County of Erie, New York

This Preliminary Official Statement and the information contained herein are subject to completion and amendment in a final Official Statement. This Preliminary Official Statement does not constitute an offer to sell or the solicitation of an offer to buy, and there may not be any sale of the Bonds offered by this Preliminary Official Statement, in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of that jurisdiction. 265(b)(3) oftheCode. tax consequencesarisingwithrespecttotheBonds.See“TAXMATTERS”herein. subdivision thereof(includingTheCityofNewYork).NoopinionisexpressedregardingotherFederalorState interest ontheBondsisexemptfrompersonalincometaxesimposedbyStateofNewYorkoranypolitical tax yearsbeginningpriortoJanuary1,2018.BondCounselisalsooftheopinionthatunderexistingstatutes purposes ofcalculatingtheFederalalternativeminimumtaximposedoncertaincorporationswithrespectto tax imposedoncorporations;interesttheBonds,however,isincludedin“adjustedcurrentearnings”for imposed onindividualsand,fortaxyearsbeginningpriortoJanuary1,2018,theFederalalternativeminimum income taxpurposes,isnotan“itemofpreference”forpurposestheFederalalternativeminimum made bytheCounty,interestonBondsisexcludedfromgrossincomeofownersthereofforFederal contained intheInternalRevenueCodeof1986,asamended(the“Code”),andaccuracycertainrepresentations decisions, andassumingcontinuingcompliancebytheCountywithitscovenantsrelatingtocertainrequirements NE “DISCLOSURE UNDERTAKING” HEREIN. OF THECOUNTY’SAGREEMENTS TOPROVIDECONTINUINGDISCLOSUREAS DESCRIBED IN THE RULE,SEE PURPOSES OFSECURITIES ANDEXCHANGECOMMISSIONRULE15c2-12(THE “RULE”).FORADESCRIPTION made throughtheofficesofDTConoraboutOctober 24,2018. be will form book-entry in Bonds the of delivery that expected is It County. the to Advisor Municipal registered Bond, Schoeneck & King, PLLC, Buffalo, New York, as Underwriters’ Counsel. Hilltop Securities Inc. serves as a Bond Counsel,andcertainotherconditions.Certain legalmatterswillbepasseduponfortheUnderwritersby as describedherein. remit such principal and interest to its Participants for subsequent distribution to the Beneficial Owners of the Bonds Trust Company,Buffalo,NewYork(the“FiscalAgent”) toTheDepositoryTrustCompany(“DTC”)whichwillinturn Redemption” herein. subject toredemptionpriormaturityinthemannerandattimesetforthherein.See“THEBONDS– Optional consisting oftwelve30-daymonths.TheBondsarepayablefromamountsprovidedbytheCounty. are each year commencing March 15, 2019. Interest on the Bonds shall be calculated on the basis of a 360-day year EXPENDITURES –TheTaxLevyLimitationLaw”herein. imposed byChapter97oftheLaws2011(the“TaxLevyLimitationLaw”).See“REVENUESOURCES AND of advaloremtaxestopayboththeprincipalandinterestonBonds,subjectcertainstatutorylimitations County haspledgeditsfullfaithandcredit.Allofthetaxablerealpropertywithinissubjectto thelevy Dated: DateofDelivery * Preliminary, subject to change. Dated: Jefferies W The Bonds will NOT be designated by the County as “qualified tax-exempt obligations” pursuant to Section to pursuant obligations” tax-exempt “qualified as County the by designated be NOT will Bonds The In theopinionofBondCounsel,underexistingstatutes,regulations,administrativerulings,andcourt THIS PRELIMINARYOFFICIAL STATEMENTISINAFORM“DEEMEDFINAL” BYTHECOUNTYFOR NewYork, PLLC, Buffalo, Beach ofHarris opinion approving final the to subject offered are Bonds The Principal ofandinterestontheBondswillbepaidby theCounty’sFiscalAgent,ManufacturersandTraders Interest ontheSeries2018ABondsand2018BispayableMarch15September of The BondsaregeneralobligationsoftheCountyErie,NewYork(the“County”),forpaymentwhich the

I SSU October __,2018 E

- $39,675,000* PU B ook- $2,195,000* S Preliminary Official Statement Date E ntry-Only

G ENERAL

BLIC E C W OU O ER

IM (the “Series2018 (the “Series2018 BLI NTY D P I R G S OV TRICT ATI O $41,870,000* Consisting of EMENT F O

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ERIAL DS ( B B onds”) onds”)

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N B O d E DS, S O Oct “ R N K B RATIN DS, S O ERIE o N Due: ber 9, 2018 DS”) ERIE GS: (See“ S 2018 Stern A s shownoninsidecover S 2018 B B R rothers & atings” herein) A C o. $39,675,000* PUBLIC IMPROVEMENT SERIAL BONDS—SERIES 2018A

Dated: Date of Delivery Principal Due: September 15, as shown below. Interest Due: March 15, 2019, September 15, 2019 and semi-annually thereafter on March 15 and September 15 in each year until maturity or prior redemption.

Principal Interest CUSIP Principal Interest CUSIP † Maturity Amount* Rate Yield Number Maturity Amount* Rate Yield Number† 2019 $2,440,000 % % 295084 2026 $3,135,000 % % 295084 2020 $2,360,000 295084 2027 $3,290,000 295084 2021 $2,455,000 295084 2028 $3,455,000 295084 2022 $2,575,000 295084 2029 $3,625,000 295084 2023 $2,705,000 295084 2030 $3,810,000 295084 2024 $2,840,000 295084 2031 $4,000,000 295084 2025 $2,985,000 295084

$2,195,000* SEWER DISTRICT SERIAL BONDS—SERIES 2018B

CUSIP Inter CUSIP Principal Interest Number† Principal est Number† Maturity Amount* Rate Yield Maturity Amount* Rate Yield

2019 $115,000 % % 295084 2026 $140,000 % % 295084 2020 $110,000 295084 2027 $150,000 295084 2021 $110,000 295084 2028 $155,000 295084 2022 $115,000 295084 2029 $165,000 295084 2023 $125,000 295084 2030 $175,000 295084 2024 $130,000 295084 2031 $180,000 295084 2025 $135,000 295084 2032 $190,000 295084 2033 $200,000 295084

† Copyright, American Bankers Association. CUSIP data herein are provided by Standard & Poor’s, CUSIP Service Bureau, a division of The McGraw-Hill Companies, Inc. The CUSIP numbers listed above are being provided solely for the convenience of bondholders only at the time of issuance of the Bonds and the County and the Underwriters do not make any representation with respect to such numbers or undertake any responsibility for their accuracy now or at any time in the future. The CUSIP number for a specific maturity is subject to being changed after the issuance of the Bonds as a result of various subsequent actions including, but not limited to, a refunding in whole or in part of such maturity or as a result of the procurement of secondary market portfolio insurance or other similar enhancement by investors that is applicable to all or a portion of certain maturities of the Bonds. ______* Preliminary, subject to change.

COUNTY OF ERIE, NEW YORK

MARK C. POLONCARZ, ESQ. County Executive

STEFAN I. MYCHAJLIW County Comptroller

MICHAEL SIRAGUSA, ESQ. County Attorney

PETER J. SAVAGE Chair, Legislature

APRIL N.M. BASKIN Majority Leader, Legislature

JOSEPH C. LORIGO Minority Leader, Legislature

HARRIS BEACH PLLC Bond Counsel

HILLTOP SECURITIES INC. Municipal Advisor

DRESCHER & MALECKI, LLP Independent Auditors

(THIS PAGE INTENTIONALLY LEFT BLANK)

The management of the County of Erie, New York (the “County”) has prepared the prospective financial information set forth herein to present certain projections of future financial information. The accompanying prospective financial information was not prepared with a view toward complying with the guidelines established by the American Institute of Certified Public Accountants with respect to prospective financial information, but, in the view of the County’s management, was prepared on a reasonable basis, reflects the best currently available estimates and judgments, and presents, to the best of management’s knowledge and belief, the expected course of action and the expected future financial performance of the County. However, this information is not fact and should not be relied upon as being necessarily indicative of future results, and readers of this Official Statement are cautioned not to place undue reliance on the prospective financial information.

Neither the County’s independent auditors, nor any other independent accountants, have compiled, examined or performed any procedures with respect to the prospective financial information contained herein, nor have they expressed any opinion or any other form of assurance on such information or its achievability, and they assume no responsibility for and disclaim any association with the prospective financial information.

The assumptions and estimates underlying the prospective financial information are inherently uncertain and, though considered reasonable by the management of the County as of the date of its preparation, are subject to a wide variety of significant business, economic, and competitive risks and uncertainties that could cause actual results to differ materially from those contained in the prospective financial information. Accordingly, there can be no assurance that the prospective results are indicative of the future performance of the County or that actual results will not differ materially from those presented in the prospective financial information. Inclusion of the prospective financial information in this Official Statement should not be regarded as a representation by any person that the results contained in the prospective financial information will be achieved.

The County does not intend to update or otherwise revise the prospective financial information to reflect circumstances existing since its preparation or to reflect the occurrence of unanticipated events, even in the event that any or all of the underlying assumptions are shown to be in error. Furthermore, the County does not intend to update or revise the prospective financial information to reflect changes in general economic or industry conditions.

Additional information relating to the principal assumptions used in preparing the projections is set forth herein.

No person has been authorized by the County to give any information or to make any representations not contained in this Official Statement and, if given or made, such other information or representations must not be relied upon as having been authorized. This Official Statement does not constitute an offer to sell or the solicitation of an offer to buy, nor there any sale of the Bonds by any person in any jurisdiction in which it is unlawful for such person to make such offer, solicitation or sale. The information, estimates and expressions of opinion herein are subject to change without notice, and neither the delivery of this Official Statement nor any sale made hereunder shall, under any circumstances, create any implication that there has been no change in the affairs of the County since the date hereof.

The Underwriters have provided the following sentence for inclusion in this Official Statement: The Underwriters have reviewed the information in this Official Statement in accordance with, and as part of, their responsibilities to investors under the federal securities laws as applied to the facts and circumstances of this transaction, but the Underwriters do not guarantee the accuracy or completeness of such information.

If and when included in this Official Statement, the words “expects,” “forecasts,” “projects,” “intends,” “anticipates,” “estimates” and analogous expressions are intended to identify forward-looking statements and any such statements inherently are subject to a variety of risks and uncertainties that could cause actual results to differ materially from those projected. Such risks and uncertainties include, among others, general economic and business conditions, changes in political, social and economic conditions, regulatory initiatives and compliance with governmental regulations, litigation and various other events, conditions and circumstances, many of which are beyond the control of the County. These forward-looking statements speak only as of the date of this Official Statement. The County and the Underwriters disclaim any obligation or undertaking to release publicly any updates or revisions to any forward-looking statement contained herein to reflect any change in the County’s expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based.

IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVERALLOT OR EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE BONDS AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.

TABLE OF CONTENTS

INTRODUCTION ...... 1 REVENUE SOURCES AND EXPENDITURES ... 37 General ...... 37 THE BONDS ...... 1 Revenues ...... 38 Authorization ...... 1 Valuations, Tax Levies and Rates ...... 40 Description ...... 1 Constitutional Tax Limit ...... 40 Nature of the Obligations ...... 2 The Tax Levy Limitation Law ...... 41 Purpose of the Series 2018A and Tax Collection...... 43 Series 2018B Bonds ...... 2 Expenditures ...... 43 Optional Redemption ...... 4 Selection of Bonds to be Redeemed...... 4 ECONOMIC CONDITIONS...... 44 Notice of Redemption ...... 4 General ...... 44 Population Characteristics ...... 44 BOOK-ENTRY-ONLY SYSTEM ...... 4 Local Economy ...... 50 INDEBTEDNESS OF THE COUNTY ...... 6 Transportation ...... 50 Constitutional Requirements ...... 6 Educational, Cultural, Media and Calculation of Constitutional Debt Recreational Facilities ...... 51 Limit ...... 7 County Employee Pension Benefits ...... 54 Calculation of Total Net Other Post-Employment Benefits ...... 55 Indebtedness ...... 8 LITIGATION ...... 57 Outstanding Direct Indebtedness ...... 10 Debt Policy ...... 13 SELF-INSURANCE ...... 57 Short-Term Indebtedness ...... 14 TAX MATTERS ...... 57

Estimated Overlapping Debt ...... 16 Federal Income Taxes ...... 57 PROVISIONS AFFECTING RIGHTS AND State and Local Income Taxes ...... 58 REMEDIES ...... 17 Other Considerations ...... 58 COUNTY GOVERNMENT ...... 17 RATINGS ...... 59 RELATED ENTITIES ...... 19 MARKET FACTORS ...... 59 Niagara Frontier Transportation DISCLOSURE UNDERTAKING ...... 59

Authority ...... 19 Compliance History ...... 61 New York Power Authority (Settlement) ...... 19 LEGAL MATTERS ...... 62 Buffalo Sewer Authority ...... 20 UNDERWRITING ...... 62 Buffalo Niagara Convention Center ...... 20 INVESTMENT POLICY ...... 62

KeyBank Center ...... 20 MUNICIPAL ADVISOR ...... 63 Erie Community College ...... 20 New Era Field ...... 21 OTHER INFORMATION ...... 63 Erie County Industrial APPENDIX A ...... A-1

Development Agency ...... 21 County of Erie New York Comprehensive Annual Erie Tobacco Asset Securitization Corporation ...... 22 Financial Report for the Year Ended December 31, Erie County Medical Center 2017 and Independent Auditors’ Reports Corporation ...... 22 ERIE COUNTY FISCAL STABILITY AUTHORITY ...... 24 Purpose and Operations ...... 24 Directors and Management ...... 25 Financing Agreement ...... 25 ECFSA Monitoring and Control Functions ...... 25 ECFSA Oversight Actions To-Date ...... 26 COUNTY FINANCES ...... 29 Four-Year Financial Plans ...... 29 Projected Financial Information...... 29 Financial Statements ...... 30 Budgetary Process ...... 30 2018 County Budget ...... 31 Operating Budget for Various Funds ...... 32 Budget Monitoring Report and Mid-Year 2018 County Budget Review ...... 33 Capital Program ...... 33 Comparative Summary of Financial Results ...... 36 i

OFFICIAL STATEMENT of the COUNTY OF ERIE, NEW YORK ______

INTRODUCTION

This Official Statement (the “Official Statement”), which includes the cover page and the inside cover page, has been prepared by the County of Erie, New York (the “County”), in connection with the sale by the County of its $39,675,000 Public Improvement Serial Bonds, Series 2018A (the “Series 2018A Bonds”) and its $2,195,000* Sewer District Serial Bonds, Series 2018B (the “Series 2018B Bonds” and, collectively with the Series 2018A Bonds, the “Bonds”). This Official Statement has been executed on behalf of the County by the Comptroller, the chief fiscal officer of the County.

All quotations from and summaries and explanations of provisions of the Constitution and laws of the State of New York (the “State”), and acts and proceedings of the County contained herein do not purport to be complete, and are qualified in their entirety by reference to the official compilations thereof, and all references to the Bonds and the proceedings of the County relating thereto are qualified in their entirety by reference to the definitive form of the Bonds and such proceedings.

Since 2005, the County has operated under State-imposed fiscal oversight imposed by the Erie County Fiscal Stability Authority (“ECFSA”) which was created by the Erie County Fiscal Stability Authority Act, enacted as Chapter 182 of the Laws of 2005, as supplemented by Chapter 183 of the Laws of 2005 and codified as Article 10-D, Title 3, Sections 3950 – 3973 of the Public Authorities Law (the “ECFSA Act”). (See “ERIE COUNTY FISCAL STABILITY AUTHORITY” herein for a discussion of its enabling legislation and its role in the oversight of County finances over the period from 2005 to the present.)

THE BONDS

Authorization

The Bonds are issued pursuant to the Constitution and laws of the State, including the Local Finance Law, constituting Chapter 33-a of the Consolidated Laws of the State, Bond Resolutions adopted by the County Legislature and approved by the County Executive on various dates, and other proceedings and determinations related thereto.

Description

The Bonds will be dated as of the date of delivery. The Bonds will mature on the dates and in the principal amounts and will bear interest at the rates shown on the inside cover page hereof. Interest on the Bonds is payable on March 15 and September 15 in each year until maturity or until earlier redemption, if any, commencing March 15, 2019. Interest on the Bonds shall be calculated on the basis of a 360-day year consisting of twelve 30-day months.

The Bonds will be issued in fully registered form, and, when issued, will be registered in the name of Cede & Co. as nominee of The Depository Trust Company (“DTC”). DTC will act as securities depository for the Bonds. Individual purchases of ownership interests in the Bonds will be made in book-entry-only form, in the principal amount of $5,000 or integral multiples thereof. Purchasers will not receive certificates representing their ownership interest in the Bonds. (See “Book-Entry-Only System” herein.)

Principal and interest on the Bonds will be paid by Manufacturers and Traders Trust Company, Buffalo, New York (the “Fiscal Agent”) to DTC, which will in turn remit such principal and interest to its Participants, for subsequent distribution to the Beneficial Owners of the Bonds. (See “Book-Entry-Only System” herein.)

Preliminary, subject to change.

Nature of the Obligations

Each Bond, when duly issued and paid for, will constitute a contract between the County and the owner thereof.

The Bonds are general obligations of the County and will contain a pledge of the faith and credit of the County for the payment of the principal thereof and the interest thereon. For the payment of such principal and interest, the County has the power and statutory authorization to levy ad valorem taxes on all taxable real property within the County subject to the statutory limitations imposed by Chapter 97 of the Laws of 2011 of the State of New York (the “Tax Levy Limitation Law”). (See “REVENUE SOURCES AND EXPENDITURES – The Tax Levy Limitation Law” herein.)

Under the Constitution of the State, the principal of and interest on the Bonds will constitute indebtedness contracted by the County, for the payment of which the County is required to pledge its faith and credit, and the State is specifically precluded from restricting the power of the County to levy taxes on real property for the payment of such indebtedness. However, the Tax Levy Limitation Law imposes a statutory limitation on the County’s power to increase its annual tax levy. The amount of such increase is limited by the formulas set forth in the Tax Levy Limitation Law. (See “REVENUE SOURCES AND EXPENDITURES – The Tax Levy Limitation Law” herein.)

Purpose of the Series 2018A and Series 2018B Bonds

The proceeds of the Series 2018A and Series 2018B Bonds, inclusive of original issue premium, will be used to provide funds to finance the cost or part of the cost of the following capital improvements.

Amount Project

Series 2018A $500,000 Springville (Scoby) Dam Fish Passage Ecosystem Restoration Project (local share) $1,923,566 DPW (Buildings and Grounds) – Rehabilitation of New Era Field $500,000 DPW (Buildings and Grounds) – Rehabilitation of Buffalo & Erie County Botanical Gardens $500,000 DPW (Buildings and Grounds) – Buffalo Niagara Convention Center Improvements $1,000,000 DPW (Buildings and Grounds) – Code and Environmental Compliance (Countywide) $500,000 DPW (Buildings and Grounds) – Roof Replacement and Exterior Waterproofing (Countywide) DPW (Buildings and Grounds) – Mechanical, Electrical, Plumbing and Miscellaneous $1,500,000 Improvements (Countywide) $250,000 DPW (Buildings and Grounds) – Energy Conservation Implementation Initiatives (Countywide) $750,000 DPW (Buildings and Grounds) – EPA Environmental Regulatory Compliance - Salt Buildings DPW (Buildings and Grounds) – Erie County Toxicology Laboratory / Pathology Renovations - $1,000,000 Phase 5 $500,000 DPW (Buildings and Grounds) – Improvements to EC Health Department Building 17 (Buffalo) DPW (Buildings and Grounds) – Highway Maintenance Facilities - Harlem Rd / Lancaster / $800,000 Clarence $750,000 DPW (Buildings and Grounds) – Preservation of County Buildings & Facilities (Countywide) $500,000 DPW (Buildings and Grounds) – Preservation of County Highway Facilities (Countywide) $1,000,000 DPW (Buildings and Grounds) – 120/134 West Eagle Street Building Rehabilitation DPW/Highways – Preservation of Roads Construction – East & West Road (CR 363) - West $3,000,000 Seneca DPW/Highways – Preservation of Roads Construction – North & South Main Street (CR 009) – $2,500,000 Village of Angola $500,000 DPW/Highways – Preservation of Roads Design (Countywide) $2,000,000 DPW/Highways – Highway Vehicle and Equipment Replacement (Countywide) $750,000 DPW/Highways – Turn Back of Roads to Towns $121,200 DPW/Highways – Federal Aid Projects Design – Maple Road (CR 192) Design - PIN 5761.76 $633,888 DPW/Highways – Federal Aid Projects Intersection Construction $124,800 DPW/Highways – Federal Aid Projects Construction – Abbott Road (CR 4) - PIN 5761.74 $249,600 DPW/Highways – Federal Aid Projects Construction – McKinley Parkway (CR 204) - PIN 5761.75 $178,600 DPW/Highways – Federal Aid Projects Construction – Armor Duells Road (CR 44) PIN 5762.25 $416,000 DPW/Highways – Federal Aid Projects Construction – Maple Road (CR 192) - PIN 5761.76 $200,000 DPW/Highways – Federal Aid Projects Bridge Preservation Design (Countywide) 2

$100,000 DPW/Highways – Federal Aid Projects Bridge New York Program - Design DPW/Highways – Federal Aid Projects Bridge Preservation Construction – Bridge New York - $935,000 Construction DPW/Highways – Federal Aid Projects Bridge Preservation Construction - Cedar Street Bridge $272,000 Replacement - PIN 5761.78 DPW/Highways – Federal Aid Projects Bridge Preservation Construction - Pontiac Road Bridge $356,000 Replacement - PIN 5761.77 DPW/Highways – Preservation of Bridges and Large Culverts Construction – Miscellaneous Culvert $500,000 Repairs/Replacements DPW/Highways – Preservation of Bridges and Large Culverts Construction – Repair/Rehabilitation $500,000 of Flagged Bridge and Culverts $800,000 DPW/Highways – Road Slides Construction - Ketchum Road (C.R. 501) Slide (Collins) $500,000 DPW/Highways – Road Slides Construction - Burdick Road (C.R. 258) Slide (Newstead) $500,000 DPW/Highways – Highway Safety Improvements $3,000,000 DPW/Highways – Various Roads Reconstruction (Countywide) $900,000 Parks – Countywide Parks Improvements (Countywide) $350,000 Parks – Shelter, Building and Comfort Station Rehabilitation (Countywide) $200,000 Parks – Roads, Pathways and Parking Lot Improvements (Countywide) $400,000 Parks – Vehicles and Equipment $100,000 Parks – Como Lake Restoration $850,000 Parks – Emery Park Ski Lift Replacement $300,000 Parks – Ellicott Creek Park Pedestrian Bridge $1,400,000 Environment and Planning – Bethlehem Steel Redevelopment $200,000 Information and Support Services – Disaster Recovery Project – Phase II $800,000 Information and Support Services – Time and Attendance Project $400,000 DPW (Buildings and Grounds) – Erie County Sheriff's Department - Misc. Renovations DPW (Buildings and Grounds) – Erie County Correctional Facility - Video and Door Control $600,000 Upgrades - Phase 2 $2,594,000 Central Police Services – Continuation of E-911 Services/Hardware Refresh DPW (Buildings and Grounds) – Buffalo & Erie County Main Library Auditorium Rehabilitation - $650,000 Phase III DPW (Buildings and Grounds) – Buffalo & Erie County Main Library Mechanical, Electrical, & $400,000 Plumbing Improvements $1,800,000 Erie Community College – Equipment (College wide) $1,000,000 Erie Community College – Roof Replacement and Exterior Waterproofing (College wide) $400,000 Erie Community College – College wide Sitework (College wide) $500,000 Erie Community College – College wide Infrastructure Improvements/Renovations $300,000 Erie Community College – Code Compliance (College wide) Erie Community College – Mechanical, Electrical, Plumbing and Miscellaneous Improvements $500,000 (College wide) $300,000 Erie Community College – College wide Preservation of Buildings & Facilities $45,054,654

Series 2018B $186,000 Erie County Sewer District #2 Various Sewer Facilities $2,309,669 Erie County Sewer District #3 Southtowns Sewage Treatment Facility $2,495,669

Optional Redemption

The Series 2018A Bonds and Series 2018B Bonds maturing on or after September 15, 20__ will be subject to redemption prior to maturity at the option of the County on September 15, 20__ and thereafter on any date, as a whole or in part, at par plus accrued interest to the date of redemption.

Selection of Bonds to be Redeemed

So long as DTC or a successor securities depository is the sole registered owner of the Bonds, the County will cause notice of redemption to be given only to DTC as registered owner. The selection of the book-entry interests within each Bond maturity to be redeemed will be done in accordance with DTC procedures. See “Book- Entry-Only System” herein regarding DTC’s practice of determining by lot the amount of the interest of each Direct Participant for partial bond redemptions.

If the Bonds are not registered in book-entry form, any redemption of less than all of a maturity of the Bonds shall be allocated (in the amounts of $5,000 or any whole multiple) among the registered owners of such maturity of the Bonds then outstanding as nearly as practicable in proportion to the principal amounts of such maturity of the Bonds owned by each registered owner. This will be calculated based on the following formula:

(principal to be redeemed) x (principal amount owned by owner) (principal amount outstanding)

Notice of Redemption

Notice of redemption shall be given by mailing such notice to the persons shown as the registered owners of the Bonds (which initially shall be Cede & Co. as nominee of DTC) to be redeemed at their respective addresses as shown upon the registration books of the Fiscal Agent not less than 30 days, nor more than 60 days, prior to such date. If notice of redemption shall have been given as aforesaid, the Bonds so called for redemption shall become due and payable at the applicable redemption price on the redemption date designated in such notice, and interest on such Bonds shall cease to accrue from and after such redemption date.

BOOK-ENTRY-ONLY SYSTEM

The “DTC” will act as securities depository for the Bonds. The Bonds will be issued as fully-registered securities, in the name of Cede & Co. (DTC’s partnership nominee) or such other name as may be requested by an authorized representative of DTC. One fully registered Bond certificate will be issued for each maturity of each series of the Bonds, in the aggregate principal amount of such maturity, and will be deposited with DTC.

DTC, the world’s largest securities depository, is a limited-purpose trust company organized under the New York Banking Law, a “banking organization” within the meaning of the New York Banking Law, a member of the Federal Reserve System, a “clearing corporation” within the meaning of the New York Uniform Commercial Code, and a “clearing agency” registered pursuant to the provisions of Section 17A of the Securities Exchange Act of 1934. DTC holds and provides asset servicing for over 3.5 million issues of U.S. and non-U.S. equity issues, corporate and municipal debt issues, and money market instruments (from over 100 countries) that DTC’s participants (“Direct Participants”) deposit with DTC. DTC also facilitates the post-trade settlement among Direct Participants of sales and other securities transactions in deposited securities, through electronic computerized book-entry transfers and pledges between Direct Participants’ accounts. This eliminates the need for physical movement of securities certificates. Direct Participants include both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations. DTC is a wholly-owned subsidiary of The Depository Trust & Clearing Corporation (“DTCC”). DTCC is the holding company for DTC, National Securities Clearing Corporation and Fixed Income Clearing Corporation, all of which are registered clearing agencies. DTCC is owned by the users of its regulated subsidiaries. Access to the DTC system is also available to others such as both U.S. and non-U.S. securities brokers and dealers, banks, trust companies and clearing corporations that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly (“Indirect Participants”). DTC has a Standard & Poor’s rating of AA+. The DTC Rules applicable to its Participants are on file with the Securities and Exchange Commission. More information about DTC can be found at www.dtcc.com.

Purchases of Bonds under the DTC system must be made by or through Direct Participants, which will receive a credit for the Bonds on DTC’s records. The ownership interest of each actual purchaser of each Bond 4

(“Beneficial Owner”) is in turn to be recorded on the Direct and Indirect Participants’ records. Beneficial Owners will not receive written confirmation from DTC of their purchase, Beneficial Owners are, however, expected to receive written confirmations providing details of the transaction, as well as periodic statements of their holdings, from the Direct or Indirect Participant through which the Beneficial Owner entered into the transaction. Transfers of ownership interests in the Bonds are to be accomplished by entries made on the books of Direct or Indirect Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive certificates representing their ownership interest in the Bonds, except in the event that use of the book-entry system for the Bonds is discontinued.

To facilitate subsequent transfers, all Bonds deposited by Direct Participants with DTC are registered in the name of DTC’s partnership nominee, Cede & Co., or such other name as may be requested by an authorized representative of DTC. The deposit of the Bonds with DTC and their registration in the name of Cede & Co. or such other DTC nominee does not affect any change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the Bonds; DTC’s records reflect only the identity of the Direct Participants to whose accounts such Bonds are credited, which may or may not be the Beneficial Owners. The Direct and Indirect Participants will remain responsible for keeping account of their holdings on behalf of their customers.

Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time.

Beneficial Owners of the Bonds may wish to take certain steps to augment the transmission to them of notices of significant events with respect to the Bonds, such as redemptions, tenders, defaults, and proposed amendments to the Bond documents. For example, Beneficial Owners of the Bonds may wish to ascertain that the nominee holding the Bonds for their benefit has agreed to obtain and transmit notices to Beneficial Owners. In the alternative, Beneficial Owners may wish to provide their names and addresses to the registrar and request that copies of notices be provided directly to them.

Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote with respect to Securities unless authorized by a Direct Participant in accordance with DTC’s MMI Procedures. Under its usual procedures, DTC mails an Omnibus Proxy to Issuer as soon as possible after the record date. The Omnibus Proxy assigns Cede & Co.’s consenting or voting rights to those Direct Participants to whose accounts Securities are credited on the record date (identified in a listing attached to the Omnibus Proxy).

Payment of principal and interest on the Bonds will be made to DTC by the Fiscal Agent. Redemption proceeds, distributions, and dividend payments on the Bonds will be made to Cede & Co. or such other nominee as may be requested by an authorized representative of DTC. DTC’s practice is to credit Direct Participants’ accounts upon DTC’s receipt of funds and corresponding detail information from the County on the payable date, in accordance with their respective holdings shown on DTC’s records. Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices, as is the case with securities held for the accounts of customers in bearer form or registered in “street name,” and will be the responsibility of such Participant and not of DTC (nor its nominee) or the County, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of redemption proceeds, distributions, and dividend payments to Cede & Co. (or such other nominee as may be requested by an authorized representative of DTC) is the responsibility of the County, disbursement of such payments to Direct Participants will be the responsibility of DTC), and disbursement of such payments to the Beneficial Owners will be the responsibility of Direct and Indirect Participants.

DTC may discontinue providing its services as depository with respect to the Bonds at any time by giving reasonable notice to the County. Under such circumstances, in the event that a successor depository is not obtained, Bond certificates are required to be printed and delivered. The County may decide to discontinue use of the system of book-entry transfers through DTC (or a successor securities depository). In that event, Bond certificates will be printed and delivered to DTC.

The information contained in the above section concerning DTC and DTC’s book-entry system has been obtained from sources that the County believes to be reliable, but the County takes no responsibility for the accuracy thereof.

NEITHER THE COUNTY NOR THE FISCAL AGENT WILL HAVE ANY RESPONSIBILITY OR OBLIGATION TO DIRECT PARTICIPANTS, TO INDIRECT PARTICIPANTS OR TO ANY BENEFICIAL OWNER WITH RESPECT TO (I) THE ACCURACY OF ANY RECORDS MAINTAINED BY DTC, ANY DIRECT 5

PARTICIPANT, OR ANY INDIRECT PARTICIPANT; (II) THE PAYMENT OR TIMELINESS OF PAYMENT BY DTC OR ANY DIRECT PARTICIPANT OR INDIRECT PARTICIPANT OF ANY AMOUNT WITH RESPECT TO THE PRINCIPAL OF OR INTEREST ON THE BONDS; OR (III) ANY NOTICE OR TIMELINESS OF NOTICE WHICH IS PERMITTED OR REQUIRED TO BE GIVEN TO HOLDERS OF THE BONDS.

INDEBTEDNESS OF THE COUNTY

Constitutional Requirements

The New York State Constitution limits the power of the County (and other municipalities and school districts of the State) to issue obligations, to contract indebtedness, and to lend its credit to others. Such constitutional limitations include the following, in summary form, and are generally applicable to the Bonds:

Purpose and Pledge. The County shall not give or loan any money or property to or in aid of any individual, or private corporation or private undertaking, or give or loan its credit to or in aid of any of the foregoing or any public corporation; provided, however, that the County may, if authorized by the State Legislature, lend its money or credit to certain entities, for the purpose of providing certain hospital or other facilities. The State Legislature has provided such authorization with respect to the Erie County Medical Center Corporation through enactment of Chapter 143 of the Laws of 2003. (See “RELATED ENTITIES - Erie County Medical Center Corporation” herein.)

The County may contract indebtedness only for County purposes, and shall pledge its faith and credit for the payment of the principal thereof and interest thereon.

Payment and Maturity. Except for certain short-term indebtedness contracted in anticipation of taxes or to be paid within three fiscal year periods, indebtedness shall be paid in annual installments commencing no later than two years after the date such indebtedness shall have been contracted and ending no later than the expiration of the period of probable usefulness of the object or purpose or, in the alternative, the expiration of the weighted average period of probable usefulness of the several purposes, for which it is contracted, and in no event may this period exceed forty years. No installment may be more than fifty per centum in excess of the smallest prior installment unless the County Legislature provides for substantially level or declining debt service payments in the manner prescribed by the State Legislature. The County is required to provide an annual appropriation for the payment of interest due during the year on its indebtedness and for the amounts required in such year for amortization and redemption of its indebtedness.

Debt Limit. The County has the power to contract indebtedness for any lawful County purpose so long as the principal amount thereof shall not exceed seven per centum of the average full valuation of taxable real estate of the County and subject to certain enumerated exclusions and deductions such as water and certain sewer facilities and cash or appropriations for current debt service. The constitutional method for determining average full valuation is calculated by taking the assessed valuations of taxable real estate for the last five completed assessment rolls and applying thereto the ratio which such assessed valuation bears to the full valuation; full valuation is determined by the State Board of Real Property Services or such other State agency or officer as the State Legislature shall direct. The State Legislature also is required to prescribe the manner by which such ratio shall be determined by such authority.

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Calculation of Constitutional Debt Limit

The constitutional debt limit calculation of the County is shown as follows:

TABLE 1 Calculation of Constitutional Debt Limit As of September 30, 2018

Equalized Full Valuation of For Fiscal Year Ended December 31 Taxable Real Property

2014 ...... $ 47,996,864,239.00 2015 ...... 49,214,694,098.00 2016 ...... 51,961,517,243.00 2017 ...... 54,929,481,216.00 2018 ...... 58,098,573,862.00

Total five year full valuation ...... $ 262,201,130,658.00

Five year average full valuation ...... $ 52,440,226,131.60

Debt limit - 7% of average full valuation ...... $ 3,670,815,829.21

SOURCE: NYS Office of the State Comptroller - Data Management Unit

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Calculation of Total Net Indebtedness

The calculation of total net indebtedness for the County is set forth below:

TABLE 2 Calculation of Total Net Indebtedness As of September 30, 2018

Five year average full valuation (2014-2018) ...... $52,440,226,131.60

Debt Limit – 7% of average full valuation ...... $ 3,670,815,829.21

Outstanding Indebtedness: Bonds – General...... $279,540,000.06 Bonds – Sewer ...... 77,272,823.62 Bond Guaranty - ECMCC (1) ...... 78,910,000.00

Total Indebtedness ...... 435,722,823.68

Less Exclusions: Budgeted Appropriations ...... 2,910,902.00

Total Exclusions ...... 2,910,902.00

Total Net Indebtedness ...... $ 432,811,921.68

Net Debt Contracting Margin ...... $ 3,238,003,907.53

Percentage of Debt Contracting Power Exhausted ...... 11.79%

(1) Erie County Medical Center Corporation

SOURCES: Property Value – NYS Office of the State Comptroller – Data Management Unit, Indebtedness and exclusions – Erie County Comptroller’s Office

Statutory Procedure

In general, the State Legislature has granted the authorization and prescribed the procedures for the County to borrow and incur indebtedness by the enactment of the Local Finance Law, subject to the constitutional provisions set forth under “Constitutional Requirements” and to limitations imposed on the County by the ECFSA Act. The power to spend money, however, generally derives from other law, including the County Law and the General Municipal Law of the State.

The Local Finance Law also provides that where a bond resolution, or a summary thereof, is published with a statutory form of notice, the validity of the bonds authorized thereby, including bond anticipation notes issued in anticipation of the sale thereof, may be contested only if:

(1) such obligations are authorized for a purpose for which the County is not authorized to expend money; or

(2) there has not been substantial compliance with the provisions of law which should have been complied with in the authorization of such obligations; and an action contesting such validity is commenced within twenty days after the date of such publication; or

(3) such obligations are authorized in violation of the provisions of the Constitution.

Such publication procedure has been followed with respect to each of the bond resolutions pursuant to which the Bonds are being issued, and the validity of the Bonds (and any bond anticipation notes issued in anticipation of the sale thereof) has not been contested.

Each bond resolution generally authorizes the construction, acquisition, or installation of the object or purpose to be financed, sets forth the plan of financing and specifies the maximum maturity of the bonds therein authorized subject to legal (Constitution, Local Finance Law, and case law) restrictions relating to the period of probable usefulness with respect thereto.

In addition, under each bond resolution, the County Legislature (Finance Board) may delegate, and has delegated, power to issue and sell bonds and bond anticipation notes in anticipation thereof to the Comptroller, as the chief fiscal officer of the County.

In general, the Local Finance Law authorizes the County Legislature (Finance Board) to delegate its power to issue general obligation revenue anticipation notes, tax anticipation notes, budget notes and capital notes to the Comptroller.

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Outstanding Direct Indebtedness

The following table shows all outstanding direct indebtedness for which the County has pledged its faith and credit for payment of the principal thereof and the interest thereon:

TABLE 3 Direct General Obligation Indebtedness Outstanding As of September 30, 2018

Bonds: Highway Improvements ...... $84,046,440.32 Buildings and other Improvements ...... 83,104,842.15 Sewer District Facilities ...... 77,272,823.62 New Era Field ...... 35,827,341.73 Community College ...... 27,876,149.38 Court House Facilities ...... 17,139,535.36 Key Bank Center ...... 8,490,000.00 Prison Facilities ...... 8,397,078.73 Computer Systems...... 7,680,760.14 Convention Center...... 4,912,988.07 Buffalo Zoo ...... 1,771,464.00 Hospital...... 293,400.18 (1) Total Long-Term Debt ...... $356,812,823.68 (1) (2)

Exclusions: Budgeted Appropriations ...... 2,910,902.00

Total Deductions ...... 2,910,902.00

Net Direct Debt ...... $353,901,921.68

(1) Pursuant to the agreement governing the sale of the County hospital and nursing home to Erie County Medical Center Corporation, the County continues to be directly responsible for the payment of certain bonded debt for these facilities. Bonded debt, in the amount of $78,910,000 of Erie County Medical Center Corporation for which the County has indirect responsibility as guarantor, is not included above. (2) This schedule reflects remaining principal for bonds issued from 1999 to 2017 by the County. SOURCE: Erie County Comptroller’s Office

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Debt Ratios

The following table sets forth certain rates relating to the County’s gross and net direct general obligation indebtedness:

TABLE 4 Debt Ratios (a) As of September 30, 2018

Percentage of Equalized Amount Per Capita(b) Full Value (c)

Gross Direct Debt $356,812,824 $385.52 .61%

Net Direct Debt $353,901,922 $382.38 .61%

(a) Does not include underlying indebtedness. (b) The County’s 2017 population estimate of 925,528 was compiled by the NYS Department of Economic Development. (c) The County’s equalized full value of taxable real estate for 2018 is $58,098,573,862.

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Annual Debt Service Schedule

The following schedule sets forth all principal and interest payments due as of September 30, 2018 (prior to the issuance of the Bonds) on all outstanding long-term general obligation indebtedness of the County:

TABLE 5 Annual Debt Service Requirements for Bonds

Fiscal Year Ending December 31 Principal Payments Interest Payments Total Debt Service

2018(1) ...... $ 2,781,100.00 $ 4,555,009.84 $ 7,336,109.84 2019 ...... 50,169,933.68 15,892,945.61 66,062,879.29 2020 ...... 51,475,809.00 13,524,745.93 65,000,554.93 2021 ...... 39,233,052.00 11,347,474.44 50,580,526.44 2022 ...... 41,034,295.00 9,424,154.94 50,458,449.94 2023 ...... 42,966,538.00 7,382,935.79 50,349,473.79 2024 ...... 21,318,781.00 5,664,526.36 26,983,307.36 2025 ...... 18,595,024.00 4,698,571.85 23,293,595.85 2026 ...... 17,042,267.00 3,828,227.40 20,870,494.40 2027 ...... 12,799,510.00 3,062,366.47 15,861,876.47 2028 ...... 13,320,752.00 2,458,435.75 15,779,187.75 2029 ...... 10,032,995.00 1,826,574.68 11,859,569.68 2030 ...... 6,140,238.00 1,374,934.26 7,515,172.26 2031 ...... 6,386,481.00 1,097,500.83 7,483,981.83 2032 ...... 2,791,336.00 895,525.96 3,686,861.96 2033 ...... 2,723,839.00 794,183.98 3,518,022.98 2034 ...... 2,613,839.00 693,783.56 3,307,622.56 2035 ...... 2,532,839.00 599,999.03 3,132,838.03 2036 ...... 1,882,839.00 505,649.89 2,388,488.89 2037 ...... 1,462,839.00 427,478.31 1,890,317.31 2038 ...... 1,492,839.00 365,577.98 1,858,416.98 2039 ...... 1,532,839.00 301,858.01 1,834,697.01 2040 ...... 1,272,839.00 237,115.97 1,509,954.97 2041 ...... 1,285,000.00 183,118.02 1,468,118.02 2042 ...... 760,000.00 140,783.35 900,783.35 2043 ...... 605,000.00 113,813.00 718,813.00 2044 ...... 615,000.00 89,559.40 704,559.40 2045 ...... 635,000.00 64,709.40 699,709.40 2046 ...... 645,000.00 39,263.00 684,263.00 2047 ...... 665,000.00 13,220.20 678,220.20 $356,812,823.68 $91,604,043.21 $448,416,866.89

(1) Amount is net of debt service payments of $65,233,895.63 made from January 1, 2018 to September 30, 2018. SOURCE: Erie County Comptroller’s Office

Trends in Long-Term Direct Indebtedness

The following table sets forth the total long-term bonded indebtedness of the County outstanding at the end of each of the last ten fiscal years:

TABLE 6 Outstanding Long-Term Direct Indebtedness (As of December 31)

Fiscal Year Amount (1)

2008 ...... $444,973,366 2009 ...... 400,024,580 2010 ...... 517,297,692(2) 2011 ...... 495,117,453(2) 2012 ...... 470,779,652(2) 2013 ...... 486,580,528(2) 2014 ...... 464,816,022(2) 2015 ...... 439,660,965(2) 2016 ...... 417,738,395(2) 2017 ...... 407,789,147(2)

(1) Excludes ECMCC bond guaranty of $101,375,000 for 2008, $99,305,000 for 2009, $97,150,000 for 2010, $94,900,000 for 2011, $92,550,000 for 2012, $90,085,000 for 2013, $87,500,000 for 2014, $84,790,000 for 2015, $81,930,000 for 2016, and $78,910,000 for 2017. (2) Excludes ECFSA bonds and includes Erie County bonds sold to ECFSA. SOURCE: Erie County Comptroller’s Office

Debt Policy

It is the County’s policy to fund major capital projects through the use of long-term financing. Interim financing for projects under construction may be provided through bond anticipation notes. Minor capital projects are typically funded in current budgets.

In order to serve its citizens on a countywide basis, the County has constructed and financed a road system, libraries, parks, facilities for health and social service-related activities, and various community college facilities.

The County is also actively involved in constructing and financing sewage treatment facilities and interceptor sewer systems in districts throughout the County, but not in the cities of Buffalo and Tonawanda. The costs of operation and debt service of these facilities are borne by special assessment of the residents of each such district and revenues from contracts with other sewer systems. The County sewer systems are generally supplemented by town and village systems, which are financed, constructed and maintained on a local basis, and by facilities furnished and financed by the Buffalo Sewer Authority.

A condition precedent to the construction of any facilities to be financed by borrowing is the adoption of a bond resolution pursuant to the Local Finance Law, which requires that the County estimate the maximum amount to be expended. The period of probable usefulness must also be determined subject to the maximum periods set forth in the Local Finance Law. Notwithstanding the period set forth in a bond resolution, the County may amortize the indebtedness over a shorter period.

Capital Projects

The following table summarizes the anticipated financing status of the County’s approved capital projects in general functional categories:

TABLE 7 Capital Projects (As of September 30, 2018)

Total Authorized & Authorization Bonds Issued Down Payments Aid Received Unissued

Buildings $67,514,116.00 $56,260,916.00 $ - $ - $11,253,200.00 ECC(1) 8,933,540.00 7,348,800.00 - - 1,584,740.00 Parks 5,849,596.00 3,075,000.00 - - 2,774,596.00 Hospital(2) 32,275,577.00 31,376,308.00 - - 899,269.00 Highways 45,330,250.00 30,062,098.00 - - 15,268,152.00 Other 5,759,477.00 5,599,429.00 - - 160,048.00 Sewer 109,768,000.00 66,071,333.00 1,357,709.00 1,179,427.00 41,159,531.00

Totals $275,430,556.00 $199,793,884.00 $1,357,709.00 $1,179,427.00 $73,099,536.00

(1) Erie Community College. (2) The agreement relating to the sale of the Erie County Medical Center Healthcare Network to the Erie County Medical Center Corporation requires the County to complete all Network capital projects established prior to December 31, 2003 (amount authorized for these projects, amount financed, and amount authorized remaining to be financed, shown in table). SOURCE: Erie County Comptroller’s Office

The County’s present estimates indicate that all projects authorized can be completed substantially within the amounts of each bond authorization. However, no assurance can be given that the actual cost will not be greater than estimated, in part because of the anticipatory nature of capital planning. For a summary of the County’s capital program, see “COUNTY FINANCES - Capital Program.”

Short-Term Indebtedness

The County is authorized to issue various types of short-term obligations, including bond anticipation notes, tax anticipation notes, revenue anticipation notes, budget notes and capital notes.

Bond Anticipation Notes (“BAN”). The County may individually finance some of its capital projects with the proceeds of BANs and renewals thereof. The County, in accordance with constitutional requirements, must periodically reduce the principal thereof to the extent required by law, from a source other than proceeds of borrowings. Statutory law in the State permits bond anticipation notes to be renewed, provided such required periodic payments are made and provided that, except with respect to notes issued for assessable improvements, such renewals do not extend five years beyond the original date of borrowing.

Tax Anticipation Notes (“TAN”). Generally, TANs may be issued by the County during a fiscal year in anticipation of the collection of unpaid real property taxes levied for such fiscal year, or for any of the four preceding fiscal years. Such notes must mature within one year from the date of their issuance. If the taxes against which such notes are issued remain uncollected, such notes may be renewed from time to time for periods of up to one year in an amount not exceeding the amount of such uncollected taxes. Such notes, including renewals, must be redeemed not later than five years from the date of original issuance, but in no event more than five years after the close of the fiscal year for which taxes were levied in anticipation of the collection of which such notes were issued. Payment of interest on such notes is provided by appropriation in the County budget. If such notes, including renewals, have not been redeemed from real property taxes within five years after the fiscal year for which the taxes were originally levied, moneys for the redemption thereof must be provided by appropriation in the County budget. The proceeds of such notes may be used for any purpose for which the tax receipts against which such notes were issued could be used.

Budget Notes. Budget notes generally may be used for the purpose of meeting expenditures for which an insufficient or no provision has been made in the County budget. In general, the maximum principal amount of budget 14

notes which may be issued in any fiscal year may not exceed approximately 5% of the County budget; however, budget notes may also be issued in unlimited amounts for certain specified purposes. Budget notes must mature not later than the close of the fiscal year following the fiscal year in which they are issued, and must be redeemed from taxes levied for the fiscal year of maturity or from other available revenues. However, if the notes are authorized subsequent to the adoption of the budget, such notes may mature not later than the end of the second fiscal year succeeding the fiscal year in which they are issued.

Capital Notes. Capital notes may be issued to finance all or part of the costs of any object or purpose for which serial bonds may be issued. They have usually been issued to provide moneys required by Section 107.00 of the Local Finance Law as the down payment in connection with the financing of a given object or purpose.

Revenue Anticipation Notes (“RANs”). RANs may be issued in any fiscal year in anticipation of the collection or receipt of taxes (other than real property taxes) and certain other types of revenue which are due and payable in such fiscal year and moneys to be received from the State or Federal government which are due in such fiscal year. Pursuant to State law, such notes must mature within one year after the date of issuance, and may be renewed from time to time for periods of up to one year; however, the maturity of such notes, including renewals, may not extend beyond the end of the second fiscal year following the fiscal year in which such notes were originally issued.

The issuance of RANs has been necessitated, in part, by the State’s practice of requiring local governments to pay 100% of the expenditures for various programs in advance, and then providing subsequent reimbursement for the non-local share.

The County, as part of its normal annual cash flow borrowing, issued $79,255,000 principal amount of RANs on September 26, 2018 with a maturity date of June 30, 2019. The RANs are general obligations of the County and were issued in anticipation of receipt of State and federal receivables for various social services programs.

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A summary of the County’s short-term borrowing for the fiscal years 2000 through 2017 is presented below:

TABLE 8 Short-Term Borrowing History (1)

Fiscal Year Amount Type Issue Date Maturity Date

2000 ...... $ - N/A N/A N/A 2001 ...... - N/A N/A N/A 2002 ...... 43,000,000 RAN 09/18/02 09/17/03 2003 ...... 90,000,000 RAN 06/24/03 06/23/04 2004 ...... 82,500,000 RAN 07/14/04 07/13/05 2005 ...... 80,000,000 RAN 03/11/05 03/10/06 2005 ...... 80,000,000 RAN 07/14/05 07/13/06 2006 ...... 110,000,000 RAN 06/13/06 06/13/07 2007 ...... 75,000,000 RAN 06/27/07 06/27/08 2008 ...... 75,000,000 RAN 09/30/08 06/30/09 2009 ...... 103,534,867 BAN (2) 05/20/09 05/18/10 2009 ...... 65,000,000 RAN 10/27/09 06/30/10 2010 ...... 45,000,000 RAN 08/12/10 06/30/11 2010 ...... 20,000,000 RAN 12/14/10 04/14/11 2011 ...... 88,000,000 RAN 10/06/11 06/29/12 2012 ...... 75,000,000 RAN 10/11/12 06/28/13 2013 ...... 109,440,000 RAN 08/27/13 06/30/14 2014 ...... 110,000,000 RAN 09/18/14 06/30/15 2015 ...... 89,560,000 RAN 12/14/15 06/30/16 2016 ...... 89,580,000 RAN 12/07/16 06/30/17 2017 ...... 111,225,000 RAN 09/28/17 06/30/18 2018 ...... 79,255,000 RAN 09/26/18 06/30/19

(1) Excludes all BANs issued and sold to the Environmental Facilities Corporation for the benefit of self-supporting sewer districts. (2) BANs may be issued in anticipation of bond proceeds to be received at a later date. On May 17, 2010, the BANs were paid by the issuance of long-term general obligation bonds by the ECFSA pursuant to an agreement entered into by the parties.

SOURCE: Erie County Comptroller’s Office

Estimated Overlapping Debt

The following table of total and net indebtedness of the various political subdivisions within the County has been compiled from the latest outstanding debt information available from the New York State Office of the State Comptroller for all subdivisions. Such indebtedness is not a debt of the County and the County is not liable therefor. Exclusions for municipalities consist of items legally excluded in the determination of net indebtedness by such municipalities (water and excluded sewer debt, tax and revenue anticipation notes, etc.), and estimated State building aid for school districts.

TABLE 9 Overlapping Debt (000s omitted)

Fiscal Year Net Debt Estimated Percentage Estimated Share of Governmental Unit Ended Outstanding Applicable Overlapping Debt

Cities ...... 06/30/16 $ 375,377 100% $ 375,377 Towns ...... 12/31/16 477,085 100% 477,085 Villages ...... 05/31/16 77,998 100% 77,998 School districts ...... 06/30/16 1,719,345 100% 1,719,345 Fire districts ...... 12/31/16 11,455 100% 11,455

Totals ...... $ 2,661,260 $ 2,661,260

SOURCE: New York State Office of the State Comptroller – Latest available data

PROVISIONS AFFECTING RIGHTS AND REMEDIES

Under current law, provision is made for contract creditors of the County to enforce payments upon such contracts, if necessary, through court action, although the present statute limits interest on the amount adjudged due to creditors to nine per centum per annum from the date due to the date of payment. As a general rule, property and funds of a municipal corporation serving the public welfare and interest have not been judicially subjected to execution or attachment to satisfy a judgment, although judicial mandates have been issued to officials to appropriate and pay judgments out of current funds or the proceeds of a tax levy.

The Constitution of the State requires that every county, city, town, village, and school district in the State provide annually by appropriation for payment of all interest and principal on its serial bonds and certain other obligations, and that, if at any time the respective appropriating authorities shall fail to make such appropriations, a sufficient sum shall be set apart from the first revenues thereafter received and shall be applied to such purposes. The Constitution of the State also provides that the fiscal officer of any county, city, town, village or school district may be required to set apart and apply such revenues at the suit of any holder of any such obligations.

The State has consented that any municipality in the State may file a petition with any United States District Court or court of bankruptcy under any provision of the laws of the United States, now or hereafter in effect, for the composition or adjustment of municipal indebtedness. However, pursuant to the Erie County Fiscal Stability Authority Act, notwithstanding any provision to the contrary in title six-A of Article Two of the Local Finance Law, the County shall not file any petition authorized by such title six-A without the approval of the Erie County Fiscal Stability Authority and the State Comptroller (see “COUNTY FINANCES—Erie County Fiscal Stability Authority Act” herein). Subject to such approvals, under the United States Constitution, Congress has jurisdiction over such matters and has enacted amendments to the existing federal bankruptcy statute, generally to the effect and with the purpose of affording municipal corporations, under certain circumstances, with easier access to judicially approved adjustment of debts including judicial control over identifiable and unidentifiable creditors.

In recent times, certain events and legislation affecting remedies on default have resulted in litigation. While courts of final jurisdiction have upheld and sustained the rights of bondholders and noteholders, such courts might hold that future events, including financial crises as they may occur in the State and in municipalities of the State, require the exercise by the State of its emergency and police powers to assure the continuation of essential public services.

No principal or interest payment relating to any County indebtedness is past due. The County has never defaulted in the payment of the principal of or interest on any indebtedness.

COUNTY GOVERNMENT

General. The County is a municipal corporation of the State. With a 2010 population of 919,040 according to the U.S. Census Bureau, it is one of the State’s most populous counties. It has a land area of 1,058 square miles and is situated in Western New York, bounded on the west by Lake Erie and Canada, to the north by Niagara County, to the 17

east by Genesee County and Wyoming County, and to the south by Cattaraugus and Chautauqua Counties. The County includes the State’s second largest city by population, Buffalo, as well as the cities of Lackawanna and Tonawanda and 25 towns. The County has numerous established residential areas, and its largest taxpayers include National Grid Power Corporation, National Fuel Gas Corporation, NY State Electric and Gas Corporation, Benderson Development Company, Inc. and Verizon New York, Inc. The County includes major urbanized and industrial areas, as well as farmlands.

The County provides a variety of general governmental services, which supplement local city, town and village services. These include parks, cultural and recreational facilities, police, libraries, youth and senior citizen services, and correctional facilities. The County is responsible for providing mandated social service programs. The County also owns and operates a community college. It provides sanitary sewage collection, treatment and disposal facilities through a variety of special assessment districts.

Subject to the State Constitution, the County operates pursuant to the County Charter and Administrative Code, and in accordance with other laws governing the County generally, to the extent that such laws are applicable to counties operating under a charter form of government. The Charter was enacted by local law and approved by the electors at a general election held in November of 1959. The Administrative Code was enacted into local law in 1960, and became effective in 1961. The Charter and Administrative Code have been amended from time to time since enactment. Pursuant to the ECFSA Act, the State currently is not controlling and supervising the financial affairs of the County and certain “Covered Organizations” (as defined in the ECFSA Act) affiliated with the County. ECFSA entered an advisory period on June 2, 2009 and has remained in an advisory period since that time. (See “COUNTY FINANCES – Four- Year Financial Plan” and “ERIE COUNTY FISCAL STABILITY AUTHORITY” herein.)

County Legislature. The legislative power of the County is vested in a County Legislature. Its members are elected for two-year terms by the voters in their respective legislative districts. The Legislature meets at both regular and special meetings throughout the year. The Legislature reviews, approves modifications and adopts the annual County budget, levies taxes, authorizes the incurrence of all indebtedness of the County, and exercises all powers of local legislation in relation to enacting, amending, repealing or rescinding local laws, legalizing acts, ordinances, or resolutions subject to veto by the County Executive.

Both the number of members and boundaries of legislative districts may be varied from time to time in accordance with requirements of the Federal and State Constitutions or by Charter amendment. There are currently 11 legislative districts, and an equal number of members of the County Legislature.

County Executive. The County Executive is elected from the County at large every four years in the year preceding the presidential election. The County Executive must be a resident of the County at the time of the election and during the term of office. The Office of County Executive is considered a full time position, and the incumbent may hold no other public office. In addition to acting as the chief executive officer and administrative head of the County government, the County Executive acts as the chief budget officer of the County. Certain actions, including supplemental or emergency appropriations of the County Legislature, cannot take effect unless approved by the County Executive. The current County Executive is Mark C. Poloncarz.

County Comptroller. The County Comptroller, who is elected from the County at large for a four-year term, is the chief fiscal, accounting, reporting and auditing officer of the County. The Comptroller is charged with the administration of the financial affairs of the County, maintaining total and complete accounting records for all receipts, investments and disbursements, including liabilities, fund balances, encumbrances, expenditures, appropriations and revenues, certifying the availability of funds, prescribing approved methods of accounting, and auditing all affairs of the County, including financial, compliance and management audits. The current County Comptroller is Stefan I. Mychajliw.

Audit Committee. Effective January 1, 1986, the Audit Committee for Erie County was established. This Committee is comprised of three community representatives and two members of the County Legislature. This Committee is currently responsible for the preparation of requests for proposals for the annual audits of the County and Erie Community College; the evaluation of responses; and making recommendations to the County Legislature for the selection of independent accounting firms. The Audit Committee is also required to prepare an annual report for the County Executive and County Legislature based on its review of audited financial statements and management letters.

