The Sebring Regional Airport and Industrial Park The Sebring Regional Airport and Industrial Park is located 7 miles southeast of Sebring, Florida, in Highlands County, is located 7 miles southeast of Sebring, Florida, in Highlands County, and encompasses nearly 2,000 acres. Nestled in amongst orange groves and encompasses nearly 2,000 acres. Nestled in amongst orange groves and cattle ranches in Florida’s Heartland, Sebring is located in close and cattle ranches in Florida’s Heartland, Sebring is located in close proximity to all major tourist attractions. In 1940, a committee of four proximity to all major tourist attractions. In 1940, a committee of four representatives of the City of Sebring traveled to Washington D.C. to representatives of the City of Sebring traveled to Washington D.C. to lobby for locating a military activity in the vicinity of Sebring. After lobby for locating a military activity in the vicinity of Sebring. After almost a year of promotional work, a Highlands County site was selected almost a year of promotional work, a Highlands County site was selected south of Sebring for a U.S. Air Corps Flying Training Command for a pilot south of Sebring for a U.S. Air Corps Flying Training Command for a pilot training base capable of supporting 1,500 men and officers and 250 cadets at a time. The City of Sebring bought land and training base capable of supporting 1,500 men and officers and 250 cadets at a time. The City of Sebring bought land and leased 9,200 acres at $1.00 per year for 99 years to the Secretary of War. By the end of 1941, the base, no longer just a leased 9,200 acres at $1.00 per year for 99 years to the Secretary of War. By the end of 1941, the base, no longer just a pilot training school, became the first Combat Crew Training School. In January 1942, the base was named Hendricks pilot training school, became the first Combat Crew Training School. In January 1942, the base was named Hendricks Field in memory of First Lieutenant Laird Woodruff Hendricks, a native of Ocala, Florida. On December 31, 1945, with Field in memory of First Lieutenant Laird Woodruff Hendricks, a native of Ocala, Florida. On December 31, 1945, with the end of World War II, Hendricks Field was inactivated. On January 25, 1946, the air base property was declared the end of World War II, Hendricks Field was inactivated. On January 25, 1946, the air base property was declared surplus to the needs of the U.S. Government and the lease was surrendered to the City of Sebring. On February 21, 1946, surplus to the needs of the U.S. Government and the lease was surrendered to the City of Sebring. On February 21, 1946, the city received a temporary permit to operate Hendricks Field as a civilian airport and an Airport Committee of the City the city received a temporary permit to operate Hendricks Field as a civilian airport and an Airport Committee of the City Council was appointed. In January 1947, unable to secure absolute title to the field, the City of Sebring agreed to take Council was appointed. In January 1947, unable to secure absolute title to the field, the City of Sebring agreed to take over management of the airport. The airport's name was changed to Sebring Air Terminal. In November 1958, the City over management of the airport. The airport's name was changed to Sebring Air Terminal. In November 1958, the City Council passed an ordinance establishing an Airport Advisory Committee to make recommendations to the City of Council passed an ordinance establishing an Airport Advisory Committee to make recommendations to the City of Sebring relative to the operation, management and control of the Sebring Air Terminal. In 1967, the city turned over the Sebring relative to the operation, management and control of the Sebring Air Terminal. In 1967, the city turned over the deed of the airport to the Sebring Airport Authority, which had just been formed by the State Legislature. Under the deed of the airport to the Sebring Airport Authority, which had just been formed by the State Legislature. Under the Sebring Airport Authority, a Commerce Park was started in the early 1970s and the airport name was changed to Sebring Sebring Airport Authority, a Commerce Park was started in the early 1970s and the airport name was changed to Sebring Airport and Commerce Park. The airport is identified in the Florida System as the Sebring Regional Airport. The Sebring Airport and Commerce Park. The airport is identified in the Florida System as the Sebring Regional Airport. The Sebring Airport Authority is governed by a board of seven (7) members, known as the Sebring Airport Authority Board. Airport Authority is governed by a board of seven (7) members, known as the Sebring Airport Authority Board. Vacancies in office are filled by appointment of the Sebring City Council. Vacancies in office are filled by appointment of the Sebring City Council. Sebring is home to one of the most famous races in the world - The 12 Hours of Sebring International Grand Prix of Sebring is home to one of the most famous races in the world - The 12 Hours of Sebring International Grand Prix of Endurance. Every year on the third Saturday of March, the scent of orange blossoms and the roar of the world's fastest Endurance. Every year on the third Saturday of March, the scent of orange blossoms and the roar of the world's fastest sports cars combine to make Sebring a harbinger of the international endurance racing season. Nestled among the orange sports cars combine to make Sebring a harbinger of the international endurance racing season. Nestled among the orange groves and cattle ranches of Highlands County, Sebring may seem an unlikely place for America's premier sports car groves and cattle ranches of Highlands County, Sebring may seem an unlikely place for America's premier sports car endurance race. Sports car enthusiast and aviation businessman Alec Ulmann promoted the first sports car race at Sebring endurance race. Sports car enthusiast and aviation businessman Alec Ulmann promoted the first sports car race at Sebring in 1950, and established the 12 Hours of Sebring in 1952. The racetrack still utilizes portions of the old Army Air Corps in 1950, and established the 12 Hours of Sebring in 1952. The racetrack still utilizes portions of the old Army Air Corps air field runways. air field runways. The Sebring Regional Airport recently completed a new Commercial Hangar building and 40 new T-hangars, bringing the The Sebring Regional Airport recently completed a new Commercial Hangar building and 40 new T-hangars, bringing the total to 9 and 80, respectively. The Commercial Hangars consist of four bays of approximately 5,000 square feet each, total to 9 and 80, respectively. The Commercial Hangars consist of four bays of approximately 5,000 square feet each, and are intended for small aviation related businesses. The hangars, which were all leased prior to project completion, are and are intended for small aviation related businesses. The hangars, which were all leased prior to project completion, are being used for aircraft sales and leasing, aircraft maintenance, flight instruction and other aviation-related enterprises. being used for aircraft sales and leasing, aircraft maintenance, flight instruction and other aviation-related enterprises. The T-hangars are garages for private aircraft storage and parking, and provide a safe and efficient method to protect a The T-hangars are garages for private aircraft storage and parking, and provide a safe and efficient method to protect a valuable asset. T-hangars are also important to general aviation airports as they normally reflect the number of based valuable asset. T-hangars are also important to general aviation airports as they normally reflect the number of based aircraft (the more T-hangars, the more based aircraft). As the number of based aircraft increases, The Authority’s priority aircraft (the more T-hangars, the more based aircraft). As the number of based aircraft increases, The Authority’s priority in competition for FAA grants increases proportionally. Also, additional T-hangars increase rental revenue for The in competition for FAA grants increases proportionally. Also, additional T-hangars increase rental revenue for The Authority. The Airport Authority makes available the State of Florida's Community Redevelopment incentives program Authority. The Airport Authority makes available the State of Florida's Community Redevelopment incentives program to businesses locating at the Airport and Commerce Park. The Sebring Regional Airport & Commerce Park is the only to businesses locating at the Airport and Commerce Park. The Sebring Regional Airport & Commerce Park is the only combined general aviation facility and Commerce Park in Florida offering these incentives. Sebring Regional Airport is combined general aviation facility and Commerce Park in Florida offering these incentives. Sebring Regional Airport is now a regular stop for DayJet, an easier more efficient way to travel regionally through the world’s first per-seat, on- now a regular stop for DayJet, an easier more efficient way to travel regionally through the world’s first per-seat, on- demand jet service. demand jet service. The ‘Compliance Section’ tab features an artist’s rendition of the Fuel Farm Project at Sebring The ‘Compliance Section’ tab features an artist’s rendition of the Fuel Farm Project at Sebring Regional Airport which is expected to be completed within a couple of years. There is no Regional Airport which is expected to be completed within a couple of years. There is no other general aviation airport in the State of Florida that currently has this type of self service other general aviation airport in the State of Florida that currently has this type of self service facility that will allow the pilot to pump and pay for their own fuel. The Fuel Farm is in facility that will allow the pilot to pump and pay for their own fuel. The Fuel Farm is in Phase I, the design, planning and permitting phase. Phase II will be the construction of Tank I, Phase I, the design, planning and permitting phase. Phase II will be the construction of Tank I, a 12,000 gallon tank for corporate jets and Tank II, a 12,000 gallon tank for general aviation a 12,000 gallon tank for corporate jets and Tank II, a 12,000 gallon tank for general aviation gas. Phase III is the construction of the self service portion of the Fuel Farm Project. gas. Phase III is the construction of the self service portion of the Fuel Farm Project.

With continuous growth on the horizon, Sebring Regional Airport and Industrial Park has With continuous growth on the horizon, Sebring Regional Airport and Industrial Park has numerous projects underway to grow and expand facilities, in order to keep pace with the ever numerous projects underway to grow and expand facilities, in order to keep pace with the ever growing population and economy of Highlands County. growing population and economy of Highlands County.

Information obtained from www.sebring-airport.com. Information obtained from www.sebring-airport.com.

HIGHLANDS COUNTY FLORIDA

COMPREHENSIVE ANNUAL FINANCIAL REPORT

For the Fiscal Year Ended September 30, 2007

Prepared by the Office of L. E. “Luke” Brooker Clerk of Courts

Pamela B. Cross, CGFO Anne D. Roberts Finance Officer Director of Accounting

i

INTRODUCTORY SECTION HIGHLANDS COUNTY, FLORIDA

COMPREHENSIVE ANNUAL FINANCIAL REPORT PRINCIPAL OFFICIALS

For the Fiscal Year Ended September 30, 2007

BOARD OF COUNTY COMMISSIONERS C. Guy Maxcy, Chairperson Don Bates Andrew Jackson

Barbara Stewart Edgar Stokes

COUNTY ADMINISTRATOR Carl E. Cool

CLERK OF COURTS and CHIEF FINANCIAL OFFICER L. E. "Luke" Brooker

TAX COLLECTOR PROPERTY APPRAISER Charles L. Bryan C. Raymond McIntyre

SHERIFF SUPERVISOR OF ELECTIONS Susan Benton Joe Campbell

COUNTY ATTORNEY J. Ross MacBeth

SENIOR DIRECTOR BUSINESS SERVICES Robert M. Jamison

FINANCE OFFICER DIRECTOR, ACCOUNTING Pamela B. Cross, CGFO Anne D. Roberts

INDEPENDENT AUDITORS The NCT Group CPA's, L.L.P.

ii HIGHLANDS COUNTY, FLORIDA

COMPREHENSIVE ANNUAL FINANCIAL REPORT

For the Fiscal Year Ended September 30, 2007

TABLE OF CONTENTS

INTRODUCTORY SECTION

Title Page ...... i

Principal Officials ...... ii

Table of Contents...... iii-ix

Letter of Transmittal ...... 1-12

Certificate of Achievement for Excellence in Financial Reporting ...... 13

Organizational Chart...... 14

FINANCIAL SECTION

Independent Auditor's Report ...... 15-16

Management’s Discussion and Analysis...... 17-26

Basic Financial Statements

Government-Wide Financial Statements: Statement of Net Assets...... 27 Statement of Activities ...... 28-29

Fund Financial Statements: Balance Sheet – Governmental Funds...... 30-31 Reconciliation of Fund Balances for Governmental Funds To Net Assets of Governmental Activities – Governmental Funds ...... 32 Statement of Revenues, Expenditures and Changes in Fund Balances – Governmental Funds...... 33-34 Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances of Governmental Funds to the Statement of Activities ...... 35 Statement of Revenues, Expenditures and Changes in Fund Balance – Budget and Actual – General Fund ...... 36 Statement of Revenues, Expenditures and Changes in Fund Balance – Budget and Actual – County Transportation Trust Fund ...... 37 Statement of Revenues, Expenditures and Changes in Fund Balance – Budget and Actual – Local Government Infrastructure Surtax Fund...... 38-39

iii HIGHLANDS COUNTY, FLORIDA

COMPREHENSIVE ANNUAL FINANCIAL REPORT

For the Fiscal Year Ended September 30, 2007

Basic Financial Statements (continued)

Fund Financial Statements (continued):

Statement of Revenues, Expenditures and Changes in Fund Balance – Budget and Actual – Affordable Housing Assistance Trust Fund ...... 40 Statement of Net Assets – Proprietary Funds...... 41-42 Statement of Revenues, Expenses and Changes in Fund Net Assets – Proprietary Funds...... 43 Statement of Cash Flows – Proprietary Funds ...... 44-45 Statement of Fiduciary Net Assets – Agency Funds ...... 46

Notes to the Financial Statements...... 47-89

Required Supplementary Information

Modified Approach for Infrastructure Assets ...... 90

Combining and Individual Fund Statements and Schedules

Schedule of Revenues, Expenditures and Changes in Fund Balance – Budget and Actual – General Fund...... 91-94

Nonmajor Governmental Funds Descriptions...... 95-99

Combining Balance Sheet – Nonmajor Governmental Funds ...... 100-114

Combining Statement of Revenues, Expenditures and Changes in Fund Balances – Nonmajor Governmental Funds...... 115-129

Budgeting Comparison Schedules:

Lake Placid Sun-N-Lake Improvement District Fund...... 130

Lake Placid Sun-N-Lake Estates Fire District Fund...... 131

DeSoto City Special Benefit Fire District Fund ...... 132

Sebring Highlands Special Tax District Fund...... 133

iv HIGHLANDS COUNTY, FLORIDA

COMPREHENSIVE ANNUAL FINANCIAL REPORT

For the Fiscal Year Ended September 30, 2007

Combining and Individual Fund Statements and Schedules (continued)

Budgeting Comparison Schedules (continued):

Orange Villa Special Benefit District Fund ...... 134

Hickory Hills Special Benefit District Fund...... 135

Placid Lakes Special Benefit District Fund...... 136

Sebring Country Estates Special Benefit District Fund...... 137

Istokpoga Marsh Watershed Improvement District Fund ...... 138

Avon Park Estates Special Benefit District Fund...... 139

North Orange Blossom (Units 8 & 9) Special Benefit District Fund ...... 140

Highlands Lakes Special Tax District Fund ...... 141

Northwest Highlands Park Special Benefit District Fund ...... 142

Highlands Park Special Benefit Fire District Fund ...... 143

Highlands Park Estates Improvement Trust Fund ...... 144

Leisure Lakes Special Benefit Fire District Fund...... 145

Sebring Hills Special Benefit District Fund ...... 146

Red Hill Farms Improvement District Fund...... 147

E911 Emergency Operations Fund – Landlines ...... 148

E911 Emergency Operations Fund – Wireless...... 149

Orange Blossom Estates Special Benefit District Fund...... 150

Sun-N-Lake Lake Placid Recreation District Fund...... 151

Conservation Trust Fund...... 152

Intergovernmental Radio Communications Fund...... 153

v HIGHLANDS COUNTY, FLORIDA

COMPREHENSIVE ANNUAL FINANCIAL REPORT

For the Fiscal Year Ended September 30, 2007

Combining and Individual Fund Statements and Schedules (continued)

Budgeting Comparison Schedules (continued):

Sebring Acres Special Benefit District Fund...... 154

Orange Blossom (Unit 12) Special Benefit District Fund ...... 155

Lake Haven Estates Special Benefit District Fund...... 156

Legal Aid Program Fund ...... 157

Lorida Special Benefit Fire District Fund ...... 158

Lake Placid Special Benefit Fire District Fund ...... 159

Law Enforcement Education Fund...... 160

Building Code Enforcement ...... 161

Florida Boating Improvement Fund ...... 162

Special Law Enforcement Trust Fund...... 163

Highway Park Special Benefit District Fund...... 164

Community Development Block Grant Fund...... 165

Highlands Park Estates Special Benefit District Fund ...... 166

Development Transportation Improvement Fund ...... 167

West Sebring Special Benefit Fire District Fund ...... 168

Driver Education Safety Trust Fund...... 169

Tourist Development Trust Fund ...... 170

Domestic Violence Training Fund ...... 171

Fire Inspection and Safety Fund ...... 172

Venus Special Benefit Fire District Fund...... 173

vi HIGHLANDS COUNTY, FLORIDA

COMPREHENSIVE ANNUAL FINANCIAL REPORT

For the Fiscal Year Ended September 30, 2007

Combining and Individual Fund Statements and Schedules (continued)

Budgeting Comparison Schedules (continued):

Sebring Parkway Maintenance Fund...... 174

State Court Facilities Trust Fund...... 175

Innovations and Supplemental Courts Funding Trust Fund ...... 176

Crime Prevention Fund...... 177

Court Tech 28.24(12)(E)1 Fund ...... 178

Court Fund...... 179

Hurricane Housing Trust ...... 180

Home Initiatives Partnership Fund ...... 181

Placid Lakes Fire District Fund ...... 182

Impact Fee – Transportation – Avon Park...... 183

Impact Fee – Transportation – Lake Placid...... 184

Impact Fee – Transportation – Sebring...... 185

Impact Fee – Parks and Recreation – Avon Park ...... 186

Impact Fee – Parks and Recreation – Lake Placid...... 187

Impact Fee – Parks and Recreation – Sebring ...... 188

Impact Fee – Correctional Facilities...... 189

Impact Fee – Fire...... 190

Impact Fee – Libraries...... 191

Impact Fee – Law Enforcement...... 192

Impact Fee – Emergency Medical Services...... 193

HCISSRB Construction...... 194

vii HIGHLANDS COUNTY, FLORIDA

COMPREHENSIVE ANNUAL FINANCIAL REPORT

For the Fiscal Year Ended September 30, 2007

Nonmajor Enterprise Funds...... 195

Combining Statement of Net Assets – Nonmajor Enterprise Funds...... 196

Combining Statement of Revenues, Expenses and Changes in Fund Net Assets – Nonmajor Enterprise Funds...... 197

Combining Statement of Cash Flows – Nonmajor Enterprise Funds...... 198-199

Internal Service Funds Description ...... 200

Combining Statement of Net Assets – Internal Service Funds...... 201

Combining Statement of Revenues, Expenses and Changes in Net Assets – Internal Service Funds ...... 202

Combining Statement of Cash Flows – Internal Service Funds ...... 203

Trust and Agency Funds Description ...... 204-205

Combining Statement of Fiduciary Net Assets – Agency Funds ...... 206-207

Schedule of Changes in Assets and Liabilities – Agency Funds...... 208-211

Capital Assets Used in the Operation of Governmental Activities

Comparative Schedules by Source...... 212

Schedule by Function and Activity...... 213-214

Schedule of Changes by Function and Activity...... 215-216

STATISTICAL SECTION

Statistical Section ...... 217

Net Assets by Component...... 218

Changes in Net Assets ...... 219-220

Fund Balance, Governmental Funds...... 221

Change in Fund Balance ...... 222

viii HIGHLANDS COUNTY, FLORIDA

COMPREHENSIVE ANNUAL FINANCIAL REPORT

For the Fiscal Year Ended September 30, 2007

Taxable Value and Actual Value of Property ...... 223

Direct and Overlapping Property Tax Rates ...... 224

Principal Property Tax Payers...... 225

Property Tax Levies and Collections...... 226

Ratios of Outstanding Debt by Type...... 227

Ratios of General Bonded Debt Outstanding...... 228

Overlapping Governmental Activities Debt ...... 229

Pledged-Revenue Coverage ...... 230

Demographic and Economic Statistics ...... 231

Principal Employers...... 232

Full-time Equivalent County Government Employees by Function...... 233

Operating Indicators by Function ...... 234-235

Capital Assets Statistics by Function...... 236

COMPLIANCE SECTION

Independent Auditor's Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards ...... 237-238

Independent Auditor's Report on Compliance with Requirements Applicable to Each Major Federal Program and State Project and Internal Control Over Compliance in Accordance with OMB Circular A-133 and Chapter 10.550, Rules of the Auditor General ...... 239-240

Schedule of Expenditures of Federal Awards and State Financial Assistance ...... 241-243

Notes to Schedule of Expenditures of Federal Awards and State Financial Assistance ...... 244

Schedule of Findings and Questioned Costs – Federal Programs and State Projects...... 245-247

ix

The accompanying report consists of five parts:

1) Management’s Discussion and Analysis, which is a narrative report providing significant information about the County and how the County’s financial position has changed from September 30, 2006 to September 30, 2007 and the reason for the change;

2) Government-wide financial statements, which report on the government and business-type assets, liabilities, revenues, and expenses of the County;

3) Fund financial statements, which report on the major individual funds of the County;

4) Budgetary comparisons for the County’s general fund and major special revenue funds; and

5) The notes to the financial statements.

REPORTING ENTITY

Highlands County is a non-charter county established under the Constitution and laws of the state of Florida. This CAFR is a countywide report, which discloses the combined results of operations for the Board of County Commissioners, the Clerk of Courts, the Property Appraiser, the Tax Collector, the Sheriff, the Supervisor of Elections, and all component units. This report also includes all funds and account groups of governmental operations where the Board of County Commissioners is financially accountable for the entity, the exclusion of which would render the financial statements misleading or incomplete. The County provides a full range of services and this report includes all activities of the County.

The Board of County Commissioners is the legislative body for the County and, as such, budgets and provides the funding used by the County departments and the separate constitutional officers with the exception of fees collected by the Tax Collector and the Property Appraiser. Under the direction of the Clerk of Courts, the Clerk’s Business Services Divisions maintain the accounting system for the Board of County Commissioners’ operations. The Clerk of Courts, the Property Appraiser, the Tax Collector, the Sheriff, and the Supervisor of Elections maintain their own separate accounting systems. However, the operations of the Board of County Commissioners and the constitutional officers have been combined for presentation in the Comprehensive Annual Financial Report.

The Highlands County District School Board, the Highlands County Hospital District, the South Florida Water Management District, and the Southwest Florida Water Management District have not met the established criteria for inclusion in the reporting entity and, accordingly, are excluded from this report. The Industrial Development Authority is included as a discretely presented component unit.

Economic Condition and Outlook

Highlands County is Florida’s 56th county established on April 23, 1921 from a segment of Desoto County. It gains its name from the abundance of hills found in the area. The City of Sebring is the county seat. The County is located in the south central part of Florida and is within 100 miles of many of the major population centers in the state. Citrus and its related industries provide the primary source of income for the economy in the County. Beef cattle and dairy farming are also important sources of income to the County. New businesses continue to locate at the Sebring Airport Industrial Park. The 12 Hours of Sebring auto race, North America’s longest running and most prestigious road race, continues to be run at the Sebring International Raceway located at the Sebring Airport. This race and other activities bring international recognition to the County, thereby promoting tourism, an important component of the economy in the County.

2 The County has successfully used a conservative approach in order to deal with the increased demand for expansion of its various public services. The general philosophy of the County is that increased revenues from existing taxes and other revenue sources must provide the base for the increase in public expenditures commensurate with expansion of public services.

While the economic and public expenditure policies are subject to change and re-evaluation, it is anticipated that the County will experience manageable growth that will not be disruptive to the current financial position of the County.

Major Initiatives

During the 2006-2007 fiscal year, the following amounts were expended for assets and infrastructure projects:

Description Amount Avon Park Interlocal Agreement$ 174,795 BMX Track Improvements 25,251 Communications Upgrade 123,707 Courthouse Parking Lot Addition 4,031 Donaldson Park 40,000 Dump Trucks 302,958 EDP Equipment 32,309 Grader 182,769 Improvements to Roads and Streets 2,474,766 Lake Placid Batting Cages 24,383 Lake Placid P.E. Facility 241,525 Land Projects 247,957 Landscaping in Lake Placid 12,704 Mack Truck 103,443 Max Long Complex 16,316 Multi-Field Complex 2,628,568 Parks & Recreation Steel Building 98,097 Radios 2,300 Road and Bridge Equipment 100,090 Sebring Airport Interlocal Agreement 885,084 Toni Dr. Mining Permit 60,353 Traffic Operations Equipment 8,981 Vehicles 396,311 Veterans/Human Services Building 3,025

Total$ 8,189,723

The major initiatives have been funded through a one-cent local option sales surtax for the purpose of financing, planning, and constructing infrastructure. The surtax was approved on August 22, 1989, and on July 20, 1999, the electorate of Highlands County approved extending this tax an additional fifteen years.

3 Major Accomplishments for 2006-2007

• Construction of Sebring Parkway Phase II – The first phase of construction has just been completed. This project will connect Phase I with US 27 (currently Highlands Avenue). The distance that this project will cover is 14,467 feet (2.4 miles) of a four-lane divided highway. Implementation of this new road construction/widening project is needed to support future traffic volumes.

• Multi-field Sports Complex – The County completed the construction of a multi-field sports complex adjacent to Sebring High School. The sports complex has five adult softball fields, football and soccer fields, a playground and a concession area. The facility provides fields for local leagues and the opportunity to attract regional and statewide tournaments.

• Georgia Pacific Access Road – Construction was completed this fiscal year. The County is requesting reimbursement on this project from three grants.

• Arbor Cove Condominium Water Line Expansion – During the 2006-2007 Fiscal Year, the condominiums paid their meter setting charges and impact fees and became connected to the Highway Park Water system.

• Lake June Road and Lake Stearns Drive Water Main Extension from Cloverleaf Road to Leisure Lakes – A contract was approved by the Board of County Commissioners in November 2006 for approximately 6,400 linear feet extension on Lake June Road with an additional 1,100 linear feet of main on Lake Stearns Drive added in January 2007. A total of 35 new customers were added to the system as part of the extension in fiscal year 2006-2007.

• Cloverleaf Trails Subdivision Water Main Expansion - Construction was completed in Fiscal Year 2006-2007 and the subdivision was connected to the Placid Utilities Water System. The infrastructure was also put in place to enable the County to extend service to the Grove of Lake Francis and Lake Francis Ridge Subdivisions in the future.

• Upgraded Clerk of Courts, Sheriff’s Office, Tax Collector, Property Appraiser and Supervisor of Elections Sungard Pentamation Financial application suite to PLUS series windows based 4.1 version in Fiscal Year 2006-2007.

• Upgraded Board of County Commissioners Sungard Pentamation Financial, Fixed Assets and Human Resources applications to PLUS series windows based 4.1 version in Fiscal Year 2006-2007.

• Implemented remote/mobile access to the CountyNet network for all Building Inspectors and Code Enforcement Officers using laptops with Sprint air cards and Virtual Private Network (VPN) connectivity.

4 Major Projects Schedule for the Future

• Asphalt Plant – The County is looking at beneficial ways of using the landfill gas. One of the methods of utilizing this gas is as an asphalt plant. The plant would be an enterprise fund and require an initial investment that would be repaid over time. The Board of County Commissioners authorized the purchase of a hot-mix asphalt plant in September 2007, with plant startup scheduled for the spring of 2008.

• Sheriff’s Office Law Enforcement Facility – This building is to be constructed on George Boulevard. It will provide much needed space for officers, administration, forensic labs, training facilities, evidence storage, county-wide emergency communications, and other needs of law enforcement. This fiscal year an architect was approved by the Board and a design kick-off meeting was held. Design is expected to take twelve months and construction fourteen months with final completion expected in early 2010.

• Law Enforcement/Public Parking Lot – This project remains in the Preliminary Design and Environmental stage. The project is scheduled to begin construction during fiscal year 2008- 2009.

• Construction of Sebring Parkway Phase II – The second phase of construction has been started.

• Southern Lifestyle Assisted Living Facility Water and Sewer Expansion – Placid Utilities Water/Wastewater System is constructing an expansion of the water and sewer system to the assisted living facility. The County also plans to complete a change order looping the water system to Tomoka Blvd. South and construct a northbound deceleration lane to the site. Final completion of the project is expected in Fiscal Year 2007-2008.

• Toni Drive/Old SR 8 – This project has been designed and currently has approval from the Water Management District. The Department of Transportation has awarded this project funds through the Small County Outreach Program for widening and resurfacing for approximately 8.88 miles of Old SR 8 from SR 70 to the south. Construction is set to begin in fiscal year 2008.

• Tractor Road and George Boulevard Extension– This project remains in the preliminary design stage and is approximately 90% complete.

• Scenic Highway/Sebring Parkway Intersection Improvements – The signal design is complete. The fabrication and delivery is proposed to be complete around February 2008 in which construction will begin. The signal should be constructed and fully operational by the spring of 2008.

• College Drive/Memorial Drive Multi-Use path – This project has the Department of Transportation’s approval for additional design and construction funds. Once the Library of Consultants has been completed, the project’s design will be put out to bid.

• Interlake Boulevard Landscaping – The Department of Transportation has approved additional funds for this project and has approved the new, revised scope. The County will be receiving funds from FDOT for both design and construction. Once the Library of Consultants has been completed, the project’s design will be put out to bid.

5 • Little Lake Jackson Off-Line Alum Injection Treatment Facility – County and City staff attended classroom and field training on the operation of the plant. Several plant start-ups were conducted throughout the year to work out operation and equipment problems. The final start up with alum is scheduled for the beginning of Fiscal Year 2007-2008. The Interlocal Agreement with the City of Sebring for the operation of the plant is expected to be approved in October or November 2007.

• Thunderbird Hill Wastewater Treatment Facility and System – County and City staff came up with details involving the abandonment of the existing wastewater plants and connection to the City of Sebring sewer system. Service area map descriptions were completed in order to prepare a special taxing district. The City and County are working on the preparation of an Interlocal Agreement to connect the system to the City’s system as well as investigating other possible solutions to solve the problem. An engineering assessment of the system is expected in Fiscal Year 2007-2008 as well as the design as a selected course of action to resolve the problem.

• Memorial Drive/Sebring Parkway Intersection Improvements – This project proposed to extend the southbound left turn lane on Memorial Drive to a total of 200 feet to accommodate future traffic from the new Elementary school. The design phase is primarily complete and is expected to begin construction by the winter of 2007.

• Piney Point Water Main Expansion – Plans and a FDEP Construction Permit have been completed and approved for a water main extension on Piney Point Drive from Lake June Road. A meeting will be held with all property owners in March 2008 to discuss the extension and customer funding solutions for the construction.

• Uptown Center Water Main and Sewer Main Expansion – The County is working on the preparation of a utility agreement with the developer of a parcel of land on US 27, north of the American Legion, to extend water from the Tomoka Water Plant north to the site and sewer from the site through the Temple Terrace Subdivision to the Grandview Point lift station in Tomoka Heights. This agreement is expected to go before the Board for approval in Fiscal Year 2007-2008.

• Six Inch Gas Line Extension to the Sebring Airport – A contract was approved by the County in June 2007 and construction commenced in July 2007 on the 46,000 linear feet gas line extension to the Sebring Airport. The project is funded by a CDBG Grant and will provide service to the E-Stone Manufacturing facility at the Airport. Construction completion is expected in Fiscal Year 2007-2008.

Financial Information

Readers of this report are encouraged to read the Management’s Discussion and Analysis (MD&A) report. The MD&A provides basic financial information about the County and an overview of the County’s activities. The government-wide financial statements, consisting of a statement of net assets and a statement of activities, provides a comprehensive financial picture of the County, split between governmental activities and business-type activities. These statements are prepared using the economic resources measurement focus and the accrual basis of accounting, where all assets, liabilities, revenues, and expenses of the County are reported. The fund financial statements provide information concerning the County’s funds and are prepared from the County’s accounting records. The County’s accounting records for general governmental operations are maintained on a modified accrual basis, with revenues being recorded when available and measurable and expenditures being recorded when the services or goods are received and the liabilities are incurred. Accounting records for the County’s proprietary funds

6 are maintained on the accrual basis. The County operates on a fiscal year of October 1 to September 30. The Clerk of Courts, through the Clerk’s Business Services Division, is responsible for establishing and maintaining internal controls to provide reasonable, but not absolute, assurance regarding the safeguarding of assets against loss from unauthorized use or disposition and the reliability of financial records for preparing financial statements and maintaining accountability for assets. The concept of reasonable assurance recognizes that the cost of control should not exceed the benefits likely to be derived, and the evaluation of costs and benefits requires estimates and judgments by management.

All internal control evaluations occur within the above framework. We believe the County’s internal accounting controls adequately safeguard assets and provide reasonable assurance of proper recording of financial transactions.

Single Audit. The County is a recipient of federal and state financial assistance, which makes us responsible for assuring that proper internal controls are in place to ensure that we are in compliance with applicable laws and regulations related to those programs. This internal control structure is audited each year by independent auditors.

Budgeting Controls. Formal budgetary integration is employed as a management control device during the year for the General, Special Revenue, and Capital Project Funds. Budgets for these funds are legally adopted on an annual basis consistent with generally accepted accounting principles (GAAP). The level of budgetary control exists with the Board of County Commissioners, and the Board follows the laws of Florida regarding the control, adoption, and amendment of the budget during each fiscal year. Open encumbrances are reported as reservations of fund balances at year-end and reappropriated the following year. Appropriations lapse at fiscal year-end.

General Government Functions and General Fund Balance. General government functions are reflected in the General, Special Revenue, and Capital Project Funds.

The following graph illustrates the composition of general governmental revenues for the current year:

General Governmental Revenues by Function

Taxes 59.1%

Intergovernmental 18.7%

Charges for Other Assessments Services 9.8% 2.9% 9.5%

Revenues for general functions totaled $107,708,445 in 2007, an increase of 22.1% from 2006. More information is available in the statistical section of this report.

7

The following graph illustrates the composition of general governmental expenditures for the current year:

General Governmental Expenditures by Function

Court-Related 4.6% Transportation 20.5%

Public Safety Other 37.5% 20.5%

General Government 16.9%

Expenditures for general government purposes totaled $100,917,984 in 2007, an increase of 25.1% from 2006. More information is available in the statistical section of this report.

8 The following graphs illustrate a ten-year history for revenues and expenditures:

General Governmental Revenue By Source

Intergovernmental Taxes 25 70 20 60 50 15 40 10 30 Millions Millions 20 5 10 0 0 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

Charges for Services Other Revenue Sources 16 14 14 12 12 10 10 8 8 6 Millions

Millions 6 4 4 2 2 0 0 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

General Governmental Expenditures By Function

Public Safety General Government 40 20 35 15 30 25 10 20

Millions 15 Millions 5 10 5 0 0 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

Transportation Other Expenditure Sources 25 30 20 25 20 15 15 10 Millions Millions 10 5 5 0 0 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 9 The unreserved, undesignated fund balance of the general fund totaled $24,289,659 as of September 30, 2007, an increase from the prior year of 43.5%. The general fund balance is used to provide the cash necessary to pay current operating expenditures until ad valorem tax revenues are available.

Proprietary Fund Type Operations. Proprietary funds are used to account for activities similar to those found in the private sector where the determination of net income is necessary for sound financial administration. Goods or services from such activities can be provided either to outside parties (enterprise funds) or to other departments or agencies primarily within the government (internal service funds).

The County maintains four Enterprise Funds: the Landfill, Placid Utilities, Highway Park Utilities, and Energy Recovery. The Landfill’s revenue is derived from non-ad valorem assessments, recycling, tipping fees, grants, and interest that fund the capital and operating costs of the landfills and recycling center. Placid Utilities’ and Highway Park Utilities’ revenues come from service fees and interest. The primary use of funds is for expansion of water and sewer lines and operating expenses.

The County maintains Internal Service Funds for liability self-insurance and dental self-insurance. The self-insurance Risk Management Fund is funded by contributions from other funds within the County for various insurance coverages. The dental self-insurance Employee Benefit Fund is funded by contributions from the County and its employees. Effective October 1, 2001, the County obtained private insurance and discontinued its self-insured health insurance plan. The dental plan remains self-insured.

Fiduciary Fund Type Operations. The County maintains Agency Funds.

Payroll deductions, tax deed surplus, child support, suspense collections, cash bonds, individual depositors, tax redemptions, vehicle registrations and title transfers, taxes, and licenses are accounted for as Agency Funds.

Debt Administration. Fiscal year 2006-2007 bond debt service payment and the balance outstanding on County bond issue at September 30, 2007, are listed in the following table:

Debt Principal Payments Amount Outstanding Bond 2006-2007 September 30, 2007 Highlands County, Florida, Infrastructure Sales Surtax Revenue Bond, Series 2002 $1,110,000 $19,025,000

Delivery Date: June 13, 2002 Last Maturity: November 1, 2019 Par Amount: $23,295,000 Net Proceeds: $23,079,891

Highlands County continued to meet all of its debt requirements.

Cash Management. Cash temporarily idle during the year was invested in the Local Government Surplus Funds Trust Fund by the Clerk of Courts’ Business Services Divisions.

The Local Government Surplus Funds Trust Fund was established to assist units of local government in maximizing net earnings on invested surplus funds, reducing the need for the imposition of additional taxes upon local constituents. The portfolio objective is to provide a short-term, very liquid, and high quality investment vehicle to participating local governments. The Board operates the pooled investment accounts similar to the manner in which various money market funds function for individual investors.

10 Local governments typically invest in the pooled funds but may establish separate special accounts at the discretion of the Board when specific needs exist.

During 1995, the County began investing in the Florida Local Government Investment Trust Fund in order to diversify its investments while following the priority of safety first, then liquidity and yield.

In fiscal year 2006-2007, the County earned $5,333,870 in investment income.

Risk Management. The County is exposed to a variety of accidental losses and has established a risk management strategy that attempts to minimize losses and the carrying costs of insurance.

Risk control techniques have been established to reasonably assure that the County’s employees are aware of their responsibilities regarding loss exposures related to their duties. In a similar manner, risk control techniques have been established to reduce possible losses to property owned by the County. Furthermore, supervisory personnel are held responsible for monitoring risk control techniques on an operational basis.

The County insures its workers’ compensation, public liability, and physical damage risks through a public risk management pool. Funding to meet the potential losses related to these risks comes from user charges to the various members participating in the program. The County’s portion of these charges is accumulated in the Internal Service Fund.

Other Information

County Road System. In order to fund new road construction, resurfacing, safety projects and improvements, purchases of rights-of-way, bridge replacements, traffic signals, and establish, operate, and maintain a transportation system and related facilities, the County receives a portion of the State of Florida’s gasoline taxes, as well as County local option gas taxes. In turn, the County distributes a portion of the sixth-cent local option gas tax to each municipality in the County pursuant to an interlocal agreement. The total gasoline tax revenue received by the County amounted to $6,999,464 for the fiscal year ended September 30, 2007, from the taxes shown below:

Collected State Gas Taxes 2006-2007 Fifth and sixth-cent $1,794,553 Seventh-cent 781,700 2,576,253

Local Option Gas Taxes Sixth-cent local option gas tax 3,897,733 Ninth-cent local option gas tax 525,477 4,423,210

Total Gas Taxes $6,999,463

Notes to Financial Statements. The notes to the financial statements presented with the Basic Financial Statements section are an integral part of this CAFR and should be read for a more complete understanding of the statements and information presented within this report.

11 Independent Audit. Section 218.39, Florida Statutes,requires that an annual fmancial audit of the accountsand recordsof the County be performedby an independentcertified public accountingfirm. This requirementhas beenmet for the fiscal year endedSeptember 30, 2007, and their opinions are included in the Financial Sectionof this report.

In addition to meeting the requirementsset forth in the statestatutes, the audit also was designedto meet the requirementsof GovernmentAuditing Standards,the Single Audit Act Amendmentsof 1996,related OMB Circular A-133, and Rules of the Auditor General, Chapter 10.550.The auditor's reports pertaining to the single audit are included in the Single Audit Sectionof this report.

Awards. The Government Finance Officers Association of the United States and Canada (GFOA) awardeda Certificate of Achievement for Excellencein Financial Reporting to Highlands County for its CAFR for the fiscal year endedSeptember 30, 2006. This was the twenty-third year that the County has receivedthis prestigiousaward. In order to be awardeda Certificate of Achievement,a governmentmust publish an easily readableand efficiently organizedComprehensive Annual Financial Report. This report satisfiedboth generally acceptedaccounting principles and applicablelegal requirements.

The certificate of achievementis valid for a period of one year only. We believe that our current CAFR continuesto meet the Certificate of AchievementProgram's requirements, and we are submitting it to the GFOA to determineits eligibility for anothercertificate.

Acknowledgments. The preparationof the CAFR on a timely basis could not have been accomplished without the efforts and dedication of the entire staff of the BusinessServices Divisions of the Clerk of Courts of Highlands County.

I, and my staff, would like to thank The NCT Group CPA's, L.L.P., the County Administrator and his staff, and the entire Board of County Commissionersfor their help and support in the preparationof this report for the citizens of HighlandsCounty.

Respectfully submitted, C~~~~k:'~'

Clerk of Courts /~(L Rl'f14~am~Senior Director BusinessServices U -6 (j~-, PamelaB. Cross,MBA FinanceOfficer

QJ t.l '" ~. ~~(?l...lc,L~ Anne D. Roberts Director of Accounting

12 Certificate of Achievement for Excellence in Financial Reporting Presentedto Highlands County Florida

For its ComprehensiveAnnual FinancialReport for the Fiscal Year Ended September30, 2006

A Certificateof Achievementfor Excellencein Financial Reportingis presentedby the GovernmentFinance Officers Associationof the United Statesand Canadato governmentunits and public employeeretirement systemswhose comprehensive annual financial reports(CAFRs) achievethe highest standardsin governmentaccounting and financial reporting.

L:2e, c ~ C~X.c ':. ..~;

President

~ /?$~~.,;p ExecutiveDirector

13

FINANCIAL SECTION T The NCT Group CPA's,L.L.P. Certified Public Accountants and Consultants

INDEPENDENT AUDITOR'S REPORT

Board of County Commissioners Highlands County, Florida

We have auditedthe accompanyingfinancial statementsof the governmentalactivities, the business-type activities, the discretely presentedcomponent unit, each major fund, and the aggregateremaining fund information of Highlands County, Florida (County), as of and for the fiscal year ended September30, 2007, which collectively comprise the County's basic financial statementsas listed in the table of contents.These financial statementsare the responsibility of the County'smanagement. Our responsibility is to expressan opinion on thesefinancial statementsbased on our audit.

We conductedour audit in accordancewith auditing standardsgenerally acceptedin the United Statesof America and the standardsapplicable to [mancial audits contained in GovernmentAuditing Standards issuedby the Comptroller Generalof the United States.Those standardsrequire that we plan and perform the audit to obtain reasonableassurance about whether the financial statementsare free of material misstatement.An audit includes examining, on a test basis, evidence supporting the amounts and disclosuresin the [mancial statements.An audit also includes assessingthe accountingprinciples used and significant estimatesmade by management,as well as evaluating the overall financial statement presentation.We believe that our audit providesa reasonablebasis for our opinion.

In our opinion, the financial statementsreferred to above present fairly, in all material respects,the respective financial position of the governmentalactivities, the business-typeactivities, the discretely presentedcomponent unit, each major fund, and the aggregateremaining fund information of Highlands County,Florida, at September30, 2007 andthe respectivechanges in financialposition and cash flows, where applicable, thereof and the budgetarycomparison for the general fund and major specialrevenue funds for the fiscal year then ended in conformity with accountingprinciples generally acceptedin the United Statesof America.

In accordancewith GovernmentalAuditing Standards,we have also issueda report datedMarch 5, 2008, on our consideration of the County's internal control over financial reporting and our tests of its compliance with laws, regulations, contracts,grant agreements,and other matters. The purposeof that report is to describethe scopeof our testing of internal control over financial reporting and compliance and the results of that testing and not to provide an opinion on internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordancewith Government Auditing Standardsand should be read in conjunction with this report in consideringthe results of our audit.

15

811E. MAIN STREET.P.O. BOX 1076. LAKELAND, FLORIDA 33802-1076. (863) 683-6783 RSMMcGladrey Network 435 SOUTH COMMERCE AVENUE. SEBRING, FLORIDA 33870-3702. (863) 385-1577 202 SECURITYSQUARE BUSINESS CENTER. P.o. BOX 2239. WINTERHAYEN, FLORIDA 33883-2239. (863)294-4131 AnIndependently Owned Member The Management'sDiscussion and Analysis on pages 17 through 26 and information on infrastructure using the modified approachon page 90 are not a required part of the basic financial statementsbut are supplementaryinformation required by accountingprinciples generally acceptedin the United Statesof America. We have applied limited procedures,which consistedprincipally of inquiries of management regardingmethods of measurementand presentationof the supplementaryinformation. However, we did not audit the information and expressno opinion on it.

Our audit was conductedfor the purposeof forming opinions on the financial statementsthat collectively comprisethe County's basic financial statements.The accompanyinginformation identified in the table of contentsas combining and individual fund statementsand schedulesand capital assetsschedules are presentedfor purposesof additional analysisand are not a requiredpart of the basic financial statements. Suchadditional information has been subjectedto the auditing proceduresapplied in our audit of the basic financial statementsand, in our opinion, is fairly presentedin all material respectswhen consideredin relation to the basic financial statementstaken as a whole.

The information identified in the table of contentsas Introductory and StatisticalSections is presentedfor purposes of additional analysis and is not a required part of the basic financial statements. Such information has not been subjectedto the auditing proceduresapplied in the audit of the basic financial statementsand, accordingly,we expressno opinion on it.

Our audit was performed for the purposeof forming opinions on the financial statementsthat collectively comprise the County's basic financial statements.The accompanyingSchedule of Federal Awards and State Assistance as of and for the year ended September30, 2007 is presentedfor the purpose of additional analysis as required by U.S. Office of Managementand Budget Circular A-133, Audits of States,Local Governments,and Non-Profit Organizations, and Chapter 10.550, Rules of the Auditor General,and is not a requiredpart of the basic financial statements.Such information has been subjected to the auditing proceduresapplied in the audit of the basic financial statementsand, in our opinion is fairly statedin all material respectsin relation to the basic financial statementstaken as a whole.

~ tJC,T ~~ cPAloS, J...L..P

THE NCT GROUP CPA's, L.L.P. Sebring,Florida March 5, 2008

16 MANAGEMENT’S DISCUSSION AND ANALYSIS

The management of Highlands County (County) offers this narrative overview and analysis of the financial activities of the County for the fiscal year ended September 30, 2007. We encourage readers to consider the information presented here in conjunction with the additional information that we have furnished in our Letter of Transmittal.

