The accounting policies of
A. Reporting Entity
The County, which is
governed by a five-member board of commissioners, is one of the 100 counties
Blended Component Units
Harnett Water and Sewer Districts
Harnett County Water and Sewer Districts (the “Districts”) exist to provide and maintain a water system for the county residents within the districts. Under State law [G.S. 162A-89], the County’s board of Commissioners also serve as the governing board for the Districts. Therefore, the Districts are reported as an enterprise fund in the County’s financial statements. The Districts do not issue separate financial statements.
The County has the following nine water and sewer districts, which are accounted for in enterprise funds:
Northeast Metro Water and Sewer District Southwest Water and Sewer District
Buies Creek/Coats Sewer District Northwest Water and Sewer District
South Central Water and Sewer District Southeast Water and Sewer District
West Central Water and Sewer District East Central Water and Sewer District
Bunnlevel/Riverside Water and Sewer District
The County entered into an agreement during fiscal year 1998, with each existing District and which will encompass additional Districts as they are created, that transferred all assets, liabilities (excluding bond indebtedness, loans, and installment notes, along with accrued interest payable), operational rights, and responsibilities to the County. In consideration for this agreement, along with related accrued interest payables, the County agreed to pay the Districts an amount equal to debt service costs for the respective Districts for the duration of the respective bonds, loans, and notes.
The County maintains the Districts’ assets, provides water and sewer operations and makes payments on outstanding debts on behalf of the respective Districts. Therefore, the County’s financial statements reflect the assets and debts in the Harnett County Public Utilities Fund. The Board of County Commissioners sits as the Board of each District. No separate financial statements are issued by these Districts as they have no operations, only certain outstanding debt that is paid on their behalf by the County pursuant to the agreement noted above.
Other Component Unit
Harnett County Industrial Facility and Pollution Control Financing Authority (“the Authority") exists to issue and service revenue bond debt of private businesses for economic development purposes. The Authority is governed by a seven-member board of commissioners, all of whom are appointed by the County commissioners. The County can remove any commissioner of the Authority with or without cause. The Authority has no financial transactions or account balances; therefore, it is not presented in the combined financial statements. The Authority does not issue separate financial statements.
B. Basis of Presentation - Fund Accounting
The accounts of the County are organized and operated on the basis of funds and account groups. A fund is an independent fiscal and accounting entity with a self-balancing set of accounts comprised of assets, liabilities, fund equity, revenues, and expenditures or expenses, as appropriate. Fund accounting segregates funds according to their intended purpose and is used to aid management in demonstrating compliance with finance-related legal and contractual provisions. The minimum number of funds is maintained consistent with legal and managerial requirements. The account groups are not funds, but are a reporting device used to account for certain assets and liabilities of the governmental funds that are not recorded directly in those funds.
The County has the following fund categories (further divided by fund type) and account groups.
Governmental Fund Types
Governmental Funds are used
to account for
General Fund - The General Fund is the general operating fund of the County. The General Fund accounts for all financial resources except those required to be accounted for in another fund.
The primary revenue sources are ad valorem taxes, sales taxes, and federal and state grants. The primary expenditures are for general government services, public safety, human services, and education. Debt service for general long-term debt is recorded as part of the general fund.
Special Revenue Funds - Special Revenue Funds account for the proceeds of
specific revenue sources (other than expendable trusts and major capital
projects) that are legally restricted to expenditures for specified purposes.
The County maintains eight Special Revenue Funds: the Section 8 Housing Fund, the Special
Districts Fund, the Community Development Block Grant Revolving Fund, the Law
Enforcement Fund, the Child Development
Grants Fund, the Hurricane Fran Fund, the Emergency Telephone System Fund, and the Emergency Response Planning
Fund. Three of these funds were closed
Capital Project Funds - Capital Project Funds account for financial resources to be used for the acquisition and construction of major capital facilities (other than those financed by proprietary funds). The County maintains five Capital Project Funds within the governmental fund types: the Masterplan Courthouse Capital Project Fund, the Airport Capital Projects Fund, the Shawtown Revitalization Capital Project Fund, the Patterson/Bailey COBG Capital Project Fund and the General Fund Capital Project Fund.
Proprietary Fund Types
Enterprise Funds - Enterprise funds are used to account for those operations that are (a) financed and operated in a manner similar to private business enterprises - where the intent of the governing body is that the costs (i.e., expenses, including depreciation) of providing goods or services to the public on a continuing basis be financed or recovered primarily through user charges; or (b) where the governing body has decided that periodic determination of revenues earned, expenses incurred, and/or net income is appropriate for capital maintenance, public policy, management control, accountability, or other purposes.
The Enterprise Fund also includes four capital project funds. Those funds include the following capital projects:
Buies Creek/Coats Capital Project Fund: Titan Industries Capital Project Fund, Buies Creek Wastewater Expansion Capital Project, and Comprehensive Wastewater Study Capital Project.
Southwest Capital Project Fund: Southwest
Regional Distribution Transmission Capital Project, Southwest Wastewater
Expansion Capital Project Fund, and
Northeast Metro Capital Projects Fund: Water Treatment Pilot Program, Lillington Regional Wastewater Capital Project, Southwest Regional Transmission III (Design Phase) Capital Project, Riverside Capital Project, Wastewater SCADA Improvements Capital Project, Harnett-Wake Transmission Capital Project, Wellons Acquisition and Anderson Creek Sewer Extension Capital Project, South Central Capital Project, Anderson Creek Water Acquisition Capital Project, Harnett Fuquay Wastewater Capital Project, and Northeast Water Plant 18 mgd Expansion Capital Project.
Closure Dunn/Erwin Landfill Capital Project Fund: Closure Dunn/Erwin Landfill.
The capital project funds are included with the Harnett County Public Utilities Fund for financial reporting purposes.
Fiduciary Fund Type
Fiduciary Funds account for the assets held by the County in a trustee capacity or as an agent for individuals, private organizations, other governmental units, and/or other funds. Fiduciary funds include the following funds:
Agency Funds - Agency funds are custodial in nature and do not involve the
measurement of operating results. Agency
funds are used to account for assets held by the County as an agent on behalf
of others. The County maintains three
Agency Funds: the Social Services Trust
Fund, Cooperative Extension Special Trust Fund and the Motor Vehicle Tax Fund.
The Cooperative Extension Special Trust Fund was closed at
General Fixed Assets Account Group - This account group is established to account for all fixed assets of the County, other than those accounted for in the proprietary fund.
General Long-Term Debt Account Group - This account group is established to account for general long-term debt and all long-term obligations of the County except those which are accounted for in the proprietary fund.
C. Measurement Focus and Basis of Accounting
The accounting and financial reporting treatment applied to a fund is determined by its measurement focus. All governmental funds are accounted for using a current financial resources measurement focus. With this measurement focus, only current assets and current liabilities generally are included on the balance sheet. Operating statements of these funds present increases (i.e., revenues and other financing sources) and decreases (i.e., expenditures and other financing uses) in net current assets.
The proprietary funds are
accounted for on a flow of economic resources measurement focus. With this measurement
focus, all assets and all liabilities associated with the operation of these
funds are included on the balance sheet.