RELATED ENTITIES

Following is information relative to certain entities that have significant financial relationships with the County:

Niagara Frontier Transportation Authority

The Niagara Frontier Transportation Authority (“NFTA”) was created in 1967 as a public benefit corporation under the Public Authorities Law of the State. The NFTA is responsible for all public transportation systems in Erie and Niagara Counties. Its Board consists of a chairman and 10 other members appointed by the Governor with the advice and consent of the State Senate. Of the 10 members other than the Chairman, one is appointed upon the written recommendation of the County Executive, and one is appointed upon the written recommendation of the County Legislature.

With respect to surface transportation, NFTA Metro operates a 6.4-mile light rail rapid transit (“LRRT”) between downtown Buffalo and the South Campus of the State University of New York at Buffalo. Full operation of the LRRT commenced in 1986. NFTA Metro’s surface operations also include 332 buses, 35 vans and 4 trolley-buses, with a ridership of approximately 94,000 people per day.

NFTA also owns and operates Buffalo Niagara International Airport (“BNIA”), which is NFTA’s second largest business center and serves more than 5 million passengers each year, and the Niagara Falls International Airport (“NFIA”), which serves as an air charter airport for the area, a general aviation airport, and a military base and home station for units of both the United States Air Force Reserve and the New York State Air National Guard.

In accordance with Section 18-b of the Transportation Law of the State, Erie and Niagara Counties are required to match annual appropriations made by the State for transit operating assistance to the NFTA. The County’s matching share for 2017 is $3,657,200, which is 89.2% of the State appropriation. The County’s 2017 budget provides for an additional appropriation of $19,912,678 for NFTA operating assistance. This amount is equal to approximately 4.17% of the amount collected in the County from the imposition of sales tax at the rate of 3%, as required by Chapter 70 of the Laws of 1990.

New York Power Authority (Settlement)

In 2006, the New York Power Authority under the Niagara Power Project Relicensing process formally approved a $279 million, 50-year settlement that will see the bulk of the funds allocated towards waterfront development efforts in both Erie and Niagara Counties.

The settlement includes a $3.5 million annual payment to the Erie Canal Harbor Development Corporation (“ECHDC”) for 50 years to help facilitate waterfront development in Buffalo. The Erie County Greenway Fund also will receive $2 million annually for 50 years to create and remediate waterfront parkland in both the County and Niagara County. Furthermore, another 14 acres of prime waterfront land has been reclaimed and is currently used to store the ice boom across the Niagara River.

ECHDC has undertaken a number of waterfront redevelopment projects including the completion of the $53 million Erie Canal Harbor Redevelopment Project, which revitalized 12.5 acres of idle waterfront space into a contemporary downtown tourist destination. Additionally, development has begun on the Canalside project, which is currently slated to include more than $294 million in public and private investments. The project consists of over 1 million square feet of commercial (retail, lodging, and office), cultural, and residential space along the Buffalo waterfront. ECHDC has contracted with Global Spectrum, one of the world’s largest venue management companies, to manage Canalside. It has also contracted with two architectural firms to develop plans for the South Aud Block that is south of Canalside.

Recently, approximately 350 acres of waterfront land was transferred from the Niagara Frontier Transportation Authority to ECHDC, whose mission and resources will better enable it to support and expedite the land’s redevelopment. Approximately 190 acres of the transferred Outer Harbor land, including a small boat marina and a beach, form the new Buffalo Harbor State Park, the first State park in the City of Buffalo under the State Office of Parks, Recreation and Historic Preservation. Planning for the remaining, adjacent land is not completed, but the land will ultimately feature mixed-use waterfront development under guiding principles established for the project by an advisory committee.

Finally, focus has been placed on reestablishing access between the inner and outer harbor areas, which has led to the Buffalo Harbor Bridge Study. This study is being funding through a partnership between the Federal Highway Administration, the State Department of Transportation and Empire State Development.

Buffalo Sewer Authority

Sewer service is provided in the City of Buffalo by the Buffalo Sewer Authority, a public benefit corporation, which finances its operations by charging sewer rent to properties served that is comprised of a component based on water consumption and a component based on the property’s assessed value, and by revenues from service contracts with County, town and village sewer districts for the use of its treatment plant and major interceptor lines.

Buffalo Niagara Convention Center

The County constructed and owns a convention center in downtown Buffalo (the “Convention Center” or the “Facility”). The City of Buffalo historically operated and maintained the Facility. In 1996, the City of Buffalo and the County entered into an intermunicipal agreement, pursuant to which the County assumed responsibility for the operation, management and control of the Facility. The County has contracted with a not-for-profit management corporation to operate and manage the Convention Center. The County completed a $7.0 million renovation to the Convention Center in 2010 and annually provides capital improvements at the facility.

A hotel room occupancy tax enacted in December 1975, and increased from 2% to 5% in 1987, is producing revenue for the benefit of the Convention Center, and for promotion of tourism in the County. The tax has been sufficient in recent years to meet all of the County’s debt service requirements on obligations issued to finance the Convention Center and on obligations issued to fund the County’s contribution to the KeyBank Center project.

KeyBank Center

The KeyBank Center is a state-of-the-art community entertainment center in the City of Buffalo, which accommodates the National Hockey League franchise Buffalo Sabres, as well as basketball, indoor lacrosse, concerts, family shows and other events. The Center seats approximately 19,400 for hockey, 21,000 for basketball and up to 21,500 for concerts with 80 private suites and 2,500 premium seats, a premium seat club, sports bar, restaurant, concession facilities and sports shop. The KeyBank Center is located at Main Street and South Park Avenue in the City of Buffalo and was constructed on a site owned by the Buffalo Urban Renewal Agency pursuant to Chapter 652 of the Laws of 1993 and a municipal cooperation agreement by and between the City and the County pursuant to Article 5-g of the General Municipal Law.

Erie Community College

The Erie Community College, formerly the Erie County Technical Institute, a unit of the State University of New York, first offered classes in 1946. This two-year institution offers more than 100 programs of study leading to associate degrees in arts, science, applied science and occupational studies, and to one-year certificates. Erie Community College reported an enrollment of approximately 10,520 full-time equivalent students for its 2016-2017 academic years.

Capital costs are shared by the County and the State; operating costs are financed by student tuition and fees, State aid, and contributions from the County based on a State-mandated formula which is subject to annual adjustment.

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The contributions of the County to support the operations of the Erie Community College for the last four fiscal years and budgeted contributions for the current fiscal year, and the percentage of the Erie Community College actual operating expenditures represented by such contributions, are detailed below:

Community College Fiscal Year Ending August 31, Erie County Amount Contribution Percent

2014 ...... $ 15,629,317 11.86% 2015 ...... 15,754,317 12.22% 2016 ...... 16,254,317 11.70% 2017 ...... 16,254,317 12.09% 2018 ...... 16,754,317 NA

SOURCES: 2014 - 2016 Erie Community College Audited Financial Statements 2018 - County of Erie Adopted Budget

New Era Field

New Era Field (the “Stadium”) in Orchard Park, owned by the County, is the home of the Buffalo Bills football team. The team participates in the National Football League.

The County, the State and the Buffalo Bills executed a lease in 2013 under which the Bills will continue to play nearly all home games at the Stadium through July 30, 2023. The Bills have the right to terminate the lease during the seventh year of the lease with a termination fee of $28,363,500. A total of $130,000,000 in capital has been invested in the Stadium, of which the State paid $53,891,000, the County $40,654,000, and the Buffalo Bills $35,455,000. All work was completed for the opening of the 2015 season. The lease contains a binding non-relocation agreement secured by right of specific performance backed by $400,000,000 in liquidated damages. The Buffalo Bills will make annual rent payments of $800,000, increasing annually by the Consumer Price Index (“CPI”), to be dedicated to a capital improvement fund. Annual capital payments shared by the County and State started at $3,800,000 in 2013, increase annually by the CPI, and can be diverted to a new stadium fund at the option of the County and State.

Working capital payments are shared by the County and State, starting at $3,000,000 in 2013 and increasing annually with CPI. Game day expenses are shared by the County and State, starting at $1,818,000 in 2013 and increasing annually with CPI. Operating expenses are shared by the County and State, starting at $2,913,000 in 2013 and increasing annually with CPI. The Buffalo Bills retain naming rights for the Stadium.

A New Stadium Advisory Group consisting of 21 members has been formed to explore potential for construction of a new stadium at the current site of the Stadium or at a new site within the County. The County, the State and the Buffalo Bills each appointed seven members of the New Stadium Advisory Group. The State is paying for a study now under way by the group. Beginning in the sixth year of the lease, up to one half of the capital improvement fund can be used to conduct studies related to a new stadium location, design and development. Approximately $2,216,000 will be available in 2018, with a total of $11,796,000 at the end of the lease term.

Erie County Industrial Development Agency

The County coordinates its economic development through the Erie County Industrial Development Agency (“ECIDA”). This public benefit corporation is a multi-faceted development organization designed to foster economic prosperity in the County through the retention, attraction and expansion of commerce and industry. The ECIDA is the focal point of efforts to encourage new capital investment and generate greater employment activities.

The ECIDA approved 27 tax incentive projects in 2017 generating $280 million in private investment in Erie County. Nine businesses, including two non-profit organizations borrowed $60.2 million in loans. In total ECIDA incentives are anticipated to create 443 new jobs and retain 2,277 jobs at average salaries of $41,024 and $52,128 respectively.

Erie Tobacco Asset Securitization Corporation

In 2000, the Erie Tobacco Asset Securitization Corporation (“ETASC”) issued $246,325,000 of Tobacco Settlement Asset Backed Bonds, Series 2000 pursuant to an indenture dated as of September 1, 2000 (the “Indenture”). The net proceeds of the Series 2000 Bonds were used to purchase from the County all of the County’s right, title and interest to Tobacco Settlement Revenues (“TSR”) to which the County would otherwise be entitled under the Master Settlement Agreement (“MSA”) and Consent Decree and Final Judgment (the “Decree”).

On August 15, 2005, ETASC issued $318,834,680 in Tobacco Settlement Asset-Backed Bonds with interest rates ranging from 5.0% to 6.75% to advance refund $239,060,000 of outstanding Series 2000 Tobacco Settlement Asset-Backed bonds bearing interest rates ranging from 5.0% to 6.5% originally issued in 2000. The net proceeds amounted to $305,330,026 after original issuance discount and payment of $13,504,654 for underwriting fees, insurance, and other issuance costs, of which $267,037,311 was used to fund an irrevocable trust to defease the remaining original bonds. This transaction enabled the ETASC to release $55,231,709 in previously restricted funds for debt service and trapping events to the County.

On September 15, 2005, ETASC entered into an agreement with the bondholders to replace the government securities in the irrevocable trust with government agency securities. This transaction generated a savings of $2,802,806. Of this, $1,331,893 was transferred to the County and the remainder less costs of sale was paid to the bondholders for their concessions. In 2010, the outstanding Series 2000 Tobacco Settlement Asset-Backed bonds were redeemed prior to maturity and the balance in the irrevocable trust was applied to pay the applicable redemption price and accrued interest to the date of redemption.

On January 5, 2006, ETASC issued $17,694,720 of Tobacco Settlement Asset-Backed Bonds, Series 2006A with an interest rate of 7.65%. ETASC entered into a purchase and sale agreement with the County on January 1, 2006, in which ETASC purchased the County’s sole undivided beneficial interest in and to the trust established by ETASC pursuant to the Declaration and Agreement of Trust dated September 1, 2000 between ETASC and the Wilmington Trust Company (“2000 Residual Trust”), in its capacity as trustee, including the County’s right to receive residual tobacco settlement revenues payable to the County, as sole beneficiary of the 2000 Residual Trust. The net proceeds of $15,638,465 were transferred to the County.

The payment of the Series 2005 and Series 2006 Bonds is dependent on the receipt of TSRs. The amount of TSRs actually collected is dependent on many factors including cigarette consumption and the continued operations of the participating cigarette manufacturers in the MSA. Such bonds are secured by and payable solely from TSRs and investment earnings pledged under the Indenture and amounts established and held in accordance with the Indenture. ETASC has no financial assets other than the collections and reserves and amounts held in the other funds and accounts established under the Indenture.

ETASC has covenanted to apply 100% of all surplus revenues (defined as revenues which are in excess of Indenture requirements for the funding of operating expenses and deposits in the Debt Service account maintained for the funding of interest, principal and other items) to the special mandatory par redemption (“Turbo Redemptions”) of Series 2005 Bonds in order of their maturity dates, beginning June 1, 2006.

ETASC meets the criteria of a component unit as defined in Governmental Accounting Standards Board Statement No. 14, The Financial Reporting Entity, and has been included as such in the County’s financial statements.

Erie County Medical Center Corporation

Erie County Medical Center Corporation (“ECMCC”) is a public benefit corporation created by Chapter 143 of the Laws of 2003 (the “Act”) with the intention of securing a form of governance for the Erie County Medical Center Healthcare Network (the “Network”) that would allow it to become more competitive and reduce the amount of taxpayer support while continuing its service to both area and State residents, including persons who lack the ability to pay. The Act provides ECMCC the power to acquire and operate the Network and to issue bonds and notes to finance the cost of providing such facilities. In addition, both the Act and Article XVII of the State Constitution authorize the County to guarantee payment of financial obligations incurred by ECMCC.

The County entered into a Sale, Purchase and Operation Agreement (“SPOA”) effective January 1, 2004 with ECMCC whereby ECMCC purchased certain assets of the Network and leased certain related real property. ECMCC issued an $85,000,000 revenue bond on January 28, 2004 to temporarily finance such purchase (the “Initial ECMCC 22

Note”). The net sale price for the purchased Network assets was $83,642,956, of which $61,675,181.48 was paid directly to the County, while the remaining $21,967,774.52 was used to establish a reserve for the purpose of retiring all County bonds outstanding as of December 31, 2003 that were used to finance Network projects.

The SPOA required the County to continue to provide an annual operating contribution to ECMCC which in any year shall never be less than the annual debt service on the Erie County-Guaranteed Senior Revenue Bonds, Series 2004 (the “2004 ECMCC Bonds”), issued by ECMCC on August 19, 2004 in the original aggregate principal amount of $101,375,000 to repay the Initial ECMCC Note, to fund a debt service reserve, and to pay costs of issuance. ECMCC is responsible for paying debt service on the 2004 ECMCC Bonds, but the County unconditionally guaranteed such payment obligations.

The County and ECMCC entered into a new agreement as of December 31, 2009 (the “2009 Agreement”) clarifying the County’s financial obligations to ECMCC under the SPOA. Under the 2009 Agreement, the County is required to provide ECMCC with an annual operating subsidy of $16,200,000 or to make certain Medicaid-related disproportionate share and upper payment limit payments, whichever is higher, in perpetuity. The terms of the 2009 Agreement did not alter the County’s unconditional guaranty of the 2004 ECMCC Bonds. The centerpiece of the 2009 Agreement involved building a replacement for the then current Erie County Home in Alden, New York. The new facility was completed on ECMCC’s Grider Street Campus at a cost of approximately $105 million and replaced the outdated buildings (the “ECMCC Improvement Project”). Pursuant to the 2009 Agreement, the County contributed $11.5 million of its current funds to finance in part the costs of the ECMCC Improvement Project. To finance the balance of such costs, on August 11, 2011: (i) the County borrowed from the Erie County Fiscal Stability Authority (“ECFSA”) the proceeds of ECFSA’s Sales Tax and State Aid Secured Bonds, Series 2011C (the “2011C ECFSA Bonds”), which amounted to $96,864,413 including original issue premium, (ii) the County loaned $96,864,413 to ECMCC (the “2011 County Loan”), and (iii) pursuant to a loan agreement with the County, ECMCC delivered to the County its Senior Revenue Bond, Series 2011 (the “2011 ECMCC Bond”) to secure repayment of such loan. The amounts due to be paid by ECMCC from time to time on the 2011 ECMCC Bond are scheduled to be at least sufficient to fund the County’s obligation to repay ECFSA for its loan of the 2011C ECFSA Bonds proceeds. (See “ERIE COUNTY FISCAL STABILITY AUTHORITY” herein).

In order to balance the growing Intergovernmental Transfer (“IGT”) expense, the County and ECMCC have in the past utilized various credit mechanisms approved by the County Legislature and ECMCC Board of Directors. In 2012, the County and ECMCC reached an agreement on IGT expenses and a credit mechanism in which the County agreed to provide ECMCC $2 million per year for fourteen years, starting in 2015. That credit mechanism was utilized by the County to address IGT costs between 2012 and 2015 and the credit was exhausted in 2015.

In order to continue balancing IGT expense, the County Executive and ECMCC agreed upon a transaction in 2017 as follows: At ECMCC’s request, the County has (i) provided a project loan to ECMCC in a principal amount of $99,492,034 to finance construction of a new emergency department and other major capital improvements at the ECMCC campus (the “2017 Project Loan”), and (ii) provided a loan of $74,366,859 to refinance the 2011 County Loan (the “2017 Refinancing Loan”). The County and ECMCC have agreed that the effective interest rate on the 2017 Project Loan and the 2017 Refinancing Loan is the rate that the ECMCC would have paid on its stand-alone credit rating, without considering the more favorable cost of funds that could be achieved by borrowing from the County (the “baseline rate”). However, the County borrowed from the ECFSA the amount needed to fund the 2017 Project Loan and the 2017 Refinancing Loan at a lower rate than the baseline rate and loaned such amount to the ECMCC at the County’s borrowing cost. Accordingly, the ECMCC agreed to pay points in the amount of $17,040,000 to the County reflecting the aggregate additional savings to the ECMCC under the 2017 Project Loan and the 2017 Refinancing Loan.

By resolution adopted March 23, 2017, the County Legislature authorized (i) County borrowing from the ECFSA to finance the 2017 Project Loan, from the proceeds of an issue of ECFSA’s Sales Tax and State Aid Secured Bonds (“2017D ECFSA Bonds”). Pursuant to a loan agreement with the County (the “2017 Loan Agreement”), ECMCC has (i) delivered to the County on September 14, 2017 its Senior Revenue Bond, Series 2017A in the principal amount of $99,492,034.29 (the “2017A ECMCC Bond”), to secure the repayment of the 2017 Project Loan, and (ii) assumed the County’s obligation to repay the capitalized interest portion of the 2017D ECFSA Bonds in the principal amount of $8,281,141.41. The amounts due to be paid by ECMCC from time to time on the 2017A ECMCC Bond and its assumption of capitalized interest obligations are scheduled to be at least sufficient to fund the County’s obligation to repay ECFSA for its loan of the 2017D ECFSA Bonds proceeds. (See “ERIE COUNTY FISCAL STABILITY AUTHORITY” herein).

The 2017 Refinancing Loan by the County to ECMCC was financed through (i) County borrowing of proceeds of an issue of ECFSA’s Sales Tax and State Aid Secured Bonds (“2017C ECFSA Bonds”), the proceeds of which were used to defease the 2011C ECFSA Bonds and cancel the 2011 ECMCC Bond. Pursuant to the 2017 Loan Agreement, ECMCC has delivered to the County on September 14, 2017 its Senior Revenue Bond, Series 2017B in the principal amount of $74,366,859.10 (the “2017B ECMCC Bond”), to secure the repayment of the 2017 Refinancing Loan. The amounts due to be paid by ECMCC from time to time on the 2017B ECMCC Bond are scheduled to be at least sufficient to fund the County’s obligation to repay ECFSA for its loan of the 2017C ECFSA Bonds proceeds. (See “ERIE COUNTY FISCAL STABILITY AUTHORITY” herein).

After issuance of the 2017A and 2017B ECMCC Bonds on September 14, 2017 as discussed above, the County owns $174,859,000 of ECMCC’s outstanding debt and guarantees $81,930,000 of ECMCC’s outstanding debt.

ECMCC meets the criteria of a component unit as defined by the Governmental Accounting Standards Board and has been included as such in the County’s financial statements beginning with the year ending December 31, 2004.

ERIE COUNTY FISCAL STABILITY AUTHORITY

Purpose and Operations

The ECFSA is a corporate governmental agency and instrumentality of the State constituting a public benefit corporation created by the ECFSA Act in July 2005 with a broad range of financial control and oversight powers, including the power to issue its bonds and notes for various County purposes, including the restructuring of a portion of the County’s outstanding debt. Pursuant to the ECFSA Act, ECFSA bonds and notes are payable from revenues of ECFSA, which are primarily derived from (i) County Sales Tax Revenues, which consist of the County’s share of the sales and compensating use taxes imposed by and within the County (the “Local Sales Tax”) and (ii) State Aid Revenues, which consist of any aid appropriated by the State as local government assistance for the benefit of the County (“State Aid”) and required by the Act to be paid to ECFSA. ECFSA bonds and notes are not a debt of the County.

The ECFSA shall continue in existence until its oversight, control or other responsibilities and its liabilities, which include the payment of ECFSA bonds and notes, have been met or discharged, which in no event may be later than December 31, 2039. In addition, the ECFSA has certain powers under the ECFSA Act to control, oversee and monitor the County’s finances, including Covered Organizations. During a “control period,” the ECFSA possesses significantly expanded oversight authority, all as more fully described below under “ECFSA Financial Control and Oversight Functions.”

The ECFSA is not authorized by State law to file a petition in bankruptcy. In addition, under the ECFSA Act, the County and the Covered Organizations are prohibited from filing any petition with any United States district court or court of bankruptcy for the composition or adjustment of municipal indebtedness without the approval of the ECFSA and the State Comptroller, and no such petition may be filed while ECFSA bonds or notes remain outstanding.

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Directors and Management The ECFSA is governed by a board of seven directors, who are appointed by the Governor of the State. Of the seven directors appointed, four are appointed directly by the Governor, and of the other three one is appointed following the recommendation of the State Comptroller, one is appointed on the recommendation of the Temporary President of the Senate, one is appointed on the recommendation of the Speaker of the Assembly; these members are required to be residents of the County. The Governor designates the Chairperson and Vice Chair from among the directors. Four directors constitute a quorum. Directors

James M. Sampson, Director, Chairperson. Peter S. Marlette, Director, Vice Chairperson. Barry A. Weinstein, Director. Catherine Creighton, Director. Oliver C. Young, Esq, Director. Craig E. Speers, Director.

VACANT, Director.

Officers

The following is a brief description of the principal officer of the ECFSA:

Kenneth Vetter, Executive Director. Mr. Vetter is a former Director of Budget and Management for the County. Mr. Vetter’s previous positions have included senior budget analyst for the County and six years with the Buffalo Regional Chamber of Commerce (Buffalo Niagara Partnership and the Greater Buffalo Development Foundation).

Financing Agreement

In accordance with the provisions of the ECFSA Act, the ECFSA and the County have entered into a Financing Agreement, dated as of May 1, 2009, a First Amendment to Financing Agreement dated as of May 1, 2010, and a Loan Agreement dated as of August 1, 2011, providing for, among other things, the issuance of bonds and notes by the ECFSA to finance various County purposes authorized under the ECFSA Act. ECFSA bonds and notes are not a debt of the County.

ECFSA Monitoring and Control Functions

The ECFSA Act provides that the ECFSA shall have different financial control and oversight powers depending upon whether the County’s financial condition causes it to be in a “control period” or an “advisory period.” Under the ECFSA Act, the ECFSA began its existence during a County advisory period, which means that the ECFSA commenced operation with the power to review the operation, management, efficiency and productivity of County operations and of any Covered Organization’s operations, and to make reports and recommendations thereon; to consult with the County in the preparation of the budget of the County and to comment on the budget; to audit compliance with the County’s financial plans; to review and comment on the terms of any proposed borrowing, including the prudence of each proposed issuance of bonds or notes by the County; to assess the impact of any collective bargaining agreement to be entered into by the County; and to impose a control period upon making one of the statutory findings.

After an advisory period has been established, a control period could be re-imposed on the County upon a determination by the ECFSA that a fiscal crisis is imminent or that any of the following events has occurred or that there is a substantial likelihood and imminence of its occurrence: (a) the County shall have failed to adopt a balanced budget, financial plan or budget modification as required by Sections 3956 and 3857 of the ECFSA Act; (b) the County shall have failed to pay the principal of or interest on any of its bonds or notes when due; (c) the County shall have incurred an operating deficit of one percent or more in the aggregate results of operations of any major fund of the County or a Covered Organization during its fiscal year assuming all revenues and expenditures are reported in accordance with generally accepted accounting principles, subject to the provisions of the ECFSA Act; (d) the County Comptroller’s certification at any time, at the request of the ECFSA or on the Comptroller’s initiative, which certification shall be made 25

from time to time as promptly as circumstances warrant and reported to the ECFSA, that on the basis of facts existing at such time such officer could not make the certification described in subdivision one of Section 3951 of the ECFSA Act; or (e) the County shall have violated any provision of the ECFSA Act.

Under a control period, the ECFSA has the maximum authorized complement of financial control and oversight powers, and is empowered, among other things, (i) to approve or disapprove contracts, including collective bargaining agreements to be entered into by the County or any Covered Organization, binding or purporting to bind the County or any Covered Organization; (ii) to approve or disapprove the terms of borrowings by the County and Covered Organizations; (iii) to approve, disapprove or modify the County’s financial plans and take any action necessary in order to implement the financial plan should the County or any Covered Organization fail to comply with any material action necessary to fulfill the plan, including issuing binding orders to the appropriate local officials; (iv) to set a maximum level of spending for any proposed budget of any Covered Organization; (v) to impose a wage or hiring freeze, or both, with respect to employees of the County or any Covered Organization; (vi) to review the operation, management, efficiency and productivity of the County and any Covered Organization; (vii) to review and approve or disapprove the terms of any proposed settlement of claims against the County or any Covered Organization in excess of $50,000; and (viii) to terminate the control period upon finding that no condition exists which would permit imposition of a control period.

ECFSA Oversight Actions To-Date

The ECFSA came into existence on July 12, 2005, following a report by the State Comptroller that projected an estimated $118.4 million County General Fund gap in the 2005 fiscal year, and gaps of $131.2 million in FY 2006, and $178.2 million in 2007, in addition to several consecutive bond rating downgrades by Moody’s Investors Service and Fitch Ratings of the County’s long-term credit rating. Since its creation, a chronology of the most significant oversight actions taken by the ECFSA is as follows:

On October 6, 2005, the ECFSA disapproved the County’s initial four-year Financial Plan for the 2006-2009 period but approved a revised version of the County’s four-year Financial Plan on January 17, 2006. On July 26, 2006, following a review of the County’s four-year financial plan and expressing concern that many initiatives included in the plan were not being implemented, the ECFSA required the County to update and modify its four-year financial plan and resubmit the plan for approval by the ECFSA by August 22, 2006. On September 6, 2006, following a review of the revised four-year financial plan and expressing concern that the four-year plan was becoming unbalanced in future years, the ECFSA rejected the County’s submission and required a resubmission of this plan by October 16, 2006. On November 3, 2006, following a review of the County’s proposed fiscal 2007 budget (as submitted on October 18, 2006) and four-year financial plan for the period 2007-2010, the ECFSA rejected the County’s submission, stating that the 2007 budget was structurally imbalanced and the 2007-2010 plan did not contain actions sufficient to ensure that with respect to the major operating funds, that annual aggregate operating expenses did not exceed annual aggregate operating revenues in each fiscal year, and imposed a control period upon the County. Also on November 3, 2006, the ECFSA adopted a resolution mandating a hiring freeze applicable to all employees of the County, effective immediately, and adopted a second resolution requiring that any contract, settlement or other obligation that binds or purports to bind the County or any Covered Organization with a value of $50,000 and above shall be reviewed and approved by the ECFSA before it takes effect. Additionally, the resolution required the County to submit for ECFSA review, all collective bargaining agreements, memoranda of understanding, and negotiated settlements to grievances prior to the next regularly scheduled ECFSA meeting.

On October 15, 2007, the County submitted a revised four-year plan in conjunction with its 2008 executive recommended budget. At its November 3, 2007 meeting, the ECFSA voted to continue in a control period, citing that the County’s 2008-2011 plan did not “contain actions sufficient to ensure with respect to major operating funds for each fiscal year of the plan that annual aggregate operating expenses for such fiscal year shall not exceed annual aggregate operating revenues for such fiscal year.”

On December 21, 2007, the County submitted budget amendments and a revised four-year plan in conjunction with the 2008 legislative adopted budget. At its January 4, 2008 meeting, the ECFSA reasserted its control status based on the same methodology and reasoning indicated in the previous submission.

On October 1, 2008, the County submitted a revised four-year plan to ECFSA, and the ECFSA rejected said revised four-year plan on October 15, 2008.

On October 15, 2008, the County Executive submitted to the ECFSA his proposed budget for the 2009 fiscal year, and a four-year financial plan for fiscal years 2009-2012 (the “2009-2012 Plan”). On November 3, 2008, having reviewed the 2009-2012 Plan, the ECFSA adopted a resolution rejecting the 2009-2012 Plan on the grounds that it did not “contain actions sufficient to ensure with respect to the major operating funds for each fiscal year of the plan that annual operating expenses for such fiscal year shall not exceed annual aggregate operating revenues for such fiscal year.”

On June 2, 2009, the members of the ECFSA’s Board of Directors reviewed the revised 2009-2012 Plan submitted on May 27, 2009 and determined that it contained actions sufficient to ensure with respect to the major operating funds for each fiscal year of the plan – including budget year 2009 and out-years 2010 through 2012 – that annual aggregate operating expenses for such fiscal year shall not exceed annual aggregate operating revenues for each fiscal year and determined that the Plan was complete and otherwise complied with the requirements of Section 3957 of the ECFSA Act and Public Authorities Law Section 3959(1) which requires the ECFSA to terminate the control period when “it determines that none of the conditions which would permit the ECFSA to impose a control period exist.”

The ECFSA found that the revised 2009-2012 Plan was complete and otherwise complied with the requirements of Section 3957 of the ECFSA Act, and that by virtue of its submission of the revised 2009-2012 Plan to the ECFSA, the County was no longer in violation of Section 3957, and the ECFSA terminated the control period first imposed upon the County on November 3, 2006.

The ECFSA immediately reverted to an advisory period, as described by Public Authorities Law Section 3958. The ECFSA may re-impose the control period upon the County whenever the ECFSA determines that any one of the five circumstances listed in Public Authorities Law Section 3959(1)(a) through 3959(1)(e) shall have arisen.

On February 12, 2010, the ECFSA accepted the County’s 2010-2013 Plan and voted to remain in advisory status, as described by Public Authorities Law section 3958.

On June 13, 2011, the ECFSA accepted the County’s 2011-2014 Plan and voted to remain in advisory status, as described by Public Authorities Law section 3958.

On April 16, 2012, the ECFSA accepted the County’s revised 2012-2015 Plan and voted to remain in advisory status, as described by Public Authorities Law section 3958.

On February 19, 2013, the ECFSA accepted the County’s revised 2013-2016 Plan and voted to remain in advisory status, as described by Public Authorities Law section 3958.

On December 19, 2013, the ECFSA accepted the County’s revised 2014-2017 Plan and voted to remain in advisory status, as described by Public Authorities Law section 3958.

On December 23, 2014, the ECFSA accepted the County’s revised 2015-2018 Plan and voted to remain in advisory status, as described by Public Authorities Law section 3958.

On November 2, 2015 the ECFSA accepted the County’s proposed 2016-2019 Plan, and voted to remain in advisory status, as described by Public Authorities Law section 3958.

On December 22, 2015 the ECFSA accepted the County’s revised 2016-2019 Plan, and voted to remain in advisory status, as described by Public Authorities Law section 3958.

On October 28, 2016, the County notified the ECFSA of its intention to issue the Bonds in accordance with Public Authorities Law section 3958.

On October 31, 2016, the ECFSA accepted the County’s proposed 2017-2020 Plan, and voted to remain in advisory status as described by Public Authorities Law section 3958.

On May 3, 2017, the ECFSA accepted the County’s revised 2017-2020 plan, and voted to remain in advisory status, as described by Public Authorities Law Section 3958.

On October 24, 2017 the ECFSA accepted the County’s proposed 2018-2021 Plan, and voted to remain in advisory status as described in Public Authorities Law section 3958.

On December 14, 2017 the ECFSA accepted the County’s revised 2018-2021 Plan and voted to remain in advisory status as described in Public Authorities Law section 3958.

On August 23, 2018 the County notified the ECFSA of its intention to issue the Bonds in accordance with Public Authorities Law section 3958.

THE BONDS BEING OFFERED HEREBY AND ANY PAYMENTS THEREON ARE NOT PLEDGED TO THE HOLDERS OF ECFSA BONDS, AND THE HOLDERS OF ECFSA BONDS HAVE NO RECOURSE TO THE COUNTY OR THE COUNTY’S REAL PROPERTY TAX REVENUES.

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COUNTY FINANCES

Four-Year Financial Plans

On December 8, 2017, the County Executive submitted to the ECFSA a revised proposed four-year financial plan for the County. Not more than 15 days after such submission, the ECFSA is required to determine whether such plan is complete and complies with the ECFSA Act, and is required to submit its recommendations with respect to the financial plan. The ECFSA approved the four-year financial plan at its board meeting on December 14, 2017. (See “ERIE COUNTY FISCAL STABILITY AUTHORITY” herein.)

The following chart summarizes revenues and expenditures under the County’s approved 2018-2021 four-year financial plan. Summary of Revenues & Expenditures Four-Year Plan (000s omitted) 2018 2019 2020 2021 REVENUES: Property Taxes ...... $ 277,945 $ 285,293 $ 291,490 $ 295,754 Sales tax (County Share) ... 459,073 467,107 474,114 481,225 Sales Tax (Other Gov't) .... 317,204 322,755 327,597 332,510 Fees Fines or Charges ...... 34,035 33,503 33,818 34,137 Other Sources ...... 39,216 43,409 44,008 44,690 State Aid ...... 172,959 176,293 179,707 183,205 Federal Aid ...... 175,147 178,601 182,344 186,180 Appropriated Fund Balance...... 10,260 10,260 10,260 4,260 Total Revenues...... $1,485,839 $1,517,221 $1,543,338 $1,561,961

EXPENDITURES: Personal Services ...... $ 217,899 $ 221,992 $ 225,339 $ 232,132 Fringe Benefits ...... 133,031 138,902 145,215 154,058 Supplies & Repairs ...... 8,722 8,854 8,986 9,121 Other ...... 24,066 24,822 25,132 25,446 Contractual ...... 146,139 147,423 149,677 151,967 Sales Tax (Other Gov't) .... 350,134 356,042 361,196 366,426 Allocations ...... 43,515 44,323 44,995 45,683 Program Related...... 500,554 516,164 520,261 520,637 Debt Service ...... 61,779 59,813 63,522 57,497 Total Expenditures ...... 1,485,839 1,518,335 1,544,323 1,562,967

Projected Gap ...... $ - $ (1,114) $ (985) $ (1,006)

Projected Financial Information

The management of the County has prepared the projected financial information set forth above under the heading “FOUR-YEAR FINANCIAL PLAN” to present the plan for the County for the fiscal years 2018 through 2021. The foregoing prospective financial information was not prepared with a view toward public disclosure or with a view toward complying with the guidelines established by the American Institute of Certified Public Accountants with respect to prospective financial information, but, in the view of the County’s management, was prepared on a reasonable basis, reflects the best currently available estimates and judgments, and presents, to the best of management’s knowledge and belief, the expected course of action and the expected future financial performance of the County. However, this

information is not fact and should not be relied upon as being necessarily indicative of future results, and readers of this Official Statement are cautioned not to place undue reliance on the prospective financial information.

Neither the County’s independent auditors, nor any other independent accountants have compiled, examined, or performed any procedures with respect to the prospective financial information contained herein, nor have they expressed any opinion or any other form of assurance on such information or its achievability, and assume no responsibility for, and disclaim any association with, the prospective financial information.

The County used current financial information, historical trends, anticipated cost increases and projected changes in service delivery in developing the four-year plan. The assumptions and estimates underlying the prospective financial information are inherently uncertain and, though considered reasonable by the management of the County as of the date of preparation of the four-year plan, are subject to a wide variety of significant business, economic, and other risks and uncertainties that could cause actual results to differ materially from those contained in the prospective financial information. Accordingly, there can be no assurance that the prospective results are indicative of the future performance of the County or that actual results will not differ materially from those presented in the prospective financial information. Inclusion of the prospective financial information in this Official Statement should not be regarded as a representation by any person that the results contained in the prospective financial information will be achieved.

Financial Statements

Since 1975 the County’s financial statements have been audited by independent accounting firms. Due to the size and complexity of County operations, separate contracts were always awarded for the audits of the Network (which was sold effective as of January 1, 2004 by the County to the ECMCC), Erie Community College, and the County’s remaining funds. In addition to the financial audit, the County’s audit includes the requirements of the Single Audit Act of 1984. The County’s basic financial statements for the year ended December 31, 2017 (audited) are included herein as Appendix A.

The Comptroller’s Office is required to consolidate all audited statements into the County’s basic financial statements. Since 1986, the Comptroller’s Office has prepared a comprehensive annual financial report (“CAFR”) for submission to the Government Finance Officers’ Association Certificate of Achievement Program. The Certificate of Achievement for Excellence in Financial Reporting is the highest form of recognition in the area of governmental accounting and financial reporting. Erie County was awarded a Certificate of Achievement for Excellence in Financial Reporting in twenty-six of the last twenty-seven years. The County did not apply for this award for fiscal year 2004.

Budgetary Process

The County’s fiscal year begins January 1 and ends December 31. The County Charter and Administrative Code require that the County Executive’s proposed budget, which must be presented to the County Legislature by October 15th of each year, must show balanced total proposed expenditures and total anticipated revenues for the budget year, as well as actual figures for the two preceding years and the adopted and adjusted budget for the current fiscal year. Section 2605 of the County Charter provides that: (i) the County Executive shall maintain an unassigned fund balance in the General Fund equal to or greater than 5% of the total budget in the preceding audited fiscal year, (ii) fund balance may be included as a revenue in an approved budget of the General Fund provided there shall remain an unassigned balance of at least 5%, and (iii) following approval of the annual budget, no additional fund balance shall be appropriated as a revenue during the fiscal year without the affirmative vote of at least two-thirds of the total membership of the County Legislature.

On or before October 1st, the County Executive shall submit to the County Comptroller all revenue estimates and expenditure estimates for Medicaid, public assistance, and pension contributions and health care insurance costs for County employees to be used in the proposed budget. The County Comptroller shall review said estimates and submit to the County Legislature in writing by October 15th a report indicating whether or not such estimates are suitable estimates for the upcoming fiscal year. Should the County Comptroller determine that any such revenue or expenditure estimate is not suitable for the upcoming fiscal year, the County Legislature may revise any such revenue estimate downward upon a two-thirds majority vote and may revise any such expenditure estimate upward by a majority vote. The Legislature shall not revise any such revenue estimate upward.

The County Legislature is permitted to increase or add line items, subject to County Executive veto, which is subject to County Legislature override by two-thirds of its members. As part of the budget process, the County 30

Legislature may eliminate or reduce appropriation line items, except those appropriations required by law or for debt service, and such reductions are not subject to the approval of the County Executive.

The Charter mandates a tax levy on all taxable property in the County determined by subtracting the total estimated non-property tax revenues from the total proposed expenditures as set forth in the adopted budget. Supplemental appropriations may be made during the year by the County Legislature, subject to veto by the County Executive, if revenues are received from unanticipated sources or are in excess of budget estimates therefore.

The County Executive is required by the County’s Administrative Code to maintain control over the expenditures of every administrative unit and financial activity of the County with the exception of those related to one of the other independently elected countywide officials (County Comptroller, County Clerk, County Sheriff and County District Attorney); and he is authorized to prescribe quotas and allotments so as to limit expenditures to available funds. The County Legislature is authorized to prescribe quotas and allotments so as to limit expenditures to available funds for the other independently elected countywide officials (County Comptroller, County Clerk, County Sheriff and County District Attorney). If at any time during the year it appears that revenues available will be insufficient to meet appropriations, the County Executive must report and recommend action to the County Legislature, which is then charged with acting to prevent or minimize any deficit. For that purpose, the County Legislature may by resolution reduce appropriations, subject to applicable state law mandating certain expenditures, and provided that no appropriations for debt service may be reduced.

2018 County Budget

The 2018 tentative budget was submitted to the County Legislature on October 13, 2017 and a final budget was adopted on December 7, 2017. Annual appropriated budgets are adopted and employed for control of the General Fund; the Road, Sewer, Downtown Mall and E-911 Special Revenue Funds; the Debt Service Fund; and the Utilities Fund, minimally detailed to the department and account level. The County Legislature held 2018 budget hearings on November 14-16, 2017.

Appropriations of fund balances are as follows (excludes normal encumbrances that are carried forward annually):

Fund Original Budget Supplements

General $ 10,260,000 $ 3,000,000 Road - 2,200,000 Sewer 12,002,025 - Debt Service 3,982,594 - Library 498,684 195,000

Total $26,743,303 $ 5,395,000

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Operating Budget for Various Funds

Summary of 2018 Budget & 2017 Actuals - Revenue and Expenditures (a) 2018 Budget 2017 Actual Revenues and Transfers: Real Property Tax $ 323,367,939 $ 313,322,989 State Aid 185,016,988 176,929,108 Federal Aid 175,146,797 164,867,867 Sales Tax 459,073,351 452,389,639 Sales Tax for Local Governments 317,204,132 312,577,544 Other Local Source Revenue 134,406,941 170,490,296 Interfund Revenue 95,711,825 110,924,182 Appropriated Fund Balance 26,743,303 - Total Revenues $ 1,716,671,276 $ 1,701,501,625

Expenditures and Transfers:

Personal Services $ 231,777,532 $ 214,504,930 Employee Payments (Non-salary) 28,217,660 28,605,358 Employee Benefits 157,645,692 144,866,001 Additions to Personal Services 210,778 - Supplies and Repairs 20,177,645 16,343,551 Program Related 500,553,500 493,150,792 Sales Tax for Local Governments 317,204,132 312,577,544 Sales Tax Sharing – Other 32,929,617 32,631,641 Contractual 170,140,178 166,147,892 Debt Service 141,658,948 102,943,397 Equipment 7,243,759 7,928,306 Allocations / Transfers 64,479,522 115,868,854 Other 44,432,313 36,473,010 Total Expenditures $1,716,671,276 $ 1,672,041,276 Excess (deficiency) of Revenues over $ - $ (29,460,349) (b) Expenditures and Transfers

The 2017 & 2018 operating budget by Fund provides for spending levels as follows:

2018 Budget 2017 Budget Utilities Enterprise Fund $ 21,168,729 $ 24,682,805 Sewer Fund 63,099,159 59,621,606 E-911 Fund (Emergency Telephone System) 7,757,243 7,702,047 General Fund 1,485,839,151 1,454,648,305 Library Operating Fund 27,997,864 27,550,344 Road Fund 37,927,129 36,494,914 Debt Service Fund 72,882,001 76,211,412 Total $ 1,716,671,276 $ 1,686,911,433 (a) Revenues and expenditures for the following funds are presented: Utilities Enterprise, Sewer, E-911, General, Library Operating, Road, and Debt Service. (b) $26,493,008 of fund balance was appropriated in 2017.

SOURCES: 2017 Results - Erie County Comptroller’s Office 2017 Erie County Adopted Budget 2018 Erie County Adopted Budget

The 2018 operating budget is 0.16%, or $2,628,229, more than the 2017 adopted operating budget. The total budget includes State and Federal matching revenues for reimbursable operations in social services, health, mental health, probation, and miscellaneous operations.

The 2018 County budget provides funding for positions for all departments in the combined operating funds, including Social Services, the Library, the Utilities Fund, the E-911 Fund, and the County Road Fund. Grants, self- supporting sewer districts, and the Erie Community College are not included in the combined operating funds.

The 2018 County budget presentation includes performance measures and productivity indicators, expanded narratives for key revenue and expenditure assumptions, the integration of departmental revenue estimates with departmental expenditures, the presentation of departmental personal service line items on a functional basis (i.e., according to major work activity and task classifications), and additional explanatory tables and graphs.

Budget Monitoring Report and Mid-Year 2018 County Budget Review

The County has instituted a monthly budget monitoring system to continually measure actual revenues and expenditures relative to budgeted amounts. The system became operational in February 1985. All County departments prepare monthly budgets for all expenditures and revenues against which actual results are measured. These monthly budgets totally allocate current appropriations and estimated revenue over the fiscal year.

The Division of Budget and Management, in coordination with all County departments, completes and issues the Budget Monitoring Report (“BMR”).

On July 18, 2018, at the start of the County Legislature’s annual mid-year budget hearings, the County Executive reported to the County Legislature, ECFSA and the public on the status of the County’s fiscal outlook for 2017 and moving forward. In his announcement, the County Executive reported on positive developments in 2018 and certain risks and challenges in 2018.

The County released its latest BMR on July 31, 2018 covering the first six months of 2018. The BMR reported that the County had a positive variance of $9,623,234. The positive variance is primarily due to the positive impact of sales tax.

Capital Program

The County Charter and Administrative Code provide for a six-year capital program (see Table 7, Capital Projects). A capital projects committee chaired by the County Executive and consisting of members of the executive and legislative branches is charged with assisting in the consideration of capital projects and programs. The Erie County Development Coordination Board also assists in this process by developing recommendations to and through the Capital Projects Committee. The Committee assigns priorities to the projects, and during the course of the process, meets with various departments and investigates projects in order to develop recommendations.

The County Executive is required to submit annually to the County Legislature, on or before October 15, a capital budget for the ensuing fiscal year and a capital program for the next six years. The County is required by its Charter and Administrative Code to adopt a capital budget annually, which may include capital items to be financed out of current funds. Whenever any capital project is to be financed by borrowings, the County Legislature is required to adopt a bond resolution (see “INDEBTEDNESS OF THE COUNTY - Statutory Procedure”). The County may at any time eliminate or terminate any such project, subject to any contract liabilities theretofore incurred. The 2018 Capital Budget in the amount of $69,112,388 was submitted to the County Legislature on October 13, 2017, and adopted December 7, 2017. The Capital Program for years 2018 through 2023, inclusive, is estimated to be $295,215,549.

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Audited Results of Financial Operations for Fiscal Year 2017

At the end of the 2017 fiscal year, the County’s fund balances for the governmental funds were:

(000s omitted) Fund Balance

General $ 138,776 Capital Projects 98,197 Road 3,167 Sewer 40,807 E-911 205 Emergency Response 1,383 Debt Service 24,555

The unassigned fund balance portion of the County’s general fund as of December 31, 2017 was $101,939.

The positive residual amounts of fund balance classified as assigned fund balance in the County’s special revenue funds as of December 31, 2017 were:

(000s omitted) Fund Balance

Road $ 2,775 Sewer 38,142 E-911 66 Emergency Response 1,383

The Community College, Buffalo and Erie County Industrial Land Development Corporation, and Enterprise Fund results for fiscal year 2017 were as follows:

(000s omitted) Change in Entity Net Position

Erie Community College $ (5,363) ILDC 6,480 Utilities Fund (37)

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Summary of Audited Financial Results for 2017

TABLE 10 Summary of Revenues, Expenditures and Changes in Fund Balances Budget and Actual (Budgetary Basis) GENERAL FUND Year Ended December 31, 2017 (Audited) (000s omitted)

Original Budgetary Variance with Budget Final Budget Actual Final Budget

REVENUES: Real property taxes and tax items ...... $ 265,001 $ 265,001 $ 265,014 $ 13 Sales and use taxes(1) ...... 768,012 334,161 336,534 2,373 Transfer and other taxes ...... - - 31 31 Intergovernmental ...... 352,931 356,800 328,856 (27,944) Interfund Revenues ...... 209 209 209 - Departmental ...... 58,670 60,676 64,360 3,684 Interest ...... 637 473 1,208 735 Miscellaneous ...... 2,416 16,003 24,444 8,441

Total revenues ...... $ 1,447,876 $ 1,033,323 $ 1,020,656 $ (12,667)

EXPENDITURES: Current: General government support ...... $ 408,915 $ 416,029 $ 409,290 $ 6,739 Public safety ...... 151,807 152,796 142,217 10,579 Health ...... 69,528 72,444 77,634 (5,190) Transportation ...... 23,570 23,789 23,939 (150) Economic assistance and opportunity ...... 598,774 617,817 593,737 24,080 Culture and recreation ...... 18,921 18,897 18,411 486 Education ...... 73,188 73,188 69,886 3,302 Home and community service ...... 3,265 2,812 3,139 (327) Debt service: Interest and fiscal charges ...... 1,010 445 445 - Total expenditures ...... $ 1,348,978 $ 1,378,217 $ 1,338,698 $ 39,519

Excess (deficiency) of revenues over expenditures ...... $ 98,898 $ (344,894) $ (318,042) $ 26,852

OTHER FINANCING SOURCES (USES): Sale of property ...... $ 151 $ 151 $ 250 $ 99 Transfers in(1) ...... 621 440,061 440,061 - Transfers out ...... (105,670) (105,279) (102,240) 3,039

Total other financing sources (uses) ...... (104,898) 334,933 338,071 3,138

Net change in fund balances(2) ...... $ (6,000) $ (9,961) $ 20,029 $ 29,990

(1) Due to the ECFSA being a component unit of the County and intercepting the County’s sales tax from the State with a subsequent transfer to the County, sales tax revenue is reported as a transfer out of the component unit and transfer in within the County’s general fund, as opposed to revenue within Sales and Use Taxes in the Final Budget and Budgetary Actual columns.

(2) The net change in fund balances was included in the budget as an appropriation (i.e., spend down) of fund balance.

SOURCE: Erie County Comprehensive Annual Financial Report - 2017 (Audited)

Comparative Summary of Financial Results

TABLE 11 Summary of Revenues, Expenditures and Changes in Fund Balances General Fund (000s omitted)

2013 2014 2015 2016 2017 REVENUES: Real property taxes and tax items ...... $ 234,194 $ 235,970 $ 240,389 $ 249,562 $ 265,014 Sales and use taxes(1) ...... 313,435 321,017 326,220 326,818 336,534 Transfer and other taxes ...... - - - 4 31 Intergovernmental ...... 329,344 348,551 343,524 335,914 328,856 Inter-fund revenues ...... 12 135 - - 209 Departmental ...... 60,254 58,153 58,017 63,602 64,360 Interest ...... 1,327 792 609 613 1,208 Miscellaneous ...... 8,574 27,637 20,426 10,852 24,444

Total revenues ...... 947,140 992,255 989,185 987,365 1,020,656

EXPENDITURES: General government support ...... 374,687 385,535 394,059 396,663 408,871 Public safety ...... 135,931 135,996 144,743 146,139 142,339 Health ...... 63,970 64,677 65,026 68,447 77,329 Transportation ...... 22,355 22,848 23,137 23,183 23,939 Economic assistance and opportunity ...... 575,078 602,478 588,683 588,114 595,119 Culture and recreation ...... 16,286 16,410 17,409 17,333 18,411 Education ...... 65,781 66,114 71,177 70,846 69,886 Home and community service ...... 2,474 2,443 2,690 2,818 3,159 Debt service Interest and fiscal charges ...... - - - 731 1,010

Total expenditures ...... 1,256,562 1,296,501 1,306,924 1,314,274 1,340,063

Excess of revenues over (under) expenditures ...... (309,422) (304,246) (317,739) (326,909) (319,407)

OTHER FINANCING SOURCES (USES) Sale of property ...... 152 482 227 168 250 Transfers in ...... 409,066 422,004 425,661 427,276 440,061 Transfers out ...... (99,568) (109,444) (107,814) (109,923) (102,240)

Total other financing sources (uses) ...... 309,650 313,042 318,074 317,521 338,071

Net change in fund balances ...... 228 8,796 335 (9,388) 18,664 Fund balances at beginning of year ...... 120,141 120,369 129,165 129,500 120,112

Fund balances at end of year ...... $ 120,369 $ 129,165 $ 129,500 $ 120,112 $ 138,776

Unassigned Fund Balance $ 89,650 $ 92,218 $ 99,859 $ 100,154 $ 101,939 As a Percentage of General Fund Revenues(2) 8.4% 8.3 % 9.0 % 9.0 % 8.9 %

(1) See footnote (1) to Table 10 on previous page. (2) Does not include shared sales tax with other municipalities. Includes Other Financing Sources. SOURCE: Erie County Comprehensive Annual Financial Reports – 2017 (Audited)

TABLE 12 General Revenues by Source (a) 2013 Through 2017 (000s omitted)

SOURCE 2013 2014 2015 2016 2017

Real property taxes and tax $ 271,757 $ 274,742 $ 280,406 $ 283,732 $ 291,149 items Sales and use taxes (b) 434,346 445,258 452,510 453,422 467,277 Transfer taxes 9,719 12,010 11,888 14,054 13,167 Intergovernmental 405,194 434,138 416,188 423,586 409,571 Interfund revenues 310 228 206 730 299 Departmental 72,756 70,012 69,247 83,086 96,226 Interest 6,334 5,336 4,900 4,965 12,295 Miscellaneous 15,337 35,425 28,372 22,678 28,141 $1,215,753 $1,277,149 $1,263,717 $1,286,253 $1,318,025

(a) General revenues are comprised of those recorded by the General, Special Revenue, Debt Service and Capital Projects Funds. (b) Excludes Sales Taxes collected on behalf of and remitted to local governments in the amount of $290,334 for 2013, $297,962 for 2014, $302,456 for 2015, $303,169 for 2016, and $312,578 for 2017 respectively. SOURCE: Erie County Comprehensive Annual Financial Reports - 2017 (Audited)

TABLE 13 Sales Tax Receipts 2013 Through 2017 (000s omitted)

% Increase or (a) (b) (c) Total Decrease 3% County 1% 0.25% 0.50% County Share from Previous Fiscal Year Share Sales Tax Sales Tax Sales Tax Sales Tax Year

2013 $ 158,431 $149,582 $ 37,356 $ 74,713 $ 420,081 2.28% 2014 162,606 153,523 38,315 76,629 431,072 2.62% 2015 165,059 155,838 38,935 77,871 437,703 1.54% 2016 165,447 156,205 39,036 78,072 438,761 0.24% 2017 170,582 161,053 40,252 80,503 452,390 3.11%

(a) Effective March 1, 1985 (b) Effective July 1, 2005 (c) Effective January 15, 2006 SOURCE: Erie County Comptroller’s Office

REVENUE SOURCES AND EXPENDITURES

General

County finances are accounted for in four groups of governmental funds: the General Fund, Special Revenue Funds, Debt Service Fund, and Capital Projects Funds.

The General Fund is the general operating fund, into which all general tax revenues are paid, and from which all current operating expenditures are made pursuant to appropriations by the County Legislature. Special Revenue Funds, including sewer district funds, receive revenues from specific sources, including sewer assessments and government grant proceeds, in order to fund related expenditures. The Debt Service Fund is used to account for current payments of principal of and interest on general obligation long-term debt, and for financial resources accumulated in a reserve for 37

payment of future principal of and interest on long-term indebtedness. Capital Projects Funds are used to account for bond proceeds and other revenues committed to or used in the acquisition or construction of major capital facilities other than those that will be financed directly by the ECMCC for the Erie County Medical Center and the Erie County Home facilities.

Revenues

Sales and Compensating Use Taxes. Section 1210 of the State Tax Law authorizes the County to levy sales and compensating use taxes of up to 3% in addition to the 4% tax levied by the State. Such sales and compensating use tax collections in New York are administered by the State Tax Commission and prior to enactment of the ECFSA Act all net collections were paid in full to the County monthly. Pursuant to the ECFSA Act, the portion of net collections that the County would otherwise receive for its own use are to be paid by the State Comptroller to the ECFSA and the County shall have no right, title, or interest in such revenues. After application of such revenues to pay debt service obligations of the ECFSA, if any (see “ERIE COUNTY FISCAL STABILITY AUTHORITY” herein), and operating expenses of ECFSA and subject to ECFSA’s agreements with the County, such revenues are to be transferred as frequently as practicable to the County.

The Tax Law permits cities to impose 1-1/2% sales and compensating use taxes within their own jurisdictions preemptively. In such event, the County may levy 3% sales and compensating use taxes Countywide in the areas outside the cities and an additional 1-1/2% tax in the cities that exercise this preemptive right. However, in those jurisdictions where the 3% County tax applies, 1-1/2% thereof must be distributed to the towns and villages. Pursuant to the agreement discussed below, all of the cities within the County have waived this preemptive right.

The County levies the maximum 3% tax permitted. Subject to the ECFSA Act provisions described above, an agreement among the County and cities within the County provides that the County receives 35.3% of all revenues from the 3% sales tax, and the balance is distributed pursuant to a formula contained in the agreement among the school districts, cities, and the areas outside of cities.

Pursuant to State enabling legislation, the County imposes an additional sales and compensating use tax of 1.75% (the “Additional Sales Tax”). Of this total, 1% has been imposed since March 1, 1985: 0.25% went into effect July 1, 2005 and 0.5% went into effect January 15, 2006, raising the County sales tax rate to 8.75%. Authority to levy the 0.75% tax expires November 30, 2019. Authority to levy the 1% sales tax also expires November 30, 2019. The Additional Sales Tax is distributed to the County solely for County purposes, and is not subject to any revenue distribution agreements established pursuant to the Tax Law with one caveat: the County is obligated to remit $12.5 million of sales tax revenue to the City of Buffalo and other local municipalities.

A local law adopted by the County Legislature prohibits any increase in the existing sales and compensating use taxes, and the imposition of any new form of County tax except by a resolution approved by the affirmative vote of two- thirds of the total membership, or a majority of the total membership if such resolution is adopted subject to permissive referendum.

Federal and State Aid. The County generally receives Federal and State aid for a portion of its mandated social services programs, such as Medicaid, Family Assistance and Safety Net, which it categorizes as “Economic Assistance and Opportunity” functional expenditures. The Safety Net program receives State, but not Federal aid. The County appropriates only the local share of Medicaid. It appropriates total expenditures for Family Assistance and Safety Net, and shows State and (in the case of the former) Federal aid as revenue items. Federal and State aid represent approximately 39% of 2018 County appropriations for social services programs.

Pursuant to the ECFSA Act, aid and incentives for municipalities received from the State, any successor type of State aid and any new aid appropriated by the State as local government assistance for the benefit of the County are to be paid by the State Comptroller to the ECFSA and the County shall have no right, title, or interest in such revenues. After application of such revenues to pay debt service obligations of ECFSA, if any (see “ERIE COUNTY FISCAL STABILITY AUTHORITY– Purpose and Operations”), and operating expenses of ECFSA and subject to ECFSA’s agreements with the County, such revenues are to be transferred as frequently as practicable to the County.

The County also receives certain Federal, State and private grants. These grants are used primarily to augment current operations, and for special demonstration projects and programs. Should funding of any such grant be stopped at any point, the County may assume the cost thereof in its operating budget or suspend the programs funded by such grant.