FINANCIAL HIGHLIGHTS

The following are key financial highlights for the fiscal year:

ƒ The County’s assets exceeded its liabilities at September 30, 2007 by $224.5 million (net assets). Of this amount, $154.2 million was invested in capital assets, net of related debt, and $9 million was restricted by law, grant agreements, debt covenants, or for capital projects. As a result, $61.3 million (unrestricted net assets) may be used to meet the government’s ongoing obligations to citizens and creditors.

ƒ The County’s total net assets increased by $19.7 million, $19.2 million of which was from governmental funds and $.5 million was from business-type activities.

ƒ As of September 30, 2007, the County's General Fund fund balance was $27.4 million which represents an increase of $9.2 million or 50.5% over the previous year. The County’s governmental funds in total reported combined ending fund balances of $70.2 million, an increase of $8.7 million from the prior year. Of this amount, $57 million is available for use at the County's discretion (unreserved fund balance).

ƒ At September 30, 2007, unreserved fund balance for the General Fund was $24.3 million, or 39.9% of total general fund expenditures.

ƒ The County’s total liabilities decreased by $700,000 or 1.4% during the fiscal year.

OVERVIEW OF THE FINANCIAL STATEMENTS

This discussion and analysis is intended to serve as an introduction to the County's basic financial statements. The County's basic financial statements comprise three components: government-wide financial statements; fund financial statements; and notes to the financial statements. This report also contains other supplementary information in addition to the basic financial statements themselves.

Government-Wide Financial Statements The government-wide financial statements are designed to provide readers with a broad overview of the County’s finances using the accrual basis of accounting in a manner similar to a private-sector business. The statement of net assets presents information on all of the County's assets and liabilities with the difference between the two reported as net assets. Over time, increases or decreases in net assets 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 the County’s net assets changed during the most recent fiscal year. All changes in net assets are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of the 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.

17 The government-wide financial statements distinguish functions of the County (known as the primary government) 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, transportation, human services, culture and recreation, physical environment, and economic environment. The business-type activities of the County include water, wastewater and solid waste. The government-wide financial statements include not only the County itself, but also legally separate entities for which the County is financially accountable (known as component units) such as the Industrial Development Authority. Financial information for these component units is reported separately from the financial information presented for the primary government itself. The government-wide financial statements can be found on pages 27-29 of this report.

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

Governmental Funds - Governmental funds are used to account for essentially the same functions reported as governmental activities in the government-wide financial statements. However, unlike the government-wide financial statements, governmental fund financial statements focus on near-term inflows and outflows of spendable resources, as well as on balances of spendable resources available at the end of the fiscal year. Such information may be useful in evaluating a government’s near-term 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 fund balance sheet and the governmental fund statement of revenues, expenditures, and changes in fund balances provide a reconciliation to facilitate this comparison between governmental funds and governmental activities. Highlands County maintains 76 individual governmental funds. Information is presented separately in the governmental fund balance sheet and in the governmental fund statement of revenues, expenditures, and changes in fund balances for the general fund, the County transportation trust fund, the local government infrastructure surtax fund, and the affordable housing assistance trust fund which are considered to be major funds. Data from the other 72 governmental funds are combined into a single, aggregated presentation. Individual fund data for each of these non-major governmental funds is provided in the form of combining statements elsewhere in this report. The County adopts an annual appropriated budget for its general fund. A budgetary comparison statement has been provided for the general fund and other major special revenue funds to demonstrate compliance with these budgets.

Proprietary Funds – The County maintains two different types of proprietary funds. Enterprise funds are used to report the same functions presented as business-type activities in the government-wide financial statements. The County uses enterprise funds to account for its water, wastewater, solid waste, and energy recovery operations. Internal service funds are an accounting device used to accumulate and allocate costs internally among the County's various functions. The County uses internal service funds to account for its dental insurance and risk retention operations. Because these services benefit governmental and business-type functions, they have been allocated to the governmental activities and business type activities in the government-wide financial statements. Proprietary funds provide the same type of information as the government-wide financial statements, only in more detail. The proprietary fund financial statements provide separate information for the proprietary operations, two of which are considered to be major funds of the County. Data from the other two enterprise funds are combined into a

18 single, aggregated presentation. Individual fund data for each of these non-major enterprise funds is provided in the form of combining statements elsewhere in this report.

Fiduciary Funds – 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 statement because resources of those funds are not available to support the County’s own programs. The accounting used for fiduciary funds is much like that used for proprietary funds.

Notes to the Financial Statements - The notes provide additional information that is essential for a full understanding of the data provided in the government-wide and fund financial statements.

Other Information - In addition to the basic financial statements and accompanying notes, this report also presents certain required supplementary information containing budget to actual comparisons for the general and major special revenue funds. The combining statements referred to earlier in connection with non-major governmental funds, internal service funds and fiduciary funds are presented immediately following the required supplementary information (RSI).

GOVERNMENT-WIDE FINANCIAL ANALYSIS

As noted earlier, net assets may serve over time as a useful indicator of a government’s financial position. In the case of the County, assets exceeded liabilities by $224.5 million as of September 30, 2007.

HIGHLANDS COUNTY, FLORIDA NET ASSETS (in thousands)

Governmental Activities Business-type Activities Total 2006 2007 2006 2007 2006 2007 Current and other assets$ 77,940 $ 86,639 $ 11,075 $ 11,873 $ 89,015 $ 98,512 Capital assets 151,737 160,527 13,285 13,959 165,022 174,486 Total assets 229,677 247,166 24,360 25,832 254,037 272,998

Long-term debt outstanding 29,457 28,454 7,989 8,597 37,446 37,051 Other liabilities 11,003 10,295 734 1,132 11,737 11,427 Total liabilities 40,460 38,749 8,723 9,729 49,183 48,478

Net Assets: Invested in capital assets net of related debt 126,606 143,724 10,010 10,475 136,616 154,199 Restricted 13,195 8,973 43 43 13,238 9,016 Unrestricted 49,416 55,720 5,584 5,585 55,000 61,305 Total net assets$ 189,217 $ 208,417 $ 15,637 $ 16,103 $ 204,854 $ 224,520

The largest portion of the County’s net assets reflects its investment in capital assets (e.g. land, buildings, machinery and equipment) less any related debt used to acquire those assets still outstanding. These capital assets are used to provide services to citizens; consequently, these assets are not available for future spending. It should also be noted that the resources required to repay the related 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 assets represents resources that are subject to external restrictions such as by debt covenants, grantors, laws or regulations, or are subject to restrictions through enabling legislation on how they may be used. The remaining balance of unrestricted net assets may be used to meet the County's ongoing obligations to citizens and creditors. As such, unrestricted net assets are net assets remaining after removing “net assets invested in capital assets, net of related debt” and “restricted assets” from total net assets. Therefore, the change in the unrestricted net assets of 19 governmental activities from $49.4 million at September 30, 2006 to $55.7 million at September 30,2007 was due to the net effect of the change in overall net assets from the prior year as adjusted by changes in “net assets invested in capital assets, net of related debt” and “restricted net assets.” Significant changes from the prior year that are responsible for the $6.3 million increase in unrestricted net assets of governmental activities are described later in the analysis. As of September 30, 2007, the County reports positive balances in all three categories of net assets, both for the government as a whole as well as for its separate governmental and business-type activities.

Governmental Activities Governmental activities increased the County’s net assets by $19.2 million while Business-Type Activities were responsible for a $500,000 increase. The growth in net assets from governmental activities represents 97.6% of the County’s total growth in net assets. Key elements of this increase are as follows: Highlands County's Changes in Net Assets (in thousands) Governmental Activities Business-Type Activities TOTAL 2006 2007 2006 2007 2006 2007 Revenues: Program revenues Charges for Services$ 18,284 $ 20,849 $ 10,740 $ 10,940 $ 29,024 $ 31,789 Operating Grants and Contributions 2,920 6,807 459 216 3,379 7,023 Capital Grants and Contributions 1,708 1,937 - 255 1,708 2,192 General Revenues: Property Taxes 36,201 48,953 - - 36,201 48,953 Other Taxes 14,759 14,398 - - 14,759 14,398 Other 16,826 17,086 498 614 17,324 17,700 Total Revenues 90,698 110,030 11,697 12,025 102,395 122,055

Expenses: General Government 17,311 19,309 - - 17,311 19,309 Public Safety 32,707 37,587 - - 32,707 37,587 Transportation 11,337 15,067 - - 11,337 15,067 Human Services 2,267 2,697 - - 2,267 2,697 Culture and Recreation 3,120 3,290 - - 3,120 3,290 Physical Environment 1,475 1,446 - - 1,475 1,446 Economic Environment 3,287 7,527 - - 3,287 7,527 Court Related 4,428 4,519 - - 4,428 4,519 Interest on Long Term Debt 1,072 634 - - 1,072 634 Solid Waste - - 9,033 9,292 9,033 9,292 Water and Sewer - - 708 797 708 797 Highway Park Utility - - 167 192 167 192 Energy Recovery - - - 28 - 28 Other 4 4 - - 4 4 Total Expenses 77,008 92,080 9,908 10,309 86,916 102,389

Increase in Net Assets - Before Transfers 13,690 17,950 1,789 1,716 15,479 19,666 Transfers 1,000 1,250 (1,000) (1,250) - - Increase in Net Assets 14,690 19,200 789 466 15,479 19,666

Net Assets-beginning 174,527 189,217 14,848 15,637 189,375$ 204,854 Net Assets-ending$ 189,217 $ 208,417 $ 15,637 $ 16,103 $ 204,854 $ 224,520

20 • Charges for services increased $2.6 million which includes a variety of reasons. Impact fees are the majority of the increase in charges for services since this is the first year for collection of the fees. The General Fund charges for services decreased by 6.75% or $376,000. The charges that had the largest reduction from prior year were recording fees, ambulance fees, zoning fees, and civil services charges. The Transportation Trust fund had an increase in charges of services of $553,000 due to work performed for other funds. The Infrastructure Surtax fund had an increase of $589,000 from reimbursement from the School Board in connection with the sports complex.

• Operating Grants & Contributions increased $3.9 million. The increase was due to the Lower Income Housing grants and the Home Again Program which total $3.8 million. The General Fund decreased in total by $273,000 due to fewer projects by South Florida Water Management District managed by the County.

• Capital grants and contributions increased $229,000. The County received a communication tower grant with assistance from the Industrial Development Authority. DOT funding of road projects remained constant.

• Property tax revenues increased $12.8 million or 35.11% due to a 40% increase in taxable assessed value of property in Highlands County, which in turn was the result of new construction and increased property values.

• Other taxes decreased by $361,000 due to the following: Communication service tax increased by 2.2%; infrastructure surtax decreased by 3.3%; and gas tax remained the same.

• Other revenues increased by $260,000 primarily due to increases in interest earnings and miscellaneous revenue from sales of equipment and insurance claims.

• General government expenses increased by $2 million due to the following: The Board experienced increases in health insurance, general insurance, personnel, network improvement, computer server upgrades, attorney fees and contractual services. Approximately half of the increase went to the Clerk of Courts, Property Appraiser and Tax Collector. They also experienced increases in insurances, fuel and other issues.

• Public safety expenses increased by $4.9 million primarily due to increased funding for the Sheriff’s Department and Detention and Corrections. The Communications program had increases in expenditures of $239,000 due to an upgrade project.

• Transportation expenses increased $3.7 million due to the purchase of land and design work done on the Sebring Parkway and other road projects. The increase in fuel and materials also had a major impact on the increase of expenditures.

• Human services expenses increased $430,000. This was due to small increases across the various departments. The largest increases were the State County Assistance Program and Mental Health.

• Culture and recreation expenses increased by $170,000, primarily due to the addition of the sports complex. The library system expense remained the same and the recreation department’s expenses increased a small amount even with the increases in insurance, gas prices and chemicals.

• Physical environment expenses decreased by $29,000 mainly due to Natural Resources and a decrease in the number of projects with South Florida Water Management District.

21 • Economic environment expenses increased by $4.2 million; the primary increase in expenses was due to activity by the Housing Department. The increase in taxable value of the CRA also contributed to the increase in expenses.

• Court related expenses increased by $91,000; this was mainly due to increased expenses on court technology and upgrades for the court system.

• Interest on long-term debt decreased by $438,000, primarily due to the early retirement of the Smart Cops debt by the Sheriff’s Department.

Business-type Activities

• Solid waste expenses increased $259,000 as a result of increases in fuel and repairs to large pieces of equipment during fiscal year 2007.

• Water and sewer expenses increased $89,000 for Placid Utilities and increased $25,000 for Highway Park Utilities. Both utilities underwent expansion in fiscal year 2007. Additional services were provided to residents as a result of this expansion.

In summary, the County’s governmental activities had net expenses of $62.5 million. However, these services are intended to be primarily funded by taxes, as opposed to charges for services and grants. The County experienced a substantial increase in property tax revenue due to the increase in the collection of back taxes and an increase in the valuation of property. The County’s business-type activities had net revenues of $1.1 million. Net assets for governmental activities have increased by 10% and business-type activities by 3%.

FINANCIAL ANALYSIS OF THE GOVERNMENT’S FUNDS

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

Governmental Funds - 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, unreserved fund balance may serve as a useful measure of a government’s net resources available for spending at the end of its fiscal year. At September 30, 2007, the County's governmental funds reported combined ending fund balances of $70.2 million. Approximately 81.2% of the combined fund balances, $57 million, constitutes unreserved fund balance, which is available for spending at the government’s discretion. The remainder of the balance is reserved to indicate that it is not available for new spending because it has already been committed: (1) to liquidate prior year obligations $8 million; (2) to pay debt service $3.9 million; or (3) for other restricted purposes. The general fund is the chief operating fund of the County.

At September 30, 2007, unreserved fund balance of the general fund was $24.3 million and total fund balance was $27.4 million. As a measure of the general fund’s liquidity, the total fund balance represents 45% of total general fund expenditures and transfers out. The unreserved fund balance increased in the General Fund by $7.4 million. The County received higher than expected revenues in the General fund due to increases in interest rates, property value increases, sale of tax deeds and the health of the economy for most of fiscal year 2007. The County put a freeze on hiring in the second half of the year. Public safety positions were filled as soon as possible but many other positions were delayed and held vacant. The County also limited travel to essential travel. Many departments made an extra effort to hold purchases and reduce spending. With the County policy to help maintain a fund balance, reduced spending by departments and the holding of vacant positions, the County increased the fund balance.

22

As of September 30, 2007, the total fund balance for the Transportation Trust Fund was $3.4 million as compared to $3.3 million as of September 2006.

As of September 20, 2007, the total fund balance for the Local Government Infrastructure Surtax Fund was $19 million as compared to $18.9 million the prior year. The unreserved fund balance for the Local Government Infrastructure Surtax Fund increased from $10.8 million to $14.6 million. This was due to a large reduction in the encumbrances carried forward. There was little change in the total fund balance for the Local Government Infrastructure Surtax Fund which is reflective of the leveling of the surtax revenue.

As of September 30, 2007, the Affordable Housing Assistance Trust fund balance remained at zero. Revenue is not earned until it has been spent; therefore, no fund balance will accumulate in the fund.

Proprietary Funds - The County's proprietary funds provide the same type of information found in the government-wide financial statements but in more detail. Solid Waste operating revenues increased $42,000 or .44% because of the growth in commercial building and increases in the County’s population was enough to offset the increased costs in insurances, equipment and fuel costs. Unrestricted net assets of the Solid Waste Department were $4.8 million at September 30, 2007, a growth of less than $200,000 from the prior year. The Solid Waste fund had no material changes in revenue or expenses from the prior year which reflect the insignificant change in revenue and fund balance.

Water and Sewer operating revenues were $633,200 for the Water and Sewer fund, reflecting an $86,005 total increase because of the expansion of the water system to include additional customers. Unrestricted net assets of the Water and Sewer system were $182,739 compared to $1.5 million in net assets invested in capital assets net of related debt reflecting the large investment of the systems in capital assets.

BUDGETARY HIGHLIGHTS

Budget and actual comparison schedules are provided in the Basic Financial Statements for the General Fund and all major special revenue funds. Budget and actual comparison schedules are also provided in the Combining and Individual Fund Statements and Schedules for all non-major funds with annually appropriated budgets. The budget and actual comparison schedules show the original adopted budgets, the final revised budget, actual results, and variance between the final budget and actual results for the general and major special revenue funds. After the original budget is approved, it may be revised for a variety of reasons such as unforeseen circumstances, new bond or loan proceeds, new grant awards, or other unanticipated revenues.

The variances between the original budget and the final amended budget for the General Fund can be summarized as follows:

ƒ Revenues and expenditures were increased by $4.7 million or a 6.9% increase over the adopted budget due primarily to an increase in fund balance, project fund, balance and encumbrances which totaled $2.4 million. The majority of the fund balance increase is for the Law Enforcement Building for design and permitting expenses and the Smart Cops program for the computer software and maintenance. The two biggest projects in the project fund balance were the Sebring Airport Authority, which included an approved list of capital improvements through an interlocal agreement, and the Inmate Housing Program which was funding provided to the Sheriff. The other major items were $653,000 for the health department renovation of the building in Avon Park, $327,640 for dispatch equipment loan, $250,000 from South Florida Water Management District for a lake project, and the remainder for various grants for the Sheriff for equipment, personnel, and capital expenses, EMS for additional capital items like the purchase of a new ambulance

23 with grant dollars and improvements to the Lake Placid EMS station, recreation funding for the aquatic weed control program, and libraries for additional books and equipment.

CAPITAL ASSETS AND DEBT ADMINISTRATION

Capital Assets - The County's investment in capital assets for its governmental and business type activities as of September 30, 2007 amounted to $174.5 million (net of accumulated depreciation) compared to $165 million for the prior year. This investment in capital assets includes land, buildings, improvements, machinery and equipment, parks, roads, highways, and bridges. The total increase in the County's investment in capital assets for the current fiscal year was 5.7%. Major capital asset events during the fiscal year included the following:

ƒ Completion of the Georgia Pacific Access Road ƒ Completion of the Multi-Field Ball Complex ƒ Sebring Parkway Phase II land acquisition, design and permitting ƒ Funding for the Sebring Airport ƒ Completion of the Lake June Water Main Extension ƒ Communications Upgrade ƒ Purchase of land for the County Annex Building ƒ Completion of Orange Blossom Paving

Highlands County's Capital Assets (In Thousands) (Net of Depreciation) Governmental Business-Type Entity Activities Activities Total 2006 2007 2006 2007 2006 2007 Land$ 27,688 $ 30,776 $ 1,864 $ 1,864 $ 29,552 $ 32,640 Infrastructure 71,028 73,041 - - 71,028 73,041 Buildings 33,375 32,720 372 342 33,747 33,062 Improvements 1,854 1,854 9,562 9,132 11,416 10,986 Equipment 13,097 13,909 1,436 1,967 14,533 15,876 Construction in Progress 4,695 8,227 51 654 4,746 8,881 Total$ 151,737 $ 160,527 $ 13,285 $ 13,959 $ 165,022 $ 174,486

Additional information on the County's capital assets can be found in Note 4 to the financial statements.

Long-term Debt At September 30, 2007, the County had total debt outstanding of $27.4 million compared to $28.4 million in the prior year. Of this amount, $8.4 million represents loans payable and other obligations and $19 million is secured solely by specified revenue sources (i.e. revenue bonds). The decrease in total outstanding debt is due to the payment of the debt service. The County did not enter into any new bond or loan agreements as of September 30, 2007.

24 Highlands County's Outstanding Debt (In Thousands)

Governmental Business-Type Entity Activities Activities Total 2006 2007 2006 2007 2006 2007 Notes payable, revenue certificates & capital leases$ 4,996 $ 4,893 $ 3,274 $ 3,484 $ 8,270 $ 8,377 Revenue Bonds 20,135 19,025 - - 20,135 19,025 Total$ 25,131 $ 23,918 $ 3,274 $ 3,484 $ 28,405 $ 27,402

The County continues to meet its financial needs through prudent use of its revenues and creative debt financing programs. The County's financial strength and sound financial management practices are reflected in its revenue bond investment ratings of A3 by Moody’s Investor Services and A by Fitch IBCA, Inc.

Please refer to Note 7 of the Notes to Financial Statements for a complete presentation of all long term liabilities. The table immediately above does not present information for compensated absences or landfill closure liability.

The County’s required Annual Disclosure Statement is available upon request. This disclosure report details and updates certain statistics and financial performance which form the basis for the security for the County’s indebtedness.

ECONOMIC FACTORS AND NEXT YEAR’S BUDGETS AND RATES

Local, national and international economic factors influence the County's revenues. The slowing of the economic growth and recession is correlated with decreased revenues from property taxes, sales taxes, gas taxes, charges for services, as well as state and federal grants. The economic slow down in the local economy may be measured by a variety of indicators such as employment growth, unemployment, new construction, assessed valuation, and tax base.

• The unemployment rate for the County is 4.9%, which is slightly higher than the rate for the State of Florida (4.4%) and higher than the nation (4.8%) for the month of December 2007.

• The taxable value of property in Highlands County increased 17.2% over last year.

• Population growth for last year was 2.2% in the unincorporated area of Highlands County for a total county population of 96,672 residents. All three cities and the unincorporated County showed population growth over the last year.

• Highlands County offers a range of tax incentives to businesses that locate and create new jobs within its Rural Enterprise Zone which includes sales and use tax credits, corporate income tax credit, and since January 2002, a higher tax credit for a longer period of time when creating new jobs to encourage business development and employment. The Florida legislation passed during the 2001 session makes Highlands County’s Rural Enterprise Zone a viable mechanism of economic development and an inducement for local employment.

• Highlands County has a diversified property tax base. The ten largest property taxpayers in the County represent only 6.0% of the total ad valorem property tax levy. 25 All of these factors were considered in preparing the County's budget for the 2007 fiscal year. More information on economic factors is provided in the Statistical Section and the transmittal letter.

Infrastructure

The County has elected to use the modified approach to account for its bridges and roadways included on the County road and bridge network. Under this approach, the County made the commitment to preserve and maintain these assets at levels established by and approved by the Board of County Commissioners. No depreciation expense is reported for such assets nor are amounts capitalized in connection with improvements that lengthen the life of such assets, unless the improvements also increase their service potential. The County maintains an inventory of these assets and performs periodic condition assessments to establish that the predetermined condition level is being maintained. The condition assessments performed during fiscal year 2006-07 show that the roadway and bridges included on the County road and bridge network are being maintained at or above established County standards. In addition, the County makes annual estimates of the amounts that must be expended to preserve and maintain the roadways and bridges included on the County road and bridge network at the predetermined condition levels. There were no significant differences from the estimated annual amount to preserve and maintain these assets compared with the actual amounts spent during the current period. For further information on the County’s established condition standards, recent condition assessments, or other information on infrastructure reported on the modified approach, refer to the RSI section 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 budgets, long-term financial planning, future debt issuances, or questions related to the management of County operations should be addressed to the County Administrator at:

Office of the County Administrator Highlands County Board of County Commissioners 600 S Commerce Ave Sebring, FL 33870

If you have any questions concerning the Basic Financial Statements or other accounting information in this report, please contact the Clerk of Courts at:

Clerk of Courts Business Services Director 590 S Commerce Avenue Sebring, FL 33870

26

BASIC FINANCIAL STATEMENTS

HIGHLANDS COUNTY, FLORIDA STATEMENT OF NET ASSETS September 30, 2007

Component Primary Government Unit Industrial Governmental Business-Type Development Activities Activities Total Authority ASSETS Cash and cash equivalents $ 74,799,521 $ 10,627,471 $ 85,426,992 $ 158,850 Investments 6,103,046 2,086 6,105,132 - Accounts receivable - net 488,637 739,115 1,227,752 28,216 Interest receivable 982 - 982 - Internal balances 35,175 (35,175) - - Due from other governmental units 4,703,770 333,756 5,037,526 - Inventory 350,141 - 350,141 - Prepaid expenses 157,626 - 157,626 - Restricted assets: Cash and cash equivalents - 205,477 205,477 - Capital assets not being depreciated 112,044,339 2,518,367 114,562,706 - Capital assets - net of accumulated depreciation 48,482,650 11,441,206 59,923,856 -

Total Assets 247,165,887 25,832,303 272,998,190 187,066

LIABILITIES Vouchers payable 3,605,920 871,727 4,477,647 28,591 Claims payable 19,270 393 19,663 - Contracts payable - retained percentage 34,188 - 34,188 - Due to other governmental units 1,221,765 - 1,221,765 - Due to others 205,066 - 205,066 - Accrued interest payable 410,556 37,899 448,455 - Accrued wages payable 1,056,582 44,645 1,101,227 2,485 Deposits 72,058 162,589 234,647 - Unearned revenue 3,669,235 14,823 3,684,058 - Noncurrent liabilities: Due within one year 2,050,656 784,284 2,834,940 6,012 Due in more than one year 26,403,698 7,813,073 34,216,771 7,168

Total Liabilities 38,748,994 9,729,433 48,478,427 44,256

NET ASSETS Invested in capital assets, net of related debt 143,723,848 10,475,156 154,199,004 - Restricted for: Debt service 3,881,799 42,887 3,924,686 - Capital projects 5,090,701 - 5,090,701 - Unrestricted 55,720,545 5,584,827 61,305,372 142,810

Total Net Assets $ 208,416,893 $ 16,102,870 $ 224,519,763 $ 142,810

See accompanying notes to financial statements. 27 HIGHLANDS COUNTY, FLORIDA STATEMENT OF ACTIVITIES For the Fiscal Year Ended September 30, 2007

Program Revenues

Operating Capital Charges for Grants and Grants and Functions/Programs Expenses Services Contributions Contributions Primary Government: Governmental activities: General government $ 19,309,283 $ 5,738,638 $ 48,961 $ - Public safety 37,587,087 7,386,221 741,103 73,159 Physical environment 1,445,740 194,114 391,634 - Transportation 15,067,226 2,403,335 149,132 978,890 Economic environment 7,526,683 12,500 5,106,185 487,190 Human services 2,696,525 79,823 23,651 - Culture and recreation 3,290,438 882,273 346,383 397,752 Court related 4,519,434 4,151,942 - - Debt service: Interest on long-term debt 633,515 - - - Other debt service 4,435 - - - Total Governmental Activities 92,080,366 20,848,846 6,807,049 1,936,991 Business-Type activities: Solid waste 9,292,480 10,007,203 215,622 - Water and sewer 797,427 773,013 - 255,348 Highway Park Utility 192,073 159,859 - - Energy Recovery 27,833 - - - Total Business-type Activities 10,309,813 10,940,075 215,622 255,348 Total Primary Government $ 102,390,179 $ 31,788,921 $ 7,022,671 $ 2,192,339

Component Unit: Industrial Development Authority $ 444,917 $ - $ 89,624 $ -

General revenues: Taxes: Property taxes Fuel taxes Sales tax Services taxes Other taxes Unrestricted state shared revenues Investment earnings Gain (loss) on sale of capital assets Miscellaneous Transfers Payment from Highlands County Total general revenues and transfers Change in net assets Net assets-beginning Net assets-ending

See accompanying notes to financial statements. 28

Net (Expense) Revenue and Changes in Net Assets Component Primary Government Unit Industrial Governmental Business-Type Development Activities Activities Total Authority

$ (13,521,684) $ - $ (13,521,684) $ - (29,386,604) - (29,386,604) - (859,992) - (859,992) - (11,535,869) - (11,535,869) - (1,920,808) - (1,920,808) - (2,593,051) - (2,593,051) - (1,664,030) - (1,664,030) - (367,492) - (367,492) -

(633,515) - (633,515) - (4,435) - (4,435) - (62,487,480) - (62,487,480) -

- 930,345 930,345 - - 230,934 230,934 - - (32,214) (32,214) - - (27,833) (27,833) - - 1,101,232 1,101,232 - (62,487,480) 1,101,232 (61,386,248) -

- - - (355,293)

48,952,589 - 48,952,589 - 4,423,210 - 4,423,210 - 9,159,885 - 9,159,885 - 815,566 - 815,566 - 416,879 - 416,879 - 10,704,175 - 10,704,175 - 4,719,371 614,499 5,333,870 5,523 131,464 - 131,464 - 1,114,021 - 1,114,021 2,851 1,250,000 (1,250,000) - - - - - 335,099 81,687,160 (635,501) 81,051,659 343,473 19,199,680 465,731 19,665,411 (11,820) 189,217,213 15,637,139 204,854,352 154,630 $ 208,416,893 $ 16,102,870 $ 224,519,763 $ 142,810

29 HIGHLANDS COUNTY, FLORIDA BALANCE SHEET GOVERNMENTAL FUNDS September 30, 2007

Local County Government Transportation Infrastructure General Trust Surtax ASSETS Cash and cash equivalents $ 29,380,892 $ 2,996,936 $ 11,604,897 Investments 725,751 - 5,275,087 Accounts receivable - net 451,839 996 15,401 Interest receivable - - 982 Due from other funds 46,631 - - Due from other governmental units 1,103,014 765,258 2,185,208 Advances to other funds - - 45,349 Prepaid items 155,339 - - Inventory 350,141 - - Total Assets $ 32,213,607 $ 3,763,190 $ 19,126,924

LIABILITIES AND FUND BALANCES Liabilities: Vouchers payable $ 2,385,146 $ 140,146 $ 92,329 Contracts payable-retained percentage - - - Customer deposits 46,758 25,300 - Due to other governmental units 900,775 - - Due to other funds 138,139 - - Due to others - - - Advances from other funds - - - Accrued wages payable 824,860 161,109 - Deferred revenue 545,523 - 9,753 Total Liabilities 4,841,201 326,555 102,082 Fund Balances: Reserved for: Encumbrances 2,732,606 935,253 518,051 Debt service - - 3,881,799 Advances - - 45,349 Other purposes 350,141 - - Unreserved reported in: General fund 24,289,659 - - Special revenue funds - 2,501,382 14,579,643 Capital projects funds - - - Total Fund Balances 27,372,406 3,436,635 19,024,842 Total Liabilities and Fund Balances $ 32,213,607 $ 3,763,190 $ 19,126,924

See accompanying notes to financial statements. 30 Affordable Housing Nonmajor Total Assistance Governmental Governmental Trust Funds Funds

$ 2,397,388 $ 21,902,995 $ 68,283,108 - - 6,000,838 - 20,305 488,541 - - 982 - 105,026 151,657 - 650,176 4,703,656 - - 45,349 - 2,287 157,626 - - 350,141 $ 2,397,388 $ 22,680,789 $ 80,181,898

$ 27,729 $ 949,780 $ 3,595,130 - 34,188 34,188 - - 72,058 - 320,990 1,221,765 - 9,069 147,208 - 205,066 205,066 - 14,623 14,623 1,129 69,484 1,056,582 2,368,530 744,378 3,668,184 2,397,388 2,347,578 10,014,804

- 3,794,386 7,980,296 - - 3,881,799 - - 45,349 - 883,043 1,233,184

- - 24,289,659 - 10,565,081 27,646,106 - 5,090,701 5,090,701 - 20,333,211 70,167,094 $ 2,397,388 $ 22,680,789 $ 80,181,898

31 HIGHLANDS COUNTY, FLORIDA RECONCILIATION OF FUND BALANCES FOR GOVERNMENTAL FUNDS TO NET ASSETS OF GOVERNMENTAL ACTIVITIES GOVERNMENTAL FUNDS September 30, 2007

Fund balances - total governmental funds $ 70,167,094

Amounts reported for governmental activities in the statement of net assets are different because:

Capital assets used in governmental activities are not financial resources, and therefore are not reported in the funds. 160,526,989

Long-term liabilities, including bonds payable and capital leases are not due and payable in the current period, and therefore are not reported in the funds. (23,918,415)

Accrued general long-term debt interest expenses are not financial uses, and therefore are not reported in the funds. (410,556)

The assets and liabilities of the internal service funds, used by management to charge the costs of certain activities to individual funds, are included in governmental activities in the statement of net assets. 2,051,781

Net assets of governmental activities $ 208,416,893

See accompanying notes to financial statements. 32 HIGHLANDS COUNTY, FLORIDA STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES GOVERNMENTAL FUNDS For the Fiscal Year Ended September 30, 2007

Local County Government Transportation Infrastructure General Trust Surtax REVENUES Taxes $ 49,662,225 $ 4,529,191 $ 9,159,885 Licenses and permits 24,763 173,190 - Intergovernmental 9,539,233 3,295,298 1,148,883 Charges for services 5,686,302 300,954 - Fines and forfeitures 104,487 - - Assessments - - - Interest earnings 2,699,531 124,102 649,506 Miscellaneous 1,613,980 866,573 249,400 Total Revenues 69,330,521 9,289,308 11,207,674

EXPENDITURES Current: General government 16,066,108 - 462,072 Public safety 34,229,033 - 107,312 Physical environment 1,352,769 - - Transportation 267,323 9,390,528 6,173,938 Economic environment 1,466,633 - - Human services 2,664,034 - 6,725 Culture and recreation 3,103,986 - 2,856,316 Court related 1,257,789 - - Debt service: Principal retirement 444,669 - 1,298,023 Interest 22,085 - 984,527 Other debt service - - - Total Expenditures 60,874,429 9,390,528 11,888,913

Excess/(Deficiency) of Revenues Over/ (Under) Expenditures 8,456,092 (101,220) (681,239)

OTHER FINANCING SOURCES (USES) Transfers in 44,616 250,000 1,000,000 Transfers (out) - - (218,417) Issuance of debt 669,765 - - Total Other Financing Sources (Uses) 714,381 250,000 781,583

Net Change in Fund Balances 9,170,473 148,780 100,344 FUND BALANCES, October 1, 2006 18,201,933 3,287,855 18,924,498 FUND BALANCES, September 30, 2007 $ 27,372,406 $ 3,436,635 $ 19,024,842

See accompanying notes to financial statements. 33 Affordable Housing Nonmajor Total Assistance Governmental Governmental Trust Funds Funds

$- $ 343,605 $ 63,694,906 - 1,522,080 1,720,033 1,421,800 4,759,843 20,165,057 - 4,199,653 10,186,909 - 945,381 1,049,868 - 3,134,252 3,134,252 81,528 1,059,488 4,614,155 - 413,312 3,143,265 1,503,328 16,377,614 107,708,445

- 518,269 17,046,449 - 3,543,352 37,879,697 - 89,971 1,442,740 - 4,817,989 20,649,778 1,503,328 4,598,835 7,568,796 - - 2,670,759 - 113,332 6,073,634 - 3,369,426 4,627,215

- 139,900 1,882,592 - 65,277 1,071,889 - 4,435 4,435 1,503,328 17,260,786 100,917,984

- (883,172) 6,790,461

- 220,266 1,514,882 - (46,465) (264,882) - - 669,765 - 173,801 1,919,765

- (709,371) 8,710,226 - 21,042,582 61,456,868 $- $ 20,333,211 $ 70,167,094

34 HIGHLANDS COUNTY, FLORIDA RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS TO THE STATEMENT OF ACTIVITIES For the Fiscal Year Ended September 30, 2007

Net change in fund balances - total governmental funds $ 8,710,226

Amounts reported for governmental activities in the statement of activities are different because:

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 as depreciation expense. This is the amount by which net capital outlay exceeded depreciation in the current period. 9,338,305

In the statement of activities, only the gain on the sale of capital assets is reported. However, in the governmental funds, the proceeds from the sale increase financial resources. Thus the change in net assets differs from the change in fund balance by the cost of capital assets sold. (548,358)

The issuance of long-term debt provides current financial resources to governmental funds, while the repayment of principal of long-term debt consumes the current financial resources of governmental funds. Neither transaction, however, has any effect on net assets. Also, governmental funds report the effect of issuance costs, premiums, discounts, and similar items when debt is first issued, whereas these amounts are deferred and amortized in the statement of activities. This amount is the net effect of these differences in the treatment of long-term debt and related items. 1,212,827

Some expenses reported in the statement of activities do not require the use of current financial resources and, therefore, are not reported as expenditures in governmental funds (a decrease in accrued bond interest $438,374). 438,374

Internal service funds are used by management to charge the costs of insurance to individual funds. The net revenue of certain activities of internal service funds is reported with governmental activities. 48,306

Change in net assets of governmental activities $ 19,199,680

See accompanying notes to financial statements. 35 HIGHLANDS COUNTY, FLORIDA STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE BUDGET AND ACTUAL GENERAL FUND For The Fiscal Year Ended September 30, 2007

Variance with Final Budget Budget Positive Original Final Actual (Negative) REVENUES: Taxes $ 48,037,069 $ 48,037,071 $ 49,662,225 $ 1,625,154 Licenses and permits 102,000 102,000 24,763 (77,237) Intergovernmental 10,166,452 11,413,334 9,539,233 (1,874,101) Charges for services 4,573,442 4,665,734 5,686,302 1,020,568 Fines and forfeitures 30,000 30,000 104,487 74,487 Interest earnings 558,515 558,515 2,699,531 2,141,016 Miscellaneous 771,821 905,392 1,613,980 708,588 Total Revenues 64,239,299 65,712,046 69,330,521 3,618,475

EXPENDITURES: Current: General government 18,131,084 18,944,003 16,066,108 2,877,895 Public safety 36,964,927 38,982,766 34,229,033 4,753,733 Physical environment 2,223,878 2,769,137 1,352,769 1,416,368 Transportation 71,662 271,662 267,323 4,339 Economic environment 1,505,007 1,530,662 1,466,633 64,029 Human services 3,312,479 4,005,734 2,664,034 1,341,700 Culture and recreation 3,568,463 3,749,942 3,103,986 645,956 Court related 1,691,683 1,493,325 1,257,789 235,536 Debt Service: Principal retirement - 391,508 444,669 (53,161) Interest and fiscal charges - 22,085 22,085 - Total Expenditures 67,469,183 72,160,824 60,874,429 11,286,395

Excess/(Deficiency) of Revenues Over/ (Under) Expenditures (3,229,884) (6,448,778) 8,456,092 14,904,870

OTHER FINANCING SOURCES (USES) Transfers in - 77,500 44,616 (32,884) Transfers (out) (1,369,622) (1,369,622) - 1,369,622 Issuance of debt - 327,640 669,765 342,125 Total Other Financing Sources (Uses) (1,369,622) (964,482) 714,381 1,678,863

Net Change In Fund Balance (4,599,506) (7,413,260) 9,170,473 16,583,733

FUND BALANCE, October 1, 2006 4,599,506 7,413,260 18,201,933 10,788,673

FUND BALANCE, September 30, 2007 $- $ - $ 27,372,406 $ 27,372,406

See accompanying notes to financial statements. 36 HIGHLANDS COUNTY, FLORIDA STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE BUDGET AND ACTUAL COUNTY TRANSPORTATION TRUST FUND For the Fiscal Year Ended September 30, 2007

Variance with Final Budget Budget Positive Original Final Actual (Negative)

REVENUES: Taxes $ 4,535,406 $ 4,535,406 $ 4,529,191 $ (6,215) Licenses and permits 200,000 200,000 173,190 (26,810) Intergovernmental 3,453,777 3,453,777 3,295,298 (158,479) Charges for services 225,000 225,000 300,954 75,954 Interest earnings 15,000 15,000 124,102 109,102 Miscellaneous 198,500 410,976 866,573 455,597

Total Revenues 8,627,683 8,840,159 9,289,308 449,149

EXPENDITURES: Current: Transportation: County engineer 1,560,119 1,974,047 1,633,731 340,316 Roads and bridges 6,704,684 7,348,883 5,097,800 2,251,083 Carpentry shop 364,114 365,853 259,854 105,999 Maintenance shop 929,937 954,083 672,560 281,523 Traffic operations 903,832 1,009,365 893,450 115,915 Mowing - right of ways 556,250 564,600 506,275 58,325 County shell pit 598,795 639,722 326,858 312,864

Total Expenditures 11,617,731 12,856,553 9,390,528 3,466,025

Excess/(Deficiency) of Revenues Over/(Under) Expenditures (2,990,048) (4,016,394) (101,220) 3,915,174

OTHER FINANCING SOURCES (USES) Transfers in 1,619,622 1,619,622 250,000 (1,369,622) Total Other Financing Sources (Uses) 1,619,622 1,619,622 250,000 (1,369,622)

Net Change in Fund Balance (1,370,426) (2,396,772) 148,780 2,545,552

FUND BALANCE - October 1, 2006 1,370,426 2,396,772 3,287,855 891,083

FUND BALANCE - September 30, 2007 $- $ - $ 3,436,635 $ 3,436,635

See accompanying notes to financial statements. 37 HIGHLANDS COUNTY, FLORIDA STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE BUDGET AND ACTUAL LOCAL GOVERNMENT INFRASTRUCTURE SURTAX FUND For the Fiscal Year Ended September 30, 2007

Variance with Final Budget Budget Positive Original Final Actual (Negative)

REVENUES:

Taxes $ 8,750,000 $ 8,750,000 $ 9,159,885 $ 409,885 Intergovernmental 281,566 3,325,420 1,148,883 (2,176,537) Charges for services 65,625 65,625 - (65,625) Interest earnings 145,000 145,000 649,506 504,506 Miscellaneous - 116,872 249,400 132,528 Total Revenues 9,242,191 12,402,917 11,207,674 (1,195,243)

EXPENDITURES:

Current: General Government: Facilities management 1,196,694 1,514,748 462,072 1,052,676 Total General Government 1,196,694 1,514,748 462,072 1,052,676

Public Safety: Ambulance service 82,688 82,688 - 82,688 Medical examiner 56,200 112,400 107,312 5,088 Total Public Safety 138,888 195,088 107,312 87,776

Transportation: Road and bridges 16,866,250 18,971,805 5,114,059 13,857,746 Airports 1,978,621 1,680,178 1,059,879 620,299 Total Transportation 18,844,871 20,651,983 6,173,938 14,478,045

Human Services: Health 700,000 700,000 6,725 693,275 Total Transportation 700,000 700,000 6,725 693,275

Culture and Recreation: Library department - 1,517 - 1,517 Recreation department 1,741,449 3,528,362 2,758,219 770,143 Parks department 200,000 200,000 98,097 101,903 Total Culture and Recreation $ 1,941,449 $ 3,729,879 $ 2,856,316 $ 873,563

(continued)

See accompanying notes to financial statements. 38 HIGHLANDS COUNTY, FLORIDA STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE BUDGET AND ACTUAL (continued) LOCAL GOVERNMENT INFRASTRUCTURE SURTAX FUND For the Fiscal Year Ended September 30, 2007

Variance with Final Budget Budget Positive Original Final Actual (Negative)

Debt Service: Principal retirement $ 1,298,730 $ 1,298,730 $ 1,298,023 $ 707 Interest 987,258 987,258 984,527 2,731 Total Debt Service 2,285,988 2,285,988 2,282,550 3,438

Total Expenditures 25,107,890 29,077,686 11,888,913 17,188,773

Excess of Revenues Over/(Under) Expenditures (15,865,699) (16,674,769) (681,239) 15,993,530

OTHER FINANCING SOURCES (USES):

Transfers in 1,000,000 1,000,000 1,000,000 - Transfers (out) (126,453) (218,417) (218,417) - Total Other Financing Sources (Uses) 873,547 781,583 781,583 -

Excess of Revenues and Other Financing Sources Over/(Under) Expenditures and Other Financing Sources (Uses) (14,992,152) (15,893,186) 100,344 15,993,530

FUND BALANCE - October 1, 2006 14,992,152 17,174,981 18,924,498 1,749,517

FUND BALANCE - September 30, 2007 $- $ 1,281,795 $ 19,024,842 $ 17,743,047

See accompanying notes to financial statements. 39 HIGHLANDS COUNTY, FLORIDA STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE BUDGET AND ACTUAL AFFORDABLE HOUSING ASSISTANCE TRUST FUND For the Fiscal Year Ended September 30, 2007

Variance with Final Budget Budget Positive Original Final Actual (Negative)

REVENUES:

Intergovernmental $ 2,033,097 $ 3,035,330 $ 1,421,800 $ (1,613,530) Interest earnings - 13,667 81,528 67,861

Total Revenues 2,033,097 3,048,997 1,503,328 (1,545,669)

EXPENDITURES:

Current: Economic Environment: State Housing Assistance Grant 2,033,097 3,229,647 1,503,328 1,726,319

Total Expenditures 2,033,097 3,229,647 1,503,328 1,726,319

(Deficiency) of Revenues (Under) Expenditures - (180,650) - 180,650

FUND BALANCE - October 1, 2006 - 180,650 - (180,650)

FUND BALANCE - September 30, 2007 $- $ - $ - $ -

See accompanying notes to financial statements. 40 HIGHLANDS COUNTY, FLORIDA STATEMENT OF NET ASSETS PROPRIETARY FUNDS September 30, 2007

Business-Type Activities - Enterprise Funds

Governmental Activities - Other Internal Solid Water Business Service Waste and Sewer Type Funds Total Funds ASSETS Current Assets: Cash and cash equivalents $ 9,628,266 $ 404,155 $ 225,495 $ 10,257,916 $ 6,885,968 Investments - - - - 104,294 Accounts receivable - net 718,114 8,527 12,472 739,113 98 Due from other funds 33,112 - - 33,112 - Due from other governmental units 333,733 - - 333,733 137 Advances to other funds 14,623 - - 14,623 -

Total Current Assets 10,727,848 412,682 237,967 11,378,497 6,990,497

Noncurrent Assets: Restricted cash and cash equivalents 87,175 100,952 17,350 205,477 -

Total Restricted Assets 87,175 100,952 17,350 205,477 -

Capital Assets: (net of $7,800,290 accumulated depreciation) 10,507,508 2,227,435 1,224,630 13,959,573 -

Total Noncurrent Assets 10,594,683 2,328,387 1,241,980 14,165,050 -

Total Assets $ 21,322,531 $ 2,741,069 $ 1,479,947 $ 25,543,547 $ 6,990,497

See accompanying notes to financial statements. 41 Business-Type Activities - Enterprise Funds

Governmental Activities - Other Internal Solid Water Business Service Waste and Sewer Type Funds Total Funds LIABILITIES Current Liabilities: Vouchers payable $ 748,897 $ 110,817 $ 11,792 $ 871,506 $ 11,011 Due to other funds - 31,454 6,107 37,561 - Accrued interest payable 26,570 11,329 - 37,899 - Accrued wages payable 37,541 5,995 1,109 44,645 - Deferred revenue - 6,780 350 7,130 1,072 Compensated absences - current portion 10,313 1,822 306 12,441 - Note payable and capital leases - current portion 597,660 96,976 - 694,636 - Landfill closure liability - current portion 77,207 - - 77,207 - Claims payable - - - - 19,663

