Madison County Commission - Alabama Local News, …media.al.com/wire/other/audit.pdf · Table of...

Ronald L. Jones, Chief Examiner 14-052

Report on the

Madison County Commission

Madison County, Alabama

October 1, 2011 through September 30, 2012

Filed: December 13, 2013

Department of

Examiners of Public Accounts 50 North Ripley Street, Room 3201

P.O. Box 302251 Montgomery, Alabama 36130-2251

Website: www.examiners.alabama.gov

State of Alabama Department of

Examiners of Public Accounts P.O. Box 302251, Montgomery, AL 36130-2251

Ronald L. Jones Chief Examiner

50 North Ripley Street, Room 3201 Montgomery, Alabama 36104-3833

Telephone (334) 242-9200

Honorable Ronald L. Jones Chief Examiner ofPublic Accounts Montgomery, Alabama 36130

Dear Sir:

FAX (334) 242-1775

Under the authority of the Code of Alabama 1975, Section 41-5-21, we submit this report on the results of the audit of the Madison County Commission, Madison County, Alabama, for the period October 1, 2011 through September 30, 2012.

Sworn to and subscribed before me this the \B~ day of t-l~ , 20 ~-~-· ·- -" 'l ""\ ...... ~~fY'\.h,J~ ~, . - · Notaty Public _.- ... .__.

- . ~-·

· S~9AJ.,to ami subscribed before me this the~ day of No'tc.r--.be.r , 20 ~

~-/h.~ Notary Public

·'.

14-052

Respectfully submitted,

~W&e.o~ Lynn Willis Brown Examiner ofPublic Accounts

AprilS. Purser Examiner ofPublic Accounts

Table of Contents Page


Summary A Contains items pertaining to federal, state and local legal compliance, Commission operations, and other matters. Schedule of State and Local Compliance and Other Findings C Contains detailed information about findings pertaining to state and local legal compliance, and other findings. Independent Auditor’s Report E Reports on whether the financial information constitutes a fair presentation of the financial position and results of financial operations in accordance with generally accepted accounting principles (GAAP). Management’s Discussion and Analysis H Provides information required by the Governmental Accounting Standards Board (GASB) that is prepared by management of the Commission introducing the basic financial statements and providing an analytical overview of the Commission’s financial activities for the year. This information has not been audited, and no opinion is provided about the information. Basic Financial Statements 1 Provides the minimum combination of financial statements and notes to the financial statements that are required for the fair presentation of the Commission’s financial position and results of operations in accordance with GAAP. Exhibit #1 Statement of Net Assets 2 Exhibit #2 Statement of Activities 4 Exhibit #3 Balance Sheet – Governmental Funds 6 Exhibit #4 Reconciliation of the Balance Sheet of Governmental Funds to the Statement of Net Assets 7 Exhibit #5 Statement of Revenues, Expenditures and Changes in Fund

Balances – Governmental Funds 8



Exhibit #6 Reconciliation of the Statement of Revenues, Expenditures and

Changes in Fund Balances of Governmental Funds to the Statement of Activities 9

Exhibit #7 Statement of Net Assets – Proprietary Funds 11 Exhibit #8 Statement of Revenues, Expenses and Changes in Fund Net Assets Proprietary Funds 15 Exhibit #9 Statement of Cash Flows – Proprietary Funds 17 Exhibit #10 Statement of Fiduciary Net Assets 21 Exhibit #11 Statement of Changes in Fiduciary Net Assets 22 Notes to the Financial Statements 23 Required Supplementary Information 57 Provides information required by the GASB to supplement the basic financial statements. This information has not been audited and no opinion is provided about the information. Exhibit #12 Schedule of Revenues, Expenditures and Changes in Fund

Balances – Budget and Actual – General Fund 58 Exhibit #13 Schedule of Funding Progress – Defined Benefit Pension Plan 62 Exhibit #14 Schedule of Funding Progress – Other Postemployment Benefits 63 Supplementary Information 64 Exhibit #15 Schedule of Expenditures of Federal Awards 65 Notes to the Schedule of Expenditures of Federal Awards 69 Additional Information 70 Exhibit #16 Commission Members and Administrative Personnel – a listing

of the Commission members and administrative personnel. 71



Exhibit #17 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 – a report on internal controls related to the financial statements and on whether the Commission complied with laws and regulations which could have a direct and material effect on the Commission’s financial statements. 72

Exhibit #18 Report on Compliance With Requirements That Could Have a

Direct and Material Effect on Each Major Program and on Internal Control Over Compliance in Accordance With OMB Circular A-133 – a report on internal controls over compliance with requirements of laws, regulations, contracts, and grants applicable to major federal programs and an opinion on whether the Commission complied with laws, regulations, and the provisions of contracts or grant agreements which could have a direct and material effect on each major program. 75

Exhibit #19 Schedule of Findings and Questioned Costs – a schedule

summarizing the results of audit findings relating to the financial statements as required by Government Auditing Standards and findings and questioned costs for federal awards as required by OMB Circular A-133. 78

Exhibit #20 Auditee Response/Corrective Action Plan – a response by the

Commission on the results of the audit and a corrective action plan for federal audit findings. 80 __________________________________________________

14-052 A

Department of Examiners of Public Accounts

SUMMARY

Madison County Commission October 1, 2011 through September 30, 2012

The Madison County Commission (the “Commission”) is governed by a seven-member body elected by the citizens of Madison County. The members and administrative personnel in charge of governance of the Commission are listed on Exhibit 16. The Commission is the governmental agency that provides general administration, public safety, construction and maintenance of county roads and bridges, sanitation services, health and welfare services and educational services to the citizens of Madison County. This report presents the results of an audit the objectives of which were to determine whether the financial statements present fairly the financial position and results of financial operations and whether the Commission complied with applicable laws and regulations, including those applicable to its major federal financial assistance programs. The audit was conducted 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 as well as the requirements of the Department of Examiners of Public Accounts under the authority of the Code of Alabama 1975, Section 41-5-14. An unqualified opinion was issued on the financial statements, which means that the Commission’s financial statements present fairly, in all material respects, its financial position and the results of its operations for the fiscal year ended September 30, 2012. Findings are numbered and reported by the fiscal year in which the finding originally occurred. An instance of noncompliance with state and local laws and regulations and other matters was found during the audit as shown on the Schedule of State and Local Compliance and Other Findings and it is summarized below. CURRENT FINDING ♦ 2012-01 relates to the Commission’s failure to comply with Act Number 80-643, Acts of

Alabama regarding private work contracts.

14-052 B

Problems were found with the Commission’s internal controls over financial reporting (Exhibit 19) and they are summarized below: ♦ 2012-02 relates to the Commission’s failure to include all bank accounts and activity from

public funds in the records of the Commission.

♦ 2012-03 relates to the Commission’s failure to deposit private work receipts on a timely basis.

Other matters which have been brought to our attention concerning one of the Commission’s district offices will be addressed in a separate report. The following officials/administrative personnel were invited to an exit conference to discuss the contents of this report: Mike Gillespie, Chairman of the Madison County Commission; Commission Members: Roger Jones, Faye Dyer, Jerry Craig, Dale Strong, Phil Riddick, and Robert Harrison; Howard Baites, County Administrator; Judy Teague and Nancy Beams, Chief Financial Directors. The following individuals attended the exit conference, held at the offices of the Madison County Commission: Commission Members: Roger Jones, Faye Dyer, Jerry Craig, Dale Strong, Phil Riddick, and Robert Harrison; and representatives of the Department of Examiners of Public Accounts: Suzy Berryman, Audit Manager; Lynn Brown and April Purser, Examiners of Public Accounts.

C

Schedule of State and Local Compliance and Other Findings

Schedule of State and Local Compliance and Other Findings For the Year Ended September 30, 2012


D

Ref. No.

Finding/Noncompliance

2012-01 Finding: The Madison County Commission is authorized under the provisions of Act Number 80-643, Acts of Alabama, to perform road related services, for a fee, and to sell road construction materials to churches, individuals, firms or corporations. The Commission can make available to its citizens the services only when such road related services and road building materials are not available to them at a reasonable cost from private enterprise. The Commission is required: 1) to provide the results of an examination of the availability of work, services and materials from private enterprise in the various areas of Madison County and to determine the cost for providing road related services and construction material; 2) to provide a written policy which will govern the performance by county road crews, use of equipment for road related services and the sale of road construction material by the county; 3) to publish annually in a newspaper of general circulation in Madison County, the written policy and pricing costs; 4) to ensure road related services performed are paid at the time of completion and any road construction material delivered is paid at the time the material is delivered; 5) to expend all moneys derived from payments of work or services performed for road projects; and 6) to require a written contract for services performed and maintain those contracts for a period not less than four years. The following issues were noted: The Commission did not perform an examination of the availability of

work, services, and material from private enterprise in the County and did not determine the cost for providing road related services and construction material.

The Commission did not provide a written policy regarding the services provided and the sales and related costs of road construction materials.

The Commission did not publish the required written policy and pricing costs.

Numerous instances were noted in which payment was not obtained timely upon completion of services performed or materials delivered.

Funds received from private work in District 3 East were deposited in a bank account maintained at the district office and were expended for various items unrelated to road projects.

The Commission did not account for the sequence of contracts issued and all contracts were not available for review.

Recommendation: Procedures should be implemented to ensure the Commission complies with all requirements of Act Number 80-643, Acts of Alabama.

E

Independent Auditor’s Report

14-052 F

Independent Auditor’s Report

We have audited the accompanying financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the Madison County Commission, as of and for the year ended September 30, 2012, which collectively comprise the basic financial statements of the Madison County Commission as listed in the table of contents as Exhibits 1 through 11. These financial statements are the responsibility of the Madison County Commission’s management. Our responsibility is to express opinions on these financial statements based on our audit. We did not audit the financial statements of the Madison County Water Department, which represents 85% and 49%, respectively, of the assets and revenues of the Enterprise Funds, business-type activities. Those financial statements were audited by other auditors whose report thereon has been furnished to us, and our opinion, insofar as it relates to the amounts included for the Madison County Water Department, is based on the report of other auditors. 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 includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinions. In our opinion, based on our audit and the report of other auditors, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the Madison County Commission, as of September 30, 2012, and the respective changes in financial position and cash flows, where applicable, thereof for the year then ended in conformity with accounting principles generally accepted in the United States of America. In accordance with Government Auditing Standards, we have also issued our report dated November 15, 2013, on our consideration of the Madison County Commission’s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts and grant agreements and other matters. The purpose of that report is 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 internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be considered in assessing the results of our audit.

Accounting principles generally accepted in the United States of America require that the Management's Discussion and Analysis (MD&A) and the Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual (Exhibit 12), and the Schedules of Funding Progress (Exhibits 13 and 14), be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements is required by the Governmental Accounting Standards Board who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management's responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance.

Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the Madison County Commission's basic financial statements. The accompanying Schedule of Expenditures of Federal Awards (Exhibit 15) as required by U.S. Office of Management and Budget Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations, is presented for purposes of additional analysis and is 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 financial statements or to the financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the Schedule of Expenditures of Federal Awards is fairly stated in all material respects in relation to the financial statements taken as a whole.

November 15,2013

14-052

y(,Jtu<~ Ronald L. Jones Chief Examiner

Department of Examiners of Public Accounts

G

This Page Intentionally Blank

H

Management’s Discussion and Analysis (Required Supplementary Information)

I

MADISON COUNTY COMMISSION MANAGEMENT’S DISCUSSION AND ANALYSIS

This section of the Madison County Commission’s Annual Financial Report represents our discussion and analysis of the Commission’s financial performance during the fiscal year that ended on September 30, 2012. It has been developed in accordance with the Governmental Accounting Standards Board (GASB) Statement Number 34. It is intended to provide the readers of this report with a general overview of the financial activities of the County during FY2012. The information in this section should be considered only in the context of the financial statements and notes to financial statements to follow. FINANCIAL HIGHLIGHTS

• The Commission’s total net assets decreased by $9.54 million over the course of the year’s

operations. Net assets of our business-type activities increased by $3.26 million (or approximately 6.93%), while the net assets of our governmental activities decreased by $12.80 million (or approximately 6.49%). The largest portion of this decrease is due to the implementation of GASB Statement 45 beginning in FY 2009. The statement requires the accrual in the financial statement of an actuarial determined liability for Other Post-Employment Benefits (OPEB). This liability represents the estimated current year contribution for funding future costs of providing health care benefits to retirees. The liability that was accrued for the fiscal year was $9.67 million.

• For FY 2012, the Madison County Commission was self-funded with respect to employee and retiree health care costs. The Madison County Commission budgets and pays employee and retiree health care claims as they are incurred on an annual basis. The Commission paid health care costs of $15.24 million for employees and retirees for the fiscal year. This amount is net of any reimbursements received for stop-loss coverage and net of any employee contributions.

• In the Commission’s governmental activities, expenses increased by $6.49 million or approximately 6.37%., while revenues increased by $.66 million or .70%.

• In the Commission’s business-type activities, operating expenses decreased by $.11 million or approximately .63%, while revenues increased by $1.79 million or approximately 9.05%.

• The General Fund used $1.93 in prior year reserves to finance current year programs. Other governmental funds reserve amount decreased by $.98 million.

OVERVIEW OF THE FINANCIAL STATEMENTS This annual report consists of three parts—management’s discussion and analysis (this section), the basic financial statements, and required supplementary information. The basic financial statements include two kinds of statements that present different views of the Commission.

• The first two statements are government-wide financial statements that provide both long-term

and short-term information about the Commission’s overall financial status. • The remaining statements are fund financial statements that focus on individual parts of the

Commission government, reporting the Commission’s operations in more detail than the government-wide statements.

J

The governmental funds statements tell how general government services like public safety

were financed in the short-term as well as what remains for future spending. • Proprietary fund statements offer short- and long-term financial information about the activities

the government operates like businesses, such as the Solid Waste Control and the Water System. • Fiduciary fund statements provide information about financial relationships – like the Law

Library Fund – in which the Commission acts solely as a trustee or agent for the benefit of others, to whom the resources in question belong.

Figure A-1

Required Components of Madison County Commission’s Annual Financial Report

The financial statements also include notes that explain some of the information in the financial statements and provide more detailed data. The statements are followed by a section of required supplementary information that further explains and supports the information in the financial statements. Figure A-1 shows how the required parts of this annual report are arranged and relate to one another.

Figure A-2 summarizes the major features of the Commission’s financial statements, including the portion of the County government they cover and the types of information they contain. The remainder of this overview section of management’s discussion and analysis explains the structure and contents of each of the statements.

Basic Financial Statements Management’s Discussion and Analysis

Government – Wide Financial Statements

Required Supplementary Information

Fund Financial Statements

Notes to the Financial Statements

K

Figure A-2

Major Features of Madison County Commission’s Government-wide and Fund Financial Statements

Fund Financial Statements

Government-Wide Statements

Governmental Funds Proprietary Funds Fiduciary Funds

Scope Entire County government (except Fiduciary Funds)

The activities of the County that are not proprietary or fiduciary , such as public safety, highways and roads, and health

Activities the County operates similar to private businesses: Waste Control and Water System

Instances in which the County is the trustee or agent for someone else’s resources, such as the Law Library Fund

Required Financial Statements

• Statement of Net Assets

• Statement of Activities

• Balance Sheet • Statement of

Revenues, Expenditures, and Changes in Fund Balances

• Statement of Net Assets

• Statement of Revenues, Expenditures, and Changes in Fund Balances

• Statement of Fiduciary Net Assets

• Statement of Changes in Fiduciary Net Assets

Accounting Basis and Measurement Focus

Accrual accounting and economic focus

Modified accrual accounting and measurement focus

Accrual accounting and economic measurement focus

Accrual accounting and economic measurement focus

Types of asset/liability information

All assets and liabilities, both financial and capital, and short-term and long-term

Only assets expected to be used up and liabilities that come due during the year or soon thereafter; no capital assets included

All assets and liabilities, both financial and capital, and short-term and long-term

All assets and liabilities, both short-term and long-term; including Capital Assets, if any

Type of inflow/outflow information

All revenues and expenses, during the year, regardless of when cash is received or paid

Revenues for which cash is received during or soon after the end of the year; expenditures when goods or services have been received and payment is due during the year or soon thereafter

All revenues and expenses during the year, regardless of when cash is received or paid

All revenues and expenses during the year, regardless of when cash is received or paid

Government-Wide Statements

The government-wide statements report information about the Commission as a whole using

accounting methods similar to those used by private-sector companies. The statement of net assets includes all of the government’s assets and liabilities. All of the current year’s revenues and expenses are accounted for in the statement of activities regardless of when cash is received or paid.

L

The two government-wide statements report the Commission’s net assets and how they have

changed. Net assets—the difference between the Commission’s assets and liabilities—is one way to measure the Commission’s financial health, or position. • Over time, increases or decreases in the Commission’s net assets are an indicator of whether its

financial health is improving or deteriorating, respectively. • To assess the overall health of the Commission you need to consider additional nonfinancial

factors such as changes in the Commission’s property tax base and the condition of the county’s roads.

The government-wide financial statements of the Commission are divided into two categories: • Governmental activities – Most of the Commission’s basic services are included here, such as

public safety, highways and roads, and general administration. Property taxes and state and federal grants finance most of these activities.

• Business-type activities – The Commission charges fees to customers to help it cover the cost of certain services it provides. The Commission’s Waste Control, Building Inspection, and Water System services are included here.

