HUTCHINSON COUNTY AUDIT REPORT For the Two Years Ended...

HUTCHINSON COUNTY

AUDIT REPORT

For the Two Years Ended December 31, 2016

HUTCHINSON COUNTY COUNTY OFFICIALS December 31, 2016

Board of Commissioners: Jerome E. Hoff

Brad Henke Steve Friesen Leon Edlund

Larry Mehlhaff

Auditor: Diane Murtha

Treasurer:

Tamara Miller

State’s Attorney: Glenn Roth

Register of Deeds:

Julie Herrboldt

Sheriff: James Zeeb

HUTCHINSON COUNTY TABLE OF CONTENTS

Page 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 1 Schedule of Prior Audit Findings 3 Schedule of Current Audit Findings 3 Independent Auditor’s Report 9 Basic Financial Statements Government-wide Financial Statements: As of December 31, 2016: Statement of Net Position--Modified Cash Basis 11 For the Year Ended December 31, 2016: Statement of Activities--Modified Cash Basis 12 For the Year Ended December 31, 2015: Statement of Activities--Modified Cash Basis 13 Fund Financial Statements: Governmental Funds As of December 31, 2016: Balance Sheet--Modified Cash Basis 14 For the Year Ended December 31, 2016: Statement of Revenues, Expenditures and Changes in Fund Balances--Modified Cash Basis 16 For the Year Ended December 31, 2015: Statement of Revenues, Expenditures and Changes in Fund Balances--Modified Cash Basis 20 Fiduciary Funds As of December 31, 2016: Statement of Fiduciary Net Position--Modified Cash Basis 24 Notes to the Modified Cash Basis Financial Statements 25

Supplementary Information:

For the Year Ended December 31, 2016: Budgetary Comparison Schedule--Modified Cash Basis--General Fund 39 Budgetary Comparison Schedule--Modified Cash Basis--Road and Bridge Fund 41 For the Year Ended December 31, 2015: Budgetary Comparison Schedule--Modified Cash Basis--General Fund 42 Budgetary Comparison Schedule--Modified Cash Basis--Road and Bridge Fund 44 Notes to the Supplementary Information – Budgetary Comparison Schedules 45 Schedule of the County’s Proportionate Share of the Net Pension Liability (Asset) 46 Notes to the Supplementary Information – Pension Schedules 47 Schedule of Changes in Long-Term Debt 48

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

County Commission Hutchinson County Olivet, South Dakota We have audited, in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States, the modified cash basis of accounting financial statements of the governmental activities, each major fund, and the aggregate remaining fund information of Hutchinson County, South Dakota (County), as of December 31, 2016, and for each of the years in the biennial period then ended, and the related notes to the financial statements, which collectively comprise the County’s basic financial statements and have issued our report thereon dated September 21, 2017.

Internal Control Over Financial Reporting In planning and performing our audit of the financial statements, we considered the County’s internal control over financial reporting (internal control) to determine the audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the County’s internal control. Accordingly, we do not express an opinion on the effectiveness of the County’s internal control. Our consideration of internal control was for the limited purpose described in the preceding paragraph and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies and therefore, material weaknesses or significant deficiencies may exist that have not been identified. However, as described in the accompanying Schedule of Current Audit Findings, we identified certain deficiencies in internal control that we consider to be material weaknesses. A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct misstatements on a timely basis. A material weakness is a deficiency, or combination of deficiencies, in internal control such that there is a reasonable possibility that a material misstatement of the County’s financial statements will not be prevented, or detected and corrected on a timely basis. We consider the deficiencies described in the accompanying Schedule of Current Audit Findings as items No. 2016-001, No. 2016-002, and No. 2016-003 to be material weaknesses.

Compliance and Other Matters As part of obtaining reasonable assurance about whether the County’s financial statements are free of material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, and contracts, noncompliance with which could have a direct and material effect on the determination of

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financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed an instance of noncompliance or other matters that is required to be reported under Government Auditing Standards and which is described in the accompanying Schedule of Current Audit Findings as item No. 2016-005.

County’s Response to Findings The County did not wish to respond to the findings identified in our audit as described in the accompanying Schedule of Current Audit Findings.

Purpose of this Report The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the County’s internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the entity’s internal control and compliance. Accordingly, this communication is not suitable for any other purpose. As required by South Dakota Codified Law 4-11-11, this report is a matter of public record and its distribution is not limited.

Martin L. Guindon, CPA Auditor General September 21, 2017

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HUTCHINSON COUNTY SCHEDULE OF PRIOR AND CURRENT AUDIT FINDINGS

SCHEDULE OF PRIOR AUDIT FINDINGS

Prior Audit Findings: Finding No. 2014-001: The County’s internal control over cash assets were inadequate resulting in diminished assurance that the County’s financial transactions were properly recorded and its assets were adequately safeguarded. This finding has not been resolved and is restated under current audit finding No. 2016-001. Finding No. 2014-002: Internal accounting controls over financial reporting for the years 2016 and 2015 were inadequate resulting in inaccurate information being presented to users of the annual financial reports. This finding has not been resolved and is restated under current audit finding No. 2016-002. Finding No. 2014-003: Deficiencies were noted in the accounting records which diminished the reliability of the accounting data generated by the County. This finding has not been resolved and is restated under current audit finding No. 2016-003. Finding No. 2014-004: The unassigned fund balance of the General Fund exceeded the maximum allowed by South Dakota Codified Law (SDCL) 7-21-18.1 by approximately $1,535,000 as of December 31, 2014. This finding has not been resolved and is restated under current audit finding No. 2016-004. Finding No. 2014-005: The County incurred expenditures in excess of appropriations contrary to SDCL 7-21-25. This finding has not been resolved and is restated under current audit finding No. 2016-005.

SCHEDULE OF CURRENT AUDIT FINDINGS Current Audit Findings: Internal Control-Related Findings - Material Weaknesses:

Cash Internal Control Deficiencies

Finding No. 2016-001: The County’s internal control over cash assets were inadequate resulting in diminished assurance that the County’s financial transactions were properly recorded and its assets were adequately safeguarded. This is the fifth consecutive audit in which a similar finding was noted.

Analysis: United States General Accounting Office, Government Auditing Standards, 2011 revisions, state:

Internal control serves as a defense in safeguarding assets and in preventing and detecting errors; fraud; noncompliance with provisions of laws, regulations, contracts or grant agreements; or abuse.

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We noted the following internal control deficiencies over cash:

a. The fund cash balances recorded in the general ledger agreed in total, but did not agree with the computed December 31, 2016 cash balances for the General Fund, Road and Bridge Fund, TIF Debt Service Fund, and Agency Funds.

b. Several agency funds had negative cash balances recorded in the general ledger. The negative cash balances existed because several of the distributions made to the school districts and municipalities were not deposited into the proper agency fund. As a result, the County disbursed more cash than deposited in the respective agency funds.

During this audit, the cash balances by fund were reconciled and reconstructed as of December 31, 2016. As a result the County was exposed to an increased risk of accounting errors or irregularities not being detected in a timely manner.

RECOMMENDATION: 1. We recommend the County improve internal controls over cash to ensure that cash assets

are adequately safeguarded. Management’s Response: Management chose not to respond to this finding.

Financial Reporting Errors Finding No. 2016-002: Internal accounting controls over financial reporting for the years 2016 and 2015 were inadequate resulting in inaccurate information being presented to users of the annual financial reports. This is the sixth consecutive audit in which a similar finding was noted. Analysis: We noted the following significant errors in the County’s annual financial reports for the years ended December 31, 2016 and December 31, 2015:

a. The 2016 Fiduciary Funds Statement of Fiduciary Net Position, Cash and Cash Equivalent was understated by $35,100.10 and in the 2016 Fund Financial Statements, the December 31, 2016 Cash and Fund Balance were overstated by $31,668.64 in the General Fund, and $2,774.27 in the Road and Bridge Fund. The remaining $657.19 was omitted from the statements.

b. The 2015 Fund Financial statements reported an unexplained prior period adjustment of $32,427.49 in the General Fund and $48.00 in the Road and Bridge Fund. Court Appointed Attorney Fee expenditures were understated by $32,427.49 in the General Fund, and Highways, Roads and Bridge expenditures were understated by $48.00 in the Road and Bridge Fund.

c. The 2016 Fund Financial Statements, Debt Service expenditures were overstated by $66,243.85 and the Highways, Roads and Bridges expenditures were understated by $66,243.85 in the Road and Bridge Fund. In addition, the 2015 Fund Financial Statements, Debt Service expenditures were understated by $66,243.85 and the Highways, Roads, and Bridges expenditures were overstated by $66,243.85 in the Road and Bridge Fund.

d. The 2015 Fund Financial Statements, Emergency and Disaster Service expenditures were understated by $23,278.08 and Federal Grant Revenue was understated by $23,278.08 in the Emergency Management Fund (Other Governmental Fund).

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Other less significant errors were also noted in the County’s annual financial report. We were able to correct the material reporting errors and therefore have issued an unmodified auditor’s opinion on the financial statements contained in the audit report. However, users of the annual financial reports received information of diminished reliability. RECOMMENDATION:

2. We recommend the County strengthen internal accounting controls over financial reporting. Management’s Response: Management chose not to respond to this finding.

Inadequate Accounting Records Finding No. 2016-003: Deficiencies were noted in the accounting records which diminished the reliability of the accounting data generated by the County. This is the fourth consecutive audit in which a similar finding was noted. Analysis: We noted the following deficiencies in the County’s accounting records for the years ended December 31, 2015 and 2016:

a. Errors and deficiencies were noted in the preparation of general journal entries:

1. Several general journal entries were repeatedly made for the same dollar amount in an attempt to correct a revenue or expenditure item; however, the general journal entries did not result in correcting the error.

2. Several general journal entries were noted which were posted back to a prior fiscal year. As a result, the records which were used to prepare the financial statements did not include these adjustments.

3. Adjustments to the accounting system made by the County Auditor did not contain documentation of approval or review by an individual other than the person making the entry. We also noticed instances where adjustments to the accounting system lacked an adequate explanation and sufficient documentation.

b. Several of the general ledger balances of the agency funds at December 31, 2016 did not agree

with the disbursements made in January 2017 to clear the balances of these funds. These funds included the Sales and Excise Fund, Birth and Death Fund, James River WDD Fund, Motor Vehicle Fund, PCG12 Fund, Fire and Ambulance District Funds, School District Funds, and the City and Township Funds.

