Grand Traverse County, Michigan Year Ended Comprehensive ...

Grand Traverse County, Michigan

Year Ended December 31,

2012

Comprehensive Annual Financial

Report

Prepared by: Finance Department

Finance DirectorDean Bott

1

GRAND TRAVERSE COUNTY, MICHIGAN

Table of Contents

Page

Title Page 1Table of Contents 2

INTRODUCTORY SECTION 7

Principal Officials 8Letter of Transmittal 9Table of Organization 17GFOA Certificate of Achievement 18

FINANCIAL SECTION 19

Independent Auditors’ Report 21

Management’s Discussion and Analysis 25

Basic Financial StatementsGovernment-wide Financial Statements:

Statement of Net Position 38Statement of Activities 40

Fund Financial Statements:Balance Sheet – Governmental Funds 44Reconciliation of Fund Balances of Governmental Funds

to Net Position of Governmental Activities 46Statement of Revenues, Expenditures and Changes in Fund Balances –

Governmental Funds 48Reconciliation of Net Changes in Fund Balances of Governmental Funds

to Change in Net Position of Governmental Activities 50Statement of Revenues, Expenditures and Changes in

Fund Balances – Budget and Actual: General Fund 51Commission on Aging Fund 55Community Development Block Grant Fund 56

Statement of Net Position – Proprietary Funds 57Statement of Revenues, Expenses and Changes in

Net Position – Proprietary Funds 58Statement of Cash Flows – Proprietary Funds 59Statement of Fiduciary Assets and Liabilities - Agency Funds 61

Notes to Financial Statements 63

Required Supplementary InformationMunicipal Employees Retirement System - Defined Benefit Plan

Primary Government:Schedule of Funding Progress 104Schedule of Employer Contributions 104

2


Table of Contents

PageRetiree Health Care Plan - Other Postemployment Benefit Plan

Primary Government:Schedule of Funding Progress 105Schedule of Employer Contributions 105

Municipal Employees Retirement System - Defined Benefit PlanPavilions:

Schedule of Funding Progress 106Schedule of Employer Contributions 106

Municipal Employees Retirement System - Defined Benefit PlanRoad Commission Component Unit:


Retiree Health Care Plan - Other Postemployment Benefit PlanRoad Commission Component Unit:


Combining and Individual Fund Financial Statements and SchedulesNonmajor Governmental Funds:

Combining Balance Sheet – Nonmajor Governmental Funds 113Combining Statement of Revenues, Expenditures and Changes in Fund

Balances – Nonmajor Governmental Funds 114Combining Balance Sheet – Nonmajor Special Revenue Funds 116Combining Statement of Revenues, Expenditures and Changes in Fund

Balances – Nonmajor Special Revenue Funds 122Schedule of Revenues, Expenditures and Changes in Fund

Balances – Budget and Actual – Nonmajor Special Revenue Funds13th Circuit Court Fund 127Local Crime Victims Rights Fund 12886th District Court Fund 129County Special Projects Fund 130Parks and Recreation Fund 131Maple Bay Development Fund 132Friend of the Court Fund 133Health Department Fund 134Gypsy Moth Suppression Program Fund 135Veterans' Trust Fund 136Register of Deeds Automation Fund 137Indigent Health Care Fund 138Corrections P.A. 511 Fund 139County Law Library Fund 140Federal Equitable Sharing Fund 141Criminal Justice Training Act Fund 142Mitchell Creek Watershed Fund 143Housing Trust Fund 144

3


Table of Contents

PageSchedule of Revenues, Expenditures and Changes in Fund

Balances – Budget and Actual – Nonmajor Special Revenue Funds (Continued)Next Michigan Fund 145EDC Fund 146EPA Grant Fund 147Revenues Sharing Reserve Fund 148Child Care Fund 149Juvenile Accountability Fund 150Safe Havens Fund 151Corrections Officers Training Fund 152

Combining Balance Sheet – Nonmajor Debt Service Funds 153Combining Statement of Revenues, Expenditures and Changes in Fund

Balances – Nonmajor Debt Service Funds 154Combining Balance Sheet – Nonmajor Capital Projects Funds 155Combining Statement of Revenues, Expenditures and Changes in Fund

Balances – Nonmajor Capital Projects Funds 156Nonmajor Enterprise Funds:

Combining Statement of Net Position – Nonmajor Enterprise Funds 158Combining Statement of Revenues, Expenditures and Changes in

Net Position – Nonmajor Enterprise Funds 160Combining Statement of Cash Flows – Nonmajor Enterprise Funds 162

Internal Service Funds:Combining Statement of Net Position – Internal Service Funds 166Combining Statement of Revenues, Expenditures and Changes in

Net Position – Internal Service Funds 168Combining Statement of Cash Flows – Internal Service Funds 170

Agency Funds:Combining Statement of Fiduciary Assets and Liabilities – Agency Funds 174Combining Statement of Changes in Fiduciary Assets and Liabilities – Agency Funds 175

Component Units:Department of Public Works:

Combining Statement of Net Position 178Combining Statement of Revenues, Expenses and Changes in Net Position 179Combining Statement of Cash Flows 180

Drain Commission:Combining Balance Sheet 182Combining Statement of Revenues, Expenditures and Changes in Fund Balances 186

Brownfield Redevelopment Authority:Statement of Net Position and Governmental Funds Balance Sheet 190Statement of Activities and Governmental Funds Statement of

Revenues, Expenditures and Changes in Fund Balances 194Economic Development Corporation:

Balance Sheet 198Statement of Revenues, Expenditures and Changes in Fund Balance 199

4


Table of Contents

PageSTATISTICAL SECTION (UNAUDITED)

Financial Trends:Net Assets / Net Position by Component 204Changes in Net Assets / Net Position 206Fund Balances, Governmental Funds 210Changes in Fund Balances of Governmental Funds 212

Revenues Capacity:Governmental Activities Tax Revenues by Year 214Assessed and Estimated Actual Value of Taxable Property 216Direct and Overlapping Property Tax Rates 218Principal Property Taxpayers 220Property Taxes, Levies and Collections 222

Debt Capacity:Ratio of Outstanding Debt by Type 223Ratio of General Bonded Debt Outstanding 224Computation of Direct and Overlapping Governmental Activities Debt 225Computation of Legal Debt Margin Information 226

Demographic and Economic Information:Demographic and Economic Statistics 228Principal Employers 230

Operating Information:Full-Time Equivalent Government Employees by Function 232Operating Indicators by Function 234Capital Asset Statistics by Function 236

SINGLE AUDIT ACT COMPLIANCE

Independent Auditors' Report on the Schedule of Expenditures ofFederal Awards Required by OMB Circular A-133 241

Schedule of Expenditures of Federal Awards 242

Notes to Schedule of Expenditures of Federal Awards 244

Independent Auditors' Report on Internal Control over Financial Reporting and on Compliance and Other MattersBased on an Audit of Financial Statements in Performed in Accordance With Governmental Auditing Standards 247

Independent Auditors' Report on Compliance forEach Major Federal Program and on Internal ControlOver Compliance Required by OMB Circular A-133 249

5


Table of Contents

Page

Schedule of Findings and Questioned Costs 251

Summary Schedule of Prior Audit Findings 255

6

INTRODUCTORY SECTION

7


Principal Officials

For the Fiscal Year Ended December 31, 2012

Board of Commissioners

Administration

Rehmann Robson, Certified Public Accountants

David Benda - County Administrator/ControllerDean Bott - Finance Director

Herbert Lemcool - ChairpersonAddison "Sonny" Wheelock, Jr. - Vice Chairperson

Larry InmanRichard Thomas

Christine MaxbauerCharlie RennyDan Lathrop

Independent Auditors

8

Grand Traverse County Board of Commissioners andCitizens of Grand Traverse County, Michigan:

June 26, 2013

County government is the largest unit of local government in Michigan and is also the oldest politicalsubdivision of the state, having attained stature and importance before any other form of governmentnow in existence.

The Comprehensive Annual Financial Report (CAFR) of Grand Traverse County, Michigan, for thecalendar year ended December 31, 2012, is hereby submitted. In accordance with State Law, re:Public Act 34 of 2001, the revised Municipal Finance Act, Section 141.2303 (1) requires eachmunicipality within the state of Michigan to file an audit report annually with the MichiganDepartment of Treasury within 6 months from the end of its fiscal year or as otherwise provided in theuniform budgeting and accounting act, 1968 PA 2, MCL 141.421 to 141.440a. This report was preparedby the Grand Traverse County Finance Department. Responsibility for both the accuracy of the dataand the completeness and fairness of the presentation, including all disclosures, rests with theCounty. To the best of our knowledge and belief, the enclosed data is accurate in all materialrespects and is reported in a manner designed to present fairly the financial position and results ofoperations of the various funds of the government based upon a comprehensive framework of internalcontrol that has been established for this purpose. Since the cost of internal control should notexceed anticipated benefits, the objective is to provide reasonable, rather than absolute assurancethat the financial statements are free of any material misstatements.

Michigan law requires an annual audit of the County's financial statements. The Grand Traverse CountyBoard of Commissioners has engaged Rehmann, Independent Auditors, for this purpose. Theindependent auditors' unqualified ("clean") opinion has been included at the front of the financialsection of this report.

Management’s discussion and analysis (MD&A) immediately follows the independent auditors’ reportand provides a narrative introduction, overview, and analysis of the basic financial statements. TheMD&A complements this letter of transmittal and it should be read in conjunction with it.

ORGANIZATIONAL STRUCTURE

Grand Traverse County, Michigan, incorporated in 1851, is located approximately 250 miles north ofDetroit, in the northwestern section of Michigan’s Lower Peninsula. It currently occupies 485 squaremiles and serves a population of 89,112. In terms of population, this ranks Grand Traverse County asthe 22rd largest of 83 counties in the State of Michigan. Grand Traverse County is empowered to levy aproperty tax on real, personal and industrial property located within its boundaries.

9

·

·

· In October, preceding the beginning of the next fiscal year, and in conformance with Act 2, PA1968, as amended by Public Act 621 of 1978, (the Uniform Budgeting and Accounting Act), theFinance department prepares, and the County Administrator/Controller submits, a proposedoperating budget to the Ways and Means committee for review and adoption by the County Boardof Commissioners.

In May of each year, budget forms are provided to all county elected officials and departmentheads, outlining the procedures for requesting appropriations for the subsequent budget year.

In July of each year, the County Administrator/Controller and Deputy Administrator - FinanceDirector hold budget hearings with all elected officials and department heads to obtain additionalinformation regarding budget requests.

The Board of Commissioners exercises the legislative power of the County and determines all mattersof policy. The Board of Commissioners is comprised of nine commissioners who are elected from theirrespective districts. Each commissioner serves a term of two years. The county administrator is theappointed head of the administrative branch of the county government. The judicial branch ofgovernment consists of two Circuit Court judges, three District Court judges, and one Probate Courtjudge. All judges are elected at large for a six-year term. The Circuit and District Court judges areelected on two-year, staggered terms. The Offices of Prosecuting Attorney, Sheriff, Clerk, Treasurer,Register of Deeds, Drain Commissioner and County Surveyor are elected at large and serve for a four-year term.

Grand Traverse County provides a wide range of services, including public safety, health and welfareservices, community and economic development, and recreational and cultural activities. Certainfinancing and oversight services on the construction of Grand Traverse County public buildings areprovided through a component unit, a legally separate building authority, which functions, in essence,as a department of Grand Traverse County, and therefore has been included as an integral part ofGrand Traverse County's financial statements. Grand Traverse County is also financially accountablefor services provided by other legally separate component units of Grand Traverse County. Theseservices include the construction and maintenance of the county's system of roads and bridges by theGrand Traverse County Road Commission, and water supply and wastewater disposal services providedby the Grand Traverse County Department of Public Works. In addition, the Grand Traverse CountyDrain Commissioner provides for the construction and maintenance of drainage districts throughoutGrand Traverse County. The Grand Traverse County Economic Development Corporation provides themeans and methods to strengthen and revitalize the economy of the County. The Grand TraverseCounty Brownfield Redevelopment Authority promotes the revitalization of environmentally distressedareas/sites. The Grand Traverse County Land Bank Authority works to provide affordable housing andeconomic development opportunities from foreclosed properties. These six component units arereported separately within Grand Traverse County’s financial statements, and additional informationon them can be found in the notes to the financial statements.

Grand Traverse County prepares, adopts and maintains budgetary controls on an annual basis.Governmental fund types of Grand Traverse County are under formal budgetary control. Activities ofthe General fund, Special Revenue funds and Debt Service funds are included in the annualappropriated budget. The level of budgetary control, that is, the level at which expenditures cannotlegally exceed the appropriated amount, is established at the function level. Capital Project fundsare budgeted by project. Enterprise funds and Internal Service funds, which are Proprietary funds,are also subject to budgetary controls and are budgeted at the function level as well. The County'sprocedures in establishing its annual budget are as follows:

10

·

There are 54,665 parcels of property in the County for the 2013 Assessment year, an increase of 0.16%from 2012. The County Equalized Value (CEV) for Grand Traverse County for 2013 is $5,213,555,306,an increase of 1.65% from 2012, which was $5,128,714,773. Taxable value increased overall 2.578%countywide from 2012 to 2013.

Property Values and Home Sales

Subsequent to the County Administrator/Controller submitting the proposed budget to the Board ofCommissioners, a public hearing is conducted to obtain taxpayer comments. The Board ofCommissioners then makes any amendments to the budget it deems necessary and adopts the sameby formal resolution prior to December 31.

The Board of Commissioners is authorized to make adjustments to the various budgets as deemednecessary. Elected officials and department heads are authorized to amend budgets under theircontrol subject to the provisions of the County’s budget resolutions as amended.

Education

On a whole, Grand Traverse County residents tend to have a higher than average education comparedto the remainder of Michigan. The County is ranked fifth in the state with 92.4% of the populationhaving a high school diploma or more and ranked ninth in the state with 28.7% of the populationhaving a bachelor’s degree or more.

ECONOMIC CONDITION AND OUTLOOK

Population Trends

Total listings of property sales in Grand Traverse County sold in 2012 by real estate agents were 1,394,up from 1,100 in 2011. The average sales price in 2012 was $199,832, up from $182,163 in 2011. Incomparison, the average price for sales in Michigan in 2012 was $110,998, an increase from 2011 whichwas $105,139.

In 2012, the estimated population of Grand Traverse County was 89,112 according to the U.S. Census.This is an increase of 2.4% from the U.S. Census 2010 count of 86,986 and 14.8% from the U.S. Census2000 count of 77,654. Grand Traverse County was the third fastest growing county in Michiganbetween 2000 and 2010.

In 2010, 15.0% of the population of Grand Traverse County was 65 years old and over which is higherthan the 13.8% for Michigan overall. In comparison, only 12.3% of the County population in 1990 was65 years old and over. This trend of an aging population is expected to continue for the region.

Labor Market

In 2012, the annual average workforce in Grand Traverse County was 45,712 employees, representing63% of total regional employment. Health care and social assistance is the largest employmentindustry in the county. Over the next 30 years, Grand Traverse County is forecasted to experienceemployment growth more than 150% higher than the state average.

11

Cherry Industry

Tourism Industry

The Grand Traverse region’s largest industry is often considered to be tourism. With a market areaaccounting for close to 10 percent of the State’s travel volume, Grand Traverse County ranks secondamong Michigan counties in the number of pleasure trips hosted. An estimated 2 million personsvisited Grand Traverse County in 2006. The Grand Traverse visitor industry is forecast to grow from 2million visitors today to 2.8 million visitors by 2025. This includes hotel guests, business meeting andconvention travelers as well as seasonal property owners. The Grand Traverse visitor industry includes3,900 hotel rooms and an estimated 3,600 seasonal condominiums. The total economic impact fromthe visitor industry in Grand Traverse County is nearly $1 billion annually.

The U.S. cherry industry produces more than 650 million pounds of tart and sweet cherries each year.Michigan, mainly the Grand Traverse region, grows about 75 percent of the tart cherry crop.Generally, Michigan produces 200 to 250 million pounds of tart cherries with the total U.S. crop being275 to 350 million pounds. Sweet cherries primarily are grown in the Pacific Coast states, butMichigan joins the top four producers, harvesting about 20 percent of the crop each year. Michiganproduces about 50 million pounds of sweet cherries.

Wine Industry

The Traverse City area is home to numerous vintners who grow grapes and bottle wines on the scenicOld Mission and Leelanau Peninsulas. The wines are fast becoming among the finest offered nationallyand internationally. The ideal climate, with vineyards protected by winter snows and conditionsmoderated by proximity to Lake Michigan, has given rise to a wine industry that has been recognizedfor its quality and variety since the first winery opened here in 1974.

The two primary public school districts in Grand Traverse County are the Traverse City Area PublicSchools and the Kingsley Area Schools. Traverse City Area Public Schools includes 23 schools spreadover 285 square miles in three different counties. The district has a current enrollment of nearly11,000 students. Kingsley Area Schools includes three schools and covers the southern end of theCounty. The district has a current enrollment of over 1,300 students. Both districts have a dualenrollment program which enables high school students to enroll in classes offered by NorthwesternMichigan College and earn college credit while still in high school.

Northwestern Michigan College pioneered post-secondary education in northern Michigan when it wasestablished as Michigan’s first community college in 1951. The College provides collegiate levelinstruction in the liberal arts and in many occupational fields. The College’s Great Lakes MaritimeAcademy, the only maritime academy on the Great Lakes, prepares students to become merchantmarine officers. The college also is in partnership with 11 Michigan colleges and universities toprovide bachelor’s completion and advanced degrees.

12

In 2011, Traverse City made Outside magazine’s list of best places to live.

In 2012, U.S. News & World Reports listed Traverse City as one of the 10 Best Places to Retire.

MAJOR INTIATIVES

The Grand Vision

Boardman River Dams Study

The Grand Traverse region has been continuously recognized for its quality of life. This same highquality of life has been essential for the economic growth of the region. Recent recognition includesthe following:

In 2010, Traverse City was named one of America’s Best Places to Live by Livability.com.

The Grand Vision is a land use and transportation study providing a framework for propelling the GrandTraverse region for the next 50 years and beyond. Phase I consisted of numerous scenario planningand vision sessions with over 12,000 participants from through out the six-county region. The result issix guiding principles for the economic prosperity of Grand Traverse, Antrim, Benzie, Kalkaska,Leelanau and Wexford Counties. Phase II consists of transportation and land use systems engineeringand planning which is currently being completed. Implementation has included the creation of sixworking groups that target each principle and keep the Grand Vision moving forward.

The Grand Traverse County Board of Commissioners has decided to remove the Boardman and SabinDams on the Boardman River after a long study that included surrounding property owners, theMichigan Department of Natural Resources and Environment (DNRE), the U.S. Army Corps of Engineers,Grand Traverse County Road Commission, City of Traverse City, and Traverse City Light and Power.This decision is joined by the City of Traverse City decision to remove Brown Bridge Dam also on theBoardman River. The County and City are working with the Army Corps of Engineers and DNRE on aprocess for removal of the dams and restore the river. A project of this scale is substantial and willhave a significant impact on the community.

Arts and Culture

Quality of Life

Munson Healthcare, the parent company for Munson Medical Center in Traverse City and six otheraffiliated hospitals, is the region’s largest provider of health care and also the region’s largestemployer with over 5,000 employees. Munson serves 24 counties in northern Michigan and offers 41specialties including one of the nation’s top heart programs.

The arts and culture industry represents a diverse group in this region from the world-renownInterlochen Center for the Arts to self-employed artists often working from their homes. Regionally,the arts and cultural organization sector has grown significantly in the past five years and is animportant contributing force in the economy. Highlights of the region include Dennos MuseumCenter, the Traverse City Opera House, the Old Town Playhouse, and the Traverse SymphonyOrchestra.

Healthcare

13

Traverse City Film Festival

Every summer, the annual Traverse City Film Festival, founded by Academy Award winning filmmakerMichael Moore and co-founders, photographer John Robert Williams and New York Times bestsellingauthor Doug Stanton, presents the best of independent, foreign, and documentary films in severalindoor movie houses and one free outdoor location. The Festival also operates the historic StateTheatre as a highly successful year-round movie house.

Traverse City Beach Bums Professional Baseball Team and Hockeytown North

Averaging 200,000 fans a year, Wuerfel Park is home to the Traverse City Beach Bums professionalbaseball team of the Frontier League and draws fans from across northern Michigan. Across town,Centre Ice, known as Hockeytown North, is home to the training camp of the Detroit Red Wings and itsannual prospects tournament.

Economic Development

Grand Traverse County has recently been designated as a Next Michigan Development Corporation bythe Michigan Strategic Fund Board. As one of only five communities in Michigan, Grand TraverseCounty will be able to utilize key economic development tools to assist in the expansion and attractionof businesses that ship goods by two or more modes of transportation. With strong support from theMichigan Economic Development Corporation, the County will work in partnership with the City ofTraverse City, Garfield Charter Township, East Bay Charter Township and Blair Township.

The Grand Traverse County Economic Development Corporation was established in 1978 under theEconomic Development Corporations Act, PA 338 of 1974, as amended, to encourage and financiallyassist industrial and commercial enterprises in locating and expanding in the County. It has arevolving loan fund which provides gap financing for area businesses. The fund has a portfolio valuedat over $2.7 million.

National Cherry Festival

Traverse City is considered the Cherry Capital of the World. Its annual celebration, the NationalCherry Festival, is held every July and attracts over 500,000 people over eight days. At a minimum,the annual festival contributes $26 million to the region. The festival has been well recognized by theGovernor, the Michigan legislature, AAA Michigan and USA Today. The festival is also annually rated inthe Top 100 Festivals and Events in North America by the American Bus Association.

Since its inception, the Grand Traverse County Brownfield Redevelopment Authority has been one ofthe most active authorities in Michigan, working to revitalize environmentally distressed areas. Over$249 million of private investment has been added to the Grand Traverse County tax base as a resultof environmental clean up of 17 brownfield sites. The new investment and new businesses haveresulted in the creation of 1,650 jobs. Further, an additional $241 million in investments isanticipated in the continued redevelopment of these sites.

Brownfield Redevelopment

14

FINANCIAL INFORMATION

OTHER INFORMATION

Cash balances are invested according to the Investment Policy adopted by the Board ofCommissioners. The Board of Commissioners has authorized the Grand Traverse County Treasurer toinvest surplus funds of the County in accordance with those investments permitted by Act 20 of theMichigan Public Acts of 1943 as amended, M.C.L. 129.91. The Act generally allows the County todeposit funds in banks, savings and loan associations, and credit unions in the state of Michigan. TheAct also provides for investments in U.S. government obligations; certificates of deposit, savingsaccounts and deposit accounts of banks, savings and loans, and credit unions who are members of theFDIC, FSLIC, and NACU, respectively; commercial paper; U. S. government or federal agency obligationrepurchase agreements; bankers' acceptances of United States banks; and, with some restrictions,mutual funds.

Employees' Retirement Systems

The County participates in the Municipal Employees’ Retirement System of Michigan (MERS), and offersboth a defined benefit pension plan and a defined contribution pension plan for most full-timeemployees.

Risk Management

Grand Traverse County, through the Michigan Municipal Risk Management Authority (MMRMA), is self-insured for property, general, inland marine, crime, auto liability, and bonds. In addition, the Countyprovides an insured short term and long term disability benefit for employees and self-insures workers’compensation claims up to $350,000. Claims in excess of this amount are covered or indemnified by aspecific excess workers’ compensation re-insurance policy up to $5,000,000.

In 2010, Traverse City was designated as a “Coast Guard City”. Traverse City is one of only ten CoastGuard Cities in the United States. There are 136 Coast Guard personnel stationed at Air StationTraverse City located at Cherry Capital Airport. Traverse City is the No.1 retirement location forCoast Guard personnel.

Relevant Financial Policies

In accordance with the County's General Financial Policy, the General Fund objective is to establishand maintain an 18% level of unreserved fund balance based on the General Fund's most currentadopted operating budget.

The 100% Tax Payment Fund Policy, which authorizes appropriations from the 100% Tax Payment fund,requires that it be self-funded. Beginning in 1999, the fund retains 25% of the earnings, with thebalance available for distribution or appropriation to the General Fund. Since 2002, $450,000 of theamount available for appropriation has been designated as a capital appropriation.

Coast Guard City

15

Respectfully submitted,

Dean BottDeputy Administrator and Director of Finance

The Government Finance Officers Association of the United States and Canada (GFOA) awarded aCertificate of Achievement for Excellence in Financial Reporting to Grand Traverse County, Michiganfor its Comprehensive Annual Financial Report (CAFR) for the fiscal year ended December 31, 2011.This was the seventh consecutive year that the government has received this prestigious award. ThisCertificate of Achievement is the highest form of recognition for excellence in state and localgovernment financial reporting.

A Certificate of Achievement is valid for a period of one year only. We believe that our current CAFRcontinues to meet the Certificate of Achievement Program's requirements, and we are againsubmitting it to the GFOA to determine its eligibility for another certificate.

Preparation of this report could not have been accomplished without the efficient and dedicatedservices of the entire staff of the Finance Department and other county departments, and the variouselected and appointed officials. We would like to express our appreciation to everyone who assisted inand contributed to the preparation of this report. We would also like to thank the Board ofCommissioners for their interest and support in planning and conducting the financial operations of thecounty in a responsible and progressive manner.

In order to be awarded a Certificate of Achievement, the government published an easily readable andefficiently organized CAFR that satisfied both generally accepted accounting principles and applicablelegal requirements.

Awards and Acknowledgements

16

FINANCIAL SECTION

19

This page intentionally left blank.

20

INDEPENDENT AUDITORS' REPORT

June 26, 2013

Board of CommissionersGrand Traverse County, Michigan

Traverse City, Michigan

Report on the Financial Statements

Management's Responsibility for the Financial Statements

Auditors' Responsibility

We have audited the accompanying financial statements of the governmental activities, the business-type activities, the aggregate discretely presented component units, each major fund, and theaggregate remaining fund information of Grand Traverse County, Michigan (the “County”), as of andfor the year ended December 31, 2012, and the related notes to the financial statements, whichcollectively comprise the County’s basic financial statements as listed in the table of contents.

Management is responsible for the preparation and fair presentation of these financial statements inaccordance with accounting principles generally accepted in the United States of America; this includesthe design, implementation, and maintenance of internal control relevant to the preparation and fairpresentation of financial statements that are free from material misstatement, whether due to fraud orerror.

Our responsibility is to express opinions on these financial statements based on our audit. Weconducted our audit in accordance with auditing standards generally accepted in the United States ofAmerica 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 andperform the audit to obtain reasonable assurance about whether the financial statements are free frommaterial misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures inthe financial statements. The procedures selected depend on the auditor’s judgment, including theassessment of the risks of material misstatement of the financial statements, whether due to fraud orerror. In making those risk assessments, the auditor considers internal control relevant to the entity’spreparation and fair presentation of the financial statements in order to design audit procedures thatare appropriate in the circumstances, but not for the purpose of expressing an opinion on theeffectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit alsoincludes evaluating the appropriateness of accounting policies used and the reasonableness ofsignificant accounting estimates made by management, as well as evaluating the overall presentationof the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis forour audit opinions.

107 S. Cass St., Suite A

Traverse City, MI 49684

Ph: 231.946.3230

Fx: 231.946.3955

www.rehmann.com

21

Opinions

Other Matters

Required Supplementary Information

Other Information

Accounting principles generally accepted in the United States of America require that themanagement’s discussion and analysis and the schedules of funding progress and employer contributionsfor the pension and other postemployment benefit plans listed in the table of contents be presented tosupplement the basic financial statements. Such information, although not a part of the basic financialstatements, is required by the Governmental Accounting Standards Board, who considers it to be anessential part of financial reporting for placing the basic financial statements in an appropriateoperational, economic, or historical context. We have applied certain limited procedures to therequired supplementary information in accordance with auditing standards generally accepted in theUnited States of America, which consisted of inquiries of management about the methods of preparingthe information and comparing the information for consistency with management’s responses to ourinquiries, the basic financial statements, and other knowledge we obtained during our audit of thebasic financial statements. We do not express an opinion or provide any assurance on the informationbecause the limited procedures do not provide us with sufficient evidence to express an opinion orprovide any assurance.

Our audit was conducted for the purpose of forming opinions on the financial statements thatcollectively comprise the County’s basic financial statements. The combining and individual fundfinancial statements and schedules are presented for purposes of additional analysis and are not arequired part of the basic financial statements.

The combining and individual fund financial statements and schedules are the responsibility ofmanagement and were derived from and relate directly to the underlying accounting and other recordsused to prepare the basic financial statements. Such information has been subjected to the auditingprocedures applied in the audit of the basic financial statements and certain additional procedures,including comparing and reconciling such information directly to the underlying accounting and otherrecords used to prepare the basic financial statements or to the basic financial statements themselves,and other additional procedures in accordance with auditing standards generally accepted in the UnitedStates of America. In our opinion, the combining and individual fund financial statements and schedulesare fairly stated in all material respects in relation to the basic financial statements as a whole.

In our opinion, the financial statements referred to above present fairly, in all material respects, therespective financial position of the governmental activities, the business-type activities, the aggregatediscretely presented component units, each major fund, and the aggregate remaining fund informationof Grand Traverse County, Michigan, as of December 31, 2012, and the respective changes in financialposition and, where applicable, cash flows thereof and the respective budgetary comparison for theGeneral Fund and each major special revenue fund for the year then ended in conformity withaccounting principles generally accepted in the United States of America.

22

Other Reporting Required by Government Auditing Standards

The introductory section and statistical tables have not been subjected to the auditing proceduresapplied in the audit of the basic financial statements, and accordingly, we do not express an opinion orprovide any assurance on them.

In accordance with Government Auditing Standards, we have also issued our report dated June 26,2013, on our consideration of Grand Traverse County, Michigan’s internal control over financialreporting and our tests of its compliance with certain provisions of laws, regulations, contracts, andgrant agreements and other matters. The purpose of that report is to describe the scope of our testingof internal control over financial reporting and compliance and the results of that testing, and not toprovide an opinion on the internal control over financial reporting or on compliance. That report is anintegral part of an audit performed in accordance with Government Auditing Standards in consideringthe County's internal control over financial reporting and compliance.

23


24

MANAGEMENT'S DISCUSSION AND ANALYSIS

25


Management's Discussion and Analysis

Financial Highlights

·

·

·

·

·

Overview of the Financial Statements

As management of Grand Traverse County, Michigan, (the “County”) we offer readers of the County’s financialstatements this narrative overview and analysis of the financial activities of the County for the fiscal year endedDecember 31, 2012. We encourage readers to consider the information presented here in conjunction with additionalinformation that we have furnished in our letter of transmittal.

The assets and deferred outflows of the County’s governmental activities exceeded its liabilities and deferredinflows at the close of the most recent fiscal year by $53,350,453 (net position ). Of this amount, $6,732,977(unrestricted net position ) may be used to meet the County’s ongoing obligations to citizens and creditors.

Total net position of the governmental activities decreased by $2,072,804.

As of the close of the current fiscal year, the County’s governmental funds reported combined ending fundbalances of $17,102,499, a decrease of $2,088,233 in comparison with the prior year. Approximately 6 percent ofthis total amount, or $980,986, is available for spending at the government’s discretion.

At the end of the current fiscal year, total fund balance for the General Fund was $8,035,321 or 22 percent oftotal general fund expenditures and transfers out.

The County’s total debt increased by $818,525 or 4 percent during the current fiscal year. Total debt wasincreased by debt issued to construct a new health services building which was offset by principal payments madeby the County’s building authority, a blended component unit, changes in compensated absences, and paymentson notes during 2012.

As discussed in further detail in this discussion and analysis, the following represents the most significant financialhighlights for the year ended December 31, 2012.

This discussion and analysis is intended to serve as an introduction to the County’s basic financial statements. TheCounty’s basic financial statements comprise three components: 1) government-wide financial statements, 2) fundfinancial statements, and 3) notes to the financial statements. This report contains other supplementary informationin addition to the basic financial statements themselves.

Government-Wide Financial Statements. The government-wide financial statements are designed to provide readerswith a broad overview of the County’s finances, in a manner similar to a private sector business.

The statement of net position presents information on all of the County’s assets, deferred outflows, liabilities, anddeferred inflows, with the residual reported as net position. Over time, increases or decreases in net position mayserve as a useful indicator of whether the financial position of the County is improving or deteriorating.

The statement of activities presents information showing how the government’s net position changed during the mostrecent fiscal year. All changes in net position are reported as soon as the underlying event giving rise to the changeoccurs, regardless of the timing of related cash flows. Thus, revenues and expenses are reported in this statement forsome items that will only result in cash flows in future fiscal periods (e.g., uncollected special assessments).

26



The government-wide financial statements include not only Grand Traverse County itself (known as the primarygovernment), but also a legally separate Road Commission, Department of Public Works, Drain Commission, BrownfieldRedevelopment Authority, and Economic Development Corporation, for which Grand Traverse County is financiallyaccountable. Financial information for these component units is reported separately from the financial informationpresented for the primary government itself. The Grand Traverse County Building Authority and Grand Traverse CountyLand Bank Authority, although legally separate, function for all practical purposes as departments of the County, andtherefore have been included as an integral part of the primary government.

Both of the government-wide financial statements distinguish functions of the County that are principally supported bytaxes and intergovernmental revenues (governmental activities ) from other functions that are intended to recover allor a significant portion of their costs through user fees and charges (business-type activities ). The governmentalactivities of the County include legislative, judicial, general government, public safety (including the jail), health andwelfare and recreation and culture. The business-type activities of the County include the medical care facility,delinquent tax collections, inspections and solid waste.

The government-wide financial statements can be found as listed in the table of contents.

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

Governmental funds. Governmental funds are used to account for essentially the same functions reported asgovernmental activities in the government-wide financial statements. However, unlike the government-wide financialstatements, governmental fund financial statements focus on near term inflows and outflows of spendable resources,as well as on balances of spendable resources available at the end of the fiscal year. Such information may be usefulin evaluating a government’s near-term financing requirements.

Because the focus of governmental funds is narrower than that of the government-wide financial statements, it isuseful to compare the information presented for governmental funds with similar information presented forgovernmental activities in the government-wide financial statements. By doing so, readers may better understand thelong term impact of the government’s near term financing decisions. Both the governmental fund balance sheet andthe governmental fund statement of revenues, expenditures, and changes in fund balances provide a reconciliation tofacilitate this comparison between governmental funds and governmental activities.

The County maintains 36 individual governmental funds. Information is presented separately in the governmental fundbalance sheet and in the governmental fund statement of revenues, expenditures, and changes in fund balances forthe General, Commission on Aging, CDBG and Building Authority Lafranier DPW funds, each of which are considered tobe major funds. Data from the other 32 governmental funds are combined into a single, aggregated presentation.Individual fund data for each of these nonmajor governmental funds is provided in the form of combining statementselsewhere in this report.

The County adopts an annual appropriated budget for its general and special revenues funds.

The basic governmental fund financial statements can be found as listed in the table of contents.

27



The basic fiduciary fund financial statements can be found as listed in the table of contents.

Proprietary funds. The County maintains two different types of proprietary funds. Enterprise funds are used to reportthe same functions presented as business-type activities in the government-wide financial statements. The Countyuses enterprise funds to account for its medical care facility, delinquent tax collections, inspections and solid wasteoperations. Internal service funds are an accounting device used to accumulate and allocate costs internally amongthe County’s various functions. Grand Traverse County uses internal service funds to account for its computerequipment maintenance and replacement, insurances, fringe benefits, vehicle usage, and office supplies. Becausethese services predominantly benefit governmental rather than business-type functions, they have been includedwithin the governmental activities in the government-wide financial statements.

Proprietary funds provide the same type of information as the government-wide financial statements, only in moredetail. The proprietary fund financial statements provide separate information for the Grand Traverse Pavilions andthe Unpledged Tax Collection funds, both of which are considered to be major funds. The internal service funds arecombined into a separate single, aggregated presentation in the proprietary fund financial statements. Individual funddata for nonmajor enterprise funds and internal service funds are provided in the form of combining statementselsewhere in this report.

The basic proprietary fund financial statements can be found as listed in the table of contents.

Fiduciary funds. Fiduciary funds are used to account for resources held for the benefit of parties outside thegovernment. Fiduciary funds are not reflected in the government-wide financial statements because the resources ofthose funds are not available to support the County’s own programs. The accounting used for fiduciary funds is muchlike that used for proprietary funds.

Notes to the financial statements. The notes provide additional information that is essential to a full understandingof the data provided in the government-wide and fund financial statements. The notes to the financial statements canbe found as listed in the table of contents.

Other information. In addition to the basic financial statements and accompanying notes, this report also presentscertain required supplementary information concerning the County’s progress in funding its obligation to provideretirement and other post employment benefits to its employees. Required supplementary information (RSI) can befound as listed in the table of contents.

The combining and individual fund financial statements and schedules are presented immediately following therequired supplementary information. Combining and individual fund statements and schedules can be found as listedin the table of contents, with the statistical data and single audit information immediately following.

Government-Wide Financial Analysis

As previously stated, net position may serve over time as a useful indicator of a government’s financial position. Inthe case of the County, assets and deferred outflows exceeded liabilities and deferred inflows by $88,798,053 at theclose of the most recent fiscal year.

