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SPRING HILL FIRE RESCUE AND EMERGENCY MEDICAL SERVICES DISTRICT FINANCIAL STATEMENTS SEPTEMBER 30, 2010

TABLE OF CONTENTS PAGE INDEPENDENT AUDITORS' REPORT 1 - 2 MANAGEMENT’S DISCUSSION AND ANALYSIS 3 - 8 BASIC FINANCIAL STATEMENTS GOVERNMENT-WIDE FINANCIAL STATEMENTS: STATEMENT OF NET ASSETS 9 STATEMENT OF ACTIVITIES 10 FUND FINANCIAL STATEMENTS: BALANCE SHEET – GOVERNMENTAL FUND 11 RECONCILIATION OF THE BALANCE SHEET – GOVERNMENTAL FUND TO THE STATEMENT OF NET ASSETS 12 STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES – GOVERNMENTAL FUND 13 RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES OF GOVERNMENTAL FUND TO THE STATEMENT OF ACTIVITIES 14 NOTES TO FINANCIAL STATEMENTS 15 - 25 REQUIRED SUPPLEMENTAL INFORMATION: SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES – 26 BUDGET AND ACTUAL – GENERAL FUND SCHEDULE OF FUNDING PROGRESS – OTHER POST-EMPLOYMENT BENEFIT PLAN 27 OTHER AUDITORS’ REPORTS REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON 28 - 29 COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS MANAGEMENT LETTER 30 – 32 MANAGEMENT’S RESPONSE 33

SPRING HILL FIRE RESCUE AND EMERGENCY MEDICAL SERVICES DISTRICT FINANCIAL STATEMENTS

SEPTEMBER 30, 2010

GOVERNMENTAL ACTIVITIES

ASSETSCash and cash equivalents 4,376,673$ Due from other governments 216,488 Accounts Receivable, net 470,740 Other receivables 238 Prepaid expenses 128,113 Restricted assets:

Temporarily restricted:Cash and cash equivalents 299,480

Capital assets (net of accumulated depreciation):Land 55,525 Other capital assets, net of depreciation 3,527,705

Total Assets 9,074,962

LIABILITIESAccounts payable and other current liabilities 520,758 Unearned revenue 18,722 Noncurrent liabilities:

Due within one year - Due in more than one year 1,051,396

Total Liabilities 1,590,876

SPRING HILL FIRE RESCUE AND EMERGENCY MEDICAL SERVICES DISTRICTSTATEMENT OF NET ASSETS

SEPTEMBER 30, 2010

NET ASSETSInvested in capital assets, net of related debt 3,583,230 Restricted for:

Impact fees 299,480 Unrestricted 3,601,376

TOTAL NET ASSETS 7,484,086$

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

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Public Safety-Fire ProtectionPersonal services 10,161,111$ Operating expenses 1,324,014Depreciation 439,055

Total Program Expenses 11,924,180

Program Revenues:Charges for services 2,904,429

Net Program Expense 9,019,751

General Revenues:Fire assessments 8,328,776Impact fees 6,759Investment earnings 19,975Miscellaneous 230,946

Total General Revenues 8,586,456

Increase in net assets (433,295)

Net Assets – Beginning 7,917,381

SPRING HILL FIRE RESCUE AND EMERGENCY MEDICAL SERVICES DISTRICTSTATEMENT OF ACTIVITIES

FOR THE YEAR ENDED SEPTEMBER 30, 2010

Net Assets – Ending 7,484,086$


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GENERALFUND

ASSETSCash and cash equivalents 4,376,673$ Due from other governments 216,488 Accounts Receivable, net 470,740 Other receivables 238 Prepaid expense 128,113 Restricted Assets:

Cash and cash equivalents 299,480

TOTAL ASSETS 5,491,732$

LIABILITIES Accounts payable 68,373$ Accrued wages payable 220,798 Other accrued liabilites 231,587 Prepaid impact fees 18,722 Unearned revenue 167,738