RECOMMENDATIONS:

3. We recommend the County strengthen internal accounting controls over accounting records.

4. We recommend the County reconcile all agency funds on a monthly basis to ensure the

funds clear after disbursements are made.

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Management’s Response: Management chose not to respond to this finding.

Compliance and Other Matters:

Surplus Unassigned Fund Balance

Finding No. 2016-004: The unassigned fund balance of the General Fund exceeded the maximum allowed by South Dakota Codified Law (SDCL) 7-21-18.1 by approximately $748,000 as of December 31, 2016. This is the fifth consecutive audit in which a similar finding was noted. Analysis: SDCL 7-21-18.1 states: “The total unreserved, undesignated fund balance of the general fund may not exceed forty percent of the total amount of all general fund appropriations contained in the budget for the next fiscal year…” Our analysis of the County General Fund indicates an excessive unassigned fund balance existed at December 31, 2016 as follows: Total Unassigned Fund Balance at December 31, 2016 $ 2,384,352.30 Less: 2017 General Fund Appropriations 4,089,581.00 Percentage of Allowance Retainage 40% Allowable Fund Balance Retainage (1,635,832.40)

Unassigned Surplus Fund Balance at December 31, 2016 in Excess of the Amount Allowed by SDCL 7-21-18.1 $ 748,519.90 RECOMMENDATION: 5. We recommend the unassigned fund balance of the General Fund be limited to 40 percent of

the next year’s General Fund appropriations as required by SDCL 7-21-18.1. Management’s Response: Management chose not to respond to this finding.

Budgetary Noncompliance Finding No. 2016-005: The County incurred expenditures in excess of appropriations contrary to SDCL 7-21-25. This is the second consecutive audit in which a similar finding was noted. Analysis: Appropriations included in the annual budget constitute maximum authorizations to spend during the fiscal year (SDCL 7-21-25), and cannot be exceeded except by subsequent amendment of the budget by the County Commission pursuant to SDCL.

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SDCL 7-21-25 states:

Unless specially and expressly authorized by law, it shall be unlawful for the board of county commissioners tor any member thereof, or for any officer of any county or any employee thereof in charge of any institution or agency of a county, to contract any indebtedness or incur any liabilities for or in behalf of the county, in any manner whatsoever, either for a purpose, object, or item for which no appropriation is provided in the budget of such county for the fiscal year in which such indebtedness is attempted to be contracted or liability attempted to be created, or in excess of the amount of any specific appropriation for any purpose, object, or item set forth in the budgets of such county, for the fiscal year in which such indebtedness is attempted to be contracted or liability attempted to be created.

We noted the following instances of noncompliance with SDCL 7-21-25:

a. In 2015 the County incurred expenditures in excess of appropriations for the following line item appropriations:

Year Ended

12/31/2015

General Fund: Activity Court Appointed Attorney $ 32,427.49 Road and Bridge Fund: Activity Intergovernmental Expenditures $ 26,300.35 Debt Service $ 66,243.85

911 Service Fund: Activity Communications Center $ 9,691.31 Modernization and Preservation Fund: Activity Register of Deeds $ 43.23

b. In 2016 the County incurred expenditures in excess of appropriations for the following line item

appropriations:

Year Ended 12/31/2016

Road and Bridge Fund: Activity Highways, Roads and Bridges $ 68,615.04 Debt Service $ 66,243.85 TIF Debt Service Fund: Activity Debt Service $ 16,874.84 RECOMMENDATION:

6. We recommend the County refrain from incurring any expenditure in excess of the amount

appropriated as required by SDCL 7-21-25.

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Management’s Response: Management chose not to respond to this finding.

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INDEPENDENT AUDITOR’S REPORT County Commission Hutchinson County Olivet, South Dakota

Report on the Financial Statements We have audited the accompanying modified cash basis of accounting financial statements of the governmental activities, each major fund, and the aggregate remaining fund information of Hutchinson County, South Dakota (County), as of December 31, 2016, and for each of the years in the biennial period then ended, and the related notes to the financial statements, which collectively comprise the County’s basic financial statements as listed in the Table of Contents.

Management’s Responsibility for the Financial Statements The County’s management is responsible for the preparation and fair presentation of these financial statements in accordance with the modified cash basis of accounting described in Note 1.c.; this includes determining that the modified cash basis of accounting is an acceptable basis for the preparation of the financial statements in the circumstances. Management is responsible for the design, implementation, and maintenance of internal controls relevant to the preparation and fair presentation of financial statements that are free from material misstatements, whether due to fraud or error.

Auditor’s Responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the County’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the County’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions.

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Opinions In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position on a modified cash basis of accounting of the governmental activities, each major fund, and the aggregate remaining fund information of Hutchinson County as of December 31, 2016, and the respective changes in financial position thereof for each of the years in the biennial period then ended in accordance with the modified cash basis of accounting described in Note 1.c. to the financial statements.

Basis of Accounting We draw attention to Note 1.c. of the financial statements, which describes the basis of accounting. The financial statements are prepared on the modified cash basis of accounting, which is a basis of accounting other than accounting principles generally accepted in the United States of America. Our opinion is not modified with respect to this matter.

Other Matters

Supplementary Information Our audit was conducted for the purpose of forming opinions on the modified cash basis of accounting financial statements that collectively comprise the County’s basic financial statements. The Budgetary Comparison Schedules, the Schedule of the County’s Proportionate Share of the Net Pension Liability (Asset), and the Schedule of Changes in Long-Term Debt listed in the Table of Contents are presented for purposes of additional analysis and are not a required part of the basic financial statements. Such information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the financial statements. The information has been subjected to the auditing procedures applied in the audit of the financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the information is fairly stated in all material respects in relation to the basic financial statements as a whole.

Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated September 21, 2017, on our consideration of the County’s internal control over financial reporting and our tests of its compliance with certain provisions of laws, regulations, contracts, and other matters. The purpose of that report is solely to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the County’s internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the County’s internal control over financial reporting and compliance.

Martin L. Guindon, CPA Auditor General September 21, 2017

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Governmental

Activities

ASSETS:

Cash and Cash Equivalents 7,083,341.34$

TOTAL ASSETS 7,083,341.34$

NET POSITION:

Restricted For: (See Note 5)

Road and Bridge Purposes 273,914.84$

911 Service Purposes 356,231.00

Other Purposes 25,715.07

Unrestricted 6,427,480.43

TOTAL NET POSITION 7,083,341.34$

The notes to the financial statements are an integral part of this statement.

HUTCHINSON COUNTY

STATEMENT OF NET POSITION - MODIFIED CASH BASIS

December 31, 2016

Primary Government

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Net (Expense) Revenue

and Changes in

Net Position

Operating Primary Government

Charges for Grants and Governmental

Functions/Programs Expenses Services Contributions Activities

Primary Government:

Governmental Activities:

General Government 1,016,413.56$ 182,426.04$ 37,917.87$ (796,069.65)$

Public Safety 367,924.08 18,240.83 85,507.81 (264,175.44)

Public Works 3,662,267.93 115,514.09 1,538,838.75 (2,007,915.09)

Health and Welfare 128,926.75 26,663.98 (102,262.77)

Culture and Recreation 9,288.74 1,025.00 (8,263.74)

Conservation of Natural Resources 162,310.22 (162,310.22)

Urban and Economic Development 50,551.88 (50,551.88)

Intergovernmental 10,123.32 (10,123.32)

*Interest on Long-Term Debt 5,286.96 (5,286.96)

Total Primary Government 5,413,093.44$ 343,869.94$ 1,662,264.43$ (3,406,959.07)

General Revenues:

Taxes:

* The County does not have interest expense Property Taxes 2,821,367.05

related to the functions presented above. This Wheel Tax 268,330.74

amount includes indirect interest expense State Shared Revenues 114,391.45

on general long-term debt. Unrestricted Investment Earnings 20,946.51

Miscellaneous Revenue 55,141.34

Total General Revenues 3,280,177.09

Change in Net Position (126,781.98)

Net Position - Beginning 7,210,123.32

NET POSITION - ENDING 7,083,341.34$


HUTCHINSON COUNTY

STATEMENT OF ACTIVITIES - MODIFIED CASH BASIS

For the Year Ended December 31, 2016

Program Revenues

12

Net (Expense) Revenue

and Changes in

Net Position

Operating Primary Government

Charges for Grants and Governmental

Functions/Programs Expenses Services Contributions Activities

Primary Government:

Governmental Activities:

General Government 945,347.90$ 154,118.29$ 17,894.20$ (773,335.41)$

Public Safety 408,958.89 13,737.47 108,347.34 (286,874.08)

Public Works 3,518,604.45 137,315.85 2,864,616.65 (516,671.95)

Health and Welfare 149,492.20 20,425.48 (129,066.72)

Culture and Recreation 7,920.22 1,425.00 (6,495.22)

Conservation of Natural Resources 150,498.49 (150,498.49)

Urban and Economic Development 52,132.47 (52,132.47)

Intergovernmental 26,300.35 (26,300.35)

*Interest on Long-Term Debt 6,953.77 (6,953.77)

Total Primary Government 5,266,208.74$ 327,022.09$ 2,990,858.19$ (1,948,328.46)

General Revenues:

Taxes:

* The County does not have interest expense Property Taxes 2,704,026.24

related to the functions presented above. This Wheel Tax 146,252.66

amount includes indirect interest expense State Shared Revenues 66,223.62

on general long-term debt. Unrestricted Investment Earnings 16,832.67

Miscellaneous Revenue 150,134.55

Total General Revenues 3,083,469.74

Change in Net Position 1,135,141.28

Net Position - Beginning 6,074,982.04

NET POSITION - ENDING 7,210,123.32$


HUTCHINSON COUNTY

STATEMENT OF ACTIVITIES - MODIFIED CASH BASIS


Program Revenues

13

Other Total

General Road and Bridge Governmental Governmental

Fund Fund Funds Funds

ASSETS:

Cash and Cash Equivalents 5,875,713.70$ 794,533.53$ 413,094.11$ 7,083,341.34$

TOTAL ASSETS 5,875,713.70$ 794,533.53$ 413,094.11$ 7,083,341.34$

FUND BALANCES: (See Note 1.j.)