Proprietary fund type equity (i.e., net total assets) is segregated into
contributed capital and retained earnings components. Operating statements for these funds present
increases (e.g., revenues) and decreases (e.g., expenses) in net total
assets. As required for periods
The fiduciary fund type is an agency fund that is purely custodial (assets equal liabilities) and thus does not involve a measurement of results of operations.
Basis of accounting determines when revenues and expenditures or expenses and the related assets and liabilities 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 applied.
In accordance with North Carolina General Statutes, all funds of the County are maintained during the year using the modified accrual basis of accounting. The governmental fund types and agency funds are presented in the financial statements on this same basis. Under the modified accrual basis, revenues are recognized in the accounting period when they become susceptible to accrual (i.e., when they are "measurable" and "available") to pay liabilities of the current period. In addition, expenditures are recorded when the related fund liability is incurred, if measurable, except for unmatured principal and interest on general long-term debt, which are recognized when due, and certain compensated absences and claims and judgments, which are recognized when the obligations are expected to be liquidated with expendable available financial resources.
The County recognizes assets of nonexchange transactions in the period when the underlying transaction occurs, when an enforceable legal claim has arisen, or when all eligibility requirements are met. Revenues are recognized, on the modified accrual basis, when they are measurable and available. Nonexchange transactions occur when one government provides (or receives) value to (from) another party without receiving (or giving) equal or nearly equal value in return. State shared revenues, sales tax, property taxes, federal grants funding federal mandates, and most donations are examples of nonexchange transactions.
The County considers all revenues available if they
are collected within 60 days after year-end, except for property taxes. Ad valorem property taxes are not accrued as
a revenue because the amount is not susceptible to accrual. At June 30, taxes receivable are materially
past due and are not considered to be an available resource to finance the
operations of the current year. Also, as
Sales taxes collected and held by the State at year-end on behalf of the County are recognized as revenue. Intergovernmental revenues, and sales and services are not susceptible to accrual because generally they are not measurable until received in cash. Expenditure-driven grants are recognized as revenue when the qualifying expenditures have been incurred and all other grant requirements have been satisfied.
Proprietary funds are
presented in the financial statements on the accrual basis of accounting. Under this basis, revenues are recognized in
the accounting period when earned and expenses are recognized in the period
they are incurred. As permitted by
accounting principles generally accepted in the
In March 1999, the GASB
adopted Statement No. 34 (“GASB 34”), (Basic
Financial Statements - and Management’s
Discussion and Analysis – for State and Local Governments), making it effective in three phases based on the
County’s total annual revenues in the first fiscal year ending after June 15,
1999. GASB 34 establishes new financial
reporting requirements for state and local governments throughout the
D. Budgetary Data
The County’s budgets are adopted as required by the North Carolina General Statues. Formal budgetary accounting is employed as a management control for all funds of the County. Annual budget ordinances are adopted each fiscal year, and amended as required, for the General Fund, all special revenue funds except the Community Development Revolving Loan Fund, the Child Development Grant Fund, the Hurricane Fran Fund, and the Emergency Response Planning Fund, which are authorized by project ordinances, and for the enterprise funds. All annual appropriations lapse at the fiscal year-end. Project ordinances are adopted for the capital project funds. All budgets are prepared using the modified accrual basis of accounting, which is consistent with the accounting system used to record transactions.
The legal level of control
over expenditures is at the department level for the General Fund,
A budget calendar is included in the North Carolina General Statutes which prescribes the last day on which certain steps of the budget procedure are to be performed. The following schedule lists the tasks to be performed and the date by which each is required to be completed.
March 20 - Each department head submits to the budget officer the budget requests and revenue estimates for their department for the budget year.
May 1 - The budget and the budget message shall be submitted to the governing board. The public hearing on the budget should be scheduled at this time.
June 19 - The budget ordinance shall be adopted by the governing board.
As required by G. S. 159-26(d), the County maintains encumbrance accounts which are considered to be "budgetary accounts." Encumbrances outstanding at year-end represent the estimated amounts of the expenditures ultimately to result if unperformed contracts in progress at year-end are completed. Encumbrances outstanding at year-end do not constitute expenditures or liabilities.
At June 30, 2001, $2,421 of open purchase orders and contracts relating the General Fund was outstanding. These encumbrances outstanding are reported as “Reserved for encumbrances” in the fund balance section of the Combined Balance Sheet. An appropriation is made in the subsequent year to complete these transactions.
E. Assets, Liabilities, and Fund Equity
Deposits and Investments
All deposits of the County are made in board-designated official depositories and are secured as required by G.S. 159-31. The County may designate, as an official depository, any bank or savings association whose principal office is located in North Carolina. Also, the County may establish time deposit accounts such as NOW and SuperNow accounts, money market accounts, and certificates of deposit.
State Law G. S. 159-30(c) authorizes the County to invest in obligations of the United States or obligations fully guaranteed both as to principal and interest by the United States; obligations of the State of North Carolina; bonds and notes of any North Carolina local government or public authority; obligations of certain non-guaranteed federal agencies; certain high quality issues of commercial paper and banker’s acceptances; and the North Carolina Capital Management Trust (“NCCMT”).
The County’s investments with a maturity of more than one year at acquisition and non-money market investments are carried at fair value as determined by quoted market prices. The securities of the NCCMT Cash Portfolio, an SEC-registered (2a-7) money market mutual funds, are valued at fair value, which is the NCCMT’s share price. The NCCMT Term Portfolio’s securities are valued at fair value. Money market investments including commercial paper that have a remaining maturity at the time of purchase of one year or less and non-participating interest earnings and investment contracts are reported at amortized cost.
Cash and Cash Equivalents
The County pools monies from several funds to facilitate disbursement and investment and to maximize investment income. Therefore, all cash and investments are essentially demand deposits and are considered cash and cash equivalents. The investment income is allocated based on each fund’s monthly balance in relation to the total pooled cash balance.
For purposes of the Statement of Cash Flows, the County’s proprietary funds consider equity in pooled cash and investments to be cash equivalents as they are essentially demand deposit accounts.
The unexpended bond proceeds of the Water and Sewer Fund Serial Bonds issued by the County are considered restricted assets (i.e., cash and investments) for the enterprise fund because their use is completely restricted to the purpose for which the bonds were originally issued. The unexpended certificate of participation proceeds in the General Fund, Water and Sewer Fund, and the Capital Projects Funds are deposited in a trustee account and are also shown as restricted assets because of contractual requirements. Such amounts are included in cash and investments. Customer deposits held by the County before any services are supplied are restricted to the service for which the deposit was collected.
Ad Valorem Taxes Receivable and Deferred Revenues
In accordance with State law [G.S. 105-347 and G.S. 159-13(a)], the County levies ad valorem taxes on property other than motor vehicles on July 1, the beginning of the fiscal year. The taxes are due on September 1 (lien date); however, penalties and interest do not accrue until the following January 6. These taxes are based on the assessed values as of January 1, 2000.
Ad valorem taxes receivable are not accrued as a revenue because the amount is not considered "available." At June 30, taxes receivable are materially past due and are not considered to be an available resource to finance the operations of the subsequent year. Accounting principles generally accepted in the United States of America state that property tax revenues which are measurable but not available should be recorded as deferred revenues. The receivable amount is reduced by an allowance for doubtful accounts, and an amount equal to the net receivable is shown as deferred revenues on the Combined Balance Sheet. In addition, property taxes collected in advance of the fiscal year to which they apply are recorded as deferred revenues.