The Federal and State governments are not constitutionally obligated to maintain or continue current levels of Federal and State aid to the County. Accordingly, no assurance can be given that present Federal and State aid levels will be maintained in the future. Federal and State budgetary restrictions which may eliminate or substantially reduce Federal or State aid could have a material adverse effect upon the County, requiring either a counterbalancing increase in revenues from other sources to the extent available or a curtailment of non-mandated expenditures. Social services and Medicaid expenditures are generally mandated by State law.

Property Tax Collection Procedure. The Countywide property tax is levied by the County upon the taxable real property in the towns and cities in the County in late December of each year at the last meeting of the County Legislature. The levy is effective on January 1 of the next succeeding fiscal year, which is the year when the taxes are recognizable as revenue. Such taxes are collected by the respective collection officers in each town and city, except that the Director of Budget, Management and Finance collects such taxes in the City of Buffalo.

With respect to the cities, the Countywide taxes are due by February 15th, and penalties are imposed as follows: 1.5% prior to March 1st, 3% prior to March 16th, 4.5% prior to April 1st, 6% prior to April 16th, 7.5% prior to May 1st, and 1.5% additional each month thereafter. The Cities of Buffalo, Lackawanna and Tonawanda each levy and collect their city taxes, and the County is not responsible for any unpaid city taxes. The County is responsible only for uncollected County taxes levied in such cities.

With respect to the towns, the Countywide property tax is levied by the County together with town property taxes, which include special district, fire district and highway taxes. In towns of the first class, taxes are due without penalties by February 15th. Penalties are 1.5% prior to March 1st, 3% prior to March 16th, 4.5% prior to April 1st, 6% prior to April 16th, 7.5% prior to May 1st, and 1.5% additional for each month thereafter. In towns of the second class, taxes are due without penalty within ten days after receipt by the respective collection agent of the tax roll. Penalties are 1.5% prior to March 16th unless waived, 7.5% prior to May 1st, and 1.5% additional each month thereafter. All towns retain from the first tax receipts all such town taxes and remit the balance of such collections to the County. The County is responsible for all uncollected taxes.

With respect to school districts, except for the City School Districts of Buffalo and Lackawanna, taxes are levied by the County by the first Tuesday in September and are due and payable to the applicable school district tax collector within 10 days after the receipt by such collector of the tax roll.

Penalties are 1.5% prior to October 16th, 7.5% prior to November 1st, and 9% prior to December 1st. On or before December 6th, the Director of Budget, Management and Finance receives a certification from each collector of the amount of unpaid school taxes. The uncollected taxes, together with a 10.5% penalty, are thereafter extended and levied on the County tax rolls against the applicable delinquent parcels. The County is responsible for all uncollected school district taxes outside the Cities of Buffalo, Lackawanna and Tonawanda. The County must pay such uncollected school taxes by February 20th.

With respect to villages, the County has adopted a local law pursuant to Section 1442 of the Real Property Tax Law, under which the County makes collections of delinquent village taxes upon request of a village. By November 16th a village must certify and transmit an account of unpaid village taxes to the Director of Budget, Management and Finance. Once the account has been received by the Director of Budget and Management, a 7.5% penalty is added to the unpaid taxes. On the date the County levies the town and County taxes, the uncollected village taxes, including the 7.5% penalty together with an additional 10.5%, are thereafter re-levied against the delinquent parcels. The County must pay to the village such uncollected village taxes by April 1st.

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Valuations, Tax Levies and Rates

The valuations, tax levies and rates for the last five years for the County are set forth below:

TABLE 14 Valuation, Tax Levy and Rates (As Reported in the Annual Report of the Division of Real Property Tax)

2014 2015 2016 2017 2018

Assessed Valuation ...... $ 37,038,326,362 $39,239,438,635 $40,289,301,287 $40,991,885,474 $42,980,773,523

Equalized Full Valuation ...... 47,996,864,239 49,214,694,098 51,961,517,243 54,929,481,216 58,098,573,862

Levied for County Purposes (a) ...... 241,721,087 245,876,811 257,638,097 272,002,597 287,386,093

Rates for $1,000 of Equalized Full Valuation...... $5.04 $5.00 $4.96 $4.95 $4.95

(a) Includes County and Library property taxes.

Pursuant to County of Erie Local Law No. 7-1992, a portion of the annual real property tax shall be annually levied and collected for library purposes, and shall be separately set out on the real property tax notices as the “amount for library purposes.” The entire amount of funds allocated in the general budget for library purposes shall be available to the Buffalo and Erie County Public Library, and shall not be subject to withholding, modification or reduction by the County after adoption of the annual County budget.

Constitutional Tax Limit

The amount that may be raised by the Countywide tax levy on real property in any fiscal year, for purposes other than for debt service on County indebtedness, is limited to 1.5% of the five-year average full valuation of taxable real property of the County. By Amendment to the County Charter, the County has limited its annual property tax levy to 1.0% of the five year average of full valuation.

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Constitutional Taxing Power For 2017

The computation of the County’s constitutional taxing power for 2018 is set forth below:

TABLE 15 Computation of Constitutional Taxing Power for 2018(a)

Tax Year Full Valuation 2014 ...... $ 47,996,864,239 2015 ...... 49,214,694,098 2016 ...... 51,961,517,243 2017 ...... 54,929,481,216 2018 ...... 58,098,573,862

Total ...... $ 262,201,130,658 Five-Year Average Full Valuation ...... $ 52,440,226,132 Tax Limit (1.5%) (b) ...... 786,603,392 Total Exclusions ...... 67,398,702

Total Taxing Power ...... 854,002,094 Total Levy for 2018 (c) ...... 322,209,663

Tax Margin (b) ...... $ 531,792,431

(a) Data excerpted from the County’s Constitutional Tax Limit Report, which is filed with the State Comptroller. (b) New York State Constitutional Tax Limit equals 1.5% of Five-Year Average Full Valuation. By Amendment to the County Charter, the County has limited its annual property tax levy to one per centum (1.0%) of the five year average of full valuation. The County’s 2018 total taxing power under this local law is $591,800,963 leaving a tax margin of $269,591,300. (c) Includes County and Library property taxes, taxes for election expenses and Community College chargebacks.

The Tax Levy Limitation Law

Chapter 97 of the Laws of 2011, as amended, (the “Tax Levy Limitation Law”) applies to all local governments, including school districts (with the exception of New York City, the counties comprising New York City and the Big 5 City School Districts (Buffalo, Rochester, Syracuse, Yonkers and New York). It also applies to independent special districts and to town and county improvement districts as part of their parent municipalities’ tax levies.

The Tax Levy Limitation Law restricts, among other things, the amount of real property taxes (including assessments of certain special improvement districts) that may be levied by or on behalf of a municipality in a particular year, beginning with fiscal years commencing on or after January 1, 2012. It expires on June 16, 2020 unless extended. Pursuant to the Tax Levy Limitation Law, the tax levy of a municipality cannot increase by more than the lesser of (i) two percent (2%) or (ii) the annual increase in the consumer price index (“CPI”), over the amount of the prior year’s tax levy. Certain adjustments would be permitted for taxable real property full valuation increases or changes in physical or quantity growth in the real property base as defined in Section 1220 of the Real Property Tax Law. A municipality may exceed the tax levy limitation for the coming fiscal year only if the governing body of such municipality first enacts, by at least a sixty percent vote of the total voting strength of the board, a local law (resolution in the case of fire districts and certain special districts) to override such limitation for such coming fiscal year only. There are permissible exceptions to the tax levy limitation provided in the Tax Levy Limitation Law, including expenditures made on account of certain tort settlements and certain increases in the average actuarial contribution rates of the New York State and Local Employees’ Retirement System, the Police and Fire Retirement System, and the Teachers’ Retirement System. Municipalities are also permitted to carry forward a certain portion of their unused levy limitation from a prior year. Each municipality prior to adoption of each fiscal year budget must submit for review to the State Comptroller any information that is necessary in the calculation of its tax levy for each fiscal year.

The Tax Levy Limitation Law does not contain an exception from the levy limitation for the payment of debt service on either outstanding general obligation debt of municipalities or such debt incurred after the effective date of the tax levy limitation provisions.

Article 8 Section 2 of the State Constitution requires every issuer of general obligation notes and bonds in the State to pledge its faith and credit for the payment of the principal thereof and the interest thereon. This has been interpreted by the Court of Appeals, the State’s highest court, in Flushing National Bank v. Municipal Assistance Corporation for the City of New York, 40 N.Y.2d 731 (1976), as follows:

“A pledge of the city’s faith and credit is both a commitment to pay and a commitment of the city’s revenue generating powers to produce the funds to pay. Hence, an obligation containing a pledge of the City’s “faith and credit” is secured by a promise both to pay and to use in good faith the city’s general revenue powers to produce sufficient funds to pay the principal and interest of the obligation as it becomes due. That is why both words, “faith” and “credit”, are used and they are not tautological. That is what the words say and that is what courts have held they mean.”

Article 8 Section 12 of the State Constitution specifically provides as follows:

“It shall be the duty of the legislature, subject to the provisions of this constitution, to restrict the power of taxation, assessment, borrowing money, contracting indebtedness, and loaning the credit of counties, cities, towns and villages, so as to prevent abuses in taxation and assessments and in contracting of indebtedness by them. Nothing in this article shall be construed to prevent the legislature from further restricting the powers herein specified of any county, city, town, village or school district to contract indebtedness or to levy taxes on real estate. The legislature shall not, however, restrict the power to levy taxes on real estate for the payment of interest on or principal of indebtedness theretofore contracted.”

On the relationship of the Article 8 Section 2 requirement to pledge the faith and credit and the Article 8 Section 12 protection of the levy of real property taxes to pay debt service on bonds subject to the general obligation pledge, the Court of Appeals in the Flushing National Bank case stated:

“So, too, although the Legislature is given the duty to restrict municipalities in order to prevent abuses in taxation, assessment, and in contracting of indebtedness, it may not constrict the city’s power to levy taxes on real estate for the payment of interest on or principal of indebtedness previously contracted....While phrased in permissive language, these provisions, when read together with the requirement of the pledge of faith and credit, express a constitutional imperative: debt obligations must be paid, even if tax limits be exceeded”.

In addition, the Court of Appeals in the Flushing National Bank case has held that the payment of debt service on outstanding general obligation bonds and notes takes precedence over fiscal emergencies and the police power of municipalities.

Therefore, while the Tax Levy Limitation Law may constrict an issuer’s power to levy real property taxes for the payment of debt service on debt contracted after the effective date of said Tax Levy Limitation Law, it is clear that no statute is able (1) to limit an issuer’s pledge of its faith and credit to the payment of any of its general obligation indebtedness or (2) to limit an issuer’s levy of real property taxes to pay debt service on general obligation debt contracted prior to the effective date of the Tax Levy Limitation Law. Whether the Constitution grants a municipality authority to treat debt service payments as a constitutional exception to such statutory tax levy limitation outside of any statutorily determined tax levy amount is not clear.

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It is possible that the Tax Levy Limitation Law will be subject to judicial review to resolve the constitutional issues raised by its adoption. Although courts in New York have historically been protective of the rights of holders of general obligation debt of political subdivisions, the outcome of any such legal challenge cannot be predicted.

Tax Collection

Set forth below is the tax collection record of the County for the past ten years:

TABLE 16 Tax Collection

Collected within the Total Collections through Fiscal Year of the Levy December 31, 2017 Total Property Taxes Levied Collections in for the Fiscal Percentage Subsequent Percentage Fiscal Year Year (a) (b) Amount of Levy Years Amount of Levy 2008 ...... $ 590,816,323 $ 575,132,293 97.35% $ 14,742,239 $ 589,874,532 99.84% 2009 ...... 612,199,787 595,839,865 97.33% 15,214,774 611,054,639 99.81% 2010 ...... 638,372,017 622,129,950 97.46% 14,806,845 636,936,794 99.78% 2011 ...... 648,241,682 628,996,639 97.03% 17,534,944 646,531,583 99.74% 2012 ...... 655,894,171 636,198,405 97.00% 17,413,447 653,611,852 99.65% 2013 ...... 655,440,978 637,052,431 97.19% 15,457,533 652,509,964 99.55% 2014 ...... 661,774,027 644,024,505 97.32% 14,073,997 658,098,502 99.44% 2015 ...... 674,167,630 655,940,466 97.30% 11,077,673 667,018,139 98.94% 2016 ...... 695,621,017 677,125,859 97.34% 6,717,169 683,843,028 98.31% 2017 ...... 719,198,527 700,924,354 97.46% N/A 700,924,354 97.46%

(a) Includes Countywide property taxes, which exclude amounts levied in accordance with State law to recover election expenditures from the municipalities that were incurred by the County. (b) Includes other property taxes, which are primarily comprised of taxes levied for the benefit of County towns, re-levy of uncollected school and village taxes, and sewer district taxes and user charges.

SOURCES: Erie County Comprehensive Annual Financial Report - 2017 (Audited)

Expenditures

The County’s major expenditures are primarily for human services, such as social services, public health and hospitals, and otherwise for courts and public safety, transportation, parks and recreation, and community colleges. Social Services expenses comprised approximately 66.92% of the total County operating budget for 2017. Medicaid expenditures are capped at 3% growth per year. Mandated social services are subject to relatively abrupt and unpredictable increases from time to time as the result of changes in economic conditions or State law. Personnel services, employee benefits and debt service accounted for an additional 33.08% of the total 2017 County budget.

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ECONOMIC CONDITIONS

General

The County is a municipal corporation of the State. With a 2010 population of 919,040, according to the U.S. Census Bureau, it is one of the State’s most populous counties. It has a land area of 1,058 square miles and is situated in Western New York, bounded on the west by Lake Erie and Canada, to the north by Niagara County, to the east by Genesee County and Wyoming County, and to the south by Cattaraugus and Chautauqua Counties. The County includes the State’s second largest city by population, Buffalo, as well as the cities of Lackawanna and Tonawanda and 25 towns. The County has numerous established residential areas, and its largest taxpayers include National Grid Power Corporation, National Fuel Gas Corporation, Benderson Development Company, Inc., Verizon New York, Inc. and New York State Electric and Gas Corp. The County includes major urbanized and industrial areas, as well as farmlands.

The County provides a variety of general governmental services which supplement local city, town and village services. These include parks, cultural and recreational facilities, police, libraries, youth and senior citizen services, and correctional facilities. The County is responsible for providing mandated social services programs. The County also owns and operates a community college. It provides sanitary sewage collection, treatment and disposal facilities through a variety of special assessment districts.

The 2010 Federal decennial census population of the cities and five largest towns are as follows:

Municipality Population

Buffalo, City ...... 261,310 Lackawanna, City ...... 18,141 Tonawanda, City ...... 15,130 Amherst, Town ...... 122,366 Cheektowaga, Town ...... 88,226 Tonawanda, Town ...... 73,567 Hamburg, Town ...... 56,936 West Seneca, Town ...... 44,711 ______SOURCE: U.S. Department of Commerce, Bureau of the Census.

Population Characteristics

TABLE 17 Population (in 000s)

Year Erie County City of Buffalo New York State United States

1970 ...... 1,114 463 18,237 203,212 1980 ...... 1,015 357 17,558 227,700 1990 ...... 969 328 18,000 248,200 2000 ...... 950 293 18,976 281,422 2010 ...... 919 261 19,378 308,746 ______SOURCE: U.S. Department of Commerce, Bureau of the Census.

Economy

The County is a major New York industrial and commercial center. The following tables illustrate the major components of the County’s employment.

TABLE 18 Percent of Non-Farm Employment by Industry (NAICS) as of 2017 (Annual Average)

Buffalo- Niagara Falls MSA (a) New York State Industry Goods Producing Natural Resources, Mining & Construction...... 3.7% 4.1% Manufacturing ...... 9.2% 4.7% Service Providing Trade, Transportation & Utilities...... 17.9% 16.5% Information ...... 1.3% 2.8% Finance Activities ...... 6.6% 7.5% Professional & Business Services ...... 12.5% 13.9% Educational & Health Services ...... 17.4% 21.1% Leisure & Hospitality ...... 10.8% 9.9% Other Services...... 4.5% 4.3% Government ...... 16.1% 15.2% ______(a) Metropolitan Statistical Area Summary SOURCE: New York State Department of Labor, Labor Market Information

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TABLE 19 Total Labor Force and Employment 1996 – 2017 (in 000s)

Erie County New York State Year Total Labor Force Employed Total Labor Force Employed

1996 468.8 446.1 8,785.7 8,237.1 1997 476.4 452.5 9,012.2 8,432.6 1998 473.1 449.0 9,071.8 8,562.2 1999 467.8 443.8 9,126.6 8,654.6 2000 465.6 445.9 9,133.9 8,718.7 2001 460.2 438.8 9,151.7 8,709.9 2002 470.1 444.9 9,275.5 8,705.4 2003 470.1 443.3 9,263.4 8,672.9 2004 472.1 445.2 9,356.0 8,812.6 2005 472.3 447.8 9,460.9 8,986.9 2006 471.1 448.1 9,508.1 9,077.5 2007 465.3 443.5 9,522.1 9,088.2 2008 473.5 446.5 9,664.8 9,139.1 2009 470.7 432.5 9,647.5 8,844.5 2010 465.7 427.0 9,595.4 8,769.7 2011 458.8 422.1 9,517.4 8,728.1 2012 461.8 423.4 9,612.2 8,793.4 2013 460.3 426.1 9,659.2 8,913.8 2014 450.4 423.0 9,591.3 8,984.1 2015 451.2 427.2 9,644.6 9,136.2 2016 448.1 426.1 9,668.7 9,200.3 2017 448.6 425.4 9,704.7 9,249.2

______Note: Annual averages not seasonally adjusted. Reflects employment of all employed persons in all occupations. SOURCE: New York State Department of Labor, Labor Market Information

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TABLE 20 Annual Average Unemployment Rates 1996-2017(a) Year Erie County NYS United States

1996 4.8% 6.2% 5.4% 1997 5.0% 6.4% 4.9% 1998 5.1% 5.6% 4.5% 1999 5.1% 5.2% 4.2% 2000 4.2% 4.5% 4.0% 2001 4.7% 4.8% 4.7% 2002 5.4% 6.1% 5.8% 2003 5.7% 6.4% 6.0% 2004 5.7% 5.8% 5.5% 2005 5.2% 5.0% 5.1% 2006 4.9% 4.5% 4.6% 2007 4.7% 4.6% 4.6% 2008 5.7% 5.4% 5.8% 2009 8.1% 8.3% 9.3% 2010 8.3% 8.6% 9.6% 2011 8.0% 8.3% 8.9% 2012 8.3% 8.5% 8.1% 2013 7.4% 7.7% 7.4% 2014 6.1% 6.3% 6.2% 2015 5.3% 5.3% 5.3% 2016 4.9% 4.8% 4.9% 2017 5.2% 4.7% 4.4%

______(a) Percent of total force unemployed, by place of residence, not seasonally adjusted. SOURCES: U.S. Rate - U.S. Department of Labor, Bureau of Labor Statistics Other Rates - New York State Department of Labor, Labor Market Information

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TABLE 21 Trends in Non-Farm Employment by Industry (NAICS) 2008 – 2017 (in 000s) Buffalo-Niagara Falls MSA

Industry 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Goods Producing: Natural Resources, Mining & Construction 20.7 19.3 18.9 19.9 19.6 19.3 20.2 20.8 21.6 20.8 Manufacturing 57.5 50.7 49.6 51.0 51.3 51.4 52.2 52.2 52.0 52.0

Service Providing: Trade, Transportation & Utilities 103.0 98.2 97.8 99.1 100.4 100.5 102.3 103.4 102.7 101.1

Information 8.5 8.3 7.8 7.6 7.6 7.6 7.6 7.3 7.0 7.0 Finance Activities 32.8 31.3 30.5 31.4 32.0 32.1 32.7 33.8 34.9 36.9 Professional & Business Services 72.6 70.8 71.6 72.5 73.1 73.4 71.8 71.9 71.1 70.5

Educational & Health Services 85.8 87.5 89.2 89.6 90.4 92.1 93.1 93.7 95.6 98.2

Leisure & Hospitality 50.2 50.8 52.5 53.6 55.0 56.9 57.7 58.7 60.2 61.0 Other Services 23.9 23.8 23.4 23.2 23.4 24.1 24.6 24.8 24.9 25.4

Government:

Federal Government 10.1 10.2 10.5 9.9 9.7 9.4 9.1 9.1 9.2 9.4

State Government 22.1 22.4 22.8 23.0 22.9 22.8 22.3 22.4 22.7 23.1 Local Government 63.2 63.1 61.7 60.6 59.0 58.0 57.6 57.7 58.0 58.5 Total Non-Farm Employment (a) (b) 550.2 536.2 536.2 541.4 544.5 547.5 551.2 555.8 560.0 563.9

(a) Totals may not add due to rounding. (b) Total non-farm employment data is compiled by the State Department of Labor upon consultation with employers.

SOURCE: New York State Department of Labor, Labor Market Information

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TABLE 22 Ten Largest Taxpayers (As of December 31, 2017)

Equalized % of Equalized Full Valuation Full Valuation

National Grid / Niagara Mohawk ...... $ 823,577,974 1.50% National Fuel Gas ...... 745,435,958 1.36% Benderson Development Company, Inc...... 638,567,204 1.16% Pyramid Company of Buffalo ...... 278,230,150 0.51% Norfolk/Conrail/CSX/PA Lines ...... 227,918,977 0.41% NY State Electric and Gas Corporation ...... 219,841,189 0.40% Uniland Development ...... 191,624,308 0.35% Verizon New York Inc ...... 182,191,707 0.33% Ellicott Group LLC ...... 168,120,431 0.31% G&I IX Empire ...... 130,955,876 0.24% TOTAL ...... $ 3,606,463,774 6.57%

______SOURCE: Erie County Comprehensive Annual Financial Report - 2017 (Audited)

TABLE 23 Ten Largest Employers (As of December 31, 2017)

Number of Full Employer Type of Activity Time Employees

State of New York Government 23,400 City of Buffalo Government 10,198 U.S. Government Government 9,000 Kaleida Health Health Care 8,113 Catholic Health System Health Care 7,347 M&T Bank Commercial Bank 7,000 University at Buffalo Education 6,992 Tops Markets LLC Supermarkets 5,423 County of Erie Government 4,084 Erie County Medical Center Corp. Health Care 3,412

______SOURCES: Erie County Comprehensive Annual Financial Report - 2017 (Audited)

Local Economy

Historically the local economy was built on railroad commerce, steel manufacturing, automobile production, Great Lakes shipping and grain storage. However, following heavy job losses in the manufacturing sector in the 1970s and early 1980s, the local economy has become more diversified with growth in the financial, health and service sectors. This diversification has cushioned local impacts during economic downturns, but redevelopment of the local economic base and improvement of the local economy has been a gradual, sometimes sporadic, process ongoing since the mid-1980s.

There are a wide range of positive economic factors affecting the County, including lower unemployment, and a significant number of public and private sector construction and economic development initiatives.

Economic development initiatives continue to proceed such as the new $270 million Women & Children’s Hospital construction project; the $110 million Conventus building project anchoring the Buffalo Niagara Medical Campus; a $40 million first phase of a new clinical science center at the Roswell Park Cancer Institute; and the current $375 million construction of the new medical school for the State University of New York at Buffalo (“UB”), being built at the Medical Campus and scheduled to open in fall 2016.

At the former Bethlehem Steel site in Lackawanna, with County funds and investment, ECIDA inducements and strong State support, the Canadian manufacturer Welded Tube has opened a specialty steel manufacturing center. This investment in the brownfield, including new rail lines and utility service, is attracting other investment, including the North American Salt Company which plans to build a $7.3 million facility to import, package and ship bulk salt from a six-acre site at the former Bethlehem property.

Under the State’s “Buffalo Billion” economic development initiative, the State has committed $1 billion in resources for the purpose of creating hundreds to thousands of new jobs to spur the local economy. As a result a wide range of projects are underway, in close consultation with the County and the ECIDA.

As part of the “Buffalo Billion” program, in February 2014, Governor Andrew Cuomo announced that IBM would anchor a major new information technology center in downtown Buffalo that will bring 500 jobs and in which the State will spend $55 million on construction and computer infrastructure. This Buffalo Information Technologies Innovation and Commercialization Hub opened in 2015.

Another “Buffalo Billion” initiative is in the area of health sciences and two firms, Albany Molecular Research and PerkinElmer, are major tenants in a pharmaceutical development center which is under construction at the Buffalo Niagara Medical Campus. At the Medical Campus, $50 million in State investment is attracting $200 million in private-sector investment and 250 initial jobs.

Another “Buffalo Billion” agenda item involves redeveloping the former Republic Steel brownfield site in Buffalo. Renamed “RiverBend,” the site is being redeveloped by the State and Tesla. The State has invested $750 million in the site, building the largest solar panel factory in the western hemisphere. Tesla plans to invest $5 billion, including payroll and operating expenses, over ten years. The project is projected to bring approximately 3,000 jobs to the region. Construction of the plant is complete and production has started in the facility.

Governor Cuomo has commenced an initiative called START-UP NY (SUNY Tax-free Areas to Revitalize and Transform Upstate NY). This is a program to transform State University of New York campuses and other university communities across the State into tax-free communities for new and expanding businesses. At UB eight companies are participating through their affiliation with UB and are projected to generate a combined 204 jobs over the next five years and will collaborate with UB faculty researchers and students.

Unemployment in Buffalo-Niagara is 4.5% in July 2018, compared to 8.9% in July 2012.

Transportation

The existing transportation network in the County provides for all modes of travel. The unique geographic location, which includes four highway and two rail entry points into Canada from Erie and Niagara Counties, has

afforded strategic transportation advantages and it is the primary reason that the County continues to serve as a transportation hub for the region.

Railroad infrastructure in the County is extensive, and includes passenger rail service provided by Amtrak (along the CSX rail corridor), commuter rail service within the City of Buffalo, four of the seven national Class I railroads, CSX and Norfolk Southern, Canadian National and Canadian Pacific, several short line railroads providing easy freight and passenger access to United States and Canadian markets. It is one of the largest rail centers in the United States and one of the few centers with international connections. Rail transportation continues to be one of the County’s largest industries employing more than 2,100 persons with payrolls totaling approximately $10 million a month.

The Buffalo-Niagara International Airport, located in Cheektowaga, offers commercial passenger service through seven airlines. In addition, the airport serves as a major distribution center for air cargo traffic through four major operators. The County also has three general aviation airports that serve smaller general aviation aircraft.

In addition to rail and air service, the County has a large trucking industry with 10 transcontinental carriers, 23 international carriers, two transcontinental heavy equipment haulers, and numerous common carriers. Of the four highway international crossings in the region, only the Peace Bridge is located in the County. However, the Peace Bridge is by far the busiest with approximately 6 million crossings annually.

The Niagara River and Lake Erie serve as the western boundary of the County. The Port of Buffalo provides an outlet to the Great Lakes System and to the Atlantic Ocean via the Welland Canal, Lake Ontario and the St. Lawrence Seaway. In recent years there has been a major push to redevelop Buffalo’s waterfront, with restoration of the original commercial slip along with other recreational and employment projects.

Educational, Cultural, Media and Recreational Facilities

There are eight colleges and universities, four community and junior colleges, and various vocational and technical schools located in the County. Erie Community College consists of three campuses: Williamsville, downtown Buffalo; and Orchard Park, with more than 10,000 students enrolled (See “RELATED ENTITIES-Erie Community College” herein).

UB is the largest and most comprehensive component of the State University system. In 2017, more than 30,648 students were enrolled in its undergraduate and graduate programs, and it had approximately 6,043 full time equivalent employees (see Table 23).

A wide assortment of vocational and other specialized educational programs offered in the County are administered through a Board of Cooperative Educational Services (“BOCES”), with financial aid provided by cooperating school districts.

An important contribution to the area’s educational facilities is the Buffalo and Erie County Public Library System. The Library System consists of a Central Library, eight branches in the City of Buffalo and twenty-two contracting member libraries, which operate twenty-eight facilities in the County, and house approximately 5,000,000 volumes. In addition the Library System boasts a number of unique and valuable community assets including ownership of Mark Twain’s The Adventures of Huckleberry Finn manuscript and a complete collection of John James Audubon’s The Birds of America, as well as the valuable resources contained the Mark Twain Room and the Grosvenor Rare Book Room.

The County has 13 hospitals with over 3,100 beds, including the 550-bed, acute care facility managed by the ECMCC, a U.S. Department of Veterans Affairs medical center and a medical school at UB. The Roswell Park Cancer Institute is a major medical research and treatment facility located in Buffalo with 133 total beds.

In 2004, the Network became a public benefit corporation, known as Erie County Medical Center Corporation, an autonomous health system. In 2008, following a recommendation from the State Commission on Healthcare Facilities in the 21st Century, ECMCC combined with Kaleida Health and UB to form a new joint entity

called Great Lakes Health. ECMCC has completed approximately $160 million in new buildings including a center for transplantation and kidney care and adjacent medical offices, as well as a move of the Erie County Home from its former location in Alden, NY to a new facility adjacent to the Erie County Medical Center in the City of Buffalo.

The Buffalo Niagara Medical Campus (“BNMC”) is a consortium of the region’s premier health care, life sciences research, and medical education institutions, all located on 120 acres in downtown Buffalo. The BNMC is dedicated to the cultivation of a world-class medical campus for clinical care, research, education, and entrepreneurship and consists of member agencies including UB, Kaleida Health, Hauptman Woodward Medical Research Institute, Roswell Park Cancer Institute, and other private sector non-profit groups. The BNMC has 6.5 million square feet of existing research, clinical, and support space today.

The County is served by a morning newspaper published by the Buffalo News, Inc. with a circulation of more than 200,000. In addition, approximately 40 weekly newspapers, and local, general and special interest magazines and periodicals are circulated throughout the County. The area is served by 24 radio stations with a diverse range of programming, seven television stations (four of which are national network affiliates), and several cable TV companies covering multi-channel fare to a growing list of subscribers.

The County is home to a number of professional sports teams including the Buffalo Bills football team, Buffalo Sabres hockey team, the Buffalo Bisons minor league baseball team, and the Buffalo Bandits lacrosse team.

The Buffalo area has attained a national reputation for a broad diversity of ethnic heritage and culture. Cultural centers include Kleinhans Music Hall (home of the Buffalo Philharmonic Orchestra), Burchfield-Penney Art Center, the KeyBank Center, the Naval and Servicemen’s Park, the Buffalo Zoo, the Albright-Knox Art Gallery, the Museum of Natural Science, the Buffalo History Museum, the Botanical Gardens, and others.

For many years there has been an emphasis on enhancing the “quality of life” and on further developing the region’s considerable cultural and recreational potential as another means of attracting and retaining investment and jobs. This includes the County’s significant investment in recent years in the area’s cultural institutions, including Frank Lloyd Wright’s Darwin Martin House, Graycliff Estate and Rowing Boathouse, the Albright-Knox Art Gallery and the Buffalo Zoo. The County continues to serve as a significant source of annual operational funding to dozens of local agencies.

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County Employees

County employees are represented by nine labor organizations, most of which have been recognized by the County since shortly after the enactment of the Taylor Law of 1967. It is important to note that employees at Erie Community College represented by the Faculty Federation and Administrators Association are not County employees, although they are represented under the County contracts.

# of Full-time Active Employees Date Contract Organizations At 08/01/18 Expires/Expired Represents

CSEA 2,515 12/31/22 White Collar AFSCME 582 12/31/21 Blue Collar NYSNA 32 12/31/17 Nurses CSEA CO’S 255 12/31/17 Sheriff-Correction Officers and Medical Staff Teamsters 536 12/31/18 Sheriff-Holding Center Deputies and Medical Staff PBA 148 12/31/21 Sheriff-Police Division Librarians 76 12/31/17 BECPL Professional Librarians Faculty 364 08/31/20 ECC Faculty Administrators 137 08/31/20 ECC Administration

______SOURCES: 2018 Erie County Executive’s Budget Message and Summary Erie Community College

The numbers of full-time positions authorized by the 2018 County budget are as follows:

2018 Authorized Full-Time Positions (Excluding Grant Fund, Sewer Fund and Erie Community College Positions)

General Fund ...... 2,150 Social Services ...... 1,418 Highway Division, County Road Fund ...... 184 E-911 ...... 77 Library Fund ...... 203 Utilities Fund ...... 2 Total Positions ...... 4,034

______SOURCE: 2018 County of Erie Adopted Budget

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County Employees

# of Full-time Active Employees Date Contract Organizations At 08/01/18 Expires/Expired Represents

CSEA 2,515 12/31/16 White Collar AFSCME 582 12/31/16 Blue Collar NYSNA 32 12/31/17 Nurses CSEA CO’S 255 12/31/17 Sheriff-Correction Officers and Medical Staff Teamsters 536 12/31/18 Sheriff-Holding Center Deputies and Medical Staff PBA 148 12/31/21 Sheriff-Police Division Librarians 76 12/31/17 BECPL Professional Librarians Faculty 364 08/31/20 ECC Faculty Administrators 137 08/31/20 ECC Administration

______SOURCES: 2018 Erie County Executive’s Budget Message and Summary Erie Community College

County Employee Pension Benefits

Substantially all employees of the County eligible for pension or retirement benefits under the Retirement and Social Security Law of the State of New York are members of the State and Local Employees” Retirement System (“ERS”). ERS is a cost-sharing multiple public employer retirement system. The obligation of employers and employees to contribute and the benefits to employees are governed by the State Retirement and Social Security Law (the “Retirement System Law”). ERS offers a wide range of plans and benefits which are related to years of service and final average salary, vesting of retirement benefits, death and disability benefits and optional methods of benefit payments. All benefits generally vest after five years of credited service for members of Tier I through IV and ten years of credited service for members of Tiers V and Tier VI. The Retirement System Law generally provides that all participating employers in each retirement system are jointly and severally liable for any unfunded amounts. Such amounts are collected through annual billings to all participating employers. Generally, all employees, except certain part-time employees, participate in ERS. ERS is non-contributory with respect to members hired prior to July 27, 1976. All members hired on or after July 27, 1976 and before January 1, 2010 must contribute 3% of their gross annual salary toward the costs of retirement programs. The 3% contribution is waived when the employee completes ten (10) years of service. Members hired on or after January 1, 2010 and before April 1, 2012 are members of Tier V. Tier V members are required to contribute 3% of their salaries toward pension costs as long as they accumulate additional pension credits. Members hired after April 1, 2012 are members of Tier VI. Tier VI members are required to contribute from 3% to 6% of their salaries based on a sliding scale toward pension costs as long as they accumulate additional pension credits.

ERS invoice payments are due February 1st of the following year. The ERS offers pre-payment by December 15th at a discounted amount.

ERS billings and County* payments for pension benefits for the past five years are summarized as follows:

Total Amount Billed by ERS (Due February 1 Discounted Regular Discounted Total Discounted Year of Following Year) Pension Contribution Adjustments Amount Paid 2017 $39,451,315 $39,034,925 $84,151 $39,119,076 2016 39,476,492 38,914,816 229,225 39,144,041 2015 42,770,279 43,486,366 (1,100,989) 42,385,377 2014 48,161,886 48,155,941 (427,477) 47,728,464 2013 48,050,188 49,872,829 (2,255,058) 47,617,771

* Includes Erie County, Erie Community College and the Library Component Unit

SOURCES: Erie County Comptroller’s Office and The New York State & Local Retirement System

The estimated 2017 invoice of $39,451,315 due February 1, 2018 was paid on December 15, 2017 at a discounted amount of $39,119,076. The discounted estimated invoice included an adjustment amount of $84,151 for prior years’ adjustments.

Other Post-Employment Benefits

In applying the requirements of GASB Statement No.45 (adopted during the year ended December 31, 2007), the County recognizes the cost of post-employment healthcare in the year when the employee services are received, reports the accumulated liability from prior years, and provides information useful in assessing potential demands on the County’s future cash flows. Recognition of the liability accumulated from prior years is being phased in over 30 years, commencing with the 2007 liability.

For the fiscal year ended December 31, 2017, the County’s annual other post-employment benefits (“OPEB”) cost (expense) of $83,663,569 is equal to the Annual Required Contribution (“ARC”), which is $90,568,500, minus certain adjustments which totaled $6,904,931. Those adjustments were: interest on the net OPEB obligation and adjustment to the ARC Considering the annual expense as well as payments for current health insurance premiums, which totaled $33,172,401 for retirees and their beneficiaries, the result was an increase in the net OPEB obligation of $50,491,168 for the year ended December 31, 2017.

The OPEB plan was unfunded, resulting in an unfunded accrued liability (“UAAL”) of $922,946,638 for governmental activities and $159,805,000 for business-type activities as of December 31, 2017. The most recent actuarial valuation date was January 1, 2016.

Annual OPEB Cost and Net OPEB Obligation (in 000’s)

Governmental Business-type Primary Government Activities Activities* Total Actuarial Accrued Liability (AAL) $922,947 $159,805 $1,082,752 Unfunded actuarial accrued liability (UAAL) 922,947 159,805 1,082,752 Normal cost at beginning of year 31,941 7,012 38,953 Amortization factor based on 30 years 17.40 17.40 17.40 Annual covered payroll 209,308 58,951 268,259 UAAL as a percentage of covered payroll 440.95% 271.08% 403.62%

Level Dollar Amortization Calculation of ARC under Projected Unit Credit Method (in 000’s)

Primary Governmental Business-type Government Activities Activities* Total ARC normal cost with interest to end of year $31,941 $7,012 $38,953 (UAAL) over 30 years with interest at end of year 58,627 9,813 68,440 Annual Required Contribution (ARC) 90,568 16,825 107,393 Interest on net OPEB obligation 17,512 3,162 20,674 Adjustment to ARC (24,417) (4,409) (28,826) Annual OPEB cost (expense) 83,663 15,578 99,241 Contribution for fiscal year ended December 31, 2017 (33,172) (5,500) (38,672) Increase in net OPEB obligation 50,491 10,078 60,659 Net OPEB obligation December 31, 2016 407,253 73,536 480,789 Net OPEB obligation December 31, 2017 457,744 83,614 541,358 Percent of ARC contributed: 36.63% 32.69% 36.01% Percent of annual OPEB cost contributed: 39.65% 35.31% 38.97%

* Erie Community College (August 31, 2017)

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LITIGATION

The County, its officers, and its employees are defendants in numerous lawsuits. The Department of Law of the County, headed by the County Attorney, has reviewed the status of pending individual cases to determine if there are any that may result in a judgment against the County for an amount of at least $5,000,000 or, if aggregated with similar cases, may result in $10,000,000 of liability. The County Attorney has advised there are no such cases pending against the County, with the exception of the following matters.

In November of 2013, the estate of an individual commenced an action pursuant to 42 U.S.C. § 1983 and New York State law against the County, the County Sheriff’s Office, as well as several employees of the Erie County Sheriff’s Office, in New York State Supreme Court, Erie County, alleging claims of wrongful death, assault, battery, intentional infliction of emotional distress, deprivation of medical treatment, excessive force, and negligent supervision, as the result of an incident that occurred at the County Holding Center. The complaint alleges that the inmate died as a result of the incident involving the inmate and Sheriff’s Office employees. As this case is still in the midst of discovery, the potential cost of an adverse determination on liability and damages cannot be determined at this time.

In May of 2017, the estate of an individual commenced an action in state court pursuant to 42 U.S.C. §1983 and tort actions under New York State law. This is filed against the County, the Erie County Sheriff’s Office, an unnamed Sheriff’s deputy, and a jail nurse. The estate also sued several contract employees who provide forensic mental health services, another municipal entity, a hospital, and the psychiatric service that provides the contract employees. The matter was removed to federal court (the Western District of New York) and the court permitted the estate to file an Amended Complaint. The allegations in the Amended Complaint directed to the County and Sheriff’s Office are for medical malpractice, violation of civil rights arising from inadequate care, and wrongful death; the gravamen of the claim is that the inmate died as a result of allegedly inadequate care. This case is still in the early pleadings stage; defendants are in the process of serving their Answer to the Amended Complaint. As this case has not yet proceeded to discovery, the potential cost of an adverse determination on liability and damages cannot be determined at this time.

SELF-INSURANCE

In order to provide for the payment of automobile and general liability claims, the County has instituted a program of self-insurance risk management. The County sets aside funds at the end of each fiscal year to provide for anticipated liabilities, which may accrue during the following year. Although the fund is not actuarially based, the annual reserves have historically been sufficient to cover all claims. In June 2018, as part of the 2017 fiscal year close out, $1,500,000 was set aside in addition to a $2,500,000 appropriation in the 2018 adopted budget for the Risk Retention Fund, resulting in a total set aside amount of $4,000,000.

TAX MATTERS

Federal Income Taxes

In the opinion of Harris Beach PLLC, Bond Counsel to the County, based on existing statutes, regulations, administrative rulings and court decisions, and assuming compliance by the County with certain covenants and the accuracy of certain representations, interest on the Bonds is excluded from gross income for Federal income tax purposes.

The Internal Revenue Code of 1986, as amended (the “Code”), imposes various limitations, conditions and other requirements which must be met at and subsequent to the respective dates of issue of the Bonds in order that interest on the Bonds will be and remain excluded from gross income for Federal income tax purposes. Included among these requirements are restrictions on the investment and use of proceeds of the Bonds and in certain circumstances, payment of amounts in respect of such proceeds to the United States. Failure to comply with the requirement of the Code may cause interest on the Bonds to be includable in gross income for purposes of Federal income tax, possibly from the respective dates of issuance thereof. The County has covenanted to comply with certain procedures and it has made certain representations and certifications, designed to assure

satisfaction of the requirements of the Code in respect to the Bonds. The opinion of Bond Counsel assumes compliance with such covenants and the accuracy, in all material respects, of such representations and certifications.

Bond Counsel is of the further opinion that interest on the Bonds is not an “item of tax preference” for purposes of Federal alternative minimum tax on individuals, and for tax years beginning prior to January 1, 2018, the federal alternative minimum tax imposed on corporations; interest on the Bonds is, however, included in “adjusted current earnings” for purposes of calculating the Federal alternative minimum tax imposed on certain corporations with respect to tax years beginning prior to January 1, 2018. Corporate purchasers of the Bonds should consult with their tax advisors concerning the computation of any alternative minimum tax.

Prospective purchasers of the Bonds should be aware that ownership of the Bonds, and the accrual or receipt of interest thereon, may have collateral Federal income tax consequences for certain taxpayers, including financial institutions, property and casualty insurance companies, S corporations, certain foreign corporations, individual recipients of Social Security or Railroad benefits and taxpayers who may be deemed to have incurred or continued indebtedness to purchase or carry such obligations. Prospective purchasers should consult their tax advisors as to any possible collateral consequences of their ownership of the Bonds and their accrual or receipt of interest thereon. Bond Counsel expresses no opinion regarding any such collateral Federal income tax consequences.

The Bonds will NOT be designated as “qualified tax exempt obligations” within the meaning of, and pursuant to Section 265(b)(3) of the Code.

State and Local Income Taxes

In the opinion of Bond Counsel, interest on the Bonds is exempt from personal income taxes imposed by the State or any political subdivision thereof (including The City of New York).

Any noncompliance with the federal income tax requirements set forth above with respect to the Bonds would not affect the exemption of interest thereon from personal income taxes imposed by the State of New York or any political subdivision thereof.

Bond Counsel expresses no opinion regarding any other state or local tax consequences related to the ownership or disposition of, or the receipt or accrual of interest on, the Bonds.

Interest on the Bonds may or may not be subject to state or local income taxes in jurisdictions other than the State of New York under applicable state or local tax laws. Bond Counsel expresses no opinion, however, as to the tax treatment of the Bonds under other state or local jurisdictions. Each purchaser of the Bonds should consult his or her own tax advisor regarding the taxable status of the Bonds in a particular state or local jurisdiction other than the State of New York.

Other Considerations

Bond Counsel has not undertaken to determine or to inform any person whether any actions taken (or not taken) or events occurring (or not occurring) after the respective dates of issuance and delivery of the Bonds may affect the tax status of interest on the Bonds.

No assurance can be given that any future legislation, including amendments to the Code or the State income tax laws, regulations, administrative rulings, or court decisions, will not, directly or indirectly, cause interest on the Bonds to be subject to Federal or State income taxation, or otherwise prevent Bondholders from realizing the full current benefit of the tax status of such interest. Further, no assurance can be given that the introduction or enactment of any such future legislation, or any judicial decision or action of the Internal Revenue Service or any State taxing authority, including, but not limited to, the promulgation of a regulation or ruling, or the selection of the Bonds for audit examination, or the course or result of any Internal Revenue Service

examination of the Bonds or of obligations which present similar tax issues, will not affect the market price or marketability of the Bonds. Prospective purchasers of the Bonds should consult their own tax advisors regarding the foregoing matters.

All summaries and explanations of provisions of law do not purport to be complete and reference is made to such laws for full and complete statements of their provisions.

ALL PROSPECTIVE PURCHASERS OF THE BONDS SHOULD CONSULT WITH THEIR TAX ADVISORS IN ORDER TO UNDERSTAND THE IMPLICATIONS OF THE CODE AS TO THE TAX CONSEQUENCES OF PURCHASING OR HOLDING THE BONDS.

RATINGS

The Bonds have been assigned ratings of “AA-“ by Standard and Poor’s Corporation (“S&P”) and “A+” by Fitch Ratings on the date of the initial issuance and delivery of the Bonds.

Such ratings reflect only the views of such organizations and any desired explanation of the significance of such ratings may be obtained only from the rating agency furnishing the same. Generally, a rating agency bases its rating on the information and materials furnished to it and on investigations, studies and assumptions of its own. There is no assurance such ratings will continue for any given period of time, or that such ratings will not be revised downward or withdrawn entirely by the respective rating agency, if in the judgment of such rating agency, circumstances so warrant. Any such downward revision or withdrawal of such rating may have an adverse effect on the market price of the Bonds.

A securities rating is not a recommendation to buy, sell or hold securities and may be subject to revision or withdrawal at any time.

MARKET FACTORS

The financial condition of the County, as well as the market for the Bonds, could be affected by a variety of factors, some of which are beyond the County’s control. There can be no assurance that adverse events in the State, including, for example, the seeking by a municipality of remedies pursuant to the Federal Bankruptcy Code or otherwise, will not occur which might affect the market price of and the market for the Bonds. If a significant default or other financial crisis should occur in the affairs of the United States of America or the State or of any of its agencies or political subdivisions, this could adversely affect both the ability of the County to arrange for additional borrowings, and the market for and market value of outstanding debt obligations, including the Bonds.

As previously stated, the County is partially dependent on financial assistance from the State. The State has previously experienced cash flow difficulties, and future State cash flow difficulties and/or delays in the adoption of future State budgets could create significant cash flow difficulties for the County through delays in the timely reimbursement to the County by the State for social, health and human service programs administered by the County. There can be no assurance that State appropriations of financial assistance to the County will not be reduced below amounts currently anticipated to be received, or that payments of State aid to the County will be timely. See “COUNTY FINANCES – 2018 County Budget.”

The enactment of the Tax Levy Limitation Law, which imposes a tax levy limitation upon municipalities, school districts and fire districts in the State, including the County, without providing an exclusion for debt service on obligations issued by municipalities and fire districts, including the County, could have an impact upon the market price for the Bonds. See “REVENUE SOURCES AND EXPENDITURES - The Tax Levy Limitation Law” herein.

DISCLOSURE UNDERTAKING

At the time of the delivery of the Bonds, the County will provide an executed copy of its “Undertaking to Provide Continuing Disclosure” (the “Undertaking”) in accordance with Rule 15c2-12 of the Securities and

Exchange Commission promulgated under the Securities Exchange Act of 1934 (the “Exchange Act”). The Undertaking will constitute a written agreement or contract of the County for the benefit of holders of and owners of beneficial interests in the Bonds to provide, or cause to be provided to the Electronic Municipal Market Access System (“EMMA”) implemented by the Municipal Securities Rulemaking Board (the “MSRB”), established pursuant to Section 15B(b)(1) of the Exchange Act, as follows:

(1) Annual Information. The required Annual Information shall consist of (i) the financial information and operating data for the preceding fiscal year, in a form generally consistent with the information contained or cross-referenced in this Official Statement under the captions “Indebtedness of the County”, “County Finances”, “Revenue Sources and Expenditures”, and “Litigation” and (ii) the audited financial statement, if any, of the County for each fiscal year. The County shall file the Annual Information on or prior to the 270th day following the end of each fiscal year, commencing with the fiscal year ending December 31, 2018. If audited financial statements are not available, unaudited financial statement shall be filed and audited financial statements shall be filed within 30 days after they become available and, in no event later than 360 days after the end of each fiscal year.

(2) In a timely manner not in excess of ten (10) business days after the occurrence of the event, notice of the occurrence of any of the following events with respect to the Bonds:

(a) principal and interest payment delinquencies;

(b) non-payment related defaults, if material;

(d) in the case of credit enhancement, if any, provided in connection with the issuance of the Bonds, unscheduled draws on credit enhancements reflecting financial difficulties;

(e) substitution of credit or liquidity providers, or their failure to perform;

(f) adverse tax opinions, the issuance by the Internal Revenue Service of proposed or final determinations of taxability, Notices of Proposed Issue (IRS Form 5701 TEB) or other material notices or determinations with respect to the tax status of the Bonds, or other material events affecting the tax status of the Bonds;

(g) modifications to rights of Bond holders, if material;

(h) bond calls, if material, and tender offers;

(i) defeasances;

(j) release, substitution, or sale of property securing repayment of the Bonds;

(k) rating changes;

(l) bankruptcy, insolvency, receivership or similar event of the County;

(m) the consummation of a merger, consolidation, or acquisition involving the County or the sale of all or substantially all of the assets of the County, other than in the ordinary course of business, the entry into a definitive agreement to undertake such an action or the termination of a definitive agreement relating to any such actions, other than pursuant to its terms, if material; and

(n) appointment of a successor or additional trustee or the change of name of a trustee, if material.

(3) In a timely manner, notice of its failure to file the afore-described annual financial information, operating data, audited financial statement, if any, and event notices on or before the date specified.

Event (c) is included pursuant to a letter from the SEC staff to the National Association of Bond Lawyers dated September 19, 1995. However, event (c) is not applicable, since no “debt service reserves” will be established for the Bonds.

With respect to event (d) the County does not undertake to provide any notice with respect to credit enhancement added after the primary offering of the Bonds.

With respect to event (l) above, the event is considered to occur when any of the following occur: the appointment of a receiver, fiscal agent or similar officer for the County in a proceeding under the U.S. Bankruptcy Code or in any other proceeding under state or federal law in which a court or government authority has assumed jurisdiction over substantially all of the assets or business of the County, or if such jurisdiction has been assumed by leaving the existing governing body and officials or officers in possession but subject to the supervision and orders of a court or governmental authority, or the entry of an order confirming a plan of reorganization, arrangement or liquidation by a court or governmental authority having supervision or jurisdiction over substantially all of the assets or business of the County. Event (l) does not include the engagement by the County of a fiscal agent for a financing transaction.

The County may from time to time choose to provide notice of the occurrence of certain other events, in addition to those listed above, if the County determines that any such other event is material with respect to the Bonds; but the County does not undertake to commit to provide any such notice of the occurrence of any material event except those events listed above.

The County’s Undertaking shall remain in full force and effect until such time as the principal of, redemption premiums, if any, and interest on the Bonds shall have been paid in full. The sole and exclusive remedy for breach or default under the Undertaking is an action to compel specific performance of the undertakings of the County, and no person or entity, including a holder of the Bonds, shall be entitled to recover monetary damages thereunder under any circumstances. Any failure by the County to comply with the Undertaking will not constitute a default with respect to the Bonds.

The County reserves the right to amend or modify the Undertaking under certain circumstances set forth therein; provided that, any such amendment or modification will be done in a manner consistent with Rule 15c2-12 as then in effect.

Compliance History

Continuing disclosure undertakings which were provided by the County with respect to its previous bond issues require the filing with EMMA of audited financial statements and certain financial and operating data of the type contained in the respective official statements relating to each of such bond issues. Although the audited financial statements of the County were filed with EMMA in a timely manner in compliance with the existing continuing disclosure undertakings for fiscal years 2012 to 2017, certain required financial information, budget information and material events were not filed on a timely basis. Notices of non-compliance with such continuing disclosure undertakings were filed with EMMA. Corrective filings relating to such financial information, budget information and material events were filed on EMMA on: July 25, 2014; October 14, 2014; July 16, 2015; September 10, 2015 October 14, 2015; July 22, 2016; November 10, 2016; and September 12, 2017.

Due to an administrative oversight, the County’s annual operating information filings to EMMA for fiscal years 2012 to 2014 did not include certain tabular information entitled “Summary of Revenues and Expenditures, Four Year Plan.” This required financial information was not timely filed with EMMA for fiscal year 2015. Information for fiscal year 2015 has since been filed (on November 10, 2016), including a notice of late filing. Given that these numbers include projections for years past, the County did not file corrective filings for fiscal years 2012 to 2014.

The County filed an event notice on September 12, 2017 with EMMA stating that since 1987, the Sewer debt amounts shown as exclusions in the County’s Official Statement tables showing calculation of both Total Net Indebtedness and Direct General Obligation Indebtedness Outstanding were incorrectly shown because the County had not obtained the required approval by the Office of the State Comptroller for such exclusions. The County is in

the process of obtaining such approval and will implement procedures to ensure that this does not occur in the future with respect to exclusion of future Sewer debt issuance.

The County has established procedures to ensure that future filings of continuing disclosure information will be complete and will be undertaken in a timely manner in compliance with existing continuing disclosure obligations, including transmitting such filings to the MSRB through EMMA.

LEGAL MATTERS

Legal matters incident to the authorization, issuance, and sale of the Bonds will be subject to the final approving opinion of Harris Beach PLLC, Buffalo, New York, Bond Counsel to the County. Such legal opinion will state that (i) in rendering the opinions expressed therein, Bond Counsel has assumed the accuracy and truthfulness of all public records, documents and proceedings examined by Bond Counsel which have been executed or certified by public officials acting within the scope of their official capacities, and has not verified the accuracy or truthfulness thereof, and Bond Counsel also has assumed the accuracy of the signatures appearing upon such public records, documents and proceedings and such certifications; (ii) the scope of Bond Counsel’s engagement in relation to the issuance of the Bonds has extended solely to the examination of the facts and law incident to rendering the opinions expressed therein; and (iii) the opinions expressed therein are not intended and should not be construed to express or imply any conclusion that the amount of real property subject to taxation within the boundaries of the County together with other legally available sources of revenue, if any, will be sufficient to enable the County to pay the principal of and interest on the Bonds as the same become due and payable. In addition, while Bond Counsel has participated in the preparation of the Official Statement, it has not verified the accuracy, completeness or fairness of the factual information contained therein and, accordingly, no opinion is expressed by Bond Counsel in connection therewith.

Certain legal matters will be passed on for the Underwriters by Bond, Schoeneck & King, PLLC, Buffalo, New York, as Underwriters’ Counsel.

UNDERWRITING

The Underwriters of the Bonds (listed on the cover page hereof), have agreed, subject to certain conditions, to purchase the Bonds from the County at a price of $______, which reflects an Underwriters' discount of $______. The Bonds are being purchased for reoffering by the Underwriters, for whom Jefferies LLC ("Jefferies") is acting as Lead Manager. The initial public offering prices for the Bonds are set forth on the inside cover page of this Official Statement. The Bonds may be offered and sold to certain dealers (including dealers depositing such Bonds into unit investment trusts) at prices lower than the initial public offering prices. The initial public offering prices may be changed from time to time by the Underwriters.

In connection with the public offering of the Bonds, the Underwriters will be receiving compensation in the amount of the Underwriters’ discount. The Underwriters’ obligation under the Contract of Purchase to accept delivery of the Bonds is subject to certain terms and conditions, including the approval of certain legal matters by counsel. The public offering prices set forth on the inside cover page hereof may be changed from time to time at the discretion of the Underwriters.

Jefferies has entered into an agreement (the “Agreement”) with E*TRADE Securities LLC (“E*TRADE”) for the retail distribution of municipal securities. Pursuant to the Agreement, Jefferies may sell a portion of the Bonds to E*TRADE and will share a portion of its selling concession compensation with E*TRADE.

INVESTMENT POLICY

Pursuant to the statutes of the State of New York, the County is permitted to invest only in the following investments: (1) special time deposit accounts in or certificates of deposit issued by a bank or trust company located and authorized to do business in the State of New York; (2) obligations of the United States of America; (3) obligations guaranteed by agencies of the United States of America where the payment of principal and interest are guaranteed by the United States of America; (4) obligations of the State of New York; (5) with the approval of the

State Comptroller, tax anticipation notes and revenue anticipation notes issued by any New York municipality or district corporation, other than the County; (6) obligations of a New York public corporation which has made lawful investments for the County pursuant to another provision of law; (7) certain certificates of participation issued on behalf of political subdivisions of the State of New York; and (8) in the case of County monies held in certain reserve funds established pursuant to law, obligations issued by the County. These statutes further require that all bank deposits, in excess of the amount insured under the Federal Deposit Insurance Act, be secured by a pledge of eligible securities.

MUNICIPAL ADVISOR

Hilltop Securities Inc. ("HilltopSecurities") is employed as Municipal Advisor to the County in connection with the issuance of the Bonds. The Municipal Advisor’s fee for services rendered with respect to the sale of the Bonds is contingent upon the issuance and delivery of the Bonds. HilltopSecurities, in its capacity as Municipal Advisor, does not assume any responsibility for the information, covenants and representations contained in any of the legal documents with respect to the federal income tax status of the Bonds, or the possible impact of any present, pending or future actions taken by any legislative or judicial bodies.

The Municipal Advisor to the County has provided the following sentence for inclusion in this Official Statement. The Municipal Advisor has reviewed the information in this Official Statement in accordance with, and as part of, its responsibilities to the County and, as applicable, to investors under the federal securities laws as applied to the facts and circumstances of this transaction, but the Municipal Advisor does not guarantee the accuracy or completeness of such information.

OTHER INFORMATION

Additional information may be obtained upon request from the Office of the County Comptroller, telephone (716) 858-8400 or from Hilltop Securities Inc., telephone (212) 642-4350.

Any statements made in this Official Statement and indicated to involve matters of opinion or estimates are represented to be opinions or estimates held or made in good faith. No assurance can be given, however, that the facts will materialize as so opined or estimated. Neither this Official Statement, nor any statement respecting the County or the Bonds which may have been made orally or in writing, is to be construed as a contract with the owners of the Bonds.

This Official Statement is submitted only in connection with the sale of the Bonds by the County, and may not be reproduced or used in whole or in part for any other purposes.

