JOHNSON COUNTY TENNESSEE - · PDF fileJohnson County Officials June 30, 2017 Officials Larry...

ANNUAL FINANCIAL REPORT

JOHNSON COUNTY, TENNESSEE FOR THE YEAR ENDED JUNE 30, 2017

DIVISION OF LOCAL GOVERNMENT AUDIT

ANNUAL FINANCIAL REPORT

JOHNSON COUNTY, TENNESSEE

FOR THE YEAR ENDED JUNE 30, 2017

COMPTROLLER OF THE TREASURY JUSTIN P. WILSON

DIVISION OF LOCAL GOVERNMENT AUDIT JAMES R. ARNETTE

Director

MARK TREECE, CPA, CGFM Audit Manager ROBERT ANDERSON PRESTON COBB MARIE TIDWELL, CPA GREG BRUSH, CISA Auditor 4 State Auditors

This financial report is available at www.comptroller.tn.gov

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http://www.comptroller.tn.gov/

Exhibit Page(s)

Summary of Audit Findings 6

INTRODUCTORY SECTION 7

Johnson County Officials 8

FINANCIAL SECTION 9

Independent Auditor's Report 10-13BASIC FINANCIAL STATEMENTS: 14

Government-wide Financial Statements:Statement of Net Position A 15-16Statement of Activities B 17-18

Fund Financial Statements:Governmental Funds:

Balance Sheet C-1 19-20Reconciliation of the Balance Sheet of Governmental Funds

to the Statement of Net Position C-2 21Statement of Revenues, Expenditures, and Changes in

Fund Balances C-3 22-23Reconciliation of the Statement of Revenues, Expenditures,

and Changes in Fund Balances of Governmental Fundsto the Statement of Activities C-4 24

Statements of Revenues, Expenditures, and Changes in FundBalances - Actual (Budgetary Basis) and Budget: General Fund C-5 25-27

Highway/Public Works Fund C-6 28-29Fiduciary Funds:

Statement of Fiduciary Assets and Liabilities D 30Index and Notes to the Financial Statements 31-82

REQUIRED SUPPLEMENTARY INFORMATION: 83Schedule of Changes in Net Pension Liability (Asset) and Related Ratios

Based on Participation in the Public Employee Pension Planof TCRS – Primary Government E-1 84

Schedule of Contributions Based on Participation in the Public EmployeePension Plan of TCRS – Primary Government E-2 85

Schedule of Contributions Based on Participation in the TeacherRetirement Plan of TCRS – Discretely Presented JohnsonCounty School Department E-3 86

Schedule of Contributions Based on Participation in the TeacherLegacy Pension Plan of TCRS – Discretely Presented JohnsonCounty School Department E-4 87

Schedule of Proportionate Share of the Net Pension Asset in theTeacher Pension Plan of TCRS – Discretely PresentedJohnson County School Department E-5 88

Schedule of Proportionate Share of the Net Pension Liability (Asset) in theTeacher Legacy Pension Plan of TCRS – Discretely PresentedJohnson County School Department E-6 89

Schedule of Funding Progress – Other Postemployment BenefitsPlans – Primary Government and Discretely Presented JohnsonCounty School Department E-7 90

Notes to the Required Supplementary Information 91

JOHNSON COUNTY, TENNESSEETABLE OF CONTENTS

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Exhibit Page(s)

COMBINING AND INDIVIDUAL FUND FINANCIALSTATEMENTS AND SCHEDULES: 92

Nonmajor Governmental Funds: 93-94Combining Balance Sheet F-1 95-98Combining Statement of Revenues, Expenditures, and Changes

in Fund Balances F-2 99-102Schedules of Revenues, Expenditures, and Changes in Fund

Balances – Actual (Budgetary Basis) and Budget:Public Library Fund F-3 103Solid Waste/Sanitation Fund F-4 104Drug Control Fund F-5 105General Capital Projects Fund F-6 106

Major Governmental Fund: 107Schedule of Revenues, Expenditures, and Changes in Fund

Balance – Actual and Budget:General Debt Service Fund G 108

Fiduciary Funds: 109Combining Statement of Fiduciary Assets and Liabilities H-1 110Combining Statement of Changes in Assets and Liabilities –

All Agency Funds H-2 111Component Unit:

Discretely Presented Johnson County School Department: 112Statement of Activities I-1 113Balance Sheet – Governmental Funds I-2 114-115Reconciliation of the Balance Sheet of Governmental Funds

to the Statement of Net Position I-3 116Statement of Revenues, Expenditures, and Changes in Fund

Balances – Governmental Funds I-4 117Reconciliation of the Statement of Revenues, Expenditures,

and Changes in Fund Balances of Governmental Fundsto the Statement of Activities I-5 118

Combining Balance Sheet – Nonmajor Governmental Funds I-6 119Combining Statement of Revenues, Expenditures, and Changes

in Fund Balances – Nonmajor Governmental Funds I-7 120Schedules of Revenues, Expenditures, and Changes in Fund

Balances – Actual (Budgetary Basis) and Budget:General Purpose School Fund I-8 121-122School Federal Projects Fund I-9 123Central Cafeteria Fund I-10 124Other Education Special Revenue Fund I-11 125

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Exhibit Page(s)

Miscellaneous Schedules: 126Schedule of Changes in Other Loans, Bonds, and Capital Leases J-1 127Schedule of Long-term Debt Requirements by Year J-2 128Schedule of Transfers – Primary Government and Discretely

Presented Johnson County School Department J-3 129Schedule of Salaries and Official Bonds of Principal Officials –

Primary Government and Discretely Presented JohnsonCounty School Department J-4 130

Schedule of Detailed Revenues – All Governmental Fund Types J-5 131-142Schedule of Detailed Revenues – All Governmental Fund Types –

Discretely Presented Johnson County School Department J-6 143-145Schedule of Detailed Expenditures – All Governmental Fund Types J-7 146-163Schedule of Detailed Expenditures – All Governmental Fund Types –

Discretely Presented Johnson County School Department J-8 164-177Schedule of Detailed Receipts, Disbursements, and Changes in

Cash Balance – City Agency Fund J-9 178

SINGLE AUDIT SECTION 179

Auditor's Report on Internal Control Over Financial Reporting and onCompliance and Other Matters Based on an Audit of FinancialStatements Performed in Accordance With GovernmentAuditing Standards 180-181

Auditor's Report on Compliance for Each Major Federal Program; Reporton Internal Control Over Compliance; and Report on the Schedule ofExpenditures of Federal Awards Required by Uniform Guidance 182-184

Schedule of Expenditures of Federal Awards and State Grants 185-187Summary Schedule of Prior-year Findings 188Schedule of Findings and Questioned Costs 189-195Management's Corrective Action Plan 196-200Best Practice 201

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Summary of Audit Findings Annual Financial Report

Johnson County, Tennessee For the Year Ended June 30, 2017

Scope We have audited the basic financial statements of Johnson County as of and for the year ended June 30, 2017.

Results Our report on Johnson County’s financial statements is unmodified. Our audit resulted in four findings and recommendations, which we have reviewed with Johnson County management. Detailed findings, recommendations, and management’s responses are included in the Single Audit section of this report.

Findings The following are summaries of the audit findings: OFFICE OF DIRECTOR OF SCHOOLS ♦ The School Department had deficiencies in a contract for commercial driver’s license

testing. OFFICE OF CIRCUIT AND GENERAL SESSIONS COURTS CLERK ♦ A cash shortage of $298.50 existed in the Office of Circuit and General Sessions Courts

Clerk as of June 29, 2017. ♦ The office did not deposit some funds within three days of collection. ♦ Bank statements were not accurately reconciled with the general ledger in a timely

manner.

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INTRODUCTORY SECTION

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Johnson County Officials June 30, 2017 Officials Larry Potter, County Mayor Darrell Reece, Road Superintendent Mischelle Simcox, Director of Schools Lisa Crowder, Trustee Matthew Lewis, Assessor of Property Tammie Fenner, County Clerk Melissa Hollaway, Circuit and General Sessions Courts Clerk Sherrie Fenner, Clerk and Master Freida May Gwinn, Register of Deeds William Reece, Sheriff Dustin Shearin, Purchasing Agent Russell Robinson, Director of Accounts and Budgets Board of County Commissioners Mike Taylor, Chairman Gina Meade Bill Adams Steve Marshall Eugene Campbell Scott Mast Robert Grindstaff Chris Pierce Evelyn Hill Tommy Poore Huey Long Bill Roark Jimmy Lowe Rick Snyder George Lowe Board of Education Kevin Long, Chairman Mike Payne Howard Carlton Jo Ann Reece Kenny Gregg Audit Committee Huey Long, Chairman Gina Meade Sally Snyder

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FINANCIAL SECTION

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STATE OF TENNESSEE COMPTROLLER OF THE TREASURY

DEPARTMENT OF AUDIT DIVISION OF LOCAL GOVERNMENT AUDIT

SUITE 1500 JAMES K. POLK STATE OFFICE BUILDING

NASHVILLE, TENNESSEE 37243-1402 PHONE (615) 401-7841

Independent Auditor's Report Johnson County Mayor and Board of County Commissioners Johnson County, Tennessee To the County Mayor and Board of County Commissioners: Report on the Financial Statements We have audited the accompanying financial statements of the governmental activities, the aggregate discretely presented component units, each major fund, and the aggregate remaining fund information of Johnson County, Tennessee, as of and for the year ended June 30, 2017, and the related notes to the financial statements, which collectively comprise the county’s basic financial statements as listed in the table of contents. Management's Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Auditor's Responsibility Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

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An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. Opinions In our opinion the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the aggregate discretely presented component units, each major fund, and the aggregate remaining fund information of Johnson County, Tennessee, as of June 30, 2017, and the respective changes in financial position thereof and the respective budgetary comparison for the General and Highway/Public Works funds for the year then ended in accordance with accounting principles generally accepted in the United States of America. Change in Accounting Principle As described in Note V.B., Johnson County has adopted the provisions of Governmental Accounting Standards Board (GASB) Statement No. 74, Reporting for Postemployment Benefit Plans Other Than Pension Plans. Our opinion is not modified with respect to this matter. Other Matters Required Supplementary Information Management has omitted the management’s discussion and analysis that accounting principles generally accepted in the United States of America require to be presented to supplement the basic financial statements. Such missing information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. Our opinion on the basic financial statements is not affected by this missing information. Accounting principles generally accepted in the United States of America require that the schedule of changes in the county’s net pension liability and related ratios, schedule of county contributions, schedule of school’s proportionate share of the net pension liability, and schedule of funding progress - other postemployment benefit plans on pages 84-91 be presented to supplement the basic financial statements. Such information, although not a

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part of the basic financial statements, is required by the Governmental Accounting Standards Board who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management's responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Supplementary and Other Information Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise Johnson County’s basic financial statements. The introductory section, combining and individual nonmajor fund financial statements, budgetary comparison schedules of nonmajor governmental funds and the General Debt Service Fund, combining and individual fund financial statements of the Johnson County School Department (a discretely presented component unit), and miscellaneous schedules are presented for purposes of additional analysis and are not a required part of the basic financial statements. The schedule of expenditures of federal awards is presented for purposes of additional analysis as required by Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, and is also not a required part of the basic financial statements. The combining and individual nonmajor fund financial statements, budgetary comparison schedules of nonmajor governmental funds and the General Debt Service Fund, combining and individual fund financial statements of the Johnson County School Department (a discretely presented component unit), miscellaneous schedules, and schedule of expenditures of federal awards are the responsibility of management and were derived from and relate directly to the underlying accounting and other records used to prepare the basic financial statements. Such information has been subjected to the auditing procedures 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 other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, based on our audit and the procedures performed as described above, the combining and individual nonmajor fund financial statements, budgetary comparison schedules of nonmajor governmental funds and the General Debt Service Fund, combining and individual fund financial statements of the Johnson County School Department (a discretely presented component unit), miscellaneous schedules, and schedule of expenditures of federal awards are fairly stated in all material respects in relation to the basic financial statements as a whole. The introductory section has not been subjected to the auditing procedures applied in the audit of the basic financial statements, and accordingly, we do not express an opinion or provide any assurance on it.

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Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated October 31, 2017, on our consideration of Johnson County’s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is solely to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the effectiveness of Johnson County’s internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering Johnson County’s internal control over financial reporting and compliance. Very truly yours,

Justin P. Wilson Comptroller of the Treasury Nashville, Tennessee October 31, 2017 JPW/yu

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BASIC FINANCIAL STATEMENTS

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Exhibit A

Johnson County, TennesseeStatement of Net PositionJune 30, 2017

ASSETS

Cash and Equivalents $ 36,344 $ 67,885Equity in Pooled Cash and Investments 9,542,905 4,325,199Accounts Receivable 60,151 52,983Due from Other Governments 757,586 276,339Due from Primary Government 0 194Property Taxes Receivable 3,825,879 2,877,584Allowance for Uncollectible Property Taxes (72,890) (54,824)Net Pension Asset - Teacher Retirement Plan 0 23,567Capital Assets: Assets Not Depreciated: Land 830,378 962,939 Construction in Progress 682,708 4,990 Assets Net of Accumulated Depreciation: Buildings and Improvements 7,091,568 12,729,421 Infrastructure 2,823,933 208,402 Other Capital Assets 959,818 1,301,142Total Assets $ 26,538,380 $ 22,775,821

DEFERRED OUTFLOWS OF RESOURCES

Deferred Charge on Refunding $ 519,806 $ 0Pension Changes in Experience 309,875 298,316Pension Changes in Investment Earnings 386,431 1,815,904Pension Contributions after Measurement Date 427,048 1,085,408Pension Other Deferrals 0 3,787Total Deferred Outflows of Resources $ 1,643,160 $ 3,203,415

LIABILITIES

Accounts Payable $ 39,396 $ 216,420Accrued Payroll 302 4,402Payroll Deductions Payable 70,637 446,345Contracts Payable 4,725 76,566Retainage Payable 26,049 0Accrued Interest Payable 17,971 0Due to Component Units 194 0Due to State of Tennessee 8,186 0Other Current Liabilities 55,858 59,883

(Continued)

PrimaryGovernment

Governmental Activities

Component

JohnsonCountySchool

Department

Unit

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Exhibit A

Johnson County, TennesseeStatement of Net Position (Cont.)

LIABILITIES (Cont.)

Noncurrent Liabilities: Due Within One Year $ 1,148,059 $ 50,370 Due in More Than One Year 11,457,670 2,462,847Total Liabilities $ 12,829,047 $ 3,316,833

DEFERRED INFLOWS OF RESOURCES

Deferred Current Property Taxes $ 3,607,658 $ 2,713,451Pension Changes in Experiences 493,881 2,025,303Pension Other Deferrals 0 70,634Total Deferred Inflows of Resources $ 4,101,539 $ 4,809,388

NET POSITION

Net Investment in Capital Assets $ 6,921,384 $ 15,206,894Restricted for: General Government 143,449 0 Finance 52,547 0 Administration of Justice 41,291 0 Public Safety 157,317 0 Public Health and Welfare 37,329 0 Highways 304,585 0 Education 0 941,651 Pensions 0 23,567 Capital Outlay 1,008,524 0Unrestricted 2,584,528 1,680,903

Total Net Position $ 11,250,954 $ 17,853,015

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

Johnson

ComponentUnit

Governmental Activities

GovernmentPrimary

CountySchool

Department

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Exhibit B

Johnson County, TennesseeStatement of ActivitiesFor the Year Ended June 30, 2017

Changes in Net Position

Program RevenuesOperating Capital

Charges for Grants and Grants and GovernmentalFunctions/Programs Expenses Services Contributions Contributions

Primary Government: Governmental Activities: General Government $ 1,514,334 $ 581,552 $ 89,681 $ 656,012 $ (187,089) $ 0 Finance 715,388 432,292 0 0 (283,096) 0 Administration of Justice 584,374 347,629 9,675 0 (227,070) 0 Public Safety 2,716,858 860,462 40,720 92,309 (1,723,367) 0 Public Health and Welfare 699,427 512,480 193,314 0 6,367 0 Social, Cultural, and Recreational Services 198,658 0 42,562 56,628 (99,468) 0 Agriculture and Natural Resources 90,052 0 0 0 (90,052) 0 Highways 1,457,040 1,965 1,635,541 28,523 208,989 0 Education 535,408 0 0 0 (535,408) 0 Interest on Long-term Debt 246,064 0 304,167 0 58,103 0

Total Primary Government $ 8,757,603 $ 2,736,380 $ 2,315,660 $ 833,472 $ (2,872,091) $ 0

Component Unit: Johnson County School Department $ 21,844,990 $ 249,164 $ 3,770,662 $ 534,202 $ 0 $ (17,290,962)

Total Component Unit $ 21,844,990 $ 249,164 $ 3,770,662 $ 534,202 $ 0 $ (17,290,962)

(Continued)

Department

Net (Expense) Revenue and

Activities

PrimaryGovernment

ComponentUnit

JohnsonCountySchool

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Exhibit B

Johnson County, TennesseeStatement of Activities (Cont.)

Changes in Net Position

Program RevenuesOperating Capital

Charges for Grants and Grants and GovernmentalFunctions/Programs Expenses Services Contributions Contributions

General Revenues: Taxes: Property Taxes Levied for General Purposes $ 3,071,785 $ 2,805,769 Property Taxes Levied for Debt Service 641,164 0 Local Option Sales Taxes 270,980 767,168 Hotel/Motel Tax 28,602 0 Wheel Tax 627,486 0 Litigation Tax - General 7,612 0 Litigation Tax - Special Purpose 38,841 0 Litigation Tax - Jail, Workhouse, or Courthouse 17,063 0 Business Tax 76,316 0 Mixed Drink Tax 753 0 Mineral Severance Tax 670 0 Wholesale Beer Tax 117,648 0 Other Local Taxes 0 2,932 Grants and Contributions Not Restricted to Specific Programs 677,918 13,572,931 Unrestricted Investment Income 59,063 103,031 Miscellaneous 57,361 170,052 Gain on Disposal of Capital Assets 24,417 268,467Total General Revenues $ 5,717,679 $ 17,690,350

Change in Net Position $ 2,845,588 $ 399,388Net Position, July 1, 2016 8,405,366 17,453,627

Net Position, June 30, 2017 $ 11,250,954 $ 17,853,015


SchoolActivities Department

ComponentUnit

Primary JohnsonGovernment County

Net (Expense) Revenue and

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Exhibit C-1

Johnson County, TennesseeBalance SheetGovernmental FundsJune 30, 2017

OtherHighway / General Govern- Total

Public Debt mental GovernmentalGeneral Works Service Funds Funds

ASSETS

Cash $ 28,581 $ 6,213 $ 0 $ 1,550 $ 36,344Equity in Pooled Cash and Investments 1,385,598 952,657 5,565,661 1,638,989 9,542,905Accounts Receivable 30,595 219 0 29,337 60,151Due from Other Governments 268,170 319,398 156,719 13,299 757,586Due from Other Funds 1,064 21,966 316,411 2,929 342,370Property Taxes Receivable 2,844,884 0 653,997 326,998 3,825,879Allowance for Uncollectible Property Taxes (54,200) 0 (12,460) (6,230) (72,890)

Total Assets $ 4,504,692 $ 1,300,453 $ 6,680,328 $ 2,006,872 $ 14,492,345

LIABILITIES

Accounts Payable $ 12,853 $ 4,887 $ 0 $ 21,656 $ 39,396Accrued Payroll 0 0 0 302 302Payroll Deductions Payable 50,143 20,494 0 0 70,637Contracts Payable 0 0 0 4,725 4,725Retainage Payable 26,049 0 0 0 26,049Due to Other Funds 241,306 0 0 101,064 342,370Due to Component Units 194 0 0 0 194Due to State of Tennessee 6,236 1,950 0 0 8,186Other Current Liabilities 28,581 6,213 0 21,064 55,858Total Liabilities $ 365,362 $ 33,544 $ 0 $ 148,811 $ 547,717


Deferred Current Property Taxes $ 2,682,617 $ 0 $ 616,694 $ 308,347 $ 3,607,658

(Continued)

Nonmajor Funds

Major Funds

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Exhibit C-1

Johnson County, TennesseeBalance SheetGovernmental Funds (Cont.)



DEFERRED INFLOWS OF RESOURCES (Cont.)

Deferred Delinquent Property Taxes $ 96,486 $ 0 $ 22,181 $ 11,090 $ 129,757Other Deferred/Unavailable Revenue 44,966 174,401 92,673 0 312,040Total Deferred Inflows of Resources $ 2,824,069 $ 174,401 $ 731,548 $ 319,437 $ 4,049,455

FUND BALANCES

Restricted:Restricted for General Government $ 143,449 $ 0 $ 0 $ 0 $ 143,449Restricted for Finance 52,547 0 0 0 52,547Restricted for Administration of Justice 41,291 0 0 0 41,291Restricted for Public Safety 63,583 0 0 93,734 157,317Restricted for Public Health and Welfare 37,329 0 0 0 37,329Restricted for Highways/Public Works 0 165,706 0 0 165,706Restricted for Capital Outlay 0 0 0 998,543 998,543

Committed:Committed for Public Health and Welfare 0 0 0 300,518 300,518Committed for Social, Cultural, and Recreational Services 0 0 0 90,798 90,798Committed for Highways/Public Works 0 926,802 0 0 926,802Committed for Capital Outlay 0 0 0 55,031 55,031Committed for Debt Service 0 0 5,948,780 0 5,948,780

Assigned:Assigned for General Government 408,148 0 0 0 408,148Assigned for Public Safety 466,376 0 0 0 466,376

Unassigned 102,538 0 0 0 102,538Total Fund Balances $ 1,315,261 $ 1,092,508 $ 5,948,780 $ 1,538,624 $ 9,895,173

Total Liabilities, Deferred Inflows of Resources, and Fund Balances $ 4,504,692 $ 1,300,453 $ 6,680,328 $ 2,006,872 $ 14,492,345


Nonmajor Funds

Major Funds

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Exhibit C-2

Johnson County, TennesseeReconciliation of the Balance Sheet of Governmental Funds to the Statement of Net PositionJune 30, 2017

Amounts reported for governmental activities in the statement of net position (Exhibit A) are different because:

Total fund balances - balance sheet - governmental funds (Exhibit C-1) $ 9,895,173

(1) Capital assets used in governmental activities are not financial resources and therefore are not reported inthe governmental funds.

Add: land $ 830,378Add: construction in progress 682,708Add: other capital assets net of accumulated depreciation 959,818Add: buildings and improvements net of accumulated depreciation 7,091,568Add: infrastructure net of accumulated depreciation 2,823,933 12,388,405

(2) Long-term liabilities are not due and payable in the currentperiod and therefore are not reported in the governmental funds.

Less: bonds payable $ (10,190,000)Less: capital leases payable (253,269)Add: deferred amount on refunding 519,806Less: compensated absences payable (210,731)Less: landfill postclosure care costs (764,196)Less: other postemployment benefits liability (688,000)Less: net pension liability (238,769)Less: accrued interest on bonds, notes, and other loans payable (17,971)Less: other deferred revenue - premium on debt (260,764) (12,103,894)

(3) Amounts reported as deferred outflows of resources and deferredinflows of resources related to pensions will be amortized andrecognized as components of pension expense in future years:

Add: deferred outflows of resourses related to pensions $ 1,123,354Less: deferred inflows of resources related to pensions (493,881) 629,473

(4) Other long-term assets are not available to pay forcurrent-period expenditures and therefore are deferredin the governmental funds. 441,797

Net position of governmental activities (Exhibit A) $ 11,250,954


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Exhibit C-3

Johnson County, TennesseeStatement of Revenues, Expenditures,

and Changes in Fund BalancesGovernmental FundsFor the Year Ended June 30, 2017



RevenuesLocal Taxes $ 3,820,095 $ 670 $ 747,868 $ 369,546 $ 4,938,179Licenses and Permits 62,992 0 0 0 62,992Fines, Forfeitures, and Penalties 113,425 750 0 54,036 168,211Charges for Current Services 55,425 0 0 509,224 564,649Other Local Revenues 479,637 12,027 0 111,642 603,306Fees Received From County Officials 706,757 0 0 0 706,757State of Tennessee 2,098,228 1,594,189 0 34,920 3,727,337Federal Government 303,847 3,280 0 3,020 310,147Other Governments and Citizens Groups 57,018 870 304,167 84,121 446,176

Total Revenues $ 7,697,424 $ 1,611,786 $ 1,052,035 $ 1,166,509 $ 11,527,754

ExpendituresCurrent:

General Government $ 652,680 $ 0 $ 0 $ 57 $ 652,737Finance 811,509 0 0 0 811,509Administration of Justice 722,190 0 0 2,080 724,270Public Safety 2,989,027 0 0 35,534 3,024,561Public Health and Welfare 279,581 0 0 458,609 738,190Social, Cultural, and Recreational Services 102,582 0 0 90,396 192,978Agriculture and Natural Resources 90,829 0 0 0 90,829Other Operations 1,211,023 0 0 0 1,211,023Highways 43,217 1,827,619 0 0 1,870,836

Debt Service:Principal on Debt 0 16,747 865,013 56,660 938,420Interest on Debt 0 3,565 206,436 0 210,001Other Debt Service 0 0 120,914 0 120,914

(Continued)

Nonmajor Funds

Major Funds

22

Exhibit C-3


and Changes in Fund BalancesGovernmental Funds (Cont.)



Expenditures (Cont.)Capital Projects $ 230,651 $ 0 $ 0 $ 105,074 $ 335,725Capital Projects - Donated 146,870 0 0 534,202 681,072

Total Expenditures $ 7,280,159 $ 1,847,931 $ 1,192,363 $ 1,282,612 $ 11,603,065

Excess (Deficiency) of RevenuesOver Expenditures $ 417,265 $ (236,145) $ (140,328) $ (116,103) $ (75,311)

Other Financing Sources (Uses)Capital Leases Issued $ 0 $ 203,338 $ 0 $ 0 $ 203,338Refunding Debt Issued 0 0 4,715,000 0 4,715,000Premiums on Debt Sold 0 0 129,823 0 129,823Insurance Recovery 19,420 2,147 0 3,395 24,962Transfers In 0 235,307 235,307 31,374 501,988Transfers Out (501,988) 0 0 0 (501,988)Payments to Refunded Debt Escrow Agent 0 0 (4,749,466) 0 (4,749,466)

Total Other Financing Sources (Uses) $ (482,568) $ 440,792 $ 330,664 $ 34,769 $ 323,657

Net Change in Fund Balances $ (65,303) $ 204,647 $ 190,336 $ (81,334) $ 248,346Fund Balance, July 1, 2016 1,380,564 887,861 5,758,444 1,619,958 9,646,827

Fund Balance, June 30, 2017 $ 1,315,261 $ 1,092,508 $ 5,948,780 $ 1,538,624 $ 9,895,173


Nonmajor Funds

Major Funds

23

Exhibit C-4

Johnson County, TennesseeReconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances of Governmental Funds to the Statement of ActivitiesFor the Year Ended June 30, 2017

Amounts reported for governmental activities in the statement of activities (Exhibit B) are different because:

Net change in fund balances - total governmental funds (Exhibit C-3) $ 248,346

(1) Governmental funds report capital outlays as expenditures. However,in the statement of activities, the cost of these assets is allocated over their useful lives and reported as depreciation expense. The difference between capital outlays and depreciation is itemized as follows:

Add: capital assets purchased in the current period $ 1,337,705Less: current-year depreciation expense (743,924) 593,781

(2) The net effect of various miscellaneous transactions involving capitalassets (sales, trade-ins, and donations) is to increase net position.

Less: book value of capital assets disposed $ (19,214)Add: assets donated and capitalized 19,500 286

(3) Revenues in the statement of activities that do not provide currentfinancial resources are not reported as revenues in the funds.

Add: deferred delinquent property taxes and other deferred June 30, 2017 $ 441,797Less: deferred delinquent property taxes and other deferred June 30, 2016 (385,860) 55,937

(4) The issuance of long-term debt (e.g., bonds, notes, other loans, leases) provides current financial resources to governmental funds, while the repaymentof the principal of long-term debt consumes the current financialresources of governmental funds. Neither transaction, however, has any effect on net position. Also, governmental funds report the effectof premiums, discounts, and similar items when debt is firstissued, whereas these amounts are deferred and amortized in the statement of activities. This amount is the effect of these differencesin the treatment of long-term debt and related items:

Less: capital lease proceeds $ (203,338)Less: bond proceeds (4,715,000)Add: principal amount of debt refunded 4,325,000Less: change in unamortized premium on debt issuances (83,630)Less: change in unamortized discount on debt (6,002)Add: principal payments on bonds 825,000Add: principal payments on other loans 40,013Add: principal payments on capital leases 73,407Add: change in deferred amount on refunding 339,907 595,357

(5) Some expenses reported in the statement of activities do not requirethe use of current financial resources and therefore are not reportedas expenditures in the governmental funds.

Change in accrued interest payable $ 8,305Change in compensated absences payable (21,221)Change in landfill postclosure care costs 65,631Change in other postemployment benefits liability 1,065,228Change in net pension liability 346,880Change in deferred outflows related to pensions 254,100Change in deferred inflows related to pensions (367,042) 1,351,881

Change in net position of governmental activities (Exhibit B) $ 2,845,588


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Exhibit C-5

Johnson County, TennesseeStatement of Revenues, Expenditures, and Changes

in Fund Balance - Actual (Budgetary Basis) and BudgetGeneral FundFor the Year Ended June 30, 2017

Actual VarianceRevenues/ with Final

Actual Less: Add: Expenditures Budget -(GAAP Encumbrances Encumbrances (Budgetary PositiveBasis) 7/1/2016 6/30/2017 Basis) Original Final (Negative)

RevenuesLocal Taxes $ 3,820,095 $ 0 $ 0 $ 3,820,095 $ 3,694,483 $ 3,695,233 $ 124,862Licenses and Permits 62,992 0 0 62,992 57,500 57,500 5,492Fines, Forfeitures, and Penalties 113,425 0 0 113,425 117,450 122,740 (9,315)Charges for Current Services 55,425 0 0 55,425 39,600 46,600 8,825Other Local Revenues 479,637 0 0 479,637 717,000 733,484 (253,847)Fees Received From County Officials 706,757 0 0 706,757 675,250 675,250 31,507State of Tennessee 2,098,228 0 0 2,098,228 1,879,483 2,485,353 (387,125)Federal Government 303,847 0 0 303,847 73,500 1,016,924 (713,077)Other Governments and Citizens Groups 57,018 0 0 57,018 57,000 63,315 (6,297)

Total Revenues $ 7,697,424 $ 0 $ 0 $ 7,697,424 $ 7,311,266 $ 8,896,399 $ (1,198,975)

ExpendituresGeneral Government

County Commission $ 68,588 $ (383) $ 305 $ 68,510 $ 82,441 $ 81,999 $ 13,489Board of Equalization 760 0 0 760 1,200 1,200 440Other Boards and Committees 930 0 0 930 2,525 2,525 1,595County Mayor/Executive 133,693 0 0 133,693 136,629 135,954 2,261County Attorney 6,000 0 0 6,000 11,200 11,200 5,200Election Commission 185,811 (1,829) 12,123 196,105 196,531 199,082 2,977Register of Deeds 119,057 (250) 2,000 120,807 128,065 127,499 6,692County Buildings 137,841 (1,560) 1,981 138,262 123,821 140,215 1,953

FinanceAccounting and Budgeting 196,070 (250) 0 195,820 191,658 196,614 794Purchasing 46,299 (1,369) 585 45,515 45,535 45,775 260Property Assessor's Office 129,126 0 25 129,151 125,007 129,236 85Reappraisal Program 71,440 0 0 71,440 71,353 71,462 22County Trustee's Office 145,816 0 0 145,816 146,900 146,811 995County Clerk's Office 222,758 (300) 300 222,758 219,277 233,319 10,561

Administration of JusticeCircuit Court 262,781 (1,134) 2,754 264,401 246,147 268,793 4,392

(Continued)

Budgeted Amounts

25

Exhibit C-5


in Fund Balance - Actual (Budgetary Basis) and BudgetGeneral Fund (Cont.)



Expenditures (Cont.)Administration of Justice (Cont.)

General Sessions Court $ 129,504 $ (362) $ 250 $ 129,392 $ 127,353 $ 129,502 $ 110Chancery Court 165,378 (37,934) 579 128,023 132,382 131,693 3,670Juvenile Court 122,732 (150) 282 122,864 96,466 127,609 4,745Courtroom Security 41,795 0 0 41,795 7,500 43,718 1,923

Public SafetySheriff's Department 1,459,549 (8,775) 5,976 1,456,750 1,496,764 1,536,792 80,042Administration of the Sexual Offender Registry 400 0 0 400 1,500 1,500 1,100Jail 1,177,263 (35,221) 39,834 1,181,876 1,143,224 1,213,381 31,505Commissary 12,310 (1,000) 1,364 12,674 35,000 35,000 22,326Fire Prevention and Control 159,000 0 0 159,000 159,000 501,391 342,391Civil Defense 87,488 (15) 600 88,073 85,456 88,721 648Other Emergency Management 66,600 0 0 66,600 66,600 66,600 0Inspection and Regulation 22,436 0 0 22,436 22,159 22,555 119County Coroner/Medical Examiner 3,981 0 0 3,981 4,893 4,893 912

Public Health and WelfareLocal Health Center 220,159 (1,035) 125 219,249 440,690 446,770 227,521Rabies and Animal Control 4,626 0 0 4,626 2,000 5,000 374Other Local Health Services 2,268 0 100 2,368 0 11,000 8,632Appropriation to State 32,069 0 0 32,069 32,069 32,069 0Other Public Health and Welfare 20,459 0 100 20,559 0 49,888 29,329

Social, Cultural, and Recreational ServicesSenior Citizens Assistance 76,082 0 0 76,082 63,742 76,335 253Other Social, Cultural, and Recreational 26,500 0 0 26,500 26,500 26,500 0

Agriculture and Natural ResourcesAgricultural Extension Service 68,803 0 0 68,803 72,490 72,490 3,687Soil Conservation 22,026 0 0 22,026 21,393 22,073 47

Other OperationsTourism 18,550 0 0 18,550 17,500 18,550 0Airport 552,566 (16,546) 156,637 692,657 20,000 599,120 (93,537)

(Continued)

Budgeted Amounts

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Exhibit C-5


in Fund Balance - Actual (Budgetary Basis) and BudgetGeneral Fund (Cont.)