Allowance for Doubtful Accounts
All receivables that historically experience uncollectible accounts are shown net of allowances for doubtful accounts. These amounts are estimated by analyzing the percentage of receivables which are not expected to be collected.
Inventory is determined by physical count and valued at cost, which approximates market. The inventory of the General Fund consists of expendable supplies held for consumption that are recorded as expenditures when purchased. The inventory of the enterprise funds consists of chemicals, meters and meter boxes, fuel oil, tubing and other supplies held for consumption. In each case, the cost of the inventory carried in the County’s enterprise fund is recorded as an expense when the inventory is consumed.
Fixed assets used in governmental fund type operations (general fixed assets) are accounted for in the General Fixed Assets Account Group. Accumulated depreciation is not recorded on general fixed assets. General fixed assets are recorded at cost. Donated fixed assets are recorded at their estimated fair market value on the date donated.
Public domain or infrastructure general fixed assets are not capitalized because such assets are immovable and of value only to the County. Also, the County has elected not to capitalize those interest costs which are incurred during the construction period of general fixed assets.
Property, plant, and equipment in the proprietary funds of the County are recorded at original cost at the time of acquisition. Property, plant, and equipment donated to these proprietary fund type operations are recorded at the estimated fair market value at the date of donation. Any interest incurred during the construction phase of proprietary fund type fixed assets is reflected in the capitalized value of the asset constructed. Assets are depreciated on a straight-line basis. Gains or losses on dispositions are credited or charged to operations. Proprietary fund assets of the County are depreciated on a class life basis at the following rates:
Plant, distribution and collection systems 20 to 40 years
Furniture and maintenance equipment 4 to 10 years
Vehicles 3 to 7 years
For governmental fund types, bond issuance costs are recognized during the current period. Bond proceeds are reported as other financing sources. Issuance costs, whether or not withheld from the actual net proceeds received, are reported as debt service expenditures. For the proprietary fund types, material bond issuance costs are deferred and amortized over the life of the bonds using the effective interest method. The Long-term debt for water system improvements is carried within the enterprise funds rather than in the general long-term debt account group. The debt service requirements for that debt are being met by water revenues, but the taxing power of the District is pledged to make these payments if water revenues should ever be insufficient. Long-term debt for other purposes is included in the general long-term debt account group. The debt service requirements for all of the debt carried in the general long-term debt account group are appropriated annually in the General Fund.
Reservations or restrictions of equity represent amounts that are not appropriable or are legally segregated for a specific purpose. Designations of equity represent tentative management plans that are subject to change.
State law [G.S. 159-13(b) (16)] restricts the appropriation of fund balance or fund equity to an amount not to exceed the sum of cash and investments minus the sum of liabilities, encumbrances and deferred revenues arising from cash receipts as those amounts stand at the close of the fiscal year preceding the budget year.
The governmental fund types classify fund balance as follows:
Reserved for Inventories - portion of fund balance not available for appropriation because it represents the year-end balance of ending inventories, which are not expendable, available resource.
Reserved for Encumbrances - portion of fund balance available to pay for commitments relating to purchase orders and contracts which remain unperformed at year-end.
Reserved by State Statute - portion of fund balance, in addition to reserves for encumbrances and reserves for inventories, which is not available for appropriation under State Law [G.S. 159-8 (a)]. This amount is usually comprised of accounts receivable and interfund receivables which are not offset by deferred revenues.
Designated for Subsequent Year's Expenditures - portion of total fund balance available for appropriation which has been designated for the adopted 2001-2002 budget ordinance.
Undesignated - portion of total fund balance available for appropriation which is uncommitted at year-end.
Contributed capital is recorded in proprietary funds that have received capital grants or contributions from developers, customers, or other funds. The majority of contributed capital consists of water and sewer lines built by developers and donated to the County.
F. Revenues, Expenditures and Expenses
The General Fund provides the basis of local resources for other governmental funds. These transactions are recorded as "operating transfers out" in the General Fund and "operating transfers in" in the receiving fund.
The vacation policy of the County provides for the accumulation of up to 10 days earned vacation leave with such leave being fully vested when earned. For the County, the current portion of the accumulated vacation pay is not considered to be material; therefore, no expenditure or liability has been reported in the County’s governmental funds. The County's liability for accumulated earned vacation and the salary-related payments as of June 30, 2001 is recorded in the General Long-Term Debt Account Group. For the Enterprise Funds, an expense and a liability for compensated absences and the salary-related payments are recorded within those funds as the leave is earned.
The County's sick leave policy provides for an unlimited accumulation of earned sick leave. Sick leave does not vest but any unused sick leave accumulated at the time of retirement may be used in the determination of length of service for retirement benefit purposes. Because the County has no obligation for the accumulated sick leave until it is actually taken, no accrual for sick leave has been made.
G. Totals (Memorandum Only) Columns
The total columns on the accompanying financial statements are captioned as “Total (Memorandum Only)” because they do not represent consolidated financial information and are presented only to facilitate financial analysis. The columns do not present information that reflects financial position, results of operations, or cash flows in accordance with accounting principles generally accepted in the United States of America for the primary government. Interfund eliminations have not been made in the aggregation of this data.
H. Comparative Data/Reclassifications
Comparative total data for the prior year have been presented in selected sections of the accompanying financial statements in order to provide an understanding of the changes in the County’s financial position and operations. Comparative totals have not been included on the statements where their inclusion would not provide enhanced understanding of the County’s financial position and operations or would cause the statements to be unduly complex or difficult to understand. Also, certain amounts presented in the prior year’s data have been reclassified to be consistent with the current year’s presentation.
At June 30, 2001, the following individual funds had a deficit in fund equity:
Special Revenue Funds:
Section 8 Housing Fund $ (226,482)
Special Districts (864)
Non-Compliance with North Carolina General Statutes
During the year ended June 30, 2001, expenditures exceeded appropriated amounts at the level of budget ordinance appropriation in the General Fund and Capital Project Funds as follows:
Budget Actual Variance
Medical Examiner $ 32,500 $ 34,950 $ (2,450)
Education 11,286,282 11,330,282 (44,000)
Capital Project Funds:
School 2000 COPS
Education - 3,648,474 (3,648,474)
The accompanying schedules reconcile certain transactions which are treated differently on the Combined Statement of Revenues, Expenditures, and Changes in Fund Balances - All Governmental Fund Types and the Combined Statement of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual - General Fund and Annually Budgeted Special Revenue Funds. A reconciliation for the Special Revenue Funds is included below:
Increase Combined (Decrease) Budgetary
Special Revenue Fund:
Restricted intergovernmental revenues $ 603,230 $ (28,572)1 $ 574,658
Permits and fees 618,408 3,3851 621,793
Investment earnings 25,438 (15,845)1 9,593
Other general revenues 80,739 (73,465)1 7,274
Public safety 3,458,687 (43,024)1 3,415,663
Other financing uses:
Operating transfer (16,884) (12,039)1 (4,845)
1 Community Development Block Grant Fund, Child Development Grant Fund, Hurricane Fran Fund, and Emergency Response Planning Fund that are budgeted on a project ordinance basis.