28



Net Position

Governmental Activities Business-type Activities Total

2012 2011 2012 2011 2012 2011Assets

Current and other assets 29,403,922$ 30,201,319$ 26,287,096$ 25,941,725$ 55,691,018$ 56,143,044$ Capital assets, net 47,424,063 43,694,506 25,534,818 25,998,581 72,958,881 69,693,087

Total assets 76,827,985 73,895,825 51,821,914 51,940,306 128,649,899 125,836,131

Deferred outflowsof resources - - 453,885 485,141 453,885 485,141

LiabilitiesLong-term liabilities 12,630,802 9,619,540 11,113,215 13,305,952 23,744,017 22,925,492 Other liabilities 8,346,306 6,337,591 2,965,471 2,541,052 11,311,777 8,878,643

Total liabilities 20,977,108 15,957,131 14,078,686 15,847,004 35,055,794 31,804,135

Deferred inflowsof resources 2,500,424 2,515,437 2,749,513 2,750,000 5,249,937 5,265,437

Net positionNet investment in

capital assets 36,440,367 35,667,866 14,927,931 13,708,093 51,368,298 49,375,959 Restricted 10,177,109 10,367,671 - - 10,177,109 10,367,671 Unrestricted 6,732,977 9,387,720 20,519,669 20,120,350 27,252,646 29,508,070

Total net position 53,350,453$ 55,423,257$ 35,447,600$ 33,828,443$ 88,798,053$ 89,251,700$

One of the largest portions of the County’s net position (57.9 percent) reflects its net investment in capital assets(e.g., land, buildings, machinery and equipment), less any related debt used to acquire those assets that is stilloutstanding. The County uses these capital assets to provide services to citizens; consequently, these assets are notavailable for future spending. Although the County’s investment in its capital assets is reported net of related debt, itshould be noted that the resources needed to repay this debt must be provided from other sources, since the capitalassets themselves cannot be used to liquidate these liabilities.

An additional portion of the County’s net position (11.5 percent) represents resources that are subject to externalrestrictions on how they may be used. The remaining balance of unrestricted net position (30.7 percent or$27,252,646) may be used to meet the County’s ongoing obligations to citizens and creditors.

At the end of the current fiscal year, the County is able to report positive balances in all categories of net position,both for the government as a whole, as well as for its separate governmental and business‑type activities.

The County’s net position decreased by $453,647 during the current fiscal year. The overall decrease in governmentalactivities net position of $2,072,804 was offset by an increase in business-type activities net position of $1,619,157.

29



Change in Net Position


2012 2011 2012 2011 2012 2011Revenues

Program revenues:Charges for services 10,440,524$ 9,563,474$ 25,932,750$ 24,830,764$ 36,373,274$ 34,394,238$ Operating grants

and contributions 9,827,907 10,033,277 4,069,658 4,017,299 13,897,565 14,050,576 Capital grants

and contributions 165,425 387,165 - - 165,425 387,165 General revenues:

Property taxes 24,500,804 24,008,006 2,882,440 2,754,293 27,383,244 26,762,299 Other 155,715 244,362 - 28,670 155,715 273,032

Total revenues 45,090,375 44,236,284 32,884,848 31,631,026 77,975,223 75,867,310

ExpensesLegislative 382,618 400,622 - - 382,618 400,622 Judicial 10,569,967 10,399,856 - - 10,569,967 10,399,856 General government 8,837,473 9,075,699 - - 8,837,473 9,075,699 Public safety 16,544,278 16,452,721 - - 16,544,278 16,452,721 Health and welfare 11,047,417 10,661,950 - - 11,047,417 10,661,950 Economic development 9,279 444,833 - - 9,279 444,833 Recreation and cultural 888,371 915,100 - - 888,371 915,100 Interest on long-term debt 442,275 360,118 - - 442,275 360,118 Inspections - - 1,040,985 1,068,636 1,040,985 1,068,636 Medical care facility - - 28,047,129 25,439,219 28,047,129 25,439,219 Solid waste - - 339,012 344,790 339,012 344,790 Delinquent taxes - - 280,066 192,938 280,066 192,938

Total expenses 48,721,678 48,710,899 29,707,192 27,045,583 78,428,870 75,756,482

Change in net positionbefore transfers (3,631,303) (4,474,615) 3,177,656 4,585,443 (453,647) 110,828

Transfers 1,558,499 2,019,942 (1,558,499) (2,019,942) - -

Change in net position (2,072,804) (2,454,673) 1,619,157 2,565,501 (453,647) 110,828

Net position, beginning of year, as restated 55,423,257 57,877,930 33,828,443 31,262,942 89,251,700 89,140,872

Net position, end of year 53,350,453$ 55,423,257$ 35,447,600$ 33,828,443$ 88,798,053$ 89,251,700$

30



·

· The planned or allowed use of fund balances to maintain programs and services.

Governmental activities. Governmental activities decreased the County’s net position by $2,072,804. Key elementsof this decrease are as follows:

The calling and redemption of the outstanding Building Authority Woodmere Law Enforcement Building debt.

Expenses and Program Revenues ‑ Governmental Activities

-

2,000,000

4,000,000

6,000,000

8,000,000

10,000,000

12,000,000

14,000,000

16,000,000

18,000,000

Legislative Judicial Generalgovernment

Public safety Health andwelfare

Economicdevelopment

Recreationand cultural

Interest onlong-term

debt

Expenses

Program Revenues

31



·

·

·

Business‑type activities. Business‑type activities increased the County’s net position by $1,619,157. Key elements ofthis increase are as follows:

Revenues by Source - Governmental Activities

Expenses and Program Revenues ‑ Business‑type Activities

Total nonoperating revenues of $2,400,229 for the Grand Traverse Pavilions Medical Care Facility which offset anoperating loss of $864,680.

Operating income of $1,185,853 for the unpledged tax collection fund offset by net transfers out of $1,371,808.

Operating income of $401,825 for the other enterprise funds offset by net transfers out of $186,691.

Charges for services23%

Operating grants and contributions

22%

Capital grants and contributions

1%

Property taxes54%

Other0%

-

5,000,000

10,000,000

15,000,000

20,000,000

25,000,000

30,000,000

Inspections Medical care facility Solid waste Delinquent taxes

Expenses

Program Revenues

32



Revenues by Source – Business-type Activities

The fund balance of the County’s General Fund increased by $264,403 during the current fiscal year. The mainreasons for this increase were additional revenues from property sales and transfers out were less than budgeted.

The Lafranier DPW debt fund had a decrease in the fund deficit of $165,000. The decrease was due to the fact thatthe General Fund made the scheduled lease payment during the fiscal year.

The Commission on Aging Fund had an increase in fund balance of $95,685 in 2012. This increase in fund balance wasdue primarily to the fact that expenditures in total were less than budgeted.

The CDBG fund had an increase in fund balance of $59,908. This increase was attributable mainly to program incomeresulting from home improvement loan repayments.

Financial Analysis of the County’s Funds

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

Governmental funds. The focus of the County’s governmental funds is to provide information on near-term inflows,outflows, and balances of spendable resources. Such information is useful in assessing the County’s financingrequirements. In particular, unassigned fund balance may serve as a useful measure of a government’s net resourcesavailable for spending at the end of the fiscal year.

As of the end of the current fiscal year, the County’s governmental funds reported combined ending fund balances of$17,102,499, a decrease of $2,088,233 in comparison with the prior year. Approximately 6 percent of this totalamount, $980,986, constitutes unassigned fund balance, which is available for spending at the County’s discretion.The remainder of fund balance is not available for spending at the County’s discretion because it is nonspendable$3,440,291; restricted $9,949,428; committed $216,284 or assigned $2,515,510.

The General Fund is the chief operating fund of the County. At the end of the current fiscal year, unassigned fundbalance of the General Fund was $3,975,986 while total fund balance was $8,035,321. As a measure of the GeneralFund’s liquidity, it may be useful to compare unassigned fund balance to total fund expenditures. Unassigned fundbalance represents 11.0 percent of total General Fund expenditures and transfers out.

Charges for services, 79%

Operating grants and contributions

12%

Property taxes9%

33



General Fund Budgetary Highlights

Capital Assets and Debt Administration

Capital Assets (Net of Depreciation)


2012 2011 2012 2011 2012 2011

Land 15,639,877$ 15,639,877$ 2,307,946$ 2,259,458$ 17,947,823$ 17,899,335$ Construction in progress - 809,339 471,494 38,232 471,494 847,571 Land improvements 1,026,180 1,109,424 1,017,175 1,107,697 2,043,355 2,217,121 Infrastructure 257,004 329,253 - - 257,004 329,253 Buildings and improvements 27,928,183 23,129,717 21,362,216 22,228,433 49,290,399 45,358,150 Furniture and equipment 2,089,558 2,065,623 326,289 309,130 2,415,847 2,374,753 Vehicles and equipment 483,261 611,273 49,698 55,631 532,959 666,904

Total 47,424,063$ 43,694,506$ 25,534,818$ 25,998,581$ 72,958,881$ 69,693,087$

Long-term Debt


2012 2011 2012 2011 2012 2011

General obligation bonds 11,030,000$ 8,025,000$ 10,500,000$ 12,725,000$ 21,530,000$ 20,750,000$ Central services notes

payable - 1,640 - - - 1,640 Less deferred amounts for:

issuance discount (46,304) - - - (46,304) - Plus deferred amounts for:

issuance premium - - 106,887 106,887 106,887 106,887 Compensated absences 1,647,106 1,592,900 506,328 474,065 2,153,434 2,066,965

Total 12,630,802$ 9,619,540$ 11,113,215$ 13,305,952$ 23,744,017$ 22,925,492$

Long-term debt. At the end of the current fiscal year, the County had total debt outstanding of $23,744,017. Of thisamount, $21,530,000 comprises debt backed by the full faith and credit of the County. The remainder of the County’sdebt represents notes payable and compensated absences.

Differences between the original and final amended budgets for expenditures resulted in a net increase of $257,434 inappropriations. The major increases in appropriations were in capital outlay expenditures relating to public safetyamounting to $210,335 and an increased appropriation to the Building Authority of $199,189 to cover the debt serviceon the new health services building. The increased appropriations were offset by a decrease in appropriations of$209,000 to the child care fund. The net increase in appropriations was covered by increased tax revenues and fromadditional charges for services or fee revenues associated with property sales within the County.

Capital assets. The County’s net investment in capital assets for its governmental and business-type activities as ofDecember 31, 2012, amounted to $51,368,298. This investment in capital assets includes land, buildings andimprovements, machinery and equipment, and vehicles less related debt. The total increase in the County’s netinvestment in capital assets for the current fiscal year was 2 percent for the governmental activities and 9 percent forthe business-type activities.

Additional information on the County’s capital assets can be found in notes to the financial statements.

34



·

·

The following factors were considered in preparing the County’s budget for the 2013 fiscal year:

·

·

·

This financial report is designed to provide a general overview of the County’s finances for all those with an interest inthe government’s finances. Questions concerning any of the information provided in this report or requests foradditional financial information should be addressed to the Finance Director’s office, 400 Boardman Avenue, TraverseCity, Michigan 49684.

State statutes limit the amount of general obligation debt a governmental entity may issue to 10 percent of its totalassessed valuation. The current debt limitation for the County is approximately $512,871,477, which is significantly inexcess of the County’s outstanding general obligation debt.

Additional information on the County’s long‑term debt can be found in notes to the financial statements.

Economic Factors and Next Year’s Budgets and Rates

It is anticipated that the taxable value for property tax revenues will increase by approximately 2 percent. Otherrevenue sources are estimated to increase slightly.

There are no open labor contracts going into 2013 and salary and benefit costs were increased based on estimatedcontract settlements.

Moody’s Investors Service – Aa3. Bonds which are rated Aa3 are judged to be of a high quality by all standards.

Overall the outlook for Grand Traverse County remains positive and is improving. The anticipated growth intaxable value should reduce the need to use available fund balances as a means of maintaining current services

Requests for Information

The County’s total debt increased by $818,525 or 3.4 percent during the current fiscal year. Total debt was increasedby debt issued to construct a new health services building which was offset by principal payments made by theCounty’s building authority, a blended component unit, changes in compensated absences, and payments on notesduring 2012.

The County maintains bond ratings from Standard & Poor’s and Moody’s Investors Services, which are as follows:

Standard & Poor’s – AA. Debt rated AA has a very strong capacity to pay interest and repay principal and differsfrom the higher rated issues only in small degrees.

35


36

BASIC FINANCIAL STATEMENTS

37


Statement of Net PositionDecember 31, 2012

Primary Government

Governmental Business-typeActivities Activities Total

AssetsCash and cash equivalents 7,586,314$ 10,463,674$ 18,049,988$ Investments 4,772,917 4,600,000 9,372,917 Receivables, net:

Accounts 1,703,062 3,882,173 5,585,235 Taxes 2,150,792 7,568,424 9,719,216 Leases - - - Interest 73,330 647,119 720,449 Due from other governments 1,947,722 1,450 1,949,172 Loans 2,397,817 - 2,397,817

Due from component unit 4,007,884 - 4,007,884 Internal balances 1,036,305 (1,036,305) - Inventories - 136,774 136,774 Prepaid items and other assets 3,727,779 23,787 3,751,566 Restricted cash - - - Land 15,639,877 2,307,946 17,947,823 Construction in progress - 471,494 471,494 Depreciable capital assets, net 31,784,186 22,755,378 54,539,564

Total assets 76,827,985 51,821,914 128,649,899

Deferred outflows of resourcesDeferred loss on advance refunding - 453,885 453,885

LiabilitiesAccounts payable 2,269,810 403,696 2,673,506 Accrued liabilities 1,045,068 1,202,023 2,247,091 Accrued interest payable 39,815 86,866 126,681 Due to other governments 227,637 645,864 873,501 Due to primary government - - - Unearned revenues 3,457,765 627,022 4,084,787 Advance from State - - - Long-term debt:

Due within one year 578,544 2,409,816 2,988,360 Due in more than one year 12,052,258 8,703,399 20,755,657

Net other postemployment benefits obligation 1,306,211 - 1,306,211

Total liabilities 20,977,108 14,078,686 35,055,794

Deferred inflows of resourcesProperty taxes levied for subsequent year 2,500,424 2,749,513 5,249,937

Net positionNet investment in capital assets 36,440,367 14,927,931 51,368,298 Restricted for:

Nonexpendable trusts 227,681 - 227,681 Revenue sharing reserve 3,614,163 - 3,614,163 State mandated programs 6,335,265 - 6,335,265

Unrestricted 6,732,977 20,519,669 27,252,646

Total net position 53,350,453$ 35,447,600$ 88,798,053$

The accompanying notes are an integral part of these financial statements.

38

Component Units

Brownfield EconomicRoad Department Drain Redevelopment Development

Commission of Public Works Commission Authority Corporation

2,417,301$ 219,272$ 141,068$ 3,018,163$ -$ - - - - -

549,011 141,852 - 34,150 - - - - 47,366 - - 32,727,960 - - - - 194,678 - 3,768 -

2,262,932 859,462 - - - - - - - - - - - - - - - - - -

963,223 - - - - 78,133 8,937 - 7,371,013 -

611,493 - - - - 27,690,875 400,000 - - -

32,857 - - - - 42,031,664 7,297,126 - - -

76,637,489 41,849,287 141,068 10,474,460 -

- - - - -

692,201 363,672 350 7,072,873 - 281,152 179,269 - - -

- 217,629 - - - - 364,694 - - - - 3,866,447 - 141,437 -

40,815 - - 3,768 - 150,637 - - - -

1,130,000 3,070,384 - 88,814 - 988,653 31,641,207 - 1,342,647 -

2,056,716 - - - -

5,340,174 39,703,302 350 8,649,539 -

- - - 42,920 -

67,790,396 1,911,875 - - -

- - - - - - - - - - - - - - -

3,506,919 234,110 140,718 1,782,001 -

71,297,315$ 2,145,985$ 140,718$ 1,782,001$ -$

39


Statement of ActivitiesFor the Year Ended December 31, 2012

Program Revenues

Indirect Operating Capital NetExpense Charges Grants and Grants and (Expense)

Functions / Programs Expenses Allocation for Services Contributions Contributions Revenues

Primary governmentGovernmental activities:

Legislative 422,352$ (39,734)$ 700$ -$ -$ (381,918)$ Judicial 8,805,868 1,764,099 2,831,995 3,695,329 - (4,042,643) General government 10,957,234 (2,119,761) 3,238,497 440,397 164,326 (4,994,253) Public safety 16,486,332 57,946 1,508,723 2,203,763 1,099 (12,830,693) Health and welfare 10,857,810 189,607 2,441,709 3,482,513 - (5,123,195) Economic development 9,279 - - - - (9,279) Recreation and cultural 888,371 - 418,900 5,905 - (463,566) Interest on long-term debt 442,275 - - - - (442,275)

Total governmental activities 48,869,521 (147,843) 10,440,524 9,827,907 165,425 (28,287,822)

Business-type activities:Inspections 918,545 122,440 989,981 - - (51,004) Medical Care Facility (Pavilions) 28,047,129 - 24,036,668 2,663,570 - (1,346,891) Solid waste 313,609 25,403 357,168 40,040 - 58,196 Delinquent tax collection

and administration 280,066 - 548,933 1,366,048 - 1,634,915

Total business-type activities 29,559,349 147,843 25,932,750 4,069,658 - 295,216

Total primary government 78,428,870$ -$ 36,373,274$ 13,897,565$ 165,425$ (27,992,606)$

Component unitsRoad Commission 10,923,951$ -$ 1,159,927$ 7,446,005$ 2,423,171$ 105,152$ Department of Public Works 6,986,231 - 1,075,019 5,659,486 - (251,726) Drain Commission 352 - - - - (352) Brownfield Redevelopment

Authority 2,795,445 - - - - (2,795,445) Economic Development

Corporation 19,537 - - - - (19,537)

Total component units 20,725,516$ -$ 2,234,946$ 13,105,491$ 2,423,171$ (2,961,908)$

continued…

40


41


Statement of Activities For the Year Ended December 31, 2012

Primary Government

Governmental Business-typeActivities Activities Total

Changes in net positionNet (expense) revenues (28,287,822)$ 295,216$ (27,992,606)$

General revenues:Property taxes 24,500,804 2,882,440 27,383,244 Unrestricted investment earnings 155,715 - 155,715

Transfers - internal activities 1,558,499 (1,558,499) -

Total general revenues and transfers 26,215,018 1,323,941 27,538,959

Change in net position (2,072,804) 1,619,157 (453,647)

Net position, beginning of year, as restated 55,423,257 33,828,443 89,251,700

Net position, end of year 53,350,453$ 35,447,600$ 88,798,053$


42

Component Units

Brownfield EconomicRoad Department Drain Redevelopment Development

Commission of Public Works Commission Authority Corporation

105,152$ (251,726)$ (352)$ (2,795,445)$ (19,537)$

- - - 1,510,546 - 6,070 49 52 12,169 21

- - - - -

6,070 49 52 1,522,715 21

111,222 (251,677) (300) (1,272,730) (19,516)

71,186,093 2,397,662 141,018 3,054,731 19,516

71,297,315$ 2,145,985$ 140,718$ 1,782,001$ -$

concluded

43


Balance SheetGovernmental FundsDecember 31, 2012

BuildingAuthority

Commission LafranierGeneral on Aging CDBG DPW

AssetsCash and cash equivalents 604,008$ 397,232$ -$ -$ Investments 2,584,483 1,741,000 - - Receivables, net:

Accounts 541,062 1,500 - - Loans - - 1,666,156 - Taxes - 2,150,792 - - Interest 73,330 - - - Due from State 391,543 - 91,194 - Due from other governments 616 - - -

Due from other funds 1,429,293 2,403 - - Due from component unit 4,007,884 - - - Prepaid items and other assets 3,040,614 775 - - Advance to other funds 396,016 - - -

Total assets 13,068,849$ 4,293,702$ 1,757,350$ -$

LiabilitiesAccounts payable 803,127$ 65,606$ 1,990$ -$ Accrued liabilities 559,624 61,932 3,005 - Due to other funds - - 22,686 - Due to State - - - - Due to other governments - - - - Advance from other funds 3,614,163 - - - Unearned revenues 56,614 - - 1,680,000

Total liabilities 5,033,528 127,538 27,681 1,680,000

Deferred inflows of resourcesProperty taxes levied for subsequent year - 2,500,424 - - Unavailable revenues - loans receivable - - 1,666,156 -

Total deferred inflows of resources - 2,500,424 1,666,156 -

Fund balancesNonspendable 3,434,335 775 - - Restricted - 1,440,841 63,513 - Committed - - - - Assigned 625,000 224,124 - - Unassigned (deficit) 3,975,986 - - (1,680,000)

Total fund balances 8,035,321 1,665,740 63,513 (1,680,000)

Total liabilities, deferred inflows of resourcesand fund balances 13,068,849$ 4,293,702$ 1,757,350$ -$


44

Nonmajor TotalGovernmental Governmental

Funds Funds

6,038,485$ 7,039,725$ 204,434 4,529,917

1,009,063 1,551,625 731,661 2,397,817

- 2,150,792 - 73,330

1,295,747 1,778,484 168,622 169,238 23,379 1,455,075

- 4,007,884 5,181 3,046,570

3,614,163 4,010,179

13,090,735$ 32,210,636$

817,043$ 1,687,766$ 178,619 803,180 116,601 139,287 47,097 47,097

180,540 180,540 396,016 4,010,179

1,721,151 3,457,765

3,457,067 10,325,814

- 2,500,424 615,743 2,281,899

615,743 4,782,323

5,181 3,440,291 8,445,074 9,949,428

216,284 216,284 1,666,386 2,515,510

(1,315,000) 980,986

9,017,925 17,102,499

13,090,735$ 32,210,636$

45


Reconciliation Fund Balances of Governmental Fundsto Net Position of Governmental ActivitiesDecember 31, 2012

Fund balances - total governmental funds 17,102,499$

Capital assets not being depreciated 15,639,877 Capital assets being depreciated, net 31,784,186 Less amounts accounted for in governmental type internal service funds (387,784)

Unavailable long-term loans receivable 2,281,899

Net position of governmental activities accounted for in internal service funds 874,395

Unamortized bond discount 46,304 Bonds payable (11,030,000) Compensated absences (1,614,897) Accrued interest on long-term liabilities (39,815) Other postemployment benefits obligation (1,306,211)

Net position of governmental activities 53,350,453$


therefore are not reported in the funds.

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

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

Because the focus of governmental funds is on short-term financing, some assets will

Internal service funds are used by management to charge the costs of certain activities,

Certain liabilities, such as bonds payable, are not due and payable in the current period, and

not be available to pay for current-period expenditures. Some of these assets (such as loanand lease receivables) are offset by deferred inflows of resources in the governmental funds,and thus are not included in fund balance.

such as insurance and other centralized costs, to individual funds. The assets and liabilitiesof internal service funds are included in governmental activities in the statement of net position.

46


47


Statement of Revenues, Expendituresand Changes in Fund Balances - Governmental FundsFor the Year Ended December 31, 2012

BuildingAuthority

Commission LafranierGeneral on Aging CDBG DPW

RevenuesTaxes 21,990,814$ 2,509,990$ -$ -$ Licenses and permits 123,968 - - - Intergovernmental:

Federal sources 163,031 - 231,591 - State sources 1,344,911 - - - Local sources 1,745,116 32,585 - -

Charges for services 4,986,992 276,873 - - Fines and forfeitures 93,339 - - - Reimbursements 3,061,890 - - - Contributions 19,909 - - - Rental revenues 517,443 - - - Interest revenues 113,796 10,632 - - Other revenues 3,567 30,535 58,723 -

Total revenues 34,164,776 2,860,615 290,314 -

ExpendituresCurrent:

Legislative 421,457 - - - Judicial 2,420,234 - - - General government 7,973,273 - - - Public safety 14,989,535 - - - Health and welfare 472,710 2,754,733 230,406 - Economic development - - - - Recreation and cultural - - - - Debt service: -

Principal - - - - Interest and fiscal charges - - - -

Capital outlay 192,678 10,485 - -

Total expenditures 26,469,887 2,765,218 230,406 -

Revenues over (under) expenditures 7,694,889 95,397 59,908 -

Other financing sources (uses)Issuance of long-term debt - - - - Discount on issuance of long-term debt - - - - Payment to refunding bond escrow agent - - - - Proceeds from sale of capital assets 16,365 288 - - Transfers in 2,554,691 - - 165,000 Transfers out (10,001,542) - - -

Total other financing sources (uses) (7,430,486) 288 - 165,000

Net change in fund balances 264,403 95,685 59,908 165,000

Fund balances (deficit), beginning of year 7,770,918 1,570,055 3,605 (1,845,000)

Fund balances (deficit), end of year 8,035,321$ 1,665,740$ 63,513$ (1,680,000)$


48

Nonmajor TotalGovernmental Governmental

Funds Funds

-$ 24,500,804$ 376,387 500,355

3,508,118 3,902,740 2,288,571 3,633,482 1,797,999 3,575,700 1,047,508 6,311,373

- 93,339 - 3,061,890 - 19,909

101,894 619,337 40,601 165,029

718,041 810,866

9,879,119 47,194,824

- 421,457 7,805,149 10,225,383 2,284,833 10,258,106

431,533 15,421,068 7,056,334 10,514,183

9,279 9,279 639,990 639,990

2,005,000 2,005,000 355,590 355,590

5,610,308 5,813,471

26,198,016 55,663,527

(16,318,897) (8,468,703)

11,170,000 11,170,000 (46,304) (46,304)

(6,192,224) (6,192,224) - 16,653

10,362,438 13,082,129 (1,648,242) (11,649,784)

13,645,668 6,380,470

(2,673,229) (2,088,233)

11,691,154 19,190,732

9,017,925$ 17,102,499$

49


Reconciliation Net Changes in Fund Balances of Governmental Fundsto Change in Net Position of Governmental ActivitiesFor the Year Ended December 31, 2012

Net change in fund balances - total governmental funds (2,088,233)$

Acquisition/construction of capital assets 5,603,395 Depreciation expense (2,088,667) Less depreciation expense accounted for in governmental internal service funds 190,378 Loss on disposal of capital assets (3,153) Proceeds from sale of capital assets (16,653)

Deferred long-term receivables (214,230)

Change in accrued interest payable (86,643) Change in net other postemployment benefits obligation (336,286)

Principal payments on bonds payable 2,005,000 Issuance of long-term debt (11,170,000) Payment to refunding bond escrow agent 6,192,224 Discount on issuance of long-term debt 46,304 Compensated absences (66,748)

Change in net position of internal service funds (39,492)

Change in net position of governmental activities (2,072,804)$


expenditures or other financing sources/uses in the governmental funds, but are reportedwith long-term liabilities in the statement of net position and are amortized.

equipment usage and employee benefits, to individual funds. The net revenues (expense) of internalservice funds is reported with governmental activities.

Bond proceeds provide current financial resources to governmental funds in the period issued, but

Internal service funds are used by management to charge the costs of certain activities, such as

resources and therefore are not reported as expenditures in governmental funds.

issuing bonds increases long-term liabilities in the statement of net position. Repayment of bond principal is an expenditure in the governmental funds, but the repayment reduces long-term liabilities in the statement of net position. Bond discounts and premiums are reported as

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

Governmental funds report capital outlays as expenditures. However, in the statement of activities,

Revenues in the statement of activities that do not provide current financial resources are not

Some expenses reported in the statement of activities do not require the use of current financial

the cost of those assets is allocated over their estimated useful lives and reported as depreciationexpense.

reported as revenues in the funds, but rather are deferred to the following fiscal year.

50


Statement of Revenues, Expenditures and Changes in Fund BalancesBudget and Actual - General FundFor the Year Ended December 31, 2012

Actual OverOriginal Amended (Under) FinalBudget Budget Actual Budget

RevenuesTaxes:

Current property taxes 20,650,000$ 20,849,249$ 20,826,490$ (22,759)$ Unpaid personal property taxes 20,000 20,000 32,947 12,947 Swamp land tax 49,371 49,371 60,784 11,413 Trailer tax 9,900 9,900 9,969 69 Payment in lieu of taxes 33,267 33,267 35,431 2,164 Commercial forest reserve tax 324 324 3,369 3,045 Industrial and commercial facilities taxes 54,600 54,600 54,803 203 Interest on taxes 74,000 76,851 76,519 (332) Liquor tax 750,000 889,148 889,148 - Cigarette tax - - 1,354 1,354

Total taxes 21,641,462 21,982,710 21,990,814 8,104

Licenses and permits:Soil erosion 70,000 70,000 89,565 19,565 Pistol permits 14,500 14,500 15,938 1,438 Marriage licenses 5,500 5,500 7,615 2,115 Township liquor licenses 7,301 7,301 7,922 621 Drug screening 4,000 4,000 2,928 (1,072)

Total licenses and permits 101,301 101,301 123,968 22,667

Federal sources:Cooperative reimbursement - prosecutor 129,330 129,330 119,785 (9,545) Anti-drug abuse act 35,000 35,000 31,649 (3,351) Bullet proof vests 1,974 1,974 4,617 2,643 OHSP enforcement - 14,664 6,980 (7,684)

Total federal sources 166,304 180,968 163,031 (17,937)

State sources:Circuit judge standardization 60,355 60,355 59,762 (593) District judge standardization 98,400 98,400 98,440 40 Probate judge standardization 54,200 54,200 54,426 226 Probate judge salary 94,195 94,195 94,195 - Probate juvenile officer salary 98,000 98,000 89,053 (8,947) Act 272 funding 2,200 2,200 1,360 (840) Victim's rights act 55,632 55,632 55,632 - Remonumentation 10,400 51,126 51,126 - Cooperative extension 28,084 28,084 25,600 (2,484) Secondary road patrol 75,240 75,240 74,647 (593) 911 public safety 240,000 240,000 255,132 15,132 Marine safety 80,000 80,000 77,253 (2,747) Off road vehicle 12,500 12,500 10,693 (1,807) Snowmobile 11,208 11,208 7,497 (3,711) State court fund distribution 400,000 400,000 354,106 (45,894) Caseflow assistance 35,320 35,320 35,989 669

Total state sources 1,355,734 1,396,460 1,344,911 (51,549)

continued…

51




Revenues (concluded)Local sources 1,786,353$ 1,801,938$ 1,745,116$ (56,822)$

Charges for services:Circuit court costs and services 129,900 151,900 183,044 31,144 District court costs and services 1,578,000 1,578,000 1,390,494 (187,506) Probate court services 29,000 29,000 32,995 3,995 Family court juvenile 588,000 588,000 650,938 62,938 Clerk services 183,475 183,475 192,006 8,531 Equalization 2,500 2,500 1,869 (631) Equalization - East Bay 125,587 125,587 121,871 (3,716) Prosecuting attorney 7,800 7,800 7,889 89 Register of deeds services 516,900 516,900 536,069 19,169 Register of deeds land transfer 348,000 418,000 519,923 101,923 Treasurer services 12,500 12,500 13,810 1,310 Cooperative extension 2,500 3,323 4,228 905 Building and grounds 65,000 65,000 50,897 (14,103) Sheriff services 126,000 126,125 105,329 (20,796) Central dispatch 740,000 740,000 709,114 (30,886) Sheriff - corrections 290,450 290,450 282,555 (7,895) Planning department 500 500 150 (350) GIS 35,000 35,000 34,778 (222) Brownfield administration 184,591 187,591 141,436 (46,155) Livery licenses 800 800 804 4 Other services 440 440 6,793 6,353

Total charges for services 4,966,943 5,062,891 4,986,992 (75,899)

Fines and forfeitures:Ordinance fines 111,000 111,000 93,339 (17,661)

Reimbursements:Indirect cost recovery 2,675,659 2,663,628 2,647,045 (16,583) Other reimbursements and refunds 106,500 109,890 98,180 (11,710) Attorney fee reimbursement 333,000 337,000 316,665 (20,335)

Total reimbursements 3,115,159 3,110,518 3,061,890 (48,628)

Contributions 1,500 24,653 19,909 (4,744)

Interest income 250,000 250,000 113,796 (136,204)

Rental revenues 526,143 526,143 517,443 (8,700)

Sales 4,800 4,800 3,567 (1,233)

Total revenues 34,026,699 34,553,382 34,164,776 (388,606)

continued…

52




ExpendituresLegislative:

Board of Commissioners 398,073$ 440,796$ 421,457$ (19,339)$

Judicial:Jury commission 46,440 35,608 27,075 (8,533) Probate court 643,414 645,475 636,885 (8,590) Probate court - juvenile 1,883,514 1,854,639 1,756,274 (98,365)

Total judicial 2,573,368 2,535,722 2,420,234 (115,488)

General government:County administrator 315,750 274,843 227,737 (47,106) Brownfield administration 184,591 186,186 177,844 (8,342) Elections 72,589 71,511 63,640 (7,871) Finance 506,699 500,609 467,341 (33,268) County clerk 899,252 913,114 883,966 (29,148) Equalization 550,959 396,073 379,479 (16,594) Equalization - East Bay 125,587 123,681 121,874 (1,807) Human resources 479,365 477,015 434,142 (42,873) Prosecuting attorney 1,568,677 1,541,658 1,514,415 (27,243) Register of deeds 270,947 270,085 255,371 (14,714) County surveyor 10,400 54,150 54,150 - County treasurer 428,657 419,783 391,568 (28,215) Cooperative extension 337,015 335,607 325,276 (10,331) Facilities management 1,129,340 1,121,690 1,129,529 7,839 Drain commission 236,801 243,571 241,216 (2,355) Soil conservation 37,240 37,240 37,240 - Contingencies (1,018,478) (667,497) 32,503 700,000 Special appropriations 700,200 700,200 697,660 (2,540) Insurance and bonds 700,000 582,517 538,322 (44,195)

Total general government 7,535,591 7,582,036 7,973,273 391,237

Public safety:Secondary road patrol 82,963 93,120 88,554 (4,566) Central records 936,941 906,603 865,822 (40,781) Central dispatch 1,717,299 1,663,471 1,550,157 (113,314) Special investigation 154,130 158,786 156,449 (2,337) County investigation 1,133,160 1,122,592 1,113,041 (9,551) County off road vehicle 22,236 22,377 18,761 (3,616) County patrol 5,241,435 5,231,198 5,110,161 (121,037) Intersection enforcement - 11,929 4,249 (7,680) Project life-saver 1,000 1,000 - (1,000) Sheriff administration 537,499 495,867 488,414 (7,453) Seatbelt enforcement - 2,735 2,734 (1) Snowmobile enforcement 16,750 16,672 9,500 (7,172) Marine law enforcement 147,696 123,416 110,225 (13,191) Township fire 72,667 71,811 70,012 (1,799) Corrections 4,692,707 4,642,286 4,376,945 (265,341) Planning 206,154 219,471 209,970 (9,501)

continued…

53




Expenditures (concluded)Public safety (continued):

G.I.S. assessment project 268,322$ 369,857$ 344,967$ (24,890)$ Substance abuse 375,000 444,574 444,574 - Ambulance 25,000 25,000 25,000 -

Total public safety 15,630,959 15,622,765 14,989,535 (633,230)

Health and welfare:Family independence agency 58,140 58,140 58,140 - Veterans counselor 393,081 425,515 414,570 (10,945)

Total health and welfare 451,221 483,655 472,710 (10,945)

Capital outlay 154,000 379,400 192,678 (186,722)

Total expenditures 26,743,212 27,044,374 26,469,887 (574,487)

Revenues over expenditures 7,283,487 7,509,008 7,694,889 185,881

Other financing sources (uses)Proceeds from sale of capital assets 10,000 10,000 16,365 6,365 Transfers in 2,506,783 2,522,386 2,554,691 32,305 Transfers out:

Building authority debt (1,037,126) (1,236,315) (1,232,814) (3,501) Veterans trust (503) (503) (550) 47 County law library (12,000) (12,000) (12,000) - Health department (1,328,566) (1,328,566) (1,328,566) - Child care (1,073,250) (864,250) (754,938) (109,312) Parks and recreation (170,636) (170,636) (170,636) - Friend of the court (354,823) (354,823) (354,823) - County facilities (1,389,760) (1,389,760) (1,389,760) - 13th Circuit Court (1,378,013) (1,388,941) (1,303,119) (85,822) 86th District Court (3,155,596) (3,155,596) (3,098,185) (57,411) Register of deeds technology (110,000) (124,000) - (124,000) Community corrections (92,497) (92,497) (92,497) - Capital improvements (137,500) (137,500) (137,500) - Fringe benefits (185,000) (126,155) (126,154) (1)

Total other financing sources (uses) (7,908,487) (7,849,156) (7,430,486) (418,670)

Net change in fund balance (625,000) (340,148) 264,403 604,551

Fund balance, beginning of year 7,770,918 7,770,918 7,770,918 -

Fund balance, end of year 7,145,918$ 7,430,770$ 8,035,321$ 604,551$

concluded


54


Statement of Revenues, Expenditures and Changes in Fund BalancesBudget and Actual - Commission on Aging FundFor the Year Ended December 31, 2012


RevenuesTaxes 2,803,651$ 2,483,651$ 2,509,990$ 26,339$ Intergovernmental - local sources 2,000 17,000 32,585 15,585 Charges for services 262,582 263,242 276,873 13,631 Interest revenues 28,800 28,800 10,632 (18,168) Other revenues 18,300 19,770 30,535 10,765

Total revenues 3,115,333 2,812,463 2,860,615 48,152


Health and welfare 3,150,710 3,247,835 2,754,733 (493,102) Capital outlay 5,500 17,600 10,485 (7,115)