Expenditures (Cont.)Other Operations (Cont.)

Veterans' Services $ 30,393 $ 0 $ 0 $ 30,393 $ 30,331 $ 30,414 $ 21Other Charges 359,449 0 1,250 360,699 654,903 615,890 255,191Contributions to Other Agencies 13,926 0 0 13,926 16,000 16,000 2,074Employee Benefits 41,439 0 0 41,439 44,536 43,207 1,768Miscellaneous 194,700 (1,000) 209 193,909 184,753 199,530 5,621

HighwaysLitter and Trash Collection 43,217 (4,255) 0 38,962 46,715 46,264 7,302

Capital ProjectsPublic Safety Projects 230,651 (221,667) 0 8,984 0 225,956 216,972

Capital Projects - DonatedCapital Projects Donated to Other Entities 146,870 0 0 146,870 0 392,603 245,733

Total Expenditures $ 7,280,159 $ (335,035) $ 227,379 $ 7,172,503 $ 6,780,208 $ 8,624,698 $ 1,452,195

Excess (Deficiency) of RevenuesOver Expenditures $ 417,265 $ 335,035 $ (227,379) $ 524,921 $ 531,058 $ 271,701 $ 253,220

Other Financing Sources (Uses)Insurance Recovery $ 19,420 $ 0 $ 0 $ 19,420 $ 0 $ 19,420 $ 0Special Items (Revenues) 0 0 0 0 7,000 0 0Transfers Out (501,988) 0 0 (501,988) (490,000) (498,200) (3,788)

Total Other Financing Sources $ (482,568) $ 0 $ 0 $ (482,568) $ (483,000) $ (478,780) $ (3,788)

Net Change in Fund Balance $ (65,303) $ 335,035 $ (227,379) $ 42,353 $ 48,058 $ (207,079) $ 249,432Fund Balance, July 1, 2016 1,380,564 (335,035) 0 1,045,529 1,487,722 1,487,722 (442,193)

Fund Balance, June 30, 2017 $ 1,315,261 $ 0 $ (227,379) $ 1,087,882 $ 1,535,780 $ 1,280,643 $ (192,761)


Budgeted Amounts

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Exhibit C-6


in Fund Balance - Actual (Budgetary Basis) and BudgetHighway/Public Works FundFor the Year Ended June 30, 2017



RevenuesLocal Taxes $ 670 $ 0 $ 0 $ 670 $ 1,000 $ 1,000 $ (330)Fines, Forfeitures, and Penalties 750 0 0 750 0 750 0Other Local Revenues 12,027 0 0 12,027 0 7,110 4,917State of Tennessee 1,594,189 0 0 1,594,189 1,450,359 2,215,259 (621,070)Federal Government 3,280 0 0 3,280 22,500 22,500 (19,220)Other Governments and Citizens Groups 870 0 0 870 0 670 200

Total Revenues $ 1,611,786 $ 0 $ 0 $ 1,611,786 $ 1,473,859 $ 2,247,289 $ (635,503)

ExpendituresHighways

Administration $ 177,178 $ 0 $ 0 $ 177,178 $ 221,394 $ 221,394 $ 44,216Highway and Bridge Maintenance 964,268 (8,161) 39,000 995,107 984,005 1,110,868 115,761Operation and Maintenance of Equipment 246,617 (5,550) 14,250 255,317 260,000 327,058 71,741Other Charges 77,289 (400) 1,050 77,939 70,490 84,740 6,801Employee Benefits 78,372 0 0 78,372 79,747 79,747 1,375Capital Outlay 283,895 0 802,840 1,086,735 91,223 1,144,713 57,978

Principal on DebtHighways and Streets 16,747 0 0 16,747 0 16,747 0

Interest on DebtHighways and Streets 3,565 0 0 3,565 0 3,565 0

Total Expenditures $ 1,847,931 $ (14,111) $ 857,140 $ 2,690,960 $ 1,706,859 $ 2,988,832 $ 297,872

Excess (Deficiency) of RevenuesOver Expenditures $ (236,145) $ 14,111 $ (857,140) $ (1,079,174) $ (233,000) $ (741,543) $ (337,631)

Other Financing Sources (Uses)Capital Leases Issued $ 203,338 $ 0 $ 0 $ 203,338 $ 0 $ 203,338 $ 0Insurance Recovery 2,147 0 0 2,147 0 2,147 0Transfers In 235,307 0 0 235,307 233,000 234,000 1,307

Total Other Financing Sources $ 440,792 $ 0 $ 0 $ 440,792 $ 233,000 $ 439,485 $ 1,307

(Continued)

Budgeted Amounts

28

Exhibit C-6


in Fund Balance - Actual (Budgetary Basis) and BudgetHighway/Public Works Fund (Cont.)



Net Change in Fund Balance $ 204,647 $ 14,111 $ (857,140) $ (638,382) $ 0 $ (302,058) $ (336,324)Fund Balance, July 1, 2016 887,861 (14,111) 0 873,750 873,751 873,751 (1)

Fund Balance, June 30, 2017 $ 1,092,508 $ 0 $ (857,140) $ 235,368 $ 873,751 $ 571,693 $ (336,325)


Budgeted Amounts

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Exhibit D

Johnson County, TennesseeStatement of Fiduciary Assets and LiabilitiesFiduciary FundsJune 30, 2017

ASSETS

Cash $ 354,579Equity in Pooled Cash and Investments 105,597Accounts Receivable 4,773Due from Other Governments 87,223

Total Assets $ 552,172

LIABILITIES

Accounts Payable $ 2,728 Due to Other Taxing Units 190,092Due to Litigants, Heirs, and Others 359,352

Total Liabilities $ 552,172


Agency Funds

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Note Page(s)

I. Summary of Significant Accounting PoliciesA. Reporting Entity 32B. Government-wide and Fund Financial Statements 33C. Measurement Focus, Basis of Accounting, and Financial

Statement Presentation 34D. Assets, Liabilities, Deferred Outflows/Inflows of Resources, and

Net Position/Fund Balance1. Deposits and Investments 362. Receivables and Payables 373. Capital Assets 384. Deferred Outflows/Inflows of Resources 385. Compensated Absences 396. Long-term Obligations 407. Net Position and Fund Balances 40

E. Pension Plans 42II. Reconciliation of Government-wide and Fund Financial Statements

A. Explanation of Certain Differences Between the Governmental FundBalance Sheet and the Government-wide Statement of Net Position 43

B. Explanation of Certain Differences Between the Governmental FundStatement of Revenues, Expenditures, and Changes in Fund Balances

and the Government-wide Statement of Activities 43III. Stewardship, Compliance, and Accountability

A. Budgetary Information 43B. Cash Shortage 44C. Expenditures Exceeded Appropriations 44

IV. Detailed Notes on All FundsA. Deposits and Investments 45B. Capital Assets 46C. Construction Commitments 50D. Interfund Receivables, Payables, and Transfers 50E. Capital Leases 51F. Long-term Obligations 52G. On-Behalf Payments 56H. Internal Financing 57

V. Other InformationA. Risk Management 57B. Accounting Changes 58C. Contingent Liabilities 60D. Landfill Closure/Postclosure Care Costs 60E. Joint Ventures 60F. Jointly Governed Organization 61G. Retirement Commitments 62H. Other Postemployment Benefits (OPEB) 79I. Office of Central Accounting and Budgeting 82J. Purchasing Laws 82

JOHNSON COUNTY, TENNESSEEIndex of Notes to the Financial Statements

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JOHNSON COUNTY, TENNESSEE NOTES TO THE FINANCIAL STATEMENTS

For the Year Ended June 30, 2017

I. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Johnson County’s financial statements are presented in accordance with generally accepted accounting principles (GAAP). The Governmental Accounting Standards Board (GASB) is responsible for establishing GAAP for state and local governments. The following are the more significant accounting policies of Johnson County:

A. Reporting Entity

Johnson County is a public municipal corporation governed by an elected 15-member board. As required by GAAP, these financial statements present Johnson County (the primary government) and its component units. The financial statements of the Johnson County Emergency Communications District, a component unit requiring discrete presentation, were excluded from this report due to materiality calculations; therefore, the effect of its omission did not affect the independent auditor’s opinion thereon. The component units discussed below are included in the county's reporting entity because of the significance of their operational or financial relationships with the county.

Discretely Presented Component Units – The following entities meet the criteria for discretely presented component units of the county. They are reported in separate columns in the government-wide financial statements to emphasize that they are legally separate from the county.

The Johnson County School Department operates the public school system in the county, and the voters of Johnson County elect its board. The School Department is fiscally dependent on the county because it may not issue debt, and its budget and property tax levy are subject to the county commission’s approval. The School Department’s taxes are levied under the taxing authority of the county and are included as part of the county’s total tax levy.

The Johnson County Emergency Communications District provides a simplified means of securing emergency services through a uniform emergency number for the residents of Johnson County, and the Johnson County Commission appoints its governing body. The district is funded primarily through a service charge levied on telephone services. Before the issuance of most debt instruments, the district must obtain the county commission’s approval. The financial statements of the Johnson County Emergency Communications District were not material to the component units’ opinion unit and therefore have been omitted from this report. The Johnson County School Department does not issue separate financial statements from those of the county. Therefore, basic financial statements of

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the School Department are included in this report as listed in the table of contents. Complete financial statements of the Johnson County Emergency Communications District can be obtained from its administrative office at the following address:

Administrative Office:

Johnson County Emergency Communications District 999 Honeysuckle Street Mountain City, TN 37683

Related Organization – The Johnson County Industrial Commission is a related organization of Johnson County. The county’s officials are responsible for appointing the members of the Johnson County Industrial Commission; however, the county’s accountability for the organization does not extend beyond making the appointments.

B. Government-wide and Fund Financial Statements The government-wide financial statements (i.e., the Statement of Net Position and the Statement of Activities) report information on all of the nonfiduciary activities of the primary government and its component units. For the most part, the effect of interfund activity has been removed from these statements. However, when applicable, interfund services provided and used between functions are not eliminated in the process of consolidation in the Statement of Activities. Governmental activities are normally supported by taxes and intergovernmental revenues. Business-type activities, which rely to a significant extent on fees and charges, are required to be reported separately from governmental activities in government-wide financial statements. However, the primary government of Johnson County does not have any business-type activities to report. Likewise, the primary government is reported separately from certain legally separate component units for which the primary government is financially accountable. The Johnson County School Department component unit only reports governmental activities in the government-wide financial statements. The Statement of Activities demonstrates the degree to which the direct expenses of a given function are offset by program revenues. Direct expenses are those that are clearly identifiable with a specific function. Program revenues include (1) charges to customers or applicants who purchase, use, or directly benefit from goods, services, or privileges provided by a given function and (2) grants and contributions that are restricted to meeting the operational or capital requirements of a particular function. Taxes and other items not properly included among program revenues are reported instead as general revenues.

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Johnson County issues all debt for the discretely presented Johnson County School Department. There were no debt issues contributed by the county to the School Department during the year ended June 30, 2017. Separate financial statements are provided for governmental funds and fiduciary funds. Fiduciary funds are excluded from the government-wide financial statements. Major individual governmental funds are reported as separate columns in the fund financial statements.

C. Measurement Focus, Basis of Accounting, and Financial Statement Presentation

The government-wide financial statements are reported using the economic resources measurement focus and the accrual basis of accounting, as are the fiduciary funds financial statements, except for agency funds, which have no measurement focus. Revenues are recorded when earned, and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. Property taxes are recognized as revenues in the year for which they are levied. Grants and similar items are recognized as revenue as soon as all eligibility requirements imposed by the provider have been met. Fund financial statements of Johnson County are organized into funds, each of which is considered to be a separate accounting entity. Each fund is accounted for by providing a separate set of self-balancing accounts that constitute its assets, deferred outflow of resources, liabilities, deferred inflow of resources, fund equity, revenues, and expenditures. Funds are organized into three major categories: governmental, proprietary, and fiduciary. An emphasis is placed on major funds within the governmental category. Johnson County has no proprietary funds to report. Separate financial statements are provided for governmental funds and fiduciary funds. Major individual governmental funds are reported as separate columns in the fund financial statements. All other governmental funds are aggregated into a single column on the fund financial statements. Fiduciary funds in total are reported in a single column. Governmental fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Revenues are recognized as soon as they become both measurable and available. Revenues are considered to be available when they are collectible within the current period or soon enough thereafter to pay liabilities of the current period. For this purpose, the county considers revenues other than grants to be available if they are collected within 30 days after year-end. Grants and similar items are recognized as revenue as soon as all eligibility requirements imposed by the provider have been met and the revenues are available. Johnson County considers grants and similar revenues to be available if they are collected within 60 days after year-end. Expenditures are generally recognized under the modified accrual basis of accounting when the related fund liability is incurred. Principal and interest on long-term debt are

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recognized as fund liabilities when due or when amounts have been accumulated in the General Debt Service Fund for payments to be made early in the following year. Property taxes for the period levied, in-lieu-of tax payments, sales taxes, interest, and miscellaneous taxes are all considered to be susceptible to accrual and have been recognized as revenues of the current period. Applicable business taxes, litigation taxes, state-shared excise taxes, fines, forfeitures, and penalties are not susceptible to accrual since they are not measurable (reasonably estimable). All other revenue items are considered to be measurable and available only when the county receives cash. Fiduciary fund financial statements are reported using the economic resources measurement focus except for agency funds, which have no measurement focus, and the accrual basis of accounting. Revenues are recognized when earned, and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows.

Johnson County reports the following major governmental funds:

General Fund – This is the county’s primary operating fund. It accounts for all financial resources of the general government, except those required to be accounted for in another fund. Highway/Public Works Fund – This special revenue fund accounts for transactions of the county’s Highway Department. Local and state gasoline/fuel taxes are the foundational revenues of this fund. General Debt Service Fund – This fund accounts for the resources accumulated and payments made for principal and interest on long-term general obligation debt of governmental funds.

Additionally, Johnson County reports the following fund types:

Capital Projects Funds – These funds account for and report financial resources that are restricted, committed, or assigned to expenditures for capital outlays, including the acquisition or construction of capital facilities and other capital assets. Agency Funds – These funds account for amounts collected in an agency capacity by the constitutional officers, local sales taxes received by the state to be forwarded to the various cities in Johnson County, and assets held in a custodial capacity for the Doe Mountain Recreation Authority. Agency funds are custodial in nature (assets equal liabilities) and do not involve measurement of results of operations. They do, however, use the accrual basis of accounting to recognize receivables and payables.

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The discretely presented Johnson County School Department reports the following major governmental funds:

General Purpose School Fund – This fund is the primary operating fund for the School Department. It is used to account for general operations of the School Department. Central Cafeteria Fund – This special revenue fund is used to account for cafeteria operations in each of the schools. Charges for current services and federal grants are the foundational revenues of this fund.

Amounts reported as program revenues include (1) charges to customers or applicants for goods, services, or privileges provided; (2) operating grants and contributions; and (3) capital grants and contributions. Internally dedicated resources are reported as general revenues rather than as program revenues. Likewise, general revenues include all taxes.

D. Assets, Liabilities, Deferred Outflows/Inflows of Resources, and Net Position/Fund Balance

1. Deposits and Investments

State statutes authorize the government to make direct investments in bonds, notes, or treasury bills of the U.S. government and obligations guaranteed by the U.S. government or any of its agencies; deposit accounts at state and federal chartered banks and savings and loan associations; repurchase agreements; the State Treasurer’s Investment Pool; bonds of any state or political subdivision rated A or higher by any nationally recognized rating service; nonconvertible debt securities of certain federal government sponsored enterprises; and the county’s own legally issued bonds or notes. The county trustee maintains a cash and internal investment pool that is used by all funds and the discretely presented Johnson County School Department. Each fund’s portion of this pool is displayed on the balance sheets or statements of net position as Equity in Pooled Cash and Investments. Most income from these pooled investments is assigned to the General Fund. Johnson County and the School Department have adopted a policy of reporting U.S. Treasury obligations, U.S. agency obligations, and repurchase agreements with maturities of one year or less when purchased on the balance sheet at amortized cost. Certificates of deposit are reported at cost. Investments in the State Treasurer’s Investment Pool are reported at amortized cost using a stable net asset value. State statutes require the state treasurer to administer the pool under the same terms and conditions, including collateral requirements, as prescribed for other funds invested by the state treasurer. All other investments are reported at fair value. No

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investments required to be reported at fair value were held at the balance sheet date.

2. Receivables and Payables

Activity between funds for unremitted current collections outstanding at the end of the fiscal year is referred to as due to/from other funds. Long-term receivables between funds, as reported in Due from Other Funds in the General Debt Service Fund financial statements, are included in committed fund balance. All property taxes receivable are shown with an allowance for uncollectibles. The allowance for uncollectible property taxes is equal to one percent of total taxes levied. Property taxes receivable are recognized as of the date an enforceable legal claim to the taxable property arises. This date is January 1 and is referred to as the lien date. However, revenues from property taxes are recognized in the period for which the taxes are levied, which is the ensuing fiscal year. Since the receivable is recognized before the period of revenue recognition, the entire amount of the receivable, less an estimated allowance for uncollectible taxes, is reported as a deferred inflow of resources as of June 30.

Property taxes receivable are also reported as of June 30 for the taxes that are levied, collected, and reported as revenue during the current fiscal year. These property taxes receivable are presented on the balance sheet as a deferred inflow of resources to reflect amounts not available as of June 30. Property taxes collected within 30 days of year-end are considered available and accrued. The allowance for uncollectible taxes represents the estimated amount of the receivable that will be filed in court for collection. Delinquent taxes filed in court for collection are not included in taxes receivable since they are neither measurable nor available.

Property taxes are levied as of the first Monday in October. Taxes become delinquent and begin accumulating interest and penalty the following March 1. Suit must be filed in Chancery Court between the following February 1 to April 1 for any remaining unpaid taxes. Additional costs attach to delinquent taxes after a court suit has been filed. Most payables are disaggregated on the face of the financial statements. Other current liabilities of the General, Highway/Public Works, and the discretely presented School Department’s General Purpose School funds consist of balances of employee federal tax deposits not drawn as of June 30, 2017. Other current liabilities of the Drug Control Fund

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represent asset seizures that have not been awarded to the county as of June 30, 2017. Retainage payable in the primary government’s General Fund represents amounts withheld from payments made on construction contracts pending completion of the projects. These amounts are held by the county trustee as Equity in Pooled Cash and Investments in the General Fund.

3. Capital Assets

Governmental funds do not capitalize the cost of capital outlays; these funds report capital outlays as expenditures upon acquisition. Capital assets, which include property, plant, equipment, and infrastructure assets (e.g., roads, bridges, and similar items), are reported in the governmental column in the government-wide financial statements. Capital assets are defined by the government as assets with an initial, individual cost of $5,000 or more and an estimated useful life of more than five years. Such assets are recorded at historical cost or estimated historical cost if purchased or constructed. Donated capital assets are recorded at estimated fair market value at the date of donation. The costs of normal maintenance and repairs that do not add to the value of the asset or materially extend assets’ lives are not capitalized. Major outlays for capital assets and improvements are capitalized as projects are constructed. Property, plant, equipment, and infrastructure of the primary government and the discretely presented School Department are depreciated using the straight-line method over the following estimated useful lives:

Assets Years

Buildings and Improvements 7 - 39Machinery and Equipment 5 - 15Other Capital Assets 5 - 15Infrastructure: Roads 9 - 20 Bridges 75 School Infrastructure 15

4. Deferred Outflows/Inflows of Resources In addition to assets, the Statement of Net Position will sometimes report a separate section for deferred outflows of resources. Deferred

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outflows of resources represent a consumption of net position that applies to a future period(s) and so will not be recognized as an outflow of resources (expense/expenditure) until then. The government has items that qualify for reporting in this category. Accordingly, the items are reported in the government-wide Statement of Net Position and the governmental funds balance sheet. These items are for pension changes in experience, pension changes in investment earnings, employer contributions made to the pension plan after the measurement date, other pension deferrals, and the deferred charge on refunding. A deferred charge on refunding results from the difference in the carrying value of refunded debt and its reacquisition price. This amount is deferred and amortized over the shorter life of the refunded or refunding debt. In addition to liabilities, the Statement of Net Position will sometimes report a separate section for deferred inflows of resources. Deferred inflows of resources represent an acquisition of net position that applies to a future period(s) and so will not be recognized as an inflow of resources (revenue, etc.) until that time. The government has items that qualify for reporting in this category. Accordingly, the items are reported in the government-wide Statement of Net Position and the governmental funds balance sheet. These items are from the following sources: current and delinquent property taxes, pension changes in experiences, other pension deferrals, and various receivables for revenues, which do not meet the availability criteria for governmental funds.

5. Compensated Absences

It is the county’s policy to permit employees to accumulate a limited amount of earned but unused vacation and sick pay benefits, which will be paid to employees upon separation of service. All vacation and sick pay is accrued when incurred in the government-wide financial statements for the county. A liability for vacation and sick pay is reported in governmental funds only if amounts have matured, for example, as a result of employee resignations and retirements. It is the policy of the Johnson County School Department to permit noncertified employees to accumulate a limited amount of earned but unused vacation benefits, which will be paid upon separation from service. All vacation pay is accrued when incurred in the government-wide financial statements for the School Department. A liability for vacation pay is reported in governmental funds only if amounts have matured, for example, as a result of employee resignations and retirements. Also, the general policy of the School Department permits all professional personnel (teachers) to accumulate an unlimited amount of unused sick leave days. There is no liability for unpaid accumulated sick leave since the School Department does not have a policy to pay any amounts when employees separate from service.

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6. Long-term Obligations

In the government-wide financial statements, long-term debt and other long-term obligations are reported as liabilities in the applicable governmental activities Statement of Net Position. Debt premiums and discounts are deferred and amortized over the life of the new debt using the straight-line method. Debt issuance costs are expensed in the period incurred. In refunding transactions, the difference between the reacquisition price and the net carrying amount of the old debt is reported as a deferred outflow of resources or a deferred inflow of resources and recognized as a component of interest expense in a systematic and rational manner over the remaining life of the refunded debt or the life of the new debt issued, whichever is shorter. In the fund financial statements, governmental funds recognize debt premiums and discounts, as well as debt issuance costs, during the current period. The face amount of debt issued is reported as other financing sources. Premiums received on debt issuances are reported as other financing sources, while discounts on debt issuances are reported as other financing uses. Issuance costs, whether or not withheld from the actual debt proceeds received, are reported as debt service expenditures. Only the matured portion (the portion that has come due for payment) of long-term indebtedness, including bonds payable, is recognized as a liability and expenditure in the governmental fund financial statements. Liabilities and expenditures for other long-term obligations, including compensated absences, other postemployment benefits, landfill closure/postclosure care costs, and pensions are recognized to the extent that the liabilities have matured (come due for payment) each period.

7. Net Position and Fund Balances

In the government-wide financial statements, equity is classified as net position and displayed in three components:

a. Net investment in capital assets – Consists of capital assets,

including restricted capital assets, net of accumulated depreciation and reduced by the outstanding balances of any bonds, mortgages, notes, or other borrowings that are attributable to the acquisition, construction, or improvement of those assets.

b. Restricted net position – Consists of net position with constraints placed on the use either by (1) external groups such as creditors, grantors, contributors, or laws or regulations of other governments or (2) law through constitutional provisions or enabling legislation.

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c. Unrestricted net position – All other net position that does not meet the definition of restricted or net investment in capital assets.

As of June 30, 2017, Johnson County had $5,100,270 in outstanding debt for capital purposes for the discretely presented Johnson County School Department. This debt is a liability of Johnson County, but the capital assets acquired are reported in the financial statements of the School Department. Therefore, Johnson County has incurred a liability significantly decreasing its unrestricted net position with no corresponding increase in the county’s capital assets.

It is the county’s policy that restricted amounts would be reduced first followed by unrestricted amounts when expenditures are incurred for purposes for which both restricted and unrestricted fund balance is available. Also, it is the county’s policy that committed amounts would be reduced first, followed by assigned amounts, and then unassigned amounts when expenditures are incurred for purposes for which amounts in any of these unrestricted fund balance classifications could be used.

In the fund financial statements, governmental funds report fund balance classifications that comprise a hierarchy based primarily on the extent to which the government is bound to honor constraints on the specific purposes for which amounts in these funds can be spent. These classifications may consist of the following:

Nonspendable Fund Balance – includes amounts that cannot be spent because they are either (a) not in spendable form or (b) legally or contractually required to be maintained intact. Restricted Fund Balance – includes amounts that have constraints placed on the use of the resources that are either (a) externally imposed by creditors, grantors, contributors or laws and regulations of other governments or (b) imposed by law through constitutional provisions or enabling legislation. Committed Fund Balance – includes amounts that can only be used for specific purposes pursuant to constraints imposed by formal resolutions of the county commission, the county’s highest level of decision-making authority and the Board of Education, the School Department’s highest level of decision-making authority, and shall remain binding unless removed in the same manner. Assigned Fund Balance – includes amounts that are constrained by the county’s intent to be used for specific purposes, but are neither restricted nor committed (excluding stabilization arrangements). The county commission and the Board of

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Education are authorized bodies to make assignments. Assigned fund balance in the General Fund includes fund balance approved for encumbrances ($227,379), and amounts assigned by the county commission for public safety ($418,278) and various other purposes ($228,867). Assigned fund balance in the discretely presented School Department’s General Purpose School Fund includes fund balance approved for use in the budget for fiscal year June 30, 2017 ($184,693), encumbrances of ($140,435), and amounts assigned by the board for various purposes within Instruction ($350,000), Support ($166,436), and Capital Outlay ($550,000). Unassigned Fund Balance – the residual classification of the General and General Purpose School funds. This classification represents fund balance that has not been assigned to other funds and that has not been restricted, committed, or assigned to specific purposes within the General and General Purpose School funds.

E. Pension Plans

Primary Government For purposes of measuring the net pension liability, deferred outflows of resources and deferred inflows of resources related to pensions, and pension expense, information about the fiduciary net position of Johnson County’s participation in the Public Employee Retirement Plan of the Tennessee Consolidated Retirement System (TCRS), and additions to/deductions from Johnson County’s fiduciary net position have been determined on the same basis as they are reported by the TCRS for the Public Employee Retirement Plan. For this purpose, benefits (including refunds of employee contributions) are recognized when due and payable in accordance with the benefit terms of the Public Employee Retirement Plan of TCRS. Investments are reported at fair value. Discretely Presented Johnson County School Department

For purposes of measuring the net pension liability, deferred outflows of resources and deferred inflows of resources related to pensions, and pension expense, information about the fiduciary net position of the Teacher Retirement Plan and the Teacher Legacy Pension Plan in the Tennessee Consolidated Retirement System, and additions to/deductions from fiduciary net position have been determined on the same basis as they are reported by the TCRS. For this purpose, benefits (including refunds of employee contributions) are recognized when due and payable in accordance with the benefit terms of the Teacher Retirement Plan and the Teacher Legacy Pension Plan. Investments are reported at fair value.

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II. RECONCILIATION OF GOVERNMENT-WIDE AND FUND FINANCIAL STATEMENTS A. Explanation of certain differences between the governmental fund

balance sheet and the government-wide Statement of Net Position

Primary Government Exhibit C-2 includes explanations of the nature of individual elements of items required to reconcile the balance sheet of governmental funds with the government-wide Statement of Net Position. Discretely Presented Johnson County School Department Exhibit I-3 includes explanations of the nature of individual elements of items required to reconcile the balance sheet of governmental funds with the government-wide Statement of Net Position.

B. Explanation of certain differences between the governmental fund

Statement of Revenues, Expenditures, and Changes in Fund Balances and the government-wide Statement of Activities

Primary Government Exhibit C-4 includes explanations of the nature of individual elements of items required to reconcile the net change in fund balances – total governmental funds with the change in net position of governmental activities reported in the government-wide Statement of Activities. Discretely Presented Johnson County School Department Exhibit I-5 includes explanations of the nature of individual elements of items required to reconcile the net change in fund balances – total governmental funds with the change in net position of governmental activities reported in the government-wide Statement of Activities.

III. STEWARDSHIP, COMPLIANCE, AND ACCOUNTABILITY

A. Budgetary Information Annual budgets are adopted on a basis consistent with generally accepted accounting principles (GAAP) for all governmental funds except the Constitutional Officers - Fees Fund (special revenue fund), which is not budgeted, and the Community Development/Industrial Park and Other Capital Projects funds, which adopt project length budgets. All annual appropriations lapse at fiscal year-end. The county is required by state statute to adopt annual budgets. Annual budgets are prepared on the basis in which current available funds must be

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sufficient to meet current expenditures. Expenditures and encumbrances may not legally exceed appropriations authorized by the county commission and any authorized revisions. Unencumbered appropriations lapse at the end of each fiscal year. The budgetary level of control is at the major category level established by the County Uniform Chart of Accounts, as prescribed by the Comptroller of the Treasury of the State of Tennessee. Major categories are at the department level (examples of General Fund major categories: County Commission, Board of Equalization, Other Boards and Committees, County Mayor/Executive, County Attorney, etc.). Management may make revisions within major categories, but only the county commission may transfer appropriations between major categories. During the year, several supplementary appropriations were necessary.

The county's budgetary basis of accounting is consistent with GAAP, except instances in which encumbrances are treated as budgeted expenditures. The difference between the budgetary basis and GAAP basis is presented on the face of each budgetary schedule. At June 30, 2017, Johnson County had the following significant encumbrances:

Fund Description Amount

Primary Government: Major Fund:

General Airport improvements $ 156,637 Highway/Public Works Road construction 723,627 " Equipment 79,213 " Road construction materials 33,500

B. Cash Shortage

The Office of Circuit and General Sessions Courts Clerk had a cash shortage of $298.50 as of June 29, 2017. This shortage has been liquidated as of June 30, 2017. Details of this cash shortage are discussed in the Schedule of Findings and Questioned Costs in the Single Audit section of this report.

C. Expenditures Exceeded Appropriations

Expenditures exceeded appropriations by the county commission in several major appropriation categories (the legal level of control) in the following funds:

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AmountFund/Major Appropriation Category Overspent

Primary Government

General: Airport $ 93,537 Transfers Out 3,788Library: Social, Cultural, and Recreation Projects 10,500

Discretely Presented School Department

General Purpose School: Special Education Program 1,299 Board of Education 99,161 Maintenance of Plant 22,959

Expenditures that exceed appropriations are a violation of state statutes. The expenditures in excess of appropriations for Airport in the General Fund and Social, Cultural, and Recreation Projects in the Library Fund were due to the recognition of payables and encumbrances for construction contracts. The expenditures in the General Fund will be funded through receipt of federal and state grant funds. The other expenditures in excess of appropriations were funded by available fund balance in the General Fund and Library Fund, and by greater than anticipated revenues in the General Purpose School Fund.

IV. DETAILED NOTES ON ALL FUNDS

A. Deposits and Investments Johnson County and the Johnson County School Department participate in an internal cash and investment pool through the Office of Trustee. The county trustee is the treasurer of the county and in this capacity is responsible for receiving, disbursing, and investing most county funds. Each fund’s portion of this pool is displayed on the balance sheets or statements of net position as Equity in Pooled Cash and Investments. Cash reflected on the balance sheets or statements of net position represents nonpooled amounts held separately by individual funds. Deposits Legal Provisions. All deposits with financial institutions must be secured by one of two methods. One method involves financial institutions that participate in the bank collateral pool administered by the state treasurer. Participating banks determine the aggregate balance of their public fund accounts for the

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State of Tennessee and its political subdivisions. The amount of collateral required to secure these public deposits must equal at least 105 percent of the average daily balance of public deposits held. Collateral securities required to be pledged by the participating banks to protect their public fund accounts are pledged to the state treasurer on behalf of the bank collateral pool. The securities pledged to protect these accounts are pledged in the aggregate rather than against each account. The members of the pool may be required by agreement to pay an assessment to cover any deficiency. Under this additional agreement, public fund accounts covered by the pool are considered to be insured for purposes of credit risk disclosure. For deposits with financial institutions that do not participate in the bank collateral pool, state statutes require that all deposits be collateralized with collateral whose market value is equal to 105 percent of the uninsured amount of the deposits. The collateral must be placed by the depository bank in an escrow account in a second bank for the benefit of the county. Investments Legal Provisions. Counties are authorized to make direct investments in bonds, notes, or treasury bills of the U.S. government and obligations guaranteed by the U.S. government or any of its agencies; deposits at state and federal chartered banks and savings and loan associations; bonds of any state or political subdivision rated A or higher by any nationally recognized rating service; nonconvertible debt securities of certain federal government sponsored enterprises; and the county’s own legally issued bonds or notes. These investments may not have a maturity greater than two years. The county may make investments with longer maturities if various restrictions set out in state law are followed. Counties are also authorized to make investments in the State Treasurer’s Investment Pool and in repurchase agreements. Repurchase agreements must be approved by the state Comptroller’s Office and executed in accordance with procedures established by the State Funding Board. Securities purchased under a repurchase agreement must be obligations of the U.S. government or obligations guaranteed by the U.S. government or any of its agencies. When repurchase agreements are executed, the purchase of the securities must be priced at least two percent below the fair value of the securities on the day of purchase. The county had no pooled and nonpooled investments as of June 30, 2017.

