Year Ended December 31, 2014 Prepared By: Monroe County Finance Department
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COUNTY OF MONROE COMPREHENSIVE ANNUAL FINANCIAL REPORT YEAR ENDED DECEMBER 31, 2014 Prepared By: Monroe County Finance Department ON THE COVER: Top row: Collage by Monroe County Staff Second row (left to right): “Follow the River” by Rita Diederichs Monroe County Courthouse by Monroe County staff Farm Picture provided by Monroe Soil Conservation District Third row (left to right): Monroe County Fair by Bill Saul War Memorial and La-Z-Boy Center by Monroe County staff Fourth row (left to right): Fermi II Power Plant provided by Detroit Edison Tenneco and River by Monroe County staff Cover compiled and designed by Kim Farver and Meagan Russell County of Monroe, Michigan Year Ended Comprehensive December 31, Annual Financial 2014 Report Prepared by: Monroe County Finance Department This page intentionally left blank. COUNTY OF MONROE, MICHIGAN Table of Contents INTRODUCTORY SECTION EXHIBIT PAGE Letter of Transmittal 1 GFOA Certificate of Achievement 9 Organizational Chart 10 List of Principal Officials 11 FINANCIAL SECTION Independent Auditors' Report 15 Management's Discussion and Analysis 20 Basic Financial Statements: Government-wide Financial Statements: Statement of Net Position A 31 Statement of Activities B 32 Fund Financial Statements: Balance Sheet - Governmental Funds C-1 34 Reconciliation - Fund Balances for Governmental Funds to Net Position of Governmental Activities C-2 37 Statement of Revenues, Expenditures, and Changes in Fund Balances - Governmental Funds C-3 38 Reconciliation - Net Changes in Fund Balances of Governmental Funds to Change in Net Position of Governmental Activities C-4 41 Statements of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual: General Fund D-1 42 County Health Special Revenue Fund D-2 43 Federal Prisoner Housing Special Revenue Fund D-3 44 Senior Citizen Special Revenue Fund D-4 45 Statement of Net Position - Proprietary Funds E-1 46 Statement of Revenues, Expenses, and Changes in Fund Net Position - Proprietary Funds E-2 47 Statement of Cash Flows - Proprietary Funds E-3 48 Statement of Fiduciary Net Position - Fiduciary Funds F-1 50 Statement of Changes in Fiduciary Net Position - Fiduciary Funds F-2 51 Component Unit Financial Statements: Combining Statement of Net Position G-1 52 Combining Statement of Activities G-2 54 COUNTY OF MONROE, MICHIGAN Table of Contents EXHIBIT PAGE Notes to Basic Financial Statements Note 1 - Summary of Significant Accounting Policies 58 Note 2 - Budgets and Budgetary Accounting 66 Note 3 - Excess of Expenditures Over Appropriations 67 Note 4 - Deposits, Investments, and Securities Lending 68 Note 5 - Receivables and Payables 74 Note 6 - Interfund Receivables, Payables, and Transfers 75 Note 7 - Capital Assets 77 Note 8 - Long-Term Debt 82 Note 9 - Pension Plan 88 Note 10 - Postemployment Benefits Other Than Pensions 94 Note 11 - Risk Management 102 Note 12 - Contingent Liabilities 105 Note 13 - Property Taxes 106 Note 14 - Net Investment in Capital Assets 106 Note 15 - Fund Balances - Governmental Funds 107 Required Supplementary Information: Employees Retirement System: Schedule of Funding Progress and Employer Contributions H-1 110 Schedule of Changes in the County's Net Pension Liability and Related Ratios H-2 111 Schedule of Investment Returns H-3 112 Schedule of County Contributions H-4 113 Retiree Health Plan - Schedule of Funding Progress and Employer Contributions H-5 114 Supplementary Information: Combining and Individual Fund Statements and Schedules: General Fund: Schedule of Revenue and Other Sources - By Source - Budget and Actual I-1 118 Schedule of Expenditures and Other Uses - By Activity - Budget and Actual I-2 121 County Health Special Revenue Fund - Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual J 133 Federal Prisoner Housing Special Revenue Fund - Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual K 134 Nonmajor Governmental Funds: Combining Balance Sheet L-1 138 Combining Statement of Revenues, Expenditures, and Changes in Fund Balance L-2 139 Nonmajor Special Revenue Funds: Combining Balance Sheet M-1 140 Combining Statement of Revenues, Expenditures, and Changes in Fund Balance M-2 143 Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual M-3 146 COUNTY OF MONROE, MICHIGAN Table of Contents EXHIBIT PAGE Nonmajor Enterprise Funds: Combining Statement of Net Position N-1 162 Combining Statement of Revenues, Expenses, and Changes in Fund Net Position N-2 164 Combining Statement of Cash Flows N-3 166 Internal Service Funds: Combining Statement of Net Position O-1 170 Combining Statement of Revenues, Expenses, and Changes in Fund Net Position O-2 172 Combining Statement of Cash Flows O-3 174 Fiduciary Funds: Combining Statement of Fiduciary Net Position - Pension and Other Employee Benefit Trust Funds P-1 178 Combining Statement of Changes in Plan Net Position - Pension and Other Employee Benefit Trust Funds P-2 179 Combining Statement of Assets and Liabilities - All Agency Funds P-3 180 