Total expenditures 3,156,210 3,265,435 2,765,218 (500,217)

Revenues over (under) expenditures (40,877) (452,972) 95,397 548,369

Other financing sourcesProceeds from sale of capital assets - - 288 288

Net change in fund balance (40,877) (452,972) 95,685 548,657

Fund balance, beginning of year 1,570,055 1,570,055 1,570,055 -

Fund balance, end of year 1,529,178$ 1,117,083$ 1,665,740$ 548,657$


55


Statement of Revenues, Expenditures and Changes in Fund BalancesBudget and Actual - Community Development Block Grant FundFor the Year Ended December 31, 2012


RevenuesIntergovernmental - federal sources 330,000$ 391,686$ 231,591$ (160,095)$ Other 6,000 6,000 58,723 52,723

Total revenues 336,000 397,686 290,314 (107,372) Expenditures

Current:Health and welfare 336,000 397,686 230,406 (167,280)

Net change in fund balance - - 59,908 59,908

Fund balance, beginning of year - 3,605 3,605 -

Fund balance, end of year -$ 3,605$ 63,513$ 59,908$


56


Statement of Net PositionProprietary FundsDecember 31, 2012

GovernmentalActivities

Grand Unpledged Nonmajor InternalTraverse Tax Enterprise ServicePavilions Collection Funds Total Funds

AssetsCurrent assets:

Cash and cash equivalents 6,598,335$ 2,376,835$ 1,488,504$ 10,463,674$ 546,589$ Investments - 4,600,000 - 4,600,000 243,000 Receivables, net:

Accounts 3,599,803 183,622 98,748 3,882,173 151,437 Taxes 2,365,156 5,145,949 57,319 7,568,424 - Interest - 647,119 - 647,119 - Due from State - - 1,450 1,450 -

Due from other funds - - - - 521 Inventories 136,774 - - 136,774 - Prepaid items and other assets 23,547 - 240 23,787 681,209

Total current assets 12,723,615 12,953,525 1,646,261 27,323,401 1,622,756

Noncurrent assets:Capital assets:

Land 1,870,064 - 437,882 2,307,946 - Construction in progress 471,494 - - 471,494 - Depreciable capital assets, net 22,755,378 - - 22,755,378 387,784

Total capital assets 25,096,936 - 437,882 25,534,818 387,784

Total assets 37,820,551 12,953,525 2,084,143 52,858,219 2,010,540

Deferred outflows of resourcesDeferred loss on advance refunding 453,885 - - 453,885 -

LiabilitiesCurrent liabilities:

Accounts payable 340,548 - 63,148 403,696 582,044 Accrued liabilities 1,176,233 - 25,790 1,202,023 123,911 Claims payable - - - - 117,977 Accrued interest payable 86,866 - - 86,866 - Due to other funds - 1,000,000 36,305 1,036,305 280,004 Due to other governments 615,511 - 30,353 645,864 - Unearned revenues 627,022 - - 627,022 - Current portion of bonds payable 2,362,858 - - 2,362,858 - Current portion of compensated absences 46,958 - - 46,958 -

Total current liabilities 5,255,996 1,000,000 155,596 6,411,592 1,103,936

Long-term liabilities:Bonds payable 8,244,029 - - 8,244,029 - Compensated absences 422,626 - 36,744 459,370 32,209

Total long-term liabilities 8,666,655 - 36,744 8,703,399 32,209

Total liabilities 13,922,651 1,000,000 192,340 15,114,991 1,136,145

Deferred inflows of resourcesProperty taxes levied

for subsequent year 2,749,513 - - 2,749,513 -

Net positionNet investment in capital assets 14,490,049 - 437,882 14,927,931 387,784 Unrestricted 7,112,223 11,953,525 1,453,921 20,519,669 486,611

Total net position 21,602,272$ 11,953,525$ 1,891,803$ 35,447,600$ 874,395$


Business-type Activities - Enterprise Funds

57


Statement of Revenues, Expenses and Changes in Net PositionProprietary FundsFor the Year Ended December 31, 2012



Operating revenuesCharges for services 24,036,668$ 300,837$ 625,281$ 24,962,786$ 12,226,938$ Licenses and permits - - 969,964 969,964 - Interest revenues - 970,960 - 970,960 - Other 2,635,500 35,140 345,559 3,016,199 709,927

Total operating revenues 26,672,168 1,306,937 1,940,804 29,919,909 12,936,865

Operating expenses Personnel services 18,324,285 - 903,612 19,227,897 680,041 Supplies 2,473,184 - 38,486 2,511,670 259,727 Contractual services 3,062,573 - 343,734 3,406,307 10,774,916 Depreciation 1,312,724 - - 1,312,724 190,378 Other operating expenses 2,364,082 121,084 253,147 2,738,313 1,197,746

Total operating expenses 27,536,848 121,084 1,538,979 29,196,911 13,102,808

Operating income (loss) (864,680) 1,185,853 401,825 722,998 (165,943)

Nonoperating revenues (expense)Property taxes 2,882,440 - - 2,882,440 - State sources - - 35,193 35,193 - Interest revenues 28,070 18,531 705 47,306 339 Interest and fiscal charges (510,281) - - (510,281) (42)

Total nonoperating revenues 2,400,229 18,531 35,898 2,454,658 297

Income (loss) before transfers 1,535,549 1,204,384 437,723 3,177,656 (165,646)

TransfersTransfers in - 150,387 - 150,387 126,154 Transfers out - (1,522,195) (186,691) (1,708,886) -

Change in net position 1,535,549 (167,424) 251,032 1,619,157 (39,492)

Net position, beginning of year,as restated 20,066,723 12,120,949 1,640,771 33,828,443 913,887

Net position, end of year 21,602,272$ 11,953,525$ 1,891,803$ 35,447,600$ 874,395$



58


Statement of Cash FlowsProprietary FundsFor the Year Ended December 31, 2012



Cash flows from operating activitiesReceipts from services 27,278,744$ -$ 1,960,236$ 29,238,980$ -$ Receipts from payment of delinquent taxes - 2,009,383 - 2,009,383 - Cash receipts from interfund services - - - - 13,127,939 Cash payments to suppliers for goods and services (7,932,848) - (591,712) (8,524,560) (11,995,404) Cash payments to employees for services (18,202,936) - (907,957) (19,110,893) (714,825) Cash payments for delinquent taxes - (121,084) - (121,084) -

Net cash provided by operating activities 1,142,960 1,888,299 460,567 3,491,826 417,710

Cash flows from noncapital financing activitiesIntragovernmental receipts - - (150,386) (150,386) 126,154 Cash received from property taxes 3,130,900 - - 3,130,900 - Cash paid from property taxes - (1,571,808) - (1,571,808) - Cash received from state grants - - 34,857 34,857 -

Net cash provided by (used in) noncapitalfinancing activities 3,130,900 (1,571,808) (115,529) 1,443,563 126,154

Cash flows from capital and related financing activitiesPrincipal payments (2,225,000) - - (2,225,000) (1,640) Interest payment and fiscal charges (444,020) - - (444,020) (42) Purchases of capital assets (872,975) - - (872,975) (234,635) Proceeds from sale of capital assets 22,988 - 1,026 24,014 -

Net cash provided by (used in) capital andrelated financing activities (3,519,007) - 1,026 (3,517,981) (236,317)

Cash flows from investing activitiesSale of investments - 1,200,000 - 1,200,000 - Interest received 28,070 18,531 705 47,306 339

Net cash provided by investing activities 28,070 1,218,531 705 1,247,306 339

Change in cash and cash equivalents 782,923 1,535,022 346,769 2,664,714 307,886

Cash and cash equivalents, beginning of year 5,815,412 841,813 1,141,735 7,798,960 238,703

Cash and cash equivalents, end of year 6,598,335$ 2,376,835$ 1,488,504$ 10,463,674$ 546,589$

continued…


59


Statement of Cash FlowsProprietary FundsFor the Year Ended December 31, 2012



Cash flows from operating activitiesOperating income (loss) (864,680)$ 1,185,853$ 401,825$ 722,998$ (165,943)$ Adjustments to reconcile operating income (loss)

to net cash provided by operating activities:Depreciation 1,312,724 - - 1,312,724 190,378 Changes in:

Accounts receivable 501,271 (422) 9,344 510,193 48,857 Taxes receivable - 660,049 23,184 683,233 - Interest receivable - 42,819 - 42,819 - Inventories (14,212) - - (14,212) - Advance from other funds - - - - 183,504 Prepaid items and other assets (6,912) - (240) (7,152) (63,719) Accounts payable 188,115 - 43,895 232,010 226,531 Accrued liabilities 89,774 - (5,033) 84,741 51,931 Due to other funds - - - - 176,894 Due to other governments - - (13,096) (13,096) - Unearned revenues (94,695) - - (94,695) - Compensated absences 31,575 - 688 32,263 (12,542) Advance from other funds - - - - (218,181)

Net cash provided by operating activities 1,142,960$ 1,888,299$ 460,567$ 3,491,826$ 417,710$

concluded



60


Statement of Fiduciary Assets and LiabilitiesAgency FundsDecember 31, 2012

Agency Funds

AssetsCash and cash equivalents 1,961,394$ Accounts receivable 440,991

Total assets 2,402,385$

LiabilitiesDue to other governments 2,016,084$ Court items payable 61,597 Undistributed receipts 263,819 Other liabilities 60,885

Total liabilities 2,402,385$


61


62

NOTES TO FINANCIAL STATEMENTS

63


Notes to Financial Statements

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The financial statements of the County have been prepared in conformity with generally acceptedaccounting principles (GAAP) as applied to governmental units. The Governmental Accounting StandardsBoard (GASB) is the accepted standard setting body for establishing governmental accounting andfinancial reporting principles. The more significant of the County’s accounting policies are describedbelow.

Reporting Entity

Grand Traverse County, Michigan, (the “County”) was organized in 1851 and covers an area ofapproximately 485 square miles with the County seat located in Traverse City, Michigan. The Countyoperates under an elected Board of Commissioners of seven (7) members and provides services, assistanceand care to County residents, primarily from the operations of its general fund and special revenue funds.The County's services, assistance and care includes the (1) general County departments, boards andcommissions; (2) court system administration; (3) law enforcement and corrections; (4) assistance and/orinstitutional care to the aged, needy, wards of the court and neglected children and public healthrecipients and (5) recreation and cultural.

As required by generally accepted accounting principles, the financial statements of the reporting entityinclude those of the County and its component units. The component units discussed below are includedin the County's reporting entity because of the significance of their operational or financial relationshipwith the County.

The Grand Traverse County Building Authority is governed by a three member board appointed by theCounty Board of Commissioners. Although it is legally separate from the County, the Grand TraverseCounty Building Authority is reported as if it were part of the primary government because its solepurpose is to obtain financing and pay for construction and capital improvements of County facilities.The Grand Traverse County Land Bank Authority works to provide affordable housing and economicdevelopment opportunities from foreclosed properties. The Grand Traverse County Land Bank Authorityis reported within the foreclosure tax collection fund.

Blended Component Units

The component unit columns in the combined financial statements include the financial data of theCounty's five discrete component units. These component units are presented in separate columns toemphasize that they are legally separate from the County.

Grand Traverse County Road Commission. Members of the governing body of the Road Commission areappointed by the County Board of Commissioners. The County also has the ability to influence theoperations of the Road Commission and has accountability for fiscal matters.

Separate financial statements for the Road Commission are available from the Grand Traverse CountyRoad Commission, 1881 LaFranier Road, Traverse City, MI 49696.

Discretely Presented Component Units

64



The financial activity of the Drain Commission for the year ended December 31, 2012 is reporteddiscretely as a governmental fund type. There are no separately issued financial statements of thiscomponent unit, although financial information for the specific drainage districts may be obtainedfrom the County Drain Commissioner, 2650 LaFranier Road, Traverse City, Michigan 49686.

Brownfield Redevelopment Authority. The Members of the governing board of the BrownfieldRedevelopment Authority are appointed by the County Board of Commissioners. They review andapprove plans for business development within designated areas of the County where property wasonce contaminated. Property tax revenues from the “captured” portion of these properties arerestricted to pay for site clean-up expenditures and future development depending on thedevelopment plan adopted for each project. The County has the ability to significantly influence theoperations of the Brownfield Redevelopment Authority and has accountability for fiscal matters.

The financial activity of the Brownfield Redevelopment Authority for the year ended December 31,2012 is reported discretely as a governmental fund type. There are no separately issued financialstatements of this component unit.

Economic Development Corporation. Members of the governing body of the Economic DevelopmentCorporation are appointed by the County Board of Commissioners. The County also has the ability toinfluence the operations of the Economic Development Corporation and has accountability for fiscalmatters.

The financial activity of the Economic Development Corporation for the year ended December 31, 2012is reported discretely as a governmental fund type. There are no separately issued financialstatements of this component unit.

Department of Public Works. Members of the governing body of the Department of Public Works areappointed by the County Board of Commissioners. The County also has the ability to influenceoperations of the Department of Public Works and has accountability for fiscal matters.

The financial activity of the Department of Public Works for the year ended December 31, 2012 isreported discretely as an enterprise fund type. There are no separately issued financial statements ofthis component unit.

Drain Commission. Each of the drainage districts established pursuant to the Drain Code of 1956 areseparate legal entities, with the power to contract, to sue and be sued, to hold, manage and disposeof real and personal property, etc. The statutory drainage board of Chapter 21 drainage districtsconsists of the State Director of Agriculture and the Drain Commissioner of each county involved in theproject. The County Drain Commissioner has sole responsibility to administer the drainage districtsestablished pursuant to Chapters 3, 4 and 8 of the Drain Code. The Drainage Board or DrainCommissioner, on behalf of the drainage districts, may issue debt and levy special assessmentsauthorized by the Drain Code without the prior approval of the County Board of Commissioners. Thefull faith and credit of the County may be given for the debt of the drainage district. The County alsohas the ability to influence operations of the Drain Commission and has accountability for fiscalmatters.

65



Basis of Presentation

Government-Wide and Fund Financial Statements

Measurement Focus, Basis of Accounting, and Financial Statement Presentation

Separate financial statements for the Northern Lakes Community Mental Health Authority are available at105 Hall Street, Traverse City, MI 49684.

Government‑wide Financial Statements. The statement of net position and the statement of activitiesreport information on all of the nonfiduciary activities of the primary government and its componentunits. For the most part, the effect of interfund activity has been removed from these statements.Governmental activities, which normally are supported by taxes and intergovernmental revenues, arereported separately from business‑type activities, which rely to a significant extent on fees and chargesfor support. Likewise, the primary government is reported separately from certain legally separatecomponent units for which the primary government is financially accountable.

Fund Financial Statements. The fund financial statements provide information about the County’s funds,including its fiduciary funds and blended component unit. Separate statements for each fund category –governmental, proprietary and fiduciary – are presented. The emphasis of fund financial statements is onmajor governmental and enterprise funds, each displayed in a separate column. All remaininggovernmental and enterprise funds are aggregated and reported as nonmajor funds.

The County participates in the operation of the Northwestern Regional Airport Commission with LeelanauCounty. The Airport Commission operates with a separate treasurer.

Separate financial statements for the Airport Commission are available from the Northwestern RegionalAirport Commission, Cherry Capital Airport Administrative Office, 144 W. South Airport Road, TraverseCity, MI 49686.

The County also participates jointly in the operation of the Northern Lakes Community Mental HealthAuthority with Missaukee, Leelanau, Crawford, Roscommon and Wexford Counties. The County providesan annual appropriation of $682,200 to this authority.

Government-wide, Proprietary and Fiduciary Fund Financial Statements. The government-wide,proprietary and fiduciary fund financial statements are reported using the economic resourcesmeasurement focus and the accrual basis of accounting, except for agency funds, which do not have ameasurement focus. Revenue is recorded when earned and expenses are recorded when a liability isincurred, regardless of the timing of related cash flows.

The statement of activities demonstrates the degree to which the direct expenses, of a given function orsegment, are offset by program revenues. Direct expenses are those that are clearly identifiable with aspecific function or segment. Program revenues include 1) charges to customers or applicants whopurchase, use, or directly benefit from goods, services, or privileges provided by a given function orsegment and 2) grants and contributions that are restricted to meeting the operational or capitalrequirements of a particular function or segment. Taxes and other items not properly included amongprogram revenues are reported instead as general revenues.

Regional Joint Operation

66



The County reports the following major governmental funds:

The commission on aging fund accounts for revenues received from property taxes and charges forservices (fee revenues) to provide services and programs for County residents 60 years of age andolder.

The CDBG fund accounts for Federal Community Development Block Grant (CDBG) funds provided tothe County and program income for the rehabilitation of owner-occupied, single family residentialunits in the county.

Governmental Fund Financial Statements are reported using the current financial resourcesmeasurement focus and the modified accrual basis of accounting. Revenues are recognized as soon asthey are both measurable and available. Revenues are considered to be available when they arecollectible within the current period or soon enough thereafter to pay liabilities of the current period.For this purpose, the government considers revenues to be available if they are collected within 60 daysof the end of the current period or within one year for reimbursement-based grants.

Property taxes, state-shared revenue, and interest associated with the current period are all consideredto be susceptible to accrual and so have been recognized as revenues of the current period. Only theportion of special assessments receivable due within the current fiscal period is considered to besusceptible to accrual as revenue of the current period. All other revenue items are considered to bemeasurable and available only when cash is received by the County.

The general fund is the County’s primary operating fund. It accounts for all financial resources of thegeneral government, except those accounted for and reported in another fund.

Proprietary funds distinguish operating revenues and expenses from nonoperating items. Operatingrevenues and expenses generally result from providing services and producing and delivering goods inconnection with a proprietary fund’s principal ongoing operations. The principal operating revenues ofthe Grand Traverse Pavilions, delinquent tax revolving, inspections and solid waste enterprise funds andthe discretely presented component unit department of public works enterprise funds and the County’sinternal service funds are charges to customers for sales and services. Operating expenses for enterprisefunds and internal service funds include the cost of sales and services, administrative expenses, anddepreciation on capital assets. All revenues and expenses not meeting this definition are reported asnonoperating revenues and expenses.

Nonexchange transactions, in which the County gives (or receives) value without directly receiving (orgiving) equal value in exchange, include property taxes, grants, entitlements and donations. On anaccrual basis, revenues from property taxes is recognized in the fiscal year for which the taxes are levied.Revenue from grants, entitlements and donations is recognized in the fiscal year in which all eligibilityrequirements have been satisfied.

Expenditures generally are recorded when a related fund liability is incurred, except for debt serviceexpenditures, compensated absences, and claims and judgments, which are recognized as expenditures to the extent they have matured. General capital asset acquisitions are reported as expenditures ingovernmental funds. Proceeds from general long-term debt and acquisitions under capital leases, if any,are reported as other financing sources.

67



The County reports the following major proprietary funds:

Additionally, the County reports the following fund types:

As a general rule, the effect of interfund activity has been eliminated from the government‑widefinancial statements. Exceptions to this general rule are payments-in-lieu of taxes and various otherfunctions of the County. Elimination of these charges would distort the direct costs and programrevenues reported for the various functions concerned.

Enterprise funds account for those operations that are financed and operated in a manner similar toprivate business or where the County has decided that the determination of revenues earned, costsincurred and/or net income is necessary for management's accountability.

Restricted net position consists of amounts that are subject to restrictions beyond the County’s control.The restrictions may be externally imposed or imposed by law. When both restricted and unrestrictedresources are available for use, it is the County’s policy to use restricted resources first, thenunrestricted resources as they are needed.

Capital projects funds are used to account for and report financial resources that are restricted,committed, or assigned to expenditure for capital outlays, including the acquisition or construction ofcapital facilities and other capital assets.

Internal service funds account for the fleet and equipment management, data processing, copymachine, mailing department, and insurance services provided to other departments or agencies ofthe County on a cost reimbursement basis.

Agency funds are custodial in nature and do not present results of operations or have a measurementfocus. These funds are used to account for assets that the County holds for others in an agencycapacity (such as taxes collected for other governments).

The unpledged tax collection fund accounts for the funds paid to each local governmental unit,including the County general fund, commission on aging fund and the Grand Traverse Pavilions Fundfor the respective amount of taxes not collected as of March 1st from previous years’ tax levies.Financing for these purchases is provided by subsequent collection of delinquent property taxes by theCounty Treasurer.

Special revenue funds are used to account for and report the proceeds of specific revenue sourcesthat are restricted or committed to expenditures for specified purposes other than debt service orcapital projects.

Debt service funds are used to account for and report financial resources that are restricted,committed, or assigned to expenditure for principal and interest.

The building authority LaFranier DPW fund was established to accumulate resources to meet theannual debt service requirements for the bond issued to construct the Public Services Building and toconstruct an addition to the DPW shop.

The Grand Traverse Pavilions fund accounts for the activities of the County’s medical care facility.

68



Assets, Liabilities and Equity

Cash and Cash Equivalents

The County’s deposits and investment policy are in accordance with statutory authority.

Restricted Cash

Investments

Receivables and payables

The County considers cash and cash equivalents to be cash on hand, demand deposits, and short-terminvestments with original maturities of three months or less from the date of acquisition.

State statutes authorize the County to invest in obligations of the U.S. Treasury and U.S. agencies,deposit agreements with federally insured financial institutions within the State of Michigan, high gradecommercial paper, repurchase obligations of the U.S. government and U.S. agencies, banker’sacceptances of U.S. banks and mutual funds comprised of the above authorized investments.

The County pools cash resources of various funds in order to facilitate the management of cash. Cashapplicable to a particular fund is readily identifiable. The balance in the pooled cash accounts isavailable to meet current operating requirements. Cash in excess of current requirements is invested invarious interest-bearing securities and disclosed as part of the County’s investments.

Restricted cash is reported in the Road Commission component unit and consists of funds advanced by theState of Michigan for road construction and proceeds from bonds issued for road maintenance.

Investments displayed on the financial statements are recorded at fair value. The investment in externalpools operate in accordance with appropriate state laws and regulations. The reported value of the poolsis the same as the fair value of the pool shares.

All Grand Traverse Pavilions’ accounts are shown net of an allowance for uncollectible accounts. GrandTraverse Pavilions’ accounts receivable in excess of 120 days comprise the allowance for uncollectibleaccounts. At December 31, 2012 the allowance amounted to $676,779.

Activity between funds that are representative of lending/borrowing arrangements outstanding at the endof the fiscal year are referred to as either “due to/from other funds” (i.e., the current portion ofinterfund loans) or “advances to/from other funds” (i.e., the non-current portion of interfund loans). Anyresidual balances outstanding between the governmental activities and business‑type activities arereported in the government‑wide financial statements as “internal balances.”

Advances between funds, as reported in the fund financial statements, are offset by a nonspendable fundbalance account in applicable governmental funds to indicate they are not available for appropriation andare not expendable available financial resources.

69



Lease Receivables

Inventories, Prepaid Items and Other Assets

All lease agreements provide for the lessees to use, operate and maintain the systems, at their ownexpense, subject to the terms and conditions of the agreement.

Loans receivable consists of Economic Development fund loans to promote economic development withinthe county, and Community Development Block Grant funds advanced to area residents for homeimprovements, which must be repaid by the homeowner upon sale or foreclosure. The County has anenforceable lien on such property. The amount of loans receivable not expected to be collected withinone year is $2,171,448.

The Department of Public Works has entered into various lease agreements with local governments toissue bonded debt and to manage the construction of water and sewer systems in those jurisdictions.These agreements generally terminate with the retirement of the related bond issues. Leases receivableare reported at an amount equal to the lesser of the actual bond-financed construction costs incurred todate or the outstanding bond principal and interest thereon. Annual lease payments under theseagreements are equal to the related bond principal and interest due each year. At termination of alease, title to the leased property is passed to the particular local governments.

Inventory of the Grand Traverse County Road Commission, consisting of various operating parts, suppliesand road material, is determined on the average unit cost method. Inventory items are charged to roadconstruction and maintenance, equipment repairs, and operations as used.

Certain payments to vendors reflect costs applicable to future accounting periods and are recorded asprepaid items in both government-wide and fund financial statements. Prepaid items are recorded asexpenditures proportionately over the periods that related service is provided (consumption method).

All inventories (excluding those of the Road Commission, described below) are valued at cost using thefirst-in/first out (FIFO) method. Inventories of governmental funds are recorded as expenditures whenpurchased.

Amounts due from other governments include amounts due from grantors for specific programs andcapital projects. Program grants and capital grants for capital assets are recorded as receivables andrevenues at the time reimbursable project costs are incurred. Revenues received in advance of projectcosts being incurred are considered unearned revenues.

The amount of lease receivables not expected to be collected within one year is $29,847,960.

70



Capital Assets

Years

Buildings 30-50Land improvements 10-20Public domain infrastructure 10-20Vehicles 5Equipment 5-25Infrastructure 5-50

Deferred Outflows of Resources

Unearned Revenue

Capital assets, which include property, plant, equipment, and infrastructure assets (e.g., roads, bridges,sidewalks, and similar items), are reported in the applicable governmental or business‑type activitiescolumns in the government‑wide financial statements. Capital assets are defined by the County as assetswith an initial, individual cost of more than $5,000 ($1,000 for the Road Commission component unit) andan estimated useful life in excess of two years. Such assets are recorded at historical cost or estimatedhistorical cost if purchased or constructed. Donated capital assets are recorded at estimated fair value atthe date of donation.

Capital assets of the primary government and component units are depreciated using the straight-linemethod (except for road equipment which uses the sum-of-year digits method) over the followingestimated useful lives:

Assets

Major outlays for capital assets and improvements are capitalized as projects are constructed. Interestincurred during the construction phase of capital assets of business‑type activities, if any, is included aspart of the capitalized value of the assets constructed.

The costs of normal maintenance and repairs that do not add to the value of the asset or materiallyextend assets lives are not capitalized.

Unearned revenue of governmental activities primarily consists of rentals and grants received in advance.Unearned revenue of business-type activities primarily consists of payments received in advance ofservices provided in the Pavilions.

In addition to assets, the statement of financial position will sometimes report a separate section fordeferred outflows of resources. This separate financial statement element, deferred outflows ofresources, represents a consumption of net position that applies to a future period(s) and so will not berecognized as an outflow of resources (expense/expenditure) until then. The County only has one itemthat qualifies for reporting in this category. It is the deferred loss on advance refunding reported in thegovernment-wide statement of net position. A deferred charge on refunding results from the difference inthe carrying value of refunded debt and its reacquisition price. This amount is deferred and amortizedover the shorter of the life of the refunded or refunding debt.

71



Compensated Absences

Long‑term Obligations

Deferred Inflows of Resources

SubsequentYears'

Unavailable Resources TotalGovernmental funds:

Loans receivable 2,281,899$ -$ 2,281,899$ Property taxes levied to finance

subsequent years' operations - 2,500,424 2,500,424

2,281,899$ 2,500,424$ 4,782,323$

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 governmentalactivities, business‑type activities, or proprietary fund type statement of net position. Bond premiumsand discounts are deferred and amortized over the life of the bonds using the straight-line method.Bonds payable are reported net of the applicable bond premium or discount. Bond issuance costs arereported as a component of interest expense when incurred.

Governmental Activities

In the fund financial statements, governmental fund types recognize bond premiums and discounts, aswell as bond issuance costs, during the current period. The face amount of debt issued is reported asother financing sources. Premiums received on debt issuances are reported as other financing sourceswhile discounts on debt issuances are reported as other financing uses. Issuance costs, whether or notwithheld from the actual debt proceeds received, are reported as debt service expenditures.

It is the County’s policy to permit employees to accumulate earned but unused vacation, sick andpersonal pay benefits depending on the date of hire. All accrued vacation, sick and personal pay benefitsare accrued when incurred in the government-wide and proprietary fund financial statements. A liabilityfor these amounts is reported in governmental funds only if they have matured, for example, as a resultof employee resignations and retirements.

In addition to liabilities, the statement of financial position will sometimes report a separate section fordeferred inflows of resources. This separate financial statement element, deferred inflows of resources,represents an acquisition of net position that applies to a future period(s) and so will not be recognized asan inflow of resources (revenue) until that time. The governmental funds report unavailable revenues,which arises only under a modified accrual basis of accounting, from loans receivable. These amounts aredeferred and recognized as an inflow of resources in the period that the amounts become available. Inaddition, deferred inflows of resources are reported in the government-wide and governmental fundfinancial statements for property taxes levied during the year that were intended to finance futureperiods.

72



Interfund Transactions

Fund Equity

Use of Estimates

2. BUDGETARY INFORMATION

During the course of normal operations, the County has numerous transactions between funds andcomponent units, including expenditures and transfer of resources to provide services, construct assets,and service debt. The accompanying financial statements generally reflect such transactions as transfers.Transfers between governmental or proprietary funds are netted as part of the reconciliation to thegovernment-wide financial statements. Internal service funds are used to record charges for services toall County departments and funds as transfers or operating revenue. All County funds record thesepayments to the internal service funds as transfers or operating expenditures/expenses.

In the fund financial statements, governmental funds report nonspendable fund balance for amounts thatcannot be spent because they are either (a) not in spendable form or (b) legally or contractually requiredto be maintained intact. Restricted fund balance is reported when externally imposed constraints areplaced on the use of resources by grantors, contributors, or laws or regulations of other governments.Committed fund balance is reported for amounts that can be used for specific purposes pursuant toconstraints imposed by formal action of the County’s highest level of decision-making authority, theBoard of Commissioners. A formal resolution of the County Board of Commissioners is required toestablish, modify, or rescind a fund balance commitment. The County reports assigned fund balance foramounts that are constrained by the County’s intent to be used for specific purposes, but are neitherrestricted nor committed. The Board of Commissioners has delegated the authority to assign fundbalance to the County Administrator/Controller or his/her designee. Unassigned fund balance is theresidual classification for the general fund.

When the County incurs an expenditure for purposes for which various fund balance classifications can beused, it is the County’s policy to use restricted fund balance first, then committed, assigned and finallyunassigned fund balance.

The preparation of financial statements, in conformity with generally accepted accounting principles,requires management to make estimates and assumptions that affect the reported amounts of assets andliabilities and disclosure of contingent assets and liabilities at the date of the financial statements andthe reported amounts of revenues and expenses during the reporting period. Actual amounts could differfrom those estimates.

Annual budgets are adopted on a basis consistent with generally accepted accounting principles for thegeneral and special revenue funds. All annual appropriations lapse at year-end.

No later than December 31 of the preceding fiscal year the County Commission shall, by resolution, adoptthe budget for the next year.

The budget document presents information by fund, function, department, and line items. The legallevel of budgetary control adopted by the governing board is the function level, which is the level atwhich expenditures may not legally exceed appropriations. Budget amendments are made in accordancewith County Commission policy.

73



3. EXCESS OF EXPENDITURES OVER APPROPRIATIONS

Amended BudgetBudget Actual Variance

General fundGeneral government:

Facilities management 1,121,690$ 1,129,529$ 7,839$ Contingencies (667,497) 32,503 700,000

Transfers out:Veterans trust 503 550 47

Nonmajor fundsFriend of the court:

Transfers out - 13,276 13,276

4. DEFICIT FUND EQUITY

The County reported deficit unassigned fund balance of $1,680,000 in the Building Authority LaFranierDPW debt service fund. This was the result of the fund receiving a lump sum payment (unearnedrevenue) in a prior year in order to call the related bonds early, which is reduced ratably over the courseof the related rental agreement. The Woodmere nonmajor governmental debt service fund also reporteda deficit unassigned fund balance of $1,315,000. This was also the result of the fund receiving a lumpsum payment (unearned revenue) in a prior year in order to call the related bonds early, which is reducedratably over the course of the related rental agreement.

P.A. 621 of 1978, as amended, provides that a local unit shall not incur expenditures in excess of theamount appropriated. In the body of the financial statements, the County's actual expenditures andbudgeted expenditures for the budgetary funds have been shown on the functional/departmental basis.The approved budgets of the County for the budgetary funds were adopted at the functional level. Thefollowing funds had excess expenditures over appropriations:

The County also reported negative unrestricted net position in the Information Technology InternalService fund of $150,156. Total net position (which includes a $359,742 net investment in capital assets)was positive. The County plans to eliminate the deficit by increasing cost reimbursement rates to recoverthe full cost of services provided.

74



5. DEPOSITS AND INVESTMENTS

Deposits

At December 31, 2012, the County’s cash, investments and restricted cash are reported as follows:

Governmental Business-type Fiduciary Component Activities Activities Funds Units Total

Cash and cash equivalents 7,586,314$ 10,463,674$ 1,961,394$ 5,795,804$ 25,807,186$ Investments 4,772,917 4,600,000 - - 9,372,917 Restricted cash - - - 611,493 611,493

Total 12,359,231$ 15,063,674$ 1,961,394$ 6,407,297$ 35,791,596$

Deposits and investments:Bank deposits (checking and savings) 17,762,261$ Bank deposits (certificates of deposit) 13,346,420 Investments (securities and money market pooled funds) 4,672,797 Cash on hand 10,118

Total 35,791,596$

Deposit and Investment Risk

Interest Rate Risk. State law limits the allowable investments and the maturities of some of theallowable investments as identified below. The County’s investment policy does not have specific limitsin excess of state law on investment maturities as a means of managing its exposure to fair value lossesarising from increasing interest rates. The maturity dates for each investment are identified below forinvestments held at year-end.

Credit Risk. State law limits investments to specific government securities, certificates of deposits andbank accounts with qualified financial institutions, commercial paper with specific maximum maturitiesand ratings when purchased, bankers’ acceptances of specific financial institutions, qualified mutualfunds and qualified external investment pools as identified below. The County’s investment policy doesnot have specific limits in excess of state law pertaining to investment credit risk. The ratings for eachinvestment are identified below for investments held at year-end.

Custodial Credit Risk – Deposits. Custodial credit risk is the risk that in the event of a bank failure, theCounty’s deposits may not be returned. State law does not require and the County’s investment policydoes not have specific limits in excess of state law pertaining to custodial credit risk. The County does aquarterly internal rating of the banks it has deposits in excess of the FDIC limit by utilizing outsidesources to obtain the ratings. As of year-end, $3,150,248 of the bank balance of the primary government(including its belnded component units) of $28,133,129 was exposed to custodial credit risk because itwas uninsured and uncollateralized, and uninsured and collateralized with securities held by pledgingfinancial institutions in the County’s name.

75



Investments

At December 31, 2012, the County’s investments consisted of the following:

Investment Balance Interest Rate Maturity Date Rating Callable

TIB 546,516$ 0.6250% 4/13/2013 S&P AAA NoncallableGO 252,800 1.7720% 11/1/2013 S&P AA- NoncallableMM-Class 3,301,566 Varies N/A S&P AAA/mMM-Chase 527,498 Varies N/A Moody AaaMM-Bank of America 7,027 Varies N/A Moody AAAMM-AIM 37,390 Varies N/A Moody Aaa

Total 4,672,797$

TIB – Treasury Inflation BondGO – State of Michigan general obligation bondsMM – Money Market

Custodial Credit Risk – Investments. For an investment, custodial credit risk is the risk that, in the eventof the failure of the counterparty, the County will not be able to recover the value of its investments orcollateral securities that are in possession of an outside party. State law does not require and the Countydoes not have a specific policy pertaining to investment custodial credit risk which is more restrictivethan state law. As of year-end, $4,672,797 of the County’s investment balance was exposed to custodialcredit risk because it was uninsured and uncollateralized.

Concentrations of Credit Risk. State law limits allowable investments but does not limit concentration ofcredit risk as identified in the listing above. The County’s investment policy does not have specific limitsin excess of state law on concentration of credit risk.