B. Capital Assets

Capital assets activity for the year ended June 30, 2017, was as follows:

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Primary Government Governmental Activities:

Balance Balance7-1-16 Increases Decreases 6-30-17

Capital Assets Not Depreciated:Land $ 830,378 $ 0 $ 0 $ 830,378Construction in Progress 708,979 740,865 (767,136) 682,708Total Capital Assets Not Depreciated $ 1,539,357 $ 740,865 $ (767,136) $ 1,513,086

Capital Assets Depreciated:Buildings and Improvements $ 11,225,081 $ 767,136 $ 0 $ 11,992,217Other Capital Assets 3,545,805 440,636 (443,207) 3,543,234Infrastructure 4,303,932 175,704 0 4,479,636Total Capital Assets Depreciated $ 19,074,818 $ 1,383,476 $ (443,207) $ 20,015,087

Less Accumulated Depreciation For:Buildings and Improvements $ 4,614,968 $ 285,681 $ 0 $ 4,900,649Other Capital Assets 2,771,945 235,464 (423,993) 2,583,416Infrastructure 1,432,924 222,779 0 1,655,703Total Accumulated Depreciation $ 8,819,837 $ 743,924 $ (423,993) $ 9,139,768

Total Capital Assets Depreciated, Net $ 10,254,981 $ 639,552 $ (19,214) $ 10,875,319

Governmental Activities Capital Assets, Net $ 11,794,338 $ 1,380,417 $ (786,350) $ 12,388,405

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

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Governmental Activities:

General Government $ 55,399Finance 2,421Administration of Justice 9,842Public Safety 212,430Public Health and Welfare 62,378Social, Cultural, and Recreational Services 22,213Other Operations 107,902Highways/Public Works 271,339Total Depreciation Expense - Governmental Activities $ 743,924

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Discretely Presented Johnson County School Department Governmental Activities:

Balance Balance7-1-16 Increases Decreases 6-30-17

Capital Assets Not Depreciated:Land $ 964,939 $ 0 $ (2,000) $ 962,939Construction in Progress 139,192 4,990 (139,192) 4,990Total Capital Assets Not Depreciated $ 1,104,131 $ 4,990 $ (141,192) $ 967,929

Capital Assets Depreciated:Buildings and Improvements $ 24,681,335 $ 215,759 $ (70,236) $ 24,826,858Other Capital Assets 4,275,561 567,652 (234,828) 4,608,385Infrastructure 2,301,093 0 0 2,301,093Total Capital Assets Depreciated $ 31,257,989 $ 783,411 $ (305,064) $ 31,736,336

Less Accumulated Depreciated For:Buildings and Improvements $ 11,593,350 $ 572,365 $ (68,278) $ 12,097,437Other Capital Assets 3,242,708 299,363 (234,828) 3,307,243Infrastructure 2,012,971 79,720 0 2,092,691Total Accumulated Depreciation $ 16,849,029 $ 951,448 $ (303,106) $ 17,497,371

Total Capital Assets Depreciated, Net $ 14,408,960 $ (168,037) $ (1,958) $ 14,238,965

Governmental Activities Capital Assets, Net $ 15,513,091 $ (163,047) $ (143,150) $ 15,206,894

Depreciation expense was charged to functions of the discretely presented Johnson County School Department, as follows: Governmental Activities:

Instruction $ 729,996Support Services 218,447Operation of Non-instructional Services 3,005Total Depreciation Expense - Governmental Activities $ 951,448

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C. Construction Commitments At June 30, 2017, the General Fund and Highway Public/Works Fund had uncompleted construction contracts of approximately $156,638 and $723,627, respectively. Funding for the future expenditures of the General Fund is expected to be received from federal and state grants as well as funding available within the General Fund. Funding of the future expenditures of the Highway/Public Works Fund is expected to be received from state grants.

D. Interfund Receivables, Payables, and Transfers The composition of interfund balances as of June 30, 2017, was as follows:

Due to/from Other Funds:

Receivable Fund Payable Fund Amount

Primary Government: General Nonmajor governmental $ 1,064 Highway/Public Works General 21,966 General Debt Service " 216,411 " Nonmajor governmental 100,000 Nonmajor governmental General 2,929

Discretely Presented School Department: General Purpose School Nonmajor governmental 4,144 Nonmajor governmental General Purpose School 38

A portion of the amount due to the General Debt Service Fund ($194,444) from the General Fund and the entire amount due from the nonmajor governmental funds to the General Debt Service Fund resulted from long-term interfund loans. The amount of these loans not expected to be received within one year is $66,667. See Note IV.H. for further details of these loans. The remaining balances resulted from the time lag between the dates that interfund goods and services are provided or reimbursable expenditures occur and payments between funds are made. Due to/from Primary Government and Component Unit: Receivable Fund Payable Fund Amount

Component Unit School Department: Primary Government: Central Cafeteria Fund General $ 194

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Interfund Transfers: Interfund transfers for the year ended June 30, 2017, consisted of the following

amounts:

Primary Government

General Debt Nonmajor

Service GovernmentalTransfers Out Fund Fund

General Fund $ 235,307 $ 235,307 $ 31,374

Total $ 235,307 $ 235,307 $ 31,374

Transfers InHighway/

PublicWorksFund

Discretely Presented Johnson County School Department

GeneralPurposeSchool

Transfers Out Fund

Nonmajor Governmental Fund $ 34,218

Total $ 34,218

Transfers In

Transfers are used to move revenues from the fund that statute or budget requires to collect them to the fund that statute or budget requires to expend them and to use unrestricted revenues collected in the General Fund to finance various programs accounted for in other funds in accordance with budgetary authorizations. The transfers reported for the primary government represent allocation of wheel tax revenues collected in the General Fund.

E. Capital Leases On April 11, 2016, Johnson County entered into a four-year lease-purchase agreement for the Highway Department for two backhoes. The terms of the agreement require total lease payments of $156,432 plus interest of 2.89 percent. Title to the equipment transferred to the Highway Department immediately upon acceptance of each item of equipment. The Highway/ Public Works and General Capital Projects funds are making the lease payments. On October 5, 2016, Johnson County entered into a four-year lease-purchase agreement for the Highway Department for two dump trucks. The terms of the agreement require total lease payments of $203,338 plus interest of

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3.95 percent. Title to the equipment transferred to the Highway Department immediately upon acceptance of each item of equipment. The Highway/ Public Works and General Capital Projects funds are making the lease payments. The assets acquired through capital leases are as follows:

GovernmentalAsset Activities

Machinery and Equipment $ 359,770 Less: Accumulated Depreciation (71,954)

Total Book Value $ 287,816

Future minimum lease payments and the net present value of these minimum lease payments as of June 30, 2017, were as follows: Year Ending GovernmentalJune 30 Funds

2018 $ 76,9722019 76,9712020 76,9742021 43,877Total Minimum Lease Payments $ 274,794Less: Amount Representing Interest (21,525)

Present Value of Minimum Lease Payments $ 253,269

F. Long-term Obligations

Primary Government General Obligation Bonds and Other Loans Johnson County issues general obligation bonds and other loans to provide funds for the acquisition and construction of major capital facilities for the primary government and the discretely presented School Department. In addition, general obligation bonds have been issued to refund other general obligation bonds and loans. Capital outlay notes are also issued to fund capital facilities and other capital outlay purchases, such as equipment. Johnson County had no outstanding capital outlay notes or other loans at June 30, 2017. General obligation bonds are direct obligations and pledge the full faith and credit of the government. General obligation bonds outstanding were issued for original terms of up to 12 years. Repayment terms are generally structured with increasing amounts of principal maturing as interest requirements

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decrease over the term of the debt. All bonds included in long-term debt as of June 30, 2017, will be retired from the General Debt Service Fund. General obligation bonds and capital leases outstanding as of June 30, 2017, for governmental activities are as follows:

OriginalInterest Final Amount Balance

Type Rate Maturity of Issue 6-30-17

General Obligation Bonds - Refunding 2 to 4 % 6-1-28 $ 16,845,000 $ 10,190,000Capital Leases 2.89 to 3.95 10-20-20 359,770 253,269

The annual requirements to amortize all general obligation bonds outstanding as of June 30, 2017, including interest payments, is presented in the following tables: Year EndingJune 30 Total

2018 $ 815,000 $ 215,650 $ 1,030,6502019 830,000 196,050 1,026,0502020 855,000 176,050 1,031,0502021 880,000 158,950 1,038,9502022 895,000 141,350 1,036,3502023-2027 4,845,000 414,888 5,259,8882028 1,070,000 21,400 1,091,400

Total $ 10,190,000 $ 1,324,338 $ 11,514,338

BondsPrincipal Interest

During the year, the Johnson County School Department contributed $304,167 to the primary government’s General Debt Service Fund to be applied toward the retirement of general obligation debt that was issued by the county for school capital purposes. There is $5,948,780 available in the General Debt Service Fund to service long-term debt. Bonded debt per capita totaled $559, based on the 2010 federal census. Total debt per capita, including bonds, capital leases, and unamortized premium on bonds totaled $587, based on the 2010 federal census. Changes in Long-term Obligations Long-term obligations activity for the year ended June 30, 2017, was as follows:

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Governmental Activities:Other Capital

Bonds Loans Lease

Balance, July 1, 2016 $ 10,625,000 $ 40,013 $ 123,338Additions 4,715,000 0 203,338Reductions (5,150,000) (40,013) (73,407)

Balance, June 30, 2017 $ 10,190,000 $ 0 $ 253,269

Balance Due Within One Year $ 815,000 $ 0 $ 67,962

Landfill OtherCompensated Postclosure Postemployment

Care Costs Benefits

Balance, July 1, 2016 $ 189,510 $ 829,827 $ 1,753,228Additions 129,981 0 102,736Reductions (108,760) (65,631) (1,167,964)

Balance, June 30, 2017 $ 210,731 $ 764,196 $ 688,000

Balance Due Within One Year $ 189,658 $ 75,439 $ 0

Net PensionLiability -

Balance, July 1, 2016 $ 585,649Additions 1,078,120Reductions (1,425,000)

Balance, June 30, 2017 $ 238,769

Balance Due Within One Year $ 0

Absences

Agent Plan

Analysis of Noncurrent Liabilities Presented on Exhibit A:

Total Noncurrent Liabilites, June 30, 2017 $ 12,344,965Less: Balance Due Within One Year (1,148,059)Add: Unamortized Premium on Debt 260,764

Noncurrent Liabilities - Due in More Than One Year - Exhibit A $ 11,457,670

Compensated absences, net pension liabilities, and other postemployment benefits will be paid from the employing funds, primarily the General and Highway/Public Works funds. The landfill postclosure care costs will be paid from the Solid Waste/Sanitation Fund.

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Advance Refunding On September 21, 2016, Johnson County advance refunded a portion of general obligation refunding bonds with a separate general obligation refunding bond issue. The county issued $4,715,000 of general obligation refunding bonds to provide resources to purchase U.S. government securities that were placed in an irrevocable trust to generate resources for all future debt service payments of the refunded debt to its call date of June 1, 2019. As a result, the refunded bonds are considered defeased, and the liability has been removed from the county’s long-term debt. As a result of the advance refunding, total debt service payments over the next 11 years will be reduced by $472,164, and an economic gain (difference between the present value of the debt service payments of the refunded and refunding bonds) of $435,030 was obtained.

Discretely Presented Johnson County School Department

Changes in Long-term Obligations Long-term obligations activity for the discretely presented School Department for the year ended June 30, 2017, was as follows:

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Governmental Activities: Other

Balance, July 1, 2016 $ 53,697 $ 714,007Additions 59,141 638,892Reductions (62,468) (430,229)

Balance, June 30, 2017 $ 50,370 $ 922,670

Balance Due Within One Year $ 50,370 $ 0

Net PensionNet Pension Liability - Liability -

Agent Plan

Balance, July 1, 2016 $ 451,632 $ 89,311Additions 831,409 3,473,374Reductions (1,098,910) (2,206,639)

Balance, June 30, 2017 $ 184,131 $ 1,356,046

Balance Due Within One Year $ 0 $ 0

TeacherLegacy Plan

Compensated PostemploymentBenefits Absences

Analysis of Noncurrent Liabilities Presented on Exhibit A:

Total Noncurrent Liabilites, June 30, 2017 $ 2,513,217Less: Balance Due Within One Year (50,370)

Noncurrent Liabilities - Due in More Than One Year - Exhibit A $ 2,462,847

Compensated absences, net pension liabilities, and other postemployment benefits will be paid from the employing funds, primarily the General Purpose School Fund.

G. On-Behalf Payments –Discretely Presented Johnson County School Department The State of Tennessee pays health insurance premiums for retired teachers on-behalf of the Johnson County School Department. These payments are made by the state to the Local Education Group Insurance Plan and the Medicare Supplement Plan. Both of these plans are administered by the State of Tennessee and reported in the state’s Comprehensive Annual Financial Report. Payments made by the state to the Local Education Group Insurance

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Plan and the Medicare Supplement Plan for the year ended June 30, 2017, were $133,020 and $9,338, respectively. The School Department has recognized these on-behalf payments as revenues and expenditures in the General Purpose School Fund.

H. Internal Financing

In-lieu-of issuing debt with financial institutions, Johnson County often chooses to internally finance various projects with idle county funds. Internally reported notes receivable from idle funds due to the General Debt Service Fund from the General and Community Development/Industrial Park funds are reflected below:

Original Date LastAmount Interest of Maturity

Borrowing Fund/Purpose of Issue Rate Issue Date

Community Development/ Industrial Park: Building Rehabilitation $ 300,000 0% 11-30-10 9-16-19General: E-911 Operations Center 250,000 0 9-17-15 6-1-18

Paid and/orMatured

Outstanding During OutstandingBorrowing Fund/Purpose 7-1-16 Period 6-30-17

Community Development/ Industrial Park: Building Rehabilitation 133,333$ $ 33,333 100,000$ General: E-911 Operations Center 222,222 27,778 194,444

Total 355,555$ $ 61,111 294,444$

The balances at June 30, 2017, are reflected as Due to Other Funds in the General and Community Development/Industrial Park Funds and as Due from Other Funds in the General Debt Service Fund.

V. OTHER INFORMATION

A. Risk Management

Primary Government The county is exposed to various risks related to general liability, property, and casualty losses. The county decided it was more economically feasible to join a public entity risk pool instead of purchasing commercial insurance for general liability, property, and casualty coverage. The county joined the Local

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Government Property and Casualty Fund (LGPCF), which is a public entity risk pool established by the Tennessee County Services Association, an association of member counties. The county pays an annual premium to the LGPCF for its general liability, property, and casualty insurance coverage. The creation of the LGPCF provides for it to be self-sustaining through member premiums. The LGPCF reinsures through commercial insurance companies for claims exceeding $100,000 for each insured event. Johnson County decided it was more economically feasible to join a public entity risk pool as opposed to purchasing commercial insurance for workers’ compensation coverage. The county joined the Local Government Workers’ Compensation Fund (LGWCF). The county pays an annual premium to the LGWCF for its workers’ compensation coverage. The creation of the LGWCF provides for it to be self-sustaining through member premiums. Johnson County participates in the Local Government Group Insurance Fund (LGGIF), a public entity risk pool established to provide a program of health insurance coverage for employees of local governments and quasi-governmental entities that was established for the primary purpose of providing services for or on behalf of state and local governments. In accordance with Section 8-27-207, Tennessee Code Annotated (TCA), all local governments and quasi-governmental entities described above are eligible to participate. The LGGIF is included in the Comprehensive Annual Financial Report for the State of Tennessee, but the state does not retain any risk for losses by this fund. The state statute provides for the LGGIF to be self-sustaining through member premiums. Discretely Presented Johnson County School Department The School Department participates in the Tennessee Risk Management Trust (TN-RMT), which is a public entity risk pool created under the auspices of the Tennessee Governmental Tort Liability Act to provide governmental insurance coverage. The School Department pays annual premiums to the TN-RMT for its general liability, property, casualty, and workers’ compensation insurance coverage. The creation of TN-RMT provides for it to be self-sustaining through member premiums. The School Department participates in the Local Education Group Insurance Fund (LEGIF), a public entity risk pool established to provide a program of health insurance coverage for employees of local education agencies. In accordance with Section 8-27-301, TCA, all local education agencies are eligible to participate. The LEGIF is included in the Comprehensive Annual Financial Report of the State of Tennessee, but the state does not retain any risk for losses by this fund. Section 8-27-303, TCA, provides for the LEGIF to be self-sustaining through member premiums.

B. Accounting Changes

Provisions of Governmental Accounting Standards Board (GASB) Statement

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No. 74, Financial Reporting for Postemployment Benefit Plans Other Than Pension Plans; Statement No. 77, Tax Abatement Disclosures; Statement No. 78, Pensions Provided through Certain Mutiple-Employer Defined Benefit Pension Plans; Statement No. 80, Blending Requirements for Certain Component Units; and Statement No. 82, Pension Issues an amendment of GASB Statements No. 67, No. 68, and No. 73, became effective for the year ended June 30, 2017. GASB Statement No. 74, establishes accounting and reporting requirements for postemployment benefits other than pensions (other postemployment benefits or OPEB), which are included in the general purpose external financial reports of state and local governmental OPEB plans. This statement replaces GASB Statements No. 43 and No. 57. It also includes requirements for defined contribution OPEB plans that replace the requirements in statements No. 25, No. 43, and No. 50. The scope of this statement includes OPEB plans, both defined benefit and defined contribution, administered through trusts meeting the necessary criteria as well as reporting assets accumulated through OPEB plans that are not administered through trusts that meet the specified criteria. GASB Statement No. 77, established reporting requirements for tax abatements. This standard requires the disclosure of information about the nature and magnitude of tax abatement agreements entered into by state and local governments that reduce the government’s tax revenues. GASB Statement No. 78, amends Statement No. 68 to exclude certain pensions provided to employees of state or local governments through a cost-sharing multiple-employer pension plans that are not state or local plans and meet specific other criteria. This statement establishes recognition, measurement, and reporting requirements criteria for these plans. GASB Statement No. 80, amends the blending requirements of paragraph 53 of Statement No. 14. This standard adds additional blending criterion, which requires blending of a component unit incorporated as a not-for-profit corporation in which the primary government is the sole corporate member. GASB Statement No. 82 amends Statements No. 67, No. 68, and No. 73. This standard establishes covered payroll as the payroll on which contributions to a pension plan are based in the Required Supplementary Information. In addition, this standard clarifies that employer paid member contributions should be considered plan member contributions for purposes of applying Statement No. 67, and employee contributions for the purposes of applying Statement No. 68. This standard further states that an employer’s expense and expenditures for employer paid member contributions should be recognized in the period for which the contribution is assessed and classified in the same manner that the employer classifies similar compensation other than pensions (for example, as salaries and wages or as fringe benefits).

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C. Contingent Liabilities

Based on letters from the attorneys and discussion with management, the county is not involved in any pending lawsuits.

D. Landfill Closure and Postclosure Care Costs

Johnson County has an active permit on file with the state Department of Environment and Conservation for a sanitary landfill. The county has provided financial assurances for estimated postclosure liabilities as required by the State of Tennessee. These financial assurances are on file with the Department of Environment and Conservation. State and federal laws and regulations require the county to place a final cover on its sanitary landfill site when it stops accepting waste and to perform certain maintenance and monitoring functions at the site for 30 years after closure. Although closure and postclosure care costs will be paid only near or after the date that the landfill stops accepting waste, the county reports a portion of these closure and postclosure care costs as an operating expense in each period based on landfill capacity used as of each balance sheet date. Johnson County closed its sanitary landfill in 1997. The $764,196 reported as postclosure care liability at June 30, 2017, represents amounts based on what it would cost to perform all postclosure care in 2017. Actual costs may be higher due to inflation, changes in technology, or changes in regulations.

E. Joint Ventures Primary Government The Upper East Tennessee Juvenile Detention Center was formed through cooperative agreements between Johnson County and the counties of Carter, Greene, Hawkins, Sullivan, Unicoi, and Washington for the operation of a program to divert youth from commitment to Department of Correction facilities. This program is governed by a board of directors designated by the counties. The board of directors has contracted with Universal Health Services to undertake the management of this program. Operation costs to the counties are allocated according to percentages based on population. Johnson County’s participation cost percentage is 3.7 percent. The county also pays a daily fee for each individual from the county using the facility. Johnson County does not retain an equity interest in these joint ventures. Complete financial statements for the above-noted joint venture can be obtained from its administrative office at the following addresses:

Upper East Tennessee Regional Juvenile Detention Center 307 Wesley Street Johnson City, TN 37601

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Discretely Presented Johnson County School Department The discretely presented School Department participates in the Northeast Tennessee Cooperative (NETCO). The cooperative was established through a contractual agreement between the Boards of Education of Johnson County and various other counties and cities in the upper East Tennessee area. The cooperative was authorized through Chapter 49 of Tennessee Code Annotated, and was established to obtain lower prices for food supplies, materials, equipment, and services by combining the purchasing requirements of each member’s school food service systems. The cooperative has contracted with a coordinating district (Johnson City School System) and a service provider to provide this service. NETCO is governed by a representative committee, including one representative from each of the member districts and an executive council, consisting of the chair, vice chair, secretary, treasurer, and a member-at-large from the representative committee. Complete financial statements for NETCO can be obtained from its administrative office at the following address:

Northeast Tennessee Cooperative 100 East Maple Street P.O. Box 1517 Johnson City, TN 37605

F. Jointly Governed Organization

Primary Government The East Tennessee Regional Agribusiness Marketing Authority was established through Title 64 of Tennessee Code Annotated, and includes the counties of Claiborne, Cocke, Grainger, Greene, Hamblen, Hancock, Hawkins, Jefferson, Johnson, Sullivan, Unicoi, and Washington. The purpose of the authority is to establish and operate a market for agricultural products of the region through a food distribution center. The authority is governed by a Board of Directors consisting of the county mayors/executives of each county or the county mayor’s/executive’s designee and one nonvoting member representing each of the following: the Tennessee Department of Agriculture and the University of Tennessee’s Agriculture Extension Service. An executive committee, consisting of the chairman, vice-chairman, secretary, and treasurer of the Board of Directors, along with the center’s manager as an ex-officio member, is in charge of the daily operations of the center.

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G. Retirement Commitments 1. Tennessee Consolidated Retirement System (TCRS)

Primary Government General Information About the Pension Plan Plan Description. Employees of Johnson County and non-certified employees of the discretely presented Johnson County School Department are provided a defined benefit pension plan through the Public Employee Retirement Plan, an agent multiple-employer pension plan administered by the TCRS. The primary government employees comprised 56.46 percent and the non-certified employees of the discretely presented School Department comprised 43.54 percent of the plan based on contribution data. The TCRS was created by state statute under Tennessee Code Annotated (TCA), Title 8, Chapters 34-37. The TCRS Board of Trustees is responsible for the proper operation and administration of the TCRS. The Tennessee Treasury Department, an agency in the legislative branch of state government, administers the plans of the TCRS. The TCRS issues a publicly available financial report that can be obtained at www.treasury.tn.gov/tcrs. Benefits Provided. TCA, Title 8, Chapters 34-37 establish the benefit terms and can be amended only by the Tennessee General Assembly. The chief legislative body may adopt the benefit terms permitted by statute. Members are eligible to retire with an unreduced benefit at age 60 with five years of service credit or after 30 years of service credit regardless of age. Benefits are determined by a formula using the member’s highest five consecutive year average compensation and the member’s years of service credit. Reduced benefits for early retirement are available to vested members at age 55. Members vest with five years of service credit. Service related disability benefits are provided regardless of length of service. Five years of service is required for non-service related disability eligibility. The service related and non-service related disability benefits are determined in the same manner as a service retirement benefit but are reduced ten percent and include projected service credits. A variety of death benefits is available under various eligibility criteria. Member and beneficiary annuitants are entitled to an automatic cost of living adjustment (COLA) after retirement. A COLA is granted each July for annuitants retired prior to the second of July of the previous year. The COLA is based on the change in the consumer price index (CPI) during the prior calendar year, capped at three percent, and applied to the current benefit. No COLA is granted if the change in the CPI is less than one-half percent. A one percent COLA is granted if the CPI change is between one-half percent and one percent. A member who

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leaves employment may withdraw their employee contributions plus any accumulated interest. Employees Covered by Benefit Terms. At the measurement date of June 30, 2016, the following employees were covered by the benefit terms: Inactive Employees or Beneficiaries Currently Receiving Benefits 223Inactive Employees Entitled to But Not Yet Receiving Benefits 359Active Employees 279

Total 861 Contributions. Contributions for employees are established in the statutes governing the TCRS and may only be changed by the Tennessee General Assembly. Employees contribute five percent of their salary. Johnson County makes employer contributions at the rate set by the Board of Trustees as determined by an actuarial valuation. For the year ended June 30, 2017, the employer contributions for Johnson County were $755,170 based on a rate of 12.75 percent of covered payroll. By law, employer contributions are required to be paid. The TCRS may intercept Johnson County’s state shared taxes if required employer contributions are not remitted. The employer’s actuarially determined contributions (ADC) and member contributions are expected to finance the costs of benefits earned by members during the year, the cost of administration, as well as an amortized portion of any unfunded liability. Net Pension Liability (Asset) Johnson County’s net pension liability (asset) was measured as of June 30, 2016, and the total pension liability (asset) used to calculate net pension liability (asset) was determined by an actuarial valuation as of that date. Actuarial Assumptions. The total pension liability as of the June 30, 2016, actuarial valuation was determined using the following actuarial assumptions, applied to all periods included in the measurement:

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Inflation 3%Salary Increases Graded Salary Ranges from 8.97%

to 3.71% Based on Age, Including Inflation, Averaging 4.25%

Investment Rate of Return 7.5%, Net of Pension Plan Investment Expenses, Including Inflation

Cost of Living Adjustment 2.5% Mortality rates were based on actual experience from the June 30, 2012, actuarial experience study, adjusted for some of the expected future improvement in life expectancy. The actuarial assumptions used in the June 30, 2016, actuarial valuation were based on the results of an actuarial experience study performed for the period July 1, 2008, through June 30, 2012. The demographic assumptions were adjusted to more closely reflect actual and expected future experience. The long-term expected rate of return on pension plan investments was established by the TCRS Board of Trustees in conjunction with the June 30, 2012, actuarial experience study by considering the following three techniques: (1) the 25-year historical return of the TCRS at June 30, 2012, (2) the historical market returns of asset classes from 1926 to 2012 using the TCRS investment policy asset allocation, and (3) capital market projections that were utilized as a building-block method in which best-estimate ranges of expected future real rate of return (expected returns, net of pension plan investment expense and inflation) are developed for each major asset class. Four sources of capital market projections were blended and utilized in the third technique. The blended capital market projection established the long-term expected rate of return by weighting the expected future real rate of return by the target asset allocation percentage and by adding inflation of three percent. The target allocation and best estimate of arithmetic real rates of return for each major asset class are summarized in the following table:

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PercentageLong-termExpected PercentageReal Rate Target

Asset Class of Return Allocations

U.S. Equity 6.46 % 33 %Developed Market International Equity 6.26 17Emerging Market International Equity 6.40 5Private Equity and Strategic Lending 4.61 8U.S. Fixed Income 0.98 29Real Estate 4.73 7Short-term Securities 0.00 1

Total 100 %

The long-term expected rate of return on pension plan investments was established by the TCRS Board of Trustees as 7.5 percent based on a blending of the three factors described above. Discount Rate. The discount rate used to measure the total pension liability was 7.5 percent. The projection of cash flows used to determine the discount rate assumes that employee contributions will be made at the current rate and that contributions from Johnson County will be made at the actuarially determined contribution rate pursuant to an actuarial valuation in accordance with the funding policy of the TCRS Board of Trustees and as required to be paid by state statute. Based on those assumptions, the pension plan’s fiduciary net position was projected to be available to make projected future benefit payments of current active and inactive members. Therefore, the long-term expected rate of return on pension plan investments was applied to all periods of projected benefit payments to determine the total pension liability.

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Changes in the Net Pension Liability (Asset)

Total Plan NetPension Fiduciary PensionLiability Net Position Liability

(a) (b) (a)-(b)

Balance, July 1, 2015 $ 21,146,264 $ 20,108,983 $ 1,037,281

Changes for the year: Service Cost $ 482,243 $ 0 $ 482,243 Interest 1,579,294 0 1,579,294 Differences Between Expected and Actual Experience (1,166,327) 0 (1,166,327) Contributions-Employer 0 716,263 (716,263) Contributions-Employees 0 281,384 (281,384) Net Investment Income 0 531,242 (531,242) Benefit Payments, Including Refunds of Employee Contributions (1,142,502) (1,142,502) 0 Administrative Expense 0 (19,298) 19,298 Other Changes 0 0 0Net Changes $ (247,292) $ 367,089 $ (614,381)

Balance, June 30, 2016 $ 20,898,972 $ 20,476,072 $ 422,900

Increase (Decrease)

Allocation of Agent Plan Changes in the Net Pension Liability (Asset)

Plan NetTotal Fiduciary Pension

Pension Net LiabilityLiability Position (Asset)

Primary Government 56.46% $ 11,799,560 $ 11,560,790 $ 238,769

School Department 43.54% 9,099,412 8,915,282 184,131

Total $ 20,898,972 $ 20,476,072 $ 422,900

Sensitivity of the Net Pension Liability (Asset) to Changes in the Discount Rate. The following presents the net pension liability (asset) of Johnson County calculated using the discount rate of 7.5 percent, as well as what the net pension liability (asset) would be if it was calculated using a discount rate that is one percentage point lower (6.5%) or one percentage point higher (8.5%) than the current rate:

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Current1% Discount 1%

Decrease Rate IncreaseJohnson County 6.5% 7.5% 8.5%

Net Pension Liability $ 2,968,281 $ 422,900 $ (1,695,012)

Pension Expense (Income) and Deferred Outflows of Resources and Deferred Inflows of Resources to Pensions Pension Expense. For the year ended June 30, 2017, Johnson County recognized pension expense of $341,961. Deferred Outflows of Resources and Deferred Inflows of Resources. For the year ended June 30, 2017, Johnson County reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources:

Deferred DeferredOutflows Inflows

of of Resources Resources

Difference Between Expected and Actual Experience $ 548,840 $ 874,745Net Difference Between Projected and Actual Earnings on Pension Plan Investments 684,433 0Contributions Subsequent to the Measurement Date of June 30, 2016 (1) 755,170 N/A

Total $ 1,988,443 $ 874,745

(1) The amount shown above for “Contributions Subsequent to the Measurement Date of June 30, 2016,” will be recognized as a reduction (increase) to net pension liability (asset) in the following measurement period.

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Allocation of Agent Plan Deferred Outflows of Resources and Deferred Inflows of Resources

Deferred DeferredOutflows of Inflows ofResources Resources

Primary Government $ 1,123,354 $ 493,881

School Department 865,089 380,864

Total $ 1,988,443 $ 874,745

Amounts reported as deferred outflows of resources, with the exception of contributions subsequent to the measurement date, and deferred inflows of resources related to pensions will be recognized in pension expense as follows:

Year EndingJune 30 Amount

2018 $ 44,5282019 44,5282020 75,3172021 194,1552022 0Thereafter 0

In the table shown above, positive amounts will increase pension expense while negative amounts will decrease pension expense. Discretely Presented Johnson County School Department Non-certified Employees General Information About the Pension Plan Plan Description. As noted above under the primary government, employees of Johnson County and non-certified employees of the discretely presented Johnson County School Department are provided a defined benefit pension plan through the Public Employee Retirement Plan, an agent multiple-employer pension plan administered by the TCRS. The primary government employees comprise 56.46 percent and the non-certified employees of the discretely presented School Department comprise 43.54 percent of the plan based on contribution data.

