notes To Financial Statements Year Ended September 30, 2012 NOTE 19 - FUND BALANCE — Continued B. Fund Balance Policy - Continued Budget Stabilization Reserve — A balance of no less than 5% of budgeted operating expenditures for the current fiscal year will be reserved only for the purpose of revenue declines or unfunded mandates from the state and federal governments. Funds utilized due to revenue declines will be replenished over a five-year period. Funds utilized for unfunded mandates or unanticipated expenditures cannot be used for more than a three-year period and must be replenished within five -years after the three-year period. At September 30, 2012, reserve amounts for those funds were: Budget Disaster Relief Stabilization Total General Fund $ 5,200,000 $ 5,200,000 $ 10,400,000 Transportation Fund 700,000 700,000 1,400,000 Emergency Services District Fund 1,400,000 1,400,000 2,800,000 Total $ 7,300,000 $ 7,300,000 $ 14,600,000 The General Fund reserves are included in the unassigned fund balance on the balance sheet. Emergency/Disaster Relief and Budget Stabilization Reserve amounts may only be revised by the Board of County Commissioners. Minimum Fund Balance - The approved fund balance policy dictates the County's attempt to maintain a minimum fund balance in the General, Transportation, and Emergency Services District funds of 20% of budgeted annual operating expenditures. The minimum fund balance level may be revised by the County Administrator or his designee. C. Spending Hierarchy For all governmental funds, when restricted, committed, assigned, and unassigned fund balances are combined in a fund, qualified expenditures are paid first from restricted or committed fund balance, as appropriate, then assigned and finally unassigned fund balances. 94 Indian River County, Florida Notes To Financial Statements Year Ended September 30, 2012 NOTE 20 - FUND BALANCE DEFICIT The following funds had a deficit in fund balance at September 30, 2012: Fund Deficit Nonmajor Governmental Funds: Metropolitan Planning Organization Fund $ 190,688 Federal/State Grants Fund 5,083 Total Deficit $ 195,771 The deficits for these two funds will be eliminated by grant proceeds in fiscal year 2013. NOTE 21— NET POSITION A. Restricted Net Position The County has established a restriction within the net position section of the proprietary funds for capital projects. Restricted net position at September 30, 2012 consist of the following: Restricted for Capital Projects: County Utilities Fund $ 17,941,773 B. Net Position Restricted by Enabling Legislation The government -wide statement of net position for the primary government reports $139,131,001 of restricted net position, of which $82,688,060 is restricted by enabling legislation. C. Restatement of Beginning Net Position In accordance with the requirements of GASB Statement 49, Accounting and Financial Reporting for Pollution Remediation Obligations, beginning net position for governmental activities was restated. Due to the addition of the Shadowbrook Estates site and based on the consultant's report, the governmental activities' portion of the estimated liability at October 1, 2011 was $127,100; therefore, beginning net position was reduced by that amount. For more information on the County's pollution remediation obligation, please see Note 15. In accordance with the requirements of GASB Statement 65, Items Previously Reported as Assets and Liabilities, beginning net position for the Golf Course and Utilities Funds was restated. The Statement required the expensing of any outstanding bond issuance costs, which had previously been reported as an asset and amortized over the life of the bond issue. At October 1, 2011, this results in the reduction of the Golf Course Fund's beginning net position by $49,523 and the reduction of the Utilities Fund's net position by $477,430. 95 Indian River County, Florida Notes To Financial Statements Year Ended September 30, 2012 NOTE 22 - RISK MANAGEMENT General Liability, Property, Worker's Compensation and Medical The County is exposed to various risks of loss related to torts, theft of, damage to and destruction of assets, errors or omissions, injuries to employees, and natural disasters. The County established a Self Insurance Fund (an internal service fund) to account for and finance its uninsured risk of loss. Under this program, the Self Insurance Fund provides coverage as follows: Worker's Compensation General Liability Auto Liability Property Damage Error or Omissions Annual Aggregate Liquor Liability 04/01/08 to 09/30/08 $ 300,000 250,000 250,000 500-25,000 250,000 1,000,000 1,000,000 10/01/08 to 04/30/11 $ 350,000 250,000 250,000 250,000 250,000 2,000,000 1,000,000 05/01/11 to 09/30/12 $ 350,000 200,000 200,000 200,000 200,000 2,000,000 1,000,000 The County purchases excess insurance to cover claims in excess of the amounts listed above. There is a 5% deductible per location for property damages arising due to a hurricane under the reinsurance policy. All departments of the County participate in the program. Payments are made by various funds to the Self Insurance Fund based on past experience and actual estimates of the amounts needed to pay current year claims. The County has received one reimbursement, for a liability claim in excess of the general liability limit, in the amount of $134,820 in fiscal year 2012. The prior two fiscal years did not incur any excess settlements. The County is also self insured for medical claims covering employees and their eligible dependents. As required by Section 112.081, Florida Statutes, retirees and their eligible dependents are provided the same health care coverage as is offered to active employees; however, the retirees are responsible for payment of the premiums. Medical claims are paid from premiums contributed by employees, retirees and by the County. Premiums and contributions are determined by projected claims based on historical and actuarial experience. The self insurance plan assumes all risk for claims, other than worker's compensation, up to $250,000 per occurrence. The County has purchased a reinsurance policy to cover claims in excess of these limits. There were no claims in excess of these limits for current and prior two fiscal years. The claims liability of $8,074,000 reported at September 30, 2012, is based on the requirements of generally accepted governmental accounting standards, which require that a liability for claims be reported if information prior to the issuance of the financial statements indicates that it is probable that a liability has been incurred at the date of the financial statements, and the amount of the loss can be reasonably estimated. Estimates for claims incurred but not reported are actuarially determined and recorded. Based on the actuary's report, $2,197,855 will be liquidated over the next twelve months. 96 Indian River County, Florida Notes To Financial Statements Year Ended September 30, 2012 NOTE 22 - RISK MANAGEMENT - Continued General Liability, Property, Worker's Compensation and Medical - Continued Changes in the fund's claim liability amount during the current and prior three fiscal years are as follows: Balance at Claims Balance Fiscal Year and Changes Claim at Fiscal Beginning in Estimates Payments Year End 2008-2009 $ 6,895,000 $ 15,637,406 $ (14,657,406) $ 7,875,000 2009-2010 7,875,000 13,940,099 (13,916,099) 7,899,000 2010-2011 7,899,000 12,901,425 (12,923,425) 7,877,000 2011-2012 7,877,000 13,967,831 (13,770,831) 8,074,000 Included in the charges to other funds is an amount to fund future catastrophic losses not actuarially determined and at September 30, 2012, unreserved net position of $24,330,918 has been designated for this purpose. The County has elected to accrue the larger of the discounted liability or undiscounted liability excluding non -incremental claims adjustment expenses. At September 30, 2012, the undiscounted liability was the greater of the two amounts. The discount rate used in the calculation was 2.5 percent. NOTE 23 - COMMITMENTS AND CONTINGENCIES A. Litigation Various suits and claims are currently pending against the County. It is impossible for the County to accurately quantify the exposure involved given the jury's latitude in assessing compensatory and punitive damages, and the court's latitude in awarding attorney's fees. The County intends to vigorously defend against these lawsuits and believes it has a good chance of prevailing on their merits. The County is contingently liable with respect to lawsuits and other claims incidental to the ordinary course of its operations. In the opinion of management and based on the advice of legal counsel, the ultimate disposition of lawsuits will not have a material adverse effect on the financial position of the County. B. Contracts and Other Commitments The County has various contracts and commitments outstanding at September 30, 2012. In the General Fund, contracts are for janitorial services, beach park landscape and custodial maintenance and external auditing services. In the Special Revenue Funds, contracts are for the construction of Fire Station 13 in the southern part of the County on 4th Street and 43rd Avenue, Oslo Road Widening from 43rd Avenue to 27th Avenue (Phase II) and from 58th Avenue to 43rd Avenue (Phase III), 66th Avenue Roadway Improvements from 16th Street to 4th Street, 27th Avenue Milling and Resurfacing, as well as a variety of other road paving and drainage projects. In the Capital Projects Fund, contracts are for the South County Regional Park Intergenerational Recreation Facility, PC South Algal Turf Scrubber Nutrient Recovery System and several sidewalk and road improvement projects throughout the County. 97 Indian River County, Florida Notes To Financial Statements Year Ended September 30, 2012 NOTE 23 - COMMITMENTS AND CONTINGENCIES - Continued B. Contracts and Other Commitments - Continued In the Enterprise Funds, contracts are for Sandridge Golf Club driving range tee renovations, Segment III Landfill Expansion, Repaving of the Winter Beach, Roseland and Gifford customer convenience centers, West Wabasso gravity sewer system, South County Brine Disposal project and various other water and sewer projects. A summary of these projects at September 30, 2012, is as follows: Total Total Paid as of Contract Price September 30, 2012 Remaining Balance at September 30, 2012 General $ 570, 803 $ (339,750) $ 231,053 Special Revenue 32,783,500 (16,365,467) 16,418,033 Capital Projects 10,110,328 (7,292,557) 2,817,771 Enterprise 8,107,986 (4,590,047) 3,517,939 Total $ 51,572,617 $ (28,587,821) $ 22,984,796 C. Grants Amounts received or receivable from grantor agencies are subject to audit and adjustment by grantor agencies. If any expenditures are disallowed as a result of these audits, the claims for reimbursement to the grantor agency would become a liability of the County. In the opinion of management, any such adjustments would not be significant. 98 Actuarial Valuation Date Actuarial Value of Assets (a) 10/01/2007 * $ 10/01/2009 $ 10/01/2011 $ 3,690,592 6,955,356 Indian River County, Florida Required Supplementary Information For the Year Ended September 30, 2012 Other Postemployment Benefits Plan Schedule of Funding Progress Actuarial Accrued Liability (AAL) - Entry Age (b) 29,098,337 32,456,186 33,877,613 Unfunded AAL (UAAL) (b -a) $ 29,098,337 $ 28,765,594 $ 26,922,257 *First year of Indian River County Other Postemployment Benefits Trust (IRCOT) Fiscal Year Ending 9/30/2008 9/30/2009 9/30/2010 9/30/2011 9/30/2012 Funded Ratio (a/b) 0.00% 11.37% 20.53% Schedule of Employer Contributions Annual Required Contribution $ 2,626,254 $ 2,809,587 $ 2,814,942 $ 2,949,686 $ 2,830,204 Covered Payroll (c) $ 64,847,001 $ 70,558,251 $ 62,739,616 Amount Percentage Net OPEB Contributed Contributed Obligation $ 2,720,348 103.58% $ (94,094) $ 2,819,373 100.35% $ (103,880) $ 3,030,792 107.67% $ (319,730) $ 2,819,540 95.59% $ (189,584) $ 2,962,301 104.67% $ (321,681) UAAL as a Percentage of Covered Payroll ((b-a)/c) 44.87% 40.77% 42.91% In the current fiscal year, there have not been any factors, such as changes in benefit provisions, the size or composition of the population covered by the plan or the actuarial methods and assumptions used, that would significantly affect the identification of trends in the amounts reported. See Note 17 for more information on the IRCOT. 99 100 COMBINING AND INDIVIDUAL FUND STATEMENTS AND SCHEDULES NONMAJOR GOVERNMENTAL FUNDS SPECIAL REVENUE FUNDS Court Facilities- To account for the court facility surcharge, additional court costs, the additional recording fee for court technology, and improvements made to court facilities. Section 8 Rental Assistance- To account for the provision of rental assistance for low income housing. Financing is provided by grants from the U.S. Department of Housing and Urban Development. Special Law Enforcement- To account for the expenditures of providing law enforcement equipment. Financing is provided by confiscation of monies and property in accordance with Section 932.704 of the Florida Statutes. Tree Ordinance Fines- To account for fines assessed against individuals for illegal removal of protected trees. Funds are used for park improvements. Tourist Development- To account for the proceeds from the levy of a local option Tourist Development tax. Funds are used to attract tourism trade and for the benefit of County residents. 911 Surcharge- To account for the receipt of the 911 surcharge on all telephone bills of the County. Monies are used to pay the operating costs of the 911 Emergency Center. Drug Abuse- To account for the collection of fines on criminal drug cases. Monies are used for drug prevention and education programs. State Housing Initiatives Partnership - To account for State funds distributed under the State Housing Initiatives Partnership Act. The purpose of this program is to provide for the creation and preservation of affordable housing. Funds are provided by the documentary stamp taxes. 102 Metropolitan Planning Organization- To account for expenditures incurred for planning community transportation in the County. Financing is provided by grants. Multi -Jurisdictional Law Enforcement- To account for expenditures incurred in connection with the cooperative drug enforcement task force established by the County, the City of Vero Beach and the City of Sebastian. Funds are provided by grants and program generated income. Native Uplands Land Acquisition - Beach Restoration- CDBG Neighborhood Stabilization Program - To account for expenditures related to the acquisition of native habitat preserve areas and for the management of such lands. Funding is provided by developers of property who pay to mitigate native uplands destruction where native upland plant communities will be destroyed. To account for the expenditure of funds to preserve and improve County beaches. Funds are provided by the levy of a local option tourist development tax. To account for the proceeds from the Community Development Block Grant. The purpose of this grant is to provide neighborhood stabilization through resale and rental of housing units purchased by the grant funds. Florida Boating Improvement Program- To account for boat registration fees which may be used for providing recreational channel marking, public launching facilities, and other boating -related activities. Library Bequests- To account for bequests which may be used for improvements to the Indian River County Libraries. Disabled Access Program- To account for fines assessed against individuals for illegal use of handicapped parking spaces. Federal/State Grants- To account for revenues and expenditures of various grants from Federal and State agencies. Traffic Education Program- To account for the proceeds of an additional $3 add-on to traffic fines authorized by County Ordinance. Proceeds must be used for traffic education programs. 103 Land Acquisition - East Gifford Stormwater- Vero Lake Estates - Vero Beach Sports Village Reserve - Clerk Special Revenue - Sheriff Special Revenue - Supervisor of Elections Special Revenue - Street Lighting Districts- CDBG Neighborhood Stabilization Program 3 Grant - To account for expenditures incurred in the purchase of environmentally sensitive land, preservation of water sources, historic sites and agricultural lands. Financing is provided by bond proceeds and state grants. To account for expenditures of funds for stormwater improvements in the East Gifford Watershed. Funds are provided by non -ad valorem taxes. To account for the expenditure of funds to improve roads in the Vero Lake Estates subdivision. Funds are provided by the levying of special assessments. To provide additional improvements to the Vero Beach Sports Village facility. The City of Vero Beach contributed $1,400,000 and the County contributed $600,000. This fund was previously known as the Dodgertown Capital Reserve Fund in prior fiscal years. To account for the proceeds from a special recording fee to be used for computer linkage and modernizing the Clerk of the Circuit Court and Comptroller's public records system. To account for the expenditure of grants, fines, and restricted revenues received by the Sheriff. To account for revenues and expenditures from state grants for voter education and pollworker activities. To account for the costs of providing street lights. Financing is provided by the levying of special assessments. To account for the proceeds from the Community Development Block Neighborhood Stabilization Program 3 Grant. The purpose of this grant is to provide neighborhood stabilization through resale of housing units purchased with the grant funds. 104 Spring Training Facility Bonds - Land Acquisition Bonds - DEBT SERVICE FUNDS To account for the accumulation of State assistance and tourist tax monies pledged to pay the principal, interest, and fiscal charges on the Spring Training Facility Bonds. To account for the accumulation of ad valorem taxes to pay the principal, interest, and fiscal charges related to the Land Acquisition Bonds. MAJOR CAPITAL PROJECTS FUND Optional Sales Tax- To account for revenues generated by the local option one cent sales tax. Monies are used for various capital projects. 105 Indian River County, Florida Combining Balance Sheet Nonmajor Governmental Funds September 30, 2012 Special Revenue Section 8 Court Rental Special Law Facilities Assistance Enforcement ASSETS Cash and cash equivalents $ 1,181,842 $ 350,254 $ 242,175 Accounts receivable - Due from other funds - Due from other governments 529 Prepaid items - Other assets held for resale Total Assets $ 1,181,842 $ 350,783 $ 242,175 LIABILITIES Accounts payable $ 25,574 $ 2,233 $ Retainage payable Due to other funds Unearned revenues Other deposits Total Liabilities 25,574 2,233 FUND BALANCES Nonspendable: Prepaid items Restricted for: Court -related costs and improvements Housing assistance Law enforcementfpublic safety Tourism -related activites Beach renourishment Boating related proj ects Library services Land acquisition Stormwater, street lighting, and other special assessments Debt service Sports Village repairs/improvements Other purposes Committed to: Environmental conservation/preservation Law enforcementfpublic safety Court operations Unassigned Total Fund Balances Total Liabilities and Fund Balances 1,156,268 348,550 242,175 1,156,268 348,550 242,175 1,181,842 $ 106 350,783 $ 242,175 Special Revenue Tree State Housing Ordinance Tourist 911 Drug Initiatives Fines Development Surcharge Abuse Partnership 219,708 $ 1,500 439,500 $ 1,042,827 $ 199,640 $ 57,839 6,588 690,479 3,628 $ 221,208 $ 439,500 $ 1,100,666 $ 206,228 $ 694,107 $ - $ 58,348 $ 26,155 $ 9,069 $ 540 221,208 58,348 26,155 381,152 9,069 540 693,567 1,074,511 - 221,208 381,152 1,074,511 197,159 197,159 693,567 $ 221,208 $ 439,500 $ 1,100,666 $ 206,228 $ 694,107 Continued 107 Indian River County, Florida Combining Balance Sheet Nonmajor Governmental Funds September 30, 2012 Special Revenue Metropolitan Multi- Native Uplands Planning Jurisdictional Land Organization Law Enforcement Acquisition ASSETS Cash and cash equivalents $ 120 $ 90,719 $ 837,361 Accounts receivable Due from other funds Due from other governments Prepaid items 7,200 Other assets held for resale Total Assets $ 7,320 $ 90,719 $ 837,361 LIABILITIES Accounts payable $ 40,508 $ - $ Retainage payable - Due to other funds 157,500 Unearned revenues Other deposits Total Liabilities 198,008 FUND BALANCES Nonspendable: Prepaid items Restricted for: Court -related costs and improvements Housing assistance Law enforcement/public safety Tourism -related activites Beach renourishment Boating related projects Library services Land acquisition Stormwater, street lighting, and other special assessments Debt service Sports Village repairs/improvements Other purposes Committed to: Environmental conservation/preservation Law enforcement/public safety Court operations Unassigned Total Fund Balances Total Liabilities and Fund Balances 7,200 (197,888) (190,688) 7,320 $ 108 90,719 837,361 90,719 837,361 90,719 $ 837,361 Special Revenue CDBG Florida Disabled Beach Neighborhood Boating Improv. Library Access Restoration Stabilization Pgm Program Bequests Program 6,133,776 $ 8,030 6,141,806 $ 20,624 $ 27,787 165 $ 1,084,470 $ 658,000 658,165 $ 1,084,470 $ 76,061 $ 56,000 144,622 $ 62,302 144,622 $ 62,302 - $ 132 $ 48,411 132,061 132 6,093,395 526,104 1,084,470 144,490 6,093,395 526,104 1,084,470 62,302 144,490 62,302 $ 6,141,806 $ 658,165 $ 1,084,470 $ 144,622 $ 62,302 Continued 109 Indian River County, Florida Combining Balance Sheet Nonmajor Governmental Funds September 30, 2012 Special Revenue Traffic FederallState Education Land Grants Program Acquisition ASSETS Cash and cash equivalents $ 917 $ 26,762 $ 314,034 Accounts receivable Due from other funds Due from other governments 9,571 Prepaid items Other assets held for resale Total Assets $ 10,488 $ 26,762 $ 314,034 LIABILITIES Accounts payable $ 9,571 $ - $ 275 Retainage payable - - - Due to other funds 6,000 Unearned revenues - - Other deposits - 55,664 Total Liabilities 15,571 - 55,939 FUND BALANCES Nonspendable: Prepaid items Restricted for: Court -related costs and improvements Housing assistance Law enforcement/public safety Tourism -related activites Beach renourishment Boating related projects Library services - Land acquisition - 258,095 Stormwater, street lighting, and other special assessments - Debt service Sports Village repairs/improvements - Other purposes 26,762 Committed to: Environmental conservation/preservation Law enforcement/public safety Court operations Unassigned (5,083) Total Fund Balances (5,083) 26,762 258,095 Total Liabilities and Fund Balances $ 10,488 $ 26,762 $ 314,034 110 Special Revenue East Vero Beach Clerk Sheriff Gifford Vero Lake Sports Special Special Stormwater Estates Village Reserve Revenue Revenue $ 17,192 $ 1,232,966 $ 658,559 $ 2,335,415 $ 2,002,061 13 1,193 11,762 7,422 5,633 $ 17,205 $ 1,234,159 $ 658,559 $ 2,347,177 $ 2,015,116 $ - $ 915 $ 105,355 $ 8,747 $ 118,450 915 105,355 8,747 118,450 11,762 2,293,412 1,505,098 17,205 1,233,244 553,204 17,205 1,233,244 553,204 391,568 33,256 - 2,338,430 1,896,666 $ 17,205 $ 1,234,159 $ 658,559 $ 2,347,177 $ 2,015,116 Continued 111 Indian River County, Florida Combining Balance Sheet Nonmajor Governmental Funds September 30, 2012 Special Revenue Supervisor Street of Elections Lighting CDBG Special Revenue Districts NSP3 Grant ASSETS Cash and cash equivalents $ 9,142 $ 494,573 $ 37,557 Accounts receivable - 56 Due from other funds 2,317 Due from other governments Prepaid items Other assets held for resale Total Assets $ 9,142 $ 496,890 $ 37,613 LIABILITIES Accounts payable $ - $ 8,829 $ 8,478 Retainage payable Due to other funds Unearned revenues 9,142 Other deposits - Total Liabilities 9,142 8,829 8,478 FUND BALANCES Nonspendable: Prepaid items Restricted for: Court -related costs and improvements - Housing assistance - 29,135 Law enforcement/public safety - - Tourism -related activites Beach renourishment Boating related projects - - Library services - - Land acquisition - - Stormwater, street lighting, and other special assessments 488,061 Debt service - - Sports Village repairs/improvements Other purposes Committed to: Environmental conservation/preservation Law enforcement/public safety Court operations Unassigned Total Fund Balances 488,061 29,135 Total Liabilities and Fund Balances $ 9,142 $ 496,890 $ 37,613 112 Debt Service Spring Land Total Nonmajor Training Acquisition Governmental Facility Bonds Bonds Funds 1,438,246 $ 928,123 $ 22,215,507 - - 12,606 - 74,417 77,940 36,661 - 124,851 283,166 - 302,128 - - 658,000 $ 1,758,073 $ 1,002,540 $ 23,391,032 $ - $ - $ 519,864 - - 27,787 - - 219,500 - - 9,142 - - 55,664 831,957 283,166 - 302,128 - - 3,449,680 - - 1,597,356 - - 2,912,503 - - 381,152 - - 6,093,395 - - 1,084,470 - - 144,490 - - 258,095 - - 1,738,510 1,474,907 1,002,540 2,477,447 - - 553,204 - - 286,223 - - 1,058,569 - - 391,568 - - 33,256 - - (202,971) 1,758,073 1,002,540 22,559,075 $ 1,758,073 8 1,002,540 $ 23,391,032 Indian River County, Florida Combining Statement of Revenues, Expenditures and Changes in Fund Balances Nonmajor Governmental Funds For the Year Ended September 30, 2012 REVENUES Taxes Permits, fees and special assessments Intergovernm ental Charges for services Judgments, fines and forfeits Interest Miscellaneous Total revenues EXPENDITURES Current: General government Public safety Physical environment Transportation Economic environment Human services Culture/recreation Court related Debt service: Principal Interest and other fiscal charges Total expenditures Special Revenue Section 8 Court Rental Special Law Facilities Assistance Enforcement - $ - $ - 1,901,583 - 465,669 37,413 35,424 - - 40,040 3,838 1,138 818 469,507 10,164 474,764 1,940,134 76,282 1,935,108 484,928 1,935,108 Excess of revenues over (under) expenditures (15,421) OTHER FINANCING SOURCES (USES) Transfers in Transfers out Total other financing sources (uses) 5,026 76,282 (104,425) (104,425) Net change in fund balances (15,421) 5,026 (28,143) Fund balances at beginning of year 1,171,689 343,524 270,318 Fund balances at end of year $ 1,156,268 $ 348,550 $ 242,175 114 Special Revenue Tree State Housing Ordinance Tourist 911 Drug Initiatives Fines Development Surcharge Abuse Partnership $ 601,845 $ - $ - $ - - 1,539,602 67,451 - - - 306,626 14,400 - - 13,364 666 1,172 4,464 603 3,041 - 1,061 1,128 3,528 15,066 604,078 1,545,194 1,924,865 81,418 313,195 45,025 - - - 22,426 935,650 15,066 605,304 605,304 1,924, 865 67,451 935,650 (1,226) (379,671) (193,141) (193,141) 13,967 (622,455) 15,066 (1,226) (572,812) 13,967 (622,455) 206,142 382,378 1,647,323 183,192 1,316,022 $ 221,208 $ 381,152 $ 1,074,511 $ 197,159 $ 693,567 Continue d 115 Indian River County, Florida Combining Statement of Revenues, Expenditures and Changes in Fund Balances Nonmajor Governmental Funds For the Year Ended September 30, 2012 REVENUES Taxes Permits, fees and special assessments Intergovernm ental Charges for services Judgments, fines and forfeits Interest Miscellaneous Total revenues Special Revenue Metropolitan Multi- Native Uplands Planning Jurisdictional Land Organization Law Enforcement Acquisition 385,202 - 4,000 - 339 2,671 385,202 EXPENDITURES Current: General government 468,478 Public safety Physical environment Transportation Economic environment Human services Culture/recreation Court related Debt service: Principal Interest and other fiscal charges Total expenditures 468,478 Excess of revenues over (under) expenditures (83,276) OTHER FINANCING SOURCES (USES) Transfers in Transfers out Total other financing sources (uses) 4,339 2,671 4,339 2,671 (26,380) (26,380) Net change in fund balances (83,276) (22,041) 2,671 Fund balances at beginning of year (107,412) 112,760 834,690 Fund balances at end of year $ (190,688) $ 90,719 $ 837,361 116 Special Revenue CDBG Florida Beach Neighborhood Boating Improv. Restoration Stabilization Pgm Program 601,845 $ 101,232 21,718 2,128 726,923 2,367,304 74,959 240 621,161 70,177 3,397 696,360 73,574 1,517,759 2,367,304 1,517,759 (1,640,381) 111,698 111,698 (1,528,683) 7,622,078 6,093,395 $ Disabled Library Access Bequests Program 494 60,134 876 198 60,628 1,074 13,337 46,832 13,337 46,832 (821,399) 60,237 (821,399) 60,237 1,347,503 1,024,233 526,104 $ 1,084,470 $ Continued 117 13,796 1,074 13,796 1,074 130,694 61,228 144,490 $ 62,302 Indian River County, Florida Combining Statement of Revenues, Expenditures and Changes in Fund Balances Nonmajor Governmental Funds For the Year Ended September 30, 2012 Special Revenue Traffic Federal/State Education Land Grants Program Acquisition REVENUES Taxes $ - $ - $ Permits, fees and special assessments - - - Intergovernmental 2,815,342 - 1,000,000 Charges for services - - - Judgments, fines and forfeits - 213 - Interest - 103 852 Miscellaneous - - 44,336 Total revenues 2,815,342 316 1,045,188 EXPENDITURES Current: General government Public safety Physical environment Transportation Economic environment Human services Culture/recreation Court related Debt service: Principal Interest and other fiscal charges Total expenditures 1,749,479 1,098,295 8,900 841,671 2,591,150 Excess of revenues over (under) expenditures 224,192 OTHER FINANCING SOURCES (USES) Transfers in Transfers out Total other financing sources (uses) 8,900 1,098,295 (8,584) (53,107) Net change in fund balances 224,192 (8,584) (53,107) Fund balances at beginning of year (229,275) 35,346 311,202 Fund balances at end of year $ (5,083) $ 26,762 $ 258,095 118 Special Revenue East Vero Beach Clerk Sheriff Gifford Vero Lake Sports Special Special Storm water Estates Village Reserve Revenue Revenue 153 $ 473 $ $ $ - 889 93,397 - - - - - - 64,478 - - 354,884 308,684 - - 152,058 183,138 54 3,902 - 6,539 23 1,096 97,772 - 513,481 556,323 - - 470,723 10,756 908,952 - 394,054 - - - - 149,631 8,821 10,756 394,054 620,354 917,773 1,096 87,016 (394,054) (47) (2,751) - (106,873) (361,450) 230,805 (47) (2,751) - - 230,805 1,049 84,265 (394,054) (106,873) (130,645) 16,156 1,148,979 947,258 2,445,303 2,027,311 $ 17,205 $ 1,233,244 $ 553,204 $ 2,338,430 $ 1,896,666 Continue d 119 Indian River County, Florida Combining Statement of Revenues, Expenditures and Changes in Fund Balances Nonmajor Governmental Funds For the Year Ended September 30, 2012 REVENUES Taxes Permits, fees and special assessments Intergovernm ental Charges for services Judgments, fines and forfeits Interest Miscellaneous Total revenues EXPENDITURES Current: General government Public safety Physical environment Transportation Economic environment Human services Culture/recreation Court related Debt service: Principal Interest and other fiscal charges Total expenditures Special Revenue Supervisor of Street Elections Lighting CDBG Special Revenue Districts NSP3 Grant 25,250 25,250 35,425 35,425 Excess of revenues over (under) expenditures (10,175) OTHER FINANCING SOURCES (USES) Transfers in Transfers out Total other financing sources (uses) Net change in fund balances Fund balances at beginning of year Fund balances at end of year 2,431 3,172 $ 179,193 1,712 2,440 129,519 23 51,258 186,517 180,800 189,032 140,557 189,032 140,557 (2,515) 40,243 (5,060) 2,431 (5,060) (7,744) 7,744 (7,575) 40,243 495,636 (11,108) $ $ 488,061 $ 29,135 120 Debt Service Total Land Nonmajor Spring Training Acquisition Governmental Facility Bonds Bonds Funds $ 401,230 $ 5,574,183 $ 7,182,901 - - 273,479 941,401 - 9,116,196 - - 1,508,700 - - 408,089 4,692 9,866 72,563 - - 787,174 1,347,323 5,584,049 19,349,102 - - 2,734,269 - - 2,878,842 - - 1,098, 295 - - 208,688 - - 1,658,316 - - 3,734,855 - - 3,426, 831 - - 633,216 630,000 593,423 1,223, 423 7,430,000 1,832,660 8,060,000 2,426,083 9,262, 660 26, 859, 395 123,900 (3,678,611) (7,510,293) 3,050,000 (112,630) 3,394,934 (444,434) 2,937,370 2,950,500 123,900 (741,241) (4,559,793) 1,634,173 1,743,781 27,118, 868 $ 1,758,073 $ 1,002,540 $ 22,559,075 121 Indian River County, Florida Budgetary Comparison Schedule Court Facilities For the Year Ended September 30, 2012 Variance Final Actual Positive Budget Amounts (Negative) REVENUES Charges for services $ 450,000 $ 465,669 $ 15,669 Interest 3,000 3,838 838 Total revenues 453,000 469,507 16,507 EXPENDITURES General government Court related Total expenditures 30,000 520,909 550,909 10,164 19,836 474,764 46,145 484,928 65,981 Net change in fund balances (97,909) (15,421) 82,488 Fund balances at beginning of year 97,909 1,171,689 1,073,780 Fund balances at end of year $ $ 1,156,268 $ 1,156,268 122 Indian River County, Florida Budgetary Comparison Schedule Section 8 Rental Assistance For the Year Ended September 30, 2012 Variance Final Actual Positive Budget Amounts (Negative) REVENUES Intergovernmental $ 1,934,707 $ 1,901,583 $ (33,124) Charges for services 37,413 37,413 Interest 1,138 1,138 Total revenues 1,934,707 1,940,134 5,427 EXPENDITURES Human services 1,949,407 1,935,108 14,299 Total expenditures 1,949,407 1,935,108 14,299 Net change in fund balances (14,700) 5,026 19,726 Fund balances at beginning of year 14,700 343,524 328,824 Fund balances at end of year $ $ 348,550 $ 348,550 123 Indian River County, Florida Budgetary Comparison Schedule Special Law Enforcement For the Year Ended September 30, 2012 Variance Final Actual Positive Budget Amounts (Negative) REVENUES Charges for services $ - $ 35,424 $ 35,424 Judgments, fines and forfeits 104,426 40,040 (64,386) Interest 818 818 Total revenues 104,426 76,282 (28,144) EXPENDITURES Public safety Total expenditures Excess of revenues over (under) expenditures 104,426 76,282 (28,144) OTHER FINANCING USES Transfers out (104,426) (104,425) 1 Total other financing uses (104,426) (104,425) 1 Net change in fund balances (28,143) (28,143) Fund balances at beginning of year 270,318 270,318 Fund balances at end of year $ $ 242,175 $ 242,175 124 REVENUES Judgments, fines and forfeits Interest Total revenues Indian River County, Florida Budgetary Comparison Schedule Tree Ordinance Fines For the Year Ended September 30, 2012 Variance Final Actual Positive Budget Amounts (Negative) $ 14,400 $ 14,400 666 666 15,066 15,066 EXPENDITURES Culture/recreation 50,000 50,000 Total expenditures 50,000 50,000 Net change in fund balances (50,000) 15,066 65,066 Fund balances at beginning of year 50,000 206,142 156,142 Fund balances at end of year $ $ 221,208 $ 221,208 125 Indian River County, Florida Budgetary Comparison Schedule Tourist Development For the Year Ended September 30, 2012 Variance Final Actual Positive Budget Amounts (Negative) REVENUES Taxes $ 508,250 $ 601,845 $ 93,595 Interest 9,500 1,172 (8,328) Miscellaneous 1,061 1,061 Total revenues 517,750 604,078 86,328 EXPENDITURES Culture/recreation 663,660 605,304 58,356 Total expenditures 663,660 605,304 58,356 Net change in fund balances (145,910) (1,226) 144,684 Fund balances at beginning of year 145,910 382,378 236,468 Fund balances at end of year 381,152 $ 381,152 126 Indian River County, Florida Budgetary Comparison Schedule 911 Surcharge For the Year Ended September 30, 2012 Variance Final Actual Positive Budget Amounts (Negative) REVENUES Intergovernmental $ 1,768,107 $ 1,539,602 $ (228,505) Interest 4,464 4,464 Miscellaneous - 1,128 1,128 Total revenues 1,768,107 1,545,194 (222,913) EXPENDITURES Public safety Total expenditures Excess of revenues over (under) expenditures OTHER FINANCING USES Transfers out Total other financing uses 2,991,033 2,991,033 1,924,865 1,066,168 1,924,865 1,066,168 (1,222,926) (379,671) 843,255 (193,141) (193,141) (193,141) (193,141) Net change in fund balances (1,416,067) (572,812) 843,255 Fund balances at beginning of year 1,416,067 1,647,323 231,256 Fund balances at end of year $ $ 1,074,511 $ 1,074,511 127 REVENUES Intergovernmental Judgments, fines and forfeits Interest Total revenues Indian River County, Florida Budgetary Com parison Schedule Drug Abuse For the Year Ended September 30, 2012 Variance Final Actual Positive Budget Amounts (Negative) $ 67,451 $ 67,451 13,364 13,364 603 603 81,418 81,418 EXPENDITURES Public safety 57,934 45,025 12,909 Human services 35,508 22,426 13,082 Total expenditures 93,442 67,451 25,991 Net change in fund balance (93,442) 13,967 107,409 Fund balances at beginning of year 93,442 183,192 89,750 Fund balances at end of year $ $ 197,159 $ 197,159 128 Indian River County, Florida Budgetary Comparison Schedule State Housing Initiatives Partnership For the Year Ended September 30, 2012 Variance Final Actual Positive Budget Amounts (Negative) REVENUES Charges for services $ 46,000 $ 306,626 $ 260,626 Interest 4,000 3,041 (959) Miscellaneous 3,528 3,528 Total revenues 50,000 313,195 263,195 EXPENDITURES Human services Total expenditures 1,002,525 1,002,525 935,650 66,875 935,650 66,875 Net change in fund balances (952,525) (622,455) 330,070 Fund balances at beginning of year 952,525 1,316,022 363,497 Fund balances at end of year $ $ 693,567 $ 693,567 129 Indian River County, Florida Budgetary Comparison Schedule Metropolitan Planning Organization For the Year Ended September 30, 2012 Variance Final Actual Positive Budget Amounts (Negative) REVENUES Intergovernmental $ 678,664 $ 385,202 $ (293,462) Total revenues 678,664 385,202 (293,462) EXPENDITURES General government 678,664 468,478 210,186 Total expenditures 678,664 468,478 210,186 Net change in fund balances (83,276) (83,276) Fund balances at beginning of year (107,412) (107,412) Fund balances at end of year $ $ (190,688) $ (190,688) 130 Indian River County, Florida Budgetary Comparison Schedule Multi -Jurisdictional Law Enforcement For the Year Ended September 30, 2012 Variance Final Actual Positive Budget Amounts (Negative) REVENUES Judgments, fines and forfeits $ 26,381 $ 4,000 $ (22,381) Interest 339 339 Total revenues 26,381 4,339 (22,042) EXPENDITURES Public safety Total expenditures Excess of revenues over (under) expenditures 26,381 4,339 (22,042) OTHER FINANCING USES Transfers out (26,381) (26,380) 1 Total other financing uses (26,381) (26,380) 1 Net change in fund balances (22,041) (22,041) Fund balances at beginning of year 112,760 112,760 Fund balances at end of year $ $ 90,719 $ 90,719 131 Indian River County, Florida Budgetary Comparison Schedule Native Uplands Land Acquisition For the Year Ended September 30, 2012 Variance Final Actual Positive Budget Amounts (Negative) REVENUES Interest $ $ 2,671 $ 2,671 Total revenues 2,671 2,671 EXPENDITURES Physical environment Total expenditures 55,000 55,000 55,000 55,000 Net change in fund balances (55,000) 2,671 57,671 Fund balances at beginning of year 55,000 834,690 779,690 Fund balances at end of year $ $ 837,361 $ 837,361 132 Indian River County, Florida Budgetary Comparison Schedule Beach Restoration For the Year Ended September 30, 2012 Variance Final Actual Positive Budget Amounts (Negative) REVENUES Taxes $ 508,250 $ 601,845 $ 93,595 Intergovernmental 101,232 101,232 Interest 28,500 21,718 (6,782) Miscellaneous 1,000 2,128 1,128 Total revenues 537,750 726,923 189,173 EXPENDITURES Culture/recreation 3,900,394 2,367,304 1,533,090 Total expenditures 3,900,394 2,367,304 1,533,090 Excess of revenues over (under) expenditures (3,362,644) (1,640,381) 1,722,263 OTHER FINANCING SOURCES Transfers in 111,698 111,698 Total other financing sources 111,698 111,698 Net change in fund balances (3,250,946) (1,528,683) 1,722,263 Fund balances at beginning of year 3,250,946 7,622,078 4,371,132 Fund balances at end of year $ $ 6,093,395 $ 6,093,395 133 REVENUES Intergovernmental Interest Miscellaneous Total revenues EXPENDITURES Economic environment Total expenditures Indian River County, Florida Budgetary Comparison Schedule CDBG Neighborhood Stabilization Program For the Year Ended September 30, 2012 Variance Final Actual Positive Budget Amounts (Negative) 1,256,221 1,256,221 $ 74,959 $ 74,959 240 240 621,161 (635,060) 696,360 (559,861) 1,911,370 1,517,759 393,611 1,911,370 1,517,759 393,611 Net change in fund balances (655,149) (821,399) (166,250) Fund balances at beginning of year 655,149 1,347,503 692,354 Fund balances at end of year $ $ 526,104 $ 526,104 134 Indian River County, Florida Budgetary Comparison Schedule Florida Boating Improvement Program For the Year Ended September 30, 2012 Variance Final Actual Positive Budget Amounts (Negative) REVENUES Intergovernmental $ 35,000 $ 70,177 $ 35,177 Interest 3,397 3,397 Total revenues 35,000 73,574 38,574 EXPENDITURES Culture/recreation Total expenditures 235,000 235,000 13,337 221,663 13,337 221,663 Net change in fund balances (200,000) 60,237 260,237 Fund balances at beginning of year 200,000 1,024,233 824,233 Fund balances at end of year $ $ 1,084,470 $ 1,084,470 135 Indian River County, Florida Budgetary Comparison Schedule Library Bequests For the Year Ended September 30, 2012 Variance Final Actual Positive Budget Amounts (Negative) REVENUES Interest $ $ 494 $ 494 Miscellaneous 60,134 60,134 Total revenues 60,628 60,628 EXPENDITURES Culture/recreation 56,193 46,832 9,361 Total expenditures 56,193 46,832 9,361 Net change in fund balances (56,193) 13,796 69,989 Fund balances at beginning of year 56,193 130,694 74,501 Fund balances at end of year $ $ 144,490 $ 144,490 136 REVENUES Judgments, fines and forfeits Interest Total revenues Indian River County, Florida Budgetary Comparison Schedule Disabled Access Program For the Year Ended September 30, 2012 8 Variance Final Actual Positive Budget Amounts (Negative) $ 876 $ 876 198 198 1,074 1,074 EXPENDITURES Human services 20,000 20,000 Total expenditures 20,000 20,000 Net change in fund balances (20,000) 1,074 21,074 Fund balances at beginning of year 20,000 61,228 41,228 Fund balances at end of year $ $ 62,302 $ 62,302 137 Indian River County, Florida Budgetary Comparison Schedule Federal/State Grants For the Year Ended September 30, 2012 REVENUES Intergovernmental Total revenues EXPENDITURES General government Human services Total expenditures Net change in fund balances Fund balances at beginning of year Fund balances at end of year Final Budget $ 2,978,598 $ 2,978,598 1,815,315 1,256,883 3,072,198 (93,600) 93,600 138 Actual Amounts Variance Positive (Negative) 2,815,342 $ (163,256) 2,815,342 (163,256) 1,749,479 841,671 2,591,150 224,192 (229,275) 65,836 415,212 481,048 317,792 (322,875) (5,083) $ (5,083) Indian River County, Florida Budgetary Comparison Schedule Traffic Education Program For the Year Ended September 30, 2012 REVENUES Judgments, fines and forfeits Interest Total revenues EXPENDITURES Transportation Total expenditures Net change in fund balances Fund balances at beginning of year Fund balances at end of year Variance Final Actual Positive Budget Amounts (Negative) 32,703 32,703 (32,703) 32,703 $ 213 $ 213 103 103 316 316 8,900 23,803 8,900 23,803 (8,584) 24,119 35,346 2,643 $ $ 26,762 $ 26,762 139 Indian River County, Florida Budgetary Comparison Schedule Land Acquisition For the Year Ended September 30, 2012 Variance Final Actual Positive Budget Amounts (Negative) REVENUES Intergovernmental $ 1,000,000 $ 1,000,000 $ Interest 852 852 Miscellaneous 100,000 44,336 (55,664) Total revenues 1,100,000 1,045,188 (54,812) EXPENDITURES Physical environment 1,206,300 1,098,295 108,005 Total expenditures 1,206,300 1,098,295 108,005 Net change in fund balances (106,300) (53,107) 53,193 Fund balances at beginning of year 106,300 311,202 204,902 Fund balances at end of year 258,095 $ 258,095 140 Indian River County, Florida Budgetary Com parison Schedule East Gifford Stormwater For the Year Ended September 30, 2012 REVENUES Taxes Permits, fees and special assessments Interest Total revenues Variance Final Actual Positive Budget Amounts (Negative) - $ 153 $ 153 1,330 889 (441) 54 54 1,330 1,096 (234) EXPENDITURES Transportation 1,928 1,928 Total expenditures 1,928 1,928 Excess of revenues over expenditures (598) 1,096 1,694 OTHER FINANCING USES Transfers out (55) (47) 8 Total other financing uses (55) (47) 8 Net change in fund balances (653) 1,049 1,702 Fund balances at beginning of year 653 16,156 15,503 Fund balances at end of year $ $ 17,205 $ 17,205 141 Indian River County, Florida Budgetary Comparison Schedule Vero Lake Estates For the Year Ended September 30, 2012 Variance Final Actual Positive Budget Amounts (Negative) REVENUES Taxes $ - $ 473 $ 473 Permits, fees and special assessments 88,174 93,397 5,223 Interest 3,325 3,902 577 Total revenues 91,499 97,772 6,273 EXPENDITURES Physical environment 141,037 141,037 Transportation 271,061 10,756 260,305 Total expenditures 412,098 10,756 401,342 Excess of revenues over (under) expenditures (320,599) 87,016 407,615 OTHER FINANCING USES Transfers out (4,401) (2,751) 1,650 Total other financing uses (4,401) (2,751) 1,650 Net change in fund balances (325,000) 84,265 409,265 Fund balances at beginning of year 325,000 1,148,979 823,979 Fund balances at end of year $ $ 1,233,244 $ 1,233,244 142 REVENUES Miscellaneous Total revenues EXPENDITURES Culture/recreation Total expenditures Indian River County, Florida Budgetary Comparison Schedule Vero Beach Sports Village Reserve For the Year Ended September 30, 2012 Variance Final Actual Positive Budget Amounts (Negative) 947,253 947,253 394,054 553,199 394,054 553,199 Net change in fund balances (947,253) (394,054) 553,199 Fund balances at beginning of year 947,253 947,258 5 Fund balances at end of year $ $ 553,204 $ 553,204 143 Indian River County, Florida Budgetary Comparison Schedule Clerk Special Revenue For the Year Ended September 30, 2012 Variance Final Actual Positive Budget Amounts (Negative) REVENUES Charges for services $ 434,632 $ 354,884 $ (79,748) Judgments, fines and forfeits 181,000 152,058 (28,942) Interest 5,026 6,539 1,513 Total revenues 620,658 513,481 (107,177) EXPENDITURES General government 470,893 470,723 170 Court related 149,765 149,631 134 Total expenditures 620,658 620,354 304 Net change in fund balances (106,873) (106,873) Fund balances at beginning of year 2,445,303 2,445,303 Fund balances at end of year $ $ 2,338,430 $ 2,338,430 144 Indian River County, Florida Budgetary Comparison Schedule Sheriff Special Revenue For the Year Ended September 30, 2012 Variance Final Actual Positive Budget Amounts (Negative) REVENUES Intergovernmental $ 64,478 $ 64,478 $ Charges for services 390,000 308,684 (81,316) Judgments, fines and forfeits 234,000 183,138 (50,862) Interest 3,715 23 (3,692) Total revenues 692,193 556,323 (135,870) EXPENDITURES Public safety 914,000 908,952 5,048 Court related 9,000 8,821 179 Total expenditures 923,000 917,773 5,227 Excess of revenues over (under) expenditures (230,807) (361,450) (130,643) OTHER FINANCING SOURCES Transfers in 230,807 230,805 (2) Total other financing sources 230,807 230,805 (2) Net change in fund balances (130,645) (130,645) Fund balances at beginning of year 2,027,311 2,027,311 Fund balances at end of year $ $ 1,896,666 $ 1,896,666 145 REVENUES Intergovernmental Total revenues Indian River County, Florida Budgetary Comparison Schedule Supervisor of Elections Special Revenue For the Year Ended September 30, 2012 Variance Final Actual Positive Budget Amounts (Negative) $ 25,250 $ 25,250 25,250 25,250 EXPENDITURES General government 35,425 (35,425) Total expenditures 35,425 (35,425) Excess of revenues under expenditures (10,175) (10,175) OTHER FINANCING SOURCES Transfers in 2,431 2,431 Total other financing sources 2,431 2,431 Net change in fund balances (7,744) (7,744) Fund balances at beginning of year 7,744 7,744 Fund balances at end of year $ $ $ 146 Indian River County, Florida Budgetary Comparison Schedule Street Lighting Districts For the Year Ended September 30, 2012 Variance Final Actual Positive Budget Amounts (Negative) REVENUES Taxes $ - $ 3,172 $ 3,172 Permits, fees and special assessments 173,876 179,193 5,317 Interest 1,084 1,712 628 Miscellaneous 3,205 2,440 (765) Total revenues 178,165 186,517 8,352 EXPENDITURES Transportation 227,496 189,032 38,464 Total expenditures 227,496 189,032 38,464 Excess of revenues over (under) expenditures (49,331) (2,515) 46,816 OTHER FINANCING USES Transfers out (6,227) (5,060) 1,167 Total other financing uses (6,227) (5,060) 1,167 Net change in fund balances (55,558) (7,575) 47,983 Fund balances at beginning of year 55,558 495,636 440,078 Fund balances at end of year $ $ 488,061 $ 488,061 147 Indian River County, Florida Budgetary Comparison Schedule CDBG NSP3 Grant For the Year Ended September 30, 2012 Variance Final Actual Positive Budget Amounts (Negative) REVENUES Intergovernmental $ 1,489,319 $ 129,519 $ (1,359,800) Interest 23 23 Miscellaneous 51,258 51,258 Total revenues 1,540,577 180,800 (1,359,777) EXPENDITURES Economic environment Total expenditures Net change in fund balances Fund balances at beginning of year Fund balances at end of year $ 1,540,577 1,540,577 148 140,557 1,400,020 140,557 1,400,020 40,243 40,243 (11,108) $ 29,135 $ 29,135 (11,108) Indian River County, Florida Budgetary Comparison Schedule Spring Training Facility Bonds For the Year Ended September 30, 2012 Variance Final Actual Positive Budget Amounts (Negative) REVENUES Taxes $ 338,834 $ 401,230 $ 62,396 Intergovernmental 892,939 941,401 48,462 Interest 6,650 4,692 (1,958) Total revenues 1,238,423 1,347,323 108,900 EXPENDITURES Debt service: Principal 630,000 630,000 Interest 608,423 593,423 15,000 Total expenditures 1,238,423 1,223,423 15,000 Net change in fund balances 123,900 123,900 Fund balances at beginning of year 1,634,173 1,634,173 Fund balances at end of year $ $ 1,758,073 $ 1,758,073 149 Indian River County, Florida Budgetary Comparison Schedule Land Acquisition Bonds For the Year Ended September 30, 2012 Variance Final Actual Positive Budget Amounts (Negative) REVENUES Taxes $ 5,488,937 $ 5,574,183 $ 85,246 Interest 17,100 9,866 (7,234) Total revenues 5,506,037 5,584,049 78,012 EXPENDITURES Debt service: Principal 7,430,000 7,430,000 Interest 1,856,830 1,832,660 24,170 Total expenditures 9,286,830 9,262,660 24,170 Excess of revenues over (under) expenditures (3,780,793) (3,678,611) 102,182 OTHER FINANCING SOURCES (USES) Transfers in 3,050,000 3,050,000 Transfers out (155,407) (112,630) 42,777 Total other financing uses 2,894,593 2,937,370 42,777 Net change in fund balances (886,200) (741,241) 144,959 Fund balances at beginning of year 886,200 1,743,781 857,581 Fund balances at end of year $ $ 1,002,540 $ 1,002,540 150 Indian River County, Florida Budgetary Comparison Schedule Optional Sales Tax For the Year Ended September 30, 2012 REVENUES Taxes Permits, fees and special assessments Intergovernmental Interest Miscellaneous Total revenues EXPENDITURES Capital projects Total expenditures Net change in fund balances Fund balances at beginning of year Fund balances at end of year Final Budget $ 12,349,349 $ 6,858,149 118,750 2,386,000 21,712,248 32,629,242 32,629,242 (10,916,994) 10,916,994 Actual Amounts 13,708,911 22,353 261,342 111,762 223,465 14,327,833 8,108,370 8,108,370 6,219,463 44,263,331 Variance Positive (Negative) $ 1,359,562 22,353 (6,596,807) (6,988) (2,162,535) (7,384,415) 24,520,872 24,520,872 17,136,457 33,346,337 $ $ 50,482,794 $ 50,482,794 151 152 INTERNAL SERVICE FUNDS Fleet Management - Self Insurance - Geographic Information System - To account for the expenses incurred to repair and maintain the County's vehicles and equipment. Revenues are generated by charging user departments for maintenance of their vehicles and equipment. To account for the expenses incurred for worker's compensation claims, general and auto liability and property damage, and employee health insurance claims. Revenues are generated by charges to the various departments and funds based on past experience and actuarial estimates. To account for the expenses incurred for maintaining the County's geographic information system. Revenues are generated by charging user departments for their use of the geographic information system. 