Total Liabilities 707 218

SPRING HILL FIRE RESCUE AND EMERGENCY MEDICAL SERVICES DISTRICTBALANCE SHEET

GOVERNMENTAL FUNDSEPTEMBER 30, 2010

Total Liabilities 707,218

Fund Balances:Reserved for:

Impact fees 299,480 Prepaid expenses 128,113

Unreserved, reported in:General Fund 4,356,921

Total fund balances 4,784,514

TOTAL LIABILITIES AND FUND BALANCES 5,491,732$


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

Fund Balance – Total Governmental Fund 4,784,514$

Capital assets used in governmental activities are not financial resourcesand therefore are not reported in the funds. 3,583,230

Transactions recorded as revenue in the statement of activities, but didnot meet the availability criteria under the modified accrual basis ofaccounting and therefore are considered to be deferred revenueuntil available in the fund statements. 167,738

Liabilities, including other long term obligations, such as long-termcompensated absences and OPEB liability are not due and payable in the current period and therefore are not reported in the funds (1,051,396)

NET ASSETS OF GOVERNMENTAL ACTIVITIES 7,484,086$

SPRING HILL FIRE RESCUE AND EMERGENCY MEDICAL SERVICES DISTRICTRECONCILIATION OF THE BALANCE SHEET - GOVERNMENTAL FUND

TO THE STATEMENT OF NET ASSETSSEPTEMBER 30, 2010


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GENERALFUND

REVENUESFire Assessments 8,328,776$ Impact fees 6,759 Interest 19,975 Miscellaneous 230,946 Charges for services 3,176,166

Total Revenues 11,762,622

EXPENDITURESCurrent:

Personal service 10,029,135 Operating 1,335,339

Capital outlay 210,409 Total Expenditures 11,574,883

Net Change in Fund Balances 187,739

SPRING HILL FIRE RESCUE AND EMERGENCY MEDICAL SERVICES DISTRICTSTATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES

GOVERNMENTAL FUNDFOR THE YEAR ENDED SEPTEMBER 30, 2010

FUND BALANCES - Beginning 4,596,775

FUND BALANCES - Ending 4,784,514$


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

Net changes in fund balances - total government funds 187,739$

Governmental funds report capital outlays as expenditures. However,in the statement of activities, the cost of those assets is allocatedover their estimated useful lives and reported as depreciationexpense and gain/loss on disposal of capital assetsin the current period. (217,321)

Revenues in the statement of activities that do not provide currentfinancial resources as they do not meet the availability criteriaand are not reported as revenues in the funds. This is the changein deferred revenue from the prior year. (271,737)

Some expenses reported in the statement of activities do not requirethe use of current financial resources and, therefore, are notreported as expenditures in governmental funds. This amountrepresents the change in long-term compensated absences. (96,976)

Some expenses reported in the statement of activities do not require

FOR THE YEAR ENDED SEPTEMBER 30, 2010

SPRING HILL FIRE RESCUE AND EMERGENCY MEDICAL SERVICES DISTRICTRECONCILIATION OF THE STATEMENT OF REVENUES

EXPENDITURES, AND CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDTO THE STATEMENT OF ACTIVITIES

p p qthe use of current financial resources and, therefore, are notreported as expenditures in governmental funds. This amountrepresents the change in OPEB liability. (35,000)

CHANGE IN NET ASSETS OF GOVERNMENTAL ACTIVITIES (433,295)$

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NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The following is a summary of the significant accounting policies followed by the

Spring Hill Fire Rescue and Emergency Medical Services District, Hernando County, Florida:

(a) Reporting Entity - Spring Hill Fire Rescue and Emergency Medical Services District