Fund Financial Statements The fund financial statements provide more detailed information about the Commission’s most significant funds – not the Commission as a whole. Funds are accounting devices that the Commission uses to keep track of specific resources of funding and spending for particular purposes. • Some funds are required by State law and by bond covenants. • The County Commission establishes other funds to control and manage money for particular

purposes or to show that it is properly using certain taxes and grants. The Madison County Commission has three kinds of funds: • Governmental Funds – Most of the Commission’s basic financial services are included in

governmental funds, which focus on (1) how cash and other financial assets that can readily be converted to cash flow in and out and (2) the balances left at year-end that are available for spending. Consequently, the governmental funds statements provide a detailed short-term view that helps you determine whether there are more or fewer financial resources that can be spent in near future to finance the Commission’s programs. Because this information does not encompass the additional long-term focus of the government-wide statements, we provide additional information at the bottom of the governmental funds statement, or on the subsequent page that explains the relationship (or differences) between them.

• Proprietary funds – Services for which the Commission charges customers a fee are generally

reported in proprietary funds. Proprietary funds, like the government-wide statements, provide both long-and short-term financial information.

M

In fact, the Commission’s enterprise funds (one type of proprietary funds) are the same as its

business-type activities, but provide more detail and additional information, such as cash flows. • Fiduciary funds – the Commission is responsible for other assets that – because of a trust

arrangement – can only be used for the trust beneficiaries. The Commission is responsible for ensuring that the net assets reported in these funds are used for their intended purposes. All the Commission’s fiduciary activities are reported in a separate statement of fiduciary net assets and a statement of changes in fiduciary net assets. We exclude these activities from the Commission’s government-wide financial statements because the Commission cannot use these assets to finance its operations.

FINANCIAL ANALYSIS OF THE COUNTY AS A WHOLE Net Assets. The Commission’s combined net assets decreased between fiscal years 2011 and 2012 by approximately $9.54 million to $234.90 million. Net assets for business-type activities increased 6.93% to $50.31 million while the net assets of the governmental activities decreased 6.48% to $184.59 million. The following tables present financial information for governmental and business-type activities for the year ended September 30, 2012, with comparative data for the fiscal year ended September 30, 2011.

Table A-1 Madison County Commission’s Net Assets

(In millions of dollars) Governmental

Activities Business-Type

Activities Total Total Percentage 2012 2011 2012 2011 2012 2011 Change

Current and Other Assets 84.45 86.93 23.19 20.02 107.64 106.95 .64% Capital Assets (Net) 197.14 195.62 39.24 39.65 236.38 235.27 .47%

Total Assets 281.59 282.55 62.43 59.67 344.02 342.22 .53%

Current Liabilities 47.42 46.72 2.12 2.25 49.54 48.97 1.16% Other Liabilities 49.58 38.44 10.00 10.37 59.58 48.81 22.07% Total Liabilities 97.00 85.16 12.12 12.62 109.12 97.78 11.60%

Net Assets:

Invested in Capital Assets, Net of related Debt 189.39 191.26 29.77 29.85 219.16 221.11 (.88%)

Restricted 13.72 12.02 .64 .64 14.36 12.66 13.43% Unrestricted (18.52) (5.89) 19.90 16.56 1.38 10.67 (87.07%)

Total Net Assets 184.59 197.39 50.31 47.05 234.90 244.44 (3.90%) Changes in net assets. The Commission’s total revenues were approximately $116.75 million. (See table A-2). Approximately 38% of the Commission’s revenues come from property taxes, and 48 cents of every dollar raised come from some type of tax. Another 34 cents comes from fees charged for services, and the majority of the remainder is state and federal aid.

N

The total cost of all programs and services was approximately $126.29 million. The

Commission’s expenses cover a range of services with over 63% related to general government and public safety.

38%

10%

34%

9%

0% 9%

Figure A-3 Madison County Commission

Revenues for Fiscal Year 2011-2012

Property Taxes

Non-Property Taxes

Charges for Services

Grants and Contributions

Interest and InvestmentEarnings

Other

O

The Commission was not able to fully fund this year’s cost through current year revenue

which resulted in a decrease in net assets of $9.54 million. Table A-2 and the narrative that follows consider the operations of governmental and business-type activities separately.

37%

26%

18%

7% 7%

2% 1% 2%

Figure A-4 Madison County Commission

Expenditures for Fiscal Year 2011-2012

General Government

Public Safety

Highways and Roads

Waste Control

Water Services

Culture and Recreation

Other

Sanitation

P

Table A-2

Changes in Madison County Commission’s Net Assets (In millions of dollars)

Governmental Activities

Business-Type Activities

Total

Total Percentage

Change 2012 2011 2012 2011 2012 2011 2011-2012 Revenues Program Revenues Charges for Services 18.22 18.90 21.59 19.71 39.81 38.61 3.11% Operating Grants and Contributions 8.02 9.95 .16 .09 8.18 10.04 (18.53%) Capital Grants and Contributions 2.54 2.99 2.54 2.99 (15.05%) General Revenues Property Taxes 43.95 43.15 43.95 43.15 1.85% County Gasoline Taxes 5.08 5.12 5.08 5.12 (.78%) Miscellaneous Taxes 6.77 6.31 6.77 6.31 7.29% TVA In-lieu of Taxes 1.83 1.76 1.83 1.76 3.98% Miscellaneous Revenues 8.39 5.17 .14 .33 8.53 5.50 55.09% Interest Revenue .29 .06 .10 .06 .39 (84.62%) Other .38 .38 --- Transfers .89 1.00 (.89) (1.00) Total Revenues and Transfers 95.69 95.02 21.06 19.23 116.75 114.25 2.19% Expenses General Government 46.37 41.84 46.37 41.84 10.83% Public Safety 32.43 31.90 32.43 31.90 1.66% Highways and Roads 22.74 20.98 22.74 20.98 8.39% Sanitation 2.49 2.20 2.49 2.20 13.18% Health 1.10 1.48 1.10 1.48 (25.66%) Welfare .38 .37 .38 .37 2.70% Culture and Recreation 2.50 3.03 2.50 3.03 (17.49%) Education .06 .06 .06 .06 -- Interest on Long-Term Debt .40 .13 .40 .13 207.69% Intergovernmental .02 .01 .02 .01 100.00% Water System 8.31 8.62 8.31 8.62 (3.60%) Solid Waste Department 8.58 8.36 8.58 8.36 2.63% Building Inspections .91 .93 .91 .93 (2.15%) Total Expenses 108.49 102.00 17.80 17.91 126.29 119.91 5.32% Increase/(Decrease) in Net Assets (12.80) (6.98) 3.26 1.32 (9.54) (5.66) (68.55%) Net Assets beginning of year 197.39 204.37 47.05 45.73 244.44 250.10 (2.26%) Net Assets end of year 184.59 197.39 50.31 47.05 234.90 244.44 (3.90%)

Governmental Activities Table A-3 presents the cost of each of the Commission’s five largest programs – general government, public safety, highways and roads, sanitation and culture and recreation – as well as each of the programs net cost (total cost less fees generated by the activities and intergovernmental aid). The net cost shows the financial burden that was placed on the Commission’s taxpayers by each of these functions.

Q

Table A-3

Net Cost of Madison County’s Governmental Activities (In millions of dollars)

Total Cost of Services

Percentage Change Net Cost of Services

2012 2011 2011-2012 2012 2011 General Government $46.37 41.84 10.83% $30.45 27.20 Public Safety 32.43 31.90 1.66% 28.75 25.23 Highways and Roads 22.74 20.98 8.39% 15.88 12.03 Sanitation 2.49 2.19 13.70 1.48 1.04 Culture and Recreation 2.50 3.03 (17.49) 2.37 2.91 Other 1.96 2.06 (4.85%) .79 1.75 Total $108.49 $102.00 % $79.72 $70.16

The cost of all governmental activities this year was $108.49 million, including depreciation expense of $4.22 million. The total cost increased from the prior year by $6.49 million. This increase is due mainly to the cost of employee benefits including health insurance and retirement.

The net cost to taxpayers for these activities was $79.72 million. Some of these costs were paid by:

• Those who directly benefited from the programs ($18.22 million), or • Other governments and organizations that subsidized certain programs with grants and

contributions ($10.55 million) • The Commission paid for the $79.72 million “public benefit” portion with property taxes, and

with other revenues such as various taxes and investment earnings and also with prior year reserves.


Revenues of the Commission’s business-type activities increased from the prior year by approximately $1.83 million while expenses decreased by $.11 million. FINANCIAL ANALYSIS OF THE COMMISSION’S FUNDS

As the Commission completed the year, its governmental funds reported a combined fund balance of $39.88 million representing a decrease from the prior year’s combined fund balance of $42.80 million. Included in the year’s total change in fund balance, is a decrease of $1.93 million in the Commission’s general fund, and an decrease of $.98 million in other governmental funds.

R

General Fund Budgetary Highlights

Over the course of the year, the County Commission revised the County budget several times. These budget amendments fall into 3 categories: • Amendments and supplemental appropriations approved shortly after the beginning of the year

to reflect the actual beginning account balances (correcting the estimated amounts in the original budget.

• Changes made to account for the various grants which were awarded during the year. • Increases in appropriations to prevent budget overruns. • Carryover of unused appropriations – In 1997, the Commission established a provision whereby

County Commissioners may carryover unused appropriations to the next fiscal year budget. The County Commission votes on the carryover of funds at the annual budget meeting.

CAPITAL ASSETS AND DEBT ADMINISTRATION

At September 30, 2012 the Commission had invested $197.14 million in a broad range of capital assets, net of accumulated depreciation, for its governmental activities. (See Table A-4). This amount represents a net increase (including additions and deductions) of $1.52 million or approximately .78% over the previous year. The increase represents additions of fixed assets totaling $5.86 million and depreciation expense of $4.22 million. Capital assets of the business-type activities decreased by $.41 million or approximately 1.03%. This amounts includes additions of $190,093 and depreciation expense of $2.73 million.

Table A-4 Madison County Commission’s Capital Assets

(net of depreciation, in millions of dollars)

Governmental

Activities

Business-Type

Activities

Total

Total Percentage

Change 2012 2011 2012 2011 2012 2011 2011-2012 Land 5.66 5.62 .14 .14 5.80 5.76 .69% Construction in Progress 2.96 .48 2.96 .48 516.67% Infrastructure 166.02 165.46 21.87 22.25 187.89 187.71 .09% Land Improvements .36 .17 .08 .09 .44 .26 69.23% Buildings 13.31 13.63 12.80 13.26 26.11 26.89 (2.90%) Equipment and Furniture 8.40 9.78 3.51 3.37 11.91 13.15 (9.43%) Equipment Under Capital Lease .43 .48 .84 .54 1.27 1.02 24.51% Total 197.14 195.62 39.24 39.65 236.38 235.27 .47%

S

Long-term Debt

At year end, the Commission had $14.89 million in long-term debt outstanding in Governmental Activities – an increase of $2.06 million from the previous year – as shown in Table A-5. This debt consists of General Obligation Bonds, Capital Leases, Compensated Absences, and Estimated Claims Costs. The Commission’s Business-Type Activities had $11.78 million on long-term debt outstanding – a decrease of $.48 million from the previous years.

On April 12, 2012, the Commission issued General Obligation Warrants in the amount of

$1,219,125.00 for the purpose of financing the acquisition of certain vehicles to be used by the sanitation department.

On March 8, 2013, the Commission passed a resolution to issue General Obligation Warrants, dated March 1, 2013, in the amount of $1,695,000 for the purpose of refunding the 2003 General Obligation Warrants in the amount of $1,540,000.00. These warrants have an average interest rate of 1.7% and a term of 10 years. As a result of this refinancing, the Commission will have a net present value savings of approximately $75,000 after the costs of issuance. Also on March 8, 2013, the Commission passed a resolution to issue Water Revenue Warrants, dated March 1, 2013, in the amount of $4,395,000 for the purpose of refunding the Series 2003 Water Revenue Warrants in the amount of $3,960,000. These warrants have an average interest rate of 1.8% and a term of 10 years. As a result of this refinancing, the Madison County Water Department will have a net present value savings of approximately $350,000.

Table A-5 Madison County Commission’s Outstanding Long-Term Debt

(In millions of dollars)

Governmental

Activities

Business-Type

Activities

Total

Total Percentage

Change 2012 2011 2012 2011 2012 2011 2011-2012 General Obligation Warrants 6.38 5.10 10.60 10.52 16.98 15.62 8.71% Capital Leases 2.33 1.41 .26 .78 2.59 2.19 18.26% Compensated Absences 4.55 5.02 .92 .96 5.47 5.98 (8.53%) Estimated Claims Costs 1.63 1.30 1.63 1.30 25.38% Total 14.89 12.83 11.78 12.26 26.67 25.09 6.30%

T

ECONOMIC FACTORS AND DECISIONS

In March 2013, the Commission’s bond rating from Moody’s Investor Service was affirmed at Aa2 and the rating from Standard and Poor’s was affirmed at AA+. The bond rating for the Water Department was also affirmed by Moody’s at Aa2 and a new rating was issued by Standard and Poor’s of AA-. These excellent credit ratings reflect the county’s: • Deep and diverse economy, including Huntsville, a regional employment and trade center; • Strong financial position with very strong reserves; • Good income indicators and below-average unemployment; and • Low debt levels and rapid debt amortization. CONTACTING THE COMMISSION’S FINANCIAL MANAGEMENT

This financial report is designed to provide our citizens, taxpayers, customers, investors and creditors with a general overview of the Commission’s finances and to demonstrate the Commission’s accountability for the money it receives. If you have any questions about this report or need additional financial information, contact the Madison Count Commission, 100 North Side Square, Huntsville, AL 35801.

1

Basic Financial Statements

Madison CountyCommission 2 Exhibit #1

Statement of Net AssetsSeptember 30, 2012

Governmental Business-Type Activities Activities Total Assets Current Assets

Cash and Cash Equivalents 37,204,868.05$ 12,568,624.70$ 49,773,492.75$ Investments 1,388,000.22 4,700,974.00 6,088,974.22 Receivables (Note 4) 7,645,058.35 1,861,445.18 9,506,503.53 Ad Valorem Taxes Receivable 37,666,496.00 37,666,496.00 Internal Balances (68,370.92) 68,370.92 Inventories 366,515.22 1,758,855.00 2,125,370.22 Prepaid Items 198,363.02 102,337.95 300,700.97 Deferred Charges 6,003.67 6,884.00 12,887.67

Total Current Assets 84,406,933.61 21,067,491.75 105,474,425.36 Noncurrent Assets

Restricted Cash with Fiscal Agent 642,704.00 642,704.00 SRF Warrants Escrow 1,413,861.00 1,413,861.00 Deferred Charges 42,302.30 61,961.00 104,263.30 Capital Assets (Note 5):

Nondepreciable 8,614,058.45 144,890.00 8,758,948.45 Depreciable, Net 188,527,284.03 39,098,619.33 227,625,903.36

Total Capital Assets, Net 197,141,342.48 39,243,509.33 236,384,851.81 Total Noncurrent Assets 197,183,644.78 41,362,035.33 238,545,680.11

Total Assets 281,590,578.39 62,429,527.08 344,020,105.47

Liabilities Current Liabilities

Payables (Note 8) 1,521,586.07 97,835.58 1,619,421.65 Deferred Revenue 40,836,542.04 87,618.99 40,924,161.03 Accrued Wages Payable 825,170.71 99,511.58 924,682.29 Accrued Interest Payable 199,566.19 54,817.29 254,383.48 Long-Term Liabilities:

Portion Due and Payable Within One Year:Capital Leases Payable 626,306.84 264,381.77 890,688.61 Warrants Payable 319,105.30 1,362,136.23 1,681,241.53 Add: Unamortized Premium 385.81 3,050.00 3,435.81 Less: Loss-Early Extinguishment of Debt (21,370.00) (21,370.00) Compensated Absences 1,948,029.27 169,771.10 2,117,800.37 Claims Costs Payable 1,141,939.59 1,141,939.59

Total Current Liabilities 47,418,631.82$ 2,117,752.54$ 49,536,384.36$ The accompanying Notes to the Financial Statements are an integral part of this statement.