Total Current Liabilities 1,498,188 265,173 19,664 1,783,025 31,746

Long-Term Liabilities: Payable from restricted assets - customer deposits 87,175 58,064 17,350 162,589 - Deferred revenue 7,672 - - 7,672 - Compensated absences payable 92,812 16,398 2,751 111,961 4,535,939 Advances from other funds - 45,349 - 45,349 - Notes payable and capital leases 2,118,868 670,913 - 2,789,781 - Landfill closure liability 4,911,331 - - 4,911,331 -

Total Long-Term Liabilities 7,217,858 790,724 20,101 8,028,683 4,535,939

Total Liabilities 8,716,046 1,055,897 39,765 9,811,708 4,567,685

Net Assets: Invested in capital assets, net of related debt 7,790,980 1,459,546 1,224,630 10,475,156 - Restricted for debt service - 42,887 - 42,887 - Unrestricted 4,815,505 182,739 215,552 5,213,796 2,422,812

Total Net Assets $ 12,606,485 $ 1,685,172 $ 1,440,182 15,731,839 $ 2,422,812

Adjustment to reflect consolidation of internal service fund activities related to enterprise funds 371,031 Net assets of business-type activities $ 16,102,870

42 HIGHLANDS COUNTY, FLORIDA STATEMENT OF REVENUES, EXPENSES AND CHANGES IN FUND NET ASSETS PROPRIETARY FUNDS For the Fiscal Year Ended September 30, 2007

Business-Type Activities - Enterprise Funds

Governmental Activities - Other Internal Solid Water Business Service Waste and Sewer Type Funds Total Funds OPERATING REVENUES Charges for services $ 4,985,293 $ 629,085 $ 122,396 $ 5,736,774 $ - Special assessments 4,415,123 - - 4,415,123 - Sale of recyclable materials 279,783 - - 279,783 - Miscellaneous 30,014 4,115 - 34,129 2,664,190 Total Operating Revenues 9,710,213 633,200 122,396 10,465,809 2,664,190

OPERATING EXPENSES Personal services 1,305,837 196,161 35,774 1,537,772 - General and administrative 6,822,838 369,564 113,770 7,306,172 67,616 Insurance and Claims - - - - 2,597,492 Depreciation 762,720 125,565 39,638 927,923 -

Total Operating Expenses 8,891,395 691,290 189,182 9,771,867 2,665,108

Operating Income (Loss) 818,818 (58,090) (66,786) 693,942 (918)

NONOPERATING REVENUES (EXPENSES) Operating grants 215,622 - - 215,622 - Interest income 565,098 31,700 10,435 607,233 64,811 Sewer impact fees - 30,632 - 30,632 - Water impact fees - 37,500 6,000 43,500 - Interest expense (110,135) (35,998) - (146,133) - Total Nonoperating Revenues (Expenses), Net 670,585 63,834 16,435 750,854 64,811

Income before contributions and transfers 1,489,403 5,744 (50,351) 1,444,796 63,893

Capital contributions - 255,348 - 255,348 - Transfer in (out) (1,285,000) - 35,000 (1,250,000) -

Change In Net Assets 204,403 261,092 (15,351) 450,144 63,893

Net Assets, October 1, 2006 12,402,082 1,424,080 1,455,533 2,358,919

Total Net Assets, September 30, 2007 $ 12,606,485 $ 1,685,172 $ 1,440,182 $ 2,422,812

Adjustment to reflect consolidation of internal service fund activities related to enterprise funds 15,587 Change in net assets of business-type activities $ 465,731

See accompanying notes to financial statements. 43 HIGHLANDS COUNTY, FLORIDA STATEMENT OF CASH FLOWS PROPRIETARY FUNDS For the Fiscal Year Ended September 30, 2007

Business-Type Activities - Enterprise Funds

Governmental Activities - Other Internal Solid Water Business Service Waste and Sewer Type Funds Total Funds CASH FLOWS FROM OPERATING ACTIVITIES Cash received from customers $ 9,118,169 $ 664,591 $ 118,879 $ 9,901,639 $ 2,746,738 Cash payments for personal services (1,295,212) (197,423) (37,089) (1,529,724) (2,635,962) Cash payments to vendors (6,114,774) (324,621) (104,014) (6,543,409) - Cash payments to employees for services - - - - (3,483) Customer deposits (15,960) 2,000 650 (13,310) - Other miscellaneous cash received 279,783 - - 279,783 - Net Cash Provided By Operating Activities 1,972,006 144,547 (21,574) 2,094,979 107,293

CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES Impact fees received - 68,132 6,000 74,132 - Grant funds received 168,707 - - 168,707 - Transfers (to) from other funds (1,285,000) - 35,000 (1,250,000) 195,362 Net Cash Provided (Used) By Noncapital Financing Activities (1,116,293) 68,132 41,000 (1,007,161) 195,362

CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES Proceeds from capital debt 804,825 - - 804,825 - Proceeds from sale of capital assets - - - - - Capital contributions - 255,348 - 255,348 - Acquisition of capital assets (1,039,122) (505,901) (3,269) (1,548,292) - Payments on loans from other funds - (16,204) - (16,204) - Principal payments on borrowings (502,137) (93,172) - (595,309) - Interest payments on borrowings (114,651) (37,604) - (152,255) - Net Cash (Used) By Capital And Related Financing Activities (851,085) (397,533) (3,269) (1,251,887) -

CASH FLOWS FROM INVESTING ACTIVITIES Interest received on investments 565,098 31,700 10,435 607,233 60,034 Net Cash Provided By Investing Activities 565,098 31,700 10,435 607,233 60,034

Net increase in cash and cash equivalents 569,726 (153,154) 26,592 443,164 362,689

Cash and Cash Equivalents - October 1, 2006 9,145,715 658,261 216,253 10,020,229 6,523,279

Cash and Cash Equivalents - September 30, 2007 $ 9,715,441 $ 505,107 $ 242,845 $ 10,463,393 $ 6,885,968 (continued)

See accompanying notes to financial statements. 44 HIGHLANDS COUNTY, FLORIDA STATEMENT OF CASH FLOWS (continued) PROPRIETARY FUNDS For the Fiscal Year Ended September 30, 2007

Business-Type Activities - Enterprise Funds

Governmental Activities - Other Internal Solid Water Business Service Waste and Sewer Type Funds Total Funds

RECONCILIATION OF NET OPERATING INCOME (LOSS) TO NET CASH PROVIDED BY OPERATING ACTIVITIES

Operating Income (loss) $ 818,818 $ (58,090) $ (66,786) $ 693,942 $ (918)

Adjustments To Reconcile Operating Income To Net Cash Provided (Used) By Operating Activities: Depreciation 762,720 125,565 39,638 927,923 - Changes in Assets and Liabilities: (Increase) decrease in accounts receivable (313,904) 31,131 (2,749) (285,522) 71,313 (Increase) decrease in due from other funds 8,477 - - 8,477 11,530 Increase (decrease) in vouchers payable 309,577 43,339 9,952 362,868 11,011 Increase (decrease) in due to other funds - 1,604 (196) 1,408 - Increase (decrease) in accrued wages payable 6,873 743 (41) 7,575 - Increase (decrease) in compensated absences 3,752 (2,005) (1,274) 473 14,652 Increase in landfill closure liability 398,487 - - 398,487 - Increase (decrease) in deferred revenues (6,834) 260 (768) (7,342) (295) Increase (decrease) in customer deposits (15,960) 2,000 650 (13,310) - Total Adjustments 1,153,188 202,637 45,212 1,401,037 108,211

Net Cash Provided By Operating Activities $ 1,972,006 $ 144,547 $ (21,574) $ 2,094,979 $ 107,293

Reconciliation Of Enterprise Fund Cash And And Cash Equivalents to Combining Balance Sheet Cash And Cash Equivalents

Cash and temporary investments $ 9,715,441 $ 505,107 $ 242,845 $ 10,463,393 $ 6,885,968

Less: Restricted cash and investments 87,175 100,952 17,350 205,477 -

Total Unrestricted Cash and Cash Equivalents $ 9,628,266 $ 404,155 $ 225,495 $ 10,257,916 $ 6,885,968

Noncash investing, capital, and financing activities:

Increase in fair value of investments $ - $ - $ - $ - $ 4,777

45 HIGHLANDS COUNTY, FLORIDA STATEMENT OF FIDUCIARY NET ASSETS AGENCY FUNDS September 30, 2007

Agency Funds ASSETS Cash and cash equivalents $ 8,752,337 Accounts receivable - net 5,827 Due from other governmental units 58,197

Total Assets $ 8,816,361

LIABILITIES Vouchers payable $ 32,449 Due to other governmental units 1,603,836 Due to others 707,041 Accrued payroll deductions and matching expense 11,906 Deposits 1,390,951 Tax deed surplus 5,070,178

Total Liabilities $ 8,816,361

See accompanying notes to financial statements. 46 NOTES TO FINANCIAL STATEMENTS

Note Page

1. Summary of Significant Accounting Policies...... 48-69

2. Cash, Cash Equivalents and Investments...... 69-70

3. Accounts Receivable...... 71

4. Capital Assets...... 72-74

5. Interfund Balances ...... 74-75

6. Restricted Assets...... 75

7. Long-Term Liabilities...... 76-82

8. Leases...... 82-83

9. Personnel Commitments ...... 83-84

10. Landfill Closure and Postclosure Care Cost ...... 84

11. Miscellaneous Revenue...... 85

12. Major Customers...... 85

13. Contingent Liabilities...... 85

14. Risk Management...... 86-87

15. Retirement Plan...... 87

16. Fund Balance Deficit ...... 88

17. Interfund Transfers...... 88

18. Subsequent Events ...... 88-89

47 HIGHLANDS COUNTY, FLORIDA

NOTES TO FINANCIAL STATEMENTS

September 30, 2007

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

A. Reporting Entity

Highlands County (County) is a Non-Charter County established under the Constitution and the laws of the State of Florida. The six offices elected county-wide are as follows: Board of County Commissioners composed of five members, Clerk of Courts, Property Appraiser, Tax Collector, Sheriff, and Supervisor of Elections.

The Board of County Commissioners (Board), as the legislative body for the County, budgets and provides the funding used by the separate constitutional offices with the exception of fees collected by the Tax Collector and the Property Appraiser. Under the direction of the Clerk of Courts, the Division of Business Services maintains the accounting system for the Board's operations. The Clerk of Courts (Clerk), Property Appraiser (Appraiser), Tax Collector (Collector), Sheriff, and Supervisor of Elections (Supervisor) each maintain their own accounting system. The operations of the Board and each constitutional office have been combined in these financial statements.

As required by United States generally accepted accounting principles, these financial statements present the government and its component units, entities for which the government is considered to be financially accountable. Blended component units, although legally separate entities, are in substance part of the government's operations and so data from these units are combined with data of the primary government. The discretely presented component unit, on the other hand, is reported in a separate column in the combined financial statements to emphasize that it is legally separate from the government. The discretely presented component unit has a September 30 fiscal year-end.

Blended Component Units

The following component units are included in the accompanying financial statements as part of the primary government because they satisfy the criteria in GASB Statement No. 14 for blending:

Lake Placid Sun-N-Lake Improvement District was established by Ordinance 80-1 to provide improvements relating to drainage and street maintenance. The Board is the ex- officio board of supervisors, the governing board of the District, and approves the annual budget of the District. The Improvement District is operated as a special revenue fund of the Board.

Lake Placid Sun-N-Lake Estates Fire District was established by Ordinance 81-2 to provide fire protection services to the residents of the District. The Board is the ex- officio board of supervisors, the governing board of the District, and approves the annual budget of the District. The Fire District is operated as a special revenue fund of the Board.

48 HIGHLANDS COUNTY, FLORIDA

NOTES TO FINANCIAL STATEMENTS

September 30, 2007

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

A. Reporting Entity (continued)

DeSoto City Special Benefit Fire District was established by Ordinance 82-6 to provide fire protection services to the residents within the District. The Board serves as the board of supervisors, the governing body of the District, and approves the annual budget of the District. The Special Benefit Fire District is operated as a special revenue fund of the Board.

Sebring Highlands Special Tax District was established by Ordinance 82-7 to provide maintenance of rights-of-way, clearance and maintenance of new rights-of-way, paving, maintenance of existing drainage, and new drainage as required. The Board serves as the board of governors, the governing body of the District, and approves the annual budget of the District. The Special Tax District is operated as a special revenue fund of the Board.

Orange Villa Special Benefit District was established by Ordinance 79-1 to provide street and recreational lights within the District. The Board serves as the governing body of the District and approves the annual budget of the District. The Special Benefit District is operated as a special revenue fund of the Board.

Hickory Hills Special Benefit District was established by Ordinance 87-3 to provide street and recreational facilities within the District. The Board serves as the board of supervisors, the governing body of the District, and approves the annual budget of the District. The Special Benefit District is operated as a special revenue fund of the Board.

Placid Lakes Special Benefit District was established by Ordinance 92-10 to provide maintenance of recreational areas, streets, fire protection, and canals. The Board is the ex-officio board of supervisors, the governing body of the District, and approves the annual budget of the District. The Special Benefit District is operated as a special revenue fund of the Board.

Sebring Country Estates Special Benefit District was established by Ordinance 78-4 to provide installation and maintenance of street lighting within the District. The Board serves as the governing body of the District and approves the annual budget of the District. The Special Benefit District is operated as a special revenue fund of the Board.

Istokpoga Marsh Watershed Improvement District was established by Ordinance 80- 2 to provide flood and erosion control and improvements to waterways within the District. The Board is the ex-officio board of supervisors, the governing body of the District, and approves the annual budget of the District. The Improvement District is operated as a special revenue fund of the Board.

49 HIGHLANDS COUNTY, FLORIDA

NOTES TO FINANCIAL STATEMENTS

September 30, 2007

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

A. Reporting Entity (continued)

Avon Park Estates Special Benefit District was established by Ordinance 80-5 to provide road maintenance, improvements, reconstruction and paving, drainage maintenance, maintenance of streetlights, and other purposes within the District. The Board serves as the governing body of the District and approves the annual budget of the District. The Special Benefit District is operated as a special revenue fund of the Board.

North Orange Blossom (Units 8 & 9) Special Benefit District was established by Ordinance 88-8 to provide roads, drainage facilities, water lines, and street lighting within the District. The Board serves as the governing body of the District and approves the annual budget of the District. The Special Benefit District is operated as a special revenue fund of the Board.

Highlands Lakes Special Tax District was established by Ordinance 84-1 to provide fire protection services within the District. The Board serves as the board of supervisors, the governing body of the District, and approves the annual budget of the District. The Special Tax District is operated as a special revenue fund of the Board.

Northwest Highlands Park Special Benefit District was established by Ordinance 87-1 to provide general maintenance of roads, water and sewer system, flood and erosion controls, and other purposes within the District. The Board serves as the board of supervisors, the governing body of the District, and approves the annual budget of the District. The Special Benefit District is operated as a special revenue fund of the Board.

Highlands Park Special Benefit Fire District was established by Ordinance 87-3 to provide fire protection services directly, or by assistance, to local volunteer fire departments on property located within the District. The Board serves as the governing body of the District and approves the annual budget of the District. The Special Benefit Fire District is operated as a special revenue fund of the Board.

Highlands Park Estates Improvement Trust was established by resolution in 1981 (Resolution Book 6, Page 20) to assure maintenance, construction and repairs on public thoroughfares in Highlands Park Estates Subdivision. The Improvement Trust is operated as a special revenue fund of the Board.

Leisure Lakes Special Benefit Fire District was established by Ordinance 85-4 to provide fire protection services within the District. The Board serves as the governing body of the District and approves the annual budget of the District. The Special Benefit Fire District is operated as a special revenue fund of the Board.

50 HIGHLANDS COUNTY, FLORIDA

NOTES TO FINANCIAL STATEMENTS

September 30, 2007

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

A. Reporting Entity (continued)

Sebring Hills Special Benefit District was established by Ordinance 89-5 to provide street lights within the District. The Board serves as the board of supervisors, the governing body of the District, and approves the annual budget of the District. The Special Benefit District is operated as a special revenue fund of the Board.

Red Hill Farms Improvement District was established by Ordinance 89-16 to provide construction and maintenance of roads and drainage facilities within the District. The Board serves as the governing body of the District and approves the annual budget of the District. The Improvement District is operated as a special revenue fund of the Board.

Orange Blossom Estates Special Benefit District was established by Ordinance 90-16 to provide road maintenance, construction of roads, and drainage facilities. The Board serves as the governing body of the District and approves the annual budget of the District. The Special Benefit District is operated as a special revenue fund of the Board.

Sun-N-Lakes of Lake Placid Recreation District was established by Ordinance 92-35 to provide recreational facilities, maintenance of parks and installation and maintenance of streetlights within the District. The Board is the ex-officio board of supervisors, the governing body of the District, and approves the annual budget of the District. The Recreation District is operated as a special revenue fund of the Board.

Sebring Acres Special Benefit District was established by Ordinance 94-14 and Section 125.01(1)(q), Florida Statutes, to provide flood and erosion control, water and sewer systems, road maintenance, fire protection, recreational facilities, and street lighting within the District. The Board is the ex-officio board of supervisors, the governing body of the District, and approves the annual budget of the District. The Special Benefit District is operated as a special revenue fund of the Board.

Orange Blossom (Unit 12) Special Benefit District was established by Ordinance 95-39 and Section 125.01(1)(q), Florida Statutes, to provide flood and erosion control, water and sewer systems, fire protection services, recreational facilities, road maintenance, and street lighting within the District. The Board is the ex-officio board of supervisors, the governing body of the District, and approves the annual budget of the District. The Special Benefit District is operated as a special revenue fund of the Board.

Lake Haven Estates Special Benefit District was established by Ordinance 95-34 and Section 125.01(1)(q), Florida Statutes, to provide street lighting within the District. The Board is the ex-officio board of supervisors, the governing body of the District, and approves the annual budget of the District. The Special Benefit District is operated as a special revenue fund of the Board.

51 HIGHLANDS COUNTY, FLORIDA

NOTES TO FINANCIAL STATEMENTS

September 30, 2007

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

A. Reporting Entity (continued)

Lorida Special Benefit Fire District was established by Ordinance 96-20 to provide fire protection services within the District. The Board is the ex-officio board of supervisors, the governing body of the District, and approves the annual budget of the District. The Special Benefit Fire District is operated as a special revenue fund of the Board.

Lake Placid Special Benefit Fire District was established by Ordinance 98-03 to provide fire protection services within the District. The Board is the ex-officio board of supervisors, the governing body of the District, and approves the annual budget of the District. The Special Benefit Fire District is operated as a special revenue fund of the Board.

Highway Park Special Benefit District was established by Ordinance 98-36 to provide and maintain street lighting within the District and pay the electrical bills incurred. The Board is the ex-officio board of supervisors, is the governing body of the District and approves the annual budget of the District. The Special Benefit District is operated as a special revenue fund of the Board.

Sun-N-Lake 1-20 Improvement Trust was established by Resolution 2001-96 to assure construction of drainage and paved streets in Units 1 through 20 of Sun-n-Lake Estates of Lake Placid Subdivision. The Improvement Trust is operated as a special revenue fund of the Board.

Highlands Park Estates Special Benefit District was established by Ordinance 00-25 to provide facilities and improvements within the District. The Board is the ex-officio board of supervisors, the governing body of the District, and approves the annual budget of the District. The Special Benefit District is operated as a special revenue fund of the Board.

West Sebring Special Benefit Fire District was established by Ordinance 01-02-6 to provide fire protection services within the District. The Board is the ex-officio board of supervisors, the governing body of the District, and approves the annual budget of the District. The Special Benefit Fire District is operated as a special revenue fund of the Board.

Venus Special Benefit Fire District was established by Ordinance 96-19 to provide fire protection services within the District. The Board serves as the board of supervisors, the governing body of the District, and approves the annual budget of the District. The Special Benefit Fire District is operated as a special revenue fund of the Board.

52 HIGHLANDS COUNTY, FLORIDA

NOTES TO FINANCIAL STATEMENTS

September 30, 2007

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

A. Reporting Entity (continued)

Placid Lakes Fire District was established by Ordinance 03-04-6 to provide fire protection services within the District. The Board serves as the board of supervisors, the governing body of the District, and approves the annual budget of the district. The Fire District is operated as a special revenue fund of the Board.

Discretely Presented Component Unit

The financial statements include the following component unit:

Industrial Development Authority

The Highlands County Industrial Development Authority (Authority), established by a resolution of the Board, is a legally separate entity governed by a board appointed by the County Commission. The Authority’s function is to finance and refinance public purpose projects as described in Sections 159.44-159.53, Florida Statutes, and to foster economic development of the County. The Authority is dependent upon the Board for a significant portion of its funding and is presented as a governmental fund type. Complete financial statements for the Industrial Development Authority may be obtained at 2113 US 27 South, Sebring, Florida 33870.

B. Measurement Focus and Basis of Accounting

The basic financial statements of the County are composed of the following:

ƒ Government-wide financial statements ƒ Fund financial statements ƒ Notes to the financial statements

Government-Wide Financial Statements Government-wide financial statements display information about the reporting government as a whole, except for its fiduciary activities. These statements include separate columns for the governmental and business-type activities of the primary government, as well as its discretely presented component unit. Governmental activities, which normally are supported by taxes and intergovernmental revenues, are reported separately from business-type activities, which rely, to a significant extent, on fees and charges for support. Likewise, the primary government is reported separately from the legally separate component unit for which the primary government is financially accountable.

53 HIGHLANDS COUNTY, FLORIDA

NOTES TO FINANCIAL STATEMENTS

September 30, 2007

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

B. Measurement Focus and Basis of Accounting (continued)

Government-Wide Financial Statements (continued) Government-wide financial statements are reported using the economic resources measurement focus and the accrual basis of accounting, as are the proprietary fund financial statements. Under the accrual basis of accounting, revenues, expenses, gains, loses, assets, and liabilities resulting from exchange and exchange-like transactions are recognized when the exchange takes place. Revenues, expenses, gains, losses, assets, and liabilities resulting from nonexchange transactions are recognized in accordance with the requirements of GASB Statement No. 33 – Accounting and Financial Reporting for Nonexhcange Transactions.

Program revenues derive directly from the program itself or from parties outside the reporting government’s taxpayers or citizenry, as a whole; they reduce the cost of the function to be financed from the government’s general revenues. Program revenues include charges for services, program specific operating grants and contributions and program specific capital grants and contributions. Program revenues are netted with program expenses in the statement of activities to present the net cost of each program.

In the State of Florida, certain state shared revenues are considered to be unrestricted general revenues.

Amounts paid to acquire capital assets are capitalized as assets in the government-wide financial statements, rather than reported as an expenditure. Proceeds of long-term debt are recorded as liabilities in the government-wide financial statements, rather than as an other financing source. Amounts paid to reduce long-term indebtedness of the reporting government are reported as a reduction of the related liability, rather than as an expenditure.

As a general rule, the effect of interfund activity, except for interfund services provided and used, has been eliminated from the government-wide financial statements. The County chooses to eliminate the indirect costs between governmental activities to avoid a “doubling up” effect.

The County’s fiduciary funds (which have been redefined and narrowed in scope) are presented in the fund financial statements by type (agency). Since these assets are being held for the benefit of a third party (other local governments) and cannot be used to address activities or obligations of the government, these funds are not incorporated into the government-wide statements.

54 HIGHLANDS COUNTY, FLORIDA

NOTES TO FINANCIAL STATEMENTS

September 30, 2007

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

B. Measurement Focus and Basis of Accounting (continued)

Government-Wide Financial Statements (continued) Fund Financial Statements The underlying accounting system of the County is organized and operated on the basis of separate funds, each of which is considered to be a separate accounting entity. The operations of each fund are accounted for with a separate set of self-balancing accounts that comprise its assets, liabilities, fund equity, revenues and expenditures or expenses, as appropriate. Governmental resources are allocated to and accounted for in individual funds based upon the purposes for which they are to be spent and the means by which spending activities are controlled.

Fund financial statements for the primary government’s governmental, proprietary and fiduciary funds are presented after the government-wide financial statements. These statements display information about major funds individually and nonmajor funds in the aggregate for governmental and enterprise funds. The fiduciary statement includes financial information for the agency fund. The agency fund of the County primarily represents assets held by the County in a custodial capacity for other individuals or governments.

When both restricted and unrestricted resources are combined in a fund, expenses are considered to be paid first from restricted resources and then from unrestricted resources.

Governmental Funds Governmental fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Revenues are recognized as soon as they are both measurable and available. Revenues are considered to be available when they are collected within the current period or soon enough thereafter to pay liabilities of the current period. For this purpose, the County considers revenues to be available if they are collected within 60 days of the end of the current fiscal period. Expenditures generally are recorded when a liability is incurred, as under accrual accounting. Property taxes, intergovernmental revenues and interest earned associated with the current fiscal period are all considered to be susceptible to accrual and so have the current fiscal period. All other revenue items are considered to be measurable only when cash is received by the County.

Under the current financial resources measurement focus, only current assets and current liabilities are generally included on the balance sheet. The reported fund balance is considered to be a measure of “available spendable resources”. Governmental funds operating statements present increases (revenues and other financing sources) and decreases (expenditures and other financing uses) in net current assets. Accordingly, they are said to present a summary of sources and uses of “available spendable resources” during a period.

Noncurrent portions of long-term receivables (special assessment) due to governmental funds are reported on their balance sheets in spite of their spending measurement focus.

55 HIGHLANDS COUNTY, FLORIDA

NOTES TO FINANCIAL STATEMENTS

September 30, 2007

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

B. Measurement Focus and Basis of Accounting (continued)

Governmental Funds (continued) Because of their spending measurement focus, expenditure recognition for governmental fund types excludes amounts represented by noncurrent liabilities. Since they do not affect net current assets, such long-term amounts are not recognized as governmental fund type expenditures or fund liabilities.

Amounts expended to acquire capital assets are recorded as expenditures in the year that resources were expended, rather than as fund assets. The proceeds of long-term debt are recorded as another financing source rather than as a fund liability. However, debt service expenditures, as well as expenditures related to compensated absences and claims and judgments, are recorded only when payment is due.

Proprietary Funds The County’s enterprise funds and internal service funds are proprietary funds. In the fund financial statements, proprietary funds are presented using the accrual basis of accounting. Revenues are recognized when they are earned and expenses are recognized when the related goods or services are delivered. In the fund financial statements, proprietary funds are presented using the economic resources measurement focus. This means that all assets and all liabilities (whether current or noncurrent) associated with their activity are included on their balance sheets. Proprietary fund type operating statements present increases (revenues) and decreases (expenses) in total net assets. The Board applies all Statement of Financial Accounting Standards and Interpretations issued before November 30, 1989 except those that conflict with or contradict Statements of Government Accounting Standards. The County has elected not to apply Financial Accounting Standards Board Pronouncements issued after November 30, 1989.

Proprietary funds distinguish operating revenues and expenses from nonoperating items. Operating revenues and expenses generally result from providing services and producing and delivering goods in connection with a proprietary fund’s principal ongoing operations. The operating revenues of the County’s enterprise funds, the Water and Sewer Units and the Solid Waste Disposal System are charges for services to customers. Operating expenses of these operations include salaries, contractual services, materials and supplies, utilities, equipment rental and maintenance, administrative charges, and depreciation. All revenues and expenses not meeting this definition are reported as nonoperating revenues and expenses.

When both restricted and unrestricted resources are available for use, it is the County’s policy to first apply restricted resources when an expense is incurred for purposes for which both restricted and unrestricted assets are available.

Amounts paid to acquire capital assets are capitalized as assets in the fund financial statements, rather than reported as an expenditure. Proceeds of long-term debt are recorded as a liability in the fund financial statements, rather than as an other financing source. Amounts paid to reduce long-term indebtedness are reported as a reduction of the related liabilities, rather than as an expense.

56 HIGHLANDS COUNTY, FLORIDA

NOTES TO FINANCIAL STATEMENTS

September 30, 2007

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

B. Measurement Focus and Basis of Accounting (continued)

Basis of Presentation: GASB Statement No. 34 sets forth minimum criteria (percentage of the assets, liabilities, revenues, or expenditures/expenses of either fund category and the governmental and enterprise combined) for the determination of major funds. The County has used GASB Statement No. 34 minimum criteria for major fund determination. The County considers the County Transportation Trust Fund important to financial statement users because of public interest and is, therefore, reporting that governmental fund as major even though the quantitative criteria have not been met. The non-major funds are combined in a column in the fund financial statements and detailed in the combining section.

Governmental Major Funds: General Fund – The General Fund is the general operating fund of the County. It is used to account for all financial resources, except those required to be accounted for in another fund.

County Transportation Trust - To account for the operations of the road and bridge department. Financing is provided principally by the County's share of state gasoline taxes and the sixth-cent local option gas tax.

Local Government Infrastructure Surtax - To account for the voted one-cent local option sales surtax. The proceeds for this surtax may only be expended on infrastructure (fixed capital outlay) projects which have a life expectancy of five or more years.

Affordable Housing Assistance Trust - To account for the revenues and expenditures of State Housing Initiatives Partnership which aids low income persons seeking housing loans.

Proprietary Major Funds: Solid Waste - This fund accounts for all facilities and administration relating to the sanitary disposal of solid waste (refuse) including debt service payments on all outstanding Solid Waste Facility long-term debt.

Water and Sewer - This fund accounts for the facilities and administration relating to residential and commercial sewer and water services provided to residents of Lake Placid, Highlands County, including debt service payments on the Water Utilities System long-term debt and to further construct and expand the System.

Other Fund Types: Internal Service Funds - Internal Service Funds account for risk retention, employee benefit and compensated absences provided to other departments of the County on a cost reimbursement basis.

57 HIGHLANDS COUNTY, FLORIDA

NOTES TO FINANCIAL STATEMENTS

September 30, 2007

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

B. Measurement Focus and Basis of Accounting (continued)

Other Fund Types (continued): Agency Funds - The Agency Funds account for all assets held by the County in its capacity as custodian or agent for individuals, other governmental units and non-public organizations. The Agency Funds are custodial in nature (assets equal liabilities) and do not involve measurement of results of operations. A description of each agency fund can be found on pages 179-180.

C. Budgets and Budgetary Accounting

The following are the procedures followed by the Board in establishing the budget for Highlands County:

1. On or before June 1 of each year, the Sheriff, the Clerk, the Collector, unless the Collector is a fee officer, and the Supervisor submit to the Board a tentative budget for their respective offices for the ensuing fiscal year.

2. Within fifteen days after certification of the ad valorem tax roll by the Appraiser, the Office of Management and Budget submits to the Board a proposed operating budget for the fiscal year commencing the following October 1. The operating budget includes proposed expenditures and the means of financing them.

3. By Board resolution, a tentative budget is submitted to the public and public hearings are held to obtain taxpayers' comments.

4. Within twenty days after adoption of the tentative budget, a final budget is submitted for review and adoption at a final public hearing.

5. The County's operating budget is legally enacted through passage of a resolution at the final public hearing. Accordingly, all fund types have an adopted budget as required by Section 129.03, Florida Statutes.

6. Section 129.07, Florida Statutes, as amended in 1978, provides that only expenditures in excess of total fund budgets are unlawful. However, because the Board acts on all budget changes between departments, this becomes the level of control. The budgetary data presented herein was amended by the Board during the year in a legally permissible manner.

58 HIGHLANDS COUNTY, FLORIDA

NOTES TO FINANCIAL STATEMENTS

September 30, 2007

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

C. Budgets and Budgetary Accounting (continued)

7. Formal budgetary integration is employed as a management control device during the year for all Governmental and Proprietary Fund Types except for the Sun-N-Lake 1- 20 Improvement Trust Fund, Public Records Modernization Trust Fund, Teen Court Operations Fund, Court Related Technologies Modernization Trust Fund, Community Donations Fund, Inmate Welfare Fund, and the DOR-GIS Programs Grant Fund, which do not have legally adopted budgets.

8. Annual appropriated budgets for the General, Special Revenue, Capital Projects, and Proprietary Funds are legally adopted on a basis consistent with generally accepted accounting principles (GAAP). However, the only funds legally required to report budgets are the General and Special Revenue Funds.

9. It is the Board's policy to amend the budget when unanticipated revenues and expenditures occur.

10. All appropriations lapse at the close of the fiscal year.

D. Reconciliation of Government-Wide and Fund Financial Statements

Explanation of Differences Between the Governmental Fund Balance Sheet and the Government-Wide Statement of Net Assets:

“Total fund balances” of the County’s governmental funds ($70,167,094) differs from “net assets” of governmental activities ($208,416,893) reported in the statement of net assets. This difference primarily results from the long-term economic focus of the statement of net assets versus the current financial resources focus of the governmental fund balance sheet.

Capital Related Items When capital assets (property, plant, equipment) that are to be used in governmental activities are purchased or constructed, the cost of those assets is reported as expenditures in governmental funds. However, the statement of net assets included those capital assets among the assets of the County as a whole.

Cost of capital assets $195,060,585 Accumulated depreciation (34,533,596)

Total capital assets $160,526,989

59

HIGHLANDS COUNTY, FLORIDA

NOTES TO FINANCIAL STATEMENTS

September 30, 2007

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

D. Reconciliation of Government-Wide and Fund Financial Statements (continued)

Explanation of Differences Between the Governmental Fund Balance Sheet and the Government-Wide Statement of Net Assets (continued):

Long-term Debt Transactions Long-term liabilities applicable to the County’s governmental activities are not due and payable in the current period and accordingly are not reported as fund liabilities. All liabilities (both current and long-term) are reported in the statement of net assets. Balances as of September 30, 2007 were:

Bonds payable $(19,025,000) Notes and revenue certificates payable (4,071,035) Capital leases (822,380) Total $(23,918,415)

Accrued Interest Accrued liabilities in the statement of net assets differ from the amount reported in governmental funds due to accrued interest on revenue bonds, notes payable and revenue certificates.

Accrued interest on bonds, notes payable and revenue certificates $ (410,556)

Internal Service Funds Internal service funds are used by management to charge the costs of risk retention, employee benefits and compensated absences to individual funds. The assets and liabilities of the internal service funds are included in governmental activities in the statement of net assets because they primarily serve governmental activities of the County.

Internal service funds $ 2,051,781

Elimination of Interfund Receivables/Payables Interfund receivables and payables in the amount of $114,096 between governmental funds must be eliminated for the statement of net assets.

Explanation of Differences Between the Governmental Fund Operating Statement and the Statement of Activities:

The “net change in fund balances” for governmental funds ($8,710,226) differs from the “change in net assets” for governmental activities ($19,199,680) reported in the statement of activities. The differences arise primarily from the long-term economic focus of the statement of activities versus the current financial resources focus of the governmental funds. The effect of the differences is illustrated below.

60 HIGHLANDS COUNTY, FLORIDA

NOTES TO FINANCIAL STATEMENTS

September 30, 2007

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

D. Reconciliation of Government-Wide and Fund Financial Statements (continued)

Explanation of Differences Between the Governmental Fund Operating Statement and the Statement of Activities (continued):

Capital Related Items When capital assets that are to be used in governmental activities are purchased or constructed, the resources expended for those assets are reported as expenditures in governmental funds. However, in the statement of activities, the costs of those assets is allocated over their estimated useful lives and reported as depreciation expense. As a result, fund balances decrease by the amount of financial resources expended, whereas net assets decrease by the amount of depreciation expense charged for the year.

Capital outlay $ 13,889,309 Depreciation expense (4,551,004)

Difference $ 9,338,305

In the statement of activities, the gain/loss on the sale of capital assets is reported. However, in the governmental funds, the proceeds from the sale increase financial resources. Thus, the change in net assets differs from the change in fund balance by the cost of the capital assets sold.

Sale of capital assets $ (548,358)

Long-term Debt Transactions The issuance of long-term debt provides current financial resources to governmental funds, while the repayment of the principal of long-term debt consumes the current financial resources of governmental funds. Neither transaction, however, has any effect on net assets. Also, governmental funds report the effect of issuance costs, premiums, discounts, and similar items when debt is first issued, whereas these amounts are deferred and amortized in the statement of activities.

Debt issued: Capital Leases $ (669,765) Principal repayments: Bonds payable 1,110,000 Notes payable 270,942 Revenue certificates 30,909 Capital leases 470,741

Net adjustment $ 1,212,827

61 HIGHLANDS COUNTY, FLORIDA

NOTES TO FINANCIAL STATEMENTS

September 30, 2007

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

D. Reconciliation of Government-Wide and Fund Financial Statements (continued)

Long-term Debt Transactions (continued) Some expenses reported in the statement of activities do not require the use of current financial resources and, therefore, are not reported as expenditures in governmental funds.

Net change in bond interest payable $ (438,374)

Internal Service Funds Operating Loss The assets and liabilities of the internal service funds are included in governmental activities in the statement of net assets because they primarily serve governmental activities of the County.

Internal service funds operating loss allocated to governmental activities $ (9,239)

Internal service funds non-operating revenues allocated to governmental activities 57,545 Net adjustment $ 48,306

E. Cash and Cash Equivalents

Cash and cash equivalents are cash on hand as well as demand deposits and investments with original maturities of three months or less from the date of acquisition.

Cash balances from the majority of funds are pooled for investment purposes. Earnings from such investments are allocated to the respective funds based on applicable cash participation by each fund. The investment pools are managed such that all participating funds have the ability to deposit and withdraw cash as if they were demand deposit accounts and, therefore, all balances representing participants' equity in the investment pools are classified as cash equivalents for purposes of these financial statements.

For the purpose of the Statement of Cash Flows, each fund's equity in the investment pool is considered to be a cash equivalent since deposits and withdrawals can be made at anytime without prior notice or penalty.

F. Investments

In accordance with the provisions of GASB Statement No. 31, the County reports investments at their fair value on the balance sheet with unrealized gains and losses charged or credited to investment income. The fair value of each security is based on the quoted market value provided by the broker. Money market investments and investments in SEC Rule 2a-7 like pools, which include the Local Government Surplus Funds Trust Fund, are reported as cash equivalents at amortized cost.

The County invests surplus public funds in accordance with Section 218.415, Florida Statutes. 62 HIGHLANDS COUNTY, FLORIDA

NOTES TO FINANCIAL STATEMENTS

September 30, 2007

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

G. Accounts Receivable

Receivables are shown net of allowance for doubtful accounts. Doubtful accounts are those unpaid more than 180 days for Emergency Medical Services (EMS) and 90 days for all other accounts. Receivables are set up when services are rendered for EMS, Landfill, and Utilities. The retired employees’ health insurance premiums receivables are billed on a monthly basis. Receivables related to grants are not reflected until expenditures are recorded against that grant. Reinsurance recovery receivable is determined by those insurance claims that exceed the County's insurance limit, but are covered by the County's excess coverage.

H. Interfund Transactions

Interfund transactions are accounted for in the following manner:

Transactions for services rendered are recorded as revenues in the receiving fund and as expenditures or expenses (as appropriate) in the disbursing fund.

Transactions to reimburse a fund for expenditures made by it for the benefit of another fund are recorded as expenditures or expenses (as appropriate) in the disbursing fund and as a reduction of expenditures or expenses (as appropriate) in the receiving fund, and transactions to shift revenues from the fund budgeted to receive them to the fund budgeted to expend them are recorded as operating transfers in and out, respectively. Transactions recording equity transfers to Proprietary Funds are reported as deductions from the beginning balance of Governmental Funds and as additions to contributed capital of Proprietary Funds.

Transfers are reported in the "Other Financing Sources (Uses)" section in the Statement of Revenues, Expenditures, and Changes in Fund Balances and in the "Transfers" section in the Statement of Revenues, Expenses, and Changes in Fund Net Assets. As of fiscal year end, any unpaid amounts related to these transactions are reported as due to/from other funds on the balance sheet. Assets acquired or constructed by resources of a Governmental Fund which are subsequently transferred to a Proprietary Fund are accounted for as expenditures within the Governmental Fund and as contributed capital in the Proprietary Fund.

Long-term interfund advances are recorded as reductions in fund balance by the advancing fund in the Governmental Fund Types. The amount advanced is reported as "Advances to other funds" and as "Reserved for advances" to maintain the accountability and to properly disclose the amount available for appropriation (unreserved fund balance). Repayments are credited to fund balance, and corresponding reductions are made in the receivable and reserve.

63 HIGHLANDS COUNTY, FLORIDA

NOTES TO FINANCIAL STATEMENTS

September 30, 2007

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

I. Inventories

Inventories are stated at cost using the moving average cost basis. The consumption method is used to account for inventories in the General Fund. The cost is recorded as an expenditure at the time individual inventory items are consumed. Inventories reported in the General Fund are equally offset by a fund balance reserve which indicates they are unavailable for appropriation.

J. Property Tax

The County's property tax roll is as follows:

Valuation Date January 1, 2007

Appraiser prepares the assessment roll with values as of January 1, 2007, submits this preliminary roll for approval by the Department of Revenue and notifies each taxing authority of their respective valuations. July 1, 2007

Each taxing authority holds two required public hearings and adopts a budget and ad valorem tax millage rates for the coming year. September 2007

Appraiser certifies the assessment roll and all real and tangible personal property taxes are due and payable (levy date). November 2007

Collector mails a notice of taxes to each property owner on the assessment role. Taxes may be paid November 2007 through March 2008 with the following applicable discounts:

Month Discount Percent November 4 December 3 January 2 February 1 March 0

All unpaid taxes on real and tangible personal property become delinquent. April 1, 2008

A list of unpaid tangible personal property taxes and a list of unpaid real property taxes are advertised. April and May, 2008

64 HIGHLANDS COUNTY, FLORIDA

NOTES TO FINANCIAL STATEMENTS

September 30, 2007

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

J. Property Tax (continued)

Tax certificates are sold on all real estate parcels with unpaid real property taxes (lien date). June 1, 2008

A court order is obtained authorizing the seizure and sale of personal property if the taxpayer fails to pay the delinquent personal property taxes. June 1, 2008

Ad valorem taxes on any real property with more than $100 of estimated taxes due may be prepaid in installments as follows:

Payment Discount Due Amount Due Percent Due Date First 25 percent of estimated tax 6.0 June 30, 2007 Second 25 percent of estimated tax 4.5 September 30, 2007 Third 25 percent of estimated tax plus 50 percent adjustment to actual tax 3.0 December 31, 2007 Fourth 25 percent of estimated tax plus 50 percent adjustment to actual tax 0.0 March 31, 2008

No accrual for the property tax levy becoming due in November 2007 is included in the accompanying financial statements since such taxes are collected to finance expenditures of the subsequent period. Property taxes receivable and a corresponding allowance for uncollectible property taxes are not included in the financial statements.

K. Capital Assets

Capital assets, which include property, plant, equipment, and infrastructure assets (e.g., roads, bridges, rights-of-way, water and sewer distribution systems and similar items) are reported in the applicable governmental or business-type activities column in the government-wide financial statements.

The Board holds legal title for the capital assets used in the operations of the Board, the Clerk, the Appraiser, the Supervisor, and the Collector, and is accountable for them under Florida Law. Capital assets used by the Board’s governmental funds are reported in the financial statements of the County. Capital assets of the Board’s enterprise and internal service funds are reported in the Proprietary Funds financial statements.

65 HIGHLANDS COUNTY, FLORIDA

NOTES TO FINANCIAL STATEMENTS

September 30, 2007

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

K. Capital Assets (continued)

Capital assets are defined by the County as assets with an initial, individual cost of $5,000 or more and an estimated useful life in excess of one year. Capital assets are valued at historical cost or estimated historical cost if actual is not available. Donated capital assets are recorded at estimated fair market value at the date of donation.

The costs of normal maintenance and repairs that do not add to the value of the asset or materially extend its useful life are not capitalized.

Capital assets acquired by lease/purchase agreements or multiple year installment purchase contracts are recorded in the governmental funds in the year acquired as capital outlay expenditures and as other financing sources in the amount of the discounted present value of the total stipulated payments.

The County has elected to use the modified approach for accounting for its bridges and roadways included in the County highway system. Under this approach, the County has made the commitment to preserve and maintain these assets at levels established by the County and approved by the Board. No depreciation expense is reported for such assets, nor are amounts capitalized in connection with improvements that lengthen the lives of such assets, unless the improvements also increase their service potential. The County maintains an inventory of these assets and performs periodic condition assessments to establish that the predetermined condition level is being maintained. In addition, the County makes annual estimates of the amounts that must be expended to preserve and maintain these assets at the predetermined condition levels. Refer to RSI for additional information in infrastructure using the modified approach.

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

Assets Years

Buildings 10-40 Improvements other than buildings 3-40 Operating machinery and equipment 4-20

L. Deferred Revenues

Revenues in the Governmental Fund Types which are measurable but not available are reported in accordance with the modified accrual basis of accounting as deferred revenue. The deferred revenues will be recognized as revenue in the fiscal year they become available.

66 HIGHLANDS COUNTY, FLORIDA

NOTES TO FINANCIAL STATEMENTS

September 30, 2007

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

L. Deferred Revenues (continued)

Chapter 218, Florida Statutes, requires that any excess of revenues over expenditures held by the Appraiser shall be allocated to each governmental unit which was billed for the operation of the Appraiser's office. This excess shall be treated as an advance on the following year's bill; therefore, the excess of revenues over expenditures at the end of each fiscal year is reflected as deferred revenue on the balance sheet.

Revenues in the Proprietary Fund Types which have not been earned are reported in accordance with the accrual basis of accounting as deferred revenue. The deferred revenue will be recognized as revenues in the fiscal year they are earned.

M. Compensated Absences

County policy permits employees to accumulate annual and sick leave credits in varying amounts, which will be paid to employees upon termination of employment. Accumulated annual and sick leave is recorded as an expenditure/expense in an Internal Service Fund for governmental activities and in Proprietary Fund Types for the vested annual and sick leave credits. The liability for compensated absences is liquidated in the fund in which an employee’s payroll expense is normally recorded.