Combining Statement of Changes in Assets and Liabilities - All Agency Funds P-4 182 Drain Commission Component Unit: Statement of Net Position/Balance Sheet-Governmental Funds Q-1 186 Statement of Activities/Statement of Revenues, Expenditures, and Changes in Q-2 188 Fund Balances-Governmental Funds Capital Assets Used in the Operation of Governmental Funds: Comparative Schedule By Source R-1 192 Schedule By Function and Activity R-2 193 Schedule of Changes By Function and Activity R-3 194 STATISTICAL SECTION SCHEDULE Net Position by Component 1 196 Changes in Net Position 2 198 Fund Balances - Governmental Funds 3 202 Changes in Fund Balances - Governmental Funds 4 204 Assessed and Estimated True Cash Value of Taxable Property 5 206 Direct and Overlapping Property Tax Rates 6 208 Principal Property Tax Payers 7 209 Property Tax Levies and Collections 8 211 Ratios of Outstanding Debt by Type 9 212 Computation of Net Direct and Overlapping Debt 10 214 Legal Debt Margin 11 216 Demographic and Economic Statistics 12 217 Principal Employers 13 218 Full-time County Primary Government Employees by Function/Program 14 219 Operating Indicators by Function/Program 15 220 Capital Asset Statistics by Function/Program 16 222 This page intentionally left blank. INTRODUCTORY SECTION This page intentionally left blank. MONROE COUNTY FINANCE DEPARTMENT 125 East Second Street Monroe, Michigan 48161-2197 Telephone: (734) 240-7250 Fax (734) 240-7266 June 25, 2015 To the Citizens of the County of Monroe, Michigan: The comprehensive annual financial report of the County of Monroe, Michigan, for the year ended December 31, 2014, is submitted herein. This report has been prepared by employees of the County of Monroe Finance Department. Responsibility for the accuracy of the data presented in the report, the completeness and fairness of the presentation, including all disclosures, rests with the County. The Michigan Uniform Accounting and Budgeting Act require every general-purpose government publish, within six months of the close of the fiscal year, a complete set of audited financial statements. This report is published to fulfill that requirement for the year ended December 31, 2014. Management assumes full responsibility for the completeness and reliability of the information contained in this report, based upon a comprehensive framework of internal control it has established for this purpose. Because the cost of internal control should not exceed anticipated benefits, the objective is to provide reasonable, rather than absolute assurance that the financial statements are free of any material misstatement. Management believes the information presented is accurate in all material respects; that it is presented in a manner designed to fairly set forth the financial position and results of operations of the County as measured by the financial activity of its various funds; and that the disclosures necessary to enable the reader to gain the maximum understanding of the County's financial activity have been included. Rehmann, Certified Public Accountants, have issued an unqualified (“clean”) opinion on the County of Monroe’s financial statements for the year ended December 31, 2014. The independent auditor’s report is located at the front of the financial section of this report. Management’s discussion and analysis (MD&A) immediately follows the independent auditor’s report and provides a narrative introduction, overview, and analysis of the basic financial statements. The MD&A complements this letter of transmittal and should be read in conjunction with it. The County is required to undergo an annual single audit in conformance with the provisions of the Single Audit Act and United States Office of Management and Budget Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations. The results of the County's single audit for the year ended December 31, 2014, are contained in a separately issued single audit report. 1 PROFILE OF THE COUNTY AND ITS SERVICES The County of Monroe, organized in 1811, is located in the southeast corner of Michigan's Lower Peninsula, approximately 20 miles southeast of Detroit. The 2010 census recorded a population of 152,021. The County’s major population areas include the City of Monroe, Village of Dundee and Bedford Township. The County seat is located in the City of Monroe. The County of Monroe is empowered to levy a property tax, the primary source of funding, on both real and personal property located within its boundaries. The governmental structure of the County is based upon the State Constitution and the general laws of the State of Michigan. The County's legislative body, and its administrative body for many functions, is the County Board of Commissioners. The Board consists of nine commissioners elected by direct vote from single- member districts every even numbered year. In addition to the Board of Commissioners, there are additional elected officials serving the County in judicial, administrative, or staff officer roles. An organization chart depicting the County structure is shown on the page following this letter.