Restricted 11,149.19$ 273,914.84$ 370,796.88$ 655,860.91$

Assigned 3,480,212.21 520,618.69 42,297.23 4,043,128.13

Unassigned 2,384,352.30 2,384,352.30

TOTAL FUND BALANCES 5,875,713.70$ 794,533.53$ 413,094.11$ 7,083,341.34$


HUTCHINSON COUNTY

BALANCE SHEET - MODIFIED CASH BASIS

GOVERNMENTAL FUNDS

December 31, 2016

14

(blank page)

15

Other Total



Revenues:

Taxes:

General Property Taxes--Current 2,802,237.27$ $ 16,874.84$ 2,819,112.11$

General Property Taxes--Delinquent 2,034.85 2,034.85

Penalties and Interest 7,379.36 7,379.36

Wheel Tax 268,330.74 268,330.74

Tax Deed Revenue 237.63 237.63

Licenses and Permits 17,688.73 1,070.00 18,758.73

Intergovernmental Revenue:

Federal Grants 24,972.47 24,972.47

Federal Payments in Lieu of Taxes 1,292.87 1,292.87

State Grants 5,700.00 226,670.10 232,370.10

State Shared Revenue:

Bank Franchise 39,788.64 39,788.64

Motor Vehicle Licenses 1,245,150.65 1,245,150.65

Court Appointed Attorney/Public Defender 2,376.23 2,376.23

Prorate License Fees 60,682.91 60,682.91

Abused and Neglected Child Defense 312.00 312.00

Telecommunications Gross Receipts Tax 34,091.03 34,091.03

Motor Vehicle 1/4% 3,264.30 3,264.30

Renewable Facility Tax 20,596.91 20,596.91

Motor Fuel Tax 6,335.09 6,335.09

911 Remittances 85,507.81 85,507.81

Liquor Tax Reversion (25%) 12,517.97 12,517.97

Other Intergovernmental Revenue 481.43 6,786.97 7,268.40

HUTCHINSON COUNTY

STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - MODIFIED CASH BASIS

GOVERNMENTAL FUNDS


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Charges for Goods and Services:

General Government:

Treasurer's Fees 17,508.00 17,508.00

Register of Deeds' Fees 87,914.75 9,255.96 97,170.71

Legal Services 20,719.20 20,719.20

Clerk of Courts Fees 7,420.40 7,420.40

Other Fees 10,768.10 10,768.10

Public Safety:

Law Enforcement 12,652.92 12,652.92

Prisoner Care 650.00 650.00

Public Works:

Road Maintenance Contract Charges 115,514.09 115,514.09

Health and Welfare:

Economic Assistance:

Poor Lien Recoveries 26,663.98 26,663.98

Veterans Service Officer 2,812.50 2,812.50

Culture and Recreation 1,025.00 1,025.00

Fines and Forfeits:

Costs 2,437.91 2,437.91

Forfeits 2,500.00 2,500.00

Miscellaneous Revenue:

Investment Earnings 15,744.52 4,056.70 1,145.29 20,946.51

Refund of Prior Year's Expenditures 11,394.00 6,715.62 18,109.62

Other 1,277.89 1,277.89

Total Revenues 3,171,488.39 1,940,242.87 138,826.37 5,250,557.63

Expenditures:

General Government:

Legislative:

Board of County Commissioners 124,643.04 124,643.04

Elections 38,235.48 38,235.48

Judicial System 29,181.59 29,181.59

Financial Administration:

Auditor 112,745.03 112,745.03

Treasurer 164,237.62 164,237.62

Legal Services:

State's Attorney 112,862.87 112,862.87

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Other Total



Court Appointed Attorney 48,756.95 48,756.95

Abused and Neglected Child Defense 3,497.52 3,497.52

Other Administration:

General Government Building 117,553.95 117,553.95

Director of Equalization 140,592.84 140,592.84

Register of Deeds 83,079.00 10,000.00 93,079.00


Predatory Animal 8,291.71 8,291.71

Public Safety:

Law Enforcement:

Sheriff 234,752.43 234,752.43

County Jail 18,180.53 18,180.53

Coroner 7,554.94 7,554.94

Juvenile Detention 1,677.64 1,677.64

Protective and Emergency Services:

Emergency and Disaster Services 24,844.13 24,844.13

Other Protective and Emergency 80,914.41 80,914.41

Public Works:

Highways and Bridges:

Highways, Roads and Bridges 3,601,311.04 3,601,311.04

Health and Welfare:


Support of Poor 48,134.20 48,134.20

Public Welfare 694.34 694.34

Health Assistance:

County Nurse 34,620.35 34,620.35


(Continued)

HUTCHINSON COUNTY


GOVERNMENTAL FUNDS

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Mental Health Services:

Mentally Ill 29,795.42 29,795.42

Mental Health Centers 13,209.28 13,209.28

Mental Illness Board 2,473.16 2,473.16

Culture and Recreation:

Recreation:

County Fair 9,288.74 9,288.74

Conservation of Natural Resources:

Soil Conservation:

County Extension 61,961.37 61,961.37

Soil Conservation Districts 20,600.00 20,600.00

Weed and Pest Control 79,748.85 79,748.85

Urban and Economic Development:

Urban Development:

Planning and Zoning 33,677.04 33,677.04

Intergovernmental Expenditures 10,123.32 10,123.32

Debt Service 66,243.85 16,874.84 83,118.69

Total Expenditures 1,602,781.85 3,677,678.21 132,633.38 5,413,093.44

Excess of Revenues Over (Under) Expenditures 1,568,706.54 (1,737,435.34) 6,192.99 (162,535.81)

Other Financing Sources (Uses):

Transfers In 550,000.00 550,000.00

Transfers Out (550,000.00) (550,000.00)

Insurance Proceeds 565.05 26,486.77 27,051.82

Sale of County Property 617.51 8,084.50 8,702.01

Total Other Financing Sources (Uses) (548,817.44) 584,571.27 0.00 35,753.83

Net Change in Fund Balance 1,019,889.10 (1,152,864.07) 6,192.99 (126,781.98)

Fund Balance - Beginning 4,855,824.60 1,947,397.60 406,901.12 7,210,123.32

FUND BALANCE - ENDING 5,875,713.70$ 794,533.53$ 413,094.11$ 7,083,341.34$


19

Other Total



Revenues:

Taxes:

General Property Taxes--Current 2,674,140.24$ $ $ 2,674,140.24$

General Property Taxes--Delinquent 10,843.77 10,843.77

Penalties and Interest 7,735.26 7,735.26

Wheel Tax 146,252.66 146,252.66

Tax Deed Revenue 182.97 182.97

Other Taxes 54.00 54.00

Licenses and Permits 20,618.00 885.00 21,503.00


Federal Grants 35,582.01 35,582.01

Federal Payments in Lieu of Taxes 1,198.80 1,198.80

State Grants 6,100.00 1,596,252.72 1,602,352.72


Bank Franchise 28,342.82 28,342.82

Motor Vehicle Licenses 1,238,836.74 1,238,836.74

Prorate License Fees 23,191.74 23,191.74

Abused and Neglected Child Defense 1,486.89 1,486.89

Telecommunications Gross Receipts Tax 37,880.80 37,880.80

Motor Vehicle 1/4% 2,904.58 2,904.58

Motor Fuel Tax 6,335.45 6,335.45

911 Remittances 85,069.26 85,069.26

Other Intergovernmental Revenue 70.00 11,000.00 11,070.00


General Government:

Treasurer's Fees 8,348.00 8,348.00

HUTCHINSON COUNTY


GOVERNMENTAL FUNDS


20

Register of Deeds' Fees 74,669.50 8,764.30 83,433.80

Legal Services 17,267.30 17,267.30

Clerk of Courts Fees 6,679.20 6,679.20

Other Fees 7,703.63 270.86 7,974.49

Public Safety:

Law Enforcement 8,733.14 8,733.14

Prisoner Care 675.73 675.73

Public Works:

Road Maintenance Contract Charges 137,315.85 137,315.85

Health and Welfare:


Poor Lien Recoveries 20,425.48 20,425.48


Culture and Recreation 1,425.00 1,425.00

Fines and Forfeits:

Costs 1,409.59 1,409.59

Forfeits 1,454.76 1,454.76

Other 1,464.25 1,464.25



Refund of Prior Year's Expenditures 147.58 147.58

Other 1,125.16 3,500.00 4,625.16

Total Revenues 2,957,604.24 3,167,055.20 131,328.77 6,255,988.21

Expenditures:

General Government:

Legislative:

Board of County Commissioners 123,541.53 123,541.53

Elections 13,358.12 13,358.12

Judicial System 27,931.00 27,931.00


Auditor 123,516.70 123,516.70

Treasurer 152,743.53 152,743.53

Legal Services:

State's Attorney 106,282.82 106,282.82

Court Appointed Attorney 32,427.49 32,427.49

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Other Total




General Government Building 111,290.93 111,290.93

Director of Equalization 139,512.45 139,512.45

Register of Deeds 81,704.43 7,043.23 88,747.66


Predatory Animal 5,540.31 5,540.31

Public Safety:

Law Enforcement:

Sheriff 227,120.72 227,120.72

County Jail 34,460.12 34,460.12

Coroner 7,888.17 7,888.17

Juvenile Detention 11,490.00 11,490.00

Protective and Emergency Services:

Emergency and Disaster Services 45,808.57 45,808.57

Communication Center 82,191.31 82,191.31

Public Works:


Highways, Roads and Bridges 3,459,314.37 3,459,314.37

Health and Welfare:


Support of Poor 56,081.21 56,081.21

Public Welfare 727.13 727.13

Health Assistance:

County Nurse 34,698.00 34,698.00


Mentally Ill 44,950.39 44,950.39


(Continued)

HUTCHINSON COUNTY


GOVERNMENTAL FUNDS

22

Mental Health Centers 8,597.00 8,597.00

Mental Illness Board 4,438.47 4,438.47


Recreation:

County Fair 7,920.22 7,920.22


Soil Conservation:

County Extension 58,681.20 58,681.20

Soil Conservation Districts 20,600.00 20,600.00

Weed and Pest Control 71,217.29 71,217.29


Urban Development:

Planning and Zoning 32,132.47 32,132.47

Economic Development:

Tourism, Industrial or Recreational Development 20,000.00 20,000.00

Intergovernmental Expenditures 26,300.35 26,300.35

Debt Service 66,243.85 66,243.85

Total Expenditures 1,579,307.06 3,551,858.57 135,043.11 5,266,208.74

Excess of Revenues Over (Under) Expenditures 1,378,297.18 (384,803.37) (3,714.34) 989,779.47


Transfers In 1,261,223.00 5,872.91 1,267,095.91

Transfers Out (1,267,095.91) (1,267,095.91)

Insurance Proceeds 11,476.78 94,081.35 105,558.13

Sale of County Property 39,803.68 39,803.68

Total Other Financing Sources (Uses) (1,255,619.13) 1,395,108.03 5,872.91 145,361.81

Net Change in Fund Balance 122,678.05 1,010,304.66 2,158.57 1,135,141.28

Fund Balance - Beginning 4,733,146.55 937,092.94 404,742.55 6,074,982.04

FUND BALANCE - ENDING 4,855,824.60$ 1,947,397.60$ 406,901.12$ 7,210,123.32$


23

Agency

Funds

ASSETS:

Cash and Cash Equivalents 288,130.96$

TOTAL ASSETS 288,130.96$

NET POSITION:

Net Position Held in Agency Capacity 288,130.96$

TOTAL NET POSITION 288,130.96$


HUTCHINSON COUNTY

STATEMENT OF FIDUCIARY NET POSITION - MODIFIED CASH BASIS

FIDUCIARY FUNDS

December 31, 2016

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HUTCHINSON COUNTY NOTES TO THE MODIFIED CASH BASIS FINANCIAL STATEMENTS 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

As discussed further in Note 1.c., these financial statements are presented on a modified cash basis of accounting. The modified cash basis of accounting differs from accounting principles generally accepted in the United States of America (GAAP). Generally accepted accounting principles include all relevant Governmental Accounting Standards Board (GASB) pronouncements.

a. Financial Reporting Entity:

The reporting entity of Hutchinson County (County), consists of the primary government (which includes all of the funds, organizations, institutions, agencies, departments, and offices that make up the legal entity, plus those funds for which the primary government has a fiduciary responsibility); those organizations for which the primary government is financially accountable; and other organizations for which the nature and significance of their relationship with the primary government are such that their exclusion would cause the financial reporting entity’s financial statements to be misleading or incomplete.

b. Basis of Presentation:

Government-wide Financial Statements:

The Statement of Net Position and Statement of Activities display information about the

reporting entity as a whole. They include all funds of the reporting entity except for fiduciary funds. Governmental activities generally are financed through taxes, intergovernmental revenues, and other non-exchange revenues.

The Statement of Activities presents a comparison between direct expenses and program revenues for each function of the County’s governmental activities. Direct expenses are those that are specifically associated with a program or function and, therefore, are clearly identifiable to a particular function. Program revenues include (a) charges paid by recipients of goods and services offered by the programs and (b) grants and contributions that are restricted to meeting the operational or capital requirements of a particular program. Revenues that are not classified as program revenues, including all taxes, are presented as general revenues.

Fund Financial Statements: Fund financial statements of the reporting entity are organized into funds, each of which is

considered to be a separate accounting entity. Each fund is accounted for by providing a separate set of self-balancing accounts that constitute its assets, liabilities, fund equity, revenues, and expenditures/expenses. Funds are organized into two major categories: governmental and fiduciary. An emphasis is placed on major funds within the governmental category. A fund is considered major if it is the primary operating fund of the County or it meets the following criteria:

1. Total assets, liabilities, revenues, or expenditures/expenses of the individual

governmental or enterprise fund are at least 10 percent of the corresponding total for all funds of that category or type, and

2. Total assets, liabilities, revenues, or expenditures/expenses of the individual governmental or enterprise fund are at least 5 percent of the corresponding total for all governmental and enterprise funds combined, or

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3. Management has elected to classify one or more governmental or enterprise funds as major for consistency in reporting from year to year, or because of public interest in the fund’s operations.

The funds of the County financial reporting entity are described below:

Governmental 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. The General Fund is always considered to be a major fund.

Special Revenue Funds – Special revenue funds are used to account for the proceeds of specific revenue sources (other than trusts for individuals, private organizations, or other governments or for major capital projects) that are legally restricted to expenditures for specified purposes.

Road and Bridge Fund – to account for funds credited to the road and bridge fund pursuant to SDCL 32-11-4.2 to be used by the board of county commissioners for grading, constructing, planing, dragging, and maintaining county highways and also for dragging, maintaining, and grading secondary roads. Proper equipment for dragging, grading, and maintaining highways, such as graders, tractors, drags, maintainers, and planers may be purchased from the road and bridge fund. (SDCL 32-11-2 and 32-11-4.2) This is a major fund. The remaining special revenue funds are not considered major funds: 911 Service, Emergency Management, Domestic Abuse, and Modernization and Preservation Relief. These funds are reported on the fund financial statements as “Other Governmental Funds.”

Debt Service Funds – Debt service funds are used to account for the accumulation of resources for, and the payment of, general long-term debt principal, interest, and related costs.

TIF Debt Service Fund – to account for property taxes which may be used only for the payment of the debt principal, interest, and related costs. This is not a major fund.

Fiduciary Funds:

Fiduciary funds consist of the following sub-category and are never considered to be major

funds:

Agency Funds – Agency funds are custodial in nature (assets equal liabilities) and do not involve measurement of results of operations. Agency funds are used to account for the accumulation and distribution of property tax revenues and various pass-through funds.

c. Measurement Focus and Basis of Accounting:

Measurement focus is a term used to describe “how” transactions are recorded within the various financial statements. Basis of accounting refers to “when” revenues and expenditures or expenses are recognized in the accounts and reported in the financial statements, regardless of the measurement focus. The County’s basis of accounting is the modified cash basis, which is a basis of accounting other than USGAAP. Under USGAAP, transactions are recorded in the accounts when

26

revenues are earned and liabilities are incurred. Under the modified cash basis, transactions are recorded when cash is received or disbursed. Measurement Focus: In the government-wide Statement of Net Position and Statement of Activities, governmental activities are presented using the economic resources measurement focus, applied within the limitations of the modified cash basis of accounting as defined below. In the fund financial statements, the “current financial resources” measurement focus or the “economic resources” measurement focus is used, applied within the limitations of the modified cash basis of accounting. Basis of Accounting: In the government-wide Statement of Net Position and Statement of Activities and the fund financial statements, governmental activities are presented using a modified cash basis of accounting. The modified cash basis of accounting involves the measurement of cash and cash equivalents and changes in cash and cash equivalents resulting from cash receipt and disbursement transactions. Under the modified cash basis of accounting, the statement of financial position reports only cash and cash equivalents (those investments with terms to maturity of 90 days (three months) or less at the date of acquisition). Under the modified cash basis of accounting, transactions are recorded in the accounts when cash and/or cash equivalents are received or disbursed and assets and liabilities are recognized to the extent that cash has been received or disbursed. The acceptable modification to the cash basis of accounting implemented by the County in these financial statements is:

Recording long-term investments in marketable securities (those with maturities more than 90-days (three months) from the date of acquisition) acquired with cash assets at cost.

As a result of the use of this modified cash basis of accounting, certain assets and their related revenues (such as accounts receivable and revenue for billed or provided services not yet collected) and certain liabilities and their related expenses (such as accounts payable and expenses for goods or services received but not yet paid, and accrued expenses and liabilities) are not recorded in these financial statements.

If the County applied USGAAP, the fund financial statements for governmental funds would

use the modified accrual basis of accounting. All government-wide financial statements would be presented on the accrual basis of accounting.

d. Deposits and Investments: For the purpose of financial reporting, “cash and cash equivalents” includes all demand and

savings accounts and certificates of deposit or short-term investments with a term to maturity at date of acquisition of three months or less. Investments in open-end mutual fund shares, or similar investments in external investment pools, are also considered to be cash equivalents.

e. Capital Assets: Capital assets include land, buildings, machinery and equipment, and all other tangible or intangible assets that are used in operations and that have initial useful lives extending beyond a single reporting period. Infrastructure assets are long-lived capital assets that

27

normally are stationary in nature and normally can be preserved for significantly greater number of years than most capital assets.

As discussed in Note 1.c. above, the government-wide Statement of Net Position and Statement of Activities and the fund financial statements are presented using a modified cash basis of accounting. The County has not elected to modify their cash basis presentation by recording capital assets arising from cash transactions and depreciating those assets where appropriate so any capital assets owned by the County and the related depreciation are not reported on the financial statements of the County.

f. Long-Term Liabilities:

Long-term liabilities include, but are not limited to, General Obligation Bonds, Revenue Bonds, Certificates of Participation, Financing (Capital Acquisition) Leases, and Compensated Absences. As discussed in Note 1.c. above, the government-wide Statement of Net Position and Statement of Activities and the fund financial statements are presented using a modified cash basis of accounting. The County has not elected to modify their cash basis presentation by recording long-term debt arising from cash transactions so any outstanding indebtedness is not reported on the financial statements of the County. The County does report the principal and interest payments on long-term debt as Debt Service expenditures on the Statement of Revenues, Expenditures and Changes in Fund Balances. On the Statement of Activities the principal portion of these Debt Service payments are reported within the appropriate expense function while the interest portion is reported as Interest on Long-Term Debt. The County has presented as Supplementary Information a Schedule of Changes in Long-Term Debt along with related notes that include details of any outstanding Long-Term Debt.

g. Program Revenues:

Program revenues derive directly from the program itself or from parties other than the County’s taxpayers or citizenry, as a whole. Program revenues are classified into three categories, as follows:

1. Charges for services – These arise from charges to customers, applicants, or others

who purchase, use, or directly benefit from the goods, services, or privileges provided, or are otherwise directly affected by the services.

2. Program-specific operating grants and contributions – These arise from mandatory and voluntary non-exchange transactions with other governments, organizations, or individuals that are restricted for use in a particular program.