N. Landfill Closure Costs

The County has obtained engineering estimates of future costs to close and monitor sanitary landfill sites in accordance with State and Federal guidelines. Estimated landfill closing and monitoring costs are being accrued in the Enterprise Fund over the operating life of the landfill representing the commitment to fund such costs for the future.

O. Encumbrances

Encumbrance accounting, under which purchase orders, contracts and other commitments for expenditure of funds are recorded to reserve that portion of the applicable appropriation, is employed in the Governmental Fund Types. Encumbrances are not the equivalent of expenditures; therefore, the encumbrances are reported as reservations of fund balances at year-end and reappropriated the following year.

P. Operating Subsidies and Grants

Operating subsidies and grants which finance current operations are generally recorded as nonoperating revenue in the Enterprise Funds when earned and as intergovernmental revenue in the Governmental Fund Types when they become measurable and available.

67 HIGHLANDS COUNTY, FLORIDA

NOTES TO FINANCIAL STATEMENTS

September 30, 2007

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Q. Self-Insurance

Employee dental insurance is provided under an externally administrated self-insured plan. Contributions from the County (single rate) and the employees (family rate) pay the dental insurance plan. Contributions are based in part on the annual actuarial study performed by an enrolled actuary.

The self-insurance dental plan is accounted for in an Internal Service Fund.

R. Eliminations

Eliminating entries were made between departments in the general fund.

S. Fund Balance Reservations

In the accompanying financial statements, use of the term "reserved" is limited to indicating that a portion of reported fund equity is restricted to a specific use or not available for appropriation or expenditure. A brief description of reported reserves follows:

Reserved for Encumbrances - Segregation of a portion of fund balance for commitments outstanding at year-end.

Reserved for Debt Service – Segregation of bond reserve, bond principal, bond interest, and bond reserve interest funds as required by the debt covenants of the Infrastructure Sales Surtax Revenue Bond Series 2002.

Fund balances reserved for other purposes include:

Reserved for Advances - Segregation of a portion of fund balance to indicate that advances to other funds do not represent expendable available financial resources.

Reserved for Law Enforcement Education - Segregation of a portion of a fund balance for amounts legally earmarked by Florida Statutes for law enforcement educational training and crime fighting purposes.

Reserved for Public Records Modernization – Segregation of a portion of fund balance for certain charges for services legally earmarked by Florida Statutes for modernization of the public records system.

Reserved for Teen Court – Segregation of a portion of fund balance for court charges earmarked to fund the Teen Court.

68 HIGHLANDS COUNTY, FLORIDA

NOTES TO FINANCIAL STATEMENTS

September 30, 2007

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

T. Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make use of estimates that affect reported amounts in the financial statements. Actual results could differ from estimates.

NOTE 2 – CASH, CASH EQUIVALENTS AND INVESTMENTS

Cash and cash equivalents at September 30, 2007, consist of:

Petty cash and change funds $ 20,651 Demand deposits 12,439,320 Local Government Surplus Trust Fund 81,924,835

$ 94,384,806

Custodial Credit Risk is the risk that in the event of a bank failure, the government’s deposits may not be returned to it. At year-end, the government’s deposits were entirely covered by federal depository insurance or guaranteed by qualified public depositories in Florida pursuant to Chapter 280.07, Florida Statutes. Other than the preceding, the County has no policy on custodial credit risk.

Collateral is provided for demand deposits through the Florida Security for Public Deposits Act. This law establishes guidelines for qualification and participation by banks and savings associations, procedures for the administration of the collateral requirements and characteristics of eligible collateral. Under this law, the qualified public depository must pledge at least 25% of the average daily balance for each month of all public deposits in excess of any applicable deposit insurance.

Additional collateral, up to a maximum of 200%, may be required if deemed necessary under the conditions set forth in this law. Eligible collateral consists of obligations of the United States and its agencies and obligations of states and their local political subdivisions and unaffiliated corporations.

Obligations pledged to secure deposits must be delivered to the State Treasurer or, with the approval of the State Treasurer, to a bank, savings association or trust company provided a power of attorney is delivered to the State Treasurer. On a monthly basis, the State Treasurer determines that the collateral has a market value adequate to cover the deposits under the provisions of this law.

The County invests funds throughout the year with the Local Government Surplus Funds Trust Fund, an investment pool administered by the State Board of Administration (SBA) under the regulatory oversight of the State of Florida. Throughout the year and as of September 30, 2007, the SBA contained certain floating and adjustable rate securities which were indexed based on the prime rate and/or one and three month LIBOR rates. These investments represented 64.14% of the SBA’s portfolio at September 30, 2007. In accordance with GASB Statement No. 31, the SBA has reported that the Local Government Investment Trust, which it operates, is a “2a-7 like” pool and, thus, these investments are valued using

69 HIGHLANDS COUNTY, FLORIDA

NOTES TO FINANCIAL STATEMENTS

September 30, 2007

NOTE 2 – CASH, CASH EQUIVALENTS AND INVESTMENTS (continued)

amortized cost. The value of the County’s position in the Local Government Surplus Funds Trust Fund is the same as the value of the pools shares.

Investments with the SBA may be made or liquidated by wire on a same-day basis. Based on the SBA’s investment structure and its availability to all local governmental units, individual unit protection is not provided.

Interest Rate Risk The County’s investment pool also includes investment in the Florida Local Government Investment Trust (FLGIT), which is a public entity investment trust organized under the laws of the State of Florida. At September 30, 2007, the FLGIT portfolio included certain floating and adjustable rate securities. These securities amounted to 32.97% of the FLGIT portfolio and included twenty investments indexed on the one month LIBOR and/or the one-year CMT index. The Florida Local Government Investment Trust reports all share information at Net Asset Value (NAV) and reflects fair value accounting in accordance with GASB Statement No. 31. The value of the County’s position in the FLGIT external investment pool is the same as the value of the pools shares.

The County has no policy on interest rate risk. Investments and related level of risk at September 30, 2007, were as follows:

Investment Maturity Investment TypeFair Value(in years)

Federal National Mortgage Association Discount Note$ 2,317,139 Less than 1 Florida Local Government Investment Trust Fund 3,442,265 Less than 1 STI Classic Funds 345,728 Less than 1

$ 6,105,132

Credit Risk Credit risk is the risk that an issuer of an investment will not fulfill its obligation to the holder of the investment. This is measured by the assignment of a rating by a nationally recognized statistical rating organization. The County has no policy on credit risk. Presented below is the actual rating as of September 30, 2007 for each type of investment:

Investment Type Credit Rating Federal National Mortgage Association Discount Note AAA Florida Local Government Investment Trust Fund AAA STI Classic Funds AAAm

70 HIGHLANDS COUNTY, FLORIDA

NOTES TO FINANCIAL STATEMENTS

September 30, 2007

NOTE 3 - ACCOUNTS RECEIVABLE

Accounts receivable for the individual major and nonmajor, internal service and fiduciary funds in the aggregate consisted of the following at September 30, 2007:

County Local Trans- Government Water Nonmajor portation Infrastructure Solid and and Other General Trust Surtax Waste Sewer Funds Total Emergency Medical Services$ 2,238,440 $ - $ - $ - $ - $ - $ 2,238,440 Landfill Charges - - - 308,578 - - 308,578 Water and Sewer Charges - - - - 11,291 31,038 42,329 Reinsurance Recovery - - - - - 98 98 Miscellaneous 162,207 996 15,401 409,536 - 20,305 608,445 Accounts Receivable- Gross 2,400,647 996 15,401 718,114 11,291 51,441 3,197,890 Allowance for Doubtful Accounts (1,948,808) - - - (2,764) (18,566) (1,970,138) Accounts Receivable - Net$ 451,839 $ 996 $ 15,401 $ 718,114 $ 8,527 $ 32,875 $ 1,227,752

Activity in Emergency Medical Services accounts receivable was as follows:

Balance - September 30, 2006$ 2,278,951 Billings 3,598,345 Less: Cash receipts (2,703,095) Medical/Medicaid adjustments (307,875) Sent to collection (464,773) Other adjustments (163,113) Balance - September 30, 2007$ 2,238,440

71 HIGHLANDS COUNTY, FLORIDA

NOTES TO FINANCIAL STATEMENTS

September 30, 2007

NOTE 4 – CAPITAL ASSETS

Capital asset activity for the year ended September 30, 2007 was as follows:

Primary Government Beginning Balance Increases Decreases Ending Balance Governmental activities: Capital assets, not being depreciated: Land $ 27,688,136 $ 3,103,786 $ (15,316) $ 30,776,606 Construction in progress 4,694,737 4,797,768 (1,265,632) 8,226,873 Infrastructure 71,028,184 2,012,676 - 73,040,860 Total capital assets, not being depreciated 103,411,057 9,914,230 (1,280,948) 112,044,339

Capital assets, being depreciated: Buildings 45,083,959 727,106 (44,448) 45,766,617 Improvements other than buildings 3,587,546 181,768 - 3,769,314 Machinery and equipment 30,814,021 4,331,837 (1,665,543) 33,480,315 Total capital assets being depreciated: 79,485,526 5,240,711 (1,709,991) 83,016,246

Less accumulated depreciation for: Buildings (11,708,914) (1,338,954) 1,019 (13,046,849) Improvements other than buildings (1,733,259) (182,123) - (1,915,382) Machinery and equipment (17,717,368) (3,029,927) 1,175,930 (19,571,365) Total accumulated depreciation (31,159,541) (4,551,004) 1,176,949 (34,533,596)

Total capital assets, being depreciated, net 48,325,985 689,707 (533,042) 48,482,650

Governmental activities capital assets, net $ 151,737,042 $ 10,603,937 $ (1,813,990) $ 160,526,989

Business-type activities: Capital assets, not being depreciated: Land $ 1,864,131 $ - $ - $ 1,864,131 Construction in progress 51,102 626,859 (23,725) 654,236 Total capital assets, not being depreciated 1,915,233 626,859 (23,725) 2,518,367

Capital assets, being depreciated: Buildings and system 587,155 - - 587,155 Improvements other than buildings 14,278,604 120,417 - 14,399,021 Machinery and equipment 3,516,970 878,958 (140,608) 4,255,320 Total capital assets being depreciated: 18,382,729 999,375 (140,608) 19,241,496

Less accumulated depreciation for: Buildings and system (214,653) (30,093) - (244,746) Improvements other than buildings (4,717,179) (549,751) - (5,266,930) Machinery and equipment (2,081,143) (348,079) 140,608 (2,288,614) Total accumulated depreciation (7,012,975) (927,923) 140,608 (7,800,290)

Total capital assets, being depreciated, net 11,369,754 71,452 - 11,441,206

Business-type activities capital assets, net $ 13,284,987 $ 698,311 $ (23,725) $ 13,959,573

72 HIGHLANDS COUNTY, FLORIDA

NOTES TO FINANCIAL STATEMENTS

September 30, 2007

NOTE 4 – CAPITAL ASSETS (continued)

Governmental activities construction in progress is comprised of the following:

Expended to Project September 30, Project Authorization 2007 Commitment

Avon Park Health Department Facility Renovation $ 600,000 $ 23,650 $ 576,350 Courthouse Security Improvements 140,000 92,367 47,633 Highlands Park Fire Station 250,000 216,250 33,750 Infrastructure 23,051,825 2,632,222 20,419,603 Landscaping in Lake Placid 300,000 48,434 251,566 Multi-Field Complex 3,520,012 3,414,245 105,767 Parks & Recreation Steel Building 200,000 98,097 101,903 Toni Drive Mining Permit 2,361,738 79,053 2,282,685 Towers 388,242 138,645 249,597 Veterans/Human Services Building 700,000 6,725 693,275 Windy Point Park 1,536,185 1,477,185 59,000

Total $ 33,048,002 $ 8,226,873 $ 24,821,129

Business-type activities construction in progress is comprised of the following:

Expended to Project September 30, Project Authorization 2007 Commitment

Cell 3 Leachate Recirculation Extension$ 75,000 $ 59,803 $ 15,197 Fire Truck Bay 75,000 21,911 53,089 Lake June Rd Water Main Extension 571,325 542,173 29,152 Landfill Gas to Energy 96,500 30,349 66,151

$ 817,825 $ 654,236 $ 163,589

73 HIGHLANDS COUNTY, FLORIDA

NOTES TO FINANCIAL STATEMENTS

September 30, 2007

NOTE 4 – CAPITAL ASSETS (continued)

Depreciation expense was charged to functions/programs of the primary government as follows:

Governmental activities: General government $ 1,219,950 Public safety 1,890,024 Physical environment 71,541 Transportation 986,165 Human services 86,673 Economic environment 1,113 Culture/recreation 239,065 Court related 56,473

Total depreciation expense - governmental activities $ 4,551,004

Business-type activities: Solid waste $ 762,720 Water and sewer 125,565 Highway Park Utility 39,638

Total depreciation expense - business-type activities $ 927,923

NOTE 5 – INTERFUND BALANCES

Interfund balances at September 30, 2007 consisted of the following amounts:

Due To/From Other Funds:

Due From Due To Other Funds Other Funds

Major Funds: General Fund $ 46,631 $ 138,139 Solid Waste Fund 33,112 - Water and Sewer Fund - 31,454 Non major Governmental Funds 105,026 9,069 Non major Enterprise Funds - 6,107

Total $ 184,769 $ 184,769

Amounts due to and from other funds arise from timing differences as a result of transactions and cash transfers for operating purposes. 74 HIGHLANDS COUNTY, FLORIDA

NOTES TO FINANCIAL STATEMENTS

September 30, 2007

NOTE 5 – INTERFUND BALANCES (continued)

Advances: In 2001, the Local Government Infrastructure Fund advanced the Water and Sewer Fund money for improvements. At September 30, 2007, the outstanding balance was $45,349. The Solid Waste fund advanced a nonmajor governmental fund money for purchase of property. As of September 30, 2007, the outstanding balance was $14,623.

NOTE 6 - RESTRICTED ASSETS

Restricted assets include those provided for by resolutions adopted by the Board. Total restricted assets as of September 30, 2007 were as follows:

Cash and Enterprise Funds: Cash Equivalents Solid Waste Customer deposits $ 87,175 Total Solid Waste 87,175

Water and Sewer Customer deposits 58,064 Sinking Fund 42,888 Total Water and Sewer 100,952

Highway Park Utility Customer deposits 6,150 Customer deposits-grant 11,200 Total Highway Park Utility 17,350

Total Restricted Assets $ 205,477

75 HIGHLANDS COUNTY, FLORIDA

NOTES TO FINANCIAL STATEMENTS

September 30, 2007

NOTE 7 - LONG-TERM LIABILITIES

The summary of changes in long-term debt for the fiscal year ended September 30, 2007 is as follows:

Balance Balance October 1, September 30, Due Within 2006 Additions Reductions 2007 One year

Governmental activities: Bonds payable$ 20,135,000 $ - $ (1,110,000) $ 19,025,000 $ 1,140,000 Notes payable 4,105,310 - (270,942) 3,834,368 280,644 Revenue certificates 267,576 - (30,909) 236,667 28,333 Capital leases 623,356 669,765 (470,741) 822,380 148,086 Compensated absences 4,325,925 1,330,469 (1,120,455) 4,535,939 453,593 Governmental activity Long-term liabilities$ 29,457,167 $ 2,000,234 $ (3,003,047) $ 28,454,354 $ 2,050,656

Business-type activities: Notes payable$ 2,816,390 $ - $ (359,149) $ 2,457,241 $ 374,694 Landfill closure liability 4,590,051 398,487 - 4,988,538 77,207 Capital leases 458,511 804,825 (236,160) 1,027,176 319,942 Compensated absences 123,929 14,454 (13,981) 124,402 12,441 Business-type activity Long-term liabilities$ 7,988,881 $ 1,217,766 $ (609,290) $ 8,597,357 $ 784,284

The following bonds payable, notes payable, revenue certificates, and mortgage payable were outstanding at September 30, 2007:

Remaining Principal Amount Governmental Activities Bonds Payable: $23,295,000 Series 2002 Infrastructure Sales Surtax Revenue Bonds with interest at 3% to 5% dated June 13, 2002 with final payment due November 1, 2019. Interest payments are due on May 1 and November 1. Beginning November 1, 2003, payments due in annual installments of approximately $1,977,300 including interest until maturity date. Serviced from and secured by designated revenues derived from the County’s share of the one cent local discretionary infrastructure sales surtax. The Series 2002 bond issue is to finance a portion of the cost of certain capital

76 HIGHLANDS COUNTY, FLORIDA

NOTES TO FINANCIAL STATEMENTS

September 30, 2007

NOTE 7 - LONG-TERM LIABILITIES (continued) Remaining Principal Amount

improvement projects, make a deposit into the Reserve Account equal to the Reserve Account Requirement for the Series 2002 Bonds, and pay costs associated with the issuance of the Series 2002 Bonds $ 19,025,000

Total Governmental Activities Bonds Payable 19,025,000 Total Bonds Payable $ 19,025,000

Governmental Activities Notes Payable: $153,250 with a fixed interest rate equal to 5.78% dated December 4, 2001 with final payment due September 1, 2016. Beginning March 1, 2002, payments due in equal semiannual installments of approximately $5,108 plus interest, until maturity date, serviced from the Lorida Special Benefit Fire District for the purchase of a fire truck. The note is payable solely from the revenues generated by the service assessment on the lots benefited in the Lorida Special Benefit Fire District. This note does not constitute an indebtedness of Highlands County $ 91,950

$765,000 with a fixed interest rate equal to 5.78% dated December 4, 2001 with final payment due September 1, 2016. Beginning March 1, 2002, payments due in equal semiannual installments of approximately $25,500 plus interest, until maturity date, serviced from the Lake Placid Sun-N-Lake Estates Fire District for purchase of a fire truck and construction of the Sun-N-Lake Lake Placid Fire Station. The note is payable solely from the revenues generated by the service assessment on the lots benefited in the Lake Placid Sun-N-Lake Estates Fire District. This note does not constitute an indebtedness of Highlands County 459,000

$240,000 with a fixed interest rate equal to 5.78% dated December 4, 2001 with final payment due September 1, 2016. Beginning March 1, 2002, payments due in equal semiannual installments of approximately $25,500 plus interest, until maturity date, serviced from the Lake Placid Sun-N-Lake Estates Fire District for purchase of a fire truck and construction of the Sun-N-Lake Lake Placid Fire Station. The note is payable solely from the revenues generated by the service assessment on the lots benefited in the Lake Placid Sun-N-Lake Estates Fire District. This note does not constitute an indebtedness of Highlands County 160,296

77 HIGHLANDS COUNTY, FLORIDA

NOTES TO FINANCIAL STATEMENTS

September 30, 2007

NOTE 7 - LONG-TERM LIABILITIES (continued)

Governmental Activities Notes Payable (continued):

Remaining Principal Amount

$3,448,637 with a fixed interest rate equal to 5.78% dated October 3, 2005 with final payment due November 1, 2019. Beginning November 1, 2005, payments due in equal semiannual installments of approximately $123,200 plus interest until maturity date. Serviced from and secured by designated revenues derived from the County’s share of the one cent local discretionary infrastructure sales surtax. The note is to finance a portion of the cost of certain capital improvement projects. 3,123,122

Total Governmental Activities Notes Payable $ 3,834,368

Business Type Activities Notes Payable: Promissory note - $1,008,675 at 4.04% interest dated October 1, 2004 with a final payment due June 1, 2014. Beginning December 1, 2004, payments due in equal semi-annual installments of approximately $50,400 plus interest until maturity date, serviced from and secured by designated revenues derived from the Water and Sewer Utility Fund $ 767,889

Promissory note - $2,800,000 at 4.44% interest dated December 3, 2002 due in 20 semi-annual installments of $174,854 including interest beginning December 3, 2002, final payment due November 30, 2012, serviced from and secured by net revenues of the Solid Waste System 1,689,352

Total Business Type Notes Payable 2,457,241

Total Notes Payable $ 6,291,609

78 HIGHLANDS COUNTY, FLORIDA

NOTES TO FINANCIAL STATEMENTS

September 30, 2007

NOTE 7 - LONG-TERM LIABILITIES (continued)

Remaining Principal Amount

Governmental Activities Revenue Certificates: $300,000 with a floating interest rate equal to 54% of the prime rate dated August 19, 1997 with a final payment due on June 1, 2017. Commencing on December 1, 1997, semi-annual payment of $7,500 in principal plus interest are due until maturity, serviced from the Sun-N-Lake Lake Placid Recreation Special District Fund for the construction of the Recreation Center. The revenue certificate is payable solely from the service assessments on the lots benefited in the Sun-N-Lake Recreation District. This certificate does not constitute an indebtedness of Highlands County 150,000

$200,000 at 6.23% interest due in 30 semi-annual installments of $6,667 plus interest dated September 30, 1998 with a final payment due December 1, 2013, serviced from the DeSoto City Special Benefit Fire District Fund for the construction of the DeSoto City Fire Department building. The revenue certificate is payable solely from the revenues generated by the service assessments on the lots benefited in the DeSoto City Special Benefit Fire District. This certificate does not constitute an indebtedness of Highlands County 86,667

Total Governmental Activities Revenue Certificates 236,667

Total Revenue Certificates $ 236,667

79 HIGHLANDS COUNTY, FLORIDA

NOTES TO FINANCIAL STATEMENTS

September 30, 2007

NOTE 7 - LONG-TERM LIABILITIES (continued)

There are a number of limitations and restrictions contained in the various notes and certificate indentures. The Board is in compliance with all significant limitations and restrictions.

The annual debt service requirements to amortize all debts outstanding as of September 30, 2007 are as follows:

Governmental Activities Year Ending Bonds Payable Notes Payable Revenue Certificates September 30, Principal Interest Principal Interest Principal Interest

2008 $ 1,140,000 $ 815,821 $ 280,644 $ 164,631 $ 28,333 $ 10,779 2009 1,180,000 775,344 290,079 151,659 28,333 9,440 2010 1,225,000 730,829 299,904 138,299 28,333 8,100 2011 1,270,000 682,154 310,154 124,511 28,333 6,762 2012 1,320,000 629,529 320,849 110,279 28,333 5,422 2013-2017 7,505,000 2,214,221 1,578,262 335,568 95,002 10,440 2018-2022 5,385,000 410,236 754,476 46,444 - -

Total $ 19,025,000 $ 6,258,134 $ 3,834,368 $ 1,071,391 $ 236,667 $ 50,943

Year Ending Business-type Activities September 30, Principal Interest

2008 $ 374,694 $ 102,047 2009 391,120 85,618 2010 408,270 68,469 2011 426,170 50,569 2012 444,859 31,880 2013-2017 412,128 16,116

Total $ 2,457,241 $ 354,699

80 HIGHLANDS COUNTY, FLORIDA

NOTES TO FINANCIAL STATEMENTS

September 30, 2007

NOTE 7 - LONG-TERM LIABILITIES (continued)

As a means to lower its borrowing costs, when compared against fixed-rate notes payable at the time of issuance in December, 2001, the Lake Placid Sun-N-Lake Estates Fire District and the Lorida Special Benefit Fire District entered into fixed/float interest rate swap agreements in connection with their notes payable. The intention of the swaps was to effectively change the Districts’ variable interest rates on the notes to synthetic fixed rates of 5.78 percent against a six month floating LIBOR (variable, 2.04% plus 67% of the LIBOR rate, adjusted the first day of each March and September).

The terms, including the counterparty credit rating of the outstanding swaps, as of September 28, 2007, are shown in the table below. The swap agreements contain scheduled reductions to the outstanding notional amounts that are expected to follow scheduled principal reductions in the associated debt issues.

Related Debt Issue Lake Placid Sun-N-Lake Lorida Special Benefit Estates Fire District Fire Fire District Fire Truck Truck Note Payable and Fire Station Note Payable

Notional Amount $459,000 $91,950

Effective Date 12/4/2001 12/4/2001

Counterparty Bank of America, N. A. Bank of America, N. A.

Credit Rating (S&P) AA AA

Fixed Rate Paid 5.78% 5.78%

Variable Rate Received USD LIBOR BBA USD LIBOR BBA

Termination Date 9/1/2016 9/1/2016

Based on the swap agreements, the Districts owe interest calculated at a fixed rate to the counterparty (Bank of America). A series of payments calculated by applying a fixed rate of interest to a notional principal amount is exchanged for a stream of payments similarly calculated but using a floating rate of interest based off of the six month US LIBOR. In these fixed-for-floating interest rate swaps, the principal amounts are not actually exchanged between the counterparties, rather, interest payments are exchanged based on “notional amounts” or “notional principals”.

Because interest rates have declined since execution of the swaps, the swaps had negative fair values of $8,093 and $1,621 respectively, as of September 28, 2007.

81 HIGHLANDS COUNTY, FLORIDA

NOTES TO FINANCIAL STATEMENTS

September 30, 2007

NOTE 7 - LONG-TERM LIABILITIES (continued)

As of September 28, 2007, the Districts were not exposed to credit risk because the swaps had negative fair values. However, should interest rates change and the fair values of the swaps become positive, the Districts would be exposed to credit risk in the amount of the derivative's fair value. The swap counterparty was rated AA by Standard & Poor's as of September 28, 2007. In addition, because a swap is a notional principal contract, no credit risk arises in respect of an amount of principal advanced by a lender to a borrower.

The districts or the counterparty may terminate the swaps if the other party fails to perform under the terms of the contracts. The Districts will be exposed to interest at the lesser of 18% per annum or the maximum lawful rate per annum on the entire principal balance owing in the event of default. Also, if at the time of termination the swaps have negative fair values, the districts would be liable to the counterparty for payments equal to the fair value of the swaps.

NOTE 8 – LEASES

Capital Leases The Board has entered into a lease agreement as lessee for financing the acquisition of communication equipment for the Sheriff and a fire truck for the Placid Lakes Fire District. The Board has also financed the acquisition of a bulldozer, loader, dump truck, and compactor for the solid waste operations. These leases qualify as capital leases for accounting purposes and, therefore, have been recorded at the present value of the future minimum lease payments as of the inception date.

The assets acquired through capital leases are as follows:

Governmental Business-Type Activities Activities

Asset:

Machinery and equipment $ 590,398 $ 1,577,056 Less: Accumulated depreciation (26,878) (246,372)

Total $ 563,520 $ 1,330,684

82 HIGHLANDS COUNTY, FLORIDA

NOTES TO FINANCIAL STATEMENTS

September 30, 2007

NOTE 8 – LEASES (continued)

Capital Leases (continued) The future minimum lease obligations and the net present value of these minimum lease payments as of September 30, 2007 are as follows:

Year Ending Governmental Business-Type September 30 Activities Activities

2008 $ 179,452 $ 355,580 2009 179,452 287,897 2010 179,452 199,208 2011 179,452 178,199 2012 105,306 89,102 2013-2017 101,467 - Total minimum lease payment 924,581 1,109,986 Less: Amount representing interest (102,201) (82,810)

Present value of minimum lease payment $ 822,380 $ 1,027,176

NOTE 9 - PERSONNEL COMMITMENTS

The County offers its employees a deferred compensation plan created in accordance with Internal Revenue Code Section 457. The plan, available to all County employees, permits them to defer a portion of their salary until future years. Participation in the plan is optional. The deferred compensation is not available to employees until termination, retirement, death, or unforeseeable emergency.

Effective January 1, 1997, Federal legislation converted the Section 457 deferred compensation assets from County assets to employee assets. As a result of these changes, plan assets are no longer subject to the claims of the County’s general creditors.

The County had previously reported the assets and associated liabilities of the deferred compensation plan in its financial statements as an agency fund. Effective with the change in legislation, these assets are no longer County assets and fiduciary responsibility has been transferred to the third party plan administrator. Consequently, these assets are no longer reported in the accompanying financial statements in compliance with Governmental Accounting Standards Board Statement No. 32.

The County is obligated to make available to qualified retired employees the option to maintain coverage with the group health, life and dental insurance plans.

83 HIGHLANDS COUNTY, FLORIDA

NOTES TO FINANCIAL STATEMENTS

September 30, 2007

NOTE 9 - PERSONNEL COMMITMENTS (continued)

In preparation for implementing the requirements of GASB Statement No. 45, Accounting and Financial Reporting by Employers for Post-employment Benefits Other Than Pensions, the County engaged an actuarial firm to determine the estimated obligation associated with Other Post-Employment Benefits (OPEB). The actuary has provided a preliminary calculation and the County is in the process of reviewing the final draft provisions. The preliminary report results of the GASB 45 actuarial valuation for fiscal year ending September 30, 2007 projected the County’s estimated Net OPEB obligation (NPO) to be $1,224,127. In addition, the County’s Annual Required Contribution (ARC) and Annual OPEB Cost (AOC) related to the Plan for fiscal year ending September 30, 2007 is projected to be $1,440,164. Actual results may differ from the preliminary calculation.

NOTE 10 - LANDFILL CLOSURE AND POSTCLOSURE CARE COST

Highlands County has three landfill sites which are comprised of a total of 14 cells, four of which are currently in operation. State and Federal laws and regulations require the County to place a final cover on the four cells currently in use when they are closed and to perform maintenance and monitoring functions for all landfill sites for thirty years after closure. Landfill operations and landfill closure and postclosure care costs are accounted for in the Solid Waste Enterprise Fund. Although closure and postclosure care costs will be paid only near or after the date the landfill stops accepting waste, the County reports as a liability a portion of closure and postclosure care costs based on landfill capacity used as of the balance sheet date. The landfill closure and postclosure care liability of $4,988,538 at September 30, 2007 represents the cumulative amount reported to date based on an average use of 36% of the total estimated capacity. The portion of the liability related to 2007 usage is an increase of $398,487. It is estimated that an additional liability totaling $8,987,079 for Arbuckle Creek Cell 1A, 1B, Cell 3, Arbuckle Creek Cell C&D and Arbuckle Creek Cell AG will be recognized between the balance sheet date and the dates these cells will be filled to capacity in the years 2024, 2024, 2024, 2027 and 2159, respectively. Actual costs may differ due to inflation, changes in technology or changes in landfill laws and regulations.

The County is required by State and Federal laws and regulations to make annual contributions to a landfill management escrow account to finance closure and postclosure care financial assurance requirements. The County is in compliance with these requirements at September 30, 2007 with cash and investments of $4,715,668 held for these purposes. The County expects that future inflation costs will be paid from future contributions and interest earnings on these contributions. In the event closure escrows and interest earnings prove inadequate due to higher than expected inflation, changes in technology or changes in laws or regulations, these costs may need to be financed by future landfill users or future tax revenue.

84

HIGHLANDS COUNTY, FLORIDA

NOTES TO FINANCIAL STATEMENTS

September 30, 2007

NOTE 11 - MISCELLANEOUS REVENUE

Miscellaneous revenue included in the Governmental Funds for the fiscal year ended September 30, 2007 consists of the following: Local County Government Other Transportation Infrastructure Governmental General Fund Surtax Funds Reimbursements$ 396,282 $ 592,848 $ - $ - Insurance surplus 89,007 - - - Tax deed surplus 621,563 - - - Tourist development - - - 900 Commissions on inmate phone calls - - - 220,392 Other 507,128 273,725 249,400 192,020

Total$ 1,613,980 $ 866,573 $ 249,400 $ 413,312

NOTE 12 - MAJOR CUSTOMERS

A significant amount of the Solid Waste Fund revenue for 2007 is derived from one major customer as follows:

Percentage of Total Revenue September 30, 2007

Republic Services of Florida LP d.b.a. Reliable Sanitation 28%

The Solid Waste Fund revenue is comprised of charges for services to residential and commercial customers and a special non-ad valorem assessment of $130 per property owner.

NOTE 13 - CONTINGENT LIABILITIES

The County is currently receiving, and has received in the past, grants which are subject to special compliance audits by the grantor agency and which may result in disallowed expenditure/expense amounts. These amounts, if any, constitute a contingent liability of the County. Accordingly, such liabilities are not reflected within the financial statements. Management does not believe the effects of contingent liabilities, if any, will be material to the financial statements.

The County is a defendant in various lawsuits. Although the outcome of these lawsuits is not presently determinable, in the opinion of legal counsel for the County, the resolution of these matters will not have a materially adverse affect on the financial condition of the County.

85

HIGHLANDS COUNTY, FLORIDA

NOTES TO FINANCIAL STATEMENTS

September 30, 2007

NOTE 14 – RISK MANAGEMENT

Risk Retention Fund: The County is exposed to various risks of loss related to torts, theft of, damage to, and destruction of assets; errors and omissions; injuries to employees; and natural disaster. During fiscal year 1990, the County established a Risk Retention Fund (an Internal Service Fund) to account for and finance its uninsured risks of loss. Under this program, the Risk Retention Fund provides coverage in the areas mentioned below. The County purchases commercial insurance for claims in excess of coverage provided by the Fund and for all other risks of loss. Settled claims have not exceeded this commercial coverage during the past three fiscal years.

Effective October 1, 1994, the Board became a member of Public Risk Management (PRM), formerly known as Southwest Florida Intergovernmental Risk Management Association, a local government liability risk pool. PRM administers insurance activities relating to property; general, automobile and public officials' liability; workers' compensation; and auto physical damage. PRM absorbs losses up to a specified amount annually and purchases excess and other specific coverages from third-party carriers. PRM assesses each member its pro rata share of the estimated amount required to meet current year losses and operating expenses. If total member assessments (premiums) do not produce sufficient funds to meet its obligations, PRM can make additional limited assessments. Losses, if any, in excess of PRM's ability to assess its members would revert to the member that incurred the loss. Transactions related to activities between the Board and PRM are presented within the Risk Retention Internal Service Fund.

All funds of the County participate in the program and make payments to the Risk Retention Fund. The reserve of $2,150,501 is designated for future claims in the Risk Retention Fund at September 30, 2007.

The County maintains excess liability coverage with PRM of $5,000,000.

Employee Benefit Fund: On October 1, 1977, the County established the Employee Benefit Fund which was formerly an expendable trust fund. Beginning in 1989, the County transferred its assets, liabilities and fund equity to an internal service fund. This fund was created to self-insure County employees and their dependents for group medical costs. Medical claims are paid from premiums generated by employees’ dependents and contributions by the County. Premiums and contributions are determined by projected losses based on historical claims experience. Effective October 1, 2001, the County obtained private insurance and discontinued its self-insurance plan for health insurance; however, the County continued its self-insurance plan for dental costs.

Claim liabilities are recorded when it is probable that a loss has occurred and the amount of the loss can be reasonably estimated, including an estimate for claims incurred but not reported. This estimate is based on historical experience and current trends and it is computed by an actuarial firm. The claims liability for estimated claims payable is $19,663 at September 30, 2007.

Claims are adjudicated by a third party administrator under contract.

86 HIGHLANDS COUNTY, FLORIDA

NOTES TO FINANCIAL STATEMENTS

September 30, 2007

NOTE 14 - RISK MANAGEMENT (continued)

Employee Benefit Fund: The following table shows the changes in aggregate liabilities for claims for the past two fiscal years:

Fiscal Beginning Incurred Ending Year Balance Claims Payments Balance 2006$ 32,087 $ 247,820 $ 260,244 $ 19,663 2007$ 19,663 $ 278,826 $ 278,826 $ 19,663

NOTE 15 - RETIREMENT PLAN

All full-time employees are participants in the Florida Retirement System (System), a multiple-employer, cost-sharing public retirement system. The System, which is controlled by the State Legislature and administered by the State of Florida, Division of Retirement, is available to governmental units within the State of Florida. Participants can choose from two options: the FRS Pension Plan or the FRS Investment Plan.

The Pension Plan provides for vesting of benefits after six years of creditable service. Normal retirement benefits are available to employees who retire at or after age 62 with six or more years of service. Early retirement is available after six years of service with a five percent reduction of benefits for each year prior to the normal retirement age. Retirement benefits are based upon age, average compensation and years-of-service credit where average compensation is computed as the average of an individual’s five highest years of earnings. Employees are not required to contribute to the Pension Plan.

The Investment Plan provides for vesting after one year of creditable service. Normal retirement benefits are available to employees who retire at or after age 62 with one or more years of service. Retirement benefits are based on the employee’s account balance. Employees are not required to contribute to the Investment Plan.

The County office has no responsibility to the System other than to make the periodic payments required by the state statutes. The Florida Division of Retirement issues a publicly available financial report that includes financial statements and required supplementary information for the System. The report may be obtained by writing to Florida Division of Retirement, 2639 Monroe Street, Building C, Tallahassee, Florida 32399-1560.

Participating employer contributions are based upon statewide rates established by the State of Florida. These rates, which include the health insurance subsidy contribution of 1.11%, are applied to employee salaries as follows: regular employees – 9.85%; special risk employees – 20.92%; senior management – 13.12%; drop program – 10.91%; and elected officials – 16.53%. The County’s contributions made during the years ended September 30, 2007, 2006, and 2005 were $4,831,016, $3,893,696, and $3,178,135, respectively, equal to the actuarially determined contribution requirements for each year. The County has determined, in accordance with GASB Statement No. 27, that there was no pension liability before or at transition.

87 HIGHLANDS COUNTY, FLORIDA

NOTES TO FINANCIAL STATEMENTS

September 30, 2007

NOTE 16 – FUND BALANCE DEFICIT

Special Revenue Funds Intergovernmental Radio Communications – The unreserved, undesignated fund balance deficit of $76,133 is a result of a significant amount of fund balance reserved for encumbrances, primarily the intergovernmental radio project for a 3 leg triangular self supporting tower at the Avon Park Youth Academy.

Community Development Block Grant – The unreserved, undesignated fund balance deficit of $957,582 is a result of a significant amount of fund balance reserved for encumbrances, primarily, the placement of a 6" natural gas pipeline to Sebring Regional Airport and water and sewer infrastructure extensions.

NOTE 17 – INTERFUND TRANSFERS

During the year ended September 30, 2007, the County made the following interfund transfers to assist with the acquisition or construction of capital assets:

Transfer In: Local County Government Non Major General Transportation Infrastructure Governmental Energy Transfer out : FundTrust Surtax Funds Recovery Total Governmental Funds: Local Government Infrastructure Surtax $ - $ - $ - $ 218,417 $ - $ 218,417 Non Major Government Funds 44,616 - - 1,849 - 46,465 Enterprise Funds: Solid Waste - 250,000 1,000,000 - 35,000 1,285,000

Total Interfund Transfers $ 44,616 $ 250,000 $ 1,000,000 $ 220,266 $ 35,000 $ 1,549,882

NOTE 18 – SUBSEQUENT EVENTS

Energy Recovery Fund Subsequent to September 30, 2007, the County entered into a 10 year capital lease in the amount of $2,854,212. The lease will provide funding for the financing of acquiring, equipping and installing of a County owned and operated hot mix asphalt facility. Additional funding in the form of an Innovative Recycling and Waste Reduction Grant from the State of Florida is expected. This facility will be the first landfill gas-fired asphalt plant in the State of Florida, as well as the first publicly owned and operated asphalt plant in the State of Florida. This project will benefit all taxpayers of the County and could additionally provide a benefit to all Florida taxpayers.

88 HIGHLANDS COUNTY, FLORIDA

NOTES TO FINANCIAL STATEMENTS

September 30, 2007

NOTE 18 – SUBSEQUENT EVENTS (continued)

Local Government Investment Trust Fund As discussed in Note 2, at September 30, 2007, the County had $81,924,835 invested in the State Board of Administration's Local Government Surplus Funds Trust Fund Investment Pool (Pool). On November 29, 2007, the State Board of Administration implemented a temporary freeze on the assets held in the Pool due to an unprecedented amount of withdrawals from the Fund coupled with the absence of market liquidity for certain securities within the Pool. The significant amount of withdrawals followed reports that the Pool held asset-backed commercial paper that was subject to sub prime mortgage risk. On December 4, 2007, based on recommendations from an outside financial advisor, the State Board of Administration restructured the Pool into two separate pools. Pool A consisted of all money market appropriate assets, which was approximately $12 billion or 86% of Pool assets. Pool B consisted of assets that defaulted on a payment, paid more slowly than expected, and/or had any significant credit and liquidity risk, which was approximately $2 billion or 14% of Pool assets. At the time of the restructuring, all current pool participants had their existing balances proportionately allocated into Pool A and Pool B.

Currently, Pool A participants may withdraw 15% of their balance or $2 million, whichever is greater, without penalty. Withdrawals from Pool A in excess of the above limit are subject to a 2% redemption fee. New investments in Pool A are not subject to the redemption fee or withdrawal restrictions. Future withdrawal provisions from Pool A will be subject to further evaluation based on the maturities of existing investments and the liquidity requirements of the Pool. On December 21, 2007, Standard and Poor's Ratings Services assigned its "AAAM" principal stability fund rating to Pool A.

Currently, Pool B participants are prohibited from withdrawing any amount from the Pool and a formal withdrawal policy has not yet been developed. Market valuations of the assets held in Pool B are not readily available. In addition, full realization of the principle value of Pool B assets is not readily determinable.

As of March 5, 2008, the County has $12,351,092 and $3,097,471 invested in Pool A and B, respectively. Additional information regarding the Local Government Surplus Funds Trust Fund may be obtained from the State Board of Administration.

Bond Rating Fitch Rating Services (Fitch) has downgraded the rating assigned to Ambac Assurance Corporation (Ambac) from "AAA" to "AA". Ambac insures the regular payment of principal and interest on the Highlands County, Florida Infrastructure Sales Surtax Revenue Bonds, Series 2002 (the Series 2002 Bonds). Fitch's downgrade of Ambac's rating has caused the rating assigned to the Series 2002 Bonds to likewise be downgraded to "AA".

89 HIGHLANDS COUNTY REQUIRED SUPPLEMENTARY INFORMATION MODIFIED APPROACH FOR INFRASTRUCTURE ASSETS For the Fiscal Year Ended September 30, 2007

Condition Rating of Highlands County Roadway System

Overall Minimum Average Condition Level (Fair Condition 51 – 75)

FY 2005 FY 2006 FY 2007 Road System 56.6 56.9 57.1

Comparison of Estimated to Actual Maintenance/Preservation

FY 2003 FY 2004 FY 2005 FY 2006 FY 2007 Budgeted$ 1,416,971 $ 2,323,980 $ 1,268,972 $ 1,536,299 $ 1,864,307 Actual$ 987,625 $ 1,396,683 $ 1,170,365 $ 1,436,738 $ 1,455,532

The condition of a road segment is measured using the Road Evaluation Standards Version 1 (RES) that is based on weighted averages or distress factors of the pavement surface. The RES system uses a measurement scale to evaluate the Pavement Condition Level (PCL) ranging from zero for a failed pavement to 100 for pavement in perfect condition. The PCL index is used to classify road segments in good condition (76–100), fair condition (51-75), poor condition (26-50), and needs reconstruction (25 or below). An overall minimum average condition level is then determined from the individual road segments and the total lane miles of roads. It is the County’s policy to maintain the road system at an overall minimum average condition level not less than 45. Road segment condition is determined annually for all arterial roads and all of the local roads are inspected annually.

Condition Rating of Highlands County Bridge System

Overall Average Sufficiency Rating

FY 2005 FY 2006 FY 2007

Bridge System 77.3 80.69 82.43

Comparison of Estimated to Actual Maintenance/Preservation

FY 2003 FY 2004 FY 2005 FY 2006 FY 2007 Budgeted$ - $ 50,000 $ 150,000 $ 150,000 $ 150,000 Actual$ - $ 25,493 $ 112,512 $ 112,057 $ 127,060

The condition of the County’s bridges is determined using the inspection program that follows state mandates and regulations. The bridge sufficiency rating is a weighted average of an assessment of the ability of individual components to meet necessary performance requirements and uses a numerical condition scale ranging from 0 to 100. It is the County’s policy to maintain an overall minimum average sufficiency rating for the County maintained bridges of not less than 60%.