All of the County's deposits are either insured or collateralized by using one of two methods. Under the Dedicated Method, all deposits exceeding the federal depository insurance coverage are collateralized with securities held by the County's agent in the County’s name. Under the Pooling Method, which is a collateral pool, all uninsured deposits are collateralized with securities held by the State Treasurer's agent in the name of the State Treasurer. Since the State Treasurer is acting in a fiduciary capacity for the County, these deposits are considered to be held by the County's agent in the County's name. The amount of the pledged collateral is based on an approved averaging method for noninterest bearing deposits and the actual current balance for interest-bearing deposits. Depositories using the Pooling Method report to the State Treasurer the adequacy of their pooled collateral covering uninsured deposits. The State Treasurer does not confirm this information with the County or the escrow agent. Because of the inability to measure the exact amount of collateral pledged for the County under the Pooling Method, the potential exists for undercollateralization, and this risk may increase in periods of high cash flows. However, the State Treasurer of North Carolina enforces strict standards of financial stability for each depository that collateralizes public deposits under the Pooling Method.
At June 30, 2001, the County's deposits had a carrying amount of $30,338,796 and a bank balance of $32,186,763. Of the bank balance, $234,051 is covered by federal depository insurance and $31,952,712 was covered by collateral held under the Pooling Method.
At June 30, 2001, Harnett County had $3,520 cash on hand.
The County's investments are categorized to give an indication of the level of custodial risk assumed by each of these entities at year-end. In the following tables, Column A includes investments that are insured or registered or for which the securities are held by the County or its agents in the entity’s name. Column B includes uninsured and unregistered investments for which the securities are held by the counterparty’s trust department or agent in the County’s name. Column C includes uninsured and unregistered investments for which the securities are held by the counterparty, or by its trust department or agent but not in the County’s name. The County’s investments in the North Carolina Capital Management Trust are exempt from risk categorization because the County does not own any identifiable securities in these mutual funds.
At June 30, 2001, the County’s Investment balances were as follows:
Categories Reported Fair
A B C Value Value
Commercial Paper $ - $ 4,098,545 $ - $ 4,098,545 $ 4,098,545
$ - $ 4,098,545 $ - 4,098,545 4,098,545
North Carolina Capital Management Trust 4,920,669 4,920,669
Total investments 9,019,214 9,019,214
Certificates of deposit 3,644,188 3,644,188
Demand Deposits 26,698,128 26,698,128
Total cash and investments $ 39,361,530 $ 39,361,530
Cash and investments at June 30, 2001, include the following restricted amounts:
Harnett County COPS 1994 School Construction $ 2,613,491
Harnett County COPS 1994 Governmental Complex 1,287,242
Capital Project Funds:
Harnett County COPS 2000 School Construction 6,969,063
Harnett County COPS 2000 Courthouse Construction 11,127,882
Harnett County Public Utility Fund 476,361
Northeast Projects Fund 376,312
Southwest Projects Fund 362,480
Total $ 23,212,831
Taxes and accounts receivable as of year end are shown on the Combining Balance Sheet, net of the allowance for doubtful accounts, as follows:
The balance in deferred revenues at June 30, 2001 composed of the following elements:
Prepaid taxes not yet earned $ 12,263 $ -
Taxes receivable, net 3,135,541 325,150
Total $ 3,144,925 $ 325,150
A. General Fixed Assets
A summary of changes in general fixed assets follows:
July 1, 2000 Additions Additions Transfers Deletions June 30, 2001
Land and improvements $ 4,207,704 $ 7,118 $ - $ - $ - $ 4,214,822
Bldg and improvements 19,696,881 12,773 - - (8,410) 19,701,244
Furniture 199,345 28,925 - - (9,756) 218,514
Equipment 2,582,897 112,815 - - (86,105) 2,609,607
Computer hardware 2,423,826 234,551 - - (197,084) 2,461,293
Vehicles 3,392,468 333,203 3,102 - (305,129) 3,423,644
Computer software 1,072,208 232,507 - - (82,787) 1,221,928
Construction in progress 2,527,418 10,065,503 - - - 12,592,921
Total general fixed
assets $ 36,102,747 $ 11,027,395 $ 3,102 $ - $ (689,271) $ 46,443,973
July 1, 2000 Additions Retirements Transfers June 30, 2001
General government $ 15,669,213 $ 329,531 $ (439,377) $ (3,190) $ 15,556,177
Public safety 8,357,153 431,568 (184,248) (8,239) 8,596,234
Environmental protect 9,515 - - - 9,515
Transportation 3,743,516 - - - 3,743,516
Econ and physical development 601,326 21,966 (12,194) (1,662) 609,436
Human services 3,829,433 22,734 (38,625) 16,357 3,829,899
Cultural and recreation 1,365,173 159,195 (14,827) (3,266) 1,506,275
Construction in progress 2,527,418 10,065,503 - - 12,592,921
Total general fixed
assets $ 36,102,747 $ 11,030,497 $ (689,271) $ - $ 46,443,973
Fixed assets additions for the fiscal year ended June 30, 2001 are listed by fund below:
General Fund $ 964,994
Capital Project Funds:
Masterplan Courthouse Update Capital Project Fund 6,425,086
General Fund Capital Project Fund 3,214,131
Shawtown Revitalization Capital Project Fund 18,271
Patterson/Bailey – CDBG Capital Project Fund 111,960
Airport Capital Project Fund 296,055
Total Capital Project Funds 10,065,503
Total fixed asset additions $ 11,030,497
The fixed assets of the proprietary funds at June 30, 2001 are summarized as follows:
Public Utilities Solid Waste
Fund Management Total
Land and land improvement $ 298,103 $ 1,793,149 $ 2,091,252
Plant, distribution and collection systems 72,679,838 - 72,679,838
Furniture and maintenance equipment 1,651,999 1,504,242 3,156,241
Vehicles 954,287 78,955 1,033,242
Construction in progress 23,597,894 - 23,597,894
99,182,121 3,376,346 102,558,467
Less accumulated depreciation 16,203,584 1,710,332 17,913,916
Net fixed assets $ 82,978,537 $ 1,666,014 $ 84,644,551
Construction period interest expense, net of interest earned in the amount of ($ 39,668) has been capitalized in the cost of proprietary fund fixed assets during the year ended June 30, 2001.
At June 30, 2001, the proprietary fund’s construction in progress consists of the following projects:
Authorization To Date
Lillington Regional Wastewater Capital Project $ 235,000 $ 141,808
Southwest Regional Transmission III (Design Phase)
Capital Project 120,000 (16,116)
Riverside Capital Project 2,441,528 2,039,300
Wastewater SCADA Improvements Capital Project 671,850 477,748
Harnett-Wake Transmission Capital Project 12,105,476 10,070,143
Wellons Acquisition and Anderson Creek Sewer
Extension Capital Project 4,431,316 3,996,915
Northeast Water Plant 18mgd Expansion Capital Project 3,376,450 2,330,759
Harnett Fuquay Wastewater Capital Project 2,287,000 143,814
Anderson Creek Water Acquisition Capital Project 400,000 (674)
South Central Capital Project 67,000 (113)
Titan Industries Capital Project Fund 1,424,567 1,007,941
Southwest Regional Distribution Transmission
Capital Project 3,216,509 3,104,039
Southwest Wastewater Expansion Capital Project Fund 1,001,500 231,397
Western Harnett & Johnsonville School Sewer Extension
Capital Project 462,985 70,933
Total $ 32,626,386 $ 23,597,894
Harnett County Industrial Facility and Pollution Control Authority has issued industrial revenue bonds to provide financial assistance to private businesses for economic development purposes. These bonds are secured by the properties financed and are payable solely from payments received from the private businesses involved. Ownership of the acquired facilities is in the name of the private business served by the bond issuance. Neither the County, the Authority, the State, nor any political subdivision thereof is obligated in any manner for the repayment of bonds. Accordingly, the bonds are not reported as liabilities in the accompanying financial statements. As of June 30, 2001, there was one series of industrial revenue bonds outstanding, with an aggregate principal amount payable of $2.7 million.