Governmental Business-Type Activities Activities Total

Noncurrent Liabilities Portion Due and Payable After One Year:

Capital Leases Payable 1,711,704.21$ $ 1,711,704.21$ Warrants Payable 6,057,309.55 9,230,270.15 15,287,579.70 Add: Unamortized Premium 3,472.39 27,451.00 30,923.39 Compensated Absences 2,603,794.06 745,809.41 3,349,603.47 Claims Costs Payable 487,574.41 487,574.41 Other Postemployment Benefit Obligation 38,714,250.00 38,714,250.00

Total Noncurrent Liabilities 49,578,104.62 10,003,530.56 59,581,635.18

Total Liabilities 96,996,736.44 12,121,283.10 109,118,019.54 Net Assets Invested in Capital Assets, Net of Related Debt 189,396,916.67 29,770,081.18 219,166,997.85 Restricted for:

Debt Service 642,704.00 642,704.00 Capital Projects 145,000.00 145,000.00 Road Projects 4,303,955.83 4,303,955.83 Local Officials 2,868,475.07 2,868,475.07 Capital Improvement 5,541,916.06 5,541,916.06 Other Purposes 859,081.25 859,081.25

Unrestricted (18,521,502.93) 19,895,458.80 1,373,955.87 Total Net Assets 184,593,841.95$ 50,308,243.98$ 234,902,085.93$


Statement of ActivitiesFor the Year Ended September 30, 2012

Charges Operating GrantsFunctions/Programs Expenses for Services and Contributions

Primary Government Governmental Activities:

General Government 46,374,161.49$ 13,253,075.04$ 1,546,826.05$ Public Safety 32,426,532.87 2,679,818.31 998,191.12 Highways and Roads 22,742,434.23 295,525.80 5,245,756.52 Sanitation 2,490,433.24 918,484.00 Health 1,104,802.81 981,007.61 Welfare 382,145.84 194,090.32 Culture and Recreation 2,497,963.84 93,553.02 31,256.49 Education 61,526.00 Intergovernmental 13,205.11 Interest on Long-Term Debt 398,024.13

Total Governmental Activities 108,491,229.56 18,221,463.78 8,016,120.50 Business-Type Activities:

Waste Control 8,575,113.52 10,168,135.30 Water Department 8,314,437.59 10,622,383.66 160,637.00 Building Inspection 909,546.79 798,762.76

Total Business-Type Activities 17,799,097.90 21,589,281.72 160,637.00

Total Primary Government 126,290,327.46$ 39,810,745.50$ 8,176,757.50$

General Revenues:Taxes:

Property Taxes for General PurposesProperty Taxes for Specific PurposesCounty Gasoline Sales TaxMiscellaneous Taxes

Payments in Lieu of TaxesInterest RevenueGain on Disposal of Capital AssetsMiscellaneous Revenue

Transfers Total General Revenues and Transfers

Change in Net Assets

Net Assets - Beginning of Year Net Assets - End of Year

The accompanying Notes to the Financial Statements are an integral part of this statement.

Program Revenues


Capital Grants Governmental Business-Typeand Contributions Activities Activities Total

1,126,685.36$ (30,447,575.04)$ $ (30,447,575.04)$ (28,748,523.44) (28,748,523.44)

1,316,887.43 (15,884,264.48) (15,884,264.48) 92,000.01 (1,479,949.23) (1,479,949.23)

(123,795.20) (123,795.20) (188,055.52) (188,055.52)

(2,373,154.33) (2,373,154.33) (61,526.00) (61,526.00) (13,205.11) (13,205.11)

(398,024.13) (398,024.13) 2,535,572.80 (79,718,072.48) (79,718,072.48)

1,593,021.78 1,593,021.78 2,468,583.07 2,468,583.07 (110,784.03) (110,784.03)

3,950,820.82 3,950,820.82

2,535,572.80$ (79,718,072.48) 3,950,820.82 (75,767,251.66)

25,019,348.71 25,019,348.71 18,934,481.87 18,934,481.87 5,080,854.31 5,080,854.31 6,766,687.69 6,766,687.69 1,829,582.46 1,829,582.46

561.52 65,039.15 65,600.67 1,410.40 1,410.40

8,388,979.42 136,826.00 8,525,805.42 893,048.32 (893,048.32)

66,914,954.70 (691,183.17) 66,223,771.53

(12,803,117.78) 3,259,637.65 (9,543,480.13)

197,396,959.73 47,048,606.33 244,445,566.06

184,593,841.95$ 50,308,243.98$ 234,902,085.93$

Net (Expenses) Revenues and Changes in Net AssetsPrimary Government


Balance SheetGovernmental FundsSeptember 30, 2012

Other TotalGeneral Governmental Governmental

Fund Funds Funds Assets

Cash and Cash Equivalents 18,934,934.84$ 18,269,933.21$ 37,204,868.05$ Investments 1,388,000.22 1,388,000.22 Ad Valorem Taxes Receivable 32,147,000.00 5,519,496.00 37,666,496.00 Due From Other Funds 2,959,466.46 20.00 2,959,486.46 Receivables (Note 4) 6,390,065.98 1,254,992.37 7,645,058.35 Inventories 366,515.22 366,515.22 Prepaid Items 184,024.53 14,338.49 198,363.02

Total Assets 62,370,007.25 25,058,780.07 87,428,787.32 Liabilities and Fund Balances Liabilities

Payables (Note 8) 1,051,045.28 470,540.79 1,521,586.07 Due To Other Funds 20,875.89 3,006,981.49 3,027,857.38 Deferred Revenue 34,286,232.71 6,550,309.33 40,836,542.04 Accrued Wages Payable 697,054.63 128,116.08 825,170.71 Compensated Absences 151,607.49 38,114.15 189,721.64 Claims Costs Payable 1,141,939.59 1,141,939.59

Total Liabilities 37,348,755.59 10,194,061.84 47,542,817.43 Fund Balances

Nonspendable: Inventories 366,515.22 366,515.22 Prepaid Items 184,024.06 14,338.49 198,362.55

Restricted for:Debt Service 67,557.74 67,557.74 Capital Projects 1,070,552.32 1,070,552.32 Roads 4,303,955.83 4,303,955.83 Capital Improvement 5,541,916.06 5,541,916.06 Other 3,866,397.79 3,866,397.79

Unassigned 24,470,712.38 24,470,712.38 Total Fund Balances 25,021,251.66 14,864,718.23 39,885,969.89

Total Liabilities and Fund Balances 62,370,007.25$ 25,058,780.07$ 87,428,787.32$ The accompanying Notes to the Financial Statements are an integral part of this statement.


Reconciliation of the Balance Sheet of Governmental Funds to theStatement of Net AssetsSeptember 30, 2012

Total Fund Balances - Governmental Funds (Exhibit 3) 39,885,969.89$

Amounts reported for governmental activities in the Statement of Net Assets (Exhibit 1) are different because:

Capital assets used in governmental activities are not financial resources, and thereforeare not reported as assets in governmental funds. These assets consist of:

Capital Assets - Nondepreciable 8,614,058.45$ Capital Assets - Depreciable 188,527,284.03

Total Capital Assets 197,141,342.48

Deferred issue costs are reported as current expenditures in the funds. However,deferred issue costs are amortized over the life of the bonds and are includedin the governmental activities in the Statement of Net Assets.

Current NoncurrentAssets Assets

Deferred Charges 6,003.67$ 42,302.30 48,305.97

Certain liabilities are not due and payable in the current period and therefore are notreported as liabilities in the funds. These liabilities at year-end consist of:

Current NoncurrentLiabilities Liabilities

Warrants Payable 319,105.30 6,057,309.55 Unamortized Premium 385.81 3,472.39 Capital Leases Payable 626,306.84 1,711,704.21 Accrued Interest Payable 199,566.19 Claims Costs Payable 487,574.41 Compensated Absences 1,758,307.63 2,603,794.06 Other Postemployment Benefits Obligation 38,714,250.00

Total Long-Term Liabilities 2,903,671.77$ 49,578,104.62$ (52,481,776.39)

Total Net Assets - Governmental Activities (Exhibit 1) 184,593,841.95$



Statement of Revenues, Expenditures and Changes in Fund BalancesGovernmental FundsFor the Year Ended September 30, 2012

Other TotalGeneral Governmental Governmental

Fund Funds Funds Revenues

Taxes 47,709,622.58$ 6,227,589.77$ 53,937,212.35$ Licenses and Permits 1,629,993.25 322,129.50 1,952,122.75 Intergovernmental 8,916,888.75 9,461,227.17 18,378,115.92 Charges for Services 11,377,410.51 4,666,105.11 16,043,515.62 Fines and Forfeits 47,581.75 47,581.75 Miscellaneous 2,657,559.68 461,305.91 3,118,865.59

Total Revenues 72,339,056.52 21,138,357.46 93,477,413.98 Expenditures Current:

General Government 32,188,520.07 10,032,489.24 42,221,009.31 Public Safety 27,097,051.90 1,298,920.64 28,395,972.54 Highways and Roads 13,489,006.29 5,252,804.82 18,741,811.11 Sanitation 1,298,418.39 276,865.61 1,575,284.00 Health 1,051,496.31 1,590.00 1,053,086.31 Welfare 187,181.99 183,431.31 370,613.30 Culture and Recreation 1,008,235.31 1,358,565.07 2,366,800.38 Education 61,526.00 61,526.00

Intergovernmental 13,205.11 13,205.11 Capital Outlay 955,610.79 3,590,628.08 4,546,238.87 Debt Service:

Principal Retirement 237,639.79 219,548.58 457,188.37 Interest and Fiscal Charges 172,390.30 87,765.46 260,155.76

Total Expenditures 77,760,282.25 22,302,608.81 100,062,891.06 Excess (Deficiency) of Revenues

Over Expenditures (5,421,225.73) (1,164,251.35) (6,585,477.08)

Other Financing Sources (Uses) Transfers In 2,948,369.81 770,735.55 3,719,105.36 Long-Term Debt Issued 1,161,559.37 1,500,000.00 2,661,559.37 Sale of Capital Assets 111,765.01 7,362.60 119,127.61 Transfers Out (728,496.20) (2,097,560.84) (2,826,057.04)

Total Other Financing Sources (Uses) 3,493,197.99 180,537.31 3,673,735.30

Net Change in Fund Balances (1,928,027.74) (983,714.04) (2,911,741.78) Fund Balances - Beginning of Year 26,949,279.40 15,848,432.27 42,797,711.67 Fund Balances - End of Year 25,021,251.66$ 14,864,718.23$ 39,885,969.89$ The accompanying Notes to the Financial Statements are an integral part of this statement.


Reconciliation of the Statement of Revenues, Expenditures and Changesin Fund Balances of Governmental Funds to the Statement of ActivitiesFor the Year Ended September 30, 2012

Net Change in Fund Balances - Total Governmental Funds (Exhibit 5) (2,911,741.78)$

Amounts reported for governmental activities in the Statement of Activities (Exhibit 2) are different because:

Governmental funds report capital outlay as an expenditure. However, in the Statement of Activities, the cost of these assets is allocated over their estimated useful lives as depreciation expense. This is the amount by which depreciation ($4,223,840.57) was exceeded by capital outlay ($4,546,238.87) in the current period. 322,398.30

In the Statement of Activities, only the loss on the sale of capital assets is reported, whereas in the governmental funds, the proceeds from the sale increase financial resources. Thus the changes in net assets differs from the change in fund balance by the book value of the capital assets sold.

Proceeds from the Sale of Capital Assets (119,127.61)$ Gain on Sale of Capital Assets 1,410.40 (117,717.21)

Repayment of bond principal is an expenditure in the governmental funds, but the

repayment reduces long-term liabilities in the Statement of Net Assets and doesnot affect the Statement of Activities. 457,188.37

Proceeds from the issuance of debt are reported as financing sources in governmentalfunds and thus contribute to the change in fund balance. Issuing long-term debtincreases liabilities in the Statement of Net Assets but does not affect the Statement of Activities. (2,661,559.37)



Some items reported in the Statement of Activities do not require the use of currentfinancial resources, and therefore are not reported as expenditures in the governmental funds. These items consist of:

Net Decrease in Compensated Absences 423,447.61$ Net Decrease in Claims Costs Payable 171,746.59 Amortization of Bond Premium 385.81 Amortization of Deferred Issuance Costs (6,003.67) Net Increase in Accrued Interest Payable (132,250.51) Net Increase in Other Postemployment Benefit Obligation (9,665,251.00)

Total Additional Expenditures (9,207,925.17)

In the Statement of Activities, donation of capital assets is recorded as revenue,whereas in the governmental funds it is not recorded.

Donated Assets 1,316,239.08

Change in Net Assets of Governmental Activities (Exhibit 2) (12,803,117.78)$


Statement of Net AssetsProprietary FundsSeptember 30, 2012

Solid Water Waste Fund Department Fund Assets Current Assets

Cash and Cash Equivalents 4,669,638.41$ 7,418,275.00$ Investments 4,700,974.00 Receivables (Note 4) 895,612.18 963,208.00 Due From Other Funds 22,296.07 140,500.00 Inventories 1,758,855.00 Prepaid Items 59,995.95 42,342.00 Deferred Charges 6,884.00

Total Current Assets 5,647,542.61 15,031,038.00 Noncurrent Assets

Restricted Cash with Fiscal Agent 642,704.00 SRF Warrants Escrow 1,413,861.00 Deferred Charges 61,961.00 Capital Assets (Note 5):

Nondepreciable 144,890.00 Depreciable, Net 3,244,967.81 35,690,301.00

Total Noncurrent Assets 3,244,967.81 37,953,717.00

Total Assets 8,892,510.42 52,984,755.00 Liabilities Current Liabilities

Payables (Note 8) 11,480.58 86,355.00 Due To Other Funds 71,303.68 19,809.00 Deferred Revenue 11,800.00 Accrued Wages Payable 42,902.05 44,651.00 Capital Leases Payable 264,381.77 Warrants Payable 297,136.23 1,065,000.00 Add: Unamortized Premium 3,050.00 Less: Loss-Early Retirement of Debt (21,370.00) Accrued Interest Payable 426.29 54,391.00 Compensated Absences 132,307.45

Total Current Liabilities 819,938.05$ 1,263,686.00$

Major Funds


Other FundBuilding Total

Inspection EnterpriseFund Funds

480,711.29$ 12,568,624.70$ 4,700,974.00

2,625.00 1,861,445.18 162,796.07

1,758,855.00 102,337.95

6,884.00 483,336.29 21,161,916.90

642,704.00 1,413,861.00

61,961.00

144,890.00 163,350.52 39,098,619.33 163,350.52 41,362,035.33

646,686.81 62,523,952.23

97,835.58 3,312.47 94,425.15

75,818.99 87,618.99 11,958.53 99,511.58

264,381.77 1,362,136.23

3,050.00 (21,370.00) 54,817.29

37,463.65 169,771.10 128,553.64$ 2,212,177.69$


Statement of Net AssetsProprietary FundsSeptember 30, 2012

Solid Water Waste Fund Department Fund

Noncurrent Liabilities Warrants Payable 800,270.15$ 8,430,000.00$ Add: Unamortized Premium on Warrants 27,451.00 Compensated Absences 189,974.07 485,688.00

Total Noncurrent Liabilities 990,244.22 8,943,139.00

Total Liabilities 1,810,182.27 10,206,825.00 Net Assets Invested in Capital Assets, Net of Related Debt 1,883,179.66 27,723,551.00 Restricted for Debt Service 642,704.00 Unrestricted 5,199,148.49 14,411,675.00

Total Net Assets 7,082,328.15$ 42,777,930.00$ The accompanying Notes to the Financial Statements are an integral part of this statement.

Major Funds




$ 9,230,270.15$

27,451.00 70,147.34 745,809.41 70,147.34 10,003,530.56

198,700.98 12,215,708.25

163,350.52 29,770,081.18 642,704.00

284,635.31 19,895,458.80

447,985.83$ 50,308,243.98$


Statement of Revenues, Expenses and Changes in Fund Net AssetsProprietary FundsFor the Year Ended September 30, 2012

Solid Water Waste Fund Department Fund Operating Revenues

Charges for Services 10,021,776.97$ 284,164.00$ Water Sales 10,210,945.00 FEMA Grant 43,110.02 Miscellaneous 165,448.00 Late Payment Fees 103,248.31

Total Operating Revenues 10,168,135.30 10,660,557.00 Operating Expenses

Salaries and Benefits 3,287,464.75 3,194,390.00 Contractual and Professional Services 51.75 448,832.00 Materials and Supplies 824,756.61 918,231.00 Repairs and Maintenance 643,326.51 160,918.00 Utilities 41,859.20 743,720.00 CommunicationsOffice Expense 5,165.06 Depreciation 1,184,113.13 1,501,967.00 Landfill Expenses 2,181,140.98 Purchase of Water 531,439.00 Billing Fees 283,191.60 356,204.00 Miscellaneous 15,644.42 94,902.00

Total Operating Expenses 8,466,714.01 7,950,603.00

Operating Income (Loss) 1,701,421.29 2,709,954.00 Nonoperating Revenues (Expenses)

Interest Revenue 9,847.50 53,703.00 Contributed Capital 136,826.00 Gain (Loss) on Disposition of Capital Assets (84,008.09) Interest Expense (24,391.42) (363,834.59) Other Nonoperating Revenue 122,463.66

Total Nonoperating Revenues (Expenses) (98,552.01) (50,841.93)

Income (Loss) Before Transfers 1,602,869.28 2,659,112.07

Transfers Out (400,352.32) (455,031.00)

Changes in Net Assets 1,202,516.96 2,204,081.07 Net Assets - Beginning of Year 5,879,811.19 40,573,848.93 Net Assets - End of Year 7,082,328.15$ 42,777,930.00$ The accompanying Notes to the Financial Statements are an integral part of this statement.