COUNTY OF ERIE, NEW YORK Erie County Comptroller’s Office

By: Stefan I. Mychajliw County Comptroller

Dated: October , 2018

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APPENDIX A

County of Erie New York Comprehensive Annual Financial Report for the Year Ended December 31, 2017 and Independent Auditors’ Report

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COUNTY OF ERIE

NEW YORK

Comprehensive Annual Financial Report

For the Year Ended December 31, 2017

STEFAN I. MYCHAJLIW

Erie County Comptroller

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COUNTY OF ERIE, NEW YORK

COMPREHENSIVE ANNUAL FINANCIAL REPORT

For the Year Ended December 31, 2017

Prepared By: Erie County Comptroller's Office STEFAN I. MYCHAJLIW Erie County Comptroller

______COUNTY OF ERIE, NEW YORK

TABLE OF CONTENTS FOR THE YEAR ENDED DECEMBER 31, 2017

INTRODUCTORY SECTION Page

Letter of Transmittal ...... i-v GFOA Certificate of Achievement ...... vi Organizational Chart ...... vii Summary of Elected Officials ...... viii

FINANCIAL SECTION

Independent Auditors' Report ...... 1-3 Management’s Discussion and Analysis ...... 4-12 Basic Financial Statements: Government-wide Financial Statements: Statement of Net Position ...... 14-15 Statement of Activities ...... 16-17 Fund Financial Statements: Balance Sheet – Governmental Funds ...... 18 Reconciliation of the Balance Sheet – Governmental Funds to the Government-wide Statement of Net Position ...... 19 Statement of Revenues, Expenditures and Changes in Fund Balances – Governmental Funds ...... 20 Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances - Governmental Funds to the Government-wide Statement of Activities ...... 21 General Fund – Statement of Revenues, Expenditures and Changes in Fund Balances – Budget and Actual (Non-GAAP Basis of Accounting) ...... 22 Statement of Net Position – Proprietary Funds ...... 23 Statement of Revenues, Expenses and Changes in Net Position – Proprietary Funds ...... 24 Statement of Cash Flows – Proprietary Funds ...... 25-26 Statement of Net Position – Agency Fund ...... 27 Notes to the Financial Statements ...... 29-88 Required Supplementary Information: Schedule of Funding Progress – Other Post-Employment Benefits Plan – Primary Government ...... 90 Schedule of Local Government’s Proportionate Share of the Net Pension Liability – Employees’ Retirement System – Primary Government ...... 91 Schedule of Local Government’s Contributions – Employees’ Retirement System – Primary Government ...... ………………………………………………………………………...... 92 Schedule of Local Government’s Proportionate Share of the Net Pension Liability/(Asset) – Teacher’s Retirement System – Primary Government ...... 93 Schedule of Local Government’s Contributions – Teacher’s Retirement System – Primary Government ...... 94 Combining and Individual Fund Financial Statements and Schedules: Nonmajor Governmental Funds: Combining Balance Sheet – Nonmajor Governmental Funds ...... 98-101 Combining Statement of Revenues, Expenditures and Changes in Fund Balances – Nonmajor Governmental Funds ...... 102-105

(continued)

COUNTY OF ERIE, NEW YORK ______

TABLE OF CONTENTS FOR THE YEAR ENDED DECEMBER 31, 2017

FINANCIAL SECTION (concluded)

Page Combining and Individual Fund Financial Statements and Schedules: (concluded) Nonmajor Governmental Funds: (concluded) Schedules of Revenues, Expenditures and Changes in Fund Balances – Budget and Actual (Non-GAAP Basis of Accounting): Road Special Revenue Fund ...... 106 Sewer Special Revenue Fund ...... 107 Downtown Mall Special Revenue Fund ...... 108 E-911 Special Revenue Fund ...... 109 Emergency Response Special Revenue Fund ...... 110 Debt Service Fund...... 111 Statement of Changes in Assets and Liabilities – Agency Fund ...... 114 Library Component Unit: Balance Sheet – Library Component Unit ...... 116 Reconciliation of the Balance Sheet – Library Component Unit to the Government-wide Statement of Net Position………………..117 Statement of Revenues, Expenditures and Changes in Fund Balance – Library Component Unit……………………………………………….…..118 Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balance – Library Component Unit to the Government-wide Statement of Activities....…………….119 Other Component Units: Combining Statement of Net Position – Other Component Units ...... 122 Combining Statement of Activities – Other Component Units ...... 123

STATISTICAL SECTION

Net Position by Component ...... 126-127 Changes in Net Position ...... 128-131 Fund Balances of Governmental Funds ...... 132-133 Changes in Fund Balances of Governmental Funds ...... 134-135 Taxable Sales by Category ...... 136-137 Assessed and Equalized Full Value of Taxable Property ...... 138-139 Direct and Overlapping Property Tax Rates ...... 140 Principal Taxpayers ...... 141 Property Tax Levies and Collections ...... 142-143 Ratios of Outstanding Debt by Type ...... 144 Ratios of General Bonded Debt Outstanding ...... 145 Legal Debt Margin Information ...... 146-147 Pledged-Revenue Coverage ...... 148-149 Direct and Overlapping Governmental Activities Debt ...... 150 Demographic and Economic Statistics ...... 151 Principal Employers ...... 151 Full-time County Government Employees by Function ...... 152-153 Operating Indicators by Function/Program ...... 154-155 Capital Asset Statistics by Function ...... 156-157

(concluded)

INTRODUCTORY SECTION

This section contains the following:

LETTER OF TRANSMITTAL GFOA CERTIFICATE OF ACHIEVEMENT ORGANIZATIONAL CHART SUMMARY OF ELECTED OFFICIALS

Management’s Discussion and Analysis (“MD&A”) immediately follows the independent auditors’ 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.

PROFILE OF THE GOVERNMENT

Basic Information

The County is a metropolitan center covering 1,058 square miles that is located on the western border of New York State, adjacent to Lake Erie. Situated within the County are 3 cities, 25 towns, and 16 villages, including the City of Buffalo, which serves as the County seat and is the State's second most populous and largest city. The County provides a variety of mandated and discretionary services covering the areas of culture, parks and recreation, social services, police, libraries, youth, health, senior services, roads, mental health, probation, corrections, emergency services, license bureau, and sanitary sewerage.

The County is a major New York industrial and commercial center, and is favorably located relative to the commercial markets of both the United States and Canada. Access to these markets is enhanced by the County’s standing of being among the largest rail centers in the United States; that it is provided trucking services by numerous transcontinental, international and common carriers and is a focal point of international water-borne transportation.

Subject to the New York State Constitution and Laws, the County operates pursuant to a County Charter (“Charter”) and Administrative Code. Additionally, various New York State laws govern the County to the extent that such laws are applicable to counties operating under a charter form of government.

Legislative authority of the County is vested in an 11-member governing body known as the County Legislature (“Legislature”), each member of which is elected for a two-year term. Principal functions of the Legislature include adoption of the annual budget, levying of taxes, review and approval of budget modifications, adoption of local laws, and authorization of the incurrence of all County indebtedness.

In addition to the members of the Legislature, there are five County-wide elected officials, each elected to four-year terms: County Executive, County Comptroller, County Clerk, District Attorney, and Sheriff. The County Comptroller serves as the County’s chief fiscal, accounting, financial reporting and auditing officer.

Component Units

Consistent with criteria promulgated in the GASB Codification, the financial statement reporting entity includes the County of Erie, New York (the primary government) and its significant component units: the Buffalo and Erie County Public Library, the Erie County Medical Center Corporation and its three component units (i.e., Research for Health in Erie County, Inc., ECMC Foundation, Inc. and The Grider Initiative, Inc.), two component units of the Erie Community College proprietary fund (i.e., the Auxiliary Services Corporation of Erie Community College, Inc. and the Erie Community College Foundation, Inc.), the Erie County Fiscal Stability Authority, the Erie Tobacco Asset Securitization Corporation (“ETASC”), and the Buffalo and Erie County Industrial Land Development Corporation, Inc. (“ILDC”). Additional detailed information relating to the specific organizations and the manner of inclusion (discrete presentation or blending) in the reporting entity as component units, and the basis for making such determinations, are also discussed in Note I (B) to the financial statements. ii

Erie County Fiscal Stability Authority

In July 2005, the New York State Legislature and Governor created the Erie County Fiscal Stability Authority (“ECFSA”) to monitor the County’s finances. Under the Erie County Fiscal Stability Authority Act (“Act”), the legislation establishing the ECFSA, the County is required to develop and submit a Four Year Financial Plan to ECFSA for its approval. Under the Act, if the County fails to meet certain criteria, or if the County meets other criteria such as the County having “incurred a major operating funds deficit of one percent or more in the aggregate results of operations of such funds of the County during its fiscal year,” (§ 3959 of the Act) the ECFSA may declare and enter into a “control period.” Under the Act, in a control period, the ECFSA may engage in a number of actions including establishing a wage and/or hiring freeze, setting maximum levels of County spending and requiring its approval for any County borrowing. On November 3, 2006, citing deficiencies in the County’s 2007- 2010 Four Year Financial Plan, ECFSA imposed a control period on Erie County, which continued until June 2009, at which time the ECFSA voted to return to an advisory status in which it continues to function.

ECONOMIC CONDITION AND OUTLOOK

Local Economy

Historically the local economy was built on railroad commerce, steel manufacturing, automobile production, Great Lakes shipping and grain storage. However, following heavy job losses in the manufacturing sector in the 1970’s and early 1980’s, the local economy has become more diversified with growth in the financial, health and service sectors. This diversification has cushioned local impacts during economic downturns, but redevelopment of the local economic base and improvement of the local economy has been a gradual, sometimes sporadic, ongoing process since the mid-1980s.

With respect to the years 2001 to 2012, after the unemployment rate hovered at approximately 5.0 percent during most of the period (i.e., 2001-2008), unemployment in Erie County increased dramatically through 2009 into 2012 as a result of the worldwide recession. Erie County’s unemployment rate in 2017 averaged 5.2 percent, compared to 4.7 percent in New York State and 4.4 percent nationally (source Erie County and NYS: New York State Department of Labor, nationally: United States Bureau of Labor Statistics).

Erie County has increasingly become a center of bioinformatics and medical research including development at the University at Buffalo, Hauptman-Woodward Medical Research Institute, and Roswell Park Cancer Institute. The Buffalo Niagara Medical Campus in downtown Buffalo has continued to grow since its inception in 2001.

Under the New York State's "Buffalo Billion" economic development initiative, the State has committed $1 billion in resources for the purpose of creating hundreds new jobs to spur the local economy. As a result a wide range of projects are underway.

Economic development initiatives continue to progress on the Buffalo Niagara Medical campus, such as Kaleida Health’s $270 million John R. Oishei Children’s Hospital. New York State provided $35 million for the project to close a funding gap, including $15 million from the Buffalo Billion, and $20 million from other State resources. The hospital opened in 2017. (Source: buffalobillion.ny.gov)

iii Across the street from the Oishei Children’s Hospital, the new $375 million Jacobs School of Medicine and Biomedical Sciences building for the State University of New York at Buffalo, an eight story 628,000 square foot building was completed in 2017. The move into the new downtown building began in November, 2017. (Source: buffalo.edu)

On July 15, 2015, the State unveiled plans for the Western New York Workforce Training Center, a new hub that will focus primarily on training for careers in the advanced manufacturing and energy sectors. The center will be named the “Northland Workforce Training Center”. The $44 million project includes funding of $29 million from the Buffalo Billion and $15 million from the New York Power Authority. The center is scheduled for completion in July, 2018. (Source: buffalobillion.ny.gov)

OTHER RELEVANT INFORMATION

Relevant Financial Policies

The County Charter, amended by Local Law 3-2006 and the Budget Modernization Act Local Law 2-2012, includes specific provisions for fund balance. The Charter requires the County to establish and maintain “a balance in the General Fund established in the budget equal to or greater than five percent of the amount contained in the budget of the Fund in the immediately preceding fiscal year.” The Charter also provides for limits and specific requirements governing the County’s use/appropriation of fund balance including legislative approval and that the County may not appropriate fund balance below the five percent level.

Monthly Accrual/Monitoring System

Since 1985, the County has maintained a Budget Monitoring System which compares budgetary estimates at the department and account level to fully accrued actual data on a monthly basis. The monitoring reports are used as a management tool during the fiscal year. All major variances are reconciled and, as appropriate, corrective measures are taken to ensure any projected deficit condition will be prevented or minimized. The County Administration is also required to submit monthly budget monitoring reports to the County Legislature.

Independent Audit

Since 1975, it has been the County's policy to have an independent audit of its annual financial statements performed by a certified public accounting firm. The Charter provides for an independent Audit Committee that is responsible for recommending one or more specific firms to conduct annual audits of the County and the Erie Community College. The County has complied with the Charter’s requirement to have an independent audit performed and the auditors’ opinion is provided in the Financial Section of this report.

Erie County’s 2018 Budget

Under the Charter, the County Executive is required to submit the tentative annual budget to the County Legislature by October 15th. On October 15, 2017, the County Executive presented his 2018 Tentative Budget to the Legislature for review and action. On December 7, 2017, the County Legislature adopted the 2018 Amended Budget.

Government Finance Officers Association

Certificate of Achievement for Excellence in Financial Reporting

Presented to

County of Erie

New York

For its Comprehensive Annual Financial Report for the Fiscal Year Ended

December 31, 2016

Executive Director/CEO

vi COUNTY OF ERIE, NEW YORK ORGANIZATIONAL CHART December 31, 2017

CITIZENS OF ERIE COUNTY

COUNTY COUNTY COUNTY DISTRICT SHERIFF COMPTROLLER LEGISLATURE CLERK EXECUTIVE ATTORNEY

BOARD OF ECC BOARD ELECTIONS ENVIRONMENT BUDGET & PERSONNEL REAL PROPERTY & PLANNING MANAGEMENT TAX OF TRUSTEES

COUNTY PUBLIC EEO VETERAN'S ATTORNEY ADVOCACY AFFAIRS

LABOR PROBATION EMERGENCY CENTRAL RELATIONS SERVICES POLICE SERVICES

INFORM ATION & SOCIAL PUBLIC PARKS & SUPPORT SERVICES SERVICES WORKS RECREATION

HEALTH PURCHASING MENTAL HEALTH SENIOR SERVICES

vii COUNTY OF ERIE, NEW YORK SUMMARY OF ELECTED OFFICIALS December 31, 2017

COUNTY DISTRICT COUNTY COUNTY CLERK SHERIFF EXECUTIVE ATTORNEY COMPTROLLER Michael P. Kearns Mark C. Poloncarz John J. Flynn Timothy B. Howard Stefan I. Mychajliw

ERIE COUNTY LEGISLATORS

District No. 1 Barbara Miller-Williams District No. 7 Patrick B. Burke

District No. 2 Betty Jean Grant District No. 8 Ted B. Morton

District No. 3 Peter J. Savage III District No. 9 Lynne M. Dixon

District No. 4 Kevin R. Hardwick District No. 10 Joseph C. Lorigo

District No. 5 Thomas A. Loughran District No. 11 John J. Mills

District No. 6 Edward A. Rath III

viii

FINANCIAL SECTION

This section contains the following:

INDEPENDENT AUDITORS' REPORT

MANAGEMENT’S DISCUSSION AND ANALYSIS

BASIC FINANCIAL STATEMENTS

REQUIRED SUPPLEMENTARY INFORMATION

COMBINING AND INDIVIDUAL FUND STATEMENTS AND SCHEDULES

Drescher & Malecki LLP 3083 William Street, Suite 5 Buffalo, New York 14227 Telephone: 716.565.2299 Fax: 716.565.2201 Certified Public Accountants INDEPENDENT AUDITORS’ REPORT

Honorable County Executive Honorable County Comptroller Honorable Members of the County Legislature County of Erie, New York:

Report on the Financial Statements

We have audited the accompanying financial statements of the governmental activities, the business-type activities, the discretely presented component units, the aggregate discretely presented component units, each major fund, and the aggregate remaining fund information of the County of Erie, New York (the “County”), as of and for the year ended December 31, 2017 (with the Erie Community College for the year ended August 31, 2017), and the related notes to the financial statements, which collectively comprise the County’s basic financial statements as listed in the table of contents.

Management’s Responsibility for the Financial Statements

The County’s management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.

Auditor’s Responsibility

Our responsibility is to express opinions on these financial statements based on our audit. We did not audit the financial statements of the Erie County Fiscal Stability Authority (“ECFSA”), which represent 5.9% and 3.5% of the assets and revenues, respectively, of the governmental activities. We did not audit the financial statements of the Erie County Industrial Land Development Corporation and Subsidiary (“ILDC”), which represents 7.2% and 5.2% of the assets and revenues, respectively, of the business-type activities. We did not audit the financial statements of Erie County Medical Center Corporation (“ECMCC”), a discretely presented component unit. We did not audit the financial statements of the Erie Community College Foundation, Inc. (“Foundation”), which is shown as an aggregate discretely presented component unit, and represents 64.4% and 39.8% of the assets and revenues, respectively, of the aggregate discretely presented other component units. Those financial statements were audited by other auditors whose reports thereon have been furnished to us, and our opinion, insofar as it relates to the amounts included for the ECFSA, ILDC, ECMCC, and Foundation, is based solely on the reports of such other auditors. We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

- 1 - !# %# #% # * Opinions ! # ### +#<=>?>@ #X[# #\] Other Matters Required Supplementary Information #\]^_ <#`^]#! ] ^#X]{ %*^ ##\] ^ #^ *%# %# Other Information |# +#!#]+! [[]]]] #^

The Combining and Individual Fund Financial Statements and Schedules, as listed in the table of contents, are the responsibility of management and were derived from and relate directly to the underlying accounting and other records used to prepare the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America by us and the other auditors. In our opinion, the Combining and Individual Fund Financial Statements and Schedules, as listed in the table of contents, are fairly stated in all material respects in relation to the basic financial statements as a whole.

The Introductory Section and Statistical Section, as listed in the table of contents, have not been subjected to the auditing procedures applied in the audit of the basic financial statements and, accordingly, we do not express an opinion or provide any assurance on them.

June 21, 2018

- 3 -

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______COUNTY OF ERIE, NEW YORK • 4

MANAGEMENT’S DISCUSSION AND ANALYSIS Year Ended December 31, 2017 (unaudited)

This section of the County of Erie, New York’s (the “County”) comprehensive annual financial report presents a discussion and analysis of the County’s financial performance during the year ended December 31, 2017, and incorporates financial information from the year ended December 31, 2016 for comparative analysis purposes. Please read it in conjunction with the County’s basic financial statements following this section. For comparative purposes, certain items from the prior year have been reclassified to conform with the current year presentation. All amounts in this Management’s Discussion and Analysis, unless otherwise indicated, are expressed in thousands of dollars.

FINANCIAL HIGHLIGHTS

The primary government’s liabilities and deferred inflows of resources exceeded its assets and deferred outflows of resources at the close of the 2017 fiscal year by $99,353. This consists of $84,263 restricted for specific purposes (restricted net position), $488,544 net investment in capital assets and unrestricted net position of $(672,160) at December 31, 2017.

As a result of current year activity, the primary government’s total net position decreased by $28,333. Governmental activities decreased the County’s net position by $29,413 and business-type activities decreased the County’s net position by $1,080.

As of December 31, 2017, the County’s governmental funds reported combined fund balances of $358,084, an increase of $48,464 in comparison to the prior year. Approximately 28.4% of the total combined governmental funds fund balance, $101,495 is available to meet the County’s current and future needs (unassigned fund balance).

At the end of the fiscal year, unassigned fund balance for the General Fund was $101,939, or 73.5%, of the total General Fund fund balance of $138,776. Nonspendable, restricted and assigned General Fund fund balance totaled $36,837 at December 31, 2017.

The total bonded debt of the primary government increased by $100,217, or 11.6%, during the 2017 fiscal year.

OVERVIEW OF THE FINANCIAL STATEMENTS

The discussion and analysis provided here is intended to serve as an introduction to the County’s basic financial statements. The County’s basic financial statements include three components: 1) government-wide financial statements, 2) fund financial statements, and 3) notes to the financial statements. In addition to the basic financial statements, other supplementary information is included.

Government-wide Financial Statements - The government-wide financial statements are designed to provide readers with a broad overview of County finances, in a manner similar to a private-sector business.

The Statement of Net Position presents financial information on all County assets, liabilities, and deferred inflows/outflows of resources, with the difference reported as net position. Over time, increases or decreases in net position may serve as a useful indicator of whether the financial position of the County is improving or deteriorating.

The Statement of Activities presents information showing how net position changed during the most recent fiscal year. All changes in net position are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of related cash flows. Thus, revenues and expenses are reported in this statement for some items that will result in cash flows in future fiscal periods (e.g., uncollected taxes and earned but unused vacation leave).

Both of these government-wide financial statements distinguish functions of the County that are principally supported by taxes and intergovernmental revenues (governmental activities) from other functions that are intended to recover all, or a significant portion, of their costs through user fees and charges (business-type activities). The governmental activities of the County include general government, public safety, health, transportation, economic assistance and opportunity, culture and recreation, education, and home and community service.

5 • COUNTY OF ERIE, NEW YORK ______

The business-type activities of the County include Erie Community College (“College”), the Buffalo and Erie County Industrial Land Development Corporation (“ILDC”) and the Utilities Aggregation Fund. A fiscal year ending August 31 is mandated by New York State law for the College. Accordingly, financial information for the College is presented as of and for the fiscal year then ended.

On July 12, 2005, the Governor of the State of New York signed legislation creating the Erie County Fiscal Stability Authority (“ECFSA”). The ECFSA began its work during 2005 in an advisory role and provides the County with financial oversight while giving local leaders the ability to improve the County’s fiscal condition without further State intervention. The ECFSA is included within governmental activities in the government-wide financial statements.

The government-wide financial statements include not only the County itself (i.e., the primary government) but also the legally separate Buffalo and Erie County Public Library (the “Library”), Erie County Medical Center Corporation (the “ECMCC”) and other component units. Financial information for these discretely presented component units of the County is reported separately from the financial information presented for the primary government itself. The Library does not issue separate financial statements.

Fund Financial Statements – A fund is a grouping of related accounts that is used to maintain control over resources that have been segregated for specific activities or objectives. The County, like other state and local governments, uses fund accounting to ensure and demonstrate finance-related legal compliance. All funds of the County are divided into three categories: governmental funds, proprietary funds, and fiduciary funds.

Governmental funds are used to account for essentially the same functions reported as governmental activities in the government-wide financial statements. However, unlike the government-wide financial statements, governmental funds financial statements focus on near-term inflows and outflows of spendable resources, as well as on balances of spendable resources available at the end of the fiscal year. Such information may be useful in evaluating a county’s near-term financing requirements.

Because the focus of governmental funds is narrower than that of the government-wide financial statements, it is useful to compare the information presented for governmental funds with similar information presented for governmental activities in the government-wide financial statements. By doing so, readers may better understand the long-term impact of the government’s near-term financing decisions. Both the governmental funds’ Balance Sheet and Statement of Revenues, Expenditures and Changes in Fund Balances provide a reconciliation to facilitate this comparison between governmental funds and governmental activities.

The County maintains fourteen (14) individual governmental funds. Additionally, the County reports the activities of its blended component units within its governmental funds. Information is presented separately in the governmental funds’ Balance Sheet and Statement of Revenues, Expenditures and Changes in Fund Balances for the General Fund, General Fund of the ECFSA blended component unit (reported as a major special revenue fund) and the Debt Service Fund of the ECFSA blended component unit (reported as a major fund). Data from the other governmental funds and blended component units are combined into a single, aggregated presentation.

The County adopts an annual appropriated budget for its General Fund. A budgetary comparison statement has been provided for the General Fund.

Proprietary funds - The County maintains one type of proprietary fund. Enterprise funds are used to report the same functions presented as business-type activities in the government-wide financial statements. The County uses enterprise funds to account for the College, ILDC and the Utilities Aggregation Fund, which is used to account for the bulk purchase and resale of gas, oil, and electric utilities.

Proprietary funds provide the same type of information as the government-wide financial statements, only in more detail. The College is considered to be a major proprietary fund of the County.

Fiduciary funds are used to account for resources held for the benefit of parties outside the government. Fiduciary funds are not reflected in the government-wide financial statements because the resources of those funds are not available to support the County’s own programs. The County has one fiduciary fund, the Agency Fund, which is used to account for funds held by the County as agent for employee withholdings, guarantee and bid deposits, court funds, monies due to other governments, and other miscellaneous items.

Notes to the Financial Statements – The notes to the financial statements provide additional information that is essential to a full understanding of the data provided in the government-wide and fund financial statements. ______COUNTY OF ERIE, NEW YORK • 6

Required Supplementary Information – In addition to the basic financial statements and accompanying notes, this report also presents certain required supplementary information concerning the County’s progress in funding its obligation to provide other post-employment benefits to its employees and the County’s net pension liability/(asset). Required supplementary information can be found immediately following the notes to the financial statements.

The Combining and Individual Fund Financial Statements provide combining statements for nonmajor governmental funds; comparisons of budgetary and actual data for certain special revenue funds and debt service fund; statement of changes in assets and liabilities for the agency fund; fund financial statements for the discretely presented Library component unit; and combining statements for other component units. They are presented immediately following the required supplementary information.

GOVERNMENT-WIDE FINANCIAL ANALYSIS

As noted earlier, net position over time may serve as a useful indicator of a government’s financial position. In the case of the County’s primary government, liabilities and deferred inflows of resources exceeded assets and deferred outflows of resources by $99,353 at the close of the most recent fiscal year.

Summary Statement of Net Position as of December 31, 2017 and 2016

PRIMARY GOVERNMENT

Governmental Business-type Activities Activities Total 2017 2016 2017 2016 2017 2016 as restated as restated Current and other assets ...... $ 842,216 $ 682,624 $ 44,454 $ 43,405 $ 886,670 $ 725,809 Noncurrent and capital assets ...... 845,998 861,898 44,070 46,244 890,068 906,090

Total assets ...... 1,688,214 1,544,522 88,524 89,649 1,776,738 1,631,899

Total deferred outflows of resources . . . 104,297 183,407 15,862 16,041 120,159 199,448

Current and other liabilities ...... 264,485 256,416 17,172 18,386 281,657 274,797 Long-term liabilities ...... 1,594,047 1,504,642 100,913 98,736 1,694,960 1,603,378

Total liabilities ...... 1,858,532 1,761,058 118,085 117,122 1,976,617 1,878,175

Total deferred inflows of resources . . . . 17,454 20,933 2,179 5,551 19,633 26,484 Net position: Net investment in capital assets ...... 451,024 455,145 37,520 34,848 488,544 487,954 Restricted ...... 84,055 64,928 208 210 84,263 64,928 Unrestricted ...... (618,554) (574,135) (53,606) (52,041) (672,160) (626,194)

Total net position ...... $ (83,475) $ (54,062) $ (15,878) $ (16,983) $ (99,353) $ (73,312)

A significant portion of the County’s net position at December 31, 2017, $488,544, reflects its investment in capital assets (e.g., land, buildings, improvements, infrastructure, and equipment), less any related debt used to acquire those assets that is still outstanding and any unspent proceeds from bond issues. The County uses these capital assets to provide services to citizens; consequently, these assets are not available for future spending. Although the County’s investment in its capital assets is reported net of related debt, it should be noted that the resources needed to repay this debt must be provided from other sources, since the capital assets themselves cannot be used to liquidate these liabilities.

An additional portion of the County’s net position, $84,263, represents resources that are subject to external restrictions on how they may be used.

The remaining component of the County’s net position, $(672,160), represents unrestricted net position which reflects all liabilities that are not related to the County’s capital assets and which are not expected to be repaid from restricted resources. Long-term liabilities are typically funded annually in the funds with revenues of that year. The combined total of (1) Erie Tobacco Asset Securitization Corporation (“ETASC”, a blended component unit of the County) bonds net of discount, ($338,649), issued to be paid back with future tobacco proceeds which are anticipated to be received annually over the next forty-two (42) years, and (2) the long-term liability associated with other post-employment benefits (“OPEB”) ($541,358), is greater than this deficit. As the revenue recognition criteria for the future funding of these liabilities has not been met, no assets have been recorded to offset these liabilities. 7 • COUNTY OF ERIE, NEW YORK ______

At the end of the current fiscal year, the County is able to report positive balances in two of the three categories of net position for the County as a whole, and in one category for its business-type activities. Governmental and business-type activities have an unrestricted net position of $(618,554) and $(53,606), respectively, at December 31, 2017.

The following table indicates the changes in net position for governmental and business-type activities for the current and prior fiscal years:

Summary of Changes in Net Position for the Years Ended December 31, 2017 and 2016

Governmental Business-type Activities Activities Total 2017 2016 2017 2016 2017 2016 Revenues: Program revenues: Charges for services ...... $ 95,229 $ 82,873 $ 52,807 $ 50,513 $ 148,036 $ 133,386 Operating grants and contributions ...... 396,823 403,575 15,457 9,982 412,280 413,557 Capital grants and contributions ...... 23,807 9,177 - - 23,807 9,177 General revenues: Property taxes ...... 290,884 283,647 - - 290,884 283,647 Sales and use taxes ...... 779,855 756,591 - - 779,855 756,591 Transfer and other taxes ...... 13,167 14,054 - - 13,167 14,054 Federal, state and local appropriations ...... - - 65,797 68,345 65,797 68,345 Unrestricted interest earnings ...... 1,373 694 71 31 1,444 725 Miscellaneous and other ...... 27,799 21,293 - - 27,799 21,293

Total revenues ...... 1,628,937 1,571,904 134,132 128,871 1,763,069 1,700,775

Expenses: General government ...... 444,172 432,365 - - 444,172 432,365 Public safety ...... 179,735 183,969 - - 179,735 183,969 Health ...... 97,574 86,713 - - 97,574 86,713 Transportation ...... 101,601 82,061 - - 101,601 82,061 Economic assistance and opportunity ...... 629,158 620,669 - - 629,158 620,669 Culture and recreation ...... 22,674 20,002 - - 22,674 20,002 Education ...... 69,060 72,784 - - 69,060 72,784 Home and community service ...... 62,452 59,475 - - 62,452 59,475 Interest and fiscal charges ...... 33,870 45,001 - - 33,870 45,001 College ...... - - 134,468 138,975 134,468 138,975 ILDC ...... - - 524 475 524 475 Purchase and resale of utilities ...... - - 16,114 15,105 16,114 15,105

Total expenses ...... 1,640,296 1,603,039 151,106 154,555 1,791,402 1,757,594

Excess (deficiency) before transfers ...... (11,359) (31,135) (16,974) (25,684) (28,333) (56,819)

Transfers ...... (18,054) (18,054) 18,054 18,054 - -

Change in net position ...... (29,413) (49,189) 1,080 (7,630) (28,333) (56,819)

Net position - beginning of year…...... (54,062) (4,873) (16,983) (11,392) (71,045) (16,265)

Restatement ...... - - 25 2,039 25 2,039 Net position - ending ...... $ (83,475) $ (54,062) $ (15,878) $ (16,983) $ (99,353) $ (71,045)

______COUNTY OF ERIE, NEW YORK • 8

Governmental Activities

During the year ended December 31, 2017, governmental activities decreased the County’s net position by $29,413. Revenues and expenses increased by $57,033 (3.6%) and $37,257 (2.3%) respectively, from 2016 to 2017. Key elements of these increases are as follows:

Charges for services increased $12,356 (14.9%) which was mainly due to increased sewer user charges ($8,904) and increased refunds from prior year’s expense ($2,954). Capital grants and contributions increased $14,630 (159.4%) during the year mainly as a result of state and federal aid increases for various College ($6,469) and road and bridge ($3,658) projects. The $23,264 (3.1%) increase in the sales and use taxes category was primarily the result of modest growth in taxable sales. General government expenses increased by $11,807 (2.7%) primarily due to an increase in the distribution of sales tax to other municipalities ($9,408) along with an increase in OPEB expense ($942). Health expenses increased $10,861 (12.5%) primarily due to increase in contractual mental health services ($8,969) along with an increase in OPEB expense ($738). Transportation expenses increased $19,540 (23.8%) primarily due to an increase in repairs and maintenance ($12,267), increase in equipment ($1,422) and increased depreciation expense ($862).

Business-type Activities

Business-type activities increased the County’s net position by $1,080 in the 2017 fiscal year compared to a decrease of $7,630 in 2016. The College generated a decrease in net position of $5,363 and a decrease of $4,798 (restated) for the years ended August 31, 2017 and 2016, respectively. The College’s operating loss at August 31, 2017 was less than the operating loss at August 31, 2016 by $5,060, as operating revenues generated increased $585 and operating expenses decreased $4,476. Revenues generated during the fiscal year ended August 31, 2017 increased primarily as a result of increases in non-credit enrollment resulting in net student tuition and fees. The decrease in expenses is primarily attributable to the savings recognized in salaries, scholarships, supplies and services. The County sponsorship share of support to the College for the College’s fiscal year ended August 31, 2017 was $18,054, and is reported as a 2017 operating transfer to the College from the County’s General ($16,254) and Special Capital ($1,800) Funds. The ILDC generated an increase in net position of $6,480 and a decrease of $30 for the years ended December 31, 2017 and 2016, respectively. The large increase was due to an increase in grant revenue of $6,520.

FINANCIAL ANALYSIS OF THE COUNTY’S FUNDS

As noted earlier, the County uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements.

Governmental funds - The general government functions are contained in the General, Special Revenue, Debt Service, and Capital Projects Funds. The focus of the County’s governmental funds is to provide information on near-term inflows, outflows, and balances of spendable resources. Such information is useful in assessing the County’s financing requirements. In particular, unassigned fund balance, which is available to meet the County’s current and future operational needs, may serve as a useful measure of a government’s net resources available for spending at the end of the fiscal year. At December 31, 2017, the County’s governmental funds reported combined fund balances of $358,084, which is an increase of $48,464 in comparison with the prior year.

Nonspendable fund balance totaling $12,251 consists of prepaid items. Nonspendable amounts represent net current financial resources that are either not in in spendable form or legally or contractually required to be maintained intact.

Restricted fund balance in the amount of $173,426 is constrained to specific purposes and consists of $162 for education, advocacy and increased public awareness of handicapped parking laws, $30,007 for community development loans, $45,060 for the future repayment of bonded debt service and $98,197 to fund capital projects and the purchase of capital assets.

9 • COUNTY OF ERIE, NEW YORK ______

Assigned fund balance includes amounts intended to be used for a specific purpose that are subject to a purpose constraint imposed by a formal action of the Erie County Legislature. Significant assignments by the County at December 31, 2017 include $22,228 to meet expenditure requirements in the 2018 fiscal year, $1,500 for future settlements of various claims and litigation, $15,246 for approved supplemental appropriations in the 2018 fiscal year, $6,884 to fund year-end encumbrances, $2,372 to cover the cost of road repairs and $22,272 that represents the positive residual balances of the County’s Special Revenue Funds that have not been classified as nonspendable, restricted or assigned for another purpose.

Approximately 28.4% of the County’s total fund balances consists of unassigned fund balance ($101,495). Deficit unassigned fund balance amounts in the Grants and the Community Development Special Revenue Funds amounting to $413 are caused by nonspendable fund balance amounts recorded for prepaid items.

Following is a discussion of the significant balances and operations of the major and selected nonmajor funds.

General Fund – The General Fund is the chief operating fund of the County. At December 31, 2017, unassigned fund balance of the General Fund was $101,939, while total fund balance was $138,776. As a measure of the General Fund’s liquidity, it is useful to compare both unassigned fund balance and total fund balance to total fund expenditures. Unassigned fund balance represents 7.6% of total expenditures (excluding other financing uses), while total fund balance represents 10.4% of that same amount. Fund balance in the County’s General Fund increased by $18,664 during the 2017 fiscal year compared to during the 2016 fiscal year, when the General Fund experienced a decrease of $9,388.

ECFSA General Fund – This fund is the chief operating fund of the ECFSA and is reported as a special revenue fund of the County. Total fund balance at the end of the current fiscal year was $420, an increase of $137 from the 2016 amount, and is classified as nonspendable for prepaid items ($9) and assigned fund balance ($411) in the County’s fund financial statements.

ECFSA Debt Service Fund – At year-end, the ECFSA held County cash in the amount of $46,805 that was accumulated by intercepting and withholding the County’s sales tax receipts from New York State. These monies will be used for future debt service payments.

Road Special Revenue Fund – Ending fund balance decreased by $2,166 compared to a $1,553 increase during 2016. Total expenditures increased by $86. Total revenues decreased by $741 which is primarily due to a decrease in transfer taxes collected from real property tax sales ($914). Net transfers also decreased by $2,892.

Sewer Special Revenue Fund – Total fund balance at the end of the current fiscal year was $40,807, an increase of $1,359 from the 2016 amount. Revenues increased by $1,354 primarily from an increase in user charges ($8,954) offset by a decrease from real property taxes ($8,040).

Capital Projects Funds – The County reports five (5) capital projects funds which account for the construction and reconstruction of general public improvements. At the end of the 2017 fiscal year, the total fund balances restricted for future capital projects amounted to $98,197, of which $27,910 was encumbered for contracted projects underway.

During 2017, the County’s capital outlay decreased in the General Government Buildings, Equipment and Improvements Fund ($7,989), the Highways, Roads, Bridges and Equipment Fund ($35) and the Sewers, Facilities, Equipment and Improvements Fund ($12,140), and increased in the Special Capital Projects Fund ($14,220). The County issued non-interest bearing bond anticipation notes ($1,591) that was purchased by the New York State Environment Facilities Corporation. In November of 2017 the short-term BANS were converted to long-term bonds.

______COUNTY OF ERIE, NEW YORK • 10

Proprietary funds - The County’s proprietary funds provide the same type of information found in the government-wide financial statements but in more detail. The College had an unrestricted net position of $(61,599) at August 31, 2017, while ILDC had unrestricted net position of $6,525 at December 31, 2017.

The following table shows actual revenues, expenses, and results of operations for the current and prior fiscal years:

Summary of Revenues, Expenses, and Changes in Net Position - Proprietary Funds For the Year Ended December 31, 2017 and 2016 Nonmajor Major Fund Major Fund Fund College ILDC Utilities (August 31,) Aggregation Total 2017 2016 2017 2016 2017 2016 2017 2016 (a s re sta te d) (a s re sta te d) (a s re sta te d) (a s re sta te d) Operating revenues ...... $ 44,292 $ 43,708 $ 484 $ 445 $ 16,077 $ 14,342 $ 60,853 $ 58,495 Operating expenses ...... 134,406 136,843 524 475 16,114 15,105 151,044 152,423 Operating (loss) income . . . . (90,114) (93,136) (40) (30) (37) (763) (90,191) (93,929) Non-operating revenues, net . 66,697 70,283 6,520 - - - 73,217 70,283 Net (loss) income before contributions and transfers . (23,417) (22,852) 6,480 (30) (37) (763) (16,974) (23,645) Transfers ...... 18,054 18,054 - - - - 18,054 18,054

Change in net position $ (5,363) $ (4,798) $ 6,480 $ (30) $ (37) $ (763) $ 1,080 $ (5,591)

The net loss before contributions and transfers of enterprise funds during 2017 of $16,974 is comprised of a net loss of $23,417 for the College, a gain of $6,480 for ILDC and a net loss of $37 for the Utilities Aggregation Fund.

The College reported a total deficit net position of $24,079 at August 31, 2017. The College’s net position has decreased significantly over the past ten fiscal years as a result of the adoption in 2007 of Governmental Accounting Standards Board (“GASB”) Statement No. 45, Accounting and Financial Reporting for Postemployment Benefits Other Than Pensions. The ILDC reported net position of $6,733 at December 31, 2017. Other factors concerning the activities of these funds have been addressed in the previous discussion of the County’s business- type activities.

GENERAL FUND BUDGETARY HIGHLIGHTS

An annual appropriated budget is adopted for the General Fund on a basis consistent with generally accepted accounting principles, except that encumbrances are reported as budgeted expenditures in the year of incurrence of commitment to purchase.

During the 2017 fiscal year there was a $415,553 decrease in total budgeted revenues between the original and final budget. The main component of the net decrease is the reclassification of $439,840 from the ‘Sales and use taxes’ line to the ‘Transfers in’ line to match sales tax transfers received from the ECFSA which intercepts the County portion of sales tax remitted by the New York State Department of Taxation and Finance. Major increases were in the miscellaneous category ($13,586), including a local source – ECMCC adjustment ($12,780), and in the intergovernmental category ($3,869) for mental health ($1,174) and social services ($1,880).

The budget for other financing sources was increased during the year by $439,440, primarily for the sales and use taxes reclassification referred to in the previous paragraph.

Budgeted appropriations and other financing uses increased by $28,848. Budgeted expenditures increased in general government support ($7,114), primarily for claims and judgments ($1,200), for a foreclosure sale ($2,000) and Department of Information and Support Services utility expenditures ($239); health ($2,916), primarily for professional health services ($500) and for various mental health programs ($1,503); and, economic assistance ($19,043), primarily due to an increase in DSH Expense ($25,769).

For the year, actual revenues fell short of budget by $12,568. This was mainly due to negative budgetary variances in the intergovernmental category of $27,944, mainly due to lower than expected claims for various social services programs ($22,599) and the persons with special needs program ($1,501), mental health programs ($360) and facility incentive aid ($271). Sales and 11 • COUNTY OF ERIE, NEW YORK ______

use taxes exceeded budget by $2,373 as actual taxable sales exceeded projections ($2,371), Miscellaneous revenues exceeded budget by $8,441 primarily as a result of local source ECMCC revenue ($4,260), unanticipated prior year revenue ($2,328), various refunds of prior year expenditures for various social services programs ($1,164) and a higher than anticipated premium on the issuance of a revenue anticipation note ($782). Actual expenditures were less than budget by $42,558 primarily due to savings in various categories as follows: general government support ($6,739), mainly due to less than anticipated payroll costs ($1,830) and fringe benefits ($1,659) in various departments, lower than expected spending for foreclosure auctions ($1,195) and maintenance contracts ($713), and savings in various department’s professional service contracts and fees accounts ($779); public safety ($10,579), mostly for fringe benefits ($1,315) and professional service contracts and fees ($381) in various departments, and interdepartmental billings from other functions ($832); economic assistance and opportunity ($24,080), primarily related to a savings in DSH Expense ($11,280), DSS child care ($7,153) and interdepartmental billings from other functions ($1,392); and education ($3,515), chiefly for a children with special needs program ($3,304).

The County experienced a positive variance in other financing uses ($3,039), as transfers to the Road ($2,600), Grant ($264) and Debt Service funds were less than anticipated.

The total budget to actual variance for the year amounted to a positive $29,990.

CAPITAL ASSETS AND DEBT ADMINISTRATION

Capital Assets

The County’s investment in capital assets for its governmental and business-type activities as of December 31, 2017, amounted to $883,518 (net of accumulated depreciation). This investment in capital assets includes land, infrastructure, buildings and improvements, improvements other than buildings, equipment, College library collections, and construction in progress. The total decrease in the County’s investment in capital assets for the current period was 1.6%.

The County’s infrastructure assets are recorded at historical cost or estimated historical cost in the government-wide financial statements as required by GASB. The County has elected to depreciate infrastructure assets.

Major capital asset events during the current fiscal year included an increase to the sewer and transportation networks of $24,301 and $27,820 respectively. Construction in progress decreased by $23,831.

Capital assets net of depreciation for the governmental and business-type activities are presented below:

Summary of Capital Assets at December 31, 2017 and 2016 (net of depreciation)

Governmental Business-type Activities Activities Total 2016 2017 2016 2017 (restated) 2017 2016 Land ...... $ 34,864 $ 34,536 $ - $ - $ 34,864 $ 34,536 Buildings and improvements ...... 257,288 270,998 29,785 26,036 287,073 297,034 Improvements other than buildings ...... 14,453 9,522 24 27 14,477 9,549 Sewer and transportation networks ...... 450,671 431,598 - - 450,671 431,598 Machinery and equipment ...... 12,235 14,926 5,183 5,709 17,418 20,635 Library collections ...... - - 1,097 1,105 1,097 1,105 Construction in progress ...... 76,487 100,318 1,431 3,448 77,918 103,766

Total ...... $ 845,998 $ 861,898 $ 37,520 $ 36,325 $ 883,518 $ 898,223

Additional information on the County’s capital assets can be found in Note I(G)(4) and Note VII of this report.

______COUNTY OF ERIE, NEW YORK • 12

Debt Administration

At December 31, 2017, the primary government had total bonded debt outstanding of $964,131, as compared to $863,914 in the prior year. During the year, payments and other reductions of bonded debt amounted to $156,591, while additions and accretions amounted to $256,808. The issuance of long-term debt is a direct function of the County and is reported within the governmental activities columns in the government-wide financial statements.

Summary of Long-term Bonded Debt Outstanding at December 31, 2017 and 2016

Governmental Activities 2017 2016 Erie County bonds ...... x $ 407,789 $ 417,738 Less: ECFSA mirror bonds ...... x (230,930) (231,750) x Net Erie County bonds ...... x 176,859 185,988 ECFSA bonds ...... x 383,830 300,145 ETASC tobacco settlement bonds ...... x 349,448 344,052 Unamortized bond discounts - ETASC ...... x (10,799) (10,893) Unamortized bond premiums ...... x 64,793 44,622 x Total primary government long-term bonded debt outstanding ...... x $ 964,131 $ 863,914

Tobacco settlement bonds are payable only from the assets of ETASC and are not legal obligations of the County.

New York State statutes limit the amount of general obligation debt a governmental entity may issue to 7% of its five-year valuation. The current debt-limitation for the County is $3,517,372, which is only 13.84% exhausted by the County’s outstanding general obligation and sewer debt of $486,699 (which includes a $78,910 bond guaranty to ECMCC).

The County’s current bond ratings are as follows: Standard & Poor’s at AA- (stable outlook), Moody's at A2 (stable outlook) and Fitch Ratings at A+ (stable outlook).

Additional information on the County’s long-term debt can be found in Note XIII of this report.

REQUESTS FOR INFORMATION

This financial report is designed to provide a general overview of the County’s finances for all those with an interest in the government’s finances. Questions concerning any of the information provided in this report, or requests for additional financial information, should be addressed to the Erie County Office of the Comptroller, 95 Franklin Street, Room 1100, Buffalo, New York 14202.

______COUNTY OF ERIE, NEW YORK • 13

BASIC FINANCIAL STATEMENTS

These basic financial statements include the financial statements and related notes of the reporting entity that are essential to fair presentation of financial position and results of operations. The reporting entity includes the primary government and its discretely presented component units.

14 • COUNTY OF ERIE, NEW YORK ______

Statement of Net Position December 31, 2017 (dollars in thousands)

PRIMARY GOVERNMENT

Governmental Business-type Activities Activities Total ASSETS: Cash and cash equivalents ...... x $ 103,732 $ 39,196 $ 142,928 Investments ...... x 19,669 - 19,669 Restricted cash and cash equivalents ...... x 138,244 - 138,244 Restricted Investments ...... x 8,234 - 8,234 Receivables (net of allowances) ...... x 369,388 3,958 373,346 Due from primary government ...... x - - - Due from component unit ...... x 180,106 10,934 191,040 Internal balances ...... x 10,590 (10,049) 541 Inventories ...... x - - - Prepaid items ...... x 12,253 415 12,668 Noncurrent net pension asset ...... x - - Noncurrent other assets ...... x - 19 19 Land held for sale ...... x - 6,531 6,531 Capital assets: x Land, rare books and construction in progress ...... x 111,351 1,431 112,782 Other capital assets, net of depreciation ...... x 734,647 36,089 770,736 Total assets ...... x 1,688,214 88,524 1,776,738

DEFERRED OUTFLOWS OF RESOURCES: Deferred charge on refunding ...... x 20,432 - 20,432 Deferred outflows relating to pensions ...... x 74,891 15,862 90,753 Deferred outflow on forward purchase agreement swap ...... x 8,974 - 8,974 Other ...... x - - - Total deferred outflows of resources ...... x 104,297 15,862 120,159

LIABILITIES: Accounts payable ...... x 63,085 3,417 66,502 Accrued liabilities ...... x 58,499 5,021 63,520 Due to component unit ...... x 22,105 - 22,105 Due to primary government ...... x - - - Unearned revenue ...... x 9,571 8,734 18,305 Short-term debt ...... x 111,225 - 111,225 Long-term liabilities: x Due within one year ...... x 81,253 3,809 85,062 Due in more than one year ...... x 1,512,794 97,104 x 1,609,898 Total liabilities ...... x 1,858,532 118,085 1,976,617

DEFERRED INFLOWS OF RESOURCES: Deferred inflows relating to pensions ...... x 17,454 2,179 19,633

NET POSITION: x Net investment in capital assets ...... x 451,024 37,520 488,544 Restricted for: x Community development loans ...... 30,007 - 30,007 Capital projects ...... x 24,184 - 24,184 Debt service ...... x 29,702 - 29,702 Other purposes ...... x 162 208 370 Unrestricted ...... x (618,554) (53,606) x (672,160) Total net position ...... x $ (83,475) $ (15,878) $ (99,353)

See accompanying notes to the financial statements. ______COUNTY OF ERIE, NEW YORK • 15

COMPONENT UNITS

Library ECMCC Other

$ 9,167 $ 25,415 $ 2,121 - 43,729 4,551 - 256,641 - - - - 574 161,258 168 - 22,105 ------34 847 19,717 11 - - - - 13,956 678 - - -

11,497 8,467 - 5,891 239,735 270 27,976 791,023 7,833

- - - 3,785 67,731 - - - - - 19,350 - 3,785 87,081 -

355 43,215 39 349 69,111 905 - - - - 191,040 - 768 41,619 27 - - -

768 6,212 - 35,682 362,553 -

37,922 713,750 971

883 19,617 -

17,388 89,103 -

------53,185 3,455 (27,334) 2,449 3,407 $ (7,044) $ 144,737 $ 6,862

16 • COUNTY OF ERIE, NEW YORK ______

Statement of Activities For the year ended December 31, 2017 (dollars in thousands)

PROGRAM REVENUES

Operating Capital Charges for Grants and Grants and Functions / Programs Expenses Services Contributions Contributions Primary government: Governmental activities: General government ...... x $ 444,172 $ 30,649 $ 25,731 $ 1,492 Public safety ...... x 179,735 5,002 3,470 - Health ...... x 97,574 2,597 59,607 - Transportation ...... x 101,601 - 10,526 6,401 Economic assistance and opportunity ...... x 629,158 25,636 242,805 136 Culture and recreation ...... x 22,674 1,453 2,883 5,881 Education ...... x 69,060 95 36,170 8,920 Home and community service ...... x 62,452 29,797 4,429 977 Interest and fiscal charges ...... x 33,870 - 11,202 - x Total governmental activities ...... x 1,640,296 95,229 396,823 23,807 x Business-type activities: x College (August 31, 2017) ...... x 134,468 36,246 8,937 - ILDC ...... x 524 484 6,520 - Utilities aggregation ...... x 16,114 16,077 - - x x Total business-type activities ...... x 151,106 52,807 15,457 - Total primary government ...... x $ 1,791,402 $ 148,036 $ 412,280 $ 23,807 x Component units: x Library ...... x $ 31,528 $ 741 $ 3,157 $ - ECMCC ...... x 647,316 620,087 35,462 - Other component units ...... x 3,431 2,329 1,064 - x Total component units ...... x $ 682,275 $ 623,157 $ 39,683 $ -

General revenues: Property taxes levied for mall, sewer, and general purposes ...... Property taxes levied for library ...... Sales and use taxes ...... Transfer and other taxes ...... Unrestricted state and local appropriations ...... Federal and state student financial aid ...... Interest earnings not restricted to specific programs ...... Unrestricted interest earnings ...... Miscellaneous ...... Gain on sale of capital assets ......

Total general revenues ...... Transfers ......

Total general revenues and transfers ...... Change in net position ......

Net position - beginning, as restated ...... Net position - ending ......