3. Program-specific capital grants and contributions – These arise from mandatory and voluntary non-exchange transactions with other governments, organizations, or individuals that are restricted for the acquisition of capital assets for use in a particular program.

h. Equity Classifications:

Government-wide Financial Statements: Equity is classified as Net Position and is displayed in two components:

1. Restricted Net Position – Consists of net position with constraints placed on their use either by (a) external groups such as creditors, grantors, contributors, or laws and regulations of other governments; or (b) law through constitutional provisions or enabling legislation.

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2. Unrestricted Net Position – All other net position that do not meet the definition of Restricted Net Position.

Fund Financial Statements: Governmental fund equity is classified as fund balance, and may distinguish between

“Nonspendable”, “Restricted”, “Committed”, “Assigned”, and “Unassigned” components. Agency Funds have no fund equity. The Net Position is reported as Net Position Held in Agency Capacity.

i. Application of Net Position:

It is the County’s policy to first use restricted net position, prior to the use of unrestricted net

position, when an expense is incurred for purposes for which both restricted and unrestricted net positions are available.

j. Fund Balance Classification Policies and Procedures:

In accordance with Government Accounting Standards Board (GASB) No. 54, Fund Balance Reporting and Governmental Fund Type Definitions, the County classifies governmental fund balances as follows: Nonspendable – includes fund balance amounts that cannot be spent either because it is

not in spendable form or because of legal or contractual constraints. Restricted – includes fund balance amounts that are constrained for specific purposes

which are externally imposed by providers, such as creditors or amounts constrained due to constitutional provisions or enabling legislation.

Committed – includes fund balance amounts that are constrained for specific purposes that are internally imposed by the government through formal action of the highest level of decision making authority and does not lapse at year-end.

Assigned – includes fund balance amounts that are intended to be used for specific purposes that are neither considered restricted or committed. Fund Balance may be assigned by the County Commissioners.

Unassigned – includes positive fund balance within the General Fund which has not been classified within the above mentioned categories and negative fund balances in other governmental funds.

The County uses restricted/committed amounts first when both restricted and unrestricted fund balance is available unless there are legal documents/contracts that prohibit doing this, such as a grant agreement requiring dollar for dollar spending. Additionally, the Government would first use committed, then assigned, and lastly unassigned amounts of unrestricted fund balance when expenditures are made. The Government does not have a formal minimum fund balance policy. The purpose of each major special revenue fund and revenue source is listed below: Major Special Revenue Fund Revenue Source Road and Bridge Fund Motor Vehicle Licenses, Grants, Taxes, and Intergovernmental Revenue

29

A schedule of fund balances is provided as follows:

HUTCHINSON COUNTY DISCLOSURE OF FUND BALANCES REPORTED ON BALANCE SHEET

GOVERNMENTAL FUNDS DECEMBER 31, 2016

Road

Other

Total

General

and Bridge

Governmental

Governmental

Fund

Fund

Funds

Funds

Fund Balances:

Restricted For: Snow Removal Purposes $ $ 273,914.84 $ $ 273,914.84 911 Service Purposes 356,231.00 356,231.00 Emergency Management Purposes 265.47 265.47 Domestic Abuse Purposes 4,425.97 4,425.97 Modernization and Preservation Relief Purposes 9,874.44 9,874.44 Motor Vehicle 1/4% Purposes 11,149.19 11,149.19 Assigned To: Applied to Next Year’s Budget 1,118,370.00 1,118,370.00 Road and Bridge Purposes 520,618.69 520,618.69 Emergency Management Purposes 42,297.23 42,297.23 Courthouse Building Purposes 2,361,842.21 2,361,842.21 Unassigned 2,384,352.30 2,384,352.30

Total Fund Balances $ 5,875,713.70 $ 794,533.53 $ 413,094.11 $ 7,083,341.34

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2. VIOLATIONS OF FINANCE-RELATED LEGAL AND CONTRACTUAL PROVISIONS

The County is prohibited by statute from spending in excess of appropriated amounts at the department level. The following represents the significant overdrafts of the expenditures compared to appropriations:

Year Ended Year Ended 12/31/2015 12/31/2016

General Fund:

Activity Court Appointed Attorney $ 32,427.49

Road and Bridge Fund: Activity Highways, Roads and Bridges $ 68,615.04 Intergovernmental Expenditures $ 26,300.35 Debt Service $ 66,243.85 $ 66,243.85 TIF Debt Service Fund: Activity Debt Service $ 16,874.84 911 Service Fund: Activity Communications Center $ 9,691.31 Modernization and Preservation Fund: Activity Register of Deeds $ 43.23 The County did not exceed the total General Fund Budget in CY 2016 or the Road and Bridge Fund Budget in CY 2015. The County did exceed the total Road and Bridge Fund Budget and the TIF Debt Service Fund in CY 2016. The County did exceed the total 911 Service Fund and Modernization and Preservation Relief Fund (Other Governmental Funds) in CY 2015.

3. DEPOSITS AND INVESTMENTS CREDIT RISK, CONCENTRATIONS OF CREDIT RISK AND

INTEREST RATE RISK

The County follows the practice of aggregating the cash assets of various funds to maximize cash management efficiency and returns. Various restrictions on deposits and investments are imposed by statutes. These restrictions are summarized below: Deposits – The County’s cash deposits are made in qualified public depositories as defined by SDCL 4-6A-1, 7-20-1, 7-20-1.1, and 7-20-1.2, and may be in the form of demand or time deposits. Qualified depositories are required by SDCL 4-6A-3 to maintain at all times, segregated from their other assets, eligible collateral having a value equal to at least 100 percent of the public deposit accounts which exceed deposit insurance such as the FDIC and NCUA. In lieu of pledging eligible securities, a qualified public depository may furnish irrevocable standby letters of credit issued by federal home loan banks accompanied by written evidence of that bank’s public debt rating which may not be less than “AA” or a qualified public depository may furnish a corporate surety bond of a corporation authorized to do business in South Dakota. Investments – In general, SDCL 4-5-6 permits County funds to be invested only in (a) securities of the United States and securities guaranteed by the United States Government either directly or indirectly; or (b) repurchase agreements fully collateralized by securities described in (a) above; or in shares of an open-end, no-load fund administered by an investment company whose

31

investments are in securities described in (a) above and repurchase agreements described in (b) above. Also, SDCL 4-5-9 requires investments to be in the physical custody of the political subdivision or may be deposited in a safekeeping account with any bank or trust company designated by the political subdivision as its fiscal agent. As of December 31, 2016, the County did not have any investments. Credit Risk – State law limits eligible investments for the County, as discussed above. The County has no investment policy that would further limit its investment choices. Concentration of Credit Risk – The County places no limit on the amount that may be invested in any one issuer. Interest Rate Risk – The County does not have a formal investment policy that limits investment maturities as a means of managing its exposure to fair value losses arising from increasing interest rates. Assignment of Investment Income – State law allows income from deposits and investments to be credited to either the General Fund or the fund making the investment. The County’s policy is to credit all income from investments to the fund making the investment.

4. PROPERTY TAXES

Property taxes are levied on or before October 1, of the year preceding the start of the fiscal year. They attach as an enforceable lien on property, and become due and payable as of the following January 1, the first day of the fiscal year. Taxes are payable in two installments on or before April 30 and October 31 of the fiscal year. The County is permitted by several state statutes to levy varying amounts of taxes per $1,000 of taxable valuation on taxable real property in the County.

5. RESTRICTED NET POSITION Restricted Net Position for the year ended December 31, 2016 was as follows:

Major Purposes:

Road and Bridge Purposes $ 273,914.84

911 Service Purposes 356,231.00

Other Purposes:

Motor Vehicle 1/4% Purposes (General Fund) 11,149.19

Domestic Abuse Purposes 4,425.97

Emergency Management Purposes 265.47 Modernization and Preservation Relief Purposes 9,874.44

Total Other Purposes 25,715.07

Total Restricted Net Position $ 655,860.91

These balances are restricted due to federal grant and statutory requirements.

32

6. INTERFUND TRANSFERS Interfund transfers for the year ended December 31, 2016 were as follows:

Transfers To:

Road

and Bridge

Transfers From: Fund

Major Funds:

General Fund $ 550,000.00 Interfund transfers for the year ended December 31, 2015 were as follows:

Transfers To:

Road Other

and Bridge Governmental

Transfers From: Fund Funds Total

Major Funds:

General Fund $ 1,261,223.00 $ 5,872.91 $ 1,267,095.91 The County typically budgets transfers to the Road and Bridge Fund and the Emergency Management Fund (Other Governmental Funds) to conduct the indispensable functions of the County.

7. TAX ABATEMENTS

In 2012, the County created the Hutchinson County Tax Increment District No. 1 under the authority granted by South Dakota Codified Law section 11-9. The tax increment district was created to stimulate and develop the general economic welfare and prosperity of the County through the promotion and advancement of industrial, commercial, manufacturing, agricultural, or natural resources; and the improvement of the area will likely enhance significantly the value of substantially all of the other real property in the tax increment district.

The county, municipal, and other local general property taxes levied on all taxable property within a tax incremental district on the increase in assessed value of the taxable property is allocated to pay for the cost of improvements in the tax increment district. The tax increments are allocated until all cost of the tax increment district project has been repaid; however, it cannot exceed 20 years. In 2013, the County entered into a development agreement with MDS Manufacturing Inc. Because the general property taxes on tax increment districts are allocated to the district, the taxes are not available to Hutchinson County during the life of the tax increment district. The amount of general property taxes levied for this tax increment district during the calendar year ended December 31, 2016, was $16,875 and the portion of general property taxes that were not available to Hutchinson County totaled $2,685. There were no taxes levied for this tax increment district during the calendar year ended December 31, 2015.