(the District) is a public municipal corporation in the State of Florida created by House Bill Number 1147 of the Legislature of the State of Florida in June 2009. The bill also required that upon the effective date of the act, the business and affairs of the District shall be conducted by a five-member board of fire commissioners consisting of five elected fire commissioners of the Spring Hill Fire Rescue and Emergency Medical Services District. There are no known component units. Revenue is provided for in the Bill by fire assessments against taxable real estate lying within the territorial bounds of the District as defined by the State of Florida. Disbursements are made for maintenance and upkeep of the fire stations, purchase of fire fighting and rescue equipment, payment of wages, employee benefits, and administrative expenses. The District has been determined to be an Independent Special District by the Florida Department of Community Affairs. In previous years, the District has been presented as a component unit of Hernando County, Florida. The State of Florida passed Legislation, which took effect January 1, 1982, and provides for the District to collect impact fees to defray the cost of improvements required to provide fire and emergency service to the new users of the District. The impact fees collected are to be used exclusively for the acquisition, purchase, or construction of new facilities and equipment required to provide these services to the new users in the District.

(b) Basis of Presentation –The District’s basic financial statements include Government-wide (which report information on all of the non-fiduciary activities of the District) and Fund financial statements (which report on the General Fund). The Basic Financial Statements present only governmental activities, as the District conducts no business type activities.

Basis of Accounting: Basic Financial Statements – Government Wide Statements- The Government-Wide Financial Statements (Statement of Net Assets and Statement of Activities) are prepared using the economic resources measurement focus and the accrual basis of accounting. For the most part, interfund activity has been removed from these statements. The District’s net assets are reported in three parts (as applicable): invested in capital assets, net of related debt; restricted net assets, and unrestricted net assets. The statement of activities reports direct program expenses offset by program revenues. The amounts reported as program revenues include charges for services. General revenues include taxes, impact fees and other items not properly included as program revenue.

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SPRING HILL FIRE RESCUE AND EMERGENCY MEDICAL SERVICES DISTRICT NOTES TO FINANCIAL STATEMENTS

SEPTEMBER 30, 2010

NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED

Basic Financial Statements – Fund Financial Statements – The District’s accounts are organized on the basis of funds, which are self-balancing set of accounts that comprises its assets, liabilities, reserves, fund equity, revenues and expenditures. The District utilizes Governmental funds, which follow the modified accrual basis of accounting. Under this method, revenues are recorded when they become 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. The District considers revenues to be available if they are collected within 60 days of the end of the current fiscal period. Expenditures are generally recorded when a fund liability is incurred. The District reports one governmental fund type, which is considered a major fund:

Governmental Funds (1) General Fund - The General Fund is the general operating fund of the District.

All general tax revenues and impact fees, as well as charges for services and other income received are accounted for in this Fund. From the Fund are paid the general operating expenditures and budgeted debt service and capital expenditures. Impact fees are restricted for the acquisition, construction or purchase of assets required to provide fire protection and emergency services.

(c) Estimates - The preparation of financial statements in conformity with U.S.

generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

(d) Budgets and Budgetary Accounting - The District prepares an annual operating budget for the fiscal year commencing October 1. Prior to September 1 of each year, the District prepares a proposed budget for the upcoming fiscal year. The budget is based on an analysis of prior year actual revenues and expenditures along with anticipated spending and revenue sources. Once the proposed budget is compiled, it is brought before the Board of Commissioners for approval. Budget amendments are approved by the Board of Commissioners.

Expenditures should not exceed the total appropriations. Appropriations lapse at the end of the year.

(e) Interfund Receivables/Payables - Interfund receivables/payables arise from temporary interfund transfers. When a fund has an interfund receivable and an interfund payable to the same fund, the amounts are recorded in separate accounts. Internal activity and balances between governmental funds has been eliminated in the government-wide statement of net assets.

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SEPTEMBER 30, 2010

NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED (f) Property Taxes - Property taxes become due and payable on November 1 of

each year. The county tax collector remits the District's portion as such revenues are received. The District collects nearly all of its tax revenues during the period November 1 through April 1, at which time the taxes become delinquent. The maximum rates of tax are set by the Legislature of the State of Florida. The District received tax revenues based on millage and also assessments which vary based on a sliding scale of property values and type of property involved and is determined by the Board of Commissioners of the District.