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Certified Employees Teacher Retirement Plan General Information About the Pension Plan Plan Description. Teachers of the Johnson County School Department with membership in the TCRS before July 1, 2014, are provided with pensions through the Teacher Legacy Pension Plan, a cost-sharing multiple-employer pension plan administered by the TCRS. The Teacher Legacy Pension Plan is closed to new membership. Teachers with membership in the TCRS after June 30, 2014, are provided with pensions through a legally separate plan referred to as the Teacher Retirement Plan, a cost-sharing multiple-employer pension plan administered by the TCRS. The TCRS was created by state statute under Tennessee Code Annotated (TCA), Title 8, Chapters 34-37. The TCRS Board of Trustees is responsible for the proper operation and administration of all employer pension plans in the TCRS. The Tennessee Treasury Department, an agency in the legislative branch of state government, administers the plans of the TCRS. The TCRS issues a publically available financial report that can be obtained at www.treasury.tn.gov/tcrs. Benefits Provided. TCA, Title 8, Chapters 34-37 establish the benefit terms and can be amended only by the Tennessee General Assembly. Members are eligible to retire with an unreduced benefit at age 65 with five years of service credit or pursuant to the rule of 90 in which the member’s age and service credit total 90. Benefits are determined by a formula using the member’s highest five consecutive year average compensation and the member’s years of service credit. A reduced early retirement benefit is available to vested members at age 60 or pursuant to the rule of 80. Members are vested with five years of service credit. Service related disability benefits are provided regardless of length of service. Five years of service is required for non-service related disability eligibility. The service related and non-service related disability benefits are determined in the same manner as a service retirement benefit but are reduced ten percent and include projected service credits. A variety of death benefits is available under various eligibility criteria. Member and beneficiary annuitants are entitled to an automatic cost of living adjustment (COLA) after retirement. A COLA is granted each July for annuitants retired prior to the second of July of the previous year. The COLA is based on the change in the consumer price index (CPI) during the prior calendar year, capped at three percent, and applied to the current benefit. No COLA is granted if the change in the CPI is less than one-half percent. A one percent COLA is granted if the CPI change is between one-half percent and one percent. Members who leave employment may withdraw their employee contributions, plus any accumulated interest. Under the Teacher Retirement Plan, benefit terms and conditions, including COLA, can be

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adjusted on a prospective basis. Moreover, there are defined cost controls and unfunded liability controls that provide for the adjustment of benefit terms and conditions on an automatic basis. Contributions. Contributions for teachers are established in the statutes governing the TCRS and may only be changed by the Tennessee General Assembly or by automatic cost controls set out in law. Teachers are required to contribute five percent of their salary to the plan. The Local Education Agencies (LEAs) make employer contributions at the rate set by the Board of Trustees as determined by an actuarial valuation. Per the statutory provisions governing TCRS, the employer contribution rate cannot be less than four percent, except in years when the maximum funded level, approved by the TCRS Board of Trustees, is reached. By law, employer contributions for the Teacher Retirement Plan are required to be paid. The TCRS may intercept the state shared taxes of the sponsoring governmental entity of the LEA if the required employer contributions are not remitted. Employer contributions for the year ended June 30, 2017, to the Teacher Retirement Plan were $50,783, which is four percent of covered payroll. The employer rate, when combined with member contributions, is expected to finance the costs of benefits earned by members during the year, the cost of administration, as well as an amortized portion of any unfunded liability. Pension Liabilities (Assets), Pension Expense, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions Pension Liabilities (Assets). At June 30, 2017, the Johnson County School Department reported an asset of $23,567 for its proportionate share of the net pension asset. The net pension asset was measured as of June 30, 2016, and the total pension liability used to calculate the net pension asset was determined by an actuarial valuation as of that date. The Johnson County School Department’s proportion of the net pension asset was based on the Johnson County School Department’s share of contributions to the pension plan relative to the contributions of all participating LEAs. At the measurement date of June 30, 2016, the Johnson County School Department’s proportion was 0.226384 percent. The proportion measured at June 30, 2015, was 0.261185 percent. Pension Expense. For the year ended June 30, 2017, the Johnson County School Department recognized pension expense of $19,812. Deferred Outflows of Resources and Deferred Inflows of Resources. For the year ended June 30, 2017, the Johnson County School Department reported deferred outflows of resources related to pensions from the following sources:

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Difference Between Expected and Actual Experience $ 2,284 $ 2,717Net Difference Between Projected and Actual Earnings on Pension Plan Investments 3,859 0Changes in Proportion of Net Pension Liability (Asset) 976 0LEA's Contributions Subsequent to the Measurement Date of June 30, 2016 50,783 0

Total $ 57,902 $ 2,717

The Johnson County School Department’s employer contributions of $50,783, reported as pension related deferred outflows of resources subsequent to the measurement date, will be recognized as an increase of net pension asset in the year ending June 30, 2018. Other amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions will be recognized in pension expense as follows:


2018 $ 1,0352019 1,0352020 1,0352021 8512022 25Thereafter 419

Actuarial Assumptions. The total pension liability in the June 30, 2016, actuarial valuation was determined using the following actuarial assumptions, applied to all periods included in the measurement:

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to 3.71% Based on Age, IncludingInflation, Averaging 4.25%

Investment Rate of Return 7.5%, Net of Pension PlanInvestment Expenses, IncludingInflation

Cost of Living Adjustment 2.5%

Mortality rates are customized based on the June 30, 2012, actuarial experience study and some included adjustment for expected future improvement in life expectancy. The actuarial assumptions used in the June 30, 2015, actuarial valuation were based on the results of an actuarial experience study performed for the period July 1, 2008, through June 30, 2012. The demographic assumptions were adjusted to more closely reflect actual and expected future experience. The long-term expected rate of return on pension plan investments was established by the TCRS Board of Trustees in conjunction with the June 30, 2012, actuarial experience study by considering the following three techniques: (1) the 25-year historical return of the TCRS at June 30, 2012, (2) the historical market returns of asset classes from 1926 to 2012 using the TCRS investment policy asset allocation, and (3) capital market projections that were utilized as a building-block method in which best-estimate ranges of expected future real rate of return (expected returns, net of pension plan investment expense and inflation) are developed for each major asset class. Four sources of capital market projections were blended and utilized in the third technique. The blended capital market projection established the long-term expected rate of return by weighting the expected future real rate of return by the target asset allocation percentage and by adding inflation of three percent. The target allocation and best estimates of arithmetic real rates of return for each major asset class are summarized in the following table:

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Total 100 %

The long-term expected rate of return on pension plan investments was established by the TCRS Board of Trustees as 7.5 percent based on a blending of the three factors described above. Discount Rate. The discount rate used to measure the total pension liability was 7.5 percent. The projection of cash flows used to determine the discount rate assumes that employee contributions will be made at the current rate and that contributions from all the LEAs will be made at the actuarially determined contribution rate pursuant to an actuarial valuation in accordance with the funding policy of the TCRS Board of Trustees and as required to be paid by state statute. Based on those assumptions, the pension plan’s fiduciary net position was projected to be available to make projected future benefit payments of current active and inactive members. Therefore, the long-term expected rate of return on pension plan investments was applied to all periods of projected benefit payments to determine the total pension liability. Sensitivity of the Proportionate Share of Net Pension Liability (Asset) to Changes in the Discount Rate. The following presents the Johnson County School Department’s proportionate share of the net pension liability (asset) calculated using the discount rate of 7.5 percent, as well as what the Johnson County School Department’s proportionate share of the net pension liability (asset) would be if it was calculated using a discount rate that is one percentage point lower (6.5%) or one percentage point higher (8.5%) than the current rate:

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School Department's Current Proportionate Share of 1% Discount 1% the Net Pension Decrease Rate Increase Liability (Asset) 6.5% 7.5% 8.5%

Net Pension Liability $ 11,129 $ (23,567) $ (49,131)

Pension Plan Fiduciary Net Position. Detailed information about the pension plan’s fiduciary net position is available in a separately issued TCRS financial report. Teacher Legacy Pension Plan General Information About the Pension Plan Plan Description. Teachers of the Johnson County School Department with membership in the TCRS before July 1, 2014, are provided with pensions through the Teacher Legacy Pension Plan, a cost-sharing multiple-employer pension plan administered by the TCRS. The Teacher Legacy Pension Plan closed to new membership on June 30, 2014, but will continue providing benefits to existing members and retirees. Beginning July 1, 2014, the Teacher Retirement Plan became effective for teachers employed by LEAs after June 30, 2014. The Teacher Retirement Plan is a separate cost-sharing, multiple-employer defined benefit plan. The TCRS was created by state statute under Tennessee Code Annotated (TCA), Title 8, Chapters 34-37. The TCRS Board of Trustees is responsible for the proper operation and administration of all employer pension plans in the TCRS. The Tennessee Treasury Department, an agency in the legislative branch of state government, administers the plans of the TCRS. The TCRS issues a publically available financial report that can be obtained at www.treasury.tn.gov/tcrs. Benefits Provided. TCA, Title 8, Chapters 34-37 establish the benefit terms and can be amended only by the Tennessee General Assembly. Members of the Teacher Legacy Pension Plan are eligible to retire with an unreduced benefit at age 60 with five years of service credit or after 30 years of service credit regardless of age. Benefits are determined by a formula using the member’s highest five consecutive year average compensation and the member’s years of service credit. A reduced early retirement benefit is available to vested members at age 55. Members are vested with five years of service credit. Service related disability benefits are provided regardless of length of service. Five years of service is required for non-service related disability eligibility. The service related and non-service related disability benefits are determined in the same manner as a service retirement benefit but are reduced ten percent and include projected service credits. A variety of death benefits is available under various eligibility criteria. Member and beneficiary annuitants are entitled to an automatic cost of living

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adjustment (COLA) after retirement. A COLA is granted each July for annuitants retired prior to the second of July of the previous year. The COLA is based on the change in the consumer price index (CPI) during the prior calendar year, capped at three percent, and applied to the current benefit. No COLA is granted if the change in the CPI is less than one-half percent. A one percent COLA is granted if the CPI change is between one-half and one percent. A member who leaves employment may withdraw their employee contributions, plus any accumulated interest. Under the Teacher Legacy Pension Plan, benefit terms and conditions, including COLAs can be adjusted on a prospective basis. Moreover, there are defined cost controls and unfunded liability controls that provide for the adjustment of benefit terms and conditions on an automatic basis. Contributions. Contributions for teachers are established in the statutes governing the TCRS and may only be changed by the Tennessee General Assembly. Teachers are required to contribute five percent of their salaries. The Local Education Agencies (LEAs) make employer contributions at the rate set by the Board of Trustees as determined by an actuarial valuation. By law, employer contributions for the Teacher Legacy Pension Plan are required to be paid. The TCRS may intercept the state shared taxes of the sponsoring governmental entity of the LEA if the required employer contributions are not remitted. Employer contributions by the Johnson County School Department for the year ended June 30, 2017, to the Teacher Legacy Pension Plan were $706,503, which is 9.04 percent of covered payroll. The employer rate, when combined with member contributions, is expected to finance the costs of benefits earned by members during the year, the cost of administration, as well as an amortized portion of any unfunded liability. Pension Liabilities (Assets), Pension Expense, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions Pension Liability (Assets). At June 30, 2017, the Johnson County School Department reported a liability of $1,356,046 for its proportionate share of the net pension liability (asset). The net pension liability (asset) was measured as of June 30, 2016, and the total pension liability used to calculate the net pension liability (asset) was determined by an actuarial valuation as of that date. The Johnson County School Department’s proportion of the net pension liability (asset) was based on the Johnson County School Department’s long-term share of contributions to the pension plan relative to the contributions of all participating LEAs. At the measurement date of June 30, 2016, the Johnson County School Department’s proportion was 0.216987 percent. The proportion measured at June 30, 2015, was 0.218027 percent.

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Pension Expense. For the year ended June 30, 2017, the Johnson County School Department recognized pension expense of $143,248. Deferred Outflows of Resources and Deferred Inflows of Resources. For the year ended June 30, 2017, the Johnson County School Department reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources:



Difference Between Expected and Actual Experience $ 57,067 $ 1,641,722Net Difference Between Projected and Actual Earnings on Pension Plan Investments 1,514,043 0Changes in Proportion of Net Pension Laibility (Asset) 2,811 70,634LEA's Contributions Subsequent to the Measurement Date of June 30, 2016 706,503 N/A

Total $ 2,280,424 $ 1,712,356

The Johnson County School Department’s employer contributions of $706,503 reported as pension related deferred outflows of resources subsequent to the measurement date, will be recognized as a decrease in net pension liability in the year ending June 30, 2018. Other amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions will be recognized in pension expense as follows:


2018 $ (270,299)2019 (270,299)2020 455,9862021 54,7402022 (108,561)Thereafter 0

In the table above, positive amounts will increase pension expense, while negative amounts will decrease pension expense.

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Actuarial Assumptions. The total pension liability in the June 30, 2016, actuarial valuation was determined using the following actuarial assumptions, applied to all periods included in the measurement:


to 3.71% Based on Age, IncludingInflation, Averaging 4.25%

Investment Rate of Return 7.5%, Net of Pension PlanInvestment Expenses, IncludingInflation


Mortality rates are customized based on the June 30, 2012, actuarial experience study and some included adjustments for expected future improvement in life expectancy. The actuarial assumptions used in the June 30, 2016, actuarial valuation were based on the results of an actuarial experience study performed for the period July 1, 2008, through June 30, 2012. The demographic assumptions were adjusted to more closely reflect actual and expected future experience. The long-term expected rate of return on pension plan investments was established by the TCRS Board of Trustees in conjunction with the June 30, 2012, actuarial experience study by considering the following three techniques: (1) the 25-year historical return of the TCRS at June 30, 2012, (2) the historical market returns of asset classes from 1926 to 2012 using the TCRS investment policy asset allocation, and (3) capital market projections that were utilized as a building-block method in which best-estimate ranges of expected future real rate of return (expected returns, net of pension plan investment expense and inflation) are developed for each major asset class. Four sources of capital market projections were blended and utilized in the third technique. The blended capital market projection established the long-term expected rate of return by weighting the expected future real rate of return by the target asset allocation percentage and by adding inflation of three percent. The target allocation and best estimates of arithmetic real rates of return for each major asset class are summarized in the following table:

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Total 100 %

The long-term expected rate of return on pension plan investments was established by the TCRS Board of Trustees as 7.5 percent based on a blending of the three factors described above. Discount Rate. The discount rate used to measure the total pension liability was 7.5 percent. The projection of cash flows used to determine the discount rate assumes that employee contributions will be made at the current rate and that contributions from all the LEAs will be made at the actuarially determined contribution rate pursuant to an actuarial valuation in accordance with the funding policy of the TCRS Board of Trustees and as required to be paid by state statute. Based on those assumptions, the pension plan’s fiduciary net position was projected to be available to make projected future benefit payments of current active and inactive members. Therefore, the long-term expected rate of return on pension plan investments was applied to all periods of projected benefit payments to determine the total pension liability. Sensitivity of the Proportionate Share of Net Pension Liability (Asset) to Changes in the Discount Rate. The following presents the Johnson County School Department’s proportionate share of the net pension liability (asset) calculated using the discount rate of 7.5 percent, as well as what the Johnson County School Department’s proportionate share of the net pension liability (asset) would be if it was calculated using a discount rate that is one percentage point lower (6.5%) or one percentage point higher (8.5%) than the current rate:

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School Department's Current Proportionate Share of 1% Discount 1% the Net Pension Decrease Rate Increase Liability (Asset) 6.5% 7.5% 8.5%

Net Pension Liability $ 7,446,280 $ 1,356,046 $ (3,688,830)

Pension Plan Fiduciary Net Position. Detailed information about the pension plan’s fiduciary net position is available in a separately issued TCRS financial report.

2. Deferred Compensation

Teachers hired after July 1, 2014, by the discretely presented Johnson County School Department are required to participate in a hybrid pension plan administered by the Tennessee Consolidated Retirement System. This hybrid pension plan requires that these teachers contribute five percent of their salaries into a deferred compensation plan managed by the hybrid plan pursuant to IRC Section 401(k). As part of their employment package, the Johnson County School Department has assumed all costs of funding this program on-behalf of the plan participants. The Section 401(k) plan assets remain the property of the participating teachers and are not presented in the accompanying financial statements. IRC Section 401(k), establishes participation, contribution, and withdrawal provisions for the plans. During the year, the Johnson County School Department contributed $62,273 to the 401(k) portion of the hybrid pension plan on-behalf of the plan participants.

H. Other Postemployment Benefits (OPEB)

Plan Description Johnson County and the School Department participate in the state-administered Local Education Group Insurance Plan and the Local Government Group Insurance Plan for healthcare benefits. For accounting purposes, the plans are agent multiple-employer defined benefit OPEB plans. Benefits are established and amended by an insurance committee created by Section 8-27-302, Tennessee Code Annotated (TCA), for local education employees and Section 8-27-207, TCA, for local governments. Prior to reaching the age of 65, all members have the option of choosing between the standard or partnership preferred provider organization (PPO) plan for healthcare benefits. Subsequent to age 65, members who are also in the state’s retirement system may participate in a state-administered Medicare Supplement Plan that does not include pharmacy. The plans are reported in the State of Tennessee Comprehensive Annual Financial Report (CAFR). The CAFR is available on the state’s website at: http://tennessee.gov/finance/article/fa-accfin-cafr.

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Funding Policy The premium requirements of plan members are established and may be amended by the insurance committee. The plans are self-insured and financed on a pay-as-you-go basis with the risk shared equally among the participants. Claims liabilities of the plans are periodically computed using actuarial and statistical techniques to establish premium rates. The employers in each plan develop a contribution policy in terms of subsidizing active employees or retired employees’ premiums since the committee is not prescriptive on that issue. The state does not provide a subsidy for local government participants; however, the state does provide a partial subsidy to Local Education Agency pre-65 teachers and a full subsidy based on years of service for post-65 teachers in the Medicare Supplement Plan. Johnson County and the School Department contributed $22,321 and $430,229, respectively, for postemployment benefits during the year ended June 30, 2017.

Annual OPEB Cost and Net OPEB Obligation

Local LocalEducation Government

Group GroupPlan Plan

ARC $ 639,000 $ 103,000Interest on the NOPEBO 26,775 65,746Adjustment to the ARC (26,883) (66,010)Annual OPEB cost $ 638,892 $ 102,736Amount of contribution (430,229) (22,321)Adjustment to Align ARC with AAL 0 (1,145,643)Increase/decrease in NOPEBO $ 208,663 $ (1,065,228)Net OPEB obligation, 7-1-16 714,007 1,753,228

Net OPEB obligation, 6-30-17 $ 922,670 $ 688,000

Percentage

Fiscal Annual of Annual Net OPEBYear OPEB OPEB Cost Obligation

Ended Plans Cost Contributed at Year End

6-30-15 Local Education Group $ 508,990 83 % $ 472,8066-30-16 " 617,988 61 714,0076-30-17 " 638,892 67 922,6706-30-15 Local Government Group 147,601 17 1,676,8936-30-16 " 99,747 23 1,753,2286-30-17 " 102,736 22 688,000

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Funded Status and Funding Progress

The funded status of the plan as of July 1, 2015, was as follows:

Local LocalEducation Government

Group GroupPlan Plan

Actuarial valuation date 7-1-15 7-1-15Actuarial accrued liability (AAL) $ 6,550,000 $ 688,000Actuarial value of plan assets $ 725,693 $ 0Unfunded actuarial accrued liability (UAAL) $ 5,824,307 $ 688,000Actuarial value of assets as a % of the AAL 11% 0%Covered payroll (active plan members) $ 10,469,162 $ 3,286,697UAAL as a % of covered payroll 56% 21%

The Board of Education has placed funds with the Tennessee School Board Association (TSBA) GASB 45 Trust to pre-fund a portion of the School Department’s OPEB liability. The TSBA GASB 45 Trust administers assets for several school defined benefit postemployment plans. Contributions to the GASB 45 Trust are made solely at the discretion of the Johnson County School Department. Contributions to the GASB 45 Trust have been considered in determining the School Department’s net OPEB obligation. The assets of the GASB 45 Trust are commingled with other participants’ funds for investment purposes, but are held in an irrevocable trust for each plan participant and may be used only for the payment of benefits to the members of the plan in accordance with the terms of their plan. At June 30, 2017, the Board of Education’s balance with the GASB 45 Trust was $864,730. The TSBA GASB 45 Trust did not disburse any benefit payments to school retirees for the year ended June 30, 2017. The TSBA GASB 45 Trust is required to have an annual audit, which may be obtained from the TSBA at 525 Brick Church Park Drive, Nashville, TN 37207. Actuarial valuations involve estimates of the value of reported amounts and assumptions about the probability of events far into the future, and actuarially determined amounts are subject to continual revision as actual results are compared to past expectations and new estimates are made about the future. The Schedule of Funding Progress, presented as required supplementary information following the notes to the financial statements, presents multi-year trend information about whether the actuarial value of plan assets is increasing or decreasing over time relative to the actuarial accrued liability for benefits. Actuarial Methods and Assumptions Calculations are based on the types of benefits provided under the terms of the substantive plan at the time of each valuation and on the pattern of sharing of costs between the employer and plan members to that point. Actuarial

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calculations reflect a long-term perspective. Consistent with that perspective, actuarial methods and assumptions used include techniques that are designed to reduce short-term volatility in actuarial accrued liabilities and the actuarial value of assets. In the July 1, 2015, actuarial valuation for the Local Government Plan and the Local Education Plan, the projected unit credit actuarial cost method was used. The actuarial assumptions included a 3.75 percent investment rate of return (net of administrative expenses) and an annual health care cost trend rate of six percent in fiscal year 2017, and then be reduced by decrements to an ultimate rate of 4.645 percent by fiscal year 2050. Both rates include a 2.5 percent inflation assumption. The unfunded actuarial accrued liability is being amortized as a level percentage of payroll on a closed basis over a 35-year period beginning with July 1, 2007. Payroll is assumed to grow at a rate of three percent.

I. Office of Central Accounting and Budgeting Johnson County operates under provisions of the Fiscal Control Acts of 1957. These acts provide for a central system of accounting and budgeting covering funds administered by the county mayor, road superintendent, and director of schools. These funds were maintained in the Office of Central Accounting under the supervision of the director of accounts and budgets.

J. Purchasing Laws

Office of County Mayor and Road Superintendent Purchasing procedures for the Offices of County Mayor and Road Superintendent are conducted under provisions of Section 5-14-101, et seq., Tennessee Code Annotated (TCA). Purchasing procedures for the Office of Road Superintendent are also governed by provisions of the Uniform Road Law, Section 54-7-113, TCA. These statutes provide for purchases exceeding $25,000 to be made on a competitive bid basis. Office of Director of Schools

Purchasing procedures for the discretely presented Johnson County School Department are governed by purchasing laws applicable to schools as set forth in Section 49-2-203, TCA, which provides for the county Board of Education, through its executive committee (director of schools and chairman of the Board of Education), to make all purchases. This statute also requires that competitive bids be solicited through newspaper advertisement on all purchases estimated to exceed $10,000.

REQUIRED SUPPLEMENTARYINFORMATION

83

Exhibit E-1

Johnson County, TennesseeSchedule of Changes in Net Pension Liability (Asset) and Related Ratios Based on Participation in the Public Employee Pension Plan of TCRSPrimary GovernmentFor the Fiscal Year Ended June 30

2014 2015 2016

Total Pension Liability (Asset)Service Cost $ 489,369 $ 477,723 $ 482,243Interest 1,364,428 1,453,651 1,579,294Changes in Benefit Terms 0 0 0Differences Between Actual and Expected Experience 322,898 839,364 (1,166,327)Changes in Assumptions 0 0 0Benefit Payments, Including Refunds of Employee Contributions (893,289) (1,057,518) (1,142,502)Net Change in Total Pension Liability (Asset) $ 1,283,406 $ 1,713,220 $ (247,292)Total Pension Liability (Asset), Beginning 18,149,638 19,433,044 21,146,264

Total Pension Liability (Asset), Ending (a) $ 19,433,044 $ 21,146,264 $ 20,898,972

Plan Fiduciary Net PositionContributions - Employer $ 668,604 $ 720,240 $ 716,263Contributions - Employee 286,133 283,354 281,384Net Investment Income 2,783,446 601,837 531,242Benefit Payments, Including Refunds of Employee Contributions (893,289) (1,057,518) (1,142,502)Administrative Expense (10,300) (13,258) (19,298)Net Change in Plan Fiduciary Net Position $ 2,834,594 $ 534,655 $ 367,089Plan Fiduciary Net Position, Beginning 16,739,734 19,574,328 20,108,983

Plan Fiduciary Net Position, Ending (b) $ 19,574,328 $ 20,108,983 $ 20,476,072

Net Pension Liability (Asset), Ending (a - b) $ (141,284) $ 1,037,281 $ 422,900

Plan Fiduciary Net Position as a Percentage of Total Pension Liability 100.73% 95.09% 97.98%Covered Payroll $ 5,690,056 $ 5,631,427 $ 5,615,758Net Pension Liability (Asset) as a Percentage of Covered Payroll (2.48%) 18.42% 7.53%

Note: ten years of data will be precented when available.

Note: data presented includes primary government and non-certified employees of the discretely presented School Department.

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Exhibit E-2Johnson County, TennesseeSchedule of Contributions Based on Participation in the Public Employee Pension Plan of TCRSPrimary GovernmentFor the Fiscal Year Ended June 30

2014 2015 2016 2017

Actuarially Determined Contribution $ 668,604 $ 720,240 $ 716,263 $ 755,170Less Contributions in Relation to the Actuarially Determined Contribution (668,604) (720,240) (716,263) (755,170)Contribution Deficiency (Excess) $ 0 $ 0 $ 0 $ 0

Covered Payroll $ 5,690,056 $ 5,631,427 $ 5,615,758 $ 5,933,915

Contributions as a Percentage of Covered Payroll 11.75% 12.79% 12.75% 12.75%

Note: ten years of data will be precented when available.

Note: data presented includes primary government and non-certified employees of the discretely presented School Department.

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Exhibit E-3Johnson County, TennesseeSchedule of Contributions Based on Participation in the Teacher Retirement Plan of TCRSDiscretely Presented Johnson County School DepartmentFor the Fiscal Year Ended June 30

2015 2016 2017

Contractually Required Contribution $ 22,164 $ 39,844 $ 50,783Less Contributions in Relation to the Contractually Required Contribution (22,164) (39,844) (50,783)Contribution Deficiency (Excess) $ 0 $ 0 $ 0

Covered Payroll $ 554,107 $ 996,096 $ 1,267,249

Contributions as a Percentage of Covered Payroll 4.00% 4.00% 4.00%

Note: ten years of data will be presented when available.

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Exhibit E-4Johnson County, TennesseeSchedule of Contributions Based on Participation in the Teacher Legacy Pension Plan of TCRSDiscretely Presented Johnson County School DepartmentFor the Fiscal Year Ended June 30

2014 2015 2016 2017

Contractually Required Contribution $ 785,473 $ 737,832 $ 708,083 $ 706,503Less Contributions in Relation to the Contractually Required Contribution (785,473) (737,832) (708,083) (706,503)Contribution Deficiency (Excess) $ 0 $ 0 $ 0 $ 0

Covered Payroll $ 8,845,421 $ 8,161,862 $ 7,832,775 $ 7,825,221

Contributions as a Percentage of Covered Payroll 8.88% 9.04% 9.04% 9.03%


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Exhibit E-5

Johnson County, TennesseeSchedule of Proportionate Share of the Net Pension Asset in the Teacher Pension Plan of TCRSDiscretely Presented Johnson County School DepartmentFor the Fiscal Year Ended June 30 *

2016 2017

School Department's Proportion of the Net Pension Liabtility (Asset) 0.266690% 0.226384%

School Department's Proportionate Share of the Net Pension Liability (Asset) $ (10,729) $ (23,567)

Covered Payroll $ 554,107 $ 996,096

School Department's Proportionate Share of the Net Pension Liability (Asset) as a Percentage of its Covered Payroll (1.94)% (2.37)%

Plan Fiduciary Net Position as a Percentage of the Total Pension Liability 127.46% 121.88%

* The amounts presented were determined as of June 30 of the prior fiscal year.


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Exhibit E-6Johnson County, TennesseeSchedule of Proportionate Share of the Net Pension Liability (Asset) in the Teacher Legacy Pension Plan of TCRSDiscretely Presented Johnson County School DepartmentFor the Fiscal Year Ended June 30 *

2015 2016 2017

School Department's Proportion of the Net Pension Liabtility (Asset) 0.225362% 0.218027% 0.216987%

School Department's Proportionate Share of the Net Pension Liability (Asset) $ (36,620) $ 89,311 $ 1,356,046

Covered Payroll $ 8,845,421 $ 8,161,862 $ 7,832,775

School Department's Proportionate Share of the Net Pension Liability (Asset) as a Percentage of its Covered Payroll (0.41)% 1.09% 17.31%

Plan Fiduciary Net Position as a Percentage of the Total Pension Liability 100.08% 99.81% 97.14%

* The amounts presented were determined as of June 30 of the prior fiscal year.


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Exhibit E-7

Johnson County, TennesseeSchedule of Funding Progress – Other Postemployment Benefits PlansPrimary Government and Discretely Presented Johnson County School DepartmentJune 30, 2017

(Dollar amounts in thousands)

ActuarialAccrued Liability

(AAL)Actuarial Projected Unfunded

Actuarial Value of Unit AAL Funded Covered Valuation Assets Credit (UAAL) Ratio Payroll

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

PRIMARY GOVERNMENT

Local Government Group 7-1-11 $ 0 $ 2,849 $ 2,849 0 % $ 3,433 83 %" 7-1-13 0 904 904 0 3,378 26.8" 7-1-15 0 688 688 0 3,287 20.9

DISCRETELY PRESENTED JOHNSON COUNTY SCHOOL DEPARTMENT

Local Education Group 7-1-11 150 5,448 5,298 2.8 11,820 44.8" 7-1-13 544 5,147 4,603 10.6 9,853 46.7" 7-1-15 726 6,550 5,824 11.1 10,469 55.6

UAAL as a Percentageof Covered

Payroll((b-a)/c)

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JOHNSON COUNTY, TENNESSEE NOTES TO THE REQUIRED SUPPLEMENTARY INFORMATION


TENNESSEE CONSOLIDATED RETIREMENT SYSTEM Valuation Date: Actuarially determined contribution rates for 2017 were calculated based on the July 1, 2015, actuarial valuation. Methods and assumptions used to determine contribution rates:

Actuarial Cost Method Frozen Initial LiabilityAmortization Method Level Dollar, Closed (Not to Exceed 20 Years)Remaining Amortization Period Varies by YearAsset Valuation 10-Year Smoothed Within a 20%

Corridor to Market ValueInflation 3%Salary Increases Graded Salary Ranges from 8.97% to

3.71% Based on Age, Including InflationInvestment Rate of Return 7.5%, Net of Investment Expense,

Including InflationRetirement Age Pattern of Retirement Determined by

Experience StudyMortality Customized Table Based on Actual

Experience Including an Adjustment for Some Anticipated Improvement


91

COMBINING AND INDIVIDUAL FUND FINANCIAL STATEMENTS AND SCHEDULES

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Nonmajor Governmental Funds

Special Revenue Funds ______________________________

Special Revenue Funds are used to account for and report the proceeds of specific revenue sources that are restricted or committed to expenditure for specified purposes other than debt service or capital projects.

______________________________

Public Library Fund – The Public Library Fund is used to account for revenues committed or restricted for library operations. Solid Waste/Sanitation Fund – The Solid Waste/Sanitation Fund is used to account for transactions involving solid waste collection. Drug Control Fund – The Drug Control Fund is used to account for revenues received from drug-related fines, forfeitures, and seizures. Constitutional Officers - Fees Fund – The Constitutional Officers - Fees Fund is used to account for operating expenses paid directly from the fee and commission accounts of the trustee, clerks, register of deeds, and sheriff.

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Capital Projects Funds ______________________________

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 of capital facilities and other capital assets.

______________________________ General Capital Projects Fund – The General Capital Projects Fund is used to account for general capital expenditures of the county. Community Development/Industrial Park Fund – The Community Development/Industrial Park Fund is used to account for community development and industrial expansion in the county. Other Capital Projects Fund – The Other Capital Projects Fund is used to account for the Trails Grant program.

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Exhibit F-1

Johnson County, TennesseeCombining Balance SheetNonmajor Governmental FundsJune 30, 2017

Constitu -Solid tional General

Public Waste / Drug Officers - CapitalLibrary Sanitation Control Fees Total Projects

ASSETS

Cash $ 300 $ 250 $ 0 $ 1,000 $ 1,550 $ 0Equity in Pooled Cash and Investments 85,611 288,888 114,798 0 489,297 710,373Accounts Receivable 100 29,173 0 64 29,337 0Due from Other Governments 10,049 3,250 0 0 13,299 0Due from Other Funds 0 0 0 0 0 2,929Property Taxes Receivable 0 32,700 0 0 32,700 294,298Allowance for Uncollectible Property Taxes 0 (623) 0 0 (623) (5,607)

Total Assets $ 96,060 $ 353,638 $ 114,798 $ 1,064 $ 565,560 $ 1,001,993

LIABILITIES

Accounts Payable $ 235 $ 21,176 $ 0 $ 0 $ 21,411 $ 0Accrued Payroll 302 0 0 0 302 0Contracts Payable 4,725 0 0 0 4,725 0Due to Other Funds 0 0 0 1,064 1,064 0Other Current Liabilities 0 0 21,064 0 21,064 0Total Liabilities $ 5,262 $ 21,176 $ 21,064 $ 1,064 $ 48,566 $ 0


Deferred Current Property Taxes $ 0 $ 30,835 $ 0 $ 0 $ 30,835 $ 277,512Deferred Delinquent Property Taxes 0 1,109 0 0 1,109 9,981Total Deferred Inflows of Resources $ 0 $ 31,944 $ 0 $ 0 $ 31,944 $ 287,493

(Continued)

Special Revenue Funds

Capital Projects Funds

95

Exhibit F-1

Johnson County, TennesseeCombining Balance SheetNonmajor Governmental Funds (Cont.)



FUND BALANCES

Restricted:Restricted for Public Safety $ 0 $ 0 $ 93,734 $ 0 $ 93,734 $ 0Restricted for Capital Outlay 0 0 0 0 0 659,469

Committed:Committed for Public Health and Welfare 0 300,518 0 0 300,518 0Committed for Social, Cultural, and Recreational Services 90,798 0 0 0 90,798 0Committed for Capital Outlay 0 0 0 0 0 55,031

Total Fund Balances $ 90,798 $ 300,518 $ 93,734 $ 0 $ 485,050 $ 714,500

Total Liabilities, Deferred Inflows of Resources, and Fund Balances $ 96,060 $ 353,638 $ 114,798 $ 1,064 $ 565,560 $ 1,001,993

(Continued)



96

Exhibit F-1


Community TotalDevelopment/ Other Nonmajor

Industrial Capital GovernmentalPark Projects Total Funds

ASSETS

Cash $ 0 $ 0 $ 0 $ 1,550Equity in Pooled Cash and Investments 431,590 7,729 1,149,692 1,638,989Accounts Receivable 0 0 0 29,337Due from Other Governments 0 0 0 13,299Due from Other Funds 0 0 2,929 2,929Property Taxes Receivable 0 0 294,298 326,998Allowance for Uncollectible Property Taxes 0 0 (5,607) (6,230)

Total Assets $ 431,590 $ 7,729 $ 1,441,312 $ 2,006,872

LIABILITIES

Accounts Payable $ 0 $ 245 $ 245 $ 21,656Accrued Payroll 0 0 0 302Contracts Payable 0 0 0 4,725Due to Other Funds 100,000 0 100,000 101,064Other Current Liabilities 0 0 0 21,064Total Liabilities $ 100,000 $ 245 $ 100,245 $ 148,811


Deferred Current Property Taxes $ 0 $ 0 $ 277,512 $ 308,347Deferred Delinquent Property Taxes 0 0 9,981 11,090Total Deferred Inflows of Resources $ 0 $ 0 $ 287,493 $ 319,437

(Continued)

Capital Projects Funds (Cont.)