153 Indian River County, Florida Combining Statement of Net Position Internal Service Funds September 30, 2012 Geographic Fleet Self Information Management Insurance Systems Totals ASSETS Current assets: Cash and cash equivalents $ 257 $ 29,813,294 $ 2,153,944 $ 31,967,495 Accounts receivable - net 90,499 1,477,836 1,568,335 Due from other governments 123,851 3,113 126,964 Interest receivable - 14,826 1,088 15,914 Inventories 218,196 - - 218,196 Prepaid items - 1,144,903 32,535 1,177,438 Total current assets 432,803 32,453,972 2,187,567 35,074,342 Non-current assets: Capital assets - depreciable 279,125 16,901 823,908 1,119,934 Accumulated depreciation (204,414) (16,901) (546,528) (767,843) Total non-current assets 74,711 - 277,380 352,091 Total assets 507,514 32,453,972 2,464,947 35,426,433 LIABILITIES Current liabilities (payable from current assets): Accounts payable 167,674 33,322 1,896 202,892 Claims payable - 2,197,855 2,197,855 Due to other funds 225,000 - 225,000 Accrued compensated absences 14,706 11,046 7,253 33,005 Total current liabilities (payable from current assets) 407,380 2,242,223 9,149 2,658,752 Non-current liabilities: Claims payable - 5,876,145 5,876,145 Accrued compensated absences - 4,686 7,279 11,965 Total non-current liabilities - 5,880,831 7,279 5,888,110 Total liabilities 407,380 8,123,054 16,428 8,546,862 NET POSITION Net investment in capital assets 74,711 277,380 352,091 Unrestricted 25,423 24,330,918 2,171,139 26,527,480 Total net position $ 100,134 $ 24,330,918 $ 2,448,519 $ 26,879,571 154 OPERATING REVENUES Charges for services Total revenues Indian River County, Florida Combining Statement of Revenues, Expenses, and Changes in Fund Net Position Internal Service Funds For the Year Ended September 30, 2012 Fleet Management Self Insurance $ 3,802,280 $ 17,434,016 $ 3,802,280 17,434,016 OPERATING EXPENSES Personal services 444,851 Material, supplies, services and other operating 3,343,965 Depreciation 34,817 1,762, 663 14,721,721 Total operating expenses 3,823,633 16,484,384 Operating income (loss) NONOPERATING REVENUES (EXPENSES) Interest income Gain on disposal of equipment Total nonoperating revenues Income (loss) before transfers Transfers in Change in net position Total net position - beginning Total net position - ending (21,353) 949,632 1,250 91,683 1,250 91,683 (20,103) 1,041,315 35,438 (20,103) 1,076,753 120,237 23,254,165 Geographic Information Systems Totals 327,254 $ 21,563,550 327,254 21,563,550 264,287 77,728 120,390 2,471,801 18,143,414 155,207 462,405 20,770,422 (135,151) 6,363 6,363 (128,788) (128,788) 793,128 98,046 1,250 99,296 892,424 35,438 927,862 2,577,307 25,951,709 $ 100,134 $ 24,330,918 $ 2,448,519 $ 26,879,571 155 Indian River County, Florida Combining Statement of Cash Flows Internal Service Funds For the Year Ended September 30, 2012 CASH FLOWS FROM OPERATING ACTIVITIES Cash received from customers Cash paid to suppliers for goods and services Cash paid to employees for services Net cash provided by (used in) operating activities Fleet Management $ 3,763,437 $ (3,335,745) (459,052) CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES Transfers Proceeds from advances from other funds Net cash provided by noncapital financing activities CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES Proceeds from sale of capital assets Purchase of capital assets Net cash provided by (used in) capital and related financing activities CASH FLOWS FROM INVESTING ACTIVITIES Interest and dividends on investments Net cash provided by investing activities Self Insurance 17,454,663 $ (14,655,076) (1,748,921) (31,360) 1,050,666 35,000 35,000 1,250 (5,122) (3,872) 35,438 35,438 98,497 98,497 Net increase (decrease) in cash and cash equivalents (232) 1,184,601 Geographic Information Systems 327,254 $ (118,449) (262,659) (53,854) (96,641) (96,641) 7,027 7,027 Totals 21,545, 354 (18,109,270) (2,470,632) 965,452 35,438 35,000 70,438 1,250 (101,763) (100,513) 105,524 105,524 (143,468) 1,040,901 Cash and cash equivalents at beginning of year 489 28,628,693 2,297,412 30,926,594 Cash and cash equivalents at end of year $ 257 $ 29,813,294 $ 2,153,944 $ 31,967,495 Classified as: Current assets $ 257 $ 29,813,294 $ 2,153,944 $ 31,967,495 156 Indian River County, Florida Combining Statement of Cash Flows Internal Service Funds For the Year Ended September 30, 2012 Geographic Fleet Self Information Management Insurance Systems Totals RECONCILIATION OF OPERATING INCOME (LOSS) TO NET CASH PROVIDED BY OPERATING ACTIVITIES Operating income (loss) $ (21,353) $ 949,632 $ (135,151) $ 793,128 Adjustments to reconcile operating income (loss) to net cash provided by operating activities: Depreciation 34,817 120,390 155,207 (Increase) Decrease in assets: Accounts receivable (27,519) 23,760 (3,759) Due from other governments (11,324) (3,113) (14,437) Inventories (8,529) - (8,529) Deposits - (134,429) (7,339) (141,768) Increase (Decrease) in liabilities: Accounts payable 16,749 4,074 (33,382) (12,559) Claims payable - 197,000 - 197,000 Accrued compensated absences (14,201) 13,742 1,628 1,169 Total adjustments (10,007) 101,034 81,297 172,324 Net cash provided by (used in) operating activities $ (31,360) $ 1,050,666 $ (53,854) $ 965,452 NONCASH CAPITAL AND RELATED FINANCING ACTIVITIES Change in fair value of investments $ - $ (12,613) $ (926) $ (13,539) 157 158 FIDUCIARY FUND Agency Fund- To account for the assets held solely in a custodial capacity by the County. 159 Indian River County, Florida Combining Statement of Changes in Assets and Liabilities Agency Fund For the Fiscal Year Ended September 30, 2012 ASSETS Cash and cash equivalents Investments Accounts receivable Total assets LIABILITIES Accounts payable Due to other governments Other deposits held in escrow Total liabilities Balance October 1, 2011 Additions Deductions Balance September 30, 2012 $ 12,571,159 $ 348,629,283 $ 349,649,883 $ 11,550,559 77,521 24,909 22,437 79,993 697 2,615 3,312 $ 12,649,377 $ 348,656,807 $ 349,675,632 $ 11,630,552 $ 821,359 $ 52,860,563 $ 53,043,958 $ 637,964 4,939,915 315,657,815 315,483,319 5,114,411 6,888,103 23,384,277 24,394,203 5,878,177 $ 12,649,377 $ 391,902,655 $ 392,921,480 $ 11,630,552 160 Statistical Section This part of the Indian River County Comprehensive Annual Financial Report presents detailed information as a context for understanding what the information in the financial statements, note disclosures and required supplementary information says about the County's overall financial health. Contents Pa2e(s) Financial Trends (Schedules 1 - 5) These schedules contain trend information to help the reader understand how the County's financial performance and well-being have changed over time. Revenue Capacity (Schedules 6 — 9) These schedules contain information to help the reader assess the County's most significant local revenue source, the property tax. Debt Capacity (Schedules 10 — 15) These schedules present information to help the reader assess the affordability of the County's current levels of outstanding debt and the County's ability to issue additional debt in the future. Demographic and Economic Information (Schedules 16 — 17) These schedules offer demographic and economic indicators to help the reader understand the environment within which the County's financial activities take place. Operating Information (Schedules 18 — 21) These schedules contain service and infrastructure data to help the reader understand how the information in the County's financial report relates to the services the County provides and the activities it performs. Additional Bond Disclosures (Schedules 22 — 27) These schedules provide information for required continuing disclosure for the water and sewer, golf course and spring training bonds. Sources: Unless otherwise noted, the information in these schedules is derived from the comprehensive annual financial report for the relevant year. 161 162-172 173-177 178-186 187-188 190-201 202-207 Indian River County, Florida Net Position by Component (Unaudited; Last Ten Fiscal Years (accrual basis of accounting) 2003 2004 2005 2006 Governmental activities Net investment in capital assets $ 227,795,289 $ 242,057,257 $ 264,193,976 $ 278,213,361 Restricted 112,083,712 128,024,220 150,019,583 158,046,966 Unrestricted 20,389,245 22,697,741 60,737,524 121,561,389 Total governmental activities net positior $ 360,268,246 $ 392,779,218 $ 474,951,083 $ 557,821,716 Business -type activities Net investment in capital assets $ 113,354,198 $ 122,280,348 $ 134,402,945 $ 152,168,135 Restricted 42,971,494 57,825,011 81,084,337 89,071,967 Unrestricted 47,079,296 44,084,834 52,553,913 53,751,547 Total business -type activities net positior $ 203,404,988 $ 224,190,193 $ 268,041,195 $ 294,991,649 Primary government Net investment in capital assets $ 341,149,487 $ 364,337,605 $ 398,596,921 $ 430,381,496 Restricted 155,055,206 185,849,231 231,103,920 247,118,933 Unrestricted 67,468,541 66,782,575 113,291,437 175,312,936 Total primary government net positior $ 563,673,234 $ 616,969,411 $ 742,992,278 $ 852,813,365 (A) Completed construction and renovations for beach renourishment, County administration buildings, emergency operations center, five fire stations, County park improvements, and the purchase of environmentally sensitive lands. (B) The County reclassified special revenue funds from unrestricted to restricted net position. 162 Schedule 1 2007 2008 2009 2010 2011 2012 $ 374,501,758 (A) $ 445,541,175 $ 173,236,941 (B) 163,119,085 60,726,026 (B) 55,081,576 $ 608,464,725 $ 663,741,836 $ $ 174,540,682 $ 83,840,471 47,338,783 $ 305,719,936 $ $ 549,042,440 $ 257,077,412 108,064,809 $ 914,184,661 $ 461,709,848 158,306,364 55,914,407 $ 480,243,738 132,928,838 85,810,359 675,930,619 $ 698,982,935 206,069,196 $ 223,273,040 $ 75,814,407 51,021,928 24,624,779 37,122,462 306,508,382 $ 311,417,430 $ 651,610,371 $ 238,933,492 79,706,355 684,982,888 209,328,292 93,036,869 970,250,218 $ 987,348,049 223,375,337 $ 27,898,292 54,592,201 305,865,830 $ $ 703,619,075 160,827,130 140,402,560 $ 1,004,848,765 163 492,300,301 $ 125,452,516 84,860,897 509,076,923 121,189,228 76,523,757 702,613,714 $ 706,789,908 217,876,742 $ 24,230,101 61,041,483 211,631,529 17,941,773 70,286,599 303,148,326 $ 299,859,901 710,177,043 $ 149,682,617 145,902,380 720,708,452 139,131,001 146,810,356 1,005,762,040 $ 1,006,649,809 Indian River County, Florida Changes in Net Position (Unaudited) Last Ten Fiscal Years (accrual basis of accounting) Expenses Governmental activities. General government Public safety Physical environment Transportation Economic environment Human service Cultural/recreation Court related Interest on long-term debt Total governmental activities expenses 2003 2004 2005 2006 20,323,241 $ 46,409,761 791,383 16,264,468 587,227 6,165,603 8,711,251 6,144,728 1,549,957 23,287,533 (C) $ 18,165,441 $ 14,642,124 54,052,726 (C) 54,271,542 58,578,985 1,039,550 2,850,738 8,490,570 (E) 21,335,262 (C) 21,726,741 22,011,006 639,826 696,448 1,077,731 7,664,422 (C) 7,385,726 12,270,899 (F) 9,616,323 (C) 10,775,291 11,546,217 6,221,983 5,704,361 6,014,793 1,313,340 1,246,237 2,315,372 (0) 106,947,619 125,170,965 122, 822,525 13 6,947,697 Business -type activities. Water and sewer 25,015,125 26,907,959 30,260,577 33,387,825 Solid waste 8,589,141 14,103,641 (C) 19,156,896 (C) 11,558,323 Golf course 2,842,907 2,806,115 2,939,321 3,058,307 Other 2,033,754 2,532,617 3,768,301 4,202,588 Total business -type activities expenses 38,480,927 46,350,332 56,125,095 52,207,043 Total primary government expenses $ 145,428,546 $ 171,521,297 $ 178,947,620 $ 189,154,740 Program Revenues Governmental activities. Charges for services: General government $ 6,513,557 $ 7,593,486 $ 8,779,557 $ 10,437,774 Public safety 4,288,357 3,927,664 4,712,594 7,151,354 Physical environment 29,260 92,354 631,456 854,219 Transportation 5,584,999 11,182,015 37,384,003 (D) 16,619,853 Human service 302,998 604,379 821,811 754,916 Cultural/recreation 776,829 813,827 800,555 5,480,612 Covet related 1,458,688 1,449,771 2,294,908 2,466,882 Operating grants and contributions 5,175,499 9,270,478 16,310,024 (C) 13,420,891 Capital grants and contributions 19,908,254 (A) 11,784,511 (C) 6,069,586 13,081,116 Total governmental activities program revenues 44,038,441 46,718,485 77,804,494 70,267,617 Business -type activities. Charges for services: Water and sewer Solid waste. Golf course Other Operating grants and contributions Capital grants and contributions Total business -type activities program revenues Total primary government program revenues 21,210,935 22,984,883 25,579,512 28,029,062 10,187,432 11,160,368 16,874, 618 13,741,864 3,112,087 3,099,287 3,247,815 3,306,424 2,432,420 3,202,380 4,535,869 4,746,668 271,662 5,760,512 8,518,757 1,235,413 19,796,906 (B) 19,138,278 (B) 38,112,182 (B) 26,781,118 (B) 57,011,442 65,345,708 96,868,753 77,840,549 101,049,883 $ 112,064,193 $ 174,673,247 $ 148,108,166 Notes: (A) County received grants for the purchase of environmentally sensitive lands and beach erosion; recorded as capital assets. (B) Contributions for water and sewer services by developers due to significant increase in County population. (C) Increase in rev enue and related expenses due to hurricane Frances and Jeanne in 2004; and hurricane Wilma in 2005. (D) Impact fees increased with building boom. (E) Environmentally sensitive lands purchased with bond proceeds. (F) Significant increase in SHIP programs due to population growth and building boom in 2005. (G) Issued new Limited. G.O. B. debt for $48,600,000. (H) Completed sections of beach renourishment program. (I) Grants received for beach renourishment, environmental sensitive lands, and v arious road projects. (J) Includes adjustment for prior years' public safety expenses. (K) Includes full year impact of increase in personnel, raises, and the depreciation and operating cost of new jail. (L,) Piper incentiv e of $4 million. (M) Increase in operating costs due to maintenance projects. (N) Received $16 million grant reimbursements for physical environment grants including beach restoration and stormwater. (0) Increase due to $5 million contribution towards joint use library and increased depreciation for beach restoration projects. (P) Decrease due to reduced impact fees collections (slowdown in constriction activity). (Q) Received Neighborhood Stabilization Grant of $2.6 million. (R) Contribution of $4.2 milion for Sector 3 beach renourishment from Sebastian Inlet District 164 Schedule 2 2007 2008 2009 2010 2011 2012 15,506,424 $ 42,050,455 (2) 34,998,512 (E) 26,17 3,989 950,024 13,925,599 31,196,252 (14) 6,870,466 3,220,907 (G) 7,416,850 $ 70,973,212 (K) 27,974,837 25,742,974 4,583,763 (L) 12,590,578 9,510,029 7,265,47 1 2,764,803 25,837,007 $ 71,221,082 813,580 23,711,653 661,897 8,453,562 24,559,117 (0) 6,765,203 2,906,802 23,506,576 $ 21,324,680 $ 19,069,181 68,235,492 67,393,943 66,456,674 1,405,690 1,353,074 2,424,109 20,861,672 22,300,819 23,629,799 2,525,988 2,056,453 1,986,091 7,370,995 7,762,962 7,749,253 16,009,122 16,484,242 18,089,432 6,251,773 5,774,032 5,635,245 2,714,422 2,526,114 2,350,241 174,892,628 168,822,517 164,929,903 14 8,881,7 30 146,976,319 147,390, 025 37,518,226 41,354,025 (14) 37,523,097 34,748,276 33,818,640 34,246,967 10,331 431 11,355,697 10,407 437 10,683,984 10,370,47 6 10,659, 004 3,084,837 2,775,497 2,937,141 2,715,607 2,537,665 2,451,603 3,703,658 3,010,668 2,168,894 1,858,420 1,623,862 1,4 87, 515 54,638,152 58,495,887 53,036,569 50,006,287 48,350,643 48,845,089 $ 229,530,780 $ 227,318,404 $ 217,966,472 $ 198,888,017 $ 195,326,962 $ 196,235,114 $ 7,957,770 $ 6,943,354 $ 6,028,321 $ 5,889,678 $ 5,845,567 $ 5,304,385 5,728,644 5,754,082 5,884,118 5,267,209 6,076,085 5,852,093 1,447,553 972,865 636,219 21,006 24,204 20,923 5,618,055 5,478,734 2,157,456 (P) 1,514,132 (P) 2,090,194 2,345,186 545,305 331,856 204,299 295,812 346,689 358,279 2,425,679 1,730,471 1,322,785 1,328,225 1,340,55 0 1,397,660 2,800,680 2,971,093 2,375,430 545,967 501,980 414,356 25,561,608 (1) 15,227,659 11,077,388 15,772,265 (Q) 7,926,832 8,230,411 13,441,915 29,165,641 (11) 15,032,731 7,016,429 (R) 1,937,488 7,053,494 65,527,209 68,575,755 44,718,747 37,650,723 26,089,589 30,976,787 27,541,849 27,876,971 26,957,649 27,738,920 27,842,092 28,361,246 11,946,566 10,758,812 9,713,883 8,972,136 9,221,396 9,582,955 3,374,772 3,313,994 3,279,135 3,148,029 3,163,062 3,216,471 3,250,585 2,726,888 1,572,693 1,612,870 1,588,934 1,735,713 72,828 217,751 1,194,994 9,729,371 10,802,859 3,748,585 1,713,074 1,923,271 2,545,759 55,915,971 55,697,275 46,466,939 43,185,029 43,738,755 45,442,144 $ 121,443,180 $ 124,273,030 $ 91,185,686 $ 80,835,752 $ 69,828,344 $ 76,418,931 165 Indian River County, Florida Changes in Net Position (Unaudited) Last Ten Fiscal Years (accrual basis of accounting) 2003 2004 2005 2006 Net (Expense)IRevenue Governmental activities $ (62,909,178) $ (78,452,480) (A) $ (45,018,031) $ (66,680,080) Business -type activities 18,530,515 (B) 18,995,376 (B) 40,743,658 (B) 25,633,506 Total primary government net expenses $ (44,378,663) $ (59,457,104) $ (4,274,373) $ (41,046,574) General Revenues and Other Changes in Net Position Governmental activities: Property taxes, levied for general purposes $ 60,139,514 $ 67,701,525 $ 71,698,850 $ 82,448,807 (C) Property taxes, levied for debt service 2,595,265 2,427,908 2,480,497 2,465,462 Sales and use taxes 17,162,979 18,825,771 21,892,558 21,855,885 Franchise fees 6,222,326 6,720,166 7,941,020 9,318,394 State shared revenues 10,605,656 11,608,557 14,022,896 13,043,670 Insurance recoveries - - 3,666,960 1,104,116 Interest earnings 2,787,928 2,536,347 4,444,772 12,163,993 Miscellaneous 1,761,754 1,336,789 1,235,708 2,089,540 Transfers (157,870) (193,611) (193,365) 5,060,846 (D) Total governmental activities 101,117,552 110,963,452 127,189,896 149,550,713 Business -type activities: State shared revenues Interest earnings 2,332,013 1,590,203 2,861,308 6,335,240 Miscellaneous 63,367 6,015 52,671 42,554 Transfers 157,870 193,611 193,365 (5,060,846) (D) Total business -type activities 2,553,250 1,789,829 3,107,344 1,316,948 Total primary government Change in Net Position Governmental activities Business -type activities Total primary government change in net position $ 103,670,802 $ 112,753,281 $ 130,297,240 $ 150,867,661 $ 38,208,374 $ 32,510,972 $ 82,171,865 $ 82,870,633 21,083,765 20,785,205 43,851,002 26,950,454 $ 59,292,139 $ 53,296,177 $ 126,022,867 $ 109,821,087 Notes: (A) Hurricanes Frances and Jeanne FEMA reimbursements had not yet been received. (B) Growth in water and sewer services due to expansion of County population. (C) Taxable values increased by $2 billion. (D) Transfers for proportionate share of new County administration building. (E) Gain on sale of capital assets due to the privatization of the County landfill. 166 Schedule 2 2007 2008 2009 2010 2011 2012 $ (109,365,419) $ (100,246,762) $ (120,211,156) $ (111,231,007) $ (120,886,730) $ (116,413,238) 1,277,819 (2,798,612) (6,569,630) (6,821,258) (4,611,888) (3,402,945) $ (108,087,600) $ (103,045,374) $ (126,780,786) $ (118,052,265) $ (125,498,618) $ (119,816,183) $ 92,592,309 $ 92,483,561 $ 87,265,989 $ 78,670,463 $ 69,856,750 $ 64,753,566 7,094,485 7,343,180 7,131,231 5,933,535 5,600,767 5,574,183 20,738,502 20,088,899 19,292,179 19,022,728 19,261,033 20,144,820 9,732,773 9,443,399 9,670,169 9,254,621 8,730,861 8,620,401 12,368,421 11,596,227 11,227,450 17,487,653 17,328,867 17,908,806 16,004,890 10,347,019 5,747,573 2,079,873 1,299,894 668,012 1,583,343 2,170,033 2,018,901 2,061,415 3,082,481 3,079,701 (106,295) 2,051,555 (7,452,905) (25,965) (643,144) (32,957) 160,008,428 155,523,873 134,900,587 134,484,323 124,517,509 120,716,532 - 417,500 - 9,209,517 5,553,239 3,685,805 1,173,512 723,870 600,116 134,656 85,374 7,893 70,181 562,651 (E) 8,400 106,295 (2,051,555) 7,452,905 25,965 643,144 32,957 9,450,468 3,587,058 11,564,103 1,269,658 1,929,665 641,473 $ 169,458,896 $ 159,110,931 $ 146,464,690 $ 135,753,981 $ 126,447,174 $ 121,358,005 $ 50,643,009 $ 55,277,111 $ 14,689,431 $ 23,253,316 $ 3,630,779 $ 4,303,294 10,728,287 788,446 4,994,473 (5,551,600) (2,682,223) (2,761,472) $ 61,371,296 $ 56,065,557 $ 19,683,904 $ 17,701,716 $ 948,556 $ 1,541,822 167 Indian River County, Florida Fund Balances, Governmental Funds (Unaudited) Last Ten Fiscal Years (modified accmal basis of accounting) General Fund Reserved Unreserved Total general fund 2003 2004 2005 2006 20,104,115 20,623,340 30,152,425 45,300,882 $ 20,104,115 $ 20,623,340 $ 30,152,425 $ 45,300,882 All other governmental funds Reserved $ 40,667,031 $ 47,458,489 $ 50,257,972 $ 38,075,117 Unreserved, reported in: Special revenue funds 69,317,385 74,344,120 115,822,479 183,318,603 Total all other governmental funds Total governmental funds General Fund Nonspendable Restricted Committed Assigned Unassigned Total general fund All other governmental funds Nonspendable Restricted Committed Assigned Unassigned $ 109,984,416 $ 121,802,609 $ 166,080,451 $ 221,393,720 $ 130,088,531 $ 142,425,949 $ 196,232,876 $ 266,694,602 Total all other governmental funds Total governmental funds Notes: (A) The County implemented GASB Statement 54 in fiscal year 2010. (B) Reclassified emergency/disaster and budget stabilization reserves from Committed to Unassigned fund balance categories. 168 Schedule 3 2007 2008 2009 2010(A) 2011 2012 $ - $ 8,000,000 $ 8,000,000 $ NIA $ N/A $ N/A 50,321,956 44,874,259 47,616,773 NIA N/A N/A $ 50,321,956 $ 52,874,259 $ 55,616,773 $ N/A $ N/A $ N/A $ 23,047,708 $ 49,667,320 $ 53,252,040 $ N/A $ N/A $ N/A N/A N/A N/A 149,564,925 96,950,614 91,600,421 NIA N/A N/A $ 172,612,633 $ 146,617,934 $ 144,852,461 $ N/A $ N/A $ N/A $ 222,934,589 $ 199,492,193 $ 200,469,234 $ NIA $ N/A $ N/A 169 $ 162760 $ 363,619 $ 311,241 18,290 50,015 1,120,087 21,757,565 21,041,045 2,374,790 (B) 1,415,000 1,660,000 1,808,000 33,160,873 33,694,612 48,722,929 (B) $ 56,514,488 $ 56,809,291 $ 54,337,047 $ 2,316,373 $ 814,858 $ 557,128 13 0,175, 284 125,082,370 116, 3 79,943 4,691,573 4,661,146 1,483,393 9,471,022 10,013,457 11, 288,602 (1,184,722) (354,995) (202,971) $ 145,469,530 $ 140,216,836 $ 129,506,095 $ 201,984,018 $ 197,026,127 $ 183,843,142 Indian River County, Florida Changes in Fund Balances, Governmental Funds (Unaudited) Last Ten Fiscal Years (modified accrual basis of accounting) Revenues Taxes Permits, fees, and special assessments Intergovernmental Charges for services Judgments, fines and forfeits Interest Miscellaneous Total Revenues 2003 2004 2005 2006 86,120,084 $ 95,675,370 $ 104,012,925 $ 116,088,548 5,499,533 11,788,168 38,043,246 26,285,557 35,213,140 26,588,303 35,973,818 38,261,489 13,683,108 14,282,5 87 18,151,546 18,204,600 1,584,737 1,508,786 1,715,875 2,069,593 2,999,915 1,999,574 4,083,164 10,574,489 1064,177 1,791,613 1,398,166 4,597369 147,064,694 153,634,401 203,378,740 216,081,645 Exp enditures Current: General government 18,446,787 19,996,339 20,107,020 21,831,839 Public safety 47,565,048 55,792,130 57,045,359 65,975,870 Physical environment 17,613,489 1,751,551 2,989,117 8,955,262 Transportation 19,442,909 21,928,790 21,285,597 30,610,413 Economic environment 583,850 627,914 713,019 1,054,239 Human service 6,178,917 7,185,411 7,270,391 12,470,222 Culture/recreation 18,378,068 13,179,751 15,062,134 16 380,438 Court related 5,998,260 6,210,614 5,630,734 5,915,727 Debt service: Principal 2,881,492 2,394,142 2,239,663 2,615,659 Interest and fiscal charges 1,639,145 1,333,392 1,255,837 1,790,431 Capital outlay 12,228,005 10,994,900 15,779,577 37,848,475 Total Expenditures 150,955,970 141,394,934 149,378,448 205,448,575 Excess of revenues over (under) expenditures (3,891,276) 12,239,467 54,000,292 10,633,070 Other Financing Sources (Uses) Debt issuance 7,800,000 Payments to escrow agent (7,800,000) Payments from capital leases. - 291,562 Transfers out (157,870) (193,611) (193,365) Transfers in 49,996,735 (236,067) 10,067,988 Total other financing sources (uses) (157,870) 97,951 (193,365) 59,828,656 Net change in fund balances $ (4,049,146) $ 12,337,418 $ 53,806,927 $ 70,461,726 Debt service as apercentage of noncapital expenditures 4.4% 3.1% (A) Early call of remaining General Obligation Bonds, Series 2001 of $3.6 million. 170 3.0% 3.4% Schedule 4 2007 2008 2009 2010 2011 2012 130,158,069 $ 119,915,640 $ 113,689,399 $ 103,626,726 $ 94,718,550 $ 90,472,569 8,397,437 15,888,780 12,433,598 11,322,039 11,189,393 11,486235 54,252,074 49,065,955 34,305,682 37,687,574 30,453,182 29,759,832 18,997,529 18,678,544 16,852,653 14,665,805 15,030,329 14,760,125 2,403,093 2,137,413 1,792,517 852,012 936,995 739,275 15,777,318 10,052,801 5,721,869 2,061,385 1,173,103 613,023 3,495,610 2,449,035 2,489,532 2,383,493 4,175,614 5,237426 233,481,130 218,188,168 187,285,250 172,599,034 157,677,166 153,068,485 24,815,255 25,323,595 22,566,113 20,894,116 19,271,196 20,477,898 72,907,822 73,982,636 74,813,164 71,489,613 70,432,615 67,761,985 34,324,331 28,111,033 910,213 1,131,173 1,371,734 1,751,623 49,503,680 50,231,090 38,111,512 27,497,907 28,432,207 29,058310 968,227 4,579,574 653,547 2,520,339 2,099,698 2,021,184 13,862,463 12,619,575 8,621,760 7,267,406 7,625,369 6,888,883 23,751,173 21,068,267 15,450,688 18,453,642 14,706,194 13,808303 6,649,724 6,940,682 6,620,830 6,214,831 5,983,085 5,860,925 4,870,876 5,069,591 5,120,000 5,315,000 4,270,000 8,060,000 (A) 3,255,767 2,803,585 2,948,758 2,758,138 2,562,374 2,426,083 42,489,997 11,617,867 10,435,212 7,487,068 5,825,287 8,108370 277,399,315 242,347,495 (43,918185) (24159,327) 186,251,797 171,029 233 1,033,453 1,569,801 162,579,759 166,223,564 (4,902,593) (19,155,079) 264,467 126,000 - - - - (19,736,023) (13,254,013) (14,366,145) (17,057,014) (8,918,267) (11,622,984) 19,629,728 13,844,944 14,309,733 17,001,997 8,862,969 11,595,078 158,172 716,931 (56,412) (55,017) (55,298) (27,906) (43,760,013) $ (23,442,396) $ 4.8% 5.0% 977,041 $ 1,514,784 $ (4,957,891) $ (13,182,985) 5.4% 5.6% 5.0% 7.6% 171 Indian River County, Florida Tax Revenues by Source, Governmental Funds (Unaudited) Last Ten Fiscal Years (modified accrual basis of accounting) Schedule 5 Fiscal Year Property (A) Sales & Use Tourist Franchise (B) Gasoline Other Total 2003 $ 62,734,779 $ 11,678,272 $ 1,286,885 $ 6,222,326 $ 3,222,742 $ 975,080 $ 86,120,084 2004 70,129,433 12,850,023 1,443,271 6,720,166 3,497,894 1,034,583 95,675,370 2005 74,179,347 15,582,689 1,675,781 7,941,020 3,573,036 1,061,052 104,012,925 2006 84,914,269 15,736,078 1,517,360 9,318,394 3,526,774 1,075,673 116,088,548 2007 99,686,794 14,549,834 1,449,083 9,732,773 3,482,514 1,257,071 130,158,069 2008 99,826,741 13,714,228 1,584,514 - 3,218,705 1,571,452 119,915,640 2009 94,397,220 13,023,095 1,294,163 - 3,369,962 1,604,959 113,689,399 2010 84,603,998 12,660,518 1,324,953 - 3,498,698 1,538,559 103,626,726 2011 75,457,517 12,942,483 1,487,060 - 3,346,362 1,485,128 94,718,550 2012 70,327,749 13,708,911 1,604,920 - 3,329,183 1,501,806 90,472,569 (A) The County's primary source of revenue is property taxes, amounting to 78 percent of Governmental Funds tax revenues in 2012. Consequently, supplemental required schedules are provided only for property tax revenues. (B) Effective 10/01/07, the State of Florida changed its uniform accounting manual to remove franchise fees from the taxes designation. 172 Indian River County, Florida Assessed Value and Actual Value of Taxable Property (Unaudited) Last Ten Fiscal Years Schedule 6 Real Personal Less: Total Taxable Total Fiscal Property Property Total Tax -Exempt Assessed Direct Year Actual Value Actual Value Actual Value Property Value Tax Rate 2003 $ 11,985,128,952 $ 694,305,280 $ 12,679,434,232 $ 3,178,543,019 $ 9,500,891,213 5.4713 2004 13,547,372,018 693,374,322 14,240,746,340 3,556,717,407 10,684,028,933 5.5181 2005 15,716,463,269 699,716,008 16,416,179,277 4,236,183,618 12,179,995,659 5.1563 2006 19,265,033,998 712,011,582 19,977,045,580 5,734,060,645 14,242,984,935 4.9173 2007 25,458,676,130 755,187,275 26,213,863,405 8,366,701,791 17,847,161,614 4.3250 2008 25,155,652,635 782,529,196 25,938,181,831 7,357,884,893 18,580,296,938 4.1037 2009 24,141,420,963 739,467,578 24,880,888,541 7,431,618,464 17,449,270,077 4.1493 2010 21,272,439,325 761,011,306 22,033,450,631 6,237,291,938 15,796,158,693 4.1666 2011 18,741,543,869 711,180,228 19,452,724,097 5,313,689,267 14,139,034,830 4.1625 2012 17,291,910,945 644,205,795 17,936,116,740 4,731,112,173 13,205,004,567 4.1625 Source: Indian River County Property Appraiser; values are established as of January 1 of the previous calendar year, i.e., January 1, 2011 taxable values apply to the fiscal year ending September 30, 2012. The actual value is based upon market values in the area. Property is assessed at the actual values less various exemptions for homestead, age, disability, widows, religious, charitable, educational and governmental situations. Total taxable values are also presented on Schedules 8 and 11. 173 Indian River County, Florida Property Tax Rates Direct and Overlapping Tax Rates (Unaudited) Last Ten Fiscal Years County direct rate General fund Municipal service Total direct rate (A) County -wide district school board rate Other County -wide rates Emergency Management Services District Land acquisition bond Total other County -wide rates Total County -wide rate (B) 2003 2004 2005 2006 3.8729 1.5984 5.4713 3.8377 1.6804 5.5181 3.6233 1.5330 5.1563 3.5204 1.3969 4.9173 8.7320 8.7100 8.4990 8.2400 2.2750 0.2839 2.5589 2.1871 0.2344 2.4215 1.9836 0.2106 2.1942 1.9911 0.1789 2.1700 16.7622 16.6496 15.8495 15.3273 City rates Fellsmere 5.7500 5.7500 5.7500 5.7500 Indian River Shores 1.4370 1.4730 1.4730 1.4730 Sebastian 4.5904 4.5904 4.5904 3.9325 Orchid 0.9354 0.8954 0.7508 0.6900 Vero Beach 2.1425 2.1425 2.1425 2.2925 Average of cities rates Other special district rates 2.9711 2.9703 2.9413 2.8276 1.9008 2.1548 (A) Per Florida State Statute 200.071, no ad valorem tax millage shall be levied against real property and tangible personal property by counties in excess of 10 mills, except for voted levies. (B) Total County -wide rate is borne by all property owners within the County boundaries. Source: Indian River County Property Appraiser 174 1.8923 1.6082 Schedule 7 2007 2008 2009 2010 2011 2012 3.1914 1.1336 4.3250 3.0202 1.0835 4.1037 3.0689 1.0804 4.1493 3.0892 1.0774 4.1666 3.0892 1.0733 4.1625 3.0892 1.0733 4.1625 7.4430 7.5380 7.0400 7.5960 8.2500 8.2440 1.7639 0.4108 2.1747 1.7201 0.4082 2.1283 13.9427 13.7700 1.7148 0.4220 2.1368 1.7148 0.3879 2.1027 1.7148 0.4087 2.1235 1.7148 0.4364 2.1512 13.3261 13.8653 14.5360 14.5577 5.7500 4.4301 4.4300 4.4300 4.4300 5.2455 1.4730 1.3923 1.3923 1.3923 1.4105 1.4731 3.0519 2.9917 3.3456 3.3456 3.3041 3.3041 0.4525 0.4494 0.4550 0.4550 0.4550 0.4550 2.1425 1.9367 1.9367 1.9367 1.9367 2.0336 2.5740 2.2400 2.3119 2.3119 2.3073 2.5023 1.4795 1.3817 1.5362 1.7515 175 1.7663 1.6856 Indian River County, Florida Principal Property Taxpayers (Unaudited) Year 2012 and Year 2003 Schedule 8 Taxpayer Florida Power & Light Disney Vacation Dev. Inc. Windsor Properties Johns Island Club Inc. BellSouth Telecomm Inc. Adult Community Services Inc. Sebastian Hospital Inc. I.R. Mall Associates Ltd. Fellsmere Joint Venture Health Care REIT Inc The New Piper Aircraft Horizon Outlet Center Ltd. Wal-Mart Stores Total Principal Property Taxpayers Real Property Assessed Valuation Total County Taxable Valuation (from schedule 6) 2012 Real Property Assessed Valuation $ 91,641,112 72,277,441 41,937,736 39,861,626 39,388,979 32,998,71 0 29,529,181 26,761,350 25,7 21,703 23,000,900 $ 423,118,738 $ 13,205,004,567 Source: Indian River County Property Appraiser Percentages of Total Assessed Rank Valuation 1 0.69 2 0.55 3 0.32 4 0.30 5 0.30 6 0.25 7 0.22 8 0.20 9 0.19 10 0.17 176 2003 Real Property Assessed Valuation $ 61,098,500 69,069,073 50,376,579 30,849,571 58,655,192 30,514,130 Percentages of Total Assessed Rank Valuation 2 0.64 1 0.73 4 0.53 7 0.32 3 0.62 8 0.32 47,574,020 5 34,121,169 29,737,070 28,577,908 3.20% $ 440,573,212 $ 9,500,891,213 6 9 10 0.50 0.36 0.31 0.30 4.64% Indian River County, Florida Property Tax Levies And Collections (Unaudited) Last Ten Fiscal Years Schedule 9 Year Percent of Percent of Total Current Current Tax Delinquent Total Total Tax Tax Tax Collections Tax Tax Collections Levy Collections To Tax Levy Collections (1) Collections To Tax Levy 2003 $ 65,289,186 $ 62,668,552 95.99% $ 7,797 $ 62,676,349 96.00% 2004 72,306,331 69,906,761 96.68 176,345 70,083,106 96.93 2005 76,748,078 73,991,702 96.41 111,220 74,102,922 96.55 2006 87,754,823 84,736,835 96.56 34,344 84,771,179 96.60 2007 102,986,045 99,404,127 96.52 61,566 99,465,693 96.58 2008 103,700,766 99,716,496 96.16 48,241 99,764,737 96.20 2009 97,439,623 94,107,423 96.58 273,002 94,380,425 96.86 2010 87,360,868 84,431,741 96.65 171,392 84,603,133 96.84 2011 77,790,733 75,215,452 96.69 290,472 75,505,924 97.06 2012 72,668,518 70,200,922 96.60 133,385 70,334,307 96.79 All taxes are due and payable on November 1 of each year or as soon thereafter as the assessment roll is certified and delivered to the Tax Collector. All unpaid taxes become delinquent on April 1 following the year in which they are assessed. Discounts are allowed for early payment at the rate of 4% in the month of November, 3% in the month of December, 2% in the month of January and 1% in the month of February. The taxes paid in March are without discount. (1) On or prior to June 1 following the tax year, certificates are sold for all delinquent taxes on real property. After the sale, tax certificates bear interest of 18% per year or at any lower rate bid by the buyer. Application for a tax deed on any unredeemed tax certificates may be made by the certificate holder after a period of two years. Unsold certificates are held by the County. Delinquent taxes on personal property bear interest of 18% per year until the tax is satisfied either by seizure and sale of the property or by the seven year statute of limitations. The County does not accrue its portion of the County -held certificates due to the immaterial amount. Source: Indian River County Property Appraiser and Tax Collector provided the above infoiniation; consequently, the reported collections on this schedule will vary from the actual collections as reported on Schedule 5. The Tax Collector does not report the interest earnings on the collections, however, the Board includes those interest earnings as part of the total tax collection. 177 Indian River County, Florida Ratios of Outstanding Debt by Type (Unaudited) Last Ten Fiscal Years Governmental Activities General Obligation Year Bonds (A) 2003 $ 2004 2005 2006 2007 2008 2009 2010 2011 2012 17,725,000 $ 16,080,000 14,385,000 61,255,000 57,160,000 52,770,000 48,210,000 43,480,000 39,815,000 32,385,000 Capital Leases 417,518 434,938 380,275 8,591 Spring Training Facility Bonds 2001 Series Business -type Activities Recreational Revenue Bonds (B) $ 15,990,000 $ 6,735,000 $ 15,515,000 15,025,000 14,520,000 14,000,000 13,455,000 12,895,000 12,310,000 11,705,000 11,075,000 6,045,000 5,595,000 5,135,000 4,660,000 4,175,000 3,685,000 3,175,000 2,655,000 2,120,000 Capital Leases 263,237 193,786 110,025 28,126 Water & Sewer Bonds (C) $ 72,760,000 70,905,000 64,880,000 62,490,000 59,985,000 57,365,000 52,720,000 49,850,000 46,860,000 43,770,000 (A) General Obligation Bonds include Series 2001 and Limited General Obligation Bonds, Series 2006. The remaining balance of the 2001 issue was called early on July 1, 2012. This information is also presented on Schedules 11 and 13. (B) Recreational Revenue Refunding Bonds, Series 2003 (C) Water & Sewer Bonds include Series 1993, Refunding Series 2005, and Series 2009. (D) Information not available. (E) Refer to Schedule 16 for personal income and population information Further information may be found in Note 13. Source for per capita income is University of Florida, Bureau of Economic and Business Research. 178 Schedule 10 Percentage Total of Total Debt Debt Primary to Personal Per Government Income (E) Capita (E) $ 113,627,518 2.33% $ 938 108,979,938 1.86 859 100, 528, 512 1.57 773 143, 593,786 2.05 1,062 135,923,616 1.74 973 127,793,126 1.67 902 117, 510,000 1.54 831 108, 815,000 1.62 788 101,035,000 1.43 728 89,350,000 (D) 644 179 Indian River County, Florida Ratio of Net General Bonded Debt Outstanding to Taxable Value and Net Bonded Debt per Capita (Unaudited) Last Ten Fiscal Years Schedule 11 Fiscal Taxable Year Population (A) Value (A) 2003 121,274 $ 9,500,891,213 2004 126,829 10,684, 028, 933 2005 130,043 12,179,995,659 2006 135,262 14,242,984,935 2007 139,757 17, 847,161, 614 2008 141,667 18,580,296,938 2009 141,475 17, 449, 270, 077 2010 138,028 15,796,158,693 2011 13 8, 694 14,139, 034, 830 2012 138,694 * 13,205,004,567 Gross General Obligation Bonded Debt Debt Service Monies Net Bonded Available (A) Debt Ratio Of Net Bonded Debt To Taxable Value $ 17,725,000 $ 684,016 $ 17,040,984 0.0018 16,080,000 867,776 15,212,224 0.0014 14,385,000 1,106,353 13,278,647 0.0011 61,255,000 1,375,837 59,879,163 0.0042 57,160,000 1,956,189 55,203,811 0.0031 52,770,000 2,530,612 50,239,388 0.0027 48,210,000 2,841,769 45,368,231 0.0026 43,480,000 1,845,314 41,634,686 0.0026 39, 815, 000 1,743,781 38,071,219 0.0027 32,385,000 1,002,540 31,382,460 0.0024 Net Bonded Debt Per Capita 140.5164 119.9428 102.1097 442.6902 394.9985 354.6301 320.6802 301.6394 274.4980 226.2712 (A) Columns are provided as additional information for General Obligation Bonds (G.O.B.), Series 2001 and Limited G.O.B., Series 2006. The remaining balance of the 2001 issue was called early on July 1, 2012. Total taxable values are also presented in Schedule 6. Gross G.O.B. debt is also presented on Schedules 10 and 13. Source of population data is the University of Florida, Bureau of Economic and Business Research. * 2012 population unchanged from 2011 due to data not available at time of printing 180 Indian River County, Florida Computation of Legal Debt Margin (Unaudited) September 30, 2012 Schedule 12 Computation of the Legal Debt Margin is omitted because the Constitution of the State of Florida (F. S. 200.181) and Indian River County set no legal debt limit. 181 Indian River County, Florida Direct and Overlapping Governmental Activities Debt (Unaudited) September 30, 2012 Schedule 13 Governmental Unit Share of Debt Percentage Overlapping Debt repaid with property taxes: Outstanding Applicable Debt Indian River County Limited General Obligation Bonds, Series 2006 Total direct debt of County: $ 33,200,714 100 $ 33,200,714 33,200,714 Indian River County School District General Obligation Bonds, 2002 Refunding 4,750,000 (A) 100 4,750,000 Other debt: Indian River County School District Certificates of Participation Indian River County School District Capital Lease Payable Total overlapping debt: 127,629,571 (A) 100 689,849 (A) 100 127,629,571 689,849 133,069,420 Total direct and overlapping debt: $ 166,270,134 (A) Indian River County School District, as of June 30, 2012 Source: Information on outstanding debt provided by the Indian River County School District Finance Department. Note: Overlapping debt is borne by all property owners within the County boundaries. 182 183 Indian River County, Florida Pledged Revenue Coverage (Unaudited) Water and Sewer Revenue Bonds (Series 1993A, 1996, 2005, 2009) Last Ten Fiscal Years 2003 2004 2005 2006 Uniform Charges Water sales $ 10,108,045 $ 11,037,623 $ 12,146,416 $ 13,336,623 Wastewater sales 8,940,200 9,439,597 10,437,091 11,634,181 Other 1,314,453 1,426,112 1,685,502 1,744,486 Total uniform charges 20,362,698 21,903,332 24,269,009 26,715,290 Septage/Sludge 348,320 278,897 269,575 332,329 Surcharges 243,342 234,746 242,451 244,166 Interest earnings 1,797,260 1,269,838 2,264,132 4,554,419 1989/1990 Special assessments 11,650 1,564 - 60,229 1996 Special assessments 2,752,661 1,539,600 722,922 350,712 Gross revenues 25,515,931 25,227,977 27,768,089 32,257,145 Less: Direct expenses 10,723,548 12,507,398 12,853,872 14,270,414 Net revenues available for debt service $ 14,792,383 $ 12,720,579 $ 14,914,217 $ 17,986,731 Annual debt service Principal $ 1,765,000 $ 1,855,000 $ 2,020,000 $ 2,390,000 Interest 4,021,989 3,936,019 3,525,573 3,157,260 Total debt service payment $ 5,786,989 $ 5,791,019 $ 5,545,573 $ 5,547,260 Debt service coverage 2.56x 2.20x 2.69x 3.24x Note: In accordance with Water and Sewer Revenue Refunding Bonds, Series 2005 bond covenants, there are items included in the debt service coverage calculation other than normal operating revenues. These items include surcharges and collections on special assessments. Expenses specifically excluded: renewal and replacement, depreciation, amortization and interest expense, and loss on disposal of equipment. Note: Water and Sewer debt information can be found in Note 13. 184 Schedule 14 2007 2008 2009 2010 2011 2012 $ 13,529,341 $ 13,435,398 $ 13,001,743 $ 13,570,657 $ 13,565,766 $ 13,621,878 12,003,677 12,128,706 11,954,333 12,375,346 12,203,750 12,515,394 1,386,198 1,460,143 1,285,605 1,430,966 1,639,985 1,727,411 26,919,216 27,024,247 26,241,681 27,376,969 27,409,501 27,864,683 290,955 256,785 294,459 302,187 314,969 373,616 243,919 245,343 244,619 245,011 245,245 246,298 6,576,873 3,650,480 2,110,031 686,776 491,260 315,377 21,138 112 413 438 8,718 268,883 220,754 184,272 151,316 93,513 75,037 34,320,984 16,226,651 31,397,721 29,075,475 28,762,697 28,563,206 28,875,011 17,147,444 17,057, 273 16,0 07,05 5 15, 40 4,503 15,657, 085 $ 18,094,333 $ 14,250,277 $ 12,018,202 $ 12,755,642 $ 13,158,703 $ 13,217,926 $ 2,505,000 $ 2,620,000 $ 2,745,000 $ 2,870,000 $ 2,990,000 $ 3,090,000 3,041,150 2,922,950 2,047,513 2,510,910 2,324,525 2,193,450 $ 5,546,150 $ 5,542,950 $ 4,792,513 $ 5,380,910 $ 5,314,525 $ 5,283,450 3.26x 2.57x 2.51x 2.37x 2.48x 2.50x 185 Indian River County, Florida Pledged Revenue Coverage (Unaudited) Recreational Revenue Refunding Bonds, Series 2003 Last Ten Fiscal Years Schedule 15 Golf Course Operations Less: Net Fiscal Revenues Expenses Available Debt Service Requirements Year Gross (A) Operating (B) Revenues Principal Interest (C) Total Coverage 2003 $ 3,135,478 $ 2,326,179 $ 809,299 $ 375,000 $ 357,103 $ 732,103 1.11 2004 3,105,806 2,474,969 630,837 410,000 202,155 612,155 1.03 2005 3,252,414 2,590,759 661,655 450,000 188,307 638,307 1.04 2006 3,324,127 2,554,640 769,487 460,000 179,291 639,291 1.20 2007 3,396,639 2,670,309 726,330 475,000 170,016 645,016 1.13 2008 3,327,236 2,390,018 937,218 485,000 159,753 644,753 1.45 2009 3,292,170 2,581,254 710,916 490,000 147,516 637,516 1.12 2010 3,157,520 2,393,964 763,556 510,000 133,889 643,889 1.19 2011 3,170,572 2,246,881 923,691 520,000 126,302 646,302 1.43 2012 3,220,559 2,180,964 1,039,595 535,000 109,301 644,301 1.61 (A) Gross revenues include charges for services of the golf course as well as interest income. Insurance recoveries and gain on disposal of equipment are excluded. (B) Operating expenses include all expenses except depreciation, amortization, interest expense, and loss on disposal of equipment. (C) Effective 1/1/11, interest expense includes 3% interest paid on an interfund loan for the purchase of golf carts. Note: Details regarding the County's outstanding debt can be found in the Notes to the Financial Statements. 186 Indian River County, Florida Demographic and Economic Statistics (Unaudited) Last Ten Years Schedule 16 Total Per Capita Personal Personal Unemployment Year Population (A) Income (B) Income (B) Rate (C) 2003 121,274 $ 4,886,086,000 $ 40,757 8.2% 2004 126,829 5,870,597,000 47,286 6.9 2005 130,043 6,386,893,000 50,369 4.7 2006 135,262 7,002,160,000 54,045 4.7 2007 139,757 7,810,408,000 59,419 7.3 2008 141,667 7,669,062,000 57,107 10.1 2009 141,475 7,610,327,000 47,689 15.2 2010 138,028 6,737,286,000 48,726 15.2 2011 138,694 7,080,348,000 50,977 13.7 2012 138,694 * (D) (D) 11.3 Sources: (A) University of Florida, Bureau of Economic and Business Research (B) US Department of Commerce, Bureau of Economic Analysis (C) Florida Agency for Workforce Innovation (D) Information not available * 2012 population unchanged from 2011 due to data not available at time of printing The population and personal income information is used in Schedule 10 for calculation of Debt Per Capita and Percentage of Debt to Personal Income. 187 Indian River County, Florida Principal Employers (Unaudited) Year 2012 and Nine Years Ago Schedule 17 2012 Employer Percentage Number of of Total County Employees Employment School District of Indian River County 2,013 3.55 Indian River County * 1,354 2.39 Indian River Medical Center 1,608 2.83 Publix Supermarkets 1,006 1.77 Piper Aircraft Inc. 700 1.23 Sebastian River Medical Center 569 1.00 John's Island 550 0.97 City of Vero Beach 492 0.87 Visiting Nurse Association 399 0.70 Indian River Estates 350 0.62 Total 9,041 15.93% Total County Employees 56,732 Employer 2003 Percentage Number of of Total County Employees Employment School District of Indian River County 1,940 3.81 Indian River Memorial Hospital 1,451 2.85 Indian River County* 1,372 2.70 The New Piper Aircraft 1,000 1.96 Publix Supermarkets 715 1.40 City of Vero Beach 681 1.34 Wal-Mart 672 1.32 Hale Groves 500 0.98 John's Island 475 0.93 Gracewood Fruit 465 0.91 Total 9,271 18.20% Total County Employees 50,904 Source: Indian River County, Florida annual budgets for individual employers. Florida Agency for Workforce Innovation - Labor Market Statistics, and Bureau of Economic and Business Research at University of Florida for total County employment figures. * This includes the Board of County Commissioners, Clerk of the Circuit Court, Supervisor of Elections, Property Appraiser, Sheriff, and the Tax Collector. 188 189 Indian River County, Florida Building Permits (Unaudited) Last Ten Fiscal Years Indian River County Munici- Fiscal # of New # of Additions & # of New Year Permits Construction Permits Alterations Permits Construction 2003 2,084 $ 386,495,461 1,382 $ 28,817,520 770 $ 128,376,076 2004 3,889 642,032,168 1,935 46,173,846 773 182,843,901 2005 4,770 703,972,409 4,409 57,549,895 1,147 262,135,977 2006 3,760 754,817,641 5,630 43,898,675 826 185,556,022 2007 1,404 280,056,839 3,899 38,290,132 269 107,099,115 2008 857 222,191,316 2,686 30,731,235 206 104,188,514 2009 442 97,694,608 1,725 17,102,312 122 41,039,432 2010 394 82,995,613 2,017 20,723,725 122 30,048,727 2011 416 96,301,948 2,288 26,368,020 112 27,812,429 2012 421 95,703,031 2,591 25,060,272 150 37,380,374 Source: Building Departments - Indian River County (including the City of Vero Beach), Town of Orchid, Town of Indian River Shores, City of Sebastian, and City of Fellsmere. 