90

COMBINING AND INDIVIDUAL FUND STATEMENTS AND SCHEDULES

HIGHLANDS COUNTY, FLORIDA SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE BUDGET AND ACTUAL GENERAL FUND For The Fiscal Year Ended September 30, 2007

Variance with Final Budget Budget Positive Original Final Actual (Negative) REVENUES: Taxes $ 48,037,069 $ 48,037,071 $ 49,662,225 $ 1,625,154 Licenses and permits 102,000 102,000 24,763 (77,237) Intergovernmental 10,166,452 11,413,334 9,539,233 (1,874,101) Charges for services 4,573,442 4,665,734 5,686,302 1,020,568 Fines and forfeitures 30,000 30,000 104,487 74,487 Interest earnings 558,515 558,515 2,699,531 2,141,016 Miscellaneous 771,821 905,392 1,613,980 708,588 Total Revenues 64,239,299 65,712,046 69,330,521 3,618,475

EXPENDITURES: Current: General Government: Board of County Commissioners 358,147 358,147 335,343 22,804 County administrator 464,842 466,653 460,026 6,627 Clerk to Board-Financial & Administration 2,077,661 2,283,902 2,077,804 206,098 County audits-CPA 135,339 167,726 167,726 - Office of management and budget 480,924 495,693 393,228 102,465 Personnel office 573,820 597,116 465,391 131,725 Non-ad valorem assessments 123,784 137,359 65,860 71,499 Public Information 94,651 95,430 64,268 31,162 Central services 2,252,904 2,486,651 1,657,208 829,443 Property Appraiser 3,396,651 3,413,381 3,303,649 109,732 Tax Collector 2,853,576 2,853,576 2,562,142 291,434 Supervisor of Elections 814,914 763,646 633,081 130,565 Purchasing 695,138 743,739 467,216 276,523 County attorney 264,728 389,228 365,686 23,542 County planning and development 625,641 650,747 567,270 83,477 Clerk to Board - Other General Govt Services 857,645 873,532 828,681 44,851 Facilities management 2,060,719 2,167,477 1,651,529 515,948 Total General Government 18,131,084 18,944,003 16,066,108 2,877,895

(continued)

91 HIGHLANDS COUNTY, FLORIDA SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE BUDGET AND ACTUAL GENERAL FUND (Continued) For The Fiscal Year Ended September 30, 2007

Variance with Final Budget Budget Positive Original Final Actual (Negative) EXPENDITURES: Current: Public Safety: Sheriff $ 16,379,054 $ 17,182,409 $ 16,545,213 $ 637,196 Florida Highway Patrol 800 800 9 791 Community traffic safety - 1,341 516 825 Fire department 84,000 93,968 72,128 21,840 County fire coordinator 674,167 694,853 485,713 209,140 Division of forestry 8,996 8,996 - 8,996 County jail - administration 881,146 1,388,508 179,011 1,209,497 Detention and correction 9,754,723 9,657,342 9,277,027 380,315 Detention medical 1,400,000 1,400,000 959,933 440,067 Zoning department 722,023 793,815 547,788 246,027 Building department - 799 (1,064) 1,863 Local emergency management agency 532,001 638,503 469,682 168,821 Emergency/ disaster relief - 7,237 482 6,755 911 Dispatch center - 339,411 339,410 1 Communications program 327,610 419,829 305,698 114,131 Information technology 92,675 93,194 47,492 45,702 Ambulance services 5,776,941 5,926,404 4,699,512 1,226,892 Medical examiner 197,686 200,886 198,545 2,341 Children's Advocacy Center 133,105 134,471 101,938 32,533 Total Public Safety 36,964,927 38,982,766 34,229,033 4,753,733

Physical Environment: Agriculture and home economics 331,669 337,107 228,773 108,334 Soil conservation 881,142 1,193,942 301,587 892,355 Aquatic plant program 740,752 890,023 600,774 289,249 Highlands beautiful / litter and marine debris 95,315 105,837 88,629 17,208 Nuisance abatement 175,000 242,228 133,006 109,222 Total Physical Environment 2,223,878 2,769,137 1,352,769 1,416,368

Transportation: Avon Park airport 27,145 27,145 25,637 1,508 Avon Park southside 44,517 44,517 41,686 2,831 Sebring airport authority - 200,000 200,000 - Total Transportation 71,662 271,662 267,323 4,339

(continued)

92 HIGHLANDS COUNTY, FLORIDA SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE BUDGET AND ACTUAL GENERAL FUND (Continued) For The Fiscal Year Ended September 30, 2007

Variance with Final Budget Budget Positive Original Final Actual (Negative) EXPENDITURES: Current: Economic Environment: Work Study Program $ 52,764 $ 52,764 $ 48,283 $ 4,481 Industrial Development Authority 335,099 337,826 337,826 - Community redevelopment - Sebring 409,631 410,586 410,585 1 Community redevelopment - Avon Park 96,640 96,640 90,868 5,772 Sebring Regional Airport/Industrial Park 252,622 252,622 240,396 12,226 Veteran service office 184,223 185,362 159,951 25,411 Highlands County Housing Authority 9,000 9,000 7,675 1,325 Housing department 165,028 185,862 171,049 14,813 Total Economic Environment 1,505,007 1,530,662 1,466,633 64,029

Human services: Health Care Responsibility Act 373,824 373,824 84,958 288,866 Health unit 300,000 903,535 318,588 584,947 Animal control 533,627 535,537 464,612 70,925 Mental health 414,437 414,437 409,437 5,000 Human services administration 202,749 211,354 197,011 14,343 Public assistance programs 145,347 145,347 135,753 9,594 State county assistance program 1,033,542 1,033,542 773,764 259,778 Commodities program 14,531 30,520 30,500 20 Human services - Project Hope 50,000 50,000 50,000 - Children's services council 174,758 174,510 126,391 48,119 Transportation for disadvantaged 69,664 79,750 73,020 6,730 Healthy families grant - 53,378 - 53,378 Total Human Services 3,312,479 4,005,734 2,664,034 1,341,700

Culture and Recreation: Library - Avon Park 222,159 237,126 205,842 31,284 Library - Sebring 394,296 422,678 345,333 77,345 Library - Lake Placid 227,306 244,101 186,220 57,881 Libraries - countywide 473,040 501,249 406,454 94,795 Recreation department 666,790 735,914 611,880 124,034 Parks department 1,425,172 1,448,518 1,203,503 245,015 Operations 153,940 154,496 144,220 10,276 Historic district site survey 5,760 5,860 534 5,326 Total Culture and Recreation 3,568,463 3,749,942 3,103,986 645,956

(continued)

93 HIGHLANDS COUNTY, FLORIDA SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE BUDGET AND ACTUAL GENERAL FUND (Continued) For The Fiscal Year Ended September 30, 2007

Variance with Final Budget Budget Positive Original Final Actual (Negative) EXPENDITURES: Current: Court Related: Court General Administration: Circuit court administration $ 4,500 $ 5,117 $ 3,951 $ 1,166 County court administration 2,116 5,579 3,267 2,312 State Attorney 16,200 21,287 7,177 14,110 Public Defender 9,889 10,014 3,819 6,195 General administration Clerk of Court 207,128 - - -

Circuit Court Criminal: Clinical evaluations - 900 900 -

Circuit Court Juvenile: Circuit court juvenile guardian ad litem 2,040 2,640 1,853 787

Court General Operations: General operations courthouse security 923,000 892,700 799,307 93,393 General operations courthouse facilities 526,810 555,088 437,515 117,573 Total Court Related 1,691,683 1,493,325 1,257,789 235,536

Debt Service: Principal retirement - 391,508 444,669 (53,161) Interest and fiscal charges - 22,085 22,085 - Total Expenditures 67,469,183 72,160,824 60,874,429 11,286,395

Excess/(Deficiency) of Revenues Over/ (Under) Expenditures (3,229,884) (6,448,778) 8,456,092 14,904,870

OTHER FINANCING SOURCES (USES) Transfers in - 77,500 44,616 (32,884) Transfers (out) (1,369,622) (1,369,622) - 1,369,622 Issuance of debt - 327,640 669,765 342,125 Total Other Financing Sources (Uses) (1,369,622) (964,482) 714,381 1,678,863

Net Change In Fund Balance (4,599,506) (7,413,260) 9,170,473 16,583,733

FUND BALANCE, October 1, 2006 4,599,506 7,413,260 18,201,933 10,788,673

FUND BALANCE, September 30, 2007 $- $ - $ 27,372,406 $ 27,372,406

94 NONMAJOR GOVERNMENTAL FUNDS

SPECIAL REVENUE FUNDS

Special Revenue Funds account for revenues from specific taxes or other earmarked revenue sources which, by law, are designated to finance particular functions or activities of government which include special benefit districts that account for the cost of street lighting, paving and maintaining streets, water control, fire protection, and recreation within certain benefit areas (districts) of the County. The purpose of the individual funds is depicted as follows:

Lake Placid Sun-N-Lake Improvement - To account for assessments relating to drainage and street maintenance.

Lake Placid Sun-N-Lake Estates Fire - To account for assessments relating to fire protection.

DeSoto City Special Benefit Fire - To account for assessments relating to fire protection.

Sebring Highlands Special Tax - To account for assessments relating to street maintenance.

Orange Villa Special Benefit - To account for assessments relating to recreation and street lighting.

Hickory Hills Special Benefit - To account for assessments relating to street maintenance and recreation.

Placid Lakes Special Benefit - To account for assessments relating to maintenance of recreational areas, cleaning canals and fire protection, etc.

Sebring County Estates Special Benefit - To account for assessments relating to street lighting.

Istokpoga Marsh Watershed Improvement - To account for assessments relating to water control and improvements.

Avon Park Estates Special Benefit - To account for assessments relating to street maintenance.

North Orange Blossom (Units 8 & 9) Special Benefit - To account for assessments relating to constructing roads, drainage facilities, installation of waterlines, street lighting, and other purposes.

Highlands Lakes Special Tax - To account for assessments relating to fire protection.

Northwest Highlands Park Special Benefit - To account for assessments relating to general maintenance of public roads, sewer and water systems.

Highlands Park Special Benefit Fire - To account for assessments relating to fire protection.

Highlands Park Estates Improvement Trust - To account for funds available for street maintenance.

Leisure Lakes Special Benefit Fire - To account for assessments relating to fire protection.

95 NONMAJOR GOVERNMENTAL FUNDS

SPECIAL REVENUE FUNDS (continued)

Sebring Hills Special Benefit - To account for assessments relating to street lighting.

Red Hill Farms Improvement - To account for assessments relating to constructing road and drainage facilities.

E911 Emergency Operations Landlines - To account for the ongoing fiscal activity relating to the collection and use of the $.50 user fee for the E911 emergency telephone number system.

E911 Emergency Operations Wireless – To account for receipt and expenditure of revenues collected pursuant to section 365.173 Florida Statutes.

Orange Blossom Estates Special Benefit - To account for assessments relating to constructing roads and drainage facilities.

Sun-N-Lake Lake Placid Recreation - To account for assessments relating to recreation and street lighting.

Conservation Trust - To account for assessments relating to land preservation.

Intergovernmental Radio Communications - To account for the additional surcharge, up to $12.50 for each moving traffic violation, to assist in funding the County's participation in the intergovernmental radio communication program approved by the Division of the Department of General Services.

Sebring Acres Special Benefit - To account for assessments relating to road construction, drainage and maintenance.

Orange Blossom (Unit 12) Special Benefit - To account for assessments relating to road and rights-of- way maintenance.

Lake Haven Estates Special Benefit - To account for assessments relating to street lighting.

Legal Aid Program -To account for additional civil court fees collected to provide legal aid within the County to those in need.

Lorida Special Benefit Fire - To account for assessments relating to fire protection.

Lake Placid Special Benefit Fire - To account for assessments relating to fire protection.

Law Enforcement Education - To account for a $2 court cost added to all fines and forfeitures. These monies can only be used for approved education and training of law enforcement, correctional and administrative personnel per s 318.18(11)(d) and s 938.15, FS.

96 NONMAJOR GOVERNMENTAL FUNDS

SPECIAL REVENUE FUNDS (continued)

Building Code Enforcement Fund - To account for operations of the building department. Financing is provided primarily from building department permits and fees.

Florida Boating Improvement - To account for the operation and maintenance of county boat ramps.

Special Law Enforcement Trust - To account for the sale of confiscated property. These monies are used for the purchase of equipment and materials to be used in specialized law enforcement activities as well as to defray the cost of protracted or complex investigations.

Highway Park Special Benefit - To account for assessments relating to street maintenance.

Community Development Block Grant - To account for revenues and expenditures of community development block grant projects.

Sun-N-Lakes 1-20 Improvement Trust - To account for funds available for the construction of drainage and paved streets.

Highlands Park Estates Special Benefit – To account for assessments relating to facilities and improvements.

Development Transportation Improvement – To account for grants-in-aid of construction for Wolf Creek Development and Vizcaya Lakes Development.

West Sebring Special Benefit Fire – To account for assessments relating to fire protection.

Driver Education Safety Trust – To account for funds for driver education programs in schools of Highlands County per s 318.1215 FS.

Tourist Development Trust – To account for the expenditure of tax revenues collected to promote and assist tourism in Highlands County, Florida.

Domestic Violence Training – To account for a domestic violence surcharge used to defray the costs of incarcerating persons sentenced under s 938.08 FS and provide additional training to law enforcement personnel in combating domestic violence.

Fire Inspection and Safety – To account for fees collected to be used for paying the cost of inspections conducted pursuant to s 633.081(1) FS and related administrative expenses and to account for fire safety enforcement fees and fire safety program fees collected and appropriated for these purposes.

Venus Special Benefit Fire – To account for assessments relating to fire protection.

Sebring Parkway Maintenance – To account for the costs associated with the interlocal agreement (07/01/03) with the City of Sebring for maintenance of the Sebring Parkway.

97 NONMAJOR GOVERNMENTAL FUNDS

SPECIAL REVENUE FUNDS (continued)

State Court Facilities Trust Fund – To account for the surcharge imposed per s 318.18(13) FS that shall be used to fund state court facilities.

Innovations and Supplemental Courts Funding Trust Fund – To account for the additional court cost imposed by s 939.185 FS used to fund innovations to supplement state funding for the elements of the state court system identified in s 29.004 FS and county funding for local requirements under s 29.008(2)(a)2 FS.

Crime Prevention – To account for the court cost imposed per s 775.083(2) FS for crime prevention programs in the county, including safe neighborhood programs.

Court Technology 28.24(12)(E)1 – To account for recording fees used to fund court related technology and court technology needs for the state trial courts, state attorney and public defender in the county.

Court Fund – To account for court related fines, fees and service charges used to pay for the court operations.

Hurricane Housing Recovery Program – To account for funds available through the Hurricane Housing Recovery Program under the State Housing Initiatives Partnership Act.

Home Initiatives Partnership – To account for HUD funds to be used for housing rehabilitation, tenant based rental assistance, assistance to home buyers, acquisition of housing, and new construction of housing.

Placid Lakes Fire District – To account for assessments for fire protection.

Public Records Modernization Trust – To account for the additional service charges on recorded instruments for modernizing the official record keeping systems in the Clerk’s office per s 28.24(12)(d) FS.

Teen Court Operations – To account for assessment of mandatory court costs for the operation and administration of the Highlands County Court Program per s 939.185 (1)(a)4 FS.

Court Related Technology Modernization Trust Fund – To account for the recording fees used to fund court related technology information needs for the Clerk of Courts.

Community Donations – To account for public donations received by the Sheriff’s Office.

Inmate Welfare Fund – To account for the commissary operated at the County jail. Revenues are provided by sales of products such as candy, cigarettes, toothpaste, etc., to the inmates. Profits from these sales can only be spent on educational and vocational training for the inmates.

DOR-GIS Program Grant – To account for the revenues and expenditures associated with the DOR- GIS grant.

Impact Fee Transportation Fund Avon Park – Pursuant to County Ordinance 05-06-44, transportation impact fees are collected by the County based on the transportation impact of new development.

98 NONMAJOR GOVERNMENTAL FUNDS

SPECIAL REVENUE FUNDS (continued)

Impact Fee Transportation Fund Lake Placid – Pursuant to County Ordinance 05-06-44, transportation impact fees are collected by the County based on the transportation impact of new development.

Impact Fee Transportation Fund Sebring – Pursuant to County Ordinance 05-06-44, transportation impact fees are collected by the County based on the transportation impact of new development.

Impact Fee Parks and Recreation Fund Avon Park – Pursuant to County Ordinance 05-06-44, parks and recreation impact fees are collected by the County to provide growth-necessitated capital improvements in the area of parks and recreation.

Impact Fee Parks and Recreation Fund Lake Placid – Pursuant to County Ordinance 05-06-44, parks and recreation impact fees are collected by the County to provide growth-necessitated capital improvements in the area of parks and recreation.

Impact Fee Parks and Recreation Fund Sebring – Pursuant to County Ordinance 05-06-44, parks and recreation impact fees are collected by the County to provide growth-necessitated capital improvements in the area of parks and recreation.

Impact Fee Correctional Facilities – Pursuant to County Ordinance 05-06-44, correctional facility impact fees are collected by the County to provide growth-necessitated capital improvements in the area of correctional facilities.

Impact Fee Fire – Pursuant to County Ordinance 05-06-44, fire services impact fees are collected by the County to accommodate new development without decreasing the current level of fire services.

Impact Fee Libraries – Pursuant to County Ordinance 05-06-44, library services impact fees are collected by the County to accommodate new development without decreasing the current level of library services.

Impact Fee Law Enforcement – Pursuant to County Ordinance 05-06-44, law enforcement impact fees are collected by the County to provide growth-necessitated capital improvements in the area of law enforcement.

Impact Fee Emergency Medical Services – Pursuant to County Ordinance 05-06-44, emergency medical services impact fees are collected by the County to provide growth-necessitated capital improvements in the area of emergency medical services.

CAPITAL PROJECTS FUND

HCISSRB Construction – These funds are used to account for financial resources to be used for the acquisition or construction of major capital facilities and infrastructure projects (other than those financed by proprietary funds).

99 HIGHLANDS COUNTY, FLORIDA COMBINING BALANCE SHEET NONMAJOR GOVERNMENTAL FUNDS September 30, 2007

Special Revenue Funds

DeSoto Lake Placid Sun-N-Lake City Sebring Improve- Estates Special Highlands ment Fire Benefit Special District District Fire District Tax District ASSETS Cash and cash equivalents $ - $ 533,491 $ 105,563 $ - Accounts receivable - net - - - - Due from other funds - 2,715 1,304 - Due from other governmental units - 24,070 2 - Prepaid expenses - - - - Total Assets $ - $ 560,276 $ 106,869 $ -

LIABILITIES AND FUND BALANCES Liabilities: Vouchers payable $ - $ 510 $ 183 $ - Contracts payable-retained percentage - - - - Due to other funds - - - - Due to other governmental units - - - - Due to others - - - - Accrued wages payable - 1,143 1,984 - Advances from other funds - - - - Deferred revenue - - - - Total Liabilities - 1,653 2,167 -

Fund Balances: Reserved: Reserved for encumbrances - 196 1,029 - Reserved for public records modernization - - - - Reserved for other purposes - - - - Unreserved: Unreserved, undesignated - 558,427 103,673 - Total Fund Balances - 558,623 104,702 -

Total Liabilities and Fund Balances $ - $ 560,276 $ 106,869 $ -

100 Page 1 of 6

Special Revenue Funds Sebring Istokpoga Avon North Orange Orange Hickory Placid Country Marsh Park Blossom Villa Hills Lakes Estates Watershed Estates (Units 8 & 9) Special Special Special Special Improve- Special Special Benefit Benefit Benefit Benefit ment Benefit Benefit District District District District District District District

$ 4,324 $ 31,666 $ 302,329 $ 62,278 $ 517,777 $ 605,768 $ - - - 250 - - - - 9 18 1,313 141 564 696 - - - 22 ------$ 4,333 $ 31,684 $ 303,914 $ 62,419 $ 518,341 $ 606,464 $ -

$- $ - $ 17,228 $ - $ 710 $ 611 $ ------17,228 - 710 611 -

- - 8,677 - 12,758 ------

4,333 31,684 278,009 62,419 504,873 605,853 - 4,333 31,684 286,686 62,419 517,631 605,853 -

$ 4,333 $ 31,684 $ 303,914 $ 62,419 $ 518,341 $ 606,464 $ - (continued)

101 HIGHLANDS COUNTY, FLORIDA COMBINING BALANCE SHEET NONMAJOR GOVERNMENTAL FUNDS (Continued) September 30, 2007

Special Revenue Funds Northwest Highlands Highlands Highlands Highlands Park Park Lakes Park Special Estates Special Special Benefit Improve- Tax Benefit Fire ment District District District Trust ASSETS Cash and cash equivalents $ 410,803 $ - $ 188,419 $ 200,627 Accounts receivable - net - - - - Due from other funds 1,586 - 379 - Due from other governmental units 1 - 16 - Prepaid expenses - - - - Total Assets $ 412,390 $ - $ 188,814 $ 200,627

LIABILITIES AND FUND BALANCES Liabilities: Vouchers payable $ 5,659 $ - $ 50,956 $ - Contracts payable-retained percentage - - 21,588 - Due to other funds - - - - Due to other governmental units - - - - Due to others - - - - Accrued wages payable 2,140 - - - Advances from other funds - - - - Deferred revenue - - - - Total Liabilities 7,799 - 72,544 -

Fund Balances: Reserved: Reserved for encumbrances 7,995 - 31,646 - Reserved for public records modernization - - - - Reserved for other purposes - - - - Unreserved: Unreserved, undesignated 396,596 - 84,624 200,627 Total Fund Balances 404,591 - 116,270 200,627

Total Liabilities and Fund Balances $ 412,390 $ - $ 188,814 $ 200,627

102 Page 2 of 6

Special Revenue Funds Leisure Red Orange Lakes Sebring Hill Blossom Special Hills Farms E911 E911 Estates Sun-N-Lake Benefit Special Improve- Emergency Emergency Special Lake Placid Fire Benefit ment Operations Operations Benefit Recreation District District District Landlines Wireless District District

$ 704,476 $ 15,927 $ 65,237 $ 89,881 $ - $ 245,703 $ 181,356 - - - 106 - - - 1,005 97 44 34,468 53,461 35 820 1 - - 27,896 38,089 - 1,255 ------$ 705,482 $ 16,024 $ 65,281 $ 152,351 $ 91,550 $ 245,738 $ 183,431

$ 1,810 $ - $ - $ - $ 9,847 $ 2,314 $ 290 ------1,810 - - - 9,847 2,314 290

1,861 - - - - 11,312 1,139 ------

701,811 16,024 65,281 152,351 81,703 232,112 182,002 703,672 16,024 65,281 152,351 81,703 243,424 183,141

$ 705,482 $ 16,024 $ 65,281 $ 152,351 $ 91,550 $ 245,738 $ 183,431 (continued)

103 HIGHLANDS COUNTY, FLORIDA COMBINING BALANCE SHEET NONMAJOR GOVERNMENTAL FUNDS (Continued) September 30, 2007

Special Revenue Funds Orange Intergov- Sebring Blossom ernmental Acres (Unit 12) Conser- Radio Special Special vation Communi- Benefit Benefit Trust cations District District ASSETS Cash and cash equivalents $ 954,555 $ 67,225 $ 87,157 $ 7,680 Accounts receivable - net - - - - Due from other funds - - 80 - Due from other governmental units - 590 - - Prepaid expenses - - - - Total Assets $ 954,555 $ 67,815 $ 87,237 $ 7,680

LIABILITIES AND FUND BALANCES Liabilities: Vouchers payable $ - $ 8,768 $ - $ 1,497 Contracts payable-retained percentage - - - - Due to other funds - - - - Due to other governmental units - - - - Due to others - - - - Accrued wages payable - - - - Advances from other funds - - - - Deferred revenue - - - - Total Liabilities - 8,768 - 1,497

Fund Balances: Reserved: Reserved for encumbrances - 135,180 - - Reserved for public records modernization - - - - Reserved for other purposes - - - - Unreserved: Unreserved, undesignated 954,555 (76,133) 87,237 6,183 Total Fund Balances 954,555 59,047 87,237 6,183

Total Liabilities and Fund Balances $ 954,555 $ 67,815 $ 87,237 $ 7,680

104 Page 3 of 6

Special Revenue Funds Lake Lake Haven Lorida Placid Estates Special Special Building Special Legal Benefit Benefit Law Code Florida Benefit Aid Fire Fire Enforcement Enforcement Boating District Program District District Education Fund Improvement

$ 27,718 $ 94,722 $ 41,406 $ 524,154 $ 115,036 $ 1,398,548 $ 151,720 ------79 - 573 1,048 - - - - - 1 - 5,641 - 2,801 ------$ 27,797 $ 94,722 $ 41,980 $ 525,202 $ 120,677 $ 1,398,548 $ 154,521

$- $ 3,598 $ 913 $ 781 $ - $ 82,044 $ ------3,165 ------83 - 24,851 ------11 - - - - 3,598 913 875 - 110,060 -

- - 766 1,869 - 69,284 9,758 ------120,677 - -

27,797 91,124 40,301 522,458 - 1,219,204 144,763 27,797 91,124 41,067 524,327 120,677 1,288,488 154,521

$ 27,797 $ 94,722 $ 41,980 $ 525,202 $ 120,677 $ 1,398,548 $ 154,521 (continued)

105 HIGHLANDS COUNTY, FLORIDA COMBINING BALANCE SHEET NONMAJOR GOVERNMENTAL FUNDS (Continued) September 30, 2007

Special Revenue Funds

Highway Community Special Park Devel- Sun-N-Lake Law Special opment 1 - 20 Enforcement Benefit Block Improvement Trust District Grant Trust ASSETS Cash and cash equivalents $ 235,367 $ 29,146 $ 252,634 $ 54,843 Accounts receivable - net - - - - Due from other funds - 62 - - Due from other governmental units - - 437,700 - Prepaid expenses - - - - Total Assets $ 235,367 $ 29,208 $ 690,334 $ 54,843

LIABILITIES AND FUND BALANCES Liabilities: Vouchers payable $ - $ - $ 379,531 $ - Contracts payable-retained percentage - - 12,600 - Due to other funds - - - - Due to other governmental units - - - - Due to others - - - - Accrued wages payable - - - - Advances from other funds - - - - Deferred revenue - - 1,161 - Total Liabilities - - 393,292 -

Fund Balances: Reserved: Reserved for encumbrances - - 1,254,624 - Reserved for public records modernization - - - - Reserved for other purposes 235,367 - - - Unreserved: Unreserved, undesignated - 29,208 (957,582) 54,843 Total Fund Balances 235,367 29,208 297,042 54,843

Total Liabilities and Fund Balances $ 235,367 $ 29,208 $ 690,334 $ 54,843

106 Page 4 of 6

Special Revenue Funds

Highlands West Park Estates Sebring Driver Special Development Special Education Tourist Domestic Benefit Transportation Benefit Fire Safety Development Violence District Improvement District Trust Trust Training

$ 173,853 $ 81,889 $ 843,736 $ 37,226 $ 384,602 $ 15,002 - - - - 2,047 - 555 - 3,067 - - - 26 - 1 3,946 35,238 117 ------$ 174,434 $ 81,889 $ 846,804 $ 41,172 $ 421,887 $ 15,119

$ 769 $ - $ 2,516 $ - $ 19,699 $ ------50 ------1,071 - 14,623 ------15,442 - 2,516 - 20,770 -

646 - 99 - 56,919 ------

158,346 81,889 844,189 41,172 344,198 15,119 158,992 81,889 844,288 41,172 401,117 15,119

$ 174,434 $ 81,889 $ 846,804 $ 41,172 $ 421,887 $ 15,119 (continued)

107 HIGHLANDS COUNTY, FLORIDA COMBINING BALANCE SHEET NONMAJOR GOVERNMENTAL FUNDS (Continued) September 30, 2007

Special Revenue Funds

Venus Fire Special Sebring Inspection Benefit Parkway And Safety Fire District Maintenance ASSETS Cash and cash equivalents $ 62,035 $ 56,733 $ 194,143 Accounts receivable - net - - - Due from other funds - 202 - Due from other governmental units - 2 - Prepaid expenses - - - Total Assets $ 62,035 $ 56,937 $ 194,143

LIABILITIES AND FUND BALANCES Liabilities: Vouchers payable $ 3,185 $ 452 $ 811 Contracts payable-retained percentage - - - Due to other funds - - - Due to other governmental units - - - Due to others - - - Accrued wages payable - - - Advances from other funds - - - Deferred revenue - - - Total Liabilities 3,185 452 811

Fund Balances: Reserved: Reserved for encumbrances - - 7,099 Reserved for public records modernization - - - Reserved for other purposes - - - Unreserved: Unreserved, undesignated 58,850 56,485 186,233 Total Fund Balances 58,850 56,485 193,332

Total Liabilities and Fund Balances $ 62,035 $ 56,937 $ 194,143

108 Page 5 of 8

Special Revenue Funds

Innovations and State Court Supplemental Hurricane Facilities Courts Funding Crime Court Tech Housing Trust Fund Trust Fund Prevention 28.24(12)(E)1 Court Trust

$ 712,594 $ 288,348 $ 114,693 $ 243,503 $ 538,983 $ 922,978 ------19,758 6,235 2,439 16,751 27,573 - - - - - 2,031 - $ 732,352 $ 294,583 $ 117,132 $ 260,254 $ 568,587 $ 922,978

$ 68,852 $ 589 $ - $ 2,812 $ 17,857 $ 222,475 ------317,605 - - - - - 205,016 - - - - 3,542 28,109 1,634 ------698,869 68,852 589 - 6,354 568,587 922,978

27,710 13,774 - 127,252 ------

635,790 280,220 117,132 126,648 - - 663,500 293,994 117,132 253,900 - -

$ 732,352 $ 294,583 $ 117,132 $ 260,254 $ 568,587 $ 922,978 (continued)

109 HIGHLANDS COUNTY, FLORIDA COMBINING BALANCE SHEET NONMAJOR GOVERNMENTAL FUNDS (Continued) September 30, 2007

Special Revenue Funds

Public Home Placid Lakes Records Initiatives Fire Modernization Partnership District Trust ASSETS Cash and cash equivalents $ 70,280 $ 120,682 $ 275,814 Accounts receivable - net - - - Due from other funds - 705 - Due from other governmental units - 5 - Prepaid expenses - - - Total Assets $ 70,280 $ 121,392 $ 275,814

LIABILITIES AND FUND BALANCES Liabilities: Vouchers payable $ 25,078 $ 41 $ - Contracts payable-retained percentage - - - Due to other funds - - - Due to other governmental units - - - Due to others - - - Accrued wages payable 865 - - Advances from other funds - - - Deferred revenue 44,337 - - Total Liabilities 70,280 41 -

Fund Balances: Reserved: Reserved for encumbrances - 3,802 - Reserved for public records modernization - - 275,814 Reserved for other purposes - - - Unreserved: Unreserved, undesignated - 117,549 - Total Fund Balances - 121,351 275,814

Total Liabilities and Fund Balances $ 70,280 $ 121,392 $ 275,814

110 Page 6 of 8

Special Revenue Funds

Court Related Teen Technology Inmate DOR-GIS Impact Fee Court Modernization Community Welfare Program Transportation Operations Trust Donations Fund Grant Avon Park

$ 15,790 $ 239,442 $ 6,951 $ 173,957 $- $ 76,914 - - - 17,902 ------256 - - - - $ 15,790 $ 239,698 $ 6,951 $ 191,859 $- $ 76,914

$- $ 1,125 $ - $ 687 $ - $ ------769 - - - 220 ------744 2,434 - 884 ------744 3,559 - 1,791 - 769

------236,139 - - - - 15,046 - - - - -

- - 6,951 190,068 - 76,145 15,046 236,139 6,951 190,068 - 76,145

$ 15,790 $ 239,698 $ 6,951 $ 191,859 $- $ 76,914 (continued)

111 HIGHLANDS COUNTY, FLORIDA COMBINING BALANCE SHEET NONMAJOR GOVERNMENTAL FUNDS (Continued) September 30, 2007

Special Revenue Funds

Impact Fee Impact Fee Impact Fee Trans- Trans- Parks and portation portation Recreation Lake Placid Sebring Avon Park ASSETS Cash and cash equivalents $ 181,064 $ 449,110 $ 7,927 Accounts receivable - net - - - Due from other funds - - - Due from other governmental units - - - Prepaid expenses - - - Total Assets $ 181,064 $ 449,110 $ 7,927

LIABILITIES AND FUND BALANCES Liabilities: Vouchers payable $ - $ - $ - Contracts payable-retained percentage - - - Due to other funds 1,811 4,491 79 Due to other governmental units - - - Due to others - - - Accrued wages payable - - - Advances from other funds - - - Deferred revenue - - - Total Liabilities 1,811 4,491 79

Fund Balances: Reserved: Reserved for encumbrances - - - Reserved for public records modernization - - - Reserved for other purposes - - - Unreserved: Unreserved, undesignated 179,253 444,619 7,848 Total Fund Balances 179,253 444,619 7,848

Total Liabilities and Fund Balances $ 181,064 $ 449,110 $ 7,927

112 Page 7 of 8

Special Revenue Funds

Impact Fee Impact Fee Parks and Parks and Impact Fee Impact Fee Recreation Recreation Correctional Impact Fee Impact Fee Law Lake Placid Sebring Facilities Fire Libraries Enforcement

$ 14,190 $ 31,938 $ 48,867 $ 58,041 $ 17,466 $ 15,432 ------$ 14,190 $ 31,938 $ 48,867 $ 58,041 $ 17,466 $ 15,432

$- $ - $ - $ - $ - $ ------142 319 489 580 175 154 ------142 319 489 580 175 154

------

14,048 31,619 48,378 57,461 17,291 15,278 14,048 31,619 48,378 57,461 17,291 15,278

$ 14,190 $ 31,938 $ 48,867 $ 58,041 $ 17,466 $ 15,432 (continued)

113 HIGHLANDS COUNTY, FLORIDA COMBINING BALANCE SHEET NONMAJOR GOVERNMENTAL FUNDS (Continued) September 30, 2007

Special Revenue Capital Projects Fund Fund

Impact Fee Total All Emergency Nonmajor Medical HCISSRB Governmental Services Construction Funds ASSETS Cash and cash equivalents $ 6,002 $ 7,115,274 $ 21,902,995 Accounts receivable - net - - 20,305 Due from other funds - - 105,026 Due from other governmental units - - 650,176 Prepaid expenses - - 2,287 Total Assets $ 6,002 $ 7,115,274 $ 22,680,789

LIABILITIES AND FUND BALANCES Liabilities: Vouchers payable $ - $ 15,582 $ 949,780 Contracts payable-retained percentage - - 34,188 Due to other funds 60 - 9,069 Due to other governmental units - - 320,990 Due to others - - 205,066 Accrued wages payable - - 69,484 Advances from other funds - - 14,623 Deferred revenue - - 744,378 Total Liabilities 60 15,582 2,347,578

Fund Balances: Reserved: Reserved for encumbrances - 2,008,991 3,794,386 Reserved for public records modernization - - 511,953 Reserved for other purposes - - 371,090 Unreserved: Unreserved, undesignated 5,942 5,090,701 15,655,782 Total Fund Balances 5,942 7,099,692 20,333,211

Total Liabilities and Fund Balances $ 6,002 $ 7,115,274 $ 22,680,789

114 HIGHLANDS COUNTY, FLORIDA COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES NONMAJOR GOVERNMENTAL FUNDS For the Fiscal Year Ended September 30, 2007

Special Revenue Funds

Lake Placid DeSoto Sun-N-Lake City Sebring Special Highlands Improve- Estates Benefit Special ment Fire Fire Tax District District District District REVENUES: Taxes $ - $ - $ - $ - Intergovernmental - - - - Charges for services - - - - Fines and forfeitures - - - - Licenses and permits - - - - Assessments 845 355,172 170,443 - Interest earnings 3,468 26,406 8,275 3,084 Miscellaneous - - 2,400 - Total Revenues 4,313 381,578 181,118 3,084

EXPENDITURES: Current: General government - - - - Public safety - 157,923 153,242 - Physical environment - - - - Transportation 464,986 - - 225,405 Economic environment - - - - Culture and recreation - - - - Court related - - - - Debt Service: Principal retirement - 51,000 13,333 - Interest - 28,741 6,107 - Other debt service - - - - Total Expenditures 464,986 237,664 172,682 225,405 Excess of Revenues Over/(Under) Expenditures (460,673) 143,914 8,436 (222,321)

OTHER FINANCING SOURCES (USES): Transfers in - - - - Transfers (out) (16,316) - - (27,163) Total Other Financing Sources (Uses) (16,316) - - (27,163)

Excess of Revenues and Other Financing Sources Over/ (Under) Expenditures and Other Financing Sources (Uses) (476,989) 143,914 8,436 (249,484) FUND BALANCES - October 1, 2006 476,989 414,709 96,266 249,484 FUND BALANCES - September 30, 2007 $- $ 558,623 $ 104,702 $ -

115 Page 1 of 8

Special Revenue Funds

Sebring Istokpoga Avon North Orange Orange Hickory Placid Country Marsh Park Blossom Villa Hills Lakes Estates Watershed Estates (Units 8 & 9) Special Special Special Special Improve- Special Special Benefit Benefit Benefit Benefit ment Benefit Benefit District District District District District District District

$- $ - $ - $ - $ - $ - $ ------1,391 2,379 171,566 18,920 74,311 90,576 4,018 239 1,810 15,685 3,286 26,040 28,904 477 - - 15,550 - - - - 1,630 4,189 202,801 22,206 100,351 119,480 4,495

------89,971 - - 1,623 7,570 131,479 17,508 - 34,067 402 ------

------2,576 ------1,182 ------1,623 7,570 131,479 17,508 89,971 34,067 4,160 7 (3,381) 71,322 4,698 10,380 85,413 335

------(1,849) ------(1,849)

7 (3,381) 71,322 4,698 10,380 85,413 (1,514) 4,326 35,065 215,364 57,721 507,251 520,440 1,514 $ 4,333 $ 31,684 $ 286,686 $ 62,419 $ 517,631 $ 605,853 $ - (continued)

116 HIGHLANDS COUNTY, FLORIDA COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES NONMAJOR GOVERNMENTAL FUNDS (Continued) For the Fiscal Year Ended September 30, 2007

Special Revenue Funds

Northwest Highlands Highlands Highlands Highlands Park Park Lakes Park Special Estates Special Special Benefit Improve- Tax Benefit Fire ment District District District Trust REVENUES: Taxes $ - $ - $ - $ - Intergovernmental - - - - Charges for services - - - - Fines and forfeitures - - - - Licenses and permits - - - - Assessments 207,486 - 49,810 - Interest earnings 22,347 278 14,926 9,661 Miscellaneous 1,800 - 652 - Total Revenues 231,633 278 65,388 9,661

EXPENDITURES: Current: General government - - - - Public safety 179,980 - 242,716 - Physical environment - - - - Transportation - 22,993 - - Economic environment - - - - Culture and recreation - - - - Court related - - - - Debt Service: Principal retirement - - - - Interest - - - - Other debt service - - - - Total Expenditures 179,980 22,993 242,716 - Excess of Revenues Over/(Under) Expenditures 51,653 (22,715) (177,328) 9,661

OTHER FINANCING SOURCES (USES): Transfers in - - - - Transfers (out) - (1,137) - - Total Other Financing Sources (Uses) - (1,137) - -

Excess of Revenues and Other Financing Sources Over/ (Under) Expenditures and Other Financing Sources (Uses) 51,653 (23,852) (177,328) 9,661 FUND BALANCES - October 1, 2006 352,938 23,852 293,598 190,966 FUND BALANCES - September 30, 2007 $ 404,591 $ - $ 116,270 $ 200,627

117 Page 2 of 8

Special Revenue Funds

Leisure Red Orange Lakes Sebring Hill Blossom Special Hills Farms E911 E911 Estates Sun-N-Lake Benefit Special Improve- Emergency Emergency Special Lake Placid Fire Benefit ment Operations Operations Benefit Recreation District District District Landlines Wireless District District

$- $ - $ - $ - $ - $ - $ ------246,050 223,391 ------131,665 12,903 6,139 - - - 107,213 33,364 1,175 3,068 12,719 8,153 24,060 9,581 1,902 - - 21 - - 8,863 166,931 14,078 9,207 258,790 231,544 24,060 125,657

------33,261 - - 317,096 149,841 ------20,977 570 - - 642,001 ------82,532 ------

------15,000 ------7,262 ------33,261 20,977 570 317,096 149,841 642,001 104,794 133,670 (6,899) 8,637 (58,306) 81,703 (617,941) 20,863

- - - - - 1,849 ------1,849 -

133,670 (6,899) 8,637 (58,306) 81,703 (616,092) 20,863 570,002 22,923 56,644 210,657 - 859,516 162,278 $ 703,672 $ 16,024 $ 65,281 $ 152,351 $ 81,703 $ 243,424 $ 183,141 (continued)

118 HIGHLANDS COUNTY, FLORIDA COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES NONMAJOR GOVERNMENTAL FUNDS (Continued) For the Fiscal Year Ended September 30, 2007

Special Revenue Funds

Orange Intergov- Sebring Blossom ernmental Acres (Unit 12) Conserva- Radio Special Special tion Communi- Benefit Benefit Trust cations District District REVENUES: Taxes $ - $ - $ - $ - Intergovernmental - 73,159 - - Charges for services 112,100 151,029 - - Fines and forfeitures - - - - Licenses and permits - - - - Assessments - - 9,996 - Interest earnings 44,351 3,390 4,146 370 Miscellaneous - 40,000 - - Total Revenues 156,451 267,578 14,142 370

EXPENDITURES: Current: General government - - - - Public safety - 386,917 - - Physical environment - - - - Transportation - - 3,030 - Economic environment - - - - Culture and recreation - - - - Court related - - - - Debt Service: Principal retirement - - - - Interest - - - - Other debt service - - - - Total Expenditures - 386,917 3,030 - Excess of Revenues Over/(Under) Expenditures 156,451 (119,339) 11,112 370

OTHER FINANCING SOURCES (USES): Transfers in - - - - Transfers (out) - - - - Total Other Financing Sources (Uses) - - - -

Excess of Revenues and Other Financing Sources Over/ (Under) Expenditures and Other Financing Sources (Uses) 156,451 (119,339) 11,112 370 FUND BALANCES - October 1, 2006 798,104 178,386 76,125 5,813 FUND BALANCES - September 30, 2007 $ 954,555 $ 59,047 $ 87,237 $ 6,183

119 Page 3 of 8

Special Revenue Funds

Lake Lake Haven Lorida Placid Estates Special Special Building Florida Special Legal Benefit Benefit Law Code Boating Benefit Aid Fire Fire Enforcement Enforce- Improve- District Program District District Education ment ment

$- $ - $ - $ - $ - $ - $ ------47,140 - - - - 72,878 233,303 ------1,469,801 - 9,921 - 74,551 137,878 - - - 1,491 5,559 2,828 24,642 4,372 23,994 7,631 - - 962 18,519 - 7,798 - 11,412 5,559 78,341 181,039 77,250 1,734,896 54,771

------45,690 39,668 23,725 1,210,151 ------9,941 ------30,085 - 46,138 - - - - -

- - 10,216 21,703 - - - - - 5,758 10,406 ------9,941 46,138 61,664 71,777 23,725 1,210,151 30,085 1,471 (40,579) 16,677 109,262 53,525 524,745 24,686

------

1,471 (40,579) 16,677 109,262 53,525 524,745 24,686 26,326 131,703 24,390 415,065 67,152 763,743 129,835 $ 27,797 $ 91,124 $ 41,067 $ 524,327 $ 120,677 $ 1,288,488 $ 154,521 (continued)

120 HIGHLANDS COUNTY, FLORIDA COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES NONMAJOR GOVERNMENTAL FUNDS (Continued) For the Fiscal Year Ended September 30, 2007

Special Revenue Funds

Special Highway Law Park Community Sun-N-Lake Enforce- Special Development 1 - 20 ment Benefit Block Improvement Trust District Grant Trust REVENUES: Taxes $ - $ - $ - $ - Intergovernmental - - 1,070,577 - Charges for services 184,794 - 78,000 - Fines and forfeitures - - - - Licenses and permits - - - - Assessments - 7,331 - - Interest earnings 7,330 1,429 - 2,641 Miscellaneous - - 19,374 - Total Revenues 192,124 8,760 1,167,951 2,641

EXPENDITURES: Current: General government - - - - Public safety 35,977 - - - Physical environment - - - - Transportation - 6,449 - - Economic environment - - 1,126,452 - Culture and recreation - - - - Court related - - - - Debt Service: Principal retirement - - - - Interest - - - - Other debt service - - - - Total Expenditures 35,977 6,449 1,126,452 - Excess of Revenues Over/(Under) Expenditures 156,147 2,311 41,499 2,641

OTHER FINANCING SOURCES (USES): Transfers in - - - - Transfers (out) - - - - Total Other Financing Sources (Uses) - - - -

Excess of Revenues and Other Financing Sources Over/ (Under) Expenditures and Other Financing Sources (Uses) 156,147 2,311 41,499 2,641 FUND BALANCES - October 1, 2006 79,220 26,897 255,543 52,202 FUND BALANCES - September 30, 2007 $ 235,367 $ 29,208 $ 297,042 $ 54,843

121 Page 4 of 8

Special Revenue Funds

Highlands Park West Estates Sebring Driver Special Development Special Education Tourist Domestic Benefit Transportation Benefit Fire Safety Development Violence District Improvement District Trust Trust Training

$- $ - $ - $ - $ 343,605 $ ------51,628 - 4,521 ------72,031 - 401,105 - - - 9,426 3,943 42,346 899 17,975 616 - - 7,443 - 900 - 81,457 3,943 450,894 52,527 362,480 5,137

------210,209 ------96,634 ------46,677 390,208 ------

------736 ------97,370 - 210,209 46,677 390,208 - (15,913) 3,943 240,685 5,850 (27,728) 5,137

------

(15,913) 3,943 240,685 5,850 (27,728) 5,137 174,905 77,946 603,603 35,322 428,845 9,982 $ 158,992 $ 81,889 $ 844,288 $ 41,172 $ 401,117 $ 15,119 (continued)

122 HIGHLANDS COUNTY, FLORIDA COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES NONMAJOR GOVERNMENTAL FUNDS (Continued) For the Fiscal Year Ended September 30, 2007

Special Revenue Funds

Fire Venus Sebring Inspection Special Benefit Parkway And Safety Fire District Maintenance REVENUES: Taxes $ - $ - $ - Intergovernmental - - - Charges for services 479 - - Fines and forfeitures - - - Licenses and permits 43,210 - - Assessments - 26,258 - Interest earnings - 3,047 - Miscellaneous - 1,244 - Total Revenues 43,689 30,549 -

EXPENDITURES: Current: General government - - - Public safety 48,558 24,239 - Physical environment - - - Transportation - - 22,970 Economic environment - - - Culture and recreation - - - Court related - - - Debt Service: Principal retirement - - - Interest - - - Other debt service - - - Total Expenditures 48,558 24,239 22,970 Excess of Revenues Over/(Under) Expenditures (4,869) 6,310 (22,970)

OTHER FINANCING SOURCES (USES): Transfers in - - 218,417 Transfers (out) - - - Total Other Financing Sources (Uses) - - 218,417

Excess of Revenues and Other Financing Sources Over/ (Under) Expenditures and Other Financing Sources (Uses) (4,869) 6,310 195,447 FUND BALANCES - October 1, 2006 63,719 50,175 (2,115) FUND BALANCES - September 30, 2007 $ 58,850 $ 56,485 $ 193,332

123 Page 5 of 8

Special Revenue Funds

Innovations and Supplemental State Court Courts Hurricane Facilities Funding Crime Court Tech Housing Trust Fund Trust Fund Prevention 28.24(12)(E)1 Court Trust

$- $ - $ - $ - $ - $ - - - - - 200,969 2,179,759 259,054 136,504 53,361 280,366 1,658,926 - - - - - 945,381 ------29,555 11,334 4,239 15,242 16,354 ------288,609 147,838 57,600 295,608 2,821,630 2,179,759

------2,179,759 ------108,392 25,385 - 367,881 2,821,630 -

------108,392 25,385 - 367,881 2,821,630 2,179,759 180,217 122,453 57,600 (72,273) - -