See accompanying notes to the financial statements. ______COUNTY OF ERIE, NEW YORK • 17

NET (EXPENSE) REVENUE and CHANGES IN NET POSITION

PRIMARY GOVERNMENT COMPONENT UNITS

Governmental Business-type Activities Activities Total Library ECMCC Other

$ (386,300) $ - $ (386,300) $ - $ - $ - (171,263) - (171,263) - - - (35,370) - (35,370) - - - (84,674) - (84,674) - - - (360,581) - (360,581) - - - (12,457) - (12,457) - - - (23,875) - (23,875) - - - (27,249) - (27,249) - - - (22,668) - (22,668) - - - (1,124,437) - (1,124,437) - - -

- (89,285) (89,285) - - - - 6,480 6,480 - - - - (37) (37) - - - - (82,842) (82,842) - - - (1,124,437) (82,842) (1,207,279) - - -

(27,630) - - - 8,233 - - - (38) (27,630) 8,233 (38)

290,884 - 290,884 ------23,944 - - 779,855 - 779,855 - - - 13,167 - 13,167 - - - - 32,098 32,098 - - - - 33,699 33,699 ------3 1,860 - 1,373 71 1,444 - - - 27,525 - 27,525 133 130 - 274 - 274 - - - 1,113,078 65,868 1,178,946 24,080 1,990 - (18,054) 18,054 - - - - 1,095,024 83,922 1,178,946 24,080 1,990 - (29,413) 1,080 (28,333) (3,550) 10,223 (38) (54,062) (16,958) (71,020) (3,494) 134,514 6,900 $ (83,475) $ (15,878) $ (99,353) $ (7,044) $ 144,737 $ 6,862

18 • COUNTY OF ERIE, NEW YORK ______

Balance Sheet Governmental Funds December 31, 2017 (dollars in thousands)

Total Total ECFSA ECFSA Nonmajor Governmental General General Debt Service Funds Funds ASSETS: Cash and cash equivalents ...... x $ 53,816 $ 462 $ - $ 49,454 $ 103,732 Investments ...... x - - - 19,669 19,669 Restricted cash and cash equivalents ...... x 162 478 38,571 99,033 138,244 Restricted investments ...... x - - 8,234 - 8,234 Receivables (net of allowances) x Real property taxes, interest, penalties x and liens ...... x 80,577 - - 34 80,611 Other ...... x 9,553 - - 31,542 41,095 Due from other funds ...... x 103,937 - - 55,263 159,200 Due from component unit ...... x - - - 185 185 Due from other governments ...... x 146,542 52,296 - 34,389 233,227 Prepaid items ...... x 8,603 9 - 3,639 x 12,251 Total assets ...... x $ 403,190 $ 53,245 $ 46,805 $ 293,208 $ 796,448 x LIABILITIES: x Accounts payable ...... x $ 19,727 $ - $ - $ 15,106 $ 34,833 Accrued liabilities ...... x 42,010 41 32 4,024 46,107 Due to other funds ...... x 905 52,774 46,804 48,125 148,608 Due to component unit ...... x 2,105 - - - 2,105 Due to other governments ...... x 25,993 - - 124 26,117 Retained percentages payable ...... x - - - 2,135 2,135 Unearned revenue ...... x 4,786 10 - 4,775 9,571 Short-term debt ...... x 111,225 - - - x 111,225 Total liabilities ...... x 206,751 52,825 46,836 74,289 380,701

DEFERRED INFLOWS OF RESOURCES: Unavailable revenue – property taxes ...... x 57,663 - - - 57,663

FUND BALANCES: x Nonspendable: Prepaid items ...... x 8,603 9 - 3,639 12,251 Restricted for: x Handicapped parking ...... 162 - - - 162 Community development loans ...... - - - 30,007 30,007 Debt service ...... x - - - 45,060 45,060 Capital expenditures ...... - - - 98,197 98,197 Assigned: x Subsequent year's x expenditures ...... x 10,226 - - 12,002 22,228 Judgments and claims ...... x 1,500 - - - 1,500 Other purposes ...... x 16,346 411 - 30,427 47,184 Unassigned ...... x 101,939 - (31) (413) 101,495 x Total fund balances ...... x 138,776 420 (31) 218,919 358,084 Total liabilities, deferred inflows of resources and fund balances ...... x $ 403,190 $ 53,245 $ 46,805 $ 293,208 $ 796,448

See accompanying notes to the financial statements. ______COUNTY OF ERIE, NEW YORK • 19

Reconciliation of the Balance Sheet Governmental Funds to the Government-wide Statement of Net Position December 31, 2017 (dollars in thousands)

Governmental Activities

Total fund balances - governmental funds (page 18) ...... x $ 358,084 x Amounts reported for governmental activities in the statement of net x position (page 14) are different because: x x Capital assets used in governmental activities are not financial x resources and, therefore, are not reported in the funds ...... x 845,998 x Other long-term assets are not available to pay for current period expenditures x and, therefore, are not reported in the funds ...... x 14,455

Certain property tax revenues are not available to pay for current period x expenditures and, therefore, are reported as unavailable revenue in the funds ...... x 57,663 x ECFSA interest receivable is reported when earned in the x government-wide financial statements, but in the fund financial x statements income is reported only if it will be received within x sixty days of year-end...... x 2,966 x Due from a component unit was deemed to be not due and payable x in the current period and, therefore, not reported in the funds...... x 179,921

Deferred outflows and inflows of resources related to pensions are applicable to future periods and, therefore, are not reported in the funds. Deferred outflows related to employer contributions ...... 25,618 Deferred outflows related to experience, changes of assumptions, investment earnings and changes in proportion ...... 49,273 Deferred inflows relating to pension plans ...... (17,454)

Certain deferred outflows of resources represent a consumption of net position in a future period and, therefore, are not reported in the funds. Unamortized deferred amounts on refundings ...... x 3,923 Unamortized deferred amounts on refundings - ETASC ...... x 16,509

Certain current liabilities and long-term liabilities, including bonds x payable, are not due and payable in the current period and, x therefore, are not reported in the funds. x Accrued bond interest ...... x (14,358) Accrued bond interest - ETASC ...... x (1,000) Compensated absences ...... x (22,663) Judgments and claims ...... x (54,180) Other post-employment benefits (OPEB) ...... x (457,744) Net pension liability ...... (86,355) Due to component unit ...... x (20,000) Unamortized bond premiums ...... x (64,793) Unamortized bond discounts - ETASC ...... x 10,799 Bonds payable ...... x (560,689) Bonds payable - ETASC ...... x (349,448) x Net position of governmental activities ...... x $ (83,475)

See accompanying notes to the financial statements. 20 • COUNTY OF ERIE, NEW YORK ______

Statement of Revenues, Expenditures and Changes in Fund Balances Governmental Funds For the year ended December 31, 2017 (dollars in thousands)

Total Total ECFSA ECFSA Nonmajor Governmental General General Debt Service Funds Funds REVENUES: Real property taxes and tax items ...... x $ 265,014 $ - $ - $ 26,135 $ 291,149 Sales and use taxes ...... x 336,534 439,840 - 3,481 779,855 Transfer and other taxes ...... x 31 - - 13,136 13,167 Intergovernmental ...... x 328,856 - - 80,715 409,571 Interfund revenues ...... x 209 - - 90 299 Departmental ...... x 64,360 - - 31,866 96,226 Interest ...... x 1,208 165 - 10,822 12,195 Miscellaneous ...... x 24,444 - - 3,697 28,141 Total revenues ...... x 1,020,656 440,005 - 169,942 1,630,603

EXPENDITURES: Current: General government support ...... x 408,871 428 - 9,646 418,945 Public safety ...... x 142,339 - - 12,724 155,063 Health ...... x 77,329 - - 9,977 87,306 Transportation ...... x 23,939 - - 29,233 53,172 Economic assistance and opportunity ...... x 595,119 - - 14,380 609,499 Culture and recreation ...... x 18,411 - - - 18,411 Education ...... x 69,886 - - - 69,886 Home and community service ...... x 3,159 - - 47,171 50,330 Capital outlay ...... x - - - 66,081 66,081 Debt service: Principal retirement ...... x - - 44,485 13,585 58,070 Other - advance refunding escrow ...... x - - 5,517 - 5,517 Interest and fiscal charges ...... x 1,010 - 13,510 19,580 34,100 Total expenditures ...... x 1,340,063 428 63,512 222,377 1,626,380 Excess (deficiency) of revenues over expenditures ...... x (319,407) 439,577 (63,512) (52,435) 4,223

OTHER FINANCING SOURCES (USES): Issuance of general obligation debt ...... x - - - 15,331 15,331 Refunding bonds issued ...... - - 62,745 - 62,745 Payments to refunded bond escrow agent ...... - - (73,974) (12,964) (86,938) Premium on bond issuance ...... x - - 11,622 7,923 19,545 Payment from Erie County- advance loan refunding ...... x - - 79,491 - 79,491 Purchase of loan by Erie County - advance loan refunding . . x - - (73,974) - (73,974) Proceeds on bond issuance ...... x - - 135,780 - 135,780 Premium on obligations ...... x - - 23,984 - 23,984 Discount on purchase of mirror bonds ...... x - - (6,718) - (6,718) Purchase of loan by Erie County ...... x - - (92,115) - (92,115) Discount on loan to Erie County ...... x - - (6,829) - (6,829) Sale of property ...... x 250 - - 24 274 Transfer to Trustee - debt service reserve ...... x - - (8,281) - (8,281) Transfers in ...... x 440,061 - 56,604 158,216 654,881 Transfers out ...... x (102,240) (439,440) (44,870) (86,385) x (672,935) Total other financing x x sources (uses) ...... x 338,071 (439,440) 63,465 82,145 44,241 Net change in fund balances ...... x 18,664 137 (47) 29,710 48,464 Fund balances - beginning ...... x 120,112 283 16 189,209 309,620 Fund balances - ending ...... x $ 138,776 $ 420 $ (31) $ 218,919 $ 358,084

See accompanying notes to the financial statements. ______COUNTY OF ERIE, NEW YORK • 21

Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances Governmental Funds to the Government-wide Statement of Activities For the year ended December 31, 2017 (dollars in thousands) Governmental Activities x Net change in fund balances - total governmental funds (page 20) ...... x $ 48,464 x Amounts reported for governmental activities in the statement of activities (pages 16-17) x are different because: x x Governmental funds report capital outlays as expenditures. However, in the statement of activities the cost of those assets is allocated over their estimated useful lives and depreciated. This is the amount by which capital outlays exceeded depreciation expense in the current period. Capital outlays ...... x $ 43,064 Capital assets received from component unit ...... x 328 Depreciation expense ...... x (59,294) Net adjustment ...... x (15,902)

Revenues in the statement of activities that do not provide current financial resources are not reported as x revenue in the funds: x ETASC tobacco revenue ...... x (232) Real property taxes ...... x (265) Net adjustment ...... x (497)

Revenues of the ECFSA in the statement of activities that do not provide current financial resources are x not reported as revenues in the funds ...... x 196 Governmental funds report loans to a component unit to be repaid on a long-term basis as expenditures. In the statement of net position, however, the cost of those outlays increases the due from component unit and does not affect the statement of activities. Similarly, repayment of long-term loan principal is a revenue in the governmental funds and thus contributes to the change in fund balance. In the statement of net position, however, repayment of long-term loan principal reduces the amount due from the component unit and does not affect the statement of activities. Loan principal retirement ...... x (1,725) Net differences between pension contributions recognized on the fund financial statements and the government-wide statements are as follows: Direct pension contributions...... 2,089 Cost of benefits earned net of employee contributions ...... (16,045) Net adjustment ...... (13,956) Bond proceeds are reported as other financing sources in the governmental funds and thus contribute to the change in fund balance. In the statement of net position, however, issuing debt increases long-term debt and does not affect the statement of activities. Similarly, repayment of bond principal is an expenditure in the governmental funds and thus contributes to the change in fund balance. In the statement of net position, however, payment of debt reduces the long-term debt liability and does not affect the statement of activities. x Principal retirement ...... 139,300 Bonds issued ...... (15,331) Refunding bonds issued ...... (62,745) Payments to advanced refunded bond escrow agent ...... 116,977 Premium on bond issuance ...... (179,309) Amortization of premium on bonds ...... 15,435 Principal retirement and amortization of bond discount - ETASC ...... 1,856 Net adjustment ...... 16,183 Certain activity reported in the statement of activities does not require the use of current financial x resources and, therefore, is not reported in the governmental funds. x Interest on bonds ...... x (5,346) Due to component unit ...... x 4,000 Deferred charge on refunding ...... x (1,666) Compensated absences ...... x 313 Judgments and claims (long-term change only) ...... x (887) Accreted interest - ETASC ...... x (7,346) Interest on bonds - ETASC ...... x 10 Deferred charge on refunding - ETASC ...... x (763) Other post-employment benefits (OPEB) ...... x (50,491) Net adjustment ...... x (62,176) Change in net position of governmental activities ...... x $ (29,413) x

See accompanying notes to the financial statements. 22 • COUNTY OF ERIE, NEW YORK ______

General Fund Statement of Revenues, Expenditures and Changes in Fund Balances Budget and Actual (Non-GAAP Basis of Accounting) For the year ended December 31, 2017 (dollars in thousands)

Original Final Budgetary Variance with Budget Budget Actual Final Budget REVENUES: Real property taxes and tax items ...... $ 265,001 $ 265,001 $ 265,014 $ 13 Sales and use taxes ...... 768,012 334,161 336,534 2,373 Transfer and other taxes ...... - - 31 31 Intergovernmental ...... 352,931 356,800 328,856 (27,944) Interfund Revenues ...... 209 209 209 - Departmental ...... 58,670 60,676 64,360 3,684 Interest ...... 637 473 1,208 735 Miscellaneous ...... 2,416 16,003 24,444 8,441

Total revenues ...... 1,447,876 1,033,323 1,020,656 (12,667)

EXPENDITURES: Current: General government support ...... 408,915 416,029 409,290 6,739 Public safety ...... 151,807 152,796 142,217 10,579 Health ...... 69,528 72,444 77,634 (5,190) Transportation ...... 23,570 23,789 23,939 (150) Economic assistance and opportunity ...... 598,774 617,817 593,737 24,080 Culture and recreation ...... 18,921 18,897 18,411 486 Education ...... 73,188 73,188 69,886 3,302 Home and community service ...... 3,265 2,812 3,139 (327) Debt service: Interest and fiscal charges ...... 1,010 445 445 -

Total expenditures ...... 1,348,978 1,378,217 1,338,698 39,519

Excess (deficiency) of revenues over expenditures ...... 98,898 (344,894) (318,042) 26,852

OTHER FINANCING SOURCES (USES): Sale of property ...... 151 151 250 99 Transfers in ...... 621 440,061 440,061 - Transfers out ...... (105,670) (105,279) (102,240) 3,039

Total other financing sources (uses) ...... (104,898) 334,933 338,071 3,138

Net change in fund balances * ...... $ (6,000) $ (9,961) $ 20,029 $ 29,990

* The net change in fund balances was included in the budget as an appropriation (i.e., spend down) of fund balance.

See accompanying notes to the financial statements. ______COUNTY OF ERIE, NEW YORK • 23

Statement of Net Position Proprietary Funds December 31, 2017 (dollars in thousands)

Business-type Activities Enterprise Funds Major Major Nonmajor Fund Fund Fund College ILDC Utilities (August 31, 2017) Aggregation Total ASSETS: Current assets: Cash and cash equivalents ...... $ 38,950 $ 246 $ - $ 39,196 Receivables (net of allowances) ...... 2,982 362 - 3,344 Loans receivable, short-term...... - 7 - 7 Due from other funds ...... 102 - 859 961 Due from component unit ...... - - 10,934 10,934 Due from other governments ...... - - 607 607 Prepaid items ...... 412 - 3 415 Total current assets ...... 42,446 615 12,403 55,464

Noncurrent assets: Loans receivable, net...... - 19 - 19 Land held for sale ...... - 6,531 - 6,531 Capital assets, net of depreciation: Construction in progress ...... 1,431 - - 1,431 Other capital assets, net of depreciation 36,089 - - 36,089

Total noncurrent assets ...... 37,520 6,550 - 44,070 Total assets ...... 79,966 7,165 12,403 99,534

DEFERRED OUTFLOWS OF RESOURCES: Deferred outflows relating to pensions ...... x 15,862 - - 15,862

LIABILITIES: Current liabilities: Accounts payable ...... 1,392 17 1,127 2,536 Accrued liabilities ...... 4,972 - 49 5,021 Due to other funds ...... 2,109 - 8,901 11,010 Due to other governments ...... - 23 858 881 Fringe benefits payable ...... 3,809 - - 3,809 Unearned revenue ...... 8,342 392 - 8,734 Total current liabilities ...... 20,624 432 10,935 31,991

Noncurrent liabilities: Fringe benefits payable ...... 4,154 - - 4,154 Net OPEB obligation ...... 83,614 - - 83,614 Net pension liability ...... 9,336 - - 9,336 Total noncurrent liabilities ...... 97,104 - - 97,104

Total liabilities ...... 117,728 432 10,935 129,095

DEFERRED INFLOWS OF RESOURCES: Deferred inflows relating to pensions ...... x 2,179 - - 2,179

NET POSITION: Net investment in capital assets ...... 37,520 - - 37,520 Restricted ...... - 208 - 208 Unrestricted, reported in: College ...... (61,599) - - (61,599) ILDC ...... - 6,525 6,525 Nonmajor fund ...... - 1,468 1,468 Total net position ...... $ (24,079) $ 6,733 $ 1,468 $ (15,878)

See accompanying notes to the financial statements. 24 • COUNTY OF ERIE, NEW YORK ______

Statement of Revenues, Expenses and Changes in Net Position Proprietary Funds For the year ended December 31, 2017 (dollars in thousands)

Business-type Activities Enterprise Funds Major Major Nonmajor Fund Fund Fund College ILDC Utilities (August 31, 2017) Aggregation Total OPERATING REVENUES: x Student tuition and fees ...... x $ 35,534 $ - $ - $ 35,534 Intergovernmental revenues and charges ...... x 1,454 - - 1,454 Administrative fees ...... x - 483 - 483 State and local contracts ...... x 6,592 - - 6,592 Interfund revenues ...... x - - 6,221 6,221 Other operating revenue ...... x 712 1 9,856 x 10,569 Total operating revenues ...... x 44,292 484 16,077 60,853 x OPERATING EXPENSES: x Employee wages ...... x 58,893 - 86 58,979 Employee benefits ...... x 38,810 - 43 38,853 Scholarships ...... x 13,092 - - 13,092 Supplies, services and general ...... x 17,241 18 - 17,259 Transfer to Erie County Industrial Development Agency ...... x - 506 - 506 Utilities and telephone ...... x 1,724 - 15,985 17,709 Depreciation ...... x 4,646 - - x 4,646 x Total operating expenses ...... x 134,406 524 16,114 151,044 Operating (loss) income ...... x (90,114) (40) (37) (90,191) x NONOPERATING REVENUES (EXPENSES): x Unrestricted state and local appropriations ...... x 32,098 - - 32,098 Federal and state student financial aid ...... x 33,699 - - 33,699 Retirement incentive ...... 891 - - 891 Income from investments ...... x 71 - - 71 Loss on disposal of plant assets ...... x (29) - - (29) Interest expense ...... x (33) - - (33) Grant Income ...... x 6,520 - x 6,520 Total nonoperating revenues (expenses) ...... 66,697 6,520 - 73,217 (Loss) gain before transfers ...... x (23,417) 6,480 (37) (16,974) x Transfers in ...... x 18,054 - - x 18,054 Change in net position ...... x (5,363) 6,480 (37) 1,080 x Total net position - beginning, as restated ...... x (18,716) 253 1,505 (16,958) Total net position - ending ...... x $ (24,079) $ 6,733 $ 1,468 $ (15,878)

See accompanying notes to the financial statements. ______COUNTY OF ERIE, NEW YORK • 25

Statement of Cash Flows Proprietary Funds For the year ended December 31, 2017 (dollars in thousands)

Business-type Activities Enterprise Funds Major Major Nonmajor Fund Fund Fund College ILDC Utilities (August 31, 2017) Aggregation Total CASH FLOWS FROM OPERATING ACTIVITIES: Receipts from students and utility customers ...... x $ 34,381 $ - $ 5,134 $ 39,515 Payments to employees for services ...... x (87,151) - (132) (87,283) Payments to suppliers for goods and services ...... x (20,757) (7) (16,641) (37,405) Payments for scholarships ...... x (13,092) - - (13,092) Federal, state and local grants ...... x 9,767 - - 9,767 Administrative and application fees...... x - 484 - 484 Transfer to Erie County Industrial Development Agency. . . . . x - (506) - (506) Internal activity - payments from other funds ...... x - - 11,639 11,639 Other operating revenues ...... x 1,148 11 - 1,159 Loans awarded ...... x - (17) - (17) x Net cash used for x operating activities ...... x (75,704) (35) - (75,739) x CASH FLOWS FROM NON-CAPITAL FINANCING ACTIVITIES: x County contribution ...... x 18,945 - - 18,945 State appropriations ...... x 42,128 - - 42,128 Municipal chargebacks ...... x 1,666 - - 1,666 Federal and state student financial aid grants ...... x 22,260 - - 22,260 Net cash provided by non-capital x financing activities ...... x 84,999 - - 84,999 x CASH FLOWS FROM CAPITAL AND RELATED x FINANCING ACTIVITIES: Purchase of capital assets ...... x (7,347) - - (7,347) Grant income ...... x - 6,549 - 6,549 Acquisition of land held for sale ...... x - (6,483) - (6,483) x Net cash used for capital and related x financing activities ...... x (7,347) 66 - (7,281)

CASH FLOWS FROM INVESTING ACTIVITIES: x Interest, dividends, and realized gains on investments ...... 71 - - 71 Net decrease in cash...... x 2,019 31 - 2,050 Cash, beginning of year ...... x 36,931 215 - 37,146 Cash, end of year ...... x $ 38,950 $ 246 $ - $ 39,196

See accompanying notes to the financial statements. 26 • COUNTY OF ERIE, NEW YORK ______

x x Statement of Cash Flows x Proprietary Funds x For the year ended December 31, 2017 x (dollars in thousands) x x x x Business-type Activities x Enterprise Funds x Major Major Nonmajor x Fund Fund Fund x College ILDC Utilities x (August 31, 2017) Aggregation Total RECONCILIATION OF OPERATING LOSS TO NET x CASH USED FOR OPERATING ACTIVITIES: x Operating loss ...... x $ (90,114) $ (40) $ (37) $ (90,191) Adjustments to reconcile operating loss to net cash x used for operating activities: x Depreciation expense ...... x 4,646 - - 4,646 Decrease (increase) in assets: x Receivables, net ...... x 1,627 - 33 1,660 Pension asset, net...... x 9,873 - - 9,873 Prepaid items ...... x (412) - - (412) Deferred outflows relating to pension ...... x 179 - - 179 Loan receivable ...... x - (8) - (8) Due from other funds ...... x - - 70 70 Due from component unit ...... x - - (2,986) (2,986) Due from other governments ...... x - - 37 37 Increase (decrease) in liabilities: x Accounts and other payables ...... x (1,380) 13 138 (1,229) Accrued expenses ...... x (365) - 46 (319) Due to other funds ...... x - - 2,768 2,768 Due to other governments ...... - - (69) (69) Unearned revenue ...... x (919) - - (919) Other long-term liabilities ...... x 10,079 - - 10,079 Pension liability, net ...... x (5,547) - - (5,547) Deferred inflows relating to pension ...... x (3,371) - - (3,371) x Net cash used for x operating activities ...... x $ (75,704) $ (35) $ - $ (75,739) (Concluded)

See accompanying notes to the financial statements. ______COUNTY OF ERIE, NEW YORK • 27

Statement of Net Position Agency Fund December 31, 2017 (dollars in thousands)

Agency Fund ASSETS: Cash and cash equivalents ...... $ 46,919 Receivables: Other receivables ...... 634 Bonds and securities held in custody ...... 20

Total assets ...... $ 47,573

LIABILITIES: Amounts held in custody for others ...... $ 47,573

Total liabilities ...... $ 47,573

See accompanying notes to the financial statements. 28 • COUNTY OF ERIE, NEW YORK ______

See accompanying notes to the financial statements. ______COUNTY OF ERIE, NEW YORK • 29

NOTES TO THE FINANCIAL STATEMENTS Year Ended December 31, 2017

I - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The basic financial statements of the County of Erie, New York (the “County”) have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”) as applied to governmental units. The Governmental Accounting Standards Board (the “GASB”) is the accepted standard setting body for establishing governmental accounting and financial reporting principles. The more significant of the County’s accounting policies are described below.

A. Description of Government-wide Financial Statements

The government-wide financial statements (i.e., the statement of net position and the statement of activities) report information on all of the nonfiduciary activities of the primary government and its component units. All fiduciary activities are reported only in the fund financial statements. Some amounts reported as interfund activity have been eliminated from these statements. Governmental activities, which normally are supported by taxes, intergovernmental revenues, and other nonexchange transactions, are reported separately from business-type activities, which rely to a significant extent on fees and charges for support. Likewise, the primary government is reported separately from the legally separate component units for which the primary government is financially accountable.

B. Reporting Entity

The County was established in 1821. Subject to the New York State Constitution, the County operates pursuant to its Charter and Administrative Code (the “Charter”), as well as various local laws. Additionally, certain New York State laws govern the County to the extent that such laws are applicable to counties operating under a charter form of government. The Charter was enacted by local law and approved by the electorate at a general election held in November 1959. The Administrative Code was enacted into local law in 1961. The County Legislature is the legislative body responsible for overall operations, the County Executive serves as chief executive officer, and the County Comptroller serves as chief fiscal, accounting, reporting and auditing officer.

The County provides mandated social service programs such as Medicaid, Temporary Assistance for Needy Families and Safety Net. The County also provides services and facilities in the areas of culture, recreation, police, libraries, youth, health, senior services, roads, and sanitary sewerage. These general governmental programs and services are financed by various taxes, state and federal aid, and departmental revenue (which is primarily comprised of service fees and various types of program-related charges). Additionally, the County operates the Erie Community College (“the College”).

The financial reporting entity includes the County (the “primary government”) and its significant component units. A component unit is either a legally separate organization for which the elected officials of a primary government are financially accountable, or another organization for which the nature and significance of its relationship with a primary government is such that exclusion would cause the reporting entity’s financial statements to be misleading or incomplete.

30 • Notes to the Financial Statements ______

1. Discretely Presented Component Units

Financial data of the County’s component units that are not part of the primary government is reported in the component units columns in the government-wide financial statements, to emphasize that these component units are legally separate from the County. The aggregate discretely presented component units are not simply an extension of the primary government (e.g. substantially different governing body and services are provided to the general public). These discretely presented component units include the following:

The Buffalo and Erie County Public Library (the “Library”), formed through a consolidation of several public and private libraries, was established by the County and chartered by the State University Board of Regents in 1953. It is a separate and distinct legal corporation that receives an annual budgetary contribution from the County. Library operations are governed by a Board of Trustees who are appointed by the County Legislature. Bonds and notes for Library capital costs are issued by the County and are obligations of the County. Title to real and personal property acquired with County funds vests with the County. The Library is included as a component unit of the County in the financial statements based on the fact that it is a legally separate entity for which the County is financially accountable. The Library does not issue separate financial statements.

Erie County Medical Center Corporation (“ECMCC”) is a public benefit corporation created in 2003 for the purpose of acquiring and operating the health facilities of the County. Effective January 1, 2004, a transaction was executed which transferred ownership of the capital assets, equipment, inventories and certain other assets to ECMCC in exchange for a payment of $85,000,000 from ECMCC to the County. Concurrent with the transaction, $101,375,000 of ECMCC bonds were issued, which are guaranteed by the County. Pursuant to consent decrees entered into between the County and ECMCC, the County is committed to providing ongoing operating and capital support to ECMCC. The following component units are included within ECMCC:

Research for Health in Erie County, Inc. (“RHEC”) is a nonprofit organization dedicated to developing and increasing the facilities of the public health institutions, agencies, and departments of the County. Additionally, RHEC is committed to provide more extensive conduct of studies and research into the causes, nature, and treatment of diseases, disorders, and defects of particular importance to the public health. RHEC’s support comes primarily from investment income. The financial statements of RHEC have been prepared on the accrual basis of accounting. RHEC is exempt from income tax as a not-for-profit corporation under Section 501 (c)(3) of the Internal Revenue Code. The entity has not been receiving funding in recent years. The annual financial report can be obtained by writing Grant Administration, Research for Health in Erie County, Inc., 462 Grider Street, Buffalo, NY 14215.

ECMC Foundation, Inc. (the “Foundation”), formerly the ECMC Lifeline Foundation, Inc., is a nonprofit organization exempt from federal income taxes under Section 501(c)(3) of the Internal Revenue Code. The Foundation was formed for the purpose of supporting ECMC programs. The annual financial report can be obtained by writing to: Executive Director, ECMC Foundation, Inc., 462 Grider Street, Buffalo, NY 14215.

The Grider Initiative, Inc. (the “Physician Endowment”) is a nonprofit organization exempt from federal income taxes under Section 501 (c)(3) of the Internal Revenue Code. The Physician Endowment was formed in 2009, and funded in 2010, for the

______COUNTY OF ERIE, NEW YORK • 31

purpose of recruiting physicians who shall practice on the Grider Street campus of ECMCC. The entity was funded with an initial transfer of $10,000 from ECMCC. Earnings from the investment of the initial transfer may be used only for physician recruitment and reasonable and necessary expenses of the entity. The annual financial report can be obtained by writing to: Chair, The Grider Initiative, Inc., 424 Main Street, Suite 2000, Buffalo, NY 14202.

ECMCC is considered to be a component unit of the County and is discretely presented based on the fact that it is a legally separate entity for which the County is financially accountable. Separate financial statements for ECMCC can be obtained from ECMCC, 462 Grider Street, Buffalo, NY 14215.

Other Discretely Presented Component Units:

The Auxiliary Services Corporation of Erie Community College, Inc. (the “ECC Auxiliary Corporation”), and the Erie Community College Foundation, Inc. (the “ECC Foundation”) are both included as discretely presented component units of the County’s primary government based on the fact that they are legally separate entities for which the College and County are financially accountable. They receive or hold economic resources that are significant to, and can be accessed by, the College that are entirely or almost entirely for the direct benefit of its constituents (students).

The purpose of the ECC Auxiliary Corporation, a New York nonprofit corporation, is to promote and cultivate educational and social relations through the operation of bookstores, on-campus dining services, vending facilities, childcare, and student centers for the convenience of the students, faculty and staff of the College. The ECC Auxiliary Corporation is funded through sales of merchandise and food, federal and state grants, and other fees. Separate financial statements can be obtained from the Auxiliary Services Corporation of Erie Community College, Inc., Executive Director, 4041 Southwestern Blvd., Orchard Park, NY 14127.

The ECC Foundation is a New York State nonprofit corporation established to support the College. Its purpose is to raise, receive, and administer all private gifts and program services for the College, its programs, and its students. Separate financial statements can be obtained from Erie Community College Foundation, Inc., Executive Director, 121 Ellicott Street, Buffalo, NY 14203.

2. Blended Component Units

Erie County Fiscal Stability Authority (“ECFSA”) is included as a blended component unit of the County’s primary government pursuant to GASB because exclusion would be misleading. The ECFSA was created to monitor and oversee the finances of the County. Agencies and departments examined by the ECFSA’s activities include all of the County’s departments and sewer districts, the College and the Library. It reports using the governmental model and its general fund is reported as part of the County’s special revenue funds.

The ECFSA is a corporate governmental agency and instrumentality of the State of New York (the “State”) constituting a public benefit corporation created by the Erie County Fiscal Stability Authority Act, Chapter 182 of the Laws of 2005, as supplemented by Chapter 183 of the Laws of 2005 (the “Act”). The Act became effective July 12, 2005.

32 • Notes to the Financial Statements ______

The ECFSA is governed by seven directors, each appointed by the Governor, including one each appointed upon the recommendation of the Majority Leader of the State Senate, the Speaker of the State Assembly and the State Comptroller. The Governor also designates the chairperson and vice-chairperson from among the directors.

The ECFSA has power under the Act to monitor and oversee the finances of the County, and upon declaration of a “Control Period” as defined in the Act, additional oversight authority. The ECFSA is also empowered to issue its bonds and notes for various County purposes, defined in the Act as “Financeable Costs.”

On November 3, 2006, the Authority imposed a control period on the County in accordance with Section 3595(1)(e) of New York Public Authorities Law through resolution 06-49. The resolution empowered the ECFSA to operate with its maximum authorized complement of control and oversight powers over County finances. During a control period all County contracts of $50,000 or more and filling of any positions are subject to ECFSA approval and ECFSA has the power to approve or reject all proposed County borrowings and the County may not borrow without formal ECFSA approval. In addition, the ECFSA has the right to freeze wages, although it has not elected to exercise that right. On June 2, 2009, the ECFSA revoked the control period and reverted to an advisory status with limited control and oversight powers over County finances.

In 2011, the ECFSA issued serial bonds to assist ECMCC in the construction of a new residential health care facility. Loan agreements were executed whereby the ECFSA loaned the proceeds to the County, who in turn loaned the monies to ECMCC. The facility was opened in February 2013.

Revenues of the ECFSA consist of sales tax revenues, defined as net collections from sales and compensating use taxes, penalties and interest authorized by the State and imposed by the County on the sales and use of tangible personal property and services in the County (“Sales Tax Revenues”), and investment earnings on money and investments on deposit in various ECFSA accounts. Sales tax revenues collected by the State Comptroller for transfer to the ECFSA are not subject to appropriation by the State or County. Revenues of the ECFSA that are not required to pay debt service, operating expenses and other costs of the ECFSA are payable to the County as frequently as practicable. Separate financial statements for ECFSA can be obtained from the Erie County Fiscal Stability Authority, 295 Main Street, Room 946, Buffalo, NY, 14203.

Erie Tobacco Asset Securitization Corporation (“ETASC”) is a special purpose local development corporation organized under the Not-for-Profit Corporation Law of the State of New York and is an instrumentality of, but separate and apart from the County. ETASC was incorporated for the sole purpose of issuing tobacco settlement asset backed bonds in order to provide funds to purchase from the County all of the County’s right, title, and interest in annual payments to be received in settlement of certain smoking-related litigation. Tobacco settlement bonds are payable only from the assets of ETASC and are not legal obligations of the County. Although legally separate and independent of the County, ETASC is considered an affiliated organization under GASB and reported as a component unit of the County for financial reporting purposes and, accordingly, is included in the County’s financial statements. Separate financial statements for ETASC can be obtained from the Erie Tobacco Asset Securitization Corporation, Treasurer, 95 Franklin Street, Room 1600, Buffalo, NY, 14202.

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Erie Community College and The Buffalo and Erie County Industrial Land Development Corporation, described at Note I, D, are considered to be blended component units of the County, presented as business-type activities.

3. Related Organizations

County elected officials nominate and confirm the three-member board of the Erie County Water Authority, (“Water Authority”) and also appoint a voting majority of the board of the Buffalo Convention Center Management Corporation (“BCCMC”). The County’s accountability for these legally separate organizations does not extend beyond making the board appointments. Specifically, the County cannot impose its will on any of these organizations. In addition, in the case of the Water Authority, no financial operating assistance is provided to, nor is the County liable for, any debt issued by this public benefit corporation. In regard to the not-for-profit BCCMC, the entity and the County are parties to an exchange transaction under which the BCCMC is responsible for operating and managing the area’s convention center. These related organizations are not component units of the County and do not meet the basic criteria for inclusion in the County reporting entity.

4. Joint Ventures

Western Regional Off-Track Betting Corporation

The County is a participant in the Western Regional Off-Track Betting Corporation (“OTB”), a public benefit corporation established under New York State Racing, Pari- Mutuel Wagering and Breeding Law. The OTB conducts within the region a system of off- track pari-mutuel betting on horse races, and distributes net revenues to the participants in accordance with a predetermined formula. Separate financial data for this joint venture has been excluded from the financial statements, consistent with GASB. Additional information about this joint venture is presented in Note XVIII.

Buffalo Erie Niagara Land Improvement Corporation

The Buffalo Erie Niagara Land Improvement Corporation (“BENLIC”) was organized on June 6, 2012, pursuant to Article 16 of the Not-for-Profit Corporation Law of the State of New York. BENLIC was formed through a joint venture of the County of Erie and Cities of Buffalo, Lackawanna, and Tonawanda. BENLIC was created to confront and alleviate the problems distressed properties cause to communities by supporting municipal and regional revitalization efforts and strategically acquiring, improving, assembling, and selling distressed, vacant, abandoned, and/or tax-delinquent properties. Separate financial data for this joint venture has been excluded from the financial statements, consistent with GASB. Additional information about this joint venture is presented in Note XVIII.

C. Basis of Presentation – Government-wide Financial Statements

While separate government-wide and fund financial statements are presented, they are interrelated. The governmental activities column incorporates data from governmental funds, while business-type activities incorporate data from the government’s enterprise funds. Separate financial statements are provided for governmental funds, proprietary funds, and fiduciary funds, even though the latter are excluded from the government-wide financial statements.

34 • Notes to the Financial Statements ______

The County has five discretely presented component units, with two major component units being shown in separate columns and three nonmajor component units being aggregated into a single column in the government-wide financial statements.

As a general rule, the effect of interfund activity has been eliminated from the government-wide financial statements. Exceptions to this general rule are interfund services provided and used such as Utilities Aggregation Fund billings to other funds. Eliminations of these charges would distort the direct costs and program revenues reported for the various functions concerned.

D. Basis of Presentation – Fund Financial Statements

The fund financial statements provide information about the County’s funds, including its fiduciary funds and blended component units. Separate statements for each fund category—governmental, proprietary, and fiduciary—are presented. The emphasis of fund financial statements is on major governmental and enterprise funds, each displayed in a separate column. All remaining governmental and enterprise funds are aggregated and reported as nonmajor funds.

The County reports the following major governmental funds:

General Fund – the principal operating fund that includes all operations not required to be recorded in other funds.

ECFSA General Fund – used to account for all of the operations of the ECFSA, included as a blended component unit. This fund accounts for sales tax revenues received by ECFSA and for general operating expenditures of ECFSA.

ECFSA Debt Service Fund – used to account for the accumulation of resources for, and for the payment of, long-term bond principal, interest and related costs of the ECFSA.

The County reports the following major proprietary funds:

Erie Community College – resources received and used for college purposes are accounted for through the College. The College is not a legally separate entity from the County. A fiscal year ending August 31 is mandated by New York State law for the College. Accordingly, financial information for the College is presented as of and for the 2016-2017 fiscal year then ended.

During the fiscal year ended August 31, 2017, the College determined that $2,039,000 of capital purchases should have been included in construction in progress as of August 31, 2016. As a result, capital assets and operating expenses for the fiscal year ended August 31, 2016 have been restated by $2,039,000.

The College does not account for certain capital projects, certain capital assets or certain indebtedness. These are direct functions of the County and are reported within the governmental activities columns in the government-wide financial statements.

Additional information as excerpted from the College’s financial statements is as follows:

The County Executive and the County Legislature approve the College’s annual budget, with the County providing funding for one-half and approximately one-fifth of capital and operating costs, respectively.

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Equipment of the College has been included in the business-type activities column in the statement of net position. This equipment is recorded at cost or estimated historical cost. Donated assets are stated at estimated fair value as of the date received.

The Buffalo and Erie County Industrial Land Development Corporation, Inc. (“ILDC”) is a legally separate entity of which the County, acting by and through the County Executive, is the sole member. It is discretely presented in the County’s financial statements because the County is financially accountable for it. The ILDC is managed by its Board of Directors. Although ILDC does not meet the GASB requirements to be presented as a major fund, the County has elected to show ILDC as a major fund.

Legal expenses in the amount of $25,608 related to the Bethlehem Steel land purchase incurred in 2016 were capitalized as part of the land cost in 2017 which resulted in a restatement of net position.

In 2009, ILDC by–laws and organizing documents were changed and specific activities first became under the direct governance of the County. These changes allow the ILDC to provide tax-exempt bond financing for not-for-profit organizations. Such debt of the ILDC can never be the debt of the County or any political subdivision thereof and can only be paid out of specific revenues and receipts of the ILDC. The ILDC provides no services to the County. Separate financial statements can be obtained from Buffalo and Erie County Industrial Land Development Corporation Inc., Chief Operating Officer, 275 Oak Street, Buffalo, NY 14203.

Additionally, the County reports a fiduciary fund type that is used to account for assets held by the County in a custodial capacity:

Agency Fund – used to account for money and property received and held in the capacity of custodian or agent. The Agency Fund is custodial in nature and does not involve measurement of results of operations.

During the course of operations the County has activity between funds for various purposes. Any residual balances outstanding at year-end are reported as due from/to other funds and advances to/from other funds. While these balances are reported in fund financial statements, certain eliminations are made in the preparation of the government-wide financial statements. Balances between the funds included in governmental activities are eliminated so that only the net amount is included as internal balances in the governmental activities column. Similarly, balances between the funds included in business-type activities (i.e., the enterprise funds) are eliminated so that only the net amount is included as internal balances in the business-type activities column.

Further, certain activity occurs during the year involving transfers of resources between funds. In fund financial statements these amounts are reported at gross amounts as transfers in/out. While reported in fund financial statements, certain eliminations are made in the preparation of the government-wide financial statements. Transfers between the funds included in governmental activities are eliminated so that only the net amount is included as transfers in the governmental activities column. Similarly, balances between the funds included in business-type activities are eliminated so that the net amount is included as transfers in the business-type activities column.

36 • Notes to the Financial Statements ______

E. Measurement Focus and Basis of Accounting

Measurement focus is the determination of what is expressed in reporting an entity’s financial performance and position (i.e., expenditures or expenses). A particular measurement focus is accomplished both by considering what resources will be measured and the basis of accounting.

Basis of accounting refers to when revenues, expenditures/expenses, and the related assets, deferred outflows/inflows of resources, 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.

Accrual Basis – The government-wide financial statements are reported using the economic resources measurement focus and the accrual basis of accounting. Under the accrual basis of accounting, revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. Property taxes are recognized as revenues in the year for which they are levied. Grants and similar items are recognized as revenue as soon as all eligibility requirements imposed by the provider have been met.

The proprietary funds are reported using the economic resources measurement focus and the accrual basis of accounting. The agency fund has no measurement focus but utilizes the accrual basis of accounting for reporting its assets and liabilities.

Modified Accrual Basis – Governmental fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Under this basis of accounting, revenues are recognized as soon as they are both measurable and available. Revenues are considered to be available when they are collectible within the current period or soon enough thereafter to pay liabilities of the current period. For this purpose, the County considers revenues to be available if they are collected within 60 days of the end of the current fiscal period (60-day rule). Revenues from federal, state, or other grants designated for specific County expenditure are recognized when the related expenditures are incurred.

Expenditures generally are recorded when a liability is incurred, as under accrual accounting. However, debt service expenditures, as well as expenditures related to compensated absences and judgments and claims, are recorded only when payment is due and expenditures for inventory-type items and for prepayments (except retirement) are recognized at the time of the disbursements. Capital asset acquisitions are reported as expenditures in governmental funds.

Issuance of long-term debt and acquisitions under capital leases are reported as other financing sources.

Property taxes, sales and use taxes, state and federal aid and various grant program revenues associated with the current fiscal period are all considered to be susceptible to accrual and so have been recognized as revenues of the current fiscal period. All other revenue items are considered to be measurable and available only when cash is received by the government, subject to the 60-day rule discussed above.

F. Budgetary Information

Annual appropriated budgets are adopted and employed for control of the General Fund; the Road, Sewer, Downtown Mall, and E-911 Special Revenue Funds; the Utilities Aggregation Enterprise Fund; and the Debt Service Fund, minimally detailed to the department and account level. These budgets are adopted on a basis consistent with GAAP, except that encumbrances are reported as

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budgetary expenditures in the year of incurrence of commitment to purchase in the General Fund, the enumerated Special Revenue Funds and the Debt Service Fund. All unencumbered appropriations lapse at the end of the fiscal year. Budgetary comparisons presented in this report are on the budgetary basis and represent the budget as modified. Annual appropriated budgets are not employed for the Grants and Community Development Special Revenue Funds.

G. Assets, Liabilities, Deferred Outflows/Inflows of Resources, and Net Position/Fund Balance

1. Cash, Cash Equivalents and Investments

All highly liquid investments with an original maturity date of three months or less are considered to be cash equivalents. Investments are stated at fair value, the amount at which a financial instrument could be exchanged in a current transaction between willing parties.

2. Restricted Cash and Cash Equivalents

Restricted cash and cash equivalents represent restricted fund balance and unspent proceeds of debt.

3. Prepaid Items and Inventories

Certain payments to vendors and the New York State and Local Employees' Retirement System reflect costs applicable to future accounting periods and are recorded as prepaid items in both government-wide and fund financial statements. The cost of prepaid items is recorded as expenditures/expenses when consumed rather than when purchased.

The cost of all supplies inventories are recorded as expenditures/expenses when purchased rather than when consumed.

4. Capital Assets

All capital assets which are acquired or constructed for general governmental purposes are reported as expenditures in the fund that finances the asset acquisition and are accounted for and reported in the government-wide financial statements as capital assets, if they meet the County’s capitalization criteria. These statements also contain the County’s infrastructure assets that are required to be capitalized under GAAP. Infrastructure assets include public domain assets such as roads, bridges, and sewer systems. Such assets are recorded at historical cost or estimated historical cost if purchased or constructed. Donated capital assets are recorded at acquisition value at the date of donation. Major outlays for capital assets and improvements are capitalized as projects are constructed. The cost of normal maintenance and repairs that do not add to the value of the asset or materially extend asset lives are not capitalized. Equipment with an initial individual cost equal to or greater than $10,000 and an estimated useful life of three or more years is capitalized. All purchases of library books are capitalized because there is no minimum capitalization threshold.

Property, plant, and equipment of the primary government, as well as the component units, are depreciated using the straight-line method over the following estimated useful lives:

Description Estimated Lives Improvements Other Than Buildings 5 - 25 years Buildings and Improvements 15 - 40 years Infrastructure 20 - 100 years Library Collections 5 - 10 years

38 • Notes to the Financial Statements ______

The Buffalo and Erie County Public Library has a rare book collection that is classified as a Work of Art and Historical Treasure for financial reporting purposes. This collection is deemed an inexhaustible asset, and therefore, is not depreciated.

When capital assets are retired, or otherwise disposed of, the cost and related accumulated depreciation are removed from the accounts, and any resulting gain or loss is reflected in income for the period in the government-wide statements. Amortization of capital leases is computed using the straight-line method over the lease term or the estimated useful lives of the assets, whichever is shorter. Maintenance and repairs are charged to expense as incurred; significant renewals and betterments are capitalized.

The capital outlays character classification is employed only for expenditures reported in the Capital Projects Fund. Routine capital expenditures in the General Fund and other governmental funds are included in the appropriate functional category (for example, the purchase of a new police vehicle included as part of expenditures-public safety). At times, amounts reported as capital outlays in the Capital Project Fund will also include non- capitalized, project-related costs (for example, furnishings).

5. Deferred Outflows/Inflows of Resources

In addition to assets, the statement of financial position will sometimes report a separate section for deferred outflows of resources. This separate financial statement element, deferred outflows of resources, represents a consumption of net position that applies to a future period(s) and so will not be recognized as an outflow of resources (expense/ expenditure) until then. The primary government has three items that qualify for reporting in this category in the government-wide statement of net position. One is the deferred charge on refunding which results from the difference in the carrying value of refunded debt and its reacquisition price. This amount is deferred and amortized over the shorter of the life of the refunded or refunding debt. Another relates to pensions. This represents the effect of the net change in the County’s proportion of the collective net pension asset or liability, the difference during the measurement periods between the County’s contributions and its proportionate share of the total contribution to the pension systems not included in the pension expense, and any contributions to the pension systems made subsequent to the measurement date. The third relates to the deferred outflow on ETASC’s forward purchase agreement swap relating to the accumulated increase in its fair value.

In addition to liabilities, the statement of financial position will sometimes report a separate section for deferred inflows of resources. This separate financial statement element, deferred inflows of resources, represents an acquisition of net position that applies to a future period(s) and so will not be recognized as an inflow of resources (revenue) until that time. The County has two items that qualify for reporting in this category. The first, unavailable revenue, arises under a modified accrual basis of accounting. The governmental funds report unavailable revenues from property taxes. These amounts are deferred and recognized as an inflow of resources in the period that the amounts become available. In addition, another item represents the effect of the net change in the County’s proportion of the collective net pension liability and the difference during the measurement periods between the County’s contributions and its proportionate share of total contributions to the pension systems not included in pension expense and is reported on the government-wide financial statements only.

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6. Net Position Flow Assumption

Sometimes the County will fund outlays for a particular purpose from both restricted (e.g., restricted bond or grant proceeds) and unrestricted resources. In order to calculate the amounts to report as restricted–net position and unrestricted–net position in the government- wide and proprietary fund financial statements, a flow assumption must be made about the order in which the resources are considered to be applied. It is the County’s policy to consider restricted–net position to have been depleted before unrestricted–net position is applied.

7. Fund Balance Flow Assumption

Sometimes the County will fund outlays for a particular purpose from both restricted and unrestricted resources (the total of committed, assigned, and unassigned fund balance). In order to calculate the amounts to report as restricted, committed, assigned, and unassigned fund balance in the governmental fund financial statements, a flow assumption must be made about the order in which the resources are considered to be applied. It is the County’s policy to consider restricted fund balance to have been depleted before using any of the components of unrestricted fund balance. Further, when the components of unrestricted fund balance can be used for the same purpose, committed fund balance is depleted first, followed by assigned fund balance. Unassigned fund balance is applied last.

8. Fund Balance Policies

Fund balance of governmental funds is reported in various categories based on the nature of any limitations requiring the use of resources for specific purposes. The County itself can establish limitations on the use of resources through either a commitment (committed fund balance) or an assignment (assigned fund balance). The committed fund balance classification includes amounts that can be used only for the specific purposes determined by a formal action of the County’s highest level of decision-making authority. The Erie County Legislature is the highest level of decision-making authority for the County that can, by adoption of a Legislative Resolution prior to the end of the fiscal year, commit fund balance. Once adopted, the limitation imposed by the resolution remains in place until a similar action is taken (the adoption of another resolution) to rescind or revise the limitation.

Amounts in the assigned fund balance classification are intended to be used by the County for specific purposes but do not meet the criteria to be classified as committed. The Legislature authorizes assigned amounts of fund balance. The County Legislature may also assign fund balance when appropriating fund balance to lower a gap between estimated revenue and appropriations in the subsequent year’s appropriated budget. Unlike commitments, assignments generally only exist temporarily. In other words, an additional action does not normally have to be taken for the removal of an assignment.

H. Revenues and Expenditures/Expenses

1. Program Revenues

Program revenues include: (1) charges to customers or applicants who purchase, use, or directly benefit from goods, services, or privileges provided by a given function, and (2) grants and contributions that are restricted to meeting the operational or capital requirements of a particular function. All taxes, including those deducted for specific purposes, and other

40 • Notes to the Financial Statements ______

internally dedicated resources are reported as general revenues rather than as program revenues.

2. Property Tax Revenue Recognition

The County-wide property tax is levied by the County Legislature effective January 1 of the year the taxes are recognizable as revenue. Taxes become a lien on the related property on January 1 of the year for which they are levied. Accordingly, property tax is only recognized as revenue in the year for which the levy is made, and to the extent that such taxes are received within the reporting period or 60 days thereafter in the fund financial statements.

Delinquent property taxes not collected at year-end (excluding collections in the 60-day subsequent period) are recorded as unearned revenue in the fund financial statements. The portion of delinquent property taxes for prior years estimated to be uncollectible at December 31, 2017, amounted to $41,212,345. This amount has been recorded as an allowance against the property taxes receivable account.

3. Unearned Revenue

Resources obtained that have not met the revenue recognition criteria for government-wide or fund financial purposes are recorded as a liability.

4. Compensated Absences

Most employees are granted vacation, personal, and sick leave and earn compensatory time in varying amounts. When they leave service, employees are entitled to payment for accumulated vacation and unused compensatory time at various rates subject to certain maximum limitations. In addition, depending on the applicable collective bargaining agreement, retirees may be eligible to receive a direct cash payment for a portion of unused sick time upon retirement.

Compensated absences for governmental fund type employees are reported as a liability and expense in the government-wide financial statements. Governmental funds recognize the expenditure when paid. For proprietary fund type employees, the accumulation is recorded as an accrued liability and/or other long-term obligation of the proprietary fund type.

Payment of compensated absences recorded in the government-wide financial statements is dependent upon many factors; therefore, timing of future payment is not readily determinable. However, management believes that sufficient resources will be made available for the payment of compensated absences when such payments become due.

5. Pensions

The County is mandated by New York State law to participate in the New York State Teacher’s Retirement System (“TRS”) and the New York State Local Employees’ Retirement System (“ERS”). For purposes of measuring the net pension (asset)/liability, deferred outflows of resources related to pensions, and pension expense, information about the fiduciary net position of the defined benefit pension plans, and changes thereof, have been determined on the same basis as they are reported by the respective defined benefit pension plans. For this purpose, benefit payments (including refunds of employee contributions) are recognized when due and payable in accordance with the benefit terms. Investments are reported at fair value. More information regarding pensions included in Note IX.

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6. Proprietary Funds Operating and Nonoperating Revenues and Expenses

Proprietary funds distinguish operating revenues and expenses from nonoperating items. Operating revenues and expenses generally result from providing educational services and the purchase and resale of utilities in connection with the proprietary fund’s ongoing operations. All revenues and expenses not meeting this definition are reported as nonoperating revenues and expenses. The principal operating revenues of the College, the County’s major proprietary fund, are charges to students for tuition and fees. Operating expenses for the College include employee wages and benefits and student scholarships.

I. Other

1. Estimates

The preparation of the financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements. Estimates also affect the reported amounts of revenues and expenditures/expenses during the reporting period. Actual results could differ from those estimates.

2. Statement of Cash Flows

For purposes of reporting cash flows, cash and cash equivalents include the following items: cash on hand; cash in checking and time accounts; and certain short-term items maturing three months or less from the date acquired, as permitted by State statute.

3. Reclassifications

Certain amounts were reclassified from ECFSA’s financial statements to conform to the County’s reporting presentation. In the ECFSA’s statement of revenue, expenditures, and change in fund balances, $56,603,737 representing principal and interest revenue received from the County relating to mirror bonds and a revenue anticipation note purchased by the ECFSA, and $439,439,752 representing sales tax revenue and other distributions to the County, were reclassified as transfers in and transfers out, respectively.

4. Adoption of New Accounting Pronouncements

During the fiscal year ended December 31, 2017, the County adopted the provisions of Governmental Accounting Standards Board (“GASB”) Statement No. 80, Blending Requirements for Certain Component Units – an amendment of GASB Statement No. 14. Statement No. 80 requires a component unit to be included in the financial statements of a reporting entity using the blending method if the component unit is organized as a not-for- profit corporation in which the primary government is the sole corporate member. GASB Statement No. 80 included ILDC as a business-type activity blended component unit. As a result, beginning net position of business-type activities has been restated to include ILDC net position ($253,335). See Note I, B for more information regarding component units. The County also presents several component units in the financial statements for consistency and improved financial reporting.

The County also implemented GASB Statements No. 74, Financial Reporting for Postemployment Benefit Plans Other Than Pension Plans; No. 81, Irrevocable Split- 42 • Notes to the Financial Statements ______

Interest Agreements; and No. 82, Pensions Issues – an amendment of GASB Statements No. 67, No. 68, and No. 73. The objective of GASB Statement No. 74 is to improve the usefulness of information about other post-employment benefits presented in financial reports. The primary objective of GASB Statement No. 81 is to provide guidance for financial reporting when a government is the beneficiary of a split-interest agreement. The objective of GASB Statement No. 82 is to improve the consistency in the application of pension accounting and financial reporting requirements. GASB Statements No. 74, No. 81, and No. 82 did not have a material impact on the County’s financial position or results of operations.

5. Future Impacts of Accounting Pronouncements

The County has not completed the process of evaluating the impact that will result from adopting GASB Statements No. 75, Accounting and Financial Reporting for Postemployment Benefit Other Than Pensions; No. 85, Omnibus 2017; and No. 86, Certain Debt Extinguishment Issues, effective for the fiscal year ending December 31, 2018; and No. 83, Certain Asset Retirement Obligations and No. 84, Fiduciary Activities, effective for the fiscal year ending December 31, 2019. The County is, therefore, unable to disclose the impact that adopting GASB Statements No. 75, 83, 84, 85, 86, 87 and 88 will have on its financial position and results of operations.

II – STEWARDSHIP, COMPLIANCE, AND ACCOUNTABILITY

A. Budgetary Information

The County follows these procedures in establishing the budgetary data reflected in the financial statements:

1. In accordance with the County Charter and Administrative Code, no later than October 15, the County Executive submits a tentative operating and capital budget which details proposed expenditures and the proposed means of financing to the Erie County Legislature for the fiscal year commencing the following January 1. The College budget is not included in the County Executive’s tentative budget, since it is separately adopted during the first County legislative meeting in July for the fiscal year commencing September 1.

2. After public hearings are conducted to obtain taxpayer comments, the County Legislature (governing board) adopts the budget no later than the second Tuesday in December.

3. The County Executive is authorized to make budget transfers within the same administrative unit up to a cumulative total of $10,000 between accounts or line items. Any proposed transfer which would result in an increase exceeding $10,000 in any one line item in the budget, as adopted during the fiscal year or would affect any salary rate or salary total, would need prior approval by resolution of the County Legislature. In no instance shall a transfer be made from appropriations for debt service, and no appropriations may be reduced below any amount which is required by law to be appropriated.

4. The Emergency Response Special Revenue Fund was established to account for revenues received from the Federal Emergency Management Agency and expenditures associated with the cleanup of major storm damage that occurred in October 2006 and November 2014.

5. Capital Projects Funds are subject to project budgets determined primarily by the bonding authorizations used to fund a particular project rather than annual budgetary appropriations. These budgets do not lapse at year-end; rather, they lapse upon termination of the project.

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6. Expenditures within the General, Special Revenue, Utilities Aggregation Enterprise, and the Debt Service funds may not legally exceed the amount appropriated for such accounts within a department. During the year, numerous supplementary appropriations were necessary.

Individual governmental fund comparisons of budgetary and actual data at the legal level of control established by the adopted budget (i.e., minimally the department and account level) are not presented in this report for those funds with annual appropriated budgets due to the excessive detail involved. However, a separate budgetary comparison report is available which contains this information. This report can be obtained from the Erie County Office of the Comptroller, 95 Franklin Street, Room 1100, Buffalo, New York 14202.

Encumbrances represent commitments related to unperformed contracts for goods or services. Encumbrance accounting, under which purchase orders, contracts, and other commitments for the expenditure of monies are recorded for budgetary control purposes to reserve that portion of the applicable appropriations, is employed in all County funds except the Enterprise Funds, and the Agency Fund. Outstanding encumbrances at year end, except for grant-related commitments that are not reported in the financial statements, are presented for GAAP reporting purposes as assignments of fund balances, and do not constitute expenditures or liabilities because the commitments will be honored during the subsequent year. Unencumbered appropriations lapse at fiscal year-end.

The County reports its budgetary status with the actual data including encumbrances as charges against budgeted appropriations. Following is a reconciliation of the budgetary basis (i.e. non-GAAP) and the GAAP basis operating results (dollars in thousands):

General Fund Excess of revenues and other financing sources over expenditures and other financing uses - GAAP basis ...... $ 19,115 Less: Encumbrances at December 31, 2017 ...... 1,100 Plus: Encumbrances at January 1, 2017 ...... 2,465 Excess of revenues and other financing sources over expenditures and other financing uses - basis of budgeting . . $ 20,480

Budget columns presented in the accompanying financial statements reflect deficiencies of revenues and other financing sources over expenditures and other financing uses. These deficiencies are caused by the anticipated use of prior-year’s fund balance, which had been assigned for 2017 expenditures through the budget process. The County overspent on Health, Transportation, and Home and Community expenditures which were largely due to DSH and IGT payments, increased repairs and maintenance, and sewer repairs, respectively.

Commitments related directly to the Grants and the Community Development Special Revenue Funds in the amounts of $8,177,659 and $2,036,770, respectively, at December 31, 2017, are not reported on the GAAP financial statements. Budget appropriations are not made available for these commitments until grant revenues are recognized at the time of expenditure.

B. Deficit Unassigned Fund Balances

Deficit unassigned fund balance amounts in the Grants and the Community Development Special Revenue Funds in the amounts of $391,394 and $22,361, respectively, are caused by nonspendable

44 • Notes to the Financial Statements ______

fund balance amounts recorded for prepaid items. Deficit unassigned fund balance in the ECFSA Debt Service Fund of $30,585 is caused by the change in the fair value of the Treasury notes.

C. Deficit Net Position

The Governmental Activities reported a total net deficit of approximately $83,024,000 at December 31, 2017, resulting primarily from ETASC’s net deficit of $288,086,944 that is caused by its recognition of bonds payable with no offsetting capital assets.

The College Proprietary Fund reported a total net position deficit of $24,079,307 that primarily represents the effect of GASB required recognition of other post-employment benefits annually. It is anticipated that this trend will continue.

III – CASH, CASH EQUIVALENTS AND INVESTMENTS

Primary Government, Agency Fund and Library Component Unit

Available cash of the County is deposited and invested in accordance with the County’s own written investment guidelines which have been established by the Comptroller’s Office, approved by the County Legislature and are in compliance with provisions of applicable State statutes. The ECFSA does not have a formal investment policy.

Agency Fund bank accounts are maintained at financial institutions where monies of the County’s other funds are also on deposit. In addition, the Library does not maintain a separate bank account; instead, it participates in the pooled cash of the County. The banks calculate and report FDIC coverage and collateral requirements for the County’s Agency Fund, the County’s other funds and Library together, separately from that of the College.

Interest Rate Risk – As a means of limiting its exposure to fair value losses arising from fluctuating interest rates, it is the County’s policy to generally limit investments to municipal bonds or investments of 180 days or less.

Credit Risk – In compliance with New York State law, it is the County’s policy to limit its investments to obligations of the United States of America, obligations guaranteed by agencies of the United States of America where the payment of principal and interest are guaranteed by the United States of America, obligations of the State of New York, time deposit accounts and certificates of deposit issued by a bank or trust company located in and authorized to do business in New York State and certain joint or cooperative investment programs.

Custodial Credit Risk – For investments, this is the risk that, in the event of the failure of the counterparty, the County will not be able to recover the value of its investments or collateral securities that are in the possession of an outside party. A margin of 2% or higher of the market value of purchased securities in repurchase transactions must be maintained and the securities must be held by a third party in the County’s name. For deposits, this is the risk that in the event of a bank failure, the County’s deposits may not be returned to it. Collateral is required for deposits and certificates of deposit in an amount equal to or greater than the amount of all deposits not covered by federal deposit insurance. Banks can satisfy collateral requirements by furnishing a letter of credit, a surety bond, or by pledging eligible securities as specified in Section 10 of New York State General Municipal Law. New York State Education Law does not require collateral for college checking accounts, unless the Board of Trustees deems it necessary. If collateral is required, it can be in the form of a surety bond or obligations of the United States, the State, or any municipality or college of the State. Certain balances for accounts held in trust are collateralized by the State of New York.

______COUNTY OF ERIE, NEW YORK • 45

Concentration of Credit Risk – To promote competition in rates and service cost, and to limit the risk of institutional failure, County deposits and investments are placed with multiple institutions. The general rule is not to place more than $200,000,000 or 50% of the County’s total investment portfolio, whichever is less, in overnight investments with any one institution.

Deposits – The County deposits cash into a number of bank accounts. Monies must be deposited in demand, time or NOW accounts or certificates of deposit issued by FDIC-insured commercial banks or trust companies located within the State. Some of the County’s accounts are required by various statutes and borrowing restrictions for specific funds, while the remainder are used for County operating cash and for investment purposes.

As of December 31, 2017 (August 31, 2017 as to the College), the bank deposits of the Primary Government, Library, and Agency Fund were either FDIC insured or fully collateralized with securities held by the pledging financial institution’s agent in the County’s name.

Cash and Cash Equivalents – All highly liquid investments with an original maturity date of three months or less are considered to be cash equivalents. Existing policies require that any underlying securities for repurchase transactions must be only federal obligations. Such obligations are explicitly guaranteed by the U.S. Government and therefore not considered to have credit risk. At December 31, 2017, the fair value of money market accounts was $37,564 which were fully collateralized with securities held by the pledging financial institution’s agent in the County’s name.

Investments – All investments are carried at fair value and are held by a third party in the County’s, ETASC’s or ECFSA’s name. Investments for the Primary Government at year-end are shown below (dollars in thousands):

Fair Value Municipal bonds ...... $ 200 Corporate commercial paper ...... 19,469

Total investments ...... $ 19,669

The County’s investment in municipal bonds at December 31, 2017 consists of $200,000 of Gulf Coast Waste Disposal Authority of Texas revenue bonds maturing September 1, 2025 that were rated Aaa by Moody’s.

ETASC’s investment in corporate commercial paper at December 31, 2017 consisted of $19,468,829 of General Electric Capital Corporation Commercial Paper which was rated P-1 by Moody’s.

ECFSA had $39,049,112 in U.S. Treasury securities at December 31, 2017.

46 • Notes to the Financial Statements ______

Fair Value Measurements — The County has adopted GASB No. 72, Fair Value Measurement and Application. This guidance requires entities to expand their fair value disclosures by determining major categories of debt and equity securities within the fair value hierarchy on the basis of the nature and risk of the investment. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Management utilizes valuation techniques that maximize the use of observable inputs (Level 1 and 2) and minimize the use of unobservable inputs (Level 3) within the fair value hierarchy established by GASB. Assets and liabilities carried at fair value are required to be classified and disclosed in one of the following three categories:

Level 1 - Valuations based on quoted prices in active markets for identical assets that the County has the ability to access.

Level 2 - Valuations based on quoted prices in active markets for similar assets, quoted prices in markets that are not active or for which all significant inputs are observable, directly or indirectly.