190 Schedule 18 palities Countywide # of Additions & # of New # of Additions & Permits Alterations Permits Construction Permits Alterations 4,141 $ 37,578,377 2,854 $ 514,871,537 5,523 $ 66,395,897 4,395 47,075,876 4,662 824,876,069 6,330 93,249,722 13,062 119,403,505 5,917 966,108,386 17,471 176,953,400 7,072 65,822,951 4,586 940,373,663 12,702 109,721,626 3,712 53,482,334 1,673 387,155,954 7,611 91,772,466 2,850 40,039,893 1,063 326,379,830 5,536 70,771,128 2,188 34,072,491 564 138,734,040 3,913 51,174,803 2,948 32,545,131 516 113,044,340 4,965 53,268,856 2,973 42,087,897 528 124,114,377 5,261 68,455,917 3,271 43,011,051 571 133,083,405 5,862 68,071,323 191 Indian River County, Florida Operating Indicators by FunctiontProgram (Unaudited) Last Ten Fiscal Years Function/Program 2003 2004 2005 2006 General Government Purchasing 2,563 2,800 2,554 2,734 Purchase orders issued Probation 731 N/A N/A N/A New cases received Public Safety Fire rescue Vehicle rescue response 10,700 11,467 10,602 6,880 Fire code inspections 2,497 2,514 2,215 2,420 Advanced life support calls 6,697 7,222 5,623 10,728 Basic life support calls (transport only) 4,090 4,340 4,606 11,105 Sheriff Arrests 4,181 4,979 5,172 5,211 Violent crimes 290 359 300 652 Non-violent crimes 2,979 2,805 3,930 3,462 Total calls for service 149,202 130,847 122,893 131,489 Building department Construction permits issued 2,084 3,889 4,770 3,760 Estimated value of construction (millions) $ 386.5 $ 642.0 $ 704.0 $ 754.8 Physical Environment Solid waste Waste stream tonnage received Total recycled material (tons) Utilities - water & sewer Number of water customers Number of wastewater customers Water ERUs Wastewater ERUs Water consumption (Average Daily Demand) 277,622 81,006 27,849 17,293 44,420 32,432 7,586,000 349,538 72,568 33,793 19,786 46,254 33,250 7,660,000 (A) Effective September 18, 2006, fire and advanced life support combined into fire rescue. Source: Internal reports prepared by the various departments of Indian River County. 192 529,238 129,869 34,867 20,237 53,032 38,387 7,780,000 380,109 70,919 43,477 25,943 54,070 41,351 8,370,000 Schedule 19 2007 2008 2009 2010 2011 2012 2,753 2,520 2,463 1,970 1,805 1,852 N/A N/A N/A N/A N/A N/A 32,488 (A) 33,845 34,480 34,529 37,550 39,316 2,593 3,527 5,917 2,358 2,239 1,874 7,537 5,862 9,085 9,751 10,935 10,904 3,643 5,759 3,486 3,269 3,077 3,406 5,012 5,620 4,331 5,065 4,464 3,144 338 353 340 310 394 107 6,192 6,383 6,099 5,719 6,058 6,063 126,490 129,389 138,998 154,480 162,944 176,170 1,404 857 442 394 416 421 280.1 $ 222.2 $ 97.7 $ 83.0 $ 96.3 $ 95.7 295,977 239,296 57,247 42,088 41,101 24,666 61,494 45,396 8,790,000 42,000 25,000 61,558 45,785 8,603,000 207,344 40,931 42,972 25,192 63,147 45,319 8,700,000 Continued 193 201,561 45,298 43,723 25,205 64,146 45,427 8,225,000 180,434 205,355 30,424 53,255 44,254 25,465 64,391 45,863 8,198,000 44,571 25,773 64,820 46,107 7,798, 000 Indian River County, Florida Operating Indicators by Function/Program (Unaudited) Last Ten Fiscal Years Function/Program 2003 2004 2005 2006 Transportation Public works Projects under design 8 3 4 5 Projects awarded for construction 2 3 0 4 Construction projects completed 3 5 0 4 County engineering Roads designed 12 12 6 11 Miles of roads designed 6.40 6.50 1.71 6.50 Traffic engineering Site plans reviewed 1,053 1,103 1,274 1,135 Culture/Recreation Library Circulation (County -wide) 1,012,852 1,012,241 1,079,206 1,140,904 Recreation department Total beach park attendance N/A N/A N/A N/A Athletic and event attedance N/A N/A N/A N/A Aquatic centers attendance 101,182 95,711 89,000 93,088 Shooting range Safety/Registration cards issued 4,929 4,616 3,718 6,036 Golf course Rounds played 108,684 106,871 97,465 107,048 Court Related Law library Circulation 21,172 25,627 26,481 26,255 194 Schedule 19 2007 2008 2009 2010 2011 2012 5 6 29 13 26 19 5 5 5 7 7 10 5 5 12 6 8 8 7 8 5 6 4 4 3.50 6.00 5.00 6.00 1.00 8.00 520 332 423 271 218 290 1,188,366 1,250,075 1,314,372 1,403,367 1,362,857 1,277,253 N/A 415,051 437,302 467,434 449,213 420,609 N/A 8,673 14,730 23,750 24,112 23,979 90,503 90,475 89,787 87,107 98,515 97,965 6,784 6,784 9,050 6,471 8,176 8,302 100,539 104,716 24,759 21,107 101,810 96,593 18,512 13,079 195 94,713 96,723 9,168 9,428 Indian River County, Florida Full -Time Equivalent County Government Employees by Function/Program (Unaudited) Last Ten Fiscal Years 2003 2004 2005 2006 General Government Board of County Commissioners 10 10 10 10 County Attorney 6 6 6 6 Administration 3 3 3 3 Financial/Administrative Seivice 23.5 23.5 23.5 24.5 Comprehensive Planning 19 20 23 23 Other 50 46 42 50 Clerk of Circuit Court 104.5 106 108 113 Property Appraiser 47 47 47 49 Supervisor of Elections 10 11.5 11.5 11.5 Tax Collector 35 40 40 40 Public Safety Fire Department 142.5 142.5 144.5 233 Advanced Life Support 82 82 82 - (A) Sheriff - Corrections 121 128 130 200 Sheriff - Court Service 37.5 25.5 25.5 26 Sheriff - Law Enforcement 261 273 276 276 Building Department 23 29 45 49 Other 22 19.5 17.5 11 Physical Environment Solid Waste 54 54 53 53 Utilities - water and sewer 122 125 126 131 Other 8 8 11 13 Transportation Road and Bridges 98 99 100 103 County Engineering 28 29 33 39 Traffic Engineering 20 20 22 24 Real Estate Acquisition 0 0 0 0 Economic Environment 6 6 6 6 Human Services 14 15 15 17 Culture/Recreation Libraries 51 51 51 51 Parks 37 37 39 43 Re cre ation D epartment 54 55 56.5 56 Coastal Engineering 0 0 3 3 Shooting Range 6 6 6 6 Golf Course 26.5 22.5 22 21.5 Court Related Law Library 1 1 1 1 Total 1,522.5 1,541 1,579 1,692.5 Source: Indian River County, Florida annual budgets Method: Using 1.0 for each full-time employee, and 0.50 for each part-time/seasonal employee. Totals include unfilled positions. (A) The fire and advanced life support departments were consolidated on September 18, 2006. 196 Schedule 20 2007 2008 2009 2010 2011 2012 10 11 10 10 10 8.5 7 7 7 6 6 6 3 3 3 2.72 2.35 2.35 25.5 26.5 22.5 21.5 19.85 19.85 23 23 19 16 14.32 15 62 49 44.5 36.5 34 34.75 118 116 99.5 98.5 98 96 50 45 40 40 36 35 12 12 9.5 9.5 8 8.5 40 38 38 38 38 38 232 241 240 246 244 243 197 197 195 198 207 163 29.5 29.5 29.5 29.5 29.5 27.5 301 301 301 301 301 303 50 33 18 17 15 14 12 12 10 9 6.68 6 53 51 49 49 10 9 139 130 128 118 112.5 112.5 14 15 9 9 8 8 106 100 86.5 80 77 77.25 42 42 33 28 27 26 26 24 21 21 20 20 0 3 2 2.28 1 1 6 4.5 3.5 3.5 2.5 2.5 15 15 14.5 13 13 13 52.5 50 45.5 47.5 46.5 42 42 41 39 37 34 28 58.5 57.5 46 37.5 33.3 39.8 3 3 3 2 2 2 6 5.5 5.5 5.5 5 5 21.5 18 16.5 15.5 15.5 15 1,757.5 1,704.5 1,589.5 1,549 1,478 1,422.5 197 Indian River County, Florida Capital Asset Statistics by Function/Program (Unaudited) Last Ten Fiscal Years Function/Program 2003 2004 2005 2006 General Government Buildings and grounds Total square footage maintained 493,270 493,270 493,270 493,270 Number of facilities and sites maintained 42 43 43 43 Vehicles 13 17 18 18 General government Vehicles 23 27 32 36 Planning Vehicles 3 6 6 GIS Vehicles Public Safety Fire department Vehicles 35 41 43 49 Fire stations 11 11 11 11 Advanced life support Vehicles 19 21 25 Z4 E911 Center Vehicles Sheriff Vehicles 227 241 252 274 Building department Vehicles 13 16 27 29 Physical Environment Solid waste Vehicles 28 32 32 33 Telecommunications Vehicles Ag Extension Vehicles 2 2 Utilities - water and sewer Vehicles 62 74 84 90 Water treatment plants 2 2 2 2 Wastewater treatment facilities 7 7 7 7 Water main - miles NIA NIA N/A 737 Force main - miles NIA NIA N/A 188 Gravity sewer lines - miles NIA NIA N/A 250 Transportation Road and bridge Miles maintained (paved & unpaved) 601 609 614 614 Bridges maintained 78 78 78 78 Vehicles 51 59 61 66 Source Internal reports prepared by the various departments of Indian River County. Schedule 21 2007 2008 2009 2010 2011 2012 715,215 715,215 715,215 715,215 715,215 720,215 47 47 47 47 47 48 17 17 15 15 15 15 37 28 27 26 31 31 7 7 7 6 54 53 54 51 51 11 11 11 12 12 21 20 20 17 18 276 295 291 288 298 22 13 9 9 9 34 32 30 30 2 2 2 51 12 18 295 9 86 82 82 81 81 85 2 2 2 2 2 2 6 6 6 6 6 6 769 780 819 845 839 843 217 240 230 226 229 223 259 261 262 269 271 270 617 625 628 636 636 638 78 78 78 78 78 78 68 65 65 64 67 67 Continued 199 Indian River County, Florida Capital Asset Statistics by Function/Program (Unaudited) Last Ten Fiscal Years Function/Program 2003 2004 2005 2006 Transportation - continued: Senior Resource Association Vehicles 9 10 20 22 Engineering Vehicles 8 9 9 11 Traffic engineering Traffic signals operated 114 119 122 125 Beacons operated 41 42 37 42 Vehicles 5 6 6 6 Traffic operations Vehicles 10 10 10 10 Human Services Health department Vehicles 14 14 17 16 Animal Control Vehicles 2 5 5 6 Rental Assistance Vehicles 2 2 3 3 Culture/Recreation Libraries Locations 2 2 2 2 Parks Number of neighborhood parks 12 12 12 12 Number of County parks 37 35 47 47 Acreage 3,869 3,857 3,994 4,004 Picnic shelters maintained 62 59 64 66 Boat ramps maintained 8 8 8 8 Vehicles 16 20 22 23 Recreation Vehicles 4 4 4 5 Shooting range Vehicles 1 1 1 0 Rifle range stations 29 29 29 0 Pistol range stations 35 35 35 35 Golf Course Holes maintained 36 36 36 36 Vehicles 1 2 2 2 200 Schedule 21 2007 2008 2009 2010 2011 2012 25 23 25 32 34 12 17 16 16 16 34 13 132 133 133 137 137 137 42 41 48 48 53 46 3 5 3 1 1 1 16 16 15 16 18 18 16 16 16 15 15 7 7 7 7 7 17 7 2 2 2 2 2 2 2 2 2 3 3 3 12 12 12 12 12 12 47 47 47 47 47 47 4,014 4,014 4,014 4,014 4,014 4,014 69 69 69 69 69 69 8 8 8 8 8 8 25 24 25 24 25 5 5 5 5 5 24 5 1 1 1 1 1 1 29 29 29 29 29 29 35 35 35 35 35 35 36 2 36 36 36 36 36 2 2 2 2 2 201 Indian River County, Florida Department of Utility Services Historical Rate Structure (Unaudited) Last Ten Fiscal Years Schedule 22 Fiscal Years 2003-2012 * WATER RATES Billing charges Base facilities charges (per ERU) $ 1.29 Single-family or commercial 7.76 Multi -family or manufactured home 6.60 Volume charge - per 1,000 gallons (per ERU) 0-3,000 gallons 2.20 3,000-7,000 gallons 2.42 7,001 gallons and over 3.85 Excess volume surcharge - greater than 13,000 gallons per month (per ERU) 7.70 Base facilities charge where capacity is reserved but lines are not yet available (per ERU) Single-family or commercial 3.88 Multi -family or manufactured home 3.30 SEWER RATES Billing charges Base facility charge (per ERU) Single-family or commercial Multi -family or manufactured home Volume charge - per 1,000 gallons Single-family & manufactured home (1,000-12,000) Multi -family & commercial (0-13,000) Multi -family & commercial (>13,000) Base facilities charge where capacity is reserved but lines are not yet available (per ERU) Single-family or commercial Multi -family or manufactured home 1.29 14.58 12.40 *The last change to the County's water and sewer rates occurred on October 1, 1999. 2.86 2.86 4.29 7.29 6.20 Source: Indian River County Utilities Department In addition to the charges shown above, users of the North Beach Water System are subject to a $13 per ERU per month surcharge. 202 Indian River County, Florida Water and Wastewater Customers (Unaudited) Last Ten Fiscal Years Schedule 23 The number of County water and wastewater customers, expressed as the number of equivalent residential units (ERUs), for the years 2003 through 2012 as set forth below: Fiscal Year Water ERUs Wastewater ERUs 2003 44,420 32,432 2004 46,254 3 3, 25 0 2005 53,032 38,387 2006 54,070 41,351 2007 61,494 45,396 2008 61,558 45,785 2009 63,147 45,319 2010 64,146 45,427 2011 64,391 45,863 2012 64,820 46,107 Source: Indian River County Utilities Department 203 Indian River County, Florida Top 10 High Volume Customers of Utility Services (Unaudited) Fiscal Year 2012 Schedule 24 Below is a table depicting the ten highest volume customers of the utility system for the fiscal year ended September 30, 2012: Customer Annual Water Annual Wastewater Volume Volume (x 1,000 gals.) (x 1,000 gals.) 1. Vista Royale 27,601 27,601 2. IRC School Board 25,145 20,364 3. City of Fellsmere (Wastewater Only) 23,372 4. Acts, Inc 23,078 23,078 5. Disney's Vero Beach Resort 21,843 21,843 6. MHC Village Green LLC 20,121 20,121 7. IRC Facilities Management / Jail 15,050 15,050 8. Vista Plantation 11,773 11,773 9. Vista Gardens 11,765 11,765 10. Palms of Vero Beach LTD 11,621 11,621 Source: Indian River County Utilities Department 204 Indian River County, Florida Capacity Charges - Utilities Department (Unaudited) Last Ten Fiscal Years Schedule 25 The County also receives capacity charges in connection with the system. Capacity charges are not pledged as a security for the bonds. While the County may pledge the capacity charges in the future, the County presently has no intention to pledge capacity charges as security for the bonds. Capacity charges for the last ten fiscal years ended September 30 are as follows: Fiscal Year Wastewater Water Capacity Capacity Total Charges Charges Charges 2003 $ 4,182,272 $ 5,448,827 $ 9,631,099 2004 5,464,809 7,559,916 13,024,725 2005 11,036,369 19,109,246 30,145,615 (A) 2006 4,758,320 8,287,244 13,045,564 2007 1,159,803 620,915 1,780,718 2008 699,054 1,088,279 1,787,333 2009 504,658 367,940 872,598 2010 1,025,700 276,551 1,302,251 2011 485,225 462,114 947,339 2012 585,490 755,838 1,341,328 (A) Large increase in capacity charges due to construction boom. 205 Indian River County, Florida Pledged Revenues for Recreational Revenue Refunding Bonds, Series 2003 (Unaudited) Last Ten Fiscal Years Schedule 26 Racetrack 7% of Fiscal and Jai Alai Half -Cent Year Fronton Funds Sales Tax 2003 $ 446,500 $ 490,138 2004 446,500 529,488 2005 446,500 612,279 2006 446,500 614,368 2007 446,500 568,608 2008 446,500 531,138 2009 446,500 490,033 2010 446,500 485,062 2011 446,500 495,257 2012 446,500 518,902 Racetrack and Jai Alai fronton funds and 7% of the Half -Cent Sales Tax are pledged as security for payment on these bonds. This is in addition to the net revenues of the golf course. Refer to pledged revenue coverage ratio on Schedule 15 and County Note 13 for more information. 206 Indian River County, Florida Pledged Revenues for Spring Training Facility Revenue Bonds, Series 2001 (Unaudited) Last Ten Fiscal Years Schedule 27 Year Professional Total Ended Sports State Tourist One Cent Half Cent September 30 Subsidy Tax Collected Tourist Tax (A) Sales Tax (B) 2003 $ 500,004 $ 1,286,885 $ 321,721 $ 7,001,976 2004 500,004 1,443,272 360,818 7,564,109 2005 500,004 1,675,781 418,945 8,746,849 2006 500,004 1,517,360 379,340 8,776,684 2007 500,004 1,449,083 362,271 8,122,976 2008 500,004 1,584,512 396,128 7,587,682 2009 500,004 1,294,163 323,541 7,000,465 2010 500,004 1,324,953 331,238 6,929,458 2011 500,004 1,487,061 363,233 7,075,101 2012 500,004 1,604,919 401,230 7,412,887 (A) A 4th cent was imposed effective February 1, 2001. (B) This amount represents 100% of the half -cent sales tax received. Eighty-six percent of this amount is pledged to the payment of debt service on the Series 2001 bonds. Refer to pledged revenue coverage on County Note 13A. 207 208 f ehmann 5070 North Highway A1A Suite 250 Vero Beach, FL 32963 Ph: 772.234.8484 Fx: 772.234.8488 www.rehmann.com Independent Auditors' Report on Internal Control over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financia( Statements Performed in Accordance with Government Auditing Standards The Honorable Board of County Commissioners Indian River County, Florida We have audited the financial statements of the governmental activities, the business -type activities, each major fund, and the aggregate remaining fund information of Indian River County, Florida (the "County") as of and for the year ended September 30, 2012, and have issued our report thereon dated March 12, 2013. 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 Management of the County is responsible for establishing and maintaining effective internal control over financial reporting. In planning and performing our audit, we considered the County's 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 County's internal control over financial reporting. Accordingly, we do not express an opinion on the effectiveness of the 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 combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the County's financial statements will not be prevented or detected and corrected on a timely basis. Our consideration of the 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 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. CPAs & Consultants Wealth Advisors Corporate Investigators 209 NEXIA INTERNATIONAL VFkehmann The Honorable Board of County Commissioners Indian River County, Florida Page two However, providing an opinion on compliance with those provisions was not an objective of our audit and, accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards. This report is intended solely for the information of the Board of County Commissioners, management, the Auditor General of the State of Florida, and federal and state awarding agencies and is not intended to be and should not be used by anyone other than these specified parties. -e,44,. Vero Beach, Florida March 12, 2013 210 f ehmann Management Letter The Honorable Board of County Commissioners Indian River County, Florida 5070 North Highway A1A Suite 250 Vero Beach, FL 32963 Ph: 772.234.8484 Fx: 772.234.8488 www.rehmann.com We have audited the financial statements of the governmental activities, the business -type activities, each major fund, and the aggregate remaining fund information of Indian River County, Florida (the "County") as of and for the year ended September 30, 2012 and have issued our report thereon dated March 12, 2013. We conducted our audit in accordance with United States generally accepted auditing standards and 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. We have issued our Report on Internal Control Over Financial. Reporting and on Compliance and Other Matters, Report on Compliance with Requirements that Could Have a Direct and Material Effect on Each Major Federal. Program and Major State Project and on Internal Control over Compliance in Accordance with OMB Circular A- 133 and Chapter 10.550, Rules of the Auditor General, and Schedule of Findings and Questioned Costs. Disclosures in those reports and schedule, which are dated March 12, 2013, should be considered in conjunction with this management letter. We have also issued separate management letters dated March 12, 2013 for each County agency not included in this letter, which should also be considered in conjunction with this management letter. Additionally, our audit was conducted in accordance with Chapter 10.550, Rules of the Auditor General, which govern the conduct of local government entity audits performed in the state of Florida. This letter includes the following information, which is not included in the aforementioned auditors' reports or schedules: In accordance with the Rules of the Auditor General (Section 10.554(1)(i)1.), there were no recommendations made in the preceding audit report. As required by the Rules of the Auditor General (Section 10.554(1)(i)2.), the scope of our audit included a review of the provisions of Section 218.415, Florida Statutes, regarding the investment of public funds. In connection with our audit, we determined that the Board of County Commissioners complied with Section 218.415, Florida Statutes. The Rules of the Auditor General (Section 10.554(1)(i)3.) require that we address in the management letter any recommendations to improve financial management. In connection with our audit, we did not make any such recommendations. CPAs & Consultants Wealth Advisors Corporate Investigators 211 NEXIA INTERNATIONAL ftehmann The Honorable Board of County Commissioners Indian River County, Florida Page two The Rules of the Auditor General (Section 10.554(1)(i)4.) require that we address violations of provisions of contracts and grant agreements or abuse that have occurred, or are likely to have occurred, that have an effect on the financial statements that is less than material but more than inconsequential. In connection with our audit, we did not identify any such findings. The Rules of the Auditor General (Section 10.554(1)(i)5.) provide that the auditor may, based on professional judgment, report the following matters that have an inconsequential effect on financial statement amounts, considering both quantitative and qualitative factors: (1) violations of provisions of contracts or grant agreements, fraud, illegal acts or abuse and (2) deficiencies in internal control that are not significant deficiencies. In connection with our audit, we did not identify any such findings. The Rules of the Auditor General (Section 10.554(1)(i)6.) require that the name or official title and legal authority for the primary government and each component unit of the reporting entity be disclosed in this management letter, unless disclosed in the notes to the financial statements. This disclosure has been included in the notes to the financial statements. As required by the Rules of the Auditor General (Section 10.554(1)(i)7.a.), none of the conditions described in Section 218.503(1), Florida Statutes, were met during the fiscal year ended September 30, 2012. As required by the Rules of the Auditor General (Section 10.554(1)(i)7.b.), the annual financial report for the fiscal year September 30, 2012, required to be filed with the Florida Department of Financial Services pursuant to Section 218.32(1)(a) of the Florida Statutes has been completed and is in agreement with the annual financial audit report. As required by the Rules of the Auditor General (Sections 10.554(1)(i)7.c. and 10.556(7)), we applied financial condition assessment procedures relating to Indian River County. It is management's responsibility to monitor the County's financial condition, and our financial condition assessment was based in part on representations made by management and the review of financial information provided by same. Our management letter is intended solely for the information and use of the Legislative Auditing Committee, members of the Florida Senate and the Florida House of Representatives, the Florida Auditor General, federal and other state granting agencies, and applicable management within the entity, and is not intended to be and should not be used by anyone other than these specified parties. Vero Beach, Florida March 12, 2013 212 f ehmann 5070 North Highway A1A Suite 250 Vero Beach, FL 32963 Ph: 772.234.8484 Fx: 772.234.8488 www.rehmann.com Independent Auditors' Report on Compliance with Requirements that Could Have a Direct and Material Effect on Each Major Federal Program and Major State Project and on Internal Control over Compliance in Accordance with OMB Circular A-133 and Chapter 10.550, Rules of the Auditor General The Honorable Board of County Commissioners Indian River County, Florida Compliance We have audited the compliance of Indian River County, Florida (the "County") with the types of compliance requirements described in the OMB Circular A-133 Compliance Supplement and the requirements described in the Florida Department of Financial Services' State Projects Compliance Supplement that could have a direct and material effect on each of its major federal programs and state projects for the year ended September 30, 2012. The County's major federal programs and state projects are identified in the summary of auditors' 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 and state projects is the responsibility of the County's management. Our responsibility is to express an opinion on 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; OMB Circular A-133, Audits of States, Local Governments, and Non -Profit Organizations; and Chapter 10.550, Rules of the Auditor General. Those standards, OMB Circular A-133, and Chapter 10.550 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 or state project 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, Indian River County, Florida complied, in all material respects, with the compliance requirements referred to above that could have a direct and material effect on each of its federal programs and major state projects for the year ended September 30, 2012. Internal Control over Compliance Management of Indian River County, Florida is responsible for establishing and maintaining effective internal control over compliance with requirements of laws, regulations, contracts, and grants applicable to federal programs and state projects. 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 or state project in order to determine our CPAs & Consultants Wealth Advisors Corporate Investigators 213 NEXIA INTERNATIONAL ftehmann Honorable Board of County Commissioners Indian River County, Florida Page two auditing procedures for the purpose of expressing our opinion on compliance and to test and report on internal control over compliance in accordance with OMB Circular A-133 and Chapter 10.550 Rules of the Auditor General, 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. The 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 or state project 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 or state project 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 solely for the information and use of the Board of County Commissioners, management, the Auditor General of the State of Florida, and applicable federal and state agencies, and is not intended to be and should not be used by anyone other than these specified parties. 44.--.4 Vero Beach, Florida March 12, 2013 214 f ehmann 5070 North Highway A1A Suite 250 Vero Beach, FL 32963 Ph: 772.234.8484 Fx: 772.234.8488 www.rehmann.com INDEPENDENT AUDITORS' REPORT ON THE SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS AND STATE PROJECTS The Honorable Board of County Commissioners Indian River County, Florida We have audited the financial statements of the governmental activities, the business -type activities, each major fund, and the aggregate remaining fund information of the Indian River County, Florida (the "County") as of and for the year ended September 30, 2012, which collectively comprise the basic financial statements, and have issued our report thereon dated March 12, 2013. 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 and state projects is presented for purposes of additional analysis as required by OMB Circular A-133, Audits of States, Local Governments, and Non -Profit Organizations, and Chapter 10.550, Rules of the Auditor General, and is not a required part of the basic financial statements. Such information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the financial statements. The information has been 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. This report is intended solely for the information and use of the Board of County Commissioners, management, the Auditor General of the State of Florida, and applicable federal and state agencies, and is not intended to be and should not be used by anyone other than these specified parties. Vero Beach, Florida March 12, 2013 CPAs & Consultants Wealth Advisors Corporate Investigators 215 NEXIA INTERNATIONAL 216 Indian River County, Florida Schedule of Expenditures of Federal Awards and State Projects For the Fiscal Year Ended September 30, 2012 Federal/State Agency CFDA Contract/ Pass-through Entity CSFA Grant Federal Program/State Project No. No. Department of Housing and Urban Development: Direct Programs: Section 8 Housing Choice Vouchers Expenditures 14.871 FL-132-V0-014to017 $ 1,935,108 Shelter Plus Care 14.238 FL29C709001 60,826 Shelter Plus Care 14.238 FL0360C4H091001 75,862 Shelter Plus Care 14.238 FL0360C4H091102 20,158 Shelter Plus Care 14.238 FL0380C4H091000 67,866 Shelter Plus Care 14.238 FL0113CH090800 60,293 Shelter Plus Care 14.238 FL0114CH091003 42,241 Shelter Plus Care 14.238 FL0114CH091104 30,939 Shelter Plus Care 14.238 FL0338CH090900 68,737 Shelter Plus Care 14.238 FL0119CH091003 98,260 Shelter Plus Care 14.238 FL0119CH091104 15,196 Shelter Plus Care 14.238 FL0120CH091003 134,110 Shelter Plus Care 14.238 FL0120CH091104 35,111 Subtotal CFDA - 14.238 709,599 Supportive Housing Program - Homeless Management Information Systems 14.235 FL0116B4H091002 35,262 Homeless Management Information Systems 14.235 FL0116B4H091104 890 Transitional Housing 14.235 FL0115B4H091003 46,709 Transitional Housing 14.235 FLO115B4H091104 23,355 Homeless Management Information Systems 14.235 FL0308B4H091002 25,856 Subtotal CFDA - 14.235 132,072 Comm. Dev. Block Grant - Neighborhood Stabilization Pgm #3 14.228 B -11 -UN -12-0022 CDBG NSP #3 Program Income Expenditures 14.228 Program Income Indirect Programs: Passed through Florida Dept. of Economic Opportunity: Comm. Dev. Block Grant - Neighborhood Revitalization Comm. Dev. Block Grant - Neighborhood Stabilization Program CDBG NSP Program Income Expenditures Subtotal CFDA - 14.228 14.228 14.228 14.228 12DB-OH-10-40-01-N01 1 ODB-4X-10-40- 01-F 13 Program Income 118,411 22,146 9,443 209,726 859,316 1,219,042 Total Department of Housing and Urban Development 3,995,821 Federal Transit Administration: Direct Programs: ARRA - Federal Transit Formula Section 5307 Grant Federal Transit Formula Section 5307 Grant Federal Transit Formula Section 5307 Grant Federal Transit Formula Section 5307 Grant Federal Transit Formula Section 5307 Grant Federal Transit Formula Section 5307 Grant Federal Transit Formula Section 5307 Grant Federal Transit Formula Section 5307 Grant Total Federal Transit Administration 20.507 20.507 20.507 20.507 20.507 20.507 20.507 20.507 217 FL -96-X 018-00 FL -90-X799 FL -90-X792 FL -90-X756 FL -90-X739 FL -90-X717 FL -90-X702 FL -90-X611 Transfers to Subrecipients 1,688,342 1,166,272 57,062 133,332 54,164 51,862 30,227 1,500 3,182,761 Indian River County, Florida Schedule of Expenditures of Federal Awards and State Projects For the Fiscal Year Ended September 30, 2012 Federal/StateAgency CFDA Contract/ Pass-through Entity CSFA Grant Transfers to Federal Program/State Project No. No. Expenditures Subrecipients Department of Transportation: Indirect Programs: Passed through Florida Depm fru ent of Transportation: Indian River Blvd Sidewalk 20.205 APK04 $ 140,947 Indian RiverBlvd/17th Street Improvements 20.205 AQ920 94,984 Old Dixie Highway Sidewalk 20.205 AQ822 1,068,499 Metropolitan Planning Organization 20.205 AA080 345,675 Subtotal CFDA - 20.205 1,650,105 Federal Transit Metropolitan Planning Grant 20.505 AQ212 40,200 Section 5311 Non -Urbanized Public Transit 20.509 APT03 69,067 Safe Routes to School 20.600 AQJ07 43,136 Passed through Florida Dep m uu ent of Environmental Protection: Trans -Florida Rail -Trail Greenway 20.219 T29025 198,686 Total Department of Transportation 2,001,194 Department of Justice: Direct Programs: State Criminal Alien Assistance Program 16.606 2011 -AP -BX -0140 88,050 ARRA - 2009 COPS Hiring 16.710 2009RKWX0223 338,320 2011 Local Solicitation Justice Assistance Grant 16.738 2011 -DJ -BX -3341 25,000 Indirect Programs: Passed through Florida Depa uuent of Law Enforcement: Bryne Formula Grant Program Multi -Agency Drug Enforcement Unit Drug Testing Program Grant Subtotal CFDA - 16.738 16.738 16.738 2012-JAGC-INRI-1-C4-130 2012-JAGC-INRI-2-C4-105 45,025 22,426 92,451 Passed through Office of the Attorney General: Crime Victim Assistance Program 16.575 V11050 39,478 Total Department of Justice 558,299 Elections Assistance Commission: Indirect Programs: Passed through Florida Dept of State Division of Elections: Federal Elections Activities 2008/2009 90.401 N/A 349 Federal Elections Activities 2009/2010 90.401 N/A 1,823 Federal Elections Activities 2010/2011 90.401 N/A 16,013 Federal Elections Activities 2011/2012 90.401 N/A 7,065 Total Elections Assistance Commission -Subtotal CFDA 16.738 25,250 Department of Health and Human Services, Agency for Children and Families, Office of Child Support Enforcement: Indirect Programs: Passed through Florida Department of Revenue: Sheriff Service of Notices Child Support Enforcement -Title IV D Total Office of Child Support Enforcement 93.563 00331 5,544 93.563 CD331 450,994 456,538 Indian River County, Florida Schedule of Expenditures of Federal Awards and State Projects For the Fiscal Year Ended September 30, 2012 Federal/State Agency CFDA Contract/ Pass-through Entity CSFA Grant Federal Program/State Project No. No. Expenditures U.S. Environmental Protection Agency: Indirect Program: Passed through St. Johns River Water Management District: Pollution Control South 66.456 27199 $ 11,349 Total U.S. Environmental Protection Agency: 11,349 U.S. Department of the Interior Fish and Wildlife Service: Direct Program: St Johns River Headwaters Project Total U.S. Department of the Interior Fish and Wildlife Service: Department of Homeland Security: Direct Project: Assistance to Firefighters Grant Indirect Programs: Passed through Division of Emergency Management: Emergency Management Homeland Security Emergency Management Homeland Security Emergency Management Homeland Security Subtotal CFDA - 97.067 Emergency Management Performance Grant 15.623 FL -N171 1,000,000 1,000,000 97.044 EMW-2011-F0-01142 1,103 97.067 97.067 97.067 10 -DS -39-10-40-01-250 11 -DS -9Z-39-10-40-386 12 -CI -24-10-40-01-407 45,100 12,132 1,700 58,932 97.042 12 -FG -R3-10-40-01-098 69,425 Total Department of Homeland Security 129,460 TOTAL EXPENDITURES OF FEDERAL AWARDS: 219 Transfers to Subrecipients $ 8,177,911 $ 3,182,761 Indian River County, Florida Schedule of Expenditures of Federal Awards and State Projects For the Fiscal Year Ended September 30, 2012 Federal/State Agency CFDA Contract/ Pass-through Entity CSFA Grant Transfers to Federal Program/State Project No. No. Expenditures Subrecipients STATE OF FLORIDA Division of Emergency Management: Direct Projects: Hazardous Materials Analysis Grant Emergency Management Programs Emergency Management Preparedness and Assistance Emergency Management Preparedness and Assistance Subtotal CSFA —52.008 52.023 12 -CP -03-10-40-01-196 $ 2,189 52.008 52.008 12 -BG -05-10-40-01-031 13 -BG -06-10-40-01-031 80,963 21,219 102,182 Total Division of Emergency Management 104,371 Florida Housing Finance Corporation: Direct Projects: State Housing Initiatives Partnership Total Florida Housing Finance Corporation Department of State: Division of Library Services: Direct Project: State Aid to Libraries Total Department of State 52.901 N/A 935,650 935,650 45.030 12 -ST -21 113,999 113,999 Department of Transportation: Direct Projects: Transportation Disadvantaged Planning Grant 55.002 AQB41 16,928 Transportation Disadvantaged Planning Grant 55.002 AQP41 2,974 Subtotal CSFA - 55.002 19,902 Small County Outreach Program (SCOP) - 27th Ave Road 55.009 AQL69 33,468 Fl Public Transit Block Grant 55.010 APT70 301,165 FDOT Service Development Grant 55.012 AQGO7 155,517 Transit Corridor Grant 55.013 A0X67 126,887 Transit Corridor Grant 55.013 AP049 166,000 Subtotal CSFA - 55.013 292,887 Intermodal Improvements to Aviation Boulevard 55.014 ANP77 11,977 Total Department of Transportation 814,916 Department of Environmental Protection: Direct Projects: Ambersand Beach Renourishment 37.003 07IR3 55,007 Pollution Control South 37.039 LP31010 7,235 Total Department of Environmental Protection 62,242 220 Indian River County, Florida Schedule of Expenditures of Federal Awards and State Projects For the Fiscal Year Ended September 30, 2012 Federal/State Agency CFDA Contract/ Pass-through Entity CSFA Grant Transfers to Federal Program/State Project No. No. Expenditures Subrecipients STATE OF FLORIDA - Continued Department of Health: Direct Project: County Awards Grant -Emergency Medical Svc 64.005 C0031 $ 16,655 Total Department of Health 16,655 Department of Management Services: Direct Project: E911 State Grant Program E911 State Grant Program Total Department of Management Services Department of Highway Safety and Motor Vehicles: Indirect Program: Passed through St. Johns River Water Management District: Pollution Control South Total Department of Highway Safety and Motor Vehicles Department of Revenue: Direct Project: Facilities for Retained Spring Trailing Franchise Total Department of Revenue 72.002 72.002 S3-10-11-01 S4-11-06-02 335,188 432,268 767,456 76.010 27199 44,446 44,446 73.016 N/A 500,004 500,004 TOTAL EXPENDITURES OF STATE FINANCIAL ASSISTANCE: $ 3,359,739 $ 221 Indian River County, Florida Notes to Schedule of Expenditures of Federal Awards and State Projects For the Fiscal Year Ended September 30, 2012 NOTE 1— SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The accounting policies and presentation of the Single Audit Report of Indian River County, Florida, (the "County") have been designed to conform to generally accepted accounting principles as applicable to governmental units, including the reporting and compliance requirements of the Audits of States, Local Governments, and Non -Profit Organizations and Office of Management and Budget Circular A- 133. A. Reporting Entity The reporting entity consists of Indian River County, the primary government, and each of its component units. The County includes a Schedule of Expenditures of Federal Awards and State Projects in the Compliance Section. B. Basis of Accounting Basis of accounting refers to when revenues and expenditures or expenses are recognized in the accounts and reported in the financial statements. Basis of accounting relates to the timing of the measurements made, regardless of the measurement focus. The Schedule of Expenditures of Federal Awards and State Projects is maintained on a modified accrual basis of accounting for governmental funds and a full accrual basis for proprietary funds, which is explained further in the notes to the financial statements. C. Program Clusters OMB Circular A-133 defines a cluster of programs as a grouping of closely related programs that share common compliance requirements. According to this definition, similar programs deemed to be a cluster of programs are tested accordingly. D. Contingencies Grant revenue amounts received by the County are subject to audit and adjustment by the grantor agencies. Such audits may result in requests for reimbursement by the grantor agency. Any adjustments to grant funding are recorded in the year the adjustment occurs. 222 f ehmann Indian River County, Florida Schedule of Findings and Questioned Costs Year Ended September 30, 2012 Section I - Summary of Auditors' Results Financial Sta temen is Type of auditors' report issued Internal control over financial reporting: Material weakness(es) identified? Significant deficiency(ies) identified not considered to be material weaknesses? Unqualified Yes Yes Noncompliance material to financial statements noted? Yes Federal Awards and State Projects 5070 North Highway A1A Suite 250 Vero Beach, FL 32963 Ph: 772.234.8484 Fx: 772.234.8488 www.rehmann.com X No X None reported X No Internal control over major programs and projects: Material weakness(es) identified? Yes X No Significant deficiency(ies) identified not considered to be material weaknesses? Yes X None reported Type of auditors' report issued on compliance for major federal programs and state projects. Unqualified Any audit findings disclosed that are required to be reported in accordance with Section 510(a) of Circular A-133? Yes X Identification of major federal programs and state projects: CFDA Number 15.623 16.710 ARRA 20. FTC ARRA 93.563 Name of Federal Program or Cluster No DOI North American Wetland Conversation DOJ Public Safety Partnership DOT Federal Transit Cluster DHHS Child Support Enforcement CPAs & Consultants Wealth Advisors Corporate Investigators 223 NEXIA INTERNATIONAL Fkehmann Indian River County, Florida Schedule of Findings and Questioned Costs Page two CSFA Number Name of State Project 52.008 FDCA EM Base Grant 52.901 FDCA SHIP 55.010 FDOT Fl Public Transit Block Grant 72.002 FDMS E911 Grant Dollar threshold used to distinguish between Type A and Type B programs $340,820 (Federal) $300,000 (State) Auditee qualified as low-risk auditee? Section II - Financial Statement Findings There were no financial statement findings. X Yes No Section III - Federal or State Award Findings and Questioned Costs There were no federal or state award findings or questioned costs. Section IV - Prior Year Findings and Questioned Costs There were no prior year findings or questioned costs. JEFFREY R. SMITH Clerk of Circuit Court and Comptroller Finance Department 1 801 27th Street, Building A Vero Beach, Florida 32960 Telephone (772) 226-1945 AFFIDAVIT r*, BEFORE ME, the undersigned authority, personally appeared Jeffrey R. Smith, who being duly sworn, deposes and says on oath that: 1. I am the Chief Financial Officer of Indian River County which is a local governmental entity of the State of Florida; 2. Indian River County adopted Ordinance No. 2005-015 on May 17, 2005 implementing an impact fee. The impact fee was subsequently amended as follows: on March 24, 2009 in Ordinance No. 2009-003, on September 22, 2009 in Ordinance No. 2009-015, and on March 16, 2010 in Ordinance No. 2010-002. The result of these amendments was suspension of five of the eight original impact fees from April 1, 2009 through March 31, 2011. On March 15, 2011 in Ordinance No. 2011-002, the impact fee was amended to suspend three of the eight original impact fees from April 1, 2011 through March 31, 2012. On March 13, 2012, Ordinance No. 2012-003 continued this suspension from April 1, 2012 through March 31, 2014. 3. Indian River County has complied and, as of the date of this Affidavit, remains in compliance with Section 163.31801, Florida Statutes. FURTHER AFFIANT SAYETH NAUGHT. (Ch. STATE OF FLORIDA COUNTY OF INDIAN RIVER ciaT• icer of the Entity) SWORN TO AND SUBSCRIBED before me this 5 day of A" (1\Cd( , 2013. NOTARY PUBLIC Print Name A O k) E . Iiia KD Personally known or produced identification Type of identification produced: My Commission Expires: At4.6 5, SOI 225 NOTARY PLBLIC-STATE OF FLORIDA Ann E. Demko ' - ` Commission #DD908571 Expires: AUG. 05, 2013 BONDED THBG ATLANTIC lc BONDING CO., INC 226 BOARD OF COUNTY COMMISSIONERS 227 228 hmann Independent Auditors' Report The Honorable Board of County of Commissioners Indian River County, Florida 5070 North Highway A1A Suite 250 Vero Beach, FL 32963 Ph: 772.234.8484 Fx: 772.234.8488 www.rehmann.com We have audited the accompanying fund financial statements of each major fund and the aggregate remaining fund information of the Indian River County, Florida Board of County of Commissioners (the "Board") as of and for the year ended September 30, 2012, which collectively comprise the Board's fund financial statements as listed in the table of contents. These financial statements are the responsibility of the Board of County of Commissioners' management. Our responsibility is to express an opinion on the 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 presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion. As described in Note 1, the fund financial statements present only the funds of the Board of County of Commissioners and do not purport to, and do not, present fairly the financial position of Indian River County as of September 30, 2012, the changes in its financial position, or, where applicable, its cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America. In our opinion, the fund financial statements referred to previously present fairly, in all material respects, the financial position of the funds of the Board of County of Commissioners as of September 30, 2012, and the changes in financial position thereof for the year then ended in conformity with accounting principles generally accepted in the United States of America. In accordance with Government Auditing Standards, we have also issued a report dated March 12, 2013 on our consideration of the Board's internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be considered in assessing the results of our audit. This report is intended solely for the information and use of management, the Board of County of Commissioners, Indian River County, the Florida Auditor General, and applicable federal and state agencies, and is not intended to be and should not be used by anyone other than these specified parties. Vero Beach, Florida March 12, 2013 CPAs & Consultants Wealth Advisors Corporate Investigators 229 NEXIA INTERNATIONAL Indian River County, Florida Board of County Commissioners Balance Sheet Governmental Funds September 30, 2012 Gener al Secondary Impact Roads Fees Construction ASSETS Cash and cash equivalents $ 49,078,178 $ 25,056,533 $ 12,569,189 Accounts receivable 459,653 Special assessments receivable - Due from other funds 498,704 Due from other governments 4,783,024 62,718 288,980 Inventories 46,893 Prepaid expenses 45,901 Other assets held for resale - Advances to other funds 188,416 255,000 Total assets $ 55,100,769 $ 25,119,251 $ 13,113,169 LIABILITIES Accounts payable Retainage payable Due to other funds Due to other governments Unearned revenues Other deposits Total liabilities DEFERRED INFLOWS OF RESOURCES Unavailable revenue - special assessments Total deferred inflows of resources 725,776 $ 1,569,517 $ 438 398,820 9,473 22,828 141,047 29,211 905,945 409,289 30,634 1,991,165 439,923 FUND BALANCES Nonspendable: Inventories 46,893 Prepaid items 45,901 Advances to other funds 188,416 255,000 Restricted for: Transportation/road improvements 13,817,620 12,418,246 Court -related costs and improvements Housing assistance Law enforcement/public safety 1,325,474 Fire/emergency services 1,618,259 Tourism -related activites Beach renourishment Boating related projects Library services 345,201 Land acquisition Stormwater, street lighting, and other special assessments Debt service Capital projects Sports Village repairs/improvements Solid waste projects 25,802 Parks/recreational projects 1,000,000 4,437,723 Other purposes 1,558,007 Committed to: Economic incentives 2,343,213 Environmental conservation/preservation - Law enforcement/public safety 4,244 Other purposes 27,333 Assigned to: Subsequent year's budget appropriation of fund balance 1,808,000 Transportation/road improvements - Unassigned 48,730,824 Total fund balances $ 54,194,824 $ 23,128,086 $ 12,673,246 Total liabilities, deferred inflows and fund balances $ 55,100,769 $ 25,119,251 $ 13,113,169 The accompanying notes are an integral part of the financial statements. 230 Tr ansportation 8,738,192 $ 310,506 232,096 9,280,794 $ Emergency Optional Other Total Services Sales Governmental Governmental District Tax Funds Funds 11,844,418 $ 38,776,874 $ 253,321 12,656,159 12,097,739 $ 51,433,033 $ 226,686 $ 171,827 $ 6,620 17,736,580 $ 163,799,964 5,184 464,837 310,506 498,704 329,467 18,605,765 46,893 290,366 336,267 658,000 658,000 443,416 19,019,597 $ 185,164,352 614,954 $ 392,667 $ 4,110,716 335,285 27,787 792,964 219,500 219,500 32,301 147,667 55,664 84,875 226,686 178,447 950,239 695,618 5,388,023 310,506 310,506 310,506 310,506 8,743,602 9,374,292 2,545,000 50,482,794 46,893 290,366 336,267 443,416 26,235,866 1,156,268 1,156,268 1,597,356 1,597,356 1,407,405 2,732,879 10,992,551 381,152 381,152 6,093,395 6,093,395 1,084,470 1,084,470 144,490 489,691 258,095 258,095 1,738,510 1,738,510 2,477,447 2,477,447 50,482,794 553,204 553,204 25,802 5,437,723 286,223 1,844,230 2,343,213 1,058,569 1,058,569 4,244 27,333 (202,971) 4,353,000 8,743,602 48,527,853 $ 8,743,602 $ 11,919,292 $ 50,482,794 $ 18,323,979 $ 179,465,823 $ 9,280,794 $ 12,097,739 $ 51,433,033 $ 19,019,597 $ 185,164,352 231 Indian River County, Florida Board of County Commissioners Statement of Revenues, Expenditures, and Changes in Fund Balances Governmental Funds For the Year Ended September 30, 2012 REVENUES Taxes Permits, fees and special assessments Intergovernmental Charges for services Judgments, fines and forfeits Interest Miscellaneous Total revenues EXPENDITURES Current: General government Public safety Physical environment Transportation Economic environment Human services Culture/recreation Court related Debt service: Principal Interest and other fiscal charges Capital projects Total expenditures General Secondary Impact Roads Fees Construction 48,402,789 $ - $ 3,329,183 8,771,35' 1 2,267,920 44,705 13,231,323 43,731 991,722 5,372,003 6,340 324,186 215,413 72,788 39,860 2,391,809 484,908 23,916 78,708,874 8,838,897 4,305,345 257,820 3,305,565 362,868 3,154,028 8,054,600 193,053 28, 472,176 Excess of revenues over (under) expenditures 50,236,698 OTHER FINANCING SOURCES (USES) Transfers in Transfers out Transfers to constitutional officers Total other financing sources (uses) 7,532 (10,696,718) (42,079,833) 2,869,347 4,435,726 272,699 472,131 9,068,091 4,955,169 2,326,872 12,139, 793 4,955,169 (9,270,446) (519,443) (100,000) (52,769,019) (100,000) Net change in fund balances (2,532,321) (9,370,446) (519,443) Fund balances at beginning of year 56,727,145 32,498,532 13,192,689 Fund balances at end of year $ 54,194,824 $ 23,128,086 $ 12,673,246 The accompanying notes are an integral part of the financial statements. 