------

180,217 122,453 57,600 (72,273) - - 483,283 171,541 59,532 326,173 - - $ 663,500 $ 293,994 $ 117,132 $ 253,900 $ - $ - (continued)

124 HIGHLANDS COUNTY, FLORIDA COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES NONMAJOR GOVERNMENTAL FUNDS (Continued) For the Fiscal Year Ended September 30, 2007

Special Revenue Funds

Placid Home Lakes Public Records Initiatives Fire Modernization Partnership District Trust REVENUES: Taxes $ - $ - $ - Intergovernmental 843,239 - - Charges for services 12,500 - 88,430 Fines and forfeitures - - - Licenses and permits - - - Assessments - 92,462 - Interest earnings - 7,418 14,564 Miscellaneous - - - Total Revenues 855,739 99,880 102,994

EXPENDITURES: Current: General government - - 74,852 Public safety - 61,498 - Physical environment - - - Transportation - - - Economic environment 855,739 - - Culture and recreation - - - Court related - - - Debt Service: Principal retirement - 26,072 - Interest - 5,085 - Other debt service - - - Total Expenditures 855,739 92,655 74,852 Excess of Revenues Over/(Under) Expenditures - 7,225 28,142

OTHER FINANCING SOURCES (USES): Transfers in - - - Transfers (out) - - - Total Other Financing Sources (Uses) - - -

Excess of Revenues and Other Financing Sources Over/ (Under) Expenditures and Other Financing Sources (Uses) - 7,225 28,142 FUND BALANCES - October 1, 2006 - 114,126 247,672 FUND BALANCES - September 30, 2007 $- $ 121,351 $ 275,814

125 Page 6 of 8

Special Revenue Funds

Court Related Teen Technology Inmate DOR-GIS Impact Fee Court Modernization Community Welfare Program Transportation Operations Trust Donations Fund Grant Avon Park

$- $ - $ - $ - $ - $ - - - - - 45,000 - 55,103 265,303 - 31,933 ------769 - - - - - 76,145 807 11,668 ------20,492 220,392 45,000 - 55,910 276,971 20,492 252,325 90,000 76,914

57,284 296,133 - - 90,000 - - - 14,332 207,046 ------769 ------

------57,284 296,133 14,332 207,046 90,000 769 (1,374) (19,162) 6,160 45,279 - 76,145

------

(1,374) (19,162) 6,160 45,279 - 76,145 16,420 255,301 791 144,789 - - $ 15,046 $ 236,139 $ 6,951 $ 190,068 $ - $ 76,145 (continued)

126 HIGHLANDS COUNTY, FLORIDA COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES NONMAJOR GOVERNMENTAL FUNDS (Continued) For the Fiscal Year Ended September 30, 2007

Special Revenue Funds

Impact Fee Impact Fee Impact Fee Trans- Trans- Parks and portation portation Recreation Lake Placid Sebring Avon Park REVENUES: Taxes $ - $ - $ - Intergovernmental - - - Charges for services - - - Fines and forfeitures - - - Licenses and permits 1,811 4,491 79 Assessments 179,253 444,619 7,848 Interest earnings - - - Miscellaneous - - - Total Revenues 181,064 449,110 7,927

EXPENDITURES: Current: General government - - - Public safety - - - Physical environment - - - Transportation 1,811 4,491 - Economic environment - - - Culture and recreation - - 79 Court related - - - Debt Service: Principal retirement - - - Interest - - - Other debt service - - - Total Expenditures 1,811 4,491 79 Excess of Revenues Over/(Under) Expenditures 179,253 444,619 7,848

OTHER FINANCING SOURCES (USES): Transfers in - - - Transfers (out) - - - Total Other Financing Sources (Uses) - - -

Excess of Revenues and Other Financing Sources Over/ (Under) Expenditures and Other Financing Sources (Uses) 179,253 444,619 7,848 FUND BALANCES - October 1, 2006 - - - FUND BALANCES - September 30, 2007 $ 179,253 $ 444,619 $ 7,848

127 Page 7 of 8

Special Revenue Funds

Impact Fee Impact Fee Parks and Parks and Impact Fee Impact Fee Recreation Recreation Correctional Impact Fee Impact Fee Law Lake Placid Sebring Facilities Fire Libraries Enforcement

$- $ - $ - $ - $ - $ ------142 319 489 580 175 154 14,048 31,619 48,378 57,461 17,291 15,278 ------14,190 31,938 48,867 58,041 17,466 15,432

------489 580 - 154 ------142 319 - - 175 ------

------142 319 489 580 175 154 14,048 31,619 48,378 57,461 17,291 15,278

------

14,048 31,619 48,378 57,461 17,291 15,278 ------$ 14,048 $ 31,619 $ 48,378 $ 57,461 $ 17,291 $ 15,278 (continued)

128 HIGHLANDS COUNTY, FLORIDA COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES NONMAJOR GOVERNMENTAL FUNDS (Concluded) For the Fiscal Year Ended September 30, 2007

Special Revenue Capital Projects Fund Fund

Impact Fee Total All Emergency Nonmajor Medical HCISSRB Governmental Services Construction Funds REVENUES: Taxes $ - $ - $ 343,605 Intergovernmental - 300,000 4,759,843 Charges for services - - 4,199,653 Fines and forfeitures - - 945,381 Licenses and permits 60 - 1,522,080 Assessments 5,942 - 3,134,252 Interest earnings - 478,875 1,059,488 Miscellaneous - - 413,312 Total Revenues 6,002 778,875 16,377,614

EXPENDITURES: Current: General government - - 518,269 Public safety 60 - 3,543,352 Physical environment - - 89,971 Transportation - 3,102,313 4,817,989 Economic environment - - 4,598,835 Culture and recreation - - 113,332 Court related - - 3,369,426 Debt Service: Principal retirement - - 139,900 Interest - - 65,277 Other debt service - 4,435 4,435 Total Expenditures 60 3,106,748 17,260,786 Excess of Revenues Over/(Under) Expenditures 5,942 (2,327,873) (883,172)

OTHER FINANCING SOURCES (USES): Transfers in - - 220,266 Transfers (out) - - (46,465) Total Other Financing Sources (Uses) - - 173,801

Excess of Revenues and Other Financing Sources Over/ (Under) Expenditures and Other Financing Sources (Uses) 5,942 (2,327,873) (709,371) FUND BALANCES - October 1, 2006 - 9,427,565 21,042,582 FUND BALANCES - September 30 2007 $ 5,942 $ 7,099,692 $ 20,333,211

129 HIGHLANDS COUNTY, FLORIDA SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE BUDGET AND ACTUAL LAKE PLACID SUN-N-LAKE IMPROVEMENT DISTRICT FUND For the Fiscal Year Ended September 30, 2007

Variance with Final Budget Budget Positive Original Final Actual (Negative)

REVENUES:

Assessments $ - $ - $ 845 $ 845 Interest earnings - - 3,468 3,468

Total Revenues - - 4,313 4,313

EXPENDITURES:

Current: Transportation: Special benefit districts - 464,986 464,986 -

Total Expenditures - 464,986 464,986 -

Excess of Revenues Over/(Under) Expenditures - (464,986) (460,673) 4,313

OTHER FINANCING USES: Transfers out - - (16,316) (16,316) Total Other Financing Uses - - (16,316) (16,316)

Excess of Revenues and Other Financing Sources Over/(Under) Expenditures - (464,986) (476,989) (12,003)

FUND BALANCES - October 1, 2006 - 464,986 476,989 12,003

FUND BALANCES - September 30, 2007 $- $ - $ - $ -

130 HIGHLANDS COUNTY, FLORIDA SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE BUDGET AND ACTUAL LAKE PLACID SUN-N-LAKE ESTATES FIRE DISTRICT FUND For the Fiscal Year Ended September 30, 2007

Variance with Final Budget Budget Positive Original Final Actual (Negative)

REVENUES:

Assessments $ 186,894 $ 195,894 $ 355,172 $ 159,278 Interest earnings 19,500 19,500 26,406 6,906

Total Revenues 206,394 215,394 381,578 166,184

EXPENDITURES:

Current: Public Safety: Special benefit districts 142,799 173,928 157,923 16,005

Total Public Safety 142,799 173,928 157,923 16,005

Debt Service: Principal retirement 51,000 51,000 51,000 - Interest 28,741 28,741 28,741 -

Total Debt Service 79,741 79,741 79,741 -

Total Expenditures 222,540 253,669 237,664 16,005

Excess of Revenues Over/(Under) Expenditures (16,146) (38,275) 143,914 182,189

FUND BALANCES - October 1, 2006 16,146 38,275 414,709 376,434

FUND BALANCES - September 30, 2007 $- $ - $ 558,623 $ 558,623

131 HIGHLANDS COUNTY, FLORIDA SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE BUDGET AND ACTUAL DESOTO CITY SPECIAL BENEFIT FIRE DISTRICT FUND For the Fiscal Year Ended September 30, 2007

Variance with Final Budget Budget Positive Original Final Actual (Negative)

REVENUES:

Assessments $ 164,839 $ 164,839 $ 170,443 $ 5,604 Interest earnings 3,300 3,300 8,275 4,975 Miscellaneous - - 2,400 2,400

Total Revenues 168,139 168,139 181,118 12,979

EXPENDITURES:

Current: Public Safety: Special benefit districts 162,295 164,471 153,242 11,229

Total Public Safety 162,295 164,471 153,242 11,229

Debt Service: Principal retirement 13,334 13,334 13,333 1 Interest 4,717 4,717 6,107 (1,390)

Total Debt Service 18,051 18,051 19,440 (1,389)

Total Expenditures 180,346 182,522 172,682 9,840

Excess of Revenues Over/(Under) Expenditures (12,207) (14,383) 8,436 22,819

FUND BALANCES - October 1, 2006 12,207 14,383 96,266 81,883

FUND BALANCES - September 30, 2007 $- $ - $ 104,702 $ 104,702

132 HIGHLANDS COUNTY, FLORIDA SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE BUDGET AND ACTUAL SEBRING HIGHLANDS SPECIAL TAX DISTRICT FUND For the Fiscal Year Ended September 30, 2007

Variance with Final Budget Budget Positive Original Final Actual (Negative)

REVENUES:

Interest earnings $ - $ - $ 3,084 $ 3,084

Total Revenues - - 3,084 3,084

EXPENDITURES:

Current: Transportation: Special benefit districts - 225,412 225,405 7

Total Expenditures - 225,412 225,405 7

Excess of Revenues Over/(Under) Expenditures - (225,412) (222,321) 3,091

OTHER FINANCING USES: Transfers out - - (27,163) (27,163) Total Other Financing Uses - - (27,163) (27,163)

Excess of Revenues and Other Financing Sources Over/(Under) Expenditures - (225,412) (249,484) (24,072)

FUND BALANCES - October 1, 2006 - 225,412 249,484 24,072

FUND BALANCES - September 30, 2007 $- $ - $ - $ -

133 HIGHLANDS COUNTY, FLORIDA SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE BUDGET AND ACTUAL ORANGE VILLA SPECIAL BENEFIT DISTRICT FUND For the Fiscal Year Ended September 30, 2007

Variance with Final Budget Budget Positive Original Final Actual (Negative)

REVENUES:

Assessments $ 1,368 $ 1,368 $ 1,391 $ 23 Interest earnings 30 30 239 209

Total Revenues 1,398 1,398 1,630 232

EXPENDITURES:

Current: Transportation: Special benefit districts 5,666 5,666 1,623 4,043

Total Expenditures 5,666 5,666 1,623 4,043

Excess of Revenues Over/(Under) Expenditures (4,268) (4,268) 7 4,275

FUND BALANCES - October 1, 2006 4,268 4,268 4,326 58

FUND BALANCES - September 30, 2007 $- $ - $ 4,333 $ 4,333

134 HIGHLANDS COUNTY, FLORIDA SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE BUDGET AND ACTUAL HICKORY HILLS SPECIAL BENEFIT DISTRICT FUND For the Fiscal Year Ended September 30, 2007

Variance with Final Budget Budget Positive Original Final Actual (Negative)

REVENUES:

Assessments $ 2,328 $ 2,328 $ 2,379 $ 51 Interest earnings 600 600 1,810 1,210

Total Revenues 2,928 2,928 4,189 1,261

EXPENDITURES:

Current: Transportation: Special benefit districts 37,280 37,280 7,570 29,710

Total Expenditures 37,280 37,280 7,570 29,710

Excess of Revenues Over/(Under) Expenditures (34,352) (34,352) (3,381) 30,971

FUND BALANCES - October 1, 2006 34,352 34,352 35,065 713

FUND BALANCES - September 30, 2007 $- $ - $ 31,684 $ 31,684

135 HIGHLANDS COUNTY, FLORIDA SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE BUDGET AND ACTUAL PLACID LAKES SPECIAL BENEFIT DISTRICT FUND For the Fiscal Year Ended September 30, 2007

Variance with Final Budget Budget Positive Original Final Actual (Negative)

REVENUES:

Assessments $ 162,108 $ 162,108 $ 171,566 $ 9,458 Interest earnings 600 600 15,685 15,085 Miscellaneous - - 15,550 15,550

Total Revenues 162,708 162,708 202,801 40,093

EXPENDITURES:

Current: Transportation: Special benefit districts 328,108 331,610 131,479 200,131

Total Expenditures 328,108 331,610 131,479 200,131

Excess of Revenues Over/(Under) Expenditures (165,400) (168,902) 71,322 240,224

FUND BALANCES - October 1, 2006 165,400 168,902 215,364 46,462

FUND BALANCES - September 30, 2007 $- $ - $ 286,686 $ 286,686

136 HIGHLANDS COUNTY, FLORIDA SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE BUDGET AND ACTUAL SEBRING COUNTRY ESTATES SPECIAL BENEFIT DISTRICT FUND For the Fiscal Year Ended September 30, 2007

Variance with Final Budget Budget Positive Original Final Actual (Negative)

REVENUES:

Assessments $ 18,137 $ 18,137 $ 18,920 $ 783 Interest earnings 600 600 3,286 2,686

Total Revenues 18,737 18,737 22,206 3,469

EXPENDITURES:

Current: Transportation: Special benefit districts 77,340 77,340 17,508 59,832

Total Expenditures 77,340 77,340 17,508 59,832

Excess of Revenues Over/(Under) Expenditures (58,603) (58,603) 4,698 63,301

FUND BALANCES - October 1, 2006 58,603 58,603 57,721 (882)

FUND BALANCES - September 30, 2007 $- $ - $ 62,419 $ 62,419

137 HIGHLANDS COUNTY, FLORIDA SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE BUDGET AND ACTUAL ISTOKPOGA MARSH WATERSHED IMPROVEMENT DISTRICT FUND For the Fiscal Year Ended September 30, 2007

Variance with Final Budget Budget Positive Original Final Actual (Negative)

REVENUES:

Assessments $ 73,135 $ 73,135 $ 74,311 $ 1,176 Interest earnings 3,000 3,000 26,040 23,040

Total Revenues 76,135 76,135 100,351 24,216

EXPENDITURES:

Current: Physical Environment: Istokpoga Marsh Improvements 528,897 583,962 89,971 493,991

Total Expenditures 528,897 583,962 89,971 493,991

Excess of Revenues Over/(Under) Expenditures (452,762) (507,827) 10,380 518,207

FUND BALANCES - October 1, 2006 452,762 507,827 507,251 (576)

FUND BALANCES - September 30, 2007 $- $ - $ 517,631 $ 517,631

138 HIGHLANDS COUNTY, FLORIDA SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE BUDGET AND ACTUAL AVON PARK ESTATES SPECIAL BENEFIT DISTRICT FUND For the Fiscal Year Ended September 30, 2007

Variance with Final Budget Budget Positive Original Final Actual (Negative)

REVENUES:

Assessments $ 82,728 $ 82,728 $ 90,576 $ 7,848 Interest earnings 15,000 15,000 28,904 13,904

Total Revenues 97,728 97,728 119,480 21,752

EXPENDITURES:

Current: Transportation: Special benefit districts 582,391 582,391 34,067 548,324

Total Expenditures 582,391 582,391 34,067 548,324

Excess of Revenues Over/(Under) Expenditures (484,663) (484,663) 85,413 570,076

FUND BALANCES - October 1, 2006 484,663 484,663 520,440 35,777

FUND BALANCES - September 30, 2007 $- $ - $ 605,853 $ 605,853

139 HIGHLANDS COUNTY, FLORIDA SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE BUDGET AND ACTUAL NORTH ORANGE BLOSSOM (UNITS 8 & 9) SPECIAL BENEFIT DISTRICT FUND For the Fiscal Year Ended September 30, 2007

Variance with Final Budget Budget Positive Original Final Actual (Negative)

REVENUES:

Assessments $ 3,933 $ 3,933 $ 4,018 $ 85 Interest earnings 400 400 477 77

Total Revenues 4,333 4,333 4,495 162

EXPENDITURES:

Current: Transportation: Special benefit districts 414 414 402 12

Total Transportation 414 414 402 12

Debt Service: Principal retirement 7,472 7,472 2,576 4,896 Interest 225 225 1,182 (957)

Total Debt Service 7,697 7,697 3,758 3,939

Total Expenditures 8,111 8,111 4,160 3,951

Excess of Revenues Over/(Under) Expenditures (3,778) (3,778) 335 4,113

OTHER FINANCING USES: Transfers out - - (1,849) (1,849) Total Other Financing Uses - - (1,849) (1,849)

Excess of Revenues and Other Financing Sources Over/(Under) Expenditures (3,778) (3,778) (1,514) 2,264

FUND BALANCES - October 1, 2006 3,778 3,778 1,514 (2,264)

FUND BALANCES - September 30, 2007 $- $ - $ - $ -

140 HIGHLANDS COUNTY, FLORIDA SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE BUDGET AND ACTUAL HIGHLANDS LAKES SPECIAL TAX DISTRICT FUND For the Fiscal Year Ended September 30, 2007

Variance with Final Budget Budget Positive Original Final Actual (Negative)

REVENUES:

Assessments $ 201,568 $ 201,568 $ 207,486 $ 5,918 Interest earnings 16,380 16,380 22,347 5,967 Miscellaneous - - 1,800 1,800 Total Revenues 217,948 217,948 231,633 13,685

EXPENDITURES:

Current: Public Safety: Special benefit districts 217,948 225,997 179,980 46,017

Total Expenditures 217,948 225,997 179,980 46,017

Excess of Revenues Over/(Under) Expenditures - (8,049) 51,653 59,702

OTHER FINANCING USES: Transfers (out) - - - - Total Other Financing Uses - - - -

Excess of Revenues Over/(Under) Expenditures and Other Financing Uses - (8,049) 51,653 59,702

FUND BALANCES - October 1, 2006 - 8,049 352,938 344,889

FUND BALANCES - September 30, 2007 $- $ - $ 404,591 $ 404,591

141 HIGHLANDS COUNTY, FLORIDA SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE BUDGET AND ACTUAL NORTHWEST HIGHLANDS PARK SPECIAL BENEFIT DISTRICT FUND For the Fiscal Year Ended September 30, 2007

Variance with Final Budget Budget Positive Original Final Actual (Negative)

REVENUES:

Interest earnings $ 800 $ 800 $ 278 $ (522)

Total Revenues 800 800 278 (522)

EXPENDITURES:

Current: Transportation: Special benefit districts 23,200 23,200 22,993 207

Total Expenditures 23,200 23,200 22,993 207

Excess of Revenues Over/(Under) Expenditures (22,400) (22,400) (22,715) (315)

OTHER FINANCING USES: Transfers out - - (1,137) (1,137) Total Other Financing Uses - - (1,137) (1,137)

Excess of Revenues and Other Financing Sources Over/(Under) Expenditures (22,400) (22,400) (23,852) (1,452)

FUND BALANCES - October 1, 2006 22,400 22,400 23,852 1,452

FUND BALANCES - September 30, 2007 $- $ - $ - $ -

142 HIGHLANDS COUNTY, FLORIDA SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE BUDGET AND ACTUAL HIGHLANDS PARK SPECIAL BENEFIT FIRE DISTRICT FUND For the Fiscal Year Ended September 30, 2007

Variance with Final Budget Budget Positive Original Final Actual (Negative)

REVENUES:

Assessments $ 43,644 $ 44,044 $ 49,810 $ 5,766 Interest earnings 14,500 14,500 14,926 426 Miscellaneous - - 652

Total Revenues 58,144 58,544 65,388 6,844

EXPENDITURES:

Current: Public Safety: Special benefit districts 58,144 296,530 242,716 53,814

Total Expenditures 58,144 296,530 242,716 53,814

Excess of Revenues Over/(Under) Expenditures - (237,986) (177,328) 60,658

FUND BALANCES - October 1, 2006 - 237,986 293,598 55,612

FUND BALANCES - September 30, 2007 $- $ - $ 116,270 $ 116,270

143 HIGHLANDS COUNTY, FLORIDA SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE BUDGET AND ACTUAL HIGHLANDS PARK ESTATES IMPROVEMENT TRUST FUND For the Fiscal Year Ended September 30, 2007

Variance with Final Budget Budget Positive Original Final Actual (Negative)

REVENUES:

Interest earnings $ - $ - $ 9,661 $ 9,661

Total Revenues - - 9,661 9,661

EXPENDITURES:

Current: Transportation: Improvement Trust - 186,623 - 186,623

Total Expenditures - 186,623 - 186,623

Excess of Revenues Over/(Under) Expenditures - (186,623) 9,661 196,284

FUND BALANCES - October 1, 2006 - 186,623 190,966 4,343

FUND BALANCES - September 30, 2007 $- $ - $ 200,627 $ 200,627

144 HIGHLANDS COUNTY, FLORIDA SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE BUDGET AND ACTUAL LEISURE LAKES SPECIAL BENEFIT FIRE DISTRICT FUND For the Fiscal Year Ended September 30, 2007

Variance with Final Budget Budget Positive Original Final Actual (Negative)

REVENUES:

Assessments $ 127,759 $ 127,759 $ 131,665 $ 3,906 Interest earnings 17,500 17,500 33,364 15,864 Miscellaneous - 1,897 1,902 5

Total Revenues 145,259 147,156 166,931 19,775

EXPENDITURES:

Current: Public Safety: Special benefit districts 145,259 148,784 33,261 115,523

Total Expenditures 145,259 148,784 33,261 115,523

Excess of Revenues Over/(Under) Expenditures - (1,628) 133,670 135,298

FUND BALANCES - October 1, 2006 - 1,628 570,002 568,374

FUND BALANCES - September 30, 2007 $- $ - $ 703,672 $ 703,672

145 HIGHLANDS COUNTY, FLORIDA SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE BUDGET AND ACTUAL SEBRING HILLS SPECIAL BENEFIT DISTRICT FUND For the Fiscal Year Ended September 30, 2007

Variance with Final Budget Budget Positive Original Final Actual (Negative)

REVENUES:

Assessments $ 12,655 $ 12,655 $ 12,903 $ 248 Interest earnings 300 300 1,175 875

Total Revenues 12,955 12,955 14,078 1,123

EXPENDITURES:

Current: Transportation: Special benefit districts 36,448 36,448 20,977 15,471

Total Expenditures 36,448 36,448 20,977 15,471

Excess of Revenues Over/(Under) Expenditures (23,493) (23,493) (6,899) 16,594

FUND BALANCES - October 1, 2006 23,493 23,493 22,923 (570)

FUND BALANCES - September 30, 2007 $- $ - $ 16,024 $ 16,024

146 HIGHLANDS COUNTY, FLORIDA SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE BUDGET AND ACTUAL RED HILL FARMS IMPROVEMENT DISTRICT FUND For the Fiscal Year Ended September 30, 2007

Variance with Final Budget Budget Positive Original Final Actual (Negative)

REVENUES:

Assessments $ 5,582 $ 5,582 $ 6,139 $ 557 Interest earnings 1,500 1,500 3,068 1,568

Total Revenues 7,082 7,082 9,207 2,125

EXPENDITURES:

Current: Transportation: Special benefit districts 61,219 61,219 570 60,649

Total Expenditures 61,219 61,219 570 60,649

Excess of Revenues Over/(Under) Expenditures (54,137) (54,137) 8,637 62,774

FUND BALANCES - October 1, 2006 54,137 54,137 56,644 2,507

FUND BALANCES - September 30, 2007 $- $ - $ 65,281 $ 65,281

147 HIGHLANDS COUNTY, FLORIDA SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE BUDGET AND ACTUAL E911 EMERGENCY OPERATIONS FUND - LANDLINES For the Fiscal Year Ended September 30, 2007

Variance with Final Budget Budget Positive Original Final Actual (Negative)

REVENUES:

Charges for services $ 328,000 $ 328,000 $ 246,050 $ (81,950) Interest earnings 1,000 1,000 12,719 11,719 Miscellaneous - - 21 21

Total Revenues 329,000 329,000 258,790 (70,210)

EXPENDITURES:

Current: Public Safety: E911 operations 339,356 339,356 317,096 22,260

Total Expenditures 339,356 339,356 317,096 22,260

Excess of Revenues Over/(Under) Expenditures (10,356) (10,356) (58,306) (47,950)

FUND BALANCES - October 1, 2006 10,356 10,356 210,657 200,301

FUND BALANCES - September 30, 2007 $- $ - $ 152,351 $ 152,351

148 HIGHLANDS COUNTY, FLORIDA SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE BUDGET AND ACTUAL E911 EMERGENCY OPERATIONS FUND - WIRELESS For the Fiscal Year Ended September 30, 2007

Variance with Final Budget Budget Positive Original Final Actual (Negative)

REVENUES:

Charges for services $ 172,000 $ 172,000 $ 223,391 $ 51,391 Interest earnings 500 500 8,153 7,653

Total Revenues 172,500 172,500 231,544 59,044

EXPENDITURES:

Current: Public Safety: E911 operations 195,148 195,148 149,841 45,307

Total Expenditures 195,148 195,148 149,841 45,307

Excess of Revenues Over/(Under) Expenditures (22,648) (22,648) 81,703 104,351

FUND BALANCES - October 1, 2006 22,648 22,648 - (22,648)

FUND BALANCES - September 30, 2007 $- $ - $ 81,703 $ 81,703

149 HIGHLANDS COUNTY, FLORIDA SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE BUDGET AND ACTUAL ORANGE BLOSSOM ESTATES SPECIAL BENEFIT DISTRICT FUND For the Fiscal Year Ended September 30, 2007

Variance with Final Budget Budget Positive Original Final Actual (Negative)

REVENUES:

Interest earnings $ 25,000 $ 25,000 $ 24,060 $ (940)

Total Revenues 25,000 25,000 24,060 (940)

EXPENDITURES:

Current: Transportation: Special benefit districts 868,222 872,522 642,001 230,521

Total Expenditures 868,222 872,522 642,001 230,521

Excess of Revenues Over/(Under) Expenditures (843,222) (847,522) (617,941) 229,581

OTHER FINANCING SOURCES: Transfers in - - 1,849 1,849 Total Other Financing Sources - - 1,849 1,849

Excess of Revenues Over/(Under) Expenditures and Other Financing Sources (843,222) (847,522) (616,092) 231,430

FUND BALANCES - October 1, 2006 843,222 847,522 859,516 11,994

FUND BALANCES - September 30, 2007 $- $ - $ 243,424 $ 243,424

150 HIGHLANDS COUNTY, FLORIDA SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE BUDGET AND ACTUAL SUN-N-LAKE LAKE PLACID RECREATION DISTRICT FUND For the Fiscal Year Ended September 30, 2007

Variance with Final Budget Budget Positive Original Final Actual (Negative)

REVENUES:

Assessments $ 60,233 $ 60,233 $ 107,213 $ 46,980 Interest earnings 3,600 3,600 9,581 5,981 Miscellaneous - 6,813 8,863 2,050

Total Revenues 63,833 70,646 125,657 55,011

EXPENDITURES:

Current: Culture and Recreation: Special benefit districts 117,294 127,795 82,532 45,263

Total Culture and Recreation 117,294 127,795 82,532 45,263

Debt Service: Principal retirement 15,000 15,000 15,000 - Interest 7,425 7,425 7,262 163

Total Debt Service 22,425 22,425 22,262 163

Total Expenditures 139,719 150,220 104,794 45,426

Excess of Revenues Over/(Under) Expenditures (75,886) (79,574) 20,863 100,437

FUND BALANCES - October 1, 2006 75,886 79,574 162,278 82,704

FUND BALANCES - September 30, 2007 $- $ - $ 183,141 $ 183,141

151 HIGHLANDS COUNTY, FLORIDA SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE BUDGET AND ACTUAL CONSERVATION TRUST FUND For the Fiscal Year Ended September 30, 2007

Variance with Final Budget Budget Positive Original Final Actual (Negative)

REVENUES:

Charges for services $ 85,000 $ 85,000 $ 112,100 $ 27,100 Interest earnings 31,000 31,000 44,351 13,351

Total Revenues 116,000 116,000 156,451 40,451

EXPENDITURES:

Current: Physical Environment: Conservation and resource management 116,000 116,000 - 116,000

Total Expenditures 116,000 116,000 - 116,000

Excess of Revenues Over/(Under) Expenditures - - 156,451 156,451

FUND BALANCES - October 1, 2006 - - 798,104 798,104

FUND BALANCES - September 30, 2007 $- $ - $ 954,555 $ 954,555

152 HIGHLANDS COUNTY, FLORIDA SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE BUDGET AND ACTUAL INTERGOVERNMENTAL RADIO COMMUNICATIONS FUND For the Fiscal Year Ended September 30, 2007

Variance with Final Budget Budget Positive Original Final Actual (Negative)

REVENUES:

Intergovernmental $ - $ 248,700 $ 73,159 $ (175,541) Charges for services 140,000 140,000 151,029 11,029 Interest earnings 4,000 4,000 3,390 (610) Miscellaneous - 40,000 40,000 -

Total Revenues 144,000 432,700 267,578 (165,122)

EXPENDITURES:

Current: Public Safety: Other public safety 262,711 600,544 386,917 213,627

Total Expenditures 262,711 600,544 386,917 213,627

Excess of Revenues Over/(Under) Expenditures (118,711) (167,844) (119,339) 48,505

FUND BALANCES - October 1, 2006 118,711 167,844 178,386 10,542

FUND BALANCES - September 30, 2007 $- $ - $ 59,047 $ 59,047

153 HIGHLANDS COUNTY, FLORIDA SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE BUDGET AND ACTUAL SEBRING ACRES SPECIAL BENEFIT DISTRICT FUND For the Fiscal Year Ended September 30, 2007

Variance with Final Budget Budget Positive Original Final Actual (Negative)

REVENUES:

Assessments $ 9,453 $ 9,453 $ 9,996 $ 543 Interest earnings 2,000 2,000 4,146 2,146

Total Revenues 11,453 11,453 14,142 2,689

EXPENDITURES:

Current: Transportation: Special benefit districts 83,502 83,502 3,030 80,472

Total Expenditures 83,502 83,502 3,030 80,472

Excess of Revenues Over/(Under) Expenditures (72,049) (72,049) 11,112 83,161

FUND BALANCES - October 1, 2006 72,049 72,049 76,125 4,076

FUND BALANCES - September 30, 2007 $- $ - $ 87,237 $ 87,237

154 HIGHLANDS COUNTY, FLORIDA SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE BUDGET AND ACTUAL ORANGE BLOSSOM (UNIT 12) SPECIAL BENEFIT DISTRICT FUND For the Fiscal Year Ended September 30, 2007

Variance with Final Budget Budget Positive Original Final Actual (Negative)

REVENUES:

Assessments $ 9,377 $ 9,377 $ - $ (9,377) Interest earnings 100 100 370 270

Total Revenues 9,477 9,477 370 (9,107)

EXPENDITURES:

Current: Transportation: Special benefit districts 987 987 - 987

Total Transportation 987 987 - 987

Debt Service: Principal retirement 8,830 8,830 - 8,830 Interest 75 75 - 75

Total Debt Service 8,905 8,905 - 8,905

Total Expenditures 9,892 9,892 - 9,892

Excess of Revenues Over/(Under) Expenditures (415) (415) 370 785

FUND BALANCES - October 1, 2006 415 415 5,813 5,398

FUND BALANCES - September 30, 2007 $- $ - $ 6,183 $ 6,183

155 HIGHLANDS COUNTY, FLORIDA SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE BUDGET AND ACTUAL LAKE HAVEN ESTATES SPECIAL BENEFIT DISTRICT FUND For the Fiscal Year Ended September 30, 2007

Variance with Final Budget Budget Positive Original Final Actual (Negative)

REVENUES:

Assessments $ 9,576 $ 9,576 $ 9,921 $ 345 Interest earnings 900 900 1,491 591

Total Revenues 10,476 10,476 11,412 936

EXPENDITURES:

Current: Transportation: Special benefit districts 36,508 36,508 9,941 26,567

Total Expenditures 36,508 36,508 9,941 26,567

Excess of Revenues Over/(Under) Expenditures (26,032) (26,032) 1,471 27,503

FUND BALANCES - October 1, 2006 26,032 26,032 26,326 294

FUND BALANCES - September 30, 2007 $- $ - $ 27,797 $ 27,797

156 HIGHLANDS COUNTY, FLORIDA SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE BUDGET AND ACTUAL LEGAL AID PROGRAM FUND For the Fiscal Year Ended September 30, 2007

Variance with Final Budget Budget Positive Original Final Actual (Negative)

REVENUES:

Interest earnings $ 4,000 $ 4,000 $ 5,559 $ 1,559

Total Revenues 4,000 4,000 5,559 1,559

EXPENDITURES:

Current: Court Related: Legal Support 134,275 134,275 46,138 88,137

Total Expenditures 134,275 134,275 46,138 88,137

Excess of Revenues Over/(Under) Expenditures (130,275) (130,275) (40,579) 89,696

FUND BALANCES - October 1, 2006 130,275 130,275 131,703 1,428

FUND BALANCES - September 30, 2007 $- $ - $ 91,124 $ 91,124

157 HIGHLANDS COUNTY, FLORIDA SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE BUDGET AND ACTUAL LORIDA SPECIAL BENEFIT FIRE DISTRICT FUND For the Fiscal Year Ended September 30, 2007

Variance with Final Budget Budget Positive Original Final Actual (Negative)

REVENUES:

Assessments $ 72,219 $ 72,219 $ 74,551 $ 2,332 Interest earnings 1,000 1,000 2,828 1,828 Miscellaneous - - 962 962

Total Revenues 73,219 73,219 78,341 5,122

EXPENDITURES:

Current: Public Safety: Special benefit districts 53,225 54,003 45,690 8,313

Total Public Safety 53,225 54,003 45,690 8,313

Debt Service: Principal retirement 15,217 15,217 10,216 5,001 Interest 7,758 7,758 5,758 2,000

Total Debt Service 22,975 22,975 15,974 7,001

Total Expenditures 76,200 76,978 61,664 15,314

Excess of Revenues Over/(Under) Expenditures (2,981) (3,759) 16,677 20,436

FUND BALANCES - October 1, 2006 2,981 3,759 24,390 20,631

FUND BALANCES - September 30, 2007 $- $ - $ 41,067 $ 41,067

158 HIGHLANDS COUNTY, FLORIDA SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE BUDGET AND ACTUAL LAKE PLACID SPECIAL BENEFIT FIRE DISTRICT FUND For the Fiscal Year Ended September 30, 2007

Variance with Final Budget Budget Positive Original Final Actual (Negative)

REVENUES:

Assessments $ 131,552 $ 131,552 $ 137,878 $ 6,326 Interest earnings 15,766 15,766 24,642 8,876 Miscellaneous - 958 18,519 17,561

Total Revenues 147,318 148,276 181,039 32,763

EXPENDITURES:

Current: Public Safety: Special benefit districts 127,188 129,428 39,668 89,760

Total Public Safety 127,188 129,428 39,668 89,760

EXPENDITURES: Debt Service: Principal retirement 21,703 21,703 21,703 - Interest 10,406 10,406 10,406 -

Total Debt Service 32,109 32,109 32,109 -

Total Expenditures 159,297 161,537 71,777 89,760

Excess of Revenues Over/(Under) Expenditures (11,979) (13,261) 109,262 122,523

FUND BALANCES - October 1, 2006 11,979 13,261 415,065 401,804

FUND BALANCES - September 30, 2007 $- $ - $ 524,327 $ 524,327

159 HIGHLANDS COUNTY, FLORIDA SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE BUDGET AND ACTUAL LAW ENFORCEMENT EDUCATION FUND For the Fiscal Year Ended September 30, 2007

Variance with Final Budget Budget Positive Original Final Actual (Negative)

REVENUES:

Charges for services $ 67,000 $ 67,000 $ 72,878 $ 5,878 Interest earnings 1,000 1,000 4,372 3,372

Total Revenues 68,000 68,000 77,250 9,250

EXPENDITURES:

Current: Public Safety: Sheriff 128,000 128,000 23,725 104,275

Total Expenditures 128,000 128,000 23,725 104,275

Excess of Revenues Over/(Under) Expenditures (60,000) (60,000) 53,525 113,525

FUND BALANCES - October 1, 2006 60,000 60,000 67,152 7,152

FUND BALANCES - September 30, 2007 $- $ - $ 120,677 $ 120,677

160 HIGHLANDS COUNTY, FLORIDA SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE BUDGET AND ACTUAL BUILDING CODE ENFORCEMENT For the Fiscal Year Ended September 30, 2007

Variance with Final Budget Budget Positive Original Final Actual (Negative)

REVENUES:

Charges for Services $ 209,000 $ 209,000 $ 233,303 $ 24,303 License & Permits 1,190,000 1,190,000 1,469,801 279,801 Interest 10,836 10,836 23,994 13,158 Miscellaneous - - 7,798 7,798

Total Revenues 1,409,836 1,409,836 1,734,896 325,060

EXPENDITURES:

Current: Public Safety: Protective Inspections 1,409,836 1,533,773 1,210,151 323,622

Total Expenditures 1,409,836 1,533,773 1,210,151 323,622

Excess of Revenues Over/(Under) Expenditures - (123,937) 524,745 648,682

FUND BALANCES - October 1, 2006 - 123,937 763,743 639,806

FUND BALANCES - September 30, 2007 $- $ - $ 1,288,488 $ 1,288,488

161 HIGHLANDS COUNTY, FLORIDA SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE BUDGET AND ACTUAL FLORIDA BOATING IMPROVEMENT FUND For the Fiscal Year Ended September 30, 2007

Variance with Final Budget Budget Positive Original Final Actual (Negative)

REVENUES:

Intergovernmental $ 32,500 $ 32,500 $ 47,140 $ 14,640 Interest earnings 4,000 4,000 7,631 3,631

Total Revenues 36,500 36,500 54,771 18,271

EXPENDITURES:

Current: Culture and Recreation: Parks department 70,000 70,000 30,085 39,915

Total Expenditures 70,000 70,000 30,085 39,915

Excess of Revenues Over/(Under) Expenditures (33,500) (33,500) 24,686 58,186

FUND BALANCES - October 1, 2006 33,500 33,500 129,835 96,335

FUND BALANCES - September 30, 2007 $- $ - $ 154,521 $ 154,521

162 HIGHLANDS COUNTY, FLORIDA SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE BUDGET AND ACTUAL SPECIAL LAW ENFORCEMENT TRUST FUND For the Fiscal Year Ended September 30, 2007

Variance with Final Budget Budget Positive Original Final Actual (Negative)

REVENUES:

Charges for services $ - $ 184,794 $ 184,794 $ - Interest earnings 1,930 7,330 7,330 -

Total Revenues 1,930 192,124 192,124 -

EXPENDITURES:

Current: Public Safety: County jail 80,340 271,046 35,977 235,069

Total Expenditures 80,340 271,046 35,977 235,069

Excess of Revenues Over/(Under) Expenditures (78,410) (78,922) 156,147 235,069

FUND BALANCES - October 1, 2006 78,410 78,922 79,220 298

FUND BALANCES - September 30, 2007 $- $ - $ 235,367 $ 235,367

163 HIGHLANDS COUNTY, FLORIDA SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE BUDGET AND ACTUAL HIGHWAY PARK SPECIAL BENEFIT DISTRICT FUND For the Fiscal Year Ended September 30, 2007

Variance with Final Budget Budget Positive Original Final Actual (Negative)

REVENUES:

Assessments $ 5,786 $ 5,786 $ 7,331 $ 1,545 Interest earnings 700 700 1,429 729

Total Revenues 6,486 6,486 8,760 2,274

EXPENDITURES:

Current: Transportation: Special benefit districts 30,653 30,653 6,449 24,204

Total Expenditures 30,653 30,653 6,449 24,204

Excess of Revenues Over/(Under) Expenditures (24,167) (24,167) 2,311 26,478

FUND BALANCES - October 1, 2006 24,167 24,167 26,897 2,730

FUND BALANCES - September 30, 2007 $- $ - $ 29,208 $ 29,208

164 HIGHLANDS COUNTY, FLORIDA SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE BUDGET AND ACTUAL COMMUNITY DEVELOPMENT BLOCK GRANT FUND For the Fiscal Year Ended September 30, 2007

Variance with Final Budget Budget Positive Original Final Actual (Negative)

REVENUES:

Intergovernmental $ 1,500,000 $ 2,014,221 $ 1,070,577 $ (943,644) Charge for services - 390,262 78,000 (312,262) Miscellaneous - - 19,374 19,374

Total Revenues 1,500,000 2,404,483 1,167,951 (1,236,532)

EXPENDITURES:

Current: Economic Environment: Community development block grant 1,500,000 2,575,206 1,126,452 1,448,754

Total Expenditures 1,500,000 2,575,206 1,126,452 1,448,754

Excess of Revenues Over/(Under) Expenditures - (170,723) 41,499 212,222

FUND BALANCES - October 1, 2006 - 170,723 255,543 84,820

FUND BALANCES - September 30, 2007 $- $ - $ 297,042 $ 297,042

165 HIGHLANDS COUNTY, FLORIDA SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE BUDGET AND ACTUAL HIGHLANDS PARK ESTATES SPECIAL BENEFIT DISTRICT FUND For the Fiscal Year Ended September 30, 2007

Variance with Final Budget Budget Positive Original Final Actual (Negative)

REVENUES:

Assessments $ 57,852 $ 57,852 $ 72,031 $ 14,179 Interest earnings 4,000 4,000 9,426 5,426

Total Revenues 61,852 61,852 81,457 19,605

EXPENDITURES:

Current: Transportation: Improvement Trust 174,036 212,581 96,634 115,947

Total Transportation 174,036 212,581 96,634 115,947

EXPENDITURES: Debt Service: Principal retirement 9,346 9,346 - 9,346 Interest 737 737 736 1

Total Debt Service 10,083 10,083 736 9,347

Total Expenditures 184,119 222,664 97,370 125,294

Excess of Revenues Over/(Under) Expenditures (122,267) (160,812) (15,913) 144,899

FUND BALANCES - October 1, 2006 122,267 160,812 174,905 14,093

FUND BALANCES - September 30, 2007 $- $ - $ 158,992 $ 158,992

166 HIGHLANDS COUNTY, FLORIDA SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE BUDGET AND ACTUAL DEVELOPMENT TRANSPORTATION IMPROVEMENT FUND For the Fiscal Year Ended September 30, 2007

Variance with Final Budget Budget Positive Original Final Actual (Negative)

REVENUES:

Interest earnings $ - $ - $ 3,943 $ 3,943

Total Revenues - - 3,943 3,943

EXPENDITURES:

Current: Transportation: Improvement Trust - - - -

Total Expenditures - - - -

Excess of Revenues Over/(Under) Expenditures - - 3,943 3,943

FUND BALANCES - October 1, 2006 - - 77,946 77,946

FUND BALANCES - September 30, 2007 $- $ - $ 81,889 $ 81,889

167 HIGHLANDS COUNTY, FLORIDA SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE BUDGET AND ACTUAL WEST SEBRING SPECIAL BENEFIT FIRE DISTRICT FUND For the Fiscal Year Ended September 30, 2007

Variance with Final Budget Budget Positive Original Final Actual (Negative)

REVENUES:

Assessments $ 388,298 $ 388,298 $ 401,105 $ 12,807 Interest earnings 25,781 25,781 42,346 16,565 Miscellaneous - 7,234 7,443 209

Total Revenues 414,079 421,313 450,894 29,581

EXPENDITURES:

Current: Public Safety: Fire control 447,740 455,446 210,209 245,237

Total Expenditures 447,740 455,446 210,209 245,237

Excess of Revenues Over/(Under) Expenditures (33,661) (34,133) 240,685 274,818

FUND BALANCES - October 1, 2006 33,661 34,133 603,603 569,470

FUND BALANCES - September 30, 2007 $- $ - $ 844,288 $ 844,288

168 HIGHLANDS COUNTY, FLORIDA SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE BUDGET AND ACTUAL DRIVER EDUCATION SAFETY TRUST FUND For the Fiscal Year Ended September 30, 2007

Variance with Final Budget Budget Positive Original Final Actual (Negative)

REVENUES:

Charges for services $ 34,500 $ 34,500 $ 51,628 $ 17,128 Interest earnings 500 500 899 399

Total Revenues 35,000 35,000 52,527 17,527

EXPENDITURES:

Current: Economic Environment: Other human services 35,000 70,313 46,677 23,636

Total Expenditures 35,000 70,313 46,677 23,636

Excess of Revenues Over/(Under) Expenditures - (35,313) 5,850 41,163

FUND BALANCES - October 1, 2006 - 35,313 35,322 9

FUND BALANCES - September 30, 2007 $- $ - $ 41,172 $ 41,172

169 HIGHLANDS COUNTY, FLORIDA SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE BUDGET AND ACTUAL TOURIST DEVELOPMENT TRUST FUND For the Fiscal Year Ended September 30, 2007

Variance with Final Budget Budget Positive Original Final Actual (Negative)

REVENUES:

Tourist development tax $ 311,000 $ 311,000 $ 343,605 $ 32,605 Interest earnings 9,470 9,470 17,975 8,505 Miscellaneous - - 900 900

Total Revenues 320,470 320,470 362,480 42,010

EXPENDITURES:

Current: Economic Environment: Industry development 457,958 564,683 390,208 174,475