76



6. CAPITAL ASSETS

Capital asset activity for the primary government for the year ended December 31, 2012 was as follows:

Beginning Ending Balance Additions Disposals Transfers Balance

Governmental activitiesCapital assets not being depreciated:

Land 15,639,877$ -$ -$ -$ 15,639,877$ Construction in progress 809,339 - - (809,339) -

16,449,216 - - (809,339) 15,639,877

Capital assets being depreciated:Land improvements 2,234,421 34,275 - - 2,268,696 Infrastructure 849,230 15,747 (36,736) - 828,241 Buildings and

improvements 38,074,713 4,831,761 664,870 43,571,344 Equipment and furniture 9,022,425 838,418 (321,200) 144,469 9,684,112 Vehicles and equipment 2,755,451 117,829 (133,770) - 2,739,510

52,936,240 5,838,030 (491,706) 809,339 59,091,903

Less accumulated depreciation for:Land improvements (1,124,997) (117,519) - - (1,242,516) Infrastructure (519,977) (76,975) 25,715 - (571,237) Buildings and

improvements (14,944,996) (1,010,580) 312,415 - (15,643,161) Equipment and furniture (6,956,802) (637,752) - - (7,594,554) Vehicles and equipment (2,144,178) (245,841) 133,770 - (2,256,249)

(25,690,950) (2,088,667) 471,900 - (27,307,717)

Total capital assets being depreciated, net 27,245,290 3,749,363 (19,806) 809,339 31,784,186

Governmental activities capital assets, net 43,694,506$ 3,749,363$ (19,806)$ -$ 47,424,063$

77




Business-type activitiesCapital assets not being depreciated:

Land 2,259,458$ 49,514$ (1,026)$ -$ 2,307,946$ Construction in progress 38,232 456,250 (22,988) - 471,494

2,297,690 505,764 (24,014) - 2,779,440

Capital assets being depreciated:Land improvements 2,726,379 38,677 - - 2,765,056 Buildings and

improvements 34,202,065 151,008 - - 34,353,073 Equipment and furniture 2,360,032 162,529 - - 2,522,561 Vehicles and equipment 283,246 14,997 - - 298,243

39,571,722 367,211 - - 39,938,933

Less accumulated depreciation for:Land improvements (1,618,682) (129,199) - - (1,747,881) Buildings and

improvements (11,973,632) (1,017,225) - - (12,990,857) Equipment and furniture (2,050,902) (145,370) - - (2,196,272) Vehicles and equipment (227,615) (20,930) - - (248,545)

(15,870,831) (1,312,724) - - (17,183,555)

Total capital assets being depreciated, net 23,700,891 (945,513) - - 22,755,378

Business-type activities capital assets, net 25,998,581$ (439,749)$ (24,014)$ -$ 25,534,818$

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

Governmental activitiesJudicial 335,348$ General government 370,202 Public safety 827,415 Health and welfare 112,603 Recreation and culture 252,721 Capital assets held by the government's internal service funds are

charged to the various functions based on their usage of the assets 190,378

Total depreciation expense - governmental activities 2,088,667$

Business-type activitiesMedical care facility 1,312,724$

78




Component unit - Road CommissionCapital assets not being depreciated:

Land and improvements 1,021,299$ -$ -$ -$ 1,021,299$ Land / right-of-way 26,569,683 99,893 - - 26,669,576 Construction in progress 73,226 32,857 (73,226) - 32,857

27,664,208 132,750 (73,226) - 27,723,732

Capital assets being depreciated:Buildings 4,042,318 - - - 4,042,318 Road equipment 7,629,692 517,019 - - 8,146,711 Shop equipment 250,258 8,000 (103,459) - 154,799 Office equipment 379,887 20,586 (189,543) - 210,930 Engineer's equipment 297,263 - (196,339) - 100,924 Yard and storage 1,688,190 - - - 1,688,190 Infrastructure - bridges 1,060,643 - - - 1,060,643 Infrastructure - roads 67,792,556 3,316,189 - - 71,108,745

83,140,807 3,861,794 (489,341) - 86,513,260

Less accumulated depreciation for:Buildings (831,366) (80,847) - - (912,213) Road equipment (7,244,375) (212,343) - - (7,456,718) Shop equipment (230,363) (8,608) 103,459 - (135,512) Office equipment (359,198) (7,221) 189,543 - (176,876) Engineer's equipment (288,100) (5,235) 196,339 - (96,996) Yard and storage (922,504) (57,845) - - (980,349) Infrastructure - bridges (855,718) (5,907) - - (861,625) Infrastructure - roads (30,096,486) (3,764,821) - - (33,861,307)

(40,828,110) (4,142,827) 489,341 - (44,481,596)

Total capital assetsbeing depreciated, net 42,312,697 (281,033) - - 42,031,664

Road CommissionCapital assets, net 69,976,905$ (148,283)$ (73,226)$ -$ 69,755,396$

79




Component unit - Department of Public WorksCapital assets not being depreciated:

Land 400,000$ -$ -$ -$ 400,000$

Capital assets being depreciated:Building 7,623,862 - - - 7,623,862

Less accumulated depreciation for:Building (108,912) (217,824) - - (326,736)

Total capital assetsbeing depreciated, net 7,514,950 (217,824) - - 7,297,126

Department of Public WorksCapital assets, net 7,914,950$ (217,824)$ -$ -$ 7,697,126$

7. INTERFUND RECEIVABLES, PAYABLES AND TRANSFERS

For the year ended December 31, 2012, interfund balances were as follows:

Due from Due ToOther Funds Other Funds

General fund 1,429,293$ -$ Commission on aging fund 2,403 - CBDG fund - 22,686 Nonmajor governmental funds 23,379 116,601 Unpledged tax collection fund - 1,000,000 Nonmajor enterprise funds - 36,305 Internal service funds 521 280,004

1,455,596$ 1,455,596$

The outstanding balances between funds are primarily short-term cash advances from the general fund tocover cash deficits, or the result of the time lag between the dates Interfund transactions are recordedand when the payments are made. These balances will be collected in the subsequent year. Theunpledged tax collection fund amount due to other funds is the amount due the general fund for thebalance of the summer tax revenue that will be paid in the subsequent year as part of the tax settlementprocess.

80



Advance to Advance fromOther Funds Other Funds

General fund 396,016$ 3,614,163$ Nonmajor governmental funds 3,614,163 396,016

4,010,179$ 4,010,179$

Due from Due ToComponent Primary

Unit Government

General fund 4,007,884$ -$ DPW - 1,397,960 DPW - Septage treatment facility fund - 2,468,170 DPW - Garfield septage facility - 317 Brownfield redevelopment authority - 141,437

4,007,884$ 4,007,884$

Nonmajor Unpledged Nonmajor TotalGeneral Governmental Tax Collection Enterprise Transfers

Transfers in Fund Funds Fund Funds Out

General fund 2,518,387$ -$ -$ 36,304$ 2,554,691$ Building Authority

LaFranier DPW fund 165,000 - - - 165,000 Nonmajor

governmental funds 7,192,001 1,648,242 1,522,195 - 10,362,438 Unpledged tax

collection fund - - - 150,387 150,387 Internal service fund 126,154 - - - 126,154

Total 10,001,542$ 1,648,242$ 1,522,195$ 186,691$ 13,358,670$

The amounts payable to the general fund relate to working capital loans that were made to the nonmajorgovernmental funds. None of these balances are expected to be collected in the subsequent year. Theadvance from the revenue sharing reserve fund is a working capital advance scheduled to be utilized bythe general fund over the next three years. As the allowed amounts are used there is no requirement forthe general fund to repay these funds.

Interfund transfers are to: (1) use as unrestricted revenues in various funds to finance various programsaccounted for in other funds in accordance with budgetary authorizations and (2) use amounts from therevenue sharing reserve fund to cover the elimination of state shared revenue in the general fund.

Transfers out

The amounts due to and from component units are established: (1) to cover cash deficits, (2) for cashadvances per operating agreements and, (3) loans made to pay existing debt of the DPW.

81



8. LONG-TERM DEBT

Beginning Ending Due Within

Balance Additions Refunding Reductions Balance One Year

Governmental activities

General obligation bonds 8,025,000$ 11,170,000$ (6,160,000)$ (2,005,000)$ 11,030,000$ 550,000$

Notes payable 1,640 - - (1,640) - -

Less deferred amounts for:

Issuance discount - (46,304) - - (46,304) -

Compensated absences 1,592,900 222,963 - (168,757) 1,647,106 28,544

9,619,540$ 11,346,659$ (6,160,000)$ (2,175,397)$ 12,630,802$ 578,544$

Business-type activities

General obligation bonds 12,725,000$ -$ -$ (2,225,000)$ 10,500,000$ 2,325,000$

Plus deferred amounts for:

Issuance premium 106,887 - - - 106,887 37,858

Compensated absences 474,065 36,744 - (4,481) 506,328 46,958

13,305,952$ 36,744$ -$ (2,229,481)$ 11,113,215$ 2,409,816$

Component unit - DPW


Notes payable - 2,417,081 - - 2,417,081 96,031

Compensated absences 55,367 19,400 - (10,257) 64,510 19,353

43,145,367$ 2,436,481$ -$ (10,870,257)$ 34,711,591$ 3,070,384$

Component unit - Road Commission


Capital lease payable 86,131 - - (86,131) - -

Compensated absences 172,510 - - (18,857) 153,653 15,000

3,308,641$ -$ -$ (1,189,988)$ 2,118,653$ 1,130,000$

Component unit

Brownfield Redevelopment

Authority

Loans payable 649,777$ 868,587$ -$ (86,903)$ 1,431,461$ 88,814$

Long-term debt activity for the year ended December 31, 2012 was as follows:

82



Balance atRates Maturing 12/31/2012

Building authority bonds:District/probate courthouse 2.00-3.125 2025 6,170,000$ Health services building 2.00-4.00 2036 4,860,000

Governmental activities total 11,030,000

Enterprise fund bonds:Series 2004A Grand Traverse Pavilions 3.00-3.50 2015 595,000 Series 2004B Grand Traverse Pavilions Cottages 3.25-4.00 2019 2,325,000 Series 2007 Grand Traverse Pavilions 4.00-4.375 2031 3,500,000 Series 2009 Grand Traverse Pavilions 3.00 2015 4,080,000

Business-type activities total 10,500,000

DPW component unit:Traverse City wastewater treatment plant refunding 1.50-3.75 2015 930,000 Whitewater Township sanitary sewer system 4.30-5.50 2015 80,000 Traverse City wastewater treatment plant upgrade 4.00-4.50 2013 145,000 Blair Township 2007 water system improvement refunding 4.00-4.625 2023 4,190,000 Blair Township 2005 sewer system improvement refunding 3.00-4.30 2025 4,250,000 East Bay and Peninsula Townships sewer/water refunding 3.00-4.00 2022 2,875,000 Traverse City wastewater treatment plant

upgrade refunding 3.00-4.00 2022 18,860,000 2004 septage treatment facility project 3.05-5.00 2024 900,000 Sewer and water improvement notes 2.00 2032 2,417,081

DPW component unit total 34,647,081

Road commission component unit bonds:2006 Michigan transporation fund 4.00 2016 1,115,000 2008 Michigan transporation fund 3.00-3.25 2013 850,000

Road commission component unit total 1,965,000

Brownfield component unit:MI Environmental Quality Remediation Loan 2.00 562,874 MI Environmental Quality Remediation Loan 1.50 868,587

Brownfield component unit total 1,431,461

Total bonds, notes and loans payable 59,573,542$

Description

83



The annual requirements to pay principal and interest on general obligation bonds payable are as follows:

Governmental Activities Business-type Activities Component Units

Year Ended December Principal Interest Principal Interest Principal Interest

2013 550,000$ 571,856$ 2,325,000$ 375,080$ 4,070,000$ 1,377,168$ 2014 545,000 545,906 2,165,000 303,661 3,220,000 1,244,872 2015 570,000 519,306 1,235,000 236,699 3,350,000 976,178 2016 570,000 491,956 425,000 196,843 3,080,000 980,644 2017 590,000 463,856 420,000 181,794 2,835,000 851,162

2018-2022 3,255,000 1,777,718 1,625,000 670,322 15,760,000 2,293,526 2023-2027 2,610,000 742,671 1,300,000 364,863 1,880,000 145,500 2028-2032 1,185,000 364,850 1,005,000 87,609 - - 2033-2036 1,155,000 118,200 - - - -

11,030,000$ 5,596,319$ 10,500,000$ 2,416,871$ 34,195,000$ 7,869,050$

The annual requirements to pay principal and interest on notes payable are as follows:

Component Units

Year Ended December Principal Interest

2013 96,031$ 48,344$ 2014 91,050 46,222 2015 101,000 44,600 2016 101,000 42,580 2017 111,000 40,560

2018-2022 585,000 168,700 2023-2027 622,000 108,620 2028-2032 710,000 43,700

2,417,081$ 543,326$

The annual requirements to pay principal and interest on loans payable are as follows:

Component Units

Year Ended December

31, Principal Interest

2013 88,814$ -$ 2014 88,813 - 2015 72,858 15,956 2016 74,315 14,498 2017 173,626 13,012

2018-2022 836,665 96,533 2023-2027 96,370 26,445

1,431,461$ 166,444$

84



Advance Refunding

Prior Year Advance Refunding / Defeased Debt

General obligation debt for governmental activities consists of general obligation bonds of the BuildingAuthority. The Building Authority Bonds were issued in prior years for construction or purchase of theWoodmere Public Safety Building and District/Probate Courthouse. In 2012 general obligation bonds wereissued for the Health Services Building. These County buildings are security for these building authoritybonds. The Building Authority has also issued the construction bonds for the Grand Traverse Pavilions(medical care facility); however, these medical care facility construction bonds are reported in and willbe paid from the medical care facility enterprise fund.

During 1999, the County issued general obligation Building Authority, Series 1999 bonds of $18,035,000(par value) with an interest rate from 4.00% to 4.50% to advance refund Building Authority, Series 1995medical care facility construction bonds. The remaining Series 1995 bonds mature in the years 2013through 2015 in the amount of $5,250,000 with interest rates of 5.625% to 5.75%.

During 2004, the County issued general obligation Building Authority, Series 2004A bonds of $2,225,000(par value) with an interest rate from 2.00% to 3.50% to advance refund Building Authority, Series 1997medical care facility construction bonds. The remaining Series 1997 bonds mature in the years 2013through 2015 in the amount of $660,000 with interest rates of 4.75% to 4.875%.

Also during 2004, the County issued general obligation Building Authority, Series 2004B bonds of$3,125,000 (par value) with an interest rate from 2.00% to 4.00% to advance refund Building Authority,Series 1999 medical care facility construction bonds. The remaining Series 1999 bonds mature in theyears 2013 through 2019 in the amount of $2,225,000 with interest rates of 5.35% to 5.65%.

During 2009, the County issued general obligation Building Authority, Series 2009 bonds of $9,095,000 (parvalue) with interest rates ranging from 2.0% to 3.0% to advance refund $10,025,000 of the BuildingAuthority, Series 1999 Refunding bonds. The remaining Series 1999 Refunding bonds mature in the years2013 through 2015 in the amount of $5,205,000 with an interest rate of 4.5%.

During 2011, the County issued general obligation City of Traverse City Wastewater Treatment PlantSeries 2011 bonds of $20,385,000 (par value) with interest rates ranging from 3.00% to 4.00% to advancerefund $21,300,000 of the County, Series 2002 bonds. The remaining Series 2002 bonds mature in theyears 2013 through 2022 in the amount of $19,750,000 with interest rates of 4.10% to 5.00%.

Compensated absences in governmental activities are generally liquidated by the general fund.

During 2012, the County issued general obligation Building Authority Series 2012 bonds of $6,170,000 (parvalue) with interest rates ranging from 2.00% to 3.125% to advance refund $6,160,000 of the County'sSeries 2005 bonds. The refunding resulted in a net present value savings of $651,039 and an economicgain of $767,713.

85



The Board of County Road Commissioners has entered into an agreement with Whitewater Township topay one-half of the principal and all of the interest on the Series 2006 bonds, and a pledge from theCounty to pay one-half of the principal and one-half of the interest on the Series 2008 bonds. Thebalance of the principal owed on these arrangements of $982,500 is reported on the statement of netposition as due from other governments – long term.

The Brownfield Redevelopment Authority has entered into an advance loan agreement with the MichiganDepartment of Environmental Quality (MDEQ) that has a balance of $562,874 at December 31, 2012. Theloan allows draws of up to $886,591 to be paid back over a 10-year period beginning in 2011 with annualpayments ranging from $72,858 to $88,814 with 2% interest, maturing in 2021. Interest began accruing in2011. In 2012, the Authority entered in to an additional advance loan agreement with the MDEQ that hasa balance of $868,587 to be paid back over a 10-year period beginning in 2017 with annual paymentsranging from $84,294 to $97,826 with interest of 1.5%, maturing in 2027. The proceeds were used fordevelopment site clean-up. The payments will be funded with tax increment financing revenues. TheCounty holds letters of credit with project developers that will be used to meet loan payments should thetax increment financing revenue fall short.

The Department of Public Works has entered into various bond agreements. The proceeds were used tofinance water, sewer, wastewater treatment plant and septage treatment facility projects, throughoutthe County. The water and sewer project bonds are direct obligations of various townships. Thewastewater treatment plant bonds are a direct obligation of the City of Traverse City and an indirectobligation of the County and the septage treatment facility bonds are a direct obligation of the County.The bonds payable will mature from 2013 through 2025.

The Board of County Road Commissioners has entered into two bond agreements with the MichiganDepartment of Transportation that have balances of $850,000 and $1,115,000 at December 31, 2012. Theproceeds of each were used to finance the construction of improvements to the County’s roadwaysystem. The $1,115,000 bond is to be paid back during 2013 with interest rates of 3.0 to 3.25%. The$850,000 bond is to be paid back over a remaining 5-year period with a sliding scale interest rate,maturing in 2016.

During 2012, the Department of Public Works, Grand Traverse County, and five local Townships amendedthe current agreements relating to the Septage Treatment Facility Series 2003 Bonds in order toaccomplish the cash redemption of the entire outstanding Series 2003 Bonds. To provide the necessarycash to redeem the Series 2003 Bonds the County and five Townships each contributed 50% of the cashthat was needed to redeem the bonds, cover the related interest payments that were due on November1, and to cover associated legal costs.

This redemption was done to reduce the annual cash flow requirements of the Septage Treatment Facilityand to also lower the overall interest expenditures relating to the Series 2003 Bonds. The advances bythe County and the five Townships are accounted for as long-term debt obligations of the SeptageTreatment Facility and will be repaid over 20 years with interest rates ranging from 2% for the first fiveyears, and then adjusted every 5 years based on the 30 year U.S. Government Bond rate if higher. Themaximum interest rate will be limited to 4%.

Discretely Presented Component Units

86



9. RISK MANAGEMENT

Risk Management Self-insurance for Workers’ Compensation

In the event a reinsurance company does not meet its obligation to the Authority, responsibility forpayment of any unreimbursed claims will be that of the Authority Reinsurance Fund.

The Authority has retained certain levels of risk rather than obtaining coverage through reinsuranceagreements. The Authority established the Authority Reinsurance Fund in order to participate in thereinsurance agreements. Individual members are provided the same level of coverage previouslyafforded through a combination of the reinsurance agreements and the Reinsurance Fund.

In addition, the Authority purchases insurance for certain risks not covered by the reinsuranceagreements.

The reinsurance agreements discussed above include provisions for minimum annual premiums. As ofDecember 31, 2012, the Authority had met the minimum requirements.

Grand Traverse County reports the activity and the County's share of the Reinsurance Fund in an InternalService Fund.

The County has established a self-insurance program for workers’ compensation, which is accounted forin the Fringe Benefits Internal Service Fund. This program is administered by a service agency thatprovides claims reviews and claims processing. A specific excess workers' compensation reinsurancepolicy indemnifies the County up to $5,000,000 for each loss in excess of the first $350,000. Allapplicable funds are charged premiums based on payroll. There has been no reduction in insurancecoverage from the prior year. Settled claims have not exceeded insurance coverage in any of the pastthree fiscal years.

Grand Traverse County is exposed to various risks of loss related to torts; theft of, damage to, anddestruction of assets; errors and omissions; injuries to employees and natural disasters.

The County participates as a member in the Michigan Municipal Risk Management Authority. TheAuthority is a municipal self-insurance entity operating pursuant to the State of Michigan Public Act 138of 1982. The purpose of the Authority is to administer a risk management fund, which provides memberswith loss protection for general and auto liability, motor vehicle physical damage and property.

The Authority has entered into reinsurance agreements providing for loss coverage in excess of theamounts to be retained by the Authority and individual members. An individual member's maximumretention on general liability and auto liability is $75,000. The limits on auto physical damage are$15,000 per unit and $30,000 per occurrence. The retention limits for property coverage are subject to a$1,000 deductible with 10 percent of the first $100,000 to be paid by the member. Some members haveindividual retention levels different than the ones previously stated.

87



2012 2011

Claims liability at beginning of year 107,098$ 277,235$ Claims and damages incurred 85,573 61,739 Claims payments (74,694) (231,876)

Claims liability at the end of year 117,977$ 107,098$

10. JOINT AGREEMENTS

11. PROPERTY TAXES

The workers' compensation claims liability of $117,977 reported in the Fringe Benefits Fund at December31, 2012, is based on the requirements of Governmental Accounting Standards Board Statement No. 10,which requires that a liability for claims be reported if it is probable that a liability has been incurred atthe date of the financial statements and the amount of the loss can be reasonably estimated. The claimsliability is reported based on information provided by the administrator of the plan. No annuity contractshave been purchased for claims liability.

The changes in the workers' compensation claims liability are as follows for the years endedDecember 31:

Beginning June 1, 1978, the County entered into an agreement with the City of Traverse City for the jointownership and operation of the Governmental Center. Under the terms of the agreement, the City owns26.39% of the property and the County owns the remaining 73.61%. The County's share of the originalbuilding cost was approximately $2,900,000.

Under the terms of a separate agreement, the City reimburses the County for their pro rata share ofoperation and maintenance costs.

The County’s property taxes are levied each July 1 for the General Fund and on December 1 for theCommission on Aging and Grand Traverse Pavilions (medical care facility) on the taxable valuation ofproperty located in the County as of the preceding December 31, the lien date. Property taxes arecollected by the local government units’ payable without penalty and interest through February 14 of thesucceeding year; as of March 1 the succeeding year, unpaid real property taxes are turned over to theGrand Traverse County Treasurer for collections.

Assessed values as established annually by the local units of government and subject to acceptance by theCounty, are equalized by the State at an estimated 50 percent of current market value. Real andpersonal property in the County for the summer 2012 levy was assessed and equalized at $4,285,338,798,representing 50 percent of estimated current market value. The government’s general operating,medical care, and commission on aging tax rates for 2012 were 4.9838, .6595, and .6000 mills,respectively.

88



12. DEFINED BENEFIT PENSION PLAN

Pension Plan – Primary Government (excluding the Grand Traverse Pavilions)

Three-Year Trend Information

Fiscal Annual Percentage NetYear Pension Cost of APC Pension

Ending (APC) Contributed Obligation

12/31/2010 3,960,432$ 100% -$ 12/31/2011 3,962,869 100% - 12/31/2012 3,879,285 100% -

Plan Description. The County’s defined benefit pension plan provides retirement and disability benefits,annual cost-of-living adjustments and death benefits to plan members and beneficiaries. The Countyparticipates in the Municipal Employees’ Retirement System of Michigan (MERS), an agent multiple-employer plan administered by the MERS Retirement Board. Act No. 427 of the Public Acts of 1984, asamended, establishes and amends the benefit provisions of the participants in MERS. The MunicipalEmployees Retirement System of Michigan issues a publicly available financial report that includesfinancial statements and required supplementary information for MERS. That report may be obtained bywriting to the Municipal Employees Retirement System of Michigan, 1134 Municipal Way, Lansing,Michigan 48917 or by calling (800) 767-6377.

Funding Policy. The County is required to contribute at an actuarially determined rate; the current rateranges from 0% to 41.42% of annual covered payroll depending on the valuation division for the County’sopen divisions. The County is required to contribute fixed amounts for the closed divisions. Closeddivisions no longer allow new employees to become members of the defined benefit pension plan.Employees are currently not required to contribute to the Plan. The contribution requirements of theCounty are established and may be amended by the Retirement Board of MERS. The contributionrequirements of plan members, if any, are established and may be amended by the County, depending onthe MERS contribution program adopted by the County.

Annual Pension Cost. For the year ended December 31, 2012, the County’s annual pension cost of$3,879,285 for MERS was equal to the County’s required and actual contributions. The requiredcontribution was determined as part of the December 31, 2010 actuarial valuation using the entry ageactuarial cost method. The actuarial assumptions included (a) a rate of return on the investment ofpresent and future assets of 8.0%, (b) projected salary increases of 1.0% per year compounded annually,attributable to inflation, and (c) additional projected salary increases of 0.0% to 13.0% per year,depending on age, attributable to seniority/merit. Although no specific price inflation assumption is usedfor this valuation, the 4.5% long- term wage inflation assumption would be consistent with a priceinflation of 3% to 4%. The actuarial value of MERS assets was determined based on a 10-year smoothedvalue of assets. The County’s unfunded actuarial accrued liability is being amortized as a levelpercentage of projected payroll on an open basis. The remaining amortization period at December 31,2011, the date of the latest actuarial valuation, was 27 years for open divisions and 14 years for closeddivisions.

89



Pension Plan – Grand Traverse Pavilions

Funded Status and Funding Progress. As of December 31, 2011, the most recent actuarial valuation date,the plan was 50.2% funded. The actuarial accrued liability for benefits was $82,943,903, and theactuarial value of assets was $41,634,521, resulting in an unfunded actuarial accrued liability (UAAL) of$41,309,382. The covered payroll (annual payroll of active employees covered by the plan) was$5,676,816 and the ratio of the UAAL to the covered payroll was 728 percent.

The schedule of funding progress, presented as required supplementary information following the notesto the financial statements, presents multiyear trend information about whether the actuarial value ofplan assets is increasing or decreasing over time relative to the actuarial accrued liability for benefits.

Plan Description. The Grand Traverse Pavilions defined benefit pension plan provides retirement anddisability benefits, annual cost-of-living adjustments and death benefits to plan members andbeneficiaries. Grand Traverse Pavilions participates in the Municipal Employees Retirement System ofMichigan (MERS), an agent multiple-employer plan administered by the MERS Retirement Board. Act No.427 of the Public Acts of 1984, as amended, establishes and amends the benefit provisions of theparticipants in MERS. The Municipal Employees Retirement System of Michigan issues a publicly availablefinancial report that includes financial statements and required supplementary information for MERS.That report may be obtained by writing to the Municipal Employees Retirement System of Michigan, 1134Municipal Way, Lansing, Michigan 48917 or by calling (800) 767-6377.

Funding Policy. The Pavilions is required to contribute at an actuarially determined rate; the currentrate ranges from 5.37% to 9.42% of annual covered payroll. Employees are currently required tocontribute to the Plan. Employee contributions range from .40 to 7.81%. The contribution requirementsof the Pavilions are established and may be amended by the Retirement Board of MERS. The contributionrequirements of plan members, if any, are established and may be amended by the Pavilions, dependingon the MERS contribution program adopted by the Pavilions.

The schedule of employer contributions, presented as required supplementary information (RSI) followingthe notes to the financial statements, presents trend information about the amounts contributed to theplan by employers in comparison to the ARC, an amount that is actuarially determined in accordance withthe parameters of GASB Statement No. 50. The ARC represents a level of funding that, if paid on anongoing basis, is projected to cover normal cost for each year and amortize any unfunded actuarialliabilities (or funding excess) over a period not to exceed thirty years.

90






12/31/2010 989,285$ 100% -$ 12/31/2011 900,517 100% - 12/31/2012 894,639 100% -

Funded Status and Funding Progress. As of December 31, 2011, the most recent actuarial valuation date,the plan was 83.5% funded. The actuarial accrued liability for benefits was $22,438,319, and theactuarial value of assets was $18,737,809 resulting in an unfunded actuarial accrued liability (UAAL) of$3,700,510. The covered payroll (annual payroll of active employees covered by the plan) was$12,592,496 and the ratio of the UAAL to the covered payroll was 29 percent.


Annual Pension Cost. For the year ended December 31, 2012, the Pavilions annual pension cost of$894,639 for MERS was equal to the Pavilions required and actual contributions. The requiredcontribution was determined as part of the December 31, 2010 actuarial valuation using the entry ageactuarial cost method. The actuarial assumptions included (a) a rate of return on the investment ofpresent and future assets of 8.0%, (b) projected salary increases of 1.0% per year compounded annually,attributable to inflation, and (c) additional projected salary increases of 0.0% to 13.00% per year,depending on age, attributable to seniority/merit. Although no specific price inflation assumption is usedfor this valuation, the 4.5% long-term wage inflation assumption would be consistent with a priceinflation of 3% to 4%. The actuarial value of MERS assets was determined on the basis of a valuationmethod that assumes the fund earns the expected rate of return, and includes an adjustment to reflectfair value. The Pavilion’s unfunded actuarial accrued liability is being amortized as a level percentage ofprojected payroll on an open basis. The remaining amortization period at December 31, 2011, the dateof the latest actuarial valuation, was 27 years.


91



Pension Plan – Road Commission Component Unit




12/31/2010 205,680$ 100% -$ 12/31/2011 258,900 100% - 12/31/2012 306,480 100% -

Plan Description. The Road Commission’s defined benefit pension plan provides retirement and disabilitybenefits, annual cost-of-living adjustments and death benefits to plan members and beneficiaries. TheCommission participates in the Municipal Employees Retirement System of Michigan (MERS), an agentmultiple-employer plan administered by the MERS Retirement Board. Act No. 427 of the Public Acts of1984, as amended, establishes and amends the benefit provisions of the participants in MERS. TheMunicipal Employees Retirement System of Michigan issues a publicly available financial report thatincludes financial statements and required supplementary information for MERS. That report may beobtained by writing to the Municipal Employees Retirement System of Michigan, 1134 Municipal Way,Lansing, Michigan 48917 or by calling (800) 767-6377.

Funding Policy. The Commission is required to contribute at an actuarially determined rate. Thecontribution requirements of the Road Commission are established by Act No. 427 of the Public Acts of1984, as amended, and may be amended by the Retirement Board of MERS. The contributionrequirements of plan members are established and may be amended by the Road Commission.

Annual Pension Cost. For the year ended December 31, 2012, the Road Commission's annual pension costof $306,480 for MERS was equal to the Road Commission’s required and actual contributions. The requiredcontribution was determined as part of the December 31, 2011 actuarial valuation using the entry ageactuarial cost method. The actuarial assumptions included (a) a rate of return on the investment ofpresent and future assets of 8.0%, (b) projected salary increases of 4.5% per year compounded annually,attributable to inflation, and (c) additional projected salary increases of 0.0% to 8.4% per year, dependingon age, attributable to seniority/merit. The actuarial value of MERS assets was determined on the basisof a valuation method that assumes the fund earns the expected rate of return, and includes anadjustment to reflect fair value. The Road Commission's unfunded actuarial accrued liability is beingamortized as a level percentage of projected payroll on an open basis. The remaining amortizationperiod at December 31, 2011 the date of the latest actuarial valuation was 27 years.


92



13. DEFINED CONTRIBUTION PLAN

Primary Government

Discretely-Presented Component Unit

During the fiscal year the Road Commission contributed $165,751 and employees contributed $36,870.

Funded Status and Funding Progress. As of December 31, 2011, the most recent actuarial valuation date,the plan was 69.4% funded. The actuarial accrued liability for benefits was $9,708,395, and the actuarialvalue of assets was $6,742,101, resulting in an unfunded actuarial accrued liability (UAAL) of $2,966,294.The covered payroll (annual payroll of active employees covered by the plan) was $487,950 and the ratioof the UAAL to the covered payroll was 608 percent.


The County sponsors the “Grand Traverse County Defined Contribution Plan” created in accordance withInternal Revenue Code Section 401(a). The plan is available to all full time employees except for theemployees who are members of the Circuit Court Association. Employees who were hired previous toMay 1, 2001 were able to chose to either stay within the defined benefit plan or to change to the definedcontribution plan once their union contract was settled. Participants vest 0% each year for the first twoyears of service, and become 25%, 50%, 75% and 100% vested in years three through six, respectively.Participants may contribute 3% of their base pay. The County is required to contribute an amount equalto 6% of the participant’s base pay plus match employee contributions up to 3% of the employees’ basepay.

The plan is administered by MERS. Plan provisions and contribution requirements were established andcan only be amended by authorization of the County Commission. In 2012, 358 employees participatedand the County contributed $1,367,653 and the employees contributed $460,933.

The Road Commission provides pension benefits to all of its full-time employees through a definedcontribution plan. It is administered by MERS. In a defined contribution plan, benefits depend solely onamounts contributed to the plan plus investment earnings. Administrative employees are eligible toparticipate from the date of employment. Union employees are eligible after one year as established byagreement. The Road Commission contributes 9% of administrative and 8% of union personnel grossearnings, respectively plus match employee contributions in an amount equal to 3% administrative and 2%union. Contributions for each employee (plus interest allocated to the employee’s account) are vested20%, 40%, 60%, 80% and 100% in years two through six, respectively. Plan provisions and contributionrequirements are established and may be amended by the Board of County Road Commissioners.

93



14. OTHER POSTEMPLOYMENT BENEFITS

Primary Government

Annual required contribution 398,293$ Interest on net OPEB obligation 38,797 Adjustment to annual required contribution (35,923) Annual OPEB cost (expense) 401,167

Contributions made (64,881)

Increase in net OPEB obligation 336,286 Net OPEB obligation, beginning of year 969,925

Net OPEB obligation, end of year 1,306,211$

Annual OPEB Cost and Net OPEB Obligation. The County’s annual other postemployment benefit (OPEB)cost (expense) is calculated based on the annual required contribution (ARC) of the employer, an amountactuarially determined in accordance with the parameters of GASB Statement 45. The ARC represents alevel of funding that, if paid on an ongoing basis, is projected to cover normal cost each year and toamortize any unfunded actuarial liabilities (or funding excess) over a period not to exceed thirty years.The following table shows the components of the County’s annual OPEB cost for the year, the amountactually contributed to the plan, and the County’s net OPEB obligation to the Retiree Health Plan atDecember 31, 2012:

Plan Description. The County administers the County’s Retiree Health Insurance Plan (the Plan) as asingle-employer defined benefit Other Postemployment Benefit plan (OPEB). The Plan provides forcontinuation of medical insurance benefits for certain retirees and can be amended by action of theCounty subject to the applicable collective bargaining and employment agreements. The Plan does notissue a stand alone financial report since there are no assets legally segregated for the sole purpose ofpaying benefits under the plan.

Plan Membership. The plan membership consisted of the following at December 31, 2010, the date of themost recent actuarial valuation: Retirees and Beneficiaries currently receiving benefits 42 and activeparticipants 38.

Funding Policy. The obligations of plan members, employers and other entities are established by actionof the County pursuant to the applicable collective bargaining and employment agreements. Therequired contribution rates of the employer and members vary depending on the applicable agreement.The County currently contributes enough money to the plan to satisfy current obligations on a pay-as-you-go basis. The costs of administering the plan are paid by the County.

Accounting policy. The accrual basis of accounting is used. The fair market value of assets, if any, isdetermined by the market value of the assets, if any, paid by a willing buyer to a willing seller.

94



Percentage ofFiscal Annual OPEBYear Annual OPEB Cost Net OPEB

Ending Cost Contributed Obligation

12/31/2010 357,819$ 24.3% 681,242$ 12/31/2011 370,135 22.0% 969,925 12/31/2012 401,167 16.2% 1,306,211

The County’s annual OPEB cost, the percentage of annual OPEB cost contributed to the plan, and the netOPEB obligation for 2012 and the previous two years was as follows:

Funded Status and Funding Progress - As of December 31, 2010, the most recent actuarial valuation date,the plan was 0% funded. The actuarial accrued liability for benefits was $6,100,749, and the actuarialvalue of assets was $0, resulting in an unfunded actuarial accrued liability (UAAL) of $6,100,749. Thecovered payroll (annual payroll of active employees covered by the plan) was $12,645,018, and the ratioof the UAAL to the covered payroll was 48.2%. Actuarial valuations of an ongoing plan involve estimatesof the value of reported amounts and assumptions about the probability of occurrence of events far intothe future. Examples include assumptions about future employment, mortality, and the healthcare costtrend. Amounts determined regarding the funded status of the plan and the annual requiredcontributions of the employer are subject to continual revision as actual results are compared with pastexpectations and new estimates are made about the future. The schedule of funding progress, presentedas required supplementary information following the notes to the financial statements, presentsmultiyear trend information about whether the actuarial value of plan assets is increasing or decreasingover time relative to the actuarial accrued liabilities for benefits.

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 ofbenefits provided at the time of each valuation and the historical pattern of sharing of benefit costsbetween the employer and plan members to that point. The actuarial methods and assumptions usedinclude techniques that are designed to reduce the effects of short-term volatility in actuarial accruedliabilities and the actuarial value of assets, consistent with the long-term perspective of the calculations.

In the December 31, 2010 actuarial valuation, the individual entry-age actuarial cost method was used.The actuarial assumptions included a 4.0% investment rate of return (net of administrative expenses),which is a blended rate of the expected long-term investment returns on plan assets, and an annualhealthcare cost trend inflation rate of 9% initially, reduced by decrements to an ultimate rate of 4.0%after 10 years. The UAL is being amortized as a level percentage of projected payroll if the divisions areopen to new hires, and as a level dollar if the divisions are closed to new hires. The remainingamortization period at December 31, 2010 was 30 years.

The schedule of employer contributions, presented as required supplementary information (RSI) followingthe notes to the financial statements, presents trend information about the amounts contributed to theplan by employers in comparison to the ARC, an amount that is actuarially determined in accordance withthe parameters of GASB Statement 45.

95



The County’s allocation of their OPEB expense to the County’s functions are as follows:

Governmental Activities:Legislative 100$ Judicial 7,779 General government 5,038 Public safety 222,842 Health and welfare 165,067 Recreation and culture 341

Total governmental activities OPEB expense 401,167$

Road Commission Discretely-Presented Component Unit

Plan membership consisted of the following at December 31, 2012:

Retirees and beneficiaries currently receiving benefits 53 Active participants 48

Annual required contribution 576,069$ Interest on net OPEB obligation 66,897 Adjustment to annual required contribution (100,615) Annual OPEB cost (expense) 542,351

Contributions made (158,063)

Increase in net OPEB obligation 384,288 Net OPEB obligation, beginning of year 1,672,428

Net OPEB obligation, end of year 2,056,716$

Plan Description. The Road Commission provides health care benefits to its retired employees, asestablished by County Board Resolution. The Road Commission pays medical premiums or reimburses aprescribed amount of medical expenses for employees based on age and years of service at the time ofretirement.

Funding Policy. The County Road Commission’s annual other postemployment benefit (OPEB) cost(expense) is calculated based on the annual required contribution of the employer (ARC). The ARCrepresents a level of funding that, if paid on an ongoing basis, is projected to cover the normal cost eachyear and amortize any unfunded actuarial liabilities (or funding excess) over a period not to exceed 30years.