Major Funds




798,762.76$ 11,104,703.73$ 10,210,945.00

43,110.02 165,448.00 103,248.31

798,762.76 21,627,455.06

811,332.62 7,293,187.37 448,883.75

32,386.05 1,775,373.66 12,228.48 816,472.99 1,810.69 787,389.89 8,172.15 8,172.15 1,215.87 6,380.93

40,595.93 2,726,676.06 2,181,140.98

531,439.00 639,395.60

1,805.00 112,351.42 909,546.79 17,326,863.80

(110,784.03) 4,300,591.26

1,488.65 65,039.15 136,826.00 (84,008.09)

(388,226.01) 122,463.66

1,488.65 (147,905.29)

(109,295.38) 4,152,685.97

(37,665.00) (893,048.32)

(146,960.38) 3,259,637.65

594,946.21 47,048,606.33 447,985.83$ 50,308,243.98$


Statement of Cash FlowsProprietary FundsFor the Year Ended September 30, 2012

Solid WaterWaste Fund Department Fund

Cash Flows from Operating ActivitiesReceipts from Customers 10,162,680.56$ 10,683,398.00$ Payments to Suppliers (3,979,868.05) (3,149,006.00) Payments to Employees (3,336,813.43) (3,188,997.00)

Net Cash Provided (Used) by Operating Activities 2,845,999.08 4,345,395.00

Cash Flows from Noncapital Financing ActivitiesChange in Restricted Assets 18.00 Advances to Other Funds 4,148.47 (1,271.00) Advances from Other Funds (182,700.54) Transfers (400,352.32) (455,031.00)

Net Cash Provided (Used) by Noncapital Financing Activities (578,904.39) (456,284.00)

Cash Flows from Capital and Related Financing ActivitiesPurchase of Capital Assets (1,536,820.66) (869,663.00) Sale of Capital Assets 13,852.50 Investment in Certificates of Deposit (47,946.00) Warrants Issued to Finance Capital Purchases 1,219,125.00 Principal Paid on Capital Debt (634,006.87) (1,030,000.00) Interest Paid on Capital Debt (24,557.65) (350,043.00) Other Nonoperating Revenues 122,463.00

Net Cash Provided (Used) by Capitaland Related Financing Activities (962,407.68) (2,175,189.00)

Cash Flows from Investing ActivitiesInterest and Dividends 9,847.50 53,703.00

Net Cash Provided (Used) by Investing Activities 9,847.50 53,703.00

Net Increase/(Decrease) in Cash and Cash Equivalents 1,314,534.51 1,767,625.00

Cash and Cash Equivalents - Beginning of Year 3,355,103.90 5,650,650.00

Cash and Cash Equivalents - End of Year 4,669,638.41$ 7,418,275.00$

Major Funds


Other Fund TotalBuilding Enterprise

Inspection Fund Funds

792,191.54$ 21,638,270.10$ (57,618.24) (7,186,492.29)

(816,838.08) (7,342,648.51) (82,264.78) 7,109,129.30

18.00 2,877.47

(754.73) (183,455.27) (37,665.00) (893,048.32) (38,419.73) (1,073,608.12)

(14,226.76) (2,420,710.42) 13,852.50

(47,946.00) 1,219,125.00

(1,664,006.87) (374,600.65) 122,463.00

(14,226.76) (3,151,823.44)

1,488.65 65,039.15 1,488.65 65,039.15

(133,422.62) 2,948,736.89

614,133.91 9,619,887.81

480,711.29$ 12,568,624.70$


Statement of Cash FlowsProprietary FundsFor the Year Ended September 30, 2012

Solid WaterWaste Fund Department Fund

Reconciliation of Operating Income (Loss) to Net CashProvided (Used) by Operating Activities

Operating Income (Loss) 1,701,421.29$ 2,709,954.00$

Adjustments to Reconcile Operating Income to NetCash Provided (Used) by Operating Activities

Depreciation Expense 1,184,113.13 1,501,967.00 Change in Assets and Liabilities:

Receivables, Net (5,454.74) 22,641.00 Contributed Capital 136,826.00 Prepaid Items 4,619.39 Inventories (22,413.00) Accounts and Other Payables 10,648.69 (9,173.00) Deferred Revenue 200.00 Wages Payable (810.34) 756.00 Employee Benefits (48,538.34) 4,637.00

Net Cash Provided by Operating Activities 2,845,999.08$ 4,345,395.00$

Noncash Investing, Capital and Financing Activities:During the year, the Water Department Fund received donated assets totaling $136,826.During the year, the Solid Waste Fund acquired capital assets in the amount of $1,536,821.


Major Funds


Other Fund TotalBuilding Enterprise

Inspection Fund Funds

(110,784.03)$ 4,300,591.26$

40,595.93 2,726,676.06

806.24 17,992.50 136,826.00

4,619.39 (22,413.00)

1,475.69 (7,377.46) (7,177.46)

(94.57) (148.91) (5,410.89) (49,312.23)

(82,264.78)$ 7,109,129.30$


Statement of Fiduciary Net AssetsSeptember 30, 2012

Private-Purpose Agency Trust Funds Funds Assets Current Assets

Cash and Cash Equivalents 3,031,289.94$ 9,176,538.77$ Ad Valorem Taxes Receivable 1,678,223.00 Receivables (Note 4) 66,780.44 2,672,530.54 Prepaid Items 38,555.21 13,282.91

Total Current Assets 4,814,848.59 11,862,352.22 Noncurrent Assets

Capital Assets (Note 5): Depreciable, Net 845,167.11

Total Noncurrent Assets 845,167.11

Total Assets 5,660,015.70 11,862,352.22 Liabilities Current Liabilities

Payables (Note 8) 33,621.74 11,022,319.26 Deferred Revenue 1,678,223.00 Accrued Wages Payable 2,300.32 Employee Benefits Payable 840,032.96 Compensated Absences 4,544.87

Total Current Liabilities 1,718,689.93 11,862,352.22 Noncurrent Liabilities

Compensated Absences 1,097.51

Total Liabilities 1,719,787.44 11,862,352.22$ Net Assets

Invested in Capital Assets, Net of Related Debt 845,167.11 Held in Trust for Other Purposes 3,095,061.15

Total Net Assets 3,940,228.26$ The accompanying Notes to the Financial Statements are an integral part of this statement.


Statement of Changes in Fiduciary Net AssetsFor the Year Ended September 30, 2012

Private-Purpose Trust Funds Additions Contributions from:

Taxes 1,683,109.84$ Intergovernmental 136,660.52 Court Fees 216,236.44 Law Library Fees 97,488.35 Excess Land Sales 623,450.11 Miscellaneous 41,207.29 Interest 5,508.98

Total Additions 2,803,661.53 Deductions

Law Library 111,778.16 Land Redemption 985,735.04 General Government 196,994.03 Public Safety 1,403,787.11 Welfare 98,392.17 Principal RetirementDepreciation Expense 440,319.91

Total Deductions 3,237,006.42

Changes in Net Assets (433,344.89) Net Assets - Beginning of Year 4,373,573.15 Net Assets - End of Year 3,940,228.26$ The accompanying Notes to the Financial Statements are an integral part of this statement.

Notes to the Financial Statements For the Year Ended September 30, 2012


23

Note 1 – Summary of Significant Accounting Policies The financial statements of the Madison County Commission (the “Commission”) have been prepared in conformity with accounting principles generally accepted in the United States of America (GAAP) as applied to governmental units. The Governmental Accounting Standards Board (GASB) is the accepted standard-setting body for establishing governmental accounting and financial reporting principles. The more significant of the government’s accounting policies are described below. A. Reporting Entity The Commission is a general purpose local government governed by separately elected commissioners. Generally accepted accounting principles (GAAP) require that the financial statements present the Commission (the primary government) and its component units. Component units are legally separate entities for which a primary government is financially accountable or other organizations for which the nature and significance of their relationship with the primary government are such that exclusion would cause the reporting entity’s financial statements to be misleading or incomplete. Based on the application of the above criteria, there are no component units that are required to be included in the reporting entity. B. Government-Wide and Fund Financial Statements Government-Wide Financial Statements The statement of net assets and the statement of activities display information about the Commission. These statements include the financial activities of the primary government, except for fiduciary activities. Eliminations have been made to minimize the double counting of internal activities. These statements distinguish between the governmental and business-type activities of the Commission. Governmental activities generally are financed through taxes, intergovernmental revenues, and other nonexchange transactions. Business-type activities are financed in whole or in part by fees charged to external parties.



24

The statement of activities presents a comparison between direct expenses and program revenues for each segment of the business-type activities of the Commission and for each function of the Commission’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. The Commission does not allocate indirect expenses to the various functions. Program revenues include (a) charges to customers or applicants who purchase, use or directly benefit from goods, services, or privileges provided by a given function or program 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 The fund financial statements provide information about the Commission’s funds, including fiduciary funds. Separate statements for each fund category – governmental, proprietary, and fiduciary – are presented. The emphasis of fund financial statements is on major governmental and enterprise funds, each displayed in a separate column. All remaining governmental and enterprise funds are aggregated and reported as nonmajor funds. The Commission reports the following major governmental funds: ♦ General Fund – The general fund is the primary operating fund of the Commission. It is

used to account for all financial resources except those required to be accounted for in another fund. The Commission primarily received revenues from collections of property taxes and revenues collected by the State of Alabama and shared with the Commission. The General Fund is also used to report expenditures of special county property taxes in the Public Buildings, Roads and Bridges Fund for building and maintaining public buildings, roads and bridges. Also, accounted for in the general fund are workers’ compensation benefits and employee health insurance to self-insure the Commission against liability claims.

The Commission reports the following major enterprise funds: ♦ Solid Waste Fund – This fund is used to account for the cost of providing solid waste service

for county residents. ♦ Water Department Fund – This fund is used to account for cost of providing water service to

residents within the unincorporated areas of Madison County with the exception of the Harvest-Monrovia community in northwest Madison County.



25

The Commission reports the following fund types in the Other Governmental Funds’ column: Governmental Fund Types ♦ Special Revenue Funds – These funds are used to account for and report the proceeds of

specific revenue sources that are restricted or committed to expenditure for specified purposes other than debt service or capital projects.

♦ Debt Service Funds – These funds are used to account for and report financial resources that

are restricted, committed, or assigned to expenditure for principal and interest and for the accumulation of resources for principal and interest payments maturing in future years.

♦ Capital Projects Funds – These funds are used to account for and report financial resources

that are restricted, committed, or assigned to expenditure for capital outlay, including the acquisition or construction of capital facilities and other capital assets.

The Commission reports the following Proprietary Fund Type: Proprietary Fund Type ♦ Other Enterprise Fund – This fund reports the activities for which fees are charged to

external users for goods or services. This fund type is also used when the activity is financed with debt that is secured by a pledge of the net revenues from the fees.

The Commission reports the following fiduciary fund types: Fiduciary Fund Types ♦ Private-Purpose Trust Funds – These funds are used to report all trust agreements under

which principal and income benefit individuals, private organizations, or other governments. ♦ Agency Funds – These funds are used to report assets held by the Commission in a purely

custodial capacity. The Commission collects these assets and transfers them to the proper individual, private organizations, or other government.



26

C. Measurement Focus, Basis of Accounting and Financial Statement Presentation The government-wide financial statements are reported using the economic resources measurement focus and the accrual basis of accounting, as are the proprietary fund and fiduciary fund financial statements. Revenues are recorded when earned and expenses are recorded at the time liabilities are incurred, regardless of the timing of related cash flows. Nonexchange transactions, in which the Commission gives (or receives) value without directly receiving (or giving) equal value in exchange, include property taxes, grants, entitlements, and donations. On an accrual basis, revenue from grants, entitlements, and donations is recognized in the fiscal year in which all eligibility requirements have been satisfied. Revenue from property taxes is recognized in the fiscal year for which the taxes are levied. As a general rule the effect of interfund activity has been eliminated from the government-wide financial statements. Exceptions to the general rule are charges between the government’s water system, solid waste function, building inspection fund and various other functions of the government. Elimination of these charges would distort the direct costs and program revenues reported for the various functions concerned. Governmental fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Revenues are recognized as soon as they are both measurable and available. Revenues are considered to be available when they are collectible within the current period or soon enough thereafter to pay liabilities of the current period. For this purpose, the Commission considers revenues to be available if they are collected within sixty (60) days of the end of the current fiscal year. Expenditures are recorded when the related fund liability is incurred, except for principal and interest on general long-term debt, claims and judgments, and compensated absences, which are recognized as expenditures to the extent they have matured. General capital asset acquisitions are reported as expenditures in governmental funds. General long-term debt issued and acquisitions under capital leases are reported as other financing sources. Proprietary funds distinguish operating revenues and expenses from nonoperating items. Operating revenues and expenses generally result from providing services and producing and delivering goods in connection with a proprietary fund’s principal ongoing operations. The principal operating revenues of the Commission’s enterprise funds are charges to customers for sales and services. Operating expenses for enterprise funds include the cost of sales and services, administrative expenses, and depreciation on capital assets. All revenues and expenses not meeting this definition are reported as nonoperating revenues and expenses.



27

Under the terms of grant agreements, the Commission funds certain programs by a combination of specific cost-reimbursement grants, categorical block grants, and general revenues. Thus, when program expenses are incurred, there are both restricted and unrestricted net assets available to finance the program. It is the Commission’s policy to first apply cost-reimbursement grant resources to such programs, followed by general revenues. Private-sector standards of accounting and financial reporting issued prior to December 1, 1989, generally are followed in both the government-wide and proprietary fund financial statements to the extent that those standards do not conflict with or contradict guidance of the Governmental Accounting Standards Board. Governments also have the option of following subsequent private-sector guidance for their business-type activities and enterprise funds, subject to this same limitation. The Commission has not elected to follow subsequent private-sector guidance. D. Assets, Liabilities, and Net Assets/Fund Balances 1. Deposits and Investments Cash and cash equivalents include cash on hand, demand deposits and short-term investments. For purposes of the statement of cash flows, the proprietary fund type considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents. State statutes authorize the County Commission to invest in obligations of the U. S. Treasury and securities of federal agencies and certificates of deposit. Investments are reported at fair value, based on quoted market prices. 2. Receivables All ad valorem tax and sales tax receivables are shown net of an allowance for uncollectibles. Sales tax receivables are based on the amounts collected within 60 days after year-end. The allowance for uncollectibles for ad valorem taxes is based on past collection experience. Sales tax receivables consist of taxes that have been paid by consumers in September. This tax is normally remitted to the Commission within the next 60 days.



28

Millage rates for property taxes are levied at the first regular meeting of the Commission in February of each year. Property taxes are assessed for property as of October 1 of the preceding year based on the millage rates established by the County Commission. Property taxes are due and payable the following October 1 and are delinquent after December 31. Amounts receivable, net of estimated refunds and estimated uncollectible amounts, are recorded for the property taxes levied in the current year. However, since the amounts are not available to fund current year operations, the revenue is deferred and recognized in the subsequent fiscal year when the taxes are both due and collectible and available to fund operations. Receivables due from other governments include amounts due from grantors for grants issued for specific programs and capital projects. Receivables also include various fees, taxes, licenses, and charges for services. Receivables in enterprise funds consist primarily of amounts due from customers who are charged fees for services provided by the Commission. Receivables from external parties are amounts that are being held in a trustee or agency capacity by the fiduciary funds. 3. Inventories Inventories are valued at cost, which approximates market, using the first-in/first-out (FIFO) method. Inventories of governmental funds are recorded as expenditures when consumed rather than when purchased. 4. Prepaid Items Certain payments to vendors reflect costs applicable to future accounting periods and are recorded as prepaid items in both government-wide and fund financial statements. 5. Restricted Assets Certain resources set aside for the repayment of water revenue warrants outstanding are classified as restricted assets on the balance sheet because they are maintained in separate bank accounts and their use is limited by applicable bond covenants. The SRF Warrants Escrow account is used to report proceeds on hand that are restricted for use in water department construction. The “Water Department Fund” accounts are used to segregate resources accumulated for debt service.



29

6. Capital Assets Capital assets, which include property, equipment, and infrastructure assets (e.g., roads, bridges, water and sewer systems, and similar items), are reported in the applicable governmental and business-type activities columns in the government-wide financial statements. Such assets are valued at cost where historical records are available and at an estimated historical cost where no historical records exist. Donated fixed assets are valued at their estimated fair market value on the date received. Additions, improvements and other capital outlays that significantly extend the useful life of an asset are capitalized. Other costs incurred for repairs and maintenance are expensed as incurred. Major outlays of capital assets and improvements are capitalized as projects are constructed. Interest incurred during the construction phase of capital assets of business-type activities is included as part of the capitalized value of the assets constructed. Depreciation on all assets is provided on the straight-line basis over the assets estimated useful life. Capitalization thresholds (the dollar values above which asset acquisitions are added to the capital asset accounts) and estimated useful lives of capital assets reported as governmental activities in the government-wide statements are as follows:

Capitalization

Threshold Estimated Useful Life

Buildings $ 50,000 20 – 40 years Equipment and Furniture $ 5,000 10 years Roads $250,000 20 years Bridges $ 50,000 40 years

Capitalization thresholds and estimated useful lives of capital assets reported in the business-type activities portion of the government-wide statements and proprietary funds are as follows:

Capitalization

Threshold Estimated Useful Life

Buildings $100 40 – 50 years Equipment and Furniture $100 5 – 7 years Water System Assets $100 40 – 50 years

The majority of governmental activities infrastructure assets are roads and bridges. The Association of County Engineers has determined that due to the climate and materials used in road construction, the base of the roads in the county will not deteriorate and therefore should not be depreciated. The remaining part of the roads, the surface, will deteriorate and will be depreciated. The entire costs of bridges in the county will be depreciated.