The key dates in the property tax cycle are as follows: Proposed assessment rate established June 1 Assessment roll validated July 1 Beginning of fiscal year for which taxes have been levied October 1 Tax bills rendered and due November 1 Property taxes payable: Maximum discount November 30 Delinquent April 1 Tax certificates sold May 31 Fiscal year begins October 1 Fiscal year ends September 30 Property taxes are recognized as revenue in the fiscal year for which the

taxes have been levied to the extent they result in current receivables. Under the system outlined above, no material amount of taxes is receivable after the end of the fiscal year.

(g) Fund Balance – Reserved and Designated - General Fund Balance is restricted

for impact fees and prepaid expenses. (h) Cash and Investments - The District maintains two cash pools. One pool is

unrestricted funds and is available for use as determined by the annual budget. The other pool is restricted funds for impact fees. Cash restricted for impact fee revenue can only be used for the acquisition, construction or purchase of assets required to provide fire protection and emergency services to new construction.

(i) Accounts Receivable – All trade receivables, related to EMS revenue are

shown net of allowance for doubtful accounts, which totaled $146,000 at September 30, 2010 and are based on management’s estimate of those accounts which may be uncollectible.

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SEPTEMBER 30, 2010


(j) Investments

In accordance with Florida Statute 218.415, the District adopted an investment policy limiting District investments to the following:

(a) The Local Government Surplus Funds Trust Fund or any intergovernmental

investment pool authorized pursuant to the Florida Interlocal Cooperation Act as provided in Section 163.01, Florida Statutes.

(b) Securities and Exchange Commission registered Money Market funds with

the highest credit quality rating from a nationally recognized rating agency. (c) Interest bearing time deposits or savings accounts in state-certified

qualified public depositories as defined in Section 280.02, Florida Statutes. (d) Direct obligations of the U.S. Treasury.

At September 30, 2010, the District had demand deposits held in a qualified public depository. Deposits whose values exceeded federal depository insurance limits were entirely insured or collateralized pursuant to Chapter 280 of the Florida Statutes. At September 30, 2010, the carrying amount of the District’s deposits was $4,676,153 and the bank balance was $4,811,605.

The District does not have a formal investment policy that limits investment maturities as a means of managing its exposure to fair value losses arising from increasing interest rates.

(k) Compensated Absences – It is the District’s policy to permit employees to

accumulate earned but unused vacation and sick pay benefits. All benefits are accrued when incurred in the government-wide financial statements. A liability for these amounts is reported in governmental funds only if they have matured or are payable from current financial resources. These liabilities are typically liquidated out of the general fund.

(l) Capital Assets – Capital assets, which include property, plant and equipment,

are reported in the government-wide financial statements. Capital assets are defined by the District as assets with an initial, individual cost of more than $1,000 and an estimated useful life of longer than one year. Capital assets are recorded at 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 repair and maintenance that do not add to the value of the asset or extend the useful life of the asset are expensed as incurred. The District does not have infrastructure assets.

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SEPTEMBER 30, 2010


Property, plant and equipment of the District are depreciated on a straight-line basis over the following estimated useful lives:

Asset Years Building and Improvements 40 Vehicles and Fire Engines 3-20 Furniture, fixtures and equipment 5-10

(m) Long-Term Obligations – In the government-wide financial statements, long-term debt and other long-term obligations are reported as liabilities. In the fund financial statements, no long-term obligations are reported as they are not due to be paid from current financial resources.

(n) Resources – When both restricted and unrestricted resources are available,

restricted resources are used first, and then unrestricted resources, as they are needed.