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 of $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 County has recorded a $50,000 accrual in the accompanying general purpose financial statements to cover any claims not paid by the insurance carrier. 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.
The County has entered into agreements to lease certain equipment. At June 30, 2001, the original cost of equipment under these leases is approximately $906,958. Title passes to the County at the end of the lease term. These agreements are in substance lease-purchases (capital leases) and are included in the General Long-Term Debt Account Group. The following is a schedule of minimum future payments required under capital lease obligations:
General Long-Term Debt Account Group:
Lease purchases of various office equipment
Payments of varying amounts totaling $20,978 per month $ 538,103
Less amounts representing interest (39,507)
Total $ 498,596
Notes payable financed by the governmental funds are accounted for in the General Long-Term Debt Account Group and are repaid from the resources of the General Fund. The notes payable and the general obligation bonds issued to finance the construction of facilities utilized in the operations of the water and sewer system and which are being retired by resources from users are reported as long-term debt in the enterprise funds. All bonds are collateralized by the full faith, credit and taxing power of the district in which the obligations originate. Principal and interest requirements are appropriated when due.
The following is a schedule of long-term debt at June 30, 2001:
Black River Drainage District loan dated July 1, 1998, to assume the outstanding debt from the Harnett County Drainage District Number One; due on January 1 in decreasing installments ranging from $1,062 to $135 through January, 2011; interest rate 5.00% (Original Issue: $23,901)
Certificates of Participation (COPS 1992) dated November 1, 1992 for the purchase of the assets of the Northeast Metropolitan Water District; due on December 1 and June 1 in increasing installments ranging from $125,000 to $300,000 through June 1, 2008; interest increasing from 3.75% to 7.00% (Original issue: $3,100,000)
Certificates of Participation (COPS 1994) dated December 1, 1994 for the construction of school facilities, Department of Social Services/Health facility and a water reservoir and pumping station; due on December 1 and June 1 in increasing installments ranging from $1,585,000 to $4,010,000 through December 1, 2014; interest increasing from 4.90% to 7.50%; secured in part by land purchased under a sale lease back agreement between the County and the Harnett County Board of Education where by the land was purchased from the Board by the County for $1 (Original issue: $40,995,000)
Certificates of Participation (COPS 2000) dated July 1, 2001 for the construction of the County Courthouse and schools; due on May 16 and November 16 in increasing installments ranging from $1,240,000 to $1,830,000 through December 16, 2016; interest increasing from 4.75% to 5.50% (Original issue: $23,675,000)
Central Carolina Community College Classroom Construction note, dated June 1997; due on December 12 and June 12 in installments ranging from $22,778 to $46,613, through June 2012; interest rate 5.00% (Original issue: $1,000,000)
Clean water bond dated June 1, 1996 for the expansion of the water treatment plant; due on November 1 and May 1 in installments of $150,000 through May 1, 2016; interest rate 5.85% (Original issue: $3,000,000)
Harnett County installment purchase dated December 20, 1999, for the purpose of installing water and sewer lines and the purchase of an existing wastewater treatment facility; due on December 1 and June 1 in equal installments of $311,667, through December 1, 2014; interest rate 5.30%. (Original issue: $4,675,000)
Harnett County State Revenue Loan, dated March 29, 2001, for the purchase of installing water lines into Wake County; due on May 1 and November 1 in installments of $43,202 through May 1, 2020; interest rate 5.25% (Original issue: $864,047)
Harnett Production Enterprise note, dated April 14, 1998, for the expansion of the Adult Special Needs Shelter ; due on October 1 and April 1 in installments ranging from $56,228 to $87,313 through April 2008; interest rate 4.95% (Original issue: $1,400,000)
Southwest Water and Sewer District, (“the District”), water bonds issued by the District dated July 16, 1998; due on November 1 and May 1 in installments of $141,211; Through May, 2017; interest at 5.3% (Original issue: $2,683,000)
Revolving loan dated June 1, 1995 for the expansion of the water treatment plant; due on May 1 and November 1, in installments of $150,000, through May 1, 2017; interest rate 3.22% (Original issue: $3,000,000)
Total notes payable
General obligation bonds:
Sanitary Sewer Refunding Bonds, dated May 1, 1993, issued by the Buies Creek-Coats Water and Sewer District; due on December 1 and June 1 in installments ranging from $70,000 to $110,000 through June 1, 2012; interest increasing from 5.6% to 5.7% (Original issue: $1,880,000)
Water Bonds Series A issued by the East Central Water and Sewer District dated October 10, 1995; due June 1 in installments ranging from $36,500 to $146,000 through June 1, 2035; interest at 5.125% (Original issue: $3,608,000)
Water Bonds Series B issued by the East Central Water and Sewer District dated October 10, 1995; due June 1 in installments ranging from $2,000 to $8,000 through June 1, 2035; interest at 5.25% (Original issue: $172,000)
Water Bonds issued by Northwest Water and Sewer District; dated June 25, 1990, due on June 1 in installments ranging from $16,000 to $64,000; through June 1, 2029; interest at 6% (Original issue: $1,604,000)
Water Bonds for the Northwest Phase II Capital Project issued by the Northwest Water and Sewer District dated October 1, 1997, due on June 1 and December 1 in installments ranging from $35,000 to $80,000 through June 1, 2016; interest at 5.30% (Original issue $995,000)
Sanitary Sewer Bonds for Bunnlevel/Riverside issued by South Central Water and Sewer District, dated July 22, 1991; due on June 1 in installments ranging from $2,000 to $8,000 through June 1, 2031; interest at 5% (Original issue: $191,000)
Water Refinancing Bonds issued by South Central Water and Sewer District, dated May 4, 1989; due on June 1 in increasing installments ranging from $15,400 to $174,500 through June 1, 2009; interest at 10.50% (Original issue $1,576,700)
Water Bonds issued by South Central Water and Sewer District, dated March 16, 1990, due on June 1 in increasing installments ranging from $9,500 to $38,000; through June 1, 2029; interest at 6% (Original issue: $951,000)
Water Bonds issued for the South Central Phase III Capital Project by the South Central Water and Sewer District dated October 1, 1996; due on December 1 and June 1,1998 in increasing installments ranging from $20,000 to $160,000 through June 1, 2014; interest at 5.50% (Original issue: $1,140,000)
Water Bonds issued for the South Central Phase III Capital Project by the South Central Water and Sewer District dated June 9, 1997, due on June 1 in installments ranging from $10,500 to $42,000 through June 1, 2037; interest rate 5.0% (Original issue: $1,000,000)
Water Bonds issued by the Southeast Water and Sewer District dated December 13, 1993; due on June 1 in installments ranging from $15,500 to $62,000 through June 1, 2033; interest at 5.125% (Original issue: $1,482,000)
1991A Water Series Bonds issued by Southwest Water and Sewer District dated November 4, 1991; due on June 1 in installments ranging from $25,000 to $100,000 through June 1, 2031; interest at 5.875% (Original issue: $2,619,000)
1991B Water Series Bonds issued by Southwest Water and Sewer District dated November 4, 1991; due on June 1 in installments ranging from $5,000 to $20,000 through June 1, 2030; interest at 5.875% (Original issue: $475,000)
Water Bonds for Carolina Lakes issued by Southwest Water and Sewer District dated March 1, 1992; due on September 1 and March 1 in installments ranging from $20,000 to $25,000 through March 1, 2013; interest increasing from 6.5% to 6.7% (Original issue: $520,000)
Series A Water Bond issued for the Southwest Phase II Capital Project by Southwest Water and Sewer District dated June 23, 1997; due on December 1 and June 1, in installments ranging from $9,500 to $38,000 through June 1, 2037; interest at 5.0%. (Original issue: $880,000)
1989A Water Series Bonds issued by West Central Water and Sewer District, dated June 27, 1989; due on June 1 in installments ranging from $6,250 to $25,000; through June 2029; interest at 6.5% (Original issue: $670,000)
1989B Water Series Bonds issued by West Central Water and Sewer District, dated June 27, 1989, ; due on June 1 in installments ranging from $1,300 to $5,000; through June 1, 2029; interest at 7.375%; (Original issue: $130,000)
Water Bonds issued by the West Central Water and Sewer District, dated December 13, 1993,; due on June 1 in installments ranging from $18,500 to $74,000; through June 1, 2033; interest at 5.125%. (Original issue: $1,800,000)
Total general obligation bonds payable
Bond anticipation notes:
$1,194,000 Water Notes issued on April 25, 2001 and due on July 25, 2001; interest at 3.295%. The notes will be repaid from a $1,194,000 bond issue expected to be sold in the next fiscal year.