Level 3 - Valuations based on inputs that are unobservable and significant to the overall fair value measurement. These are generally company generated inputs and are not market-based inputs. The County has no Level 3 assets.

The primary government has the following fair value measurements as of December 31, 2017:

Description Level 1 Level 2 Level 3 Total Debt Securities: Municipal bonds ...... $ 200 $ - $ - $ 200 Corporate commercial paper ...... 19,469 - - 19,469 Treasury securities ...... 39,049 - - 39,049

Total ...... $ 58,718 $ - $ - $ 58,718

ECMCC Component Unit

The ECMCC maintains various accounts for depositing, disbursing and investing its funds. The ECMCC’s investments are made in accordance with State regulations and its investment guidelines.

Cash and Cash Equivalents – Include cash on hand and monies deposited in checking and money market accounts. Excluding assets whose use is limited, cash and cash equivalents total $25,415,000 as of December 31, 2017.

Interest Rate Risk – As a means of limiting its exposure to fair value losses arising from fluctuating interest rates, it is the ECMCC’s policy to generally limit investments to maturities of less than one year.

______COUNTY OF ERIE, NEW YORK • 47

Investments – All investments are carried at fair value, and are categorized as insured or uninsured, and collateralized by securities held by the pledging financial institution in the ECMCC’s name. The ECMCC’s investments and restricted cash and cash equivalents as of December 31, 2017 are shown below (dollars in thousands).

Fair Value Money market mutual funds, bank accounts and deposits ...... $ 162,865 Marketable equity securities ...... 21,568 U.S. Government and Agency Obligations ...... 51,748 Corporate bonds ...... 33,151 Short term fixed income ...... 16,910 Total investments and restricted cash and cash equivalents ECMCC primary government ...... 286,242 Foundation Component Unit ...... 2,317 RHEC Component Unit ...... 1,016 Physician Endowment Component Unit ...... 10,795

Total ECMCC investments and restricted cash and cash equivalents ...... $ 300,370

Fair Value Investments - unrestricted...... $ 43,729 Restricted cash and cash equivalents ...... 256,641

Total ...... $ 300,370

Fair Value Measurements – ECMCC primary government has the following fair value measurements as of December 31, 2017 (dollars in thousands):

Description Level 1 Level 2 Level 3 Total Investments and assets whose use is limited: Cash and cash equivalents ...... $ 162,865 $ - $ - $ 162,865 Marketable equity securities: Mid-cap value equities ...... 3,984 - - 3,984 Value equities ...... 1,993 - - 1,993 Growth equities ...... 11,649 - - 11,649 Global core equities ...... 3,942 - - 3,942 Short-term fixed income ...... - 16,910 - 16,910 Corporate bonds ...... - 33,151 - 33,151 Government bonds ...... - 51,748 - 51,748

Total ...... $ 184,433 $ 101,809 $ - $ 286,242

48 • Notes to the Financial Statements ______

Other Component Units

Erie Community College Foundation, Inc. – The portfolio of investments is carried at their fair value. For donated investments, costs are determined to be fair value at the date of gift.

Fair values and net unrealized gains and losses pertaining to the investment portfolio as of August 31, 2017 are as follows (dollars in thousands):

Quoted Market Prices Cost (Level 1) Fixed income ...... $ 1,481 $ 1,517 International equities ...... 840 864 Domestic stocks ...... 2,059 2,170

Total ...... $ 4,380 $ 4,551

Net unrealized gain ...... $ 171

IV - RESTRICTED CASH AND CASH EQUIVALENTS

Primary Government

Restricted Cash and Cash Equivalents – At December 31, 2017 the County reported the following restricted cash and cash equivalents (dollars in thousands):

Fair Value Handicapped parking ...... $ 162 Capital expenditures ...... 138,082

Total ...... $ 138,244

______COUNTY OF ERIE, NEW YORK • 49

ECMCC Component Unit

Assets Whose Use is Limited – Assets whose use is limited are reported as restricted cash and cash equivalents at December 31, 2017 and consist of the following (dollars in thousands):

Fair Value Patient and resident's trust cash ...... $ 334 Restricted for debt service principal and interest ...... 19,788 Medical and dental staff funds...... 340 Designated for retiree health obligations ...... 24,831 Designated for self insurance ...... 37,329 Designated for long-term investment ...... 18,595 Designated for DSRIP program...... 24,440 NYS voluntary defined contribution plan escrow...... 129 Foundation Component Unit ...... 1,672 Restricted for capital projects ...... 99,041 Physicians Endowment Component Unit ...... 10,795 Restricted - insured workers' compensation collateral ...... 19,347

Total ...... $ 256,641

V - PROPERTY TAXES

The Countywide property tax is levied by the County upon the taxable real property in the towns and cities in the County in late December of each year at the last meeting of the County Legislature and becomes a lien on the next succeeding January 1. Such taxes are collected by the respective collection officers in each town and in the cities of Lackawanna and Tonawanda until the date established for return of the tax rolls to the County, which can be no later than September 15. For the City of Buffalo, the County collects these taxes from the lien date.

With respect to the cities, the County taxes are due by February 15, and penalties are imposed as follows: 1.5% prior to March 1; 3% prior to March 16; 4.5% prior to April 1; 6% prior to April 16; 7.5% prior to May 1; and 1.5% additional each month thereafter. The cities each levy and collect their city taxes, and the County is not responsible for any unpaid city taxes. The County is responsible only for uncollected County taxes levied in such cities.

With respect to the towns, the countywide property tax is levied by the County together with town property taxes, which include special district, fire district, and highway taxes. In towns of the first class, taxes are due without penalties by February 15. Penalties are 1.5% prior to March 1; 3% prior to March 16; 4.5% prior to April 2; 6% prior to April 16; 7.5% prior to May 1; and 1.5% additional for each month thereafter. In towns of the second class, taxes are due without penalty within ten days after receipt of the tax roll by the respective collection agency. Penalties are 1.5% prior to March 16 unless waived; 7.5% prior to May 1; and 1.5% additional each month thereafter. All towns first retain their share of taxes from collections and remit the balance to the County. The County is responsible for uncollected taxes of all subordinate jurisdictions, except for the three cities.

The County levies taxes for most school districts throughout the County and is responsible for uncollected school district taxes outside the cities of Buffalo, Lackawanna, and Tonawanda.

Additionally, at the option of villages within the County, the County may also be responsible for uncollected village taxes.

50 • Notes to the Financial Statements ______

Constitutional Tax Limit

The amount that may be raised by the countywide tax levy on real estate in any fiscal year (for purposes other than debt service on County indebtedness) is limited to one and one-half per centum (subject to increase up to two per centum by resolution of the County Legislature) of the five-year average full valuation of taxable real estate of the County, per New York State statutes. On November 13, 1978, a local law became effective which limits the maximum amount of real estate taxes which can be levied other than for debt service to one per centum of such average full valuation of all the taxable real estate within the County.

The County constitutional tax limit (per New York State statutes) for the fiscal year ended December 31, 2017 is computed as follows (dollars in thousands):

Five-year average full valuation of taxable real estate (2013-2017) ...... $ 50,248,169

Tax limit @ 1.5% ...... $ 753,723 Statutory additions ...... 72,768

Total taxing power ...... 826,491 Total levy ...... (312,545)

Tax margin ...... $ 513,946

______COUNTY OF ERIE, NEW YORK • 51

VI – RECEIVABLES AND DUE FROM OTHER GOVERNMENTS

All major revenues of the County’s governmental funds are considered “susceptible to accrual” based on the 60 day rule under the modified accrual basis. These include property tax, sales tax, state and federal aid, and various grant program revenues. The proprietary funds record revenues using the accrual basis of accounting.

Major revenues accrued by the County in the various governmental fund types at December 31, 2017 include sales and use taxes in the amount of $52,295,726; state and federal assistance for social services of $106,947,024; and other state and federal aid (including grants) approximating $69,534,944.

Receivables at year-end of the County’s major individual funds and nonmajor funds in the aggregate, including the applicable allowances for uncollectible accounts, are as follows (dollars in thousands):

Receivables and due from Other other governments - General ECFSA Governmental Governmental Funds Fund General Funds Total Real property taxes, interest, penalties and liens ...... $ 121,789 $ - $ 34 $ 121,823 Sales and use tax ...... - 52,296 - 52,296 Federal and state assistance for social services programs ...... 106,947 - - 106,947 Other federal and state aid ...... 36,879 - 32,205 69,084 Other ...... 12,269 - 33,726 45,995 Gross receivables ...... 277,884 52,296 65,965 396,145 Less: allowances for uncollectibles . . . . . 41,212 - - 41,212 Total receivables ...... $ 236,672 $ 52,296 $ 65,965 $ 354,933

Receivables and due from Utilities other governments - College Aggregation Proprietary Funds 8/31/17 Fund Total Accounts receivable ...... $ 11,792 $ - $ 11,792 Other ...... - 607 607 Gross receivables ...... 11,792 607 12,399 Less: allowances for uncollectibles . . . . . 8,810 - 8,810 Total receivables ...... $ 2,982 $ 607 $ 3,589

All Governmental and Proprietary Fund receivables are expected to be collected within one year.

52 • Notes to the Financial Statements ______

VII - CAPITAL ASSETS

Capital asset activity for the year ended December 31, 2017 was as follows (dollars in thousands):

A. Primary Government

1. Governmental Activities

Balance Reclassifications and Balance 1/1/17 Increases Decreases 12/31/17 Capital assets, not being depreciated: Land ...... $ 34,536 $ 328 $ - $ 34,864 Construction in progress ...... 100,318 51,976 (75,807) 76,487

Total capital assets, not being depreciated . . . . . 134,854 52,304 (75,807) 111,351

Capital assets, being depreciated: Buildings and improvements ...... 646,171 5,581 - 651,752 Transportation network ...... 646,248 27,820 - 674,068 Sewer network ...... 293,568 24,301 - 317,869 Improvements other than buildings ...... 30,373 6,527 - 36,900 Machinery and equipment ...... 123,796 2,667 (17) 126,446

Total capital assets, being depreciated ...... 1,740,156 66,896 (17) 1,807,035

Less accumulated depreciation for: Buildings and improvements ...... (375,173) (19,291) - (394,464) Transportation network ...... (400,246) (28,323) - (428,569) Sewer network ...... (107,972) (4,725) - (112,697) Improvements other than buildings ...... (20,851) (1,596) - (22,447) Machinery and equipment ...... (108,870) (5,358) 17 (114,211)

Total accumulated depreciation ...... (1,013,112) (59,293) 17 (1,072,388)

Total capital assets, being depreciated, net . . . . 727,044 7,603 - 734,647

Governmental activities capital assets, net ...... $ 861,898 $ 59,907 $ (75,807) $ 845,998

Depreciation expense was charged to functions of the governmental activities as follows:

Governmental activities: General government ...... $ 14,095 Public safety ...... 6,591 Health ...... 366 Transportation ...... 29,336 Economic assistance and opportunity ...... 24 Culture and recreation ...... 1,482 Education ...... 1,674 Home and community service ...... 5,725

Total governmental activities depreciation expense ...... $ 59,293

______COUNTY OF ERIE, NEW YORK • 53

2. Business-type Activities*

Balance 9/1/16 Reclassifications and Balance (as restated) Increases Decreases 8/31/17 Capital assets, not being depreciated: Construction in progress ...... $ 3,448 3,480$ $ (5,497) $ 1,431

Capital assets, being depreciated: Building improvements ...... 32,150 5,494 - 37,644 Land improvements ...... 64 - - 64 Equipment ...... 24,837 2,176 (255) 26,758 Library collections ...... 2,271 218 (246) 2,243

Total capital assets, being depreciated ...... 59,322 7,888 (501) 66,709

Less accumulated depreciation for: Building improvements ...... (6,114) (1,745) - (7,859) Land improvements ...... (37) (3) - (40) Equipment ...... (19,128) (2,685) 238 (21,575) Library collections ...... (1,166) (213) 233 (1,146)

Total accumulated depreciation ...... (26,445) (4,646) 471 (30,620)

Total capital assets, being depreciated, net . . . 32,877 3,242 (30) 36,089

Business-type activities capital assets, net ...... $ 36,325 $ 6,722 $ (5,527) $ 37,520

Depreciation expense for the College was $4,645,867 for the year ended August 31, 2017. The Utilities Aggregation Fund does not have capital assets.

ILDC’s land held for resale is recorded at net realizable value based on the assessment of the fair value of each project. The net realizable value as of December 31, 2017 amounted to $6,530,672.

B. Component Units

1. Library

Balance Balance 1/1/17 Increases Decreases 12/31/17 Capital assets, not being depreciated: Rare book collection ...... $ 11,434 $ 63 $ - $ 11,497 Capital assets, being depreciated: Machinery, equipment and library materials ...... 56,159 3,044 (3,689) 55,514 Less accumulated depreciation for: Machinery, equipment and library materials ...... (50,417) (2,582) 3,376 (49,623)

Total capital assets, being depreciated, net ...... 5,742 462 (313) 5,891

Library component unit capital assets, net ...... $ 17,176 $ 525 $ (313) $ 17,388

Depreciation expense for the Library was $2,582,291 for the year ended December 31, 2017.

54 • Notes to the Financial Statements ______

2. ECMCC

Balance Balance 1/1/17 Increases Decreases 12/31/17 Capital assets, not being depreciated: Construction in progress ...... $ 3,629 8,086$ $ (3,248) $ 8,467

Total capital assets, not being depreciated ...... 3,629 8,086 (3,248) 8,467

Capital assets, being depreciated: Land and land improvements ...... 20,289 237 - 20,526 Buildings and building improvements ...... 420,679 1,687 (71) 422,295 Fixed/major moveable equipment ...... 153,046 10,361 (255) 163,152

Total capital assets, being depreciated ...... 594,014 12,285 (326) 605,973 Less accumulated depreciation ...... (337,797) (28,677) 236 (366,238)

Total capital assets, being depreciated, net ...... 256,217 (16,392) (90) 239,735

ECMCC component unit capital assets, net ...... $ 259,846 $ (8,306) $ (3,338) $ 248,202

Depreciation expense for ECMCC was $28,677,000 for the year ended December 31, 2017.

VIII – PAYABLES, ACCRUED LIABILITIES AND DUE TO OTHER GOVERNMENTS

Payables at year-end of the County’s major individual funds and nonmajor funds in the aggregate are as follows (dollars in thousands):

Accounts and retained percentage payable, accrued liabilities and Other due to other governments - General ECFSA ECFSA Governmental Governmental Funds Fund General Debt Funds Total Accounts payable ...... $ 19,727 $ - $ - $ 15,106 $ 34,833 Other governments ...... 25,993 - - 124 26,117 Health and social service programs and agencies ...... 35,562 - - 668 36,230 Retained percentages ...... - - - 2,135 2,135 Salaries & fringes ...... 4,944 - - 931 5,875 Other ...... 1,504 41 32 2,425 4,002

Total ...... $ 87,730 $ 41 $ 32 $ 21,389 $ 109,192

Accounts payable, accrued liabilites due to other governments and Utility fringe benefits payable - current College Aggregation Proprietary Funds 8/31/17 Fund Total Accounts payable ...... $ 1,392 $ 1,127 $ 2,519 Fringes benefits payable - current ...... 3,809 - 3,809 Other ...... 4,972 907 5,879

Total ...... $ 10,173 $ 2,034 $ 12,207

______COUNTY OF ERIE, NEW YORK • 55

IX – PENSION OBLIGATIONS

Background

The County participates in the New York State and Local Employees’ Retirement System (“ERS”). In addition, all faculty and administrators of the College have the option of participating in the New York State Teachers’ Retirement System (“TRS”) or the Teachers’ Insurance and Annuity Association – College Retirement Equities Fund (“TIAA-CREF”).

A. Defined Benefit Plans

Plan Descriptions and Benefits Provided

New York State and Local Employees’ Retirement System – This is a cost-sharing multiple- employer retirement system. The ERS provides retirement benefits, as well as death and disability benefits. Obligations of employers and employees to contribute and benefits to employees are governed by the New York State Retirement and Social Security Law (“NYSRSSL”). As set forth in the NYSRSSL, the Comptroller of the State of New York (“Comptroller”) serves as sole trustee and administrative head of the ERS. System benefits are established under the provisions of the NYSRSSL. Once a public employer elects to participate in the System, the election is irrevocable. The New York State Constitution provides that pension membership is a contractual relationship and plan benefits cannot be diminished or impaired. Benefits can be changed for future members only by enactment of a State statute. The System is included in the State’s financial report as a pension trust fund. That report, including information with regards to benefits provided, may be found at www.osc.state.ny.us/retire/publications/index.php or obtained by writing to the New York State and Local Retirement System, 110 State Street, Albany, NY 12244.

The system is noncontributory, except for those employees who joined the ERS after July 27, 1976 who contribute 3% of their salary for the first ten years of membership and employees who joined on or after January 1, 2010, who generally contribute 3.0% to 3.5% of their salary for their entire length of service. Those joining after April 1, 2012 (Tier 6) are required to contribute a percentage ranging from 3% to 6%, based on salary. Under the authority of the NYSRSSL, the Comptroller annually certifies the actuarially determined rates expressly used in computing the employer’s contributions based on the salaries paid during the ERS’s fiscal year ending March 31.

New York State Teachers’ Retirement System – The TRS is a cost-sharing multiple-employer retirement system. TRS provides retirement benefits as well as death and disability benefits to plan members and beneficiaries as authorized by the Education Law and Retirement and the New York State Retirement and Social Security Law (“NYSRSSL”). TRS is governed by a 10 member Board of Trustees. TRS benefits are established under New York State Law. Membership is mandatory and automatic for all full-time teachers, teaching assistants, guidance counselors and administrators employed in New York State Public Schools and BOCES who elect to participate in TRS. Once a public employer elects to participate in TRS, the election is irrevocable. The New York State Constitution provides that pension membership is a contractual relationship and plan benefits cannot be diminished or impaired. Benefits can be changed for future members only by enactment of a State statute. Additional information regarding TRS may be obtained by writing to the New York State Teachers’ Retirement System, 10 Corporate Woods Drive, Albany, NY 12211-2395 or by referring to the NYSSTR Comprehensive Annual Financial Report which can be found on TRS’s website at www.nystrs.org.

56 • Notes to the Financial Statements ______

Plan members who joined the TRS before July 27, 1976, are not required to make contributions. Those joining after July 27, 1976 are required to contribute 3.0% to 3.5% of their annual salary. Employees in the System more than ten years are no longer required to contribute. Pursuant to Article 11 of the Education Law, rates are established annually by the New York State Teachers’ Retirement Board.

Pension Liabilities, Pension Expense, and Deferred Outflows of Resources and Inflows of Resources Related to Pensions—At December 31, 2017, the County reported the following liability/(asset) for its proportionate share of the net pension liability/(asset) for ERS and TRS (dollars in thousands):

Governmental Business-type Business-type Activities Activities Activities ERS ERS TRS Measurement date ...... March 31, 2017 March 31, 2017 June 30, 2016 Net pension liability/(asset) ...... $ 86,355 $ 8,291 $ 1,045 County's portion of the Plan's total net pension liability/(asset) . . . . 0.9190395% 0.0882347% 0.0976120%

The net pension liability/(asset) was measured as of March 31, 2017 for ERS and as of June 30, 2016 for TRS. The total pension liability/(asset) used to calculate the net pension liability/(asset) were determined by actuarial valuations as of April 1, 2016 and June 30, 2015, respectively, with update procedures used to roll forward the total net pension liability/(asset) to the measurement dates. The County’s proportion of the net pension liability/(asset) were based on projections of the County’s long-term share of contributions to the Systems relative to the projected contributions of all participating members, actuarially determined. This information was provided by the Systems in reports provided to the County and College. For ERS, the Library is under the County’s plan. The County determined a percentage allocated to the Library for their portion of the County’s net pension liability.

______COUNTY OF ERIE, NEW YORK • 57

For the year ended December 31, 2017, the County recognized pension expense of $52,683,344 for the ERS, and an actuarial increase of $1,705,060 for the TRS. At December 31, 2017, the County reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources (dollars in thousands):

Deferred Outflows of Resources Governmental Business-type Business-type Activities Activities Activities ERS ERS TRS Differences between expected and actual experiences ...... $ 2,164 $ 208 $ - Changes in assumptions ...... 29,502 2,832 5,956 Net difference between projected and actual earnings on pension plan investments . . . . 17,249 1,656 2,351 Changes in proportion and differences between the County's contributions and proportionate share of contributions ...... 358 33 15 County contributions subsequent to the measurement date ...... 25,618 1,363 1,448

Total ...... $ 74,891 $ 6,092 $ 9,770

Deferred Inflows of Resources Governmental Business-type Primary Activities Activities Government- ERS ERS TRS Differences between expected and actual experiences ...... $ 13,114 $ 1,259 $ 339 Net difference between projected and actual earnings on pension plan investments . . . . - - - Changes in proportion and differences between the County's contributions and proportionate share of contributions ...... 4,340 417 164

Total ...... $ 17,454 $ 1,676 $ 503

The County’s contributions subsequent to the measurement date will be recognized as a reduction of the net pension liability in the year ending December 31, 2018. Other amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions will be recognized in pension expense as follows (dollars in thousands):

Governmental Business-type Business-type Year ending Activities Activities Activities December 31, ERS ERS TRS 2018 ...... $ 14,948 $ 1,435 $ 703 2019 ...... 14,948 1,435 703 2020 ...... 13,880 1,332 2,529 2021 ...... (11,957) (1,149) 1,961 2022 ...... - - 886 Thereafter ...... - - 1,037

58 • Notes to the Financial Statements ______

Actuarial Assumptions—The total pension liability/(asset) as of the measurement date were determined by using actuarial valuations as noted in the table below, with update procedures used to roll forward the total pension liability/(asset) to the measurement date. The actuarial valuations used the following actuarial assumptions:

ERS TRS Measurement date ...... March 31, 2017 June 30, 2016 Actuarial valuation date ...... April 1, 2016 June 30, 2015 Interest rate ...... 7.00% 7.50% Salary scale ...... 3.80% 1.90%-4.72% Decrement tables ...... April 1, 2010 - July 1, 2009 - March 31, 2015 June 30, 2014 Inflation rate ...... 2.50% 2.50%

For ERS, annuitant mortality rates are based on April 1, 2010 – March 31, 2015 System’s experience with adjustments for mortality improvements based on the Society of Actuaries Scale MP-2014. For TRS, annuitant mortality rates are based on July 1, 2009 – June 30, 2014 System experience with adjustments for mortality improvements based on the Society of Actuaries Scale MP-2014, applied on a generational basis.

For ERS, the actuarial assumptions used in the April 1, 2016 valuation are based on the results of an actuarial experience study for the period April 1, 2010 – March 31, 2015. For TRS, the actuarial assumptions used in the June 30, 2015 valuation are based on the results of an actuarial experience study for the period July 1, 2009 – June 30, 2014.

The long-term rate of return on pension plan investments was determined using a building block method in which best estimate ranges of expected future real rates of return (expected returns net of investment expense and inflation) are developed for each major asset class. These ranges are combined to produce the long-term expected rate of return by weighting the expected future real rates of return by each the target asset allocation percentage and by adding expected inflation. Best estimates of the arithmetic real rates of return for each major asset class included in the target asset allocation are summarized below: Long-Term Expected Target Allocation Real Rate of Return ERS TRS ERS TRS Measurement date ...... March 31, 2017 June 30, 2016

Asset class: Domestic equities ...... 36.0% 37.0% 4.6% 6.1% International equities ...... 14.0% 18.0% 6.3% 7.3% Private equity ...... 10.0% 7.0% 7.8% 9.2% Real estate ...... 10.0% 10.0% 5.8% 5.4% Absolute return strategies . . . . . 2.0% 20.0% 4.0% 1.9% Opportunistic portfolio ...... 3.0% 0.0% 5.9% 0.0% Real assets ...... 3.0% 0.0% 5.5% 0.0% Bonds and mortgages ...... 17.0% 8.0% 1.3% 3.1% Cash ...... 1.0% 0.0% (0.3%) 0.0% Inflation-indexed bonds ...... 4.0% 0.0% 1.5% 0.0%

100.0% 100.0%

______COUNTY OF ERIE, NEW YORK • 59

Discount Rate—The discount rate used to calculate the total pension liability was 7.0% for ERS and 7.5% for TRS. The projection of cash flows used to determine the discount rate assumes that contributions from plan members will be made at the current contribution rates and that contributions from employers will be made at statutorily required rates, actuarially. Based upon the assumptions, the Systems’ fiduciary net position was projected to be available to make all projected future benefit payments of current plan members. Therefore, the long-term expected rate of return on pension plan investments was applied to all periods of projected benefit payments to determine the total pension liability/(asset).

Sensitivity of the Proportionate Share of the Net Pension Liability/(Asset) to the Discount Rate Assumption—The chart below presents the County’s proportionate share of the net pension liability/(asset) calculated using the discount rate of 7.0% for ERS and 7.5% for TRS, as well as what the County’s proportionate share of the net pension liability/(asset) would be if they were calculated using a discount rate that is one percentage-point lower (6.0% for ERS and 6.5% for TRS) or one percentage-point higher (8.0% for ERS and 8.5% for TRS) than the current assumption (dollars in thousands):

1% Current 1% Governmental Activities Decrease Assumption Increase ERS (6.0%) (7.0%) (8.0%) Employer's proportionate share of the net pension liability/(asset) ...... $ 275,801 $ 86,355 $ (73,821)

1% Current 1% Business-type Activities Decrease Assumption Increase ERS (6.0%) (7.0%) (8.0%) Employer's proportionate share of the net pension liability/(asset) . . . . . $ 26,479 $ 8,291 $ (7,087)

1% Current 1% Business-type Activities Decrease Assumption Increase TRS (6.5%) (7.5%) (8.5%) Employer's proportionate share of the net pension liability/(asset) . . . . . $ 13,640 $ 1,045 $ (9,519)

Pension Plan Fiduciary Net Position—The components of the current-year net pension liability/(asset) of the employers as of the valuation dates, were as follows (dollars in thousands):

ERS TRS Total Valuation date ...... April 1, 2016 June 30, 2015 Employers' total pension liability/(asset) ...... $ 177,400,586 $108,577,184 $285,977,770 Plan fiduciary net position ...... 168,004,363 107,506,142 275,510,505

Employers' net pension liability/(asset) ...... $ 9,396,223 $ 1,071,042 $ 10,467,265 System fiduciary net pension as a percentage of total pension liability/(asset) . . . 94.70% 99.00% 96.34%

60 • Notes to the Financial Statements ______

Payables to the Pension Plan—For ERS, employer contributions are paid annually based on the System’s fiscal year which ends on March 31, payable in full by February 1. The County opted to prepay the required contribution on December 15th at an offered discount of 0.84%. Accrued retirement contributions as of December 31, 2017 are attributable entirely to the College (August 31, 2017) and represents the projected employer contribution for College’s fiscal year of April 1, 2017 to August 31, 2017 based on paid ERS wages multiplied by the employer’s contribution rate, by tier. Accrued retirement contributions for ERS at the end of the College’s fiscal year amounted to $1,755,584.

For TRS, employer and employee contributions for the College fiscal year ended August 31, 2017 are paid to TRS in September, October and November 2017 through a state aid intercept. Accrued retirement contributions as of August 31, 2017 represent employee and employer contributions for the fiscal year ended August 31, 2017 based on paid TRS wages multiplied by the employer’s contribution rate, by tier, and employee contributions for the fiscal year as reported to the TRS System. Accrued retirement contributions for TRS as of August 31, 2017 amounted to $1,953,237.

B. Defined Contribution Plan

Teachers’ Insurance and Annuity Association - College Retirement Equities Fund

Plan Description – TIAA-CREF is an optional retirement program (“ORP”) authorized by the trustees of the State University of New York. The TIAA/CREF issues a publicly available financial report that contains financial statements and required supplementary information. The report may be obtained by writing to the Teachers’ Insurance and Annuity Association - College Retirement Equities Fund, 730 Third Avenue, New York New York, 10017.

Funding Policy – TIAA-CREF provides benefits through annuity contracts and provides retirement and death benefits to those employees who elected to participate in the ORP. Benefits are determined by the amount of individual accumulations and the retirement income option selected. All benefits generally vest after the completion of one year of service if the employee is retained thereafter. TIAA- CREF is contributory for employees who joined after July 27, 1976, who contribute 3% of their salary. For employees enrolled after June 30, 1992, the College contributes 8% of salary for the first seven years of employment and 10% of salary thereafter. For employees enrolled between July 27, 1976 and June 30, 1992, the College contributes 9% of the first $16,500 in salary and 12% thereafter. Those joining after April 1, 2013 contribute a percentage ranging from 3% to 6%, based on salary for their entire length of service. Employee contributions are deducted from their salaries and remitted on a current basis to TIAA-CREF.

Contributions made by the College and its employees in the 2017 fiscal year were $1,896,246 and $104,609 respectively. The total unpaid balance of this retirement liability at August 31, 2017 was $11,617.

______COUNTY OF ERIE, NEW YORK • 61

X - CONSTRUCTION AND OTHER COMMITMENTS

Construction Commitments – The County has a number of active construction projects at December 31, 2017. The amounts spent to date and remaining commitments (encumbrances) presented by major project groupings are as follows (dollars in thousands):

Remaining Projects Spent-to-date Commitments General government buildings, equipment and improvements ...... $ 12,729 $ 10,199 Highways, roads, bridges and equipment ...... 8,500 11,824 Sewers, facilities equipment and improvements ...... 15,336 2,670 Special capital projects ...... 21,627 3,217

Total ...... $ 58,192 $ 27,910

Operating Leases – Operating lease obligations are primarily for rental of space. Lease expenditures/expenses for the year were $5,143,727 for the primary government and approximately $3,300,000 for the ECMCC component unit. The future minimum rental payments required for non-cancelable operating leases are (dollars in thousands):

Fiscal Primary ECMCC Year Government Component Unit 2018 ...... $ 1,996 $ 1,624 2019 ...... 1,239 1,278 2020 ...... 1,069 1,112 2021 ...... 851 747 2022 ...... 281 718 2023-2027 ...... - 1,925

Totals ...... $ 5,436 $ 7,404

XI - RISK MANAGEMENT

A. Insurance

The County assumes the liability for most risk including, but not limited to, property damage, personal injury liability, medical malpractice, and workers’ compensation. Asserted and incurred but not reported judgments and claims are recorded when it is probable that an asset has been impaired or a liability has been incurred and the amount of loss can be reasonably estimated. Such recording is consistent with the requirements of GAAP. Governmental fund type estimated current contingent loss liabilities for property damage, personal injury liability, medical malpractice, and workers’ compensation are reported within governmental activities in the government-wide financial statements.

Loss contingency liabilities arising from operations of the College are recorded in accordance with GASB by the County and are reported in full within governmental activities in the government-wide financial statements and in the General Fund when payment is due. They are only recognized as a College liability when invoiced from the County.

62 • Notes to the Financial Statements ______

B. Self-Insurance Programs

The County is exposed to various risks of losses related to torts; theft of, damage to, and destruction of assets; business interruption; errors or omissions; injuries to employees; and natural disasters. The County assumes the liability for risks relating to property damage, personal injury liability, medical malpractice and workers’ compensation. The County has also elected to purchase some minor policies from commercial insurers to provide for items such as comprehensive crime and boiler/machinery coverage, as well as protection of valuable papers and records; settled claims have not exceeded commercial coverage in any of the past three fiscal years.

Judgments and claims are recognized as liabilities in the government-wide financial statements when it is probable that an asset has been impaired or a liability has been incurred and the amount of the loss can be reasonably estimated. These liabilities include an estimate of claims that have been incurred but not reported, and the effects of both specific, incremental claims adjustment expenditures/expenses and estimated recoveries on unsettled claims, if any. Judgments and claims reportable as part of the County’s governmental type fund activities are recognized as expenditures and liabilities in the General Fund when payment is due.

The County Attorney is responsible for analyzing the County’s judgments and claims and providing an opinion regarding the County’s ability to cover its liabilities in the self-insurance programs. Based on this analysis, judgments and claims of $54,180,143 were recorded as governmental activities long- term liabilities at December 31, 2017.

In addition, the County has claims in the range of $2,052,000 to $17,209,000 for which there is a reasonable possibility of a future loss. No accrual has been recorded for such possible losses as of December 31, 2017.

The amounts and classifications of the judgments and claims noted above are based upon information and opinions from the County Attorney.

The changes since December 31, 2014 in the County’s judgment and claims liability for risk financing activities were as follows (dollars in thousands):

Beginning of End of Year Year Year Balance Additions Reductions Balance 2015 . . . . . $ 54,131 $ 14,513 $ 13,298 $ 55,346 2016 . . . . . 55,346 8,253 11,333 52,266 2017 . . . . . 52,266 13,716 11,802 54,180

______COUNTY OF ERIE, NEW YORK • 63

Erie County Medical Center Corporation

Losses from asserted and unasserted claims identified under ECMCC’s incident reporting system are accrued based on actuarial estimates that incorporate ECMCC’s past experience, the nature of each claim or incident, relevant trend factors, and estimated recoveries on unsettled claims. Approximately $28,767,000 has been accrued at December 31, 2017, discounted at 2.00% and included as liabilities in the accompanying statement of net position. The County assumed ECMCC’s malpractice liability for periods prior to 2004 and, under terms of a consent decree, has agreed to provide ECMCC indemnification for malpractice related exposures of up to $1,000,000 for each of 2006 and 2007. Approximately $732,000 and $387,000 of indemnification remains available for 2006 and 2007, respectively. No accrual has been recorded by the County for such possible losses. In addition, ECMCC has recorded liabilities of approximately $28,747,000 for workers’ compensation related exposure, discounted at 1.25%. Effective January 1, 2012, ECMCC has a high deductible workers’ compensation insurance policy.

XII - SHORT-TERM DEBT

Short-term debt of the County may include revenue, tax, and/or bond anticipation notes. These notes are reported as a fund liability in the fund receiving the proceeds in accordance with the criteria set forth in GASB Statement No. 62.

The following is a summary of changes in the County’s short-term debt for the year ended December 31, 2017 (dollars in thousands):

Balance Balance Description 1/1/17 Issued Redeemed 12/31/17 Bond anticipation notes-Sewer ...... $ 13,574 $ 1,591 $ 15,165 $ - Revenue anticipation notes (RAN) ...... 89,580 111,225 89,580 111,225 Total ...... $ 103,154 $ 112,816 $ 104,745 $ 111,225

The County issued non-interest bearing bond anticipation notes in the amount of $1,591,258 during the year ended December 31, 2017 that were purchased by the New York State Environmental Facilities Corporation. In November of 2017 the short-term BANS were converted to long-term bonds.

On September 28, 2017 Erie County issued a RAN totaling $111,225,000 with an interest rate of 2.00%. The RAN matures on June 30, 2018.

64 • Notes to the Financial Statements ______

XIII - LONG-TERM LIABILITIES

A. Bonded Indebtedness

Bonded indebtedness is reported in the government-wide financial statements.

On July 18, 2017, the County issued $31,495,000 in Series 2017A, and $580,000 in Series 2017B general obligation serial bonds, all of which were issued for governmental activities. The serial bonds were issued at a premium of $6,489,897 and at an interest rate of 3.0%-5.0%. Principal payments on the bonds begin June 15, 2019 and will be fully matured on June 15, 2031.

On November 9, 2017 the County converted their bond anticipation notes (BAN) into bonds, through the NYS Environmental Facilities Corporation (EFC). The 2017C Series bonds were issued for $15,331,000 at an interest rate of 0.96%-3.98%. Principal payments on the bonds begin February 1, 2018 and will be fully matured on February 1, 2047.

The following is a summary of bond transactions of the County for the year ended December 31, 2017 (dollars in thousands):

Interest Balance Balance Due Within Purpose (1) Issue Maturity Rate (%) 1/1/17 Additions Reductions 12/31/17 One Year

Governmental activities general obligation bonds issued by County of Erie:

Capital 1999 2018 0.00 $ 13 $ - 6$ $ 7 $ 7 Capital 2001 2031 0.00 2,690 - 164 2,526 165 Capital 2002 2031 1.362-5.082 770 - 50 720 50 Capital 2002 2024 2.521-6.181 2,245 - 245 2,000 255 Capital 2003 2032 1.031-4.901 830 - 40 790 40 Capital 2003 2029 2.549-6.259 8,105 - 720 7,385 740 Capital 2003 2032 0.00 265 - 16 249 16 Capital 2003 2032 0.790-4.612 770 - 40 730 40 Capital 2004 2033 1.02-4.63 715 - 35 680 35 Capital 2005 2034 1.56-4.57 2,122 - 91 2,031 96 Capital 2005 2033 2.06-4.13 1,710 - 80 1,630 85 Capital 2005 2035 3.50-5.00 9,400 - 9,400 - - Capital 2006 2035 0.00 1,170 - - 1,170 - Capital 2006 2017 3.50-4.00 1,560 - 1,560 - - Capital 2006 2036 3.50-4.25 3,425 - 3,425 - - Capital 2007 2036 3.63-4.79 3,820 - 155 3,665 155 Capital 2010 2023 2.00-4.99 98,525 - 12,160 86,365 12,725 Capital 2010 2039 0.290-4.60 4,795 - 145 4,650 150 Refunding 2010 2020 3.865-21.455 25,500 - 5,935 19,565 6,215 Refunding 2010 2022 2.001-5.00 11,520 - 6,870 4,650 1,535 Refunding 2010 2018 0.95-3.13 30 - 15 15 15 Refunding 2011 2018 1.01-3.30 115 - 100 15 15 Capital 2011 2040 0.00 428 - 18 410 18 Capital & Refunding 2011 2041 0.28-4.95 12,410 - 425 11,985 440 Refunding 2011 2018 2.00-5.00 14,290 - 6,970 7,320 7,320 Capital 2011 2023 3.00-5.00 10,950 - 1,355 9,595 1,420 Capital 2012 2026 2.00-5.00 17,085 - 1,370 15,715 1,425 Capital 2012 2042 0.27-4.27 2,830 - 75 2,755 80 Capital 2013 2024 2.726-5.00 21,240 - 2,295 18,945 2,375 Refunding 2013 2024 2.00-5.00 23,005 - 5,155 17,850 5,420 Capital 2013 2023 2.00-5.00 26,720 - 3,295 23,425 3,445 Capital 2014 2026 2.00-5.00 21,510 - 1,740 19,770 1,810 Capital 2014 2028 2.00-5.00 2,130 - 135 1,995 140 Capital 2015 2028 5.00 28,025 - 1,760 26,265 1,850 Refunding 2015 2029 5.00 22,210 - 2,510 19,700 2,545 Capital 2015 2028 3.00-5.00 2,045 - 140 1,905 145 Capital 2016 2029 4.00-5.00 30,705 - - 30,705 1,945 Capital 2016 2028 3.00-5.00 2,060 - - 2,060 145 Capital 2017 2031 3.00-5.00 - 32,075 - 32,075 - Refunding 2017 2036 2.00-5.00 - 11,590 450 11,140 405 Capital 2017 2047 0.96-3.98 - 15,331 - 15,331 490 Totals carried forward ...... 417,738 58,996 68,945 407,789 53,757

______COUNTY OF ERIE, NEW YORK • 65

Interest Balance Balance Due Within Purpose (1) Issue Maturity Rate (%) 1/1/17 Additions Reductions 12/31/17 One Year

Totals brought forward ...... $ 417,738 $ 58,996 $ 68,945 $ 407,789 53,757$

Less bonds issued by the County to ECFSA (mirror bonds):

Capital 2010 2023 2.00-4.99 (98,525) - (12,160) (86,365) (12,725) Refunding 2010 2020 3.865-21.455 (25,500) - (5,935) (19,565) (6,215) Refunding 2010 2022 2.00-5.00 (11,520) - (6,870) (4,650) (1,535) Refunding 2011 2018 2.00-5.00 (14,290) - (6,970) (7,320) (7,320) Capital 2011 2023 3.00-5.00 (10,950) - (1,355) (9,595) (1,420) Capital 2013 2024 2.726-5.00 (21,240) - (2,295) (18,945) (2,375) Refunding 2013 2024 2.00-5.00 (23,005) - (5,155) (17,850) (5,420) Capital 2013 2023 2.00-5.00 (26,720) - (3,295) (23,425) (3,445) Capital 2017 2031 3.00-5.00 - (32,075) - (32,075) - Refunding 2017 2036 0.96-3.98 - (11,590) (450) (11,140) (405)

Total mirror bonds ...... (231,750) (43,665) (44,485) (230,930) (40,860)

Net general obligation bonds issued by County of Erie ...... 185,988 15,331 24,460 176,859 12,897

Governmental activities general obligation bonds issued by ECFSA:

Capital 2010 2023 2.0-5.0 52,230 - 12,160 40,070 12,725 Refunding 2010 2020 2.25-5.24 25,500 - 5,935 19,565 6,215 Refunding 2010 2022 2.0-5.0 11,520 - 6,870 4,650 1,535 Refunding 2011 2018 2.00-5.00 14,290 - 6,970 7,320 7,320 Capital 2011 2023 2.00-5.00 10,950 - 1,355 9,595 1,420 ECMCC facility 2011 2028 4.00-5.00 70,355 - 70,355 - - Capital 2013 2024 2.00-5.00 21,240 - 2,295 18,945 2,375 Refunding 2013 2024 2.00-5.00 23,005 - 5,155 17,850 5,420 Capital 2013 2023 2.00-5.00 26,720 - 3,295 23,425 3,445 Refunding 2016 2023 3.375-5.00 44,335 - - 44,335 - Capital 2017 2031 4.00-5.00 - 32,075 - 32,075 - Refunding 2017 2036 2.00-5.00 - 11,590 450 11,140 405 ECMCC facility 2017 2034 3.00-5.00 - 62,745 - 62,745 2,505 ECMCC capital 2017 2039 3.00-5.00 - 92,115 - 92,115 500

Total general obligation bonds issued by ECFSA ...... 300,145 198,525 114,840 383,830 43,865

Total general obligation bonds issued by County of Erie and ECFSA ...... 486,133 213,856 139,300 560,689 56,762

Premium on bond issuance ...... 18,474 - 1,744 16,730 - Premium on bond issuance-ECFSA ...... 26,148 35,606 13,691 48,063 -

Total County of Erie and ECFSA bonds payable-net ...... 530,755 249,462 154,735 625,482 56,762

Governmental activities bonds issued by ETASC(2):

Tobacco refunding 2005 varies varies 238,105 - 1,950 236,155 - Subordinate CABs 2005 varies varies 32,870 - - 32,870 - Subordinate CABs 2006 varies varies 17,695 - - 17,695 - Subordinate CABs 2005-06 varies varies 55,382 7,346 - 62,728 -

Subtotal bonds issued by ETASC ...... 344,052 7,346 1,950 349,448 -

Discount on ETASC bonds ...... (9,420) - (77) (9,343) - Discount on ETASC subordinate CABs...... (1,473) - (17) (1,456) -

Total ETASC bonds payable-net ...... 333,159 7,346 1,856 338,649 - Governmental activities bonds payable for financial statement purposes ...... $ 863,914 $ 256,808 $ 156,591 $ 964,131 56,762$

(Concluded) (1) Capital–Capital acquisition and construction. (2) Refer to discussion within Note XIII(B) regarding outstanding ETASC bonds payable, including Capital Appreciation Bonds (“CABs”).

66 • Notes to the Financial Statements ______

B. Erie Tobacco Asset Securitization Corporation (a Blended Component Unit)

In 2000, ETASC issued $246,325,000 of Tobacco Settlement Asset-Backed Bonds, Series 2000 pursuant to an indenture dated as of September 1, 2000 (the “Indenture”). The $246,325,000 bond issuance was comprised of $196,985,000 Tobacco Settlement Asset-Backed Bonds Series 2000A and $49,340,000 Tobacco Settlement Asset-Backed Bonds Series 2000B. The net proceeds of the Series 2000 Bonds were used to purchase from the County all of the County’s right, title and interest to Tobacco Settlement Revenues (“TSRs”) to which the County would otherwise be entitled under the Master Settlement Agreement (“MSA”) and Consent Decree and Final Judgment (the “Decree”).

On August 15, 2005, ETASC issued $318,834,680 in Tobacco Settlement Asset-Backed Bonds (series 2005A, E) and Capital Appreciation Bonds (“CABs”) (Series 2005B, C, D) with interest rates ranging from 5.0% to 6.75% to advance refund $239,060,000 of outstanding Series 2000 Tobacco Settlement Asset-Backed bonds bearing interest rates ranging from 5.0% to 6.5% originally issued in 2000. The net proceeds amounted to $305,330,026 after original issuance discount and payment of $13,504,654 for underwriting fees, insurance, and other issuance costs, of which $267,037,311 was used to fund an irrevocable trust to defease the remaining original bonds. This transaction enabled the ETASC to release $55,231,709 in previously restricted funds for debt service and trapping events to the County.

In connection with this bond issuance, ETASC entered into a forward purchase agreement and an effective swap of variable market rate returns with a fixed rate return that will expire by its terms on the final maturity of the asset-backed bonds on June 1, 2055. ETASC entered into this forward purchase agreement to facilitate investment of the monies in the Debt Service Reserve Fund while the 2005 ETASC bonds are outstanding.

ETASC has evaluated the forward purchase agreement using the consistent critical terms method and deemed it to be effective. As of December 31, 2017, the notional amount of the agreement totals $19,218,750, the fair value is $8,973,868, and net cash flows during the year totaled $509,385.

The forward purchase agreement is valued using quoted prices for similar assets or liabilities in active markets (Level 2 input - See Note III).

On September 15, 2005, ETASC entered into an agreement with the bondholders to replace the government securities in the irrevocable trust with government agency securities. This transaction generated a savings of $2,802,806. Of this, $1,331,893 was transferred to the County and the remainder less costs of sale was paid to the bondholders for their concessions. During 2010, the bonds were called and the balance in the irrevocable trust was used to satisfy all required debt payments.

On January 5, 2006, ETASC issued $17,694,720 of Tobacco Settlement Asset-Backed CABs, Series 2006A with an interest rate of 7.65%. ETASC entered into a purchase and sale agreement with the County on January 1, 2006, in which ETASC purchased the County’s sole undivided beneficial interest in and to the trust established by ETASC pursuant to the Declaration and Agreement of Trust dated September 1, 2000 between ETASC and the Wilmington Trust Company (“2000 Residential Trust”), in its capacity as trustee, including the County’s right to receive residual tobacco settlement revenues payable to the County, as sole beneficiary of the 2000 Residential Trust. The net proceeds of $15,638,465 were transferred to the County’s General Fund.

______COUNTY OF ERIE, NEW YORK • 67

The payment of the Series 2005 and Series 2006 Bonds is dependent on the receipt of TSRs. The amount of TSRs actually collected is dependent on many factors including cigarette consumption and the continued operations of the participating cigarette manufacturers in the MSA. Such bonds are secured by and payable solely from TSRs and investment earnings pledged under the Indenture and amounts established and held in accordance with the Indenture, and are not legal obligations of the County. ETASC has no financial assets other than the collections and reserves and amounts held in the other funds and accounts established under the Indenture.

Interest on the Series 2005A and E Bonds are payable each June 1 and December 1. The 2005 Series B, C and D and the Series 2006A are subordinate CABs and accrue interest throughout the life of the bonds but is not payable until bond maturity. Future interest accretion has been recorded as bond discount and amortized as the current interest accretes. The accreted interest on the Subordinate CABs is reflected within the Subordinate CABs payable liability. Series 2005B, C, and D CABs are subject to redemption at the option of ETASC beginning in years after 2016. The Series 2006A CABs may be redeemed after May 31, 2017.

68 • Notes to the Financial Statements ______

Details of ETASC’s long-term debt as of December 31, 2017 are as follows:

$318,834,680 Term Bond Issue Projected Final Turbo Amount Rate Description Redemption Date $ 30,330,000 5.000% Series 2005A Bonds Due June 1, 2031 June 1, 2031 Semi-annual interest only payments through maturity, may be redeemed at the option of the ETASC at anytime in whole or in part after June 1, 2015

74,685,000 5.000% Series 2005A Bonds Due June 1, 2038 June 1, 2038 Semi-annual interest only payments through maturity, may be redeemed at the option of the ETASC at anytime in whole or in part after June 1, 2015

111,480,000 5.000% Series 2005A Bonds Due June 1, 2045 June 1, 2045 Semi-annual interest only payments through maturity, may be redeemed at the option of the ETASC at anytime in whole or in part after June 1, 2015

9,163,000 5.750% Series 2005B Bonds Due June 1, 2047 June 1, 2047 Semi-annual interest accrued but not payable until maturity, subject to redemption at the option of ETASC anytime after June 1, 2015 at accreted values as follows: June 1, 2015 through May 31, 2016, 102%; June 1, 2016 through May 31, 2017, 101%; June 1, 2017 and thereafter, 100%

12,565,080 6.250% Series 2005C Bonds Due June 1, 2050 June 1, 2050 Semi-annual interest accrued but not payable until maturity, subject to redemption at the option of ETASC anytime after June 1, 2015 at accreted values as follows: June 1, 2015 through May 31, 2016, 102%; June 1, 2016 through May 31, 2017, 101%; June 1, 2017 and thereafter, 100%

11,141,600 6.750% Series 2005D Bonds Due June 1, 2055 June 1, 2055 Semi-annual interest accrued but not payable until maturity, subject to redemption at the option of ETASC anytime after June 1, 2015 at accreted values as follows: June 1, 2015 through May 31, 2016, 102%; June 1, 2016 through May 31, 2017, 101%; June 1, 2017 and thereafter, 100%

69,470,000 6.000% Series 2005E Taxable Bonds Due June 1, 2028 June 1, 2028 Semi-annual interest only payments through maturity, may be redeemed at the option of the ETASC at anytime in whole or in part after June 1, 2015

(Continued)

______COUNTY OF ERIE, NEW YORK • 69

$17,694,720 Term Bond Issue Projected Final Turbo Amount Rate Description Redemption Date $ 17,694,720 7.650% Series 2006A Taxable Bonds Due June 1, 2060 June 1, 2060 Semi-annual interest accrued but not payable until maturity, subordinate to the Series 2005 A-E Bonds, subject to redemption at the option of the ETASC anytime after June 1, 2016 at accreted values as follows: June 1, 2016 through May 31, 2017, 102%; June 1, 2017 through May 31, 2018, 101%, and June 1, 2018 and thereafter, 100%

(Concluded)

Changes in ETASC bonded indebtedness for the year ended December 31, 2017 were as follows (dollars in thousands):

Tobacco Settlement Subordinate Bonds CABs Total Bonds payable at January 1, 2017 ...... $ 238,105 $ 105,947 $ 344,052 Principal payments during 2017 ...... (1,950) - (1,950) Annual net interest accretion ...... - 7,346 7,346

Bonds payable at December 31, 2017 ...... $ 236,155 $ 113,293 $ 349,448

The amount reflected in the statement of net position for ETASC’s bonds payable is net of unamortized discounts on the sale of bonds totaling $10,798,603.

The ETASC’s debt service requirements for the Series 2005A and 2005E bonds as of December 31, 2017 are as follows (dollars in thousands): Total Year ending December 31, Principal Interest Debt Service 2018 ...... $ - $ 12,004 $ 12,004 2019 ...... - 12,004 12,004 2020 ...... - 12,004 12,004 2021 ...... - 12,004 12,004 2022 ...... - 12,004 12,004 2023-2027 ...... - 60,022 60,022 2028-2032 ...... 49,990 52,439 102,429 2033-2037 ...... - 46,541 46,541 2038-2042 ...... 74,685 29,737 104,422 2043-2045 ...... 111,480 13,937 125,417

$ 236,155 $ 262,696 $ 498,851

70 • Notes to the Financial Statements ______

C. Erie County Medical Center Corporation

Long-term Debt – The following is a summary of long-term bonded debt at December 31, 2017:

Erie County—Guaranteed Senior Revenue Bonds, Series 2004 (interest of 4.1% to 5.7%) ...... $ 78,910,000

The Series 2004 bonds are secured by a pledge of the gross receipts of ECMCC and amounts on deposit in certain debt service reserve funds. To the extent that the debt service reserve funds fall below their requirements, the County has agreed to restore such accounts to their requirement.

Pursuant to a Guaranty Agreement, the County has unconditionally guaranteed to ECMCC the punctual payment of the principal, interest and redemption premium, if any, on the Series 2004 Bonds, as the same shall become due and payable, and has pledged the faith and credit of the County for the performance of such guaranty. A municipal bond insurance policy has been purchased by ECMCC to guarantee all debt service payments in case of default by ECMCC and the County.

The Series 2004 Bonds require ECMCC to make monthly payments to certain debt service accounts for the semiannual payment of interest and the annual payment of principal (principal payments commenced November 1, 2009).

D. Other Long-Term Liabilities

In addition to bonded indebtedness, the County incurs a variety of other long-term liabilities. Descriptions of these liabilities follow:

1. Due to Retirement Systems

Retirement payables of the primary government at December 31, 2017 for amounts due in 2018 and future years are reported in the government-wide financial statements as follows (dollars in thousands):

Business-type Activities* Retirement liability outstanding at year-end ...... $ 3,720 Less: Due within one year ...... 3,504

Due in more than one year . . . . . $ 216

* The College (August 31, 2017)

The College has recorded the above retirement liabilities as long-term liabilities on the statement of net position.

2. Compensated Absences

The value recorded in the government-wide financial statements for compensated absences at December 31, 2017, for governmental activities is $22,662,964 classified as a long-term liability in the accompanying financial statements, which includes $13,116,282 due within one year. The following governmental funds have been used in prior years to liquidate this liability: General Fund and the Road, Sewer, E-911, Grants and Community Development Special Revenue Funds.

______COUNTY OF ERIE, NEW YORK • 71

Compensated absences of $3,247,123 have been reported for business-type activities, classified as fringe benefits payable, on the fund financial statements, which includes $305,000 due within one year.

Compensated absences of the Library component unit totaling $1,418,709 have been reported as a long-term liability, which includes $768,094 due within one year. Compensated absences of the ECMCC component unit totaling approximately $11,506,000 have been reported as an accrued liability.

3. Judgments and Claims

As further explained in Note XI, the County is self-insured. Liabilities are established for workers’ compensation, general and malpractice claims in accordance with GAAP. Estimated long-term contingent loss liabilities of governmental fund types total $53,153,143 and have been reported as long-term liabilities in the government-wide financial statements.

Also, as further explained in Notes XI and XIII (E) (4), ECMCC is self-insured and has recorded approximately $27,573,000 and $22,967,000 for the long-term portions of medical malpractice and workers’ compensation liability related exposures, respectively.

4. Other Post-employment Benefits (“OPEB”) – Health Insurance

The County has a single-employer post-employment benefit plan. The County recognizes the cost of post-employment healthcare in the year when the employee services are received, reports the accumulated liability from prior years, and provides information useful in assessing potential demands on the County’s future cash flows. Recognition of the liability accumulated from prior years will be phased in over 30 years, and commenced with the 2007 liability.

Plan Description – The County provides continuation of medical insurance coverage to employees if they have been continuously employed by the County for the equivalent of at least five years at the time of retirement. The obligation of the County to contribute to the cost of these benefits has been established pursuant to legislative resolution and various collective bargaining agreements. The retiree and his or her beneficiaries receive this coverage for the life of the retiree. Healthcare benefits for non-union employees are similar to those of union employees. The retiree’s share of premium costs in most instances range from 0% to 50% depending on the employee group, length of service and year of retirement.

Funding Policy – The County currently pays for Governmental Activities post-employment health care benefits on a pay-as-you-go basis, primarily from the General Fund (86%). The remainder is allocated to the Road, Sewer, E-911, Grants and Community Development Special Revenue Funds. These financial statements assume that pay-as-you-go funding will continue.

Annual Other Post-employment Benefit Cost – For the fiscal year ended December 31, 2017, the County’s annual OPEB cost (expense) of $83,663,569 is equal to the Annual Required Contribution (“ARC”) of $90,568,500, minus certain adjustments which totaled $6,904,931. Those adjustments were: interest on the net OPEB obligation and adjustment to the ARC. Considering the annual expense as well as payments for current health insurance premiums, which totaled $33,172,401 for retirees and their beneficiaries, the result was an increase in the net OPEB obligation of $50,491,168 for the year ended December 31, 2017.

72 • Notes to the Financial Statements ______

Annual OPEB Cost and Net OPEB Obligation (dollars in thousands)

Primary Governmental Business-type Government Activities Activities * Total Actuarial accrued liability (AAL) ...... $ 922,947 $ 159,805 $ 1,082,752 Unfunded actuarial accrued liability (UAAL) ...... 922,947 159,805 1,082,752 Normal cost for the fiscal year ...... 31,941 7,012 38,953 Amortization factor based on 30 years ...... 17.40 17.40 17.40 Annual covered payroll ...... 209,308 58,951 268,259 UAAL as a percentage of covered payroll ...... 440.95% 271.08% 403.62%

Level Dollar Amortization Calculation of ARC under Projected Unit Credit Method

ARC normal cost with interest to end of year ...... $ 31,941 $ 7,012 $ 38,953 UAAL over 30 years with interest at end of year ...... 58,627 9,813 68,440

Annual required contribution (ARC) ...... 90,568 16,825 107,393 Interest on net OPEB obligation ...... 17,512 3,162 20,674 Adjustment to ARC ...... (24,417) (4,409) (28,826)

Annual OPEB cost (expense) ...... 83,663 15,578 99,241 Contribution for fiscal year ended December 31, 2017 . . (33,172) (5,500) (38,672)

Increase in net OPEB obligation ...... 50,491 10,078 60,569 Net OPEB obligation December 31, 2016 ...... 407,253 73,536 480,789

Net OPEB obligation December 31, 2017 ...... $ 457,744 $ 83,614 $ 541,358

Percentage of ARC contributed ...... 36.63% 32.69% 36.01% Percent of annual OPEB cost contributed: 2017...... 39.65% 35.31% 38.97% 2016...... 41.61% 43.75% 41.94% 2015...... 51.94% 55.77% 52.51%

* The College (August 31, 2017)

Funded Status and Funding Progress – As of January 1, 2016, the most recent actuarial valuation date, the funded status of the plan was as follows (dollars in thousands):

Actuarial accrued liability (AAL) ...... $ 1,050,089 Actuarial value of plan assets ...... - Unfunded actuarial accrued liability (UAAL) ...... $ 1,050,089 Funded ratio (actuarial value of plan assets / AAL) ...... 0.00% Annual covered payroll ...... $ 267,195 UAAL as a percentage of covered payroll ...... 393.00%

______COUNTY OF ERIE, NEW YORK • 73

The County’s annual OPEB cost, the percentage of annual OPEB cost contributed to the plan, and the net OPEB obligation for the fiscal years ended December 31, 2017 and the two preceding years were as follows:

Fiscal Percentage of Net Year Annual Annual OPEB OPEB Ended OPEB Cost Cost Contributed Obligation 12/31/2017 . . . . . $ 99,241 38.97%$ 541,358 12/31/2016 ...... 91,484 41.94% 480,789 12/31/2015 ...... 72,307 52.51% 427,676

Actuarial valuations of an ongoing plan involve estimates of the value of reported amounts and assumptions about the probability of occurrence of events far into the future. Amounts determined regarding the funded status of the plan and the annual required contributions of the employer are subject to continual revision as actual results are compared with past expectations and new estimates are made about the future. The schedule of funding progress, presented as required supplementary information following the notes to the financial statements, presents multiyear trend information that shows whether the actuarial value of plan assets is increasing or decreasing over time relative to the actuarial accrued liabilities for benefits.