NOTE B - CAPITAL ASSETS Capital asset activity for the year ended September 30, 2010 was: Beginning Ending Balance Increases Decreases Transfers Balance Governmental Activities: Capital assets, not being depreciated: Land $ 55,525 $ -0- $ -0- $ -0- $ 55,525 Construction in progress -0- -0- -0- -0- -0- Total capital assets, not being fully depreciated 55,525 -0- -0- -0- 55,525 Capital assets being depreciated: Buildings and improvements 3,215,452 -0- -0- -0- 3,215,452 Machinery and equipment 4,116,354 221,734 -0- -0- 4,338,088 Total capital assets being depreciated 7,331,806 221,734 -0- -0- 7,553,540 Less accumulated depreciation for: Buildings and improvements (777,436) (87,929) -0- -0- (865,365) Machinery and equipment (2,809,344) (351,126) -0- -0- (3,160,470) Total accumulated depreciation (3,586,780) (439,055) -0- -0- (4,025,835) Total capital assets, being depreciated, net 3,745,026 (217,321) -0- -0- 3,527,705 Governmental activities capital assets, net $ 3,800,551 $ (217,321) $ -0- $ -0- $ 3,583,230

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SEPTEMBER 30, 2010

NOTE B - CAPITAL ASSETS - CONTINUED

Depreciation in the amount of $439,055 was reported as a separate line item in the statement of activities.

NOTE C - LONG-TERM DEBT

General long-term debt consisted of the following at September 30, 2010:

Beginning Ending Due Within Balance Additions Reductions Balance One Year Compensated absences $ 808,420 $ 626,020 $ (529,044) $ 905,396 $ -0- OPEB liability 111,000 35,000 -0- 146,000 -0- Governmental Activities – Long-term liabilities $ 919,420 $ 661,020 $ (529,044) $ 1,051,396 $ -0-

NOTE D - RECONCILIATION OF GOVERNMENT-WIDE AND FUND FINANCIAL STATEMENTS Explanation of certain differences between the governmental fund balance sheet and

government-wide statement of net assets.

The reconciliation between the fund balance – total governmental funds as reported in the governmental fund balance sheet and net assets – governmental activities as reported in the statement of net assets, is included on page 12 of the basic financial statements. One line of that reconciliation explains “liabilities, including long-term compensated absences and OPEB are not due and payable in the current period and therefore are not reported in the governmental funds.” Compensated absences $ (905,396) OPEB liability (146,000) $ (1,051,396) Explanation of certain differences between the governmental fund statement of revenues, expenditures, and changes in fund balances and the government-wide statement of activities. The reconciliation between the net changes in fund balances – total governmental funds as reported in the statement of revenues, expenditures and changes in fund balances, and the changes in net assets as reported in the statement of activities is included on page 14 of the basic financial statements. One line in that reconciliation explains that “Governmental Funds report capital outlays as expenditures. However, in the statement of activities the cost of those assets is allocated over their estimated useful lives and reported as depreciation expense.”

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SEPTEMBER 30, 2010

NOTE D - RECONCILIATION OF GOVERNMENT-WIDE AND FUND FINANCIAL STATEMENTS -

CONTINUED

The details of the difference are show below: Capital outlay included as additions $ 221,734 Depreciation expense (439,055) $ (217,321)

NOTE E - PENSION PLAN

1. Plan Description

All full-time employees of the District as of September 30, 2010 are covered by the State of Florida Retirement System, which is administered by the Department of Administration, Division of Retirement. The system is a noncontributory, defined benefit, cost-sharing multiple-employer PERS (Public Employee Retirement System). The pension plan provides pension benefits and disability benefits. Normal retirement age for “regular” employees is 62 or 30 years of service and vesting occurs after 6 years of creditable service. Normal retirement age for “special risk” employees is 55 or 25 years of service and vesting occurs after 6 years of creditable service. “Regular” and “Senior Management” employees who retire at age 62 and “special risk” employees who retire at age 55 are entitled to a blended rate ranging from 1.6% to 3% of their final, five-year average compensation times the number of years they were members of the system. The final, five-year average compensation is the average salary of the employee during the highest five years of employment.