Total Expenditures 457,958 564,683 390,208 174,475

Excess of Revenues Over/(Under) Expenditures (137,488) (244,213) (27,728) 216,485

FUND BALANCES - October 1, 2006 137,488 244,213 428,845 184,632

FUND BALANCES - September 30, 2007 $- $ - $ 401,117 $ 401,117

170 HIGHLANDS COUNTY, FLORIDA SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE BUDGET AND ACTUAL DOMESTIC VIOLENCE TRAINING FUND For the Fiscal Year Ended September 30, 2007

Variance with Final Budget Budget Positive Original Final Actual (Negative)

REVENUES:

Charges for services $ 2,600 $ 2,600 $ 4,521 $ 1,921 Interest 150 150 616 466

Total Revenues 2,750 2,750 5,137 2,387

EXPENDITURES:

Current: Public Safety: Sheriff 10,244 10,244 - 10,244

Total Expenditures 10,244 10,244 - 10,244

Excess of Revenues Over/(Under) Expenditures (7,494) (7,494) 5,137 12,631

FUND BALANCES - October 1, 2006 7,494 7,494 9,982 2,488

FUND BALANCES - September 30, 2007 $- $ - $ 15,119 $ 15,119

171 HIGHLANDS COUNTY, FLORIDA SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE BUDGET AND ACTUAL FIRE INSPECTION AND SAFETY FUND For the Fiscal Year Ended September 30, 2007

Variance with Final Budget Budget Positive Original Final Actual (Negative)

REVENUES:

Charges for services $ 100 $ 100 $ 479 $ 379 Licenses and permits 47,000 47,000 43,210 (3,790)

Total Revenues 47,100 47,100 43,689 (3,411)

EXPENDITURES:

Current: Public Safety: Fire control 76,473 76,781 48,558 28,223

Total Expenditures 76,473 76,781 48,558 28,223

Excess of Revenues Over/(Under) Expenditures (29,373) (29,681) (4,869) 24,812

FUND BALANCES - October 1, 2006 29,373 29,681 63,719 34,038

FUND BALANCES - September 30, 2007 $- $ - $ 58,850 $ 58,850

172 HIGHLANDS COUNTY, FLORIDA SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE BUDGET AND ACTUAL VENUS SPECIAL BENEFIT FIRE DISTRICT FUND For the Fiscal Year Ended September 30, 2007

Variance with Final Budget Budget Positive Original Final Actual (Negative)

REVENUES:

Assessments $ 25,129 $ 25,129 $ 26,258 $ 1,129 Interest earnings 2,000 2,000 3,047 1,047 Miscellaneous - - 1,244 1,244

Total Revenues 27,129 27,129 30,549 3,420

EXPENDITURES:

Current: Public Safety: Special benefit districts 35,770 35,916 24,239 11,677

Total Expenditures 35,770 35,916 24,239 11,677

Excess of Revenues Over/(Under) Expenditures (8,641) (8,787) 6,310 15,097

FUND BALANCES - October 1, 2006 8,641 8,787 50,175 41,388

FUND BALANCES - September 30, 2007 $- $ - $ 56,485 $ 56,485

173 HIGHLANDS COUNTY, FLORIDA SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE BUDGET AND ACTUAL SEBRING PARKWAY MAINTENANCE FUND For the Fiscal Year Ended September 30, 2007

Variance with Final Budget Budget Positive Original Final Actual (Negative)

REVENUES:

Intergovernmental $ 126,452 $ 126,452 $- $ (126,452)

Total Revenues 126,452 126,452 - (126,452)

EXPENDITURES:

Current: Transportation: Special benefit districts 252,905 271,315 22,970 248,345

Total Expenditures 252,905 271,315 22,970 248,345

Excess of Revenues Over/(Under) Expenditures (126,453) (144,863) (22,970) 121,893

OTHER FINANCING SOURCES: Transfers in 126,453 137,374 218,417 81,043

Total Other Financing Sources 126,453 137,374 218,417 81,043

Excess of Revenues and Other Financing Sources Over (Under) Expenditures and Other Financing (Uses) - (7,489) 195,447 202,936

FUND BALANCES - October 1, 2006 - 7,489 (2,115) (9,604)

FUND BALANCES - September 30, 2007 $- $ - $ 193,332 $ 193,332

174 HIGHLANDS COUNTY, FLORIDA SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE BUDGET AND ACTUAL STATE COURT FACILITIES TRUST FUND For the Fiscal Year Ended September 30, 2007

Variance with Final Budget Budget Positive Original Final Actual (Negative)

REVENUES:

Charges for services $ 131,000 $ 161,953 $ 259,054 $ 97,101 Interest earnings - 4,097 29,555 25,458

Total Revenues 131,000 166,050 288,609 122,559

EXPENDITURES:

Current: Court Related: Operating expenses 131,000 166,050 108,392 57,658

Total Expenditures 131,000 166,050 108,392 57,658

Excess of Revenues Over/(Under) Expenditures - - 180,217 180,217

FUND BALANCES - October 1, 2006 - - 483,283 483,283

FUND BALANCES - September 30, 2007 $- $ - $ 663,500 $ 663,500

175 HIGHLANDS COUNTY, FLORIDA SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE BUDGET AND ACTUAL INNOVATIONS AND SUPPLEMENTAL COURTS FUNDING TRUST FUND For the Fiscal Year Ended September 30, 2007

Variance with Final Budget Budget Positive Original Final Actual (Negative)

REVENUES:

Charges for services $ 56,800 $ 72,283 $ 136,504 $ 64,221 Interest earnings 150 303 11,334 11,031

Total Revenues 56,950 72,586 147,838 75,252

EXPENDITURES:

Current: Court Related: Operating expenses 84,750 111,835 25,385 86,450

Total Expenditures 84,750 111,835 25,385 86,450

Excess of Revenues Over/(Under) Expenditures (27,800) (39,249) 122,453 161,702

FUND BALANCES - October 1, 2006 27,800 39,249 171,541 132,292

FUND BALANCES - September 30, 2007 $- $ - $ 293,994 $ 293,994

176 HIGHLANDS COUNTY, FLORIDA SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE BUDGET AND ACTUAL CRIME PREVENTION FUND For the Fiscal Year Ended September 30, 2007

Variance with Final Budget Budget Positive Original Final Actual (Negative)

REVENUES:

Charges for services $ 37,000 $ 37,000 $ 53,361 $ 16,361 Interest earnings 600 600 4,239 3,639

Total Revenues 37,600 37,600 57,600 20,000

EXPENDITURES:

Current: Public Safety: Operating expenses 95,600 95,600 - 95,600

Total Expenditures 95,600 95,600 - 95,600

Excess of Revenues Over/(Under) Expenditures (58,000) (58,000) 57,600 115,600

FUND BALANCES - October 1, 2006 58,000 58,000 59,532 1,532

FUND BALANCES - September 30, 2007 $- $ - $ 117,132 $ 117,132

177 HIGHLANDS COUNTY, FLORIDA SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE BUDGET AND ACTUAL COURT TECH 28.24(12)(E)1 FUND For the Fiscal Year Ended September 30, 2007

Variance with Final Budget Budget Positive Original Final Actual (Negative)

REVENUES:

Charges for services $ 310,000 $ 310,000 $ 280,366 $ (29,634) Interest earnings 6,000 6,000 15,242 9,242

Total Revenues 316,000 316,000 295,608 (20,392)

EXPENDITURES:

Current: Court Related: Operating expenses 374,118 610,489 367,881 242,608

Total Expenditures 374,118 610,489 367,881 242,608

Excess of Revenues Over/(Under) Expenditures (58,118) (294,489) (72,273) 222,216

FUND BALANCES - October 1, 2006 58,118 294,489 326,173 31,684

FUND BALANCES - September 30, 2007 $- $ - $ 253,900 $ 253,900

178 HIGHLANDS COUNTY, FLORIDA SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE BUDGET AND ACTUAL COURT FUND For the Fiscal Year Ended September 30, 2007

Variance with Final Budget Budget Positive Original Final Actual (Negative)

REVENUES:

Intergovernmental $ 138,000 $ 200,969 $ 200,969 $ - Charges for services 1,651,709 1,658,926 1,658,926 - Fines and forfeitures 913,800 945,381 945,381 - Interest - 16,354 16,354 -

Total Revenues 2,703,509 2,821,630 2,821,630 -

EXPENDITURES:

Current: Court Related: Operating expenses 2,703,509 2,821,630 2,821,630 -

Total Expenditures 2,703,509 2,821,630 2,821,630 -

Excess of Revenues Over/(Under) Expenditures - - - -

FUND BALANCES - October 1, 2006 - - - -

FUND BALANCES - September 30, 2007 $- $ - $ - $ -

179 HIGHLANDS COUNTY, FLORIDA STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE BUDGET AND ACTUAL HURRICANE HOUSING RECOVERY PROGRAM FUND For the Fiscal Year Ended September 30, 2007

Variance with Final Budget Budget Positive Original Final Actual (Negative)

REVENUES:

Intergovernmental $ 2,654,655 $ 2,108,830 $ 2,179,759 $ 70,929

Total Revenues 2,654,655 2,108,830 2,179,759 70,929

EXPENDITURES:

Current: Economic Environment: Operating expenses 2,654,655 2,787,162 2,179,759 607,403

Total Expenditures 2,654,655 2,787,162 2,179,759 607,403

Excess of Revenues Over/(Under) Expenditures - (678,332) - 678,332

FUND BALANCES - October 1, 2006 - 678,332 - (678,332)

FUND BALANCES - September 30, 2007 $- $ - $ - $ -

180 HIGHLANDS COUNTY, FLORIDA SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE BUDGET AND ACTUAL HOME INITIATIVES PARTNERSHIP FUND For the Fiscal Year Ended September 30, 2007

Variance with Final Budget Budget Positive Original Final Actual (Negative)

REVENUES:

Intergovernmental $ 1,626,238 $ 1,369,245 $ 843,239 $ (526,006) Charges for services - - 12,500 12,500

Total Revenues 1,626,238 1,369,245 855,739 (513,506)

EXPENDITURES:

Current: Economic Environment: Operating expenses 1,626,238 1,639,656 855,739 783,917

Total Expenditures 1,626,238 1,639,656 855,739 783,917

Excess of Revenues Over/(Under) Expenditures - (270,411) - 270,411

FUND BALANCES - October 1, 2006 - 270,411 - (270,411)

FUND BALANCES - September 30, 2007 $- $ - $ - $ -

181 HIGHLANDS COUNTY, FLORIDA SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE BUDGET AND ACTUAL PLACID LAKES FIRE DISTRICT FUND For the Fiscal Year Ended September 30, 2007

Variance with Final Budget Budget Positive Original Final Actual (Negative)

REVENUES:

Assessments $ 89,148 $ 89,148 $ 92,462 $ 3,314 Interest earnings 10,000 10,000 7,418 (2,582)

Total Revenues 99,148 99,148 99,880 732

EXPENDITURES:

Current: Public Safety: Special benefit districts 67,991 98,345 61,498 36,847

Total Public Safety 67,991 98,345 61,498 36,847

Debt Service: Principal retirement 20,851 20,851 26,072 (5,221) Interest 10,306 10,306 5,085 5,221

Total Debt Service 31,157 31,157 31,157 -

Total Expenditures 99,148 129,502 92,655 36,847

Excess of Revenues Over/(Under) Expenditures - (30,354) 7,225 37,579

FUND BALANCES - October 1, 2006 - 30,354 114,126 83,772

FUND BALANCES - September 30, 2007 $- $ - $ 121,351 $ 121,351

182 HIGHLANDS COUNTY, FLORIDA SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE BUDGET AND ACTUAL IMPACT FEE - TRANSPORTATION - AVON PARK For the Fiscal Year Ended September 30, 2007

Variance with Final Budget Budget Positive Original Final Actual (Negative)

REVENUES:

Licenses & Permits $ - $ - $ 769 $ 769 Assessments 495,450 495,450 76,145 (419,305)

Total Revenues 495,450 495,450 76,914 (418,536)

EXPENDITURES:

Current: Transportation: Impact Fees 495,450 495,450 769 494,681

Expenditures 495,450 495,450 769 494,681

Excess of Revenues Over/(Under) Expenditures - - 76,145 76,145

FUND BALANCES - October 1, 2006 - - - -

FUND BALANCES - September 30, 2007 $- $ - $ 76,145 $ 76,145

183 HIGHLANDS COUNTY, FLORIDA SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE BUDGET AND ACTUAL IMPACT FEE - TRANSPORTATION - LAKE PLACID For the Fiscal Year Ended September 30, 2007

Variance with Final Budget Budget Positive Original Final Actual (Negative)

REVENUES:

Licenses & Permits $ - $ - $ 1,811 $ 1,811 Assessments 495,450 495,450 179,253 (316,197)

Total Revenues 495,450 495,450 181,064 (314,386)

EXPENDITURES:

Current: Transportation: Impact Fees 495,450 495,450 1,811 493,639

Expenditures 495,450 495,450 1,811 493,639

Excess of Revenues Over/(Under) Expenditures - - 179,253 179,253

FUND BALANCES - October 1, 2006 - - - -

FUND BALANCES - September 30, 2007 $- $ - $ 179,253 $ 179,253

184 HIGHLANDS COUNTY, FLORIDA SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE BUDGET AND ACTUAL IMPACT FEE - TRANSPORTATION - SEBRING For the Fiscal Year Ended September 30, 2007

Variance with Final Budget Budget Positive Original Final Actual (Negative)

REVENUES:

Licenses & Permits $ - $ - $ 4,491 $ 4,491 Assessments 990,900 990,900 444,619 (546,281)

Total Revenues 990,900 990,900 449,110 (541,790)

EXPENDITURES:

Current: Transportation: Impact Fees 990,900 990,900 4,491 986,409

Expenditures 990,900 990,900 4,491 986,409

Excess of Revenues Over/(Under) Expenditures - - 444,619 444,619

FUND BALANCES - October 1, 2006 - - - -

FUND BALANCES - September 30, 2007 $- $ - $ 444,619 $ 444,619

185 HIGHLANDS COUNTY, FLORIDA SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE BUDGET AND ACTUAL IMPACT FEE - PARKS AND RECREATION - AVON PARK For the Fiscal Year Ended September 30, 2007

Variance with Final Budget Budget Positive Original Final Actual (Negative)

REVENUES:

Licenses & Permits $ - $ - $ 79 $ 79 Assessments 49,276 49,276 7,848 (41,428)

Total Revenues 49,276 49,276 7,927 (41,349)

EXPENDITURES:

Current: Culture and Recreation: Impact Fees 49,276 49,276 79 49,197

Expenditures 49,276 49,276 79 49,197

Excess of Revenues Over/(Under) Expenditures - - 7,848 7,848

FUND BALANCES - October 1, 2006 - - - -

FUND BALANCES - September 30, 2007 $- $ - $ 7,848 $ 7,848

186 HIGHLANDS COUNTY, FLORIDA SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE BUDGET AND ACTUAL IMPACT FEE - PARKS AND RECREATION - LAKE PLACID For the Fiscal Year Ended September 30, 2007

Variance with Final Budget Budget Positive Original Final Actual (Negative)

REVENUES:

Licenses & Permits $ - $ - $ 142 $ 142 Assessments 49,276 49,276 14,048 (35,228)

Total Revenues 49,276 49,276 14,190 (35,086)

EXPENDITURES:

Current: Culture and Recreation: Impact Fees 49,276 49,276 142 49,134

Expenditures 49,276 49,276 142 49,134

Excess of Revenues Over/(Under) Expenditures - - 14,048 14,048

FUND BALANCES - October 1, 2006 - - - -

FUND BALANCES - September 30, 2007 $- $ - $ 14,048 $ 14,048

187 HIGHLANDS COUNTY, FLORIDA SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE BUDGET AND ACTUAL IMPACT FEE - PARKS AND RECREATION - SEBRING For the Fiscal Year Ended September 30, 2007

Variance with Final Budget Budget Positive Original Final Actual (Negative)

REVENUES:

Licenses & Permits $ - $ - $ 319 $ 319 Assessments 98,552 98,552 31,619 (66,933)

Total Revenues 98,552 98,552 31,938 (66,614)

EXPENDITURES:

Current: Culture and Recreation: Impact Fees 98,552 98,552 319 98,233

Expenditures 98,552 98,552 319 98,233

Excess of Revenues Over/(Under) Expenditures - - 31,619 31,619

FUND BALANCES - October 1, 2006 - - - -

FUND BALANCES - September 30, 2007 $- $ - $ 31,619 $ 31,619

188 HIGHLANDS COUNTY, FLORIDA SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE BUDGET AND ACTUAL IMPACT FEE - CORRECTIONAL FACILITIES For the Fiscal Year Ended September 30, 2007

Variance with Final Budget Budget Positive Original Final Actual (Negative)

REVENUES:

Licenses & Permits $ - $ - $ 489 $ 489 Assessments 178,182 178,182 48,378 (129,804)

Total Revenues 178,182 178,182 48,867 (129,315)

EXPENDITURES:

Current: Public Safety: Impact Fees 178,182 178,182 489 177,693

Expenditures 178,182 178,182 489 177,693

Excess of Revenues Over/(Under) Expenditures - - 48,378 48,378

FUND BALANCES - October 1, 2006 - - - -

FUND BALANCES - September 30, 2007 $- $ - $ 48,378 $ 48,378

189 HIGHLANDS COUNTY, FLORIDA SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE BUDGET AND ACTUAL IMPACT FEE - FIRE For the Fiscal Year Ended September 30, 2007

Variance with Final Budget Budget Positive Original Final Actual (Negative)

REVENUES:

Licenses & Permits $ - $ - $ 580 $ 580 Assessments 217,909 217,909 57,461 (160,448)

Total Revenues 217,909 217,909 58,041 (159,868)

EXPENDITURES:

Current: Public Safety: Impact Fees 217,909 217,909 580 217,329

Expenditures 217,909 217,909 580 217,329

Excess of Revenues Over/(Under) Expenditures - - 57,461 57,461

FUND BALANCES - October 1, 2006 - - - -

FUND BALANCES - September 30, 2007 $- $ - $ 57,461 $ 57,461

190 HIGHLANDS COUNTY, FLORIDA SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE BUDGET AND ACTUAL IMPACT FEE - LIBRARIES For the Fiscal Year Ended September 30, 2007

Variance with Final Budget Budget Positive Original Final Actual (Negative)

REVENUES:

Licenses & Permits $ - $ - $ 175 $ 175 Assessments 63,686 63,686 17,291 (46,395)

Total Revenues 63,686 63,686 17,466 (46,220)

EXPENDITURES:

Current: Culture and Recreation: Impact Fees 63,686 63,686 175 63,511

Expenditures 63,686 63,686 175 63,511

Excess of Revenues Over/(Under) Expenditures - - 17,291 17,291

FUND BALANCES - October 1, 2006 - - - -

FUND BALANCES - September 30, 2007 $- $ - $ 17,291 $ 17,291

191 HIGHLANDS COUNTY, FLORIDA SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE BUDGET AND ACTUAL IMPACT FEE - LAW ENFORCEMENT For the Fiscal Year Ended September 30, 2007

Variance with Final Budget Budget Positive Original Final Actual (Negative)

REVENUES:

Licenses & Permits $ - $ - $ 154 $ 154 Assessments 60,185 60,185 15,278 (44,907)

Total Revenues 60,185 60,185 15,432 (44,753)

EXPENDITURES:

Current: Public Safety: Impact Fees 60,185 60,185 154 60,031

Expenditures 60,185 60,185 154 60,031

Excess of Revenues Over/(Under) Expenditures - - 15,278 15,278

FUND BALANCES - October 1, 2006 - - - -

FUND BALANCES - September 30, 2007 $- $ - $ 15,278 $ 15,278

192 HIGHLANDS COUNTY, FLORIDA SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE BUDGET AND ACTUAL IMPACT FEE - EMERGENCY MEDICAL SERVICES For the Fiscal Year Ended September 30, 2007

Variance with Final Budget Budget Positive Original Final Actual (Negative)

REVENUES:

Licenses & Permits $ - $ - $ 60 $ 60 Assessments 20,033 20,033 5,942 (14,091)

Total Revenues 20,033 20,033 6,002 (14,031)

EXPENDITURES:

Current: Public Safety: Impact Fees 20,033 20,033 60 19,973

Expenditures 20,033 20,033 60 19,973

Excess of Revenues Over/(Under) Expenditures - - 5,942 5,942

FUND BALANCES - October 1, 2006 - - - -

FUND BALANCES - September 30, 2007 $- $ - $ 5,942 $ 5,942

193 HIGHLANDS COUNTY, FLORIDA SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE BUDGET AND ACTUAL HCISSRB CONSTRUCTION For the Fiscal Year Ended September 30, 2007

Variance with Final Budget Budget Positive Original Final Actual (Negative) REVENUES: Intergovernmental $ 300,000 $ 300,000 $ 300,000 $ - Interest earnings 120,000 120,000 478,875 358,875

Total Revenues 420,000 420,000 778,875 358,875

EXPENDITURES:

Transportation: Road and street facility 9,192,813 9,458,116 3,102,313 6,355,803

Total Transportation 9,192,813 9,458,116 3,102,313 6,355,803

Debt Service: Bond administration 3,000 15,098 4,435 10,663

Total Debt Service 3,000 15,098 4,435 10,663

Total Expenditures 9,195,813 9,473,214 3,106,748 6,366,466

(Deficiency) of Revenues (Under) Expenditures (8,775,813) (9,053,214) (2,327,873) 6,725,341

FUND BALANCE - October 1, 2006 8,775,813 9,053,214 9,427,565 374,351

FUND BALANCE - September 30, 2007 $- $ - $ 7,099,692 $ 7,099,692

194 NONMAJOR ENTERPRISE FUNDS

Enterprise funds account for activities for which a fee is charged to external users for goods or services. The purpose of the individual nonmajor funds is depicted as follows:

Highway Park Utility – To account for the water and sewer services provided by the County to Highway Park in Lake Placid.

Energy Recovery – To account for the creation of a county owned and operated asphalt plant.

195 HIGHLANDS COUNTY, FLORIDA COMBINING STATEMENT OF NET ASSETS NONMAJOR ENTERPRISE FUNDS September 30, 2007

Enterprise Funds Highway Energy Park Utility Recovery Total ASSETS Current Assets: Cash and cash equivalents $ 208,938 $ 16,557 $ 225,495 Accounts receivable - net 12,472 - 12,472 Total Current Assets 221,410 16,557 237,967

Noncurrent Assets: Restricted cash and cash equivalents 17,350 - 17,350 Total Restricted Assets 17,350 - 17,350

Capital Assets: (net of accumulated depreciation) 1,224,630 - 1,224,630 Total Noncurrent Assets 1,241,980 - 1,241,980

Total Assets 1,463,390 16,557 1,479,947

LIABILITIES Current Liabilities: Vouchers payable 2,402 9,390 11,792 Due to other funds 6,107 - 6,107 Accrued wages payable 1,109 - 1,109 Deferred revenue 350 - 350 Compensated absences - current portion 306 - 306 Total Current Liabilities 10,274 9,390 19,664

Long-Term Liabilities: Payable from restricted assets - customer deposits 17,350 - 17,350 Compensated absences payable 2,751 - 2,751 Total Long-Term Liabilities 20,101 - 20,101

Total Liabilities 30,375 9,390 39,765

Net Assets: Invested in capital assets, net of related debt 1,224,630 - 1,224,630 Unrestricted 208,385 7,167 215,552

Total Net Assets $ 1,433,015 $ 7,167 $ 1,440,182

196 HIGHLANDS COUNTY, FLORIDA COMBINING STATEMENT OF REVENUES, EXPENSES AND CHANGES IN FUND NET ASSETS NONMAJOR ENTERPRISE FUNDS For the Fiscal Year Ended September 30, 2007

Enterprise Funds

Highway Energy Park Utility Recovery Total OPERATING REVENUES Charges for services $ 122,396 $ - $ 122,396 Total Operating Revenues 122,396 - 122,396

OPERATING EXPENSES Personal services 35,774 - 35,774 General and administrative 85,937 27,833 113,770 Depreciation 39,638 - 39,638 Total Operating Expenses 161,349 27,833 189,182

Operating Income (Loss) (38,953) (27,833) (66,786)

NONOPERATING REVENUES (EXPENSES) Interest income 10,435 - 10,435 Water impact fees 6,000 - 6,000 Total Nonoperating Revenues (Expenses), Net 16,435 - 16,435

Income before contributions and transfers (22,518) (27,833) (50,351)

Transfer in (out) - 35,000 35,000

Change In Net Assets (22,518) 7,167 (15,351)

Net Assets, October 1, 2006 1,455,533 - 1,455,533

Total Net Assets, September 30, 2007 $ 1,433,015 $ 7,167 $ 1,440,182

197 HIGHLANDS COUNTY, FLORIDA COMBINING STATEMENT OF CASH FLOWS NONMAJOR ENTERPRISE FUNDS For the Fiscal Year Ended September 30, 2007

Enterprise Funds

Highway Energy Park Utility Recovery Total CASH FLOWS FROM OPERATING ACTIVITIES Cash received from customers $ 118,879 $ - $ 118,879 Cash payments for personal services (37,089) - (37,089) Cash payments to vendors (85,571) (18,443) (104,014) Customer deposits 650 - 650 Net Cash Provided By Operating Activities (3,131) (18,443) (21,574)

CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES Impact fees received 6,000 - 6,000 Transfers (to) from other funds - 35,000 35,000 Net Cash Provided (Used) By Noncapital Financing Activities 6,000 35,000 41,000

CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES Acquisition of capital assets (3,269) - (3,269) Net Cash (Used) By Capital And Related Financing Activities (3,269) - (3,269)

CASH FLOWS FROM INVESTING ACTIVITIES Interest received on investments 10,435 - 10,435 Net Cash Provided By Investing Activities 10,435 - 10,435

Net increase in cash and cash equivalents 10,035 16,557 26,592

Cash and Cash Equivalents - October 1, 2006 216,253 - 216,253

Cash and Cash Equivalents - September 30, 2007 $ 226,288 $ 16,557 $ 242,845

(continued)

198 HIGHLANDS COUNTY, FLORIDA COMBINING STATEMENT OF CASH FLOWS NONMAJOR ENTERPRISE FUNDS (concluded) For the Fiscal Year Ended September 30, 2007

Enterprise Funds

Highway Energy Park Utility Recovery Total

RECONCILIATION OF NET OPERATING INCOME (LOSS) TO NET CASH PROVIDED BY OPERATING ACTIVITIES

Operating Income (loss) $ (38,953) $ (27,833) $ (66,786)

Adjustments To Reconcile Operating Income To Net Cash Provided (Used) By Operating Activities: Depreciation 39,638 - 39,638 Changes in Assets and Liabilities: (Increase) decrease in accounts receivable (2,749) - (2,749) Increase (decrease) in vouchers payable 562 9,390 9,952 Increase (decrease) in due to other funds (196) - (196) Increase (decrease) in accrued wages payable (41) - (41) Increase (decrease) in compensated absences (1,274) - (1,274) Increase (decrease) in deferred revenues (768) - (768) Increase (decrease) in customer deposits 650 - 650 Total Adjustments 35,822 9,390 45,212

Net Cash Provided By Operating Activities $ (3,131) $ (18,443) $ (21,574)

Reconciliation Of Enterprise Fund Cash And And Cash Equivalents to Combining Balance Sheet Cash And Cash Equivalents

Cash and temporary investments $ 226,288 $ 16,557 $ 242,845

Less: Restricted cash and investments 17,350 - 17,350

Total Unrestricted Cash and Cash Equivalents $ 208,938 $ 16,557 $ 225,495

199 INTERNAL SERVICE FUNDS

The Internal Service Funds account for the financing of goods or services provided by one department or agency to other departments or agencies of the Board and to other governmental units on a cost reimbursement basis. The Board maintains the following Internal Service Funds:

Risk Retention - To account for the fiscal activity related to the self-insurance for general liability, property and workers' compensation needs of County departments and elected officials. Claims for these insurance coverages are administered by an agent of record prior to being paid by the County.

Employee Benefit – To account for employer, employee and retiree contributions to the County's dental plan and the payment of dental expenses.

Compensated Absences – To account for accumulated annual and sick leave which will be paid to employees upon termination of employment.

200 HIGHLANDS COUNTY, FLORIDA COMBINING STATEMENT OF NET ASSETS INTERNAL SERVICE FUNDS September 30, 2007

Risk Employee Compensated Retention Benefit Absences Fund Fund Fund Total ASSETS Current Assets: Cash and cash equivalents $ 2,150,364 $ 199,665 $ 4,535,939 $ 6,885,968 Investments - 104,294 - 104,294 Accounts receivable - 98 - 98 Due from other governmental units 137 - - 137 Total assets 2,150,501 304,057 4,535,939 6,990,497

LIABILITIES Current Liabilities: Vouchers payable - 11,011 - 11,011 Claims payable - 19,663 - 19,663 Deferred revenues - 1,072 - 1,072 Total current liabilities - 31,746 - 31,746

Noncurrent Liabilities: Compensated absences - - 4,535,939 4,535,939 Total liabilities - 31,746 4,535,939 4,567,685

NET ASSETS Unrestricted 2,150,501 272,311 - 2,422,812 Total net assets $ 2,150,501 $ 272,311 $ - $ 2,422,812

201 HIGHLANDS COUNTY, FLORIDA COMBINING STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET ASSETS INTERNAL SERVICE FUNDS For the Fiscal Year Ended September 30, 2007

Risk Employee Compensated Retention Benefit Absences Fund Fund Fund Total OPERATING REVENUES Miscellaneous income $ 2,313,437 $ 342,492 $ - $ 2,655,929 Other miscellaneous income - - 8,261 8,261 Total operating revenues 2,313,437 342,492 8,261 2,664,190

OPERATING EXPENSES General and administrative 49,191 290 18,135 67,616 Insurance and claims 2,209,965 387,527 - 2,597,492 Total operating expenses 2,259,156 387,817 18,135 2,665,108

Operating Income (Loss) 54,281 (45,325) (9,874) (918)

NONOPERATING REVENUES (EXPENSES) Interest income 41,112 13,825 9,874 64,811 Total nonoperating revenues (expenses) 41,112 13,825 9,874 64,811

CHANGE IN NET ASSETS 95,393 (31,500) - 63,893

NET ASSETS, October 1, 2006 2,055,108 303,811 - 2,358,919

NET ASSETS, September 30, 2007 $ 2,150,501 $ 272,311 $- $ 2,422,812

202 HIGHLANDS COUNTY, FLORIDA COMBINING STATEMENT OF CASH FLOWS INTERNAL SERVICE FUNDS For the Fiscal Year Ended September 30, 2007

Risk Employee Compensated Retention Benefit Absences FundFund Fund Total CASH FLOWS FROM OPERATING ACTIVITIES Cash received from customers $ 2,320,389 $ 418,088 $ 8,261 $ 2,746,738 Cash paid to suppliers for goods and services (2,259,156) (376,806) - (2,635,962) Cash paid to employees for services - - (3,483) (3,483) Net cash provided by operating activities 61,233 41,282 4,778 107,293

CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES Transfers from general fund - - 195,362 195,362 Net cash provided by noncapital related financing activities - - 195,362 195,362

CASH FLOWS FROM INVESTING ACTIVITIES Interest and dividends from investments 41,112 9,048 9,874 60,034 Net cash provided by investing activities 41,112 9,048 9,874 60,034

Net increase in cash and cash equivalents 102,345 50,330 210,014 362,689

Cash and Cash Equivalents - October 1, 2006 2,048,019 149,335 4,325,925 6,523,279 Cash and Cash Equivalents - September 30, 2007 $ 2,150,364 $ 199,665 $ 4,535,939 $ 6,885,968

RECONCILIATION OF NET OPERATING INCOME (LOSS) TO NET CASH PROVIDED BY OPERATING ACTIVITIES

Operating Income (loss) $ 54,281 $ (45,325) $ (9,874) $ (918)

Adjustments To Reconcile Operating Income To Net Cash Provided (Used) By Operating Activities: Changes in Assets and Liabilities: (Increase) decrease in accounts receivable 6,952 64,361 - 71,313 (Increase) decrease in due from other governmental units - 11,530 - 11,530 Increase (decrease) in vouchers payable - 11,011 - 11,011 Increase in compensated absences - - 14,652 14,652 Increase (decrease) in deferred revenues - (295) - (295) Total Adjustments 6,952 86,607 14,652 108,211 Net Cash Provided By Operating Activities $ 61,233 $ 41,282 $ 4,778 $ 107,293

Noncash investing, capital, and financing activities: Increase in fair value of investments $ - $ - $ - $ 4,777

203 TRUST AND AGENCY FUNDS (FIDUCIARY FUNDS)

These funds account for assets held by the County in a trustee capacity or as an agent for individuals, private organizations, other governmental units, and/or other funds.

The County maintains the following Fiduciary Funds:

Agency Funds:

Sheriff's Inmates - To account for monies collected from inmates who have money in their possession at the time of their arrest and subsequent incarceration.

Sheriff's Cash Bonds - To account for cash appearance bonds. These funds are maintained until disposition is ordered by the court.

Sheriff’s Unclaimed Evidence – To account for monies seized by law enforcement. These funds are maintained until final determination by the court.

Sheriff's Individual Depositors - To account for fees charged to serve civil process. Fees are collected and held until service is complete and then remitted to other governmental agencies.

Sheriff's Suspense - To account for fees and court ordered payments collected for various agencies. These funds are remitted to the County or other governmental agencies.

Tax Collector's Tag Agency - Used by the Collector to account for motor vehicle and vessel registrations and title transfer fees remitted to the State of Florida.

Tax Collector's Tax and License - Used by the Collector to account for the collection of ad valorem and non-ad valorem taxes, tangible personal property taxes, occupational licenses, and hunting and fishing licenses remitted to various taxing agencies and the State of Florida.

Tax Collector's Tax Redemption - Used by the Collector to account for the collection of redeemed tax certificates issued in connection with delinquent ad valorem taxes and remittance to the certificate holders.

Tax Collector's Special Payroll – Used by the Collector to account for payroll deductions withheld from the Collector's employees for remittance to other governmental agencies and benefits paid on behalf of employees by the Collector.

Clerk's Child Support - To account for child support and/or alimony payments collected by the Clerk and remitted to the appropriate recipients.

Clerk's Suspense - Used by the Clerk to account for documentary stamp fees and recording fees, jury and witness payments and fines and forfeitures collected through the court system and remitted to other governmental agencies.

(continued)

204 TRUST AND AGENCY FUNDS (FIDUCIARY FUNDS) (continued)

Board's Tax Deed Surplus - To account for funds paid in excess of the delinquent taxes, fees and other costs due on real property sold through the tax deed process. These funds are held for two years in accordance with the provisions of Section 197.582, Florida Statutes, and, unless claimed by the original property owner, they are transferred to the General Fund and become property of the County.

205 HIGHLANDS COUNTY, FLORIDA COMBINING STATEMENT OF FIDUCIARY NET ASSETS AGENCY FUNDS September 30, 2007

Sheriff's Sheriff's Tax Sheriff's Sheriff's Unclaimed Individual Sheriff's Collector's Inmates Cash Bonds Evidence Depositors Suspense Tag Agency Assets: Cash and cash equivalents $ 18,880 $ 109,350 $ 52,505 $ 21,353 $ 3,350 $ 130,136 Accounts receivable-net - - - - 320 4,251 Due from other governmental units ------

Total Assets $ 18,880 $ 109,350 $ 52,505 $ 21,353 $ 3,670 $ 134,387

Liabilities: Vouchers payable $ - $ 15,500 $ - $ - $ 3,397 $ - Due to other governmental units 15,544 - - 21,353 273 132,765 Due to others 3,336 - 52,505 - - 1,622 Deposits - 93,850 - - - - Tax deed surplus ------Accrued payroll deductions and matching expense ------

Total Liabilities $ 18,880 $ 109,350 $ 52,505 $ 21,353 $ 3,670 $ 134,387

206 Tax Tax Tax Collector's Collector's Collector'sClerk's Board's Tax and Tax Special Child Clerk's Tax Deed License Redemption Payroll Support Suspense Surplus Total

$ 1,096,673 $ 74,061 $ 11,906 $ 299 $ 2,219,735 $ 5,014,089 $ 8,752,337 - 792 - - 464 - 5,827 - - - - 2,108 56,089 58,197

$ 1,096,673 $ 74,853 $ 11,906 $ 299 $ 2,222,307 $ 5,070,178 $ 8,816,361

$ 5,045 $ - $ - $ - $ 8,507 $ - $ 32,449 1,091,488 - - - 342,413 - 1,603,836 140 74,853 - 299 574,286 - 707,041 - - - - 1,297,101 - 1,390,951 - - - - - 5,070,178 5,070,178

- - 11,906 - - - 11,906

$ 1,096,673 $ 74,853 $ 11,906 $ 299 $ 2,222,307 $ 5,070,178 $ 8,816,361

207 HIGHLANDS COUNTY, FLORIDA SCHEDULE OF CHANGES IN ASSETS AND LIABILITIES AGENCY FUNDS For the Fiscal Year Ended September 30, 2007

Balance Balance October 1, September 30, 2006 AdditionsDeductions 2007

SHERIFF'S INMATES ASSETS Cash and cash equivalents $ 16,510 $ 435,538 $ 433,168 $ 18,880 Total Assets $ 16,510 $ 435,538 $ 433,168 $ 18,880

LIABILITIES Due to other governmental units $ 11,013 $ 4,531 $ - $ 15,544 Due to others 5,497 440,495 442,656 3,336 Total Liabilities $ 16,510 $ 445,026 $ 442,656 $ 18,880

SHERIFF'S CASH BONDS ASSETS Cash and cash equivalents $ 109,850 $ 520,398 $ 520,898 $ 109,350 Total Assets $ 109,850 $ 520,398 $ 520,898 $ 109,350

LIABILITIES Vouchers payable $ - $ 572,390 $ 556,890 $ 15,500 Deposits 109,850 556,390 572,390 93,850 Total Liabilities $ 109,850 $ 1,128,780 $ 1,129,280 $ 109,350

SHERIFF'S UNCLAIMED EVIDENCE ASSETS Cash and cash equivalents $ 32,476 $ 20,623 $ 594 $ 52,505 Total Assets $ 32,476 $ 20,623 $ 594 $ 52,505

LIABILITIES Due to others $ 32,476 $ 20,623 $ 594 $ 52,505 Total Liabilities $ 32,476 $ 20,623 $ 594 $ 52,505

SHERIFF'S INDIVIDUAL DEPOSITORS ASSETS Cash and cash equivalents $ 1,380 $ 134,337 $ 114,364 $ 21,353 Total Assets $ 1,380 $ 134,337 $ 114,364 $ 21,353

LIABILITIES Vouchers payable $ - $ 124,988 $ 124,988 $ - Due to other governmental units 1,380 155,997 136,024 21,353 Total Liabilities $ 1,380 $ 280,985 $ 261,012 $ 21,353 (continued)

208 HIGHLANDS COUNTY, FLORIDA SCHEDULE OF CHANGES IN ASSETS AND LIABILITIES AGENCY FUNDS (continued) For the Fiscal Year Ended September 30, 2007

Balance Balance October 1, September 30, 2006 Additions Deductions 2007

SHERIFF'S SUSPENSE ASSETS Cash and cash equivalents $ 1,352 $ 729,298 $ 727,300 $ 3,350 Accounts receivable-net 34,008 3,390 37,078 320 Total Assets $ 35,360 $ 732,688 $ 764,378 $ 3,670

LIABILITIES Vouchers payable $ 35,360 $ 624,609 $ 656,572 $ 3,397 Due to other governmental units - 695,666 695,393 273 Total Liabilities $ 35,360 $ 1,320,275 $ 1,351,965 $ 3,670

TAX COLLECTOR'S TAG AGENCY ASSETS Cash and cash equivalents $ 145,184 $ 9,220,397 $ 9,235,445 $ 130,136 Accounts receivable-net 2,213 10,137 8,099 4,251 Total Assets $ 147,397 $ 9,230,534 $ 9,243,544 $ 134,387

LIABILITIES Vouchers payable $ 3,382 $ 13,871 $ 17,253 $ - Due to other governmental units 143,507 9,178,463 9,189,205 132,765 Due to others 508 36,374 35,260 1,622 Total Liabilities $ 147,397 $ 9,228,708 $ 9,241,718 $ 134,387

TAX COLLECTOR'S TAX AND LICENSE ASSETS Cash and cash equivalents $ 844,273 $ 337,784,578 $ 337,532,178 $ 1,096,673 Total Assets $ 844,273 $ 337,784,578 $ 337,532,178 $ 1,096,673

LIABILITIES Vouchers payable $ 37,376 $ 465,004 $ 497,335 $ 5,045 Due to other governmental units 806,816 127,466,063 127,181,391 1,091,488 Due to others 81 395,820 395,761 140 Total Liabilities $ 844,273 $ 128,326,887 $ 128,074,487 $ 1,096,673

TAX COLLECTOR'S TAX REDEMPTION ASSETS Cash and cash equivalents $ 137,856 $ 4,391,846 $ 4,455,641 $ 74,061 Accounts receivable, net - 792 - 792 Total Assets $ 137,856 $ 4,392,638 $ 4,455,641 $ 74,853

LIABILITIES Vouchers payable $ 74,363 $ 136,522 $ 210,885 $ - Due to others 63,493 4,398,259 4,386,899 74,853 Total Liabilities $ 137,856 $ 4,534,781 $ 4,597,784 $ 74,853 (continued)

209 HIGHLANDS COUNTY, FLORIDA SCHEDULE OF CHANGES IN ASSETS AND LIABILITIES AGENCY FUNDS (continued) For the Fiscal Year Ended September 30, 2007

Balance Balance October 1, September 30, 2006 Additions Deductions 2007

TAX COLLECTOR'S SPECIAL PAYROLL ASSETS Cash and cash equivalents $ 48,881 $ 1,691,462 $ 1,728,437 $ 11,906 Total Assets $ 48,881 $ 1,691,462 $ 1,728,437 $ 11,906

LIABILITIES Vouchers payable $ 15,893 $ 869,426 $ 885,319 $ - Accrued payroll deductions and matching expense 32,988 823,143 844,225 11,906 Total Liabilities $ 48,881 $ 1,692,569 $ 1,729,544 $ 11,906

CLERK'S CHILD SUPPORT ASSETS Cash and cash equivalents $ 10,408 $ 1,290,681 $ 1,300,790 $ 299 Due from others - 128 128 - Total Assets $ 10,408 $ 1,290,809 $ 1,300,918 $ 299

LIABILITIES Due to others $ 10,408 $ 1,317,003 $ 1,327,112 $ 299 Total Liabilities $ 10,408 $ 1,317,003 $ 1,327,112 $ 299

CLERK'S SUSPENSE ASSETS Cash and cash equivalents $ 3,571,613 $ 21,981,434 $ 23,333,312 $ 2,219,735 Accounts receivable-net 660 4,290 4,486 464 Due from other governmental units 2,816 21,758 22,466 2,108 Total Assets $ 3,575,089 $ 22,007,482 $ 23,360,264 $ 2,222,307

LIABILITIES Vouchers payable $ 10,816 $ 9,414,849 $ 9,417,158 $ 8,507 Due to other governmental units 672,769 14,648,825 14,979,181 342,413 Due to others 1,610,628 4,759,811 5,796,153 574,286 Deposits 1,280,876 1,396,094 1,379,869 1,297,101 Total Liabilities $ 3,575,089 $ 30,219,579 $ 31,572,361 $ 2,222,307

BOARD'S TAX DEED SURPLUS ASSETS Cash and cash equivalents $ 5,258,652 $ 3,693,650 $ 3,938,213 $ 5,014,089 Due from other governmental units - 56,089 - 56,089 Total Assets $ 5,258,652 $ 3,749,739 $ 3,938,213 $ 5,070,178

LIABILITIES Tax Deed Surplus $ 5,258,652 $ 2,475,923 $ 2,664,397 $ 5,070,178 Total Liabilities $ 5,258,652 $ 2,475,923 $ 2,664,397 $ 5,070,178 (continued)

210 HIGHLANDS COUNTY, FLORIDA SCHEDULE OF CHANGES IN ASSETS AND LIABILITIES AGENCY FUNDS (continued) For the Fiscal Year Ended September 30, 2007

Balance Balance October 1, September 30, 2006 Additions Deductions 2007

TOTAL ALL AGENCY FUNDS ASSETS Cash and cash equivalents $ 10,178,435 $ 381,894,242 $ 383,320,340 $ 8,752,337 Accounts receivable-net 36,881 18,609 49,663 5,827 Due from others - 128 128 - Due from other governmental units 2,816 77,847 22,466 58,197 Total Assets $ 10,218,132 $ 381,990,826 $ 383,392,597 $ 8,816,361

LIABILITIES Vouchers payable $ 177,190 $ 12,221,659 $ 12,366,400 $ 32,449 Due to other governmental units 1,635,485 152,149,545 152,181,194 1,603,836 Due to others 1,723,091 11,368,385 12,384,435 707,041 Accrued payroll deductions and matching expense 32,988 823,143 844,225 11,906 Deposits 1,390,726 1,952,484 1,952,259 1,390,951 Tax Deed Surplus 5,258,652 2,475,923 2,664,397 5,070,178 Total Liabilities $ 10,218,132 $ 180,991,139 $ 182,392,910 $ 8,816,361

211

CAPITAL ASSETS USED IN THE OPERATION OF GOVERNMENTAL ACTIVITIES

HIGHLANDS COUNTY, FLORIDA CAPITAL ASSETS USED IN THE OPERATION OF GOVERNMENTAL FUNDS COMPARATIVE SCHEDULES BY SOURCE September 30, 2006 and 2007

2006 2007 GOVERNMENTAL FUNDS CAPITAL ASSETS

Land $ 27,688,136 $ 30,776,606 Buildings 45,083,959 45,766,617 Improvements 3,587,546 3,769,314 Equipment 30,814,021 33,480,315 Infrastructure 71,028,184 73,040,860 Construction in progress 4,694,737 8,226,873