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8. PENSION PLAN

Plan Information: All employees, working more than 20 hours per week during the year, participate in the South Dakota Retirement System (SDRS), a cost sharing, multiple employer defined benefit pension plan administered by SDRS to provide retirement benefits for employees of the State of South Dakota and its political subdivisions. The SDRS provides retirement, disability, and survivor benefits. The right to receive retirement benefits vests after three years of credited service. Authority for establishing, administering and amending plan provisions are found in SDCL 3-12. The SDRS issues a publicly available financial report that includes financial statements and required supplementary information. That report may be obtained at http://sdrs.sd.gov/publications.aspx or by writing to the SDRS, P.O. Box 1098, Pierre, SD 57501-1098 or by calling (605) 773-3731. Benefits Provided: SDRS has three different classes of employees, Class A, Class B public safety and Class B judicial. Class A retirement benefits are determined as 1.7 percent prior to 2008 and 1.55 percent thereafter of the employee’s final 3-year average compensation times the employee’s years of service. Employees with 3 years of service are eligible to retire at age 55. Class B public safety benefits are determined as 2.4 percent for service prior to 2008 and 2.0 percent thereafter of employee final average compensation. Class B judicial benefits are determined as 3.733 percent for service prior to 2008 and 3.333 percent thereafter of employee final average compensation. All Class B employees with 3 years of service are eligible to retire at age 45. Employees are eligible for service-related disability benefits regardless of length of service. Three years of service is required for nonservice-related disability eligibility. Disability benefits are determined in the same manner as retirement benefits but are payable immediately without an actuarial reduction. Death benefits are a percent of the employee’s final average salary. The annual increase in the amount of the SDRS benefits payable on each July 1

st is indexed to the

consumer price index (CPI) based on SDRS funded status:

If the SDRS market value funded ratio is 100% or more – 3.1% COLA If the SDRS market value funded ratio is 80.0% to 99.9%, index with the CPI

90.0% to 99.9% funded — 2.1% minimum and 2.8% maximum COLA 80.0% to 90.0% funded — 2.1% minimum and 2.4% maximum COLA

If the SDRS market value funded ratio is less than 80% -- 2.1% COLA

All benefits except those depending on the Member’s Accumulated Contributions are annually increased by the Cost-of-Living Adjustment. Contributions: Per SDCL 3-12, contribution requirements of the active employees and the participating employers are established and may be amended by the SDRS Board. Covered employees are required by state statute to contribute the following percentages of their salary to the plan; Class A Members, 6.0% of salary; Class B Judicial Members, 9.0% of salary; and Class B Public Safety Members, 8.0% of salary. State statute also requires the employer to contribute an amount equal to the employee’s contribution. State statute also requires the employer to make an additional contribution in the amount of 6.2 percent for any compensation exceeding the maximum taxable amount for social security for general employees only. The County’s share of contributions to the SDRS for the calendar years ended December 31, 2016, 2015, and 2014, equal to the required contributions each year, were as follows:

Year Amount

2016 $ 83,649

2015 $ 77,788

2014 $ 73,052

34

Pension Liabilities: At June 30, 2016, SDRS is 96.89% funded and accordingly has a net pension liability. The

proportionate shares of the components of the net pension liability of South Dakota Retirement System, for the County as of this measurement period ending June 30, 2016 are as follows:

Proportionate share of total pension liability $ 7,678,270.17 Less proportionate share of net position restricted for pension benefits

7,439,252.21

Proportionate share of net pension liability $ 239,017.96

The net pension liability was measured as of June 30, 2016 and the total pension liability used to calculate the net pension liability was based on a projection of the County’s share of contributions to the pension plan relative to the contributions of all participating entities. At June 30, 2016, the County’s proportion was .0707593%, which is an increase of .0021461% from its proportion measured as of June 30, 2015.

Actuarial Assumptions: The total pension liability in the June 30, 2016 actuarial valuation was determined using the

following actuarial assumptions, applied to all periods included in the measurement: Inflation 3.25 percent Salary Increases 5.83 percent at entry to 3.87 percent after 30 years of service Investment Rate of Return 7.25 percent through 2017 and 7.50 percent thereafter, net of

pension plan investment expense Mortality rates were based on the RP-2000 Employee Mortality Table for males and females, as

appropriate. The actuarial assumptions used in the June 30, 2016 valuation were based on the results of an

actuarial experience study for the period July 1, 2005 through June 30, 2011. The mortality assumptions were revised based on an extension of the experience study including mortality experience through June 30, 2013.

Investment portfolio management is the statutory responsibility of the South Dakota Investment

Council (SDIC), which may utilize the services of external money managers for management of a portion of the portfolio. SDIC is governed by the Prudent Man Rule (i.e., the council should use the same degree of care as a prudent man). Current SDIC investment policies dictate limits on the percentage of assets invested in various types of vehicles (equities, fixed income securities, real estate, cash, private equity, etc.). The long-term expected rate of return on pension plan investments was determined using a method in which best-estimate ranges of expected future real rates of return (expected returns, net of pension plan investment expense and inflation) are developed for each major asset class. These ranges are combined to produce the long-term expected rate of return by weighing the expected future real rates of return by the target asset allocation percentage and by adding expected inflation. Best estimates of real rates of return for each major asset class included in the pension plan’s target asset allocation as of June 30, 2016 (see the discussion of the pension plan’s investment policy) are summarized in the following table using geometric means:

35

Asset Class

Target Allocation

Long-Term Expected Real Rate of Return

Global Equity 58.0% 4.5% Fixed Income 30.0% 1.8% Real Estate 10.0% 4.6% Cash 2.0% 0.7%

Total 100%

Discount Rate: The discount rate used to measure the total pension liability (asset) was 7.25 percent through 2017

and 7.50% thereafter. The projection of cash flows used to determine the discount rate assumed that plan member contributions will be made at the current contribution rate and that matching employer contributions from will be made at rates equal to the member rate. Based on these assumptions, the pension plan’s fiduciary net position was projected to be available to make all future benefit payments of current plan members. Therefore, the long-term expected rate of return on pension plan investments was applied to all periods of projected benefit payments to determine the total pension liability (asset).

Sensitivity of liability (asset) to changes in the discount rate: The following presents the County’s proportionate share of net pension liability (asset) calculated

using the discount rate of 7.25 percent through 2017 and 7.50 percent thereafter, as well as what the County’s proportionate share of the net pension liability (asset) would be if it were calculated using a discount rate that is 1-percentage point lower (6.25/6.50%) or 1-percentage point higher (8.25/8.50%) than the current rate:

1% Decrease

Current Discount

Rate

1%

Increase

County’s proportionate share of the net pension liability (asset)

$ 1,337,541.34

$ 239,017.96

$ (656,945.83)

Pension Plan Fiduciary Net Position: Detailed information about the plan’s fiduciary net position is available in the separately issued

SDRS financial report. 9. SIGNIFICANT CONTINGENCIES – LITIGATION

At December 31, 2016, the County was involved in one lawsuit. No determination can be made at this time regarding the potential outcome of this lawsuit. However, as discussed in the Risk Management note, the County has liability coverage for itself and its employees. Therefore, no material effects are anticipated to the County as a result of the potential outcome of this lawsuit.

10. RISK MANAGEMENT

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 disasters. During the period ended December 31, 2016, the County managed its risks as follows:

36

Employee Health Insurance:

The County purchases health insurance for its employees from a commercial insurance carrier. Settled claims resulting from these risks have not exceeded the liability coverage during the past three years.

Liability Insurance:

The County joined the South Dakota Public Assurance Alliance (SDPAA), a public entity risk pool currently operating as a common risk management and insurance program for South Dakota local government entities. The objective of the SDPAA is to administer and provide risk management services and risk sharing facilities to the members and to defend and protect the members against liability, to advise members on loss control guidelines and procedures, and provide them with risk management services, loss control and risk reduction information and to obtain lower costs for that coverage. The County’s responsibility is to promptly report to and cooperate with the SDPAA to resolve any incident which could result in a claim being made by or against the County. The County pays an annual premium, to provide liability coverage detailed below, under a claims-made policy and the premiums are accrued based on the ultimate cost of the experience to date of the SDPAA member, based on their exposure or type of coverage. The County pays an annual premium to the pool to provide coverage for:

a. General Liability, b. Automobile Liability, c. Law Enforcement Operations, d. Wrongful Acts, e. Good Samaritan Liability, f. Pollution Liability, g. Broad Legal Defense Liability, and h. Property Coverage

The agreement with the SDPAA provides that the above coverages will be provided to a $5,000,000 limit. Member premiums are used by the pool for payment of claims and to pay for reinsurance for claims in excess of $250,000 for property coverage and $500,000 for liability coverage to the upper limit. A portion of the member premiums are also allocated to a cumulative reserve fund. The County would be eligible to receive a refund for a percentage of the amount allocated to the cumulative reserve fund on the following basis:

End of County’s First Full Year 50% End of County’s Second Full Year 60% End of County’s Third Full Year 70% End of County’s Fourth Full Year 80% End of County’s Fifth Full Year 90% End of County’s Sixth Full Year and Thereafter 100%

As of December 31, 2016, the County has vested balance in the cumulative reserve fund of $62,998.50. The County does not carry additional insurance to cover claims in excess of the upper limit. Settled claims resulting from these risks have not exceeded the liability coverage during the past three years. Worker's Compensation: The County joined the South Dakota Municipal League Worker's Compensation Fund (Fund), a public entity risk pool currently operating as a common risk management and insurance program for South Dakota local government entities. The objective of the Fund is to formulate, develop, and

37

administer, on behalf of the member organizations, a program of worker’s compensation coverage, to obtain lower costs for that coverage, and to develop a comprehensive loss control program. The County’s responsibility is to initiate and maintain a safety program to give its employees safe and sanitary working conditions and to promptly report to and cooperate with the Fund to resolve any worker’s compensation claims. The County pays an annual premium, to provide worker's compensation coverage for its employees, under a self-funded program and the premiums are accrued based on the ultimate cost of the experience to date of the Fund members. Coverage limits are set by state statute. The pool pays the first $650,000 of any claim per individual. The pool has reinsurance which covers up to statutory limits in addition to a separate combined employer liability limit of $2,000,000 per incident.

The County does not carry additional insurance to cover claims in excess of the upper limit. Settled claims resulting from these risks have not exceeded the liability coverage over the past three years. Unemployment Benefits: The County provides coverage for unemployment benefits by paying into the Unemployment Compensation Fund established by state law and managed by the State of South Dakota.