30

7. Long-Term Obligations In the government-wide financial statements, and proprietary fund types in the fund financial statements, long-term debt and other long-term obligations are reported as liabilities in the applicable governmental activities, business-type activities, or proprietary fund type statement of net assets. Bond/Warrant premiums and discounts, as well as issuance costs, are deferred and amortized over the life of the bonds. Bonds/Warrants payable are reported net of the applicable bond/warrant premium or discount. Bond/Warrant issuance costs are reported as deferred charges and amortized over the term of the related debt. In the fund financial statements, governmental fund types recognize bond premiums and discounts, as well as bond issuance costs, during the current period. The face amount of debt issued is reported as other financing sources. Premiums received on debt issuances are reported as other financing sources while discounts on debt issuances are reported as other financing uses. Issuance costs, whether or not withheld from the actual debt proceeds received, are reported as debt service expenditures. 8. Compensated Absences The Commission has a standard leave policy for its full-time employees as to sick and annual leave. Annual Leave For the first year through the fifth year, all non-probationary employees are credited 1 day of annual leave for each month of continuous employment. Upon the completion of the fifth year and each year thereafter, in addition to the 1 day per month, an employee’s leave account is credited with 1 additional day of leave for each year of continuous employment after the fifth year, to a maximum of 13 days additional leave over and above the basic 12 days. Unused annual leave credits may be accumulated and carried over into successive years by employees up to a maximum of 60 days. Upon separation or retirement, employees are paid, up to the maximum, for accrued annual leave. Sick Leave Sick leave benefits with pay are provided for permanent full-time employees in the amount of 12 workdays per fiscal year. Sick leave benefits are accrued by all non-probationary permanent full-time employees at a rate of 1 workday per month of continuous employment and credited each month. Unused sick leave credits may be accumulated and carried over into successive fiscal years by employees. There is no limit on the number of hours an employee may accrue. All unused sick leave is forfeited upon separation and is not compensated to the employee.



31

Compensatory Leave Compensatory leave is provided to permanent full-time employees in accordance with the Fair Labor Standards Act. The maximum accrual for regular employees is 240 hours. The maximum accrual for law enforcement personnel (excluding those covered under Code of Alabama 1975, Section 36-21-4.1) is 480 hours. According to the Fair Labor Standards Act, employees should be paid for compensatory leave in excess of the maximum hours stipulated. Compensatory leave is calculated at one and one-half times the regular hours. At September 30, 2012, no liability for unpaid sick leave is accrued in the financial statements since employees do not receive termination payments for sick leave balances. 9. Net Assets/Fund Equity Net assets are reported on the government-wide and proprietary fund financial statements and are required to be classified for accounting and reporting purposes into the following net asset categories: ♦ Invested in Capital Assets, Net of Related Debt – Capital assets, net of accumulated

depreciation and outstanding principal balances of debt attributable to the acquisition, construction or improvement of those assets. Any significant unspent related debt proceeds at year-end related to capital assets are not included in this calculation.

♦ Restricted – Constraints imposed on net assets by external creditors, grantors, contributors,

laws or regulations of other governments, or law through constitutional provision or enabling legislation.

♦ Unrestricted – Net assets that are not subject to externally imposed stipulations. Unrestricted

net assets may be designated for specific purposes by action of the Commission. Fund balance is reported in governmental funds in the fund financial statements under the following five categories: ♦ Nonspendable – Nonspendable fund balances include amounts that cannot be spent because

they are either (a) not in spendable form or (b) legally or contractually required to be maintained intact. Examples of non-spendable fund balance reserves for which fund balance shall not be available for financing general operating expenditures include: inventories, prepaid items, and long-term receivables.



32

♦ Restricted – Restricted fund balances consist of amounts that are subject to externally

enforceable legal restrictions imposed by external creditors, grantors, contributors, laws or regulations of other governments, or law through constitutional provision or enabling legislation.

♦ Committed – Committed fund balances consist of amounts that are subject to a purpose

constraint imposed by formal action or resolution of the Commission, which is the highest level of decision-making authority, before the end of the fiscal year, and that requires the same level of formal action to remove or modify the constraint.

♦ Assigned – Assigned fund balances consist of amounts that are intended to be used by the

Commission for specific purposes. The Commission authorized the Commission Chairman or County Administrator to make a determination of the assigned amounts of fund balance. Such assignments may not exceed the available (spendable, unrestricted, or uncommitted) fund balance in any particular fund. Assigned fund balances require the same level of authority to remove the constraint.

♦ Unassigned – Unassigned fund balances include all spendable amounts not contained in the

other classifications. This portion of the total fund balance in the general fund is available to finance operating expenditures.

When an expenditure is incurred for purposes for which both restricted and unrestricted (committed, assigned, or unassigned) amounts are available, it shall be the policy of the Commission to consider restricted amounts to have been reduced first. When an expenditure is incurred for the purposes for which amounts in any of the unrestricted fund balance classifications could be used, it shall be the policy of the Commission that committed amounts would be reduced first, followed by assigned amounts and then unassigned amounts. Note 2 – Stewardship, Compliance, and Accountability Budgets Budgets are adopted on a basis of accounting consistent with accounting principles generally accepted in the United States of America (GAAP) for the General Fund with the exception of motor vehicle ad valorem taxes, which are budgeted only to the extent expected to be paid rather than on the modified accrual basis of accounting. Budgets for all other governmental funds are adopted on a basis consistent with GAAP. Capital project funds adopt project-length budgets. All appropriations lapse at year-end.



33

The present statutory basis for county budgeting operations is the County Financial Control Act of 1935, as amended by Act Number 2007-488, Acts of Alabama. According to the terms of the law, at some meeting in September of each year, but in any event not later than October 1, the Commission must estimate the anticipated revenues, estimated expenditures and appropriations for the respective amounts that are to be used for each of such purposes. The appropriations must not exceed the total revenues available for appropriation plus any balances on hand. Expenditures may not legally exceed appropriations. Budgets may be adjusted during the fiscal year when approved by the County Commission. Any changes must be within the revenues and reserves estimated to be available. Note 3 – Deposits and Investments Deposits The custodial credit risk for deposits is the risk that, in the event of a bank failure, the Commission will not be able to cover deposits or will not be able to recover collateral securities that are in the possession of an outside party. The Commission’s deposits at year-end were entirely covered by federal depository insurance or by the Security for Alabama Funds Enhancement Program (SAFE Program). The SAFE Program was established by the Alabama Legislature and is governed by the provisions contained in the Code of Alabama 1975, Sections 41-14A-1 through 41-14A-14. Under the SAFE Program all public funds are protected through a collateral pool administered by the Alabama State Treasurer’s Office. Under this program, financial institutions holding deposits of public funds must pledge securities as collateral against those deposits. In the event of failure of a financial institution, securities pledged by that financial institution would be liquidated by the State Treasurer to replace the public deposits not covered by the Federal Deposit Insurance Corporation (FDIC). If the securities pledged fail to produce adequate funds, every institution participating in the pool would share the liability for the remaining balance. All of the Commission’s investments were in certificates of deposit. These certificates of deposit are classified as “Deposits” in order to determine insurance and collateralization. However, they are classified as “Investments” on the financial statements.



34

Note 4 – Receivables On September 30, 2012, receivables for the Commission’s individual major funds and other governmental funds, proprietary funds and fiduciary funds in the aggregate are as follows:

Governmental Funds

General

Fund

Other Governmental

Funds

Total Governmental

Funds Due From Other Governments $2,359,018.57 $1,180,312.48 $3,539,331.05 Other Receivables 755,011.01 74,679.89 829,690.90 Intergovernmental 3,276,036.40 3,276,036.40 Total Receivables $6,390,065.98 $1,254,992.37 $7,645,058.35

Proprietary Funds

Solid Waste Fund

Water Department

Fund

Other Enterprise

Fund

Total Enterprise

Funds Receivables: Accounts Receivable $895,612.18 $913,738.00 $2,625.00 $1,811,975.18 Due From Other Governments 49,470.00 49,470.00 Net Total Receivables $895,612.18 $963,208.00 $2,625.00 $1,861,445.18

Fiduciary Funds

Agency Funds

Private-Purpose Trust Funds

Total Fiduciary Funds

Receivables: Due From Other Governments $2,314,300.09 $ 3,214.50 $2,317,514.59 Other Receivables 306,679.46 61,990.29 368,669.75 External Parties 51,550.99 1,575.65 53,126.64 Total Receivables $2,672,530.54 $66,780.44 $2,739,310.98



35

Governmental funds report deferred revenues in connection with receivables for revenues that are not considered to be available to liquidate liabilities of the current period. Governmental funds also defer revenue recognition in connection with resources that have been received, but not yet earned. At September 30, 2012, the various components of deferred revenue and unearned revenue reported in the governmental, proprietary, and fiduciary funds were as follows: Unavailable Unearned Ad Valorem Property Taxes Receivable $38,697,309.33 $ Ad Valorem Motor Vehicle Taxes Receivable 1,999,600.67 Grant Revenues Received Prior to Meeting Eligibility Requirements 139,632.04 Total Deferred/Unearned for Governmental Funds $38,697,309.33 $2,139,232.71 Proprietary Funds – Customer Deposits $ 87,618.99 Fiduciary Funds – Ad Valorem Taxes Receivable $ 1,678,223.00 Note 5 – Capital Assets Capital asset activity for the year ended September 30, 2012, was as follows:

Balance

10/01/2011

Additions (*)

Retirements (*) Balance

09/30/2012 Governmental Activities: Capital Assets, Not Being Depreciated: Land $ 5,619,061.09 $ 71,239.00 $ (34,000.00) $ 5,656,300.09 Construction in Progress 476,433.58 2,781,470.96 (300,146.18) 2,957,758.36 Total Capital Assets, Not Being Depreciated 6,095,494.67 2,852,709.96 (334,146.18) 8,614,058.45 Capital Assets Being Depreciated: Infrastructure 177,161,676.69 1,569,028.86 178,730.705.55 Land Improvements 177,529.04 210,932.02 388,461.06 Buildings 22,811,144.28 271,370.00 23,070,339.28 Equipment and Furniture 26,702,985.59 1,258,583.29 (1,166,844.98) 26,806,898.90 Equipment Under Capital Lease 571,735.00 571,735.00 Total Capital Assets Being Depreciated 227,425,070.60 3,309,914.17 (1,166,844.98) 229,568,139.79 Less Accumulated Depreciation for: Infrastructure (11,703,213.16) (999,353.67) (12,702,566.83) Land Improvements (7,968.00) (19,966.56) (27,934.56) Buildings (9,178,355.75) (577,061.04) (9,755,416.79) Equipment and Furniture (16,924,026.58) (2,570,286.02) 1,083,127.77 (18,411,184.83) Equipment Under Capital Lease (86,579.47) (57,173.28) (143,752.75) Total Accumulated Depreciation (37,900,142.96) (4,223,840.57) 1,083,127.77 (41,040,855.76) Total Capital Assets Being Depreciated, Net 189,524,927.64 (913,926.40) (83,717.21) 188,527,284.03 Governmental Activities Capital Assets, Net $195,620,422.31 $ 1,938,783.56 $ (417,863.39) $197,141,342.48 (*) The additions and retirement columns include $300,146.18 for assets that were reclassified from construction in progress to equipment and furniture and $1,316,239.08 in donated infrastructure.



36

Balance

10/01/2011

Additions

Retirements Balance

09/30/2012 Business-Type Activities: Capital Assets, Not Being Depreciated: Land $ 144,890.00 $ $ $ 144,890.00 Total Capital Assets, Not Being Depreciated 144,890.00 144,890.00 Capital Assets Being Depreciated: Land Improvements 138,454.78 138,454.78 Buildings 19,253,047.87 19,253,047.87 Infrastructure 34,850,207.26 445,816.60 (24,716.83) 35,271,307.03 Equipment and Furniture 10,929,863.02 2,011,001.99 (1,087,030.77) 11,853,834.24 Equipment Under Capital Lease 2,235,385.00 (216,259.00) 2,019,126.00 Total Capital Assets Being Depreciated 67,406,957.93 2,456,818.59 (1,328,006.60) 68,535,769.92 Less Accumulated Depreciation for: Land Improvements (48,277.19) (451,283.88) (499,561.07) Buildings (5,997,353.10) (806,784.11) 7,743.72 (6,796,393.49) Infrastructure (12,602,988.61) (6,922.44) (12,609,911.05) Equipment and Furniture (7,561,404.73) (1,039,839.13) 1,052,933.44 (7,548,310.42) Equipment Under Capital Lease (1,694,488.00) (421,846.03) 133,359.47 (1,982,974.56) Total Accumulated Depreciation (27,904,511.63) (2,726,675.59) 1,194,036.63 (29,437,150.59) Total Capital Assets Being Depreciated, Net 39,502,446.30 (269,857.00) (133,969.97) 39,098,619.33 Business-Type Activities Capital Assets, Net $ 39,647,336.30 $ (269,857.00) $ (133,969.97) $ 39,243,509.33

Balance

10/01/2011

Additions (*)

Retirements (*) Balance

09/30/2012 Fiduciary Activities: Capital Assets, Not Being Depreciated: Construction In Progress $ $ 15,345.00 $ $ 15,345.00 Total Capital Assets, Not Being Depreciated 15,345.00 15,345.00 Capital Assets Being Depreciated: Buildings 53,672.00 53,672.00 Equipment and Furniture 2,354,510.45 2,283,809.90 (14,270.10) 4,624,050.25 Equipment Under Capital Lease 2,249,412.90 (2,249,412.90) Total Capital Assets Being Depreciated 4,657,595.35 2,283,809.90 (2,263,683.00) 4,677,722.25 Less Accumulated Depreciation for: Buildings (9,727.47) (1,341.72) (11,069.19) Equipment and Furniture (1,537,617.86) (2,313,483.19) 14,270.10 (3,836,830.95) Capital Assets Under Capital Lease (1,874,505.00) (240,985.34) 2,115,490.34 Total Accumulated Depreciation (3,421,850.33) (2,555,810.25) 2,129,760.44 (3,847,900.14) Private-Purpose Trust Activities, Net $ 1,235,745.02 $ (256,655.35) $ (133,922.56) $ 845,167.11 (*) Amounts were reclassified from Equipment Under Capital Lease to Equipment and Furniture in the amount of $2,249,412.90, with related depreciation of $2,115,490.34.



37

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

Current Year Depreciation

Expense Governmental Activities: General Government $ 973,606.86 Public Safety 772,684.30 Highway and Roads 2,381,849.26 Health 8,801.28 Welfare 619.92 Culture and Recreation 86,278.95 Total Depreciation Expense – Governmental Activities $4,223,840.57


Expense Business-Type Activities: Solid Waste $1,184,113.13 Building Inspection 40,595.93 Water Department 1,501,966.53 Total Depreciation Expense – Business-Type Activities $2,726,675.59


Expense Fiduciary Activities: General Government $ 47,418.52 Public Safety 392,901.39 Total Depreciation Expense – Fiduciary Activities $440,319.91



38

Note 6 – Defined Benefit Pension Plan A. Plan Description The Commission contributes to the Employees’ Retirement System of Alabama, an agent multiple-employer public employee retirement system that acts as a common investment and administrative agent for the various state agencies and departments. Substantially all employees of the Commission are members of the Employees’ Retirement System of Alabama. Membership is mandatory for covered or eligible employees of the Commission. Benefits vest after 10 years of creditable service. Vested employees may retire with full benefits at age 60 or after 25 years of service. Retirement benefits are calculated by two methods with the retiree receiving payment under the method which yields the highest monthly benefit. The methods are (1) Minimum Guaranteed, and (2) Formula, of which the Formula method usually produces the highest monthly benefit. Under this method retirees are allowed 2.0125% of their average final salary (best three of the last ten years) for each year of service. Retirees may also elect to receive a reduced retirement allowance (Special Privileges at Retirement) in order to provide an allowance to a designated beneficiary after the member’s death. Disability retirement benefits are calculated in the same manner. Pre-retirement death benefits in the amount of the annual salary for the fiscal year preceding death is provided to plan members. The Employees’ Retirement System was established as of October 1, 1945, under the provisions of Act Number 515, Acts of Alabama 1945, for the purpose of providing retirement allowances and other specified benefits for State employees, State police, and on an elective basis to all cities, counties, towns and quasi-public organizations. The responsibility for general administration and operation of the Employees’ Retirement System is vested in the Board of Control. Benefit provisions are established by the Code of Alabama 1975, Sections 36-27-1 through 36-27-103, as amended, Sections 36-27-120 through 36-27-139, as amended, and Sections 36-27B-1 through 36-27B-6. Authority to amend the plan rests with the Legislature of Alabama. However, the Legislature has granted the Commission authority to accept or reject various Cost-Of-Living-Adjustments (COLAs) granted to retirees. The Retirement Systems of Alabama issues a publicly available financial report that includes financial statements and required supplementary information for the Employees’ Retirement System of Alabama. That report may be obtained by writing to The Retirement Systems of Alabama, 201 South Union Street, Montgomery, Alabama 36130-2150.



