October 12, 2001
Board
of
We are pleased to present the Comprehensive Annual
Financial Report (“CAFR”) of
This report is divided into four sections: the Introductory, Financial, Statistical, and
Compliance Sections. The Introductory
Section, which is unaudited, contains this letter of
transmittal and information about the County’s organization and principal
officials. The Financial Section is
composed of the auditors’ report, the general purpose financial statements, and
the combining and individual fund and account group financial statements and
schedules. The general purpose financial
statements are often issued separately for securities offerings or widespread
distributions and are frequently referred to as “liftable”
general purpose financial statements.
The Statistical Section, which is unaudited,
contains fiscal and economic data designed to provide a more complete
understanding of the County. Many tables
in this section present financial data for the past ten years. Finally, the Compliance Section presents
reports and schedules required by the federal and state Single Audit Acts.
The County is required to undergo an annual single
audit in conformity with the provisions of the U.S. Office of Management and
Budget Circular A-133, Audits of States, Local Governments, and Non-Profit
Organizations, and the State Single Audit Implementation Act. Information related to this single audit,
including the Schedule of Expenditures of Federal and State Awards, Schedule of
Findings and Questioned Costs, Corrective Action Plan, Summary Schedule of
Prior Year Audit Findings and independent auditor’s compliance and internal
control reports on the general purpose financial statements and major federal
and state programs, are presented in the compliance section of this report.
DESCRIPTION OF
COUNTY
The County, formed in 1855, is located in the south
central portion of
Generally, the eastern
two-thirds of the County exhibits topographic features common to the Coastal
Plain of North Carolina. It is an area of level to
gently rolling terrain with elevations ranging from 100 to 300 feet above sea
level. Undeveloped lands are covered by
pines and low-growing shrubs. The major
underlying geological formation includes sedimentary rocks consisting mostly of
unconsolidated sands and clays.
Topographic features in the western part of the County resemble the
Piedmont region of
The County contains 384,640 acres or 642 square
miles. The
The County is governed by a Board of Commissioners
(the "Board"). The Board
consists of five members who are elected from districts, on a partisan basis,
by a district vote and serve staggered four-year terms. Elections for the Board are held in November
of even-numbered years. The
Commissioners take office at the first meeting in December following the
November election. At that time, the
Board elects a Chairman and a Vice Chairman from among its members. Commissioners hold policy-making and
legislative authority. They are also
responsible for adopting the budget and appointing the
The County provides its citizens with a wide range
of services including: public safety, human
services, culture and recreation
development, environmental protection, sanitation, and general government
services. This report includes the
County’s activities in maintaining these services. The County also extends financial support to
certain boards, agencies, and commissions to assist their efforts in serving
citizens. Among these are the Harnett
County Board of Education,
ECONOMIC
CONDITIONS and OUTLOOK
During the past year, travelers
spent $42.5 million in
The
Residential
growth in predominantly the southwest and northeast portions of the County
continued in 2000-2001. The County’s
affordable cost of living index continues to contribute to population
growth. Residential construction permits
were approved during the 1999-2000 year totaling $73,386,903. Commercial and industrial construction
projects totaled $10,584,520. The
County’s population grew over 34% from 1990 to 2000, ranking
Agriculture plays a significant role in the economy
of
Urban horticulture is another important aspect of
agricultural economy in
Principal taxpayers include a wholesale distributor,
four public service companies, a textile manufacturer, shopping strip, a
defense contractor, custom truck body manufacturer, a book manufacturer, and a
mobile home manufacturer. The County is
fortunate to have such diversity among these corporate citizens.
An economic development assessment and action plan
prepared by the Leak-Goforth Company, a development
consultant, was presented to the County in March, 2001. The plan calls for developing industrial parks
at four strategic locations in the County to provide additional options for new
and expanding industries.
Significant Economic Facts for the 2000-2001 fiscal year include the following:
¨ Powell and Powell Supply
purchased the vacant This End Up Furniture facility
and created 75 jobs.