97

Exhibit F-1




FUND BALANCES

Restricted:Restricted for Public Safety $ 0 $ 0 $ 0 $ 93,734Restricted for Capital Outlay 331,590 7,484 998,543 998,543

Committed:Committed for Public Health and Welfare 0 0 0 300,518Committed for Social, Cultural, and Recreational Services 0 0 0 90,798Committed for Capital Outlay 0 0 55,031 55,031

Total Fund Balances $ 331,590 $ 7,484 $ 1,053,574 $ 1,538,624

Total Liabilities, Deferred Inflows of Resources, and Fund Balances $ 431,590 $ 7,729 $ 1,441,312 $ 2,006,872


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Exhibit F-2

Johnson County, TennesseeCombining Statement of Revenues, Expenditures,

and Changes in Fund BalancesNonmajor Governmental FundsFor the Year Ended June 30, 2017



RevenuesLocal Taxes $ 41,550 $ 35,252 $ 0 $ 0 $ 76,802 $ 292,744Fines, Forfeitures, and Penalties 0 0 54,036 0 54,036 0Charges for Current Services 148 506,939 0 2,137 509,224 0Other Local Revenues 0 5,541 125 0 5,666 0State of Tennessee 12,049 16,621 0 0 28,670 0Federal Government 0 0 0 0 0 0Other Governments and Citizens Groups 84,121 0 0 0 84,121 0

Total Revenues $ 137,868 $ 564,353 $ 54,161 $ 2,137 $ 758,519 $ 292,744


General Government $ 0 $ 0 $ 0 $ 57 $ 57 $ 0Administration of Justice 0 0 0 2,080 2,080 0Public Safety 0 0 35,534 0 35,534 0Public Health and Welfare 0 458,609 0 0 458,609 0Social, Cultural, and Recreational Services 90,396 0 0 0 90,396 0

Debt Service:Principal on Debt 0 0 0 0 0 56,660

Capital Projects 9,425 0 0 0 9,425 50,860Capital Projects - Donated 0 0 0 0 0 534,202

Total Expenditures $ 99,821 $ 458,609 $ 35,534 $ 2,137 $ 596,101 $ 641,722

(Continued)



99

Exhibit F-2


and Changes in Fund BalancesNonmajor Governmental Funds (Cont.)



Excess (Deficiency) of RevenuesOver Expenditures $ 38,047 $ 105,744 $ 18,627 $ 0 $ 162,418 $ (348,978)

Other Financing Sources (Uses)Insurance Recovery $ 3,395 $ 0 $ 0 $ 0 $ 3,395 $ 0Transfers In 0 0 0 0 0 31,374

Total Other Financing Sources (Uses) $ 3,395 $ 0 $ 0 $ 0 $ 3,395 $ 31,374

Net Change in Fund Balances $ 41,442 $ 105,744 $ 18,627 $ 0 $ 165,813 $ (317,604)Fund Balance, July 1, 2016 49,356 194,774 75,107 0 319,237 1,032,104

Fund Balance, June 30, 2017 $ 90,798 $ 300,518 $ 93,734 $ 0 $ 485,050 $ 714,500

(Continued)



100

Exhibit F-2





RevenuesLocal Taxes $ 0 $ 0 $ 292,744 $ 369,546Fines, Forfeitures, and Penalties 0 0 0 54,036Charges for Current Services 0 0 0 509,224Other Local Revenues 105,976 0 105,976 111,642State of Tennessee 6,250 0 6,250 34,920Federal Government 0 3,020 3,020 3,020Other Governments and Citizens Groups 0 0 0 84,121

Total Revenues $ 112,226 $ 3,020 $ 407,990 $ 1,166,509


General Government $ 0 $ 0 $ 0 $ 57Administration of Justice 0 0 0 2,080Public Safety 0 0 0 35,534Public Health and Welfare 0 0 0 458,609Social, Cultural, and Recreational Services 0 0 0 90,396

Debt Service:Principal on Debt 0 0 56,660 56,660

Capital Projects 40,474 4,315 95,649 105,074Capital Projects - Donated 0 0 534,202 534,202

Total Expenditures $ 40,474 $ 4,315 $ 686,511 $ 1,282,612

(Continued)


101

Exhibit F-2





Excess (Deficiency) of RevenuesOver Expenditures $ 71,752 $ (1,295) $ (278,521) $ (116,103)

Other Financing Sources (Uses)Insurance Recovery $ 0 $ 0 $ 0 $ 3,395Transfers In 0 0 31,374 31,374

Total Other Financing Sources (Uses) $ 0 $ 0 $ 31,374 $ 34,769

Net Change in Fund Balances $ 71,752 $ (1,295) $ (247,147) $ (81,334)Fund Balance, July 1, 2016 259,838 8,779 1,300,721 1,619,958

Fund Balance, June 30, 2017 $ 331,590 $ 7,484 $ 1,053,574 $ 1,538,624


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Exhibit F-3

Johnson County, TennesseeSchedule of Revenues, Expenditures, and Changes

in Fund Balance - Actual (Budgetary Basis) and BudgetPublic Library FundFor the Year Ended June 30, 2017


Actual Add: Expenditures Budget -(GAAP Encumbrances (Budgetary PositiveBasis) 6/30/2017 Basis) Original Final (Negative)

RevenuesLocal Taxes $ 41,550 $ 0 $ 41,550 $ 41,550 $ 41,550 $ 0Charges for Current Services 148 0 148 0 148 0State of Tennessee 12,049 0 12,049 0 13,500 (1,451)Other Governments and Citizens Groups 84,121 0 84,121 29,223 82,898 1,223

Total Revenues $ 137,868 $ 0 $ 137,868 $ 70,773 $ 138,096 $ (228)

ExpendituresSocial, Cultural, and Recreational Services

Libraries $ 83,763 $ 0 $ 83,763 $ 70,773 $ 85,092 $ 1,329Other Social, Cultural, and Recreational 6,633 3,547 10,180 0 11,500 1,320

Capital ProjectsSocial, Cultural, and Recreation Projects 9,425 5,775 15,200 0 4,700 (10,500)

Total Expenditures $ 99,821 $ 9,322 $ 109,143 $ 70,773 $ 101,292 $ (7,851)

Excess (Deficiency) of RevenuesOver Expenditures $ 38,047 $ (9,322) $ 28,725 $ 0 $ 36,804 $ (8,079)

Other Financing Sources (Uses)Insurance Recovery $ 3,395 $ 0 $ 3,395 $ 0 $ 3,395 $ 0

Total Other Financing Sources $ 3,395 $ 0 $ 3,395 $ 0 $ 3,395 $ 0

Net Change in Fund Balance $ 41,442 $ (9,322) $ 32,120 $ 0 $ 40,199 $ (8,079)Fund Balance, July 1, 2016 49,356 0 49,356 49,355 49,355 1

Fund Balance, June 30, 2017 $ 90,798 $ (9,322) $ 81,476 $ 49,355 $ 89,554 $ (8,078)

Budgeted Amounts

103

Exhibit F-4


in Fund Balance - Actual (Budgetary Basis) and BudgetSolid Waste/Sanitation FundFor the Year Ended June 30, 2017



RevenuesLocal Taxes $ 35,252 $ 0 $ 0 $ 35,252 $ 32,405 $ 32,405 $ 2,847Charges for Current Services 506,939 0 0 506,939 450,000 450,000 56,939Other Local Revenues 5,541 0 0 5,541 4,000 4,000 1,541State of Tennessee 16,621 0 0 16,621 10,000 13,250 3,371

Total Revenues $ 564,353 $ 0 $ 0 $ 564,353 $ 496,405 $ 499,655 $ 64,698

ExpendituresPublic Health and Welfare

Sanitation Management $ 458,609 $ (200) $ 3,673 $ 462,082 $ 496,405 $ 499,655 $ 37,573Total Expenditures $ 458,609 $ (200) $ 3,673 $ 462,082 $ 496,405 $ 499,655 $ 37,573

Excess (Deficiency) of RevenuesOver Expenditures $ 105,744 $ 200 $ (3,673) $ 102,271 $ 0 $ 0 $ 102,271

Net Change in Fund Balance $ 105,744 $ 200 $ (3,673) $ 102,271 $ 0 $ 0 $ 102,271Fund Balance, July 1, 2016 194,774 (200) 0 194,574 191,961 191,961 2,613

Fund Balance, June 30, 2017 $ 300,518 $ 0 $ (3,673) $ 296,845 $ 191,961 $ 191,961 $ 104,884

Budgeted Amounts

104

Exhibit F-5


in Fund Balance - Actual and BudgetDrug Control FundFor the Year Ended June 30, 2017

Variancewith FinalBudget -Positive

Actual Original Final (Negative)

RevenuesFines, Forfeitures, and Penalties $ 54,036 $ 8,400 $ 47,505 $ 6,531Other Local Revenues 125 0 125 0

Total Revenues $ 54,161 $ 8,400 $ 47,630 $ 6,531

ExpendituresPublic Safety

Drug Enforcement $ 35,534 $ 27,100 $ 66,330 $ 30,796Total Expenditures $ 35,534 $ 27,100 $ 66,330 $ 30,796

Excess (Deficiency) of RevenuesOver Expenditures $ 18,627 $ (18,700) $ (18,700) $ 37,327

Net Change in Fund Balance $ 18,627 $ (18,700) $ (18,700) $ 37,327Fund Balance, July 1, 2016 75,107 76,677 76,677 (1,570)

Fund Balance, June 30, 2017 $ 93,734 $ 57,977 $ 57,977 $ 35,757

Budgeted Amounts

105

Exhibit F-6


in Fund Balance - Actual (Budgetary Basis) and BudgetGeneral Capital Projects FundFor the Year Ended June 30, 2017


Actual Less: Expenditures Budget -(GAAP Encumbrances (Budgetary PositiveBasis) 7/1/2016 Basis) Original Final (Negative)

RevenuesLocal Taxes $ 292,744 $ 0 $ 292,744 $ 272,449 $ 272,449 $ 20,295

Total Revenues $ 292,744 $ 0 $ 292,744 $ 272,449 $ 272,449 $ 20,295

ExpendituresPrincipal on Debt

Highways and Streets $ 56,660 $ 0 $ 56,660 $ 0 $ 56,660 $ 0Capital Projects

General Administration Projects 38,928 0 38,928 262,010 40,350 1,422Highway and Street Capital Projects 11,932 0 11,932 34,000 34,000 22,068

Capital Projects - DonatedCapital Projects Donated to School Department 534,202 (136,280) 397,922 0 397,922 0

Total Expenditures $ 641,722 $ (136,280) $ 505,442 $ 296,010 $ 528,932 $ 23,490

Excess (Deficiency) of RevenuesOver Expenditures $ (348,978) $ 136,280 $ (212,698) $ (23,561) $ (256,483) $ 43,785

Other Financing Sources (Uses)Transfers In $ 31,374 $ 0 $ 31,374 $ 30,500 $ 30,500 $ 874

Total Other Financing Sources $ 31,374 $ 0 $ 31,374 $ 30,500 $ 30,500 $ 874

Net Change in Fund Balance $ (317,604) $ 136,280 $ (181,324) $ 6,939 $ (225,983) $ 44,659Fund Balance, July 1, 2016 1,032,104 (136,280) 895,824 894,730 894,730 1,094

Fund Balance, June 30, 2017 $ 714,500 $ 0 $ 714,500 $ 901,669 $ 668,747 $ 45,753

Budgeted Amounts

106

Major Governmental Fund

General Debt Service Fund ___________________________________

The General Debt Service Fund is used to account for and report financial resources that are restricted, committed, or assigned to expenditure for principal and interest.

____________________________________

107

Exhibit G


in Fund Balance - Actual and BudgetGeneral Debt Service FundFor the Year Ended June 30, 2017



RevenuesLocal Taxes $ 747,868 $ 1,432,912 $ 665,744 $ 82,124Other Governments and Citizens Groups 304,167 264,154 304,167 0

Total Revenues $ 1,052,035 $ 1,697,066 $ 969,911 $ 82,124

ExpendituresPrincipal on Debt

General Government $ 263,000 $ 188,000 $ 263,000 $ 0Education 602,013 562,000 602,013 0

Interest on DebtGeneral Government 91,641 200,518 125,518 33,877Education 114,795 114,795 114,795 0

Other Debt ServiceGeneral Government 119,708 30,000 125,357 5,649Education 1,206 751,500 4,332 3,126

Total Expenditures $ 1,192,363 $ 1,846,813 $ 1,235,015 $ 42,652

Excess (Deficiency) of RevenuesOver Expenditures $ (140,328) $ (149,747) $ (265,104) $ 124,776

Other Financing Sources (Uses)Refunding Debt Issued $ 4,715,000 $ 0 $ 4,715,000 $ 0Premiums on Debt Sold 129,823 0 129,823 0Transfers In 235,307 228,750 228,750 6,557Payments to Refunded Debt Escrow Agent (4,749,466) 0 (4,749,466) 0

Total Other Financing Sources $ 330,664 $ 228,750 $ 324,107 $ 6,557

Net Change in Fund Balance $ 190,336 $ 79,003 $ 59,003 $ 131,333Fund Balance, July 1, 2016 5,758,444 5,400,093 5,400,093 358,351

Fund Balance, June 30, 2017 $ 5,948,780 $ 5,479,096 $ 5,459,096 $ 489,684

Budgeted Amounts

108

Fiduciary Funds _______________________________

Agency Funds are used to account for assets held by the county in a trustee capacity or as an agent for individuals, private organizations, other governments, and/or other funds. Agency funds are custodial in nature (assets equal liabilities) and do not involve measurement of results of operations.

_______________________________ Cities - Sales Tax Fund – The Cities - Sales Tax Fund is used to account for the second half of the sales tax revenues collected inside incorporated cities of the county. These revenues are received by the county from the State of Tennessee and forwarded to the various cities on a monthly basis. Constitutional Officers - Agency Fund – The Constitutional Officers - Agency Fund is used to account for amounts collected in an agency capacity by the county clerk, circuit and general sessions courts clerk, clerk and master, register of deeds, and sheriff. Such collections include amounts due the state, cities, other county funds, litigants, heirs, and others. Other Agency Fund – The Other Agency Fund is used to account for amounts received and disbursed in an agency capacity for the Doe Mountain Recreation Authority.

109

Exhibit H-1Johnson County, TennesseeCombining Statement of Fiduciary Assets and LiabilitiesFiduciary FundsJune 30, 2017

Constitu -Cities - tionalSales Officers - OtherTax Agency Agency Total

ASSETS

Cash $ 0 $ 354,579 $ 0 $ 354,579Equity in Pooled Cash and Investments 0 0 105,597 105,597Accounts Receivable 0 4,773 0 4,773Due from Other Governments 87,223 0 0 87,223

Total Assets $ 87,223 $ 359,352 $ 105,597 $ 552,172

LIABILITIES

Accounts Payable $ 0 $ 0 $ 2,728 $ 2,728Due to Other Taxing Units 87,223 0 102,869 190,092Due to Litigants, Heirs, and Others 0 359,352 0 359,352

Total Liabilities $ 87,223 $ 359,352 $ 105,597 $ 552,172

Agency Funds

110

Exhibit H-2

Johnson County, TennesseeCombining Statement of Changes in Assets and Liabilities - All Agency FundsFor the Year Ended June 30, 2017

Beginning Ending Balance Additions Deductions Balance

Cities - Sales Tax Fund Assets Equity in Pooled Cash and Investments $ 0 $ 504,334 $ 504,334 $ 0 Due from Other Governments 83,486 87,223 83,486 87,223

Total Assets $ 83,486 $ 591,557 $ 587,820 $ 87,223

Liabilities Due to Other Taxing Units $ 83,486 $ 591,557 $ 587,820 $ 87,223


Constitutional Officers - Agency Fund Assets Cash $ 599,555 $ 4,275,159 $ 4,520,135 $ 354,579 Accounts Receivable 4,657 4,773 4,657 4,773

Total Assets $ 604,212 $ 4,279,932 $ 4,524,792 $ 359,352

Liabilities Due to Litigants, Heirs, and Others $ 604,212 $ 4,279,932 $ 4,524,792 $ 359,352

Total Liabilities $ 604,212 $ 4,279,932 $ 4,524,792 $ 359,352

Other Agency Fund Assets Equity in Pooled Cash and Investments $ 31,335 $ 233,578 $ 159,316 $ 105,597 Accounts Receivable 10,000 0 10,000 0

Total Assets $ 41,335 $ 233,578 $ 169,316 $ 105,597

Liabilities Accounts Payable $ 545 $ 2,728 $ 545 $ 2,728 Due to Other Taxing Units 40,790 230,850 168,771 102,869


Totals - All Agency Funds Assets Cash $ 599,555 $ 4,275,159 $ 4,520,135 $ 354,579 Equity in Pooled Cash and Investments 31,335 737,912 663,650 105,597 Accounts Receivable 14,657 4,773 14,657 4,773 Due from Other Governments 83,486 87,223 83,486 87,223

Total Assets $ 729,033 $ 5,105,067 $ 5,281,928 $ 552,172

Liabilities Accounts Payable $ 545 $ 2,728 $ 545 $ 2,728 Due to Other Taxing Units 124,276 822,407 756,591 190,092 Due to Litigants, Heirs, and Others 604,212 4,279,932 4,524,792 359,352

Total Liabilities $ 729,033 $ 5,105,067 $ 5,281,928 $ 552,172

111

Johnson County School Department _________________________

This section presents combining and individual fund financial statements for the Johnson County School Department, a discretely presented component unit. The School Department uses a General Fund and three Special Revenue Funds.

_________________________

General Purpose School Fund – The General Purpose School Fund is used to account for general operations of the School Department. School Federal Projects Fund – The School Federal Projects Fund is used to account for restricted federal revenues, which must be expended on specific education programs. Central Cafeteria Fund – The Central Cafeteria Fund is used to account for the cafeteria operations in each of the schools. Other Education Special Revenue Fund – The Other Education Special Revenue Fund is used to account for a Headstart program, which is funded by charges for services.

112

Exhibit I-1

Johnson County, TennesseeStatement of ActivitiesDiscretely Presented Johnson County School DepartmentFor the Year Ended June 30, 2017

Net (Expense)Revenue and

Program Revenues Changes inOperating Capital Net Position

Charges Grants Grants Totalfor and and Governmental

Functions/Programs Expenses Services Contributions Contributions Activities

Governmental Activities: Instruction $ 12,186,383 $ 0 $ 2,236,679 $ 0 $ (9,949,704) Support Services 7,646,769 46,113 185,308 534,202 (6,881,146) Operation of Non-instructional Services 2,011,838 203,051 1,348,675 0 (460,112)

Total Governmental Activities $ 21,844,990 $ 249,164 $ 3,770,662 $ 534,202 $ (17,290,962)

General Revenues: Taxes: Property Taxes Levied for General Purposes $ 2,805,769 Local Option Sales Taxes 767,168 Interstate Telecommunications Tax 2,932 Grants and Contributions Not Restricted for Specific Programs 13,572,931 Unrestricted Investment Income 103,031 Miscellaneous 170,052 Gain on Disposal of Capital Assets 268,467Total General Revenues $ 17,690,350

Change in Net Position $ 399,388Net Position, July 1, 2016 17,453,627

Net Position, June 30, 2017 $ 17,853,015

113

Exhibit I-2

Johnson County, TennesseeBalance Sheet - Governmental FundsDiscretely Presented Johnson County School DepartmentJune 30, 2017

OtherGeneral Govern- TotalPurpose Central mental GovernmentalSchool Cafeteria Funds Funds

ASSETS

Cash $ 59,883 $ 8,002 $ 0 $ 67,885Equity in Pooled Cash and Investments 3,409,559 757,389 158,251 4,325,199Accounts Receivable 52,983 0 0 52,983Due from Other Governments 45,091 26,013 205,235 276,339Due from Other Funds 4,144 0 38 4,182Due from Primary Government 0 194 0 194Property Taxes Receivable 2,877,584 0 0 2,877,584Allowance for Uncollectible Property Taxes (54,824) 0 0 (54,824)

Total Assets $ 6,394,420 $ 791,598 $ 363,524 $ 7,549,542

LIABILITIES

Accounts Payable $ 216,317 $ 0 $ 103 $ 216,420Accrued Payroll 3,660 0 742 4,402Payroll Deductions Payable 363,742 31,955 50,648 446,345Contracts Payable 76,566 0 0 76,566Due to Other Funds 38 0 4,144 4,182Other Current Liabilities 59,883 0 0 59,883Total Liabilities $ 720,206 $ 31,955 $ 55,637 $ 807,798


Deferred Current Property Taxes $ 2,713,451 $ 0 $ 0 $ 2,713,451Deferred Delinquent Property Taxes 97,595 0 0 97,595Other Deferred/Unavailable Revenue 297 0 0 297Total Deferred Inflows of Resources $ 2,811,343 $ 0 $ 0 $ 2,811,343

(Continued)

Nonmajor Funds

Major Funds

114

Exhibit I-2

Johnson County, TennesseeBalance Sheet - Governmental FundsDiscretely Presented Johnson County School Department (Cont.)


FUND BALANCES

Restricted:Restricted for Education $ 174,121 $ 759,643 $ 7,887 $ 941,651

Committed:Committed for Education 0 0 300,000 300,000

Assigned:Assigned for Education 1,391,564 0 0 1,391,564

Unassigned 1,297,186 0 0 1,297,186Total Fund Balances $ 2,862,871 $ 759,643 $ 307,887 $ 3,930,401

Total Liabilities, Deferred Inflows of Resources, and Fund Balances $ 6,394,420 $ 791,598 $ 363,524 $ 7,549,542

Nonmajor Funds

Major Funds

115

Exhibit I-3

Johnson County, TennesseeReconciliation of the Balance Sheet of Governmental Funds to the Statement of Net PositionDiscretely Presented Johnson County School DepartmentJune 30, 2017

Amounts reported for governmental activities in the statement of net position (Exhibit A) are different because:

Total fund balances - balance sheet - governmental funds (Exhibit I-2) $ 3,930,401

(1) Capital assets used in governmental activities are not financial resources and therefore are not reported inthe governmental funds.

Add: land $ 962,939Add: construction in progress 4,990Add: buildings and improvements net of accumulated depreciation 12,729,421Add: other capital assets net of accumulated depreciation 1,301,142Add: infrastructure net of accumulated depreciation 208,402 15,206,894

(2) Long-term liabilities are not due and payablein the current period and therefore are not reportedin the governmental funds.

Less: compensated absences payable $ (50,370)Less: other postemployment benefits liability (922,670)Less: net pension liability - agent plan (184,131)Less: net pension liability - teacher legacy retirement plan (1,356,046) (2,513,217)

(3) Amounts reported as deferred outflows of resources and deferredinflows of resources related to pensions will be amortized andrecognized as components of pension expense in future years: Add: deferred outflows of resources related to pensions $ 3,203,415 Less: deferred inflows of resources related to pensions (2,095,937) 1,107,478

(4) Net pension assets are not current financial resourcesand therefore are not reported in the governmental funds.

Add: cost-sharing plan net pension assets - teacher plan 23,567

(5) Other long-term assets are not available to pay forcurrent-period expenditures and therefore are deferredin the governmental funds. 97,892

Net position of governmental activities (Exhibit A) $ 17,853,015

116

Exhibit I-4


and Changes in Fund Balances - Governmental Funds

Discretely Presented Johnson County School DepartmentFor the Year Ended June 30, 2017


RevenuesLocal Taxes $ 3,627,012 $ 0 $ 0 $ 3,627,012Licenses and Permits 2,468 0 0 2,468Charges for Current Services 106,857 142,307 555,256 804,420Other Local Revenues 542,091 2,061 0 544,152State of Tennessee 13,465,571 0 0 13,465,571Federal Government 35,136 1,335,854 1,937,516 3,308,506

Total Revenues $ 17,779,135 $ 1,480,222 $ 2,492,772 $ 21,752,129


Instruction $ 9,857,374 $ 0 $ 1,760,690 $ 11,618,064Support Services 7,132,165 0 476,914 7,609,079Operation of Non-Instructional Services 387,217 1,419,841 238,876 2,045,934

Debt Service:Other Debt Service 304,167 0 0 304,167

Total Expenditures $ 17,680,923 $ 1,419,841 $ 2,476,480 $ 21,577,244

Excess (Deficiency) of RevenuesOver Expenditures $ 98,212 $ 60,381 $ 16,292 $ 174,885

Other Financing Sources (Uses)Insurance Recovery $ 1,117 $ 0 $ 0 $ 1,117Transfers In 34,218 0 0 34,218Transfers Out 0 0 (34,218) (34,218)

Total Other Financing Sources (Uses) $ 35,335 $ 0 $ (34,218) $ 1,117

Net Change in Fund Balances $ 133,547 $ 60,381 $ (17,926) $ 176,002Fund Balance, July 1, 2016 2,729,324 699,262 325,813 3,754,399

Fund Balance, June 30, 2017 $ 2,862,871 $ 759,643 $ 307,887 $ 3,930,401

Nonmajor Funds

Major Funds

117

Exhibit I-5

Johnson County, TennesseeReconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances of Governmental Funds to the Statement of ActivitiesDiscretely Presented Johnson County School DepartmentFor the Year Ended June 30, 2017

Amounts reported for governmental activities in the statement of activities (Exhibit B) are different because:

Net changes in fund balances - total governmental funds (Exhibit I-4) $ 176,002

(1) Governmental funds report capital outlays as expenditures. However,in the statement of activities, the cost of these assets is allocated over their useful lives and reported as depreciation expense. The difference between capital outlays and depreciation is itemized as follows:

Add: capital assets purchased in the current period $ 115,007Less: current-year depreciation expense (951,448) (836,441)

(2) The net effect of various miscellaneous transactions involving capitalassets (sales, trade-ins, and donations) is to increase net position.

Add: assets donated and capitalized $ 534,202Less: proceeds received from the disposal of capital assets (272,425)Add: gain on disposal of capital assets 268,467 530,244

(3) Revenues in the statement of activities that do not provide currentfinancial resources are not reported as revenues in the funds.

Add: deferred delinquent property taxes and other deferred June 30, 2017 $ 97,892Less: deferred delinquent property taxes and other deferred June 30, 2016 (135,887) (37,995)

(4) Some expenses reported in the statement of activities do not requirethe use of current financial resources and therefore are not reportedas expenditures in the governmental funds. Change in compensated absences payable $ 3,327 Change in other postemployment benefits liability (208,663) Change in net pension asset - teacher retirement plan 12,838 Change in net pension liability - teacher legacy retirement plan (1,266,735) Change in net pension liability - agent plan 267,501 Change in deferred outflows related to pensions 1,709,613 Change in deferred inflows related to pensions 49,697 567,578

Change in net position of governmental activities (Exhibit B) $ 399,388

118

Exhibit I-6

Johnson County, TennesseeCombining Balance Sheet - Nonmajor Governmental FundsDiscretely Presented Johnson County School DepartmentJune 30, 2017

Other TotalSchool Education NonmajorFederal Special GovernmentalProjects Revenue Funds

ASSETS

Equity in Pooled Cash and Investments $ 142,182 $ 16,069 $ 158,251Due from Other Governments 203,423 1,812 205,235Due from Other Funds 38 0 38

Total Assets $ 345,643 $ 17,881 $ 363,524

LIABILITIES

Accounts Payable $ 30 $ 73 $ 103Accrued Payroll 123 619 742Payroll Deductions Payable 36,227 14,421 50,648Due to Other Funds 4,144 0 4,144Total Liabilities $ 40,524 $ 15,113 $ 55,637

FUND BALANCES

Restricted:Restricted for Education $ 5,119 $ 2,768 $ 7,887

Committed:Committed for Education 300,000 0 300,000

Total Fund Balances $ 305,119 $ 2,768 $ 307,887

Total Liabilities and Fund Balances $ 345,643 $ 17,881 $ 363,524


119

Exhibit I-7


and Changes in Fund Balances - Nonmajor Governmental Funds

Discretely Presented Johnson County School DepartmentFor the Year Ended June 30, 2017

Other TotalSchool Education NonmajorFederal Special GovernmentalProjects Revenue Funds

RevenuesCharges for Current Services $ 0 $ 555,256 $ 555,256Federal Government 1,937,516 0 1,937,516

Total Revenues $ 1,937,516 $ 555,256 $ 2,492,772


Instruction $ 1,371,517 $ 389,173 $ 1,760,690Support Services 310,776 166,138 476,914Operation of Non-Instructional Services 238,876 0 238,876

Total Expenditures $ 1,921,169 $ 555,311 $ 2,476,480

Excess (Deficiency) of RevenuesOver Expenditures $ 16,347 $ (55) $ 16,292

Other Financing Sources (Uses)Transfers Out $ (34,218) $ 0 $ (34,218)

Total Other Financing Sources (Uses) $ (34,218) $ 0 $ (34,218)

Net Change in Fund Balances $ (17,871) $ (55) $ (17,926)Fund Balance, July 1, 2016 322,990 2,823 325,813

Fund Balance, June 30, 2017 $ 305,119 $ 2,768 $ 307,887


120

Exhibit I-8


in Fund Balance - Actual (Budgetary Basis) and BudgetDiscretely Presented Johnson County School DepartmentGeneral Purpose School FundFor the Year Ended June 30, 2017



RevenuesLocal Taxes $ 3,627,012 $ 0 $ 0 $ 3,627,012 $ 3,528,070 $ 3,528,070 $ 98,942Licenses and Permits 2,468 0 0 2,468 1,250 1,250 1,218Charges for Current Services 106,857 0 0 106,857 85,500 125,815 (18,958)Other Local Revenues 542,091 0 0 542,091 56,250 407,497 134,594State of Tennessee 13,465,571 0 0 13,465,571 13,276,797 13,361,661 103,910Federal Government 35,136 0 0 35,136 68,000 68,000 (32,864)

Total Revenues $ 17,779,135 $ 0 $ 0 $ 17,779,135 $ 17,015,867 $ 17,492,293 $ 286,842

ExpendituresInstruction

Regular Instruction Program $ 7,658,272 $ 0 $ 9,357 $ 7,667,629 $ 7,597,146 $ 7,689,749 $ 22,120Alternative Instruction Program 54,243 0 0 54,243 121,616 54,244 1Special Education Program 1,235,782 0 0 1,235,782 1,124,513 1,234,483 (1,299)Career and Technical Education Program 909,077 (1,224) 9,466 917,319 870,689 926,151 8,832

Support ServicesAttendance 85,421 0 0 85,421 83,570 85,812 391Health Services 272,180 (2,073) 0 270,107 276,681 274,515 4,408Other Student Support 396,863 (1,272) 0 395,591 392,993 402,322 6,731Regular Instruction Program 818,449 (100) 332 818,681 758,447 819,479 798Special Education Program 145,402 0 0 145,402 151,954 146,954 1,552Career and Technical Education Program 89,074 0 0 89,074 89,143 89,143 69Other Programs 142,358 0 0 142,358 0 142,358 0Board of Education 637,032 (200) 0 636,832 522,910 537,671 (99,161)Director of Schools 269,794 (2,800) 533 267,527 179,508 272,892 5,365Office of the Principal 1,286,690 (28) 0 1,286,662 1,318,767 1,290,743 4,081Fiscal Services 93,715 0 0 93,715 95,243 95,541 1,826Human Services/Personnel 61,116 0 0 61,116 63,630 61,859 743Operation of Plant 1,513,675 (16,064) 19,035 1,516,646 1,610,323 1,580,036 63,390Maintenance of Plant 417,003 (24,725) 69,256 461,534 369,940 438,575 (22,959)

(Continued)

Budgeted Amounts

121

Exhibit I-8


in Fund Balance - Actual (Budgetary Basis) and BudgetDiscretely Presented Johnson County School DepartmentGeneral Purpose School Fund (Cont.)



Expenditures (Cont.)Support Services (Cont.)