39

B. Funding Policy Employees of the Commission, with the exception of full-time law enforcement officers, are required by statute to contribute 5 percent of their salary to the Employees’ Retirement System. As of January 1, 2001, full-time law enforcement officers are required by statute to contribute 6 percent of their salary to the Employees’ Retirement System. The Commission is required to contribute the remaining amounts necessary to fund the actuarially determined contributions to ensure sufficient assets will be available to pay benefits when due. The contribution requirements of the Commission are established by the Employees’ Retirement System based on annual actuarial valuations. The employer’s contribution rate for the year ended September 30, 2012 was 8.06 percent based on the actuarial valuation performed as of September 30, 2009. C. Annual Pension Cost For the year ended September 30, 2012, the Commission’s annual pension cost of $3,253,124.28 was equal to the Commission’s required and actual contribution. The required contribution was determined using the “entry age normal” method. The actuarial assumptions as of September 30, 2011, the latest actuarial valuation date, were: (a) 8 percent investment rate of return on present and future assets, and (b) projected salary increases ranging from 7.25 percent at age 20 to 3.75 percent at age 65. Both (a) and (b) include an inflation component of 3.0 percent. The actuarial value of assets was determined using techniques that smooth the effects of short-term volatility in the market value of investments over a five-year period. The unfunded actuarial accrued liability is being amortized as a level percentage of projected payroll on an open basis. The remaining amortization period as of September 30, 2011, was 30 years. The following is three-year trend information for the Commission:

Fiscal Year

Ended Annual Pension

Cost (APC) Percentage of

APC Contributed Net Pension Obligation

09/30/2012 $3,253,124.28 100% $0 09/30/2011 $3,411,503.03 100% $0 09/30/2010 $3,023,439.00 100% $0



40

D. Funded Status and Funding Progress As of September 30, 2011, the most recent actuarial valuation date, the plan was 65.4 percent funded. The actuarial accrued liability for benefits was $149,146,567 and the actuarial value of assets was $97,516,342, resulting in an unfunded actuarial accrued liability (UAAL) of $51,630,225. The covered payroll (annual payroll of active employees covered by the plan) was $44,471,875, and the ratio of the UAAL to the covered payroll was 116.10 percent. The Schedule of Funding Progress, presented as RSI following the notes to the financial statements, presents multiyear trend information about whether the actuarial value of plan assets is increasing or decreasing over time relative to the actuarial accrued liability for benefits. Note 7 – Other Postemployment Benefits (OPEB) A. Plan Description The Madison County Commission provides a single-employer defined benefit medical insurance plan for eligible retirees and their spouses. The medical insurance plan covers both active and retired members. The Code of Alabama 1975, Section 11-91-1 through 11-91-8, gives authority to the Commission to establish and amend benefit provisions. The plan does not issue a stand-alone report. B. Funding Policy On November 20, 1987, the Commission approved a motion to allow retired employees and officials to continue to participate in the county’s health insurance plan. At this time, the retirees paid the full health insurance premium and the County did not share in the cost. Then on May 16, 1988, the Commission passed a motion to pay 25% of the retirees’ health insurance premium for those who wished to participate. On October 9, 1998, the Commission approved a motion to allow retired employees with 20 or more years of service to participate in the County’s health insurance plan at no cost to the retiree.



41

On September 22, 2004, the Commission modified the contribution rates based on years of service and age. The Commission approved a motion to modify retiree insurance contribution rates as follows:

Years of Service Age Category Rate

10-14 Years of Service Employee or Dependent Under Age 65 $76 Each per Month 10-14 Years of Service Employee or Dependent Age 65 and Over $65 Each per Month 15-19 Years of Service Employee or Dependent Under Age 65 $65 Each per Month 15-19 Years of Service Employee or Dependent Age 65 and Over $54 Each per Month 20-24 Years of Service Employee or Dependent Under Age 65 $43 Each per Month 20-24 Years of Service Employee or Dependent Age 65 and Over $33 Each per Month 25+ Years of Service Employee - Any Age $0 25+ Years of Service Dependent Under Age 65 $27 per Month 25+ Years of Service Dependent Age 65 and Over $0

The Commission’s contributions are on a pay-as-you-go basis, and as of September 30, 2012, the Commission contributed $2,519,075 to cover approximately 316 participants. C. Annual OPEB Cost For fiscal year 2012, the Commission’s annual other postemployment benefit (OPEB) cost (expense) for medical insurance was $12,003,854. The Commission’s annual OPEB cost, the percentage of annual OPEB cost contributed to the plan, and the net OPEB obligation for 2012 is as follows:

Fiscal Year Ended

Annual

OPEB Cost

Percentage of Annual OPEB Cost

Contributed

Net OPEB

Obligation

09/30/2012 $12,003,854.00 20.99% $38,714,250.00 09/30/2011 $12,003,854.00 19.48% $29,049,999.00 09/30/2010 $11,766,637.00 18.45% $19,383,748.00



42

D. Funded Status and Funding Progress The funding status of the plan as of September 30, 2012, was as follows:

Actuarial Accrued Liability (AAL) $157,829,756.00 Actuarial Value of Plan Assets 300,000.00 Unfunded Actuarial Accrued Liability (UAAL) $157,529,756.00 Funded Ratio (Actuarial Value of Plan Assets/AAL) .19% Covered Payroll (Active Plan Members) $ 40,798,283.00 UAAL as a Percentage of Covered Payroll 386.12%

Actuarial valuations of an ongoing plan involve estimates of the value of reported amounts and assumptions about the probability of occurrence of events far into the future. Examples include assumptions about future employment, mortality, and the healthcare cost trends. Amounts determined regarding the funding status of the plan and the annual required contributions of the employer are subject to continual revision as actual results are compared with past expectations and new estimates are made about the future. The schedule of funding progress, presented as required supplementary information following the notes to the financial statements, will in future years present multiyear trend information that will show whether the actuarial value of the plan assets is increasing or decreasing over time relative to the actuarial accrued liabilities for benefits. E. Actuarial Methods and Assumptions Projections of benefits for financial reporting purposes are based on the substantive plan (the plan as understood by the employer and plan members) and include the types of benefits provided at the time of each valuation and the historical pattern of sharing of benefit costs between the employer and plan members to that point. The actuarial methods and assumptions used include techniques that are designed to reduce short-term volatility in actuarial accrued liabilities and the actuarial value of assets, consistent with the long-term perspective of the calculations. The actuarial cost method used was the projected unit credit method. The actuarial assumptions included a 4 percent investment return assumption (or discount rate) and an annual healthcare cost trend rate of 10.5 percent initially, reduced by decrements to an ultimate rate of 5 percent after ten years. It was assumed that 90 percent of future retirees would elect medical and 90 percent of retirees electing coverage who have spouses would elect spousal coverage. The unfunded actuarial accrued liability is being amortized as a level percentage of projected payroll on an open period. The unfunded actuarial accrued liability (UAAL) is being amortized over 30 years.



43

Note 8 – Payables On September 30, 2012, payables for the Commission’s individual major funds and nonmajor and fiduciary funds in the aggregate are as follows:

Accounts Payables –

Vendors

Due to Other Governments

Payable to External Parties

Deposits Payable

Employee Benefits Payable

Total General Fund $439,890.15 $ 26,206.24 $539,420.64 $5,000.00 $40,528.25 $1,051,045.28 Other Governmental Funds 26,717.20 443,823.59 470,540.79 Total Governmental Funds 466,607.35 470,029.83 539,420.64 5,000.00 40,528.25 1,521,586.07 Water Department Fund 49,719.79 36,635.21 86,355.00 Solid Waste Fund 11,480.58 11,480.58 Total Proprietary Funds 61,200.37 36,635.21 97,835.58 Total $527,807.72 $506,665.04 $539,420.64 $5,000.00 $40,528.25 $1,619,421.65

Accounts Payables –

Vendors

Due to Other Governments

Payable to External Parties

Total Agency Funds $ 75,459.98 $7,674,444.62 $3,272,414.66 $11,022,319.26 Private-Purpose Trust Funds 30,000.00 3,621.74 33,621.74 Total $105,459.98 $7,674,444.62 $3,276,036.40 $11,055,941.00

Note 9 – Lease Obligations Capital Leases The Commission is obligated under certain leases accounted for as capital leases. Assets under capital leases totaled $571,735.00 for governmental activities and $2,019,126.00 for business-type activities at September 30, 2012. If the Commission completes the lease payments according to the schedules below, which is the stated intent of the Commission, ownership of the leased equipment will pass to the Commission. The lease purchase contracts give the Commission the right to cancel the lease with 30 days written notice and payment of a pro rata share of the current year’s lease payments.



44

The following is a schedule of future minimum lease payments under capital leases, together with the net present value of the minimum lease payments as of September 30.

Fiscal Year Ending Governmental

Activities Business-Type

Activities

September 30, 2013 $ 689,335.68 $266,995.76 2014 576,254.43 2015 576,254.46 2016 180,351.80 2017 180,351.80

2018-2019 360,703.60 Total Minimum Lease Payments 2,563,251.77 266,995.76 Less: Amount Representing Interest (225,240.72) (2,613.99) Present Value of Net Minimum Lease Payments $2,338,011.05 $264,381.77

Note 10 – Long-Term Debt The Commission issues General Obligation Bonds to provide funds for the acquisition and construction of major capital facilities, and to refund debt previously issued. In May 2003, $3.7 million in General Obligation Warrants, with interest rates ranging from 1.0 to 4.2 percent, were issued to provide funds for the construction of a public safety building, purchase equipment, and to refund certain equipment debt. $1.1 million of the proceeds were allocated to refund equipment debt in the Enterprise Fund – Solid Waste, and the remainder was allocated to equipment purchase and construction of a public safety building. In May 2003, the Commission issued $6.7 million in Special Obligation “Water Revenue Refunding and Capital Improvement Warrants”, with interest rates ranging from 1.0 to 4.2 percent. The proceeds were used to refund the Series 1993 Special Obligation Water Revenue Warrants and to acquire and/or construct certain capital improvements, consisting primarily of fire hydrants and water lines. In September 1999, the Commission issued Special Obligation Water System Revenue Warrants in the amount of $12,645,000 to construct a water treatment plant and two water storage tanks. In July 2010, the Commission issued Recovery Zone Economic Development Warrants in the amount of $2,500,000, with an interest rate of 6.55 percent, to construct a community resource center in Madison County.



45

In November 2010, the Commission issued a General Obligation Warrant in the amount of $1,000,000, with an interest rate of 2.94 percent, for the purpose of planning, acquiring, constructing, and equipping a satellite office to be utilized primarily for the sale of licenses by the Madison County License Commissioner. In December 2011, the Commission issued a General Obligation Warrant in the amount of $1,500,000, with an interest rate of 3.48 percent, for additional financing needed to construct a community resource center in Madison County. In February 2012, the Commission issued Special Obligation Water System Revenue Warrants in the amount of $6,215,000, with an interest rate of 2.50%, to refund the Series 1999 Water System Revenue Warrants. In April 2012, the Commission issued General Obligation Warrants, in the amount of $1,219,125, with an interest rate of 2.29% to purchase vehicles to be used by the sanitation department.



46

The following is a summary of long-term debt transactions for the Commission for the year ended September 30, 2012:

Debt Outstanding 10/01/2011

Issued/ Increased

Repaid/ Decreased

Debt Outstanding 09/30/2012

Amounts Due within One Year

Governmental Activities: Bonds Payable: General Obligation Bonds, 2003 $ 1,670,000.00 $ $ (130,000.00) $ 1,540,000.00 $ 140,000.00 General Obligation Bonds, 2010 2,500,000.00 (1,016.88) 2,498,983.12 44,751.26 General Obligation Bonds, 2010 926,980.31 (89,548.58) 837,431.73 92,011.40 General Obligation Bonds, 2011 1,500,000.00 1,500,000.00 42,342.64 Deferred Amounts: Unamortized Premium 4,244.01 (385.81) 3,858.20 385.81 Total Bonds Payable 5,101,224.32 1,500,000.00 (220,951.27) 6,380,273.05 319,491.11 Other Liabilities: Capital Leases 1,413,074.59 1,161,559.37 (236,622.91) 2,338,011.05 626,306.84 Compensated Absences 5,014,911.27 (463,087.94) 4,551,823.33 1,948,029.27 Other Postemployment Benefits 29,048,999.00 9,665,251.00 38,714,250.00 Estimated Claims Costs 1,298,514.00 331,000.00 1,629,514.00 1,141,939.59 Total Other Liabilities 36,775,498.86 11,157,810.37 (699,710.85) 47,233,598.38 3,716,275.70 Total Governmental Activities Long-Term Liabilities 41,876,723.18 12,657,810.37 (920,662.12) 53,613,871.43 4,035,766.81 Business-Type Activities: Solid Waste Department Warrants 1,219,125.00 (121,718.62) 1,097,406.38 297,136.23 Water Department Warrants 10,525,000.00 6,215,000.00 (7,245,000.00) 9,495,000.00 1,065,000.00 Deferred Amounts: Deferred Amount on Refunding (42,740.82) 21,370.82 (21,370.00) (21,370.00) Unamortized Premium 33,551.26 (3,050.26) 30,501.00 3,050.00 Total Bonds Payable 10,515,810.44 7,434,125.00 (7,348,398.06) 10,601,537.38 1,343,816.23 Other Liabilities: Capital Leases 776,670.02 (512,288.25) 264,381.77 264,381.77 Compensated Absences 961,842.09 (46,261.58) 915,580.51 169,771.10 Business-Type Activities Long-Term Liabilities 12,254,322.55 7,434,125.00 (7,906,947.89) 11,781,499.66 1,777,969.10 Fiduciary-Type Activities: Other Liabilities: Capital Leases 307,485.59 (307,485.59) Compensated Absences 1,972.23 3,670.15 5,642.38 4,544.87 Fiduciary-Type Activities Long-Term Liabilities $ 309,457.82 $ 3,670.15 $ (307,485.59) $ 5,642.38 $ 4,544.87



47

Payments on the bonds payable that pertain to the Commission’s governmental activities are made by the General Fund and Debt Service Funds. The capital lease liability for the governmental activities will be liquidated by the General Fund. The compensated absences liability attributable to the governmental activities will be liquidated by several of the Commission’s governmental funds. In the past, approximately (92%) has been paid by the General Fund and the remainder (8%) by the other governmental funds. The worker’s compensation liability will generally be liquidated through the Commission’s General Fund. The warrants payable that pertain to the Commission’s business-type activities are paid by the Water Department Fund and the Solid Waste Fund. In accordance with the 2003 Water Revenue Warrants bond indenture, the Water Department is required to establish a Debt Service Reserve Fund in an amount equal to the maximum annual net debt service requirement; a Bond Fund that is funded monthly with an amount equal to one-sixth of the semi-annual interest due at the next payment date plus one-twelfth of the principal due to mature. The required balances are as follows as of September 30, 2012:

Debt Service Reserve Fund $515,366.46 Bond Fund $127,337.55

The compensated absences payable attributable to the fiduciary activities will be paid by the Volunteer Fire Department Fund.



48

The following is a schedule of debt service requirements to maturity:


General Obligation

Warrants Series 2003

General Obligation

Warrants Series 2010 Fiscal Year Ending Principal Interest Principal Principal

September 30, 2013 $ 140,000.00 $ 57,440.00 $ 44,751.26 $ 166,411.45 2014 140,000.00 53,100.00 48,177.86 162,984.85 2015 150,000.00 48,550.00 51,377.34 159,785.37 2016 155,000.00 43,450.00 54,789.29 156,373.42 2017 160,000.00 38,025.00 58,009.38 153,153.33

2018-2022 660,000.00 105,825.00 355,204.09 700,609.47 2023-2027 135,000.00 5,670.00 489,932.46 565,881.09 2028-2032 675,775.88 380,037.67 2033-2037 720,965.56 123,685.53

Totals $1,540,000.00 $352,060.00 $2,498,983.12 $2,568,922.18


Series 2003 Revenue

Warrants Payable Series 2012 Revenue

Warrants Payable Fiscal Year Ending Principal Interest Principal Interest

September 30, 2013 $ 360,000.00 $148,375.00 $ 705,000.00 $138,375.00 2014 370,000.00 137,215.00 730,000.00 120,750.00 2015 310,000.00 125,190.00 760,000.00 102,500.00 2016 320,000.00 114,650.00 790,000.00 83,500.00 2017 1,785,000.00 387,910.00 820,000.00 63,750.00

2018-2022 815,000.00 51,460.00 1,730,000.00 65,250.00 Totals $3,960,000.00 $964,800.00 $5,535,000.00 $574,125.00



49


General Obligation


General Obligation


Capital Leases

Total Principal and Interest

Requirements Principal Interest Principal Principal Principal Interest to Maturity

$ 92,011.40 $ 23,724.52 $ 42,342.64 $ 48,720.00 $ 626,306.86 $ 63,028.82 $ 1,304,736.95

94,791.88 20,944.04 39,631.63 51,431.01 526,048.97 50,205.46 1,187,315.70 97,656.39 18,079.53 41,029.97 50,032.67 537,880.85 38,373.61 1,192,765.73

100,565.01 15,170.91 42,477.64 48,585.00 151,525.84 28,825.96 796,763.07 103,646.42 15,170.91 43,847.39 47,215.25 158,268.74 22,083.06 799,419.48 348,760.63 29,262.54 244,141.35 211,171.85 337,979.79 22,723.81 3,015,678.53

290,378.45 164,934.75 1,651,796.75 345,373.64 109,939.56 1,511,126.75 410,777.29 44,535.91 1,299,964.29

$837,431.73 $122,352.45 $1,500,000.00 $776,566.00 $2,338,011.05 $225,240.72 $12,759,567.25


Series 2012-A General

Obligation Warrants Payable Capital Leases

Total Principal and Interest

Requirements Principal Interest Principal Interest to Maturity

$ 297,136.23 $22,321.53 $264,381.77 $2,613.99 $ 1,938,203.52

304,109.05 15,348.71 1,677,422.76 311,245.47 8,212.29 1,617,147.76 184,915.63 1,434.43 1,494,500.06

3,056,660.00 2,661,710.00

$1,097,406.38 $47,316.96 $264,381.77 $2,613.99 $12,445,644.10



50

As of September 30, 2012, $1,413,861.00 of the Water Revenue Warrants, Series 2012 had not been issued. This amount is reflected as a noncurrent asset on the financial statements. Bond Issuance Costs, Premiums, and Loss on Early Extinguishment of Debt The Commission has warrant issuance costs as well as warrant premiums in connection with the issuance of its 2003 General Obligation Warrants. The Commission has issuance costs in connection with the 2004 General Obligation Lease. The issuance costs and premium are being amortized using the straight-line method over a period of twenty years. The issuance costs are being amortized using the straight-line method over a period of fifteen years.