232 $ Transportation - $ 106,427 2,723,247 118,731 35,865 1,151,450 Emergency Optional Other Total Services Sales Governmental Governmental District Tax Funds Funds 17,848,785 $ 95,560 4,779,183 7,000 55,920 140,939 13,708,911 $ 22,353 261,342 111,762 223,465 7,182,901 $ 273,479 9,026,468 845,132 72,893 66,001 787,174 90,472,569 11,486,235 26,373,393 11,121,389 404,079 597,609 5,203,661 4,135,720 22,927,387 14,327,833 18,254,048 145,658,935 273,897 395,508 11,520,797 12,190,202 (8,054,482) 7,499,582 24,473,608 8,108,370 24,473,608 8,108,370 (1,546,221) 6,219,463 (379,401) 7,499,582 (379,401) (554,900) (1,925,622) 6,219,463 2,228,121 11,613,614 1,969,890 31,220,974 1,098,295 1,751,623 208,688 29,058,310 1,658,316 2,021,184 3,734,855 6,888,883 3,426,831 13,808,303 474,764 667,817 8,060,000 8,060,000 2,426,083 2,426,083 8,108,370 25,285,843 115,625,161 (7,031,795) 30,033,774 3,161,698 10,668,812 (10,696,718) (444,434) (43,003,668) 2,717,264 (43,031,574) (4,314,531) (12,997,800) 9,298,502 13,844,914 44,263,331 22,638,510 192,463,623 $ 8,743,602 $ 11,919,292 $ 50,482,794 $ 18,323,979 $ 179,465,823 233 Indian River County, Florida Board of County Commissioners Statement of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual General Fund For the Year Ended September 30, 2012 Variance with Final Budget Budgeted Amounts Actual Positive Original Final Amounts (Negative) REVENUES Taxes $ 47,634,737 $ 47,634,736 $ 48,402,789 $ 768,053 Permits and fees 8,530,525 8,530,525 8,771,351 240,826 Intergovernmental 9,897,915 12,799,538 13,231,323 431,785 Charges for services 5,147,534 5,239,006 5,372,003 132,997 Judgments, fines and forfeits 303,525 303,525 324,186 20,661 Interest 258,875 258,875 215,413 (43,462) Miscellaneous 449,113 572,019 2,391,809 1,819,790 Total revenues 72,222,224 75,338,224 78,708,874 3,370,650 EXPENDITURES Current: General government 9,211,574 9,514,363 8,838,897 675,466 Public safety 4,249,605 4,449,655 4,305,345 144,310 Physical environment 255,043 266,143 257,820 8,323 Transportation 845,286 4,467,615 3,305,565 1,162,050 Economic environment 349,264 444,074 362,868 81,206 Human services 3,178,533 3,572,249 3,154,028 418,221 Culture/recreation 8,177,728 8,485,377 8,054,600 430,777 Court related 229,285 229,491 193,053 36,438 Total expenditures 26,496,318 31,428,967 28,472,176 2,956,791 Excess of revenues over expenditures 45,725,906 43,909,257 50,236,698 6,327,441 OTFIER FINANCING SOURCES (USES) Transfers in - 7,600 7,532 (68) Transfers out (7,646,718) (10,696,718) (10,696,718) - Transfers to constitutional officers (42,181,270) (42,392,002) (42,079,833) 31 2,1 69 Total other financing uses (49,827,988) (53,081,120) (52,769,019) 312,101 Net change in fund balances (4,102,082) (9,171,863) (2,532,321) $ 6,639,542 Fund balances at beginning of year 4,102,082 9,171,863 56,727,145 Fund balances at end of year $ $ $ 54,194,824 The accompanying notes are an integral part of the financial statements. 234 Indian River County, Florida Board of County Commissioners Statement of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual Impact Fees Fund For the Year Ended September 30, 2012 REVENUES Permits, fees and special assessments Intergovernmental Interest Miscellaneous Total revenues EXPENDITURES Current: General government Public safety Physical environment Transportation Culture/re creation Total expenditures Excess of revenues over (under) expenditures OTHER FINANCING USES Transfers out Total other financing uses Net change in fund balances Fund balances at beginning of year Fund balances at end of year Budgeted Amounts Original Final $ 1,363,250 $ 114,000 1,477, 250 277,891 90,000 25,000 7,435,837 2,050,000 9,878,728 1,363,250 $ 114,000 1,477, 250 480,142 3,218,460 25,000 17,419,285 8,052,554 29,195, 441 (8,401,478) (27,718,191) (100,000) (100,000) (8,401,478) (27,818,191) Actual Amounts 2,267,920 $ 43,731 72,788 484,908 Variance with Final Budget Positive (Negative) 904,670 43,731 (41, 212) 484,908 2,869,347 1,392, 097 272,699 472,131 9,068,091 2,326,872 207,443 2,746,329 25,000 8,351,194 5,725,682 12,139,793 17,055,648 (9,270,446) 18,447,745 (100,000) (100,000) (9,370,446) $ 18,447,745 8,401,478 27,818,191 $ - $ 32,498,532 - $ 23,128,086 The accompanying notes are an integral part of the financial statements. 235 Indian River County, Florida Board of County Commissioners Statement of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual Secondary Roads Construction Fund For the Year Ended September 30, 2012 Variance with Final Budget Budgeted Amounts Actual Positive Original Final Amounts (Negative) REVENUES Taxes $ 3,220,500 $ 3,220,500 $ 3,329,183 $ 108,683 Permits, fees and special assessments - - 44,705 44,705 Intergovernmental - 3,697,186 991,722 (2,705,464) Charges for services - - 6,340 6,340 Interest 52,250 52,250 39,860 (12,390) Miscellaneous 23,750 23,750 23,916 166 Total revenues 3,296,500 6,993,686 4,435,726 (2,557,960) EXPENDITURES Current: Transportation 11,026,726 16,806,158 Total expenditures 11,026,726 16,806,158 4,955,169 11, 850,989 4,955,169 11,850,989 Net change in fund balances (7,730,226) (9,812,472) (519,443) $ 9,293,029 Fund balances at beginning of year 7,730,226 9,812,472 13,192,689 Fund balances at end of year $ - $ - $ 12,673,246 The accompanying notes are an integral part of the financial statements. 236 Indian River County, Florida Board of County Commissioners Statement of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual Transportation Fund For the Year Ended September 30, 2012 REVENUES Permits, fees and special assessments Intergovernmental Charges for services Interest Miscellaneous Total revenues Budgeted Amounts Original Final Actual Amounts Variance with Final Budget Positive (Negative) $ 118,750 $ 118,750 $ 106,427 $ (12,323) 2,492,800 2,500,263 2,723,247 222,984 87,875 87,875 118,731 30,856 49,400 49,400 35,865 (13,535) 792,750 793,793 1,151,450 357,657 3,541,575 3,550,081 4,135,720 585,639 EXPENDITURES Current: General government 285,958 Physical environment 544,058 Transportation 11,461,141 Total expenditures 12,291,157 Excess of revenues under expenditures (8,749,582) OTHER FINANCING SOURCES Transfers in Total other financing sources Net change in fund balances Fund balances at beginning of year Fund balances at end of year 286,656 647,434 12,459,867 13,393,957 (9,843,876) 7,499,582 7,499,582 7,499,582 7,499,582 (1,250,000) (2,344,294) 273,897 395,508 11,520,797 12,190, 202 12,759 251,926 939,070 1,203,755 (8,054,482) 1,789,394 7,499,582 7,499,582 (554,900) $ 1,789,394 1,250,000 2,344,294 $ - $ 9,298,502 - $ 8,743,602 The accompanying notes are an integral part of the financial statements. 237 Indian River County, Florida Board of County Commissioners Statement of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual Emergency Services District Fund For the Year Ended September 30, 2012 Variance with Final Budget Budgeted Amounts Actual Positive Original Final Amounts (Negative) REVENUES Taxes $ 17,580,683 $ 17,580,683 $ 17,848,785 $ 268,102 Intergovernmental 33,250 105,627 95,560 (10,067) Charges for services 4,186,175 4,186,175 4,779,183 593,008 Judgments, fines and forfeits 1,900 1,900 7,000 5,100 Interest 90,250 90,250 55,920 (34,330) Miscellaneous 14,527 14,527 140,939 126,412 Total revenues 21,906,785 21,979,162 22,927,387 948,225 EXPENDITURES Current: Public safety Total expenditures Excess of revenues over (under) expenditures OTHER FINANCING USES Transfers to constitutional officers Total other financing uses Net change in fund balances Fund balances at beginning of year Fund balances at end of year 24,659,507 25,896,332 24,473,608 1,422,724 24,659,507 25,896,332 24,473,608 1,422,724 (2,752,722) (3,917,170) (1,546,221) 2,370,949 (451,068) (451,068) (379,401) 71,667 (451,068) (451,068) (379,401) 71,667 (3,203,790) (4,368,238) (1,925,622) $ 2,442,616 3,203,790 4,368,238 13,844,914 - $ - $ 11,919,292 The accompanying notes are an integral part of the financial statements. 238 Indian River County, Florida Board of County Commissioners Statement of Net Position Proprietary Funds September 30, 2012 Enterprise Funds Solid Waste Disposal Golf County County Internal District Course Utilities Building Total Service Funds ASSETS Current assets: Cash and cash equivalents $ 14,759,997 $ 183,390 $ 38,463,042 $ 4,235,328 $ 57,641,757 $ 31,967,495 Accounts receivable - net 113,820 2,808,184 2,922,004 1,568,335 Due from other governments 98,965 11,100 64,457 174,522 126,964 Interest receivable 9,608 438 525,988 2,105 538,139 15,914 Inventories 56,673 893,806 950,479 218,196 Prepaid items 211,858 211,858 1,177,438 Current restricted assets: Cash and cash equivalents 13,869,807 470,681 27,852,242 42,192,730 Total current assets 28,852,197 722,282 70,819,577 4,237,433 104,631,489 35,074,342 Non-current assets: Capital assets- non -depreciable 18,755,620 786,611 9,709,991 29,252,222 Capital assets -depreciable 21,836,756 8,314,248 404,979,117 456,109 435,586,230 1,119,934 Accumulated depreciation (8,710,425) (1,811,236) (196,570,779) (425,153) (207,517,593) (767,843) Non-current restricted assets: Special assessments receivable 1,007,420 1,007,420 Impact fees receivable 739,785 739,785 Liens receivable 2,819,565 2,819,565 Totalnon-currentassets 31,881,951 7,289,623 222,685,099 30,956 261,887,629 352,091 Total assets 60,734,148 8,011,905 293,504,676 4,268,389 366,519,118 35,426,433 DEFERRED OUTFLOWS OF RESOURCES Deferred amounts on refundings Total deferred outflows of resources 107,215 2,768,024 2,875,239 107,215 2,768,024 2,875,239 LIABILITIES Current liabilities (payable from current assets): Accounts payable 1,973,276 139,328 660,621 19,963 2,793,188 202,892 Retainage payable 216,211 4,987 20,818 242,016 - Claims payable - 2,197,855 Due to other funds 54,204 54,204 225,000 Due to other governments 7,771 2,833,946 14,546 2,856,263 Unearned revenues 29,652 - - 29,652 Other deposits 1,000 1,000 Pollution remediation costs payable - 2,510 2,510 Accrued compensated absences 36,275 36,579 492,621 79,470 644,945 33,005 Total eurrent liabilities (payable from current assets) 2,225,762 273,521 4,010,516 113,979 6,623,778 2,658,752 Current liabilities (payable from re stricted assets): Accounts payable 59,013 59,013 Retainage payable 35,364 35,364 Accrued interest payable 6,931 173,413 180,344 Bonds payable 555,000 3,205,000 3,760,000 Customer deposits 126,626 - 2,769,128 2,895,754 Total current liabilities (payable from restricted assets) 126,626 561,931 6,241,918 6,930,475 Total current liabilities 2,352,388 835,452 10,252,434 113,979 13,554,253 2,658,752 Non-current liabilities: Accrued compensated absences 5,998 6,456 180,217 19,521 212,192 11,965 Advance from other funds 443,416 443,416 - Claims payable - - 5,876,145 Pollution remediation costs payable 6,290 6,290 Closure and maintenance costs payable 10,513,736 - 10,513,736 Bonds payable - net of discount and premium - 1,546,871 43,257,698 44,804,569 Total non-currentliabilities 10,519,734 1,996,743 43,444,205 19,521 55,980,203 5,888,110 Total liabilities 12,872,122 2,832,195 53,696,639 133,500 69,534,456 8,546,862 NET POSITION Net investment in capital assets 31,881,951 5,294,967 174,423,655 30,956 211,631,529 352,091 Restricted for: Capital projects 17,941,773 17,941,773 Unrestricted 15,980,075 (8,042) 50,210,633 4,103,933 70,286,599 26,527,480 Total net position $ 47,862,026 $ 5,286,925 $ 242,576,061 $ 4,134,889 $ 299,859,901 $ 26,879,571 The accompanying notes are an integral part of the financial statements. 239 Indian River County, Florida Board of County Commissioners Statement of Revenues, Expenses, and Changes in Fund Net Position Proprietary Funds For the Year Ended September 30, 2012 Enterprise Funds Solid Waste Disposal Golf District Course OPERATING REVENUES Charges for services $ 9,582,955 $ Charges for services pledged as security for revenue bonds 3,216,471 Total operating revenues 9,582,955 3,216,471 OPERATING EXPENSES Personal services 533,291 537,390 Material, supplies, services and other operating 9,283,395 1,643,574 Depreciation 842,318 129,906 Total operating expenses 10,659,004 2,310,870 Operating income (loss) (1,076,049) 905,601 NONOPERATING REVENUES (EXPENSES) Interest income 268,633 Interest income pledged as security for revenue bonds - 4,088 Gain on disposal of equipment - 625 Interest expense (109,301) Bond amortization expense (31,432) Loss on disposal of equipment - Total nonoperating revenues (expenses) 268,633 (136,020) Income (loss) before transfers and capital contributions Capital contributions Capital grants Transfers - (7,532) Change in net position (807,416) 762,049 (807,416) 769,581 Total net position - beginning, as restated (Note 19B) 48,669,442 4,524,876 Total net position - ending $ 47,862,026 $ 5,286,925 The accompanying notes are an integral part of the financial statements. 240 County County Utilities Building 28,361,246 Total Internal Service Funds $ 1,735,713 $ 11,318,668 $ 21,563,550 28,361,246 1,735,713 31,577,717 42,896,385 21,563,550 7,315,133 1,038,946 9,424,760 2,471,801 10,059,161 445,023 21,431,153 18,143,414 14,414, 302 3,546 15,390, 072 155,207 31,788,596 1,487,515 46,245,985 20,770,422 (3,427,350) 248,198 (3,349, 600) 793,128 12,018 280,651 98,046 315,377 - 319,465 7,775 8,400 (2,184, 076) (2,293,377) (25,828) (57,260) (248,467) - (248,467) 1,250 (2,135,219) 12,018 (1,990,588) 99,296 (5,562,569) 260,216 (5,340,188) 2,513,774 - 2,513,774 72,474 - 72,474 - - (7,532) (2,976,321) 892,424 35,438 260,216 (2,761,472) 927,862 245,552,382 3,874,673 302,621,373 25,951,709 $ 242,576,061 $ 4,134,889 $ 299,859,901 $ 26,879,571 Indian River County, Florida Board of County Commissioners Statement of Cash Flows Proprietary Funds For the Year Ended September 30, 2012 Enterprise Funds Solid Waste Disposal Golf District Course CASH FLOWS FROM OPERATING ACTIVITIES Cash received from customers $ 9,574,854 $ 3,217,549 Cash paid to suppliers for goods and services (7,804,212) (1,566,655) Cashpaidto employees for services (530,952) (559,077) Net cash provided by (used in) operating activities 1,239,690 1,091,817 CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES Transfers in Transfers out Proceeds from advances from other funds Payments on advances from other funds Net cash provided by (used in) noncapital financing activities (7,532) (307,604) (315,136) CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES Principal payments - bonds/notes - (535,000) Interest paid on long-term debt - (111,081) Proceeds from sales of capital assets 501 625 Purchase of capital assets (2,648,473) (84,625) Bond paying agent and arbitrage fees Capital grants and contributions Net cash provided by (used in) capital and related financing activities (2,647,972) (730,081) CASH FLOWS FROM INVESTING ACTIVITIES Interest and dividends on investments 274,658 4,224 Net cash provided by investing activities 274,658 4,224 Net increase (decrease) in cash and cash equivalents Cash and cash equivalents at beginning of year (1,133,624) 50,824 29,763,428 603,247 Cash and cash equivalents at end of year $ 28,629,804 $ 654,071 Classified as: Current assets $ 14,759,997 $ 183,390 Restricted assets 13,869,807 470,681 Totals $ 28,629,804 $ 654,071 The accompanying notes are an integral part of the financial statements. 242 County County Utilities Building Total Internal Service Funds $ 28,212,318 $ 1,736,088 $ 42,740,809 $ 21,545,354 (9,469,003) (428,657) (19,268,527) (18,109,270) (7,263,059) (1,035,613) (9,388,701) (2,470,632) 11,480,256 271,818 14,083,581 965,452 (3,090,000) (2,193,450) 7,775 (2,773,381) (1,620) 1,626, 811 (29,465) 35,438 (7,532) - (307,604) 35,000 (315,136) 70,438 (3,625,000) - (2,304,531) - 8,901 1,250 (5,535,944) (101,763) (1,620) 1,626,811 (6,423,865) (29,465) (9,831,383) (100,513) 325,697 12,925 325,697 12,925 5,382,088 255,278 617,504 105,524 617,504 105,524 4,554,566 1,040,901 60,933,196 3,980,050 95,279,921 30,926,594 $ 66,315,284 $ 4,235,328 $ 99,834,487 $ 31,967,495 $ 38,463,042 $ 4,235,328 $ 57,641,757 $ 31,967,495 27,852,242 42,192, 730 $ 66,315,284 $ 4,235,328 $ 99,834,487 $ 31,967,495 Continued 243 Indian River County, Florida Board of County Commissioners Statement of Cash Flows Proprietary Funds For the Year Ended September 30, 2012 RECONCILIATION OF NET OPERATING INCOME (LOSS) TO NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES Operating income (loss) Adjustments to reconcile operating income to net cash provided by operating activities: Enterprise Funds Solid Waste Disposal Golf District Course $ (1,076,049) $ 905,601 Work in progress reclassified as expense - Depreciation 842,318 129,906 (Increase) Decrease in assets: Accounts receivable (5,526) Due from other governments (2,060) (300) Inventories - (2,211) Liens receivable - Impact fees receivable - Special assessments receivable - Prepaid items - Increase (Decrease) in liabilities: Accounts payable 981,683 79,104 Due to other governments - 26 Retainage payable - Customer deposits (515) Closure and maintenance costs payable 497,500 Pollution remediation costs payable - Unearned revenues - 1,378 Claims payable - Accrued compensated absences 2,339 (21,687) Total adjustments 2,315,739 186,216 Net cash provided by (used in) operating activities $ 1,239,690 $ 1,091,817 NONCASH CAPITAL AND RELATED FINANCING ACTIVITIES Change in fair value of investments $ (8,175) $ (373) Contributed property, infrastructure and equipment $ - $ Capital assets purchased through accounts payable $ 773,815 $ The accompanying notes are an integral part of the financial statements. 244 County County Utilities Building Total Internal Service Funds $ (3,427,350) $ 248,198 $ (3,349,600) $ 793,128 458,343 - 458,343 14,414,302 3,546 15,390,072 (37,426) 375 (42,577) (4,280) - (6,640) (17,547) - (19,758) (686,120) - (686,120) 31,919 - 31,919 249,216 - 249,216 (30,694) - (30,694) 239,702 13,136 1,313,625 6,422 3,230 9,678 (3,446) - (3,446) 291,341 - 290,826 - - 497,500 (56,200) - (56,200) - - 1,378 52,074 3,333 36,059 14,907,606 23,620 155,207 (3,759) (14,437) (8,529) (141,768) (12, 559) 197,000 1,169 17,433,181 172,324 $ 11,480,256 $ 271,818 $ 14,083,581 $ 965,452 $ (25,536) $ (1,791) $ (35,875) $ (13,539) $ 926,147 $ - $ 926,147 $ $ 231,834 $ - $ 1,005,649 $ 245 Indian River County, Florida Board of County Commissioners Statement of Fiduciary Net Position Fiduciary Funds September 30, 2012 Agency Other Postem ployment Benefits Trust ASSETS Cash and cash equivalents $ 3,224,907 $ Investments, at fair value: Index funds - 4,748,954 U.S. government securities funds 5,379,116 Prime money market fund 705,586 Total assets $ 3,224,907 10,833,656 LIABILITIES Accounts payable $ 637,575 Benefits payable - 1,459,609 Other deposits held in escrow 2,587,332 Total liabilities $ 3,224,907 1,459,609 NET POSITION Net position held in trust for other postemployment benefits 9,374,047 Total net position $ 9,374,047 The accompanying notes are an integral part of the financial statements. 246 Indian River County, Florida Board of County Commissioners Statement of Changes in Fiduciary Net Position Other Postemployment Benefits Trust Fund For the Year Ended September 30, 2012 ADDITIONS Employer contributions $ 2,948,661 Investment loss 930,584 Investment expense (945) Total additions 3,878,300 DEDUCTIONS Benefits payments Total deductions 1,459,609 1,459,609 Change in net position 2,418,691 Net position - beginning 6,955,356 Net position - ending $ 9,374,047 The accompanying notes are an integral part of the financial statements. 247 248 Indian River County, Florida Board of County Commissioners Notes To Financial Statements Year Ended September 30, 2012 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The Board of County Commissioners (the "Board") is a County agency and a local governmental entity pursuant to Article VIII, Section 1(e) of the Constitution of the State of Florida. For financial statement and reporting purposes, the Board does not meet the definition of a legally separate organization and is not considered to be a component unit. The Board is considered to be a part of the primary government of Indian River County. The financial statements contained herein represent the financial transactions of the Board only. The following is a summary of the significant accounting principles and policies used in the preparation of the accompanying financial statements. A. Reporting Entity The concept underlying the definition of the reporting entity is that elected officials are accountable to their constituents for their actions. The reporting entity's financial statements should allow users to distinguish between the primary government (the Board) and its component units. However, some component units, because of the closeness of their relationship with the Board, should be blended as though they are part of the Board. Otherwise, most component units should be discretely presented. As required by generally accepted accounting principles, the financial reporting entity consists of: (1) the primary government (the Board), (2) organizations for which the Board is financially accountable, and (3) other organizations for which the nature and significance of their relationship with the Board are such that exclusion would cause the reporting entity's financial statements to be misleading or incomplete. The Board is financially accountable if it appoints a voting majority of the organization's governing body and (a) it is able to impose its will on that organization or (b) there is a potential for the organization to provide specific financial benefits to, or impose specific financial burdens on, the Board. The Board is financially accountable if an organization is fiscally dependent on the Board regardless of whether the organization has (a) a separately elected governing board, (b) a governing board appointed by a higher level of government, or (c) a jointly appointed board. Based on these criteria, Board management examined all organizations, which are legally separate, in order to determine which organizations, if any, should be included in the Board's financial statements. Management determined that the Solid Waste Disposal District and the Emergency Services District were the only organizations that should be included in the Board's financial statements as blended component units. Blended Component Units Solid Waste Disposal District (SWDD) Created pursuant to County Ordinance 87-67, the Board of County Commissioners serves as the Board for the SWDD and sets the non ad valorem assessment fees for the SWDD. Although legally separate, the SWDD is appropriately blended as a proprietary fund type (enterprise) component unit into the primary government. Emergency Services District (EMS) Created pursuant to County Ordinance 90-25, the Board of County Commissioners serves as the Board for the EMS and sets the millage rate for EMS. Although legally separate, the EMS is appropriately blended as a governmental fund type (special revenue) component unit into the primary government. 249 Indian River County, Florida Board of County Commissioners Notes To Financial Statements Year Ended September 30, 2012 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued B. Fund Financial Statements The underlying accounting system of the Board is organized and operated on the basis of separate funds, each of which is considered to be a separate accounting entity. The operations of each fund are accounted for with a separate set of self -balancing accounts that comprise its assets, liabilities, fund balances, revenues and expenditures or expenses, as appropriate. Governmental resources are allocated to and accounted for in individual funds based upon the purposes for which they are to be spent and the means by which spending activities are controlled. Fund financial statements for the Board's governmental, proprietary, and fiduciary funds are presented. Governmental accounting standards set forth minimum criteria (percentage of the assets plus deferred outflows of resources, liabilities plus deferred inflows of resources, revenues or expenditures/expenses of either fund category and the governmental and enterprise combined) for the determination of major funds. These statements display information about major funds individually and nonmajor funds in the aggregate for governmental and enterprise funds. The Statement of Fiduciary Net Position presents assets held by the Board in a custodial capacity for other individuals or organizations. See Note 17 for more information on the spending hierarchy of fund balances in the fund financial statements. Governmental Funds Governmental fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Revenues are recognized as soon as they are both measurable and available. Revenues are considered to be available when they are collectable within the current period or soon enough thereafter to pay liabilities of the current period. For this purpose, the Board considers revenues to be available if they are collected within 51 days after the end of the current fiscal period. Expenditures generally are recorded when a liability is incurred, as under accrual accounting. Franchise fees, sales taxes, gas taxes, operating and capital grants, 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. All other revenue items are considered to be measurable only when cash is received by the Board. Under the current financial resources measurement focus, only current assets, deferred outflows of resources, current liabilities, and deferred inflows of resources are generally included on the balance sheet. The reported fund balance is considered to be a measure of "available spendable resources". Governmental funds operating statements present increases (revenues and other financing sources) and decreases (expenditures and other financing uses) in fund balances. Accordingly, they are said to present a summary of sources and uses of "available spendable resources" during a period. Long-term receivables are reported on their balance sheets in spite of their spending measurement focus. Advances and notes to other funds are offset as nonspendable fund balance. See Note 17 for more information on the categories and descriptions of fund balances in the fund financial statements. 250 Indian River County, Florida Board of County Commissioners Notes To Financial Statements Year Ended September 30, 2012 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES — Continued B. Fund Financial Statements — Continued Because of their spending measurement focus, expenditure recognition for governmental fund types excludes amounts represented by non-current liabilities. Since they do not affect net current assets, such long-term amounts are not recognized as governmental fund type expenditures or fund liabilities. Amounts expended to acquire capital assets are recorded as expenditures in the year that resources were expended, rather than as fund assets. The proceeds of long-term debt are recorded as an other financing source rather than as a fund liability. Debt service expenditures, as well as expenditures related to compensated absences and claims and judgments, are recorded only when payment is due. Proprietary Funds The Board's enterprise and internal service funds are proprietary funds. In the fund financial statements, proprietary funds are presented using the accrual basis of accounting. Revenues are recognized when they are earned and expenses are recognized when the related goods or services are delivered. In the fund financial statements, proprietary funds are presented using the economic resources measurement focus. This means that all assets, deferred outflows of resources, liabilities, and deferred inflows of resources (whether current or non-current) associated with their activity are included on their balance sheets. Proprietary fund type operating statements present increases (revenues) and decreases (expenses) in total net position. The Board applies all GASB Pronouncements as well as all FASB and AICPA Pronouncements. Proprietary fund operating revenues, such as charges for services, result from exchange transactions associated with the principal activity of the fund. Exchange transactions are those in which each party receives and gives up essentially equal values. Non-operating revenues, such as subsidies, taxes, and investment earnings result from nonexchange transactions or ancillary activities. Amounts paid to acquire capital assets are capitalized as assets in the fund financial statements, rather than reported as an expense. Proceeds of long-term debt are recorded as a liability in the fund financial statements, rather than as an other financing source. Amounts paid to reduce long-term indebtedness are reported as a reduction of the related liabilities, rather than as an expense. Fiduciary Funds The fiduciary financial statements include financial information for the agency fund and the other postemployment benefits trust fund. The agency fund of the Board primarily represents assets held by the Board in a custodial capacity for other individuals or governments. The other postemployment benefits trust fund (Trust) accounts for activities of the Trust, which accumulates resources for health insurance benefit payments for current retirees and for current employees upon their retirement. The agency and Trust fund statements are presented using the accrual basis of accounting. 251 Indian River County, Florida Board of County Commissioners Notes To Financial Statements Year Ended September 30, 2012 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued B. Fund Financial Statements - Continued Governmental Major Funds General Fund — The General Fund is the general operating fund of the County. It is used to account for all financial resources, except those required to be accounted for in another fund. Impact Fees Fund — The Impact Fees Fund accounts for the receipt of various impact fees. Funds are used for the construction of roads and bridges, correctional, public safety, library, park, public building, and solid waste facilities. Funds are also used for administrative expenditures of monitoring the aforementioned activities. Secondary Roads Construction Fund — The Secondary Roads Construction Fund accounts for the expenditures of road and bridge construction, roadway, bridge and right of way maintenance and drainage, and related administrative expenses. Financing is provided by collections of the local option gas tax. Transportation Fund — The Transportation Fund accounts for expenditures incurred for the maintenance and repair of County roads. Financing is provided by the 5th and 6th cent gas tax, County gas tax and transfers from the General Fund. Emergency Services District Fund — The Emergency Services District Fund accounts for the expenditures of providing fire protection and advanced life support to the County. Ad valorem taxes are the primary source of revenue. Optional Sales Tax Fund — The Optional Sales Tax Fund accounts for revenue generated by the local option one -cent sales tax and some capital grants that use the local option one -cent sales tax as matching funds. Monies are used for various capital projects. Proprietary Major Funds Solid Waste Disposal District — The Solid Waste Disposal District Fund accounts for the revenues, expenses, assets and liabilities associated with the County landfill. Golf Course Fund — The Golf Course Fund accounts for the revenues, expenses, assets and liabilities associated with the Golf Course. County Utilities Fund — The County Utilities Fund accounts for the revenues, expenses, assets and liabilities associated with the County water and sewer system. County Building Fund — The County Building Fund accounts for revenues, expenses, assets, and liabilities associated with the County building permit and inspection program. 252 Indian River County, Florida Board of County Commissioners Notes To Financial Statements Year Ended September 30, 2012 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued B. Fund Financial Statements - Continued Other Fund Types Internal Service Funds — Internal Service Funds account for Fleet Management, Self Insurance and Geographic Information Systems services provided to other departments of the County on a cost reimbursement basis. Agency Fund The Agency Fund is used to account for assets held in a custodial capacity by the County for other governmental units, other funds, individuals and businesses. Examples include payroll deductions, self insurance premiums, and developer escrow funds. Other Postemployment Benefits Trust Fund — The Other Postemployment Benefits Trust Fund accounts for activities of the Trust, which accumulates resources for health insurance benefit payments for current retirees and for current employees upon their retirement. Contributions are recorded when earned and benefit payments and refunds when incurred within each year. C. Cash and Cash Equivalents Cash and cash equivalents include deposits and all highly liquid investments with maturities of ninety days or less when purchased. The Board maintains a cash and investment pool that is available for use by all funds. Earnings for the pooled investments are allocated to the respective funds based on applicable cash participation by each fund. The investment pool is managed such that all participating funds have the ability to deposit and withdraw cash as if they were demand deposit accounts. Therefore, all balances representing participants' equity in the investment pools are classified as cash and cash equivalents for financial statement purposes. In addition, longer-term investments are held by several of the Board's funds and are, therefore, reported as current restricted cash and cash equivalents on these statements. D. Investments Investments consist of U.S. Treasury Securities, U.S. Government Agency Securities, money market funds, Florida PRIME Fund (formerly known as the Local Government Surplus Funds Trust Fund Investment (SBA) Fund A), Fund B Surplus Funds Trust Fund, and the Florida Local Government Investment Trust Fund (FLGIT). Investments are reported at fair value based upon the average price obtained from three brokers/dealers. The SBA and FLGIT values are based upon the fair market value per share of the underlying portfolio. Refer to Note 2-C, Investments, for further information on individual investments. E. Allowance for Doubtful Accounts The Board provides an allowance for water and sewer accounts receivables that may become uncollectable. At September 30, 2012, this allowance was $424,493. No other allowances for doubtful accounts are maintained since other accounts receivable are considered collectable as reported at September 30, 2012. 253 Indian River County, Florida Board of County Commissioners Notes To Financial Statements Year Ended September 30, 2012 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued F. Inventories Inventories are valued at cost, which approximates market, using the "first -in, first -out" method of accounting, with the exception of the Shooting Range and Fleet Internal Service Fund's inventories which are valued using the average cost method of accounting. Inventories of all funds are recorded as expenditures (expenses) when consumed rather than when purchased. G. Prepaid Items This account represents prepayments for services that will be used in future periods. The Board's policy is to record the expenditure for the services when they are used rather than when the cash is disbursed. H. Other Assets Held For Resale This account represents assets the Board has purchased with the intent to resell. In fiscal year 2009, the Board was allocated $4.6 million from the U.S. Department of Housing and Urban Development's Neighborhood Stabilization Program under a Community Development Block Grant. This funding was to be used by local governments for acquiring, redeveloping, and reselling foreclosed properties that might otherwise become sources of abandonment within their communities. At September 30, 2012, seven homes remain unsold. The Board intends to resell these homes in the next fiscal year. They are reported at the lower of cost or market value on the balance sheet of the Board's governmental funds. I. Capital Assets Capital assets, which include property, plant, equipment, infrastructure (e.g., roads, bridges, right-of- ways, water and sewer distribution systems, beach restoration, stormwater systems and similar items), and intangible assets (e.g. software, easements, and rights), are reported in the applicable governmental or business -type activities column in the government -wide financial statements. The Board defines capital assets as assets with an initial, individual cost of $1,000 or more and an estimated useful life in excess of one year. Except for roads and bridges constructed prior to October 1, 1981, assets are recorded at historical cost. Roads and bridges constructed prior to October 1, 1981 are reported at estimated historical cost. Donated capital assets are recorded at estimated fair market value at the date of donations. Transfers of capital assets within the Board are recorded at their carrying value at the time of the transfer. The costs of normal maintenance and repairs that do not add to the value of the asset nor materially extend its useful life are not capitalized. Major outlays for capital assets and improvements are capitalized as projects are constructed. Interest incurred during the construction phase of capital assets of business -type activities is included as part of the capitalized value of the assets constructed. The Board holds legal title to the capital assets used in the operations of the Board, Clerk of the Circuit Court, Property Appraiser, Supervisor of Elections and Tax Collector, and is accountable for them under Florida Law. Capital assets used by the Board's governmental funds are reported in the financial statements of the County. Capital assets of the Board's enterprise and internal service funds are reported in the Proprietary Funds' financial statements. 254 Indian River County, Florida Board of County Commissioners Notes To Financial Statements Year Ended September 30, 2012 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES — Continued I. Capital Assets - Continued Property, plant, equipment, intangible, and infrastructure assets of the primary government, as well as the component units, are depreciated, or amortized as in the case of intangible assets, using the straight- line method over the following estimated useful lives: Assets Years Building and improvements 10 — 50 Machinery and equipment 3 10 Utility distribution systems 25 50 Road and bridge infrastructure 20 50 Fiberoptics 20 Software 3-5 Beach preservation infrastructure 7 Stormwater infrastructure 30 J. Capitalization of Interest Interest costs related to bond issues are capitalized during the construction period. These costs are netted against applicable interest earnings on construction fund investments. During the current period, the Board did not have any capitalized interest. K. Deferred Outflows/Inflows of Resources Deferred outflows of resources represent a consumption of net position/fund balance that applies to a future period(s) and so will not be recognized as an outflow of resources (expense/expenditure) until then. The Board only has one item that qualifies for reporting in this category. It is the deferred charge on refunding reported on the Statement of Net Position for the Proprietary funds. A deferred charge on refunding results from the difference in the carrying value of refunded debt and its reacquisition price. This amount is deferred and amortized over the shorter of the life of the refunding debt. Deferred inflows of resources represent an acquisition of net position/fund balance that applies to a future period(s) and so will not be recognized as an inflow of resources (revenue) until then. The Board only has one type of item, which arises under a modified accrual basis of accounting, that qualifies for reporting in this category. The item, unavailable revenue, is reported only in the governmental funds balance sheet. The source of the unavailable revenue is a special assessment on road paving. This amount is deferred and recognized as an inflow of resources in the period the amounts become available. 255 Indian River County, Florida Board of County Commissioners Notes To Financial Statements Year Ended September 30, 2012 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES — Continued L. Unamortized Bond Discounts and Premiums Bond discounts and premiums associated with the issuance of Proprietary Fund revenue bonds are amortized over the life of the bonds according to the straight-line method. For financial reporting, unamortized bond discounts and premiums are netted against the applicable long-term debt. M. Landfill Closure Costs Under the terms of current state and federal regulations, the Solid Waste Disposal District (SWDD) is required to place a final cover on closed landfill areas, and to perform certain monitoring and maintenance functions for a period of up to thirty years after closure. The SWDD recognizes these costs of closure and post -closure maintenance over the active life of each landfill area, based on landfill capacity used during the period. Required obligations for closure and post -closure costs are recognized in the Solid Waste Disposal District Enterprise Fund. N. Unearned Revenues In governmental fund financial statements (in accordance with the modified accrual basis of accounting), unearned revenues represent revenues, which are available but not earned. O. Accrued Compensated Absences The Board does not report compensated absences in the governmental fund statements since they are not current liabilities payable from available spendable resources. They are reported in the financial statements of the County. Proprietary fund types accrue compensated absences in the period they are earned. P. Obligation for Bond Arbitrage Rebate Pursuant to Section 148(f) of the U.S. Internal Revenue Code, the Board must rebate to the United States Government the excess of interest earned from the investment of certain debt proceeds and pledged revenues over the yield rate of the applicable debt. The Board has no arbitrage liability outstanding as of September 30, 2012. Q. New Accounting Pronouncements Effective October 1, 2011, the Board implemented the provisions of GASB Statement No. 63 Financial Reporting of Deferred Outflows of Resources, Deferred Inflows of Resources, and Net Position and GASB Statement No. 65 Items Previously Reported as Assets and Liabilities. 256 Indian River County, Florida Board of County Commissioners Notes To Financial Statements Year Ended September 30, 2012 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES — Continued R. Budgets and Budgetary Accounting The Board uses the following procedures in establishing the budgetary data reflected in the financial statements: 1. The constitutional officers submit, at various times, to the Board and to certain divisions within the Florida Department of Revenue and the Florida Clerks of Court Operations Corporation, a proposed operating budget for the following fiscal year. The operating budget includes proposed expenditures and the means of financing them, as set forth in Chapter 129 of the Florida Statutes. 2. The Department of Revenue, State of Florida, has the final authority on the operating budgets for the Tax Collector and the Property Appraiser included in the General Fund. 3. Constitutional officers, all departments controlled by the Board, and outside state and local agencies submit their proposed budgets to the Office of Management and Budget for assistance, review, and compilation. The County Administrator then reviews all County departments, state agencies, and nonprofit organization's budgets and makes his budget recommendation to the Board. 4. On or before July 15 of each year, the County Administrator and the Director of the Office of Management and Budget, as the Board's designated budget officer, submit to the Board a tentative budget for the ensuing fiscal year. The tentative budget includes proposed expenditures and the means of financing them. The Board then holds workshops to review the tentative budget by fund on a departmental level. 5. During September, public hearings are held pursuant to Section 200.065 of the Florida Statutes in order for the Board to receive public input on the tentative budget. At the end of the last public hearing, the Board enacts resolutions to legally adopt the budgets at the fund level for all governmental and proprietary fund types. The budgets legally adopted by the Board set forth the anticipated revenues by source and the appropriations by function. 6. Formal budgetary integration on an object level is used as a management control device for the governmental and proprietary funds of the Board. Management is authorized to transfer budgeted amounts between objects and departments in any fund as long as management does not exceed the total appropriations of a fund. Board approval to amend the budget is only required when unanticipated revenues are received that management wishes to have appropriated, thereby increasing the total appropriations of a fund. 7. Budgets for the governmental and proprietary fund types are adopted on a basis consistent with generally accepted accounting principles. 8. Appropriations for the Board lapse at the close of the fiscal year. 257 Indian River County, Florida Board of County Commissioners Notes To Financial Statements Year Ended September 30, 2012 NOTE 2 - CASH AND CASH EQUIVALENTS The Board maintains a cash and investment pool that is available for use by all funds except those whose cash and investments must be segregated due to bond covenants or other legal restrictions. A. Deposits At September 30, 2012, the carrying value of the Board's deposits was $18,001,674 and the bank balance was $20,538,877. All the deposits were covered by the FDIC or collateralized in accordance with Chapter 280, Florida Statutes, also known as the "Florida Security for Public Deposits Act". Cash on hand at September 30, 2012 was $8,240. B. Accrued Interest Interest earnings on U.S. Treasury Notes and government agency bonds are recorded in the cash and investment pools and then allocated to each fund based on each fund's average monthly balance. As of September 30, 2012, accrued interest for the Board's portfolio totaled $143,142 and was allocated to the funds based on their average monthly balance for September. 258 Indian River County, Florida Board of County Commissioners Notes To Financial Statements Year Ended September 30, 2012 NOTE 2 - CASH AND CASH EQUIVALENTS - Continued C. Investments On August 12, 2008, the Indian River County Board of County Commissioners modified the investment policy pursuant to Section 218.415, Florida Statutes that established permitted investments, asset allocation limits, issuer limits, credit ratings requirements and maturity limits to protect the Board's cash and investments. As of September 30, 2012, the Board had the following investments: Investment Type Fixed Rate Debt Instruments: U.S. Treasuries U.S. Agencies:*** Federal Farm Credit Bureau Federal Home Loan Bank Federal Home Loan Mortgage Federal National Mortgage Assoc. Other Fixed Rate Investments: Fund B Surplus Funds Trust Fund Florida Local Government Investment Trust Fund Other Market Rate Investments: Regions Bank Money Market Suntrust Bank NOW Account Florida Trust Day to Day Fund W&S Sinking Fund Reserve: U.S. Treasuries Fidelity Institutional Money Market Total Fair Value Fair Value $ 97,027,307 45,054,504 49,021,782 23,001,426 10,991,812 Weighted Average Maturity Portfolio InYears Percentage Credit Risks* 0.80 34.57 % N/A 1.24 0.88 0.59 0.55 473,079 4.08 10,442, 551 0.08 13,210,015 13,579,733 12, 43 8,923 5,410,103 22,562 $ 280,673,797 Weighted Average Maturity of Investments 0.08 0.08 0.08 1.03 0.08 0.74 16.05 AA+ 17.47 AA+ 8.20 AA+ 3.92 AA+ 0.17 Not Rated AAAf and 3.72 S-1** 4.71 N/A 4.84 N/A 4.43 AAAm 1.92 N/A 0.00 AAAm 100.00 % * Ratings based upon Standard and Poor's * * AAAf credit quality, S-1 Market Volatility *** The weighted calculation considers the investments are carried until full maturity (i.e. call dates are not considered). 