Total bond anticipation notes
Special Revenue Funds
Total lease obligations
The following is a summary of changes in general long-term debt for the year ended June 30, 2001:
2000 Additions Payments 2001
Notes payable $ 31,214,358 $ 23,675,000 $ 2,142,933 $ 52,746,425
Capitalized leases 488,468 222,119 211,991 498,596
Accrued Vacation 897,460 127,668 - 1,025,128
Law Enforcement Officers'
Special Separation Allowance 188,523 28,973 - 217,496
Total $ 32,788,809 $ 24,053,760 $ 2,354,924 $ 54,487,645
2000 Additions Payments 2001
Black River Drainage $ 19,448 $ - $ 1,329 $ 18,119
Governmental buildings 7,693,200 13,605,000 518,401 20,779,799
Central Carolina Community
Classroom Construction 854,502 - 53,490 801,012
School Construction 21,476,850 10,070,000 1,447,200 30,099,650
Harnett Production Enterprises 1,170,358 - 122,513 1,047,845
Equipment 488,468 222,119 211,991 498,596
Accrued vacation 897,460 127,668 - 1,025,128
Law Enforcement Officers'
Special Separation Allowance 188,523 28,973 - 217,496
Total $ 32,788,809 $ 24,053,760 $ 2,354,924 $ 54,487,645
The following summarizes the annual debt service requirements to maturity for the County (excluding accrued vacation and Law Enforcement Officers’ Special Separation Allowance):
At June 30, 2001, Harnett County had bonds authorized but unissued in the amount of $1,800,000 for Riverside Water and Sewer District. The County is subject to the Local Government Bond Act of North Carolina which limits the amount of net bonded debt the County may have outstanding to eight percent of the appraised value of property subject to taxation. At June 30, 2001, such statutory limit for the County was $224,988,729 providing a legal debt margin of approximately $155,224,612.
A. Multiple - Employer Plans
Local Governmental Employees’ Retirement System
All regular full-time employees participate in the statewide Local Governmental Employee’s Retirement System (the “System”), a multiple-employer, cost-sharing, defined benefit pension plan administered by the State of North Carolina. The System provides retirement and disability benefits to plan members and beneficiaries. Article 3 of G.S. Chapter 128 assigns the authority to establish and amend benefit provisions to the NC General Assembly. The System is included in the Comprehensive Annual Financial Report (“CAFR”) for the State of North Carolina. The State’s CAFR includes financial statements and required supplementary information for LGERS. That report may be obtained by writing to the Office of State Controller, 1410 Mail Service Center, Raleigh, NC 27699-1410, or by calling (919) 981-5454.
Plan members are required to contribute six percent of their annual covered salary. The County is required to contribute at an actuarially determined rate. For the County, the current rate for employees not engaged in law enforcement and for law enforcement officers is 4.91% and 4.63% respectively of annual covered payroll. The contribution requirements of members and of the County are established and may be amended by the North Carolina General Assembly. The County’s contributions to LGERS for the years ended June 30, 1999, 2000, and 2001 were $679,827, $754,540, and $815,936 respectively. The contributions made by the County equaled the required contributions for each year.
B. Single - Employer Plan
Law Enforcement Officers' Special Separation Allowance
Harnett County administers a public employee retirement system (the “Separation Allowance”), a single-employer, defined benefit pension plan that provides retirement benefits to the County’s qualified sworn law enforcement officers. The separation allowance is equal to .85% of the annual equivalent of the base rate of compensation most recently applicable to the officer for each year of credible service. The retirement benefits are not subject to any increase in salary or retirement allowances that may be authorized by the General Assembly. Article 12D of G.S. Chapter 143 assigns the authority to establish and amend benefit provisions to the North Carolina General Assembly. Separate financial statements were not issued.
All full-time County law enforcement officers are covered by the Separation Allowance. At December 31, 2000, the Separation Allowance’s membership consisted of:
Retirees receiving benefits 2
Terminated plan members entitled to
but not yet receiving benefits 0
Active plan members 72
Basis of Accounting
The County has chosen to fund the Separation Allowance on a “pay as you go” basis. Pension expenditures are made from the General Fund, which is maintained on the modified accrual basis of accounting.
Method Used to Value Investments
No funds are set aside to pay benefits and administrative costs. These expenditures are paid as they come due.
The County is required by Article 12D of G.S. Chapter 143 to provide these retirement benefits and has chosen to fund the benefit payments on a pay as you go basis through appropriations made in the General Fund operating budget. The County’s obligation to contribute to this plan is established and may be amended by the North Carolina General Assembly. There were no contributions made by employees.
The annual required contribution for the current year was determined as part of the December 31, 1999 actuarial valuation using the projected unit credit actuarial cost method. The actuarial assumptions included (a) 7.25% investment rate of return (net of administrative expenses) and (b) projected salary increases of 5.9% to 9.8% per year. Item (b) included an inflation component of 3.75%. The assumptions did not include post-retirement benefit increases. The actuarial value of assets was market value. The unfunded actuarial accrued liability is being amortized as a level dollar amount on a closed basis. The remaining amortization period at December 31, 2000 was 20 years.
