Snohomish County, Washington Comprehensive Annual Financial Report For The Year Ended December 31, 2017 Dave Somers Snohomish County Executive Nathan Kennedy, CPA Director of Finance Sharyl L. Raines, CPA Controller Snohomish County Finance Department 3000 Rockefeller Ave. MS 610 Everett, WA 98201 (425) 388-3401 2017 Table of Contents Page INTRODUCTORY SECTION Letter of Transmittal ...................................................................................................................................................... i Certificate of Achievement for Excellence in Financial Reporting ............................................................................. vii Organizational Chart ................................................................................................................................................. viii Elected Officials .......................................................................................................................................................... ix FINANCIAL SECTION Independent Auditor’s Report ...................................................................................................................................... 1 Management’s Discussion & Analysis (MD&A) ........................................................................................................... 4 Basic Financial Statements Government-wide Financial Statements Statement of Net Position ............................................................................................................................. 17 Statement of Activities .................................................................................................................................. 19 Fund Financial Statements - Governmental Funds Balance Sheet - Governmental Funds .......................................................................................................... 20 Reconciliation of Governmental Funds Balance Sheet to the Statement of Net Position ............................ 21 Statement of Revenues, Expenditures, and Changes in Fund Balances - Governmental Funds ................ 22 Reconciliation of Governmental Funds Statement of Revenues, Expenditures, and Changes in Fund Balances to the Statement of Activities .................................................................................................. 23 Statement of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual - General Fund .......................................................................................................................................... 24 Statement of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual - County Roads Fund ................................................................................................................................ 27 Statement of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual - Human Services Fund ............................................................................................................................ 28 Fund Financial Statements - Proprietary Funds Statement of Net Position - Proprietary Funds ............................................................................................. 30 Statement of Revenues, Expenses, and Changes in Net Position - Proprietary Funds ............................... 32 Statement of Cash Flows - Proprietary Funds .............................................................................................. 33 Fund Financial Statements - Fiduciary Funds Statement of Net Position - Fiduciary Funds ................................................................................................ 34 Statement of Changes in Net Position - Fiduciary Funds ............................................................................. 35 Notes to the Financial Statements Note 1 Summary of Significant Accounting Policies ..................................................................................... 36 1.A Reporting Entity ................................................................................................................................ 36 1.B Measurement Focus, Basis of Accounting, and Financial Statement Presentation ........................ 37 1.C Assets, Deferred Outflows, Liabilities, Deferred Inflows, and Equity ............................................... 41 Note 2 Stewardship, Compliance, and Accountability .................................................................................. 45 2.A Budgetary Data ................................................................................................................................ 45 2.B Deficit Fund Equity ........................................................................................................................... 46 Note 3 Detail Notes on Transaction Classes/Accounts ................................................................................ 46 3.A Deposits and Investments ................................................................................................................ 46 3.B Taxes Receivable............................................................................................................................. 50 3.C Other Receivables ........................................................................................................................... 53 3.D Capital Assets .................................................................................................................................. 53 3.E Short-Term Debt .............................................................................................................................. 55 3.F Long-Term Debt ............................................................................................................................... 55 3.G Compensated Absences ................................................................................................................. 59 3.H Accrued Liabilities ............................................................................................................................ 60 3.I Interfund Balances and Transfers ..................................................................................................... 60 3.J Governmental Fund Balance ............................................................................................................ 62 Note 4 Other Notes ....................................................................................................................................... 63 4.A Pension Plans and Other Benefit Plans ........................................................................................... 63 4.B Risk Management ............................................................................................................................ 79 4.C Commitments, Contingencies, and Legal Matters ........................................................................... 81 2017 Table of Contents Note 5 Reconciliation of Government-Wide and Fund Financial Statements .............................................. 85 5.A Explanation of Differences between the Governmental Fund Balance Sheet and the Government-Wide Statement of Net Position .................................................................................. 85 5.B Explanation of Differences between Governmental Fund Operating Statements and the Statement of Activities ..................................................................................................................... 87 Note 6 Pollution Remediation Obligations .................................................................................................... 88 Note 7 Related Party Transactions ............................................................................................................... 88 Note 8 Tax Abatements ................................................................................................................................ 88 Required Supplementary Information Schedule of Proportionate Share of the Collective Net Pension Liability ..................................................... 90 Schedule of Employer Contributions ............................................................................................................ 91 Schedule of Funding Progress - Other Postemployment Benefits Plan ....................................................... 92 Notes to the Required Supplementary Information ....................................................................................... 93 Combining Financial Statements and Schedules Governmental Funds Combining Balance Sheet - Other Governmental Funds ............................................................................. 94 Combining Statement of Revenues, Expenditures, and Changes in Fund Balance - Other Governmental Funds .................................................................................................................. 101 Combining Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual - Other Governmental Funds ................................................................................. 108 Proprietary Funds Combining Statement of Net Position - Internal Service Funds ................................................................. 123 Combining Statement of Revenues, Expenses, and Changes in Net Position - Internal Service Funds.........................................................................................................................