Total governmental funds capital assets $ 182,896,583 $ 195,060,585

INVESTMENT IN GOVERNMENTAL FUNDS CAPITAL ASSETS BY SOURCE

General Fund revenues $ 99,301,974 $ 100,667,621 Special Revenue Fund revenues 50,728,105 57,511,080 Capital Projects Fund revenues 30,434,297 33,536,609 Private gifts or other sources 2,432,207 3,345,275

Total governmental funds capital assets $ 182,896,583 $ 195,060,585

212 HIGHLANDS COUNTY, FLORIDA CAPITAL ASSETS USED IN THE OPERATION OF GOVERNMENTAL FUNDS SCHEDULE BY FUNCTION AND ACTIVITY September 30, 2007

Improvements Machinery Construction Other Than and In Function and Activity Land Buildings Buildings Equipment Infrastructure Progress Total

GENERAL GOVERNMENT: Legislative $ - $ 113,981 $ 17,369 $ 8,000 $ - $ - $ 139,350 Executive - - - 62,117 - - 62,117 Financial and administrative 31,806 250,665 11,300 3,209,280 - - 3,503,051 Comprehensive planning - - - 52,210 - - 52,210 Other general government 21,774,976 20,157,655 942,135 3,296,549 65,616,514 65,486 111,853,315 Total general government 21,806,782 20,522,301 970,804 6,628,156 65,616,514 65,486 115,610,043

PUBLIC SAFETY: Law enforcement - 72,749 155,787 4,810,515 - - 5,039,051 Fire control 44,385 1,315,038 23,693 4,601,104 - 216,250 6,200,470 Detention and/or correction 438,202 14,286,251 24,169 725,101 - - 15,473,723 Protective inspection - - - 225,437 - - 225,437 Emergency and disaster 380,067 1,734,290 85,720 1,383,558 - - 3,583,635 Ambulance and rescue 8,771 314,114 - 1,409,692 - - 1,732,577 Other public safety - - - 597,885 - 73,159 671,044 Total public safety 871,425 17,722,442 289,369 13,753,292 - 289,409 32,925,937

PHYSICAL ENVIRONMENT: Conservation and resource 708,415 728,825 25,171 256,549 - - 1,718,960 Total physical environment 708,415 728,825 25,171 256,549 - - 1,718,960

TRANSPORTATION: Road and street facilities 6,112,678 1,870,374 1,406,157 11,141,839 7,424,346 2,759,709 30,715,103 Total transportation 6,112,678 1,870,374 1,406,157 11,141,839 7,424,346 2,759,709 30,715,103

ECONOMIC ENVIRONMENT: Veteran services - - - 7,170 - - 7,170 Housing/Urban Development 24,732 - - 18,494 - - 43,226 Total economic environment 24,732 - - 25,664 - - 50,396

HUMAN SERVICES: Health - 271,934 - 362,560 - 23,651 658,145 Welfare 7,300 33,256 - - - 6,725 47,281 Other human services - - - 33,561 - - 33,561 Total human services 7,300 305,190 - 396,121 - 30,376 738,987

CULTURE/RECREATION: Libraries 86,898 3,793,296 19,705 267,604 - - 4,167,503 Parks and recreation 1,158,376 528,784 1,058,108 607,154 - 4,989,526 8,341,948 Total culture/recreation 1,245,274 4,322,080 1,077,813 874,758 - 4,989,526 12,509,451

COURT RELATED: Court General Administration: State Attorney administration - 8,640 - - - - 8,640 Jury management - - - 5,796 - - 5,796

Circuit Court Criminal: Clerk of Court - - - 6,740 - - 6,740

(continued) 213 HIGHLANDS COUNTY, FLORIDA CAPITAL ASSETS USED IN THE OPERATION OF GOVERNMENTAL FUNDS SCHEDULE BY FUNCTION AND ACTIVITY (Continued) September 30, 2007

Improvements Machinery Construction Other Than and In Function and Activity Land Buildings Buildings Equipment Infrastructure Progress Total

Circuit Court Family: Clerk of Court - - - 7,400 - - 7,400

Circuit Court Juvenile: Clerk of Court - - - 15,089 - - 15,089

Court General Operations: Courthouse facilities - 286,765 - 110,100 - 92,367 489,232 Information services - - - 233,587 - - 233,587 Other operating costs - - - 8,886 - - 8,886

County Court Traffic: Clerk of Court - - - 8,169 - - 8,169 Other county court traffic - - - 8,169 - - 8,169 Total Court Related - 295,405 - 403,936 - 92,367 791,708

Total governmental funds capital assets $ 30,776,606 $ 45,766,617 $ 3,769,314 $ 33,480,315 $ 73,040,860 $ 8,226,873 $ 195,060,585

214 HIGHLANDS COUNTY, FLORIDA CAPITAL ASSETS USED IN THE OPERATION OF GOVERNMENTAL FUNDS SCHEDULE OF CHANGES BY FUNCTION AND ACTIVITY For the Fiscal Year Ended September 30, 2007

Governmental Governmental Funds Capital Funds Capital Assets Assets Function and Activity October 1, 2006 Additions Deletions September 30, 2007

General Government: Legislative $ 139,350 $ - $ - $ 139,350 Executive 42,527 42,119 (22,529) 62,117 Financial and administrative 3,045,134 479,673 (21,756) 3,503,051 Comprehensive planning 37,156 15,054 - 52,210 Other general government 111,178,252 883,442 (208,379) 111,853,315 Total general government 114,442,419 1,420,288 (252,664) 115,610,043

Public Safety: Law enforcement 4,459,266 1,529,871 (950,086) 5,039,051 Fire control 5,998,470 312,000 (110,000) 6,200,470 Detention and/or correction 15,255,685 288,498 (70,460) 15,473,723 Protective inspection 181,531 59,760 (15,854) 225,437 Emergency and disaster 3,206,675 376,960 - 3,583,635 Ambulance and rescue 1,895,495 20,852 (183,770) 1,732,577 Other public safety 555,021 116,023 - 671,044 Total public safety 31,552,143 2,703,964 (1,330,170) 32,925,937

Physical Environment: Conservation and resource 1,685,869 68,541 (35,450) 1,718,960 Total physical environment 1,685,869 68,541 (35,450) 1,718,960

Transportation: Road and street facilities 24,410,009 7,504,004 (1,198,910) 30,715,103 Total transportation 24,410,009 7,504,004 (1,198,910) 30,715,103

Economic Environment: Veterans' services 7,170 - - 7,170 Housing/Urban Development - 43,226 - 43,226 Total economic environment 7,170 43,226 - 50,396

Human Services: Health 610,212 221,678 (173,745) 658,145 Welfare 40,556 6,725 - 47,281 Other human services 33,561 - - 33,561 Total human services 684,329 228,403 (173,745) 738,987

Culture/Recreation: Libraries 4,167,503 - - 4,167,503 Parks and recreation 5,319,687 3,022,261 - 8,341,948 Total culture/recreation 9,487,190 3,022,261 - 12,509,451 (continued)

215 HIGHLANDS COUNTY, FLORIDA CAPITAL ASSETS USED IN THE OPERATION OF GOVERNMENTAL FUNDS SCHEDULE OF CHANGES BY FUNCTION AND ACTIVITY (Continued) For the Fiscal Year Ended September 30, 2007

Governmental Governmental Funds Capital Funds Capital Assets Assets Function and Activity October 1, 2006 Additions Deletions September 30, 2007

Court Related: Court General Administration: State Attorney administration 8,640 - - 8,640 Jury management 5,796 - - 5,796

Circuit Court Criminal: Clerk of Court 6,740 - - 6,740

Circuit Court Family: Clerk of Court 7,400 - - 7,400

Circuit Court Juvenile: Clerk of Court 15,089 - - 15,089

Court General Operations: Courthouse facilities 396,865 92,367 - 489,232 Information services 161,700 71,887 - 233,587 Other operating costs 8,886 - - 8,886

County Court Traffic: Clerk of Court 8,169 - - 8,169 Other county court traffic 8,169 - - 8,169 Total court related 627,454 164,254 - 791,708

Total Governmental Funds Capital Assets $ 182,896,583 $ 15,154,941 $ (2,990,939) $ 195,060,585

216

STATISTICAL SECTION Statistical Section

This section of the County's Comprehensive Annual Financial Report represents 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 These schedules contain trend information to help the reader understand how the County's financial performance and well-being have changed over time. Net Assets by Components, Last Five Fiscal Years ...... 218 Changes in Net Assets, Last Five Fiscal Years ...... 219-220 Fund Balances, Governmental Funds, Last Ten Years ...... 221 Change in Fund Balances, Governmental Funds, Last Ten Years ...... 222

Revenue Capacity These schedules contain information to help the reader assess the County's most significant local revenue source, ad valorem taxes. Taxable Value and Actual Value of Property, Last Ten Fiscal Years ...... 223 Direct and Overlapping Property Tax Rates, Last Ten Fiscal Years ...... 224 Principal Property Tax Payers, Current Fiscal Year and Nine Years Prior...... 225 Property Tax Levies and Collections, Last Ten Fiscal Years...... 226

Debt Capacity 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. Ratios of Outstanding Debt by Type, Last Ten Fiscal Years...... 227 Ratios of General Bonded Debt Outstanding, Last Ten Fiscal Years ...... 228 Overlapping Governmental Activities Debt ...... 229 Pledged-Revenue Coverage, Last Ten Fiscal Years ...... 230 The table which concerns computation of legal debt margins is omitted because the Constitution of the State of Florida, Section 200.181, Florida Statutes, and Highlands County set no legal debt limit.

Demographic and Economic Information These schedules offer demographic and economic indicators to help the reader understand the environment which the County's financial activities take place. Demographic and Economic Statistics, Last Ten Fiscal Years ...... 231 Principal Employers, Current Fiscal Year and Nine Years Prior ...... 232

Operating Information These schedules contain service and capital asset data to help the reader understand how the information in the County's financial report relates to the services provided by the County and the activities it performs.

Full-time Equivalent County Government Employees by Function, Last Ten Fiscal Years ...... 233 Operating Indicators by Function ...... 234-235 Capital Asset Statistics by Function ...... 236

Sources: Unless otherwise noted, the information contained in the schedules in this Statistical Section are derived from the comprehensive annual financial reports for the relevant year. Highlands County implemented GASB Statement No. 34 in 2003; schedules presenting government-wide information include information beginning in that year

217

HIGHLANDS COUNTY, FLORIDA CHANGES IN NET ASSETS Last Five Years

Fiscal Year 2007 2006 2005 2004 2003 Expenses Governmental activities: General government$ 19,309,283 $ 17,311,569 $ 15,043,416 $ 12,174,487 $ 10,445,874 Public safety 37,587,087 32,707,118 29,138,885 26,415,525 25,642,705 Physical environment 1,445,740 1,475,436 1,146,635 1,240,704 1,471,317 Transportation 15,067,226 11,336,681 10,117,959 10,783,574 10,993,934 Economic environment 7,526,683 3,286,915 1,778,190 3,396,508 1,820,635 Human services 2,696,525 2,267,454 2,550,432 2,300,600 2,539,159 Culture and recreation 3,290,438 3,119,978 2,285,674 2,556,588 2,579,957 Court related 4,519,434 4,428,799 4,066,663 3,766,910 4,034,636 Debt service: Interest on long-term debt 633,515 1,072,180 997,479 1,005,415 1,537,524 Other debt service 4,435 3,715 3,997 3,314 8,898 Total governmental activities expenses 92,080,366 77,009,845 67,129,330 63,643,625 61,074,639

Business-type activities: Solid waste 9,292,480 9,033,198 8,365,204 7,107,739 8,661,065 Water and sewer 797,427 707,697 707,207 526,183 528,148 Highway Park Utility 192,073 166,666 156,264 116,331 125,874 Energy recovery 27,833 - - - - Total business-type activities expenses 10,309,813 9,907,561 9,228,675 7,750,253 9,315,087

Total primary government expenses$ 102,390,179 $ 86,917,406 $ 76,358,005 $ 71,393,878 $ 70,389,726

Program Revenues Governmental activities: Charges for services: General government$ 5,738,638 $ 4,817,950 $ 3,306,051 $ 2,250,153 $ 2,030,220 Public safety 7,386,221 6,996,469 6,653,507 5,740,591 5,576,672 Physical environment 194,114 214,099 197,156 190,731 144,910 Transportation 2,403,335 1,770,813 991,141 849,634 737,314 Economic environment 12,500 - - 50 - Human services 79,823 81,771 56,207 38,001 39,460 Culture and recreation 882,273 232,243 224,711 150,486 138,709 Court related 4,151,942 4,170,953 3,398,645 2,384,219 1,709,947

Operating grants and contributions: General government 48,961 146,106 195,594 1,015,001 566,434 Public safety 741,103 1,055,670 679,399 417,094 438,249 Physical environment 391,634 533,650 288,508 619,717 548,717 Transportation 149,132 135,585 2,389 40,000 (41,445) Economic environment 5,106,185 710,085 430,759 1,325,416 277,294 Human services 23,651 - - 5,088 16,818 Culture and recreation 346,383 339,310 325,462 278,477 298,525 Court related - - - 160,123 167,192

Capital grants and contributions: General government - - 2,298 727,161 1,146,210 Public safety 73,159 43,344 355,293 36,822 67,208 Physical environment - - - - - Transportation 978,890 322,013 946,346 321,842 300,000 Economic environment 487,190 882,254 277,727 - - Human services - - - - 140,000 Culture and recreation 397,752 460,274 502,301 - - Court related - - - - -

Total governmental activities program revenues 29,592,886 22,912,589 18,833,494 16,550,606 14,302,434 (continued)

219 HIGHLANDS COUNTY, FLORIDA CHANGES IN NET ASSETS Last Five Years (continued)

Fiscal Year 2007 2006 2005 2004 2003 Business-type activities: Charges for services: Solid waste 10,007,203 9,884,632 10,107,665 8,706,567 8,130,090 Water and sewer 773,013 711,727 739,968 587,552 632,335 Highway Park Utility 159,859 143,415 130,302 99,383 110,988 Energy recovery - - - - -

Operating grants and contributions: Solid waste 215,622 458,966 208,892 177,294 289,299 Water and sewer - - - - - Highway Park Utility - - - - - Energy recovery - - - - -

Capital grants and contributions: Solid waste - - - - - Water and sewer 255,348 - - - - Highway Park Utility - - 161,526 - - Energy Recovery - - - - -

Total business-type activities program revenues 11,411,045 11,198,740 11,348,353 9,570,796 9,162,712

Total primary government program revenues$ 41,003,931 $ 34,111,329 $ 30,181,847 $ 26,121,402 $ 23,465,146

Net (Expense) / Revenue Governmental activities$ (62,487,480) $ (54,097,256) $ (48,295,836) $ (47,093,019) $ (46,772,205) Business-type activities 1,101,232 1,291,179 2,119,678 1,820,543 (152,375) Total primary governmental net expense$ (61,386,248) $ (52,806,077) $ (46,176,158) $ (45,272,476) $ (46,924,580)

General Revenues and Other Changes in Net Assets Governmental activities: Taxes: Property taxes$ 48,952,589 $ 36,201,450 $ 31,587,749 $ 28,778,216 $ 26,511,859 Fuel taxes 4,423,210 4,491,005 4,554,251 4,428,675 3,702,865 Sales tax 9,159,885 9,471,209 8,672,935 7,711,242 6,639,940 Services taxes 815,566 797,295 716,320 465,888 412,025 Other taxes 416,879 410,012 399,007 346,480 235,363 State shared revenues 10,704,175 10,806,441 10,569,151 9,665,466 8,779,948 Investment earnings 4,719,371 3,267,968 1,277,866 640,221 852,735 Gain (loss) on sale of capital assets 131,464 122,709 66,448 34,999 92,402 Miscellaneous 1,114,021 2,219,070 7,868,343 3,365,594 1,963,181 Transfers 1,250,000 1,000,000 1,750,000 - - Total governmental activities 81,687,160 68,787,159 67,462,070 55,436,781 49,190,318

Business-type activities: Investment earnings 614,499 487,002 253,917 89,761 86,129 Gain (loss) on sale of capital assets - - (63,061) - (35,616) Miscellaneous - 11,228 113,363 485,014 - Transfers (1,250,000) (1,000,000) (1,750,000) - - Total business-type activities (635,501) (501,770) (1,445,781) 574,775 50,513

Total primary government$ 81,051,659 $ 68,285,389 $ 66,016,289 $ 56,011,556 $ 49,240,831

Change in Net Assets Government activities$ 19,199,680 $ 14,689,903 $ 19,166,234 $ 8,343,762 $ 2,418,113 Business-type activities 465,731 789,409 673,897 2,395,318 (101,862) Total primary government$ 19,665,411 $ 15,479,312 $ 19,840,131 $ 10,739,080 $ 2,316,251

220

HIGHLANDS COUNTY, FLORIDA PROPERTY TAX LEVIES AND COLLECTIONS Last Ten Years

Taxes Levied Collected within the for theFiscal Year of the Levy Collections Total Collections to Date Fiscal Fiscal Yeara Percentage of in Subsequent Percentage of Year (Original Levy) Amountb Original Levy Years Amount Original Levy 2007$ 50,043,678 $ 46,310,231 92.54% *** *** *** 2006 37,501,546 34,793,807 92.78% *** *** *** 2005 31,346,313 29,479,267 94.04% *** *** *** 2004 28,850,618 26,915,429 93.29% *** *** *** 2003 27,491,064 25,537,624 92.89% *** *** *** 2002 25,061,090 23,335,100 93.11% *** *** *** 2001 24,123,215 22,277,689 92.35% *** *** *** 2000 22,849,122 21,293,144 93.19% *** *** *** 1999 21,587,440 20,058,789 92.92% *** *** *** 1998 21,380,669 19,844,160 92.81% *** *** ***

***Information was not provided by the Office of the Tax Collector.

Notes: aProperty taxes become due and payable on November 1 of each year. A four percent discount is allowed if taxes are paid in November, with the discount declining by one percent each month thereafter. Accordingly, taxes collected will never be 100% of the tax levy. Taxes become delinquent on April 1 of each year and tax certificates for the full amount of any unpaid taxes must be sold no later than June 1 of each year. Property taxes receivable and a corresponding reserve for uncollectible property taxes are not included in the financial statements as there are no delinquent taxes as of September 30, 2007. Information regarding the Original Levy was obtained from the Property Appraiser. bInformation was obtained from the Clerk of Courts Office based on remittance from the Office of the Tax Collector.

226

HIGHLANDS COUNTY, FLORIDA RATIOS OF GENERAL BONDED DEBT OUTSTANDING Last Ten Fiscal Years

General Bonded Debt Outstanding Less: Amounts Percentage of General Restricted to Percentage Actual Value Fiscal Obligation Repaying Principal of Personal of Taxable Per Year Bondsa and Interest Total Income Property Capita 2007$ 19,025,000 $ 1,936,737 $ 17,088,263 N/A 0.27% 173.01 2006$ 20,135,000 $ 1,942,395 $ 18,192,605 N/A 0.29% 188.19 2005$ 21,215,000 $ 1,973,435 $ 19,241,565 N/A 0.37% 205.89 2004$ 22,270,000 $ 1,966,972 $ 20,303,028 0.96% 0.44% 220.55 2003$ 23,295,000 $ 1,953,666 $ 21,341,334 1.06% 0.48% 236.09 2002$ 23,295,000 $ 1,122,404 $ 22,172,596 1.13% 0.53% 249.02 2000$ - $ - $ - N/A N/A N/A 1999$ - $ - $ - N/A N/A N/A 1998$ - $ - $ - N/A N/A N/A 1997$ - $ - $ - N/A N/A N/A

Notes: aHighlands County Florida Infrastructures Sales Surtax Revenue Bond Series 2002, delivered 6/13/02. Next principal payment due November 2008.

228 HIGHLANDS COUNTY, FLORIDA OVERLAPPING GOVERNMENTAL ACTIVITIES DEBT As of September 30, 2007

Estimated Estimated Share of Debt Percentage Overlapping Governmental Unit Outstanding Applicablea Debt

Debt repaid with property taxes: County$ 71,455,000 100% 71,455,000

Total overlapping debt $ 71,455,000

Source: Debt outstanding data provided by the Highlands County School Board.

Note: 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 Highlands County. This process recognizes that, when considering the government's ability to issue and repay 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. a The percentage of overlapping debt applicable is estimated using taxable assessed property values. Applicable percentages were estimated by determining the portion of the county's taxable assessed value that is within the government's boundaries and dividing it by the county's total taxable assessed value.

229 HIGHLANDS COUNTY, FLORIDA PLEDGED-REVENUE COVERAGE Last Ten Fiscal Years

aInfrastructure Sales Surtax Revenue Note, Series 2005 Infrastructure Fiscal Sales Debt Service Year Revenue Principal Interest Coverage 2007$ 265,143 $ 188,023 $ 132,819 0.83 2006$ 333,587 $ 126,786 $ 103,079 1.45 2005$ 39,227 - - N/A 2004 - - - - 2003 - - - - 2002 - - - - 2001 - - - - 2000 - - - - 1999 - - - - 1998 - - - -

Notes: Details regarding the County's outstanding debt can be found in the notes to the financial statements.

aThe Infrastructure Sales Surtax Revenue Note, Series 2005 is serviced from and secured by designated revenues derived from the County's share of the one cent local discretionary infrastructure sales surtax.

230 HIGHLANDS COUNTY, FLORIDA DEMOGRAPHIC AND ECONOMIC STATISTICS Last Ten Fiscal Years

Total Personal Per Capita Public Incomeb Personal School Unemployment a c d e Year Population (in thousands) Income Enrollment Rate 2007 98,768 $ - $ - 12,391 5.20% 2006 94,950 $ - $ - 12,456 4.00% 2005 93,456 $ 2,249,711 $ 23,511 12,133 4.70% 2004 92,057 $ 2,123,596 $ 22,802 12,004 6.80% 2003 90,393 $ 2,012,432 $ 22,111 11,625 1 6.20% 2002 89,038 $ 1,959,546 $ 22,004 11,459 7.40% 2001 88,212 $ 1,875,365 $ 20,746 11,360 4.90% 2000 87,400 $ 1,770,538 $ 20,505 11,500 7.30% 1999 81,780 $ 1,743,225 $ 20,058 10,856 7.80% 1998 80,458 $ 1,679,875 $ 19,647 11,042 8.40%

Notes: aInformation was provided by the Office of Economic and Demographic Research, Florida Legislature, and Bureau of Economic and Business Research, University of Florida. bInformation was provided by the U.S. Department of Commerce, Bureau of Economic Analysis. cInformation was provided by Bureau of Economic and Business Research, U.S. Department of Commerce, and State of Florida. dInformation was provided by the Highlands County District School Board. eInformation was provided by the Florida Agency for Workforce Innovation, Bureau of Labor Statistics.

231 HIGHLANDS COUNTY, FLORIDA PRINCIPAL EMPLOYERS Current Fiscal Year and Nine Years Prior

2007 1998 Percentage Percentage of Total City of Total City Employer Employees Rank Employment Employees Rank Employment Florida Hospital 1,260 1 3.08% 950 2 3.94% Highlands Regional Medical Center 570 2 1.39% 400 4 1.66% Wal-Mart 510 3 1.25% - - 0.00% South Florida Community College 464 4 1.13% - - 0.00% Cross Country Automotive Services 450 5 1.10% - - 0.00% Highlands County Board of County Commissioners 448 6 1.10% 695 3 2.88% Medical Data Systems, Inc 387 7 0.95% - - 0.00% Palms of Sebring 265 8 0.65% - - 0.00% Alan Jay Automotive Network 260 9 0.64% - - 0.00% Highlands Greenhouses, Inc. 255 10 0.62% - - 0.00% Highlands County School Board - - 0.00% 1,500 1 6.22% SunPure - - 0.00% 170 5 0.71% Consolidated Tomoka Citrus Packing - - 0.00% 165 6 0.68% Ben Hill Griffin - - 0.00% 150 7 0.62% Sprint - - 0.00% 147 8 0.61% Barnett Bank - - 0.00% 145 9 0.60% Georgia Pacific - - 0.00% 131 10 0.54%

Total 4,869 11.91% 4,453 18.47%

Labor Force Employed 40,883 24,109

Source: Top employer information was provided by the Highlands County Economic Development Commission. Labor force employed numbers were obtained from the Florida Research and Economic Database.

232

HIGHLANDS COUNTY, FLORIDA OPERATING INDICATORS BY FUNCTION

Function Fiscal Year Program 2007 2006

General Government New Hires 60 122 Purchase Orders Issued 3,572 2,733 Comp Plan Amendments 30 38 IT Work Orders Completed 4,702 1,672 IT Users Served 514 560

Public Safety Emergency Medical Services: Emergency 911 Call Volume: EMS Calls 12,970 12,644 Fire Department Calls 5,567 6,520 Average EMS Response Time (in minutes) 5.90 6.54 Air Medical Service (number of flights) 69 82 Sheriff: Arrests Made 7,372 6,984 Traffic Citations Issued 7,027 15,705 Detentions and Correction: Jail Average Daily population 456 328 Building Department: Permits Issued 7,743 10,273 Inspections Performed 14,808 16,791 Zoning Department: Code Enforcement Complaints Received 644 2,745 Code Enforcement Inspections Performed 3,584 6,585

Physical Environment Recycled Waste (tons) 3,354.46 3,314.99 Landfill Waste: Residential Household Waste (tons) 54,900.74 59,073.36 Commercial Waste (tons) 39,613.89 42,008.18

Transportation Miles of Road Constructed 1.02 0.57 Miles of Road Reconstructs - 0.97 Miles of Road Resurfaced 16.26 19.52

Economic Environment Down Payment Assistance Loan Program * 9 Veterans' Services: In Office Visits 8,137 4,341 Phone Calls Received 29,874 19,608 Home Visits 107 48 Transportation Trips 731 539 Presentations 528 255

(continued)

234 HIGHLANDS COUNTY, FLORIDA OPERATING INDICATORS BY FUNCTION (concluded)

Function Fiscal Year Program 2007 2006

Human Services Animal Control: Number of Complaints received 6,382 7,265 Number of Impoundments 4,039 4,212 Animals Reclaimed 363 36,453 Animals Adopted 66 53 Animals Donated to Humane Society 68 65 Animals Euthanized 3,089 3,183 Wildlife Relocated 413 454 Transportation Trips for Disadvantaged Persons 30,824 29,715

Culture and Recreation Library Operations: Registered Borrowers in Highlands County 41,700 41,557 Library Visitors 325,182 288,332 Items Circulated: Adult 279,438 168,471 Children 85,129 162,727 Adult Programs: Number of Programs 165 629 Number of Attendees 1,786 2,955 Children's Programs: Number of Programs 288 279 Number of Attendees 7,011 5,319 Volunteer Hours 6,202 8,570 Park Rentals: H.L. Bishop * 62 R.K. Butler - 476 Boat Ramps Maintained 39 39

Court Related Cases in Court 30,942 31,915 Individuals thru Security 139,066 119,052

Source: Information was obtained from each various County departments. Information has only been reported for the fiscal years ended September 30, 2007 and 2006. In future years, the information will be expanded to reflect 10 years of history.

* Information not available

235 HIGHLANDS COUNTY, FLORIDA CAPITAL ASSETS STATISTICS BY FUNCTION

Function Fiscal Year Program 2007 2006 General Government IT Networked buildings 27 25

Public Safety EMS Vehicles Ambulances 14 14 Jaws 2 2 Administrative 2 2 Sheriff's Stations 1 1 Sub-Stations 3 3 Patrol vehicles 80 87 Command Center 3 1 Special Operations Vehicle 2 1 Aircraft 1 1 Watercraft 4 2 Correction facility capacity 512 512

Transportation Miles of county road: Paved 980.06 977.08 Unpaved 204.76 202.93 Number of airports 3 2

Culture and Recreation Number of county libraries 3 3 Library books 166,139 193,943 Library audio materials 10,409 - Library video materials 16,955 14,755 Number of county boat ramps 39 39 Number of county parks 21 18 Parks with playgrounds 5 4 Parks with baseball/softball fields 6 2 Park acreage (estimated): Developed 1,469.83 1,447.83 Undeveloped 30.67 52.67

Source: Information was obtained from each various County departments. Information has only been reported for the fiscal years ended September 30, 2007 and 2006. In future years, the information will be expanded to reflect 10 years of history.

236 Fuel Farm

COMPLIANCE SECTION T The NCT Group CPA's,L.L.P. Certified Public Accountants and Consultants

INDEPENDENT AUDITOR'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS

Board of County Commissioners Sebring,Florida

We have audited the financial statementsof Highlands County, Florida (County) as of and for the year ended September30, 2007, and have issuedour report thereondated March 5, 2008. We conductedour audit in accordancewith auditing standardsgenerally acceptedin the United Statesof America and the standardsapplicable to financial audits contained in GovernmentAuditing Standards issued by the Comptroller Generalof the United States.

Internal Control Over Financial Reporting In planning and performing our audit, we consideredthe County'sinternal control over financial reporting as a basis for designingour auditing proceduresfor the purposeof expressingour opinion on the financial statements,but not for the purposeof expressingan opinion on the effectivenessof the County's internal control over financial reporting. Accordingly, we do not expressan opinion on the effectivenessof the County'sinternal control over financial reporting.

Our considerationof internal control over financial reporting was for the limited purposedescribed in the precedingparagraph and would not necessarilyidentify all deficienciesin internal control over financial reporting that might be significant deficienciesor material weaknesses.However, as discussedbelow, we identified certain deficienciesin internal control over financial reporting that we considerto be significant deficiencies.

A control deficiency exists when the design or operation of a control does not allow managementor employees, in the normal course of performing their assigned functions, to prevent or detect misstatementson a timely basis. A significant deficiency is a control deficiency, or combination of control deficiencies, that adversely affects the entity's ability to initiate, authorize, record, process,or report financial data reliably in accordancewith generally acceptedaccounting principles such that there is more than a remote likelihood that a misstatementof the entity's financial statementsthat is more than inconsequentialwill not be preventedor detectedby the entity's internal control.

A material weaknessis a significant deficiency, or combinationof significant deficiencies,that results in more than a remote likelihood that a material misstatementof the financial statementswill not be preventedor detectedby the entity's internal control.

237

811E. MAIN STREET.P.o. BOX 1076. LAKELAND, FLORIDA 33802-1076. (863) 683-6783 RSMMcGladre 435SOUTH COMMERCE AVENUE. SEBRING, FLORIDA 33870-3702. (863) 385-1577 . y Network 202 SECURITY SQUARE BUSINESS CENTER. P.O. BOX 2239. WINTER HAVEN, FLORIDA 33883-2239. (863) 294-4131 An IndependentlyOwned Member

- Our considerationof the internal control over financial reporting was for the limited purposedescribed in the first paragraphof this sectionand would not necessarilyidentify all deficienciesin the internal control that might be significant deficiencies and, accordingly, would not necessarilydisclose all significant deficiencies that are also consideredto be material weaknesses. However, we believe finding 07-0I describedin the accompanyingSchedule of Findings and QuestionedCosts is a material weakness.

Compliance and Other Matters As part of obtaining reasonableassurance about whether the County's financial statementsare free of material misstatement,we performed tests of its compliancewith certain provisions of laws, regulations, contracts,and grant agreements,noncompliance with which could have a direct and material effect on the determinationof financial statementamounts. However, providing an opinion on compliancewith those provisions was not an objective of our audit and, accordingly, we do not expresssuch an opinion. The results of our tests disclosed no instancesof noncomplianceor other matters that are required to be reportedunder GovernmentAuditing Standards.

We noted certain mattersthat we reportedto managementof the County in a separateletter datedMarch 5, 2008. This report is intended solely for the information of the Board of County Commissioners, management,federal and state awarding agencies,and the State of Florida Auditor General and is not intendedto be and shouldnot be usedby anyoneother than thesespecified parties.

~ NU GyvtJ.f CPA~.L..l-.P. THE NCT GROUP CPA's, L.L.P. Sebring,Florida March 5, 2008

238 T The NCT Group CPA's,L.L.P. Certified Public Accountants and Consultants

INDEPENDENT AUDITOR'S REPORT ON COMPLIANCE WITH REQUIREMENTS APPLICABLE TO EACH MAJOR FEDERAL PROGRAM AND STATE PROJECT AND INTERNAL CONTROL

OVER COMPLIANCE IN ACCORDANCE WITH OMB CIRCULAR A-133 , AND CHAPTER 10.550,RULES OF THE AUDITOR GENERAL ,

"~ i ,;~

Board of County Commissioners Highlands County, Florida

Compliance We have audited the compliance of Highlands County, Florida (County) with the types of compliance requirements described in the U.S. Office of Management and Budget (OMB) Circular A-133 ComplianceSupplement and the requirementsdescribed in the Executive Office of the Governor's State Projects Compliance Supplementthat are applicable to each of its major federal programs and state projects for the year endedSeptember 30,2007. The County's major federalprograms and stateprojects are identified in the summaryof auditor's results sectionof the accompanyingSchedule of Findings and Questioned Costs. Compliance with the requirements of laws, regulations, contracts, and grants applicable to each of its major federal programsand stateprojects is the responsibility of the County's management.Our responsibility is to expressan opinion on the County's compliancebased on our audit.

We conductedour audit of compliancein accordancewith auditing standardsgenerally acceptedin the United Statesof America; the standardsapplicable to financial audits containedin GovernmentAuditing Standardsissued by the Comptroller Generalof the United States;OMB Circular A-133, Audits of States, Local Governments,and Non-Profit Organizations; and Chapter 10.550,Rules of the Auditor General. Those standards,OMB Circular A-133 and Chapter 10.550,Rules of the Auditor General,require that we plan and perform the audit to obtain reasonableassurance about whether noncompliance with the types of compliancerequirements referred to abovethat could have a direct and material effect on a major federal program or state project occurred. An audit includes examining, on a test basis, evidence about the County's compliance with those requirementsand performing such other proceduresas we considered necessaryin the circumstances. We believe that our audit provides a reasonablebasis for our opinion. Our audit doesnot provide a legal determinationon the County's compliancewith thoserequirements.

In our opinion, the County complied, in all material respects,with the requirementsreferred to abovethat are applic,ableto each of its major federal programsand stateprojects for the year ended September30, 2007.

239

811E. MAIN STREET.P.o. BOX 1076. LAKELAND, FLORIDA 33802-1076. (863) 683-6783 RSMMcGladre 435soum COMMERCEAVENUE. SEBRING, FLORIDA 33870-3702. (863) 385-1577 . yNetwork 202 SECURITY SQUARE BUSINESS CENTER. P.O. BOX 2239. WINTER HAYEN, FLORIDA 33883-2239 . (863) 294-4131 An IndependentlyOwned Member

HIGHLANDS COUNTY, FLORIDA

SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS AND STATE FINANCIAL ASSISTANCE

For the Fiscal Year Ended September 30, 2007

CFDA Grant Federal/State agency CSFA Contract Transfers to Pass-through Entity Number Number Expenditures Subrecipients

U.S. Department of Agriculture: Direct Programs: Istokpoga Levee Repair 10.916 69-4209-6-1662$ 99,626 $ - Total U.S. Department of Agriculture 99,626 -

U.S. Department of Housing and Urban Development: Direct Programs: Home Investment Partnerships Program 14.239 M-06-DC-12-0233 52,708 - Pass-through from Florida Department of Community Affairs: Small Cities Housing Rehabilitation Grant 14.228 06DB-3K-07-38-01-H04 661,387 - E-Stone CDBG Economic Development 14.228 06-BD-3K-07-38-01-E12 394,832 - Economic Development- ALF 14.228 07-DB-3R-07-38-01-E-17 14,358 - Pass-through from Florida Housing Finance Corporation: Home Investment Partnerships Program 14.239 HA04-722 263,569 - Pass-through from City of Sebring: Home Investment Partnerships Program 14.239 HA04-721 234,228 - Pass-through from City of Avon Park: Home Investment Partnerships Program 14.239 HA04-723 178,067 - Total U.S. Department of Housing and Urban Development 1,799,149 -

U.S. Department of Justice: Direct Programs: Bulletproof Vest Partnership Program 16.607 N/A 8,524 - Edward Byrne-Justice Assistance Grant 16.738 2007-JAGC-HIGH-1-P3-114 17,250 - Edward Byrne-Justice Assistance Grant 16.738 2007-JAGC-HIGH-1-P3-115 29,476 - Pass-through from Florida Attorney General: Crime Victim Assistance 16.575 V6079 103,057 - Total U.S. Department of Justice 158,307 -

U.S. Department of Transportation: Pass-through from Florida Department of Transportation: Highway Planning and Construction 20.205 ANV91 12,704 - Child Safety and Child Booster Seat Incentive 20.613 OP-07-27-13 7,369 - State and Community Highway Safety Funds 20.605 FS 07-27-13 25,878 - Total U.S. Department of Transportation 45,951 -

(continued)

241 HIGHLANDS COUNTY, FLORIDA

SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS AND STATE FINANCIAL ASSISTANCE (continued)

For the Fiscal Year Ended September 30, 2007

CFDA Grant Federal/State agency CSFA Contract Transfers to Pass-through Entity Number Number Expenditures Subrecipients

Election Assistance Commission: Pass-through from Florida Division of Elections: Voter Education Grant 90.401 N/A 6,660 - Total Election Assistance Commission 6,660 -

Department of Homeland Security: Direct Program: Emergency Food & Shelter 97.024 N/A 11,806 - Pass-through from Florida Department of Community Affairs: Specialized Training 97.004 05-DS-2N-38-01-302 175 - Pass-through from Florida Department of Law Enforcement: Buffer Zone Protection Plan 97.078 2006-BZPP-4 45,000 - Pass-through from United Way: Emergency Food and Shelter 97.024 N/A 1,237 - Homeless Prevention Program 97.024 N/A 6,453 - Total Department of Homeland Security 64,671 -

TOTAL EXPENDITURES OF FEDERAL AWARDS $ 2,174,364 -

STATE FINANCIAL ASSISTANCE Office of the Governor: Pass-through from Office of Tourism, Trade, and Economic Development Economic Development Transportation Fund 31.002 OT04-014 & OT04-015 49,505 - APYA Cell Tower 31.003 DIG-05 & 06 73,159 - Total Office of the Governor, Office of Tourism, Trade, and Economic Development 122,664 -

Florida Department of Environmental Protection: Small County Consolidated Grants 37.012 SC716 191,176 - Cooperative Collection Center Grant 37.007 S0302 16,530 - Florida Recreation Development Assistance Program 37.017 F7034 199,252 - Florida Recreation Development Assistance Program 37.017 F7035 198,500 - Total Florida Department of Environmental Protection 605,458 -

Florida Department of State & Secretary of State Division of Library & Information Services State Aid to Libraries 45.030 07-ST-19 346,383 - Total Florida Department of State, Division of Library and Information Services 346,383 -

(continued)

242 HIGHLANDS COUNTY, FLORIDA

SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS AND STATE FINANCIAL ASSISTANCE (continued)

For the Fiscal Year Ended September 30, 2007

CFDA Grant Federal/State agency CSFA Contract Transfers to Pass-through Entity Number Number Expenditures Subrecipients

Florida Department of Community Affairs: Hazards Analysis Grant Contract 52.023 07-CP-11-07-38-01-XXX 5,231 - Emergency Mgmt Preparedness & Assistance Base Grant 52.008 07-BG-07-07-38-01-314 121,379 - Total Florida Department of Community Affairs 126,610 -

Florida Finance Corporation: State Housing Initiatives Partnership (SHIP) Program 52.901 N/A 1,280,389 - Hurricane Housing Recovery Program 52.902 N/A 2,179,759 - Total Florida Finance Corporation 3,460,148 -

Florida Department of Transportation: Small County Road Assistance 55.016 413953-1-58-01 46,967 - Total Florida Department of Transportation 46,967 -

Florida Department of Health: Pass-through Highlands County Health Department: Avon Park Health Department Facility N/A N/A 23,651 - Total Florida Department of Health 23,651 -

Florida Department of Children & Families Pass-through from Highlands County Coalition for the Homeless Homeless Grant-in-Aid Program 60.021 TFZG4 3,015 - Total Florida Department of Children & Families 3,015 -

Florida Department of Revenue Digital Map Conversion 73.023 P0071 45,000 - Total Florida Department of Revenue 45,000 -

TOTAL STATE FINANCIAL ASSISTANCE $ 4,779,896 -

243 HIGHLANDS COUNTY, FLORIDA NOTES TO SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS AND STATE FINANCIAL ASSISTANCE For The Fiscal Year Ended September 30, 2007

NOTE 1 - GENERAL

The accompanying Schedule of Expenditures of Federal Awards and State Financial Assistance presents the activity of all federal and state financial award programs of Highlands County, Florida (County). The County reporting entity is defined in Note 1 to the County’s basic financial statements for the year ended September 30, 2007. All federal financial awards received directly from federal agencies as well as federal financial awards passed through other government agencies are included in the schedule.

NOTE 2 - BASIS OF ACCOUNTING

The accompanying Schedule of Expenditures of Federal Awards and State Financial Assistance is presented using the modified accrual basis of accounting for awards recorded in governmental fund types and the accrual basis of accounting for awards recorded in the proprietary fund types which are described in Note 1 to the County’s general purpose financial statements for the year ended September 30, 2007.

NOTE 3 - CONTINGENCIES

Grant monies received and disbursed by the County are for specific purposes and are subject to review by the grantor agencies. Such audits may result in requests for reimbursement due to disallowed expenditures. Based upon prior experience, the County does not believe that such disallowances, if any, would have a material effect on the financial position of the County. As of March 5, 2008, there were no material questioned or disallowed costs as a result of grant audits in process or completed.

244 HIGHLANDS COUNTY, FLORIDA SCHEDULE OF FINDINGS AND QUESTIONED COSTS- FEDERAL PROGRAMS AND STATE PROJECTS For the Fiscal Year Ended September 30, 2007

A. SUMMARY OF AUDITOR’S RESULTS

1. The type of report issued on the financial statements: Unqualified opinion

2. Internal control over financial reporting:

Material weaknesses Yes

Significant deficiencies not considered to be material weaknesses No

3. Noncompliance material to the financial statements: No

4. Internal control over major programs:

Material weaknesses No

Significant deficiencies not considered to be material weaknesses No

5. Type of report is to be issued on compliance for major programs: Unqualified opinion

6. Any audit findings which are required to be reported under Section 510(a) of Circular A-133 or Chapter 10.650, Rules of the Auditor General: No

7. Major Federal programs: CFDA # Home Investments Partnership 14.239

8. Major state projects: CSFA #

Hurricane Housing Recovery Program 52.902 Florida Recreation Development Assistance Program 37.017

9. Dollar threshold used to distinguish between Type A and Type B programs for Federal programs and state projects: $300,000

10. Auditee qualified as low-risk auditee under OMB Circular A-133? Yes

11. There were no prior year findings or corrective actions to report.

245 HIGHLANDS COUNTY, FLORIDA SCHEDULE OF FINDINGS AND QUESTIONED COSTS- FEDERAL PROGRAMS AND STATE PROJECTS (continued) For the Fiscal Year Ended September 30, 2007

B. FINDINGS RELATING TO THE FINANCIAL STATEMENTS REPORTED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS:

07-01: Financial Reporting and Journal Entries Condition A material weakness in internal control over financial reporting existed as of September 30, 2007 because the County did not have personnel with sufficient technical knowledge and training to prepare financial statements in accordance with generally accepted accounting principles. Additionally, material adjusting journal entries needed to be posted to the trial balances originally presented for audit in order for the financial statements to be presented fairly in accordance with generally accepted accounting principles. This weakness resulted in a material understatement of the County’s grants receivable, accounts payable, revenues, and expenditures and an overstatement of deferred revenue for the year ended September 30, 2007.

Criteria: Internal control over financial reporting should be in place to ensure that staff is trained to prepare financial statements and trial balances in accordance with accounting principles generally accepted in the United States.

Context: Substantive testing of account balances to supporting documentation noted the differences and necessary adjustments.

Effect: Training staff to prepare financial statements and perform a review of disbursements subsequent to year-end should be performed to ensure accurate financial reporting.

Cause: Turnover in staff and changes in staff responsibilities has limited the ability to provide the training necessary to perform these functions.

Recommendation: We recommend training staff so that they have the technical knowledge needed to prepare the financial statements in accordance with generally accepted accounting principles. We also recommend re-evaluating the system for paying invoices subsequent to year-end to ensure that all invoices requiring accrual are recorded in the proper period.

Management Response: Management agrees with the finding. With regard to the new mandated technical knowledge aspect of this finding, which has been imposed by the Auditing Standards Board in their Statement on Auditing Standards Statement #112, management determined that it was not economically justified at this juncture to recruit and hire staff with the requisite knowledge to meet this requirement at this time. Management chose instead to contract this knowledge at a fraction of the cost through the existing auditing contract with the County's auditor of record, The NCT Group CPA's, while progressively training existing staff to ultimately have the knowledge

246 HIGHLANDS COUNTY, FLORIDA SCHEDULE OF FINDINGS AND QUESTIONED COSTS- FEDERAL PROGRAMS AND STATE PROJECTS (continued) For the Fiscal Year Ended September 30, 2007

B. FINDINGS RELATING TO THE FINANCIAL STATEMENTS REPORTED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS (continued):

07-01: Financial Reporting and Journal Entries (continued)

in-house. This conscious decision was expected to generate a finding of this nature for probably two consecutive years until the technical knowledge has been acquired. With regard to the material adjusting journal entries aspect of this finding, the Clerk's Office and Board management are committed to improving inter-agency communications to avoid this problem in the future.

C. Findings and questioned costs relating to federal and state awards:

None

247 Special Thanks to the following staff members of the Sebring Airport Authority for their time and effort in Special Thanks to the following staff members of the Sebring Airport Authority for their time and effort in providing information and pictures: providing information and pictures:

Mike Willingham – Executive Director Mike Willingham – Executive Director Leah G raves – Executive Assistant Leah G raves – Executive Assistant Bob Wood – Chairman, U.S. Sport Aviation Expo Bob Wood – Chairman, U.S. Sport Aviation Expo Erik Treudt – Airport/Project Manager Erik Treudt – Airport/Project Manager