The components of the County Road Commission’s annual OPEB (other postemployment benefit) cost forthe year, the amount actually contributed to the Plan, and changes in the County’s net OPEB obligationto the Plan are as follows:

96



Percentage ofYears Annual OPEBEnded Annual OPEB Cost Net OPEB

December 31, Cost Contributed Obligation

12/31/2010 648,229$ 20.1% 1,300,772$ 12/31/2011 660,801 25.0% 1,672,428 12/31/2012 542,351 23.6% 2,056,716

Actuarial accrued liabilities (AAL) 5,571,962$ Actuarial value of plan assets 30,000

Unfunded actuarial accrued liability 5,541,962$

Actuarial valuation date 12/31/2011Actuarial cost method Projected unit creditAmortization method Level dollar, closedRemaining amortization period 27 yearsActuarial assumptions:

Investment rate of return 4.0%Healthcare inflation rate 9.0% downgraded to 5% over 4 years

Actuarial valuations of an ongoing plan involve estimates of the value of reported amounts andassumptions about the probability of occurrence of events far into the future. Examples includeassumptions about future employments, mortality, and the healthcare cost trend. Amounts determinedregarding the funded status of the plan and the annual required contributions of the employer are subjectto continual revision as actual results are compared to past expectations and new estimates are madeabout the future. The schedule of funding progress, presented as required supplementary informationfollowing the notes to the financial statements, presents multiyear trend information that shows whetherthe actuarial value of plan assets is increasing or decreasing over time relative to the actuarial liabilitiesfor benefits.

Projections of benefits for financial reporting purposes are based on the substantive plan (the plan asunderstood by the employer and plan members) and include the types of benefits provided at the time ofeach valuation and the historical pattern of sharing benefit costs between the employer and planmembers to that point. The actuarial methods and assumptions used include techniques that aredesigned to reduce the effects of short-term volatility in actuarial accrued liabilities and the actuarialvalue of assets, consistent with the long-term perspective of the calculations. Significant methods andassumptions were as follows:

The Road Commission’s annual OPEB cost, the percentage of annual OPEB cost contributed to the plan,and the net OPEB obligation for 2012 and the previous two years was as follows:

The funded status of the Plan as of December 31, 2011, the date of the latest actuarial valuation, was asfollows:

97



15. CONTINGENCIES AND COMMITMENTS

16. LEASES

Future commitments to maturity on the operating leases are as follows:

Year Amount

2013 42,036$ 2014 1,668 2015 1,251

44,955$

17. RELATED-PARTY TRANSACTIONS

·

· To operate for the benefit of and in support of the Organization.

The Road Commission is party to litigation concerning the Foxcraft Subdivision paving and restorationproject. The Road Commission withheld payment on the basis the contractor did not perform the workrequired by the contract. The contractor sued the Road Commission and alleged they are owedadditional money related to this project. The Road Commission is contesting the matter vigorously. It isnot possible to estimate the results of this litigation at this time.

The Road Commission discretely-presented component unit has executed two noncancellable operatingleases with Caterpillar Financial Services Corporation, payable in monthly installments, that mature in2013 and 2015. The Road Commission entered into a copier lease which commenced on August 31, 2010and expires in 2015. Future lease commitments amount to $44,955. Lease expense for the year endedDecember 31, 2012 was $42,036.

In July 1998, the Grand Traverse Pavilions Foundation (the “Foundation”) and in 2001, the Grand TraversePavilions Endowment were organized for the following purposes:

To accept and administer donations, contributions and gifts for the benefit of the Grand TraversePavilions (the “Organization”), a County Enterprise Fund.

There are lawsuits pending in which the County is involved. The County estimates that the potentialclaims against the County not covered by insurance resulting from such litigation would not materiallyaffect the financial statements of the County.

The County participates in a number of Federal and State assisted grant programs, including mainly theFriend of Court and Prosecuting Attorney Cooperative Reimbursement programs, and Health DepartmentGrant programs, which are subject to financial and compliance audits. The disbursement of fundsreceived under these programs generally requires compliance with terms and conditions specified in thegrant agreements and are subject to audit by the grantor agencies. The amount, if any, of expenditureswhich may be disallowed by the granting agencies cannot be determined at this time, although theCounty expects such amounts if any, to be insignificant.

98



·

· To operate solely as a non-profit corporation in such a manner that no part of its net earnings willincur to the benefit of any member, trustee, officer or individual.

The Foundation’s Board of Directors is appointed by the Grand Traverse Pavilions’ Board of Directors.During 2012, the Organization paid operating expenses on behalf of the Foundation for which theOrganization is reimbursed. There is no balance due to the organization at December 31, 2012.

To provide resources for any activities that will provide a direct benefit to, and improve the healthand welfare of the participants of the Organization.

99



18. FUND BALANCES - GOVERNMENTAL FUNDS

CommunityGeneral Commission Development Lafranier Nonmajor

Fund on Aging Block Grant DPW Governmental TotalNonspendable:

Prepaid items and other assets 3,040,614$ 775$ -$ -$ 5,181$ 3,046,570$

Long-termadvances, net 393,721 - - - - 393,721

Total nonspendable 3,434,335 775 - - 5,181 3,440,291

Restricted for:Commission on Aging - 1,440,841 - - - 1,440,841 CDBG - - 63,513 - - 63,513 Local Crime Victims Rights - - - - 1,339 1,339 Friend of the Court - - - - 1,197,582 1,197,582 Health Department - - - - 1,055,936 1,055,936 Veterans' Trust - - - - 5,111 5,111 ROD Automation - - - - 249,608 249,608 Corrections PA 511 - - - - 213,257 213,257 Criminal Justice Training - - - - 19,337 19,337 Housing Trust Fund - - - - 370,771 370,771 Next Michigan - - - - 19,326 19,326 EDC - - - - 1,630,919 1,630,919 EPA Grant - - - - 3,614,163 3,614,163 Child Care - - - - 8,472 8,472 Corrections Officers Trainin - - - - 7,458 7,458 Health Services - - - - 51,795 51,795

Total restricted - 1,440,841 63,513 - 8,445,074 9,949,428

Committed for:Parks and Rec - - - - 17,808 17,808 Gypsy Moth Suppression - - - - 626 626 County Law Library - - - - 4,399 4,399 Federal Equitable Sharing - - - - 193,451 193,451

Total committed - - - - 216,284 216,284

Assigned for:Subsequent years budget 625,000 224,124 - - 1,666,386 2,515,510

Unassigned (deficit) 3,975,986 - - (1,680,000) (1,315,000) 980,986

Total fund balances,governmental funds 8,035,321$ 1,665,740$ 63,513$ (1,680,000)$ 9,017,925$ 17,102,499$

The County reports fund balance in governmental funds based on the provisions of GASB Statement No. 54, Fund Balance Reporting and Governmental Fund Type Definitions. GASB 54 establishes fund balance classificationsthat comprise a hierarchy based primarily on the extent to which a government is bound to observe constraintsimposed upon the use of the resources reported in governmental funds. Detailed information on fund balances ofgovernmental funds is as follows:

100



19. NET INVESTMENT IN CAPITAL ASSETS

The composition of the net investment in capital assets as of December 31, 2012, was as follows:

Governmental Business-type ComponentActivities Activities Units

Capital assets:Capital assets not being depreciated 15,639,877$ 2,779,440$ 28,123,732$ Capital assets being depreciated, net 31,784,186 22,755,378 49,328,790

47,424,063 25,534,818 77,452,522

Related debt:Bonds payable (11,030,000) (10,500,000) (2,865,000) Bond discount 46,304 - - Bond premium - (106,887) - Notes payable - - (2,417,081) Due to primary government - - (2,468,170)

(10,983,696) (10,606,887) (7,750,251)

Net investment in capital assets 36,440,367$ 14,927,931$ 69,702,271$

20. RESTATEMENT

The County adopted the provisions of GASB Statement No. 63, Financial Reporting of Deferred Outflowsof Resources, Deferred Inflows of Resources, and Net Position, and GASB Statement No. 65, Items Previously Reported as Assets and Liabilities, in the current year. As a result, the beginning net positionof the business-type activities was decreased by $95,273 and the beginning net position of theDepartment of Public Works Component Unit was decreased by $113,458 to eliminate unamortized bondissuance costs, which no longer meet the definition of an asset and are now required to be recognized asan expense in the period incurred.

101


102

REQUIRED SUPPLEMENTARY INFORMATION

103


Required Supplementary InformationMERS Agent Multiple-Employer Defined Benefit PlanPrimary Government

ActuarialAccrued UAAL as a

Actuarial Liability Unfunded PercentageActuarial Value of (AAL) - AAL Funded Covered of coveredValuation Assets Entry Age (UAAL) Ratio Payroll Payroll

Date (a) (b) (b - a) (a / b) (c) ((b - a) / c)

12/31/2006 36,695,376$ 74,170,541$ 37,475,165$ 49.5% 6,216,867$ 602.8%12/31/2007 38,487,034 76,407,968 37,920,934 50.4% 6,247,271 607.0%12/31/2008 39,109,567 78,874,560 39,764,993 49.6% 5,997,727 663.0%12/31/2009 39,448,510 79,212,816 39,764,306 49.8% 6,148,220 646.8%12/31/2010 40,647,280 80,396,593 39,749,313 50.6% 5,928,845 670.4%12/31/2011 41,634,521 82,943,903 41,309,382 50.2% 5,676,816 727.7%

AnnualYear Ended Required Percentage

December 31, Contribution Contributed

2007 3,275,853$ 100.0%2008 3,441,339 100.0%2009 3,572,016 100.0%2010 3,960,432 100.0%2011 3,962,869 100.0%2012 3,879,285 100.0%

Schedule of Funding Progress

Schedule of Employer Contributions

104


Required Supplementary InformationRetiree Health Care Other Postemployment Benefit PlanPrimary Government



Date (a) (b) (b - a) (a / b) (c) ((b - a) / c)

12/31/2006 -$ 3,835,158$ 3,835,158$ 0.0% 12,439,409$ 30.8%12/31/2008 - 4,857,649 4,857,649 0.0% 12,581,495 38.6%12/31/2010 - 6,100,749 6,100,749 0.0% 12,645,018 48.2%



2008 260,593$ 19.0%2009 272,319 27.0%2010 353,505 24.0%2011 363,809 22.0%2012 398,293 16.3%



105


Required Supplementary InformationMERS Agent Multiple-Employer Defined Benefit PlanPavilions Component Unit



Date (a) (b) (b - a) (a / b) (c) ((b - a) / c)

12/31/2007 12,416,856$ 16,566,596$ 4,149,740$ 75.0% 11,215,513$ 37.0%12/31/2008 13,778,226 18,474,514 4,696,288 74.6% 11,454,361 41.0%12/31/2009 15,370,615 19,069,186 3,698,571 80.6% 11,930,874 31.0%12/31/2010 17,086,794 20,387,510 3,300,716 83.8% 12,125,296 27.2%12/31/2011 18,737,809 22,438,319 3,700,510 83.5% 12,592,496 29.4%



2008 933,906$ 100.0%2009 798,288 100.0%2010 989,285 100.0%2011 900,517 100.0%2012 894,639 100.0%



106


Required Supplementary InformationMERS Agent Multiple-Employer Defined Benefit PlanRoad Commission Component Unit



Date (a) (b) (b - a) (a / b) (c) ((b - a) / c)

12/31/2006 7,619,448$ 9,211,183$ 1,591,735$ 82.7% 714,176$ 222.9%12/31/2007 7,762,515 9,304,536 1,542,021 83.4% 671,186 229.7%12/31/2008 7,545,596 9,455,062 1,909,466 79.8% 568,511 335.9%12/31/2009 7,184,722 9,494,975 2,310,253 75.7% 614,659 375.9%12/31/2010 6,953,860 9,612,932 2,659,072 72.3% 467,908 568.3%12/31/2011 6,742,101 9,708,395 2,966,294 69.4% 487,950 607.9%



2007 165,255$ 100.0%2008 171,607 100.0%2009 161,892 100.0%2010 205,680 100.0%2011 258,900 100.0%2012 306,480 100.0%



107


Required Supplementary InformationRetiree Health Care Other Postemployment Benefit PlanRoad Commission Component Unit



Date (a) (b) (b - a) (a / b) (c) ((b - a) / c)

12/31/2008 -$ 6,695,670$ 6,695,670$ 0.0% Not available Not available12/31/2011 30,000 5,571,962 5,541,962 0.5% Not available Not available



2008 601,268$ 43.0%2009 648,229 30.0%2010 660,801 21.0%2011 528,310 25.0%2012 576,069 32.0%



108

COMBINING AND INDIVIDUAL FUNDFINANCIAL STATEMENTS AND SCHEDULES

109


Nonmajor Governmental Funds

Special Revenue Funds

13th Circuit Court Fund - This fund is used to account for revenues received from Grand Traverse,Antrim and Leelanau counties to cover court activities.

Local Crime Victims Rights Fund - This fund is used to account for payments from defendants forLCVR sentencing assessment, to allow timely payments to victims when restitution from defendantsis not likely due to incarceration, etc. as determined by Circuit Court Administration.

86th District Court Fund - This fund is used to account for revenues received from Grand Traverse,Antrim and Leelanau counties to cover court activities.

County Special Projects Fund - This fund is used to account for grants or other revenue receivedspecifically for County special projects such as trails and the nature center.

Parks and Recreation Fund - This fund is used to account for revenue sources generated by Countypark facilities to cover the cost of corresponding expenditures.

Maple Bay Development Fund - This fund is used to account for grants and other revenuesspecifically for improvement of the Maple Bay property.

Friend of the Court Fund - This fund is used to account for judgment fees, state grants, Title IV-D,charges for services, and revenues received from Grand Traverse, Antrim and Leelanau counties forFOC activities.

Health Department Fund - This fund is used to account for the federal and state grants, localservice fees, and General Fund appropriations, which are used to provide health services to citizensof the County.

Gypsy Moth Suppression Program Fund - This fund is used to account for revenues received fromproperty owners and federal and state grants for controlling gypsy moths.

Veterans’ Trust Fund - This fund is used to account for revenue received from the State andCounty match funds to provide emergency assistance to Michigan veterans.

Register of Deeds Automation Fund - This fund is used to account for the collection of $5.00 of thetotal fee collected for each recording, which is used for upgrading technology in the Register ofDeeds' Office.

Indigent Health Care Fund - This fund is used to account for donations from private sources to helpcover indigent health care for County citizens.

110



Special Revenue Funds (Continued)

Corrections P.A. 511 Fund - This fund is used to account for tether program revenue,appropriations from the General Fund and state grant revenue for community corrections programssuch as the transition house and tether program.

County Law Library Fund - This fund is used to account for revenue received from penal fines andGeneral Fund appropriations earmarked for maintaining a law library.

Federal Equitable Sharing Fund - This fund is used to account for revenue received from the UnitedStates Treasury/IRS for a portion of properties seized/confiscated during a federal investigation.Revenue is to be used for law enforcement purposes.

Criminal Justice Training Act Fund - This fund is used to account for state grant revenue to helpcontinue law enforcement employee training.

Mitchell Creek Watershed Fund - This fund is used to account for the DEQ Coastal Managementstate grant and County funds for improvement of the Mitchell Creek Watershed.

Housing Trust Fund - This fund is used to account for HUD grant revenue and County contributionsfor affordable housing, corridor revitalization plans, and housing inventory/assessment.

Next Michigan Fund - This fund is used to account for economic development activities relating tothe expansion and attraction of businesses that ship goods by two or more modes of transportation.

EDC Fund - This fund is used to account for interest revenue and principal repayments from EDCloans to help promote economic development within the County.

EPA Grant Fund - This fund is used to account for federal funds used to assess propertiescontaminated by petroleum substances.

Revenue Sharing Reserve Fund - This fund is used to account for tax revenues accumulated as aresult of the gradual shift of the County property tax levy from December 1 to July 1. These taxrevenues are a temporary substitute or replacement revenue for state revenue sharing payments.

Child Care Fund - This fund is used to account for revenues received from the General Fund,federal and state grants, private agencies, and individuals to provide care, guidance, and control ofchildren coming under the jurisdiction of the Family Division of the 13th Circuit Court.

Juvenile Accountability Fund - This fund is used to account for revenues received from the GeneralFund and state grants to provide foster care to children under the jurisdiction of the FamilyDivision of the 13th Circuit Court, who do not qualify for the state foster care program.

111



Special Revenue Funds (Concluded)

Safe Havens Fund - This fund is used to account for revenues received from the federal governmentfor the supervised visitation and safe exchange program.

Corrections Officers Training Fund - This fund is used to account for revenue received from inmatebooking fees to be used for costs relating to the continuing education, certification, re-certification, and training of local correction officers.

Debt Service Funds

Woodmere Debt Fund - This fund was established to accumulate resources to meet the annual debtservice requirements for the bond issued to purchase and renovate the Woodmere Law EnforcementBuilding.

Courthouse Debt Fund - This fund was established to accumulate resources to meet the annualdebt service requirements for the bond issued to build the new Hall of Justice Building.

Health Services Debt Fund - This fund was established to accumulate resources to meet the annualdebt service requirements for the bond issued to build the new Health Services Building.

Capital Projects Funds

County Facilities Fund - This fund was established to account for the cost of maintaining andoperating County facilities.

Capital Improvement Fund - This fund was established to accumulate resources for infrastructure,capital improvements, major repairs and maintenance expenditures.

Health Services Capital Fund - This fund was established to accumulate resources for constructionof the new Health Services building.

112


Combining Balance SheetNonmajor Governmental FundsDecember 31, 2012

TotalSpecial Debt Capital Nonmajor

Revenue Service Projects GovernmentalFunds Funds Funds Funds

AssetsCash and cash equivalents 4,416,280$ -$ 1,622,205$ 6,038,485$ Investments 204,434 - - 204,434 Receivables, net:

Accounts 932,890 - 76,173 1,009,063 Loans 731,661 - - 731,661 Due from State 1,295,747 - - 1,295,747 Due from other governments 168,622 - - 168,622

Due from other funds 13,826 - 9,553 23,379 Prepaid items and other assets 4,516 - 665 5,181 Advances to other funds 3,614,163 - - 3,614,163

Total assets 11,382,139$ -$ 1,708,596$ 13,090,735$

LiabilitiesAccounts payable 433,946$ -$ 383,097$ 817,043$ Accrued liabilities 178,619 - - 178,619 Due to other funds 116,601 - - 116,601 Due to State 47,097 - - 47,097 Due to other governments 180,540 - - 180,540 Advance from other funds 396,016 - - 396,016 Unearned revenues 156,151 1,315,000 250,000 1,721,151

Total liabilities 1,508,970 1,315,000 633,097 3,457,067

Deferred inflows of resourcesUnavailable revenues - loans receivable 615,743 - - 615,743

Fund balancesNonspendable 4,516 - 665 5,181 Restricted 8,393,279 - 51,795 8,445,074 Committed 216,284 - - 216,284 Assigned 643,347 - 1,023,039 1,666,386 Unassigned (deficit) - (1,315,000) - (1,315,000)

Total fund balances 9,257,426 (1,315,000) 1,075,499 9,017,925

Total liabilities, deferred inflows of resourcesand fund balances 11,382,139$ -$ 1,708,596$ 13,090,735$

113


Combining Statement of Revenues, Expenditures and Changes in Fund Balances - Nonmajor Governmental FundsFor the Year Ended December 31, 2012

TotalSpecial Debt Capital Nonmajor

Revenue Service Projects GovernmentalFunds Funds Funds Funds

RevenuesLicenses 376,387$ -$ -$ 376,387$ Intergovernmental:

Federal sources 3,343,792 - 164,326 3,508,118 State sources 2,288,571 - - 2,288,571 Local sources 1,686,558 - 111,441 1,797,999

Charges for services 1,037,955 - 9,553 1,047,508 Rental revenues 101,894 - - 101,894 Interest revenues 32,571 - 8,030 40,601 Other revenues 365,350 - 352,691 718,041

Total revenues 9,233,078 - 646,041 9,879,119


Judicial 7,805,149 - - 7,805,149 General government 95,007 - 2,189,826 2,284,833 Public safety 431,533 - - 431,533 Health and welfare 7,056,334 - - 7,056,334 Economic development 9,279 - - 9,279 Recreation and cultural 639,990 - - 639,990

Debt service:Principal - 2,005,000 - 2,005,000 Interest and fiscal charges - 355,590 - 355,590

Capital outlay 144,407 - 5,465,901 5,610,308

Total expenditures 16,181,699 2,360,590 7,655,727 26,198,016

Revenues under expenditures (6,948,621) (2,360,590) (7,009,686) (16,318,897)

Other financing sources (uses)Issuance of long-term debt - 6,170,000 5,000,000 11,170,000 Discount on issuance of long-term debt - - (46,304) (46,304) Payment to refunding bond escrow agent - (6,192,224) - (6,192,224) Transfers in 7,128,589 1,067,814 2,166,035 10,362,438 Transfers out (1,648,242) - - (1,648,242)

Total other financing sources 5,480,347 1,045,590 7,119,731 13,645,668

Net change in fund balances (1,468,274) (1,315,000) 110,045 (2,673,229)

Fund balances, beginning of year 10,725,700 - 965,454 11,691,154

Fund balances (deficit), end of year 9,257,426$ (1,315,000)$ 1,075,499$ 9,017,925$

114


115


Combining Balance SheetNonmajor Special Revenue FundsDecember 31, 2012

Local13th Crime 86th County

Circuit Victims District Special Court Rights Court Projects

AssetsCash and cash equivalents 27,138$ 9,339$ 4,967$ 26,888$ Investments - - - - Receivables, net:

Accounts 216,640 - 477,027 - Loans - - - - Due from State - - 23,636 - Due from other governments - - - -

Due from other funds 13,276 - - - Prepaid items and other assets - - - - Advances to other funds - - - -

Total assets 257,054$ 9,339$ 505,630$ 26,888$

LiabilitiesAccounts payable 36,180$ -$ 63,067$ -$ Accrued liabilities 8,512 - 68,058 - Due to other funds 9,426 - - - Due to State - - - - Due to other governments 67,557 - 112,983 - Advance from other funds 135,379 - 260,637 - Unearned revenues - - - -

Total liabilities 257,054 - 504,745 -

Deferred inflows of resourcesUnavailable revenues - loans receivable - - - -

Fund balancesNonspendable - - - - Restricted - 1,339 - - Committed - - - - Assigned - 8,000 885 26,888

Total fund balances - 9,339 885 26,888

Total liabilities, deferred inflows of resourcesand fund balances 257,054$ 9,339$ 505,630$ 26,888$

116

Gypsy Moth Register of Parks and Maple Bay Friend of Health Suppression Veterans' Deeds IndigentRecreation Development the Court Department Program Trust Automation Health Care

30,062$ 8,908$ 998,969$ 905,539$ 626$ 5,435$ 252,351$ -$ - - - - - - - -

80,525 - - 158,180 - - - - - - - - - - - - - - 322,983 713,819 - - - - - - - - - - - - - - - - - 550 - - - - 275 4,241 - - - - - - - - - - - -

110,587$ 8,908$ 1,322,227$ 1,781,779$ 626$ 5,985$ 252,351$ -$

8,914$ -$ 14,391$ 67,024$ -$ -$ 2,743$ -$ 13,360 - 46,703 33,443 - 874 - -

- - 13,276 - - - - - - - - 36,271 - - - - - - - - - - - - - - - - - - - -

2,787 - - 153,364 - - - -

25,061 - 74,370 290,102 - 874 2,743 -

- - - - - - - -

- - 275 4,241 - - - - - - 1,197,582 1,055,936 - 5,111 249,608 -

17,808 - - - 626 - - - 67,718 8,908 50,000 431,500 - - - -

85,526 8,908 1,247,857 1,491,677 626 5,111 249,608 -

110,587$ 8,908$ 1,322,227$ 1,781,779$ 626$ 5,985$ 252,351$ -$

continued…

117



Federal CriminalCorrections County Law Equitable Justice

P.A. 511 Library Sharing Training ActAssets

Cash and cash equivalents 193,669$ 15,992$ 193,451$ 19,337$ Investments - - - - Receivables, net:

Accounts - 518 - - Loans - - - - Due from State 65,421 - - - Due from other governments - - - -

Due from other funds - - - - Prepaid items and other assets - - - - Advances to other funds - - - -

Total assets 259,090$ 16,510$ 193,451$ 19,337$

LiabilitiesAccounts payable 9,871$ 4,111$ -$ -$ Accrued liabilities 7,669 - - - Due to other funds - - - - Due to State - - - - Due to other governments - - - - Advances from other funds - - - - Unearned revenues - - - -

Total liabilities 17,540 4,111 - -

Deferred inflows of resourcesUnavailable revenues - loans receivable - - - -

Fund balancesNonspendable - - - - Restricted 213,257 - - 19,337 Committed - 4,399 193,451 - Assigned 28,293 8,000 - -

Total fund balances 241,550 12,399 193,451 19,337

Total liabilities, deferred inflows of resourcesand fund balances 259,090$ 16,510$ 193,451$ 19,337$

118

Mitchell Housing RevenueCreek Trust Next EPA Sharing Juvenile

Watershed Fund Michigan EDC Grant Reserve Child Care Accountability

8,155$ 372,473$ 19,326$ 1,311,090$ -$ -$ 107$ -$ - - - 204,434 - - - -

- - - - - - - - - - - 731,661 - - - - - - - - - - 167,602 2,286 - 36,830 - - 33,149 - - 2,704 - - - - - - - - - - - - - - - - - - - - - 3,614,163 - -

8,155$ 409,303$ 19,326$ 2,247,185$ 33,149$ 3,614,163$ 167,709$ 4,990$

-$ 38,532$ -$ 523$ 25,880$ -$ 148,411$ 1,878$ - - - - - - - - - - - - 7,269 - - 3,112 - - - - - - 10,826 - - - - - - - - - - - - - - - - - - - - - - - - -

- 38,532 - 523 33,149 - 159,237 4,990

- - - 615,743 - - - -

- - - - - - - - - 370,771 19,326 1,630,919 - 3,614,163 8,472 - - - - - - - - -

8,155 - - - - - - -

8,155 370,771 19,326 1,630,919 - 3,614,163 8,472 -

8,155$ 409,303$ 19,326$ 2,247,185$ 33,149$ 3,614,163$ 167,709$ 4,990$

continued…

119



CorrectionsOfficers

Safe Havens Training TotalAssets

Cash and cash equivalents -$ 12,458$ 4,416,280$ Investments - - 204,434 Receivables, net:

Accounts - - 932,890 Loans - - 731,661 Due from State - - 1,295,747 Due from other governments 95,939 - 168,622

Due from other funds - - 13,826 Prepaid items and other assets - - 4,516 Advances to other funds - - 3,614,163

Total assets 95,939$ 12,458$ 11,382,139$

LiabilitiesAccounts payable 12,421$ -$ 433,946$ Accrued liabilities - - 178,619 Due to other funds 83,518 - 116,601 Due to State - - 47,097 Due to other governments - - 180,540 Advances from other funds - - 396,016 Unearned revenues - - 156,151

Total liabilities 95,939 - 1,508,970

Deferred inflows of resourcesUnavailable revenues - loans receivable - - 615,743

Fund balancesNonspendable - - 4,516 Restricted - 7,458 8,393,279 Committed - - 216,284 Assigned - 5,000 643,347

Total fund balances - 12,458 9,257,426

Total liabilities, deferred inflows of resourcesand fund balances 95,939$ 12,458$ 11,382,139$

concluded

120


121


Combining Statement of Revenues, Expendituresand Changes in Fund Balances - Nonmajor Special Revenue FundsFor the Year Ended December 31, 2012

Local13th Crime 86th County

Circuit Victims District Special Court Rights Court Projects

RevenuesLicenses -$ -$ -$ -$ Intergovernmental:

Federal sources - - 48,188 - State sources - - 8,492 - Local sources 445,791 10,656 886,266 -

Charges for services - - 1,275 - Rental revenues - - - - Interest revenues - - - - Other revenues - - 1,286 -

Total revenues 445,791 10,656 945,507 -


Judicial 1,762,185 9,647 4,042,807 - General government - - - - Public safety - - - - Health and welfare - - - - Economic development - - - - Recreation and cultural - - - -

Capital outlay - - - - Total expenditures 1,762,185 9,647 4,042,807 -

Revenues over (under) expenditures (1,316,394) 1,009 (3,097,300) -

Other financing sources (uses)Transfers in 1,316,394 - 3,098,185 - Transfers out - - - -

Total other financing sources (uses) 1,316,394 - 3,098,185 -

Net change in fund balances - 1,009 885 -

Fund balances, beginning of year - 8,330 - 26,888

Fund balances, end of year -$ 9,339$ 885$ 26,888$

122

Gypsy Moth Register of Parks and Maple Bay Friend of Health Suppression Veterans' Deeds IndigentRecreation Development the Court Department Program Trust Automation Health Care

-$ -$ -$ 376,387$ -$ -$ -$ -$

- - 1,210,033 1,608,620 - - - - - - 118,757 1,281,091 - 53,372 - -

5,905 - 144,928 165,858 - 300 - - 314,640 - 162,623 321,164 - - 119,050 - 101,505 389 - - - - - -

- - - - - - - - 2,366 - 106 4,421 - - - -

424,416 389 1,636,447 3,757,541 - 53,672 119,050 -

- - 1,953,595 - - - - - - - - - - - 95,007 - - - - - - - - - - - - 5,022,668 - 52,676 - 19,699 - - - - - - - -

639,990 - - - - - - - 9,762 - - 134,645 - - - -

649,752 - 1,953,595 5,157,313 - 52,676 95,007 19,699

(225,336) 389 (317,148) (1,399,772) - 996 24,043 (19,699)

170,636 - 354,823 1,328,566 - 550 - - - - (13,276) - - - - -

170,636 - 341,547 1,328,566 - 550 - -

(54,700) 389 24,399 (71,206) - 1,546 24,043 (19,699)

140,226 8,519 1,223,458 1,562,883 626 3,565 225,565 19,699

85,526$ 8,908$ 1,247,857$ 1,491,677$ 626$ 5,111$ 249,608$ -$

continued…

123



Federal CriminalCorrections County Law Equitable Justice

P.A. 511 Library Sharing Training ActRevenues

Licenses -$ -$ -$ -$ Intergovernmental:

Federal sources - - - - State sources 188,840 - - 12,244 Local sources 26,854 - - -

Charges for services 68,668 - - - Rental revenues - - - - Interest revenues - - 1,011 - Other revenues 46,476 7,622 2,801 -

Total revenues 330,838 7,622 3,812 12,244


Judicial - 36,915 - - General government - - - - Public safety 372,022 - 25,256 13,606 Health and welfare - - - - Economic development - - - - Recreation and cultural - - - -

Capital outlay - - - - Total expenditures 372,022 36,915 25,256 13,606

Revenues over (under) expenditures (41,184) (29,293) (21,444) (1,362)

Other financing sources (uses)Transfers in 92,497 12,000 - - Transfers out - - - -

Total other financing sources (uses) 92,497 12,000 - -

Net change in fund balances 51,313 (17,293) (21,444) (1,362)

Fund balances, beginning of year 190,237 29,692 214,895 20,699

Fund balances, end of year 241,550$ 12,399$ 193,451$ 19,337$

124

Mitchell Housing RevenueCreek Trust Next EPA Sharing Juvenile

Watershed Fund Michigan EDC Grant Reserve Child Care Accountability

-$ -$ -$ -$ -$ -$ -$ -$

- 123,671 - - 143,618 - - 44,572 - - - - - - 620,823 4,952 - - - - - - - - - - 19,537 - - - - - - - - - - - - - - 542 - 31,018 - - - - - - - 190,939 - - 109,214 -

- 124,213 19,537 221,957 143,618 - 730,037 49,524

- - - - - - - - - - - - - - - - - - - - - - - - - 123,671 - - 143,618 - 1,479,388 49,524 - - 211 9,068 - - - - - - - - - - - - - - - - - - - -

- 123,671 211 9,068 143,618 - 1,479,388 49,524

- 542 19,326 212,889 - - (749,351) -

- - - - - - 754,938 - - - - - - (1,634,966) - -

- - - - - (1,634,966) 754,938 -

- 542 19,326 212,889 - (1,634,966) 5,587 -

8,155 370,229 - 1,418,030 - 5,249,129 2,885 -

8,155$ 370,771$ 19,326$ 1,630,919$ -$ 3,614,163$ 8,472$ -$

continued…

125



CorrectionsOfficers

Safe Havens Training TotalRevenues

Licenses -$ -$ 376,387$ Intergovernmental:

Federal sources 165,090 - 3,343,792 State sources - - 2,288,571 Local sources - - 1,686,558

Charges for services - 30,998 1,037,955 Rental revenues - - 101,894 Interest revenues - - 32,571 Other revenues - 119 365,350

Total revenues 165,090 31,117 9,233,078


Judicial - - 7,805,149 General government - - 95,007 Public safety - 20,649 431,533 Health and welfare 165,090 - 7,056,334 Economic development - - 9,279 Recreation and cultural - - 639,990

Capital outlay - - 144,407 Total expenditures 165,090 20,649 16,181,699

Revenues over (under) expenditures - 10,468 (6,948,621)

Other financing sources (uses)Transfers in - - 7,128,589 Transfers out - - (1,648,242)

Total other financing sources (uses) - - 5,480,347

Net change in fund balances - 10,468 (1,468,274)

Fund balances, beginning of year - 1,990 10,725,700

Fund balances, end of year -$ 12,458$ 9,257,426$

concluded

126


Schedule of Revenues, Expendituresand Change in Fund Balances13th Circuit Court - Budget and ActualFor the Year Ended December 31, 2012

13th Circuit Court



Federal sources - - - - State sources - - - - Local sources 442,246 444,246 445,791 1,545

Charges for services - - - - Rental revenues - - - - Interest revenues - - - -

Other revenues - - - -

Total revenues 442,246 444,246 445,791 1,545


Judicial 1,819,229 1,833,187 1,762,185 (71,002) General government - - - - Public safety - - - - Health and welfare - - - - Economic development - - - - Recreation and cultural - - - - Other expense - - - -

Capital outlay 1,030 - - - Total expenditures 1,820,259 1,833,187 1,762,185 (71,002)

Revenues over (under) expenditures (1,378,013) (1,388,941) (1,316,394) 72,547

Other financing sources (uses)Transfers in 1,378,013 1,388,941 1,316,394 (72,547) Transfers out - - - -

Total other financing sources (uses) 1,378,013 1,388,941 1,316,394 (72,547)

Net change in fund balances - - - -

Fund balances, beginning of year - - - -

Fund balances, end of year -$ -$ -$ -$

127


Schedule of Revenues, Expendituresand Change in Fund BalancesLocal Crime Victims Rights - Budget and ActualFor the Year Ended December 31, 2012

Local Crime Victims Rights



Federal sources - - - - State sources - - - - Local sources 9,000 9,670 10,656 986



Total revenues 9,000 9,670 10,656 986

ExpendituresCurrent: -

Judicial 18,000 18,000 9,647 (8,353) General government - - - - Public safety - - - - Health and welfare - - - - Economic development - - - - Recreation and cultural - - - - Other expense - - - -

Capital outlay - - - - Total expenditures 18,000 18,000 9,647 (8,353)


Other financing sources (uses)Transfers in - - - - Transfers out - - - -

Total other financing sources (uses) - - - -

Net change in fund balances (9,000) (8,330) 1,009 9,339

Fund balances, beginning of year 8,330 8,330 8,330 -

Fund balances (deficit), end of year (670)$ -$ 9,339$ 9,339$

128


Schedule of Revenues, Expendituresand Change in Fund Balances86th District Court - Budget and ActualFor the Year Ended December 31, 2012

86th District Court



Federal sources - 29,396 48,188 18,792 State sources - 39,925 8,492 (31,433) Local sources 959,398 959,398 886,266 (73,132)

Charges for services 8,000 8,000 1,275 (6,725) Rental revenues - - - - Interest revenues - - - -

Other revenues - - 1,286 1,286

Total revenues 967,398 1,036,719 945,507 (91,212)



Capital outlay 2,200 2,100 - (2,100) Total expenditures 4,122,994 4,192,315 4,042,807 (149,508)


Other financing sources (uses)Transfers in 3,155,596 3,155,596 3,098,185 (57,411) Transfers out - - - -

Total other financing sources (uses) 3,155,596 3,155,596 3,098,185 (57,411)

Net change in fund balances - - 885 885


Fund balances, end of year -$ -$ 885$ 885$

129


Schedule of Revenues, Expendituresand Change in Fund BalancesCounty Special Projects - Budget and ActualFor the Year Ended December 31, 2012

County Special Projects



Federal sources - - - - State sources - - - - Local sources - - - -



Total revenues - - - -


Judicial - - - - General government - - - - Public safety - - - - Health and welfare - - - - Economic development - - - - Recreation and cultural - - - - Other expense - - - -

Capital outlay - - - - Total expenditures - - - -

Revenues over (under) expenditures - - - -





Fund balances, end of year 26,888$ 26,888$ 26,888$ -$

130


Schedule of Revenues, Expendituresand Change in Fund BalancesParks and Recreation - Budget and ActualFor the Year Ended December 31, 2012

Parks and Recreation



Federal sources - - - - State sources - - - - Local sources 100 5,100 5,905 805

Charges for services 345,523 345,523 314,640 (30,883) Rental revenues 91,956 91,956 101,505 9,549 Interest revenues - - - -