259 Indian River County, Florida Board of County Commissioners Notes To Financial Statements Year Ended September 30, 2012 NOTE 2 - CASH AND CASH EQUIVALENTS - Continued C. Investments — Continued At September 30, 2012, the Board had $498,519 invested in Fund B Surplus Funds Trust Fund (Fund B), a fluctuating net asset value pool. The State Board of Administration (SBA) determined that Fund B did not meet the requirements of a SEC 2a7 -like fund; therefore, a fair value factor (total net asset value of Fund B divided by total participant balances) was provided for reporting the value of the Board's participation in Fund B at fiscal year-end. This resulted in a negative adjustment of 5.1% of the portfolio balance, or $25,440. Consequently, the net investment in Fund B is reported at $473,079. The Florida Local Government Investment Trust Fund is a pool of various securities with maturities of less than five years. The fund was established by Florida Statute 163.01, is administered by the Florida Association of Court Clerks, and is marked to market daily. Interest Rate Risk The Board's investment policy limits interest rate risk by attempting to match investment maturities with known cash needs and anticipated cash flow requirements. All investments must have stated maturities of ten (10) years or less and no more than 25% of the portfolio shall be invested in instruments with stated final maturities greater than five (5) years. The portfolio shall have securities with varying maturity and at least 10% of the portfolio shall be invested in readily available funds. Credit Risks Florida Statutes, Section 218.415 and the Board's investment policy limit investments to the following: 1. Direct obligations of the United States Treasury; 2. Florida PRIME (formerly known as Fund A) and Fund B Surplus Funds Trust Fund (Fund B); 3. Florida Local Government Investment Trust Fund; 4. Interest-bearing time deposits or savings in qualified public depositories as defined in Section 280.02, Florida Statutes; 5. Federal agencies and instrumentalities; 6. Securities of, or other interests in, any open-end or closed-end management -type investment company or investment trust registered under the Investment Company Act of 1940, 15 U.S.C. ss. 80a-1 et seq., as amended from time to time, provided that the portfolio of such investment company or investment trust is limited to obligations of the United States Government or any agency or instrumentality thereof and to repurchase agreements fully collateralized by such United States Government obligations, and provided that such investment company or investment trust takes delivery of such collateral either directly or through an authorized custodian; 260 Indian River County, Florida Board of County Commissioners Notes To Financial Statements Year Ended September 30, 2012 NOTE 2 - CASH AND CASH EQUIVALENTS - Continued C. Investments — Continued 7. Securities and Exchange Commission registered money market funds with the highest credit quality rating from a nationally recognized rating agency; 8. Repurchase agreements with a term of one year or less collateralized by direct obligations of the United States Government which have maturities of three (3) years or less and a market value 103% or more of the repurchase amount. Currently, Fund B participants are permitted to withdraw scheduled amounts as assets become liquid. Full realization of the principal value of Fund B assets is uncertain and dependent upon the collateralized securities underlying each holding and is contingent upon future market conditions. Concentration Risk The Board's investment policy has established asset allocation and issuer limits to reduce concentration of credit risk in the Board's investment portfolio. The Board's investment policy does not allow for more than 20% of the entire portfolio to be invested in any one issuer, with the exception of United States Treasury Obligations and state authorized pools. No more than 10% of the portfolio may be placed in certificates of deposit and no more than $3 million of the portfolio may be placed in certificates of deposit with any one financial institution. No more than 5% of the portfolio may be placed in any one money market fund, mutual fund, or intergovernmental investment pool. Custodial Credit Risk The Board's investment policy pursuant to Section 218.415 (18), Florida Statutes requires securities to be registered and held with a third party custodian. All securities purchased, as well as all collateral obtained, by the Board shall be held in the name of the Board. The securities must be held in an account separate and apart from the assets of the financial institution. As of September 30, 2012, the Board's investment portfolio in U.S. Treasuries, U.S. Agencies, and money market fund, was held by The Bank of New York/Mellon. Additional investments include the following: the SunTrust NOW account, the Regions Bank Money Markets, the Florida Local Government Investment Trust (held by the Bank of New YorklMellon) and the Florida Trust Day to Day Fund (held by UMB Bank). D. OPEB Trust Investments Funds are held in the name of the Indian River County OPEB Trust (IRCOT), an irrevocable trust, by a third party custodian, Bank of New YorklMellon. The investments are reported at fair value based upon market -close price on the last business day of each month. The Board approved a separate investment policy for the IRCOT assets on February 3, 2009 (last amended on April 6, 2010). The Board adopted a broadly diversified portfolio composition consisting of equity, debt, and cash and cash equivalents. Asset allocations are divided between short term and long term investments. Short term asset allocations include cash and cash equivalents with maturities of 180 days or less. Long term asset allocations range from 0-60% for equities, 0-60% for fixed income securities, and 0-100% for cash and cash equivalents. 261 Indian River County, Florida Board of County Commissioners Notes To Financial Statements Year Ended September 30, 2012 NOTE 2 - CASH AND CASH EQUIVALENTS - Continued D. OPEB Trust Investments - Continued The contribution of $2.96 million for the year ended September 30, 2012 was invested in the various funds listed below. As of September 30, 2012, the Indian River County OPEB Trust (IRCOT) had the following investments: Investment Type Short -Term Portion: Weighted Average Maturity Portfolio Credit Fair Value InYears Percentage Risks* Fidelity Treasury Money Market $ 1,493,663 Long -Term Portion: 0.15 13.79 % AAAm Vanguard 500 Index 2,105,515 N/A 19.43 N/A Vanguard All World Ex -US 1,948,813 N/A 17.99 N/A Vanguard Mid Cap Index 466,038 N/A 4.30 N/A Vanguard Small Cap Index 228,588 N/A 2.11 N/A Vanguard Short Term Treasury 2,179,647 2.20 20.12 AA+ Vanguard Intermediate Treasury 1,500,241 5.50 13.85 AA+ Vanguard Prime Money Market 705,586 0.16 6.51 A-1 Vanguard Federal Money Market 205,565 0.16 1.90 A-1 Total Fair Value $ 10,833,656 100.00 % * Ratings based upon Standard and Poor's NOTE 3 - PROPERTY TAX REVENUES Taxable values for all property are established as of January 1, which is the date of lien, for the fiscal year starting October 1. Property tax revenues recognized for the 2011-2012 fiscal year were levied in October 2011. All taxes are due and payable on November 1 or as soon as the assessments roll is certified and delivered to the Tax Collector. Discounts are allowed for early payment at the rate of 4% in November, 3% in December, 2% in January, and 1% in February. Taxes paid in March are without discount. All unpaid taxes become delinquent as of April 1. Virtually all unpaid taxes are collected via the sale of tax certificates on or prior to June 1; therefore, there were no material taxes receivable at fiscal year end. 262 Indian River County, Florida Board of County Commissioners Notes To Financial Statements Year Ended September 30, 2012 NOTE 4 — CAPITAL ASSETS A. Governmental Fund Type Capital Assets A summary of changes in the governmental fund type capital assets is as follows: Land Buildings And Improvements Construction Equipment Intangibles Infrastructure In Progress T otal Balance 10/1/2011 $ 138,388,559 $ 187,159,035 $ 39,688,685 $ 2,851,824 $ 8,986,693 $ 4,633,494 Additions 1,295,487 7,485,490 2,999,139 582,932 8,552,682 Deletions (50,796) (167,323) (3,495,620) (102,351) (7,626,843) $ 381,708,290 20,915,730 (11,442,933) Balance 9/30/2012 $ 139,633,250 $ 194,477,202 $ 39,192,204 $ 3,332,405 $ 8,986,693 $ 5,559,333 $ 391,181,087 Depreciation expense, which includes amortization expense on intangible assets, for governmental fund type capital assets is not reported in the financial statements of the Board. Depreciation expense is reported in the financial statements of the County. Please refer to the County Notes for a more detailed explanation of the County's policy on depreciation. B. Proprietary Fund Type Capital Assets A summary of changes in the proprietary fund type capital assets is as follows: Balance at 10/1/2011 Additions Deletions Less: Accumulated Depreciation Balance at 9/30/2012 Buildings And Land Improvements Equipment Intangibles $ 20,530,432 $ 412,817,452 $14,736,673 $2,875,241 755,578 8,606,838 336,011 158,912 - (1,194,636) (199,214) - 21,286,010 420,229,654 14,873,470 3,034,153 - (194,174,136) (13,211,389) (899,911) Construction In Progress $ 10,367,438 4,985,908 (8,818,247) 6,535,099 $21,286,010 $ 226,055,518 $ 1,662,081 $2,134,242 $ 6,535,099 263 T otal $ 461,327,236 14,843,247 (10,212,097) 465,958,386 (208,285,436) $ 257,672,950 Indian River County, Florida Board of County Commissioners Notes To Financial Statements Year Ended September 30, 2012 NOTE 5 — RESTRICTED CASH AND CASH EQUIVALENTS AND INVESTMENTS Solid Waste Disposal Golf County District Course Utilities Total Sinking funds $ - $ 470,681 $ 6,176,994 $ 6,647,675 Renewal and replacement 3,229,445 3,485,928 6,715,373 Customer deposits 126,626 2,769,128 2,895,754 Capital construction 15,420,192 15,420,192 Closure and maintenance cost 10,513,736 10,513,736 Total $ 13,869,807 $ 470,681 $ 27,852,242 $ 42,192,730 NOTE 6 — PAYABLE FROM RESTRICTED ASSETS Liabilities payable from the Board's Enterprise Funds restricted assets above are as follows: Solid Waste Disposal Golf County District Course Utilities Total Accounts payable $ - $ - $ 59,013 $ 59,013 Retainage payable - - 35,364 35,364 Accrued interest payable - 6,931 173,413 180,344 Bonds payable (current portion) 555,000 3,205,000 3,760,000 Closure/maint. costs payable 10,513,736 10,513,736 Customer deposits 126,626 2,769,128 2,895,754 Total $ 10,640,362 $ 561,931 $ 6,241,918 $ 17,444,211 264 Indian River County, Florida Board of County Commissioners Notes To Financial Statements Year Ended September 30, 2012 NOTE 7 - INTERFUND BALANCES Interfund balances at September 30, 2012, consisted of the following: Receivable Fund Payable Fund Amount General Fund Nonmajor Governmental Funds $ 219,500 General Fund Golf Course Enterprise Fund 54,204 General Fund Fleet Internal Service Fund 225,000 $ 498,704 In October 2010, the General Fund loaned $ 333,050 to the Golf Course Fund to purchase new golf carts. The amount reported as due from the Golf Course Fund is the current portion of the scheduled payments due to the General Fund in fiscal year 2013. The remaining amount due from the Golf Course Fund is reported as an interfund advance. The amounts due from the Fleet Internal Service Fund and the Nonmajor Governmental Funds represent short-term cash loans that will be repaid within the next twelve months. Interfund advances at September 30, 2012, consisted of the following: Receivable Fund Payable Fund Amount Secondary Roads Construction Fund Golf Course Fund $ 255,000 General Fund Golf Course Fund 188,416 $ 443,416 These amounts are considered long-term advances between major funds expected to be paid over the course of several years. These amounts have been presented as nonspendable on the General and Secondary Roads Construction Funds Balance Sheets. NOTE 8 - INTERFUND TRANSFERS Interfund transfers for the year ended September 30, 2012, consisted of the following: Transfers In: Nonmajor Internal General Transportation Governmental Service Fund Fund Funds Fund Transfers Out: Total General Fund $ - $ 7,499,582 $ 3,161,698 $ 35,438 $ 10,696,718 Golf Course Fund 7,532 - - 7,532 Total $ 7,532 $ 7,499,582 $ 3,161,698 $ 35,438 $ 10,704,250 265 Indian River County, Florida Board of County Commissioners Notes To Financial Statements Year Ended September 30, 2012 NOTE 8 - INTERFUND TRANSFERS - Continued Transfers are used for the following purposes: 1) use unrestricted general fund revenues to finance transportation activities which must be accounted for in a special revenue fund, 2) use unrestricted general fund revenues for beach restoration activities which must be accounted for in another fund, 3) use unrestricted general fund revenues to pay off a bond issue, 4) use unrestricted general fund revenues to offset a portion of salaries and benefits expenses for an employee accounted for in the health insurance fund, and 5) to reimburse the general fund for a golf course server. NOTE 9 — DUE FROM OTHER GOVERNMENTS Governmental Funds On November 18, 2008, the Board entered into a locally funded agreement with the Florida Department of Transportation (FDOT) to advance the six-laning of State Road 60 from 82nd Avenue to I-95 (Segment Two). The agreement obligated the Board to pay $14,429,754 to the FDOT. Payment was made in November 2008 to the FDOT. Funding was from the Optional Sales Tax Fund. Reimbursement by the FDOT for Segment Two will be in ten quarterly installments over a three-year period which began in July 2011. Repayments to the Board will include principal and any accumulated interest earnings that have not been used for supplemental costs of the project. Segment Two Amount Advance Funded Less: Reimbursements received as of 9/30/2012 Balance Due from FDOT SR60 Agreement Additional Funds Due from other governments Total Due from other governments Optional Sales Tax Fund $ 14,429,754 (3,000,000) 11,429,754 1,226,405 $ 12,656,159 266 Indian River County, Florida Board of County Commissioners Notes To Financial Statements Year Ended September 30, 2012 NOTE 10 - ACCOUNTS PAYABLE Accounts Payable at September 30, 2012, were as follows: Governmental Funds: General Impact Fees Secondary Roads Construction Transportation Emergency Services Optional Sales Tax Other Governmental Total Governmental Funds Proprietary Funds: Payable from current assets: Solid Waste Golf Course Utilities Building Other Proprietary Payable from restricted assets: Utilities Total Proprietary Funds Vendors $ 688,876 1,569,236 408,483 204,782 109,067 614,954 389,933 $ 3,985,331 $ 1,971,588 137,826 637,379 16,588 199,858 59,013 $ 3,022,252 Salaries and Benefits $ 36,900 281 806 21,904 62,760 2,734 $ 125,385 $ 1,688 1,502 23,242 3,375 3,034 Total Accounts Payable $ 725,776 1,569,517 409,289 226,686 171,827 614,954 392,667 $ 4,110,716 $ 1,973,276 139,328 660,621 19,963 202,892 59,013 $ 32,841 $ 3,055,093 The Board has not engaged in any short-term debt activity during fiscal year 2012 other than that listed in Note 7. Due To Other Governments - Utilities Fund On August 25, 2010, the Board received notification from the State Division of Emergency Management that a repayment of $2,827,524 may be due to the Federal Emergency Management Agency (FEMA) for disallowed costs related to a sewer project. The Board has appealed FEMA's decision. As of September 30, 2012, the Board recorded these costs as a liability, Due to Other Governments, in the Utilities proprietary fund while awaiting FEMA's response to the appeal. 267 Indian River County, Florida Board of County Commissioners Notes To Financial Statements Year Ended September 30, 2012 NOTE 11 - LONG-TERM LIABILITIES A. Governmental Long -Term Debt Changes in Long -Term Liabilities Accrued Compensated Absences: Balance Balance October 1, September 30, 2011 Additions Deletions 2012 $ 4,163,758 $ 3,066,993 $ 3,048,565 $ 4,182,186 Bonds Payable: Limited General Obligation Bonds - 2006 Series 35,385,000 3,000,000 32,385,000 General Obligation Bonds - 2001 Series 4,430,000 4,430,000 Spring Training Facility Revenue Bonds - 2001 Series 11,705,000 630,000 11,075,000 Total Bonds Payable 51,520,000 8,060,000 43,460,000 Grand Total $ 55,683,758 $ 3,066,993 $ 11,108,565 $ 47,642,186 Of the $4,182,186 liability for accrued compensated absences, management estimates that $3,293,589 will be due and payable within one year. The long-term liabilities are not reported in the financial statements of the Board since they are not payable from available spendable resources. They are reported in the financial statements of the County by the fund which normally pays the personnel service costs of the employee. The General Obligation Bonds and Spring Training Facility Revenue Bonds are not reported in the governmental fund statements since they are not current liabilities payable from available spendable resources. They are reported in the government -wide financial statements of the County. Payments on the above general obligation and revenue bonds are made by debt service funds (refer to the Table of Contents for these debt service funds under the category: Combining Balance Sheet and Combining Statement of Revenues, Expenditures and Changes in Fund Balances of Nonmajor Governmental Funds). 268 Indian River County, Florida Board of County Commissioners Notes To Financial Statements Year Ended September 30, 2012 NOTE 11 - LONG-TERM LIABILITIES — Continued A. Governmental Long -Term Debt - Continued Annual Debt Service Payments The annual debt service payments for bonds outstanding at September 30, 2012, are as follows: Fiscal Year Ending September 30 2013 2014 2015 2016 2017 2018-2022 2023-2027 2028-2031 Total Less: Current portion Add: Unamortized bond premium Total Limited General Obligation Bonds Series 2006 Principal Interest $ 3,120,000 $ 1,492,263 3,255,000 1,367,463 3,390,000 1,204,712 3,545,000 1,035,212 3,705,000 893,413 15,370,000 1,774,350 32,385,000 7,767,413 Spring Training Facility Revenue Bonds Series 2001 Principal Interest 655,000 $ 566,333 685,000 537,513 725,000 501,550 760,000 463,487 795,000 423,587 3,945,000 1,443,575 1,780,000 708,250 1,730,000 218,750 11,075,000 4,863,045 3,120,000 655,000 815,714 $ 30,080,714 $ 7,767,413 $ 10,420,000 $ 4,863,045 Limited General Obligation Bonds Purpose — On July 6, 2006, the Board issued $48,600,000 of Limited General Obligation Bonds, Series 2006. The issuance of the Series 2006 bonds was approved by a majority of votes cast in a bond referendum held on November 2, 2004, by the qualified electors of the County. The referendum authorized a total of $50,000,000 aggregate principal amount of limited general obligation bonds. The proceeds of this issue will provide funds to acquire interest in lands to protect water resources and/or drinking water sources, environmentally sensitive lands, historic sites, and/or agricultural lands together with the necessary preservation, restoration, remediation and reclamation activities to preserve and enhance such property. Pledge of revenues - The principal and interest on the bonds are payable from ad valorem taxes not exceeding 1/z mil and having a maturity not exceeding fifteen years, which are levied by the Board upon the taxable real and personal property of the Board. 269 Indian River County, Florida Board of County Commissioners Notes To Financial Statements Year Ended September 30, 2012 NOTE 11 - LONG-TERM LIABILITIES — Continued A. Governmental Long -Term Debt - Continued Limited General Obligation Bonds - Continued Bonds Issued - At September 30, 2012, Limited General Obligation Bonds consisted of the following: Description Limited General Obligation Bonds, 2006 Series Outstanding at Interest Rates September 30, and Date Maturity Issue 2012 4.00%-5.00% 1/1 and 7/1 2021 $ 48,600,000 $ 32,385,000 Optional Redemption - The Limited General Obligation Bonds, Series 2006, maturing on or after July 1, 2017, are subject to redemption prior to maturity, at the option of the Board on and after July 1, 2016, in whole or in part, at any time, on any date at a redemption price of par, together with accrued interest to the redemption date. General Obligation Bonds (GOB) Purpose — On November 2, 1992, County voters approved a bond referendum authorizing a total of $26,000,000 aggregate principal amount of general obligation bonds, in one or more series, to acquire environmentally sensitive lands, together with the necessary restoration, remediation, and reclamation activities to preserve and enhance such property. On November 29, 2001, the Board issued the second series of GOBS in the amount of $11,000,000. The remaining outstanding principal balance of $3,620,000 was called early on July 1, 2012. On July 1, 2003, the Board issued $7,800,000 of General Obligation Refunding Bonds, Series 2003. The bonds were issued to provide funds, together with $600,000, to refund and redeem the entire outstanding principal amount of the Board's $15,000,000 General Obligation Bonds, Series 1995. Proceeds of the bonds were used to pay the cost of issuance of the bonds, including the premiums for guaranty insurance. The last installment of these GOBs was paid on July 1, 2010. Spring Training Facility Revenue Bonds Purpose - On August 15, 2001, the Board issued $16,810,000 of Spring Training Facility Revenue Bonds, Series 2001. The Series 2001 bonds are being issued by the Board to provide funds, together with other available funds, to (1) finance a portion of the cost of acquisition and expansion of a spring training facility currently known as "Vero Beach Sports Village" (formerly known as Dodgertown); (2) pay a premium for a municipal bond insurance policy and a debt service reserve account surety bond, and (3) pay certain costs and expenses incurred in connection with the issuance of the Series 2001 bonds. 270 Indian River County, Florida Board of County Commissioners Notes To Financial Statements Year Ended September 30, 2012 NOTE 11 - LONG-TERM LIABILITIES - Continued A. Governmental Long -Term Debt — Continued Spring Training Facility Revenue Bonds - Continued Pledge of Revenues - The principal and interest on the Series 2001 bonds will be payable from and secured by a first lien upon and pledge of the following, together with any investment income realized on any funds held under the Resolution, except the Cost of Issuance Account and the Rebate Fund: 1. Payments received by the Board from the State of Florida pursuant to Section 212.20, Florida Statutes; and 2. The Fourth Cent Tourist Development Tax levied by the County in Ordinance No. 2000-029, enacted pursuant to Section 125.0104(3)(1), Florida Statutes; and 3. Eighty-six percent (86%) of the Local Government Half -Cent Sales Tax distributed to the Board, pursuant to Chapter 218, part VI, Florida Statutes. The foregoing is collectively referred to herein as the "pledged revenues". These revenue streams are pledged for the remaining term of the bonds. The Fourth Cent Tourist Development Tax and the Local Government Half -Cent Sales Tax pledged to the payment of debt service on the Series 2001 bonds are automatically released as pledged revenue for the Series 2001 bonds immediately following the April 1, 2021 principal payment on the Series 2001 bonds. The current principal and interest payments of $1,223,423 represent seventeen percent of total pledged revenues. All three pledged revenue sources totaled $7,276,317 for the current fiscal year. The Board applied 100% of the first two pledged revenues and six percent of the Half -Cent Sales Tax to the debt service payments. The total principal and interest remaining to be paid on the bonds is $15,938,045. Bonds Issued - At September 30, 2012, Spring Training Facility Revenue Bonds consisted of the following: Description Spring Training Facility Revenue Bonds, 2001 Series Outstanding at Interest Rates September 30, and Date Maturity Issue 2012 3.30%-5.25% 4/1 and 10/1 2031 $ 16,810,000 $ 11,075,000 Optional Redemption - The Series 2001 bonds maturing on or after April 1, 2012, were subject to redemption at the option of the Board, in whole or in part, on April 1, 2011, or on any date thereafter at par plus accrued interest and plus a premium ranging between 0% to 1% depending on the year of the redemption. 271 Indian River County, Florida Board of County Commissioners Notes To Financial Statements Year Ended September 30, 2012 NOTE 11 - LONG-TERM LIABILITIES - Continued A. Governmental Long -Term Debt — Continued Spring Training Facility Revenue Bonds - Continued Mandatory Redemption - The Series 2001 Term Bonds are subject to mandatory redemption prior to maturity, by lot, at par plus accrued interest, according to the following schedule: Term Bonds due April 1, 2015 Date Principal Amount April 1, 2014 $ 685,000 April 1, 2015 725,000 Term Bonds due April 1, 2017 Date Principal Amount April 1, 2016 $ 760,000 April 1, 2017 795,000 Term Bonds due April 1, 2021 Date Principal Amount April 1, 2018 $ 840,000 April 1, 2019 890,000 April 1, 2020 930,000 April 1, 2021 980,000 Term Bonds due April 1, 2027 Date Principal Amount April 1, 2022 $ 305,000 April 1, 2023 320,000 April 1, 2024 340,000 April 1, 2025 355,000 April 1, 2026 375,000 April 1, 2027 390,000 Term Bonds due April 1, 2031 Date Principal Amount April 1, 2028 $ 410,000 April 1, 2029 430,000 April 1, 2030 455,000 April 1, 2031 435,000 272 Indian River County, Florida Board of County Commissioners Notes To Financial Statements Year Ended September 30, 2012 NOTE 11 - LONG-TERM LIABILITIES - Continued B. Proprietary Funds Long -Term Debt Changes in Long -Term Liabilities Accrued Compensated Absences Balance Balance October 1, September 30, 2011 Additions Deletions 2012 $ 864,879 $ 714,164 $ 676,936 $ 902,107 Bonds Payable: Recreational Revenue Refunding Series 2003 2,655,000 - 535,000 2,120,000 Water & Sewer Revenue Refunding Series 2005 20,490,000 - 1,480,000 19,010,000 Water & Sewer Revenue Refunding Series 2009 26,370,000 1,610,000 24,760,000 Total Bonds Payable 49,515,000 - 3,625,000 45,890,000 Grand Total $ 50,379,879 $ 714,164 $ 4,301,936 $ 46,792,107 Annual Debt Service Payments The annual debt service payments for bonds outstanding at September 30, 2012 are as follows: Fiscal Year Recreational Water and Sewer Water and Sewer Ending Revenue Refunding Revenue Refunding Revenue Refunding September 30 Bonds Series 2003 Bonds Series 2005 Bonds Series 2009 Principal Interest Principal Interest Principal Interest 2013 $ 555,000 $ 83,169 $ 1,530,000 $ 877,150 $ 1,675,000 $ 1,203,800 2014 580,000 62,356 1,605,000 800,650 1,745,000 1,136,800 2015 600,000 39,881 1,670,000 736,450 1,815,000 1,067,000 2016 385,000 15,881 1,750,000 652,950 1,905,000 976,250 2017 - 1,840,000 565,450 2,000,000 881,000 2018-2022 - 10,615,000 1,405,250 11,600,000 2,801,250 2023-2024 - - - 4,020,000 268,000 Total 2,120,000 201,287 19,010,000 5,037,900 24,760,000 8,334,100 Less: Current portion 555,000 - 1,530,000 - 1,675,000 Unam ortized bond discount 18,129 - - - - Add: Unam ortized bond premium - 610,413 - 2,082,285 Total $1,546,871 $201,287 $18,090,413 $ 5,037,900 $ 25,167,285 $8,334,100 273 Indian River County, Florida Board of County Commissioners Notes To Financial Statements Year Ended September 30, 2012 NOTE 11— LONG-TERM LIABILITIES - Continued B. Proprietary Funds Long -Term Debt - Continued Recreational (Golf Course) Revenue Refunding Bonds, Series 2003 Purpose - On October 15, 2003, the Series 2003 bonds were issued to redeem $6,735,000 of the Board's outstanding Recreational Revenue Bonds, Series 1993. The Series 2003 bonds are being issued by the Board to provide funds, together with $583,790, to retire all of the outstanding 1993 Series bonds and to pay for all bond issuance costs. The previous bonds were issued to build a County -owned golf course. The aggregate difference in debt service between the Series 1993 debt ($9,284,290) and Series 2003 debt ($8,060,911) is $1,223,379. The net economic gain was $348,450 and is amortized over the life of the bonds. The unamortized balance of the deferred amount on the refunding at September 30, 2012 is $107,215 and is reflected as a deferred outflow of resources on the Statement of Net Position. Pledge of Revenue - The revenue bonds are secured by liens, for the remaining term of the bonds, in the following order: (1) the net revenues derived from the operations of the golf course, (2) one hundred percent of racetrack and Jai Alai Fronton funds, and (3) seven percent of the half -cent sales tax accruing annually to the County. The financial strength of our municipal bond insurer, AMBAC, was downgraded to Baal in November 2008. This downgrade required the Board to fully cash fund the debt service reserve. The Board elected to pledge the Racetrack and Jai Alai Fronton funds to meet this bond covenant. The total annual amount of the required debt service reserve of $417,500 was cash funded. The current principal and interest payments of $637,964 represent sixty-one percent of net revenues of $1,039,595 of the golf course. The total principal and interest remaining to be paid on the bonds is $2,321,287. All three pledged revenue sources totaled $2,004,997 for the current fiscal year. The Board did not utilize the second and third revenue sources toward the current year principal and interest payments. Rate Covenant — Net revenues shall be sufficient to pay 100% of reserve and current year principal and interest requirements. Bonds Issued - At September 30, 2012, the revenue bonds consisted of the following: Outstanding at Interest Rates September 30, Description and Date Maturity Issue 2012 Recreational Revenue 2.00 — 4.125% 9/1/16 $ 6,455,000 $ 2,120,000 Refunding Bonds, Series 2003 3/1 and 9/1 Optional Redemption - The revenue bonds, maturing on or after September 1, 2014, are subject to redemption prior to maturity, at the option of the Board on and after September 1, 2013, in whole or in part, at any time thereafter at the redemption price of par, plus interest accrued to the date of redemption. 274 Indian River County, Florida Board of County Commissioners Notes To Financial Statements Year Ended September 30, 2012 NOTE 11— LONG-TERM LIABILITIES - Continued B. Proprietary Funds Long Term Debt - Continued Water and Sewer Revenue Refunding Bonds, Series 2005 Purpose - The Series 2005 bonds were issued to defease $31,680,000 of the Board's outstanding Water and Sewer Revenue Bonds, Series 1996. These bonds were issued by the Board to provide funds, together with $5,000,000, to retire 95 percent of the 1996 Series and to pay for all bond issuance costs. The September 1, 2005 and 2006 principal installments were not subject to early call and consequently paid at their respective maturity dates. The 1996 bonds were issued to acquire an existing water and sewer facility, as well as for capital improvements to the existing system. The aggregate difference in debt service between the Series 1996 ($40,585,193) and Series 2005 ($39,619,193) is $966,000. The net economic gain, which included shortening the term of the bonds by four years and lowering average annual debt service by $242,000, was $2,944,661 and is amortized over the life of the bonds. The unamortized balance of the deferred amount on the refunding at September 30, 2012 is $1,684,686 and is reflected as a deferred outflow of resources on the Statement of Net Position. Pledge of Revenues — The revenue bonds are collateralized, for the remaining term of the bonds, by a pledge of all net revenues derived from the operation of the system, certain surcharges, and special assessments. Annual principal and interest payments of $2,405,250 represent approximately eighteen percent of net revenues of $13,217,926 of the utility system. The total principal and interest remaining to be paid on the bonds is $24,047,900. Rate Covenant — Net revenues shall be sufficient to pay 100% of reserve and 120% of current year principal and interest requirements. Bonds Issued - At September 30, 2012, the revenue bonds consisted of the following: Outstanding at Interest Rates September 30, Description and Date Maturity Issue 2012 Water and Sewer 3-5% Revenue Bonds, 3/1 and 9/1 2022 $ 27,675,000 $ 19,010,000 Series 2005 Outstanding In -Substance Defeased Debt - The proceeds from the refunding were invested in Federal Securities and placed in an escrow account with J.P. Morgan. All of the defeased bonds ($31,680,000) were called on September 1, 2006 at 102% of the outstanding principal amount. Optional Redemption - The Series 2005 bonds maturing after September 1, 2015, are subject to redemption by the Board on or after September 1, 2015, in whole or in part, at par, plus accrued interest to date of redemption. 275 Indian River County, Florida Board of County Commissioners Notes To Financial Statements Year Ended September 30, 2012 NOTE 11 - LONG-TERM LIABILITIES - Continued B. Proprietary Funds Long Term Debt— Continued Water and Sewer Revenue Refunding Bonds, Series 2009 Purpose - The Series 2009 bonds were issued to refund and redeem on September 11, 2009, $28,270,000 of the Board's outstanding Water and Sewer Revenue Bonds, Series 1993A. The refunding excluded debt service payments due September 1, 2010 and 2011. The aggregate difference in debt service between the Series 1993A ($80,434,415) and Series 2009 ($78,755,772) is $1,678,643. The net economic gain, which lowered average annual debt service by $126,000, was $1,368,427 and is amortized over the life of the bonds. The unamortized balance of the deferred amount on the refunding at September 30, 2012 is $1,083,338 and is reflected as a deferred outflow of resources on the Statement of Net Position. Pledge of Revenues — The revenue bonds are collateralized, for the remaining term of the bonds, by a pledge of all net revenues derived from the operation of the system, certain surcharges, and special assessments. The current principal and interest payments of $2,878,200 represent approximately twenty two percent of net revenues of $13,217,926 of the utility system. The total principal and interest remaining to be paid on the bonds is $33,094,100. Rate Covenant— Net revenues shall be sufficient to pay 100% of reserve and 120% of current year principal and interest requirements. Bonds Issued - At September 30, 2012, the revenue bonds consisted of the following: Outstanding at Interest Rates September 30, Description and Date Maturity Issue 2012 Water and Sewer 4-5% Revenue Bonds, 3/1 and 9/1 2024 $ 26,370,000 $ 24,760,000 Series 2009 Outstanding In -Substance Defeased Debt - The proceeds from the refunding were invested in Federal Securities and placed in an escrow account with Bank of New York/Mellon. All of the defeased bonds ($28,270,000) were called on September 1, 2009 at 101% of the outstanding principal amount. Optional Redemption - The Series 2009 bonds maturing on or prior to September 1, 2019, are not subject to redemption prior to their respective dates of maturity. The Series 2009 bonds stated to mature after September 1, 2019, are subject to redemption at the option of the Board in whole or, from time to time, in part on September 1, 2019, at the redemption price of the principal amount to be redeemed, plus accrued interest to the date of redemption. 276 Indian River County, Florida Board of County Commissioners Notes To Financial Statements Year Ended September 30, 2012 NOTE 12 - PROVISION FOR CLOSURE COSTS Current regulations of the U.S. Environmental Protection Agency (EPA) and the Florida Department of Environmental Protection (FDEP) require the Solid Waste Disposal District (SWDD) to place a final cover on closed landfill areas, and to maintain those areas for up to thirty years after closure. The SWDD annually obtains updated and revised estimates of total future closure and post -closure costs from its consulting engineers. The SWDD recognizes the expenses associated with the final closure and post - closure maintenance of the landfill areas over the active life of those areas. The provision for closure costs reported in the financial statements as operating expense represents the portion of these estimated future outlays which are allocable to the current year based on the amount of capacity used. The total unrecognized closure and post -closure costs are approximately $3.6 million. These costs will be recognized in future periods as the remaining capacity is filled. The Board's policy is to fund 100% of the current year's allocation (based upon the consulting engineers' report) of both closure and post - closure care. Required closure and post -closure sub -accounts: Capacity Estimated Used Closing Closure Costs Class I - Segments I and II Construction and Demolition - Cell I 58% 89% Amount 2030 $ 6,801,947 2017 1,118,866 Post -closure Costs Class I - Segments I and II N/A N/A 2,413,435 Construction and Demolition - Cell I N/A N/A 179,488 Total account balance at 9/30/12: $ 10,513,736 All amounts recognized are based on what it would cost to perform all closure and post -closure functions in current dollars. Actual costs may be different due to inflation, deflation, changes in technology, or changes in laws and regulations. The SWDD is required by FDEP to annually show proof of ability to finance closure and post -closure costs. The SWDD is making annual deposits to a closure and post -closure cost escrow account to provide for the financing of future closure -related expenses. At September 30, 2012, $10,442,551 was on deposit at the Florida Local Government Investment Trust and $71,185 was on deposit in the Board's Operating account. A summary of changes in the landfill closure liability account is as follows: Balance Balance 10/01/11 Deposits Withdrawals 09/30/12 Closure and long-term care costs $ 10,016,236 $ 497,500 $ $10,513,736 Of the $10,513,736 liability for closure and long-term care costs, management estimates that no funds will be due and payable within one year. 277 Indian River County, Florida Board of County Commissioners Notes To Financial Statements Year Ended September 30, 2012 NOTE 13 — POLLUTION REMEDIATION In accordance with GASB Statement 49, Accounting and Financial Reporting for Pollution Remediation Obligations, a consultant evaluated five sites to assess pollution remediation liabilities. The consultant calculated for each site an expected value (EV) estimate for pollution remediation based on three plausible mitigation scenarios. An obligating event occurred at each of the following five sites requiring the Board (using the consultant's services) to attempt to accrue a liability for pollution remediation. The liability totaled $2,621,800 at September 30, 2012 for all five sites. The pollution remediation obligation is an estimate and subject to changes resulting from price increases and reductions, technology, and changes in applicable laws or regulations. There are no estimated recoveries that would reduce the liability. Governmental Funds: 1) South Gifford Road closed landfall — The nature of the pollution remediation obligation is chlorinated solvent contamination. The consultant will conduct monitoring, bioremediation and reporting with the Florida Department of Environmental Protection (FDEP). The amount of the estimated year end liability is $2,425,000 and will be paid from the Optional Sales Tax Fund. 2) Old Administration Building — The nature of the pollution remediation obligation is closed underground storage tank contamination. The consultant will conduct monitoring and reporting with the FDEP. The amount of the estimated year end liability is $32,000 and will be paid from the General Fund. 3) Cattle dip site The nature of the pollution remediation obligation is arsenic contamination. The consultant will conduct monitoring and assessment. The amount of the estimated year end liability is $73,200 and will be paid from the Impact Fees Fund. 4) Shadowbrook Estates The nature of the pollution remediation obligation is arsenic and lead contamination in two areas of a former citrus grove. The consultant will conduct the additional assessment and natural attenuation monitoring. The amount of the estimated year end liability is $82,800 and will be paid from a nonmajor fund, the Land Acquisition Fund. Total governmental funds liability: $2,613,000 Proprietary Funds: 5) North County Reverse Osmosis plant — The nature of the pollution remediation obligation is groundwater inorganic contamination. The consultant will conduct monitoring and assessment. The amount of the estimated year end liability is $8,800 and will be paid from the County Utilities Fund. Total proprietary funds liability: $13,M 278 Indian River County, Florida Board of County Commissioners Notes To Financial Statements Year Ended September 30, 2012 NOTE 14 — PENSION PLANS Florida Retirement System Plan Description: The Board's employees participate in the Florida Retirement System (FRS), a cost- sharing, multiple -employer public employee retirement system, administered by the Florida Department of Management Services. Effective July 1, 2011, the FRS became a contributory plan for all members, except DROP participants, whereby members contribute 3% and employers pay a rate based upon each member's employment class. Employer rates effective as of July 1, 2012 were as follows: regular class 5.18%, senior class 6.30%, special risk 14.90%, and elected official class 10.23%. Employees elect participation in either the defined benefit plan (Pension Plan) or the defined contribution plan (Investment Plan). If the employee enrolled in the FRS prior to July 1, 2011, normal retirement is age 62 with 6 years of service or 30 years of service, regardless of age. If the employee enrolled in the FRS on or after July 1, 2011, normal retirement is age 65 with 8 years of service or 33 years of service, regardless of age. Under the Pension Plan, early retirement is available before reaching normal retirement age and will be subject to an early-retirement reduction of 5% for each year your age at retirement is under your normal retirement age. For those employees who elect participation in the Investment Plan rather than the Pension Plan, vesting occurs after one year of service. Participants have access to the full value of their vested account balance when they leave FRS employment, regardless of age. These participants receive a defined contribution for self-direction in an investment product with a third party administrator selected by the State Board of Administration. Retirement benefits are determined by age, years of service, the average of the highest 5 or 8 fiscal years of pay, membership class and the payment option selected at retirement. In addition to the above benefits, the FRS administers a Deferred Retirement Option Program (DROP). This program allows eligible employees to defer receipt of monthly retirement benefit payments while continuing employment with a FRS employer for a period not to exceed five years after electing to participate. Deferred monthly benefits are held in the FRS Trust Fund and accrue interest. Employer contributions to the FRS for the fiscal years ended September 30, 2010, 2011 and 2012, were equal to 13.4%, 12.8%, and 7.7% of the annual covered payroll. Employer contributions to the FRS for the fiscal years ended September 30, 2010, 2011, and 2012, were $5,602,795, $4,975,937 and $2,894,804 respectively. Employee contributions for the fiscal years ended September 30, 2011 and 2012 were $259,425 and $956,266. Both employer and employee contributions were equal to 100% of the required contribution for each year. Florida Statutes Chapter 121, as may be amended from time to time by the state legislature, determines contribution rates for the various membership classes of the FRS. The FRS issues a publicly available financial report that includes financial statements, ten-year historical trend information and other required supplementary information. That report may be obtained by writing to the Florida Department of Management Services, Division of Retirement, Attention: Research and Education Section, P.O. Box 9000, Tallahassee, Florida 32315-9000, or from the website at www.dms.myflorida.com. The funding policy is described in detail in the Florida Retirement System note in the County -wide financial statements. 279 Indian River County, Florida Board of County Commissioners Notes To Financial Statements Year Ended September 30, 2012 NOTE 15 — OTHER POSTEMPLOYMENT BENEFITS PLAN (OPEB) A. Plan Description On September 23, 2008, the Board of County Commissioners approved resolution number 2008-163, establishing an irrevocable trust (OPEB Trust) to separately identify assets accumulated to pay OPEB benefits for eligible retirees. The OPEB Trust includes the Board of County Commissioners and the five constitutional officers (Clerk of the Circuit Court, Property Appraiser, Sheriff, Supervisor of Elections, and Tax Collector). The resolution also established the Board of County Commissioners as trustees of the OPEB Trust and the authority for the trustees to amend the benefit provisions. The OPEB Trust is a single -employer defined benefit plan (OPEB Plan). The OPEB plan subsidizes (see the chart below) the cost of health care for employees hired prior to February 1, 2006 and their eligible dependents according to the provisions of the substantive plan (the plan as understood by the employer and plan members). Employees hired on or after February 1, 2006, will not be eligible for any subsidy, regardless of the years of service or Medicare eligibility. Active participants as well as retirees are subject to the same benefits and rules. Retired employees are permitted to remain covered under the Board's medical and life insurance plans as long as they pay a premium applicable to the coverage elected. This conforms to the minimum required of Florida governmental employers per Florida Statute 112.0801. The retiree has the option to continue with the Board group health plan or elect Medicare Advantage Plan. The implicit rate subsidy applies to health and life insurance coverage since the premiums charged are based upon a blending of younger active employees and older retired employees. Health insurance premiums, effective October 1, 2011 range from $198 for Medicare participants to $735 for family coverage. Life insurance is available to retirees at a flat rate of $.20 per $1000 of coverage (to a maximum of $20,000 until the age of 70). After 70, the maximum amount of life insurance is $10,000. The Board subsidizes the cost of the health premiums for each retiree based upon their years of service and employment date (as mentioned above); a 2% discount is given for each year of service based upon the following table: Retirement Date Years of Service Under Age 65 Medicare Eligible Before 01/01/04 N/A No subsidy 60% subsidy 01/01/04 - 10/01/04 Less than 15 years No subsidy 60% subsidy 01/01/04 - 10/01/04 15 or more years 2%/yr-max 40% 20% in addition to yrs of service -max 60% subsidy 10/01/04 - 01/31/09 Less than 15 years No subsidy 20% subsidy 10/01/04 - 01/31/09 15 or more years 2%o/yr-max 40% 20% in addition to yrs of service -max 60% subsidy 02/01/09 and after Less than 15 years No subsidy No subsidy 02/01/09 and after 15 or more years 2%/yr-max 40% No subsidy 280 Indian River County, Florida Board of County Commissioners Notes To Financial Statements Year Ended September 30, 2012 NOTE 15 — OTHER POSTEMPLOYMENT BENEFITS PLAN — Continued A. Plan Description — Continued The OPEB Trust financial statements are reported using the accrual basis of accounting and are included in the Indian River County Comprehensive Annual Financial Report (CAFR). Questions regarding the OPEB plan may be directed to the Finance Director. At October 1, 2011, the date of the latest actuarial valuation, plan participation consisted of: Active participants 1,428 Retired participants 371 Total participants 1,799 There are two classes of participants at October 1, 2011: Regular and senior management 1,127 Special risk 672 Total participants 1,799 The average employer's contribution was $1,981 per employee, approximately 4.5% of current payroll. Financial statements for the OPEB Trust are included in this report and can be found on pages 40-41. A separate, stand-alone financial report is not issued by the Board; however, the OPEB Trust investments can be found in Note 2D and the Schedule of Funding Progress can be found on page 99. B. Funding Policy The Board of County Commissioners, in concert with the OPEB Board of Trustees, has the authority to establish and amend the funding policy of the OPEB Plan. The OPEB Trust is advance funded by the Board. For the year ended September 30, 2012, the County contributed $2.96 million to the qualifying OPEB Trust. Plan members receiving benefits contributed $1.5 million, or approximately 51 percent of the total premiums. It is the Board's policy to base future contributions on the annual required contribution (ARC) in subsequent annual actuarial reports. Custodial and individual fund administrative fees are paid from the portfolio dividend and interest income. C. Annual OPEB Cost and Net OPEB Obligation The employer's contribution (i.e. annual cost or expense) to the County's OPEB Trust is based on the ARC calculation. The ARC is an amount actuarially determined in accordance with the parameters of GASB Statement No. 45. The ARC represents a level of funding that, if paid on an ongoing basis, is projected to cover the normal cost each year and amortize any unfunded actuarial liability over a period not to exceed 20 years. The following table shows the components of the County's annual cost for the current and two preceding years, the amount actually contributed, and the changes in the net obligation. 