Transportation $ 882,085 $ (76,244) $ 25,947 $ 831,788 $ 882,503 $ 880,906 $ 49,118Central and Other 21,308 0 0 21,308 22,831 21,342 34

Operation of Non-Instructional ServicesFood Service 101,226 0 0 101,226 101,257 103,326 2,100Community Services 73,816 (1,200) 0 72,616 83,647 81,931 9,315Early Childhood Education 212,175 (13,097) 6,509 205,587 310,586 210,004 4,417

Capital OutlayRegular Capital Outlay 0 0 0 0 25,000 2,000 2,000

Other Debt ServiceEducation 304,167 0 0 304,167 312,178 312,178 8,011


Excess (Deficiency) of RevenuesOver Expenditures $ 98,212 $ 139,027 $ (140,435) $ 96,804 $ (349,208) $ (261,921) $ 358,725

Other Financing Sources (Uses)Insurance Recovery $ 1,117 $ 0 $ 0 $ 1,117 $ 0 $ 1,042 $ 75Transfers In 34,218 0 0 34,218 69,807 69,807 (35,589)

Total Other Financing Sources $ 35,335 $ 0 $ 0 $ 35,335 $ 69,807 $ 70,849 $ (35,514)

Net Change in Fund Balance $ 133,547 $ 139,027 $ (140,435) $ 132,139 $ (279,401) $ (191,072) $ 323,211Fund Balance, July 1, 2016 2,729,324 (139,027) 0 2,590,297 2,585,907 2,585,907 4,390

Fund Balance, June 30, 2017 $ 2,862,871 $ 0 $ (140,435) $ 2,722,436 $ 2,306,506 $ 2,394,835 $ 327,601

Budgeted Amounts

122

Exhibit I-9


in Fund Balance - Actual (Budgetary Basis) and BudgetDiscretely Presented Johnson County School DepartmentSchool Federal Projects FundFor the Year Ended June 30, 2017



RevenuesFederal Government $ 1,937,516 $ 0 $ 0 $ 1,937,516 $ 2,734,693 $ 2,299,060 $ (361,544)

Total Revenues $ 1,937,516 $ 0 $ 0 $ 1,937,516 $ 2,734,693 $ 2,299,060 $ (361,544)


Regular Instruction Program $ 898,862 $ (4,491) $ 887 $ 895,258 $ 1,355,032 $ 1,015,329 $ 120,071Special Education Program 446,505 (4,175) 565 442,895 499,945 542,432 99,537Career and Technical Education Program 26,150 (727) 2,592 28,015 28,030 28,015 0

Support ServicesOther Student Support 27,924 (295) 0 27,629 29,530 34,417 6,788Regular Instruction Program 187,647 (249) 16 187,414 325,091 228,609 41,195Special Education Program 27,807 (3,321) 355 24,841 80,764 47,500 22,659Transportation 67,398 0 0 67,398 93,846 80,301 12,903

Operation of Non-Instructional ServicesCommunity Services 238,876 (7,192) 704 232,388 291,127 286,574 54,186


Excess (Deficiency) of RevenuesOver Expenditures $ 16,347 $ 20,450 $ (5,119) $ 31,678 $ 31,328 $ 35,883 $ (4,205)

Other Financing Sources (Uses)Transfers In $ 0 $ 0 $ 0 $ 0 $ 2,878 $ 0 $ 0Transfers Out (34,218) 0 0 (34,218) (28,450) (35,883) 1,665

Total Other Financing Sources $ (34,218) $ 0 $ 0 $ (34,218) $ (25,572) $ (35,883) $ 1,665

Net Change in Fund Balance $ (17,871) $ 20,450 $ (5,119) $ (2,540) $ 5,756 $ 0 $ (2,540)Fund Balance, July 1, 2016 322,990 (20,450) 0 302,540 0 0 302,540

Fund Balance, June 30, 2017 $ 305,119 $ 0 $ (5,119) $ 300,000 $ 5,756 $ 0 $ 300,000

Budgeted Amounts

123

Exhibit I-10


in Fund Balance - Actual and BudgetDiscretely Presented Johnson County School DepartmentCentral Cafeteria FundFor the Year Ended June 30, 2017



RevenuesCharges for Current Services $ 142,307 $ 245,000 $ 245,000 $ (102,693)Other Local Revenues 2,061 3,000 3,000 (939)Federal Government 1,335,854 1,342,699 1,342,699 (6,845)

Total Revenues $ 1,480,222 $ 1,590,699 $ 1,590,699 $ (110,477)

ExpendituresOperation of Non-Instructional Services

Food Service $ 1,419,841 $ 1,590,699 $ 1,590,699 $ 170,858Total Expenditures $ 1,419,841 $ 1,590,699 $ 1,590,699 $ 170,858

Excess (Deficiency) of RevenuesOver Expenditures $ 60,381 $ 0 $ 0 $ 60,381

Net Change in Fund Balance $ 60,381 $ 0 $ 0 $ 60,381Fund Balance, July 1, 2016 699,262 697,604 697,604 1,658

Fund Balance, June 30, 2017 $ 759,643 $ 697,604 $ 697,604 $ 62,039

Budgeted Amounts

124

Exhibit I-11


in Fund Balance - Actual and BudgetDiscretely Presented Johnson County School DepartmentOther Education Special Revenue FundFor the Year Ended June 30, 2017



RevenuesCharges for Current Services $ 555,256 $ 541,339 $ 563,671 $ (8,415)

Total Revenues $ 555,256 $ 541,339 $ 563,671 $ (8,415)


Regular Instruction Program $ 389,173 $ 377,670 $ 392,304 $ 3,131Support Services

Attendance 60,922 64,608 64,849 3,927Health Services 18,610 19,435 19,843 1,233Regular Instruction Program 86,606 79,626 86,675 69

Total Expenditures $ 555,311 $ 541,339 $ 563,671 $ 8,360

Excess (Deficiency) of RevenuesOver Expenditures $ (55) $ 0 $ 0 $ (55)

Net Change in Fund Balance $ (55) $ 0 $ 0 $ (55)Fund Balance, July 1, 2016 2,823 0 0 2,823

Fund Balance, June 30, 2017 $ 2,768 $ 0 $ 0 $ 2,768

Budgeted Amounts

125

MISCELLANEOUS SCHEDULES

126

Exhibit J-1

Johnson County, TennesseeSchedule of Changes in Other Loans, Bonds, and Capital LeasesFor the Year Ended June 30, 2017

Paid and/orOriginal Date Last Issued MaturedAmount Interest of Maturity Outstanding During During Debt Outstanding

Description of Indebtedness of Issue Rate Issue Date 7-1-16 Period Period Refunded 6-30-17

OTHER LOANS PAYABLE

Contributed by School Department through General Purpose School Fund to the General Debt Service Fund Energy Efficient Schools Initiative $ 336,161 0% 6-2-10 4-1-17 $ 40,013 $ 0 $ 40,013 $ 0 $ 0Total Payable through General Debt Service Fund $ 40,013 $ 0 $ 40,013 $ 0 $ 0

Total Other Loans Payable $ 40,013 $ 0 $ 40,013 $ 0 $ 0

BONDS PAYABLE

Payable through General Debt Service Fund General Refunding Bonds, Series 2010 5,660,000 4 1-25-10 6-1-19 $ 4,815,000 $ 0 $ 155,000 $ 4,325,000 $ 335,000 General Refunding Bonds, Series 2015 6,470,000 2 to 2.25 3-18-15 6-1-25 5,810,000 0 595,000 0 5,215,000 General Refunding Bonds, Series 2016 4,715,000 2 9-21-16 6-1-28 0 4,715,000 75,000 0 4,640,000Total Payable through General Debt Service Fund $ 10,625,000 $ 4,715,000 $ 825,000 $ 4,325,000 $ 10,190,000

Total Bonds Payable $ 10,625,000 $ 4,715,000 $ 825,000 $ 4,325,000 $ 10,190,000

CAPITAL LEASES PAYABLE

Payable through Highway/Public Works and General Capital Projects Funds Highway Equipment 156,432 2.89 4-11-16 4-11-20 $ 123,338 $ 0 $ 29,529 $ 0 $ 93,809 Highway Dump Trucks 203,338 3.95 10-5-16 10-20-20 0 203,338 43,878 0 159,460

Total Payable through Highway/Public Works andGeneral Capital Projects Funds $ 123,338 $ 203,338 $ 73,407 $ 0 $ 253,269

Total Capital Leases Payable $ 123,338 $ 203,338 $ 73,407 $ 0 $ 253,269

127

Exhibit J-2Johnson County, TennesseeSchedule of Long-term Debt Requirements by Year

Year EndingJune 30 Principal Interest Total

2018 $ 815,000 $ 215,650 $ 1,030,6502019 830,000 196,050 1,026,0502020 855,000 176,050 1,031,0502021 880,000 158,950 1,038,9502022 895,000 141,350 1,036,3502023 910,000 123,450 1,033,4502024 930,000 103,575 1,033,5752025 960,000 83,263 1,043,2632026 1,000,000 62,300 1,062,3002027 1,045,000 42,300 1,087,3002028 1,070,000 21,400 1,091,400

Total $ 10,190,000 $ 1,324,338 $ 11,514,338

YearEndingJune 30 Principal Interest Total

2018 $ 67,962 $ 9,010 $ 76,9722019 70,324 6,647 76,9712020 72,773 4,201 76,9742021 42,210 1,667 43,877

Total $ 253,269 $ 21,525 $ 274,794

Bonds

Capital Leases

128

Exhibit J-3

Johnson County, TennesseeSchedule of TransfersPrimary Government and Discretely Presented Johnson County School DepartmentFor the Year Ended June 30, 2017

From Fund To Fund Purpose Amount

PRIMARY GOVERNMENT

General Highway/Public Works Allocate wheel tax $ 235,307" General Debt Service " 235,307" General Capital Projects " 31,374

Total Transfers Primary Government $ 501,988

DISCRETELY PRESENTED JOHNSON COUNTY SCHOOL DEPARTMENT

School Federal Projects General Purpose School Indirect costs $ 30,074" " Reimburse expenses 4,144

Total Transfers Discretely Presented JohnsonCounty School Department $ 34,218

129

Exhibit J-4

Johnson County, TennesseeSchedule of Salaries and Official Bonds of Principal OfficialsPrimary Government and Discretely Presented Johnson County School DepartmentFor the Year Ended June 30, 2017

Salary Paid

DuringOfficial Authorization for Salary Period Bond Surety

County Mayor Section 8-24-102, TCA $ 75,929 $ 100,000 Western Surety CompanyRoad Superintendent Section 8-24-102, TCA 71,743 100,000 "Director of Schools State Board of Education

and County Board of Education 102,988 (1) 400,000 Tennessee Risk Management TrustTrustee Section 8-24-102, TCA 65,221 699,996 Western Surety CompanyAssessor of Property Section 8-24-102, TCA 65,221 50,000 "Director of Accounts and Budgets County Commission 59,139 100,000 "County Clerk Section 8-24-102, TCA 65,221 100,000 "Circuit and General Sessions Courts Clerk Section 8-24-102, TCA 65,221 100,000 "Clerk and Master Section 8-24-102, TCA 65,221 (2) 100,000 "

and Chancery Court JudgeRegister of Deeds Section 8-24-102, TCA 65,221 100,000 "Sheriff Section 8-24-102, TCA 72,343 (3) 100,000 "Purchasing Agent County Commission 34,068 100,000 "

Employee Blanket Bonds:Public Employees Dishonesty - County Departments 400,000 Local Government Insurance PoolPublic Employees Dishonesty - School Department 400,000 Tennessee Risk Management Trust

(1) Includes contractual payments for travel allowance of $5,000 and stipends paid from School Federal Projects Fund as grant program director of $6,000.(2) Does not include special commissioner fees of $2,080 paid through court and special commissioner fees paid outside of court system $1,740.(3) Includes a $600 law enforcement training supplement.

130

Exhibit J-5

Johnson County, TennesseeSchedule of Detailed Revenues -

All Governmental Fund TypesFor the Year Ended June 30, 2017

Constitu -Solid tional Highway /

Public Waste / Drug Officers - PublicGeneral Library Sanitation Control Fees Works

Local TaxesCounty Property Taxes

Current Property Tax $ 2,579,312 $ 0 $ 29,488 $ 0 $ 0 $ 0Trustee's Collections - Prior Year 91,514 0 2,933 0 0 0Trustee's Collections - Bankruptcy 22 0 1 0 0 0Circuit Clerk/Clerk and Master Collections - Prior Years 37,525 0 1,765 0 0 0Interest and Penalty 18,526 0 502 0 0 0Payments in-Lieu-of Taxes - Other 27,313 0 314 0 0 0

County Local Option TaxesLocal Option Sales Tax 131,683 41,550 0 0 0 0Hotel/Motel Tax 28,602 0 0 0 0 0Wheel Tax 627,486 0 0 0 0 0Litigation Tax - General 7,612 0 0 0 0 0Litigation Tax - Special Purpose 38,841 0 0 0 0 0Litigation Tax - Jail, Workhouse, or Courthouse 17,063 0 0 0 0 0Business Tax 76,316 0 0 0 0 0Mixed Drink Tax 753 0 0 0 0 0Mineral Severance Tax 0 0 0 0 0 670

Statutory Local TaxesBank Excise Tax 19,879 0 249 0 0 0Wholesale Beer Tax 117,648 0 0 0 0 0

Total Local Taxes $ 3,820,095 $ 41,550 $ 35,252 $ 0 $ 0 $ 670

Licenses and PermitsLicenses

Cable TV Franchise $ 61,500 $ 0 $ 0 $ 0 $ 0 $ 0

(Continued)


131

Exhibit J-5


All Governmental Fund Types (Cont.)



Licenses and Permits (Cont.)Permits

Beer Permits $ 1,492 $ 0 $ 0 $ 0 $ 0 $ 0Total Licenses and Permits $ 62,992 $ 0 $ 0 $ 0 $ 0 $ 0

Fines, Forfeitures, and PenaltiesCircuit Court

Fines $ 7,949 $ 0 $ 0 $ 0 $ 0 $ 0Drug Control Fines 0 0 0 2,458 0 0Jail Fees 1,937 0 0 0 0 0DUI Treatment Fines 1,010 0 0 0 0 0Data Entry Fee - Circuit Court 1,208 0 0 0 0 0Courtroom Security Fee 3,150 0 0 0 0 0

Criminal CourtOfficers Costs 9,764 0 0 0 0 0Drug Control Fines 1,614 0 0 1,614 0 0Drug Court Fees 1,213 0 0 0 0 0

General Sessions CourtFines 13,558 0 0 0 0 0Fines for Littering 128 0 0 0 0 0Officers Costs 21,654 0 0 0 0 0Game and Fish Fines 191 0 0 0 0 0Drug Control Fines 3,834 0 0 4,214 0 0Drug Court Fees 2,713 0 0 0 0 0Jail Fees 16,909 0 0 0 0 0DUI Treatment Fines 2,587 0 0 0 0 0Data Entry Fee - General Sessions Court 6,617 0 0 0 0 0Courtroom Security Fee 8,397 0 0 0 0 0

(Continued)


132

Exhibit J-5





Fines, Forfeitures, and Penalties (Cont.)Chancery Court

Officers Costs $ 845 $ 0 $ 0 $ 0 $ 0 $ 0Data Entry Fee - Chancery Court 1,368 0 0 0 0 0Courtroom Security Fee 95 0 0 0 0 0

Other Fines, Forfeitures, and PenaltiesProceeds from Confiscated Property 5,390 0 0 45,700 0 0Other Fines, Forfeitures, and Penalties 1,294 0 0 50 0 750

Total Fines, Forfeitures, and Penalties $ 113,425 $ 0 $ 0 $ 54,036 $ 0 $ 750

Charges for Current ServicesGeneral Service Charges

Self-Insurance Premiums/Contributions $ 7,453 $ 0 $ 0 $ 0 $ 0 $ 0Tipping Fees 0 0 506,939 0 0 0Other General Service Charges 7,401 0 0 0 0 0

FeesAirport Fees 4,497 0 0 0 0 0Copy Fees 1,973 148 0 0 0 0Telephone Commissions 18,396 0 0 0 0 0Vending Machine Collections 329 0 0 0 0 0Constitutional Officers' Fees and Commissions 0 0 0 0 57 0Special Commissioner Fees/Special Master Fees 0 0 0 0 2,080 0Data Processing Fee - Register 5,270 0 0 0 0 0Probation Fees 175 0 0 0 0 0Data Processing Fee - Sheriff 913 0 0 0 0 0Sexual Offender Registration Fee - Sheriff 1,350 0 0 0 0 0Data Processing Fee - County Clerk 7,668 0 0 0 0 0

Total Charges for Current Services $ 55,425 $ 148 $ 506,939 $ 0 $ 2,137 $ 0

(Continued)


133

Exhibit J-5





Other Local RevenuesRecurring Items

Investment Income $ 59,063 $ 0 $ 0 $ 0 $ 0 $ 0Lease/Rentals 77,066 0 0 0 0 0Sale of Materials and Supplies 3,262 0 5,541 0 0 1,095Commissary Sales 51,345 0 0 0 0 0Sale of Gasoline 221,140 0 0 0 0 0Sale of Maps 40 0 0 0 0 0Retirees' Insurance Payments 9,595 0 0 0 0 1,130Miscellaneous Refunds 43,176 0 0 125 0 335

Nonrecurring ItemsSale of Equipment 2,950 0 0 0 0 9,467Sale of Property 12,000 0 0 0 0 0

Total Other Local Revenues $ 479,637 $ 0 $ 5,541 $ 125 $ 0 $ 12,027

Fees Received From County OfficialsFees In-Lieu-of Salary

County Clerk $ 201,338 $ 0 $ 0 $ 0 $ 0 $ 0Circuit Court Clerk 39,706 0 0 0 0 0General Sessions Court Clerk 121,046 0 0 0 0 0Clerk and Master 62,194 0 0 0 0 0Register 58,951 0 0 0 0 0Sheriff 293 0 0 0 0 0Trustee 223,229 0 0 0 0 0

Total Fees Received From County Officials $ 706,757 $ 0 $ 0 $ 0 $ 0 $ 0

(Continued)


134

Exhibit J-5





State of TennesseeGeneral Government Grants

Juvenile Services Program $ 9,675 $ 0 $ 0 $ 0 $ 0 $ 0Airport Maintenance Program 509,142 0 0 0 0 0Aging Programs 20,000 0 0 0 0 0

Public Safety GrantsLaw Enforcement Training Programs 8,400 0 0 0 0 0

Public Works GrantsLitter Program 33,156 0 0 0 0 0

Other State RevenuesIncome Tax 44,197 0 0 0 0 0Beer Tax 8,598 0 0 0 0 0Vehicle Certificate of Title Fees 19,478 0 0 0 0 0Alcoholic Beverage Tax 53,129 0 0 0 0 0State Revenue Sharing - T.V.A. 490,759 0 0 0 0 0Contracted Prisoner Boarding 722,728 0 0 0 0 0Gasoline and Motor Fuel Tax 0 0 0 0 0 1,568,275Petroleum Special Tax 0 0 0 0 0 13,164Registrar's Salary Supplement 15,164 0 0 0 0 0Other State Grants 27,500 12,049 0 0 0 0Other State Revenues 136,302 0 16,621 0 0 12,750

Total State of Tennessee $ 2,098,228 $ 12,049 $ 16,621 $ 0 $ 0 $ 1,594,189

Federal GovernmentFederal Through State

Community Development $ 210,879 $ 0 $ 0 $ 0 $ 0 $ 0Homeland Security Grants 27,000 0 0 0 0 0Other Federal through State 0 0 0 0 0 0

(Continued)


135

Exhibit J-5





Federal Government (Cont.)Direct Federal Revenue

Other Direct Federal Revenue $ 65,968 $ 0 $ 0 $ 0 $ 0 $ 3,280Total Federal Government $ 303,847 $ 0 $ 0 $ 0 $ 0 $ 3,280

Other Governments and Citizens GroupsOther Governments

Contributions $ 0 $ 53,608 $ 0 $ 0 $ 0 $ 0Contracted Services 47,708 0 0 0 0 870

Citizens GroupsDonations 8,810 10,290 0 0 0 0

OtherOther 500 20,223 0 0 0 0

Total Other Governments and Citizens Groups $ 57,018 $ 84,121 $ 0 $ 0 $ 0 $ 870

Total $ 7,697,424 $ 137,868 $ 564,353 $ 54,161 $ 2,137 $ 1,611,786

(Continued)


136

Exhibit J-5



CommunityGeneral General Development/ Other

Debt Capital Industrial CapitalService Projects Park Projects Total


Current Property Tax $ 591,853 $ 266,497 $ 0 $ 0 $ 3,467,150Trustee's Collections - Prior Year 33,724 13,196 0 0 141,367Trustee's Collections - Bankruptcy 8 3 0 0 34Circuit Clerk/Clerk and Master Collections - Prior Years 14,376 5,714 0 0 59,380Interest and Penalty 6,274 2,522 0 0 27,824Payments in-Lieu-of Taxes - Other 6,282 2,826 0 0 36,735

County Local Option TaxesLocal Option Sales Tax 90,926 0 0 0 264,159Hotel/Motel Tax 0 0 0 0 28,602Wheel Tax 0 0 0 0 627,486Litigation Tax - General 0 0 0 0 7,612Litigation Tax - Special Purpose 0 0 0 0 38,841Litigation Tax - Jail, Workhouse, or Courthouse 0 0 0 0 17,063Business Tax 0 0 0 0 76,316Mixed Drink Tax 0 0 0 0 753Mineral Severance Tax 0 0 0 0 670

Statutory Local TaxesBank Excise Tax 4,425 1,986 0 0 26,539Wholesale Beer Tax 0 0 0 0 117,648

Total Local Taxes $ 747,868 $ 292,744 $ 0 $ 0 $ 4,938,179


Cable TV Franchise $ 0 $ 0 $ 0 $ 0 $ 61,500

(Continued)

Debt Service Fund Capital Projects Funds

137

Exhibit J-5





Licenses and Permits (Cont.)Permits

Beer Permits $ 0 $ 0 $ 0 $ 0 $ 1,492Total Licenses and Permits $ 0 $ 0 $ 0 $ 0 $ 62,992

Fines, Forfeitures, and PenaltiesCircuit Court

Fines $ 0 $ 0 $ 0 $ 0 $ 7,949Drug Control Fines 0 0 0 0 2,458Jail Fees 0 0 0 0 1,937DUI Treatment Fines 0 0 0 0 1,010Data Entry Fee - Circuit Court 0 0 0 0 1,208Courtroom Security Fee 0 0 0 0 3,150

Criminal CourtOfficers Costs 0 0 0 0 9,764Drug Control Fines 0 0 0 0 3,228Drug Court Fees 0 0 0 0 1,213

General Sessions CourtFines 0 0 0 0 13,558Fines for Littering 0 0 0 0 128Officers Costs 0 0 0 0 21,654Game and Fish Fines 0 0 0 0 191Drug Control Fines 0 0 0 0 8,048Drug Court Fees 0 0 0 0 2,713Jail Fees 0 0 0 0 16,909DUI Treatment Fines 0 0 0 0 2,587Data Entry Fee - General Sessions Court 0 0 0 0 6,617Courtroom Security Fee 0 0 0 0 8,397

(Continued)


138

Exhibit J-5





Fines, Forfeitures, and Penalties (Cont.)Chancery Court

Officers Costs $ 0 $ 0 $ 0 $ 0 $ 845Data Entry Fee - Chancery Court 0 0 0 0 1,368Courtroom Security Fee 0 0 0 0 95

Other Fines, Forfeitures, and PenaltiesProceeds from Confiscated Property 0 0 0 0 51,090Other Fines, Forfeitures, and Penalties 0 0 0 0 2,094

Total Fines, Forfeitures, and Penalties $ 0 $ 0 $ 0 $ 0 $ 168,211

Charges for Current ServicesGeneral Service Charges

Self-Insurance Premiums/Contributions $ 0 $ 0 $ 0 $ 0 $ 7,453Tipping Fees 0 0 0 0 506,939Other General Service Charges 0 0 0 0 7,401

FeesAirport Fees 0 0 0 0 4,497Copy Fees 0 0 0 0 2,121Telephone Commissions 0 0 0 0 18,396Vending Machine Collections 0 0 0 0 329Constitutional Officers' Fees and Commissions 0 0 0 0 57Special Commissioner Fees/Special Master Fees 0 0 0 0 2,080Data Processing Fee - Register 0 0 0 0 5,270Probation Fees 0 0 0 0 175Data Processing Fee - Sheriff 0 0 0 0 913Sexual Offender Registration Fee - Sheriff 0 0 0 0 1,350Data Processing Fee - County Clerk 0 0 0 0 7,668

Total Charges for Current Services $ 0 $ 0 $ 0 $ 0 $ 564,649

(Continued)


139

Exhibit J-5






Investment Income $ 0 $ 0 $ 0 $ 0 $ 59,063Lease/Rentals 0 0 102,976 0 180,042Sale of Materials and Supplies 0 0 0 0 9,898Commissary Sales 0 0 0 0 51,345Sale of Gasoline 0 0 0 0 221,140Sale of Maps 0 0 0 0 40Retirees' Insurance Payments 0 0 0 0 10,725Miscellaneous Refunds 0 0 3,000 0 46,636

Nonrecurring ItemsSale of Equipment 0 0 0 0 12,417Sale of Property 0 0 0 0 12,000

Total Other Local Revenues $ 0 $ 0 $ 105,976 $ 0 $ 603,306

Fees Received From County OfficialsFees In-Lieu-of Salary

County Clerk $ 0 $ 0 $ 0 $ 0 $ 201,338Circuit Court Clerk 0 0 0 0 39,706General Sessions Court Clerk 0 0 0 0 121,046Clerk and Master 0 0 0 0 62,194Register 0 0 0 0 58,951Sheriff 0 0 0 0 293Trustee 0 0 0 0 223,229

Total Fees Received From County Officials $ 0 $ 0 $ 0 $ 0 $ 706,757

(Continued)


140

Exhibit J-5






Juvenile Services Program $ 0 $ 0 $ 0 $ 0 $ 9,675Airport Maintenance Program 0 0 0 0 509,142Aging Programs 0 0 0 0 20,000

Public Safety GrantsLaw Enforcement Training Programs 0 0 0 0 8,400

Public Works GrantsLitter Program 0 0 0 0 33,156

Other State RevenuesIncome Tax 0 0 0 0 44,197Beer Tax 0 0 0 0 8,598Vehicle Certificate of Title Fees 0 0 0 0 19,478Alcoholic Beverage Tax 0 0 0 0 53,129State Revenue Sharing - T.V.A. 0 0 0 0 490,759Contracted Prisoner Boarding 0 0 0 0 722,728Gasoline and Motor Fuel Tax 0 0 0 0 1,568,275Petroleum Special Tax 0 0 0 0 13,164Registrar's Salary Supplement 0 0 0 0 15,164Other State Grants 0 0 5,000 0 44,549Other State Revenues 0 0 1,250 0 166,923

Total State of Tennessee $ 0 $ 0 $ 6,250 $ 0 $ 3,727,337


Community Development $ 0 $ 0 $ 0 $ 0 $ 210,879Homeland Security Grants 0 0 0 0 27,000Other Federal through State 0 0 0 3,020 3,020

(Continued)


141

Exhibit J-5





Federal Government (Cont.)Direct Federal Revenue

Other Direct Federal Revenue $ 0 $ 0 $ 0 $ 0 $ 69,248Total Federal Government $ 0 $ 0 $ 0 $ 3,020 $ 310,147

Other Governments and Citizens GroupsOther Governments

Contributions $ 304,167 $ 0 $ 0 $ 0 $ 357,775Contracted Services 0 0 0 0 48,578

Citizens GroupsDonations 0 0 0 0 19,100

OtherOther 0 0 0 0 20,723

Total Other Governments and Citizens Groups $ 304,167 $ 0 $ 0 $ 0 $ 446,176

Total $ 1,052,035 $ 292,744 $ 112,226 $ 3,020 $ 11,527,754


142

Exhibit J-6


All Governmental Fund TypesDiscretely Presented Johnson County School DepartmentFor the Year Ended June 30, 2017

OtherGeneral School EducationPurpose Federal Central SpecialSchool Projects Cafeteria Revenue Total


Current Property Tax $ 2,606,000 $ 0 $ 0 $ 0 $ 2,606,000Trustee's Collections - Prior Year 126,097 0 0 0 126,097Trustee's Collections - Bankruptcy 30 0 0 0 30Circuit Clerk/Clerk and Master Collections - Prior Years 53,755 0 0 0 53,755Interest and Penalty 24,189 0 0 0 24,189Payments in-Lieu-of Taxes - Other 27,633 0 0 0 27,633

County Local Option TaxesLocal Option Sales Tax 767,168 0 0 0 767,168Other County Local Option Taxes 69 0 0 0 69

Statutory Local TaxesBank Excise Tax 19,243 0 0 0 19,243Interstate Telecommunications Tax 2,828 0 0 0 2,828

Total Local Taxes $ 3,627,012 $ 0 $ 0 $ 0 $ 3,627,012


Marriage Licenses $ 1,112 $ 0 $ 0 $ 0 $ 1,112Permits

Other Permits 1,356 0 0 0 1,356Total Licenses and Permits $ 2,468 $ 0 $ 0 $ 0 $ 2,468

Charges for Current ServicesEducation Charges

Lunch Payments - Adults $ 0 $ 0 $ 47,016 $ 0 $ 47,016

(Continued)


143

Exhibit J-6


All Governmental Fund TypesDiscretely Presented Johnson County School Department (Cont.)


Charges for Current Services (Cont.)Education Charges (Cont.)

A la Carte Sales $ 0 $ 0 $ 95,291 $ 0 $ 95,291Contract for Instructional Services with Other LEA's 0 0 0 555,256 555,256Receipts from Individual Schools 46,113 0 0 0 46,113Community Service Fees - Children 60,744 0 0 0 60,744

Total Charges for Current Services $ 106,857 $ 0 $ 142,307 $ 555,256 $ 804,420


Investment Income $ 100,970 $ 0 $ 2,061 $ 0 $ 103,031E-Rate Funding 33,211 0 0 0 33,211Retirees' Insurance Payments 28,392 0 0 0 28,392Miscellaneous Refunds 72,879 0 0 0 72,879

Nonrecurring ItemsSale of Equipment 32,713 0 0 0 32,713Sale of Property 272,426 0 0 0 272,426Contributions and Gifts 1,500 0 0 0 1,500

Total Other Local Revenues $ 542,091 $ 0 $ 2,061 $ 0 $ 544,152


On-behalf Contributions for OPEB $ 142,358 $ 0 $ 0 $ 0 $ 142,358State Education Funds

Basic Education Program 12,649,000 0 0 0 12,649,000Early Childhood Education 207,371 0 0 0 207,371

(Continued)


144

Exhibit J-6




State of Tennessee (Cont.)State Education Funds (Cont.)

School Food Service $ 12,821 $ 0 $ 0 $ 0 $ 12,821Other State Education Funds 393,088 0 0 0 393,088Career Ladder Program 60,933 0 0 0 60,933

Total State of Tennessee $ 13,465,571 $ 0 $ 0 $ 0 $ 13,465,571


USDA School Lunch Program $ 0 $ 0 $ 871,814 $ 0 $ 871,814USDA - Commodities 0 0 112,159 0 112,159Breakfast 0 0 331,709 0 331,709USDA - Other 0 0 20,172 0 20,172Adult Education State Grant Program 25,296 0 0 0 25,296Vocational Education - Basic Grants to States 0 46,532 0 0 46,532Title I Grants to Local Education Agencies 0 866,103 0 0 866,103Special Education - Grants to States 0 523,306 0 0 523,306Special Education Preschool Grants 0 20,858 0 0 20,858Safe and Drug-free Schools - State Grants 0 75,205 0 0 75,205Rural Education 0 39,421 0 0 39,421Eisenhower Professional Development State Grants 0 124,858 0 0 124,858Other Federal through State 0 241,233 0 0 241,233

Direct Federal RevenueOther Direct Federal Revenue 9,840 0 0 0 9,840

Total Federal Government $ 35,136 $ 1,937,516 $ 1,335,854 $ 0 $ 3,308,506

Total $ 17,779,135 $ 1,937,516 $ 1,480,222 $ 555,256 $ 21,752,129


145

Exhibit J-7

Johnson County, TennesseeSchedule of Detailed Expenditures -

All Governmental Fund TypesFor the Year Ended June 30, 2017

General FundGeneral Government

County CommissionBoard and Committee Members Fees $ 36,000Social Security 1,845Pensions 3,407Medical Insurance 753Employer Medicare 501Advertising 1,149Audit Services 7,867Dues and Memberships 4,775Travel 1,649In Service/Staff Development 10,642

Total County Commission $ 68,588

Board of EqualizationBoard and Committee Members Fees $ 760

Total Board of Equalization 760

Other Boards and CommitteesBoard and Committee Members Fees $ 840Social Security 10Pensions 25Medical Insurance 52Unemployment Compensation 1Employer Medicare 2

Total Other Boards and Committees 930

County Mayor/ExecutiveCounty Official/Administrative Officer $ 75,929Secretary(ies) 22,264Social Security 5,889Pensions 12,102Medical Insurance 12,062Unemployment Compensation 80Employer Medicare 1,377Data Processing Services 2,429Operating Lease Payments 490Office Supplies 71Other Charges 1,000

Total County Mayor/Executive 133,693

County AttorneyOther Contracted Services $ 6,000

Total County Attorney 6,000

Election CommissionCounty Official/Administrative Officer $ 58,699Deputy(ies) 25,010Clerical Personnel 486

(Continued)

146

Exhibit J-7



General Fund (Cont.)General Government (Cont.)

Election Commission (Cont.)Other Salaries and Wages $ 4,102Election Commission 7,000Election Workers 25,376Social Security 4,815Pensions 10,670Medical Insurance 13,643Unemployment Compensation 120Employer Medicare 1,135Data Processing Services 14,999Dues and Memberships 200Operating Lease Payments 516Legal Notices, Recording, and Court Costs 3,500Printing, Stationery, and Forms 2,550Rentals 446Equipment Parts - Light 499Office Supplies 1,059In Service/Staff Development 9,106Data Processing Equipment 999Office Equipment 881

Total Election Commission $ 185,811

Register of DeedsCounty Official/Administrative Officer $ 65,221Deputy(ies) 19,590Social Security 4,992Pensions 9,539Medical Insurance 11,341Unemployment Compensation 139Employer Medicare 1,170Data Processing Services 4,105Dues and Memberships 472Operating Lease Payments 1,669Printing, Stationery, and Forms 474Office Supplies 99Office Equipment 246

Total Register of Deeds 119,057

County BuildingsCustodial Personnel $ 23,778Social Security 1,386Pensions 2,949Medical Insurance 6,142Unemployment Compensation 80Employer Medicare 324Maintenance Agreements 9,926Maintenance and Repair Services - Buildings 36,136Custodial Supplies 7,406

(Continued)

147

Exhibit J-7



General Fund (Cont.)General Government (Cont.)