Total revenues 437,579 442,579 424,416 (18,163)


Judicial - - - - General government - - - - Public safety - - - - Health and welfare - - - - Economic development - - - - Recreation and cultural 708,751 703,986 639,990 (63,996) Other expense - - - -

Capital outlay - 9,765 9,762 (3) Total expenditures 708,751 713,751 649,752 (63,999)

Revenues over (under) expenditures (271,172) (271,172) (225,336) 45,836

Other financing sources (uses)Transfers in 170,636 170,636 170,636 - Transfers out - - - -

Total other financing sources (uses) 170,636 170,636 170,636 -

Net change in fund balances (100,536) (100,536) (54,700) 45,836



131


Schedule of Revenues, Expendituresand Change in Fund BalancesMaple Bay Development - Budget and ActualFor the Year Ended December 31, 2012

Maple Bay Development




Charges for services - - - - Rental revenues - - 389 389 Interest revenues - - - -


Total revenues - - 389 389


Judicial - - - - General government - - - - Public safety - - - - Health and welfare - - - - Economic development - - - - Recreation and cultural 8,518 8,518 - (8,518) Other expense - - - -

Capital outlay - - - - Total expenditures 8,518 8,518 - (8,518)

Revenues over (under) expenditures (8,518) (8,518) 389 8,907



Net change in fund balances (8,518) (8,518) 389 8,907


Fund balances, end of year 1$ 1$ 8,908$ 8,907$

132


Schedule of Revenues, Expendituresand Change in Fund BalancesFriend of the Court - Budget and ActualFor the Year Ended December 31, 2012

Friend of the Court



Federal sources 1,344,248 1,344,248 1,210,033 (134,215) State sources 12,500 12,500 118,757 106,257 Local sources 144,928 144,928 144,928 -

Charges for services 145,290 145,290 162,623 17,333 Rental revenues - - - - Interest revenues - - - -

Other revenues - - 106 106

Total revenues 1,646,966 1,646,966 1,636,447 (10,519)



Capital outlay 1,500 500 - (500) Total expenditures 2,061,789 2,061,789 1,953,595 (108,194)


Other financing sources (uses)Transfers in 364,823 364,823 354,823 (10,000) Transfers out - - (13,276) (13,276)

Total other financing sources (uses) 364,823 364,823 341,547 (23,276)


Fund balances, beginning of year 1,223,458 1,223,458 1,223,458 -

Fund balances, end of year 1,173,458$ 1,173,458$ 1,247,857$ 74,399$

133


Schedule of Revenues, Expendituresand Change in Fund BalancesHealth Department - Budget and ActualFor the Year Ended December 31, 2012

Health Department


RevenuesLicenses 329,425$ 353,625$ 376,387$ 22,762$ Intergovernmental:

Federal sources 1,833,989 1,871,789 1,608,620 (263,169) State sources 1,208,771 1,308,771 1,281,091 (27,680) Local sources 147,595 164,028 165,858 1,830

Charges for services 289,900 293,285 321,164 27,879 Rental revenues - - - - Interest revenues - - - -

Other revenues 1,065,859 1,065,859 4,421 (1,061,438)

Total revenues 4,875,539 5,057,357 3,757,541 (1,299,816)


Judicial - - - - General government - - - - Public safety - - - - Health and welfare 6,690,476 6,835,539 5,022,668 (1,812,871) Economic development - - - - Recreation and cultural - - - - Other expense - - - -

Capital outlay - 143,935 134,645 (9,290) Total expenditures 6,690,476 6,979,474 5,157,313 (1,822,161)


Other financing sources (uses)Transfers in 1,328,566 1,328,566 1,328,566 - Transfers out - - - -

Total other financing sources (uses) 1,328,566 1,328,566 1,328,566 -



Fund balances, end of year 1,076,512$ 969,332$ 1,491,677$ 522,345$

134


Schedule of Revenues, Expendituresand Change in Fund BalancesGypsy Moth Suppression Program - Budget and ActualFor the Year Ended December 31, 2012

Gypsy Moth Suppression Program














Fund balances, beginning of year 626 626 626 -

Fund balances, end of year 626$ 626$ 626$ -$

135


Schedule of Revenues, Expendituresand Change in Fund BalancesVeterans' Trust - Budget and ActualFor the Year Ended December 31, 2012

Veterans' Trust



Federal sources - - - - State sources 35,500 54,122 53,372 (750) Local sources - - 300 300



Total revenues 35,500 54,122 53,672 (450)


Judicial - - - - General government - - - - Public safety - - - - Health and welfare 36,003 58,190 52,676 (5,514) Economic development - - - - Recreation and cultural - - - - Other expense - - - -


Revenues over (under) expenditures (503) (4,068) 996 5,064

Other financing sources (uses)Transfers in 503 503 550 47 Transfers out - - - -

Total other financing sources (uses) 503 503 550 47

Net change in fund balances - (3,565) 1,546 5,111


Fund balances, end of year 3,565$ -$ 5,111$ 5,111$

136


Schedule of Revenues, Expendituresand Change in Fund BalancesRegister of Deeds AutomationFor the Year Ended December 31, 2012

Register of Deeds Automation




Charges for services - - 119,050 119,050 Rental revenues - - - - Interest revenues - - - -


Total revenues - - 119,050 119,050


Judicial - - - - General government 210,000 210,000 95,007 (114,993) Public safety - - - - Health and welfare - - - - Economic development - - - - Recreation and cultural - - - - Other expense - - - -



Other financing sources (uses)Transfers in 110,000 110,000 - (110,000) Transfers out - - - -

Total other financing sources (uses) 110,000 110,000 - (110,000)




137


Schedule of Revenues, Expendituresand Change in Fund BalancesIndigent Health Care - Budget and ActualFor the Year Ended December 31, 2012

Indigent Health Care








Judicial - - - - General government - - - - Public safety - - - - Health and welfare 19,699 19,699 19,699 - Economic development - - - - Recreation and cultural - - - - Other expense - - - -

Capital outlay - - - - Total expenditures 19,699 19,699 19,699 -

Revenues over (under) expenditures (19,699) (19,699) (19,699) -



Net change in fund balances (19,699) (19,699) (19,699) -



138


Schedule of Revenues, Expendituresand Change in Fund BalancesCorrections P.A. 511 - Budget and ActualFor the Year Ended December 31, 2012

Corrections P.A. 511



Federal sources - - - - State sources 197,293 197,293 188,840 (8,453) Local sources 26,854 26,854 26,854 -


Other revenues 20,450 20,450 46,476 26,026

Total revenues 334,597 334,597 330,838 (3,759)


Judicial - - - - General government - - - - Public safety 441,953 441,953 372,022 (69,931) Health and welfare - - - - Economic development - - - - Recreation and cultural - - - - Other expense - - - -








139


Schedule of Revenues, Expendituresand Change in Fund BalancesCounty Law Library - Budget and ActualFor the Year Ended December 31, 2012

County Law Library





Other revenues 6,500 7,100 7,622 522

Total revenues 6,500 7,100 7,622 522


Judicial 26,600 40,200 36,915 (3,285) General government - - - - Public safety - - - - Health and welfare - - - - Economic development - - - - Recreation and cultural - - - - Other expense - - - -








140


Schedule of Revenues, Expendituresand Change in Fund BalancesFederal Equitable Sharing - Budget and ActualFor the Year Ended December 31, 2012

Federal Equitable Sharing




Charges for services - - - - Rental revenues - - - - Interest revenues - - 1,011 1,011


Total revenues - - 3,812 3,812



Capital outlay 100,000 100,000 - (100,000) Total expenditures 200,000 200,000 25,256 (174,744)







141


Schedule of Revenues, Expendituresand Change in Fund BalancesCriminal Justice Training Act - Budget and ActualFor the Year Ended December 31, 2012

Criminal Justice Training Act



Federal sources - - - - State sources 13,000 13,000 12,244 (756) Local sources - - - -



Total revenues 13,000 13,000 12,244 (756)










142


Schedule of Revenues, Expendituresand Change in Fund BalancesMitchell Creek Watershed - Budget and ActualFor the Year Ended December 31, 2012

Mitchell Creek Watershed








Judicial - - - - General government - - - - Public safety - - - - Health and welfare - - - - Economic development - - - - Recreation and cultural - - - - Other expense 8,155 8,155 - (8,155)

Capital outlay - - - - Total expenditures 8,155 8,155 - (8,155)

Revenues over (under) expenditures (8,155) (8,155) - 8,155



Net change in fund balances (8,155) (8,155) - 8,155


Fund balances, end of year -$ -$ 8,155$ 8,155$

143


Schedule of Revenues, Expendituresand Change in Fund BalancesHousing Trust Fund - Budget and ActualFor the Year Ended December 31, 2012

Housing Trust Fund



Federal sources - 171,669 123,671 (47,998) State sources - - - - Local sources - - - -

Charges for services - - - - Rental revenues - - - - Interest revenues - - 542 542


Total revenues - 171,669 124,213 (47,456)




Revenues over (under) expenditures (340,000) (340,000) 542 340,542



Net change in fund balances (340,000) (340,000) 542 340,542



144


Schedule of Revenues, Expendituresand Change in Fund BalancesNext Michigan - Budget and ActualFor the Year Ended December 31, 2012

Next Michigan




Charges for services - 19,500 19,537 37 Rental revenues - - - - Interest revenues - - - -


Total revenues - 19,500 19,537 37


Judicial - - - - General government - - - - Public safety - - - - Health and welfare - - - - Economic development - 19,500 211 (19,289) Recreation and cultural - - - - Other expense - - - -

Capital outlay - - - - Total expenditures - 19,500 211 (19,289)

Revenues over (under) expenditures - - 19,326 19,326



Net change in fund balances - - 19,326 19,326


Fund balances, end of year -$ -$ 19,326$ 19,326$

145


Schedule of Revenues, Expendituresand Change in Fund BalancesEDC - Budget and ActualFor the Year Ended December 31, 2012

EDC




Charges for services - - - - Rental revenues - - - - Interest revenues 40,000 40,000 31,018 (8,982)

Other revenues 70,000 70,000 190,939 120,939

Total revenues 110,000 110,000 221,957 111,957


Judicial - - - - General government - - - - Public safety - - - - Health and welfare - - - - Economic development 330,000 335,000 9,068 (325,932) Recreation and cultural - - - - Other expense - - - -



Other financing sources (uses)Transfers in 20,000 20,000 - (20,000) Transfers out - - - -

Total other financing sources (uses) 20,000 20,000 - (20,000)



Fund balances, end of year 1,218,030$ 1,213,030$ 1,630,919$ 417,889$

146


Schedule of Revenues, Expendituresand Change in Fund BalancesEAP Grant - Budget and ActualFor the Year Ended December 31, 2012



Federal sources 650,000 650,000 143,618 (506,382) State sources - - - - Local sources - - - -



Total revenues 650,000 650,000 143,618 (506,382)










EPA Grant

147


Schedule of Revenues, Expendituresand Change in Fund BalancesRevenue Sharing Reserve - Budget and ActualFor the Year Ended December 31, 2012


RevenuesLicenses -$ -$ - -$ Intergovernmental:









Other financing sources (uses)Transfers in - - - - Transfers out (1,619,363) (1,634,966) (1,634,966) -

Total other financing sources (uses) (1,619,363) (1,634,966) (1,634,966) -

Net change in fund balances (1,619,363) (1,634,966) (1,634,966) -


Fund balances, end of year 3,629,766$ 3,614,163$ 3,614,163$ -$

Revenue Sharing Reserve

148


Schedule of Revenues, Expendituresand Change in Fund BalancesChild Care - Budget and ActualFor the Year Ended December 31, 2012

Child Care



Federal sources - - - - State sources 763,250 763,250 620,823 (142,427) Local sources - - - -


Other revenues 150,000 150,000 109,214 (40,786)

Total revenues 913,250 913,250 730,037 (183,213)


Judicial - - - - General government - - - - Public safety - - - - Health and welfare 1,986,500 1,886,500 1,479,388 (407,112) Economic development - - - - Recreation and cultural - - - - Other expense - - - -

Capital outlay - - - - Total expenditures 1,986,500 1,886,500 1,479,388 (407,112)

Revenues over (under) expenditures (1,073,250) (973,250) (749,351) 223,899

Other financing sources (uses)Transfers in 1,073,250 973,250 754,938 (218,312) Transfers out - - - -

Total other financing sources (uses) 1,073,250 973,250 754,938 (218,312)

Net change in fund balances - - 5,587 5,587



149


Schedule of Revenues, Expendituresand Change in Fund BalancesJuvenile Accountability - Budget and ActualFor the Year Ended December 31, 2012

Juvenile Accountability



Federal sources 41,695 44,667 44,572 (95) State sources 4,634 4,964 4,952 (12) Local sources - - - -



Total revenues 46,329 49,631 49,524 (107)


Judicial - - - - General government - - - - Public safety - - - - Health and welfare 46,329 49,631 49,524 (107) Economic development - - - - Recreation and cultural - - - - Other expense - - - -

Capital outlay - - - - Total expenditures 46,329 49,631 49,524 (107)







150


Schedule of Revenues, Expendituresand Change in Fund BalancesSafe Havens - Budget and ActualFor the Year Ended December 31, 2012

Safe Havens



Federal sources 308,512 308,512 165,090 (143,422) State sources - - - - Local sources - - - -



Total revenues 308,512 308,512 165,090 (143,422)










151


Schedule of Revenues, Expendituresand Change in Fund BalancesCorrections Officers Training - Budget and ActualFor the Year Ended December 31, 2012

Corrections Officers Training





Other revenues 7,000 7,000 119 (6,881)

Total revenues 41,000 41,000 31,117 (9,883)









Fund balances (deficit), end of year (3,010)$ -$ 12,458$ 12,458$

152


Combining Balance SheetNonmajor Debt Service FundsDecember 31, 2012

HealthWoodmere Courthouse Services Total

AssetsCash and cash equivalents -$ -$ -$ -$

LiabilitiesUnearned revenues 1,315,000$ -$ -$ 1,315,000$

Fund balanceUnassigned (deficit) (1,315,000) - - (1,315,000)

Total liabilities and fund balance -$ -$ -$ -$

153


Combining Statement of Revenues, Expendituresand Changes in Fund Balances - Nonmajor Debt Service FundsFor the Year Ended December 31, 2012

HealthWoodmere Courthouse Services Total

RevenuesInterest revenues -$ -$ -$ -$

ExpendituresDebt service:

Principal 1,515,000 350,000 140,000 2,005,000 Interest and fiscal charges 26,371 199,445 129,774 355,590

Total expenditures 1,541,371 549,445 269,774 2,360,590

Revenues under expenditures (1,541,371) (549,445) (269,774) (2,360,590)

Other financing sources (uses)Transfers in 226,371 571,669 269,774 1,067,814 Issuance of long-term debt - 6,170,000 - 6,170,000 Payment to refunding bond escrow agent - (6,192,224) - (6,192,224)

Total other financing sources 226,371 549,445 269,774 1,045,590

Net change in fund balances (1,315,000) - - (1,315,000)


Fund balances (deficit), end of year (1,315,000)$ -$ -$ (1,315,000)$

154


Combining Balance SheetNonmajor Capital Projects FundsDecember 31, 2012

County Capital Health Facilities Improvement Services Total

AssetsCash and cash equivalents 746,728$ 593,122$ 282,355$ 1,622,205$ Receivables, net:

Accounts 55,227 20,946 - 76,173 Due from other funds - 9,553 - 9,553 Prepaid items and other assets 665 - - 665

Total assets 802,620$ 623,621$ 282,355$ 1,708,596$

Liabilities

Accounts payable 146,327$ 6,210$ 230,560$ 383,097$ Unearned revenues 250,000 - - 250,000

Total liabilities 396,327 6,210 230,560 633,097

Fund balances Nonspendable 665 - - 665 Restricted - - 51,795 51,795 Assigned 405,628 617,411 - 1,023,039

Total fund balances 406,293 617,411 51,795 1,075,499

Total liabilities and fund balances 802,620$ 623,621$ 282,355$ 1,708,596$

155


Combining Statement of Revenues, Expenditures and Changes in Fund Balances - Nonmajor Capital Projects FundsFor the Year Ended December 31, 2012

County Capital Health Facilities Improvement Services Total

RevenuesIntergovernmental:

Federal sources 1,581$ 162,745$ -$ 164,326$ Local sources 57,776 53,665 - 111,441

Charges for services - 9,553 - 9,553 Interest revenues - - 8,030 8,030 Other 90,220 262,471 - 352,691

Total revenues 149,577 488,434 8,030 646,041


General government 1,679,788 479,911 30,127 2,189,826 Capital outlay 45,846 540,251 4,879,804 5,465,901

Total expenditures 1,725,634 1,020,162 4,909,931 7,655,727

Revenues under expenditures (1,576,057) (531,728) (4,901,901) (7,009,686)

Other financing sources (uses)Issuance of long-term debt - - 5,000,000 5,000,000 Discount on issuance of long-term debt - - (46,304) (46,304) Transfers in 1,590,347 575,688 - 2,166,035

Total other financing sources (uses) 1,590,347 575,688 4,953,696 7,119,731

Net change in fund balances 14,290 43,960 51,795 110,045

Fund balances, beginning of year 392,003 573,451 - 965,454

Fund balances, end of year 406,293$ 617,411$ 51,795$ 1,075,499$

156


Nonmajor Enterprise Funds

Foreclosure Tax Collections Fund - This fund was established to account for the collection of taxrevenue on foreclosed properties.

Inspections Fund - This fund was established to account for revenue received by the individualconstruction code trades through permit fees and charges for service and track the correspondingexpenditures by trade.

Solid Waste Fund - This fund was established to account for revenue received from fees for landfilltipping, tub grinder fees, service fees and state grants for hazardous waste and pesticidemanagement to provide corresponding services to the community.

Homestead Fund - This fund is used to account for interest earned on delinquent tax revenues fromproperties determined not eligible for homestead exemptions. Collected tax payments areremitted to local school districts.

Building Authority Fund - This fund was established to account for the operation of public facilitiesby the building authority board.

157


Combining Statement of Net PositionNonmajor Enterprise FundsDecember 31, 2012

Foreclosure SolidTax Collection Inspections Waste


Cash and cash equivalents 626,486$ 369,195$ 448,323$ Receivables, net:

Accounts 34,192 - 64,556 Taxes - - - Due from State - - 1,450

Prepaid items and other assets - 240 - Total current assets 660,678 369,435 514,329

Capital assets:

Land 437,882 - -

Total assets 1,098,560 369,435 514,329


Accounts payable 31,132 23,847 8,169 Accrued liabilities 6,598 17,877 1,315 Due to other funds 36,305 - - Due to other governments - - -

Total current liabilities 74,035 41,724 9,484

Long-term liabilities:Compensated absences - 36,744 -

Total liabilities 74,035 78,468 9,484

Net positionNet investment in capital assets 437,882 - - Unrestricted 586,643 290,967 504,845

Total net position 1,024,525$ 290,967$ 504,845$

158

BuildingHomestead Authority Total

44,460$ 40$ 1,488,504$

- - 98,748 57,319 - 57,319

- - 1,450 - - 240

101,779 40 1,646,261

- - 437,882

101,779 40 2,084,143

- - 63,148 - - 25,790 - - 36,305

30,353 - 30,353 30,353 - 155,596

- - 36,744

30,353 - 192,340

- - 437,882 71,426 40 1,453,921

71,426$ 40$ 1,891,803$

159


Combining Statement of Revenues, Expenses and Changes in Net PositionNonmajor Enterprise FundsFor the Year Ended December 31, 2012


Operating revenuesCharges for services 247,832$ 20,017$ 357,168$ Licenses and permits - 969,964 - Other revenues 331,591 - 4,847

Total operating revenues 579,423 989,981 362,015

Operating expenses Personnel services - 728,777 174,799 Supplies 5,750 27,591 5,139 Contractual services 127,119 93,595 123,020 Other operating expenses 26,107 191,022 36,018

Total operating expenses 158,976 1,040,985 338,976

Operating income (loss) 420,447 (51,004) 23,039

Nonoperating revenuesState sources - - 35,193 Interest revenues 705 - -

Total nonoperating revenues 705 - 35,193

Income (loss) before transfers 421,152 (51,004) 58,232

TransfersTransfers out (186,691) - -

Change in net position 234,461 (51,004) 58,232

Net position, beginning of year 790,064 341,971 446,613

Net position, end of year 1,024,525$ 290,967$ 504,845$

160


264$ -$ 625,281$ - - 969,964

9,121 - 345,559

9,385 - 1,940,804

- 36 903,612 6 - 38,486 - - 343,734 - - 253,147

6 36 1,538,979

9,379 (36) 401,825

- - 35,193 - - 705

- - 35,898

9,379 (36) 437,723

- - (186,691)

9,379 (36) 251,032

62,047 76 1,640,771

71,426$ 40$ 1,891,803$

161


Combining Statement of Cash FlowsNonmajor Enterprise FundsFor the Year Ended December 31, 2012


Cash flows from operating activitiesReceipts from services 561,201$ 989,981$ 389,581$ Cash payments to suppliers for goods and services (133,042) (292,282) (166,382) Cash payments to employees for services (4,755) (728,730) (174,436)

Net cash provided by (used in) operating activities 423,404 (31,031) 48,763

Cash flows from noncapital financing activitiesIntragovernmental payments (150,386) - - Cash received from state grants - - 34,857

Net cash provided by (used in) noncapitalfinancing activities (150,386) - 34,857

Cash flows from capital and related financing activitiesProceeds from sale of capital assets 1,026 - -

Cash flows from investing activitiesInterest received 705 - -

Net change in cash and cash equivalents 274,749 (31,031) 83,620

Cash and cash equivalents, beginning of year 351,737 400,226 364,703

Cash and cash equivalents, end of year 626,486$ 369,195$ 448,323$

Cash flows from operating activites

Operating income (loss) 420,447$ (51,004)$ 23,039$ Adjustments to reconcile operating income (loss)

to net cash provided by (used in) operating activities:Changes in:

Accounts receivable (18,222) - 27,566 Taxes receivable - - - Prepaid items and other assets - (240) - Accounts payable 25,934 20,166 (2,205) Accrued liabilities (4,755) (641) 363 Due to other governments - - - Compensated absences - 688 -

Net cash provided by (used in) operating activities 423,404$ (31,031)$ 48,763$

162


19,473$ -$ 1,960,236$ (6) - (591,712) - (36) (907,957)

19,467 (36) 460,567

- - (150,386) - - 34,857

- - (115,529)

- - 1,026

- - 705

19,467 (36) 346,769

24,993 76 1,141,735

44,460$ 40$ 1,488,504$

9,379$ (36)$ 401,825$

- - 9,344 23,184 - 23,184

- - (240) - - 43,895 - - (5,033)

(13,096) - (13,096) - - 688

19,467$ (36)$ 460,567$

163


164


Internal Service Funds

Information Technology Fund - This fund was established by the County to account for the cost ofthe IT and telecommunications department and properly distribute the cost back to thedepartments that utilize their service proportionately.

County Insurance Fund - This fund was established by the County to provide insurance coverage toits departments or funds for general liability insurance. It is funded by charges to the various fundscovered under the program, with all claims being paid from the fund.

Fringe Benefits Fund - This fund was established by the County to provide insurance coverage andfringe benefits to its departments or funds for healthcare, post-employment healthcare, workers’compensation, short-term disability, life insurance, MERS and defined contribution retirement plancosts. It is funded by charges to the various funds covered under the program, with allclaims/costs being paid from the fund.

Central Services Fund - This fund was established by the County to centralize the purchase ofsupply items to obtain a volume discount, perform the postage and mailing tasks for alldepartments, and purchase and maintain departmental copiers.

Motor Pool Fund - This fund was established by the County to track the purchase of County vehicles and maintain the inventory for insurance and depreciation purposes. This fund is being eliminated.

165

GRAND TRAVERSE COUNTY

Combining Statement of Net PositionInternal Service FundsDecember 31, 2012

Information County FringeTechnology Insurance Benefits


Cash and cash equivalents -$ -$ 312,032$ Investments - - 243,000 Accounts receivable, net 132,303 - 42 Due from other funds - - - Prepaid items and other assets 78,806 202,364 371,633

Total current assets 211,109 202,364 926,707

Capital assets:Equipment 1,827,740 - - Less accumulated depreciation (1,467,998) - -

Total capital assets 359,742 - -

Total assets 570,851 202,364 926,707


Accounts payable 101,001 419 479,477 Accrued liabilities 19,316 77,700 26,895 Claims payable - - 117,977 Due to other funds 208,739 60,698 10,567

Total current liabilities 329,056 138,817 634,916

Long-term liabilities:Compensated absences 32,209 - -

Total liabilities 361,265 138,817 634,916

Net positionNet investment in capital assets 359,742 - - Unrestricted (deficit) (150,156) 63,547 291,791

Total net position 209,586$ 63,547$ 291,791$

166

Central MotorServices Pool Total

234,557$ -$ 546,589$ - - 243,000

19,092 - 151,437 521 - 521

28,406 - 681,209 282,576 - 1,622,756

121,882 327,059 2,276,681 (93,840) (327,059) (1,888,897) 28,042 - 387,784

310,618 - 2,010,540

1,147 - 582,044 - - 123,911 - - 117,977 - - 280,004

1,147 - 1,103,936

- - 32,209

1,147 - 1,136,145

28,042 - 387,784 281,429 - 486,611

309,471$ -$ 874,395$

167


Combining Statement of Revenues, Expenses and Changes in Net PositionInternal Service FundsFor the Year Ended December 31, 2012


Operating revenuesCharges for services 1,537,257$ 601,318$ 9,844,498$ Other revenues 3,374 14,024 691,837

Total operating revenues 1,540,631 615,342 10,536,335

Operating expensesPersonnel services 627,681 - 23,705 Supplies 90,213 - 2,078 Contractual services 152,047 - 10,621,989 Depreciation 178,237 - - Other operating expenses 470,792 678,293 16,059

Total operating expenses 1,518,970 678,293 10,663,831

Operating income (loss) 21,661 (62,951) (127,496)

Nonoperating revenues (expense)Interest revenues - - 339 Interest and fiscal charges - - -

Total nonoperating revenues(expense) - - 339

Income (loss) before transfers 21,661 (62,951) (127,157)

Transfers in - - 126,154

Change in net position 21,661 (62,951) (1,003)

Net position, beginning of year 187,925 126,498 292,794

Net position, end of year 209,586$ 63,547$ 291,791$

168


243,865$ -$ 12,226,938$ 692 - 709,927

244,557 - 12,936,865

28,655 - 680,041

167,436 - 259,727 880 - 10,774,916

12,141 - 190,378 32,602 - 1,197,746

241,714 - 13,102,808

2,843 - (165,943)

- - 339 (42) - (42)

(42) - 297

2,801 - (165,646)

- - 126,154

2,801 - (39,492)

306,670 - 913,887

309,471$ -$ 874,395$

169


Combining Statement of Cash FlowsInternal Service FundsFor the Year Ended December 31, 2012


Cash flows from operating activitiesCash receipts from interfund services 1,469,768$ 676,040$ 10,734,552$ Cash payments to suppliers for goods and services (591,185) (675,147) (10,542,086) Cash payments to employees for services (659,910) (14,229) (12,031)

Net cash provided by (used in) operating activities 218,673 (13,336) 180,435

Cash flows from noncapital financing activitiesIntragovernmental receipts - - 126,154

Cash flows from capital and related financing activitiesPrincipal payments - - - Interest payments - - - Purchases of capital assets (218,673) - -

Net cash used in capital and related financing activities (218,673) - -

Cash flows provided by investing activitiesInterest received - - 339

Net change in cash and cash equivalents - (13,336) 306,928

Cash and cash equivalents, beginning of year - 13,336 5,104

Cash and cash equivalents, end of year -$ -$ 312,032$

Cash flows from operating activitiesOperating income (loss) 21,661$ (62,951)$ (127,496)$ Adjustments to reconcile operating income (loss)

to net cash provided by (used in) operating activities:Depreciation 178,237 - -

Changes in:Accounts receivable 41,689 - 3,625 Advance to/due from other funds - - 184,025 Prepaid items and other assets 35,134 (71,446) (41,887) Accounts payable 86,733 419 139,927 Accrued liabilities (19,687) 59,944 11,674 Due to other funds 105,629 60,698 10,567 Compensated absences (12,542) - - Advance from other funds (218,181) - -

Net cash provided by (used in) operating activities 218,673$ (13,336)$ 180,435$

170


247,579$ -$ 13,127,939$ (186,986) - (11,995,404) (28,655) - (714,825)

31,938 - 417,710

- - 126,154

(1,640) - (1,640) (42) - (42)

(15,962) - (234,635)

(17,644) - (236,317)

- - 339

14,294 - 307,886

220,263 - 238,703

234,557$ -$ 546,589$

2,843$ -$ (165,943)$

12,141 - 190,378

3,543 - 48,857 (521) - 183,504

14,480 - (63,719) (548) - 226,531

- - 51,931 - - 176,894 - - (12,542) - - (218,181)

31,938$ -$ 417,710$

171


172


Agency Funds

Trust and Agency Fund - This fund accounts for money held by the County in trust for other localunits of government and their political subdivisions as well as some receipts that are not initiallyallocated to individual funds. As required by accounting principles generally accepted in the UnitedStates of America (GAAP), all monies that accrue to the benefit of the County have been allocatedto the appropriate funds within these financial statements. Any balance remaining in the Trust andAgency fund is held in a fiduciary capacity for other parties.

Inmate Trust Fund - This fund was established to account for the profits accruing from the inmatecommissary activities in the county jail. These funds are used mainly to purchase items forcommon benefit or use by the inmates.

District Court Trust Fund - This fund was established to account for bond and other trust moneyheld by the 86th District Court.

Friend of Court Fund - This fund accounts for escrow funds received until their ultimate dispositionor use has been determined.

Library Fines Fund - This fund is used to accumulate money collected by courts for fines imposedfor State law violations. The accumulated fines must be apportioned annually among the publiclibraries and county library in accordance with the directions of hte State Board for Libraries.

Water and Sewer Receiving Funds - These funds were established to account for the user feescollected on the various township sewer and water systems to cover the related maintenance,operating, and debt service costs associated with those systems.

173


Combining Statement of Fiduciary Assets and LiabilitiesAgency FundsDecember 31, 2012

Water andTrust and District Friend of Sewer

Agency Inmate Court Court Library ReceivingFund Trust Trust Trust Fines Funds Total

AssetsCash and cash equivalents 878,625$ 14,385$ 10,006$ 9,263$ 126,941$ 922,174$ 1,961,394$ Accounts receivable, net - - - - - 440,991 440,991

Total assets 878,625$ 14,385$ 10,006$ 9,263$ 126,941$ 1,363,165$ 2,402,385$

LiabilitiesDue to other governments 652,919$ -$ -$ -$ -$ 1,363,165$ 2,016,084$ Court items payable 51,591 - 10,006 - - - 61,597 Undistributed receipts 136,878 - - - 126,941 - 263,819 Other liabilities 37,237 14,385 - 9,263 - - 60,885

Total liabilities 878,625$ 14,385$ 10,006$ 9,263$ 126,941$ 1,363,165$ 2,402,385$

174


Combining Statement of Changes in Fiduciary Assets and LiabilitiesAgency FundsFor the Year Ended December 31, 2012

Balance BalanceJanuary 1, December 31,

2012 Additions Deductions 2012Trust and Agency Fund

AssetsCash and cash equivalents 774,148$ 65,502,454$ (65,397,977)$ 878,625$ Accounts receivable - 3,150 (3,150) -

Total assets 774,148$ 65,505,604$ (65,401,127)$ 878,625$

LiabilitiesDue to other governments 542,286$ 40,739,073$ (40,628,440)$ 652,919$ Court items payable 44,789 407,699 (400,897) 51,591 Undistributed receipts 160,332 24,432,776 (24,456,230) 136,878 Other liabilities 26,741 458,317 (447,821) 37,237

Total liabilities 774,148$ 66,037,865$ (65,933,388)$ 878,625$

Inmate Trust Fund

AssetsCash and cash equivalents 23,675$ 366,420$ (375,710)$ 14,385$

LiabilitiesOther liabilities 23,675$ 366,420$ (375,710)$ 14,385$

District Court Trust Fund


LiabilitiesCourt items payable 11,185$ 222,744$ (223,923)$ 10,006$

Friend of Court Trust Fund

AssetsCash and cash equivalents 5,552$ 1,355,236$ (1,351,525)$ 9,263$

LiabilitiesOther liabilities 5,552$ 1,355,236$ (1,351,525)$ 9,263$

Library Fines Fund


LiabilitiesUndistributed receipts 154,785$ 271,931$ (299,775)$ 126,941$

continued…

175


Combining Statement of Changes in Fiduciary Assets and LiabilitiesAgency FundsFor the Year Ended December 31, 2012

Balance BalanceJanuary 1, December 31,

2012 Additions Deductions 2012Water and Sewer Receiving Funds

AssetsCash and cash equivalents 888,483$ 9,251,748$ (9,218,057)$ 922,174$ Accounts receivable, net 538,268 8,305,984 (8,403,261) 440,991

Total assets 1,426,751$ 17,557,732$ (17,621,318)$ 1,363,165$

LiabilitiesDue to other governments 1,426,751$ 9,228,159$ (9,291,745)$ 1,363,165$

Total liabilities 1,426,751$ 9,228,159$ (9,291,745)$ 1,363,165$

Total Agency Funds

AssetsCash and cash equivalents 1,857,828$ 76,970,533$ (76,866,967)$ 1,961,394$ Accounts receivable, net 538,268 8,309,134 (8,406,411) 440,991

Total assets 2,396,096$ 85,279,667$ (85,273,378)$ 2,402,385$

LiabilitiesDue to other governments 1,969,037$ 49,967,232$ (49,920,185)$ 2,016,084$ Court items payable 55,974 630,443 (624,820) 61,597 Undistributed receipts 315,117 24,704,707 (24,756,005) 263,819 Other liabilities 55,968 2,179,973 (2,175,056) 60,885

Total liabilities 2,396,096$ 77,482,355$ (77,476,066)$ 2,402,385$

concluded

176


Component Units

Grand Traverse County Department of Public Works (the “DPW”) – Members of the governing bodyof the Department of Public Works are appointed by the County Board of Commissioners. TheCounty also has the ability to influence operations of the Department of Public Works and hasaccountability for fiscal matters.

Drainage Districts – Each of the drainage districts established pursuant to the Drain Code of 1956are separate legal entities, with the power to contract, to sue and be sued, to hold, manage anddispose of real and personal property, etc. The statutory drainage board of Chapter 21 drainagedistricts consists of the State Director of Agriculture and the Drain Commissioner of each countyinvolved in the project. The County Drain Commissioner has sole responsibility to administer thedrainage districts established pursuant to Chapters 3, 4 and 8 of the Drain Code. The DrainageBoard or Drain Commissioner, on behalf of the drainage districts, may issue debt and levy specialassessments authorized by the Drain Code without the prior approval of the County Board ofCommissioners. The full faith and credit of the County may be given for the debt of the drainagedistrict. The County also has the ability to influence operations of the Drain Commission and hasaccountability for fiscal matters.

Brownfield Redevelopment Authority – The members of the governing board of the BrownfieldRedevelopment Authority are appointed by the County Board of Commissioners. They review andapprove plans for business development within designated areas of the County where property wasonce contaminated. Property tax revenues from the “captured” portion of these properties arerestricted to pay for site clean-up expenditures and future development depending on thedevelopment plan adopted for each project. The County has the ability to significantly influencethe operations of the Brownfield Redevelopment Authority and has accountability for fiscalmatters.

Economic Development Corporation – Members of the governing body of the EconomicDevelopment Corporation are appointed by the County Board of Commissioners. The County alsohas the ability to influence the operations of the Economic Development Corporation and hasaccountability for fiscal matters.