Governmental Activities Issuance

Costs Premium Total Issuance Costs and Premium $105,410.00 $7,716.30 Amount Amortized in Prior Years 51,100.36 3,472.29 Balance, Issue Costs 54,309.64 4,244.01 Current Amount Amortized 6,003.67 385.81 Balance Issuance Costs and Premium $ 48,305.97 $3,858.20

The Commission has warrant issue costs, a loss on early extinguishment of debt as well as a premium in connection with the Series 2003 Water Revenue Warrants. The issuance costs and premium are being amortized using the straight-line method over a period of twenty years. The loss on early extinguishment of debt is to be amortized over the original remaining life of the refunded debt (10 years).

Business-Type Activities Issuance

Costs

Loss: Early Extinguishment

of Debt Premium Total Issuance Costs, Loss: Early Extinguishment and Premium $75,729.00 $42,740.00 $33,551.00 Current Amount Amortized 6,884.00 21,370.00 3,050.00 Balance Issuance Costs, Loss: Early Extinguishment and Premium $68,845.00 $21,370.00 $30,501.00



51

Pledged Revenues The Commission issued Series 2003 Special Obligation “Water Refunding and Capital Improvement Warrants” which are pledged to be repaid from the proceeds of water revenues derived from the operation by the Madison County Water Department of its water works plant and distribution system. The warrant proceeds were used to refund the Series 1993 Special Obligation Water Revenue Warrants and to acquire and/or construct certain capital improvements consisting primarily of fire hydrants and water lines. Future revenues in the amount of $4,924,800.00 are pledged to repay the principal and interest on the warrants as of September 30, 2012. Proceeds of the water revenues in the amount of $10,533,313.98 were received by the Commission during the fiscal year ended September 30, 2012, of which $508,875.00 was used to pay principal and interest on the warrants. The Series 2003 Special Obligation “Water Revenue Refunding and Capital Improvement Warrant” will mature in fiscal year 2023. The Commission issued Series 2012 Special Obligation Water System Revenue Warrants which are pledged to be repaid from the proceeds of water revenues derived from the operation of by the Madison County Water Department of its water works plant and two water storage tanks. The warrant proceeds were used to refund the 1999 Special Obligation Water System Revenue Warrants in which those warrant proceeds were used to construct a water treatment plant and two water storage tanks. Future revenues in the amount of $6,109,125.00 are pledged to repay the principal and interest on the warrants at September 30, 2012. Proceeds of the water revenues in the amount of $10,533,313.98 were received by the Commission during the fiscal year ended September 30, 2012 of which $874,218.75 was used to pay principal and interest on the warrants. The Series 2012 Special Obligation Water System Revenue Warrants will mature in fiscal year 2019.



52

Prior Year Defeasance of Debt In prior years, the Commission defeased certain revenue warrants by placing the proceeds of the new warrants in an irrevocable trust to provide for all future debt service payments of the old warrants. Accordingly, the trust account assets and the liability for the defeased debt are not included on the Commission’s financial statements. The following schedule summarizes the refunded issues and the outstanding balances on the defeased warrants:

Balance Outstanding

September 30, 2012 Series 1981 Water Authority Revenue Bonds $ 394,000.00 Series 1982-KC Water Authority Revenue Bonds 356,000.00 Series 1982-CS Water Authority Revenue Bonds 486,000.00 Total Defeased Debt $1,236,000.00

All defeased warrants are revenue warrants whereby the Commission pledged water system revenues to pay the debt service on the warrants. Note 11 – Risk Management The Commission 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. The Commission has purchased general liability insurance through a commercial insurance carrier. Coverage is provided up to $1,000,000 per claim for a maximum total coverage of $3,000,000. The Commission also purchases commercial insurance for other risks of loss, including property and casualty insurance. Settled claims resulting from these claims have not exceeded commercial insurance coverage in any of the past three years. The Commission is self-insured with regard to worker’s compensation coverage. The Commission retains the risk of loss of $550,000 per occurrence and also has an aggregate limit of indemnity of $1,000,000 for the liability period. The Commission purchases insurance for claims in excess of the specific and aggregate limits. An estimate of the short-term claims liability is reported in the General Fund. The entire long-term estimated liability is included in the government-wide financial statements. These liabilities are based on estimates utilizing historical loss experience and current trends on a case-by-case review. The Commission uses the discounted amount to report claim costs.



53

The Commission is self-insured with regard to employee health insurance. The Commission purchases insurance for claims in excess of the aggregate stop loss basis. The aggregate stop loss basis is determined annually based on the Commission’s claim experience. An estimate of the claims liability is reported in the General Fund. The entire long-term liability is included in the governmental-wide financial statements. These liabilities are based on estimates utilizing past experience. Workers’ Compensation Employee Health Insurance Total 2012 2011 2012 2011 2012 2011 Unpaid Claims and Claim Adjustment Expenses at Beginning of Fiscal Year (PY Ending Balance) $273,824.75 $313,610.75 $ 575,000.00 $ 553,960.00 $ 848,824.75 $ 867,570.75 Incurred Claims and Claim Adjustment Expenses: Provision for Insured Events of Current Fiscal Year 304,445.37 208,401.34 11,258,873.81 9,717,070.40 11,563,319.18 9,925,471.74 Increases/(Decrease) in Provision for Insured Events of Prior Fiscal Years (39,786.00) 331,000.00 21,040.00 331,000.00 (18,746.00) Total Incurred Claims and Claim Adjustment Expenses 304,445.37 168,615.34 11,589,873.81 9,696,030.40 11,894,319.18 9,906,725.74 Payments: Claims and Claim Adjustment Expenses Attributable to Insured Events of Current Fiscal Year 252,789.86 51,655.51 11,258,873.81 9,717,070.40 11,511,663.67 9,768,725.91 Claims and Claim Adjustment Expenses Attributable to Insured Events of Prior Fiscal Year 51,655.51 156,745.83 51,655.51 156,745.83 Total Payments 304,445.37 208,401.34 11,258,873.81 9,717,070.40 11,563,319.18 9,925,471.74 Total Unpaid Claim and Claim Adjustment Expenses at End of Fiscal Year 273,824.75 273,824.75 906,000.00 575,000.00 1,179,824.75 848,824.75 IBNR (Incurred But Not Reported) Estimate (100% 2010 Recommended Reserve)

(Recommended Actuarial Reserve) 567,810.00 567,810.00 N/A N/A 567,810.00 567,810.00 Total Liability as Shown on Exhibit #1 723,514.00 723,514.00 906,000.00 575,000.00 1,629,514.00 1,298,514.00 Short-Term (General Fund) 235,939.59 64,193.00 906,000.00 575,000.00 1,141,939.59 639,193.00 Long-Term (General Long-Term Debt) 487,574.41 659,321.00 487,574.41 659,321.00 Total $723,514.00 $723,514.00 $ 906,000.00 $ 575,000.00 $ 1,629,514.00 $1,298,514.00



54

Note 12 – Interfund Transactions Due To/From Other Funds The amounts due to/from other funds at September 30, 2012, were as follows:

Due From Other Funds

General

Fund

Other Governmental

Funds

Solid Waste Fund

Water System Fund Total

Due To Other Funds: General Fund $ $20.00 $20,855.89 $ $ 20,875.89 Other Governmental Funds 2,865,541.31 1,440.18 140,000.00 3,006,981.49 Solid Waste Fund 71,303.68 71,303.68 Water Department Fund 19,809.00 19,809.00 Other Proprietary Fund 2,812.47 500.00 3,312.47 Total $2,959,466.46 $20.00 $22,296.07 $140,500.00 $3,122,282.53

Interfund Transfers The amounts of interfund transfers during the fiscal year ending September 30, 2012, were as follows: Transfers Out

General

Fund

Other Governmental

Funds

Water Department

Fund

Solid Waste Fund

Other Proprietary

Funds Totals Transfers In General Fund $ $2,092,687.09 $402,665.40 $400,352.32 $52,665.00 $2,948,369.81 Other Governmental Funds 713,496.20 4,873.75 52,365.60 770,735.55 Other Proprietary Funds 15,000.00 15,000.00 Totals $728,496.20 $2,097,560.84 $455,031.00 $400,352.32 $52,665.00 $3,734,105.36

The Commission typically used transfers to fund ongoing operating subsidies and to transfer the portion from the General Fund to the Debt Service Funds to service current-year debt requirements.



55

Note 13 – Related Organizations A majority of the board members of the following organizations are appointed by the Madison County Commission: Madison County Board of Building Inspection Appeals, Public Building Authority, Harvest-Monrovia Water Authority, Owens Cross Roads Water Authority, and the Executive Airport Authority. The Commission, however, is not financially accountable, because it does not impose its will and have a financial benefit or burden relationship, for these organizations and the organizations are not considered part of the Commission’s financial reporting entity. These organizations are considered related organizations of the County Commission. The following organizations are separate legal entities which are jointly governed by the City of Huntsville and Madison County in which neither government appoints a voting majority of the Board. The organizations were created for the benefit for city and county residents and generally receive financial assistance from both governments: Huntsville/Madison County Marina and Port Authority, Huntsville/Madison County Railroad Authority, Huntsville/Madison County Airport Authority, Madison County Communications District, Madison County Mental Retardation Board, Huntsville-Madison County Mental Health Board and Madison County Human Resources Board. Note 14 – Joint Ventures The Madison County Commission is a participant with the City of Huntsville and the Public Building Authority of the City of Huntsville in a joint venture to construct and operate the “Huntsville-Madison County Jail”. The Public Building Authority of the City of Huntsville will, throughout the term of the contract, hold title to all property deemed necessary for the project’s construction. At the expiration of the contract between these entities, Madison County has the option to purchase all rights, title and interest to any real property conveyed to the Public Building Authority of the City of Huntsville for the purpose of this project. The daily operations of the Huntsville-Madison County Jail will be managed by the Madison County Sheriff and funded by the Madison County Commission. Additionally, pursuant to the agreement executed on April 8, 2010 between the Madison County Commission and the City of Huntsville, the City of Huntsville will pay the County $2,100,000 per year to help defray current operating costs. The City of Huntsville will maintain the physical plant and structural integrity. Funds for the maintenance of the physical plant and structural integrity will be provided by the City of Huntsville. It is expected that no net income will be generated by this joint venture. The expenditures for the daily operation of the Huntsville-Madison County Jail will be recorded in the County’s General Fund. The expenditures for the renovation/construction of the facility will be recorded in the records of the Public Building Authority of the City of Huntsville, and the expenditures for maintaining the physical plant and structural integrity will be recorded in the accounting records of the City of Huntsville. This information will be available at the respective offices.



56

Note 15 – Subsequent Events On March 8, 2013, the Commission passed a resolution to issue Water Revenue Warrants, dated March 1, 2013, in the amount of $4,395,000 for the purpose of refunding the Series 2003 Water Revenue Warrants in the amount of $3,960,000. These warrants have an average interest rate of 1.8% and a term of 10 years. On March 8, 2013, the Commission passed a resolution to issue General Obligation Warrants, dated March 1, 2013, in the amount of $1,695,000 for the purpose of refunding the 2003 General Obligation Warrants in the amount of $1,540,000. These warrants have an average interest rate of 1.7% and a term of 10 years.


57

Required Supplementary Information


Schedule of Revenues, Expenditures and Changes in Fund BalancesBudget and Actual - General FundFor the Year Ended September 30, 2012

Actual AmountsOriginal Final Budgetary Basis

RevenuesTaxes 27,061,000.00$ 27,990,006.43$ 27,351,104.60$ Licenses and Permits 1,491,000.00 1,514,273.88 1,573,787.94 Intergovernmental 7,375,707.00 7,890,617.47 7,644,613.83 Charges for Services 11,022,210.00 11,093,179.77 11,235,060.76 Fines and Forfeits 47,581.75 Miscellaneous 1,965,580.00 2,019,846.60 2,312,158.05

Total Revenues 48,915,497.00 50,507,924.15 50,164,306.93

ExpendituresCurrent:

General Government 28,403,319.00 33,173,174.52 31,867,466.30 Public Safety 26,806,131.00 26,365,008.14 27,087,051.90 Highways and Roads 250,000.00 407,385.76 302,509.98 Sanitation 1,101,552.00 1,266,552.00 1,243,254.06 Health 572,858.00 672,858.00 601,258.00 Welfare 251,260.00 240,260.00 187,181.99 Culture and Recreation 1,026,738.88 1,229,476.72 1,008,235.31 Education 61,526.00 61,526.00 61,526.00

Capital Outlay 401,500.00 1,359,549.49 591,914.12 Debt Service:

PrincipalInterest and Fiscal Charges

IntergovernmentalTotal Expenditures 58,874,884.88 64,775,790.63 62,950,397.66

Excess (Deficiency) of Revenues OverExpenditures (9,959,387.88) (14,267,866.48) (12,786,090.73)

Other Financing Sources (Uses)Transfers In 2,245,594.00 2,855,594.00 2,888,375.23 Sale of Capital Assets 20,224.93 50,045.11 Long-Term Debt Issued 1,161,559.37 Transfers Out (309,040.00) (481,700.52) (304,795.00)

Total Other Financing Sources (Uses) 1,936,554.00 2,394,118.41 3,795,184.71

Net Change in Fund Balances (8,022,833.88) (11,873,748.07) (8,990,906.02)

Fund Balances - Beginning of Year 11,901,498.98 11,901,498.98 11,975,538.39

Fund Balances - End of Year 3,878,665.10$ 27,750.91$ 2,984,632.37$

Budgeted Amounts


Budget to GAAP Actual AmountsDifferences GAAP Basis

(1) (2) 20,358,517.98$ 47,709,622.58$ (2) 56,205.31 1,629,993.25 (2) 1,272,274.92 8,916,888.75 (2) 142,349.75 11,377,410.51

47,581.75 (2) 345,401.63 2,657,559.68

22,174,749.59 72,339,056.52

(3) 321,053.77 32,188,520.07 (3) 10,000.00 27,097,051.90 (3) 13,186,496.31 13,489,006.29 (3) 55,164.33 1,298,418.39 (3) 450,238.31 1,051,496.31

187,181.99 1,008,235.31

61,526.00 (3) 363,696.67 955,610.79

(3) 237,639.79 237,639.79 (3) 172,390.30 172,390.30 (3) 13,205.11 13,205.11

14,809,884.59 77,760,282.25

7,364,865.00 (5,421,225.73)

(4) 59,994.58 2,948,369.81 61,719.90 111,765.01

(4) 1,161,559.37 (4) (423,701.20) (728,496.20)

(301,986.72) 3,493,197.99

7,062,878.28 (1,928,027.74)

(5) 14,973,741.01 26,949,279.40

22,036,619.29$ 25,021,251.66$


Schedule of Revenues, Expenditures and Changes in Fund BalancesBudget and Actual - General FundFor the Year Ended September 30, 2012

Explanation of differences between Actual Amounts on Budgetary Basis and Actual Amounts GAAP Basis:

(1) The Commission recognizes motor vehicle ad valorem taxes as they are received without regard to when they are earned.

Some amounts are combined with the General Fund for reporting purposes,but are budgeted separately.

(2) Revenues Public Buildings, Roads and Bridges Fund 20,399,084.97 Severed Mineral Tax Fund 89,456.21 District #1 Landfill Expense Fund 33,579.84 Sharon Johnston Park Rebuilding Fund 20.74 Transportation Grant Fund 305,948.87 Animal Control Program Fund 64,672.04

(3) Expenditures Public Roads, Buildings and Bridges Fund 14,038,592.51 Sharon Johnston Park Rebuilding Fund 321,053.77 Animal Control Program Fund 450,238.31

(4) Other Financing Sources/(Uses), Net Public Roads, Buildings and Bridges Fund 301,986.72

Net Increase in Fund Balance - Budget to GAAP

(5) The amount reported as "fund balance" on the budgetary basis of accounting derives from the basis of accounting used in preparing the Commission's budget. This amount differs from the fund balance reported in the Statement of Revenues, Expenditures and Changes in Fund Balances because of the effect of transactions such as those described above.


1,281,986.92$

20,892,762.67

(14,809,884.59)

(301,986.72)

7,062,878.28$

Schedule of Funding Progress Defined Benefit Pension Plan

For the Year Ended September 30, 2012

Madison County Exhibit #13 Commission

62

Actuarial Valuation

Date

Actuarial Value of Assets (a)**

Actuarial Accrued Liability (AAL)

Entry Age (b)*

Unfunded AAL

(UAAL) (b-a)

Funded Ratio (a/b)

Covered Payroll

Percentage of Covered

Payroll [(b-a)/c]

09/30/2011**** $97,516,342 $149,146,567 $51,630,225 65.40% $44,471,875 116.10% 09/30/2010*** $98,478,211 $141,911,635 $43,433,424 69.40% $41,970,659 103.50% 09/30/2009 $99,103,026 $129,703,926 $30,600,900 76.40% $40,381,752 75.80%

* Reflects liability for cost of living benefit increases granted on or after October 1, 1978. ** Market Value of Assets as of September 30, 2011: $83,486,079. *** Reflects the impact of Act Number 2011-27, which closes the DROP program to new applicants after March 24, 2011. ****Reflects changes in actuarial assumptions.