38

Variance with

Final Budget

Original Final Actual Amounts Positive (Negative)

Revenues:

Taxes:

General Property Taxes--Current 2,761,583.00$ 2,761,583.00$ 2,802,237.27$ 40,654.27$

General Property Taxes--Delinquent 1,000.00 1,000.00 2,034.85 1,034.85

Penalties and Interest 2,000.00 2,000.00 7,379.36 5,379.36

Tax Deed Revenue 1,500.00 1,500.00 237.63 (1,262.37)

Licenses and Permits 23,000.00 23,000.00 17,688.73 (5,311.27)


Federal Payments in Lieu of Taxes 2,000.00 2,000.00 1,292.87 (707.13)

State Grants 0.00 0.00 5,700.00 5,700.00


Bank Franchise 35,000.00 35,000.00 39,788.64 4,788.64

Court Appointed Attorney/Public Defender 0.00 0.00 2,376.23 2,376.23

Abused and Neglected Child Defense 0.00 0.00 312.00 312.00

Telecommunications Gross Receipts Tax 40,000.00 40,000.00 34,091.03 (5,908.97)

Motor Vehicle 1/4% 0.00 0.00 3,264.30 3,264.30

Renewable Facility Tax 0.00 0.00 20,596.91 20,596.91

Liquor Tax Reversion (25%) 0.00 0.00 12,517.97 12,517.97

Other Intergovernmental Revenue 200.00 200.00 481.43 281.43


General Government:

Treasurer's Fees 4,400.00 4,400.00 17,508.00 13,108.00

Register of Deeds' Fees 93,000.00 93,000.00 87,914.75 (5,085.25)

Legal Services 16,400.00 16,400.00 20,719.20 4,319.20

Clerk of Courts Fees 6,200.00 6,200.00 7,420.40 1,220.40

Other Fees 13,500.00 13,500.00 10,768.10 (2,731.90)

Public Safety:

Law Enforcement 6,900.00 6,900.00 12,652.92 5,752.92

Prisoner Care 800.00 800.00 650.00 (150.00)

Health and Welfare:


Poor Lien Recoveries 10,000.00 10,000.00 26,663.98 16,663.98

Veterans Service Officer 2,820.00 2,820.00 2,812.50 (7.50)

Culture and Recreation 1,000.00 1,000.00 1,025.00 25.00

Fines and Forfeits:

Costs 2,000.00 2,000.00 2,437.91 437.91

Forfeits 0.00 0.00 2,500.00 2,500.00

Other 3,000.00 3,000.00 0.00 (3,000.00)



Refund of Prior Year's Expenditures 5,300.00 5,300.00 11,394.00 6,094.00

Other 1,500.00 1,500.00 1,277.89 (222.11)

Total Revenues 3,043,103.00 3,043,103.00 3,171,488.39 128,385.39

Expenditures:

General Government:

Legislative:

Board of County Commissioners 104,601.00 124,643.04 124,643.04 0.00

Contingency 175,000.00 175,000.00

Amount Transferred (27,465.06) 147,534.94

Elections 108,596.00 108,596.00 38,235.48 70,360.52

Judicial System 31,439.00 31,439.00 29,181.59 2,257.41


Auditor 126,905.00 126,905.00 112,745.03 14,159.97

Treasurer 176,464.00 176,464.00 164,237.62 12,226.38

Other 1,000.00 1,000.00 0.00 1,000.00

Legal Services:

State's Attorney 112,163.00 112,862.87 112,862.87 0.00

Court Appointed Attorney 60,000.00 60,000.00 48,756.95 11,243.05

Abused and Neglected Child Defense 8,000.00 8,000.00 3,497.52 4,502.48


General Government Building 131,648.00 131,648.00 117,553.95 14,094.05

Director of Equalization 158,187.00 158,187.00 140,592.84 17,594.16

SUPPLEMENTARY INFORMATION

Budgeted Amounts

HUTCHINSON COUNTY

BUDGETARY COMPARISON SCHEDULE - MODIFIED CASH BASIS

GENERAL FUND


39

Variance with

Final Budget



Budgeted Amounts

HUTCHINSON COUNTY


GENERAL FUND


(Continued)

Register of Deeds 83,079.00 83,079.00 83,079.00 0.00

Veterans Service Officer 20,010.00 22,735.96 22,735.96 0.00

Predatory Animal 5,505.00 8,291.71 8,291.71 0.00

Public Safety:

Law Enforcement:

Sheriff 242,443.00 245,188.14 234,752.43 10,435.71

County Jail 44,000.00 44,000.00 18,180.53 25,819.47

Coroner 14,494.00 14,494.00 7,554.94 6,939.06

Juvenile Detention 14,000.00 14,000.00 1,677.64 12,322.36

Health and Welfare:


Support of Poor 114,460.00 114,460.00 48,134.20 66,325.80

Public Welfare 2,500.00 2,500.00 694.34 1,805.66

Health Assistance:

County Nurse 35,000.00 35,000.00 34,620.35 379.65

Social Services:

Domestic Abuse 1,650.00 1,650.00 0.00 1,650.00


Mentally Ill 60,130.00 60,130.00 29,795.42 30,334.58

Mental Health Centers 12,720.00 13,209.28 13,209.28 0.00

Mental Illness Board 2,000.00 2,473.16 2,473.16 0.00


Recreation:

County Fair 17,176.00 17,176.00 9,288.74 7,887.26


Soil Conservation:

County Extension 68,007.00 68,626.00 61,961.37 6,664.63

Soil Conservation Districts 20,600.00 20,600.00 20,600.00 0.00

Weed and Pest Control 100,393.00 100,393.00 79,748.85 20,644.15


Urban Development:

Planning and Zoning 33,429.00 33,677.04 33,677.04 0.00


Tourism, Industrial or Recreational Development 10,000.00 10,000.00 0.00 10,000.00

Total Expenditures 2,095,599.00 2,098,963.14 1,602,781.85 496,181.29

Excess of Revenues Over (Under) Expenditures 947,504.00 944,139.86 1,568,706.54 624,566.68


Transfers Out (1,800,000.00) (1,800,000.00) (550,000.00) 1,250,000.00

Insurance Proceeds 0.00 0.00 565.05 565.05

Sale of County Property 0.00 0.00 617.51 617.51

Total Other Financing Sources (Uses) (1,800,000.00) (1,800,000.00) (548,817.44) 1,251,182.56

Net Change in Fund Balance (852,496.00) (855,860.14) 1,019,889.10 1,875,749.24

Fund Balance - Beginning 4,855,824.60 4,855,824.60 4,855,824.60 0.00

FUND BALANCE - ENDING 4,003,328.60$ 3,999,964.46$ 5,875,713.70$ 1,875,749.24$

40

Variance with

Final Budget


Revenues:

Taxes:

Wheel Tax 242,398.00$ 242,398.00$ 268,330.74$ 25,932.74$


State Grants 215,671.00 215,671.00 226,670.10 10,999.10


Motor Vehicle Licenses 780,000.00 780,000.00 1,245,150.65 465,150.65

Prorate License Fees 55,000.00 55,000.00 60,682.91 5,682.91

Motor Fuel Tax 6,500.00 6,500.00 6,335.09 (164.91)

Other Intergovernmental Revenue 0.00 0.00 6,786.97 6,786.97


Public Works:

Road Maintenance Contract Charges 100,200.00 100,200.00 115,514.09 15,314.09



Refund of Prior Year's Expenditures 0.00 0.00 6,715.62 6,715.62

Other 10,000.00 10,000.00 0.00 (10,000.00)

Total Revenues 1,411,769.00 1,411,769.00 1,940,242.87 528,473.87

Expenditures:

Public Works:


Highways, Roads and Bridges 3,532,696.00 3,532,696.00 3,601,311.04 (68,615.04)

Intergovernmental Expenditures 15,000.00 15,000.00 10,123.32 4,876.68

Debt Service 0.00 0.00 66,243.85 (66,243.85)

Total Expenditures 3,547,696.00 3,547,696.00 3,677,678.21 (129,982.21)

Excess of Revenues Over (Under) Expenditures (2,135,927.00) (2,135,927.00) (1,737,435.34) 398,491.66


Transfers In 2,000,000.00 2,000,000.00 550,000.00 (1,450,000.00)

Insurance Proceeds 0.00 0.00 26,486.77 26,486.77

Sale of County Property 5,000.00 5,000.00 8,084.50 3,084.50

Total Other Financing Sources (Uses) 2,005,000.00 2,005,000.00 584,571.27 (1,420,428.73)

Net Change in Fund Balance (130,927.00) (130,927.00) (1,152,864.07) (1,021,937.07)


FUND BALANCE - ENDING 1,816,470.60$ 1,816,470.60$ 794,533.53$ (1,021,937.07)$


Budgeted Amounts

HUTCHINSON COUNTY


ROAD AND BRIDGE FUND


41

Variance with

Final Budget


Revenues:

Taxes:

General Property Taxes--Current 2,673,636.00$ 2,673,636.00$ 2,674,140.24$ 504.24$

General Property Taxes--Delinquent 10,000.00 10,000.00 10,843.77 843.77

Penalties and Interest 2,000.00 2,000.00 7,735.26 5,735.26

Tax Deed Revenue 1,500.00 1,500.00 182.97 (1,317.03)

Other Taxes 300.00 300.00 54.00 (246.00)

Licenses and Permits 23,200.00 23,200.00 20,618.00 (2,582.00)


Federal Payments in Lieu of Taxes 700.00 700.00 1,198.80 498.80

State Grants 0.00 0.00 6,100.00 6,100.00


Bank Franchise 38,000.00 38,000.00 28,342.82 (9,657.18)

Abused and Neglected Child Defense 0.00 0.00 1,486.89 1,486.89

Telecommunications Gross Receipts Tax 40,000.00 40,000.00 37,880.80 (2,119.20)

Motor Vehicle 1/4% 0.00 0.00 2,904.58 2,904.58

Other Intergovernmental Revenue 200.00 200.00 70.00 (130.00)


General Government:

Treasurer's Fees 4,300.00 4,300.00 8,348.00 4,048.00

Register of Deeds' Fees 92,750.00 92,750.00 74,669.50 (18,080.50)

Legal Services 3,000.00 3,000.00 17,267.30 14,267.30

Clerk of Courts Fees 6,200.00 6,200.00 6,679.20 479.20

Other Fees 5,500.00 5,500.00 7,703.63 2,203.63

Public Safety:

Law Enforcement 7,500.00 7,500.00 8,733.14 1,233.14

Prisoner Care 0.00 0.00 675.73 675.73

Health and Welfare:


Poor Lien Recoveries 10,000.00 10,000.00 20,425.48 10,425.48

Veterans Service Officer 0.00 0.00 2,812.50 2,812.50

Culture and Recreation 1,000.00 1,000.00 1,425.00 425.00

Fines and Forfeits:

Fines 500.00 500.00 0.00 (500.00)

Costs 2,000.00 2,000.00 1,409.59 (590.41)

Forfeits 0.00 0.00 1,454.76 1,454.76

Other 15,000.00 15,000.00 1,464.25 (13,535.75)



Capital Credit Refunds 1,500.00 1,500.00 1,125.16 (374.84)

Total Revenues 2,948,786.00 2,948,786.00 2,957,604.24 8,818.24

Expenditures:

General Government:

Legislative:

Board of County Commissioners 129,175.00 129,175.00 123,541.53 5,633.47

Contingency 175,000.00 175,000.00

Amount Transferred (46,728.31) 128,271.69

Elections 17,500.00 17,500.00 13,358.12 4,141.88

Judicial System 79,500.00 87,931.00 27,931.00 60,000.00


Auditor 121,504.00 123,516.70 123,516.70 0.00

Treasurer 163,045.00 163,045.00 152,743.53 10,301.47

Legal Services:

State's Attorney 107,265.00 107,265.00 106,282.82 982.18

Court Appointed Attorney 0.00 0.00 32,427.49 (32,427.49)


General Government Building 92,460.00 111,290.93 111,290.93 0.00

Director of Equalization 152,125.00 152,125.00 139,512.45 12,612.55

Register of Deeds 82,970.00 82,970.00 81,704.43 1,265.57

Veterans Service Officer 18,290.00 20,455.36 20,455.36 0.00

Predatory Animal 5,505.00 5,540.31 5,540.31 0.00


Budgeted Amounts

HUTCHINSON COUNTY


GENERAL FUND


42

Variance with

Final Budget



Budgeted Amounts

HUTCHINSON COUNTY


GENERAL FUND


(Continued)

Public Safety:

Law Enforcement:

Sheriff 228,745.00 228,745.00 227,120.72 1,624.28

County Jail 43,500.00 43,500.00 34,460.12 9,039.88

Coroner 11,400.00 11,400.00 7,888.17 3,511.83

Juvenile Detention 14,000.00 14,000.00 11,490.00 2,510.00

Health and Welfare:


Support of Poor 113,155.00 113,155.00 56,081.21 57,073.79

Public Welfare 3,500.00 3,500.00 727.13 2,772.87

Health Assistance:

County Nurse 35,000.00 35,000.00 34,698.00 302.00


Mentally Ill 68,650.00 68,650.00 44,950.39 23,699.61

Mental Health Centers 5,517.00 8,597.00 8,597.00 0.00

Mental Illness Board 2,000.00 4,438.47 4,438.47 0.00


Recreation:

County Fair 11,100.00 11,100.00 7,920.22 3,179.78


Soil Conservation:

County Extension 63,010.00 63,010.00 58,681.20 4,328.80

Soil Conservation Districts 20,600.00 20,600.00 20,600.00 0.00

Weed and Pest Control 86,006.00 86,006.00 71,217.29 14,788.71


Urban Development:

Planning and Zoning 36,850.00 36,850.00 32,132.47 4,717.53


Tourism, Industrial or Recreational Development 25,000.00 25,000.00 20,000.00 5,000.00


Excess of Revenues Over (Under) Expenditures 1,036,414.00 1,046,148.54 1,378,297.18 332,148.64


Transfers Out (1,800,000.00) (1,800,000.00) (1,267,095.91) 532,904.09


Total Other Financing Sources (Uses) (1,800,000.00) (1,800,000.00) (1,255,619.13) 544,380.87

Net Change in Fund Balance (763,586.00) (753,851.46) 122,678.05 876,529.51


FUND BALANCE - ENDING 3,969,560.55$ 3,979,295.09$ 4,855,824.60$ 876,529.51$

43

Variance with

Final Budget


Revenues:

Taxes:

Wheel Tax 128,000.00$ 128,000.00$ 146,252.66$ 18,252.66$


State Grants 0.00 0.00 1,596,252.72 1,596,252.72


Motor Vehicle Licenses 730,000.00 730,000.00 1,238,836.74 508,836.74

Energy Minerals Severance Tax 0.00 0.00 23,191.74 23,191.74

Prorate License Fees 55,000.00 55,000.00 0.00 (55,000.00)

Wind Farm Taxes 0.00 0.00 6,335.45 6,335.45

Motor Fuel Tax 6,500.00 6,500.00 0.00 (6,500.00)

Other Intergovernmental Revenue 0.00 0.00 11,000.00 11,000.00


General Government:

Other Fees 0.00 0.00 270.86 270.86

Public Works:

Road Maintenance Contract Charges 75,000.00 75,000.00 137,315.85 62,315.85



Refund of Prior Year's Expenditures 0.00 0.00 147.58 147.58

Other 10,000.00 10,000.00 3,500.00 (6,500.00)

Total Revenues 1,006,500.00 1,006,500.00 3,167,055.20 2,160,555.20

Expenditures:

Public Works:


Highways, Roads and Bridges 3,170,985.00 3,570,985.00 3,459,314.37 111,670.63

Intergovernmental Expenditures 0.00 0.00 26,300.35 (26,300.35)

Debt Service 0.00 0.00 66,243.85 (66,243.85)


Excess of Revenues Over (Under) Expenditures (2,164,485.00) (2,564,485.00) (384,803.37) 2,179,681.63


Transfers In 1,800,000.00 1,800,000.00 1,261,223.00 (538,777.00)


Sale of County Property 0.00 0.00 39,803.68 39,803.68

Total Other Financing Sources (Uses) 1,800,000.00 1,800,000.00 1,395,108.03 (404,891.97)

Net Change in Fund Balance (364,485.00) (764,485.00) 1,010,304.66 1,774,789.66

Fund Balance - Beginning 937,092.94 937,092.94 937,092.94 0.00

FUND BALANCE - ENDING 572,607.94$ 172,607.94$ 1,947,397.60$ 1,774,789.66$


Budgeted Amounts

HUTCHINSON COUNTY


ROAD AND BRIDGE FUND


44

HUTCHINSON COUNTY NOTES TO THE SUPPLEMENTARY INFORMATION

Schedules of Budgetary Comparisons for the General Fund and for each major Special Revenue Fund with a legally required budget

Note 1. Budgets and Budgetary Accounting:

The County follows these procedures in establishing the budgetary data reflected in the financial statements:

1. Between the fifteenth and thirtieth days of July in each year the Board of County

Commissioners prepares and files with the County Auditor a provisional budget for the following year, containing a detailed estimate of cash balances, revenues, and expenditures.

2. Prior to the first Tuesday in September in each year a notice of budget hearing is

published once each week for two successive weeks, and the text of the provisional budget is published with the first publication.

3. The Board of County Commissioners holds a meeting for the purpose of considering

the provisional budget on or prior to the first Tuesday in September in each year. Such hearings must be concluded by October first. Changes made to the provisional budget are entered at length in the minutes of the Board of County Commissioners.

4. Before October first of each year the Board of County Commissioners adopts an

annual budget for the ensuing year. The adopted budget is filed in the office of the County Auditor.

5. After adoption by the Board of County Commissioners, the operating budget is legally

binding and actual expenditures for each purpose cannot exceed the amounts budgeted, except as indicated in number 7.

6. A line item for contingencies may be included in the annual budget. Such a line item

may not exceed 5 percent of the total county budget.

7. If it is determined during the year that sufficient amounts have not been budgeted, state statute allows the adoption of supplemental budgets.

8. Unexpended appropriations lapse at year end unless encumbered by resolution of the

Board of County Commissioners.

9. Formal budgetary integration is employed as a management control device during the year for the General Fund and special revenue funds.

45

2016 2015 2014

County's proportion of the net pension

liability (asset) 0.0707593% 0.0686132% 0.0666122%

County's proportionate share of net

pension liability (asset) 239,017.96$ (291,008.19)$ (479,913.66)$

County's covered-employee payroll 1,303,180.09$ 1,206,170.93$ 1,125,892.15$

County's proportionate share of the net

pension liability (asset) as a percentage

of its covered-employee payroll 18.34% -24.13% -42.63%

Plan fiduciary net position as a

percentage of the total pension

liability (asset) 96.9% 104.1% 107.3%


HUTCHINSON COUNTY

South Dakota Retirement System

*Last 10 Fiscal Years

SCHEDULE OF THE COUNTY'S PROPORTIONATE SHARE OF THE NET PENSION LIABILITY (ASSET)

* The amounts presented for each fiscal year were determined as of the measurement date of the collective net pension

liability (asset) which is 6/30. Until a full 10-year trend is compiled, the County will present information for those years for

which information is available.

46

HUTCHINON COUNTY NOTES TO THE SUPPLEMENTARY INFORMATION

Schedule of the Proportionate Share of the Net Pension Liability (Asset)

Changes of benefit terms: No significant changes. Changes of assumptions: No significant changes.

47

Long-Term Add Less Long-Term

Debt New Debt Debt

Indebtedness January 1, 2015 Debt Retired December 31, 2016

Governmental Long-Term Debt:

Other Long-Term Debt Payable:

Financing (Capital Acquisition) Leases 247,351.92$ $ (120,246.97)$ 127,104.95$

Note 1 - Long-Term Debt:

Debt payable at December 31, 2016 is comprised of the following:

Financing (Capital Acquisition) Leases:

82,686.45$

Caterpillar CB44B Roller; Issued 7/8/14; Final Maturity Date of July 2019; Interest Rate 2.8%; 44,418.50$

Paid from the Road and Bridge Fund

Caterpillar 320 E Hydraulic Excavator; Issued 6/16/14; Final Maturity Date of July 2018; Interest Rate 2.817%;

Paid from the Road and Bridge Fund


HUTCHINSON COUNTY

SCHEDULE OF CHANGES IN LONG-TERM DEBT

For the Two Years Ended December 31, 2016

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HUTCHINSON COUNTY AUDIT REPORT For the Two Years Ended...

Documents

Transcript of HUTCHINSON COUNTY AUDIT REPORT For the Two Years Ended...