¨ Carolina Pre-Cast concrete
added a 10,000 square foot office facility.
¨ South River EMC built a new 35,000
square foot corporate office in Dunn.
¨ Davis Love, Inc. opened
their new golf course at the Village at Anderson Creek, a 2,100 lot subdivision
in
¨ New Century Bank began
construction on its $1.5 million corporate headquarters in Dunn.
MAJOR INITIATIVES
As
This year economic development efforts have taken center stage in
As noted in
previous years, continuing improvements to infrastructure will determine the
County’s ability to respond to the tremendous growth we continue to
experience. The capital needs of public
education continue as the number one priority of the County’s overall capital
program. During the past year, school
construction has continued at a significant pace and will remain a priority in
the years to come. Schools currently
under construction include
Over the
past few years, the County has also made a concentrated effort to improve the
quality and efficiency of its facilities.
This year, efforts in this area continue. Currently, a new courthouse and an adjoining
office building are under construction and should be completed by June,
2002. These facilities will house both District and Superior Courtrooms, as well as the Clerk
of Court, District Attorney, Tax Office, and Register of Deeds.
Finally, in
regards to overall public service, several departments continue changes in how
they will service our citizens. These
include Central Permitting, GIS, Emergency Communications, and overall web site
access to county services. As always,
Harnett County Government continues to strive to better serve its citizens and,
at the same time, be mindful of the taxpayer.
With both of these factors in mind, we believe we are preparing our
County for the future.
AWARDS
The
Harnett County Library received a grant award from the Bill & Melinda Gates
Foundation. This award is dedicated to
partner with libraries to bring access to computers, the Internet, and digital
information for patrons in low-income communities in the
The
Harnett County Department of Health Director Wayne Raynor, received the “Health
Director of the Year – 2001” award from
the North Carolina Association of Local Health Directors. Various programs were implemented under Mr.
Raynor’s direction. The Maternal Health
Program was designed to address the infant mortality rate in
The
Harnett County Emergency Services Department was presented with two awards from
the North Carolina Association of County Commissioners. These awards recognized the department’s work
for the “Fire Awareness Resistance Education Program” (F.A.R.E.) and the “Safe
Kids Coalition”.
The
Safe Kid’s Coalition purpose is to reduce the number of preventable and
unintentional injuries for kids. These
injuries include motor vehicle and bicycle accidents, falls, choking, drowning,
fires and burns, and poisoning. The Safe
Kids mission is to educate the public through outreach to the community and
school. Examples of this outreach
include distributing automobile child safety seats to Medicaid eligible and/or
needy families and a smoke detector program for the elderly or households with
children age 6 and under.
The “Fire Awareness Resistance Education Program” (F.A.R.E.) was implemented in response to the rash of fires, particularly woods fires, started by juveniles in hopes of educating elementary children about the dangers of fire. The Harnett County Fire Marshall’s Office begain visiting the K-3 classes during the Fire Prevention Week. After a review of the program by the Harnett County Board of Education, the “Learn Not to Burn” curriculum was implemented in the standard course of study.
FINANCIAL
INFORMATION
The budget is an integral part of a unit’s
accounting system and daily operations.
An annual budget or project ordinance, as adopted by the governing
body, creates a legal limit on spending authorizations. For Harnett County, annual budgets are
adopted for the General, Special Revenue (except the Community Development
Revolving Loan Fund, the Child Development Grant Fund, the Hurricane Fran Fund,
and the Emergency Response Planning Fund), and Enterprise Funds. Multi-year project budgets are adopted for
Capital Projects. Appropriations are
made at the line item level.
For internal
accounting purposes, budgetary control is maintained on a specific line-item
basis by the use of an encumbrance system.