281 Indian River County, Florida Board of County Commissioners Notes To Financial Statements Year Ended September 30, 2012 NOTE 15 — OTHER POSTEMPLOYMENT BENEFITS PLAN - Continued C. Annual OPEB Cost and Net OPEB Obligation - Continued Annual Required Contribution Interest on Net OPEB Obligation Adjustment to Annual Required Contribution Annual OPEB Cost (expense) Contributions Change in Net OPEB Obligation Net OPEB Obligation beginning of year Net OPEB Obligation — end of year Percentage of Annual OPEB Cost Contributed D. Funded Status and Funding Progress FY 2011/2012 2,828,452 (12,323) 14,075 2,830,204 (2,962,301) (132,097) (189,584) (321,681) 104.67% FY 2010/2011 $ 2,948,682 $ (22,381) 23,385 2,949,686 (2,819, 540) 130,146 (319,730) $ (189,584) $ 95.59% FY 2009/2010 2,814,435 (7,272) 7,779 2,814,942 (3,030,792) (215,850) (103,880) (319,730) 107.67% The Schedule of Funding Progress and Schedule of Employer Contributions, presented as required supplementary information immediately following the County Notes to the Financial Statements (on page 99), presents multi-year trend regarding liabilities, funding, and payroll. The data also reflects whether the actuarial value of the plan assets is increasing or decreasing over time relative to the actuarial accrued liabilities for benefits. This information includes the current and past two actuarial valuations and five years of funding data. Actuarial valuations of an ongoing plan involve estimates of the value of reported amounts and assumptions about the probability of occurrence of events into the future. Examples include assumptions about future employment, mortality, and the healthcare cost trend. Amounts determined regarding the funded status of the plan and the annual required contributions of the employer are subject to continual revision as actual results are compared with past expectations and new estimates are made about the future. E. Actuarial Methods and Assumptions Projections of benefits for financial reporting purposes are based on the benefits provided under terms of the substantive plan (the plan as understood by the employer and the plan members) in effect at the time of each valuation and on the pattern of sharing of costs between the employer and plan members to that point. The projection of benefits for financial reporting purposes does not explicitly incorporate the potential effects of legal or contractual funding limitations on the pattern of cost sharing between the employer and plan members in the future. Actuarial calculations reflect a long-term perspective. Consistent with that perspective, actuarial methods and assumptions used include techniques that are designed to reduce the effects of short-term volatility in actuarial accrued liabilities and the actuarial value of assets. 282 Indian River County, Florida Board of County Commissioners Notes To Financial Statements Year Ended September 30, 2012 NOTE 15 — OTHER POSTEMPLOYMENT BENEFITS PLAN - Continued E. Actuarial Methods and Assumptions - Continued The actuarial methods are: Actuarial cost method Amortization method Amortization period (closed) Asset valuation method The actuarial assumptions are: Investment rate of return Projected annual salaries increase Healthcare cost trend rate Inflation rate NOTE 16 - OPERATING LEASES Entry age normal cost method Level percent of payroll projected to grow 4% per year 16 years Market Value 6.5% (net administrative expenses) 4.0%-9.47% (dependent on years of service and age) 8.5% (decreasing 1/z% each year & thereafter to the ultimate value of 5.32%) 3% The Board has entered into noncancelable operating leases, both as lessor and lessee. Lease terms vary from 1 to 99 years. Lease revenues totaled $587,765 and lease expenditures totaled $76,908 for the year ended September 30, 2012. The Board also leases other equipment and office facilities as both lessor and lessee on a month-to-month basis. A. Future Minimum Lease Receipts Year 2013 2014 2015 2016 2017 2018-2022 2023-2027 2028-2032 2033-2037 2038 Total future minimum receipts: Amount $ 492,658 458,600 471,411 456,234 443,383 2,121,034 1,298,906 721,056 132,600 27,900 $ 6,623,782 The property being leased is reported in the financial statements of County and has a cost of $29,060,384, and a carrying value of $20,723,566. Current year depreciation on property being leased was $368,896. 283 Indian River County, Florida Board of County Commissioners Notes To Financial Statements Year Ended September 30, 2012 NOTE 16 - OPERATING LEASES - Continued B. Future Minimum Lease Payments The following is a schedule, by years, of minimum future rentals to be paid by the Board for various noncancelable operating leases as of September 30, 2012: Year Amount 2013 $ 80,114 2014 42,739 2015 25,170 2016 25,170 2017 25,170 2018-2022 54,840 2023-2027 7,500 2028-2032 7,500 2033-2037 6,900 2038-2042 4,500 2043-2047 4,500 2048-2052 3,300 2053-2057 2,400 2058-2062 1,500 2063-2067 1,500 2068-2072 1,500 2073-2077 1,500 Total future minimum lease payments: $ 295,803 284 Indian River County, Florida Board of County Commissioners Notes To Financial Statements Year Ended September 30, 2012 NOTE 17 - FUND BALANCE GASB Statement 54 — Fund Balance Reporting and Governmental Funds Type Definitions requires the fund balance for governmental funds to be reported in classifications that comprise a hierarchy based primarily on the extent to which the government is bound to honor constraints on the specific purposes for which amounts in those funds can be spent. A. Categories There are five categories of fund balance for governmental funds under Statement 54: Nonspendable — Amounts that cannot be spent because they are not in spendable form or are legally or contractually required to remain intact. Restricted — Use of these resources is based on the constraints imposed externally by creditors, grantors, contributors, or laws and regulations of other governments; or imposed by law through constitutional provisions or enabling legislation. Committed — Amounts whose use is constrained by the approval of a County ordinance by the Board of County Commissioners. This category also includes existing resources on hand to satisfy the obligations that arise from contractual obligations entered into by the Board of County Commissioners. Assigned — The Board of County Commissioners is the governing body authorized to assign fund balance amounts to be used for specific purposes. Amounts appropriated to eliminate a budgetary deficit in a subsequent year are reported in this category as well. Unassigned — Residual amounts in the general fund that do not meet any of the other fund balance classifications. B. Fund Balance Policy On September 21, 2010, the Board approved a Fund Balance and Reserve Policy that set forth the following reserves of fund balance in the General, Transportation, and Emergency Services District Funds: Emergency/Disaster Relief Reserve — A balance of no less than 5% of budgeted operating expenditures for the current fiscal year will be reserved only for the purpose of responding to natural and man-made disasters. Disasters include hurricanes, tropical storms, floods, wildfires, or terrorist activities. These funds can only be used to respond and provide relief after such a disaster. Funds will be replenished over a five-year period after the completion of the recovery from the disaster. 285 Indian River County, Florida Board of County Commissioners Notes To Financial Statements Year Ended September 30, 2012 NOTE 17 - FUND BALANCE — Continued B. Fund Balance Policy - Continued Budget Stabilization Reserve A balance of no less than 5% of budgeted operating expenditures for the current fiscal year will be reserved only for the purpose of revenue declines or unfunded mandates from the state and federal governments. Funds utilized due to revenue declines will be replenished over a five-year period. Funds utilized for unfunded mandates or unanticipated expenditures cannot be used for more than a three-year period and must be replenished within five -years after the three-year period. At September 30, 2012, reserve amounts for those funds were: Budget Disaster Relief Stabilization Total General Fund $ 5,200,000 $ 5,200,000 $ 10,400,000 Transportation Fund 700,000 700,000 1,400,000 Emergency Services District Fund 1,400,000 1,400,000 2,800,000 Total $ 7,300,000 $ 7,300,000 $ 14,600,000 The General Fund reserves are included in the unassigned fund balance on the balance sheet. The Emergency/Disaster Relief and Budget Stabilization Reserve amounts may only be revised by the Board of County Commissioners. Minimum Fund Balance - The approved fund balance policy dictates the Board's attempt to maintain a minimum fund balance in the General, Transportation, and Emergency Services District funds of 20% of budgeted annual operating expenditures. The minimum fund balance level may be revised by the County Administrator or his designee. C. Spending Hierarchy For all governmental funds, when restricted, committed, assigned, and unassigned fund balances are combined in a fund, qualified expenditures are paid first from restricted or committed fund balance, as appropriate, then assigned and finally unassigned fund balances. 286 Indian River County, Florida Board of County Commissioners Notes To Financial Statements Year Ended September 30, 2012 NOTE 18 - FUND BALANCE DEFICIT The following funds had a deficit in fund balance at September 30, 2012: Fund Deficit Nonmajor Governmental Funds: Metropolitan Planning Organization Fund $ 190,689 Federal/State Grants Fund 5,083 Total Deficit $ 195,772 The deficits for these two funds will be eliminated by grant proceeds in fiscal year 2013. NOTE 19 — NET POSITION A. Restricted Net Position The Board has established a restriction within the net position section of the proprietary funds for capital projects. Restricted net position at September 30, 2012 consist of the following: Restricted for Capital Projects: County Utilities Fund $ 17,941,773 B. Restatement of Beginning Net Position In accordance with the requirements of GASB Statement 65, Items Previously Reported as Assets and Liabilities, beginning net position for the Golf Course and Utilities Funds were restated. Due to the write off of the unamortized bond issuance costs outstanding at September 30, 2011, the Golf Course Fund's beginning net position was reduced by $49,523 and the Utilities Fund's beginning net position was reduced by $477,430. 287 Indian River County, Florida Board of County Commissioners Notes To Financial Statements Year Ended September 30, 2012 NOTE 20 - RISK MANAGEMENT General Liability, Property, Worker's Compensation and Medical The Board is exposed to various risks of loss related to torts, theft of, damage to and destruction of assets, errors or omissions, injuries to employees, and natural disasters. The Board established a Self Insurance Fund (an internal service fund) to account for and finance its uninsured risk of loss. Under this program, the Self Insurance Fund provides coverage as follows: 04/01/08 to 10/01/08 to 05/01/11 to 09/30/08 04/30/11 09/30/12 Worker's Compensation $ 300,000 $ 350,000 $ 350,000 General Liability 250,000 250,000 200,000 Auto Liability 250,000 250,000 200,000 Property Damage 500 - 25,000 250,000 200,000 Error or Omissions 250,000 250,000 200,000 Annual Aggregate 1,000,000 2,000,000 2,000,000 Liquor Liability 1,000,000 1,000,000 1,000,000 The Board purchases excess insurance to cover claims in excess of the liability coverage listed above. There is a 5% deductible per location for property damages arising due to a hurricane under the reinsurance policy. All departments of the Board participate in the program. Payments are made by various funds to the Self Insurance Fund based on past experience and actual estimates of the amounts needed to pay current year claims. The Board has received one reimbursement, for a liability claim in excess of the general liability limit, in the amount of $134,820 in fiscal year 2012. The prior two fiscal years did not incur any excess settlements. The Board is also self-insured for medical claims covering employees and their eligible dependents. As required by Section 112.081, Florida Statutes, retirees and their eligible dependents are provided the same health care coverage as is offered to active employees; however, the retirees are responsible for payment of the premiums. Medical claims are paid from premiums contributed by employees, retirees, and by the Board. Premiums and contributions are determined by projected claims based on historical and actuarial experience. The self-insurance medical plan assumes all risk for claims, other than worker's compensation, up to $250,000 per occurrence. The Board has purchased a reinsurance policy to cover claims in excess of these limits. There were no medical claims in excess of the $250,000 limit for the current and prior two fiscal years. 288 Indian River County, Florida Board of County Commissioners Notes To Financial Statements Year Ended September 30, 2012 NOTE 20 - RISK MANAGEMENT - Continued General Liability, Property, Worker's Compensation and Medical — Continued The claims liability of $8,074,000 reported at September 30, 2012, is based on the requirements of generally accepted governmental accounting standards, which require that a liability for claims be reported if information prior to the issuance of the financial statements, and the amount of the loss, can be reasonably estimated. Estimates for claims incurred but not reported are actuarially determined and recorded. Based on the actuary's report, $2,197,855 will be liquidated over the next twelve months. Changes in the fund's claims liability amount during the current and prior three fiscal years are as follows: 2008-2009 2009-2010 2010-2011 2011-2012 Balance at Fiscal Year Beginning $ 6,895,000 7,875,000 7,899,000 7,877,000 Claims and Changes in Estimates $15,637,406 13,940,099 12,901,425 13,967, 831 Claims Payments $ (14,657,406) (13,916,099) (12,923,425) (13,770,831) Balance at Fiscal Year End $ 7,875,000 7,899,000 7,877,000 8,074,000 Included in the charges to other funds is an amount to fund future catastrophic losses not actuarially determined; and at September 30, 2012, unrestricted net position of $24,330,918 has been designated for this purpose. The Board has elected to accrue the larger of the discounted liability or undiscounted liability. At September 30, 2012, the undiscounted liability was the greater of the two amounts. The discount rate used in the calculation was 2.5 percent. NOTE 21 - COMMITMENTS AND CONTINGENCIES A. Litigation Various suits and claims are currently pending against the Board. It is impossible for the Board to accurately quantify the exposure involved given the jury's latitude m assessing compensatory and punitive damages, and the court's latitude in awarding attorney's fees. The Board intends to vigorously defend against these lawsuits and believes it has a good chance of prevailing on their merits. The Board is contingently liable with respect to lawsuits and other claims incidental to the ordinary course of its operations. In the opinion of management and based on the advice of legal counsel, the ultimate disposition of lawsuits will not have a material adverse effect on the financial position of the Board. 289 Indian River County, Florida Board of County Commissioners Notes To Financial Statements Year Ended September 30, 2012 NOTE 21 - COMMITMENTS AND CONTINGENCIES - Continued B. Contracts and Other Commitments The Board has various contracts and commitments outstanding at September 30, 2012. In the General Fund, contracts are for janitorial services, beach park landscape and custodial maintenance and external auditing services. In the Special Revenue Funds, contracts are for the construction of Fire Station 13 in the southern part of the County on 4th Street and 43rd Avenue, Oslo Road Widening from 43rd Avenue to 27th Avenue (Phase II) and from 58th Avenue to 43rd Avenue (Phase III), 66th Avenue Roadway Improvements from 16 Street to 4th Street, 27th Avenue Milling and Resurfacing, as well as a variety of other road paving and drainage projects. In the Capital Projects Fund, contracts are for the South County Regional Park Intergenerational Recreation Facility, PC South Algal Turf Scrubber Nutrient Recovery System and several sidewalk and road improvement projects throughout the County. In the Enterprise Funds, contracts are for Sandridge Golf Club driving range tee renovations, Segment III Landfill Expansion, Repaving of the Winter Beach, Roseland and Gifford customer convenience centers, West Wabasso gravity sewer system, South County Brine Disposal project and various other water and sewer projects. A summary of these projects at September 30, 2012, is as follows: Total Total Paid as of Contract Price September 30, 2012 Remaining Balance at September 30, 2012 General $ 570, 803 $ (339,750) $ 231,053 Special Revenue 32,783,500 (16,365,467) 16,418,033 Capital Projects 10,110,328 (7,292,557) 2,817,771 Enterprise 8,107,986 (4,590,047) 3,517,939 Total $ 51,572,617 $ (28,587,821) $ 22,984,796 C. Grants Amounts received or receivable from grantor agencies are subject to audit and adjustment by grantor agencies. If any expenditures are disallowed as a result of these audits, the claims for reimbursement to the grantor agency would become a liability of the Board. In the opinion of management, any such adjustments would not be significant. 290 f ehmann 5070 North Highway A1A Suite 250 Vero Beach, FL 32963 Ph: 772.234.8484 Fx: 772.234.8488 www.rehmann.com Independent Auditors' 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 The Honorable Board of County Commissioners Indian River County, Florida We have audited the accompanying fund financial statements of each major fund and the aggregate remaining fund information of Indian River County, Florida Board of County of Commissioners (the "Board") as of and for the year ended September 30, 2012, which collectively comprise the Board's fund financial statements as listed in the table of contents. 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 Management of the Board is responsible for establishing and maintaining effective internal control over financial reporting. In planning and performing our audit, we considered the Board's 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 Board's internal control over financial reporting. Accordingly, we do not express an opinion on the effectiveness of the Board'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 combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the financial statements will not be prevented or detected and corrected on a timely basis. Our consideration of the 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. CPAs & Consultants Wealth Advisors Corporate Investigators 291 NEXIA INTERNATIONAL VFkehmann The Honorable Board of County Commissioners Indian River County, Florida Page two Compliance and Other Matters As part of obtaining reasonable assurance about whether the Board'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 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 the Board of County Commissioners, management, and the Auditor General of the State of Florida and is not intended to be and should not be used by anyone other than these specified parties. -4m4, Vero Beach, Florida March 12, 2013 292 f ehmann Management Letter The Honorable Board of County Commissioners Indian River County, Florida 5070 North Highway A1A Suite 250 Vero Beach, FL 32963 Ph: 772.234.8484 Fx: 772.234.8488 www.rehmann.com We have audited the financial statements of each major fund and the aggregate remaining fund information of the Indian River County, Board of County of Commissioners (the "Board") as of and for the year ended September 30, 2012 and have issued our report thereon dated March 12, 2013. We conducted our audit in accordance with United States generally accepted auditing standards and 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. We have issued our Report on Internal Control over Financial Reporting and on Compliance and Other Matters, Report on Compliance with Requirements that Could Have a Direct and Material Effect on Each Major Federal Program and Major State Project and on Internal Control over Compliance in Accordance with OMB Circular A-133 and Chapter 10.550, Rules of the Auditor General, and Schedule of Findings and Questioned Costs. Disclosures in those reports and schedule, which are dated March 12, 2013, should be considered in conjunction with this management letter. Additionally, our audit was conducted in accordance with Chapter 10.550, Rules of the Auditor General, which govern the conduct of local government entity audits performed in the state of Florida. This letter includes the following information, which is not included in the aforementioned auditors' reports or schedules. In accordance with the Rules of the Auditor General (Section 10.554(1)(i)1.), there were no findings and recommendations made in the preceding annual financial audit report. As required by the Rules of the Auditor General (Section 10.554(1)(i)2.), the scope of our audit included a review of the provisions of Section 218.415, Florida Statutes, regarding the investment of public funds. In connection with our audit, we determined that the Board of County Commissioners complied with Section 218.415, Florida Statutes. The Rules of the Auditor General (Section 10.554(1)(i)3.) require that we address in the management letter any recommendations to improve financial management. In connection with our audit, we did not make any such recommendations. The Rules of the Auditor General (Section 10.554(1)(i)4.) require that we address violations of provisions of contracts and grant agreements or abuse that have occurred, or are likely to have occurred, that have an effect on the financial statements that is less than material but more than inconsequential. In connection with our audit, we did not identify any such findings. CPAs & Consultants Wealth Advisors Corporate Investigators 293 NEXIA INTERNATIONAL VFkehmann The Honorable Board of County Commissioners Indian River County, Florida Page two The Rules of the Auditor General (Section 10.554(1)(i)5.) provide that the auditor may, based on professional judgment, report the following matters that have an inconsequential effect on financial statement amounts, considering both quantitative and qualitative factors: (1) violations of provisions of contracts or grant agreements, fraud, illegal acts or abuse and (2) deficiencies in internal control that are not significant deficiencies. In connection with our audit, we did not identify any such findings. The Rules of the Auditor General (Section 10.554(1)(i)6.) require that the name or official title and legal authority for the primary government and each component unit of the reporting entity be disclosed in this management letter, unless disclosed in the notes to the financial statements. This disclosure has been included in the notes to the financial statements. This letter is intended solely for the information and use of the Legislative Auditing Committee, members of the Florida Senate and the Florida House of Representatives, the Florida Auditor General, federal and other state granting agencies, and applicable management within the entity, and is not intended to be and should not be used by anyone other than these specified parties. -4.,,c'i,-L, Vero Beach, Florida March 12, 2013 294 CLERK OF THE CIRCUIT COURT AND COMPTROLLER 295 Fkehmann Independent Auditors' Report The Honorable Jeffrey R. Smith Clerk of the Circuit Court and Comptroller Indian River County, Florida Rebmann Robson 5070 North Highway A1A Suite 250 Vero Beach, FL 32963 Ph: 772.234.8484 Fx: 772.234.8488 www.rehmann.com We have audited the accompanying fund financial statements of the major funds and the aggregate remaining fund information of the Indian River County, Florida Clerk of the Circuit Court (the "Clerk") as of and for the year ended September 30, 2012, which collectively comprise the Clerk's fund financial statements as listed in the table of contents. These financial statements are the responsibility of the Clerk's management. Our responsibility is to express opinions on the 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 presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinions. As described in Note 1, the fund financial statements present only the funds of the Clerk and do not purport to, and do not, present fairly the financial position of Indian River County as of September 30, 2012 the changes in its financial position, or, where applicable, its cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America. In our opinion, the fund financial statements referred to previously present fairly, in all material respects, the financial position of the major funds and the aggregate remaining fund information of the Clerk as of September 30, 2012, and the changes in financial position thereof for the year then ended in conformity with accounting principles generally accepted in the United States of America. In accordance with Government Auditing Standards, we have also issued a report dated March 12, 2013 on our consideration of the Clerk's internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be considered in assessing the results of our audit. This report is intended solely for the information and use of management, the Clerk, Indian River County, the Florida Auditor General, and applicable federal and state agencies, and is not intended to be and should not be used by anyone other than these specified parties. Vero Beach, Florida March 12, 2013 Rehmann is an independent member of Nexia International. CPAs & Consultants Wealth Advisors Corporate Investigators 296 NEXIA IN TBRNATIONAL Indian River County, Florida Clerk of the Circuit Court and Comptroller Balance Sheet Govermnental Funds September 30, 2012 Total Governmental General Special Revenue Funds ASSETS Cash and cash equivalents $ 307,357 $ 2,335,415 $ 2,642,772 Accounts receivable 78,565 78,565 Prepaid items 22,136 11,762 33,898 Due from other governments 3,995 - 3,995 Total assets $ 412,053 $ 2,347,177 $ 2,759,230 LIABILITIES AND FUND BALANCES Liabilities: Accounts payable Due to other governments Other deposits held in escrow Total liabilities 4,081 $ 43,036 222,713 269,830 8,747 $ 12,828 43,036 222,713 8,747 278,577 Fund Balances: Nonspendable: Prepaid items 22,136 11,762 33,898 Restricted for: Court -related costs and improvements 120,087 2,293,412 2,413,499 Committed to: Court operations - 33,256 33,256 Total fund balances 142,223 2,338,430 2,480,653 Total liabilities and fund balances $ 412,053 $ 2,347,177 $ 2,759,230 The accompanying notes are an integral part of the financial statements. 297 Indian River County, Florida Clerk of the Circuit Court and Comptroller Statement of Revenues, Expenditures, and Changes in Fund Balances Governmental Funds For the Year Ended September 30, 2012 Total Governmental General Special Revenue Funds REVENUES Intergovernmental $ 3,296,711 $ $ 3,296,711 Charges for services 1,108,511 354,884 1,463,395 Judgments, fines and forfeits - 152,058 152,058 Interest 363 6,539 6,902 Total revenues 4,405,585 EXPENDITURES General government 1,709,019 Court related 3,529,676 Total expenditures 5,238,695 Excess of revenues over 513,481 4,919,066 470,723 149,631 2,179,742 3,679,307 620,354 5,859,049 (under) expenditures (833,110) (106,873) (939,983) OTHER FINANCING SOURCES (USES) Transfers from Board of County Commissioners Transfers to Board of County Commissioners Transfer to other governments Total other financing sources (uses) Net change in fund balances Fund balances at beginning of year Fund balances at end of year 932,252 (5,375) (33,690) 932,252 (5,375) (33,690) 893,187 893,187 60,077 82,146 (106,873) 2,445,303 (46,796) 2,527,449 142,223 $ 2,338,430 $ 2,480,653 The accompanying notes are an integral part of the financial statements. 298 Indian River County, Florida Clerk of the Circuit Court and Comptroller Statement of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual General Fund For the Year Ended September 30, 2012 Budgeted Amount Original Final Actual Variance with Final Budget Positive (Negative) REVENUES Intergovernmental $ 3,327,601 $ 3,327,601 $ 3,296,711 $ (30,890) Charges for services 940,000 940,000 1,108,511 168,511 Interest - - 363 363 Total revenues 4,267,601 4,267,601 4,405,585 137,984 EXPENDITURES General government 1,630,655 1,684,216 1,709,019 (24,803) Court related 3,419,738 3,643,904 3,529,676 114,228 Total expenditures 5,050,393 5,328,120 5,238,695 89,425 Excess of revenues over (under) expenditures (782,792) (1,060,519) (833,110) 227,409 OTHER FINANCING SOURCES (USES) Transfers from other funds 69,062 128,267 (128,267) Transfers from Board of County Commissioners 932,252 932,252 932,252 Transfers to Board of County Commissioners - - (5,375) (5,375) Transfers to other governments (218,522) - (33,690) (33,690) Total other financing sources (uses) 782,792 1,060,519 893,187 (167,332) Net change in fund balances $ - $ - 60,077 $ 60,077 Fund balances at beginning of year 82,146 Fund balances at end of year $ 142,223 The accompanying notes are an integral part of the financial statements. 299 Indian River County, Florida Clerk of the Circuit Court and Comptroller Statement of Fiduciary Net Position Agency Fund September 30, 2012 ASSETS Cash and cash equivalents $ 4,426,491 Total assets $ 4,426,491 LIABILITIES Accounts payable $ 389 Due to other governments 1,208,493 Escrow deposits 3,217,609 Total liabilities $ 4,426,491 The accompanying notes are an integral part of the financial statements. 300 Indian River County, Florida Clerk of the Circuit Court and Comptroller Notes To Financial Statements Year Ended September 30, 2012 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The Clerk of the Circuit Court and Comptroller (Clerk) is a County agency and a local governmental entity pursuant to Article VIII, Section 1(d) of the Constitution of the State of Florida. For financial statement and reporting purposes, the Clerk does not meet the definition of a legally separate organization and is not considered to be a component unit. The Clerk is considered to be a part of the primary government of Indian River County. As part of the 2009 Legislative changes, the Clerk's court -related functions are now funded through general revenue appropriations and by trust funds supported by filing fees, service charges, fines, and court costs assessed to parties using the court system. Under 2009-204, Laws of Florida, revenue collected by the Clerk is remitted to the Florida Department of Revenue and deposited in the Clerk of Court Trust Fund within the Justice Administrative Commission. The fiscal year for court operations is July 1 to June 30 and the fiscal year for non -court operations is October 1 to September 30. The financial statements contained herein represent the financial transactions of the Clerk of the Circuit Court and Comptroller only. The format of the Clerk's statements has been prepared in accordance with the presentation requirements of GASB 34 for fund financial statements. The following is a summary of the significant accounting principles and policies used in the preparation of the accompanying financial statements. A. Description of Funds For reporting purposes, the accounting records are organized into the following two fund types: governmental funds and a fiduciary fund. Governmental Funds General Fund — The General Fund, which is a governmental fund, is used to account for all revenues and expenditures applicable to the general operations of the Clerk which are not accounted for in another fund. All financial resources, which are not accounted for and reported in another fund, are recorded in the General Fund. The governmental fund measurement focus is based upon determination of financial position and changes in financial position (sources, uses and balances of financial resources) rather than upon net income determination. Special Revenue Fund — The Special Revenue Fund accounts for the proceeds from recording fees to be used for modernizing the Clerk's public records systems, subsidizing court -related operational needs and program enhancements, and adding access to public records (by charging a computer usage fee). Fiduciary Fund Agency Fund — The Agency Fund is used to account for assets held by the Clerk in a trustee capacity or as an agent. These funds cannot be used to support the Clerk's own programs. 301 Indian River County, Florida Clerk of the Circuit Court and Comptroller Notes To Financial Statements Year Ended September 30, 2012 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued B. Basis of Accounting, Measurement Focus and Presentation The accounts of the governmental funds are maintained on the modified accrual basis. Under the modified accrual basis, expenditures are recorded at the time liabilities are incurred. Revenues are recorded when received in cash or when they are considered both measurable and available. The Clerk only considers revenue to be available if collected within the current fiscal year, except for Title IV -D grant revenue. This grant revenue is subject to accrual and has been recognized as revenue of the current fiscal period. Revenues collected in excess of expenditures are not considered earned and are reflected as liabilities. The fiduciary fund is accounted for on the accrual basis. C. Budgetary Requirements State statutes require the Clerk to prepare his budget in two parts: the budget relating to the State court system and the budget relating to the requirements of the Clerk as Clerk to the Board of County Commissioners, County auditor, and custodian of all County funds and other County -related duties. The budget relating to the State court system is prepared by the Clerk and submitted to the Florida Clerks of Court Operations Corporation (CCOC) prior to October 1 of each year. The budget relating to the requirements of the Clerk as Clerk to the Board of County Commissioners is prepared prior to May 1 and is reviewed, modified if required, and approved by the Board by October 1. Both budgets are adopted on a basis consistent with generally accepted accounting principles. The budget legally adopted by the Clerk must be balanced; that is, the total of estimated receipts, including funding from the Board, shall equal the total estimated expenditures. Management is authorized to transfer budgeted amounts between objects and departments in any fund as long as management does not exceed the total appropriations of a fund. D. Cash and Cash Equivalents Cash and cash equivalents include deposits and all highly liquid investments with maturities of ninety days or less when purchased. E. Prepaid Items This account represents prepayments for services that will be used in future periods. The Clerk's policy is to record the expenditure for the services when they are used rather than when the cash is disbursed. F. Capital Assets Acquisitions of equipment are recorded as expenditures at the time of purchase for governmental fund financial statements. Tangible personal property used by the Clerk in operations is reported in the financial statements of the County. Refer to the County -wide note on capital assets for capitalization threshold, depreciation methodology and useful lives. 302 Indian River County, Florida Clerk of the Circuit Court and Comptroller Notes To Financial Statements Year Ended September 30, 2012 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued G. Compensated Absences The Clerk accrues a liability for employees' rights to receive compensation for future absences when certain conditions are met. The Clerk does not, nor is he legally required to, accumulate expendable available financial resources to liquidate this obligation. Accordingly, the liability for compensated absences is not reported in the Clerk financial statements. Additional information on the liability is reflected in subsequent Note 6. H. Transfer In The Clerk budgeted one transfer in the amount of $128,267 from the public records modernization fund to subsidize court technology expenses. At year end, this amount was not needed due to recording fees exceeding budget. The non -court operations (finance function and board meeting recordings) were funded by the Board of County Commissioners in the amount of $932,252. I. Transfer Out In accordance with Florida Statutes, all non -court -related revenues in excess of expenditures as of year- end are owed to the Board of County Commissioners before November 1. On October 29, 2012, $5,375 in unspent budget funds was returned to the Board. This transfer is also reported as due to other governments on the balance sheet. With the change in fiscal year for court -related operations from September 30 to June 30, excess revenues over expenditures at June 30, in the amount of $33,690, were submitted to the CCOC through the Department of Revenue for deposit to the Clerk of Court Trust Fund. J. Fund Balance GASB Statement 54 — Fund Balance Reporting and Governmental Funds Type Definitions was implemented as of October 1, 2009. The Statement requires the fund balance for governmental funds to be reported in classifications that comprise a hierarchy based primarily on the extent to which the government is bound to honor constraints on the specific purposes for which amounts in those funds can be spent. Categories for fund balance are as follows: nonspendable, restricted, committed, assigned, and unassigned. For more information, see the County -wide note on fund balance. Per 2009 Florida Senate Bills 1718 and 2108, excess fees for the court related function are determined on June 30 of each year to coincide with the State fiscal year. Court -related revenues in excess of expenditures from July 1, 2012 through September 30, 2012 were $142,223; this amount is presented as fund balance of the General Fund at September 30, 2012. 303 Indian River County, Florida Clerk of the Circuit Court and Comptroller Notes To Financial Statements Year Ended September 30, 2012 NOTE 2 - CASH AND CASH EQUIVALENTS A. Deposits At September 30, 2012, the carrying value of the Clerk's deposits was $2,842,948 and the bank balance was $3,373,102. All deposits with financial institutions were 100% insured by federal depository insurance or by collateral provided by qualified public depositories to the State Treasurer in accordance with Section 280.01, Florida Statutes, also known as the Florida Security for Public Deposits Act. Cash on hand at September 30, 2012 was $1,900. The Clerk's office follows the above state law (governing custodial credit risk) for cash deposits. Refer to the County -wide Note 4, Cash and Cash Equivalents, for definition of custodial credit risk. B. Investments At September 30, 2012, the Clerk had $20,055 invested in the Fund B Surplus Funds Trust Fund (Fund B), a fluctuating net asset value pool. The fund was established by Florida Statute 218.405 and is administered by the Florida State Board of Administration (SBA). The SBA determined that Fund B did not meet the requirements of a SEC 2a7 -like fund; therefore, a fair value factor (total net asset value of Fund B divided by total participant balances) was provided for reporting the value of the Clerk's participation in Fund B at fiscal year-end. This resulted in a negative adjustment of 5.1% of the portfolio balance, or $1,023. Consequently, the net investment in Fund B is reported at $19,032. The Clerk also participated in the Florida Trust Day to Day Fund, part of the Florida Local Government Investment Trust Fund. The Day to Day fund is a money market product of various securities with an average maturity of 55 days. It was established by Florida Statute 163.01, is administered by the Florida Association of Court Clerks, and is marked to market daily. At year end, the Clerk maintained a balance of $4,205,383 in this trust fund. The Clerk's office elected not to adopt a formal investment policy and selected the alternative investment guidelines as provided by Florida Statutes 218.415, subsection 17, which specifically permitted these State authorized pools. This statute, the County -wide investment policy, and credit risks are explained in Note 4 of the County -wide financial statements. NOTE 3 — PENSION PLAN Florida Retirement System Plan Description: The Clerk's employees participate in the Florida Retirement System (FRS), a cost- sharing, multiple -employer public employee retirement system, administered by the Florida Department of Management Services. Effective July 1, 2011, the FRS became a contributory plan for all members, except DROP participants, whereby members contribute 3% and employers pay a rate based upon each member's employment class. Classes and rates in effect at July 1, 2012 were: regular class 5.18%, senior class 6.30%, DROP class 5.44%, and elected official class 10.23%. 304 Indian River County, Florida Clerk of the Circuit Court and Comptroller Notes To Financial Statements Year Ended September 30, 2012 NOTE 3 — PENSION PLAN - Continued Florida Retirement System - Continued Employees elect participation in either the defined benefit plan (Pension Plan) or the defined contribution plan (Investment Plan). If the employee enrolled in the FRS prior to July 1, 2011, normal retirement is age 62 with 6 years of service or 30 years of service, regardless of age. If the employee enrolled in the FRS on or after July 1, 2011, normal retirement is age 65 with 8 years of service or 33 years of service, regardless of age. Under the Pension Plan, early retirement is available before reaching normal retirement age and will be subject to an early-retirement reduction of 5% for each year your age at retirement is under your normal retirement age. For those employees who elect participation in the Investment Plan rather than the Pension Plan, vesting occurs after one year of service. Participants have access to the full value of their vested account balance when they leave FRS employment, regardless of age. These participants receive a defined contribution for self-direction in an investment product with a third party administrator selected by the State Board of Administration. Retirement benefits are determined by age, years of service, the average of the highest 5 or 8 fiscal years of pay, membership class and the payment option selected at retirement. For further information concerning the Florida Retirement System and contribution rates, please read County -wide Note 16, Pension Plans. Employer contributions to the FRS for the fiscal years ended September 30, 2010, 2011 and 2012, were equal to 10.62%, 9.92% and 5.21% of the annual covered payroll. Employer contributions to the FRS for the fiscal years ended September 30, 2010, 2011 and 2012 were $375,894, $371,781 and $186,001 respectively. Employee contributions for the fiscal years ended September 30, 2011 and 2012 were $23,576 and $91,895 respectively. Both employer and employee contributions were equal to 100% of the required contribution for each year. NOTE 4 — OTHER POSTEMPLOYMENT BENEFITS The Clerk participated in the Indian River County Other Postemployment Benefits Trust (IRCOT). The Clerk's 2012 annual required contribution of $165,045 was funded by the Board of County Commissioners in the amount of $26,362; non -court revenue in the amount of $25,176; court -related State expenditures in the amount of $111,624; and the public modernization trust fund in the amount of $1,883. This contribution was considered part of a total contribution determined by the IRCOT actuary. Further information on the IRCOT can be found in the County -wide financial statements and in the County notes. 305 Indian River County, Florida Clerk of the Circuit Court and Comptroller Notes To Financial Statements Year Ended September 30, 2012 NOTE 5— RISK MANAGEMENT Indian River County maintains a risk management program that provides for coverage of risks of loss related to torts, theft of, damage to and destruction of assets, errors or omissions, injuries to employees, natural disasters, and medical and life insurance coverage for employees and their eligible dependents. Various excess catastrophe insurance policies with a commercial carrier are also in force for claims exceeding the amount chargeable against the Self-insurance Fund. The Clerk participated in the County's self-insurance program during fiscal year 2012 at an annual cost of approximately $716,634. Further details of this self-insurance program are discussed in the County -wide financial statements and County notes. NOTE 6 — LONG-TERM LIABILITIES Changes in Long -Term Liabilities The following is a schedule of changes in long-term liabilities as of September 30, 2012: Beginning Ending Balance Balance 10/01/11 Additions Deletions 9/30/12 Accrued Compensated Absences $ 281,148 $ 350,541 $ 346,201 $ 285,488 Of the $285,488 liability for accrued compensated absences, management estimates that $75,000 will be due and payable within one year. The long-term liabilities are not reported in the financial statements of the Clerk since they are not payable from available spendable resources. They are reported in the financial statements of the County by the fund which normally pays the personnel service costs of the employee. 306 Fkehmann Rebmann Robson 5070 North Highway A1A Suite 250 Vero Beach, FL 32963 Ph: 772.234.8484 Fx: 772.234.8488 www.rehmann.com 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 The Honorable Jeffrey R. Smith Clerk of the Circuit Court and Comptroller Indian River County, Florida We have audited the fund financial statements of the major fund and the aggregate remaining fund information of the Indian River County, Florida Clerk of the Circuit Court (the "Clerk"), as of and for the year ended September 30, 2012, which collectively comprise the Clerk's fund financial statements and have issued our report thereon dated March 12, 2013. 