Actuarial Methods and Assumptions – Projections of benefits for financial reporting purposes are based on the types of benefits provided under the terms of the substantive plan (the plan as understood by the employer and the plan members) and on the historical pattern of cost sharing between the employer and plan members at that point. The actuarial methods and assumptions used include techniques that are designed to reduce the effects of short-term volatility in actuarial accrued liabilities and the actuarial value of assets, consistent with the long-term perspective of the calculations. Included coverages are “experience-rated” and annual premiums for experience-rated coverages were used as a proxy for claims costs with age adjustments for pre-65 and post-65 participants. The unfunded actuarial accrued liability is being amortized over 30 years on a level dollar open basis.

In the January 1, 2016 actuarial valuation, the liabilities were computed using the projected unit credit method. The actuarial assumptions utilized an inflation rate of 2.25% and a 4.30% investment rate of return. The latter rate is based on the projected long-term earning rate of the assets expected to be available to pay benefits. Because the County does not currently segregate funding for these benefits, the rate selected is the expected return on the County’s assets. The valuation assumes healthcare cost trends as follows: pre-65 medical, 7.50%; post-65 medical, 5.80% and prescription, 10.50%. Healthcare trends are reduced by decrements to reach a rate of 3.886% in 2075.

Medical Reimbursements – The County’s Medicare Part D prescription drug subsidy, which reduces the cost of retiree healthcare premiums, is accrued as revenue only in the current year. Projected subsidies for future years cannot be recognized as a reduction to the actuarial accrued liability.

74 • Notes to the Financial Statements ______

E. Summary of Changes in Long-Term Liabilities

The following is a summary of changes in long-term liabilities for the year ended December 31, 2017 (dollars in thousands):

1. Governmental Activities

Balance Balance Due Within 1/1/17 Additions Reductions 12/31/17 One Year

Bonds payable for financial statement purposes ...... $ 863,914 $ 256,808 $ 156,591 $ 964,131 $ 56,762 Compensated absences ...... 22,977 18,482 18,796 22,663 13,116 Judgments and claims ...... 52,266 13,716 11,802 54,180 11,375 OPEB liability ...... 407,253 83,663 33,172 457,744 - Net pension liability * ...... 145,614 - 59,259 86,355 - Accrued derivative liability - ETASC . . 8,962 12 - 8,974 -

Governmental activities long-term liabilities ...... $ 1,500,986 $ 372,681 $ 279,620 $ 1,594,047 $ 81,253

* Reductions to the net pension liability are shown net of additions.

The General Fund or applicable special revenue funds are the governmental funds that generally have been used in prior years to liquidate compensated absences, judgments and claims, other post- employment benefit and net pension liabilities.

2. Business-Type Activities*

Balance Balance Due Within 9/1/16 Additions Reductions 8/31/17 One Year

Retirement liabilities ...... $ 4,343 $ 6,756 $ 7,379 $ 3,720 $ 3,504 Compensated absences and fringe benefits ...... 4,497 161 415 4,243 305 Capital leases ...... 1,477 - 1,477 - - OPEB liability ...... 73,536 15,578 5,500 83,614 - Net pension liability** ...... 14,883 - 5,547 9,336 - Business-type activities long-term liabilities ...... $ 98,736 $ 22,495 $ 20,318 $ 100,913 $ 3,809

* The College (August 31, 2017) ** Reductions to the net pension liability are shown net of additions.

______COUNTY OF ERIE, NEW YORK • 75

3. Library Component Unit

Balance Balance Due Within 1/1/17 Additions Reductions 12/31/17 One Year Compensated absences . . . . . $ 1,504 $ 872 $ 957 $ 1,419 $ 768 OPEB liability ...... 27,129 4,999 1,466 30,662 - Net pension liability* ...... 7,254 - 2,885 4,369 - Library Component Unit long-term liabilities . . . . . $ 35,887 $ 5,871 5,308$ $ 36,450 $ 768

* Reductons to the net pension liability are shown net of additions.

4. ECMCC Component Unit

Balance Balance Due Within 1/1/17 Additions Reductions 12/31/17 One Year Bonds payable for financial statement purposes ...... $ 81,930 $ - $ 3,020 $ 78,910 $ 3,185 Long-term loan (1) ...... 75,811 182,140 78,030 179,921 4,095 Other Loan ...... 8,100 - 67 8,033 810 Capital Lease ...... 8,142 - 2,500 5,642 2,217 Judgments and claims (2). . . . . 51,584 8,091 9,135 50,540 - OPEB liability...... 138,557 26,902 14,759 150,700 Net pension liability ...... 116,006 - 44,462 71,544 - Other ...... 3,474 - 78 3,396 - ECMCC Component Unit long-term liabilities ...... $ 483,604 217,133$ 152,051$ 548,686$ $ 10,307

(1) Refer to discussion within Note XV(B) regarding long-term loan due to primary government. (2) Refer to discussions within Notes XI(B) and XIII(D)(3) and regarding judgments and claims of ECMCC.

Additional judgments and claims liabilities for workers’ compensation and medical malpractice, along with other post-employment benefits have been recorded by ECMCC as accrued liabilities in the amounts of $5,780,000, $1,194,000 and $10,777,000 respectively.

76 • Notes to the Financial Statements ______

F. Maturity Schedules (dollars in thousands)

1. Remaining Annual Maturities of Long-Term Liabilities (by Debt Type) – Primary Government

Compensated Accrued Absences Net Derivative and Fringe Judgments Pension Liability - Year Total Bonds Retirement Benefits and Claims OPEB Liability ETASC 2018 ...... $ 85,062 56,762$ 3,504$ $ 13,421 11,375$ $ - -$ -$ 2019 ...... 53,516 53,300 216 - - - - - 2020 ...... 54,736 54,736 ------2021 ...... 43,463 43,463 ------2022 ...... 45,469 45,469 ------2023-2027 . . 141,147 141,147 ------2028-2032 . . 125,117 125,117 ------2033-2037 . . 58,691 58,691 ------2038-2042 . . 103,514 103,514 ------2043-2047 . . 114,645 114,645 ------2048-2052 . . 21,728 21,728 ------2053-2057 . . 11,142 11,142 ------2058-2060 . . 17,695 17,695 ------Various (1) . . 765,041 62,728 - 13,485 42,805 541,358 95,691 8,974 1,640,966 910,137 $ 3,720 $ 26,906 54,180$ 541,358$ 95,691$ $ 8,974

(10,798) (10,799) Remaining unamortized discount on bond issuance - ETASC (16,730) 16,730 Remaining unamortized premium of bond issuance (48,062) 48,063 Remaining unamortized premium of bond issuance - ECFSA $ 1,565,376 964,131$ Long-term liabilities for financial statement purposes

(1) Payment of Subordinate CABs, compensated absences, judgments and claims, OPEB, and net pension liabilities are dependent upon many factors; therefore, timing of future payments is not readily determinable.

2. Annual Interest Payments Due on Serial Bonds

Primary ECMCC Year Government Component Unit 2018 ...... $ 33,651 $ 4,445 2019 ...... 30,761 4,270 2020 ...... 32,555 4,085 2021 ...... 30,219 3,890 2022 ...... 28,053 3,685 2023-2027 . . . . 113,726 13,605 2028-2032 . . . . 81,214 8,778 2033-2037 . . . . 61,512 412 2038-2042 . . . . 32,666 - 2043-2047 . . . . 14,256 -

Totals . . . . $ 458,613 $ 43,170

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3. Principal and Interest Payments Due on County Mirror Bonds to ECFSA

Year Principal Interest 2018 ...... $ 40,860 $ 10,946 2019 ...... 36,875 8,474 2020 ...... 38,405 6,710 2021 ...... 25,760 5,144 2022 ...... 26,995 3,859 2023-2027 . . . . 43,680 7,285 2028-2032 ...... 15,670 2,124 2033-2036 . . . . 2,685 176

Totals . . . $ 230,930 $ 44,718

4. Remaining Annual Maturities of Long-Term Liabilities - Library Component Unit

Compensated Net Pension Year Total Absences OPEB Liability 2018 ...... $ 768 $ 768 $ - $ - Various (1) . . . 35,682 651 30,662 4,369

Totals . . . $ 36,450 $ 1,419 $ 30,662 $ 4,369

(1) Payment of compensated absences, OPEB and net pension liabilities are dependent on many factors; therefore, timing of future payments is not readily determinable.

5. Remaining Annual Maturities of Long-Term Liabilities - ECMCC Component Unit

Net Long-term Capital Judgments Pension Year Total Serial Bonds Loan Lease and Claims OPEB Liability Other 2018 ...... $ 10,307 $ 3,185 $ 4,905 $ 2,217 $ - -$ $ - $ - 2019 ...... 18,064 3,360 12,435 2,269 - - - - 2020 ...... 10,615 3,545 5,914 1,156 - - - - 2021 ...... 10,556 3,740 6,816 - - - - - 2022 ...... 10,935 3,945 6,990 - - - - - 2023-2027 . . . 61,038 23,260 37,778 - - - - - 2028-2032 . . . 73,719 30,655 43,064 - - - - - 2033-2037 . . . 59,595 7,220 52,375 - - - - - 2038-2039 . . . 17,677 - 17,677 - - - - - Various (1). . . 276,180 - - - 50,540 150,700 71,544 3,396

Totals . . $ 548,686 $ 78,910 $ 187,954 5,642$ $ 50,540 $ 150,700 71,544$ 3,396$

(1) Payment of judgments and claims, OPEB and net pension liabilities is dependent on many factors; therefore, timing of future payments is not readily determinable.

G. Permanent Financing Requirements

Under New York State statutes, permanent bonding of general County improvements must take place within five to seven years of the date of initial financing. Specially assessed improvements, (e.g., sewer), have no limitation as to their period of temporary financing, except that a three-year limitation exists where such financing has been obtained through the New York State Environmental Facilities Corporation. The County has permanently financed all significant indebtedness subject to this permanent financing statute.

78 • Notes to the Financial Statements ______

H. Constitutional Debt Limit

The County constitutional debt limit at December 31, 2017 is computed as follows (dollars in thousands):

Five-year average full valuation of taxable real estate (2013-2017) ...... $ 50,248,169

Debt limit @ 7% ...... $ 3,517,372 Net indebtedness (after statutory exclusions) ...... 486,699 *

Net debt contracting margin ...... $ 3,030,673

Percentage of debt contracting power exhausted ...... 13.84%

*Net indebtedness includes general obligation bonds of $327,405,000, sewer bonds of $80,384,000 and ECMCC bond guaranty of $78,910,000 (excludes RAN of $111,225,000, ETASC bonds of $349,447,400 to be paid with tobacco settlement proceeds by ETASC and ECFSA bonds of $92,115,000 for capital projects and $62,745,000 for the nursing home refunding, totaling $154,860,000 to be paid by ECMCC. The capital projects bonds will mature in September 2039 while the refunding bonds will mature in September 2034).

I. Defeasance

In the prior year, the Authority defeased serial bonds by placing the proceeds of the new bonds in an irrevocable trust account to provide for all future debt service payments on the old bonds. Accordingly, the trust account assets and the liability for the defeased bonds are not included in the Authority’s financial statements. At December 31, 2017, $46,295,000 of defeased bonds remain outstanding, with a call date of May 15, 2020 – 2023.

J. Current Refunding

In July 2017, the County of Erie issued $11,590,000 in general obligation bonds to refund $12,825,000 of outstanding bonds. The net proceeds of $12,963,559 were deposited into an Escrow Deposit Fund. The moneys deposited constituted an irrevocable deposit and remained there un- invested and without liability for interest, in an amount that was sufficient to pay the redemptive price of the refunded bonds and all accumulated interest up to the date fixed for redemption.

The County of Erie elected to call and redeem on August 17, 2017 all of the outstanding aggregate principal amount of the $12,825,000 refunded serial bonds at par plus accrued interest to the redemption date.

The County completed the current refunding to reduce its total debt service payments over the next 21 years by $2,931,098 and to obtain an economic gain (difference between the present values of the old and new debt service payments) of $2,286,030.

K. ECFSA Transactions

The County entered into a loan agreement and a capitalized interest liability assumption agreement with the Erie County Medical Center, with the assistance of the Erie County Fiscal Stability Authority. The proceeds of the loan were used to finance the construction of a new Level 1 Adult

______COUNTY OF ERIE, NEW YORK • 79

Trauma Center and Emergency Department, fund various other capital projects on the Erie County Medical Center’s campus as well as refinance the 2011 loan. The loan has an interest rate of 3.377% with monthly principal and interest payments ranging from $38 to $930 during the term of the loan. In addition to the loan, the Erie County Medical Center assumed the liability related to funds borrowed to pay capitalized interest during construction on the various projects noted above. The capitalized interest liability assumption has an interest rate of 3.377% with monthly principal and interest payments ranging from $3 to $77 during the term of the loan. The new money portion of the loan and the capitalized interest assumption agreement is fully amortized and matures in 2039. The refinancing component of the loan has an interest rate of 2.649% with monthly principal and interest payments ranging from $300 to $460 during the term of the loan and is fully amortized and maturing in 2034.

In September 2017, the Authority issued $62,745,000 in sales tax and State aid secured refunding bonds with interest rates ranging from 3.0% to 5.0% to advance refund $70,355,000 of outstanding Series 2011C serial bonds with interest rates of 5.0%. Proceeds of $79,884,255 (including a premium of $11,621,859 and other debt set-aside funds of $5,517,396) were used to purchase U.S. Government Securities of $79,491,279 and to fund estimated costs of issuance in the amount of $392,976. The securities were placed in an irrevocable trust with an escrow agent to pay for all future debt service payments of the original bonds until their call date of December 1, 2021. As a result, the original bonds are considered to be defeased and the liability has been removed from the financial statements. The amount outstanding on the original bonds at December 31, 2017 was $65,935,000.

XIV – NET POSITION AND FUND BALANCE

A. Net Position

The government-wide and proprietary fund financial statements utilize a net position presentation. Net position is categorized as net investment in capital assets, restricted and unrestricted.

Net Investment In Capital Assets – This category groups all capital assets, including infrastructure, into one component of net position. Accumulated depreciation and the outstanding balances of debt that are attributable to the acquisition, construction or improvement of these assets reduce the balance in this category.

Restricted Net Position – This category represents external restrictions imposed by creditors, grantors, contributors or laws or regulations of other governments and restrictions imposed by law through constitutional provisions or enabling legislation.

Unrestricted Net Position – This category represents net position of the County not restricted for any project or other purpose.

B. Fund Balance

In the governmental fund financial statements, nonspendable amounts represent net current financial resources that cannot be spent because they are either not in spendable form or legally or contractually required to be maintained intact. Nonspendable fund balance maintained by the County at December 31, 2017 includes:

Prepaid Items – $12,251,851 representing amounts prepaid to vendors and the New York State and Local Employees' Retirement System that are applicable to future accounting periods.

80 • Notes to the Financial Statements ______

In the fund financial statements, restricted fund balances are amounts constrained to specific purposes (such as grantors, bondholders, and higher levels of government) through constitutional provisions or by enabling legislation. Restricted fund balance of the County at December 31, 2017 includes:

Handicapped Parking – $161,655 representing monies restricted for education, advocacy and increased public awareness of handicapped parking laws.

Community Development Loans – $30,006,869 representing amounts offset for community development loans receivable, which are legally required to be maintained intact.

Debt Service – $45,060,469 representing funds to be used toward the future repayment of bonded debt service.

Capital Expenditures – $98,196,660 representing funds that have been reserved to fund capital projects and the purchase of capital assets. This amount includes commitments (encumbrances) of $27,909,713 for capital projects currently in process.

The County Legislature authorizes assigned amounts of fund balance. Assigned funds represent amounts intended to be used for a specific purpose. In the fund financial statements, assignments by the County at December 31, 2017 include:

Subsequent Year’s Expenditures – Represents available fund balance of $22,227,476 appropriated to meet expenditure requirements in the 2017 year.

Judgments and Claims – Represents amounts to fund future settlements of various claims and litigation in the amount of $1,500,000.

Other Purposes – Includes amounts assigned for supplemental appropriations ($15,246,437) within the 2018 year which were approved by the Legislature subsequent to the adoption of the 2018 budget, amounts to cover the County’s cost of road repairs ($2,371,502), encumbrances ($5,783,843) and positive residual balances ($22,271,655) in Special Revenue Funds; and General Fund encumbrances ($1,100,045).

Accounting prescription set by the Erie County Comptroller provides for a sunset provision of one fiscal year for all fund balance assignments. Legislature approval is required to establish and subsequently appropriate fund balance assignments.

The County considers encumbrances to be significant for amounts that are encumbered in excess of $1,000,000 for a particular purpose. As of December 31, 2017, significant encumbrances are as follows (dollars in thousands): Other Governmental Purpose Funds Community Development Block Grant Van Program. . . . . 1,009 Renovation to Lab & Medical Exam Facility...... 1,195 Goodrich Rd Construction and Preservation ...... 4,140 Stony Rd Bridge Construction and Preservation ...... 1,375 Countywide Highway Vehicle & Equipment Replacement 1,839 Countywide Capital Overlay Program ...... 1,031 Sewer District #3 Construction and Improvements ...... 1,767 ECC - New Academic Building...... 2,945 Total ...... $ 15,301

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In circumstances where an expenditure is to be made for a purpose for which amounts are available in multiple fund balance classifications, it is the County’s policy that the order in which resources will be expended is as follows: restricted fund balance, followed by committed fund balance, assigned fund balance, and lastly, unassigned fund balance.

XV - INTERFUND BALANCES AND TRANSACTIONS

A. Interfund Receivables and Payables

Interfund receivables and payables of the County at December 31, 2017, and the College at August 31, 2017, consisted of the following (dollars in thousands):

Receivable Fund Payable Fund Amount General Fund ECFSA General...... $ 52,774 Nonmajor Governmental Funds . . . . . 39,668 College ...... 2,594 Nonmajor Proprietary Fund ...... 8,901 103,937

Nonmajor Governmental Funds Nonmajor Governmental Funds . . . . . 55,263

College General Fund ...... 102

Nonmajor Proprietary Fund College ...... 2 General Fund ...... 857 859

Total receivables ...... 160,161 Plus: timing differences ...... (541) Total payables ...... $ 159,620

Interfund receivables exceed interfund payables by $541,091. This difference represents interfund receivables in the amounts of $486,541 and $54,550 recorded by the County and the College, respectively, that are not reflected as interfund payables in the corresponding balance sheets because of the difference between the County and the College fiscal year end.

All balances resulted from the time lag between the dates that (1) interfund goods and services are provided or reimbursable expenditures occur, (2) transactions are recorded in the accounting system, and (3) payments between funds are made.

82 • Notes to the Financial Statements ______

B. Due To/From Component Unit and Primary Government Amounts due between the component units and the primary government at December 31, 2017, consisted of the following (dollars in thousands):

Receivable Entity Payable Entity Amount

Primary Government-Governmental Activities ECMCC Component Unit ...... $ 179,921

Primary Government-Nonmajor Governmental Fund ECMCC Component Unit ...... $ 185

Primary Government-Nonmajor Proprietary Fund ECMCC Component Unit ...... $ 10,934

ECMCC Component Unit Primary Government-Governmental Activities. . $ 22,105

During 2011, the ECFSA issued serial bonds in the amount of $86,250,000 to assist ECMCC in the construction of a new residential health care facility. Loan agreements were executed whereby the ECFSA loaned the proceeds and net premium of $10,614,413 to the County, who in turn loaned the monies to ECMCC. In 2017, these serial bonds were refunded through a similar agreement. The par amount of the refunded bonds issued was $62,745,000. Although the amortization schedules on the bonds and the loan are approximately the same in total, the principal and interest components vary. On a monthly basis, ECMCC pays the County directly, while the ECFSA withholds sales tax revenue that otherwise would be transferred to the County. The ECFSA retains these monies until the semiannual debt service on the bonds are due. Principal and interest payments on long-term obligations between the ECFSA and the County are reported as transfers in and transfers out in the fund financial statements.

Principal payments received from ECMCC during 2017 totaling $2,219,000 are recorded within miscellaneous revenues in the County’s Debt Service Fund and eliminated in the government-wide statements. The remaining amount due from ECMCC in the amount of $179,921,000 is reported on the government-wide financial statements only. This balance is shown as a reconciling item on the Reconciliation of the Balance Sheet – Governmental Funds to the Statement of Net Position.

The remaining principal and interest payments on ECMCC’s long-term loan payable to the County are as follows (dollars in thousands):

Year Principal Interest Total 2018 ...... $ 4,095 $ 1,874 $ 5,969 2019 ...... 5,212 2,927 8,139 2020 ...... 5,914 5,092 11,006 2021 ...... 6,816 4,905 11,721 2022 ...... 6,990 4,705 11,695 2023-2027 . . . 37,778 20,331 58,109 2028-2032 . . . . 43,064 14,487 57,551 2033-2037 . . . 52,375 7,358 59,733 2038-2039 . . . . 17,677 459 18,136

Totals . . . $ 179,921 $62,138 $ 242,059

______COUNTY OF ERIE, NEW YORK • 83

C. Interfund Transfers

Interfund transfers for the County for the year ended December 31, 2017, and the College for the year ended August 31, 2017, consisted of the following (dollars in thousands):

Transfers Out Transfers In Amount Purpose - provide financial resources: General Fund Nonmajor Governmental Funds ...... $ 4,848 For the local share of Grant programs Nonmajor Governmental Funds ...... 63,166 For general debt service Nonmajor Governmental Funds ...... 340 To support various capital projects Nonmajor Governmental Funds ...... 141 For highway maintenance Nonmajor Governmental Funds ...... 13,787 For highway improvements Nonmajor Governmental Funds ...... 3,704 To support E-911 operations College ...... 16,254 To support College operations

102,240

ECFSA General Fund ...... 439,440 For general operations from sales tax receipts

Nonmajor Governmental Funds Nonmajor Governmental Funds ...... 12,717 To support various capital projects Nonmajor Governmental Funds ...... 5,309 To support various capital projects Nonmajor Governmental Funds ...... 6,457 To support various capital projects Nonmajor Governmental Funds ...... 5,729 For general debt service Nonmajor Governmental Funds ...... 24,123 For highway maintenance Nonmajor Governmental Funds ...... 17,507 For sewer debt service Nonmajor Governmental Funds ...... 380 For Sewer operations Nonmajor Governmental Funds ...... 8 For County share of CDBG grants ECFSA Debt Service ...... 56,604 For ECFSA Debt Service General Fund ...... 621 For general operations College ...... 1,800 For movable equipment

131,255 Total transfers ...... $ 672,935

84 • Notes to the Financial Statements ______

XVI – PROPERTY TAX ABATEMENTS

As of December 31, 2017, the County provides property tax abatements through a Housing for Low and Very Low Income Households Payment in Lieu of Taxes (“PILOT”) program. The program was established to stimulate development of affordable housing in the region, especially for those with the lowest level of incomes.

The State of New York passed Articles 5 and 11 of the New York State Private Housing Finance Law and section 421-e of the New York State Real Property Tax Law, which allows municipal governments to enter into agreements with developers to make a PILOT agreement. In 1999, the Erie County PILOT Policy was approved by the Erie County Legislature through resolution 21E-26. This policy defined two PILOT agreements for low income households in Erie County.

PILOT A refers to PILOT agreements that are used with housing for low income households. The criteria for PILOT A agreements is that 60% of units are affordable (no more than 30% of resident’s imputed income) to people earning no more than 60% median income for the area.

PILOT B refers to PILOT agreements that are used with housing for very low income households. The criteria for PILOT B agreements is that 60% of units are affordable (no more than 30% of resident’s imputed income) to people earning no more than 50% median income for the area.

Both PILOTs A & B must have a fifteen year commitment for low-income use that includes appropriate regulatory restrictions.

Applicants for a PILOT agreement must supply the Erie County Department of Environment and Planning and the local taxing jurisdiction with information that includes, but is not limited to, the percentage of units for low and very low income residents, the planned development’s five year operating budget, the number of residential units and square footage and a letter indicating community support from the chief elected official.

Once the application is received by Erie County, the Commissioner of Environment and Planning will respond within fifteen business days with a letter acknowledging the receipt of the application. The Commissioner will then write a letter of recommendation to approve or disapprove the PILOT request within thirty days of receipt of the completed application. If recommended for approval, the Commissioner will submit the PILOT agreement to the County Legislature within forty days of receipt of the application. Once approved by the Legislature, the PILOT agreement will be submitted to the County Executive for his signature. It is expected that the applicant will concurrently seek approval from the local taxing jurisdiction in which the planned development is located.

The initial PILOT payment will be 5% of the housing project’s Total Effective Income for PILOT A agreements, and 3% of the housing project’s Total Effective Income for PILOT B agreements. Under both PILOT agreements, in each and every subsequent year, a 3% escalator will be applied to the previous year’s PILOT payment. Payments will continue for 15 years, after which time the property will be subject to full taxation. Of the PILOT payments, 75% will be paid directly to the local taxing jurisdiction in which the Development is located, and 25% of will be paid directly to the County.

During 2017, the County received payments for 40 PILOT agreements from within the City of Buffalo, which encompassed 164 properties. The County real property taxes for these properties totaled $738,726 while $223,128 was received for PILOT payments. This resulted in tax abatements totaling $515,598.

There were also two additional agreements with properties in the Town of Amherst that were not covered under an IDA. The County real property taxes for these properties totaled $55,250 while $22,297 was received for PILOT payments. This resulted in tax abatements totaling $32,953.

______COUNTY OF ERIE, NEW YORK • 85

The County also is subject to tax abatements granted by six (6) Industrial Development Agencies (“IDA’s”), entities created under New York State Law. The IDA’s in Erie County have adopted a Countywide Industrial Development Agency Uniform Tax Exemption Policy to provide for uniform policies for the claiming of IDA incentives. Permissible business activities include traditional manufacturing, distributive services, business services, and arts, entertainment and recreation.

Property tax abatements for the year ended December 31, 2017 were as follows: Real Property PILOT Tax IDA Taxes Payments Abatements Amherst ...... $ 1,006,980 $ 571,727 $ 435,253 Clarence ...... 381,799 282,977 98,822 Concord ...... 26,846 18,048 8,798 Erie County (ECIDA) . . . . . 4,399,110 2,551,094 1,848,016 Hamburg ...... 592,086 280,637 311,449 Lancaster ...... 657,356 365,927 291,429

Total ...... $ 7,064,177 $ 4,070,410 $ 2,993,767

XVII - CONTINGENCIES

A. Sales Tax Audits

The State of New York periodically audits its distribution of sales tax revenues to counties throughout the State. Subsequent revisions to the revenues recorded as of December 31, 2017, if any, would be reflected in the operating statement in the year that they are calculated.

B. Supplemental 1% Sales Tax

Through legislation approved by the County and the State of New York, first effective in March of 1985, the County extended an additional 1% sales and compensating use tax. An added requirement of this legislation commencing in 2007, is that the County is required to share $12,500,000 of this tax with other local municipalities. This tax generated approximately $161,053,121 (gross) for the year ended December 31, 2017. The enabling legislation allowing this additional tax expires November 30, 2019. Legislative approval by both New York State and the County is required for the continuation of this revenue source.

C. Supplemental 0.25% Sales Tax

Through legislation approved by the County and the State of New York, the County initiated an additional 0.25% sales and compensating use tax effective July 1, 2005. This tax generated approximately $40,251,561 for the year ended December 31, 2017. The enabling legislation allowing this additional tax expires November 30, 2019. Legislative approval by both New York State and the County is required for the continuation of this revenue source.

86 • Notes to the Financial Statements ______

D. Supplemental 0.50% Sales Tax

The County Legislature approved a home rule message requesting approval of the New York State Legislature to raise the sales tax 0.50%, to 8.75%. The New York State Legislature approved the Sales Tax Request in January 2006 and the County Legislature enacted the tax increase effective January 15, 2006. This tax generated approximately $80,503,122 for the year ended December 31, 2017. The enabling legislation allowing this additional tax expires November 30, 2019. Legislative approval by both New York State and the County is required for the continuation of this revenue source.

E. Federal and State Aid

The County receives federal aid, state aid, or both for a portion of its mandated social services program expenditures (reported in the Economic Assistance and Opportunity category in the financial statements), such as Medicaid, Family Assistance and Safety Net. The County appropriates only the local share of state administered Medicaid expenditures. Conversely, the County appropriates total expenditures for Family Assistance and Safety Net programs, and budgets state and/or federal aid as revenue. Federal and state aid represents approximately 42% of 2017 County appropriations for social services programs.

The County also receives certain federal, state and private grants. These grants are used primarily to augment current operations, and for special demonstration projects and programs. Should funding of any such grant be stopped at any point, the County may assume the cost thereof in its operating budget or suspend the programs funded by such grant.

The Federal and State governments are not constitutionally obligated to maintain or continue current levels of federal and state aid to the County. Accordingly, no assurance can be given that present federal and state aid levels will be maintained in the future. Federal and state budgetary restrictions which may eliminate or substantially reduce federal or state aid could have a material adverse effect upon the County, requiring either a counterbalancing increase in revenues from other sources or a curtailment of non-mandated expenditures. Social Services and Medicaid expenditures are generally mandated by New York State law.

F. Other Contingent Liabilities

1. Financial Assistance Audits

As discussed above, the County receives significant financial assistance from numerous federal and state governmental agencies and third-party payors. The disbursement of monies received under these programs generally requires compliance with terms and conditions specified in the related agreements and are subject to audit by the funding agencies or payors. Any disallowed expenditures resulting from such audits could become a liability of the governmental or proprietary funds. At December 31, 2017, ECMCC, a component unit of the County, has recorded $22,521,000 as an accrued liability for probable third-party payor settlements. The amount of any other expenses that may be disallowed cannot be determined at this time, although ECMCC expects such other amounts to be immaterial.

______COUNTY OF ERIE, NEW YORK • 87

2. Pollution Remediation

The County has identified two pollution remediation sites that trigger the obligating event criteria relating to GASB Statement No. 49, Accounting and Financial Reporting for Pollution Remediation Obligations. The County is aware that the New York State Department of Environmental Conservation has classified these sites as Class 2, meaning that remediation action is required due to a significant threat posed to the public health or environment. Although a loss is probable, it is not possible at this time to reasonably estimate the amount of any obligation for remediation that would be material to the County's financial statements because the extent of environmental impact, allocation among the potentially responsible parties, remediation alternatives (which could involve no or minimal efforts), and concurrence of the regulatory authorities have not yet advanced to the stage where a reasonable estimate of any loss that would be material to the County can be made.

XVIII – JOINT VENTURES

A. Western Regional Off-Track Betting

Pursuant to authority provided by New York State statute, a regional off-track betting corporation was established in 1973 to operate a system of off-track pari-mutuel betting within the Western New York area. This public benefit corporation, known as the Western Regional Off-Track Betting Corporation (“OTB”), is governed by a Board of Directors comprised of one member from each participating county and city. The OTB net revenue is divided among the participating counties, with one-half being distributed based on population and the remainder based on each entity’s share of the total wagering in the region. A county containing an eligible city that has elected to participate in the OTB must relinquish a portion of the revenue to which it would otherwise be entitled to such city in an amount equal to the percentage of the county population attributable to the city. In the case of Erie County, both the County and the City of Buffalo participate in the OTB.

The OTB has the power to issue bonds and notes to carry out the purposes for which it was formed. Such bonds, notes or other, obligations are not a debt of the participating municipalities, and they may only be paid from the OTB’s funds.

OTB total undistributed net revenue decreased by $1,294,349 for the year ended December 31, 2017. The OTB reported net revenue available for distribution to participating municipalities of $205,384. Separate financial statements for this joint venture can be obtained from the OTB Comptroller at 8315 Park Road, Batavia, New York, 14020.

B. Buffalo Erie Niagara Land Improvement Corporation

The Buffalo Erie Niagara Land Improvement Corporation (“BENLIC”) was established on June 6, 2012 under New York State’s Land Bank Act (Article 16 of the Not-for-Profit Corporation Law). BENLIC’s mission is to confront and alleviate the problems distressed properties cause to communities by supporting municipal and regional revitalization efforts and strategically acquiring, improving, assembling, and selling distressed, vacant, abandoned, and/or tax-delinquent properties. BENLIC was formed through a joint venture of the County of Erie and Cities of Buffalo, Lackawanna, and Tonawanda and is governed by a Board of Directors comprised of 11 members.

BENLIC has the power to incur debt to carry out the purposes for which it was formed. Such debt is not an obligation of the participating municipalities, and may only be paid from BENLIC funds.

88 • Notes to the Financial Statements ______

BENLIC is eligible to receive financial assistance from federal and state governmental agencies in the form of grants. BENLIC reported revenues and other support totaling $1,697,467 and expenses totaling $1,480,170 for year ended December 31, 2017. BENLIC reported net position of $2,643,231 at December 31, 2017, of which $0 was temporarily restricted.

Separate financial statements for this joint venture can be obtained from the BENLIC Executive Director at 95 Franklin Street, Buffalo, New York, 14202.

XIX - SUBSEQUENT EVENTS

Management has evaluated subsequent events through June 21, 2018, which is the date the financial statements are available for issuance, and have determined that there are no subsequent events that require disclosure under generally accepted accounting principles.

******

______COUNTY OF ERIE, NEW YORK • 89

REQUIRED SUPPLEMENTARY INFORMATION

The schedule of funding progress presents the results of OPEB valuations as of January 1, 2016, 2014, 2012, 2010, 2008, and 2006 and provides trend information about whether the actuarial values of the plan assets are increasing or decreasing over time relative to the actuarial accrued liabilities for benefits.

The schedules of local government’s proportionate share of the net pension liability/(asset) and local government’s contributions presents trend information of the components of the net pension liability/(asset) and related ratios for each retirement system the County participates in, including the pension plan’s fiduciary net position as a percentage of the total pension liability, and the contributions as a percentage of covered-employee payroll.

90 • COUNTY OF ERIE, NEW YORK ______

Schedule of Funding Progress Other Post-Employment Benefits Plan – Primary Government (dollars in thousands)

Actuarial UAAL as a Actuarial Actuarial Accrued Unfunded Percentage Valuation Value of Liability (1) AAL Funded Covered of Covered Date Assets ("AAL") ("UAAL") Ratio Payroll Payroll

1/1/2016 ...... - $ 1,050,089 $ 1,050,089 - % $ 267,195 393.00%

1/1/2014 ...... - 906,421 906,421 - % 262,355 345.49%

1/1/2012 ...... - 838,682 838,682 - % 254,423 329.64%

1/1/2010 ...... - 916,628 916,628 - % 260,985 351.22%

1/1/2008 ...... - 835,493 835,493 - % 248,847 335.75%

1/1/2006 ...... - 736,192 736,192 - % 243,332 302.55%

Note: (1) Based on the Projected Unit Credit Actuarial Cost Method

______COUNTY OF ERIE, NEW YORK • 91

Schedule of Local Government's Proportionate Share of the Net Pension Liability Employees' Retirement System - Primary Government Last Four Fiscal years (1) (dollars in thousands)

Year Ended December 31, 2017 2016 2015 2014

Measurement date ...... March 31, 2017 March 31, 2016 March 31, 2015 March 31, 2014

County's proportion of the net pension liability ...... 1.007277% 0.999966% 0.991287% 0.991287%

County's proportionate share of the net pension liability ...... $ 94,646 $ 160,497 $ 33,488 $ 44,795

County's covered payroll ...... $ 250,626 $ 244,605 $ 228,878 $ 232,489

County's proportionate share of the net pension liability as a percentage of its covered-employee payroll ...... 37.76% 65.61% 14.63% 19.27%

Plan fiduciary net position as a percentage of the total pension liability ...... 94.70% 90.70% 97.95% 97.15%

Note: (1) Information prior to the year ended December 31, 2014 is not available.

92 • COUNTY OF ERIE, NEW YORK ______

Schedule of Local Government's Contributions Employees' Retirement System - Primary Government Last Four Fiscal years (1) (dollars in thousands)

Year Ended December 31, 2017 2016 2015 2014

Contractually required contributions ...... $ 36,452 $ 35,896 $ 35,997 $ 29,608

Contributions in relation to the contractually required contribution ...... (36,452) (35,896) (35,997) (29,608)

Contribution deficiency (excess) ...... $ - $ - $ - -$

County's covered-employee payroll ...... $ 232,041 $ 227,722 $ 224,514 $ 220,536

Contributions as a percentage of covered-employee payroll ...... 15.71% 15.76% 16.03% 13.43%

Note: (1) Information prior to the year ended December 31, 2014 is not available. ______COUNTY OF ERIE, NEW YORK • 93

Schedule of Local Government's Proportionate Share of the Net Pension Liability/(Asset) Teacher's Retirement System - Primary Government Last Four Fiscal years (1) (dollars in thousands)

Year Ended August 31, 2017 2016 2015 2014

Measurement date ...... June 30, 2016 June 30, 2015 June 30, 2014 June 30, 2013

College's proportion of the net pension liability/(asset) ...... 0.097612% 0.095057% 0.092554% 0.095618%

College's proportionate share of the net pension liability/(asset) ...... $ 1,045 $ (9,873) $ (10,651) $ (609)

College's covered payroll ...... $ 15,568 $ 14,377 $ 14,243 $ 13,674

College's proportionate share of the net pension liability/(asset) as a percentage of its covered-employee payroll ...... 6.70% (68.68%) (74.78%) (4.46%)

Plan fiduciary net position as a percentage of the total pension liability/(asset) . . . 99.00% 110.50% 111.48% 100.70%

Note: (1) Information prior to the year ended December 31, 2014 is not available.

94 • COUNTY OF ERIE, NEW YORK ______

Schedule of Local Government's Contributions Teacher's Retirement System - Primary Government Last Four Fiscal years (1) (dollars in thousands)

Year Ended August 31, 2017 2016 2015 2014 Contractually required contributions ...... $ 1,997 $ 2,503 $ 2,295 $ 1,605

Contributions in relation to the contractually required contribution ...... (1,997) (2,503) (2,295) (1,605)

Contribution deficiency (excess) ...... $ - $ - $ - -$

College's covered-employee payroll ...... $ 14,912 $ 15,544 $ 14,483 $ 14,350

Contributions as a percentage of covered-employee payroll ...... 13.39% 16.10% 15.85% 11.18%

Note: (1) Information prior to the year ended August 31, 2014 is not available. ______COUNTY OF ERIE, NEW YORK • 95

COMBINING AND INDIVIDUAL FUND FINANCIAL STATEMENTS AND SCHEDULES

These financial statements and schedules provide more detailed information than is presented in the basic financial statements.

Combining statements are presented for the nonmajor governmental funds.

Individual fund statements and schedules present the following:

- Comparisons of budgetary and actual data for certain Special Revenue Funds and the Debt Service Fund.

- Statement of Changes in Assets and Liabilities for the Agency Fund.

- Fund financial statements for the discretely presented Library component unit.

Combining statements are presented for the discretely presented Other Component Units.

96 • COUNTY OF ERIE, NEW YORK ______

NONMAJOR GOVERNMENTAL FUNDS

SPECIAL REVENUE FUNDS

These funds are used to account for the proceeds of specific revenue sources that are legally restricted to expenditures for specific purposes. These funds include the Road, Sewer, Downtown Mall, E-911, Emergency Response, Grants and Community Development Funds. In addition, the Erie Tobacco Asset Securitization Corporation (“ETASC”) General Fund is presented as a nonmajor Special Revenue Fund.

Road Fund Used to account for all revenues and expenditures related to the maintenance of County roads and bridges, snow removal, construction and reconstruction of County roads not required to be recorded in a Capital Projects Fund.

Sewer Fund Used to account for the activities of the various sewer districts currently in operation within the County.

Downtown Mall Fund Used to account for revenues raised through a special district charge levy and the subsequent expenditure of these monies for the operation and maintenance of a downtown pedestrian/transit mall.

E-911 Fund Used to account for revenues raised through a telephone access line surcharge and the subsequent expenditure of these monies for the establishment and maintenance of an enhanced 911 emergency telephone system.

Emergency Response Fund Used to account for revenues received from the Federal Emergency Management Agency and expenditures associated with the ongoing clean-up of major winter storm damage that occurred in October 2006 and November 2014.

Grants Fund Used to account for federal and state operating grants (except the Community Development Block Grant) earmarked for specific programs, so that grantor accounting and reporting requirements can be satisfied.

ETASC General Fund Used to account for all financial resources associated with ETASC except for those required to be accounted for in another fund.

Community Development Fund Used to assist participating municipalities in the development of locally approved community or economic development activities that are eligible under federal program regulations.

______COUNTY OF ERIE, NEW YORK • 97

DEBT SERVICE FUNDS

Debt Service Funds are used to account for current payments of principal and interest on general obligation long-term debt, and for financial resources that have been accumulated to make future principal and interest payments on general long term indebtedness.

Debt Service Fund Used to account for the accumulation of resources for, and for the payment of, long-term bond principal, interest and related costs of the County.

ETASC Debt Service Fund Used to account for the accumulation of resources for, and for the payment of, long-term bond principal, interest and related costs of the ETASC.

CAPITAL PROJECTS FUNDS

Capital Projects Funds are used to account for financial resources to be used for the acquisition or construction of major capital facilities.

General Government Buildings, Equipment and Improvements Fund Used to account for capital projects administered by the Department of Public Works involving the acquisition, construction, or reconstruction of major or permanent facilities having a relatively long useful life and equipment purchased from the proceeds of long-term debt.

Highways, Roads, Bridges and Equipment Fund Utilized to account for capital projects administered by the Department of Public Works for the construction or reconstruction of County roads and bridges and the acquisition of equipment not accounted for in the Road Fund.

Sewers, Facilities, Equipment and Improvements Fund Used to account for capital projects relating to the construction and acquisition of sewer facilities and equipment by the operating sewer districts.

Tobacco Proceeds Fund Used to account for the net proceeds from the County’s securitization of its share of the 1998 Master Settlement Agreement with the tobacco industry that will be used to fund capital projects that otherwise would have been supported by operating funds or the issuance of bonds.

Special Capital Projects Fund Utilized to account for capital projects administered by departments other than Public Works that are primarily for the acquisition or construction of buildings, improvements and equipment.

98 • COUNTY OF ERIE, NEW YORK ______

Combining Balance Sheet Nonmajor Governmental Funds December 31, 2017 (dollars in thousands)

Special Revenue

Downtown Emergency Road Sewer Mall E-911 Response ASSETS: Cash and cash equivalents ...... x $ - $ 30,663 $ 48 $ - $ - Investments ...... x - - - - - Restricted cash and cash equivalents ...... x - - - - - Receivables (net of allowances) x Real property taxes, interest, x penalties and liens ...... x - - 34 - - Other ...... x 72 3 - 326 - Due from other funds ...... x - 8,457 - - - Due from component unit ...... 3 182 - - - Due from other governments ...... x 9,248 89 - - 1,780 Prepaid items ...... x 392 2,665 - 139 - x

Total assets ...... x $ 9,715 $ 42,059 $ 82 $ 465 $ 1,780 x LIABILITIES: x Accounts payable ...... x $ 1,112 $ 790 $ - $ 44 $ 5 Accrued liabilities ...... x 435 455 82 108 - Due to other funds ...... x 5,001 - - 108 341 Due to other governments ...... - - - - 51 Retained percentages payable ...... x - 7 - - - Unearned revenue ...... x - - - - - x Total liabilities ...... x 6,548 1,252 82 260 397

FUND BALANCES: x Nonspendable: Prepaid items ...... x 392 2,665 - 139 - Restricted for: x Community development loans ...... - - - - - Debt service ...... x - - - - - Capital expenditures ...... x - - - - - Assigned: x Subsequent year's x expenditures ...... x - 12,002 - - - Other purposes ...... x 2,775 26,140 - 66 1,383 Unassigned ...... x - - - - - x Total fund balances ...... x 3,167 40,807 - 205 1,383 Total liabilities and fund balances ...... x $ 9,715 $ 42,059 $ 82 $ 465 $ 1,780

______COUNTY OF ERIE, NEW YORK • 99

Special Revenue

ETASC Community Grants General Development Total

$ - $ 63 $ 774 $ 31,548 ------

- - - 34 570 - 30,025 30,996 - - - 8,457 - - - 185 12,760 - 4,299 28,176 391 30 22 3,639

$ 13,721 $ 93 $ 35,120 $ 103,035

$ 1,918 $ $ 1,647 $ 5,516 1,731 - 85 2,896 8,575 - - 14,025 23 - 50 124 51 - - 58 1,423 - 3,331 4,754 13,721 - 5,113 27,373

391 30 22 3,639

- - 30,007 30,007 ------

- - - 12,002 - 63 - 30,427 (391) - (22) (413) - 93 30,007 75,662

$ 13,721 $ 93 $ 35,120 $ 103,035

(Continued)

100 • COUNTY OF ERIE, NEW YORK ______

Combining Balance Sheet Nonmajor Governmental Funds December 31, 2017 (dollars in thousands)

Debt Service

Debt ETASC Service Debt Service Total ASSETS: Cash and cash equivalents ...... $ - $ - $ - Investments ...... - 19,469 19,469 Restricted cash and cash equivalents ...... - 1,036 1,036 Receivables (net of allowances) - Real property taxes, interest, - penalties and liens ...... - - - Other ...... - - - Due from other funds ...... 46,806 - 46,806 Due from component unit ...... - - - Due from other governments ...... 107 - 107 Prepaid items ...... - - x -

Total assets ...... $ 46,913 $ 20,505 $ 67,418 x LIABILITIES: x Accounts payable ...... $ 49 $ - $ 49 Accrued liabilities ...... 103 - 103 Due to other funds ...... 22,206 - 22,206 Due to other governments ...... - - - Retained percentages payable ...... - - - Unearned revenue ...... - - x - Total liabilities ...... 22,358 - 22,358

FUND BALANCES: x Nonspendable: Prepaid items ...... - - - Restricted for: Community development loans ...... - - - Debt service ...... 24,555 20,505 45,060 Capital expenditures ...... - - - Assigned: Subsequent year's expenditures ...... - - - Other purposes ...... - - - Unassigned ...... - - -

Total fund balances ...... 24,555 20,505 45,060 Total liabilities and fund balances ...... $ 46,913 $ 20,505 $ 67,418

______COUNTY OF ERIE, NEW YORK • 101

Capital Projects General Government Highways, Sewers, Buildings, Roads, Facilities, Special Total Equipment and Bridges and Equipment and Tobacco Capital Nonmajor Improvements Equipment Improvements Proceeds Projects Total Funds

$ 3,301 $ 3,837 $ 9,200 $ - $ 1,568 $ 17,906 $ 49,454 - - - 200 - 200 19,669 42,940 35,017 9,655 16 10,369 97,997 99,033

------34 - - - - 546 546 31,542 ------55,263 ------185 436 2,623 200 - 2,847 6,106 34,389 ------3,639

$ 46,677 $ 41,477 $ 19,055 $ 216 $ 15,330 $ 122,755 $ 293,208

$ 2,319 $ 3,249 $ 648 $ - $ 3,325 $ 9,541 $ 15,106 434 148 85 - 358 1,025 4,024 511 2,761 8,457 - 165 11,894 48,125 ------124 473 281 210 - 1,113 2,077 2,135 - 21 - - - 21 4,775 3,737 6,460 9,400 - 4,961 24,558 74,289

------3,639

------30,007 ------45,060 42,940 35,017 9,655 216 10,369 98,197 98,197

------12,002 ------30,427 ------(413) 42,940 35,017 9,655 216 10,369 98,197 218,919

$ 46,677 $ 41,477 $ 19,055 $ 216 $ 15,330 $ 122,755 $ 293,208

(Concluded)

102 • COUNTY OF ERIE, NEW YORK ______

Combining Statement of Revenues, Expenditures and Changes in Fund Balances Nonmajor Governmental Funds For the year ended December 31, 2017 (dollars in thousands) Special Revenue

Downtown Road Sewer Mall E-911 REVENUES: Real property taxes and tax items ...... x $ - $ 24,366 $ 1,769 $ - Sales and use taxes ...... x - - - 3,481 Transfer and other taxes ...... x 13,136 - - - Intergovernmental ...... x 10,526 - - 21 Interfund revenues ...... x - - - - Departmental ...... x 156 26,322 - - Interest ...... x - 20 - - Miscellaneous ...... x - 735 - - x Total revenues ...... x 23,818 51,443 1,769 3,502 x EXPENDITURES: x Current: x General government support ...... x - - 1,769 - Public safety ...... x - - - 5,938 Health ...... x - - - 1,201 Transportation ...... x 29,221 - - - Economic assistance and opportunity ...... x - - - - Home and community service ...... x - 40,639 - - Capital outlay ...... x - - - - Debt service: x Principal retirement ...... x - - - - Interest and fiscal charges ...... x - 32 - - x Total expenditures ...... x 29,221 40,671 1,769 7,139 x Excess (deficiency) of revenues x over expenditures ...... x (5,403) 10,772 - (3,637) x OTHER FINANCING SOURCES (USES) : x Issuance of general obligation debt ...... x - - - - Refunding bonds issued...... x - - - - Payments to refunded bond escrow agent ...... x - - - - Premium on bond issuance ...... x - - - - Sale of Property ...... x - 24 - - Transfers in ...... x 13,787 380 - 3,704 Transfers out ...... x (10,550) (9,817) - - x Total other financing x sources (uses) ...... x 3,237 (9,413) - 3,704 Net change in fund balances ...... x (2,166) 1,359 - 67 Fund balances - beginning ...... 5,333 39,448 - 138 x Fund balances - ending ...... x $ 3,167 $ 40,807 $ - $ 205

______COUNTY OF ERIE, NEW YORK • 103

Special Revenue

Emergency ETASC Community Response Grants General Development Total

$ - $ - $ - $ - $ 26,135 - - - - 3,481 - - - - 13,136 - 30,978 - 2,282 43,807 ------1,045 - 3,853 31,376 - - - - 20 - 1,233 - - 1,968 - 33,256 - 6,135 119,923

407 7,236 99 - 9,511 - 6,786 - - 12,724 - 8,776 - - 9,977 12 - - - 29,233 - 14,134 - 246 14,380 - 1,180 - 5,352 47,171 - - - - -

------32 419 38,112 99 5,598 123,028

(419) (4,856) (99) 537 (3,105)

------24 - 4,856 - - 22,727 - - - (8) (20,375)

- 4,856 - (8) 2,376 (419) - (99) 529 (729) 1,802 - 192 29,478 76,391

$ 1,383 $ - $ 93 $ 30,007 $ 75,662 (Continued)

104 • COUNTY OF ERIE, NEW YORK ______

Combining Statement of Revenues, Expenditures and Changes in Fund Balances Nonmajor Governmental Funds For the year ended December 31, 2017 (dollars in thousands) Debt Service

Debt ETASC Service Debt Service Total REVENUES: Real property taxes and tax items ...... x $ - $ - $ - Sales and use taxes ...... x - - - Transfer and other taxes ...... x - - - Intergovernmental ...... x 412 13,176 13,588 Interfund revenues ...... x - - - Departmental ...... x - - - Interest ...... x 10,520 271 10,791 Miscellaneous ...... x 1,725 - x 1,725 Total revenues ...... x 12,657 13,447 26,104 x EXPENDITURES: x Current: x General government support ...... x 135 - 135 Public safety ...... x - - - Health ...... x - - - Transportation ...... x - - - Economic assistance and opportunity ...... x - - - Home and community service ...... x - - - Capital outlay ...... x - - - Debt service: x Principal retirement ...... x 11,635 1,950 13,585 Interest and fiscal charges ...... x 7,995 11,553 x 19,548 Total expenditures ...... x 19,765 13,503 33,268 x Excess (deficiency) of revenues x over expenditures ...... x (7,108) (56) (7,164) x OTHER FINANCING SOURCES (USES) : x Issuance of general obligation debt ...... x - - - Refunding bonds issued...... x - - - Payments to refunded bond escrow agent ...... x (12,964) - (12,964) Premium on bond issuance ...... x 1,486 - 1,486 Sale of Property ...... x - - - Transfers in ...... x 86,402 - 86,402 Transfers out ...... x (56,650) - x (56,650) Total other financing x sources (uses) ...... x 18,274 - 18,274 Net change in fund balances ...... x 11,166 (56) 11,110 Fund balances - beginning ...... x 13,389 20,561 33,950 x Fund balances - ending ...... x $ 24,555 $ 20,505 $ 45,060

______COUNTY OF ERIE, NEW YORK • 105

$ - $ - $ - $ - $ - $ - $ 26,135 ------3,481 ------13,136 7,510 6,663 227 - 8,920 23,320 80,715 90 - - - - 90 90 92 310 88 - - 490 31,866 - - 11 - - 11 10,822 4 - - - - 4 3,697 7,696 6,973 326 - 8,920 23,915 169,942

------9,646 ------12,724 ------9,977 ------29,233 ------14,380 ------47,171 16,121 24,806 3,531 - 21,623 66,081 66,081

------13,585 ------19,580 16,121 24,806 3,531 - 21,623 66,081 222,377

(8,425) (17,833) (3,205) - (12,703) (42,166) (52,435)

- - 15,331 - - 15,331 15,331 ------(12,964) 2,553 2,725 114 - 1,045 6,437 7,923 ------24 13,057 24,264 5,309 - 6,457 49,087 158,216 (2,115) (2,937) (1,472) - (2,836) (9,360) (86,385)

13,495 24,052 19,282 - 4,666 61,495 82,145 5,070 6,219 16,077 - (8,037) 19,329 29,710 37,870 28,798 (6,422) 216 18,406 78,868 189,209

$ 42,940 $ 35,017 $ 9,655 $ 216 $ 10,369 $ 98,197 $ 218,919 (Concluded)

106 • COUNTY OF ERIE, NEW YORK ______

Road Special Revenue Fund Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual (Non-GAAP Basis of Accounting) For the fiscal year ended December 31, 2017 (dollars in thousands)

Original Final Budgetary Variance with Budget Budget Actual Final Budget REVENUES: Transfer taxes ...... $ 11,300 $ 11,300 $ 13,136 $ 1,836 Intergovernmental ...... 8,800 8,800 10,526 1,726 Interfund revenue ...... 50 50 - (50) Departmental ...... 110 110 156 46

Total revenues ...... 20,260 20,260 23,818 3,558

EXPENDITURES: Current: Transportation ...... 29,745 30,106 29,161 945

Total expenditures ...... 29,745 30,106 29,161 945

Excess (deficiency) of revenues over expenditures ...... (9,485) (9,846) (5,343) 4,503

OTHER FINANCING SOURCES (USES): Transfers in ...... 16,235 16,386 13,787 (2,599) Transfers out ...... (6,750) (10,550) (10,550) -

Total other financing sources (uses) ...... 9,485 5,836 3,237 (2,599)

Net change in fund balances * ...... $ -$ (4,010) $ (2,106) $ 1,904

* The net change in fund balances was included in the final budget as an appropriation (i.e., spend down) of fund balance. ______COUNTY OF ERIE, NEW YORK • 107

Sewer Special Revenue Fund Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual (Non-GAAP Basis of Accounting) For the fiscal year ended December 31, 2017 (dollars in thousands)

Original Final Budgetary Variance with Budget Budget Actual Final Budget REVENUES: Real property taxes and tax items ...... $ 24,333 $ 24,333 $ 24,366 $ 33 Departmental ...... 25,648 25,648 26,322 674 Interest ...... 21 21 20 (1) Miscellaneous ...... 29 29 735 706

Total revenues ...... 50,031 50,031 51,443 1,412

EXPENDITURES: Current: Home and community service ...... 48,399 48,777 40,570 8,207 Debt service: Interest and fiscal charges ...... 42 44 32 12

Total expenditures ...... 48,441 48,821 40,602 8,219

Excess (deficiency) of revenues over expenditures ...... 1,590 1,210 10,841 9,631

OTHER FINANCING SOURCES (USES): Sale of property ...... - - 24 24 Transfers in ……………………………………………… - 380 380 - Transfers out ...... (11,181) (11,181) (9,817) 1,364

Total other financing sources (uses) ...... (11,181) (10,801) (9,413) 1,388

Net change in fund balances * ...... $ (9,591) $ (9,591) $ 1,428 $ 11,019

* The net change in fund balances was included in the budget as an appropriation (i.e., spend down) of fund balance.

108 • COUNTY OF ERIE, NEW YORK ______

Downtown Mall Special Revenue Fund Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual (Non-GAAP Basis of Accounting) For the fiscal year ended December 31, 2017 (dollars in thousands)

Original Final Budgetary Variance with Budget Budget Actual Final Budget REVENUES: Real property taxes and tax items ...... $ 1,773 $ 1,773 $ 1,769 $ (4)

Total revenues ...... 1,773 1,773 1,769 (4)

EXPENDITURES: Current: General government support ...... 1,773 1,773 1,769 4

Total expenditures ...... 1,773 1,773 1,769 4

Net change in fund balances ...... $ -$ - $ - $ -

______COUNTY OF ERIE, NEW YORK • 109

E-911 Special Revenue Fund Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual (Non-GAAP Basis of Accounting) For the fiscal year ended December 31, 2017 (dollars in thousands)

Original Final Budgetary Variance with Budget Budget Actual Final Budget REVENUES: Sales and use taxes ...... $ 3,626 $ 3,626 $ 3,481 $ (145) Intergovernmental ...... 19 19 21 2

Total revenues ...... 3,645 3,645 3,502 (143)

EXPENDITURES: Current: Public safety ...... 6,406 6,406 5,953 453 Health ...... 1,296 1,296 1,201 95

Total expenditures ...... 7,702 7,702 7,154 548

Excess (deficiency) of revenues over expenditures ...... (4,057) (4,057) (3,652) 405

OTHER FINANCING SOURCES: Transfers in ...... 4,057 4,057 3,704 (353)

Total other financing sources ...... 4,057 4,057 3,704 (353)

Net change in fund balances ...... $ - $ - $ 52 $ 52

110 • COUNTY OF ERIE, NEW YORK ______

Emergency Response Special Revenue Fund Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual (Non-GAAP Basis of Accounting) For the fiscal year ended December 31, 2017 (dollars in thousands)

Original Final Budgetary Variance with Budget Budget Actual Final Budget EXPENDITURES: General government support ...... - 209 407 (198)

Total expenditures ...... - 209 407 (198)

Excess (deficiency) of revenues over expenditures ...... - (209) (407) (198)

Net change in fund balances ...... $ - $ (209) $ (407) $ (198)

______COUNTY OF ERIE, NEW YORK • 111

Debt Service Fund Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual (Non-GAAP Basis of Accounting) For the fiscal year ended December 31, 2017 (dollars in thousands)

Original Final Budgetary Variance with Budget Budget Actual Final Budget REVENUES: Intergovernmental ...... $ 412 $ 412 $ 412 $ - Interest ...... 905 2,664 10,520 7,856 Miscellaneous ...... 63 1,436 1,725 289

Total revenues ...... 1,380 4,512 12,657 8,145

EXPENDITURES: Current: General government support ...... - 135 135 - Debt service: Principal retirement ...... 57,449 12,292 11,635 657 Interest and fiscal charges ...... 18,762 8,842 7,995 847

Total expenditures ...... 76,211 21,269 19,765 1,504

Excess (deficiency) of revenues over expenditures ...... (74,831) (16,757) (7,108) 9,649

OTHER FINANCING SOURCES (USES): Proceeds on refunding bonds ...... - 11,590 - (11,590) Payments to refunded bond escrow ...... - (12,964) (12,964) - Premium on bond issuance ...... - - 1,486 1,486 Transfers in ...... 72,758 72,758 86,402 13,644 Transfers out ...... - (56,650) (56,650) -

Total other financing sources (uses) ...... 72,758 14,734 18,274 3,540

Net change in fund balances * ...... $ (2,073) $ (2,023) $ 11,166 $ 13,189

* The net change in fund balances was included in the budget as an appropriation (i.e., spend down) of fund balance.