177


Combining Statement of Net PositionDepartment of Public Works Component UnitFor the Year Ended December 31, 2012

Septage GarfieldDPW Facility Septage Facility Total


Cash and cash equivalents 86,037$ 133,235$ -$ 219,272$ Receivables, net:

Accounts 31,063 109,746 1,043 141,852 Leases 2,880,000 - - 2,880,000 Interest 194,678 - - 194,678 Due from other governments 859,462 - - 859,462

Prepaid items and other assets - 8,937 - 8,937 Total current assets 4,051,240 251,918 1,043 4,304,201

Noncurrent assets:

Leases receivable 29,847,960 - - 29,847,960 Land - 400,000 - 400,000 Capital assets, net - 7,297,126 - 7,297,126

Total noncurrent assets 29,847,960 7,697,126 - 37,545,086

Total assets 33,899,200 7,949,044 1,043 41,849,287


Accounts payable 338,575 24,391 706 363,672 Accrued liabilities 177,974 1,295 - 179,269 Accrued interest payable 194,678 22,951 - 217,629 Due to other governments 313,585 51,089 20 364,694 Due to primary government - - 317 317 Current portion of bonds payable 2,880,000 75,000 - 2,955,000 Current portion of notes payable - 96,031 - 96,031 Current portion of compensated absences 19,353 - - 19,353

Total current liabilities 3,924,165 270,757 1,043 4,195,965

Long-term liabilities:Bonds payable 28,450,000 825,000 - 29,275,000 Notes payable - 2,321,050 - 2,321,050 Due to primary government 1,397,960 2,468,170 - 3,866,130 Compensated absences 45,157 - - 45,157

Total long-term liabilities 29,893,117 5,614,220 - 35,507,337

Total liabilities 33,817,282 5,884,977 1,043 39,703,302

Net positionNet investment in capital assets - 1,911,875 - 1,911,875 Unrestricted 81,918 152,192 - 234,110

Net position 81,918$ 2,064,067$ -$ 2,145,985$

178


Combining Statement of Revenues, Expensesand Changes in Net PositionDepartment of Public Works Component UnitFor the Year Ended December 31, 2012


Operating revenuesCharges for services 87,345$ 981,959$ 5,715$ 1,075,019$ Local sources 5,436,267 70,241 - 5,506,508

Total operating revenues 5,523,612 1,052,200 5,715 6,581,527

Operating expenses Personnel services 1,080,412 54,152 - 1,134,564 Public works 62,419 - - 62,419 Supplies 211,809 8,663 - 220,472 Contractual services 130,781 563,826 - 694,607 Depreciation - 217,824 - 217,824 Other expense 2,607,536 125,335 5,715 2,738,586

Total operating expenses 4,092,957 969,800 5,715 5,068,472

Operating income 1,430,655 82,400 - 1,513,055

Nonoperating revenues (expense)Local sources 152,978 - - 152,978 Interest revenues 21 28 - 49 Interest and fiscal charges (1,654,689) (263,070) - (1,917,759)

Total nonoperating revenues (expense) (1,501,690) (263,042) - (1,764,732)

Change in net position (71,035) (180,642) - (251,677)

Net position, beginning of year, as restated 152,953 2,244,709 - 2,397,662

Net position, end of year 81,918$ 2,064,067$ -$ 2,145,985$

179


Combining Statement of Cash FlowsDepartment of Public Works Component UnitFor the Year Ended December 31, 2012


Cash flows from operating activitiesReceipts from services 5,539,819$ 1,022,528$ 6,004$ 6,568,351$ Payments to suppliers for goods and services (2,901,710) (699,346) (6,142) (3,607,198) Payments to employees for services (1,070,199) (53,667) - (1,123,866)

Net cash provided by (used in) operating activities 1,567,910 269,515 (138) 1,837,287

Cash flows from noncapital financing activitiesTransfers from primary government 254,374 2,365,991 138 2,620,503

Cash flows from capital and related financing activitiesPayment of lease receivable 5,619,087 - - 5,619,087 Proceeds from issuance of debt - 2,417,081 - 2,417,081 Principal payments (6,160,000) (4,700,000) - (10,860,000) Interest payments (1,404,114) (219,380) - (1,623,494)

Net cash used in capital and related financingactivities (1,945,027) (2,502,299) - (4,447,326)

Cash flows provided by investing activitiesInterest received 55,377 28 - 55,405

Net change in cash and investmentsand cash equivalents (67,366) 133,235 - 65,869

Cash and investments and cash equivalents, beginning of year 153,403 - - 153,403

Cash and investments and cash equivalents, end of year 86,037$ 133,235$ -$ 219,272$

Cash flows from operating activitiesOperating income 1,430,655$ 82,400$ -$ 1,513,055$ Adjustments to reconcile operating income

to net cash provided by (used in) operating activitiesDepreciation - 217,824 - 217,824 Changes in:

Accounts receivables (15,549) (80,761) 269 (96,041) Prepaid items and other assets - (8,937) - (8,937) Due from other governments 31,671 - - 31,671 Accounts payable 110,835 7,415 (427) 117,823 Accrued liabilities 1,070 485 - 1,555 Due to other governments 85 51,089 20 51,194 Compensated absences 9,143 - - 9,143

Net cash provided by (used in) operating activities 1,567,910$ 269,515$ (138)$ 1,837,287$

180


181


Combining Balance SheetDrain Commission Component UnitDecember 31, 2012


Silver LakeHeritage Estates Acme Town Sam's Club Farms Drain

Drain Special Center Drain Special SpecialAssessment Project Assessment Assessment

AssetsCash and cash equivalents 1,509$ 1,837$ 4,283$ 924$

LiabilitiesAccounts payable -$ -$ -$ -$

Fund balances Assigned 1,509 1,837 4,283 924

Total liabilities and fund balances 1,509$ 1,837$ 4,283$ 924$

182


Cherry Ridge Westchester Silver Lake DeepwaterEstates Drain Holiday South Hills Drain Lake Level Point Drain Old Mission Cass Road

Special Drain Special Special Special Special Drain Special Drain SpecialAssessment Assessment Assessment Assessment Assessment Assessment Assessment

4,555$ 697$ 373$ 1,762$ 43,139$ 2,376$ 5,078$

-$ -$ -$ 350$ -$ -$ -$

4,555 697 373 1,412 43,139 2,376 5,078

4,555$ 697$ 373$ 1,762$ 43,139$ 2,376$ 5,078$

continued…

183


Combining Balance SheetDrain Commission Component UnitDecember 31, 2012


TimberlaneGilbert Park Drive DrainDrain Special Special DrainAssessment Assessment Revolving Total

AssetsCash and cash equivalents 9,049$ 65,486$ -$ 141,068$

LiabilitiesAccounts payable -$ -$ -$ 350$

Fund balances Assigned 9,049 65,486 - 140,718

Total liabilities and fund balances 9,049$ 65,486$ -$ 141,068$

concluded

184


185


Combining Statement of Revenues, Expenditures and Changes in Fund BalancesDrain Commission Component UnitFor the Year Ended December 31, 2012


Silver LakeHeritage Estates Acme Town Sam's Club Farms Drain

Drain Special Center Drain Special SpecialAssessment Project Assessment Assessment

RevenuesInterest revenues 1$ 1$ 2$ -$

ExpendituresPublic works - - 1 -

Net change in fund balances 1 1 1 -

Fund balances, beginning of year 1,508 1,836 4,282 924

Fund balances, end of year 1,509$ 1,837$ 4,283$ 924$

186


Cherry Ridge Westchester Silver Lake DeepwaterEstates Drain Holiday South Hills Drain Lake Level Point Drain Old Mission Cass Road

Special Drain Special Special Special Special Drain Special Drain SpecialAssessment Assessment Assessment Assessment Assessment Assessment Assessment

2$ 1$ -$ 1$ 15$ 1$ 2$

- - - 351 - - -

2 1 - (350) 15 1 2

4,553 696 373 1,762 43,124 2,375 5,076

4,555$ 697$ 373$ 1,412$ 43,139$ 2,376$ 5,078$

continued…

187


Combining Statement of Revenues, Expenditures and Changes in Fund BalancesDrain Commission Component UnitFor the Year Ended December 31, 2012


TimberlaneGilbert Park Drive DrainDrain Special Special DrainAssessment Assessment Revolving Total

RevenuesInterest revenues 3$ 23$ -$ 52$

ExpendituresPublic works - - - 352

Net change in fund balances 3 23 - (300)

Fund balances, beginning of year 9,046 65,463 - 141,018

Fund balances, end of year 9,049$ 65,486$ -$ 140,718$

concluded

188


189


Statement of Net Position and Governmental Funds Balance SheetBrownfield Redevelopment Authority Component UnitDecember 31, 2012


CSXTGeneral River's Boardman Park Bridgestone

Fund Edge Lake Street FirestoneAssets

Cash and cash equivalents 145,540$ 18,081$ 252,255$ 45,183$ 7,438$ Receivables, net

Accounts - - - - - Taxes - - 24,297 1,681 - Interest - - - - -

Due from other fund 2,002 - - - - Prepaid items and other assets - 2,972,097 - 1,550,000 699,170

Total assets 147,542$ 2,990,178$ 276,552$ 1,596,864$ 706,608$

LiabilitiesAccounts payable 6,105$ 2,972,097$ -$ 1,550,000$ 699,170$ Due to primary government 141,437 - - - - Due to other fund - - - - - Unearned revenues - - - - - Loans payable - - - - -

Total liabilities 147,542 2,972,097 - 1,550,000 699,170


for subsequent year - - 24,297 - -

Fund balances / net positionRestricted:

Economic development - 18,081 252,255 46,864 7,438 Unrestricted - - - - -

Total fund balances / net position - 18,081 252,255 46,864 7,438

Total liabilities, deferredinflows of resources andfund balances / net position 147,542$ 2,990,178$ 276,552$ 1,596,864$ 706,608$

190


River Kirby GT Land TCWest Boot Jimmy Bank East Bay Cherry

Kinney Snowden Lake John's Parcels Plaza Republic

3,026$ 77,166$ 19,858$ 469$ -$ 8,714$ -$

- - - - - - - - - 221 18 2,327 692 280 - - - - - - - - - - - - - -

419,627 - - - 13,990 - 1,000

422,653$ 77,166$ 20,079$ 487$ 16,317$ 9,406$ 1,280$

158,734$ -$ -$ -$ 13,990$ -$ -$ - - - - - - -

260,893 - - - 1,001 - 1,001 - - - - - - - - - - - - - -

419,627 - - - 14,991 - 1,001

- - 694 18 - 692 -

3,026 77,166 19,385 469 1,326 8,714 279 - - - - - - -

3,026 77,166 19,385 469 1,326 8,714 279

422,653$ 77,166$ 20,079$ 487$ 16,317$ 9,406$ 1,280$

continued…

191


Statement of Net Position and Governmental Funds Balance SheetBrownfield Redevelopment Authority Component UnitDecember 31, 2012

Grand GrandTraverse Blarney Traverse Copper Traverse

Cast Castle Auto Ridge CommonsAssets

Cash and cash equivalents 16,121$ 137,867$ 429,748$ 104,115$ 8,457$ Receivables, net

Accounts - - - - - Taxes 8,217 895 - - 478 Interest - - 3,768 - -

Due from other fund - - - - - Prepaid items and other assets 125,588 745,672 415,398 - 3,995

Total assets 149,926$ 884,434$ 848,914$ 104,115$ 12,930$

LiabilitiesAccounts payable 125,588$ 745,672$ 430,398$ -$ 3,995$ Due to primary government - - - - - Due to other fund - - - - - Unearned revenues - - 3,768 - - Loans payable - - - - -

Total liabilities 125,588 745,672 434,166 - 3,995


for subsequent year 8,217 895 - - 478

Fund balances / net positionRestricted:

Economic development 16,121 137,867 414,748 104,115 8,457 - - - - -

Total fund balances / net position 16,121 137,867 414,748 104,115 8,457

Total liabilities, deferredinflows of resources andfund balances / net position 149,926$ 884,434$ 848,914$ 104,115$ 12,930$


192

DebtService Fund

Mitchell Traverse LocalCreek House Revolving Statement of

Three Mile Scamehorn Loan Fund Total Adjustments Net Position

36,483$ 10,338$ 1,697,304$ 3,018,163$ -$ 3,018,163$

- - 34,150 34,150 - 34,150 1,875 6,385 - 47,366 - 47,366

- - - 3,768 - 3,768 - - 280,893 282,895 (282,895) - - 387,124 37,352 7,371,013 - 7,371,013

38,358$ 403,847$ 2,049,699$ 10,757,355$ (282,895) 10,474,460

-$ 367,124$ -$ 7,072,873$ - 7,072,873 - - - 141,437 - 141,437 - 20,000 - 282,895 (282,895) - - - - 3,768 - 3,768 - - - - 1,431,461 1,431,461

- 387,124 - 7,500,973 1,148,566 8,649,539

1,244 6,385 - 42,920 - 42,920

37,114 10,338 2,049,699 3,213,462 (3,213,462) - - - - - 1,782,001 1,782,001

37,114 10,338 2,049,699 3,213,462 (1,431,461) 1,782,001

38,358$ 403,847$ 2,049,699$ 10,757,355$ (282,895)$ 10,474,460$

concluded

Capital Project Funds

193


Statement of Activities and Governmental Funds Statement of Revenues, Expenditures and Changes in Fund BalancesBrownfield Redevelopment Authority Component UnitFor the Year Ended December 31, 2012

CSXTGeneral River's Boardman Park Bridgestone

Fund Edge Lake Street FirestoneExpenditures / expenses

Public works 175,000$ 419,999$ 281,536$ 20,000$ 144,318$ Interest and fiscal charges - - - - 20,683

Total expenditures/expenses 175,000 419,999 281,536 20,000 165,001

General revenuesTaxes - 375,293 245,216 60,193 173,506 Interest revenues - 61 289 35 -

Total general revenues - 375,354 245,505 60,228 173,506

Other financing sources (uses)Transfers in 175,000 - - - - Transfers out - (14,982) (43,992) (4,186) (4,924) Loan proceeds - - - - -

Total other financing sources (uses) 175,000 (14,982) (43,992) (4,186) (4,924)

Change in fund balances / net position - (59,627) (80,023) 36,042 3,581

Fund balances / net position,beginning of year - 77,708 332,278 10,822 3,857

Fund balances / net position, end of year -$ 18,081$ 252,255$ 46,864$ 7,438$


194

River Kirby GT Land TCWest Boot Jimmy Bank East Bay Cherry

Kinney Snowden Lake John's Parcels Plaza Republic

50,005$ -$ -$ 28$ 999$ 2,307$ -$ - - - - - - -

50,005 - - 28 999 2,307 -

52,775 23,812 4,441 262 2,325 8,341 279 - 94 25 - - 7 -

52,775 23,906 4,466 262 2,325 8,348 279

- - - - - - - (1,381) (633) (357) - - - -

- - - - - - -

(1,381) (633) (357) - - - -

1,389 23,273 4,109 234 1,326 6,041 279

1,637 53,893 15,276 235 - 2,673 -

3,026$ 77,166$ 19,385$ 469$ 1,326$ 8,714$ 279$

continued…


195


Statement of Activities and Governmental Funds Statement of Revenues, Expenditures and Changes in Fund BalancesBrownfield Redevelopment Authority Component UnitFor the Year Ended December 31, 2012

Grand GrandTraverse Blarney Traverse Copper Traverse

Cast Castle Auto Ridge CommonsExpenditures / expenses

Public works 62,968$ 745,674$ 131,436$ 547,727$ 4,537$ Interest and fiscal charges - - - - -

Total expenditures / expenses 62,968 745,674 131,436 547,727 4,537

General revenuesTaxes 91,969 11,115 52,291 284,304 7,040 Interest revenues 13 253 29 1,168 10

Total general revenues 91,982 11,368 52,320 285,472 7,050

Other financing sources (uses)Transfers in - - - - - Transfers out (14,557) (166) (1,320) (76,106) (855) Loan proceeds - 868,587 - - -

Total other financing sources (uses) (14,557) 868,421 (1,320) (76,106) (855)

Change in fund balances / net position 14,457 134,115 (80,436) (338,361) 1,658

Fund balances / net position,beginning of year 1,664 3,752 495,184 442,476 6,799

Fund balances / net position, end of year 16,121$ 137,867$ 414,748$ 104,115$ 8,457$


196

DebtService Fund

Mitchell Traverse LocalCreek House Revolving Statement of

Three Mile Scamehorn Loan Fund Total Adjustments Activities

-$ 147,002$ 128,129$ 2,861,665$ (86,903)$ 2,774,762$ - - - 20,683 - 20,683

- 147,002 128,129 2,882,348 (86,903) 2,795,445

10,472 91,520 15,392 1,510,546 - 1,510,546 45 23 10,117 12,169 - 12,169

10,517 91,543 25,509 1,522,715 - 1,522,715

- - - 175,000 - 175,000 (995) (10,546) - (175,000) - (175,000)

- - - 868,587 (868,587) -

(995) (10,546) - 868,587 (868,587) -

9,522 (66,005) (102,620) (491,046) (955,490) (1,272,730)

27,592 76,343 2,152,319 3,704,508 (649,777) 3,054,731

37,114$ 10,338$ 2,049,699$ 3,213,462$ (1,605,267)$ 1,782,001$

concluded


197


Balance SheetEconomic Development CorporationComponent UnitDecember 31, 2012

AssetsCash and cash equivalents -$

Fund balance -$

198


Statement of Revenues, Expenditures and Changes in Fund BalanceEconomic Development CorporationComponent UnitFor the Year Ended December 31, 2012

ExpendituresPublic works 19,537$

RevenuesInterest revenues 21

Net change in fund balance (19,516)

Fund balance, beginning of year 19,516

Fund balance, end of year -$

199


200

STATISTICAL SECTION

201


Statistical Section Table of Contents

Page

Financial Trends Tables 1 - 4

These schedules contain trend information to help the readerunderstand and evaluate how the County’s financial condition,performance and well-being have changed over time. 204

Revenue Capacity Tables 5 - 9

These schedules contain information to help the reader assessthe County’s ability to generate its most significant local revenuesource, the property tax. 214

Debt Capacity Tables 10 - 13

These schedules present information to help the reader assessthe affordability of the County’s current levels of outstandingdebt and its ability to issue additional debt in the future. 223

Demographic andEconomic Information Tables 14 - 15

These schedules present various demographic and economicindicators to help the reader understand the environment withinwhich the County operates and how they affect the County’sfinancial activities. 228

Operating Information Tables 16 - 18

These schedules contain information about the County’soperations and resources to help the reader understand how theinformation in the County’s financial report relates to theservices the County provides and the activities it performs. 232

This part of the County’s Comprehensive Annual Financial Report presents detailed information to assistthe user in understanding what the financial statements, note disclosures and required supplementaryinformation say about the overall economic condition of the County of Grand Traverse, Michigan.

Sources: Unless otherwise noted, the information in these schedules is derived from the ComprehensiveAnnual Financial Report for the relevant year. The County implemented GASB Statement No. 34 in 2003;schedules presenting government-wide information include data beginning in that year.

202


203


Net Assets / Net Position by ComponentLast Ten Fiscal Years(amounts expressed in thousands)

2012 2011 2010 2009

Governmental activitiesNet investment in capital assets 36,440$ 35,668$ 33,229$ 32,048$

Restricted 10,177 15,617 7,077 8,645 Unrestricted 6,733 4,138 17,572 19,918

Total governmental activities net assets 53,350$ 55,423$ 57,878$ 60,611$

Business-type activitiesNet investment in capital assets 14,928$ 13,708$ 11,728$ 10,522$

Restricted - - - - Unrestricted 20,520 20,216 19,630 17,173

Total business-type activities net assets 35,448$ 33,924$ 31,358$ 27,695$

Primary governmentNet investment in capital assets 51,368$ 49,376$ 44,957$ 42,570$

Restricted 10,177 15,617 7,077 8,645 Unrestricted 27,253 24,354 37,202 37,091

Total primary government net assets 88,798$ 89,347$ 89,236$ 88,306$

Fiscal Year

Primary Government Activities

Note: GASB Statement No.'s 63 and 65 were implemented for Fiscal Year Ended December 31, 2012. Information on this scheduleis reported prospectively for the year of implementation. Grand Traverse County, Michigan has chosen not to make thenecessary calculations to retroactively report the information for the nine Fiscal Years Ended December 31, 2003 through 2011.

204

Table 1 - Unaudited

2008 2007 2006 2005 2004 2003

32,644$ 31,048$ 31,093$ 29,890$ 29,096$ 28,810$ 10,218 11,728 13,190 9,060 4,884 - 19,254 19,832 17,059 15,357 13,863 12,471

62,116$ 62,608$ 61,342$ 54,307$ 47,843$ 41,281$

9,121$ 8,397$ 7,609$ 7,235$ 7,002$ 6,490$ - - - - - -

17,237 16,348 15,970 14,894 14,676 14,918

26,358$ 24,745$ 23,579$ 22,129$ 21,678$ 21,408$

41,765$ 39,445$ 38,702$ 37,125$ 36,098$ 35,300$ 10,218 11,728 13,190 9,060 4,884 - 36,491 36,180 33,029 30,251 28,539 27,389

88,474$ 87,353$ 84,921$ 76,436$ 69,521$ 62,689$

Fiscal Year

205


Changes in Net Assets / Net PositionLast Ten Fiscal Years(amounts expressed in thousands)

2012 2011 2010 2009Expenses

Governmental activities:Legislative 383$ 434$ 413$ 423$ Judicial 10,570 8,639 8,862 8,826 General government 8,838 11,202 11,653 11,765 Public safety 16,544 16,379 16,058 15,480 Public works - - - - Health and welfare 11,047 10,481 10,660 9,567 Economic development 9 445 84 322 Recreation and culture 888 915 966 1,640 Interest on long-term debt 442 360 481 516

Total governmental activities expenses 48,721 48,855 49,177 48,539

Business-type activities:Inspections 1,041 949 989 1,137 Medical Care Facility (Pavilions) 28,047 25,439 24,259 24,937 Solid waste 339 320 661 705 Delinquent tax collection and administration 280 193 250 277

Total business-type activities expenses 29,707 26,901 26,159 27,056

Total primary government expenses 78,428$ 75,756$ 75,336$ 75,595$

Program RevenuesGovernmental activities:

Charges for services:Legislative 1$ 8$ 9$ 1$ Judicial 2,832 2,920 3,005 2,927 General government 3,238 2,677 2,410 2,426 Public safety 1,509 1,516 1,625 1,603 Health and welfare 2,442 2,048 2,443 1,989 Recreation and culture 419 395 460 306

Operating grants and contributions 9,828 10,033 10,438 11,218 Capital grants and contributions 165 387 443 33

Total governmental activities program revenues 20,434 19,984 20,833 20,503

Business-type activities:Charges for services:

Inspections 990 925 871 846 Medical Care Facility (Pavilions) 24,037 25,191 23,747 23,429 Solid waste 357 442 568 576 Delinquent tax collection and administration 548 2,170 2,334 1,874

Operating grants and contributions 4,070 120 112 136 Total business-type activities program revenues 30,002 28,848 27,632 26,861

Total primary government program revenues 50,436$ 48,832$ 48,465$ 47,364$

Fiscal Year

206

Table 2 - Unaudited

2008 2007 2006 2005 2004 2003

539$ 471$ 403$ 384$ 385$ 384$ 8,511 7,852 7,993 7,486 6,995 7,043

11,967 22,504 10,079 9,372 8,828 9,060 16,471 14,835 14,584 13,605 12,736 13,332

- - - - - 2 9,753 9,990 8,789 8,296 8,543 8,784

251 - - - - - 650 915 846 977 963 821 537 575 254 317 281 271

48,679 57,142 42,948 40,437 38,731 39,697

1,327 1,503 1,604 1,489 1,474 1,414 24,594 23,618 23,035 22,365 28,068 34,241

575 703 627 682 634 317 89 48 69 42 8 8

26,585 25,872 25,335 24,578 30,184 35,980

75,264$ 83,014$ 68,283$ 65,015$ 68,915$ 75,677$

4$ 4$ 1$ 2$ 9$ 2$ 3,100 3,150 3,212 3,138 2,807 2,503 2,351 4,703 2,861 2,809 3,107 4,384 1,593 2,681 1,326 1,382 1,407 1,502 1,704 2,605 1,635 1,548 1,746 1,917

402 237 422 423 491 391 11,944 17,728 10,947 11,232 10,527 9,781

900 42 - 11 17 15 21,998 31,150 20,404 20,545 20,111 20,495

1,017 1,376 1,715 2,084 1,928 1,717 23,280 21,770 21,301 19,907 26,008 32,392

737 777 832 731 459 244 1,163 1,109 951 794 739 762

93 19 225 215 136 215 26,290 25,051 25,024 23,731 29,270 35,330

48,288$ 56,201$ 45,428$ 44,276$ 49,381$ 55,825$

continued…

Fiscal Year

207


Changes in Net Assets / Net PositionLast Ten Fiscal Years(amounts expressed in thousands)

2012 2011 2010 2009

Fiscal Year

Net (expense) revenuesGovernmental activities (28,287)$ (28,871)$ (28,344)$ (28,036)$ Business-type activities 295 1,947 1,473 (195)

Total primary government net (expense) revenues (27,992)$ (26,924)$ (26,871)$ (28,231)$

General revenues and other changes in net assets / net positionGovernmental activities:

Property taxes 24,501$ 24,008$ 24,146$ 24,619$ Unrestricted grants and contributions - - - - Unrestricted investment earnings 156 227 344 611 Other revenues (expense) - 17 13 - Transfers - internal activities 1,558 2,164 1,158 1,301

Total governmental activities 26,215 26,416 25,661 26,531

Business-type activities:Property taxes 2,882 2,754 3,203 2,784 Unrestricted investment earnings - 29 78 60 Other revenues - - 16 (11) Transfers - internal activities (1,558) (2,164) (1,158) (1,301)

Total business-type activities 1,324 619 2,139 1,532

Total primary government 27,539$ 27,035$ 27,800$ 28,063$

Change in net assets / net positionGovernmental activities (2,072)$ (2,455)$ (2,683)$ (1,505)$ Business-type activities 1,619 2,566 3,612 1,337

Total primary government change in net assets / net position (453)$ 111$ 929$ (168)$

208

Table 2 - Unaudited

2008 2007 2006 2005 2004 2003

Fiscal Year

(26,681)$ (25,992)$ (22,544)$ (19,892)$ (18,620)$ (19,202)$ (295) (821) (311) (847) (914) (650)

(26,976)$ (26,813)$ (22,855)$ (20,739)$ (19,534)$ (19,852)$

23,922$ 23,857$ 26,901$ 24,197$ 22,907$ 16,620$ - - - - 465 1,266

1,294 2,471 1,748 1,001 657 667 (29) - (9) 3 79 140

1,001 930 940 1,154 1,074 1,038 26,188 27,258 29,580 26,355 25,182 19,731

2,677 2,525 2,351 2,217 2,102 2,013 237 391 351 224 146 137

5 - - 10 10 3 (1,011) (930) (940) (1,154) (1,074) (1,038) 1,908 1,986 1,762 1,297 1,184 1,115

28,096$ 29,244$ 31,342$ 27,652$ 26,366$ 20,846$

(493)$ 1,266$ 7,036$ 6,463$ 6,562$ 529$ 1,613 1,165 1,451 450 270 465

1,120$ 2,431$ 8,487$ 6,913$ 6,832$ 994$

concluded

209


Fund Balances, Governmental FundsLast Ten Fiscal Years(amounts expressed in thousands)

2012 2011 2010 2009General fund:

Nonspendable 3,434$ 2,988$ -$ -$ Restricted - 10 - - Committed - - - - Assigned 625 625 - - Unassigned 3,976 4,148 - - Reserved - - 870 961 Unreserved - - 7,230 8,206

Total general fund 8,035 7,771 8,100 9,167

All other governmental funds:Nonspendable 6 349 - - Restricted 9,949 10,130 - - Committed 216 104 - - Assigned 1,891 2,682 - - Unassigned (2,995) (1,845) - - Reserved - - 7,184 8,645 Unreserved - - Special revenues funds - - 7,173 6,873 Debt service funds - - - - Capital projects funds - - 1,064 1,996

Total all other governmental funds 9,067 11,420 15,421 17,514

Total governmental funds 17,102$ 19,191$ 23,521$ 26,681$

Fiscal Year

Note: The County implemented GASB Statement No. 54 for the Fiscal Year Ended December 31, 2011. Prior years were notrestated retroactively.

210

Table 3 - Unaudited

2008 2007 2006 2005 2004 2003

-$ -$ -$ -$ -$ -$ - - - - - - - - - - - - - - - - - - - - - - - -

660 795 661 922 1,204 1,486 8,909 8,723 6,937 5,396 4,466 4,317 9,569 9,518 7,598 6,318 5,670 5,803

- - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

10,218 11,812 13,198 9,069 4,891 11

5,658 6,840 4,272 3,827 3,712 3,240 - - - 1 - -

2,217 1,018 2,778 7,590 3,085 2,580 18,093 19,670 20,248 20,487 11,688 5,831

27,662$ 29,188$ 27,846$ 26,805$ 17,358$ 11,634$

Fiscal Year

211


Changes in Fund Balances of Governmental FundsLast Ten Fiscal Years(amounts expressed in thousands)

2012 2011 2010 2009Revenues

Taxes 24,501$ 24,008$ 24,146$ 24,619$ Licenses and permits 500 460 461 434 Intergovernmental:

Federal sources 3,903 4,224 4,590 3,574 State sources 3,633 3,799 3,672 4,240 Local sources 3,576 3,470 3,704 3,522

Charges for services 6,311 6,068 6,222 5,915 Fines and forfeits 93 87 104 101 Reimbursements 3,062 3,040 3,172 3,023 Contributions 20 1 2 5 Rental revenues 619 649 638 620 Interest revenues 165 251 349 609 Other revenues 811 802 1,946 2,596

Total revenues 47,194 46,859 49,006 49,258


Legislative 421 432 411 422 Judicial 10,225 10,013 10,212 10,016 General government 10,258 10,975 11,012 11,311 Public safety 15,421 15,342 15,453 14,656 Health and welfare 10,514 10,363 11,708 10,990 Economic development 9 445 84 322 Recreation and culture 640 658 716 686 Other - - - - Debt service:

Principal 2,005 2,525 1,050 740 Interest and fiscal charges 356 390 484 512

Capital outlay 5,814 1,923 1,820 1,590

Total expenditures 55,663 53,066 52,950 51,245

Revenues over (under) expenditures (8,469) (6,207) (3,944) (1,987)

Other financing sources (uses)Issuance of long-term debt 11,170 - - - Discount on issuance of long-term debt (46) - - - Payment to refunding bond escrow agent (6,192) - - - Proceeds from sale of capital assets 17 17 16 12 Transfers in 13,082 13,575 13,371 14,410 Transfers out (11,650) (11,716) (12,553) (13,416)

Total other financing sources (uses) 6,381 1,876 834 1,006

Net change in fund balances (2,088)$ (4,331)$ (3,110)$ (981)$

Debt service as a percentage of noncapital expenditures 4.74% 5.70% 5.02% 4.21%

Fiscal Year

212

Table 4 - Unaudited

2008 2007 2006 2005 2004 2003

23,923$ 23,857$ 26,901$ 24,197$ 22,907$ 16,620$ 448 457 528 566 575 517

4,757 3,848 3,686 3,753 2,797 2,789 3,810 4,129 3,431 3,761 4,483 5,539 3,644 3,544 3,344 3,208 2,871 2,888 5,789 5,971 6,672 6,714 6,921 6,267

123 160 167 176 216 192 2,360 2,067 1,955 1,968 1,760 2,448

2 14 19 67 35 44 659 613 610 627 672 653

1,275 1,985 1,738 989 726 656 1,801 1,648 1,715 1,501 1,398 3,043

48,591 48,293 50,766 47,527 45,361 41,656

534 468 404 385 386 383 9,272 8,598 8,452 8,074 7,612 7,497

10,846 10,690 10,447 9,954 9,160 8,797 15,838 13,931 13,879 13,693 12,577 11,715 10,803 10,657 9,744 9,644 8,569 9,577

251 - - - - - 752 937 621 764 750 1,233

- 53 - - - -

710 680 650 345 570 395 538 563 247 259 279 254

1,445 1,138 6,036 4,274 675 3,084

50,989 47,715 50,480 47,392 40,578 42,935

(2,398) 578 286 135 4,783 (1,279)

- - - 8,385 - 2,815 - - - (74) - (15) - - - - - -

31 - - 4 23 - 13,464 11,762 11,395 10,756 10,218 9,310

(12,623) (10,997) (10,640) (9,759) (9,300) (8,415)

872 765 755 9,312 941 3,695

(1,526)$ 1,343$ 1,041$ 9,447$ 5,724$ 2,416$

4.12% 4.26% 3.05% 2.57% 3.16% 2.48%

Fiscal Year

213

Table 5 - Unaudited

Governmental Activities Tax Revenues by YearLast Ten Fiscal Years

Fiscal PropertyYear Tax

2003 16,620,080$ 2004 22,907,266 2005 24,196,544 2006 26,901,070 2007 23,856,854 2008 23,922,584 2009 24,618,627 2010 24,145,712 2011 24,008,006 2012 24,500,804


214


215


Assessed and Estimated Actual Value of Taxable PropertyLast Ten Fiscal Years

Personal AssessedResidential Commercial Property Value

2,958,706,837$ 1,054,207,087$ 233,282,630$ 4,246,196,554$ 3,256,883,720 1,120,978,842 241,452,500 4,619,315,062 3,558,397,608 1,178,484,484 249,658,082 4,986,540,174 3,964,980,260 1,249,326,857 255,575,931 5,469,883,048 4,238,375,228 1,343,000,157 258,664,798 5,840,040,183 4,342,963,319 1,390,127,029 251,468,812 5,984,559,160 4,283,832,904 1,369,999,093 266,500,315 5,920,332,312 4,042,595,921 1,286,802,285 261,118,622 5,590,516,828 3,806,716,018 1,184,052,681 253,983,234 5,244,751,933 3,820,469,838 1,113,170,336 279,915,132 5,213,555,306

Sources:

Grand Traverse County Equalization DepartmentGrand Traverse County Official Statement for 2003 Septage Treatment Bond Issue pg 19

Tax rates are per $1,000 of assessed value.

Note: Property in the county is equalized annually. The county assesses property at approximately 50percent of market value for all types of real and personal property.

Year

Real Property

2007

20052006

20042003

20122011201020092008

FiscalTotal

216

Table 6 - Unaudited

Direct Actual Taxable toTax Rate Value Actual Value

6.1772 8,492,393,108$ 50.00%6.0770 9,238,630,124 50.00%6.2495 9,973,080,348 50.00%6.1681 10,939,766,096 50.00%6.1291 11,680,080,366 50.00%6.1291 11,969,118,320 50.00%6.1291 11,840,664,624 50.00%6.2291 11,181,033,656 50.00%6.2433 10,489,503,866 50.00%6.2433 10,427,110,612 50.00%

Total Estimated Percentage of

217


Direct and Overlapping Property Tax RatesLast Ten Fiscal Years

Fiscal Operating Commission Medical Care Total Intermediate District Library District LibraryYear (1) (2) Millage On Aging Facility Millage Schools Operations Debt

2003 5.2112 0.2763 0.6897 6.1772 2.9929 0.9990 0.23002004 5.1267 0.2718 0.6785 6.0770 2.9732 0.9827 0.21302005 5.0815 0.4955 0.6725 6.2495 2.9589 0.9740 0.18502006 5.0154 0.4890 0.6637 6.1681 2.9421 0.9609 0.14202007 4.9838 0.4858 0.6595 6.1291 2.9334 0.9548 0.18302008 4.9838 0.4858 0.6595 6.1291 2.9312 0.9548 0.14502009 4.9838 0.4858 0.6595 6.1291 2.9312 0.9548 0.13442010 4.9838 0.5858 0.6595 6.2291 2.9312 0.9548 0.15972011 4.9838 0.6000 0.6595 6.2433 2.9312 0.9548 0.15202012 4.9838 0.6000 0.6595 6.2433 2.9312 0.9548 0.1520

(2) Fiscal year is the year in which the tax is levied. 1997 refers to the 1998 tax collection, 1999 refers tothe 2000 tax collection, and so on through 2004. Starting with the 2005 County levy there was a shift, 1/3each year for three years, from the traditional December levy for the subsequent year to a July levy for thecurrent year.

Overlapping Rates

(1) Rates reduced to comply with the Headlee Amendment.