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 Management of the Clerk is responsible for establishing and maintaining effective internal control over financial reporting. In planning and performing our audit, we considered the Clerk's internal control over financial reporting as a basis for designing our auditing procedures for the purpose of expressing our opinion on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the Clerk's internal control over financial reporting. Accordingly, we do not express an opinion on the effectiveness of the Clerk'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 combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the financial statements 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 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. Rehmann is an independent member of Nexia International. CPAs & Consultants Wealth Advisors Corporate Investigators 307 NEXIA TXT 'TS/ 4 WATT/11W T Rehmann The Honorable Jeffrey R. Smith Clerk of Court and Comptroller Page two Compliance and Other Matters As part of obtaining reasonable assurance about whether the Clerk'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 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 Clerk, Indian River County, others within the entity, the Florida Auditor General, and applicable federal and state agencies, and is not intended to be and should not be used by anyone other than these specified parties. -7(4„ Vero Beach, Florida March 12, 2013 308 Fkehmann Management Letter The Honorable Jeffrey R. Smith Clerk of the Circuit Court and Comptroller Indian River County, Florida Rebmann Robson 5070 North Highway A1A Suite 250 Vero Beach, FL 32963 Ph: 772.234.8484 Fx: 772.234.8488 www.rehmann.com We have audited the fund financial statements of the major fund and the aggregate remaining fund information of the Indian River County, Florida Clerk of the Circuit Court (the "Clerk"), as of and for the year ended September 30, 2012, which collectively comprise the Clerk's fund financial statements and have issued our report thereon dated March 12, 2013. We conducted our audit 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 Chapter 10.550, Rules of the Florida Auditor General. We have issued our Independent Auditors' Report on Internal Control over Financial Reporting and on Compliance and Other Matters Based on an Audit of the Financial Statements Performed in Accordance with Government Auditing Standards. Disclosures in that report, which is dated March 12, 2013, should be considered in conjunction with this management letter. Additionally, our audit was conducted in accordance with Chapter 10.550, Rules of the Auditor General, which govern the conduct of local governmental entity audits performed in the State of Florida. This letter includes the following information which is not included in the aforementioned auditors' report: Section 10.554(1)(i)1., Rules of the Auditor General, requires that we determine whether or not corrective actions have been taken to address findings and recommendations made in the preceding annual financial audit report. There were no findings or recommendations in the preceding annual financial audit report. Section 10.554(1)(i)2., Rules of the Auditor General, requires our audit to include a review of the provisions of Section 218.415, Florida Statutes, regarding the investment of public funds. In connection with our audit, we determined that the Clerk complied with Section 218.415, Florida Statutes. Section 10.554(1)(i)3., Rules of the Auditor General, requires that we address in the management letter any recommendations to improve financial management. In connection with our audit, we did not identify any such recommendations. Section 10.554(1)(i)4., Rules of the Auditor General, requires that we address violations of provisions of contracts or grant agreements, or abuse that have occurred, or are likely to have occurred, that have an effect on the financial statements that is less than material, but more than inconsequential. In connection with our audit, we did. Rehmann is an independent member of Nexia International. CPAs & Consultants Wealth Advisors Corporate Investigators 309 NEXIA INTERNATIONAL Rehmann The Honorable Jeffrey R. Smith Clerk of the Circuit Court and Comptroller Page two Section 10.554(1)(1)5., Rules of the Auditor General, provides that the auditor may, based on professional judgment, report the following matters that have an inconsequential effect on financial statements, considering both quantitative and qualitative factors: (1) violations of provisions of contracts or grant agreements, or fraud, illegal acts, or abuse and, (2) deficiencies in internal control that are not significant deficiencies. In connection with our audit, we did not identify any such findings. Section 10.554(1)(i)6., Rules of the Auditor General, requires that the name or official title and legal authority for the primary government and each component unit of the reporting entity be disclosed in this management letter, unless disclosed in the notes to the financial statements. This information is disclosed in the notes to the financial statements. Section 10.554(1)(i)8., Rules of the Auditor General, requires a statement as to whether or not the Clerk complied with the requirements of Sections 28.35 and 28.36, Florida Statutes. In connection with our audit, we determined that the Clerk complied with such requirements. Our management letter is intended solely for the information and use of the Legislative Auditing Committee, members of the Florida Senate and the Florida House of Representatives, the Florida Auditor General, Federal and other granting agencies, and applicable management and is not intended to be and should not be used by anyone other than these specified parties. -ed-4, Vero Beach, Florida March 12, 2013 310 PROPERTY APPRAISER 311 Fkehmann Independent Auditors' Report The Honorable David C. Nolte Property Appraiser Indian River County, Florida Rebmann Robson 5070 North Highway A1A Suite 250 Vero Beach, FL 32963 Ph: 772.234.8484 Fx: 772.234.8488 www.rehmann.com We have audited the accompanying fund financial statements of the major fund of the Indian River County, Florida Property Appraiser (the "Property Appraiser") as of and for the year ended September 30, 2012, which comprise the Property Appraiser's fund financial statements as listed in the table of contents. These financial statements are the responsibility of the Property Appraiser's management. Our responsibility is to express an opinion on the 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 presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion. As described in Note 1, the fund financial statements present only the fund of the Property Appraiser and do not purport to, and do not, present fairly the financial position of Indian River County as of September 30, 2012 the changes in its financial position, or, where applicable, its cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America. In our opinion, the fund financial statements referred to previously present fairly, in all material respects, the financial position of the funds of the Property Appraiser as of September 30, 2012, and the changes in financial position thereof for the year then ended in conformity with accounting principles generally accepted in the United States of America. In accordance with Government Auditing Standards, we have also issued a report dated March 12, 2013 on our consideration of the Property Appraiser's internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be considered in assessing the results of our audit. This report is intended solely for the information and use of management, the Property Appraiser, Indian River County, the Florida Auditor General, and applicable federal and state agencies, and is not intended to be and should not be used by anyone other than these specified parties. Vero Beach, Florida March 12, 2013 Rehmann is an independent member of Nexia International. CPAs & Consultants Wealth Advisors Corporate Investigators 312 NEXIA IN TBRNATIONAL Indian River County, Florida Property Appraiser Balance Sheet General Fund September 30, 2012 ASSETS Cash and cash equivalents Accounts receivable Total assets $ 171,932 3,385 $ 175,317 LIABILITIES AND FUND BALANCES Liabilities: Accounts payable $ 38,591 Due to other governments 121,391 Deposits 15,335 Total liabilities 175,317 Fund Balances: Unassigned Total fund balances Total liabilities and fund balances $ 175,317 The accompanying notes are an integral part of the financial statements. 313 Indian River County, Florida Property Appraiser Statement of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual General Fund For the Year Ended September 30, 2012 Budgeted Amount Original Final Actual Variance with Final Budget Positive (Negative) REVENUES Charges for services $ 2,818,582 $ 2,818,100 $ 2,826,103 $ 8,003 Interest - - 1,324 1,324 Total revenues 2,818,582 2,818,100 2,827,427 9,327 EXPENDITURES General government 2,818,582 2,818,100 2,706,036 112,064 Total expenditures 2,818,582 2,818,100 2,706,036 112,064 Excess of revenues over (under) expenditures OTFIER FINANCING USES Transfers to Board of County Commissioners Transfers to other governments Total other financing uses Net change in fund balances Fund balances at beginning of year Fund balances at end of year 121,391 121,391 - - (109,762) (109,762) (11,629) (11,629) (121,391) (121,391) The accompanying notes are an integral part of the financial statements. 314 Indian River County, Florida Property Appraiser Notes To Financial Statements Year Ended September 30, 2012 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The Property Appraiser is a County agency and a local governmental entity pursuant to Article VIII, Section 1(d) of the Constitution of the State of Florida. For financial statement and reporting purposes, the Property Appraiser does not meet the definition of a legally separate organization and is not considered to be a component unit. The Property Appraiser is considered to be a part of the primary government of Indian River County. The financial statements contained herein represent the financial transactions of the Property Appraiser only. The format of the Property Appraiser's statements has been prepared in accordance with the presentation requirements of GASB 34 for fund financial statements. The following is a summary of the significant accounting principles and policies used in the preparation of the accompanying financial statements. A. Description of Funds For reporting purposes, the accounting records are organized on the basis of governmental funds. Governmental Fund General Fund — The General Fund, which is a governmental fund, is used to account for all revenues and expenditures applicable to the general operations of the Property Appraiser. All financial resources, which are not accounted for and reported in another fund, are recorded in the General Fund. The governmental fund measurement focus is based upon determination of financial position and changes in financial position (sources, uses and balances of financial resources) rather than upon net income determination. B. Basis of Accounting, Measurement Focus and Presentation The accounts of the governmental funds are maintained on the modified accrual basis. Under the modified accrual basis, expenditures are recorded at the time liabilities are incurred. Revenues are recorded when received in cash or when they are considered both measurable and available. Revenues collected in excess of expenditures are not considered earned and are reflected as liabilities. C. Budgetary Requirements State statutes require the Property Appraiser to prepare an annual budget, which clearly reflects the revenues available to his office and the functions for which money is to be expended. The budgeted revenues and expenditures are subject to the review and approval of the Department of Revenue. Management is authorized to transfer budgeted amounts between objects and departments as long as management does not exceed the total appropriations of a fund. Department of Revenue approval is only required when unanticipated revenues are received that management wishes to have appropriated, thereby increasing the total appropriations. The budget is prepared on a basis consistent with generally accepted accounting principles. 315 Indian River County, Florida Property Appraiser Notes To Financial Statements Year Ended September 30, 2012 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES — Continued D. Capital Assets Acquisitions of equipment are recorded as expenditures at the time of purchase for governmental fund financial statements. Tangible personal property used by the Property Appraiser in operations is reported in the financial statements of the County. Refer to the County -wide note on capital assets for capitalization threshold, depreciation methodology and useful lives. E. Compensated Absences The Property Appraiser accrues a liability for employees' rights to receive compensation for future absences when certain conditions are met. The Property Appraiser does not, nor is he legally required to, accumulate expendable available financial resources to liquidate this obligation. Accordingly, the liability for compensated absences is not reported on the Property Appraiser's financial statements. Additional information on the liability is reflected in subsequent Note 6. F. Transfer Out In accordance with Florida Statutes, all revenues in excess of expenditures as of year-end are owed to the Board of County Commissioners and other governments. These "excess fees" totaled $121,391 and are reported as transfers out. These transfers are also reflected as due to other governments on the balance sheet. G. Fund Balance GASB Statement 54 — Fund Balance Reporting and Governmental Funds Type Definitions was implemented as of October 1, 2009. This Statement requires the fund balance for governmental funds to be reported in classifications that comprise a hierarchy based primarily on the extent to which the government is bound to honor constraints on the specific purposes for which amounts in those funds can be spent. Categories for fund balance are as follows: nonspendable, restricted, committed, assigned, and unassigned. For more information, see the County -wide note on fund balance. NOTE 2 - CASH Deposits At September 30, 2012, the carrying amount of the Property Appraiser's deposits was $171,862 and the bank balance was $214,123. All deposits with financial institutions were 100% insured by federal depository insurance or by collateral provided by qualified public depositories to the State Treasurer in accordance with Section 280.01, Florida Statutes, also known as the Florida Security for Public Deposits Act. The Property Appraiser adopted the Board of County Commissioners' investment policy. This policy requires the Property Appraiser's office to follow the above state law (governing custodial credit risk) for cash deposits. Refer to the County -wide Note 4, Cash and Cash Equivalents, for definition of custodial credit risk. Cash on hand at September 30, 2012 was $70. 316 Indian River County, Florida Property Appraiser Notes To Financial Statements Year Ended September 30, 2012 NOTE 3— PENSION PLAN Florida Retirement System Plan Description: The Property Appraiser's employees participate in the Florida Retirement System (FRS), a cost-sharing, multiple -employer public employee retirement system, administered by the Florida Department of Management Services. Effective July 1, 2011, the FRS became a contributory plan for all members, except DROP participants, whereby members contribute 3% and employers pay a rate based upon each member's employment class (regular class 5.18%, senior class 6.30%, and elected official class 10.23%). Employees elect participation in either the defined benefit plan (Pension Plan) or the defined contribution plan (Investment Plan). If the employee enrolled in the FRS prior to July 1, 2011, normal retirement is age 62 with 6 years of service or 30 years of service, regardless of age. If the employee enrolled in the FRS on or after July 1, 2011, normal retirement is age 65 with 8 years of service or 33 years of service, regardless of age. Under the Pension Plan, early retirement is available before reaching normal retirement age and will be subject to an early-retirement reduction of 5% for each year your age at retirement is under your normal retirement age. For those employees who elect participation in the Investment Plan rather than the Pension Plan, vesting occurs after one year of service. Participants have access to the full value of their vested account balance when they leave FRS employment, regardless of age. These participants receive a defined contribution for self-direction in an investment product with a third party administrator selected by the State Board of Administration. Retirement benefits are determined by age, years of service, the average of the highest 5 or 8 fiscal years of pay, membership class and the payment option selected at retirement. For further information concerning the Florida Retirement System and contribution rates, please read County -wide Note 15, Pension Plans. Employer contributions to the FRS for the fiscal years ended September 30, 2010, 2011, and 2012, were equal to 10.73%, 10.02%, and 5.41% of the annual covered payroll. Employer contributions to the FRS for the fiscal years ended September 30, 2010, 2011, 2012 were $224,920, $195,025, and $102,232 respectively. Employee contributions for the fiscal years ended September 30, 2011 and 2012 were $13,320 and $52,696 respectively. Both employer and employee contributions were equal to 100% of the required contribution for each year. NOTE 4 — OTHER POSTEMPLOYMENT BENEFITS The Property Appraiser participated in the Indian River County Other Post Employment Benefits Trust (IRCOT). The Property Appraiser's 2012 annual required contribution of $65,905 was funded by the Board of County Commissioners as part of a total contribution determined by the IRCOT actuary. Further information on the IRCOT can be found in the County -wide financial statements and in the County notes. 317 Indian River County, Florida Property Appraiser Notes To Financial Statements Year Ended September 30, 2012 NOTE 5 — RISK MANAGEMENT Indian River County maintains a risk management program that provides for coverage of risks of loss related to torts, theft of, damage to and destruction of assets, errors or omissions, injuries to employees, natural disasters, and medical and life insurance coverage for employees and their eligible dependents. Various excess catastrophe insurance policies with a commercial carrier are also in force for claims exceeding the amount chargeable against the Self-insurance Fund. The Property Appraiser participated in the County's self-insurance program during fiscal year 2012 at an annual cost of approximately $271,260. Further details on the self-insurance program are discussed in the County -wide financial statements and County notes. NOTE 6 — LONG-TERM LIABILITIES Changes in Long -Term Liabilities A summary of changes in long-term liabilities is as follows: Accrued Compensated Absences Beginning Ending Balance Balance 10/01/11 Additions Deletions 09/30/12 $ 75,789 $ 106,709 $ 161,476 $ 21,022 Of the $21,022 liability for accrued compensated absences, management estimates that $10,000 will be due and payable within one year. The long-term liabilities are not reported in the financial statements of the Property Appraiser since they are not payable from available spendable resources. They are reported in the financial statements of the County. NOTE 7 — COMMITMENTS AND CONTINGENCIES Litigation Various suits and claims are currently pending against the Property Appraiser. It is impossible for the Property Appraiser to accurately quantify the exposure involved given the jury's latitude in assessing compensatory and punitive damages, and the court's latitude in awarding attorney's fees. The Property Appraiser intends to vigorously defend against these lawsuits and believes he has a good chance of prevailing on their merits. In the opinion of management and based on the advice of legal counsel, the ultimate disposition of these lawsuits will not have a material adverse effect on the financial position of the Property Appraiser. 318 Fkehmann Rebmann Robson 5070 North Highway A1A Suite 250 Vero Beach, FL 32963 Ph: 772.234.8484 Fx: 772.234.8488 www.rehmann.com 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 The Honorable David C. Nolte Property Appraiser Indian River County, Florida We have audited the fund financial statements of the major fund of the Indian River County, Florida Property Appraiser ("the Property Appraiser"), as of and for the year ended September 30, 2012, which comprises the Property Appraiser's fund financial statements and have issued our report thereon dated March 12, 2013. 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 Management of the Property Appraiser is responsible for establishing and maintaining effective internal control over financial reporting. In planning and performing our audit, we considered the Property Appraiser's internal control over financial reporting as a basis for designing our auditing procedures for the purpose of expressing our opinion on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the Property Appraiser's internal control over financial reporting. Accordingly, we do not express an opinion on the effectiveness of the Property Appraiser'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 combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the financial statements 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 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. Rehmann is an independent member of Nexia International. CPAs & Consultants Wealth Advisors Corporate Investigators 319 NEXIA IN TBRNATIONAL Rehmann The Honorable David C. Nolte Property Appraiser Page two Compliance and Other Matters As part of obtaining reasonable assurance about whether the Property Appraiser'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 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 Property Appraiser, Indian River County, others within the entity, the Florida Auditor General, and applicable federal and state agencies, and is not intended to be and should not be used by anyone other than these specified parties. -7(4„ Vero Beach, Florida March 12, 2013 320 Fkehmann Management Letter The Honorable David C. Nolte Property Appraiser Indian River County, Florida Rebmann Robson 5070 North Highway A1A Suite 250 Vero Beach, FL 32963 Ph: 772.234.8484 Fx: 772.234.8488 www.rehmann.com We have audited the fund financial statements of the major fund information of the Indian River County, Florida Property Appraiser (the "Property Appraiser"), as of and for the year ended September 30, 2012, which comprises the Property Appraiser's fund financial statements and have issued our report thereon dated March 12, 2013. We conducted our audit 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 Chapter 10.550, Rules of the Florida Auditor General. We have issued our Independent Auditors' Report on Internal Control over Financial Reporting and on Compliance and Other Matters Based on an Audit of the Financial Statements Performed in Accordance with Government Auditing Standards. Disclosures in that report, which is dated March 12, 2013, should be considered in conjunction with this management letter. Additionally, our audit was conducted in accordance with Chapter 10.550, Rules of the Auditor General, which govern the conduct of local governmental entity audits performed in the State of Florida. This letter includes the following information which is not included in the aforementioned auditors' report: Section 10.554(1)(i)1., Rules of the Auditor General, requires that we determine whether or not corrective actions have been taken to address findings and recommendations made in the preceding annual financial audit report. There were no findings or recommendations in the preceding annual financial audit report. Section 10.554(1)(i)2., Rules of the Auditor General, requires our audit to include a review of the provisions of Section 218.415, Florida Statutes, regarding the investment of public funds. In connection with our audit, we determined that the Property Appraiser complied with Section 218.415, Florida Statutes. Section 10.554(1)(i)3., Rules of the Auditor General, requires that we address in the management letter any recommendations to improve financial management. In connection with our audit, we did not identify any such recommendations. Section 10.554(1)(i)4., Rules of the Auditor General, requires that we address violations of provisions of contracts or grant agreements, or abuse that have occurred, or are likely to have occurred, that have an effect on the financial statements that is less than material, but more than inconsequential. In connection with our audit, we did not identify any such findings. Rehmann is an independent member of Nexia International. CPAs & Consultants Wealth Advisors Corporate Investigators 321 NEXIA IN TBRNATIONAL Rehmann The Honorable David C. Nolte Property Appraiser Page two Section 10.554(1)(1)5., Rules of the Auditor General, provides that the auditor may, based on professional judgment, report the following matters that have an inconsequential effect on financial statements, considering both quantitative and qualitative factors: (1) violations of provisions of contracts or grant agreements, or fraud, illegal acts, or abuse and, (2) deficiencies in internal control that are not significant deficiencies. In connection with our audit, we did not identify any such findings. Section 10.554(1)(i)6., Rules of the Auditor General, requires that the name or official title and legal authority for the primary government and each component unit of the reporting entity be disclosed in this management letter, unless disclosed in the notes to the financial statements. This information is disclosed in the notes to the financial statements. This letter is intended solely for the information and use of the Legislative Auditing Committee, members of the Florida Senate and the Florida House of Representatives, the Florida Auditor General, Federal and other granting agencies, and applicable management and is not intended to be and should not be used by anyone other than these specified parties. -ert,,, Vero Beach, Florida March 12, 2013 322 SHERIFF 323 Fkehmann Independent Auditors' Report The Honorable Deryl Loar Sheriff Indian River County, Florida Rebmann Robson 5070 North Highway A1A Suite 250 Vero Beach, FL 32963 Ph: 772.234.8484 Fx: 772.234.8488 www.rehmann.com We have audited the accompanying fund financial statements of the major funds and the aggregate remaining fund information of the Indian River County, Florida Sheriff (the "Sheriff") as of and for the year ended September 30, 2012, which collectively comprise the Sheriff's fund financial statements as listed in the table of contents. These financial statements are the responsibility of the Sheriff's management. Our responsibility is to express opinions on the 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 presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinions. As described in Note 1, the fund financial statements present only the funds of the Sheriff and do not purport to, and do not, present fairly the financial position of Indian River County as of September 30, 2012 the changes in its financial position, or, where applicable, its cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America. In our opinion, the fund financial statements referred to previously present fairly, in all material respects, the financial position of the major funds and the aggregate remaining fund information of the Sheriff as of September 30, 2012, and the changes in financial position thereof for the year then ended in conformity with accounting principles generally accepted in the United States of America. In accordance with Government Auditing Standards, we have also issued a report dated March 12, 2013 on our consideration of the Sheriff's internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be considered in assessing the results of our audit. This report is intended solely for the information and use of management, the Sheriff, Indian River County, the Florida Auditor General, and applicable federal and state agencies, and is not intended to be and should not be used by anyone other than these specified parties. Vero Beach, Florida March 12, 2013 Rehmann is an independent member of Nexia International. CPAs & Consultants Wealth Advisors Corporate Investigators 324 NEXIA IN TBRNATIONAL Indian River County, Florida Sheriff Balance Sheet Governmental Funds September 30, 2012 General Total Special Governmental Revenue Funds ASSETS Cash and cash equivalents $ 1,554,284 $ 2,002,061 $ 3,556,345 Accounts receivable - net 45,716 7,422 53,138 Due from other governments 5,633 5,633 Prepaid items 118 - 118 Total assets $ 1,600,118 $ 2,015,116 $ 3,615,234 LIABILITIES AND FUND BALANCES Liabilities: Accounts payable $ 1,593,358 $ 118,450 $ 1,711,808 Due to other governments 6,760 6,760 Total liabilities 1,600,118 118,450 1,718,568 Fund Balances: Nonspendable: Prepaid items Restricted for: Law enforcement/public safety Committed for: Law enforcement/public safety Unassigned Total fund balances Total liabilities and fund balances 118 (118) - 118 1,505,098 1,505,098 391,568 391,568 - (118) 1,896,666 1,896,666 $ 1,600,118 $ 2,015,116 $ 3,615,234 The accompanying notes are an integral part of the financial statements. 325 Indian River County, Florida Sheriff Statement of Revenues, Expenditures, and Changes in Fund Balances Governmental Funds For the Year Ended September 30, 2012 REVENUES Intergovernm ental Charges for services Judgments, fines and forfeits Interest Miscellaneous Total revenues General Total Special Governmental Revenue Funds $ 64,478 $ 64,478 308,684 308,684 183,138 183,138 23 23 62,026 - 62,026 62,026 556,323 618,349 EXPENDITURES Public safety 35,632,059 908,952 36,541,011 Court related 1,504,980 8,821 1,513,801 Total expenditures 37,137,039 917,773 38,054,812 Excess of revenues over (under) expenditures (37,075,013) OTHER FINANCING SOURCES (USES) Transfers from Board of County Commissioners Transfers to Board of County Commissioners Total other financing sources Net change in fund balances Fund balances at beginning of year Fund balances at end of year 37,079,084 (4,071) 37,075,013 (361,450) (37,436,463) 230,805 37,309,889 (4,071) 230,805 37,305,818 (130,645) 2,027,311 (130,645) 2,027,311 $ 1,896,666 $ 1,896,666 The accompanying notes are an integral part of the financial statements. 326 Indian River County, Florida Sheriff Statement of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual General Fund For the Year Ended September 30, 2012 Budgeted Amount Original Final Actual REVENUES Miscellaneous $ - $ 62,026 $ 62,026 $ Total revenues - 62,026 62,026 Variance with Final Budget Positive (Negative) EXPENDITURES Public safety 36,883,794 35,636,120 35,632,059 4,061 Court related 1,574,313 1,504, 990 1,504,980 10 Total expenditures 38,458,107 37,141,110 37,137,039 4,071 Excess of revenues over (under) expenditures (38,458,107) (37,079,084) (37,075,013) 4,071 OTHER FINANCING SOURCES (USES) Transfers from Board of County Commissioners 38,458,107 37,079,084 37,079,084 Transfers to Board of County Commissioners - - (4,071) (4,071) Total other financing sources 38,458,107 37,079,084 37,075,013 (4,071) Net change in fund balances Fund balances at beginning of year Fund balances at end of year $ - $ The accompanying notes are an integral part of the financial statements. 327 Indian River County, Florida Sheriff Statement of Fiduciary Net Position Agency Fund September 30, 2012 ASSETS Cash and cash equivalents $ 84,088 Total assets $ 84,088 LIABILITIES Escrow deposits $ 84,088 Total liabilities $ 84,088 The accompanying notes are an integral part of the financial statements. 328 Indian River County, Florida Sheriff Notes To Financial Statements Year Ended September 30, 2012 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The Sheriff is a County agency and a local governmental entity pursuant to Article VIII, Section 1(d) of the Constitution of the State of Florida. For financial statement and reporting purposes, the Sheriff does not meet the definition of a legally separate organization and is not considered to be a component unit. The Sheriff is considered to be a part of the primary government of Indian River County. The financial statements contained herein represent the financial transactions of the Sheriff only. The format of the Sheriff's statements has been prepared in accordance with the presentation requirements of GASB 34 for fund financial statements. The following is a summary of the significant accounting principles and policies used in the preparation of the accompanying financial statements. A. Description of Funds For reporting purposes, the accounting records are organized into the following two fund types: governmental funds and a fiduciary fund. Governmental Funds General Fund — The General Fund, which is a governmental fund, is used to account for all revenues and expenditures applicable to the general operations of the Sheriff, which are not accounted for in another fund. All financial resources, which are not accounted for and reported in another fund, are recorded in the General Fund. The governmental fund measurement focus is based upon determination of financial position and changes in financial position (sources, uses and balances of financial resources) rather than upon net income determination. Special Revenue Fund — The Special Revenue Fund accounts for the proceeds of specific revenue sources that are legally restricted or committed for public safety such as police education, special purpose equipment, jail commissary, and special law enforcement activities. Fiduciary Fund Agency Fund — The Agency Fund is used to account for assets held by the Sheriff in a trustee capacity or as an agent. These funds cannot be used to support the Sheriff's own programs. B. Basis of Accounting, Measurement Focus and Presentation The accounts of the governmental funds are maintained on the modified accrual basis. The fiduciary fund is reported on an accrual basis. Under the modified accrual basis, expenditures are recorded at the time liabilities are incurred. Revenues are recorded when received in cash or when they are considered both measurable and available. Revenues collected in excess of expenditures are not considered earned and are reflected as liabilities. 329 Indian River County, Florida Sheriff Notes To Financial Statements Year Ended September 30, 2012 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued C. Budgetary Requirements State statutes require the Sheriff to submit a proposed budget to the Board of County Commissioners by May 1 of each year. The budget reflects the estimated amounts of all proposed expenditures for operating and equipping the Sheriff's office and jail. Capital improvements for these buildings are funded by the Board. The budget is prepared on a basis consistent with generally accepted accounting principles. After review and approval of the budget by the Board, the Sheriff is authorized to transfer budgeted amounts between objects and departments as long as he does not exceed the total appropriations approved by the Board. Increases in the total budget are subject to the review and approval of the Board. The budgeted revenues and expenditures in the accompanying financial statements reflect all amendments approved by the Board of County Commissioners. D. Compensated Absences The Sheriff accrues a liability for employees' rights to receive compensation for future absences when certain conditions are met. The Sheriff does not, nor is he legally required to, accumulate expendable available financial resources to liquidate this obligation. Accordingly, the liability for compensated absences is not reported on the Sheriff's financial statements. Additional information on the liability is reflected in subsequent Note 7. E. Transfer Out In accordance with Florida Statutes, all revenues in excess of expenditures as of year-end are owed to the Board of County Commissioners. This unspent budget totaled $4,071 and was reported as a transfer to the Board of County Commissioners at year end. These transfers are also included as due to other governments on the balance sheet. F. Fund Balance GASB Statement 54 — Fund Balance Reporting and Governmental Funds Type Definitions was implemented as of October 1, 2009. This Statement requires the fund balance for governmental funds to be reported in classifications that comprise a hierarchy based primarily on the extent to which the government is bound to honor constraints on the specific purposes for which amounts in those funds can be spent. Categories for fund balance are as follows: nonspendable, restricted, committed, assigned, and unassigned. For more information, see the County -wide note on fund balance. 330 Indian River County, Florida Sheriff Notes To Financial Statements Year Ended September 30, 2012 NOTE 2 - CASH Deposits At September 30, 2012, the carrying amount of the Sheriff's deposits was $3,640,433, and the bank balance was $5,700,087. All deposits with financial institutions were 100% insured by federal depository insurance or by collateral provided by qualified public depositories to the State Treasurer in accordance with Section 280.01, Florida Statutes, also known as the Florida Security for Public Deposits Act. The Sheriffs office elected not to adopt a formal investment policy and selects the alternative investment guidelines as provided by Florida Statutes 218.415, subsection 17. Refer to the County -wide Note 4, Cash and Cash Equivalents, for the definition of custodial credit risk. NOTE 3 — CAPITAL ASSETS Tangible personal property used by the Sheriff in operations is reported in the financial statements of the County. State law requires the Sheriff to account for all tangible property used by the Sheriff. A summary of changes in capital assets is as follows: Beginning Ending Balance Balance 10/01/11 Additions Deletions 09/30/12 Tangible Personal Property $ 19,021,420 $ 1,186,435 $1,041,639 $ 19,166,216 Refer to the County -wide Note on capital assets for capitalization threshold, depreciation methodology and useful lives. 331 Indian River County, Florida Sheriff Notes To Financial Statements Year Ended September 30, 2012 NOTE 4 — PENSION PLAN Florida Retirement System Plan Description: The Sheriff's employees participate in the Florida Retirement System (FRS), a cost- sharing, multiple -employer public employee retirement system, administered by the Florida Department of Management Services. Effective July 1, 2011, the FRS became a contributory plan for all members, except DROP participants, whereby members contribute 3% and employers pay a rate based upon each member's employment class (regular class 5.18%, special risk 14.90%, senior class 6.30%, and elected official class 10.23%). Employees elect participation in either the defined benefit plan (Pension Plan) or the defined contribution plan (Investment Plan). If the employee enrolled in the FRS prior to July 1, 2011, normal retirement is age 62 with 6 years of service or 30 years of service, regardless of age. If the employee enrolled in the FRS on or after July 1, 2011, normal retirement is age 65 with 8 years of service or 33 years of service, regardless of age. Under the Pension Plan, early retirement is available before reaching normal retirement age and will be subject to an early-retirement reduction of 5% for each year your age at retirement is under your normal retirement age. For those employees who elect participation in the Investment Plan rather than the Pension Plan, vesting occurs after one year of service. Participants have access to the full value of their vested account balance when they leave FRS employment, regardless of age. These participants receive a defined contribution for self-direction in an investment product with a third party administrator selected by the State Board of Administration. Retirement benefits are determined by age, years of service, the average of the highest 5 or 8 fiscal years of pay, membership class and the payment option selected at retirement. For further information concerning the Florida Retirement System and contribution rates, please read County -wide Note 16, Pension Plans. Employer contributions to the FRS for the fiscal years ended September 30, 2010, 2011, and 2012 were equal to 18.29%, 17.87%, and 11.30% of the annual covered payroll. Employer contributions to the FRS for the fiscal years ended September 30, 2010, 2011, 2012 were $4,294,161, $4,048,292, and $2,544,542 respectively. Employee contributions for the fiscal years ended September 30, 2011 and 2012 were $146,774 and $629,659 respectively. Both employer and employee contributions were equal to 100% of the required contribution for each year. NOTE 5 — OTHER POSTEMPLOYMENT BENEFITS The Sheriff participated in the Indian River County Other Post Employment Benefits Trust (IRCOT). The Sheriff's 2012 annual required contribution of $1,101,834 was funded by the Board of County Commissioners as part of a total contribution determined by the IRCOT actuary. Further information on the IRCOT can be found in the County -wide financial statements and County notes. 332 Indian River County, Florida Sheriff Notes To Financial Statements Year Ended September 30, 2012 NOTE 6 — RISK MANAGEMENT Indian River County maintains a risk management program that provides for coverage of risks of loss related to torts, theft of, damage to and destruction of assets, errors or omissions, injuries to employees, natural disasters, and medical and life insurance coverage for employees and their eligible dependents. Various excess catastrophe insurance policies with a commercial carrier are also in force for claims exceeding the amount chargeable against the Self-insurance Fund. The Sheriff participated in the County's self-insurance program during fiscal year 2012 at an annual cost of approximately $3,458,737. Further details on this self-insurance program are disclosed in the County -wide financial statements and County notes. NOTE 7 — LONG-TERM LIABILITIES Changes in Long -Term Liabilities The following is a schedule of changes in long-term liabilities as of September 30, 2012: Beginning Ending Balance Balance 10/01/11 Additions Deletions 09/30/12 Accrued Compensated Absences $ 6,054,416 $ 3,594,958 $ 3,311,513 $ 6,337,861 Of the $6,337,861 liability for accrued compensated absences, management estimates that $3,100,000 will be due and payable within one year. The long-term liabilities are not reported in the financial statements of the Sheriff since they are not payable from available spendable resources. They are reported in the County -wide financial statements and County notes. NOTE 8 — OPERATING LEASES The Sheriff has entered into noncancelable operating leases as lessee of a building, hangar, mail machine, and copiers. Lease expenditures totaled $105,639 for the year ended September 30, 2012. The following is a schedule by years of minimum future rentals to be paid by the Sheriff for noncancelable operating leases as of September 30: Year Amount 2013 $ 82,987 2014 32,332 2015 11,482 2016 5,983 2017 2,992 Total Future Minimum Lease Payments $ 135,776 333 Indian River County, Florida Sheriff Notes To Financial Statements Year Ended September 30, 2012 NOTE 9 — COMMITMENTS AND CONTINGENCIES Various suits and claims are currently pending against the Sheriff. It is impossible for the Sheriff to accurately quantify the exposure involved given the jury's latitude in assessing compensatory and punitive damages, and the court's latitude in awarding attorney's fees. The Sheriff intends to vigorously defend against these lawsuits and believes he has a good chance of prevailing on their merits. In the opinion of management and based on the advice of legal counsel, the ultimate disposition of these lawsuits will not have a material adverse effect on the financial position of the Sheriff. 334 Fkehmann Rebmann Robson 5070 North Highway A1A Suite 250 Vero Beach, FL 32963 Ph: 772.234.8484 Fx: 772.234.8488 www.rehmann.com 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 The Honorable Deryl Loar Sheriff Indian River County, Florida We have audited the fund financial statements of the major fund and the aggregate remaining fund information of the Indian River County, Florida Sheriff (the "Sheriff"), as of and for the year ended September 30, 2012, which collectively comprise the Sheriff's fund financial statements and have issued our report thereon dated March 12, 2013. 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 Management of the Sheriff is responsible for establishing and maintaining effective internal control over financial reporting. In planning and performing our audit, we considered the Sheriff's internal control over financial reporting as a basis for designing our auditing procedures for the purpose of expressing our opinion on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the Sheriff's internal control over financial reporting. Accordingly, we do not express an opinion on the effectiveness of the Sheriff'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 combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the financial statements 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 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. Rehmann is an independent member of Nexia International. CPAs & Consultants Wealth Advisors Corporate Investigators 335 NEXIA INTERNATIONAL Rehmann The Honorable Deryl Loar Sheriff Page two Compliance and Other Matters As part of obtaining reasonable assurance about whether the Sheriff'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 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 Sheriff, Indian River County, others within the entity, the Florida Auditor General, and applicable federal and state agencies, and is not intended to be and should not be used by anyone other than these specified parties. -,(,-,,,, Vero Beach, Florida March 12, 2013 336 Fkehmann Management Letter The Honorable Deryl Loar Sheriff Indian River County, Florida Rebmann Robson 5070 North Highway A1A Suite 250 Vero Beach, FL 32963 Ph: 772.234.8484 Fx: 772.234.8488 www.rehmann.com We have audited the fund financial statements of the major fund and the aggregate remaining fund information of the Indian River County, Florida Sheriff (the "Sheriff"), as of and for the year ended September 30, 2012, which collectively comprise the Sheriff's fund financial statements and have issued our report thereon dated March 12, 2013. We conducted our audit 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 Chapter 10.550, Rules of the Florida Auditor General. We have issued our Independent Auditors' Report on Internal Control over Financial Reporting and on Compliance and Other Matters Based on an Audit of the Financial Statements Performed in Accordance with Government Auditing Standards. Disclosures in that report, which is dated March 12, 2013, should be considered in conjunction with this management letter. Additionally, our audit was conducted in accordance with Chapter 10.550, Rules of the Auditor General, which govern the conduct of local governmental entity audits performed in the State of Florida. This letter includes the following information which is not included in the aforementioned auditors' report: Section 10.554(1)(i)1., Rules of the Auditor General, requires that we determine whether or not corrective actions have been taken to address findings and recommendations made in the preceding annual financial audit report. There were no findings or recommendations in the preceding annual financial audit report. Section 10.554(1)(i)2., Rules of the Auditor General, requires our audit to include a review of the provisions of Section 218.415, Florida Statutes, regarding the investment of public funds. In connection with our audit, we determined that the Sheriff complied with Section 218.415, Florida Statutes. Section 10.554(1)(i)3., Rules of the Auditor General, requires that we address in the management letter any recommendations to improve financial management. In connection with our audit, we did not identify any such recommendations. Section 10.554(1)(i)4., Rules of the Auditor General, requires that we address violations of provisions of contracts or grant agreements, or abuse that have occurred, or are likely to have occurred, that have an effect on the financial statements that is less than material, but more than inconsequential. In connection with our audit, we did not identify any such findings. Rehmann is an independent member of Nexia International. CPAs & Consultants Wealth Advisors Corporate Investigators 337 NEXIA IN TBRNATIONAL Rehmann The Honorable Deryl Loar Sheriff Page two Section 10.554(1)(1)5., Rules of the Auditor General, provides that the auditor may, based on professional judgment, report the following matters that have an inconsequential effect on financial statements, considering both quantitative and qualitative factors: (1) violations of provisions of contracts or grant agreements, or fraud, illegal acts, or abuse and, (2) deficiencies in internal control that are not significant deficiencies. In connection with our audit, we did not identify any such findings. Section 10.554(1)(i)6., Rules of the Auditor General, requires that the name or official title and legal authority for the primary government and each component unit of the reporting entity be disclosed in this management letter, unless disclosed in the notes to the financial statements. This information is disclosed in the notes to the financial statements. This letter is intended solely for the information and use of the Legislative Auditing Committee, members of the Florida Senate and the Florida House of Representatives, the Florida Auditor General, Federal and other granting agencies, and applicable management and is not intended to be and should not be used by anyone other than these specified parties. -ed-t. Vero Beach, Florida March 12, 2013 338 SUPERVISOR OF ELECTIONS 339 Fkehmann Independent Auditors' Report The Honorable Leslie Rossway Swan Supervisor of Elections Indian River County, Florida Rebmann Robson 5070 North Highway A1A Suite 250 Vero Beach, FL 32963 Ph: 772.234.8484 Fx: 772.234.8488 www.rehmann.com We have audited the accompanying fund financial statements of the major fund and the aggregate remaining fund information of the Indian River County, Florida Supervisor of Elections (the "Supervisor of Elections") as of and for the year ended September 30, 2012, which collectively comprise the Supervisor of Election's fund financial statements as listed in the table of contents. These financial statements are the responsibility of the Supervisor of Elections' management. Our responsibility is to express an opinion on the 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 presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion. As described in Note 1, the fund financial statements present only the funds of the Supervisor of Elections and do not purport to, and do not, present fairly the financial position of Indian River County as of September 30, 2012 the changes in its financial position, or, where applicable, its cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America. In our opinion, the fund financial statements referred to previously present fairly, in all material respects, the financial position of the funds of the Supervisor of Elections as of September 30, 2012, and the changes in financial position thereof for the year then ended in conformity with accounting principles generally accepted in the United States of America. In accordance with Government Auditing Standards, we have also issued a report dated March 12, 2013 on our consideration of the Supervisor of Elections' internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be considered in assessing the results of our audit. This report is intended solely for the information and use of management, the Supervisor of Elections, Indian River County, the Florida Auditor General, and applicable federal and state agencies, and is not intended to be and should not be used by anyone other than these specified parties. Vero Beach, Florida March 12, 2013 Rehmann is an independent member of Nexia International. CPAs & Consultants Wealth Advisors Corporate Investigators 340 NEXIA IN TBRNATIONAL Indian River County, Florida Supervisor of Elections Balance Sheet Governmental Funds September 30, 2012 General Total Special Governmental Revenue Funds ASSETS Cash and cash equivalents $ 36,150 $ 9,142 $ 45,292 Prepaid items 4,803 - 4,803 Total assets $ 40,953 $ 9,142 $ 50,095 LIABILITIES AND FUND BALANCES Liabilities: Accounts payable $ 16,659 $ - $ 16,659 Due to other governments 24,294 - 24,294 Unearned revenue - 9,142 9,142 Total liabilities 40,953 9,142 50,095 Fund Balances: Nonspendable: Prepaid items 4,803 - 4,803 Unassigned (4,803) - (4,803) Total fund balances - - - Total liabilities and fund balances $ 40,953 $ 9,142 $ 50,095 The accompanying notes are an integral part of the financial statements. 