112 • COUNTY OF ERIE, NEW YORK ______COUNTY OF ERIE, NEW YORK • 113

AGENCY FUND

The Agency Fund is used to account for money and property received and held in the capacity of custodian or agent. The Agency Fund is custodial in nature and does not involve measurement of results of operations.

114 • COUNTY OF ERIE, NEW YORK ______

Statement of Changes in Assets and Liabilities Agency Fund For the year ended December 31, 2017 (dollars in thousands)

Balance Balance 1/1/2017 Additions Deductions 12/31/2017 ASSETS: Cash and cash equivalents ...... $ 44,011 $ 357,132 $ 354,224 $ 46,919 Receivables: Other receivables ...... 618 7,286 7,270 634 Bonds and securities held in custody ...... 20 - - 20

Total assets ...... $ 44,649 $ 364,418 $ 361,494 $ 47,573

LIABILITIES: Amounts held in custody for others: Court funds ...... $ 17,725 $ 8,231 $ 5,342 $ 20,614 Mortgage tax ...... 3,881 23,350 24,366 2,865 Social services ...... 7,487 105,101 104,952 7,636 Bail and bid deposits ...... 781 790 893 678 Payroll taxes and withholdings ...... 4,338 200,469 200,422 4,385 Miscellaneous - other ...... 10,437 11,921 10,963 11,395

Total amounts held in custody for others . . . . . 44,649 349,862 346,938 47,573

Total liabilities ...... $ 44,649 $ 349,862 $ 346,938 $ 47,573

______COUNTY OF ERIE, NEW YORK • 115

LIBRARY COMPONENT UNIT

The financial data shown for the Buffalo and Erie County Public Library (the “Library”) is derived from records maintained on its behalf by the County. The Library does not issue separate financial statements. The inclusion of the Library as a component unit in the County’s basic financial statements reflects the County’s financial accountability for this legally separate entity.

116 • COUNTY OF ERIE, NEW YORK ______

Balance Sheet Library Component Unit December 31, 2017 (dollars in thousands)

Library

ASSETS: Cash and cash equivalents ...... x $ 9,167 Receivables (net of allowances) x Other ...... x 181 Due from other governments ...... x 393 Prepaid items ...... x 847 x Total assets ...... x $ 10,588 x LIABILITIES: x Accounts payable ...... x $ 355 Accrued liabilities ...... x 349 Unearned revenue ...... x 768 x Total liabilities ...... x 1,472

FUND BALANCES: x Nonspendable ...... x 847 Committed ...... x 2,797 Assigned ...... x 2,190 Unassigned ...... x 3,282 x Total fund balances ...... x 9,116 Total liabilities and fund balances ...... x $ 10,588 x

______COUNTY OF ERIE, NEW YORK • 117

Reconciliation of the Balance Sheet Library Component Unit to the Government-wide Statement of Net Position December 31, 2017 (dollars in thousands)

Library

Total fund balance - Library component unit ...... x $ 9,116 x Amounts reported for governmental activities in the statement x of net position are different because: x x Capital assets used in governmental activities are not financial x resources and, therefore, are not reported in the funds ...... x 17,388

Deferred outflows and inflows of resources related to pensions are applicable to future periods and, therefore, are not reported in the funds. Deferred outflows related to employer contributions ...... 1,293 Deferred outflows related to experience, changes of assumptions, investment earnings and changes in proportion ...... 2,492 Deferred inflows relating to pension plans ...... (883)

Long-term liabilities are not due and payable in the current x period and, therefore, are not reported in the funds ...... x (36,450) x Net position of Library component unit ...... x $ (7,044)

118 • COUNTY OF ERIE, NEW YORK ______

Statement of Revenues, Expenditures and Changes in Fund Balance Library Component Unit For the year ended December 31, 2017 (dollars in thousands)

Library x REVENUES: x Real property taxes and tax items ...... x $ 23,944 Intergovernmental ...... x 3,157 Departmental ...... x 741 Interest ...... x 3 Miscellaneous ...... x 133 x Total revenues ...... x 27,978 x EXPENDITURES: x Current: x Culture and recreation ...... x 27,571 x Total expenditures ...... x 27,571 Net change in fund balance ...... x 407 x Fund balance - beginning ...... x 8,709 Fund balance - ending ...... x $ 9,116

______COUNTY OF ERIE, NEW YORK • 119

Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balance Library Component Unit to the Government-wide Statement of Activities For the year ended December 31, 2017 (dollars in thousands)

Library

Net change in fund balance - Library component unit ...... x $ 407 x Amounts reported for library component unit in the statement of activities are different because:

Governmental funds report capital outlays as expenditures. However, x in the statement of activities the cost of those assets is allocated x over their estimated useful lives and depreciated. This is the amount x by which capital outlays exceeded depreciation expense in the current period. x Capital outlays, net of disposals of $302 ...... x $ 2,794 Depreciation expense ...... x (2,582) Net adjustment ...... x 212 x Net differences between pension contributions recognized on the fund financial statements and the government-wide statements are as follows: Direct pension contributions...... (1,293) Cost of benefits earned net of employee contributions ...... 572 (721) Certain expenses reported in the statement of activities do not require x the use of current financial resources and, therefore, are not reported x as expenditures in governmental funds ...... x (3,448) x Change in net position of Library component unit ...... x $ (3,550)

120 • COUNTY OF ERIE, NEW YORK ______

______COUNTY OF ERIE, NEW YORK • 121

OTHER COMPONENT UNITS

Other Component Units of Erie County include:

The financial data shown for the Erie Community College Foundation, Inc. and the Auxiliary Services Corporation of Erie Community College, Inc. is derived from their separately issued financial statements. Both of these entities are included as component units in the County’s basic financial statements, based on the fact that they are legally separate entities for which the College and County are financially accountable.

122 • COUNTY OF ERIE, NEW YORK ______

Combining Statement of Net Position Other Component Units December 31, 2017 (dollars in thousands)

Auxiliary College Services Foundation Corporation (August 31, 2017) (August 31, 2017) Total ASSETS: Cash ...... x $ 409 $ 1,712 $ 2,121 Investments ...... x 4,551 - 4,551 Grant receivable ...... x - - - Receivables (net of allowances) ...... x 82 86 168 Inventories ...... x - 34 34 Prepaid items ...... x - 11 11 Other assets ...... x - 678 678 Land held for sale ...... x - - - Capital assets: x Other capital assets, net of depreciation . . . . . x - 270 x 270 Total assets ...... x 5,042 2,791 7,833 x LIABILITIES: x Accounts payable ...... x 4 35 39 Accrued liabilities ...... x 159 746 905 Unearned revenue ...... x - 27 x 27 Total liabilities ...... x 163 808 971 x NET POSITION: x Net investment in capital assets ...... x - - - Restricted for: x Other purposes ...... x 3,256 199 3,455 Unrestricted ...... 1,623 1,784 x 3,407 Total net position ...... x $ 4,879 $ 1,983 $ 6,862

______COUNTY OF ERIE, NEW YORK • 123

Combining Statement of Activities Other Component Units For the year ended December 31, 2017 (dollars in thousands)

Auxiliary College Services Foundation Corporation (August 31, 2017) (August 31, 2017) Total EXPENSES: Program operations ...... x $ 1,305 $ 2,126 x $ 3,431 Total expenses ...... x 1,305 2,126 3,431 x PROGRAM REVENUES: x Charges for services ...... x 372 1,957 2,329 Operating grants and contributions ...... x 977 87 1,064 Nonoperating grants and contributions ...... x - - x - x Total program revenues ...... x 1,349 2,044 3,393 Change in net position ...... x 44 (82) (38) x Total net position - beginning ...... x 4,835 2,065 6,900 Total net position - ending ...... x $ 4,879 $ 1,983 $ 6,862

124 • COUNTY OF ERIE, NEW YORK ______

______COUNTY OF ERIE, NEW YORK • 125

STATISTICAL SECTION

This part of Erie County’s comprehensive annual financial report presents detailed information as a context for understanding what the information in the financial statements, note disclosures, and required supplementary information says about the County’s overall financial health.

Contents Page

Financial Trends...... 126

These schedules contain trend information to help the reader understand how the County’s financial performance and well-being have changed over time.

Revenue Capacity...... 136

These schedules contain information to help the reader assess two of the County’s most significant revenue sources; sales and use taxes and property taxes.

Debt Capacity ...... 144

These schedules present information to help the reader assess the affordability of the County’s current levels of outstanding debt and the County’s ability to issue additional debt in the future.

Demographic and Economic Information ...... 151

These schedules offer demographic and economic indicators to help the reader understand the environment within which the County’s financial activities take place.

Operating Information...... 152

These schedules contain service and infrastructure data to help the reader understand how the information in the County’s financial report relates to the services the County provides and the activities it performs.

126 • COUNTY OF ERIE, NEW YORK ______

Net Position by Component Last Ten Fiscal Years (accrual basis of accounting) (dollars in thousands)

Fiscal Year 2008 2009 2010 2011 Governmental activities: Net investment in capital assets ...... $ 330,411 $ 373,664 $ 374,188 $ 361,546 Restricted ...... 18,979 16,148 6,231 27,317 Unrestricted (deficit) ...... (339,975) (362,063) (361,686) (412,170) Total governmental activities net position ...... $ 9,415 $ 27,749 $ 18,733 $ (23,307)

Business-type activities: Net investment in capital assets ...... $ 11,141 $ 12,628 $ 14,421 $ 17,474 Restricted ...... - - - - Unrestricted (deficit) ...... (5,989) (13,093) (18,630) (25,891) Total business-type activities net position ...... $ 5,152 $ (465) $ (4,209) $ (8,417)

Primary government: Net investment in capital assets ...... $ 341,552 $ 386,292 $ 388,609 $ 379,020 Restricted ...... 18,979 16,148 6,231 27,317 Unrestricted (deficit) ...... (345,964) (375,156) (380,316) (438,061) Total primary government net position ...... $ 14,567 $ 27,284 $ 14,524 $ (31,724)

Source: Erie County Basic Financial Statements

______COUNTY OF ERIE, NEW YORK • 127

Fiscal Year 2012 2013 2014 2015 2016 2017

$ 385,776 $ 395,657 $ 411,226 $ 443,834 $ 455,145 $ 451,024 34,960 40,914 45,924 75,151 64,928 84,055 (435,137) (472,024) (493,690) (523,858) (574,135) (618,554) $ (14,401) $ (35,453) $ (36,540) $ (4,873) $ (54,062) $ (83,475)

$ 20,828 $ 23,349 $ 27,069 $ 32,148 $ 32,809 $ 37,520 - - - - - 208 (30,946) (34,406) (39,058) (43,798) (52,059) (53,606) $ (10,118) $ (11,057) $ (11,989) $ (11,650) $ (19,250) $ (15,878)

$ 406,604 $ 419,006 $ 438,295 $ 475,982 $ 487,954 $ 488,544 34,960 40,914 45,924 75,151 64,928 84,263 (466,083) (506,430) (532,748) (567,656) (626,194) (672,160) $ (24,519) $ (46,510) $ (48,529) $ (16,523) $ (73,312) $ (99,353)

128 • COUNTY OF ERIE, NEW YORK ______

Changes in Net Position Last Ten Fiscal Years (accrual basis of accounting) (dollars in thousands)

Fiscal Year 2008 2009 2010 2011 EXPENSES: Primary government: Governmental activities: General government ...... $ 418,986 $ 420,026 $ 423,161 $ 462,487 Public safety ...... 118,220 122,888 141,543 131,715 Health ...... 85,091 89,927 82,855 71,714 Transportation ...... 65,292 62,673 72,615 70,201 Economic assistance and opportunity ...... 537,650 567,035 579,927 591,057 Culture and recreation ...... 29,910 23,754 24,567 19,295 Education ...... 66,883 70,716 75,529 73,777 Home and community service ...... 52,299 48,628 53,186 59,127 Interest and fiscal charges ...... 41,784 39,511 37,833 43,985

Total governmental activities expenses ...... 1,416,115 1,445,158 1,491,216 1,523,358

Business-type activities: College (fiscal year ending August 31,) ...... 112,401 123,988 132,556 133,416 ILDC ...... - - - - Purchase and resale of utilities ...... 44,902 27,490 28,587 25,947

Total business-type activities expenses ...... 157,303 151,478 161,143 159,363 Total primary government expenses ...... $ 1,573,418 $ 1,596,636 $ 1,652,359 $ 1,682,721

PROGRAM REVENUES: Primary government: Governmental activities: Charges for services: General government ...... $ 21,113 $ 25,057 $ 26,794 $ 26,708 Public safety ...... 7,290 5,971 5,578 6,285 Health ...... 3,717 3,950 2,470 2,373 Economic assistance and opportunity ...... 34,237 29,657 29,008 28,413 Culture and recreation ...... 3,267 6,032 1,552 1,459 Education ...... 95 95 95 95 Home and community service ...... 9,930 11,986 9,311 9,865 Operating grants and contributions ...... 402,443 468,793 456,029 410,157 Capital grants and contributions ...... 8,661 12,282 25,718 12,206

Total governmental activities program revenues ...... 490,753 563,823 556,555 497,561

Business-type activities: Charges for services: College (fiscal year ending August 31,) ...... 29,008 30,863 31,144 32,616 ILDC ...... - - - - Purchase and resale of utilities ...... 45,475 27,434 28,805 26,017 Operating grants and contributions ...... 31,181 6,790 7,412 6,584

Total business-type activities

program revenues ...... 105,664 65,087 67,361 65,217 Total primary government program revenues ...... $ 596,417 $ 628,910 $ 623,916 $ 562,778

NET (EXPENSE) / REVENUE: Governmental activities ...... $ (925,362) $ (881,335) $ (934,661) $ (1,025,797) Business-type activities ...... (51,639) (86,391) (93,782) (94,146)

Total primary government net expense ...... $ (977,001) $ (967,726) $ (1,028,443) $ (1,119,943)

______COUNTY OF ERIE, NEW YORK • 129

Fiscal Year 2012 2013 2014 2015 2016 2017

$ 434,922 $ 426,627 $ 444,564 $ 424,884 $ 432,365 $ 444,172 152,968 157,278 158,867 170,293 183,969 179,735 72,928 72,137 73,687 78,789 86,713 97,574 71,685 71,592 83,361 79,804 82,061 101,601 578,592 594,354 616,548 609,415 620,669 629,158 20,709 18,156 22,516 19,828 20,002 22,674 69,833 68,208 67,907 72,947 72,784 69,060 54,618 53,704 52,410 51,506 59,475 62,452 34,905 39,515 36,859 36,115 45,001 33,870 1,491,160 1,501,571 1,556,719 1,543,581 1,603,039 1,640,296

129,424 132,318 131,991 129,053 138,975 134,468 - - - - 475 524 21,350 25,398 29,199 18,758 15,105 16,114 150,774 157,716 161,190 147,811 154,555 151,106 $ 1,641,934 $ 1,659,287 $ 1,717,909 $ 1,691,392 $ 1,757,594 $ 1,791,402

$ 31,239 $ 26,702 $ 26,684 $ 25,624 $ 27,143 $ 30,649 6,846 7,239 6,591 6,065 5,059 5,002 2,777 2,192 2,103 2,237 2,302 2,597 27,147 23,723 22,037 23,431 28,857 25,636 1,460 1,322 1,350 1,406 1,456 1,453 95 95 95 95 95 95 10,348 9,630 10,521 10,381 17,961 29,797 401,431 395,047 419,988 418,078 403,575 396,823 25,630 17,185 21,276 14,274 9,177 23,807

506,973 483,135 510,645 501,591 495,625 515,859

35,512 36,868 35,807 35,914 35,726 36,246 - - - - 445 484 20,692 25,438 29,409 18,867 14,342 16,077 5,654 5,282 5,707 6,002 9,982 15,457

61,858 67,588 70,923 60,783 60,495 68,264 $ 568,831 $ 550,723 $ 581,568 $ 562,374 $ 556,120 $ 584,123

$ (984,187) $ (1,018,436) $ (1,046,074) $ (1,041,990) $ (1,107,414) $ (1,124,437) (88,916) (90,128) (90,267) (87,028) (94,060) (82,842) $ (1,073,103) $ (1,108,564) $ (1,136,341) $ (1,129,018) $ (1,201,474) $ (1,207,279)

(Continued)

130 • COUNTY OF ERIE, NEW YORK ______

Changes in Net Position

Last Ten Fiscal Years (accrual basis of accounting) (dollars in thousands)

Fiscal Year 2008 2009 2010 2011 GENERAL REVENUES AND OTHER CHANGES IN NET POSITION: Governmental activities: Taxes Property taxes levied for mall, sewer, and general purposes . . . . . $ 239,333 $ 251,224 $ 257,749 $ 275,705 Sales and use taxes ...... 667,783 646,893 661,933 691,208 Transfer and other taxes ...... 8,901 8,553 7,246 8,353 Unrestricted interest earnings ...... 3,994 1,592 1,524 1,280 Miscellaneous ...... 8,772 7,896 14,162 24,242 Gain on sale of capital assets ...... 559 732 460 492 Transfers ...... (17,162) (17,221) (17,429) (17,429)

Total governmental activities ...... 912,180 899,669 925,645 983,851

Business-type activities: Unrestricted state and local appropriations ...... 32,524 34,049 34,071 31,163 Federal and state student financial aid ...... - 29,206 38,392 41,207 Unrestricted interest earnings ...... 663 298 146 139 Miscellaneous ...... - - - - Transfers ...... 17,162 17,221 17,429 17,429

Total business-type activities ...... 50,349 80,774 90,038 89,938 Total primary government ...... $ 962,529 $ 980,443 $ 1,015,683 $ 1,073,789

CHANGE IN NET POSITION: Governmental activities ...... $ (13,182) $ 18,334 $ (9,016) $ (41,946) Business-type activities ...... (1,290) (5,617) (3,744) (4,208)

Total change in net position ...... $ (14,472) $ 12,717 $ (12,760) $ (46,154)

Source: Erie County Basic Financial Statements

______COUNTY OF ERIE, NEW YORK • 131

(Continued)

Fiscal Year 2012 2013 2014 2015 2016 2017

$ 270,806 $ 269,809 $ 274,900 $ 277,889 $ 283,647 $ 290,884 707,995 724,680 743,220 754,966 756,591 779,855 9,432 9,719 12,010 11,888 14,054 13,167 1,012 1,352 810 632 694 1,373 9,231 11,287 30,994 24,206 21,125 27,525 361 152 482 253 168 274 (17,429) (17,343) (17,429) (17,554) (18,054) (18,054) 981,408 999,656 1,044,987 1,052,280 1,058,225 1,095,024

30,157 32,590 33,343 32,867 32,760 32,098 39,527 38,690 38,511 38,172 35,585 33,699 102 75 52 30 31 71 - 491 - - - - 17,429 17,343 17,429 17,554 18,054 18,054 87,215 89,189 89,335 88,623 86,430 83,922 $ 1,068,623 $ 1,088,845 $ 1,134,322 $ 1,140,903 $ 1,144,655 $ 1,178,946

$ (2,779) $ (18,780) $ (1,087) $ 10,290 $ (49,189) $ (29,413) (1,701) (939) (932) 1,595 (7,630) 1,080 $ (4,480) $ (19,719) $ (2,019) $ 11,885 $ (56,819) $ (28,333) (Concluded)

132 • COUNTY OF ERIE, NEW YORK ______

Fund Balances of Governmental Funds Last Ten Fiscal Years (modified accrual basis of accounting) (dollars in thousands)

Fiscal Year 2008 2009 2010 2011 (1) General Fund: Reserved ...... x $ 8,361 $ 6,758 $ 11,853 N/A Unreserved ...... x 49,830 95,080 113,460 N/A Total general fund ...... x $ 58,191 $ 101,838 $ 125,313 N/A

All Other Governmental Funds: Reserved ...... x $ 73,361 $ 87,772 $ 62,740 N/A Unreserved, reported in: Special revenue funds ...... x 10,879 17,722 19,690 N/A Capital project funds (deficit) ...... x (18,315) (69,217) 66,095 N/A x Total all other governmental funds ...... x $ 65,925 $ 36,277 $ 148,525 N/A

General Fund: Nonspendable ...... x N/A N/A N/A $ 8,394 Restricted ...... x N/A N/A N/A 187 Assigned ...... x N/A N/A N/A 24,065 Unassigned ...... x N/A N/A N/A 83,489 Total general fund ...... x N/A N/A N/A $ 116,135 x x All Other Governmental Funds: x Nonspendable ...... x N/A N/A N/A $ 3,097 Restricted ...... x N/A N/A N/A 114,758 Assigned ...... x N/A N/A N/A 29,251 Unassigned ...... x N/A N/A N/A (472) Total all other governmental funds ...... x N/A N/A N/A $ 146,634

Source: Erie County Basic Financial Statements

Notes: (1) The year ended December 31, 2011, was the first year the County's financial statements were prepared in accordance with GASB Statement No. 54, "Fund Balance Reporting and Governmental Fund Type Definitions."

N/A = Not Available

______COUNTY OF ERIE, NEW YORK • 133

Fiscal Year 2012 2013 2014 2015 2016 2017

N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A

N/A N/A N/A N/A N/A N/A

N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A

$ 9,322 $ 10,292 $ 10,231 $ 9,087 $ 8,595 $ 8,603 196 138 140 154 171 162 22,291 20,289 26,576 20,400 11,192 28,072 88,332 89,650 92,218 99,859 100,154 101,939 $ 120,141 $ 120,369 $ 129,165 $ 129,500 $ 120,112 $ 138,776

$ 3,359 $ 3,539 $ 3,408 $ 34,774 $ 3,295 $ 3,648 110,982 152,860 121,468 119,522 148,734 173,264 31,406 31,933 37,272 38,026 44,347 42,840 (509) (543) (654) (548) (6,868) (444) $ 145,238 $ 187,789 $ 161,494 $ 191,774 $ 189,508 $ 219,308

134 • COUNTY OF ERIE, NEW YORK ______

Changes in Fund Balances of Governmental Funds Last Ten Fiscal Years (modified accrual basis of accounting) (dollars in thousands)

Fiscal Year 2008 2009 2010 2011 REVENUES: Real property taxes and tax items ...... x $ 229,874 $ 244,221 $ 253,512 $ 263,799 Sales and use taxes ...... x 667,783 647,287 661,933 691,208 Transfer taxes ...... x 8,901 8,553 7,246 8,353 Intergovernmental ...... x 408,732 481,067 478,484 416,269 Interfund revenues ...... x 323 426 370 318 Departmental ...... x 79,173 80,618 74,714 74,683 Interest ...... x 6,881 2,931 3,045 3,949 Miscellaneous ...... x 8,080 7,199 13,184 24,512 Total revenues ...... x 1,409,747 1,472,302 1,492,488 1,483,091

EXPENDITURES: Current: General government support ...... x 368,288 348,167 361,693 386,272 Public safety ...... x 113,984 121,345 134,388 133,258 Health ...... x 82,646 88,891 82,090 70,954 Transportation ...... x 44,504 42,549 43,909 44,190 Economic assistance and opportunity ...... x 537,251 566,664 576,624 590,268 Culture and recreation ...... x 21,105 21,389 21,462 16,405 Education ...... x 65,169 69,043 73,889 71,848 Home and community service ...... x 45,908 42,149 44,324 43,382 Capital outlay ...... x 41,966 59,507 93,066 158,769 Debt service: x Principal retirement ...... x 50,875 50,214 47,936 53,605 Other - advance refunding escrow ...... - - - - Interest and fiscal charges ...... x 40,482 36,587 38,380 37,965 Total expenditures ...... x 1,412,178 1,446,505 1,517,761 1,606,916

Excess (deficiency) of revenues over expenditures ...... x (2,431) 25,797 (25,273) (123,825)

OTHER FINANCING SOURCES (USES): Issuance of general obligation debt ...... x - 3,232 249,598 115,244 Refunding bonds issued ...... x - - 120 30,695 Payments to refunded bond escrow agent ...... x - - (99,432) (34,469) Premium on BAN issuance ...... x - 1,449 374 821 Premium on bond issuance ...... x - - 27,301 17,496 Payment from Erie County - advance loan refunding ...... x - - - - Purchase of loan by Erie County - advance loan refunding . . . . . x - - - - Proceeds on bond issuance ...... x - - - - Premium on obligations ...... x - - - - Discount on purchase of mirror bonds ...... x - - - - Purchase of loan by Erie County...... x - - - - Discount on loan to Erie County...... x - - - - Sale of property ...... x 579 742 460 492 Transfer to Trustee - debt service reserve ...... x - - - - Transfers in ...... x 474,097 455,169 736,133 668,194 Transfers out ...... x (491,259) (472,390) (753,562) (685,623) x Total other financing sources (uses) ...... x (16,583) (11,798) 160,992 112,850

Net change in fund balances ...... x $ (19,014) $ 13,999 $ 135,719 $ (10,975) Debt service as a percentage of non-capital expenditures ...... x 6.6% 6.3% 6.0% 5.9% Source: Erie County Basic Financial Statements

______COUNTY OF ERIE, NEW YORK • 135

Fiscal Year 2012 2013 2014 2015 2016 2017

$ 268,069 $ 271,757 $ 274,742 $ 280,406 $ 283,732 $ 291,149 707,995 724,680 743,220 754,966 756,591 779,855 9,432 9,719 12,010 11,888 14,054 13,167 426,376 405,194 434,138 416,188 423,586 409,571 1,323 310 228 206 730 299 78,843 72,756 70,012 69,247 83,086 96,226 6,067 6,334 5,336 4,900 4,965 12,195 10,087 15,337 35,425 28,372 22,678 28,141 1,508,192 1,506,087 1,575,111 1,566,173 1,589,422 1,630,603

386,719 384,065 393,501 402,264 407,302 418,945 148,601 150,138 151,308 157,404 158,624 155,063 72,412 71,832 72,696 73,569 76,812 87,306 45,252 45,527 50,227 50,534 52,425 53,172 577,526 588,819 616,018 603,687 602,921 609,499 18,944 16,497 16,954 17,722 17,333 18,411 68,152 65,867 66,159 71,177 70,846 69,886 44,280 46,685 45,267 45,733 50,360 50,330 61,896 58,042 98,279 66,645 72,025 66,081

50,643 50,359 57,915 88,040 76,913 58,070 - - - - - 5,517 41,888 39,426 39,230 37,971 43,418 34,100 1,516,313 1,517,257 1,607,554 1,614,746 1,628,979 1,626,380

(8,121) (11,170) (32,443) (48,573) (39,557) 4,223

24,110 61,470 27,405 32,000 32,765 15,331 - 31,135 - 24,615 44,335 62,745 - (35,895) - - (46,295) (86,938) 444 - - - - - 3,245 14,430 4,486 8,822 14,984 19,545 - - - - - 79,491 - - - - - (73,974) - - - - - 135,780 - - - - - 23,984 - - - - - (6,718) - - - - - (92,115) - - - - - (6,829) 361 152 482 253 168 274 - - - - - (8,281) 528,799 663,321 589,751 607,492 613,113 654,881 (546,228) (680,664) (607,180) (625,046) (631,167) (672,935)

10,731 53,949 14,944 48,136 27,903 44,241

$ 2,610 $ 42,779 $ (17,499) $ (437) $ (11,654) $ 48,464

6.4% 6.1% 6.4% 8.1% 7.7% 6.2%

136 • COUNTY OF ERIE, NEW YORK ______

Taxable Sales by Category Last Ten Fiscal Years (1) (dollars in thousands)

Fiscal Year Category (2) 2008 2009 2010 2011 Utilities (excluding residential energy) ...... x $ 284,203 $ 255,086 $ 203,045 $ 237,525 Construction ...... x 212,232 212,131 206,569 224,364 Manufacturing ...... x 321,439 323,017 302,139 524,088 Wholesale trade ...... x 852,168 845,706 810,170 572,372 Retail trade total ...... x 5,320,102 5,345,974 5,318,507 6,096,968 Information ...... x 669,659 697,479 712,376 660,451 Professional, scientific, and technical ...... x 141,275 143,249 134,130 211,576 Administrative/support services ...... x 265,412 270,747 277,016 285,239 Health care ...... x 19,312 19,430 19,534 11,744 Arts, entertainment, and recreation ...... x 170,063 152,189 153,858 164,837 Accommodation and food services ...... x 1,316,380 1,381,465 1,402,403 1,538,578 Other services total ...... x 400,801 411,302 403,228 381,059 Agriculture, mining, transportation, fire, education, government ...... x 562,164 508,664 445,883 499,523 Agriculture, forestry, fishing, and hunting ...... - - - - Mining, quarry, and oil and gas extraction ...... - - - - Transportation and warehousing ...... - - - - Finance and insurance ...... - - - - Real estate and rental and leasing ...... - - - - Management of companies and enterprises ...... - - - - Educational services ...... - - - - Public administration ...... - - - - Utilities ...... - - - - Unclassified by industry ...... x 70,900 52,828 61,537 11,911 x Total ...... x $ 10,606,110 $ 10,619,267 $ 10,450,395 $ 11,420,235 x County Direct Sales Tax Rate ...... x 2.81% 2.81% 2.81% 2.81%

Source: New York State Department of Taxation and Finance

Notes: (1) NYS Department of Taxation & Finance's reporting period is March to February. Data represents the reporting periods beginning March 1, 2007 and ending February 28, 2017

(2) Detailed information regarding payers or remitters is not available. Prior to the 2014 reporting period, utilities sales excluded residential energy purchases.

(3) As of the 2013-2014 tax period (the County's 2014 Fiscal Year), the NYS Department of Taxation and Finance re-registered all sales tax vendors, which resulted in a change in total sales and sales distribution by industry. The new reporting system contains more up-to-date and accurate information.

(4) Taxable Sales for fiscal year 2017 are preliminary.

______COUNTY OF ERIE, NEW YORK • 137

Fiscal Year 2012 2013 2014 (3) 2015 (3) 2016 (3) 2017 (3)(4) $ 215,848 $ 215,137 $ - $ - $ - $ - 279,797 263,192 302,282 312,989 350,168 338,751 533,668 507,377 505,746 513,112 539,075 536,291 571,245 603,582 823,460 821,596 815,940 798,842 6,070,438 5,990,508 8,105,009 8,195,701 8,060,594 8,131,763 668,665 670,161 714,504 725,298 716,610 755,901 203,998 215,302 237,551 245,129 273,361 268,948 297,223 297,761 327,805 354,062 408,457 402,667 14,896 14,594 22,568 23,697 25,069 13,393 167,880 138,331 169,495 178,011 187,551 200,990 1,633,538 1,693,772 1,751,920 1,823,917 1,954,805 2,021,714 408,318 395,122 426,800 437,025 608,815 591,115 539,089 534,342 ------16,507 16,673 18,312 19,290 - - 14,913 21,313 23,875 18,291 - - 73,093 74,908 77,221 70,135 - - 54,827 46,565 53,800 68,458 - - 375,059 349,303 361,075 370,141 - - 27,611 26,188 26,853 21,974 - - 12,734 13,051 13,421 14,934 - - 2,302 2,466 2,159 2,168 - - 918,704 938,766 779,985 749,502 2,285 11,432 49,823 50,980 62,314 18,744 $ 11,606,888 $ 11,550,613 $ 14,932,713 $ 15,170,750 $ 15,359,460 $ 15,414,012

2.81% 2.81% 2.81% 2.81% 2.81% 2.81%

138 • COUNTY OF ERIE, NEW YORK ______

Assessed and Equalized Full Value of Taxable Property (1) Last Ten Fiscal Years (dollars in thousands)

Total Total Assessed Less: Total Taxable Direct Residential Commercial Property Tax-Exempt Assessed Tax Fiscal Year Property Property Value Property Value Rate (2) 2008 ...... $ 25,566,393 $ 8,864,027 $ 34,430,420 $ 2,308,570 $ 32,121,850 $ 6.39 2009 ...... 26,426,841 9,383,744 35,810,585 2,408,149 33,402,436 6.38 2010 ...... 27,465,909 9,743,878 37,209,787 2,358,179 34,851,608 6.56 2011 ...... 27,840,959 9,812,645 37,653,604 2,186,296 35,467,308 6.52 2012 ...... 28,314,750 9,672,758 37,987,508 2,279,789 35,707,719 6.59 2013 ...... 28,269,007 9,684,510 37,953,517 2,193,126 35,760,391 6.57 2014 ...... 29,011,563 10,174,472 39,186,035 2,147,709 37,038,326 6.59 2015 ...... 30,634,675 10,693,215 41,327,890 2,088,451 39,239,439 6.59 2016 ...... 31,420,866 10,956,886 42,377,752 2,088,451 40,289,301 6.50 2017 ...... 31,874,701 11,091,876 42,966,577 1,974,692 40,991,885 6.44

Source: Erie County Department of Real Property Tax Services

Notes: (1) Equalization rates are provided by New York State and applied by the County to the assessed valuation of taxable real estate to arrive at equalized full value which is comparable to estimated actual value.

(2) Per $1,000 of assessed value.

______COUNTY OF ERIE, NEW YORK • 139

Total Actual Assessed Value Taxable as a Percentage Equalized of Equalized Full Value Full Value (1) $ 42,821,246 75.01% 44,382,615 75.26% 46,120,910 75.57% 46,738,120 75.89% 47,235,307 75.60% 47,138,287 75.86% 47,996,864 77.17% 49,214,694 79.73% 51,961,517 77.54% 54,929,481 74.63%

140 • COUNTY OF ERIE, NEW YORK ______

Direct and Overlapping Property Tax Rates Last Ten Fiscal Years (rate per $1,000 of assessed value)

Erie County Direct Rates Overlapping Rates Special Cities, City General Revenue Total Towns & School Special of Fiscal Year Fund Funds Direct Villages Districts Districts Buffalo (1) 2008 ...... 4.95 1.44 6.39 4.01 17.76 5.06 24.53 2009 ...... 5.03 1.35 6.38 3.94 17.67 5.10 23.88 2010 ...... 5.04 1.52 6.56 3.98 17.13 4.87 23.27 2011 ...... 5.03 1.49 6.52 4.03 17.53 4.92 22.84 2012 ...... 5.03 1.56 6.59 4.01 18.15 4.88 22.39 2013 ...... 5.03 1.54 6.57 3.92 18.53 5.03 21.58 2014 ...... 5.04 1.55 6.59 3.89 18.81 4.91 21.17 2015 ...... 5.00 1.59 6.59 3.85 18.87 4.85 20.52 2016 ...... 4.96 1.54 6.50 3.74 18.55 4.77 18.26 2017 ...... 4.95 1.49 6.44 3.68 17.91 4.63 16.84

Source: Erie County Department of Real Property Tax Services

Note: (1) City of Buffalo is presented separately and is, therefore, not included in the column for cities, towns, and villages. The rate shown for the City of Buffalo includes the levy for the Buffalo Public School District, which receives funding from the City and is unable to levy taxes.

______COUNTY OF ERIE, NEW YORK • 141

Principal Taxpayers Current Year and Nine Years Ago

2017 2008 Percentage Percentage of of Equalized Equalized Equalized Equalized Full Full Full Full Taxpayer Value Rank Value (1) Value Rank Value (1) National Grid / Niagara Mohawk ...... $ 823,577,974 1 1.50% $ 565,948,192 2 1.32% National Fuel Gas ...... 745,435,958 2 1.36% 684,800,536 1 1.60% Benderson Development Company . . . . . 638,567,204 3 1.16% 200,664,965 4 0.47% Pyramid Company of Buffalo ...... 278,230,150 4 0.51% 142,904,478 6 0.33% Norfolk/Conrail/CSX/PA Lines ...... 227,918,977 5 0.41% NY State Electric & Gas Corporation . . . . 219,841,189 6 0.40% 125,823,147 7 0.29% Uniland Development ...... 191,624,308 7 0.35% Verizon New York Inc ...... 182,191,707 8 0.33% 319,609,988 3 0.75% Ellicott Group LLC ...... 168,120,431 9 0.31% G&I IX Empire...... 130,955,876 10 0.24% BG Properties LLC ...... 187,799,569 5 0.44% DDR MDT LLC ...... 119,863,500 8 0.28% Seneca One Realty LLC ...... 84,000,000 9 0.20% Wegmans Food Market ...... 83,302,920 10 0.19%

Totals ...... $ 3,606,463,774 6.57% $ 2,514,717,295 5.87%

Source: Erie County 2017 & 2008 Annual Reports published by the Department of Real Property Tax Services

Note: (1) Percentage of equalized full value is calculated by dividing the valuation shown for each of the listed taxpayers by the County's total equalized full value (excluding exemptions).

142 • COUNTY OF ERIE, NEW YORK ______

Property Tax Levies And Collections Last Ten Fiscal Years

Collected within the County All Other Fiscal Year of the Levy Property Taxes Property Taxes Total Property Percentage Fiscal Year Levied (1) Levied (2) Taxes Levied Amount of Levy 2008 ...... $ 211,837,793 $ 378,978,530 $ 590,816,323 $ 575,132,293 97.35% 2009 ...... 223,306,326 388,893,461 612,199,787 595,839,865 97.33% 2010 ...... 232,413,974 405,958,043 638,372,017 622,129,950 97.46% 2011 ...... 235,182,208 413,059,474 648,241,682 628,996,639 97.03% 2012 ...... 237,692,831 418,201,340 655,894,171 636,198,405 97.00% 2013 ...... 237,270,828 418,170,150 655,440,978 637,052,431 97.19% 2014 ...... 241,721,087 420,052,940 661,774,027 644,024,505 97.32% 2015 ...... 245,876,811 428,290,819 674,167,630 655,940,466 97.30% 2016 ...... 257,638,097 437,982,920 695,621,017 677,125,859 97.34% 2017 ...... 272,002,597 447,195,930 719,198,527 700,924,354 97.46%

Sources: Erie County Department of Real Property Tax Services Erie County Govern Tax Collection System

Notes: (1) Totals shown exclude amounts levied in accordance with State law to recover election expenditures from the municipalities that were incurred by the County.

(2) Totals shown are primarily comprised of taxes levied for the benefit of County towns, re-levy of uncollected school and village taxes, and sewer district taxes and user charges. See Note V - Property Taxes beginning on page 49 for more information on the annual property tax levy process.

N/A = Not Available

______COUNTY OF ERIE, NEW YORK • 143

Collections Total Collections to Date in Subsequent Percentage Years Amount of Levy $ 14,742,239 $ 589,874,532 99.84% 15,214,774 611,054,639 99.81% 14,806,845 636,936,794 99.78% 17,534,944 646,531,583 99.74% 17,413,447 653,611,852 99.65% 15,457,533 652,509,964 99.55% 14,073,997 658,098,502 99.44% 11,077,673 667,018,139 98.94% 6,717,169 683,843,028 98.31% N/A 700,924,354 97.46%

144 • COUNTY OF ERIE, NEW YORK ______

Ratios of Outstanding Debt by Type Last Ten Fiscal Years (dollars in thousands, except per capita)

Governmental Business-type Activities Activities General ETASC Obligation Tobacco General Bonds - Securitization Total Percentage Obligation Sewer &Asset BackedCapital Primary of Personal Per Fiscal Year Bonds (1) ECMCC (2) Bonds Leases Government Income (3)(4) Capita (3)(4) 2008 ...... $ 396,114 $ 65,728 $ 292,800 $ - $ 754,642 1.12% $ 435 2009 ...... 352,176 63,071 288,363 - 703,610 1.00% 387 2010 ...... 477,893 68,575 286,318 - 832,786 1.32% 520 2011 ...... 452,604 164,676 310,612 - 927,892 1.20% 493 2012 ...... 431,015 164,410 334,818 - 930,243 1.07% 469 2013 ...... 454,789 156,801 338,715 5,907 956,212 1.09% 494 2014 ...... 429,288 151,826 339,938 4,430 925,482 1.04% 465 2015 ...... 405,903 146,051 344,218 2,954 899,126 0.94% 440 2016 ...... 390,827 139,928 333,159 1,477 865,391 0.89% 424 2017 ...... 390,238 235,244 338,649 - 964,131 N/A 422

Source: Erie County Basic Financial Statements 2008-2017

Notes: (1) Amounts shown are net of related premiums, discounts and adjustments. (2) Includes self-supporting sewer district bonds for the years 2008 to 2017 and bonds issued by the ECFSA in 2011 to assist ECMCC in the construction of a new residential health care facility. Loan agreements were executed whereby ECMCC will fund the repayment of the bonds in future years ($86,250 was outstanding at December 31, 2011 and 2012; $82,505 was outstanding at December 31, 2013; $78,615 was outstanding December 31, 2014; $74,565 was outstanding December 31, 2015; and $70,355 was outstanding December 31, 2016). In 2017, the 2011 bonds issued by ECFSA for ECMCC's health care facility were refunded. ECFSA also issued bonds to assist ECMCC's capital projects in 2017. Similar loan agreements were executed, as mentioned above. As of December 31, 2017, $62,745 was outstanding for the ECMCC facility bonds and $92,115 was oustanding for the ECMCC capital projects bonds. (3) Calculation excludes self-supporting debt (i.e., ETASC tobacco settlement bonds, sewer district bonds, ECMCC related bonds and ECC capital leases). ETASC bonds are not legal obligations of the County. The County operates sewer districts in select areas of the County only. ECMCC related debt and ECC capital leases are repaid solely by ECMCC and ECC, respectively.

(4) See the "Demographic and Economic Statistics" schedule on page 151 for personal income and population data.

N/A = Not Available

______COUNTY OF ERIE, NEW YORK • 145

Ratios of General Bonded Debt Outstanding Last Ten Fiscal Years (dollars in thousands, except per capita)

General Net Percentage of Bonded Debt Actual Taxable Outstanding Value (5) of Per Fiscal Year (1,2,3,4) Property Capita (6) 2008 ...... $ 384,312 1.20% $ 422 2009 ...... 342,504 1.03% 377 2010 ...... 471,651 1.35% 513 2011 ...... 448,145 1.26% 488 2012 ...... 427,021 1.20% 465 2013 ...... 445,928 1.25% 485 2014 ...... 422,687 1.14% 458 2015 ...... 397,283 1.01% 431 2016 ...... 380,066 0.94% 412 2017 ...... 369,884 0.90% 400

Source: Erie County Basic Financial Statements 2008-2017

Notes: (1) Excludes Library Component Unit bonds which matured in 2008.

(2) Does not include sewer bonds which are considered self-supporting debt.

(3) Excludes ECMCC bond guaranty of $101,375 for 2008, $99,305 for 2009, $97,150 for 2010, $94,900 for 2011, $92,550 for 2012, $90,085 for 2013, $87,500 for 2014, $84,790 for 2015, $81,930 for 2016 and $78,910 for 2017.

(4) Net of resources restricted for principal repayment of general bonded debt.

(5) See the "Assessed and Equalized Full Value of Taxable Property" schedule on pages 138-139 for property value data.

(6) See the "Demographic and Economic Statistics" schedule on page 151 for population data.

146 • COUNTY OF ERIE, NEW YORK ______

Legal Debt Margin Information Last Ten Fiscal Years (dollars in thousands)

Fiscal Year 2008 2009 2010 2011

Debt limit ...... $ 2,680,794 $ 2,820,171 $ 2,962,433 $ 3,082,612 480,620 436,259 545,873 511,592 Total net debt applicable to limit ......

Legal debt margin ...... $ 2,200,174 $ 2,383,912 $ 2,416,560 $ 2,571,020

Total net debt applicable to the limit as a percentage of debt limit ...... 17.93% 15.47% 18.43% 16.60%

Sources: Property value - NYS Office of the State Comptroller - Data Management Unit Indebtedness and exclusions - Erie County Comptroller's Office Erie County Basic Financial Statements

Notes: (1) The computation of net debt-contracting margin performed by municipalities in New York State is akin to the computation of legal debt margin performed by municipalities in other states.

(2) Equalization rates are provided by New York State and applied by the County to the assessed valuations of taxable real estate to arrive at equalized full value. (3) Per New York State constitution, the County's outstanding general obligation debt should not exceed 7 percent of total average five-year assessed property value.

______COUNTY OF ERIE, NEW YORK • 147

Legal Debt Margin Calculation for Fiscal Year 2017 (1) Full value (average five-year valuation) (2) ...... $ 50,248,169 Debt limit (7% of assessed value) (3) ...... $ 3,517,372 Debt applicable to limit: General obligation bonds and guaranty . . . . . $ 486,699 Total net debt applicable to limit ...... 486,699 Legal debt margin ...... $ 3,030,673 Fiscal Year 2012 2013 2014 2015 2016 2017 $ 3,176,940 $ 3,242,613 $ 3,293,213 $ 3,336,526 $ 3,409,653 $ 3,517,372 563,330 576,666 552,316 524,451 499,668 486,699

$ 2,613,610 $ 2,665,947 $ 2,740,897 $ 2,812,075 $ 2,909,985 $ 3,030,673

17.73% 17.78% 16.77% 15.72% 14.65% 13.84%

148 • COUNTY OF ERIE, NEW YORK ______

Pledged-Revenue Coverage Last Ten Fiscal Years (dollars in thousands)

Tobacco Securitization Asset Backed Bonds (1) Carry-forward of Prior Year Tobacco Fund Balance Less: Settlement Interest Operating Restricted for Future Operating Fiscal Year Revenue Earnings Transfer-Out Debt Service Expenses

2008 ...... $ 18,064 $ 163 $ (100) $ 19,940 $ (24) 2009 ...... 19,422 13 (100) 19,893 (12) 2010 ...... 15,925 86 (202) 20,412 - 2011 ...... 15,098 116 (200) 19,964 - 2012 ...... 15,397 139 (158) 19,919 (1) 2013 ...... 15,388 42 - 19,991 (1) 2014 ...... 17,409 12 - 20,734 (1) 2015 ...... 14,898 12 (400) 20,602 - 2016 ...... 30,091 166 - 20,372 - 2017 ...... 13,176 271 - 20,561 -

Source: ETASC Financial Statements

Note: (1)Tobacco settlement bonds are payable only from the assets of ETASC and are not legal obligations of the County.

______COUNTY OF ERIE, NEW YORK • 149

Tobacco Securitization Asset Backed Bonds

Net Available Debt Service Resources Principal Interest Coverage $ 38,043 $ 3,865 $ 14,285 2.10 39,216 5,265 13,539 2.09 36,221 2,875 13,382 2.23 34,978 1,805 13,254 2.32 35,296 2,195 13,110 2.31 35,420 1,785 12,901 2.41 38,154 4,855 12,697 2.17 35,112 2,220 12,520 2.38 50,629 18,015 12,053 1.68 34,008 1,950 11,553 2.52

150 • COUNTY OF ERIE, NEW YORK ______

Direct And Overlapping Governmental Activities Debt (1) As of December 31, 2017 (dollars in thousands)

Estimated Fiscal Estimated Share of Year Debt Percentage Overlapping Governmental Unit Ended Outstanding Applicable Debt Cities ...... 06/30/16 $ 375,377 100% $ 375,377 Towns ...... 12/31/16 477,085 100% 477,085 Villages ...... 05/31/16 77,998 100% 77,998 School districts ...... 06/30/16 1,719,345 100% 1,719,345 Fire districts ...... 12/31/16 11,455 100% 11,455 Subtotal, overlapping debt ...... 2,661,260

County direct debt ...... 625,482 ETASC direct debt ...... 338,649 County and ETASC direct debt ...... 964,131

Total direct and overlapping debt ...... $ 3,625,391

Sources: Net debt outstanding of Erie County - Erie County Comptroller's Office All other information - Latest available from the New York State Office of the State Comptroller

Note: (1) Overlapping governments are those that coincide, at least in part, with the geographic boundaries of the County. This schedule estimates the portion of the outstanding debt of those overlapping governments that is borne by the residents and businesses of Erie County. This process recognizes that, when considering the County's ability to issue and re-pay long-term debt, the entire debt burden borne by the residents and businesses should be taken into account. However this does not imply that every taxpayer is a resident, and therefore responsible for repaying the debt, of each overlapping government.

______COUNTY OF ERIE, NEW YORK • 151

Demographic and Economic Statistics Last Ten Calendar Years

Personal Per Income Capita School (thousands Personal Enrollment Unemployment Year Population of dollars) Income (Grades K-12) Rate

2008 ...... 909,858 $ 35,298,163 $ 38,795 152,366 5.7% 2009 ...... 909,247 35,047,750 38,546 143,936 8.3% 2010 ...... 919,040 36,170,467 39,369 141,583 8.2% 2011 ...... 918,028 37,864,000 41,245 140,981 8.2% 2012 ...... 918,922 40,377,000 43,932 143,633 8.2% 2013 ...... 919,866 41,850,059 45,496 144,334 7.4% 2014 ...... 922,835 41,287,539 44,740 137,617 6.1% 2015 ...... 922,578 43,164,184 46,786 138,391 5.4% 2016 ...... 921,046 43,804,180 47,559 140,620 4.9% 2017 ...... 925,528 N/A N/A N/A 5.2% Sources: Population: The 2008 to 2009 and 2011 to 2017 estimates were compiled by the NYS Department of Commerce and the NYS Department of Economic Development, respectively, using data provided by the United States Bureau of the Census. 2010 is the decennial census of the population conducted by the federal government. Personal Income: United States Department of Commerce, Bureau of Economic Analysis; material compiled by NYS Department of Commerce. School Enrollment: NYS Education Department, Information Center on Education. School enrollment data represents the 2007-2008 to 2016-2017 school years. Unemployment Rate: NYS Department of Labor. Note: N/A = Not Available

Principal Employers Current Year and Nine Years Ago

2017 2008 Percentage Percentage of Total County of Total County Employer Employees Rank Employment Employees Rank Employment

State of New York ...... 23,400 1 5.22% 16,755 1 3.76% U.S. Government ...... 9,000 2 2.01% 10,000 2 2.25% City of Buffalo (2) ...... 10,198 3 2.27% 8,462 4 1.90% Kaleida Health ...... 8,113 4 1.81% 10,000 2 2.25% Catholic Health System ...... 7,347 5 1.64% 5,191 6 1.17% M & T Bank ...... 7,000 6 1.56% 4,431 9 1.00% University at Buffalo ...... 6,992 7 1.56% Tops Markets LLC...... 5,423 8 1.21% 4,600 8 1.03% County of Erie (1) ...... 4,084 9 0.91% 4,187 10 0.94% Erie County Medical Center Corp 3,412 10 0.76% Employer Services Corp ...... 5,033 7 1.13% HSBC Bank USA, N.A...... 5,848 5 1.31% Total ...... 84,969 18.94% 74,507 16.74%

Sources: Erie County Employment: Erie County Comptroller's Office. Total Employed Within Erie County: NYS Department of Labor. All Other Employer Data: Business First - Book of Lists

Notes: (1) Represents filled full-time positions, excluding positions for Erie Community College. (2) Includes Buffalo Public School District.

152 • COUNTY OF ERIE, NEW YORK ______

Full-time County Government Employees by Function (1) Last Ten Fiscal Years

Fiscal Year Function 2008 2009 2010 2011 2012 General government support ...... 627 642 630 588 602 Public safety ...... 1,181 1,169 1,197 1,160 1,180 Health ...... 316 277 267 235 256 Transportation ...... 151 160 151 152 149 Economic assistance and opportunity ...... 1,559 1,521 1,442 1,528 1,432 Culture and recreation ...... 81 75 36 50 49 Education ...... 32 34 31 27 27 Home and community service ...... 240 235 217 227 239 Total ...... 4,187 4,113 3,971 3,967 3,934

Source: Erie County Comptroller's Office

Note: (1) Excludes Erie Community College.

______COUNTY OF ERIE, NEW YORK • 153

Fiscal Year 2013 2014 2015 2016 2017 610 606 615 637 637 1,213 1,235 1,243 1,264 1,326 210 215 219 295 230 141 151 173 175 170 1,353 1,388 1,386 1,392 1,394 50 53 57 60 64 84 86 98 27 27 245 240 229 241 236 3,906 3,974 4,020 4,091 4,084

154 • COUNTY OF ERIE, NEW YORK ______

Operating Indicators by Function/Program Last Ten Fiscal Years

Fiscal Year Function/Program 2008 2009 2010 2011

General government support: Major construction projects successfully completed ...... 5121214 Motor vehicle registrations processed by County Clerk ...... 249,733 244,026 367,533 272,934 Cases prosecuted or arraigned by the District Attorney's Office ...... 32,441 31,819 31,195 30,523

Public safety: Sheriff's calls for service ...... 88,863 84,259 70,829 88,963 Vehicle and traffic arrests ...... 10,835 11,363 12,764 11,269 Inmate population-Holding Center (average per day) ...... 500 479 495 497 Inmate population-Correctional Facility (average per day) ...... 864 866 855 749 Probation cases-supervised ...... 5,410 6,048 7,233 7,231 Fire personnel trained ...... 5,115 5,143 6,961 8,074

Health: Patient visits - pediatric care ...... 2,953 2,932 92 - (1) Persons served by Mental Health agencies (per month) ...... 28,921 26,845 27,389 9,552

Transportation: Bridges inspected ...... 248 78 244 74 Miles of roads receiving surface treatment ...... 211 141 181 222

Economic assistance and opportunity: Home Energy Assistance Program payments administered ...... 119,758 185,447 159,047 157,949 Number of clients enrolled in Medicaid Managed Care programs . . . . . 76,615 89,331 97,777 104,789 Senior services home care to frail elderly (hours) ...... 106,420 83,015 95,477 85,272

Culture and recreation: Park attendance ...... 1,700,000 1,900,000 1,985,500 1,704,479 Rounds of golf played ...... 67,558 67,298 60,129 51,193

Education: Children with special needs receiving service ...... 4,206 4,182 4,168 4,032 Erie Community College full-time student headcount (2) ...... 8,404 8,874 9,560 9,845

Home and community service: Sewer flow per day (millions of gallons) ...... 59 59 56 60

Source: Various County Departments

Notes: (1) Clinics providing pediatric care were closed effective June 30, 2010.

(2) Average per semester.

N/A = Not Available

______COUNTY OF ERIE, NEW YORK • 155

Fiscal Year 2012 2013 2014 2015 2016 2017

17 815141212 260,257 278,409 274,936 286,500 283,895 279,172 30,116 29,605 31,172 32,225 24,798 22,838

88,956 88,659 88,944 89,941 98,881 105,384 13,655 10,988 9,406 11,446 10,900 11,112 524 517 497 544 493 426 808 852 742 712 690 644 7,543 7,092 6,245 5,799 5,424 4,938 7,608 7,782 7,657 7,266 8,357 8,772

------11,354 2,325 2,901 3,023 3,341 4,214

239 78 234 77 231 76 215 12 114 147 199 158

193,115 174,777 206,518 122,938 157,902 105,892 118,431 125,580 160,983 171,752 170,189 173,550 80,575 67,450 71,566 86,969 74,982 80,405

1,863,326 N/A N/A N/A N/A N/A 59,623 N/A N/A 56,339 54,627 47,748

3,790 3,835 3,821 3,933 3,833 3,907 9,173 9,116 8,514 7,862 7,422 7,077

42 49 48 46 45 52

156 • COUNTY OF ERIE, NEW YORK ______

Capital Asset Statistics by Function Last Ten Fiscal Years

Fiscal Year Function (1) 2008 2009 2010 2011

Public safety: Emergency communication stations ...... 1 1 1 1 Training centers operated by the County ...... 3 3 3 3 Correctional facilities ...... 1 1 1 1 Holding centers ...... 1 1 1 1

Health: Health Department clinics / in County-owned buildings ...... 11 / 5 11 / 5 4 / 4 4 / 1

Transportation: Miles of roads ...... 1,187 1,187 1,187 1,187 Highway maintenance facilities ...... 5 5 5 5

Culture and recreation: Parks ...... 23 23 23 23 Park and forest acreage ...... 10,247 10,247 10,247 10,247 Golf courses ...... 2 2 2 2

Education: Erie Community College campuses ...... 3 3 3 3 Erie Community College library volumes ...... 135,097 126,537 125,272 120,206

Home and community service: Miles of sanitary sewer ...... 931 937 942 944 Miles of storm sewer ...... 47 47 48 48 Pumping stations ...... 100 97 98 98 Grinder pumps ...... 463 463 463 463

Source: Various County Departments

Note: (1) No capital asset indicators are available for general government support and economic assistance and opportunity functions.

______COUNTY OF ERIE, NEW YORK • 157

Fiscal Year 2012 2013 2014 2015 2016 2017

1 1 1 1 1 1 3 3 3 3 3 3 1 1 1 1 1 1 1 1 1 1 1 1

4 / 1 4 / 1 4 / 1 4 / 1 4 / 1 4 / 1

1,187 1,187 1,187 1,187 1,187 1,187 5 5 5 5 5 5

23 23 23 23 23 23 10,247 10,247 10,247 10,247 10,486 10,486 2 2 2 2 2 2

3 3 3 3 3 3 116,674 112,651 109,198 110,945 107,702 104,453

1,054 1,071 1,071 1,074 1,074 1,080 48 48 48 48 48 48 100 96 96 96 93 93 455 452 452 466 466 458

158 • COUNTY OF ERIE, NEW YORK ______

COUNTY OF ERIE, NEW YORK • PUBLIC IMPROVEMENT SERIAL BONDS, SERIES 2018A AND SEWER DISTRICT SERIAL BONDS, SERIES 2018B