As purchase orders are issued, corresponding appropriations are reserved
for later payment. If an
over-encumbrance of balances would result, purchase orders are not written
until additional appropriations are made available. Open encumbrances are reported as
reservations of fund balance at
In accordance with State law, the County's budget is prepared on the modified accrual basis, and its accounting records are maintained on that basis. Under modified accrual accounting, revenues are recorded when measurable and available. Expenditures are recorded when a fund liability is incurred, except for unmatured principal and interest on long-term debt and certain compensated absences. Governmental Fund Types, such as the County’s General Fund, Special Revenue Funds, Capital Project Funds, and Trust and Agency Funds are reported on the modified accrual basis in the financial statements. The County’s Enterprise Funds are reported on the full accrual basis in the financial statements, under which revenues are recorded when earned and expenses are recorded when incurred.
County
management is responsible for the accounting system and for establishing and
maintaining an internal control structure.
The internal control structure is designed to provide reasonable, but
not absolute, assurance regarding (1) the safeguarding of assets against loss
from unauthorized use or disposition, (2) the reliability of financial records
for preparing financial statements in conformity with generally accepted
accounting principles and maintaining accountability for assets; and (3)
compliance with applicable laws and regulations related to federal and state
financial assistance programs. The concept of reasonable assurance recognizes
that (1) the cost of a control should not exceed the benefits likely to be
derived, and (2) the evaluation of costs and benefits requires estimates and
judgments by management.
The County has 24 schools and a community college (
All internal control evaluations occur within the
above framework. We believe that the
County's internal accounting controls adequately safeguard assets and provide
reasonable assurance of proper recording of financial transactions. As a part of the County’s single audit
(discussed in more detail in a later paragraph), the independent auditor
performed a review of the County’s internal control structure. This review was not an audit and no opinion
was issued on the County’s internal control structure.
General Governmental Fund Types
General governmental revenues totaled $63,420,910 an increase of 2.49% from the prior year. Revenues by source for the Governmental Funds (General, Special Revenue, Capital Projects) are as follows:
2001 Fiscal Percent
Percent Year Ended June 30, Increase/ Increase/
of Total 2001 2000 (Decrease) (Decrease)
Ad valorem taxes 43.66% $ 27,691,049 $ 25,027,816 $ 2,663,233 10.64%
Other taxes and licenses 18.65% 11,827,780 11,342,368 485,412 4.28%
Intergovernmental 22.09% 14,012,400 17,655,266 ( 3,642,866) (20.63)%
Permits & fees 2.65% 1,680,296 1,683,467 ( 3,171) (
.19)%
Sales and services 7.13% 4,518,842 4,041,423 477,419 11.81%
Investment earnings 3.27% 2,071,810 1,135,207 936,603 82.51%
Miscellaneous 2.55% 1,618,733 995,797 622,936 62.56%
Total 100.00% $63,420,910 $61,881,344 $
1,539,566 2.49%
Ad valorem taxes provide the
County's primary source of revenue. The
revenue of $27,691,049 for 2000 - 2001 reflects a 10.64% increase over the
previous year. Current year collection
rates are 92.32%.
Investment earnings for 2000 - 2001 increased 82.51% over the previous
year. While the interest rates during
the current year continued to decline, the County’s earnings increased due to
the COPS 2000 proceeds for the courthouse and school projects. Permits and fees
decreased .19% in 2000 – 2001 Although
the permit fees charged by the Inspections Department remained the same, the
number of permits issued for construction decreased. The sales and services category increased by 11.81%. This increase reflects a continued increase in gross
ambulance billings. The Intergovernmental category decreased 20.63%, and was
due to a reduction of
various program revenues.