Grand Traverse County

Source:

Grand Traverse County Official Statement for 2003 Septage Treatment Bond issue Pg. 16 2003, 2004, 2005,2006 & 2007 Apportionment Reports, 2008, 2009, 2010, 2011, & 2012 L4402

218

Table 7 - Unaudited

Grand Total

Direct &Community Community Overlapping

College College Debt BATA Rates

2.2693 0.8000 0.3500 13.81842.2324 0.6000 0.3428 13.42112.2127 0.7300 0.3380 13.64812.1838 0.7300 0.3317 13.45862.1700 0.7000 0.3283 13.39862.1700 0.7000 0.3272 13.35732.1700 0.7000 0.3454 13.36492.1700 0.7000 0.3454 13.49022.1700 0.7700 0.3454 13.56672.1700 0.7700 0.3454 13.5667

Overlapping Rates

219


Principal Property TaxpayersCurrent Year and Nine Years Ago

Percentage ofTaxable Total Taxable

Taxpayer Value Rank Value

Consumers Energy 24,864,456$ 1 0.58%Sara Lee/Hillshire Brands 16,272,244 2 0.38%Michigan Consolidated Gas Co. 13,993,678 3 0.33%Cherryland Rural Electric Co-op 12,492,571 4 0.29%Michigan Electric Transmission Co. 12,452,358 5 0.29%Grand Traverse Resort & Spa LLC 12,398,000 6 0.29%Grand Traverse Mall LTD PTNR 12,113,137 7 0.28%State of Michigan (Taxable lands) 9,362,697 8 0.22%Great Wolf Lodge TC Development LLC 8,241,400 9 0.19%Charter Communications 7,590,543 10 0.18%Grand Traverse Crossing ShoppingGDO Investments / OlesonsCarpenter Enterprises LTDGrand Traverse Band of Ottawa Indians

129,781,084$ 3.03%

2012/2003 County Total Taxable Value 4,286,130,690$

Source:

Grand Traverse County Equalization Department website

Fiscal 2012

220

Table 8 - Unaudited

Percentage ofTaxable Total Taxable Value Rank Value

17,629,321$ 1 0.39%

15,198,340 5 0.34%15,792,008 4 0.35%

12,257,040 6 0.27%10,718,802 10 0.24%11,297,290 8 0.25%

17,069,490 2 0.38%11,306,821 7 0.25%16,492,360 3 0.37%10,911,350 9 0.24%

138,672,822$ 3.09%

4,485,317,866$

Fiscal 2003

221

GRAND TRAVERSE COUNTY, MICHIGAN Table 9 - Unaudited

Property Taxes, Levies and CollectionsLast Ten Fiscal Years

Tax Year Levy for Percentage Purchased by in Subsequent PercentageLevy Fiscal Year Amount of Levy Treasurer Years (1) Amount of Levy

2003 15,752,780$ 14,682,260$ 93.20% 978,541$ 91,979$ 15,752,780$ 100.00%2004 16,745,479 15,662,758 93.53% 958,902 123,819 16,745,479 100.00%2005 17,740,803 16,721,195 94.25% 956,102 63,506 17,740,803 100.00%2006 19,039,918 18,006,682 94.57% 980,328 52,908 19,039,918 100.00%2007 20,245,356 19,257,383 95.12% 927,609 60,364 20,245,356 100.00%2008 21,015,942 19,909,206 94.73% 1,056,543 50,193 21,015,942 100.00%2009 21,697,005 20,562,406 94.77% 1,091,846 42,753 21,697,005 100.00%2010 21,310,329 20,318,560 95.35% 934,969 56,800 21,310,329 100.00%2011 20,746,929 19,875,126 95.80% 842,469 29,334 20,746,929 100.00%2012 20,759,994 20,064,727 96.65% 673,697 21,570 20,759,994 100.00%

Source:

Grand Traverse County Treasurer

(1) Personal property collected over 5 year period, if not collected after 5 years, amounts are written off through Circuit Court

Total Collections to 4/30Collected to March 1

Total Tax Delinquents CollectionsFollowing Year of the Levy

222


Ratios of Outstanding Debt by TypeLast Ten Fiscal Years

General General Total PercentageFiscal Obligation Notes Obligation Notes Primary of Personal Per Year Bonds Payable Bonds Payable Government Income (1) Capita (1)

2003 6,910,000$ 49,372$ 26,465,000$ 5,654$ 33,430,026$ 13.74% 408$ 2004 6,340,000 10,435 25,510,000 1,167 31,861,602 12.17% 385 2005 14,380,000 107,569 24,285,000 - 38,772,569 14.39% 462 2006 13,730,000 82,747 22,810,000 - 36,622,747 12.65% 431 2007 13,050,000 76,623 21,465,000 - 34,591,623 11.40% 405 2008 12,340,000 101,293 19,725,000 - 32,166,293 10.36% 374 2009 11,600,000 34,990 16,835,000 - 28,469,990 9.13% 330 2010 10,550,000 3,206 14,840,000 - 25,393,206 8.23% 292 2011 8,025,000 1,640 12,725,000 - 20,751,640 6.37% 235 2012 11,030,000 - 10,500,000 - 21,530,000 (2) 242

Note: Details regarding the County's outstanding debt can be found in the notes to the financial statements.

(1) Personal income and population data can be found in the Schedule of Demographic and Economic Statistics.(2) This information is not yet available.

Governmental Activities Business-Type Activities

223


Ratios of General Bonded Debt OutstandingLast Ten Fiscal Years

Percentage ofEstimated

General Less: Amounts Actual TaxableFiscal Obligation Available in Debt Value of Per Year Bonds Service Fund Total Property Capita (1)

2003 33,375,000$ 62$ 33,374,938$ 1.09% 407$ 2004 31,850,000 64 31,849,936 0.96% 385 2005 38,665,000 1,144 38,663,856 1.09% 460 2006 36,540,000 141 36,539,859 0.98% 430 2007 34,515,000 148 34,514,852 0.83% 404 2008 32,065,000 - 32,065,000 0.74% 373 2009 28,435,000 - 28,435,000 0.63% 329 2010 25,390,000 - 25,390,000 0.58% 292 2011 20,750,000 - 20,750,000 0.48% 235 2012 21,530,000 - 21,530,000 0.50% 242

Note: Details regarding the County's outstanding debt can be found in the notes to the financial statements.Taxable value provided by the Grand Traverse County Equalization Department.

(1) Population data can be found in the Schedule of Demographic and Economic Statistics.

224


Computation of Direct and Overlapping Governmental Activities DebtAs of December 31, 2012

EstimatedEstimated Share of

Debt Percentage OverlappingOutstanding Applicable (1) Debt

Debt repaid with property taxes: County 213,649,032$ 84.75% 181,062,118$

County direct debt 21,530,000

Total direct and overlapping debt 202,592,118$

(1) Applicable percentages were estimated by determining the portion of the County's taxable value that is within theCounty's boundaries and dividing it by the County's total taxable value.

Source:

Note: Overlapping governments are those that coincide, at least in part, with the geographic boundaries of the County. Thisschedule estimates the portion of the outstanding debt of those overlapping governments that is borne by the residents andbusinesses of the County. This process recognizes that, when considering the County's ability to issue and repay long termdebt, the entire debt burden borne by the residents and businesses should be taken into account. However, this does notimply that every taxpayer is a resident, and therefore responsible for repaying the debt, of each overlapping government.

Debt outstanding and estimated share of overlapping debt provided by Municipal Advisory Council of Michigan.

225


Computation of Legal Debt Margin InformationLast Ten Fiscal Years(amounts expressed in thousands)

2012 2011 2010 2009

Debt limit 512,871$ 524,475$ 559,052$ 592,033$

Total net debt applicable to limit 57,156 63,556 83,427 91,896

Legal debt margin 455,715$ 460,919$ 475,625$ 500,137$

Total net debt applicable to the limit as a percentage of debt limit 11.14% 12.12% 14.92% 15.52%

(1) Includes primary government and component units.

Fiscal Year

Note: Under state finance law the County's outstanding general obligation debt should not exceed 10 percent of total assessedproperty value. By law, the general obligation debt subject to the limitation may be offset by amounts set aside for repayinggeneral obligation bonds.

226

Table 13 - Unaudited

2008 2007 2006 2005 2004 2003

598,456$ 584,004$ 546,988$ 498,654$ 461,932$ 424,620$

100,386 102,658 105,820 112,864 103,980 99,150

498,070$ 481,346$ 441,168$ 385,790$ 357,952$ 325,470$

16.77% 17.58% 19.35% 22.63% 22.51% 23.35%

Legal Debt Margin Calculation for Fiscal Year 2012(amounts expressed in thousands)

State equalized value of real property 4,871,715$ State equalized value of personal property 256,999 Total state equalized value 5,128,714$

Debt limit (10% of total state equalized value) 512,871

Debt applicable to limit: (1) 57,156$ Less:

Assets in Debt Service fundsavailable for payment of principal -$

Total amount of debt applicable todebt limit 57,156

Legal debt margin 455,715$

Fiscal Year

227


Demographic and Economic StatisticsLast Ten Fiscal Years

PersonalIncome (2) Per(amounts Capita

Fiscal expressed Personal School UnemploymentYear Population (1) in thousands) Income (2) Enrollment (3) Rate (4)

2003 82,011 2,433,318$ 29,662$ 10,770 6.10%2004 82,752 2,618,351 31,600 10,692 6.40%2005 83,971 2,694,009 32,089 10,581 5.60%2006 84,952 2,894,249 34,260 10,479 5.90%2007 85,479 3,033,402 35,520 10,310 6.50%2008 86,071 3,104,898 36,129 9,984 7.60%2009 86,333 3,119,045 36,128 9,859 11.80%2010 86,986 3,086,127 35,459 9,773 11.70%2011 88,349 3,259,588 36,894 9,773 9.60%2012 89,112 (5) (5) 9,774 8.00%

Sources:

(3) MaryBeth Stein TCAPS Pupil Accounting Specialist(4) U.S. Department of Labor Statistics Data www.data.bls.gov. - Unemployment rate information is a yearly average not seasonally adjusted(5) Data not available at this time

(1) U.S. Census Bureau & Grand Traverse County 2003 Financial Overview, Employment/Economic pg. 48, Demographics pg. 4. (2) Bureau of Economic Analysis, www.bea.gov, U.S. Department of Commerce

228


229


Principal EmployersCurrent Year and Nine Years Ago

Percentage ofTotal County

Employer Employees Rank Employment

Munson Medical Center 3,740 1 8.72%Traverse City Area Public Schools 1,985 2 4.63%Grand Traverse Resort & Casino 750 3 1.75%Northwestern Michigan College 700 4 1.63%Traverse Bay Intermediate School District 620 5 1.45%Sara Lee/Hillshire Brands 550 6 1.28%Grand Traverse County Government 530 7 1.24%Grand Traverse Pavilions 470 8 1.10%Hagerty Insurance 350 9 0.82%Interlochen Center for the Arts 350 10 0.82%Lear Corp/United TechMeijer, Inc.Tom's Food MarketsTower Automotive Totals 10,045 23.43%

Total Employment 2012 / 2003 42,866

Sources:

Grand Traverse County Planning DepartmentGrand Traverse County Official Statement for 2003 Building Authority Bond Issue pg. A-4 U.S Dept. of Labor www.data.bls.gov - employment rate not seasonally adjusted

2012

230


Percentage ofTotal County

Employees Rank Employment

4,000 1 8.92%2,136 2 4.76%

650 4 1.45%600 5 1.34%

600 7 1.34%470 8 1.05%

718 3 1.60%600 6 1.34%450 9 1.00%400 10 0.89%

10,624 23.69%

44,845

2003

231


Full-time Equivalent Government Employees by FunctionLast Ten Fiscal Years

2012 2011 2010 2009

Legislative 1 1 1 1 Judicial 93 93 95 94 General Government 110 122 124 129 Public Safety 149 149 154 158 Public Works 22 21 21 21 Health & Welfare 128 127 128 121

Total 503 513 523 524

Source:

Grand Traverse County Human Resources

Function

Full-time Equivalent Employees as of December 31,

232


2008 2007 2006 2005 2004 2003

1 1 1 1 1 1 94 93 93 92 95 95

128 126 123 117 117 123 158 156 155 145 139 142 21 21 21 19 17 17

111 102 95 84 80 81

513 499 488 458 449 459

Full-time Equivalent Employees as of December 31,

233


Operating Indicators by FunctionLast Ten Fiscal Years

2012 2011 2010 2009

Public safety:Average daily inmate population -

Jail only 138.6 146.00 150.00 149.00 Average daily population - Includes

inmates boarded-out 138.6 146.00 150.00 149.00 911 Computer aided dispatch calls* 55,654 98,901 53,701 54,086

Commissary:Number of orders placed by inmates 7,553 6,910 7,241

Health and welfare:Commission on aging-client visits:

Homemaker Aide Program 16,058 16,376 17,065 16,157 Home Health Care Program 8,011 8,308 7,489 7,573 Home Chore Program 8,365 10,476 8,914 10,481 Walk in & telephone assistance calls 13,184 30,968 37,173 26,129

Public works:Number of Sewer billings 7,968 8,024 7,916 8,988 Number of Water billings 1,035 1,017 1,468 6,256 Number of Combined Billings 68,504 67,424 66,096 50,844

General Government:County Clerk-Passports processed 1,424 1,531 1,669 1,978 Finance-Checks processed 19,488 16,644 20,457 18,022 MSU-Extension:

4-H Participants 1,384 - - - FNP Participants - 565 430 1,771 PAT Participants - - - 1,884

Register of Deeds-records filed:Discharge of Mortgage 4,900 4,148 4,243 5,286 Mortgage 5,577 4,143 4,672 5,728 Warranty Deed 2,266 1,760 1,678 1,680

Judicial:Circuit court total caseload 2,584 2,694 2,983 3,205 District court total caseload 14,046 16,433 19,348 20,414 Probate court total caseload 596 531 563 514

Recreation and culture:Swimming pool admissions 19,706 18,014 19,564 15,630

Community and Economic Development:Construction permits issued 4,236 4,162 3,965 3,709 EDC loans - 7 6 13

Medical care facility-skilled nursing:Resident Admits 492 425 350 263 Resident Days 85,727 81,513 78,857 79,479

Source:

*911 changed their numbering system to include every department involved in the call gets counted separately

Function

Fiscal Year

234


2008 2007 2006 2005 2004 2003

154.00 164.00 159.00 146.29 141.35 149.13

154.00 164.00 167.00 169.23 159.49 164.73 54,433 50,449 47,247 59,364 52,935 52,506

7,814 7,902 7,998 7,390 7,129 7,618

14,828 13,073 9,078 7,361 6,619 5,772 7,022 4,911 5,342 5,336 5,592 5,092 9,962 5,840 4,964 5,105 4,939 4,280

22,742 16,582 13,264 12,993 14,332 19,648

15,587 15,445 24,729 21,348 20,208 19,372 8,171 7,962 26,674 16,120 14,884 13,048

37,384 36,319 - - - -

1,675 2,826 2,369 1,794 1,817 1,709 19,552 19,090 18,566 17,302 17,111 16,631

- 1,605 1,487 3,549 1,614 3,377 1,672 778 2,149 1,959 2,022 1,622 1,213 1,222 947 1,390 1,279 3,510

4,417 5,236 5,837 6,813 7,941 13,095 4,671 6,046 7,451 8,922 9,847 13,771 1,820 2,492 2,955 3,437 3,511 3,514

3,254 3,179 2,368 3,043 3,075 3,213 21,754 24,659 25,543 24,170 22,820 24,218

556 618 588 936 1,028 1,092

16,215 15,246 16,284 16,522 16,931 18,840

3,777 4,541 7,070 8,393 8,255 8,461 11 13 16 15 14 13

314 281 253 272 251 236 79,465 79,231 79,362 79,470 79,298 79,184

Fiscal Year

235


Capital Asset Statistics by FunctionLast Ten Fiscal Years

2012 2011 2010 2009

Public safety:Police:

Stations 1 2 2 2 Buildings 5 6 5 5 Radio Towers 6 6 6 6 Vehicles 96 98 92 91 Boats 5 9 9 9 Snowmobiles 2 4 4 2

Animal control:Building 1 1 1 1 Vehicles 2 2 2 2

General government:Buildings 3 4 4 4 Vehicles 22 30 28 28

Health and welfare:Buildings 1 3 3 3 Vehicles 23 15 15 15

Public works:Vehicles 16 17 17 18

Judicial:Buildings 3 3 3 3 Vehicles - 3 3 3

Recreation and culture:Buildings 15 18 18 18 Vehicles 3 3 3 4 Parks 10 10 10 10

Construction trades:Vehicles 9 9 10 10

Medical care facility:Beds 240 240 221 221

Sources:

Various County departments

Function

Fiscal Year

236


2008 2007 2006 2005 2004 2003

2 2 2 2 2 2 5 5 5 5 7 7 6 6 6 6 6 6

90 95 97 95 86 86 9 9 12 11 11 12 2 4 4 4 4 4

1 1 1 1 1 1 2 1 2 2 3 3

4 4 4 4 4 4 28 26 24 21 22 18

3 3 3 2 2 2 14 14 19 19 19 19

17 18 17 17 18 12

3 3 3 2 2 2 3 3 3 4 2 2

18 16 16 16 16 16 5 3 6 6 6 6

10 10 10 10 10 10

11 12 15 13 13 14

221 221 221 221 221 221

Fiscal Year

237


238

SINGLE AUDIT ACT COMPLIANCE

239


240

Honorable Members of the Board of Commissioners of Grand Traverse CountyTraverse City, Michigan

Independent Auditors’ Reporton the Schedule of Expenditures of Federal Awards

Required by OMB Circular A-133

June 26, 2013

We have audited the financial statements of the governmental activities, the business-type activities,the aggregate discretely presented component units, each major fund, and the aggregate remainingfund information of Grand Traverse County, Michigan (the "County") as of and for the year endedDecember 31, 2012, and the related notes to the financial statements, which collectively comprise theCounty’s basic financial statements. We issued our report thereon dated June 26, 2013, whichcontained unmodified opinions on those financial statements. Our audit was conducted for the purposeof forming opinions on the financial statements that collectively comprise the basic financialstatements. The accompanying schedule of expenditures of federal awards is presented for purposes ofadditional analysis as required by Office of Management and Budget Circular A-133, Audits of States,Local Governments, and Non-Profit Organizations and is not a required part of the basic financialstatements. Such information is the responsibility of management and was derived from and relatesdirectly to the underlying accounting and other records used to prepare the basic financial statements.The information has been subjected to the auditing procedures applied in the audit of the financialstatements and certain additional procedures, including comparing and reconciling such informationdirectly to the underlying accounting and other records used to prepare the basic financial statementsor to the basic financial statements themselves, and other additional procedures in accordance withauditing standards generally accepted in the United States of America. In our opinion, the schedule ofexpenditure of federal awards is fairly stated in all material respects in relation to the basic financialstatements as a whole.



Ph: 231.946.3230

Fx: 231.946.3955

www.rehmann.com

241


Schedule of Expenditures of Federal AwardsFor the Year Ended December 31, 2012

CFDA Passed Pass-through / FederalFederal Agency / Cluster / Program Title Number Through Grantor Number Expenditures

U.S. Department of AgricultureWomen, Infant and Children (WIC) Program 10.557 MDCH 20121155 402,319$ WIC Breastfeeding 10.557 MDCH 20121155 60,694

Total U.S. Department of Agriculture 463,013

U.S. Department of CommercePublic Safety Interoperable Communications Grant

Program (noncash assistance) 11.555 APR7 2007-GS-H7-0043 162,745

U.S. Department of Housing and Urban DevelopmentCommunity Development Block Grant/Entitlement Grant:

Community Development Block Grant 14.218 MSHDA MSC-2010-0781-HOA 109,710

Neighborhood Enterprise Zone 14.228 MSHDA MSC-2009-0781 67,810

Home Investment Partnership:Home Investment Partnership (HOME) 14.239 MSHDA M-2007-0781 46,159 Home Investment Partnership (HOME) 14.239 MSHDA M-2010-0781 37,347

83,506

Community Challenge Planning Grant 14.703 Direct CCPMI0012-20 123,671

Total U.S. Department of Housing and Urban Development 384,697

U.S. Department of JusticeJuvenile Accountability Block Grant:

FY 2011 16.523 MDHS JABGN11-2801 3,290 FY 2012 16.523 MDHS JABGN12-2801 41,282

44,572

Safe Haven Supervised Visitation and SafeExchange Program 16.527 Direct 2010CWAXK023 165,090

Bullet Proof Vest 16.607 Direct -n/a- 8,604

JAG Program Cluster:Anti-Drug Abuse Act-TNT Officer 16.738 CM 2011-DJ-BX-2240 31,649 ARRA - Pilot Mental Health Courts 16.803 MDSP SCAO-2012-083 25,840 ARRA - Pilot Mental Health Courts 16.803 MDSP SCAO-2013-005 22,348

79,837

Total U.S. Department of Justice 298,103

U.S. Department of TransportationHighway Safety Cluster:

Traffic Enforcement Grant - Safety Belt 20.600 MOHSP PT-12-30 2,734

Traffic Enforcement Grant - Impaired Driving 20.601 MOHSP PT-12-30 4,246 6,980

Hazardous Materials Emergency Preparedness Grant 20.703 MDSP -n/a- 1,600

Total U.S. Department of Transportation 8,580

U.S. Environmental Protection AgencyBrownfields Assessment and Cleanup

Cooperative Agreements 66.818 Direct 00E38601 143,618

continued…

242


Schedule of Expenditures of Federal AwardsFor the Year Ended December 31, 2012

CFDA Passed Pass-through / FederalFederal Agency / Cluster / Program Title Number Through Grantor Number Expenditures

U.S. Department of EnergyARRA - Energy Efficiency and Conservation Block Grant 81.128 MDELEG EE-0000753 1,581$

U.S. Department of Health and Human ServicesFDA Tobacco Retailer Inspections 93.058 MDCH 20121155 7,477

Public Health Emergency Preparedness:Bioterrorism - Supplemental 93.069 MDCH 20121155 112,771 Bioterrorism - Supplemental - Regional EPI 93.069 MDCH 20121155 10,000

122,771

Family Planning Services 93.217 MDCH 20121155 49,355

Immunization:Immunization & Vaccine Program 93.268 MDCH 20121155 39,645 Vaccines (non-cash assistance) 93.268 MDCH 20121155 94,362

134,007

Child Support Enforcement:Title IV-D - Incentive Payments 93.563 MDHS CSFOC10-28001 124,882 Title IV-D - Incentive Payments 93.563 MDHS CSFOC13-28001 44,264 Title IV-D - Friend of the Court 93.563 MDHS CSFOC10-28001 747,693 Title IV-D - Friend of the Court 93.563 MDHS CSFOC13-28001 293,194 Title IV-D - Prosecuting Attorney 93.563 MDHS CSPA 10-28002 66,071 Title IV-D - Prosecuting Attorney 93.563 MDHS CSPA 13-28002 26,998

1,303,102

Title IV-E - Reimbursement - Prosecutor 93.658 MDHS PROFC-11-28001 26,716

Medicaid:Medical Assistance Program - Medicaid Outreach 93.778 MDCH 20121155 210,908 CSHCS - Medical Assistance Program 93.778 MDCH 20121155 13,298 CSHCS - Medical Assistance Program (MDCH Outreach) 93.778 MDCH 20121155 11,537

235,743

Maternal and Child Health Services Block Grant:Maternal and Child Health Services Block Grant 93.994 MDCH 20121155 38,283 CSHCS - Family Planning Services 93.994 MDCH 20121155 2,800 CSHCS - Maternal and Child Health Services Block Grant 93.994 MDCH 20121155 13,406

54,489

Total U.S Department of Health and Human Services 1,933,660

U.S. Department of Homeland SecurityEmergency Management Performance 97.042 MDSP -n/a- 24,695

2010 State Homeland Security Grant Program (noncash assistance) 97.067 COBLM 2010-SS-TO-0009 54,707

Total U.S. Department of Homeland Security 79,402

Total Expenditures of Federal Awards 3,475,399$

concluded

See notes to schedule of expenditures of federal awards.

243


Notes to Schedule of Expenditures of Federal Awards

1. BASIS OF PRESENTATION

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

3. PASS-THROUGH AGENCIES

Pass-through Agency

Abbreviation Pass-through Agency Name

APR7 Alpena County Region 7COBLM Counties of Benzie & Leelanau, Michigan

CM County of Missaukee, MichiganMDCH Michigan Department of Community Health

MDELEG Michigan Department of Energy, Labor and Economic GrowthMDHS Michigan Department of Human ServicesMDSP Michigan Department of State Police

MOHSP Michigan Office of Highway Safety PlanningMSHDA Michigan State Housing Development Authority

The accompanying schedule of expenditures of federal awards (the “Schedule”) includes the federal grantactivity of Grand Traverse County, Michigan (the “County”) under programs of the federal government forthe year ended December 31, 2012. The information in this Schedule is presented in accordance with therequirements of the Office of Management and Budget (OMB) Circular A-133, Audits of States, LocalGovernments, and Non-Profit Organizations. Because this Schedule presents only a selected portion ofthe operations of the County, it is not intended to and does not present the financial position, changes innet position or cash flows of the County.

The County’s reporting entity is defined in Note 1 of the County’s Comprehensive Annual FinancialReport. The County’s financial statements include the operations of the Grand Traverse County RoadCommission discretely-presented component unit, which received federal awards that are not included inthe Schedule for the year ended December 31, 2012, as this entity was separately audited.

Expenditures reported on the Schedule are reported on the modified accrual basis of accounting, which isdescribed in Note 1 to the County's financial statements. Such expenditures are recognized following thecost principles contained in OMB Circular A-87, Cost Principles for State, Local, and Indian TribalGovernments, wherein certain types of expenditures are not allowable or are limited as toreimbursement. Pass-through entity identifying numbers are presented where available.

The County receives certain federal grant as subawards from non-federal entities. Pass-through entities,where applicable, have been identified in the Schedule with an abbreviation, defined as follows:

244


Notes to Schedule of Expenditures of Federal Awards

4. RECONCILIATION OF FEDERAL REVENUE TO THE SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS

3,902,740$

54,707

(482,048)

$ 3,475,399

Comprehensive Annual Financial Report

Less: Amounts deemed to be vendor relationships

Health

Below is a reconciliation of federal revenues as reported on the County’s Comprehensive Annual FinancialReport and federal expenditures as reported on the County’s Schedule of Expenditures of Federal Award.

Federal revenues as reported in the

with the Michigan Department of Community

grants and contributionsAdd: Donated equipment reported as operating

245


246


Internal Control Over Financial Reporting

In planning and performing our audit of the financial statements, we considered the County’s internalcontrol over financial reporting (internal control) to determine the audit procedures that areappropriate in the circumstances for the purpose of expressing our opinions on the financialstatements, but not for the purpose of expressing an opinion on the effectiveness of the County’sinternal control. Accordingly, we do not express an opinion on the effectiveness of the County’sinternal control.

Our consideration of internal control was for the limited purpose described in the preceding paragraphand was not designed to identify all deficiencies in internal control that might be material weaknessesor significant deficiencies and therefore, material weaknesses or significant deficiencies may exist thatwere not identified. However, as described in the accompanying schedule of findings and questionedcosts, we identified certain deficiencies in internal control over financial reporting that we consider tobe material weaknesses.

Performed in Accordance with Government Auditing Standards

June 26, 2013

Independent Auditors’ Report on Internal Control over Financial Reportingand on Compliance and Other Matters Based on an Audit of Financial Statements

We have audited, in accordance with the auditing standards generally accepted in the United States ofAmerica and the standards applicable to financial audits contained in Government Auditing Standardsissued by the Comptroller General of the United States, the financial statements of the governmentalactivities, the business-type activities, the aggregate discretely presented component units, each majorfund, and the aggregate remaining fund information of Grand Traverse County, Michigan (the"County"), as of and for the year ended December 31, 2012, and the related notes to the financialstatements, which collectively comprise the County’s basic financial statements, and have issued ourreport thereon dated June 26, 2013.



Ph: 231.946.3230

Fx: 231.946.3955

www.rehmann.com

247

As part of obtaining reasonable assurance about whether the County’s financial statements are freefrom 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 andmaterial effect on the determination of financial statement amounts. However, providing an opinion oncompliance with those provisions was not an objective of our audit, and accordingly, we do not expresssuch an opinion. The results of our tests disclosed no instances of noncompliance or other matters thatare required to be reported under Government Auditing Standards.

Grand Traverse County's Response to Findings

Purpose of this Report

The County’s responses to the findings identified in our audit are described in the accompanyingschedule of findings and questioned costs. The County’s responses were not subjected to the auditingprocedures applied in the audit of the financial statements and, accordingly, we express no opinion onthem.

The purpose of this report is solely to describe the scope of our testing of internal control andcompliance and the results of that testing, and not to provide an opinion on the effectiveness of theCounty’s internal control or on compliance. This report is an integral part of an audit performed inaccordance with Government Auditing Standards in considering the entity’s internal control andcompliance. Accordingly, this communication is not suitable for any other purpose.

Compliance and Other Matters

A deficiency in internal control exists when the design or operation of a control does not allowmanagement or employees, in the normal course of performing their assigned functions, to prevent, ordetect and correct misstatements on a timely basis. A material weakness is a deficiency, or acombination of deficiencies, in internal control such that there is a reasonable possibility that amaterial misstatement of the entity’s financial statements will not be prevented, or detected andcorrected on a timely basis. We consider the deficiencies described in the accompanying schedule offindings and questioned costs as items 2012-FS-01 and -02 to be material weaknesses.

A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is lesssevere than a material weakness, yet important enough to merit attention by those charged withgovernance.

248

We have audited the compliance of Grand Traverse County, Michigan (the "County") with the typesof compliance requirements described in the OMB Circular A-133 Compliance Supplement that couldhave a direct and material effect on each of the County's major federal programs for the year endedDecember 31, 2012. The County’s major federal programs are identified in the summary of auditor’sresults section of the accompanying schedule of findings and questioned costs.

Management's Responsibility

Management is responsible for compliance with the requirements of laws, regulations, contracts, andgrants applicable to its federal programs.

Auditors' Responsibility

Our responsibility is to express an opinion on compliance for each of the County’s major federalprograms based on our audit of the types of compliance requirements referred to above. We conductedour audit of compliance in accordance with auditing standards generally accepted in the United Statesof America; the standards applicable to financial audits contained in Government Auditing Standardsissued 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 requirethat we plan and perform the audit to obtain reasonable assurance about whether noncompliance withthe types of compliance requirements referred to above that could have a direct and material effecton a major federal program occurred. An audit includes examining, on a test basis, evidence about theCounty’s compliance with those requirements and performing such other procedures as we considerednecessary in the circumstances.

The County’s basic financial statements include the operations of the Grand Traverse County RoadCommission, a discretely presented component unit. Our audit, described below, did not include theoperations of the Grand Traverse County Road Commission because that component unit arranged for aseparate audit in accordance with A-133.

Report on Compliance for Each Major Federal Program

Independent Auditors’ Report on Compliance for Each Major Federal Programand on Internal Control over Compliance Required by OMB Circular A-133

June 26, 2013




Ph: 231.946.3230

Fx: 231.946.3955

www.rehmann.com

249

Management of the County is responsible for establishing and maintaining effective internal controlover compliance with the types of compliance requirements referred to above. In planning andperforming our audit of compliance, we considered the County’s internal control over compliance withthe types of requirements that could have a direct and material effect on each major federal programto determine the auditing procedures that are appropriate in the circumstances for the purpose ofexpressing an opinion on compliance for each major federal program and to test and report on internalcontrol over compliance in accordance with OMB Circular A-133, but not for the purpose of expressingan opinion on the effectiveness of internal control over compliance. Accordingly, we do not express anopinion on the effectiveness of the County’s internal control over compliance.

Opinion on Each Major Federal Program

In our opinion, the County complied, in all material respects, with the types of compliancerequirements referred to above that could have a direct and material effect on each of it's majorfederal programs for the year ended December 31, 2012.

Report on Internal Control Over Compliance

The purpose of this report on internal control over compliance is solely to describe the scope of ourtesting of internal control over compliance and the results of that testing based on the requirements ofOMB Circular A-133. Accordingly, this report is not suitable for any other purpose.

Our consideration of internal control over compliance was for the limited purpose described in the firstparagraph of this section and was not designed to identify all deficiencies in internal control overcompliance that might be material weaknesses or significant deficiencies. We did not identify anydeficiencies in internal control over compliance that we consider to be material weaknesses. However,material weaknesses may exist that have not been identified.

A deficiency in internal control over compliance exists when the design or operation of a control overcompliance does not allow management or employees, in the normal course of performing theirassigned functions, to prevent, or detect and correct, noncompliance with a type of compliancerequirement of a federal program on a timely basis. A material weakness in internal control overcompliance is a deficiency, or combination of deficiencies, in internal control over compliance, suchthat there is a reasonable possibility that material noncompliance with a type of compliancerequirement of a federal program will not be prevented, or detected and corrected, on a timely basis.A significant deficiency in internal control over compliance is a deficiency, or a combination ofdeficiencies, in internal control over compliance with a type of compliance requirement of a federalprogram that is less severe that a material weakness in internal control over compliance, yet importantenough to merit attention by those charged with governance.

Purpose of this Report

We believe that our audit provides a reasonable basis for our opinion on compliance for each majorfederal program. However, our audit does not provide a legal determination of the County'scompliance.

250


Schedule of Findings and Questioned CostsFor the Year Ended December 31, 2012

SECTION I - SUMMARY OF AUDITORS’ RESULTS

Financial Statements

X yes no

yes X none reported

yes X no

Federal Awards

yes X no

yes X none reported

yes X no

CFDA Number Name of Federal Program or Cluster

yes X no

10.557 Women, Infants and Children (WIC)93.069 Bioterrorism Funding/H1N1

Unqualified

Any audit findings disclosed that are required to be reported in accordance withCircular A-133, Section 510(a)?

Identification of major programs:

for major programs:Type of auditors’ report issued on compliance

Type of auditors’ report issued: Unqualified

Internal control over financial reporting:

Material weakness(es) identified?

Significant deficiency(ies) identified?

Noncompliance material to financial statementsnoted?

Internal control over major programs:

Material weakness(es) identified?

Significant deficiency(ies) identified?

93.268 Immunizations Cluster93.563 Child Support Enforcement

Auditee qualified as low-risk auditee?

Dollar threshold used to distinguish between Type A and Type B programs: $ 300,000

251



SECTION II – FINANCIAL STATEMENT FINDINGS

2012-FS-01 – Material Audit Adjustments (repeated from prior year)

Condition. During our audit, we identified and proposed certain material adjustments (which were approvedand posted by management) to adjust the County’s general ledger to the appropriate balances. In our opinion,these adjustments were material to the County's financial statements. These adjustments included adjustinginterest receivable on delinquent taxes to the appropriate year-end balance and adjusting Pavilions receivablebalances for contractual write-offs and allowances.

View of Responsible Officials. Grand Traverse County management understands that is has the soleresponsibility for maintaining its accounting records in accordance with generally accepted accountingprinciples (GAAP). The County Finance Department will implement controls to strengthen year-end closingprocedures to ensure that transactions are properly recorded.

Recommendation. The adjustments referenced above have been reviewed by management, posted to theCounty's records, and are reported correctly in the County's financial statements. We recommend the Countyreview year-end closing procedures to prevent such oversights from occurring in the future.

Cause. This condition was caused by an error in the journal entry posted to adjust interest receivable ondelinquent taxes to agree with supporting schedules at year-end. Pavilions accounts receivable balances wereinitially misstated due to management not initially evaluating aging balances at year-end for necessarycontractual adjustments and write-offs.

Effect. As a result of this condition, the County’s accounting records were initially misstated by amountsmaterial to certain individual opinion units.

Finding Type. Material Weakness in Internal Control over Financial Reporting.

Criteria. Management is responsible for maintaining its accounting records in accordance with generallyaccepted accounting principles (GAAP).

252



SECTION II – FINANCIAL STATEMENT FINDINGS (CONCLUDED)

2012-FS-02 – Preparation of Schedule of Expenditures of Federal Awards

Recommendation. We recommend that the County carefully review all grant agreements and award letters inpreparing the SEFA in order to ensure Federal expenditures are identified and reported correctly. In addition,department heads responsible for applying for and receiving grant awards should be made aware of thereporting requirements that apply to federal funding and instructed to provide supporting documentation tothe Finance Department.

View of Responsible Officials. Grand Traverse County management understands that it has the soleresponsibility for identifying and reporting federal expenditures on its Schedule of Expenditures of FederalAwards. To ensure the County reports all federal expenditures all department heads and elected officials willbe informed of this reporting requirement for both cash and non-cash assistance awards in order for them toassist management in both the accounting and reporting of all federal awards received.

Finding Type. Material Weakness in Internal Control over Financial Reporting.

Criteria. OMB Circular A-133, §___.300, requires that a recipient of federal awards subject to a single audit“identify, in its accounts, all Federal awards received and expended and the federal programs under whichthey were received. Federal program and award identification shall include, as applicable, the CFDA title andnumber, award number and year, name of the federal agency, and name of the pass-through entity.” Inaddition, the County is required to “prepare appropriate financial statements, including the Schedule ofExpenditures of Federal Awards in accordance with §___.310.”

Condition. We noted an error in the initial Schedule of Expenditures of Federal Awards (SEFA) (the "Schedule")provided by management. The error was related to omission of non-cash assistance received as part of thePublic Safety Interoperable Communications grant.

Cause. This condition appears to be the result of the receipt of a unique and non-recurring non-cash awardwhich management did not identify as being from a federal source.

Effect. As a result of this condition, the County's SEFA was initially misstated by amounts that were material tothe Schedule. Appropriate adjustments were proposed by the auditors, and approved by management.However, the County was exposed to the risk that expenditures of federal awards would be unintentionallyomitted from the Schedule, which if not subsequently identified could have impacted major programdetermination and related testing performed by the auditors.

253



SECTION III – FEDERAL AWARD FINDINGS AND QUESTIONED COSTS

None.

254


Summary Schedule of Prior Audit FindingsFor the Year Ended December 31, 2012

Finding 2011-FS-01 – Material Audit Adjustments

During the prior year audit, certain material audit adjustments were identified and proposed to adjust theCounty’s general ledger to the appropriate balances. Material adjustments were identified as a result of theaudit process again in the current year. Refer to finding 2012-FS-01. Finding 2011-SA-01 – Documentation of Payroll Costs in Accordance with OMB Circular A-87 - InternalControls over Compliance and Immmaterial Noncompliance (Activities Allowed/Unallowed) – ImmunizationCluster CFDA # 93.268 and 93.712

Certain administrative employee personnel costs were charged directly to a Federal program but were notbeing documented in accordance with Federal cost principles. In the current year, such administrativeemployee personnel costs are now assigned to an administrative cost center and allocated to programs utilizinga recognized cost allocation plan. This finding has been resolved and no further corrective action is required.

Finding 2011-SA-02 – Timeliness of Reporting - Immmaterial Noncompliance (Reporting) – Title IV-DCooperative Reimbursement Program CFDA # 93.563

Certain reports required under the provisions of the grant agreement were not filed by the stated due dates.This condition was caused by the third-party provider to which the County outsources the preparation of thesereports failing to provide these reports to the County by the submission deadline. In the current year, a finance department employee was assigned with the responsibility of monitoring submission of the afforementionedreports to ensure timely filing. This finding has been resolved and no further corrective action is required.

255

Grand Traverse County, Michigan Year Ended Comprehensive ...

Documents

Transcript of Grand Traverse County, Michigan Year Ended Comprehensive ...