COUNTY OF KERN STATE OF CALIFORNIA COMPREHENSIVE ANNUAL FINANCIAL REPORT Fiscal Year Ended June 30, 2018 Mary B. Bedard, CPA Auditor-Controller-County Clerk COMPREHENSIVE ANNUAL FINANCIAL REPORT FISCAL YEAR ENDED JUNE 30, 2018 COUNTY OF KERN Supervisor Mick Gleason ....................................................... First District Supervisor Zach Scrivner ................................................. Second District Supervisor Mike Maggard .................................................... Third District Supervisor David Couch .................................................... Fourth District Supervisor Leticia Perez ....................................................... Fifth District Ryan Alsop – County Administrative Officer Prepared by the Office of Mary B. Bedard, Auditor-Controller-County Clerk COUNTY OF KERN Comprehensive Annual Financial Report For the Fiscal Year Ended June 30, 2018 Table of Contents INTRODUCTORY SECTION LETTER OF TRANSMITTAL .................................................................................................................................................................... 2 DIRECTORY OF ELECTED COUNTY OFFICIALS ........................................................................................................................................ 7 DIRECTORY OF APPOINTED COUNTY OFFICIALS .................................................................................................................................... 8 ORGANIZATIONAL CHART ..................................................................................................................................................................... 9 CERTIFICATE OF ACHIEVEMENT FOR EXCELLENCE IN FINANCIAL REPORTING ....................................................................................... 10 FINANCIAL SECTION INDEPENDENT AUDITOR’S REPORT ..................................................................................................................................................... 12 MANAGEMENT’S DISCUSSION AND ANALYSIS ...................................................................................................................................... 15 BASIC FINANCIAL STATEMENTS: Government-Wide Financial Statements: Statement of Net Position .................................................................................................................................................... 27 Statement of Activities ......................................................................................................................................................... 28 Fund Financial Statements: Governmental Funds Balance Sheet ..................................................................................................................................................................... 30 Reconciliation of the Governmental Funds Balance Sheet to the Government-Wide Statement of Net Position – Governmental Activities ............................................................................................................... 32 Statement of Revenues, Expenditures, and Changes in Fund Balances .................................................................................... 33 Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances of Governmental Funds to the Government-Wide Statement of Activities – Governmental Activities ........................... 35 Proprietary Funds Statement of Net Position .................................................................................................................................................... 36 Statement of Revenues, Expenses, and Changes in Net Position ............................................................................................. 37 Statement of Cash Flows ..................................................................................................................................................... 38 Fiduciary Funds Statement of Net Position .................................................................................................................................................... 40 Statement of Changes in Net Position ................................................................................................................................... 41 Discretely Presented Component Units Statement of Net Position .................................................................................................................................................... 42 Statement of Activities ......................................................................................................................................................... 43 Notes to the Financial Statements: Note I. Summary of Significant Accounting Policies ............................................................................................................... 45 Note II. Restatements of Net Position .................................................................................................................................. 53 Note III. Stewardship, Compliance and Accountability ........................................................................................................... 54 Note IV. Cash and Investments ........................................................................................................................................... 55 Note V. Receivables ........................................................................................................................................................... 58 Note VI. Interfund Transactions .......................................................................................................................................... 60 i COUNTY OF KERN Comprehensive Annual Financial Report For the Fiscal Year Ended June 30, 2018 Table of Contents Note VII. Capital Assets ...................................................................................................................................................... 62 Note VIII. Leases ............................................................................................................................................................... 64 Note IX. Long-Term Debt ................................................................................................................................................... 65 Note X. Pension Plan .......................................................................................................................................................... 71 Note XI. Other Postemployment Benefits (OPEB) .................................................................................................................. 77 Note XII. Risk Management ................................................................................................................................................ 80 Note XIII. Commitments and Contingencies ......................................................................................................................... 81 Note XIV. Landfills ............................................................................................................................................................. 82 Note XV. Pollution Remediation ........................................................................................................................................... 84 Note XVI. Deferred Outflows and Inflows of Resources/Advances from Others ........................................................................ 84 Note XVII. Fund Balances/Net Position ................................................................................................................................ 86 Note XVIII. Other Information ............................................................................................................................................ 88 Note XIX. Subsequent Events .............................................................................................................................................. 90 REQUIRED SUPPLEMENTARY INFORMATION: Budgetary Comparison Schedules – Major Governmental Funds General Fund ...................................................................................................................................................................... 92 Behavioral Health & Recovery Services ................................................................................................................................. 93 Community Development ..................................................................................................................................................... 94 County Local Revenue Fund ................................................................................................................................................. 95 Human Services .................................................................................................................................................................. 96 Roads ................................................................................................................................................................................ 97 Structural Fire ..................................................................................................................................................................... 98 Notes to Required Supplementary Information ...............................................................................................................................