***********
General governmental
expenditures totaled $73,950,975, an increase of 16.65% from the prior
year. Categorized by character and major
function, expenditures for the Governmental Funds (General, Special Revenue, Capital Projects) were as follows:
2001 Fiscal Percent
Percent Year
Ended June 30, Increase/ Increase/
of Total 2001 2000 (Decrease) (Decrease)
General government 19.94% $ 14,743,012 $ 7,323,620 $ 7,419,392 101.31%
Public safety 19.21% 14,209,303 13,988,669 220,634
1.58%
Transportation .05% 38,665 40,478 (1,813)
(4.48)%
Environmental protection .12% 89,927 84,628 5,299 6.26%
Economic
and physical dev. 3.76% 2,781,166 1,889,076 892,090 47.22%
Human services 28.19% 20,848,442 18,990,848 1,857,594 9.78%
Cultural and recreational 1.36% 1,006,145 851,386 154,759 18.18%
Education 20.50% 15,162,953 16,201,445 ( 1,038,492) (6.41)%
Debt service 6.87% 5,071,362 4,025,659 1,045,703 25.98%
Total 100.00 % $ 73,950,975 $ 63,395,809 $ 10,555,166 16.65%
The expenditures in the education category decreased
6.41%, which was due to the Public School Building Bonds. These funds will no
longer pass-through the County but will be sent directly to the Harnett County
Board of Education by the State.
The Human Services category continues to be a large
area of expenditures. In 2000 - 2001,
this category
increased 9.78% from the prior year. Medicaid is a State mandated program and may
increase or decrease as required by the State and is based upon the number of eligible
participants and the forecasted rates of inflation of the cost of services. In 1998, the North Carolina General Assembly
increased the income ceiling to 100% of the federal poverty level for the aged,
blind and disabled citizens who became eligible for full Medicaid participation
on
Fund Balance in the General Fund - The General Fund
ended the fiscal year with a total fund balance of $15,888,723. Over $6.8 million of this fund balance is
unreserved, which is equal to 11.79% of the annual expenditures. This fund balance is considered adequate to
meet unforeseen events and to avoid cash flow shortfalls during periods of low
tax collections.
Enterprise
Operating revenues for the Solid Waste Management Fund totaled $2,394,576 down 6.7% from the prior year's revenue of $2,567,796. Total operating expenses for this fund totaled $2,753,669, an increase of 7.75% from the prior year. There was an operating loss of $359,093.
Operating revenues for the
Harnett County Public Utilities Fund totaled $9,704,913, up 7.215% from the prior year’s revenue of
$9,051,869. Based upon our records, this
increase is due to the increased number of daily average consumption and service connections made. The operating income of $1,465,686 is a good
indication of how well revenues are covering total expenses. Unlike many other government units,
Debt
Administration
CASH MANAGEMENT
The County's idle cash during the year was invested
in fully insured or collateralized certificates of deposit, and in demand
deposits in the state-authorized mutual fund whose portfolio consists of
certificates of deposit, prime quality commercial paper, U. S. Government
securities and banker's acceptances.
A comparison of the investment portfolio at the
close of the last two fiscal years is as follows:
Class Amount % of Total Amount % of Total
Certificates of deposit $ 3,644,188 28.77% $ 7,300,000 26.91%
Commercial paper 4,098,545 32.37% 4,088,346 15.07%
Management 4,920,669 38.86% 15,734,755 58.02% Total $ 12,663,402 100.00% $ 27,123,101 100.00%
RISK MANAGEMENT
The County is exposed to various risks of loss
related to torts; theft of, damage to, and destruction of assets; errors and
omissions; injuries to employees; and natural disasters. The County carries commercial coverage for
all risks of loss. The County carries
commercial coverage for Worker’s Compensation with limits or $1,000,000 for
bodily injury by accident for each accident, $1,000,000 for bodily injury by
disease policy limit, and $1,000,000 bodily injury by disease for each
employee. The comprehensive general
liability general aggregate limit is $4 million. There have been no significant reductions in
insurance coverage from the previous year and settled claims have not exceeded
coverage in any of the past three fiscal years A schedule of insurance in force is
included in the statistical section of this report.
Other Information
Preparation of this report would not have been possible
without the dedicated efforts of the entire staff of the Finance
Department. Each member of the Finance
Department has my sincere appreciation for their contributions. I would also like to thank the members of the
Board of Commissioners and the
Respectfully
submitted,
Vanessa
W. Young
Finance Officer