County Buildings (Cont.)Electricity $ 36,823Natural Gas 4,005Uniforms 1,059Water and Sewer 7,141Other Charges 686

Total County Buildings $ 137,841

FinanceAccounting and Budgeting

Supervisor/Director $ 59,139Data Processing Personnel 69,927Social Security 7,191Pensions 16,004Medical Insurance 20,170Unemployment Compensation 240Employer Medicare 1,682Data Processing Services 12,742Operating Lease Payments 1,607Printing, Stationery, and Forms 4,441Office Supplies 1,092Data Processing Equipment 1,180Office Equipment 655

Total Accounting and Budgeting 196,070

PurchasingCounty Official/Administrative Officer $ 34,068Social Security 2,084Pensions 4,225Unemployment Compensation 80Employer Medicare 487Advertising 299Dues and Memberships 235Office Supplies 3,891Office Equipment 930

Total Purchasing 46,299

Property Assessor's OfficeCounty Official/Administrative Officer $ 65,221Deputy(ies) 24,130Social Security 5,011Pensions 11,079Medical Insurance 13,989Unemployment Compensation 80Employer Medicare 1,172Advertising 65Data Processing Services 6,503Operating Lease Payments 815

(Continued)

148

Exhibit J-7



General Fund (Cont.)Finance (Cont.)

Property Assessor's Office (Cont.)Postal Charges $ 98Printing, Stationery, and Forms 93Office Supplies 91Data Processing Equipment 621Office Equipment 158

Total Property Assessor's Office $ 129,126

Reappraisal ProgramClerical Personnel $ 21,585Other Salaries and Wages 21,276Social Security 2,350Pensions 5,319Medical Insurance 11,849Unemployment Compensation 160Employer Medicare 550Contracts with Government Agencies 3,200Data Processing Services 3,751Other Contracted Services 1,400

Total Reappraisal Program 71,440

County Trustee's OfficeCounty Official/Administrative Officer $ 65,221Deputy(ies) 28,941Other Salaries and Wages 4,122Social Security 5,634Pensions 11,676Medical Insurance 14,213Unemployment Compensation 121Employer Medicare 1,318Advertising 92Data Processing Services 9,059Dues and Memberships 472Operating Lease Payments 516Printing, Stationery, and Forms 1,160Other Contracted Services 2,062Office Supplies 959Office Equipment 250

Total County Trustee's Office 145,816

County Clerk's OfficeCounty Official/Administrative Officer $ 65,221Deputy(ies) 27,192Other Salaries and Wages 54,905Social Security 8,173Pensions 17,042Medical Insurance 23,936Unemployment Compensation 322

(Continued)

149

Exhibit J-7



General Fund (Cont.)Finance (Cont.)

County Clerk's Office (Cont.)Employer Medicare $ 1,911Data Processing Services 17,228Dues and Memberships 472Operating Lease Payments 834Printing, Stationery, and Forms 2,095Office Supplies 627Office Equipment 2,800

Total County Clerk's Office $ 222,758

Administration of JusticeCircuit Court

County Official/Administrative Officer $ 65,221Other Salaries and Wages 96,275Jury and Witness Expense 7,580Social Security 9,483Pensions 17,789Medical Insurance 21,784Unemployment Compensation 402Employer Medicare 2,237Advertising 2,059Data Processing Services 12,253Dues and Memberships 472Operating Lease Payments 1,251Printing, Stationery, and Forms 2,214Office Supplies 4,234Other Supplies and Materials 2,688Data Processing Equipment 14,346Office Equipment 2,493

Total Circuit Court 262,781

General Sessions CourtJudge(s) $ 91,064Social Security 5,544Pensions 11,292Medical Insurance 6,142Employer Medicare 1,297Contracts with Private Agencies 2,150Data Processing Services 3,782Dues and Memberships 150Operating Lease Payments 516Printing, Stationery, and Forms 7,205Office Supplies 362

Total General Sessions Court 129,504

Chancery CourtCounty Official/Administrative Officer $ 65,221Deputy(ies) 25,881

(Continued)

150

Exhibit J-7



General Fund (Cont.)Administration of Justice (Cont.)

Chancery Court (Cont.)Social Security $ 5,218Pensions 10,330Medical Insurance 12,263Unemployment Compensation 115Employer Medicare 1,220Data Processing Services 1,078Dues and Memberships 472Operating Lease Payments 1,080Printing, Stationery, and Forms 1,066Office Supplies 1,153Data Processing Equipment 37,934Office Equipment 2,347

Total Chancery Court $ 165,378

Juvenile CourtYouth Service Officer(s) $ 25,618Secretary(ies) 11,392Social Security 2,238Pensions 4,230Medical Insurance 2,494Unemployment Compensation 121Employer Medicare 523Travel 87Other Contracted Services 72,015Office Supplies 463Other Supplies and Materials 3,551

Total Juvenile Court 122,732

Courtroom SecurityOther Supplies and Materials $ 41,795

Total Courtroom Security 41,795

Public SafetySheriff's Department

County Official/Administrative Officer $ 72,343Deputy(ies) 371,834Investigator(s) 123,287Guards 143,479Secretary(ies) 66,698School Resource Officer 20,741Overtime Pay 63,423Other Salaries and Wages 14,458Social Security 51,288Pensions 120,507Medical Insurance 109,676Unemployment Compensation 2,336Employer Medicare 12,100

(Continued)

151

Exhibit J-7



General Fund (Cont.)Public Safety (Cont.)

Sheriff's Department (Cont.)Communication $ 23,611Dues and Memberships 1,500Operating Lease Payments 1,825Maintenance and Repair Services - Vehicles 116,246Postal Charges 2,945Printing, Stationery, and Forms 1,083Rentals 1,200Travel 388Other Contracted Services 21,101Law Enforcement Supplies 3,898Office Supplies 3,629Uniforms 6,572Other Supplies and Materials 367In Service/Staff Development 24,730Other Charges 2,908Data Processing Equipment 5,537Law Enforcement Equipment 67,628Office Equipment 2,211

Total Sheriff's Department $ 1,459,549

Administration of the Sexual Offender RegistryOther Charges $ 400

Total Administration of the Sexual Offender Registry 400

JailGuards $ 383,264Maintenance Personnel 31,124Overtime Pay 69,518Other Salaries and Wages 20,736Social Security 29,894Pensions 40,295Medical Insurance 57,699Unemployment Compensation 2,556Employer Medicare 6,991Operating Lease Payments 895Maintenance and Repair Services - Buildings 77,517Medical and Dental Services 184,909Custodial Supplies 16,978Electricity 56,008Food Supplies 117,909Natural Gas 19,171Office Supplies 2,248Uniforms 4,856Water and Sewer 26,319Other Supplies and Materials 4,872In Service/Staff Development 645Food Service Equipment 90

(Continued)

152

Exhibit J-7




Jail (Cont.)Office Equipment $ 2,876Other Equipment 19,893

Total Jail $ 1,177,263

CommissaryFood Supplies $ 5,163Other Supplies and Materials 7,147

Total Commissary 12,310

Fire Prevention and ControlContracts with Other Public Agencies $ 1,000Contributions 148,400Liability Insurance 9,600

Total Fire Prevention and Control 159,000

Civil DefenseSupervisor/Director $ 39,446Secretary(ies) 10,290Social Security 2,928Pensions 6,167Medical Insurance 6,023Unemployment Compensation 120Employer Medicare 685Communication 2,861Operating Lease Payments 1,024Maintenance and Repair Services - Vehicles 2,525Instructional Supplies and Materials 1,976Uniforms 465Other Supplies and Materials 4,207In Service/Staff Development 470Other Equipment 8,301

Total Civil Defense 87,488

Other Emergency ManagementContracts with Other Public Agencies $ 66,600

Total Other Emergency Management 66,600

Inspection and RegulationSecretary(ies) $ 13,077Social Security 755Pensions 1,622Medical Insurance 2,566Unemployment Compensation 40Employer Medicare 176Operating Lease Payments 258Medical and Dental Services 2,930Office Supplies 128Office Equipment 884

Total Inspection and Regulation 22,436

(Continued)

153

Exhibit J-7




County Coroner/Medical ExaminerMedical Personnel $ 1,200Social Security 74Employer Medicare 17Other Contracted Services 600Drugs and Medical Supplies 400Other Charges 1,690

Total County Coroner/Medical Examiner $ 3,981

Public Health and WelfareLocal Health Center

Custodial Personnel $ 18,225Other Salaries and Wages 88,841Social Security 5,229Pensions 9,304Medical Insurance 13,759Unemployment Compensation 345Employer Medicare 1,223Other Fringe Benefits 9,356Communication 178Contracts with Other Public Agencies 36,981Dues and Memberships 375Maintenance and Repair Services - Buildings 9,082Travel 4,442Custodial Supplies 4,470Office Supplies 2,085Utilities 14,141Other Supplies and Materials 2,123

Total Local Health Center 220,159

Rabies and Animal ControlContracts with Other Public Agencies $ 4,626

Total Rabies and Animal Control 4,626

Other Local Health ServicesOther Supplies and Materials $ 268Other Charges 2,000

Total Other Local Health Services 2,268

Appropriation to StateContracts with Other Public Agencies $ 32,069

Total Appropriation to State 32,069

Other Public Health and WelfareTravel $ 83Other Contracted Services 6,179Other Supplies and Materials 14,197

Total Other Public Health and Welfare 20,459

(Continued)

154

Exhibit J-7



General Fund (Cont.)Social, Cultural, and Recreational Services

Senior Citizens AssistanceSupervisor/Director $ 28,743Bus Drivers 19,776Other Salaries and Wages 138Social Security 2,825Pensions 5,220Medical Insurance 5,519Unemployment Compensation 226Employer Medicare 663Communication 1,691Data Processing Services 1,400Utilities 5,140Other Supplies and Materials 1,196Other Charges 2,500Data Processing Equipment 1,045

Total Senior Citizens Assistance $ 76,082

Other Social, Cultural, and RecreationalContracts with Other Public Agencies $ 25,000Contributions 1,500

Total Other Social, Cultural, and Recreational 26,500

Agriculture and Natural ResourcesAgricultural Extension Service

Other Salaries and Wages $ 150Social Security 10Unemployment Compensation 2Employer Medicare 3Communication 2,143Contracts with Other Public Agencies 56,996Dues and Memberships 365Operating Lease Payments 803Travel 5,147Other Supplies and Materials 2,200Office Equipment 984

Total Agricultural Extension Service 68,803

Soil ConservationSecretary(ies) $ 18,334Social Security 1,085Pensions 2,273Unemployment Compensation 80Employer Medicare 254

Total Soil Conservation 22,026

Other OperationsTourism

Contributions $ 15,000

(Continued)

155

Exhibit J-7



General Fund (Cont.)Other Operations (Cont.)

Tourism (Cont.)Dues and Memberships $ 550Other Charges 3,000

Total Tourism $ 18,550

AirportCommunication $ 1,886Maintenance and Repair Services - Buildings 19,079Travel 860Electricity 639Liability Insurance 937Airport Improvement 529,165

Total Airport 552,566

Veterans' ServicesSecretary(ies) $ 13,077Other Salaries and Wages 10,012Social Security 1,375Pensions 1,622Medical Insurance 2,566Unemployment Compensation 120Employer Medicare 322Data Processing Services 399Operating Lease Payments 258Office Equipment 642

Total Veterans' Services 30,393

Other ChargesDiesel Fuel $ 147,662Gasoline 59,239Trustee's Commission 64,310Workers' Compensation Insurance 85,042Other Charges 3,196

Total Other Charges 359,449

Contributions to Other AgenciesContracts with Other Public Agencies $ 10,000Remittance of Revenue Collected 3,926

Total Contributions to Other Agencies 13,926

Employee BenefitsHandling Charges and Administrative Costs $ 782Life Insurance 2,046Medical Insurance 28,389Other Fringe Benefits 10,222

Total Employee Benefits 41,439

(Continued)

156

Exhibit J-7



General Fund (Cont.)Other Operations (Cont.)

MiscellaneousBank Charges $ 480Communication 24,889Legal Notices, Recording, and Court Costs 48Maintenance and Repair Services - Buildings 4,753Postal Charges 29,367Duplicating Supplies 7,137Electricity 1,067Judgments 8,000Liability Insurance 101,042Premiums on Corporate Surety Bonds 8,803Other Charges 9,114

Total Miscellaneous $ 194,700

HighwaysLitter and Trash Collection

Part-time Personnel $ 1,685Other Salaries and Wages 19,898Social Security 1,180Pensions 2,467Medical Insurance 6,142Unemployment Compensation 97Employer Medicare 276Communication 1,787Maintenance and Repair Services - Vehicles 735Other Contracted Services 5,306Other Supplies and Materials 1,296Other Charges 2,348

Total Litter and Trash Collection 43,217

Capital ProjectsPublic Safety Projects

Architects $ 1,440Consultants 2,750Engineering Services 1,456Building Construction 204,001Furniture and Fixtures 21,004

Total Public Safety Projects 230,651

Capital Projects - DonatedCapital Projects Donated to Other Entities

Consultants $ 5,000Other Supplies and Materials 141,870

Total Capital Projects Donated to Other Entities 146,870

Total General Fund $ 7,280,159

(Continued)

157

Exhibit J-7



Public Library FundSocial, Cultural, and Recreational Services

LibrariesBonus Payments $ 1,000Other Salaries and Wages 38,247Social Security 2,321Pensions 2,636Life Insurance 21Medical Insurance 3,549Unemployment Compensation 242Employer Medicare 543Other Fringe Benefits 180Communication 3,118Data Processing Services 4,649Dues and Memberships 305Operating Lease Payments 795Maintenance and Repair Services - Buildings 7,658Postal Charges 385Travel 242Electricity 4,538Library Books/Media 3,850Office Supplies 1,678Periodicals 532Water and Sewer 269Other Supplies and Materials 1,663Trustee's Commission 952Workers' Compensation Insurance 222Regular Instruction Equipment 4,168

Total Libraries $ 83,763

Other Social, Cultural, and RecreationalPart-time Personnel $ 3,156Social Security 196Unemployment Compensation 32Employer Medicare 46Other Supplies and Materials 3,184Workers' Compensation Insurance 19

Total Other Social, Cultural, and Recreational 6,633

Capital ProjectsSocial, Cultural, and Recreation Projects

Architects $ 8,225Engineering Services 1,200

Total Social, Cultural, and Recreation Projects 9,425

Total Public Library Fund $ 99,821

(Continued)

158

Exhibit J-7



Solid Waste/Sanitation FundPublic Health and Welfare

Sanitation ManagementEquipment Operators $ 70,062Other Salaries and Wages 10,290Social Security 4,888Pensions 9,964Life Insurance 53Medical Insurance 6,142Unemployment Compensation 291Employer Medicare 1,143Other Fringe Benefits 270Communication 1,863Operating Lease Payments 516Maintenance and Repair Services - Equipment 3,584Printing, Stationery, and Forms 223Other Contracted Services 312,438Custodial Supplies 1,421Diesel Fuel 2,877Electricity 4,689Gasoline 2,112Office Supplies 159Uniforms 2,294Water and Sewer 774Other Supplies and Materials 65Liability Insurance 7,993Trustee's Commission 5,725Workers' Compensation Insurance 6,125Other Charges 1,231Data Processing Equipment 472Site Development 945

Total Sanitation Management $ 458,609

Total Solid Waste/Sanitation Fund $ 458,609

Drug Control FundPublic Safety

Drug EnforcementDeputy(ies) $ 17,000Confidential Drug Enforcement Payments 8,000Trustee's Commission 86Law Enforcement Equipment 10,448

Total Drug Enforcement $ 35,534

Total Drug Control Fund 35,534

Constitutional Officers - Fees FundGeneral Government

Other General AdministrationOther Charges $ 57

Total Other General Administration $ 57

(Continued)

159

Exhibit J-7



Constitutional Officers - Fees Fund (Cont.)Administration of Justice

Chancery CourtSpecial Commissioner Fees/Special Master Fees $ 2,080

Total Chancery Court $ 2,080

Total Constitutional Officers - Fees Fund $ 2,137

Highway/Public Works FundHighways

AdministrationCounty Official/Administrative Officer $ 71,743Clerical Personnel 29,882Other Salaries and Wages 27,206Social Security 7,399Pensions 15,806Medical Insurance 18,454Unemployment Compensation 485Employer Medicare 1,731Dues and Memberships 2,284Operating Lease Payments 880Travel 37Office Supplies 970Office Equipment 301

Total Administration $ 177,178

Highway and Bridge MaintenanceLaborers $ 503,592Social Security 28,834Pensions 59,419Medical Insurance 105,217Unemployment Compensation 5,878Employer Medicare 6,852Asphalt - Liquid 121,593Crushed Stone 112,913Pipe 15,172Road Signs 4,227Wood Products 571

Total Highway and Bridge Maintenance 964,268

Operation and Maintenance of EquipmentLaundry Service $ 2,217Diesel Fuel 52,674Equipment and Machinery Parts 129,180Garage Supplies 18,931Gasoline 16,024Lubricants 6,879Tires and Tubes 20,712

Total Operation and Maintenance of Equipment 246,617

(Continued)

160

Exhibit J-7



Highway/Public Works Fund (Cont.)Highways (Cont.)

Other ChargesCommunication $ 6,572Medical and Dental Services 1,495Electricity 6,416Water and Sewer 564Liability Insurance 29,540Premiums on Corporate Surety Bonds 350Trustee's Commission 15,871Other Charges 16,481

Total Other Charges $ 77,289

Employee BenefitsLife Insurance $ 463Other Fringe Benefits 3,262Workers' Compensation Insurance 74,647

Total Employee Benefits 78,372

Capital OutlayHighway Equipment $ 283,895

Total Capital Outlay 283,895

Principal on DebtHighways and Streets

Principal on Capital Leases $ 16,747Total Highways and Streets 16,747

Interest on DebtHighways and Streets

Interest on Capital Leases $ 3,565Total Highways and Streets 3,565

Total Highway/Public Works Fund $ 1,847,931

General Debt Service FundPrincipal on Debt

General GovernmentPrincipal on Bonds $ 263,000

Total General Government $ 263,000

EducationPrincipal on Bonds $ 562,000Principal on Other Loans 40,013

Total Education 602,013

Interest on DebtGeneral Government

Interest on Bonds $ 91,641Total General Government 91,641

(Continued)

161

Exhibit J-7



General Debt Service Fund (Cont.)Interest on Debt (Cont.)

EducationInterest on Bonds $ 114,795

Total Education $ 114,795

Other Debt ServiceGeneral Government

Trustee's Commission $ 24,351Underwriter's Discount 33,750Other Debt Issuance Charges 61,607

Total General Government 119,708

EducationOther Debt Issuance Charges $ 1,206

Total Education 1,206

Total General Debt Service Fund $ 1,192,363

General Capital Projects FundPrincipal on Debt

Highways and StreetsPrincipal on Capital Leases $ 56,660

Total Highways and Streets $ 56,660

Capital ProjectsGeneral Administration Projects

Trustee's Commission $ 5,778Law Enforcement Equipment 33,000Transportation Equipment 150

Total General Administration Projects 38,928

Highway and Street Capital ProjectsBridge Construction $ 11,932

Total Highway and Street Capital Projects 11,932

Capital Projects - DonatedCapital Projects Donated to School Department

Transportation Equipment $ 534,202Total Capital Projects Donated to School Department 534,202

Total General Capital Projects Fund 641,722

Community Development/Industrial Park FundCapital Projects

General Administration ProjectsCommunication $ 1,200Maintenance and Repair Services - Buildings 3,560Other Contracted Services 12,000Electricity 3,057

(Continued)

162

Exhibit J-7



Community Development/Industrial Park Fund (Cont.)Capital Projects (Cont.)

General Administration Projects (Cont.)Water and Sewer $ 1,542Other Charges 7,560Site Development 11,555

Total General Administration Projects $ 40,474

Total Community Development/Industrial Park Fund $ 40,474

Other Capital Projects FundCapital Projects

Social, Cultural, and Recreation ProjectsOther Supplies and Materials $ 50Other Charges 4,265

Total Social, Cultural, and Recreation Projects $ 4,315

Total Other Capital Projects Fund 4,315

Total Governmental Funds - Primary Government $ 11,603,065

163

Exhibit J-8


All Governmental Fund TypesDiscretely Presented Johnson County School DepartmentFor the Year Ended June 30, 2017

General Purpose School FundInstruction

Regular Instruction ProgramTeachers $ 5,118,909Career Ladder Program 36,920Educational Assistants 98,816Bonus Payments 101,600Other Salaries and Wages 9,924Certified Substitute Teachers 18,929Non-certified Substitute Teachers 77,517Social Security 320,833Pensions 496,505Medical Insurance 890,140Unemployment Compensation 2,786Employer Medicare 75,317Other Fringe Benefits 4,424Evaluation and Testing 3,480Operating Lease Payments 20,183Maintenance and Repair Services - Equipment 8,906Tuition 25,026Other Contracted Services 29,008Instructional Supplies and Materials 103,628Textbooks - Bound 163,259Other Supplies and Materials 15,608Other Charges 9,468Regular Instruction Equipment 27,086

Total Regular Instruction Program $ 7,658,272

Alternative Instruction ProgramTeachers $ 29,519Career Ladder Program 500Educational Assistants 9,752Bonus Payments 1,600Non-certified Substitute Teachers 207Social Security 2,549Pensions 3,560Medical Insurance 5,080Unemployment Compensation 129Employer Medicare 597Other Contracted Services 550Instructional Supplies and Materials 200

Total Alternative Instruction Program 54,243

Special Education ProgramTeachers $ 535,896Career Ladder Program 4,000Homebound Teachers 40,468Educational Assistants 46,779Speech Pathologist 97,385

(Continued)

164

Exhibit J-8



General Purpose School Fund (Cont.)Instruction (Cont.)

Special Education Program (Cont.)Bonus Payments $ 22,800Other Salaries and Wages 78,161Certified Substitute Teachers 420Non-certified Substitute Teachers 31,945Social Security 50,377Pensions 72,891Medical Insurance 113,504Unemployment Compensation 1,803Employer Medicare 11,820Contracts with Private Agencies 56,654Other Contracted Services 65,135Instructional Supplies and Materials 5,692Other Supplies and Materials 52

Total Special Education Program $ 1,235,782

Career and Technical Education ProgramTeachers $ 531,450Career Ladder Program 2,000Clerical Personnel 17,360Bonus Payments 11,200Other Salaries and Wages 57,358Non-certified Substitute Teachers 9,035Social Security 37,584Pensions 56,339Medical Insurance 81,154Unemployment Compensation 1,000Employer Medicare 8,815Other Fringe Benefits 2,830Operating Lease Payments 3,563Maintenance and Repair Services - Equipment 4,243Other Contracted Services 9,790Instructional Supplies and Materials 18,562T&I Construction Materials 52,537Other Supplies and Materials 1,697Other Charges 1,936Vocational Instruction Equipment 624

Total Career and Technical Education Program 909,077

Support ServicesAttendance

Supervisor/Director $ 62,617Career Ladder Program 1,000Bonus Payments 800Social Security 3,975Pensions 5,823Medical Insurance 6,391

(Continued)

165

Exhibit J-8



General Purpose School Fund (Cont.)Support Services (Cont.)

Attendance (Cont.)Unemployment Compensation $ 55Employer Medicare 930Other Supplies and Materials 911In Service/Staff Development 2,919

Total Attendance $ 85,421

Health ServicesMedical Personnel $ 108,354Bonus Payments 4,600Other Salaries and Wages 66,912Social Security 10,822Pensions 20,426Medical Insurance 31,954Unemployment Compensation 386Employer Medicare 2,531Other Fringe Benefits 797Travel 1,977Other Contracted Services 690Drugs and Medical Supplies 3,434Instructional Supplies and Materials 174Other Supplies and Materials 7,116In Service/Staff Development 5,921Other Charges 5,521Other Equipment 565

Total Health Services 272,180

Other Student SupportCareer Ladder Program $ 500Guidance Personnel 245,954Bonus Payments 4,000Other Salaries and Wages 5,093In-service Training 2,100Social Security 15,307Pensions 22,270Medical Insurance 30,895Unemployment Compensation 373Employer Medicare 3,622Evaluation and Testing 7,938Travel 1,146Other Contracted Services 32,203Other Supplies and Materials 1,284In Service/Staff Development 1,738Other Charges 22,440

Total Other Student Support 396,863

(Continued)

166

Exhibit J-8




Regular Instruction ProgramSupervisor/Director $ 177,152Career Ladder Program 1,000Librarians 184,671Instructional Computer Personnel 57,461Bonus Payments 6,200Other Salaries and Wages 14,712In-service Training 3,650Social Security 24,584Pensions 39,476Medical Insurance 61,742Unemployment Compensation 528Employer Medicare 6,266Other Fringe Benefits 1,825Operating Lease Payments 5,640Travel 5,863Other Contracted Services 153,778Library Books/Media 24,001Periodicals 6,000Other Supplies and Materials 16,475In Service/Staff Development 21,316Other Charges 3,620Other Equipment 2,489

Total Regular Instruction Program $ 818,449

Special Education ProgramSupervisor/Director $ 54,840Psychological Personnel 34,044Secretary(ies) 13,590Bonus Payments 1,825In-service Training 900Social Security 6,336Pensions 9,993Medical Insurance 3,579Unemployment Compensation 111Employer Medicare 1,482Other Fringe Benefits 463Travel 9,638Other Contracted Services 3,330Other Supplies and Materials 795In Service/Staff Development 4,476

Total Special Education Program 145,402

Career and Technical Education ProgramSupervisor/Director $ 65,796Bonus Payments 800Social Security 4,088

(Continued)

167

Exhibit J-8




Career and Technical Education Program (Cont.)Pensions $ 6,020Medical Insurance 6,391Unemployment Compensation 55Employer Medicare 956Other Fringe Benefits 304In Service/Staff Development 4,664

Total Career and Technical Education Program $ 89,074

Other ProgramsOn-behalf Payments to OPEB $ 142,358

Total Other Programs 142,358

Board of EducationSecretary to Board $ 1,200Board and Committee Members Fees 11,600Social Security 642Pensions 372Life Insurance 7,304Medical Insurance 217Unemployment Compensation 6,961Employer Medicare 185Other Fringe Benefits 170,235Audit Services 13,058Dues and Memberships 11,918Legal Services 2,974Other Contracted Services 9,698Liability Insurance 145,000Trustee's Commission 100,599Workers' Compensation Insurance 127,799In Service/Staff Development 13,771Other Charges 13,499

Total Board of Education 637,032

Director of SchoolsCounty Official/Administrative Officer $ 96,988Clerical Personnel 21,204Bonus Payments 800Social Security 7,267Pensions 11,496Medical Insurance 12,770Unemployment Compensation 110Employer Medicare 1,700Communication 33,873Postal Charges 2,000Other Contracted Services 11,664Office Supplies 5,354

(Continued)

168

Exhibit J-8




Director of Schools (Cont.)In Service/Staff Development $ 8,069Other Charges 56,499

Total Director of Schools $ 269,794

Office of the PrincipalPrincipals $ 468,387Career Ladder Program 7,000Assistant Principals 236,439Secretary(ies) 172,152Bonus Payments 17,600Non-certified Substitute Teachers 230Social Security 54,086Pensions 86,817Medical Insurance 115,288Unemployment Compensation 1,175Employer Medicare 12,655Other Fringe Benefits 30,190Communication 52,185Dues and Memberships 180Operating Lease Payments 5,288Postal Charges 915Travel 414Other Contracted Services 7,347Office Supplies 969In Service/Staff Development 10,491Other Charges 6,317Administration Equipment 565

Total Office of the Principal 1,286,690

Fiscal ServicesSupervisor/Director $ 34,006Accountants/Bookkeepers 31,559Bonus Payments 1,400Social Security 4,023Pensions 8,304Medical Insurance 10,971Unemployment Compensation 95Employer Medicare 941Other Fringe Benefits 308Travel 203Office Supplies 411In Service/Staff Development 1,429Other Charges 65

Total Fiscal Services 93,715

(Continued)

169

Exhibit J-8




Human Services/PersonnelSupervisor/Director $ 11,336Clerical Personnel 32,589Bonus Payments 1,000Social Security 2,717Pensions 5,571Medical Insurance 4,708Unemployment Compensation 69Employer Medicare 635Other Fringe Benefits 132In Service/Staff Development 2,022Other Charges 45Administration Equipment 292

Total Human Services/Personnel $ 61,116

Operation of PlantGuards $ 62,131Custodial Personnel 331,541Bonus Payments 19,200Other Salaries and Wages 10,535Social Security 23,775Pensions 42,850Medical Insurance 120,309Unemployment Compensation 1,502Employer Medicare 5,868Other Fringe Benefits 10,866Other Contracted Services 161,845Custodial Supplies 70,369Electricity 509,681Natural Gas 58,403Water and Sewer 48,052Other Supplies and Materials 19,578In Service/Staff Development 212Other Charges 1,412Plant Operation Equipment 15,546

Total Operation of Plant 1,513,675

Maintenance of PlantMaintenance Personnel $ 95,418Bonus Payments 2,360Social Security 5,750Pensions 10,760Medical Insurance 22,355Unemployment Compensation 182Employer Medicare 1,345Other Fringe Benefits 4,400Maintenance and Repair Services - Buildings 13,204

(Continued)

170

Exhibit J-8




Maintenance of Plant (Cont.)Maintenance and Repair Services - Equipment $ 2,874Other Contracted Services 3,836General Construction Materials 1,098Other Supplies and Materials 251,878In Service/Staff Development 481Other Charges 1,062

Total Maintenance of Plant $ 417,003

TransportationSupervisor/Director $ 45,341Mechanic(s) 58,708Bus Drivers 242,825Clerical Personnel 22,441Bonus Payments 17,640Social Security 22,112Pensions 43,650Medical Insurance 158,668Unemployment Compensation 1,432Employer Medicare 5,291Other Fringe Benefits 2,908Communication 4,798Contracts with Parents 790Medical and Dental Services 3,420Rentals 3,809Travel 138Other Contracted Services 2,311Diesel Fuel 86,753Equipment and Machinery Parts 1,915Garage Supplies 2,053Gasoline 14,310Lubricants 5,034Tires and Tubes 17,513Vehicle Parts 54,967Other Supplies and Materials 4,747In Service/Staff Development 3,750Other Charges 25,688Transportation Equipment 29,073

Total Transportation 882,085

Central and OtherClerical Personnel $ 10,678Bonus Payments 271Social Security 651Pensions 1,358Medical Insurance 2,812Unemployment Compensation 19

(Continued)

171

Exhibit J-8




Central and Other (Cont.)Employer Medicare $ 152Other Fringe Benefits 51Travel 1,903Other Contracted Services 1,411In Service/Staff Development 2,002

Total Central and Other $ 21,308

Operation of Non-Instructional ServicesFood Service

Supervisor/Director $ 49,285Accountants/Bookkeepers 21,674Bonus Payments 1,600Social Security 4,438Pensions 7,315Medical Insurance 12,781Unemployment Compensation 110Employer Medicare 1,038Other Fringe Benefits 330Travel 2,565Other Supplies and Materials 90

Total Food Service 101,226

Community ServicesOther Salaries and Wages $ 54,541Social Security 3,321Pensions 5,788Medical Insurance 2,339Unemployment Compensation 231Employer Medicare 780Other Fringe Benefits 250Food Supplies 3,251Other Charges 3,315

Total Community Services 73,816

Early Childhood EducationSupervisor/Director $ 15,097Teachers 87,680Educational Assistants 26,302Bonus Payments 4,520Other Salaries and Wages 4,626Non-certified Substitute Teachers 3,897Social Security 8,551Pensions 13,212Medical Insurance 21,990Unemployment Compensation 294Employer Medicare 2,027

(Continued)

172

Exhibit J-8



General Purpose School Fund (Cont.)Operation of Non-Instructional Services (Cont.)

Early Childhood Education (Cont.)Other Fringe Benefits $ 619Instructional Supplies and Materials 14,475In Service/Staff Development 2,146Other Charges 6,739

Total Early Childhood Education $ 212,175

Other Debt ServiceEducation

Debt Service Contribution to Primary Government $ 304,167Total Education 304,167

Total General Purpose School Fund $ 17,680,923

School Federal Projects FundInstruction

Regular Instruction ProgramTeachers $ 323,569Educational Assistants 158,862Bonus Payments 19,200Other Salaries and Wages 78,074Non-certified Substitute Teachers 13,173Social Security 35,407Pensions 52,609Medical Insurance 120,571Unemployment Compensation 1,489Employer Medicare 8,346Other Fringe Benefits 2,712Instructional Supplies and Materials 73,375Other Charges 11,475


Special Education ProgramTeachers $ 107,569Educational Assistants 101,337Speech Pathologist 8,693Bonus Payments 11,400Other Salaries and Wages 41,911Non-certified Substitute Teachers 5,616Social Security 16,126Pensions 28,768Medical Insurance 49,662Unemployment Compensation 744Employer Medicare 3,806Other Fringe Benefits 1,271Instructional Supplies and Materials 39,602Other Charges 826Special Education Equipment 29,174


(Continued)

173

Exhibit J-8



School Federal Projects Fund (Cont.)Instruction (Cont.)

Career and Technical Education ProgramVocational Instruction Equipment $ 26,150

Total Career and Technical Education Program $ 26,150

Support ServicesOther Student Support

Other Salaries and Wages $ 3,244Social Security 198Pensions 298Unemployment Compensation 1Employer Medicare 46Travel 7,250Other Supplies and Materials 9,205In Service/Staff Development 7,149Other Charges 533

Total Other Student Support 27,924

Regular Instruction ProgramSupervisor/Director $ 33,529Instructional Computer Personnel 15,219Secretary(ies) 7,249Bonus Payments 984In-service Training 59,868Social Security 7,275Pensions 11,584Medical Insurance 9,239Unemployment Compensation 190Employer Medicare 1,701Other Fringe Benefits 553Travel 1,440Other Contracted Services 310Other Supplies and Materials 1,903In Service/Staff Development 36,603

Total Regular Instruction Program 187,647

Special Education ProgramOther Salaries and Wages $ 600Social Security 130Pensions 133Medical Insurance 35Unemployment Compensation 11Employer Medicare 30Other Fringe Benefits 3Other Supplies and Materials 12,479In Service/Staff Development 12,382Other Equipment 2,004


(Continued)

174

Exhibit J-8



School Federal Projects Fund (Cont.)Support Services (Cont.)