341 Indian River County, Florida Supervisor of Elections Statement of Revenues, Expenditures, and Changes in Fund Balances Governmental Funds For the Year Ended September 30, 2012 REVENUES Intergovernmental Charges for services Miscellaneous Total revenues EXPENDITURES General government Total expenditures General Total Special Governmental Revenue Funds - $ 25,250 $ 25,250 5,003 - 5,003 52,708 - 52,708 57,711 25,250 82,961 1,166,995 1,166,995 35,425 1,202,420 35,425 1,202,420 Excess of revenues over (under) expenditures (1,109,284) (10,175) (1,119,459) OTHER FINANCING SOURCES (USES) Transfers from Board of County Commissioners Transfer from other funds Transfers to Board of County Commissioners Transfer to other funds Total other financing sources (uses) 1,136,009 (24,294) (2,431) 1,109,284 2,431 1,136,009 2,431 (24,294) (2,431) 2,431 1,111,715 Net change in fund balances - (7,744) (7,744) Fund balances at beginning of year - 7,744 7,744 Fund balances at end of year $ - $ - $ The accompanying notes are an integral part of the financial statements. 342 REVENUES Charges for services Miscellaneous Total revenues Indian River County, Florida Supervisor of Elections Statement of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual General Fund For the Year Ended September 30, 2012 Budgeted Amount Original Final Actual Variance with Final Budget Positive (Negative) $ 5,003 $ 5,003 52,708 52,708 - 52,708 57,711 5,003 EXPENDITURES General gov emment 1,133,509 1,186, 217 1,166,995 19,222 Total expenditures 1,133,509 1,186,217 1,166,995 19,222 Excess of revenues over (under) expenditures (1,133,509) (1,133,509) (1,109,284) 24,225 OTHER FINANCING SOURCES (USES) Transfers from Board of County Commissioners 1,136,009 1,136,009 1,136,009 Transfers to Board of County Commissioners - - (24,294) (24,294) Transfers to other funds (2,500) (2,500) (2,431) 69 Total other financing sources (uses) 1,133,509 1,133,509 1,109,284 (24,225) Net change in fund balances Fund balances at beginning of year Fund balances at end of year $ - $ The accompanying notes are an integral part of the financial statements. 343 344 Indian River County, Florida Supervisor of Elections Notes To Financial Statements Year Ended September 30, 2012 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The Supervisor of Elections is a County agency and a local governmental entity pursuant to Article VIII, Section 1(d) of the Constitution of the State of Florida. For financial statement and reporting purposes, the Supervisor of Elections does not meet the definition of a legally separate organization and is not considered to be a component unit. The Supervisor of Elections is considered to be a part of the primary government of Indian River County. The financial statements contained herein represent the financial transactions of the Supervisor of Elections only. The format of the Supervisor of Elections' statements has been prepared in accordance with the presentation requirements of GASB 34 for fund financial statements. The following is a summary of the significant accounting principles and policies used in the preparation of the accompanying financial statements. A. Description of Funds The accounting records are organized for reporting purposes on the basis of governmental funds. Governmental Funds General Fund — The General Fund, which is a governmental fund, is used to account for all revenues and expenditures applicable to the general operations of the Supervisor of Elections. All financial resources, which are not accounted for and reported in another fund, are recorded in the General Fund. The governmental fund measurement focus is based upon determination of financial position and changes in financial position (sources, uses and balances of financial resources) rather than upon net income determination. Special Revenue Fund — The Special Revenue Fund accounts for the grant proceeds from the State and matching funds from the County. These funds are legally restricted for voter education and poll worker recruitment and training. B. Basis of Accounting, Measurement Focus and Presentation The accounts of the governmental funds are maintained on the modified accrual basis. Under the modified accrual basis, expenditures are recorded at the time liabilities are incurred. Revenues are recorded when received in cash or when they are considered both measurable and available. Revenues collected in excess of expenditures are not considered earned and are reflected as liabilities. C. Budgetary Requirements State statutes require the Supervisor of Elections to submit a proposed budget to the Board of County Commissioners by May 1 of each year. After review and approval of the budget by the Board, the Supervisor or Elections is authorized to transfer budgeted amounts between objects and departments as long as she does not exceed the total appropriations approved by the Board. Increases in the total budget are subject to the review and approval of the Board. The budgeted revenues and expenditures in the accompanying financial statements reflect all amendments approved by the Board of County Commissioners. The budget is prepared on a basis consistent with generally accepted accounting principles. 345 Indian River County, Florida Supervisor of Elections Notes To Financial Statements Year Ended September 30, 2012 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued D. Prepaid Items Deposits in the governmental funds represent prepayments for services that will be used in future periods. The Supervisor of Election's policy is to record the expenditure for the services when they are used rather than when the cash is disbursed. E. Capital Assets Acquisitions of equipment are recorded as expenditures at the time of purchase for governmental fund financial statements. Tangible personal property used by the Supervisor of Elections in operations is reported in the financial statements of the County. Refer to the County -wide note on capital assets for the capitalization threshold, depreciation methodology and useful lives. F. Unearned Revenues Unearned revenues reported on the Supervisor of Election's balance sheet represent revenues which are available but not earned. G. Compensated Absences The Supervisor of Elections accrues a liability for employees' rights to receive compensation for future absences when certain conditions are met. The Supervisor of Elections does not, nor is she legally required to, accumulate expendable available financial resources to liquidate this obligation. Accordingly, the liability for compensated absences is not reported on the Supervisor of Elections' financial statements. Additional information on the liability is reflected in subsequent Note 6. H. Transfer Out In accordance with Florida Statutes, all revenues in excess of expenditures as of year-end are owed to the Board of County Commissioners and other governments. This unspent budget totaled $24,294 and was reported as transfers out. These transfers are also reflected as due to other governments on the balance sheet. I. Fund Balance GASB Statement 54 — Fund Balance Reporting and Governmental Funds Type Definitions was implemented as of October 1, 2009. This Statement requires the fund balance for governmental funds to be reported in classifications that comprise a hierarchy based primarily on the extent to which the government is bound to honor constraints on the specific purposes for which amounts in those funds can be spent. Categories for fund balance are as follows: nonspendable, restricted, committed, assigned, and unassigned. For more information, see the County -wide note on fund balance. 346 Indian River County, Florida Supervisor of Elections Notes To Financial Statements Year Ended September 30, 2012 NOTE 2 - CASH Deposits At September 30, 2012, the carrying amount of the Supervisor of Elections' deposits was $45,167, and the bank balance was $114,041. All deposits with financial institutions were 100% insured by federal depository insurance or by collateral provided by qualified public depositories to the State Treasurer in accordance with Section 280.01, Florida Statutes, also known as the Florida Security for Public Deposits Act. Cash on hand at September 30, 2012 was $125. The Supervisor of Elections has adopted the Board of County Commissioners' investment policy. This policy requires the Supervisor of Elections' office to follow the above state law (governing custodial credit risk) for cash deposits. Refer to the County -wide Note 4, Cash and Cash Equivalents, for definition of custodial credit risk. NOTE 3 — PENSION PLAN Florida Retirement System Plan Description: The Supervisor of Elections' employees participate in the Florida Retirement System (FRS), a cost-sharing, multiple -employer public employee retirement system, administered by the Florida Department of Management Services. Effective July 1, 2011, the FRS became a contributory plan for all members, except DROP participants, whereby members contribute 3% and employers pay a rate based upon each member's employment class (regular class 5.18%, senior class 6.30%, and elected official class 10.23%). Employees elect participation in either the defined benefit plan (Pension Plan) or the defined contribution plan (Investment Plan). If the employee enrolled in the FRS prior to July 1, 2011, normal retirement is age 62 with 6 years of service or 30 years of service, regardless of age. If the employee enrolled in the FRS on or after July 1, 2011, normal retirement is age 65 with 8 years of service or 33 years of service, regardless of age. Under the Pension Plan, early retirement is available before reaching normal retirement age and will be subject to an early-retirement reduction of 5% for each year your age at retirement is under your normal retirement age. For those employees who elect participation in the Investment Plan rather than the Pension Plan, vesting occurs after one year of service. Participants have access to the full value of their vested account balance when they leave FRS employment, regardless of age. These participants receive a defined contribution for self-direction in an investment product with a third party administrator selected by the State Board of Administration. Retirement benefits are determined by age, years of service, the average of the highest 5 or 8 fiscal years of pay, membership class and the payment option selected at retirement. For further information concerning the Florida Retirement System and contribution rates, please read County -wide Note 16, Pension Plans. Employer contributions to the FRS for the fiscal years ended September 30, 2010, 2011, and 2012, were equal to 11.4%, 11.5%, and 6.19% of the annual covered payroll. Employer contributions to the FRS for the fiscal years ended September 30, 2010, 2011, 2012 were $59,170, $48,433 and $28,013 respectively. Employee contributions for the fiscal years ended September 30, 2011 and 2012 were $1,957 and $13,585 respectively. Both employer and employee contributions were equal to 100% of the required contribution for each year. 347 Indian River County, Florida Supervisor of Elections Notes To Financial Statements Year Ended September 30, 2012 NOTE 4 — OTHER POSTEMPLOYMENT BENEFITS The Supervisor of Elections participated in the Indian River County Other Post Employment Benefit Trust (IRCOT). The Supervisor of Election's 2012 annual required contribution of $13,181 was funded by the Board of County Commissioners as part of a total contribution determined by the IRCOT actuary. Further information on the IRCOT can be found in the County -wide financial statements and County notes. NOTE 5 — RISK MANAGEMENT Indian River County maintains a risk management program that provides for coverage of risks of loss related to torts, theft of, damage to and destruction of assets, errors or omissions, injuries to employees, natural disasters, and medical and life insurance coverage for employees and their eligible dependents. Various excess catastrophe insurance policies with a commercial carrier are also in force for claims exceeding the amount chargeable against the Self-insurance Fund. The Supervisor of Elections participated in the County's self-insurance program during fiscal year 2012 at an annual cost of approximately $42,320. NOTE 6 — LONG-TERM LIABILITIES Changes in Long -Term Liabilities The following is a schedule of changes in long-term liabilities as of September 30, 2012: Beginning Ending Balance Balance 10/01/11 Additions Deletions 09/30/12 Accrued Compensated Absences $ 23,770 $ 28,179 $ 25,360 $ 26,589 Of the $26,589 liability for accrued compensated absences, management estimates that $8,315 will be due and payable within one year. The liability for accrued compensated absences is not reported in the financial statements of the Supervisor of Elections since it is not payable from available spendable resources. The liability is reported in the financial statements of the County. 348 Indian River County, Florida Supervisor of Elections Notes To Financial Statements Year Ended September 30, 2012 NOTE 7 — OPERATING LEASES The Supervisor of Elections has entered into noncancelable operating leases as lessee for a mail machine and letter opener. Lease expenditures totaled $7,245 for the year ended September 30, 2012. The following is a schedule by years of minimum future rentals to be paid by the Supervisor of Elections for the noncancelable operating leases as of September 30: Year Amount 2013 3,379 Total Future Minimum Lease Payments $ 3,379 349 Fkehmann Rebmann Robson 5070 North Highway A1A Suite 250 Vero Beach, FL 32963 Ph: 772.234.8484 Fx: 772.234.8488 www.rehmann.com 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 The Honorable Leslie Rossway Swan Supervisor of Elections Indian River County, Florida We have audited the fund financial statements of the major fund and the aggregate remaining fund information of the Indian River County, Florida Supervisor of Elections (the "Supervisor of Elections"), as of and for the year ended September 30, 2012, which collectively comprise the Supervisor of Election's fund financial statements and have issued our report thereon dated March 12, 2013. 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 Management of the Supervisor of Elections is responsible for establishing and maintaining effective internal control over financial reporting. In planning and performing our audit, we considered the Supervisor of Elections' internal control over financial reporting as a basis for designing our auditing procedures for the purpose of expressing our opinion on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the Supervisor of Elections' internal control over financial reporting. Accordingly, we do not express an opinion on the effectiveness of the Supervisor of Elections' 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 combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the financial statements 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 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. Rehmann is an independent member of Nexia International. CPAs & Consultants Wealth Advisors Corporate Investigators 350 NEXIA INTERNATIONAL Rehmann The Honorable Leslie Rossway Swan Supervisor of Elections Page two Compliance and Other Matters As part of obtaining reasonable assurance about whether the Supervisor of Elections' 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 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 Supervisor of Elections, Indian River County, others within the entity, the Florida Auditor General, and applicable federal and state agencies, and is not intended to be and should not be used by anyone other than these specified parties. ,(4„ Vero Beach, Florida March 12, 2013 351 Fkehmann Management Letter The Honorable Leslie Rossway Swan Supervisor of Elections Indian River County, Florida Rebmann Robson 5070 North Highway A1A Suite 250 Vero Beach, FL 32963 Ph: 772.234.8484 Fx: 772.234.8488 www.rehmann.com We have audited the fund financial statements of the major fund and the aggregate remaining fund information of the Indian River County, Florida Supervisor of Elections (the "Supervisor of Elections"), as of and for the year ended September 30, 2012, which collectively comprise the Supervisor of Election's fund financial statements and have issued our report thereon dated March 12, 2013. We conducted our audit 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 Chapter 10.550, Rules of the Florida Auditor General. We have issued our Independent Auditors' Report on Internal Control over Financial Reporting and on Compliance and Other Matters Based on an Audit of the Financial Statements Performed in Accordance with Government Auditing Standards. Disclosures in that report, which is dated March 12, 2013, should be considered in conjunction with this management letter. Additionally, our audit was conducted in accordance with Chapter 10.550, Rules of the Auditor General, which govern the conduct of local governmental entity audits performed in the State of Florida. This letter includes the following information which is not included in the aforementioned auditors' report: Section 10.554(1)(i)1., Rules of the Auditor General, requires that we determine whether or not corrective actions have been taken to address findings and recommendations made in the preceding annual financial audit report. There were no findings or recommendations in the preceding annual financial audit report. Section 10.554(1)(i)2., Rules of the Auditor General, requires our audit to include a review of the provisions of Section 218.415, Florida Statutes, regarding the investment of public funds. In connection with our audit, we determined that the Supervisor of Elections complied with Section 218.415, Florida Statutes. Section 10.554(1)(i)3., Rules of the Auditor General, requires that we address in the management letter any recommendations to improve financial management. In connection with our audit, we did not identify any such recommendations. Section 10.554(1)(i)4., Rules of the Auditor General, requires that we address violations of provisions of contracts or grant agreements, or abuse that have occurred, or are likely to have occurred, that have an effect on the financial statements that is less than material, but more than inconsequential. In connection with our audit, we did not identify any such findings. Rehmann is an independent member of Nexia International. CPAs & Consultants Wealth Advisors Corporate Investigators 352 NEXIA IN TBRNATIONAL Rehmann The Honorable Leslie Rossway Swan Supervisor of Elections Page two Section 10.554(1)(i)5., Rules of the Auditor General, provides that the auditor may, based on professional judgment, report the following matters that have an inconsequential effect on financial statements, considering both quantitative and qualitative factors: (1) violations of provisions of contracts or grant agreements, or fraud, illegal acts, or abuse and, (2) deficiencies in internal control that are not significant deficiencies. In connection with our audit, we did not identify any such findings. Section 10.554(1)(i)6., Rules of the Auditor General, requires that the name or official title and legal authority for the primary government and each component unit of the reporting entity be disclosed in this management letter, unless disclosed in the notes to the financial statements. This information is disclosed in the notes to the financial statements. This letter is intended solely for the information and use of the Legislative Auditing Committee, members of the Florida Senate and the Florida House of Representatives, the Florida Auditor General, Federal and other granting agencies, and applicable management and is not intended to be and should not be used by anyone other than these specified parties. -ert,,, Vero Beach, Florida March 12, 2013 353 354 TAX COLLECTOR 355 Fkehmann Independent Auditors' Report The Honorable Carole Jean Jordan Tax Collector Indian River County, Florida Rebmann Robson 5070 North Highway A1A Suite 250 Vero Beach, FL 32963 Ph: 772.234.8484 Fx: 772.234.8488 www.rehmann.com We have audited the accompanying fund financial statements of the major fund and the aggregate remaining fund information of the Indian River County, Florida Tax Collector (the "Tax Collector") as of and for the year ended September 30, 2012, which collectively comprise the Tax Collector's fund financial statements as listed in the table of contents. These financial statements are the responsibility of the Tax Collector's management. Our responsibility is to express opinions on the 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 presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinions. As described in Note 1, the fund financial statements present only the funds of the Tax Collector and do not purport to, and do not, present fairly the financial position of Indian River County as of September 30, 2012 the changes in its financial position, or, where applicable, its cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America. In our opinion, the fund financial statements referred to previously present fairly, in all material respects, the financial position of the funds of the Tax Collector as of September 30, 2012, and the changes in financial position thereof for the year then ended in conformity with accounting principles generally accepted in the United States of America. In accordance with Government Auditing Standards, we have also issued a report dated March 12, 2013 on our consideration of the Tax Collector's internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be considered in assessing the results of our audit. This report is intended solely for the information and use of management, the Tax Collector, Indian River County, the Florida Auditor General, and applicable federal and state agencies, and is not intended to be and should not be used by anyone other than these specified parties. Vero Beach, Florida March 12, 2013 Rehmann is an independent member of Nexia International. CPAs & Consultants Wealth Advisors Corporate Investigators 356 NEXIA IN TBRNATIONAL Indian River County, Florida Tax Collector Balance Sheet General Fund September 30, 2012 ASSETS Cash and cash equivalents $ 2,311,394 Investments 691,980 Accounts receivable 74,959 Inventories 1,153 Prepaid items 1,821 Total assets $ 3,081,307 LIABILITIES AND FUND BALANCES Liabilities: Accounts payable $ 341,656 Due to other governments 2,706,242 Unearned revenues 32,485 Other deposits held in escrow 924 Total liabilities 3,081,307 Fund Balances: Nonspendable: Inventories 1,153 Prepaid items 1,821 Unassigned (2,974) Total fund balances Total liabilities and fund balances $ 3,081,307 The accompanying notes are an integral part of the financial statements. 357 Indian River County, Florida Tax Collector Statement of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual General Fund For the Year Ended September 30, 2012 Budgeted Amount Original Final Actual Variance with Final Budget Positive (Negative) REVENUES Charges for services $ 5,561,845 $ 5,561,845 $ 5,556,132 $ (5,713) Interest 10,000 10,000 7,165 (2,835) Total revenues 5,571,845 5,571,845 5,563,297 (8,548) EXPENDITURES General government 2,937,181 2,941,647 2,857,055 84,592 Total expenditures 2,937,181 2,941,647 2,857,055 84,592 Excess of revenues over (under) expenditures 2,634,664 2,630,198 2,706,242 76,044 OTHER FINANCING USES Transfers to Board of County Commissioners (2,305,858) (2,301,949) (2,368,531) (66,582) Transfers to other governments (328,806) (328,249) (337,711) (9,462) Total other financing uses (2,634,664) (2,630,198) (2,706,242) (76,044) Net change in fund balances Fund balances at beginning of year Fund balances at end of year The accompanying notes are an integral part of the financial statements. 358 Indian River County, Florida Tax Collector Statement of Fiduciary Net Position Agency Fund September 30, 2012 ASSET S Cash and cash equivalents Investments Total assets LIABILITIES 4,414,722 79,993 4,494,715 Due to other governments $ 4,494,715 Total liabilities $ 4,494,715 The accompanying notes are an integral part of the financial statements. 359 360 Indian River County, Florida Tax Collector Notes To Financial Statements Year Ended September 30, 2012 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The Tax Collector is a County agency and a local governmental entity pursuant to Article VIII, Section 1(d) of the Constitution of the State of Florida. For financial statement and reporting purposes, the Tax Collector does not meet the definition of a legally separate organization and is not considered to be a component unit. The Tax Collector is considered to be a part of the primary government of Indian River County. The financial statements contained herein represent the financial transactions of the Tax Collector only. The format of the Tax Collector's statements has been prepared in accordance with the presentation requirements of GASB 34 for fund financial statements. The following is a summary of the significant accounting principles and policies used in the preparation of the accompanying financial statements. A. Description of Funds The accounting records are organized for reporting purposes on the basis of governmental funds and a fiduciary fund. Governmental Fund General Fund — The General Fund, which is a governmental fund, is used to account for all revenues and expenditures applicable to the general operations of the Tax Collector. All financial resources, which are not accounted for and reported in another fund, are recorded in the General Fund. The governmental fund measurement focus is based upon determination of financial position and changes in financial position (sources, uses and balances of financial resources) rather than upon net income determination. Fiduciary Fund Fiduciary Fund The Fiduciary Fund of the Tax Collector is the Agency Fund, which is used to account for assets held by the Tax Collector as an agent. The Agency Fund is custodial in nature and does not involve measurement of results of operations. These funds cannot be used to support the Tax Collector's own programs. B. Basis of Accounting, Measurement Focus and Presentation The accounts of the governmental funds are maintained on the modified accrual basis. The fiduciary fund is reported on an accrual basis. Under the modified accrual basis, expenditures are recorded at the time liabilities are incurred. Revenues are recorded when received in cash or when they are considered both measurable and available. Revenues collected in excess of expenditures are not considered earned and are reflected as liabilities. C. Budgetary Requirements State statutes require the Tax Collector to prepare an annual budget that clearly reflects the revenues available to her office and the functions for which money is to be expended. The budgeted revenues and expenditures are subject to the review and approval of the Department of Revenue. 361 Indian River County, Florida Tax Collector Notes To Financial Statements Year Ended September 30, 2012 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued C. Budgetary Requirements - Continued Management is authorized to transfer budgeted amounts between objects and departments as long as management does not exceed the total appropriations of a fund. Department of Revenue approval is only required when unanticipated revenues are received that management wishes to have appropriated, thereby increasing the total appropriations of a fund. The budget is prepared on a basis consistent with generally accepted accounting principles. D. Cash and Cash Equivalents Cash and cash equivalents include deposits and all highly liquid investments with maturities of ninety days or less when purchased. E. Prepaid Items This account represents prepayments for services that will be used in future periods. The Tax Collector's policy is to record the expenditure for the services when they are used rather than when the cash is disbursed. F. Capital Assets Acquisitions of equipment are recorded as expenditures at the time of purchase for governmental fund financial statements. Tangible personal property used by the Tax Collector in operations is reported in the financial statements of the County. Refer to the County -wide note on capital assets for capitalization threshold, depreciation methodology and useful lives. G. Unearned Revenues Unearned revenues reported on the Tax Collector's balance sheet represent revenues which are available but not earned. H. Compensated Absences The Tax Collector accrues a liability for employees' rights to receive compensation for future absences when certain conditions are met. The Tax Collector does not, nor is she legally required to, accumulate expendable available financial resources to liquidate this obligation. Accordingly, the liability for compensated absences is not reported on the Tax Collector's financial statements. Additional information on the liability is reflected in subsequent Note 7. I. Transfer Out In accordance with Florida Statutes, all revenues in excess of expenditures as of year-end are owed to the Board of County Commissioners and other governments. These "excess fees" are reported as transfers out and a liability and were $2,706,242 at year-end. 362 Indian River County, Florida Tax Collector Notes To Financial Statements Year Ended September 30, 2012 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued J. Fund Balance GASB Statement 54 Fund Balance Reporting and Governmental Funds Type Definitions was implemented as of October 1, 2009. This Statement requires the fund balance for governmental funds to be reported in classifications that comprise a hierarchy based primarily on the extent to which the government is bound to honor constraints on the specific purposes for which amounts in those funds can be spent. Categories for fund balance are as follows: nonspendable, restricted, committed, assigned, and unassigned. For more information, see the County -wide note on fund balance. NOTE 2 - CASH AND CASH EQUIVALENTS A. Deposits At September 30, 2012, the carrying amount of the Tax Collector's deposits was $6,710,592 and the bank balance was $6,617,689. All deposits with financial institutions were 100% insured by federal depository insurance or by collateral provided by qualified public depositories to the State Treasurer in accordance with Section 280.01, Florida Statutes, also known as the Florida Security for Public Deposits Act. Cash on hand at September 30, 2012 was $15,524. B. Investments The Tax Collector modified their investment and deposit policy in August 2011. This policy requires the Tax Collector's office to follow the above state law (governing custodial credit risk) for deposits and Section 218.415, Florida Statutes. Refer to the County -wide Note 4, Cash and Cash Equivalents, for definition of custodial credit risk. At September 30, 2012, the Tax Collector had the following investments: Weighted Average Portfolio Credit Investment Type Fair Value Maturity In Years Percentage Risks Other Fixed Rate Investments: Florida PRIME (formerly Fund A) $ 161,276 .08 20.89% AAAm Fund B Surplus Funds Trust Fund 79,993 4.08 10.36 Not Rated Other Market Rate Investments: Certificate of Deposit — 22 Month 251,043 1.84 32.52 N/A Certificate of Deposit 1 Year 254,413 1.00 32.96 N/A Florida Trust Day to Day Fund 25,248 .08 3.27 AAAm Total Fair Value $ 771,973 100.00% Portfolio weighted average maturity 1.37 363 Indian River County, Florida Tax Collector Notes To Financial Statements Year Ended September 30, 2012 NOTE 2 - CASH AND CASH EQUIVALENTS - Continued B. Investments - Continued Concentration Risk The Tax Collector's cash and investment policy limits portfolio composition to the following maximum guidelines: Local Government Surplus Funds Trust Fund 95% Florida Trust Day to Day Fund 95% Direct Obligations of the U.S. Government 25% Money Market, CD's, and Savings Accounts 50% Securities & Exchange Commission Money Funds 25% Bank Super NOW Accounts 95% Bank Repo Agreements 50% United States Government Agencies 25% The Tax Collector invests surplus funds in an external investment pool, the Local Government Surplus Funds Trust Fund (the "State Pool"). The State Pool is administered by the Florida State Board of Administration ("SBA"), who provides regulatory oversight. During fiscal year 2008, the SBA reported that the State Pool was exposed to potential risks due to indirect exposure in the sub -prime mortgage financial market. Consequently, the SBA placed some restrictions on how participants could access portions of their surplus funds and ultimately restructured the State Pool into two separate pools ("Florida PRIME" and "Fund B"). The Florida PRIME has adopted operating procedures consistent with the requirements for a 2a-7 like fund. The Tax Collector's investment in the Florida PRIME is reported at amortized cost. The fair value of the position in the pool is equal to the value of the pool shares. At September 30, 2012, the Florida PRIME held a rating of AAAm by Standard and Poor's and had a weighted average days to maturity of 39 days. The investment objective for Fund B is to maximize the present value of distributions to participants, to the extent reasonable and prudent, net of fees; thus weight is given not only to the realized value of security sales, but also to the speed with which monies are distributed (liquidity). As cash becomes available in Fund B, it is distributed among participant accounts in the Florida PRIME, according to each participant's pro rata share of Fund B. All distributions from Fund B are 100% available liquid balance (ALB) upon transfer. Fund B is reported at fair value, determined by the fair value per share of the Pool's underlying portfolio. Fund B was unrated as of September 30, 2012. 364 Indian River County, Florida Tax Collector Notes To Financial Statements Year Ended September 30, 2012 NOTE 2 - CASH AND INVESTMENTS - Continued B. Investments - Continued Concentration Risk - Continued All funds held in Fund B are "on -behalf -of' (OBF) accounts. These OBF accounts were established on December 26, 2007 and held for the eleven taxing districts that did not have SBA accounts at the time of the restructuring of SBA funds into the Florida PRIME and Fund B. At September 30, 2012, the Tax Collector had $84,295 invested in Fund B Surplus Funds Trust Fund, a fluctuating net asset value pool. The State Board of Administration (SBA) determined that Fund B did not meet the requirements of a SEC 2a7 -like fund; therefore, a fair value factor (total net asset value of Fund B divided by total participant balances) was provided for reporting the value of the Tax Collector's participation in Fund B at fiscal year-end. This resulted in a negative adjustment of 5.1% of the portfolio balance, or $4,302. Consequently, the net investment in Fund B is reported at $79,993. Interest Rate Risk The Tax Collector will attempt to match investment maturities with known cash needs and anticipated cash flow requirements. Investments of current operating funds shall have maturities of no longer than twelve months and funds in excess of current operating needs may have maturities of no longer than twenty-four months. Credit Risk Florida Statutes authorize investments in certificates of deposit, savings accounts, the Local Government Surplus Funds Trust Fund administered by the Florida State Board of Administration; Securities and Exchange Commission registered money market funds with the highest credit quality rating from a nationally recognized rating agency, and direct obligations of the U.S. Treasury. Custodial Credit Risk All investments are held in the name of the Tax Collector, by the Tax Collector, with the exception of the Florida Trust Day to Day Fund, which was held by UMB Bank, and the Florida PRIME which was held by BNY Mellon. NOTE 3 - INVENTORIES Inventories are valued at cost, which approximates market, using the "first -in, first -out" method of accounting. The costs of general fund inventory are recorded as an expenditure when consumed rather than when purchased. Inventory of the Tax Collector, included in the general fund, represents postage. 365 Indian River County, Florida Tax Collector Notes To Financial Statements Year Ended September 30, 2012 NOTE 4 — PENSION PLAN Florida Retirement System Plan Description: The Tax Collector's employees participate in the Florida Retirement System (FRS), a cost-sharing, multiple -employer public employee retirement system, administered by the Florida Department of Management Services. Effective July 1, 2011, the FRS became a contributory plan for all members, except DROP participants, whereby members contribute 3% and employers pay a rate based upon each member's employment class (regular class 5.18%, senior class 6.30%, and elected official class 10.23%). Employees elect participation in either the defined benefit plan (Pension Plan) or the defined contribution plan (Investment Plan). If the employee enrolled in the FRS prior to July 1, 2011, normal retirement is age 62 with 6 years of service or 30 years of service, regardless of age. If the employee enrolled in the FRS on or after July 1, 2011, normal retirement is age 65 with 8 years of service or 33 years of service, regardless of age. Under the Pension Plan, early retirement is available before reaching normal retirement age and will be subject to an early-retirement reduction of 5% for each year your age at retirement is under your normal retirement age. For those employees who elect participation in the Investment Plan rather than the Pension Plan, vesting occurs after one year of service. Participants have access to the full value of their vested account balance when they leave FRS employment, regardless of age. These participants receive a defined contribution for self-direction in an investment product with a third party administrator selected by the State Board of Administration. Retirement benefits are determined by age, years of service, the average of the highest 5 or 8 fiscal years of pay, membership class and the payment option selected at retirement. For further information concerning the Florida Retirement System and contribution rates, please read County -wide Note 16, Pension Plans. Employer contributions to the FRS for the fiscal year ended September 30, 2010, 2011, and 2012, were equal to 11.44%, 10.69%, and 5.63% of the annual covered payroll. Employer contributions to the FRS for the fiscal years ended September 30, 2010, 2011, 2012 were $179,908, $170,864, and $90,405 respectively. Employee contributions for the fiscal years 2011 and 2012 were $10,326 and $45,214. Both employer and employee contributions were equal to 100% of the required contribution for each year. NOTE 5 — OTHER POSTEMPLOYMENT BENEFITS The Tax Collector participated in the Indian River County Other Postemployment Benefits Trust (IRCOT). The Tax Collector paid their 2012 annual required contribution of $80,969 which was their part of the total contribution determined by the IRCOT actuary. Further information on the IRCOT can be found in the County -wide financial statements and County notes. 366 Indian River County, Florida Tax Collector Notes To Financial Statements Year Ended September 30, 2012 NOTE 6 — RISK MANAGEMENT Indian River County maintains a risk management program that provides for coverage of risks of loss related to torts, theft of, damage to and destruction of assets, errors or omissions, injuries to employees, natural disasters, and medical and life insurance coverage for employees and their eligible dependents. Various excess catastrophe insurance policies with a commercial carrier are also in force for claims exceeding the amount chargeable against the Self-insurance Fund. The Tax Collector participated in the County's self-insurance program during fiscal year 2012 at an annual cost of approximately $258,784. Further details of this self-insurance program are discussed in the risk management note in the County- wide financial statements. NOTE 7 — LONG-TERM LIABILITIES Changes in Long -Term Liabilities The following is a schedule of changes in long-term liabilities as of September 30, 2012: Beginning Ending Balance Balance 10/01/11 Additions Deletions 09/30/12 Accrued Compensated Absences $ 125,804 $ 21,525 $ 46,793 $ 100,536 Of the $100,536 liability for accrued compensated absences, management estimates that $12,711 will be due and payable within one year. The long-term liabilities are not reported in the financial statements of the Tax Collector since they are not payable from available spendable resources. They are reported in the financial statements of the County. NOTE 8 — OPERATING LEASES The Tax Collector has entered into noncancelable operating leases as lessee for office space and office equipment. Lease expenditures totaled $91,623 for the fiscal year ended September 30, 2012. The following is a schedule by years of minimum future rentals to be paid by the Tax Collector for noncancelable operating leases as of September 30, 2012: Year Amount 2013 $ 95,085 2014 61,801 2015 50,018 2016 1,142 Total future minimum lease payments $ 208,046 367 Fkehmann Rebmann Robson 5070 North Highway A1A Suite 250 Vero Beach, FL 32963 Ph: 772.234.8484 Fx: 772.234.8488 www.rehmann.com 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 The Honorable Carole Jean Jordan Tax Collector Indian River County, Florida We have audited the fund financial statements of the major fund and the aggregate remaining fund information of the Indian River County, Florida Tax Collector (the "Tax Collector"), as of and for the year ended September 30, 2012, which collectively comprise the Tax Collector's fund financial statements and have issued our report thereon dated March 12, 2013. 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 Management of the Tax Collector is responsible for establishing and maintaining effective internal control over financial reporting. In planning and performing our audit, we considered the Tax Collector's internal control over financial reporting as a basis for designing our auditing procedures for the purpose of expressing our opinion on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the Tax Collector's internal control over financial reporting. Accordingly, we do not express an opinion on the effectiveness of the Tax Collector'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 combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the financial statements 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 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. Rehmann is an independent member of Nexia International. CPAs & Consultants Wealth Advisors Corporate Investigators 368 NEXIA TXT 'TS/ 4 WATT/11W T Rehmann The Honorable Carole Jean Jordan Tax Collector Page two Compliance and Other Matters As part of obtaining reasonable assurance about whether the Tax Collector'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 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 Tax Collector, Indian River County, others within the entity, the Florida Auditor General, and applicable federal and state agencies, and is not intended to be and should not be used by anyone other than these specified parties. ,(4„ Vero Beach, Florida March 12, 2013 369 Fkehmann Management Letter The Honorable Carole Jean Jordan Tax Collector Indian River County, Florida Rebmann Robson 5070 North Highway A1A Suite 250 Vero Beach, FL 32963 Ph: 772.234.8484 Fx: 772.234.8488 www.rehmann.com We have audited the fund financial statements of the major fund and the aggregate remaining fund information of the Indian River County, Florida Tax Collector (the "Tax Collector"), as of and for the year ended September 30, 2012, which collectively comprise the Tax Collector's fund financial statements and have issued our report thereon dated March 12, 2013. We conducted our audit 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 Chapter 10.550, Rules of the Florida Auditor General. We have issued our Independent Auditors' Report on Internal Control over Financial Reporting and on Compliance and Other Matters Based on an Audit of the Financial Statements Performed in Accordance with Government Auditing Standards. Disclosures in that report, which is dated March 12, 2013, should be considered in conjunction with this management letter. Additionally, our audit was conducted in accordance with Chapter 10.550, Rules of the Auditor General, which govern the conduct of local governmental entity audits performed in the State of Florida. This letter includes the following information which is not included in the aforementioned auditors' report: Section 10.554(1)(i)1., Rules of the Auditor General, requires that we determine whether or not corrective actions have been taken to address findings and recommendations made in the preceding annual financial audit report. There were no findings or recommendations in the preceding annual financial audit report. Section 10.554(1)(i)2., Rules of the Auditor General, requires our audit to include a review of the provisions of Section 218.415, Florida Statutes, regarding the investment of public funds. In connection with our audit, we determined that the Tax Collector complied with Section 218.415, Florida Statutes. Section 10.554(1)(i)3., Rules of the Auditor General, requires that we address in the management letter any recommendations to improve financial management. In connection with our audit, we did not identify any such recommendations. Section 10.554(1)(i)4., Rules of the Auditor General, requires that we address violations of provisions of contracts or grant agreements, or abuse that have occurred, or are likely to have occurred, that have an effect on the financial statements that is less than material, but more than inconsequential. In connection with our audit, we did not identify any such findings. Rehmann is an independent member of Nexia International. CPAs & Consultants Wealth Advisors Corporate Investigators 370 NEXIA IN TBRNATIONAL Rehmann The Honorable Carole Jean Jordan Tax Collector Page two Section 10.554(1)(1)5., Rules of the Auditor General, provides that the auditor may, based on professional judgment, report the following matters that have an inconsequential effect on financial statements, considering both quantitative and qualitative factors: (1) violations of provisions of contracts or grant agreements, or fraud, illegal acts, or abuse and, (2) deficiencies in internal control that are not significant deficiencies. In connection with our audit, we did not identify any such findings. Section 10.554(1)(i)6., Rules of the Auditor General, requires that the name or official title and legal authority for the primary government and each component unit of the reporting entity be disclosed in this management letter, unless disclosed in the notes to the financial statements. This information is disclosed in the notes to the financial statements. This letter is intended solely for the information and use of the Legislative Auditing Committee, members of the Florida Senate and the Florida House of Representatives, the Florida Auditor General, Federal and other granting agencies, and applicable management and is not intended to be and should not be used by anyone other than these specified parties. -ed-t. Vero Beach, Florida March 12, 2013 371 372