Three Year Trend Information
Fiscal Year Annual Pension Percentage of APC Net Pension Obligation
Ended Cost (“APC”) Contributed End of Year
6/30/01 $ 46,665 37.91% $ 217,496
6/30/00 43,401 35.21% 188,523
6/30/99 37,859 26.10% 160,404
Annual Pension Cost and Net Pension Obligation
The County’s annual pension cost and net pension obligation to the Separation Allowance for the current year were as follows:
Annual required contributed $ 50,534
Interest on net pension obligation 13,668
Adjustment to annual required contribution (17,537)
Annual pension cost 46,665
Contributions made (17,692)
Increases in net pension obligation 28,973
Net pension obligation beginning of year 188,523
Net pension obligation end of fiscal year $ 217,496
C. Supplemental Retirement Income Plan for Law Enforcement Officers
The County contributes to the Supplemental Retirement Income Plan (“The Plan”), a defined contribution pension plan administered by the Department of State Treasurer and a Board of Trustees. The Plan provides retirement benefits to law enforcement officers employed by the County. Article 5 of G.S. Chapter 135 assigns the authority to establish and amend benefit provisions to the North Carolina General Assembly.
Article 12E of G.S. Chapter 143 requires the County to contribute each month, an amount equal to 5% of each officer’s salary, and all amounts contributed are vested immediately. Also, the law enforcement officers may make voluntary contributions to the plan. Contributions for the year ended June 30, 2001 were $142,212, which consisted of $104,857 from the County and $37,355 from the law enforcement officers.
The County has complied with changes in the internal revenue code laws which govern the County’s Deferred Compensation Plan, requiring all assets of the plan to be held in trust for the exclusive benefit of the participants and their beneficiaries. In accordance with GASB Statement 32, the County’s Deferred Compensation Plan is not reported within the County’s Agency Funds.
D. Registers of Deeds' Supplemental Pension Fund
Harnett County also contributes to the Register of Deeds’ Supplemental Pension Fund (“The Fund”), a non-contributory, defined contribution plan administered by the North Carolina Department of State Treasurer. The Fund provides supplemental pension benefits to any eligible county register of deeds who is retired under the Local Governmental Employees’ Retirement System (LGERS) or an equivalent locally sponsored plan. Article 3 of G.S. Chapter 161 assigns the authority to establish and amend benefit provisions to the North Carolina General Assembly.
On a monthly basis, the County remits to the department of State Treasurer, an amount equal to four and one-half percent (4.5%) of the monthly receipts collected pursuant to Article 1 of G.S. 161. Immediately following January 1 of each year, the Department of State Treasurer divides ninety-three percent (93%) of the amount in the Fund at the end of the preceding calendar year into equal shares to be disbursed as monthly benefits. The remaining seven percent (7%) of the Fund’s assets may be used by the State Treasurer in administering the Fund. For the fiscal year ended June 30, 2001, the County’s required and actual contributions were $17,146.
E. Other Post-Employment Benefits
At retirement, all employees have the option to purchase basic medical insurance at the County's group rate. The entire cost of this insurance is paid by the County for those employees, until age 65, who retire with 30 years of Harnett County service. Those employees who retire with less than 30 years of service with Harnett County have their post-retirement benefits paid for by the County, but on a prorated basis. Currently 14 retirees are eligible for post-retirement health benefits. For the fiscal year ended June 30, 2001, the County made payments for post-retirement health benefit premiums of $27,918. The County obtains health care coverage through private insurers.
State and federal laws and regulations require the County to place a final cover on its Dunn-Erwin Solid Waste Landfill when it stops accepting waste and to perform certain maintenance and monitoring functions at the site for 30 years after closure. Although closure and postclosure care costs will be paid only near or after the date that the landfill stops accepting waste, the County reports a portion of these closure and postclosure care costs as an operating expense in each period based on landfill capacity used as of each balance sheet date. Expenditures of $19,280 have been applied to the liability during the current fiscal year. The $3,648,710 postclosure care liability at June 30, 2001 represents a cumulative amount reported to date based on the use of 100% of the total estimated capacity of the landfill. The County closed the Dunn-Erwin Solid Waste Landfill on January 1, 1998. These amounts are based on what it would cost to perform all closure and postclosure care in 2001. Actual costs may be higher due to inflation, changes in technology, or changes in regulations.
The County had commitments under uncompleted construction contracts in the Enterprise Funds totaling $2,557,590 and in the Governmental Funds totaling $9,585,153 at June 30, 2001.
During the year ended June 30, 2001 the 2000 COPS issue was subject to arbitrage regulations. The arbitrage rebate payments are due on the fifth anniversary of the bond issue date. It is management’s belief that no rebates will be payable.
Claims and Judgments
At June 30, 2001, the County was a defendant in various lawsuits. In the opinion of the County's management and the County attorney, the ultimate outcome of these legal matters will not have a material adverse effect on the County's financial position.
Federal and State Assisted Programs
The County has received proceeds from several federal and state awards. Periodic audits of these awards are required and certain costs may be questioned as not being appropriate expenditures under the award agreements. Such audits could result in the refund of award monies to the grantor agencies. Management believes that any required refunds will be immaterial. No provision has been made in the accompanying financial statements for the refund of award monies.
Enterprise Funds - Contributed Capital
Grants, entitlements, and shared revenues restricted for the acquisition or construction of capital assets are recorded as contributed capital prior to the implementation of GASB Statement 33, Accounting and Financial Reporting for Nonexchange Transactions. As required by GASB Statement 33, the County has begun recognizing capital contributions as revenue in the current year rather than as contributed capital. The County utilizes an option allowed under NCGA Statement 2 for the combined statement of revenues, expenses and changes in retained earnings whereby it charges depreciation expense on assets acquired or constructed through grants, entitlements, or shared revenues to the contributed capital account rather than to retained earnings.
The following is a summary of the changes in contributed capital for the year ended June 30, 2001:
Federal State Local Total
July 1, 2000 $ 12,269,238 $ 2,887,284 $ 14,217,005 $ 29,373,527
Depreciation 332,277 59,644 184,884 576,806
June 30, 2001 $ 11,936,961 $ 2,827,640 $ 14,032,121 $ 28,796,721
The composition of interfund balances as of June 30, 2001 is as follows:
General Fund $ 214,309 $ -
Special Revenue Funds -
Section 8 Housing Fund - 214,309
Total $ 214,309 $ 214,309
A summary of interfund operating transfers by fund for the year ended June 30, 2001 is as follows:
The County operates two enterprise funds, one of which provides water and sewer services and one which provides solid waste disposal services. Segment information for the year ended June 30, 2001 is as follows:
Fund Management Total
Operating revenue $ 9,704,913 $ 2,394,576 $ 12,099,489
Depreciation expense 2,094,642 97,124 2,191,766
Operating income (loss) 1,465,686 (359,093) 1,106,593
Net income (loss) 3,645,697 (122,920) 3,522,777
Capital contributions 6,811,905 - 6,811,905
Plant, property, and equipment
additions 16,198,376 23,596 16,221,972
Net working capital 2,659,301 2,976,562 5,635,863
Total assets 90,379,278 4,923,062 95,302,340
Bonds and other long-term
liabilities payable from
operating sources 36,633,843 3,671,311 40,305,154
Total equity 52,024,087 971,265 52,995,352
The County, in conjunction with Lee County, participates in the Lee/Harnett Area Mental Health Authority. Harnett County appoints eight members to the 15-member board. The Authority is a joint venture established to provide the participating counties with legally mandated mental health services. The County has an ongoing financial responsibility for the Authority because the Authority's continued existence depends on the participating governments' continued funding. The County contributed $177,280 to the Authority during the fiscal year ended June 30, 2001. Neither of the participating governments has any equity interest in the Authority, so no equity interest has been reflected in the financial statements at June 30, 2001. Complete financial statements for the Authority can be obtained from the Authority's administrative office at Highway 421, Post Office Box 457, Buies Creek, North Carolina 27506.