2. Contribution Required and Made

The required contributions for the year ended September 30, 2010 ranged from 9.85% - 10.77% for “regular” employees, 13.12% - 14.57% for senior management, and 20.92% - 23.25% for “special risk” employees. Current year’s covered payroll, which equals total payroll, was $6,757,171. Current year contributions were $1,409,455 and equaled required contributions. During the years ended September 30, 2009 and 2008 the District contributed $1,170,680 and $1,226,625, respectively, which equaled required contributions

3. Funding Status and Progress

A separate plan financial statement is issued by the State of Florida Division of Retirement for the plan year, which ends on June 30, which provides detail on the plan funding and status. The report may be obtained from the Florida Division of Retirement, 2639 North Monroe Street, Building C, Tallahassee, Florida 32399-1560.

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SEPTEMBER 30, 2010


SEPTEMBER 30, 2010

NOTE E - PENSION PLAN - CONTINUED

4. Post-Employment Benefits

Pursuant to Section 112.363, Florida Statutes, the Florida Legislature established the Retiree Health Insurance Subsidy (HIS) to assist retirees of all State-administered retirement systems in paying health insurance costs. During the 2009-2010 fiscal year, the HIS program was funded by required contributions consisting of 1.11% assessed against the payroll for all active employees covered in State-administered retirement systems. This assessment is included in the Florida Retirement System contribution rates presented in the State Retirement Plans footnote above. Eligible retirees, spouses, or financial dependents under any State-administered retirement system must provide proof of health insurance coverage, which can include Medicare. During the 2009-2010 fiscal year, participants received an extra $5 per month for each year of creditable service completed at the time of retirement; however, no eligible retiree or beneficiary may receive a subsidy payment of more than $150 or less than $30. If Contributions fail to provide full subsidy benefits to all participants, the subsidy payments may be reduced or canceled.

NOTE F - OTHER POST EMPLOYMENT BENEFITS OTHER THAN PENSION

SUMMARY AND PLAN DESCRIPTION In addition to the retirement plan described in Note E, the District provides post retirement health care benefits in accordance with Section 112.0801, Florida Statutes, to all employees who retire as employees from the District. The benefits are administered through a single-employer defined benefit healthcare plan (the “Plan”). In most cases, the retiree pays 100% of the premium cost for the retiree to participate in the District’s insurance program. In general, health care costs increase with age. Thus age-adjusted healthcare premiums for active employees can normally be expected to be less than age-adjusted premiums for retirees. When a single premium is established for both active employees and retirees, the retiree benefits from an abnormally low premium. Governmental Accounting Standards Board (GASB) Statement No. 45 describes such an arrangement as an implicit rate subsidy and mandates that any retiree savings be treated as an Other Post Employment Benefit (OPEB) even though the employer makes no payments directly on behalf of retirees. The Plan provides healthcare benefits including medical coverage, prescription drug benefits, vision care, dental care and life insurance coverage to both active and eligible retired employees. Dental and vision care benefits are immaterial and are not believed to result in an OPEB; therefore, they are not included in the OPEB calculation. The Plan does not issue a separate financial report.