Schedule of Funding Progress Other Postemployment Benefits For the Year Ended September 30, 2012


63

Actuarial Valuation

Date

Actuarial Value of Assets

(a)

Actuarial Accrued Liability (AAL)

Entry Age (b)*

Unfunded AAL

(UAAL) (b-a)

Funded Ratio (a/b)

Covered Payroll

(c)

UAAL as a Percentage of Covered

Payroll [(b-a)/c]

09/30/2010 $300,000 $157,829,756 $157,529,756 0.2% $40,798,283 386.1% 09/30/2008 $300,000 $137,872,120 $137,572,120 0.2% $40,072,761 343.7%

*As reported by the County.


64

Supplementary Information


Schedule of Expenditures of Federal AwardsFor the Year Ended September 30, 2012

Grantor's/Federal Grantor/ Federal Pass-ThroughPass-Through Grantor/ CFDA Grantor'sProgram Title Number Number

U. S. Department of AgriculturePassed Through Alabama Department of Education

Child Nutrition Cluster:School Breakfast Program 10.553 A31-0000National School Lunch Program:

Cash Assistance 10.555 A31-0000Non-Cash Assistance 10.555 A31-0000

Sub-Total National School Lunch ProgramSummer Food Service Program for Children 10.559 A31-0000

Sub-Total Child Nutrition Cluster Total U. S. Department of Agriculture

U. S. Department of Housing and Urban DevelopmentPassed Through Alabama Department of Economicand Community Affairs

Community Development Block Grants/State's Program andNonentitlement Grants in Hawaii 14.228 CE PF 10 031

U. S. Department of JusticeDirect Programs

Congressionally Recommended Awards 16.753 2009-D1-BX-0014Congressionally Recommended Awards 16.753 2009-D1-BX-0036

Sub-Total Congressionally Recommended Awards

Passed Through Alabama Department of Economicand Community Affairs

Violence Against Women Formula Grants 16.588 11-WF-LE-003ARRA-Violence Against Women Formula Grants, Recovery Act 16.588 09-EF-RPR-012

Sub-Total Violence Against Women Formula Grants (M)Total U. S. Department of Justice

U. S. Department of LaborPassed Through Alabama Department of Economicand Community Affairs

Workforce Investment Act National Emergency Grants (M) 17.277 OF 200008

U. S. Department of TransportationPassed Through Alabama Department of Transportation

Formula Grants for Other than Urbanized Areas 20.509 N/AARRA-Formula Grants for Other than Urbanized Areas, Recovery Act 20.509 N/A

Sub-Total Formula Grants for Other than Urbanized Areas Total U. S. Department of Transportation

Sub-Total Forward


Assistance Federal RevenuePeriod Total Share Recognized Expenditures

10/01/2011-09/30/2012 8,224.20$ 8,224.20$ 8,224.20$ 8,224.20$

10/01/2011-09/30/2012 12,328.30 12,328.30 12,328.30 12,328.30 10/01/2011-09/30/2012 925.77 925.77 925.77 925.77

13,254.07 13,254.07 13,254.07 13,254.07 10/01/2011-09/30/2012 152,242.32 152,242.32 152,242.32 152,242.32

173,720.59 173,720.59 173,720.59 173,720.59 173,720.59 173,720.59 173,720.59 173,720.59

11/22/2010-11/26/2012 284,365.61 140,000.00 140,000.00 140,000.00

10/01/2009-06/30/2012 175,000.00 175,000.00 72,950.00 72,950.00 08/01/2009-03/31/2013 1,500,000.00 1,500,000.00 270,931.16 270,931.16

1,675,000.00 1,675,000.00 343,881.16 343,881.16

10/01/2011-09/30/2012 119,209.04 89,952.35 89,952.35 89,952.35 09/01/2011-12/31/2011 34,439.23 25,829.42 25,829.42 25,829.42

153,648.27 115,781.77 115,781.77 115,781.77 1,828,648.27 1,790,781.77 459,662.93 459,662.93

05/16/2011-12/31/2012 3,222,344.61 3,222,344.61 1,141,387.86 1,141,387.86

10/01/2011-09/30/2012 313,635.00 232,933.00 134,315.00 134,315.00 10/01/2011-09/30/2012 536,067.00 536,067.00 6,435.00 6,435.00

849,702.00 769,000.00 140,750.00 140,750.00 849,702.00 769,000.00 140,750.00 140,750.00

6,358,781.08$ 6,095,846.97$ 2,055,521.38$ 2,055,521.38$

Budget


Schedule of Expenditures of Federal AwardsFor the Year Ended September 30, 2012

Grantor's/Federal Grantor/ Federal Pass-ThroughPass-Through Grantor/ CFDA Grantor'sProgram Title Number Number

Sub-Total Brought Forward

U. S. Department of EnergyDirect ProgramARRA-Energy Efficiency and Conservation Block

Grant Program-Recovery Act 81.128 N/A

U. S. Election Assistance CommissionPassed Through Alabama Secretary of State

Help America Vote Act Requirements Payments 90.401 N/A

U. S. Department of Homeland SecurityPassed Through Alabama Department of Homeland Security

Homeland Security Grant Program 97.067 09SHLHomeland Security Grant Program 97.067 09MALHomeland Security Grant Program 97.067 10SHL

Sub-Total Homeland Security Grant ProgramTotal U. S. Department of Homeland Security

Total Expenditures of Federal Awards

(M) = Major ProgramN/A = Not Available or Not Applicable

The accompanying Notes to the Schedule of Expenditures of Federal Awards are an integral part of this schedule.


Assistance Federal RevenuePeriod Total Share Recognized Expenditures

6,358,781.08$ 6,095,846.97$ 2,055,521.38$ 2,055,521.38$

10/01/2009-09/30/2012 420,300.00 420,300.00 48,000.00 48,000.00

10/01/2011-09/30/2012 97,167.11 92,308.75 92,308.75 92,308.75

10/01/2011-09/30/2012 84,784.00 84,784.00 84,784.00 84,784.00 10/01/2011-09/30/2012 5,400.00 5,400.00 5,400.00 5,400.00 10/01/2011-09/30/2012 49,916.82 49,916.82 49,916.82 49,916.82

140,100.82 140,100.82 140,100.82 140,100.82 140,100.82 140,100.82 140,100.82 140,100.82

7,016,349.01$ 6,748,556.54$ 2,335,930.95$ 2,335,930.95$

Budget

Notes to the Schedule of Expenditures of Federal Awards

For the Year Ended September 30, 2012


69

Note 1 – Basis of Presentation The accompanying Schedule of Expenditures of Federal Awards includes the federal grant activity of the Madison County Commission and is presented on the modified accrual basis of accounting. The information in this schedule is presented in accordance with the requirements of OMB Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations. Therefore, some amounts presented in this schedule may differ from amounts presented in or used in the preparation of the primary government financial statements.


70

Additional Information

Commission Members and Administrative Personnel October 1, 2011 through September 30, 2012


71

Commission Members Term Expires Hon. Mike Gillespie Chairman 2012 Hon. Roger Jones Member 2012 Hon. Faye Dyer Member 2012 Hon. Jerry Craig Member 2012 Hon. Dale W. Strong Member 2012 Hon. Phil Riddick Member 2012 Hon. Robert C. Harrison Member 2012 Administrative Personnel Mr. Howard Baites Administrator Appointed Ms. Judy Teague Chief Financial Director Retired 02/29/2012 Ms. Nancy Beams Chief Financial Director 09/28/2012

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


72

We have audited the financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the Madison County Commission (the “Commission”) as of and for the year ended September 30, 2012, which collectively comprise the Commission’s basic financial statements and have issued our report thereon dated November 15, 2013. We did not audit the financial statements of the Madison County Water Department, which represents 85% and 49%, respectively, of the assets and revenues of the Enterprise funds’ business-type activities. Those financial statements were as it relates to the amounts included for the Madison County Water Department, is based on the report of other auditors. 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. Internal Control Over Financial Reporting Management of the Commission is responsible for establishing and maintaining effective internal control over financial reporting. In planning and performing our audit, we considered the Commission’s internal control over financial reporting as a basis for designing our auditing procedures for the purpose of expressing our opinion on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the Commission’s internal control over financial reporting. Accordingly, we do not express an opinion on the effectiveness of the Commission’s internal control over financial reporting. 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 entity’s financial statements will not be prevented, or detected and corrected on a timely basis.




73

Our consideration of internal control over financial reporting was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control over financial reporting that might be deficiencies, significant deficiencies or material weaknesses. We did not identify any deficiencies in internal control over financial reporting that we consider to be material weaknesses, as defined above. However, we identified certain deficiencies in internal control over financial reporting, described in the accompanying Schedule of Findings and Questioned Costs as items 2012-02 and 2012-03 that we consider to be significant deficiencies in internal control over financial reporting. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance. Compliance and Other Matters As part of obtaining reasonable assurance about whether the Commission’s financial statements are free of material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts and grant agreements, noncompliance with which could have a direct and material effect on the determination of 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 no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards. However, we noted a certain additional matter that we reported to management of the Commission in the Schedule of State and Local Compliance and Other Findings. The Commission’s response to the findings identified in our audit is described in the accompanying Auditee Response/Corrective Action Plan. We did not audit the Commission’s response and, accordingly, we express no opinion on it.



This report is intended solely for the information and use of management, members of the Madison County Commission, the County Administrator, the Chief Financial Director, others within the entity, federal awarding agencies and pass-through entities and is not intended to be and should not be used by anyone other than these specified parties.

November 15, 2013


74

Chief Examiner Department of Examiners of Public Accounts

Exhibit #17

Report on Compliance With Requirements That Could Have a Direct and Material Effect on Each Major

Program and on Internal Control Over Compliance in Accordance With OMB Circular A-133


75

Independent Auditor's Report

Compliance We have audited the Madison County Commission’s (the “Commission”) compliance with the types of compliance requirements described in the OMB Circular A-133 Compliance Supplement that could have a direct and material effect on each of the Commission’s major federal programs for the year ended September 30, 2012. The Commission’s major federal programs are identified in the Summary of Examiner’s Results Section of the accompanying Schedule of Findings and Questioned Costs. Compliance with the requirements of laws, regulations, contracts and grants applicable to each of its major federal programs is the responsibility of the Commission’s management. Our responsibility is to express an opinion on the Commission’s compliance based on our audit. We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and OMB Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations. Those standards and OMB Circular A-133 require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types of compliance requirements referred to above that could have a direct and material effect on a major federal program occurred. An audit includes examining, on a test basis, evidence about the Commission’s compliance with those requirements and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Our audit does not provide a legal determination of the Commission’s compliance with those requirements. In our opinion, the Commission complied, in all material respects, with the compliance requirements referred to above that could have a direct and material effect on each of its major federal programs for the year ended September 30, 2012.




76

Internal Control Over Compliance Management of the Commission is responsible for establishing and maintaining effective internal control over compliance with requirements of laws, regulations, contracts and grants applicable to federal programs. In planning and performing our audit, we considered the Commission’s internal control over compliance with the requirements that could have a direct and material effect on a major federal program to determine the auditing procedures for the purpose of expressing our opinion on compliance and to test and report on internal control over compliance in accordance with OMB Circular A-133, but not for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, we do not express an opinion on the effectiveness of the Commission’s internal control over compliance. A deficiency in internal control over compliance exists when the design or operation of a control over compliance does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, noncompliance with a type of compliance requirement of a federal program on a timely basis. A material weakness in internal control over compliance is a deficiency, or combination of deficiencies, in internal control over compliance, such that there is a reasonable possibility that material noncompliance with a type of compliance requirement of a federal program will not be prevented, or detected and corrected, on a timely basis. Our consideration of the internal control over compliance was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control over compliance that might be deficiencies, significant deficiencies or material weaknesses. We did not identify any deficiencies in internal control over compliance that we consider to be material weaknesses, as defined above.



This report is intended solely for the information and use of management, members of the Madison County Commission, the County Administrator, the Chief Financial Director, others within the entity, federal awarding agencies and pass-through entities and is not intended to be and should not be used by anyone other than these specified parties.

November 15, 2013


77

Chief Examiner Department of Examiners of Public Accounts

Exhibit #18

Schedule of Findings and Questioned Costs For the Year Ended September 30, 2012


78

Section I – Summary of Examiner's Results

Financial Statements Type of opinion issued: Unqualified Internal control over financial reporting: Material weakness(es) identified? Yes X No Significant deficiency(ies) identified?

X Yes None reported

Noncompliance material to financial statements noted?

Yes X No

Federal Awards Internal control over major programs: Material weakness(es) identified? Yes X No Significant deficiency(ies) identified?

Yes X None reported

Type of auditor’s report issued on compliance for major programs:

Unqualified

Any audit findings disclosed that are required to be reported in accordance with Section 510(a) of OMB Circular A-133?

Yes X No Identification of major programs:

CFDA Numbers Name of Federal Program or Cluster

16.588 Violence Against Women Formula Grants 17.277 Workforce Investment Act National

Emergency Grants

Dollar threshold used to distinguish between Type A and Type B programs:

$300,000.00

Auditee qualified as low-risk auditee? Yes X No

Schedule of Findings and Questioned Costs For the Year Ended September 30, 2012


79

Section II – Financial Statement Findings (GAGAS)

Ref. No.

Type of Finding


Questioned Costs

2012-02

Internal Control

Finding: An adequate system of internal control requires all funds held in the Commission’s name be reflected on the Commission’s books. District 3 East road department maintained a bank account at the district office that was not included in the Commission’s books. Recommendation: All bank accounts held in the Commission’s name should be reflected on the Commission’s books.

2012-03 Internal Control

Finding: An adequate system of internal control requires deposits be made timely. Testing of private work contracts revealed receipts from the road department district offices were not always turned in to the Commission office timely for deposit. Recommendation: Receipts should be deposited in a timely manner.

Section III – Federal Awards Findings and Questioned Costs

Ref. No.

CFDA No.

Program


Questioned Costs

No matters were reportable.


80

Auditee Response/Corrective Action Plan

MADISON CouNTY CoMMISSION Office of Chairman

D ALE W. STRONG

November 20,2013

Mr. Ronald L. Jones Chief Examiner State of Alabama Department of Examiners

Of Public Accounts P. 0. Box 302251 Montgomery, Alabama 3 613 0-2251

Dear Mr. Jones:

Pursuant to your letter dated November 14, 2013 regarding the Madison County Commission audit for the period of October 1, 2011 through September 30, 2012, below is our Corrective Action Plan regarding the findings of the audit which is in compliance with the U.S. Office of Management and Budget Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations.

2012-02

2012-03

2012-01

Finding: An adequate system of internal control requires all funds held in the Commission's name be reflected on the Commission's books. District 3 East road department maintained a bank account at the district office that was not included in the Commission's books.

Response: The Commission has taken steps to ensure that all funds held in the Commission's name will be included on the Commission's books and that no bank accounts will be opened without proper authorization.

Finding: An adequate system of internal control requires deposits be made timely. Testing of private work contracts revealed receipts from the road department district offices were not always turned in to the Commission office timely for deposit.

Response: All districts have been notified that all receipts should be turned into the Commission office in a timely manner so that they may be deposited timely.

Finding: The Madison County Commission is authorized under the provisions of Act Number 80-643 , Acts of Alabama, to perform road related services, for a

I 00 Northside Square • Huntsville, Alabama 35801-4820 • Phone: 256-532-3795 • Fax: 256-532-6994

of3 Mr. Ronald L. Jones November 20, 2013

fee, and to sell road construction materials to churches, individuals, firms or corporations. The Commission can make available to its citizens the services only when such road related services and road building materials are not available to them at a reasonable cost from private enterprise. The Commission is required: 1) to provide the results of an examination of the availability of work, services and materials from private enterprise in the various areas of Madison County and to determine the cost for providing road related services and construction material; 2) to provide a written policy which will govern the performance by county road crews, use of equipment for road related services and the sale of road construction material by the county; 3) to publish annually in a newspaper of general circulation in Madison County, the written policy and pricing costs; 4) to ensure road related services performed are paid at the time of completion and any road construction material delivered is paid at the time the material is delivered; 5) to expend all moneys derived from payments of work or services performed for road projects; and 6) to require a written contract for services performed and maintain those contracts for a period not less than four years. The following issues were noted:

• The Commission did not perform an examination of the availability of work, services, and material from private enterprise in the County and did not determine the cost for providing road related services and construction material.

• The Commission did not provide a written policy regarding the services provided and the sales and related costs of road construction materials.

• The Commission did not publish the required written policy and pricing costs.

• Numerous instances were noted in which payment was not obtained timely upon completion of services performed or materials delivered.

• Funds received from private work in District 3 East were deposited in a bank account maintained at the district office and were expended for various items unrelated to road projects.

• The Commission did not account for the sequence of contracts issued and all contracts were not available for review.

Response:

• The Commission has contracted with a CPA Firm to determine the cost for providing road related services and construction material. The Commission will do this on an annual basis. The Commission will also determine whether the work, services, and materials are reasonably available on an annual basis.

• The Commission will establish written policies regarding the services provided and the sales and related costs of road construction materials.

• The Commission will publish the written policy and pricing costs.

of3 Mr. Ronald L. Jones November 20, 2013

• The Commission has notified all districts that payment for private work must be obtained at the time services are completed.

• The Commission has taken steps to ensure that all bank accounts are maintained by the Commission office and that all expenditures from Private Work revenue are related to road projects.

• The Commission has notified all districts that all contract numbers should be accounted for and made available for review.

Should you have any questions or need anything further, please do not hesitate to contact me.

DWS/dmw

ng Chairman I Madison County Commission

Madison County Commission - Alabama Local News, …media.al.com/wire/other/audit.pdf · Table of...

Documents

Transcript of Madison County Commission - Alabama Local News, …media.al.com/wire/other/audit.pdf · Table of...