The County, in conjunction with the State of North Carolina, Lee County, Chatham County and the Lee County Board of Education, participates in a joint venture to operate Central Carolina Community College. Harnett County appoints two members of the 17-member board of trustees of the community college. The president of the community college's student government association serves as a non-voting, ex officio member of the board of trustees. The community college is included as a component unit of the state.
The County has the basic responsibility for providing funding for the Harnett County facilities of the community college and also provides some financial support for the community college's operations. The County has an ongoing financial responsibility for the community college because of the statutory responsibilities to provide funding for the community college's Harnett County facilities. The County contributed $318,119 to the community college for operating purposes during the fiscal year ended June 30, 2001. The participating governments do not have any equity interest in the joint venture; therefore, no equity interest has been reflected in the County's financial statements at June 30, 2001. Complete financial statements for the community college may be obtained from the community college's administrative offices at 1105 Kelly Drive, Sanford, North Carolina 27330.
The County, in conjunction with the City of Dunn and the Dunn Area Chamber of Commerce, participates in the Averasboro Township Tourism Development Authority. The Authority is a joint venture established to receive the net proceeds of the room occupancy and tourism development tax levied in Averasboro Township in Harnett County. The Authority may spend these proceeds to develop, promote, and advertise travel and tourism in Averasboro Township, to sponsor tourist-oriented events and activities for Averasboro Township, to operate and maintain museums and historic sites throughout Averasboro Township, and to purchase, operate, and maintain a convention facility for Averasboro Township. The County appoints two members to the seven-member board. The County has an ongoing financial responsibility for the Authority because the Authority's continued existence depends on the participating governments' continued funding. The County remitted $128,950 to the Authority during the fiscal year ended June 30, 2001. Neither of the participants has any equity interest in the Authority, so no equity interest has been reflected in the financial statements at June 30, 2001. Complete financial statements for the Authority can be obtained from the Dunn Area Chamber of Commerce at 209 West Divine Street, Post Office Box 548, Dunn, North Carolina 28335.
The County, in conjunction with two other counties and twenty municipalities, established the Mid-Carolina Council of Governments (Council). The participating governments established the Council to coordinate various funding received from federal and state agencies. Each participating government appoints one member to the Council's governing board. The County paid membership fees of $13,405 to the Council during the fiscal year ended June 30, 2001.
Local Government Sales and Use Taxes
Chapter 105, Articles 40 and 42, of the North Carolina General Statutes requires the County to use a portion of the proceeds of its supplemental and additional supplemental sales taxes, or local option sales taxes, for public school capital outlays or to retire public school indebtedness. During the fiscal year ended June 30, 2001, the County reported these local option sales taxes within its General Fund. The County expended the restricted portion of these taxes for public school capital outlays.
The General Assembly passed the School Facilities Finance Act of 1987 (“Act”) to assist county governments in meeting their public school facility capital needs. The Act created a state-funded program for the construction and renewal of school facilities: the Public School Building Capital Fund administered by the Office of State Budget and Management. The Public School Building Capital Fund may also be used to finance equipment needs under the local school unit’s technology plan.
This program is funded using a portion of the corporate income taxes which are imposed on corporations doing business in the state. Each calendar quarter, the Department of Revenue shall remit to the State Treasurer for the credit in the fund, an amount equal to the applicable fraction provided by the following table of the net collections of corporate income taxes received during the previous quarter minus $2.5 million, which it deposits into the Critical School Facilities Needs Fund.
Prior to 10/1/97 Two thirty-firsts (2/31)
10/1/97 to 9/30/98 One-fifteenth (1/15)
10/1/98 to 9/30/99 Two twenty-ninths (2/29)
10/1/99 to 9/30/00 One fourteenth (1/14)
After 9/30/00 Five sixty-ninths (5/69)
Monies in the fund are allocated to Harnett County on the basis of the average daily membership (“ADM”) for Harnett County Board of Education as determined by the State Board of Education. The Office of State Budget and Management establishes and maintains an ADM allocation account for the County. At June 30, 2001 the balance of the County's ADM account was $3,642,562. The County must match this balance on the basis of one dollar for every three dollars of State funds for financing the school unit’s facilities capital needs. The local school technology plan does not require a county match.
After approving a school capital project authorized by the Act, the Office of State Budget and Management will transfer funds from the County's ADM allocation account to its disbursing account maintained with the State Treasurer. At June 30, 2001, the County's disbursing account had a zero balance and there were no additional authorized capital projects. These funds are available for future appropriations upon application. The County must match the balance on the basis of one dollar for every three dollars of state funds.
Funds in the allocation and disbursing accounts are considered state monies until the County issues warrants to disburse them. At that time, they are recognized in the General Fund as a restricted intergovernmental revenue.
The General Assembly passed the Public School Building Bond Act of 1996 to provide the for issuance of $1.8 billion in State bonds to be used for making grants to counties for qualified public school capital outlay projects. The Department of Public Instruction is responsible for project approval and the distribution of funds. The principal amounts of bonds or notes issued by the State in any twelve month period may not exceed $450 million.
Of the total $1.8 billion authorized, $30 million will be allocated as grants to counties that have small county school systems, after considering whether the counties demonstrate both greater than average school construction needs and high property tax rates. The primary allocation of $1.77 billion will be distributed to all counties based on the average daily membership, the ability to pay, and the growth rate of the school administrative units located within each county.
The distribution of the primary allocation is subject to the satisfaction of certain match requirements by the counties. Match requirements may be satisfied by non-State expenditures for public school facilities made on or after January 1, 1992. Harnett County’s matching requirement of $.50 for each dollar of allocated bond proceeds has been fulfilled.
Because the County has met its matching requirement, the County recognized revenues equal to the liabilities incurred for approved project expenditures. Harnett County requests bond funds by project to be transferred to an account established by Harnett County Board of Education for payment of invoices. To date, the County has expended $32,122,222 of their total allocation of $42,985,558.
The amounts listed below were paid directly to individual recipients by the state from federal and state monies. County personnel are involved with certain functions, primarily eligibility determinations, that cause benefit payments to be issued by the state. These amounts disclose this additional aid to County recipients which do not appear in the general purpose financial statements because they are not revenues and expenditures of the County.
Medicaid Assistance Programs – Medicaid Title XIX $ 40,485,247 $ 20,300,120
Food Stamps 5,484,830 -
Aid to Families with Dependent Children (16,034) (4,197)
Temporary Assistance for Needy Families 1,460,829 (1,955)
Special Assistance to Adults - 1,079,654
Low Income Home Energy Assistance 157,940 -
Child Welfare Services - Permanency Planning (821) 71,768
Title IV-E- Adoption Assistance 138,322 41,743
Special Supplemental Food Program for
Women, Infants and Children 1,603,793 -
Total $ 49,314,106 $ 21,487,133
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