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SEPTEMBER 30, 2010


SUMMARY AND PLAN DESCRIPTION – CONTINUED Eligibility for participation in the Plan is limited to full time employees of the District, employees who are active participants in the Plan at the time of retirement, who retire and are either vested with the Florida Retirement System (FRS), are vested in the FRS and are age 62, have 30 years of creditable service before age 62, or meet alternative criteria if disabled or a member of a Special Risk Class. Surviving spouses or dependents of participating retirees may continue in the Plan if eligibility criteria specific to those classes are met. In an open session, the District approves the Plan rates for the enrollment period, and may amend the Plan with changes to the benefits, premiums and/or levels of participant contribution at any time. As of September 30, 2010, the date of the last actuarial valuation, plan participation was as follows: Active Plan Participants 111 Retirees and Beneficiaries Receiving Benefits 7 Total Membership 118 FUNDING POLICY Currently, the District’s OPEB benefits are unfunded. There is no separate trust fund or equivalent arrangement into which the District would make contributions to advance-fund the obligation. Therefore, the ultimate subsidies which are provided over time are financed directly by general assets of the District which are invested in qualified public depositories. ANNUAL OPEB COST AND NET OPEB OBLIGATION The District’s annual cost (expense) for OPEB is calculated based on the Annual Required Contribution (ARC), an amount actuarially determined in accordance with the Governmental Accounting Standards Board (GASB) Statement No. 45. The ARC represents a level of funding that, if paid on an ongoing basis, is projected to cover the normal cost each year and amortize any unfunded actuarial liability over a period not to exceed 30 years. The following table shows the components of the District’s annual OPEB cost for the year, the amount actually contributed, and the changes in the net OPEB obligation. 9/30/10 Annual required contribution $ 169,000 Less previously recorded balance (111,000) Interest on net OPEB obligation -0- Adjustment to annual required contribution -0- Annual OPEB cost (expense) 58,000 Contributions made (23,000) Increase in net OPEB obligation 35,000 Net OPEB obligation - beginning of year 111,000 Net OPEB obligation – end of year $ 146,000

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SEPTEMBER 30, 2010


Schedule of funding progress as of September 30, 2010 was as follows:

Actuarial Actuarial UAAL as a Actuarial Value of Accrued Unfunded Percentage of

Valuation Assets Liability (AAL) AAL (UAAL) Funded Covered Covered Payroll Date (a) (b) (b-a) Ratio Payroll ([b-a]/c) * 9/30/10 $-- $ 1,375,000 $ 1,375,000 0.00% $ 4,753,000 28.9%

* Performed as of February 1, 2011 for September 30, 2010.

The District’s OPEB cost, the percentage of annual OPEB cost contributed and the Net OPEB obligation follows:

Fiscal Annual Age Adjusted % of Annual OPEB Net OPEB Year OPEB Cost Contributions Cost Contributed Obligation **9/30/09 $ 111,000 $ -0- 0% $ 111,000 9/30/10 $ 169,000 $ -0- 14% $ 146,000

** Based on Actuarial valuation from October 1, 2006. ACTUARIAL METHODS AND ASSUMPTIONS Actuarial valuations of an ongoing plan involve estimates of the value of reported amounts and assumptions about the probability of occurrence of events far into the future. Examples include assumptions about future employment, mortality, and the healthcare cost trend. Amounts determined regarding the funded status of the plan and the annual required contributions of the employer are subject to continual revision as actual results are compared with past expectations and new estimates are made about the future. The schedule of funding progress, presented as required supplementary information following the notes to the financial statements, presents trend information about whether the actuarial value of the plan assets is increasing or decreasing over time relative to the actuarial accrued liabilities for benefits. Projection of benefits for financial reporting purposes are based on the substantive plan provisions, as understood by the employer and participating members, and include the type of benefits provided at the time of each valuation and the historical pattern of sharing benefit costs between the employer and participating members. Projections of benefits for financial reporting purposes does not explicitly incorporate the potential effects of legal or contractual funding limitations on the pattern of cost sharing between the District and Plan members. The actuarial methods and assumptions used include techniques that are designed to reduce the effect of short-term volatility in actuarial accrued liabilities and the actuarial value of assets, consistent with the long-term perspective of the calculations.