TransportationBus Drivers $ 25,689Bonus Payments 2,400Other Salaries and Wages 17,978Social Security 2,338Pensions 3,483Medical Insurance 12,781Unemployment Compensation 260Employer Medicare 659Other Fringe Benefits 1,810

Total Transportation $ 67,398

Operation of Non-Instructional ServicesCommunity Services

Supervisor/Director $ 24,000Teachers 105,020Clerical Personnel 13,004Educational Assistants 6,082Other Salaries and Wages 18,000Social Security 10,293Pensions 15,079Medical Insurance 1,575Unemployment Compensation 47Employer Medicare 2,408Other Fringe Benefits 771Travel 906Instructional Supplies and Materials 28,114Other Supplies and Materials 3,704In Service/Staff Development 4,928Other Charges 3,037Other Equipment 1,908

Total Community Services 238,876

Total School Federal Projects Fund $ 1,921,169

Central Cafeteria FundOperation of Non-Instructional Services

Food ServiceCafeteria Personnel $ 365,082Bonus Payments 22,400Social Security 22,481Pensions 45,895Medical Insurance 167,856Unemployment Compensation 1,627Employer Medicare 5,258Other Fringe Benefits 12,244Communication 1,294

(Continued)

175

Exhibit J-8



Central Cafeteria Fund (Cont.)Operation of Non-Instructional Services (Cont.)

Food Service (Cont.)Maintenance and Repair Services - Equipment $ 16,200Transportation - Other than Students 3,187Travel 2,151Other Contracted Services 15,598Food Preparation Supplies 41,044Food Supplies 571,891Office Supplies 2,232Uniforms 3,210USDA - Commodities 112,159Other Supplies and Materials 2,218In Service/Staff Development 670Other Charges 1,361Food Service Equipment 3,783

Total Food Service $ 1,419,841

Total Central Cafeteria Fund $ 1,419,841

Other Education Special Revenue FundInstruction

Regular Instruction ProgramTeachers $ 163,441Educational Assistants 47,793Bonus Payments 6,400Other Salaries and Wages 625Non-certified Substitute Teachers 6,240Social Security 12,589Pensions 21,465Medical Insurance 47,336Unemployment Compensation 435Employer Medicare 2,948Other Fringe Benefits 1,064Instructional Supplies and Materials 13,531Other Supplies and Materials 2,918Other Charges 62,388


Support ServicesAttendance

Social Workers $ 35,294Bonus Payments 1,600Other Salaries and Wages 572Social Security 1,901Pensions 3,930Medical Insurance 12,126Unemployment Compensation 149Employer Medicare 520

(Continued)

176

Exhibit J-8



Other Education Special Revenue Fund (Cont.)Support Services (Cont.)

Attendance (Cont.)Other Fringe Benefits $ 184Operating Lease Payments 290Travel 2,907Other Supplies and Materials 580Other Charges 869

Total Attendance $ 60,922

Health ServicesMedical Personnel $ 9,930Bonus Payments 200Social Security 628Pensions 1,256Medical Insurance 1,548Unemployment Compensation 11Employer Medicare 147Other Fringe Benefits 304Other Contracted Services 1,474Drugs and Medical Supplies 3,077Other Charges 35

Total Health Services 18,610

Regular Instruction ProgramSupervisor/Director $ 48,388Bonus Payments 480In-service Training 3,180Social Security 3,118Pensions 4,812Medical Insurance 6,356Unemployment Compensation 67Employer Medicare 729Other Fringe Benefits 232Travel 650Other Supplies and Materials 2,305In Service/Staff Development 8,997Other Charges 7,292

Total Regular Instruction Program 86,606

Total Other Education Special Revenue Fund $ 555,311

Total Governmental Funds - Johnson County School Department $ 21,577,244

177

Exhibit J-9Johnson County, TennesseeSchedule of Detailed Receipts, Disbursements, and Changes in Cash Balance - City Agency FundFor the Year Ended June 30, 2017

Cities -Sales Tax

Fund

Cash ReceiptsLocal Option Sales Tax $ 504,334

Total Cash Receipts $ 504,334

Cash DisbursementsRemittance of Revenues Collected $ 499,291Trustee's Commissions 5,043

Total Cash Disbursements $ 504,334

Excess of Cash Receipts Over (Under)Cash Disbursements $ 0

Cash Balance, July 1, 2016 0

Cash Balance, June 30, 2017 $ 0

178

SINGLE AUDIT SECTION

179





Independent Auditor’s Report on Internal Control Over Financial Reporting and on

Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance With Government Auditing Standards

Johnson County Mayor and Board of County Commissioners Johnson County, Tennessee To the County Mayor and Board of County Commissioners: We have audited, in accordance with the auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States, the financial statements of the governmental activities, the aggregate discretely presented component units, each major fund, and the aggregate remaining fund information of Johnson County, Tennessee, as of and for the year ended June 30, 2017, and the related notes to the financial statements, which collectively comprise Johnson County’s basic financial statements, and have issued our report thereon dated October 31, 2017. Internal Control Over Financial Reporting In planning and performing our audit of the financial statements, we considered Johnson County’s internal control over financial reporting (internal control) to determine the audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of Johnson County’s internal control. Accordingly, we do not express an opinion on the effectiveness of Johnson County’s internal control. A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control such that there is a reasonable possibility that a material misstatement of the entity's financial statements will not be prevented, or detected and corrected on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance.

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Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies and therefore, material weaknesses or significant deficiencies may exist that were not identified. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. We did identify a certain deficiency in internal control, described in the accompanying Schedule of Findings and Questioned Costs that we consider to be a significant deficiency: 2017-004. Compliance and Other Matters As part of obtaining reasonable assurance about whether Johnson County’s financial statements are free from material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed instances of noncompliance or other matters that are required to be reported under Government Auditing Standards and which are described in the accompanying Schedule of Findings and Questioned Costs as items: 2017-001, 2017-002, and 2017-003. Johnson County’s Responses to Findings Johnson County’s responses to the findings identified in our audit are described in the accompanying Schedule of Findings and Questioned Costs. Johnson County’s responses were not subjected to the auditing procedures applied in the audit of the financial statements and, accordingly, we express no opinion on them. Purpose of this Report The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the entity's internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering Johnson County’s internal control and compliance. Accordingly, this communication is not suitable for any other purpose. Very truly yours,


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Independent Auditor’s Report on Compliance for Each Major Program and on

Internal Control Over Compliance and on the Schedule of Expenditures of Federal Awards Required by the Uniform Guidance

Johnson County Mayor and Board of County Commissioners Johnson County, Tennessee To the County Mayor and Board of County Commissioners: Report on Compliance for Each Major Federal Program We have audited Johnson County’s compliance with the types of compliance requirements

described in the OMB Compliance Supplement that could have a direct and material effect on each of Johnson County’s major federal programs for the year ended June 30, 2017. Johnson County’s major federal programs are identified in the summary of auditor's results 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, and grants applicable to its federal programs. Auditor's Responsibility Our responsibility is to express an opinion on compliance for each of Johnson County’s major federal programs based on our audit of the types of compliance requirements referred to above. We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and the audit requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Those standards and the Uniform Guidance require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types of compliance requirements referred to above that could have

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a direct and material effect on a major federal program occurred. An audit includes examining, on a test basis, evidence about Johnson County’s compliance with those requirements and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion on compliance for each major federal program. However, our audit does not provide a legal determination of Johnson County’s compliance. Opinion on Each Major Federal Program In our opinion, Johnson County complied, in all material respects, with the types of compliance requirements referred to above that could have a direct and material effect on each of its major federal programs for the year ended June 30, 2017. Report on Internal Control Over Compliance Management of Johnson County is responsible for establishing and maintaining effective internal control over compliance with the types of compliance requirements referred to above. In planning and performing our audit of compliance, we considered Johnson County’s internal control over compliance with the types of requirements that could have a direct and material effect on each major federal program to determine the auditing procedures that are appropriate in the circumstances for the purpose of expressing an opinion on compliance for each major federal program and to test and report on internal control over compliance in accordance with the Uniform Guidance, but not for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, we do not express an opinion on the effectiveness of Johnson County’s internal control over compliance. A deficiency in internal control over compliance exists when the design or operation of a control over compliance does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, noncompliance with a type of compliance requirement of a federal program on a timely basis. A material weakness in internal control over compliance is a deficiency, or combination of deficiencies, in internal control over compliance, such that there is a reasonable possibility that material noncompliance with a type of compliance requirement of a federal program will not be prevented, or detected and corrected, on a timely basis. A significant deficiency in internal control over compliance is a deficiency, or a combination of deficiencies, in internal control over compliance with a type of compliance requirement of a federal program that is less severe than a material weakness in internal control over compliance, yet important enough to merit attention by those charged with governance. Our consideration of internal control over compliance was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control over compliance that might be material weaknesses or significant deficiencies. We did not identify any deficiencies in internal control over compliance that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified.

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The purpose of this report on internal control over compliance is solely to describe the scope of our testing of internal control over compliance and the results of that testing based on the requirements of the Uniform Guidance. Accordingly, this report is not suitable for any other purpose. Report on Schedule of Expenditures of Federal Awards Required by the Uniform Guidance We have audited the financial statements of the governmental activities, the aggregate discretely presented component units, each major fund, and the aggregate remaining fund information of Johnson County, Tennessee, as of and for the year ended June 30, 2017, and the related notes to the financial statements, which collectively comprise Johnson County’s basic financial statements. We issued our report thereon dated October 31, 2017, which contained unmodified opinions on those financial statements. Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the basic financial statements. The accompanying Schedule of Expenditures of Federal Awards is presented for purposes of additional analysis as required by the Uniform Guidance and is not a required part of the basic financial statements. Such information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the basic financial statements. The information has been subjected to the auditing procedures 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 other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the Schedule of Expenditures of Federal Awards is fairly stated in all material respects in relation to the basic financial statements as a whole. Very truly yours,


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Johnson County, Tennessee, and the Johnson County School DepartmentSchedule of Expenditures of Federal Awards and State Grants (1) (2)For the Year-Ended June 30, 2017

Federal Pass-throughFederal/Pass-Through Agency/State CFDA Entity IdentifyingGrantor Program Title Number Number Expenditures

U.S. Department of Agriculture: Direct Programs: Schools and Roads - Grants to States 10.665 N/A $ 13,120 Passed-through State Department of Education: Child Nutrition Cluster: (4) School Breakfast Program 10.553 N/A 331,709 National School Lunch Program 10.555 N/A 871,814 (6) Summer Food Service Program for Children 10.559 N/A 20,172 Passed-through State Department of Agriculture: Child Nutrition Cluster: (4) National School Lunch Program (Commodities - Noncash Assistance) 10.555 N/A 112,159 (6) Passed-through State Department of Health: Special Supplemental Nutrition Program for Women, Infants, and Children 10.557 (5) 9,766Total U.S. Department of Agriculture $ 1,358,740

U.S. Department of Housing and Urban Development: Passed-through State Department of Housing and Urban Development: Hurricane Sandy Community Development Block Grant Disaster Recovery Grants 14.269 (3) $ 64,009Total U.S. Department of Housing and Urban Development $ 64,009

U.S. Department of the Interior: Direct Program: Payments in-Lieu-of Taxes 15.226 N/A $ 50,015Total U.S. Department of the Interior $ 50,015

U.S. Department of Justice Assistance: Direct Program: Bulletproof Vest Partnership Program 16.607 (3) $ 8,800Total U.S. Department of Justice Assistance $ 8,800

U.S. Department of Transportation: Passed-through State Department of Transportation: Airport Improvement Program 20.106 AERO-13-119-00 $ 473,549 Passed-through State Department of Environment and Conservation: Recreational Trails Program 20.219 (3) 3,020Total U.S. Department of Transportation $ 476,569

U.S. Appalachain Regional Commission: Passed-through State Department of Economic and Community Development: Appalachian Regional Development 23.001 (3) $ 146,870Total U.S. Appalachain Regional Commission $ 146,870

U.S. Institute of Museums and Library Services: Passed-through Department of State Division of Library Services: Grants to States 45.310 (3) $ 2,000Total Institute of Museums and Library Services $ 2,000

(Continued)

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Johnson County, Tennessee, and the Johnson County School DepartmentSchedule of Expenditures of Federal Awards and State Grants (1) (2) (Cont.)

Federal Pass-throughFederal/Pass-Through Agency/State CFDA Entity IdentifyingGrantor Program Title Number Number Expenditures

U.S. Department of Education: Passed-through State Department of Education: Title 1 Grants to Local Educational Agencies 84.010 N/A $ 869,986 Special Education Cluster: (4) Special Education-Grants to States 84.027 N/A 529,884 Special Education - Preschool Grants 84.173 N/A 20,858 Career and Technical Education - Basic Grants to States 84.048 N/A 44,666 Twenty-first Century Community Learning Centers 84.287 (3) 77,965 Rural Education 84.358 N/A 39,421 Improving Teacher Quality State Grants 84.367 N/A 124,858 Teacher Incentive Fund 84.374 N/A 4,144 Passed-through State Higher Education Commission: Gaining Early Awareness and Readiness for Undergraduate Programs 84.334 (3) 81,380Total U.S. Department of Education $ 1,793,162

U.S. National Archives and Records Administration: Passed-through State Historical Records Advisory Board: National Historical Publications and Records Grant 89.003 (3) $ 3,448Total U.S. National Archives and Records Administration $ 3,448

U.S. Department of Health and Human Services: Passed-through State Department of Health: Injury Prevention and Control Research and State and Community Based Programs 93.136 (5) $ 2,763 Family Planning Services 93.217 (5) 1,489 National State Based Tobacco Control Programs 93.305 (5) 9,234 Medical Assistance Program 93.778 (5) 11,597 HIV Prevention Activities - Health Department Based 93.940 (5) 396 Maternal and Child Health Services Block Grant to the States 93.994 (5) 3,478 Passed-through State Department of Education: Child Care and Development Block Grant 93.575 N/A 17,115Total U.S. Department of Health and Human Services $ 46,072

U.S. Department of Homeland Security: Passed-through State Department of Military: Emergency Management Performance Grants 97.042 (3) $ 27,000 Total U.S. Department of Homeland Security $ 27,000

Total Expenditures of Federal Awards $ 3,976,685

(Continued)

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Johnson County, Tennessee, and the Johnson County School DepartmentSchedule of Expenditures of Federal Awards and State Grants (1) (2) (Cont.)

FederalFederal/Pass-Through Agency/State CFDA ContractGrantor Program Title Number Number Expenditures

State Grants Juvenile Justice - State Commission on Children and Youth N/A (3) $ 9,675 Airport Maintenance - State Department of Transportation N/A AERM-17-144-00 9,284 Airport Acquisition - State Department of Transportation N/A AERM-15-179-00 26,308 Aging Program - First Tennessee Development District N/A (3) 20,000 Health Department Program - State Department of Health N/A (3) 85,470 Health Access Program - State Department of Health N/A Z-17152613 10,000 Tobacco Funds - State Department of Health N/A (3) 22,500 Litter Program - State Department of Transportation N/A (3) 33,156 Archives Grant - State Department of Library and Archives N/A (3) 6,601 Used Oil Grant - State Department of Environment and Conservation N/A (3) 16,000 Adult Basic Education - State Department of Education N/A (3) 8,432 Family Resource Center Grant - State Department of Education N/A (3) 30,191 Safe Schools Act Grant - State Department of Education N/A (3) 10,888 Lottery for Education After School Program - State Department of Education N/A (3) 162,225 Connect TN - State Department of Education N/A (3) 5,395 Early Childhood Education Pilot Project - State Department of Education N/A (3) 207,371 Coordinated School Health Program - State Department of Education N/A (3) 102,194 Read to be Ready Coaching Network Program - State Department of Education N/A (3) 4,928

Total State Grants $ 770,618

CFDA = Catalog of Federal Domestic AssistanceN/A = Not Applicable

(1) Presented in conformity with generally accepted accounting principles using the modified accrual basis of accounting.(2) Johnson county elected not to use the 10% de minimus cost rate permitted in the Uniform Guidance.(3) Information not available.(4) Child Nutrition Cluster total $1,335,854; Special Education Cluster total $550,742. (5) Multi-service contract: GG-17-50330-00.(6) Total for CFDA No 10.555 is $983,973.

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Johnson County, TennesseeSummary Schedule of Prior-year FindingsFor the Year Ended June 30, 2017

Fiscal Page Finding CFDAYear Number Number Number

OFFICES OF COUNTY MAYOR AND DIRECTOR OF ACCOUNTS AND BUDGETS

2016 189 2016-001 Amounts Withheld from Contractor N/APayments were not Deposited intoan Escrow Account

OFFICE OF DIRECTOR OF SCHOOLS

2016 190 2016-002 The School Department had Deficiencies N/Ain Purchasing Procedures

OFFICE OF CIRCUIT AND GENERAL SESSIONS COURTS CLERK

2016 191 2016-003 Abstract Bills of Cost were not Filed N/Awith the State in a Timely Manner

OFFICES OF CLERK AND MASTER, REGISTER OF DEEDS, AND SHERIFF

2016 192 2016-004 Duties were not Segregated Adequately N/A

There were no prior-year federal award findings to report.

Government Auditing Standards require auditors to report the status of uncorrected findings fromprior audits. In addition, OMB's Uniform Guidance requires auditees to report the status of all prior-year findings whether corrected or not. Presented below are financial statement findings along withtheir current status from the Annual Financial Report for Johnson County, Tennessee, for the yearended June 30, 2016.

Title of Finding Current Status

Prior-year Financial Statement Findings

Prior-year Federal Awards Findings

Corrected

Corrected

Corrected

Corrected

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Financial Statements:

1. Our report on the financial statements of Johnson County is unmodified.

2. Internal Control Over Financial Reporting:

* Material weakness identified? NO

* Significant deficiency identified? YES

3. Noncompliance material to the financial statements noted? NO

Federal Awards:

4. Internal Control Over major federal Programs:

* Material weakness identified? NO

* Significant deficiency identified? NONE REPORTED

5. Type of report auditor issued on compliance for major programs. UNMODIFIED

6. Any audit findings disclosed that are required to be reported in accordance with 2 CFR 200.516(a)? NO

7. Identification of major federal programs:

* CFDA Numbers: 10.553, 10.555, and 10.559 Nutrition Cluster: School Breakfast Program, National School Lunch Program, and Summer Food ServiceProgram for Children

* CFDA Number 84.010 Title I Grants to Local Education Agencies

8. Dollar threshold used to distinguish between Type A and Type B Programs. $750,000

9. Auditee qualified as low-risk auditee? NO

JOHNSON COUNTY, TENNESSEE

SCHEDULE OF FINDINGS AND QUESTIONED COSTS


PART I, SUMMARY OF AUDITOR'S RESULTS

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PART II, FINDINGS RELATING TO THE FINANCIAL STATEMENTS

Findings and recommendations, as a result of our audit, are presented below. We reviewed these findings and recommendations with management to provide an opportunity for their response. Written responses for all findings are presented following each finding and recommendation. Management’s corrective action plans, whether related to the financial statements or federal awards, are presented separately in the Management’s Corrective Action Plan in the Single Audit Section of this report. Findings relating specifically to the audit of federal awards, if any, are separately presented under Part III, Findings and Questioned Costs for Federal Awards. OFFICE OF DIRECTOR OF SCHOOLS FINDING 2017-001 THE SCHOOL DEPARTMENT HAD DEFICIENCIES IN A

CONTRACT FOR COMMERCIAL DRIVER’S LICENSE TESTING (Noncompliance Under Government Audit Standards)

While performing interim audit procedures for the Johnson County School Department, it came to our attention that the School Department was party to a contract with the Tennessee Department of Safety and Homeland Security to provide commercial driver’s license third-party testing. Under the terms of the contract, the School Department is to perform skills testing for Commercial Driver’s License (CDL) applicants with testing to be performed by a certified examiner. Applicants are to be charged no more than $75 for the administration of the three-part test and $50 for use of school equipment. The School Department has designated the transportation director and another school employee as the certified examiners. The current contract with the Department of Safety and Homeland Security is for the period from May 6, 2014, through May 5, 2019. Discussions with management and other procedures resulted in the following deficiencies:

A. After a review of school board minutes, we could not determine if this contract had been approved by the Board of Education. Additionally, the current contract was signed by the transportation director, not by the board’s Executive Committee. Section 49-2-206, Tennessee Code Annotated (TCA), states that it is the duty of the Executive Committee, the chair of the board of education and the director of schools, to sign contracts authorized by the Board of Education.

B. The School Department did not document whether the fees collected were to be remitted to the county as county revenue or retained by the examiners as compensation for providing the training. In addition, no known receipts books were maintained by the examiners to document the amount of fees collected. Fees received by the transportation director for the examiners to administer the tests or the use of department equipment were not remitted to the county but were retained by the examiners. Information obtained from the Department of Safety and Homeland Security revealed that the transportation director administered at least 658 tests between January 1, 2015, and May 19, 2016, and the other school employee administered at least 150 tests during the same period. Based on the fee of $75 noted above, the transportation director and the other school employee collected approximately $49,350 and $11,250, respectively, during this period. We could not

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determine if fees were collected for the use of department equipment while administering the tests.

C. The fees retained by the transportation director and the other school employee were not paid through the School Department’s payroll system and were in addition to their regular salaries. Since these supplemental payments were not paid through the department’s payroll system, the payments were not subjected to income tax, social security, and Medicare deductions. Also, the department did not report and pay its required matching portions of social security and Medicare associated with these fee payments. This compensation was not reported to the federal government on Forms 1099 or W-2.

These deficiencies exist because of a lack of management oversight, which weakens internal controls over collections and increases the risks of fraud and misappropriation. In addition, the use of department resources and facilities exposes the School Department to other potential liabilities.

RECOMMENDATION All contracts for the School Department should be approved by the Board of Education and signed by its Executive Committee, the chairman of the Board of Education and the director of schools. The School Department should provide written documentation concerning the use of contract fees charged applicants. Official prenumbered receipts should be issued for the collection of all fees as required by Section 9-2-103, TCA. All fees collected from department contracts should be remitted to the county trustee and appropriated by the county commission as required by Section 5-9-401, TCA. All fees collected for the use of department equipment should be considered department revenue and retained by the department. Any fees considered compensation for the certified examiners should be handled through the department’s payroll process. All payroll related payments to department employees should be made through the department’s payroll system to properly reflect the employee’s total compensation. Also, all wages should be subject to the proper employee payroll taxes, the county’s matching portions, and properly reported to the federal government. MANAGEMENT’S RESPONSE – DIRECTOR OF SCHOOLS During the audit it was determined that these deficiencies were a result of a lack of management oversight. The current contract was signed and submitted under former management. Current management was unaware of details as related to third party testing. The Johnson County Board of Education has been made aware of this situation and the recommendation was to continue the practice that is currently in place with receipt documentation procedures implemented. The receipt documentation procedure will include both completed receipts and a collection log and will be reviewed monthly by the Director of Schools and the Finance Director. Many of the tests were given at no charge to government and county employees. Any testing in which fees were collected was done during non-work hours. The Board is in agreement that when the current contract expires, board approval will be required for any future contracts.

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AUDITOR’S REBUTTAL As stated in the finding, we were unable to determine the exact number of tests given at no-charge and when the tests were performed. However, it remains a concern that employees of the School Department could use taxpayer funded facilities, equipment, and resources to supplement their income, over a 17-month period, by as much as $60,600. Since the contract is between the Johnson County School Department and the Tennessee Department of Safety and Homeland Security and does not expire until May 5, 2019, immediate steps should be taken to ensure that all fees collected from department contracts are remitted to the county trustee and appropriated by the county commission as required by Section 5-9-401, TCA. As stated in the recommendation, all fees collected for the use of department equipment should be considered department revenue and retained by the department. Likewise, any fees considered compensation for the certified examiners should be handled through the department’s payroll process. All payroll related payments to department employees should be made through the department’s payroll system to properly reflect the employee’s total compensation. Also, all wages should be subject to the proper employee payroll taxes, the county’s matching portions, and properly reported to the federal government.

____________________________ OFFICE OF CIRCUIT AND GENERAL SESSIONS COURTS CLERK FINDING 2017-002 A CASH SHORTAGE OF $298.50 EXISTED IN THE

OFFICE OF CIRCUIT AND GENERAL SESSIONS COURTS CLERK AS OF JUNE 29, 2017 (Noncompliance Under Government Auditing Standards)

The Circuit and General Sessions Courts Clerk’s Office collects various court related costs and fees. On June 30, 2017, the circuit court clerk filed a Fraud Reporting Form with the Comptroller of the Treasury indicating that there was a net cash shortage totaling $298.50. During the annual audit of the clerk’s office, auditors determined that the cash shortage resulted from differences between collections and deposits on July 12, 2016, July 20, 2016, and August 1, 2016. The official was unaware of the deposit differences due to management oversight and due to incomplete bank reconciliations. The circuit court clerk liquidated the cash shortage from her personal funds on June 29, 2017. RECOMMENDATION The circuit court clerk should ensure that adequate controls for receipting, depositing, and reconciliations of office collections are in place. The office should maintain proper oversight of collections and investigate and resolve any differences between receipts and deposits in a timely manner.

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MANAGEMENT’S RESPONSE – CIRCUIT AND GENERAL SESSIONS COURTS CLERK We concur with this finding. A new bookkeeper has been hired and additional training has been conducted. Additional dates have been added to the deposit schedule, along with additional segregation of duties.

_____________________________ FINDING 2017-003 THE OFFICE DID NOT DEPOSIT SOME FUNDS

WITHIN THREE DAYS OF COLLECTION (Noncompliance Under Government Auditing Standards)

As part of our audit procedures for obtaining reasonable assurance that funds were properly receipted and deposited, we judgmentally selected receipts for the months of July, November, and December 2016, and January and May 2017, to trace to deposits. Our examination revealed, in both Circuit Court and General Sessions Court, multiple instances where funds were not deposited within three days of collection as required by Section 5-8-207, Tennessee Code Annotated. During the months tested, 37 items were held from seven to ten business days in Circuit Court, and 41 items were held from seven to 15 business days in General Sessions Court after receipts were issued before being deposited to the offices’ bank accounts. The delay in depositing funds weakens internal controls over collections and increases the risks of fraud and misappropriation and directly contributed to the cash shortage noted above. This deficiency is the result of management oversight. RECOMMENDATION All collections should be deposited within three days of collection as required by state statute. MANAGEMENT’S RESPONSE – CIRCUIT AND GENERAL SESSIONS COURTS CLERK We concur with this finding. A new bookkeeper has been hired and additional training has been conducted. Additional dates have been added to the deposit schedule, along with additional segregation of duties.

_____________________________

FINDING 2017-004 BANK STATEMENTS WERE NOT ACCURATELY

RECONCILED WITH THE GENERAL LEDGER IN A TIMELY MANNER (Internal Control – Significant Deficiency Under Government Auditing Standards)

Bank statements for the Circuit and General Sessions Courts Clerk’s bank accounts were not accurately reconciled with general ledgers in a timely manner. The clerk had attempted to reconcile the accounts from July 2016 through February 2017; however, differences and errors had not been identified and corrected in a timely manner. These unidentified reconciling differences had accumulated during the year and had not been identified or corrected when auditors arrived in March 2017. Sound business practices dictate that bank statements should be reconciled with the general ledger monthly and that differences

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should be identified and corrected promptly. This deficiency is the result of management failing to accurately reconcile the accounts on a current basis and failing to identify the reasons for any reconciling differences. It should be noted that clerk was able to accurately reconcile bank accounts with general ledgers at June 30, 2017, after assistance from auditors. RECOMMENDATION Bank statements should be reconciled with general ledgers monthly, and any differences discovered should be corrected promptly. MANAGEMENT’S RESPONSE – CIRCUIT AND GENERAL SESSIONS COURTS CLERK We concur with this finding. A new bookkeeper has been hired and additional training has been conducted. Personnel have been given separate duties with the clerk checking off on each task monthly. Bank statements are to be reconciled on the day the statements are received from the bank.

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PART III, FINDINGS AND QUESTIONED COSTS FOR FEDERAL AWARDS There were no findings and questioned costs related to federal awards for the year ended June 30, 2017.

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FindingNumber

OFFICE OF DIRECTOR OF SCHOOLS

2017-001

OFFICE OF CIRCUIT AND GENERAL SESSIONS COURTS CLERK

2017-002

2017-003

2017-004

The Office did not Deposit Some Funds Within Three Days of Collection

Bank Statements were not Accruately Reconciled with the General Ledger in a Timely Manner

A Cash Shortage of $298.50 Existed in the Office of Circuit and General Sessions Courts Clerk as of June 29, 2017

We reviewed the financial statement and federal award findings and recommendations withmanagement to provide an opportunity for their response as required by the auditee requirementswithin Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, CostPrinciples, and Audit Requirements for Federal Awards (Uniform Guidance). Management’s correctiveaction plans for all financial statement findings and federal award findings are presented in this sectionand have been indexed below. The corrective action plans were prepared by management and havebeen presented as they were submitted.

Johnson County, TennesseeManagement's Corrective Action Plan


Title of Finding

The School Department had Deficiencies in a Contract for Commercial Driver's License Testing

Corrective ActionPlan Page Number

197

198

199

199

196

TZtE JOHNSON COUNTY SCHOOLS DIRECTOR OF SCHOOLS 211 North Church Street *Mountain City, TN 37683 Dr. Mischelle Simcox (423) 727-2640 *FAX (423) 727-2663 www.iocoed.k12tn.net

SEE

IND

Corrective Action Plan

FINDING: THE SCHOOL DEPARTMENT HAD DEFICIENCIES IN A CONTRACT FOR COMMERCIAL DRIVER'S LICENSE TESTING

Response and Corrective Action Plan Prepared by: Dr. Mischelle Simcox, Tina Lipford and Barry Bishop - Johnson County Board of Education

Person Responsible for Implementing the Corrective Action: Dr. Mischelle Simcox, Director of Schools

Anticipated Completion Date of Corrective Action: Corrective action implemented immediately and will be on-going

Repeat Finding: No

Planned Corrective Action: The Johnson County Board of Education has been made aware of this situation and the recommendation was to continue the practice that is currently in place with receipt documentation procedures implemented. The receipt documentation procedure will include both completed receipts and a collection log and will be reviewed monthly by the Director of Schools and the Finance Director. Many of the tests were given at no charge to government and county employees. Any testing in which fees were collected was done during non-work hours. The Board is in agreement that when the current contract expires, board approval will be required for any future contracts.

Signature: .

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FINDING: THE OFFICE DID NOT DEPOSIT SOME FUNDS

WITHIN THREE DAYS OF COLLECTION

Response and Corrective Action Plan Prepared by:

Melissa Hollaway, Circuit Court Clerk

Person Responsible for Implementing the Corrective Action:

Melissa Hollaway, Circuit Court Clerk

Anticipated Completion Date of Corrective Action:

Date 10-16-17

Repeat Finding: Yes or No

Reason Corrective Action was Not Taken in the Prior Year: Not a prior year finding.

Planned Corrective Action:

Additional training has been conducted for accounting personnel. Designated personal have been assigned separate duties with the clerk checking off on each task daily. Additional dates have been added to the deposit schedule. The changes are effective immediately. The chief deputy will be responsible for ensuring deposits are made within three days of collection.

FINDING BANK STATEMENTS WERE NOT ACCURATELY RECONCILED WITH THE GENERAL LEDGER IN A TIMELY MANNER

Response and Corrective Action Plan Prepared by: Melissa Hollaway, Circuit Court Clerk

Person Responsible for Implementing the Corrective Action: Melissa Hollaway, Circuit Court Clerk

Anticipated Completion Date of Corrective Action: Date 10-16-17

Repeat Finding:

Yes or No

Reason Corrective Action was Not Taken in the Prior Year: Not a prior year finding.

Planned Corrective Action:

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BEST PRACTICE Accounting literature describes a best practice as a recommended policy, procedure, or technique that aids management in improving financial performance. Historically, a best practice has consistently shown superior results over conventional methods. The Division of Local Government Audit strongly believes that the item noted below is a best practice that should be adopted by the governing body as a means of significantly improving accountability and the quality of services provided to the citizens of Johnson County.

JOHNSON COUNTY SHOULD ADOPT A CENTRAL SYSTEM OF PURCHASING FOR ALL DEPARTMENTS

Johnson County operates under provisions of the Fiscal Control Acts of 1957. These acts provide for a central system of accounting and budgeting covering funds administered by the county mayor, road superintendent, and director of schools. These funds were maintained in the Office of Central Accounting under the supervision of the director of accounts and budgets. The Fiscal Control Acts of 1957 also include provisions for centralized purchasing for funds maintained by the county mayor and road superintendent. However, purchasing procedures for the School Department are governed by purchasing laws applicable to schools as set forth in Section 49-2-203, Tennessee Code Annotated, which provides for the county Board of Education, through its executive committee (director of schools and chairman of the Board of Education), to make all purchases. Sound business practices dictate that establishing a central system would significantly improve internal controls over the purchasing process. The absence of a central system of purchasing has been a management decision by the county comission, resulting in decentralization and some duplication of effort. We recommend the adoption of the County Financial Management System of 1981 or a private act, which would provide for a central system of purchasing for all county departments.

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JOHNSON COUNTY TENNESSEE - · PDF fileJohnson County Officials June 30, 2017 Officials Larry...

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