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SEPTEMBER 30, 2010

NOTE F - OTHER POST EMPLOYMENT BENEFITS OTHER THAN PENSION - CONTINUED

The actuarial methods are: Actuarial cost method Projected Unit Credit Amortization method Level dollar payment Amortization period 30 years Asset valuation method Fair Value The actuarial assumptions are: Investments rate of return 4.0% (includes inflation at 2.75% per annum) Healthcare cost trend rate 10% for 2011/12, graded to 6% for 2019/20 Ultimate rate – 5% per annum

NOTE G - CONCENTRATIONS OF LABOR SUBJECT TO COLLECTIVE BARGAINING AGREEMENT

The District’s Professional Firefighters, and other non-salaried employees, which represent a significant portion of the District’s employees, are represented by a Union.

NOTE H - RISK MANAGEMENT

The District is exposed to various risks of loss related to torts; theft of, damage to, and destruction of assets; errors and omissions; and natural disasters. The District has obtained commercial insurance from independent third parties to mitigate the costs of these risks; coverage may not extend to all situations. There has been no significant decrease in coverage from the prior year. Settled claims from these risks have not exceeded commercial insurance coverage over the past three years.

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REQUIRED SUPPLEMENTARY INFORMATION

SPRING HILL FIRE RESCUE AND EMERGENCY MEDICAL SERVICES DISTRICTSCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND

BALANCES -BUDGET AND ACTUAL-GENERAL FUNDFOR THE YEAR ENDED SEPTEMBER 30, 2010

ORIGINAL VARIANCE WITHAND FINAL BUDGET

ORIGINA FINAL FAVORABLEBUDGET BUDGET ACTUAL (UNFAVORABLE)

REVENUESFire assessments 8,110,520$ 8,328,776$ 218,256$ Impact Fees 90,000 6,759 (83,241)Impact Fees 90,000 6,759 (83,241) Interest 171,800 19,975 (151,825) Miscellaneous 94,000 230,946 136,946 Charges for services 2,667,770 3,176,166 508,396

Total Revenues 11,134,090 11,762,622 628,532

EXPENDITURESCurrent:

Personal service 10,222,579 10,029,135 193,444 Operating 1,531,311 1,335,339 195,972

Debt Service 260,000 - 260,000 Capital Outlay 229,250 210,409 18,841

Total Expenditures 12,243,140 11,574,883 668,257

Net Change in Fund Balance (1,109,050) 187,739 1,296,789

FUND BALANCES - Beginning 4,596,775 4,596,775 -

FUND BALANCES - Ending 3,487,725$ 4,784,514$ 1,296,789$

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SPRING HILL FIRE RESCUE AND EMERGENCY MEDICAL SERVICES DISTRICT SCHEDULE OF FUNDING PROGRESS POST-EMPLOYMENT BENEFIT PLAN

SCHEDULE OF FUNDING PROGRESS:

ACTUARIAL UAAL AS A

ACTUARIAL ACCRUED UNFUNDED PERCENTAGE ACTUARIAL VALUE OF LIABILITY AAL FUNDED COVERED OF COVERED VALUATION ASSETS (AAL) (UAAL) RATIO PAYROLL PAYROLL DATE (a) (b) (b-a) (a/b) (c) ((b-a)/c)

10/01/06 $ -0- $ 1,224,000 $ 1,224,000 0% $ 6,617,579 18.5% * 02/01/11 $ -0- $ 1,375,000 $ 1,375,000 0% $ 4,753,000 28.9% *Performed February 1, 2011 for September 30, 2010.

The information presented in the required supplementary schedules was determined as part of the actuarial valuations at the date indicated. Additional information as of the latest actuarial valuation follows:

Valuation date 02/01/11 (for 9/30/10)

Actuarial cost method Projected Unit Credit Amortization method Level dollar payment Amortization period 30 years Actuarial assumptions:

Investment rate of return 4.0% inflation at 2.75% Healthcare cost trend rate 10% for 2011/12 graded to 6% for 2019/20 Ultimate rate – 5% per annum

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OTHER AUDITORS’ REPORTS

SPRING HILL FIRE RESCUE AND EMERGENCY MEDICAL … rpts/2010 springhill... · Accounts Receivable,...

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